UPDATE : Justice Dept. Alleges Clinton’s Friend May Have Impeded Its Investigation

Justice Department attorneys have shifted their investigation involving Hollywood producer and presidential friend Harry Thomason from possible conflict-of-interest violations to whether he and a business partner impeded the probe, according to knowledgeable sources.

The conflict-of-interest portion of the inquiry had focused on whether Thomason used a White House office and credentials early in the Clinton administration to lobby for an aviation firm he co-owned to be brought in to take over some duties of the White House travel office.

But that area of the probe ended with the determination that Thomason’s White House ties did not make him a federal employee subject to government conflict-of-interest laws.

Officials have not closed their criminal investigation, however. They are reviewing whether their inquiry was impeded by erroneous information given to them by Darnell Martens, Thomason’s partner in the aviation consulting firm TRM, these sources said.

Thomason, who along with his wife, Linda Bloodworth-Thomason, is close to both President and Mrs. Clinton, also figured prominently in a congressional inquiry into the 1993 firing of the seven travel office employees.

A House committee has portrayed Thomason as the source of early White House rumors that employees in the travel office, headed by Billy R. Dale, were “on the take” from transportation firms that handled travel by the White House press corps. The FBI found no evidence to support the rumors.

White House memos and testimony before the House Government Reform and Oversight Committee show that Thomason urged the firings in direct conversations with the Clintons and with then-presidential aides David Watkins, William Kennedy and the late Vincent Foster.

At the same time, documents obtained under subpoena by the committee and Justice Department investigators show, Thomason was seeking to have TRM obtain a share of the White House travel business and even more lucrative government work. He made a pitch directly to the president for TRM to get a government contract to audit the use of all non-military federal aircraft to see if the government could cut costs.

Thomason had access to people in power because he had staged Clinton’s inauguration, a job that gave him a White House pass and use of an office there.

While the House panel has focused on events leading up to the travel office dismissals in May 1993--an episode the White House later apologized for--the Justice Department’s public integrity section has mainly concerned itself with whether Thomason misused his access to high officials to seek federal work for his firm.

According to documents obtained by the department and the panel, Thomason and Martens planned early in Clinton’s term to seek a $500,000 contract from the General Services Administration to conduct a “plane by plane” inventory of the government’s fleet of 1,800 aircraft.

The proposed study was to be aimed at determining whether non-military government airplanes, such as those assigned to the U.S. Customs Service and the Drug Enforcement Agency, were being used efficiently. Noting their firm had helped arrange aircraft for Clinton’s 1992 campaign, Martens wrote in one memo to Thomason their skills could be used to save the government money.

After Thomason discussed this plan with Clinton, one of Martens’ memos was stamped “the president has seen.” Clinton scrawled in the margins, “These guys are sharp,” and forwarded the proposal to then-White House Chief of Staff Thomas (Mack) McLarty.

Two months later, April 1993, Thomason arranged for Martens to meet with presidential aide Bruce Lindsey, a longtime Arkansas friend of Clinton. Documents show that another part of the Thomason plan was to take over “scheduling of the White House press corps aircraft,” a job being handled by the White House travel office.

The furor that arose over the firing of travel office employees focused unwelcome attention on Thomason’s role in the fiasco and effectively killed his hopes for any government contracts.

For Thomason to be charged with conflict-of-interest violations, he would have to have been either a full-time federal official or a “special government employee.” The General Accounting Office, the investigative arm of Congress, concluded he did not fit either category. The GAO’s finding was based on the fact that Thomason received no government pay, did not have a permanent White House office and his White House pass was only temporary.

The Justice Department, knowledgeable sources said, has reached the same conclusion.

Thomason--who has denied any wrongdoing--has told the committee through his attorney that he would like to testify publicly to clear his name. Committee sources told The Times that the panel does not plan to call Thomason until it is satisfied all relevant documents have been provided.

Plans to have Thomason talk with Justice Department lawyers reportedly are still under discussion.