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The Byzantine ways of a congressional investigation.

The Byzantine Ways of a Congressional Investigation

Some innocent business people may get caught up in the wave of congressional hearings into failed thrifts. These hybrid proceedings fall somewhere between law and politics and boast their own unique set of rules.

The partisan debate on Capitol Hill over blame for the "S&L scandal" has not been limited to urgent calls for stiffer penalties (including life prison sentences for so-called S&L "king-pins") and more criminal prosecutions.

The political fallout from the thrift debacle ultimately may find its way to the doors of officers and directors of failed or troubled thrift institutions. If that happens, these business people may find themselves affected in another way: as witnesses called before committees of Congress who are conducting their own investigations of the thrift crisis.

Already, committees of both houses of Congress have conducted highly publicized hearings on the involvement of the President's son, Neil Bush, as a director of Denver's Silverado Banking Savings and Loan Association. Hearings have also examined the activities of James M. Fail, chairman of the Dallas-based Bluebonnet Savings Bank. Congressional activity in this area is sure to intensify next year as members look for "a smoke screen to shift the culpability for the S&L mess [away] from the Congress and onto a few unscrupulous businessmen," according to Colorado Republican Senator William L. Armstrong (the sole dissenter from the Senate's recent 99-1 vote for a package of increased penalties and expenditures for investigating and prosecuting bank fraud).

Thrift institution officers and directors thrust into the congressional spotlight for the first time are likely to find bewildering the unfamiliar procedures of this hybrid of law and politics--the congressional investigation. With the ethics committee investigations of the "Keating Five" group of senators making major headlines around the country, it is more important than ever to examine some of the rules that apply when congressional committees don their investigative hats.

For the record

To set the record straight, congressional committees have no power to adjudicate a person's guilt or innocence, they only gather information in furtherance of Congress's oversight and legislative functions. In performing that role, committee members act as combination of prosecutor and judge; (some might add executioner as well). Unlike judicial proceedings, no rules of evidence apply. (It's said that the only burden of proof is beyond a "reasonable innuendo.") Leading questions are often used. Indeed, members' questions are often not questions at all, but rather brief statements designed to attract a place on that evening's television news or in the next day's headlines. And, to the extent that any response is possible, the interrogating member may be out the door even before the witness has an opportunity to respond.

A significant way in which congressional hearings differ from judicial proceedings is that the role of the witness's counsel at a congressional hearing is strictly limited. The classic description of the attorney at a congressional hearing--sitting next to the witness, nervously shuffling papers while ever-vigilant to kick his client under the table when the Fifth Amendment ought to be asserted--is probably not far from the truth.

This does not mean that the role of the private attorney in a congressional investigation is that of the proverbial "potted plant." On the contrary, there is a great deal that can and should be done--however, virtually all of it should be accomplished prior to the hearings.

Begin by negotiating

It is usually advisable immediately to set up a meeting with the chief counsel or the committee staff member responsible for the investigation. Before that, an attempt should be made to ascertain what has prompted the committee's interest. It is a mistake to assume that a congressional investigation necessarily involves the direct participation or even the concurrence of the full membership of the committee or subcommittee. More often than not, only the chairman of a subcommittee or one or two other members will be involved. Indeed, at a preliminary stage, committee staff members may be proceeding on their own initiative. The identity of the staff member who makes contact is the first indication of who has prompted the committee's interest.

Congressional investigations may be ignited by a variety of sparks, ranging from a long-standing involvement of a member in a subject area; a news report; a tip from a reporter or someone in a government agency; or information provided by a disgruntled employee or even a business competitor.

Negotiations with the committee staff may be possible on the timing and scope of documents to be produced in response to a subpoena or request, as well as procedures to protect the confidentiality of documents. Once documents are turned over, however, beware--leaks in congressional investigations are as old as Congress itself. The relationship between the press and congressional committees is a close one. Committees get leads from the press, and the press depends on those same committees for leaks. While it is certainly advisable to obtain assurances of confidentiality when providing sensitive information, it is prudent to begin with the assumption that any documents turned over may at some point be revealed to the press.

Negotiations may also be possible on the setting for the witness's testimony, that is, whether the witness testifies in public or private. Some witnesses called before a congressional committee may prefer to testify in closed session for reasons ranging from the fear that publicity will damage their reputation, to concern that sensitive business information will be exposed. Other witnesses will want to testify only in open session, often out of a fear that the committee will leak information about their testimony in a distorted form. Although witnesses have no absolute right to demand to be heard in either open or closed session, they have a right to have the full committee or subcommittee vote upon the request. This is one area where early negotiation with committee staff can have an impact. Furthermore, subpoenaed witnesses appearing before House (but not Senate) committees have an absolute right to demand the prohibition of television, radio or photographic coverage of their testimony.

