We have a right to know and we have a duty to tell the people that we represent.

I'm not certain that he's right or wrong. I'm not going to make that judgment right now. I'm just going to continue to find the facts. I just want you to know how I feel.

Mr. FREEMAN. Senator, I appreciate your comments. I think you can understand my sensitivity. After 37 years my integrity has been unquestioned.

I find it difficult being tried as many times as I have been in the public eye; it is a difficult thing to operate an agency that way. It's not easy, but that's what I bought when I took the job.

Senator PRYOR. When we step out there in that glass house that we live in, we choose that. No one makes us do it. I just want you to know my feelings on that.

Mr. FREEMAN. I appreciate that.

Senator CHILES. Admiral, I did note in your statement and I hadn't mentioned it yet, that you seem to be attempting to clear up any misapprehension that might have been made by others that you think the scandal was overblown at GSA. I hope that you feel that way.

Everytime I think that we are about to get a handle on it, we turn over another rock and there are 70 furniture warehouses that are full of furniture, with much of it new.

Mr. FREEMAN. I wish I could assure you that I won't find something else.

Senator CHILES. Well, now we are just seeing the building leases. I think from what I understand, we are just scratching the surface on the problems that we are going to uncover on that. We've got term contracts to go.

Now that we have the fraud assessment in the hands of the Inspector General, I don't know where else it's going to go.

I think Senator Pryor has put it properly. If the people don't get tired of us and the job that we are trying to do, we are going to continue to have you up here. We are going to continue to be looking at what's going on in GSA and see if there is some way that we can turn it around.

I hope you will realize that you deal a lot, and you talk about fact and talk about due process, and those are very, very real. But, we are dealing with a public that is losing confidence in all of us, elected officials, appointed officials and everyone else, because they can't see that anything is getting better.

All they keep getting is the bad news, and unless we can do something about that-if we lose their consent, we don't have enough policemen to enforce the collection of the Internal Revenue of the Service, or anything else. If we lose their consent, we're done.

Mr. FREEMAN. Senator, I am looking forward to the day when I can come before this committee with good news.

Senator CHILES. I am, too. Thank you.

Our last witness today is Mr. William Lynch, Chief of the GSA Task Force, the Department of Justice GSA Task Force. Mr. Lynch, I will swear you in.

[Whereupon, William S. Lynch, having been first duly sworn, vas called as a witness herein, and was examined and testified as follows:]

TESTIMONY OF WILLIAM S. LYNCH, CHIEF, DEPARTMENT OF JUSTICE, GSA TASK FORCE

Mr. LYNCH. Senator Chiles, and Senator Pryor, with your permission, in view of the hour and in view of your tennis date, Mr. Chairman, can I forego the reading of my statement? I will make it available.

Senator CHILES. I think that would be very proper, and I want to thank you for your patience. You have been here since the opening gun this morning; and I can tell you that we did not suspect that this hearing-somebody told me that this hearing might last until 2 o'clock, and I said, "That's crazy. We will be out of here by noon."

Mr. LYNCH. I think you were very optimistic, Mr. Chairman, in putting five witnesses on in the time you did.

Senator CHILES. Tell us, if you can, what's going on now in the task force.

Mr. LYNCH. When I last appeared before you I gave you certain statistics. As of today another approximately 23, 24 people have been charged criminally, another 15 or 16 have been convicted, including several corporations.

We are continuing the investigations that we had before the Justice Department formed a task force, and have had some very encouraging results since October, including several prosecutions that I deem fairly significant.

However, I did want to point out to the committee, and to you, Mr. Chairman, white collar crime investigations are often-they are always complex, but they are often protracted.

So, what we are getting now in charges and convictions is the result of several years of difficult and careful and thorough investigations by the Department of Justice, the Federal Bureau of Investigation, and the Inspector General.

Senator CHILES. What kind of cooperation, or lack of cooperation do we have now between the strike force and GSA?

