ectors were pushed under the carpet. portrayed as cases of illiquid illiquidity. history will register this was an abuse of the notion of solidarity. greece was never really bailed out. only 9% of the bailouts, loans that we took over the last few years went to the greek state. the rest went to the banking sector. finally, the historical record will show that the reform program that accompanies the loans was precisely wrong. if one is to rank all the cases of ma liglignancy in greece, from the worst case to the least offensive one, you'll find that the reform program over the last five years started from the bottom, not from the top. and the rest of interest that lurks at the top where they once backing, the government that was pointing moralizing fingers at majority of greeks who may have

been. could not be easily persuaded to reform themselves when being told to do so by the greatest rent seekers who thought that reforms were never for them. unsurprisingly as a result of this practice debts, both private and public, skyrocketed. banks seized to function as credit providing institutions. investment dried up. and all we have had over the last few years was a slowing down of the rate of our economy as all the fat went, then the plus muscle, then we were proceeding to the bones of our economy. it's often said that 2014 marked

a recovery of short. very mild, very fragile recovery, but a recovery. i beg to differ on this. what happened in 2014 was nominal gdp, gdp in market prices continued to fall. but as market prices on average were falling even faster. that's not my definition or anybody's definition of recovery. it's the definition of what happens when you go through recession to depression. but that's all past history. we're now negotiating a very simple principle. on the one hand we have an existing program that the greek state is committed to legally. legally bound. and surely, states have a continuity continuity, and therefore, there's no doubt, even though we were elected to challenge the philosophy, logic, the essence of those policies, we're bound to them.

this is a principle of democratic states. but there's another principle, too. that democracy should matter for something. in some degree. the fact that we have a mandate to challenge the philosophy of the problem that we inherited should also make a difference. so what happens when you have two different principles that are clashing with one another? that's what democracies are for. in democracies, you have various things that clash with one another. liquidity. against interest of the collective. this is what we do with democracies. we blend together contradictory principles. this is precisely what we tried to do upon our election. we tried to convince our partners in the euro group, in the european union, at the imf,

that what we need to establish the common ground on which to build a new set of conditionalties, a set of conditionalties that we would all, i'm sure, have agreed upon had we started afresh. so that we over come the inertia, the institutional inertia of the program which i'm not sure -- actually, i am quite sure that almost everyone had they had the chance to start afresh, to start would have considered to be a failure and would not want to continue along those lines. but you know how bureaucracies are, how very complex organizations are and there's nothing more complex than the eurozone system or lack thereof managing our collective economic prospects. they tend to develop a life of their own and they tend to be

subject to inertia. and it's very difficult to shift once you have embarked upon a certain path. we would not be putting ourselves in a situation, in this very harsh negotiation, if we didn't think that the path we have embarked upon for greece is a path that could get us to a good place. we are convinced that it can't. the greek people did not vote for us because they believed the greek success story of last year. they voted for us because they knew that it was smoke and mirrors. in this negotiation, we're not trying to impose our will upon our 18 partners in the euro group. we have a mandate. so do they. i accept this fully. what we are asking for is for the opportunity to do two things. firstly, to be heard. to have our proposals for the way in which the greek social

economy must be reformed, discussed in good faith. and the second thing we're asking for is for the time and the space in which to allow this conversation to take place so that we can do the one thing that needs to be done. and what is that one thing? we need to convince our partners especially in northern europe, that this government is not about going back to yesteryear, and they need to convince us that they're serious about rebooting a series of measures, programs, fiscal consolidation plan, that has failed. this negotiation must succeed, and the reason why it must succeed is because as mario

draghi said months ago for the euro project to succeed anywhere, it must succeed everywhere. greece insists on being part of it everywhere. greece believes that the new government that the greek people have elected is offering our partners despite our significant political differences, a chance for pluralism and democracy, to prevail within a monetary union that knows how to acknowledge errors and do what the united states has done with such great success in the 19th and 20th centuries. and what is that? create consolidation out of the crisis. in europe, we like to say that we have achieved that, that we've learned the lesson, that we consolidated, that we created new institutions which are allowing our monetary union to evolve and to develop the

mechanisms that lacked, by which to counter a major earthquake shock like that of 2008. i cannot believe we have done that. i believe that the many ways we have proclaimed in name that which we have denied in practice. for instance, a proper banking union. this government, with our quirky left wing background i admit is keen to come to an arrangement with our global and european partners that will sit with europe consolidates in a manner that creates greater efficiency genuine growth overcomes the major productivity failures and investment failures of the last few years not just for greece but for everyone, in a way that allows all europeans especially those who are

critical of institutions of europe, to remain within the europeanist camp which is where our government firmly locates itself. thank you very much. >> i just want to thank, again the minister very much for his really excellent speech, i will say. i just want to say two things. one is i want to introduce david, my partner and friend here today on the panel who's the director of the center on fiscal and monetary policy. he joined brookings about a year and a half ago. he was at "the wall street journal" most recently as economics editor. he's the author of two "new york times" bestsellers in 2009 and

2012. "in fed we trust: ben bernanke's war on the great panic" published in 2009. and "red ink: inside the high stakes politics of the federal budget," 2012. he shared two pulitzer prizes in '84 and 2003. one for the "boston globe" series on the persistence of racism in boston. that was 1984. in 2003, for "storystories on corporate scandals. i'm happy david is here. it makes much after all this possible. thanks for being here, glen. now we're going to have a discussion, and we all look forward to it. i'll let david ask the first question. >> thank you. minister, thank you for very your clear remarks. to an outsider, it seems as if there's very little overlap between the policies that fall within your mandate, and the ones on which the imf and your

european partners are insisting. so, it's hard for us to see how this comes to a happy conclusion, and there's been speculation that one option here is to have some kind of referendum on staying in the eurozone, or perhaps a snap election in there for the different coalition. is that part of your game plan now? >> this is an easy question to answer. absolutely not. let me be precise. >> precise. >> in terms of the first part of the question. now, you mentioned -- or you alluded to a great gap between the policies that have been pursued by our government and the policies that would be acceptable to our partners. i don't think it's so great. remember what -- the "p" word that i used, pluralism.

we used live in societies where we tolerated difference of opinion and different mixes of public and private virtues. so you recall in the '70s and even in the early '80s we used to take great pride of the fact that we lived in a mixed economy where we had the public sector playing an important role where we had conventions and norms of collective bargaining that created a safety net in the workplace, where we had the social welfare net that also played the same role regarding humanitarian issues. we had public enterprise with private enterprise. remember that one of the great arguments in favor of capitalism in the old cold war days is precisely. now, what we are bringing to the table here is the notion that this culture where everything

public must, by definition be problematic, and everything private, everything must necessarily be on the road to virtue. that has not worked very well. it hasn't worked very well here in the united states. it hasn't worked very well anywhere. now, what precise mix we use and we hope for, is another matter. let me be a bit more precise regarding some of the policies. this is where i'm going to be specific. privatization pensions labor markets. just the big three out of the hat. take privatizations. let me tell you what our policies are on this. firstly, we look at the privatizations that took place in the last few years. they were disasters. firstly, they were a disaster from the point of view of legal public rights.

so -- a number of significant ones collapsed when they were taken to the high court. high court. to the european competition commission. so you have private investors that go through the process of securing a bid and winning a bid, an auction. they get the property rights they make an investment, then the holding goes belly-up. so there's this aspect this is not neither left nor right. it's a question of efficiency and the security of property rights. we want to change that. i can give you many examples. secondly, we are in the middle of a great depression. now, how clever is it to try to sell public assets when asset prices are through the floor? at such a time without strength, and take these few pennies that you get and put them into the bottomless pit of an

unsustainable debt. i don't think this is an apt use of public assets. so what we're saying -- we're not against privatization. we're against this kind of fire sale that doesn't even dent even a little bit our debt situation. so our policies, just to wrap this up is simple. we want to impose minimum investment levels on the winning bid so as to give a developmental developmental dimension to the nationalization, privatization. secondly, we want to have a deal with the winning bidder regarding minimum labor standards. minimum environmental standards. we also want to ensure that the local economies are cut into the deal so that there is both national and local developmental

effect. is this something we cannot discuss sensibly with the imf and european partners? i think it is. i don't think that mrs. thatcher would do it the way the previous government did. there's no doubt that our pension system is in trouble, but how could it be otherwise? we have a collapsed labor market. we have a massive reduction in numbers of people who work and who are capable of making pension fund contributions. we have more than 30% of paid labor being undeclared edd labor. so when we look at the problem of the pension system and the labor market, they're intertwined, and our government is saying that cutting and pasting from the imf rule book the ideas about labor market, completely useless in greece. we have the most regulated market in the world. we are, as i keep saying.

