willing to testify, that there was a rapid turnover of Labor Department personnel in the course of the investigation; and that there was no clear direction to the investigation; and, like a lot of investigations, there was a lot of duplicative effort.

Have you been able as yet to look into that matter, or does any of your staff want to tell us what has been happening out there?

Secretary MARSHALL. You mean before we took over, or after? I am not sure as to which period you are referring.

Mr. GIBBONS. I am not sure when you took over.

Mr. MARSHALL. We took over January 27.

Mr. GIBBONS. You didn't have any investigators out there last year? Secretary MARSHALL. That is when I was sworn in.

Mr. GIBBONS. I was talking about your Department. Maybe somebody else with you could answer that question better.

Secretary MARSHALL. Mr. Sacher would be the appropriate one to answer that.

Mr. SACHER. Mr. Chairman, I may have to interrupt at some point in this answer if I come too close to areas which are very intricately interwoven with matters that are the subject of our ongoing investigation.

Mr. GIBBONS. If you do, just tell us, and I will back off until we can consider doing something else about hearing it. I am trying to get some general information at this point.

Mr. SACHER. The Central States Fund is a massive, enormously large pension fund. It is the first or second largest Taft-Hartley multiemployer pension fund in the country. It carries its assets at a book value of about $1.4 billion. It covers about 450-some-odd-thousand participants and involves contributions from about 16,000 or so contributing employers.

Investigating it is somewhat like walking into a bag filled with foam rubber. It was no small undertaking, and the Department recognized at the very beginning that we would have to structure the investigation in a fashion different than our normal investigations.

Normally, investigations are conducted by the Enforcement Division, pension and welfare benefit programs. We realized that it would be helpful in his investigation to target particular personnel solely for this purpose; and beyond that to integrate the investigators with the lawyers.

Mr. GIBBONS. We have had people who have come to us who have participated in the investigation. I have had them come to me personally, and they have come to our staff; and they have said that there was a rapid turnover of personnel there-that people were in for 30 to 60 days and no longer than 90 days, they were in and out, and they weren't assigned to the job on an early basis. Is that true?

Mr. SACHER. In the early stages of the investigation, in the fall of 1975, the investigation was triggered by the massive publicity that surrounded the disappearance of Mr. Hoffa. The Department recognized from the day that ERISA was enacted that we would have to investigate this fund. We were not anxious to get started when we were forced to get started by the publicity surrounding Mr. Hoffa's disappearance. We simply weren't ready. We geared up as rapidly as we could. We temporarily diverted staff into the investigation effort, and

beginning at the very end of 1975 and in January of 1976, we established the special investigations staff, and began to permanently assign people to the investigation.

Mr. GIBBONS. Now, let me ask you here, and this is going to be my last question because I don't want to transgress on the other members' time. When did you begin to coordinate your investigation, or activity, with the IRS?

Mr. SACHER. We contacted the Service in the early autumn of 1975 at the time that we began our investigation, at the same time that we contacted the Department of Justice, and coordination began at that time.

As you know, much of the material, or virtually all the material that the Service has is subject to the confidentiality requirements of the Internal Revenue Code.

Mr. GIBBONS. We know they claim that. We are not real sure they are right.

Mr. SACHER. We are not experts on the Internal Revenue Code ourselves, so we have to accept what our sister agency tells us.

In any event, we have requested at various times material under the disclosure authority that the Commissioner can exercise, and Mr. Lippe can supply further details; but I believe that every time we have requested it, we have received it.

Mr. GIBBONS. One final question: Have you been associated with the investigation ever since it began? When did you get involved?

Mr. SACHER. I have been involved in the investigation since it began, because my office is responsible for all of the legal matters that arise under title I of ERISA, and we recognized at the outset that this particular case would have a great deal of publicity attending it and also wanted to be certain that since we were establishing a separate, special investigation, that there was full coordination between the regulatory on-going program, and the special investigation.

So my role in the early stages of the investigation was a kind of liaison role, and later on, in more recent events, I have been more closely involved because we have been approaching the point where we consider litigation.

Mr. GIBBONS. Thank you.

