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  • Key stories about the Espy probe.

  •   As Espy Trial Ends, Its Insight Into Gifts and Favors Is Murky

    By Bill Miller
    Washington Post Staff Writer
    Monday, November 23, 1998; Page A21

    Independent counsel Donald C. Smaltz said the trial of former agriculture secretary Mike Espy would show how a high government official betrayed the public's trust by taking $35,000 in gifts from companies he was supposed to be regulating. Now that Smaltz has rested his case, after calling 70 witnesses in seven weeks of testimony, the issues do not appear as clear-cut as he contended.

    Many of Smaltz's witnesses have depicted Espy as a bright, ambitious agriculture secretary who made decisions based on merit and not to reward any special interests. They said Espy worked long hours and traveled extensively to promote policies on important trade and farm issues. Although several lobbyists testified that they gave Espy tickets to sporting events and other gifts, they insisted they did so out of friendship and not to reward him for past or future acts.

    The trial has been a primer into the way Washington works. On one side is Smaltz, who maintains the law requires public officials to keep a professional detachment from lobbyists and the interests they regulate. The defense contends that public officials can enjoy friendships with corporate officials and lobbyists and still make decisions fairly.

    It will be up to U.S. District Judge Ricardo M. Urbina and the jury to sort out the matter and decide whether Espy is guilty of 38 corruption charges. Under federal law, public officials are barred from accepting gifts as a reward for past or future acts.

    Not all gifts are illegal: The law permits officials to receive gifts borne out of friendship and warm feelings.

    Defense lawyers Ted Wells and Reid H. Weingarten filed papers Friday asking Urbina to dismiss the charges, and the judge plans to issue his ruling on Tuesday. Wells and Weingarten said they do not plan to present any defense witnesses. Urbina has scheduled closing arguments for Nov. 30.

    Smaltz has succeeded in showing that Espy got gifts from companies and lobbyists who had business pending before USDA after he became President Clinton's first agriculture secretary in 1993. Espy's tenure ended in December 1994 amid allegations of wrongdoing. Many of his actions, however, went against the very same people and firms he was socializing with.

    Smaltz's case is framed upon his belief that Espy had little regard for his ethical obligations and deprived the public of his honest services. Espy paid for several gifts after his conduct came under investigation, but Smaltz said he did so in a last-ditch effort to save his job and gloss over misdeeds.

    The items went to Espy not out of friendship, Smaltz said during opening statements, but "because he was the secretary of agriculture and had made or could be making decisions that could have an impact on their businesses. Mr. Espy knew who these people were who were giving gifts to him, and why they were giving them."

    But Wells said the jury should take into account Espy's overall actions, which demonstrated some mistakes, but no crimes.

    "The best way to understand that he's not a crook, he didn't do anything wrong, is look at what he did. He called everything straight down the middle. That's what the evidence will show you," Wells told the jury at the trial's start. "If his friends were right, he ruled that way, When his friends were wrong, he ruled against them. . . . He's not being some dishonest public official."

    Espy, 44, a former congressman from Mississippi, has sat quietly at the defense table throughout the trial. He occasionally reads a Bible -- which he keeps hidden from the jury's view -- during the case's most plodding moments. When he was indicted last year, as the prime target of Smaltz's $17 million investigation, he vowed to win vindication in court.

    The gifts at issue include items received from Tyson Foods Inc., the Arkansas-based poultry giant; Sun-Diamond Growers of California, a large fruit and nut cooperative; Oglethorpe Power Corp. of Georgia; Smith Barney Inc., the international banking and securities firm; EOP Group Inc., a political and business consulting firm in Washington; Quaker Oats Co. of Chicago; and Fernbank Inc., a private nonprofit organization that runs a museum in Atlanta.

    Smaltz, a lawyer from Los Angeles who was appointed to investigate Espy in September 1994, has relied upon the testimony of business executives, lobbyists and Agriculture Department officials, many of whom came to court reluctantly. Some of his witnesses had their own brushes with the independent counsel, whose probe has generated more than a dozen convictions of individuals and businesses. The bow-tied Smaltz has chosen to handle much of the courtroom work himself.

    His key witnesses provided ammunition for both prosecution and defense.

