[Congressional Record Volume 140, Number 145 (Friday, October 7, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
  INQUIRY INTO POTENTIAL CONFLICTS OF INTEREST WITH THE SECRETARY OF 
                                COMMERCE

  (Mr. CLINGER asked and was given permission to address the House for 
5 minutes and to revise and extend his remarks.)
  Mr. CLINGER. Mr. Speaker, I take this time reluctantly but out of a 
sense of frustration, Mr. Speaker, because of a project that we have 
had underway in the Committee on Government Operations for some time, 
and have found ourselves unable to get the information we need in order 
to resolve an apparent conflict of interest, or apparent conflicts of 
interest with a member of the President's Cabinet.
  The Committee on Government Operations, on which I am pleased to 
serve as the ranking Republican member, is charged, among other things, 
with ensuring the ethical running of the Government. As part of that 
responsibility we are charged with ensuring that no conflicts exist and 
Cabinet-level officials are required to file financial disclosure 
reports upon entry into service annually that they are not in any way 
put in a situation where they may be in a conflict of interest. Those 
reports report their assets, their transactions, their liabilities and 
report positions that are held outside of the Government. As a part of 
our review of Secretary of Commerce Brown's holdings, they have 
revealed to us what appeared to be a potential conflict of interest. 
Let me just say what I feel that conflict appears to be, and that is 
that the Secretary has large financial interests in the information and 
communications area. He has had or holds a number of interests in 
telecommunications and in communications interests.
  Why is that a conflict of interest? Because the Secretary, as the 
Secretary of Commerce, has a significant role to play in the 
development and implementation of policy in that sector. The Secretary 
is responsible under the law for the National Telecommunications and 
Information Administration, for the International Trade Administration, 
and both of the above, Mr. Speaker, have significant roles in the 
development of the information highway, which is a major initiative of 
this administration.
  He is also in his capacity as Secretary of Commerce cochairman of the 
U.S. Advisory Council on the National Information Infrastructure.
  Over the past 8 months we have attempted to resolve or get answers to 
these appearances of potential conflicts, which I think are very real. 
However, the Secretary has consistently refused to answer questions 
about these holdings, and that has gone on now for a period of about 8 
months. Apparently the Secretary is determined that he is not 
accountable to Congress or to the American public with regard to his 
holdings in what seems to be a very apparent conflict of interest.
  As a result of that I have called for, and 2 days ago sent letters 
asking for two independent investigations of these matters which we 
have not been able to resolve in the Committee on Government 
Operations. First I have directed or asked the Department of Commerce 
inspector general to determine whether the Secretary's personal 
financial holdings during his tenure as Secretary pose any conflicts of 
interest with his financial responsibilities. I have further asked and 
directed a letter to the Office of Government Ethics to ask them to 
seriously evaluate the ethics program at the Commerce Department, 
because the department's ethics officials failed to obtain the 
necessary information to satisfactorily review and analyze Secretary 
Brown's financial holdings prior to certifying on his financial 
disclosure reports that no conflicts exist.
  That is the bottom line. We are really trying to determine if there 
is a conflict.
  We are not doing this, I must say, as any Republican witch hunt. We 
are not out to get the Secretary. We are just out to try and get some 
information.
  To give an example of how we have tried to get this information, back 
in February of this year I sent a letter to the Secretary asking very 
specific questions about his interests in companies in the 
communications and information area given his responsibilities as 
Secretary of Commerce in this field. I did not allege any wrongdoing. I 
still do not allege any wrongdoing. I simply stated that the potential 
appearance of a conflict needed to be alleviated in order to alleviate 
my concerns. I received no response from the Secretary. That was back 
in February. Instead, on March 2 of last year I received a letter form 
Barbara Fredericks who is the assistant general counsel at the 
designated agency, the ethics official at the Department of Commerce. 
