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For White House Travel Office, a Two-Year Trip of Trouble

By Toni Locy
Washington Post Staff Writer
Monday, February 27, 1995; Page A04

On President Clinton's 100th day in office, John McSweeney and Ralph "Moe" Maughan were at work in the White House travel office when a uniformed messenger presented each with a long-stemmed red rose and a card from the president and First Lady thanking them for their hard work.

Before they had a chance to smell the roses, the messenger burst back into the room and snatched the flowers back, saying, "You were not supposed to get these."

"All we could do was laugh," McSweeney recalled.

The repossessed roses were an omen, the travel office employees say now, that their government careers – some spanning decades and several presidents – were in danger. Amid allegations of corruption and bad management, they were fired three weeks later on May 19, 1993, touching off one of the Clinton administration's great political embarrassments. The episode led to reprimands of top Clinton aides, charges of a politically motivated FBI probe of the office and news media criticism so harsh that it was later judged to be a factor in the depression that drove White House deputy counsel Vincent Foster to his July 1993 suicide.

Fallout from the travel office affair continues, with Republicans vowing to hold congressional hearings this spring. And former office director Billy R. Dale, 57, awaits trial on charges that he embezzled $68,000 in news media money through a scheme in which he allegedly deposited refunds from travel service companies into his bank account. The White House contends it had to move quickly to remove Dale because it had evidence of corruption; Dale and former travel office employees believe he was forced out to make room for Clinton's distant cousin to take over the office, a move that began even before Clinton took office.

The Justice Department has declined to comment on the case, which is being handled through its public integrity section. The two-count indictment, which carefully dates most of Dale's alleged crimes before Clinton took office, alleges that between 1988 and 1991 Dale took $54,000 in refund payments and embezzled about $14,000 in petty cash.

Much of the travel office saga already has been made public through an internal White House review and a General Accounting Office report that sharply criticized the Clinton administration's actions. Former White House associate counsel William Kennedy was reprimanded, and Foster was searching for a private attorney at the time of his death. Of the seven fired employees, the five who were not involved in the office's bookkeeping were given other federal jobs, and the Arkansans and longtime Clinton supporters brought in to run the travel office were removed.

But Dale's attorney, Steven C. Tabackman, intends to lay out a case much like a political thriller, complete with amateur spies, interference by a Hollywood producer and missing documents that Dale claims could exonerate him by proving that the unaccounted-for funds went to pay for media travel.

Tabackman's strategy is to turn the attention away from Dale and put administration officials on trial, especially Clinton's third cousin, White House aide Catherine A. Cornelius.

Attorney Stephen Braga, who represents Cornelius, dismissed Tabackman's strategy as "a standard defense tactic" to divert attention from the defendant and denied that Cornelius did anything wrong.

Tabackman also privately has told a federal judge about a secret witness who will testify about Dale's missing documents: a record of the office's petty cash disbursements and a log of checks Dale deposited in his personal account to cover tips and other job-related expenses.

Justice Department lawyers Stuart M. Goldberg and Raymond N. Hulser argue there is no proof that Dale's documents ever existed and suggest that if they did, Dale could have taken them himself. The prosecutors also point out that no other travel office employee knew about the record Dale says he kept on checks he deposited in his checking account. Braga said Cornelius, who was caught secretly copying and taking home office records, has never seen the documents Dale says are missing.

U.S. District Judge Harold H. Greene recently dealt Tabackman a setback by denying a request to subpoena a cast of characters involved in the travel office firings, including Hillary Rodham Clinton and Hollywood producer Harry Thomason. But he said he will reconsider the request after he sees what evidence the government produces.

The travel operation got its start during Andrew Jackson's administration when aides helped reporters following the president book train tickets. In recent times, the small operation on the Old Executive Office Building's ground floor consisted of seven employees who handled about $7 million a year in travel arrangements for the White House press corps.

"It was not glamorous," McSweeney, who worked in the office beginning in 1980, said of presidential trips around the world. "I can't tell you how many times I've ridden in the back of open trucks with baggage and been rained on. It all looks like Peoria."

Veteran employee Billy Dale took over the office in 1982. In recent interviews, six of the office employees described Dale as an old-fashioned manager who ran the office like "a country store," as McSweeney said. "But it was an honest country store with the little ledger with the IOUs."

