Mr. Chairman, in sum, we defer to the Congress on the matter of the proper penalties to be assessed for knowingly and willfully false statements made on EIGA forms. However, insofar as S. 2214 would have the effect of voiding or modifying in any respect criminal penalties already imposed as a result of violations of the Ethics in Government Act, we believe it exceeds Congress' power to legislate and would be an unconstitutional intrusion on the President's pardoning power.

Mr. Chairman, that concludes my statement. I will be glad to try to answer any questions you have.

Senator COHEN. Thank you very much, Mr. Keeney.

I'd like to review with you a statement that has been made about the bill before us and just get your assessment of it.

"If this legislation passes, it would mean that if someone applies for a Government position and fills out a 171 form and willfully files false information on that form, that the Government would be entitled to prosecute that person for a violation of section 1001.” Is that correct?

Mr. KEENEY. Yes, sir; right.

Senator COHEN. The statement continues: "If the legislation passes, on the other hand, the Congressman who files false forms to his constituents and to his peers, would not be subject to 1001 prosecution."

Mr. KEENEY. As far as it's prospective; yes, sir.

Senator COHEN. To continue: "If an individual goes down to his bank and files a false financial disclosure for a loan, he could be prosecuted for a felony under 1014."

Mr. KEENEY. Yes, sir.

Senator COHEN. But the Congressman or the executive branch official, if there is a decriminalization here, who files false financial information, in the court, to his peers or his constituents, would not be subject to prosecution.

Mr. KEENEY. That's right.

Senator COHEN. OK. Now that statement was made by the Department of Justice last week before Judge Green, when it opposed Mr. Hansen's motion for a reduction of his sentence. And the prosecutor went on to say to the court that "While the Congress is empowered to produce such an anomalous result, I would submit that the court should have nothing to do with encouraging such an anomalous result."

Now has the Department changed its position? You seem to indicate that if it wants to do it prospectively, that's up to Congress. You would object to a retroactive application, because it would intrude upon the ability of the President's authority to pardon. But you seem to imply in your statement that if Congress as a policy matter wants to enact legislation prospectively, it should go ahead. Mr. KEENEY. Prospectively, yes, sir. Counsel for the Government was arguing there that it was a valid conviction under then-existing law and that it should be upheld, irrespective of what Congress might do with S. 2214.

Senator COHEN. But the implication from that statement was that the Justice Department was arguing even that Congress should not do this. It would produce an anomalous result.

Mr. KEENEY. I'm sorry▬▬▬

Senator COHEN. In other words, the implication made by the prosecutor in the statement that I read through about the individual citizen versus the public servant was that even Congress shouldn't do it.

Mr. KEENEY. You can read that into his statement; yes, sir.

Senator COHEN. Well, but what I'm saying is that I don't read that into your statement today.

Mr. KEENEY. No, sir. I'm presenting the position of the Department; namely, that it's going to defer to Congress with respect to whether or not criminality should continue in this area.

Senator COHEN. Well, I wrote to the Attorney General back on March 28, asking him to give us the views of the Department of Justice on this bill, and the Department didn't respond to my request. And then again on May 29, I wrote to the Attorney General asking for the Department's view again. I received no response. And despite the position that was taken in court in the Hansen case last week, my staff was told by the Department that it did not decide its position on the legislation until 2 days ago.

Now does this reflect some division within the Justice Department, with respect to this legislation?

Mr. KEENEY. It reflects the fact, Senator, that there was a great deal of discussion in reaching an ultimate decision; yes, sir. Senator COHEN. Why?

Mr. KEENEY. Well, there are people, you know, who believe that the filings required by the Ethics in Government Act are intrusive into the private affairs of individuals. On the other hand, there are people who are of the view reflected by our counsel in the Hansen case, that when one deliberately makes a false statement, that person should be subject to criminal prosecution.

Senator COHEN. In addition to the public financial disclosure reports filed by the top-level officials in the executive branch and Members of Congress here in the legislative branch, there are midlevel employees who have to file a private or confidential statement. That is required by Executive Order 11222. Is that right? Are you familiar with that?

