Provide fewer, more quality. That is a great topic. I saw an amazing presentation the other day. My goal is not to have fewer stars the more quality whether that means 800 but higherquality that is a great goal to have. More than less intelligence and this information out there it does not give us the greater picture the having less that are more directed. My goal is not to have less. I would like more. The goal is really necessarily higherquality what to look out for and i commend Western Union for how proactive they are. Yes. Good afternoon thank afternoon, thank you for the presentation, agent kane with Homeland Security presentation. One question. Following up. With trying to counter the financing of isis with al qaeda it was a different structure. What do you think is touchable. I dont have a specific answer for you. The money they have within their holdings. So i dont necessarily have a distinct number for you. It becomes that whole of government and Partnership Approach to using every tool we have in the toolbox whether it be through the department of Defense Authority to tackle oil and other things sanctions as well but i think much like whether were talking about organized crime for the money is when one that my search the see that and go outside that is a avenue with which we can tackle it. Thank you very much. An estimation about abortion that the sources of financing. I dont have a specific number to give you but i can tell you obviously as it has been, as we touched on the demand in the back talked about it now just becomes one avenue transfer the money versus a lot of others. What we are having is the traditional but the interaction of electronic quality essentially. [inaudible conversations] let them know. Prepaid, in a nutshell it is one where you go to your cvs and buy a card visa card, amazon and there is value on that card. Anywhere in the world. That card has value on it. It. You can give someone outside of the world the phone car phone call or email that number email that number and they can use it as cash anywhere in the world. You go to cvs and there are 30 different types of prepaid cards including ones that are not tied to a particular store. Without the money moving, and informal value system old, plays an Important Role but it is there to be abused. And it involves trust between the two people on different sides of the world but has been used for good purposes and other purposes. There is a lot of new and old. A lot of talk about crowdsourcing another variation of the term crowdfunding, the Financial ActionTask Force Report cited a concern. Isil has manipulated networks encouraged donations and conducted a Marketing Campaign in a manner consistent with industry standards established by major crowdfunding companies. Most people read that and here vulnerability. I i am former fbi and former treasury intelligence. I here opportunity. In what way do Something Like that presents an opportunity . Crowdsourcing, the Online Campaign basically much like utilized by the charitable organizations or any other organization that you might see doing a Marketing Campaign in order to raise funds for organizations, isil have used social media. Dont want to travel or are not in a position to or a position to join the fight. You are to do what you can to help the organization. By doing so they have fleshed out this massMarketing Campaign through which they are asking folks to fund them through social media sites. I agree with you much like they are similar to other social media campaigns and communication spreading propaganda it gives us an opportunity to identify and target other individuals. Excellent. Yes, sir. Mike riley. The question about the private sector partnerships. I understand the primary motive committee to have communication often takes a fair amount of time to compile and get to. When you are dealing with matters of Financial Crime and fraud the urgency might be less so. Can you comment on your relationship to the banks with urgent financial matters . Banks are the world is flat, a lot of information out there. Banks, i can talk about Western Union and our Bank Partnerships that are proactive and what they do. In the cases of an attack the banks are proactive in examining what is in their holdings and quickly pushing out. Our relationships obviously we need to file subpoenas or other information but a very Good Relationship with our partners to understand the urgency and they are able to prioritize and get this information as quickly as they feasibly can. I have absolutely no complaints with comes to an urgent matter and the ways and times in which we get the information which is part of this campaign why we are doing this outreach in order to allow them to understand the current and emerging terrorist picture is so that they understand the sense of urgency. A followup in front. Thank you. I comment on that that if i may. It is important to. Out the same threats that the u. S. Treasury through our tf pp program in dc, within one hour and 40 minutes provided 60 leads to the french authorities will the hostages were still held and that is a matter of public record, a record public program, and it is no evidence that we spent together so much facilitated. Some of the more more see the complex. I complex. I wonder if there is a parallel that we can draw. Within our efforts a onesizefitsall approach across the country, for example, the three pilot projects that we have across the country a very different. The office of boston because there are different types of activities in these areas, areas, even though so much is happening in line. It knows no borders. And the term a lot of it is happening online. I wonder, online. I wonder do we see different types of activities, different types of groups being more prominent being more prominent sure several other. A oneway fbi stand up and provide information and every session that i have been at i have taken away and learned. So ill just want to clarify that. And the fact that we do this outreach as much line is we who teach. So i think thats a good leeway into your much like what we talked about is no one picture. Tv, a to finance its necessary, one model and we get caught in a trap. So the uniqueness of radicalization that and look at all of the options. A particular community doing it one way details sometimes people. Has refocused dont even talking about cigna advantage of our focus elsewhere to consolidate its position. I wonder if theres a concern in this area that as we are so supremely focused on isil that this could be an opportunity more traditional under the radar and take advantage of the opportunity for finance to their benefit. Thats a great question and something you know from being in the bureau before having worked terrorism before that. Through the present. I can tell you that we have constantly made sure that because were looking at the threat in front of us that we are not the surly looking at the threat to the right of us. Said Deputy Director of the year. If aligned the potential to act and to combine the prioritization will will the amount that we will simulate somebody [inaudible conversations] potential for other groups sued for somebody with a light but it will have for a but slightly with a little milk in what. Do we put groups that are considered terrorist groups were the United States and may be raising funds and certainly