Her response ignored most of my specific questions. She suggested that 
I wait for 3 months until May of this year to view the Secretary's 1993 
incumbent financial disclosure report which would then be released.

                              {time}  2220

  Having really not gotten any satisfactory answer, on March 23 of this 
year I wrote to the Secretary to emphasize the lack of responsiveness 
to my February letter as well as reiterated my original questions about 
what did he hold, when did he hold it, when did he get rid of it, if he 
did get rid of it, and so forth. Again, this time I got no response 
from the Secretary for the second time. This time I received a letter 
from Ginger Lew, general counsel of the Department of Commerce, on June 
1, 1994; she enclosed a copy of the Secretary's financial disclosure 
statement of 1993, filing answers to the questions raised, she said, in 
my letter of March 23.
  Frankly, it was totally unsatisfactory. There were few questions that 
were answered, and it raised many additional questions.
  The staff, my staff on Government Operations, then met with Miss Lew 
and Miss Fredericks in an attempt once again to answer these 
outstanding questions. They saw no reason for such a meeting and 
declined to attend a meeting with me. Finally, with much reluctance, 
they agreed. They informed me that the bulk of the information 
requested was beyond the scope of the designated agency ethics 
officer's responsibility and, therefore, they could not provide me with 
the information.
  Actually my requests from the word go were directed to Secretary 
Brown, not to any ethics officer or to anyone else in the Commerce 
Department, but the Secretary or somebody referred the letter to the 
ethics officer to respond.
  The bottom line is we did not get any answer.
  Then on September 9 of this year we finally received a response from 
the Secretary himself after 8 months who claims that my requests are no 
longer relevant, because he had divested his interest in most of the 
companies in question. That assertion, Mr. Speaker, fails to recognize 
accountability under the Government ethics statutes during his entire 
tenure in office and, in fact, from his ethics report, it is not clear 
whether in fact he has divested his interest in many of these holdings.
  So what interests and activities has he been involved in that we 
would like to get some answers to? That is why I am here tonight. I 
have not gone public with this; I have not tried to make political hay 
out of it or publicity out of it. I have just been trying to get some 
answers, and having been foiled at every turn, I chose this forum to 
try and get the attention of the Secretary to try and get some response 
to some questions.
  He has held or holds interest in the Boston Bank of Commerce and 
Boston Bank of Commerce Associates, where he indicated in his initial 
filing that he had a $15,000 to $50,000 interest in the Boston Bank of 
Commerce Associates and a directorship in the Boston Bank of Commerce. 
His incumbent financial disclosure report in 1993 retained his interest 
in the Boston Bank of Commerce Association but resigned his 
directorship in the Boston Bank of Commerce. I know this gets very 
convoluted and very complex, but the Secretary never actually asked for 
a waiver for his interest in the Boston Bank of Commerce.
  He said he was going to ask for a waiver. No such waiver was ever 
filed. Miss Lew, who we talked to, claimed the Boston Bank of Commerce 
Associates is a holding company for Boston Bank of Commerce. However, 
despite repeated requests, no written verification has ever been 
provided. We would like to get some verification.
  The waiver, as written, referred only to the Boston Bank of Commerce, 
not to the Boston Bank of Commerce Associates.

  The Secretary continues to have substantial interest in a company, in 
an industry, the banking industry, which could be affected and very 
clearly could be affected by the policies the Secretary develops and 
implements in his capacity as the Secretary of Commerce of the United 
States.
  The second holding which we have questions about but have not 
received answers for has to do with the First International 
Communications Co. When he became Secretary of Commerce, Mr. Brown 
showed that he had a $500,000 to $1 million interest in an outfit 
called First International Communications, Inc. No waiver was ever 
asked or received from the White House for that interest, and in light 
of this very large financial interest, we asked him to provide the 
client list, the nature of what were indicated as international-
domestic consulting and investment services, that the company provided 
to their clients, the names of the officers, the major stockholders, 
the company's net worth, the company's current valuation, and the 
nature of the Secretary's financial interest.