90% of unemployed people receive unemployment benefits. nobody else. nine. okay? let me put it differently. 91% of the unemployed have never received one euro of unemployment benefit. how much more can you this labor market? half a million workers working for more than five months and haven't been paid a cent. why? because of a recession. and they keep reporting to work in order not to lose their dignity, in order not to lose their claim to the company, to help the company survive so that they don't lose everything. now, what we're saying is in that environment, smart collective bargaining agreements similar to the ones they have in germany, that we want to hammer out in unison together in cooperation with the ilo will help re-regulate markets now in an efficient way but in a way that brings the part of the labor market into the labor

market the formal part. the sail time, dealing with a pension problem. now, one of the things that is impeding a conclusion for this negotiation is quite well known, i'm not preaching anything by saying this. is the demand that we don't stop an automatic clause that was voted in by the previous government that would have secretary pensions cut by almost 90%. secretary -- that can mean that somebody on a 600 euro a month pension will have to lose 180 euros. in the middle of this humanitarian crisis, in the middle of this recession, we want to put a freeze on this. we are accused of rolling back reform. now, why reform to reduce low, low, low pensions? it's a cutback, but i don't see any serious reform. we want to reform the pension system. now, of course when they ask us, so, how do you envision the

pension system to function in the next 20 years? i have to admit to you, i don't have an answer that goes beyond a general description of principle, but when france, germany, and the united states answer that question we will answer that question, too. it may take a little bit more than a few weeks. to be serious now. what we're asking is for the absolutely sensible principle that we're a new government, we need to come to terms with our partners on four five large reforms that need to be instituted tomorrow which we can do because we have common ground on this on a number of them. maybe there's a disagreement. we will compromise. we are perfectly prepared to compromise. introduce these reforms, come up with a rational fiscal plan for the next five, eight years. not the one we have now.

4.5% primary surpluses for the foreseeable future. best economy without a banking system that functions properly as a credit system is absurd. and once we get this agreement going, then we can keep negotiating until -- and our intention is in good faith to reach a new contract with our partners by the end of june that will create a sustainable greek economy so we can cease having these conversations. >> so let me make two points and ask a question. two points, part you already covered, but i want to emphasize them, that balance sheets are more important than flaws. i mean we had the same discussion with minister. if you focus just on the flaws of one year you miss a lot of the story. if a country like germany can invest negative interest rates and create positive assets, expenditure may go up, but, in

fact, the balance sheet of the public sector improves and that's the point for example, larry summers makes all the time. one of the issues between the fund program and, you know, discussion not just on greece but on other countries is this importance of taking, or having truly a medium-term framework rather than an annual expenditure limit. and i think you alluded to that. the second point, and i can't help wanting to support it is privatization. i had the same experience when i was in kind of your job in turkey. yeah. i was in your job. you know one demand was privatize everything. immediately. at whatever price you can fetch. well, that is not good for public finance. i'm sorry. and i refuse. we were asked to privatize turkish airlines and allow for a

strategic investor to buy it. we refused. and today, turkish airlines is the airline that flies to the greatest number of countryies in the world and it's quite profitable and it's still a state enterprise but open to small private investors. so you know when we talk macroeconomic policy we always discuss primary surplus. when we say structural reform, somehow there's something under there which i think we have to get into the details of to see whether they're good or bad. replacing the public monopoly by a private monopoly even if one is a perfect liberal economist is not a good idea. two things i had to get off my chest. but i think if there's one thing that could have -- i wonder -- i mean, you made a very strong point. very, very strong. by saying, you know the people of greece are the same as the other people in the eurozone.

i mean, we we are the people of the eurozone. don't you think that at the beginning it would have been better to somehow give the message or maybe the press distorted the message. i don't know. the press was quite careful at times. that there are two sides to being part of the eurozone. that they have to respect -- they, meaning your creditors, have to respect greek democracy and the will of the greek people and realize the suffering that the greek people have gone through. but at the same time that the greek government, if it was to be in the eurozone in the european union, cannot just do whatever it wants. and the message came out, we've been elected. we've got the support of the people. we'll do whatever we want. and that -- you can do it outside europe you know but inside europe, you do have to kind of stress that the european

agreement is needed. >> let me start with your last point then go back to the earlier ones only because i'm very interested in them. you're quite correct. i did mention it before that having won a mandate in the election of the 25th of january. i mentioned remember, there are another 18 mondays. but the point i made was that it gave us that mandate that i say we'd like to be heard about the social economy. when we're in a great depression, we have a humanitarian crisis. we want -- and my request of the first euro group i attended was i asked for four weeks during

which in peace and quiet without the threat of liquidity and liquidation, without the reports, that gave rise to background, a sit-down to be allowed a month during which once we have control of our own ministries to come up with a plan and to present it to our partners. then i asked for another month during which to come to an agreement, we call it. we never said that we are going to, you know -- we're not irresponsible citizens that think we have the right to do anything we want. that was never the point. but that we have the right to be heard and we have the right to challenge the logic of the program that has clearly failed. i believe that that was -- on the other two points that you mentioned regarding

privatizations weprivatizations, we don't have -- in answer to the question, are you in favor or against? the answer to this question is which privatization? if you ask me about the railways, about the ports about electricity generation and distribution, if you ask me about the horse racing outfit or electronic gambling i'll give you different answers depending on the particular case. you mentioned the balance sheets versus stock flows. we are a very particular economic union. we have governments without central banks backing them. and we have a central bank without a federal government

backing it. this is a unique state of affairs. ideally, completely speculating a federal government and a fed. but, of course and this is a sad realization that i am sharing with you. this crisis that began in 2008 2009, 2010, instead of helping us come closer together it's great creating forces that's making the political process even harder. that's something we should lose sleep over. as germans, as greeks as portuguese as fins, as slovaks, as french. i left out the irish and some others. please forgive me. once you are caught up in this monetary union that has very peculiar forms of governance as

well as constraints to labor under, you end up with a complete lack of coordination when it comes to investment policy. so the argument that you mentioned earlier -- the argument, i didn't listen to it i wish i had about germany's capacity to invest to borrow at negative yields at negative interest rates. that is very different -- i understand your arguments. i also understand the fear of the government that does not want to have a debt to gdp rashtio that exceeds 6%. in the case of our government, there's absolutely no fiscal room for a standard deficit spending investment program. however, and this is a big however, the eurozone as a whole is dignified not only by a

mountain of great private and public debts which we do have, but there's another mountain hiding behind it the mountain, huge mountain of idle savings with nowhere to go. it should be a joint project to energize to motivate those savings to help them overcome their great fear that keeps them idle and channel them into productive investment. now, how do we do this? well we have a european investment bank that could do this, and we have a european central bank. well, why can't the aib fund a major new deal for europe? that channels investment to the private sectors of the countries and the regions with countries that have a major gap? great deflationary forces running through them. with the ecb standing by ready

to jump into the secondary markets to purchase these bonds if they yield. now, have you noticed that there's no mention of the government here? there's no need for government to be involved. this is not deficit spending by germany, greece, by portugal, by anyone. it's all money that is borrowed by the taxpayer. it is money that is borrowed on banking principles as it has been doing for decades. but you have the ecb playing the role that simulates a federal government and in the complex of smart quantityative easing. we need an answer to the question, okay you don't have federation, you don't have the political dynamic that can lead you to one. how can you respond differently from self-defeating austerity? and ei just wanted to give just one small example of the kind of

out-of- out-of-the-box thinking to get us there. to do this, we need to begin trusting each other. i come back to the original question. we greeks have to earn the trust of our partners, but they must also acknowledge the fact that for five years now, a particular program has been imposed upon our nation that has been making a bad thing worse. >> okay. let's say i buy your analysis but there's a certain reality here. you owe some money yet you can't afford to pay unless they open it. they say it's up to them, they meet my conditions, or i'm not going to let them have any money. not quite how he put it. he says that look what's going on, greek yields are rising in the bond market there's no con teenaginge ing contagion to portugal, spain. if you have to leave the euro, it could probably be done,

though. aren't you inex-orally walking to a point where you have little left and you basically have to default, then ha happenwhat happens after that? >> i would willingly legally and enthusiastically accept any terms offered to us if they made sense. if it was founded upon a reform program that attacked greece and made the reforms that were necessary in order to enhance efficiently and social justice if it came from berlin, if it came from brussels, if it came from portugal, from slovakia i don't care where it comes from. i would have embraced it. the problem we have with these conditions here the deliberate conditions is not so much -- it

