[House Report 105-792]
[From the U.S. Government Publishing Office]
Calendar No. 271
105th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 105-792
_______________________________________________________________________
CONTEMPT OF CONGRESS AGAINST FRANKLIN L. HANEY
__________
R E P O R T
of the
COMMITTEE ON COMMERCE
together with
ADDITIONAL AND MINORITY VIEWS
on the
CONGRESSIONAL PROCEEDINGS AGAINST
MR. FRANKLIN L. HANEY FOR
WITHHOLDING SUBPOENAED DOCUMENTS
October 7, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
COMMITTEE ON COMMERCE
TOM BLILEY, Virginia, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
DAN SCHAEFER, Colorado RALPH M. HALL, Texas
JOE BARTON, Texas RICK BOUCHER, Virginia
J. DENNIS HASTERT, Illinois THOMAS J. MANTON, New York
FRED UPTON, Michigan EDOLPHUS TOWNS, New York
CLIFF STEARNS, Florida FRANK PALLONE, Jr., New Jersey
BILL PAXON, New York SHERROD BROWN, Ohio
PAUL E. GILLMOR, Ohio BART GORDON, Tennessee
Vice Chairman ELIZABETH FURSE, Oregon
JAMES C. GREENWOOD, Pennsylvania PETER DEUTSCH, Florida
MICHAEL D. CRAPO, Idaho BOBBY L. RUSH, Illinois
CHRISTOPHER COX, California ANNA G. ESHOO, California
NATHAN DEAL, Georgia RON KLINK, Pennsylvania
STEVE LARGENT, Oklahoma BART STUPAK, Michigan
RICHARD BURR, North Carolina ELIOT L. ENGEL, New York
BRIAN P. BILBRAY, California THOMAS C. SAWYER, Ohio
ED WHITFIELD, Kentucky ALBERT R. WYNN, Maryland
GREG GANSKE, Iowa GENE GREEN, Texas
CHARLIE NORWOOD, Georgia KAREN McCARTHY, Missouri
RICK WHITE, Washington TED STRICKLAND, Ohio
TOM COBURN, Oklahoma DIANA DeGETTE, Colorado
RICK LAZIO, New York
BARBARA CUBIN, Wyoming
JAMES E. ROGAN, California
JOHN SHIMKUS, Illinois
HEATHER WILSON, New Mexico
James E. Derderian, Chief of Staff
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
------
Subcommittee on Oversight and Investigations
JOE BARTON, Texas, Chairman
CHRISTOPHER COX, California RON KLINK, Pennsylvania
Vice Chairman HENRY A. WAXMAN, California
JAMES C. GREENWOOD, Pennsylvania RALPH M. HALL, Texas
MICHAEL D. CRAPO, Idaho BART STUPAK, Michigan
RICHARD BURR, North Carolina ELIOT L. ENGEL, New York
BRIAN P. BILBRAY, California GENE GREEN, Texas
GREG GANSKE, Iowa JOHN D. DINGELL, Michigan
TOM COBURN, Oklahoma (Ex Officio)
TOM BLILEY, Virginia
(Ex Officio)
LETTER OF TRANSMITTAL
Dear Mr. Speaker: At several points during a Committee
investigation into the circumstances surrounding the planned
relocation of the Federal Communications Commission to the
Portals office complex, the Committee sought certain records
from Mr. Franklin L. Haney, whose company is a general partner
in the Portals partnership.
Despite more than five months of repeated attempts to
obtain Mr. Haney's cooperation, Mr. Haney refused to provide
the records voluntarily, forcing the Subcommittee on Oversight
and Investigations to authorize the issuance of subpoenas duces
tecum to Mr. Haney and three related companies under his
control. Mr. Haney did not dispute that he had possession or
control over all of the subpoenaed documents, but he
nonetheless failed to produce any responsive documents on the
subpoena return date--even after his meritless objections
concerning pertinency, attorney-client privilege, and
confidentiality as to some of the documents were heard and
overruled by the Subcommittee, in the presence of Mr. Haney's
attorney, at an open Subcommittee meeting on June 17, 1998.
Given his willful refusal to comply with the subpoenas and
the Subcommittee's rulings on his objections, the Subcommittee
proceeded to find Mr. Haney in contempt and reported the matter
to the Full Committee for appropriate action. On June 24, 1998,
the Full Committee met in open session to consider the
Subcommittee contempt report, and voted to adopt and submit the
enclosed report to the House of Representatives with a
recommendation that the full House cite Mr. Haney for contempt
and refer the matter to the designated U.S. Attorney for
prosecution under the Federal criminal contempt statute.
Three weeks after the Full Committee action, Mr. Haney
reversed his position and agreed to produce all documents
responsive to the subpoenas. Mr. Haney's subsequent production
of records to the Committee appears to meet his obligation of
full compliance. Accordingly, I have no present intention of
bringing this privileged report and accompanying resolution
before the House. I nonetheless believe it is important that
this Committee report, including the additional and minority
views, be filed with the House, so that it may serve as useful
precedent in future disputes with private or governmental
parties concerning the prerogative of the Committees of the
House to require the production of information pertinent to a
lawful congressional investigation.
Sincerely,
Tom Bliley, Chairman,
Committee on Commerce, U.S. House of Representatives.
C O N T E N T S
----------
Page
Transmittal Letter............................................... III
Introduction..................................................... 1
Facts, Background, and Chronology................................ 2
Authority and Legislative Purpose................................ 6
The Subpoenaed Documents......................................... 7
Objections to the Subpoenas by Mr. Haney......................... 8
A. Claims Regarding Pertinency of Document Requests.......... 8
B. Claims of Attorney-Client Privilege....................... 11
C. Claim of Client Confidentiality under Bar Association
Rules...................................................... 15
House Rules Requirements......................................... 16
A. Committee Consideration................................... 16
B. Roll Call Votes........................................... 17
C. Other House Rules Requirements............................ 21
Conclusion....................................................... 21
Appendix A: All Correspondence Between the Committee and Franklin
L. Haney....................................................... 23
Appendix B: Subpoenas Served Upon Franklin L. Haney.............. 74
Appendix C: June 16, 1998, Memorandum from the Congressional
Research Service, Library of Congress, entitled ``Assessment of
Committee Subpoenas for Documents''............................ 85
Appendix D: June 16, 1998, Memorandum from the Office of the
General........................................................ 107
Counsel, U.S. House of Representatives, entitled ``D.C. Rule of
Professional Conduct 1.6 and the Congressional Subpoena Power'' 107
Additional and Minority Views.................................... 117
Calendar No. 271
105th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 105-792
_______________________________________________________________________
CONTEMPT OF CONGRESS AGAINST FRANKLIN L. HANEY
_______
October 7, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______________________________________________________________________
Mr. Bliley, from the Committee on Commerce, submitted the following
R E P O R T
together with
ADDITIONAL AND MINORITY VIEWS
Introduction
After five months of attempting to gain documents and other
information voluntarily, the Subcommittee on Oversight and
Investigations of the Committee on Commerce voted on April 30,
1998, to authorize the issuance of subpoenas in furtherance of
the Committee's investigation into the circumstances
surrounding the planned relocation of the Federal
Communications Commission (FCC) to the Portals--a relocation
that has become embroiled in controversy over the possible use
of improper or illegal influence by certain key figures in the
$400 million deal. Pursuant to that authorization, Commerce
Committee Chairman Tom Bliley signed and had served, on June 4,
1998, four subpoenas demanding that Franklin L. Haney--whose
company Tower Associates II, Inc., is a general partner in the
partnership that owns the Portals buildings--and three
companies under his control produce specified documents before
the Subcommittee at its business meeting on June 17, 1998.
In the cover letter accompanying these subpoenas, Chairman
Bliley stated that Mr. Haney would be given an opportunity to
raise any legal objections he may have to the subpoenas and
have them ruled upon at that time by the Subcommittee, but that
he should be prepared to comply on June 17, under threat of
contempt, with the rulings on those objections. Chairman Bliley
also stated that Mr. Haney should provide his formal legal
objections to the subpoenas, in writing, by noon on June 9,
1998, including a document-specific log of any material being
withheld on grounds of attorney-client privilege. Mr. Haney
failed to meet that deadline. Approximately one hour before the
scheduled business meeting on June 17, the Committee received a
letter from Mr. Haney's attorney setting forth his client's
legal objections to each category of subpoenaed documents, but
failing to include any privilege log. The objections focused on
issues of pertinency, attorney-client privilege, and attorney-
client confidentiality, which were similar to the general
objections the Committee had received in response to its
numerous voluntary attempts to secure documents from Mr. Haney
since December of last year.
After debate and due consideration of these objections, and
based on legal counsel provided by the Congressional Research
Service, the House General Counsel's Office, and Committee
counsel, the Subcommittee overruled all of Mr. Haney's
objections. When Mr. Haney's attorney stated that his client
would not comply at that time with the Subcommittee's ruling,
the Subcommittee proceeded to hold Mr. Haney in contempt of
Congress, and directed the Subcommittee chairman to report and
refer the matter to the full Committee.
Mr. Haney's refusal to produce the subpoenaed documents is
without legitimate basis and is a direct affront to the lawful
investigative functions of Congress. The House of
Representatives must not permit such defiance to go
unchallenged or unpunished. To do so not only would undermine
this particular investigation into the Portals, but also would
set a damaging precedent for other ongoing or future oversight
by House committees by sending a signal to would-be
obstructionists that the House will not act to enforce its
constitutional rights to obtain all information pertinent to
its lawful investigations. Upon adoption by the Commerce
Committee and the House, this report and resolution would
direct the Speaker to certify and refer the matter to the U.S.
Attorney for the District of Columbia for prosecution in
accordance with the statutory provision for contempt of
Congress, 2 U.S.C. Sec. 192. That offense carries a sentence of
no less than one month and no more than one year in prison,
plus fines up to $100,000.
Facts, Background, and Chronology
The Committee's Inquiry into the FCC's Planned Move to the Portals
In October 1997, Business Week reported, in a detailed
investigative account, about certain troubling circumstances
surrounding the planned relocation of the FCC to the Portals--
entitled ``Did Gore Open A Door? A friend of Al, a sweet real
estate deal from the feds, and a $230,000 campaign
contribution.'' In particular, the article suggested that, at
the request of Mr. Haney and his partners, there were
significant and uncommon changes made in 1996 to the Portals
lease with the General Services Administration (GSA). The
article also suggested that the FCC dropped its longstanding
and vigorous opposition to the move after Mr. Haney became
involved in the project in the Fall of 1995. The article quoted
a lawyer involved in the negotiations as stating: ``It was
remarkable. They [the FCC] were adamantly opposed, and then
suddenly, boom, in early 1996, they were for it.'' The article
described Mr. Haney as a Tennessee real estate developer and a
``longtime friend of Vice-President Al Gore and his family,''
who--one month after closing the deal with GSA and joining the
Portals partnership--``contributed $230,000 to the Democratic
National Committee and five state Democratic parties.''
