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Hearings of the
Subcommittee on Rules & Organization of the House

Cooperation, Comity, and Confrontation: Congressional Oversight of the Executive Branch

Statement of Hon. Joe Barton (R-TX)
Chairman -- Subcommittee on Energy and Power
Committee on Commerce

Mr. Chairman, I was pleased to accept your invitation to testify before your subcommittee this morning on what I believe is a very important problem that too often has flown under the public’s radar -- that is, the deliberate efforts of the Clinton Justice Department to obstruct, or at least significantly delay, Congressional oversight of Executive Branch activities, particularly those involving the Justice Department’s own failures to enforce Federal law. This delay and obstruction takes a heavy toll on Congressional committees in terms of unnecessary expended resources, and hampers our constitutional responsibility to shine the light of public disclosure on the sometimes questionable inner workings of our Federal government.

During the 104th and 105th Congresses, I was honored to serve as the chairman of the Commerce Committee’s Subcommittee on Oversight and Investigations -- one of the longest standing and historically most powerful oversight subcommittees in Congress. My subcommittee’s jurisdiction was quite broad, and our work in several areas brought us into contact -- and ultimately conflict -- with the Justice Department. I’d like to take a few minutes to describe three specific situations to this subcommittee.

Justice Department’s Attempts to Block Diesel Engine Investigation

The first situation arose as part of our review of the Environmental Protection Agency’s (EPA) diesel engine certification program. We began our review in late 1997, after learning information suggesting that there may have been attempts by the manufacturers to circumvent federal emission standards, and that EPA might have been asleep at the wheel, so to speak, with respect to setting and enforcing these standards for heavy-duty diesel engines. For a year, we put off certain aspects of our investigation at the request of EPA and Justice, based on their representation that our inquiries might negatively impact pending enforcement actions against diesel-engine manufacturers.

However, even after EPA, Justice and the manufacturers entered into a settlement in October of 1998, Justice continued to try to block our attempts to gain information from interviewing EPA personnel -- on the increasingly strained theory that the settlement had not yet been approved by the court and could result in litigation, with possible depositions of those same EPA personnel in the future. In one moment of unusual candor, EPA even acknowledged that the Administration’s concern was that our investigation might uncover information embarrassing to its settlement position. But let me make very clear that we were never seeking information relating to the settlement negotiations or the settlement itself -- rather, we were simply seeking historical information about when EPA knew, or should have known, about the potential for excess diesel emissions, and why this agency, charged with protecting the environment, seemingly looked the other way in this case for so many years. In other words, we were conducting good, old-fashioned, programmatic oversight.

Eventually, EPA permitted us to interview the program personnel -- despite a memorandum from the Justice Department advising EPA against doing so. I think EPA made the right decision here, and I truly must question the judgment of the Justice Department in continuing to advocate such an obstructionist and extreme position. If Justice had had its way, our investigation would have been delayed indefinitely. And if that same Justice Department theory were applied across the board, virtually all Congressional oversight could be negatively affected since there are few Executive Branch actions that are insulated from the potential of future civil or administrative litigation.

Justice Department’s Handling of Perjury Referral Concerning FDA Official

The second case involves a request that I made to the Justice Department on March 26, 1996, as Chairman of the Subcommittee on Oversight and Investigations, to investigate a matter that I had reason to believe constituted perjury. In support of that request, I enclosed a Committee staff report detailing the evidence supporting probable cause to believe that a senior Food and Drug Administration (FDA) official, Mitch Zeller, committed perjury at hearings before the Subcommittee on November 15 and December 5, 1995.

The FDA was one of the Federal agencies under my Subcommittee's jurisdiction, and in fulfillment of our oversight responsibilities, as Chairman I directed a letter on August 17, 1995, to David Kessler, M.D., Commissioner of Food and Drugs, requesting information on several items relating to the status of the publication of a proposed rule to downclassify bone screws for use in the pedicles of the spine (also known as a pedicle screw) during spine surgery. Pedicle screws are screws used to stabilize the spine after spinal injury, or to correct severe spinal curvatures and other abnormalities. At that time, it had been over a year since the FDA's Advisory Panel unanimously recommended downclassification and the FDA still had not published the proposed rule on downclassification. One of the items in the Subcommittee's request related to an FDA internal investigation of allegations about individuals involved with the Advisory Panel and connected with the effort to downclassify pedicle screws.