Dale, who is not an accountant, estimated the costs of press travel on charter aircraft, hotels and telecommunications equipment for each trip, dividing the total among the media representatives who signed up to accompany the president. If his estimates were off, or if reporters canceled, Dale's practice was to make up the difference to the media on subsequent trips, reducing the price if there was a prior overpayment or increasing it if the previous payment was too low, according to his attorney and former employees. With no supervision of his billing methods, Dale kept a ledger of his calculations, and press representatives were aware of the practice, the former employees said.

Press travel costs soared during the Bush administration, and Dale was pressured by the White House press secretary's office and the press corps to keep costs down. But he was given little guidance on specifically how to do that, said Maughan, who started to work there in 1973. "Billy Dale was told, Just make it happen,' and he did," Maughan said.

Because presidential trips often occurred on short notice and only a few charter companies could handle the frantic scheduling, Dale came to rely on a company called Airline of the Americas, founded by former Pan Am pilot Charles P. Caudle. Since press money and not government money was involved, he did not believe he had to open the business to competitive bidding, co-workers said.

Dale also needed a healthy petty cash fund to provide the "tips" demanded by foreign airport and hotel employees, which, in some cases, travel office employees acknowledge, amounted to bribes. McSweeney said he remembers an Indonesian Air Force major who delayed a press plane's departure by insisting that luggage be examined and that Dale "rent" his X-ray machine. Bus drivers were routinely given crisp $20 bills and presidential tie clips, he said. No one got receipts of these payments, which they considered customary costs of traveling abroad, McSweeney said.

Air and bus companies, hotels and telephone companies routinely refunded money to the travel office if they provided fewer services than expected. In 1988, Dale began depositing those refund checks into his personal account and used it to cover the substantial sums in tips and other off-the-books payments his job required, his attorney contended. Dale rationalized that he did not have to return the money to the press but could make up the difference by providing a discount on the next media trip, according to his attorney.

By commingling personal funds with media money, Dale exposed himself to prosecution. Under law, a jury could convict him of embezzlement simply because he converted the money, or mixed it with his personal funds. To try to keep that from happening, Tabackman will have to reconstruct presidential trips and account for most, if not all, of the money the government says was stolen.

"Was it a system where people could have stolen? Yes," McSweeney said. "But we didn't. The job was to get the press there to cover the president. Getting them there without a hitch was a reflection on the president."

Cornelius, Clinton's distant cousin from Houston who handled travel for the 1992 Clinton-Gore campaign, began efforts to take over the travel office before Inauguration Day, meeting with representatives of World Wide Travel Inc., a Little Rock, Ark., agency that handled campaign travel, and David Watkins, a campaign official who took charge of the White House administration. Watkins did not return telephone calls seeking comment.

World Wide once had been a division of Little Rock's Worthen Bank, a former client of Watkins and of the Rose Law Firm, where Hillary Clinton was a partner. Company president Betta Carney, a Clinton campaign contributor, had transformed the company into the nation's 24th largest travel agency, counting the Democratic National Committee among its clients. A World Wide official was quoted in Arkansas publications soon after Clinton's election saying the firm was close to Watkins and expected to get the White House travel business.

Cornelius went to work for Watkins and in three memos outlined a plan to take over the travel operation and install World Wide as the White House's travel agent. Her memos, according to GAO's report, falsely projected the cost savings that could be realized by replacing the existing staff. The GAO said she overestimated ticket sales and inaccurately described travel industry commission and rebate practices. Cornelius said that under her plan the White House could earn $210,000 in rebates; the GAO later placed the figure at about $10,000.

Next to enter the debate was Hollywood producer Thomason, a longtime Clinton friend, whose business partner, Darnell Martens, began making inquiries about how to bid on White House charters. Thomason and Martens were partners in an air consulting firm, Thomason, Richland & Martens, which had worked closely with the Clinton campaign.

Thomason had a White House pass and an East Wing office from which he offered advice on presidential events, and soon he began dropping hints to Clinton that there was trouble in a White House office. He also told Hillary Clinton he had heard a rumor about wrongdoing, according to the GAO and White House reviews.