historically have raised funds but do not traditionally target us. So for a moment from the very cutting edge was the status on their activities . Obviously we continue to look at all of our groups. Good slap you in the 2nd see which many do obviously in particular were talking about hezbollah in the last three years the tax. So its still a real threat to us and us citizens overseas. [applause] taking the time and have a good weekend. [inaudible conversations] make me for governor were,. The invention of sewing machines. Tourist attractions. If you the tourist attraction people to supply them with fabric. They were sitting there selling and making things. This was a little boy shirt. From the 1920s. This was an experiment. This will experiment designed for the 20s. Sometimes they were bigger than doing that particular decade. All kinds of things that happened. A regular navigation. It was called controls. They would continue on another 70 miles or so. [inaudible] his work overseas, and they were. Three carriers are undermining the competition and threatening american jobs. The opposite side, the effort commits misguided sense of you write you and the like on that will thank you for inviting the few lists [inaudible conversations] in fact today we released an econometric analysis showing that these carriers are not actually adding travel. Stifling travel. They become partners in a way that is quite detrimental to us jobs. What we are asking our country to do is to invoke the consultation of the open agreements at least the nations. We are Firm Believers in open skies. Consumers, consumers a boon to our employees, a boon to the us airlines but in this case of a hundred and 14 to are being heavily abused and were spending a considerable amount of time and money to uncover the degree of subsidization dumping airlines. Subsidized by Foreign Governments. The Foreign Government policy to go traffic. And this is an important issue that is causing current harm. The harm is accelerating. We have seen with the gulf carriers have done to the carriers in europe. We have seen what they have done to singapore. We know how this movie ends. It does not end well for american consumers. It does not end well for the professional men and women of our airlines. Parker. That follow the merger and you have been ceo at us airways and america west. Now you are seeing these gulf carriers adding new routes routes, and now you want the Us Government to take an unusual step of freezing new routes. It does not sound like what a a competitor would do. Why are you taking this strange step . It is not strange at all but exactly what is called for. The request the request is simply to have consultations. Without that the request, too many talks we would like to see a freeze in the fine but that has not happened. We should note that since we have laid out our case those three carriers have increased the capacity by 25 percent. So they are clearly recommitting to win the race against the clock. The reality is we are not being extremely competitive. Well i recognize and above. [inaudible conversations] previously ran northwest airlines. Go all the way back to 1987 in the industry when you began continental. You have cited the figure 42 billion in subsidies. How do you back up the figure when theyre are public documents that anyone can see that will show that figure command that assuming that these subsidies are happening down the road you will have to show that they are actually harming you and the industry. Will you be able to show arm . 1st on the evidence we started the process a couple of years ago because just by definition and a 380 daily from milan to jfk intuition tells you he did not need to see a flight profitability system to tell you that they cannot work. And we kept reading that the carriers were saying that there were now government subsidies to any of these carriers but over the timeframe of these bilateral neck to that bilateral relationships, 24 nonstops 24 daily nonstops. And it was and it was just counterintuitive because those countries had populations size of north dakota. So normally you so normally you would have that kind of traffic between two points a just would not support. So we began a process to try to figure out what was going on and found the Financial Statements, found them in places like malta and singapore but we spread out around the world and it was kind of interesting. Those countries are required airlines to file Financial Statements. Oddly enough in the us we do not require that. Other countries do certified Financial Statements the show subsidies that fully disclose. So the so the work that we did was not only that, but we also did Research Across all the financial documents we could find around the World Airport financing financing by government command we were able to build a strong case. To put it in a Legal Framework we proved subsidy beyond a reasonable doubt. You cannot refute the evidence. It is overwhelming. The us carriers essentially american and delta have been put in the market. A very big country that has a huge trade relationship with the us particularly for it huge agricultural base. In essence we do not have any aviation trade. We have exited the market completely because essentially we of subsidize Government Strategies come into the marketplace to basically shift the traffic off of us and take us out of the indian market. You think about it us flight carriers out to be in the indian market. But it but it is not sustainable. 41 billion worth of subsidy it is difficult if not impossible to compete. That is immediate. I get analysis. A longhaul widebody triple seven in the us command we count the professional pilots and flight attendants and dispatchers and technicians and ground operations personnel it drives about 900 really 900 really good actually on a gross basis almost 1000 jobs per flight. We put a triple seven or a 74 or and a 350 or a 787 on a daily nonstop across the ocean it drives almost a thousand jobs for each one of these carriers. Those jobs are not here. The airlines you see here today collectively employ about 300,000 people. The budgets are well over 12 billion per year and investment in airplanes and infrastructure command we create Huge Positive trade surplus for our country. Our aviation policy the state of aviation policy in this country is we will act vigorously through all our appropriate means to defend our rights and airlines to ensure that competition is fair and the Playing Field is level by eliminating marketplace distortions such as government subsidy in the case. It is time to get understanding through consultation as to what the appropriate remedies are to create a level Playing Field. I have a lot of questions. I will combine some. What reaction have you had from the Obama Administration to your complaint. Why would they want to poke their finger in the eyes of key allies in the middle east at a time like this . And the other one came up at the camp david meeting that president obama held. If not what is the agenda . Let me answer one of those five or six questions. The longstanding practice of the United States government with respect to trade disputes to bifurcate the trade dispute for matters of National Security and defense. Its a large reason for trade dispute. The amount of subsidies your are dwarfed by more than a factor of two. That was a dispute with