Political Economics - Page A4
February 25, 1997 White House Secret Dealings
by Staff Journalists, The Daily Republican Newspaper
With Felon Webster Hubbell
WASHINGTON DESK - The White House felon Webster L. Hubbell, who plead guilty to fraud and tax-evasion charges in 1994 was released from prison last week after serving only 16 months of a term of three-years. Hubbell, the former law partner of the first lady and longtime friend is now refusing to cooperate with Congressional prosecutors. After his release from prison, Hubbell claimed that if he supplied the requested documents to a House committee, that he might incriminate himself in wrongdoing.
The Los Angeles Times reported on Tuesday that during the 16 months that Hubbell spent in prison, a top White House aide, Marsha Scott, frequently visited him. It also has come to light this week that when Hubbell was first appearing before a grand jury investigating the Whitewater controversy, Scott traveled to Little Rock to confer with him.
Scott's visits with Hubbell in late 1994 through 1996 and her relaying of any messages from the Clintons are certain to stir controversy.
Scott's personal relationships with the Clintons, and Hubbell and his wife, Suzanne are long standing. Scott and Hubbell were even in the same graduating class at Little Rock's Hall High School.
The clintons have attempted to maintain 'distance' with Hubbell, but apparently, behind a veil of secrecy, Scott has been in continuous contact and may have relayed instructions from the White House.
House Committee investigators are trying to determine how Hubbell obtained a number of well-paying business engagements after he resigned his No. 3 job at the Justice Department including a deal with an affiliate of Indonesia's Lippo conglomerate since implicated in illegal political donations to the Clinton-Gore Campaign.
Members of the House Committee have raised questions about the payments to Hubbell as a from of 'hush money.'
Hubbell resigned from the Justice Department in March 1994. He was imprisoned the next year on fraud and income-tax tax evasion charges stemming from his bilking of $482,410 from former clients and partners at Rose, where he and Mrs. Clinton had been partners.
Hubbell had promised to cooperate with Whitewater investigators at that time, in December 1994. But Hubbell never delivered on the promise. Staff of Independent Counsel Kenneth W. Starr have been frustrated by Hubbell's claims that he cannot recall the key events involving the president and first lady.
Little Rock, Arkansas thrift at the center of the Whitewater inquiry because of a variety of insider transactions. Both Hubbell and Mrs. Clinton, while partners at the Rose Law Firm, had dealings with Madison and received money from Madison in exchange for so-called 'legal services.'
A Federal Deposit Insurance Corp. audit in 1996, accused the first lady of drafting a real-estate document in 1986 used to 'deceive' regulators about a property transaction that generated more than $300,000 in questionable commissions for a Madison representative. The representative was Seth Ward, Hubbell's father-in-law.
The first lady said that she remembers nothing about drafting the false documentation Madison used to illegally obtain federal funds. Hubbell told investigators he also can't recall the matters. The actions of the first lady and Hubbell made the collapse of Madison Guaranty inevitable. That failure cost U.S. taxpayers $50 million.
In an appearance before the Senate Banking, Housing and Urban Affairs Committee last year, Hubbell told members that he began his arrangement with the Lippo Bank in Los Angeles in the summer of 1994, shortly after leaving the Justice Department.
Hubbell refused to say what he was paid or what work he did. A Senate Governmental Affairs Committee subpoena delivered last week to Lippo's Bank has not been responded to.
Another of Hubbell's employment deals under investigation is the oral, no-bid contract he was given in late 1994 by the city of Los Angeles Department of Airports.
Investigators from the U.S. Department of Transportation who later questioned Hubbell said that he 'claimed to not know how Los Angeles came up with the idea.'
President Clinton has told reporters he had not been kept informed about Hubbell 's employment arrangements with th Lippo Bank before going to prison.