Several weeks after the publication of this article, and
while pursuing an unrelated oversight matter involving the
Department of Energy, Committee staff was told by Mr. Bernie
Wunder, former managing partner of the lobbying firm Wunder,
Knight, Levine, Thelen & Forscey (the Firm), that one of its
top partners--lawyer/lobbyist Peter Knight, who served as
campaign manager for the 1996 Clinton-Gore Re-Election
Committee--billed and received in early 1996 a $1 million
``performance'' payment from an unnamed client for certain work
performed in 1995. Subsequently, in a Time magazine article,
Mr. Haney acknowledged that he had paid Mr. Knight a fee of $1
million for, according to the magazine, ``general legal work on
the [Portals] project.'' However, Mr. Haney and Mr. Knight now
both claim that the $1 million fee was for roughly a dozen
different projects, including the Portals, over a three-year
time period commencing in June of 1995 and ending this year.
After the Time magazine article appeared, Committee staff
attempted to contact Mr. Haney on several occasions to confirm
whether he was the source of the $1 million payment and, if so,
for what services the payment was made, but Mr. Haney did not
respond to these repeated inquiries. Because of Mr. Haney's
failure to respond to the Committee's informal overtures, on
November 7, 1997, Commerce Committee Chairman Tom Bliley and
Subcommittee Chairman Joe Barton sent the first of several
letters to Mr. Haney requesting information about these
allegations. In particular, the chairmen referred to and
repeatedly quoted from the Business Week and Time articles, and
then stated: ``If you paid Mr. Knight $1 million in one lump
sum as a performance fee [on the Portals], we would have
serious questions about the services for which you were paying
Mr. Knight on this federal contract, which involves an agency
within the Committee's oversight responsibilities.'' In a
subsequent letter explaining further the Committee's interest
in this matter, the chairmen told Mr. Haney's attorney that
``[t]his Committee has both the right and the duty to inquire
as to whether this planned relocation is being conducted to
further the efficient and effective execution of the FCC's
statutory responsibilities, or whether the relocation has been
influenced by other, less legitimate considerations.'' (Copies
of all correspondence between the Committee and Franklin L.
Haney are appended to the end of this report.)
While Mr. Haney produced a limited number of documents in
response to the initial request for information,1 he
subsequently has refused to provide any further information,
whether in the form of documents, responses to written
questions, a staff interview, or even a log of those documents
being withheld from the Committee and the grounds therefor.
These refusals have been blanket ones, without any serious
attempts by Mr. Haney at even partial compliance or compromise,
and without any recognition of the rights of Congress to such
information. Mr. Haney also refused to consent to Mr. Knight
and other individuals employed by the Firm providing certain
documents or being interviewed by Committee staff, even on non-
privileged matters, by invoking broad client confidentiality
restrictions.2
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\1\ Specifically, Mr. Haney produced a copy of the $1 million
check, the invoices received from the Firm, the engagement letter
between Mr. Haney and the Firm, and several documents reflecting his
personal communications with the FCC on the Portals matter.
\2\ The Firm's documents ultimately were obtained on June 17 and
June 18, 1998, following the service of a subpoena on the Firm's
managing partner and the Subcommittee's overruling of the objections
raised by the Firm on Mr. Haney's behalf. The fact that the Firm agreed
at the Subcommittee's June 17 meeting to produce the subpoenaed
documents in its possession does not, however, relieve Mr. Haney of his
independent duty to produce all responsive documents in his own
possession, especially given the lack of any evidence that Mr. Haney's
document production would be or is co-extensive with the Firm's
production.
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Because of the Subcommittee's inability to gather
information voluntarily from key individuals with knowledge of
the events in question, the Subcommittee voted on April 30,
1998, to authorize subpoenas for documents and testimony on
this matter. Pursuant to that vote, four subpoenas were served
upon Mr. Haney on June 4, 1998, requiring the production on
June 17 of certain categories of documents within his
possession or custody or that of the three companies under his
control.3 Most of the documents covered by the
subpoenas had been requested previously by the Committee, and
on more than one occasion over the prior six months, without
success. Furthermore, as noted earlier, Mr. Haney ignored
Chairman Bliley's request for written legal objections and a
privilege log by June 9, waiting until the morning of the
Subcommittee meeting to produce a cursory two-page list of
objections without any supporting legal memorandum, analysis,
or privilege log.
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\3\ Mr. Haney previously had refused to comply with similar
document subpoenas served upon him on May 13, 1998, contending that
``[b]oth the House rules and the caselaw interpreting the contempt
statute require the return of the subpoena be made to a duly convened
committee [as opposed to the Committee offices], which may consider the
objections of the witness and rule thereon, thereby providing the due
process to which he is entitled in determining whether his compliance
is lawfully required.''
After consulting with the House Parliamentarian and the House
General Counsel, and reviewing past practices of this and other
committees of the House, the Committee determined that this procedural
objection was without merit. There is no requirement, in the House
rules or elsewhere, that subpoenas be returnable to a ``duly convened
committee.'' Nonetheless, to expedite production of the documents and
to satisfy Mr. Haney's demand for ``due process,'' on June 4, 1998,
Chairman Bliley signed and had served new subpoenas returnable to a
Subcommittee meeting at 10:30 a.m. on June 17, 1998. By cover letter of
June 4, Chairman Bliley informed Mr. Haney that the Subcommittee would
convene at that time to consider his legal objections and rule thereon,
precisely as requested by Mr. Haney's counsel. Chairman Bliley also
stated, as noted above, that Mr. Haney should provide his formal legal
objections to the subpoenas, in writing, by noon on June 9, 1998,
including a document-specific log of any material being withheld on
grounds of attorney-client privilege.
Mr. Haney failed to meet this deadline. Instead, on June 16, 1998,
the day before the Subcommittee was to meet, Mr. Haney's counsel sent
another letter to Chairman Bliley in which he suggested, for the first
time, that the Subcommittee needed to convene a hearing, rather than a
meeting, so that the ``rules and procedures governing committee
hearings will apply.'' He did not specify which rules and procedures he
was referring to, nor did he provide any explanation as to how such
rules and procedures would benefit his client. Finally, he demanded
that the Chairman ``provide us with the details of the procedure to be
followed on June 17, 1998. Once we have the details of such procedure,
we will then be able to interpose Mr. Haney's objections to the
Subcommittee's subpoenas in a way that provides for their mature
consideration by Subcommittee members before a quorum meets to address
any issues thus raised.''
However, after consulting again with the House Parliamentarian and
the House General Counsel, the Committee determined that there was
nothing procedurally defective with respect to the June 4, 1998
subpoenas or the June 17, 1998 business meeting format. Indeed, Mr.
Haney's interpretation would imply that all congressional information-
gathering must take place in a formal hearing setting--an
interpretation that would be completely inconsistent with long-standing
congressional practice and would, as a practical matter, be highly
disruptive to the effective performance of Congress' constitutional
legislative and oversight responsibilities. The Committee also notes
that, to the extent that Mr. Haney's process concern focused on the
existence of a quorum of the Subcommittee, Mr. Haney's counsel was
specifically advised the day before the meeting that a quorum of the
Subcommittee was necessary to conduct any business and would be present
to consider Mr. Haney's objections to the subpoenas--and that, in fact,
the Committee's rules require a larger quorum of members for meetings
than they do for hearings. Mr. Haney's counsel did not, at that time or
any time thereafter, raise any further, specific procedural questions
or concerns.
Furthermore, Mr. Haney's attempt to dictate the format, process and
sequence of a congressional investigation is utterly without
foundation. Mr. Haney had no right to demand a meeting, much less a
hearing, of the Subcommittee. Nonetheless, having been given an
unprecedented opportunity to appear personally before the Subcommittee,
as requested by his counsel's letter of May 20, Mr. Haney chose to
ignore the deadline set by the Chairman and raise a new procedural
objection at the last minute. As the Supreme Court has remarked with
respect to similar gamesmanship, ``[s]uch a patent evasion of the duty
of one summoned to produce papers before a congressional committee
cannot be condoned.'' United States v. Bryan, 339 U.S. 323, 333 (1950).
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At the Subcommittee meeting on the subpoena return date,
Chairman Barton explained in detail the scope of the
Committee's investigation in his preliminary statement:
As the Members are aware, since last November, the
Committee has been conducting an investigation into the
planned relocation of the Federal Communications
Commission to the Portals, including the circumstances
surrounding the lease arrangements for the FCC
headquarters and the FCC's decision-making with regard
to the move, the efforts of Franklin L. Haney and his
representatives to influence those lease arrangements
or the FCC's decision-making, and the circumstances
surrounding a $1 million payment from Franklin L.
Haney--a general partner in the Portals--to Peter
Knight for services related in part or whole to the
Portals.
Following Chairman Barton's remarks, Mr. Haney's attorney
was given the opportunity to explain his client's legal
objections, and was questioned about them by Subcommittee
members for more than one hour. During that questioning, Mr.
Haney's attorney admitted that his client was withholding non-
privileged documents relating to the Portals project and the
services performed by Mr. Knight for the $1 million
fee,4 and unequivocally stated that his client would
not provide a privilege log for any of the allegedly privileged
documents being withheld from the Subcommittee. After the
members exhausted their questioning of Mr. Haney's counsel, Mr.
Burr moved to overrule all of Mr. Haney's objections and order
full compliance with the subpoenas. That motion was fully
debated and approved by the Subcommittee on a 9-6 vote.
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\4\ Mr. Haney's counsel stated that, because of his procedural
questions about the June 17 meeting, he did not believe that his client
was under any compulsion to comply with the subpoenas on the return
date, even for admittedly pertinent and non-privileged documents. While
Mr. Haney's counsel did agree to produce, at some unspecified future
time, non-privileged documents relating to the Portals project, this
commitment did not and should not affect the determination of contempt,
especially in light of Mr. Haney's defiant refusal to provide all other
responsive records and his failure to date to provide the Committee
with any of these non-privileged documents. As the Supreme Court has
made clear, the act of contempt occurs when there is a willful refusal
to produce the subpoenaed documents on the subpoena return date. See
United States v. Bryan, 339 U.S. 323, 330 (1950) (``[W]hen the
Government introduced evidence in this case that respondent had been
validly served with a lawful subpoena directing her to produce records
within her custody and control, and that on the day set out in the
subpoena she intentionally failed to comply, it made out a prima facie
case of wilful default.''); see also Quinn v. United States, 349 U.S.
