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Romney uses business links to swell GOP coffers

Critics say loophole lets donations flow

Drawing on his connections in the financial world, Governor Mitt Romney is raising hundreds of thousands of dollars in campaign contributions from Massachusetts corporate leaders, and using the donations to funnel resources and cash to Republican legislative candidates and his campaign to unseat Democrats on Beacon Hill.

In doing so, Romney and his GOP operatives are sidestepping the cap that limits an individual donation to a candidate to $500 a year and are using what advocates of campaign-finance change say are seriously flawed loopholes in the state and federal laws to allow individuals to donate a total of $15,000 to two committees run by the state Republican Party.

The result, according to campaign-finance reports, is that Romney, a former venture capitalist, is able to use his wide network of business contacts to tap corporate executives to finance what he is billing as a ''reform" campaign to elect Republicans to the Legislature this fall.

''These are major loopholes that essentially make a mockery of the contribution limits we have for the rest of us," said Pamela Wilmot, executive director of Common Cause of Massachusetts.

''It is a way to pass corporate money through the party apparatus and direct it to individual state legislative campaign coffers," added Galen Nelson, research director at the Massachusetts Money and Politics Project. ''When a donor makes a $500 contribution, you can't allege that there is some access and influence buying. But when a donor makes a $10,000 contribution, their employers can't go unnoticed by the party. It will make the party all the more indebted to the special interest."

Executives at Fidelity Investments, which often lobbies lawmakers and governors over tax issues and investment regulations, have donated $203,000 to the Republican's state and federal accounts since January 2003, according to a Globe analysis of the two Republican Party accounts. Officials from Bain Capital, which Romney founded in 1984 and where he served as CEO for 17 years, have given $92,000.

Venture capitalists and financial interests were particularly generous. Of the $2.7 million donated to the federal campaign account run by the Massachusetts Republican Party since January 2003, nearly $500,000 came from venture capitalists, $338,000 came from financial interests including investors and investment houses, and more than $90,000 came from medical interests, including doctors and dentists.

Many of the donors gave the maximum allowed by state and federal law. The party's federal account received 99 donations of $10,000 each, the maximum allowed, and another 103 donations of $5,000. A separate state GOP war chest collected 100 donations of $5,000, the maximum allowable for that account, the Globe found.

The money is going to rebuild what GOP strategists call a long-dormant Republican Party, as Romney seeks to cut into the Democrats' overwhelming majority in the House and Senate. The state Republican Party has distributed over $1 million in the last few months to some 92 candidates recruited by the governor to run against incumbent Democratic legislators or for open seats. The party is helping to fund mailings and advertising, and also deliver unlimited in-kind donations such as computerized voting lists.

Tim O'Brien, the GOP's executive director, said the Romney-recruited candidates are ''complete underdogs" and will be outspent by as much as 3-to-1 by the Democratic incumbents they are challenging. He also scoffed that the Republicans are pandering to special interests, noting that the war chest of Democratic lawmakers are filled with donations from lobbyists and special-interests groups.

''These are the same rules that the Democratic Party is playing with," O'Brien said. ''If there is anything unbalanced and unfair, it is the laws that Democratic legislators have written to protect themselves."

Indeed, the flow of corporate money to both parties has been heavy in recent years. House Speaker Thomas M. Finneran won a referendum he put on the state ballot to prevent the funding of Clean Elections, after raising $616,000 in several weeks. He used the funds to air a barrage of campaign ads; currently, he has more than $500,000 in his campaign account.

Fidelity and other major corporations also made substantial contributions to the Democratic Party convention in July. Others paid $100,000 or more each to sponsor a special benefit for US Senator Edward M. Kennedy during the convention.

Eric Fehrnstrom, Romney's communications director, declined to comment.

Romney has carefully crafted an image as a clean government figure who denounces the Democrats' legislative leaders for taking special-interest money and thwarting his efforts for reform and to ''clean up the mess" at the State House. Wilmot and other advocates say Romney has taken fund-raising to a new level, when compared with previous Bay State governors of either party.

The advocates argue that Romney and the GOP are breaking down the legal barriers that bar corporate money from being used in state political campaigns.

Romney's ability to draw among his peers in the corporate world was evident from the donations from executives at the Waters Corp. in Milford, who contributed a total of $85,000. The company makes instruments for scientific laboratories, and its executives met Romney when Bain, Romney's old company, helped finance Waters's spin-off from Millipore in 1994.

''That is when I learned about Mitt Romney, about his capabilities and business practices," said Douglas A. Berthiaume, Waters's president, chairman, and chief executive officer. He said Romney came to his company headquarters in June for a fund-raising event that he had arranged for his executives.

Berthiaume disputed critics' assertions that Waters's donations were a form of corporate funding of campaigns. He said the fund-raising event was low-key, aimed at allowing his colleagues who felt ideologically in tune with the GOP/Romney agenda to donate.

''I don't think it is corporate money," Berthiaume said in an interview last week. ''Speaking for myself and my associates, it is all individual money. People are digging deep into their own pocket. There is no mysterious ways of reimbursing, no aggressive arm twisting. People are giving by their own volition. I know of a number of people who attended the event and did not write checks to the Republican Party and to Mitt Romney. Some felt they are good Democrats."

Romney's fund-raising game plan is evident from the records filed with the Federal Election Commission in Washington and with the Office of Campaign and Political Finance on Beacon Hill. The records also show that some company executives, in apparently coordinated donations, gave the maximum to each of the committees, often at roughly the same time of the year.

In late May and early June of this year, for example, Fidelity executives donated a total of $35,000 to the federal Republican account. Fidelity employees gave another $55,000 to the federal Republican account in mid-September of 2003, the records show.

''The number of people who make those high-level donations is pretty much limited to a tiny percentage of our population, who have unlimited personal wealth, who are invested in politics for business and are expected to do so," Wilmot said. ''The list is huge as to the kind of decisions the governor makes day in and day out that affect the business of donors."

Fidelity executives also supported some Democrats in this election cycle, the records show. Attorney General Thomas F. Reilly, a Democrat who is considering a run against Romney in 2006, received about $9,000, for example.

Over the years, Fidelity has sought tax relief from Beacon Hill, including playing a role in getting Democratic lawmakers in 1996 to extend to all mutual firms a tax break for adding jobs in the state.

Vincent G. Loporchio, Fidelity spokesman, said the company and its executives are bipartisan in their political donations, noting the firm had given $1 million to help finance the Democratic Party's convention in July. He also sharply disputed any assertion that Fidelity is looking for access through its fund-raising activities.

''We are one of the largest employers in Massachusetts, so we have the ability to meet with the state's public officials," he said. ''Fidelity has long encouraged our employees to participate in civic affairs. . . . We are bipartisan."

Globe correspondents Emma Stickgold and Bill Dedman contributed to this report.

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