[Congressional Record Volume 141, Number 19 (Tuesday, January 31, 1995)]
[House]
[Pages H958-H962]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             INVESTIGATION OF COMMERCE SECRETARY RON BROWN

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 1995, the gentleman from Indiana, [Mr. Burton] is recognized 
for 60 minutes as the majority leader's designee.
  Mr. BURTON of Indiana. Mr. Speaker, let me first say that I just 
listened with great interest to my colleague from Ohio. I think she is 
right on the money.
  I would like for my friends who are paying attention to this special 
order to know that this is a bipartisan concern about the circumvention 
of the will of the people and the will of the Congress. I think it is 
wrong.
                              {time}  2010

  Mr. Speaker, there were many of us that worked on the draft 
legislation for the loan guaranty program with Mexico. In the draft 
legislation we had many conditions spelled out to protect the American 
taxpayer and to put in some other things that were very important to 
our hemisphere.
  I am the chairman of the Subcommittee on Western Hemisphere Affairs 
of the Committee on Foreign Affairs. We put things in there that we 
thought would put the heat on Castro in Cuba and stop Mexico from 
giving aid, direct or indirect aid to Castro. We wanted to put $3 
billion in hard assets in American banks to protect American taxpayers 
against a loss or a default. All those things are circumvented by this 
Executive order.
  I think the gentlewoman is right on the money. The people of this 
country ought to be outraged, as well as their 
[[Page H959]] Representatives in the Congress. I congratulate the 
gentlewoman on her fine remarks.
  Tonight I want to talk about another subject, however, because I 
think it is very, very important and it bears upon the credibility of 
this Government and this administration. The Secretary of Commerce, Mr. 
Ron Brown, who is the former chairman of the Democratic National 
Committee, is once again under fire by the media for possible 
improprieties that took place since he became the Secretary of 
Commerce. However, before I get into that, I want to talk a little bit 
about Ron Brown's background, because I think it is extremely important 
that my colleagues know what this gentleman has done over the past 
several years.
  Mr. Speaker, back in the early 1990's, in 1991, Ron Brown was 
involved with an organization called the Chemfix Technologies Corp. The 
Commerce Secretary has a history of questionable business dealings. 
This is one of them. None of the charges have been adequately 
investigated by the FBI or this body regarding Chemfix or any of these 
other allegations I'm going to talk about tonight. We need to have 
answers to these questions.
  In 1991, columnist Michael Kinsley wrote about Brown's conflicts of 
interest in the Washington Post. Kinsley's allegations were followed by 
a television report on ``20/20.''
  While chairman of the Democratic National Committee, Brown was a 
partner in the law firm of Patton, Boggs, and Blow in Washington, DC. 
This firm represented BCCI here in the United States.
  Brown was also a member of the board of directors of this company, 
Chemfix Technologies, a Louisiana-based company that helps cities 
dispose of sewage. Right when the Democrat National Convention was 
being decided, the committee was meeting to decide whether they were 
going to hold its 1992 convention in New York, that city gave Chemfix a 
$210 million contract to dispose of sewage from New York. This deal was 
made despite complaints from numerous other cities about Chemfix's poor 
operations, their past performance.
  Right after the deal was struck, before the convention, Ron Brown 
purchased 5,000 shares of stock in this company. The ``20/20'' report 
on Chemfix stated that the city of New Haven was so dissatisfied with 
Chemfix's performance that it tried to get out of the deal. Chemfix 
refused, and Ron Brown made $100,000 on the stock options. Brown's 
firm, Patton, Boggs, and Blow, also made hundreds of thousands of 
dollars doing Chemfix's legal work. This all happened during Brown's 
tenure as chairman of the Democrat Party.
  In responding to Kinsley's column, Brown stated that he had nothing 
to do with the fact that Chemfix was awarded the $210 million New York 
contract, and that the contract played no role in the selection of New 
York City as the site of the 1992 Democrat convention. Right. But as 
Kinsley wrote, ``There is only one reason a Louisiana sewage company 
would want a Washington lawyer high in Democrat politics on its board, 
and it's not because of his knowledge of sewage.'' That is the first 
time, not the first time, but it is the first glaring example of some 
possible improprieties on the part of Mr. Brown.
