Ashcroft Defends Contract for His Firm
Wednesday, March 12, 2008
Former attorney general John D. Ashcroft defended a government-sanctioned contract yesterday that could earn his consulting firm more than $50 million, saying that nothing is improper about the selection made by one of his former U.S. attorneys.
Ashcroft has come under scrutiny from Democratic lawmakers since he accepted a no-bid contract to oversee the operations of a medical equipment company that is accused of giving kickbacks to doctors. He was chosen for the job by U.S. Attorney Christopher J. Christie of New Jersey, a Republican who once worked for him.
"There is not a conflict," Ashcroft said. "There is not an appearance of conflict."
His testimony to the House Judiciary subcommittee on commercial and administrative law marked his first appearance before Congress since he left his post as head of the Justice Department in early 2005.
Ashcroft, who sparred regularly with lawmakers during his four years as attorney general, joined fellow Republicans on the panel yesterday in lashing out at Democrats for questioning the propriety of the contract.
He also used the occasion to herald some of his accomplishments as attorney general, including a decline in crime rates and the creation of aggressive anti-terrorism programs.
Ashcroft is now a lobbyist who runs his own Washington consulting firm, the Ashcroft Group LLC, which was awarded a contract last fall to oversee the operations of Zimmer Holdings of Warsaw, Ind. The company, which is the world's largest manufacturer of knee and hip implants, avoided prosecution for allegedly paying doctors to use its products, according to the settlement.
The deal is expected to earn Ashcroft's firm $28 million to $52 million over 18 months, according to financial filings.
Subcommittee Chairman Linda T. Sanchez (D-Calif.) said the arrangement "appeared to be a backroom, sweetheart deal," because Christie chose the firm without competition.
Sanchez also said that, until this week, "the parties to these agreements were operating in a Wild West environment with no laws and no Justice Department guidelines."
The Justice Department imposed new restrictions Monday that require U.S. attorneys to obtain approval from Justice headquarters for such agreements and to form special committees to review applications for the assignments.
Ashcroft said that outside monitors, which have been used increasingly in corporate fraud cases in recent years, save taxpayers money by avoiding costly prosecutions and by forcing companies to follow the law.
"This hearing cost far more in tax dollars than my monitorship will cost, because it did not cost taxpayers one thin dime," Ashcroft testified. Under the arrangements, the cost of the monitoring is covered by the company, which agrees to pay for oversight and structural changes in the way it does business, to avoid prosecution.
The practice has become more popular since the 2002 indictment of accounting firm Arthur Andersen LLP, which was convicted of obstructing justice. Prosecutors view deferred prosecutions, with monitoring arrangements, as a way to avoid closing a company altogether while ensuring compliance with the law.
Typically, U.S. attorneys defer the threat of prosecution as a way to maintain leverage over the companies' future conduct. Such deferred prosecutions have until recent years been used primarily for nonviolent juvenile and drug offenders, rather than for large corporations suspected of wrongdoing.