[House Report 104-849]
[From the U.S. Government Publishing Office]
Union Calendar No. 461
104th Congress, 2nd Session - - - - - - - - House Report 104-849
INVESTIGATION OF THE WHITE HOUSE TRAVEL OFFICE FIRINGS AND RELATED
MATTERS
----------
FIFTEENTH REPORT
by the
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
together with
MINORITY AND ADDITIONAL VIEWS
September 26, 1996.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
INVESTIGATION OF THE WHITE HOUSE TRAVEL OFFICE FIRINGS AND RELATED
MATTERS
Union Calendar No. 461
104th Congress, 2nd Session - - - - - - - - House Report 104-849
INVESTIGATION OF THE WHITE HOUSE TRAVEL OFFICE FIRINGS AND RELATED
MATTERS
__________
FIFTEENTH REPORT
by the
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
together with
MINORITY AND ADDITIONAL VIEWS
September 26, 1996.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, Jr., Pennsylvania, Chairman
BENJAMIN A. GILMAN, New York CARDISS COLLINS, Illinois
DAN BURTON, Indiana HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York
ILEANA ROS-LEHTINEN, Florida JOHN M. SPRATT, Jr., South Carolina
WILLIAM H. ZELIFF, Jr., LOUISE McINTOSH SLAUGHTER, New York
New Hampshire PAUL E. KANJORSKI, Pennsylvania
JOHN M. McHUGH, New York GARY A. CONDIT, California
STEPHEN HORN, California COLLIN C. PETERSON, Minnesota
JOHN L. MICA, Florida KAREN L. THURMAN, Florida
PETER BLUTE, Massachusetts CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia THOMAS M. BARRETT, Wisconsin
DAVID M. McINTOSH, Indiana BARBARA-ROSE COLLINS, Michigan
RANDY TATE, Washington ELEANOR HOLMES NORTON,
DICK CHRYSLER, Michigan District of Columbia
GIL GUTKNECHT, Minnesota JAMES P. MORAN, Virginia
MARK E. SOUDER, Indiana GENE GREEN, Texas
WILLIAM J. MARTINI, New Jersey CARRIE P. MEEK, Florida
JOE SCARBOROUGH, Florida CHAKA FATTAH, Pennsylvania
JOHN B. SHADEGG, Arizona BILL BREWSTER, Oklahoma
MICHAEL PATRICK FLANAGAN, Illinois TIM HOLDEN, Pennsylvania
CHARLES F. BASS, New Hampshire ELIJAH CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio ------
MARSHALL ``MARK'' SANFORD, BERNARD SANDERS, Vermont
South Carolina (Independent)
ROBERT L. EHRLICH, Jr., Maryland
SCOTT L. KLUG, Wisconsin
James L. Clarke, Staff Director
Kevin M. Sabo, General Counsel
Judith McCoy, Chief Clerk
Barbara Olson, Chief Investigative Counsel
Barbara Comstock, Special Counsel
Joe Loughran, Investigator/Professional Staff Member
Robert Shea, Professional Staff Member
Kristi Remington, Investigator
Laurie Taylor, Investigator
Bud Myers, Minority Staff Director
LETTER OF TRANSMITTAL
----------
House of Representatives,
Washington, DC, September 26, 1996.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
Dear Mr. Speaker: By direction of the Committee on
Government Reform and Oversight, I submit herewith the
committee's fifteenth report to the 104th Congress.
William F. Clinger, Jr., Chairman.
C O N T E N T S
----------
Page
Introduction..................................................... 1
I. Summary overview.................................................2
A. The White House stonewalled all investigations into the
White House Travel Office firings and related matters.. 3
B. The full cooperation pledged by the President was a
hollow promise......................................... 8
C. President Clinton's staff engaged in an unprecedented
misuse of executive power and executive privilege...... 9
D. The consequences of the White House's cover-up have
been dramatic to the Travel Office employees, the
Foster family, and administration officials in
personal, as well as in institutional terms............ 10
II. Committee findings and recommendations..........................11
III. Actions in May 1993 which led to the White House Travel Office
firings.........................................................28
A. The career Travel Office employees are fired, accused
by the White House of wrongdoing and political cronies
are put in charge of the Travel Office................. 28
B. The Travel Office firings were a result of pressure by
Harry Thomason and Mrs. Clinton which accelerated in
the week before the firings............................ 29
IV. The Travel Office firings were part of a campaign payback scheme
that was in place long before May 1993..........................52
A. Harry Thomason sought the travel business from the
early days of the transition, told Mrs. Clinton he
could provide the service and President Clinton and
Mrs. Clinton provided the access to do so. Harry
Thomason maligned the Travel Office employees, as well
as Travel Office contractor UltrAir in order to move
them out of that office. Thomason's travel business
interests posed an inherent conflict with his
involvement in Travel Office decisions or any
solicitation of business in this area.................. 52
1. Harry Thomason's ownership interest in aviation
companies presented inherent conflicts of interest
in his seeking Travel Office business.............. 52
2. TRM, Thomason's company, provided service to the
Clinton/Gore campaign and sought to capitalize on
their association with the new administration...... 53
3. A January 29, 1993 memorandum from Darnell Martens
to Harry Thomason catalogs the ambitious Washington
agenda for TRM: pursuing Travel Office business and
obtaining ``official status'' at the White House... 55
a. Seeking ``Washington opportunities''........... 55
b. Obtaining ``some form of official status''..... 55
c. Seeking the Travel Office business............. 57
4. Putting Martens in touch with the White House to
obtain Travel Office business...................... 57
5. Drafting a memorandum covering his conversation
with Dale which shows he was seeking the Travel
Office business.................................... 58
6. Laying out the strategy to get the Travel Office
business in a March 5, 1993 memorandum: dig up dirt
on the current employees and replace them with
campaign cronies................................... 58
B. Catherine Cornelius pursued her interest in taking over
the Travel Office from the very first days of the
transition and into the early days of the
administration, proposing herself as co-director of the
office................................................. 61
C. Darnell Martens gives the nod to his campaign
benefactor Penny Sample of Air Advantage............... 63
D. Arkansas travel agency World Wide Travel provided
services during the campaign, obtained the DNC contract
in November 1992, and sought White House Travel Office
business............................................... 64
E. Conclusion............................................. 65
V. Harry Thomason pursued opportunities in Government contracts
through his relationship with the President which would have
resulted in a financial benefit to him and his company..........66
VI. Employment status of selected advisors to the President.........69
A. Special Government employee defined.................... 69
B. An individual may undertake certain activities that
qualify for a special Government employee status
without formal appointment............................. 70
C. Treatment of SGES in the executive branch.............. 71
1. Michael S. Berman's activities at the Clinton White
House.............................................. 72
2. Activities of Harry Thomason and Darnell Martens... 74
a. The Justice Department found that there is no
evidence that Martens or Thomason had any
formal status as a Government employee or
special Government employee.................... 76
b. The Justice Department found that there is not
sufficient evidence that either Thomason or
Martens was a de facto Government employee or
special Government employee or that they sought
to avoid the formalities of Government office
in an effort to skirt the conflict of interest
laws........................................... 77
c. The Justice Department found that insufficient
evidence exists that Thomason performed a
Federal function or acted under the supervision
of a Federal employee.......................... 77
d. The Justice Department found that both men
participated in some manner in the inquiry
concerning the Travel Office--at minimum
providing information relevant to the
decisionmakers. It is not at all clear,
however, that such participation would qualify
as ``substantial'' under the statute........... 78
e. The Justice Department found that Thomason and
Martens clearly had no decisionmaking role..... 78
f. The Justice Department found that even if we
could establish that they had some employment
status, we would have difficulty establishing
that the employment was connected with the
Travel Office.................................. 79
3. Activities of Penny Sample......................... 81
4. Conclusion......................................... 82
VII. Lack of competitive bidding.....................................83
A. Background............................................. 83
B. Competitive bidding in the Clinton White House......... 84
C. KPMG Peat Marwick contract............................. 85
D. World Wide Travel...................................... 87
E. Air Advantage.......................................... 88
F. American Express....................................... 89
VIII.The White House initiated a full-scale campaign of misinformation
in the aftermath of the Travel Office firings and put in place a
cover-up from which it could not extricate itself...............90
A. President Clinton led the misinformation campaign from
the first days of the Travelgate debacle............... 90
B. The initial press offensive against the Travel Office
employees mischaracterized the Peat Marwick review and
the FBI's role in order to cover-up the real reasons
for the firings........................................ 91
C. Neither the Congress, the press nor the public bought
the White House story.................................. 93
D. The last best hope for a cover-up? A man from hope,
Mack McLarty........................................... 95
1. David Gergen assumes damage control patrol......... 95
2. White House Management Review: Truth or
obfuscation?....................................... 96
3. The Management Review excluded information which
was exculpatory to Travel Office employees and
derogatory to President Clinton and his cronies.... 97
4. The Management Review minimized the role of Mrs.
Clinton............................................ 99
IX. The White House's failure to admit Thomason's baseless
``kickback'' allegations were false and led to a fruitless IRS
investigation..................................................102
A. Introduction........................................... 102
B. UltrAir................................................ 103
C. The UltrAir matter was not handled under the same
standards as other potential tax violations............ 104
D. Securing the records................................... 106
E. KPMG Peat Marwick: Both sides now...................... 107
F. Bill Kennedy and the IRS............................... 107
G. Kickback allegations disproved by the White House...... 107
H. Internal Revenue Code 6103............................. 108
X. Vincent Foster became increasingly disturbed by the problems
generated by Travelgate--as did numerous high ranking White House
officials......................................................109
A. Despite Foster's initial efforts during the management
review, he was unsuccessful in concealing ``the
clients'' role in the Travel Office firings............ 109
B. The Management Review's inclusion of Bill Kennedy's
reference to the involvement of ``the highest levels''
of the White House in the firings raised problems for
both President Clinton and Mrs. Clinton................ 110
C. Foster was troubled by the prospect of numerous
congressional and criminal investigations into the
Travel Office firings.................................. 112
D. Foster was in the middle of problems related to Harry
Thomason, which were starting to gather steam.......... 115
E. Foster strongly argued for private attorneys to assist
the White House in handling the coming investigations
but Nussbaum rebuffed him. Foster discussed the issues
with outside attorneys and friends..................... 120
XI. Foster's death generated another layer of a cover-up over a cover-
up.............................................................121
A. Foster's death shattered a White House just recovering
from an abysmal first 6 months of administration....... 121
B. At the time of Foster's death on July 20, 1993, his
office contained damaging evidence about the Travelgate
matter and related events. Individuals with a reason to
hide or cover-up documents were at or around Foster's
office prior to the office being sealed................ 122
C. White House Counsel Bernard Nussbaum obstructed
numerous investigations into the Travel Office and the
death of Vince Foster, by withholding the Vince Foster
Travel Office notebook................................. 125
D. Neil Eggleston withheld the Foster Travel Office file
from relevant investigations even after it was
belatedly disclosed to him by Bernard Nussbaum......... 130
E. Craig Livingstone provided testimony about his
activities on the morning after Foster's death which is
inconsistent with law enforcement officials and new
White House documents which were withheld under a claim
of executive privilege until August 1996............... 131
F. Evidence of Mrs. Clinton's involvement in the response
to the finding of Foster's ``suicide'' note. Her
direction not to tell the President about the note, on
July 26, 1993, was withheld from investigators......... 134
XII. The White House has stonewalled all previous investigations and
engaged in an unprecedented damage control operation run out of
the White House Counsel's Office...............................138
A. Hearings were requested in 1993 on this matter......... 138
B. White House history of stonewalling.................... 138
1. GAO investigation.................................. 139
2. OPR investigation.................................. 149
XIII.Stonewalling this committee's investigation....................154
A. History of seeking Travelgate documents from the White
House.................................................. 154
1. Chairman Clinger's efforts to investigate while in
the minority....................................... 154
2. Committee efforts in the 104th Congress............ 155
B. White House protection efforts were particularly keyed
to withholding documents potentially damaging and
shielding key players.................................. 160
1. Harry Thomason role................................ 160
2. Notes of interview with Mrs. Clinton--missing...... 161
3. Missing memo in Kennedy's office which was reviewed
by FBI agents...................................... 161
4. Missing Mack McLarty memo.......................... 162
C. White House response on matters related to Mrs. Clinton 162
D. Pattern of obstruction................................. 165
1. Delays in document production...................... 165
2. Reluctant witness.................................. 166
E. Committee moved to depositions under oath.............. 167
1. ``I don't recall . . .''........................... 167
2. Who couldn't ``recall''............................ 167
XIV. The stonewall begins to crack..................................171
A. Watkins memo begins to explain the true story.......... 171
1. Pressure from First Lady and Mack McLarty.......... 172
2. Pressure from Harry Thomason....................... 174
3. Secret Service incident............................ 175
B. White House made ineffective claims of ``executive
privilege'' over discussions about ``Watkins memo''.... 176
C. Congress holds White House accountable................. 176
XV. President Clinton has abused executive power and executive
privilege and misused the counsel's office in order to effectuate
a cover-up of the Travel Office matter.........................176
A. The long road to getting White House documents--from
foot dragging to executive privilege................... 176
B. The President engaged in an unprecedented use of
executive privilege in the course of the committee's
depositions............................................ 178
C. Executive privilege claims are being asserted for
political security not national security............... 178
1. Conversations with Mrs. Clinton = executive
privilege?......................................... 179
2. Executive privilege for debriefings with outside
attorneys?......................................... 179
3. Executive privilege over White House briefing
papers created for Congress?....................... 179
4. Executive privilege over information regarding
Vincent Foster?.................................... 179
D. The misuse of the counsel's office began under the
tenure of Bernard Nussbaum as President Clinton's first
White House counsel.................................... 180
E. President Clinton's second counsel, Lloyd Cutler,
sustained the pattern of obstruction set by Nussbaum... 181
F. President Clinton's special counsel begins her ``task
list'' of oversight of all congressional as well as
independent counsel investigations..................... 181
G. President Clinton pushes the boundaries of his claims
of executive privilege against producing relevant
documents to Congress.................................. 184
H. The President has insisted that all of his counsel's
maintain an obstructionist position with Congress...... 185
APPENDIX
Supporting documentation for the record.......................... 187
VIEWS
Minority views of Hon. Cardiss Collins, Hon. Henry A. Waxman,
Hon. Tom Lantos, Hon. Robert E. Wise, Jr., Hon. Major R. Owens,
Hon. Edolphus Towns, Hon. John M. Spratt, Jr., Hon. Louise
McIntosh Slaughter, Hon. Paul E. Kanjorski, Hon. Karen L.
Thurman, Hon. Carolyn B. Maloney, Hon. Thomas M. Barrett, Hon.
Barbara-Rose Collins, Hon. Eleanor Holmes Norton, Hon. James P.
Moran, Hon. Gene Green, Hon. Carrie P. Meek, Hon. Chaka Fattah,
Hon. Tim Holden, and Hon. Elijah Cummings...................... 858
Additional views of Hon. Paul E. Kanjorski....................... 887
Union Calendar No. 461
104th Congress Report
HOUSE OF REPRESENTATIVES
2nd Session 104-849
_______________________________________________________________________
INVESTIGATION OF THE WHITE HOUSE TRAVEL OFFICE FIRINGS AND RELATED
MATTERS
_______
September 26, 1996.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______________________________________________________________________
Mr. Clinger, from the Committee on Government Reform and Oversight,
submitted the following
FIFTEENTH REPORT
together with
MINORITY AND ADDITIONAL VIEWS
On September 18, 1996, the Committee on Government Reform
and Oversight approved and adopted a report entitled
``Investigation of the White House Travel Office Firings and
Related Matters.'' The chairman was directed to transmit a copy
to the Speaker of the House.
Introduction
In order to establish a baseline for examining the facts
compiled by the committee, it is useful to begin with the
statements uttered by the President early on in his
administration. It is also useful to measure the statements
against his deeds. This will provide the public with a proper
measure for determining the success of this President in
resolving issues in his own backyard--in particular this issue
known as ``Travelgate.'' As President Clinton stated himself
when this matter first come to light, ``Look at the facts,
evaluate the facts, and draw your own conclusions.'' \1\
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\1\ Transcript of remarks by President Clinton, May 21, 1993.
``It will be a great story [firing the Travel Office
employees]--Bill Clinton cleaning up the White House.''
--Harry Thomason, May 1993 in a conversation
with White House aide Jennifer O'Connor.
``May 12, p.m.--Thomason comes back in DW's [office]--says he
bumped into Hillary and she's ready to fire them all
that day.
--David Watkins notes of May 31, 1993
discussing contacts on the Travel Office.
``Harry says his people can run things better; save money, etc.
And besides we need those people out--we need our
people in--We need the slots-- . . . Is the real story
to be told?''
--David Watkins notes of a conversation with
the First Lady on May 14, 1993.
``If we do any kind of report & fail to address these
q[uestion]s, press jumps on you wanting to know
answers; while if you give answers that aren't fully
honest (e.g., nothing re HRC) you risk hugely
compounding the problem by getting caught in half-
truths. You run risk of turning this into a
`coverup'.''
--Todd Stern, co-author of the White House
Management Review of the Travel Office firings.
``Defend management decision, thereby defend HRC role whatever
it is, was in fact or might have been misperceived to
be.''
--Vincent Foster, July 1993.
``Bernie, are you hiding something?''
--Former Deputy Attorney General Philip
Heymann in a conversation with Bernard Nussbaum
following Nussbaum's refusal to allow law
enforcement authorities to review Foster's
documents, July 1993.
I. Summary Overview
Travelgate is a story about the failure of the Clinton
White House to live up to the ethical standards expected of the
highest office in the land. The wrongdoing of this
administration lies not in the firings of the seven Travel
Office employees. They served at the pleasure of the President.
If the President chose to fire them to reward political
cronies, that was his prerogative. And he must reap the
consequences.
Rather, the wrongdoing occurred after the firings. It
resulted from a desire to hide the truth about who actually
fired them and why.
The committee spent 3\1/2\ years investigating not just who
fired them and why, but the wrongdoing that followed. The
resulting mosaic pieced together from the facts uncovered
reveals the answers the White House refused to disclose. In the
end, the actions of the Clinton administration following the
firings may have a lasting and damaging impact on the Office of
the Presidency.
The committee has found that the motive for the firings was
political cronyism: the President sought to reward his friend,
Harry Thomason, with the spoils of the White House travel
business. A pretext for the firings was created, and the
trigger was pulled.
When the public reacted to the firing with outrage, the
roles of the President, First Lady and Thomason were minimized
as the White House staff engaged in a colossal damage-control
effort.
First, it had to portray the victims of the firings as the
wrongdoers. This was achieved by White House officials
unleashing the full powers of the Federal Government against
the seven former workers. The extraordinary might of the
Federal Bureau of Investigation, the Internal Revenue Service
and the Department of Justice--not to mention the prestige of
the White House itself--all were brought to bear. These actions
constitute a gross abuse of the rights of seven American
citizens and their families.
Second, an enormous and elaborate cover-up operation,
housed in the White House Counsel's Office, sought to prevent
numerous investigations from discovering not only the roles of
who fired the workers and why, but also their efforts to
persecute the victims. In the process, the administration may
have severely damaged the credibility and prestige of the White
House: it obstructed and frustrated all investigations; it
turned the Office of the White House Counsel into a political
damage-control operation; it made frivolous claims of executive
privilege; it abused its powers to smear innocent citizens; and
most important, it failed to level with the American people.
As a result, it is the committee's view that the White
House stands in contempt of its own constitutional
responsibilities to faithfully uphold and execute the
Constitution and laws of the Nation. Never before has a
President and his staff done so much to cover up improper
actions and hinder the public's right to learn the truth. The
following chapters reveal the facts that tell this story.
A. The White House stonewalled all investigations into the White House
Travel Office firings and related matters
Three and a half years ago, the friends of Webb Hubbell,\2\
David Watkins,\3\ Jim and Susan McDougal,\4\ Mike Espy,\5\
Harold Ickes,\6\ Bruce Lindsey,\7\ Bernard Nussbaum,\8\ Susan
Thomases,\9\ Jim Guy Tucker,\10\ Craig Livingstone,\11\ Bill
Kennedy,\12\ and Dick Morris\13\ came to Washington vowing to
provide the ``most ethical'' administration in the history of
the Republic.\14\ One of their first targets in allegedly
``cleaning up'' Washington was the small, tucked-away White
House Travel Office, where then-Director Billy Dale had served
for over 30 years through eight Presidents and had voted for
the new President, William Jefferson Clinton. Before long, Bill
Clinton, who campaigned on the mantra, ``I feel your pain,''
caused a great deal of pain in the lives of seven career
Government employees as well as countless others caught up in
the events known as ``Travelgate.''
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\2\ The former Associate Attorney General for the Clinton
administration convicted of tax evasion and mail fraud for stealing
money from clients of the Rose Law Firm which included the Federal
Government.
\3\ The former White House administrator who resigned in May 1994
after using a Presidential helicopter to play golf. The cost of the
flight was estimated at more than $13,000.
\4\ The former business partners and good friends of Bill and
Hillary Clinton. James McDougal was convicted in June 1996 on 18 counts
of bank fraud and conspiracy. His ex-wife Susan McDougal was convicted
in June 1996 on 4 counts of bank fraud and conspiracy.
\5\ The former Clinton Agriculture Secretary who resigned December
31, 1994, due to potential conflicts of interest relating to his
relationship with the poultry industry (specifically Tyson Foods). The
appointment of an Independent Counsel in October 1994, spurred Espy's
resignation.
\6\ Currently the White House Deputy Chief of Staff. Ickes was the
lawyer for LIUNA (Laborers' International Union of North America), a
union investigated by the Justice Department for alleged mob activity.
\7\ Deputy White House Counsel, close advisor to President Clinton
and unindicted co-conspirator in Independent Counsel Starr's
prosecution of Arkansas bankers, Hill and Branscum. Lindsey was alleged
to have distributed funds from Arkansas Banks for Clinton gubernatorial
campaign.
\8\ The controversial first Clinton White House Counsel who
presided over numerous administration debacles, including Travelgate,
and resigned in March 1994 following the issuance of numerous
Whitewater subpoenas to the White House.
\9\ Close friend and advisor to Mrs. Clinton. Thomases was
allegedly involved in advising Bernard Nussbaum that Mrs. Clinton was
concerned about law enforcement officials having ``unfettered access''
to Foster's office following his death.
\10\ The former Governor of Arkansas who resigned after his
conviction for obtaining illegal loans from David Hale. His prison term
was suspended pending his good behavior while on probation.
\11\ The ex-bar bouncer who was brought to the White House to
direct the Office of Personnel Security after serving on the Clinton/
Gore campaign as senior consultant on ``counter events operations''
including the ``deployment'' of ``Chicken George.'' Livingstone
reportedly hurled racial epithets at a senior aide to Representative
Floyd Flake earlier this year and in 1993 threatened to ``punch in''
the face of a female neighbor. Mr. Livingstone resigned in the wake of
the FBI files matter while appearing before this committee on June 26,
1996.
\12\ Former associate counsel who was and is a partner in Mrs.
Clinton's former law firm. Mr. Kennedy was Craig Livingstone's boss and
distinguished himself by failing to obtain passes for White House
officials in a timely fashion and neglecting to report his ``nanny
tax'' problem when he joined the White House staff. Mr. Kennedy
resigned in November 1994.
\13\ Resigned from the Clinton/Gore '96 Campaign amidst reports
that he had a year-long relationship with a Virginia call girl in his
official office/suite at the Jefferson Hotel. Reported to have told
$200-an-hour prostitute Sherry Rowlands that a paranoid Mrs. Clinton
ordered the FBI files of Republicans for review by the Clinton White
House. Mr. Morris claims he was only talking about ``polling data''
which indicated the American people thought Mrs. Clinton was behind the
FBI files matter.
\14\ Bill Clinton 1992 campaign statement.
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Because the White House has gone to great lengths to
prevent this committee from investigating the Travelgate
matter, the committee must ask: Why have so many on the
Government payroll at the White House worked so hard for so
long to keep the real story about the Travel Office firings and
related events from the American people? Why, to use the words
of a senior White House official, did the President ``run the
risk of turning this into a cover-up?'' \15\ Why did the
President ultimately resort to the most frivolous claim of
executive privilege rivaling even the Nixon administration in
his determined efforts to delay this investigation and push it
into the political season? Why did the White House hide the
fact of President Clinton's knowledge of the firings before
they occurred?
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\15\ Handwritten notes of Deputy Staff Secretary Todd Stern, May
27, 1993, CGEPR 682-683.
---------------------------------------------------------------------------
The Committee on Government Reform and Oversight has
discovered endless cover-ups hidden within cover-ups. One of
President Clinton's lawyers offered a prophetic rationale as to
why the White House continues to keep matters under wraps. In
typed notes over which President Clinton claimed executive
privilege, a White House Counsel tellingly quoted William
Safire:
No politician is stupid enough to hide something when
he has nothing to hide.\16\
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\16\ ``Whitewater Potential Questions'' prepared by White House
Counsel's office, DF 781532.
The evasiveness with which President Clinton's lawyers have
dealt with congressional investigators for more than 3 years
presented the committee with the following dilemma: If there
really is nothing there, why are the President's lawyers
working so hard to hide something?
We learned that the lives of seven innocent long-time
career Government employees were shattered, their reputations
smeared, to make way for the ambitions and arrogance of the
President's friends and family. We learned that the FBI and IRS
became involved in this matter because of Harry Thomason's
false allegations that Travel Office Director Billy Dale
received illegal ``kickbacks'' from a charter airline company.
The White House knew very quickly that the alleged source of
the kickback charges denied ever making them. But upon learning
this fact, the White House did nothing to correct the public
record it had created through misinformation.
In fact, long after President Clinton's White House staff
knew the allegations were false, they continued in their
efforts to make a case against the beleaguered and increasingly
impoverished Billy Dale. The Department of Justice (``DOJ'')
case, U.S. v. Billy Ray Dale, was sorely lacking in evidence.
It was compromised by missing records that had not been secured
by the Clinton White House or the Justice Department.
It was obvious, even to Justice Department prosecutors,
that they had no witnesses who could provide any derogatory
information about Billy Dale. Finally, they were left only with
the dubious claim that the notoriously frugal Mr. Dale lived a
``lavish lifestyle.'' The prosecution revealed to the jury the
``scandalous'' evidence that Mrs. Dale went to a hairdresser
and purchased large quantities of groceries for the Lake Anne
vacation home the two-career Dales saved many years to build
and enjoy. Predictably, Dale was acquitted in less than 2 hours
by a jury of his peers.
Unfortunately, Mr. Dale's speedy acquittal did not put an
end to his 3-year ordeal. The IRS pursued Dale, threatening
income tax audits. The IRS also was busy in Smyrna, TN auditing
the company that did business with Mr. Dale at the Travel
Office, UltrAir.
Only recently was Mr. Dale given a clean bill of health by
the Internal Revenue Service after 3 years of intense scrutiny.
UltrAir had no tax liability and an owner of UltrAir received a
$5,000 refund before the IRS gave up its search for any shred
of evidence to justify its harassment of this small struggling
business.
We learned that the individual responsible for ``securing''
the Travel Office on the day of the firings and maintaining the
records was none other than the now famous ex-bouncer and
political operative, Craig Livingstone, former Director of the
White House Security Office.\17\ Mr. Livingstone was the same
individual seen by Secret Service Agent Bruce Abbott removing
boxes of documents from the White House the morning after Vince
Foster's death in July 1993.
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\17\ Committee deposition of Craig Livingstone, March 22, 1996 p.
115.
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The much-heralded White House Management Review
(hereinafter ``WHMR'') proved to be nothing more than a
whitewash overseen by then-Chief of Staff and childhood friend
of Bill Clinton, Mack McLarty, the very person who had
authorized the Travel Office firings. In the course of the
committee investigation, evidence of a vast cover-up of
President Clinton's knowledge and dealings with his close
friend Harry Thomason as well as his staff's deliberate
minimization of Hillary Clinton's role emerged and still
continues to unfold.
We learned that access does indeed have its privileges. For
the seven fired White House Travel Office employees, this meant
they had to be moved out of the picture to make way for
President Clinton's Hollywood connection, Harry Thomason. The
committee obtained evidence that President Clinton personally
gave the nod for Harry Thomason to come to the White House to
work on the ``Image Project''--not Political Director Rahm
Emanuel as has been represented by the White House. We learned
that having powerful friends and the same lawyer as President
Clinton can make for timid prosecutors.\18\
---------------------------------------------------------------------------
\18\ President Clinton's personal defense lawyer, Robert Bennett,
who handles the Paula Jones case, also represents ``Friend of Bill''
Harry Thomason in both criminal and civil matters. Deputy Chief of
Staff Harold Ickes is another of the colorful clients responsible for
monopolizing Bennett's legal dance card.
---------------------------------------------------------------------------
We learned that a long-hidden memo by a key figure in the
Travel Office affair, David Watkins, disclosed that Hillary
Clinton, based upon information provided by Harry Thomason,
pressured senior White House aides for the firings.\19\ Despite
President Clinton's misleading press accounts that he knew
little about the firings, we learned Bill Clinton actually was
briefed on the firings 2 days before they occurred.\20\ And
then-Assistant to President Clinton for Management and
Administration, David Watkins reluctantly became the designated
fall guy for the firings in order to protect the higher-ups who
had directed his actions.
---------------------------------------------------------------------------
\19\ Undated memorandum by David Watkins entitled ``Response to
Internal White House Travel Office Management Review,'' (otherwise
known as the ``Watkins soul-cleansing memo''), White House document
production Bates Stamp No. CGE 012286-012294. (Hereinafter document
numbers preceded by ``CGE'', ``CGEPR'', or ``DF'' indicate White House
documents.)
\20\ White House Management Review interview notes of Bruce
Lindsey, June 9, 1993, CGEPR 331-334.
---------------------------------------------------------------------------
We learned of the long-hidden notebook kept by Vincent
Foster had been in the office of White House Counsel Bernard
Nussbaum following Mr. Foster's death. The notebook chronicled
Mr. Foster's anguish over Hillary Clinton's role in the
firings, Harry Thomason's potential criminal liability, and
whether the White House scandal containment strategy could be
maintained to stop at the level of David Watkins.
We learned that Mrs. Clinton directed President Clinton's
Chief of Staff, Mack McLarty not to tell President Clinton
about the torn up ``suicide'' note found in Vincent Foster's
briefcase on July 26th, 6 days after his death. Mrs. Clinton
instructed the President's senior aides to wait until a
``coherent position'' was developed before informing the
President.\21\ The note was essentially an outline of a defense
of the Travel Office firings. When it took more than a day to
turn the note over to the proper law enforcement authorities,
both the Attorney General and Deputy Attorney General were so
concerned that the Deputy Attorney General immediately
initiated an FBI investigation into the delay in turning over
the note.\22\ In the investigation of the delay, no one
mentioned Mrs. Clinton's involvement in reviewing the note or
recommending a delay in turning it over.\23\
---------------------------------------------------------------------------
\21\ White House debriefing of David Gergen's attorney Andy
Krulwich, by Miriam Nemetz, July 13, 1995. The debriefing pertained to
David Gergen's deposition before the Senate Whitewater Committee on
July 12, 1995, DF 781220-781224.
\22\ ``Vincent Foster, Jr., Deputy White House Counsel to the
President--Victim; 7/20/93,'' by Special Agent Scott M. Salter, 7/29/
93-8/9/93. The report was made to the Deputy Attorney General who
requested the FBI to enter the captioned investigation and to ``focus
FBI efforts on the turning over of a note found in the office of
Vincent W. Foster.''
\23\ Id.
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We learned of the existence of a letter long withheld from
all investigators which David Watkins wrote to ``Hillary.'' In
that letter, Watkins lamented that the GAO revealed
conversations that Watkins had with Mrs. Clinton. Mr. Watkins
assured Mrs. Clinton that he knew who his ``client'' was and
regretted revealing that Mrs. Clinton told him she wanted
``those people out'' and ``our people in.'' \24\
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\24\ Letter to Hillary Rodham Clinton from David Watkins, May 3,
1994, CGE 39294.
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After a long battle to obtain responsive subpoenaed
documents, White House Counsel to the President Jack Quinn
finally turned over documents one of which led us to discover
that hundreds of FBI files of Reagan and Bush officials,
including that of former Travel Office Director Billy Dale,
were wrongfully requisitioned from the FBI in 1993 and 1994 by
two political operatives, Craig Livingstone and his sidekick
Anthony Marceca, who had specialized in opposition research for
the Democratic Party.
We now know that the individual placed by President Clinton
in charge of the FBI files was the very same individual whom
the White House had put in charge of securing the Travel Office
records on the day of the firings--the now infamous security
officer, Craig Livingstone.
We learned that the White House Counsel's office withheld
Billy Dale's FBI background file for months misrepresenting it
to the committee as a personnel file, effectively keeping the
lid on the Filegate scandal.\25\
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\25\ Letter from White House Counsel Jack Quinn to Chairman
Clinger, June 10, 1996. But see, conflicting testimony by Special
Counsel to the President, Jane Sherburne in her committee deposition of
July 23, 1996, p. 32. (Although Quinn, in his letter suggests that the
White House knew of its possession of the Billy Dale FBI background
file-referring to it as a ``personnel file,'' Sherburne, in sworn
testimony, stated unequivocally that she did not know of the existence
of the file in February of this year.)
---------------------------------------------------------------------------
The fact that Craig Livingstone held the fate of Billy Dale
and his colleagues in his hands, however, came as no surprise
to Mr. Dale. He and his family were subjected to inexcusable,
unending indignities by the Clinton White House, hounded by the
servile Justice Department and the IRS. Mr. Dale was denied the
opportunity to defend himself by a Department of Justice
prosecutor who opposed Dale's defense motion to present facts
detailing the missing Travel Office records. We know that the
prosecutor himself told IRS investigators that records were
missing, most likely removed by Presidential cousin Catherine
Cornelius, who had designs on running the Travel Office.\26\
Why didn't the Justice Department's prosecutor feel he had the
same disclosure responsibilities to Mr. Dale as to other
Government investigative units? This question never was
answered.
---------------------------------------------------------------------------
\26\ IRS Agent Bruce Brown's memorandum of his discussion with DOJ
Prosecutor Stuart Goldberg, August 16, 1993.
---------------------------------------------------------------------------
Fortunately, Mr. Dale was acquitted despite the actions of
the White House and the Justice Department. His colleagues were
totally exonerated of any wrongdoing. Nevertheless, to this
day, President Clinton continues to malign Mr. Dale and
continues to exhibit an unusually thin-skinned response to
press inquiries about this matter. In January of this year,
White House Press Secretary Mike McCurry gave his assurances
that President Clinton would sign a bill to reimburse Billy
Dale's legal expenses.\27\ However, the President recently, and
angrily, reneged on that promise.\28\
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\27\ White House press briefing, January 30, 1996. (Q: ``Would the
President . . . sign . . . such a measure, were it to pass?'' McCurry:
``Yes, he would sign it.'')
\28\ In an August 1, 1996, press conference, Clinton addressed
questions regarding his prior commitment to sign a bill, which would
reimburse Billy Dale for $500,000 in legal fees Dale incurred in his
defense. Clinton angrily declared, ``I never gave my word on that.''
Referring to White House aides who have been asked to give testimony to
this and other investigations, he snapped, ``There are a lot of people
who were never charged with anything, much less offering to plead
guilty to anything . . . Are we going to pay their legal expenses,
too?''
---------------------------------------------------------------------------
Although the committee has been far more successful in
uncovering new information to explain these events than has any
previous investigation, the disappearance of relevant
documents, the selective amnesia among dozens of relevant
witnesses and the sustained obstruction orchestrated by
President Clinton's stable of White House lawyers, have kept
the full story from being told. This continues to be the
standard operating procedure of the Clinton White House to this
day.
B. The full cooperation pledged by the President was a hollow promise
\29\
---------------------------------------------------------------------------
\29\ January, 12, 1996, press briefing. (President Clinton, in
answer to questions about Republican assertions that the White House
has not been cooperative with probes into the Travel Office and
Whitewater affairs, stated: ``We're in the cooperation business. That's
what we want to do.'' In a July 13, 1993 letter to Jack Brooks,
President Clinton stated, ``The Attorney General is in the process of
reviewing any matters relating to the Travel Office and you can be
assured that the Attorney General will have the Administration's full
cooperation in investigating those matters which the Department wishes
to review.''
---------------------------------------------------------------------------
The President's promise to cooperate fully with
investigations into the Travel Office and related matters never
was honored. Requested records never were appropriately
provided to the Justice Department or any other investigative
body over the course of numerous inquiries--including criminal
investigations and the investigation by this committee.
Five separate investigations examined various aspects of
the Travel Office firings. What all five previous
investigations had in common was the White House's success in
denying production of relevant documents to each of them. Such
sustained obstruction over so long a period of time only could
persist if directed from the very ``highest levels.'' The buck
stops at the President.
While this committee has been far more successful in
obtaining relevant records than any other previous
investigation, its painstaking efforts have met with
obstruction from President Clinton's staff at every turn. As a
result, in some areas the committee's investigation is still
inconclusive. Since the firings and especially since the 1994
elections, the White House Counsel's office hired a team of
lawyers for a major damage control operation which we have
concluded focused on withholding from the committee documents
related to Harry Thomason, Mrs. Clinton and President Clinton.
In January 1995, Congressman Clinger became the chairman of
the new House Committee on Government Reform and Oversight and
announced that a thorough investigation into the growing Travel
Office scandal would be undertaken. Three hearings had been
held and subpoenas were issued when documents suddenly
materialized inside the White House that previously had been
subpoenaed by other bodies and requested by the committee. On
March 9, 1996, the U.S. House of Representatives by voice vote
adopted House Resolution 369 which authorized committee staff
to take depositions pursuant to a subpoena in the White House
Travel Office matter.
The committee has deposed 72 witnesses, informally
interviewed 23 witnesses, obtained 58,734 documents from the
White House and approximately 45,000 documents from the Justice
Department, Treasury Department and other agencies.
The committee was determined to ensure that the Clinton
administration did not succeed in its attempt to derail this
Travel Office investigation, as it had with every preceding
investigation. Unfortunately, the committee found that issuance
of subpoenas was not sufficient to ensure the production of all
relevant records. It became necessary for the committee to take
the rare action, holding White House Counsel John M. Quinn in
contempt of Congress on May 9, 1996 by the committee. It was
only after scheduling a May 30, 1996, House floor vote on the
Resolution that the White House turned over 1,000 pages over
which it initially had asserted were ``subject to'' executive
privilege.
However, the White House continued to withhold 2,000 pages
of documents. President Clinton asserted a blanket claim of
executive privilege, stalling for time throughout the summer of
1996. The White House Counsel's Office/Chief of Staff's
Sherburne ``team'' finally provided the committee with access
to the 2,000 pages of overly-redacted documents only when a
second threat of a House floor vote on contempt of Congress was
made. Only at that point did President Clinton finally
relinquish the outstanding subpoenaed documents to the
committee on August 15, 1996. A date calculated to attract the
least attention from the media as it was the same evening that
Senator Dole accepted the Republican nomination for President.
Had the committee failed to pursue its right to obtain this
information, its investigation would have been severely
undermined and we never would have learned the key facts
surrounding the termination of the seven Travel Office
employees. We likely never would have uncovered the Clinton
White House's receipt of hundreds of FBI background files or
evidence of the vast White House cover-up of Travelgate and
Filegate.
C. President Clinton's staff engaged in an unprecedented misuse of
executive power and executive privilege
From the start, the White House Travel Office matter has
reflected a disturbing pattern of misuse of executive power and
resistance by the White House to any type of public
accountability for highly questionable activities. Ironically,
while President Clinton preaches individual responsibility, he
assembled a team of taxpayer-funded White House attorneys to
evade accountability and avoid responsibility for his actions
and those of his staff and advisors. President Clinton created
his own personal legal defense team, the likes of which the
Office of the President has never before seen.
We have learned through documents most reluctantly produced
to the committee that President Clinton's White House Counsel
routinely engaged in the practice of debriefing witnesses'
attorneys after giving sworn testimony. The witnesses, mostly
current and former White House staff, included those being
deposed by this and other committees as well as those
testifying before criminal grand juries. This practice is
unprecedented for any White House undergoing an investigation,
and may result in the waiver of the attorney-client privilege
in matters currently being investigated by the Independent
Counsel.
In addition, other documents contained in the 2,000 were
provided to the committee only after a threat of a
congressional criminal contempt vote. These detailed scripts
were created by White House Counsel for use by minority members
of the committee to thwart this investigation. Such meticulous
executive branch scripting for congressional hearings is
something even the Nixon White House did not dare to undertake.
The information from these debriefings and scripts demonstrates
that the White House was privy to information which was
inconsistent with public statements made by Clinton officials
and even President Clinton and Mrs. Clinton.
It became clear that President Clinton ultimately had
resorted to a blanket claim of executive privilege over these
and other documents which clearly were not covered by any
logical reading of the law of the privilege, in a last-ditch
effort to forestall the committee's review of relevant
documents.
D. The consequences of the White House's cover-up have been dramatic to
the Travel Office employees, the Foster family, and administration
officials in personal, as well as in institutional terms
Undeniably, the Travel Office fiasco and the resulting
cover-up have had sad and even tragic consequences. They caused
irreparable damage to the lives and reputations of seven
innocent Travel Office employees, led to numerous thwarted and
even obstructed investigations, and it seems clear contributed
to the depression and death of one of the central figures in
the firings, former Deputy Counsel to the President, Vincent
Foster.
The White House's reasons for obscuring facts, covering up
the initial events and covering up the cover-ups, often were
petty or otherwise reflected the vanity of a new administration
refusing to admit its mistakes in the matter, or acknowledge
inappropriate interference in other areas. In some cases, it
was an administration seeking favors for friends that, if
implemented, at the very least, would have crossed ethical
lines. It is clear that once the ``official'' story was made
public, any movement toward the truth brought the threat of
damaging legal and political ramifications that the Clinton
White House could not afford to risk.
The extensive documentary record constructed over the past
year has dismantled the White House cover story. The committee
sought records of meetings, phone logs, Secret Service logs and
White House residence records that were the only way to fill in
the missing memories of countless witnesses. While the
recollections of witnesses frequently have been implausibly
flawed, the documentary record often tells a very different and
far more complete story.
Finally, it is the President himself who ultimately must be
held accountable for this persistent pattern of White House
misinformation and misuse of executive power and executive
privilege. Given the alarming turnover of key White House
operatives over the past 3\1/2\ years, only the President
himself could have sustained such a pattern of misbehavior. Why
has President Clinton tried to keep the true story from being
told? A recurring question arises whether the President is
above the law--whether the First Lady is above the law.
The discrepancies, vagaries and omissions between the
``official'' White House account of these matters and the
factual record now properly falls within the scope of the
criminal investigation by Independent Counsel Kenneth Starr,
now known as ``Travelgate.''
II. Committee Findings and Recommendations
Committee Findings
PLANS TO FIRE THE WHITE HOUSE TRAVEL OFFICE EMPLOYEES AND REPLACE THEM
WITH CAMPAIGN PERSONNEL WERE IN PLACE FROM THE EARLIEST DAYS OF THE
CLINTON ADMINISTRATION
Efforts to dislodge the longstanding White
House Travel Office employees began shortly after the
1992 election and continued throughout the Clinton
transition. Presidential cousin Catherine Cornelius,
who had worked on travel arrangements for the campaign,
teamed up with Arkansas-based travel company World Wide
Travel to advocate ``out-sourcing'' the travel
operations at the White House.
White House Administrator David Watkins met
with Cornelius and World Wide representatives several
times prior to January 20, 1993, and Cornelius
submitted several memos during this timeframe.
Meanwhile, World Wide Travel secured the Democratic
National Committee business, an account it still holds
today.
Harry Thomason, whose air charter consulting
company Thomason, Richland and Martens, Inc. (TRM)
provided services to the Clinton/Gore campaign, spoke
with Mrs. Clinton during the transition and pressed his
view that the long-time career employees ``should be
replaced because they were disloyal.'' \30\ Thomason
also told President Clinton about allegations of
wrongdoing in the Travel Office in March 1993.
---------------------------------------------------------------------------
\30\ Notes of White House Associate Counsel Natalie Williams of
conversation with Harry Thomason attorney, Amy Sabrin, undated (but
most likely from January 1996 timeframe), DF 780464-465. The President
exerted a claim of executive privilege over these notes on May 30, 1996
and they were not provided to the committee until August 15, 1996.
---------------------------------------------------------------------------
HARRY THOMASON WHO HAD A FINANCIAL STAKE IN THE TRAVEL BUSINESS,
INSTIGATED THE FIRING OF THE TRAVEL OFFICE EMPLOYEES. MR. THOMASON HAD
PERSONAL AND FINANCIAL STAKES IN ENSURING THAT THE FORMER TRAVEL OFFICE
EMPLOYEES WERE FIRED WHICH MADE IT CLEARLY INAPPROPRIATE FOR HIM TO
HAVE ANY INVOLVEMENT IN THIS MATTER
Harry Thomason was the first person to pass
along rumors about the Travel Office employees to Mrs.
Clinton and President Clinton. (While Mrs. Clinton has
suggested that Vincent Foster may have told her first
about the rumors, Foster's own notes indicate that he
did not know about the rumors until May 12, 1993, when
Watkins and Harry Thomason first approached him. Mrs.
Clinton only raised this issue with Foster the
following day.) Neither Mrs. Clinton nor anyone in Mrs.
Clinton's office could identify any alternative source
of the rumors.\31\
---------------------------------------------------------------------------
\31\ See depositions of First Lady's Chief of Staff Maggie
Williams, July 29, 1996, and Press Secretary Lisa Caputo, May 14, 1996,
and responses to interrogatories from the First Lady of March 21, 1996.
---------------------------------------------------------------------------
The suggestion by President and Mrs. Clinton
that there were ``rumors everywhere'' and Harry
Thomason's sworn testimony about ``a buzz in the air''
of wrongdoing in the Travel Office are not consistent
with the more than 70 depositions conducted by the
committee and dozens of informal interviews. Virtually
no one--except those in direct contact with Harry
Thomason--heard rumors. The White House Management
Review authors confirmed that they discovered no other
source of the rumors and their notes make clear that
Thomason was the source of the rumors. Both the General
Accounting Office review and the DOJ Office of
Professional Responsibility (``OPR'') review concluded
that Harry Thomason passed on the rumors to Mrs.
Clinton.
Harry Thomason and Darnell Martens made
efforts to investigate the Travel Office employees in
the spring of 1993. Martens had Penny Sample of Air
Advantage make calls to UltrAir, the company that had
the Travel Office business, and Martens sought out a
former UltrAir employee for information. Documents
related to these efforts are missing. A March 5, 1993,
memo indicated that Darnell Martens was to receive a
package from Miami Air and would have a ``complete
summary with substantive information'' for Thomason.
These documents never were produced to the committee.
Harry Thomason contacted David Watkins on
April 16, 1993, and passed on rumors of wrongdoing
about the Travel Office. According to Watkins'
contemporaneous notes, Harry Thomason related the
allegations of 5% kickbacks in this conversation.\32\
Watkins then relayed this information to Catherine
Cornelius and asked her to investigate the office.
---------------------------------------------------------------------------
\32\ David Watkins handwritten notes dated April 16, 1993, CGE
29184.
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PRESIDENT CLINTON APPROVED HARRY THOMASON'S ``IMAGE PROJECT'' AT THE
WHITE HOUSE, GIVING THOMASON AN ``OFFICIAL STATUS.'' THIS FACILITATED
HARRY THOMASON'S EFFORTS TO OBTAIN LUCRATIVE GOVERNMENT CONTRACTS
President Clinton, Mack McLarty, George
Stephanopoulos, and Mandy Grunwald ``all approved'' the
``White House Project''--Harry Thomason's image project
at the White House.\33\ Contrary to White House
representations that Rahm Emanuel was responsible for
bringing Harry Thomason to the White House, Mack
McLarty, with President Clinton's approval, authorized
Thomason's work at the White House. Emanuel would not
have had the authority to bring anyone into the White
House in such a fashion. There was a McLarty memo, now
missing, that was circulated to senior staff about
Thomason's role.\34\
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\33\ Committee deposition of Todd Stern, May 29, 1996, pp. 38-39.
[Note: all committee deposition citations reflect the page(s) of the
original deposition transcripts.]
\34\ Jennifer O'Connor's handwritten notes dated August 18, 1993,
identify the memo, CGE 37586; committee deposition of Jennifer
O'Connor, March 29, 1996, p. 45.
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Thomason's White House Project went beyond
simple ``image'' issues and he was involved in meetings
on how to obtain more money for staffing purposes
throughout the White House. The possibility of using
excess Presidential inaugural funds for extra staff
also was being explored by the White House.\35\
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\35\ The White House later inappropriately withheld from GAO
investigators the page of the White House Project memo which discusses
this issue on the grounds that it was a ``political'' issue.
---------------------------------------------------------------------------
HARRY THOMASON ABUSED HIS OFFICIAL STATUS AND WHITE HOUSE ACCESS AT A
TIME WHEN HE HAD A FINANCIAL STAKE IN THE TRAVEL BUSINESS. HARRY
THOMASON'S ACTIVITIES AT THE WHITE HOUSE MAKE HIM A SPECIAL GOVERNMENT
EMPLOYEE TO WHICH THE CONFLICT OF INTEREST LAWS APPLY
Darnell Martens, Harry Thomason's partner in
his air charter consulting company, TRM, wrote a
January 29, 1993 memo to Thomason outlining how they
should pursue ``Washington opportunities'' in the early
days of the Clinton administration. These opportunities
included seeking White House travel business as well as
a quarter-of-a-million dollar GSA contract to survey
all non-military Government aircraft. Documents
provided to this committee and only subsequently
provided to the Justice Department, clearly establish
that TRM was seeking both Travel Office business and
the GSA contract.
Darnell Martens, with the assistance of his
partner Harry Thomason, contacted Billy Dale in
February 1993 seeking the Travel Office business.
Martens' post-May 19, 1993, explanations that he was
seeking the business on behalf of others, contradicts
his own documents of March 5, 1993, in which he
advocates that ``the Administration . . . disband the .
. . system in favor of the functions being outsourced
to TRM/Air Advantage.'' Furthermore, TRM would have
stood to benefit from potential commissions as well as
business goodwill even if only seeking the contracts
for others.
On or around February 16-17, 1993, Harry
Thomason gave President Clinton a February 11, 1993,
memo drafted by Martens soliciting the GSA contract to
audit non-military aircraft. At this time, Thomason was
working at the White House and staying as a guest in
the White House residence.\36\ At or around this same
time, Harry Thomason first told President Clinton of
rumors of wrongdoing in the Travel Office and informed
President Clinton he would speak with the appropriate
office at the White House about this. President
Clinton, fully aware of Thomason's business interests
in this area, took no action to discourage Thomason's
involvement.
---------------------------------------------------------------------------
\36\ See committee deposition of John Podesta, June 5, 1996, p. 23.
Podesta was then-Staff Secretary at the White House, testified that he
did not see the February 11, 1993, memo go into President Clinton's
office but he did see it coming out of his office. Harry Thomason
stayed at the residence on February 16 and 17, 1993. Thomason recalls
bowling with President Clinton on this occasion--and beating the
President--and he is listed in White House residence records but he
does not recall whether he passed on the February 11 memo (CGE 2223) on
which the President wrote a February 17, 1993, note. Committee
deposition of Harry Thomason, May 17, 1993, p. 122.
---------------------------------------------------------------------------
President Clinton reviewed the TRM proposal
for the GSA contract and set in motion efforts to
assist TRM in obtaining Government business by sending
a note to Mack McLarty reading: ``Mack/These guys are
sharp/shd discuss/w/Panetta/Lader.'' On February 17,
1993, Staff Secretary John Podesta passed along this
memo from the President to McLarty, David Watkins and
Mark Gearan for ``ACTION.'' \37\
---------------------------------------------------------------------------
\37\ February 17, 1993, buck slip from John Podesta to Mack
McLarty, Mark Gearan and David Watkins marked for ``ACTION'' attached
to a February 11, 1993, memo from Darnell Martens to Harry Thomason,
CGE 02296.
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Mr. Thomason, who then was working on the
White House ``image'' project for the purpose of
obtaining good press stories for President Clinton,
told David Watkins, Jennifer O'Connor and others that
firing the Travel Office employees would be a ``good
press story.'' Thus, creating a good news story to
bolster President Clinton's image was an objective of
the Travel Office firings. This was all done in the
course of Thomason's duties in the image project for
which even White House Counsel Beth Nolan opined that
he was a special Government employee.
Mr. Thomason was involved in numerous meetings
concerning the Travel Office. Thomason's advice on
restaffing a new Travel Office was both offered to Mrs.
Clinton and relayed to David Watkins and Catherine
Cornelius. Ms. Cornelius was instructed to meet with
Thomason about the Travel Office. Thomason tasked
Darnell Martens about having Penny Sample come to
Washington and the White House to work in the Travel
Office. While an SGE for purposes of the imaging
project, Thomason independently became an SGE for
purposes of the Travel Office by virtue of his integral
involvement in these matters.
THE WHITE HOUSE COMMUNICATIONS OFFICE, IN CONJUNCTION WITH THE WHITE
HOUSE COUNSEL'S OFFICE, PUBLICLY ACCUSED THE TRAVEL OFFICE EMPLOYEES OF
CRIMINAL CONDUCT AND MISUSED AND MANIPULATED THE FBI TO FURTHER THEIR
POLITICAL AGENDA
George Stephanopoulos and Dee Dee Myers
relayed wrong information to the press about reasons
for the firings and the involvement of the FBI. On May
21, 1993, the FBI again was misused and abused when
Stephanopoulos and Myers summoned the FBI
Communications Director to in effect come to the White
House and take dictation for the FBI press release that
the White House wished for, and insisted that the FBI
release.
After the Travel Office firings were announced
and met with great controversy with the press, the
White House immediately initiated a disinformation
campaign. The White House tried to contain the
responsibility for the firings at the level of David
Watkins even though his actions undeniably were
precipitated by pressures from above.
The White House announced the Travel Office
firings and claimed they resulted from a Peat Marwick
review that had yet to be completed. Peat Marwick
representatives then were pressured by the
communications office to brief the press and to rush to
produce a review corroborating the White House
allegations.
PRESIDENT CLINTON INAPPROPRIATELY ALLOWED HIS COUSIN CATHERINE
CORNELIUS TO REMAIN IN A POSITION WHERE SHE HAD A CLEAR CONFLICT OF
INTEREST. CORNELIUS PURSUED AN INVESTIGATION OF EMPLOYEES OF AN OFFICE
IN WHICH SHE COVETED THE TOP JOB AND FOR WHICH SHE PLANNED A
REORGANIZATION
Once at the White House working for David
Watkins, Catherine Cornelius continued her efforts to
take over the Travel Office, among other things writing
a January 26, 1993, memo and a February 15, 1993, memo
co-authored with Clarissa Cerda, designating herself
and Cerda as future co-directors of the office.
MRS. CLINTON, ACTING ON HARRY THOMASON'S BASELESS ALLEGATIONS OF
WRONGDOING AGAINST THE TRAVEL OFFICE EMPLOYEES, ASSERTED PRESSURE ON
SENIOR WHITE HOUSE STAFF TO FIRE THE TRAVEL OFFICE EMPLOYEES
When Harry Thomason arrived at the White House
during the week of May 10, 1993, he was anxious to
learn what had transpired since he passed on rumors
about the Travel Office to David Watkins. Watkins had
not yet acted upon Thomason's allegations, so Thomason
spoke with Mrs. Clinton about these matters. Mrs.
Clinton in turn pressured Mack McLarty, Vince Foster
and David Watkins to fire the employees. Thomason also
met with Catherine Cornelius to exchange information.
Thomason told Jennifer O'Connor about the kickback
allegations and told her that the Travel Office
employees had been ``ripping us off for years.''
Harry Thomason had numerous contacts with
President Clinton and Mrs. Clinton throughout the first
half of May 1993, including: calls to the residence
private line on May 5 and May 6; phone messages both to
and from Mrs. Clinton throughout the week of May 10-14;
meetings with President Clinton on the mornings of May
12 and May 13; and a lengthy dinner in the White House
residence on the evening of May 13, 1993. Thomason
provided incomplete testimony to the committee about
the nature of these contacts and exhibited selective
memory loss in recounting these meetings.
Once Mrs. Clinton's wishes were relayed to
Watkins on May 12, Watkins turned to Foster to
determine a course of action. Foster tasked Associate
Counsel Bill Kennedy to find a solution. Kennedy called
the FBI and informed them that the ``highest levels''
of the White House were interested in this matter.
On May 14, 1993, Mrs. Clinton, following a
lengthy dinner with Harry Thomason the evening before,
relayed to David Watkins that ``Harry'' had a ``plan''
for the Travel Office and that ``we need to get those
people out'' and ``our people in.'' Harry Thomason
continued to press for the firings throughout the day.
On May 16, 1993, in a previously undisclosed
meeting between Mrs. Clinton and Mack McLarty, Mrs.
Clinton pressured McLarty to fire the Travel Office
employees.
On May 17, 1993, McLarty met with Watkins and
told him the Travel Office was on Mrs. Clinton's radar
screen. Watkins, responding to pressure from McLarty,
Foster and Mrs. Clinton, decided to fire the employees
because he thought there ``would be hell to pay'' if he
did not accede to the First Family's wishes. McLarty
approved the decision and the May 17 memo on the firing
was ``cc'd'' to ``Hillary Rodham Clinton'' and faxed to
President Clinton in California.
Even though it was cited as the basis for the
firings, the Peat Marwick review was not completed
until May 21, 1993, 2 days following the firings.