  Then, in 1993, a gentleman named Binh Ly from Florida came to see me 
to talk to me about a deal that was allegedly made between Mr. Brown 
and a man named Mr. Hao and the Government of Vietnam to normalize 
relations with that country, even though we had never had an accounting 
of the POW-MIA's that are still missing. Mr. Ly said that the 
Government of Vietnam had promised to give Ron Brown a large sum of 
money, $700,000, as a down payment for his influence to normalize 
relations with that country.
  Members will recall that this country had made a commitment under 
President after President after President since the Vietnam war that we 
would never
 normalize relations with Vietnam until we had a full accounting of all 
those POW's and MIA's. It still has not been done, and yet the 
normalization process has started because of Ron Brown's efforts.

  In February of 1993 Binh Ly, this gentleman I'm talking about, was 
interviewed by the FBI. The FBI gave him a lie detector test, a 6-hour 
lie detector test, which he passed.
  The FBI, after the lie detector test, gave him a briefcase equipped 
with a tape recorder and a beeper so he could tape conversations 
between him and Mr. Hao about Mr. Brown's activities. In April of 1993, 
the FBI mysteriously took the beeper and the briefcase back, claiming 
budget cuts, and discontinued the investigation.
  I might add that Mr. Ly told me that he asked the FBI ``Why are you 
taking the beeper back, because we are trying to get evidence on Mr. 
Brown,'' and the FBI man winked at him and said it was, it is because 
of budget cuts, and the inference was he was getting orders from the 
top to curtail the investigation into Mr. Brown.
  A grand jury investigation was not begun until after an extensive 
article about Ron Brown's Vietnam contacts had been published in the 
U.S. News and World Report in the summer of 1993. After denying, Mr. 
Brown, Ron Brown, Secretary of Commerce, after denying that he had 
never met with Mr. Hao, Ron Brown admitted later that year in 
September, 1993, that he met with him not once, not twice, but three 
times, the third time being at the Department of Commerce, just like 
Binh Ly claimed.
  In October of 1993, ABC News and other news organizations reported 
that the FBI had obtained two notes faxed from Mr. Hao to the 
Vietnamese Government stating that his first two meetings with Ron 
Brown had been a big success, further verifying Binh Ly's statements.
  Also in October the New York Times reported that the FBI had 
uncovered evidence of wire transfers indicating that the Vietnamese 
Government was preparing to establish a special bank account in 
Singapore, backing up Binh Ly's statements that the Vietnamese 
Government was going to pay Ron Brown $700,000 through this bank in 
Singapore.
  They had proven, the FBI had proven, that there was a bank in 
Singapore, that there were wire transfers, just as Ly said, and the 
amount was not disclosed, but we estimated, we believe it was the 
$700,000 that had been promised in the agreement.
  In December of 1993 the Federal prosecutor conducting the 
investigation in Miami, the grand jury investigation, attempted to 
terminate the investigation without even calling Binh Ly to testify.
  We contacted him and said that Binh Ly should testify because he was 
the principal witness, so the special prosecutor put Binh Ly before the 
grand jury only when he was ordered to do so by his superiors. This was 
clearly not a very aggressive prosecutor.
  I might add, this prosecutor was not the local U.S. District Attorney 
in Miami, whom you would normally think would conduct the grand jury 
investigation. It was a special assistant to Janet Reno, the Attorney 
General, who was ordered to go down there and conduct the grand jury 
investigation.
  They then said to me and other Members of Congress, they did not say 
Ron Brown was innocent. They said they did not have enough evidence, in 
their opinion, to indict him. Because they said they did not have 
enough evidence to indict him, then he was able to keep his job as 
Secretary of Commerce and everything went on as usual.
  The fact of the matter is, this Congress has never had a complete 
report on that investigation by the Justice Department. Now that we 
have a majority in this Congress on the Republican side, we are trying 
to get a complete documented report from the Department of Justice on 
the entire investigation, starting with the FBI. We are going to 
continue to work on that until we get to the bottom of it.
  Now we come to the latest allegations that have been in the paper 
this past week. These are pretty damning as well. These latest 
allegations are about a lady named Nolanda Hill and Ron Brown, and are 
very serious and demand a very thorough investigation.
