One of the unique, and often overlooked, investigative bodies in Washington, D.C. is the United States Congress. With Representatives and Senators in constant fundraising and re-election cycles and the constant challenge of actually passing legislation, the Congressional Investigation, and participation therein, is a critical vehicle for members of both chambers to obtain visibility and demonstrate their commitment to governing on behalf of their constituencies. During this presentation, you will hear from those who labored under the marble columns of the Capitol and deftly navigated their clients through congressional scrutiny. In light of the stated platform of the administration and the majority in Congress, the presenters will also cover the “hot” areas that will face special scrutiny during the 117th Congress.
In this program, you’ll gain valuable insights from four of our DC insiders: Fry Wernick, former Assistant Chief of DOJ’s Criminal Fraud Section, FCPA Unit supervisor, and Senate staffer; Zach Terwilliger, former U.S. Attorney for the Eastern District of Virginia, and Senate staffer; Mike Dry, former Deputy Criminal Chief for the Eastern District of Virginia; and Conrad Bolston, who focuses on environmental and litigation, compliance counseling and white collar defense. The group shared their perspectives on what to expect in enforcement and what it means for you and your companies.
Four Essentials to Know During a Congressional Investigation
When a law enforcement agency or government regulator investigates a corporation, much of what happens outside of a trial — if the matter ever reaches that stage — occurs behind the scenes.
Strict confidentiality rules apply. The goal is to get to the truth, and if no wrongdoing is uncovered, then shareholders, customers and other stakeholders may never know anything more about the matter than what the company reveals through benign disclosures in filings with the U.S. Securities and Exchange Commission (“SEC”), for example.
A congressional investigation is a different matter entirely, as similar to the formal legal process as a barroom brawl is to a refereed boxing match.
The motivation on Capitol Hill is more often about scoring political points than discovering the bare facts of the matter, and that desire may color virtually everything that happens, according to Vinson & Elkins lawyers who participated in a July 1, 2021 webinar, “Navigating a Congressional Investigation.”
Following are four takeaways from the session conducted by Michael S. Dry, Ephraim (Fry) Wernick and G. Zachary (Zach) Terwilliger, Partners in the firm’s Government Investigations and White-Collar Criminal Defense practice; and Conrad Bolston, a Senior Associate in the Environment and Natural Resources practice. All four are based in Washington, D.C.
Terwilliger, Wernick and Dry have an inside perspective on congressional investigations, especially when it touches on white-collar crimes. Terwilliger has held several high-ranking positions at the U.S. Department of Justice (“DOJ”), including serving as the Senate-confirmed U.S. Attorney for the Eastern District of Virginia, and working as an Associate Deputy Attorney General, where he helped prepare the Attorney General and other senior DOJ officials to testify to Congress. He also worked on the Hill as counsel to the Chairman of the U.S. Senate Committee on the Judiciary. Wernick formerly served as Assistant Chief of DOJ’s Criminal Fraud Section and supervised the agency’s Foreign Corrupt Practices Act (FCPA) unit, and he also served two stints on the Hill: once as counsel on the U.S. Senate Permanent Subcommittee on Investigations and also more recently as counsel to the Chairman of the U.S. Senate Committee on the Judiciary. Dry was Deputy Chief of the Criminal Division in the U.S. Attorney’s Office for the Eastern District of Virginia.
1. Be prepared for intense — and unflattering — publicity.
Such reviews are “typically very public” and thrive on media coverage, explained Dry. “Members of Congress often announce the start, the focus and who is under investigation.”
That’s unlike scrutiny by the SEC, the DOJ and other government agencies, which “have rules requiring confidentiality and regulations that prevent disclosure,” he said.
Losing such protections is often jarring to people caught in a congressional committee’s sights, and many clients take umbrage at the lack of due process. “For many executives and people testifying, it’s been a long time since anyone under bright lights and on TV has come after them,” Terwilliger said. “You want to make sure you know what’s happening, that you can get your affirmative points out there and that you don’t fall into certain traps.”
2. Know that investigations can lead to collateral inquiries.
When Congress begins a high-profile probe, “other government regulators are going to feel pressure to open their own investigations,” Dry explained. “If there’s an investigation into an airline practice, for instance, you can bet that there may be a Federal Aviation Administration investigation that hops off as a result.”
Frequently, a congressional committee’s review of corporate behavior also leads to scrutiny from the SEC and shareholder derivative lawsuits, he noted.
As for the committees themselves, while they wield subpoena power, the manner in which they exercise it varies widely, based on rules set by individual panels. It’s important to find out whether the subpoena has to be bipartisan, whether only members of the party in power — the majority party — can issue them or if minority members have the authority to do so as well, Dry said.
Dry noted that even though “congressional committees often have a difficult time enforcing subpoenas, as a practical matter, our clients don’t want to appear to be uncooperative. The vast majority of the time, we are recommending to clients to respond in some way to avoid the negative press of appearing not to do so.”
3. Find out who committee members are and what they want.
Subpoenas aren’t the only option available to congressional committees, which can also utilize less formal letters of request. Both the method chosen and the person employing it will influence determination of the best response, says Wernick.
While only a subpoena is legally enforceable, it’s usually wise to reply to any request — for public relations, reputational and strategic reasons, he says.
Before doing so, though, Wernick recommends scrutinizing the request itself to find out whether it’s coming from an elected lawmaker or one of the lawmaker’s aides, for example, or a minority-party committee member versus the panel’s chairman.
Depending on the issue, a company should be able to form alliances with other members that will help frame its response. Researching past speeches and statements by committee members and examining the member’s constituencies can provide valuable insights into their motivations.
One of the issues people struggle with when summoned to a congressional hearing is the “gotcha question,” said Bolston. “The best way to suss those out is past statements. Donors and constituents are very helpful in figuring those out.”
Further, “you don’t necessarily have to always answer the question as it is asked,” Wernick noted. “These can be opportunities to frame the topic in a way that really focuses on the issues you want to focus on, to correct the record and to put the issues most favorable to your client on display. These are really important strategic considerations.”
Companies and executives may benefit, too, from juxtaposing their responses with those of other parties under scrutiny by the committee, says Bolston.
There’s an old joke that if you’re being chased by a bear, “you don’t have to outrun the bear, you just have to outrun the person next to you,” he explained. “In this context, you can take the opportunity to not be the most extreme person on the panel testifying, to make yourself look better in context and more reasonable.”
4. Coordinate each step in your response.
While large corporations often have robust communications and government affairs departments in addition to expert in-house counsel, they’re frequently siloed, and communication can be lacking. Government affairs staffers, for instance, may get hints of trouble brewing based on casual questions from government aides with whom they have relationships, but they may fail to realize their significance. Then, weeks later, “there’s a really problematic document request that’s casting aspersions that we could have gotten ahead of if there were better coordination,” Dry says. In large companies, “a lot of times, one hand doesn’t know what the other hand is doing.”
His advice to clients facing such an investigation is that all departments need to communicate thoroughly with each other. “We need to be coordinated with the communications shop, the government affairs folks, outside lobbyists, anybody speaking to anybody else,” Dry says. “We have to be very consistent with all our touchpoints so that we’re speaking with one voice and considering what the collateral consequences could be from any approach.”
Overall, understanding the framework of a congressional investigation, the inherent risks, and the goals of the lawmakers leading it can enable corporate executives to turn a high-profile challenge into an opportunity, the lawyers said.
People preparing to testify at a committee hearing need to know “who are your friends, who are your foes, what are the softballs, what are the curveballs and where is the tidal wave coming?” Terwilliger said. “There is a lot of gamesmanship. You have to be prepared for it.