The Chair will next recognize Mr. Pickle.

Mr. PICKLE. Thank you, Mr. Chairman.

Mr. Secretary, we are glad to see you, and we hope we can get some good information here.

Let me say at the outset that I recognize that if we ask you a question you feel you can't answer, we will respect your position. But I hope you understand that I, as one member of this subcommittee, feel that a great deal needs to be said openly and publicly. I hope you approach this hearing in that vein.

First, let me ask you something about the March 14, 1977, press release announcing the March 13 agreements. It looks from it like all the parties expected that independent investment managers would be agreed upon by April 10. Now, that is just 5 days from now. Have the managers been agreed upon?

Secretary MARSHALL. They are in the process of agreement, but the final decision has not been made. We fully expect that timetable to be

met.

Mr. PICKLE. Do you expect the timetable of April 10 to be met?
Secretary MARSHALL. Yes.

Mr. PICKLE. You anticipate that Mr. Fitzsimmons and the three other trustees will be off the Board of Trustees by April 10?

Mr. KELLY. The agreement was, as announced in the press release, that we would have either the agreement in principle between the fund and the independent investment managers or an interim committee would be established by April 10.

Following that, the different plan amendments would be executed satisfactory to IRS and, at that point, when there was the requalification of the fund by IRS, the four holdover trustees would step down; all of this had to take place no later than April 30.

Mr. PICKLE. Yes, I understand the timetable, Mr. Kelly. I read it several times. I am trying to get from you now, so that this committee, and so that the public may know. Is it your feeling that the agreement that you announced on March 13 will be consummated by April 10?

Mr. KELLY. It is our feeling that the agreement in principle between the fund and the independent investment managers, will be put together by April 10, and if all the different parts of that agreement do not take place, as agreed, then we will have to resort to litigation.

Mr. PICKLE. If that agreement that you tentatively agreed on is reached by April 10, or April 30, do you feel that the Government case, then, rests at that point?

Secretary MARSHALL. Go ahead, Steve.

Mr. SACHER. As we noted in the release of March 14, when all the conditions in the release are satisfied, the Department will terminate the portion of its investigation that was focused on the asset management procedures of the fund, because we will have accomplished the changes that we believe are necessary in those procedures to bring them into compliance with part 4 of title Ï.

Mr. PICKLE. Do you think that is proper action for the Labor Department to take at that point, assuming the consummation of the agreement?

Mr. SACHER. Absolutely.

Secretary MARSHALL. The answer is, of course, that our whole case will not be completed by then.

Mr. SACHER. That is correct. We have made it clear on numerous occasions to the trustees and to their representatives and their lawyers that the termination of that portion of our investigation does not mean the termination of other portions of the investigation that are looking to questions of individual liability for particular imprudent actions or criminal actions.

Mr. PICKLE. Doesn't this really mean, if this agreement is carried out, and you anticipate that it will be, doesn't it really mean that the deal that has been cut between Labor, IRS, and the Teamsters Fund is that Labor would not go into court on matters from January 1, 1975 onMr. SACHER. NO.

Secretary MARSHALL. It does not mean that.

Mr. PICKLE. With respect to the Plan, with respect to ERISA. And that IRS, likewise, would forgive, or drop, the 10 years of back tax liability except for that 1 year's gap?

If this is so, then we have to ask ourselves, is that a good deal for the public? Am I correct in my assumption, in my analysis?

Mr. SACHER. Congressman Pickle, we believe what is best for the public is what most efficiently and cheaply and rapidly brings about the changes in the asset management of this fund that are necessary to preserve its assets and to protect its participants and beneficiaries.

Mr. PICKLE. I recognize that is a very important part of your responsibilities and duties. But it seems to me that, if this agreement is reached, both Labor and IRS are, in effect, forgiving that which has gone on for the past 12 years, with this possible gap; and if it means that the only court action that we can expect might be that which might affect fraud or kickbacks, or actions of that nature, the public is going to ask is what kind of victory this is even if the agreements you have announced are fully carried out.

Now, Mr. Secretary, have you participated in the negotiations with respect to this March 13 or March 14 agreement?

