The Travelgate Cover-Up
Brock, David
David Brock The Travelgate Cover-Up Hillary Clinton, Vincent Foster, David Watkins, William Kennedy, Harry Thomason, Patsy Thomasson, Betta Carney, Catherine Cornelius, Clarissa Cerda, Darnell...
...It was clearly the brokerage Dale was referring to when, according to the memo, he was adamant that there was "no chance" the White House would change its current operations...
...We anticipate receiving the final report of the auditors soon and will analyze their findings to determine the next steps in the investigation...
...He is suing Thomason for $80 million for libel for disseminating false rumors of kickbacks about UltrAir that he alleges caused an FBI probe, and causing the publication of false and damaging material from the Martens memo, which surfaced in the press as Caudle was negotiating a deal to start another airline...
...Emphasis added.]) Kennedy told the agents of "rumors" about lavish lifestyles among travel office personnel...
...In the end, the Watkins group bought the license and turned around and sold the franchise in 1988 to the telecommunications giant McCaw Cellular Communications Inc...
...Watkins next 3 Caudle resigned as AOA' s chief executive officer before the travel office controversy...
...But that was not the end of White House shaping of the statement, the GAO revealed...
...According to sources familiar with the situation, her concerns focused on one employee who owned a cabin on some $10-an-acre property near Virginia's Lake Anna and a $6,000 pontoon boat—hardly high living...
...TRM now does business under the name Harry Thomason & Associates...
...Apple and Foran then consulted with their boss, Daniel Coulson, a deputy assistant director of the FBI...
...Watkins needed Hillary's imprimatur to implement the plan...
...Foster asked Kennedy to contact the FBI about initiating an investigation of the office...
...REPRINTS AVAILABLE Copies of David Brock's "The Travelgate Cover-Up" are available for $5 each...
...Though Heymann had been designated by Reno to oversee the investigation of the suicide, Margolis raised no objection as Nussbaum conducted the search and possibly obstructed the investigation...
...Cornelius disclosed to the GAO that Watkins ordered her to make the call..Though the White House Review did not disclose this, perhaps because it would contradict the line that TRM was not seeking White House business, on May 12 Martens applied for a White House pass, according to the GAO...
...The uncompensated flights were discontinued to the satisfaction of the concerned government agencies...
...violations of conflict-of-interest laws...
...Cornelius also secretly photocopied travel office documents and squirreled them away until she got caught by colleagues one day when a check accidentally jammed the copier...
...The cover memo on the draft clearly noted: "[O]ur procedures do not constitute an audit, examination, or review in accordance with standards established by the American Institute of Certified Public Accountants...
...and the decision had been made to fire the travel office employThe American Spectator June 1994 35 ees...
...the White House Review and the GAO audit omitted them entirely...
...The key meetings came next, when Wade, Carl, and Kennedy met first with Foster...
...A second look at the scandal reveals an array of hidden agendas and payback schemes implicating the president and—espeDavid Brock is, the author of The Real Anita Hill (Free Press), now in paperback, and an investigative writer for TAS...
...A second falsehood is that the FBI "suggested they believed there was sufficient cause for them to conduct a criminal investigation but they asked us to have Peat Marwick complete with audit before the FBI would begin further work...
...But it still would not have justified a "Kafkaesque" raid, Tax Notes concluded...
...In a January 26, 1993 memo to Watkins (now a top assistant to the president), Cornelius explicitly proposed that she and Clarissa Cerda, who had supervised the campaign's early-billing operation, could perform the functions of the White House travel office working with World Wide...
...a compromised Justice Department...
...An interim contract to handle the White House business was awarded to American Express...
...The House Republican Policy Committee adopted a statement calling for a special counsel on Travelgate: Who authorized or directed a Presidential counsel to summon FBI agents to the White House to seek an investigation of the travel office...
...On the very day that Collingwood was summoned to the White House, Sessions was in a face-to-face meeting with Reno at the Justice Department discussing his future...
...The garish couple hosted many Hollywood fundraisers for Clinton, and their production company donated $60,000 to the Democratic National Committee...
...Apple also recalls Kennedy indicating that the matter was being directed or followed at the highest levels of the White House," the Review said...
...The White House permitted live television coverage only of the opening statements of McLarty, Panetta, and other officials...
...M eanwhile, apparently tipped off by Carney and Cornelius, another group of close associates began maneuvering for a piece of the White House business...
...Such employees are permanent staff only by tradition, not by right, and the Clintons apparently think nothing of indulging their whims by replacing White House 30 The American Spectator June 1994 ushers, telephone operators, correspondence clerks, and chefs...
...The FBI lied in their report to the AG," the note continued, an apparent reference to Sessions's version of events...
...But it was rooted in long-standing political and business relationships in Arkansas...
...Following the meeting with Watkins, Thomason "repeated his concerns" to Hillary, and then reported back to Watkins on the conversation...
...a criminal probe had then been ordered...
...Did she take actions on Thomason's behalf...
...B y this time, naturally, the White House intervention had aroused so much suspicion in the press that the original goal of firing the travel office employees to make room for Cornelius & Co...
...that day's Wall Street Journal carried especially detailed but unsubstantiated allegations about the company's practices and its relationship with the travel office, attributed to White House officials...
...0 n Wednesday morning, May 19, Watkins gave Dee Dee Myers written talking points on the travel office firings, which were to occur within the hour...
...David Brock The Travelgate Cover-Up Hillary Clinton, Vincent Foster, David Watkins, William Kennedy, Harry Thomason, Patsy Thomasson, Betta Carney, Catherine Cornelius, Clarissa Cerda, Darnell Martens, Penny Sample, Larry Herman, George Stephanopoulos, Bernard Nussbaum, Mack McLarty, Jeff Eller, Joseph Gangloff, David Margolis, John Podesta, Philip Heymann, the IRS, the GAO, and FBI agent Tom Carl...
...cially—the first lady more directly in Travelgate than has been previously established...
...The company ran into controversy during the presidential campaign when it provided press transportation without 2 The Martens memo was eventually released to the press by the White House after it was leaked by one of the travel office veterans, apparently by Dale, who had somehow got hold of both the Cornelius-Cerda memo and the Martens memo, after it was faxed to Watkins at the White House...
...The audit cover-story now became all-important...
...In addition to Whitewater, Fiske might take a look at Travelgate...
...At the Criminal Division's Public Integrity Section, where the investigation is being conducted, Joseph Gangloff is now the permanent deputy chief...
...A portion of the campaign's travel debts was thereby deferred until federal matching funds started pouring in...
...The full extent of these connections has never been explored, despite an internal White House Review in July 1993 and last month's whitewash of the affair by Congress's General Accounting Office...
...Later on May 12, Watkins, Cornelius, and Harry Thomason met again, this time with deputy counsel Foster...
...In effect, Foster's death saved the administration from further scrutiny...
...But Kennedy was adamant...
...Bond: "You didn't participate in the process...
...Over the next two days, the FBI wrote four different press guidance statements that changed subtly to foster the misleading impression of a relationship between the audit and the investigation...
...Two weeks after the election, Steve Davison, director of customer service for World Wide, was quoted As security stood by, the humiliated seven cleared out their belongings and were escorted from the building like accused criminals...
...Either way, how Gangloff can be involved in the investigation when serious questions linger about his own conduct is unfathomable...
...The chief auditor, Nancy Kingsbury, may have knuckled under last year to White House pressure to soften an investigation of David Watkins and Patsy Thomasson for issuing retroactive pay increases and permitting double-dipping salary payments for White House staff...
...On May 25, however, in the midst of the Travelgate firestorm, Nussbaum amended the policy in a new memo, this time requiring that all future calls to the FBI or Justice from the White House regarding even potential criminal matters be routed only through top DOJ officials...
...The headlines of mid-July were filled with GOP demands for congressional hearings and the appointment of a special counsel, the certain outcome had a Republican administration been caught in similar circumstances...
...There may well have been no direct influence, but that would not absolve the administration entirely...
...This may or may not be the full story of how the IRS got involved (IRS agents don't typically unilaterally decide to investigate based on newspaper accounts...
...Kingsbury said this was "a rather Substantial mischaracterization of my remarks," but went on to essentially confirm the characterization...
...Bond: "Did you participate with the Peat Marwick auditors in the review of the Travel Office affair...
...Myers, perhaps naively, referred Martens to Billy Dale, the long-time travel office director who would soon become one of the Travelgate Seven...