Silent treatment

Of paramount concern in instances of suspected thrift fraud is that a witness's testimony may lead to criminal prosecution. Unlike an accused defendant in a criminal case, who has the right to remain silent and not take the stand, a congressional witness may not refuse to testify altogether. The Fifth Amendment privilege can only be used in response to specific questions that may incriminate the witness. This requires that the witness's counsel shrewdly determine the point at which the committee's questions would tend to elicit incriminating answers. A witness may risk being held in contempt by pleading the Fifth Amendment too soon in response to a question that a court later determines would not have elicited an incriminating answer; the witness, on the other hand, must be careful not to plead the Fifth Amendment too late and risk a court finding that the privilege was waived because of the prior answers.

If counsel knows that the witness will invoke the Fifth Amendment in response to particular areas of questioning, it is best to apprise the committee of that in advance. Most, but not all, committees will grant the request of a witness to claim the privilege in closed session, and not require the witness to go through the highly objectionable charade of having to invoke the privilege in public.

If a committee has a substantial interest in a witness's story, it may be possible to negotiate congressional immunity for the testimony. A witness granted congressional immunity remains subject to criminal prosecution for the transaction about which he or she testifies, but neither the immunized testimony nor information derived from that testimony may be used as evidence against the witness in a criminal prosecution. However, congressional immunity does not immunize a witness from prosecution for perjury arising from the congressional testimony, and immunized testimony may also be used against the witness in state or federal civil and administrative proceedings.

The granting of immunity is an area where the rapid pace of congressional investigations may work to a witness's advantage. On the one hand, prosecutors may be arguing to the committee that no immunity be granted, or at least that a lengthy delay be interposed to permit the prosecution to isolate evidence obtained independently. On the other hand, the congressional committee may wish to grant immunity, and grant it quickly, in order to gain the testimony it wants and move its investigation forward. If the committee decides to grant immunity, there is little the Justice Department can do to prevent it. The result may be that, in some instances, later prosecution of the witness will be impossible as a practical matter.

Nevertheless, conflicts between congressional committees and prosecutors should be not be exaggerated. A typical congressional investigation does not involve matters of such great public concern as, say, the Watergate and Iran-Contra hearings. When a congressional investigation is looking at the wrongdoing of businessmen or other private citizens who are also the subject of a criminal investigation, congressional committees may be far more willing to delay the granting of immunity (and in some instances their investigation altogether) until prosecutors have completed their work. In light of a recent federal court of appeals decision calling into question Oliver L. North's criminal convictions because of the possible improper taint from his 1987 immunized congressional testimony, congressional committees are likely to be especially sensitive to these concerns in the future.

Discovery advantages

It is worth noting that a congressional investigation can be an opportunity, as well as a problem, for witnesses concerned about the possibility of parallel criminal proceedings. In addition to the risk of congressional immunity complicating later prosecution efforts, a congressional committee may hear testimony from some of the same individuals who are likely to be adverse witnesses in any later prosecution. This provides a rare chance, given the limited scope of discovery in criminal proceedings, to hear the testimony of these accusers in advance. Criminal defense attorneys are highly skilled at finding inconsistencies in prior testimony of witnesses, and congressional testimony can provide a wealth of useful material in this regard.

The public eye

Coordination of public relations efforts are always crucial, and must be carefully thought through at all stages of the congressional investigation. However, one caveat bears mentioning: while it is necessary to be prepared for the negative publicity that may result from a congressional investigation, it is often advisable to restrain the impulse to immediately set in motion a public relations counter-offensive. The attention span of many members of Congress is notoriously limited, and there are numerous instances when a threatening phone call from a committee staff member, indicating that the chairman and full committee were fully behind the investigation, has not been followed up with any further action.

Finally, given the limited role of counsel at congressional hearings, preparation of a witness's testimony in advance of the hearing is always critical. The witness should be exposed to all possible avenues of examination (both penetrating and bumbling questions should be posed). A witness must be schooled to resist the temptation to be evasive or cute in response to what at times may seem to be unsophisticated and even incoherent questioning by

committee members. Otherwise the witness's tactics are sure to backfire, because no matter how unprepared a committee member may seem, he or she will likely have a staff member close by who has done sufficient homework and who will be ready to hand the member a note with a damaging follow-up question.

The importance of careful preparation by the witness before providing congressional testimony cannot be overemphasized--especially for high-level corporate officers who tend to be confident in their ability to ad-lib in even the most difficult of situations. These witnesses must be persuaded that, unlike most familiar settings, a congressional inquiry comes with rules that are very much stacked against them. An inadequate preparation or a cavalier approach is an invitation for disaster.

While most people will never find themselves the focus of such a unique form of inquiry, it is intriguing to know the rules of the game that apply. With the projected cost of the thrift bailout continuing to rise, congressional investigations into the matter are likely to stoke the nightly news headlines for some time to come. These insights will hopefully present which players are using the rules to their advantage and which ones are failing to present their best case due to ill preparation.

John C. Grabow is a defense attorney in Washington, D.C. with Ginsburg, Feldman and Bress and the author of The Law and Practice of Congressional Investigations.
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Author:Grabow, John C.
Publication:Mortgage Banking
Date:Dec 1, 1990
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