Both the language and intent of the statute barring contingency fees on Federal contracts simply cannot support Mr. Wagster's strained interpretation of it. As before, the relevant question is: Would he have received the fee if not for GSA's agreement, at his urging, to sign a supplemental lease? The short answer is apparently no, thus providing strong evidence that the fee arrangement between Mr. Haney and Mr. Wagster was unlawful. Thus, the evidence supports further investigation by the Department of Justice as to whether Mr. Haney violated the bar against contingent fees on Federal contracts (41 U.S.C. § 254(a)), and caused false statements to be filed with the government concerning his partnership's lack of contingent fee relationships in violation of the False Statements Act (18 U.S.C. § 1001) and/or the False Claims Act (31 U.S.C. § 3729). G. Other Haney Contingency Arrangements with Knight and Sasser Despite Mr. Haney's repeated assertions that he "would never pay a contingency fee" on a Federal contract, there is substantial evidence that he conducted his government business in such an unlawful manner on at least several occasions. In addition to the Portals-related fee arrangements discussed above, other evidence confirms that Mr. Haney agreed to pay both Mr. Knight's law firm and Mr. Sasser contingency fees upon the completion of projects involving government contracts. 1. A Contingency Fee Arrangement with Sasser on TVA Leases: - In his March 1995 financial disclosure form, Mr. Sasser disclosed an unidentified contingent fee arrangement with a client, which -- as it turned out involved two distinct contingent fee agreements with Mr. Haney. The first fee was contingent upon the successful negotiation of certain lease extensions with the Tennessee Valley Authority (TVA) on properties owned by Mr. Haney, while the second fee was contingent upon the successful renegotiation of existing bonds that were backed by the rental payments on one of those TVA-leased properties, the Chestnut Street Towers in Chattanooga, Tennessee. This latter contingency involved securing the tax authorities' assent to tax-exempt treatment for any re-issuance of the bonds -- a re-issuance that was Mr. Haney's original planned source of funds to finance the Portals. When questioned by the State Department about these contingent fee arrangements, Mr. Sasser informed the Department that he would relinquish his rights to them. With respect to the first contingency, there appears to be no question that this arrangement, at least initially, was an unlawful contingent fee on a Federal contract. The evidence also is clear that Mr. Sasser took affirmative steps to help bring about the contingency, by contacting TVA Chairman Craven Crowell -- who had served as then-Senator Sasser's chief of staff -- to ask him to have "somebody look at" Mr. Haney's extension proposal, given the hostility towards Mr. Haney and his proposal at the TVA contracting officer level. In fact, Chairman Crowell did just that, asking TVA's Chief Administrative Officer to handle this matter for him - a highly unusual occurrence on TVA leasing matters, according to TVA's leasing personnel. The strategy to elevate the matter within TVA apparently worked, as TVA agreed to extend the Chestnut Street Towers lease on a fixed 10-year basis, despite the opposition of the TVA career contracting officials who did not believe any extension of the lease was warranted. Notably, in Mr. Sasser's response to a Senate nomination questionnaire concerning his Federal lobbying activities, he does not mention his direct efforts to assist Mr. Haney in securing certain TVA lease extensions. - Moreover, the apparent effort by both Mr. Haney and Mr. Sasser, in their testimony, to alter their previous representations on this particular matter in order to bring them into line with one another (and with the requirements of law) suggests a knowing and willful plan to make false statements under oath before the Subcommittee concerning material matters. Accordingly, further investigation by the Department of Justice is warranted as to whether these men committed perjury in their sworn testimony on this particular matter. 2. A Contingency Arrangement with Knight on the Reagan Building: As noted above, the testimony of Mr. Trapasso with respect to his law firm's work for Mr. Haney on the Ronald Reagan Building project suggests that Mr. Haney offered to pay, essentially, a success or contingency fee for the firm's successful efforts. Mr. Trapasso also made clear that, had the refinancing proposal been accepted by GSA, it would have resulted in some type of lease or contract between Mr. Haney and the government. Although Mr. Haney never actually paid the firm any such fee (since the deal never closed), this episode clearly reveals that Mr. Haney was willing to pay Mr. Knight a contingency fee on a Federal contract. H. The Role of Political Influence and Campaign Contributions "[T]he first time Mr. Knight called me when I was at the FCC and Testimony of former FCC official Robert Peck, Vice President