155, 165-66 (1955). There is no question that Mr. Haney's actions have
laid the predicate for a referral and prosecution for criminal contempt
under 2 U.S.C. Sec. 192. Quinn, 349 U.S. at 166.
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Following the overruling of his objections, Chairman Barton
ordered Mr. Haney to comply with the Subcommittee's ruling, but
Mr. Haney, through his counsel, refused to commit to a course
of compliance--even though he was specifically advised that
such refusal could lead to his being held in contempt of
Congress by the Subcommittee at that time (consistent with
Chairman Bliley's June 4 letter to Mr. Haney).5 Mr.
Haney's counsel then was dismissed from the witness table, and
the Subcommittee proceeded to consideration of a resolution to
hold Mr. Haney in contempt. After full debate by the members,
the resolution was approved on a 9-7 vote.
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\5\ Chairman Bliley's June 4 letter to Mr. Haney contained the
following explicit warning:
Finally, please be advised that, should the Subcommittee
overrule your objections to the subpoenas at its meeting,
you will be ordered to comply with them immediately. If you
do not do so, the Subcommittee--with my full backing--will
proceed immediately, at that same meeting, to consideration
of a resolution to hold you in contempt and to refer the
matter to the full Committee with a recommendation for
similar action. Once such a contempt finding is made by the
Subcommittee, it cannot be cured by subsequent compliance.
Thus, to avoid being held in contempt of Congress and
ultimately prosecuted therefor, you must bring all the
subpoenaed documents to the Subcommittee on June 17, and be
prepared to comply at that time with any adverse ruling on
your objections.
Authority and Legislative Purpose
Mr. Haney did not contest the authority and valid
legislative purpose of the investigation either at the
Subcommittee meeting or in his written objections filed on June
17--in fact, his counsel conceded during questioning that this
Committee had the right to inquire into the stated subject
matter of the investigation. Nonetheless, in earlier
correspondence relating to the Committee's voluntary requests
for information, Mr. Haney's attorney did raise questions about
the jurisdiction of this Committee to investigate the
circumstances surrounding the Commission's planned relocation
to the Portals. Accordingly, a brief discussion of the
Committee's authority to investigate this matter is in order,
even though jurisdictional objections were not raised in
response to the subpoenas themselves.
As the Subcommittee chairman stated during his preliminary
statement at the June 17 business meeting, and in the presence
of Mr. Haney's counsel: ``Our jurisdiction to investigate
[these] matters is clear, since it is concurrent with the
jurisdiction of the full Committee, which is the authorizing
committee for the FCC and is charged with oversight of the
agency's `organization and operations' '' (quoting Rule X,
Clause 2(b)(1) of the U.S. House of Representatives). While
this Committee does not have primary jurisdiction over GSA, it
certainly does have the right to inquire into GSA actions that
affect the ``organization and operations'' of the Commission.
Indeed, this Committee has in the past held hearings on GSA
actions involving the Commission and other agencies within the
Committee's jurisdiction. 6 Accordingly, the
jurisdiction of the Committee to investigate this matter is not
subject to credible challenge.
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\6\ The Committee's views on the jurisdictional question also were
explained fully to Mr. Haney's counsel in a November 21, 1997 letter
from Chairman Bliley.
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With respect to a valid legislative purpose, the
Subcommittee chairman addressed that issue at the June 17
meeting as well, stating:
[W]e are not here to make allegations of wrongdoing
against any party. Rather, we are here to reaffirm the
Subcommittee's right to obtain all information relevant
to our inquiry, so that we can answer these outstanding
questions, make informed judgments about whether
misconduct has occurred, and if so, what legislative
actions may be necessary to correct it or prevent its
reoccurrence. For example, we may need to make or
recommend statutory changes in the [FCC]'s
administrative structure or the powers and duties of
the Chairman and the Managing Director, or [take] more
specific Portals-related actions.
Given Chairman Barton's remarks and the lack of any objection
on this ground by Mr. Haney, there is no basis upon which to
challenge the Committee's legislative purpose in conducting
this oversight project.
The Subpoenaed Documents
The subpoenas to Mr. Haney and his three companies--Tower
Associates II, Inc., the Franklin L. Haney Company, and
Building Finance Company of Tennessee--seek identical
categories of documents, as follows:
(1) All records that relate to Franklin L. Haney's or
the Franklin L. Haney Companies' retention or hiring
of, or the decision to retain or hire, Peter Knight,
WKLTF, or James Sasser for counsel or services
regarding the Portals or the relocation of the FCC.
(2) All records that relate to any payments or fees
made to James Sasser for services, efforts, lobbying,
or other work undertaken or provided regarding the
Portals or the relocation of the FCC, from January 1,
1994, through the present, including but not limited to
all bills or invoices submitted by any of the
foregoing.
(3) All records that relate to the services, efforts,
lobbying, or other work undertaken or provided, or to
be undertaken or provided, by Peter Knight, WKLTF, or
James Sasser regarding the Portals or the relocation of
the FCC.
(4) All records that relate to the services, efforts,
lobbying, or other work undertaken or provided, or to
be undertaken or provided, by Peter Knight, WKLTF, or
any other person or entity for the $1 million fee
billed to the Franklin L. Haney Company in January
1996.
(5) All records that relate to the $1 million fee
billed by Peter Knight and/or WKLTF to the Franklin L.
Haney Company in January 1996, not produced in response
to the above request.
(6) All records that relate to any fee arrangement
with Peter Knight, WKLTF, or James Sasser for work
undertaken or provided, or to be undertaken or
provided, by any of the foregoing regarding the Portals
or the relocation of the FCC, including but not limited
to all records that relate to the nature, negotiation,
agreement, billing, payment, structure, purpose, or
allocation of such fee arrangement.
(7) All records that relate to any contact,
communication, understanding, or agreement (whether
written, electronic, or oral) between any two or more
of the following individuals or entities regarding the
Portals or the relocation of the FCC: (i) Peter Knight;
(ii) WKLTF; (iii) James Sasser; (iv) former FCC
Chairman Reed Hundt, or any other official or employee
at the FCC; (v) the Office of the Commissioner, Public
Building Service, General Services Administration
(GSA), or any official or employee thereof; (vi) the
Office of the GSA Administrator, or any official or
employee thereof; (vii) the Office of the GSA Regional
Administrator for the National Capital Region, or any
official or employee thereof; (viii) the Office of
General Counsel, GSA, or any official or employee
thereof; (ix) Robert Peck; (x) the Executive Office of
the President (including but not limited to the Office
of the Vice President), or any official or employee
thereof; (xi) Franklin L. Haney; (xii) John Wagster;
(xiii) T.J. Mancuso; or (xiv) any one or more of the
Franklin L. Haney Companies.
(8) All warranties and certifications that relate to
the Portals and that are executed, signed, or co-signed
under the provisions of 41 U.S.C. Sec. 254(a) (or any
other similar statute or regulation governing
contingent fee representations) by Franklin L. Haney,
any one or more of the Franklin L. Haney Companies,
Parcel 49C Limited Partnership, or any other company or
partnership in which Franklin L. Haney or any one or
more of the Franklin L. Haney Companies have a
financial interest, and all records that relate to any
such warranty or certification.
(9) All records that relate to the negotiation of the
supplemental lease agreements signed by Parcel 49C
Limited Partnership and GSA in January and March of
1996.
(A copy of each subpoena is appended to the end of this
report.)
As is evident from those descriptions, all of the requests
relate directly to the involvement of Mr. Haney or his
representatives in the Portals matter, or to the $1 million fee
from Mr. Haney to Mr. Knight.
Objections to the Subpoenas by Mr. Haney
A. claims regarding pertinency of document requests
Mr. Haney has made several pertinency objections to the
subpoenas, which will be addressed in turn below, following a
brief discussion of the scope and nature of the pertinency
requirement with respect to congressional investigations.
The federal contempt statute, 2 U.S.C. Sec. 192, provides
that a committee's questions or subpoena requests must be
``pertinent to the subject under inquiry.'' In determining
matters of pertinency, the courts have required only that the
specific inquiries or document requests be reasonably related
to the subject matter under investigation. Sinclair v. United
States, 279 U.S. 263, 279 (1929); Ashland Oil, Inc. v. FTC, 409
F.Supp. 297, 305 (D.D.C. 1976). As the American Law Division of
the Congressional Research Service stated in its recent
memorandum to the Committee on the validity of the Haney
subpoenas:
Because of the breadth of congressional
investigations, the courts have long recognized that
pertinency in the legislative context is broader than
that of relevance under the law of evidence. ``A
judicial inquiry relates to a case, and the evidence to
be admissible must be measured by the narrow limits of
the pleadings. A legislative inquiry anticipates all
possible cases which may arise thereunder and the
evidence must be responsive to the scope of the inquiry
which generally is very broad.'' Townsend v. United
States, 95 F.2d 252, 261 (D.C.Cir.), cert. denied, 303
U.S. 664 (1938) (emphasis in original).
Memorandum from Morton Rosenberg, Specialist in American Public
Law, the American Law Division, Congressional Research Service,
to the Honorable Tom Bliley, Chairman of the House Committee on
Commerce, and the Honorable Joe Barton, Chairman of the
Subcommittee on Oversight and Investigations, dated June 16,
1998, at 10 [hereinafter referred to as ``the CRS
Memorandum'']. (A copy of this memorandum is appended to the
end of this report.)
As the above makes clear, pertinency is not a rigid
concept, but rather is one that is flexible enough to permit an
investigation to pursue all related leads. See Eastland v.
United States Servicemen's Fund, 421 U.S. 491, 509 (1975); see
also Senate Select Committee on Ethics v. Packwood, 845 F.Supp.
17, 21 (D.D.C. 1994) (``Yet where, as here, an investigative
subpoena is challenged on relevancy grounds, the Supreme Court
has stated that the subpoena is to be enforced `unless the
district court determines that there is no reasonable
possibility that the category of materials the Government seeks
will produce information relevant to the general subject of the
. . . investigation.' '').
Turning to Mr. Haney's specific pertinency objections, he
has objected to providing all of the records relating to the $1
million fee, claiming that the fee also covered projects other
than the Portals and that such other information is not
pertinent to our investigation. On several occasions, the
Committee has attempted to explain to Mr. Haney and his counsel
the pertinency of this and similar voluntary requests made
during this investigation. For example, in an April 16, 1998
document request to Mr. Haney, Chairman Bliley stated:
[A]ny objection to producing documents relating to
the details of the $1 million fee, and the work
performed by Mr. Knight for that fee, would be equally
baseless. Despite the stunning coincidence between the
date of the invoice and the signing of a key Portals
lease agreement, you claim--without providing any
supporting information--that the $1 million fee was not
solely for Mr. Knight's work on the Portals, but for a
variety of projects. While the Committee's jurisdiction
is founded on the Portals matter, it is incumbent upon
the Committee, and within the legitimate scope of our
investigation, to test your claim by reviewing all
documents that will shed light on the nature and
purpose of the $1 million payment.