very clear allies. Members of nato command yet our government. They understand the difference between trade dispute in we had visited with the department of commerce and transportation the white house ustr the department of state command we have gotten serious interest from serious people that a serious issue that theyre clearly are a lot of issues involved. Our government has asked us in addition to the white paper and the considerable documentation be provided in january they asked us additional questions which we responded to and filed with them a stack of paper about that high in response. They have very good information. We expect them to act upon it. The concern we have candidly is we need them to act on it with urgency because as they mentioned the carriers are taking advantage of this timeframe that 25 percent more than they have as of january 28 which is a serious issue because the harm his current happening, and accelerating. We also know as i mentioned earlier, this accelerates to the. Where it can threaten the very existence. It has in europe. This is a serious issue that our government is taking seriously. Should this have been on the agenda yesterday and president obamas meeting with the goal state leaders . I i do not know the content of those discussions. However no way of knowing. My understanding from the press is those are matters relating to defense. As such, i would not expect these to be discussed because they are sensitive. Very practically, these are the sorts of issues that should be handled in the normal course separate and apart from those kinds of defense meetings. By the way, we also support open skies the state department to work to the issues in the normal channels is in the if you dig in leaving. [inaudible conversations] not part of this. The fact that it is not an issue. You what you are will let me try that one. So it doesnt concern them. Here is the reality. The experience. Will happen here if her government allows this to continue only do the. Reporter that has the material potential impact which is why our employees are so concerned. The moment that happens the three of us are so concerned while sometimes i think everyone pretty much understands if we find International Flights from philadelphia to europe, they are full of people fly nonstop. They are flying from all over the United States. The entire commercial us Aviation System is materially different. It is not right. That is what we will happen. That is why the three of us are so concerned. Concerned. They either dont understand or dont care about Us Commercial aviation. Am sorry. Part of what were saying is meant to harm the business. This is simply about commercial aviation and passenger carriers. So you may have something but they clearly do not understand the impact. What i was going to say sorry to answer a and draft you, with the exception of cargo carriers, they understand our issues. They however have a set of traffic lights they rely on through the middle east which are different than our set of traffic rights. This is an issue for passenger carriers. Cargo carriers our issue can bleed over to some retaliation to their rights. We are so they have no concern but appreciate the damage that is occurring here but their concern his retaliation. Boeing sells airplanes to you and to the gulf and as far as i can tell they are staying on the sidelines in this. Is that where they should stay because it is a nowin situation or do they need to see the concerns that you see in getting involved . Well, boeing has been very straightforward in its neutrality on this issue. That is appropriate. [inaudible conversations] they stay neutral. [inaudible conversations] force the policy. And if you go look at the file ways that were done by boeing against airbus on the subsidies you can take the words boeing and substitute American United in delta and the issue is exactly the same command our position with respect to subsidies is identical so there is the position that boeing and that wto subsidy case. The largest subsidy case which has been proven by documents when compared to any wto case. From that standpoint as we say we have the worst case which is identical to the boeing case and the wto. Research the quotes and the statements made. I have several questions that are just for you. That is where sitting in the middle seat. A special seat. I wrote all over it. [laughter] likes to combine questions. I will combine some for you. One of the questions is along the lines of this, america as part of the Oneworld Alliance. A key partner. British Airways Partner in support of the middle eastern carriers positioned. Qatar is a member of the Oneworld Alliance and apparently you supported their entry into the alliance couple of years ago. And maybe i just will leave it at that. It certainly makes for a peculiar get together awkward when oneworld gets together in one room. How how do you figure all of this out . It does not seem to make sense the way that i just laid it out. Let me try to explain. The alliance because it is important. Customers that want to get the parts of the world that america does not serve such as the middle east. Relationships that allow them. That is what i think is the right thing to do for American Airlines customers. That does not mean that we should sit and watch subsidized travel to not enforce the policy with the countrys. To us this is much less about individual airlines and about other policy. In the policy is the Us Government working with the uae and qatar to enforce that policy. As it relates to bring British Airways they have a different view at the Different Network dynamic than most of us do. Great airline great partner, British Airways very well run and managed. The reality is there global hub does not face the same issues the rest of us do because it is not possible to have subsidized capacity and enormous conscience. The issue on the other front. They are completely different. Traditionally this has been a fight led by delta. Both the old american and us airlines are mostly on the sidelines. Why have they taken such a strong part in the campaign at this time . The data. I like i have been in this business a long time. When i saw the amount of flying my intuition was to say we have seen this before. Airlines come and go and do economic things. They guilty of they go away eventually. They will be gone because you cannot find that much capacity in the middle east and expect to be profitable. Then we saw indeed they were playing by unfair rules. If you allow that to happen the rules become completely different. So once we saw the data we were all in. Up until that time we were skeptical because we had see more proof and frankly just assumed overtime fortunately the work was done, we saw the data. This questionnaire says given that your three airlines have two headtohead daily competitive overlaps, is this not really about protecting passenger flows and connecting opportunities for your European Alliance partners . And what is the Us GovernmentNational Interest in demanding that the government protect your European Partners by forcing passengers to connect in frankfurt, munich paris amsterdam command london . Let me start, this is not protectionism. This is about enforcing trade policy. This is about what our nation stands for in the United States, which is fair competition free of distortion, particularly