of people, not only the designated agency ethics And then we have what l always categorize as Senate Governmental Affairs Hearing, In the face of OGE's explanations of their investigatory, oversight, and enforcement functions and practices concerning Individual conflicts of Interest and ethics matters, tbe Senate and the House in the 98th Congress, in reauthorizing OGE for 5 more years, agreed to no substantive changes In the statutory authority of OGE with regard to its responsibilities and powers over these matters. See P.L. 98-l50. The reauthorization legislation did provide that the Director of OGE may request assistance from the Inspector general of an agency in conducting Investigations of the public financial disclosure statements under subsections (b)(3) and (b)(4) of section 402 of the Act. See P.L. 98-l50, I 5 (5 O.S.C. App. I 403). This authority did not expressly extend, however, to 'inquiries' or other activity with respect to Individual conflicts or ethics matters beyond financial disclosure statements, nor specifically to such matters Is tbe coarse of 'ordering corrective action on the part of agencies and employees* under section 402(b)(9) of the Act. Mr. Sikorski. Our first witness today is the gentleman, a Member of Congress from Tennessee, Don Sundquist. It is the practice of this subcommittee to swear in all witnesses. A copy of the House rules is available before you. You don't wish to have counsel present, and you have no objection to being sworn in? [Witness sworn.] Mr. Sikorski. The subcommittee welcomes Mr. Sundquist and will allow him such time as he needs. TESTIMONY OF HON. DON SUNDQUIST, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE Mr. Sundquist. Thank you, Mr. Chairman. I might add before I begin my testimony that TVA did not call me and ask me to testi Mr. Chairman, thank you for this opportunity to testify before this subcommittee. As a Member of Congress from the Tennessee Valley, and I might add a vocal and consistent critic of TVA management, I have always tried to work with fellow Members who were genuinely interested in helping this agency resolve its problems. So it came as quite a surprise to me when I learned late yesterday afternoon that this hearing was being called on short notice. It is my understanding that TVA itself, was not notified about this hearing until one o'clock yesterday. I am also quite aware that The Washington Post ran a lengthy critical article over the weekend concerning Admiral Steven White's contract with TVA. I think the timing and the nature of this hearing then is just a little more than coincidental. For fairness' sake, I wish this subcommittee had not proceeded so hastily. Today you will hear testimony concerning the propriety of Admiral White's $355,200 contract. The validity of this contract along with allegations of conflicts of interest is being investigated by the TVA Inspector General, by private counsel, and by the Office of Government Ethics. Until these investigations are complete, I think hearings in Congress will serve no useful purpose, beyond the purpose of publicity. The testimony you will hear today, like the Post story on Saturday, is based on allegations of TVA's former general counsel. The Post article clearly implied that the former general counsel resigned his position recently in protest the TVA Board's actions in hiring Admiral White. The story made no mention of the fact that the general counsel resigned amid reports that he had improperly divulged pension fund information to benefit TVA's former nuclear power management. Nor did the story point out that the same former general counsel, who is currently being investigated by TVA's Inspector General for what the Associated Press described Friday as possible "kickbacks and manipulation of the Retirement System for personal gain." Mr. Chairman, I have no idea whatsoever whether these charges against this former general counsel are true or false. I don't know about Mr. Sanger's motivation in attacking Admiral White. But in light of the severity of the allegations, I think any reasonable person should keep these reports in mind when considering his testimony. Mr. Chairman, there are other serious reasons why I am concerned about the nature of this hearing. I am concerned that the microscopic scrutiny that is being paid to Admiral White's salary deflects attention away from some much, much more serious problems within TVA. Let me say this: As a member of two subcommittees with oversight responsibility for TVA, I believe that TVA is on sound legal footing in their relationship with Admiral White. But even if I am wrong, the problem here is insignificant in comparison to the gravity of TVA's nuclear difficulties. Mr. Chairman, TVA is undergoing a nuclear safety crisis of monumental proportions. All five nuclear plants have been shut down since last August as a result of TVA mismanagement. By last fall, it became obvious to our TVA Congressional Caucus that TVA could not solve this crisis with their existing management leadership. There was a bipartisan consensus in our Valley delegation that extraordinary steps had to be taken. The most important first step was to force TVA to hire a tough, independent nuclear manager to take over the program. TVA simply had no choice except to pay the market rate for such a service. Admiral White was hired on a temporary basis. He has been on board for only a few months. He is tough. He is independent. He is experienced. And he is able. He may not solve this safety crisis, but right now he is the only chance we have. We in the Valley Congressional Delegation, believe he needs to be given a chance to succeed. My point is this: the shutdown of TVA's nuclear plants is costing the ratepayers of the Tennessee Valley more than a million dollars a day in replacement energy costs alone. When you figure the total cost that the ratepayers are paying for nuclear energy plants that are not operating, this figure rises to $4.6 million every day of the week. In comparison to the bottom-line cost to the ratepayers, Admiral White's salary is minuscule. As the safety crisis continues, Tennessee Valley consumers are paying more in one single hour than the entire annual sum of Admiral White's contract. I don't like being here and defending a $355,200 salary. It is not a comfortable position. But I can assure