Donald C. Smaltz, Independent Counsel In re Espy, announced:

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 Espy’s 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, was $207.

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 Espy’s 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.