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Clinton Aides Sought Help for Hubbell

By Susan Schmidt
Washington Post Staff Writer
Wednesday, April 2, 1997; Page A01

Two of President Clinton's top political advisers, Erskine B. Bowles and Thomas F. "Mack" McLarty, called business friends to line up financial help for Webster L. Hubbell when he was coming under the scrutiny of Whitewater investigators, the White House said yesterday.

McLarty, then White House chief of staff, told Clinton and first lady Hillary Rodham Clinton that he intended to be "supportive" and "to try to help" Hubbell as their longtime friend was resigning as associate attorney general in March 1994, officials said. Hubbell left the Justice Department post after coming under investigation for defrauding his former law firm and clients of nearly $500,000 and later served an 18-month prison term.

Officials said McLarty's recollection of his conversation about Hubbell with the president is hazy, but one said McLarty recalls that Hillary Clinton "acknowledged his comments and maybe thanked him" without saying much more.

McLarty and Bowles, Clinton's current chief of staff, made the phone calls in an effort to find work out of concern for Hubbell, White House spokesman Lanny J. Davis said. McLarty called Arkansan Truman Arnold, who hired Hubbell for unspecified duties and prevailed on others to hire him.

"He may have communicated to the president and the first lady that Truman was going to hire the guy," said one White House aide.

Bowles, then chief of the Small Business Administration, called an investment banker and two lawyers on Hubbell's behalf after a conversation with then-U.S. Trade Representative Mickey Kantor about Hubbell's financial plight, Davis said. Officials said those efforts resulted in no payments to Hubbell.

Independent counsel Kenneth W. Starr is investigating the payments made to Hubbell after he left the Justice Department. Starr's investigators want to know whether any of the payments Clinton associates arranged for Hubbell were intended to buy his silence in the Whitewater investigation. To date, investigators have learned of more than $500,000 in payments to Hubbell from a dozen or so entities that year, including $100,000 from the Indonesia-based Lippo Group that is at the center of the campaign financing controversy.

The disclosure that the Clintons knew and perhaps tacitly sanctioned solicitations on Hubbell's behalf is likely to fuel an investigation into whether the payments constituted hush money, officials said. Hubbell has refused to discuss the payments but expressed outrage at a congressional hearing in 1995 when he was asked whether he refused to cooperate with Starr's investigation as a result of payments from Lippo.

Hubbell was a former law partner of Hillary Clinton's at the Rose Law Firm in Little Rock and would have been familiar with legal work she did with the savings and loan owned by the Clintons' business partners in the Whitewater land venture, James B. and Susan McDougal.

Hubbell is a central figure in several aspects of the Whitewater inquiry. Both he and Hillary Clinton had some involvement in Castle Grande, a real estate project that bank examiners said was founded on sham land sales and phony loans intended to enrich insiders at Madison Guaranty Savings & Loan. Investigators are trying to determine whether Hillary Clinton deliberately tried to hide her involvement in the project, and whether Hubbell sought to conceal the record of her work on Castle Grande and other matters in removing files on them from the Rose Law Firm.

The White House said it was disclosing the information about McLarty and Bowles in response to questions posed on the subject by several news organizations.

McLarty, one of the Clintons' longtime friends from Arkansas, is now an unofficial ambassador at large on Latin American issues for the White House. He recalls having had a conversation during March 1994 about Hubbell's dire financial prospects with Vernon Jordan, one of the president's closest friends, and advisers outside the White House, officials said. Jordan's law firm, Akin Gump, represents two companies that hired Hubbell that year, Time Warner and billionaire Ronald O. Perelman's conglomerate, MacAndrews and Forbes Holdings Inc. Jordan is on the board of MacAndrews' Revlon Group.

McLarty and Bowles, said Davis, "were motivated out of friendship and concern for a man about to lose his job." Despite news reports of a criminal investigation of his billing practices, Davis said, "lots of people believed that Webb Hubbell had done nothing wrong . . . that he was involved in some type of billing dispute with his former law partners."

According to White House aides, McLarty recalls telling Hillary Clinton of his plans to help Hubbell at the breakup of a meeting in the residence of the Executive Mansion to discuss the resignation of White House counsel Bernard Nussbaum. Nussbaum was ousted when the news media reported that he and other presidential aides had improperly obtained confidential law enforcement information about the budding Whitewater investigation.

Present at the meeting were the Clintons, then-deputy chief of staff Harold Ickes, the first lady's chief of staff, Margaret Williams, and David Kendall, the Clintons' personal lawyer, White House sources said.

McLarty recalls making the comment about Hubbell to the first lady out of earshot of the others. "He said, `I think I remember that she nodded her head and said something that indicated an acknowledgment of what I had said, or a thank-you for the comment,' " Davis said.

"He thinks he might have also mentioned it to the president, but his memory is less clear about that," Davis said.

He did not specifically tell the Clintons he planned to make calls on Hubbell's behalf, Davis said.

A few days after that meeting in the residence, Davis said, McLarty called Arnold and "expressed his concerns about Webb," a friend of 20 years. "He asked Arnold whether Webb might be useful to Arnold in any of his business enterprises or to any of his associates." Arnold, also a friend of Hubbell's, asked McLarty to send Hubbell's resume. The two did not discuss whom Arnold might ask to hire Hubbell, said Davis. Davis said McLarty had no recollection of discussion of how much money Hubbell needed, but said "there might have been discussion of it."

But "any suggestion there was a linkage in Mr. McLarty's mind between Whitewater-related issues and his call to Mr. Arnold is without foundation," Davis said.

Bowles got to know Hubbell in late 1992, during a post-election economic summit in Little Rock attended by Kantor, members of the Lippo-controlling Riady family and others who later were involved in arranging payments to Hubbell.

Bowles arranged a meeting between Hubbell and Will Dunbar, then of Allied Capital Corp., a client of Bowles's old venture capital firm. He also asked Sam Poole and Reef Ivy, attorneys at North Carolina's Sanford Law Firm, if they could hire Hubbell. None of the contacts produced work.

Staff writer Charles R. Babcock contributed to this report.

Copyright 1997 The Washington Post Company

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