Martens fueled the fire by putting his concerns into a memo, which Thomason had him fax to the White House. He described Airline of the Americas as "decidedly anti-Clinton" and "Republican-operated." He also recounted his conversation with Dale about competitive bidding for the White House business, arguing that because his company, TRM, handled a larger volume of charter hours than the travel office, it could offer lower costs.

Lawyer Robert S. Bennett, who represents Thomason and Martens, said that despite the language in the memo, Martens was not interested in the press business but was concerned about competitive bidding. "Neither of them did anything in any way improper or unethical," Bennett said.

McSweeney and other travel office employees, however, said Dale believed Martens was trying to get TRM installed as a middleman to line up charters for press travel. Dale didn't need a middleman because he was dealing directly with the charter company, they said.

After hearing Thomason's allegations, Watkins told Cornelius to "keep her eyes and ears open," according to the White House and GAO reports. Thomason alerted Hillary Clinton, and Foster and Kennedy from the White House counsel's office were brought in. After Cornelius produced records she had secretly taken home, the lawyers recommended an audit but were told the White House did not have the capability to do one.

Kennedy turned to the FBI for help, a move that Clinton opponents say was an attempt to use the bureau for political ends. Over a two-day period, Kennedy met with agents, who initially said they believed there was insufficient evidence to investigate. When the agents hesitated, Republican critics would later contend, Kennedy leveled a threat by playing on agency rivalries: If the FBI didn't respond quickly, the White House would turn to the Internal Revenue Service.

In the end, it was Cornelius who convinced the agents that an investigation was needed. She told them about suspected kickbacks and petty cash discrepancies. The agents later told the GAO that they did not know of her interest in running the office.

Tabackman may try to focus attention on how the FBI got involved, but he is more likely to attack the failure of agents to take possession of the travel office's records until nearly three weeks after the employees were fired, leaving them in the hands of people who wanted to run the office.

Hillary Clinton's actions also could come under scrutiny in the Dale case. In a meeting with Foster, she asked about the travel office, and Foster told her that Kennedy was looking into it. She also talked with Thomas F. "Mack" McLarty, then chief of staff, about it, according to the reports.

As the FBI was poised to begin its probe, Foster tried to slow events. Before firing any employees, he wanted to first have a completed review of travel office finances, which was done by the consulting firm KPMG Peat Marwick. He asked FBI agents to hold off until it was completed.

But Thomason, Cornelius, and her boyfriend, Jeff Eller, who worked in the White House communications office, urged speedy action, as did Hillary Clinton. Watkins said the First Lady wanted to get "our people" into the travel office, the GAO report said. In written responses to questions from GAO investigators, according to the report, Hillary Clinton said "she doesn't recall this conversation with the same level of detail as Mr. Watkins."

With McLarty's backing, Foster stalled action against the employees until the review was completed. But he insisted that Watkins, who was getting constant updates over the May 14-16 weekend, keep Hillary Clinton apprised.

Watkins fired the employees two days after KPMG Peat Marwick found problems in the travel office and an $18,200 petty cash discrepancy. As they packed, the employees watched in horror as press secretary Dee Dee Myers revealed during a news conference that the FBI was investigating them.

The travel office workers weren't the only ones who were upset. Several White House officials tried but failed to intercept Myers to delete the reference to the FBI investigation contained in "talking points" that Watkins had given her. It is against FBI policy to discuss the existence of an investigation. Myers's public comments put the White House in the awkward position of knowing details of a supposedly confidential FBI probe.

The next months were turbulent. World Wide Travel moved quickly to set up a White House operation, but as criticism mounted, the company told the White House it wanted out. Penny Sample of Air Advantage, a charter firm that was another alumnus of the Clinton campaign, lasted until June 2. A close friend of Martens, Sample was criticized for taking a $1,400 commission; she later returned it, saying it was a mistake.

Watkins ran into other problems and was forced to resign in May 1994 after using a presidential helicopter for a golf outing. Kennedy resigned in November. Of the major players in the travel office saga, only Cornelius still works in the White House; she was placed in the advance office, preparing for presidential trips.

But the FBI investigation did not go away, and it became clear that Dale was its sole target. In the summer of 1993, the Justice Department notified the other employees they were no longer targets of the investigation. By winter, the White House found new jobs for five of them; Dale and the assistant director retired.

