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Energy Secretary Taking Offensive; Defends Trade Missions

June 13, 1996

WASHINGTON (AP) _ Under attack for months from congressional critics about her foreign travel, Energy Secretary Hazel O’Leary today strongly defended four controversial trade missions which cost taxpayers $3.2 million.

Testifying before the House Commerce investigations subcommittee, O’Leary acknowledged management problems with the trade trips to India, Pakistan, China and South Africa but insisted they benefited American businesses and U.S. foreign policy.

Republican members of the panel have been highly critical of the 1994-95 trips, each involving groups of between 59 and 67 executives and department officials. They said that expenses were mismanaged and the Energy Department has yet to show any substantial economic benefits.

``I accept responsibility for the problems identified,″ O’Leary said, alluding to an internal DOE inspector general report made public last week that said the trips were mismanaged with some questionable expenditures.

But O’Leary said the criticism ``should not diminish in any way the value of trade missions as an important tool of government policy.″

``We are proud of our accomplishments on them and remain confident that this work will return dividends to the American taxpayer as projects succeed and new opportunities are seized in the future,″ O’Leary said.

At the same time, Republicans lawmakers were expected to continue to hammer away on the foreign travel issue. One panel source said that despite the controversy, O’Leary was planning a trip later this summer to Latin America, including stops in El Salvador, Bolivia and three cities in Brazil.

Associates of O’Leary have said that she has been eager to tell her side of the story in the travel dispute and had wanted to testify last December when the Commerce panel opened its inquiry.

Rep. Joe Barton, R-Texas, the subcommittee chairman, said he wanted to focus on fact gathering and reviewing hundreds of documents supplied by the department _ as well as a review by congressional auditors _ before calling on the secretary.

O’Leary got some support Wednesday from nine executives who traveled on some of the trade missions. They called the government-sponsored trips valuable in laying the groundwork for business opportunities and in some cases an important factor in developing contracts.

Kenneth Kara, president of Zond Corp., a company that makes wind power generating equipment, questioned why lawmakers ``would spend so much time investigating″ the trade missions that, he said, over time ``will more than pay for themselves.″

Jerome Davis, president of Cummins Renewable Energy Corp., who went with O’Leary to South Africa, called the trip ``an extremely helpful first step″ that he said will lead to the sale of ``tens of millions of dollars of solar equipment″ in the country.

Barton told the executives that while he considered international trade promotion proper for the federal government, it shouldn’t be the job of the Energy Department ``or the No. 1 priority of the secretary of energy.″

The Energy Department ``has greatly exaggerated the economic benefits of the trade missions,″ he argued.

Republican members of the subcommittee repeatedly in recent months have accused the Clinton administration of overstating the benefits of O’Leary’s promotional trade trips. They cited early claims of as much as $19 billion in potential benefits, later reduced to just over $2 billion in firm contracts arising from the trips to India, Pakistan, China and South Africa in 1994 and 1995.

The General Accounting Office, Congress’ auditing arm, said that it could substantiate only about $450 million in additional U.S. exports resulting from the four trips because many of the firm contracts involved major foreign partners, including Japanese, German and British companies.

Last week an internal DOE inspector general’s report said that while the trips ``helped move many (ongoing commercial) agreements forward″ the department could not quantify the benefits either in contracts or the breaking down of barriers for the U.S. companies that participated.

In addition to the four trade missions, O’Leary has traveled extensively to various European cities and to Russia, usually in connection with official business involving discussions on nuclear weapons or energy issues.

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