[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
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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
---------------------------------------------------------------------------
    \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.' 
'')
---------------------------------------------------------------------------

                        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.




                                
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