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  •   Tyson Foods Admits Illegal Gifts to Espy

    By Susan Schmidt
    Washington Post Staff Writer
    Tuesday, December 30, 1997; Page A01

    Poultry giant Tyson Foods Inc. pleaded guilty yesterday to giving former agriculture secretary Mike Espy $12,000 in illegal gratuities and consented to pay $6 million in fines and costs. Tyson officials agreed to testify at Espy's upcoming trial.

    Tyson Foods admitted to lavishing gifts on Espy -- including football tickets, airline trips, meals and scholarship money for his girlfriend -- at a time when his department was considering action on several matters affecting the company's business, including safe handling instructions on poultry packaging.

    The plea agreement, obtained by independent counsel Donald C. Smaltz, was approved by Judge Ricardo M. Urbina in U.S. District Court here. To avoid a trial, Tyson Foods said it will pay $4 million in fines and $2 million toward the cost of the investigation.

    Company chairman Don Tyson and his son John Tyson were granted immunity from prosecution as part of the agreement. In addition, the company said it would comply with ethics requirements in dealing with federal officials, and as a result will not be subjected to a potentially costly ban on doing business with the Agriculture Department and Department of Defense.

    Smaltz has battled lawyers in the Justice Department who contended he has ranged too far afield from his original mission of investigating gratuities to Espy. Some Democrats have charged that three years and $8.5 million is too much time and money devoted to investigating petty corruption.

    But Smaltz has nevertheless racked up a substantial tally of convictions and penalties. With yesterday's plea, his investigation has so far resulted in criminal convictions of seven individuals, five corporations and a law firm. Three people have been cleared and three cases -- including the one against Espy -- are pending. With the Tyson plea, Smaltz has won a total of $10.5 million in fines and penalties.

    "The gravamen of this investigation from its inception, has been unlawful gift-giving by prohibited corporate sources to a sitting member of the Cabinet. Such conduct must continue to invite outrage, never passivity, from those who are regulated, the public and our lawmakers. . . . " said Smaltz in a statement. "Our government is a government of all the people and not just the privileged few who seek to buy their way into regulatory grace."

    The company said in a statement: "Tyson looks forward to having this long, costly, distracting matter behind us."

    The plea agreement represents an embarrassment to an administration already beset by scandals and investigations. Earlier this month, another former Clinton administration Cabinet official, former HUD secretary Henry Cisneros, was indicted on charges he lied to the FBI about payments to an ex-mistress.

    Espy's chief of staff, Ronald H. Blackley, was convicted Dec. 1 of lying to authorities about receiving $22,000 from Mississippi agribusinesses seeking subsidies from his department. Smaltz complained publicly before a congressional panel this month that the Justice Department tried to prevent his office from bringing that case.

    The White House had no comment on the Tyson plea yesterday. Officials of the company, a major employer in Arkansas, have long-standing ties to Bill and Hillary Clinton. When Don and John Tyson appeared in court yesterday, they were accompanied by James Blair, Tyson's corporate counsel and a close friend of the Clintons who advised Hillary Clinton in 1978 on commodities trades that earned her $100,000.

    Espy, 44, a former Mississippi congressman, is accused of soliciting $35,458 worth of gifts from companies he regulated. One of those companies, fruit and nut grower Sun-Diamond, has appealed its conviction on charges it illegally bestowed gifts on Espy, including an all-expense-paid trip to the U.S. Open tennis tournament in New York for Espy and his girlfriend. Lawyers for Espy and Sun-Diamond maintain the gifts were not barred under the law because they were given by longtime friends of Espy.

    A spokesman for Smaltz said Don Tyson may be called to testify against Espy at his corruption trial in March.

    Such testimony could represent a significant blow to Espy's defense. His lawyer, Reid Weingarten, said in a statement that Tyson Foods' guilty plea "does not implicate Mike Espy, and Mr. Espy is confident that he will be fully vindicated on the merits at trial."

    "Corporations often choose to resolve criminal investigations through plea agreements for reasons that have nothing to do with guilt or innocence," said Weingarten.

    Tyson officials also agreed to cooperate in other cases, including the trial of company lobbyist Jack Williams now scheduled for February, and in the investigation of Tyson Foods "Vice President X," an official whose identity is under seal.

    The company identified the official as its spokesman, Archie Schaffer. Tyson said it believes neither man did anything wrong.

    Tyson, of Springdale, Ark., is a publicly held company and the largest producer of poultry in the world. It has $200 million in yearly sales in programs managed by the Agriculture Department.

    According to court papers filed yesterday, during the period it was showering gifts on Espy, Tyson Foods was urging USDA to go slow on imposing new meat and poultry handling instructions. Smaltz's office said prompt imposition of the new rule would have cost Tyson Foods $30 million. In the end, a court blocked enforcement of the rule.

    © Copyright 1997 The Washington Post Company

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