Gingrich Calls Allegations of Illegal Spending ‘Phony’ : Finances: Speaker angrily dismisses FEC charges that his political organization wrongly aided his and other federal election campaigns.

WASHINGTON — An angry House Speaker Newt Gingrich on Thursday curtly dismissed allegations by the Federal Election Commission that his political organization illegally spent $250,000 to aid his troubled campaign in 1990. But Democrats renewed their call for an independent counsel to investigate the Georgia Republican’s wide-ranging political activities.

“This is the smoking gun,” House Minority Whip David E. Bonior (D-Mich.) said of the FEC report, issued on Wednesday.

Gingrich denied that GOPAC, the political action committee that he then chaired, had provided him with the funds five years ago. “No, they did not. They explicitly did not,” he told reporters during a brief encounter.

“It is totally phony. That should answer all the questions you have,” Gingrich said. “It is phony. How can I make it clear? The word phony should get it across to you. The FEC allegations are phony.”

The FEC alleges that GOPAC spent more than $500,000 to help GOP congressional candidates in 1989 and 1990--including at least $250,000 for Gingrich’s reelection campaign--at a time when the committee was prohibited from influencing federal elections, according to court records released Wednesday. Gingrich won a seventh term in 1990 by 974 votes.

Also on Thursday, the Republican-controlled House for the second time in two weeks rejected a Democratic attempt to force the House Ethics Committee to issue a progress report on its 14-month investigation of Gingrich.

The 218-170 vote came even as the committee was conducting a regularly scheduled session on Gingrich. All such meetings take place behind closed doors.

Rep. Nancy L. Johnson (R-Conn.), who chairs the committee, said that the FEC matter was “completely separate” from the work of her panel.

Earlier in the day, Bonior charged that the Ethics Committee may never “get to the bottom of these charges” and called for an outside counsel to complete the case. He said that the FEC allegation, if true, would be a “flagrant and egregious violation of campaign finance laws and House disclosure rules.”

Gingrich has come under fire from Democrats for providing special favors to large GOPAC donors who requested legislative assistance in dealing with federal regulators. The court records released by the FEC provided additional cases of contributors seeking help from Gingrich.

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On Dec. 19, 1989, for example, Gingrich solicited a GOPAC contribution from Miller Nichols, a real estate developer from Missouri. Two weeks later, after individual employees from thC. Nichols Co. pitched in a minimum of $1,000 apiece to GOPAC, Gingrich wrote Miller Nichols: “You are such a special and enthusiastic friend!”

On Jan. 17, 1990, Nichols followed up with a $10,000 contribution and, in a letter to Gingrich, noted that his total donations to GOPAC had reached $59,000. In the same letter, Nichols said that his firm had an asbestos problem with the federal government that was costing “millions and millions of dollars.”

Nichols’ appeal received prompt attention. On Jan. 19, 1990, former Rep. Howard H. (Bo) Calloway, GOPAC’s chairman, wrote on the letter: “Please put in folder to discuss with Newt--emphasize that it is very important for Miller to get a quick answer.” Gingrich sent a letter to Nichols the next day urging him to send more information on the problem.

Nichols, who is now retired, did not return calls Thursday. It was uncertain what action, if any, Gingrich took on his company’s behalf.

On Capitol Hill, House Democrats wasted no time Thursday jumping on the issue, with many making floor speeches demanding a full and prompt accounting of Gingrich’s financial affairs. Their zeal reflected the potentially damaging nature of the FEC report.

“This is not just some Democratic member of Congress accusing the Speaker of a violation, but the FEC,” said Rep. Tim Roemer (D-Ind.). “This will not be the straw that broke the camel’s back--but the brick that broke the camel’s back,” he said.

The FEC was created by Congress 20 years ago in the wake of the Watergate scandal as a nonpartisan agency responsible for enforcing federal campaign finance laws.

Operating on a relatively small $26.5-million annual budget, the agency developed a reputation for taking a cautious, deliberate approach in deciding to pursue enforcement cases against elected officials, political committees and individual donors.

The commission’s GOPAC case began in September, 1990, after the Democratic Congressional Campaign Committee filed a complaint alleging that GOPAC had been raising funds for the purpose of influencing federal elections without abiding by federal campaign restrictions.

The FEC consists of six presidential appointees whose selection requires Senate approval. To ensure its nonpartisan status, no more than three members are allowed from a single political party and four votes are required for any action. Three of the five current commissioners were appointed by Republican presidents and two by President Clinton. A sixth seat remains vacant.

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Oral arguments on the GOPAC case are scheduled for February. The FEC contends that GOPAC spent the money on consultants’ salaries, travel costs and other “Newt support” expenses to help reelect Gingrich.

At the time, GOPAC was barred from donating to congressional candidates because it did not register as a federal political action committee until 1991. Federal PACs are required to abide by strict limits on contributions and to disclose the names of donors and the nature of expenditures.