Senate Labor Committee Chairman Orrin G. Hatch (R-Utah) expressed his anger yesterday over the new furor surrounding Secretary of Labor Raymond J. Donovan and said he wants to know why federal officials didn't bring the allegations to his committee's attention last winter.
"That would have been the time to dispose of these matters," Hatch said, recalling his panel's stormy and highly publicized confirmation hearings concerning Donovan's background last January. "Why wasn't all this brought out then? I'm mad about it."
The FBI has been conducting a new inquiry under the Ethics in Government Act into the current charges that Donovan was present at a 1977 meeting when another official of his New Jersey construction company handed a labor union leader an envelope containing $2,000 in $100 bills.
The allegations were first made several years ago to members of a federal organized crime strike force that was investigating reports of widespread payoffs within the union, Laborers International Local 29 of New York.
The Justice Department is expected to decide shortly on whether to seek appointment of a special prosecutor to conduct a full-blown investigation into the incident. Also pending are other vintage allegations of illegal relationships between Donovan's former company, Schiavone Construction, and Laborers Local 29, in connection with a series of New York City subway projects.
Hatch warned in a telephone interview that he might order Senate hearings on the issue, even if a special prosecutor is appointed. He said he would definitely do so if Donovan wants the matter aired.
Still voicing full confidence in the labor secretary, Hatch directed most of his verbal fire at the head of the Federal Organized Crime Strike Force in Brooklyn, Thomas Puccio.
"Puccio and his people knew about these allegations last winter ," Hatch declared. "Why didn't they bring them up at the time? That's what's got me upset. Why now?"
Puccio has refused to comment about the case, but his defenders insist that he personally was not aware of the allegations involving Donovan and Schiavone until late September, after the president of the mob-connected local, Louis Sanzo, was convicted on income tax evasion and conspiracy charges.
That, sources say, began the clock running for the 90-day preliminary inquiry that the FBI must conduct under the law to help the attorney general determine whether a special prosecutor should be appointed.
Attorney General William French Smith can avert such a step only if he finds that "the matter is so unsubstantiated that no further investigation or prosecution is warranted" and so informs the special prosecutor division of the U. S. Court of Appeals here.
Whatever the reason for the earlier inattention, Puccio is reportedly planning to embark on his own investigation of Schiavone Construction and its activities in New York, as distinct from Donovan personally.
Informed sources indicated this was the reason for the Puccio's reported issuance on Dec. 1 of subpoenas for Schiavone records dating back to 1977. According to the Newhouse News Service, the records were due to be produced several days ago, but have been held up pending a decision on the special prosecutor.
Government sources said such an appointment still is virtually certain although it may come a bit later than the originally projected Monday deadline. It appears that the 90 days may be calculated from the time the allegations were brought to the attorney general's attention rather than to Puccio's. "If there was ever situation made for having one a special prosecutor, this is it," said one well-placed source.
Donovan has steadily refused all comment, but sources say he has denied to the FBI that he attended the 1977 luncheon at which former Local 29 secretary-treasurer Mario Montuoro says the $2,000 "token of appreciation" was handed to Sanzo.
Montuoro told The Washington Post in an interview this week that he cannot say whether Donovan knew what was in the envelope or whether he heard Schiavone executive Joseph DiCarolis describe it to Sanzo as "a token of appreciation for the help you did for us."
But Montuoro said that "I remember him [Donovan] . . . sitting over there," next to DiCarolis.
Montuoro has also charged that Schiavone paychecks and vacation chits were frequently made out to "ghost employes" and later cashed by Sanzo and other Local 29 officials. Two former bookkeepers for the local, Joyce Cole and Julietta Fernandez, have also attested to the payments for "no-show" employes.
Montuoro was ousted as secretary-treasurer of Local 29 in May, 1978, for what he says were his reform efforts, and he apparently began cooperating with federal authorities as soon as they contacted him later that year in their investigation. Cole and Fernandez were fired after they had testified before a federal grand jury.
Hatch said he still is inclined to believe Donovan. "He's pretty upset," Hatch added. "He thinks somebody is out to get him."
As for a possible Senate hearing, the senator said he would want to hear from all the principals.
"If Donovan demands it, I'll give him one," Hatch said. "I sure as heck want to know the answers to these things . . . . The question is when. I might want one in the next week or so."