BILL KENNEDY ABUSED THE FBI BY REPEATEDLY INVOKING THE ``HIGHEST
LEVELS'' OF THE WHITE HOUSE IN MEETINGS WITH THE FBI
Bill Kennedy sought to and in fact did abuse
and compromise the FBI by invoking the ``highest
levels'' of the White House in order to involve FBI
headquarters officials rather than a field agent as
would have been the normal procedure. Mr. Kennedy
provided inaccurate and incomplete testimony to this
committee and numerous other investigative bodies
regarding his statements to the FBI.
White House officials hoped to fire the
employees on May 13 and drafted talking points on May
13, 1993, discussing the Travel Office firings and
claiming an FBI investigation was underway. The FBI,
however, could not move that quickly and did not
believe it had sufficient predication to launch a
criminal fraud audit.
The alleged ``predication'' for the FBI
investigation was the ``kickback allegation'' relayed
to the FBI by Catherine Cornelius.\38\ Cornelius
obtained this information from Harry Thomason who
subsequently had repeated it to numerous other White
House staffers.
---------------------------------------------------------------------------
\38\ OPR Report, tab B: May 13, 1993, FBI e-mail from Richard Wade
to Thomas Kubic, subject: White House Travel Office, DOJ document #AZ
000603.
---------------------------------------------------------------------------
FBI headquarters never should have been
contacted directly on this matter. Such allegations
normally would have been handled by a field agent or
even the local police.
WHITE HOUSE OFFICIALS COVERED-UP THE REAL REASONS FOR THE FIRING OF THE
WHITE HOUSE TRAVEL OFFICE EMPLOYEES. THE FIRINGS WERE NOT BASED ON THE
PEAT MARWICK REVIEW, BUT RATHER WERE DECIDED BEFORE PEAT MARWICK
EXAMINERS EVER SET FOOT IN THE WHITE HOUSE
At the very latest, the decision to fire the
Travel Office employees was made by May 12, 1993, a
full day before the FBI was called to the White House
and 2 days before the Peat Marwick review team came to
the White House. On May 12, Harry Thomason told David
Watkins that he had talked with Mrs. Clinton and she
was ``ready to fire them all that day.'' On May 10,
Thomason had circulated the memo by Martens outlining
allegations of wrongdoing in the Travel Office. The
decision to fire was made first; the White House
rationale was sought later.
THE WHITE HOUSE MISREPRESENTED THE PEAT MARWICK REVIEW. IT WAS NEITHER
AN AUDIT NOR INDEPENDENT AND WAS DIRECTED BY A WHITE HOUSE WHICH DID
NOT WANT AN AUDIT TO BE CONDUCTED
The Peat Marwick employee who was called in to
conduct a supposed ``audit'' already had volunteered
his services to the Vice President's National
Performance Review in a May 10, 1993, meeting with
Jennifer O'Connor. The Peat Marwick work, as explained
in its own engagement letter and subsequent draft and
formal reports was a review conducted in keeping with
and limited by the White House's needs. It was neither
``independent'' nor an audit as represented by the
White House.
Contrary to representations made by both the
White House and Peat Marwick, the Travel Office records
were auditable according to Dan Russell, the Peat
Marwick auditor who worked on the review.\39\ An audit
would have taken longer and the White House did not
want to take the extra time. The White House dictated
how the Peat Marwick review would be conducted and
focused its attentions on particular issues including a
``kickbacks.''
---------------------------------------------------------------------------
\39\ Committee deposition of Daniel Russell, March 27, 1996, p. 59.
---------------------------------------------------------------------------
Peat Marwick found no basis for the
``kickbacks'' allegations in its review. The findings
of the Peat Marwick review have been seriously
misrepresented by the White House.
On July 8, 1993--6 days after the Management
Review was published--Vince Foster has notes indicating
that Peat Marwick auditors contacted the White House.
His notes state: [auditors] ``strongly disagree[d] with
[the] review conclusion'' of the Management Review.\40\
---------------------------------------------------------------------------
\40\ CGE 000967.
---------------------------------------------------------------------------
THE FBI ALLOWED THE WHITE HOUSE TO CONTROL ITS INVESTIGATION
Once the FBI was brought to the White House on
May 13, 1993, despite its desire to be involved in the
investigation, it ceded control of the investigation to
the White House. The White House told the FBI that Peat
Marwick auditors would be brought in first and that the
FBI could not observe the audit despite its request to
do so.
From May 13, 1993, when the FBI first was
contacted through May 19, 1993, the FBI exerted no
control over the investigation. The White House ignored
the FBI's request not to fire the employees on May 19,
1993, and the White House failed to honor its
commitment to maintain control over the Travel Office
records.
THE FBI MISHANDLED THE TRAVEL OFFICE INVESTIGATION FROM THE BEGINNING,
ALLOWING THE WHITE HOUSE TO CONTROL THE INVESTIGATION AND DID NOT
ADEQUATELY SECURE TRAVEL OFFICE RECORDS IN A TIMELY FASHION
There was no integrity in maintaining the
Travel Office records in the White House due to a total
abdication of responsibility by anyone in the White
House Counsel's office, the Office of Administration,
and the Staff Secretary's office. The Staff Secretary,
John Podesta, was contacted by Records Management
officials who were concerned about the loss of Travel
Office records on the day after the firings. No one
from Mr. Podesta's office responded.
Craig Livingstone, the Director of Personnel
Security, was the individual put in charge of securing
the office and the records and files in the Travel
Office on May 19, 1993. In light of what we now know
about Craig Livingstone's gathering of hundreds of FBI
files on former Republican administration officials,
his background as an ex-bouncer and his grand ambitions
at the White House, the integrity of the Travel Office
records is all the more suspect.
Vincent Foster, Bill Kennedy, David Watkins
and others were aware that Catherine Cornelius was
removing records from the Travel Office and taking them
home over a month-long period. No immediate efforts
were made to ensure that all records secreted out of
the office by Cornelius were returned.
The FBI failed to secure any records in the
Travel Office until almost a month after the firings.
David Bowie, the Washington Metropolitan Field Office
supervisor in charge of the investigation, negligently
failed to exert control over the records in a timely
fashion and generally remained unaware of the ongoing
controversy.
Whether due to White House withholding of
documents or by its own design, the Justice Department
cavalierly responded to the potential for missing
records. Furthermore, the Department was grossly
negligent in failing to gain any control over Travel
Office documents or prevent the destruction of
documents which could ultimately have determined
whether or not allegations made against former Travel
Office Director Billy Dale were true.
Despite the fact that lead Justice Department
prosecutor Stuart Goldberg acknowledged to IRS
officials that Travel Office records were missing,
Justice Department officials vigorously opposed efforts
by Billy Dale to seek White House documents pertaining
to this subject.
THE WHITE HOUSE ENGAGED IN A CONSPIRACY OF SILENCE OF THE TRUE STORY
BEHIND THE FIRINGS FROM THE VERY FIRST DAYS. IT DID SO FOR DAMAGE
CONTROL PURPOSES
President Clinton denied knowing anything
about the Travel Office firings even though he had been
briefed on the matter 2 days before the firings. This
was known to at least Bruce Lindsey and Jeff Eller.
Such statements by the President had to have sent a
chilling message to all those individuals who were
aware of President Clinton's prior knowledge of the
firings, in effect creating a conspiracy of silence.
The fact that President Clinton was briefed prior to
the firings was not disclosed publicly until this
investigation.
PRESIDENT CLINTON ESTABLISHED A COVER-UP SITUATION WHEN HE
INAPPROPRIATELY PLACED THE PERSON WHO HAD APPROVED THE FIRINGS--MACK
McLARTY--IN CHARGE OF THE MANAGEMENT REVIEW AND McLARTY WITHHELD
INFORMATION IN THE COURSE OF THE INVESTIGATION. IT IS INAPPROPRIATE FOR
THE WHITE HOUSE TO INVESTIGATE ITSELF IN MATTERS OF CONFLICTS
It was inappropriate for Mack McLarty, the
individual who both pushed Watkins to fire the Travel
Office employees and approved the firings pursuant to
``pressure'' from Mrs. Clinton, to oversee the
subsequent White House Management Review announced on
May 25, 1993, in the wake of a firestorm of media
criticism and the embarrassing upbraiding of the White
House by Attorney General Reno about the misuse of the
FBI.
McLarty represented that Podesta and Stern
were chosen to conduct the review because neither had
been involved in any of the relevant events. But Staff
Secretary Podesta was aware of the efforts by Thomason
to obtain Government business through his contacts with
the President and also had been informed that the
records in the Travel Office were not being
appropriately secured. Further, two McLarty aides were
provided to assist Podesta.
The White House set up a sham investigation in
which a key person involved in the firings was to be
briefed on, oversee and steer the investigation of
alleged wrongdoing for which he was in large part
responsible.
In the initial meetings with Podesta and
Stern, McLarty did not disclose his full role in the
firings, and he withheld the fact that the May 17 memo
was cc'd to Mrs. Clinton and that he had a May 16
meeting with Mrs. Clinton. While Podesta and Stern
learned of the May 17 memo in the course of their
review, they never were informed by McLarty of the May
16 meeting in which McLarty was pressured by Mrs.
Clinton to take action in the Travel Office matter. It
should come as no surprise that Podesta and Stern were
ineffective in investigating their own bosses.
THE INTERNAL WHITE HOUSE MANAGEMENT REVIEW WAS A CATALOG OF ``MISTAKES
AND DECEPTION'' \41\ WHICH OMITTED INCRIMINATING INFORMATION ABOUT THE
PRESIDENT, MRS. CLINTON AND HARRY THOMASON. THE WHITE HOUSE CHOSE TO
COVER-UP INCRIMINATING INFORMATION FOR POLITICAL EXPEDIENCY
---------------------------------------------------------------------------
\41\ ``A Stealthy, Evasive Confession,'' the New York Times, July
11, 1993.
---------------------------------------------------------------------------
When the White House conducted the Management
Review, the President was at an abysmally low 36
percent approval rating, his budget and health plans
were on the ropes, and numerous debacles in the first 6
months had the White House reeling.
The White House Management Review covered up
President Clinton's prior knowledge of the Travel
Office firings beginning at least 2 days before they
occurred.
The White House Management Review covered up
the fact that it was President Clinton who approved of
Harry Thomason's working at the White House. Thomason
was designated on his pass as a ``White House
staffer,'' not as a volunteer. And Thomason was to
report to President Clinton.
The White House Management Review covered up
President Clinton's efforts to assist Harry Thomason in
obtaining Government contracts for TRM. Even though a
specific section in the report discussed ``appearances
of impropriety'' by Harry Thomason and Darnell Martens,
it ignored this most blatant abuse of White House
access which directly involved President Clinton.
The White House Management Review minimized
Mrs. Clinton's role in the Travel Office firings and
omitted the testimony of witnesses indicating a larger
role by Mrs. Clinton. It also failed to note that
senior White House aides initially had withheld
information about Mrs. Clinton's involvement in the
firings.
The White House Management Review omitted
conversations Harry Thomason had with Mrs. Clinton
about the Travel Office and failed to note that
Thomason refused to cooperate with the review after an
initial interview.
The White House Management Review concealed
the fact that the alleged source of Harry Thomason's
rumor--the President of Miami Air--denied that Billy
Dale or anyone in the Travel Office ever solicited
kickbacks.\42\ As a result, the IRS continued a 2\1/2\
year fruitless investigation in which UltrAir prevailed
with a $5,000 refund from the agency.
---------------------------------------------------------------------------
\42\ WHMR interview of Ross Fischer of Miami Air, June 17, 1993.
CGEPR 237-239.
---------------------------------------------------------------------------
The White House Management Review largely
ignored the fact that Peat Marwick, World Wide Travel
and Penny Sample of Air Advantage were brought into the
White House with no competitive bidding. White House
ethics officials had reviewed these matters and
expressed such concerns. The concerns were not
contained in the final report.
The White House Management Review, contrary to
representations made to the press on July 2, 1993, by
McLarty, Gearan and Podesta, attempted to conduct its
own investigation of the seven employees. However, when
they came up empty-handed, they abandoned these efforts
and failed to disclose the exculpatory information they
had discovered which would have been of benefit to the
reputations of the Travel Office employees.
In the aftermath of the Travel Office firings
and in the course of the White House Management Review,
Patsy Thomasson sought to intimidate and coerce false
representations from Catherine Cornelius and Clarissa
Cerda regarding whether or not David Watkins had read
their February 15, 1993, memo on the takeover of the
Travel Office. Chief of Staff McLarty inappropriately
ignored this gross violation of standards of conduct by
Ms. Thomasson when he was informed of it. Further,
Thomasson even resorted to pulling Cornelius' and
Cerda's mess privileges when they did not comply with
her request that they misrepresent Watkins' knowledge.
THE WHITE HOUSE MANAGEMENT REVIEW REPRIMANDED PEOPLE WHO WERE ONLY
FOLLOWING THE ORDERS OF THE REAL INSTIGATORS
Despite Mr. Nussbaum's request to McLarty that
both he and Foster be reprimanded if Kennedy were
reprimanded, McLarty refused to issue those reprimands
because they would have been too close to the ``highest
levels.''
It was apparently politically unthinkable for
President Clinton to hold those actually responsible
for the firings publicly accountable. This set in
motion a cover-up that grew more convoluted with each
subsequent investigation. With the intersection of the
investigations into the death of Vincent Foster, the
tangled Travelgate web became harder to re-weave to
accommodate subsequent revelations.
Rather than reprimanding the lower-level
players (Bill Kennedy, David Watkins, Jeff Eller and
Catherine Cornelius), the appropriate action would have
been for the President to acknowledge his role in
bringing Harry Thomason to the White House and
providing him the opportunity to inappropriately seek
Government business.
The White House Management Review, the
possibility of congressional hearings and the pending
criminal investigation by Public Integrity were of
great concern to Vincent Foster. But a concerted effort
was launched by McLarty to downplay his concerns in
investigations with GAO, OPR and the FBI.
THE WHITE HOUSE'S OBSTRUCTION OF THE REVIEW OF VINCE FOSTER'S DOCUMENTS
WAS DUE IN PART TO CONCERNS ABOUT TRAVELGATE DOCUMENTS IN FOSTER'S
CUSTODY
Independent Counsel Fiske properly concluded
that the Travel Office firings were a significant
factor in Mr. Foster's depression in the weeks
preceding his death. His colleagues, most notably
Bernard Nussbaum, ignored the potential ramifications
of the problems faced by Harry Thomason's actions and
President Clinton and Mrs. Clinton's involvement in the
Travel Office matter and dismissed Foster's attempts to
have these matters handled by outside counsel as would
have been appropriate.
White House Counsel Bernard Nussbaum conducted
a sham review of the documents in Foster's office
following Foster's death. Mr. Nussbaum did not
adequately or accurately describe to law enforcement
officials relevant documents in Foster's office,
including the Vince Foster Travel Office file. Despite
Nussbaum's claims to the contrary, no one present in
Foster's office during the July 22, 1993, search
recalls seeing the Vince Foster Travel Office file or
hearing of any document described as such by Nussbaum.
Mr. Nussbaum withheld information concerning
the existence of, and concealed the critical Vince
Foster Travel Office notebook from GAO, Public
Integrity and FBI investigators for almost a year
following Foster's death and only informed the White
House of its existence after he disclosed it to a Grand
Jury in May 1994.
Following Vincent Foster's death, high-ranking
White House officials quietly killed efforts by TRM to
obtain the GSA contract, concealed all documents
pertaining to these efforts from the ongoing General
Accounting Office investigation, and long-delayed their
production of documents to the Justice Department's
Public Integrity unit investigating possible criminal
conflicts of interest by Harry Thomason and Darnell
Martens while they were at the White House.
MRS. CLINTON INSTRUCTED WHITE HOUSE STAFF ON THE HANDLING OF FOSTER
DOCUMENTS AND THE FOSTER NOTE FOUND ON JULY 26, 1993, AND SENIOR WHITE
HOUSE STAFF COVERED UP THIS INFORMATION AND KEPT IT FROM INVESTIGATORS
Mrs. Clinton personally was involved in the
discussions regarding the White House's handling of
documents in Vince Foster's office following his death.
Mrs. Clinton made known her views that investigators
should be denied ``unfettered access'' to Foster's
office prior to the search of the office on July 22,
1993.
The White House withheld evidence subsequently
discovered among the 2,000 pages over which President
Clinton invoked executive privilege, that senior White
House aide Bill Burton spoke with Mrs. Clinton on the
evening of Foster's death (July 20, 1993).
Mrs. Clinton directed that Mack McLarty and
others not inform the President about the discovery of
the Foster ``suicide'' note on July 26, 1993. This note
essentially defended Foster's and the White House's
actions in the Travel Office firings and Mrs. Clinton
suggested that executive privilege research be done
regarding the note.
The White House's delay in turning over the
Foster note was due to senior staffers' deference to
Mrs. Clinton's wishes. Statements by Mack McLarty and
David Gergen that the note was not immediately turned
over because of the need to notify Mrs. Foster and the
President are not consistent with the evidence. No one
called Mrs. Foster the evening the note was discovered
and President Clinton was not told about the note's
existence until after Mrs. Clinton met with Bernard
Nussbaum and Steve Neuwirth. Mr. Nussbaum and Mr.
Neuwirth had been tasked with studying the executive
privilege issue at 2:30 p.m. Susan Thomases and Bob
Barnett also were in the residence that afternoon at
approximately 3 p.m.
The Foster note most likely was not a
``suicide'' note but rather a note in preparation for
resigning or in the event that Foster was asked to
resign or take the fall for the problems generated by
the firings and related matters.\43\
---------------------------------------------------------------------------
\43\ Foster's sister, Sheila Anthony told OPR investigators that in
July 1993, Foster had told her he was considering resigning. Mrs.
Foster told the Independent Counsel that the note was probably written
on or about July 11, 1993: ``On that day, she had encouraged him to
write down everything that was disturbing him. . . . Later that day,
Foster told his wife that he had written the opening argument for his
defense.'' Report of the Independent Counsel, June 30, 1994, p. 14.
---------------------------------------------------------------------------
THE JUSTICE DEPARTMENT DEFERRED TO THE WHITE HOUSE DURING ITS
INVESTIGATIONS OF THE WHITE HOUSE TRAVEL OFFICE AND HARRY THOMASON AND
IGNORED THE OBSTRUCTIVE BEHAVIOR EXHIBITED BY THE COUNSEL'S OFFICE
The Justice Department vigorously pursued
criminal allegations from the White House about Billy
Dale while minimally investigating allegations of
conflicts by Presidential friend Harry Thomason.
Prosecutor Stuart Goldberg told an FBI agent that DOJ
intended to indict Dale before the 1994 elections.
Prosecutor Goldberg also told an IRS agent
that there were missing documents in this case and that
Public Integrity believed they might be in Catherine
Cornelius' possession. Yet when Dale raised the issue
of missing documents as a defense at his own trial, the
Justice Department opposed this request and the Judge
ruled in the Government's favor.
Even after the White House stonewalled the
Justice Department on its requests for Harry Thomason
documents and engaged in obstructive behavior that
necessitated the issuance of a September 13, 1994,
subpoena to the White House, the Justice Department
showed little interest in further investigating. In
fact the Department failed to obtain critical documents
from Thomason himself until this committee threatened a
subpoena to obtain them and did in fact obtain
documents particularly relevant to a conflicts
investigation.\44\
---------------------------------------------------------------------------
\44\ In particular, the January 29, 1993 (EZ 037684), and March 12,
1993 (CGE 00224), memos demonstrated a clear interest in obtaining the
Travel Office business as well as numerous other ``Washington
opportunities.''
---------------------------------------------------------------------------
In stark contrast to the stated intent of
indicting Billy Dale before the 1994 elections,\45\ the
Justice Department declined prosecution of Harry
Thomason and Darnell Martens citing, in part, concerns
that it might be viewed as a ``political prosecution.''
---------------------------------------------------------------------------
\45\ FBI e-mail from Gregory D. Meacham, to Tom Kubic, dated
September 26, 1994, ``Regarding your inquiry . . . I . . . was advised
by SA Pam Bombardi, that DOJ Trial Attorney Stuart Goldberg had stated
that he wanted to do the indictment before the elections, probably on
October 4, 1994.'' Bates Stamp No. FBI-00000242.
---------------------------------------------------------------------------
In startling contrast to its chronic
stonewalling on all matters related to Harry Thomason
or Vincent Foster, the White House not only cooperated
fully with the investigation of Billy Dale but
conducted its own investigation into wrongdoing and
provided any incriminating information it could find to
both the Public Integrity Section and the GAO.
The FBI ignored the fact that the White House
interviewed many witnesses (in the course of the White
House Management Review) before the FBI interviewed
them in the weeks following the Travel Office firings.
In direct contrast to the Justice Department's strong
opposition to this committee interviewing witnesses
involved with the Travel Office matter, the Justice
Department registered no protests against this and took
no action to ensure that the FBI was allowed to
interview witnesses before the White House did. David
Bowie once again was woefully negligent and entirely
unaware of the fact that the White House was conducting
a Management Review.\46\
---------------------------------------------------------------------------
\46\ Committee interview of David Bowie.
---------------------------------------------------------------------------
The Justice Department deferred to the White
House by allowing the White House: to initially control
the investigation of the Travel Office and call all the
shots; to maintain custody and control over the Travel
Office documents for almost a month after the firings;
and to delay for almost a year the production of
documents relevant to the DOJ investigation of Harry
Thomason. At every turn, the Justice Department was
overly accommodating of a controlling White House.
In the course of the committee's
investigation, the Justice Department put a former
Clinton campaign staffer in charge of handling
documents produced to the committee. Following Billy
Dale's November 1995 acquittal, his 1994 plea
negotiations were leaked to the press. This information
inappropriately was used by the White House and
President Clinton to malign Billy Dale long after
President Clinton publicly wished Dale well and hoped
Dale could put the matter behind him.
WHITE HOUSE OFFICIALS ENGAGED IN A PATTERN OF DELAY, DECEIT AND
OBSTRUCTION OVER THE COURSE OF 3 YEARS OF INVESTIGATIONS INTO THE
TRAVEL OFFICE AND MATTERS RELATED TO VINCENT FOSTER'S DEATH
The GAO's investigation was delayed for months
by document production delays. Ultimately GAO did not
receive all documents relevant to its inquiry
including: the Vince Foster Travel Office file, the
White House Management Review interview notes,
documents related to the TRM efforts to obtain GSA
contracts and the Watkins ``soul cleansing'' memo. A
GAO representative noted that the level of cooperation
that it received from the White House was not conducive
to properly conducting GAO's work.\47\
---------------------------------------------------------------------------
\47\ Testimony of Nancy Kingsbury before the House Committee on
Government Reform and Oversight, October 24, 1995.
---------------------------------------------------------------------------
The ``Watkins memo'' was responsive to
numerous document requests and was inappropriately
withheld by David Watkins, Matthew Moore and Patsy
Thomasson. All three had hard copies and/or computer
copies of the memo and were made aware of the various
document requests and subpoenas to which it would have
been responsive.
In responding to a Public Integrity request
for documents regarding Harry Thomason, Matthew Moore
wrote an April 4, 1994 memo to Neil Eggleston stating:
``I know of no documents in my possession, or ever in
my possession, responsive to the request.'' This was
false. The Watkins memo clearly was responsive to this
request. At or around this time, Moore removed the
Watkins memo from his computer and provided a disk copy
to Watkins as he left the White House. However, Moore
maintained his own copy of the disk which included
several previous drafts of the memo.
The White House withheld documents from the
Justice Department's Office of Professional
Responsibility including the Vince Foster Travel Office
file, the White House Management Review interview notes
and the Watkins ``soul cleansing memo.'' OPR Counsel
Michael Shaheen found the White House's lack of
cooperation ``unprecedented'' in his 20 year Government
career.
White House stonewalling forced the Public
Integrity Section at the Justice Department to
acknowledge it had no confidence that the White House
had faithfully produced all documents ``relating to the
Thomason allegations.'' While Section Chief Lee Radek
noted that the ``integrity of our review is entirely
dependent upon securing all relevant documents,'' he
did not obtain all relevant documents: notably the
complete Vince Foster Travel Office notebook and the
Watkins ``soul cleansing'' memo, as well as more than
120 items over which the White House claimed executive
privilege. The Justice Department quietly acceded to
this inappropriate invocation of privilege. One of the
key items that it did not receive was a White House
Counsel's Office memo demonstrating that the Counsel's
office did believe there was a case to be made that
Harry Thomason was a special Government employee.\48\
---------------------------------------------------------------------------
\48\ Memo by Beth Nolan, Associate White House Counsel handling
ethics issues, CGE 43349.
---------------------------------------------------------------------------
Bernard Nussbaum obstructed the FBI
investigation into the discovery of the Foster note as
well as numerous other investigations, including
congressional investigations, by failing to timely
inform anyone in law enforcement, the White House, or
Congress about the Vince Foster Travel Office notebook
that he had secreted in Nussbaum's office by July 22,
1993.
An FBI investigation was ordered on July 28,
1993 by Philip Heymann, the day after the note was
turned over to the Park Police after the 30-hour delay
in informing law enforcement authorities. Heymann
instructed David Margolis to be ``very aggressive'' in
the investigation.
Nussbaum failed to inform those tasked with
overseeing document production to both the Justice
Department and the GAO that he was secreting a relevant
document in his office. Nevertheless, once he informed
Neil Eggleston in May 1994, Eggleston also failed to
turn over the documents to the Public Integrity Section
in a timely and responsive manner.
Neil Eggleston and Cliff Sloan, at Nussbaum's
direction, delayed the production of documents relating
to the criminal investigation of Harry Thomason and
Darnell Martens to the Public Integrity section and
ultimately denied all such documents to GAO.
DAVID WATKINS' ``SOUL CLEANSING'' MEMO ACCOUNT OF THE TRAVEL OFFICE IS
SUBSTANTIALLY CORROBORATED BY NUMEROUS RECORDS AND WITNESS TESTIMONY
Watkins' contemporaneous account of Travel
Office events told by Watkins in his ``soul cleansing''
memo is corroborated by the records of meetings, phone
calls, contacts and documents that demonstrate the
involvement and pressures to act from Mrs. Clinton,
Mack McLarty and Harry Thomason.
The President's invocation of executive
privilege over discussions about the Watkins memo held
between and among White House Counsel, Maggie Williams,
Ann Lewis, and Mrs. Clinton is an extraordinary misuse
of the privilege in light of the ongoing criminal
investigation of these matters.
The Watkins memo and the documentary evidence
contradict sworn testimony by Mrs. Clinton that the
claims in her April 1994 GAO responses that she had
``no role'' in the firings of the Travel Office
employees were accurate.
PRESIDENT CLINTON HAS ENGAGED IN AN UNPRECEDENTED MISUSE OF THE
EXECUTIVE POWER, ABUSE OF EXECUTIVE PRIVILEGE AND OBSTRUCTION OF
NUMEROUS INVESTIGATIONS INTO THE TRAVEL OFFICE
The White House Counsel's office coordinated
and controlled to the greatest extent possible, all
investigations into this matter. It engaged in pre-
interviews, debriefings and regular efforts to
coordinate with outside attorneys for the individuals
involved in investigations. This conduct is unsuitable
for the White House Counsel's office and is
unprecedented.
Attorneys of numerous current and former White
House officials and others may have waived their
clients' attorney-client privilege by debriefing White
House attorneys about their clients' depositions and in
some cases providing information to the White House
that was withheld from Congress.
The White House Counsel's office hired a team
of lawyers to mount a massive damage control operation
which focused on minimizing public awareness of the
roles of President Clinton and Mrs. Clinton in the
firings and their contacts with Harry Thomason. This
team reported directly to Deputy Chiefs of Staff Harold
Ickes and Evelyn Liebermann, among the closest of
confidantes with the First Family, instead of the White
House Counsel.
White House efforts to obstruct all
investigations of this matter were part of a larger
pattern exhibited by the Counsel's office which
continues to this day to shadow the investigations of
this and other congressional committees as well as the
Independent Counsel. A task list prepared by Special
Counsel Jane Sherburne demonstrates that the White
House even tracked convicted felon and former Associate
Attorney General Webster Hubbell's cooperation with the
Independent Counsel.
The pattern of behavior of the White House
Counsel's office, including unprecedented misuse of
executive privilege, was designed deliberately to
obstruct all investigations and thereby avoid full
disclosure of the facts surrounding the Travel Office
firings and matters related to Vincent Foster.
The collective memory loss of dozens of
employees is unconvincing and disturbing. Throughout
the course of the committee's depositions, the phrases
``I don't recall,'' ``I don't know'' and ``I can't
remember'' were uttered thousands of times and
regarding the most basic and memorable information.
Those closest to the President and First Lady
appear to suffer the most significant memory losses
about key events involving the First Family. The White
House Counsel's office and those who conducted the
Management Review--and were most intimately familiar
with the factual record in this case--also are affected
with seeming memory disorders. And while many of the
key events in this investigation occurred 3 years ago,
memory losses of key individuals were consistently poor
whether the events occurred years or weeks ago.
Covering up the true story behind the Travel
Office matter led to the White House's obstruction of
numerous investigations. This obstruction was
conducted, overseen and encouraged by those at the
``highest levels'' of the White House, compounded by
the death of Vincent Foster which then caused a further
cover-up on top of the Travelgate cover-up.
Committee Recommendations
1. The ``Special Government Employee'' (SGE) provisions of
the U.S. Code should be reformed to prevent its requirements to
be ignored. Clear standards should be identified under which
agencies, including the Executive Office of the President,
should analyze the activities of volunteers to determine if
they meet the definition of SGE. Agencies should be required to
perform this analysis for each volunteer and maintain
appropriate records. Congress should conduct rigorous oversight
of the activities of advisors and volunteers throughout
Government.
2. The Executive Office of the President should establish
financial and internal review controls consistent with the
requirements of the Chief Financial Officers Act and the
Inspectors General Act. These requirements should include the
development of annual, audited financial statements of all
business activities and the establishment of an internal review
system. Such systems could be crafted to protect the
constitutionally protected responsibilities of the President.
Some of these provisions are included in H.R. 3452, while other
provisions require further study by Congress.
3. The Presidential Records Act and the Federal Records Act
should be amended to provide for jurisdiction of Federal courts
to ensure that Government records are not unlawfully destroyed,
but are managed and preserved as required by law. A recent
court decision in Armstrong v. Bush, 924 F.2d 282 (D.C. Cir.
1991) held that judicial review was available to enforce the
provisions of the Federal Records Act, but not the Presidential
Records Act. The Department of Justice has interpreted that
ruling to be so broad that it would preclude the courts from
enjoining the wholesale destruction of records that the
Presidential Records Act clearly requires be preserved.
4. The Office of the Counsel to the President should return
to its traditional mission of providing traditional legal
counsel to the President and his immediate staff. Not more than
a couple of decades ago, the White House Counsel's office
consisted of just a few highly qualified jurists. The
congressional appropriation committees, when funding the White
House, should oversee the size and mission of the Counsel's
office. The Counsel's office should be required to disclose the
number of attorneys working in the Counsel's office, each
attorney's job description, and the supervision of each
attorney. If necessary, limitations should be placed on
Executive Office appropriations designed to limit the scope of
responsibilities performed by the White House Counsel's office.
5. Congress should consider the feasibility of prohibiting
the EOP from procuring goods and services through its own
procurement operations and requiring the EOP, where possible,
to procure using existing contracts of other agencies, such as
the General Services Administration's Federal Supply Schedules.
Where current contracts do not satisfy the specific
requirements of the EOP, the EOP should select another agency
for its purchasing needs.
Further, Congress should consider requiring the EOP to
submit to Congress a report detailing each noncompetitive
procurement and the justification for the use of such
procedure.
6. Only individuals of the highest quality and ethics
should be employed by and volunteer services to the Government.
The committee is frustrated that such obvious recommendations
must be made at this time in our country's history. Individuals
with their own financial interest as their paramount goal, with
little respect for the constitutional responsibilities of the
U.S. Congress, and with loyalties to anyone other than the
American people should not seek or obtain employment in the
public sector.
III. Actions in May 1993 Which Led to the White House Travel Office
Firings
A. The career Travel Office employees are fired, accused by the White
House of wrongdoing and political cronies are put in charge of the
Travel Office
At approximately 10 a.m., on May 19, 1993, all seven
members of the White House Travel Office staff were fired.\49\
They were ordered to vacate the White House compound within 2
hours. Returning to the Travel Office by 10:30 a.m., the fired
Travel Office employees found their desks already occupied by
the President's cousin, Catherine Cornelius and employees of
World Wide Travel, the Arkansas travel agency which arranged
for press charters during the Clinton Presidential campaign. A
week before any determination had been made by the FBI or Peat
Marwick, World Wide Travel was summoned to Washington by
Cornelius.
---------------------------------------------------------------------------
\49\ There were only five employees present on May 19, 1993, when
the firings of all seven occurred. The individuals present that day
included Director Billy Dale, John Dreylinger, Barney Brasseux, Ralph
Maughan and Robert Van Eimeren. Two of them were out of the country:
John McSweeney was on vacation in Ireland and Deputy Director Gary
Wright was on an advance trip in Seoul, South Korea.
---------------------------------------------------------------------------
Presidential friend, Clinton/Gore campaign operative and
Hollywood producer, Harry Thomason, began working at the White
House in early 1993, allegedly on the ``staging'' of White
House events. Mr. Thomason's company, TRM, had brokered
charters during the campaign, and he shortly thereafter got in
touch with his partner, Darnell Martens, to collaborate on
future business. Mr. Thomason requested that Martens ask Penny
Sample, another Clinton/Gore campaign veteran, to come to the
White House to assist in the Travel Office.\50\ Ms. Sample
owned an airline charter brokerage company called Air Advantage
which arranged charters for the Clinton/Gore campaign. Mr.
Thomason claims he doesn't know how Martens came to be asked
for this assistance,\51\ but in sworn testimony both Martens
and Catherine Cornelius confirm that Thomason did make such a
request.\52\
---------------------------------------------------------------------------
\50\ Committee deposition of Darnell Martens, April 11, 1996, pp.
148-150.
\51\ Committee deposition of Harry Thomason, May 17, 1996, pp. 126-
128.
\52\ Committee deposition of Catherine Cornelius, April 30, 1996,
p. 104; Martens deposition, pp. 172-173.
---------------------------------------------------------------------------
By early afternoon on May 19, the Travel Office employees
heard then-White House Press Secretary Dee Dee Myers
inappropriately announce at a press briefing that they were the
subject of an FBI criminal investigation. Ms. Myers also
falsely reported that an audit had found ``gross
mismanagement.'' An official audit of the Travel Office never
was performed, and nowhere in the report of the management
review did Peat Marwick refer to ``gross mismanagement'' in the
White House Travel Office prior to May 19, 1993.\53\
---------------------------------------------------------------------------
\53\ Committee interview of Larry Herman, August 29, 1995.
---------------------------------------------------------------------------
The Travel Office employees had been given no indication at
the time of their dismissals that they were under
investigation. They had cooperated fully with a review
conducted by Peat Marwick in the days preceding the firings,
which they were falsely told was part of the National
Performance Review. After the completion of their out-
processing, the Travel Office employees, shadowed by White
House Security Officer Craig Livingstone, were driven out of
the White House compound in a windowless panel van with no
passenger seats. What the fired Travel Office employees did not
know was that their nightmare had just begun.
B. The Travel Office firings were a result of pressure by Harry
Thomason and Mrs. Clinton which accelerated in the week before the
firings
May 10, 1993, Monday
The events precipitating the Travel Office firings erupted
more than a week before in a May 10, 1993 meeting. At that
time, Harry Thomason's baseless kickback allegations were
coupled with Catherine Cornelius' open ambition to run the
Travel Office. Mr. Thomason had already pressed his allegations
on David Watkins, Mrs. Clinton and President Clinton.
Mr. Watkins told Cornelius that she should speak with
Thomason about the Travel Office and she e-mailed White House
colleagues, Clarissa Cerda and Mike Lufrano:
I have a meeting with Harry Thomason at 10 a.m. this
morning . . . to discuss the future of this office . .
. could be over very soon.\54\
---------------------------------------------------------------------------
\54\ CGE 39295.
---------------------------------------------------------------------------
Lufrano e-mailed back with the warning:
remember . . . everything you send on e-mail is
stored forever in the archives. Careful! \55\
---------------------------------------------------------------------------
\55\ CGE 39296.
Following her meeting with Thomason, Cornelius e-mailed
Clarissa Cerda: ``I need to start thinking about how you
officially bring in someone to help . . . Does the White House
engage in a memorandum of understanding to assist in crisis
situation . . . please let me know.'' \56\
---------------------------------------------------------------------------
\56\ CGE 39297.
---------------------------------------------------------------------------
On May 10, 1993, Matt Moore, another assistant to David
Watkins wrote a memo to Watkins' deputy, Patsy Thomasson,
stating in part: ``Billy Dale informs me that there is no
written agreement in place to cover travel . . . no contracts
in place.'' Moore's handwritten notes on the document mentioned
Charlie Caudle, the owner of UltrAir and Express One who soon
would be under investigation by the IRS.\57\
---------------------------------------------------------------------------
\57\ CGE 8391.
---------------------------------------------------------------------------
The same day, Thomason had a message on his calendar to
``call Hillary . . . she wants to talk to you tonight.'' \58\
Mr. Thomason also had messages to call David Watkins, Mack
McLarty for a meeting the next day, and Susan Thomases at
home.\59\ At 1 o'clock, Thomason received a memo he requested
from his TRM partner, Darnell Martens, outlining allegations of
wrongdoing concerning the Travel Office.\60\ He provided the
memo to Catherine Cornelius, Vincent Foster, and Bill Kennedy
at the White House that week.\61\ In describing when and why he
had the Martens memo faxed to the White House, Thomason
testified:
---------------------------------------------------------------------------
\58\ Harry Thomason phone logs, May 10, 1993, Thomason document
production, Bates Stamp No. 00000105.
\59\ Id.
\60\ Committee deposition of Bobbie Faye Ferguson, April 12, 1996,
p. 63.
\61\ Id.; Thomason deposition, p. 128.
Answer. To the best of my knowledge it was after some
conversations about the Travel Office had been
discussed. There were some conversations about the
Travel Office, and some of the White House personnel,
and I am not exactly sure who wanted to know does Mr.
Martens have anything on this and at that time I
requested that--I told somebody to call Mr. Martens'
office and request that it be sent.
Question. Do you know who was making those requests
at the White House?
Answer. To the best of my recollection it was David
Watkins or somebody in his office.\62\
---------------------------------------------------------------------------
\62\ Committee deposition of Harry Thomason, May 17, 1996, pp. 107-
108.
Mr. Thomason enjoyed a very busy White House schedule for
an avowed ``non-employee.'' He was utilizing a White House
office, had the benefit of a White House pass, had a full-time
assistant who helped schedule his numerous meetings with White
House staff. It was fitting that on May 11, 1993, David Watkins
approved a work order to put phones and a computer hookup in
``Harry Thomason's office.'' \63\
---------------------------------------------------------------------------
\63\ Committee deposition of Bonnie Berry, May 21, 1996, pp. 30-32.
---------------------------------------------------------------------------
May 11, 1993, Tuesday
The next morning, May 11, Mrs. Clinton called Harry
Thomason at 10 a.m. and left a message for him to call her.\64\
He also received a message to call Craig Livingstone: ``come
over while Susan is here.'' Mr. Thomason also had a meeting
with Mack McLarty scheduled on this afternoon.\65\ (McLarty had
the same time scheduled for a meeting with Thomason on his
calendar.) \66\ Mr. Thomason does recall a meeting in which he
provided McLarty with a copy of the White House ``image''
project report during this week.\67\
---------------------------------------------------------------------------
\64\ Harry Thomason telephone logs for May 11, 1993, Thomason
document production, Bates Stamp No. 00000106.
\65\ Id.
\66\ McLarty calendar, CGE 26860.
\67\ Thomason deposition, p. 179.
---------------------------------------------------------------------------
Mr. McLarty had no recollection of any meetings with
Thomason on the White House Project but stated that he believed
the President Clinton and Mrs. Clinton asked Thomason to come
to the White House for the staging of events.\68\ Mr. Thomason
was given his pass on March 23, 1993.\69\ The request for his
pass did in fact show him reporting to President Clinton,
contrary to White House reports that Rahm Emanuel, Assistant to
the President and Director of Special Projects, was responsible
for Thomason's tour of duty at the White House.\70\ Mr.
Thomason also had a 3 p.m. meeting scheduled with Susan
Thomases following the meeting with McLarty and a message to
call her at her home that evening.\71\
---------------------------------------------------------------------------
\68\ Committee deposition of Thomas F. McLarty, July 12, 1996, pp.
23-24, 66-67.
\69\ CGE 2931, 2933.
\70\ In the White House Management Review, GAO interviews and in
public statements, the White House gave the impression that Rahm
Emanuel was responsible for bringing Harry Thomason to the White House.
Rahm Emanuel's interview with the White House Management Review
indicated that he told them that the President, Mack McLarty, George
Stephanopoulos and Mandy Grunwald ``all approved'' the project, yet the
review omitted Rahm Emanuel not being the sole actor in bringing
Thomason to the White House. CGEPR 236.
\71\ Harry Thomason phone logs, documents provided by Harry
Thomason, Bates Stamp No. 00000106.
---------------------------------------------------------------------------
On May 11, 1993, Cornelius, while on a trip to Chicago with
President Clinton, was paged by the Travel Office and given a
message to call a Time magazine reporter who was seeking
information on whether or not Cornelius was the President's
cousin.\72\ Steve Davison of World Wide Travel informed White
House investigators that in this timeframe, ``HT [Harry
Thomason], JC [James Carville], GS [George Stephanopoulos], and
HRC [Hillary Rodham Clinton] furious and ready to throw them
out that day.'' \73\
---------------------------------------------------------------------------
\72\ White House Management Review (``WHMR''), authored by John
Podesta and Todd Stern, July 2, 1993, p. 7.
\73\ White House Management Review interview of Steve Davison, June
5, 1993, CGEPR 185.
---------------------------------------------------------------------------
The Management Review reported that in response to the call
from Time, ``Cornelius spoke with Deputy Communications
Director Jeff Eller, with whom she had a personal relationship.
She told Eller that she believed a Travel Office employee
leaked this information to the press.'' \74\
---------------------------------------------------------------------------
\74\ Id.
---------------------------------------------------------------------------
May 12, 1993, Wednesday
On May 12, 1993, Watkins called Foster to set up a meeting
with him. Mr. Watkins mentioned that Mrs. Clinton was
interested in the matter which they were to discuss.\75\ Mr.
Thomason testified that the meeting was for President Clinton
to sign some commemorative inaugural books for campaign
workers. He claimed that the Travel Office was never
mentioned.\76\
---------------------------------------------------------------------------
\75\ Foster Travel Office notebook, CGE 899a.
\76\ Thomason deposition, p. 156.
---------------------------------------------------------------------------
Mr. Martens arrived at the White House that morning for a
9:30 a.m. meeting with OMB's Jack Kelly. Mr. Martens set this
meeting to discuss the logistics of obtaining a GSA Government
contract for his and Thomason's company, Thomason, Richland &
Martens (TRM). Also that day, Martens received a White House
pass. Mr. Martens was to report to Harry Thomason and David
Watkins.\77\
---------------------------------------------------------------------------
\77\ CGE 18296, 18298.
---------------------------------------------------------------------------
Following his meeting with President Clinton, Thomason met
with Foster about personal issues concerning President
Clinton's family.\78\ Michael Berman also attended the
meeting.\79\ At the end of their conversation, Thomason
mentioned that he ``may have learned of some graft'' in the
Travel Office and promised to let Foster know when he learned
more.\80\
---------------------------------------------------------------------------
\78\ Foster Travel Office notebook, CGE 899a.
\79\ Foster Travel Office notebook, CGE 899a. Mr. Berman was at the
White House working on determining how they could utilize an excess of
$10 million in leftover Presidential inaugural funds for White House
activities.
\80\ Foster Travel Office notebook, CGE 000923.
---------------------------------------------------------------------------
Mr. Thomason next met with Cornelius to exchange
information on the Travel Office and then discussed their
suspicions with Watkins. Ms. Cornelius showed Thomason her
``file'' and told him that cash seemed to be missing. Mr.
Thomason told Cornelius on this date that Mrs. Clinton would be
unhappy with what he believed was going on in the Travel
Office. He made it clear to Mrs. Clinton that he was going to
share his concerns with her.\81\ Ms. Cornelius said Thomason
repeated references to Mrs. Clinton during the course of the
week.\82\ The two later moved the meeting to Watkins' office.
---------------------------------------------------------------------------
\81\ Cornelius deposition, pp. 114-115.
\82\ Id.
---------------------------------------------------------------------------
Mr. Martens arrived after his OMB meeting and he joined in
the meeting which had grown to include Cornelius, Thomason,
Watkins and Patsy Thomasson.\83\ Mr. Martens previously had
been gathering information about the Travel Office and had
contacted Billy Dale about obtaining the travel business.\84\
---------------------------------------------------------------------------
\83\ Cornelius deposition, p. 85.
\84\ See infra section V.
---------------------------------------------------------------------------
During his visit to the White House, Martens was asked by
Thomason if the charter company, Air Advantage, would be able
to handle a trip for the White House the following Sunday. This
clearly indicated that the plan for the Travel Office firings
was in place. (A fax sent the next day by Martens detailing how
he could provide planes for Sunday also confirms the plan was
in place.\85\ Mr. Martens explained in his deposition:
---------------------------------------------------------------------------
\85\ Fax to Harry Thomason at the White House from Darnell Martens,
May 13, 1993, discussing ``30 day billing cycle'' and ``aircraft being
reviewed for Sunday . . . '' (Documents provided by Harry Thomason.)
Answer. Harry had asked me at some point in time on
the afternoon of May 12th when I was at the White House
whether Air Advantage would be able to handle a trip
for the White House on Sunday, that coming Sunday.
Question. Which would have been May 14th?
Answer. No, this is Friday----
Question. May 16th, I am sorry.
Answer. It might be the 16th or 17th, somewhere in
there. And so I said I will track her down and ask her.
He goes okay, just make sure they can do a 30 day
billing, that they can bill like a normal 30 day
invoice. I said okay.
Question. So this is actually asking you to check
with Penny Sample to see if 30 day billing is okay, not
TRM?
Answer. Yes. For Air Advantage.
Question. Harry made that request?
Answer. Yes.\86\
---------------------------------------------------------------------------
\86\ Martens deposition, pp. 157-9.
In Thomason's own deposition, he attempted to explain that
---------------------------------------------------------------------------
Martens' request for assistance originated:
in connection with somebody at the White House saying
if we do this we don't want to miss a beat and we have
to have somebody in place to temporarily take over and
could you recommend somebody, and I said the people
that worked on the campaign are obviously the people. I
don't know what 30-day billing cycle means. I just know
that there was somebody from the White House [who]
passed, evidently, along this information after I had
called in, and this was the answer.\87\
---------------------------------------------------------------------------
\87\ Thomason deposition, p. 213.
Mr. Thomason next attended a meeting with Jennifer O'Connor
to discuss the 25 percent White House staff cut, and other
personnel matters. During the meeting, Thomason informed
O'Connor that the Travel Office employees ``were ripping us
off'' and that firing them would be a ``great press story . . .
Bill Clinton cleaning up House.'' \88\ Ms. O'Connor recounted
that she and Thomason had to leave the meeting to tend to a
``crisis'' in Watkins' office.\89\ Mr. Watkins' contemporaneous
notes show that Thomason returned to Watkins' office that
afternoon. Mr. Thomason told Watkins he ``bumped into'' Mrs.
Clinton in the hall, and she was ready ``to fire them all that
day.'' \90\
---------------------------------------------------------------------------
\88\ WHMR interview notes of Jennifer O'Connor, June 11, 1993,
CGEPR 383-390.
\89\ WHMR interview notes of Jennifer O'Connor, June 11, 1993,
CGEPR 383-390.
\90\ May 31, 1993 notes of David Watkins, Watkins document
production, PM 000169.
---------------------------------------------------------------------------
At this point, Watkins, who earlier had contacted Foster
for assistance, went to meet with him along with Thomason and
Cornelius. The accounts of the meeting by Cornelius and
Watkins, as well as Foster's notes all recount Thomason
discussing the kickback issue.\91\ Mr. Thomason was evasive on
this point in his deposition:
---------------------------------------------------------------------------
\91\ Cornelius deposition, p. 79; Watkins memorandum to Mack
McLarty, May 17, 1993, CGE 17753-17754; Foster Travel Office notebook,
CGE 000903.
Answer. Well, I remember Mr. Foster asking what are
the rumors; and I remember just saying, okay, here is
what all we have heard.
Question. Was there any discussion that you recall
concerning kickbacks or bribery allegations in that
meeting?
Answer. Again, I can't be specific. That was sort of
the buzz that was in the air. Now, was it kickbacks or
was it taking gifts; I mean, I don't know. You know, I
just remember there was something that--and that is
about the general term of taking something, you know;
and I don't know if they were kickbacks or what, but
yes was the buzz in the air.
At another point in his deposition:
Question. Do you recall ever relaying that
information to anyone in the White House that there
were kickbacks, or 5 percent kickbacks, or kickbacks,
or allegations of bribery?
Answer. Well, I don't remember 5 percent kickbacks,
but there was always--in all of those meetings there
was always sort of a buzz in the room that had to do
with, well, there were kickbacks, there was this, there
was that, and did I start them? I don't know, but I
don't think so. Did I hear them? Yes. Did I repeat
them? I don't recall.
Question. Do you know who you heard them from?
Answer. I don't, because it would always be a group
of people in a room, and there was just the buzz about
what somebody had heard and, you know, or discovered or
something.
Question. And were these at the White House, these
meetings or people in the room?
Answer. Right, I mean, you know, the--there were a
couple of those kind of meetings.\92\
---------------------------------------------------------------------------
\92\ Thomason deposition, pp. 136-137, 188.
From the accounts of others present in this and other
meetings, Thomason was the ``buzz.'' Ms. Cornelius testified
that Thomason told her about the kickbacks \93\ and in fact,
further testified that she could not recall ``anyone else
discussing [kickbacks].'' \94\ Testimony of Bruce Lindsey in
the White House Management Review recounted that ``Sometime in
Feb-March-April HT [Harry Thomason] said to me that travel
office--demanding kickbacks . . .'' \95\ Mr. Thomason's
kickback allegations also surfaced in Jennifer O'Connor's
testimony to the White House Management Review. She stated that
while having lunch with David Watkins on May 12, 1993, Watkins
told her ``this is confidential,'' that Thomason had dealings
with travel companies and that the Travel Office was soliciting
kickbacks.\96\
---------------------------------------------------------------------------
\93\ Cornelius deposition, p. 79.
\94\ Id., p. 88.
\95\ WHMR interview notes of Bruce Lindsey, CGEPR 331.
\96\ WHMR interview notes of Jennifer O'Connor, CGE 385.
---------------------------------------------------------------------------
The OPR report noted that Thomason related a conversation
suggesting that a friend of his ``had seen what he considered
possible evidence of a kickback involving the Travel Office.''
\97\ This account is further supported by an entry in Foster's
Travel Office notebook where he writes, ``HT related vague
story of 3d party request for kickback/5 percent--vague.'' \98\
Mr. Thomason was passing on information in which he had his own
financial interest.
---------------------------------------------------------------------------
\97\ OPR Report, p. 9.
\98\ Foster Travel Office notebook, CGE 923.
---------------------------------------------------------------------------
The Watkins/Cornelius/Thomason/Foster meeting adjourned and
they reconvened later with White House Associate Counsel Bill
Kennedy joining the group.\99\ Ms. Cornelius returned from a
quick trip to her house where she was keeping documents she had
covertly removed from the Travel Office at David Watkins'
request.\100\ Mr. Kennedy then was tasked with crafting a
response to this matter.\101\ In the meeting they discussed who
could do an audit. They sought an alternative to a GAO audit
because previous investigations by GAO had been unfavorable to
the White House.\102\
---------------------------------------------------------------------------
\99\ Cornelius deposition, p. 94.
\100\ Cornelius deposition, pp. 93-94.
\101\ Cornelius deposition, p. 96.
\102\ OPR interview of Catherine Cornelius, September 2, 1993, p.
3, she quotes Patsy Thomasson saying in response to Kennedy's idea to
bring in the FBI, ``Well, Billy Kennedy, I certainly would like that,
because that would keep the GAO out.''
---------------------------------------------------------------------------
At approximately 5:30 p.m. Kennedy contacted James Bourke,
Chief of the FBI's Special Inquiry Unit (SPIN). Even though two
FBI agents were permanently assigned to the White House,
Kennedy never asked them for ``guidance''--his stated reason
for contacting the FBI. By this time, Thomason, Foster and
Watkins were well aware of Mrs. Clinton's interest in this
matter and discussed it freely. Mr. Kennedy, however, made the
implausible claim in his committee deposition that he had no
idea of Mrs. Clinton's interest at that time.\103\
---------------------------------------------------------------------------
\103\ Committee deposition of Bill Kennedy, April 9, 1996, p. 133.
---------------------------------------------------------------------------
On this day, Cornelius, while planning the takeover of the
Travel Office, called World Wide Travel to alert them to the
opening for the new business. World Wide immediately sent an
agent, Steve Davison, to Washington, DC in response to the
call. In this timeframe, the Travel Office employees recall
Catherine Cornelius' frequent absences from the Travel Office
to attend meetings elsewhere. One employee recalled an occasion
in the first weeks of May where Cornelius informed them that
she had a meeting with Thomason and Mrs. Clinton.\104\
---------------------------------------------------------------------------
\104\ Committee interview of Robert Van Eimeren, July 26, 1995.
---------------------------------------------------------------------------
Throughout May 12 and May 13, Watkins received ``periodic
reports from Vince Foster that [the] First Lady had inquired
about [the] Travel Office and why wasn't action being taken--
report was that they should be fired immediately and out of
here by the end of the day.'' \105\ On the 12th, McLarty called
Susan Thomases with whom Harry Thomason had conversations
during the week. Lorraine Voles, deputy Press Secretary,
reported that in this timeframe that Eller advised her about
the Travel Office allegations. Ms. Voles' notes indicate that
she had heard that Susan Thomases ``went to Mac . . . Hillary
wants these people fired . . . Mac wouldn't do it . . . DW
[David Watkins] didn't want to do it.'' \106\ Susan
Thomases,\107\ was at the White House the week before on
Friday, May 7, 1993, from 2:30 to 7:47 p.m.\108\
---------------------------------------------------------------------------
\105\ Notes of David Watkins, May 31, 1993, Watkins document
production, Bates Stamp No. PM 000169.
\106\ Notes of Lorraine Voles, undated (approximately May 1993),
CGE 009110.
\107\ Ms. Thomases was a reference for Catherine Cornelius on her
resume. Ms. Thomases worked on advance throughout the campaign and
Cornelius worked on travel. Ms. Thomases certainly was not one known
for being shy with her views on how to run the White House or on her
authority to speak for Mrs. Clinton.
\108\ Secret Service WAVES records (for entrances and exits) for
Susan Thomases, May 7, 1993.
---------------------------------------------------------------------------
May 13, 1993, Thursday
On May 13, 1993, Kennedy summoned the FBI to the White
House after a flurry of early morning calls from the White
House to the FBI. Mr. Kennedy told FBI Unit Chief James Bourke
that ``he was getting some pressure and he needed a call back
in the next 15 minutes or he may have to go to another agency,
such as the IRS.'' \109\ Mr. Kennedy claims that his sense of
urgency was based on the fear that documents would be
destroyed, but no other testimony corroborates his claim.''
\110\
---------------------------------------------------------------------------
\109\ OPR Report, p. 15.
\110\ Contrast this statement with other testimony, such as Vince
Foster's, that documents of ``kickbacks'' or some other financial
allegations, simply could not all be destroyed. Furthermore, the idea
that anyone at the White House was concerned with documents being
destroyed in the Travel Office is inconsistent with the fact that there
was no control asserted over the office at any time during the weeks
before or after the firings. Neither Kennedy nor anyone else in the
White House Counsel's Office ever made any attempts to secure the
documents in the Travel Office.
---------------------------------------------------------------------------
Indeed, it is more likely that his sense of urgency was a
response to that which Watkins and Foster were responding--
pressure from Thomason and Mrs. Clinton. This is further
supported by evidence that Kennedy alerted the FBI that those
at ``the highest level'' in the White House wanted prompt
action on a matter allegedly involving financial
wrongdoing.\111\ Mr. Kennedy made the dubious explanation that
by highest levels, he must have been referring to Foster and
Watkins.\112\ It is unlikely that the highest levels referred
to individuals that Kennedy did not report to and in fact, were
on an equal footing with him.
---------------------------------------------------------------------------
\111\ OPR Report, p. 20.
\112\ Committee deposition of William Kennedy, April 9, 1996, p.
91.
---------------------------------------------------------------------------
At this time, the FBI was beleaguered by an embattled
Director and was operating under a reduced budget imposed by
President Clinton. When the White House called, the FBI
immediately dispatched two Headquarters agents, Pat Foran and
Howard Apple, despite their protests that it would be more
appropriate to assign a field agent.\113\ Mr. Kennedy was
adamant that FBI Headquarters personnel with a ``national
perspective'' be involved.\114\ The two agents arrived at the
White House Counsel's Office for an 11 a.m. meeting, which
lasted approximately 30 minutes.\115\
---------------------------------------------------------------------------
\113\ OPR Report, p. 17. Agent Howard Apple was the acting chief of
the Violent Crimes and Major Offenders section. Agent Pat Foran was the
Unit Chief of the Operational Intelligence Unit, Criminal Intelligence
Section, ``CID''.
\114\ DOJ, OPR interview of Howard B. Apple, Unit Chief of the
Interstate Theft Crimes Unit, Criminal Investigative Division, August
11, 1993.
\115\ OPR Report, p. 20.
---------------------------------------------------------------------------
Agent Apple reported that Kennedy told Agent Bourke that he
would contact the IRS if the FBI did not respond.\116\ Mr.