  In response, Miss Fredericks at Commerce on behalf of the Secretary 
said, and I am quoting, ``With regard to First International 
Communications, the Secretary's sole financial interest in this entity 
is that he owns an equity interest.'' Well, that was apparent from what 
he said on his report; he owns an equity interest.
  But the committee staff went to other sources, and what we discovered 
at Dunn and Bradstreet revealed that First International 
Communications, Inc., was just a trade name for Corridor Broadcasting 
Corp., which is clearly involved in the telecommunications-
communications industry, and ironically, in response to another of my 
questions, Miss Fredericks stated, ``The Secretary does not have, nor 
has he ever had, a financial interest in Corridor Communications,'' a 
clear conflict for which we are still waiting for an answer to resolve 
why we were told he did not have any interest in Corridor 
Communications but, in fact, Corridor Communications is basically the 
name of First International, which is a major communications company in 
which he had a $500,000 to $1 million interest.
  Pursuant to Miss Lew's suggestion, we looked to the incumbent report 
to find clarification about First International. The only information 
provided was that the Secretary sold his interest in First 
International on or before December 31, 1993. That made no sense, 
frankly; because Miss Fredericks informed me on March 2, 3 months 
later, the Secretary had an equity interest in First International. So, 
you see, the plot thickens. It gets very, very complex. We get 
confusing, conflicting answers about the nature of the Secretary's 
interests and when he had them and when he got rid of them.
  Mr. WALKER. Mr. Speaker, will the gentleman yield?
  Mr. CLINGER. I am happy to yield to the gentleman from Pennsylvania.
  Mr. WALKER. Mr. Speaker, has the Secretary been willing to cooperate 
with you in resolving these matters, where this is a very confusing 
interlocking of relationships?
  Mr. CLINGER. That is why we are here tonight, frankly. As I said at 
the beginning, I am reluctant to really come to the floor with this, 
because we have been trying to get some resolution of these questions, 
which, I mean, I have got to say very frankly that the Secretary's 
financial statements which he filed when he became Secretary and which 
he has filed subsequently are misleading, do not give a clear picture 
of what his holdings are, the extent of those holdings, when they are 
sold, if they were sold; you know, holdings appear on his statement 
which then the next year disappear, and yet there is no indication of 
how they were gotten rid of, what happened to them.
  Mr. WALKER. Are those financial disclosure forms the same as the ones 
we file?
  Mr. CLINGER. Exactly the same.
  Mr. WALKER. Are not there supposed to be places, as I recall, on that 
form for saying whether or not you sold off asset or bought an asset in 
the previous years? You mean, those particular parts of the financial 
disclosure form are not properly filled out?
  Mr. CLINGER. They just disappear. Of course, you are not required to 
report a sale if it results in less than $1,000 coming back to you, but 
these were interests that were $500,000 to $1 million, $15,000 to 
$50,000. Suddenly they just disappeared. There is no indication of who 
now owns them or whether the Secretary still owns them.
  Again, I say, you know, what he owns or does not own is not really 
relevant. What he owns that has relation to the telecommunications-
communications industry and the new massive development that we are 
going to have in the telecommunications superhighway, I think, is 
relevant and deserves some answers. I mean, that is all we are trying 
to get at is: Is there a conflict or not?
  Mr. WALKER. Is not this the kind of thing that would typically be 
subjected to some congressional hearings when these kinds of questions 
arise with regard to a Cabinet official?
  Mr. CLINGER. I would think that would be an appropriate thing to do. 
Clearly, I am going to be calling for that and asking for those 
hearings in the next session of Congress, because we have, frankly, 
been frustrated at every turn to get the answers, and I really have 
tried very hard to get a response.
  Mr. WALKER. The committee, the Committee on Government Operations in 
the personage of the chairman, has not been willing to use the subpoena 
power of the committee to try to get some of these records?
