Washington Post Staff Writer
Tuesday, March 11, 2008; 3:04 PM
Former attorney general John D. Ashcroft today strenuously defended a government-sanctioned contract that could earn his consulting firm more than $50 million, saying there is no conflict of interest in the appointment made by one of his former U.S. attorneys.
Ashcroft has come under scrutiny from Democratic lawmakers since he accepted a no-bid contract to oversee the operations of an Indiana medical equipment company which is accused of giving kickbacks to doctors. He was chosen by U.S. Attorney Christopher Christie of New Jersey, a Republican who once worked for Ashcroft.
"There is not a conflict," Ashcroft said. "There is not an appearance of conflict."
Ashcroft's testimony to the House Judiciary Subcommittee on Commercial and Administrative Law marked his first appearance before Congress since he left his post as head of the Justice Department in late 2004, officials said.
In addition to defending his current work, Ashcroft used the occasion to herald some of his accomplishments as attorney general, including generally declining crime rates and aggressive anti-terrorism programs.
Ashcroft is now a lobbyist who runs his own Washington consulting firm, The Ashcroft Group, which was awarded a contract last fall to oversee the operations of Zimmer Holdings of Warsaw, Ind. Zimmer avoided criminal prosecution for allegedly paying doctors to use its products, according to the settlement.
The deal is expected to earn Ashcroft's firm between $28 million and $52 million over 18 months, according to financial filings.
The subcommittee's chairwoman, Rep. Linda Sanchez (D-Calif.), said today that the deal "appeared to be a backroom, sweetheart deal," because Ashcroft was chosen by Christie without competition.
Sanchez also said that, until this week, "the parties to these agreements were operating in a Wild West environment with no laws and no Justice Department guidelines."
The Justice Department on Monday imposed new restrictions on such monitoring agreements, requiring U.S. attorneys to obtain approval from Justice headquarters for such agreements and to form special committees to review potential applicants for the assignments.
Ashcroft said that outside monitors, which have been used increasingly in corporate fraud cases in recent years, save taxpayers money by avoiding costly prosecutions and forcing companies to follow the law.
"This hearing cost far more in tax dollars than my monitorship will cost, because it did not cost taxpayers one thin dime," Ashcroft testified. Under the arrangements, the cost of the monitoring is borne by the company, which agrees to pay to avoid criminal prosecution.
The practice has become more popular since the 2002 indictment of accounting firm Arthur Andersen LLP, which folded after being convicted of obstructing justice and put most of its employees out of work. Prosecutors view deferred prosecutions, with monitor arrangements, as a way to avoid closing a company altogether while ensuring compliance with the law.
Typically, U.S. attorneys defer the threat of prosecution as a way of maintaining some leverage over the companies' future conduct. Such deferred prosecutions have mostly been used for nonviolent juvenile and drug offenders, rather than for large corporations suspected of criminal wrongdoing.
Staff writer Carrie Johnson contributed to this report.