Kennedy repeated the statement at this meeting, that the
inquiry was directed from the highest levels. Although Kennedy
denies making any reference to the ``highest level,'' four FBI
agents testified under oath that the did.\117\ Agent Apple
testified that when he questioned Kennedy's reference, Kennedy
responded, ``Let's just say the highest level.'' \118\ Agent
Foran testified that he interpreted Mr. Kennedy's reference to
the ``highest levels'' to mean President Clinton or Vice
President Gore.\119\
---------------------------------------------------------------------------
\116\ OPR Report, p. 18.
\117\ See DOJ, OPR interviews of: Unit Chief Howard Apple, August
11, 1993; Patrick Foran, Unit Chief of the Operational Intelligence
Unit, Criminal Intelligence Section, August 16, 1993; Richard Wade,
Unit Chief of the Governmental Fraud Unit, Criminal Investigative
Division, August 11, 1993; Thomas Carl, Supervisory Special Agent in
the Government Fraud Unit, Criminal Investigation Division, August
1993.
\118\ General Accounting Office interview of Howard Apple, October
15, 1993. (Emphasis added.)
\119\ OPR Report, p. 20.
---------------------------------------------------------------------------
Mr. Kennedy also told the FBI agents that ``a company which
had done work for President Clinton during the campaign was
interested in obtaining a contract for the services provided by
the Travel Office,'' but had not been allowed to bid on the
business.\120\ During this discussion, Kennedy gave Agent Foran
an ``untitled document to read that he retrieved from a folder
in his desk.'' \121\ The agents testified that ``the document
repeated the suspicions regarding the Travel Office that
Kennedy had described to Foran and Apple orally.'' \122\
---------------------------------------------------------------------------
\120\ OPR Report, pp. 21-22.
\121\ Id.
\122\ OPR Report, p. 22.
---------------------------------------------------------------------------
Although Agents Foran and Apple were not allowed to keep
the document, both agents described it as a far lengthier
document than the Martens memo and dissimilar in format from
the Martens memo. This memo has never been produced to the
committee and the White House continues to claim it does not
exist.
The FBI agents ultimately told Kennedy that they were not
the appropriate unit to handle this matter and returned to FBI
Headquarters to determine who should assist. The agents
testified that they clearly had the sense that Kennedy was
under considerable pressure to resolve this matter.\123\ Mr.
Kennedy telephoned his good friend, Webster Hubbell, almost
immediately after the agents left his office.\124\ At this
time, Hubbell was the No. 3 person at the Justice Department
and, effectively, running the Department.
---------------------------------------------------------------------------
\123\ OPR Report, p. 25.
\124\ See Hubbell telephone log of 11:30 phone call from Kennedy to
Hubbell.
---------------------------------------------------------------------------
By 12:20 p.m. on May 13th, Martens responded to a request
from Thomason at the White House. Mr. Martens faxed information
to Thomason that ``aircraft are being reviewed for Sunday, if
needed . . . Penny [Sample, of Air Advantage] and I can be at
White House to assist `C' [Cornelius] as needed to begin
operations.'' \125\
---------------------------------------------------------------------------
\125\ Martens deposition, p. 187; Bobbie Faye Ferguson production,
BFF 1013.
---------------------------------------------------------------------------
A second set of FBI agents was sent to the White House to
meet with Kennedy the afternoon of May 13; Tom Carl and Rick
Wade.\126\ Mr. Kennedy repeated his message that this was an
``urgent matter'' which had interest from ``high levels.''
These agents similarly reported that Kennedy was ``very tense
and frustrated throughout the meeting.'' \127\ Mr. Kennedy
repeated the various allegations about the Travel Office
employees, including Thomason's allegations of kickbacks and
bribery. When it appeared that Kennedy was not making any
progress with the second set of FBI agents, he asked if it
would assist them if they spoke with someone who had more
direct evidence. Mr. Kennedy left and returned with Catherine
Cornelius, President Clinton's third cousin and current Office
of Administration Assistant. The agents were left alone with
Cornelius to discuss her ``allegations.'' \128\
---------------------------------------------------------------------------
\126\ Richard Wade was Unit Chief of the Governmental Fraud Unit,
Criminal Investigative Division; Thomas Carl was Supervisory Special
Agent in the Government Fraud Unit, Criminal Investigation Division.
\127\ OPR Report, p. 27.
\128\ OPR Report, pp. 29-31.
---------------------------------------------------------------------------
Ms. Cornelius reported to the agents that she had copied
and removed documents from the Travel Office in the course of
her investigation.\129\ She also relayed the information she
received from Harry Thomason about solicitations of kickbacks
from Miami Air. In addition, she gave her version of the
alleged ``lavish'' lifestyles of the Travel Office employees.
When Kennedy and Foster rejoined the meeting, they were told
that the agents were ``keying in'' on the bribery
allegation.\130\
---------------------------------------------------------------------------
\129\ OPR Report, p. 31.
\130\ OPR Report, p. 31.
---------------------------------------------------------------------------
The FBI accepted Cornelius' recitation of these otherwise
unsubstantiated allegations as sufficient predication to launch
a criminal investigation, with a particular focus on
``kickbacks'' for jurisdictional purposes.\131\ No one
questioned whether Cornelius had any conflicts of interest
concerning her investigation of the Travel Office employees.
Neither her relationship to President Clinton nor her widely
known desire to take over the Travel Office as its Director
were revealed to the FBI.\132\ An FBI headquarters supervisor
later testified that he was ``surprised'' that an interview of
Cornelius had occurred since witness interviews were supposed
to be handled by a case agent, not an FBI headquarters
supervisor.\133\
---------------------------------------------------------------------------
\131\ OPR Report, pp. 34, 36.
\132\ OPR Report, p. 30.
\133\ ``Report of OPR's Review of the Conduct of the FBI in
Connection with its contacts with the White House in the Travel Office
Matter,'' to JoAnn Harris, Acting Deputy Attorney General, from Michael
E. Shaheen, Jr. Counsel to the Office of Professional Responsibility,
March 18, 1994, p. 33, footnote 37.
---------------------------------------------------------------------------
Even as the FBI informed the White House it had sufficient
predication to launch an investigation on May 13, the White
House Counsel's Office shifted gears. Messrs. Foster and
Kennedy informed the FBI agents that the White House intended
to conduct an outside audit and would allow the FBI to proceed
with an investigation at a later point if it determined that
one were warranted.
Mr. Watkins' contemporaneous notes suggest a reason for
this dramatic shift in strategy:
What will reaction by press be if we do S&L/bank type
audit and no improper findings. . . . What are negative
political consequences if no criminal violations? \134\
---------------------------------------------------------------------------
\134\ Handwritten notes of David Watkins, May 14, 1993, ``White
House Travel,'' CGE 007989-7991.
The FBI telephoned the White House Counsel's office several
times that afternoon to insist that for the sake of the
investigation, FBI agents should be present in the Travel
Office during the audit. Mr. Foster offered to check with
``higher authority'' to see whether the FBI should participate
and promised to call back with an answer at 6:30 p.m.\135\
---------------------------------------------------------------------------
\135\ OPR Report, p. 33.
---------------------------------------------------------------------------
FBI White Collar Crime Unit Chief Tom Kubic \136\ testified
about the issue of whether FBI should be present at the audit.
He said that he thought ``that decision ought to be made not by
FBIHQ, but by the agent conducting the investigation in
consultation with the prosecutor.'' \137\ In a strange turn of
events, the FBI acquiesced when Foster called Agent Wade and
informed him that ``the White House did not want FBI agents to
accompany the auditors.'' \138\
---------------------------------------------------------------------------
\136\ Agent Kubic also was the supervisor for Agents Wade and Carl.
\137\ OPR Report, p. 33, fn. 37.
\138\ OPR Report, p. 36, fn. 41.
---------------------------------------------------------------------------
Agent Wade initially tried to convince Foster that FBI
involvement in the audit would prevent the auditors from
possibly being witnesses in a criminal matter. Mr. Foster
remained firm that he did not want agents present during the
audit.\139\ According to Foster's notes, he consulted with
Hubbell about the FBI being present. He wrote, ``WH [Hubbell] &
I, he agrees . . . discussion w/ Wade . . .'' \140\ A
commitment was made to the agents that the documents would be
properly secured. Mr. Kennedy had no recollection of any
identifiable actions by anyone in the White House to ensure
that records were properly secured.\141\
---------------------------------------------------------------------------
\139\ OPR Report, p. 37.
\140\ Vince Foster Travel Office notebook, CGE 1050.
\141\ Committee deposition of William Kennedy, April 9, 1996. pp.
98-99.
---------------------------------------------------------------------------
The only ``higher ups'' with whom Foster met on May 13
concerning this matter were President Clinton's Chief of Staff,
Mack McLarty and twice with Mrs. Clinton. Based upon the fact
that McLarty is not a lawyer, he would have little knowledge
about FBI concerns regarding the preservation evidence and the
likelihood that the auditors might become witnesses at a trial.
On May 13, Mrs. Clinton raised the topic of the Travel Office,
asking Foster, ``Are you on top of it?'' \142\ Mr. Foster
assured her that Kennedy was addressing the matter but that he
had ``just heard about it yesterday.'' \143\
---------------------------------------------------------------------------
\142\ Foster Travel Office notebook, CGE 000971. (In these same
notes Foster describes the First Lady's demeanor in this meeting--
``general impatience'' . . . ``general frustration.'')
\143\ Foster Travel Office notebook, CGE 000971.
---------------------------------------------------------------------------
Mr. Foster recorded in his notebook that in his second
meeting with Mrs. Clinton, she appeared less than satisfied
with the timeliness of decisionmaking.\144\ Mr. Foster
particularly was concerned about who, other than Mrs. Clinton,
may have known about this second meeting or overheard the
conversation. He writes:
---------------------------------------------------------------------------
\144\ See Foster Travel Office notebook.
Q--anyone else present . . . don't recall . . . when
SS [Secret Service] in hall and door open I go in . . .
sometimes other persons present, sometimes not.\145\
---------------------------------------------------------------------------
\145\ Foster Travel Office notebook, CGE 001003.
This meeting occurred after Kennedy's meetings with the FBI
that day.
Mrs. Clinton also called McLarty on May 13 requesting to
meet, specifically to talk about the Travel Office. Mrs.
Clinton arrived at his office at approximately 3 p.m. McLarty
testified that,
[Mrs. Clinton] had heard that there might be serious
problems, deep concerns, in the Travel Office, about
management and conduct. . . . I responded that I was
aware of those possibilities and with that she said,
well, good, you are aware of it. I think this is a
serious matter, we should look into it.\146\
---------------------------------------------------------------------------
\146\ McLarty deposition, p. 33.
Following this meeting, McLarty met with Watkins, Foster,
and Patsy Thomasson about the Travel Office at approximately 4
p.m.\147\ Prior to the start of this meeting, Foster told Patsy
Thomasson that his ``clients,'' a reference to the President
and Mrs. Clinton, were very concerned about the Travel
Office.\148\ At this meeting, they decided to call in an
outside company to audit the Travel Office.
---------------------------------------------------------------------------
\147\ McLarty deposition, pp. 30-31; OPR interview of P. Thomasson,
September 22, 1993, p. 2.
\148\ OPR interview of P. Thomasson, p. 2.
---------------------------------------------------------------------------
Later that evening, Watkins and Patsy Thomasson contacted
Larry Herman of KPMG/Peat Marwick (Peat Marwick).\149\ Mr.
Herman had already volunteered his services for NPR and had
been scheduled to conduct some NPR work the following day. Mr.
Watkins' assistant, Jennifer O'Connor, later contacted Herman
to brief him with background information on the Travel Office
work.\150\
---------------------------------------------------------------------------
\149\ O'Connor deposition, p. 63.
\150\ O'Connor deposition, p. 63.
---------------------------------------------------------------------------
Director of Media Affairs Jeff Eller \151\ had at least two
meetings with Thomason, in which Eller advised quick firings to
get ahead of the press story.\152\ Mr. Thomason had two
messages from Eller on this date, May 13, marked ``very
important.'' Mr. Eller was working on ``May 13 talking
points,'' which assumed the Travel Office firings were to occur
on that day and that the FBI was investigating.\153\
---------------------------------------------------------------------------
\151\ It was revealed that Eller had a close, personal relationship
with Catherine Cornelius during this period.
\152\ Committee deposition of Jeff Eller, April 18, 1996, pp. 15-
16. Outside of these two meetings, Eller could recall virtually nothing
of substance and stated, ``I don't recall,'' ``I don't know'' or ``I
have no recollection,'' almost 700 times in the course of his
deposition in response to questions about his involvement in and
knowledge of the firings.
\153\ May 13, 1993, talking points on the Travel Office by Jeff
Eller, CGE 7933. (Although Eller could not recall doing the talking
points or discussing them with anyone, Patsy Thomasson, John Podesta,
Todd Stern and others identified them as ``Jeff Eller's Talking
Points.'')
---------------------------------------------------------------------------
That evening of May 13, 1993, Foster called to update Mrs.
Clinton on the day's activities. The call came in during a 3-
hour dinner Mrs. Clinton had with Harry Thomason in the
residence.\154\ Despite the flurry of events on this day, as
well as the keen and urgent interest expressed by both Mrs.
Clinton and Thomason throughout this dinner, neither has any
specific recollection of any discussions about the Travel
Office during that dinner.
---------------------------------------------------------------------------
\154\ White House residence logs.
---------------------------------------------------------------------------
GAO investigators asked Mrs. Clinton in March 1994, if she
participated in ``any other discussions with White House staff
or Mr. Thomason concerning the White House Travel Office matter
during the period leading up to the removal of the Travel
Office employees on May 19, 1993? If so, when and how would you
describe those discussions.'' \155\ Mrs. Clinton decided to
limit her April 6, 1994, response with the oft-repeated mantra:
---------------------------------------------------------------------------
\155\ GAO questions submitted to Mrs. Clinton, April 6, 1994.
She has no specific recollection of any particular
conversation with Mr. Thomason on this issue at that
time.\156\
---------------------------------------------------------------------------
\156\ Id.
Two years later Mrs. Clinton responded under oath to the
---------------------------------------------------------------------------
committee's March 1996 interrogatories:
I believe I became aware from Vincent Foster or Harry
Thomason of concerns about financial mismanagement in
the White House Travel Office. . . . I cannot recall
specific conversations with him regarding the White
House Travel Office or its personnel, but as indicated
above, it is possible that at some point in May 1993,
he may have mentioned to me issues of possible
financial mismanagement in the Travel Office. I do not
recall what, if anything, I may have said to him on
this topic.\157\
---------------------------------------------------------------------------
\157\ Mrs. Clinton's answers to Government Reform and Oversight
Committee's interrogatories, March 21, 1996.
The evidence points to Harry Thomason as the first person
to pass on rumors of wrongdoing in the Travel Office to Mrs.
Clinton. It is impossible that Foster could have been the
person who first told Mrs. Clinton about the Travel Office
matter unless he was lying to his notebook when he said he
first heard about it on May 12. It is clear that Mrs. Clinton
knew about the Travel Office at the time she first approached
Foster and that she was not responding to information he was
relaying to her. Moreover, David Watkins' notes state that on
May 12, 1993, Mrs. Clinton told Thomason she wanted them all
fired that day.\158\ Mr. Thomason confirmed through his
attorney to the White House Counsel's office that he told
Watkins that Mrs. Clinton shared his views that the Travel
Office employees should be replaced.\159\
---------------------------------------------------------------------------
\158\ Notes of David Watkins, May 31, 1993, Watkins document
production, PM 000169.
\159\ Thomason deposition, p. 228; handwritten notes of Associate
White House Counsel Natalie Williams, DF 780464.
---------------------------------------------------------------------------
The only other source of rumors that the committee has come
across in over a year of investigation was Craig Livingstone.
Mr. Livingstone testified that he heard of rumors in the spring
of 1993 from a source he could not identify. He passed those
rumors on to Kennedy, who thanked him.\160\ Mr. Kennedy
testified that he considered Livingstone's rumors to be the
``worst kind of third party hearsay'' and that he took no
action and made no response to the rumors.\161\
---------------------------------------------------------------------------
\160\ Livingstone deposition, March 22, 1996, pp. 27-28.
\161\ OPR Report, p. 10, fn. 10. (Mr. Kennedy pinpointed the date
of his receipt of these rumors at February 1993.)
---------------------------------------------------------------------------
Recently Mrs. Clinton denied even knowing who Livingstone
was in 1993. Mr. Kennedy denied ever talking with Mrs. Clinton
about these matters. This leaves Harry Thomason as the only
possible source of these allegations against the Travel Office
employees. Neither John Podesta nor Todd Stern could uncover
any other sources of the rumors in their White House
investigation.\162\ The same is true of all the other
investigations.
---------------------------------------------------------------------------
\162\ See committee depositions of John Podesta, June 5, 1996 and
Todd Stern, May 31, 1996.
---------------------------------------------------------------------------
It is doubtful that either Livingstone or Kennedy could
have informed Mrs. Clinton of all the rumors she reported
hearing. It is most likely that by at least May 12, Thomason
had ample opportunity and informed Mrs. Clinton of his
allegations against the Travel Office employees. David Watkins'
``soul cleansing'' memorandum provides further confirmation:
[T]he First Lady took interest in having the Travel
Office situation resolved quickly, following Harry
Thomason's bringing it to her attention. Thomason
briefed the First Lady on his suspicion that the Travel
Office was improperly funnelling business to a single
charter company, and told her that the functions of
that office could be easily replaced and reallocated.
Once this made it onto the First Lady's agenda, Vince
Foster became involved, and he and Harry Thomason
regularly informed me of her attention to the Travel
Office situation--as well as her insistence that the
situation be resolved immediately by replacing the
Travel Office staff.
Foster regularly informed me that the First Lady was
concerned and desired action--the action desired was
the firing of the Travel Office.\163\
---------------------------------------------------------------------------
\163\ Watkins memorandum, CGE 012287.
---------------------------------------------------------------------------
May 14, 1993, Friday
On May 14, 1993, the White House brought in what it
heralded as an ``independent'' auditor. In fact, the individual
brought in to head the White House Travel Office review was
neither independent nor an auditor. The White House engaged the
management consulting division, not the public accounting
division of Peat Marwick, to conduct its ``Management Review''
of the Travel Office. Peat Marwick's engagement letter, draft
report and final report all state that Peat Marwick was not
asked to and indeed did not conduct the work necessary for an
``audit, examination or review'' in accordance with established
accounting standards.\164\ Although the Management Review team
was directed to look for kickbacks, it found no such evidence.
---------------------------------------------------------------------------
\164\ CGE 006965-006980. Mr. Herman, partner in charge of the
review for Peat Marwick, confirmed ``we were never asked to perform an
audit.'' Response to committee interrogatories, June 19, 1996.
---------------------------------------------------------------------------
Throughout the day, Patsy Thomasson kept Watkins and
Kennedy apprised of developments.\165\ Mr. Kennedy called FBI
Agent Carl during the course of the Peat Marwick review to
advise him of the progress.\166\
---------------------------------------------------------------------------
\165\ Committee deposition of Patsy Thomasson, April 22, 1996, pp.
98, 101. Mr. Watkins was out of town at the time attending his
daughter's graduation.
\166\ OPR Report, p. 44.
---------------------------------------------------------------------------
The White House directed Peat Marwick's efforts in the
Travel Office review. In its draft report, Peat Marwick stated,
``The procedures we performed were limited in nature and extent
to those which the Office of the Counsel determined best fit
its needs.'' \167\ In contrast, the final report, states that
the Office of Management and Administration limited the review
procedures.\168\ The distinction is telling, given the fact
that the White House Counsel's Office would determine whether
or not the FBI proceeded with a criminal investigation.
Obviously, the White House did not want the White House
Counsel's role in directing Peat Marwick's efforts to be
revealed in its final report.
---------------------------------------------------------------------------
\167\ CGE 006965.
\168\ CGE 006980.
---------------------------------------------------------------------------
Over the course of the last 3 years the White House has
maintained that the Travel Office records were not auditable.
The testimony of Dan Russell, a Peat Marwick accountant,
contradicts this.\169\ He testified that the White House Travel
Office records were indeed auditable and that an audit of the
records could have been performed within several weeks.\170\
---------------------------------------------------------------------------
\169\ For example, in the White House Management Review it stated
that Peat Marwick was unable to conduct a formal audit because
financial records were too disorganized and irregular. WHMR, p. 10.
\170\ Russell deposition, p. 59.
---------------------------------------------------------------------------
In a morning meeting in McLarty's office, Eller argued
vigorously that the employees should be fired that day.\171\
Mr. Eller later explained to the GAO that he made this argument
only under the assumption that the decision to fire the
employees had already been made by Watkins and Patsy Thomasson.
---------------------------------------------------------------------------
\171\ McLarty deposition, p. 35. Other evidence shows that Eller
had been meeting with Harry Thomason and Cornelius throughout this
week.
---------------------------------------------------------------------------
At approximately 6:30 or 7 p.m. on May 14, Foster asked
Watkins to speak with Mrs. Clinton about the Travel Office.
Mrs. Clinton had inquired about the Travel Office with Foster
earlier in the day.\172\ Even though Watkins was in Memphis,
TN, trying to celebrate his daughter's graduation, Foster
insisted that:
---------------------------------------------------------------------------
\172\ OPR Report, p. 45.
it was important that [he] speak directly with the
First Lady that day. [Watkins] called her that evening
and she conveyed to [him] in clear terms her desire for
swift and clear action to resolve the situation.\173\
---------------------------------------------------------------------------
\173\ Watkins memorandum, CGE 012287.
---------------------------------------------------------------------------
During this conversation, Watkins recorded that Mrs. Clinton:
mentioned that Thomason had explained how the Travel
Office could be run after removing the current staff--
that plan included bringing in World Wide Travel and
Penny Sample to handle the basic travel functions, the
actual actions taken post dismissal--and in light of
that she thought immediate action was in order.\174\
---------------------------------------------------------------------------
\174\ Id. Watkins also reported that ``Harry Thomason indicated
that he could put a more efficient structure in place in an hour's time
to handle all the tasks of the Travel Office.'' CGE 012292.
Foster was present during the conversation.\175\
---------------------------------------------------------------------------
\175\ Responses to questions for the First Lady from the Committee
on Government Reform and Oversight of the House of Representatives,
March 21, 1996, p. 11.
---------------------------------------------------------------------------
In contrast, Mrs. Clinton's recall of this conversation was
first provided in responses to GAO inquiries on April 6, 1994,
in which she responded:
Mrs. Clinton does not recall this conversation with
the same level of detail as Mr. Watkins. She recalls
that on Friday, May 14, she had a very short telephone
call with Mr. Watkins. Mr. Watkins stated that Mr.
Foster had mentioned that Mrs. Clinton was interested
in knowing what was going on with the Travel Office.
Mrs. Clinton knew that Mr. Watkins was out of town. Mr.
Watkins conveyed to her that even though he was not in
Washington, his office was taking appropriate
action.\176\
---------------------------------------------------------------------------
\176\ April 6, 1994 response to GAO interrogatories by Mrs.
Clinton.
Mrs. Clinton also told the GAO that she ``did not know the
origin of the decision to remove the White House Travel Office
employees'' and that she had ``no role in the decision to
terminate the employees.'' \177\ These statements are
inconsistent with Watkins' sworn statements. He testified that
``Foster regularly informed me that the First Lady was
concerned and desired action--the action desired was the firing
of the Travel Office staff.'' \178\
---------------------------------------------------------------------------
\177\ Mrs. Clinton's responses to committee interrogatories, p. 3.
\178\ Watkins' testimony in committee hearing, January 17, 1996;
see also Watkins ``soul cleansing'' memo, CGE 012287.
---------------------------------------------------------------------------
Almost 2 years later, Mrs. Clinton took an oath that her
original answers were accurate. However, she provided
additional information which indeed does show a role:
I may have expressed the view that appropriate action
should be taken if the circumstances warranted it. . .
. I expressed my concern . . . that if there were
fiscal mismanagement in the Travel Office or in any
part of the White House, it should be addressed
promptly.\179\
---------------------------------------------------------------------------
\179\ Mrs. Clinton's answers to interrogatories, pp. 12-13.
On this day, Harry Thomason was asking about the Travel
Office developments throughout the day. He had a message from
Cornelius that ``the audit started in the travel office.''
\180\ Late that evening, Patsy Thomasson interrupted the
Watkins' family graduation celebration again to ``urge him'' to
call Harry Thomason who was staying at the Jefferson Hotel. Mr.
Watkins reached Harry Thomason at midnight and told him the
Peat Marwick report would not be released before Monday.\181\
It appears that Harry Thomason and Eller had been pressing
since the previous day for the firings to take place before 5
p.m. on May 14, 1993, which was a Friday.\182\
---------------------------------------------------------------------------
\180\ Thomason message logs, Thomason document production, Bates
Stamp No. 00000112.
\181\ FBI 302 interview of David Watkins, August 10, 1993.
\182\ It is a common practice to release information on Fridays to
minimize news coverage.
---------------------------------------------------------------------------
May 15-16, 1993, Saturday-Sunday
Throughout the weekend, the Peat Marwick review continued.
Despite numerous conversations with FBI Headquarters, no one at
the White House ever informed the agents that Peat Marwick was
not performing an ``audit.''
Moreover, the White House did not inform the FBI that it
was conducting its own investigation. Patsy Thomasson enlisted
Jennifer O'Connor and Brian Foucart under the pretense of an
NPR review to interview Billy Dale and report back to her.\183\
Ms. Thomasson requested they provide a memo of the
results.\184\ Ms. Thomasson also tried to enlist one of her
assistants, Peter Siegel, to go on a trip scheduled for the
following Monday to shadow the Travel Office employees and
record an ``hour-by-hour'' accounting of what they did. This
mission was to be carried out ``unobtrusively.'' \185\
---------------------------------------------------------------------------
\183\ Committee deposition of Brian Foucart, May 3, 1996, pp. 30-
32.
\184\ OPR Report, p. 46.
\185\ White House typed memo ``For Peter,'' undated [but is from
May 1993], CGE 008268.
---------------------------------------------------------------------------
On May 15, Kennedy contacted FBI Agent Carl at home to
receive an private briefing from Peat Marwick. Agent Carl
arrived at the White House at 5 p.m. with the Washington
Metropolitan Field Office Supervisor assigned to the matter,
David Bowie.\186\ Again, Kennedy assured the FBI agents that
the Travel Office records were secure.
---------------------------------------------------------------------------
\186\ OPR Report, p. 46.
---------------------------------------------------------------------------
Also on May 15, McLarty telephoned Foster to tell him that
he was going to New York with Mrs. Clinton that evening and
wanted Foster to ``give highlights, status'' to him before the
trip.\187\ Steve Davison of World Wide Travel reported, ``We'd
heard that Mack couldn't get a hotel room, that HRC was pissed
at Travel staff,'' as a possible reason for the firings.\188\
---------------------------------------------------------------------------
\187\ Foster Travel Office notebook, CGE 000909.
\188\ WHMR interview notes of Steve Davison, June 5, 1993, CGEPR
185-198.
---------------------------------------------------------------------------
On Sunday, May 16, 1993, Patsy Thomasson continued her own
investigative work by calling in several computer people to
remove the hard drives on all the computers in the Travel
Office. Again, the FBI was not informed of these
activities.\189\
---------------------------------------------------------------------------
\189\ Thomasson deposition, pp. 123-124.
---------------------------------------------------------------------------
A World Wide Travel employee Fan Dozier talked with Harry
Thomason on this day and recounted that Thomason remarked:
``you mean you're not up there working [in the Travel
Office]?'' \190\ Mr. Thomason added that ``the First Lady would
be very upset'' to hear that World Wide Travel was not already
in place.\191\
---------------------------------------------------------------------------
\190\ WHMR interview notes of Fan Dozier, June 8, 1993, CGEPR 204-
211.
\191\ Id.
---------------------------------------------------------------------------
Later that evening, McLarty was in the White House
residence for a dinner with President Clinton and Mrs. Clinton
and several cabinet members.\192\ Mrs. Clinton spoke with
McLarty in private about the progress of the Travel Office
investigation. McLarty later added a notation to one of the
numerous chronologies subsequently created by the White House
Counsel's office that on this date, there was ``HRC pressure.''
\193\ Although McLarty previously did not acknowledge this
meeting, he testified before this committee that Mrs. Clinton
did pressure him to act at this time.\194\
---------------------------------------------------------------------------
\192\ McLarty deposition, pp. 37-38.
\193\ ``Chronology of Travel Office Firings (as of 5.25.93)'' with
handwritten notations by Chief of Staff Mack McLarty, CGEPR 0563-0564.
\194\ McLarty deposition, pp. 40-42.
---------------------------------------------------------------------------
Mr. Foster arrived at the White House for a late night
meeting with President Clinton at approximately 9 p.m. The
meeting lasted approximately 2 hours, until 11 p.m. On Foster's
calendar detailing his activities on May 16 for Travel Office
matters, the only notation he wrote was ``?'' \195\
---------------------------------------------------------------------------
\195\ Foster Travel Office notebook, CGE 911, 1039.
---------------------------------------------------------------------------
May 17, 1993, Monday
Mr. Watkins had an early morning meeting with McLarty. Mr.
McLarty informed him that this matter was on Mrs. Clinton's
``radar screen.'' \196\ Mr. Watkins recorded that there ``would
be hell to pay if . . . we failed to take swift and decisive
action in conformity with the First Lady's wishes.'' \197\
---------------------------------------------------------------------------
\196\ Watkins memorandum, CGE 012287.
\197\ Watkins ``soul cleansing memo,'' CGE 012287.
---------------------------------------------------------------------------
Mr. Watkins drafted a memo to McLarty later this same day
covering the planned Travel Office firings. Mr. Watkins copied
this memo to Mrs. Clinton.\198\ The memo was faxed to Eller who
was traveling with President Clinton in California.\199\ Mr.
Eller discussed the memorandum with Presidential confidante
Bruce Lindsey. In turn, Lindsey discussed the memorandum with
President Clinton in California.\200\ That morning, Lindsey
placed a phone call to Kennedy from Air Force One and left a
message for Kennedy to call him.\201\
---------------------------------------------------------------------------
\198\ Early White House productions of this memorandum to the
committee contained copies of this memorandum with Mrs. Clinton's names
crossed out and unable to be read. No explanation has been given for
why her name had been crossed out on these copies.
\199\ White House Management Review interview notes of Bruce
Lindsey, June 9, 1993, CGEPR 331-334. President Clinton's ill-fated
trip to California ended with a $200 haircut on the runway of the Los
Angeles airport.
\200\ The fact that the President knew of the firings prior to
their occurrence on May 19 had always been denied by the White House
prior to this investigation. The committee uncovered notes that
detailed the briefing of President Clinton on this matter. For example,
on July 2, 1993, during a press briefing on the release of the White
House Management Review, Mack McLarty was asked:
Question. Was the President aware that the Travel Office was being
dismissed before it was dismissed?
Mr. McLarty. He was interviewed, Mr. Podesta interviewed him. He
was not aware of the other----
Question. Neither one?
Mr. McLarty. I don't believe he was, not to my knowledge. And I
think in terms of perhaps his being aware of some of this perhaps he
was ill served in that regard.
\201\ Phone logs of William Kennedy, CGE 23023. Neither Kennedy nor
Lindsey have any recollection of this telephone call. See committee
deposition of Bruce Lindsey, July 29, 1996, p. 50; see also Kennedy
deposition (April 9, 1996), pp. 130-131.
---------------------------------------------------------------------------
Mr. Dale went to see Watkins later this day to inquire
about retiring. Mr. Watkins advised Dale that he did not want
to discuss it at this time and scheduled a meeting for
Wednesday morning, May 19, at 10 a.m. with all the
employees.\202\
---------------------------------------------------------------------------
\202\ WHMR, p. 11.
---------------------------------------------------------------------------
May 18, 1993, Tuesday
The FBI called the White House to see what was happening to
the ``audit'' only to be put off for the day. Throughout the
day, Cornelius was finalizing plans with World Wide Travel
staff to effectuate the takeover of the Travel Office
operations. A new director of the Travel Office was selected by
David Watkins: the reticent Brian Foucart.\203\ Mr. Foucart
recalled little of any events while at the White House. He
testified that he could not recall what his title was or
exactly when he began working there.\204\
---------------------------------------------------------------------------
\203\ Foucart deposition, p. 42.
\204\ Mr. Foucart arrived at the White House after serving as the
budget and finance person at the DNC.
---------------------------------------------------------------------------
Harry Thomason also had a meeting with Craig Livingstone on
this day although the purpose is unknown.\205\ Ms. Cornelius
enlisted Thomason's help as she had in the previous week to
determine how the Travel Office could be run.\206\
---------------------------------------------------------------------------
\205\ Mr. Thomason had undated notes of a meeting that he testified
was with Craig Livingstone to discuss Livingstone's interest in
securing the Director's job in the White House Military Office.
Thomason did not recall when this meeting occurred. On May 18, 1993,
Livingstone put Anthony Marceca on an access list to the White House.
CGE 47618.
\206\ Cornelius deposition, pp. 116-117.
---------------------------------------------------------------------------
At the end of the day, Kennedy put his arms around the
shoulders of FBI agents assigned to the White House, Dennis
Sculimbrene and Gary Aldrich and said,
You guys are really going to thank me in the morning.
. . . I can't talk about it right now, but I kept you
out of something and you are going to be very grateful
in the morning that you were kept out of this.\207\
---------------------------------------------------------------------------
\207\ Committee deposition of Gary Aldrich, July 18, 1996, p. 49.
The only event that occurred the next day was the firing of the
seven White House Travel Office employees and the announcement
that they were under investigation by the FBI. We now know that
Kennedy exhibited an uncanny foresight into future events.
However, Kennedy's statement reveals a level of prescience that
being a part of the firing of the seven Travel Office employees
was not something anyone wanted to acknowledge.
May 19, 1993, Wednesday
While the FBI awaited the completion of what it had been
falsely told was going to be an audit, the White House suddenly
decided to fire the Travel Office employees on Wednesday, May
19, 1993. The firings were announced in a press briefing and
the President's press office proceeded, contrary to official
policy, to announce that there was an ongoing FBI
investigation.
Early that morning, Watkins provided White House Press
Secretary Dee Dee Myers with talking points which included the
mention that the White House asked the FBI to investigate.\208\
When Kennedy called Agents Carl and Wade to tell them about the
impending firings, Agent Wade warned ``that the termination
could pose problems for the investigation.'' \209\ The White
House ignored the FBI's concerns and neither the FBI nor the
Justice Department ever publicly voiced any further objections.
---------------------------------------------------------------------------
\208\ WHMR, p. 11.
\209\ OPR Report, p. 49.
---------------------------------------------------------------------------
When word of the firings reached the Justice Department,
its Criminal Division Acting Chief, Jack Keeney, drafted an
``Urgent Memo'' on May 19, 1993. In that memorandum, he noted
that the FBI had become involved due to the ``kickbacks''
allegation.\210\
---------------------------------------------------------------------------
\210\ Urgent memo of May 19, 1993 from Jack Keeney to Janet Reno,
Philip Heymann and Webster Hubbell. While Attorney General Reno, Deputy
Attorney General Heymann and Associate Attorney General Hubbell all
deny reading this memo until the following week, an assistant to
Heymann, Cynthia Monaco states that she personally handed the memo to
Heymann on the day it was written or possibly as late as the next day
and that she watched him read it according to her informal interview
with the committee. Nevertheless, the oblivious response from the
Justice Department to the highly unorthodox developments of this
investigation in the earliest days seemed to set a pattern.
---------------------------------------------------------------------------
Peat Marwick's report was not available when the White
House announced the firings on May 19. In fact, it was not yet
written. Consequently, Peat Marwick's primary author, partner
Larry Herman, was ushered into a meeting with George
Stephanopoulos, Dee Dee Myers, Vince Foster, Bill Kennedy,
Ricki Seidman and Harry Thomason. He was immediately greeted
with the question, ``Where the hell is the report?'' \211\ Mr.
Herman testified that Harry Thomason pressed him with questions
about whether they had uncovered anything about ``kickbacks.''
\212\
---------------------------------------------------------------------------
\211\ Herman interview.
\212\ Id.
---------------------------------------------------------------------------
During this timeframe, Thomason spoke to Ross Fischer of
Miami Air and discovered that Fischer never made any
allegations of kickbacks.\213\ Harry Thomason quickly learned
that his allegations were turning to dust.
---------------------------------------------------------------------------
\213\ Staff interview of Ross Fischer in fall 1995. This
information was notably absent from any public accounts or in the White
House Management Review which was released on July 2, 1993 absent this
exculpatory information.
---------------------------------------------------------------------------
Meanwhile, Thomason contacted his partner Darnell Martens
and asked for his assistance in contacting Penny Sample of Air
Advantage to come to Washington to help in the Travel Office.
She arrived the next day.\214\ Mr. Thomason again was vague
about his participation to summon Penny Sample. He testified:
---------------------------------------------------------------------------
\214\ Martens deposition, p. 173.
Question. There was a time before the firings when
Darnell Martens placed a telephone call to Penny
Sample. It was in May of 1993. Did you have any
involvement or offer any advice concerning the
telephone call that was placed to Penny Sample to come
to the White House?
Answer. I don't know. I don't know. I mean, at one
point I remember somebody in the White House said: Who
could do this if we decided to make a change in this
department? But so, I don't remember anything else
about it actually.
Question. Do you know who recommended Mr. Martens
call Ms. Sample to come to the White House prior to the
firing of the White House Travel Office employees on
May 19th?
Answer. I don't. Mr. Martens was at the White House
in a meeting with several people later, and I'm not
sure what the date was or anything, and it came out of
that conversation. But exactly who, I couldn't tell
you.\215\
---------------------------------------------------------------------------
\215\ Thomason deposition, pp. 17-18.
---------------------------------------------------------------------------
May 20, 1993, Thursday
The firings were met with near universal skepticism in the
press once it was revealed that President Clinton's cousin and
Harry Thomason were in the wings to take over the operations of
the White House Travel Office. The press soon began to learn
just how instrumental they had been in generating the firings.
The announcement of the FBI investigation was a particular
problem because to this point, the FBI had allowed the White
House to totally control the alleged investigation. The White
House had already made a premature announcement of the
investigation and now the FBI press office was busy catching up
with the White House ``press responses.'' The FBI had to deal
with White House press responses that continued to support the
White House's indications that there would be an FBI
investigation.\216\
---------------------------------------------------------------------------
\216\ See OPR Report, p. 62.
---------------------------------------------------------------------------
The FBI press response did concede that the FBI planned to
await the ``final report of the auditors'' in order to
``analyze their findings and conduct appropriate
investigation.'' \217\ At this point, the FBI did not have the
report and had not learned there was not going to be an
``audit'' upon which to base an investigation. FBI Media
Affairs Director John Collingwood testified that he sent copies
of his ``press responses'' to the White House throughout this
week.\218\
---------------------------------------------------------------------------
\217\ FBI press response, May 20, 1993, OPR Report, p. 57; see
supra note 64.
\218\ OPR Report, p. 57, fn. 65.
---------------------------------------------------------------------------
The press also learned on this date that Cornelius and
Clarissa Cerda prepared a February 15, 1993 memorandum for
Watkins which positioned them as co-directors of the Travel
Office. When this broke in the press, Patsy Thomasson
instructed Cornelius and Cerda to deny that Watkins ever read
the memo, a claim which both believed was false.\219\ A White
House created chronology disclosed that Gene Gibbons of Reuters
and Wolf Blitzer of CNN informed Stephanopoulos that they had
obtained this memorandum. They agreed to hold their stories
until Watkins, Myers and Stephanopoulos met with the reporters'
bureau chiefs the following morning.\220\
---------------------------------------------------------------------------
\219\ Cornelius deposition, p. 143; committee deposition of
Clarissa Cerda, April 16, 1996, pp. 124-125. Ms. Cornelius testified in
detail to the actions taken by Patsy Thomasson against her in her
attempt to ``save David's job.'' Not only was Cornelius asked to resign
from her job at the White House, but her mess privileges were taken
away by Thomasson when she refused to do so. Ms. Cornelius testified
that she would not leave the White House unless President Clinton asked
her to do so. Ms. Cornelius' attorney authored a letter to Deputy Chief
of Staff Bill Burton requesting a substantial raise for Ms. Cornelius
above the pay rate of the job. In this letter, it is noted that
Cornelius had ``admirably chosen to remain silent'' as a ``complete
team player'' throughout this whole Travel Office ordeal. Letter from
Stephen Braga to Charles William Burton, August 6, 1993, CGE 029028-30.
\220\ ``Chronology of Travel Office Firings (as of 5.25.93)'', CGE
563-564.
---------------------------------------------------------------------------
Once Eller's personal relationship with Cornelius became
public, he told interviewers that he threw away all his
documents and allegedly ``removed himself'' from the issue.
However, Cornelius testified that Eller was engaged in a heated
discussion with Stephanopoulos about this matter about this
time--an altercation neither can now recall.\221\
---------------------------------------------------------------------------
\221\ Cornelius deposition, p. 142; committee deposition of Jeffrey
Eller, April 18, 1996, p. 129; committee deposition of George
Stephanopoulos, May 15, 1996, p. 33.
---------------------------------------------------------------------------
With the pressure growing for a Peat Marwick report that
matched the advance hype, Larry Herman called in front office
reinforcements from Peat Marwick. Mr. Kennedy informed the FBI,
which had made several requests for the report, that the
``auditors'' were working on the report but that ``changes were
being made to the draft and that [the FBI] would get a copy as
soon as it was available.'' \222\
---------------------------------------------------------------------------
\222\ OPR interview of Supervisory Special Agent Thomas Carl,
August 1993, p. 10.
---------------------------------------------------------------------------
May 21, 1993, Friday
The FBI still had not received what they thought would be
an ``audit'' report from the White House. Ms. Myers and
Stephanopoulos met with various White House personnel to try to
put a story together to quell the growing press fury. Mr.
Foster recorded in his notes of this date that at some point
Stephanopoulos was told of HT's [Harry Thomason's] memo and
that Stephanopoulos ``gets upset'' because he had already told
the press that Thomason had no financial interest at
stake.\223\
---------------------------------------------------------------------------
\223\ Foster Travel Office notebook, CGE 917.
---------------------------------------------------------------------------
Ann Devroy and Ruth Marcus of the Washington Post contacted
Stephanopoulos about the ``Martens memo'' they had obtained.
This memorandum detailed Martens' efforts to obtain Travel
Office business as well as his call to Dale in February 1993,
about obtaining Travel Office business.
The story about the Cornelius/Cerda memorandum to take over
the Travel Office was reported that morning by CNN and
Stephanopoulos quickly dismissed it as the work of yet another
``low-level staffer'' in the Clinton White House. He claimed
that the memorandum had nothing to do with the firings. The
Martens memorandum's release made it imperative that the
``management decision'' to fire the employees not only be
backed up by Peat Marwick but also by the FBI.
Delays in the final Peat Marwick review and the FBI formal
announcement of an investigation had become a problem. The
White House called John Collingwood at the FBI to come to a
White House press strategy meeting. Once there, Stephanopoulos
asked him to revise his FBI press response.\224\ He did so upon
his return to the FBI and faxed it to the White House. Mr.
Stephanopoulos used the revised response in his 4 p.m. press
conference.
---------------------------------------------------------------------------
\224\ OPR Report, p. 62.
---------------------------------------------------------------------------
The White House finally released the long-awaited Peat
Marwick review at this press conference. The FBI did not
receive the Peat Marwick review until later that evening at
Headquarters. The assigned FBI field office did not receive the
report until the following week. Nevertheless, before anyone at
the FBI reviewed the Peat Marwick report, the FBI
``investigation'' had been confirmed.
In a previously undisclosed phone conversation between
White House Counsel Bernie Nussbaum and Deputy Attorney General
Phil Heymann on the morning of Friday, May 21, Nussbaum asked
Heymann if the White House could say that the FBI had signed
off on an investigation.\225\ Mr. Nussbaum later claimed that
Stephanopoulos pressed him to take action.\226\ Mr. Nussbaum
also said FBI Deputy Director Floyd Clarke happened to be in
Heymann's office when Heymann gave the go ahead to announce the
investigation.
---------------------------------------------------------------------------
\225\ WHMR interview notes of Bernard Nussbaum, June 8, 1993, CGEPR
380-382.
\226\ Id.
---------------------------------------------------------------------------
White House Deputy Director of Records Management Lee
Johnson sent a memorandum to Staff Secretary John Podesta on
this date expressing serious concerns about the records in the
Travel Office and the lack of control over these records.\227\
Podesta's office was responsible for records management at the
White House.\228\
---------------------------------------------------------------------------
\227\ CGE 7763.
\228\ May 21, 1993 memo to John Podesta from Lee Johnson, CGE
007763. This memo was not provided to the Justice Department in the
course of the investigation into Billy Dale. It was finally provided to
the defendant in the course of his trial after it became public. This
was among a number of documents that the White House was seriously
deficient in providing the Justice Department which continued to
receive records from the White House throughout the trial.
---------------------------------------------------------------------------
Mr. Johnson repeatedly contacted Steven Neuwirth in the
White House Counsel's office about this matter and received no
response. FBI Agent Sculimbrene also raised concerns about the
lack of control over the documents. He stated that he had seen
people throwing out records and documents from the Travel
Office and was shocked that there was absolutely no FBI
presence or control over the investigation at this point.\229\
Mr. Podesta's Deputy Todd Stern later noted that: ``document
handling . . . terrible . . . no documents secured . . . but
FBI may not want this--prejudice case . . . who drove it and
who knew.'' \230\
---------------------------------------------------------------------------
\229\ Sculimbrene Public Integrity interview, August 16, 1995. None
of the Justice Department prosecution team for the Dale case questioned
Agent Sculimbrene about these documents even though he made his
knowledge of the situation abundantly clear to his superiors at the
FBI. After Agent Sculimbrene was asked to testify in the Billy Dale
trial, he was treated as an outcast by his superiors at the FBI. Agent
Sculimbrene testified that he was drug tested for the first time in his
career and then ultimately removed from the White House so that he
would not cause the Clinton administration to be ``uncomfortable.''
After months of working without any assignments at a desk in the field
office, Agent Sculimbrene finally resigned from the FBI. FBI general
counsel Howard Shapiro attacked Agent Sculimbrene's integrity and
honesty in testimony before the committee. Testimony before the
committee, August 1, 1996.
\230\ Handwritten notes of Todd Stern, May 27, 1993, CGEPR 0679.
---------------------------------------------------------------------------
That evening, Cornelius and Cerda had dinner at the
Jefferson Hotel with Thomason and his White House assistant
Bobbie Faye Ferguson. Ms. Cerda told Ferguson that she and
Cornelius had been told to say that Watkins did not read their
February 15 memorandum.\231\ Ms. Cerda did not think this was
true and believed she was being asked to lie.\232\
---------------------------------------------------------------------------
\231\ Ferguson deposition, p. 81.
\232\ Committee deposition of Clarissa Cerda, April 16, 1996, pp.
124-125.
---------------------------------------------------------------------------
May 22, 1993, Saturday
The White House staff was reeling from a grueling press
week on both the Christophe haircut and the Travel Office
firings. President Clinton's staff gathered at the White House
throughout the weekend to ``war room'' the press strategy. Mr.
Thomason appeared at the White House over this weekend.\233\
---------------------------------------------------------------------------
\233\ Secret Service logs, CGE 9287.
---------------------------------------------------------------------------
May 24-25, 1993, Monday-Tuesday
On May 24 and 25, 1993, an increasingly skeptical press
continued to question White House cronyism and misuse of the
FBI. The Attorney General was asked by a Washington Post
reporter on May 24, if she was aware of the White House
contacts with the FBI. General Reno denied any such knowledge
in spite of the fact that an Urgent Memo about the matter was
provided to her on May 19.\234\
---------------------------------------------------------------------------
\234\ OPR Report, p. 68, fn. 76.
---------------------------------------------------------------------------
The press learned that Collingwood had been at the White
House on Friday, May 21, and continued to raise questions about
President Clinton's staff exerting pressure on the FBI. New
York Times columnist William Safire accused the White House of
``politicizing'' the FBI during an appearance on ``Meet the
Press'' on May 23 and again in his New York Times column on May
24.\235\
---------------------------------------------------------------------------
\235\ Numerous copies of Mr. Safire's column were produced by the
White House.
---------------------------------------------------------------------------
On May 25, President Clinton was questioned during a photo
session about Mr. Safire's allegations. President Clinton
responded that:
whenever you've asked me a question, I've told you
all I know about it. All I knew was there was a plan to
cut the size of the office, save tax dollars, save the
press money.
President Clinton's lack of knowledge is in conflict with Bruce
Lindsey's testimony that he briefed President Clinton on the
matter prior to the firings. When Lindsey briefed him,
President Clinton asked, ``What's it about?'' \236\
---------------------------------------------------------------------------
\236\ WHMR interview notes of Bruce Lindsey, CGEPR 331-334.
---------------------------------------------------------------------------
General Reno took the White House to task for directly
contacting the FBI without going through the Justice Department
and expressed her consternation with these events to President
Clinton's Counsel Bernard Nussbaum.\237\
---------------------------------------------------------------------------
\237\ OPR Report, pp. 68-69.
---------------------------------------------------------------------------
The White House announced that a ``White House Management
Review'' would be immediately undertaken to be presided over by
then-Chief of Staff Mack McLarty. Mr. McLarty was put in charge
of the internal investigation even though he clearly had a role
in the firings. The incongruity of putting the person who
authorized the firings in charge of this investigation ensured
from the beginning that the full story would not be told.
May 27, 1993, Thursday
White House Management Review co-author Todd Stern
memorialized his concerns in his handwritten notes:
problem is that if we do any kind of report and fail
to address these Qs [questions], press jumps on you
wanting to know answers; while if you give answers that
aren't fully honest (e.g. nothing re HRC) you risk
hugely compounding the problem by getting caught in
half-truths. You run the risk of turning this into a
`cover-up'. . . . We need to think seriously about
whether or not it won't be better to come clean . .
.\238\
---------------------------------------------------------------------------
\238\ Handwritten notes by Todd Stern, May 27, 1993, CGEPR 0682-
683.
Unfortunately, Mr. Stern's musings were never heeded--coming
clean was not on the White House agenda.
IV. The Travel Office Firings Were Part of a Campaign Payback Scheme
That was in Place Long Before May 1993
A. HARRY THOMASON SOUGHT THE TRAVEL BUSINESS FROM THE EARLY DAYS OF THE
TRANSITION, TOLD MRS. CLINTON HE COULD PROVIDE THE SERVICE AND
PRESIDENT CLINTON AND MRS. CLINTON PROVIDED THE ACCESS TO DO SO. HARRY
THOMASON MALIGNED THE TRAVEL OFFICE EMPLOYEES, AS WELL AS TRAVEL OFFICE
CONTRACTOR ULTRAIR IN ORDER TO MOVE THEM OUT OF THAT OFFICE. THOMASON'S
TRAVEL BUSINESS INTERESTS POSED AN INHERENT CONFLICT WITH HIS
INVOLVEMENT IN TRAVEL OFFICE DECISIONS OR ANY SOLICITATION OF BUSINESS
IN THIS AREA
The origins of the Travelgate story began long before the
May 19, 1993, firings and long before the Clintons crossed the
White House threshold in January 1993. Harry Thomason, famous
Hollywood producer and a long-time close friend of the
Clintons, became an indispensable member of the 1992 campaign
entourage. He and his wife provided much needed assistance:
from their own personal aircraft in the early days of the
campaign and help with Hollywood fund-raising, to scripting and
staging of the 1992 Democrat convention complete with a
Thomason produced video, ``The Man from Hope.''
1. Harry Thomason's ownership interest in aviation companies presented
inherent conflicts of interest in his seeking Travel Office
business
Mr. Thomason possessed an ownership interest in several
aviation oriented companies. He had a 33 percent ownership
interest in Thomason, Richland & Martens, Inc., (TRM), an
aviation consulting company based in Cincinnati, OH. TRM's cash
flow depended heavily on moneys derived from the Clinton/Gore
campaign from the fall of 1991 through the election in November
1992. This reliance continued throughout the Clinton/Gore
transition.
Mr. Thomason's two partners had a 33 percent ownership in
TRM. Darnell Martens was brought into TRM and served as the
president of the company. Martens testified how the company
began financially:
Question. And so there were the two financial
backers?
Answer. Yes.
Question. Did they in fact put up equal money----
Answer. No.
Question. Can you just explain what happened with
that?
Answer. Each were to put up $50,000. Harry put in 25
initially, Dan [Richland] did not. Maybe a year and a
half later, Dan put up 25,000. He subsequently put in
his other 25,000. And Harry has yet to put in his final
25,000.
Question. Were you a financial backer of the company?
Answer. Only from the aspect of bringing the
Executive Jet contract with me as part of the original
deal.
Question. And you served as president?
Answer. Correct.\239\
---------------------------------------------------------------------------
\239\ Martens deposition, p. 36.
Mr. Thomason met Darnell Martens in 1989 when he bought a
plane from Executive Jet while Martens was employed there.\240\
Mr. Martens, who claims his real life ambition was to work in
the television industry, kept in touch with Thomason over the
next several years. Mr. Martens testified that in 1991,
Thomason encouraged him to present a business plan for the
company that ultimately became TRM. TRM was incorporated in
November 1991, shortly after Bill Clinton announced he was
running for President.
---------------------------------------------------------------------------
\240\ Martens deposition, p. 10.
---------------------------------------------------------------------------
Mr. Martens additionally took on a role with a second Harry
Thomason-owned aviation company, the Thomason Aircraft Corp.,
as acting president. The Thomason Aircraft Corp., marketed
aircraft parts and some aircraft sales.\241\ This company
became a client of TRM and Martens worked between the two
companies in Ohio and California. At one point, Thomason
Aircraft supplied an eight-seater plane to TRM.
---------------------------------------------------------------------------
\241\ Martens deposition, p. 16. The Thomason Aircraft Corp. was a
``corporate aircraft maintenance facility at Van Nuys Airport,''
California. This company had a ``piston maintenance operation, a
turbine maintenance operation and then a parts department.'' Aircraft
sales was added to the company's activities the following year. Id.,
pp. 12-14.
---------------------------------------------------------------------------
Martens' income was covered under an arrangement he made
with Executive Jet to provide his salary for approximately 1
year. In May 1993, his 1 year contract was ending and the
additional commissions he obtained for his service to the
Clinton/Gore campaign were drying up. The access that Harry
Thomason could provide was an attractive solution for the cash
strapped start up company. Mr. Martens testified that after the
inauguration he wanted to have enough money so that he could
spend a few months doing research and ``get back to his
business plan'' providing financial advisory service for
companies that owned aircraft and developing ``benchmark
products.'' \242\
---------------------------------------------------------------------------
\242\ Id., pp. 14, 38, 45, 48.
---------------------------------------------------------------------------
2. TRM, Thomason's company, provided service to the Clinton/Gore
campaign and sought to capitalize on their association with the
new administration
In December 1991, Thomason told Martens that he had a
friend, Bill Clinton, who was running for President. In his
deposition, Martens explained:
I kind of rolled my eyes and said: Okay, so what?
And he goes: Well, it is Bill Clinton.
I had never heard of Bill Clinton. In fact, when he
said it, right then was the first time I had ever heard
the name.
So I said: Yes, so?
He goes: Well, the thing is that they have been
getting into chartering airplanes and just ad hoc, you
know, if somebody needs to go somewhere. And we are
real concerned about primarily the safety issues, who
are they using, how much are they paying, are they
properly insured, some of those issues. You know, there
has been some discussion around with some of the
advisors that maybe somebody should take a look at what
they are doing so that they don't actually have
something bad happen, you know, use an operator they
shouldn't or whatever.
He said: It seems to me maybe you would want to go
down and see if there was an opportunity for you to do
some consulting for them.
I said: Sure, that will be fine.\243\
---------------------------------------------------------------------------
\243\ Martens deposition, pp. 20-21.
Mr. Martens attended a Los Angeles fund-raiser with
Thomason, shook Bill Clinton's hand, and then met with David
Buxbaum of the Clinton/Gore campaign and obtained the campaign
charter business. Mr. Buxbaum was in charge of budget matters
and reported directly to Watkins who was then Clinton/Gore
campaign manager. Mr. Martens was not aware of any competitive
bidding done to obtain the business.
Initially, TRM provided all the planes for the fledgling
campaign. As Clinton successes mounted in the primary season
and the entourage grew, Martens utilized a New Mexico charter
company, Air Advantage, to serve as a charter broker. Air
Advantage paid an agreed upon percentage to Martens through
TRM. Although Martens testified that he did billing and
consulting work with Air Advantage, Air Advantage owner Penny
Sample claimed she really didn't know what Martens did or for
what they were paying him.\244\
---------------------------------------------------------------------------
\244\ GAO deposition of Penny Sample, September 1, 1993, pp. 21-22.
---------------------------------------------------------------------------
When Bill Clinton won the Presidency in November 1992, the
TRM partners and their associates set their sights on
``Washington opportunities.'' Linda Bloodworth-Thomason
ridiculed the idea of her husband trying to get the Travel
Office business as the equivalent of taking over someone's
lemonade stand when the whole Travel Office debacle blew up in
May 1993, after the firings:
given our salaries, setting our sights on the White
House travel office would be the financial equivalent
of us taking over someone's lemonade stand.\245\
---------------------------------------------------------------------------
\245\ Judith Michaelson, Putting `House' and Past in Order, Old
Nemeses Delta Burke and Thomason's Combined Forces, Los Angeles Times,
January 4, 1995.
