Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, October 6, 1995 TAG: 9510060047
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Over the past two years, a gas company controlled by a prominent Democratic couple from Oklahoma has placed Commerce Secretary Ronald Brown's son on its board, given him a 5 percent stake and provided him a $60,000 golf-club membership.
Over the same period, the Commerce Department hired the daughter of Eugene and Nora T. Lum of Tulsa in an entry-level political appointee job, and the Clinton administration invited Nora Lum to a White House state dinner and a trade meeting.
The relationship began to draw attention after the Lums were sued by former business partners Stuart and Linda Mitchell Price.
The lawsuit, filed in Tulsa, accuses the Lums of using their majority control of Dynamic Energy Resources Inc. to ``systematically loot'' the natural gas pipeline company of $3 million to benefit themselves and their friends, including Michael Brown, 30, a Washington lobbyist and son of the commerce secretary.
``The Lums wrongfully caused the corporation to pay consulting fees, expenses and other benefits to or for the benefit of themselves, their friends and relatives and Michael Brown for which the corporation did not receive value,'' the lawsuit charges.
The Lums, disputing the charges, have countersued.
Commerce Department spokeswoman Carol Hamilton said Ronald Brown has been friends with the Lums since his days as Democratic Party chairman and is aware of his son's involvement with their company.
But she said the secretary had ``zero'' role or financial interest. ``He hasn't had any input or intervention whatsoever on behalf of or that benefited the company or the Lums as individuals,'' she said.
The scrutiny comes at an awkward time for Brown, as a special prosecutor investigates whether the commerce secretary improperly accepted $500,000 from a business partner and filed false financial disclosure statements.
In an affidavit, Linda Price alleges Michael Brown went to Tulsa in March ``and met with Nora Lum and attorneys for Ron Brown to discuss personal, legal and public relations issues regarding his father.''
A lawyer for Michael Brown and the company acknowledges his client was in Oklahoma that month but denies any such discussion took place. ``He was in Tulsa, but he had no such meeting and would not consider such a discussion,'' lawyer Jonathan Siegfried said.
Attorney Reid Weingarten, who is representing Ronald Brown, said he was unaware of any such meeting.
The Prices' suit names the younger Brown as a defendant, alleging he has been paid a consulting fee and expenses of $8,300 per month. Supporting documents allege the company paid $60,000 for a Robert Trent Jones golf club membership in suburban Washington for Michael Brown's ``exclusive use.''
Linda Price's affidavit said Michael Brown told the company of ``potential government contracts which Dynamic could pursue with his assistance as a consultant.''
Lawyer Siegfried said the consulting fees go to Brown's law firm - Greenberg, Traurig - and not him personally, and the golf membership was ``for corporate use ... entertaining clients.'' Brown is director of legislative affairs for the firm.
In an affidavit, Michael Brown acknowledged owning 5 percent of Dynamic and being a director. He said he has done consulting and lobbying for Dynamic in Washington, D.C., Pennsylvania, New Jersey, Florida and Indiana. He did not specify its nature.
Siegfried said Brown was one of several friends the Lums appointed to their board, and all were given shares in the company ranging from 1 to 5 percent. He said Michael Brown first met Nora Lum in 1988 while working on a political campaign.
Siegfried declined to estimate the worth of Brown's 5 percent stake, except to say that it was ``nowhere near'' the $500,000 cited in published reports.
Hamilton, the Commerce Department spokeswoman, said Trisha Lum, the couple's daughter, was hired in 1993 as an office assistant shortly after Brown took over, but he was not involved. Trisha Lum left the department in 1994.
by CNB