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Behind the Clinton cocaine smear
Conservative billionaire funded secret investigation of Clinton's alleged drug connections.
BY MURRAY WAAS | Conservative billionaire Richard Mellon Scaife secretly paid more than $250,000 to two law firms and a former Mississippi law enforcement official to investigate allegations that President Clinton, while governor of Arkansas, ordered local law enforcement authorities to protect the activities of a cocaine smuggling ring operating in his state.
The investigation was part of a broader, three-year, $2.4 million anti-Clinton campaign funded by Scaife from June 1993 to December 1997, known as the "Arkansas Project."
As part of the Arkansas Project, Scaife retained a private investigator and former Mississippi state law enforcement officer named Rex Armistead to look into Clinton's alleged drug connections, according to documents and sources. Armistead is a former director of the criminal investigation section of the Mississippi Department of Public Safety.
The disbursements to Armistead and two law firms are detailed in financial records obtained by Salon, and the role of the private investigator was described by four sources.
Armistead supplied information about his Clinton drug investigation to the House Banking Committee, which conducted an exhaustive two-year probe of the charges, according to a committee spokesman. Federal investigators have found no evidence to support the allegations, which have been widely circulated by fierce conservative opponents of the president.
The investigative effort by Armistead was so secretive that funds that were paid by Scaife to Armistead were first funneled through two tax-exempt foundations, and then through two law firms before they finally reached Armistead.
Later, Armistead, while twice being interviewed by agents of the Drug Enforcement Agency, misled the federal agents about the true source of his investigation's funding, according to the confidential reports of those interviews obtained by Salon.
Armistead was hired by Scaife to investigate allegations that President Clinton, while governor of Arkansas, ordered state law enforcement officials to turn a blind eye to a cocaine smuggling ring operating out of the small airport of Mena, Ark., about 120 miles southwest of Little Rock.
Almost no expense was spared for Armistead's investigation of the Mena allegations: Armistead took trips to Europe and the Central American nation of Belize to pursue the charges. He also traveled extensively across the United States in the effort.
In a brief telephone interview, Armistead refused to answer most of a Salon reporter's questions about his Mena investigation. He did say that the reporter had false impressions of his work, threatening, "You better be careful what you write, or I'm going to put a lawsuit on you."
Armistead also called the reporter a "punk" and implied that he had investigated the reporter's personal life. "Are you a Jew?" he asked the reporter. When the reporter replied, "I'm Jewish," Armistead said, "I thought so."
Allegations about Clinton and the Mena drug trafficking ring have been publicized for several years by numerous conservative political organizations and media outlets. According to these stories, then-Gov. Clinton ordered Arkansas state officials to overlook the Mena operation because a wealthy campaign contributor was said to profit from the illicit activity, and also because proceeds from the smuggling were allegedly funding a covert CIA operation.
No credible evidence, however, has ever come to light to substantiate the charges.
Indeed, two official U.S. government investigations of the matter -- by the House Banking Committee and the CIA Inspector General -- have found the charges to be groundless.
The first allegations regarding Mena were made on talk radio shows and in videos produced and distributed by the Rev. Jerry Falwell and Citizens for Honest Government, a conservative, Orange County, Calif.-based political organization. Citizens for Honest Government also covertly paid individuals identified in the group's accounting records as "expert witnesses" who were later quoted in the American Spectator and the Wall Street Journal.
As Salon reported, the Wall Street Journal articles prompted House Banking Committee Chairman Jim Leach, R-Iowa, to launch an investigation of Mena allegations. In an interview with Salon, David Runkel, the House Banking Committee spokesman, said that House Speaker New Gingrich encouraged Leach to undertake the investigation and that Gingrich followed its progress.
"I don't know the frequency or the nature of the contacts between Mr. Leach and the Speaker," Runkel said. "But I do know that Mr. Leach has kept the Speaker appraised and that the Speaker has been appreciative."
Armistead provided information from his Mena investigation to federal law enforcement officials, journalists for conservative publications such as the American Spectator and investigators for the House Banking Committee, according to documents and sources.
Runkel confirmed that committee investigators had spoken with Armistead on numerous occasions. "More than one of our committee staff spoke to him several times," Runkel said. "But information for our investigation was gathered from hundreds of people. Mr. Armistead was not a primary source."
Twice, Armistead also met with agents of the Drug Enforcement Agency to provide information to them about his Mena investigation, according to confidential DEA reports obtained by Salon.
Armistead urged DEA agents to investigate the Mena allegations. But the DEA agents conducting the interviews were also interested in who was funding Armistead's efforts, the DEA reports indicate.
During both interviews with the DEA, Armistead misled agents as to who was behind his investigation. In one interview with DEA agents, Armistead said that he had been retained by a law firm that represented the Republican National Committee. A spokesman for the Republican National Committee said they knew nothing about Armistead. In a second interview with the DEA, Armistead said he was working with the House Banking Committee.
But in an interview, Armistead denied ever meeting with investigators from the House Banking Committee or the Drug Enforcement Administration.
Information unearthed by Armistead was also used for a series of articles written about Mena that appeared in the American Spectator, written by the magazine's editor, R. Emmett Tyrrell Jr. The articles on Mena were published over the objections of other editors at the magazine, including one who resigned over the matter, sources at the conservative magazine said.
In conversations with others at the Spectator, the sources said, Tyrrell often referred to Armistead as "my investigator."
Indeed, the American Spectator played a key role as a conduit through which Scaife sent funds to Armistead and other agents of the Arkansas Project, two sources said.
Under the scheme, two of Scaife's tax-exempt foundations transferred as much as $600,000 a year to the American Spectator Educational Foundation, which owns the conservative magazine. The American Spectator, in turn, then transferred almost all of the funds to Stephen S. Boynton, an attorney with long-standing ties to Scaife, according to documents detailing the financial transactions.
Boynton then transferred funds to another law firm, which then paid Armistead to conduct his investigation, two sources said.
In an interview, Armistead said he knew nothing about Scaife or the Arkansas Project. Armistead said that he was paid for his investigation by a Clinton, Miss., attorney, William E. Spell.
In an interview, Spell denied that he had ever retained Armistead to investigate the Mena matter. He also denied having anything to do with Scaife, the Arkansas Project, the American Spectator or Stephen Boynton "I don't even know who the hell these people are," said Spell. "I live in the South. I am trying to forget the North."
But Spell said he had retained Armistead to
investigate other matters: "He and I have been involved in some matters
that involve sensitive national security issues, and I'm not at liberty
to talk about them. It would not be good for the national security. And
it would not be proper for the attorney-client privilege to be
Murray Waas is a frequent contributor to Salon. Additional reporting by Joe Conason and Gene Lyons. Research assistance by Mike Evans and Deirdre Hussey.
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PHOTO BY AP/WIDE WORLD