is the fact that we tried that medicine and it hasn't worked. >> okay. what happens if you can't come to a resolution? >> just a second. i'll come to that. that's the second question. these days i'm told that liquidity is drying up in greece and it is. but you know what? there's a reason why it's drying up. the reason is that the previous government in its infinite wisdom decided to try to retain power by starting a bank run, by saying no uncertain terms, if we win, will be shut the next day. now, how irresponsible is that for a sitting government when the poll clearly shows we're going to win? at the very same time you have voices from within the system, the euro system the system of european central banks, warning that if we win there would be

liquidity restrictions and the moment we won, the liquidity restrictions started happening. on the 4th of february, the day after i visited london and inspired some enthusiasm in investors' minds to the extent the exchange went up by 11% the next day the ecb moved away and started imposing stricter restrictions on the commercial banks' capacity to participate. so the liquidity was being squeezed while at the same time the demand for liquidity due to the fair that was being propagated within the system increased. so it's like, you know, you imagine take a band an elastic band and tied it around your arm very tightly then i said to you oh, you have a liquidity problem with your blood vessels there, you're going to become gangrene. what are you going to do about it? i don't think this is the way

that our european union and monetary union was meant to function. our answer to your question is very simple. we will compromise we will compromise and we will compromise in order to come to a speedy agreement, but we're not going to end up being compromised. this is not what we were elected for. we were elected to put an end, to draw a line at the debt deflationary spiral, and to the fact that the reform program that was perpetuated in greece imposed in greece was badly de designed and administered by those who had to be deformed but refusing to be. in this means that europe is going to stand idly by while a young government is snuffed out, then i have to say that our only

rationale pro-european response is to spend every waking hour, moment, second, trying to reach an honorable agreement with our partners. we shall endeavor to come to reforms along the lines that i mentioned on privatization, on pensions, on -- and at the same time make a commitment that is cast in stone and even, you know penned in our own blood you know to increase it. that we shall never sleep again in primary deficit. this is what we're committing to. we're inviting our global partners and european partners to meet us not halfway, 1/5 of the way. and we expect them to do this why? because toying with -- which is something we don't do. we are refusing to discuss it because as i've said before, even worrying about it is like

being worried about hitting by a comet, in which comets are attracted to you if you're wearing. dealing with ideas of amputating greece is profoundly anti-european because anybody who claims that they know what the effect is. >> let me come in. i must say that when the minister confirmed it was here an hour ago, he also ruled out out -- and expressed his confidence that a solution will be found. i was quite kind of happy to hear that, and he said it quite strongly. i think -- i think everybody i think, is trying to find a solution. let me ask you, in the experience of the imf and of the world bank and of the debt issues, there is the precedent

of saying to a country, to a group of countries bring up your reform program we will suspend your debt payment, but the final debt agreement will come two or three years later provided that your reform program, i mean, that can be changed during the two three years, but provided that your program has been carried out. in other words greece would suspend payments with the agreement of the creditors, including, by the way, imf payment s payments, in exchange of agreement of reform but will also commit -- this is not restructuring. the real legal restructuring or reprofiling, if you like or change of interest, whatever you call it, would come two or three

years after the period in which the program is carried out. to me -- there is this experience that has been actually successful for a group of low-income countries. it has never been used for a middle-income country. but i kind of wonder whether the seemingly unbridgeable gap, because when you make the death payment, you run out of money and you don't have the time right now to build up the program. in the meantime your debt burden would be relieved your primary surplus would go down. at the same time the international institutions would not write off any part of your debt in a complete way or agree to any change in interest rate in the final way. >> well, this is such a radical

proposal that i didn't even think about it myself. >> well, our proposals are extremely moderate by comparison. if this is good to me, i can assure you that i'm going to look at it firstly with disbelief, and then a few minutes later with glee. and satisfaction. we don't need that degree of generosity from our creditors. if we get it, we'll be very happy. what we need is to stay faithful to the spirit of the 20th of february agreement of the euro group level, which allows greece to -- reform agenda. would dearly like to get down to work of actually discussing the actual bills that will go through parliament for the reforms. we've been pushing for this. instead, however, we keep hearing that there has to be a comprehensive review, the kind that never happened the last two

years. it has happened within a few weeks of our government being re-elected. nevertheless, we go along with that. and what would be, i think, very would be to separate the conditionalties for closing the final review of this problem on the basis of four, five major reforms that need to be done and can be done in the space of the next two weeks, because let's face it, this is a timeframe we're facing. then do what you're suggesting by the end of june, which is again, fight -- pretty soon. in other words, we're prepared to do this. by the end of june come to an agreement about the long-term term. that is what we're proposing, keen right from the beginning to effect. the separation therefore of the current review from the medium and long term, is i think

essential for avoiding the accident and creating circumstances for greece's recovery which by the way let's say a few things on an optimistic note. if we make this, and i believe we will, and i'm greatly encouraged by what was said in this whole -- an hour or so ago. if there is a declaration similar to that of mario draghi's of 2012 that the eurozone will do whatever it means to remain indivisible and at the same time there is an announcement of an agreement between greece and its international and european partners on a number, firstly, fiscal manners, agree on appropriate fiscal primary surpluses that are not exorbitant as they are now, substantial investment packages through the european investment bank. a way of writing off

non-performing loans from the banking sector in order to unclog the clog. privatization policies that are aimed to development and social security and safety and others. in the end, ends up giving more value back to our creditors through gdp and bonds. at the same time, we attack what i call the trilogy of sin in greece which is procurement, bureaucracy, the political system, the way that it has such a cozy relationship with the oligarchy, and the media that play a toxic role in greek society, always have done. at the same time, we have reforms that then percolate down to the level of product markets supermarkets, then we can go down to pharmacies if we need to. be patient with pharmacists before we attack all the sources of rent-seeking greece.

it would be also tragic. these are things that i believe we can agree upon in one afternoon. the announcement of such an agreement will unleash such a wave of optimism about greece. remember, asset prices in greece now are on the floor. suddenly, greece will be a great field for bargain hunting. there's going to be such a relief amongst greek investors, foreign investors, and we have excellent human capital and various potentially growth industries that we can do the one thing we have not managed to do and that is create an export-led developmental model that will have initial enthusiasm and which will be fueled immediately after that by a never-ending sequence of great reforms.

this is what we're fighting for. it will be such a great shame if this agreement is not concluded in the next now days weeks. thank you. >> we have to leave the room at 4:00. >> you want to -- >> okay. let's see. yes. but what i'll do if it's okay, i'll take a few together. okay the lady up front here. please identify yourself. >> thank you very much. i am greek citizen. and i would like to thank you for the political analysis. but i would like to ask a question, and i address this question to the policymaker because the government started in january. and we know from our families,

from our friends in greece that day after day, greeks are waiting for action from this government related to development. so i would like to ask you, do you have any proposal any developmental measure that these government talks since january 2015? thank you very much. >> yeah, we'll go for the gentleman there in the middle. yeah? >> thanks very much. i'm a professor, assistant professor at johns hopkins. i have actually a question for you as a politician. i think many of us actually agree with your economic analysis, and i think d.c. is probably your most favorable audience you're going to get. but as a politician, are you worried that being right is not going to be enough? because the political economy is that the reality is you're 1 against 18 in the eurozone. how are the 18 other eurozone

countries going to sell the concessions they're going to make to your government? if they're going to meet you 1/5 of the way? thank you. >> third, the gentleman all the way to the back there. yes. right there. >> i've been an observer or the greek economy over the last 30 years off and on. and i wanted to make a suggestion regarding ones that you might find sensible, dealing with the state-owned enterprises. and the suggestion is before you sell off the family jewels that you consider making them more productive by eliminating patronage jobs that have gone on for 30 years or longer, and specifically that you fire nonperforming employees who have very high salaryies compared to the private sector in greece, in contrast to many other countries but they have extreme job

security. know though on top of this you give these jobs to the youth of greece which have 60% unemployment. to attract foreign investment you consider eliminating the restrictions on mass dismissals. >> i think we'll take three and then -- you answer this. a few more? okay. then you have the -- >> the lady at the back there next to the camera who still has her hand up. i'm trying to keep gender balance also. >> thank you so much. from bloomberg tv africa. we know that a lot of economists are betting on the fact that greece is going to leave the euro eurozone. that's at least what we're hearing. what are you going to do to ensure greece doesn't leave the year eurozone? madam lagarde said you can't have delay in payments. give your advice to ensure you will stick to the reforms.