Gore In the very first conversation between Mr. Knight and the FCC's Mr. Peck regarding the Portals, Mr. Knight made clear to his friend that Mr. Haney was no ordinary client seeking a meeting. Rather, he was a "friend of Al's" -- 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 at the time, Mr. Reed Hundt. This conversation led to a series of meetings between Mr. Knight, Mr. Peck, Mr. Haney and others to discuss the FCC's cooperation in the relocation to the Portals meetings that mostly occurred at Mr. Knight's private law office instead of on FCC premises, and meetings that were not revealed to the FCC's top career administrative officer, who also had day-today responsibility for the Portals matter. Mr. Haney's representatives, including Mr. Sasser, also met with FCC Chairman Reed Hundt in October 1995 to discuss the Commission's opposition to the Portals relocation, just weeks before the FCC changed course and accepted the Portals space assignment by GSA. As for GSA, Mr. Knight again sought to use his political connections to jump-start a stalled lease amendment process, securing a meeting with top GSA officials in the Office of the Administrator to request lease changes. Before this meeting, GSA General Counsel Emily Hewitt, who was in attendance, was advised by the GSA Administrator's office that Mr. Knight had requested the meeting and had been a Clinton-Gore campaign official. Although Mr. Pagonis, the GSA contracting officer in charge of the Portals, was not invited to this meeting, he learned about the meeting from others who were there, and he, too, was told that Mr. Knight had previously held some position with the 1992 Clinton-Gore presidential 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 above-described GSA headquarters meeting -- told him that GSA already had agreed to the key fixed rent start date at a meeting at "central office," and questioned why Mr. Pagonis was continuing to express reluctance on that point. Further, and with respect to the critical second supplemental lease negotiations, Mr. Pagonis acknowledged that he had heard complaints with respect to his stubbornness from GSA political officials, and that he 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. 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, infra, 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. 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. It otherwise would be senseless for a developer with decades of experience dealing with GSA leases to hire such political heavyweights and pay them millions of dollars in fees. Indeed, at the very same time Mr. Haney and Mr. Knight were trying to obtain favorable action from GSA and the FCC on the Portals, Mr. Knight secured a $50,000 fundraising commitment from Mr. Haney for the Clinton-Gore re-election campaign. This commitment prompted 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. Moreover, although it is not discussed in the indictment, Mr. Haney -- after discussions with Mr. Knight -- 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. The timing of these contributions and the involvement of Mr. Knight as both government lobbyist and political fundraiser 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. I. Haney's Lack of Credibility and Efforts to Obstruct the Committee's 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 subpoenaed documents, by refusing to be interviewed by Committee staff, and by refusing to permit his agents and attorneys to be interviewed by Committee staff, even on clearly non-privileged 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 on the Portals project and related matters. Moreover, with respect to Mr. Haney's testimony before the Subcommittee, he repeatedly denied knowledge or recall concerning contemporaneous documents and meetings with government officials on the Portals. His reluctance to acknowledge these documents and meetings appears to have been calculated, while his repeated lack of recollection appears to have been designed to separate himself from the contents of those letters and the discussions at those meetings, all of which undercut his recent public assertions about his Portals-related involvement. In short, Mr. Haney's utter lack of cooperation, his efforts to prevent cooperation from others under his control or influence, his unlawful withholding of damaging documents, his inability to recall even the most basic details of his involvement in the Portals, his deliberate campaign of public misinformation, his apparent false statements and representations to this Committee and Subcommittee, and his questionable non-Portals related dealings with the government all strongly suggest that Mr. Haney broke the law in this matter and has been trying to conceal it ever since. The Committee's investigation has revealed a pattern of questionable legal and ethical activities and numerous apparent false statements by Mr. Haney and his representatives not only in connection with the Portals, but also with respect to Mr. Haney's leasing activities with the Tennessee Valley