Similarly, at the June 17 Subcommittee meeting, Chairman
Barton stated the following in the presence of Mr. Haney's
counsel:
The juxtaposition of the questions under inquiry with
the list of subpoenaed documents, I think, makes clear
the pertinency of our requests. To date, the
Subcommittee has received conflicting evidence about
the nature and purpose of the $1 million fee, as well
as the degree of involvement of Mr. Haney and his
representatives in securing certain lease terms or the
FCC's agreement at the time to move. The demanded
documents will help us get to the truth.
Moreover, Committee counsel and Mr. Haney's attorney discussed
the pertinency of these particular records at considerable
length in telephone conversations on June 16, 1998.
Despite all of these explanations, Mr. Haney continued to
interpose this pertinency objection at the June 17 meeting, and
made clear his refusal to comply with the Subcommittee's ruling
on his claim of pertinency. The Subcommittee, in making that
determination, relied upon its own analysis of the need for
such materials, as well as the CRS Memorandum, which concluded
in relevant part (at page 10):
It has been claimed, without tangible verification,
that the payment was for a number of assignments that
have been or would be undertaken by Mr. Knight over the
three year period of the retainer agreement. The
coincidence of the payment and the signing of the
supplemental lease agreement between GSA and the
Portals partnership has raised what appears to be
legitimate concerns about the nature and purpose of the
payment, which the conflicting evidence thus far
gathered by the Subcommittee has not allayed. In
response, Mr. Haney has supplied unconfirmable denials
of pertinency. In this posture, the current record
would appear to provide a strong foundation for a court
to find that Mr. Haney has been informed of the
pertinence of the subpoena requests.
The Committee need not take Mr. Haney's ``unconfirmable
denials'' at face value. The most direct way for the Committee
to test the assertions by Mr. Knight and Mr. Haney with respect
to the $1 million fee is to see what the other alleged projects
were, what level of services were provided, when they were
provided in relation to the payment, and whether these other
projects were ever completed. The subpoenaed documents
certainly are pertinent to that legitimate investigative
task.\7\
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\7\ During discussion on the pertinency of the non-Portals projects
allegedly performed for the $1 million fee, Mr. Haney's counsel also
argued that these records were business sensitive in nature and that
disclosure to the Subcommittee would be harmful to Mr. Haney's business
interests. Mr. Haney did not, however, raise this issue in his written
legal objections filed on June 17, presumably because it is clear that
the sensitive nature of records is not a legal basis upon which private
parties can withhold documents from Congress. This Committee routinely
requests and receives business sensitive (and attorney-client
privileged) records from private parties, and takes all appropriate
steps to ensure their confidentiality.
---------------------------------------------------------------------------
Mr. Haney's other pertinency objection relates to any and
all records concerning his relationship with, and
representation by, Mr. Sasser on the Portals matter. Mr. Haney
has not articulated to any degree why he believes such records
are not pertinent to the Committee's investigation into whether
improper influences were brought to bear on GSA and FCC by Mr.
Haney or his representatives--one of whom was Mr. Sasser, the
former United States Senator and current U.S. Ambassador to
China. Prior to the issuance of the subpoenas, Chairman Bliley
explained to Mr. Haney the pertinency of these requests in an
April 16, 1998 letter, stating:
On a separate but related matter, the Committee has
received information that, in addition to Mr. Knight,
you also retained former Senator James Sasser to
represent you on the Portals, and that Mr. Sasser met
with GSA and FCC officials, including then-FCC Chairman
Reed Hundt, to discuss this matter. In light of the
questions surrounding your fee arrangement with Mr.
Knight, I am interested in learning the nature of your
fee arrangement with Mr. Sasser, and the details of Mr.
Sasser's efforts to influence the GSA lease and the
FCC's relocation.
In light of this notice, and the lack of any detailed rebuttal
by Mr. Haney or his counsel, the claim that these records are
not pertinent to this investigation is without merit.\8\
---------------------------------------------------------------------------
\8\ Mr. Haney's attorney also has intimated in past correspondence
with the Committee on this matter--although not in response to the
subpoenas--that documents relating to communications with GSA, as
opposed to the FCC, are not pertinent to the Committee's investigation.
However, as stated above, actions taken by GSA that affect the FCC fall
within the Committee's jurisdiction and the scope of this
investigation.
---------------------------------------------------------------------------
B. claims of attorney-client privilege
Mr. Haney has made a sweeping claim of entitlement to
withhold whole categories of documents on grounds of attorney-
client privilege. For various reasons described in more detail
below, the Subcommittee decided to overrule this claim and
demand production of all requested records.
With respect to Mr. Haney's claim of privilege, we start
with the jurisdictional proposition that there is no
constitutional, statutory or common law bar to the Subcommittee
demanding even explicitly privileged materials. The historic
position of the House of Representatives is that committees of
Congress are not bound to recognize any non-Constitutional
privilege, such as the attorney-client privilege. Rather, as
the CRS Memorandum makes plain (at page 11):
The precedents of the House of Representatives and
the Senate, which are founded on Congress' inherent
constitutional prerogative to investigate, establish
that acceptance of a claim of attorney-client or work
product privilege rests in the sound discretion of a
committee, regardless of whether a court would uphold
the claim in the context of litigation * * * \9\
\9\ This Committee, in particular, has been a strong proponent of
this view. As then-Chairman Dingell stated in a June 1983 Committee
document on this very subject: ``[T]he position of the Subcommittee has
consistently been that the availability of the attorney-client
privilege to witnesses before it is a matter subject to the discretion
of the Chair.'' Committee on Commerce Print 98-I (98th Congress, 1st
Session). See also the Opinion of the Senate Subcommittee on Nuclear
Regulation, July 19, 1989, at 12-13 (``As an independent branch of
government with such constitutional authority, the Congress must
necessarily have the independent authority to determine the validity of
non-constitutional evidentiary privileges that are asserted before the
Congress.'').
---------------------------------------------------------------------------
An earlier CRS memorandum elaborates on the rationale for such
a conclusion, emphasizing the problematic consequences of any
contrary view:
Indeed the suggestions that the investigatory
authority of the legislative branch of government is
subject to non-constitutional, common law rules,
developed by the judicial branch to govern its
proceedings arguably is contrary to the concept of
separation of powers. It would, in effect, permit the
judiciary to determine congressional procedure and is
therefore difficult to reconcile with the congressional
authority granted each House of Congress to determine
its own rules.
Memorandum of Morton Rosenberg, Specialist in American Law, the
American Law Division, CRS, dated September 3, 1982, at 21-22
(published in Committee on Commerce Print 98-I, at 23-24 (98th
Congress, 1st Session).
That said, most congressional committees have looked to
analogous judicial authority in determining whether to
recognize a particular claim of privilege--a practice from
which there is no need to deviate in this particular instance,
for it appears to be without question that Mr. Haney's claim of
privilege would not be sustained by any court of law.
Mr. Haney's blanket claim of privilege is unacceptable and prevents any
balancing of interests
The attorney-client privilege, while long established in
the law, has never been particularly favored. As Dean Wigmore,
the father of the law of evidence, has aptly pointed out:
``[The privilege] is nonetheless an obstacle to the
investigation of truth. It ought to be strictly confined within
the narrowest possible limits consistent with the logic of its
principle.'' 8 Wigmore, Evidence, Sec. 2291, at 554 (McNaughton
rev. 1961). Accordingly, for the privilege to apply, the
claimant affirmatively must establish (1) a communication, (2)
made in confidence, (3) to an attorney, acting in such
capacity, (4) by a client, and (5) for the purpose of seeking
or obtaining legal advice (ibid.)--subject to a strict standard
of waiver, as well as numerous other exceptions that have been
carved out by the courts in an effort to reduce the truth-
frustrating impact of the privilege in certain situations. See
the CRS Memorandum, at 12-18.
Accordingly, the burden of establishing the existence of
each element of the attorney-client privilege rests with the
party asserting the privilege--not the party seeking to gain
the information. FTC v. Lukens Steel Co., 444 F. Supp. 803, 806
(D.D.C. 1977) (``The party seeking the benefit of the privilege
has the burden of demonstrating its applicability.''); see also
E. Epstein, The Attorney-Client Privilege and the Work-Product
Doctrine, at 29-30 (American Bar Association, 3d ed. 1997).
While the fact that Mr. Knight, Mr. Sasser and other
individuals hired by Mr. Haney are licensed attorneys raises
questions about the potential applicability of the attorney-
client privilege, the key words here are ``potential
applicability.'' The federal courts have been quite clear that
``the attorney-client relationship does not create an automatic
`cloak' of protection . . . draped around all occurrences and
conversations which have any bearing, direct or indirect, upon
the relationship of the attorney with his client.'' United
States v. Goldfarb, 328 F.2d 280, 281-82 (6th Cir.), cert.
denied, 377 U.S. 976 (1964); see also The Attorney-Client
Privilege, supra, at 24. Rather,
the privilege must be asserted against giving
particular testimony or producing particular documents.
Blanket assertions of privilege are not countenanced.
Thus, the privilege may not be raised against
testifying generally or engaging in any discovery at
all. It must be raised communication by communication
or document by document.
The Attorney-Client Privilege, supra, at 24 (citing
cases).10
---------------------------------------------------------------------------
\10\ See also the CRS Memorandum, at 13-14 and n.8 (``Blanket
assertions of the privilege have been deemed `unacceptable,' and are
strongly disfavored.'') (internal citations omitted).
---------------------------------------------------------------------------
Thus, in order to facilitate this determination, ``courts
have required the parties asserting the privilege to create a
privilege log or index, document by document, identifying each
document for which the privilege is claimed and the basis for
the claim of privilege.'' The Attorney-Client Privilege, supra,
at 33. Congressional committees also follow this common
practice when faced with refusals to produce responsive
documents.11
---------------------------------------------------------------------------
\11\ This Committee routinely requires logs from both governmental
and private parties who claim some entitlement to withhold requested
information from the Committee--whether the claim is one of attorney-
client privilege, executive privilege, enforcement sensitive, or
otherwise. Even the White House routinely provides such logs to the
Committee when dealing with Presidential decision-making records or
sensitive foreign policy documents. The Committee should neither expect
nor require any less from Mr. Haney.
---------------------------------------------------------------------------
The record in this case can leave little doubt that Mr.
