John R. McKean, chairman of the Postal Service board of governors, has charged the Postal Service $97,793 for legal fees he incurred during investigations into loans he arranged for Attorney General Edwin Meese III.
The board has agreed to pay for the legal work, which was provided by its outside counsel, former Carter administration official Joseph A. Califano Jr., and his law firm.
Rep. Glenn English (D-Okla.), chairman of a House Government Operations subcommittee that oversees the Postal Service, said the bill "certainly seems out of line."
"The real question is why the Postal Service, particularly the mailing public, should pay the legal bills resulting from an investigation of McKean's private business dealings -- particularly when those business dealings predate his appointment to the board," English said.
Califano said he represented McKean, who had been Meese's accountant, in an independent counsel's probe of allegations involving Meese, and later helped McKean prepare testimony for Meese's Senate confirmation hearings.
Califano said that the bill was not unreasonable for 18 months of work and that he charges the postal board $150 an hour, substantially less than he bills private clients. He said the board had agreed to pay McKean's legal bills because the investigations concerned McKean's presidential appointment to the part-time postal job.
"He is entitled to have legal representation on something arising out of the appointment to his job," Califano said. "It was clearly and explicitly authorized by the board. Everyone knew about it. I think that we would do this for any board member."
McKean, a San Francisco accountant, did not respond to requests for comment yesterday.
The investigation by independent counsel Jacob A. Stein last year found no evidence of a connection between McKean's arranging $60,000 in loans for Meese in 1981 and Meese's recommendation about the same time that McKean be named to the postal board.Meese did not pay interest on the loans until they were disclosed in news accounts in 1983.
Disclosure of McKean's legal bills follows a controversy over $720,824 in legal fees that Meese's lead attorneys, Leonard Garment and E. Bob Wallach, billed to the government for their firms' work during the Stein investigation. A three-judge panel from the U.S. Court of Appeals here awarded the attorneys $472,190 last month under a law that allows the government to pay a defendant's legal bills in such investigations if no charges are brought.
McKean's $97,793 fee was almost as much as the $101,397 that Garment and Wallach sought for the portion of their work that dealt with allegations involving McKean. Garment and Wallach based their request on a top billing rate of $250 an hour.
English noted that McKean was not a defendant in the probe and questioned whether Califano, who charged $150 an hour, "would have to spend twice as much time to run up the same bill."
Califano disputed the comparison, saying that his work took 18 months and the Stein probe lasted only six. He said he also accompanied McKean to Meese's confirmation hearings and dealt with a House panel's probe of the loans to Meese.
Califano, who was secretary of health, education and welfare under President Jimmy Carter, called the work "exactly what any general counsel in any Cabinet agency would do for an agency head."
Califano said at least two other lawyers at his firm -- Dewey, Ballantine, Bushby, Palmer & Wood -- assisted him in preparing "an extensive reconstruction" of McKean's dealings with Meese.
Califano said that McKean "is not a political person" and needed extensive preparation to testify at Meese's confirmation hearings. He said he had not charged the board for dealing with the news media, a task for which Meese's lawyers unsuccessfully sought reimbursement.
David F. Harris, secretary to the postal board, agreed that "this was legal work that properly could be done at board expense."
Several other board members could not be reached for comment. One former board member, David E. Babcock, said he considered the allegations involving McKean "a private matter" and added that he would not have charged the board for such legal fees. But Babcock said he accepted Califano's assurances to the board that the expenses were proper.
In a letter to English, Califano said the postal board also paid his firm about $22,000 to represent McKean in connection with conflict-of-interest allegations referred to the Justice Department in February. Two federal agencies asked the department to examine allegations that McKean participated in the award of a $300,000 Postal Service contract to a San Francisco labor-law firm for which McKean has done accounting work.
McKean has said he suggested last year that then-Postmaster General William F. Bolger consider hiring the firm and that he sat in on Bolger's interview with its partners.
Califano said that McKean had personally been paying Califano's firm to represent him since the Justice Department entered the probe. Califano said he was representing other board members in interviews with prosecutors at Postal Service expense.
Califano's letter also said he had billed the board about $66,000 for dealing with separate allegations that Bolger participated in postal-rate deliberations last year while negotiating a possible job with a mass-mailing group whose members would be affected by the rate changes. That matter also has been referred to the Justice Department.
Califano, the board's outside counsel since 1980, said his firm was paid $655,000 last year for largely technical work.
Although it receives nearly $1 billion in federal money, the Postal Service is a quasipublic corporation that pays all its expenses from mail revenues.