[Dialogue] Top Republicans Leave Telecom Accused of Bribery

[Harry Wainwright]

Published on Tuesday, November 7, 2006 by the Inter <http://www.ipsnews.net>
Press Service 

Top Republicans Leave Telecom Accused of Bribery 

by Lucy Komisar

 

NEW YORK - Five nationally prominent U.S. Republicans, the independent board
members of a corporation that has been charged with paying hundreds of
thousands of dollars in bribes to get a sweetheart telecom deal in Haiti,
are leaving its board. 

The company is IDT, the world's third-ranked international phone company. 

The Republicans are Rudy Boschwitz, former senator from Minnesota; James S.
Gilmore III, former Virginia governor; Thomas Slade Gorton III, former
senator from Washington State; Jack Kemp, former congressman from New York
and 1996 vice presidential nominee; and Jeane Kirkpatrick, the former U.S.
ambassador to the U.N. under President Ronald Reagan. 

They are not included among nominees on the IDT proxy statement filed with
the U.S. Securities and Exchange Commission (SEC) Oct. 30. Two other
independent board members, Warren Blaker and Saul K. Fenster, are also
leaving, and four company board members are stepping down, whilst three
others are coming on, reducing the board from 15 to seven members, with the
independents at a one-person majority. 

IDT is run by James Courter, a former Republican congressman from New
Jersey. The company is under investigation by the SEC, the United States
Attorney in Newark, New Jersey, and a U.S. federal grand jury for allegedly
paying bribes to Jean-Bertrand Aristide, former president of Haiti. 

The five board members either declined or did not respond to requests for
comment. The Oppenheimer Fund, the largest institutional investor in IDT,
also chose not to comment. 

However, Herb Denton, president of Providence Capital, a New York investment
firm with stock in the company until March, said, "Kirkpatrick, Gordon,
Gilmore, Kemp and Boschwitz were pals and friends of James Courter," he told
IPS. "Why do you put very powerful politicians on your board? Because you
like them, you think they're capable, and they buy you protection." 

Of the independents, only Marc J. Oppenheimer, president of Octagon
Associates, Inc., a banking and financial strategy firm, currently serves on
the board. The new members will be James R. Mellor, former CEO of General
Dynamics; Alan Claman, former president of an aerospace company; and Judah
Schorr, who owns an anesthesia supplier. 

Denton noted that other than Mellor, the new board nominees had never sat on
other company boards, which was unusual. He explained, "You want business
people with public company board experience." 

IDT spokesperson Gil Nielsen said that the company two weeks ago had told
the SEC it planned to reduce the size of its board "as part of a cost saving
and restructuring plan". He said, "Clearly, the fact that several board
members will not stand for re-election is only a result of the proposed
reduction in the number of board seats." Nielsen did not explain why IDT,
while removing some members, added three new people to its board. 

He said, "As far as any allegations concerning Haiti, IDT continues to
maintain that any such claims are false and without merit and are the result
of a former disgruntled employee." 

Bribery allegations were first raised by a former IDT executive, Michael
Jewett, who said that IDT made a deal to pay off Aristide in return for a
lucrative contract to provide phone service to Haiti, paying nine cents a
minute instead of the legally mandated 23 cents. He said that the money was
paid to a secret offshore bank account controlled by Aristide and listed in
the name of a shell company in the Turks and Caicos Islands. Jewett says
that when he refused to go along with the deal, he was fired. In October
2005, he sued the company in U.S. court for wrongful dismissal. 

Following the Jewett allegations, in November 2005, the government of Haiti
and the phone company, Teleco, filed a RICO (Racketeer Influenced and
Corrupt Organisations Act) lawsuit in Miami against the former president and
his alleged collaborators. It says that in one six-month period, February to
April 2004, IDT paid 302,588 dollars in kickbacks to the Aristide group. 

Through his lawyer, Ira Kurzban, Aristide has denied all charges and
described them as a "political investigation". 

Regarding the recent shake-up of the board, Denton said, "I speculate
there's something rotten in Denmark." He said he thought the departure of
the Republican board members "goes back to the 27 million dollars this
company spent over three years on Bill Weld's law firm [McDermott, Weld and
Emery]." 

Until he resigned in fall 2005, William F. Weld, the former Republican
governor of Massachusetts, was a member of the IDT board and chairman of its
corporate governance committee. 

Denton said, "We have no investment in this company at this moment. We used
to own stock in the company until we started to wonder why the company spent
nine million dollars a year on Bill Weld's law firm. There was something
they were investigating, in my opinion. We got out of it this year." Weld
did not respond to a request for comment. 

Denton explained, "This company acquired licenses to do telecommunications
in a lot of strange parts of the world. 'Notoriously corrupt' are the words
that come to mind. I think Weld's law firm was looking at dozens of other
countries that are notoriously corrupt, such as Russia, the Caribbean, South
America, where this company does business. I asked Courter 'How did they get
all these licenses?' He said, 'We swarm all over them'." 

Denton said, "I don't think so; that doesn't sound plausible to me. This
company was put together in 1993 and they sprung up like mushrooms all over
the world getting telecom licenses in notoriously corrupt places. I don't
think Teleco Haiti gave a darn whether they were 'swarmed'. They cared that
Aristide got paid off." 

He noted, "The Foreign Corrupt Practices Act goes right to the board of
directors. [The Act bans bribery and kickbacks.] Gorton, Kemp, Kirkpatrick,
Boschwitz and Gilmore have reputations to protect. Why do they leave all at
one time?" 

After Weld's departure, his fellow Republicans were the sole members of the
corporate governance committee. Boschwitz was also on the audit committee,
which investigated the Haiti bribery charge and concluded that there was no
wrongdoing. 

The directors are paid 25,000 dollars, plus 15,000 dollars if they are
directors of IDT subsidiaries. They also get stock options. Denton said that
the only serious new candidate who replaced them was James Mellor, the
former General Dynamics CEO, who is on a committee of Net-to-Phone, an IDT
subsidiary. 

The IDT's shareholder's meeting will be Dec. 14 at the company's
headquarters in Newark, New Jersey. Denton said he would be there. He said,
"I wouldn't miss this for the world." 

*Lucy Komisar is a New York-based investigative journalist writing a book on
the international impact of the offshore bank and corporate secrecy system. 

Copyright C 2006 IPS-Inter Press Service

###

 

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