Figures in Wright Oil Deal Won’t Talk to Ethics Panel

SAN ANTONIO —  House Ethics Committee members ran into a stone wall Tuesday when all of the remaining key players in a controversial oil well deal involving House Speaker Jim Wright refused to answer questions about the transaction.

Rep. John T. Myers (R-Ind.), the ranking Republican on the committee investigating Wright’s financial affairs, was clearly miffed by the turn of events, calling the subpoenaed witnesses “uncooperative” as he left a motel conference room where the interviews were supposed to have taken place.

In a letter to the committee, however, the witnesses’ lawyer accused the panel of overstepping its bounds and asking for information that it should not be given without proof of further wrongdoing by Wright.

In Blind Trust

Specifically, the letter, written by Washington attorney Stanley Brand, said that the committee had to prove that Wright knew about the oil deal, a transaction made in a blind trust, before compelling the testimony and obtaining requested documents.

It was not immediately clear how the panel would respond. “We’ll just have to go back to Washington and talk to the committee,” said Myers, who traveled to Texas with committee Chairman Julian C. Dixon (D-Los Angeles).

Questions about the oil well deal were left unresolved earlier this month when the committee issued a report on its 10-month investigation of Wright, alleging that the Texas Democrat had violated House rules of ethical financial conduct on 69 occasions.

The panel has hoped to explore the transaction before deciding whether to uphold the ethics charges and consider recommending possible disciplinary action against the Speaker.

In Washington, Wright’s office declined comment on the witnesses’ refusal to testify. “We don’t have any information about their reasons for not appearing,” said spokesman Mark Johnson. “We just don’t have any connection with it.”

Meanwhile, Wright indicated that he may donate to charity the proceeds of eight book sales questioned by the Ethics Committee, should the panel make such a request. The committee charged that the bulk sales of his 1984 book of essays were arranged to evade House limits on outside income.

“If that’s what the committee wants me to do, of course I can,” Wright said of the charity donation originally suggested by Rep. Patricia Schroeder (D-Colo.).

Dixon’s and Myers’ trip to Texas was believed to be the first time that committee members have gone into the field in the lengthy Wright inquiry.

One man involved in the oil deal, engineer L. R. Brammer, gave his deposition Monday night to the members.

But on Tuesday morning, when testimony was expected to begin from Texas financier Morris Jaffe and his son, Douglas, Dixon emerged from the meeting room to announce the new snag.

The letter from Brand said that under House rules the committee has the power of subpoena only during preliminary inquiries and disciplinary hearings and that the first was over and the second had not occurred.

It said that the subpoenas constitute an invasion of privacy without justification and that “serious legal questions are raised by the sheer overbreadth of these subpoenas, and the lack of adequate time for the witnesses to review the documents and obtain counsel to advise them of their rights and obligations.”

The East Texas oil deal at the center of this phase of the investigation netted the Speaker and his Ft. Worth business associate, George A. Mallick Jr., a profit of $341,000 in a single day last year for what turned out to be a dry hole.

The man who sold Wright and Mallick an interest in the well was Douglas Jaffe, a San Antonio businessman with interests in petroleum, aviation and real estate. His father, Morris, has been a major benefactor to Democrats for many years and was a confidant of the late President Lyndon B. Johnson.

In that same oil deal, the man who bought a portion of the share owned by Wright and Mallick was Douglas Jaffe, the same man who sold it to them. He bought the interest for $440,000 on behalf of Union Rheinische Inc., a West German firm that the younger Jaffe has advised for a number of years.

Counsel’s Report

The report prepared for the Ethics Committee by special counsel Richard J. Phelan contended that the well already was known to be a failure at the time the buy-back occurred. It raised questions about whether the transaction was engineered to funnel money to Wright.

Mallick has contended that the deal was legitimate and that the well was still thought to be productive at the time the deal was completed. He said that the drilling of a sidetrack well--at a cost of another $1.1 million--was further proof of a strong belief by other investors that the well eventually would be a gusher.

The well was capped last September. Mallick said the fact that the transaction under investigation occurred in a single day was merely a bookkeeping matter.

For his part, Wright has claimed that he has no knowledge of the oil well deal because Mallightco, a corporation he co-owned with Mallick, was in a blind trust at the time.

The ethics panel is trying to determine whether Wright had knowledge of the deal when it occurred. It also is looking into the question of whether the Jaffes might have had an interest in legislation and therefore might have benefited from giving gifts to the Speaker.

Brand said that the burden was not on his clients if the proceedings were dragged on by their unwillingness to testify.

“Phelan dragged it out,” he said. “Why not, with his $2 million (in investigatory funds) didn’t he pursue it and wind it up? The delay is none of our doing.”

Wright, in comments to reporters Tuesday, reiterated that he has never deliberately violated House rules or accepted improper income from book sales or any other source.

“I never consciously considered people buying books instead of paying for my speech,’ he said. He said that he gives about 250 speeches a year and almost all of them are given without charge.

Staff writer William J. Eaton in Washington contributed to this story.