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Indonesian's payment to Hubbell came after visit to White House

New York Times - March 20, 1997

Stephen Labaton and Jeff Gerth, Washington – In late June of 1994, Indonesian businessman James Riady saw President Clinton and some of his aides in five days of White House visits ending on a Saturday. Early the next week, one of Riady's Hong Kong companies paid about $100,000 to Webster Hubbell, the president's close friend, who was then facing a rapidly unfolding criminal investigation, according to people in the United States and abroad familiar with the arrangement.

The payment, from one of a number of Clinton friends who hired Hubbell when he ran into his legal troubles and resigned from the Justice Department, was made soon after he had begun withholding important personal financial documents from Whitewater investigators, according to people familiar with the 1994 inquiry.

By then, these people say, the investigators had largely built the criminal case against him, for defrauding his former law partners and clients.

Riady's visits to the White House have been known for some time, and it was recently disclosed that he paid Hubbell about $100,000 through the Hong Kong company in 1994 for services that the two men have repeatedly declined to describe. But it has not been previously known how closely that payment followed Riady's White House visits.

David Kendall, the first family's personal lawyer, said Wednesday that "neither the president nor Mrs. Clinton ever asked or suggested that anybody hire Web Hubbell," and a presidential spokesman said the same applied to other White House officials.

While it was previously known that Bruce Lindsey, a senior White House official, was aware in 1994 that Riady had hired Hubbell, current and former aides say that at least two other high officials also knew then of Riady's financial support for him.

The aides also say that Riady's relationship with Clinton became a source of quiet concern to presidential advisers and that they went to great lengths to keep it out of public view.

The timing of the meetings produces a chain of events that has attracted the attention of Congressional investigators and the Whitewater independent counsel, who are now focusing on whether Clinton or other officials played a role in lining up financial assistance for Hubbell at a time when he was deeply in debt, facing growing legal difficulties and emerging as a key witness in the Whitewater investigation.

A central question for the investigators is whether Hubbell, who received more than $400,000 in income in 1994, much of it from companies controlled by friends and supporters of Clinton, was paid to discourage him from cooperating in the Whitewater inquiry.

White House lawyers have received a grand jury subpoena seeking information about what officials knew of Hubbell's dealings with the $12 billion empire controlled by the Riady family.

Hubbell, a former law partner of Hillary Rodham Clinton whom the president has called his closest friend, stepped down as associate attorney general in April 1994 to deal with the criminal investigation.

That December, he pleaded guilty to two felony counts of bilking his former clients and law partners of nearly $400,000. In a sign that prosecutors did not believe he had been fully forthcoming, they declined to recommend a reduction in his prison sentence, which he completed last month after serving a year and a half.

Hubbell has denied that the Riady payment or any other income he received in 1994 affected his level of cooperation with investigators.

The White House has not disclosed many of the details of Riady's White House visits, and Riady himself, who with associates is now also at the center of separate campaign financing investigations, has declined repeated requests for interviews.

Clinton has said through his aides that he may have known about some other payments to Hubbell in 1994. But he has also said he did not know of the Riady payment until he read about it in the press last year.

At a news conference two months ago, the president was asked whether he found the Riady payment unusual or suspicious, and what steps he had taken to find out whether it had been hush money. Clinton appeared surprised by the question, and replied:

"I can't imagine who could have ever arranged to do something improper like that and no one around here know about it. We did not know anything about it, and I can tell you categorically that that did not happen. I knew nothing about it. None of us did before it happened. I didn't personally know anything about it until I read about it in the press."

Asked Wednesday whether either of the Clintons was aware of Riady's payment to Hubbell when it was made, Kendall, the first family's personal lawyer, declined to comment.

Because of his close ties to the Clintons, Hubbell has long been regarded by investigators as a crucial witness in the long-running examination of the president's political and personal finances. He has also been considered important because of his friendship with his former law partner Vincent Foster, who committed suicide in 1993 a few months after becoming deputy White House counsel.

Hubbell and Foster played an important role during the 1992 presidential campaign in shaping the Clintons' version of the Whitewater affair, a version that would later come under intense scrutiny by investigators. They also handled files at the Rose Law Firm in Little Rock, Ark., where they and Mrs. Clinton were partners, concerning her role in the affair. Some of the files, long sought by investigators, eventually surfaced. Others remain missing.

During the spring of 1994, both before and after he resigned from the government, Hubbell told close friends that he was simply engaged in a billing dispute with his former partners at the Rose firm. In fact, by that time he knew that criminal investigators were closing in on him, according to many of the people involved in the inquiry.

Shortly after Hubbell left the Justice Department that spring, he received two subpoenas from Whitewater investigators. One ordered him to provide any documents he might have from the Rose firm that would shed light on the Clintons' business dealings. The other sought documents for an examination of his own personal finances.

