U.S. District Judge Robert R. Merhige Jr., angry over the failure of A. H. Robins Co. to identify its officers who authorized millions of dollars of improper payments, told Assistant U.S. Attorney S. David Schiller today to "go get 'em."
"Get 'em under oath," Merhige told Schiller in ordering him to find out from Robins' officials who ordered the payments.
The judge gave his orders at the end of a brief, fiery hearing at which he denied a Robins motion for appointment of an independent examiner to look into the payments, which violated a consent order entered after Robins filed for involuntary bankruptcy last Aug. 21.
"These people have admitted they did something they had no right to do," Merhige said. "It might have been done in all innocence. All we want to know is precisely who did it, why they did it, were they advised to do it, and were they encouraged to do it, and, if so, by whom?"
Up to now, the judge said, all he's gotten from company counsel is "a lot of legal mumbo-jumbo" about the privacy of the lawyer-client relationship. "They're not going to get away with it," he said.
Denying the motion for an independent examiner -- subject to a possible appeal -- frees the government to take depositions from 19 Robins officials and employes, starting on Wednesday, and compels 19 Robins attorneys to respond in writing to written questions.
Originally, Robins asked for appointment of an independent examiner and for a halt in Schiller's legal discovery. On Monday afternoon, essentially the same motion was filed by the Committee of Equity Security Holders, and Merhige set a hearing for today. The biggest block of Robins stock -- 42 percent -- is controlled by Chairman E. Claiborne Robins and his family.
Merhige told committee counsel Robert M. Miller that the company won't say how it happened to violate the law, even though it would be "very simple" for it to find out.
"Nobody does that," Merhige said. "The law is the law is the law. And no corporation, no person, is above it, especially in this court."
Earlier today, at a separate hearing, Robins Senior Vice President G. E. R. Stiles said former president William L. Zimmer III, who was one of the recipients of the payments, was given $336,000 and has repaid $265,000 of it. He paid the difference, $71,000, in federal and state income taxes, Stiles said.
The $336,000 was paid in February to Zimmer, who has been a director since 1948 and who was president and chief operating officer until his retirement Jan. 1, 1978. Stiles said the money constituted deferred "bonuses" for services before that date.
Stiles and Robins' vice president and treasurer, H. Carlton Townes, testified at a monthly financial "status hearing" held by U.S. trustee William C. White, a Justice Department official who is monitoring the Robins bankruptcy.
Stiles disclosed the amounts of the Zimmer payment and refund under questioning by Murray Drabkin of Cadwallader, Wickersham & Taft. The Washington law firm has been retained by the new committee, which represents women who have filed claims for injuries they attribute to the Dalkon Shield, the contraceptive device Robins sold in the early 1970s.
Robins' February financial report showed that deferred compensation payments had increased to $1.75 million from the $1.2 million originally listed. When asked to explain the $550,000 increase, Stiles said it represented deferred compensation payments in "the early part of 1986."
The payments went to between 60 and 75 high-ranking officials who participated in a "key employes compensation plan."
The $1.75 million is part of approximately $7.3 million that was paid in violation of the consent order. Merhige has retroactively validated certain payments totalling $3.8 million, leaving $3.5 million to be recovered.
Stiles said today the company asked all recipients of the $3.5 million to return the payments. Michael L. Cook of Skadden, Arps, Slate, Meager and Flom, a New York firm retained by Robins Monday as its special bankruptcy counsel, said he has begun an investigation into how the improper payments were made and would have answers "within the next month."
Cook also said he would review a request made previously by Drabkin that Robins pay no bonuses while it is operating under Chapter 11 of the Bankruptcy Code, that existing compensation arrangements be examined for possible excesses and that the company determine if any bonuses or other compensation paid since 1982 should be retrieved in light of the bankruptcy.
In an exchange with Townes, the treasurer, Drabkin established the possibility that Robins overfunded its pension plan by $9 million, which could be transferred to the bankrupt estate for creditors, principally Dalkon Shield claimants.