Espy Quits Amid Probe of Ethics : Cabinet: Secretary of Agriculture faces allegations of abusing perquisites of office. He apparently hoped to spare the Administration embarrassment.

TIMES STAFF WRITERS

Agriculture Secretary Mike Espy resigned abruptly Monday, apparently hoping to spare the Clinton Administration the embarrassment of an independent counsel's investigation of allegations that he abused the perquisites of office and improperly accepted sports tickets and trips from businesses.

Espy's surprise decision to step down by Dec. 31 ended prematurely the once-promising tenure of the Administration's youngest Cabinet appointee and the first African American to serve as agriculture secretary. With the departure of Defense Secretary Les Aspin, Espy becomes the second Clinton Cabinet official to resign.

The decision also proved to be a humiliating admission of defeat for the energetic young Espy, who had vowed to survive what he claimed were politically motivated and unsubstantiated allegations that he violated ethics laws by accepting the hospitality of such companies as Tyson Foods of Arkansas, Quaker Oats of Missouri and Sun Diamond of California.

Meanwhile, The Times has learned, another Clinton Cabinet official whose actions are under scrutiny, Housing and Urban Development Secretary Henry G. Cisneros, has told White House officials that he is willing to step down, too, if the Justice Department determines that he misled the FBI before his appointment about payments in excess of $200,000 to a former woman friend. She has alleged that Cisneros agreed to pay the money to help alleviate damage to her career as a result of a romantic relationship between them some years ago.

Espy, 40, a former Mississippi congressman, announced his resignation at a hastily scheduled news conference and insisted that he had not been asked to step down by the President or any other White House official.

"This was my choice," he said.

Nevertheless, his resignation came as the White House counsel's office was completing work on an internal review of the Espy matter that apparently uncovered reasons to challenge the agriculture secretary's contention that he had done nothing wrong. Among other things, the White House inquiry uncovered a previously unknown $1,200 "scholarship" that Pat Dempsey, a woman friend of Espy's, received from Tyson Foods.

Sources said that White House Chief of Staff Leon E. Panetta and White House Counsel Abner J. Mikva briefed Espy last Friday on the preliminary results of their review and gave him until Monday to decide how to respond. They were said to have left little doubt that they wanted him to quit.

"We didn't want this to linger," said a senior official, adding that White House officials were determined in this case to avoid the criticism they had received for failing to obtain the prompt resignation of Deputy Treasury Secretary Roger C. Altman after he was accused of lying to a congressional committee.

In a statement accepting Espy's resignation, the President said he was troubled by the appearance of conflict of interest created by Espy's acceptance of favors from industry sources and he concluded that the secretary's resignation was suitable.

"Over the last few weeks . . . the Office of the White House Counsel has reviewed information about Secretary Espy and the actions he took while in office," Clinton said. "Although Secretary Espy has said he has done nothing wrong, I am troubled by the appearance of some of these incidents and believe his decision to leave is appropriate."

Yet because Espy's resignation does not take effect for three months, Clinton will not be forced to face the politically sensitive task of selecting a successor until after the November election. Among the contenders to succeed him are Ruth Harkin, wife of Sen. Tom Harkin (D-Iowa), and Robert Rominger, former California agriculture secretary.

While Espy's resignation spares Clinton the political damage of having a sitting Cabinet member under a cloud, it nonetheless does nothing to limit Espy's own legal liability. The investigation of Espy will continue under independent counsel Donald C. Smaltz.

Among other things, Smaltz is investigating Espy's acceptance of lodging at the picturesque Tyson Management Center after a speech to the Arkansas Poultry Federation and his return trip to Washington aboard a Tyson corporate jet. Dempsey accompanied him on that trip and also enjoyed the Tyson company's hospitality.

In addition, Espy and Dempsey attended a National Football League playoff game as guests of Tyson.

For Clinton, the allegations against Espy related to Tyson Foods were the most politically volatile. The President has often been accused of accepting favors from the head of the corporation, Don Tyson, a prominent Democrat in Clinton's home state of Arkansas.

In addition, some critics claim that while Espy was accepting personal favors from Tyson Foods, his department was slow to act on proposals to improve poultry industry inspections--a charge the secretary has vehemently denied.

Tyson Foods issued a statement Monday reiterating "that our contacts with the secretary were handled appropriately and that at no time did we ever seek special or preferential treatment from anyone at the USDA."

