American Spectator audit: Is the fox guarding the henhouse?

Theodore Olson, a close friend of Kenneth Starr's and a former attorney for David Hale, heads the embattled American Spectator's crucial internal investigation.

By Jonathan Broder
Published April 27, 1998 7:00PM (EDT)

WASHINGTON -- While the independent counsel's office and the Justice Department wrangle over who is best qualified to probe allegations of payments made to key Whitewater witness David Hale, another investigation into the matter is quietly proceeding inside the American Spectator, the conservative magazine that is alleged to have facilitated those payments.

Helping to supervise the magazine's internal investigation is Theodore Olson, 57, the American Spectator's former secretary-treasurer and a member of its board of directors. Olson, a close friend and former law partner of independent counsel Kenneth Starr, has also represented Hale in the Whitewater affair.

In addition, Olson helped oversee the so-called Arkansas Project, a $2.4 million effort by the American Spectator to investigate President Clinton, which was funded by right-wing billionaire Richard Mellon Scaife. According to stories in Salon and elsewhere, the alleged payments to Hale were made by operatives of the Arkansas Project.

These connections have prompted some observers to wonder if Olson's audit can remain free of potential conflicts of interest. "Mr. Olson would appear to have interests that could be contradictory," says Richard Ben-Veniste, Democratic counsel for the Senate Whitewater Committee.

But others, including Olson's former legal adversaries, describe him as a consummate professional who would be unlikely to stumble blindly into a conflict. "This is a very savvy lawyer," says John Barrett, a former prosecutor who came up against Olson during the Iran-contra investigation. "I'll bet you that he bent over backwards to anticipate these issues."

While the American Spectator's probe of the Arkansas Project is an internal matter that does not require the magazine to reveal what, if anything, its investigation uncovers, the audit could potentially assist those federal investigators who will eventually examine the allegations of payments and possible witness tampering involving Hale. This puts Olson, as one of the key figures looking into the explosive allegations, in a crucial and delicate position.

Terry Eastland, the magazine's publisher, said that Olson was one of the board members to whom he would report about the audit. Eastland also said Olson was providing him with legal advice on how to proceed with the probe.

Olson did not return several telephone calls seeking comment for this article, but Eastland assured Salon that the magazine's internal audit has been "in process" for the past few months. "We haven't completed it yet," Eastland said, adding that so far the audit had uncovered no evidence that any money from the Arkansas Project was used to pay Hale.

Olson, currently a partner at the Washington, D.C., law firm of Gibson, Dunn & Crutcher, has been a conservative partisan since the 1980s. According to Olson's colleagues -- both Republicans and Democrats -- Olson became embittered by what he regarded as a politically driven independent counsel's investigation into allegations that he had lied to Congress while an assistant attorney general in the Reagan administration. No charges were filed against Olson.

As an attorney, Olson has been involved in high-profile cases, including representing the Virginia Military Institute in its attempt to remain all-male. He also represented four white students in Texas in a case that led to the ending of affirmative action at the University of Texas law school.

Olson also co-authored a series of articles for the American Spectator that laid out various offenses supposedly tied to Clinton and his associates. His wife, Barbara Olson, a lawyer and investigator for a congressional committee looking into various Clinton scandals, is also an outspoken critic of the president.

Earlier this year, when Paula Jones challenged President Clinton's claim of immunity from civil suits while in office, Olson, together with conservative legal theorist and former judge Robert Bork, held a moot court to prepare Jones' lawyers for their successful argument before the Supreme Court.

The Arkansas Project began in 1993 when Scaife, an arch-conservative Pittsburgh publisher who has funded numerous legal and media efforts against Clinton, provided the foundation that owns the American Spectator with the first of four $600,000 payments that were made over the following four years to dig up damaging details about Clinton and his associates. The money was handled by Washington attorneys Stephen Boynton and David Henderson, both conservative political activists with long-standing ties to Scaife, who then distributed the money to a handful of operatives in Arkansas.

In 1995, Henderson confided to several people at the American Spectator that a "mechanism" existed within the Arkansas Project "to take care of David Hale and his family," two former executives at the American Spectator told Salon. Growing increasingly concerned about how the Arkansas Project money was being spent and worrying about possible legal consequences, the magazine's publisher, Ronald Burr, strongly recommended an independent audit of the project's activities, to be conducted by the Arthur Andersen accounting firm.

