GOP nominee for NJ governor will testify before House panel on settlement oversight contracts

NJ governor candidate to testify before US panel

TRENTON, N.J. — The Republican candidate for governor will tell a congressional subcommittee about white-collar crime settlements he approved as a federal prosecutor, including a deal potentially worth $52 million to his one-time boss, former U.S. Attorney General John Ashcroft.

Chris Christie is to testify before the House panel in Washington on Thursday, one of seven witnesses being called in an ongoing investigation into deferred prosecution agreements.

The deals allow companies accused of crimes to avoid trials by agreeing pay fines, change their practices and submit to federal oversight. Monitors are paid millions to oversee the deals.

The number of agreements ballooned during George W. Bush’s presidency, but fell back last year following increased scrutiny about whether the deferrals provide a break to corporate wrongdoers.

Appearing before the House Judiciary Committee in May, U.S. Attorney General Eric Holder defended the use of deferrals in cases where taking a company to trial would unduly punish shareholders or employees. He said the deals are struck within Justice Department guidelines, and that he would investigate concerns over monitor selection and compensation.

As New Jersey’s top federal prosecutor, Christie approved seven such deals, but put deferred prosecutions on the national radar with the one involving Ashcroft.

Ashcroft’s consulting firm stood to make $28 million to $52 million or more for 18 months of work monitoring a hip and knee replacement manufacturer accused of giving kickbacks to doctors. The contract, paid by the accused, Zimmer Holdings Inc., allowed Ashcroft’s firm to bill monthly fees and expenses of $1.5 million to $2.9 million or more, including a base of $750,000, according to documents provided to congressional investigators.

During a contentious Congressional hearing last year, Ashcroft denied there was anything improper about the deal. Christie also has denied any conflicts.

The day before the hearing, the Justice Department announced revised guidelines that require monitors to be chosen by a committee and approved by a senior official in Washington rather than by a U.S. attorney in the field.

Another Christie deal led to additional reform.

The department announced last year that out-of-court settlement defendants could not be required to donate to a random charity, school or hospital. The guideline was in response to a requirement from Christie’s office that Bristol-Myers Squibb endow a chair in business ethics at Seton Hall Law School, Christie’s alma mater, as part of a 2006 agreement to avoid prosecution.

Democrats have criticized deferred prosecutions for being secret and lacking accountability. Reps. Frank Pallone and Bill Pascrell of New Jersey and Steve Cohen of Tennessee introduced legislation in April that would require federal judges to approve monitoring contracts and disclose terms of the deals.

The issue has spilled into the New Jersey governor’s race, where Christie leads Gov. Jon S. Corzine in early polls. Democrats have tried to use the agreements to tarnish Christie’s reputation as a corruption-buster.