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Hubbell Meetings With Riady Draw Probers' Scrutiny

By Susan Schmidt
Washington Post Staff Writer
Sunday, March 23 1997; Page A01

Three months after he left his Justice Department job in disgrace in 1994, Webster L. Hubbell scheduled a 7 a.m. breakfast meeting in Washington with an old friend just in from Indonesia, James Riady. A few hours after breakfast, Riady was at the White House, but not for long; Hubbell had his friend penciled in for a midday luncheon meeting at the elegant Hay-Adams hotel.

What Hubbell and Riady talked about, and what transpired in a flurry of meetings Riady had at the White House every day that week, are now at the heart of a mystery investigators are trying to unravel.

Hubbell's breakfast and lunch with Riady, the head of the Lippo Group, a multibillion-dollar Indonesia-based conglomerate, occurred on June 23, 1994. That same month, according to knowledgeable sources, a Lippo subsidiary paid Hubbell $100,000. Little work, if any, was expected from Hubbell in return for the money, according to a source familiar with some of Lippo's activities. Investigators want to know whether the payment was intended purely to buy his silence.

The meetings and the money are just part of the mystery surrounding Hubbell and Lippo.

John Huang, the former Commerce Department official and Democratic National Committee fund-raiser now at the center of a Justice Department inquiry into questionable campaign activities during last year's presidential contest, helped facilitate the $100,000 Lippo payment to Hubbell, according to the source with knowledge of the company's activities here.

Huang's attorneys say their client did nothing improper.

Huang attended several of the White House meetings with Riady that June, including the June 23 White House session that Riady sandwiched in between breakfast and lunch with Hubbell. Two days before that, Riady met with President Clinton, administration officials said. That was just one of 25 visits Riady has made to the White House since Clinton was elected, records show.

Clinton spokesman Lanny J. Davis said he did not know who Riady saw at the White House each time he visited, but on June 23 he was in the company of Huang and Mark Grobmyer, a Little Rock lawyer who has tried to put together several international trade deals, including some with Lippo. Davis could not confirm the reason for the White House visits by Riady and Grobmyer, but he said they appeared to be connected to a briefing on a think tank that studies the presidency.

Investigators in Congress, in the office of Whitewater independent counsel Kenneth W. Starr and on the Justice Department task force created to examine questionable fund-raising practices in the 1996 election campaigns are all trying to learn more about the payment to Hubbell from Lippo. The Justice Department task force is focusing specifically on whether China tried to influence U.S. elections through Lippo and other companies.

Prosecutors are using grand juries here and in Little Rock to examine the Lippo payment to Hubbell. They are also scrutinizing about a dozen other payments he received after leaving the Justice Department. The payments, which exceeded $500,000, dwarfed Hubbell's $123,000 Justice Department salary. They were also made at a time when he was under intense pressure to provide information about the Clintons to Starr's investigators.

Hubbell was forced to step down from his job as associate attorney general in April 1994 after his former colleagues at Little Rock's Rose Law Firm, where he was a partner with Hillary Rodham Clinton, accused him of stealing from his clients and the firm. In December 1994, Hubbell agreed to plead guilty to mail and tax fraud and pledged to cooperate in the Whitewater inquiry, cooperation prosecutors felt he never provided.

Last month, Hubbell completed an 18-month jail term, but Starr now wants to know more about the money Hubbell was paid before he entered the guilty pleas.

A key question, sources said, is whether Hubbell fully reported his income for that year to the Internal Revenue Service and disclosed it accurately to the court at his sentencing. What Hubbell told court officials then about his financial status is not publicly known. But the judge who sentenced Hubbell ordered that he make only $135,000 in restitution to the Rose Law Firm, far less than the $484,000 he acknowledged stealing.

Despite his widely publicized legal troubles in the summer and fall of 1994, Hubbell had no trouble signing up clients back then.

Besides the $100,000 he got from Lippo, Hubbell also received a portion of a book advance of undetermined size from HarperCollins around the time he went to jail.

