Rep. Rick Renzi (R-AZ) was indicted in federal court on Feb. 22, 2008, on 35 counts including official extortion and money laundering. Read the indictment here.
Recent public corruption cases have given us a glimpse into the shady world of legislative land swaps. Federal lands worth hundreds of millions of dollars change hands every year with little or no oversight. While some may serve the public interest, many others are set up to enrich special interests. The land exchange (pdf) at the center of the Rep. Rick Renzi (R-AZ) investigation illustrates how corrupt actions by lawmakers can encourage poor management of federal land assets, and hurts honest businesses.
Resolution Copper, a joint venture between Rio Tinto and BHP Billiton needed Congressional approval for a land swap so they could build the world’s largest copper mine near Superior, Arizona. They contacted their local elected official, Rep. Rick Renzi (R-AZ). According to the Wall Street Journal, Mr. Renzi told Resolution in 2005 (pdf) that his support for the land swap would hinge on whether they would buy a 480-acre alfalfa field, ostensibly to protect the water supply of Fort Huachuca.
Rep. Renzi has long ties to the base. His father, a retired Army General and former Commandant of the base, now runs the defense operations of ManTech Corp, one of the base’s largest contractors.* What was later discovered is that Rep. Renzi also had ties to the parcel that he was encouraging Resolution Copper to purchase. The land, it was later discovered, was owned by Mr. Renzi's business partner, James Sandlin.
When Resolution balked at Rep. Renzi’s overtures, he turned to another investment group, the Petrified Forest Group, that was looking to put together an unrelated land swap. They purchased the parcel because Rep. Renzi promised them their swap would get a “free pass” from the House’s Natural Resources Committee, the committee that is supposed to provide vigorous oversight over these types of projects.
Mr. Sandlin bought land 2003 for about $1 million, (pdf) and with Rep. Renzi’s help sold it for $4.5 million just two years later.
According to the WSJ, federal investigators are looking at a May 2005 payment of $200,000 from Mr. Sandlin to Rep. Renzi, which was sent the same day that Mr. Sandlin received the first payment from the Petrified Forest group. The company that received the payment, Renzi Vino, (pdf) is a wine company owned by Rep. Renzi at the time. Days after the $200,000 transaction was complete, Rep. Renzi sold Renzi Vino. Rep Renzi contends that the $200,000 was a debt repayment. Whether the payment was legal or not, Rep. Renzi failed to disclose the payment on his public disclosure forms. (pdf)
This isn’t the first trouble that Sandlin and Renzi have been in. In 2004, a Federal Election Commission audit (pdf) concluded that Renzi received a total of $369,000 in illegal corporate funds from Sandlin’s company in the 2002 election cycle. A recent investigation by the Federal Election Commission (FEC) forced the congressman and his wife to pay back $324,000 (pdf) in federal and state taxes and fined him $25,000, (pdf) which the Congressman paid on April 4, 2007. (pdf)
*Rep. Renzi's father has passed since the writing of this article.