Mr. LYNCH. I think we have full cooperation. I speak with and get together with Mr. Muellenberg quite frequently, and people on my staff speak with people on his staff almost daily.

The arrangements between myself and the Inspector General's office I think are effective and efficient. The lack of coordination that has been observed in past investigations I don't see as a problem; not as a problem that presents any obstacle to the investigation, or prosecution. There are always some problems when you deal with individuals, even when they are pursuing the same objective.

Senator CHILES. What kind of cases and the quality of cases are you getting from GSA? What kind of referrals?

Mr. LYNCH. I think Mr. Muellenberg gave you, Mr. Chairman, a rough outline of the referrals made over the past few months. That correlates with my receipt of those investigations. They range anywhere from credit cards frauds to contract fraud.

I'm a little encouraged, because I notice of the several investigations that have been referred by Mr. Muellenberg, some of them did relate to attempted bribes on GSA employees.

Those instances involved GSA employees who, immediately upon having been approached about a bribe, so reported, and investigative action was taken to secure evidence to bring charges. That's an encouraging sign.

Senator CHILES. You are saying that's an encouraging sign because that is showing that the employees themselves now are coming forward and attempting to help where they are being approached for soliciting for a bribe.

Mr. LYNCH. That's right.

Senator CHILES. How many GS-15 cases are we seeing from any source? We've talked about a lot of 12's and 13's and under.

Mr. LYNCH. There have been several 14's which is not an insignificant GS rating. The best I can offer you, Mr. Chairman, is my understanding there was a recent case here in Washington, D.C. He had some office in the State Department. He was an FSR, Foreign Service Reserve Officer with the equivalent rank of GS-15 or possibly 16. I am not that familiar with FSR.

Senator CHILES. What was his crime?

Mr. LYNCH. Bribery.

Senator CHILES. Give us very quickly the conviction that you were able to obtain in the Atlas Paint & Varnish case.

Mr. LYNCH. The Atlas Paint & Varnish Co. case involved the company itself which was convicted, a former head of the GSA regional laboratory in region 2, and a former head of quality control in region 2 in New York, a gentleman by the name of Pionzio, and the attorney, Mr. Lowell, himself was convicted.

Senator CHILES. How many grand juries do we have now that are looking at GSA matters?

Mr. LYNCH. I don't think we've had too many more since the last time I spoke to you, Mr. Chairman. There are approximately six districts where grand juries are looking into pending

Senator CHILES. At one time we have about 10 U.S. attorneys involved in some matter or the other.

Mr. LYNCH. That's correct, and some of those cases

Senator CHILES. Some of those have terminated-so now we are talking about six.

Mr. LYNCH. Approximately.

Senator CHILES. So, now we are talking around six grand juries and their U.S. attorneys?

Mr. LYNCH. Yes.

Senator CHILES. I know this is very hard to do, but how long do you see the need for a strike force?

Mr. LYNCH. I gave you my guesstimation when I last appeared, and that is that in 6 to 9 months we will have a pretty good idea how much further we have to go, if at all, in our investigations. That should be acccompanied by a general caveat, Mr. Chairman, that weekly, matters are being discovered and being referred to me by the Inspector General.

Should anything develop of systemic corruption, or fraud out of our investigations, I would have to alter my estimate.

Senator CHILES. Are you familiar with the fraud assessment plan that is now at GSA that the Inspector General has adopted? Mr. LYNCH. Vulnerability assessment?

Senator CHILES. Right.

Mr. LYNCH. I am generally familiar with it. Mr. Muellenberg and I have discussed it in general terms.

Senator CHILES. But you don't, at this time, have any idea of whether that will bring additional work?

Mr. LYNCH. No.

Senator CHILES. Senator Pryor?

Senator PRYOR. Have you felt or heard of any influence exerted by the White House over any of your activities?

Mr. LYNCH. Over my activities; no.

Senator PRYOR. How about in the Inspector General's Office of GSA?

Mr. LYNCH. I have no knowledge of that.

