Why Eric Holder Represents What's Wrong with Washington

Eric Holder Jr., by all accounts, is a decent, smart, caring, competent fellow. President-elect Barack Obama's pick to be attorney general had a brilliant career in public service: he graduated from Columbia University law school, worked at the NAACP Legal Defense Fund, was a trial attorney at the Justice Department, a Superior Court judge in Washington, DC, a US attorney, and, then deputy attorney general. He has served on various nonprofit boards: George Washington University, the American Constitution Society, Morehouse School of Medicine, Save the Children Foundation, the District of Columbia's Police Foundation, and the Innocence Project. He's been a member of Concerned Black Men for over 25 years. He also, in a way, represents what's wrong with Washington.

That's not because of Holder's infamous role in the Marc Rich pardon. That episode--which Holder will certainly be asked about during confirmation hearings, which are scheduled to begin Thursday--was a case of Washington pay-to-play. There's little doubt that Rich, a fugitive financier indicted for tax evasion, racketeering, and trading with the enemy (Iran), was able to win that last-minute pardon from President Clinton (with Holder, as deputy attorney general, leaning slightly in its favor) because he had hired a former Clinton White House counsel to argue his case and because Rich's ex-wife had pledged money to Clinton causes.

Holder's role in the Rich pardon may not have been instrumental, but it was a mistake--a terrible way to cap off decades of public service. But he is a poster child for something perhaps more pernicious and extensive in the nation's capital: selling out. Months after the Clinton administration ended, Holder went to work for the influential law firm and lobbying shop of Covington and Burling. (He also joined the boards of Eastman Kodak and MCI.)

Holder was doing what so many routinely do in Washington: cashing in. He took years of experience he had gathered as a public servant and rented it to corporations accused of serious wrongdoing. He smoothly went from doing good to doing well. In 2008, according to his confirmation questionnaire, he made $2.1 million at Covington and Burling. And he expects in 2009 to bring in over $2.5 million, including his separation payment.

Holder's private legal work for the Chiquita banana company, which faced the possibility of federal charges for having paid protection money to Colombian terrorists, has earned media attention. Holder also helped Merck settle a massive Medicaid overbilling case that culminated in a $671 million civil settlement. The pharmaceutical company had been accused by the Justice Department of cheating the government regarding Vioxx, its arthritis drug, and Zocor, its cholesterol drug.

But it may be a lesser-known piece of lawyering that best symbolizes how Holder went from prosecuting bad guys to protecting them.

In 2001, Darrell McGraw Jr., the longtime Democratic attorney general of the state of West Virginia, filed a civil case against Purdue Pharma in 2001, the manufacturer of OxyContin, a highly addictive painkiller approved for serious pain treatment. He alleged that the company had engaged in "coercive and deceptive" marketing of OxyContin. McGraw charged that Purdue had disseminated misleading advertisements and had promoted the inappropriate use of OxyContin for minor pain. His lawsuit contended that Purdue had offered doctors free trips to "pain management" seminars where the firm pitched the drug as safe and effective for treating minor pain--without mentioning the drug was supposed to be used only for severe pain and easily abused. McGraw also alleged that Purdue had told "pharmacists that they can get in trouble if they do not fill prescriptions, even if they believe someone may be an abuser of the drug." He maintained that the firm's underhanded practices had caused users in West Virginia to become addicted to the drug. And he noted that while Purdue's annual sales revenue from OxyContin had surpassed $1 billion, the state of West Virginia was saddled with the cost of treating people who had become addicted due to misuse of the drug encouraged by Purdue.

This suit was a serious threat to the drugmaker, and it eventually called in Holder. And in November 2004, the morning that the case was about to go to trial, Holder helped negotiate a settlement. Working in the judge's chambers in West Virginia, he forged an agreement under which the firm would have to pay $10 million over four years into drug abuse and education programs in West Virginia. Purdue would not have to admit any wrongdoing. (Days earlier, the firm had offered the state about $2 million to settle; McGraw had turned down Purdue and had not bothered to produce a counter-offer.)

The settlement was a big win for the company. Ten million dollars was a piddling amount compared to what Purdue was reaping from OxyContin sales. More important, this settlement helped keep the lid on the firm's criminal activities. There would be no trial--and no public release of documents or testimony about the company's actions, which were already being investigated by federal prosecutors. In late 2002, the feds had begun an investigation of Purdue, with the first of what would be nearly 600 subpoenas for corporate records related to the manufacturing, marketing, and distribution of OxyContin.

In May 2007, the company and its three top executives pleaded guilty to federal charges of fraudulently marketing OxyContin by claiming it was less addictive, less subject to abuse, and less likely to cause withdrawal symptoms. Purdue and the three execs agreed to pay fines of $634.5 million*. At the time, US attorney John Brownlee summed up the case:

Even in the face of warnings from health care professionals, the media, and members of its own sales force that OxyContin was being widely abused and causing harm to our citizens, Purdue, under the leadership of its top executives, continued to push a fraudulent marketing campaign that promoted OxyContin as less addictive, less subject to abuse, and less likely to cause withdrawal. In the process, scores died as a result of OxyContin abuse and an even greater number of people became addicted to OxyContin; a drug that Purdue led many to believe was safer, less abusable, and less addictive than other pain medications on the market.

That is, Darrell McGraw, the West Virginia attorney general, had been correct.

Yet Holder had helped the company slip past McGraw's charges. And that permitted the drugmaker to continue its fraudulent ways until the Justice Department finally stopped them. "We didn't know why they settled with us," says Frances Hughes, McGraw's chief deputy attorney general. "Our suspicion is that they did not want anything to come out at the trial." Is it possible that because of Holder's efforts (whether he realized it or not), patients suffered--and perhaps died? But Holder did nothing wrong--in the legal or ethical sense. He was merely working for a client.

Corporate miscreants do have the right to legal representation. Yet Holder, who as a government official in earlier years had targeted wrongdoers, had no obligation to become a hired gun after leaving the Justice Department. He could have become a university president, a law school dean, a nonprofit chairman, a public interest lawyer. True, he would have had to get by on perhaps $250,000 or so a year instead of ten times that amount. But he would have continued a life of service.

Holder did what so many Washingtonians--Democrat and Republican--do upon leaving government: he left the public interest behind. The money was more important. (In his confirmation questionnaire, Holder did note he has "done more than fifty hours of pro bono work in every year except one" at Covington & Burling.) Many of the people who follow this sort of path like to continue to define themselves by their public deeds. When they serve on boards or write op-eds, they tend to ID themselves as a former government official--not as a current shill for this or that in-trouble corporation. They assume they can easily move back and forth between public service and private service--and they are right. In Washington, public officials are not snubbed or denigrated when they become private profiteers. When it's time for them to return to public life, it's usually no big deal. The capital's revolving door spins people into and out of government.

Holder may get a slap or two from the Republicans on the Senate judiciary committee for the Rich pardon or something else. But he's likely to be confirmed. He may well become a good attorney general. Someday, down the road, he might be feted at a fancy testimonial dinner, and all his rather impressive accomplishments will be repeatedly noted. And with the encomiums flowing, there won't be any mention of the Purdue Pharma victims and the highly-paid work Holder did to protect the people and company who caused their suffering.

*This post has been corrected to reflect the fact that Purdue and its executives paid $634.5 million in fines, not $634,515. Sorry.