  In a nutshell here is what happened. A company owned by Nolanda Hill 
defaulted on a $40 million debt that the Federal Government inherited, 
the taxpayers inherited, from bankrupt savings and loans.
  At the same time, that same company was paying $12,000 a month to 
another company that was co-owned by Nolanda Hill and Ron Brown, so 
while 
[[Page H960]] she was defaulting on a $40 million obligation to the 
taxpayers of this country, and the same company that was in bankruptcy, 
she was paying $12,000 a month to another company in the same office 
that was owned by her and Ron Brown.
  The second company, First International Communications, was located 
in the very same office as the company that defaulted on the loans.
  Now let us talk about First International Communications. In the 
1980's Ron Brown and Nolanda Hill formed a partnership. They named it 
First International Communications. Nolanda Hill owned a second company 
named Corridor Broadcasting.
                              {time}  2020

  Corridor Broadcasting borrowed $26 million from two savings and loans 
in Texas and New Mexico to buy two television stations, one here in 
Washington, DC, WFTY, Channel 50, and the other in Needham, MA, WUNI, 
Channel 27. Corridor also borrowed an additional $23 million from 
another savings and loan.
  Nolanda Hill's company, Corridor, eventually defaulted, as I said, on 
both of the loans, the savings and loans failed, and the $40 million in 
bad debt was inherited by the taxpayers, the Federal Government.
  Interestingly enough, Corridor Broadcasting, Nolanda Hill's company, 
and First International Communications, the partnership between Nolanda 
Hill and Ron Brown, as I said, were in the same office. Ron Brown has 
stated repeatedly that he never invested any of his own money in First 
International. He also stated many times for the record that there were 
never any ties between Corridor Broadcasting and First International.
  However, it was just revealed this month that First International's 
only substantial source of income was the $12,000 a month in interest 
payments coming from Corridor Broadcasting on a loan of $875,000.
  Here you have Ron Brown saying there is no connection between the two 
companies, and yet there was a loan from one to the other and the 
defunct company that was in default to the taxpayers to the tune of $40 
million was paying $12,000 a month in interest to the other company, 
while Ron Brown said there was no connection.
  In other words, at the same time that Corridor Broadcasting could not 
afford to repay $40 million in debts that had been inherited by the 
taxpayers, it could still afford to pay $12,000 a month in interest to 
Nolanda Hill and Ron Brown.
  Ron Brown's lawyer has recently stated that Ron Brown did not know 
that First International had made a loan to Corridor Broadcasting and 
was not directly involved in First International's operations.
  Here are some questions that need to be answered:
  If Ron Brown was one of the two partners in the firm, how could he be 
ignorant of the firm's sole source of income? It is beyond 
comprehension.
  If Ron Brown did not invest any of his own money in First 
International, what was the purpose of including him in the 
partnership? Was it to use his influence, first as chairman of the 
Democrat Party and then as Secretary of Commerce?
  Three. Where did the $875,000 come from that First International 
loaned to Corridor Broadcasting? Nobody said where did that $875,000 
come from? Where did it come from?
  It has been alleged, as I said before, that the Government of Vietnam 
wanted to pay Ron Brown $700,000 for his influence to get the embargo 
on Vietnam lifted, and according to the FBI, there was an electronic 
transfer from the Government of Vietnam to this bank in Singapore, and 
here all of a sudden we have a mysterious $875,000 turning up that was 
invested into this corporation. And Ron Brown said he does not know 
anything about it.
  If Corridor Broadcasting could not afford to repay the taxpayers of 
this country, the Resolution Trust Corporation, and the Federal Deposit 
Insurance Corporation, how could it afford to pay $12,000 a month in 
interest to Secretary Brown and Nolanda Hill?
  Let us talk further about Ron Brown and this possible payoff that we 
were talking about. Ron Brown was nominated to be Secretary of Commerce 
in December 1992. He was confirmed by the Senate in January 1993. He 
owned a share of First International Communications throughout 1993, 
although he did not pay anything for it, but he owned a share in it. He 
did not pay anything for it.
  Listen to this. He owns a share in it and did not pay anything for 
it, yet he received roughly $135,000 in payments from First 
International in 1993. That is a pretty good investment. It didn't cost 
you anything and you get $135,000. This was the year that Corridor 
Broadcasting's loans were finally written off by the Federal 
Government.