how do you plan to ensure you're not going to be compromised but instead ensure that you are going to compromise as much as you possibly can without putting the greek economy in danger? thank you. >> maybe one more. yes, you? >> i mean, subject to nigh imf friends friends in the room, there has been cases of arrangement, conditional performance. it's not an undone thing that some things are unfinanced or delayed. >> thank you very much. my question is really a follow-up to what all of the colleagues said before. and it goes to the essence of negotiations that are taking place. it seems to me and, you know, reads theing the papers and trying to talk to some of the actors involved, that the piece that is missing is not so much the flexibility and trying to find a

slightly different compromise on how to achieve the goals that you want to achieve, but the lack of specificity. basically how i understand it the basically, how i understand it your eurozone partners and the institutions involved are showing some kind of flexibility but since there has been a breakdown in trust what they would like to see is not so much generic goals formulated but more specific actions taken or at least the beginning of actions taken that can sort of help to restore the trust ha has been broken over the last few years, not due to your actions necessarily but due to all things that have happened since 2010. how do you respond to that criticism? >> i think your turn. >> right.

your question. policies. what are we suggesting? i did allude to some before. but of course i didn't get a chance to -- each one of these topics would take up a whole lecture lecture. but the example i gave, concerned privatization. okay? so our policy of developing public assets in conjunction with privateeers where we have minimum investment standards, in the port of salomoniki, when it comes to railways. now, that is a very clear policy of saying that we are going to go into partnership with the private sector, we will allow them to manage it, we will even give them a majority shareholding. but they will have to ensure

minimum investment, minimum environmental, minimum labor standards. i could give you a lot of different examples on this. i could talk to you about our ideas regarding the tax system. so for instance in greece we have the peculiar privilege of being a country with extremely high tax rates and extremely low tax takes. how do we intend to tackle this program? there are ways of doing it. but again, you have to realize that our sovereignty is severely circumscribed by the negotiations. in almost everything that we're introducing as ideas we're being told that it has to go through the filter of the negotiating process. that is slowing us down. we are much keener than it seems to legislate and put these

policies in practice. i'll cut to your question because it's related. on the question of lack of specificity. well, let me answer it just utterly directly. our original suggestion to our partners was that we sit down and we specify three, four, five bills that need to be introduced, particular reforms, and indeed we said to them to build trust this is the only way we know how to do it. let us agree on measures and you watch it taken. and you pass judgment on us depending on that. we didn't get anywhere. we were told the review has to be comprehensive. everything has to be discussed. my fear is when you discuss everything you're not discussing about much. let me share another source of frustration with you.

we entered into these forecast,s. we constantly asked for narrowing down the focus the spes fisty. we presented proposals. ten tajz, 20 pages. 100 pages. proposals. particular proposals. which are not discussed. because instead we have the comprehensive review, which is effectively an avalanche of questions and questionnaires about this, that, or the other. quantifying this. that's not the same thing as talking about specific policies. and then the international press is -- becomes full of reports that we have no proposals. in a situation where we would reveal our proposals this would be a unilateral action that is breaching faith. on the question you asked me the standard question, what is it better, to be right or to actually suck snooed i doentsucceed?

consider this my personal failure as a politician. in that case i'm very happy to let you say i'm not a very good politician. but i'd rather tell you what i think should be done. instead of using subterfuge. you see, the previous five years are full of greek politicians who signed on the dotted line and they played little strategic games and made commitments they never intended to uphold. didn't work very well. maybe the truth will work. not that i have the monopoly of the truth. but i'm telling you what i truly believe in. so even though i trained as a game theorist this is not a game for me personally speaking. and let me also just because you also asked the question how will you convince the 18 that are standing in front of you? i don't believe that it is as simple as that. appearances are deceptive. there is a great deal of common

ground between us and the 18. there's something else happening here. there is a kind of equilibrium of consensus which is not founded on genuine unity of conviction that everybody is on the right track and our suggestions are wrong. but as adam smith once said, that when you address the baker the brewer, and the butcher you do not speak to them of your needs. you address them on the basis of their interest. so we will always try to couch our arguments in terms of what's in the common interest of europe. because we genuinely believe we're not in this for the greeks. we're in this for maximizing the benefit to the other europeans. it's the only strategy i'm willing to pursue.

>> go ahead. there was one more question? >> there was a question about state enterprises. >> oh, yeah. >> and jobs that are secure, highly paid, and effectively produce patronage. >> highly qualified workers. >> this is obviously a fine ambition. and it's one i share. firstly, let me say we have many fewer state enterprises than we did some years ago. since you've been an observer. privatization is not a process that's going to begin now. it's already happened to a very large extent. very few state enterprises exist. telecommunications gone. the port authority partly gone. we are in the process of considering -- you know there is a tenderremainder.

we'll be very happy to see the development of the railway system in conjunction with private partners and management teams that come from outside. but you're quite right. and not so much for state enterprise but for the whole of the greek bureaucracy, of the greek public sector. now, it is quite clear that what we need in order to do what you're saying, we need to affect the system of proper valuation. under the previous governments under the troika affected was a travesty. i know it from firsthand that in some of these occasions the people who were fired were the most productive and younger. and the ones that were kept were the better connected ones. we know this from universities, don't we? that systems of evaluation can be a double-edged sword. what they do, they create not only a system of valuation but a system of power. and sometimes when their own people use it in order to propagate their own power, the

result is precisely the opposite of that which we intended. this is what we need to do and we need to do it very carefully. we're working on it. and finally, what will i do to stay in the eurozone? we are going to compromise, compromise, compromise without being compromised. that is what we're going to do. >> did you choose the last two questions? but very quick, the question. >> one over there. and then the gentleman here over here. stand up roberto. >> very quickly, please because of logistics. >> i work in local government and we are looking at models that use collective impact where a rising tide can raise all boats. it's compromise but it's also using collective impact. it's collaboration between non-profits, the private sector and public sector. and we're having good success with that here. i'm in fairfax county virginia just outside washington, d.c. there's some interesting progress that's been made in looking at social impact loans. >> over here.

>> how confident are you that if there will be an agreement you'll be able to reach an agreement with institutions? that everyone hopes that agreement will be approved by your parliament. >> if we reach an agreement, it will be approved by parliament. >> regarding your question i'm familiar with social impact bonds. they're a very good idea. but first we need to conclude this negotiation so we can get down to work. >> okay. we do have to close. i'm very grateful. please stay so that the minister can be escorted outside first. that's the rule. but many, many thanks to all of you. and yanis, many thanks. i want to predict there will be an agreement. [ applause ]

[ applause ] >> as this comes to a close, if you missed any of this discussion, make sure to check it out shortly online at c-span.org. check the c-span video library. and be with us later today when united nations secretary-general ban ki moon will be speaking at the national press club. he will become the sixth u.n. speaker -- leader to speak there. iran, ukraine, russia cuba. we do expect the secretary-general to touch on the world's hot spots.

watch that live starting at 7:00 p.m. eastern on our companion network, c-span. >> and the road to the white house 2016 continues as candidates prepare for the upcoming primaries and caucuses. join us tomorrow when the new hampshire republican party kicks off its so-called first in the nation leadership summit. speakers tomorrow will include new jersey governor chris christie, senator marco rubio and former florida governor jeb bush. coverage gets under way tomorrow at noon eastern on our companion network, c-span. then we will continue our coverage from new hampshire on saturday with remarks from senators rand paul, ted cruz, and lindsey graham. saturday coverage starts at 10:00 a.m. eastern. also on c-span. this weekend the c-span cities tour has partnered with comcast to learn about the history and literary life of st. augustine florida. >> ponce de leon may or may not have been searching for the fountain of eternal youth. a lot of people have said that he was out for additional

property for the king of spain and colonization attempts and gold, which is very decidedly true. we do know that one ponce de leon came ashore after searching for good harbor took on water and wood. this area presents one of the few freshwater springs in the area around 30 degrees 8 minutes and is also the location of the 1565 first settlement of st. augustine. 42 years before the settlement of jamestown was founded and 55 years before the pilgrims landed on plymouth rock. >> the hotel ponce de leon was built by henry morrison flagler. now, flagler is a man who is very little known outside of the state of florida, but he was one of the wealthiest men in america. he essentially had been a co-funder of standard oil

company with john d. rockefeller. he was a man who always wanted to undertake some great enterprise. and as it turned out florida was it. he realized that he needed to own the railroad between jacksonville and st. augustine, too, to ensure that gusts could get to his hotel conveniently. so clearly the dream was beginning to grow on flagler. he was a man who had big dreams. he was a visionary. >> watch all of our events from st. augustine saturday at noon eastern on c-span 2's book tv and sunday afternoon at 2:00 on american history tv on c-span 3. >> earlier this week members of the house oversight and government reform committee criticized d.e.a. administrator michele leonhart for not firing agents amid allegations of attending illegal sex parties

hosted by drug cartels overseas. the fbi deputy director and justice department inspector general also appear before the committee during this three-hour ten-minute hearing. congressman jason chaffetz chairs the committee. congressman elijah cummings serves as ranking member. >> good morning. the committee on oversight and government reform will come to order. without objection the chair is authorized to declare a recess at any time. we're here today to talk about some alarming problems that our country's premier law enforcement agencies. the latest report from the department of justice inspector general outlines a number of problems with the conduct of law enforcement officers and the agencies that manage them.

