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Correction to This Article
An April 28 A-section story article incorrectly reported that ABC News released a statement saying former deputy secretary of state Randall L. Tobias acknowledged using an escort service to provide massages, not sex. ABC reported his remarks on its Web site, then sent an e-mail with a copy of that report to The Post.
Rice Deputy Quits After Query Over Escort Service
Randall Tobias Oversaw U.S. Foreign Aid Programs

By Glenn Kessler
Washington Post Staff Writer
Saturday, April 28, 2007

Randall L. Tobias, the deputy secretary of state responsible for U.S. foreign aid, abruptly resigned yesterday after he was asked about an upscale escort service allegedly involved in prostitution, U.S. government sources said.

Tobias resigned after ABC News contacted him with questions about the escort service, the sources said. ABC News released a statement last night saying Tobias acknowledged Thursday that he had used the service to provide massages, not sex.

Tobias has been Secretary of State Condoleezza Rice's point man in an ambitious effort to overhaul how the U.S. government manages foreign aid, a key part of her "transformational diplomacy" agenda. Just two days ago, President Bush lauded Tobias for his work in the administration leading "America's monumental effort to confront and deal with the HIV/AIDS epidemic on the continent of Africa."

In an unusual statement issued at 5 p.m., State Department spokesman Sean McCormack said Tobias informed Rice "today that he must step down as Director of U.S. Foreign Assistance and U.S. Agency for International Development Administrator effective immediately. He is returning to private life for personal reasons."

Contacted last night at his home in the District, Tobias, a former chief executive of pharmaceutical giant Eli Lilly & Co., declined to discuss the circumstances of his resignation, saying he would "stick with the statement the State Department released today."

According to ABC News, Tobias said he contacted the escort service "to have gals come over to the condo to give me a massage" and that there had been "no sex" involved.

In a memo yesterday to the USAID staff, James R. Kunder, acting deputy USAID administrator, called the resignation "shocking news" and urged workers not to be "distracted from our developmental and emergency work."

Within minutes of McCormack's announcement, Tobias's biography was removed from the USAID Web site.

State Department officials declined to comment further on the reasons for Tobias's resignation.

"I'm sad today," said one person close to Tobias. "The president loves him and Condi absolutely loves him."

White House officials said Rice briefed Bush on the matter early yesterday before he met with Japanese Prime Minister Shinzo Abe. The president "was saddened and disappointed and wished Dr. Tobias and his family well," spokeswoman Dana Perino said.

Deborah Jeane Palfrey, who operated the escort service, was indicted on federal racketeering charges in February and has threatened to expose her high-profile client list.

Palfrey has contended that her escort service provided clients with college-educated women who engaged in legal, sexual game-playing for $275 per 90-minute session in their homes or hotel rooms. Prosecutors allege she ran a prostitution ring.

Palfrey's attorney, Montgomery Blair Sibley, said yesterday that he has been contacted in the past few days by five lawyers asking whether their client's phone numbers are on Palfrey's list of 10,000 to 15,000 customers from 2002 to 2006. Some have also asked about whether an accommodation can be made to avoid identifying their clients, which Sibley said he is not able to promise. ABC's "20/20" is mining that database of phone numbers, Sibley said, for a news report on the more notable of Palfrey's customers.

"I presume '20/20' crews running around with cameras has led to this flurry of activity," Sibley said. "That may cause some people to worry."

ABC reporters interviewed Palfrey last week, Sibley said, and asked her about specific customers by name. Sibley declined to identity them or speculate about Palfrey's clients whose identities may be revealed in coming days. He said that in many cases, he and Palfrey did not have the investigative resources to identify them from their phone numbers, but that ABC did.

ABC is grappling with the question of whether to air a report or identify some of those on the list. "We can't comment on ongoing reporting," ABC News spokesman Jeffrey Schneider said.

After a long career in the corporate world, including stints not only at Eli Lilly but also as AT&T vice chairman, Tobias joined the administration in 2003 to be the first global AIDS coordinator, with the rank of ambassador. He was responsible for a start-up program designed to spend $15 billion over five years, with the largest share going to 12 African and two Caribbean countries that account for roughly half the world population with HIV/AIDS.

Last year, Rice tapped Tobias to be the first director of U.S. foreign assistance, with the rank of deputy secretary, giving him the task of both running USAID and coordinating all foreign aid so that the delivery of aid would more closely follow the administration's policy goals. Under Tobias, for the first time, the State Department produced documents showing exactly how much aid was going to each country. He has proven so essential to Rice's plans that she had refused to let him leave even though officials said he had wanted to resign from the high-pressure job for at least six months.

The ambitious effort has been controversial on Capitol Hill, where Tobias's style and performance have come under attack. At a hearing last month, Rep. Tom Lantos (D-Calif.), chairman of the House Foreign Affairs Committee, accused Tobias of "tycoonitis," which he described as "people who come from the top of the corporate ladder who consider congressional suggestions, requests for information and participation in decision-making as intruding on their turf."

Staff writers Michael Abramowitz, John Solomon, Carol D. Leonnig, Howard Kurtz and Martin Weil and researcher Julie Tate contributed to this report.

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