Report finds Treasury Whitewater briefings troubling, but not unethical

August 01, 1994|By New York Times News Service

WASHINGTON -- A nonpartisan federal ethics agency has concluded that Treasury officials violated no ethics regulations when they briefed White House officials about an investigation into a savings and loan with ties to President Clinton and his wife.

But the agency found the meetings troubling and said that some senior officials did not fully understand the ethics rules.

The report was prepared by the Office of Government Ethics, the main executive branch agency for handling ethics issues, which is staffed by career civil servants.

It was released at a news conference yesterday by Treasury Secretary Lloyd Bentsen, as he and other senior Treasury officials were preparing to be grilled by members of the House and Senate banking committees this week at separate hearings examining the administration's handling of the Whitewater investigation.

The meetings between White House and Treasury officials, which occurred from September 1993 to last February, concerned a probe by the Resolution Trust Corp. into Madison Guaranty Savings and Loan and one of its law firms, Rose Law of Little Rock, Ark., where Hillary Rodham Clinton had been a partner.

Madison had been owned and operated by a business partner of the Clintons in Whitewater Development Co., an Ozarks real estate venture. The savings association failed in 1989, costing taxpayers more than $60 million.

When the White House counsel, Lloyd N. Cutler, appeared before the House banking committee last week to open the Whitewater hearings, he said the Office of Government Ethics had given him an "informal opinion" that no standards had been violated.

But yesterday's report concluded that -- even though no ethics regulations were violated -- "many of the contacts detailed in the report are troubling." It said that political appointees at Treasury who were also serving as regulators at the Resolution Trust Corp., the savings and loan bailout agency, often confused their roles.

"In the course of our review, it appeared that there were some misconceptions on the part of Treasury employees that may have contributed to the fact that those contacts occurred," the report said.

"Treasury employees who performed both Treasury and RTC functions seem to have failed to appreciate which roles they were performing and, thus, which agency's policies and regulations applied."

While the report provided a summary of Mr. Bentsen's testimony to investigators that he was unaware of the Treasury-White House discussions, it also provided more evidence that he discussed Whitewater generally with his senior aides and with the White House.

The ethics report also said that discrepancies in testimony by two top Treasury officials -- Deputy Secretary Roger C. Altman and the department's counsel, Jean Hanson -- had made it impossible to determine whether certain regulations had been violated.

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