The General Accounting Office has found that a former Commerce Department official may have violated federal conflict-of-interest laws by talking to three companies about a job while participating in government decisions affecting his potential employers.
The GAO, which planned to release its investigation of former deputy assistant secretary of Commerce Walter C. Lenahan at a congressional hearing today, said it will pass on its findings to the Justice Department for possible criminal prosecution.
The Justice Department already is conducting a criminal investigation into Lenahan as the result of a request from Sen. Strom Thurmond (R-S.C.), chairman of the Senate Judiciary Committee. Lenahan, a 20-year veteran of the State and Commerce departments, also is being investigated by the inspector general of the Commerce Department.
An attorney for Lenahan declined comment yesterday.
Lenahan, who ran the government's textile quota program until February, is now vice president of International Business and Economic Research Corp. (IBERC), a consulting firm that represents textile exporters. The three companies that the GAO said Lenahan talked to about a new job while he participated in government actions that affected them were IBERC, Liz Claiborne Inc. and Burlington Industries Inc.
Under conflict-of-interest laws, the GAO said, federal employes are prohibited from "personally and substantially" taking part in government activities that they know will affect the financial interests of organizations with which they are negotiating for a job.
According to the GAO, the investigative arm of Congress, Lenahan also advised clients of his consulting firm about textile trade issues that he had been deeply involved in for the government. The GAO said he helped Israel change an agreement he had negotiated six months earlier for the U.S. government; advised the Japanese government on a new textile agreement after he had served as a member of the U.S. delegation in the talks a month earlier, and advised Hong Kong on its textile agreement after having served on the government committee that developed the U.S. negotiating strategy.
The GAO said these activities did not appear to violate federal laws.
Rep. Doug Barnard Jr. (D-Ga.), whose House Government Operations Committee panel will receive the GAO report at a hearing today, said its findings demonstrate the need to toughen the laws restricting what federal workers can do after they leave government.
Barnard also said the GAO report "confirms Congress' bipartisan view that our textile and apparel trade agreements unfairly favor exporting nations against the domestic industry."
The investigations into Lenahan have been spurred by textile-state lawmakers who became enraged when they learned that the official in charge of enforcing the government's effort to curb textile imports had switched sides and gone to work for major exporters.
Thurmond became interested after hearing allegations that linked Lenahan to a leak of secret U.S. negotiating strategy in textile talks with major Asian suppliers.
The GAO looked into those allegations, but said security considerations prevented an open discussion of them. The GAO added that its investigors were unable to conclude whether Lenahan was responsible for any leak that may have occurred.
The GAO listed four episodes in which Lenahan may have violated federal conflict-of-interest laws: While discussing a possible job with Liz Claiborne, Lenahan served on a government panel that developed the U.S. negotiating position for textile quota agreements with Taiwan, Korea and Hong Kong. Lenahan said he knew that Hong Kong and Taiwan were major suppliers of Liz Claiborne garments. While talking about his present job with IBERC, Lenahan ran meetings that affected textile imports from Kong Kong and China. These countries are clients of IBERC and the New York-Washington law firm of Mudge, Rose, Guthrie, Alexander and Ferdon, with which the consulting firm is allied. The meetings led to toughening of quotas for those countries. Lenahan participated in the negotiation of a bilateral trade agreement with Japan despite knowing that IBERC had an interest in the outcome. One of the consulting firm's client is the Japan Chemical Fibers Association. Lenahan advised Commerce officials about a textile quota bill then before Congress while he was talking about a new job with Liz Claiborne, IBERC and Burlington. By significantly reducing textile imports, the GAO said, the bill would affect the financial interests of all three firms.