Senator PRYOR. Would it be difficult for you to testify as to the best of your knowledge what you perceive to be the general attitude or morale of the Inspector General's Office at this time? Mr. LYNCH. I think that is more appropriately elicited from the people in the Inspector General's Office.

Senator PRYOR. You do work with their people. I know that's a difficult question to answer.

Mr. LYNCH. The people who have been assigned to me from the Inspector General's Office, auditors and investigators, are doing their work and they are doing it well. I don't see any problem as far as they are concerned.

Senator PRYOR. There has been a suggestion of a movement afoot to get back to business as usual at GSA.

From where you sit, have you seen any sign of a slightening of the effort to clean up GSA?

Mr. LYNCH. No; I have not.

Senator PRYOR. Do you feel that a sufficient number of cases are today being referred to the Department of Justice for prosecution or examination?

Mr. LYNCH. I feel that the cases being referred are generally well investigated. They may need additional investigation or utilization of the tools of a Federal grand jury. Of course, they range from cases that are significant to cases that are not all that significant from my point of view.

I cannot give a quantitative analysis as to how much they should be doing as to what they are doing.

Senator PRYOR. Do you think a sufficient number of cases are being referred, given the number of problems that we have seen in the past with the General Services Administration, plus a 1980 dollar budget in the Office of Inspector General, plus almost 600 employees in that Office; and then given the number of cases that have been referred to the Department?

Mr. LYNCH. I think I know the answer you want. The one thing I can't tell you is whether or not the investigative apparatus has been in place long enough to be able to generate the kinds of cases that those kind of resources should be able to generate, if the problem is there to the extent indicated.

Senator PRYOR. Mr. Chairman, that's all.

Senator CHILES. You have a general agreement that was agreed to at the time the then Assistant Attorney General was setting up and forming the task force, set out in a memorandum of understanding.

Do you feel that both parties have lived up to that memorandum of understanding?

Mr. LYNCH. So far as I know.

Senator CHILES. Do you have any feeling as to whether GSA has held back referring matters to the strike force that should be referred to the strike force?

Mr. LYNCH. Not that I am aware of, Mr. Chairman. Some of the initial referrals came over and really weren't sufficiently ripe to have been referred. That is to say they had not been developed sufficiently. As a consequence, I sent some of them back.

Senator CHILES. So, you worked out sort of a working arrangement now where you

Mr. LYNCH. Yes; we have a good working arrangement. That does not mean that from time to time I will get something from the Inspector General's office where it is not sufficiently investigated, and additional investigation is needed by the Inspector General's office before I am in a position to study it.

Senator CHILES. Do you have adequate resources now to carry out your task?

Mr. LYNCH. Yes; I do, Mr. Chairman. I still have the yearning, if you will, that I discussed in my testimony before you last October that we had better arrangements, and access to the financial investigative resources of the IRS. We have already discussed that. Senator CHILES. Has there been any change at all since we discussed that?

Mr. LYNCH. Not that I'm aware of.

Senator CHILES. And you still could use that access?

Mr. LYNCH. Yes.

Senator PRYOR. This is a difficult question, but I think it's pertinent. Is there any way you could compare the quality of research and the preparation of cases before and after the present Inspector General came on the job?

Mr. LYNCH. That is a very difficult question. I don't know how long some of these cases have been in the pipeline that are coming through now. Some of them started perhaps a year, or year and a half ago. Some of them started only a couple of months ago, but were at a sufficient stage for referral under the Inspector General Act as the Inspector General is required to do by law.

I will say it's apparent that there have been additional tools available to the Inspector General's office, including the tool of access by subpena to company records that otherwise-when I first received certain early referrals-had not been looked into by an investigator, because they did not have access to those records. The Inspector General's office has been very active in the utilization of its subpena power to develop the evidence necessary to be developed.

Senator CHILES. Thank you very much. We again apologize for holding you all this period of time.

[The prepared statement, with attachment, of Mr. Lynch follows:]