By and  on May 31, 1994

NEW YORK -- Congressman Paul E. Kanjorski (D, Pa.), who represents the district where The Leslie Fay Cos. has its headquarters and factories, is leading an effort to have the Justice Department and the Securities and Exchange Commission deliver interim status reports on their investigations of the company's accounting scandal.

The eight Pennsylvania House members, in letters dated May 26 to Attorney General Janet Reno and SEC chairman Arthur Levitt, asked for an official update on the apparent ongoing investigations of "alleged fraudulent activities by past and/or present officials" of Leslie Fay.

The company, which has facilities in and around Wilkes Barre, Pa., has been struggling to get out of bankruptcy after it announced last year that the discovery of false accounting entries had turned profits into losses in 1991 and 1992. No reason has been given for why the false entries were made or who made them.

Last year, the company said an independent auditors' report, which was never made public, absolved top management of any implication in the plot. The only actions taken were the dismissals of Donald F. Kenia, corporate controller, and Paul F. Polishan, chief financial officer.

In March, Leslie Fay created further controversy when it announced it wants to drop domestic production entirely, which would eliminate about 1,200 factory jobs in Pennsylvania.

Since then, the company and the union have been locked in a bitter battle over the proposed closings. This has led to calls by the union for a boycott of Leslie Fay products, and the company has sued the union over payment of import fees, called liquidated damages, which the union has as a standard part of its labor contract with manufacturers. The company says the stipulation is a violation of labor law. The labor contract between the ILGWU and Leslie Fay expires today.

"The situation regarding this company has become critical, threatening the jobs and livelihood of literally thousands of our constituents," the House members, all Democrats, wrote to Reno.

The legislators asked Reno to deliver the status report by Friday.

Kanjorski's office also said Friday that a field hearing has been scheduled for June 7 by the House Education and Labor Subcommittee on Labor-Management Relations regarding Leslie Fay's proposed plant closing.

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