The second subpoena was prompted by questions raised by his former partners, who had been unable to account for huge expenses he had billed to them and to clients. He offered a cash settlement to resolve the dispute quietly, but the firm declined the offer, according to lawyers who were involved in the matter.

Hubbell at first cooperated with the investigators, but in June he reversed course and declined to produce expense documents that were being sought, according to people involved in the inquiry.

By the end of June, they said, the case against him had been largely made. Hubbell has provided few details publicly about his work for the Riady family and other clients who hired him after he left the Justice Department. The $100,000 from the Hong Kong company was paid to him in the last week of June that year, possibly with the stated purpose of his helping to set up a Washington office for the Riady businesses, according to people familiar with the arrangement, including associates of the Riadys in Asia.

Shortly before the payment, Riady was in Washington to see his old friends in the White House, including the president. The two men had become friends more than a decade earlier, when Clinton was governor of Arkansas and Riady was an executive at a Little Rock bank partly owned by his family. The Riadys had become major donors to the Democratic Party by 1992 and gave $100,000 to Clinton's 1993 inauguration committee. They soon became frequent guests at the White House.

From June 21 to June 25, 1994, Riady paid a series of visits to the White House, where he saw Clinton and presidential aides, according to the White House. Security logs indicate that Riady attended a large business reception with Clinton there on Tuesday, June 21, and the taping of a presidential radio address on Saturday, June 25.

Officials say the logs also show that he was at the White House on Wednesday, Thursday and Friday of that week, for a variety of meetings and other events.

White House aides say they have no records to indicate how much Riady saw of Clinton or other officials with whom he met on those occasions, or what was discussed. Riady also met some officials that week in his room at the Hay Adams Hotel, across Lafayette Park from the White House.

Around the time of Riady's visit, his family had several important matters pending in Washington. Most broadly, as major entrepreneurs in China, their ancestral homeland, where they have close ties to the government leadership, they wanted the Clinton administration to renew China's most-favored-nation trade status. In late May of that year, Clinton reversed course and renewed it.

Among the Riady business ventures was a plan to build a joint U.S.-Chinese power plant in northern China. The U.S. endorsement of the project was announced by Commerce Secretary Ron Brown at a trade mission in Beijing in August 1994. The project was later shelved.

The Riadys were also interested in landing a post in the Clinton Administration for their senior American executive, John Huang. Huang had been under consideration for a job in the Commerce Department for some time. He was formally notified of his appointment as a mid-level trade official June 7 of that year, according to Commerce Department records.

Finally, the Riadys were looking ahead to November, when Clinton was to join Asian-Pacific leaders at a meeting in the family's hometown, Jakarta.

While the family viewed the gathering as an opportunity to showcase Indonesia, some White House aides had come to see the Riadys as a public relations problem, White House advisers say.

The precise reason for the aides' concern remains unclear, but after Hubbell's conviction some investigators came to suspect that the Riadys had hired him to use his ties in Washington to arrange for the president to see them in Jakarta, according to former investigators.

Several weeks before the presidential visit, some officials knew that the supposedly cash-strapped Hubbell had been to Indonesia, meeting with Riady. Along the way, he had stopped off in Bali, where he had played golf as a guest of the Riady family's main company, according to associates of his.

In this atmosphere, White House aides took steps to reduce the possibility of Clinton's being seen with Riady in Indonesia.

The Riadys had planned to have Clinton stop by a real estate development of theirs to visit a school that was named for Hope, Ark., his hometown. The plan was dropped after consultations between some White House aides and the U.S. Embassy in Jakarta, according to U.S.officials and White House advisers.

In addition, they said, at least one senior White House aide stood close to the president when he appeared in public during the Jakarta visit, to reduce the possibility that he would be photographed with one or another of the Riadys.

White House aides also intervened to stop a proposed visit to the meeting by a group of Arkansas businessmen with close ties to the president, Hubbell and the Riadys. That visit was to have been underwritten by a Riady company.

Nonetheless, members of the family actually did see Clinton at least once during the trip, at a Chinese restaurant reception where the Riadys' conglomerate, the Lippo Group, played host.

The company's spokeswoman, Dewi Dharmanan, told reporters during the visit that the president also saw Riady at his home late that night after the reception. But White House aides say that as far as they know, Clinton saw him only at the reception.

Since the Riady family's relationships to Clinton and the Democrats came under heavy scrutiny in the closing weeks of the 1996 presidential campaign, White House aides have provided conflicting and incomplete accounts of them.

While White House press secretary Mike McCurry initially insisted a few months ago that no one at the White House knew of Hubbell's arrangement with the Riadys in 1994, some details of the arrangement were known in 1994 by Lindsey, one of Clinton's closest aides.

And at least two other high-ranking administration officials also knew of Riady's support for Hubbell – indeed, one of them learned of it from Riady – former aides and their associates now say.