  Mr. CLINGER. We have not gone to that route. However, I think that 
may be what we are going to have to do in order to get this. Because, 
frankly, the Secretary, I think, has shown, you know, basically a 
contempt for legitimate requests of a committee that has oversight over 
these kinds of responsibilities, has not been willing to give us the 
barest understanding of it. I was, frankly, not suspicious of anything 
really involved. I really just said, ``Look, there is a parent here. 
Let us clear it up.'' That has been 8 months ago. We are now 8 months 
down, and we keep getting this sort of misdirection, ``No, we cannot 
tell you that; no, we told you all we are going to tell you; we are not 
going to give you any more information,'' We have reached a stonewall 
which brings me to the floor tonight.

                              {time}  2030

  Mr. WALKER. You know, I remember from some of the work that the 
gentleman was doing over the past several months that he turned up some 
concern about Secretary Brown having association with a woman by the 
name of Yolanda Hill, who within the last year defaulted on a loan 
taken over by the FDIC which resulted in a $23 million loss to the 
American taxpayers. Has the gentleman's investigation resolved the 
matter of that loan and that loss?
  Mr. CLINGER. The very short answer to that is no, we have not been 
able to resolve that. That is one of the other questions that still 
remains hanging out there to which we do not have answers. Yolanda Hill 
was and may still be actively involved in two of the companies which 
were or may still be owned by Secretary Brown, First International and 
Harmon International. As I stated before, the purposes of these 
companies and the relationship of Yolanda Hill remain unclear despite 
our efforts to try to get them resolved. The Secretary refused to 
answer my questions about their relationship. In addition, the 
Secretary has an outstanding promissory note to a company called Noh, 
Inc. Our sources have told us that Yolanda Hill is involved in Noh, 
Inc. I might add that at the time that Yolanda Hill was defaulting on 
that loan which the gentleman mentioned which did result in the loss to 
taxpayers of some many millions of dollars, she was at that very time 
contributing $75,000 to the Democratic National Party in soft money.
  So, again, these are a number of questions that we really feel----
  Mr. WALKER. I believe the gentleman said in his answer that the 
Secretary has refused to answer his questions about the relationship 
and some of these troubling problems. The gentleman has written him 
specifically about this or he has inquired, and what has he--has he 
just refused to answer the letters?
  Mr. CLINGER. Basically the first two letters we wrote we got--we were 
siphoned off onto the designated agency ethics officer, who was 
nonresponsive to the questions we asked. The final letter, which we 
received a couple of weeks ago, basically said, ``You got all we are 
going to give you.'' This was from the Secretary, and he said, ``You 
got all we are going to give you. We are not going to give you any 
further answers. You have got my ethics report which I filed, my 
disclosure statement.'' The disclosure statement is totally inadequate 
because it does not show what disposition was made of the interest in 
telecommunications companies that showed up on the previous report. So 
it is not adequate, and that is why I am here. I am just trying to 
force some action, some response to the questions that we have raised.
  Mr. WALKER. Let me just try to clear something here for the record. I 
think maybe the gentleman has had some correspondence, as I recall, 
with the designated agency ethics officer, which is what the gentleman 
just referred to, I think. And that ethics officer--that ethics officer 
came up to the Hill, and you were informed that you had to ask the 
Secretary the questions about his financial holdings directly.
  Mr. CLINGER. That is right. The ethics officer said, ``We can't 
answer those questions, those questions you would have to ask the 
Secretary.'' Of course, we asked the Secretary because the letter we 
wrote was directed to the Secretary. He chose not to answer them, 
referred them to the ethics officer, who then said, ``We can't answer 
those questions, those can only be answered by the Secretary.''
