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House Ethics Chairman’s Spouse Earned $100,000 on $15,000 Investment

June 12, 1989

WASHINGTON (AP) _ The wife of Rep. Julian Dixon, chairman of the House ethics committee, earned more than $100,000 last year on a 1986 investment of less than $15,000 in two retail companies under scrutiny by officials at the Los Angeles International Airport.

Dixon filed an amended 1986 financial disclosure form Monday to list the cost of his wife’s investment after initially telling The Associated Press he was not required to provide that information.

The companies, Mir Kanon Inc. and Peideau Inc., are part of a joint venture awarded a concession worth millions of dollars in sales to operate duty-free and gift stores at the airport, the third-busiest in the world.

Dixon, who gained prominence in presiding over the ethics committee probe that ended with the resignation of Speaker Jim Wright, disclosed his wife’s investment in an amended filing Monday that showed it apparently soared in value right after she purchased it.

In his letter Monday to the House clerk, Dixon said his wife paid between $5,000-$15,000 for 12 percent interest in the two minority firms in July 1986, three months after the companies were given the concession for duty-free shops at the airport.

Dixon’s earlier filing for 1986 said the investment was worth between $100,000 and $250,000 at the end of the year, less than six months after his wife purchased the stock.

Dixon’s 1988 financial disclosure form says he and his wife, Betty, earned over $100,000 during that calendar year from the two companies.

Los Angeles airport officials are looking into the companies’ ownership to determine whether they meet the airport’s standards as minority contractors.

Glenn Kroh, the airport’s property manager, said he has uncovered nothing ″illegal or immoral″ about the multimillion-dollar concession business.

Dixon said there was nothing improper about his wife’s business arrangement and that she was the ″ideal person″ to sit on the companies’ boards because she has a background in retailing. Her Washington business, ″Much Ado About Something Inc.,″ distributes advertising novelties.

Saying the California investment has been ″better than we ever expected,″ Dixon, D-Calif., said he was ″sorry that I made that mistake″ of not diclosing the cost of the investment. ″Obviously I feel badly about it,″ he said in a telephone interview.

Dixon’s revision came as the finances of congressional spouses are in the spotlight because of Wright’s resignation after being charged with 69 violations by the House ethics committee. The committee contended that Wright’s wife received improper gifts from a wealthy businessman, a charge Wright denied.

Dixon, who also a member of the House Appropriations Committee, said his wife’s high-yield investment has never affected his decisions in Congress.

″I’m sure I’ve supported bills that have supported the airport,″ said Dixon, whose congressional district abuts the airport.

″I don’t recall any specific requests that I’ve made to members, nor have I contacted the Federal Aviation Administration.″

Airport officials are looking into the makeup of Mir Kanon Inc. and Peideau, whose boards include Mrs. Dixon and a number of prominent black Atlanta businessmen.

Donald Miller, the airport’s deputy executive director, said officials ″want to make sure they are a bona fide minority business enterprise and women’s business enterprise.″

When airport commissioners awarded the duty-free concession, Miller said, Mir Kanon was classified as a minority enterprise, while Peideau was classified as a business run by women.

California records show the companies had identical boards of directors on Sept. 28, 1988. They also had the same agent, who listed the same address in Culver City, Calif.

″That is not the way it was proposed to us originally,″ Miller said.

However, he said airport officials knew from the beginning there was overlapping ownership in Mir Kanon and Peideau, in that prominent Atlanta businessmen Jesse Hill Jr., president of Atlanta Life Insurance Inc.; Herman J. Russell, a contractor; and Felker Ward, an attorney, own part of the businesses.

Last week, Dixon initially declined to disclose how much his wife paid for her investment, saying she didn’t own stock in the California companies.

In his letter to the House clerk on Monday, he wrote, ″Because I was not and am not, personally or legally involved in this business transaction of my wife’s, I have always considered her interest in Mir Kanon/Peideau in terms of her percentage of participation and ownership in the venture and not from the perspective of her being a shareholder.″

But he said ″upon recent review″ of the companies’ articles of incorporation ″it appears that, technically, Betty is deemed a stockholder.

″In this light, her acquisition of interest in Mir Kanon/Peideau in July 1986 also should have been reflected in the transaction section....″

House ethics rules permit members to amend their financial disclosure statements if a change is made in a timely fashion after new information is brought to a lawmaker’s attention.

As a member of both companies’ boards, Mrs. Dixon said she attends meetings and helps set corporate policy.

Although active on the boards, Mrs. Dixon added: ″I don’t have a job there, not a 9-to-5 job.″

In 1988, Duty Free Shoppers Group Ltd., the majority partner in the duty free concession, accumulated gross revenues of $78 million from the duty free shops, airport officials said.

Mir Kanon and Peideau have 32 percent of the business in a joint venture with Duty Free Shoppers to run the duty-free stores, airport officials said. The companies also are part of the concession for gift and news stores.

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