FEDERAL INVESTIGATIONS | Sen. Bob Menendez

Long before FBI raid, Sen. Menendez tried to help donor’s Dominican Republic business

 

As the FBI examines Sen. Bob Menendez’s links to a longtime friend and donor, a mammoth port-security contract in the Dominican Republic draws attention.

mcaputo@MiamiHerald.com

Sen. Bob Menendez used his influence to advocate for a Dominican Republic business deal that helped a longtime friend and donor whose South Florida office was raided by federal agents this week.

Menendez questioned Obama administration officials at a July hearing about what it was doing to help U.S. businesses that he felt were being unfairly treated by the government of the Dominican Republic and other Latin American countries.

One company Menendez was apparently referring to: ICSSI, acquired the year before by Dr. Salomon Melgen, a Palm Beach County eye doctor and friend. The firm was seeking to enforce a contract it had won to X-ray Dominican Republic port cargo, that could be worth $500 million to $1 billion over two decades.

“You have another company that has American investors that ... has a contract actually given to it by the — ratified by the Dominican Congress — to do X-ray of all of the cargo that goes through the ports,” Menendez, a Democrat from New Jersey, said at the July 31 hearing of the Senate Foreign Relations Subcommittee on the Western Hemisphere. “And they don’t want to live by that contract either.”

Menendez didn’t mention ICSSI by name in talking to Francisco J. Sánchez, the Commerce Department’s undersecretary for international trade and Matthew Rooney, the deputy assistant secretary in the Bureau of Western Hemisphere Affairs for the State Department.

Menendez’s office said the senator did nothing improper. Senators, especially on the Foreign Relations Committee that Menendez will soon chair, frequently advocate for U.S. business abroad.

In addition to trade, the senator’s office said he was concerned about fighting drugs.

“Senator Menendez has over the last few years advocated for more attention to the spread of narco-trafficking throughout Central America and the Caribbean,” chief of staff Danny O’Brien said. “It is an issue of protecting our national security, and these drugs end up on our streets and in our communities, fueling crime and addiction.”

Still, Menendez’s close ties to Melgen have been under a white-hot spotlight ever since federal agents raided the eye doctor’s West Palm Beach office on Tuesday and Wednesday.

The raid included agents from the FBI and the U.S. Department of Health and Human Services, which are investigating the doctor for alleged Medicare fraud.

At the same time, the FBI is conducting a separate corruption probe of the doctor and his relationship with Menendez, including trips they took to the Dominican Republic.

The FBI began examining the two last year after the group Citizens for Responsibility and Ethics in Washington forwarded a batch of emails from a shadowy tipster who claimed Menendez and Melgen had hired underage prostitutes at the ophthalmologist’s Dominican home — charges both deny.

An FBI agent tried, but failed to meet with the tipster, who refused to even phone the agent.

As the conservative press began circulating the reports about the two, the New Jersey Republican Party filed a complaint against Menendez for flying on Melgen’s private plane to the Dominican Republic but failing to disclose the gifts.

Menendez’s office checked his schedule and realized the senator had flown twice on Melgen’s plane without paying for it in 2010. On Jan. 4, Menendez cut a check for $58,500 — the air-charter rate for the pricey flights —to fully settle the matter.

Menendez’s chief of staff, Danny O’Brien, said the senator maintains his innocence and has taken responsibility for his error in failing to pay for his charter flights with Melgen, a longtime friend.

“The Senator realized it was an oversight, that it was sloppy,’’ O’Brien said. “It was junior varsity at best.’’

By reimbursing Melgen for the flights, Menendez effectively undercut a standing ethics complaint and the possibility he’d face something more serious: a possible federal charge.

“It’s technically a federal crime to not report gifts on a federal financial-disclosure form,” said Melanie Sloan, executive director of CREW.

The flights, however, would no longer be considered a gift because Menendez just paid for them. And it doesn’t matter that he took the then-freebie flights more than two years ago, in 2010.

Menendez would have been required to disclose the flights on his federal financial disclosure forms if the trips were considered gifts that he didn’t pay for.

Menendez’s office said the senator could have claimed the flights as gifts, however, because Melgen is a longtime friend and would qualify under a type of friendship exemption concerning gifts to sitting members of Congress.

Melgen’s a big supporter of the senator, too.

Melgen and his family contributed $33,700 to Menendez, and another $60,400 to the Democratic Senatorial Campaign Committee, which Menendez chaired from 2009 to 2011, when he took the trips.

About that time, Melgen used a West Palm Beach-based company to buy a 50 percent share in ICSSI.

For more than a decade, the company had held a port-security contract in the Dominican Republic. But it had never gone into effect because of protests from a former Customs agency director who said the deal unfairly benefited the company.

Meanwhile, the country’s business community also complained that the contract would increase fees and hurt trade.

Last month, the president of country’s shipping association told Hoy newspaper that the industry couldn’t afford to pay additional fees to X-ray cargo.

“The problem here is that we’re looking at a contract that looks unfair because it was signed several administrations ago and that it essentially creates a monopoly in all the ports,’’ said association president Teddy Heinsen.

But Melgen’s supporters in the Dominican Republic charge that opposition to the deal is also rooted in the drug trade. The more port security and the more X-rays, they say, the more authorities will be aided in combating drug trafficking.

Menendez, when he spoke at the July hearing in Washington, didn’t sound more concerned about ICSSI than other companies. He mentioned a road builder by name that he thought was being unfairly treated. And he also brought up a dispute involving textiles.

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