When Did He Know It?

In late February, with leaked documents in hand detailing what appears to be a clear conflict of interest in the Whitewater investigation being carried out by special prosecutor Kenneth Starr, The Nation sought an interview with him. Starr's press secretary said that he would respond only to queries in writing, and so a list of questions was swiftly faxed to Starr's Little Rock office. No answers ever came back.

The questions revolved around what the documents, from court and Resolution Trust Corporation records, showed: that Starr's law firm, Kirkland & Ellis, was being sued by the R.T.C. for professional negligence at the same time he was investigating R.T.C. officials in his role as independent counsel. Furthermore, beyond the institutional link, some R.T.C. personnel figured as both decision-makers in the suit against Starr's firm and as subjects of his Whitewater inquiry. All this neither Starr nor the R.T.C. had ever made public; in fact, the R.T.C.'s complaint against Kirkland & Ellis was settled in January with the law firm paying $325,000 but each side promising secrecy as part of the deal.

With a prepublication copy of the resulting Nation story in hand ["The Dual Roles of Kenneth W. Starr," March 18], CBS News had slightly better luck when it called Starr's office on February 28 for comment. On the CBS Evening News that night, Dan Rather mentioned Starr's response to the network, namely that Starr "himself, he says, had raised the conflict issue in advance with what he calls 'ethics reviewers,' who, he said, found no conflict of interest."

That cursory reply left many issues hanging. What did Starr know about that million-dollar lawsuit against his partnership, for example, and when did he know it -- and when did he reveal this potential conflict to the "ethics reviewers," or to anyone else?

On February 29 those matters were raised on Capitol Hill during a hearing of the House Judiciary Committee's subcommittee on crime, which was reviewing the independent counsel statute under which Starr was appointed. At that hearing, Representative Charles Schumer said he wanted to know whether Starr had informed the judges who appointed him in August 1994 about the R.T.C. litigation, and whether Starr had at any time discussed the lawsuit or a possible settlement with his partners at Kirkland & Ellis. The Congressman also wondered aloud about when Starr had informed his outside ethics counsel, Sam Dash, of the lawsuit, and whether Dash had rendered a formal opinion in writing about the potential conflict. "It may well be that Mr. Starr has a convincing answer for the appearances that [the Nation] article raises," said Schumer. "But, in any case, we must get the answers." And indeed, Congress got more answers than CBS did: Five days after the hearing, Bill McCollum, chairman of the crime subcommittee, received a letter from the Office of the Independent Counsel purporting to lay out the facts.

According to the letter, an R.T.C. official telephoned Mark Tuohey, then Starr's deputy, in "approximately March of 1995" to inform Starr of the existence of the R.T.C. suit against his law partnership. "Mr. Tuohey was told that the lawsuit involved conduct that predated Judge Starr joining Kirkland & Ellis," the letter noted. What it didn't mention was that the lawsuit was filed after Starr had joined the firm, and would thus have affected him as a partner, both financially and with respect to the firm's reputation.

The letter from the independent counsel's office states that "after being informed of the lawsuit by Mr. Tuohey," Starr asked him -- as the "Designated Agency Ethics Officer" -- and Dash, the outside ethics counselor, "to consider whether any actions needed to be taken in light of this information." They rendered an oral opinion that no ethics rules required Starr to be recused from investigation of R.T.C. officials, because the lawsuit's issues preceded his arrival at Kirkland & Ellis and because "he had not and would not have any participation in the R.T.C. litigation."

After press inquiries about the lawsuit last August, the letter continues, Starr again asked Tuohey and Dash if he should recuse himself. At that point, the ethics watchdogs "spoke with Kirkland & Ellis...and were told that as of Judge Starr's appointment, as Independent Counsel the attorneys at Kirkland & Ellis involved in the litigation with the R.T.C. had made a determination to wall him off from any participation.... Kirkland & Ellis also stated that prior to Judge Starr's appointment, the R.T.C. litigation would not have reached a stage where it would have been brought to his attention as a member of the firm's governing committee." This was good enough for Dash and Tuohey, who reiterated that Starr need not recuse himself from investigation of the very R.T.C. officials who had sued his law firm.

The most obvious problem with the account provided by Starr's office is its avoidance of the central question: Exactly when did he learn about the R.T.C. lawsuit? Without explicitly stating it, Starr's letter implies that he knew nothing about the litigation until March 1995, seven months after his appointment as special counsel. That seems implausible -- especially given the fact that in 1993, two officers of First America Savings Bank, his law firm's client, had been convicted of felonies related to the same fraudulent tax transactions that were the basis for the R.T.C. charge of negligence against Kirkland & Ellis. Is it credible that the firm's governing committee would be unaware for more than a year of
a million-dollar legal action brought against the partnership by a federal agency? Starr's insensitivity to ethical problems or the strong appearance of them has become part of his track record -- making a vague accounting in this instance particularly troubling. Technically couched answers denying specific violation of laws is a loophole game and hardly exercises ethical probity.

What is clear from the chronology provided by Starr's office is that the R.T.C. officials knew they were suing the law firm of the special prosecutor who was investigating them -- and who might decide to indict them for obstruction of justice. How that ominous knowledge affected their treatment of Kirkland & Ellis, whose settlement of only $325,000 was significantly below the $1 million that R.T.C. attorneys thought could be levied against it in court, is another question that remains unanswered.


JOE CONASON AND MURRAY WAAS


Joe Conason is a columnist and executive editor of The New York Observer. Murray Waas is a Washington reporter.


Copyright (c) 1996, The Nation Company, L.P. All rights reserved. Electronic redistribution for nonprofit purposes is permitted, provided this notice is attached in its entirety. Unauthorized, for-profit redistribution is prohibited. For further information regarding reprinting and syndication, please call The Nation at (212) 242-8400, ext. 213 or send e-mail to Peter Rothberg.


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