Haney utterly failed to carry his burden on this issue. The
Committee made repeated requests that Mr. Haney provide a log
or index of those documents over which he claimed a privilege,
but he refused to do so.12 This failure left the
Subcommittee without any information to test the assertions of
privilege and no record upon which to find a valid claim of
privilege in Mr. Haney's favor. Mr. Haney's actions also
prevented the Subcommittee from balancing whatever valid claims
of privilege he may have had against the Subcommittee's
investigative need. In short, the privilege was Mr. Haney's to
assert, prove, and protect, yet he took no concrete steps to do
so. The Subcommittee's decision to overrule his blanket claims
of privilege was therefore proper, and consistent with the
practice of courts throughout the country. See, e.g.,
International Paper Co. v. Fiberboard Corp., 63 F.R.D. 88, 94
(D.Del. 1974) (denying claim of privilege due to lack of
specificity, and stating: ``An improperly asserted claim of
privilege is no claim of privilege at all. . . .''); The
Attorney-Client Privilege, supra, at 23-34.13
---------------------------------------------------------------------------
\12\ When pressed on this matter at the Subcommittee meeting, Mr.
Haney's counsel simply stated that he was aware of case law supporting
his client's refusal to produce a log. However, he did not supply such
case law to the Committee, either at the Subcommittee meeting or in his
June 17 letter listing Mr. Haney's formal objections to the subpoenas,
and the Committee--despite its own research--is not aware of any such
court decisions.
\13\ Relatedly, Mr. Haney has claimed the work-product doctrine as
an additional basis upon which to withhold some of the same categories
of documents. The reasons discussed above for overruling Mr. Haney's
claim of attorney-client privilege apply equally to his claim of work-
protection, and thus need not be separately discussed. The Committee
notes, however, that Mr. Haney's claim of work product protection
raises the additional question of whether the services he received from
Mr. Knight and his other lawyers were ``in anticipation of
litigation,'' as required under federal rules and case law in order to
invoke this doctrine.
---------------------------------------------------------------------------
Mr. Haney failed to demonstrate any privileged relationship with Mr.
Knight
Even if Mr. Haney had produced a privilege log of
communications between him and Mr. Knight, there is substantial
reason to believe that such communications would not
berecognized as privileged by the federal courts for one simple reason:
the communications do not appear to have been made in furtherance of
obtaining predominantly legal advice from Mr. Knight. As the CRS
Memorandum explains (at page 15):
the case law has consistently emphasized that one of
the essential elements of the attorney-client privilege
is that the attorney be acting as an attorney and that
the communication be made for the purpose of securing
legal services. The privilege therefore does not attach
to incidental legal advice given by an attorney acting
outside the scope of his role as attorney. `` `Acting
as a lawyer' encompasses the whole orbit of legal
functions. When he acts as an advisor, the attorney
must give predominantly legal advice to retain his
client's privilege of non-disclosure, not solely, or
even largely, business advice'' (quoting Zenith Radio
Corp. v. Radio Corp. of America, 121 F. Supp. 792, 794
(D.Del. 1954) (emphasis supplied)).
In order to ascertain the capacity in which an attorney is
acting on behalf of a client, the courts routinely permit the
party seeking the documents to question the party withholding
the documents (or his attorney) on such issues as ``the general
nature of the attorney's services to his client, the scope of
[the attorney's] authority as agent and the substance of
matters which the attorney, as agent, is authorized to pass
along to third parties.'' CRS Memorandum at 15-16.
Consistent with that authority, Subcommittee members
attempted to question Mr. Haney's attorney about the nature of
the services provided by Mr. Knight, but he refused to answer
certain questions. Instead, he simply stated that Mr. Knight
was hired to perform the full range of legal services that a
person usually hires an attorney to perform, and would not
elaborate further. Thus, again, when given the opportunity to
establish a privileged relationship with Mr. Knight, Mr. Haney
balked. This failure alone warrants a finding against the
validity of his privilege claims.14
---------------------------------------------------------------------------
\14\ As the Committee on Foreign Affairs stated in its contempt
report involving the refusal of the Bernsteins to answer questions
about their representation of Ferdinand Marcos: ``Having been given
numerous opportunities to raise their objections and to make their
case, including providing written submissions as well as oral
statements, the Bernsteins made no effort to establish that their
services were legal rather than business in nature.'' H. Rep. No. 99-
462, reprinted at 132 Cong. Rec. 3031 (February 27, 1986).
---------------------------------------------------------------------------
Furthermore, the other evidence gathered by the Committee--
including the records of Mr. Knight's firm--raises serious
questions as to whether Mr. Knight was hired to provide
predominantly legal advice. While the retainer letter between
Mr. Knight and Mr. Haney discusses both ``legal'' and
``strategic'' counsel, there is little, if any, evidence of Mr.
Knight providing legal advice to Mr. Haney, or Mr. Haney
seeking legal advice from Mr. Knight. Thus, the Subcommittee
agrees with the legal conclusion contained in the CRS
Memorandum (at page 18):
In short, based on the record now before the
Subcommittee, the claims of attorney-client [privilege]
would not likely be sustained by a reviewing court. In
particular, Mr. Haney has failed to supply the
essential elements necessary to support a privilege
assertion, including evidence that the relationship
with Mr. Knight was predominantly for legal, rather
than business, advice, or that the ``strategic'' advice
was not meant to be communicated to third parties. In
the absence of a detailed and descriptive privilege log
that could set forth specific facts that, if credited,
would be sufficient to establish each element of the
privilege claimed, it is unlikely that a reviewing
court would [accept] the claims.
C. Claim of Client Confidentiality under Bar Association Rules
Mr. Haney also has claimed, as a basis for refusing to
provide certain subpoenaed documents, a local bar rule (Rule
1.6 of the D.C. Rules of Professional Conduct) that prohibits
attorneys from disclosing any confidences or secrets of their
clients without the client's consent, a court order, or
otherwise as required by law. But as the nature of the rule
should make clear, it imposes an ethical duty on the attorney,
not the client--the latter of whom is free to divulge whatever
information he or she chooses. Because Mr. Haney is the client
in this case, he is not under any ethical duty to withhold
these documents from the Committee, and he can face no adverse
consequences by doing so since he would not be revealing any
confidences of a client.15
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\15\ Although he repeatedly raised this rule as a basis for his
client's withholding of certain categories of documents, Mr. Haney's
counsel also apparently conceded under questioning that Mr. Haney could
not legitimately claim the protection of this rule for documents in his
own possession. Thus, it is still unclear upon what basis Mr. Haney is
refusing to produce the non-privileged documents in his possession,
such as information relating to his retention of Mr. Sasser, their fee
arrangement and billing history on the Portals, and the non-Portals
project records allegedly detailing work performed for the $1 million
fee.
---------------------------------------------------------------------------
Even if Mr. Haney could claim the protection of this rule
in some other context, the rule itself does not explicitly
address requests from Congress. While there does not appear to
be any judicial precedent for the rule's application in the
legislative arena, federal courts consistently have found, in
analogous contexts, that general confidentiality provisions--
even if mandated as a matter of federal law--cannot be used to
shield information from Congress, unless these statutes
expressly bring Congress within their ambit. See, e.g., F.T.C.
v. Owens-Corning Fiberglass Corp., 626 F.2d 966, 970 (D.C. Cir.
1980) (citing other cases for same proposition).
Furthermore, it is important to stress that this rule is
not a common law privilege that shields client information from
all disclosures--just voluntary ones. See Memorandum of
Geraldine R. Gennet, House General Counsel, to the Honorable
Tom Bliley, Chairman of the House Committee on Commerce, and
the Honorable Joe Barton, Chairman of the Subcommittee on
Oversight and Investigations, dated June 16, 1998, at 2-3
[hereinafter referred to as ``the General Counsel
Memorandum'']. (A copy of this memorandum is appended to the
end of thisreport.) Thus, the rule expressly permits disclosure
upon court order or as required by law. In the civil or criminal
litigation context, an attorney therefore must challenge information
requests, including subpoenas, by making a motion to quash the
discovery to the appropriate judicial official. If that fails and the
court orders compliance, the attorney can provide the information
without concern of disbarment or other professional sanctions.
Similarly,
[o]nce the Chair in a congressional proceeding
overrules the objection, the period when disclosure
would be ``voluntary'' is past. Once the subcommittee
overruled [his] objection, [Mr. Haney] was bound to
obey its direction, and follow its ruling as a
commandment of disclosure, in the words of the [Bar]
Code, ``required by law.'' [His] resistance to doing so
was contempt of Congress.
Contempt Report of Committee on Foreign Affairs, H. Rep. No.
99-462, reprinted at 132 Cong. Rec. 3033 (Feb. 27, 1986)
(citing Quinn v. United States, 349 U.S. 155, 165-66
(1955)).16
---------------------------------------------------------------------------
\16\ See also the General Counsel Memorandum, at 5-9 (concluding
that bar association rule is satisfied by issuance of subpoena and
overruling of objections to production).
---------------------------------------------------------------------------
Finally, the notion that a state or local ethics rule
established by a professional organization can impede a
congressional investigation has been rejected in the past by
both Houses of Congress. As the Committee on Foreign Affairs
stated in its contempt report involving the Bernstein brothers,
who also claimed this bar rule as a basis for withholding
information from its respective subcommittee, it is ``well-
established that no professional or bar association rule can
override Federal law, such as the Congress' inherent
constitutional investigatory power.'' H. Rep. No. 99-462,
reprinted at 132 Cong. Rec. 3033 (Feb. 27, 1986).17
This Committee agrees, as should the entire Congress.
---------------------------------------------------------------------------
\17\ See also the Opinion of the Senate Subcommittee on Nuclear
Regulation, July 19, 1989, at 13 n.5 (rejecting claim by attorney of
ethical duty to withhold requested information, and stating: ``We
believe this Subcommittee's determination [regarding the validity of
privileges] would qualify under the Model Code as `required by law.'
'')
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House Rules Requirements
A. Committee Consideration
On Thursday, April 30, 1998, the Subcommittee on Oversight
and Investigations met in open session and, by a roll call vote
of 9 yeas to 6 nays, authorized the issuance of subpoenas ad
testificandum and subpoenas duces tecum in connection with the
Subcommittee's ongoing Portals investigation, including
subpoenas duces tecum for the records of Franklin L. Haney and
three companies under his control.
On Wednesday, June 17, 1998, the Subcommittee on Oversight
and Investigations held an open business meeting to receive
subpoenaed documents in connection with the Subcommittee's
ongoing Portals investigation. The Subcommittee, by a roll call
vote of 9 yeas to 7 nays, adopted a resolution finding Franklin
L. Haney in contempt for failure to comply with the subpoenas
duces tecum served on him, and directing the Chairman of the
Subcommittee to report such finding to the Committee on
Commerce for such action as the Committee deems appropriate.
On Wednesday, June 24, 1998, the Full Committee on Commerce
met in open session to consider a Report finding Franklin L.
