AUSTIN, Texas — Authorities are conducting a criminal investigation into whether corporate money, including hundreds of thousands of dollars linked to U.S. House Majority Leader Tom DeLay, improperly financed the Republican Party's takeover of the Texas Capitol.
The probe is focused on several political and fundraising organizations run by Republican activists, investigators said. One of the organizations, the political action committee Texans for a Republican Majority, has direct ties to DeLay, a Texas Republican and one of the most powerful politicians in Washington.
At issue is whether the organizations improperly used corporate contributions to help finance the campaigns of more than 20 Republican candidates for the Texas House of Representatives in 2002, according to documents and interviews with prosecutors and government investigators.
Many campaign finance watchdog organizations believe the investigation is a test of whether "soft money" -- unlimited contributions from corporations, unions and wealthy individuals -- will begin playing a more direct role in state and local elections.
Such donations were outlawed at the national level by a campaign finance reform law, recently upheld by the Supreme Court, but the measure does not ban the contributions at the state level. Reform advocates worry that soft-money donors will begin contributing at the state level to curry favor and advance their causes.
Texas law bans corporations from contributing money to candidates for office. Corporations are allowed to fund many ancillary costs of a political campaign, such as office rental or telephone lines, and in many cases are allowed to educate voters through advertisements and other programs, provided they do not specifically advocate a candidate's defeat.
Texans for a Republican Majority is an offshoot of DeLay's Americans for a Republican Majority, created in 1994 to elect conservatives to public office. The Texas group was created in 2001, with the 2002 elections in mind, using seed money from Americans for a Republican Majority.
Investigators said they suspected that the Texas group spent hundreds of thousands of dollars on telephone banks and other initiatives during the election -- projects, they said, that went beyond the administrative costs corporations are allowed to fund in Texas elections. The money, in effect, represented a direct contribution to Republican candidates, they argue.
DeLay, whose office did not respond to requests for interviews, long has been viewed as one of the most innovative and prodigious fundraisers in politics. He has not been accused personally of any campaign finance violations.
Republican leaders said they worked with lawyers who specialize in election law to ensure that their corporate money was used legally. They denied wrongdoing and pointed out that the force behind the investigation, Dist. Atty. Ronnie Earle of Travis County, Texas, is a Democrat. They said the investigation -- and two lawsuits containing similar allegations brought by five Democrats who lost in the 2002 election -- represent sour grapes among Democrats.
"I think it is definitely politically motivated. And I think it is without merit," said Bill Hammond, a former Republican member of the Texas House of Representatives.
Hammond's business and lobbying organization, which is based in Austin and known as TAB, is another focus of the investigation. According to TAB's newsletter, it spent nearly $2 million to mail Texas voters 4 million advertisements that attacked Democratic candidates and supported Republicans.
Sources close to the investigation said that as many as 20 people, including several of Austin's power brokers, have appeared before two grand juries as prosecutors push for indictments. Most, including Hammond, have retained criminal lawyers. The sources said at least two people, including the former director of Texans for a Republican Majority, John Colyandro, have been granted limited immunity in exchange for testimony.
Colyandro, also the executive director of the legislative group Texas Conservative Coalition, did not return a phone call seeking comment.
Almost all the candidates supported by the organizations won their races in the 2002 election, which was a turning point in Texas. According to documents distributed among Republican activists and gathered by investigators, several of the GOP candidates concede that they would not have won without the advertisements produced by Hammond's organization.
The election gave Republicans their first majority in the House of Representatives in 130 years. That paved the way for a host of initiatives favored by conservative advocates. The Legislature, for example, last year set limits on lawsuits brought by consumers against manufacturers and health-care companies, passed abortion restrictions and, most controversially, redrew congressional districts in Texas.