In Re Espy: An Overview of the Smaltz Investigation

Rick Young is a producer of "Secrets of an Independent Counsel."

Jim Mokhiber provided reporting and research.

In September, 1994, about one month after Ken Starr was appointed to the Whitewater investigation, Donald Smaltz arrived from California to oversee an independent counsel inquiry into then-Secretary of Agriculture, Mike Espy. The mandate from the court, as requested by Attorney General Janet Reno, was to examine whether Espy had unlawfully accepted gifts or gratuities from organizations or individuals with business before his Department.

Allegations of wrongdoing first surfaced in a March, 1994 Wall Street Journal article, which questioned whether the Arkansas-based agribusiness giant Tyson Foods was receiving preferential treatment from Espy's Agriculture Department. The article noted that Espy had been "feted" by Don Tyson at a football game, and outlined several regulatory decisions that seemed to benefit Tyson Foods. Subsequent press reports raised further questions about Espy's relationship with companies regulated by the Department, including his acceptance of private air travel and tickets to other sporting events.

The news reports prompted an investigation by the Agriculture Department's Inspector General, who, in the spring of 1994, filed a report with the Department of Justice. At Justice, lawyers spent several months reviewing the matter to determine whether an independent counsel investigation was warranted. Attorneys at the DOJ were divided on the question. Career lawyers with the Public Integrity section argued against an independent counsel, while the FBI pushed for the appointment of one. In the end, Reno, who had vigorously pushed for reauthorization of the independent counsel law, requested that the Special Division appoint an independent counsel.

Within a month of Smaltz's arrival in Washington, D.C., Mike Espy announced his intention to resign at the end of the year. Smaltz let it be known, however, that neither Espy's decision to resign, nor his efforts to reimburse Tyson subsequent to the news reports, would erase the seriousness of the initial violations, if proven true.

Early on, Smaltz focused his investigation on Tyson Foods, seeking to determine whether the company had a practice of providing gratuities to government officials. In searching for inside information about the company's activities, Smaltz discovered a former Tyson airplane pilot named Joe Henrickson, who had unsuccessfully sued the company for wrongful termination. Henrickson told Smaltz an explosive story about having transported envelopes of cash from Tyson corporate officers to then-Governor Bill Clinton. Henrickson also told the story to Time Magazine, which reported in December 1994, that Smaltz had granted Henrickson immunity in exchange for his cooperation.

Publication of Henrickson's allegations, as well as unguarded comments by Smaltz that the pilot's charges had "the ring of truth" to them, sparked an immediate and blistering response from both Tyson Foods and the White House. Tyson blasted Smaltz for engaging in a "witchhunt" and White House Counsel Abner Mikva sent a letter admonishing Smaltz for his public comments, as did the President's personal attorney, David Kendall. The war against this particular independent counsel, Donald Smaltz, had begun.

Smaltz sought cover at the Department of Justice, where he asked Janet Reno to bless an expansion of his investigation into broader questions about the political dealings of Tyson Foods, including Henrickson's allegations about "cash-to-Clinton." The Justice Department, however, believed Smaltz's probe was moving beyond it's original mandate and, therefore, into investigative matters that would more properly be handled by the Department. Smaltz's request for expansion was denied. But, the independent counsel was not deterred.

Despite Reno's denial of expansion, Smaltz continued to investigate a broad range of Tyson related matters, and eventually, even called Joe Henrickson before a grand jury. Smaltz's relentlessness persuaded Tyson Foods lobbyist, Tom Green, to send Reno a strongly-worded denunciation of Smaltz. Green asked Reno to "remove" Smaltz. The show-down culminated in a July 18, 1995 meeting at the Department of Justice where Smaltz was told by the Attorney General to confine his investigation of Tyson to the allegations about Espy. It would not be Smaltz's last run-in with Reno.

In pursuing the initial allegations, Smaltz also homed in on questions about the Department of Agriculture's decision in early 1993 to shelve regulations that would tighten the inspection standards at poultry operations. In particular, Smaltz wanted to know more about a sequence of meetings in early 1993 that involved Espy, Tyson Foods lobbyist, Jack Williams, and Espy's chief of staff, Ron Blackley. To get answers about Espy, Smaltz went after Blackley. But in going after Blackley, Smaltz again found himself face-to-face with the Department of Justice.

This time, instead of seeking Reno's approval to investigate Blackley, Smaltz took his request straight to the Special Division. In an unusual and precedent setting judicial clash, the DOJ objected to Smaltz's reach for Blackley. In particular, the DOJ opposed Smaltz's plan to investigate whether Blackley, as chief of staff, had improperly intervened in decisions about farm subsidy payments to his former clients. The DOJ argued that Smaltz had again wandered beyond his jurisdictional charter and, moreover, that he needed approval from the Attorney General to proceed. The court, however, rebuffed the Justice Department's opposition and ruled in Smaltz's favor.

In addition to pursuing Tyson Foods and Ron Blackley, Smaltz zeroed in on Espy's relationship with several other organizations and individuals with business before the Department. He also investigated campaign contributions provided to Espy's brother, Henry, who ran unsuccessfully to fill the Secretary's former Congressional seat. To date, Smaltz's investigation has resulted in a dozen criminal convictions or pleas including a plea from Tyson Foods on one felony count of illegally giving $12,000 in gratuities to Espy. In connection with the plea agreement, Tyson has agreed to pay a $6 million fine. Former Chief of Staff Ron Blackley was convicted for making false statements and sentenced to 27 months in prison, which he is appealing.

But this aggressive independent counsel has also lost a few. Several defendants have been acquitted and, in some cases, convictions have been overturned. In the most significant setback to date, an appellate court reversed a key gratuities conviction against Sun-Diamond Growers of California. The Appeals Court for the District of Columbia rejected Smaltz's argument that the receipt of gratuities alone, absent any demonstrated quid pro quo, is illegal. Across the United States, the judicial circuits remain divided on this pivotal interpretation of the anti-gratuities law, and Smaltz is now planning to pursue an appeal to the Supreme Court - a decision that may keep his investigation open for at least another year or so.

As for Mike Espy, the original target of the independent counsel probe, a D.C. grand jury returned a 39-count indictment against the former Secretary in July 1997. He faces a litany of charges relating to the receipt of gratuities, mail fraud, witness tampering and false statements. In all, Smaltz has charged Espy with accepting $35,000 worth of gifts and gratuities, including tickets to sporting events, lodging, airfare and even a scholarship provided to his girlfriend.

The effect of the Sun-Diamond reversal on the Espy case remains uncertain, but Smaltz has another problem as well. Last December, a Federal judge has already dismissed the most serious charges against Espy, three counts of violating the Meat Inspection Act. Espy's trial was scheduled for March, but was vacated with no new date set.


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