- The Washington Times - Wednesday, March 12, 2008

Former Attorney General John Ashcroft sharply disputed accusations yesterday by Democrats that his firm received a “sweetheart deal” when it was awarded a multimillion-dollar contract to monitor a troubled medical supplier in order to settle federal kickback accusations.

In testimony before the House Judiciary subcommittee on commercial and administrative law, Mr. Ashcroft rejected the concerns of Chairman Linda T. Sanchez, California Democrat, who said the 18-month contract — worth between $28 million and $52 million — represented a potential conflict of interest.

Mrs. Sanchez said Mr. Ashcroft obtained “a backroom, sweetheart deal” to serve as the independent corporate monitor of Zimmer Holdings Inc. of Warsaw, Ind. — noting that the contract was awarded by U.S. Attorney Christopher Christie in New Jersey, who used to work for Mr. Ashcroft.

“You don’t believe that it may be a conflict of interest in a former employee hiring the former boss, or suggesting that he be hired, for a very lucrative contract?” she asked. “I also was concerned to learn in press accounts that Mr. Ashcroft was selected with no public notice and no bidding.”

Mr. Ashcroft said he did not take part in any of the discussions leading up to his firm’s appointment and that he only learned of it after the U.S. attorney’s office and officials at Zimmer Holdings discussed the arrangement. He said he did not believe there should be “discrimination against individuals who have had the privilege of public service,” and angrily denied there was any conflict of interest by the Ashcroft Group LLC.

“One hundred percent of the monitor’s fees are paid for by the defendant company. The fact that no taxpayer money is spent on monitor’s fees helps insulate a monitor from political pressure,” he said. “This hearing cost far more in tax dollars than my monitorship will cost, because it did not cost taxpayers one thin dime.”

The hearing fell along party lines: Democrats said the arrangement was troubling and could shake the public’s confidence in the Justice Department, while Republicans said Mr. Ashcroft’s credentials made him a logical choice to help reform a troubled company.

Rep. Bill Pascrell Jr., New Jersey Democrat, criticized Mr. Ashcroft’s selection, calling the monitoring agreements “no-bid federal contracts that are ripe for political considerations.”

But Rep. Chris Cannon, Utah Republican, questioned the motivation for the hearing, saying the subcommittee was “devoting its oversight to continued assault against the way the [Justice] Department has exercised its prosecutorial discretion.”

Zimmer Holdings was among five medical supply companies, who account for nearly 95 percent of the market for hip and knee surgical implants, to agree to corporate compliance procedures and federal monitoring to avoid being prosecuted for paying financial inducements to surgeons to use their products.

Zimmer, DePuy Orthopaedics Inc., Biomet Inc., and Smith & Nephew Inc. executed deferred prosecution agreements to avoid criminal prosecution. Criminal complaints said the four violated federal anti-kickback statutes, charges that will be dismissed if they institute the required reforms. They also agreed to pay $311 million to settle their cases.

Stryker Corp. of Kalamazoo, Mich., cooperated with the probe and signed a nonprosecution agreement, which also requires the firm to implement necessary reforms and be monitored for 18 months.

The Justice Department released new guidelines Monday to cover the selection of corporate monitors used to oversee companies in criminal cases. They require, among other things, that the appointment of the monitors be approved by the deputy attorney general.

Carl Tobias, law professor at the University of Richmond, said the new guidelines “will at least regularize the process and have some central review of the arrangements that the 93 U.S. attorneys make for monitoring of deferred prosecution agreements.” He said whether they are effective in preventing conflicts of interest or the appearance of conflicts will “depend on how strictly they are implemented.”

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