  So while Corridor Broadcasting is going down the tubes, First 
International, which is getting $12,000 a month in interest payments, 
paid him another $135,000.
  In December 1993, he sold his share of the company back to Nolanda 
Hill because of the bad publicity, and, get this, he did not pay 
anything to own part of the company, but he got between $250,000 and 
$500,000 for his one share of stock.
  He got $135,000, then when he sells his share of
   stock back, he gets almost half a million dollars with no 
investment.

  However, it has just been revealed that in 1994, Nolanda Hill spent 
an additional $190,000 paying off personal debts of Ron Brown. Their 
attorneys state that this was part of the transaction in which 
Secretary Brown liquidated his holdings in First International.
  So we have got $135,000. We have got between $250,000 and $500,000. 
Now we have another $190,000. And all this with no investment.
  It is unclear if this $190,000 was part of the payment listed on 
Secretary Brown's 1993 financial disclosure statement or if it was in 
addition to that amount.
  Here are some questions:
  If Secretary Brown did not invest any of his own money in First 
International and most of its ventures were total failures, how could 
his shares be worth almost a half million dollars? Everything was a 
failure. He put no money into it. How could it be worth a half a 
million dollars?
  Did Nolanda Hill repurchase these shares at fair market value, or was 
this a gift to Secretary of Commerce Brown?
  Three. What was the total amount Secretary Brown received from 
Nolanda Hill? Was the $190,000 Nolanda Hill used to pay Ron Brown's 
debts part of the money reported on Secretary Brown's financial 
disclosure report for 1993 or was it in addition to that amount?
  Four. If Ron Brown did not invest any money in First International, 
then all the money he was paid when he divested himself should be 
considered a capital gain.
  Question: Did Secretary Brown pay capital gains taxes on all these 
funds, including the $190,000 paid to him last year to pay his debts?
  There is another corporation in this same office, a third one, called 
Know, Inc. Nolanda Hill owned a third company, Know, Inc. Oddly enough, 
Know, Inc. was in the same office as Corridor Broadcasting and First 
International.
  In 1992, Nolanda Hill loaned Ron Brown $78,000 through this third 
corporation.
  We have got $135,000, he got $190,000 and he got somewhere between 
$250,000 and $500,000. Through this third corporation he got $78,000 so 
he could pay off another debt. According to the Washington Post, Brown 
needed to repay a debt to the National Bank of Washington before his 
Senate confirmation hearings began.
  Nolanda Hill--now, get this--she loaned him $78,000 to pay off his 
debts. And now Nolanda Hill later forgave the debt and did not require 
Ron Brown to pay it back.
  So here he is now. He has got $135,000, $190,000, probably a half a 
million dollars, and now he has got $78,000 in a note that is forgiven. 
All with no investment.
  Questions:
  If Nolanda Hill could not afford to repay the taxpayers any of the 
$40 million she owed, where did she keep coming up with all this money 
for Ron Brown? Did Secretary Brown report this $78,000 as income on his 
financial disclosure statement? Did Secretary Brown report this $78,000 
on his income 
[[Page H961]] taxes, and why did Nolanda Hill have so many different 
companies, if they were all located in the same office? Could it have 
been to shield herself from paying off legitimate debts that the 
taxpayers are now paying to the tune of $40 million?
  The FDIC announced this week that they are launching an investigation 
of Nolanda Hill's defaulted loan. In addition, 14 Senators have written 
to Attorney General Reno to ask for a thorough investigation of this 
entire matter. A thorough investigation of this whole mess is 
absolutely necessary and an independent counsel is probably necessary. 
Congress in my opinion must also continue to investigate all of these 
nefarious activities or apparently nefarious activities of Ron Brown 
that have taken place for the last 5 or 6 years that have garnered him 
probably millions of dollars.
  I would just like to say that we have tried for the past couple of 
years to get an independent counsel to investigate the allegations of 
the Vietnamese affair and we have done that without success.
