Washington Post Staff Writer
Sunday, March 29, 1998; Page A08
When Paul Eckstein walked out of the Interior Department late in the afternoon of July 14, 1995, the lobbyist had bad news for the political consultant who hired him.
Not only was Interior Secretary Bruce Babbitt, Eckstein's old friend and law school classmate, unwilling to give Eckstein more time to make the case for the Hudson, Wis., Indian gambling casino he had signed up to promote, but the decision was already made. The casino would not receive the department's approval.
Eckstein said Babbitt had earlier promised him a chance to bring his tribal partners in for a final presentation, but wouldn't wait. The reason, Eckstein told political consultant Mark Goff, was intervention from White House deputy chief of staff Harold Ickes. Babbitt told Eckstein that the presidential adviser "had just called and said the decision had to go out today," according to Goff's recollection of the conversation he had with Eckstein right after his meeting with Babbitt.
Babbitt has adamantly denied that Ickes directed him to make the decision that day. But he acknowledged in Senate testimony last year that he invoked Ickes's name -- though only in an "awkward" effort to end the meeting.
What the interior secretary said that afternoon nearly three years ago, and why he said it, spurred the appointment earlier this month of independent counsel Carol Elder Bruce.
In determining whether Babbitt lied to Congress, Bruce will have to sift through the differing accounts of that meeting. Attorney General Janet Reno acknowledged that Bruce's investigation "will necessarily be based almost exclusively on Eckstein's recollection of a one-on-one conversation" -- but almost is an important qualifier, presumably referring to Goff. He said he had been interviewed by the FBI about his conversation with Eckstein, which occurred on their way to National Airport immediately after the session with Babbitt.
And the dispute is not just about the conversation between Babbitt and Eckstein. It is also about allegations that the decision to reject the casino was improperly influenced by the prospect of Democratic campaign contributions from tribes opposed to the project -- they later gave more than $350,000 -- and by pressures from White House and Democratic Party officials.
In her application to the court that names independent counsels, Reno said her preliminary investigation did not attempt to resolve "whether the underlying decision was criminally corrupted." But because the independent counsel might decide that issue needs to be explored "for evidence of a possible motive to lie," she said Bruce should have jurisdiction over "any potential criminal violations" in connection with the casino decision.
To do so, Bruce will have to reconstruct key events in the lobbying blitz that surrounded the Hudson casino application.
For his part, Babbitt has said he was "out of the loop" on the casino controversy, but he has defended rejection of the casino project as "the right decision" in view of strong opposition from surrounding communities and neighboring tribes such as the St. Croix. Career Interior Department officials recommended that the proposal be turned down, Babbitt said, and so it was.
Those who hired Eckstein have another view of why they were turned down. The chief promoter of the project, Fred Havenick, owner of a money-losing dog track in Hudson who saw a gambling casino as a way to start turning a profit, said Eckstein also told him about Ickes's supposed intervention. That news, Havenick said, was passed on the day after the meeting with Babbitt during a conference call that included Goff in Milwaukee, Havenick in Miami and Eckstein in Phoenix.
Their recollections, however, differ somewhat.
As Havenick remembers it, "The conversation was that Ickes wanted the decision out by sundown. And then Babbitt said, 'I know this sounds crass,' -- this is Eckstein reciting what Babbitt had said -- 'I know this sounds crass, but do you know how much is involved?' Then Eckstein said he said, 'I have no idea.' And he said Babbitt said, 'It's on the order of $500,000.' "
"I remember commenting later on his choice of words," Havenick, who has not been interviewed by the FBI, said in an interview. " 'Crass.' That word really got to me."
Goff remembers the word, too, but is uncertain "whether Paul was saying on his own, 'I know this is going to sound crass,' or whether he was quoting Babbitt."
Right after the meeting with Babbitt, on the way to the airport, Goff said, Eckstein also alluded to campaign contributions. "I asked him whether [Babbitt] said why we were being turned down," Goff added. He said Eckstein quoted Babbitt as saying, " 'There was too much money involved.' "
A law school classmate of Babbitt, onetime law partner, 1982 Babbitt campaign chairman and member of Babbitt's "kitchen cabinet" when he was governor of Arizona, Eckstein declined to be interviewed. He said he had given a deposition to lawyers for the Senate Governmental Affairs Committee Sept. 30 and then testified before the committee Oct. 30. Beyond that, he said, "I'm not commenting on anything."
In Washington, Eckstein has been portrayed by congressional Democrats as a heavy-handed lobbyist who tried to take advantage of an old friend. But in Arizona, friends say, he has a reputation for integrity that matches Babbitt's. A prominent trial lawyer in Phoenix who successfully co-prosecuted Arizona Gov. Evan Mecham (R) at his impeachment trial in 1988, Eckstein has been a law school lecturer on legal ethics and has headed several administration of justice reform projects in Arizona.
Goff, a consultant for Havenick and the three poor Chippewa tribes in the casino partnership, said he first contacted Eckstein in the fall of 1994 when regional officials of the Bureau of Indian Affairs in Minneapolis recommended approval of the application and sent it to Washington for review. Goff said he had been shopping around for a well-connected lobbyist and was told that Eckstein, who often represented the Navajo nation, would be his best bet because of his ties to Babbitt.
