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Former Textile Negotiator Hit on Alleged Conflict

July 31, 1986

WASHINGTON (AP) _ A former U.S. trade official may have violated conflict-of-interest laws by negotiating for a job in the textile industry before he left the government, congressional investigators said Thursday.

Former textile negotiator Walter C. Lenahan advised the government on how to deal with a textile bill at the same time he discussed working for importers of Asian textile goods, a General Accounting Office report said.

The GAO, an investigative arm of Congress, said it would send its findings on Lenahan to the Justice Department ″for such actions as it deems appropriate.″

Under law, federal employees are prohibited from participating ″personally and substantially″ in any ″particular matter″ that affects the financial interests of organizations with which they are negotiating for employment.

The GAO report was released as the textile industry and its congressional supporters geared up for a House effort next week to override President Reagan’s veto of legislation to tighten textile and apparel import quotas.

But the GAO said it could not conclude that Lenahan was to blame for an alleged leak of the U.S. position in negotiations with Hong Kong.

At a hearing of a House Government Operations subcommittee where the report handed out, the current textile negotiator with the U.S. trade representative’s office said he knew about the leak but declined to provide details.

″I didn’t prepare for this question,″ Ronald Sorini, deputy chief textile negotiator, told the subcommitee.

Lenahan, formerly deputy assistant secretary of Commerce for textiles and apparel, declined an invitation to appear before the subcommittee on commerce, consumer and monetary affairs. But he issued a statement saying he was ″confident that the investigations presently under way will result in my complete vindication.″

″As you know, I am currently the subject of investigations being conducted by the General Accounting Office, the inspector general of the Department of Commerce and the Department of Justice concerning allegations that I leaked confidential information to a foreign government and that the circumstances of my departure from my post ... involved conflicts of interest,″ the statement said.

″I do want the subcommittee members to know that I have given over 20 years of loyal service to the United States government and that I never have and never will betray the trust implicit in that service,″ Lenahan said.

″I have never provided confidential government information to a representative of a foreign government or prematurely disclosed the government’s negotiating position,″ he said. ″And I engaged in no conflict of interest in the months preceding my departure from government or since.″

Lenahan is vice president of International Business and Economic Research Corp., which is affiliated with the law firm of Mudge, Rose, Guthrie, Alexander and Ferdon.

He retired from the Commerce Department Feb. 7 and joined the Washington- base d trade consulting firm the next day.

William J. Anderson, director of the GAO’s general government division, told the subcommittee that beginning in September 1985 Lenahan discussed future employment with IBERC.

At that time, he was chairman of government meetings that led to import quotas for products from China and Hong Kong.

″Mr. Lenahan said that he knew at that time that both were IBERC clients,″ Anderson said.

While Lenahan’s job talks with the private firm were under way, he participated in the negotiation of a bilateral trade agreement with Japan ″despite his apparent knowledge of IBERC’s interest in the negotiations,′ ′ Anderson said.

Anderson told the panel that Lenahan discussed potential employment with the apparel company of Liz Claiborne Inc. while serving on an inter-agency working group that developed the U.S. position in talks with Hong Kong, Korea and Taiwan. ″Mr. Lenahan said that he knew at the time that Hong Kong and Taiwan were large Liz Claiborne suppliers,″ the GAO official said.

″While discussing employment with Liz Claiborne Inc., IBERC and Burlington Industries,″ Anderson said, ″Mr. Lenahan advised Commerce officials with respect to the proposed Textile and Apparel Trade Enforcement Act of 1985,″ popularly called the textile bill.

The bill would significantly reduce textile imports, and, therefore, affect the financial interests of all three firms, Anderson said.

Anderson said Lenahan told GAO investigators that he had not discussed salary and specifics with any firm until this year, and thus was free of any alleged conflict of interest.

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