by Mr. Haney and/or Mr. Sasser with respect to these TVA lease extensions, particularly Chestnut Street Towers.9!

In his first day of testimony, Mr. Haney flatly denied having any contingent fee agreements with Mr. Sasser, other than the $1 million fee on the Portals project. When asked specifically whether he was the unidentified client that is referenced in Mr. Sasser's May 1996 disclosure to the State Department of two prior contingent fee agreements (Appendix A, at 249-250), Mr. Haney testified:

Appendix A, at 251. Moreover, during his second appearance before the Subcommittee, Mr. Haney also denied that he ever had a "conversation with Senator Sasser that would have made him believe that [they] also had a contingency agreement on the extension of a TVA lease." Appendix C, at 309.

However, after having Mr. Sasser's testimony on this point read back to him, Mr. Haney acknowledged that he may have made a comment to Mr. Sasser suggesting a contingency fee with respect to "refinanc[ing] the loans behind the TVA deal" -- that is, if the lease was extended and they successfully renegotiated and refinanced the Chattanooga bonds backed by the TVA lease. Appendix C, at 310-311. But Mr. Haney insisted that there was no separate contingency fee tied to

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Because Mr. Haney likely would have been required to re-certify or re-affirm the lack of any contingent fee arrangements in connection with this lease extension, any such certification by Mr. Haney would appear to run afoul of both the False Statements Act, 18 U.S.C. § 1001, and/or the False Claims Act, 31 U.S.C. § 3729, and would raise questions under the general Federal conspiracy statute (18 U.S.C. § 371), as discussed in Report Sections IV, V, & VI, supra.

the lease extension itself, only to the refinancing, which to him would be perfectly legal. Appendix C, at 310-311.

But Mr. Haney's admission that he did not disagree with Mr. Sasser's recollection of their conversation, at least with respect to the IRS bond renegotiation, conflicts with his earlier testimony denying any contingency fee agreement, even on those bonds. Appendix A, at 251. In addition, Mr. Haney's acknowledgment that he did have plans, at one point, to refinance the loans behind the TVA deal (Appendix C, at 311) conflicts with his first day of testimony, in which he swore that he never had any plans to refinance those loans. Appendix A, at 228. Finally, his testimony that he never had any plans to use the Chestnut Street Towers lease extension to help finance the Portals (Appendix A, at 220) appears to be clearly false, given the testimony of Mr. Mancuso that the reissuance of the Chattanooga bonds were the original planned source of Portals financing, and the documentation reflecting that those bonds would be backed by a second mortgage on the Chestnut Street Towers. See Appendix R, at 4; Appendix B, at 7-12.

Further, Mr. Sasser's last-minute claim that he never had legally-binding contingency fee agreements with Mr. Haney -- despite his repeated, contemporaneous descriptions of them as such -violates basic notions of contract law and simply is not credible under the circumstances." An agreement does not become a non-agreement just because all of the details have not been worked out at the time of initiation. Rather, a contract is formed when there is a meeting of the minds on the work to be done under circumstances that suggest compensation reasonably would be expected. The failure to agree, up-front, on the exact amount of a fee does not prevent the formation of a contract, or eliminate its enforceability, particularly when as here -- actual performance has occurred. See, e.g., Browne v. R&R Engineering Co., Inc., 264 F.2d 219 (3d Cir. 1959) (evaluating enforceability and legality of contingent fee contract despite lack of set fee); see also E. Allan Farnsworth, Contracts, § 3.7, at 200-212 (2d ed. 1998). Thus, the conversation between Mr. Sasser and Mr. Haney, in which the latter stated that he would pay a success fee if his TVA leases were extended, would appear to be a classic contingency fee contract. As a result, Mr. Sasser's statements to the contrary would, apparently, be inaccurate at the least.

The apparent effort by both Mr. Sasser and Mr. Haney, in their testimony, to alter their previous representations on this particular matter in order to bring them into line with one another's (and with the requirements of law) suggest a knowing and willful plan to make false statements under oath before the Subcommittee concerning material matters. Accordingly, the evidence warrants investigation by the Department of Justice as to whether both men violated the Federal perjury statute, 18 U.S.C. § 1621, or the False Statement Act, 18 U.S.C. § 1001, in their sworn testimony before the Subcommittee on this particular matter.

