There is "substantial evidence" that First Lady Hillary Rodham Clinton lied under oath in denying that she played a role in the 1993 White House travel office firings, independent counsel Robert W. Ray reported Thursday.
But Ray, summing up his findings in the so-called Travelgate scandal for a panel of appeals court judges, said that he will not seek to indict Mrs. Clinton because he cannot prove beyond a reasonable doubt that any of her testimony was false.
Ray's conclusions, the second of several reports on the nearly 6-year-old Whitewater investigation, amount to a challenge to the first lady's veracity from a high-ranking law enforcement official in the midst of her campaign for a U.S. Senate seat in New York.
The White House, however, declared the report a vindication of the first lady. "After seven years and the expense of tens of millions of taxpayer dollars, the independent counsel confirms what we have said all along. There is no evidence that the first lady did anything wrong," said spokesman Joe Lockhart, traveling with President Clinton in Phoenix.
Mrs. Clinton's opponent in the Senate race, Rep. Rick Lazio (R-N.Y.), declined to comment.
Ray, who succeeded Kenneth W. Starr in October and took charge of his still-unfinished investigations, filed his report under seal with a three-judge panel of the U.S. Court of Appeals for the District of Columbia. He made public only a three-page summary of his findings.
The Travelgate investigation was prompted by differing accounts of the role of the first lady in the May 1993 firing of all seven employees of the White House travel office. The firings themselves were not illegal. At issue was whether the first lady or others had sought to cover up her actions and whether anyone broke the law by testifying falsely about her role.
Mrs. Clinton maintained that she played no part in the firings.
"Mrs. Clinton does not know the origin of the decision to remove the White House travel office employees," her lawyers told congressional auditors in 1994. They added that the first lady "did not direct that any action be taken."
Mrs. Clinton told Congress in 1996 that the earlier answers "were accurate."
But later that year a memo surfaced from then-presidential aide David Watkins stating that the first lady had been behind the firings. The matter was then referred by Atty. Gen. Janet Reno to Starr, who began submitting evidence about the controversy to a federal grand jury.
Specifically, Starr examined whether Watkins perjured himself during a congressional investigation of the episode when he insisted under oath that Mrs. Clinton had not played any role in the firings.
During lengthy hearings by a Republican-led House committee, the White House later surrendered memos written by Watkins that suggested Mrs. Clinton had instigated the firings at the urging of Hollywood producer Harry Thomason, a longtime friend of the Clintons who was seeking a share of the White House travel business.
The nonpolitical travel office, staffed by career employees, is in charge of making all travel arrangements for the White House press corps, whose members reimburse the office for expenses incurred in covering the president on his travels throughout the world.
President Clinton later apologized for the firings and offered other jobs in the government to most of those who had been dismissed.
As the controversy dragged on, Watkins resigned from the White House after he was reprimanded for taking a government helicopter to play golf in suburban Maryland.
In one memorandum obtained by congressional investigators, Watkins said to Thomas "Mack" McLarty, then White House chief of staff: "We both knew there would be hell to pay if . . . we failed to take swift and decisive action in conformity with the first lady's wishes."
In other documents, Watkins wrote that Mrs. Clinton was regularly pressing for the travel office employees to be fired. He quoted her as saying at one meeting: "We need those people out and we need our people in."
The independent counsel said he concluded that "the evidence was insufficient to prove that Mr. Watkins or Mrs. Clinton made any knowingly false statements, committed perjury or obstructed justice in this matter."
But "there was substantial evidence that [the first lady] had a 'role' in the decision to fire the travel office employees," Ray reported.
"She had discussions with Deputy White House Counsel Vince Foster, Chief of Staff Mack McLarty and longtime friend and advisor Harry Thomason, and one direct telephone conversation with David Watkins. . . . These individuals discussed her concerns among themselves, which produced a momentum to take immediate action," he added.
Foster, a longtime friend of both Clintons and former law partner of Hillary Clinton, committed suicide later in 1993.
Ray also criticized the White House for offering "substantial resistance" to Starr's investigation of the travel office.
"The White House asserted unfounded privileges that were later rejected in court," he said. "White House officials also conducted inadequate searches for documents and failed to make timely production of documents, including relevant e-mails, in their possession."
David Garth, a veteran New York political consultant whose clients have included New York City Mayor Rudolph W. Giuliani, predicted that the report would hurt Hillary Clinton's campaign for the Senate.
"It continues to raise the question about whether she was really involved in the machinations of the White House," Garth said. "It is just one more thing she will have to explain."
Recent polls show that Mrs. Clinton and Lazio, who became the GOP candidate after Giuliani dropped out of the race, are virtually tied.
Under terms of the now-expired independent counsel act, which still governs Ray's office, the court must keep the full Travelgate report confidential for 90 days. During that time, any person mentioned adversely in the document and their attorneys may view sections of the report at the federal courthouse and submit material in rebuttal.
When the 90 days are past, the court can make Ray's report public in whole or in part, including statements on behalf of those named in it.
The first of Ray's Whitewater reports, filed in March, said that prosecutors found no crimes were involved when White House officials obtained hundreds of FBI personnel files early in the Clinton administration.
Later this year, Ray is planning to file a report on the core inquiry that led to Starr's appointment in 1994: the involvement of President Clinton, who was then the governor of Arkansas, as well as Mrs. Clinton, in the failed Ozark real estate development in Arkansas known as Whitewater.
That report is expected to contain Ray's conclusions about allegations of financial fraud by Clinton, as well as his findings on whether Mrs. Clinton obstructed justice by failing to turn over billing records from her work as a partner in the Rose Law Firm in Little Rock, Ark.
Times staff writer John J. Goldman in New York contributed to this story.