On October 3, 1995, at the request of the Subcommittee, FDA officials, including Mr. Mitch Zeller of the FDA Commissioner's Office of Policy, briefed Committee staff about the status of the proposed rule and aspects of the internal investigation. During the briefing, Mr. Zeller informed Subcommittee staff that he had received documentation supporting allegations that three individuals outside FDA involved in FDA's downclassification effort may not have disclosed all relevant financial interests. Mr. Zeller further indicated that he had received the documentation from an attorney, John Coale, and another unidentified attorney around mid-June 1995. Mr. Zeller also mentioned that Mr. Coale provided further documentation and allegations concerning travel of FDA employees involved in the downclassification process and the adequacy of a retrospective study used by the Advisory Panel in its downclassification decision. When Subcommittee staff inquired about access to the documentation, they were informed by FDA officials that some of the documentation given to Mr. Zeller was subject to protective order or under seal, and that FDA would need to get leave of court to provide the Subcommittee with access to the documents.

On October 12, 1995, I directed a letter to Dr. Kessler to confirm facts developed at the October 3rd briefing and to seek more specific information about documents, including identification of each document provided by Mr. Coale to Mr. Zeller that were subject to the confidentiality order. On October 27, 1995, FDA responded to my letter and provided information and documents. Included in the documents sent in the FDA package was a document index identifying several documents given to Mr. Zeller as subject to a protective order. The Subcommittee did not receive any documents (whether subject to protective order or not) given to Mr. Zeller by Mr. Coale, however. As indicated in Dr. Kessler's September 7, 1995 and October 27, 1995 letters to me, the FDA did not want to release even those documents that were not subject to the protective order because the agency was concerned that "disclosure could affect ongoing OIA investigations, the reputations of individuals and entities, or the Agency's ability to obtain confidential information or protect confidential sources in the future." Consequently, the FDA indicated at the time that it would work with the Committee on providing an opportunity to view the documents.

On December 7, 1995, the FDA sent the Subcommittee the documents not subject to protective order that Mr. Coale had provided to Mr. Zeller, but continued to refuse to produce those documents subject to the protective order -- even though those documents had been provided to the FDA by Mr. Coale in violation of that same protective order. On February 29, 1996, two months after the protective order was lifted, the FDA finally sent the Subcommittee the documents subject to the protective order that Mr. Coale had provided to Mr. Zeller.

When the Subcommittee eventually received the documents that had initially been withheld by the FDA, there were notable conflicts between the documents and the testimony of Mr. Zeller at the November 15 and December 5, 1995 hearings. In particular, the documents contradicted Mr. Zeller’s testimony that he did not know the documents he received in June were covered by a protective order.

Mr. Zeller testified that the documents he received in June 1995 were marked "MDL" (multi-district litigation) and stamped confidential. He also testified that he read and used the documents. Although he admitted knowing the documents were confidential, he specifically denied knowing the documents were subject to a protective order when he received the documents. However, the documents themselves specifically were marked “confidential subject to protective order” or “con order.” In fact, Mr. Zeller testified that he read a brief with a cover stating “[t]his document contains `confidential information’ and is filed under seal pursuant to Pre-trial Order No. 7.” Mr. Zeller, an attorney licensed to practice in the State of New York, should have been expected to understand what the terms “confidential” or “protective” order signifies, as well as the term “under seal.”

Not only did the documents he received have stamps and markings signifying a protective order, Mr. Zeller received a letter signed by Mr. Coale that specifically stated that the documents were confidential material. In Exhibit 3, Mr. Coale wrote to the staff of Senator Breaux that “[p]ortions of the brief and some of the supporting documentation described below have been designated by the court as confidential material, not subject to public disclosure.” (See Exhibit 3 ). Mr. Zeller received a copy of this letter on or about June 15, 1995. Also, the cover letter addressed to Mr. Zeller states “[a]s stated to Senator Breaux, this material is strictly confidential....” and refers to the letter to Senator Breaux's staff. Based on the documents, Mr. Zeller's testimony was not credible when he claims he did not know the documents he received in June 1995 were covered by a protective order.

The second statement by Mr. Zeller that he did not have any previous dealings with Mr. Coale or know that he would be receiving documents also appeared to be perjury. The cover letter’s salutation was “Dear Mitch” and stated "enclosed is the material that we spoke of." The personal salutation implied a pre-existing relationship, and the statement “we spoke of earlier” suggested that Mr. Zeller knew that he would be receiving the documents and the subject matter of those documents, and that he did have a previous dealing with Mr. Coale.

