Chapter Twenty-six

THE SULLEN YEAR

The facts swirling around the sad case of Webster Hubbell certainly had a ripe odor. Since his resignation in 1994, when his former Rose Law Firm partners were reporting that Hubbell had bilked the firm and its clients out of hundreds of thousands of dollars through fraudulent billings, he had pleaded guilty and been sentenced to twenty-one months at the federal penitentiary in Cumberland, Maryland. But in the fifteen months between plea and incarceration, Hubbell had done rather better for himself than the typical high government official who leaves office under a cloud. He made hundreds of thousands of dollars in consulting fees. To provide what services? This was not at all clear, and Hubbell refused to say. Most tantalizing of all was the source of this money. One of his largest contracts, for $100,000, came from the mysterious Lippo Group of Indonesia. This was the very same outfit that was then in the thick of controversy for making illegal foreign contributions to the Democratic National Committee to fund Clinton’s 1996 re-election campaign. Commentators were not delicate in voicing their suspicions. “Hush money,” thundered William Safire in the New York Times. The Clintons, he felt sure, had arranged a comfortable exile for Hubbell to ensure his silence before prosecutors on topics that might spell trouble for the White House, including Hillary Clinton’s work at the Rose Law Firm on matters related to the Whitewater investigation.

As aides prepared the president in late January to face questions about Hubbell, Clinton’s first response was to dismiss the suspicions airily. It was only natural, he explained, to suppose that old friends might try to help out Hubbell, a man with four children, when he hit a patch of bad luck. The president’s lawyers assured him the matter was deadly serious. Clinton said he was in no danger: He had known nothing about the Lippo Group’s hiring of Hubbell until he read about it in the papers. This was the answer he rehearsed carefully the morning of January 28, as he and his team did their ritual “pre-brief” before meeting reporters. That afternoon, though, as he met with reporters in the East Room, Clinton became oddly flustered. He was not asked the expected question, Did you know about the Hubbell payments? Instead, the reporter backed into the matter by inquiring whether Clinton himself did not think it was just a bit “unusual or suspicious” for a man who had resigned in scandal to suddenly be showered with lucrative business contracts?

Clinton, usually so fluent, fumbled for an answer. He began with an almost solicitous tone. “Well, first of all, I did not know about it,” he explained. “To the best of my recollection I didn’t know anything about his having that job until I read it in the press. And I can’t imagine who could have ever arranged to do something improper like that and no one around here know about it. It’s just not—we—we did not know anything about it.” Still stammering, he repeated himself. “I knew nothing about it. None of us did before it happened.” Then, in a moment, Clinton seemed to fix on the challenge to his integrity implied by the question. His jaw clenched and eyes narrowed as he glowered at the reporter. “I think when somebody makes a charge like that there ought to be some burden on them to substantiate their charge instead of saying, we’ll make a charge, see if you can disprove it. That’s not the way things work.”

Defensiveness, anger, defiance: The cycle of moods displayed in that one answer neatly captured the spectrum of Clinton’s reactions throughout 1997, as he entered his second term and discovered that he would be under no less accusation and suspicion than he had been in the first.

It was a year of quiescence and compromise in Washington only when it came to policy. When it came to politics, the battles over Bill Clinton were as sullen and unrelenting as ever. For reasons of self-interest, Newt Gingrich and the Republicans had decided they needed to find common ground with Clinton over the budget. They had hardly given up the dream, however, that his ethical failings would lead to his ruination. If anything, the opposite was true: As the Republican leadership compromised with Clinton over once inviolate principles on taxes and spending, there was even greater imperative to intensify the fight elsewhere—or risk charges of appeasement among the rank and file. Whitewater’s prospects as the magic bullet seemed to be receding. A year had passed since Hillary Clinton’s grand jury appearance—the one that fueled so much talk about her imminent indictment—and still Kenneth Starr’s team labored away with no clear bead on the first family. As ever, Clinton provided his adversaries with promising new ammunition. The campaign finance scandal of 1997 faded with remarkable speed in public memory. It looked pale in retrospect only after being overtaken by a more florid scandal of 1998.