subsidized distortion. This distortion is off the scale. Orders of magnitude subsidization far beyond anything that i have ever seen in my career. This is a significant issue to us to our employees, to the Us Airline Industry does it affect our foreign partners . Of course but we compete on a global scale. We fly united alone over 500 flights a day to 365 destinations on six continents. We fly either directly or through alliance a competition with carriers every single day. You take the entire network and there are only three destinations not served by a member of star alliance. This is a competitive situation and we are more than happy to and each of us american delta, united we compete globally and are ready and able to complete globally. You cannot compete against a number of the state. And it has never been the trade policy of the United States of america says we have escaped mercantilism to accept subsidized groups because of longterm damage to jobs in the Economic Health of the United States. Out with a study today saying that the university of 70 billion in subsidies 70 billion since 2,000 including bankruptcy and the pension. And so i want to get your response to that. Also other questions. [inaudible conversations] have to hold us back. Wait a minute. I want to take that one right now. I we will turn it to the audience. I would like the airline employees in this room who lost their pensions in bankruptcy or had their pension frozen please stand up. Now, i would like them to tell these people about whether chapter 11 has subsidies . [inaudible conversations] it does not. It did not have subsidies. There there were no government subsidies and it was the employees and creditors in a Legal Process that went through a reorganization. It is just simply not a subsidy under wt the law or us law. It is not a subsidy because it is not a subsidy. It is just nonsense. There is no Government Support that provides support to those carriers when they could not meet their obligations. The commitments creditors employees found that they were not airlines could not meet there commitments and ended up with pensions lost, jobs lost not being paid back all sorts of horrible things. That is what bankruptcy is. If this is their defense fantastic because we disagree. Lets sit down and talk about it. We would like to argue about what bankruptcy really means and help them understand versus the subsidy. That that would be a great conversation to have end is all we want to do. If the argument is it is okay to be subsidized because you guys file bankruptcy come on. Two of the three carriers in their Financial Statements that we were able to uncover growing concern. What that means is they are saying this is not a growing concern. This entity does not have sufficient cash flow profitability to survive and therefore needs to be liquidated. The government stepped in and shovel then more subsidy to keep them afloat. So it is absurd not only from a wto perspective to argue that bankruptcy people pay for those employees, creditors shareholders a devastating thing. Two of those three carriers but for massive government subsidies 17 billion per year almost 17 billion. But for those subsidies the carriers would be liquidated and would not exist today. But you have received government subsidy over the years whether guarantee loans or atc to some degree subsidizing business. Paid for every penny. [inaudible conversations] general taxpayer dollars. We can go. That is not correct. You are not saying you dont get any government subsidy. We do not receive subsidy. The taxes we have had. We do not receive subsidies from the United States part of the Airline Deregulation act. We do not receive subsidies. Tax cuts, loan guarantees you would not call those subsidies. If you look at our tax rate on financials we are a full taxpayer the highest Corporate Tax rate plus we pay some of the highest taxes for fuel passenger facility charges segment fees tsa fees patient fees cbt fees. There is i believe sharon is here the expert 17 taxes that we pay a ticket. [inaudible] overall. Overall. We will do one last question on this issue and then move to general airline issues. Anything you want to say you should say on this question. Do you think that the government will do something at the end of the day. The Washington Post was out with an article earlier this week. They were hesitant you know made it sound like the government would not take action. Do you expect the government to take action . If not will you shut this down and move along . Is there another way to win . Could you see something on export import or some other area of benefit that would stem from your arguments on this matter . I will start and let these gentlemen join in. I believe that it should take action and has taken action. It is enforced consistently. There are major trade agreements in front of congress today. It is important that this administration take action on a significant trade dispute a clear violation of the underlying trade agreement between the us and the uae and qatar and we are confident that they will take action. Should they not take action for some reason there are other avenues that we will need to pursue. And they can start and end their career there. But not because u. S. Government simply ignore the fact we cannot let that happen. [applause] we have been at it over two years and we will not stop. It will just keep going. We have huge support in congress may be 260 members but weve will continue no the future of an industry and it is our to do what is it is a the best interests of the aged Aviation Industry why hasnt that fuel cost been passed on to customers . But talking about pricing the fact that we are together is an oddity it is only because were so close on this issue. This is hard on all of us [laughter] that is Proof Positive how serious this issue is. The thought is is is being seen by consumers throughout the world it is down your over your much of that is due to new capacity and added fuel prices remain high but it is incorrect to disconnect the drop of fuel just to say it is capacity but that would die have happened for the fact that fuel has fallen. Says u. S. Base a Pilot Shortage . I believe it does. Because you have several factors at work. Because of the after 9 11 we had a decade where the industry essentially declined in size and those events were devastating to the industry there is a period of time with no hiring a and it shrunk a fair amount because you have fuel prices from where we started at 20 a barrel then in 2005 it was 60 then 2007 or 2008 it was 150. In the financial bill that well down and now we have demographics catching up there is a huge wave of retirement at the same time now lot of investment goes into fleet and as a result there is a significant demand. In the case of delta we will hire about 1,000 pilots this year. It is not the issue of the mainland carrier they are a good job as we treat them well and it is a solidly profitable industry and people recognize they can have a a terrific career but it affects the regional characters because of the pay structure which is historically has spent in that is why you see carriers over time like united dial down in dialup the mainline is better for our customers as well but with the regional jets are some but for the project so there is no problem whatsoever. There have been conversations