From The New York Times:
WASHINGTON — The Justice Department announced guidelines Monday to prevent the sort of conflict-of-interest accusations that followed its decision to steer a private contract worth tens of millions of dollars to former Attorney General John Ashcroft to monitor a large out-of-court settlement.
The announcement came on the eve of scheduled Congressional testimony by Mr. Ashcroft to explain the circumstances of the no-bid 18-month contract, worth $28 million to $52 million, that calls for him to monitor a settlement between the government and an Indiana medical supply company.
Original DVD cover.
Wow! Talk about coincidences! They changed the guidelines just in time to take some of the heat off one of their own (and let one of their own make megabucks).
Until now, the Justice Department has allowed individual federal prosecutors who do not work in Washington to select outside lawyers to monitor out-of-court settlements involving large companies, with the companies paying the monitors’ fees.
Under the new guidelines, the monitors must now be chosen by a committee and approved in Washington by the office of the deputy attorney general, the department’s No. 2 official.
The timing of the announcement appears intended to undercut some of the criticism of Mr. Ashcroft and the department that is expected to emerge Tuesday at a hearing of the House Judiciary Committee.
Justice Department officials said the internal deliberations that resulted in the new guidelines began long before the disclosure of Mr. Ashcroft’s contract with Zimmer Holdings, the Indiana supply company, which had been under investigation on allegations of paying kickbacks to doctors.
[…] the Justice Department has moved to resolve dozens of criminal investigations involving large companies with pretrial agreements. According to a study by two researchers in Texas, there were 35 such agreements last year, up from 20 in 2006.
Among the companies that entered into the agreements last year were British Petroleum, Union Bank of California, the pharmaceutical company Pfizer and Zimmer Holdings.
Zimmer hired Mr. Ashcroft as its monitor at the suggestion of the United States attorney in New Jersey, Christopher J. Christie, who had worked under Mr. Ashcroft at the Justice Department and pursued the investigation of the company.
The new monitoring guidelines offer no rules to help prosecutors determine how much a monitor should be paid. In Mr. Ashcroft’s case, the fees were determined in negotiations between Zimmer and his firm, the Ashcroft Group.
Outside lawyers who have reviewed Mr. Ashcroft’s fee structure said it was not out of line. But Professor [Peter J. Henning, a law professor at Wayne State University who is a specialist in white-collar crime] said he believed that many companies were willing to pay exorbitant fees to a monitor in hopes of leniency.
And just how much did Zimmer pay Chimpy’s little buddy?
From the Washington Post:
Ashcroft’s consulting firm stands to collect between $28 million and $52 million over 18 months for reviewing the operations of Zimmer Holdings, an Indiana company that makes replacement hips and knees. Zimmer last year settled government charges over kickbacks it allegedly provided doctors in exchange for using its products.
Zimmer paid the Ashcroft Group $7.5 million between last September and January, according to information provided to the Senate Special Committee on Aging. Ashcroft and about a half-dozen senior staff members of his firm are covered under a flat $750,000 monthly payment from Zimmer. Other top lawyers affiliated with Ashcroft’s consulting business are billing as much as $895 per hour under the agreement, while administrative support staff members are billing $50 to $150 per hour, Senate aides said.
Bills submitted by monitors for the other four companies involved in the settlement are less than half of what the Ashcroft group has charged, averaging a total of about $2 million each, the aides said. Zimmer is by far the largest company in the investigation, and it paid most of the financial penalties to the government under the settlement.