Newsweek: Tyco -> Abramoff -> Rove, and other fun stuff [View All]

[swag]

http://www.msnbc.msn.com/id/8941526/site/newsweek/

(Michael Isikoff)

. . .

Another possible reason for the Feds' stance: to pressure Abramoff to cooperate in a broader, D.C.-based probe that could touch members of Congress and Bush administration officials. The probe centers on tens of millions in allegedly inflated lobbying fees Abramoff collected from Indian gaming tribes. But that's not all that's under scrutiny. A lawyer for another client, Tyco International, tells NEWSWEEK that it's turned over to Justice evidence alleging Abramoff defrauded it with a lobbying campaign against legislation to bar federal contracts to U.S. companies, like Tyco, headquartered in overseas tax havens. Tyco, based in Bermuda, paid $1.7 million to Abramoff's firm in 2003 and 2004—plus $1.5 million for a "grass roots" campaign to gin up opposition to the effort among Tyco's domestic suppliers. The Tyco official who hired Abramoff is the firm's general counsel, Tim Flanigan, a former White House lawyer nominated by President Bush for deputy attorney general. Tyco lawyer George Terwilliger says the firm "was a victim of a rip-off." Abramoff, he says, recommended the $1.5 million be paid to Grassroots Interactive, a group that allegedly did little work and later diverted funds for other purposes. Grassroots is "controlled" by Abramoff, says Nathan Lewin, a lawyer for Tyco's registered agent. Abramoff's former law firm has agreed "in principle" to repay the $1.5 million, says a source close to Tyco who declined to be identified because of the sensitivity of the matter.

Abramoff, who raised more than $100,000 for Bush's re-election, allegedly told Flanigan he'd lobby White House aide Karl Rove on behalf of Tyco, says the source close to the company. Rove, whose secretary formerly worked for Abramoff, has "never spoken to about any of his clients," says a White House spokeswoman. An Abramoff spokesman and his former law firm declined to comment.