Gifts to DNC Flanked Session With Clinton

Over the lunch hour on Friday, Aug. 23, 1996, Frederick W. Smith, the chairman of Federal Express, met for 45 minutes with President Clinton in the Oval Office to discuss a problem that was costing his company $100 million a year in lost revenue.

Using charts and graphs, Smith pressed Clinton to impose sanctions on the Japanese government, which has refused to allow Federal Express to deliver cargo from Japan to other lucrative Asian markets, including the People’s Republic of China.

Laura D’Andrea Tyson, who headed the National Economic Council in the White House and was in charge of coordinating the administration’s policy on the Federal Express-Japan issue, had opposed the one-on-one meeting with Smith in the Oval Office. Officials said Tyson was concerned that imposition of sanctions on Japan could lead to a trade war between Washington and Tokyo.

But Tyson’s concerns were overridden when Thomas F. “Mack” McLarty, Clinton’s first White House chief of staff and one of his liaisons with the business community, agreed to arrange the Oval Office meeting with Smith. Such meetings between the president and an executive of a single corporation are extremely rare, White House officials said.

During an eight-month period before and after the meeting with Clinton, Smith and Federal Express contributed $275,000 to the Democratic National Committee. Less than three weeks after the Smith meeting with Clinton, on Sept. 10, 1996, Federal Express gave $100,000 to the DNC.

In a telephone interview Wednesday, Smith said the money he and Federal Express contributed to the DNC had nothing to do with the meeting he had with Clinton. “There is absolutely no connection between fund-raising and a meeting with the president or any Federal Express issues,” Smith said, adding that he had requested the meeting to point out flaws in what he called the administration’s “lily-livered” failure to stand up to the Japanese, who he says are not honoring their treaty obligations to the United States.

“It’s precisely why I wanted the meeting, so the president would overrule his own policymaking apparatus,” Smith said.

Smith quoted the president as saying in the meeting, “If I impose sanctions [during the presidential campaign], they would think I was grandstanding for political purposes.” Smith said Clinton then pledged that after the election he would solve the problem and quoted Clinton as saying, “We are committed to solving this problem.”

Smith added, “He understood we were getting screwed and [that] the failure to take on the Japanese showed the ineptitude of U.S. foreign policy.”

U.S. negotiators are to meet with Japanese representatives next week to discuss the flight restriction issue, and Smith said the United States will present its strongest position to date, short of sanctions. Smith said he believed this meant Clinton was delivering on his promise to solve the problem.

Administration officials said the Oval Office meeting with Smith had no connection with the campaign contributions.