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Justice Examining Role of Transportation Secretary

March 1, 1995

WASHINGTON (AP) _ The Justice Department’s criminal division is reviewing what role, if any, Transportation Secretary Federico Pena played in the award of a Los Angeles transit system contract to his former management company, two government officials said Wednesday.

The inquiry was triggered by a referral in February from the Transportation Department inspector general, according to one official, who spoke on condition of anonymity.

Under the independent counsel law, which governs the investigations of top federal officials, the Justice Department has 30 days to decide whether there are specific allegations from a credible source that Pena committed a federal felony.

If such allegations were found, the department would have 90 days for a preliminary investigation to weigh any available evidence. If enough evidence were found to warrant a full investigation, Attorney General Janet Reno would ask a special three-judge court to name an independent counsel to conduct it.

Bill Adams, a spokesman for Pena, had no immediate comment. But Pena has previously denied any impropriety in his dealings with the management firm, Pena Investment Advisers Inc., a Denver money management company he founded.

A second official, who also declined to be identified by name, said the current review stemmed at least in part from reports about the Los Angeles contract.

Pena Investment Advisers won a contract to manage $5 million in the Los Angeles transit system pension fund, the Los Angeles Times reported last month. The contract was awarded in 1993 just weeks after Pena became transportation secretary.

Pena reported on federal financial disclosure forms in January 1993 that he sold his interest in the company at a loss.

The Los Angeles transit system is building a multibillion-dollar subway system, and Pena approved $187 million in additional federal funds for it this January, according to the Times.

Pena is the fourth Clinton administration Cabinet member to undergo scrutiny under the independent counsel act.

Justice officials are conducting preliminary investigations of Housing Secretary Henry Cisneros and Commerce Secretary Ron Brown. They are looking at allegations Cisneros lied to the FBI during his confirmation process about payments to an ex-lover. In Brown’s case, investigators are looking at whether he fully disclosed his finances and complied with all tax laws. Brown and Cisneros have denied any wrongdoing.

Mike Espy resigned as agriculture secretary last fall to defend himself during a full investigation by an independent counsel into whether he improperly received gifts from businesses regulated by his department.

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