Clinton officials blocked probe, counsel says

A 10-year, $22 million investigation into former Housing Secretary Henry G. Cisneros says Clinton-administration officials blocked an independent counsel probe into his failure to pay income taxes on “hush money” payments he made to a mistress.

The inquiry by independent counsel David M. Barrett concludes in a 474-page report that the treatment of possible criminal charges against Mr. Cisneros by the Clinton Justice Department and Internal Revenue Service “was at best questionable and at worst represented serious wrongdoing.”

“There seems to be no question that Cisneros was given special consideration and more limited scrutiny because of who he was — an important political appointee,” according to the heavily redacted report, released yesterday.

Mr. Barrett, in the report, said that, “enough high-ranking officials with enough power were able to blunt any effort to bring about a full and independent examination of Cisneros’ possible tax offenses in the face of what seemed to many to be obvious grounds for such an inquiry.”

He said his office received “little in the way of cooperation” from Justice and IRS, “whose purpose should be to protect the public interest and not to circle the wagons in protection of government personnel.”

In a press release yesterday, Mr. Barrett said he hoped the public would read the entire report and draw its own conclusions.

“After a thorough reading of the report it would not be unreasonable to conclude as I have that there was a coverup at high levels of our government and, it appears to have been substantial and coordinated,” he said. “The question is why? And that question regrettably will go unanswered. Unlike some other coverups, this one succeeded.

“An accurate title for the report could be, ‘What We Were Prevented From Investigating,’ ” he said.

Justice Department and IRS officials denied the accusations, calling the report flawed. Attorneys for Mr. Cisneros, in a letter attached to the report, said they had moved on six years ago and suggested that Mr. Barrett do the same.

The report was completed in August 2004, but was held pending challenges to its release by lawyers representing those involved in the probe. A court order eventually called for the redaction of 120 pages — although several lawmakers, including Sen. Charles E. Grassley, Iowa Republican and chairman of the Senate Finance Committee, yesterday said they will challenge the ruling to ensure the document’s full release.

Mr. Grassley described the report’s finding as “troubling.” He said that despite the significant redactions, “I can see why so many people were fighting to keep the report from seeing the light of day.”

“The conclusions cast a very troubling light on the actions of the Clinton administration that suggest that high-ranking officials did not believe the tax laws should apply to friends of the Clinton White House,” he said. “Proper and equitable enforcement of the tax laws is a bedrock of our nation and faith in our tax system.”

Mr. Barrett said the White House was aware of Mr. Cisneros’ possible tax problems and about misstatements he made to FBI investigators concerning the payments to his mistress before his nomination as housing secretary, but was not concerned about the relationship and was determined to name the Hispanic former mayor of San Antonio to the Cabinet.

He said that despite a 1997 memo by an IRS investigator in Texas saying there was evidence that Mr. Cisneros illegally diverted substantial amounts of cash from personal speaking fees to former mistress Linda Medlar, the case was taken over by IRS officials in Washington who ruled there was insufficient evidence to proceed with a criminal investigation.

Mr. Cisneros, facing an 18-count felony indictment, pleaded guilty Sept. 7, 1999 to a misdemeanor count of lying to the FBI about cash payments he made to Miss Medlar, his former lover. The plea was accepted by U.S. District Judge Stanley Sporkin, who ordered Mr. Cisneros to pay a $10,000 fine. He later was pardoned by President Clinton.

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