Had Mr. Zeller testified truthfully regarding his awareness that some of the documents provided by Mr. Coale were subject to the protective order, he would have acknowledged a possible violation of a court order and potentially unethical conduct. Mr. Zeller is a member of the New York State Bar. It appears he violated §1200.19 of the New York Disciplinary Rules of the Code of Professional Responsibility, regarding the preservation of client confidences. The ABA has interpreted Rule 1.6 of the Model Rules of Professional Conduct (which is virtually identical to New York's §1200.19) as prohibiting an attorney from examining materials known by the attorney to be confidential and not intended for his examination. Mr. Zeller was not one of the attorneys permitted under the confidentiality order to review the documents.

Mr. Zeller may also have violated the Protective Order (Pre-trial Order No. 7) when he received the documents covered by this order and then used them outside the litigation. A person need not be expressly named in the Protective Order to be held liable for civil contempt. It is not necessary that the person be formally served with the order, or that the violation be willful or that there be intent to violate the court order.

What appears to be Mr. Zeller’s failure to testify truthfully materially affected the Subcommittee’s investigation in the pedicle screw controversy. If Mr. Zeller had testified to facts confirmed by the documents, the Subcommittee would have had a concrete allegation on which it could have urged the FDA to make a referral to the Inspector General for further investigation of FDA's receipt and usage of documents provided by Mr. Coale. What appears to be the failure of Mr. Zeller to truthfully testify interfered with the Subcommittee’s duty to find the truth and the referral of this aspect of the investigation to the Inspector General’s Office.

My March 26, 1996 request to the Attorney General to investigate perjury was referred to the Public Integrity Section. On May 8, 1996, I brought additional information about another false statement to the attention of the Department of Justice that I believed might be pertinent to its investigation. That additional information is as follows.

On September 28, 1995, the Justice Department on behalf of the FDA filed under seal a motion for written permission from the Court to receive and utilize confidential discovery information in the bone screw products liability litigation. On page 2 of the memorandum in support of the motion the following statement was made: "To date, only attorneys in the Justice Department's Civil Division and the FDA's Office of General Counsel have been given access to the confidential discovery material." The accuracy of this statement was contradicted by sworn testimony and documents received by the Subcommittee that showed that FDA officials outside the Office of General Counsel (Mitch Zeller of the Office of Policy, Commissioner David Kessler, officials at the Division of Ethics and Program Integrity, Deputy Commissioner Mary Pendergast, and the Office of Internal Affairs) had access to some of the confidential discovery material prior to September 28, 1995. That statement raised the question of whether false statements were made to the Justice Department in preparation of this motion by a representation that only FDA officials in the Office of General Counsel had been given access to the confidential discovery material.

In other words, it appeared that at the same time the Justice Department on behalf of the FDA was asking written permission from the Court to receive and use documents subject to protective order, the FDA was trying to cover up the fact that it already received some of the documents subject to that protective order. I requested that this question be investigated by the Department.

In August 1996, the Department of Justice summarily decided not to proceed further with my request for investigation of this perjury matter and declined to prosecute. The Department's declination letter did not even address the question raised by my May 8, 1996 request to investigate a possible false statement to the Department. (The Department did orally advise Committee staff, however, that the letter also covered the May 8, 1996 request.) The Department gave the Committee only minimal information about the Department's efforts in response to my request to investigate suspected perjury before Congress. We were told that perjury is an extremely difficult crime to prosecute and that there was insufficient evidence to prosecute.

As far as the Committee could tell, all the Justice Department did over four months was review my referral and request materials from the FDA. Neither I nor the Committee staff was provided specific information about whether the Justice Department attempted to interview Mr. Coale or FDA officials connected with this matter. We were given no written report or any indication that my referral was investigated with any degree of energy or thoroughness. No effort was made to provide any status report which would include, to the extent appropriate, a description of the scope of the investigation and the nature and extent of resources committed by the Department in this investigation.

By contrast, in 1990, a U.S. Attorney prosecuted and convicted an FDA official for lying in a federal trial about whether the FDA official had ever had lunch with industry representatives. Yet a few years later, a senior FDA official testifies before my Subcommittee that he received and used documents that were clearly marked "confidential subject to protective order,” knew they were “confidential,” but denied that he knew the documents were subject to a protective order, and the same Justice Department does nothing. That testimony is similar to someone who received a box stamped "Dangerous: Radioactive Material" and testified that he knew the box was dangerous but not radioactive material. The testimony was inherently preposterous and justified a further, vigorous investigation by Justice of perjury before Congress designed to conceal violations of a court order and attempts by outside parties with financial interests to influence an ongoing rulemaking. Justice’s inaction, and its refusal to provide any detailed explanation to the Committee, was, I believe, simply inexcusable.

