In Re Espy: An Overview of the Smaltz Investigation


Rick Young was a producer of and Jim Mokhiber provided reporting and research for "Secrets of an Independent Counsel."

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 its 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 more than 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.

In a significant setback to Smaltz's investigation, 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. As of December 1998, the case is on appeal to the US Supreme Court.

As for Mike Espy, the original target of the independent counsel probe, he was indicted on 39 counts of corruption in August 1997. He pled guilty to one count, and the District Court judge threw out eight others. On December 2, 1998, a federal jury acquitted him of the remaining 30 charges, ending Smaltz's four-year, $17 million investigation. The charges were based on Smaltz's allegations that Espy illegally received approximately $34,000 worth of gifts and gratuities, including tickets to sporting events, lodging, airfare and a scholarship provided to his girlfriend. Smaltz tried much of the two month case himself, presenting 70 witnesses over the course of two months. Espy himself did not take the stand, and his lawyers presented no witnesses to testify in his defense. In closing, they argued to the jury that the gifts he had received were not illegal in that they stemmed from longstanding friendships with members of the industries he regulated, and that there was no proof that the gifts influenced him in any official decision making. In a statement issued by the White House after Espy's acquittal, President Clinton said: "I am heartened that he has, as he said, emerged from this ordeal stronger. I hope that as he moves forward he will continue his notable record of service to the country." Smaltz stated that, although he was disappointed in the verdict, he believed the investigation served an important purpose: "If the investigation and prosecutions by our office dissuade corporations from giving gifts to their regulators -- or the regulators from accepting gifts from those who are regulated -- I believe that the costs we have incurred, and the efforts we have expended, are worth the price."

 


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