Washington Post Staff Writer
Friday, April 17, 1998; Page A01
Independent counsel Kenneth W. Starr said yesterday that with "the end not yet in sight" for his investigation, he has scrubbed his plans of eventually taking a post at Pepperdine University in California.
Facing reporters on the steps of the federal courthouse, Starr also fired a shot back at the Justice Department and asserted that his office could more credibly investigate an Arkansas woman's claims that Whitewater witness David Hale received money from conservatives trying to discredit President Clinton.
In a letter yesterday to Attorney General Janet Reno every bit as pointed as the one he received last week from Deputy Attorney General Eric H. Holder Jr., Starr wrote that while his office has "at most the appearance of a conflict of interest" in investigating the Hale claims, the Justice Department "may have not only an appearance problem but multiple actual conflicts of interest."
Starr's unusual news conference was the first of what he and his new public information counselor, Charles Bakaly, said will be more regular sessions with reporters. Starr said he increasingly saw the need to respond to what he called "misinformation" about the independent counsel's office, even as he tried to conduct the investigation in secret.
Starr was clearly referring in part to assertions by Clinton lawyer David E. Kendall, who fired his own broadside at the independent counsel last week with a letter claiming Starr had "well-publicized connections" to Richard Mellon Scaife, a wealthy conservative publisher and critic of the president. Scaife is a donor to Pepperdine's fledgling public policy school that Starr agreed in early 1996 to run.
Scaife also has financed anti-Clinton writing and research projects, including a $1.8 million effort by the American Spectator magazine to publicize damaging information about Clinton gathered in Arkansas. The allegation that Hale was paid off by anti-Clinton conservative activists came from the former girlfriend of an Arkansas man who was paid $1,000 a month to provide information to the American Spectator.
In his letter to Starr, Kendall had said that a "thorough investigation" of Hale might jeopardize Starr's Whitewater efforts, and therefore the independent counsel's office could not credibly examine the payment allegations.
Starr yesterday explained his decision to withdraw for good from Pepperdine as something he owed the university, which has waited more than a year for him to assume the post there. At the same time, he said, "The issue of public confidence is a very important one, and I owe it to the American people to seek the facts, and seek them fairly."
Fourteen months ago, Starr announced he was leaving as independent counsel for Pepperdine but reversed course four days later after public criticism. Since then, he noted yesterday, the work of his office has "expanded considerably," most recently with the investigation of whether Clinton perjured himself and tried to obstruct justice in the Monica S. Lewinsky matter.
Starr said that Scaife had nothing to do with the Pepperdine offer. "I have never met him; I have never talked to him," he said and added that there was "no arrangement explicit or implicit" with the conservative publisher.
Richard Larry, president of several of Scaife's charitable foundations, said Scaife does not know Starr and had no role in his being offered a job, and noted that Scaife's newspapers have been highly critical of his investigation. Those criticisms have included the finding by Starr's office that deputy White House counsel Vincent Foster killed himself. Scaife-financed investigative reporting has sought to show that Foster was the victim of foul play.
Starr said he informed university officials by phone on March 19 that he would not take the deanship of the university's new school of public policy, and on April 2 he told them he could not take the other half of the dual post offered him -- the deanship of Pepperdine's law school. He sent a formal letter yesterday.
A White House spokesman said that the public is "entitled to a completely independent and unbiased investigation" and that by withdrawing from Pepperdine, "Mr. Starr acknowledged one of his conflicts of interests in this matter."
Starr said in his letter to Reno that the Justice Department had been overseeing the Whitewater investigation during late 1993 and 1994, when "most if not all of the FBI-supervised contacts" occurred between Hale and his longtime friend Parker Dozhier, the individual who allegedly paid him.
Hale, Dozhier and Spectator officials have all denied the claim that Dozhier passed money to Hale, a central witness in the trial of then-Arkansas Gov. Jim Guy Tucker and the Clintons' Whitewater business partners, James B. and Susan McDougal. Hale has testified that Clinton talked to him about making an illegal $300,000 loan to a shell company owned by Susan McDougal. Clinton's denial under oath that he did so is one of the areas of possible perjury by the president being pursued by Starr's office.
Starr contends that the Justice Department has a potential conflict because Hale has provided evidence damaging to the president, and that additionally, the Justice Department is barred by law from looking into matters being examined by the independent counsel.
Starr said he does not usually make his correspondence with Justice public but decided to do so "inasmuch as the Holder letter was made public."
The Holder letter has come under attack in conservative quarters as an effort to intimidate Starr and force him to send the allegations against Hale back to the Clinton Justice Department for investigation. The department might then decide it needs to appoint another independent counsel to investigate the claims, further delaying the completion of Starr's probe.
Holder yesterday said, "I've not done anything that was designed to protect anybody."
"That letter was simply an attempt to get information to Mr. Starr," Holder told reporters at a weekly news briefing. "It was not in any way a warning or anything like that."
The April 9 letter, which Holder said had been reviewed by Reno, told Starr that "there have been suggestions that your office would have a conflict of interest, or the appearance of a conflict, in looking into this matter, because of the importance of Hale to your investigation and because the payments allegedly came from funds provided by Richard Scaife.
"Should you believe that this matter would be better investigated by the Department of Justice, we would be prepared to accept a referral from you."
Filling in for Reno, who was in New Hampshire for a conference on family violence, Holder spoke before Starr held his news conference and before receipt of Starr's response.
"We referred the matter to them with the expectation that they would handle it appropriately," Holder said. Meanwhile, one of Starr's two grand juries at the federal courthouse here was in its 12th week of hearing evidence in the Lewinsky matter. Only one witness appeared, and he declined to identify himself to reporters or to comment.
Mark Geragos, an attorney for Susan McDougal, said yesterday his client has been told she will be taken before the separate panel sitting in Little Rock on April 23, two weeks before that grand jury's term is to expire. Geragos said he expects Starr to indict McDougal for criminal contempt for refusing to answer Starr's questions. McDougal, who is in federal prison in Los Angeles serving a two-year term for unrelated bank fraud, already has spent 18 months in jail on a civil contempt citation in the Whitewater matter.
Staff writers George Lardner Jr. and Bill Miller contributed to this report.
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