Former Attorney General John Ashcroft Testifies on Public-Private Corporate Monitoring

WASHINGTON – Former Attorney General John Ashcroft appears to have won a "backroom, sweetheart deal" worth millions of dollars to monitor a corporation accused of wrongdoing, the chairwoman of a House panel probing the federal contract said Tuesday.

Rep. Linda Sanchez, D-Calif., said Ashcroft received the contract, worth between $28 million and $52 million, without going through a bidding process. She was referring to reports that U.S. Attorney Christopher Christie hand-picked Ashcroft to monitor a corporation accused of wrongdoing in exchange for the company's avoiding prosecution, known as a "deferred prosecution agreement."

"I also was concerned to learn in press accounts that Mr. Ashcroft was selected with no public notice and no bidding and that he had to use considerable time to prepare for the assignment and learn more about the business that he was contracted to monitor," Sanchez, chair of the House Judiciary's subcommittee on commercial and administrative law.

In remarks prepared for testimony Tuesday before the panel, Ashcroft said he is limited in his ability to discuss the criminal case he is monitoring because it remains pending in federal District Court in New Jersey.

He said that deferred prosecution agreements help preserve "innocent employee jobs" and shareholder value of the corporations involved.

Ashcroft's testimony comes a day after the Justice Department issued new guidelines for administering deferred prosecution agreements in white-collar criminal cases.

The guidelines require that contracts for federal monitoring of corporations must be approved by the Justice Department's second-ranking official.

Assistant Attorney General Alice S. Fisher said the guidelines were designed to increase transparency in how independent monitors are selected, and clarify the scope and duration of their duties.

Rep. Frank Pallone, D-N.J., said the new guidelines were too weak and were offered "to thwart any effort to come up with stronger standards." Pallone is sponsoring a bill that would require federal judges to approve monitoring contracts.

Generally, corporations hire monitors as part of a settlement agreement with the government. The monitors watch to make sure the corporations follow the agreement, and the monitors can report back to the government with the results. Deferred prosecution agreements have been around since the early 1990s, but have become more common in recent years in white-collar crime cases.

Sanchez pointed out that the government has tremendous leverage over corporations that agree to deferred prosecution.

"Corporations facing criminal prosecution have an unfair choice. They can either risk a conviction and perhaps even dissolution after trial or be coerced into accepting the terms and the monitor that a prosecutor unilaterally believes are appropriate," she said.

Christie in September picked Ashcroft to monitor Zimmer Holdings Inc. of Warsaw, Ind., a manufacturer of replacement hips and knees. Zimmer was one of five companies that agreed to pay a total of $310 million in fines to settle cases over alleged kickbacks to doctors.

Ashcroft's Washington-based consulting firm, The Ashcroft Group LLC, stands to make $27 million to $52 million from the contract, according to a filing with the Securities and Exchange Commission. Christie was once Ashcroft's subordinate at the Justice Department.

Zimmer's deferred prosecution agreement provides for dismissing a criminal complaint charging it with conspiracy to violate anti-kickback statutes if the outside monitor certifies after 18 months that the company has complied with the settlement's terms.