you of one thing, Mr. Chairman. The costs are going to be thousands of times greater if we don't give TVA a chance to make the system work. This matter has already been debated before the full House of Representatives. Less than two months ago, Representative Schroeder of Colorado attempted to cut $355,200 from TVA's appropriated budget as a protest against Admiral White's salary. The matter was debated fully on the floor and the amendment was rejected. I find it extremely disappointing that Members of Congress outside of the Valley have spent more time debating Admiral White's contract than on proposing ways to help TVA work its way out of the nuclear crisis. In conclusion, let me say I share the chairman's concern and The Washington Post's concern about the technicalities of the $355,200 contract. But I am much more concerned, however, about a nuclear safety crisis that may cost billions and could hold dire, unspeakable consequences in the absence of strong leadership. As you proceed with this hearing, I hope you can keep the big Eicture in mind, and I appreciate the opportunity for my words to e given today. Thank you. Mr. Sikorski. Thank you, Mr. Sundquist. I appreciate your words and can assure you that we are sensitive. I have had occasion to oppose that salary number. But I have to say, in talking with Members from the Valley, that TVA's problems are such that it is perhaps necessary to purchase the kind of talent that only comes at a price higher than the Federal pay cap. However, the focus here is on conflict-of-interest laws and the way that White's end-run around the pay cap was structured. And our concern is what happens to ethics officials who try to enforce the law, and the kind of support they get or don't get from the Office of Government Ethics. That is why this hearing comes so close to our investigation of the OGE. We want to give the two TVA agency officials who were in charge of ethics a chance to enlighten us as to their experience. Mr. Sundquist. Mr. Chairman, I thank you for that comment, and I understand where you are headed. I just think it may be a little premature being that all these other folks have not reported yet. I also am a little perturbed that we didn't give TVA enough time, enough notice to testify. And in the absence of that, I would hope that you would ask Mr. Sanger today if he didn't in fact write the contract for Mr. Bill Bibb of the MAC Company that established the pattern for Admiral White's salary. I, incidentally, have fought TVA in their blanket attempt to lift the pay cap. But the seventy-some thousand dollar pay cap for some nuclear managers is a problem. You can't find skilled nuclear expertise for under that price. I think TVA tried before to find nuclear expertise for that price and they failed. So something clearly has to be done. I think TVA was dealing in good faith when they tried to find an expert and a way that would solve the TVA nuclear safety crisis. Also, I would ask that you question the witness today as to the extent of his activities as the person in charge of listening to whistleblowers. There has been a lot of discussion off the record and I have received phone calls and correspondence from people who wanted to tell what was going on but felt like they couldn't over the past few years. Mr. Sikorski. I have questions on my list already and I will star them to be asked. Have you had an opportunity at all to talk with either Mr. Sanger or Mr. Mason? Mr. Sundquist. I have not. I thought it would be inappropriate, considering the fact that Mr. Sanger's conduct has been the focus of an ongoing investigation. Mr. Sikorski. About the conflict-of-interest charges or the subsequent charges dealing with their personal conduct? Mr. Sundquist. To my knowledge, I haven't spoken to them. Mr. Sikorski. The OGE has taken a position, a very strong position, on the conflict of interest, and they assured us yesterday that they are not finished with it. The non-statutory TVA Inspector General sent back the original memorandum raising the conflict-ofinterest charges to Mr. Sanger, and told him that it wasn't in his area. We are going to attempt to find out what is the position of TVA's private counsel. You made mention that these three entities were looking at the issue. Mr. Sundquist. That is right. And I do think it would be better if we had some balance the same day, and I realize that TVA couldn't testify. But certain comments by Mr. Sanger, I am sure, will want to be answered by TVA. Mr. Sikorski. Of course they get the benefit of seeing those comments and preparing a long well-researched and well-funded response. They get the benefit of not having to respond on a one-toone basis, too. I think it is a plus and a minus, and evidently they weighed those. And we are going to respect their right to have their side of the story told. Mr. Sundquist. I appreciate that, Mr. Chairman. Thank you for letting me testify. Mr. Sikorski. Thank you. Our next witnesses are Mr. Herbert S. Sanger, Jr. and Mr. William E. Mason. Mr. Sanger worked at the TVA for some 25 years. The past 11 years he was TVA Chief Counsel, as well as the Designated Agency Ethics Official for six years. Mr. Mason was TVA Assistant General Counsel for seven years. Gentlemen, some technical questions. I will note that before you on the table there is a list of the rules of the House. With particular reference to House Rule 11, do either of you wish to have counsel present? Mr. Sanger. No. Mr. Mason. No. Mr. Sikorski. And do either of you object to being sworn? Mr. Sanger. No. Mr. Mason. No. [Witnesses sworn.] Mr. Sikorski. Good morning, gentlemen. Do you have a prepared statement? Mr. Sanger. Mr. Chairman, I have some brief notes. There is also a statement that is available here. Mr. Sikorski. Let me make sure I have it—is that this "Statement of Herbert S. Sanger, Jr., Concerning Events Leading to His Forced Resignation From the TVA"? Mr. Sanger. That is correct. Mr. Sikorski. Very good. And do you have a summary of the important points you would like to make? Mr. Sanger. Yes. Mr. Sikorski. OK, why don't you proceed? TESTIMONY OF HERBERT S. SANGER, JR., FORMER CHIEF COUNSEL AND DESIGNATED AGENCY ETHICS OFFICIAL, TENNESSEE VALLEY AUTHORITY Mr. Sanger. My name is Herbert S. Sanger, Jr. With me is William E. Mason. Mr. Mason was an assistant general counsel who |