private privatizing air Traffic Control to have their run by a nonprofit to look favorable loan this idea but could never get through congress . And then youll see members worried about the staffing so will this group ever give up control . The issue is not the minimum or the leadership there doing a very good job given the resources and governance constraints. But the start and stop budgeting they cannot borrow longterm for investments that have a great deal of difficulty difficulty because of the budgeting problems and the massive micromanagement in congress that is a problem because what the nation needs and deserves is a modern modern air Traffic Control system just like in canada which does a superb job and it is safer and the most technologically advanced in a the world there progressing at a clip of which ensuring currently to support a reformation of the nations air Traffic Control system right now faa is in a conflict of interest deregulates for safety in that operates proven be much better if it was split where s. A. A was a regulator in the air Traffic Control was a separate system is it is a natural monopoly so and has tremendous amount of regulation but not for profit like in canadas is successful that is what we should give the great deal of consideration to. But we do know the Current System does not work well at all. When i start a business we would schedule a flight from here to newark for an hour now is an hour and half because of their rules. Think of the groundbased Radar Technology compared to today. Most of you have better guidance on your honda than we do. [laughter] so we need transformation. There are considerable risks without question in transition issues but just because it is difficult and complex many other nations have done this in this great nation could rise to this. There has been tremendous gains in safety of when something would have been to make adjustments over the years. They have a horrible situation with the crash in germany with the pilots bringing it down. Has that reveal the safety crack or is that so far flung that the Industry Needs to take so with the Pilot Training qualification that they require incredible experience to be the atp holder and in postmen 11 and i believe the europeans are adopting. I lois the final recommendations have come now but we should wait and see of the ntsb you will it always wanted to run its course of the recommendation middle let anything just be such an anomaly. We think our business is different enough so to study it so to make sure we do what we possibly can. With error just say it is such an anomaly but we can cover the bases. Before we get to the final question i just want to mention in the National Press club this leading organization for journalist. For more information go to the web site and to learn about the nonprofit visit the web site. One week from today we will have the all author of the prairie home companion will address the press club band on july 8 we have the cushion of the washington end capitols n. M. With the right to present each of our three guests. [laughter] [applause] these are the extremely valuable artifacts i am sure it will be treasured. Recall slightly aboveaverage. [laughter] so we have the tradition to end of the lighter side and to mention how we have three in every donor of that will happen again. [laughter] but all have the opportunity to save what yours is better than the guys sitting next to you. [laughter] how much time do you have . I will jump out first. [laughter] actually i think post consolidation common industry is so much better than it has ever been and candidly is far out ahead of perception. Delta and American United offer today have a better product they have offered in their history, better customer service, better technology, facilities, fleet common networks, and better customer convenience common schedule utility then we have never had. The reason we compete together so well and so fervently is because we are now in a position that we may that we have never been able to make. Not because you were stupid the poll were. Now we make sufficient time to invest in our businesses and fleet and the technology. We try and a good airline the top for Different Things but we all offer the increasingly better product that is why it is so important to us were not giving up on this issue because it will happen and we will tell the nextgeneration that is so damaging to the state and as if to give us the opportunity to address this very important crown. Thank you. [applause] that was very diplomatic of the. [laughter] but this is really where we compete we compete for that premium customers we are proud of what we are doing. Redo have the luxury product but just looking at his socks for gods sake. [laughter] [applause] we had american our professional carriers. But i do want to say that how big dent deal it is but somehow to be turned on to the media with ceo verses deal with this is not what it is about with Public Policy they are doing what we will into to fly where they can and do the best they can with what they are given. The three of us are not fighting them but petitioning our government because the other two countries are not playing fair. It has nothing to do with people or airlines but trade policy. Mr. Anderson to want to defend your socks . [laughter] no but i feel i should defend his. [laughter] i will yield. Please give a round of applause. [applause] the. Also to the staff include data earned Journalism Institute in the view id like a copy of todays program go to the web site. We are richard. Adjourned. [inaudible conversations] john roth reports on the finding. This runs an hour and 40 minutes. Committee on oversight and government reform comes to order. The chair is authorized to declare a recess at any time. We are meeting to talk about the United Secret Service and t were meeting to talk about the secret Service Accountability march 14 incident. On march 14 to Senior Secret Service special agents one had the title of deputy special agent in charge the special agent in charge. The allegation and the concern was that they drove through a criminal scene investigation of a potential bomb at the whitehouse. Following the incident there was allegations that the two agents were intoxicated after being at a bar downtown for a retirement party. There were no sobriety test given and no repremand given. Everyone involved was told to go home and pretend like nothing happened. To get a better sense on what happened we talked directory to clancy but he could not answer questions. So we scheduled a hearing and he could not answer there. He defered to the office of the Inspector General who investigated the matter. That investigation is complete and we are pleased to have mr. Roth here to talk about the conclusion. Now the facts are in it is time for accountable. The Inspector General determined both agents judgment was impaired by alcohol. Since there was no sobriety test given the Inspector General came to the conclusion based on the facts. Both of the men spent five hours in a bar running a bar tab that included 14 drinks after two hours of an open bar. And the objective behavior of the two experienced secret Service Agents who should have known better. This resulted in them driving into a crime scene and inches from what the rest of the secret service was treating as a potential explosive device and