Attorney General William French Smith asked a panel of federal judges yesterday to appoint a special prosecutor to investigate "an allegation" of union corruption involving Secretary of Labor Raymond J. Donovan.
Justice Department spokesmen refused to provide any details, but it was clear that the request was for an inquiry specifically limited to the charge that Donovan was present at a 1977 luncheon when another official of his construction company handed a New York labor union leader an envelope containing $2,000 in cash.
The man who leveled the charge, Mario Montuoro, former secretary-treasurer of Laborers International Local 29 in New York, has also alleged that the firm, Schiavone Construction Co., bestowed other favors on Local 29 officials in apparent violation of federal labor law, but none of these assertions involved Donovan personally.
The Justice Department said the special three-judge panel, headed by Roger Robb of the U.S. Circuit Court of Appeals here, has approved public release of the report on the preliminary FBI investigation in the case, but not until the special prosecutor has been designated. Department spokesman Tom DeCair said this could take "a couple of weeks" since the judges have yet to interview candidates or have their credentials checked.
DeCair would not comment on the substance of the single "allegation" that the attorney general decided needs further investigation under the provisions of the Ethics in Government Act. But, sources say, FBI agents assigned to the preliminary inquiry required under the law have concentrated exclusively on the alleged $2,000 payoff.
The court could presumably broaden the prosecutor's mandate as it did in a 1979 case involving White House chief of staff Hamilton Jordan. The Justice Department had asked that that investigation be limited to assertions--later rejected as false--that Jordan had used cocaine on a visit to a New York discotheque. The court expanded the prosecutor's authority to cover "any other related or relevant allegation" that Jordan might have violated federal drug laws.
The Justice Department's announcement came on the heels of a public statement by Donovan Tuesday urging appointment of a special prosecutor to lay to rest what he described as a series of "false statements, leaks and innuendo" over the past two weeks. But Donovan urged a somewhat broader inquiry, into all the charges made by Montuoro against Schiavone Construction and against himself.
The department said Donovan's call had no impact on Smith's decision. Spokesman DeCair said Smith made his decision in Los Angeles Tuesday morning, winding up the preliminary inquiry that the FBI started Dec. 2. Smith, reporters were told, then informed the White House and top department aides.
DeCair said Donovan's lawyer, Dean Burch, was told of the action yesterday morning. In another brief statement following the department's formal announcement, Donovan welcomed it as "the only way to prove the falsity of the allegations--once and for all."
For his part, Montuoro said through his lawyer that he was sticking by his account of the 1977 luncheon at Prudenti's restaurant in Long Island City. He said Schiavone vice president Joseph DiCarolis --whom Montuoro knew as Joe DiCarlo--handed Local 29 president Louis Sanzo an envelope containing $2,000 in $100 bills as "a token of appreciation for the help you did for us."
Donovan, then executive vice president of Schiavone, was, according to Montuoro, sitting next to DiCarolis.
The labor secretary angrily declared Tuesday that he had never even been in Prudenti's, but Montuoro told a reporter he was sure he had the right spot in mind.
"Believe me, I can't afford to eat in that place," he said.
Speaking for Montuoro and two former Local 29 bookkeepers who have supported some of his allegations about other favors from Schiavone, New York labor lawyer Arthur Schwartz said they, too, welcomed the Justice Department announcement, but voiced hope that the prosecutor would "investigate all of the allegations" concerning Donovan and Schiavone.
"Only by investigating the series of payoffs and favors allegedly given to union officials can the true import of the circumstances of the alleged incident at Prudenti's be made clear," Schwartz said.
Montuoro was even more explicit. "Now they want to do only one item?" he exclaimed in a telephone interview last night. "If that ain't a cover-up, what is?" The former Local 29 official, whom a National Labor Relations Board judge has held was improperly fired from the union, first told authorities of the alleged $2,000 payoff several years ago, then was interviewed about it again in late September by officials of the Federal Organized Crime Strike Force in Brooklyn.
Higher-ups at the Justice Department here, however, say they were not informed by strike force chief Thomas Puccio until early December.
Puccio's office reportedly did some investigating of its own before notifying Washington. Sources say he has been contemplating an investigation of Schiavone by his office insofar as its activities fall outside the special prosecutor's mandate.
Allegations of ties to organized crime and union corruption have swirled about Donovan and his construction company since January when his nomination ran into a bruising set of confirmation hearings.
The early charges, none of which the FBI was able to corroborate, ranged from assertions that Donovan had made payoffs to organized-crime figures in New Jersey in the late 1960s to maintain labor peace for Schiavone, to claims of bid-rigging on state contracts and talk that the company was "mobbed up" by social and business links with organized crime.
The FBI conducted an intensive but hurried investigation of the most specific allegations, primarily those made by a government-protected witness named Ralph Picardo, but ignored other accusations that came to the bureau's attention a few days before the final confirmation vote on the Senate floor.
Then as now, Donovan dismissed the charges against him as groundless and the talk of "hoodlums," and concentrated his fire on his chief accuser, Picardo, whom Donovan called "murdering slime."
Similarly, in his statement Tuesday urging appointment of a special prosecutor, the secretary zeroed in on Montuoro, denouncing him as "a damnable and contemptible liar," and emphasizing Montuoro's two criminal convictions, one from the 1960s (possession of heroin, sentence suspended) and the other from the 1970s (possession of a deadly weapon, sentence suspended).
Schwartz, however, pointed out that a number of Montuoro's charges have been corroborated by Joyce Cole, a former bookkeeper at his union local who was fired in 1979 after testifying before a federal grand jury.
In addition, Senate Labor Committee Chairman Orrin G. Hatch (R-Utah) observed to a reporter several days ago that there are a number of "unanswered questions" left in the wake of the confirmation hearings.
Among these are questions stemming from federal wiretaps and electronic surveillance during 1979 of a South Bronx warehouse that served as headquarters for William P. Masselli, an alleged member of the Genovese family of the Mafia and head of a trucking company that has served as subcontractor for Schiavone on a series of New York City subway projects.
In addition, the FBI never looked into the claims of another government-protected witness, Patrick Kelly, who told The Washington Post last winter that he had heard talk by organized-crime figures in New Jersey in 1977 about alleged bid-rigging involving Schiavone and about asserted ties to the Genovese family.
At the time, Hatch dismissed Kelly's leads as "puffs of smoke" too vague to order the FBI back into the field, but he said more recently that he was not satisfied with that aspect of the inquiry.