"I didn't anticipate any problems, but I told him that if we ran into trouble, we might need someone who would be able to make a query," Goff said. Eckstein "was a little hesitant" about being enlisted to lobby his friend Babbitt, Goff recalled. "He said he had never contacted Babbitt personally on that basis" but could approach someone else he knew at Interior, solicitor John D. Leshy. "If things get stuck, I can call Leshy," Eckstein said, according to Goff.
The alarm bells went off in late March when Havenick and his partners were told that Interior had decided to give anti-casino forces more time to express their opposition. Babbitt's counselor, John Duffy, agreed to the extension at a Feb. 8, 1995, meeting on Capitol Hill with opposing lawmakers, lobbyists and tribal representatives who saw their own gambling profits threatened, but the Chippewa applicants were not notified until March 27.
The chairmen of the three Chippewa bands -- Red Cliff, Lac Courte Oreilles and Mole Lake -- wrote an angry letter to Babbitt, contending the comment period had ended the previous summer and denouncing the second chance for the opposition as "highly improper." Goff brought in Eckstein at the same time. By then, Goff said, they knew a call to Leshy would not work.
"The process had been stopped by John Duffy, who worked for Babbitt. So we knew he [Eckstein] would have to contact Babbitt," Goff said.
In his testimony, Eckstein said he did that "early on," asking for a chance to have the Chippewa meet with Babbitt before any final turndown.
"Secretary Babbitt," Eckstein recalled, "said I would be given that opportunity."
Those opposed to the casino went higher. Their chief lobbyist, Minneapolis lawyer Patrick O'Connor, buttonholed President Clinton at an April 24, 1995, reception in Minneapolis. A longtime Democratic fund-raiser chagrined at the failure of a White House aide to return his phone calls on the matter, O'Connor said he told the president that the tribes he represented were "concerned about a possible casino going in near Hudson." At that, O'Connor testified, Clinton turned him over to top aide Bruce R. Lindsey, who assured O'Connor he would be "getting some calls" about his concerns before the day was out.
He did. Ickes, who as deputy chief of staff had responsibilities for political and policy matters, called O'Connor that day and the next but never made contact. Before the end of that week, O'Connor and the chairmen of five of the opposing tribes met with Democratic National Committee Chairman Donald L. Fowler to detail what they saw as "the adverse economic repercussions" on their gambling operations and to ask his help in arranging a meeting with Ickes.
O'Connor sent a follow-up letter to Ickes on May 8, saying he understood Fowler "has talked to you about this matter" and expressing fears that "those at Interior who are involved are leaning toward" approval of the casino application.
O'Connor then went on to "relate the politics involved in this situation," asserting that Wisconsin Gov. Tommy G. Thompson, a Republican, was supporting the project and that the opposing tribes who met with Fowler were longstanding Democratic contributors who had supported the Clinton-Gore ticket in 1992 while the chairman of one of the applicant Chippewa tribes was "active in Republican Party politics."
By accident, Goff said, his side got a copy of the letter the same day it was sent to Ickes; the city clerk's office in Hudson gave them a copy that had been faxed to the mayor.
"When I got it, I couldn't believe it," Goff said. "That's when we knew we were in big trouble."
The lobbying on both sides intensified in subsequent weeks. Repeatedly urged by O'Connor and his colleagues to help them out, Ickes has testified that he was only "peripherally involved."
"I recall having one discussion [about the Hudson casino] . . . a telephone discussion with Don Fowler," Ickes said. "I told him I would check on it."
On July 10 or 11, 1995, Eckstein called Babbitt in response to rumors that a decision was imminent. The secretary told him, "You need to meet with John Duffy," Babbitt's point man on Indian issues.
Eckstein and another pro-casino lobbyist, former representative Jim Moody (D-Wis.), saw Duffy July 14 and made what they thought was an effective presentation, but after about a half-hour, Duffy interrupted to tell them the application was going to be denied that day.
Eckstein called Babbitt for an emergency meeting that afternoon. Eckstein testified that he "reminded him of the commitment that had been made to make a presentation to him with my clients" -- which would have taken until Monday to arrange.
"His response was that Harold Ickes had directed him to issue the decision that day," Eckstein said. He said he started to argue the case, and then, perhaps because Ickes had been mentioned, brought up O'Connor's letter to Ickes, including its mention of the opposing tribes' support of the 1992 Clinton-Gore campaign.
About this point, Eckstein testified, Babbitt asked him rhetorically: " 'Do you know how much these Indians with gaming contracts' -- it wasn't exactly clear what 'Indians' he was referring to, but 'Indians' were certainly used -- 'have given to Democrats?' I said, 'I don't have the slightest idea.' And he said, 'Half a million dollars.' "
Tribes opposed to the Hudson casino eventually contributed more than $350,000 to Democrats for the 1996 campaign, most of it after the decision was made.
Babbitt has testified that he "had no communications with Harold Ickes or anyone else at the White House about either the substance or the timing" of the Hudson decision.
Asked whether he talked with Eckstein about Indian political contributions, he said, "I simply have no recollection of any conversation to that effect."
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