which under different circumstances could have been let me read that quote again. The agents impaired judgment led them to drive into a crime scene inches from what the rest of the secret service was treating as a potential explosive device and which under different circumstances could have endangered their own lives and those in the uniforms responding. If that had been a real bomb these agents would have been lucky to be alive. They were endangering the lives of too many people. The story made its way up the way of command and reached mr. Connelly himself. Required to report what happened, mr. Connelly chose not to. Mr. Connelly even met with his boss, special agent in charge on march 6th to talk about the incident but made no mention of being involved with the incident himself. The other agent had a duty to self report as well and chose not to. The failure to report reflects poor judgment or trying to hide their activities. Senior uniform Division Leaders also violated their duty to report by failing to inform mr. Connellys boss. The head of the Protection Division. Perhaps the situation might have been dealt with earlier if the agents were given a breathalizer test that night. They decided not to administer to them because he was worried to do so would be a quote career killer end quote. He was probably right. The watch commanders decision was likely influenced by the secret Service Reputation for punishing those or ignoring those who filled violations such as drunk driving. That is why the problems of this incident expand beyond this incident. We are concerned the problems within the secret service are continuing. We have thousands that serve correctly but they are not above the law. The secret service has to abide by the law. We have heard Senior Personal are treated differently from the rank and file and the uniform district is treated differently from the agents. These agents believed they could act in a way of getting away with it. The culture of special treatment for senior agents must stop. It as a highly embarrassing and the security incidents need to end. The secret Service Mission is too importantment i want to commend mr. Roth and his team on th gore rooms and pfiffner receiving the allegations. A week after the incident and finished them in less than eight weeks and that says a lot. It was found the two agents were drinking and driving. The report bunks other allegations concluding there is and i quote no evidence that the video of the incident was intentionally deleted or destroyed end of quote. This was a model of how an investigation should be conducted. And it demonstrated why congress and this committee in particular rely rely on. At a previous meeting, i expressed grave concern with the secret Service Culture that seemed to punish those who raise concern, a culture which employees are afraid to report incidents from the higher chain of command. We were discussing an incident in 2011 when multiply shots were fired at the whitehouse. One officer on the scene believed bullets that hit the whitehouse but feared the consequences of disputing her superiors. As a result it wasnt discovered until four days later that the whitehouse had been struck four times. This cultural problem is widespread. The report highlights and i quote the secret services repetition of punishing those who report such violations. According to the Inspector Generals report some officers relayed that the watch commander at the seen on the night of the incident raised concern. According to one officers the commander told the colleagues that the agents who drove in the barricade were and i quote hammered unquote. According to that officer, the watch commander said ordering a sobriety test would have been and i quote a career killer. Therefore no sobriety test was done and both agents drove their vehicles home after a night of drinking. The Inspector General reports concludes and i quote the watch commanders action must be considered in light of a vast disparity between the watch commander and connelly who was in the watch commanders chain of command end of quote. I am also extremely concerned because just two days ago, our Committee Conducted a key interview that further cooberates this view. We interviewed alfonso and he admitted to the staff he had two telephone calls with mr. Connelly on the night of the incident. One while mr. Connelly was in the middle of the suspicious package scene and another as he was driving home later that night. In those calls, mr. Dyson warned mr. Connelly that the watch commander and i quote was going to make it a problem end of quote. Mr. Dyson admitted he told mr. Connelly the watch commander might cause trouble for him. Mr. Dyson stated and a quote it was going to stir the pot, he was going to spread the rumors he was going to get the guys riled up that is what i believe and relayed to to dsic and connelly. This is unacceptable based on the report the watch commander should have done more that night not less. And it is appalling that Senior Secret Service officials would disparage Junior Officers from doing the right thing. The agents and the officers will never have the full trust of their colleagues while the fear of retaliation continues. Let me conclude by thanking the director for his cooperation and quick action. As the Inspector General reports, the director acted appropriately after receiving information about misconduct. The Inspector General said he received outstanding cooperation from the director during the entire investigation. We hoped the director would be available but this is police week and he is attending several events to honor officers who are active and the families of those who have fallen in the line of duty. He called personal the chairman to express his concern and regrets he could not be with us at this hearing and i know that chairman understood that and i understood that and i want it thank him for all he has done. He offered to reschedule for another day and i look forward to hearing from him. With that i yield back. I think the ranking member. It is true i really do believe through experience that the director has been more than responsive and his availability is very much appreciated. We may disagree on some points obviously, but his accessibility has been one of the best that we have seen. I also want to highlight just at this moment the secret service is evidently involved and engaged in apprehending someone trying to fly a drone and basing this on media reports but every day these men and women are dealing with very exceptionally difficult situations with something going wrong at any given time. They do more than we hear and see and we appreciate that. They need to know we love and care for them and they have a no fail mission. That is why when something goes wrong we have to learn from it and make sure that we fix the problems because some of this behavior is unacceptable. The secretary award for valor was given to a secret Service Agent from the home town of scranton, pennsylvania and stationed in washington, d. C. Let me read the photograph. While in route to work on november 22nd 2014 the u. S. Sargeant came upon a Motor Vehicle accident at the baltimore washington parkway and was the first to respond. When he noticed flames from underneath the vehicle he removed the occupant who was later determine to have a broken pelvic and unable to move. I cannot