that report outlined a number of key problems. first law enforcement personnel at home and abroad engaged in reprehensible sexual harassment and misconduct that jeopardized our national security. second the agencies where they work mishandled their responses to those incidents by failing to properly report them leading to insufficient punishment and third, the fbi and the d.e.a. tried to hide these incidents from the inspector general by improperly withholding information and encouraging employees not to cooperate with the inspector general. hiding information from the inspector general is simply and totally unacceptable. the department of justice inspector general report documents a number of highly concerning findings about federal law enforcement. one of the most shocking incidents, mr. horwitz described in his report involved d.e.a. agents in colombia partying with prostitutes paid for by drug cartels. while the d.e.a. agents were

spending time with those prostitutes, local colombian police were watching the agents' guns and property. the fact that this happened was bad enough. but none of these agents were even punished by the d.e.a. most of the agents involved were suspended for a few days and allowed to return to work with their security clearances in full. based on the testimony we have read from the d.e.a. administrator, she says she doesn't have the power to simply fire these people. i don't buy it. the american public doesn't buy it. and for the thousands of men and women who serve honorably, they're patriotic, they work hard. they put their lives on the line. this administration, this d.e.a. administrator has got to hold those people accountable and get them out of in. if this is the kind of behavior that they're going to engage in it's totally unacceptable. they should not have a security clearance and they should be

fired. some of these agencies compromised our national security and then essentially got a vacation. the punishment for engaging in this type of behavior was two to ten days off paid leave -- or non-paid leave. that sounds like a vacation to me. it doesn't sound like punishment. to suggest these people couldn't be fired or do something more severe is simply unacceptable. and again, i want to remind our members, this is a matter of national security. we're talking about people's lives. and the d.e.a. as much as anybody puts people overseas in very tough and difficult situations. but when we have bad apples who repeatedly do the same type of behavior, compromise their national security, then they need to lose their national security clearances and they need to be fired. the i.g. found this was hardly an isolated incident. the report highlights repeated

incidences of misconduct including unreported cases of atf training instructors sleeping with their students using government vehicles to facilitate inappropriate sexual relationships, and managers sexually harassing employees and asking them to watch pornography. the report also makes clear that when law enforcement agents engage in inappropriate and ill list ilt sexual behavior the agency they work for oftentimes just simply looks the other way. to use the i.g.'s language, these cases of sexual misconduct are treated as "local management issues." in other words, they're basically swept under the rug. adding to the concerns raised in this report is the fact the d.e.a. and the fbi tried to hide these incidents from their own inspector general. both the d.e.a. and the fbi went out of their way to impede and delay the inspector general's report. according to their report the d.e.a. and the fbi delayed responding to requests for

information, provided heavily redacted documents and even told their employees not to cooperate. for example, the inspector general asked the d.e.a. to run more than 40 search terms to search their data base, and identify relevant information. the three terms three out of the more than 40 that they ran, included sex, prosti, and exposure. not included were brothel, escort harass rape, solicit, and the list goes on. why exclude? why exclude the search terms the inspector general's asking for? it's not the d.e.a.'s responsibility to weed that out. your job is to allow the inspector general to get in there, get his fingernails dirty, and go figure out the truth. but that's not what happened. i want to put up a slide here.

when the d.e.a. finally did provide information after significant delay, in some cases documents were so heavily redacted the i.g. couldn't even tell what the documents were about. this is the type of documentation that the inspector general was given by you at the d.e.a. and we want answers as to why that is. the good men and women who work at the inspector general's office do tough, difficult work. but they can't do anything if they get that kind of material from the d.e.a. and it's not just the d.e.a. it's the fbi. it's the other agencies as well. it's not acceptable. we have a lot of questions for our witnesses here to testify on behalf of both the d.e.a. and fbi. it's incumbent on the leadership of both these law enforcement agencies to weed out employees who put our security at risk, embarrass the country and break the law. to our good men and women the overwhelming majority of men and women who do their job in a

patriotic hard-working way put their lives on the line. god bless you. we need you, we love you, we care for you. but it's also irresponsible of management to not deal with the bad apples. people are going to make mistakes. but these weren't simple mistakes. this went on and on and on. multiple reports of sex parties, of loud parties. to the point that the landlord was actually complaining back to our government about how to control our own federal employees who are serving overseas. again, the people who cause these problems i recognize are a small population -- small percentage of the total population, who have not been held accountable for their dangerous lapses in judgment. i would ask unanimous consent. i'd like to enter two documents into the record. first of all, is from our attorney general eric holder, on april 10th of this year. prohibition on the solicitation of prostitution. how bad is it? one of his last acts as the

attorney general, eric holder has to actually go forward and issue a memorandum explaining to people you that can't do this again. it's almost embarrassing that he has to do this. i appreciate that he did it. to clarify if there's some misunderstanding out there. but i'd like to enter that into the record. i also want to enter into the record a document response. this is to the assistant inspector general for evaluations and inspections. the office of inspector general tanina -- i'm going to slaughter her last name. pelletiere, i guess. from michael dixon the acting chief deputy inspector office of inspection. the last line, "d.e.a. did a second review of the cases the o.i.g. reviewed to determine if the office of professional responsibility had appropriately and thoroughly investigated these allegations. it was found through the review

that the investigations were investigated properly through the d.e.a.'s disciplinary process and related misconduct." basically telling the inspector general that yeah, we did everything we could, that it was proper properly moved -- investigated properly through d.e.a.'s disciplinary process. and that's a sad day for the d.e.a. with that i will yield to the gentleman from maryland the ranking member mr. cummings for five minutes. >> thank you very much mr. chairman. it's set forth mr. chairman, at the beginning of the inspector general's report a well-known doctrine for law enforcement officers. it simply says, and i quote "given the nature of their work, federal law enforcement employees are held to the highest standards of conduct and must be accountable for their actions both on and off duty.

although this tenet should be obvious, it bears repeating here today and bears repeating every day. the inspector general's report details conduct that is simply deplorable for anyone. let alone law enforcement officials serving the united states of america. the report details allegations that a colombian police officer and i quote "arranged sex parties," end of quote, with prostitutes funded by the local drug cartels for these d.e.a. agents at their government-leased headquarters, end of quote. although inspector general's report describes activities between 2005 and 2008 last night our committee obtained new

documents showing that some of these allegations were made far earlier. and some date back as early as 2001. in response to the committee's request, the d.e.a. has now produced to the committee 88 internal reports issued by its office of professional responsibility. one of these reports in particular case number 20120085, goes into great detail about these allegations. however, the agency has warned that releasing the entire report could, and i quote, expose complainants, witnesses, and victims, end of quote. so we must summarize its findings today. this new internal report details years of allegations beginning in 2001 that portray d.e.a. agents as completely out of

control. they appear to have fraternized with cartel members, accepted lavish gifts and paid for prostitutes with no concern whatsoever for the negative repercussions or security vulnerabilities they created. this new internal report describes not one or two isolated incidents but literally dozens of parties with prostitutes in which d.e.a. agents use government funds and government offices. mr. chairman, my staff prepared a summary of this new internal report. and i ask unanimous consent that it be included in the hearing record. >> without objection. >> this new internal report details a truly breathtaking recklessness by d.e.a. agents who are sworn to protect our country. today i want to know how these

egregious misconduct incidents could have continued for so long. for the better part of a decade, without being addressed. the head of this agency, michele leonhart is here with us today. given her extended tenure at d.e.a. during the same time frame of these abuses, we'll have very direct questions for her. the administrator was nominated by president bush in 2003 to serve as deputy administrator of d.e.a. she began serving as acting administrator in 2007. and president bush nominated her to serve as administrator in 2008. she was nominated again by president obama and confirmed by the senate in 2010. the inspector general reports and i quote, says that the

d.e.a. supervisors treated alleged sexual misconduct and sexual harassment as a local management or performance-related issue, end of quote. it also finds that when the administrator learned about these allegations her agency imposed extremely light penalties. for example, when she was informed about while parties involving prostitutes, she, and i quote, counseled the regional director for failing to report the allegations end of quote. that was it. just counseling. no other disciplinary action. one critical question for the administrator is what women who work in these law enforcement agencies must think. with only counseling sessions and suspensions of two weeks or less for misconduct like this