However, Thomason and Martens did in fact seek a quarter of
a million dollar Government contract as well as the potential
$10 million annual cash flow. It is now apparent, that even
before the start of the Clinton administration, Harry Thomason
spoke with Mrs. Clinton about replacing Travel Office employees
because they were ``disloyal'' and discussed the fact that he
(TRM) could do the same work he had performed for the
campaign.\246\
---------------------------------------------------------------------------
\246\ Handwritten notes of President Clinton's Associate Counsel
Natalie Williams detailing a conversation with one of Harry Thomason's
attorneys, Amy Sabrin, DF 780464. Although President Clinton claimed
executive privilege over all of Ms. Williams' handwritten notes, the
committee received production on August 15, 1996.
---------------------------------------------------------------------------
3. A January 29, 1993 memorandum from Darnell Martens to Harry Thomason
catalogs the ambitious Washington agenda for TRM: pursuing
Travel Office business and obtaining ``official status'' at the
White House
a. Seeking ``Washington opportunities''
In a memorandum never before provided to investigators
until the committee threatened to subpoena Harry Thomason, the
multiple Thomason-Martens enterprises were revealed. In the
January 29, 1993 memorandum from Martens to Thomason, Marten
detailed numerous ``Washington opportunities'' that could be
pursued by ``capitaliz[ing] on the `Thomason' name
recognition.'' \247\
---------------------------------------------------------------------------
\247\ DOJ document production, EZ 037684.
---------------------------------------------------------------------------
Mr. Martens first suggested changing the TRM firm name to
``Harry Thomason & Associates'' as they moved forward with
their ``opportunities.'' Mr. Martens made up his own letterhead
and proceeded to use this new name when faxing requests for
meetings at the White House.\248\ Mr. Thomason testified,
however, that this was done without his approval and claimed to
have put an immediate halt to the name change. Nevertheless,
this same heading appears on later TRM correspondence to the
White House.\249\
---------------------------------------------------------------------------
\248\ Confidential fax cover sheet (CGE 2228) with memo offering
assistance with the Travel Office, May 13, 1993, Bates Stamp No. BFF
1031; memorandum from Martens to Bruce Lindsey, April 12, 1993,
regarding proposal to perform financial audit of non-military Federal
aircraft, CGE 2229.
\249\ Thomason deposition, p. 110.
---------------------------------------------------------------------------
b. Obtaining ``some form of official status''
Second, Martens' memo recommended obtaining ``some form of
official status as advisors to the White House for general
aviation policy matters.'' The memorandum proposed achieving
this goal through special consulting projects such as
developing a ``computerized safety and operational database''
or reviewing ``all non-military Government aircraft to
determine financial and operational appropriateness.'' \250\
President Clinton greatly facilitated this effort after a
February 10, 1993, cabinet meeting when he announced he was
``ordering an inventory of the airplane fleet.'' \251\
---------------------------------------------------------------------------
\250\ Confidential memorandum to Thomason from Martens, January 29,
1993 regarding ``TRM Action Items'', DOJ production, Bates Stamp No. EZ
037684.
\251\ ``Remarks at a Meeting with Cabinet Members,'' 29 Wkly Comp.
Pres. Documents, p. 67.
---------------------------------------------------------------------------
Messrs. Martens and Thomason did in fact obtain the
``official status'' of White House passholders. Harry Thomason
obtained his pass on March 23, 1993, and Darnell Martens
obtained his pass on May 12, 1993.\252\ Mr. Thomason was listed
as reporting directly to President Clinton.\253\ Mr. Martens
reported to Harry Thomason and Watkins.\254\
---------------------------------------------------------------------------
\252\ See GAO interview of Craig Livingstone, March 10, 1994. Craig
Livingstone testified to GAO investigators that this request was
``unheard of.'' Livingstone went to the Office of Administration to
find out why he had been given an access form from President Clinton
requesting a pass for Harry Thomason. According to Livingstone, Watkins
refused to provide any explanation and only told him that it needed to
be done.
But see Thomason deposition, p. 75. Thomason stated in sworn
testimony that after arriving at the White House for several days and
having to wait at the gate for someone to grant him entrance through
the gate, Livingstone approached him one day and said: ``[W]hy are we
doing this? You know, it causes a waste of time, you a waste of time.
Why don't we get you a temporary pass so that we just won't have to
make the call everyday.''
\253\ CGE 2933.
\254\ CGE 18296.
---------------------------------------------------------------------------
Harry Thomason was enlisted to come to the White House when
the White House fell upon hard times with the press and
President Clinton's polling figures headed south. Mr. Thomason
was officially brought in to assist in better ``staging'' of
events for the President. Mrs. Clinton acknowledged discussing
these ``staging'' efforts with Harry Thomason.\255\
---------------------------------------------------------------------------
\255\ Mrs. Clinton's answers to interrogatories, p. 9.
---------------------------------------------------------------------------
Rahm Emanuel told White House Management Review
investigators that McLarty, Stephanopoulos, Mandy Grunwald and
President Clinton were consulted about bringing in Harry
Thomason for staging advice and they all signed off on the
project. Mr. Emanuel confirmed in sworn testimony before this
committee that McLarty approved bringing in Harry
Thomason.\256\
---------------------------------------------------------------------------
\256\ WHMR interview notes of Rahm Emanuel, June 14, 1993, CGE
0236. In his committee deposition, Emanuel could not recall this fact.
However, Todd Stern, who took notes at Emanuel's interview, confirmed
that his notes did reflect that the President, Mack McLarty, Mandy
Grunwald and George Stephanopoulos approved the ``White House Project''
that Harry Thomason was working on. See Stern deposition, pp. 38-39.
---------------------------------------------------------------------------
In stark contrast, McLarty claimed he had no role in
bringing Harry Thomason to the White House in numerous public
statements as well as the White House Management Review.\257\
Furthermore, McLarty testified to this committee that he
``thought the President and First Lady had asked him [Harry
Thomason] to come to the White House.'' \258\ Other Clinton
administration staff consistently maintained that Emanuel was
responsible for Harry Thomason coming to the White House. The
White House Management Review is vague on the subject:
---------------------------------------------------------------------------
\257\ GAO interview of Thomas F. ``Mack'' McLarty, March 21, 1994.
\258\ McLarty deposition, p. 23.
At the end of April, Thomason returned to Washington.
He had been asked to consult on the staging of
Presidential events and was provided with an access
pass of the kind issued to staff, allowing him open
passage throughout the White House complex.\259\
---------------------------------------------------------------------------
\259\ The White House Management Review, p. 6.
It is unlikely that Emanuel's position gave him the
authority to bring someone to work at the White House, provide
an East Wing office, computer, phone hook up, White House pass
and direct senior staff to meet with such an individual for a
``project.'' Such a task clearly would be within the scope of
the Chief of Staff, particularly when it involved the Clintons'
close friend and supporter, Harry Thomason.
Mr. McLarty denies his role in bringing in Harry Thomason
and furthermore, states he never met with Thomason while he was
at the White House.\260\ Mr. Thomason directly contradicts this
account. He testified to this committee that in the May 12,
1993 meeting reflected on his calendar, he gave McLarty a copy
of ``The White House Project.'' \261\
---------------------------------------------------------------------------
\260\ McLarty deposition, pp. 23-24.
\261\ McLarty does not appear to have turned over his copy of ``The
White House Project'' to John Podesta and Todd Stern in the course of
the Management Review. Stern recalls receiving the document from Rahm
Emanuel. Podesta does not recall from whom they received the document.
---------------------------------------------------------------------------
Mr. McLarty's testimony that he believed President Clinton
and Mrs. Clinton asked Harry Thomason to come to the White
House for the ``staging'' efforts, would explain why Thomason's
White House pass had him reporting directly to the President.
Moreover, there is evidence that McLarty sent a memorandum to
certain staff explaining Thomason's designated role at the
White House prior to Thomason's scheduled interviews with
department heads. This memorandum has not surfaced in the
course of the committee's document requests to the White
House.\262\ Again, the White House Chief of Staff would be the
logical person to send out such a memo so that staff would
understand why they were being asked to take time out of their
schedules to meet with Harry Thomason.\263\
---------------------------------------------------------------------------
\262\ Jennifer O'Connor recounted such a memo in handwritten notes,
CGE 37586; see also Cornelius deposition, p. 76. Cornelius testified
that O'Connor told her of such a memo. The committee specifically
sought this memorandum from the White House to no avail.
\263\ In the course of the White House Project, Harry Thomason had
meetings with dozens of White House staffers as is reflected in an
agenda provided by both the White House and Harry Thomason. Most of
Thomason's meetings were conducted on April 30 and May 1, 1993.
---------------------------------------------------------------------------
c. Seeking the Travel Office business
Mr. Martens clearly envisioned seeking the Travel Office
business according to his January 29 memo to Harry Thomason:
Determine who controls the scheduling of the White
House Press Corps aircraft. This can be done by TRM
much as the campaign aircraft were handled.
There is no documentary evidence that Thomason ever objected to
any of these activities. In fact, Thomason personally forwarded
a proposal memorandum for a GSA contract to President Clinton,
which was one of the items on the January 29 memorandum
list.\264\
---------------------------------------------------------------------------
\264\ CGE 2296-2297.
---------------------------------------------------------------------------
Mr. Martens January 29 memo also recommended that he and
Thomason ``travel to Washington within the next 30 to 45 days
to meet with either DOT [Department of Transportation] or White
House transportation advisors'' regarding these items. Within
the month, while an overnight guest at the White House, Harry
Thomason passed on his ideas personally to President
Clinton.\265\ Martens even fancied that he and his Hollywood
partner could provide ``selection assistance'' regarding
President Clinton's choice for a new FAA Administrator.\266\
---------------------------------------------------------------------------
\265\ Thomason was an overnight guest in the White House residence
on February 16 and 17, 1993 and forwarded the February 11, 1993 memo
(CGE 2297) to the President.
\266\ See Darnell Martens memorandum, dated January 29, 1993, DOJ
production, Bates Stamp No. EZ 037684.
---------------------------------------------------------------------------
4. Putting Martens in touch with the White House to obtain Travel
Office business
Mr. Thomason used his access to the White House to put
Martens in touch with Myers and learn how to solicit the Travel
Office business. Ms. Myers in turn put Martens in touch with
Billy Dale. When Martens attempted to seek Travel Office
business from the former Travel Office Director, Billy Dale, he
was rebuffed. Then, perhaps, was the point at which Mr. Dale's
fate was sealed. He made the mistake of not giving business to
President Clinton's friend even though to do so would have
disrupted a longstanding arrangement preferred by the customers
of the Travel Office--the White House press corps.
5. Drafting a memorandum covering his conversation with Dale which
shows he was seeking the Travel Office business
Mr. Martens recounted his impressions of this conversation
with Dale in a memorandum that was disclosed to the press just
days after the firings. Mr. Martens testified that he wrote the
memorandum contemporaneous with his conversation with Dale in
early February 1993.\267\ The Martens memorandum clearly states
that TRM was seeking business from the Travel Office:
---------------------------------------------------------------------------
\267\ Martens deposition, p. 52.
Dee Dee Myers stated to both Harry Thomason
(personally) and Darnell Martens (by phone) that the
White House was not tied to any particular charter
operator and that based on that assumption, she saw no
reason why Thomason, Richland & Martens, Inc. (TRM)
should not be able to compete for the White House Press
Corps charter business.\268\
---------------------------------------------------------------------------
\268\ Martens memo, WHMR, exhibit ``G''.
Mr. Martens goes on to detail his conversation with Dale in
which he was told that ``there was no possible combination of
price/service under which TRM could earn the White House
business.\269\
---------------------------------------------------------------------------
\269\ Id.
---------------------------------------------------------------------------
Mr. Dale acknowledged that he interpreted Martens'
overtures as a bid for TRM to get the Travel Office business
and that he simply didn't need a ``middle man.'' \270\ What
Martens was soliciting was to take over Dale's job. Robert Van
Eimeren overheard the conversation and concurred with Dale's
account.\271\
---------------------------------------------------------------------------
\270\ Committee interview of Billy R. Dale, November 27, 1995.
\271\ Committee interview of Robert Van Eimeren, July 26, 1995.
---------------------------------------------------------------------------
A reading of the Martens memorandum further leads to the
conclusion that TRM was seeking the Travel Office business.
Again, Martens wrote, ``Martens informed Dale that TRM
purchases a much higher volume of charter hours than the White
House does and that the buying power could be combined with the
White House business to lower the cost from particular vendors
to the Press Corps.''
Mr. Martens' memorandum continues for close to two pages to
outline his opinion that the Travel Office is a Republican
operation: ``Airline of Americas [UltrAir--the then current
charter company] is a Republican-operated charter airline.''
Mr. Martens seemed to view the White House Travel Office
business as a political plum that now belonged to Clinton
supporters:
Once again, a company which made its choice and has
represented that it did not support the Clinton
presidential initiative continues to benefit from its
special relationship with Billy R. Dale and the White
House Travel Services Department.\272\
---------------------------------------------------------------------------
\272\ Martens memo, WHMR, exhibit ``G''.
---------------------------------------------------------------------------
6. Laying out the strategy to get the Travel Office business in a March
5, 1993 memorandum: dig up dirt on the current employees and
replace them with campaign cronies
Even more significant was another version of this ``Martens
memo'' that never saw the light of day prior to this
investigation. Even the criminal investigation team in the
Public Integrity Section of the Justice Department failed to
obtain this document until brought to their attention by the
committee. Like its predecessor, this March 5, 1993, memorandum
further supports that TRM was seeking business in the Travel
Office. Mr. Martens subsequently tried to explain it away by
suggesting that it was merely a ``memo to myself.'' Mr.
Thomason finally turned over this document under threat of a
subpoena in December 1995.
The March 5 memorandum from Martens to Thomason discussed
Martens' efforts to gather incriminating information on the
Travel Office employees while promoting TRM's plan to take over
the Travel Office. In this version, Martens outlines the
``solution'' for the Travel Office:
the Administration should disband the antiquated
Transportation Department system in favor of the
functions being outsourced to TRM/Air Advantage.\273\
---------------------------------------------------------------------------
\273\ Memorandum from Darnell Martens to Harry Thomason, March 5,
1993.
Air Advantage was the same charter company used by TRM during
the campaign. This is precisely what the events of May 1993,
were designed to achieve. Similar to the May 13, 1993, fax
discussed above that was sent to the White House, Thomason and
Martens clearly envisioned ``Penny [Penny Sample of Air
Advantage] and I [Martens]'' working at the White House.
Perhaps no other document so clearly lays out the agenda
behind the maligning of the Travel Office employees--dirty them
up, move them out and move in TRM and Air Advantage. The
explanation is all laid out in this long-withheld document. The
cover memo to this March 5 ``solution'' memo indicates that
Martens took the following actions to investigate the Travel
Office employees:
``contacted the DOT regarding the AOA [Airline
of the Americas/UltrAir] campaign violations''
``we are contacting a party Treasurer to
determine if AOA's owners made substantial Republican
contributions''
``we are to receive a package from Miami Air
today with additional information on their experience
with the White House . . . ''
``we are trying to obtain an on-the-record
conversation with the ex-AOA employee.''
Mr. Martens noted in his cover memo that he felt like ``Mike
Wallace on 60 minutes.'' He informed Thomason that he would be
sending additional information.
Of course, Martens and Thomason have said that this memo,
like the others meant nothing.\274\ Mr. Martens testified that
this was just a memo ``to myself.'' \275\ They attempted to
explain it away as just a big misunderstanding by people who
write fabricated memos to themselves that inadvertently fall
into the wrong hands. In spite of this, Thomason did pass this
information on to others at the White House including, but not
limited to, Watkins, Foster, Kennedy, Cornelius, Patsy
Thomasson, and O'Connor over the next few months.
---------------------------------------------------------------------------
\274\ See depositions of Martens and Thomason.
\275\ Martens deposition, p. 74.
---------------------------------------------------------------------------
Notably, Harry Thomason made numerous phone calls to Mrs.
Clinton's press office, to Lindsey's office, and to the
Washington Post on March 5, 1993.\276\ In the following days,
the calls to Mrs. Clinton's office continued. Thomason's phone
logs identify numerous contacts with Mrs. Clinton and her
office throughout the week of May 10 through May 14, 1993. He
called the private residence phone on both May 5 and May 6,
1993, and had a lengthy dinner in the residence on May 13,
1993.
---------------------------------------------------------------------------
\276\ The phone number called at the Washington Post was 334-7463.
Thomason phone records, Thomason document production, Bates Stamp No.
876.
---------------------------------------------------------------------------
The paperwork for Thomason's White House pass was completed
on March 10, faxed to Mrs. Clinton's press office on March 23,
1993, stamped ``RUSH ASAP.'' \277\ Mr. Thomason obtained a
Temporary White House Office pass, not a Temporary White House
volunteer pass as would have been appropriate had he been a
volunteer.\278\ Since Harry Thomason's White House Project did
not begin until the end of April, why the ``RUSH ASAP'' to get
his pass in March if not for tending to Travel Office affairs?
---------------------------------------------------------------------------
\277\ This factual evidence is consistent with Watkins ``soul
cleansing'' memo in which he states that ``Management and
Administration had no part in bringing Thomason into the White House .
. . Contact with this Office on the subject consisted only of the First
Lady's Office calling to insist on immediate access for Thomason.'' CGE
12291-12292.
\278\ CGE 2933.
---------------------------------------------------------------------------
The January 29 and March 5 Martens memoranda are consistent
with the information Thomason passed on to White House
officials. In order to get rid of the Travel Office employees,
however, the ``good story'' that Thomason was hoping for needed
a better plot-line. Simple patronage and steering contracts to
rich friends never makes for a good story.
``These guys are crooks,'' Harry Thomason roared through
the White House. ``They are ripping us off'' he declared
according to White House employee Jennifer O'Connor.\279\ With
these words, the lives of seven men changed forever.
---------------------------------------------------------------------------
\279\ WHMR interview notes of Jennifer O'Connor, June 11, 1993,
CGEPR 0384.
---------------------------------------------------------------------------
Mr. Thomason worked with Cornelius and Watkins on his
vision of the new Travel Office. The May 13, 1993 fax to the
White House clearly shows that the plan was set in action on
May 12, 1993. This was the same date that Martens was at the
White House, obtained his White House pass, assigned to report
to Harry Thomason. On this same day, Cornelius called upon
World Wide Travel Agency to send staff to Washington. By the
time Watkins was assigned this agenda item, the outcome of the
Travel Office had already been decided by higher ups. He only
had to determine the means; the ends were set. Mr. Watkins only
executed the directives from above.
White House officials preposterously claimed that
Thomason's efforts in obtaining Travel Office business and
Government contracts for TRM were unrelated. They clearly were
contemporaneous and overlapping as part of a larger effort to
benefit from ``Washington opportunities'' for TRM. Mr. Thomason
sought to take full advantage of the access that Thomason
enjoyed with President Clinton and Mrs. Clinton.
Mr. Thomason's business interests, ``advice'' and
``staging'' all complemented each other. The good story of the
Travel Office clean-up was just another ``image project'' to
get better press for President Clinton and business for TRM. In
order to accelerate his plans, Thomason and Martens made what
turned out to be totally baseless allegations against the
Travel Office employees and UltrAir. Even the Justice
Department found no basis for kickbacks or bribery allegations.
In contrast, the Justice Department did dismiss the
criminal charges against Thomason and Martens after a tortured
reading of the documents.\280\ Moreover, it took considerable
gullibility to buy into the ``we lied to our memos'' theory
Martens presented concerning his memos. Given that DOJ's Public
Integrity Division never sought these documents until after
this committee obtained them, the actions of Harry Thomason and
Darnell Martens deserve additional scrutiny by the Independent
Counsel. The committee has compiled a far more extensive record
of documentation that addresses a wider array of issues
pertaining to Harry Thomason and Darnell Martens.
---------------------------------------------------------------------------
\280\ See memorandum from Lee Radek to Stuart Goldberg, January 11,
1996, ``Subject:'' Recommendation to Decline: Harry Thomason and
Darnell Martens. AX 500000-500023.
---------------------------------------------------------------------------
B. Catherine Cornelius pursued her interest in taking over the Travel
Office from the very first days of the transition and into the early
days of the administration, proposing herself as co-director of the
office
The firings were long a glimmer in the eye of Catherine
Cornelius, who wanted to run the Travel Office herself. Ms.
Cornelius had a relationship with Eller, who also pushed for
the firings as early as December 1992 when he told reporters
there may be changes in the office. During the campaign,
Cornelius handled travel matters along with World Wide Travel
and wanted to continue that role when she joined the White
House.
During the transition, Cornelius met with Betta Carney and
Steve Davison of World Wide Travel and made suggestions to
Watkins for reorganizing the Travel Office. On December 2,
1992, Betta Carney wrote a letter to Cornelius expressing
interest in the White House Travel Office business.\281\
---------------------------------------------------------------------------
\281\ CGE 7918.
---------------------------------------------------------------------------
In late December, Cornelius began to prepare several memos
detailing her plan to take over the Travel Office. On December
31, 1992, she sent a memorandum to Watkins and Barbara Yates
\282\ outlining the functions of the White House Travel Office.
Cornelius claimed in her memo that the Clinton-Gore
administration ``has a unique and unprecedented opportunity to
establish a comprehensive Travel Management Program for the
White House.'' \283\ In her summary conclusions, Cornelius
outlines the advantages to her plan which include the
elimination of five staff positions from the payroll, replacing
those positions with those of an ``out sourced agency.'' \284\
---------------------------------------------------------------------------
\282\ Ms. Yates worked as a financial consultant at Baird, Kurtz,
and Dobson, the financial consulting firm for the Clinton-Gore
Campaign.
\283\ Memorandum from Cornelius to Watkins and Yates, December 31,
1992, Watkins document production, Bates Stamp No. JML 2551.
\284\ Id.
---------------------------------------------------------------------------
A follow-up memo to Watkins expands on the existing
structure of the office.\285\ On the first day of the new
administration, people
began calling the Travel Office asking for Cornelius, ``the new
head of the White House Travel Office.'' \286\ Catherine
Cornelius herself says she was open about her ambition to run
the Travel Office.
---------------------------------------------------------------------------
\285\ Memorandum from Cornelius to Watkins, January 26, 1993,
Watkins document production, Bates Stamp No. JML 2558.
\286\ Testimony of John McSweeney before the Committee on
Government Reform and Oversight, January 24, 1996.
---------------------------------------------------------------------------
Ms. Cornelius took the job at the White House with Watkins
with the promise of a better position with a better salary. Ms.
Cornelius hoped that position to be the co-director of the
Travel Office. Her desire to be the co-director had been made
clear to Watkins in her February 15, 1993 memo designating
herself in that position.\287\ It was particularly
inappropriate for Cornelius to pursue an investigation of an
office in which she hoped to assume the position of director.
Yet that is exactly what happened. Despite her apparent
conflict of interest, Kennedy put her in front of the FBI
agents to describe a basis for a criminal investigation of the
Travel Office employees.
---------------------------------------------------------------------------
\287\ See WHMR, exhibit F.
---------------------------------------------------------------------------
After several months in Watkins' office, Cornelius was
moved over to the Travel Office in early April 1993. She was
officially tasked to handle the staff travel for White House
employees including Health Care Task Force travel arrangements.
On April 16, 1993, Harry Thomason called Watkins to discuss
a number of items including the Travel Office.\288\ Mr.
Watkins' notes of this conversation refer to the Travel Office
and ``charter press . . . be taking kick-backs . . . ask for 5%
kickbacks.'' \289\ The White House Management Review remarked
that Thomason phoned Watkins in April to pass on ``allegations
about corruption in the Travel Office.'' \290\
---------------------------------------------------------------------------
\288\ Watkins contemporaneous notes of April 16, 1993, CGE 29184.
These notes also reflect a discussion with Thomason about the Secret
Service. A Secret Service agent named Bob Coy is reflected in the notes
as well as some references to agents talking to Bob Woodward and a
reference to someone named ``George Stewart.'' The committee has
learned that George Stewart is a private investigator from the Little
Rock, AR area. It was reported that he was contracted by the White
House early in the administration to do undisclosed investigative work.
\289\ Handwritten notes of David Watkins, CGE 029184.
\290\ WHMR, p. 6.
---------------------------------------------------------------------------
Mr. Watkins' notes of April 16, 1993, also reference a
conversation Thomason had with Bruce Lindsey. Mr. Thomason's
phone records show a call from Thomason's Hollywood studio to
Lindsey the day before.
Two days later, Watkins called Cornelius into his office to
tell that there may be some wrongdoing in the Travel Office.
Cornelius told DOJ Public Integrity investigators in 1993, and
the committee in 1996, that Watkins read from a notebook as he
described the allegations against the Travel Office employees:
``Those guy are a bunch of crooks. They have been on the take
for years.'' \291\
---------------------------------------------------------------------------
\291\ Public Integrity 302 interview of Cornelius, September 19,
1994; Cornelius deposition, p. 70.
---------------------------------------------------------------------------
Ms. Cornelius had not observed any wrongdoing at this
point, however, once the thought was planted in her mind, she
started to watch over the Travel Office employees with a new
perspective.\292\ Mr. Watkins told her to keep her ``eyes and
ears open.'' \293\
---------------------------------------------------------------------------
\292\ Ms. Cornelius was a 24-year-old, recent college graduate
working in her first job.
\293\ Cornelius deposition, p. 70.
---------------------------------------------------------------------------
Ms. Cornelius began copying receipts and records from the
Travel Office and removing documents to review. One evening in
April, she carried documents to Watkins office for his
review.\294\ In the process of copying and removing documents,
Cornelius jammed a check in the copier which was later found by
one of the Travel Office employees. Cornelius also took
documents home with her, a fact known by Watkins and later by
Kennedy and Foster. No one raised any concerns about her
removal of these Presidential records.\295\
---------------------------------------------------------------------------
\294\ Public Integrity 302 interview of Catherine Cornelius, June
9, 1993.
\295\ The White House Records Management employees became very
concerned after the firings when they learned there was no control over
the documents, and that Cornelius had asked for boxes. Lee Johnson, the
Deputy Director of Records Management, wrote a memo to Staff Secretary
John Podesta on May 21, 1993 expressing concern over the handling of
White House Travel Office records. CGE 7763.
---------------------------------------------------------------------------
In the course of her time in the Travel Office, Cornelius
reported to Watkins that she thought the Travel Office
employees lived beyond their means. Cornelius offered examples
of this high-lifestyle to include vacation time in Europe,
ownership of a race horse and Billy Dale's lake home in
Virginia.\296\
---------------------------------------------------------------------------
\296\ Mr. Dale's lake home held a mortgage of less than $100,000.
Mr. Dale had lived in his home in Maryland for over 30 years and his
mortgage was paid.
---------------------------------------------------------------------------
When Harry Thomason arrived in Washington on May 10, 1993,
Cornelius met with him and the two swapped stories about what
they thought would merit ``a good story'' about the Travel
Office employees. Mr. Thomason told Cornelius of his
allegations that the employees were seeking ``kickbacks'' from
Miami Air. The committee now has evidence that Thomason
repeated these allegations to Mrs. Clinton, Foster, Kennedy,
Lindsey, Patsy Thomasson and numerous others at the White
House.\297\
---------------------------------------------------------------------------
\297\ This evidence is derived from their testimony as well as
Foster's Travel Office notebook.
---------------------------------------------------------------------------
By May 12, 1993, Thomason and Martens planned to bring
Penny Sample of Air Advantage into the White House and the
firings were on the way. The recommendations set forth in the
TRM memos and in Catherine Cornelius' memos came to fruition
throughout the rest of the month.\298\
---------------------------------------------------------------------------
\298\ See supra discussion of May 10-May 27, 1993.
---------------------------------------------------------------------------
C. Darnell Martens gives the nod to his campaign benefactor Penny
Sample of Air Advantage
Air Advantage, whose president was Penny Sample, served as
the Clinton-Gore campaign's charter broker. Mr. Martens knew
her through the billing and consulting work that he did with
Air Advantage during the campaign. Mr. Martens testified that
after the election he wanted to assist or refer Air Advantage
and other campaign charter carriers in obtaining White House
press charter business. Even Martens recognized the goodwill,
if not financial benefits, that would flow from his help to
provide these companies with White House access.
In a May 23, 1993, Los Angeles Times article, Harry
Thomason claimed that ``Darnell Martens had contacted White
House Travel Office Director Dale in February to find out how
nine airline charter companies that supplied planes for the
Clinton campaign could bid for the White House business.''
\299\
---------------------------------------------------------------------------
\299\ David Lauter and John M. Broder, Clinton Friend Defends Role
in Travel Flap, Los Angeles Times, May 23, 1993.
---------------------------------------------------------------------------
Mr. Martens enlisted Sample's assistance to provide
information on the background of the White House Travel Office
and the charter airline they used. Ms. Sample began gathering
information for Martens' memorandum. She called Airline of the
Americas and reported back to Martens the number of airplanes
and where they were located.\300\ She provided background
information on the White House Travel Office's contractual
arrangements with Pan Am and Airline of the Americas for press
travel charters.\301\ Mr. Martens testified that Penny Sample
``knows a lot about everybody.'' He added ``that's her job.''
\302\ In return for her undercover work, Martens called Sample
to come to the White House to take over the charter business
after the firings.
---------------------------------------------------------------------------
\300\ Martens deposition, p. 73.
\301\ Id., p. 68.
\302\ Martens deposition, p. 73.
---------------------------------------------------------------------------
D. Arkansas travel agency World Wide Travel provided services during
the campaign, obtained the DNC contract in November 1992, and sought
White House Travel Office business
World Wide Travel played a critical role in the 1992
Clinton Presidential campaign. In particular, the Washington
Times reported that Watkins credited World Wide with:
setting up cash management practices that obtained
advance payments from traveling journalists. This freed
campaign money for advertising in such key states as
Michigan and Illinois.
Mr. Watkins stated that World Wide's billing arrangement with
the Clinton campaign, ``allowed us to win key primaries, to
have money that otherwise would be tied up in accounts
receivable to put in advertising.'' \303\ Travel Weekly
explained that:
---------------------------------------------------------------------------
\303\ ``Travel agency in loop; Helped Clinton before election,'' by
Frank J. Murray, the Washington Times, May 21, 1993.
This was achieved by requiring them to pay by credit
card whereby the agency issues ghost American Express
cards to those travelers who, for whatever reason, do
not carry plastic. Representatives of the press and the
Secret Service also were required to sign a manifest
each time they boarded a plane chartered by the
campaign. The agency billed immediately and collected
payment within 48 hours. . . . Because of the quick
turn around, the Clinton campaign was then able to
spend the freed-up funds on advertising efforts in key
primary states, such as Michigan and Illinois.\304\
---------------------------------------------------------------------------
\304\ ``Clinton Camp Credits Agency for Governor's Primary Wins,''
by Fran Golden, Travel Weekly, September 10, 1992.
Ironically, World Wide's aggressive billing led the White
House press corps to challenge Stephanopoulos' May 20, 1993,
---------------------------------------------------------------------------
contention that World Wide would save the press corps money:
George, speaking of sloppy record-keeping, I don't
know anyone on the campaign plane who ever got a
detailed accounting of the charges. I think most of us
just got a charge on our American Express bill saying,
`signature on file,' and had to then call up and hound
World Wide Travel to get some sort of detailed bill. I
mean, did you look into their accounting procedures at
all before you selected them as an interim travel
agency? \305\
---------------------------------------------------------------------------
\305\ White House press conference, May 20, 1993.
Ms. Cornelius called World Wide Travel to come to
Washington on May 12, 1993, asking them to be prepared to come
to the White House at any time. On May 19, 1993, after being
fired by Watkins, the Travel Office employees returned to their
office to find at their desks World Wide Travel agents.
World Wide soon realized that Cornelius had not arranged
the ``emergency contract'' authorizing them to be in the White
House. Nor was the bad press following the firings doing
anything for its reputation. After 2 days in the White House,
on Friday, May 19, Steve Davison told Watkins that World Wide
was leaving.\306\ They finally agreed to remain through the day
and leave the following Monday when American Express was
brought in to assume the duties of the fired Travel Office
employees.
---------------------------------------------------------------------------
\306\ WHMR interview of Steve Davison, CGEPR 174.
---------------------------------------------------------------------------
When the ``plan began to unravel,'' Watkins, Thomasson, and
Foucart begged World Wide Travel to stay. Special Assistant to
the President Patsy Thomasson told World Wide ``we'll give you
anything you want.'' \307\ World Wide Travel later told White
House investigators that ``what I needed was the seven
people.'' \308\ However, the fired Travel Office employees were
carted out of the White House in a windowless van. The White
House press offensive to discredit them was well underway.
---------------------------------------------------------------------------
\307\ Id.
\308\ Id. Mr. Davison had worked with Watkins and Cornelius during
the campaign and thought Watkins had placed her in the Travel Office
``because he wanted to get rid of her.'' He told investigators that
Cornelius ``portrayed herself as bosom buddy of BC [Bill Clinton],''
but that she ``didn't have a clue'' as to running a travel operation.
WHMR interview notes of Steve Davison, June 5, 1996, CGE 0174-0203.
---------------------------------------------------------------------------
Mr. Davison explained to investigators that ``no one gave
any forethought as to what would happen when the seven [Travel
Office employees] left.'' World Wide Travel said that ``we felt
betrayed beyond belief.'' \309\ World Wide Travel left the
White House within 2 days of their arrival.
---------------------------------------------------------------------------
\309\ CGEPR 200.
---------------------------------------------------------------------------
E. Conclusion
Harry Thomason, assisted by Mrs. Clinton was at the center
of events leading to the firings of the Travel Office
employees. Early on in the administration, Thomason had told
Mrs. Clinton and the President about the alleged problems, and
by May his rumors of wrongdoing had spread.
The White House consistently maintained that the firings of
the Travel Office employees were due to mismanagement evidenced
by a Peat Marwick audit. There was no audit. The firings were
initiated long before Peat Marwick was called, and before
anyone in the Clinton administration met the Travel Office
employees. Furthermore, as the GAO report noted, if there was
mismanagement in the Travel Office, it was the responsibility
of David Watkins and Patsy Thomasson to handle.\310\ GAO found
serious management deficiencies in the way Watkins and
Thomasson managed the Travel Office, and in the course of their
GAO interviews, it became apparent that they had little working
knowledge of basic Government management regulations.\311\
---------------------------------------------------------------------------
\310\ See GAO Report on the White House Travel Office Operations,
May 2, 1994.
\311\ David Watkins GAO interview, December 9, 1993.
---------------------------------------------------------------------------
The firings were discussed in December 1992, a full month
before the new administration took office. Mr. Eller told the
press in December 1992, that there might be changes in the
Travel Office. The firings were decided upon in order to
advance the personal agendas of Presidential friends and
family, long before any wrongdoing or mismanagement was
alleged. It is clear from the volume of documents and testimony
that the committee has obtained that the decision to fire the
employees was made first--in order to push the interests of
Clinton friends and family--and the rationale came later.
V. Harry Thomason Pursued Opportunities in Government Contracts Through
his Relationship With the President Which Would Have Resulted in a
Financial Benefit to him and his Company
While Harry Thomason was spreading rumors of wrongdoing in
the Travel Office, he and Martens were seeking other Government
business, including a quarter of a million dollar Government
contract. The January 29, 1993, memo discussed above was a
laundry list of ``Washington opportunities'' for TRM.\312\ One
of the ``opportunities'' Martens sought for his and Thomason's
company was a consulting project to review ``the operational
and fiscal soundness of all federal non-military aircraft.''
---------------------------------------------------------------------------
\312\ Memo from Darnell Martens to Harry Thomason, January 29,
1993, Re: TRM Action Memo.
---------------------------------------------------------------------------
On February 10, 1993, Martens was surprised to hear
President Clinton discuss the idea on television because he had
not yet had a chance to formally put something together on the
topic:
Question. Okay. In the memo, you talk about the fact
that the President had stated in a Cabinet meeting that
his staff had informed him that there were savings to
be had in the review of government aircraft.
Answer. Yes.
Question. Did you actually see that on CNN?
Answer. Yeah. I was in a hotel room getting dressed
in the morning and saw it.
Question. Did Harry give you any information or did
you receive any information that the President was
going to bring up basically your project in a Cabinet
meeting?
Answer. No, because it's--I was amazed. In fact, I
was stunned. That's why I put it in here. Because it's
opposite--I hadn't put it in a memo yet, and to my
knowledge Harry hadn't been back to see him so--because
that was the purpose of putting this memo together, so
Harry would understand what I was talking about, and
then he said he would mention it to him if he had a
chance.\313\
---------------------------------------------------------------------------
\313\ Martens deposition, pp. 87-88.
Mr. Martens put together the February 11, 1993, memo. While
Thomason has portrayed this as something Martens was pushing,
it was Thomason who had the access to brief the President. In
the February 11 memo, Martens said, ``Put me in front of the
right person at the White House and I will prove the value of
both the project and Thomason's capabilities.'' \314\
---------------------------------------------------------------------------
\314\ Confidential memo to Harry Thomason from Darnell Martens, Re:
White House Inventory of the Federal Aircraft Fleet, CGE 2223.
---------------------------------------------------------------------------
Mr. Martens explained:
We've demonstrated our capabilities to the President
by coordinating all aircraft activities for the Clinton
For President Committee, the Clinton/Gore '92 Committee
and the Clinton/Gore Transition Team. . . . Harry, I
can state without qualification that TRM is uniquely
qualified to conduct this study.
Again, Martens viewed these contracts, as he had the Travel
Office business, as a reward for good service to the Clinton-
Gore campaign. There are no written documents from Thomason
disabusing him of that notion and certainly Thomason's actions
on behalf of TRM kept Martens encouraged.
The February 11 memo was forwarded to McLarty, Gearan and
Watkins, with a note indicating that the President had reviewed
the material and forwarded it to them for ``Action.'' Written
on the memo was a note for McLarty from the President: ``Mack--
These guys are sharp--shd [should] discuss w/Panetta/Lader.''
Staff Secretary Podesta could provide no information as to what
``Action'' the President intended be taken on this memo.
Mr. Podesta first became aware of the memo when it showed
up in the President's ``out box.'' \315\ As Staff Secretary,
Podesta was responsible for the daily flow of paperwork in and
out of President Clinton's office. Mr. Podesta had never seen
the February 11 memo go into the President's office but he did
see it coming out.\316\ Mr. Thomason spent the night in the
White House residence on February 16, 1993, and even bowled
that evening with the President. While Thomason distinctly
remembers beating the President at bowling that evening, he has
``no recollection'' of giving the President the February 11,
memo soliciting the GSA contract for his company TRM.\317\
Since Martens later refers to this in an April memo and
mentions that Thomason discussed it with the President, it is
clear Thomason did give the President the memo.\318\
---------------------------------------------------------------------------
\315\ Podesta deposition, p. 54.
\316\ Podesta deposition, p. 54.
\317\ Thomason deposition, pp. 118, 122.
\318\ Darnell Martens sends Bruce Lindsey a cover note on April 6,
1993 forwarding his February 11, 1993 memo describing it as a memo
``which was presented and discussed with the President in mid-
February.'' CGE 002227.
---------------------------------------------------------------------------
On March 12, 1993, Martens sent Thomason another memo about
the proposed Federal aircraft study and refers to a discussion
Thomason had with the President about the February 11, 1993
memo: ``Based on your discussion with President Clinton of my
2/11/93 memo, I began the process of obtaining specific
information.'' \319\ This memo provides an overview of the
proposed project.
---------------------------------------------------------------------------
\319\ Intercompany memorandum from Darnell Martens, president to
Harry Thomason, chairman, Re: Federal Aircraft Management Information
System (FAMIS), on TRM, Inc. stationery, March 12, 1993, CGE 002224.
---------------------------------------------------------------------------
By April 1993, Thomason had put Martens in touch with Bruce
Lindsey who took care of aviation matters in the White
House,\320\ although his official position at that time was
head of Presidential personnel. On April 6, 1993 Martens faxed
Lindsey his February 11 memo, detailing a ``follow-up memo to
Harry's meeting with the President.'' The memo discussed the
cooperation of ICAP [Interagency Committee on Aviation Policy]
and a work summary estimating a 1-year timeframe for the
project and the estimated costs. The cover letter again noted
TRM's ``loyalty to the Administration.'' \321\
---------------------------------------------------------------------------
\320\ Lindsey deposition, p. 30.
\321\ CGE 002227.
---------------------------------------------------------------------------
The following day Martens met with Lindsey to discuss the
project. He sent Lindsey a follow-up memo on April 12, 1993
``recommending that the Office of the President initiate an
operational and financial audit of all non-military Federal
aircraft.'' He wanted to do this by working with ICAP and GSA
participation, but it was clear that the project was to be
White House based. Martens recommended an Executive order to
get the project moving.
By April 26, 1993, Martens sent a note to Lindsey to see if
any action had been taken and reminded Lindsey that Thomason
would be in the White House that coming Friday and Saturday. He
wanted to see if Thomason could follow up with Lindsey at that
time. Martens sent Lindsey another summary of the proposed
audit on April 29, 1993.
Lindsey claims that throughout this time, he had no idea
that TRM had any connection with Thomason.\322\ This is not
credible given that the meetings were initiated by Thomason and
that some of the memos sent to Lindsey had a letterhead which
read, ``Harry Thomason & Associates.''
---------------------------------------------------------------------------
\322\ Id., p. 39.
---------------------------------------------------------------------------
Clearly, as with the Travel Office business TRM sought,
Thomason and Martens were capitalizing on Thomason's access to
the White House. The GSA/ICAP contract was being designed so
that Martens could officially work at the White House, thus
explaining why he was issued a pass on May 12, 1993, upon
arriving at the White House. While at the White House, Martens
would also be able to provide assistance as needed in the new
Travel Office. Mr. Thomason had already begun work on various
projects at the White House. These included projects such as
how to use excess Presidential inaugural funds for paying extra
White House staff, and the staff cuts issue in addition to his
``staging'' duties at the White House.
Mr. Thomason had a financial interest in White House
business. Despite his protestations that he was too rich to
care about any of this business, he was maximizing his
connections to keep his fledgling aircraft business and Martens
afloat. It is significant that Podesta was aware of Thomason's
efforts from the first day he was tasked with the Management
Review. Despite the fact that the review addressed
``conflicts'' and ``appearances of impropriety,'' the White
House totally ignored Mr. Thomason's conflicts.
Furthermore, this project was not eliminated once the
Travel Office firings occurred. It was not until sometime in
August 1993, that then-Deputy Chief of Staff Roy Neel wrote
current Chief of Staff and then-OMB Chief Leon Panetta a memo
saying that no action should be taken on the project.\323\ By
this time, the Justice Department's criminal investigation on
Harry Thomason's possible conflicts of interest was underway
and no doubt, a second conflict had to be put to bed. Was
Foster aware about this second looming conflict?
---------------------------------------------------------------------------
\323\ Memorandum for Leon Panetta from Roy Neel, August 25, 1993.
CGE 017597.
---------------------------------------------------------------------------
VI. Employment Status of Selected Advisors to the President
One of the Federal personnel regulations to which every
White House is expected to comply is the ``Special Government
Employee laws.'' \324\ The committee's investigation has
revealed a general lack of attention that all executive branch
agencies in the Clinton administration paid to the status of
their advisors and volunteers. This is especially true of a
White House which President Clinton pledged would be the most
ethical ever.
---------------------------------------------------------------------------
\324\ The category of a ``special Government employee'' was
established by P.L. 97-849 (1962), to facilitate recruiting persons
with specialized knowledge and skills to serve Government without
applying the full range of conflict of interest laws that apply to
regular Government employees. See, S. Rept. No. 2213, 87th Cong., 2d
Sess. (1962), reprinted at 1962 U.S. Code Cong. & Ad. News 3852-3853.
---------------------------------------------------------------------------
A. Special Government employee defined
The United States Code defines a special Government
employee (SGE) as a person who is ``. . . retained, designated,
appointed, or employed to perform, with or without
compensation, for not to exceed 130 days during any period of
365 consecutive days. . . .'' \325\ If the period of employment
exceeds 130 days during any period of 365 consecutive days,
that individual should be considered a regular Government
employee, with or without compensation.
---------------------------------------------------------------------------
\325\ 18 U.S.C. 202(a).
---------------------------------------------------------------------------
The law is clear that a person who performs work as a
Federal employee cannot evade the conflicts laws simply by
avoiding formal appointment to office.\326\ Thus, a consultant
or advisor who is not a regular Government employee may be a
special Government employee for purposes of the conflicts of
interest laws.
---------------------------------------------------------------------------
\326\ White House ethics counsel came to this conclusion when
reviewing the activities of Harry Thomason. See CGE 43349.
---------------------------------------------------------------------------
While regular and special Government employees are treated
the same under the conflict-of-interest requirements of Title
18 U.S. Code Sections 204, 207, 208, and 209, they are treated
differently in the conflict-of-interest provisions included in
Sections 203 and 205.\327\ Section 216 of Title 18 sets out the
criminal penalties for willful and non-willful violations of 18
U.S.C. Sections 203, 204, 205, 207, 208, or 209. Section 216
also provides the Attorney General with the option to bring a
civil action for damages or seek an injunction against a person
who engages in conduct constituting offenses under the
conflict-of-interest provisions.
---------------------------------------------------------------------------
\327\ As will be discussed later, these sections restrict regular
Government employees from representing anyone except the Government
before a court or Government agency in a particular matter in which the
United States is a party. However, this only applies in relation to a
covered matter involving a specific party or parties in which the
Government employees at anytime have participated personally and
substantially for the Government, or which is pending in the department
or agency in which the special Government employees are serving. The
restriction on representation on any pending matter does not apply to
special Government employees who have served in a department or agency
for not more than 60 days of the last 365 consecutive days.
---------------------------------------------------------------------------
Section 211 of Title 18 prohibits any SGE from improper use
of title or position. This prohibits the use of a SGE's
influence in return for money or any thing of value. Government
employees also must comply with the Standards of Conduct
regulations for all executive branch employees including
regulation of gifts, disclosure of non-public information, use
of official property for unofficial purposes, and outside
activity that conflicts with Government duties.
B. An individual may undertake certain activities that qualify for a
special Government employee status Without Formal Appointment
The Justice Department's Office of Legal Counsel issued an
opinion concerning the status of advisors to the President and
whether their act of providing advice to the President
qualifies them as a SGE is found in an opinion of the Justice
Department's Office of Legal Counsel.\328\ The Office of Legal
Counsel found that although ``the term `employee' is not
defined in the conflict-of-interest laws, it was no doubt
intended to contemplate an employer-employee relationship as
that term is understood in other areas of the law.''
---------------------------------------------------------------------------
\328\ ``Conflict of Interest-Status of an Informal Presidential
Advisor as a `Special Government Employee' '', 1977 OLC Lexis 9; 1 Op.
O.L.C. 20, February 24, 1977. See also, OGE Op. 82x22.
---------------------------------------------------------------------------
Beyond the definition of SGE, discussed above, Title 5 of
the United States Code identifies several criteria to determine
whether a person is an ``officer'' or ``employee'' of the
United States.\329\ As a matter of first principles, an
individual obviously is an officer or employee if ``properly
appointed.'' The first SGE requirement, however, only requires
that the individual be ``retained, designated, appointed, or
employed.'' There are two other criteria whereby an individual
may become an officer or employee, when that individual has not
been formally appointed. If the person:
---------------------------------------------------------------------------
\329\ 5 U.S.C. Sections 2104, 2105.
---------------------------------------------------------------------------
--is engaged in the performance of a Federal function
under authority of law; and
--is subject to the supervision of a Federal officer
or employee.
The Office of Legal Counsel, and supporting materials
prepared by the Office of Government Ethics, stress that any
determinations of an individual as a SGE must be performed on a
case-by-case basis. A leading commentator on the subject, cited
in the OLC opinion, is Professor Bayless Manning. He suggests
several questions to be posed if the individual does not have a
formal designation. He writes:
Is the person's advice solicited frequently? Is it
sought by one official, who may be a personal friend,
or impersonally by a number of persons in a government
agency that needs expert counsel? Do meetings take
place during office hours? Are they conducted in the
government office, and does, perhaps, the adviser
maintain a desk or working materials in government
facilities?\330\
---------------------------------------------------------------------------
\330\ See Bayless Manning, Federal Conflict of Interest Law, pp.
29-30 (1964).
It may be helpful to provide a few examples of when
individuals are or are not considered SGEs based on the
assistance they provide to the Federal Government.
Example 1: A question has arisen as to whether Mr. A
should be regarded as an SGE for purposes of the
Federal conflict-of-interest laws. Generally, Mr. A
advises the President almost daily, principally on an
informal basis. This essentially personal relationship
would not in itself result in Mr. A's being a SGE.
Example 2: Mr. A, from the example above, departs
from his usual role of an informal adviser to the
President in connection with his recent work on a
current social issue. Mr. A has called and chaired a
number of meetings that were attended by employees of
various agencies, in relation to this work, and he has
assumed considerable responsibility for coordinating
the administration's activities in that particular
area. Mr. A clearly is engaging in a governmental
function when he performs these duties, and he
presumably is working under the direction or
supervision of the President. For this reason, Mr. A
should be designated an SGE for purposes of this
work.\331\
---------------------------------------------------------------------------
\331\ See 1977 (Counsel-Inf. Op.) 1 Op.O.L.C. 20.
---------------------------------------------------------------------------
Example 3: An expert in policy analysis was used as a
consultant by staff of the Office of Management and
Budget. Although he took no oath of office, had no
tenure and received no salary, he is still an SGE due
to the nature of his relationship with individual
members of the OMB staff.\332\
---------------------------------------------------------------------------
\332\ See United States v. Mississippi Valley Generating Co., 364
U.S. 520, 552 (1961).
---------------------------------------------------------------------------
Example 4: The First Lady of the United States is not
an SGE however frequently she might advise the
President or make policy recommendations.
C. Treatment of SGEs in the executive branch
Once a person is deemed to be an SGE, he is subject to the
criminal conflict of interest provisions included in Title 18
of the United States Code and must file periodic financial
disclosure forms as well.
The term ``special Government employee,'' as defined in
Section 202(a), is used in sections 203, 205, 207, 208, and 209
of Title 18. A January 28, 1963, memorandum from the Attorney
General highlighted the similarities and differences among
conflict-of-interest statute applications to regular and
special Government employees under these statutes.\333\ Special
and regular Government employees are treated similarly in
sections 207 and 208 of Title 18 of the U.S. Code.
---------------------------------------------------------------------------
\333\ See 18 U.S.C. Sec. 201 nt., for a reprint of this memorandum.
---------------------------------------------------------------------------
Section 205 prohibits a Federal employee from personally
representing another before a Federal agency, with or without
compensation. Specifically, Section 205 prohibits a Federal
employee from acting as ``agent or attorney'' for anyone before
any Federal agency in connection with any particular matter in
which the United States is a party or has a direct and
substantial interest.
Section 207(a) restricts employees after leaving Government
service from representing anyone other than the Government in
connection with a particular matter:
(1) in which the Government is a party or has an
interest,
(2) in which he or she participated personally and
substantially, and
(3) which involved a specific party or specific
parties at the time of the participation.\334\
---------------------------------------------------------------------------
\334\ In section 207, the term ``participated'' means an action
taken as an officer or employee through decision, approval,
disapproval, recommendation, rending of advice, investigation, or other
action.
---------------------------------------------------------------------------
Section 207(c) places a 1 year restriction on senior level
officers and employees from representing anyone other than the
United States before his or her former department or agency
after terminating Federal employment. This restriction does not
apply to SGEs who serve less than 60 days in a 1-year period
before terminating their employment.\335\
---------------------------------------------------------------------------
\335\ At the request of an agency, the Director of the Office of
Government Ethics may waive this prohibition if the Director determines
that imposing it would create an undue hardship in obtaining qualified
personnel and granting the waiver would not create the potential for
gaining undue influence or unfair advantage.
---------------------------------------------------------------------------
Section 207(d) applied the 1-year restriction discussed in
207(c) to ``very senior'' personnel, i.e., the Vice President,
officials at Executive Schedule levels I and II, and certain
persons on Presidential and Vice Presidential staffs. Unlike
those covered by subsection (c), officials covered by
subsection (d) also may not undertake any representation before
any Executive Schedule levels I through V person in any
executive branch department or agency.
Section 207(f) restricts any person subject to restrictions
in subsections (c), (d), or (e), from representing a foreign
entity before any department or agency or aiding or advising a
foreign entity with the intent to influence a Federal
Government decision within 1 year after terminating employment.
Section 208 permanently restricts both special and regular
Government employees, unless exempted, from participating
personally and substantially in a governmental capacity in
which they, their spouses, minor children, general partners,
organization in which they serve as a director, trustee,
general partner or employee, or any person or organization with
whom they are negotiating or have an arrangement concerning
prospective employment, have a financial interest. A person may
act in a governmental capacity through such things as decision,
approval, disapproval, recommendation, rendering advice,
investigation, or otherwise, in a judicial or other proceeding
application for request for ruling or other determination,
contract, claim, controversy, charge or accusation.
Exceptions may be granted in a number of circumstances. For
example, an officer or employee may avoid this restriction if
he or she first advises the appointing official of the nature
and circumstances of the proceeding or other governmental
action, and makes full disclosure of the financial interest and
receives in advance a written determination by the appointing
official that the interest is not so substantial as to affect
the integrity of the services of the officer or employee.
1. Michael S. Berman's activities at the Clinton White House
In many ways, the experience of Michael S. Berman is
representative of the manner in which the Clinton
administration views its obligations under Federal personnel
laws. According to his deposition before the committee, Mr.
Berman was adjudicated to be a special Government employee by
the Department of Justice when he volunteered to assist in the
Senate confirmation of Webster Hubbell.
Mr. Berman testified that the ``appropriate ethics office''
at the Department of Justice determined that to perform these
duties, Mr. Berman would have to be classified as an SGE and
comply with all of the conflicts of interest laws when it came
to representing his clients before the Justice Department. Mr.
Berman complied,\336\ and while he did not file a financial
disclosure statement, he did understand that:
---------------------------------------------------------------------------
\336\ Deposition of Michael Berman, p. 11.
There was a requirement that I could not do any
business at the Department during the period of time,
and I didn't do any.\337\
---------------------------------------------------------------------------
\337\ Id., p. 17.
This attention to Federal law by the Clinton administration
ended when Mr. Berman left the Department of Justice and became
a volunteer at the White House. Again, according to his
---------------------------------------------------------------------------
testimony before this committee:
Question. Was there any prohibition placed on you
doing work at the White House while you were at the
Department of Justice?
Answer. No.
Question. Similarly, was there any prohibition placed
on your company generally at the White House?
Answer. No.
Question. During the period that you had the--were on
the access list, did you fill out any disclosure forms
or similar forms?
Answer. No.
Question. And was there any prohibition on you doing
other activities at the White House while you were on
the access list?
Answer. No.\338\
---------------------------------------------------------------------------
\338\ Id., pp. 17-18.
While Berman was at the White House to assist in the
Supreme Court nomination of Ruth Bader Ginsberg and advise on
the Senate confirmation of Webster Hubbell, he also provided
advice to numerous Clinton senior staff. It appears that he was
performing many of the same duties at the White House as he had
performed at the Department of Justice. This includes attending
meetings, offering advise on management practices, drafting
memos, issuing reports, etc. Naturally, he still was
functioning as a special Government employee. The committee
found no evidence that the Clinton White House, unlike the
Department of Justice, ever bothered to inquire or evaluate his
status.
During Mr. Berman's deposition, he was asked:
Question. Did anyone at the White House ever discuss
with you special government employee issues or status
of special government employees at the White House?
Answer. No.\339\
---------------------------------------------------------------------------
\339\ Id., p. 55.
This lack of attention to statutory requirements is very
troubling when repeated instances of such ethical lapses are
uncovered. This issue is of particular importance because Mr.
Berman admits to representing outside clients during his work
at the White House. Mr. Berman testified to his numerous
telephone calls to Bruce Lindsey concerning certain airline
industry clients that he was representing.\340\ He testified:
---------------------------------------------------------------------------
\340\ Mr. Berman testified that Bruce Lindsey handled issues
relating to the airline industry for President Clinton.
Answer. The White House has a role in deciding, along
with DOT--I represent United Airlines--as to whether or
not United Airlines will fly from Chicago to Heathrow,
or American Airlines will fly from Chicago to Heathrow.
And if there were a series of calls--some of them may
well have been social, but my guess is that--and I
don't know specifically, but there were some cases in
'95, and Bruce [Lindsey] is one of the people in the
White House that one contacts if you are interested in
aviation issues. That was part of his portfolio.
Question. So this call would have been made in your
capacity as part of the Duberstein Group?
Answer. Yes.\341\
---------------------------------------------------------------------------
\341\ Id., pp. 85-86.
Such representation of a private interest while also an
employee of the Federal Government appears to collide with the
restriction contained in Section 205, discussed above, which
prohibits a Federal employee from acting as ``agent or
attorney'' for anyone before any Federal agency in connection
with any particular matter in which the United States is a
party or has a direct and substantial interest. Obviously, if
Berman was a special Government employee while in the White
House, a review of his activities in relation to all of the
conflicts of interest and standards of conduct regulations
needs to be undertaken.
2. Activities of Harry Thomason and Darnell Martens
Harry Thomason is a Hollywood television producer and
personal friend of the President and First Lady. He was
involved in a variety of aspects of the Clinton/Gore campaign
from the primary season through the November 3, 1992
election.\342\ After raising large amounts of money for the
Clinton campaign, Mr. Thomason flew in from California to
assist Mr. Clinton in the pivotal New Hampshire primary and
produced the ``Man from Hope'' video for the 1992 Democratic
Convention, among other things. Mozark Productions, the
Hollywood production company owned by Harry Thomason and his
wife, Linda Bloodworth-Thomason, became known as the 1992
Clinton campaign's ``second campaign headquarters'' as a result
of all the activities undertaken there on candidate Clinton's
behalf. The Los Angeles Times reported,
---------------------------------------------------------------------------
\342\ For more information on the activities of Harry Thomason
while at the White House, see memorandum to Lee J. Radek, Chief, Public
Integrity Section, Criminal Division, U.S. Department of Justice from
Stuart M. Goldberg, Senior Litigation Counsel and Raymond N. Hulser,
Trial Attorney, Public Integrity Section, Criminal Division,
Recommendations to Decline: Harry Thomason and Darnell Martens, January
11, 1996. See also, memorandum from Beth Nolan, Associate Counsel to
the President, to Cliff Sloan, July 14, 1993.