Authority. Accordingly, the evidence warrants further investigation by GSA, TVA, the State Department, the Department of Justice, and/or any other appropriate law enforcement authorities. II. HANEY'S EFFORTS TO SECURE KEY AMENDMENTS TO THE GSA- A. The Chronology of Events After years of controversy and litigation, GSA and Parcel 49C Limited Partnership (Parcel 49C or the Portals partnership) signed a 20-year lease in August 1994 for 287,000 square feet of office space to be built at the Portals, a commercial development located in southwest Washington, D.C. Although the FCC was intended to be the occupant of this space since the inception of the procurement process, the Commission steadfastly had opposed relocating to the Portals site for various reasons before and after this initial lease was executed. Moreover, around the same time that the August 1994 lease was signed, one of the partners in the Portals partnership -- Confederation Life Insurance Company -- was experiencing serious financial difficulties, which led the managing partner, Mr. Steve Grigg of the Portals Development Associates Limited Partnership, to seek alternative financing and partnership arrangements. - - In the Spring of 1995, Mr. Haney and Mr. Grigg -- through their mutual relationship with Mr. Elliot Levitas, a former Member of Congress who had worked for both Mr. Haney and Mr. Grigg on separate matters first began discussing the possibility of Mr. Haney's involvement in the Portals project, either as a lender, partner, or both. But, from the beginning, Mr. Haney had concerns about the existing GSA lease and the FCC's intentions. At that time, Mr. Haney already had retained former U.S. Senator James Sasser to assist him on various government projects he was considering in Washington, D.C., including the Portals, paying him $100,000 per month for such services. By May of 1995, Mr. Haney also had retained the services of two other politically well-connected Washington attorney-lobbyists to assist him on the Portals project -- Peter Knight and John Wagster. These three representatives brought significant political clout to Mr. Haney's team: Mr. Sasser had been the chairman of the U.S. Senate committee with jurisdiction over GSA, Mr. Wagster had served as a staff director under then-Senator Sasser for the subcommittee with oversight of GSA, and Mr. Knight had served as a top aide to Vice President Gore for over a decade, had been a senior official on the 1992 vice presidential campaign and deputy director of personnel for the presidential transition team, and had political connections with officials at both GSA and the FCC. Specifically, Mr. Knight had a long acquaintance with Barbara Silbey, chief of staff to then-GSA Administrator Roger Johnson, as well as with FCC Chairman Reed Hundt and Robert Peck, the FCC political official handling the Portals issue whom he had assisted in securing a position with the Commission. Appendix C, at 383-384. Mr. Hundt's close friendship and political association with Mr. Knight began in 1984, while Mr. Hundt's similar relationship with the Vice President dates back to 1961, when they both attended the same high school. Appendix C, at 372. By June of 1995, Mr. Haney clearly was interested in participating in the Portals project, provided that certain changes could be made to the August 1994 GSA-Portals lease that would permit Mr. Haney to finance this project on favorable terms and through the sale of lease-backed bonds. Accordingly, in June of 1995, he and his Washington representatives began a concerted effort to persuade GSA officials to agree to specific changes to the existing Portals lease in order to facilitate his financing scheme. This effort started at the top of the GSA regional structure. Mr. Knight arranged for Mr. Haney, Mr. Sasser, Mr. Wagster, and Mr. Thomas Mancuso Mr. Haney's bond counsel who handled the financing matters on this project -- to meet with Mr. Thurman Davis, the head of GSA's National Capital Region, on June 19, 1995. None of the participants at this meeting had any detailed recollection of what transpired in Mr. Davis' office that day, but Mr. Knight did testify about the general purpose of the meeting that he had set up: as a Well, I don't recall the meeting specifically. But I think it's Appendix B, at 278 (emphasis added). Similarly, Mr. Mancuso testified about the purpose of this meeting as follows: We were there because we wanted to complete the process, Appendix B, at 241. Two contemporaneous documents shed further light on the purpose and substance of this meeting with Mr. Davis, and the circumstances under which Mr. Haney would agree to participate in the project. A June 19, 1995 letter from Mr. Haney to Mr. Davis, thanking him for the meeting and recounting their discussion earlier that day, begins by stating that Mr. Haney had been 1 Mr. Knight testified that he arranged this meeting (Appendix B, at 288), and this meeting also is documented on the calendars of Mr. Knight and Mr. Sasser, attached hereto as Appendix B, at 355, and Appendix C, at 191 respectively. |