Bell Accused of Interest Conflict in Hutton Probe : Senate Panel Scores Conduct of Ex-Atty. Gen. During Investigation

A Senate panel, armed with a new congressional report, accused former Atty. Gen. Griffin B. Bell on Thursday of conflict of interest in his investigation of criminal check-kiting practices by the huge investment firm of E. F. Hutton & Co.

Bell, who was hired by Hutton to conduct an internal investigation of the overdraft scandal last year, defended his probe before the Senate Judiciary Committee after a House subcommittee released a highly critical analysis of his inquiry a day earlier.

The 21-page analysis, prepared by the staff of the House Judiciary crime subcommittee and released by Chairman William J. Hughes (D-N.J.), is a point-by-point critique of Bell’s investigating methods and cites him for consistently failing “to provide details in support of his assertions.”

Bell’s 183-page report, disclosed at a Sept. 5 press conference, cited poor management and “implicit” approval by the banks involved. It recommended a series of disciplinary actions and reforms but exonerated Hutton officials of criminal wrongdoing.

In the case, Hutton branch office employees had written millions of dollars in checks on accounts where checks were deposited but had not yet cleared. The practice allowed Hutton to avoid thousands of dollars in interest fees and service charges.

In May, 1985, the investment firm admitted to 2,000 counts of felony fraud that resulted in the maximum $2-million fine, reimbursement of $750,000 in federal investigative costs, payment of interest and fees imposed by the banks and an agreement to halt any related illegal practices not spelled out in the charges.

“It’s not the substance of the (Hutton) report but the conduct of Griffin Bell that’s in question,” Sen. Howard M. Metzenbaum (D-Ohio) said during Thursday’s hearing.

In response to a question, Bell told the committee that a tax attorney employed by his Atlanta-based law firm issued bonds and had real estate investment dealings with Hutton while the investigation was under way but that he built “a Chinese wall” to avoid conflict-of-interest charges.

During a particularly heated exchange, Metzenbaum said: “You came out with a report that helped Hutton. By and large it was a clean bill of health for them.”

Bell retorted: “I didn’t get paid enough for all the harassment I have been through. I was harassed yesterday by the Hughes report and you are harassing me now.”

Bell received an additional premium fee from Hutton because he conducted the investigation on an emergency basis.

Sen. Joseph R. Biden Jr. (D-Del.) said it was “unusual” that Bell found many Hutton officials “unaware” of the financial wrongdoing that resulted in branch office profits of more than 177%.

“That’s like a piano player in a house of prostitution saying he doesn’t know what’s going on upstairs,” Biden said. “They are irresponsible corporate directors and managers if they did not notice.”

Moreover, he criticized the Justice Department for granting immunity from prosecution to low-level Hutton employees before gathering testimony from them. “It seems to me there was excessive availability of immunity from the outset,” Biden said.