Copyright 2000 The Washington Post
The Washington
Post
October 31, 2000, Tuesday, Final Edition
SECTION: A SECTION; Pg. A01
LENGTH: 1376 words
HEADLINE:
Moran Got Loan From Drug Lobbyist; Va. Congressman Co-Sponsored
Bill to Help Pharmaceutical Firm
BYLINE: Jo Becker ,
Washington Post Staff Writer
BODY:
The
stakes were high. Schering-Plough Corp. had assembled a lobbying team to
persuade Congress to help preserve its monopoly on the popular allergy
drug Claritin. Furious watchdog groups argued that extending
the pharmaceutical giant's patent would cost consumers billions
of dollars by delaying access to cheaper generic drugs.
The
drug company found an ally in Rep. James P. Moran Jr. (D-Va.).
On June 30, 1999, Moran signed up to co-sponsor a bill to help
Schering-Plough. On July 23, 1999, Moran sent a letter to other New Democrats,
seeking their support.
About the same time that summer, Moran received
some much-needed financial help: an unsecured $ 25,000 loan from Terry Lierman,
a lobbyist for Schering-Plough. Moran was in the midst of a messy divorce and in
financial straits.
Lierman, a Montgomery County Democrat now running
against Rep. Constance A. Morella (R-Md.), said he lent Moran the money based
solely on their long-standing friendship.
"Jim Moran has been my friend
for 26 years," Lierman said. "To draw any other conclusion would be malicious in
any context."
Moran said his support of Schering-Plough had nothing to
do with the loan. He said he was convinced by the company's argument that it
deserved a patent extension because the drug's entry into the
market had been delayed.
"I can see why people might raise their
eyebrows if that's all the information they had," said Moran, a five-term
incumbent from Alexandria. "But I met with a number of Schering-Plough people.
Terry may have been involved in setting that up, but Terry really never lobbied
me on anything."
Lierman said Sunday night that he could not release the
terms of the loan without talking to Moran first. Yesterday, Lierman faxed to
The Washington Post a copy of a one-paragraph promissory note dated June 25,
1999, that said Moran borrowed $ 25,000, with the option to borrow more at the
same 8 percent annual interest rate. The promissory note was never publicly
recorded, Lierman said.
Bankers, speaking without knowledge of the
people involved, described the loan as unusual because it lacks a maturity date
and has no provision for repayment of the principal other than to say that
Lierman may call in the loan at any time.
"It would be very unlikely
that you get those terms at a bank," said Keith Leggett, a senior economist at
the American Bankers Association.
It also might have been difficult for
Moran to go to a bank, something he said he didn't even consider. The promissory
note is dated five days before Moran signed on to the Claritin bill and one day
after Moran's wife filed for divorce.
Divorce records showed that the
couple's finances were in dismal shape, the result of heavy stock trading losses
and personal debts incurred since their young daughter's 1994 battle with
cancer.
Members of Congress are forbidden to accept gifts "in return for
being influenced in the performance of an official act." Even without a quid pro
quo, a loan to a House member can be considered an improper gift if it was not
made on "commercially reasonable" terms.
Members of Congress may accept
loans from a person other than a financial institution "provided that the loan
is on commercially reasonable terms, including requirements for repayment and a
reasonable rate of interest," House rules say.
The law also prohibits
members from soliciting a gift "from any person who has interests before the
House," a prohibition that applies not only to the solicitation of money, but
"anything of value."
Lierman said Moran, a longtime friend, came to him
for help. Lierman said that he "probably did lobby Jim" on the Claritin bill but
that there was no connection to the loan.
"He has a divorce problem and
he comes to a friend, and a friend does what any friend would do," Lierman said.
Moran said he couldn't recall if he had "directly called Terry. It may
have been through . . . my campaign manager."
Moran did not disclose the
loan on the annual financial disclosure report he filed May 15 this year. That,
Moran first said yesterday, was an oversight.
But late yesterday, his
chief of staff said Moran was mistaken. On May 15, 2000, the same day that Moran
filed his financial disclosure report, he wrote to the House Committee on
Standards of Official Conduct and asked for a ruling on whether he had to
disclose the loan. Moran's divorce lawyer had advised him that he did not have
to disclose the loan because the money was being used to pay Moran's legal fees.
The ethics committee disagreed. So Moran disclosed the loan in an
unsigned, undated amended report received July 31 by the House Legislative
Resource Center.
Lierman reported collecting an amount ranging from $
201 to $ 1,000 in interest from "Sen. Jim Moran" in 1999 on his financial
disclosure form. Such forms do not ask for a specific amount. Moran said he
tries to pay between $ 500 and $ 1,000 a month. His office said it would try to
locate canceled checks and release them today.
The terms outlined in the
promissory note require that Moran pay 8 percent in interest annually. The
payments must be made no less than semiannually.
In June 1999, when
Lierman lent Moran the money, the minimum rate for an unsecured personal loan in
the Washington area was 12.5 percent, according to Bank Rate Inc., a company
that tracks rates.
"With an unsecured loan and no collateral, [banks]
really are going to look at your credit rating" to set the rate, said the
company's John Schaffer. One possible reason that Lierman might charge Moran a
lower rate is that the loan may be called in at any time, said Leggett, the
bankers association economist.
Moran said he did not think there was
anything unusual about the loan. "I just didn't want him [Lierman] to lose
money," he said. "If he put it into a savings account, he wouldn't have earned
as much as 8 percent."
House members are told to contact the Committee
on Standards of Official Conduct "before entering into a loan arrangement with a
person other than a financial institution." House rules also state that gifts
from friends valued at more than $ 250 "may not be accepted unless the Standards
Committee issues a written determination."
Moran did contact the ethics
committee by letter--three days after he got the loan.
But he asked only
whether he could accept a loan from an unnamed individual and "whether there is
any limitation on the profession of the creditor." The letter did not disclose
the loan's terms.
Lierman said that he and Moran first met in 1976, when
Lierman, then the staff director for a Senate Appropriations subcommittee, hired
Moran for a staff job. They became close friends, and their families vacationed
together, Lierman said.
But last year, Moran's family life was
unraveling.
On June 23, 1999, Moran's wife, Mary M. Moran, placed an
emergency call to police during a domestic argument at the couple's Alexandria
home. No charges were filed.
The next day, she filed for divorce.
According to public records and associates of Moran who were contacted at the
time, Moran was earning $ 136,700 as a congressman. But after making roughly $
7,000 in monthly housing and loan payments, the family was living on less than $
2,000 a month.
The day after that, Lierman, then a registered lobbyist
for Schering-Plough, lent Moran the money.
On June 30, 1999, Moran
signed up to co-sponsor the eventually unsuccessful bill to help the
drug company extend its exclusive Claritin
patent--and keep generic drug manufacturers
from encroaching on its business. For Schering-Plough, it was no small matter;
the drug brought the company $ 2.3 billion in revenue last
year. But extending the patent could cost consumers $ 7.3
billion over 10 years, a University of Minnesota study found.
On July
23, 1999, Moran and Rep. Ellen Tauscher (D-Calif.) sent a letter to fellow New
Democrats, urging them to vote for the Claritin bill.
Moran said
yesterday: "There were a whole bunch of people bringing that up at the time. . .
. I don't know how much influence I had."
Twenty days after the letter
went out, Schering-Plough's political action committee donated $ 2,000 to
Moran's campaign, Federal Election Commission records show.
LOAD-DATE: October 31, 2000 
