TOBACCO MONEY FINDS A WAY TO GET DONATIONS TO LAWMAKERS

WASHINGTON - Since Jennifer Dunn first ran for Congress in 1992, she has
had a loyal friend in Philip Morris. The tobacco giant's political-action
committee supported the Washington state Republican's maiden campaign and
has been there for her ever since.

This election cycle, Dunn decided not to take any tobacco money, saying it
created "too much trouble." But that didn't mean she had to go cold turkey.

Philip Morris subsidiary Kraft Foods - which had never before given a penny
to Dunn - stepped in to fill the money vacuum. So far, Kraft has
contributed $3,000 from its PAC, which is funded entirely by the Philip
Morris PAC.

As Congress debates a comprehensive anti-smoking measure this spring, the
nervous tobacco industry is pouring record sums into the political process.
But with smoking becoming an increasingly incendiary issue this election
year, a growing number of candidates on both sides of the aisle are saying
no to money from Big Tobacco.

"Tobacco money became a big question," said Dunn, who has risen to the
highest leadership post held by a Republican woman in the House. "I didn't
want to spend time explaining why I take it."

GOP fund-raising consultant Tom Hammond estimates that half his
congressional clients this year have rejected tobacco contributions,
fearing that taking the money gives opponents an easy target.

Yet, as Dunn's experience illustrates, the profits of cigarette makers or
their related businesses are finding their way into campaign coffers in
more subtle and hard-to-trace ways.

One tobacco executive said candidates have started asking companies to be
stealthier about their giving, directing checks to state parties or the
House and Senate campaign committees - organizations that deprive the
politicians of direct control over the money, but that can work to their
benefit while providing deniability.

Some candidates vow not to take tobacco money, but then accept checks from
the political-action committees of tobacco subsidiaries - even though
almost all that money comes directly from the tobacco parent's PAC. Others
swear off tobacco money but solicit it for their state parties or pet
projects. Some who refuse contributions supplied by company executives
through a tobacco PAC accept private checks from the same individuals.

The list of those who have decided recently to reject industry
contributions spans the political spectrum and stretches from coast to
coast, with the logical exception of tobacco-growing states where taking
the money carries no stigma. The two highest-ranking congressional
Democrats, Senate Minority Leader Thomas Daschle, S.D., and House Minority
Leader Richard Gephardt, Mo., both swore off tobacco money in the mid-1990s.

Kicking The Habit

Even Republicans, who in recent years have been the primary beneficiary of
tobacco's largesse, are kicking the tobacco habit. The list includes
newcomers such as Sens. Sam Brownback, Kan., and Gordon Smith, Ore., and
those facing tough campaigns this fall such as Sen. Christopher Bond, Mo.,
and Reps. J.D. Hayworth, Ariz. and Washington state's Rick White.

"You don't really want to be associated with an industry that consistently
lied to Congress and the American people," said Rep. Deborah Pryce, R-Ohio.

Yet when Pryce and Dunn hosted 700 people for the Republican Women's
Leadership Forum here last week, tobacco helped foot the bill. Kraft
donated $25,000, US Tobacco gave $5,000 and its subsidiary St. Michele, a
Washington state winery, donated $5,000 worth of wine.

Defending The Kraft Donation

Dunn said accepting PAC checks from Kraft does not violate her anti-tobacco
policy. "I make a distinction between Kraft and Philip Morris," Dunn said.
"Kraft produces a lot of good products."

Known as PhilPAC, the Philip Morris committee receives donations from
executives of Philip Morris, Kraft, and Miller Brewing, and then transfers
money to the Kraft and Miller PACs.

Federal Election Commission records show Philip Morris transfers far more
money into the Kraft and Miller PACs than it receives from executives of
those two subsidiaries. Last year, for example, the Philip Morris PAC
received more than $13,000 from Kraft executives but sent $37,000 to Kraft.
Miller executives gave a little over $8,000 to the Philip Morris PAC, but
nearly $15,000 was transferred to the Miller PAC.

