----------------------------------------------------------- IRS SENIOR EMPLOYEE MISCONDUCT PROBLEMS ----------------------------------------------------------- Hearings before the Commerce, Consumer, and Monetary Affairs Subcommittee of the Committee on Government Operations, House of Representatives, One Hundred First Congress, First Session, July 25, 26, and 27, 1989. ----------------------------------------------------------- Washington : U.S. G.P.O. : For sale by the Supt. of Docs., Congressional Sales Office, U.S. G.P.O., 1989. ----------------------------------------------------------- GOV DOC # Y 4.G 74/7:Em 7/11. ----------------------------------------------------------- Congressman Doug Barnard, Jr. (D-Georgia) was Chairman of the Commerce, Consumer, and Monetary Affairs Subcommittee. The following exchange occurred on July 27, 1989 between William Alexander, Congressman (D-Arkansas), Michael Murphy, Senior Deputy Commissioner of the Internal Revenue Service, and Fred Goldberg, Commissioner of the Internal Revenue Service. Excerpts are from pages 554-559. Mr. BARNARD. Well - I want to take that back up. I think we need to. I have invited Mr. Alexander, who is not a member of the committee, but a former member of the committee, to come - to sit in at these hearings and according the accommodations that we have in Congress, I will give him the opportunity to ask any questions. Mr. ALEXANDER. Thank you very much, Mr. Chairman. First, I would like to thank the chairman, the minority, and the entire committee for permitting these hearings and I would explain my reason for being here, to state for the record and under oath, if you wish, Mr. Chairman, that the House Appropriations Committee, specifically the Subcommittees on Commerce, Justice, State, and Judiciary and Treasury, both of which I am a member of, together and in cooperation with the Subcommittee on Crime, Chairman Hughes of the House Judiciary Committee, the General Accounting Office, and in cooperation with the Criminal Investigation Division of the Arkansas State Police, have been investigating events surrounding the Mena, AR, Airport for several years. The allegations here are of the most serious nature involving allegation of high crimes in high places in Washington. They involve allegations that a C-123/C-130 operation, contract operation, was operating out of Mena Airport transporting guns to Central America and running drugs to Arkansas, and laundering money in Arkansas from the sale of those drugs. I wish at this point to state publicly my appreciation for the cooperation of the Federal Bureau of Investigation and the Drug Enforcement Administration, both of which agencies have cooperated with the House Appropriations Committee, the General Accounting Office, the Subcommittee on Crime, and the Arkansas State Police. This investigation led us to the Internal Revenue Service about 1 year ago, at which time I attempted to obtain that agency's cooperation by asking IRS to provide access to one of the witnesses here today. I believe it was in September of last year, because of the failure of that cooperation, I wrote a letter to Mr. Gibbs, who was then Commissioner, and I will submit a copy of that letter for the record, requesting the cooperation of the Commissioner and specifically requesting the access to information and testimony of Mr. Duncan. I did not receive a reply to that letter by March of this year, and I spoke directly to Mr. Murphy, who appeared before our Committee on Treasury appropriations. Mr. Murphy appeared to be cooperative and stated his cooperation, but as of this moment, except for the evidence that I have heard here today and through the General Accounting Office resulting from the resignation of Mr. Duncan as a criminal investigator for the Internal Revenue Service, the IRS has not provided any evidence or any access to that evidence to me, to the Subcommittee on Crime nor to the General Accounting Office or the Arkansas State Police Criminal Division. I will state for the record that it has only been through the resignation of Mr. Duncan and his testimony here today that we have discovered part of the truth that, we think will lead us to an indictment on money laundering charges for drug trafficking in Arkansas. The action of the Internal Revenue Service has prevented the Government from investigating and prosecuting these cases in Arkansas. I don't think that it is intentional on your part to do so, but I would like to state to you that I have for over a year been trying to gain access to Mr. Duncan's testimony. It has been explained to me that you could not provide it because it was prevented by the security provisions of the confidentiality requirements on tax returns and grand jury information. I might say that the emissary that you have sent to me has been most polite in explaining that to me. The effect of the failure of your cooperation has been to permit the statute of limitations to continue to run on persons that we believe to be drug traffickers, in effect, to protect drug traffickers and their drug lords that are profiting from the illicit drug trafficking in the United States and specifically in my State of Arkansas. That is to say, that little children in Arkansas are buying drugs because we are unable to discover sufficient evidence to bring indictments to prevent that from happening. I don't think you intend to do that, but that is the effect of the Government and the bureaucracy not cooperating with law enforcement officials. It is a serious problem in this country, and one of the most serious obstacles to attacking the problem, the war on drugs, is the bureaucracy, the rules and regulations, and the intentional prevention of the