THE PORTALS AFFAIR: EXPECT A PACKET OF HOUSE SUBPOENAS

Edited by Douglas Harbrecht

The House Commerce Committee's oversight and investigations panel on Apr. 30 voted along party lines to allow the issuance of subpoenas to eight people involved in the development of a new headquarters building that the Federal Communications Commission is due to occupy in August.

Included among the eight are Peter S. Knight, a longtime aide to Vice-President Al Gore. Knight chaired the '96 Clinton-Gore Reelection Committee and worked as a Washington-based consultant to Tennessee developer Franklin L. Haney, for whom the panel also approved a subpoena. Haney owns one-half of the Portals and is the financier behind the FCC's future home in southwest Washington The other half is owned by a consortium of developers, led by Steven A. Grigg, who also may be subpoenaed. All have publicly denied any wrongdoing. The panel also authorized issuance of a subpoena to U.S. Ambassador to China James R. Sasser, a Gore confidant and former Tennessee senator. Sasser also worked as a Washington-based consultant to Haney. Sasser could not immediately be reached for comment.

The panel wants to know if the Portals developers received special lease terms because of $250,000 in 1996 Presidential campaign contributions made by Haney, his companies, and an employee, as first revealed by Business Week. For example, at Haney's request, the Portals lease was revised to stipulate that government rent payments would begin in July, 1997. According to sources involved at the time, the start date was added despite resistance by government lawyers, who warned that any startup projection was likely to be missed, given the project's troubled history. Such warnings proved correct: So far, taxpayers have ponied up $10 million for an empty building and will be out some $16 million by the time the FCC moves in.

The House subcommittee also is curious about a controversial $1 million payment by Haney to Knight. Knight arranged high-level meetings between Haney and the FCC, General Services Administration, and others, and billed Haney $1 million for "legal services rendered" on Jan. 3, 1996 -- the same day the amended Portals lease was signed. Federal law forbids companies from paying fees that are contingent on the successful awarding of a government contract. Haney, through a spokesman, denies that the $1 million was a contingency fee and insists that Knight was paid for a dozen other projects as well as for the Portals.

The Portals deal has been the subject of a decade-long dispute among a succession of FCC officials, telecom lawyers, lawmakers, and lobbyists. Because of its remote location -- it's surrounded by the Potomac River, highways, and a parking lot -- the move to the Portals has been strongly resisted by many at the FCC, even after a 1994 U.S. Appeals Court decision that said the GSA, which procures government office space, had to honor its choice of the Portals site. Congressional investigators, however, want to know if the project's bumpy path was smoothed once longtime friends, aides, and financial supporters of Gore became involved in the summer of 1995.

By Paula Dwyer in Washington