...In a recent interview with Business Week (which briefly mentioned the deal but did not make the WatkinsTravelgate connection), Larry Wallace, another investor in the Watkins group who owns the NBC affiliate in Little Rock, said Hillary's connection to the governor was thought to be a way of attracting the FCC...
...Watkins then took out a loan to buy out the winner, with Hillary personally guaranteeing $60,000...
...A close examination of the redacted interviews released by the IRS last year shows that some of the IRS personnel said there was "no contact" by anyone outside the IRS regarding the UltrAir audit—but others used the term "no influence," indicating, perhaps, that there was contact...
...And "it was a mistake for the White House to publicly discuss FBI involvement" Summoning Collingwood to the White House to meet with Nussbaum, Stephanopoulos, Foster, and Kennedy was a "mistake" also...
...Perhaps this was written with the expectation that the memo would be made public, because McLarty surely knew that the only connection between the audit and the NPR was Larry Herman...
...The IRS is not authorized to go on fishing expeditions for wrongdoing by government contractors...
...There was no clear prohibition on discussing this subject matter, and so it was not technically "improper...
...Some of his money was made in a 1983 bid he put together to compete for a cellular phone franchise in Little Rock...
...That contact produced sufficient information for the FBI to determine that additional criminal investigation is warranted...
...But that was not to be...
...and, at the center of the muck, with her "strong moral compass," Hillary Rodham Clinton...
...These contacts were divulged in the Sessions letter...
...Since he is a career prosecutor, this would have been a knowing violation of the law...
...In accepting McLarty's transparently false statement that "on the basis of KPMG's findings, he had approved the removal of the employees," the GAO falsified the history of the affair to comport with the White House cover story...
...ment reach...
...On Thursday, May 20, newspapers were filled with stories raising questions about UltrAir's practices...
...was forced to sell the agency when the Federal Reserve Board ruled that banks had to divest themselves of their travel services, but Stephens arranged for it to be bought by its manager, Beta Carney...
...On whose authority Martens made this rather spectacular offer of a White House job to his girlfriend is not known...
...Collingwood to make it clearer and 'consistent with the facts.' " The White House Review never acknowledged this final step, which resulted in this statement: At the request of the White House, the FBI has had preliminary contact with the White House and the auditors brought in to audit the White House Travel Office...
...And drawing in his boss Bernard Nussbaum, Foster had summoned the FBI to the White House to shape the bureau's press guidance on the investigation...
...Though it added a few essential facts to the mix, the GAO's conclusions did not track with even its own factual 7 This seems to be a reference to a review of the travel office conducted in the early months of the Reagan administration by the man who then held Watkins' s position...
...The arrangement enabled the campaign to instantly pump cash into advertising in crucial races in Michigan and Illinois...
...That review found sloppy bookkeeping as well, but no wrongdoing...
...After Collingwood returned to the FBI, he updated his written press response to reflect his earlier oral press responses and the conversation in Stephanopoulos's office," according to the Review...
...McLarty was a World Wide client, as is Stephens Inc., and Wal-Mart, on whose board of directors Hillary Rodham Clinton sat...
...Matt Labash helped in the research for this article...
...Unannounced visits, euphemistically called "canvassing the district," and other coercive measures are standard operating procedure in organized crime and drug dealing cases, when ill-gotten income has not been reported and the earner is likely to flee...
...A potential conflict arose because the Clintons had not put their holdings into a blind trust until six months after taking office...
...He faxed the new press response to the White House, on the understanding it wouldn't be released...
...Kennedy . . . to receive a further update about the preliminary findings of the 'performance review.' " Sessions further revealed that the two agents met not only with Kennedy, but also with Patsy Thomasson and Larry Herman of Peat Marwick.4 Given Herman's ties to the administration, of course, the audit can hardly be called truly independent...
...Penny Sample, whose Air Advantage company had brokered charter planes to the campaign for World Wide, was eager to perform the same service for the White House press corps...
...The American Spectator June 1994 33 dispatched Cornelius to work in the travel office for several weeks and report back to him by May 15 on her observations...
...Beyond that, we are not in a position to comment...
...Normally, if credible allegations had been raised and a decision made to investigate, the FBI would have moved in and sealed the office...
...Thomasson then called Watkins...
...Moreover, attorneys for Dale and Wright may now challenge any indictment on grounds that their clients were victims of a vindictive prosecution...
...After the travel office fiasco, she was reassigned to the White House counsel's office where she is an assistant counsel to the president...
...On February 15, Cornelius and Cerda presented Watkins with a document called "The White House Travel Office: Briefing Book and Proposal...
...In a sworn affidavit filed in connection with a libel suit against Harry Thomason, Charles Caudle, one of AOA's founding shareholders, maintained that it never flew any White House charter flights for less than normal quoted charter rates, nor did the airline ever provide free transportation for members of the press...
...They-had to do things like take a plane load of White House correspondents through ten countries in ten days...
...The "action," of course, was pre-determined by Hillary on May 12 after she spoke with Thomason.5 0 n Monday, May 17, Watkins sent a memo to McLarty reporting the results of a draft of the Peat Marwick.review and informing him of the pending firings, though one had nothing substantively to do with the other...
...At Watkins's instruction, World Wide moved into the White House on May 19, the day of the firings, but the agency's representatives were tossed out two days later...
...But what else could really be expected from a review honchoed by McLarty, who was reviewing his own conduct...
...It will not be enough for Fiske to conclude that Foster committed suicide...
...But motivation is irrelevant...
...When Foster and Kennedy saw the talking points, they panicked and told Watkins to remove any mention of the FBI...
...The travel office workers were now publicly smeared as the targets of a criminal investigation...
...Though Landmark was informed several months ago that a one-foot stack of documents responsive to the request has been identified, it won't be released before "consultations" with Reno...
...A scandal involving a rather petty scheme to reward a network of cronies with a federal contract would now become a scandal about the use of the police powers of the government for political purposes...
...if his activity involved a "particular matter" (such as advice on new charter arrangements...
...The atmosphere at the White House was tense...
...On May 21, the same day the White House released the FBI statement referring to a "criminal investigation," three IRS agents arrived unannounced at the offices of UltrAir in Smyrna, Tennessee...
...While not confirming or denying the conversation between Margolis and Goldberg, Justice Department spokesman Carl Stern said: "It is not uncommon for DOJ investigators and congressional committees with oversight to consult and coordinate during a criminal investigation...
...During a phone conversation with Darnell Martens, Thomason suggested that Martens call Myers to follow up...
...H ow Hillary first became aware of the "problems" has been one of the enduring mysteries of Travelgate, a question glossed over entirely in the White House Review...
...But Nussbaum also made a sly change: Previously, only the top two officials could be contacted...
...Then–deputy attorney general Philip Heymann wrote a letter to Podesta advising him not to interview the seven, but the letter seemed to be an after-the-fact measure to blunt criticism of a decision already made in the White House not to permit the fired employees to rebut the Peat Marwick audit...
...One of the more glaring deficiencies in the report was that none of the seven travel office employees was interviewed...
...the operation, why was he meeting with World Wide in the first place...
...The White House Review concluded that Thomason's involvement was "in no way motivated by a desire to enrich himself...
...In a subsequent conversation, according to the Review, then–White House Communications Director George Stephanopoulos asked Thomason whether he had any financial interest in any company bidding on White House work, and Thomason denied it...
...That debt seems to have been partially repaid in 1991, when then-Gov...
...and Dan Richland, the agent of Thomason's wife Linda Bloodworth-Thomason...
...Thomason's interests dovetailed nicely with what White House sources describe as Hillary's obsession with clearing out "Republican holdovers" from the White House staff...
...A draft report had concluded that the two officials did not have the authority to authorize the irregular payments, but the final report concluded the White House had not exceeded its authority...
...He asked Dee Dee Myers if the White House charter business was open for competitive bidding, and Myers said she thought it was...
...As for undue influence on the IRS, Treasury concluded there was "no evidence that any IRS employee involved in this matter was influenced by anyone outside the IRS or within the Service...
...But the Justice Department and the Office of Government Ethics have acknowledged that those criteria are merely a guide...
...For example, there was no record in the office's petty cash ledger for $18,0130 worth of checks written to cash over a 17-month period...