what incentive do women employees have to report sexual harassment by their supervisors? so on friday the attorney general sent a letter to the committee outlining steps to address the issues. we're very pleased to receive that letter. these included re-examining the security clearances of those involved, reviewing d.e.a. procedures for investigating misconduct and predict the solicitation of prostitution regardless of whether it may be legal overseas. these steps are critical but they are clearly long, long overdue. if the first instances of this misconduct occurred in 2001. finally, let me note that these problems transcend politics. on march 27 chairman chaffetz and i wrote a bipartisan letter

to the d.e.a. announcing our investigation investigation, and we are fully committed to working together to investigate these incidents. how the agency responded and whether additional steps are needed to help prevent this misconduct from ever happening again. with that, mr. chairman i yield back. >> i thank the gentleman. we hold the record open for five legislative days for any member who'd like to submit a written statement. we now recognize our first and only panel of witnesses. we're pleased to welcome the honorable michele leonhart, administrator of the drug enforcement agency, the honorable michael horowitz, inspector general of the united states department of justice and mr. kevin perkins, associate deputy director of the fbi the federal bureau of investigation. we welcome all of you and thank you all for being here. pursuant to committee rules all witnesses will be sworn before they testify. if you'll please rise and raise your right hand. do you solemnly swear or affirm that the testimony you're about to give will be the truth the

whole truth, and nothing but the truth? thank you. let the record reflect that all witnesses answered in the affirmative. in order to allow time for discussion, we would appreciate limiting your testimony to five minutes. your entire written statement will be made part of the record. the d.e.a. administrator ms. leonhart we'll recognize you first. >> chairman chaffetz ranking member cummings distinguished members of this committee thank you for the opportunity to discuss the department's report on sexual harassment and misconduct allegations by the department's law enforcement components. d.e.a. has a single mission, to enforce our nation's laug drug laws. our more than 9,000 employees including over 4,600 special agents are dedicated to this single mission, and each one of us took an oath.

the same one i took over 30 years ago. to serve the citizens of the united states with honor professionalism, and pride. d.e.a. personnel located in over 300 offices around the world including 67 foreign countries are doing extraordinary work under often difficult and dangerous circumstances. this includes the investigation and arrest of leaders of the most violent and sophisticated drug cartels in the world. unfortunately, poor choices made by a few individuals can tarnish the reputation and overshadow the outstanding work being done at the d.e.a. i want to assure the members of this committee that like you i am disgusted, i am appalled by the behavior described in the inspector general's report. and to see the integrity of my agency and of federal law enforcement, which i have been a part of for nearly my entire

professional life, damaged by these allegations has not been easy. this conduct is a violation of the high professional standards of conduct that the men and women of the d.e.a. are held to and undermines our effectiveness in fulfilling our mission. and as noted in the report this behavior is contrary to the behavior of the overwhelming majority of those at d.e.a. although the o.i.g. audit generally found that there were relatively few reported allegations of sexual harassment and sexual misconduct the serious allegations o.i.g. highlighted are certainly troubling and describe behaviors that cannot be ignored. in particular, the allegations that agents assigned in bogota engaged in prostitution and accepted gifts from drug traffickers was pursued by our office of professional responsibility. however, the resulting investigation left some questions unanswered. even though the events in

question occurred between 2001 and 2004 and were not reported and investigated until 2010 it is nevertheless important that we hold our employees to the highest standards. and in this instance i assure you that i was quite disappointed in the penalties imposed. however, consistent with the protections afforded to employees under civil service laws, i do not have the ability to change the imposed penalties. i can and do, however, ensure that disciplinary actions are appropriately noted in an employee's personnel file which is taken into consideration when that employee is considered for future positions within the d.e.a. this behavior should not be rewarded. as outlined in my written statement, d.e.a. concurred with and has begun implementing changes responsive to each of the o.i.g. recommendations. however, it is also essential

that we make clear to all employees that this behavior is not acceptable. it is my hope that the additional train can go and guidance that we have provided to all personnel, particularly those stationed overseas, will prevent similar incidents from occurring in the future. d.e.a. has taken specific concrete steps to accomplish, this including ensuring that it is clearly understood by all d.e.a. employees that this kind of behavior is unacceptable. outlining the steps employees and supervisors must take when incidents occur. increasing training for all employees, especially those assigned overseas. clarifying guidelines for disciplinary offices. in the office of security programs and in the office of professional responsibility are made promptly aware of allegations and can take appropriate action in a timely manner. in closing, i want to reiterate

that the kind of activity reported by the o.i.g. has not and will not be tolerated. o.i.g. plays an important role in reviewing our policies and procedures. and i'm committed to working with the o.i.g. to make sure they have access to the documents they need to do their work. we have taken steps to address this kind of behavior, and moving forward, d.e.a. will respond to this kind of misconduct head on and with the decisive resolve you and the public expect. we are open to further recommendations so that we can continuously improve our policies, policies that demand the highest levels of personal and professional integrity from our employees. and thank you again for the opportunity to address you today. >> thank you. now i'll recognize mr. horowitz for five minutes. >> mr. chairman ranking member cummings, members of the committee, thank you for inviting me to testify today. federal agents are held to the highest standards of conduct, both on and off duty.

as a former federal prosecutor and as an inspector general it has been my experience that the overwhelming majority of department agents meet those high standards and perform their work with great integrity and honor, thereby helping keep our community safe and our country safe. nevertheless, we find instances where law enforcement agents engage in serious misconduct and even criminal violations affecting the agency's reputation potentially compromising prosecutions, and possibly affecting the security of the agents and agency operations. furthermore, misconduct that involves sexual harassment affects employee morale and creates a hostile work environment. following the incidents during the president's trip to colombia in 2012 the o.i.g. conduct two-day reviews, one relating to department policies and training regarding off-duty conduct by employees working in foreign countries and one relating to the handling of allegations of sexual harassment and misconduct

by the department's law enforcement components. our off-duty conduct report found a lack of departmentwide policies or training requirements pertaining to off-duty conduct whether in the united states or other countries. this was particularly concerning given that we made recommendations back in 1996 in an o.i.g. report involving allegations at the time about department law enforcement ags agent off-duty conduct. despite those early recommendations we found little had changed in the intervening two decades. we did find however that the fbi made changes, including providing comprehensive training for its employees to help them make day-to-day decisions, to make appropriate day-to-day decisions about off-duty conduct while working abroad. however, we found that the other three department law enforcement components contained little or no information about off-duty conduct before sending their

employees abroad. having one in four law enforcement components effectively preparing its employees for overseas assignments demonstrates the need for departmentwide training and policies. in march 2015 we issued our report on the nature and frequency of reporting investigation and adjudication of allegations of sexual harassment or misconduct in the department's four law enforcement components. the report identified significant systemic issues that require prompt corrective action by the department. these issues include a lack of coordination between internal affairs offices and security personnel, failure to meet -- to report misconduct allegations to component headquarters failure to investigate allegations fully, weaknesses in the adjudication process, and weaknesses in detecting and preserving sexually explicit text messages and images. together our reviews demonstrate the need to improve disciplinary and security processes as well as to clearly communicate to d.o.j.'s and the -- to

communicate to d.o.j. and components' employees the expectations for employee conduct. strong and unequivocal action from department and component leadership at all levels is critical to ensure that department employees meet the highest standards of conduct and are held fully accountable for any misconduct. as we also described in our march 20 sa report the failure by the d.e.a. and fbi to promptly provide information we requested significantly impeded our review. both agencies raised baseless legal objections and only relented when i elevated the issue to agency leadership. however, even then the information we received was still incomplete. we therefore cannot be confident that the fbi and d.e.a. provided us with all information relevant to this review. in addition, after we completed our draft report we learned that the d.e.a. failed to conduct the entire search of its data base we had requested. in order to conduct effective

oversight the o.i.g. must have timely and complete access to documents and materials. this review starkly demonstrates the dangers of allowing the department and its components to decide on their own what documents they will share with the o.i.g. the delays we experienced impeded our work, delayed our ability to discover the significant issues we ultimately identified, wasted department and o.i.g. resources, and affected our confidence and the completeness of our review. unfortunately, this was not an isolated incident. rather, we faced repeated instances in which our timely access to records has been impeded. congress recognized the significance of this impairment and included a provision in the recent appropriations act section 218, prohibiting the department from impeding our timely access to records. nevertheless, the fbi continues to proceed exactly as it did before section 218 was adopted. spending appropriated funds to review records to determine if they should be withheld from the o.i.g. we are approaching the one-year