He had other sources of income, as well.

Among those who have worked to help Hubbell financially were the lobbyist for Arkansas-based Tyson Foods Inc.; billionaire Democratic fund-raiser Ronald O. Perelman; Clinton friend and prominent Washington lobbyist Michael Berman; James C. Wood Jr., who would later become U.S. envoy to Taiwan before resigning this year amid allegations he pressed Taiwanese businessmen to contribute to Clinton's reelection campaign; then-U.S. Trade Representative Mickey Kantor, and a host of other wealthy friends and supporters.

While he appears to have been kept at arm's length by the White House after he left the Justice Department, his appointment logs and other documents for that period show he maintained close ties to the executive mansion. Entries from Hubbell's appointment book, for example, indicate that he played golf on one occasion with Clinton and on another with Vernon E. Jordan Jr., a friend and informal adviser of the president's, that he went twice to Camp David, and that he had many meetings and lunches with White House officials.

Hubbell is a likable bear of a man with a large circle of friends. Some of those who hired him or contributed to funds established to help pay his legal bills and put his children through school say they were motivated by nothing more than friendship and concern. Hubbell and his lawyers have refused to comment on the payments made to him.

Hubbell's ties to John Huang and James Riady date to his days at the Rose Law Firm. Rose represented Worthen Bank, owned in part by the Riady family. Huang and Riady, who served as Worthen's president for a time, lived in Little Rock during the 1980s, and there they got to know the Clintons.

Some of those who tried to help Hubbell in 1994 had direct or indirect ties to Lippo.

Kantor, the former U.S. trade representative who recently resigned as Clinton's secretary of commerce, saw Hubbell on at least four occasions in the summer of 1994, for example. Kantor's old law firm, Manatt, Phelps & Phillips, represents Lippobank in the United States. Kantor's former partner at the firm, White House aide for intergovernmental affairs John Emerson, met with Hubbell at least nine times while Hubbell was under investigation, records show. Emerson could not be reached for comment on his meetings with Hubbell.

Kantor has denied he was involved in arranging consulting work for Hubbell, but he said he contributed to an education fund for Hubbell's children and asked Texas businessman and Democratic Party contributor Bernard Rapoport to donate as well. Rapoport said he did so and also put Hubbell on his payroll for $3,000 a month for six months. Rapoport said he made the arrangement with Hubbell at the request of another major Democratic fund-raiser. Texas oilman and former DNC finance chief Truman Arnold has said he also hired Hubbell for an undisclosed amount.

Clinton has denied knowing anything about the Lippo payment to Hubbell. Earlier this month, Davis, the special White House counsel, said Clinton "never asked or suggested that anyone hire Webb Hubbell." But he added that Clinton thinks that "at some point he may have heard Bernard Rapoport or Truman Arnold, or both, who are old friends of the president . . . hired or intended to hire Mr. Hubbell."

Others who hired Hubbell were major supporters of the president.

Perelman's company, MacAndrews & Forbes Holdings Inc., confirmed that it hired Hubbell in April 1994 and employed him until December of that year. A spokesman for the company declined say how much Hubbell was paid or what he was hired to do. Like officials at several firms that hired Hubbell, MacAndrews & Forbes spokesman Jim Conroy said he was not authorized to say any more about Hubbell's employment, including who arranged for it or how it came about.

Perelman and his wife, Patricia Duff, have been major fund-raisers for Clinton in New York, and have contributed more than $750,000 to the Democratic Party since 1993.

Some of those who arranged for contributions or contract work for Hubbell have refused to talk about their involvement. Others have acknowledged that they were approached by friends of the Clintons who were concerned about their old friend from Little Rock. Time-Warner said it hired Hubbell to work on an antitrust issue at a fee of $5,000 a month in late 1994. Lobbyist Michael Berman, a close friend of Hillary Clinton, helped arranged the Hubbell deal with Time-Warner, which lasted several months. Berman has said he was acting on his own. He also gave $5,000 to a fund set up to help defray the cost of sending Hubbell's children through school.