Justice Department’s Handling of Criminal Referrals Relating to the Portals

The third case involved a criminal referral to the Justice Department by me and full Committee chairman Tom Bliley with respect to top Democrat party officials, fundraisers and lobbyists on a matter that came to be known as the Portals -- after the name of the privately-developed building that the Federal Communications Commission recently moved into after years of refusing to do so. Our investigation uncovered a complex web of influence-peddling and questionable million dollar payments, of secret meetings and curious government actions, all relating to this project.

At the end of the day, we determined that the evidence was sufficient to refer the matter to the Justice Department for criminal investigation of several prominent Democrats -- including James Sasser, the former Senator and U.S. Ambassador to China, Mr. Peter Knight, a top Democrat lobbyist, fundraiser, and former Clinton-Gore campaign chairman, and Mr. Franklin Haney, a close friend of the Vice President’s, a top Democrat contributor and, if the Justice Department is to be believed, a very questionable Clinton-Gore fundraiser. Committee staff prepared a lengthy, detailed, and fact-based report, based on the testimony of and interviews with dozens of individuals and a review of thousands of relevant documents. That report was then sent to Attorney General Reno for her review on December 15, 1998, along with all relevant materials, including the unsupportive views of our ranking member -- which, I might add, did not dispute or even attempt to rebut a single specific fact contained in the staff report.

As that staff report exhaustively set forth, we found that Mr. Haney paid Mr. Knight and Mr. Sasser one million dollars each upon the successful closing of the Portals transaction, in which the Federal government agreed to specific lease changes sought by Mr. Haney as a condition for his financing of the Portals building. We believed then, as I continue to do now, that the report set forth specific and credible evidence warranting further investigation as to whether Mr. Haney and his representatives may have violated Federal laws in connection with these fee arrangements -- in particular, the Federal law against contingency fees on Federal contracts. The report also contained evidence suggesting that these same individuals may have made false statements under oath before the Subcommittee concerning the nature of their fee arrangements, the nature of their efforts to influence Federal agencies, and other material and related matters. And in the specific case of Peter Knight, who is a covered official under the Independent Counsel Act, we indicated our belief to the Attorney General that there was “specific and credible” information warranting a preliminary investigation into whether an independent counsel should be appointed to review the evidence against him.

Under the provisions of that Act, the Attorney General was required to make a determination within 30 days of our referral as to whether the information provided was sufficiently specific and from a credible source to constitute grounds to initiate a 90-day preliminary inquiry to determine whether an independent counsel should be appointed to review the matter. The burden on her under this law is quite clear: If she cannot say, with certitude, that the information provided to her is not specific or from a credible source, she must proceed with a preliminary investigation under the Act. On the 30th day, January 14, 1999, the Committee received a cursory response from Justice, stating that the Department’s campaign finance task force had previously determined -- apparently prior to even receiving or reviewing our referral of evidence -- that Mr. Knight’s $1 million payment from Mr. Haney was not an illegal contingency fee on a Federal contract and therefore would not launch a preliminary inquiry under the Independent Counsel Act.

The Department’s response raises both procedural and substantive flags. First, the response -- which notably never said whether the very specific pieces of evidence contained in the referral met the minimal triggering threshold under the Act -- appears to indicate that such an analysis was not even performed by the Department. Instead, it appears that the Department simply relied upon its own prior judgment that the $1 million payment was not a contingency fee and interpreted the referral’s evidence to conform with its initial determination. Moreover, the response indicates that the Department reached a conclusion on the facts -- that the payment was not a contingency fee -- as opposed to making the statutorily-required finding of whether the referral contained specific and credible evidence warranting further investigation under the Act. I must question whether, under the Act, the Department -- rather than an independent counsel -- is the appropriate body to make this type of determination involving a covered official such as Mr. Knight.

In dismissing the evidence contained in the referral, the Department also appears to have resolved disputed credibility issues in Mr. Knight’s favor based on unidentified “other evidence” gathered by the Department’s task force. Again, I must question whether the Department properly can weigh other evidence when examining the specificity and credibility of particular pieces of evidence provided under the Act. It would seem to me that a weighing of competing pieces of evidence with respect to a covered official is a task that the Act requires be left to an independent prosecutor.

