Under White House pressure, first lady Hillary Rodham Clinton's two brothers pulled out of a proposed $118 million business venture in the former Soviet republic of Georgia last night, only hours after saying they would carry it through.
National security adviser Samuel R. "Sandy" Berger had urged Anthony D. Rodham and Hugh Rodham to drop the venture last week because it involved a controversial Georgian political figure who had suggested that the deal might bring him political support from President Clinton.
The brothers initially rejected the request. They issued a statement yesterday afternoon saying they had no reason to believe that their associates are involved "in any illegal activities." But they added that they would withdraw if "rumors or allegations" of wrongdoing were proven.
A few hours later, the Rodhams' Washington lawyer, James Hamilton, said the brothers were withdrawing because they did not want "to do any harm to the first lady or the administration."
A source familiar with the situation said White House officials contacted the Rodham brothers last night to express concerns after learning they had rejected Berger's request.
The Rodham brothers traveled to Georgia last month to promote their plan to invest $118 million in growing and exporting hazelnuts. Joining them at a rally for the venture was Aslan Abashidze, a local political leader who is a rival to Georgian President Eduard Shevardnadze. The United States considers Shevardnadze's government an ally.
The Rodhams' venture was first reported in a column on yesterday's Washington Post op-ed page.
Intelligence and press accounts have linked Abashidze to an alleged mobster named Grigori Loutchansky. The State Department refused to grant Loutchansky a visa to the United States in 1995.
National Security Council officials say they were unaware of the Rodham brothers' visit to Georgia until Shevardnadze's government complained Aug. 17 that the Americans had planned to head straight to Batumi, Abashidze's stronghold. The Clinton administration became more concerned Aug. 31, when Abashidze made a statement that the Rodhams' visit might portend "political support rendered to him by U.S. President Bill Clinton."
Berger subsequently placed at least one phone call to Anthony Rodham, "advising the brothers they should withdraw from the deal," said Berger's spokesman, David Leavy. The White House said Clinton and the first lady had approved the call in advance.
A spokesman for Hillary Clinton's exploratory Senate campaign in New York said the first lady had no comment.
Hugh Rodham did not return phone calls yesterday to his Florida home and workplace.