Mr. KEENEY. I'm not familiar with 11222. In the executive branch

Senator COHEN. That's a confidential reporting disclosure form. It's not made public.

Mr. KEENEY. All right. If there is such a filing, it would be subject to 1001; yes, Senator.

Senator COHEN. So if this bill were to pass, then top-level officials in the executive branch would be escaping criminal liability, and yet the midlevel employee, who files a confidential or private disclosure form would be subject to criminal liability.

Mr. KEENEY. Yes; they would, as well as the higher level people who happen to have to file that particular document; yes.

Senator COHEN. If mid-level employees make false statements on confidential disclosure reports filed under Executive Order 11222, then they would be subject to the criminal responsibility, but toplevel officials who file public financial disclosure reports would not be criminally liable.

Mr. KEENEY. Well, what it is trying to say, Senator, was to the extent that any governmental official has to file this document, this confidential document, that person would be subject to prosecution for a false statement.

Senator COHEN. Senator Levin, you have some questions?

Senator LEVIN. Yes. I am trying to understand the position of the Department of Justice myself. I've got problems when I read this argument in the Hansen matter, in which the representatives of the Department of Justice, Reid Weingarten and James Cole, arguing for the Government, said it would be an "anomalous" result if the Congress adopted this bill.

You seem to say you don't care whether we do or not. Putting aside the retroactive aspect of it, would you say the result of the bill is anomalous, or wouldn't you say it's anomalous?

Mr. KEENEY. Well, Senator Levin, we have to put ourselves in the context of the prosecutors who are arguing for a prosecution that they thought was validly brought and a conviction validly obtained.

There is a bit of anomaly there, with respect to our not taking the same position with respect to S. 2214.

Senator LEVIN. So is that the position of the Department of Justice that there is "a bit of an anomaly?"

Mr. KEENEY. No; the position of the Department of Justice is, Senator Levin, that we're deferring to the Congress on the criminality aspect.

Senator LEVIN. But when you just said there was "a bit of anomaly"-is that the position of the Department of Justice?

Mr. KEENEY. I'm just expressing my own personal view, Senator, and that the view of the Department of Justice is that we're deferring to Congress on its legislation.

Senator COHEN. Doesn't it strike you as being unusual that the Justice Department is so reticent, when on the average we have very strong opinions expressed by the Justice Department on practically everything we do up here?

Mr. KEENEY. Well, it is not the usual position; you're rightSenator LEVIN. Isn't it somewhat anomalous, as a matter of fact [laughter] for the Department of Justice not to take a position on this kind of an issue?

Can you remember when the Department of Justice did not take a position on this type of an issue on a bill pending in front of Congress?

Mr. KEENEY. Offhand, I can't direct you to any situation, Senator. I am sure there have been a few, but I can't direct you to any. Senator LEVIN. Well, are you now going to inform the judge in the Hansen appeal-I presume that an appeal is pending from this district court decision-are you going to inform the court of appeals that the Department of Justice has decided to take no position on this bill-

Mr. KEENEY. No, sir.

Senator LEVIN [continuing]. Unlike what the Justice Department argued in the district court, that it was anomalous?

Mr. KEENEY. No, sir; we're not, because an argument was being presented, and it had been presented previously to the court, that it was not the intention of Congress when they enacted EIGA, that there should be criminal penalties. Now we argued against that and were successful. Counsel for Congressman-former Congressman-Hansen pointed to S. 2214 as a example that Congress still

felt this way. And I don't think that impacts in any respect on that particular prosecution.

Senator LEVIN. So you don't think that the argument of the U.S. attorney was relevant to the matter in front of the court?

Mr. KEENEY. I think the argument was relevant, but the argu

ment

Senator LEVIN. But if it was relevant then, that the bill is anomalous, why isn't it relevant in the court of appeals that it may be or may be not anomalous?

Mr. KEENEY. It's relevant in response to an argument, Senator Levin, that because of the fact that this committee, this Congress was considering decriminalizing ethics in government filings, that the court should take that situation into consideration in ruling on the Hansen motions.

