House Democrat Demands Rove Probe

W A S H I N G T O N, July 17, 2001 -- A top congressional Democrat is calling for the Justice Department to investigate Karl Rove, one of President Bush's closest advisers, for doing work that could have affected companies in which he owned stock.

California Rep. Henry Waxman, ranking Democrat on theHouse Government Reform Committee, sent a letter today to White House Counsel Alberto Gonzalez demanding the Justice Department investigate whether Rove violated ethics laws. (Full text of letter: PDF format)

In the nine-page letter, Waxman cites news reports identifying two companies held by Rove that were affected by the sweeping White House energy policy: Enron and General Electric. According to published reports, Rove had $60,000 invested in Enron stock and owned $80,000 in GE stock.

Rove also held $110,000 in Intel stock when he met withsenior executives of the company on March 12, at the same time the tech giant was seeking government approval of a merger. The merger with an Intel subsidiary and a Dutch company was approved in May.

"If the news reports of Mr. Rove's conduct are accurate, Mr. Rove discussed federal policies with senior executives of companies in which he had substantial investments," Waxman writes. "This is exactly the type of conflict of interest that the ethics laws are designed to prevent."

A White House spokeswoman responded to Waxman's letter with a defense of Rove's conduct, arguing that he "followed all of the ethical guidelines and acted appropriately in his role as senior adviser to the president." The spokeswoman went on to accuse Waxman of playing the "politics of personal destruction."

"This is the same old finger-pointing that does nothing to change the tone and achieve bipartisan results on behalf of the American people," she said.

Responding to earlier letters from Waxman on the matters, Gonzalez defended Rove's handling of his financial holdings. Gonzalez claimed that Rove, the mastermind behind Bush's presidential campaign, had tried to divest his stocks sooner but was advised to hang on to the investments until he could receive an exemption that would let him sell the holdings without paying capital gains taxes.

"Mr. Rove either had passing, inconsequential contacts or participated in broad policy discussions, neither of which presents an ethical problem under applicable regulations," Gonzalez wrote in the letter.

But Waxman said Gonzalez has no authority to make the determination of whether Rove broke conflict of interest laws.

"The White House is under a legal obligation to seek an independent review of Mr. Rove's conduct by the Public Integrity Section of the Department of Justice," Waxman writes.

Alleging the Clinton administration was held to a higher standard, Waxman cited former National Security advisers Sandy Berger and Anthony Lake. They were referred to the Justice Department and ultimately paid fines for holding stock in energy companies.

An administration official today said Waxman's likening of Rove's situation to that of Berger and Lake is comparing apples and oranges. They held their stock for two years after being instructed by then-President Clinton's counsel to sell the holdings. Rove, the aide said, sold his stock immediately after receiving the tax waiver certificate.

The aide argued that Rove sold his stock immediately after he received his certificate of divestiture. Rove has since sold his stock holdings, estimated to be worth between $1 million and $2.5 million.

Clinton officials Lake and Berger, the aide noted, held their stock two years after being instructed by the counsel's office to sell their holdings.

Furthermore, the White House official claims Berger and Lake admitted to attending meetings on subjects which could directly affect the price of stocks they held. Rove, the aide argued, had done no such thing.

The White House counsel's office is preparing a formal response to Waxman's letter.

ABCNEWS' Tamara Lipper and Brian Hartman contributed to this report.