conspiracy exemption from the statute would result in what this committee is intending with this legislation. Mr. KEENEY. I understand. But you have to keep in mind, Mr. McCloskey, that the coming into the Federal Maritime Commission was not totally a voluntary act. Mr. MCCLOSKEY. Wait a minute. It was not totally a voluntary act. Mr. KEENEY. There are investigations going which may have impelled the coming in in the voluntary disclosure. Mr. MCCLOSKEY. Are you referring to forum shopping. It is a common practice of attorneys to pick the forum which they feel may be most suitable to their client's case. Mr. KEENEY. Maybe that analysis is accurate. But what I am saying is, that there were investigations going by the Department of Justice which were unearthing these violations. Mr. MCCLOSKEY. Is it any less voluntary to go to an agency and fully disclose facts while you are being investigated? Mr. KEENEY. Yes. Mr. MCCLOSKEY. You feel that is less voluntary? Mr. KEENEY. Yes. Mr. MCCLOSKEY. And that can apply in your decision about whether or not criminal conspiracy prosecution should be pursued? Mr. KEENEY. Yes. An investigation going on puts the company on notice that they may be subject to criminal prosecution, and if thereafter they come in to either the Department of Justice or an administrative agency it is quite different, Mr. McCloskey, than a situation where a company is put on notice by congressional statute or by the agency, and then they come in without any indication that their criminal investigation is underway. Mr. MCCLOSKEY. If that is the case, wouldn't you react precisely the same way to the 27 companies now under investigation who have refused to cooperate at all even though they know the statute is being enforced because one of their colleagues may be prosecuted? Doesn't that cause you to feel those companies are more guilty of reprehensible conduct and thus justify a more severe remedy? Mr. KEENEY. It is a fact that we have to give weight to. Mr. MCCLOSKEY. So, if we passed this bill leaving in the 371 exemption, and everyone came forward and cooperated, you would take into account as a crucial element their not coming forward earlier when deciding whether or not to prosecute them criminally? Mr. KEENEY. That they had not come forward previously when others of their colleague companies were under investigation. Mr. MCCLOSKEY. They would be in worse shape than Sea-Land? Mr. KEENEY. No. We would also take into consideration the fact that they came in as a result of the congressional legislation. Mr. MCCLOSKEY. In other words, if the legislation bailed you out of the difficult decision you are now facing? Mr. KEENEY. No; I would not say that. The legislation would be a factor-the fact that they come in and respond to legislation would be something we would have to consider. The fact that they did not come in previously when they were on notice that investigations were being conducted with respect to similar companies would be a factor that we would also have to consider on the other side of the coin. Mr. MCCLOSKEY. You agree, do you not, that we should seek precision in the law so that whoever deals with it has a reasonable idea as to whether or not they are affected by it. We should create an absolutely clear legislative history when enacting this law and lay out who is to be prosecuted. There is not any way under your definition that anyone would ever know, is there? Mr. KEENEY. Well, that is one way of putting it, Mr. McCloskey, because if on the proposals that we have made to Chairman Murphy, we leave open the conspiracy to defraud possibility, and as you point out, nobody will ever know whether or not we will prosecute in an individual situation until it comes before us. I mean, lawyers do have some guidance, Mr. McCloskey, in the number of prosecutions that have been initiated in this area and the prosecuting policies that have been followed in similar situations. Mr. MCCLOSKEY. Do you understand my problem, Mr. Keeney? If we are going to pass a law to try and clarify the situation and encourage consent in the settlement process, leaving the slightest loophole that someone is liable to be prosecuted criminally would frustrate the entire purpose of the legislation. Do you agree with that? Mr. KEENEY. If that is your purpose, to get everybody in, there would be a loophole left open for prosecution. Mr. MCCLOSKEY. When you reviewed this legislation, did you not perceive that the sole purpose of this legislation was to encourage cooperation with the enforcement authorities? Mr. KEENEY. Yes. Mr. MCCLOSKEY. If that is the sole purpose, it can be frustrated by allowing this exemption, can it not? Mr. KEENEY. That is true. On the other hand, retaining right and discretion in