A Pardon's Path

Arthur Levitt Jr. didn't hide his feelings. On the morning of Jan. 19, the day before Bill Clinton left office, the Securities and Exchange Commission chairman got a phone call from a top White House official. The official told Levitt that the president was preparing a last-minute pardon for accused tax swindler Marc Rich. What did he think? After a quick check with his staff, Levitt called back. "The man's a fugitive!" he fumed. "This looks terrible." The administration official sheepishly agreed. "Yeah," he said. "You're right."

Levitt wasn't alone in expressing early doubt at the idea of pardoning Rich, who was charged with evading $48 million in taxes and trading with Iran during the 1979 hostage crisis. White House lawyers were concerned that the grounds for a pardon were shaky at best, and would only lead to trouble. In the end, Clinton ignored them all. But why? The former president, in New York exile, has insisted that he granted the pardon strictly on the "merits," after hearing convincing pleas from Israeli Prime Minister Ehud Barak and Rich's well-connected attorney, former White House counsel Jack Quinn. "Once the facts are out there," Clinton said, "people will understand what I did and why, even if they may not agree with it."

He couldn't have been more wrong. If anything, the facts in the case, which are now beginning to come out, have made the pardon seem more dubious than ever. Last week the same Republican-led congressional committee that spent years trying to unravel the Clinton scandals began hearings into the Rich pardon, convinced that the president acted wrongly and that laws may have been broken along the way. The evidence and testimony strongly suggested that Rich and his ex-wife Denise orchestrated a quiet campaign to persuade Clinton, calling on foreign heads of state and a Nobel Peace Prize winner, and hiring a lawyer with close personal ties to the president. Denise Rich made sure she had the president's ear: since 1993 she had given more than $1.3 million in various political contributions to Bill and Hillary, including $450,000 for the Clinton library in Arkansas. Congressional investigators want to know if Marc Rich was the secret--and illegal--source of that cash.

The latest Clinton mess has given an unexpected windfall to the president's diehard political enemies, who seem delighted at the opportunity to once again crank up the Washington scandal machinery. Yet the former president also alienated and angered many on his own team by deliberately keeping top aides and Justice Department officials in the dark about the controversial pardon until it was too late. They, too, are now demanding answers. NEWSWEEK has learned that Mary Jo White, the U.S. attorney in Manhattan--where Rich was indicted in 1983 but never prosecuted--is considering opening a criminal probe into the contributions and gifts surrounding the pardon. White and the Justice Department declined to comment, but sources close to White say the hard-charging prosecutor is "livid" at not being consulted about the pardon of a fugitive she hoped to bring to justice--and she is determined not to let the matter drop. "I don't see how any prosecutor could not look at this," says Morris (Sandy) Weinberg, the former federal prosecutor who indicted Rich in 1983. Sources say White is likely to pursue Denise Rich's bank records to determine if she was used as a conduit for contributions from her ex-husband--who has renounced his U.S. citizenship and may not be eligible to make political donations. House Republicans are sending out subpoenas for the same financial records. They also want the list of donors to the Clinton library, but Clinton's lawyers have vowed to fight.

Rep. Dan Burton, the Indiana Republican and Clinton nemesis who called last week's hearings, wanted Denise Rich to come before the committee and tell her side of the story. Instead, she claimed her Fifth Amendment right against self-incrimination and refused to appear--a move that only added to speculation that she and others involved in the pardon had something to hide. (Her lawyer, Carol Elder Bruce, says Denise Rich "committed no wrongdoing with respect to the pardon.") She was clearly more involved in her ex-husband's pardon than she admitted at first. A remarkable flurry of e-mail, letters and documents made public last week details of how Denise Rich, working with a team of politically connected friends and Marc Rich's lawyers, worked frantically to secure the pardon.

The pardon campaign's No. 1 rule: secrecy. "Frankly, I think we benefit from not having the existence of the petition known," one of Marc Rich's lawyers, Robert Fink, wrote to Quinn on Dec. 26. Rich's attorneys feared that if prosecutors found out about the pardon they would raise strong objections and torpedo the deal. So Quinn went around the usual process of filing a formal petition with the Justice Department. Instead, he mentioned the matter to Deputy Attorney General Eric Holder--who expressed regret last week for not paying closer attention--and then took his case directly to the White House.

One of Marc Rich's greatest assets was Denise, who first wrote to Clinton on Dec. 6. She told the president that she supported her ex-husband's pardon "with all my heart." Two weeks later the lawyers planned a second emotional letter to be sent from Denise to Clinton.

Another key player in the effort was Denise Rich's friend and fellow Democratic fund-raiser Beth Dozoretz, who apparently appealed directly to Clinton. In a Jan. 10 e-mail, Fink told Quinn that, according to Denise Rich, Dozoretz "got a call from POTUS," and Dozoretz discussed the pardon with him. According to the e-mail, Clinton told Dozoretz "that he wants to do it and is doing all possible to turn around the WH counsels." (Dozoretz disputes that Clinton told her he was trying to sway the lawyers.)

In their appeals to Clinton, Quinn and Denise Rich tried to win sympathy for Rich by tapping into the president's own resentment toward the zealous prosecutors who had dogged him for years. Quinn portrayed Rich as the victim of a "highly publicized and aggressive investigation." Denise Rich laid it on even thicker, saying she knew "what it feels like to see the press try and convict the accused without regard for the truth." Sources close to Clinton say these arguments hit home. "I think Clinton wanted to pardon all of them," says one lawyer of the applicants tugging on his sleeve. "He just can't stand law enforcement." As he signed Rich's pardon, Clinton may have thought his own troubles were at an end. If Republicans on the Hill and prosecutors in New York have their way, the latest Clinton scandal may have just begun.