...A quick financial audit of the travel office would be undertaken as the ostensible basis for the decision by the FBI and the Justice Department to open an investigation—which would serve as the ostensible basis for installing Clinton cronies in the travel office...
...In the spring of 1993, she was also one of those White House employees implicated in a double-dipping arrangement, whereby she was paid for a time by both the White House and the Clinton transition...
...Martens made a case for replacing the current charter airline, UltrAir—formerly Airline of the Americas (AOA), which had been founded by ex-Pan Am executives using Pan Am's old planes after Pan Am's bankruptcy in 1991...
...the counsel's office (headed by her mentor from the Watergate period, Bernard Nussbaum and staffed by former Rose associates Vince Foster and William Kennedy...
...Some insiders speculate that the investigation has been kept open so that subjects like Dale, (continued on page 94) 8 The GAO concluded that Thomason was not a special government employee under the conflict-of-interest laws...
...The implication is that the unnamed FBI official acted independently after learning of the IRS investigation in the newspapers...
...The GOP settled for a GAO report, which was released in early May to a universal yawn in the media...
...Foster objected to the immediate firings, because the audit had to happen first, and McLarty backed him up...
...The GAO sent a list of questions but never followed up for the answers...
...Watkins had apparently included it to justify the firings...
...But screwing over the "little people" is the Clintons' prerogative...
...VII...
...To rebut the charge that the FBI had been manipulated for political ends, Sessions maintained that the Justice Department had made the final call: The final determination that there was sufficient predication to initiate a criminal investigation was made by Mr...
...And the GAO did not appear anxious to interview the Travelgate Seven, none of whom were spoken to...
...TRM and Air Advantage had a contractual relationship during the 1992 campaign...
...But Martens's company was a charter broker, not a charter operator, and the White House already had a charter broker—the travel office itself...
...In attempting to lay to rest Wolf's questions, moreover, the Treasury report actually raised another one: whether the investigation may have been improperly influenced by the White House after it was begun...
...At that point, the Review reported, "Foster asked the FBI to wait for the results of the Peat Marwick financial review before proceeding with its investigation...
...On Friday afternoon, John Collingwood, the chief spokesman for the FBI, was summoned to a White House meeting being convened by George Stephanopoulos with the administration's top guns: Nussbaum, Stephanopoulos, Foster, and Kennedy...
...The press would be told that an audit had suddenly turned up credible allegations of wrongdoing...
...travel agency, with annual business of $158 million...
...I n a letter dated July 14, 1993, GOP Rep...
...In a third false statement, Watkins conveyed the impression that the new system for the travel office had been devised during the weekend of the audit, rather than months before at his instruction...
...The White House needed not a simple statement of fact from the bureau but a substantive comment about the information coming to the FBI...
...I'm told the offending official was Associate Deputy Attorney General David Margolis, who spoke about the case with Donald Goldberg, deputy counsel to Chairman John Conyers of the House Government Operations Committee...
...But even that was not soon enough for Harry Thomason, Cornelius, and Jeff Eller, who met with Mack McLarty on Friday morning to urge him to fire the travel office employees by 5 p.m...
...Christopher Bond of Missouri had this exchange with Thomasson...
...Margolis and his DOJ colleague Roger Adams, two FBI agents, and some Park Police looked on as Nussbaum withheld several Whitewater documents from investigators—and who knows what else?—on grounds of "executive privilege" that are disingenuously bogus...
...Democrats on the House Judiciary Committee turned back a Republican attempt to force the president to furnish a raft of documents concerning potential misuse of the FBI in the travel office investigation...
...The principal federal conflict-of-interest law provides that "no office or employee" of the government may participate "personally and substantially" in a "particular matter" in which, to the individual's knowledge, he has a "financial interest...
...He was given a White House pass and an East Wing office, and received telephone calls and messages and faxes at the White House, according to White House sources...
...Next time, Kennedy could just call Hubbell...
...By the last week of June, however, the White House had (continued on page 78) The American Spectator June 1994 71 DAVID BROCK (continued from page 71) begun to examine a list of candidates to replace Sessions, and the director had been forced into discussions with the Justice Department on the timing of his resignation...
...Therefore Margolis was in a position to know that the White House Review had omitted important information...
...Through his lawyer, Thomason said he could not recall any conversation with Hillary...
...Coulson sent a second team of senior agents, Richard Wade, the chief of the governmental fraud unit, and Tom Carl, a supervisor in that unit, to meet with Kennedy...
...Throughout the day on May 14 and during the weekend, Kennedy urgently attempted to feed any preliminary findings he could get his hands on to the FBI in a vain effort to cover his tracks...
...A possible factor in this part of the scandal was FBI Director Sessions's struggle to keep his job...
...Such low-level house-cleaning is unprecedented: the well-mannered Bushes, for instance, dutifully ate food they didn't like for two years before the Reagans' cook quit voluntarily...
...Hillary got a check for $45,998 on her $2,014 investment...
...One World Wide official flew in the next day...
...As will be discussed later, the audit turned up no evidence of kickbacks...
...Did she participate in the guidance on White House–Justice Department contacts that was revised to include Hubbell...
...There is no record of any complaint being filed against AOA with the FEC or the Department of Transportation regarding allegations of free trips for the press...
...And late that afternoon, the deputy White House counsel who was at the center of the Travelgate scandal, Vincent Foster, was found dead in Fort Marcy Park...
...No, this isn't a story about influence-peddling and sleazy deal-making fifteen years ago in Arkansas...
...Sessions wrote the letter to Dole June 28, flatly exposing the White House cover-up...
...In a July 2, 1993 letter from Janet Reno to Mack McLarty, Reno revealed that Margolis was the senior DOJ official who ensured "that the [White House Review] is in substance consistent with the FBI's report concerning its dealings with the White House on this matter...
...It wasn't until they read the papers over the next few mornings that they realized they were accused criminals...
...According to UltrAir officials, the IRS agents said the visit was prompted by newspaper articles that had raised allegations against the company...
...x. o minimize the impact of the disclosures, the report was T released late in the afternoon of Friday, July 2. Advance copies of the report were not available...
...There were several additional contacts between Kennedy and the FBI once the decision to audit was made...
...This activity by AOA does, however, indicate a decidedly anti-Clinton philosophy which seems, on the surface, to be inconsistent with the current administration...
...Watkins and Cornelius passed on their allegations about the travel office, though they likely held back the fact that both Cornelius and Thomason had direct interests in disseminating the allegations...
...He had personally authorized the firings and the attempted cover-up...
...Two very senior agents in the criminal division, Howard Apple and Pat Foran, went to the White House to meet with Kennedy following what Apple described to the GAO as a "nebulous and cryptic" telephone call from Kennedy...
...Martens, his business partner...
...This was a lie, part of the official line being fed to the press...
...W atkins was born in Hope, the same town as Bill Clinton and Mack McLarty, and like McLarty is said to be a boyhood friend of the president's...
...For one, it refers to Martens in the third person...
...Dole placed the text of the letter in the Congressional Record on July 14, 1993...
...There is ample reason to question the objectivity of the GAO's findings...
...According to the Washington Times, by the time Clinton locked up the nomination, Carney was already secretly analyzing the White House travel office operation...
...continued on page 71) The American Spectator June 1994 37 DAVID BROCK (continued from page 37) Though there is no conflict issue for Watkins, the partnership is yet another sign of his ties...
...I was briefed by Peat Marwick during the process, sir...
...Who authorized him to threaten the FBI with transferring the investigation to the IRS unless the agents took prompt action...
...Why Hillary...
...and if he was in fact a special government employee, as his office, telephone service, and duties at the White House indicate, all the elements of the criminal statute would have been met.8 The conduct of Hillary Clinton also deserves serious review...
...But by then, media interest in the story had waned, and its contents have never been written about...
...According to its president, Richard Millinor, UltrAir had no corporate existence before June 1992...
...Within a few days of the Thomason-Clinton conversation, Thomason called Watkins and told him of the corruption rumors he'd heard...
...36 The American Spectator June 1994 Review...
...Take, for example, the case of Harry Thomason...
...Watkins carbon-copied only Hillary on this memo, placing the "cc" designation prominently across the top of the first page, yet another sign that Hillary was privy to the firings before they occurred, as well as to the plan to appoint 5 What Peat Marwick issued, in fact, was not an audit at all...
...who then brought Cornelius' s accusations to the Justice Department on May 14...
