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Treasury Official Found to Have Met With Probe Subjects Outside Office

May 10, 1996

WASHINGTON (AP) _ A top Treasury enforcement official met several times outside his office with representatives of companies his agency was investigating and once divulged to Mobil Corp. that it was under investigation, an internal inquiry found.

The Treasury inspector general’s investigative report involving Office of Foreign Assets Control Director R. Richard Newcomb cites two possible violations of federal regulations related to the appearance of conflicts of interest and gifts.

A summary of the report was obtained by The Associated Press.

Newcomb’s superiors at the Treasury Department concluded there were no ethical or legal violations and gave him a mild admonishment.

``The fact that you met privately outside your office with representatives of parties under investigation tended to create an appearance of impropriety,″ Treasury Deputy Assistant Secretary John P. Simpson wrote Newcomb. He told him to ``make every effort to avoid″ such contacts outside the office.

Some matters in the investigation were also reviewed by a federal prosecutor, who concluded there were no legal violations, according to Newcomb’s lawyer, Earl J. Silbert.

``There was a lengthy comprehensive investigation,″ Silbert said. ``Mr. Newcomb met with and answered all questions put to him. And he was confident of what the investigation would find.″

The inspector general found that while OFAC agents were investigating allegations of possible Vietnam embargo violations against Mobil, Newcomb accepted a limousine ride from the company in December 1992 to attend a speech, according to the report summary, portions of which were blacked out.

Later, Newcomb divulged to Mobil representatives the allegations while the probe was under way ``without coordinating″ with investigators and then gave the company a copy of an administrative subpoena days before his investigators served it in January 1993, the report said. Newcomb’s office is responsible for enforcing U.S. trade embargoes.

The lead investigator in the case, Stephen Plitman, told the IG that while conducting the investigation he got a call from a Mobil lawyer advising the company knew what he was working on.

``I was completely taken aback, and I immediately asked them how they became aware of the investigation,″ Plitman wrote in an affidavit. ``They stated that Mr. Newcomb told them about the allegations and that they were sure they could respond with a satisfactory explanation.″

Plitman, who has filed a job grievance against Newcomb, told the IG he considered the contact to be ``nothing less than a tipoff.″

Secret Service logs obtained under the Freedom of Information Act show that Newcomb met with Mobil representatives in his office a week before the company received the subpoena.

A Mobil spokeswoman, Gail Campbell Woolley, said that the company provided Newcomb a ride in a sedan to the speaking engagement and that later the OFAC director gave them ``a passing heads up″ on the probe. ``It was something mentioned in a meeting about something else,″ she said.

Woolley said Mobil did its own investigation, determined it had not violated the Vietnam embargo and responded to the OFAC accordingly. No further action was taken, she said.

The inspector general reviewed 11 cases involving Newcomb based on a series of AP stories in 1994 and 1995, allegations made by several OFAC employees and a series of questions submitted to Treasury officials by the AP that were referred to the inspector general.

The report concluded that Newcomb:

_Attended ``several private lunches″ with a representative of Texaco during the time the company was under investigation by the OFAC for possible embargo violations in Haiti. The AP had previously reported that Newcomb ignored the advice of his enforcement chief to step aside from the case because of his friendship with the Texaco lawyer.

_Failed to document a ``significant″ conversation he had in 1992 in which then-Treasury Secretary Nicholas Brady expressed his ``sympathies″ for Texaco in the Haiti case. Documents reported by the AP in 1994 showed Newcomb repeatedly ignored his staff’s recommendations to bring criminal charges against Texaco and quoted Newcomb as saying Brady had instructed him to ``go slow″ in the investigation.

_Failed to conduct a criminal investigation into allegations that a New York bank was funneling money from major U.S. companies to Vietnam in the late 1980s and 1990s.

The AP reported last year that documents showed Newcomb had instructed his investigators in 1991 to stop working on the case, which was being run by the Customs Services. Then, without coordinating with Customs, he took steps that ended the investigation, including sending an order to the bank telling it to ``cease and desist″ the activities being investigated.

The IG wrote that Newcomb failed to coordinate his actions with Customs or to further consult with the federal prosecutor in New York handling the case.

And though a subsequent audit confirmed many of the transactions that were being investigated, the OFAC did nothing further to determine if criminal violations had in fact occurred, the report said.

Silbert declined to address the inspector general’s specific findings, but acknowledged his client may have had occasional disagreements in cases.

``Any official who undertakes to perform those responsibilities in a way that he has done is necessarily at some point in time going to have disagreements with officials in either his same agency or other agencies,″ Silbert said.

The IG report was sent to Treasury Department supervisors last September but no action was taken until February _ after a House subcommittee began its own inquiry of the OFAC. Officials usually are required to respond to an inspector general’s report within 90 days.

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