Furthermore, the Department’s response to our referral was simply inaccurate in its assertion that “each of the allegations of wrongdoing by Mr. Knight in the Report rests on the view that Mr. Knight’s payment was a contingency fee.” In fact, Mr. Knight twice testified under oath before my Subcommittee that the $1 million payment from Mr. Haney was for three years of mostly prospective work on a dozen or so projects, including both the Portals and other projects such as the Ronald Reagan Building refinancing. However, other evidence compiled by the Committee and contained in the referral to the Department strongly suggests that the $1 million payment -- regardless of whether it was a contingency fee -- was solely for Mr. Knight’s work on the Portals, including certain evidence that we know was never considered or uncovered by the Department’s task force in its own investigation. Thus, the question raised in our referral as to whether Mr. Knight committed perjury is not answered by the Department’s conclusion that the $1 million payment was not a contingency fee. The Department’s obvious error in this regard indicates the lack of serious attention given to our referral.

On the substance of the Attorney General’s decision, let me say that I -- along with others knowledgeable about the referral and the workings of the Act -- find it virtually impossible to believe that the referral failed to set forth specific and credible information against Mr. Knight that at the very least warranted further review under the Independent Counsel Act. The referral contained testimony of individuals with personal knowledge of this matter, backed by corroborative documentation that generally went unchallenged by Mr. Knight and Mr. Haney. Although Mr. Knight claimed that the $1 million fee was not an unlawful contingency fee for his successful Portals work, but was a flat fee for three years of work on a dozen projects from 1995 through 1998, the Committee heard testimony and received documentary evidence -- all of which was provided to the Department -- clearly indicating the opposite.

In order to give this Subcommittee a sense of how incredible the Attorney General’s response to our referral truly was, a brief recounting of some of the evidence contained in our referral is necessary.

 

  • On October 23, 1995, Mr. Knight and Mr. Haney entered into a written retainer agreement under which Mr. Knight would bill Mr. Haney on a “project-by-project basis at a rate to be determined” -- an agreement that was never modified in writing at any time during the course of the three-year engagement;
  • On January 4, 1996, the day after the General Services Administration agreed to Mr. Haney’s desired lease changes, Mr. Knight sent Mr. Haney an invoice for $1 million for unidentified “legal services rendered” in 1995 -- past tense;

     

  • Mr. Knight instructed his firm to bill Mr. Haney the full amount for work performed and completed in 1995, and the firm accounted for the resulting payment as if it had been fully earned in 1995;

     

  • The only documented work Mr. Knight performed for Mr. Haney in 1995 was in relation to the Portals project;

     

  • Mr. Haney paid Mr. Knight the $1 million fee within days of the closing of the Portals deal, out of a special purpose corporation that Mr. Haney set up specifically for handling the Portals transaction and that he admitted would not properly be engaged in any other business;

     

  • Mr. Knight sought to take the $1 million check -- which had been made out personally to him rather than the firm -- directly and immediately into his own pocket, instead of running the check through the normal firm distribution processes;

     

  • Some of Mr. Knight’s partners who were involved in contemporaneous discussions with respect to this $1 million fee stated that it was their understanding that the fee was a performance or incentive payment for the successful completion of a particular project for a client;

     

  • Significantly, Mr. Haney discussed with Mr. Knight’s law firm compensation in addition to and separate from the $1 million payment, to be paid upon the successful conclusion of another project that Mr. Knight and Mr. Haney now claim was covered by the $1 million fee; and

     

  • When Mr. Haney was first questioned about the nature of the $1 million fee -- prior to his knowledge of any Department or Committee investigation -- he described the fee as payment for Mr. Knight’s work on the Portals project, and did not mention any other alleged projects.

All of the foregoing facts would appear to constitute specific and credible evidence suggesting that the $1 million fee was not for three years of prospective work on a dozen different projects, but was instead solely for Mr. Knight’s successful Portals-related work in 1995. And other evidence uncovered by the Committee significantly corroborates that conclusion.

Most prominent is the detailed and credible testimony of Mr. Joseph Trapasso, a close associate and now partner of Mr. Knight’s who proved to be a reluctant witness in our investigation. Both Mr. Knight and Mr. Haney testified that one of the dozen projects on which Mr. Knight worked for Mr. Haney under the $1 million fee arrangement was Mr. Haney’s plans to refinance the Ronald Reagan Building project. However, Mr. Trapasso testified in detail that, in the latter part of 1996, he and Mr. Haney discussed various aspects of how and when the firm would receive compensation for its work on the Reagan Building project -- despite the fact that Mr. Haney had recently paid the firm a $1 million fee to allegedly cover this and other projects on a non-contingent, prospective basis. Notably, when questioned under oath about Mr. Trapasso’s testimony, Mr. Haney denied any recollection of this conversation, despite the provision by Mr. Trapasso of specific details regarding the timing, context, location, and substance of their fee discussion. Simply stated, Mr. Trapasso’s testimony is consistent with the written -- and only documented -- fee arrangement between Mr. Knight and Mr. Haney (payment on a project-by-project basis), and is virtually irreconcilable with the sworn statements of Mr. Knight and Mr. Haney that the $1 million fee covered the firm’s work on the Reagan Building project.