...On May 12, Watkins and Cornelius met with Thomason and Darnell Martens in the White House to discuss the situation...
...Though the arrangement was not disclosed in either the White House Review or the GAO audit, according to a 1992 report inin a little-noticed Arkansas Business article as saying that "World Wide is studying the possibilities of opening an office in Washington, D.C...
...Even the White House Review had to come clean on this score, noting that Foster had persuaded FBI agent Wade to delay investigating until the audit could be churned out...
...He will need to explore fully the potential reasons for it...
...Also on the day of the firings, Darnell Martens, who now had White House access, called Penny Sample and told her she could begin arranging charters for upcoming presidential trips on a volunteer basis...
...In these conversations, Martens passed on "rumors" of corruption in the travel office...
...Contrary to the later White House spin that problems in the travel office cropped up in a routine audit in late spring...
...What was her knowledge of White House staff contact with the FBI...
...1993, the takeover of the travel office had been decided on the previous summer...
...The upshot was that after misusing the FBI once, the White House misused it again to deflect attention from the fact that Foster and Kennedy had politicized the criminal justice process...
...The Treasury IG released answers to Wolf's questions in April of this year...
...In reviewing the Kennedy call to the FBI, the White House Review noted that while contacts on pending criminal cases are barred, Kennedy was reporting a potentially criminal matter...
...By now, it was apparently already "investigating": At the request of the White House, the FBI has had preliminary contact with the White House and the auditors brought in to audit the White House Travel Office...
...Foster had devised the plan to cover up this initial contact with a phony audit, and the plan failed...
...That is, Cornelius was planted in the office to substantiate rumors that she not only had an interest in fanning but had helped originate in the first place...
...Collingwood had been especially close to Sessions, and it is plausible that in late May he was pliant in the face of White House demands on Travelgate to bolster Sessions's position...
...None raised an objection," the Review reported...
...had to quickly be abandoned...
...These charges, too, appear unfounded...
...As for the travel office, the GAO found the same evidence of poor management as had KPMG—lack of documentation for the bidding process, ledger entries rather than vouchers for checks written to cash, and the like...
...Justice can't investigate independently...
...T he Justice investigation has been open for an extraordinarily long time...
...Beyond that, we are not in a position to comment...
...Foster's suicide choked off the congressional inquiry and completely quelled GOP demands for a special counsel...
...Further, this activity had to have been operated with the full knowledge and cooperation of the White House Travel Service Department since all flights dealt with following President Bush...
...World Wide still banks with Worthen and until 1990 had its corporate offices in the Worthen Bank Building...
...Was this a message to Sessions that he could hang on if he played ball on the travel office...
...The Martens memo was faxed from his Cincinnati office...
...Foster had personally met with FBI agents in the White House to spur an investigation...
...We anticipate receiving the final report of the auditors soon and will analyze their findings to determine the next steps in the investigation...
...If Thomason's company, TRM, was seeking White House business, as the GAO concluded...
...This became necessary when long-standing FBI policy against confirming or denying the existence of an investigation was violated by Myers, on Watkins's instructions...
...Thomason has countered that Caudle has misrepresented his role in Travelgate...
...improper contacts with fridependent law-enforcement agencies...
...In all likelihood, Margolis also drafted the Heymann letter to Podesta that was used by the White House as political cover...
...efforts to deceive the press...
...and who met with Kennedy, Patsy Thomasson, and Larry Herman at the White House once more on May 15...
...The press corps was often billed for trips by estimate, with no later reconciliation, though media organizations were not known to complain about the arrangement...
...The campaign, which spent an estimated $100,000 a week chartering planes, also tried to force the Secret Service to pay immediately...
...That determination was made on May 14 [by D0.1], one week before the FBI received a copy of the auditor's report...
...Carboning the first lady in this bold way suggests the two had a quite close relationship, and Watkins was willing to call in some chips for Carney...
...If the review really mattered at all, why not wait for the final report, which was due that Wednesday, rather than act on a draft...
...Watkins confirmed Sessions's statement that the FBI had White House contact that day...
...It hardly seems possible that none of the lawyers involiied realized that White House encouragement of a criminal investigation would set off alarm bells if it were ever disclosed...
...If Justice is "coordinating" criminal investigations with the Hill, there may be a much broader scandal brewing...
...Gangloff [then the acting chief of the department's public integrity section] after being briefed by SSA Carl...
...But the Times suggested that the Thomasons' television shows may have picked up the tab for some of these services, a possible violation of federal election laws limiting corporate contributions...
...a review conducted to deflect, not resolve, legitimate questions...
...According to the Sessions letter, Gangloff made the initial determination to open a criminal investigation based solely on Cornelius's representations, as relayed by the FBI's Tom Carl...
...By 1993, World Wide was the twenty-fourth largest U.S...
...Margolis is also one of two Justice Department lawyers who were present during the July 22 search of Foster's office...
...and Jack Keeny, a deputy assistant attorney general...
...Cousin Catherine was told to come up with a rationale for gutting the current travel office and assuming the same role in the White House that she had played in the campaign...
...Watkins denied this to the GAO...
...The key change in a second statement issued by the FBI on May 20 was the presentation of the audit process—rather than the Cornelius allegations—as the predicate for the investigation: At the request of the White House, the FBI has had preliminary contact with the White House and the auditors brought in to audit the White House Travel Office...
...According to associates of the seven, if they had been allowed to quit with dignity—which would have meant little more than two weeks' notice and a perfunctory going-away party in the Indian Treaty Room—they would have left without a fuss...
...one hundred for $250...
...The IRS refused to release information on the questions of how the audit was initiated and whether it deviated from standard practice...
...Watkins's ad agency produced many of the advertising spots for Clinton's gubernatorial campaigns...
...That may be so...
...With this, Foster drew the FBI and the Justice Department into the plan to get rid of the travel office workers by ginning up a criminal probe...
...A pparently already realizing the terrible impropriety of having asked Kennedy to call on the FBI on May 12, the next day Vince Foster, consulting with Watkins and Patsy Thomasson (who works under Watkins as an assistant to the president and is no relation to Harry Thomason), came up with a strategy to conceal the activities of White House staff vis-a-vis the FBI, while at the same time hiding the involvement of Clinton friends in the travel office firings: a two-pronged cover-up...
...In 1979, Stephens Inc...
...that day...
...the government, of course, never pays on time, and this was an early source of friction between the Secret Service and the Clinton people...
...Actions of senior White House staff were described as "mistakes in judgment, mistakes of inexperience...
...Cornelius estimated that on a travel budget of nearly $6 million a year, this would yield a $210,000 rebate...
...In a Senate subcommittee hearing March 25 of this year, GOP Sen...
...The Hatch Act was on the floor and we were going to launch a broadside about the politicization of the FBI and abuse of power," said one GOP Senate aide...
...Ix...
...Watkins, his wife and family members, and the Watkins Company, a closely held consulting firm he owns, and Carney and her family and her travel agency, all have been financial supporters of Clinton's candidacies over the years, typically "bundling" their contributions to end-run campaign finance laws...
...That threat seemed to move things along...
...In 1992, the Clintons became indebted once again to David Watkins, who helped arrange the campaign's $3.5 million bridge loan from his former employer, Worthen National Bank...
...In the mid-1970s, Watkins, who ran the Worthen-owned Advertising Travel Weekly, World Wide did the Clinton campaign a big favor: it agreed to bill the campaign based on the amount of money it was taking in, rather than on the money it was spending...
...The plan to replace the White House travel office with a hand-picked travel agency, World Wide Travel of Little Rock, was hatched shortly after the 1992 election...
...This portion of the memo, titled "Research Information," hardly seems intended only for Martens's files...
...AOA wanted the flights to be considered a contribution but this was denied by the FEC/DOT subsequent to a complaint initiated by David Buxbaum of the Clinton/Gore '92 Committee...
...Watkins invited Hillary to join a group of prominent Arkansans to apply for a license through the Federal Communications Commission...
...Myers was "unwise" to trust Watkins's talking points...
...B etta Carney and David Watkins enlisted 25-year-old Catherine Cornelius, a fellow Arkansan who served as the liaison between the Clinton campaign and World Wide and whose great-grandmother was a sister of Clinton's great-grandfather...
...Box 549, Arlington, Virginia 22216-0549...
...Before answering or even seeing any written questions, Thomason's lawyer Bennett responded with a hand-delivered letter containing a preemptive libel threat...
