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House Panel Accuses Watt of Trading on Influence

June 09, 1989|From United Press International

WASHINGTON — Members of a House panel today accused former Interior Secretary James G. Watt of influence peddling at a combative hearing in which the outspoken Watt defended his role as a consultant in federal housing projects.

Watt, who headed the Interior Department from 1981 to 1983 and left President Ronald Reagan's Cabinet under fire for intemperate remarks, denied any wrongdoing in tense confrontations with Democrats and Republicans of the House Government Operations housing subcommittee.

He defended his role as a consultant who, for a fee of $300,000 split with associates, helped a developer win approval from the Housing and Urban Development Department of a low-income housing project in Essex, Md.

Watt's consulting amounted to setting up a meeting with HUD Secretary Samuel Pierce and asking Pierce to see why the Maryland developer's application was stalled in the HUD bureaucracy.

Watt, who has no background in the housing industry, told the panel he kept $169,000 of the fee and split the rest with associates. He said he made $120,000 more in consulting fees from developers on two other projects in the same HUD program.

'Seemed Like a Lot'

"This project came into existence because of influence peddling by you," committee Chairman Rep. Tom Lantos (D-San Mateo) told Watt, who acknowledged the $300,000 consulting fee "seemed like a lot of money to me."

A HUD inspector general's report found that developers who hired Republican consultants won contracts in the housing program while applicants who did not hire GOP consultants did not.

Congress and Pierce's successor as HUD secretary, Jack Kemp, are investigating the growing scandal in the department.

In a letter to Lantos, Kemp said the program appeared to be "based on the perception and reality of favortism and abuse."

But Watt vehemently disagreed and repeatedly insisted he had not been paid in taxpayer funds--just money from the developer's potential profits if the project was approved.

He said his fee did not increase rents and he sought Pierce's help because the bureaucracy was "paralyzed" as political and career HUD employees refused to act on applications.

"There was no abuse. There was no illegality. There was nothing done wrong," said Watt, who has not been charged with any impropriety. "My participation was legal, moral, ethical and effective."

Called Improper on Its Face

That assessment was challenged by Democratic and Republican panel members, who said Watt's political ability to arrange a meeting with Pierce unavailable to others was improper on its face.

"That fits every definition of influence peddling," Rep. Christopher Shays (R-Conn.) told Watt. "This is a smelly system in which you were a participant."

Shays said Watt had "missed totally the point if you think the issue is whether you received federal funds or not."

The criticism got so intense that Watt declared, "I'm not on trial. I'm not here to defend the system. The system is flawed."

In one of the sharpest exchanges of the hearing, Rep. Charles E. Schumer (D-N.Y.) asked Watt, "Was it moral what you did?"

"Absolutely," Watt replied.

"I don't think you've learned a thing from this," Schumer shot back.

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