Cascading cast of Whitewater characters… - Whitewater Development Co - Column

0 Comments | Insight on the News, Nov 28, 1994 | by Rebecca Borders, | Alejandro Benes

Is it just coincidence that the same people connected to Goldman, Sachs & Co., an investment house involved in Arkansas financial interests when Bill Clinton was dipping his toe into Whitewater, now are helping him tread the financial depths of his legal defense? Could be, but the connections of several principals attached to the Presidential Legal Expense Trust, the fund intended to help pay the legal fees incurred by the president and first lady as they defend themselves on matters stemming from the Whitewater investigation and the Paula Jones sexual-harassment lawsuit, will raise questions about the trust's activities and this administration's practices.

Goldman Sachs has had a relatively long association with Arkansas and Clinton. In the late 1980s, the investment banking firm helped underwrite $400 Million in bonds for the Arkansas Development Finance Authority, or ADFA. An early recipient of the ADFA bond money was POM, a parking-meter manufacturer in Russellville, Ark. POM was run by Seth Ward II, the brother-in-law of Webster Hubbell, who was the lawyer for POM. Hubbell is a former associate attorney general in the Clinton Justice Department and friend of the first family. He resigned under pressure after questions arose about overbilling when he was with the Rose Law Firm in Little Rock, Ark., where the first lady also worked. Rose handled accounts for the Resolution Trust Corp., the agency responsible for cleaning up the savings-and-loan mess.

Hubbell still is connected to people involved in the presidential trust. He now has an office at the merchant banking firm G. William Miller and Co., an office loaned to him by Michael Cardozo, who runs the company and also serves as the executive director of the presidential trust. Both Hubbell and Cardozo say there is nothing strange about this set of circumstances. Hubbell says that he has started a consulting business in Washington in addition to his law practice back in Arkansas. He declines to comment on whether he contributed to the fund. "That's my business and they [the trust! will release all the names at the appropriate times, I understand," he says. Cardozo denies that Hubbell worked as a fund-raiser for the trust. "Funds to date have been spontaneously generated," he says.

Cardozo, appointed by former White House counsel Lloyd N. Cutler to supervise the trust, worked for Cutler in the Carter White House. Cardozo's wife worked as a volunteer in the Clinton White House Social Office. Cardozo himself also worked briefly in the Clinton administration, serving for three months in 1993 as the acting assistant to the attorney general at the same time Hubbell served at Justice. He says that he was brought into the Justice Department transition team because the then-nominee for attorney general, Zoe Baird, had requested him. Baird had worked for Cardozo in the Carter White House.

To return to Goldman Sachs, the company's officers earlier helped pay for Clinton's presidential campaign. In the 1992 race, the firm's officers contributed more than $100,000 in so-called "bundled" money and raised millions more. According to Federal Election Commission records, Robert Rubin, who is now assistant to the president for economic policy and then was cochairman of Goldman Sachs, made a $275,000 contribution along with his wife from their personal foundation to the New York Host Committee of the Democratic National Convention. Another former cochairman of Goldman Sachs, John Whitehead, a Republican, is a trustee of the presidential fund. He is currently a limited partner in Goldman Sachs.

Michael Berman is a Washington lobbyist. He and his firm, the Duberstein Group, represent Goldman Sachs in Washington. The company's main interest in the nation's capital is keeping banks out of the brokerage business, according to sources at Goldman Sachs. On July 31, the Washington Post reported, "Berman is raising funds for Clinton's legal defense fund, after working with Cutler in setting up the fund." Said Berman in a telephone interview: "I've called a few people, sure. But that's totally on my own hook."

Making those phone calls helped Berman get himself named in a lawsuit file by two Washington groups, Judicial Watch and the National Legal Policy Center. The suit claims that the trustees of the legal defense fund are the equivalent of a federal advisory committee operating at the pleasure of the president and advising him on the receipt and expenditures of money. "What it interesting about the trust is that the receipt of this money is for a governmental purpose," says Larry Klayman, general counsel at Judicial Watch. "It's being used to pay President and Mrs. Clinton's legal expenses. The reason they take that position is because, if they don't take that position, it becomes out-and-out bribery under the law."

Berman maintains a close relationship with the president and with Hillary Rodham Clinton. Until last spring, Berman was one of the few nonemployees to have "special access" roaming privileges at the White House. He said that whenever he went to the White House to lobby anyone, he always went through "proper channels." (Berman says he could not speak at great length about these matters because he was being sued.)