Follow the money

February 17, 1997|By Michael Kelly

WASHINGTON -- There is a grim hilarity to the way things are going with the Clinton fund-raising scandal. For a while there, with the stories mounting, the president's defenders argued that it was all perfectly legal, if perfectly revolting. There was, you see, no evidence of an actual quid pro quo. As the president put it in a revealing remark, the only thing the donors were guaranteed was ''a respectful hearing if they had a concern about the issues.'' A deeply respectful hearing.

That's finished. Recent stories in the Wall Street Journal, the Los Angeles Times, the Boston Globe and Newsweek have kicked the slats out from under even this feeble and cynical defense. The traffic in government favors for cash has now been established well past the degree necessary to warrant a criminal investigation.

The Journal reported that Alan Leventhal and Fred Siegel, two Boston businessmen who were personally caffeinated by Mr. Clinton in the White House, and who raised $3 million for the president's campaign, were rewarded last fall with a remarkably toothsome deal.

Their company, Energy Capital Partners, was chosen by Mr. Clinton's Department of Housing and Urban Development to serve as the main administrator of a new $200 million loan program. The structure of the program guarantees Energy Capital millions of dollars in profit, while also insulating the company from risk. Not only is the government putting up the money to be lent, but, unprecedentedly, HUD agreed that, should loans default, Energy Capital will be repaid ahead of the government.

The Journal story also established that the Clinton administration violated at least the spirit of the law banning fund-raising within the White House itself, as well as the Hatch Act, which bars government officials from soliciting funds for a political party.

The story demonstrated that (a) the president and the vice president personally approved the massive fund-raising operation that was ostensibly run by the Democratic National Committee; (b) Harold Ickes, then deputy chief of staff, supervised the operation through weekly Wednesday meetings in the White House; (c) at least some donors were told explicitly that they could buy their way into White House coffees with the president, where they could pitch him personally on their concerns; (d) many of those who attended these special sessions with the president also contributed large sums of money at about the same time, and (e) the DNC arranged meetings between donors and government officials to whom the donors had requested access.

Stories in the Los Angeles Times, Newsweek and the Globe also provided evidence of quid pro quos directly involving Mr. Clinton and then-Commerce Secretary Ron Brown, and also showed that the president and top White House officials were personally involved in soliciting money and funneling it to the Democratic National Committee, in possible violations of the law.

As the Times and Newsweek reported, Mr. Clinton was approached at a Florida fund-raiser two weeks before Election Day by an exporter named R. Warren Meddoff, who handed the president a business card on which he had written: ''My associate has $5 million he is prepared to donate to the DNC.''

Not a bagman

Mr. Clinton's response was not: ''Sir, I am the president of the United States of America. I am not a bagman.'' It was: ''Let me have another one of those cards.''

The president then assured Mr. Meddoff that a member of the White House staff would call him, and a few days later Mr. Ickes called. ''The president asked me to handle this matter,'' he said. Mr. Meddoff told Mr. Ickes that a Texas speculator named William Morgan wished to give big to the Democrats, but he also wanted to get a tax break for his gift. The law prohibits claiming political contributions as tax-deductible.

Mr. Ickes's response was not: ''Sir, I am the deputy White House chief of staff. I cannot advise you on how to take illegal tax deductions.'' It was: ''We have a way to do this.''

Mr. Ickes then asked if Mr. Morgan could come up with $1.5 million in ''the next day or so.'' The following day, Mr. Ickes faxed a memo detailing how Mr. Morgan could make his political contribution and also claim a tax deduction for it.

The memo said ''it would be greatly appreciated'' if Mr. Morgan would wire $500,000 to the bank accounts of several get-out-the-vote organizations, which were supposedly nonpartisan and therefore tax-exempt, but which specialized in the almost monolithically Democratic black vote. Most helpfully, the memo provided Mr. Meddoff with the groups' bank-account numbers. Mr. Ickes also asked Mr. Meddoff to wire $500,000 directly to the DNC's bank account, which certainly looks like a clear violation of the Hatch Act.

But what was the quid for Mr. Meddoff's quo? Mr. Meddoff told the Globe that he went to the fund-raiser in Miami and offered Mr. Clinton $5 million to persuade the president to lift the ban on aid flights to Cuba.

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