Haney in Contempt of Congress and directing the Speaker of the
House of Representatives to certify the Report of the Committee
on Commerce with respect to Franklin L. Haney to the U.S.
Attorney for the District of Columbia and, by a roll call vote
of 26 yeas to 18 nays, adopted and reported the Report to the
House.
B. RollCall Votes
Clause 2(l)(2)(B) of Rule XI of the Rules of the House
requires the Committee to list the recorded votes on the motion
to report a measure to the House and amendments thereto. The
following are the recorded vote on the motion to adopt and
report the Report to the House, including the names of those
Members voting for and against, and the recorded votes on the
motions considered in connection with the Report.
Committee on Commerce--105th Congress Voice Votes
Measure: Report finding Franklin L. Haney in Contempt of
Congress and directing the Speaker of the House of
Representatives to certify the Report of the Committee on
Commerce with respect to Franklin L. Haney to the U.S. Attorney
for the District of Columbia.
Unanimous consent request: A Unanimous Consent Request by
Mr. Bliley provided that, among other things, the nine
technical and conforming amendments agreed to by staff are
hereby made to the Report, and the Committee will be permitted
to include in the Report all sections required to be in
committee reports pursuant to the Rules of the House.
Disposition: Agreed to, without objection
C. Other House Rules Requirements
Pursuant to clause 2(l)(3)(A) of Rule XI of the Rules of
the House of Representatives, the Subcommittee on Oversight and
Investigations and the Full Committee on Commerce met and made
findings that are reflected in this report.
Pursuant to clause 2(l)(3)(D) of Rule XI of the Rules of
the House of Representatives, no oversight findings have been
submitted to the Committee by the Committee on Government
Reform and Oversight.
The Committee finds that the provisions of clause
2(l)(3)(B) of Rule XI (pertaining to new budget authority,
entitlement authority, and tax expenditures) and clause
2(l)(3)(C) of Rule XI (pertaining to a Congressional Budget
Office cost estimate) are not applicable to this report.
Pursuant to clause 2(l)(4) of Rule XI of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this report is provided in Article
I, section 8, clause 3, which grants Congress the power to
regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
Finally, the Committee finds that: (1) the provisions of
section 5(b) of the Federal Advisory Committee Act (pertaining
to the creation of advisory committees) are not applicable to
this report; and (2) the report does not relate to the terms
and conditions of employment or access to public services or
accommodations within the meaning of section 102(b)(3) of the
Congressional Accountability Act.
Conclusion
To date, and in large part due to the uncooperativeness of
Mr. Haney, the Subcommittee has been unable to resolve the
truth of the allegations first raised last year in the Business
Week and Time magazine articles. The evidence gathered so far
paints an incomplete and conflicting picture with respect to
the nature and purpose of the $1 million fee and the
involvement of Mr. Haney and his representatives in securing
certain changes to the Portals lease or the FCC's relocation to
that site. At this point, the Committee is not prepared to say
that Mr. Haney or any other party has engaged in illegalities,
wrongdoing or misconduct. In fact, the very point of this
contempt report is that Mr. Haney's recalcitrance has denied
the Committee key information regarding whether those
allegations may be true.
As former Representative Solarz said with respect to his
recommendation that the House hold the Bernstein brothers in
contempt for their refusal to provide information on their
representation of Ferdinand Marcos:
At the time we began the hearings, we had no hard
evidence that the allegations were accurate . . . . We
have pursued this matter simply because we are
interested in establishing the right of our committee
and the Congress as a whole to obtain this kind of
information. If the House does not turn over such
witnesses to the Department of Justice, we could be
creating a precedent that could potentially cripple the
capacity of the Congress to fulfill its constitutional
and legislative responsibilities . . . . 132 Cong. Rec.
3048 (Feb. 27, 1986).
The Subcommittee lawfully authorized and issued subpoenas
for Mr. Haney's records--records that were pertinent to a valid
congressional investigation within the scope of the
Subcommittee's jurisdiction. In response to those subpoenas,
Mr. Haney failed to provide any responsive records, including
by his counsel's own admission clearly non-privileged documents
relating to his negotiations with GSA over the Portals lease
amendments. Mr. Haney's claims of privilege, confidentiality,
and pertinence were properly overruled by the Subcommittee, as
Mr. Haney failed to carry his burden of establishing any lawful
right to withhold these documents from Congress. His refusal to
comply with the subpoenas and the Subcommittee's rulings on his
objections was willful and contemptible.
Accordingly, the Committee recommends to the House
the following resolution:
Resolved, That pursuant to sections 102 and 104 of
the Revised Statutes of the United States (2 U.S.C.
Sec. Sec. 192, 194), the Speaker of the House of
Representatives certify the report issued by the
Subcommittee on Oversight and Investigations and
adopted by the full Committee on Commerce, detailing
the failure of Mr. Franklin L. Haney to produce papers
to the Committee on Commerce, to the United States
Attorney for the District of Columbia, to the end that
Mr. Franklin L. Haney be proceeded against in the
manner and form provided by law.
Additional Views
During the Subcommittee and full Committee meetings to
consider holding Franklin L. Haney in contempt of Congress for
his failure to produce subpoenaed records, several Members of
the Minority made pointed criticisms of the Majority's handling
of this investigation and these contempt proceedings. We
believe that a rebuttal is required for the record.
Some in the Minority claim that we have proceeded too
quickly and without attempts at compromise with Mr. Haney. But
as the detailed correspondence between the Committee and Mr.
Haney (attached as an appendix to the Contempt Report)
reflects, the Committee made numerous, good faith attempts to
secure relevant records and other information from Mr. Haney
voluntarily, over a five month period of time, before even
authorizing these document subpoenas--and even then we waited
several more weeks before issuing them. Mr. Haney was given
repeated opportunities to comply or seek a compromise with the
Committee in order to avoid these compulsory requests, but he
chose instead to attack our investigation publicly and
stonewall our attempts to gather information in their entirety.
Even after we issued subpoenas, Mr. Haney proceeded in bad
faith, refusing to turn over any responsive documents and
raising meritless procedural claims at the last minute in an
attempt to justify this contemptible behavior. It was not until
the day before the Subcommittee contempt meeting that Mr. Haney
made any attempt at compromise, but even then he insisted on
dictating to this Committee what records were relevant to our
inquiry and what records were ``privileged'' or
``confidential,'' without providing the Committee with one
piece of evidence to support these claims. And it was not until
the middle of the full Committee contempt meeting that Mr.
Haney finally produced some of the non-privileged materials and
a privilege log--even though the Subcommittee already had
overruled all of his objections to the subpoenas, including his
unsupported claims of privilege, and had ordered full
compliance. Thus, we now know that Mr. Haney has been
withholding from this Committee for more than half a year
information that even he conceded he had no right to withhold--
documents relating to his contacts with government officials on
the Portals project.
Simply put, that is not the way the process works. Mr.
Haney, and apparently some in the Minority, seem to believe
that the time for negotiation and compromise is after subpoenas
have been issued and after the subpoena return dates have come
and gone. We strongly disagree. Under Chairman Bliley's
leadership, the Committee has issued subpoenas sparingly and
only after voluntary attempts to secure information or
compromise have proven unsuccessful. But once the Committee
takes the extraordinary step of issuing subpoenas, we expect
compliance with them to be timely and full. Failure to do so
after the Committee has considered and rejected all potential
objections to the subpoenas is contempt, pure and simple, and
subpoenaed parties must know that their refusals to cooperate
carry a price.
The dissenters also have criticized our failure to permit
Mr. Haney to testify at a public hearing prior to holding him
in contempt. In fact, we offered Mr. Haney an opportunity to
appear before the Subcommittee to raise objections to the
subpoenas, but he chose to send his attorney instead (who was
questioned at length by Subcommittee members). This process of
hearing and considering objections to subpoenas in a public
meeting, with full opportunity for debate, is virtually
unprecedented in the Committee's history, and is a sign of the
extraordinary due process afforded to Mr. Haney. Furthermore,
enforcement of subpoenas for documents is not, and should not
be, conditioned upon when or to what Mr. Haney testifies at a
public hearing. As former Chairman John Dingell has said,
permitting individuals to testify at a hearing prior to
receiving all their relevant documents or conducting interviews
with them is contrary to long-standing Committee investigative
practices and would prevent full and fair questioning of the
witnesses. Mr. Haney's testimony has been delayed precisely
because of his refusal to produce the requested documents and
be interviewed by Committee staff on this matter.
Apparently in a partisan attempt to undermine this
investigation, certain Members of the Minority have attempted
to re-write the history of congressional investigations to
support their view that we are on a ``fishing expedition'' and
a ``partisan witch hunt.'' They have alleged on various
occasions that we lacked ``probable cause'' to issues these
subpoenas, that the subpoenas were overbroad, and that our
investigation has uncovered no ``evidence of wrongdoing'' to
justify enforcing them against Mr. Haney. With respect to the
first two claims, we would urge all Members to review the legal
analysis performed by the experts at the Congressional Research
Service's American Law Division, which solidly refutes these
claims and is appended to the Contempt Report.
As for the claim that we lack ``evidence of wrongdoing,''
let us make three related points. First, regardless of what the
evidence gathered to date shows or does not show, we do not
understand its legal relevance to the question that was before
the Committee--Did Mr. Haney have any lawful basis upon which
to withhold the subpoenaed documents? Surely, the dissenters do
not believe that lawful subpoenas can be ignored by subpoena
recipients simply because those recipients (or certain Members)
think that an investigation to date has not produced evidence
of the recipients' wrongdoing. We have been seeking these
records from Mr. Haney since the very beginning of our
investigation, and we should not allow evidence gathered from
others during the period of his recalcitrance to eliminate or
reduce his independent obligation to provide all requested
materials. To do so would reward delay and obstruction, and
likely would encourage others to not provide prompt and
complete cooperation with congressional investigations.
Second, the assumption underlying the dissenters' view--
that evidence of wrongdoing is a condition precedent to the
issuance and enforcement of congressional subpoenas--is
demonstrably false. As past practices of this and other
committees of Congress show, the oversight jurisdiction and
responsibilities of Congress are not confined to criminal
violations. For example, this Committee's 1982 contempt report
on Interior Secretary James Watt--which was not even prepared
until six months after the full Committee voted to hold him in
contempt--does not contain a single allegation of wrongdoing by
Mr. Watt, nor any evidence of wrongdoing by him. Even in the
contempt report held up by some in the Minority as a model--
that involving the Bernstein brothers' failure to testify about
their dealings with Ferdinand Marcos--there is absolutely no
evidence of wrongdoing of any kind. In fact, virtually
theentire factual section of that report consists of allegations
contained in newspaper articles, without any discussion of the
subcommittee's investigative efforts or findings as to whether those
allegations were accurate (other than the issuance of subpoenas to the
Bernstein brothers). In all of these examples, the question was not
``What wrongdoing has been proven so far?,'' but instead was ``On what
basis is information being withheld from Congress?'' That is what we
have been asking throughout these contempt proceedings, and Mr. Haney's
answers have been far from satisfactory.