Espy's support at the White House apparently dried up a few days ago when his lawyer, Reid Weingarten, told Clinton's lawyers belatedly about the Tyson "scholarship" for Dempsey. He insisted that she obtained the money without Espy's assistance but White House officials concluded that it had the appearance of an illegal indirect favor to Espy.

Dempsey is said to have received the $1,200 last fall from a foundation run by Tyson, even though Espy has said that he discouraged her at the time from taking it. She recently returned the money after Espy's ethics came under scrutiny, according to one official.

Espy has contended that agribusiness gifts to Dempsey did not violate the law.

Among the other potential ethical violations being investigated by Smaltz:

* Espy's alleged request to Quaker Oats to provide him tickets to a Chicago Bulls National Basketball Assn. playoff game.

* A lavish birthday party for Espy co-hosted by his old college friend, Richard Douglas, a senior vice president of Sun Diamond, a company that benefits from the millions of dollars spent by the Agriculture Department to promote U.S. products overseas.

* A lucrative Agriculture Department contract given to Patricia Jensen, a friend to Douglas. Douglas and Jensen are known to frequently socialize with Espy and Dempsey.

* Dempsey's employment by a firm that frequently lobbies the Agriculture Department for agribusinss clients.

* At least 20 trips that Espy made at government expense to his home state of Mississippi during his first 20 months in office and his decision to charge the government for the lease of a Jeep Cherokee that he drove when he was in Mississippi.

While federal ethics laws prohibit all Cabinet members from soliciting gratuities or accepting gifts that might influence them in their official capacity, Espy, as agriculture secretary, is also bound by the even more restrictive provisions of the Meat Inspection Act. Enacted in 1907, that law prohibits officials with responsibility for overseeing meat inspections from accepting any gratuity such as travel accommodations or sports tickets.

In addition to Rominger, an Espy deputy, and Harkin, who heads the Overseas Private Investment Corp., other potential candidates to replace Espy include Rep. Kika de la Garza (D-Tex.), chairman of the House Agriculture Committee; Rep. Jill Long (D-Ind.), Rep. Dan Glickman (D-Kan.) and Rep. Mike Synar (D-Okla.), who recently lost renomination.

Long and Harkin were passed over for the job in January, 1993. Rominger, a former California farmer, is said to be under consideration because of California's political importance to Clinton. De la Garza, if chosen, would be the first Latino agriculture secretary.

As for Cisneros, sources said he has told White House officials, "if push comes to shove, he's not going to resist" efforts to persuade him to resign. The Justice Department initiated an investigation recently after Linda Medlar, his former woman friend, released tapes of telephone conversations in which he suggested that he had misled the FBI about the nature of the financial payments when agents investigated his background before his nomination in early 1993.

Times staff writers Elizabeth Shogren and Alan C. Miller contributed to this story.

* RELATED STORY: A18

Evolution of the Case

Some of the main events in the months preceding Mike Espy's resignation, according to press reports and investigators:

May 16 1993: Spends night at Arkansas conference center owned by Tyson Foods Inc. Travels next day to Washington on Tyson-owned jet.

June 18: Attends Chicago Bulls basketball game using tickets provided by Quaker Oats.

Jan. 16 1994: Attends NFL playoff game using tickets provided by Tyson.

Jan. 30: Attends Super Bowl, using tickets donated by Atlanta museum, but bills government for travel.

March, date uncertain: Following reports of favorable treatment given the poultry industry, Office of Inspector General begins investigating Espy's travel and possible favors from Tyson Foods Inc.

April 19: Investigation referred to Justice Department.

Aug. 8: Atty. Gen. Janet Reno requests appointment of independent counsel.

Sept. 14: Writes first of $7,600 in personal checks to reimburse for questionable expenses.

* Name: Mike Espy

* Education: Graduate of Howard University and Santa Clara University Law School.

* Experience: U.S. secretary of agriculture; member of Congress; assistant attorney general and director of the Mississippi Division of Consumer Protection; assistant Mississippi secretary of state and director of Division of Public Lands; managing attorney, Central Mississippi Legal Services, Jackson, Miss.; law intern, Reuben Anderson ad Fred Banks Law Firm, Jackson, Miss.

Source: Times wire reports

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