Sept. 28 (Bloomberg) -- U.S. Representative Tom DeLay, the No. 2 Republican in the House, was indicted by a Texas grand jury on a charge of criminal conspiracy in connection with illegal corporate political donations.

DeLay, 58, who faces up to two years in prison, will temporarily step aside as House majority leader, he said in a statement. House Speaker Dennis Hastert said he will recommend that Representative David Dreier of California replace the Texas Republican as leader, the Associated Press reported.

Two former campaign aides, John Colyandro and Jim Ellis, were also charged with conspiracy by the state grand jury in Travis County, Texas, according to the single-count indictment.

The charge stems from an investigation into alleged use of illegal corporate contributions by DeLay's political action committee, Texans for a Republican Majority, in the 2002 races for the state House of Representatives.

The four-page indictment charges that DeLay conspired with Ellis and Colyandro to use donations from companies including Williams Companies Inc. and Sears, Roebuck and Co., now Sears Holdings Corp., to help finance the election campaigns of seven members of the Texas House in 2002. Under Texas law, corporations aren't permitted to donate to candidates.

Six Seats

A spokesman for Tulsa-based Williams didn't immediately return a phone call seeking comment. A Sears spokesman, Chris Brathwaite, had no comment. Sears was cleared by the Travis County District Attorney's office of all charges relating to its 2002 contribution last year.

The donations -- totaling $190,000 -- were passed from the PAC to the Republican National Committee with instructions to donate to the seven candidates, the indictment said.

Funds raised by DeLay's group helped the Republican Party take control of the Texas Legislature in the 2002 elections. At DeLay's urging, the new Republican majority then redrew the state's congressional district lines without waiting for the new Census, helping the party to pick up six U.S. House seats in Texas in the November 2004 elections and extend its decade-long control over Congress.

There is no legal bar to mid-decade redistricting, although most states do it once a decade.

``No jury can undo the outcome of Texas's 2002 election,'' Craig McDonald, the director of Texans for Public Justice, said in a statement. ``As criminal indictments pile up, we believe that Washington and Austin both are in need of a good House-cleaning to restore integrity.''

Party Rules

Texans for Public Justice, an Austin-based campaign-finance watchdog, submitted the formal complaint to the Travis County District Attorney requesting an investigation into DeLay's PAC.

House Republican caucus rules require party leaders to leave their posts if indicted on a felony charge that carries a prison sentence of two or more years. DeLay, who was admonished three times last year by the House ethics committee, said he'll comply with that rule until the criminal case is resolved.

``I have notified the speaker that I will temporarily step aside from my position as majority leader pursuant to rules of the House Republican Conference and the actions of the Travis County District Attorney today,'' he said in his statement.

`Partisan Vendettas'

His office issued another statement saying the charges ``have no basis in fact.''

``This is just another example of Ronnie Earle misusing his office for partisan vendettas,'' said Kevin Madden, DeLay's spokesman, referring to the Democratic Travis County district attorney who is leading the investigation. ``Ronnie Earle refused to let the facts or the law get in the way of his partisan desire to indict a political foe.''

President George W. Bush's spokesman, Scott McClellan, said DeLay, who has served in the House since 1985, has helped get the administration's agenda through Congress.

``Congressman DeLay is a good ally and a leader who we have worked closely with to get things done for the American people,'' McClellan said in response to questions at the daily White House briefing today in Washington. ``We need to let the legal process work.''

Republicans Dismayed

House Republicans expressed dismay over the indictment. Representative Pete Sessions, a Texas Republican who is close to DeLay, said he expects his colleague to be cleared.

``The actions of the district attorney are once more called into question,'' said Sessions.

Sessions said he expects Speaker Hastert will convene a meeting of all House Republicans to discuss his hand-picked successor. He said it isn't ``a given'' that the rank and file will go along with what Hastert recommends.

House Education and Workforce Committee Chairman John Boehner, an Ohio Republican, told Bloomberg News in an interview this summer that he is interested in returning to a leadership post at some point. The former chairman of the House Republican Conference was approached by a cluster of reporters near the House chamber earlier today to inquire about his interest in running for a post, but he slipped out a side door.

To contact the reporters on this story: Darrell Preston in Dallas at dpreston@bloomberg.net. Laura Litvan in Washington at llitvan@bloomberg.net.

Last Updated: September 28, 2005 14:03 EDT