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September 1, 1999, Wednesday
National Desk

Executives Press for Political Finance Change

By DON VAN NATTA Jr.

Leaders of a committee of business executives who have endorsed a ban on unlimited campaign contributions said today that their members would not be intimidated by an aggressive letter-writing campaign led by Senator Mitch McConnell, one of the Senate's most ardent opponents of a bill that would overhaul the campaign finance system.

In the letters, Mr. McConnell, a Kentucky Republican, accused the group of trying to ''eviscerate private sector participation in politics'' by imposing ''anti-business speech controls.''

''I hope you will resign from C.E.D.,'' Mr. McConnell scribbled near the bottom of one letter sent to an unidentified senior executive of a telecommunications corporation.

Leaders of the organization attacked by Mr. McConnell, the Committee for Economic Development, which includes executives of General Motors, Xerox, Merck and the Sara Lee Corporation, refused to identify the executive or the corporation in the letter. But they did say that Mr. McConnell wrote letters to executives who work for companies that have significant issues pending before Congress.

None of nearly 20 members of the Committee for Economic Development planned to resign from the committee, as Mr. McConnell urged in the letters sent in late July, committee leaders said.

Edward A. Kangas, a co-chairman of the C.E.D. committee that studied the campaign finance system, said today that Mr. McConnell's letter confirmed for him that the organization, which has enlisted more than 100 current and retired executives to endorse new campaign finance rules, was beginning to shape the contentious debate on the subject on Capitol Hill. The letter was first reported on Sunday on the editorial page of The New York Times.

''What we've been doing as a group of business leaders is obviously beginning to have an impact,'' said Mr. Kangas, the chairman and chief executive of Deloitte Touche Tohmatsu, the accounting and consulting firm. ''If we weren't having an impact, he would not be communicating with us.''

In his public statements, Mr. McConnell argues that current campaign-finance legislation would infringe on free speech protections of the First Amendment. Critics of the Republican Party's position on the issue, however, say that Republicans are motivated by the knowledge that they hold a commanding advantage in raising campaign money from the private sector.

In one letter, Mr. McConnell also wrote that he was ''astonished'' that the corporation of the recipient had ''lent its name, prestige and presumably financial backing'' to the Committee for Economic Development, which he said was lobbying on behalf of a ''radical campaign-finance agenda.'' Mr. McConnell argued that the executive's alliance with such a group had consequently damaged the reputation of the executive's employer.

Mr. McConnell wrote the letters in his role as chairman of the National Republican Senatorial Committee, the party's major fund-raising group for Senate candidates. His spokesman, Robert Steurer, said that Mr. McConnell was unavailable for comment, and referred questions to the National Republican Senatorial Committee.

Steven Law, executive director of the National Republican Senatorial Committee, issued a brief statement tonight, in which he said: ''Nearly all the companies we contacted had no idea that C.E.D. was throwing their name around in connection with campaign-finance reform and they were outraged that C.E.D. had hijacked their corporate identity to sell a position with which they sharply disagreed.''

The executives on the C.E.D. committee are speaking for themselves, and not necessarily on behalf of their companies. Most of their corporations still continue to give large sums to political parties and candidates.

Mr. Kangas and other committee leaders said they had recruited more executives in the past several days. They said their goal was to have 300 executives endorse their campaign finance proposals by late autumn.

''I think most of the people at C.E.D. have figured out just how corrupt the campaign finance system is, and this letter is just an example of what they already knew,'' Mr. Kangas said. ''Actually, we are broadening the constituency of business leaders who recognize that the campaign finance system is a real problem. Senator's McConnell's letter has not had much impact.''

The letters were seen by some as an attempt to intimidate the members with the implied message: Resign and keep quiet or don't count on doing business with Congress. ''The reaction was interesting,'' Mr. Kangas said. ''These guys are running big enterprises of their own. They are not easily intimidated. They looked at the letter and most of them just chuckled and filed it away.''

The committee is a 60-year-old business-led public policy and research association based in Manhattan. Its leaders pride themselves that it is fiercely non-partisan.

The executives on the committee are urging Congress to prohibit soft money, the unlimited donations that corporations give to political parties. The committee also advocates increasing the limit on individual contributions to $3,000 from the current limit of $1,000.

''The business community, by and large, has been the provider of soft money, said Charles Kolb, the committee's president. ''These people are saying: We're tired of being hit up and shaken down. Politics ought to be about something besides hitting up companies for more and more money.''

The committee's members studied the campaign finance system for two years. Committee members said they were horrified at the public perception that big donors receive special favors in Washington. In a report released in March, the committee wrote: ''The suspicion of corruption deepens public cynicism and diminishes public confidence in Government. More important, these activities raise the likelihood of actual corruption.''

In a response sent to Mr. McConnell last week, leaders of the committee wrote: ''We know that a majority of the House and the Senate supports campaign finance reform. That sentiment is also shared by a growing number of business community leaders.''

Both Warren E. Buffett, the acclaimed value investor and chief executive of Berkshire Hathaway, and Jerome Kohlberg, a founder of the leveraged buyout firm Kohlberg Kravis Roberts & Company, have tried on their own to persuade chief executives of businesses to embrace campaign finance reform measures. But many, though sympathetic, refused to speak out because they do not want to rankle the legislators on whom they depend.

Mr. Kangas said he disagreed with Mr. McConnell's position that campaign contributions were protected by the First Amendment. ''I was a little disappointed that he would suggest that freedom of speech does not apply to us, but it applies to the people who agree with him,'' Mr. Kangas said.