...Ultra Air [had] yet to file an income tax return for calendar year 1992 [it had been granted an extension...
...Did he know of interest "at the highest levels of the White House...
...But this was still not enough to allay press suspicion that there was no basis for FBI involvement other than strong-arming by the White House...
...In one meeting, Kingsbury huffed that the fired travel office employees "are better off' because five of them were given other jobs and the other two "enjoy full federal retirement and all of its benefits...
...Associate counsel William Kennedy joined Foster in a second meeting with the trio...
...As for the other five workers, the White House Review concluded that the charges against them were baseless...
...Based on GAO's interviews with the FBI agents, and our interviews with the IRS employees, the Nashville FBI agent was not provided any material information concerning the taxpayer...
...A second question of undue influence involves the possible abuse of the investigatory authority of the IRS...
...Travel Weekly quoted Watkins as saying that "were it not for World Wide Travel here, the Arkansas governor may never have been in contention for the highest office in the land...
...Pressure from the White House and Cornelius's junior-league sleuthing led to a decision to open a criminal investigation...
...With no hard evidence of any wrongdoing by the current employees, Cornelius called Betta Carney and told her to prepare to send staffers to Washington to take over the travel operation, because the staff was about to be fired...
...No one in the White House, to my knowledge, violated any law or standard of conduct, including any action in the travel office...
...By comparison, allegations raised about Commerce Secretary Ron Brown, involving a tangled web of international financial transactions, were dismissed in a few months...
...Thomasson: "No, sir...
...Also on June 14, Dole called for a special counsel to investigate "this sorry episode of mistakes, misstatements and downright wrongdoing...
...Apple was clearly unimpressed, telling Kennedy he needed more information before deciding whether to investigate, according to the GAO...
...He said the memo in question was written by Martens, never mentioned Caudle, and was published months after Caudle had left AOA...
...If, as he later maintained, he put the CorneliusCerda briefing book "in a file and I never read it," why did he begin implementing its plans shortly after he received it...
...But in this case, there were no credible allegations—the investigation was being done because the White House demanded it...
...Though often identified as "career" employees, the Travelgate Seven, like most White House staff, served at the pleasure of the president...
...Later, as the White House flailed about trying to control the spin, Dee Dee Myers would say that TRM was not even in the business of brokering...
...Jerry McDowell...
...Under the federal rules of criminal procedure, it's a crime for a lawyer to divulge information disclosed in grand jury proceedings, which Margolis may have done...
...Justice is also stalling on an extensive FOIA request on Travelgate filed by the Landmark Legal Foundation...
...According to Wade and Carl, Kennedy indicated that the Travel Office was a matter of some urgency and that it was being followed at high or the highest levels at the White House," according to the Review...
...Interestingly, the GAO quotes Apple as saying he was told by Kennedy "that the matter was 'directed at the highest levels' of the White House...
...twenty-five for $75...
...Thus the investigation would have to be delayed until a middle step could be invented...
...The general principle set forth by the Carter administration and reaffirmed by each subsequent administration is that White House contacts with law enforcement agencies on civil or criminal investigations should go through the counsel's office and the contact should be made only at the highestlevels of the Justice Department (through either the attorney general or the deputy attorney general...
...In an interview in July 1992 with the Washington Post, Watkins said of the group, 'We were picking friends...
...He was advised that the FBI was only authorized to conduct criminal investigations...
...The Clintons were even more beholden to the Thomasons than to Betta Carney...
...The woefully inadequate White House Review did not escape the notice of Republican members of Congress, particularly Senators Dole and Bond...
...Apple said he told Kennedy that if normal procedure were followed, the matter would be referred to .the FBI's Washington Metropolitan Field Office or even the local police rather than involve FBI unit chiefs...
...The staffers say that sections of the GAO report were circulating in draft before key White House officials were even interviewed...
...On July 20, scrutiny of the scandal began to intensify...
...Send your order to: The American Spectator P.O...
...indeed, two aides from Watkins's office—deputy Brian Foucart and Jennifer O'Connor, a staff assistant—worked with Herman, checking back with Thomasson on their progress throughout the weekend...
...Though supposedly a volunteer, she diverted a $1,400 commission to her charter firm on the first flight she arranged...
...80 The American Spectator June 1994 findings...
...The GAO, however, found that Thomason "made inquiries about obtaining Travel Office business on behalf of Mr...
...Though hailed in the press as remarkably self-critical, the White House Review, headed by McLarty and OMB Director Leon Panetta, also found no wrongdoing by the White House or Thomason or Martens, only "mistakes," "inappropriate" actions, and unfortunate "appearances...
...The Review described Martens as merely being "interested in helping Air Advantage," and he and Thomason have main32 The American Spectator June 1994 tained that they were not seeking business for themselves...
...Though he would later tell White House investigators that he never intended "to review or modify the current White House travel operation in the near term," all the documentation belies his denials...
...6 Indeed, it was during this period in July that Vince Foster went shopping for a Washington lawyer to represent him in what he believed would be inevitable congressional inquiries into the matter...
...Personal papers of the president can't be withheld on grounds of executive privilege...
...No other employees were adversely affected...
...Martens's firm, Thomason, Richland & Martens (TRM), was co-owned by Martens...
...The FCC, however, decided to award the franchise by lottery and the Watkins group lost out...
...We anticipate receiving the final report of the auditors soon and will analyze their findings and conduct appropriate investigation...
...Though he received no formal appoinment, he may have been a "special government employee," and thus subject to conflict-of-interest laws...
...Myers said that after the FBI sent a press statement to the White House on May 21 'for guidance,' she asked Mr...
...Despite press accounts focusing on the conniving Cornelius, Watkins orchestrated events...
...Martens charged that UltrAir flew the press corps on "a virtually exclusive basis...
...who is retained, designated, appointed, or employed to perform with or without compensation, for not to exceed one hundred and thirty days during any period of three hundred and sixty-five consecutive days, ternporary duties either on a full time or intermittent basis...
...GOP demands were taken quite seriously by the White House...
...The case will be heard in U.S...
...Shortly thereafter, Thomason brought the matter up with Clinton himself, telling the president in late March that he thought there was "trouble" in the White House travel office...
...As security stood by, the humiliated seven cleared out their belongings and were escorted from the building like accused criminals...
...A millionaire, Watkins has owned an advertising agency, a music company, a cellular telephone company and two telecommunications businesses...
...Clinton appointed Watkins's father Henry Grady Watkins III to the Arkansas Pollution Control and Ecology Commission, a local version of the EPA with broad powers touching on virtually every aspect of the state's economy, from land use to air and water quality...
...0 n May 19, 1993, David Watkins, assistant to the president for management and administration, met with the seven staffers of the White House office that arranges air travel for staff and charters planes for the White House press corps...
...It does not mention Whitewater at all...
...Fortunately, there's a special counsel already in business, Robert Fiske, and he is investigating the Foster death as part of his mandate...
...McLarty decided that no action would be taken until the completion of the Peat Marwick review," according to the 4 Thomasson has learned how to respond to questions with answers that are technically correct but misleading nonetheless...
...it was drafted as a letter to Bill Kennedy...
...The specter of White House pressure for a criminal probe had thus been raised by the White House itself...
...Though none of the press accounts picked up on it, the missing piece of the puzzle was disclosed by the GAO...
...Thomason and Martens refused to be interviewed...
...they are not definitive...
...Foster had told Watkins to doctor the White House media talking points, only to have Dee Dee Myers spill the beans accidentally...
...The charter account is worth about $40,000 a day, and a commission would go to the brokers off the top...
...In other words, how high up did this shocking politicization of law enforce6 None of the implicated players consented to be interviewed for this article, despite repeated oral and written requests...
...At the time of Foster's death, the media assumed that such a "minor" issue could not have possibly been a factor in the suicide...
...But Reno's interests may conflict with full disclosure, since the conduct of her subordinates and perhaps herself is in question...
...The Heymann letter was dated July 1, the day before the Review was released...
...Eventually, Nussbaum and Hubbell would be bounced out of the administration, and Kennedy would be hobbled...
...The White House later said this was a "mistake," and the money was repaid...
...The publication noted that the travel office's use of large amounts of cash to pay bills, if received and unreported by UltrAir as required by law, may have raised eyebrows at the IRS...
...See page 29 for a complete listing of reprints available...