Third, we take strong issue with the dissenters' one-sided
characterization of the facts developed during the course of
this investigation. Not surprisingly, the individuals involved
in the events at issue, who have a strong interest in defending
the Portals deal and their own involvement in it, have denied
in Committee staff interviews or carefully worded testimonial
proffers any improper or illegal conduct. But as we have
gathered more documentation and begun the process of re-
interviewing these individuals, it has become clear that there
are many unresolved questions about the efforts of Mr. Haney
and his representatives to influence government officials, and
what impact those efforts may have had on agency decision
making. For example, we now know that the FCC's Managing
Director, the top administrative officer who was ostensibly in
charge of the relocation issue, was never advised of private
meetings between FCC political officials and Mr. Haney and his
representatives, including Mr. Knight and Mr. Sasser. We also
now know that FCC political officials overruled a January 1996
recommendation by the Managing Director that the Commission
withdraw its conditional acceptance and instead reject the
Portals space assignment. And each new set of documents we
receive about the $1 million fee and the work performed for it
raises more questions than it answers. (An earlier, more
detailed rebuttal of some of the Minority's misleading and
inaccurate statements with respect to this investigation is
appended to these Additional Views as Attachment A.) Do the
conflicting evidence and unanswered questions prove that anyone
did anything improper or illegal? No. But do they warrant
further investigation? Absolutely yes.
On the question of attorney-client privilege, we believe
the Contempt Report makes clear that the Subcommittee's
decision to overrule Mr. Haney's claims of privilege was based
on a sound legal analogy to the judicial context, rather than
on Congress' inherent right to reject even valid claims of
privilege if necessary for the performance of its
constitutional functions. Thus, the Subcommittee did what
virtually every court in the country would have done--we
rejected blanket assertions of privilege devoid of any
affirmative showing by Mr. Haney that the elements of the
privilege were satisfied as to any particular document or that
his relationship with Mr. Knight was based predominantly upon
the solicitation or receipt of legal advice. We believe this
determination is supported by the subsequent review of other
materials over which Mr. Haney had vigorously claimed
privilege--those that were recently produced to the Committee
by Mr. Knight's law firm. We asked Mr. Morton Rosenberg--a
Congressional Research Service expert on attorney-client issues
whom the Minority often relied upon for legal advice when it
ran this Committee--to review and analyze 35 of these claimed
privileged documents. He found that 34 of the 35 claims of
privilege likely would not be sustained by a reviewing court.
Mr. Rosenberg's analysis, appropriately redacted, is appended
to these Additional Views as Attachment B.
We also note that, as compared to our Minority predecessors
on this Committee, we handled Mr. Haney's claims of privilege
in a far more open, fair, and considered fashion. We have
appended to these Additional Views, as Attachment C, an
affidavit from the former chief counsel and staff director for
then-Chairman Dingell, who explains the ``process'' by which
the then-Chairman unilaterally ruled against all 30 claims of
privilege raised by subpoenaed parties over a 10-year period.
Finally, in an attempt to paint the current investigation
as part of a political smear campaign against a close confidant
of the Vice President, Mr. Peter Knight, some in the Minority
have taken to reciting or attaching to their correspondence
one-sided and generally inaccurate commentary by one or two
journalists who had criticized the Subcommittee's recent
investigation into the Department of Energy's funding of Molten
Metal Technology (another client of Mr. Knight's). They have
ignored, however, the favorable reporting by the Washington
Post, Time magazine, and other news organizations on this same
matter. We also want to emphasize that the Subcommittee
initiated the Molten Metal investigation at the urging of the
Minority staff, and as an outgrowth of the Committee's overall
programmatic review of the Office of Science and Technology.
That review has led to numerous changes in the Office's
management and operations, which we believe will improve the
effectiveness of its technology development efforts.
The issue here is Mr. Franklin Haney's illegitimate refusal
to provide subpoenaed documents. That is what the Contempt
Report is about. For all of the above reasons, we strongly urge
the adoption of the Contempt Report by the House of
Representatives, followed by a speedy referral of this matter
to the U.S. Attorney for the District of Columbia for
prosecution under the criminal contempt statute.
Tom Bliley.
W.J.``Billy'' Tauzin.
Michael G. Oxley.
Michael Bilirakis.
Dan Schaefer.
Joe Barton.
Cliff Stearns.
James C. Greenwood.
Michael D. Crapo.
Steve Largent.
Richard Burr.
Brian P. Bilbray.
Charlie Norwood.
Rick White.
John Shimkus.
J. Dennis Hastert.
Bill Paxon.
Christopher Cox.
Rick Lazio.
Barbara Cubin.
Minority Views of Representative Ron Klink
I am joined in my views by Representatives Dingell, Waxman,
Markey, Boucher, Manton, Towns, Pallone, Brown, Gordon, Furse,
Deutsch, Rush, Stupak, Engel, Sawyer, Wynn, Green, McCarthy,
Strickland, and DeGette.
Although the subpoena to Mr. Haney was issued on a party
line vote, one does not take lightly the decision by Mr. Haney
not to comply with a Congressional subpoena. But we should also
not take lightly the move to hold a private person in criminal
contempt of Congress. Fundamental fairness to our citizens
requires that this body demonstrates that all efforts have been
made to provide the person with a full opportunity to provide
personally his or her defense to the nation's elected
representatives.
In this case there are three overwhelming reasons that
forced our negative vote that we wish to lay before the
Speaker:
(1) There has not been a shred of credible evidence of
wrongdoing in the Portals matter. To the contrary, all of the
information gathered by the Committee so far has suggested the
opposite.
(2) The Committee has refused repeated requests by Mr.
Haney, Mr. Knight and Steven Grigg, the primary developer of
the Portals, to provide testimony at a Committee hearing prior
to proceeding with the drastic step of a contempt proceeding.
(3) We cannot ignore the partisan political agenda of the
majority in the development of this issue.
My statement made at the June 24 Committee meeting to
consider the matter of contempt provides the details of this
matter and is attached at the end of these views, but I want to
summarize each of these three important points.
(1) There has not been a shred of credible evidence of
wrongdoing in the Portals matter. To the contrary, all of the
information gathered by the committee so far has suggested the
opposite.
Although never clearly stated by the Subcommittee or
Committee chairmen, the allegation before the Committee appears
to be that Mr. Haney was involved in an improper or illegal
attempt to influence government agencies to obtain a favorable
supplemental lease for the Portals partnership and paid an
improper contingency fee to his attorney. Members of the House
who read the Majority report might wonder why the only evidence
of impropriety cited in the report are two magazine articles
that appeared in October 1997. (This is particularly curious in
light of the FCC's attached October 6, 1997, rebuttal to the
Business Week article that described the article as
``materially and demonstrably inaccurate in several critical
respects.'') One might reasonably conclude that the Committee
has not followed up on this matter over the past eight months.
To the contrary, the Committee has received thousands of pages
of requested documents from the General Services Administration
(GSA), the Federal Communications Commission (FCC), the White
House, Mr. Haney, Mr. Knight and others concerning the Portals
lease and the relocation of the FCC, and Committee staff has
interviewed numerous government officials and private persons
who negotiated the lease or were otherwise involved with the
Portals. The reason the investigation is not mentioned is
simple: none of the documents, nor any of the staff interviews
revealed any impropriety in the negotiation of the lease, the
hiring of Mr. Knight by Mr. Haney or in the actions of any of
Mr. Haney's representatives. Subcommittee Chairman Barton
admitted this in the June 24, 1998, Committee contempt meeting.
At that Committee meeting to consider the Majority report,
Representative Stupak offered an amendment to include important
material, outlining the scope of the investigation, which was
missing in the Majority report. The text of the amendment is
included at the conclusion of these views. One part of the
amendment read as follows:
Between the initial letter to Mr. Haney on November
7, 1997, and the present, Subcommittee staff has
interviewed numerous officials of the Federal
Communications Commission and the General Accounting
Office. These include Reed Hundt, former FCC Chairman;
Andrew Fishel, FCC managing director in charge of the
FCC move since 1989; Jeff Ryan, operations management
and services chief, who works with Mr. Fishel; Robert
Peck, formerly an assistant to Mr. Hundt and a member
of the legislative staff and currently the Public
Buildings Commissioner at GSA; Paul Chistolini, deputy
commissioner; Blair Levin, a former special assistant
to Mr. Hundt; Jackie Chorney, a former legal advisor to
Mr. Hundt; Sharon Roach and Barry Siegal, attorneys at
the General Services Administration who negotiated the
lease; Tom Pagonis, the contract officer for the
Portals project; Bob Goodman, director of property
acquisition and realty services; Bill Lawson, GSA's
assistant administrator for public buildings; Douglas
Benton, Mr. Goodman's successor; Thurman Davis, the
former GSA administrator for the National Capital
Region; and Barbara Silbey, a former special assistant
to the GSA administrator.
All of these officials have stated in their
interviews that they had no knowledge of or any
evidence of improper political influence by Mr. Haney
or other misconduct by Mr. Haney or his representatives
or of an illegal contingency fee.
Although the amendment was defeated on a party line vote,
the Chairman of the Oversight and Investigations Subcommittee
stipulated that the above statement concerning the interviews
of government officials that Mr. Haney was alleged to have
improperly influenced was true. He stated that a reason for
withholding these facts from the House was the refusal of
Representative Stupak to vote in favor of contempt, even if his
amendment were adopted.
In addition to a lack of evidence of impropriety in the
negotiation of the Portals lease, the Committee has actually
received affirmative evidence of the propriety of the lease.
The impartial General Accounting Office reviewed the lease at
Senator John McCain's request, and in a letter dated February
27, 1998, GAO concluded, ``The lease is in the best financial
interest of the government and is preferable to FCC's staying
in its current location.''
GAO also stated, ``No evidence came to our attention that
GSA's solicitation of space for FCC was not in compliance with
applicable laws and its own agency regulations governing the
procurement of leased space, except for its cancellation of the
SFO in February 1992.'' GAO concluded that after the courts
reinstated the improperly canceled solicitation, ``It appears
that GSA followed the Court's decision and thereafter complied
with applicable laws and regulations we reviewed in resuming
the procurement process, and it subsequently awarded the lease
to Portals II. Furthermore, the award to Portals II was
consistent with the fiscal year 1988 lease prospectus for
approximately 260,000 occupiable square feet.'' GAO has looked
at this project several times in the last five years and never
found anything amiss.
