More than a decade and $21 million after it began, the final and longest-running independent counsel investigation in U.S. history ended yesterday with allegations from the prosecutor that "a coverup at high levels of our government" prevented him from bringing further charges in the case of Henry G. Cisneros, former secretary of housing and urban development.
In a 474-page report, independent counsel David M. Barrett conceded that he was "not able to say with certainty whether any criminal laws were broken" by government officials in his inquiry of possible tax violations by Cisneros. But he alleged that officials in the Justice Department and Internal Revenue Service "resisted our efforts to investigate" the possibilities.
The report itself does not appear to include clear evidence of obstruction, however. Many officials named in the investigation angrily denied Barrett's accusations in written rebuttals attached to the document.
"Mr. Barrett conjured up a far-fetched theory of a wide-reaching government conspiracy to justify prolonging his tenure for another six years," wrote Susan J. Park, a trial lawyer in the Justice Department's public integrity section. "He has nothing to show for his efforts. If Mr. Barrett is serious about exploring the issue of integrity, he should examine his own."
The investigation began in May 1995 after Cisneros's former mistress, Linda Medlar, accused him of lying to the FBI about money he gave her. Cisneros was eventually indicted on 18 felony charges but pleaded guilty in 1999 to a single misdemeanor of making false statements. He paid a $10,000 fine and was later pardoned by outgoing president Bill Clinton in January 2001.
Cisneros has remained silent since his guilty plea, but Barry S. Simon, one of his attorneys, criticized Barrett's investigation in a letter to the federal court that had jurisdiction over it.
"The materials that are now being publicly released are simply an effort to 'try' the case that [Barrett's office] could not win in court in an adversarial process," Simon wrote.
Barrett did not return a telephone call seeking comment yesterday, but wrote in the report that the cost and duration of the investigation resulted because he attempted to ensure that government officials are not treated differently than others when accused of wrongdoing.
The Barrett inquiry was the last in a series of broad and controversial Washington investigations begun under the authority of the independent counsel statute, a post-Watergate law that Congress allowed to expire in 1999 amid complaints that the process had careened out of control during the Clinton years.
Barrett's inquiry ranks as the longest ever, surpassing even the wide-ranging investigation by Kenneth W. Starr into Whitewater, Vince Foster, the White House travel office and Monica Lewinsky. Only one other investigation cost more -- Lawrence E. Walsh's $47 million examination of the Iran-contra affair -- but it took less than eight years to complete.
Lawmakers battled in recent years over whether to shut down Barrett's inquiry amid suspicions among some Republicans that Democrats were attempting to suppress embarrassing revelations about the Clinton administration. A three-judge panel advocated removing from the public report accusations related to Clinton administration officials but was overruled by congressional Republicans.
Despite these earlier controversies, yesterday's final report was greeted with virtual silence on Capitol Hill. The document, which was released with limited redactions, included no findings related to Sen. Hillary Clinton (D-N.Y.) or former president Clinton, as had been widely rumored in political circles.
Rep. Henry A. Waxman (D-Calif.), who has sharply criticized Barrett's office, said yesterday that he thinks Barrett was "delusional" in making the coverup allegations, and Waxman questioned the overall value of the investigation.
"He spent $21 million over a 10-year period, and half of it has been spent since Cisneros pled guilty to a misdemeanor," Waxman said. "This is an astounding sum of money, and I'm not sure what we got for it. . . . The taxpayers have been abused."
But Sen. Charles E. Grassley (R-Iowa) praised Barrett for overcoming "hurdles and stonewalling" and said he plans to review the case further as head of the Senate Finance Committee. "The conclusions cast a very troubling light on the actions of the Clinton administration that suggest that high-ranking officials did not believe the tax laws should apply to friends of the Clinton White House," he said.
The key disputes in the report center on the second phase of Barrett's investigation, which focused on whether Cisneros had violated tax laws in making payments to Medlar.
Barrett complained that he was originally appointed "without jurisdiction over tax offenses" in May 1995 and that when he unearthed possible tax crimes, the Justice Department and Internal Revenue Service opposed his efforts to expand his authority.
The independent counsel's office "identified" more than $300,000 in income that had gone unreported to the IRS in four years, and found "evidence indicating that Cisneros's underreporting of income was willful," the report said. But an IRS lawyer said the problems may have stemmed from mistakes by Cisneros's accountant.
Later, when then-Attorney General Janet Reno allowed Barrett's office to investigate Cisneros's taxes for 1992, Barrett said his office "came upon significant evidence that certain officials of the [Justice Department] and the IRS had acted improperly to prevent an independent counsel investigation of Cisneros for tax offenses."
The report cited evidence of fees that were paid to Cisneros -- and then turned over to Medlar -- that were not reflected on tax forms sent to him by groups that paid him for speeches and other work.
The report also questioned whether such payments to Medlar may have been taxable to Cisneros as gifts. At that time, gifts totaling more than $10,000 in one year (the limit is now $12,000) would have been subject to a gift tax levied on the giver.
As evidence of a coverup, the report pointed to complaints by FBI and IRS employees involved in the case that leads were not followed, and in the case of the IRS, that senior officials in Washington departed from normal procedure to take the investigation out of the hands of regional IRS officials and derail it.
Barry Finkelstein, who was assistant IRS chief counsel of criminal tax matters at the time and is prominently cited in the report, said in a comment letter that "cases involving politically sensitive targets have always, in practice, been reviewed by the head office of the Office of Chief Counsel in Washington."
In the case of Cisneros, "although it was determined that his [tax] returns were not accurate, the case did not meet the required standard of proof beyond a reasonable doubt," Finkelstein said.