At the time, all manner of dark possibilities loomed. Had Clinton, in his frantic pursuit of cash for the re-election campaign, let shadowy foreign agents infiltrate his political operation, and thus the top levels of the executive branch? What to make of the strange payments to Hubbell from some of these same people? As the controversy blossomed, the roster of mysterious characters became ever longer and more confusing. The linkages between Clinton and these characters and suspected misdeeds were murky but tantalizing. For a time, it seemed to Republicans that they might indeed have discovered a unified field theory of scandal—a pattern that linked Arkansas cronyism with Washington corruption in ways that had compromised national security. With his usual light touch, Gingrich predicted, “What we’re seeing here is the opening phase of what will turn into being the largest scandal in American history.”

Behind all the shouting was a byzantine maze of allegations and bizarre characters, organized around three main themes. The first avenue of suspicion was that Clinton may have intentionally—or, more likely, through gross negligence—encouraged foreigners to contribute illegally to the Democratic National Committee to help pay for his re-election campaign. This stream of foreign money, it was in turn suspected, might have been exploited by agents of the People’s Republic of China eager to influence U.S. policy. As ever with Clinton, the origins of the controversy reached back to Arkansas. It was in Little Rock that Clinton first became acquainted with the Riady family, ethnic Chinese in origin and the principals of a powerful Indonesian financial conglomerate called the Lippo Group. The family patriarch was named Mochtar Riady. The scion, James Riady, had run a branch of the business in Arkansas in the mid-1980s and became a financial supporter of Clinton. Clinton knew the Riadys to be generous folk during times of need. During the 1992 campaign, following a limousine ride with the candidate, James Riady made a $200,000 contribution to the Democratic National Committee. Unknown to most people in Washington, the family had come to command considerable attention at the White House. At the family’s urging, a veteran Lippo employee, John Huang, was appointed to a senior position at the Commerce Department. Meanwhile, James Riady was a frequent visitor to the White House, and he and Huang both had received numerous personal audiences with the president. By 1997, this high-level access had taken on a menacing aura. Justice Department and congressional investigators believed that the Lippo Group had been infiltrated by, and was possibly an agent of, the Chinese intelligence service. In the meantime, John Huang, who had left his job at Commerce but retained his high-level security clearance, became one of the Democratic National Committee’s top fund-raisers, a switch that James Riady personally recommended to Clinton. Huang proved superbly effective at his work. The problem came late in the 1996 campaign, when it was disclosed that millions of dollars that had been raised by Huang and others mining the Asian connection had come from illegal foreign contributions. In many cases, the money had been funneled through the U.S. subsidiaries of Asian firms, including vast sums from the Lippo Group. The money path was painfully hard to follow. The most extreme interpretations drawn by Republicans seemed far-fetched: The White House penetrated by agents for China? Yet it seemed equally hard to conjure a benign explanation, as the DNC recognized when it returned millions of dollars of suspect funds after the election.

In the meantime, new revelations about Hubbell formed a second avenue of suspicion. Clinton’s indignant assertions of January that “no one around here” knew anything about Hubbell’s lucrative employment were soon exposed by investigators and reporters as false. Clinton’s loyal aide Bruce Lindsey had known shortly after the Lippo contract was made. Mack McLarty, then the chief of staff, had called business friends on behalf of Hubbell in the spring of 1994, and later testified that he told Hillary Clinton about his efforts. Bowles, then serving as the administrator of the Small Business Administration, had likewise made calls to business contacts recommending Hubbell. So had Vernon Jordan. Just two days before James Riady had hired Hubbell, Riady had met with Clinton at the White House. It remained possible that the president had not been informed of any of this activity on Hubbell’s behalf until he “read it in the press.” Yet to believe that required giving Clinton the benefit of the doubt in the face of suspicious circumstances. Few in political Washington—not the press, not the Republicans in Congress, or even many Democrats—were of a mind to do that anymore.