anniversary of the deputy attorney general's request to the office of legal counsel for an opinion on these matters. yet that opinion remains outstanding and we have been given no timeline for its issuance. although the o.i.g. has been told that the opinion is a priority the length of time that has passed suggests otherwise. instead the status quo continues. the american public deserves and expects an o.i.g. that is able to conduct rigorous oversight of the depending activities. unfortunately, our ability to conduct that oversight is conducting every day that goes by without a resolution of this dispute. i want to thank the committee again for its bipartisan support for our work. and i would be pleased to answer any questions that you may have. >> thank you, mr. horowitz. we'll now recognize mr. perkins for five minutes. >> good morning, chairman chaffetz, ranking member cummings and members of the committee. thank you for the opportunity to appear before you today to discuss issues raised in the inspector general's audit

entitled the handling of sexual harassment and misconduct allegations by the department's law enforcement components. the fbi's policy on sexual harassment and sexual misconduct is very simple. the fbi does not tolerate sexual harassment or sexual misconduct within the ranks. the fbi has a robust disciplinary process guided by well-established policies procedures and practices. it consists of trained special agents in the inspections divisions, internal investigations section, who conduct thorough investigations of employee misconduct. when the investigation is completed, a team of experienced lawyers in the fbi's office of professional responsibility take over. reviewing the investigative materials and determining whether applicable policies rules, regulations, laws, or other legal standards were violated and if so what penalty should be imposed on employees in question up to and including dismissal. in addition, the office of the

inspector general reviews all allegations of misconduct at the fbi prior to any investigation being initiated and all final adjudications of misconduct at the fbi are reported on a regular basis to the o.i.g. we're pleased that the office of the inspector general found relatively few reported allegations of sexual harassment and sexual misconduct in the department's law enforcement components for fiscal years 2009 through 2012. in fact, the o.i.g. found the fbi had the lowest rate of this type of misconduct across the components. while we strive to have no cases of sexual harassment or misconduct, we have and we will continue to implement measures to better address these types of app gaigss. we're also pleased the o.i.g.'s audit recognizes the fbi's coordination between our internal investigation section and our security divisions as a best practice to ensure that misconduct allegations are

evaluated for potential security concerns including continued eligibility to hold a security clearance. notwithstanding these findings there are improvements to be made. we must always look to improve and evolve as an organization. and we appreciate the o.i.g.'s recommendations for making our process better. as a result the fbi concurs with the recommendations in the o.i.g.'s report. the fbi takes very seriously our obligation to enable congress and the o.i.g. to conduct effective oversight of all of our activities. we work closely with the o.i.g. staff to ensure that we are responsive to their requests and that issues are identified and promptly resolved. you may also be aware that we have a good faith disagreement with the o.i.g. regarding what law requires with respect to providing fbi documents that have been obtained pursuant to provisions of law such as the wiretap act, the bank secrecy act, and those related to grand

jury proceedings. we have been completely transparent with the o.i.g. and the leadership of the department of justice with respect to our legal disagreement and are presently awaiting the office of legal counsel to render an opinion as to the correct reading of the law. o'in the interim we are giving the o.i.g. an assumption of access in these audits with respect to title 3, rule 6-e and fcra materials. senior leadership has also directed that our internal business process consulting group rigorously evaluate our processes to ensure that we are as effective and efficient as possible in providing the inspector general with requested documents in a timely fashion consistent with the law. chairman chaffetz ranking member cummings, and members of the community i thank you for the opportunity to testify before you today concerning our commitment to ensuring allegations of sexual harassment and misconduct are addressed in a prompt thorough, and

equitable manner. we take our responsibilities on this topic very seriously and appreciate your interest in these matters. now i'm happy to answer any questions you may have. >> thank you. i'll recognize myself for five minutes. mr. perkins, i totally disagree with your assessment that you're being open and transparent in providing access to the inspector general. that is a topic we will continue to discuss today. but i find your comments to be totally inconsistent with what the inspector general is telling us. we'll need to hash that out. it's one of the reason that's you're here today. i'm glad that you're here. but my questions -- i want to focus with the d.e.a. for a moment. do you have any questions, administrator, as to the accuracy of the o.i.g. report? you don't question the accuracy of the report, do you? >> i don't question the accuracy. >> so this included allegations and examples of d.e.a. agents participating in so-called sex parties where local police were

watching d.e.a. equipment. it included a, quote loud party incidents involving what one would consider bad judgment, allowing prostitutes and allowing those in close proximity with d.e.a. agents to be actually in these agents' rooms and housing. you wouldn't then have a problem with this going away party that involved a d.e.a. assistant regional director at his residence. you wouldn't disagree then with the assessment they had multiple accounts of landlords complaining about the loud parties and whatnot were going in there. is it wrong for prostitutes to be in government housing? >> well, first of all, it's deplorable behavior by those

agents -- >> but is it a violation of policy? >> it's absolutely a violation of policy. >> is it wrong to have a foreign national in close proximity to a d.e.a. agent close to their guns personal effects computer, smartphones? does that pose any sort of security risk? >> of course it poses security risks. and that is why these are very serious allegations. >> did you do any investigation as to the age of the women that were involved? were they just simply there for entertainment? >> the investigation, although it's ten years later, the investigation -- >> don't try to paint a picture that this is one incident ten years ago. there's an incident, for instance, in july of 2009, for instance, where the d.e.a. agent in bogota was accused of physically assaulting a prostitute over a payment dispute. a security guard witnessed this agent throwing a glass and hitting the woman. this agent then claimed that the

woman had had a seizure while she was in the bathroom and cut herself on a candlestick but later admitted that yes, he had engaged with a prostitute. and you know what the punishment for this person was? should days unpaid leave. go on vacation for two weeks. you can sit here and cry a pretty picture about how deplorable it is. but your actions suggest otherwise. because there was not the consequence that should have happened. this person is posing a national security risk, engaging in behavior that is just -- it's embarrassing that we have to talk about this. it's an embarrassment that you don't fire that person. it's an embarrassment that you don't revoke his security clearance. why can't you revoke their security clearance? what prohibits you from revoking that person's security clearance? >> everything you've said about the behavior i completely agree with. as far as the disciplinary penalties that were handed out

in that case i'm very disappointed in that. >> you're the administrator. >> the system that's set up following civil service laws, i don't fire. i can't -- >> can you revoke their security clearance? >> i can't revoke their security clearance. i can ensure that there's a mechanism -- >> why can't you? >> like i did after the cartagena incident make sure that there's a mechanism in place for those security -- for a security review which resulted in those three agents having their security clearances revoked. and they were -- >> but here's the problem. here's the concern i have. high profile. it's in all the media. everybody's reporting about the secret service engaging with prostitutes. you all get nervous about it. and those people have some discipline. but when it's quiet and nobody hears about it and it comes across your desk and your senior staff, can you show me another

example where people were engage engaging in prostitution, in creating these national security problems where you revoked their security clearances? that's what i want to see. because in this case that's how it happened. that wasn't too long ago. you're not disputing any of the facts that show up in the report. there's nothing that -- is there a statute of limitations? is there a limit that you can't reach further back? and yet you allow this person who engages a prostitute, throws glass at her breaks the skin, there's blood all over the place, and they're still employed at the d.e.a.? and you allow that. you're allowing that. i mean, did you try to fire them? did you try to revoke their security clearance? do we need to change that law? what do we need to do? >> well you could look at an exemption like the fbi has. because the current disciplinary process, myself and other directors of federal law enforcement agencies are not allowed to invoke ourselves in

the disciplinary process. if we were exempted or if there was other legislation passed that would allow that that would allow our directors of federal law enforcement to take that action. the same thing with the result like cartagena where they have done these deplorable activities that it is investigated and a decision is made by the agency without appeal rights to the mspb. >> okay. so my concern is high-profile, you take action. when it's not so high-profile and there's a woman involved, you don't take action. and that's a concern. but i hear what you're saying. the last question, because i've exceeded my time. if you are both, the fbi and the d.e.a. sincere about rooting out this problem and finding solutions, then you need to allow the inspector general to

look at the information. why do you continue to prohibit him from seeing that information? why do you hold it back? why not do all 45 search terms? why did you only do three? so i really got to question your sincerity about getting out and rooting out this problem if you don't even know the extent of the problem. you don't even know the extent of the cases because you won't even allow the inspector general and his staff to actually look at the cases that are there. you're limth the inspector from doing their job. which is to help you, help us help them. help the rest of the agency. that's -- i need you to both explain that answer to me, and then i'll yield to the ranking member. go ahead. >> moving forward, because there's a number of things that i put in place after cartagena and you should know that the other incidents i learned about after cartagena, but they had

