Espy To Be Held to Higher Standard : Probe: Independent counsel believes Meat Act’s position on gratuities ‘reaches the secretary.’ But he says he’ll weigh all factors, and that a ‘fair shake’ is deserved.

At the outset of an investigation of Agriculture Secretary Mike Espy, independent counsel Donald C. Smaltz has decided that the law requires him to hold Espy to a higher standard of conduct than normally applies to Cabinet officers.

Smaltz, a Los Angeles attorney who was appointed by the federal courts on Sept. 9 to investigate Espy’s acceptance of sports tickets, travel and hotel accommodations from several companies, said in an interview with The Times that he does not accept Espy’s contention that he is not subject to the unusually strict law that prohibits the acceptance of any gratuities by Agriculture Department officials.

Espy and his lawyer, Reid H. Weingarten of Washington, have argued that the standards imposed on Agriculture Department employees under the 1907 Meat Inspection Act should not apply to the secretary because Congress intended the law strictly to deal with bribery of meat inspectors.

Enacted in the wake of Upton Sinclair’s book exposing the meatpacking industry, “The Jungle,” the Meat Inspection Act states that Agriculture Department employees with jurisdiction over meat inspections must not accept any favor or benefit from regulated companies. It imposes a higher standard than the general gratuity statute that applies to all executive branch officials, which requires proof that the gift was given as a bribe in exchange for official acts.

Smaltz, who was interviewed in his downtown Los Angeles office after he spent last week in Washington making preparations to launch his investigation of Espy, said he recognizes that the Meat Act’s standards of conduct for public officials are “the broadest criminal statute that I’ve ever come across.” But he added that there is no doubt in his mind that the law’s prohibition against gratuities “reaches the secretary.”

Yet while Smaltz’s interpretation of the law is clearly a setback for Espy’s defense, the independent counsel cautioned that it does not necessarily mean that Espy’s acceptance of favors from agribusiness firms will result in an indictment. He said he will also weigh other factors, including the size of the gratuities and whether they occurred as a result of “ignorance or a mistake.”

“The secretary deserves a fair shake in this investigation,” Smaltz emphasized.

The issue of whether the Meat Act applies to Espy’s behavior has already been hotly debated within the Administration itself.

FBI officials who conducted a preliminary review of the case concluded that Espy’s conduct potentially violated the Meat Inspection Act, but some Justice Department officials resisted appointing an independent counsel on grounds that Espy was subject only to the less stringent gratuity restrictions.

In her request to the courts for the appointment of an independent counsel, Atty. Gen. Janet Reno indicated that she disagreed with those in her department who would exempt Espy from the strict provisions of the Meat Inspection Act. She said the law clearly prohibits “any Department of Agriculture employee . . . from accepting any gift from any person engaged in commerce, without regard to the intent of the donor or the donee.”

Reno noted that according to a memorandum of understanding negotiated between the Justice and Agriculture departments in 1976, the Meat Inspection Act provisions do not apply to gifts of a trivial nature or those motivated by personal or family relationships.

“However,” she said, “the acceptance of non-trivial gifts of entertainment, transportation, lodging and meals by a Department of Agriculture official who has responsibilities under the Meat Inspection Act from an entity that is subject to regulation by the Department of Agriculture falls within the purview of the statute.”

Weingarten, Espy’s lawyer, acknowledged in a recent interview that even though the stricter provisions appear to apply to Espy “at first blush,” no previous secretary of agriculture has ever been prosecuted under this part of the Meat Inspection Act. In fact, he said, the law has never been used to prosecute anyone in the Agriculture Department higher than the rank of meat inspector.

Furthermore, even if the Meat Inspection Act is eventually deemed to apply to the actions of the secretary, Weingarten said, it should only apply to his dealings with companies regulated by the act--not to every company that comes under the purview of the Agriculture Department, as Reno’s statement implies.

Espy has been accused of accepting sports tickets, transportation, meals and hotel accommodations from agribusiness companies, including some regulated by the Meat Act, such as Tyson Foods Inc. of Arkansas, and some that do not involve meat products, such as Quaker Oats of Missouri and Sun Diamond of California.

Smaltz said his charter requires him to conduct a sweeping investigation into these and any other potentially criminal matters that may arise during his probe. Noting that most of the allegations against Espy were uncovered initially by the news media, he indicated that he intends to look into every matter raised in the press.

Nor does Smaltz intend to limit his investigation to Espy’s activities alone. He indicated that the probe will include the activities of other Agriculture Department employees, such as former Chief of Staff Ronald Blackley and perhaps even Espy’s close friends, including Richard Douglas, senior vice president of Sun Diamond, and Michael O’Bannon, a consultant with frequent business at the Agriculture Department.

In March, 1993, while Blackley was serving as Espy’s chief of staff, he allegedly ordered the Agriculture Department to stop work on proposed tougher inspection standards for poultry producers, including Tyson.

Douglas, whose company is regulated by the Agriculture Department, was co-host of a lavish birthday party given in Espy’s honor after he became agriculture secretary. O’Bannon’s firm employs a girlfriend of Espy’s, Patricia Dempsey.

Smaltz said he intends to explore the legal issue of whether favors accepted by Dempsey from agribusiness lobbyists could be construed as indirect gifts to Espy under the meaning of the Meat Inspection Act and the general gratuity statute.

Asked about Espy’s recent decision to repay some companies and the government for benefits he has received, Smaltz replied: “If criminal conduct had occurred, repayment isn’t a defense.”

Smaltz said he has hired the first of several attorneys to aid in the investigation, which he believes will last longer than six months.