The scandal’s third line of inquiry was less about specific violations of law than of simple decorum. In 1995 and 1996, Clinton had been a desperate man. The pursuit of campaign cash had been a matter of survival. In this urgent atmosphere, the procedures and restraints that would have saved later embarrassment came tumbling down—and all manner of unsavory figures came waltzing in. There was Johnny Chung, whom Clinton’s own national security aides had described as a “hustler” who should be kept away from the White House. Instead, he went to the White House some fifty times. On one occasion he arrived in Hillary Clinton’s office with a $50,000 check. “You take, you take!” he urged in broken English to the first lady’s aides. Her chief of staff did exactly that, passing the money on to the DNC. It turned out some of the money had come from an executive in a Chinese aerospace firm. Chung later told an interviewer that he viewed the White House “like a subway: you have to put in coins to open the gates.” Others viewed it similarly. There was Charlie Trie, a Little Rock restaurateur whose Chinese joint Governor Clinton had enjoyed. When Clinton became president, Trie set up shop in Washington as a fund-raiser and as a for-hire facilitator of export deals to Asia. He showed up in the offices of Clinton’s legal defense fund—established to help pay the president’s Whitewater bills—with $460,000 in sequentially numbered money orders, ostensibly from different people but all filled out in the same handwriting. Among those Trie escorted to the White House in twenty-three visits was a Chinese arms dealer for a meet-and-greet with the president. That had been at one of the White House “coffees” in which prospective donors were treated to sweet rolls and hour-long sessions with the president, usually a day or two before the DNC moneyman called. Also joining Clinton for coffee were a New Jersey stock swindler with a recent conviction and ties to the Gambino crime family, and Roger Tamraz, a controversial Lebanese-American businessman who was trying to win administration backing for his Caspian Sea oil pipeline project. Once again, national security aides waved flags, saying Tamraz was trouble and should be kept out. Instead, after $177,000 in contributions, he was let in four times. “Good to see you again,” Clinton cooed in a videotape of the coffee later made public.

More than the hustlers, more than the coffees, what seemed to ignite public outrage that year was the Lincoln Bedroom. In Clinton’s term 938 guests stayed in the Executive Mansion, including in the historic Lincoln Bedroom and the Queen’s Bedroom, directly across the hall. More nights than not in the White House, the Clintons had houseguests, people staying literally just down the hall from their own bedroom. Many were longtime friends from Arkansas. Some were celebrities whom the Clintons wanted to get to know, like Tom Hanks, Chevy Chase, and Steven Spielberg. But dozens of others seemed to have had little or any previous relationship with the Clintons other than that they gave significant contributions to the Democratic Party. Clinton had raised the money he needed to pay for Dick Morris’s ads in 1995 and 1996. In the process he had left a flatulent air—the scent of garishness and greed—wafting over his White House.

When the watchdog group Center for Public Integrity first alleged in the summer of 1996 that Clinton had turned the White House into a “Fat Cat Hotel,” Clinton spokeswoman Ann Lewis said the suggestion that contributions and overnight invitations were linked was an “outrageous accusation, without one shred of evidence.” But evidence, in Clinton’s own hand, was soon unearthed. A subpoena of Harold Ickes’s political papers forced the disclosure of a note Clinton had scrawled after his December 1994 meeting with fund-raiser and future DNC chairman Terry McAuliffe. The fund-raiser had told the president he needed to be more attentive to the party’s most generous donors, some of whom had felt neglected since 1992. Clinton agreed, and days later scribbled a note on a memo to his staff. Now his words were in cold daylight: “Ready to start overnights right away.” He admonished his staff, “Give me the top ten list back, along with the 100, 50,000” dollar donors.

The response to this latest revelation brilliantly illuminated an unbridgeable gulf. It was the difference in how Clinton perceived himself and his motives, and how he and they were perceived by others, in particular by the press. Even the imperturbable Lewis, who would point to the sunny skies shining on Clinton no matter what storm was raining down, had to modify her defense in light of inconvenient new facts. Yes, she acknowledged, the Clintons had invited friends to stay with them, and also people who “weren’t friends yet.” Clinton, by contrast, was not prepared to yield at all. On February 25, the day the White House released his handwritten note to McAuliffe, Clinton was asked to explain why he had used the White House residence for fund-raising. “That’s one more false story we’ve had to endure.” Clinton was not lying. He was not even trying to deny the facts of his memo. Instead, he was employing his singular ability to blend facts and language into a description of reality that felt true to him. Charles Krauthammer, the conservative commentator, aptly summarized the view of Clinton prevailing that year among establishment Washingtonians of all ideological stripes: “Richard Nixon was laid low by his enemies list. How fitting that Bill Clinton should be laid low by his friends list. . . . Has there ever been a president so lacking in discrimination in his choice of friends, associates, liaisons, partners? So willing to embrace, engage, exploit, transact with anyone? So ‘ready to start overnights right away’?”