The Thomason's production company, Mozark, has become
known as the ``second campaign headquarters'' for
Clinton--and has become Hollywood's own little slice of
Arkansas. Clinton's brother, Roger, 35, who works as a
$500-a-week production assistant on ``Designing Women''
and ``Hearts Afire'', and that each day the ``Clinton
Clipper,'' a collection of the day's articles and
headlines on the campaign, appears on the office fax
machine.\343\
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\343\ ``Designing Presidential Politics; Television: Behind the
Scenes [With the Bloodworth-Thomason's],'' by Diane Haithman, Los
Angeles Times, July 25, 1992.
Mr. Martens was an executive with Executive Jet in
Cincinnati, OH when he first met Thomason in the late 1980s. In
November 1991, they incorporated Thomason, Richland & Martens,
Inc. (TRM), an aviation consulting firm in Cincinnati. Mr.
Thomason and Mr. Martens each were one-third partners in TRM
along with Dan Richland, the Thomasons' Hollywood agent.
In January 1992, Mr. Thomason introduced Mr. Martens to
then-Governor and Mrs. Clinton at a campaign fundraiser
luncheon in Los Angeles. He also suggested that Mr. Martens go
to Little Rock to see if he could assist the Clinton campaign
there. Mr. Martens did so and, for the duration of the 1992
campaign, Martens assisted in the chartering of aircraft for
the campaign. Martens reviewed charter contracts and rates,
determined whether they were proper, checked certifications and
so forth.
While TRM never had a formal contract with the Clinton
campaign, Martens charged a brokerage commission or a
consulting fee for TRM's work, depending on the size of the
charter. For corporate aircraft, Martens worked through
Executive Jet. After interviewing several brokers for larger
airplanes, he selected Air Advantage of Albuquerque. Through
Air Advantage, he came to know, and work with, Penny Sample,
Air Advantage's president. Ms. Sample's activities are
discussed below.
In March 1993, Thomason was asked to come to the White
House and provide guidance on ways to better use the White
House for public relations events and improve the President's
image. An itinerary for a series of meetings at the White House
was developed and Thomason was provided a White House pass.
At the White House, Thomason was given access to a
telephone and computer, as well as office space in the East
Wing. He was even listed in a White House phone directory. Mr.
Thomason received no compensation from the Government for his
work at the White House. He was appointed to no Government
position, had no title and took no oath of office.
As was discussed in detail in the overview chapter, Mr.
Thomason and his business partner Darnell Martens clearly were
central players in events that led to the firings in the Travel
Office. In fact, the chronology clearly evidences Mr.
Thomason's involvement in nearly every aspect of the management
of the White House during the early months of the Clinton
administration.
As early as February 1993, Mr. Thomason approached senior
Clinton administration officials to discuss possibilities for
his company to bid on lucrative aviation contracts with the
Federal Government. Messrs. Thomason and Martens were seeking a
several hundred thousand dollar sole source Government contract
to perform a review of all civilian Government aircraft. They
worked with Bruce Lindsey and communicated with the President
about these activities in the spring of 1993.
While working at the White House, Thomason told President
Clinton about alleged problems at the White House Travel
Office. Mr. Thomason subsequently spread Travel Office rumors
to various staffers about alleged ``kickbacks'' solicited by
Travel Office personnel. Mr. Thomason was involved in efforts
to implement the so-called 25 percent personnel cuts at the
White House. He authored ``The White House Project,'' and
worked on management problems in the Correspondence Office. His
duties clearly went beyond the scope of the imaging project.
The White House Travel Office Management Review, the
General Accounting Office review and the Department of Justice
each concluded that Messrs. Thomason and Martens should not be
considered special Government employees for the purposes of his
dealing with the Travel Office matter and, as a result, were
not required to abide by conflict-of-interest statutes.
However, each of these reports relied upon the limited fact
pattern found in the White House Management Review.
The committee's investigation uncovered numerous documents
which directly support the conclusion that Mr. Thomason
fulfilled the requirements of an SGE. Moreover, Thomason
appeared to be pursuing his personal financial business each
day while he was at the White House in violation of the
conflict of interest statutes. Throughout the 3 years of
investigation, we have seen the elaborate steps taken by White
House counsel to hide pieces of this material from other
legitimate investigative bodies.
On January 11, 1996, the Department of Justice determined
that neither Harry Thomason nor Darnell Martens were subject to
the provisions of 18 U.S.C. Sections 208 or 208 and, therefore,
should not be prosecuted.\344\ Due to the narrow interpretation
the Justice Department reads into the SGE statute, we believe
its analysis was flawed for several reasons. After reviewing
the law, which the committee also believes that it should be
reviewed during the next Congress. The Justice Department's
conclusions will be addressed individually here.
---------------------------------------------------------------------------
\344\ Memorandum from Stuart M. Goldberg, Senior Litigation Counsel
and Raymond N. Hulser, Trial Attorney, Public Integrity Section,
Criminal Division, to Lee J. Radek, Chief, Public Integrity Section,
Criminal Division, January 11, 1996.
---------------------------------------------------------------------------
a. The Justice Department found that there is no evidence
that Martens or Thomason had any formal status as a
Government employee or special Government employee
\345\
---------------------------------------------------------------------------
\345\ Justice Department memorandum, p. 22.
---------------------------------------------------------------------------
The Department points out that neither was appointed to a
position, took an oath of office or received a title, that the
personnel office did not keep a file on them, they did not seek
a regular appointment, receive compensation, or hold themselves
out to be a Government employee. It comes as no surprise that
the Clinton White House did not require its volunteer workers
to take an oath or otherwise review applicable statutes
regarding the activities of Government volunteers. One thing
that the American people have learned over the last several
years is that this White House was hardly vigilant when it came
to such details.
Harry Thomason was asked, however, to assist in the White
House by the President of the United States and regularly
worked with numerous senior administration officials. He was
given a White House pass and the paperwork submitted for his
pass indicates he was to ``report'' to President Clinton. The
frequent number of telephone calls and meetings with the
President or Mrs. Clinton clearly demonstrates their
supervisory nature. Finally, the receipt of compensation is not
a requirement to become a Government employee.\346\ Beth
Nolan's review of this section pointed out that a person cannot
avoid being designated an SGE merely because there has not been
a formal appointment.
---------------------------------------------------------------------------
\346\ 364 U.S. p. 552.
---------------------------------------------------------------------------
b. The Justice Department found that there is not
sufficient evidence that either Thomason or Martens
was a de facto Government employee or special
Government employee or that they sought to avoid
the formalities of Government office in an effort
to skirt the conflict of interest laws \347\
---------------------------------------------------------------------------
\347\ Id.
---------------------------------------------------------------------------
Contrary to the Justice Department's findings, it would be
difficult to imagine a more clear example of a de facto
Government employee than Harry Thomason. He was asked by
President Clinton to come into the White House to assist in
developing a successful management structure at the White
House, certainly a Government task. He received a ``hard pass''
for easy entry into the White House, which were hard to get for
even regular White House employees. He had a telephone, desk,
and office in the White House. Harry Thomason was even listed
in the White House telephone directory.
Furthermore, an ``intentional'' effort to skirt the
conflict of interest laws would be informative when determining
whether someone meets the definition of Government employee,
but it would not be determinative. What is required, as
discussed above, is an employer-employee relationship
characterized by typical criteria.
c. The Justice Department found that insufficient evidence
exists that Thomason performed a Federal function
or acted under the supervision of a Federal
employee \348\
---------------------------------------------------------------------------
\348\ Id.
---------------------------------------------------------------------------
The Department's memo included a shocking footnote:
Thomason might also argue that his imaging project,
which focused on communicating President Clinton's
message more effectively, was political campaign work,
rather than federal government work. In fact, the
proposal that Thomason prepared suggested the use of
inaugural funds for its implementation, rather than
government funds.\349\ (Emphasis Added).
---------------------------------------------------------------------------
\349\ Id., p. 23. Footnote 36.
It is startling that the Department of Justice would argue that
a private individual may have been performing campaign work out
of the White House, using Federal Government resources such as
computer equipment, telephones, etc., and then disregard the
implications of that admission.
The committee disagrees with the Department's suggestion,
however, that the work of Thomason and Martens was campaign
related, rather than governmental. Mr. Thomason's ``imaging
project'' was similar to the type of work performed by press
secretaries throughout the Clinton administration. In fact, a
good portion of the current White House Counsel's Office
devotes its resources toward improving the ``image'' of the
President.
Beyond the imaging project, however, Thomason additionally
helped to reshape the entire management structure at the
Clinton White House. The chronology provided in this report
clearly demonstrates his involvement in numerous management
issues, many far beyond the scope of Presidential imaging.
Given that broad range of job duties, it stands to reason
that Mr. Thomason would make recommendations on the efficiency
and effectiveness of White House offices and that his changes
would immediately be implemented. What is not allowed, however,
is that he would base his recommendations in pursuit of his own
financial interests.
d. The Justice Department found that both men participated
in some manner in the inquiry concerning the Travel
Office--at minimum providing information relevant
to the decisionmakers. It is not at all clear,
however, that such participation would qualify as
``substantial'' under the statute \350\
---------------------------------------------------------------------------
\350\ Id., p. 24.
---------------------------------------------------------------------------
Given the lack of cooperation the Clinton White House
provided to and was accepted by the Justice Department, one can
quickly see how its analysis would conclude that the activities
of Thomason and Martens were minimal. Facts uncovered by the
committee, however, suggest just the opposite.
A review of the chronology of events, provided earlier in
this report, suggests that Harry Thomason in particular was
involved in White House activities nearly every day, including
numerous telephone calls to Government officials and private
meetings with the President, Mrs. Clinton, and the Chief of
Staff. Copies of official correspondence were routinely sent to
Thomason as though he was a regular member of the White House
staff, and meetings were scheduled to include Thomason at the
White House. In the days leading up to the firing of the Travel
Office workers, Thomason spent nearly all of his time in
meetings or telephone calls discussing the operations of the
Travel Office.
e. The Justice Department found that Thomason and Martens
clearly had no decisionmaking role \351\
---------------------------------------------------------------------------
\351\ Id.
---------------------------------------------------------------------------
Once again, the Department makes a conclusion which ignores
the realities of Government service. Neither Thomason nor
Martens were required to ``sign'' documents attesting to their
decisionmaking role. But, given the fact that at least Thomason
was introduced to the White House staff as a close friend and
advisor to the President, who occasionally spent the night at
the White House, their influence was surely felt. That
influence should not, by itself, suggest that Thomason or
Martens were Government employees, but in an analysis of the
facts, it would be inappropriate and not very realistic to
conclude that Thomason or Martens lacked a decisionmaking role.
The committee also questions whether holding a
decisionmaking role is a vital step to being considered a
Government employee. Thousands of Government employees are
hired to advise more senior officials on what decisions to
make. Their services are sought for the quality and type of
advice they provide, not the decisions they make.
f. The Justice Department found that even if we could
establish that they had some employment status, we
would have difficulty establishing that the
employment was connected with the Travel Office
\352\
---------------------------------------------------------------------------
\352\ Id.
---------------------------------------------------------------------------
The Department echoes a view discussed in an analysis by
the White House which suggests that an individual can be deemed
a Government employee for some circumstances but not for
others. In effect, according to this analysis, an individual
can wear two hats. One moment, they can meet with a senior
Government official to advise them on what steps that official
should take to make the President ``look better'' in public
functions. The next moment they advise that same Government
official on how the Government should buy services offered by
the advisor. The committee rejects that conclusion.
When an individual gains special status by accepting a
Government official's request for help, they should not try to
use that privilege for profit. The committee refuses to accept
the conclusion that the Congress, when drafting the Government
employment statutes, meant to allow individuals to profit from
the Government at a time when they held special authorities
provided by the Government. The committee agrees that Congress
should revisit the Government employment statutes to ensure
that agencies abide by their obligations to determine when
volunteers become Government employees. But the committee does
not believe that current law should be read to allow volunteers
to become profiteers.
In a revealing inter-office memorandum, White House
Associate Counsel Beth Nolan opined:
When viewed as a whole, the facts revealed in the
[White House Travel Office Management] Report could
support a conclusion that Mr. Thomason was an
uncompensated consultant with the status of a special
government employee, by virtue of his assignment to
consult on the staging of presidential events . . . the
matter is not free from doubt, and we should proceed to
analyze Mr. Thomason's conduct as if he were a
government employee.\353\
---------------------------------------------------------------------------
\353\ Nolan memorandum, p. 6, CGE 43265.
Although this document was kept from the committee for
years under claims of executive privilege, even Nolan's limited
review of the few facts she had, determined that Harry Thomason
likely was a special Government employee. However, Nolan went
on to repeat the Department of Justice's reasoning that even if
Thomason was an SGE for the purposes of the imaging project,
such a status should be compartmentalized and should not have
---------------------------------------------------------------------------
an impact on his other activities. Specifically, she stated,
Harry Thomason may have been a special government
employee with respect to the assignment he was given to
consult on staging presidential events, but this did
not convert him into a special government employee for
other matters, including the Travel Office.\354\
---------------------------------------------------------------------------
\354\ Id., p. 11.
Not only did Nolan only rely on the facts provided in the
White House Travel Office Management Review, but she did not
discuss how, if Thomason was a special Government employee, his
activities could be compartmentalized so as to allow him to
represent his personal business interests when he was not
wearing his SGE hat. Nothing in the legislative history
suggests that Congress meant to allow a President to bring his
campaign staff into the White House as part time SGEs,
introduce them to influential contracting officers throughout
the Government, allow them to gain inside advantages on other
Government contracts, and then bid on Government business
simply by taking off their SGE hat. The theory that an SGE
could change his status as easily as walking into another room
is bad public policy and not found in any legitimate reading of
the statute.
In the final analysis, the committee believes that when
viewed in light of the totality of activities taken on by
Thomason, he should be viewed as a special Government employee.
Previous analysis of this matter was fatally flawed, however,
due to the lack of cooperation by members of the White House
staff who intentionally withheld information from Government
officials seeking to investigate the White House activities of
Harry Thomason and Darnell Martens. Because Martens acted more
as an assistant to Thomason, without the same trappings of
approval by the White House, the committee is not prepared to
conclude that he meets the definition of SGE. That does not
suggest, however, that the committee condones his efforts to
use the special access afforded Thomason to profit at the
public's expense.
As suggested, the committee's investigation was further
frustrated by a convenient lack of memory regarding the
circumstances of Thomason's activities at the White House.
Individuals who could otherwise remember precise details about
some of their activities throughout 1993 made inconsistent or
even conflicting statements about their relations with
Thomason. Once again, we have seen a friend of the President's
``air brushed'' out of internal reports and statements since
the early days of the Clinton administration. Even further,
Harry Thomason refused to cooperate with the General Accounting
Office and refused to be interviewed a second time for the
White House Travel Office Management Review. Without the force
of a subpoena, Thomason very likely would have refused to
cooperate with this committee as well. Further inquiry should
determine whether this lack of cooperation was criminal.
3. Activities of Penny Sample
What is less disputed is that Penny Sample, president of
Air Advantage, was a special Government employee for the
purposes of assisting in White House Travel Office operations
following the May 19, 1993 firings. On May 20, 1993, after the
Travel Office workers had been terminated, Sample was brought
into the White House Travel Office as a volunteer worker. In
her interview with the General Accounting Office, she stated
that she had:
. . . made charter arrangements for the Clinton
campaign. She reported that she was contacted on May 17
or 18 by Mr. Martens, with whom she had worked during
the campaign, to inquire about her availability to work
in the White House Travel Office. She was asked to call
Ms. Cornelius, who inquired if she would be available
to provide temporary assistance in the procurement of
aircraft charters for the White House press corps
without compensation. She agreed to do so but said that
she could only do so for a short period of time.\355\
---------------------------------------------------------------------------
\355\ General Accounting Office Report, pp. 67-68.
Ms. Sample did not leave that post until June 2, 1993
following revelations that she had received a commission from
the first airline charter that she had booked for a White House
Travel Office trip to New Hampshire on May 22, 1993. Air
Advantage forwarded the $52,000 to Midwest Air.
It is clear from the circumstances surrounding Sample's
arrival at the White House that she should have been considered
an SGE. Again, due to the lax management standards at the White
House, no one analyzed this volunteer's employment standards
and responsibilities. She was, however, given an affirmative
work assignment at the White House. She reported to a permanent
Government employee (David Watkins); performed a single task,
was provided access to all materials necessary to perform her
work, and made financial decisions which obligated the Federal
Government.
White House attorney Beth Nolan also believed Penny Sample
was an SGE:
. . . it seems clear that PS was asked to serve as a
volunteer in the White House to perform a federal job,
and as such probably was a special government employee.
As discussed above, Section 208 of Title 18 restricts
Government employees from participating personally and
substantially in a governmental capacity in which he or she has
a financial interest. A person may act in a governmental
capacity through such things as decision, approval,
disapproval, recommendation, rendering advice, investigation,
or otherwise, in a judicial or other proceeding, application
for request for ruling or other determination, contract, claim,
controversy, charge, accusation.
Penalties for violating section 208 of Title 18 appear in
18 U.S.C. Sec. 216. Section 216 establishes different criminal
penalties for non-willfully and willfully engaging in conduct
constituting offenses under the conflict of interest
provisions. Non-willful engagement is punishable by
imprisonment for not more than 1 year or a fine in an amount
set forth in Title 18, or both.\356\ Willful engagement is
punishable by imprisonment of not more than 5 years or a fine
in an amount set forth in Title 18, or both.\357\
---------------------------------------------------------------------------
\356\ See, 18 U.S.C. Sec. 3559, which indicates that the offense of
non-willful engagement is classified as a Class A misdemeanor because
the term of imprisonment is 1 year or less, and 18 U.S.C. Sec. 3571,
which indicates that the fine for an individual convicted of that
offense is not more than $100,000.
\357\ See, 18 U.S.C. Sec. 3559, which indicates that the offense of
willful engagement appears to be classified as a Class E felony, and 18
U.S.C. Sec. 3571, which indicates that the fine for an individual
convicted of such an offense is not more than $250,000.
---------------------------------------------------------------------------
White House attorney Beth Nolan's notes also are revealing
at this point:
P.S. is the president of a charter broker, Air
Advantage. She arranged for Air Advantage to forward a
fee to Midwest Express to cover official White House
expenses. Even though there seems to have been no
financial advantage to Air Advantage in this
transaction, its forwarding of a $52,000 fee probably
had a financial effect on Air Advantage. Section 208
requires neither that the financial effect be positive,
nor that the financial effect be substantial (there is
no de minimis exception). (Emphasis Added)
The fact pattern discussed in this chapter and the
introductory overview support this committee's conclusion that
Penny Sample was a special Government employee subject to the
conflict-of-interest provisions of Title 18. The committee
further agrees with the analysis of Clinton White House
attorney Beth Nolan, above, when she concludes that Sample and
Air Advantage violated Section 208 of U.S.C. Title 18.
4. Conclusion
What is also clear as a result of the committee's
investigation is that President Bill Clinton willingly opened
the doors of the White House to friends and supporters and
allowed those individuals to, in effect, take whatever booty
they could find. Documents provided under threat of subpoena by
Thomason and Martens provide shocking evidence that close
friends of the President planned to raid the public treasury
long before Bill Clinton was sworn into office.\358\
---------------------------------------------------------------------------
\358\ At the time this committee is drafting this report, White
House political advisor Dick Morris resigned his position with the
Clinton re-election campaign. This resignation comes on the heels of
reports that Mr. Morris shared sensitive Government information with an
outside individual, allegedly a call girl. The White House defended
themselves by arguing that Mr. Morris was not a Government employee and
did not hold a security classification. That defense misses the point.
News accounts suggest that Mr. Morris was involved in not only campaign
decisions, but public policy decisions concerning actions of the
Presidency as well. Advising the President on whether the
administration should support or oppose numerous pieces of legislation
and public policy proposals clearly is a Government function. Given his
broad responsibilities, the Clinton White House should have determined
whether Mr. Morris met the requirements to be a special Government
employee and should have conducted a security background investigation.
---------------------------------------------------------------------------
The committee condemns the greedy, self-serving activities
of those who obviously believed ``access had its privileges''
and used their special access to the White House to promote
their own financial gain. A Washington Post article provides
interesting insight into Thomason's belief that one's support
of a successful Presidential candidate entitles one to realize
personal private gain from subsequent voluntary public service:
I do find it surprising that a person who was as
instrumental as I was in the Clinton campaign cannot
pick up a phone in the White House and ask for
information for people . . . If President Bush was in
office, I would do the same thing if I had this
access.\359\
---------------------------------------------------------------------------
\359\ ``Travel Office Flap Cited as Evidence of Need for White
House Staff Changes,'' Ann Devroy, Washington Post, May 27, 1993.
Both Thomason and Martens could have gained considerable
financial advantage had they succeeded in their overall efforts
to review the entire Federal civilian aircraft fleet under the
auspices of the Interagency Committee on Aviation Policy
(ICAP). Taking effective control of the White House Travel
Office was simply a first step in their plans to capitalize on
Thomason's name recognition in Washington, DC during the
Clinton administration.
VII. Lack of Competitive Bidding
A. Background
Purchases by the Federal Government from the private sector
provide opportunities for the expansion of participating
businesses and the creation of new service-oriented companies.
Procurement expenditures generate secondary and related
consumer spending. Thousands of Federal activities are involved
in acquiring products and services that affect the Nation's
economy. The economic impact resulting from the award of a
major contract can greatly benefit a city or region, while the
loss of a Government contract can cause financial hardship.
The growth of Federal procurement during the past decades
resulted in a proliferation of complex and overlapping Federal
regulations that often hindered an agency's ability to purchase
the best goods and services at the lowest cost. Potential
vendors complained of the frustrating labyrinth of Federal
specifications that controlled the production of goods. This
committee, working with the Clinton administration, took
significant steps to reform these bureaucratic procedures.
On September 7, 1993, Vice President Albert Gore's National
Performance Review issued a report entitled Creating a
Government that Works Better and Costs Less.\360\ This report
included 20 specific recommendations on procurement reform. The
Clinton administration proposed a legislative package designed
to restructure and reduce impediments to the Federal
Government's acquisition practices. Following extensive
hearings by this committee, President Clinton signed into law
P.L. 103-355 on October 13, 1994.\361\ That same day, President
Clinton issued Executive Order 12931, entitled Federal
Procurement Reform, which requires executive branch agencies to
make their own administrative procurement procedures more
effective and innovative ``over and above those required by
statute.'' \362\
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\360\ Albert Gore, Jr., Vice President of the United States;
Creating a Government that Works Better and Costs Less; Report 1994;
September 14, 1994.
\361\ 108 Stat. 3243.
\362\ Executive Order No. 12931, 59 Fed. Reg. 52,387 (1994).
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Federal acquisition laws were further revised, under the
leadership of Chairman Clinger and this committee and the
Clinton administration, as part of the 1996 Defense
Authorization Act.\363\ Division D of that act, referred to as
the Federal Acquisition Reform Act of 1996, concerns changes to
the procurement requirements for armed services and civilian
agency acquisitions. The general effect of Subdivision D is to
eliminate or simplify certain contracting procedures. For
example, one provision raises the dollar thresholds for
contracts that use other than competitive procedures and are
approved by high-level agency officials. Another provision
limits the competitive range to the largest number permitting
an efficient competition. The committee believes that these
provisions will streamline Government contracting and cut out
unnecessary requirements.
---------------------------------------------------------------------------
\363\ The National Defense Authorization Act for Fiscal Year 1996,
Pub. L. 104-106. For information on the legislative history of the
National Defense Authorization Act for Fiscal Year 1996, see H.R. Rept.
No. 450, 104th Cong., 2d Sess. (1996).
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Notwithstanding these recent reforms, the preferred method
for Federal procurement has traditionally been full and open
competition, where all potential suppliers and vendors are
given an equal opportunity to compete for Government
contracts.\364\ In the past, agencies used streamlined small
purchase procedures only for purchases of $25,000 or less. The
Federal Acquisition Streamlining Act raised this minimum to
$100,000. The Federal Government publicizes its intention to
buy property by posting solicitations in public places,
announcements in the Department of Commerce publication
Commerce Business Daily, and by sending invitations for bid to
business firms on applicable mailing lists.
---------------------------------------------------------------------------
\364\ 41 U.S.C. s. 253. Subsection (c) states that a competitive
bid is not required when there is ``an unusual and compelling
urgency.''
---------------------------------------------------------------------------
Whenever possible, agency contracting officers are required
to promote full and open competition in soliciting offers and
awarding Government contracts. Procurement actions may involve
sealed bids, negotiated proposals, sole source acquisition, or
multiple award schedules.
This committee's position is that any effort to reform the
Federal Government's procurement process should begin with a
firm commitment to encourage the use of competition in the
Federal marketplace. In order to require Federal agencies to
increase their use of competition in Federal procurement
actions, Congress enacted the Competition in Contracting Act of
1984.\365\ This legislation required Federal agencies to open
their bidding process to all qualified firms wishing to compete
for the Government's business and by eliminated advertising
restrictions and non-competitive bidding procedures.
---------------------------------------------------------------------------
\365\ The Competition in Contracting Act of 1984 can be found in
Title VII of division B of the Deficit Reduction Act of 1984 (Pub. L.
98-369; 98 Stat. 1175).
---------------------------------------------------------------------------
B. Competitive Bidding in the Clinton White House
Despite the support for competition in the Federal
marketplace by both the Congress and the administration, the
Clinton White House apparently believed that full and open
competition should apply only to other agencies, while it
awarded lucrative contracts to friends and political supporters
of the President. The White House contends that the Travel
Office's failure to conduct competitive bidding for press
charters played a part in its decision to fire the Travel
Office workers. However, it was the Clinton administration,
itself, that failed to utilize competitive bidding in the award
of lucrative Government contracts. The White House directed
procurement funds toward friends and supporters of the
President. For example, on June 24, 1993, 1 month after the
Travel Office firings, the White House refused to utilize a
competitive bidding procedure to purchase a $25 million
telephone system contract for the White House. Clinton aide
Patsy Thomasson was involved in this and other non-competitive
awards. In each case, she conveniently claimed that ``urgent
and compelling'' circumstances existed to obviate any
obligation to bid the contract competitively.
According to the White House Management Review, ``[Harry]
Thomason was concerned that the White House charter business
was not competitively bid and that the Travel Office might also
be engaged in wrongdoing.'' \366\ Others professed concerns
about problems in the Travel Office. The White House Travel
Office Management Review states that:
---------------------------------------------------------------------------
\366\ White House Chief of Staff Mack McLarty and Office of
Management and Budget Director Leon Panetta, White House Travel Office
Management Review, July 2, 1993, p. 5.
On May 1, at the White House Correspondents
Association Dinner, Thomason heard George Condon,
President of the Correspondents Association, address
the growing expense to the press of traveling on
Presidential trips, a particular problem for smaller
news agencies. Harry Thomason viewed the no-bid
practices of the Travel Office as part of the
problem.\367\
---------------------------------------------------------------------------
\367\ White House Chief of Staff Mack McLarty and Office of
Management and Budget Director Leon Panetta, White House Travel Office
Management Review, July 2, 1993, p. 6.
That view was further echoed in the General Accounting Office
---------------------------------------------------------------------------
Report:
To ensure that the Travel Office receives the best
value for the funds it spends, goods and services
generally should be procured through a competitive
process.\368\
---------------------------------------------------------------------------
\368\ General Accounting Office, White House Travel Office
Operations: Travel Office Operations, Report No. GGD-94-132, May 1994
p. 27.
Clinton administration actions leading up to and following
the Travel Office firings belie these professed concerns
regarding competitive bidding, however. From the hiring of KPMG
Peat Marwick through the recruitment of World Wide Travel, Air
Advantage, and possibly, American Express, the Clinton
administration avoided legitimate competitive bidding of Travel
Office contracts altogether.
C. KPMG Peat Marwick Contract
When it was decided that an outside firm should review the
Travel Office, David Watkins, Assistant to the President for
Management and Administration called KPMG partner Larry Herman.
Mr. Herman, who had addressed staff members of the National
Performance Review on the issue of reinventing Government, was
recommended to Watkins by Jennifer O'Connor, a member of the
White House staff. Mr. Herman's firm was hired over the phone
on the evening of May 13, 1993. Mr. Herman was asked to be at
the White House early the following morning. No competitive bid
was solicited to conduct this review of the White House Travel
Office.\369\ Mr. Watkins later said that KPMG Peat Marwick was
sought because the White House had no internal audit
capability.\370\ Deputy White House Counsel Vincent Foster,
while in the presence of FBI agents, initially recommended that
an audit be conducted on the Travel Office. Because the FBI had
no authority to conduct an audit without the predicate of an
investigation, the FBI suggested that Foster ``get OMB or GAO
to do the audit.'' \371\ The committee found no evidence to
suggest that the White House staff investigated the suitability
of an audit conducted by the General Accounting Office or the
Office of Management and Budget.
---------------------------------------------------------------------------
\369\ General Accounting Office, White House: Travel Office
Operations, Report No. GGD-94-132, p. 57. Clinton aide David Watkins
reported to Chief of Staff McLarty on May 17, 1993 that the Travel
Office staff had been told the audit was part of the Vice President's
National Performance Review effort. The committee was informed that the
KPMG partner responsible for the review was on leave and worked on a
voluntary basis for the National Performance Review. Representatives of
the Vice President later informed the committee that while reforming
the Travel Office was consistent with the goals of the National
Performance Review, the review was not conducted under the auspices of
the NPR.
\370\ A bill referred to the House of Representatives by this
committee, H.R. 3452, 104th Cong., 2d Sess. (1996), the Presidential
and Executive Office Accountability Act, introduced by Congressman John
Mica, would provide, inter alia, an internal Inspector General for the
Executive Office of the President. Surprisingly, the White House has
expressed its opposition to this measure.
\371\ Michael E. Shaheen, Jr., Office of Professional
Responsibility of the U.S. Department of Justice, Report of the Office
of Professional Responsibility's Review of the Conduct of the FBI in
Connection with its Contacts with the White House in the Travel Office
Matter, pp. 28-29.
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The White House Travel Office Management Review, while
criticizing the procurement practices of the fired Travel
Office staff, did not even discuss the fact that KPMG Peat
Marwick was brought into the White House without a competitive
bid. The gap in the report regarding the circumstances under
which KPMG was hired is problematic. White House documents
indicate that the authors of the White House Travel Office
Management Review were aware that a problem existed with the
non-competitive bid for KPMG. These documents indicate there
were numerous discussions between White House Counsel and the
Chief of Staff McLarty about how to get around (i.e., justify)
this problem.
In the end, Peat Marwick arrived at the White House without
a contract for the work it was about to undertake. Mr. Herman
drafted a preliminary work contract on May 19, 1993, 5 days
after the review was initiated. While this contract was signed
the week of May 17, 1993, the final KPMG contract was not sent
out by the White House until 3 months later, on August 17,
1993. To justify why normal procurement procedures were not
followed, the White House argued:
Normal procurement procedures were not an option due
to a perception of potential financial mismanagement.
Due to this perception, the need for financial review
became urgent and compelling, with time of the
essence.\372\
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\372\ White House memorandum from Patsy Thomasson to Dale Helms,
Delegation of Authority Relative to Peat Marwick Contract, August 9,
1993, CGE 2514-2518.
The committee does not support this conclusion. The White House
should have searched for other means to conduct an internal
review of the White House Travel Office. The arguments raised
in defense of the decision to hire an outside auditor bring
force to the case for legislation approved by this committee
that would provide the President with his own, hand picked
auditor.
D. World Wide Travel
World Wide Travel Service, Inc., was selected by White
House staff to provide commercial travel services in lieu of
those formally provided by the long-term employees of the White
House Travel Office. World Wide had performed similar services
for the Clinton Presidential Campaign in 1992. According to the
General Accounting Office report:
Ms. Betta Carney, President of World Wide, told us
that on May 11 she was telephoned by Ms. Cornelius, who
reported that the White House Travel Office staff would
possibly be dismissed in the near future, due to
allegations of wrongdoing; Ms. Cornelius asked that
this information be kept secret. The next day, Ms.
Cornelius, who told us she called at the direction of
Mr. Watkins, asked if World Wide could start at the
White House Travel Office for an interim period until a
competition could be held. A representative of World
Wide arrived in Washington on May 14 and remained on
call throughout the weekend, but was not called.
According to Mr. Stephen Davison, World Wide's Director
of Customer Service, on May 18, he and a World Wide
travel agent met with Ms. Cornelius, who reported that
the Travel Office matter was not resolved. However,
that evening Ms. Cornelius called to ask that the World
Wide officials meet her the next morning (May 19) in
Mr. Watkins' office. At the meeting the next morning,
Mr. Watkins informed the World Wide representatives
that the Travel Office employees had been fired and
were vacating the premises.\373\
---------------------------------------------------------------------------
\373\ General Accounting Office, White House: Travel Office
Operations, Report No. GGD-94-132, pp. 66-67.
Representatives of World Wide were in the offices of the White
House Travel Office before the career White House employees had
returned from the 10 a.m. meeting at which Watkins fired them
on May 19, 1993.
Also in the General Accounting Office interview, Betta
Carney said that when Catherine Cornelius called her on May 12,
1993, to come to the White House, Carney asked:
[I]s this legal, could we do this, and on site,
without a formal contract? And she said something about
emergency procurement of some type that the White House
lawyers had talked about it, and that there was a
possibility that it would be okay and that we should be
ready to send someone up there at a moment's
notice.\374\
---------------------------------------------------------------------------
\374\ Barney Gomez and Bob Homan of the General Accounting Office;
interview with Betta Carney and Steve Davison of Worldwide Travel;
Little Rock, AR; September 7, 1993; p. 48.
In questions posed by reporters at a White House press
---------------------------------------------------------------------------
conference, Betta Carney was referred to as:
. . . the closest associate with David Watkins here,
. . . [and] sort of carried the campaign in its early
days when they didn't have any money and agreed to bill
them on a delayed basis as their contributions came in.
And Watkins has been quoted as saying that that enabled
them to free up money to use for advertising in the
Michigan and Illinois primaries at a time when they
might not otherwise have been able to do so. That
sounds like it treads dangerously close to corporate
contributions and FEC violations.\375\
---------------------------------------------------------------------------
\375\ George Stephanopoulos; White House press briefing;
Washington, DC; May 21, 1993, p. 8.
George Stephanopoulos did not comment on this allegation, but
he confirmed that individuals at World Wide Travel made
donations to the Clinton campaign.
Notwithstanding evidence to the contrary, the White House
tried to argue that the selection of World Wide Travel was not
based on its prior personal or business relationship with
members of the campaign staff, now members of the White House
staff.\376\ There is no evidence that the White House had any
other reason to choose World Wide Travel, an Arkansas based
travel service, over other, nationally known travel firms.
---------------------------------------------------------------------------
\376\ At the time that World Wide Travel was chosen by the White
House, both Catherine Cornelius and David Watkins were on staff at the
White House.
---------------------------------------------------------------------------
The conclusion of the White House Travel Office Management
Review simply states that, ``hiring World Wide Travel on a no-
bid basis--even as an interim, stop-gap measure--created the
appearance of favoritism toward a local friend of the
campaign.'' \377\ All evidence points to the fact that the
appointment of World Wide Travel was, in fact, favoritism
toward a friend of the Clinton campaign. There is evidence,
however, that this was intended not as an ``interim, stop-gap
measure,'' but as a permanent, financial arrangement.
---------------------------------------------------------------------------
\377\ White House Chief of Staff Mack McLarty and Office of
Management and Budget Director Leon Panetta, White House Travel Office
Management Review, July 7, 1993, p. 20.
---------------------------------------------------------------------------
E. Air Advantage
Penny Sample, president of Air Advantage, provided airline
charters for the Clinton campaign and was assisted by Thomason,
Richland & Martens (TRM), an aviation consulting business. Mr.
Martens contacted Penny Sample on May 17, 1993, and asked if
she would be willing ``to provide temporary assistance in the
procurement of aircraft charters for the White House press
corps without compensation.'' \378\ Sample agreed to provide
this service as a volunteer. Within 2 weeks, Sample left the
White House Travel Office after it was disclosed that she
received a commission on the first charter trip she arranged
for the White House, a press trip to New Hampshire on June 22,
1993.
---------------------------------------------------------------------------
\378\ General Accounting Office, White House: Travel Office
Operations, Report No. GGD-94-132, p. 45.
---------------------------------------------------------------------------
This financial arrangement was mentioned in both the
General Accounting Office report and White House Travel Office
Management Review, but neither discussed at any length to the
lack of competition afforded when the contract was signed. The
GAO Report stated:
With the removal of the Travel Office employees,
several organizations were approached to provide White
House travel services. World Wide Travel Services, Inc.
And Air Advantage had both been involved in campaign
travel . . . Air Advantage was brought in on May 18 or
19 to provide temporary help in procuring aircraft
charters for the White House press corps.\379\
---------------------------------------------------------------------------
\379\ Id., p. 45.
---------------------------------------------------------------------------
The White House Management Review stated:
Bringing in Penny Sample of Air Advantage, to handle
press charters on a no-bid, volunteer basis furthered
the appearance that the White House was trying to help
its friends. This implies no improper conduct on
Sample's part, but again created an appearance of
favoritism.\380\
---------------------------------------------------------------------------
\380\ White House Chief of Staff Mack McLarty and Office of
Management and Budget Director Leon Panetta, White House Travel Office
Management Review, July 7, 1993, p. 20.
Favoritism was a major factor in the selection of a White
House contractor. Unfortunately, this fact was ignored in each
of the major Travel Office reviews.
F. American Express
On May 21, 1993, at 4:10 p.m., then White House
Communications Director George Stephanopoulos announced that
World Wide Travel would be departing the White House Travel
Office effective immediately, as a result of White House
concerns with appearances of favoritism in its hiring
practices. Mr. Stephanopoulos then announced that American
Express would replace World Wide Travel in the Travel Office
beginning Monday, May 24, 1993. Once again, no competitive bid
preceded this announcement of a major change in the Travel
Office. The White House engaged in a formal competitive bid for
this business on Sunday, May 23, 1993, 2 days after
Stephanopoulos' announcement that American Express had been
awarded the contract.
The timing of Stephanopoulos' announcement seems curious,
when competitive bidding had yet to occur. The committee did
learn, in the course of its investigation, that Patsy Thomasson
met behind closed doors with representatives of American
Express hours before Stephanopoulos' May 21, 1993 announcement.
In fact, Patsy Thomasson requested that she have the FBI guard
the doors for her closed-door meeting with American Express.
When told that was not appropriate given the FBI's role in the
Travel Office matter, Ms. Thomasson had Secret Service agents
guard the door. Ms. Thomasson also discussed the travel
contracts over the phone with American Express, until she was
told to stop contacting them. There was no indication that
Patsy Thomasson met with either of American Express' two
competitors for the Travel Office business. American Express'
selection subsequently was credited to its excellent bid
presentation and for including resumes of those who would work
in the Travel Office in its packet.
The committee is concerned that this preparation very
likely followed Ms. Thomasson's own ``heads-up'' of American
Express.
VIII. The White House Initiated a Full-Scale Campaign of Misinformation
in the Aftermath of the Travel Office Firings and put in Place a Cover-
up From Which it Could not Extricate Itself
A. President Clinton led the misinformation campaign from the first
days of the Travelgate debacle
Immediately after the firing of the White House Travel
Office (WHTO) employees on May 19, 1993, the press asked
whether the President had approved of that decision:
Question. Who made this decision to fire them?
Ms. Myers: David Watkins supervised the review. David
Watkins runs the Office of Administration. It was his
decision.
Question. And had the acquiescence of the President?
Ms. Myers: Absolutely.\381\
---------------------------------------------------------------------------
\381\ White House press conference, May 19, 1993.
Bruce Lindsey briefed President Clinton about the Travel
Office firings 2 days before they occurred.\382\ David Watkins
called Air Force One on May 18th to inform the President of the
firings.\383\ As Ms. Myers noted, the President approved the
firings. We now know that the President also approved bringing
in Harry Thomason for the ``image'' project \384\ which
included staging good press events--one of which was supposed
to be the firing of the Travel Office employees--``Bill Clinton
cleaning house,'' as Harry Thomason explained.\385\
---------------------------------------------------------------------------
\382\ WHMR interview of Bruce Lindsey, CGEPR 331-334.
\383\ Phone logs of David Watkins.
\384\ Committee deposition of Mack McLarty, July 12, 1996, p. 23.
\385\ Committee deposition of Jennifer O'Connor, March 29, 1996,
pp. 37-38.
---------------------------------------------------------------------------
On the afternoon of May 19th, the President was already
distancing himself from his Press Secretary's statement
regarding his role in the White House Travel Office matter:
Question. Mr. President, can we ask you if you feel
you were fair in summarily dismissing some employees of
the government of long-standing without a hearing, and
leaving the impression perhaps that they may have
committed criminal acts?
The President: I don't know. I'll have to refer to
the Chief of Staff about that.
Question. We're speaking about the Travel Office,
sir.
The President: I know. All I know about it is that I
was told that the people who were in charge of
administering in the White House found serious problems
there and thought there was no alternative. I'll have
to refer to them for any other questions. That is
literally all I know about it. I know nothing else
about it.\386\
---------------------------------------------------------------------------
\386\ May 19, 1993 White House press conference.
On May 25th, the day the White House announced it was placing
five of the former White House Travel Office employees on
``extended administrative leave'' and initiating an internal
---------------------------------------------------------------------------
investigation, the President again was asked about the firings:
Question. Mr. President, are you upset by this whole
Travel Office mess? And who is responsible for it, sir?
The President: Well, ultimately, anything that
happens in the White House is the responsibility of the
President. And whenever you've asked me a question,
I've told you all I know about it. All I knew was there
was a plan to cut the size of the office, save tax
dollars, save the press money.\387\
---------------------------------------------------------------------------
\387\ May 25, 1993 White House press conference.
The next day, May 26th, while responding again to media
questions about the Travel Office firings, President Clinton
---------------------------------------------------------------------------
explained:
. . . the press complained to me repeatedly about
being gauged (sic) by the White House Travel Office. I
kept hearing everywhere.\388\
---------------------------------------------------------------------------
\388\ May 26, 1993, White House press conference.
During the CBS This Morning, town hall meeting on the morning
---------------------------------------------------------------------------
of May 27th, President Clinton said:
We found out that there were seven people working in
the Travel Office, primarily to book travel for the
press, and that the press was complaining that the cost
was too high. So, there were all these recommendations
made to change it. But nothing was done until an
accounting firm came in and reviewed the operations and
found serious management questions in terms of
unaccounted funds and things like that. So then the
person in charge of that made the decision to replace
them.\389\
---------------------------------------------------------------------------
\389\ CBS This Morning (CBS television broadcast, May 27, 1993).
Of course this statement was false, as the New York Times
---------------------------------------------------------------------------
pointed out, writing:
. . . why even after the public had learned how
Clinton friends engineered the travel office flushout,
did the staff feed President Clinton the discredited
line that the firings were simply economy measures?
\390\
---------------------------------------------------------------------------
\390\ ``A Stealthy, Evasive Confession,'' the New York Times, July
11, 1993, Section 4.
``Let's not obscure what happened,'' the President said in
the days following the firings.\391\ Yet this is the course set
by the President himself from the first day of the firings.
---------------------------------------------------------------------------
\391\ The Washington Post, ``Travel Office'' (Cont'd), May 28,
1993, p. A20.
---------------------------------------------------------------------------
B. The initial press offensive against the Travel Office employees
mischaracterized the Peat Marwick review and the FBI's role in order to
cover-up the real reasons for the firings
The first series of Clinton administration deceptions
occurred in the days immediately following the firings. White
House statements on May 19, 1993, indicated the firings
followed an audit performed pursuant to Vice President Gore's
National Performance Review, which uncovered ``abysmal
mismanagement'' and ``shoddy accounting practices.'' \392\
Spokesperson Dee Dee Myers added that the FBI was investigating
possible criminal violations by the fired employees. In fact,
an audit of the Travel Office never was undertaken, let alone
completed.
---------------------------------------------------------------------------
\392\ May 19, 1993, White House press conference. (Statement of Dee
Dee Myers).
---------------------------------------------------------------------------
Peat Marwick's engagement letter, draft and final report
all specify that its work did not constitute an audit. Peat
Marwick told the White House that:
such procedures do not constitute an audit,
examination, or review in accordance with Standards
established by the American Institute of Certified
Public Accountants and, therefore, we do not express an
opinion or any other form of assurance on the
information presented in our report.\393\
---------------------------------------------------------------------------
\393\ KPMG Peat Marwick Draft Report, CGE 006966, (although it was
dated May 17, 1993, it was not actually drafted before May 19 or 20,
1993).
---------------------------------------------------------------------------
Peat Marwick further explained to the White House that:
The procedures we performed were limited in nature
and extent to those which the Office of the Counsel
determined best fit its needs.\394\
---------------------------------------------------------------------------
\394\ KPMG Peat Marwick Draft Report, CGE 006966, (although this
was dated May 17, 1993, it was not actually drafted before May 19 or
20, 1993).
The White House also informed the press that the Travel
Office records were ``in shambles'' and not auditable. However,
a Peat Marwick C.P.A., Dan Russell, testified before this
committee that the pre-firing Travel Office records were
auditable and that they simply would have needed more than the
3 days allowed by the White House for their review to perform
such an audit.\395\
---------------------------------------------------------------------------
\395\ Committee deposition of Dan Russell, March 27, 1996, p. 59.
---------------------------------------------------------------------------
The Travel Office employees themselves first heard the
allegations of criminal wrongdoing on television while packing
their personal belongings before leaving the White House. When
firing them earlier that day, David Watkins made no mention of
any criminal investigation but instead represented the firings
as part of a reorganization effort.\396\
---------------------------------------------------------------------------
\396\ Foucart deposition, May 3, 1996, pp. 42-43. Foucart took
notes of David Watkins' speech to the employees as he fired them:
``What we are going to do is surgical rather than prolonged.''
---------------------------------------------------------------------------
The Vice President's office quickly distanced the firings
from anything having to do with the National Performance Review
by repudiating the White House press secretary's assertions
that the Peat Marwick review was part of the National
Performance Review.\397\ Meanwhile, Larry Herman, Peat
Marwick's partner in charge of the review, was confounded by
the fact that the White House would base the Travel Office
firings on an as-yet-unfinished report. Mr. Herman never told
anyone at the White House his review would justify the firing
of all of the employees, particularly those that had nothing to
do with the financial aspects of the office.\398\
---------------------------------------------------------------------------
\397\ Letter to Nancy Kingsbury (GAO) from Todd Campbell in the
Vice President's office, December 1993, CGE 2554.
\398\ Committee interview of Larry Herman, August 29, 1995; see
also GAO interview of Larry Herman, August 31, 1993, p. 11.
---------------------------------------------------------------------------
The White House Press shop pressured Herman to provide
selective off-the-record press briefings on May 19.\399\ Harry
Thomason and Jeff Eller were also present in the press room
that day when ``kickback'' allegations were circulated to the
press. By that time, Herman informed White House officials that
he had found absolutely no basis for the kickback
allegations.\400\
---------------------------------------------------------------------------
\399\ Committee interview of Larry Herman, August 29, 1995.
\400\ Committee deposition of Harry Thomason, May 17, 1996, p. 223.
(Thomason claims he inadvertently ended up in the press briefing room
at the precise time of the briefing on the Travel Office firings
because he was taking a tour of the White House.)
---------------------------------------------------------------------------
George Stephanopoulos stated in a May 20 press conference
that Harry Thomason had ``no financial interest'' in White
House travel matters,\401\ a patently false statement in light
of Thomason's various White House business solicitations on
behalf of TRM.\402\ Mr. Foster later wrote of a meeting on May
21 in which they discussed Thomason's financial interests. Mr.
Foster's notes indicate that Stephanopoulos became ``upset''
when he was shown an ``HT memo,'' presumably reflecting that
Thomason had a financial interest in the matter.\403\ Mr.
Foster also noted that while Stephanopoulos said there was no
financial interest, ``DD/M [Dee Dee Myers] & Eller [Jeff Eller]
and I disagree.'' \404\
---------------------------------------------------------------------------
\401\ White House press conference, May 20, 1993.
\402\ See supra at Sections IV, V and VI.
\403\ Vince Foster Travel Office notebook, CGE 000917.
\404\ Vince Foster Travel Office notebook, CGE 000917.
---------------------------------------------------------------------------
The initial response by White House officials when faced
with a press hostile to the firings was to hide the truth. They
withheld the full scope and extent of Harry Thomason's favor-
seeking at the White House, misrepresented the Peat Marwick
review and repeatedly maligned the seven fired Travel Office
employees. When that did not work and the press raised issues
of cronyism and patronage, on May 21, the White House press
office summoned the FBI spokesperson to the White House to edit
the FBI's press statements in an effort to bolster the White
House's story.\405\ When news of this additional effort to
politicize the FBI was learned the following Monday, May 24,
the Attorney General contacted White House Counsel Nussbaum and
expressed concern about the direct contact by the White House
with the FBI.\406\
---------------------------------------------------------------------------
\405\ OPR Report, p. 58.
\406\ OPR Report, p. 68.
---------------------------------------------------------------------------
The press highlighted the fact that at the very time the
FBI spokesman was attending a White House press strategy
meeting on the Travel Office, embattled FBI Director William
Sessions was meeting with Webb Hubbell and Janet Reno about
whether he would keep his job.\407\ When Attorney General Reno
learned of the direct contact that the FBI had with the White
House in both initiating the investigation and revising the FBI
press statements, she expressed her concerns. Ms. Reno told
Nussbaum that the FBI should not have the appearance of being
used for political purposes.\408\
---------------------------------------------------------------------------
\407\ OPR Report.
\408\ OPR Report, pp. 68-69.
---------------------------------------------------------------------------
C. Neither the Congress, the press nor the public bought the White
House story
The Travel Office firings were met by intense press
skepticism. From the first days, when the roles of Harry
Thomason and Catherine Cornelius became apparent, this was a
clear-cut case of cronyism. The New York Times editorial page
wrote on May 26, 1993, ``By design or incompetence or a blend
of the two, the White House has used a highly vulnerable FBI
for unworthy political purposes.'' \409\
---------------------------------------------------------------------------
\409\ ``Myopia at the White House: The FBI Abused,'' the New York
Times, May 26, 1993, p. A20.
---------------------------------------------------------------------------
The Washington Post editorial page wrote on the same day:
``It looks as if the FBI logo was being used by the White House
as a political shield.'' \410\ Washington Post editorial page
editor Meg Greenfield wrote on June 7, 1993:
---------------------------------------------------------------------------
\410\ ``The Missing Voice,'' the Washington Post, May 26, 1993, p.
A18.
They should see no business, hear no business and
speak no business and, above all, do no business. Harry
Thomason and Linda Bloodworth Thomason, the First
Family friends involved in all the fuss last week,
indignantly pointed out that they were much too well
off to have even been interested in the money to be
gained from a travel-office deal . . . But the familiar
``moi?'' defense (a decent person like me couldn't
possibly do a gross thing like that) is irrelevant to
the conflict-of-interest issue. Where a prospective
conflict exists such people must keep out of it.\411\
---------------------------------------------------------------------------
\411\ ``The Moi? Defense,'' Meg Greenfield, Newsweek, June 7, 1993,
p. 72.
The Baltimore Sun editorial page opined, ``Some Republicans
have called for a congressional review. Democratic senators
ought to join them. This is an important matter. It should be
above partisan point-making.'' \412\
---------------------------------------------------------------------------
\412\ ``The White House and the FBI,'' the Baltimore Sun, May 26,
1993, p. 18A.
---------------------------------------------------------------------------
What became known as ``Travelgate'' was soon being compared
to Watergate: ``It was no exaggeration when the Senate minority
leader on Tuesday compared the Clinton administration's use of
the FBI last week in the flap over the White House Travel
Office to Richard Nixon's attempt to pervert the agency to
political purposes during Watergate. It is an outrage,'' noted
the Chicago Tribune editorial page on May 26, 1993.\413\
---------------------------------------------------------------------------
\413\ ``Clinton tries to shake Travelgate,'' the Chicago Tribune,
May 26, 1993, p. 12.
---------------------------------------------------------------------------
In the face of such severe criticism, acknowledging the
full extent of Harry Thomason's activities and the President's
role in promoting Thomason's business interests would cause
additional political vulnerability. With Mrs. Clinton's health
care bill being touted as the centerpiece of the Clinton
agenda, acknowledging her role in the Travel Office would
detract from one of the administration's highest priorities at
that time.
The inability to tell the truth about the Travel Office
firings must be viewed in the context of the poll-driven, image
conscious Clinton White House of 1993. The President's
popularity polls reached a devastating low of 36 percent
following the May 19, 1993 Travel Office firings.\414\ The
firings had the misfortune of coinciding with the May 18 $200
haircut aboard Air Force One on the Los Angeles International
Airport tarmac.
---------------------------------------------------------------------------
\414\ ``The Man Who Has Clinton's Ear,'' Michael Kinsley, Time,
September 2, 1996.
---------------------------------------------------------------------------
June 1993 brought hard-fought budget battles in which the
President's tax raising budget narrowly passed the Senate by
one vote. The headlines at the time were brutal: ``Another
failed Presidency?'' ``What Went Wrong?'' ``The Incredible
Shrinking President.'' The hemorrhaging had to be stopped and
the President called upon confidante and then Chief of Staff,
Mack McLarty, the very same person who approved the firings.
D. The Last Best Hope for a Cover-Up? A Man from Hope, Mack McLarty
The President undermined his own commitment to ``get to the
bottom'' of the Travel Office matter in announcing the
Management Review when he incongruously put the person who had
fired the employees in charge of the review. Then-Chief of
Staff McLarty presided over a review in which the conclusions
were as pre-determined as the decision to fire the Travel
Office employees.
Mr. McLarty did not fail the President. Mr. McLarty
participated in the cover-up of the President's involvement in
bringing Harry Thomason to the White House for the image
project. Mr. McLarty also concealed how the President
inappropriately assisted Thomason with getting business for his
company, Thomason, Richland & Martens. Finally, McLarty covered
up the fact that the President knew about the firings before
they occurred.
While aboard Air Force One, on May 17, 1993, Jeff Eller
approached senior Presidential aide Bruce Lindsey and informed
him of the Travel Office and Lindsey asked, ``if involved w/
HT's [Harry Thomason's] concern?'' \415\ Mr. Eller briefed
Lindsey on the pending firings, Lindsey in turn briefed
President Clinton a full 2 days before the firings
occurred.\416\
---------------------------------------------------------------------------
\415\ WHMR interview notes of Bruce Lindsey, June 9, 1993, CGEPR
0331.
\416\ Id.
---------------------------------------------------------------------------
But Thomason's ``staged'' productions clearly received
disastrous reviews. It was time for an image make-over.
1. David Gergen assumes damage control patrol
The President was reportedly furious with his staff when
Thomason's idea of a good story--firing the Travel Office
employees--went south. There was talk of a staff shake-up.
Newspaper stories at the time were strikingly critical of the
abuse of the FBI in these events. The Washington Post had taken
the President to task:
But it was wrong to smear them in public as
wrongdoers in advance of any finding that they have
done wrong. If they were fired for unconfessed
political reasons, that was wrong, too. And the
apparent muscling of the FBI to put a stronger gloss on
the case (even as its director fights and is beholden
to the White House to keep his job) was wrongest of
all.\417\
---------------------------------------------------------------------------
\417\ ``The Missing Voice,'' the Washington Post, May 26, 1993, p.
A18.
In late May 1993, the President turned to the another image
maker, David Gergen. It is noteworthy that on May 28th when
David Gergen was brought to the White House to meet with the
President about his new position,\418\ Harry Thomason and Linda
Bloodworth-Thomason were in the residence that evening for
dinner with Mrs. Clinton. Gergen was ushered up to the
residence by Roy Neel at approximately 10 p.m. where Gergen met
with Mrs. Clinton and the President. Mr. Gergen told the
committee ``I have to tell you, I do not know Mr. Thomason. If
he walked in the door now, I wouldn't know him.'' \419\ White
House residence logs show the Thomasons arriving for dinner at
8:30 p.m. and David Gergen and the Thomasons leaving the
residence together at 1 a.m.
---------------------------------------------------------------------------
\418\ Committee interview of David Gergen, September 13, 1995, p.
7.
\419\ Gergen interview, p. 21.
---------------------------------------------------------------------------
One of Gergen's first tasks was to placate the press in the
midst of the biggest press debacle to that date: the Travel
Office firings. Mr. Gergen testified he also was involved in
quelling rumors that Mrs. Clinton and Susan Thomases were
behind the firings. Mr. Gergen told the press that this charge
was false; however, he said he could not recall the source of
his information.\420\
---------------------------------------------------------------------------
\420\ Gergen interview, p. 10.
---------------------------------------------------------------------------
2. White House Management Review: Truth or Obfuscation?
At about the same time Gergen was brought in, McLarty
tasked Presidential aides John Podesta and Todd Stern to
conduct the White House Management Review. Mr. Podesta and
Stern regularly reported back their findings to McLarty
throughout the review process. Mr. McLarty, the supervisor of
the review, does not appear to have informed Podesta and Stern
of his conversations with Mrs. Clinton until information from
other sources surfaced about her role.\421\
---------------------------------------------------------------------------
\421\ See committee depositions of John Podesta and Todd Stern.
