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Chapter 15

Propelled by a $4.5 million fee from the government of Taiwan, Cassidy & Associates rises to a new level among Washington lobbyists.

By Robert G. Kaiser

For a lobbying firm whose reputation was built on winning earmarked appropriations for universities and hospitals, helping General Dynamics Corp. save the Seawolf submarine was a thrilling experience -- "one of the biggest lobbying efforts ever," in the words of Vincent Versage, Cassidy's team leader for the project. It put Cassidy & Associates into a new league.

The Republic of China on Taiwan confirmed this new status in 1994 when it picked Cassidy for a sensitive and lucrative assignment -- to persuade the United States government to change its policy toward the leader of Taiwan, and allow him to visit the United States.

The story began in April 1994, at a time when Cassidy knew almost nothing of Taiwan, and the Taiwanese knew absolutely nothing about Cassidy. That month the fiery and determined Taiwanese president, Lee Teng-hui, sought permission to land his plane in Hawaii and spend a night in Honolulu on his way from Taiwan to South America. But the U.S. government said Lee could stop only to refuel, and could not visit Hawaii. The Clinton administration was adhering to rules established after the United States formally recognized China's mainland government in Beijing in 1979. That agreement required Washington to break off "official" relations with Taiwan, which subsequent U.S. administrations had interpreted as meaning no visits by Taiwanese officials to the United States.

Lee Teng-hui
Lee Teng-hui, the former president of Taiwan, set out to test longstanding U.S. policy toward China. (File photo)

Lee, the first native Taiwanese to lead his country, was insulted by his treatment in Hawaii. Because he was preparing to run in the first democratic election for president in Taiwan's history, he saw the episode as an opportunity. He felt the rebuff was particularly unjust because of the changes he had brought to Taiwan since becoming president in 1988. Under his leadership the island republic -- ruled by Chiang Kai-shek after he lost control of China to Mao Zedong's communists in 1949 -- was becoming a functioning democracy. What had long been a corrupt dictatorship acquired, under Lee, legalized opposition parties and a free press. Taiwan's economy was thriving, its trade with the United States was important and growing. Why should he have to accept humiliation of the sort he encountered in Hawaii?

Lee asked a former protégé, Huang Lien-Fu, then an economics professor at Howard University in Washington, to help him find a way to influence the Clinton administration. Huang approached Jerrold Schecter, a former Time magazine correspondent and spokesman for the National Security Council under President Carter. The Taiwanese knew that Schecter had a personal relationship with Strobe Talbott, then the deputy secretary of state, who had been a Rhodes Scholar with Bill Clinton. Who, the Taiwanese envoy asked Schecter, could help Lee improve his relationship with Washington?

Jerrold L. Schecter
Jerrold L. Schecter helped connect Taiwan and Cassidy. (Photo: Steven Schecter)

Schecter sought the advice of an old friend, Colin Mathews, a former Capitol Hill aide and lawyer-lobbyist in the Washington office of a Houston law firm. Both Mathews and his father, Tom Mathews, a well-known Democratic direct-mail fundraiser, had done some work with Cassidy. They liked him and respected his firm. Mathews thought the challenge of helping Lee would appeal to Gerald Cassidy. He also thought Cassidy would agree to Schecter's request to be paid for bringing in the client, since Cassidy & Associates regularly paid finder's fees. Schecter met Cassidy and they struck a deal.

Cassidy flew to Taiwan to meet with Lee. Cassidy told Lee he thought he could mobilize public opinion to sway Congress and ultimately convince the Clinton administration to change its policy on visits by Taiwanese officials. The policy was vulnerable because it appeared to grant Communist China the right to dictate how Americans would deal with old friends and allies on Taiwan. There was "an underlying issue of fairness," Cassidy remembered telling Lee at their first meeting -- fairness was a basic American value.

Lee seemed skeptical, Cassidy recalled later. "Like so many foreign leaders, Lee failed to understand the American system," especially "the power of Congress." Lee knew that the State Department was dead set against changing the policy, but Cassidy assured him that State's objections could be overcome.

Using a think-tank affiliated with the ruling political party on Taiwan as the formal client, the Taiwanese hired Cassidy & Associates. According to U.S. diplomats, the money came from Taiwan's intelligence agency. The first contract set a fee of $4.5 million for three years' representation. The relationship lasted more than five years; the fee later rose to $2 million a year.