VIII. THE ROLE OF POLITICAL INFLUENCE AND CAMPAIGN CONTRIBUTIONS

Mr. Haney and his Washington representatives were not shy about flaunting their political connections, and their political clout did not go unnoticed by either GSA or the FCC.

Indeed, one of the very first calls Mr. Knight made on behalf of Mr. Haney and his interest in the Portals project was to his friend Bob Peck, whom he had helped to obtain a job at the FCC and who, as luck would have it, was placed in charge of the Portals relocation by FCC Chairman Hundt. Mr. Hundt himself has had a long professional, political, and personal association with both Mr. Knight and Vice President Gore the latter of whom assisted in placing Mr. Hundt in the FCC chairmanship. See "A Nominee for Head of F.C.C.," The New York Times, June 30, 1993, at D1 (Appendix Z).

92 That initial denial also is contradicted by numerous contemporaneous documents reflecting those refinancing plans. See, e.g., Appendix S; Appendix Y.

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As noted earlier, both Mr. Lake and Mr. Sasser's current counsel repeatedly described the understandings between Mr. Haney and Mr. Sasser as contingent fee agreements -- in their oral and written submissions to the State Department at the time, and in their recent oral conversations and interviews with Committee staff.

As discussed in detail earlier (see Report Section III, supra), in that initial conversation between Mr. Knight and Mr. Peck, Mr. Knight identified Mr. Haney and his interest in the project, and sought a meeting with Mr. Peck to discuss whether the FCC was going to relocate to the Portals. In that same conversation, Mr. Knight made clear to his friend that Mr. Haney was no ordinary client - rather, he was a "friend of Al's" (Appendix C, at 379) -- a direct reference to the Vice President of the United States, whom both Mr. Knight and Mr. Peck knew had a close relationship with the FCC chairman, Mr. Hundt.94 Mr. Peck agreed to what ultimately became a series of at least four meetings between him and Mr. Haney or his representatives to discuss the FCC's views on the relocation.

Although there is no evidence that Mr. Peck informed any of his career-level colleagues at the FCC about these meetings, he did let at least one of them know about Mr. Haney's connections with the Vice President, stating that Mr. Haney's political influence and relationship to the Vice President successfully influenced certain Democrats in the United States Senate to approve additional prospectus authority for GSA to relocate the FCC to the Portals -- something that, prior to Mr. Haney's involvement, no one at the FCC thought ever would occur. See Report Section III, supra.95

Furthermore, contemporaneous documents and events suggest that, despite the current public spin of the FCC, its views on the acceptability of the Portals location underwent a dramatic change following Mr. Haney's involvement -- a change that emanated from the Office of the FCC Chairman. See Report Section III, supra.

As for GSA, Mr. Knight again sought to use his political connections to jump-start a stalled lease amendment process, seeking a meeting with top GSA officials in the Office of the Administrator. This time, Mr. Knight contacted the Administrator's chief of staff, Barbara Silbey, with whom he had a long acquaintance, and requested a meeting to discuss the Portals. Ms. Silbey agreed, and requested that GSA General Counsel, Emily Hewitt, also attend. Ms. Hewitt, in her interview with Committee staff, stated that, when Ms. Silbey approached her on this subject, Ms. Silbey told her that "Peter Knight wants a meeting on the Portals -- you know Peter, from the campaign," or words to that effect.

Although Mr. Pagonis, the GSA contracting officer in charge of the Portals, was not invited to this meeting at GSA headquarters, he informed Committee staff that he did learn about the meeting from others who were there, and that he was told at the time that Mr. Knight previously had held some position with the 1992 Clinton-Gore campaign. Mr. Pagonis also stated in his testimony and in Committee staff interviews that, during the lease negotiations, Mr. Wagster -- who was present at the August 14, 1995 GSA headquarters meeting -- told him that GSA already had agreed to the key fixed rent start date provision at a meeting at "central office," and questioned why Mr. Pagonis was continuing to express reluctance on that point." And with respect to the critical second

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When questioned about why he would even mention Mr. Haney's relationship with the Vice President in his conversation with Mr. Peck, Mr. Knight responded that he did not recall making the statement so he could not answer the question. Appendix B, at 467-468.

