Former Attorney General John Ashcroft denied any conflict of interest today in connection with a multimillion dollar arrangement with the Justice Department to monitor a corporation accused of wrongdoing.
Ashcroft, now a lobbyist, said the department and the corporation decided to seek his services and offered him the opportunity after their discussions. He confirmed that he did not participate in any bidding for the contract &
said to be worth between $28 million and $52 million &
but denied any conflict of interest in the monitoring appointment from New Jersey U.S. Attorney Christopher Christie, who worked for Ashcroft when he headed the department.
The former attorney general said there was no public money involved in the deal. Generally, corporations hire monitors as part of a settlement agreement with the government.
"This hearing cost far more in tax dollars than my monitorship will cost, because it did not cost taxpayers one thin dime," Ashcroft told a hearing before a House Judiciary subcommittee investigating the contract. "There is not a conflict, there is not an appearance of a conflict."
Rep. Linda Sanchez, D-Calif., the panel's chairwoman, said she was concerned that Ashcroft obtained "what appeared to be a backroom, sweetheart deal" to serve as an independent corporate monitor and collect the multimillion dollar fees. She was referring to reports that Christie hand-picked Ashcroft to monitor a corporation accused of wrongdoing in exchange for the company's avoiding prosecution, known as a "deferred prosecution agreement."
"I also was concerned to learn in press accounts that Mr. Ashcroft was selected with no public notice and no bidding and that he had to use considerable time to prepare for the assignment and learn more about the business that he was contracted to monitor," Sanchez added.
Ashcroft, in turn, accused Sanchez of "attacking" Christie and held up what appeared to be newspaper clippings summarizing Christie's record as a prosecutor.
His testimony comes a day after the Justice Department issued new guidelines for administering deferred prosecution agreements in white-collar criminal cases.
The guidelines require that contracts for federal monitoring of corporations must be approved by the Justice Department's second-ranking official.
Assistant Attorney General Alice S. Fisher said the guidelines were designed to increase transparency in how independent monitors are selected, and clarify the scope and duration of their duties.
Rep. Frank Pallone, D-N.J., said the new guidelines were too weak and were offered "to thwart any effort to come up with stronger standards." Pallone is sponsoring a bill that would require federal judges to approve monitoring contracts.
The monitors watch to make sure the corporations follow the agreement and report to the government with the results. Deferred prosecution agreements have been around since the early 1990s, but have become more common in recent years in white-collar crime cases.
Sanchez pointed out that the government has tremendous leverage over corporations that agree to deferred prosecution.
"Corporations facing criminal prosecution have an unfair choice. They can either risk a conviction and perhaps even dissolution after trial or be coerced into accepting the terms and the monitor that a prosecutor unilaterally believes are appropriate," she said.
Christie in September picked Ashcroft to monitor Zimmer Holdings Inc. of Warsaw, Ind., a manufacturer of replacement hips and knees. Zimmer was one of five companies that agreed to pay a total of $310 million in fines to settle cases over alleged kickbacks to doctors.
Ashcroft's Washington-based consulting firm, The Ashcroft Group LLC, stands to make $27 million to $52 million from the contract, according to a filing with the Securities and Exchange Commission. Christie was once Ashcroft's subordinate at the Justice Department.
Zimmer's deferred prosecution agreement provides for dismissing a criminal complaint charging it with conspiracy to violate anti-kickback statutes if the outside monitor certifies after 18 months that the company has complied with the settlement's terms.
On the Net:
House Judiciary commercial and administrative law subcommittee: http:judiciary.house.gov/oversight.aspx?ID 425
Justice Department: http:www.usdoj.gov
Former U.S. Attorney General John Ashcroft denies any conflict of interest