|Rove’s ties to Intel are questioned|
Bush aide, holding stock, met with executives seeking merger
By John Mintz
THE WASHINGTON POST
June 14 — Karl Rove, President Bush’s top White House political adviser, met with senior executives of a high-tech firm who were seeking his help in obtaining government approval of a merger at a time when he owned stock in the company worth more than $100,000.
ROVE TOLD the executives of Intel Corp. in the White House meeting in March that he had no decision-making role in the merger, and suggested they talk to officials at the Pentagon and Treasury Department who were involved. The merger was approved several weeks after the meeting.
“Karl Rove offered them no advice or counsel on the matter,” said White House spokesman Anne Womack. “He explained to them he had no decision-making role, and referred them to other officials who would be involved in the decision. He has no recollection of it ever coming up with the president.”
She also said that Rove had been advised by the White House counsel’s office to avoid a role in decisions concerning companies in which he owned shares, and that he thought his reaction at the meeting was consistent with that advice. The episode was first disclosed yesterday by the Associated Press.
Rove sold his shares in Intel, the world’s largest maker of computer chips, and a number of other companies last Thursday. Financial disclosure documents released by the White House last week revealed that he owned Intel stock valued at $100,000 to $250,000, and that his entire stock portfolio was valued at $2 million. The forms offer only broad ranges of the holdings’ value.
Some ethics experts said they were not troubled by Rove’s behavior.
“The question of what gives an appearance of a conflict of interest is subjective, but since it doesn’t appear he did anything [involving Intel], it’s hard to get too excited about this,” said Kenneth Gross, a Washington attorney and expert on government ethics.
Robert Bauer, a Democratic specialist on government ethics, agreed, but added, “this should be a lesson to Rove and others in the administration that appearances do matter, just as they insisted in all their attacks on the Clinton administration in the last eight years.”
Intel’s chief executive, Craig Barrett, and other Intel officials met with Rove in his White House office in March, and discussed a range of subjects such as education reform and export controls on software.
At the end of the session, the Intel executives brought up an issue that loomed large for them — the proposed $1.2 billion merger of an Intel supplier, Silicon Valley Group, with a Dutch company, ASML. Intel officials said they viewed the deal as critical because together the two would be a world leader in developing a technology considered key to Intel’s future, the use of advanced lithography in manufacturing computer chips.
But the deal required approval from a Treasury-Pentagon panel because it meant a foreign company would control sensitive technologies that the Silicon Valley company has sold to the military.
Under the criminal conflict-of-interest law, a government employee is prohibited from “participating personally and substantially in any particular matter” in which he “has a financial interest” that could be affected.
DELAYED STOCK SALE
Regulations issued by the Office of Government Ethics say that would occur if “there is a close causal link between any decision or action to be taken on the matter and any expected effect of the matter on the financial interest.” The ethics rules state that “to participate substantially means that the employee’s involvement is of significance to the matter” and requires more than “official responsibility, knowledge, [or] perfunctory involvement.”
Rove had been advised in January by Fred Fielding, the White House’s transition counsel, that under government ethics rules he should defer sale of his holdings to obtain a special approval allowing him to delay paying capital gains taxes on any sale, Womack said.
Preparation of the standard government certificate of divestiture was delayed because White House lawyers were preoccupied with securing security clearances of administration officials and other tasks, White House officials said.
“During this time Karl received multiple ethics briefings explaining the importance of avoiding the appearance of conflict of interest, so Karl avoided any discussions that specifically or materially affected his holdings,” Womack said.
An Intel official who requested anonymity said yesterday his colleagues had no idea during the meeting that Rove owned Intel shares.
Rove, a longtime Texas GOP consultant who has been close to George W. Bush throughout his political career, held shares in a broad swath of U.S. companies, including General Electric Co., Boeing Co., and Cisco Systems Inc.
© 2001 The Washington Post Company