...orld Wide Travel was originally owned by the W Worthen Bank, which is in turn controlled by the all-powerful Stephens family...
...Tactics such as unannounced visits and administrative summonses are usually reserved for cases when the taxpayer resists polite requests to provide information...
...Interestingly, Clinton aide Jeff Eller, who had a "close personal relationship" with Cornelius, according to the White The American Spectator June 1994 31 House Review, was already telling reporters in December 1992 that there were unspecified "problems" in the travel office and that he would not be surprised if some people got fired...
...Cornelius proposed that the White House short-circuit regular procedures and select the private contractor itself...
...He is a partner with Hillary in Value Partners, an investment group that "sold short" on several health care stocks after the Cantons took office and Hillary began making policy pronouncements in the area of health care that may have driven down the value of the stocks she held...
...The question, then, is how the IRS was put onto UltrAir in the first place, and why they went after the company so fiercely...
...As luck had it, an auditor with political ties to the administration, Larry Herman of the accounting firm KPMG Peat Marwick, was already in residence in Vice President Gore's office, doing early work on the examination of government management that would come to be known as the National Performance Review...
...the only question was how to effect it...
...Yet the IRS does not usually investigate such crimes unless there are tax implications, and in the case of UltrAir there was no tax return to trigger an audit...
...Reno said she would continue to review the accusations and had reached no decision...
...This exactly reversed the sequence of what had actually happened...
...For instance, when Gangloff made the decision, did he know of the personal benefit to Cornelius and Harry Thomason...
...Late that day, Kennedy contacted FBI agent Jim Bourke for the first time...
...Aggressive nonfiler procedures [used against UltrAir], in the sense of physically going after the nonfiler, are usually only invoked in criminal cases...
...The IRS Criminal Investigator did not provide the FBI official with any material information...
...On May 15, according to Sessions, FBI agents Tom Carl and David Bowie, of the bureau's Washington Metropolitan Field Office, went to the White House "at the behest of Mr...
...The usual starting point for an IRS examination is a return...
...But it would have revolved around Foster, and no one wanted to pee on his grave...
...The stated reason for this omission was that the FBI and the Justice Department were conducting an investigation of the travel office and the White House interviews might interfere...
...Watkins called Foster...
...Individuals like the Thomasons are free to volunteer their services to campaigns on a virtually unrestricted basis...
...Emphasis added.] Regardless of who actually made the decision, the FBI and the Justice Department don't usually act so quickly in determining that a criminal investigation should be initiated—in this case, either on the very day of, or one day after, the first face-to-face meeting with White House officials...
...One has to wonder if the Clintons' oft-stated concern for "privacy" was not a factor in placing trusted aides in jobs where only they would know who slipped on and off Air Force One...
...From this reply it can be inferred that Kennedy and Foster had asked the FBI to do an audit, and that the FBI refused...
...We have to wonder about the appropriateness and timing of that remark and hope that it is not consistent with Department policy...
...This bar extends to "special government employees" as well, defined by the statute as: an officer or employee of the executive or the legislative branch of the United States Government, or an independent agency...
...Cornelius to head the re-organized office working hand in glove with World Wide Travel...
...The torn-up note the White House alleges it discovered in Foster's briefcase several days after the initial search of his office—a photocopy of which was publicly released only after a 48-hour delay—mentions Travelgate specifically in five of eleven lines...
...No mention was made of allegations of criminality or of an FBI investigation...
...The Nashville FBI agent spoke with four IRS Nashville employees: two Criminal Investigators, the Public Affairs Officer, and the District Disclosure Officer...
...Clearly, someone owed World Wide...
...There was some poor record keeping, but I'd be very surprised if there was anything else...
...In the few days she was on the job, Sample managed to get in hot water...
...Did she question the propriety of Thomason's actions...
...District Court in Washington...
...The agency reached its conclusion by contending that Thomason did not meet the three criteria required if an individual is to have the legal status of a federal officer or employee under the definition of those terms in title 5 of the civil service laws...
...Frank Wolf posed several questions to the Office of the Inspector General of the Treasury Department, which oversees the IRS...
...Compare his statement with the FBI's White House–massaged May 21 statement above: "The FBI did not use the report of the auditors to make a determination that sufficient predication existed to conduct a criminal use the report of the auditors to make a determination that sufficient predication existed to conduct a criminal investigation...
...On the afternoon of May 19, in response to many media inquiries, the FBI issued a one sentence statement: We understand that the results of the audit of the White House Travel Office will be referred to the FBI for our review...
...All of this bespeaks the need for a special counsel on Travelgate...
...Sessions seemed to reveal as much in his letter to Dole, who had asked what the FBI agents recommended to Kennedy as a course of action on May 13: "No course of action was recommended to Mr...
...El © The American Spectator/ All rights reserved...
...Cornelius had never really taken control of the office before the plan blew up in her face...
...the rather hostile quesThe American Spectator June 1994 79 tion-and-answer session that followed was yanked off the air...
...and the Justice Department (run, de facto, by her former law partner Webb Hubbell...
...There was no intent to benefit any individual or specific group," Foster wrote...
...Thomasson: "The process of reviewing the White House Travel Office was done by a group of staff from the White House as well as assisted by Peat Marwick for the financial side and for doing numbers...
...Cornelius sent Watkins a detailed memo dated December 31, 1992, arguing that "privatizing" 'the White House travel office would let Clinton fulfill his campaign promise to reduce White House personnel and make it easier to get discounted airfares...
...Foster's death, then, will not have aided the cover-up after all...
...But even if it is, troubling questions about administration involvement remain...
...Cornelius failed to point out that the remaining 6.5 percent (or $390,000 a year) would go right into World Wide's coffers...
...According to a lawyer for one of the five exonerated employees, a GAO auditor called requesting an interview, and he was told to submit written questions...
...What Treasury didn't disclose is that the agent also acted after numerous contacts with the White House and senior DOJ officials...
...William Clinger, Henry Hyde, and Dick Armey wrote: "It is particularly disturbing to know that one DOJ employee has told congressional staff that criminal charges would probably be filed against one or more of the former Travel Office employees...
...He was brought in by Philip Heymann, but had the political connections to be kept on by Jamie Gorelick, Heymann's successor...
...Sample arrived for work at the White House on May 20, and arranged one charter before she was told on June 1 to leave...
...During White House briefings on Travelgate, reporters appeared positively baffled by the charge that they were given free trips...
...Watkins was also contradicted on this point by Gore's office, which told the GAO that the audit was not conducted under the auspices of the NPR...
...Hollywood producer Harry Thomason, a longtime Arkansas friend of the Clintons...
...Once the words "criminal investigation" were extracted from the bureau, the White House released copies of the press guidance to reporters as an official press release from the FBI, again contravening FBI policy, which says a guidance is to be used only for oral briefings...
...Though the GAO ignores these conversations, she had asked both Vince 'Foster and Mack McLarty in separate meetings that day what was being done about the "problems" in the travel office...
...But Martens's major indictment was political, playing to a now well-established anti-Republican paranoia in the Oval Office: Airline of the Americas is a Republican-operated charter airline...
...Indeed, the GAO reported that on May 14, in a call to update Hillary on the audit, Watkins told the GAO that Hillary "urged that action be taken to get 'our people' into the Travel Office . . ." Though Hillary declined to be interviewed by the GAO, in written responses she maintained that she "does not recall this conversation with the same level of detail as Mr...
...Reno wrote to Brooks the next day pledging the same...
...A career prosecutor, Margolis is a top aide in the office of the deputy attorney general, who oversees the criminal division...
...Martens wrote a memorandum for his files about the Dale telephone call that indicates he was in fact seeking White House business for TRM.2 Martens referred to an interest in "earning" White House business for TRM and conveyed his frustration that Dale "refuses to discuss business opportunities with legitimate charter operators...
...The far more disturbing aspects of the incident involving members of the Clinton administration and its political supporters may not be getting similar scrutiny, despite Clinton's and Reno's assurances to Congress...
...The White House Review portrayed the decision to investigate as an indepen34 The American Spectator June 1994 dent judgment reached by the FBI: "Following this conversation [with Cornelius]," the Review reported, "[Wade and Carl] determined there were grounds for further investigation," On May 14, the day after this determination, Carl briefed three Justice Department lawyers: Joe Gangloff...