Democrat Daschle offers another case study in creative financing. His
political director, Michael Meehan, said the senator has "taken the extra
step" of giving up tobacco money because the issue has become "so
controversial and so highly charged."

However, Daschle hosted a fund-raising breakfast for a dozen lobbyists here
last May that included three industry lobbyists - Tommy Payne of R.J.
Reynolds and David Nicoli and James Molloy of Philip Morris - who wrote
personal checks totalling $2,000. Daschle collected another $2,000 in
tobacco money later in the year from executives at Philip Morris and US
Tobacco.

Checks `Accepted In Error'

Meehan said the checks were "accepted in error." But the money was only
returned last month - nearly a year after some of it was collected - after
the Center for Responsive Politics produced a chart detailing members'
tobacco receipts.

Daschle also kept a $1,000 contribution from one of Philip Morris' main
outside lobbyists, Walter Stewart, who organized the breakfast and helped
solicit the tobacco executives' checks, because he is not employed
full-time by the industry and therefore is not barred by Daschle's policy,
Meehan said.

In addition, US Tobacco's PAC contributed $2,500 and Miller Brewing
contributed $5,000 to a Daschle-arranged event that benefitted both the
senator's reelection campaign and the South Dakota state party; Meehan said
the money from both companies went to the state party, which also received
$5,000 directly from the RJR Nabisco PAC and another $2,500 from the UST
PAC.

Daschle and Dunn are hardly alone. In addition to taking from Kraft and
Miller, lawmakers who shun tobacco money accept contributions from Stimson
Lane, a wine-making subsidiary of US Tobacco whose PAC money comes entirely
from the parent company's PAC, and Nabisco, which keep its finances
separate from its parent company, RJR Nabisco.

Under federal election law, companies can't give directly to federal
candidates, only to political parties. But they earn points with candidates
through their employee-funded PACs, which can give a toal of $5,000 per
election.

"There's a game you can play," said Democratic fund-raising consultant Tom
Erickson. "People want to know if they can take Kraft Foods or Miller and
we have to tell them at the beginning that it is from the same actual PAC."

Last August, Rep. George Nethercutt, R-Wash., returned a $500 donation sent
by Philip Morris' PAC. "My Dad died of lung cancer in 1977. I have a bias
against smoking," he said recently. "I don't want to encourage the
industry."

FEC records show the Kraft PAC wrote a $500 check to Nethercutt the same
day the Philip Morris check was returned.

Sen. John McCain, R-Ariz., primary author of a $516 billion anti-smoking
bill, has not taken tobacco money since 1992 but accepted a $1,000 Miller
contribution last June. "This one obviously slipped through the cracks,"
said McCain's press secretary Nancy Ives. She said McCain would send the
check back because "it's just another way of getting money from tobacco
companies."

Tobacco Money Pervasive

In an illustration of the pervasiveness of tobacco money, however, McCain
is scheduled to appear at a $500-a-head fund-raiser sponsored by lawyers at
the lobbying firm of Patton Boggs - including two, Thomas Hale Boggs Jr.
and Darryl D. Nirenberg, who represent the Smokeless Tobacco Council.

Screening out money from lobbyists whose clients include tobacco "sets a
standard no one in this town could meet," said Ives.

As the mid-term election approaches, some candidates are taking preemptive
measures to insulate themselves from attacks they are shills for Big
Tobacco.

"Candidates are scared," said GOP fund-raising consultant Dan Morgan. "They
don't want to do anything that's going to give them any vulnerability out
there."

Rep. Rick White, R-Wash., was stalked by "Butt Man" at campaign appearances
two years ago for accepting $3,500 from cigarette makers. Although the
money would help in this year's equally difficult re-election race, White
has decided to do without. "The issue was really demagogued against Rick in
1996 and it just wasn't worth it," said White campaign consultant Brett
Bader.