---------------------------------------------------------------------------
The White House told the public that John Podesta was put
in charge of these matters because he had no involvement in the
events examined. But in fact McLarty, in selecting Podesta to
head up the matter, selected a person who was knowledgeable
about Thomason's efforts to obtain Government contracts as well
as the President's efforts to help Thomason.\422\ Mr. Podesta
forwarded the Harry Thomason/Darnell Martens ``these guys are
sharp'' memo to McLarty and others.\423\
---------------------------------------------------------------------------
\422\ See supra Sections V and VI.
\423\ In addition, Podesta was contacted by the Office of Records
Management on the day following the firings to inform him of the grave
concern about loss of records in the Travel Office.
---------------------------------------------------------------------------
Mr. Podesta became aware of the February 11, 1993 memo that
Darnell Martens had forwarded to Harry Thomason when it showed
up in President Clinton's ``out box'' on February 17.\424\ As
Staff Secretary, Podesta was responsible for the daily flow of
paperwork in and out of the President's office. Although
Podesta had never seen the February 11, 1993 memo go into the
President's office, he did see it coming out.\425\
---------------------------------------------------------------------------
\424\ Podesta deposition, p. 54.
\425\ Id.
---------------------------------------------------------------------------
On February 16, 1993, Thomason was at the White House,
spent the night at the White House and even bowled with the
President that evening.\426\ Although Thomason distinctly
remembers beating the President at bowling that evening, he has
``no recollection'' of giving the President the February 11,
1993 memo soliciting the GSA contract for his company,
TRM.\427\ Podesta found the memo in the President's out box the
very next day.\428\
---------------------------------------------------------------------------
\426\ White House residence logs of February 16-17, 1993.
\427\ Harry Thomason deposition, pp. 118, 122.
\428\ Podesta deposition, p. 54.
---------------------------------------------------------------------------
Yet the Management Review, which distinctly addressed the
issues of ``personal interests'' and ``the appearance of
favoritism,'' totally ignored Thomason's efforts in getting
Government contracts and President Clinton's assistance in
Thomason's efforts. While earlier drafts of the Management
Review included these matters and the authors thoroughly
reviewed the issues involved, they were excluded from the final
report. In committee depositions, neither Podesta nor Stern
could credibly explain how Harry Thomason's solicitation of
aviation contracts had nothing to do with ``the appearance of
favoritism.'' \429\
---------------------------------------------------------------------------
\429\ See, Podesta deposition, May 29, 1996; Stern deposition, June
5, 1996.
---------------------------------------------------------------------------
3. The Management Review excluded information which was exculpatory to
Travel Office employees and derogatory to President Clinton and
his cronies
Clearly the omitted facts regarding Thomason's efforts to
obtain Government business were relevant in learning the true
picture behind the firings. Mr. Podesta had even asked Beth
Nolan, the White House ethics counsel, to review the issue of
whether or not Harry Thomason was a special Government employee
and whether or not issues of conflict of interest pertained to
Thomason.\430\ But when Ms. Nolan came back with a preliminary
conclusion that Thomason might in fact be a special Government
employee and might have conflicts, the information was excluded
from the final report.\431\
---------------------------------------------------------------------------
\430\ Nolan deposition, p. 35.
\431\ Memorandum for John Podesta and Todd Stern from Beth Nolan,
July 1993, subject: Questions from Travel Office Report re Harry
Thomason, CGE 43235-43246.
---------------------------------------------------------------------------
In striking contrast, while the Management Review excluded
information that could have had negative public and possibly
legal impact on Harry Thomason, its authors spent a large
portion of the report condemning the Travel Office employees
and their operations. The authors excluded the most significant
finding regarding allegations against the employees: that the
``kickbacks'' allegation made by Thomason had no basis in
fact.\432\
---------------------------------------------------------------------------
\432\ WHMR interview of Ross Fischer, CGEPR 237-239.
---------------------------------------------------------------------------
The kickback allegation provided the predicate for FBI
involvement in the Travel Office matter.\433\ In the course of
the review, Podesta contacted Ross Fischer of Miami Air, who
denied he ever made the allegation.\434\ In fact, it appears
the Management Review authors recognized this problem. Their
own notes allude to concerns about FBI jurisdiction absent the
kickbacks issue.\435\ A kickbacks discussion was deemed
irrelevant, despite the authors' awareness of exculpatory
information.
---------------------------------------------------------------------------
\433\ OPR Report, pp. 31-32.
\434\ WHMR interview of Ross Fischer, CGEPR 237-239.
\435\ CGEPR 0530-537, memo to Todd Stern from Dwight Holton, dated
June 22, 1993, re: Complete list of checks, and checking plan.
---------------------------------------------------------------------------
A pattern developed throughout the course of the review:
information unflattering to the Travel Office employees was
included in the report, exculpatory information was not. In the
case of Harry Thomason, little unflattering information was
included. This is especially true where such information might
involve the President.
In seeking derogatory information on the Travel Office
employees, Podesta reviewed their personnel files.\436\ Mary
Beck, the Director of Personnel in the Office of
Administration, said this was the only instance during her
tenure in the White House in which such an unusual request was
made of her office.\437\ The files circulated around the White
House for several weeks before Ms. Beck made an urgent call for
them to be returned.\438\ Although asked repeatedly, Podesta
could provide no ``official need'' for the files.\439\
---------------------------------------------------------------------------
\436\ CGE 029652, memo from Mary Beck to John Podesta, re: Official
Personnel folders.
\437\ Committee deposition of Mary Beck, p. 27.
\438\ July 15, 1993 memo to Irene McGowan from Mary Beck, CGE
22205.
\439\ See Podesta deposition.
---------------------------------------------------------------------------
Soon after the firings Thomason retained attorney Bob
Bennett and Thomason thereafter did not cooperate with
Podesta's review. For example, Thomason refused to do a follow-
up interview and Podesta became aware that Thomason was not
pleased with the direction of his report.\440\ Mr. Thomason's
actions were successful; his stonewalling of Podesta worked.
Mr. Podesta gave up on pursuing further information about
Thomason.
---------------------------------------------------------------------------
\440\ Committee deposition of John Podesta, June 5, 1996, p. 120.
---------------------------------------------------------------------------
By omitting the efforts of Thomason's company, TRM, to get
business contracts from the Government, the report considerably
diminished the full picture of Thomason's abuse of Presidential
access. The report thereby made no reference to the President's
complicity in that abuse. An internal White House memo, over
which the President initially claimed privilege, asked:
Doesn't ICAP [the GSA efforts] show how deeply
Thomason and his personal interests had infiltrated the
White House? Is the reason this was not included to
avoid mentioning the involvement of the President in
promoting the financial interests of his friends? \441\
---------------------------------------------------------------------------
\441\ DF781538-542. This memo was among those initially withheld by
the President under a claim of executive privilege on May 30, 1996 and
not released to the committee until August 15, 1996.
The committee believes the answers to these two questions are
``yes.''
The fact that TRM and Harry Thomason indeed had sought
contracts clearly undermines his claim that he was not seeking
the Travel Office business. The Martens memo, which had been
made public, clearly showed that TRM was seeking the Travel
Office business; however, it was implausibly dismissed by
Martens as not meaning precisely what it said. Had the report
included information about Thomason's other Government
interests, this information would have been more damaging.
In contrast to every other interview conducted during the
White House Management Review, there were reportedly no notes
taken of the ``interview'' that Podesta conducted with the
President.\442\ Mr. Podesta recalls nothing of the interview
with the President, whether he discussed the President's
knowledge of the firings, or whether he asked about the
President's complicity in Thomason's activities. The only
answer Podesta offered was that everything that the President
told him was in the report.\443\
---------------------------------------------------------------------------
\442\ Podesta deposition, p. 98. In contrast, there are brief notes
of Podesta's interview with the First Lady, CGEPR 0129.
\443\ See, Podesta deposition, p. 99.
---------------------------------------------------------------------------
The review also omitted various documents and comments that
undermined the official White House story. White House talking
points of May 13, 1993, authored by Jeff Eller, demonstrated
that there were plans to fire the employees a full day before
Peat Marwick came to the White House.\444\ This was left out of
the report. These talking points claimed that the FBI was going
to perform an audit, thus showing the real purpose of
requesting FBI involvement.\445\
---------------------------------------------------------------------------
\444\ CGE 7933, May 13 talking points.
\445\ Id.
---------------------------------------------------------------------------
Another story omitted from the final draft of the
Management Review was David Watkins' and Patsy Thomasson's
intimidation of Catherine Cornelius. Mr. Watkins enlisted the
help of his assistant, Brian Foucart, to convince Cornelius to
resign.\446\ Patsy Thomasson attempted to go through Cornelius'
friend and roommate, Clarissa Cerda, to secure Cornelius'
resignation.\447\ Ms. Cerda, however, did not cooperate. Patsy
Thomasson contacted Cornelius directly regarding Cornelius'
memo on Travel Office reorganization.\448\ Ms. Thomasson wanted
it to appear as though Watkins never relied on Cornelius' memo
on Travel Office reorganization. She wanted Cornelius to
conceal any knowledge she had regarding whether Watkins read
the memo.\449\
---------------------------------------------------------------------------
\446\ Committee deposition of Brian Foucart, May 3, 1996, pp. 64-
69. (Watkins asked Foucart to speak with Cornelius a second time, in
August 1993, to get her to resign. Foucart refused the request.)
\447\ Cerda deposition, pp. 123-125.
\448\ Cornelius deposition, p. 143.
\449\ WHMR interview of Catherine Cornelius, CGEPR 0161; WHMR
interview notes of Clarissa Cerda, CGEPR 0117. (The memo which
Cornelius and Cerda co-wrote outlined how the two could more
efficiently run the Travel Office without the assistance of the present
employees.)
---------------------------------------------------------------------------
4. The Management Review minimized the role of Mrs. Clinton
The White House Management Review, while successful in its
attempt to cover up the President's actions regarding Harry
Thomason and to conceal documents which demonstrated a
predetermined course of action, was not successful in fully
concealing Mrs. Clinton's role. Mr. Podesta learned of Mrs.
Clinton's involvement and interest in the matter when he
discovered the May 17, 1993 memo to McLarty from Watkins
regarding the firings. The memo includes a notation that it was
sent to Mrs. Clinton.\450\
---------------------------------------------------------------------------
\450\ Watkins memorandum to McLarty, May 17, 1993, CGE 17753-54.
---------------------------------------------------------------------------
Neither Podesta nor his assistant, Stern, could recall when
they first learned of this May 17 memo or who provided it to
them.\451\ However, it does not appear that Mack McLarty
initially made this or other information that he had obtained
regarding the Travel Office firings available to Podesta for
his Management Review.\452\
---------------------------------------------------------------------------
\451\ Podesta deposition, p. 37; Stern deposition, p. 100.
\452\ See depositions of Podesta and Stern.
---------------------------------------------------------------------------
Mr. Stern recalled that he first learned definitively of
Mrs. Clinton's role on June 8, 1993 when he interviewed World
Wide Travel employee, Fan Dozier. Ms. Dozier told Stern about a
conversation she had with Harry Thomason on May 16, 1993.
Stern's notes recount what Dozier told Stern about her
conversation with Harry Thomason.
HT [Harry Thomason] said ``You mean you're not up
there working?'' HT said he'd call HRC [Hillary Rodham
Clinton] and she would be very upset to hear they [the
seven Travel Office employees] were still there . . .
this was probably Sunday 5/16.\453\
---------------------------------------------------------------------------
\453\ WHMR notes, June 8, 1993, CGEPR 0208.
Mr. Stern believes he heard vague rumblings about Mrs.
Clinton's role prior to this date, however the Dozier interview
provided the first concrete information in that regard.\454\ It
is clear that Mr. Stern was concerned from the earliest days of
the Management Review about the possibility that Mrs. Clinton's
role would be covered-up: ``if you give answers that aren't
fully honest (e.g. nothing re HRC) you risk hugely compounding
the problem by getting caught in half-truths. You run the risk
of turning this into a cover-up.'' \455\
---------------------------------------------------------------------------
\454\ Stern deposition, pp. 32-33.
\455\ Handwritten notes of Todd Stern, May 27, 1993, CGEPR 0683.
---------------------------------------------------------------------------
There was an effort from the beginning, at least on the
part of Mrs. Clinton, to blur the facts regarding exactly from
whom she had heard rumors of wrongdoing in the Travel Office.
In talking points prepared by her staff for the release of the
White House Management Review, the summary stated: ``Mrs.
Clinton heard rumblings about problems in the Travel Office as
did most White House staff.'' \456\ In over 75 depositions and
interviews, the committee found no basis for the notion that
there were ``rumblings'' known to ``most White House staff.''
Indeed, the opposite is true. When asked directly about rumors,
most staff stated that they had heard nothing until the actual
firings.
---------------------------------------------------------------------------
\456\ CGE 032978.
---------------------------------------------------------------------------
Deputy White House Counsel Foster was reluctant to disclose
his contacts with Mrs. Clinton and President Clinton, or, as he
referred to them, ``the clients.'' On May 13, while waiting to
see McLarty, Foster told Patsy Thomasson that ``his clients,
meaning President and Mrs. Clinton, were concerned about the
White House Travel Office matter.'' \457\ These comments,
relayed by Ms. Thomasson, demonstrate that President and Mrs.
Clinton's interest in the Travel Office were communicated to
Foster by May 13.
---------------------------------------------------------------------------
\457\ OPR interview of Patsy Thomasson, September 22, 1993.
---------------------------------------------------------------------------
When Foster was interviewed in the course of the White
House Management Review, he told John Podesta, ``I assume many
of the conversations I had were privileged.'' \458\ Mr. Foster
initially provided all information about the firings, except
his contacts with the ``the clients.'' When Foster was asked in
his interview if ``anyone else'' was ``involved'' he responded,
``I think that's all I should say about that.'' \459\
---------------------------------------------------------------------------
\458\ WHMR interview of Foster, CGEPR 0248.
\459\ WHMR Management interview of Foster, June 3, 1993, CGEPR
0257.
---------------------------------------------------------------------------
In Foster's June 3, 1993 meeting with the White House
Management Review team he omitted his conversations with Mrs.
Clinton about the Travel Office, yet included events as
inconsequential as getting a haircut in between Travel Office
meetings.\460\ David Watkins also carefully omitted the
conversation he had with Mrs. Clinton as well as his knowledge
of her involvement from the account he provided to Podesta
during his interview on June 3, 1993.\461\
---------------------------------------------------------------------------
\460\ WHMR interview of Foster, June 3, 1993, CGEPR 0249.
\461\ WHMR interview of David Watkins, June 2, 1993, CGEPR 487-508.
---------------------------------------------------------------------------
Eventually, Foster and Watkins were forced to disclose
conversations they had with Mrs. Clinton in later interviews
with Podesta, who had learned elsewhere of Mrs. Clinton's
involvement.\462\ However, notes from the June 30 meeting, the
same day as Mrs. Clinton's interview with Podesta, show that
her role was down-played as much as possible.\463\
---------------------------------------------------------------------------
\462\ Podesta deposition, p. 81; WHMR interview of Foster, June 30,
1993, CGEPR 0258. (Harry Thomason also failed to disclose his
conversations with the First Lady in his interview with the White House
Management Review on May 27, 1993. Thomason refused to cooperate in any
additional interviews with Podesta and Stern.)
\463\ Foster Travel Office notebook, CGE 1047, 1053-1054.
---------------------------------------------------------------------------
Mr. Foster's notebook, which was withheld from
investigators for years, detailed a potential defense for Mrs.
Clinton's involvement: ``Defend management decision, thereby
defend HRC role whatever is, was in fact or might have been
misperceived to be.'' \464\ This was the line of defense used
by the White House. It became essential that the ``management
decision,'' firing Dale and others for ``cause,'' be defended.
Under this ``defend management decision'' tactic, it appears
Foster thought Mrs. Clinton would be protected whether or not
her true role became known. This would also serve the President
and is in fact the defense the White House continues to assert.
---------------------------------------------------------------------------
\464\ Foster Travel Office notebook, CGE 1047.
---------------------------------------------------------------------------
The real story was kept from the public. With the Clinton
ship of state barely afloat after a rocky spring of 1993, the
review omitted what would have been damaging admissions,
including:
That despite the President's public denials,
he, in fact, knew about the planned Travel Office
firings BEFORE they occurred; he was briefed on the
firings by Presidential aide Bruce Lindsey; and he knew
of Thomason's quest for aviation contracts.
That the President, himself, approved Harry
Thomason's arrival at the White House for an ``image''
project and that Thomason obtained an official
``staff'' pass, not a ``volunteer'' pass.
Harry Thomason's solicitations were not
limited to the Travel Office business, but involved
efforts to get a quarter of a million dollar Government
contract through an Executive order. President Clinton
spoke with Thomason and assisted him in obtaining
Government business.
That Mrs. Clinton pressured high ranking White
House officials and was a driving force behind the
firing of the entire Travel Office staff on May 19,
1993 and that this pressure came before any Peat
Marwick review or FBI guidance.
That Chief of Staff Mack McLarty, who
responded to Mrs. Clinton's pressure, failed to
disclose promptly contacts with Mrs. Clinton while
McLarty was supervising the Management Review.
That the rumors passed on by Harry Thomason
were denied by the alleged source of those rumors, the
President of Miami Air.
That initially, in the course of the review,
senior White House aides Foster, Watkins and McLarty
tried to conceal the role of Mrs. Clinton in the
firings.
Given these omissions, McLarty was less than honest when he
stood at the White House press podium and declared that the
report was ``thorough'' and ``candid.'' The report was a
whitewash for the Clinton administration. The report publicly
lashed the designated scapegoats, who had only responded to
pressure from superiors. As Cornelius explained, `` . . . I did
everything everyone told me to do.'' \465\ Mr. Watkins was only
following orders that he felt were impossible to ignore:
---------------------------------------------------------------------------
\465\ Committee deposition of Catherine Cornelius, April 30, 1996,
p. 146.
I think all this makes clear that the Travel Office
incident was driven by pressures for action originating
outside my Office. If I thought I could have resisted
those pressures, undertaken more considered action, and
remained in the White House, I certainly would have
done so. . . . I was convinced that failure to take
immediate action in this case would have been directly
contrary to the wishes of the First Lady, something
that would not have been tolerated in light of the
Secret Service incident earlier in the year.\466\
---------------------------------------------------------------------------
\466\ Watkins memo, CGE 12286-12294.
In the end, the White House Management Review had little to do
with the reality behind the firings.
IX. The White House's Failure to Admit Thomason's Baseless ``Kickback''
Allegations Were False and Led to a Fruitless IRS Investigation
A. Introduction
In a May 20, 1993, news account of the May 19 White House
Travel Office firings, the Wall Street Journal \467\ reported
that the White House and FBI also were investigating possible
kickbacks involving the seven fired Travel Office employees and
UltrAir. Unnamed ``officials privately said'' and ``those
familiar with [the investigation]'' indicated that there were
improprieties in the Travel Office's business dealings with
UltrAir which another anonymous White House source charged
``was all done with a wink and a nod.'' \468\ At the time of
publication, none of these allegations had been corroborated
and, in fact, they subsequently were found to have been
baseless. The White House, so quick to broadcast these false
allegations, made no effort to retract them and correct the
record publicly when it learned, within a month, that they were
without merit.
---------------------------------------------------------------------------
\467\ Michael K. Frisby, Clinton Fires White House Travel Office,
FBI is Probing Allegations of Kickbacks, the Wall Street Journal, May
20, 1993, p. A5.
\468\ Id.
---------------------------------------------------------------------------
Attorney General Janet Reno later would chastise the White
House openly for improperly announcing the FBI investigation of
the Travel Office.\469\ But the White House's announcement
clearly was calculated to ``dirty up'' the Travel Office
employees in order to minimize negative reactions to a bald-
faced exercise in political cronyism by which the Clinton
administration installed Presidential cousin Catherine
Cornelius, Clinton campaign travel agency World Wide Travel,
Clinton charter broker Penny Sample and her company, Air
Advantage, in the Travel Office while raising the possibility
of Travel Office opportunities for Harry Thomason, Darnell
Martens and their partnership, Thomason, Richland and Martens,
Inc. (TRM) From the very start, Cornelius and Thomason had been
key players in the Travel Office coup.
---------------------------------------------------------------------------
\469\ OPR Report, pp. 68-69; see also ``Clinton Staff Bypassed Reno
to FBI, White House Gave Bureau `Guidance' on Travel Statement,'' Ann
Devroy and Michael Isikoff, Washington Post, May 25, 1993, pp. A1, A9.
---------------------------------------------------------------------------
The White House's world-wide broadcast of uncorroborated,
and, in fact, false allegations of criminal conduct against the
Travel Office employees and UltrAir would have immediate and
ominous consequences not merely for the Travel Office employees
but also for UltrAir. Its Smyrna, TN, offices would be raided
by IRS agents at 3 p.m. on Friday, May 21, 1993, just 1 day
after the false allegations hit newsstands. A former UltrAir
executive also found himself the subject of an IRS audit in the
wake of these false allegations.
B. UltrAir
UltrAir is an airline charter company founded in 1991 which
provided press charters to the White House Travel Office
starting in June 1992. UltrAir was a successor company to White
House press charter carrier Airline of the Americas. Both
companies were founded by employees who previously worked for
the now-defunct Pan Am when it provided White House press
charters.
At 3 p.m. on May 21, 1993, three IRS agents ``raided''
UltrAir's offices in Smyrna, TN. There, UltrAir chief financial
officer Ed Hamblin informed the IRS that the firm's tax records
had been transferred to Houston, TX. Mr. Hamblin phoned UltrAir
CEO Rick Millinor in Houston. Mr. Millinor, on the advice of
his attorney, told the IRS that UltrAir would not surrender its
records to IRS. At that time, IRS served UltrAir with an
administrative summons for its records. UltrAir subsequently
turned over all requested records on June 9, 1993.
Coming within a day of the White House's uncorroborated
allegations of criminal wrongdoing against the Travel Office
employees and UltrAir, the UltrAir raid raised serious concerns
of possible misuse of the IRS. Those concerns led to
investigations by the IRS Inspection Service, the Department of
Treasury Office of Inspector General and the General Accounting
Office, which addressed IRS issues most substantively in its
March 1994, draft report on Travel Office operations.
Predictably, the IRS Inspection Service, in its
investigation of the matter, found that IRS personnel took no
inappropriate actions in the UltrAir matter and concluded that
there was no evidence of any White House contact on the
matter.\470\ The IRS Inspection Service was a strictly internal
review, however, and no one outside the IRS was interviewed in
the course of its investigation.
---------------------------------------------------------------------------
\470\ Allegations of Inappropriate White House, FBI, and IRS Action
Involving UltrAir Company are Unfounded, GAO draft material,
contemporaneous with March 19, 1994 draft of White House Travel Office
Report, p. 1.
---------------------------------------------------------------------------
The Department of Treasury Office of Inspector General
Report, conducted pursuant to the July 14, 1993 request of
Congressman Frank Wolf and released on March 31, 1994, also
concluded that IRS officials took no inappropriate action and
found no evidence of White House contact.\471\ It did, however,
raise additional questions. The report referred to an August 5,
1993 letter to Congressman Wolf from IRS Commissioner, Peggy
Richardson, in which:
---------------------------------------------------------------------------
\471\ ``Inquiry of Alleged Misuse of the IRS RE: the White House
Travel Office,'' Robert P. Cesca, Department of the Treasury, Deputy
Inspector General, March 31, 1994.
[S]he stated that IRS Revenue Agents generally do not
issue a summons during an unannounced visit in
connection with an examination. Taxpayers are notified
of an examination through correspondence or by
telephone prior to an agent's arrival.\472\
---------------------------------------------------------------------------
\472\ Id., p. 7.
This suggests that the manner of the IRS raid on UltrAir was,
in fact, unusual. Additionally, the report's conclusion that,
``Based on our discussions with IRS officials, and
corroborating evidence from records of GAO evaluators, we found
no evidence that there were any contacts generated from anyone
at the White House to the IRS regarding this matter,'' appears
less than categorical.\473\ If its discussions were, in fact,
limited to IRS officials and GAO evaluators, it is not clear
that the investigation exhausted all the available evidence.
Such questions are critical in retrospect, given the Clinton
White House's now well-established practices of withholding
documents and coordinating witness testimony.
---------------------------------------------------------------------------
\473\ Id., p. 10.
---------------------------------------------------------------------------
The Treasury OIG Report also noted that an FBI official,
subsequently identified as Supervisory Special Agent Tom Carl
of the FBI Government Fraud Unit:
. . . contacted an IRS National Office Criminal
Investigator to obtain some investigative information,
if applicable. The IRS Criminal Investigation did not
provide the FBI Official with any material information.
(This information was corroborated with the IRS
Investigator.) The National FBI Official then contacted
a Nashville, Tennessee, FBI agent to make an
investigative inquiry with local IRS officials.\474\
---------------------------------------------------------------------------
\474\ Id., p. 10.
Agent Carl, of course, was made aware of the ``highest levels''
interest in the Travel Office matter by Associate White House
Counsel Bill Kennedy.\475\ And while Agent Carl made his
inquiries in the week following the IRS raid on UltrAir, his
involvement with both the White House Counsel's office and the
IRS investigation of UltrAir raises concerns that his
understanding of ``highest levels'' interests led to calls to
the IRS in Washington and Nashville concerning UltrAir. While
the Treasury OIG Report concluded the IRS did not provide any
material information to the FBI, it did not say whether the FBI
provided material information to IRS.
---------------------------------------------------------------------------
\475\ See GAO interview of Agent Tom Carl, October 20, 1993.
---------------------------------------------------------------------------
C. The UltrAir Matter Was Not Handled Under the Same Standards as Other
Potential Tax Violations
While the GAO Draft report also suggested that allegations
of improper contacts among the White House, FBI and IRS were
unfounded, it too raised further questions. A GAO footnote
stated, ``IRS' policy is that all referrals of potential tax
violations are to be handled the same, regardless of the
source.'' \476\
---------------------------------------------------------------------------
\476\ GAO draft report, White House Travel Office Operations, p. 1.
---------------------------------------------------------------------------
Yet, the UltrAir raid was not handled in the usual fashion
of other potential tax violations. The 1-day turnaround between
the publication of allegations concerning UltrAir in the Wall
Street Journal and the May 21, 1993, raid was highly unusual,
if not unprecedented. In a June 7, 1993, article in Tax Notes
Today, Lee A. Sheppard reported that several former IRS
executives had found the raid on UltrAir highly unusual.\477\
She wrote that:
---------------------------------------------------------------------------
\477\ Lee A. Sheppard, Was the IRS Involved in `Travelgate'?; Tax
Notes Today, Vol. 59, June 7, 1993, p. 1301.
The usual starting point for an IRS examination is a
[tax] return; without a return, there is nothing for
agents to talk about.\478\
---------------------------------------------------------------------------
\478\ Id.
But UltrAir, which had been founded in 1991, but had not
begun operations until mid-1992, had yet to file an income tax
return. On March 15, 1993, the company had filed for and
received an extension on its 1992 return. It had filed no
return for 1991, in which it generated no revenues. Ms.
---------------------------------------------------------------------------
Sheppard added that,
In a normal audit, the IRS calls first, makes an
appointment for an agent to visit, and requests
documents that it needs to examine.\479\
---------------------------------------------------------------------------
\479\ Id.
Referring to Internal Revenue Manual chapter 4022.3, Sheppard
noted that standard IRS practice is to exhaust all other means
of obtaining the desired information before issuing an
administrative summons. In other words, the taxpayer must
resist IRS requests for information; records provided must be
thought to be incomplete and/or pertinent details withheld; or
the availability of the records must be in doubt. That was not
the case with UltrAir. Ms. Sheppard adds, ``Aggressive nonfiler
procedures, in the sense of physically going after the
nonfiler, are usually only invoked in criminal cases.''
In her June 28, 1993, follow-up article entitled, ``What
the IRS Travelgate Report Does and Does Not Say,'' Sheppard
asked:
Could an excise tax dispute justify sending three
agents with an administrative summons on an unannounced
visit to the taxpayer? This requires an assumption that
UltrAir failed to pay excise taxes, had been notified
of that failure, and continued to resist paying. That
did not happen.\480\
---------------------------------------------------------------------------
\480\ ``What the IRS Report Does and Does Not Say,'' Lee A.
Sheppard, Tax Notes Today, Vol. 59, June 28, 1993, pp. 1743, 1744.
Ms. Sheppard found other aspects of the IRS raid on UltrAir
unusual. Given the fact that the IRS report indicated that
UltrAir was not the subject of a criminal investigation,
---------------------------------------------------------------------------
Sheppard wrote:
If there is no criminal investigation of UltrAir, why
was the IRS treating the company like criminals? Why
did the IRS send three agents to an airline so small
that the agents outnumbered the airplanes? Why did they
make an unannounced visit, which is normal procedure
for criminals? Why did they resort to an administrative
summons, a coercive tool that the Internal Revenue
Manual reserves for uncooperative taxpayers?\481\
---------------------------------------------------------------------------
\481\ Id., p. 1743.
Not only was the UltrAir case not a criminal matter, the
IRS had every reason to believe that the company was an
otherwise responsible corporate citizen. In fact, in October
1992, UltrAir CFO Hamblin voluntarily approached the IRS with a
question concerning excise tax compliance and its White House
press charter operations. Mr. Hamblin worked with the IRS on
this issue through early 1993, when the IRS tentatively found
UltrAir liable for some $220,000 in excise taxes related to the
White House press charters.\482\ (Because UltrAir had not
calculated excise taxes into its press charter billings, the
White House eventually paid them. The IRS ultimately would
conclude that the Travel Office was responsible for collecting
excise taxes from the press corps and paying them to the IRS.)
\483\
---------------------------------------------------------------------------
\482\ GAO draft letter to (then) ranking minority members of House
and Senate committees (Chms. Clinger and Grassley) [never sent], May
1994, p. 9.
\483\ Id., p. 8.
---------------------------------------------------------------------------
D. Securing the Records
GAO provided some insights into why the IRS issued the
highly unusual administrative summons. GAO reported that once
the IRS became aware of media stories implicating UltrAir in
possible wrongdoing at the Travel Office, it was concerned
about maintaining access to UltrAir excise tax records. In
particular, it was concerned that if the FBI subpoenaed those
documents, it would no longer have access to them. In short,
UltrAir was caught up in a turf battle between the IRS and the
FBI. IRS' other reported concerns in securing documents, that
UltrAir might destroy documents and that it was in the middle
of a corporate move to Houston, appear specious. The committee
is confident that the IRS had sufficient Houston-based
resources to continue any investigation originating in
Nashville, TN.
Ironically, IRS personnel advised committee investigative
staff in an October 23, 1995 briefing that the IRS would not
have known who--or where--UltrAir was had it not been for the
fact that CFO Hamblin voluntarily came forward to the IRS some
7 months before with his questions concerning excise taxes. In
other words, UltrAir's good faith efforts as a corporate
citizen led to its May 21, 1993, mistreatment as a suspected
tax criminal.
GAO reports that after an IRS agent in Nashville informed a
group manager and branch chief of the UltrAir media accounts,
the agents determined that UltrAir had not filed 1991 or 1992
income tax returns.\484\ In the former case, UltrAir
incorrectly assumed that it need not file a tax return for a
year in which it generated no business revenues. In the latter
case, UltrAir had filed for an extension on March 15, 1993 but
IRS computers lost the record. UltrAir filed returns for both
1991 and 1992 on July 1, 1993.
---------------------------------------------------------------------------
\484\ GAO draft report, p. 7.
---------------------------------------------------------------------------
Based on this information, IRS' Nashville branch chief
instructed agents to prepare an administrative summons for
UltrAir and visit its offices unannounced. It never made any
effort to call first to raise questions and concerns with
UltrAir as Sheppard suggested would be the normal procedure.
GAO noted in its report that UltrAir's refusal, on May 21,
1993, to turn over the documents called for in the
administrative summons was appropriate given its surprise at
the raid and the advice of its attorneys. UltrAir turned over
all requested documents to the IRS on June 9, 1993.\485\
---------------------------------------------------------------------------
\485\ GAO draft letter, p. 7.
---------------------------------------------------------------------------
E. KPMG Peat Marwick: Both Sides Now
Importantly, KPMG Peat Marwick's Nashville, TN-based
certified public accountants gave UltrAir a clean audit opinion
in March 1993, in essence stating that it found no sign of
irregularities--such as kickbacks--in UltrAir's financial
records. This is noteworthy, given the fact that KPMG Peat
Marwick management consultants would be brought into the White
House Travel Office 2 months later to look for evidence of
kickbacks which could have implicated another Peat Marwick
client. KPMG Peat Marwick found no evidence of kickbacks in the
White House Travel Office, either.
F. Bill Kennedy and the IRS
In his initial meetings with FBI agents, prior to the
Travel Office firings, Associate White House Counsel Bill
Kennedy reportedly stated that if the FBI could not assist him,
that he would go to another agency, in particular, the
IRS.\486\ The investigation of UltrAir which immediately ensued
prompted investigators to question if Kennedy's stated
intentions were acted upon by him or other White House
officials. But Kennedy has repeatedly, unequivocally, denied
taking action. Specifically, he testified to the GAO that:
---------------------------------------------------------------------------
\486\ OPR Report, p. 27.
[H]e did not say that he would call the IRS directly,
and that he never contacted any IRS official about the
White House Travel Office or UltrAir. [Emphasis added]
\487\
---------------------------------------------------------------------------
\487\ GAO draft report, p. 11.
The preceding remarks appear to contradict the notes of a June
28, 1993, White House Management Review interview of Associate
White House Counsels Beth Nolan and Cliff Sloan. These notes
---------------------------------------------------------------------------
read, in part:
BK [Associate White House Counsel Bill Kennedy] said
PR [IRS Commissioner Peggy Richardson] on top of it.
She said at party IRS on top of it & some reference to
IRS agents aware or something like that.\488\
---------------------------------------------------------------------------
\488\ WHMR interview of Nolan and Sloan, June 28, 1993, CGEPR 0379.
We believe this contradiction has not been adequately
investigated.
G. Kickback Allegations Disproved by the White House
In a June 17, 1993, interview with Ross Fischer of Miami
Air, White House Staff Secretary John Podesta, who was in
charge of the White House Management Review, learned that
Fischer and Miami Air were ``never approached for kickback.''
Mr. Podesta's handwritten note underscores the words ``never
approached'' twice.\489\ In his committee deposition, Podesta
acknowledged that he found no information to substantiate the
kickback allegations.\490\ Similarly, no evidence of kickbacks
was found by KPMG Peat Marwick (at the Travel Office or
UltrAir), the General Accounting Office, the FBI or the IRS.
---------------------------------------------------------------------------
\489\ WHMR interview notes of Ross Fischer, June 17, 1993, CGEPR
0237.
\490\ Podesta deposition, pp. 162-163.
---------------------------------------------------------------------------
Mr. Podesta was aware that the FBI investigation of the
Travel Office--and the White House's smear campaign against the
fired Travel Office employees and UltrAir--was based in large
part on the kickbacks allegation. But Podesta refused to advise
the FBI of his discovery. The White House's refusal to inform
the FBI, the IRS, and the press of its discovery immediately,
needlessly subjected UltrAir, former UltrAir president Charles
Caudle and the fired Travel Office employees to the threat of
investigations, audits and worse.
In late 1994, the IRS informed UltrAir that it had no
additional income tax liability. At approximately the same
time, former UltrAir president Charles Caudle received a $4,900
tax refund when the IRS closed his audit. In testimony before
the committee in January 1996, Billy Dale and several of his
Travel Office colleagues indicated that they faced the threat
of IRS audits for well over 2 years, but, again, no violations
were found.\491\
---------------------------------------------------------------------------
\491\ Testimony of Billy R. Dale before the Committee on Government
Reform and Oversight, January 24, 1996.
---------------------------------------------------------------------------
H. Internal Revenue Code 6103
The committee attempted to determine what precipitated the
highly unusual 1-day turnaround from the publication of a news
article to a full-blown audit of a company that had not yet
filed its first income tax return. However, that attempt was
stymied by Internal Revenue Code Section 6103.
For good reason, Section 6103 makes it a crime to disclose
tax records and tax return material without the proper
authorities. Yet, the president of UltrAir and his attorneys
provided several successive 6103 waivers to committee staff
precisely because they hoped the committee's investigation
would uncover the impetus of the IRS' audit. Each successive
6103 waiver form was completed with scrupulous attention to
requirements dictated by various representatives of the IRS and
the Treasury Department. In the end, the committee was informed
that the IRS was ``not comfortable'' with releasing the
requested information. The committee does not believe ``not
comfortable'' is a legal term of art which justifies the
withholding of materials an individual or corporate tax citizen
wishes to be released.
Section 6103, at the same time it prevents previous abuses,
may shield IRS abuses from proper congressional oversight.
Without the ability to review relevant tax records pursuant to
UltrAir's own waiver, too many questions still remain
unanswered.
In her June 30, 1993, Tax Notes Today article entitled:
``What the IRS Travelgate Report Does and Does Not Say,'' Lee
A. Sheppard wrote: ``Nothing in the redacted IRS report
addresses the exquisite timing of the IRS visit to UltrAir. It
seems to be more than coincidental.'' \492\ She concluded:
---------------------------------------------------------------------------
\492\ Lee A. Sheppard, What the IRS Travelgate Report Does and Does
Not Say, Tax Notes Today, Vol. 59, p. 1743.
As we cannot emphasize too often, the IRS is not a
free-ranging, all-purpose investigative agency
empowered to root out crimes and misdeeds wherever they
may occur. At least four people at the IRS had to think
that the rough treatment of UltrAir was warranted.\493\
---------------------------------------------------------------------------
\493\ Id.
The committee concurs in these remarks, and believes that
the answers to these questions, currently sealed behind IRS
Code Section 6103, warrant further attention. Moreover, that
executive branch officials were aware of investigations arising
from their own false allegations and took no action to inform
the investigators, constitutes a reckless abuse of the public
trust.
X. Vincent Foster Became Increasingly Disturbed by the Problems
Generated by Travelgate--as Did Numerous High Ranking White House
Officials
A. Despite Foster's initial efforts during the Management Review, he
was unsuccessful in concealing ``the clients''' role in the Travel
Office firings
On May 13, 1993, almost a week before the Travel Office
firings, Foster disclosed to Patsy Thomasson that ``the
clients'' were interested in this matter. Ms. Thomasson reports
that ``the clients'' was how Foster referred to President and
Mrs. Clinton.
John Podesta and Todd Stern testified that Deputy Counsel
Vincent Foster did not inform them of his contacts with Mrs.
Clinton concerning the Travel Office prior to the firings.\494\
However, Podesta and Stern did learn of Mrs. Clinton's
involvement from other sources and questioned Foster in a
second interview.\495\ Mr. Foster raised the issue of
privileged conversations in his White House Management Review
interview.\496\ In the days prior to his death, Foster
expressed his serious concerns about getting outside counsel
for ``the clients.'' \497\
---------------------------------------------------------------------------
\494\ Committee deposition of John Podesta, June 5, 1996, p. 90;
committee deposition of Todd Stern, May 29, 1996, p. 30.
\495\ WHMR interview notes of Foster, June 30, 1993, CGEPR 240-259.
\496\ Id.
\497\ OPR Report, p. 90.
---------------------------------------------------------------------------
Independent Counsel Fiske concluded in his report: ``Those
close to Foster have stated that the single greatest source of
his distress was the criticism he and others within the
Counsel's Office received following the firing of seven
employees from the White House Travel Office.'' \498\ Mrs.
Clinton told Independent Counsel Fiske she never talked with
Foster about the Travel Office in June or July 1993,\499\ and
was unaware of his concerns. In his committee deposition,
Nussbaum testified that he thought Mrs. Clinton discussed the
report or related events with Foster at some time at or around
the release of the Management Review.\500\
---------------------------------------------------------------------------
\498\ Hearings relating to Madison Guaranty S&L and the Whitewater
Development Corporation--Washington, DC Phase, Volume I on the Death of
Vincent W. Foster, Jr., July 29, 1994, p. 185.
\499\ Testimony of Hillary Rodham Clinton before the Office of the
Independent Counsel, June 12, 1994 in hearings before the Committee on
Banking, Housing and Urban Affairs, U.S. Senate, 103d Congress, 2d
Sess., Volume II on ``Death of Vincent Foster, Jr.,'' July 29, 1994, p.
2106.
\500\ Committee deposition of Bernard Nussbaum, June 12, 1996, pp.
127-129.
---------------------------------------------------------------------------
Mrs. Clinton's role in the Travel Office firings became an
issue following the release of the July 2, 1993 Management
Review. With the onset of numerous investigations into the
firings, the role of President Clinton and Mrs. Clinton was
again a problematic issue in the Counsel's office.
B. The Management Review's inclusion of Bill Kennedy's reference to the
involvement of ``the highest levels'' of the White House in the firings
raised problems for both President Clinton and Mrs. Clinton
Mr. Foster reportedly was distraught by reports from FBI
agents who said Kennedy informed them the Travel Office matter
had the interest of those at ``the highest levels'' and ``the
highest level'' at the White House.\501\ Mr. Kennedy also was
reported saying that if the FBI didn't respond quickly, he
would call the IRS.\502\ Mr. Foster strongly opposed including
this account in the Management Review.\503\ The inclusion of
the FBI version of events, in effect, verified the agents'
accounts of these discussions. This implicit admission opened
the door to consider further both Mrs. Clinton's and President
Clinton's involvement in the firings.
---------------------------------------------------------------------------
\501\ See e.g. GAO interview of FBI Agent Howard Apple, October 15,
1993, pp. 1, 4.; OPR Report, pp. 82-83.
\502\ OPR Report, p. 27.
\503\ OPR Report, p. 84.
---------------------------------------------------------------------------
Mr. Kennedy denied making these statements to the FBI
agents,\504\ however, the fact that the Management Review
included a reprimand of Kennedy, acknowledges that the word of
four FBI agents had been implicitly accepted over that of
Kennedy. The committee, having interviewed all four FBI agents
and reviewed their sworn statements to OPR, also finds them
credible. Mr. Kennedy's statements about whether or not he
referred to ``the highest levels'' of the White House being
interested in the Travel Office, are in direct conflict with
the testimony of the four FBI agents.
---------------------------------------------------------------------------
\504\ Kennedy deposition, p. 91.
---------------------------------------------------------------------------
In addition to the sworn testimony of four FBI agents, the
committee obtained testimony from an additional witness,
Matthew Moore, who was part of Watkins' team of assistants
assembled on May 13, 1993 to prepare for the Peat Marwick
review the next day. According to Moore, Kennedy told the
group, ``something to the degree that you know, this goes to
the highest level, the concern about this, you know, goes to
the highest level.'' \505\
---------------------------------------------------------------------------
\505\ Committee deposition of Matthew Moore, March 26, 1996, p. 98.
---------------------------------------------------------------------------
It is notable that in the course of the White House
Management Review, Podesta and Stern re-interviewed the FBI
agents to be sure they would uphold their version of events.
Messers. Podesta and Stern also gave Kennedy a second chance to
change his account.\506\ According to numerous White House
aides, Foster argued in vain that these comments should not be
included in the report and that Kennedy's version of events
should be accepted.\507\ Mr. Foster also was upset because he
felt responsible for Kennedy's involvement, and expressed
remorse at not having handled the matter himself.\508\ Mr.
Foster's close friend, Webb Hubbell, told OPR investigators
that, ``even after the White House Report was released . . .
Foster continued to be upset that Kennedy had been
reprimanded.'' \509\
---------------------------------------------------------------------------
\506\ WHMR interview notes. Agent Howard Apple was interviewed
first on June 9, 1993 and then again on June 25, 1993. Agent Wade was
interviewed on June 9, 1993 and June 28, 1993; Agent Tom Carl, was
interviewed on June 9, 1993 and again on June 25, 1993. William Kennedy
was interviewed first on June 8, 1993 and then again on June 30, 1993.
\507\ OPR Report, p. 84.
\508\ See OPR Report, p. 85, discussion of a conversation Foster
had with Webb Hubbell about his concerns.
\509\ OPR Report, p. 85.
---------------------------------------------------------------------------
If, as FBI agents stated and now have testified under oath
to OPR, Kennedy did point to the involvement of ``the highest
levels'' of the White House in the Travel Office firings, then
future investigations could pose problems for President and
Mrs. Clinton. Would criminal investigators ask Foster or
Kennedy about the role of President and Mrs. Clinton?
If there were misuse of Harry Thomason's access to the
White House and his status as a special Government employee
became an issue, what would Foster have to disclose regarding
the knowledge of those at the highest levels? What were the
liabilities of the President and First Lady in helping Thomason
obtain Government business, including the Travel Office?
Mr. Foster's handwritten notebook detailing the Travel
Office saga notes ``misuse of FBI'' followed by ``they deny''
and ``HR no role.'' \510\ In this context, ``HR'' appears to
refer to ``Hillary Rodham.'' Was Foster worried that Mrs.
Clinton might be dragged into the ``misuse of the FBI'' issue?
If so, why?
---------------------------------------------------------------------------
\510\ Foster Travel Office notebook.
---------------------------------------------------------------------------
Following the release of the Management Review, Foster
talked with his sister and his brother-in-law, Sheila and Beryl
Anthony, on the occasion of a July 9 dinner. He voiced his
concerns with the report and his belief that the ``FBI lied
regarding the Travel Office matter.'' Sheila Anthony said she
thought that Foster's ``remarks regarding the FBI concerned the
conversations between the White House Counsel's Office and the
FBI that had been described in the White House Report.'' \511\
Mr. Anthony said these remarks made a ``big impression'' on him
because Foster was not ``subject to exaggeration and never made
inflammatory remarks.'' \512\
---------------------------------------------------------------------------
\511\ OPR Report, p. 87, discussion of comments by Sheila Anthony.
\512\ OPR Report, p. 89.
---------------------------------------------------------------------------
Mr. Foster also told his sister that he was considering
resigning his position at the White House.\513\ While it is
possible that Foster believed Kennedy when Kennedy said he made
no such statements to the FBI agents, Foster himself, on the
same day, informed Patsy Thomasson that ``the clients''--the
same people who are at ``the highest levels''--were concerned.
It appears unlikely that Foster would have shared information
about the President and Mrs. Clinton's interest in this matter
with others such as Ms. Thomasson, but not with Kennedy. Mr.
Foster repeatedly told Watkins of Mrs. Clinton's interest.\514\
Since Kennedy was the main person Foster had tasked with
responding to this matter, it is implausible that he did not
inform Kennedy of Mrs. Clinton's interest.
---------------------------------------------------------------------------
\513\ Id.
\514\ See Watkins ``soul cleansing'' memo, CGE 12286-12294.
---------------------------------------------------------------------------
Perhaps what Foster didn't believe is that Kennedy would
have been foolish enough to tell outsiders at the FBI of Mrs.
Clinton's interest. But the committee has obtained new
documentation suggesting Kennedy, indeed, was prone to exerting
his influence over outside agencies and engaging in a pattern
of intimidation.\515\ The committee's own experience with
Kennedy is consistent with this pattern.\516\
---------------------------------------------------------------------------
\515\ The committee is in receipt of a memo from the CIA
``Memorandum for the Record, Subject: Halperin Nomination--Conversation
with Bill Kennedy, White House Counsel's office''. The memo discusses
Mr. Kennedy's efforts to keep the Senate Armed Services Committee from
obtaining information from the CIA which pertained to Mr. Halperin. Mr.
Kennedy was reported to have told the CIA to ``abstain from doing any
file searches: `don't hit a lick,' to use his precise words.'' A CIA
official reviewing this memo circled this request and handwrote: ``This
is an outrage. The WH [White House] staff does not control our files.''
Apparently, Mr. Kennedy had a history of muscling outside agencies. If
he would do this to the CIA, the committee, armed with the testimony of
four FBI agents, believes he would do the same thing with the FBI. The
committee does note that the FBI agents stated they did not feel
intimidated by Kennedy's remarks but this does not excuse Mr. Kennedy
for making such statements and does not resolve the actual facts behind
the statements about the ``highest levels.''
\516\ Kennedy's own indiscretions in failing to report his nanny
taxes and not providing this information to the White House raises
additional questions about his veracity.
---------------------------------------------------------------------------
Prior to considering resignation, it is significant that
Foster himself was considered for a reprimand for his actions
in the Travel Office. Mr. Nussbaum informed the committee that
when he heard that Kennedy was to be reprimanded for his
actions, he went to McLarty and demanded that he and Foster
also be reprimanded in the belief that the Counsel's office
should stick together.\517\ Mr. Nussbaum says that when he told
Foster of his demand that they all be reprimanded, ``[Foster]
didn't look about it as happy as I did, at that point.'' \518\
However, Nussbaum and Foster were not reprimanded. This would
have brought matters closer to ``the highest levels'' when the
White House intended to contain this to mid-level staff. ``Low-
level'' staff are often available to take responsibility for
mistakes in the Clinton White House.
---------------------------------------------------------------------------
\517\ Nussbaum deposition, pp. 138-139.
\518\ Id., p. 139.
---------------------------------------------------------------------------
But it was not low-level staff who were responsible for
this blunder, as claimed by the White House. It was not the
``inexperience and ineptitude'' of young White House staff who
gave Harry Thomason free reign in the White House. It was the
arrogance and favor-seeking of President Clinton's friends and
family, championed by senior White House aides, responding to
President and Mrs. Clinton that caused these problems.
C. Foster was troubled by the prospect of numerous congressional and
criminal investigations into the Travel Office firings
Members of Congress, both from the House and the Senate,
called for the immediate appointment of an independent counsel
and were getting support from the media by mid-July. On July 2,
1993, the very day that the White House Management Review was
released, President Clinton was forced to sign a bill that
included a provision providing for a General Accounting Office
review of the Travel Office firings.\519\ The GAO review
provision was inserted by Senator Byrd on an appropriations
bill.\520\
---------------------------------------------------------------------------
\519\ The Supplemental Appropriations Act of 1993 (P.L. 103-50),
signed the same day, required that GAO ``conduct a review of the action
taken with respect to the White House Travel Office . . . ''
\520\ Supplemental Appropriations Act of 1993 (P.L. 103-50).
---------------------------------------------------------------------------
The White House already ran into trouble with GAO reviews
of the White House purchase of a new phone system and a resume
reviewing system in 1993. The thought of GAO investigators
examining the ``management decision'' Foster had vowed ``to
defend'' was another headache for the already overburdened
Deputy White House Counsel who was spending many of his working
hours on personal matters for the Clintons.\521\
---------------------------------------------------------------------------
\521\ In testimony before the Senate Whitewater Committee, White
House Counsel secretary, Linda Tripp, testified that Mr. Foster spent
most of his time working on personal matters for the Clintons. Since
Ms. Tripp had previously worked at the White House under other
Counsels, she recognized this was unusual and raised it with Mr.
Nussbaum who dismissed her concerns. Senate Whitewater deposition of
Linda Tripp, July 12, 1995, pp. 52-53.
---------------------------------------------------------------------------
Senior Democrats in Congress were skeptical about the
Management Review and Chairman Jack Brooks was reported to have
told Mack McLarty he should have fired people higher up.\522\
Chairman Brooks was faced with fending off a ``House Resolution
of Inquiry'' in the Judiciary Committee.
---------------------------------------------------------------------------
\522\ Michael Isikoff, ``Foster Was Shopping for Private Lawyer,
Probers Find,'' Washington Post, August 15, 1993, p. A20.
---------------------------------------------------------------------------
On June 16, 1993, Republican House leaders and then ranking
minority member of the Government Operations Committee William
Clinger filed a ``House Resolution of Inquiry,'' \523\ which
was considered on July 14, 1993. The resolution allowed the
House to ask the President to provide certain documents and
answer specific questions focusing on the possible misuse of
the FBI and the IRS. While the President could not be compelled
to respond to a ``Sense of Congress'' resolution, it would have
put Congress on record as demanding responses from the White
House.
---------------------------------------------------------------------------
\523\ House Resolution 198, 103d Cong., 1st Sess. (1993).
---------------------------------------------------------------------------
Clinton administration officials were hard at work to ward
off the attempt to open a congressional inquiry. In a July 13,
1993 letter to Chairman Brooks, President Clinton pledged that
the Attorney General would have the administration's ``full
cooperation'' in a Department of Justice review of the
Management Review.\524\ Chairman Brooks and his staff were
communicating with the Associate Attorney General Webb Hubbell
in the days leading up to the July 14, 1993 consideration of
the Resolution of Inquiry \525\ and a letter to the committee
was received from the Attorney General.\526\
---------------------------------------------------------------------------
\524\ Letter from President Clinton to Chairman Brooks, July 13,
1993.
\525\ Phone logs of Webster Hubbell indicate that Chairman Brooks
phoned Hubbell on July 13, 1993 and on July 15, 1993, the day after the
Resolution of Inquiry was defeated. Chairman Brooks Counsel, Jon
Yarowsky called Hubbell on behalf of Brooks and left the message that
Brooks extended his thanks ``for all your help.'' Yarowsky is now a
White House Associate Counsel who has been one of the key White House
lawyers handling the Travelgate investigation.
\526\ Letter from Attorney General Reno to Honorable Jack Brooks,
July 14, 1993.
---------------------------------------------------------------------------
The ``House Resolution of Inquiry'' required President
Clinton to turn over all responsive documents and answer
questions concerning FBI and IRS actions related to the
firings.\527\ During the days and weeks leading up to the
Resolution, IRS Commissioner Peggy Richardson made numerous
calls to Webb Hubbell.\528\ The Resolution was defeated but
House rules still allowed for the full House to vote on the
inquiry and a plan was in the works for a vote later in the
month.
---------------------------------------------------------------------------
\527\ House Resolution of Inquiry, H.Res. 198, voted down in the
Judiciary Committee, 20-15, July 14, 1993.
\528\ Webb Hubbell phone logs reflect phone calls from Peggy
Richardson to Webb Hubbell on June 17, 1993--the day after the House
Resolution of Inquiry was introduced. Richardson calls Hubbell again on
June 23 and June 25 (with message she will be out of town for 2 weeks
and will call). The House Resolution of Inquiry was scheduled for a
vote on July 14, 1993. Richardson calls Hubbell on July 12, July 13 and
July 14. Richardson cancelled meetings with Rep. Frank Wolf regarding
IRS/Travel Office matters on both July 14 and July 15, 1993. In
reviewing over 15 months of Hubbell's phone logs, there are only one or
two other phone messages from Commissioner Richardson in the entire 15
months Hubbell served at the Justice Department.
---------------------------------------------------------------------------
In the weeks following the Management Review, Foster
discussed his growing concerns about where the investigations
would lead with a number of people inside and outside the White
House.\529\ Both Podesta and Stern, co-authors of the
Management Review, recall talking with Foster after the report
was completed. They were tasked with responding to
congressional efforts in the ``House Resolution of Inquiry.''
Podesta discussed one such conversation in his committee
deposition:
---------------------------------------------------------------------------
\529\ OPR Report, pp. 82-92.
Question. Can you describe the discussions you had
with him about congressional inquiries?
Answer. I think that he was--I specifically recall
driving him home one evening, obviously prior to July
20th, in which he expressed concern about the Hill and
what was going on and what was happening on the
Resolution of Inquiry, et cetera.
Question. So you place this discussion sometime prior
to the House Resolution of Inquiry, or thereabouts?
Answer. I would place it between July 2nd and July
20th. I think it was before our briefing of the House
committee, so it would have been probably the week of
the 4th or something.
Question. Do you recall having any discussion with
him after you briefed the committee, telling him what
went on with the committee or after the vote?
Answer. After the vote of the committee?
Question. Yes.
Answer. I don't know whether I discussed it with him.
I might have. I generally thought that his concern was
serious enough that I needed to let him know what was
going on.\530\
---------------------------------------------------------------------------
\530\ Deposition of John Podesta, pp. 187-188.
The timing of a call that Foster made to Jim Lyons is
consistent with concerns that he had about the Resolution of
Inquiry. Mr. Lyons reported that Foster called him in a panic
approximately a week before his death and wanted Lyons to come
to Washington as soon as possible to assist him in the Travel
Office matter.\531\ By the next day, Foster had called back to
inform him that the situation was not as urgent. Mr. Lyons
planned to travel to Washington, DC the following week and he
and Foster made plans to get together to discuss the Travel
Office and other matters.\532\ This was also the week in which
Foster spoke with Susan Thomases and Jim Hamilton about Travel
Office matters.\533\
---------------------------------------------------------------------------
\531\ OPR Report, p. 91.
\532\ Id.
\533\ Id., fn. 97.
---------------------------------------------------------------------------
Mr. Foster's notes also indicate that he was preparing for
defending these issues in various forums, including
congressional investigations, the GAO review, and the
Department of Justice. In his handwritten notes, he did a
detailed analysis of ``opponents theories'' and wrote, ``avoid
forcing DOJ.'' \534\ In preparing for hearings or litigation,
Foster identified numerous problems for himself and other White
House lawyers and staff such as: ``5. communications by joint
defense . . . application to Bernie speaking for WH . . ., 6.
Witnesses by virtue of participation in mgment review . . . 9.
Accumulation of add'l evidence, e.g. HT [Harry Thomason]
tapes,\535\ nexis tvl office, news file . . . 13. Does everyone
who edited report become a witness . . . existence of drafts .
. . 14. Difficulty of operating prep w/ 3-4 ws [witnesses] in
office..'' One item he noted: ``Communications w/top 2''
apparently referring to President and Mrs. Clinton.\536\
---------------------------------------------------------------------------
\534\ Foster Travel Office notebook, CGE 1045, 1047.
\535\ The committee has subpoenaed all documents related to Harry
Thomason including tapes. Committee staff has particularly asked about
Harry Thomason tapes and asked for all tapes he may have produced or
provided. The only tape the committee has received to date is ``The Man
from Hope.''
\536\ Foster Travel Office notebook, CGE 1048.
---------------------------------------------------------------------------
On July 15, 1993, the day after the Resolution of Inquiry
was defeated, then Deputy Attorney General Phil Heymann
directed the Office of Professional Responsibility to
investigate the FBI's response to the White House in
investigating the firings. The Public Integrity Section of the
Justice Department already had a criminal investigation
underway concerning the Travel Office operations and
allegations of wrongdoing by the White House. Clearly many
White House witnesses, including Foster and others at ``the
highest levels'' would be called upon to testify--and under
oath.