I find nothing inconsistent in those positions.

Senator LEVIN. Well, I think it is inconsistent and, frankly, I'm surprised that the Department of Justice is ducking this. I think that you ought to take a position on it. I think we have to. I think that's what you're there for, to give us recommendations on legislation like this. I generally welcome the recommendations of our Department of Justice, because I think it is important that we have their consideration. The fact that you're unwilling to give us an opinion on a critical issue like this, I think, is ducking your responsibility.

Senator COHEN. Could I inquire as to what the Justice Department-assuming we pass this bill-would recommend to the President in terms of whether he should sign it or veto it?

Mr. KEENEY. I don't know that, sir. I am not prepared to answer that.

Senator COHEN. Because we, this particular subcommittee, has been involved in passing-or have recommended passage of lots of legislation. For example, we had a major dispute with the administration as to whether certain provisions of the Competition in Contracting Act were constitutional. We have always had the benefit of what the Justice Department was going to recommend to the President so we could take it into account.

We might end up passing a bill, and then you turn around and say, Mr. President, we think it is anomalous and you shouldn't be on record as supporting something like this and we are recommending you veto it.

Mr. KEENEY. Senator, all I can say is I am reflecting the views of the administration on this issue. Whether or not the administration has focused on what they would recommend to the President in the event of enactment, I have no idea.

Senator COHEN. I have some more questions, but I will yield to Senator Rudman.

Senator RUDMAN. Well, I just want to follow up with just one question because most of the questions that I would have asked have been asked and answered.

I have read your statement again in the last couple of minutes and I am trying to figure out for myself why you have taken the position you have taken.

Senator Cohen asked you that question, and your answer, if I understood it correctly, was that it took so long to come up with a

position because of an essential dispute within the Department concerning the efficacy of financial disclosure at all.

Was that basically your answer?

Mr. KEENEY. Well, as I indicated to Senator Cohen, there are people with varying views, and those were the views-those who believe that the filings themselves are extremely intrusive, some who felt that maybe the filings themselves should be modified in some fashion, and then there were some views that a false statement should be prosecuted.

I am giving you the final decision of the Department, Senator. I didn't go through the rationale with each one of the decisionmakers. I am just communicating what it is.

Senator RUDMAN. Well, I understand, but I am getting to a point here. Obscure as it may be, it will become apparent in a moment. Then essentially what you are saying is that the disagreement concerned the narrow issue of disclosure forms generally and how they are to be filled out, what the forms required, whether or not they ought to be required, and there is a divergence of view in the Department on that issue.

That was the central issue that caused the Department to take the position it has taken to essentially say we are going to defer to the Congress as to whether or not you wish to impose further requirements or less requirements.

Mr. KEENEY. That is my understanding, Senator. I have no firsthand knowledge. My participation in these was limited, so I am only reflecting what has been communicated to me with respect to those discussions.

Senator RUDMAN. I see.

Mr. KEENEY. But that is what I understand them to be.

Senator RUDMAN. Do you know how high those discussions reached in the Department?

Mr. KEENEY. They went all the way up. The extent to which the highest levels were involved I am not sure, but there was some involvement.

Senator RUDMAN. And in reporting to you what they wanted you to say up here today, essentially all of the important points that they relayed to you are contained in your statement?

Mr. KEENEY. Yes, sir.

Senator RUDMAN. OK. Well, then my question is: after reading this, I first thought before hearing the questions that the reason the Department may have been reluctant to make a recommendation would be based on some notion of separation of powers, and since the Congress essentially would be regulating itself and imposing standards of performance and penalty on its own members, that somehow the Justice Department did not wish to impose its view on the Congress but rather thought that Congress ought to do that unimpeded.

That was not an issue?

Mr. KEENEY. That is not an issue in my mind, Senator. The bill applies across the board to

Senator RUDMAN. All right.

Mr. KEENEY. There are more executive people affected by this than there are congressional.

Senator RUDMAN. Well, that may be.