the Department of Justice gives us the opportunity and the power to proceed against somebody who is willfully frustrating the congressional in tent. Mr. MCCLOSKEY. I quite understand that. If I may say so, we are talking about a much more serious issue. We would like to preserve for the Department of Justice the right and discretion to prosecute those violating the congressional intent of the law, but here we are dealing with a foreign policy issue. Because you have reserved the right of discretion the State Department admits it cannot assure any foreign government what will happen in the event a national is required to cooperate. It seems to me this kind of issue must be decided at the White House level. Someone there has got to say, "In this case, is foreign policy more important than preserving prosecutorial discretion with respect to foreign nationals?" I do not see how we can pass legislation to achieve that result if we leave this discretion to the Justice Department. We might as well pass no legislation at all. Let me go back to the Sea-Land case because that has been the subject of correspondence between the chairman, myself, and the Justice Department. So far as we know, for months the Justice Department has known everything the FMC knows. When are you going to make a decision? Mr. KEENEY. We expect to make it in the very near future. Mr. MCCLOSKEY. When you say in the very near future, are you talking about February, March, April, June, or next September. Mr. KEENEY. I am talking about 3 or 4 weeks. We have had some problems. We have had communication from Senator Inouye and Chairman Murphy with respect to this, and we have had to look into and had extensive review made of legislative history of the 1972 act to see what, in fact, Congress did intend. Did Congress intend to leave us the authority to proceed under 371 for violation of the civil statute and so forth? We have resolved that and have concluded that in aggravated situations we have the authority to proceed. Now, we are reviewing various cases in the light of that. Mr. MCCLOSKEY. Is it your conclusion that Congress intended to leave the Justice Department the right to prosecute a criminal conspiracy charge in aggravated situations? Mr. KEENEY. We concluded Congress did not take away the right to proceed under either Mr. MCCLOSKEY. Would it be fair to say Congress never considered that question? Mr. KEENEY. Yes. Mr. MCCLOSKEY. There is absolutely no legislative history to indicate Congress was even aware of this kind of expanded use of section 371 at that time? Mr. KEENEY. Yes; we have also concluded, Mr. McCloskey, that we retain the right to proceed for violation of the civil statute. That is clear, it has been clear since 1924 Mr. MCCLOSKEY. You have the right to criminally prosecute a conspiracy to violate the civil section? Mr. KEENEY. Yes. Mr. MCCLOSKEY. Was there any committee discussion of that during passage of the 1972 act? Mr. KEENEY. No; because there was no discussion of it, we did not infer a congressional intent to change existing law. Mr. MCCLOSKEY. Yet, is it correct that in the last two decades this power to prosecute criminal conspiracy has not been used? Mr. KEENEY. Under Maritime Commission Act? Mr. MCCLOSKEY. Yes. Mr. KEENEY. Maybe that is true under the Maritime Commission Act, but we have used it in other areas, Mr. McCloskey. Mr. MCCLOSKEY. In 1962, there were a whole series of cases referred to you by the House Judiciary Committee alleging violations of the Rebate Act. Not one of those violations was prosecuted by the Justice Department for conspiracy to violate the rebate statute, was it? Mr. KEENEY. I do not believe so, Mr. McCloskey. I am aware of reasons for not proceeding. Mr. MCCLOSKEY. Does that not create a history? Since Congress had referred over 200 violations to the Justice Department and they chose not to prosecute a single one, does it not seem reasonable that in 1972 Congress may well have believed the Justice Department never intended to use the criminal conspiracy statute? Mr. KEENEY. You can argue that way, Mr. McCloskey. But on the other hand, we do not know, at least I do not know what the basis was for the decision not to prosecute on those 1962 cases. Mr. MCCLOSKEY. When was the last time the Justice Department brought a criminal conspiracy charge to violate the rebating sections of the maritime statute? Mr. KEENEY. Civil rebating? Mr. MCCLOSKEY. Has the Justice Department ever brought criminal charges for violating rebating statutes? Mr. KEENEY. Yes. Mr. MCCLOSKEY. How long ago? Mr. KEENEY. We have given you a list, Mr. McCloskey. Mr. MCCLOSKEY. You have a list? Mr. KEENEY. Yes. We submitted it with our letter to Chairman Murphy. Mr. MCCLOSKEY. I have your letter of December 