In addition, Mr. Haney’s fee arrangements with his other attorneys involved in the Portals transaction, while certainly circumstantial, shed further light on the true nature of the $1 million payment to Mr. Knight. As the referral details, Mr. Haney hired two other attorneys to assist with the Portals deal -- former Senator James Sasser and former Senate staff member John Wagster. Both of these men received large lump sum payments upon the successful closing of the Portals transaction, under arrangements in which those fees ($1 million and $500,000, respectively) would be paid only upon that closing. Surely, Mr. Knight’s services were worth more than those of a mere Senate staff member, and were more comparable to those provided by Mr. Sasser. So why would Mr. Haney have not paid Mr. Knight similarly? Why would Mr. Knight only get a flat fee to cover three years of service and not receive any success fee on the Portals closing? In addition, Mr. Sasser’s self-described $1 million contingency fee for his Portals work was originally an oral agreement between him and Mr. Haney that was reached in the late Fall of 1995 -- the same time period in which Mr. Knight and Mr. Haney orally reached agreement on the $1 million fee that was billed in January 1996. Why should we believe or expect that these two arrangements would be any different from one another?

Indeed, the only “evidence” gathered by the Committee that points directly to an opposite conclusion about the nature of the $1 million fee is the testimony of Mr. Knight and Mr. Haney. These men would implausibly ask us to believe that they orally modified their written retainer agreement in a highly significant way but never memorialized that modification in writing -- despite the long-standing policy of Mr. Knight’s law firm and the mandatory requirements of bar association rules that the amount and nature of a fee between lawyer and client be specified clearly in writing. Furthermore, despite the significance of this oral modification, neither man could describe any details surrounding its formation, such as the timing, location, context, or substance of the conversation -- detracting significantly from the credibility of their general statements in this regard. Under the law of Federal evidence, the testimony of individuals with an interest in the outcome -- such as Mr. Knight and Mr. Haney -- is considered to have inherent credibility problems and generally would not be an appropriate basis upon which to dismiss credible evidence to the contrary. Yet it would seem, from what little we have been able to determine about the Department’s processes to date, that the Department significantly relied on interviews with these two men or their counsel in reaching its conclusion that the $1 million payment was not a contingency fee. In essence, the Department appears to have discounted the credible evidence outlined above, and accepted the incredible alternative spun by the very subjects of its investigation.

As this brief recounting of the evidence and the obvious procedural irregularities in Justice’s response amply demonstrate, it was reasonable for the Committee to inquire as to the basis for the Department’s conclusion, against the weight of all this evidence, that there were insufficient grounds to even begin a preliminary investigation of Mr. Knight under the Independent Counsel Act. But when we sought a staff-level briefing to discuss this matter, Justice simply said “no” -- asserting that it did not have to explain its decision to us, but that, even if it wanted to, it couldn’t because of rules protecting grand jury secrecy.

Well, we asked, could we discuss the evidence gathered by the Committee and why Justice felt that it was not sufficiently specific and credible -- without discussing any matters that occurred before the grand jury? “No.” Could we review the declination memo, setting forth the Department’s position on our referral? “No.” How about a redacted version to protect grand jury matters? “Nope.” Could we get an explanation for the clear error contained in Justice’s response regarding the scope of our perjury referral? “No,” except for a lame reassurance that, despite what Justice had said in writing, the Department had in fact “considered everything.” Could we discuss or review the information provided to the Department by Peter Knight’s counsel in response to our referral -- information clearly not protected by grand jury rules? “No” to that as well. Apparently Justice can meet with what is called “the target” of an investigation to discuss the evidence, but not with the referring body -- a co-equal branch of the Federal government.

We were told, however, that our referral failed to contain any “new evidence” that the Department had not previously learned about, and that “other evidence” gathered by the Department’s task force in the course of its own investigation led to a firm conclusion that the $1 million payment was not a contingency fee. With respect to the notion that our referral did not contain any “new evidence,” I am at a loss to understand how that could be possible, given that the Department -- by its own admission -- never even interviewed Mr. Knight after receiving our referral, despite the fact that his two days of testimony before the Committee were featured prominently in the referral and were, of course, the very basis for the specific perjury-related referrals. In addition, it is my understanding that, during the entire course of the Department’s investigation, no one from Justice or the FBI ever contacted several of the other witnesses who provided significant testimony and information to the Committee, as highlighted in the referral. Given these facts, I must question whether the Department truly conducted a thorough investigation of this extraordinary $1 million payment or the evidence contained in our referral.