The travel office business also was put out to bid and American Express was selected to book press charters. The office now has one more employee than it did under Dale – four from American Express and four from the White House staff, including director Steve Riewertz. Nearly two years later, news organizations are complaining again that the costs of charter press flights are making travel with the president prohibitively expensive.

GAO investigators estimate the firings cost taxpayers more than $250,000 in salaries and legal fees, close to the amount Cornelius incorrectly said could have been saved if her plan for running the travel office had been approved.

McSweeney said the White House and Justice Department are using Dale to defend themselves. "Once the Justice Department and the FBI got {involved}, there was no turning it off," he said. "They can't back out. That's unfortunate, for Billy's sake."

Nearly two years have passed since the day seven employees of the White House travel office were abruptly fired. But fallout from the affair continues, with the former travel office head, Billy R. Dale, 57, standing accused of embezzlement as part of an investigation that co-workers say was an attempt by the White House to justify the debacle. And the House Government Reform and Oversight Committee vows to hold hearings on the matter in the spring.

1982

Billy R. Dale, a 20-year veteran of the office, is appointed as its head. Later, during the Bush administration, he is urged to take steps to control escalating costs of press travel.

1992

During Bill Clinton's presidential campaign and Clinton-Gore transition, commercial travel for Clinton's staff is handled by Catherine A. Cornelius, a distant cousin of his.

1993

OUTSIDER SEEKS BID

February: Darnell Martens, a partner of Hollywood producer and Clinton friend Harry Thomason in an aviation consulting firm, contacts Dale to learn how to bid for the press air charter business. Meanwhile, Cornelius, now working in the White House as an aide to David Watkins, assistant to the president for administration, writes a memo proposing that she and a colleague take over the travel office.

WHITE HOUSE MEETINGS

May 12: Cornelius, who has been assigned to the travel office by Watkins, meets with Thomason at the White House and reports her observations. They meet with Watkins and Martens. Martens brings up an allegation that a travel office employee had solicited a kickback from a charter airline.

* Thomason also meets with First Lady Hillary Rodham Clinton about his concerns.

* Watkins brings in White House deputy counsel Vincent Foster and associate counsel William Kennedy to meet with Cornelius and Thomason on alleged travel office problems.

* Foster and Kennedy recommend an audit; the accounting firm KPMG Peat Marwick is contacted the next day.

* Kennedy calls the FBI for guidance.

May 13: Hillary Clinton, meeting Foster on another matter, asks him about the travel office. He tells her Kennedy is looking into the matter. Later, Foster tells her KPMG will conduct a review.

* Thomason, Cornelius and Jeff Eller, White House director of media affairs and Cornelius's boyfriend, recommend that the travel office matter be dealt with quickly.

* FBI agents visit Kennedy at the White House and agree to investigate, despite initial qualms about lack of evidence.

May 14: FBI briefs Justice Department lawyers in the public integrity and fraud sections.

May 17: KPMG's report to Kennedy questions travel office operations, including petty cash procedures. Watkins decides to fire employees; White House Chief of Staff Thomas F. "Mack" McLarty approves.

THE FIRINGS

May 19: All seven travel office employees are fired, they are told, because of allegations of bad management. White House spokeswoman Dee Dee Myers raises the possibility of criminal activity and says they are under FBI investigation.

May 25: The White House reconsiders the firings; five of the employees are placed on administrative leave.

FOSTER SUICIDE

July 2: A White House internal review criticizes top Clinton administration officials for travel office firings, naming Kennedy and Watkins.

July 20: Foster, deeply depressed, kills himself in a Virginia park. Investigators later conclude his anxiety was largely centered on the travel office matter.

Oct. 27: Congress sets aside $150,000 to pay legal fees for the five travel office employees on leave. The five receive new government jobs by that winter.

1994

GAO REPORT

May 2: General Accounting Office issues a report criticizing the insensitive handling of travel office employees and the appearance of improper influence because of easy White House access by Clinton friends. Later that month, Watkins leaves the White House.

Dec. 7: A federal grand jury charges Dale with embezzling $68,000 that news organizations had paid for expenses incurred traveling with the president.

1995

Spring: Republicans on the House Government Reform and Oversight Committee, chaired by Rep. William F. Clinger Jr. (R-Pa.), plan to hold hearings on the firings.

SOURCE: Staff reports, GAO report on travel office and White House Travel Office Management Review

Copyright 1997 The Washington Post Company

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