Kantor Admits Helping Hubbell Gain L.A. Fee

A former member of President Clinton’s Cabinet has for the first time acknowledged that he helped former Justice Department official Webster L. Hubbell pry loose a disputed consulting fee from the city of Los Angeles, months after Hubbell pleaded guilty to felony charges.

Mickey Kantor, who served in the Cabinet from 1993 until last January, said earlier this year that it would have been “inappropriate” for him to have gotten involved with the Los Angeles payment to Hubbell.

But in sworn testimony to congressional investigators--a transcript of which was obtained by The Times--and in an interview, Kantor described steps he took to help Hubbell obtain the $24,750 payment from the city government in late 1995.

Kantor’s aid is important because at the time, prosecutors examining the Whitewater affair were seeking the cooperation of Hubbell, who had been a law partner of First Lady Hillary Clinton and a close friend of the president.

Those prosecutors now are also examining whether any of the payments Hubbell received were intended to discourage him from providing damaging testimony about the Clintons’ role in Whitewater.

Kantor is but one of several top Clinton administration officials who sought to help Hubbell financially after he resigned from the Justice Department in April 1994 following accusations that he had defrauded former clients and law partners in Arkansas.

Clinton, among others, has defended telephone calls to prospective employers and other efforts that were made on Hubbell’s behalf. Clinton told reporters last April that when his aides, including the then-White House chief of staff, sought to help Hubbell in 1994, they acted in good faith.

“Let me remind you of the critical fact: At the time that was done, no one had any idea . . . what the nature of the allegations were against Mr. Hubbell or whether they were true,” Clinton said.

But Kantor is the first administration official known to have assisted Hubbell with his finances after the former associate attorney general had pleaded guilty, in December 1994, to fraud and tax-evasion charges stemming from his theft, through overbilling, of $480,000 from his clients and partners.

The emergence of Kantor’s role regarding the Los Angeles payment comes at a time of renewed difficulty for Hubbell.

The Whitewater independent counsel, Kenneth W. Starr, is considering whether to bring fraud charges against Hubbell in connection with the Los Angeles deal. Both Kantor and a city official have testified this month before a Whitewater grand jury in Washington.

The prosecutors are also weighing tax-related charges against Hubbell regarding the consulting income he received after quitting the administration. Hubbell obtained 14 or more deals, including a $100,000 payment from a company controlled by James T. Riady of Indonesia, a Clinton friend who has been a figure in the campaign finance controversy.

Hubbell, upon leaving federal custody 10 months ago, said he would no longer answer questions about his difficulties. He was unavailable for comment Saturday.

Kantor, in his recent testimony to lawyers with the House Government Reform and Oversight Committee, termed Hubbell “a close friend and someone I care a lot about.” During Hubbell’s 16-month stay in federal prison, Kantor said, they spoke by phone about 10 times and Kantor visited him once.

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Kantor also raised money for the private schooling of Hubbell’s children and helped the oldest land two jobs in Washington.

It was not until December 1996, Kantor testified, that he decided to distance himself.

“It became clear to me that any contact between me and Webb would be--could be--misconstrued,” Kantor testified. “ . . . I thought it was better for me and my family that I not have any contact with Mr. Hubbell.”

Among those who sought to line up deals for Hubbell in 1994 was Thomas F. “Mack” McLarty, then the White House chief of staff, and Erskine B. Bowles, who then was head of the Small Business Administration and now is White House chief of staff.

Bowles has said he swung into action for Hubbell on the basis of a conversation he had with Kantor, who then was Clinton’s trade representative.

Kantor, in an interview on his last day in the Cabinet, then as Commerce secretary, said he “wasn’t involved” with Hubbell’s Los Angeles consulting deal.

Hubbell had been retained by the city under a six-month, $49,500 contract to help persuade the Clinton administration not to block Mayor Richard Riordan’s plan to shift $58 million from a Los Angeles International Airport account to the city’s general fund. Hubbell was terminated in December 1994, following his guilty plea.

When officials with the Los Angeles controller’s office began reviewing a request from the Department of Airports to pay Hubbell, they balked at the validity of his arrangement.

In his interview with The Times in January, while he was still secretary of Commerce, Kantor said he had nothing to do with the Los Angeles matter.

“The fact is, I was a part of the administration, and it would have been inappropriate for me to be involved in, you know, doing anything in that regard, regarding Webb,” he said.

But in his sworn testimony to the House committee, Kantor said Hubbell complained to him about the matter in early 1995, and that he then got involved.

“He was concerned because he had not been paid,” Kantor testified. “He said they owed him quite a bit of money. . . . I recall he said $50,000.”

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Kantor said he then discussed Hubbell’s predicament with Lisa Specht, a lobbyist and former law partner of Kantor’s from Los Angeles, when she attended a dinner at his house in Washington.

“She indicated that she might be able to inquire as to why he had not been paid by the L.A. airports or by the city of L.A.,” Kantor testified. “. . . She called me sometime subsequent to that--I don’t know the timing--and suggested to me that I should tell Mr. Hubbell that he needed to document his work.”

A lawyer with the House committee asked Kantor, “And then you, in turn, told that to Mr. Hubbell?”

Kantor responded: “I, in turn, which was natural, talked to Mr. Hubbell and said that is what he needed to do.”

Kantor elaborated, in a brief interview Friday:

“I said to her [Specht], ‘Is there any way you can inquire or ask why Webb hasn’t been paid?’ ” Kantor recalled. “She came back and said, ‘Mickey, he didn’t document the work he did.’ ”

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Kantor added that soon thereafter, “I said, ‘Webb, you’ve got to document the work you’ve done.’ ”

Hubbell soon delivered more detailed descriptions of what work he claimed he had done for the city. On Sept. 14, 1995, the city issued him the check, for $24,750.

But in June of this year, the Los Angeles controller’s office issued a report concluding that Hubbell defrauded the city by misrepresenting the extent of any work he performed in order to win payment. In sworn testimony made public with the report, City Controller Rick Tuttle said that, during the period in 1995 when auditors were questioning Hubbell’s deal and were withholding payment, he was contacted by Specht.

Tuttle recalled that Specht told him she was inquiring about the status of Hubbell’s payment “as a friend of the family or as a friend of a friend of the family.”

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Based on phone records obtained under the Freedom of Information Act, The Times reported on July 23 that Specht and Kantor had contacts within the same time period that Specht had called Tuttle. Specht told The Times she had learned of Hubbell’s plight while attending a Washington dinner party; she declined to say whether she discussed the matter with Kantor.

Ironically, Kantor told the House committee that during the weekend before Hubbell resigned from the Justice Department in 1994, they discussed “how Mr. Hubbell might justify his [law firm] expenses which were under question.”

The Los Angeles controller’s report recommended that authorities should consider prosecuting Hubbell for “wire fraud, mail fraud and presenting a false claim to the city.”

Times Washington Bureau Chief Doyle McManus contributed to this story.