...But in a comedy of errors, neither Watkins nor Jeff Eller could find Myers in time: "When Watkins returned to her office before her press briefing, he learned that Myers, shortly after noon, had taken a press call and disclosed the FBI inquiry in response to a reporter's question...
...Margolis—who was criticized in 1986 for not seeking an indictment against Teamsters president Jackie Presser, a Reagan supporter—had his fingers in both Travelgate and the botched Foster suicide investigation...
...The actual figure was 66 percent of the White House charter business, and several charter operators told me the White House business was competitively bid...
...After initially expressing a preference for agents to accompany the Peat Marwick team, FBI agent Wade agreed with Foster and Kennedy to wait for the completion of Peat Marwick's review," the Review said...
...Specifically, it is the full story of Travelgate...
...In other words, the next time the White House wanted to exert influence on a potential or pending case, it wouldn't get into the fix it found itself in with Travelgate...
...The FBI agents told the White House lawyers that insufficient grounds existed for an investigation...
...Authorization [for subsequent White House-FBI contacts] was based on previously detailed discussion within the FBI and the decision by DOJ that sufficient predication existed to initiate a criminal investigation...
...Martens had chartered "Air Elvis," the airplane that transported Clinton and his aides during the presidential race...
...It's a story about influence-peddling and sleazy deal-making one year ago in the Clinton White House...
...Late Saturday, we briefed the FBI on these findings and began planning a new system to replace the old one," he wrote...
...3 Martens went back to Thomason and held at least two conversations—one on the telephone, and one in person in Los Angeles—complaining of Dale's reaction...
...Cornelius, who had returned to her home to retrieve the travel office documents, was then summoned, and she told the FBI of a small amount of checks made out to cash that were not accounted for and unsubstantiated stories about kickbacks...
...The terms "officer" and "employee" are not defined in those laws...
...to handle travel plans for Clinton's staff when he becomes president," arrangements that had historically been handled by the White House travel office...
...What you had was sloppy accounting," said one person familiar with the operations of the office...
...ten for $35...
...After the election, Thomason helped choreograph the Clinton inaugural and consulted on staging presidential events...
...In 1992, the Thomasons went to extraordinary lengths to make film editors, cameramen, make-up artists, and wardrobe people, as well as studio facilities and equipment from their TV shows, available for Clinton campaign videos, according to a recent report in the Los Angeles Times...
...When discussing the statements made by Kennedy to the FBI, the report said "such comments should not have been made...
...No one in the White House was fired or even seriously disciplined though the tacky Thomasons seem to have been banished...
...In a February 24 letter to Reno, Republican Reps...
...There has also been at least one leak regarding the travel investigation from a senior level in Justice, which raises questions about whether the investigation has been compromised...
...The loan, based on funds the campaign was expected to bring in, was critical to Clinton's candidacy...
...Meanwhile, a criminal investigation of the travel office by the Justice Department's Public Integrity Section continues...
...Why was Hillary Clinton, and not the president, briefed on decisions involving the travel office...
...Those talking points described the dismissal as the result of a routine review conducted as part of the Vice President's National Performance Review," the White House Review said...
...94 The American Spectator June 1994...
...I. B y now, the plot lines are familiar: abuse of government power to benefit campaign contributors...
...B ut four days before the Review was released, William Sessions, then the embattled director of the FBI, painted a different picture in a letter dated June 28, 1993, sent in response to inquiries from Senate Minority Leader Bob Dole...
...And it places in sharp relief the possible reasons behind deputy White House counsel Vincent Foster's suicide last July...
...The Justice Department may have become a bottomless hole into which such politically sensitive matters as Travelgate are thrown, so that the administration can hide behind perennially "ongoing investigations...
...Meanwhile, both Watkins and Carney forged relationships with Mack McLarty, now White House chief of staff, who became chief executive officer of the Stephens-owned Arkla Gas Company in the early 1980s...
...The GAO found no evidence of criminal wrongdoing in the office...
...Watkins quickly named both Cornelius and Cerda to his White House staff as assistants, with the apparent intention of moving them to the travel office at a propitious moment.' While the authorship of the memo creates the appearance that Cornelius was initiating the plan, Cornelius told GAO auditors that Watkins requested this memo and a subsequent one...
...The group made more than $2 million on the sale...
...Nonfiler procedures cannot be invoked before a return is due, including extensions, unless the situation meets the requirements for a jeopardy assessment . . In UltrAir's case, the IRS did not go so far as to make a jeopardy assessment...
...Watkins made them surrender their White House passes and ordered them off the premises within an hour...
...But Watkins, Cornelius, and Thomason did not have the ability to execute the purge and cover it up...
...The document envisioned giving Clinton loyalists control of all White House travel functions, including keeping the manifest of Air Force One—Watkins at the helm, with the two "co-directors of travel," Cornelius and Cerda, working under him...
...Beyond that, we are not in a position to comment...
...In an attempt to head off hearings and a special counsel, Clinton had written on June 13 to Chairman Jack Brooks of the House Judiciary Committee, pledging a full and independent investigation of Travelgate by the Justice Department...
...the money would otherwise have been only a ledger entry in accounts receivable for weeks...
...This followed the release last June of a heavily redacted investigative report that the sinister agency produced itself—a useless two-inch stack of mostly blank paper with a single black line running diagonally across each page...
...government, including the IRS, on notice that there was a "problem" in the travel office and that the White House had a keen interest in the case...
...and Foster told Watkins to call Hillary...
...The talking points also disclosed the White House contacts with the FBI, just the thing the audit was designed to hide...
...If he never intended to modify 1 Both Clarissa Cerda and her brother Jose Cerda work in the White House...
...In early February, he began to make discreet inquiries about the travel office...
...The National FBI Official then contacted a Nashville, Tennessee FBI agent and asked him to make an investigative inquiry with local IRS officials...
...In response to written questions from The American Spectator, Thomason's Washington super-lawyer, Robert Bennett, said: 'There have been no violations of campaign laws...
...The Review, however, did not mention certain FBI–White House contacts divulged by the Sessions letter, which Sessions said was reviewed by Justice...
...The review said Gangloff "raised no objection" to the decision...
...Additional revenue would be generated through a rebate scheme in which 3.5 percent of the agency's 10-percent commission on tickets (which the airlines had kept under the old system) would be rebated to the White House Travel Account...
...McLarty probably didn't know that Cornelius had already told World Wide to come to Washington...
...The White House also had to backtrack on the seven firings.Director Billy Dale, who had a sterling reputation with the press corps in his thirty-one years in the travel office, and the assistant director, Gary Wright, filed for retirement...
...now, the third-ranking official, Associate Attorney General Webster Hubbell, was included as well...
...Watkins was involved in a second partnership with Hillary, one that has raised conflict-of-interest questions for the first lady...
...Foster had kept Hillary in the loop by instructing Watkins to keep her briefed...
...The travel office people then locked up the files on her, making it impossible for Cornelius to return the papers...
...According to Republican staffers in the House, Kingsbury betrayed a bias in briefings on the progress of the GAO travel audit this spring...
...The FBI was uncomfortable with this procedure, but acquiesced...
...Both Justice and OGE have applied a functional test in determining special government employee status in the past, and the descriptions of Thomason's activities at the White House—attending meetings, reviewing employees' performance—appear to meet that test The American Spectator June 1994 81 DAVID BROCK (continued from page 81) Wright, and Thomason would conveniently be unavailable for the GAO...
...But Travelgate remained covered up...
...All the memos referred to in this article were released as exhibits to the White House Review...
...World Wide required journalists to charge their tickets in advance, and made sure that those funds were wired back into the campaign's coffers within a few days...
...Both Margolis and the Conyers staff could be said to have an interest in seeing indictments handed down, a development that would be seen as vindicating the administration...
...On February 22, Bernard Nussbaum had issued a memo reiterating the Bush administration's guidelines that inquiries on pending criminal or civil investigations must go through the attorney general or the deputy...
...Otherwise, Kennedy warned, he would call in the IRS...
...By disclosing the FBI investigation on May 19, and leaking other details to the press, the White House at least indirectly and improperly—put all of the law enforcement agencies of the U.S...
...The agents had been dispatched from the Nashville IRS District Office to investigate allegations of bribery and kickbacks in connection with the White House charters and they produced an administrative summons for all of the company's financial records...
...7 A sixth line, "the public will never believe the innocence of the Clintons and their loyal staff," could very well have been another reference to Travelgate...