    John Tyson, board chairman of the poultry firm, testified that Espy was a guest of the company at a January 1993 inaugural dinner, attended a lavish party paid for by the firm in May 1993, and sat in the Tyson Foods skybox at Texas Stadium for a Dallas Cowboys football playoff game in January 1994. In addition, he said, the company provided Espy's then-girlfriend, Patricia Dempsey, with a $1,200 scholarship so she could pursue a business degree.

    Like other executives who testified, Tyson appeared under an immunity deal with Smaltz. Tyson Foods Inc. pleaded guilty last December to giving Espy more than $12,000 in illegal gratuities. The company agreed to pay a $4 million fine and contribute $2 million to Smaltz's investigation.

    But during a half-day on the witness stand, Tyson testified that there were no ulterior motives behind the roughly $12,000 in gifts, adding that Espy's policies went against the company. Espy pushed for a regulation that would have required poultry and meat producers, such as Tyson, to place safe handling instructions on all packaging labels. He wanted a relatively quick enactment date, despite the company's protests. As it turned out, a judge -- not Espy -- temporarily derailed the labeling plan.

    Tyson confirmed that Espy was a guest of his father, Don Tyson, at a party in Russellville, Ark., in May 1993. The event featured food, drinks and music from entertainers, such as B.B. King and Ronnie Milsap. According to John Tyson, Espy was in the area for a business meeting and his father invited him as an act of personal friendship.

    "He never mixes business and drinking," Tyson said of his father. "Dad's a serious business guy and a serious drinker. He does both of them well."

    Leaders of Fernbank Inc. testified they provided Espy with four tickets to the 1994 Super Bowl for a legitimate reason. Fernbank had a USDA contract to promote a traveling exhibit honoring the 50th anniversary of Smokey Bear, the icon of the U.S. Forest Service, a part of the Agriculture Department. Smokey Bear was to be honored during the Super Bowl's halftime show, Fernbank officials said.

    According to Espy's lawyers, Espy intended to accompany a costumed Smokey Bear onto the field, and cleared the trip with a USDA lawyer. However, the costume proved uncomfortable for an actor, and the idea was scrapped. Instead Smokey Bear got a quick salute on the Georgia Dome's scoreboard.

    Prosecutors contended that Espy had no legitimate reason to go to the game and that the tickets were illegal because Fernbank was a USDA contractor.

    Sports also figured into Espy's dealings with William Smithburg, the former chairman of Quaker Oats Co., who testified that a staff member for Espy called his office in June 1993 to request tickets for a Chicago Bulls playoff game. Smithburg said he gave Espy two of his own personal seats for the game as a goodwill gesture.

    "I was not trying to influence him," Smithburg told the jury.

    More tickets and gifts came from Richard Douglas, then a lobbyist with Sun-Diamond Growers. Sun-Diamond's former president, Larry Busboom, testified that he didn't realize the gifts were illegal. He said he believed Douglas was just doing his job, and at the same time continuing a friendship with Espy that dated to their days together at Howard University.

    Douglas testified that he led Espy to believe that the gifts actually were coming from him, not from Sun-Diamond. Among other things, Douglas gave Patricia Dempsey $3,200 in cash so that she could pay for airfare to accompany Espy on a business trip to Greece. Douglas, who at the time was a vice president of Sun-Diamond, said that he never asked Espy for any favors for the company and that Espy never provided any.

    Another friend of Espy's, lobbyist Michael O'Bannon, likewise denied doing anything improper by giving him a ticket to the 1994 Super Bowl game. At the time, O'Bannon was working on behalf of Oglethorpe Power, which wanted to repay a $3 billion USDA loan earlier than scheduled but also wanted to avoid paying $300 million in penalties. Although Espy and others at USDA sided with Oglethorpe, the Treasury Department rejected the arrangement.

    O'Bannon also helped Patricia Dempsey. In early 1994, he hired her to work as a training and events coordinator for his company, EOP Group Inc., a job that paid $35,000 a year. O'Bannon testified that Dempsey's performance was "sporadic at best," and said his partners and clients complained about her. She resigned from the firm in March 1995, after Espy had left USDA. O'Bannon testified that he hired Dempsey because the firm needed help and not in any way to curry favor with Espy. "I don't do favors in hiring," he said. Dempsey was not called as a witness.

    Douglas and O'Bannon, who are black, testified they felt that Espy was bound to develop enemies as the first African American to head USDA and insisted they would not have done anything to contribute to his downfall.

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