I also must say that I find it difficult to believe that there is significant “other evidence” that would not have been provided to the Committee during the course of our extensive investigation -- other evidence presumably so exculpatory or compelling in nature to cause the Department to dismiss the vast body of specific evidence contained in the referral. In fact, when Committee staff raised this point about what “other evidence” the Department possibly could have to rebut the specific testimony and documents outlined above and in the referral, the Department’s only response was to ask whether we had interviewed Mr. Haney about the fee -- a truly amazing question that suggests a disturbing lack of familiarity with our referral and our year-long investigation. As the Department apparently does not know, the Committee utilized its full powers to compel, when necessary, the production of all documents and the testimony of all witnesses with any connection to the Portals or the fee arrangement between Mr. Knight and Mr. Haney, including both principals. It obviously would have been in the best interest of Mr. Knight and Mr. Haney for them to have produced any exculpatory evidence to our Committee, not just to the Department. Thus, I reject the notion that either individual could have provided the Justice Department with any significant or credible additional evidence to support their vague, inconsistent, and self-serving accounts of this transaction.

And even the piecemeal information that the Department reluctantly provided to us via its legislative liaison -- such as the mere facts that a declination memo existed and that Peter Knight’s counsel had met with Justice personnel -- took several weeks and repeated attempts to obtain. On other points, it took the Department weeks to provide basic chronological information about its investigation, and oftentimes its delayed answers were not even responsive to the original questions or later contradicted by subsequent information -- resulting in further delays. Something clearly is not right where, as here, getting basic and accurate information out of the Department of Justice is like pulling teeth out of a junkyard dog.

I am well aware of the strictures placed on the Department by Rule 6(e) of the Federal Rules of Criminal Procedure, which governs grand jury secrecy. But there is absolutely no reason that the Department cannot explain to us why the evidence that the Committee gathered and compiled in the referral failed to meet the minimal statutory threshold contained in the Independent Counsel Act, or why the Department may have reached certain legal conclusions about the criminal statutes involved or their application to the facts of this now-closed matter. Rule 6(e), while certainly important, is not a shield behind which the Department can hide whenever it wants to avoid answering difficult questions from committees of Congress. Rather, it applies to specific matters “occurring before the grand jury,” such as the identity and testimony of witnesses appearing before the grand jury, or other information that would disclose the substance of the grand jury’s activities.

As numerous judicial opinions have recognized, Rule 6(e)’s secrecy provisions generally do not apply to investigative interviews by DOJ or FBI personnel outside of the grand jury, nor to the Department’s analyses of those interviews or pre-existing records obtained by the Department. See Anaya v. United States, 815 F.2d 1373, 1380-81 (10th Cir. 1987); In Re Grand Jury Matter, Catania, 682 F.2d 61, 63 (3d Cir. 1982); In Re Grand Jury Proceedings, Newport News Drydock & Shipbuilding Company, slip op., at 3-4 (E.D.Va. Nov. 20, 1984); In Re Grand Jury Impanelled October 2, 1978 (79-2), 510 F. Supp. 112, 115 (D.D.C. 1981). Rule 6(e) also does not shield those portions of DOJ recommendations or memoranda that do not reveal what actually occurred before the grand jury, see In Re Grand Jury Impanelled October 2, 1978 (79-2), 510 F. Supp. at 115, nor does it cover procedural aspects of the grand jury’s functioning, such as its name or the dates upon which it was constituted, terminated, or engaged in other activities. See In Re Grand Jury Investigation (DiLoreto), 903 F.2d 180, 182 (3d Cir. 1990).

I should note in this regard that Mr. Haney testified that he was interviewed by Justice Department staff but never called before the grand jury -- a fact that would appear to substantially reduce, if not eliminate, the Rule 6(e) issues surrounding the substance of information provided by him to the Department. Furthermore, the Department’s investigation into the specific activities of Mr. Knight -- a covered official under the Independent Counsel Act -- could not have involved the convening of a grand jury or the issuance of grand jury subpoenas, since those acts are barred explicitly by statute. Thus, it would appear that, while the Department’s investigation of Mr. Knight’s $1 million payment may have paralleled or utilized the same staff resources as the Department’s campaign finance grand jury investigation, it was not a grand jury investigation for purposes of Rule 6(e)’s secrecy requirements, and thus the information gathered as part of that process would not be shielded from disclosure. See In Re Grand Jury Subpoena (Under Seal), 920 F.2d 235, 242-43 (4th Cir. 1990) (disclosure of information produced by criminal investigation paralleling, but independent of, grand jury investigation not violation of grand jury secrecy because not matter occurring before a grand jury); In Re Grand Jury Matter, Catania, 682 F.2d at 63-64.