At the time, Olson, while serving as a member of the magazine's board of directors, represented Hale when he was subpoenaed to testify before the Senate Whitewater Committee. Hale pleaded the Fifth Amendment and ultimately did not testify after the committee's Democrats refused to grant him immunity.

Sources within the magazine say Olson, who was aware of the Arkansas Project, was instrumental in rejecting the idea of an audit and getting Burr fired in 1997. Sources also told Salon that it was Olson who negotiated Burr's $350,000 severance package, which includes a provision that bars Burr from ever publicly discussing the circumstances surrounding his removal.

"What we could never figure out -- and by 'we,' I mean me and Burr and others at the magazine -- is this: Why would Ted Olson have an interest in getting rid of Ron Burr?" said David Brock, the former American Spectator reporter who broke the 1993 "Troopergate" story, which prompted Paula Jones to sue President Clinton for sexual harassment.

"No one could figure it out until, as time went on and people began to piece the puzzle together, it became clear that either he was trying to protect his own position and his former client's position, Hale, if this stuff were disclosed, or that because of his closeness to Starr, he was trying to protect Starr's investigation. The big question was, why did they want to cut off the audit?"

Brock has been bitterly criticized in conservative circles since he publicly repudiated the Troopergate story last month and apologized to President Clinton.

Eastland, who replaced Burr as publisher and is said to be close to Olson, would not comment on Brock's statement. "That was before my time," Eastland said.

So far, Eastland told Salon, the magazine's investigation has looked at the financial records of Boynton and Henderson, the two lawyers who distributed the Arkansas Project money, and has questioned Parker Dozhier, a Hot Springs, Ark., resort operator who allegedly passed money to Hale. But Eastland said he had not questioned others involved in the alleged payments, including Dozhier's former live-in girlfriend, Caryn Mann, who told Salon and other media outlets about Dozhier's alleged role; and Mann's son, Joshua Rand, who has claimed he saw money changing hands.

Asked if he thought Olson might have a conflict of interest as the American Spectator's lawyer, as Hale's attorney and as the board member overseeing the magazine's internal audit into possible payments to Hale, Eastland replied: "That's a question you can put to your ethics experts."

Stephen Gillers, a professor of legal ethics at New York University Law School, says Olson could have lawyer conflict problems if the magazine's investigation were to uncover information that his former client, Hale, wished to conceal.

"As a matter of legal ethics, I would look at Ted Olson as walking down a road as the person directing the magazine's inquiry, having to anticipate the possibility that the road may lead to a place where David Hale doesn't want to be. At the point that the roads diverge, and what's best for Hale and the magazine are inconsistent, lawyer ethics rules would require Olson to pass the torch on the investigation to someone else. He could no longer continue."

But Gillers paints another hypothetical scenario in which the interests of the magazine and Hale are the same. "Let's suppose for a moment that the magazine does not want it revealed, if true, that it was a conduit for payments to Hale," Gillers says. "The magazine might conclude that they are better off having the lawyer for Hale, who also would not want this information revealed if true, conduct the investigation for them because their interests are aligned with Hale's in that regard. From the point of view of legal ethics, Olson as a lawyer would not be doing anything wrong. Remember: Olson only has an ethical problem as a lawyer if the interests of his multiple clients are inconsistent. Indeed, under this scenario, he's unique as the choice."

Former prosecutor Barrett, who now teaches legal ethics at St. John's University Law School in New York, agrees. "There are multiple roles here, but there are ways to navigate it," he says. "And I haven't seen anything to suggest that Olson didn't navigate it properly." Barrett also points out that even if the magazine's internal audit uncovers something explosive, Olson has no duty to report it. "This is private information," he says.

But Olson's navigational skills could be tested if federal investigators ever start asking him questions. "When the investigator asks the lawyer what he or she knows, and then the lawyer makes a claim of attorney-client privilege, that's when things can get very tricky. After all, we're talking about the possibility of federal witness-tampering here in a case involving the president of the United States. I would imagine that in this kind of a case, the reach of this attorney-client privilege can be a real murky thing."

Jonathan Broder

Jonathan Broder is Salon's Washington correspondent.

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