US Senate Committee on Health, Education, Labor, & Pensions

Alexander Questions Tom Perez, Nominee for U.S. Secretary of Labor, on Involvement in Dismissal of Whistleblower Case Worth $200 Million to Taxpayers

At Senate hearing, calls on Perez to produce information and witnesses “essential to the Senate doing its job of advice and consent”

Thursday, April 18, 2013Liz Wolgemuth 202-228-4729

Washington, D.C., April 18 – At a hearing today of the Senate Health, Education, Labor and Pensions Committee on the nomination of Tom Perez for U.S. Secretary of Labor, Ranking Member U.S. Senator Lamar Alexander (R-Tenn.) questioned the nominee’s role in dismissing a whistleblower case during his time at the Department of Justice, and called for Perez to produce additional information and witnesses “essential to the Senate doing its job of advice and consent.”

Alexander said: “It is the responsibility of the Secretary of Labor to protect the rights of whistleblowers who report violations under 22 important statutes on topics from clean air and pipeline safety to Sarbanes Oxley. …That is why the allegations which have been made in a report that was issued this week about Mr. Perez’s interference with decisions not to intervene in a whistleblower case are of concern.”

Alexander added: “Whistleblowers have been around a long time, they are protected by the False Claims Act which started with President Lincoln. Sen. Grassley amended it in 1986, led an effort to do that, and since 1986 use of the False Claims Act has returned $35 billion in taxpayer dollars by pursuing 8,500 whistleblower claims. And in 90 percent of the cases in which the government joins in with the whistleblower, they win.”

In his questions to Perez, Alexander said: “Here is the way it looks to me: You are in one division of the Department of Justice. You see St. Paul in the Supreme Court with a case that you are afraid would produce the wrong result. To me it is an extraordinary thing that you would then become involved with the city of St. Paul – with another division of the Department of Justice and with the Department of Housing and Urban Development which had originally recommended that the whistleblower case be taken by the Department of Justice. And the end result after you’re involved with all this is that the Department of Justice declines to become involved in the whistleblower case.  We know that 90 percent of the time, when the Justice Department does get involved, the case succeeds. So it declines to become involved, the case doesn’t collect the money. St. Paul agrees to withdraw the lawsuit that might produce the result that you don’t like. That seems to me to be an extraordinary amount of wheeling and dealing outside the normal responsibilities of the Assistant Attorney General for Civil Rights.  It seems you have a duty to the government to collect the money [owed to taxpayers], a duty to protect the whistleblower who is left hanging in the wind, and at the same time it seems to me that you are manipulating the legal process to try to get the result you want in the Supreme Court in a way that seems inappropriate for the Assistant Attorney General of the US.”

At the end of the hearing, Alexander again called on Perez to provide information, including emails for which there is an outstanding subpoena and which Oversight Chairman Darrell Issa (R-Calif.) and Senator Chuck Grassley (R-Iowa) “believe have been complied with only partially,” as well as two witnesses in the Department of Housing and Urban Development who have not been made available for interviews to the House Committee despite a request dated to October 26 of 2012.  Alexander also has an outstanding request for copies of transcribed interviews gathered during the Department of Justice Inspector General’s investigation.

Senator Alexander’s complete opening statement is below:

“Thanks Mr. Chairman. Mr. Perez, welcome – congratulations on your nomination.  As Senator Harkin has said, the Department of Labor is a very important agency with an extremely broad reach:  job training programs, keeping work places safe from injury, fair employment practices, integrity of the unemployment compensation trust fund, vast enforcement powers working with the President and us to find ways to help Americans get back to work at a time when nearly 12 million people are unemployed. 

“Among those responsibilities is the responsibility for protecting the rights of whistleblowers who report violations under 22 important statutes on topics from clean air and pipeline safety to Sarbanes Oxley.

“Whistleblowers have been around a long time, they are protected by the False Claims Act which started with President Lincoln. Senator Grassley amended it in 1986, led an effort to do that, and since 1986 use of the False Claims Act has returned $35 billion in taxpayer dollars by pursuing 8,500 whistleblower claims. And in 90 percent of the cases in which the government joins in with the whistleblower, they win.  That is why the allegations which have been made in a report that was issued this week about Mr. Perez’s inference with decisions not to intervene in a whistleblower case are of concern. 

“On April 15, the House Oversight Committee and the House Judiciary Committee and Senator Grassley’s staff released a report detailing in their opinion, how Mr. Perez intervened with the Department of Housing and Urban Development and with the civil division of the Department of Justice and persuaded them to drop support for a whistleblower case.  The case could have returned, the report says, up to $200 million of misspent funds to taxpayers.  And in exchange for that, Mr. Perez, according to the report, helped to convince the city of St. Paul to drop a Supreme Court case that he feared would limit the application of the disparate impact theory, a legal theory that Mr. Perez admires. 

“So the report concluded that this is a quid pro quo between the Department of Justice and the city of St. Paul, engineered by Mr. Perez.  It said that in the whistleblower complaint, the Department of Justice gave up an opportunity to return as much as $200 million to taxpayers – the reports said that the consensus of the federal government to switch its recommendation and to decline to intervene in the whistle blower case was directly the result of Mr. Perez’s intervention.  

“Another report released in March 2013 by Department of Justice Inspector General found harassment of employees based on political views and a lack of professionalism among some division employees.  So the House Oversight and Judiciary committees and Senator Grassley still were investigating these actions and seeking some information and in three ways. Mr. Perez, we met and I’ll be asking you this in question time: There is an outstanding subpoena for emails which the oversight chairman and Senator Grassley believe have been complied with only partially. There are two witnesses from the Department of Housing and Urban Development who can shed light on the St. Paul transaction that have not yet been made available for interviews to the House committees even though the request was made October 26.  I have an outstanding request for copies of transcribed interviews, gathered during the Department of Justice Inspector General investigations that resulted in the March 12 report -  all of these could be produced I would hope, in a matter of a few days, all of them are essential to doing our job of advice and consent.”

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