  We have brought to the attention of the gentleman from Pennsylvania 
[Mr. Clinger], the chairman of the Committee on Government Reform and 
Oversight, and I believe that the gentleman is already looking into 
this and hopefully we will have a very thorough investigation not only 
into these latest allegations against Ron Brown but also into these 
others.
  I hope the FDIC and the Internal Revenue Service will take a very 
close look at his ethics reports as well as his income taxes, because 
if all of that stuff is on his income tax reports, he must have paid a 
heck of a lot of money in the last couple of years.
                              {time}  2030

  Mr. FOX of Pennsylvania. Mr. Chairman, will the gentleman yield?
  Mr. BURTON of Indiana. I am happy to yield to my colleague, the 
gentleman from Pennsylvania.
  Mr. FOX of Pennsylvania. Mr. Chairman, I thank the gentleman for 
yielding. I would ask the gentleman from Indiana, if the Speaker will 
permit, a few questions if I may in regard to his presentation.
  First, does the law impute that the Commerce Secretary would be 
knowledgeable of the questionable transactions of his firm?
  Mr. BURTON of Indiana. Does the law require that?
  Mr. FOX of Pennsylvania. Would the law impute, in other words, based 
on the transactions the gentleman spoke of and the fact it was in his 
firm, would they automatically assume that the Secretary would have 
known?
  Mr. BURTON of Indiana. I would think that any investigative attorney 
would question highly a partner in a firm with these kinds of 
resources.
  Mr. FOX of Pennsylvania. Especially with the size of the amount.
  Mr. BURTON of Indiana. Not knowing about the activities of one of the 
partners, so it is beyond comprehension to me that Mr. Brown would not 
know of these activities.
  Mr. FOX of Pennsylvania. Would the gentleman further yield?
  Mr. BURTON of Indiana. Sure, I am happy to yield to the gentleman 
from Pennsylvania.
  Mr. FOX of Pennsylvania. Are members of the Cabinet required to file 
statements of financial disclosure?
  Mr. BURTON of Indiana. Yes; they are.
  Mr. FOX of Pennsylvania. Would the transactions that the gentleman 
listed or discussed here this evening be noted on the Secretary's 
financial disclosure form?
  Mr. BURTON of Indiana. Yes; I believe all of these activities should 
be very thoroughly documented in his report, and that is one of the 
reasons why I believe that the Senators and those of us in the House 
are asking the FDIC, and other agencies of Government to take a close 
look at those, and his income tax returns, because we question whether 
or not this stuff has been reported.
  Mr. FOX of Pennsylvania. Mr. Speaker, will the gentleman further 
yield?
  Mr. BURTON of Indiana. I am happy to yield.
  Mr. FOX of Pennsylvania. Based on the issue of credibility and 
questionable activities you have outlined, does this loss of confidence 
make it difficult for the Commerce Secretary to be fully effective, in 
your opinion?
  Mr. BURTON of Indiana. Yes; and I think one of the things that we 
should do is we should write a letter to the President, and I believe 
we will probably have one drafted sometime tomorrow asking the 
President to have the Commerce Secretary step aside while this 
investigation is taking place so it will not cast any aspersions on the 
administration. You know, the administration has had a lot of problems 
in the past year with not only allegations but proven allegations being 
made public on a number of administration officials, Web Hubbell and 
Mr. Altman and others, and Mr. Nussbaum, and as a result those people 
having been forced to resign, and I think the administration would be 
well advised to ask Mr. Brown to step aside. They do not have to ask 
him to resign his post if they do not want to, but ask him to step 
aside so he does not conduct any of his official duties while this 
investigation is taking place.
  Mr. FOX of Pennsylvania. Only the U.S. Senate has the right to 
confirm Presidential appointees and Cabinet members. What options does 
this House have to
 investigate a Cabinet member as far as you know?

  Mr. BURTON of Indiana. The chairman of the Government Operations 
Committee or Government Oversight and Reform Committee has the right to 
hold hearings on suspected inappropriate activity on the part of a 
member of the executive branch; much like the Banking Committee held 
hearings on the Whitewater investigation last fall.
  So, I think since the Resolution Trust is involved and a default of 
$40 million of taxpayers' money, then I think that possibly the Banking 
Committee, as well as Government Reform and Oversight Committee would 
have jurisdiction and we could both have hearings.
