Donald C. Smaltz, Independent Counsel In re Espy,
The Robert Mondavi Corporation, a Napa Valley, California producer, importer and
distributor of premium table wines paid $100,000 to the United States in settlement of a
civil tort and conflict of interest action brought today by the Office of Independent
Counsel for giving six bottles of wine valued at $187 to or for the benefit of former
Secretary of Agriculture Michael Espy in 1993 and dinner to and for the benefit of Espy
and his girlfriend valued at $207 in 1994. Mondavi gave the gratuity while there were
matters that company officials wished to discuss with or were within the jurisdiction of
Secretary Espy. As part of its settlement, Mondavi agreed to spend at least $30,000 for a
public education program to educate those in the wine industry and other California
business leaders about corporate compliance programs and the bribery, gratuity and
campaign finance laws.
Mr. Smaltz stated:
The management of Mondavi was quick to recognize the misdeeds of one of its senior
officials and promptly accepted responsibility for his actions. From the inception of the
investigation into the illegal gratuities, Mondavi has cooperated fully by making
documents and witnesses available to this Office's investigators and lawyers.
Just as the criminal justice system must act as a deterrent to those who violate the
trust placed in senior government officials, so too should the prosecutor's discretion to
pursue civil remedies apply where a corporation and its officers cooperate fully and
timely with the government and initiate creative corrective action.
In its Settlement, Mondavi committed to spend at least $30,000 for a public education
program in conjunction with a leading California graduate business school or university
over the next two years to include free lectures and panel discussions focused on the
bribery, gratuity and campaign finance laws and corporate compliance issues. The purpose
of the program is to educate current and future business leaders about the importance of
all laws prohibiting or limiting the giving of gratuities to government officials. In
addition to the series of seminars, Mondavi also agreed to publish a monograph dealing
with corporate compliance with laws addressing the bribery, gratuity and campaign finance
laws, with an emphasis on gifts and gratuities to public officials, and distribute it to
industry-recognized vintners and wine-making businesses in the United States and trade
associations representing the wine industry. Finally, Mondavi agreed to sponsor and cause
to be published not fewer than three articles addressing issues of legal compliance in
corporate dealings with public officials.
In addition to the public education program, Mondavi agreed to institute a
comprehensive compliance program, which includes the appointment of an Ethics Compliance
Officer responsible directly and collectively to the General Counsel, President and
C.E.O., and Chairman of the Board of Directors of Mondavi. Mondavi further agreed to pay
$20,000 toward the cost of the Independent Counsel's investigation.
The Complaint alleges that on October 29, 1993, Secretary Espy visited the Mondavi
winery in the California Napa Valley. In advance of and during the visit to the winery,
Richard Douglas solicited wine from Mondavi in the name of and for the benefit of
Secretary Espy. Douglas was the Senior Vice President for Corporate Affairs for
Sun-Diamond Growers of California and advisor to Secretary Espy who pleaded guilty to
making a false statement to the FBI about gratuities that he and Sun-Diamond gave to
Secretary Espy and Espys receipt of certain basketball tickets from another
prohibited source. During the Secretary's visit to the Mondavi winery in Napa, company
representatives discussed with Secretary Espy the following and other issues which were
within his agency's jurisdiction: (1) research funding to combat a pest that was
devastating Mondavi and other Napa Valley vineyards, (2) including the health
benefits of moderate wine consumption in a joint publication of the Departments of
Agriculture and Health and Human Services, (3) obtaining and using USDA funds to promote
American-made wine abroad, and (4) certain international trade issues and agreements.
Before Secretary Espy and his entourage left the winery, Mondavi's Vice President of
Government Relations and Community Relations, at the request and direction of Douglas,
gave six bottles of wine valued at $187 to or for the benefit of Secretary Espy.
Additionally, on March 8, 1994, Secretary Espy and his girlfriend attended a dinner
hosted and paid for by Mondavi at Kinkead's restaurant in Washington, D.C. During the
dinner, representatives of the company discussed with Secretary Espy including the health
benefits of moderate wine consumption in the same joint USDA-HHS publication and the
creation of federal marketing orders for wine grapes. The value of the dinner given to and
for the benefit of Secretary Espy, including the dinner for Secretary Espy's girlfriend,
As part of the Settlement Agreement, the government agreed not to bring charges against
any Mondavi employee who may have been involved in this matter.
This is the second civil action for damages and civil penalties ever brought by an
Independent Counsel, the first being a payment of $1,050,000 by the Wall Street investment
firm of Smith Barney. In July 1997, Smith Barney accepted responsibility for the act of
one of its Managing Directors -- giving a $2,200 Super Bowl ticket purchased from a ticket
scalper to Espy. As with the charge settled by Smith Barney, Mondavi is charged with
participating in and procuring a violation of Secretary Espys fiduciary duty to the
United States and interference with his agency relationship with the United States
Department of Agriculture and the Executive Branch of the United States Government.
This matter was handled by Deputy Independent Counsel Ted Greenberg and Associate
Independent Counsel Jacob Frenkel, with the assistance of special agents of the Federal
Bureau of Investigation and the Office of Inspector General of the USDA.
A copy of the Complaint and Settlement Agreement are available from the Office of
Independent Counsel upon request.
Mondavi's payment brings to approximately $10.87 million the criminal fines, civil
penalties, damages and costs that the Independent Counsel has brought into the United
States Treasury from violations of law uncovered by this investigation.
Secretary Espy is scheduled to go on trial for his solicitation and receipt of illegal
gratuities valued in excess of $35,000 and other federal felony offenses, including
tampering with a witness, on October 1, 1998 in the United States District Court for the
District of Columbia.
The Independent Counsel's investigation is continuing.