Another lobbyist, Jack L. Williams, represents two more entities that hired Hubbell, the Pacific Telesis Group (Pac-Tel), a telecommunications concern, and the Mid-America Dairymen's Association. Officials at the dairy association did not return phone calls, but a source close to Pac-Tel confirmed that Williams had a role in getting Hubbell work with that firm.

Williams has represented a handful of big Arkansas firms in Washington, including Tyson Foods, where Clinton friend Jim Blair has served as legal counsel. Tyson spokesman Archie Schaffer said the company knows nothing about payments to Hubbell and did not make any.

Williams was convicted last week of making false statements in the federal probe of alleged favors by Tyson to former agriculture secretary Mike Espy. His lawyer declined to comment on the Hubbell payments.

Pac-Tel hired Hubbell in July 1994 to advise the company about a dispute between the Justice Department and the Federal Communications Commission that affected Pac-Tel's efforts to get into the long distance telephone market. Unbeknownst to Pac-Tel, a source close to the company said, Hubbell also went to work for Sprint, a company that wanted to get into local telephone markets and had interests counter to those of Pac-Tel.

Sprint officials have declined to comment on how they came to hire Hubbell, what he was employed to do or how much they paid him. They issued a statement saying only that they hired Hubbell in late 1994 and terminated his services when Hubbell entered his guilty plea in December of that year.

Among the other payments Hubbell received while he was under investigation:

The Los Angeles Airport Commission hired Hubbell in late summer 1994 to help ensure the U.S. Department of Transportation did not stop the city from making use of $58 million in airport funds. It paid Hubbell $24,750. A year ago, amid questions about the arrangement, former DOT inspector general Mary Schiavo found that Hubbell did not solicit the job and appeared to have done little work. She found Hubbell's lobbying consisted largely of one or two five-minute phone calls to the DOT general counsel. Hubbell was recommended to airport officials by the husband of then-Deputy Mayor Mary Leslie, a Hubbell friend and one-time Clinton administration appointee at the Small Business Administration under Erskine B. Bowles.

White House spokesman Michael McCurry has said Bowles does not recall knowing anything about Hubbell's work for the airport commission. Leslie did not return phone calls seeking comment.

The airport funding issue came to the attention of the White House, Schiavo found, landing at several points on the desk of senior aide and longtime Hubbell friend Bruce Lindsey. In response to questions posed by a congressional panel last year, Lindsey said he was unaware of Hubbell's role with the airport commission. Hubbell told Schiavo's office he never discussed the airport issue with Lindsey, but he said he did discuss it with his friend John Emerson, a White House official who worked on the issue with Lindsey.

The Consumer Support and Education Fund, a private foundation in California, paid Hubbell $45,000 to write a treatise on public officials who are tyrannized by a scandal-driven press. Lawyer John Phillips, who said he met Hubbell through Emerson and quickly became a friend, recommended commissioning Hubbell for the report. Hubbell did not write it. Phillips said he repaid the grant out of his own pocket.

SunAmerica Inc., a Los Angeles-based insurance company owned by big Democratic giver Eli Broad, hired Hubbell to generate public interest in a national policy to encourage saving for retirement. SunAmerica declined to disclose what it paid Hubbell. The Arkansan worked for the company in the 1980s on a case in which he had gotten to know another SunAmerica lawyer: Mickey Kantor.

Friends in Little Rock established three funds to help pay legal bills, education costs and living expenses for Hubbell's family while he was in prison.

Publisher HarperCollins agreed to pay Hubbell slightly more than $100,000 for his memoirs around the time he was going to prison, in August 1995, a publishing source said. Standard publishing practice is for authors to receive a third to a half of the advance on signing the contract. Because Hubbell failed to complete the book in time to be published before the 1996 election, HarperCollins canceled it.

Staff writer Paul Blustein and special correspondent Anne Farris contributed to this report.

© Copyright 1997 The Washington Post Company

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