LITTLE ROCK, ARK., MARCH 23 -- Arkansas Gov. Bill Clinton said today he played no role in the awarding of a $30 million state bond contract that benefited a major campaign contributor and social friend who was later convicted on cocaine charges.
The Los Angeles Times reported today that in May 1985, Clinton lobbied three state legislators to support the financing of a new state police communications system after a team that included Little Rock businessman Dan Lasater had been selected to handle financing of the project.
But a review of state records and interviews with current and former officials who participated in the police project show that Clinton's lobbying efforts were directed toward gaining legislative support for the police communications system after key lawmakers raised concerns about the project and did not involve the selection of Lasater's investment banking firm.
Asked about the report today, Clinton called Lasater a "substantial supporter of mine and others . . . he did state business." But Clinton said that while his administration's policy was to broaden the number of firms that could participate in the bond business, "I can tell you that our policy was not to specifically favor anybody."
Meanwhile, the Clinton campaign released an accounting firm's report that said the Clintons lost all but $10,000 of the $69,000 they invested in a controversial real estate venture.
The Clintons sought the review of the Ozark Mountains land deal in an effort to counter suggestions that the deal, first reported in the New York Times earlier this month, was structured so the Clintons were at little risk for losses but could earn high profits.
The report, by a Denver accounting firm, said the Clintons' partners in the real estate venture -- James and Susan McDougal -- put in $92,200 and lost roughly the same amounts as the Clintons.
The accounting firm also said the Clintons incorrectly claimed interest deductions in connection with the land venture that reduced their taxes by about $2,100. Clinton has said he will reimburse the government for any mistakes made in his favor.
The allegations about Clinton's ties to Lasater date back to 1986 when Republican candidate and former governor Frank White raised them in the waning days of that year's election campaign. The charge that Clinton had steered state business to Lasater, a prominent investment banker who had contributed $3,000 to Clinton's campaign, produced headlines because it came at a time that Lasater and his former chauffeur were pleading guilty to conspiracy to distribute cocaine among their friends.
In addition, Clinton's half brother, Roger Clinton, had publicly testified in February 1985 -- three months before the state bond contract was signed -- that Lasater had loaned him $8,000 to cover his cocaine debts to a New York-based Colombian drug dealer. Roger Clinton was arrested by Arkansas State Police in August 1984 and later pleaded guilty to cocaine distribution charges.
Bob Newman, a state representative from Smackover, Ark., said he recalls Clinton calling him about the matter after he expressed opposition on the grounds that the communications system would not cover his rural district. "My question was, would it cover the whole state, and the governor assured me it would," Newman said.
The new communications system had been a priority of the State Police after a trooper was killed in 1984 in an area where the existing state radio system did not reach. The state legislature approved funding for a new system in early 1985. On May 10, 1985, a committee of the State Police Commission voted 4 to 2 to select a team composed of Lasater, E.F. Hutton and the Little Rock-based investment firm of T.J. Raney & Sons to handle the financing for the project, picking the group over three alternative proposals.
Johnny Mitchum, a member of the police commission who had been appointed by former Republican governor White, recommended that the Lasater group be selected after he hired an independent actuary to review the competing proposals. "It was the best deal for the state," said Mitchum in an interview today.
Mitchum, a former accountant who had been designated by the panel to review the proposals, said he was never contacted by Clinton or anybody on his staff to urge him to select Lasater.
State Police Chief Col. Tommy Goodwin confirmed today that there were "widespread rumors" and unconfirmed intelligence reports about Lasater's involvement in cocaine at the time that his group was selected.
But Goodwin said the allegations were unsubstantiated and did not justify opening a State Police probe of Lasater because "I've never heard of him selling cocaine and those are the people we normally target." Nevertheless, Goodwin said he was concerned enough about Lasater to check with federal agencies and was assured they had no active investigation of the investment banker at the time.
Jeff Eller, a Clinton campaign spokesman, said that because there were no charges pending against Lasater in May 1985, "it would be improper to deny someone the right to participate in state competitive bidding process based on rumors and allegations."