Notably, a memo from Franklin Haney to Peter Knight in the summer of 1995 indicates that Mr. Haney considered seeking Portals-related assistance from U.S. Senator Bob Kerrey (D-Nebraska), during an upcoming meeting to discuss fundraising for the Democratic Senatorial Campaign Committee. Appendix B, at 295-297. Although both Mr. Haney and Mr. Knight denied contacting Senator Kerrey on the Portals matter, Mr. Haney did make a $50,000 contribution to the Nebraska state Democratic party out of the proceeds from the successful Portals closing. See Appendix A, at 133.

This conversation between Mr. Pagonis and Mr. Wagster (see Appendix C, at 491, 596) reinforces the earlier documentation from Lehman Brothers suggesting that GSA officials either agreed, or led Mr. Haney to believe that they had agreed,

supplemental lease negotiations, Mr. Pagonis acknowledged that he heard complaints with respect to his stubbornness from GSA political officials, and that he then gave up his original demands for financial consideration in return for agreeing to Mr. Haney's desired lease changes -- although he disputes any connection between the two. Appendix C, at 453.

Nonetheless, these subtle political pressures, while hard to quantify, can have an immeasurable effect on the proper functioning of the government contracting process. That is why the system was designed to remove both political officials and their influence from the system. In this case, however, there appears to have been a concerted effort by Mr. Haney and his representatives to upset the normal contracting process through the use of their political connections at GSA.

The Committee's investigation of related matters also reveals that Mr. Haney's conduct in the Portals matter was not an aberration. TVA contracting officials interviewed by Committee staff emphasized Mr. Haney's not-so-subtle efforts to exert political pressure, often referring to his connections with TVA's political officials or to influential politicians such as Mr. Sasser. And, as described in detail in Report Section VII, supra, Mr. Haney and his representative, Mr. Sasser, sought to use their influence with TVA's chairman to bypass TVA's contracting personnel, who opposed TVA's extension of leases on certain Haney-owned buildings. Further, Mr. Trapasso testified that, in connection with his work on Mr. Haney's TVA debt-refinancing project, Mr. Haney suggested that they seek the intervention of Mr. Sasser -- who at the time already was a U.S. Ambassador -- to persuade TVA to agree to the deal. Appendix C, at 327." Thus, Mr. Haney's vehement assertions that neither he nor his representatives ever sought to use their political clout on the Portals must be evaluated with a high degree of skepticism.

Indeed, at the very same time Mr. Haney and Mr. Knight were trying to obtain favorable action from GSA and the FCC, Mr. Knight discussed with Mr. Haney a $50,000 fundraising commitment from Mr. Haney for the Clinton-Gore re-election campaign -- prompting Mr. Haney to embark upon an illegal scheme to donate all of the money himself, according to a recent indictment of Mr. Haney secured by the Justice Department as part of its campaign finance investigation. In May 1995, at approximately the same time that Mr. Haney hired Mr. Knight to assist on the Portals, Mr. Knight discussed with Mr. Haney the latter's efforts to raise $50,000 for the re-election effort, for which Mr. Haney was included in relatively small gatherings hosted by the Vice President and the President -- on June 6, 1995 and October 6, 1995, respectively. See Appendix B, at 291, 316-317, 455. Mr. Knight personally informed Vice President Gore about Mr. Haney's commitment, and asked the Vice President to call Mr. Haney to thank him for his generosity. See Appendix B, at 291, 455.

According to the Justice Department indictment, the first bundle of illegal contributions arising from this commitment occurred on June 14, 1995 -- several weeks after Mr. Haney's first two meetings with FCC officials, and just five days before his first meeting with GSA (the June 19, 1995 meeting with the GSA Regional Administrator). The indictment also alleges that Mr. Haney's remaining commitment, of roughly $35,000, was illegally satisfied in mid- to late- November 1995 -- shortly after Mr. Haney's representatives met with FCC Chairman Hundt and GSA formally

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to Mr. Haney's desired lease changes back in August and without input from the legal decision maker -- Mr. Pagonis, the contracting officer. Appendix C, at 90. Although the GSA participants in that August 1995 meeting denied making any such promises or commitments, the Pagonis-Wagster conversation is nonetheless troubling. If Mr. Wagster's statements were true, then they raise substantial questions about the propriety of the actions taken by Mr. Haney and GSA's top political officials on this supplemental lease negotiation. If Mr. Wagster's statements were false, they raise significant questions about the manner in which Mr. Haney's representatives were attempting to use political pressure to persuade the GSA contracting officer into making the desired lease changes.