Secretary MARSHALL. Yes. Let me say that we have agreed to no forgiveness for civil or criminal actions of any kind, and we have made it clear that those investigations would continue; and that the immediate settlement was entirely in terms of management of the assets; and to the specific question-the answer is yes. I have participated, and the decision we made immediately was to protect the fund's assets as rapidly as we could.

Mr. PICKLE. Has that been your decision?

Secretary MARSHALL. Yes.

Mr. PICKLE. Have you checked this with anyone at the White House prior to your decisions?

Secretary MARSHALL. One of the things I did immediately was to call a meeting and consult with the Attorney General, with the Secretary of the Treasury, and to get our case together; and we jointly agreed on this line of investigation on this approach, and felt that the settlement that we worked out was a good one.

I have, of course, confidence that it is, and if it is not carried out in this fashion, we will go to court to obtain a satisfactory resolution of that matter; but this in no way means that we are forgetting about any criminal or civil liability.

Mr. PICKLE. May I conclude with this: You are reported in the press as saying there are civil and criminal cases that are pending, or the possibility of civil and criminal cases pending, and you have said this morning in your testimony that major litigation remains a possibility.

Secretary MARSHALL. Yes.

Mr. PICKLE. If that goes forward, I have to assume that if an agreement is reached, it will only be with respect to those cases that could prove fraud

Secretary MARSHALL. No, the agreement is only-with respect to the management of the assets of the fund, and to get independent investment managers.

Mr. SACHER. Congressman, the commitments that the trustees have made and which the Government has accepted relate to proceduresprocedures that will be used by the fund for the management of its assets. They have nothing whatsoever to do with particular actions

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that have been taken or not taken by trustees of the fund or other fiduciaries of the fund in the period since the time that the Labor Department received the power to enforce Federal fiduciary responsibility standards, namely, January 1, 1975.

Those matters are still open, continue to be investigated, and may result in civil fiduciary liability lawsuits, or criminal cases, or both. They are not confined to fraud, as I think you have been using that term, because the provisions of ERISA are much broader than that. Mr. GIBBONS. Mr. Pickle, the Chair will come back to you.

Mr. Ford?

Mr. FORD. Thank you, Mr. Chairman.

Mr. Secretary, was a written record of work performed ever maintained and regularly updated?

Secretary MARSHALL. You mean in connection with the case by our people?

Mr. FORD. Yes. I note that a report here from the Oversight investigative staff regarding the Labor Department indicates that there was no scope, no records of work done, considerable duplication and triplication of effort, and tremendous turnover in staff and decision-making. One individual indicated that he has never seen an investigation conducted so loosely. He is willing to come to the public and talk about it. Secretary MARSHALL. We would like to discuss that in executive session, if we could. I think that there are matters involved that are also very sensitive to our future litigation. We would be happy to do that, though.

Mr. FORD. Mr. Chairman, I will yield the rest of my time and if the subcommittee decides to go into executive session, I will raise the question then.

Mr. GIBBONS. Mr. Bafalis?

Mr. BAFALIS. Thank you, Mr. Chairman.

Mr. Secretary, we welcome you to the committee this morning. I want to echo Mr. Pickle's statement that we hope we will be able to develop as much of this information as possible in the public arena, because we think the public has a right to know. Many of us have a feeling that whatever did take place prior to the time of the press release, except for those matters that deal directly with pending litigation, should be discussed publicly, because we don't think that any possible "secret" deals should be made that the public is not aware of.

When Mr. Shannon appeared before us, he stated that the asset value of the Central States Fund was approximately $1.4 billion. He also stated that no appraisals had been made, and some of us, particularly myself, were very concerned as to whether or not the asset value that they are alleging is in fact the true value of their assets.

I just wonder if, in your investigation, you have been able to determine whether or not the $1.4 billion dollar figure does represent true asset value, and can you make that determination without an appraisal; and if not, do you think they ought to go through the appraisal process?

Secretary MARSHALL. It is, of course, difficult to appraise it, and we think that it should be appraised. There are other matters about that that I would like to respond to in executive session, if I could.