submission of evidence that we have heard from the witnesses today. I would just like to ask a couple of questions about those witnesses, because my committee, together with the Subcommittee on Crime, and in cooperation with this committee, will be subpoenaing you gentlemen in the future if that is necessary to get all the information. We hope that is not necessary. Mr. Murphy, did you know that since I talked to you in March my effort to acquire access to needed information to pursue a prosecution in Arkansas has not been forthcoming? Mr. MURPHY. Mr. Alexander, I am aware that there has been a serious issue as to what information, if any, we could provide to you. As you well pointed out, on the day that I testified before the House Appropriations Committee, we met and I thought we had - a good communication privately. Mr. ALEXANDER. We had a good communication. We can stipulate that, but we still don't have any evidence. Mr. MURPHY. I understand that. I thought you showed me a letter that you wrote to the Regional Commissioner in Southeast and I also recall that I apologized to you for not responding to it. I had. Mr. ALEXANDER. You are correct. The letter was to the Regional Commissioner in Atlanta. I am mistaken about that. I will submit a copy of the letter for the record. [The information follows:] BILL ALEXANDER, M.C. 233 CANNON HOUSE OFFICE BUILDING ARKANSAS WASHINGTON, DC 20515 (202) 225-4078 COMMITTEE ON APPROPRIATIONS Congress of the United States September 26, 1988 Mr. Thomas A. Cardoza Regional Commissioner Internal Revenue Service Southeast Region Post Office Box 926 (Room 600) Atlanta, Georgia 30370 Dear Mr. Cardoza: Please be advised that the General Accounting Office Congressman William Hughes, Senator John Kerry and I are conducting a Congressional investigation of illegal drug trafficking from Latin American countries to the United States. Of particular interest is the use of Mena Airport in Arkansas as a staging area for the transport of arms to, and drugs from Central America. One of your special operations coordinators, Bill Duncan has information relevant to this investigation. Accordingly, I herewith request that you authorize Bill Duncan to share all relevant information pertaining to the Congressional investigation which I have herein described. Thanking you for your cooperation in this matter, I am Sincerely yours, BILL ALEXANDER Member of Congress BA/js Mr. MURPHY. The apology for being nonresponsive to the letter, whether you wrote to the Regional Commissioner, to me, or to the Commissioner, we should have responded. Mr. ALEXANDER. It has been a year. Mr. MURPHY. I know that. Mr. ALEXANDER. The statute of limitations is running on the criminals. Mr. MURPHY. I understand, but I had Ms. Morin with me. I am going to ask Mr. Keightley to respond to the question because there were issues that, upon the advice of counsel I gave directions that if there was some way that we could legally cooperate with your committee and provide information to you, that was my objective. Mr. ALEXANDER. Mr. Murphy, I understand that you have rules and regulations to operate by and we don't want to violate those rules. It is not our purpose to do that. Our purpose is to try to stop drugs from coming into this country. Your interpretation of your rules and regulations are, in effect, cooperating with the drug lords. Your bureaucracy is preventing us from waging a war on drugs. Mr. MURPHY. Mr. Alexander, before I ask Mr. Keightley to respond, I would like to point out to you, IRS agents, including Special Agent Duncan when he was with us, across the country have been partners in dealing with the war on drugs. We have gotten much, much recognition on that and I think we can even do more on that. I think Mr. Keightley can respond to the specifics. Mr. ALEXANDER. Mr. Keightley can respond for the record. I have heard the explanation. The basic problem here is that while I have the highest possible clearance that the Government can provide for secrecy - being cleared for secrets that the President and no one else gets, I have still been denied access to information in a criminal investigation in my State. Now, Mr. Duncan came in here this morning and he has testified that he was prevented from offering evidence that he thought relevant to that investigation. In effect he has testified that he was, in effect, ordered to perjure himself in evidence before a grand jury. I have other information that Mr. Duncan believes that the prevention of his testimony before the grand jury prevented an indictment on drug money laundering charges - very serious charges - and you were all part of that. What we want to do is to get to the bottom of this thing so that we are all working together to fight this war on drugs instead of fighting one another. We are fighting one another and we ought to be out here fighting these drug lords. Now, will you and Mr. Goldberg order all of the agents in the Internal Revenue Service to cooperate with these investigations and will you submit a memorandum to that effect and send us a copy of it? Mr. GOLDBERG. Mr. Alexander, I will make crystal clear to every one of our employees that they are obligated to and they will cooperate to the fullest extent of the law with your investigation and any other investigation conducted by the Congress of the United States. Mr. ALEXANDER. And will you put in writing to me the reason that you have not cooperated thus far? Mr. GOLDBERG. Mr. Alexander, I have stopped beating my wife - I don't know whether we have cooperated or not, but I assure you I will personally look into this matter and I will personally be on your doorstep in the future with my report. Mr. ALEXANDER. Thank you. Thank you, Mr. Chairman.