Former Clinton Appointee Helped Hubbell Get L.A. Contract

Webster L. Hubbell, the convicted former law partner of First Lady Hillary Rodham Clinton, won a contract with the city of Los Angeles after being recommended by an appointee of President Clinton who had also been the president’s chief California fund-raiser.

Interviews and records obtained by The Times show that Hubbell won the Los Angeles contract in 1994 after being recommended by Mary E. Leslie, who just four months earlier had left her post as an appointee in the Small Business Administration. Leslie’s husband, Alan S. Arkatov, a former Democratic political consultant, also recommended Hubbell.

Arkatov said Friday that he and Leslie supported Hubbell because of his abilities and his precarious financial status.

Hubbell had resigned a few months earlier as the Justice Department’s No. 3 official. He got the Los Angeles contract at the same time he was facing felony prosecution by an independent counsel probing the Whitewater affair.

Because this and two other consulting arrangements were born when Hubbell was discussing with prosecutors the nature of any testimony he might provide against others, interest has been heightened in determining whether anyone seeking to shield the first family facilitated the deals.

Asked whether the Los Angeles contract could be construed as a form of “hush money,” Leslie said: “No. . . . That magnifies it in a way that I don’t think does it justice.”

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She and Arkatov said they recommended Hubbell of their own volition to Airport Commission President Theodore O. Stein Jr., who this week has declined to comment.

“This was someone who we thought was certainly going to be hurting financially,” Arkatov said. “. . . This was an attempt to help someone out, someone who we thought was very qualified.”

Arkatov and Leslie said they expected Hubbell to be exonerated of allegations that he had cheated clients and his former partners at the Rose Law Firm in Little Rock, Ark.

“Webb had pretty much told all our friends [in 1994] that there was nothing to this,” said Leslie, who served as the SBA’s associate deputy administrator for business development from January 1993 to March 1994.

Leslie, who was finance director of Clinton’s 1992 campaign in California, was Los Angeles Mayor Richard Riordan’s deputy for economic development in July 1994, when she said she recommended the hiring of Hubbell. Hubbell’s city contract was awarded Aug. 24, 1994.

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Arkatov said he learned of Hubbell’s potential financial strain through a news report after Hubbell left the Justice Department in the spring of 1994.

“I thought he could be a very good advocate [for the city],” Arkatov said, adding that he made his recommendation to Stein on his own. Soon afterward, Arkatov said, he phoned Hubbell to inform him of his recommendation.

“We had known [Hubbell] through the social circles in Washington,” said Arkatov, who formerly worked for a prominent Democratic consulting firm, Doak & Shrum. “It was simply trying to help out someone who needed help.”

Hubbell was hired to help persuade the Transportation Department not to block Riordan’s proposed transfer of $58 million from a Los Angeles International Airport account to the city’s general fund.

In December 1994, about three months after he was hired by Los Angeles, Hubbell pleaded guilty to bilking more than $400,000 from his former clients and partners of the Rose Law Firm. He is serving a 21-month sentence in federal prison.

Based on information reported Friday by The Times, showing that Hubbell’s efforts for Los Angeles did not match what he had claimed to have done in two letters, City Controller Rick Tuttle said he would seek reimbursement of some or all of the money paid to Hubbell last year.

Under the contract, Hubbell would have been paid $49,500 over six months. He received $24,750 for three months’ work.

What has remained unanswered since the Los Angeles contract first came to light in September 1995 is whether any ulterior motive affected the steering of the contract to Hubbell. Hubbell’s lawyer, John Nields, declined to discuss the matter when contacted this week.

A previously confidential Transportation Department inspector general’s report summarizes Hubbell’s statements, under oath, regarding the Los Angeles contract and his acquaintanceship with Leslie and Arkatov: “Hubbell advised that he first met Leslie during the presidential transition and then knew her in the administration. Hubbell noted that he and Leslie had mutual friends. He had spoken to Arkatov over the phone several times but had never met him.”

The report said that Hubbell’s activity calendar showed that he met with Leslie on July 29, 1994, at his office in Washington.

“Hubbell did not recall the purpose of this meeting with Leslie or what transpired during it, but he thought it was possible that Stein was present with Leslie and the matter of consulting to Los Angeles surfaced,” the report said.

Leslie told The Times that she recalled a less formal meeting with Hubbell, perhaps over drinks.

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Her overall goal regarding the airport, Leslie said, was to win the policy result sought by Riordan. The issue, she said, was one of several involving the federal government that she was working on for the mayor.

She said she believed Hubbell when he assured her that his legal problems would be quickly rectified. “At that time, people, and you can call it naive, thought this was a private matter that he had with his former partners at Rose. . . . You’re innocent until proven guilty in this country.”

Stein, who played a lead role in the hiring of Hubbell, told The Times 13 months ago that he could not recall who gave him the idea to retain the former official. A lawyer and developer who intends to run next year for city attorney, Stein recalled more when he was questioned subsequently by the inspector general.

The inspector general’s report also said that Hubbell “advised that to his knowledge, nobody in the Clinton administration ever got him work or suggested to anyone that he be hired. He claimed to not know how Los Angeles came up with the idea for hiring him.”

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The report added that Stein told the inspector general’s office that “Arkatov raised Hubbell’s name as someone Stein might consider utilizing as a consultant [and] that perhaps Hubbell could help Los Angeles because he knew administrative processes well.”

Contrary to the inspector general’s report summarizing the probe, the U.S. attorney’s office in Washington did not decline to prosecute Hubbell in connection with his work for Los Angeles.

A spokesman for U.S. Atty. Eric H. Holder Jr. said Friday that the matter was never formally presented to the office.