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Congressional investigations

Eye on the US: Lawmakers often initiate Congressional hearings not in the hope of passing new laws, but to draw media and public attention - a guaranteed outcome of investigating a pharma company

USACongressional investigations have been a fact of life in the United States since 1792, when President George Washington allowed members of a special committee of the US House of Representatives access to War Department records to probe General Arthur St Clair's devastating defeat at the hands of Native American fighters in the Battle of the Wabash.

These days, the investigations are a powerful and much-used tool for shedding light on corruption and misdeeds in the government, the military and the private sphere. Although they don't result in an official verdict or penalty in individual cases, they can help inform important legislative changes. 

However, the investigations and related hearings can also be a forum in which lawmakers can grandstand, bloviate and intimidate without many rules to rein them in. Unlike lawyers in a courtroom, lawmakers in a hearing room are not reprimanded by a judge if their questions are leading, bullying or otherwise inappropriate, and a witness has no power to object to a line of questioning.

There are very few restrictions on what sort of entities and activities may be the subject of a Congressional investigation. The law does stipulate that there must be some relevance to possible legislation or legislative changes, but there is no obligation that the investigation actually has to lead to any such legislation. Therefore, given that almost any human activity could in theory be the subject of legislation, almost any human activity can be the subject of a Congressional investigation.

Lawmakers often initiate hearings not so much because they expect them to lead to new laws but because they want to draw public attention to a particular issue.

Changing faces, changing focus
Over the past decade or so, Congress has increased its focus on investigating corporations, with the pharmaceutical industry being a key target. Pharma companies have been investigated by Congress concerning their marketing practices, their product pricing and their shareholder relations, among other issues.

The recent Republican takeover of the House of Representatives may decrease the number of investigations into pharma and other private sector industries, as the focus shifts towards holding the Obama Administration's feet to the fire. "One certainly would anticipate that… oversight of the Obama Administration, including the FDA and CMS, is going to intensify," said John R Manthei, a partner in the Washington, DC office of the law firm Latham & Watkins. "As a practical matter, it will probably mean there will be less focus on industry."

Early in 2011, Rep. Darrell Issa, a Republican from California, became the chair of the House Oversight and Government Reform Committee, which has the broadest jurisdiction of any House committee. Issa had been the lead Republican on the powerful panel for some time, but in becoming chairman, he gained the power to call hearings and issue subpoenas. Last year, Issa released a list of his oversight priorities, which focus mainly on investigating the Obama Administration rather than on the private sector.

The House Energy and Commerce Committee, another committee that spends a great deal of time on investigations, also has new leadership. Since the Republican takeover, the committee is now chaired by Rep. Fred Upton. The Michigan Republican replaces the California Democrat Henry Waxman, who was known as a bulldog when it came to investigations.

While the climate may be changing, however, Congressional investigations of corporations are not going to disappear, nor is the focus on the pharma industry, which lawmakers know is a winning issue when it comes to attracting media attention and gaining voter support.

The investigations can be quick and clean, but they do sometimes drag on for years and can inflict significant damage on a company's finances and reputation. In addition, Congressional investigations often lead to criminal investigations, civil lawsuits or parallel and/or subsequent investigations by government agencies such as the Securities and Exchange Commission, which can result in hefty fines and other serious penalties. 

Finally, of course, another possible outcome is that the investigations will lead to new legislation as they are intended to do – and such legislation is not likely to be friendly to the industry or businesses under investigation.

A public forum
The process of a Congressional investigation can be quite public from the very beginning. Congress has broad authority to issue subpoenas to force companies and executives to produce documents and to testify. However, far more standard than a subpoena is a letter – often, it should be noted, an open letter that is simultaneously released to the press – requesting materials and information, with subpoenas frequently reserved for companies that fail to cooperate with the initial request.

'Whether one voluntarily responds to a document request or is compelled through a subpoena, care must be taken to provide a complete and accurate production,' the law firm of Day Pitney advises in materials for clients. In addition to complicating the process and causing ill will, failure to cooperate can result in federal felony charges, including obstructing congressional inquiry or investigation and making false or misleading statements to congressional investigators, the firm points out.

Lawmakers often make public what they learn from the documents that are submitted, and the hearings themselves are in most cases open to the public and the press; although witnesses may request closed hearings under certain circumstances. (The rules about closed hearings, like many of the rules governing Congressional investigations, can vary between the House and Senate, as well as among individual committees.)

Witnesses who are forced to testify can plead the Fifth Amendment. "The privilege, however, is available to individuals – not entities – and is of limited utility to corporations," Day Pitney notes. "In fact, even a corporate officer must produce corporate documents that contain evidence that would incriminate him personally."

The investigations are "very public and very political," said Latham & Watkins' Manthei, who chairs his firm's Washington, DC healthcare practice and was formerly Majority Counsel for the US House of Representatives' Committee on Energy and Commerce. "It's high-profile, there are news cameras there, and it's a challenging forum for companies to be able to tell their complete side of the story. Generally, they get a 10-minute opening statement followed by lines of questioning by members of Congress that have the potential to be hostile."

Materials from the law firm of Akin Gump also paint an intimidating picture of the hearing room for clients. "If the issue itself (eg, substandard conditions at Walter Reed) or the witnesses testifying (eg, Dennis Quaid on medical errors) is high profile, the executive should expect a full hearing room," according to Akin Gump. "Most members of the committee will be present and sitting on a raised dais, staff will line the walls, public seats will be full and throngs of print, video and photo journalists will be jockeying to capture the moment. This is not typical of every hearing but represents one extreme of what to expect, especially if the Congressional committee has leaked material beforehand to increase public interest."

The media relations, PR and communications challenges of a Congressional investigation can be similar to those surrounding a high-profile lawsuit, but they tend to be even more slippery, since there are no clear 'verdicts' in Congressional investigations. Without a judge or jury to issue a final decision, it becomes easier for all parties involved, as well as the media covering the investigation, to put their own spin on things.

To address the implications of a Congressional investigation on a company's reputation, many PR and public affairs agencies have begun to offer services in the area. The agencies sometimes help prepare company executives to deliver their testimony at a Congressional hearing, but they also aid in crafting messages tailored to the employees, shareholders, partners and regulators, all of whom will be carefully watching the investigation unfold.

Kate Fodor


Contact Kate Fodor at



16th May 2011


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