While there were numerous other matters arising with
respect to Whitewater--the Clintons' taxes and other potential
problems for the White House that Foster would be dealing with,
it appears that the Travel Office and the future problems it
threatened, weighed particularly heavily on Mr. Foster.
D. Foster was in the middle of problems related to Harry Thomason,
which were starting to gather steam
Mr. Foster's general anxiety about the burgeoning Travel
Office problems included concerns about Harry Thomason. The
issue of whether Harry Thomason was a special Government
employee and whether his actions constituted a conflict of
interest was going to be reviewed by both Congress and criminal
investigators and was generating considerable press
attention.\537\ Mr. Foster in turn tasked White House Associate
Counsels Beth Nolan and Cliff Sloan with reviewing Thomason's
status as a special Government employee.
---------------------------------------------------------------------------
\537\ A July 9, 1993 Washington Times editorial by columnist Tony
Snow was forwarded to Foster by Mack McLarty's senior counselor Bill
Burton and found in Foster's long withheld Travel Office file. The
column details the legal problems that Harry Thomason might face in the
conflicts area and potential problems for other White House officials,
including the First Lady.
---------------------------------------------------------------------------
During the Management Review, Podesta requested Nolan and
Sloan to review conflicts of interest and standards of conduct
issues. Ms. Nolan concluded that Penny Sample of Air Advantage
was a special Government employee and that it was possible that
Harry Thomason was a special Government employee.\538\ Mr.
Foster held several meetings with Nolan and Sloan on July 7 and
8, 1993 about these issues. These meetings are reflected in
Foster's handwritten Travel Office notebook where potential
defenses to these issues are mapped out.\539\
---------------------------------------------------------------------------
\538\ Memorandum for John Podesta and Todd Stern from Beth Nolan,
Re: Questions from Travel Office Report re Harry Thomason, July 1993,
CGE 43223.
\539\ Foster Travel Office notebook, CGE 000965.
---------------------------------------------------------------------------
On July 7, 1993, Foster's notes reflect a discussion of
Harry Thomason as an ``SGE who violated ethics rules
(criminal?) re promoting his company . . . at least in getting
goodwill (--by promoting process by which there would be
competitive bidding?)'' \540\ On this same day, Foster's notes
read: ``Need for coordinating litigator.'' \541\
---------------------------------------------------------------------------
\540\ Foster Travel Office notebook, CGE 000965.
\541\ Foster Travel Office notebook, CGE 000966.
---------------------------------------------------------------------------
Again on July 8, 1993, Foster's notes indicate a meeting
with Beth Nolan and Cliff Sloan in which they discussed the
status of Harry Thomason and in which Foster accurately
comments, ``cannot evade `appointed' '' and points out the 18
U.S.C. 202 definition of SGE as ``retained . . . to perform
formal duties.'' \542\ Learning the law that applies to special
Government employees, Foster recognized there were potential
problems.
---------------------------------------------------------------------------
\542\ Foster Travel Office notebook, CGE 1052.
---------------------------------------------------------------------------
On July 8, 1993, Peat Marwick auditors brought Foster more
bad news. The auditors strongly disagreed with the conclusions
of the Management Review.\543\ The seams of the cover-up were
beginning to fray. How would they ``defend the management
decision'' if they had to worry about Peat Marwick? Would
Thomason's role become more of a problem if they didn't have
the Peat Marwick report as an excuse for the firings?
---------------------------------------------------------------------------
\543\ Foster Travel Office notebook, CGE 00967.
---------------------------------------------------------------------------
The information regarding Peat Marwick auditors
``disagreeing,'' which is reflected in Foster's notebook,
appears to have been relayed to him by David Watkins. The notes
also appear to discuss Watkins' response to the Management
Review with Watkins arguing that most managers would make the
same decision.\544\ Mr. Foster's notes of July 8 reflect
sentiments similar to those in Watkins' ``soul cleansing
memo.'' In that memorandum, Watkins' writes, ``I . . .
explained my decision to terminate them; I explained that from
a management perspective, in this case it was best to relieve
them all immediately from their jobs and provide them an
additional two weeks in pay. . . . I explained that in light of
the mismanagement, it was best to dismiss the entire office.''
\545\
---------------------------------------------------------------------------
\544\ Foster Travel Office notebook, CGE 0967.
\545\ Watkins ``soul cleansing memo,'' CGE 012288.
---------------------------------------------------------------------------
By this time, Justice Department lawyers were trying to get
an interview with Harry Thomason and Darnell Martens for the
ongoing criminal investigation into the Travel Office to no
avail. On July 8, 1993, Thomason's lawyers contacted the
Counsel's office and spoke with Cliff Sloan and requested a
copy of the notes from the interview in which Thomason
participated with Podesta and Stern during the Management
Review and informed him the Justice Department had requested an
interview of Thomason.\546\ Sloan did not initially provide the
notes, but was later instructed by Nussbaum to read the notes
verbatim over the phone to Thomason's lawyer.\547\
---------------------------------------------------------------------------
\546\ Phone records of Cliff Sloan, July 8, 1993, CGE 37130.
\547\ Committee deposition of Cliff Sloan, June 28, 1996, p. 48.
---------------------------------------------------------------------------
Both Mack McLarty and Rahm Emanuel contacted Harry Thomason
on July 8, 1993.\548\
---------------------------------------------------------------------------
\548\ Phone logs of Harry Thomason, Thomason document production,
Bates Stamp No. 000820. Thomason had called McLarty on July 6, 1993 and
his attorney contacted Cliff Sloan on July 7, 1993.
---------------------------------------------------------------------------
On July 9, 1993, there were several news items that
directly related to Harry Thomason. The Washington Post carried
an analysis in Al Kamen's column of Harry Thomason's status as
a special Government employee. The article noted that Thomason
had a ``special assignment'' at the White House and was one of
the ``couple handfuls'' of Clinton pals with ``the ultimate
power symbols in Washington: a permanent White House pass that
allows free access to much of the compound. . . .'' \549\ Two
other people with White House passes were Harold Ickes \550\
and Susan Thomases. Ickes and Thomases were exchanging phone
calls with Thomason during this time.\551\ Harry Thomason
called Harold Ickes at 3:50 p.m. on the afternoon of July 9,
1993.\552\
---------------------------------------------------------------------------
\549\ ``White House May Clamp Down on Passes,'' the Washington
Post, July 9, 1993.
\550\ Harold Ickes is currently the Deputy Chief of Staff. His
major responsibilities however include handling the damage control
matters related to various Clinton scandals from Whitewater to
Travelgate to the various Independent Counsels investigating Clinton
officials. Special Counsel Jane Sherburne testified in her committee
deposition that she reports to Harold Ickes.
\551\ ``Ickes, Clinton Insider and Puerto Rico Advocate, Shows Not
All Who Lobby Must Wait in the Hall,'' Jeffrey Birnbaum, Wall Street
Journal, September 21, 1993, p. A24; ``Ickes Has His Special Pass to
the White House Pulled,'' Wall Street Journal, September 29, 1993.
\552\ Thomason phone logs.
---------------------------------------------------------------------------
Harold Ickes and Susan Thomases, two powerful New York
attorneys, were regularly working at the White House throughout
the spring without the benefit of any conflicts of interest
analysis or review of their status. Clearly they could be open
to many of the same problems as Thomason.
The Washington Post article also stated that, when asked if
the White House examined this issue, ``a senior official there
said the lawyer in charge of ethics, Beth Nolan, looked into it
and concluded Thomason was not covered by the law.'' \553\
However, Nolan's phone logs from the same day show that she had
a ``telephone conference with Vince Foster,'' which notes that
she left a message with Ricki Seidman, then Communications
Director for McLarty, talked with Podesta and Stern, and
planned to call Arthur Jones, a White House press spokesman.
Nolan also had notes which contradict this statement: ``not
clear HT [Harry Thomason] had no official status (Got it from
Mack).'' \554\ Furthermore, the committee is in receipt of
numerous analyses in which Nolan did indicate Harry Thomason
could be viewed as a special Government employee.\555\
---------------------------------------------------------------------------
\553\ ``White House May Clamp Down on Passes,'' the Washington
Post, July 9, 1993.
\554\ Beth Nolan phone logs for July 9, 1993, Nolan document
production, Bates Stamp No. B00059.
\555\ Memorandum from Nolan to John Podesta and Todd Stern, dated
July 1993, Subject: Questions from Travel Office Report re Harry
Thomason, CGE 43223-43234; July 10, 1993 draft of above memorandum, CGE
43235-43246; memorandum from Nolan to Cliff Sloan, July 13, 1993,
Preliminary Thoughts on Travel Office Report re Harry Thomason, CGE
43266-43275; memorandum from Nolan to Sloan, June 20, 1993, Subject:
Response to Questions from Republican Leadership (includes analysis of
Thomason as SGE), CGE 043210-43213.
---------------------------------------------------------------------------
The Washington Times also had an article on July 9, 1993,
which discussed the fact that Republican leaders were
investigating whether Thomason ``used his quasi-federal officer
status to steer White House travel business to his company in
violation of federal law.'' \556\ In this article, White House
spokesman Arthur Jones claimed Thomason never held any official
status at the White House . . . ``He's not a federal employee .
. . He's just a friend.'' \557\ A hard hitting column in the
Detroit News also highlighted the conflicts of interest
problems of Harry Thomason and the role of high ranking White
House officials as well as Mrs. Clinton.\558\ This column was
forwarded to Foster's attention from Mack McLarty's Chief of
Staff, Bill Burton.
---------------------------------------------------------------------------
\556\ ``GOP says Thomason may have broken law,'' the Washington
Times, July 9, 1993.
\557\ ``GOP says Thomason may have broken law,'' the Washington
Times, July 9, 1993.
\558\ ``Travelgate Far From Over,'' the Detroit News, Gannett News
Service, July 9, 1993.
---------------------------------------------------------------------------
Mr. Thomason made phone calls to New York lawyer and First
Lady confidante Susan Thomases as well as, Harold Ickes on a
number of occasions in July 1993.\559\ Susan Thomases, in turn,
testified that she talked with Foster about the Travel Office
on July 14. Ms. Thomases came to Washington, visited Nussbaum
at the White House, and told him she was worried about
Foster.\560\ Harold Ickes has a July 14, 1993 message from
Susan Thomases which reads, ``1) Alan Barnes--more 2) Vince
Foster.'' \561\
---------------------------------------------------------------------------
\559\ Both Harry Thomason and Harold Ickes share the same lawyer--
Bob Bennett. Mr. Bennett is also representing the President in the
Paula Jones sexual harassment lawsuit.
\560\ Thomases' Senate testimony regarding this evening meeting
with Foster was inconsistent with previous testimony she had provided
to Independent Counsel Fiske on June 14, 1994 in which she had
recounted that she had lunch with Foster and some other people on the
Wednesday or Thursday before his death and ``she noted no change in his
demeanor or physical appearance but was aware that he was working very
hard and was under considerable pressure.'' ``Hearings related to
Madison Guaranty S&L and the Whitewater Development Corporation--
Washington, DC Phase,'' 103d Congress, Volume II, July 29, 1994, pp.
1777-78.
\561\ Harold Ickes phone logs, Ickes document production, Bates
Stamp No. HR-0036.
---------------------------------------------------------------------------
On July 14, 1993, Harry Thomason's attorney was again
checked with Cliff Sloan about obtaining documents related to
the White House Management Review. Mr. Sloan noted that Carl
Rauh, one of Thomason's attorneys, ``called and talked to him--
suggested that we could discuss matter but I didn't want to
turn over docs. He agreed.'' \562\
---------------------------------------------------------------------------
\562\ Cliff Sloan phone logs, CGE 037130. Cliff Sloan did
eventually read over the phone to Thomason's attorney the White House
Management Review interview notes from Thomason's interview with
Podesta and Sloan. Committee deposition of Cliff Sloan, June 28, 1996,
pp. 49, 54-56
---------------------------------------------------------------------------
On July 15, 1993, the day after Susan Thomases' visit with
Foster, she called Harry Thomason. Harry Thomason later placed
a call to Thomases at 3:40 p.m. on July 15, 1993.\563\ At 5:20
p.m. that evening, Harold Ickes called Thomason.\564\ At 6:53
that evening, Foster's brother-in-law, Beryl Anthony, faxed the
names of six attorneys, as was requested by Foster earlier that
month.\565\ Consistent with the lack of recall among senior
officials close to the Clintons, neither Harry Thomason, nor
Harold Ickes, could remember anything about these phone calls
or ever talking about any concerns about Foster prior to his
death.\566\ Ms. Thomases' recollections are hazy.\567\
---------------------------------------------------------------------------
\563\ Harry Thomason phone logs, Thomason document production,
Bates Stamp No. 0822.
\564\ Id.
\565\ CGE 2649-2654.
\566\ Committee deposition of Harold Ickes, June 14, 1996, p. 90;
Thomason deposition, p. 205.
\567\ See hearing on Investigation into the Whitewater Development
Corp. and Related Matters, May 14, 1996.
---------------------------------------------------------------------------
The next day, Friday, July 16, started out with another
flurry of calls back and forth. Harry Thomason called Harold
Ickes at 9:14 a.m. and Susan Thomases at 9:17 a.m. Harold Ickes
had a 12:30 p.m. message from Susan Thomases who also called
Harry Thomason that day. On Sunday, July 18, 1993, two calls
were placed to the White House from Harry Thomason's California
residence--one to Mrs. Clinton's office and the other to the
main White House number.\568\ Again, no one recalls any details
of these conversations. However, from the timing of the calls,
the events which were going on at the time, and the disclosures
by Ms. Thomases that she did speak with Foster about his grave
concerns over the Travel Office, it is very probable these
individuals at least addressed matters related to the Travel
Office or Mr. Foster's concerns and depression.
---------------------------------------------------------------------------
\568\ Harry Thomason phone billing records.
---------------------------------------------------------------------------
In the days leading up to July 20, 1993, Mrs. Clinton was
staying with the Thomasons at their home in California.
Therefore, some of the phone calls that involved Mr. Thomason
also could have included Mrs. Clinton. There may have been
discussions about these matters between or among Thomason,
Susan Thomases, Harold Ickes and Mrs. Clinton.
Over the weekend, Friday, July 16--Sunday, July 18, 1993,
Foster decided to go on a weekend trip to the Maryland shore
with his wife. He was joined by Webb and Suzie Hubbell and
Michael and Carolyn Cardozo. Mr. Hubbell testified that he
never discussed the Travel Office with Foster over this
weekend, ``even though you may find that hard to believe.''
\569\ Mr. Hubbell also claims he and Foster never had any
conversations about the Travel Office prior to the firings, and
only a few very general conversations after the firings. Since
Foster was such a close friend of Hubbell's it is difficult to
believe that Hubbell didn't have any conversations about the
Travel Office with Foster over that weekend since he had been
talking with so many other people about this topic at that
time.\570\ Mr. Hubbell also has maintained that he never spoke
with Foster about the Travel Office prior to the firings.\571\
---------------------------------------------------------------------------
\569\ Committee interview of Webster Hubbell, June 16, 1995.
\570\ The OPR Report notes that Foster spoke with Jim Lyons, Jim
Hamilton, Susan Thomases, Bruce Lindsey and others at the White House
about his concerns. OPR Report, p. 91, fn. 97.
\571\ Informal committee interview, June 16, 1993.
---------------------------------------------------------------------------
But there appears to be a cryptic, but logical, reference
in Foster's Travel Office notebook to a conversation that
Foster had with Hubbell on May 13, 1993; a critical day in the
Travelgate saga. In a section where Foster lays out a detailed
chronology, on Thursday, May 13 after he has met with the FBI
agents in the afternoon, he has the reference, ``WH & I, he
agrees.'' \572\ The context of the notes and the timing of
these comments suggest that Foster may have called Webb Hubbell
after the FBI agents left that afternoon. Mr. Foster said he
had to check with ``higher ups'' to see if they wanted to have
the FBI present for the Peat Marwick review. Later in the
evening of May 13, the FBI agents were informed that they
should not plan on attending the ``audit.'' \573\
---------------------------------------------------------------------------
\572\ Foster Travel Office notebook, CGE 001050.
\573\ OPR Report, p. 33.
---------------------------------------------------------------------------
Mr. Hubbell maintains that he never discussed the matters
with his close friend, Mr. Foster, even though they were
together at the height of the controversy. Mr. Hubbell, at
least, acknowledged that Foster had expressed some general
concerns about the Travel Office and his concerns with the
workload in the Counsel's office prior to this weekend.\574\
Mr. Hubbell informed the committee that Foster was generally
anxious, even paranoid, during this time. Mr. Hubbell
attributed this to Foster's ``illness.'' But it also appears
there were real reasons for his concerns about the Travel
Office and that they led directly to White House officials at
``the highest levels.''
---------------------------------------------------------------------------
\574\ OPR Report, p. 85; committee interview of Hubbell, June 16,
1995.
---------------------------------------------------------------------------
On the evening of Foster's death, Mrs. Clinton was
travelling to Little Rock from California. Upon learning of Mr.
Foster's death, Harry Thomason--who met Foster for the first
time in May 1993--was the second person Mrs. Clinton called.
The first person Mrs. Clinton called was her Chief of Staff,
Maggie Williams. Upon concluding her call with Harry Thomason,
Mrs. Clinton called Susan Thomases.\575\
---------------------------------------------------------------------------
\575\ See Final Report of the Special Committee to Investigate
Whitewater Development Corporation and Related Matters, June 17, 1996,
p. 46.
---------------------------------------------------------------------------
E. Foster strongly argued for private attorneys to assist the White
House in handling the coming investigations but Nussbaum rebuffed him.
Foster discussed the issues with outside attorneys and friends
On July 9, 1993, the day after Thomason received a call
from McLarty and Thomason's lawyers informed the White House of
the Justice Department's request for an interview with
Thomason, Foster was seeking outside attorneys to assist White
House staff in anticipation of future problems. Foster spoke
with his brother-in-law, Beryl Anthony, asking for names of
attorneys.\576\ Mr. Anthony explained that Foster's concerns
``might stem from the fact that some White House staff may have
reported information to Foster that had not been made public
but that he would be asked to testify about.'' \577\
---------------------------------------------------------------------------
\576\ OPR Report, p. 90.
\577\ OPR Report, p. 90.
---------------------------------------------------------------------------
Mr. Foster spoke with Jim Lyons about the need for outside
counsel in this matter. Mr. Lyons is the Denver attorney who
did the ``Lyons report'' on the Whitewater investments during
the 1992 campaign. Foster and Lyons got to know each other
through working together on the campaign and throughout the
transition.
Mr. Lyons reported that Foster was:
concerned that he was so involved in the Travel
Office matter that it had affected of his objectivity
in advising `his clients,' the Clintons, on how to
handle the matter. Foster thought it might be necessary
for them to have independent/outside counsel to advise
them on this matter.\578\
---------------------------------------------------------------------------
\578\ OPR Report, p. 90.
Mr. Lyons also reported that Foster claimed there was
something in the report which concerned him, and he sent the
report to Lyons to see if Lyons could find the source of
Foster's concern.\579\ Lyons told Foster that while he saw no
apparent problems in the report, he would be happy to discuss
it with him further.\580\ They spoke again on the evening of
Sunday, July 18, 1993 to plan a meeting later in the week.
Lyons was going to meet with Foster on Wednesday, July 21,
1993.
---------------------------------------------------------------------------
\579\ OPR Report, p. 90.
\580\ OPR Report, p. 91.
---------------------------------------------------------------------------
Mr. Foster repeatedly suggested to Nussbaum that President
and Mrs. Clinton needed outside counsel in this matter. These
were not the rantings of a man losing touch with reality. In
fact, it appears that, despite his depression, Vince Foster was
one of the few White House officials who saw matters clearly.
Mr. Lyons said that Foster discussed the issue of outside
counsel for the President concerning the Travel Office matter
with Lyons, Lindsey, Susan Thomases and Washington attorney
James Hamilton.\581\ Clearly, matters were heating up and
talented lawyers were being sought. Now the White House had to
cover-up the cover-up.
---------------------------------------------------------------------------
\581\ OPR Report, p. 91, footnote 97. Mr. Hamilton has always been
represented as the attorney for Mr. Foster and the Foster family and
the impression has been given that Foster had gone to Hamilton for his
own personal legal concerns. But Foster was not seeking Hamilton out as
a personal lawyer but as a lawyer to represent the White House and/or
President and Mrs. Clinton. Mr. Hubbell hired Jim Hamilton on the
evening of Foster's death as the family's attorney. Initial press
reports acknowledged that Foster was looking out ``for the interests of
the entire White House counsel's office'' and was not seeking his own
attorney. ``Foster was shopping for private lawyer, probers find,'' the
Washington Post, August 15, 1993, p. A20.
---------------------------------------------------------------------------
XI. Foster's Death Generated Another Layer of a Cover-up Over a Cover-
up
A. Foster's death shattered a White House just recovering from an
abysmal first 6 months of Administration
The President's popularity polls were just inching over 40
percent when Vincent Foster's death shattered the White House.
President Clinton's 36 percent approval rating in May 1993 was
the lowest for any Postwar-President at that point in his
administration. The urgency for the need to cover up must be
viewed in the context of a time when the media driven Clinton
administration was facing the worst first year of any
administration in recent history. In 1993, President Clinton
had fallen fast and the dreams of a Camelot reprise were
vanishing.
For the same reasons that the White House had to keep the
lid on the true Travel Office story and related events, the
curtains had to be drawn around the death of Vincent Foster. If
it were learned that Foster despaired over an out-of-control
cover-up of the Travel Office matter, those at the ``highest
levels'' would not only have to shoulder the weight of a Travel
Office scandal but the responsibility for contributing to
Foster's despair. After Foster's death, President Clinton
strangely and calmly declared, ``no one can ever know why this
happened . . . what happened was a mystery about something
inside him.'' \582\
---------------------------------------------------------------------------
\582\ ``Excerpts of Remarks in a Meeting with White House Staff on
the Death of Deputy White House Counsel Vincent Foster, Jr.,'' July 21,
1993, 29 Wkly Comp. Pres. Docs 1351, 1411.
---------------------------------------------------------------------------
Sadly for the Foster family, efforts to protect the Clinton
political family exposed them to countless and continued
investigations into Mr. Foster's death that have gone on far
longer than they would have if the President had offered any
modicum of cooperation from the start. What was in Foster's
office that the President wanted to keep hidden? As the years
have passed, we have learned there was a lot to hide: a lot
about Whitewater; a lot about the Clintons personal taxes; and
a lot about the Travel Office. What we do not know is what may
be missing. We do, however, have some ideas about who had the
now missing documents. We also have reasons as to why those
documents remain ``missing.''
B. At the time of Foster's death on July 20, 1993, his office contained
damaging evidence about the Travelgate matter and related events.
Individuals with a reason to hide or cover-up documents were at or
around Foster's office prior to the office being sealed
Mr. Foster was a key attorney involved in the Travel Office
matter and, as it turned out, he kept a detailed notebook
describing the events that led to the firings and what occurred
in the aftermath of the firings.\583\ Since it took almost a
year before White House Counsel Bernard Nussbaum revealed the
existence of this document to any law enforcement
authority,\584\ we will never be able to know if the records
are complete. Certainly, the White House has shown itself
capable of misplacing and losing records.\585\
---------------------------------------------------------------------------
\583\ Foster Travel Office notebook, CGE 894-1240.
\584\ It appears that Mr. Nussbaum first disclosed the existence of
the Foster Travel Office notebook during a Grand Jury appearance in May
1994. White House Counsel's Office notes which were initially withheld
from the committee under a claim of executive privilege indicated that
Nussbaum called Eggleston after his Grand Jury appearance.
\585\ This investigation has been hindered by numerous ``lost''
documents. For example: The notes of an interview with the First Lady
in preparation for her answers to the GAO inquiries taken by White
House Associate Counsel Neil Eggleston are missing. Mr. Eggleston said
he left them at the White House with Special Counsel Jane Sherburne who
heads up document production. Ms. Sherburne could not locate the
documents left in her custody. An approximately 10 page memo which
described allegations against the Travel Office is also missing as is a
memo from Mack McLarty to senior staff describing Harry Thomason's job
while at the White House. The ``missing'' billing records which turned
up in the White House residence are another example of the migrating
records in this White House.
---------------------------------------------------------------------------
The facts surrounding Mr. Foster's death and the handling
of his office and papers have been addressed at length by the
Senate Whitewater Committee.\586\ Regarding the facts relevant
to the Travel Office, it is particularly interesting that on
the evening of Foster's death, all three of the individuals who
were in his office before it was sealed had a Travelgate
connection:
---------------------------------------------------------------------------
\586\ See generally The Final Report of the Senate Special
Committee to Investigate the Whitewater Development Corporation and
Related Matters. July 17, 1996.
---------------------------------------------------------------------------
White House Counsel Bernard Nussbaum--his
office oversaw the initial requests to the FBI to
investigate the Travel Office. Messers. Nussbaum,
Foster and Kennedy also sat in on the meeting where the
FBI Public Affairs spokesman was asked to revise a
statement meet the liking of the White House. In the
days before his death, Foster had urged Nussbaum to get
outside counsel for President and Mrs. Clinton and
others at the White House.
Mrs. Clinton's Chief of Staff Maggie
Williams--Ms. Williams had received a copy of the May
17, 1993 memo from David Watkins, which was ``cc'd'' to
Mrs. Clinton, and helped prepare talking points with
Mrs. Clinton when the Management Report was released.
Mrs. Clinton's role in the firings had become a key
issue following the issuance of the Management Review.
Patsy Thomasson--Ms. Thomasson was the
assistant to David Watkins and had worked on the Travel
Office review by Peat Marwick. Ms. Thomasson attempted
to coerce Catherine Cornelius and Clarissa Cerda to
misrepresent Watkins' knowledge of their memo proposing
a takeover of the Travel Office. Foster had told
Thomasson about ``the clients' '' interest in the
Travel Office.
It is clear that Foster's office was never properly sealed
following his death; that an inappropriate search of his office
was conducted by Patsy Thomasson, Maggie Williams and Bernard
Nussbaum on the evening of his death; that files may have been
removed from his office, and that Bernard Nussbaum changed the
ground rules for the review of Foster's office after frantic
phone calls to, from, between and among, Mrs. Clinton, Susan
Thomases, Maggie Williams, Bernard Nussbaum and perhaps others
in the Chief of Staff's office and the Counsel's office prior
to the July 22, 1993 search of Foster's office.\587\
---------------------------------------------------------------------------
\587\ See The Final Report of the Senate Special Committee to
Investigate Whitewater Development Corporation and Related Matters,
July 17, 1996.
---------------------------------------------------------------------------
Park Police Detective Sgt. Cheryl Braun testified she
clearly remembered asking White House Administrator David
Watkins to seal the office on the evening of Foster's
death.\588\ Sergeant Braun met with Watkins because she and her
partner were requested to pick up Watkins ``to allow him and
his wife to assist us with the notification to the Foster
family.'' \589\ When Watkins introduced himself he provided
Braun with his business card. Braun unequivocally testified
that she asked Watkins to seal Foster's office that evening.
This did not occur.\590\
---------------------------------------------------------------------------
\588\ Senate Whitewater Final Report, pp. 44-46.
\589\ Senate testimony of Detective Sgt. Cheryl Braun on July 20,
1995, the Washington Times, July 21, 1995, p. A12.
\590\ Testimony of Detective Sgt. Cheryl Braun, the Washington
Times, July 21, 1995, p. A21.
---------------------------------------------------------------------------
When Sergeant Braun requested Watkins to seal the office,
Watkins was well aware that his assistant Patsy Thomasson was
on her way to the White House to go into Foster's office,
ostensibly looking for a note. Mr. Watkins, however, never
informed Braun of this information. Again, the roles of Watkins
and Thomasson in the Travel Office debacle raise questions. Had
Watkins provided any documents to Foster that he wanted to
retrieve? In Foster's Travel Office notebook there is a
reference to a July 8, 1993 meeting which appears to be with
David Watkins. The notes appear to discuss Watkins' complaints
about the Management Review.\591\
---------------------------------------------------------------------------
\591\ Foster Travel Office notebook, CGE967.
---------------------------------------------------------------------------
The purpose behind Sergeant Braun's request, with which
Watkins agreed to comply, was essentially being violated at the
very same time. In response to this assertion, Watkins claims,
``I did not hear such a request . . . If I had been asked, I
would have acted. That was my job.'' \592\ Additional testimony
indicated that other White House officials had claimed to have
taken responsibility for securing the office, however, nobody
did.\593\
---------------------------------------------------------------------------
\592\ ``Justice was wary of Foster probe,'' the Washington Times,
July 26, 1995, p. A1.
\593\ ``Investigation of Whitewater Development Corporation and
Related Matters,'' Final Report of the Special Committee to Investigate
Whitewater Development Corporation and Related Matters, June 17, 1996,
p. 55. Mr. Hubbell said he had been told by Mack McLarty's Chief of
Staff Bill Burton that McLarty took care of sealing the office. Mr.
Burton claimed not to recall this even though he had contemporaneous
notes that were consistent with this information. In addition Major
Hines of the Park Police also testified that he requested Burton on the
night of July 20 seal the office. In a 10 a.m. meeting on the morning
of July 21, White House officials assured Chief Langston that the room
had been sealed the night before even though it was not.
---------------------------------------------------------------------------
By failing to seal Foster's office that evening and by
instead sending in Patsy Thomasson to rifle through the office,
Watkins and other senior White House officials irreparably
harmed any legitimate review process.
One of the key records in Foster's office at the time of
his death was a Travel Office file which addressed the Travel
Office firings and related issues--particularly issues related
to potential conflicts of interest problems for Harry Thomason.
Mr. Foster's records also contained a file on a ``White House
Project''--another one of Harry Thomason's efforts at the White
House.
From the information the committee has to date, it is not
clear where the Foster Travel Office notebook was at the time
of Foster's death although it does appear likely it was in
Foster's office at that time. Whether it stayed there until
July 22, 1993 is another question because the White House
``chain of custody'' on the file only accounts for July 22,
1993 forward.\594\ The ``White House Project'' file was one of
the 24 files placed in a closet in the White House residence on
July 22, 1993--following Nussbaum's sham review of the
documents.\595\
---------------------------------------------------------------------------
\594\ Letter to Chairman Clinger from then-Counsel to the
President, Abner Mikva, August 30, 1995. Judge Mikva claimed that the
Foster file was first found on July 22, 1993, despite the fact that
Nussbaum, Maggie Williams, Patsy Thomasson and perhaps others had
entered Foster's office on July 20, and July 21, ostensibly to search
for a suicide note. Moreover, Nussbaum's claims that he described the
file to investigators and staff present on July 22 are not credible, as
no investigation has found a witness to corroborate his account.
\595\ Letter to committee Investigative Counsel Barbara Comstock
from the Clintons' personal attorney David Kendall, September 5, 1995.
Mr. Kendall explains that there was a file folder labelled ``White
House Project'' which was empty except for an envelope in it which was
addressed to Foster from David Watkins. The envelope was a Brookings
Institution envelope. Mr. Kendall represented that the firm received
the file empty on July 27, 1993, when Mr. Barnett had obtained the
files from the White House.
---------------------------------------------------------------------------
The committee has met with a great deal of White House
reluctance in explaining the ``chain of custody'' of the Foster
Travel Office file as well as other files. By July 1995, the
White House Counsel's office had carefully detailed a ``chain
of custody'' analysis of the Foster Travel Office notebook, yet
when the committee made requests for this explanation, it took
the White House almost 2 months to produce information that was
clearly available to them in July 1995.\596\
---------------------------------------------------------------------------
\596\ The White House first released the Foster Travel Office
notebook to the press in early July 1995 prior to the Whitewater
hearings. This document was responsive to a June 14, 1995 document
request that the White House had failed to comply with at that time
because the committee would not provide armed security guards and a
special room in which to place the Travelgate documents. On July 13,
1995, the chairman requested a copy of the Foster Travel Office file
that the White House had provided to the press. The committee received
the file on July 19, 1995, and then requested a chain of custody
explanation on July 20, 1995.
---------------------------------------------------------------------------
In a July 25, 1995 letter to the chairman, former Clinton
White House Counsel, Judge Mikva wrote: ``The actual documents
in Mr. Foster's Travel Office file remained in the custody of
the Counsel's Office from the time of his death on July 20,
1993 until they were provided to Independent Counsel Kenneth
Starr.'' No information was provided at this time about all of
the people who had learned of the file and how they had come to
learn about it. That information was not provided until the
committee received additional letters on August 30, 1995 and
September 15, 1995.\597\
---------------------------------------------------------------------------
\597\ Letter to Chairman Clinger from Judge Mikva, Counsel to the
President, August 30, 1995; letter to Barbara Bracher, chief
investigative counsel from Jane Sherburne, September 15, 1995.
---------------------------------------------------------------------------
It is worth noting that the White House Counsel's office
appears to have been in close contact with Mr. Nussbaum's
attorneys throughout the summer of 1995.\598\ This was a time
when Mr. Nussbaum was also explaining the withholding of this
file to the Senate during Whitewater hearings. This is just one
of many examples where the White House Counsel's office
intentionally withheld information from this investigation and
provided it with their own timetables and press strategy.
---------------------------------------------------------------------------
\598\ See memorandum to Jane Sherburne, ``Foster Travel Office
File: Custody and Disclosure Issues,'' July 9, 1995, DF 780008-18.
---------------------------------------------------------------------------
The documents the committee eventually obtained dealing
with the chain of custody of the Foster Travel Office file were
among those withheld from the investigation until August 1996
due to the President's claim of executive privilege. These
documents demonstrate how the Counsel's office worked with Mr.
Nussbaum to craft his explanations for withholding this
document.
According to the White House, at least at the time Mr.
Nussbaum conducted the search of Foster's office on July 22,
1993, the Vince Foster Travel Office notebook was in Foster's
briefcase: ``The documents were located in Mr. Foster's
briefcase on July 22, 1993 by Mr. Nussbaum . . . '' \599\ The
White House has made no representations as to where the
documents were before that time: ``We have no knowledge of how
or where Mr. Foster maintained this material prior to this
date.'' \600\
---------------------------------------------------------------------------
\599\ Letter to Chairman Clinger from White House Counsel Abner J.
Mikva, August 30, 1995.
\600\ Id.
---------------------------------------------------------------------------
Since Mr. Foster obviously did not maintain ``this
material'' between the time of his death on July 20 and July
22, 1993, when Mr. Nussbaum reviewed the material, there is an
unaccounted for lapse of approximately 2 days in the chain of
custody for the file. Did anyone remove this file on the
evening of Foster's death? Secret Service Agent Henry O'Neill
did report seeing Mrs. Clinton's Chief of Staff removing
documents from Foster's office on the evening of July
20th.\601\ Ms. Williams denies removing any documents from
Foster's office that evening. Yet why was Nussbaum so secretive
with this document that he refused to tell his own staff--staff
who were working on Travelgate document requests and documents
related to Foster's death?
---------------------------------------------------------------------------
\601\ Final Report of the Special Committee to Investigate
Whitewater Development Corporation and Related Matters, June 17, 1996,
pp. 53-55.
---------------------------------------------------------------------------
When the committee asked for a ``chain of custody''
explanation for the file, after the Counsel had thoroughly
analyzed this issue, the White House responded with a cryptic
and nonresponsive answer. The committee had to write several
more letters before obtaining the appropriate information.\602\
It is this kind of ``hide the ball'' tactic pursued by the
White House Counsel's Office, which has made this committee
question the candor and cooperation of the President.
---------------------------------------------------------------------------
\602\ Letter from Abner Mikva to Chairman Clinger, July 25, 1995;
letter from Abner Mikva to Chairman Clinger, August 30, 1995; letter
from Abner Mikva to Chairman Clinger, September 18, 1995.
---------------------------------------------------------------------------
C. White House Counsel Bernard Nussbaum obstructed numerous
investigations into the Travel Office and the Death of Vince Foster, by
withholding the Vince Foster Travel Office notebook
The withholding of the Vince Foster Travel Office notebook
by White House Counsel Bernard Nussbaum is one of the most
blatantly obstructionist actions taken by the White House
Counsel's Office given both the numerous investigations into
the Travel Office and the intersection of this matter with the
various investigations into Mr. Foster's death.\603\
---------------------------------------------------------------------------
\603\ The discussions between and among White House and Justice
Department officials about the review of Vince Foster's office
following his death have been extensively reviewed in the course of the
Senate Whitewater investigation and will not be re-examined here.
See ``Investigation of Whitewater Development Corporation and
Related Matters,'' the final report of the Special Committee to
Investigate Whitewater Development Corporation and Related Matters,
June 17, 1996, ``The Foster Phase,'' pp. 1-134.
---------------------------------------------------------------------------
There were numerous investigations underway into the Travel
Office at the time of Foster's death: 1) the GAO investigation
that was initiated by law on July 2, 1993; 2) the Office of
Professional Responsibility investigation which was initiated
by Deputy Attorney General on July 15, 1993; and 3) the Public
Integrity investigation of the Travel Office which included
both allegations of wrongdoing against the Travel Office
employees, as well as, allegations of conflicts of interest
violations of law by Harry Thomason.
Mr. Nussbaum was clearly aware of all of these
investigations. A July 1995 memo to Special Counsel Jane
Sherburne, indicates that ``Nussbaum says he took the file
because it concerned an active matter for which he would be
responsible.'' \604\ The fact that he recognized it was
``active'' indicates that he knew this file was responsive, yet
he kept it from numerous investigations.
---------------------------------------------------------------------------
\604\ Memorandum to Jane Sherburne, ``Foster Travel Office File:
Custody and Disclosure Issues,'' July 9, 1995, DF 780008-18.
---------------------------------------------------------------------------
Following the death of Vince Foster there were additional
investigations including: 1) an FBI investigation into the
delay in finding the Foster ``suicide'' note; and 2) Park
Police and FBI investigations into Foster's death. By January
1994, Independent Counsel Fiske's investigation was added to
this list. As discussed above, investigating the delay in
turning over the Foster ``suicide'' note is the first
investigation for which the Foster Travel Office file would
have been relevant. Nonetheless, Nussbaum very deliberately
withheld this vital information from the law enforcement
officials who interviewed him just days after the finding of
the Foster Travel Office file and the Foster ``suicide''
note.\605\
---------------------------------------------------------------------------
\605\ FBI interview of Bernard Nussbaum by SA Charles K. Dorsey and
SA Scott Salter, July 30, 1993, WMFO 175B-WF-187743.
---------------------------------------------------------------------------
In July 1995, Nussbaum's lawyers told the White House
Counsel's office a curious story. They claimed that Nussbaum
did not recall any of the document requests but that he did not
believe the Foster Travel Office file was responsive to any of
the requests, he couldn't remember! \606\ Both Cliff Sloan and
Neil Eggleston, Associate Counsels who worked on the Travelgate
investigations while in the Counsel's office, testified that
Nussbaum had not informed them of the existence of this
document.\607\
---------------------------------------------------------------------------
\606\ Memorandum to Jane Sherburne, ``Foster Travel Office File:
Custody and Disclosure Issues,'' draft, July 9, 1995, DF 780011.
\607\ Committee deposition of Cliff Sloan, June 28, 1996, pp. 72-
78; committee deposition of Neil Eggleston, June 3, 1996, pp. 94-95.
---------------------------------------------------------------------------
When Nussbaum called Eggleston in May 1994 to inform him of
the existence of the document, Eggleston asked Nussbaum why he
did not know about it before. Nussbaum did not answer.\608\ Mr.
Eggleston said, ``why am I just now hearing about this . . .
how could I just now be learning about this. . . .?'' \609\ Mr.
Eggleston agreed that Nussbaum was ``well aware of the type and
nature of documents that were being requested.'' \610\
---------------------------------------------------------------------------
\608\ Eggleston deposition, p. 95.
\609\ Eggleston deposition, p. 97.
\610\ Eggleston deposition, p. 96.
---------------------------------------------------------------------------
While Mr. Nussbaum has recently suggested that Cliff Sloan
knew about the Foster Travel Office file, and would remember it
because he has a ``photographic memory,'' \611\ Sloan clearly
stated that he did not have any knowledge of this file and had
never seen it until his committee deposition.\612\
---------------------------------------------------------------------------
\611\ Nussbaum deposition, p. 123.
\612\ Sloan deposition, p. 72.
---------------------------------------------------------------------------
Furthermore, Nussbaum's suggestion that Sloan knew about
the file does not explain why Nussbaum would have to call Neil
Eggleston to inquire about it. In May 1994 when Nussbaum made
his call to Eggleston, Sloan still worked at the White House.
Mr. Sloan, who initially had worked on the Travelgate document
requests had passed his duties on to Eggleston. If Mr. Sloan
had known of the file as Nussbaum suggests, he certainly would
have informed Eggleston by this time. Why then did Nussbaum
consider it necessary to inform the White House about the
document? The answer is that, most likely no one knew it was
there and Nussbaum knew that. Representations made to the
committee by the Foster family attorney, indicate that Nussbaum
did not even tell Mr. Hamilton about this file even though it
had been marked ``attorney client privileged in anticipation of
litigation.'' \613\
---------------------------------------------------------------------------
\613\ Foster Travel Office notebook, CGE 894-1240.
---------------------------------------------------------------------------
And where was this mystery document in May 1994 when
Nussbaum finally informed someone of its existence? Mr.
Eggleston testified that it was filed under the general files
in the secretarys' suite under ``T for Travel''! \614\ Mr.
Nussbaum had kept the file in his office during his tenure.
When he left the White House in March 1994 he apparently placed
it in the general alphabetical files without telling
anyone.\615\
---------------------------------------------------------------------------
\614\ Eggleston deposition, p. 99. Mr. Eggleston testified that he
rarely utilized these files.
\615\ Eggleston deposition, p. 94.
---------------------------------------------------------------------------
Mr. Eggleston testified he had daily meetings with Nussbaum
from September 1993, when he first joined the White House,
through April 1994 when Nussbaum left.\616\ Mr. Eggleston would
``discuss with him regularly document requests from GAO and
what we were doing to respond.'' \617\ Mr. Eggleston, a top law
school graduate and Supreme Court clerk, testified about his
job as an Associate Counsel under Nussbaum: ``I was a grunt
working on this. Mr. Nussbaum was the decision maker.'' \618\
Mr. Nussbaum made the decision to keep this highly relevant
document under wraps and away from investigators.
---------------------------------------------------------------------------
\616\ Eggleston deposition, p. 95.
\617\ Eggleston deposition, p. 96.
\618\ Eggleston deposition, pp. 132-133.
---------------------------------------------------------------------------
According to a White House analysis, even the White House
Counsel's office had a hard time explaining this blatant action
of obstruction.\619\ The White House Counsel's Office analysis
of Nussbaum's actions shows that the Foster Travel Office file
was responsive to at least five requests from GAO \620\ yet it
was never turned over. More surprisingly, there was never even
any discussion about the document. The committee has no doubt
that the Foster Travel Office file was responsive to GAO
requests and GAO confirmed this in the committee's October 1995
hearing.\621\
---------------------------------------------------------------------------
\619\ Memorandum to Jane Sherburne, ``Foster Travel Office File:
Custody and Disclosure Issues,'' draft July 9, 1995, DF 780008-18.
\620\ Id., 780013.
\621\ Testimony of Nancy Kingsbury before the Committee on
Government Reform and Oversight on October 24, 1995.
---------------------------------------------------------------------------
The Foster Travel Office file was also responsive to an OPR
request in August 1993. In July 1995, when OPR Counsel Michael
Shaheen learned of the Foster Travel Office file in the same
manner in which the committee learned about it--reading about
it in Newsweek--he wrote a memo in which he complained:
We were stunned to learn of the existence of this
document since it so obviously bears directly upon the
inquiry we were directed to undertake in late July and
August 1993, by then DAG Philip Heymann . . . the White
House was less than fully cooperative and forthcoming.
The fact that we have just now learned of the existence
of obviously relevant notes written by Mr. Foster on
the subject of the FBI Report is yet another example of
the lack of cooperation and candor we received from the
White House throughout the inquiry.\622\
---------------------------------------------------------------------------
\622\ Memorandum to David Margolis, Associate Deputy Attorney
General, from Michael E. Shaheen, Jr., Counsel, OPR, subject:
Undisclosed Foster notebook re the White House Travel Office Matter,
July 24, 1995.
Mr. Shaheen also testified before the committee in October
1995, that the lack of cooperation and candor from the White
House in this matter was ``unprecedented'' in his over 20 year
career in Government.\623\
---------------------------------------------------------------------------
\623\ Testimony of Michael Shaheen before the Committee on
Government Reform and Oversight, October 24, 1995.
---------------------------------------------------------------------------
The White House Counsel's Office had provided the White
House Management Review interview notes of Mr. Foster to OPR
based on the fact that Foster was not available as a
witness.\624\ If notes of an interview with Mr. Foster were
relevant clearly his own notes of events would have been even
more pertinent. The White House was also keenly aware of OPR's
mandate to investigate the meaning of Foster's suicide note
which addressed many Travel Office issues. At the outset of the
OPR inquiry, Philip Heymann wrote to Nussbaum and McLarty
requesting that the White House assist in arranging interviews
of relevant witnesses in the matter.\625\
---------------------------------------------------------------------------
\624\ Eggleston deposition, p. 99.
\625\ Shaheen memo, July 24, 1995.
---------------------------------------------------------------------------
OPR requested that Nussbaum provide notes taken during the
White House Management Review. Mr. Shaheen stated, ``the White
House declined to provide the notes and failed to mention the
existence of any handwritten notes by Mr. Foster on the
subject.'' \626\ OPR investigators also carefully explained to
each witness the purpose of the inquiry and asked for any
information they were aware of--``through conversations with
Mr. Foster or otherwise''--that might shed light on Foster's
``suicide'' note.\627\ The Foster note read as follows:
---------------------------------------------------------------------------
\626\ Id.
\627\ Id.
I made mistakes from ignorance, inexperience and
overwork
I did not knowingly violate any law or standard of
conduct
No one in the White House, to my knowledge, violated
any law or standard of conduct, including any action in
the travel office. There was no intent to benefit any
individual or any group.
The FBI lied in their report to the AG
The press is covering up the illegal benefits they
received from the travel staff
The GOP has lied and misrepresented its knowledge and
role and covered up a prior investigation
The Ushers Office plotted to have excessive costs
incurred, taking advantage of Kaki and HRC
The public will never believe the innocence of the
Clintons and their [loyal or legal] staff.\628\
---------------------------------------------------------------------------
\628\ OPR Report, tab A.
Foster's Travel Office notebook clearly detailed most of
the issues outlined in this note. The notebook would have been
the single most instructive record in explaining the meaning of
---------------------------------------------------------------------------
Foster's note. Shaheen concluded:
. . . we believe that our repeated requests to White
House personnel and counsel for any information that
could shed light on Mr. Foster's statement regarding
the FBI clearly covered the notebook, and that even a
minimum level of cooperation by the White House should
have resulted in its disclosure to us at the outset of
our investigation.\629\
---------------------------------------------------------------------------
\629\ Id.
Furthermore, the note had been found in Foster's briefcase,
exactly where the Foster Travel Office notebook was found. The
note may very well have been part of the notebook--in fact it
was in many ways a summary of the notebook. In trying to
justify withholding this notebook, Nussbaum's only defense to
date for his apparent obstruction, is that everyone in the room
on July 22, 1993, when Foster's documents were reviewed knew
about this particular document. As is set out extensively in
the Whitewater report, no one else in the room on that day has
any recollection of this document.\630\
---------------------------------------------------------------------------
\630\ See Final Report of Special Committee on Whitewater
Development Corporation and Related Matters, June 17, 1996, ``The
Foster Phase.''
---------------------------------------------------------------------------
Mr. Nussbaum is directly responsible for obstructing the
GAO and OPR investigations. Along with others who had relevant
information about the Foster ``suicide'' note, Nussbaum also
obstructed the FBI investigation into why there was a delay in
turning over the Foster note after it was found on July 26,
1993. (See discussion below.)
Finally, the DOJ Public Integrity criminal investigation
had an interest in obtaining all documents that related to
Harry Thomason and the work he was doing at the White House.
Beginning in the summer of 1993, Public Integrity began to
investigate the issue of whether Harry Thomason was a special
Government employee and whether or not he had any criminal
conflicts of interest problems. Mr. Foster had been keenly
aware of this problem as is evidenced throughout his Travel
Office notebook. There had been a flurry of phone calls between
and among various parties to these concerns as discussed in a
previous section. That Nussbaum withheld these documents from a
criminal investigation, is the most clearly obstructionist act
of all.
The consistent pattern of withholding information about the
existence of this file--even from his own staff--demonstrates a
clear intent on Nussbaum's part to keep this file away from
investigators. This report has already discussed at length the
highly relevant information in this file, particularly
regarding the role of Mrs. Clinton and the activities of Harry
Thomason in connection with the Travel Office firings. These
facts were highly relevant to numerous ongoing investigations
of which Nussbaum was well aware.
That Nussbaum never discussed this document with anyone
indicates that it was a record that he did not dare discuss
even with his colleagues. After the sham search of Foster's
office on July 22, 1993, then Deputy Attorney General Phil
Heymann asked Bernard Nussbaum: ``Bernie, are you hiding
something?'' \631\ The answer was then and remains today: YES.
---------------------------------------------------------------------------
\631\ Final Report of the Whitewater Committee, p. 8.
---------------------------------------------------------------------------
D. Neil Eggleston withheld the Foster Travel Office file from relevant
investigations even after it was belatedly disclosed to him by Bernard
Nussbaum
In May 1994, when Eggleston was belatedly informed about
the Foster Travel Office file by Nussbaum, he proceeded to
review the file for an outstanding document request from
Independent Counsel Fiske and decided it was not
responsive.\632\ Despite an outstanding document request from
the Public Integrity investigation for all documents related to
Harry Thomason, Eggleston ignored this request entirely. Mr.
Eggleston testified that after he reviewed the Foster Travel
Office file, he determined it was not responsive and placed it
back in the ``T for Travel'' file.\633\
---------------------------------------------------------------------------
\632\ Memorandum for Lloyd Cutler from W. Neil Eggleston, Re:
Foster File, July 10, 1994, CGE 005909-5918.
\633\ Eggleston deposition, p. 102.
---------------------------------------------------------------------------
Mr. Eggleston, who had been involved with narrowing the
Fiske subpoena claims he never discussed the Foster Travel
Office file with any of his colleagues before dismissing it as
nonresponsive to the Fiske subpoena in May 1994.\634\
---------------------------------------------------------------------------
\634\ Eggleston deposition, pp. 102-103.
---------------------------------------------------------------------------
Mr. Eggleston's actions in withholding the Foster Travel
Office from Independent Counsel Fiske cannot be viewed in
isolation. By the spring of 1994 Eggleston had spent months
either delaying or denying sensitive records regarding Harry
Thomason to investigators. Mr. Eggleston was in charge of
document production on Travelgate matters beginning in
September 1993 throughout his tenure which ended on September
1994. (The discussion in Section XII of this report extensively
details the delays and dilatory tactics engaged in by Mr.
Eggleston under the direction of Nussbaum.)
Mr. Nussbaum had directed Eggleston not to turn over
documents related to Harry Thomason's attempts to get GSA/ICAP
contracts over to the GAO investigation.\635\ In an April 11,
1994 memo to the then new White House Counsel Lloyd Cutler and
John Podesta, Eggleston noted the White House had not addressed
``the effort by Martens to get a contract to conduct an
accounting of the federal aircraft fleet'' in responding to
GAO.\636\ The White House did not end up providing the GSA/ICAP
documents to GAO even though they would have been responsive to
GAO's requests.
---------------------------------------------------------------------------
\635\ Committee deposition of Neil Eggleston, June 3, 1996.
\636\ CGE 7719.
---------------------------------------------------------------------------
When Independent Counsel Fiske published his report on the
death of Vince Foster in June 1994, it focused on Foster's
concerns about the Travel Office. Mr. Eggleston was asked about
Foster's Travel Office files by Lloyd Cutler. It was at that
time that Eggleston says he realized that the Foster Travel
Office file was possibly responsive to other document
requests.\637\
---------------------------------------------------------------------------
\637\ See deposition of Neil Eggleston, June 3, 1996.
---------------------------------------------------------------------------
Mr. Eggleston then wrote what can best be described as a
``CYA'' memo, explaining why he had not previously disclosed
the Foster Travel Office file to all of the various Travel
Office investigations.\638\ Even though the July 10, 1994 memo
clearly indicated that the Foster Travel Office file should be
provided to Public Integrity, it was not turned over for
another month. Even at that time, only portions of the Travel
Office file were turned over to Public Integrity. When the
Justice Department asked for an explanation for the delay,
Eggleston claimed it was his fault. He resigned shortly
thereafter. Mr. Eggleston under the supervision of two White
House Counsels engaged in dilatory delaying tactics in turning
over the Foster Travel Office file. There was a concerted
effort at the White House to keep this document from being
public. Even after Eggleston left and a subpoena was issued for
all documents relating to Harry Thomason, relevant documents
such as the Watkins memo was withheld. The pattern of
obfuscation continued.
---------------------------------------------------------------------------
\638\ July 10, 1994 memorandum for Lloyd Cutler from Neil
Eggleston, re: Foster file, CGE 005910-5918.
---------------------------------------------------------------------------
E. Craig Livingstone provided testimony about his activities on the
morning after Foster's death which is inconsistent with law enforcement
officials and new White House documents which were withheld under a
claim of executive privilege until August 1996
Craig Livingstone went with Bill Kennedy to identify
Foster's body at Fairfax Hospital on the evening of July 20,
1993 upon learning of Foster's death from the Secret Service at
approximately 9 p.m.\639\ That evening upon leaving the
hospital, Livingstone and Kennedy went to the Foster home.\640\
Mr. Livingstone arrived at his home late that evening after
returning Mr. Kennedy to his home.
---------------------------------------------------------------------------
\639\ Senate Whitewater deposition of Craig Livingstone, July 10,
1995, p. 46.
\640\ Livingstone Senate deposition, p. 53.
---------------------------------------------------------------------------
The next morning, Livingstone awoke early and made the
decision--he claims unprompted--to go over to the Foster home
and watch for any press presence at the home. Mr. Livingstone
has testified that he believes he arrived at the White House at
8:14 a.m. based on the Secret Service logs of when he clocked
in to the White House.\641\
---------------------------------------------------------------------------
\641\ Livingstone Senate deposition, p. 68.
---------------------------------------------------------------------------
Exactly when Livingstone arrived at the White House has
become an issue in both the general investigation of Foster's
death and the issue of whether any documents were removed from
Foster's office. The latter is significant because a Secret
Service agent testified that he saw Livingstone the morning
after Foster's death (July 21) coming down from the area of the
Counsel's office with records.\642\ Secret Service Agent Bruce
Abbott testified that he saw Livingstone passing his post at
the West Wing basement entrance approximately four times that
morning. Mr. Abbott estimates the time when he saw Livingstone
at or around 7 or 8 a.m.
---------------------------------------------------------------------------
\642\ Senate Whitewater deposition of Bruce Abbott, June 23, 1995,
p. 42.
---------------------------------------------------------------------------
On one occasion Abbott saw Livingstone carrying a briefcase
accompanied by a man in his 20s carrying an open box with
binders on the top. Mr. Abbott then spoke to his supervisor,
Agent Dennis Martin, relaying this information about
Livingstone.
Mr. Abbott also informed Detective Markland of the U.S.
Park Police about Livingstone. Detective Markland confronted
Livingstone and asked him whether or not he had taken boxes
down from area of the Counsel's office. Mr. Livingstone did not
deny that he had done so but did deny removing any documents
from Foster's office.\643\ In testimony before this committee
Livingstone stated that he does not recall ever carrying boxes
out of the West Wing.
---------------------------------------------------------------------------
\643\ Senate Whitewater deposition of Peter Markland, June 28,
1995, pp. 85-88.
---------------------------------------------------------------------------
Mr. Livingstone has reported that he arrived at the White
House at 8:14 a.m. the morning of July 21, 1993 on numerous
occasions throughout his Whitewater deposition:
Question. . . . What's the next thing you recall, Mr.
Livingstone, in connection with Mr. Foster's death?
Answer. Getting up a couple hours, a few hours later,
and doing my best effort to get to his house around
what time I would have thought the morning news shows
would be, which I seem to remember being around maybe a
little before.
Question. Your chronology says ``on Wednesday July
21st I drove by the house at 6:30 a.m. and stayed until
8:00 a.m. There was no press activity.'' Is that your
recollection today?
Answer. Yes, I can't recall if there was or
wasn't.\644\
---------------------------------------------------------------------------
\644\ Livingstone Senate deposition, pp. 64-65.
---------------------------------------------------------------------------
Question. . . . what time did you arrive at the White
House that morning?
Answer. I believe that I arrived at the White House
at around 8:14, something like that, because the Secret
Service said that that's when my pass showed me as
entering the White House. And I don't believe that I
entered the White House at any other time; therefore, I
believe that's an accurate accounting of my arrival at
the White House.\645\
---------------------------------------------------------------------------
\645\ Livingstone Senate deposition, p. 68.
---------------------------------------------------------------------------
Question. Did you ask them [the Secret Service] to
search their records and see what time you arrived that
morning?
Answer. I did I asked if it was possible.
Question. Who did you ask that?
Answer. Arnold Cole, the Secret Service agent.
Question. Why did you ask Mr. Cole to do that?
Answer. Because I could not specifically remember
exactly when I arrived, and I knew that I had only come
in once, and I wanted to know when I arrived? \646\
---------------------------------------------------------------------------
\646\ Id., pp. 68-69.
---------------------------------------------------------------------------
Question. Okay. Whatever the reason, your best
recollection today is you arrived at the White House
around 8:14?