Al Gore had spent years in the House and Senate without any taint of scandal. As vice president, he had long worried that the bubbling pot of Clinton’s ethical controversies might splatter on him. When Whitewater first reached a boil, he nervously asked a top aide, “How many times do I have to stand up for them? Do you think my credibility is being hurt by this?” Whitewater had not splashed on Gore, but the “Funny Money scandal” (as the New York Post dubbed it) was indeed lapping at the vice president’s office. This was fair. Ever the loyal soldier, Gore had plunged into the job of raising money with his usual discipline. In so doing, he had found himself in circumstances both absurd and indefensible. One of the indelible images of the 1996 campaign had been a sober-faced Gore wearing a necklace of flowers as he was escorted to speak at the Hsi Lai Buddhist Temple in Los Angeles, where monks take vows of poverty. That did not prevent John Huang from raising $140,000 at the event, including some in envelopes from monks filled with $5,000 in cash. The money, plainly from other sources and therefore illegal, was returned by the DNC. Meanwhile, Gore was learning to cleave to Clintonesque distinctions. At first he explained that he had thought the event was “community outreach.” When documents he had viewed cast doubt on this, he allowed that the temple was a “finance-related event” but not a fund-raiser, apparently since no money was raised until afterward. This level of pettifoggery required an expert, but Gore was an amateur. He was in palpable agony.

Gore and Clinton had at first tried to defend themselves by saying that the fund-raising problems had been at the national party, not the Clinton-Gore re-election campaign—overlooking the fact that the DNC was under the White House’s direct control. The Washington Post’s Dan Balz, in a January 1997 interview, pressed Gore on this seemingly spurious distinction. His answer began with a four-second pause. “Uh,” he finally began, followed by another four-second pause, “well,” and here a two-second pause, “the DNC is a, uh, uh, different entity from the campaign, uh, and uh.” The sentence trailed off, followed by a twelve-second pause. “That, that’s a fact,” he finally concluded.

This paralysis under pressure did not bode well for the vice president, who had been planning to steadily raise his profile in the second term, in preparation to be Clinton’s successor. An even more anguishing moment came in early March, when questions were raised about Gore’s making fund-raising solicitations from his White House office. If so, this was possibly a violation of federal law, though a seemingly trivial one, since if Gore had walked to a pay phone across the street the calls would have been perfectly legal. Gore decided he needed to address the controversy at once, and hurriedly called a news conference in the White House briefing room to offer his defense. In preparation, Charles Burson, Gore’s lawyer, told him there was “no controlling legal authority” about the calls—in other words, no legal precedent that suggested what Gore did was wrong. The vice president had a mind that fixed on precise facts and phrases, and somehow he fixed on this one. Over and over, seven times in a twenty-four–minute encounter with reporters, he invoked the term about “no controlling legal authority.”

Clinton, watching in mounting dismay on television in the Oval Office, moaned, “What is he saying? This is horrible, this is horrible.”

Upon the vice president’s return to the Oval Office, Clinton beamed and told him, “Al, you did great!”

Despite the president’s protests, the campaign finance furor of 1997 was not an invention of the news media or the Republicans. What responsible reporter or opposition would ignore reports of mysterious hustlers showing up at the White House with envelopes of campaign cash? Clinton’s evasive response was characteristic, too, as he described strangers as friends and acted as if he could change facts by proclamation. Still, what happened in 1996 was about sloppiness and excess, no more. No criminal wrongdoing was ever uncovered. The Democratic moneymen, including Huang and Chung, pleaded guilty to fund-raising violations, but no link to espionage or Chinese government infiltration was ever established. And like so many of the Clinton scandals before it, it faded slowly away.