As noted earlier, TVA's chairman at the time was Mr. Craven Crowell, who had formerly worked as then-Senator Sasser's chief of staff.

assigned the Portals space to the FCC, and just days before the FCC finally ended its longstanding opposition and accepted relocation to that site.

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Moreover, although it is not discussed in the indictment, Mr. Haney contributed over $200,000 to various state Democratic parties and the Democratic National Committee in May 1996, following the successful closing of the Portals deal in March and the announcement by President Clinton in April of his selection of Mr. Knight as the Clinton-Gore re-election campaign manager. Mr. Knight acknowledged in his testimony that he likely discussed Mr. Haney's desire to make this large contribution, and probably put him in touch with the appropriate officials at the DNC, who could better direct Mr. Haney on where and how to make the donations. Appendix B, at 488-489. Mr. Haney, in turn, solicited the $20,000 contribution made by Mr. Wagster to the DNC on or about the same day as Mr. Haney's other bundled contributions. Mr. Wagster testified as much, although he denied knowing about Mr. Haney's contemporaneous contributions. Appendix B, 57-58. He also stated that the largest prior contribution he ever had made to a political organization was several hundred dollars. Appendix B, at 57. But Mr. Wagster, of course, had just received a $500,000 check from Mr. Haney one month earlier, upon the Portals closing.

The timing of these contributions, the involvement of Mr. Knight as both government lobbyist and political fundraiser, and the solicitation of Mr. Wagster's contribution by Mr. Haney raise substantial questions about whether there was any link between Mr. Haney's contributions and his contemporaneous desire for, or receipt of, favorable government treatment on the Portals.

IX.

HANEY'S LACK OF CREDIBILITY AND EFFORTS TO OBSTRUCT THE
COMMITTEE'S INVESTIGATION

From the very outset of this investigation, Franklin Haney sought to obstruct the legitimate fact-finding processes of the Committee by refusing to answer written questions, by refusing to produce relevant documents, by refusing to be interviewed by Committee staff, and by refusing to permit his agents and/or attorneys to be interviewed by Committee staff, even on clearly nonprivileged matters. His course of conduct throughout these proceedings -- including his repeated use of evasive, non-responsive, and misleading answers in his testimony before the Subcommittee -raises serious questions about the credibility of Mr. Haney's sworn denials of unlawful conduct with respect to the Portals.

In response to the Committee's initial inquiry for information, Mr. Haney partially complied but not until after releasing the requested information to the media, accompanied by a highly misleading press statement that suggested Mr. Haney had absolutely no involvement in the GSA lease changes under scrutiny since they were completed prior to his formal acquisition of a partnership interest in the Portals. Appendix AA, at 1. Yet, as the evidence now clearly shows, Mr. Haney and his representatives were pushing GSA to make these changes, which were critical to Mr. Haney's financing plans.99

But, apparently, Mr. Haney was hoping that the evidence contradicting his public statements would never find its way into the light of day. Despite voluntary requests and then subpoenas demanding records documenting his communications with GSA officials, Mr. Haney unlawfully withheld from the Committee several key documents -- including the June 19, 1995 letter to the GSA Regional Administrator, in which Mr. Haney recounts their discussion that day about lease changes sought by Mr. Haney, and the September 7, 1995 letter from Mr. Haney to Mr. Knight, in which he

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This announcement, which occurred on or about April 23, 1996, came just weeks after Mr. Knight received the $1 million payment from Mr. Haney.

In this same press statement, Mr. Haney also stated that he never "contacted the Vice President or anyone else in the Executive Office of the President" with respect to the Portals. Appendix AA, at 1. Yet the evidence also shows that Mr. Haney and Mr. Sasser met with an official in the Executive Office of the President the OMB branch chief in charge of GSA -- to discuss the Portals project. Appendix C, at 103-104.

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