  Mr. FOX of Pennsylvania. So it is your opinion then that the Banking 
Committee under Jim Leach and Government Reform and Oversight Committee 
under Congressman Clinger could in fact hold appropriate hearings to 
get the appropriate and honest and fair information regarding this 
matter so Congress would have and the American people would have a 
proper view of these circumstances, am I correct?
  Mr. BURTON of Indiana. Yes, I think that should be done. And I also 
believe we should seriously consider urging that an independent counsel 
be appointed to thoroughly look into all of these activities I have 
alluded to. If we can get the Justice Department and FBI to give us a 
thorough accounting of what went on in the Vietnamese affair I talked 
about, I think that that probably would give Chairman Clinger in this 
particular case reason to hold hearings on that subject alone. I really 
believe that.
  But if that were not enough, then certainly these latest revelations 
would lead Chairman Clinger to hold not only hearings here, but also to 
urge that we have an independent counsel investigate this.
  Mr. FOX of Pennsylvania. If the gentleman will further yield, one 
final question. Inasmuch as the Federal Deposit Insurance Corporation 
is already conducting an investigation in a related portion of the 
matters you have raised before the House tonight, would the Commerce 
Secretary's involvement as part of the overall investigation be 
appropriate by FDIC, or do you believe it should be a committee of the 
House?
  Mr. BURTON of Indiana. I think the FDIC is looking into this already, 
because it involves taxpayers' moneys and loans from the Federal 
Government. And so I think that the FDIC is going to look into this at 
the request I believe of Chairman Clinger and others.
  I also think there should be an audit of Mr. Brown's tax returns 
because of the tremendous amounts of money and loans that were given to 
him and were forgiven, to see if they were declared as income.
  So I think there should be a number of agencies involved in this 
investigation: FDIC, the IRS, independent counsel, as well as the House 
and Senate Committees on Government Oversight.
  Mr. FOX of Pennsylvania. If the gentleman will further yield, I would 
say I know the Members of the House appreciate your bringing these 
issues forward because the very foundation of 
[[Page H962]] our democracy is we are a nation of laws and not men.
  And Congressman Burton, I appreciate your bringing this forward 
tonight. I hope you will continue to advise the House of whatever 
matters come before you or Chairman Clinger, so we are aware of what is 
happening and the American public has a chance to weigh in as well.
  Mr. BURTON of Indiana. I thank the gentleman from Pennsylvania for 
his participation in this special
 order, and I agree with him that we should continue these special 
orders to illuminate issues of national concern.

  One of the problems that we have in this country right now is there 
is not a great deal of confidence in government. I think the last 
election showed that very clearly. And when you have member after 
member after member of the administration quitting or being forced to 
resign under a cloud, it creates more doubts and concerns among the 
electorate and the people of this country. So I think what we have to 
do is reinstill confidence in them that the Government is honest, that 
the people that are running the Government in both the executive and 
legislative branches are honest, and if we find some wrongdoing, that 
needs to be brought out in the full light of day through hearings or 
investigations. And that is why we urged during the Vietnamese debacle 
there be hearings, but we were not in the majority at that time and 
could not get it done.
  Now that we are in the majority, we should have full and fair 
hearings. I do not think it should be we are tying him up and tar and 
feathering him and carrying him off over into the sunset. I think they 
ought to be fair hearings with fair questions being asked and expecting 
fair answers from Mr. Brown and his associates.
  But these things that are in the paper are going all across the 
country right now, and the people I am sure are shaking their heads and 
saying, ``Oh my gosh, there is another corrupt government official.'' 
And we need to get to the bottom of it and get to the bottom of 
questions like this.
  Mr. FOX of Pennsylvania. I hope the gentleman will get back to us 
through this forum of the special orders or within our Committee on 
Government Reform and Oversight because I know the gentleman from 
Pennsylvania [Mr. Clinger] has a full plate with many of the Contract 
With America items, but I know he has made a priority your discussion 
with regard to restoring public confidence in public officials. We look 
forward to hearing further.
  Mr. BURTON of Indiana. I thank the gentleman. Let me just say next 
week we will be taking a special order going into some other activities 
in the administration which I think will be of great interest to my 
colleagues.
  With that, I yield back the balance of my time.

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