For the next five years, the life of the Taiwan contract, Mathews received $75,000 a year from Cassidy as his finder's fee. Schecter, who also worked on the account as a consultant to Cassidy & Associates, earned $125,000 a year.

Cassidy assembled a team to pursue the interests of the firm's lucrative new client. The key person on this team was Gerald Felix Warburg, a descendant of the banking Warburgs and a former foreign policy aide to Sen. Alan Cranston of California, who was the Democratic whip in the Senate when Warburg worked for him from 1976 to 1988.

Cassidy and his new client agreed on a strategic objective -- to get Lee a U.S. visa allowing him to give a speech at Cornell University in Ithaca, N.Y. Coincidentally, both men had been students at Cornell in the mid-1960s, though they never met. Lee earned a PhD in agricultural economics in 1968; Cassidy completed Cornell Law School in 1967. According to Frank Rhodes, Cornell's president at the time, the university had previously invited Lee to visit his alma mater, but because of the rules barring U.S. visits by Taiwanese officials, he could never accept. The father of a Cassidy employee was the director of development -- fundraising -- at Cornell. Using this connection, a request was made to the university to renew its invitation to Lee. Cornell readily agreed.

Cassidy and Warburg decided they should not try to hide what they were doing from the Clinton administration. "I like to go to my opponents and tell them what I'm going to do," Warburg said. In this case he went to officials in the administration who were people he knew from his years with Cranston, Democrats then working in the White House and at the State Department. He recalled what he told them: "We're going to try to bring some really strong pressure on you guys so keep your flexibility, you may want to change your position." Warburg's pals brushed his warning off.

"The work on the Lee visit was unique," Warburg recalled. "It combined local, state and federal [lobbying], it combined [attempts to influence the] media with direct lobbying, it combined getting hearings with friends of Taiwan and in-your-face, man-to-man lobbying on the merits to people who were not supportive of Taiwan." Over many months, the Cassidy campaign began to bear fruit. The first victories seemed somewhat eccentric -- resolutions passed by five state legislatures asking that Lee be allowed to visit the United States.

Warburg liked this gambit because he thought it would put the issue in front of President Clinton's political advisors, not just the foreign policy people. The main game played out in Congress. The timing could not have been better. Shortly after Taiwan became Cassidy's client, the Republicans won control of Congress. Many of them sympathized with Taiwan. Rep. Newt Gingrich (R-Ga.), the new speaker of the House, even called for Taiwan's admission to the United Nations. Many Democrats, including senior members, were also sympathetic to Taiwan.

Warburg and his team encouraged Taiwan's friends on both sides of the aisle in Congress to press the administration to explain the "unfair" policy of denying Lee a chance to revisit his alma mater. Warburg remembered fondly a hearing of the House Committee on International Affairs in early February 1995, when the assistant secretary of state for Asia, Winston Lord, faced one question after another from both Democrats and Republicans all pressing for the approval of a visa to allow Lee to visit.

"We had spoken to every member of the committee, one by one," Warburg recalled. Most of them didn't need much encouragement -- they were already committed to the idea. Rep. Sam Gejdenson, senior Democrat on the committee, warned Lord at the beginning of the hearing, "You won't simply hear a chorus about President Lee from the other [Republican] side; you'll hear it from this side as well. I think many of us feel that especially with the progress that's gone on in Taiwan . . . that it seems illogical not to allow President Lee in on a private basis to go back to his alma mater -- not just that it's the right thing to do because of all the progress that's occurred in Taiwan, but I think it's also an excellent message to China."

A decade later, Lord also remembered that hearing. In an interview he said of the House members who beat him up over the Lee visa, "I agreed with them secretly." Lord, too, thought the administration's policy showed excessive deference to Beijing. But his boss, Warren Christopher, the secretary of state, had given a formal commitment to his Chinese counterpart that there would be no visit by Lee to the United States.

