Coelho tapped government resources to repay personal loan

Tony Coelho, the chairman of Vice President Al Gore’s presidential campaign, used government employees and resources to raise funds to help repay a $300,000 personal loan that he obtained from a Portuguese bank, the Center for Public Integrity has learned.

The State Department’s Office of Inspector General criticized Coelho for intermingling his activities as the U.S. Commissioner General of last year’s World Exposition in Lisbon, Portugal, with the activities and obligations of a private foundation “not officially connected to the [U.S.] pavilion” at the fair. The Center has learned that Coelho solicited contributions for the organization in question, the Luso-American Wave Foundation, even though throughout the fair the foundation was no more than a toll-free telephone number and a mailing address within the offices of a Washington lobbying firm.

The Center has also learned:

  • Even though Coelho’s personal lawyer, Stanley Brand, initially told reporters that the loan “was paid off with donations from people donating to the memorial, including a large contribution from Tony himself,” Brand told the Center on Monday that Coelho “is in the process of paying off” the loan and still owes $109,000. (Brand was unable to provide the Center with any documents relating to the loan or to the Luso-American Wave Foundation.)
  • Coelho did not report the loan as a liability on a federal financial disclosure form he filed on June 11, 1998.
  • The foundation that Coelho formed to raise money for the memorial has not been granted tax-exempt status by the Internal Revenue Service. What’s more, its certificate and articles of incorporation were revoked on September 7, 1999, by the government of the District of Columbia “for having failed and/or refused to file” any of the reports required by law.
  • During the four-and-a-half-month-long world’s fair in Lisbon, Coelho’s staff — all of them on the public payroll — routinely participated in daily fund-raising meetings for the Luso-American Wave Foundation. The meetings were conducted during the workday in government-leased space in the U.S. pavilion, though in the wake of complaints about the nature of the meetings one of Coelho’s deputies ordered them removed from the official daily schedule.
  • Coelho hired Janet Morais, the daughter of one of the foundation’s directors, to be a $2,500-a-month fund-raiser for Expo ’98. She was on the public payroll from February 1998 to October 1998, at which time she reportedly went to work for the Luso-American Wave Foundation. In the summer of 1998, Coelho ordered Morais, along with more than a dozen other key Expo ’98 workers, to destroy their “weekly activity reports” to him. (The Center was unable to reach Morais on Monday.)

Coelho announced the formation of the Luso-American Wave Foundation on April 22, 1998 — a month before the world’s fair opened — in Washington, D.C. Its purpose, Coelho said, was to raise funds to build “The Wave,” a dramatic stainless-steel and blue-tile sculpture, 8 1/2 feet high and 60 feet long, that today sits more than a block away from the building that was the U.S. Pavilion at Expo ’98. The wave-like wall, designed by artist Stephen Frietch and architect Steven Spurlock, both of Washington, was to be inscribed with the names of Portuguese-American families who immigrated to the United States — or at least with the names of those who made contributions of $100 to $5,000 to the foundation, which Coelho heavily promoted. “The wave memorial will serve as a lasting tribute and reminder to future generations of the great sacrifices and efforts made by the Portuguese who immigrated to the United States,” Coelho was quoted as saying in the news release accompanying the announcement, which was posted on the official website of the U.S. Pavilion at World Expo ’98.

The Center has determined that the Luso-American Wave Foundation did not file its articles of incorporation in the District of Columbia until December 9, 1998 — more than seven months after Coelho’s announcement and more than two months after the world’s fair officially closed on September 30.

To launch the project, Coelho obtained $300,000 from the president of Banco Espirito Santo, a Lisbon-based bank. The $300,000 initially went into the USIA Trust Funds for Expo ’98, the Center previously reported, but later had to come out when it was discovered that the $300,000 was a personal loan to Coelho, not a gift.

“Obligations of a private foundation were recorded on the U.S. pavilion’s financial records, and most staff wore buttons promoting this foundation during working hours although this organization was not officially connected to the pavilion,” the report of the State Department’s Office of Inspector General noted. “Although the foundation was not a federal project, the commissioner general [Coelho], as a USIA employee representing the U.S. government, may have exposed the agency to a potential liability. Notwithstanding the fact that this organization was not connected with the U.S. pavilion, USIA may be responsible for the repayment of this loan if the foundation does not raise sufficient funds to pay it back. Moreover, because of the poor system to track, control, and account for funds, donations to the pavilion could have been erroneously used to repay this loan.”

The Center has also learned that Coelho approved the use of free airline tickets by Paul Afonso, the executive director of the Luso-American Wave Foundation, who at the time was a principal of The Bristol Group and a lobbyist for Air Portugal. (The offices of The Bristol Group were closed, and the Center was unable to reach Afonso.) Free lodging was also provided to unnamed employees of the foundation.

Even today, the official website of the U.S. Pavilion at Expo ’98 urges visitors to “Contribute to the Wave and Have Your Name Engraved on the Monument.” But when the Center asked Brand how anyone — including Coelho — could contribute to the apparently defunct foundation, he replied, “I don’t know the answer to that.”

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