Sen. Patrick J. Leahy (D-Vt.) has asked the White House to review the role of an assistant secretary of agriculture, John B. Crowell Jr., in a stock fraud case involving the company for which Crowell was chief attorney before joining the Reagan administration in 1981.
Leahy told White House counsel Fred F. Fielding in a letter this week that a U.S. District Court jury verdict last summer against Louisiana-Pacific Corp., Crowell's old company, raised new questions about him. Louisiana-Pacific settled the case for $5.3 million after the jury found it guilty of fraud, market manipulation and misrepresentation during its takeover of the Fibreboard Corp. in 1978. Crowell was not mentioned in the case, and denied in an interview that either he or Louisiana-Pacific had done anything wrong.
He accused Leahy of pursuing a vendetta against him.
But Louisiana-Pacific officers testified that, on advice of their company lawyer, they had made public statements and taken certain actions, alleged to be part of a conspiracy to depress the price of Fibreboard stock and ease the sale.
The suit was filed by one of Fibreboard's major shareholders in January, 1981, when Crowell was still with Louisiana-Pacific. He left the firm the following month to become assistant secretary of agriculture for natural resources and environment, which includes management of U.S. forests. Crowell was confirmed by the Senate after Leahy and other Democrats raised questions about potential conflicts of interest on forest policy.
Louisiana-Pacific is a major purchaser of timber from publicly owned forests.
In his letter to Fielding, who advises the president on issues of ethics and conflicts, Leahy asked the White House to review its records to determine if Crowell had disclosed information about the Fibreboard case and whether he is "still fit" to remain in office.
Fielding could not be reached for comment on the Leahy letter.
Crowell said in the interview this week that he "probably" was involved in many of the decisions leading to the purchase of Fibreboard, although Louisiana-Pacific had retained an outside law firm, Sullivan & Cromwell of New York, to assist in the acquisition.
"We would have relied on Sullivan & Cromwell," Crowell said, adding that he could not recall how deeply he was involved in the corporate decisions at issue in the trial. He said he felt that Louisiana-Pacific had complied with federal securities laws and that he was "shocked and astonished" by the verdict in Philadelphia last summer.
The questions raised by Leahy were part of "a long and tenuous chain that is being constructed to tar me," Crowell said. "Sen. Leahy took an active role in trying to defeat my nomination and confirmation.
"I don't see what he is trying to prove. That I am incompetent? Or that I counseled an illegal action? . . . Here we are two years away from this. I went through the confirmation battle, sold all my forest products and energy company holdings, went further and set up a blind trust for me and my wife in order to avoid any kind of conflict, and now we find someone trying to dredge up something. It's rather hard to take."
Fibreboard shareholders who were plaintiffs in the Philadelphia case contended that Lousiana-Pacific deliberately conditioned the market by leading the public to believe through news releases that a $15-a-share offer was considered seriously by both companies in the takeover when it already had been rejected. Fibreboard had been holding out for $20 a share, but finally settled on $17.
Louisiana-Pacific's president, Harry Merlo, and its press officer, Gerard R. Griffin, testified that their decisions on the news releases were based on advice from the company's lawyers. Crowell, in his confirmation disclosure report, said that as general counsel he administered the firm's law department, provided legal advice and administered litigation involving the company.
Leahy, in his letter to Fielding, said, "The testimony of Louisiana-Pacific officials established that John Crowell was responsible for critical decisions which the plaintiffs alleged were designed to manipulate the stock market."