thank the men and women who do this work enough. We expect a lot. We expect people will make mistakes but not ones that put people in danger and certainly never put the president in danger. He is our president. I dont care republican or democrat he is our president and he has to stay safe. That is why it is so pivotal we continue to investigate that. I will hold the record open for five days for any members who want to submit a witness statement. It is with pleasure we welcome Inspector General john roth. He assumed his position on march 10th, 2014 after serving as the director of the drug administration. He had a long career with the department of justice and welcome to Committee Rules all witnesses are here to be sworn. Rise and raise your right hand. Do you swear or affirm the testimony you are about to give will be the truth, the whole truth and nothing but the truth . Let the record reflect the playoff answered in the affirmti affirmtive. Thank you for having me here. We have made the report public as you know. Our objective was to conduct a factual inquiry and assess the reasonableness of the actions of those involved. We conducted the investigation from march 12 until april 30. This inquiry was centered around the activities of mark connolly. His duties include all aspects of white house security. George ovi is the George Ogilvie is the assistant to the officer in charge. He has previously worked in the president ial Protection Division. The report that we wrote is a summary of the investigation. It is attached to my written testimony. The materials of our investigation that we produced are reports of interviews, the physical evidence, and the documents we found, have been turned over to the secret service in accordance with our regular procedures. The Inspector Generals office does not make recommendations as to whether or what personnel action should be taken, but leave that to the secret service. Our duties are purely investigative. Report makes conclusions based on the evidence that we found. For example, it is more likely than not that their judgment was impaired by alcohol. The two agents displayed poor judgment and a lack of Situational Awareness driving into the scene. During their interviews, each denied drinking to excess. We must assess those denials in light of uniform position officers observations, the fact that they spent the previous five areas hours in the bar, and that they drove into a crime scene inches from where the rest of the secret service was treating a potential explosive device, which, under different circumstances, could have endangered their own lives and those uniform Division Officers. Both agents work required to report their conduct up the chain of command but failed to do so. Each told us that they did not believe that what they had done amounted to a reportable incident. Their failure to report reflects either poor judgment on their part for an affirmative desire to hide their conduct. With regard to the actions of the uniformed division, we found that they reacted to the suspicious package generally in accordance with operational procedures. However, the establishment of a perimeter should have been better executed. While there is often confusion inherent in a fastmoving and fluid situation, a number of vehicles and pedestrians came within close proximity to the object after the uniform division had established the safety perimeter. The uniform Division Officers made reasonable attempts while they were securing the scene to canvass the area for the suspect. An early partial description of the vehicle foiled the ability to apprehend the suspect. The secret service investigative agents reacted quickly to identify the suspect and determine the nature of the threat. It was the watch commanders decision to allow connolly and ogilvie to pass without further inquiry into their sobriety. He made this assessment based on his observations. While it would have been preferable if he ordered a field sobriety test or made other inquiries to establish both agents fitness to drive, it his actions must be considered in light of the vast disparity in rank between the watch commander and connolly. The secret Service Reputation for punishing or ignoring those who would further investigate reports and report such violations. The watch commander reported the facts to his superior officer. The watch commander and his subordinates should have been able to rely on their superior officers to appropriately report the situation. Both uniform Division Deputy chief dyson and simpson were notified that night that the agents had driven into an evacuated area and that alcohol was involved. Each could have reported the incident but did not. I would like to publish late to publicly acknowledge the agent who conducted this investigation. They displayed the professionalism that does me proud and i am grateful for their efforts. I would like to express my appreciation for the outstanding cooperation we are seeing from the secret Service Office of professional responsibility and from director clancy himself. That concludes my testimony. I happy to answer any questions you may have. Rep. Chaffetz thank you. I recognize myself for live minutes. There was an email about the incident on march 4. Can you tell me more about that . Mr. Roth certainly. What we found was that let me get to the page of the report that has that. Rep. Chaffetz the version i have is page 15. Mr. Roth thank you, sir. Correct. There was an email that was sent up the chain of command all the way to the president ial Protection Division that described, in very vague terms, that occurred at the entrance. Rep. Chaffetz why do you think the email was forwarded by deputy chief dyson to mr. Connolly himself . Mr. Roth i think it was to let mr. Connolly no know that he was getting out of the incident and he had the necessity to selfreport. Rep chaffetz how did mr. Connolly respond . Mr. Roth during the night, when he was driving home, he called deputy chief dyson, who expressed concerns at the fact that this was getting out . Rep. Chaffetz if deputy chief dyson denied he was aware of this, would you find that denial credible question mr. Roth not knowing the other facts, it would raise some additional questions i would have to ask deputy chief dyson. The president the evidence we have indicates that they had a conversation as connolly was driving home expressing concerns about that email itself. Rep. Chaffetz for him to suggest that he had no idea that connolly was in the car, that could not possibly be true, could it . Mr. Roth our interview with deputy chief dyson, he indicated that it sounded like connolly was in the car as they were having that discussion. Rep. Chaffetz did your investigators asked questions about the video cameras being directed away from the area where they were questioning connolly and ogilvie . That is something that our whistleblowers had concerns about, that the video cameras were moved away so they would not see that interaction. Mr. Roth i was not aware of any of that. What we did find with regard to the video preservation was, as you know, there is only a 72hour preservation of the video. What we found in the course of our investigation was the actual what i would call a barrel incident. Ogilvie striking the barrel and moving the barrel out of the way was burned at the request of the uniform division folks who were on