already been through the system. what we put in place in cartagena moving forward is the model for how we will handle -- >> is the model to impede the ability of the inspector general to look at the information? >> i'm talking about the discipline -- >> i'm talking about the i.g. why can't the i.g. look at this? >> and know that those cases when they were first reported are reported immediately over to the o.i.g. they handed those cases back to us to handle as management as a management review. we felt that the behavior was so outrageous they needed to be investigated. what we've put in place -- >> but you went back and investigated again and still came to the same conclusion that we would have came to the sum conclusion. my time is exceeded. but you gave them two to ten days' paid leave. you put them on vacation. you didn't take the disciplinary action. i've got to yield to the gentleman from maryland. we're going to go actually to

miss plasket first. now recognized for five minutes. plus very generous overtime if you need it. >> thank you, mr. chairman. mr. ranking member. good morning to you all. of course we all find the reports of sexual harassment and misconduct particularly i think the actions of the d.e.a. spanning back to 2001, extremely troubling. and the american people seem understandably outraged over this behavior and particularly women. the i.g. reports states, and i quote, "sexual misconduct and sexual harassment in the workplace also affect employee morale and hamper employees' ability to have and maintain effective working relationships." mr. horowitz can you explain how sexual harassment and sexual misconduct can impact employee morale? >> it has a significant debilitating effect on morale, particularly when the

individuals in the workplace try to report the information and see no results. and that's one of the things we highlight here that's particularly concerning when for example, in three of the incidents we identified in one of twhem learned of them we learned about it -- or it was reported -- >> which agencies is that? >> the three matters involving d.e.a. one is reported in june 2010 through an anonymous letter. that's how that information gets forwarded. the 2001 to 2004 events that are referred to in the report as the sex parties those don't get reported until 2009, 2010, when the corrupt law enforcement officers are charged. >> and what's the rationale that you were given as to why they weren't reported? >> because they were dealt with locally, reviewed locally and didn't need to be reported to -- >> and were they dealt with? >> they were not. and that was the concern we

identified. and on the third incident that we report there that's sent to the o.i.g. and d.e.a. by the state department. not through the d.e.a. employees in the organizations not only need to know they have a safe work environment to go to and a non-hostile work environment, but they need to know they can come forward, report allegations, and they'll be taken seriously abe addressed promptly. >> thank you. miss leonhart, you spoke about how your own outrage being a law enforcement officer for 30 years. i completely understand that. i was raised by a new york city police officer who says every good cop hates the most a bad cop because they make all the good cops -- it completely taints everyone else. but do you agree with the i.g. that sexual harassment negatively impacts morale, and have you seen that in your agency? >> i know it has the potential to do that.

and that is why several directives, reminders -- >> but i didn't ask you its potential. i asked you has it affected the morale? >> in the offices where >> in the offices where the employees attempted to report misconduct and there was nothing ha happened it was not reported up and investigated. i could imagine those employees felt they lost faith in the agency. in a number of other case, however, where they are reported up investigated, the supervisors take immediate action, help the employee whose come forward with a complaint. i see over my 35 years in dea, a huge change more willingness to report. more willingness for supervisors to help that employee who came forward with it and my job is to work on the disciplinary end to

make sure that as these are reported, as they're thoroughly investigated, that the proper discipline is handed out. >> that's interesting that you say that it's your job to deal with the discipline. because you've just stated earlier to the chairman that you don't have any say over the discipline. so, which one is it? do you or don't you have a say over the discipline of these vitds? vitd individuals? >> i am not in the process for investigating, proposing or handing out discipline. what i can do is what i did a year ago. i sent out a directive to every dea employee and said here are the conduct issues i am concerned about. they must be reported they're not acceptable. this is not acceptable behavior in about five or six different areas. and i sent a strong message to

the board of conduct and to the deciding officials that in these type of instances there should be severe discipline handed out. >> what would you consider severe discipline? >> i would consider what happened with the cart hey na agents to be severe discipline. >> what about the agents given two to ten days of paid leave? >> i'm not happy with that. i am not in the disciplinary process. i am very disappointed. >> wait a minute so, you're not in the tis palestinian nar process, but you're responsible for the discipline. >> i'm responsible for the whole agency so, i am responsible to set up a mechanism to send messages to our employees, to hold people accountable if they're not going to, if they're going to conduct this misbehavior, that they face the significant discipline. and that is what i have done over the last couple of years, so tend that message to make our

employees, number one report their allegations and two hold managers accountable for not reporting and number three, make sure that we set up a process, have good opr inspectors. i was one at one time. do the investigation. so that our disciplinary process, our board of conduct that proposes and our deciding officials have all the information they need to be able to impose severe discipline. >> but don't you believe that the morale of your agents and the good men and women of that agency would have been better served and believed you really stood behind that if the information has been more fully and quickly forthcoming to the ig? how can you say that you are on, you weren't pleased with the discipline when you your agency impeded the investigation at the

ig level? >> the ig it gave the investigation back to the ea. >> they gave you the portion of it relating to disciplining the individuals. not the structure of yur agency. >> no, they gave us back the investigation and said that they would not take it. it looked like a management issue. we investigated as misconduct and as we investigated it and we learned more and more, by interviewing a number of witnesses in the old bogota case, the information that was put together, the interviews, all of that was entered into the discipline system and i am very dis disappointed that our discipline system did not do what it needed to do and we have to fix it and i've put mechanisms in place

moving forward to make sure that that does not happen again. because i don't believe that that discipline that was doled out in those cases that chairman chaffetz doled out is close to what it should. >> mr. chairman, rank member, it's my saszment that the discussion here and actions are at a complete disconnect. >> now recognize the gentleman from florida for five minutes. >> thank you, mr. chairman. let me ask, follow up on some of the questioning that's taken place as to whether there was a full investigation of this whole matter. you claim, administrator, that there was a full investigation of the matter. all of these, sexual harassment sexual assault issues that have

been raised. that we're -- that were a part of this inspector general's review. you claim again just tell us. you believe they were fully investigated. >> i believe that they were investigated. i have concerns about the completeness thorough this has of a couple of the investigations. >> so, then you agree with mr. horowitz, is oig, there was a thorough investigation with the incident? >> i agree that some of the incidents were not fully investigated. >> and that was your position, too, the assumption that i have from your report. >> that's correct. >> that in itself raises great questions when the inspector general says these incidents were not fully investigated. so that to me is a big issue right there. >> the gentlemen --

>> i yield for a -- >> i hate to do this to you, on march, but i was just handed -- march 26th of this year, you, miss leonhart as the administrator, sent this e-mail out within your agency and you said these allegations were fully investigated by the dea, office of professional responsibility. >> yield back. >> again, there seems to be a conflict between again what the chairman has just cited, what we've had as previous testimony and what the inspector general. okay, that being said, then i have some question, too. you -- you say you don't have the authority, but you took the authority post cart hey na. it looks like before, you've been there since 2010? is is that right? >> that's correct. you didn't just arrive on the block.

and you see the conduct that took place in 2004 2008 20 -- the sex parties the assaults. all of these things that were going on. cart hey na was two years ago? >> 2012. >> three years ago. >> well what happened, you set up a culture within the agency that you could get away with this and you were there. you must have known some of this was going on. it brought it to the press and our attention. the size and scope of what was going on. the thing that concerns me is before that, some of the people got who were involved, looks like you attended a sex party. one report here, one agent was cleared of any wrong doing seven of ten agents attended to the parties and engaging with prostitutes. so, it looked like the penalty

they got suspensions of a few days. and i think the most was like six days? up to that time. so, that was sort of the standard operating procedure while you were there. until that's the kind of penalty they were getting, right? >> if i can explain congressman. the first, the first i heard of any of these sex parties or the behavior that's described in the report, was actually cart hey na. when it happened, i became concerned is this systemic? has this happened before? and we went back and took a look at where this akctivity had occurred. if anybody had been disciplined for it and we found one boeggota case. >> well, again we have

instances and we have penalties most of them omp gol minor penalties and it is known that some of us has posed great security risks. i guess drug folks were paying for some of this activetivity and they got anywhere from four to six days. only a suspension of 515 days or many is considered serious for adverse employment action, so those people went right on working at that time. so, what i'm saying is the culture existed while you were there, up to car te hey na and there were low penalties. after that, you took some action. some people were fired, is that correct? >> yes, tha the first case that came -- >> and the difference about the members of the committee, this is the same thing whether it's the secret service, dea, irs