WASHINGTON - Former Federal Reserve governor Martha Seger agreed to pay a $5,000 civil penalty after the U.S. Department of Justice investigated allegations that she violated federal conflict-of-interest laws.

In August, Ms. Seger agreed to an out-of-court settlement with federal law enforcement officials. The case resulted from a meeting that Ms. Seger set up and attended on behalf of Kroger Co. with Fed Governor John P. LaWare in 1991, five months after Ms. Seger left the central bank.

The settlement is the first reached with a former or current senior banking regulator under new civil provisions of federal ethics laws established in 1989. Government-wide, it is one of only a handful of civil actions based on these new post-employment restrictions.

Admitted No Wrongdoing

As part of the settlement, Ms. Seger, who served as a Fed governor from July 1984 to March 1991, admitted no wrongdoing. While she confirmed in public documents that she had set up and attended a meeting soon after leaving the Fed, she denied that her actions were made in an attempt to influence the board.

The civil action was described in a recent report of Brent L. Bowen, the Fed's inspector general. It was also highlighted by the Office of Government Ethics in a Nov. 15 memorandum circulated to general counsels and inspectors general governmentwide.

Cited as Precedent-Setter

That memo described the case as one of two significant and "precedent-setting" examples of the justice department carrying out new provisions of federal ethics laws.

By law, high-level government officials are barred from contacting their former agencies with the aim of influencing policy decisions for one year after leaving.

Took Voluntary Leave

Ms. Seger has served as an outside director of Kroger since May 1991. She requested and was granted voluntary leave from that position in February, but has since returned to full service on the board, a Kroger official said.

According to court documents, Ms. Seger arranged a meeting between Mr. LaWare and officials of the national grocery chain in August 1991 to discuss a Fed proposal that banks be required to report certain highly leveraged transactions.

Officials Wrote to Fed

Ms. Seger attended the meeting - along with Kroger chief executive Joseph A. Pichler and chief financial officer William Sinkula - and was paid $1,500 for setting it up.

Kroger officials also wrote the

Fed, urging modification of the proposal. In their letter, they argued that it would diminish credit availability for companies with a high liabilities-to-assets leverage ratio, such as Kroger.

In court documents, Ms. Seger said she made no substantive comments at the meeting and that her actions did not constitute an attempt to influence policy in violation of ethics laws.

She also said she did not ask for payment from Kroger for attending the meeting. he was merely going in to respond to the Federal Reserve's request for public comment," said her attorney, Carl S. Rauh. "t was never our belief that in doing so there was anything improper."

But justice department officials perceived her visit as an attempt to influence policy.

The department chose to accept the civil settlement with Ms. Seger and not to proceed with a criminal investigation.

Sought to Avoid Big Legal Fees

Had she been criminally prosecuted, it is unlikely that stronger sanctions would have been imposed.

Ms. Seger agreed to the settlement, her attorney said, "to avoid years of litigation and substantial legal fees."

Ms. Seger could not be reached for comment. She now serves as a director on a number of corporate boards and is a college instructor, Mr. Rauh said.

In a statement, Kroger said that the company was "pleased that this matter was settled with no suggestion of impropriety on the part of the company or its executives and in fact, no finding of wrongdoing on the part of anyone."

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