the scene. They wanted to figure out how it was that the barrel was moved. We had no other video. It was nothing else to review other than that snippet that had been burned. Rep. Chaffetz that is one of our deep concerns longterm. Why the policy . You retire you require an airport to retain video for 30 days. They retain this for hours. There were a couple potential crimes going on. There were people trying to detain this person from driving away. That is not all caps it from start to finish. The bumbling of how we would apprehend this person who left a potential bomb. Were there any officers who outranked braun . Mr. Roth there was an assistant to the sack in the president ial Protection Division who was there. In other words, an investigative agent, gs14 level. I am assuming that that outranks braun, but i am not sure. Rep. Chaffetz one of the concerns is that when director clancy new knew. This thing was spreading like wildfire. There were people asking for videotape to be preserved because they were upset. You had former agents, retired agents, a newspaper reporter, members of congress all heard about this before director clancy. Is that feasible . Mr. Roth apparently, that is what the facts show. Rep. Chaffetz so who is responsible . Where did it stop . Where did it not continue up the mr. Roth i think there were several points of failure. One is with connolly and ogilvie, who had a duty to report their own misconduct up the chain. The president ial protection envision division should have been informed by connolly and the Washington Field office should have been informed by ogilvie but were not. That is one point of failure. The other is with the supervisors, the leadership in the uniform division. Both the chief and the deputy chief could have and should have reported it up. Each of them said that the reason they did not do it is because connolly said that he would selfreport, so they did not want to do it. They would rather have connolly do it. Rep. Chaffetz technically, both should have happened, right . They knew that this conduct had happened. Mr. Roth correct. Rep. Chaffetz so why didnt they do it . Mr. Roth i think it was a failure on those individuals parts. Rep. Chaffetz anybody else who should have reported . Mr. Roth those are the four individuals who i believe had primary responsibility. There were others, including the 18 special agents supervisor who was there that evening probably should have reported it up. There are the uniform division individuals themselves who could have reported as well. Rep. Chaffetz my concern is that they did not preserve all the video that was germane to both the leaving of the package, the fleeing of the person, and the incident is. With that, i yield back. Rep. Cummings picking up exactly where the chairman left off, i noticed that in the beginning of your report, you mentioned that you were deferring specific conclusions about systemic issues facing the secret service until you have completed your investigation into at least five or six other incidents. Is that correct . Mr. Roth that is correct . Rep. Cummings what form is that going to take . It seems like we have a culture of complacency, a culture of fear of retaliation. How do you what do you see where are you going with that . Mr. Roth yes, i do. Where we add value is having the independent factfinding ability, to be able to go in and gather documents, interview individuals who are compelled under the dhs rules to talk to us. What we intend to do is very similar to what we did with the bush president s alarm report that was issued a few weeks ago. We are going to find a lot of facts and see what we find. We will publish reports, report them both to the secretary, to the director of the secret service. We think that, at the end of those fact findings, some of the conclusions or some of the themes will become apparent. For example, we are in the process of doing an investigation into the 24th incident at the cdc, where the president was in close proximity to an Armed Security guard unknown to the secret service. We will write a factual report about exactly what happened, where there were failures within that, and publish that to this committee as well as the other committees, the secretary, and the director. Rep. Cummings when the doj comes into the Police Department and looks at patterns of practice, is that similar . Mr. Roth i think that is a good analogy. The only difference is we are going to do this early. We are not going to wait until the end. We think it is important to get the information out as quickly as possible. Rep. Cummings i want to ask you about Agency Policies regarding alcohol. First, let me walk through some details. According to your report, it started about 5 30 and lasted until about 7 30, an open bar. Afterwards, mr. Connelly and mr. Ogilvie stayed at the bar. According to your report, mr. Ogilvie opened a new bar tab at 7 44 p. M. And closed it three hours later. As part of your investigation, you obtained the actual bar tab. I would like to put it up on the screen. Your report says they purchased eight glasses of scott, two vodka drinks, one glass of wine, and three glasses of beer. They were on a roll. Looking at this tab [laughter] the first three items are beers, then a glass of wine, then eight Johnny Walker reds, then two vodka drinks. Investigators said that some were given away to others, but he could not remember to whom. Ask at a minimum, mr. Ogilvie admitted to drinking two scotches and one beer. Mr. Connelly admitted to drinking two beers. They also admitted that they drove the government vehicle that same evening on their way home. Is that right . Mr. Roth that is correct. Rep. Cummings they had a policy that prohibits operating government vehicles while under the influence. Your report says that this policy applies only to uniform Division Officers, not to agents right mr. Connelly or mr. Ogilvie. This seems a bit ridiculous to me. Do you know why . Mr. Roth we do not. What we found with a lot of these policies is that they were put in in kind of a piecemeal fashion. We do not have a good explanation as to why it only applied to the uniform division but not the special agents. Rep. Cummings the secret service is also part of the Homeland Security department of Homeland Security, which has its own policy which prevents all employees from Drinking Alcohol within eight hours of operating a government vehicle. Even if we take the statements at their word in terms of how much they drank that night, it seems they violated these listings dhs policy. Your report says you found no evidence that anyone in the secret service was aware of this policy. That is a problem. I do not see how we can have the elite of the elite and they do not even know what their own rules are. After the incident, secret ciphers secret service issued a new rule. This new rule is even more strict than the dhs offering. Is that correct . Mr. Roth that is correct. Rep. Cummings do you know if the secret service is taking steps to educate their employees and conducting training in that regard . Mr. Roth we did not look at that in this investigation, but it is something we are certainly interested in. Rep. Cummings there are significant problems relating to alcohol at the agency. We have seen that in past incidents as well. But also, the vague policies just make worse the problem. I hope todays hearing is part