Eventually, everything the Cassidy team sought fell into place. Taiwan's traditional supporters, from Sen. Paul Simon (D-Ill.) on the left to Sen. Jesse Helms (R-N.C.) on the right, pushed for resolutions in both Houses supporting granting a visa. Commentators from across the political spectrum supported the idea, often invoking the fairness argument, especially after the Clinton administration allowed visits by Gerry Adams, leader of the political wing of the Irish Republican Army, and Yasser Arafat of the Palestine Liberation Organization.

Warburg remembered with a grin a particular accomplishment that he credited to Jody Powell, once the press secretary to President Jimmy Carter, whose public relations firm was owned by Cassidy's firm. This was the six days in May 1995, when The Washington Post, New York Times and Washington Times "all had an editorial saying why can't the guy come to the United States? It had a big effect." (Powell himself said he was happy to take credit for those editorials, but "I honestly can't remember that I did anything to deserve it.")

Soon afterward the House of Representatives passed a "sense of the House" resolution -- by a vote of 396-0 -- calling on the administration to grant a visa to Lee to visit Cornell. The Senate followed suit, by a vote of 97-1. Members of both houses announced their intention to pass binding legislation if the White House ignored this overwhelming sentiment.

At the State Department and National Security Council, officials responsible for Sino-American relations steadfastly opposed granting the visa. Christopher publicly opposed the visa, and told his Chinese counterpart in April that allowing Lee's visit would contradict U.S. policy on Taiwan.

But the political pressure proved irresistible. At a meeting May 18 with four moderate Democratic senators, President Clinton agreed to give Lee the visa.

"I was flabbergasted," said Peter Tomsen, the deputy assistant secretary of state for East Asian and Pacific Affairs at the time. "It was really spectacular how [Cassidy & Associates] maneuvered and got done what Lee Teng-hui wanted."

Jerrold L. Schecter
President Clinton, right, embraces outgoing White House Chief of Staff Leon Panetta at the White House on Nov. 8, 1996. Panetta, a former House member, advised Clinton to issue the visa to Lee. Later, he downplayed the influence of Cassidy's lobbying campaign in prompting the White House decision. (Photo: Associated Press)

But more political officials saw it differently. Leon Panetta, a former member of the House who was Clinton's chief of staff when these events occurred, thought Congress's position was too strong to ignore. There was no practical alternative to granting the visa, he said in a recent interview. That's what he and Samuel G. (Sandy) Berger told Clinton in a private meeting that May, Panetta recalled. Had the lobbying campaign made the crucial difference? Panetta thought not. Such a situation, he said, was "a lobbyist's wet dream . . . You've got an issue that from a policy point of view was bound to go your way, you do your campaign with bells and whistles, you win, and you take credit for the result."

In June 1995, Lee spoke at Cornell. The communist authorities in Beijing were livid; their relations with Taiwan deteriorated rapidly. A year later, they were firing missiles over Taiwan in a show of strength that prompted the United States to send two aircraft carriers into the Taiwan Strait, between Taiwan and the mainland. Taiwan's currency and its stock market both tumbled in the crisis. Taiwanese had been thrilled when Lee went to Cornell, but in the aftermath the benefits of the visit were less clear.

Not long after Lee's visit, Cornell received anonymous gifts of several million dollars in his honor. One gift for $2 million established the Lee Teng-hui Professorship of World Affairs.

Cassidy & Associates eventually earned nearly $10 million in fees from Taiwan.

Washington Post research editor Alice Crites contributed to this report.

Monday: The firm experiences the strains and tribulations of growth.

About This Series | Chapters:

Photo Gallery

An overview of Gerald Cassidy's life and career.

Key Players

A "cast of characters" in the life and career of Gerald Cassidy.

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if a tree falls in the forest, does cassidy take credit and 2 million dollars for that?

Posted by: mrcleanmrclean | March 24, 2007 01:59 PM

When you receive money from a foreign government to promote its agenda, isn't it call traitor?

Posted by: infoshop | March 25, 2007 01:00 PM

Traitor?? Gimme a break, dude. Maybe this is news to you but the U.S. government *wants* foreign governments with interests in the U.S. to register with American lobbyists so they can work inside the system.

Do we not want an informed debate? Do we not want to hear all voices? Isn't that kind of unwillingness to listen to other countries what got us into the current Mess'opotamia?

Posted by: sportsfan | March 26, 2007 11:11 AM

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