...In the opening paragraph of the memo, Watkins linked the audit to Gore's National Performance Review ("We placed the Travel Office at the front end of the review...
...Carney made well over $1 million as the Clinton presidential campaign's travel agent, in a contract arranged on a noncompetitive basis by Watkins, who by then was the deputy manager and chief financial officer of the campaign...
...who met with Kennedy, Foster, Watkins, and Cornelius at the White House...
...Harry Thomason is from Hampton, about 60 miles from Hope...
...Unless the audit was intended only to conceal that the White House was the source demanding a criminal investigation, there was no legitimate need for an audit, since the matter had already been raised to the level of potential criminality...
...Kennedy's reference to the IRS "could have been interpreted as an ultimatum, even if that was not intended...
...They laid out lots of cash to get reporters where they needed to go, including tipping for them...
...It gives the lie to Bill Clinton's post-Whitewater defense that he has never been accused of abusing the office of the presidency...
...Against this backdrop, Watkins's role in Travelgate is easier to understand...
...But the foregoing reconstruction should show that, in addition to other problems and worries that may have been weighing on his mind, Travelgate wasn't a minor issue for Foster after all: Foster had instructed Kennedy to call the FBI...
...It turns out that the sense of urgency in the White House on May 13—the day Kennedy gave the FBI fifteen minutes to jump—was at least partly due to Hillary's clicking her heels...
...The GAO also found the FBI's actions "consistent with normal procedures"—a laughable conclusion, considering the White House's highly unusual efforts to shape FBI press guidance...
...The more serious charges of kickbacks and embezzlement were not backed up in the Review, which found only some poor record keeping and clerical errors...
...That month, Cornelius and representatives from World Wide met in Little Rock with Watkins (now a transition official) to discuss strategy for World Wide's takeover of the travel operation...
...If he never intended to review the operation, why did Cornelius's January 26 memo contain explicit descriptions of her discussions with him on the matter...
...Shortly after the campaign, Carney's agency was rewarded with the Democratic National Committee's travel business...
...As for the current travel operation, the GAO found that promised accounting and management procedures were not in place ten months after the firings...
...Hillary put up $2,014 for a 2.5 percent interest in the group...
...An extensive examination of the issue by the authoritative publication Tax Notes concluded: Several former IRS executives called the visit highly unusual...
...Recall that on May 12, Thomason and Martens had met with Watkins—and then Watkins told Cornelius to call World Wide with news of imminent firings...
...The next morning, May 13, Bourke called Kennedy, who demanded to know—"within 15 minutes"—what the FBI was going to do...
...But the very asking of thequestion seems incriminating: Why would Stephanopoulos suspect that, of all the thousands of travel companies in the country, it was Thomason's that stood to profit...
...Associates, Inc., became a major client of Carney's, and vice-versa...
...When members of the press fly on a candidate's chartered aircraft, the campaign bills them a pro-rated fare plus 10 percent...
...Hillary, unlike the president, could be compelled to testify before Congress...
...One might even say pastime, for a curious aspect of the affair is why the White House didn't simply obtain the staffers' resignations without going to the trouble of smearing them as crooks...
...Kennedy does not recall making this statement, but does recall indicating that his superiors—Foster and Watkins—were looking over his shoulder...
...For another, Harry Thomason later had it faxed to Watkins as factual evidence against Dale's operation...
...In short, does Gangloff have an interest in how his division's investigation comes out...
...According to his financial disclosure report, Watkins had assets in Value Partners valued between $100,000 and $250,000 in 1992...
...Despite the self-serving nature of the Cornelius allegations, the GAO concluded that the FBI had acted in accord with the attorney general's guidelines on criminal investigations, which require a "reasonable" indication of a federal crime before an investigation can be opened...
...Apparently the records were too disorganized to do a formal audit...
...According to sources familiar with it, the concentration appears to be on Billy Dale and Gary Wright...
...Note that Treasury says only that the IRS passed no "material" information on to the agent "regarding the taxpayer...
...In a third statement issued later that day, the FBI was dragged in a bit further...
...Congressional sources who were briefed by Treasury on the report say that the FBI agent referred to is supervisory agent Tom Carl—the agent who had been told by Kennedy of high-level White House interest in the matter...
...The note also said "the press is covering up the illegal benefits they received from the travel staff," and "the GOP has lied and misrepresented its knowledge and role and covered up a prior investigation...
...The five were quickly re-hired by other government agencies and informed that they were not targets of any criminal investigation, and McLarty apologized for "insensitive" treatment...
...With Foster's death, Hillary's iron triangle began to crumble...
...if he participated "personally and substantially" in events leading up to the firing of the travel office workers...
...That appeared to be a tightening of the restrictions...
...What came next was a reprise of Rose Law Firm days, where Foster had been the brains and Kennedy had gained a reputation as the firm's bully, its bad cop...
...In a normal audit, the IRS calls first, makes an appointment for an agent to visit, and requests documents that it needs to examine...
...It wasn't until they read the papers over the next few mornings that they realized they were accused criminals...
...The gang of four apparently pushed Collingwood to say that the FBI had determined grounds for a criminal investigation...
...V. H illary Clinton had seen to it that such a frightening abuse was possible by constructing an iron triangle at the outset of the administration: the White House...
...Watkins—the key player in Travelgate, and, strangely, the only one to have been spared press scrutiny—told the startled group, many of whom had served for twenty years, that they were summarily fired...
...Sessions revealed to Dole that twice on May 14 Kennedy called Wade, "provid[ing] additional information [on the] audit being conducted at the Travel Office and discrepancies being found by the auditors...
...Comments like these risk creating the perception that the FBI is being improperly pressured...
...She put out the word that some travel office workers were living above their means, implying that funds were being embezzled or kicked back from the charter companies...
...The agency also adopted an unusual billing policy for journalists...
...Foster told Hillary late Thursday that the audit would start the next morning...
...Peat Marwick did not consider whether this was in part the consequence of Cornelius's rifling through documents and removing some of them...
...The report contained this intriguing passage: In an interview conducted with GAO evaluators [GAO shared material with the IG], a National Office FBI official stated that after reading newspaper articles relevant to this matter regarding the IRS and a taxpayer, the FBI official contacted an IRS National Office Criminal 78 The American Spectator June 1994 Investigator to obtain some investigative information, if applicable...
...Yet this was a hair-splitting distinction, as even the White House seemed to recognize...
...The then-director retired and Billy Dale was promoted...
...The Clinton administration's own review, in fact, contains a long footnote regarding post-Watergate policy concerning White House contacts with the Department of Justice or the FBI on pending investigations...
...Sample's boyfriend, Darnell Martens, was president of a small Cincinnati-based aviation consulting firm that had done billing and consulting for Air Advantage...
...The manipulations of Thomason, Martens, and Cornelius were described in squishy language: they had "potential" personal and business interests and their actions "appeared to anticipate the removal of the employees...
...and Hillary's Rose law firm has represented Worthen for years...
...thus, not only were their rights trampled as accusations against them were publicized with no opportunity to respond, but the charges turned out to be false...
...without a return, there is nothing for agents to talk about...
...Once on the scene, she began eavesdropping on conversations...
...Instead, they would be ruined, Arkansas-style...
...How is it that a meeting on Saturday at the White House with Kennedy, Larry Herman, and two FBI agents doesn't count as "participating in the process...
...chargebacks to the press in order to insure good press coverage of Bush campaign appearances...
...On May 13, when Kennedy and Foster were meeting with top FBI agents, newspapers reported that Attorney General Janet Reno had tentatively concluded that allegations of Sessions's misusing government employees for personal purposes were not serious enough to warrant dismissal...
...Congressional sources say the Review was actually conducted for the most part by John Podesta, an assistant to the president, who is now, quite appropriately, chairing the daily Whitewater damage-control sessions in the White House...
...it says nothing about what the agent may have passed on to the IRS, nor does it rule out other information being passed on to the FBI...
...Mack McLarty signed off on the Foster-Watkins-Thomasson cover-up plan late Thursday, May 13...
...One cannot say with certainty where such inquiries would have led, but it is safe to say that Hillary Clinton, George Stephanopoulos, Bernard Nussbaum, Vince Foster, William Kennedy, David Watkins, Patsy Thomasson, Harry Thomason, and Darnell Martens, and senior officials in the FBI and the Justice Department, all would have been implicated...
Vol. 27 • June 1994 • No. 6
