Ashcroft: No 'Conflict' in Watchdog Role

March 11, 2008— -- Displaying the fire and tenacity that made him a controversial attorney general, John Ashcroft appeared before Congress, Tuesday, to defend his selection as a federal watchdog for a company that was investigated by the Justice Department, which he used to lead.

Ashcroft, who served as the nation's top lawyer during George W. Bush's first term, testified about his role as a federal monitor in a case for Zimmer Holdings before the House Judiciary Committee's Commercial and Administration Law panel.

Ashcroft defended his role and fees paid to his company, The Ashcroft Group, LLC, which, according to subcommittee chairwoman Linda Sanchez, D-Calif., could total $28 million to $50 million.

Zimmer was one of five companies investigated by the U.S. attorney's office in New Jersey for allegedly paying doctors' consulting fees in order to recommend particular artificial hip and knee reconstruction and replacement products.

Sanchez said she had concerns that Ashcroft's appointment as compliance monitor appeared to have been reached with no guidelines and was not transparent.

After several questions, Ashcroft became visibly agitated and defended himself, saying, "This hearing cost far more in tax dollars than my monitorship will cost, because it did not cost taxpayers one dime ... there is not a conflict, there is not an appearance of a conflict," Ashcroft boomed at Sanchez, with whom he had a heated exchange.

Ashcroft was appointed as the monitor for Zimmer last September and has already billed the firm considerable fees, which must be paid by the company, not taxpayer funds.

Ashcroft's role is designed to ensure that Zimmer complies with a deferred prosecution agreement it entered into with the Justice Department. That agreement gives the company an opportunity to correct alleged actions before the government moves forward with prosecution. Generally, if all conditions of the agreement are met, the prosecutor declines to file a case.

Zimmer and three other firms entered into deferred prosecution agreements with the Justice Department.

Ashcroft said he was not involved in any dealings between Zimmer and the Justice Department before he was selected as the monitor.

Another company involved, Stryker Corp., was the first to cooperate in the investigation and did not pay any civil penalties, while Zimmer and the other firms paid about $311 million in penalties, according to the Justice Department.

Stryker recently disclosed in Securities and Exchange Commission filings that it is still under criminal investigation by the Justice Department for possible violations of the foreign corrupt practices act for "sale of medical devices in certain foreign countries."

Sanchez said she was concerned there was an appearance of a conflict of interest because the U.S. attorney on the case, Chris Christie, had hired his former boss, Ashcroft.

Ashcroft defended Christie as an "outstanding prosecutor," adding, "The ability to serve as a monitor should not have any bearing on having been in public service."

Five of the companies, including Zimmer, that were investigated by the U.S. attorney's office, control 95 percent of the products used in hip and knee replacement surgeries. According to the Senate Special Committee on Aging, the firms spent $230 million on payments to the doctors.

Ashcroft said Tuesday there is currently an ongoing criminal investigation into the doctors and consultants who took the fees from the companies.

On Monday, the Justice Department issued new requirements to have the chief of the criminal division and the deputy attorney general approve all deferred and non-prosecution agreements, and to sign off on the monitors that are ultimately selected.