Justice Dept. pondering Pena probe

March 01, 1995|By Los Angeles Times

WASHINGTON -- The Justice Department is reviewing whether to seek appointment of an independent counsel to investigate Transportation Secretary Federico Pena, according to government officials.

Those familiar with the review, opened in February, said it encompasses efforts by a money management company founded by Mr. Pena to win a contract with a Los Angeles transit pension fund.

According to the government officials, the review has been initiated by the Transportation Department's inspector general. The review is the fourth of its kind undertaken of a Clinton administration Cabinet secretary.

Spokesmen for Mr. Pena said yesterday that the transportation secretary has not been contacted by the Justice Department but would cooperate, if questioned. Mr. Pena's representatives reiterated that the secretary believes he has done nothing wrong.

The Los Angeles Times reported Feb. 10 that Pena Investment Advisors Inc., the Denver money management company founded the transportation secretary, won a contract to manage $5 million from the Los Angeles transit pension fund. That contract was approved 19 days after Mr. Pena took federal office.

Officials in Los Angeles, including the former manager of the pension fund, said that the Pena company was hired as part of an effort to curry the good will of the incoming transportation secretary. Melvin F. Marquardt, the pension manager, said the Pena company would not have been hired if Mr. Pena had not been appointed to Mr. Clinton's Cabinet.

The federal government is paying half -- by far the largest share -- of construction costs for the multibillion-dollar Los Angeles subway. Mr. Pena, using his discretion as President Clinton's chief transportation policy-maker, in January approved $187 million of extra funding for the subway project, most of which will help pay for extending the subway to East Los Angeles.

Mr. Pena has said that, while he was aware of the investment company's efforts to win the transit pension fund as a client, he averted any potential conflict of interest by selling his stake as president and chief executive officer shortly before taking office.

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