Broker, Trader, Lawyer, Spy - Eamon Javers [61]
At the time, Dingell’s staffers had focused on Drexel Burnham Lambert, which had recently agreed to plead guilty to securities charges and pay a $650 million fine. They focused on a sideshow to the main saga, a $2.25 billion class-action lawsuit filed by an attorney in California, William Bertain, against Drexel and another defendant. Kroll was working for Drexel as usual, and its investigators were scrambling to figure out what was going on with the lawsuit. Kroll’s John Gibbons led the West Coast piece of the investigation. Gibbons was a veteran of the U.S. Department of Justice; he had spent a long time there and had risen to serve as chief of the Criminal Division for the Northern District of California. He was a religious family man, who had devoted his life to law enforcement. But Gibbons’s integrity was on the line when Bertain claimed that Gibbons had lied about who he was working for in the investigation. Bertain alleged that Gibbons said he was working for the congressional staff—not Kroll—in conversations. What’s more, Bertain said he had tape-recorded Gibbons making the false statements.
This was a dangerous moment for Kroll. Dingell was bearing down and the press was lapping up the allegations that a Kroll operative had impersonated a congressional investigator. Corporate clients would flee the firm at the first sign of scandal. “It was pretty scary,” Kroll says. “I saw that my life’s work could have gone up in smoke.” He relocated to Washington, D.C., to lead the fight against the accusations, setting up camp in the Mayflower Hotel.* This time, though, Kroll saw an opportunity in the growing scandal: in California, it is illegal to tape a conversation if both parties haven’t agreed to it; therefore, the recording that Bertain made of Gibson might itself be illegal. That gave Kroll a way to fight back against the charges.
The drama came to a head in the congressional hearing room. Some members of Congress turned their attention to Bertain, asking him whether his recording was legal or not. Bertain dropped a bombshell: he said he had been told to make the possibly illegal tape by one of Dingell’s own employees, the subcommittee’s staffer Brian McTigue. What’s more, he argued that the staff member’s request made the recording legal, since it cloaked Bertain in the legal immunity of the House of Representatives. This was an astonishing claim, and a legal stretch. Bertain was arguing that a staff aide on Capitol Hill had deputized him as an investigator, allowing him to break California law.
When it was Gibbons’s turn to testify, he refused to speak, saying that he and his lawyers hadn’t been given enough notice of the existence of a tape to prepare a response. Jules Kroll had a growing sense of unease. A congressional hearing is a freewheeling affair, buffeted by political agendas, subject to media scrutiny, and played out under rules that give enormous discretion to the committee chairman. Kroll felt lost. This was more like a Star Chamber than a public hearing.
Despite Gibbons’s refusal to testify, it was Dingell who was now on the defensive. Had a staff aide really promised immunity to Bertain? Was that even legal? Behind the scenes, the committee members were in an uproar, demanding answers. Dingell’s position got worse when the tape of Gibbons’s conversation was played in the hearing room. It was far from clear that Gibbons had misrepresented himself. At one point on the tape, Bertain asked if Gibbons was working for Congress, and Gibbons replied “Well, not directly.” This wasn’t a slam-dunk case of misrepresentation.
Now Dingell was on the defensive. Had a rogue staffer on his committee made promises of dubious legality? And was the smoking-gun