Tyson to Pay $6 Million in Espy Case
World poultry giant Tyson Foods Inc. on Monday agreed to pay $6 million in penalties after pleading guilty to giving former Agriculture Secretary Mike Espy illegal gifts, including tickets to President Clinton’s first inaugural dinner.
Under the plea agreement with independent counsel Donald Smaltz, Tyson will be allowed to continue to arrange contracts with the U.S. military and for school lunch programs. Such contracts represent several millions of dollars in revenue for the company.
The Springdale, Ark.-based company admitted making more than $12,000 in gifts to Espy during 1993 when it gave the newly appointed Cabinet member four tickets, worth $6,000, to Clinton’s 1992 inaugural dinner.
At the time, the department was considering several regulations of interest to Tyson, including an emergency rule requiring safe handling instructions on all raw meat and chicken packages.
Espy, 44, has been indicted as a result of the investigation, which forced him to resign three years ago. He has denied any wrongdoing.
Gifts from Tyson prompted an internal Agriculture Department investigation and subsequent investigation by Smaltz. The investigation also led to the trial and conviction of Sun-Diamond Growers of California, another agribusiness giant, and a guilty plea and fine for Crop Growers Corp., a leading crop insurance firm.
Tyson had sales of $6.5 billion in 1996. Though known for chicken, the company is in the pork and seafood business as well. It is also a leading U.S. maker of tortillas.
Tyson Foods Senior Chairman Don Tyson entered the one-count felony plea on behalf of the company in a federal court in Washington.
The plea agreement was a switch for the company, which previously had denied any wrongdoing and called its gifts to Espy “acts of common hospitality.”
“This investigation just showed no signs of coming to a prompt conclusion,” Tyson Foods lawyer Thomas C. Green said. “The company simply felt that it was more prudent to get this behind it.”
Tyson shares rose 19 cents to close at $20.06 on the New York Stock Exchange.
The $6-million penalty includes a $4-million fine and $2 million to help pay for the investigation.
The agreement must be approved by U.S. District Judge Ricardo M. Urbina, who scheduled sentencing for Jan. 14.
Tyson and his son, John, Tyson Foods’ vice chairman, had been granted immunity in exchange for their grand jury testimony. Smaltz has been investigating Archie Schaffer, the company’s senior spokesman. The firm’s Washington lobbyist, Jack Williams, has been indicted after an earlier conviction was thrown out. Trial is set for Feb. 2.
The agreement calls for the company to help with Smaltz’s cases against Espy, Schaffer and Williams.
In a statement, the firm said it believes Schaffer and Williams are innocent and “will continue to support these individuals.”