The Department’s seemingly dismissive attitude with respect to our referral and our follow-up questions evidences a disturbing lack of respect for our Committee and its processes. Our Committee has every right -- indeed, has a duty -- to make sure that the testimony it receives is the whole truth and nothing but the truth and that, when individuals may have crossed that line, appropriate law enforcement action is taken in order to protect the integrity of the Committee’s investigative processes and to deter similar abuses in the future. The Committee also has a legitimate interest in conducting oversight of the Department of Justice with respect to its decisions that impact or affect agencies or programs within the Committee’s jurisdiction -- in this case, the Federal Communications Commission. Apparently, the Justice Department sees things quite differently.

The Department’s delay in responding to our follow-up inquiries also has, rather conveniently, created a situation in which the Independent Counsel Act now has recently expired, thus relieving the Attorney General from the clear duty to appoint one to investigate Mr. Knight. However, the expiration of this Act will not reduce her accountability for failing to enforce Federal laws, and I look forward to re-submitting this criminal referral when a new Attorney General -- one whose judgment has not been questioned by a bipartisan array of Members of Congress -- is sworn in.

Apart from the questions surrounding Mr. Knight, I also am concerned about the Department’s seven-month delay in acting on other aspects of our criminal referral relating to the activities and fee arrangements of Mr. Haney and Mr. Sasser, many of which have undisputed fact patterns and only raise questions of law. For example, Mr. Sasser does not deny that he had what was, in essence, a million-dollar fee arrangement with Mr. Haney that depended upon the successful closing of the Portals project. Rather, his purported defense is that the law barring contingent fees on Federal contracts does not govern their fee arrangement because the successful execution of the Federal contract in this case was only one of several events that had to occur before he would be paid. Thus, the legal question is whether a contingency fee that has as a condition precedent the successful signing of a Federal contract violates the ban on contingency fees. If the Department’s view is that such clearly evasive activity escapes the legal ban, then it is important for Congress to be promptly advised of such so that we can consider taking appropriate legislative action. I am sure all would agree that the evils against which the existing ban is designed to protect are just as applicable in the scenario admitted to by Mr. Sasser and Mr. Haney.

In addition, the question of whether Mr. Sasser’s admitted agreement and acceptance of a $1 million contingent payment, while a U.S. Ambassador, for services rendered on a matter clearly involving the Federal government violated Federal criminal ethics law also is primarily answered through legal interpretation rather than a detailed factual investigation and analysis. And the referral contains evidence suggesting that Mr. Haney and Mr. Sasser may have committed the quite serious offense of perjury in their sworn testimony before my Subcommittee about these and related events. In response to Committee staff inquiries about the status of these aspects of our referral, all the Department will say is that they are still under review -- somewhere in the black hole that seems to envelope all politically-sensitive enforcement matters at the Department of Justice.

At least I can say that Chairman Bliley and I are in good company. Charles LaBella -- the esteemed Federal prosecutor and former head of Justice’s campaign finance task force who authored a lengthy memorandum arguing how the evidence warranted the appointment of an independent counsel to review the fundraising activities of the Clinton-Gore Re-election Campaign -- was recently interviewed about his experience dealing with Janet Reno’s Justice Department. He said that his memorandum basically was ignored by Reno, whom he thought already had made up her mind on the issue. He said no one called him to ask him any questions about his memorandum or recommendation. To him, it seemed that no one followed up on it at all. That’s exactly what I believe happened with our Portals referral, as well as the FDA-related referral I discussed earlier, and I think the notion that such determinations are simply unreviewable, and that those who make them are effectively unaccountable, must be changed.

I don’t believe that Congress ever intended for Rule 6(e) or any vague assertion of “law enforcement sensitivity” to act as such a complete bar to any and all oversight of the Justice Department and, if that’s Justice’s view of the world, then maybe Congress needs to step in and make its view of this matter more clear. As we move toward a brave new world without an Independent Counsel Act -- a development that I personally favor -- the importance of Congressional oversight of the Department of Justice will only increase. We now must take the necessary steps to remove the shackles that prevent us from doing our job.

Thank you, Mr. Chairman, and I’d be glad to answer any questions that you or the other Members might have.

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