The allegation of an improper contingency fee paid to Peter
Knight in return for obtaining a supplemental lease has also
found no support in the subsequent investigation of the matter.
The only source cited in the Majority report for the
proposition that the fee was a contingency fee is one of Mr.
Knight's law partners, Bernard Wunder, a former Republican
staffer on this Committee. Mr. Wunder had stated last year in a
staff interview that Mr. Knight had received a ``lump sum
payment'' or a ``performance fee.'' In a subsequent staff
interview in May, Mr. Wunder told committee staff that he did
not intend the term ``performance fee'' to mean an illegal
contingency fee, but rather to mean it was for work that was
not covered by a monthly retainer or an hourly fee, an
important fact also missing from the Majority's report. Mr.
Wunder also stated that he knew that Mr. Knight had worked on
other projects for Mr. Haney.
Mr. Haney and Mr. Knight have also denied the existence of
a contingency fee in letters to the Committee and in proffers
of testimony made to the Subcommittee. Both have contended that
the fee covered multiple projects over a period of three years.
Documents provided by Mr. Knight confirmed that work subsequent
to the signing of the Portals lease was performed, and
additional documents received recently pursuant to a subpoena
to Mr. Knight's law firm again confirmed the existence of other
projects. In an interview of Mr. Knight's executive assistant,
who prepared the bill, she confirmed that Mr. Haney had been a
client of Mr. Knight's for almost three years, that she
frequently communicated with Mr. Haney, that she had set up
separate files for his various projects, and that she billed
him every month for expenses relating to work done on his
projects, but had never billed him another fee after 1996.
In a proffer of testimony, Steve Grigg, the managing
partner of the Portals project, stated that he asked for and
negotiated the provisions in the supplemental lease that the
Majority apparently believes to be the provisions demanded
before a contingency fee was paid to Mr. Knight. Mr. Haney did
not become a partner in the Portals development until March 26,
1996, over three months after the lease provisions in question
were signed.
During the course of the meeting to consider the contempt
matter, members of the Majority continually stated that these
facts were irrelevant, and that all that mattered was a
subpoena had been issued, and Mr. Haney had refused to comply.
I do not agree. Mr. Haney has asserted that some materials were
covered by an attorney-client privilege, and that other
documents were not pertinent to the Portals investigation. In
overcoming such claims of legal privilege that protect all
American citizens, the Committee should show at least some need
for the information.
The lack of any coherent allegation of impropriety backed
by credible evidence, and the existence of considerable
exculpatory evidence, provide no reason to proceed to contempt.
(2) The Committee has refused to take the reasonable step
of hearings before proceeding with the drastic step of a
contempt proceeding.
From the early days of this investigation, the parties and
the Minority members have been asking for public hearings under
oath, and the Committee repeatedly has refused to hold them. At
the November 5, 1997, hearing on Molten Metal Technology, at
which Chairman Barton first raised the issue of the $1 million
payment to Mr. Knight, I asked for, and received, a promise
from Chairman Barton--a public hearing at which Mr. Wunder, the
apparent source of the allegation that some kind of illegal or
improper fee was involved would testify. In that same hearing,
under oath, Mr. Knight denied that he had received any type of
contingency fee (p. 195), and Chairman Barton admitted that he
was making no allegations of illegalities (p. 198). The hearing
with Mr. Wunder has not been held.
As early as December 22, Mr. Haney's lawyer stated in a
letter to the Committee that he would prefer a public hearing
``accompanied by an on-the-record transcript, and the rules of
procedure applicable to such hearings, as preferable to the
campaign of unsubstantiated accusation and innuendo which we
have experienced to date.'' This was in response to a letter
threatening to subpoena Mr. Haney for testimony if he continued
to refuse to submit to ``voluntary'' interview.
Mr. Knight, also requested a public hearing. On March 30,
1998, in a letter from his attorney Mr. Grigg requested a
public hearing ``so that we could put these matters to rest.
For a variety of reasons, we believe it is most appropriate to
discuss these matters at a public hearing and not in an
informal staff interview.''
At the June 24 meeting on the contempt matter, I offered a
motion to postpone consideration of the contempt citation until
the Committee had held a hearing to receive testimony from Mr.
Haney, Mr. Knight, Mr. Grigg, Reed Hundt, formerly chair of the
FCC, and Emily Hewitt, general counsel for the GSA. It was
rejected on a party line vote.
Throughout the course of this investigation, Mr. Haney has
never refused to testify at a hearing. To the contrary, in
letters and statements from his attorney, he has welcomed
anopportunity to testify. Yet the Majority refuses to hold a hearing so
that Members could determine whether the documents sought by the
Committee were necessary or the underlying allegations were
sustainable.
In early May, it appeared that the Committee was about to
hold a hearing at which Mr. Wunder and William Diefenderfer, a
former law partner of Mr. Knight's, would testify about the fee
Mr. Knight received from Mr. Haney. However, after Mr. Wunder
informed Committee staff that he would not testify that the fee
was an illegal contingency fee, the proposed hearing was
cancelled. Similarly, the Committee has refused to call Mr.
Knight or Mr. Knight's secretary Jewelle Hazel, who prepared
the bills, both of whom have information about the fee
arrangement. After an offer by Ms. Hazel's attorney to
Committee staff, Minority staff set up an interview with Ms.
Hazel. But the Majority staff refused to attend.
With respect to the negotiation of the Portals lease, none
of the government officials involved in negotiation of the
lease has been called to testify. Nor has the private sector
individual, Mr. Grigg, who negotiated the lease, been called,
despite his expressed willingness to testify. The General
Accounting Office auditors, who have examined the entire
leasing chronology, have also not been called.
It is unprecedented to our knowledge that an individual,
particularly a private businessman being required to provide
documents about on-going activities unrelated to the project
under investigation, cited for contempt of Congress would not
be first given an opportunity to testify before the Committee.
For example, in this Committee, former Secretary James Watt
appeared at two public hearings prior to his contempt citation.
Whether or not such an opportunity is legally required, the
refusal of the Subcommittee to hold a single hearing on this
matter suggests that the Majority has little interest in
obtaining the facts, and, more likely, is afraid that the
testimony may rebut allegations of impropriety.
(3) We cannot ignore the partisan political agenda of the
Majority in the development of this issue.
It is an unfortunate fact that this investigation is part
of an overall program within this Congress of Republican-led
investigations of high level administration officials and
Democratic supporters. This pattern of politically motivated
investigations is documented in a June 18, 1998, report by the
U.S. House Democratic Policy Committee entitled ``Politically-
Motivated Investigations by House Committees.''
The investigation of Mr. Haney has its roots in a previous
investigation by the subcommittee of Mr. Knight's
representation of the Molten Metal Technology company and its
obtaining a contract with the Department of Energy. The
interest in Molten Metal appeared to result from the
involvement of Mr. Knight, a former longtime aide to Vice
President Al Gore and the Clinton-Gore `96 campaign manager.
Mr. Knight was one of two Washington lobbyist--the other was a
Republican--hired by Molten Metal for strategic advice in
obtaining government business. Molten Metal had a unique
process for the treatment of mixed waste, and theDepartment of
Energy was under great pressure to begin disposing of the wastes it had
been generating.
In that investigation, a memorandum from counsels Mark
Paoletta and Tom DiLenge to Chairman Joe Barton dated October
20, 1997, which stated that they had no real evidence of
wrongdoing, nonetheless set out the reasons for holding
hearings:
``(ii) it forces the key players to deny allegations
of misconduct under oath''
* * * * * * *
``(v) will likely generate enormous press coverage,
in light of the recent, high-profile news coverage of
MMT's contracts with DOE.''
The counsels urged holding the hearing despite this
warning:
``The cons of holding such a hearing are (I) there is
no smoking gun, which opens us up to partisan criticism
for engaging in a witch-hunt or smear of Democrat
officials, lobbyists, and fund-raising practices (the
``everyone does it'' defense).''
Although the hearings, as predicted, found no evidence of
impropriety, the results for Molten Metal were catastrophic.
The publicity from the hearings made it impossible to obtain
$20 million in bond financing and drove the company into
bankruptcy. After the hearings, 221 Molten Metal employees lost
their jobs, including 45 in Chairman Barton's state of Texas. A
planned $70 million plant in Bay City, Texas was put on hold.
The press soon caught on to the partisan nature of the
investigation. Thomas Oliphant wrote in the Boston Globe on
September 23, 1997:
``This sordid story could never have flown without
the feeding frenzy that surrounds the vice president,
but as an attempt at guilt by the associations of his
associates it is as cheap as any of the shots that will
in time come back to hit those who connived in
launching it.''
A similar conclusion was drawn by Jonathan Broder in Boston
Magazine in February, 1998:
``Despite all the insinuations, Republican
investigators have presented no evidence that Molten
Metal's contributions to the DNC resulted in its
winning government contracts.''
After a final hearing on Molten Metal, George Lobsenz
writing in The Energy Daily on February 18, 1998, concluded
(``Facts Play Second Fiddle In Barton's Campaign Against Gore,
MMT''):
``Barton has labored to sketch a conspiracy in which
MMT hired a lobbyist, Peter Knight, a major Gore
backer; cozied up to Grumbly, a Gore protegee; funneled
campaign contributions to the Clinton-Gore campaign and
qthen saw Grumbly boost its DOE funding from $1 million
to $33 million despite uncertain results from the
initial grants provided the company.
``A pretty sexy story, if you can prove the political
connection. The problem is, Barton can't.''
Lobsenz also noted:
``Last Thursday, Barton finally got around to giving
Molten Metal Technology officials an opportunity to
appear in person before his panel to answer the
charges. But the uncomfortable truth for all concerned
is that the facts of the case have long since ceased to
matter because the damage has been done.
``The company, which was struggling commercially even
before Barton's attacks, has laid off hundreds of
employees and is scrambling to find new financing--and
clean the mud off its reputation.''
During the course of the disastrous Molten Metal
investigation, the investigators were told of a payment made to
Mr. Knight by Mr. Haney, whose name is similar to that of
William Haney, the former president of Molten Metal. We cannot
ignore the political motivation of the subcommittee to focus
upon Mr. Knight and Franklin Haney, who has been a long-time
contributor to the Democratic Party and a one-time Democratic
candidate for governor of Tennessee. Given the finding of GAO
that the Portals lease was in the taxpayers' interest, and the
utter lack of evidence of impropriety in the entire affair, we
are led to believe that partisan politics is at the root of
this investigation.
The following are my statements at the meetings of the
Committee and Subcommittee to consider contempt, the amendment
offered by Representative Stupak to the Report, and the October
6, 1997, response of the FCC to the Business Week article cited
by the Majority.
Ron Klink.