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Commentary

What a Difference a Few Dots Make in Investigations

September 03, 2002|VICTOR GOLD | Victor Gold is national correspondent for Washingtonian magazine.

The trick to understanding what congressional investigatory committees are up to--and I've been following them since Estes Kefauver was scourging organized crime in 1951--lies in the dots the committee members don't connect.

Kefauver, for example, held televised hearings on illegal gambling in major cities across the country. Notably skipped over were Memphis, Nashville and Knoxville.

Missing dot: What state did Kefauver represent in the U.S. Senate?

Or take the Senate committee that investigated organized labor six years later. One ranking member of the committee was presidential hopeful John F. Kennedy. The committee counsel was his brother, Bobby. The focus of the investigation was union operations in Detroit. Teamster chief Jimmy Hoffa was called to testify, but not United Auto Workers chief Walter Reuther.

Missing dot: Which Detroit labor union chief was prominently backing Sen. Kennedy's campaign for the presidency?

Not that Democrats are the only ones to play the Capitol Hill missing-dots game. Consider the current Republican-led investigation of alleged insider trading involving ImClone's Sam Waksal and his friend, Martha Stewart.

Let's take it dot by dot:

* A federal regulatory agency, the Federal Drug Administration, after long review, makes a decision that will adversely affect the market value of a company (ImClone) on Wall Street.

* A lawyer-lobbyist for one of the company's major business allies (Bristol-Myers) puts a call in to Richard Pazdur, the FDA official in charge of the review, asking Pazdur for advance information on what the agency has decided.

* Although news of the agency's decision has not yet been made public, Pazdur tells Bristol-Myers' lobbyist of the adverse outcome, informing him that a letter giving ImClone the bad news is on the way.

* The lobbyist gives this information to his client, who passes it on to ImClone's CEO, Waksal.

* Four days go by before the information privately leaked to the lobbyist--information that FDA's Pazdur surely must have known would affect ImClone's stock value--becomes public via a letter faxed to the company.

* During those four days, Waksal first calls the FDA, trying to forestall the decision. Failing that, he unloads his ImClone stock. His family and friends (among them, Martha Stewart) do the same.

* When news gets out that Waksal, his family and Stewart have unloaded their stock, the House Committee on Government Reform goes into Congressional Outrage Mode, and the Justice Department indicts Waksal for insider trading, i.e. trading based on information known to the trader but not the general public.

Missing Dot No. 1: When a public official (Pazdur) provides information to a private company (Bristol-Myers) before that information is made public, what responsibility does the public official have for the stock-market scandal that follows?

Missing Dot No. 2: If the House Committee on Government Reform is truly interested in long-range reform rather than the headlines gained from Martha Stewart-bashing, why isn't it looking into the FDA practice of providing favored lawyer-lobbyists with confidential information before releasing it to the public?

Fill in the dots, complete the picture. Or would that take all the fun out of Martha Stewart-bashing?

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