  So, you know, I feel, as I say, that I have been run around in a 
circle in this whole thing because we have been trying quietly, not in 
the glare of publicity, trying to get some answers. But on February 10 
I sent the Secretary questions, the questions were referred to the 
ethics officer by the Secretary, I presume, because the letter was sent 
to him and the ethics officer came up to Capitol Hill and we met for 
some time, got no answers to the questions, and we wrote other letters 
and got no answer, which brought me to the floor tonight.
  Mr. WALKER. Let me see if I can understand the merry-go-round. On the 
merry-go-round, you write a letter to the Secretary, the Secretary 
refers it to the ethics officer, the ethics officer comes and talks to 
you, and he says that what you have to do is talk to the Secretary. So 
when you go to the Secretary, the Secretary says he is not going to 
answer, you have to talk to the ethics officer, and the ethics officer 
then comes back and says that you have to talk to the Secretary, and 
round and round and round you go and nobody ever answers.
  Mr. CLINGER. That is why I am here tonight, because I really feel we 
have got to break this daisy chain of nonresponse which we have been 
getting for the last 8 months. So, as a result of that, I have now, as 
I indicated earlier in my response, I requested the Office of 
Government Ethics to look into whether the ethics officers in the 
Department of Commerce are doing their job.
  Second, I have requested the Commerce Department inspector general to 
try to get answers to the questions that I have been asking now for 8 
months and have not been able to get a response to.
  Mr. WALKER. I will tell you what I find disturbing in all this. These 
are the kinds of questions that should be asked by the appropriate 
committees of the Congress and typically would be asked except that in 
instance after instance on Capitol Hill this particular Congress has 
refused to ask these kinds of questions to officers of this 
administration. And I think as a result we now have almost trial by 
newspaper headline, as some of these things then do leak out and people 
are put through the mill of innuendo about what is going on. Far better 
that we would hold some hearings and properly handle these things. It 
seems to me the gentleman has legitimate questions that should be posed 
by the committees of the Congress, answered by the Secretary.
  If he has good answers for them, that clears up the matter 
immediately. It is done on the public record that way, it clears up the 
matter immediately and we do not have to go through the kind of 
exercise we are going through here tonight.
  Mr. CLINGER. It could have been done 8 months ago. It could have been 
given 8 months ago, these answers. But I think it raises a broader 
question, and that is where you do have the executive branch and the 
legislative branch both in the control of one political party, how do 
we really assure that we conduct--that we can conduct oversight to make 
sure everything is done properly?
  Well, that is not the case, for example, in the last administration. 
We had a Republican executive branch and a Democratic Congress, the 
Congress had the subpoena power to compel the answers to the questions.
  That is not what we have at the present time. That has made our job 
much more difficult, which is why I think what we are raising here is 
really a broader question what is the right of the minority to know, 
what is the right of the American people to know, when there is an 
effort to not provide information?
  That is really what the broader question is that is raised by our 
example here of trying to get some information from Secretary Brown. I 
think we will ultimately proceed to get that information, but it has 
taken too long and it has been too difficult to acquire, and we really 
need to, I think, address the broader question.
  Mr. WALKER. I thank the gentleman. I congratulate him for the work he 
has done and the amount of time he has spent on this investigation. It 
seems to me he raises some very troubling questions here, questions 
that deserve answers, not just for the Congress, but the American 
people deserve answers to these questions because the conflicts of 
interest that occur in a department like the Commerce Department are 
matters then that affect the whole of the public. Middle-class America 
does deserve to have answers to questions as troubling as the ones that 
the gentleman raised tonight.
  Mr. CLINGER. I thank the gentleman. I think that really is the bottom 
line. We do have responsibility to assure that decisions that are made 
by poicymakers are made without concern for personal aggrandizement and 
where you have at least a suggestion that those decisions, policy 
decisions, could be influenced by financial holdings in industries that 
may be benefited or harmed by decisions that you make, I think we 
desperately need to have that information. And the American people 
deserve to have it to be sure that the decisions are unbiased.
  I thank the gentleman, and I yield back the balance of my time.

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