12. Mr. KEENEY. It should be attached to it. If it is not, we will give you a copy. The CHAIRMAN. How many cases? Mr. MCCLOSKEY. I thought when I went to your offices in the Justice Department, I was advised that prosecution of a criminal conspiracy to violate a civil section had not been done for several decades. Mr. KEENEY. Yes; but maybe I misunderstood your question. I thought the final question was whether the Justice Department had brought any actions to enforce rebating provisions, and we have, we brought substantive violations Mr. MCCLOSKEY. But, you have not brought a criminal conspiracy charge of violating a civil section? Mr. KEENEY. No, Sir. Mr. MCCLOSKEY. In the past? Mr. KEENEY. No; we have not. Mr. MCCLOSKEY. Since the law was passed in 1916, has it ever been done? Mr. TAYLOR. I think there was a lot of confusion here. When the law was passed, the rebating provisions, violations of those were criminal and not civil. It did not become civil until 1972. Since 1972, when it became civil, we have brought no criminal prosecutions in connection with rebating statutes. Obviously, we could not bring a substantive one, and we have not brought a conspiracy to violate the civil. We did bring a case after 1972 where the actions took place prior to 1972, and the courts held that the changing from criminal to civil in 1972 was retroactive. Mr. MCCLOSKEY. What was the name of that case? Mr. TAYLOR. Blue Sea Lines case. We would have to proceed civilly, but you see it was criminal up to 1972. We have brought criminal prosecutions for rebating until 1972. After 1972, the actions for rebating were civil, brought by the civil division. We never did, of course, bring a conspiracy to violate civil provisions. We only could have done that after 1972, and we have not done it. Mr. MCCLOSKEY. I am glad you cleared up the confusion because, like many of my colleagues, I am a lawyer and I have been a prosecutor as well as a defense attorney. It came as somewhat of a surprise that the Federal Government considered conspiracy to violate a civil offense could be a crime. I always thought a conspiracy charge was sort of a cheap shot way to attack a problem. I think you explained in earlier discussions that conspiracy is used by prosecutors primarily because it allows the introduction of evidence that would not otherwise be admissible. I understand the Justice Department's use of the criminal conspiracy section to prosecute the violation of a civil act is very rarely done. Mr. TAYLOR. I would say it has been very rarely. It is a felony indeed, which is somewhat of an anomaly in the law. If you conspire to violate misdemeanor statutes, it is a misdemeanor. If you conspire to violate civil penalty statutes, it is a felony. Mr. MCCLOSKEY. You say it has been law since 1924. Mr. KEENEY. At least. It was recognized by the Supreme Court of the United States in 1924, Mr. McCloskey. It was recognized in the lower court decisions prior to that time. Mr. MCCLOSKEY. I have gone back and read the legislative history of the 1972 act and I just cannot imagine that Congress had been advised. In fact, the only two witnesses from the Government, Attorney General Kleindienst and Helen Bentley, then the Chairlady of the FMC, both testified that this change in the law would allow the FMC enforcement to be more effective than the U.S. attorneys in bringing criminal prosecution. Do not advise Congress at this stage of an obscure right of the Justice Department, and then argue that in 1972 we did not take away that right because we never considered it. It seems to me that the Congress would have made a decision had it been faced with the question you raise. We wanted to make rebating a civil offense. We also wanted to make conspiracy to violate that civil offense not a crime, for the very reasons testified to by Kleindienst and Mrs. Bentley. They wanted to shift prosecutional responsibility from the Department of Justice to the FMC. Mr. KEENEY. Mr. McCloskey, we are not objecting to congressional enactment that would take away the right to proceed on a conspiracy to violate the civil statute. Mr. MCCLOSKEY. I appreciate that, Mr. Keeney. But you are reserving the right to prosecute Sea-Land at the present time for criminal conspiracy under what is at best a hazy interpretation of what Congress intended in 1972, because, as you say, there is no indication of what Congress intended. There was no testimony before us as to whether we wanted to use this obscure remedy, one you admit is very rarely used. Mr. KEENEY. That is true with respect to conspiracy to violate civil statutes, Mr. McCloskey. I do not agree that it is that rare with respect to conspiracy to defraud the United States. The CHAIRMAN. Would the gentleman yield? |