Answer. Whatever the report says, I feel comfortable
that that's right. I think give or take a minute or
two. I don't remember the exact time they said.\647\
---------------------------------------------------------------------------
\647\ Id., p. 71.
---------------------------------------------------------------------------
Question. How many times were you in the White House
counsel's reception area before the meeting that began
at approximately 11:00 a.m. that morning?
Answer. I don't recall specifically. I think--for
sure once, maybe twice.
Answer. I work with these people. I mean,
particularly Ms. Pond I knew. It's my office. Just to
visit.
Question. When you say it's your office, what do you
mean?
Answer. It's the office I report to, that I work
under.\648\
---------------------------------------------------------------------------
\648\ Id., pp. 73-74.
However, a new White House document--1 of the 2,000 over
which the President had claimed executive privilege until
August 15, 1996--indicates that Livingstone arrived at the
White House that morning between 7:15 and 7:20--not 8:14 a.m.
as Livingstone has contended.\649\ Thus, the White House had
information that was consistent with the account of the Secret
Service agent--not the account of Craig Livingstone.
Nonetheless, throughout the past 3 years the White House has
bolstered Livingstone's position and given him a 40 percent
raise in the process.\650\
---------------------------------------------------------------------------
\649\ Memorandum to the file from Jane Sherburne, subject: Senate
deposition of Craig Livingstone (a debriefing of Livingstone's
deposition from his attorney, Randy Turk) attached to a one page
summary, ``Livingstone Deposition.'' DF781649-50 and a Draft
``Privileged and Confidential'' Chronology on Foster, dated May 15,
1996 [note: this date may be inaccurate and be the date of the print of
the document rather than when it was written] DF781054-95.
\650\ Memorandum from Livingstone to William Kennedy, ``Re:
Extension of Nancy Gemmell's employment'', May 10, 1993. ``I would like
to bring on my receptionist . . . salary would be $17,000. On August 1,
1993, my salary would increase to $50,000 from $45,000 based on the
reduction of salary for the receptionist.'' CGE 47884.
Memorandum from Livingstone to Abner Mikva, ``Subject: Follow-up to
pay adjustment request'', May 30, 1995. ``I am well deserving of a pay
increase to 65K . . . I have done my best to be a good soldier. I am
facing living pay-check-to-pay-check.'' CGE 48059.
Memorandum from Livingstone to Abner Mikva, ``Subject: Personal
Security office issues'', August 28, 1995. ``I hope to increase the
present payroll by $14K the bulk of which $12.5k, would be used to
adjust my salary to $70K. The remaining $1.5k would bring my exec.
assistant up to 30K.'' CGE 48058.
Memorandum from Jodie R. Torkelson to Kelli McLure, ``Subject:
Counsel Office $'', May 14, 1996. ``Livingstone's at it again. He's
submitted paperwork for signature giving himself a raise and saying
that he was promised the money by Ab. It's to go to $70,000. . . .
Thanks much. I'd like to kill this before I leave.'' CGE 53840.
---------------------------------------------------------------------------
Given Livingstone's highly suspect role in the FBI Files
matter, the committee is skeptical of Livingstone. For example,
Livingstone testified before this committee that he was not
Anthony Marceca's supervisor. Mr. Marceca was a political
operative who helped gather FBI files with Livingstone in 1993.
Mr. Livingstone's history as a former bar bouncer and
political operative who boasted of such accomplishments as
``deploying Chicken George'' at President Bush campaign events
made him a highly dubious choice for heading up the White House
Office of Personnel Security. The extensive documents the
committee has obtained about Craig Livingstone raise serious
questions: Why was he able to demand substantial raises in the
face of so little experience and a checkered background? What
prevented the White House from firing Livingstone?
Linda Tripp, a secretary in the Counsel's suite provided
testimony that Livingstone was not a regular presence in their
office but ``became more a presence thereafter than prior.
Bernie used to call him `Cliff '.'' \651\ Mr. Livingstone
reported directly to Bill Kennedy not Vince Foster or Bernard
Nussbaum. Mr. Kennedy's office was in the Old Executive Office
Building, not the West Wing as were the offices of Foster and
Nussbaum.\652\ Why did Livingstone become more of a presence in
the Counsel's office after Foster's death? Why did Bernie
Nussbaum ``promise'' him a raise that subsequent counsels felt
compelled to pay? Why couldn't anyone fire Craig Livingstone?
---------------------------------------------------------------------------
\651\ Whitewater deposition of Linda Tripp, July 12, 1995, p. 74.
\652\ White House directory.
---------------------------------------------------------------------------
The committee believes there is far more to the Craig
Livingstone story than anyone has disclosed to date.
F. Evidence of Mrs. Clinton's involvement in the response to the
finding of Foster's ``suicide'' note. Her direction not to tell the
President about the note, on July 26, 1993, was withheld from
investigators
On the afternoon of July 26, 1993--6 days after Foster's
death, and 4 days after the search of his office--Associate
Counsel Steve Neuwirth while searching Foster's briefcase,
found a writing by Foster which was torn up into 28 pieces.
Shortly after finding the note, Mr. Neuwirth was joined by
Nussbaum, Bill Burton (from the Chief of Staff's office) and
Mrs. Clinton. They all viewed the note and Nussbaum placed a
call to Mack McLarty who was travelling with the President in
Chicago.\653\ It took another 30 hours before the note was
turned over to the proper law enforcement authorities on the
evening of July 27, 1993.
---------------------------------------------------------------------------
\653\ Senate Whitewater deposition of McLarty, July 6, 1995, p. 65.
---------------------------------------------------------------------------
The ``public,'' sanitized White House version of this story
to date has been that Mrs. Clinton was in the room only
briefly, became upset about the note and quickly left the room.
What had not been revealed to date was that Mrs. Clinton had
weighed heavily in on how to substantively handle this
document.
A new and disturbing revelation about omissions in the
testimony of Nussbaum, McLarty, Gergen, Burton and Neuwirth has
emerged in light of the committee obtaining the 2000 pages of
documents over which President Clinton had claimed executive
privilege until August 15, 1996.
A White House Counsel's office document indicates that
these same individuals who initially failed to tell the FBI of
Mrs. Clinton's being present upon the finding of the note also
failed to point out that one of the reasons for the delay in
turning over the ``suicide'' note--the main reason--was because
Mrs. Clinton instructed Chief of Staff Mack McLarty not to tell
the President about it on July 26, 1993.\654\ White House notes
indicate that former Chief of Staff Mack McLarty said that Mrs.
Clinton wanted to delay breaking the news of the Foster
``suicide'' note to President Clinton.\655\ In a debriefing
conducted of Gergen's attorney, he told Ms. Nemetz:
---------------------------------------------------------------------------
\654\ Memorandum for the file from White House Counsel Miriam
Nemetz, July 13, 1995. This was a White House debriefing of David
Gergen's attorney. This document was 1 of 2,000 over which President
Clinton claimed executive privilege. DF 781220.
\655\ Memorandum for the file from Miriam Nemetz, July 13, 1995,
Re: Gergen deposition. The debriefing took place 1 day after Mr.
Gergen's July 12, 1995 deposition with the Whitewater Committee. DF
781220
Giuffra [Robert Giuffra, Counsel to the Whitewater
Committee] did not elicit testimony regarding a second
conversation Gergen had with McLarty. According to Burt
Rein, in the later conversation, McLarty said he had
decided to wait until the next day to decide whether to
turn over the note. McLarty said that the First Lady
was very upset and believed the matter required further
thought and that the President not yet be told. She
said they should have a coherent position and should
have decided what to do before they told the
President.\656\
---------------------------------------------------------------------------
\656\ Id.
But the testimony of David Gergen, as well as others privy
to this information, suggests that they were asked questions
which should have elicited this information if the witnesses
had been at all forthcoming. In Gergen's deposition he was
---------------------------------------------------------------------------
asked:
Question. Do you have any reason to believe that he
[the President] was advised of the note's existence
prior to 6:00 o'clock on the 27th?
Answer. I have no reason to believe either way. He
did not say in the meetings I attended that he already
knew about it to the best of my knowledge.
Question. I believe you've testified that as far as
you know, Mr. McLarty first advised the President of
the discovery of the note at 6:00 o'clock on the 27th?
Answer. So far as I know. Mr. McLarty did not tell me
one way or the other that he may have told him about it
prior to that time.
Surely, the fact that McLarty had informed him that Mrs.
Clinton did not want President Clinton to be told about the
note gave Gergen a reason ``to believe either way'' about
whether the President was informed prior to this time. In
McLarty's deposition of July 6, 1995, he is similarly ``vague
and protective'':
Question. Did you tell the President on Monday night
that something had been found?
Answer. No I did not.
Question. Why not?
Answer. For the reasons, really, that I've already
suggested. I wanted to see the note, and I wanted to
have all of this in reasonably good order when it was
related to the President. And it just didn't seem to me
that we had this matter in good order to give him half
information about what the note was and so forth.
The White House story over the past 3 years has been that
the reason the Foster ``suicide'' note was not turned over to
law enforcement authorities for almost 30 hours was because of
the need to contact Mrs. Foster and to inform the President.
Yet on the day the note was discovered neither Mrs. Foster nor
President Clinton were informed.\657\ The operative phrase in
this communication appears to be: ``McLarty said he had decided
to wait until the next day to decide whether to turn over the
note.''
---------------------------------------------------------------------------
\657\ No attempts were made to contact Mrs. Foster on July 26th and
Mrs. Clinton specifically instructed McLarty not to inform the
President about the note.
---------------------------------------------------------------------------
Senior White House officials, including McLarty, have
always indicated that there was never any question but that
this document was going to be turned over to authorities. These
notes indicate otherwise.
Senior White House officials, as well as Mrs. Clinton, also
have insisted that Mrs. Clinton had no role in the handling of
Foster documents. These notes clearly indicate otherwise.
It also should be noted that the White House has always
claimed that the President could not be informed about the note
until late the next day because his schedule was so full.
However, the schedule produced for the FBI report, addressing
why there was a delay in turning over the note, indicates that
the President had a fairly open schedule that afternoon.\658\
---------------------------------------------------------------------------
\658\ Investigation by Special Agent Scott M. Salter, Title of
Case: Vincent Foster, Jr.; Deputy White House Counsel to the
President--Victim; 7/20/93; investigative period 7/29/93-8/9/93, CZ
000753-000754.
---------------------------------------------------------------------------
In light of this new information, a scheduled meeting the
next day--July 27th at 2:30 p.m.--with Mrs. Clinton, Bernard
Nussbaum and Steven Neuwirth takes on new significance. Mr.
Nussbaum had instructed Neuwirth to research the executive
privilege issues regarding the note. Were executive privilege
issues regarding the note discussed in this meeting? July 27th
is the day when there is an almost universal lack of recall
among the individuals who had any contact with Mrs. Clinton on
this day.
On July 28, 1993, the day after the Foster ``suicide'' note
was turned over to law enforcement authorities, then Deputy
Attorney General Philip Heymann instructed Associate Deputy
Attorney General David Margolis to ask the FBI to conduct a
thorough and aggressive investigation into the discovery of the
note.\659\ This investigation was undertaken both because of
the failure to find the note in the course of the July 22
search of Foster's office, and because of the 30 hour delay in
turning it over to law enforcement authorities.
---------------------------------------------------------------------------
\659\ See Final Report of the Special Committee To Investigate
Whitewater Development Corporation and Related Matters, June 1996.
---------------------------------------------------------------------------
It is significant, that on July 30, 1993 when Nussbaum was
interviewed about the delay in turning over the note, FBI
officials report that he was aware of ``no other notes or
messages left by Vincent Foster which would be relevant to the
investigation of his death.'' \660\ Mr. Nussbaum never told
Agent Salter, the FBI agent in charge of the investigation, or
anyone else about the Travel Office file, yet he claims to have
informed them in his Whitewater testimony.\661\ There has been
no testimony from any Justice Department official which
supports Nussbaum.\662\
---------------------------------------------------------------------------
\660\ Investigation by Special Agent Scott M. Salter, Title of
Case: Vincent Foster, Jr.; Deputy White House Counsel to the
President--Victim; 7/20/93; investigative period 7/29/93-8/9/93,
interview of Bernard Nussbaum conducted on 7/30/93, CZ00707.
\661\ Senate Whitewater deposition of Bernard Nussbaum, July 17,
1995.
\662\ See Final Report of the Senate Whitewater Committee, June 17,
1996, ``The Foster Phase.''
---------------------------------------------------------------------------
Mr. Nussbaum and his colleagues who were involved in the
review of Foster's note omitted the fact that Mrs. Clinton had
reviewed the note on the afternoon of July 26, 1993. This
information was finally obtained last summer in the course of a
deposition of Bill Burton during the Whitewater hearings. The
information about Mrs. Clinton weighing in on the Foster note
was disclosed only to the Counsel's office and was studiously
withheld from all investigations.
The FBI interviewed Bill Burton, David Gergen, Mack
McLarty, and Steven Neuwirth about the circumstances
surrounding the discovery of the note. These interviews were
just days after the finding of the note \663\ so these
witnesses had no reason to universally forget information about
Mrs. Clinton unless it was by design. None of the reports of
these interviews included the fact that Mrs. Clinton had been
brought in to review the note even though all of the above
individuals were aware of that fact. Mr. Neuwirth, in testimony
before the Whitewater Committee attempted to claim that he did
in fact tell the FBI that Mrs. Clinton had been made aware of
the note but neither the typed account or the FBI agent's
handwritten notes recorded this information.
---------------------------------------------------------------------------
\663\ FBI Report of SA Scott Salter, August 9, 1993. Investigative
period 7/29/93-8/9/93.
---------------------------------------------------------------------------
Withholding the Foster Travel Office notebook and the
information about Mrs. Clinton's reviewing Foster's note have
one thing in common: protection of Mrs. Clinton and avoidance
of full disclosure of her role in these matters.
When the note was finally turned over, David Gergen noted
that ``Reno questioned the group as to why the note had not
been turned over sooner and she was advised that the only
reason that the note was not turned over sooner was that it had
been decided to notify President Clinton prior to turning over
the note and that the first opportunity to meet with President
Clinton occurred at approximately 6 p.m., on July 27, 1993. It
was explained that the contents of the note had potential
implications regarding executive privilege. In addition it was
explained to the AG that it had been decided to meet with Lisa
Foster prior to the note being disclosed.'' \664\ Notes from
Mark Gearan regarding the finding of the note indicate that
Attorney General Reno was displeased with the delay. Mr.
Gearan's notes indicated that Reno was ``worried'' about the
``lateness'' in finding the Foster note and the ``length of
time'' the White House took in disclosing the fact of its
existence to any law enforcement officials.\665\ Cynthia
Monaco, an assistant to Deputy Attorney General Philip Heymann,
also confirmed that both Reno and Heymann were annoyed that the
note had not been turned over sooner. Ms. Monaco noted that
Heymann told her he was ``proud''
of Reno for taking the White House to task on the tardiness of
disclosing this relevant information.\666\
---------------------------------------------------------------------------
\664\ Senate Whitewater deposition of David Gergen, July 12, 1995,
p. 145.
\665\ ``Justice war wary of Foster probe,'' the Washington Times,
July 26, 1995, p. A1.
\666\ Committee staff interview with Cynthia Monaco, summer 1995.
The committee notes that Ms. Monaco appears to be one of the rare
Clinton appointees who had a semblance of a memory about these events.
Ms. Monaco's testimony was a rare exercise in candor and completeness.
---------------------------------------------------------------------------
CONCLUSION
Following the death of Vincent Foster, Jr., the White House
deliberately and immediately set upon a pattern of concealment
and obstruction concerning Foster's documents. That pattern
exists to this day. Senior White House aides implicated in the
Travelgate affair were involved with improper searches of the
office on the evening of July 20, 1993 as well as the sham
``official'' search of July 22, 1993. Mrs. Clinton also played
a role in trying to avoid ``unfettered access'' to Foster's
office and now we know she also weighed in on discussions
regarding the turning over of the Foster note. Significantly,
Foster's office contained a large Travel Office file in his
briefcase which was withheld from numerous investigations for
years.
XII. The White House Has Stonewalled all Previous Investigations and
Engaged in an Unprecedented Damage Control Operation run out of the
White House Counsel's Office
For more than 3 years, the Republican members of the
committee--both as minority members and majority members--have
attempted to get to the bottom of this matter and faced a White
House intent on withholding key documents and obscuring the
truth. By subpoenaing documents from both the White House and
the individuals involved and by piecing together the
documentary record, it is clear that the White House's initial
``mea culpa'' regarding the Travel Office was a whitewash--a
``limited, modified hangout'' that was misleading at best.
A. HEARINGS WERE REQUESTED IN 1993 ON THIS MATTER
Providing oversight of 1600 Pennsylvania Avenue entails
unique challenges. More than 3 years ago, Chairman Clinger
requested Travel Office hearings after the White House's
investigation was led by the Chief of Staff who approved the
firings in the first place. Far from standing the test of time,
the White House Management Review's credibility did not even
survive its first news cycle.
B. WHITE HOUSE HISTORY OF STONEWALLING
The White House response to the various investigations into
the White House Travel Office matter has been a history of 3
years of stonewalling. Despite a GAO investigation which was
mandated by law--a law which President Clinton himself signed--
and an OPR investigation conducted by the President's own
political appointee, and a criminal investigation conducted by
the Justice Department, the White House has continued to
withhold documents relating to Travelgate. An abbreviated
history of the stonewalling follows.
1. GAO Investigation
On July 2, 1993, a law was signed by the President which
included a provision mandating the GAO review of the Travel
Office.\667\ The report originally was to be completed by
September 30, 1993, but due in part to numerous White House
delays, interviews were not completed until March 1994.
Furthermore, the White House repeatedly delayed productions of
records critical to the congressionally mandated investigation.
In some cases, GAO never was informed of the existence of key
documents responsive to its requests. In the committee's
October 24, 1995, hearing, a GAO representative testified that
the measure of cooperation received from the White House was
less than optimal and that all documents requested were not
produced.
---------------------------------------------------------------------------
\667\ P.L. 103-50.
---------------------------------------------------------------------------
The following is an overview of White House delays and
denials in dealing with the investigation of the General
Accounting Office's congressionally mandated review of the
White House Travel Office matter.
July 2, 1993: President Clinton signs into
law, P.L. 103-50, Fiscal Year 1993 Supplemental
Appropriations Act, which, among other things, mandates
a GAO investigation of the White House Travel Office
matter. The report is due to be completed on September
30, 1993.
August 11, 1993: GAO held an opening meeting
with the White House to explain the statutory
requirements and scope of its investigation. White
House Deputy Chief of Staff Roy Neel arrived 1 hour
late, asked what GAO would do if the White House
refused to provide documents and whether Congress would
have access to GAO work papers, including material Neel
said, ``could be explosive.'' Mr. Neel said he
considered GAO's work a ``nuisance'' he wanted done as
soon as possible.
August 17, 1993: GAO's Director of Federal
Human Resource Management Issues Nancy R. Kingsbury
writes Associate White House Counsel Clifford M. Sloan
GAO's first document request covering 20 categories of
records concerning Travel Office operations before and
after the firings; White House Management Review
records; White House press releases, personnel and
performance records; records concerning Harry Thomason
and Darnell Martens, among others. A list of 17 White
House staff to be interviewed also is attached.
August 26, 1993: White House (Mr. Sloan)
writes GAO (Ms. Kingsbury) in response to August 17
letter promising to do ``our best to respond
expeditiously'' but provides no documents. Also agrees
to address the timing of any interviews during the week
of August 30, 1993.
September 14, 1993: GAO Assistant Director
John S. Baldwin, Sr., writes White House (Mr. Sloan)
with four additional records requests, including a list
of Presidential trips and, trip files, and procedural
and computer manuals relating to the new Travel
Office's management system.
September 15, 1993: White House (Mr. Sloan)
cover letter provides GAO (Ms. Kingsbury) documents
related to the new Travel Office management system.
September 23, 1993: Matt Moore meets with
Cliff Sloan about GAO records at 2 p.m. in the White
House. [White House Travel Office Chronology, prepared
by Government Reform and Oversight Majority Staff.]
September 23, 1993: GAO (Ms. Kingsbury) writes
White House (Mr. Sloan) with additional request for
Travel Office's bank and financial records. Reiterates
the need to promptly review documents.
September 24, 1993: White House (Mr. Sloan)
writes GAO (Ms. Kingsbury) with a document responsive
to GAO's August 17, 1993, letter's request #3.
September 27, 1993: White House (Mr. Sloan)
writes GAO (Ms. Kingsbury) four separate letters. Two
provide a total of 12 trip files for Presidential trips
taking place between April 1992 and April 1993. The
other two letters provide documents related to the
Travel Office's Riggs National Bank account.
September 29, 1993: White House (Mr. Sloan)
advises GAO (Ms. Kingsbury)--in response to GAO's
September 14, 1993, request--that it is seeking ``an
audit report done in 1981 or 1982'' from Reagan and
Bush Presidential archives.
September 30, 1993: GAO Interim Report on the
White House Travel Office matter was due to the House
and the Senate. The report noted the problems GAO was
having with the White House in getting access to
documents.
October 1, 1993: White House (Mr. Sloan)
advises GAO (Ms. Kingsbury) that it is making available
White House canceled checks for May through October
1992.
October 7, 1993: GAO (Ms. Kingsbury) writes
White House (Associate Counsel W. Neil Eggleston) a 10-
page letter reviewing, ``the status of our requests for
documents and interviews from the White House.'' This
letter states that: 16 of 20 requests made in its
August 17, 1993, letter were not provided or were only
partially provided; 2 of 3 requests made in its
September 14, 1993, letter were incomplete; 7 of 10
requests made in its September 23, 1993, letter were
not provided or only partially provided. This letter
indicates that the White House has yet to provide any
documents pertaining to Harry Thomason.
October 8, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) providing copies of an
anonymous 1988 complaint against Travel Office
employees and documents relating to a 1981 Travel
Office internal review.
October 14, 1993: White House (Peter C.
Pappas) writes GAO (Ms. Kingsbury) two letters,
attaching financial disclosure filings of three White
House staff and various documents related to Air
Advantage.
October 14, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) a letter providing
additional documents relevant to a 1981 Travel Office
internal review and the 1988 anonymous complaint.
October 15, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) two separate letters. The
first states that the White House is continuing ``in as
expeditious a manner as possible'' to photocopy Travel
Office trip files but notes that the White House's
understanding of GAO's statutory authority limits GAO's
trip files request to trips from January 1992 through
May 1993, and refers to redactions of material the
White House considers privileged, relevant to
Presidential security, or not germane. The second
letter states that the White House has been unable to
locate any Travel Office petty cash journals.
October 19, 1993: White House (Mr. Pappas)
sends GAO (Ms. Kingsbury) four letters concerning: 9
trip files; President Clinton's Travel Office remarks
on May 21, 1993, and George Stephanopoulos' Travel
Office responses in a May 20, 1993, press briefing; a
Bush administration document on ``Prohibited Contacts
with Agencies,'' and ``In the spirit of cooperation,''
an August 6, 1993, copy of a Travel Office Policies and
Procedures Review prepared by GSA.
October 20, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) two letters. Letter requests
``narrow and specific requests for the time period
after May 19'' which the White House will consider in
light of the statutory definition of GAO's scope. The
second declines to provide a copy of the White House
telephone directory and states that interviews with
various White House staffers have completed the White
House response to Paragraph 7 of GAO's October 7, 1993,
letter.
October 22, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with four additional
trip files.
October 26, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with the trip file
for President Bush's October 25-November 4, 1992,
``campaign swing.''
October 28, 1993. White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) letter with enclosures it
contends complete Paragraph 28 of GAO's October 7,
1993, request.
November 2, 1993. White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with five additional
Travel Office trip files dated September through
November 1992.
November 3, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with four additional
Travel Office trip files dating from December 1991,
through October 1992.
November 4, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with airline ticket
reports for 1992 and travel agent coupons for periods
from December 1991, through June 1992.
November 5, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with six additional
trip files from February and March 1992.
November 10, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with copies of travel
agent coupons for various time periods from February
1992, through March 1993.
November 10, 1993: GAO (Mr. Homan) facsimiles
White House (Mr. Eggleston) handwritten memo stating
that GAO is available for interviews ``on Friday
between 8 a.m.-12 noon and 2-4 p.m.'' Still to be
interviewed: Jeff Eller, Mark Gearan, John Podesta,
Todd Stern, Chris Vein, Jack Kelly (6 of the original
17 requested interviewees).
November 12, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with five further
trip files for January and February 1992.
November 15, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with two additional
trip files from January and September 1992. Attached to
this document are three letters addressed to the
Internal Revenue Service attaching trip files.
November 18, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) three letters with:
additional copies of travel agent coupons for March/
April 1993; and documents relevant to Paragraph 2 of
GAO's October 7, 1993, request.
November 23, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) two letters with: eight
further trip files from June through August 1992, and
Travel Office itineraries for January 1992.
November 29, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) two letters with: Travel
Office itineraries for February 1992, and a copy of a
newspaper article attached to Catherine Cornelius' and
Clarissa Cerda's February 15, 1993, Travel Office
reorganization memo.
November 30, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) two letters: one includes
additional trip files; the second includes a 1987 study
of White House Facilities and Operating Units.
November 30, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) letter confirming GAO's
withdrawal of a request to interview a representative
of the Vice President's National Performance Review
(NPR) ``setting forth the relationship between the
Review and the actions taken with respect to the Travel
Office.''
December 1, 1993: White House (Mr. Pappas)
forwards Travel Office itineraries for March 1992, to
GAO (Ms. Kingsbury).
December 2, 1993: White House (Mr. Pappas)
sends GAO (Ms. Kingsbury) two additional letters. One
encloses Travel Office itineraries for April 1992. The
second enclosed five additional trip files.
December 3, 1993: GAO (Ms. Kingsbury) writes
White House (Mr. Eggleston) a 15-page letter updating
the status of GAO's work, White House document
productions and interviews. It reviews some 27 of 36
document requests not yet provided or only partially
provided by the White House as of that date--5 months
into the investigation. It further notes that 4 White
House staffers and 1 GSA staffer have yet to be
interviewed: Gearan, Eller, Podesta, Stern and Kelly
(GSA). It closes with: ``If the White House does not
intend to arrange these interviews, or does not possess
or intend to provide any of the documents requested, we
respectfully request that you explain the circumstances
or reasons in writing to us by January 10, 1994.''
December 4, 1993: Neil Eggleston meets with
Bernie Nussbaum, John Podesta, Cliff Sloan and Todd
Stern concerning how to deal with GAO. Among those
issues discussed was whether GAO should be provided
access to White House Management Review documents. Mr.
Nussbaum decided, ``No.'' Mr. Eggleston notes dated
December 4, 1993, discuss Travel Office issues
including ICAP, say not to provide GAO the Management
Review interview notes.
December 6, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) contending that GAO's
``December 3, 1993, Request Compilation unnecessarily
introduces a measure of confusion into the process of
requesting documents and interviews and responding to
such requests'' and that it ``undermines our effort to
cooperate in this matter.'' It suggests that GAO has
``chosen to alter the requests and the completeness of
the responses'' and requests that GAO redraft the
December 3, 1993, letter.
December 7, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) with eight additional trip
files.
December 7, 1993: GAO (Ms. Kingsbury) writes
White House (Mr. Eggleston) a 16-page letter
superseding its December 3, 1993, letter updating the
status of document requests and separating new requests
from outstanding requests. This letter indicates that
the White House still has provided no Harry Thomason
documents to GAO.
December 8, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) two letters with: six
further Travel Office trip files and Travel Office
itineraries for May through August 1992, respectively.
December 9, 1993: David Watkins is interviewed
by GAO with Watkins' attorney Ty Cobb and Associate
White House Counsel Neil Eggleston in attendance. It is
at this interview that GAO learns of First Lady Hillary
Rodham Clinton's involvement in the White House Travel
Office matter.
December 14, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) with five further trip
files.
December 14, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) four letters regarding,
respectively, December 7, 1993, Paragraphs 5 (``fully
complied with''), 7 (``fully complied with''), 37
(``decline to provide a briefing about the general
procedures for the granting of access passes'' . . .
but agree to provide a witness to explain how the
procedures applied to Messrs. Thomason and Martens) and
41 (declining to respond to a request for current legal
conclusions).
December 15, 1993: Neil Eggleston writes a
memo for the White House's GAO/Travel Office file
outlining, ``GAO Themes in Questioning.'' Several of
the themes deal with Mrs. Clinton, including: ``Mrs.
Clinton--the Management Report omits earlier
involvement by her in the matter and fails to report
her conversation with David Watkins on the night of
Friday, May 14th.'' Also notes, ``The authors of the
Management Review were pressured to omit embarrassing
details about Mrs. Clinton or the Administration from
the Report.''
December 15, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) two letters. In one, the
White House claims to have complied with Paragraph 6 of
GAO's December 7, 1993, letter, ``to the extent that we
believe the request is relevant to the GAO inquiry''
and declining further response without GAO's
establishing the relevance of materials withheld. This
request involved resumes, applications, appointment
documents and financial disclosure filings of Kennedy,
Watkins, Cornelius, Cerda and Eller. In the second, it
claims to have provided what was requested of Paragraph
32 of the December 7, 1993, letter, the article
attached to Cornelius' and Cerda's February 15, 1993,
memo.
December 16, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) two letters enclosing Travel
Office itineraries for September through November 1992,
and providing additional trip files.
December 16, 1993: GAO (Ms. Kingsbury) writes
White House (Mr. Eggleston) clarifying outstanding
requests and adding others arising from the GAO's
interview of David Watkins, including a request that
Mr. Eggleston arrange for GAO to interview Mrs.
Clinton, whose name came up in the Watkins interview.
GAO noted it only asked whether or not the White House
had made a determination. GAO adds that its ``normal
procedures . . . when someone reports to us that
another party made certain statements, we arrange an
interview . . . '' The letter notes that the White
House has refused to provide information on whether or
not the White House had determined Harry Thomason and
Darnell Martens' status as Special Government
Employees.
December 19, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with December 1992,
Travel Office itineraries.
December 21, 1993: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter with further Travel
Office trip files.
December 29, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) six separate letters
claiming to complete its responses to Paragraphs 1, 9,
11, 14, 17, 31. Per Paragraph 1, Eggleston claims that
GAO's failure to address a White House letter dated
October 20, 1993, leaves the White House unable to
comply with this request concerning White House Travel
Office management since May 19, 1993, and interviews
with Foucart and Riewerts. Responding to a GAO inquiry
concerning lower charter costs under new Travel Office
management, two Brian Foucart memos dated May 27 and
May 31, 1993. The other five letters claim prior
completion or completion based on attached
documentation.
December 30, 1993: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) two letters. One declines to
produce the White House phone book and the second
claims to complete the White House response to
Paragraph 50. attaches a memorandum from Matthew Moore
to David Watkins circa February 15, 1993. This includes
a chart that identifies Billy Dale and his staff as
``Bush Person[s]''.
January 3, 1994: White House (Mr. Pappas)
forwards GAO (Ms. Kingsbury) additional Travel Office
itineraries for January and February 1993.
January 4, 1994: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) two letters including the
March 1993, Travel Office itineraries and additional
trip files, respectively.
January 7, 1994: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter enclosing
miscellaneous travel data and binders.
January 8, 1994: White House (Mr. Pappas)
writes GAO (Ms. Kingsbury) letter enclosing
miscellaneous travel binders.
January 13, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) two letters making more
Travel Office worksheets, binders and trip files.
January 18, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) letter responding to a
request on Page 15 of GAO's December 7, 1993, request
compilation for information concerning the Vice
President's National Performance Review (NPR) and the
review of the White House Travel Office. Attached to
this letter is a memo to Ms. Kingsbury from Todd J.
Campbell, Counsel to the Vice President, stating that
there was no connection between them.
February 3, 1994: White House (Special
Hearings Counsel Matthew Moore) writes GAO (Ms.
Kingsbury) letter providing a list of Presidential
trips from May 22 through December 31, 1993.
February 9, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) letter enclosing copies of
the cover and title page of a book on bookkeeping for
small business.
February 14, 1994: GAO (Ms. Kingsbury) writes
White House (Mr. Eggleston) two letters concerning ``a
compulsively complete list'' of what GAO still needs to
complete its work by the end of the month. Some 21
items, identified as ``A'' through ``V,'' are attached.
February 14, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) two letters. One challenges
the relevance of request ``M'' from GAO's February 14,
1994, letter. This referred to several people
identified on several passenger lists as Travel Office
staff and requests they be identified as civilian or
military personnel and that the White House arrange
interviews with them. Mr. Eggleston requests that GAO
indicate how the request ``would contribute to the
statutorily defined scope of the GAO review.'' The
second encloses information concerning checks and
deposit slips missing from a previous production.
February 17, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) nine separate letters
responding to various of February 14, 1994's compiled
requests. These letters: 1) seek to limit Paragraphs
``A'' and ``B'' [respectively: post-May 19 trip files
and operations records; and all records pertaining to
the decision to bring World Wide Travel and Penny
Sample into the White House] per issues of GAO's
``scope''; 2) note that the White House has provided
all relevant documents it could locate for item ``C''
[documents describing policies and procedures in place
before May 1993, including all financial management
records]; 3) enclose White House's KPMG Peat Marwick
payment documentation per ``G''; 4) confirm that Travel
Office records in FBI custody do not include complete
copies of press billings from March 1992 through May
1993; 5) ask that GAO provide copies of its documents
to assist the White House in fulfilling a request; 6)
names the five fired non-supervisory Travel Office
employees and their new Federal employers; 7) clarify a
request concerning relevant and irrelevant documents in
a Gary Wright briefcase; 8) address 9 World Wide Travel
file folders; and, 9) make limited production of
documents from a ``Presidential and Vice Presidential
Visit Manual.''
February 18, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) six letters responding to
various of February 14, 1994's compiled requests. They
include: 1) ``Trust Travel Fund Reconciliation;'' 2)
press information; 3) travel guidelines; 4) billing for
various trips; 5) refund log; and, 6) bus contacts and
master call-out list with phone numbers.
February 23, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) two letters explaining that
it cannot comply with two separate requests because: 1)
Travel Office documents [documentation of who paid for
new ticketing equipment installed in May 1993, before
American Express entered the Travel Office] ``were not
kept in the form reflected in the inventory and are no
longer identifiable''; and, 2) the 15 to 20-year-old
documents requested are ``far beyond the scope of GAO's
original request.''
March 4, 1994: Bernard Nussbaum resigns as
White House Counsel.
March 9, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) letter attaching Harry
Thomason and Darnell Martens White House pass
applications.
March 14, 1994: GAO (Ms. Kingsbury) writes
White House (Mr. Eggleston) three letters. They
request: 1) ``copies of processing documents used'' to
further its understanding of Travel Office financial
management''; 2) authorization to ask Riggs National
Bank questions concerning the Travel Office Press Fund,
whether Travel Office payments are subject to the
Prompt Pay Act and State and local tax issues; and, 3)
copies of trip files for the new Travel Office
management.
March 16, 1994: GAO (Ms. Kingsbury) writes
White House (Mr. Eggleston) letter with questions to be
asked of First Lady Hillary Rodham Clinton, Leon
Panetta, Patsy Thomasson and Margaret Williams. She
requests that the written responses to these questions
be provided to GAO by March 25, 1994.
March 19, 1994: GAO's Ms. Kingsbury completes
a draft of the Travel Office report. [White House
Travel Office Chronology, prepared by Government Reform
and Oversight Committee majority staff.]
March 25, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) to state that it
``anticipates'' being able to respond to requests due
that day the following week.
March 25, 1994: GAO (Ms. Kingsbury) writes
White House (Mr. Eggleston) letter beginning, ``I
understand that you are busy these days, but I am
concerned that we have not been able to be in contact
at least by telephone . . . '' and adding, ``Finally, I
must express serious concern about our recent
experiences with obtaining clearance for staff on this
assignment.''
March 25, 1994: White House (Mr. Eggleston)
responds to GAO (Ms. Kingsbury) letter on access.
March 30, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) four letters which
respectively: 1) request that someone call Matt Moore
for William Kennedy's notes of his conversations with
FBI agents prior to the Travel Office firings; 2)
direct GAO to seek drafts of KPMG Peat Marwick from
Peat Marwick itself; 3) state that a briefing paper
referenced in paragraph 6 of GAO's mid-March document
request cannot be located; and, 4) responds to GAO
written questions directed to Watkins and McLarty on
their behalf. States that Watkins recalled, ``his
conversation with Mrs. Clinton on this issue was on the
evening of May 14, 1993;'' and that McLarty recalled
meeting with the First Lady on May 13, 1993.
March 31, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) regarding a June 3, 1993,
memo from Vince Foster to David Watkins regarding 14
C.F.R. 121.
April 1, 1994: White House (Mr. Moore)
facsimile transmittal cover sheet to GAO (Nancy
Kingsbury) regarding ``Letters in Response to Travel
Office Review Requests. Attached is an April 1, 1994,
White House memo (Mr. Eggleston) to GAO (Ms. Kingsbury)
regarding Paragraph E of GAO's February 14, 1994,
request (granting White House passes in general and
Thomason/Martens White House passes in particular)
which he said were forwarded to GAO on March 9.
April 4, 1994: Neil Eggleston writes a memo to
White House Counsel Lloyd Cutler, Joel Klein, John
Podesta and Todd Stern regarding Travel Office issues
involving IRS. Mr. Eggleston discusses the issue of IRS
taking the position that the White House is obligated
to pay excise taxes on Travel Office press charters.
Attached to this memo is a draft copy of the GAO Travel
Office Report on the IRS.
April 11, 1994: Neil Eggleston writes a memo
to White House Counsel Lloyd Cutler and John Podesta
concerning the GAO Travel Office document requests,
noting that the White House had not addressed ``the
effort by Martens to get a contract to conduct an
accounting of the federal aircraft fleet . . .''
because it previously had decided that the documents
were not responsive.
April 12, 1994: GAO representatives Nancy
Kingsbury, David Clark, and others meet with White
House staffers Neil Eggleston, Patsy Thomasson, Brian
Foucart, Steve Riewerts, Kim Johnson and Matt Moore to
discuss completion of the GAO report and outstanding
issues.
April 13, 1994: White House (Mr. Moore)
facsimile transmittal cover sheet to GAO (Nancy
Kingsbury) followed by White House (Mr. Eggleston)
letter to GAO (Ms. Kingsbury) listing individuals
responsible for baggage security.
April 13, 1994: GAO (Ms. Kingsbury) writes
White House (Mr. Eggleston) letter stating GAO's need
to ``verify that the copies of documents we have
received are authentic,'' and ``survey the universe of
documents to determine if any classes of records were
withheld.'' The letter includes a listing of documents
to be verified.
April 16, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) letter responsive to
Paragraph D of GAO's February 14, 1994, request
compilation, with attached memorandum to Harry Thomason
and Markie Post concerning their meetings at the White
House on April 30 and May 1, 1993, and the White House
Project. These documents were withheld for almost 10
months from GAO even though they were available
immediately.
April 22, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) two letters. One breaks down
administrative leave costs of the five fired non-
supervisory White House Travel Office employees. The
second addresses the status of a Department of
Agriculture detailee to the Travel Office.
April 23, 1994: White House (Mr. Eggleston)
writes GAO (Ms. Kingsbury) letter confirming that ``GAO
has not requested documents prepared in connection with
the White House Management Review,'' and adding that
the White House did not provide attorney notes and
analysis prepared after the events in the Travel
Office. GAO had been told by Podesta and Stern that
they only took a ``thimblefull of notes'' in the course
of their review.
May 2, 1994: GAO issues its final Travel
Office Report.
May 3, 1994: David Watkins writes a letter to
Mrs. Clinton: ``Hillary--The GAO erred in stating that
I said that you urged me to replace members of the
travel office with `our people.' `Urge' is not a word I
commonly use. Additionally, as I know you have
experienced many times, the statement was reported out
of context without my complete response to their
questions being reported. Obviously, I regret any and
all press references and their innuendoes as it related
to your involvement in this affair. I have always known
who my `client' is.''
July 10, 1994: Neil Eggleston writes a memo to
the file regarding the Vince Foster Travel Office file
and how it may or may not be responsive to numerous
investigations including GAO, OPR, Public Integrity and
Independent Counsel Fiske. He subsequently decides it
is responsive to Public Integrity but only portions are
provided 1 month later. Mr. Eggleston says that there
is no need to tell GAO and OPR because they have
completed their reports.
September 7, 1994: Neil Eggleston writes a
memo to Patsy Thomasson and Jodie Torkelson about
Travel Office issues and the status of GAO documents,
IRS audit and FBI investigations into Billy Dale, Harry
Thomason and Darnell Martens. This memo is copied to
White House Counsel Lloyd Cutler, Joel Klein and Chris
Cerf. A day later, Eggleston writes a letter to Stuart
Goldberg at Public Integrity announcing his
resignation, effective immediately. A clear pattern
emerges in the course of this document production:
documents that were potentially damaging to Billy Dale
were the first out the door, while those that deal with
Harry Thomason or ``high level'' White House officials
were deliberately and extensively delayed. Documents
re: Harry Thomason clearly were requested in the first
GAO request on August 17, 1993. Yet no Harry Thomason
documents were produced until March 9, 1994, several
days after Independent Counsel Fiske subpoenaed records
from the White House and several days after the
resignation of Bernard Nussbaum. The withholding of
documents re: Harry Thomason and Darnell Martens and
their business ventures was deliberate and consistent
with attempts to withhold these documents from all
other investigations.
2. OPR investigation
Following the issuance of the White House Management
Review, the Attorney General committed to reviewing the report
and following up on any aspects necessary.\668\ By July 15,
1993, then Deputy Attorney General Heymann tasked the Office of
Professional Responsibility to conduct a review of ``the
conduct of the FBI in connection with its contacts with the
White House on the Travel Office matter and to report its
findings and recommendations. The report was completed on March
18, 1994 but never released by the Justice Department.
---------------------------------------------------------------------------
\668\ July 14, 1993, letter from Attorney General Janet Reno to the
Honorable Jack Brooks.
---------------------------------------------------------------------------
Initially the Justice Department was requested to delay the
release of the report due to the Independent Counsel
investigations--both by Independent Counsel Fiske and
Independent Counsel Starr. By the summer of 1995, OPR realized
it, too, had been stonewalled for 2 years by its own White
House, which refused to provide access to Vince Foster's Travel
Office notebook. The Foster notebook was concealed from all
previous investigations for 2 years.
In a scathing July 24, 1995, Justice Department internal
memo, OPR Counsel Michael Shaheen wrote:
[W]e were stunned to learn of the existence of this
document since it so obviously bears directly upon the
inquiry we were directed to undertake in late July and
August 1993 . . . we believe that our repeated requests
to White House personnel and counsel for any
information that could shed light on Mr. Foster's
statement regarding the FBI clearly covered the
notebook and that even a minimum level of cooperation
by the White House should have resulted in its
disclosure to us at the outset of the investigation.
In fact, as early as December 1993, OPR considered
approaching Attorney General Reno to request a full Travel
Office investigation because ``very dangerous signals''
suggested possible obstruction of its investigation.
July 15, 1993: Then-Deputy Attorney General
Philip Heymann decided to call on the Justice
Department's Office of Professional Responsibility to
conduct a review of the FBI's role in the Travel Office
firings. Later, after Vincent Foster's death and the
discovery of his ``suicide note,'' Mr. Heymann added to
the investigation a review of the comments in Vincent
Foster's note about the ``FBI lied.''
July 28, 1993: Then Deputy Attorney General
Heymann publicly announced a review of the FBI's role
in the Travel Office firings and included a review of
the comments in Vincent Foster's note about the ``FBI
lied.'' The FBI had also been tasked on this date with
investigating the delay in the turning over of the
Foster ``suicide'' note.
August 1993: First letter to Nussbaum
requesting documents.
Summer 1993: White House failed to provide the
Vince Foster Travel Office file. OPR Counsel Michael
Shaheen wrote a scathing memo in July 1995 about not
receiving this document for OPR's investigation. Mr.
Shaheen wrote: ``we were stunned to learn of the
existence of this document since it so obviously bears
directly upon the inquiry we were directed to undertake
in late July and August 1993 . . .''
The White House only provided the White House
Management Review notes from the interview with Vincent
Foster to OPR. OPR had asked for all of the interview
notes. Mr. Shaheen wrote: ``The White House declined to
provide the notes and failed to mention the existence
of any handwritten notes by Mr. Foster on the
subject.''
Mr. Shaheen also stated in his memo: ``we
believe that our repeated requests to White House
personnel and counsel for any information that could
shed light on Mr. Foster's statement regarding the FBI
clearly covered the notebook [the Vince Foster Travel
Office notebook] and that even a minimum level of
cooperation by the White House should have resulted in
its disclosure to us at the outset of our
investigation.''
Shaheen noted that the Vince Foster Travel
Office notebook also had been withheld from the
Independent Counsel.
Mr. Shaheen and members of his staff informed
committee Counsel in an interview in August 1995 that
by December 1993, OPR was considering going to the
Attorney General to request a full investigation into
the Travel Office matter because of the ``very
dangerous signals'' sent to the investigators which
indicated possible obstruction of its investigation.
Shaheen and his investigators noted that the memories
of White House witnesses were very vague and this was
only several months after the events in question. Mr.
Shaheen's investigation was cut short by the
appointment of the Independent Counsel.
JUSTICE DEPARTMENT, PUBLIC INTEGRITY SECTION
While the Clinton White House cooperated fully with the
Public Integrity Section's investigation of Billy R. Dale, its
refusal to provide documents relevant to Public Integrity's
investigation of Harry Thomason and Darnell Martens for more
than a year was so egregious that the Chief of Public
Integrity, Lee Radek, concluded on September 8, 1994:
At this point, we are not confident that the White
House has produced to us all the documents in its
possession relating to the Thomason allegations. . . .
[T]he White House's incomplete production greatly
concerns us because the integrity of our review is
entirely dependent upon securing all relevant
documents.
The following week, the Clinton administration's own Public
Integrity Section was forced by these concerns to subpoena all
documents responsive to its investigation of Thomason and
Martens. Even then, the Clinton administration refused to
produce some 120 responsive documents. Due to White House
obstruction, Public Integrity had prosecuted--and lost--the
Dale case before it even had received all documents relevant to
its investigation of Thomason and Martens.
May 1993: Public Integrity began a criminal
investigation into the Travel Office matter and shortly
thereafter began an investigation into the roles of
Harry Thomason and Darnell Martens at the White House.
July 1993: The Department of Justice began
trying to get an interview with Harry Thomason while
Thomason's lawyer began trying to get access to the
White House Management Review interview notes of Harry
Thomason.
Summer 1993: Public Integrity began seeking
documents from the White House in the summer of 1993
but received little information. As of September 30,
1993, Prosecutor Goldberg wrote to the White House ``to
confirm that the White House had only located two
documents related to Harry Thomason.''
October 12, 1993: White House Counsel sent an
agreement which would allow Public Integrity Prosecutor
Goldberg to ``view'' the two Harry Thomason memos.
November 12, 1993: Goldberg signed an
agreement to view two Harry Thomason ``White House
project'' memos but not take any notes or make copies.
At this point, almost 6 months after the firings and 6
months after the initiation of an investigation into
Travel Office related matters, no one at the White
House appears to have mentioned the GSA/ICAP contracts
Harry Thomason and Darnell Martens generated while
seeking business for their company, TRM.
January 1994--Spring 1994: Public Integrity
continued to seek documents about Harry Thomason's
activities at the White House and received its first
ICAP/GSA contract documents regarding efforts by Harry
Thomason and Darnell Martens to seek Government
contracts.
March 14, 1994: Public Integrity wrote to
White House Counsel Eggleston asking for confirmation
in writing that the White House had searched for all
Harry Thomason files.
April 5, 1994: Neil Eggleston distributed a
memo to gather all Harry Thomason and Darnell Martens
documents by April 7, 1994. It requires a signed
certification stating: ``I have searched my files and I
have no documents responsive to the requests set forth
in this memorandum.''
April 5, 1994: An FBI e-mail on this date
titled: ``WHTO Update'' states: ``there has been some
problem in obtaining records from the White House
regarding Thomason's duties and responsibilities.
Goldberg is considering issuing a subpoena . . .''
Spring 1994: Production of Harry Thomason
documents to Public Integrity continues. Matt Moore and
Neil Eggleston were involved in document production.
(Matt Moore possessed copies of the Watkins memos that
were never turned over.)
May 11, 1994: Neil Eggleston, Joel Klein and
Marvin Krislov (all in the White House Counsel's
office) wrote a letter to the Independent Counsel
addressing how the White House would comply with the
Independent Counsel's grand jury subpoena. (Their
letter narrowed the scope of the Independent Counsel's
initial request.)
May 1994: Neil Eggleston reviews the Foster
Travel Office file to determine if it is responsive to
the Fiske subpoena. He decides that it is not.
Eggleston apparently ignores the fact that the Foster
Travel Office file, which mentions Harry Thomason and
Darnell Martens throughout, is responsive to the Public
Integrity document requests.
June 24, 1993: Neil Eggleston writes a letter
to Stuart Goldberg informing him that Public Integrity
has all of the Harry Thomason documents as of this
date. (Vince Foster Travel Office file is not
included.)
July 10, 1994: Neil Eggleston writes a memo to
Lloyd Cutler about the Vince Foster Travel Office file
and why it wasn't produced to any investigation to
date. Eggleston recommends producing only portions of
the Foster notebook to Public Integrity by that Tuesday
(July 12, 1994). Those portions are not provided until
1 month later.
August 30, 1994: Neil Eggleston provides the
additional documents from Foster's Travel Office
notebook to Public Integrity (approximately 20 pages of
the 100-plus page document are provided.).
August 30, 1994: Public Integrity prosecutor
Goldberg writes the White House to ask why Harry
Thomason documents were withheld and asks for an
explanation by September 8, 1994.
September 8, 1994: Neil Eggleston writes
Goldberg explaining why he failed to turn over all of
the Harry Thomason documents saying ``I sincerely
apologize for the oversight and hope that the delay in
production of these documents has not caused you any
inconvenience . . . please be advised that I have
resigned effective September 8, 1994.''
September 8, 1994: Public Integrity Chief Lee
Radek writes a memo to Jack Keeney stating: ``At this
point we are not confident that the White House has
produced to us all documents in its possession relating
to the Thomason allegations . . . the White House's
incomplete production greatly concerns us because the
integrity of our review is entirely dependent upon
securing all relevant documents.''
September 13, 1994: A Grand Jury subpoena for
documents from the White House relating to Harry
Thomason and Darnell Martens is served on the White
House with a September 30, 1994, due date.
September 30, 1994: All Harry Thomason and
Darnell Martens pursuant to the September 13, 1994,
subpoena are due to the Grand Jury. The White House
produced a ``PRIVILEGE LOG'' which identifies more than
120 documents that the White House refuses to turn over
to its own Justice Department in the course of a
criminal investigation involving activities at the
White House.
July 6, 1995: White House provides complete
Vince Foster Travel Office file to the press.
July 28, 1995: White House, in responding to
Public Integrity Prosecutor Goldberg, sends more pages
of Vince Foster Travel Office notebook.
August 17, 1995: Public Integrity prosecutor
Goldberg reviews more Vince Foster documents at the
White House with White House Associate Counsel Natalie
Williams.
November 4, 1995: In the midst of the Billy
Dale trial, a White House Associate Counsel faxes a
memo on the Travel Office files that is dated 5/21/93.
The memo was from a member of the White House Records
Management staff who expressed concerns about the
handling of the documents in the Travel Office after
the firings. The memo had not been provided previously
to Public Integrity or to defendant Billy Dale, whose
criminal trial was under way.
November 6, 1995: The White House sends
additional unknown documents to Public Integrity
Prosecutor Goldberg.
In summary, nearly 6 months had passed before the White
House allowed Public Integrity prosecutors to see any documents
related to Harry Thomason and nearly a year to provide most of
the ICAP/GSA documents. The White House refused to provide the
Vince Foster Travel Office file in its entirety until July
1995, after it released the file to the press. Portions of the
file had been provided to Public Integrity in August 1994. A
September 1994, subpoena failed to produce this document in its
entirety.
The White House also failed to provide the Watkins ``soul
cleansing memo'' which was in Patsy Thomasson's files despite
numerous document requests and the September 1994, subpoena. At
the very least, David Watkins, Matt Moore and Patsy Thomasson
were aware of the existence of this document throughout the
course of document requests.
Even after the September 1994, subpoena from Public
Integrity, the White House produced a privilege log of 120-plus
documents it refused to provide to its own Justice Department
in the course of a criminal investigation. White House
production of documents to Public Integrity continued
throughout the course of the Billy Dale trial in October-
November 1995. Since these documents belatedly were provided to
Public Integrity, they also belatedly were provided to the
defendant during his trial instead of before the trial began.
Public Integrity does not appear to have sought documents
directly from Harry Thomason until after the Billy Dale trial
ended and after both the Committee on Government Reform and
Oversight and the Independent Counsel had sought documents from
Thomason and Martens. New documents regarding efforts by
Thomason and Martens to seek business for TRM were included in
these productions to the Justice Department after Billy Dale's
trial.
Public Integrity's tolerance of White House foot-dragging
was in stark contrast to the aggressive pursuit of Billy Dale
and his family throughout the course of the criminal
investigation of Mr. Dale.
The contrast is stark between Public Integrity Section's
prosecution of Billy Dale and its utter passivity while the
White House stonewalled its investigation of Thomason and
Martens. Its criminal investigation of Billy Dale was
compromised from the beginning. The FBI relied on
uncorroborated--and false--allegations of kickbacks against the
Travel Office employees in launching a criminal investigation.
But for nearly a month, it ceded control over Travel Office
documents to a White House that pledged to secure them while
allowing numerous individuals with and without White House
passes free reign to review and destroy documents critical to
its investigation.
In the midst of the Dale investigation, FBI Supervisory
Special Agent Bowie was unaware the White House ordered a
``Management Review'' of the Travel Office matter which
provided a ``heads-up'' of sort. The Management Review provided
political cover to the Clinton administration while forewarning
the White House of potentially embarrassing discoveries and
``explosive documents'' in the words of Deputy Chief of Staff
Neel. The Management Review's discovery that the kickback
allegations against the Travel Office employees were baseless
is a prime example: the White House refused to inform the FBI
or Public Integrity of this fact.
In Dale's case, an FBI e-mail stated that Justice
inexplicably intended to indict ``before the November
elections.'' In addition, prosecutor Stuart Goldberg was well-
aware that Travel Office records it was obligated to secure had
been lost. As Goldberg himself informed IRS agents: ``Records
that were there at one time are now missing and they don't know
who took them. Mr. Goldberg stated that it may have been
Catherine Cornelius.'' Even so, Justice prevented Dale from
using this information at trial in his own defense.
Yet in its investigation of Thomason and Martens, even
after Justice attempted to end the White House's year-long
stonewall with a grand jury subpoena, it passively acceded to a
White House privilege log of 120 withheld documents.
Public Integrity's experience with the Clinton White House
offered further evidence of administration obstruction while
providing critical insights into its own tale of two very
different investigations.
XIII. Stonewalling This Committee's Investigation
A. HISTORY OF SEEKING TRAVELGATE DOCUMENTS FROM THE WHITE HOUSE
1. Chairman Clinger's efforts to investigate while in the minority
Chairman Clinger began the investigation into the Travel
Office matter while he was the ranking minority member of the
committee. Ranking Member Clinger's efforts in the minority
from 1993-94 included:
June 16, 1993: Chairman Clinger joins
Republican leadership in requesting documents and
responses to questions regarding the Travel Office. (No
substantive response ever was provided.)
August 6, 1993: Chairman Clinger joins
Republican leadership in requesting information on the
IRS investigation and other Travel Office questions.
(No substantive response ever was provided.)
October 15, 1993: Chairman Clinger writes
Bernard Nussbaum concerning the status of Harry
Thomason as a special Government employee. (No
substantive response ever was provided.)
September 13, 1994: Chairman Clinger requests
that the White House provide access to GAO documents
maintained at the White House. (Access never provided--
later memo shows White House Counsel Neil Eggleston
recommended denying the request after the
Appropriations bill for the White House had passed.)
September 20, 1994: Chairman Clinger again
requests access to GAO documents at the White House.
October 1994: Chairman Clinger issues a report
analyzing the GAO report on the Travel Office and
calling for hearings on the discrepancies found in the
GAO work papers versus the final report, and other
outstanding issues.
2. Committee efforts in the 104th Congress
In the beginning of the 104th Congress, Chairman Clinger
committed to a full investigation into the Travel Office matter
and began making inquiries of the White House in the spring of
1995. The White House initially would not even provide the GAO
working papers which Roy Neel had described as ``explosive,''
and recommended against congressional review.\669\
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\669\ GAO notes on meeting with Roy Neel, August 1993.
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The committee initiated document requests on the Travel
Office matter beginning in June 1995. Initially, the White
House conditioned its compliance on the provision of armed
security guards to protect the ``explosive'' documents. The
foot-dragging that followed is outlined below.
June 14, 1995: Committee makes first document
request to White House focusing on White House
Management Review documents and documents related to
Harry Thomason's activities at the White House.
White House Response:
Throughout June and July 1995, White
House fails to produce any documents and
requests that the committee hire security
guards to protect any documents provided to the
committee.
July 18, 1995: White House produces
the Vince Foster Travel Office file several
weeks after providing it to the press.
August 2, 1995: White House produces
documents, 90 percent of which have been
previously made publicly available (i.e. White
House Management Review copies, GAO report
copies, press conference transcripts).
August 9, 1995: White House produces
more copies of the Management Review from
various files and several miscellaneous
documents.
August 28, 1995: White House produces
miscellaneous handwritten notes by White House
employees.
September 5, 1995: White House
produces a privilege log identifying 900 pages
of documents from the White House Management
Review.