Special Counsel to Probe House Checks Scandal

Atty. Gen. William P. Barr on Friday appointed a special counsel to investigate the spreading House bank scandal, as outrage within the Capitol increasingly focused on House Speaker Thomas S. Foley (D-Wash.) and his leadership of the institution.

With election-year polls showing public confidence in Congress at its lowest point ever, Foley announced that he plans to take steps to curb privileges that House members have long enjoyed, such as free prescription drugs. He also has asked that members be charged for use of the House gym facilities.

However, some on Capitol Hill say those measures are far too modest to quiet the political uproar as one House operation after another is accused of corruption and mismanagement.

In the space of a few months, the House bank has been closed after it was revealed that it routinely floated members interest-free loans by allowing them to write thousands of overdrafts, members were found to have run up tens of thousands of dollars of unpaid bills in the subsidized House restaurant and the House post office has been accused of cashing members’ checks in violation of federal postal regulations.

Barr named retired federal judge Malcolm R. Wilkey as special counsel for the House bank case, saying that the scandal requires the full-time attention of a respected, nonpartisan legal figure. The U.S. attorney for the District of Columbia had been handling the probe.

Wilkey, 73, sat on the federal appeals bench in Washington for 15 years and has been a federal prosecutor, senior U.S. Justice Department official and ambassador to Uruguay. Wilkey will conduct a preliminary investigation on the case, then report to Barr.

Meanwhile, the bad-check count continued to rise Friday for some members of Congress.

Ethics Committee officials notified Rep. Barbara Boxer (D-Greenbrae) that she had written 143 bad checks in the 39-month period under scrutiny--not the 87 checks that the congresswoman has admitted drafting. The total face value of the checks was $41,417.82, the officials said, compared to a figure of $29,276.37 that Boxer’s staff calculated.

A spokeswoman for Boxer said she continued to believe her own figures were accurate.

In giving Wilkey a case that was being handled by a federal prosecutor, Barr seemed to be trying to lend credibility to an investigation that comes in an election year and now involves both Republicans and Democrats.

In a statement, Barr said, “Given the unique circumstances and public sensitivities of this matter, I have concluded that the public interest will be served by appointing an individual . . . who will be able to devote his full-time and undivided attention to the task.”

The appointment, he added, “does not represent any escalation of the Justice Department’s effort, or any change in the nature of the inquiry.”

Barr was a law clerk to Wilkey after Barr graduated from law school in the 1970s. Wilkey left the federal bench in 1984, and has since served as ambassador, and as chairman of President Bush’s Commission on Reform of Federal Ethics Laws.

As they turned the focus of the House scandal more sharply on Foley, critics said the Speaker was aware--or should have been--of the abuses and failed to stop them. Because he did not crack down on the worst offenders, angry House members contend, those whose transgressions amounted to a handful of bookkeeping errors could find themselves suffering the same consequences as those who knowingly wrote one large bad check after another.

But Foley has his staunch defenders. One aide to the House Democratic leadership noted that General Accounting Office audits of the House Bank have been public record since 1977. “The paradox is it’s finally being cleaned up on the Speaker’s watch, but the Speaker is being criticized for it,” he said.

Even before the latest furor, many House members were privately critical of Foley’s leadership style, saying he is too much a creature of the institution--low-key, conciliatory and unwilling to do battle with the Republican White House. Paradoxically, however, lawmakers hailed those very traits in Foley when he assumed the office, after the combative and autocratic Jim Wright (D-Tex.) was forced to resign under an ethical cloud in 1989.

Now, some are saying for the first time that Foley’s future as House leader may be in question. In the past few days, members of Foley’s own party have even taken the relatively unusual step of criticizing the Speaker in public.

Earlier this week, Rep. Joseph D. Early (D-Mass.) declared on the floor of the House that he had never intentionally written any of the 140 overdrafts of which he reportedly is accused, and added that the way in which Foley has handled the matter is “a disgrace.”

Behind the scenes, the grumbling is even more intense.

“Staffers are furious; members are furious. So a coup wouldn’t surprise me,” one Democratic staff member said, adding, “I have no idea who has the guts to lead it.”

Such talk has reached the point where some are even speculating about a successor to Foley, with the names of House Majority Leader Richard A. Gephardt (D-Mo.) and Rep. Vic Fazio (D-West Sacramento), head of the Democratic Congressional Campaign Committee, being mentioned most frequently. But spokesmen for both lawmakers dismissed the possibility of Foley’s ouster.

Foley has defended himself by noting that he demanded changes in the bank as far back as 1990, but that they were never implemented by Sergeant-at-Arms Jack Russ, who recently resigned. In that job, Russ was in charge of the bank, where he cashed $56,100 worth of bad checks over a 13-month period.

Foley’s explanation has satisfied few. “There is something very weak in the Speaker saying, ‘I told him to do it. Can I help it that he didn’t do it?’ Give me a break,” one Democratic aide said.

One angry Democratic House member, speaking on the condition that he not be identified, said that when Foley has been confronted about the matter by House members in private, he has argued that a member’s checkbook is a personal matter, and noted that the bank was strictly an in-house operation that did not involve public funds.

That assertion, the Democrat said, ignores the fact that “there seemed to be a little clique of people who figured out the combination to the vault. . . . They were doing something they knew was wrong. They were taking other people’s money.”

House Budget Committee Chairman Leon E. Panetta (D-Carmel Valley) conceded: “There’s no question that the initial anger within most of the members has been directed at the Speaker.” But he said that Foley’s fate “depends a great deal on events over the next few months.”

Foley must move decisively to implement reforms and end the scandal, Panetta said.

But if there are further revelations, or if the questions already raised cost significant numbers of Democrats their seats in this fall’s elections, Panetta said, Foley may face a strong challenge from within his party when he is up for reelection as Speaker next January.

Times staff writers Tracy Wilkinson, Alan Miller, Paul Richter, James Bornemeier, Sara Fritz and Jack Nelson contributed to this story.