Kantor Questioned About Hubbell Before Grand Jury

Former Clinton administration Cabinet member Mickey Kantor was questioned before a grand jury Tuesday by prosecutors investigating why top aides and supporters of the president arranged financial assistance for Webster L. Hubbell after Hubbell resigned as the No. 3 official in the Justice Department and came under investigation in the Whitewater affair.

Kantor, a prominent lawyer in Los Angeles before joining the Clinton White House, has acknowledged soliciting trust fund contributions to pay for the private schooling of Hubbell’s youngest children and helping to land two separate jobs, one within the administration, for Hubbell’s son.

Kantor did not return phone calls seeking comment after his testimony, which lasted more than two hours.

Kantor’s appearance came as new fallout emerged regarding a disputed consulting engagement that Hubbell won three years ago with the city of Los Angeles. The deal was one of more than a dozen that Hubbell obtained in 1994 after he resigned from the Justice Department.

Los Angeles City Controller Rick Tuttle has been called to testify Thursday about the deal before the Whitewater grand jury in Washington. His office issued a report in June that concluded Hubbell won payment of $24,750 from the city after submitting a “materially false” account of his work.

Tuttle said he was questioned in Los Angeles as recently as two weeks ago by staff of independent counsel Kenneth W. Starr regarding the city’s engagement with Hubbell.

The fact that he has now been subpoenaed to testify before the grand jury, Tuttle said, indicates that Starr’s staff is weighing whether to prosecute Hubbell in connection with the Los Angeles deal.

“My basic position is [Hubbell] defrauded the city,” Tuttle said in an interview.

The Los Angeles city attorney’s office has formally sought reimbursement of the money from Hubbell, according to sources familiar with the matter. The city Board of Airport Commissioners has scheduled a discussion of the issue for Thursday as an item of “anticipated litigation.”

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People with knowledge of the situation told The Times that Hubbell, through his lawyers, has offered to make restitution. If the airport board approved the proposed settlement, Hubbell, who reportedly received a $400,000 advance for a just-published book, might be able to offset some of the outrage that prosecutors would hope to convey to jurors in a criminal case.

Reached for comment, Senior Assistant City Atty. Breton K. Lobner said the city controller’s report recommended that municipal lawyers consider seeking recovery of the money.

“What we’re doing on Thursday is in line with that,” he said. Lobner would not comment on any proposed settlement.

Among the unanswered questions is whether Hubbell would be forced to pay not only the $24,750, but also the costs of the city controller’s investigation.

Any settlement with Hubbell would probably further inflame city officials’ relations with Starr, whose staff is continuing to investigate whether any of Hubbell’s deals were orchestrated to discourage him from providing damaging information about the Clintons. A deputy to Starr wrote City Controller Tuttle almost a year ago, requesting that he refrain from interfering with the independent counsel’s investigation.

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Hubbell, who until coming to Washington in 1993 had been a law partner of First Lady Hillary Rodham Clinton in Little Rock, Ark., pledged to cooperate with the Whitewater investigation when he pleaded guilty Dec. 6, 1994, to fraud and tax evasion. The charges stemmed from Hubbell’s bilking of $482,410 from his former law firm. But Hubbell’s inability to recall details of certain transactions at the heart of the Whitewater investigation frustrated Starr, who recommended that Hubbell receive no leniency in sentencing.

The deals and consulting work obtained by Hubbell after his resignation brought him about $500,000.

Kantor said last spring that whatever help he extended was offered solely out of friendship.

Kantor, who first served in Clinton’s Cabinet as U.S. trade representative and then as Commerce secretary, solicited money for the Hubbell children’s education. Kantor also gave Hubbell’s son a summer job at the trade representative’s office just weeks after the elder Hubbell left the Justice Department to face criminal investigation in 1994. Kantor later helped secure the son a full-time job with the Federal National Mortgage Assn.

Kantor has insisted that he played no role in securing any of the varied consulting deals won by Hubbell in 1994.

However, White House Chief of Staff Erskine B. Bowles has said he began making phone calls to associates who might hire Hubbell on the basis of a conversation he had in the spring of 1994 with Kantor. And Hubbell, in his new book, said Kantor was among those with whom he conferred as he left the Justice Department on April 1, 1994.

Hubbell also wrote that as he and his lawyer struggled to find a way to avoid his resigning in the spring of 1994, he conferred repeatedly with Kantor. It was Kantor, Hubbell wrote, who informed Clinton on March 14, 1994, that Hubbell was announcing his intention to resign.

Hubbell, who was in the Los Angeles area Tuesday promoting his book, was not available for comment.

Times staff writer Beth Shuster in Los Angeles contributed to this story.