Justice Department Eyes the ‘Arkansas Project’

The Justice Department is scrutinizing the so-called “Arkansas Project,” conservative billionaire Richard Mellon Scaife’s $1.7 million effort to discredit President Bill Clinton. According to recent reports in the Associated Press and the on-line magazine Salon , F.B.I. agents in Arkansas are investigating allegations that an employee of the Arkansas Project made secret payments to David Hale, who is independent counsel Kenneth Starr’s key witness in the Whitewater case.

Given the seriousness of those charges, the fate of Mr. Starr’s own probe may well depend on whether Attorney General Janet Reno authorizes a full investigation of the Scaife-funded project. If she does, the results could be severely embarrassing to Mr. Starr, whose prosecutors had Mr. Hale in protective custody during the period in question. Moreover, any inquiry into the Arkansas Project would inevitably involve Mr. Scaife and his foundations, which financed the sinecure at Pepperdine University that awaits Mr. Starr whenever he resigns as independent counsel.

As The Observer reported in February, funding for the Arkansas Project was channeled between 1993 and 1996 from foundations controlled by Mr. Scaife and into another tax-exempt foundation that publishes the American Spectator magazine. Officials of the Spectator foundation then directed most of the money to a Virginia attorney named Stephen Boynton, who worked closely with David Henderson, a Spectator vice president and longtime Scaife associate. Both men have refused to discuss how they spent the Scaife money, an issue that became so controversial within the Spectator ‘s office that it led to the firing of the publisher who helped found the magazine in 1967.

Both men have confirmed, however, that they met frequently between 1993 and 1996 with Mr. Hale, although Mr. Boynton told The Observer that those meetings were merely social. The meetings commenced shortly after Mr. Hale accused Mr. Clinton of pressuring him to make a fraudulent $300,000 loan to Mr. Clinton’s Whitewater partners James and Susan McDougal, but Mr. Boynton said they never discussed the controversial land development. All they ever did, he insisted, was go fishing.

Their favorite piscatory rendezvous was a bait shop and lakeside resort in Hot Springs, Ark., owned by a man named Parker Dozhier. Mr. Dozhier was on the Arkansas Project payroll for at least $1,000 a month to clip local newspapers, or so he told the Associated Press. But his former live-in girlfriend, Caryn Mann, and her 17-year-old son, Joshua Rand, both told Salon reporters that they saw Mr. Dozhier give cash to Mr. Hale out of funds that he received from Mr. Boynton and Mr. Henderson. According to Ms. Mann, who served as Mr. Dozhier’s bookkeeper, as much as $200,000 in checks and cash were passed from the Arkansas Project to the bait shop owner.

She and her son both recalled intense discussions about Whitewater whenever Mr. Hale visited, and said that he provided documents and information about the case to Mr. Henderson and Mr. Boynton. In early 1994, The Spectator , a publication deeply hostile to the President, featured a series of articles based on “exclusive” interviews with Mr. Hale.

Mr. Boynton, Mr. Henderson and Spectator publisher Terry Eastland have all denied that any payments were made to Mr. Hale. But Salon (to which this columnist is an occasional contributor) also quoted two anonymous Spectator sources as confirming the story told by Ms. Mann and Mr. Rand. Ms. Mann also told Salon that Mr. Dozhier had threatened her life, saying that if she “ever talked about what he was doing against Clinton, I would get into my car one morning and my car would blow up.” And in an interview with Salon , Mr. Dozhier made a similar threat against Mr. Rand, warning that the teenager was “destined to be a chalk outline somewhere.”

After Federal authorities learned of those alleged payments and threats, P.K. Holmes III, the U.S. Attorney for the western district of Arkansas, sent F.B.I. agents to interview Ms. Mann and Mr. Rand. Justice Department officials in Washington are now considering whether to authorize a complete investigation of Mr. Dozhier and the Arkansas Project, and who should conduct it.

The implications of any such decision would be momentous for Mr. Starr. He would almost certainly try to gain control of a probe into the Arkansas Project and may already be attempting to do so. But regardless of his urge to protect Mr. Hale, the convicted swindler whose testimony is so crucial to his case, the independent counsel must first answer some difficult questions. Why should he be allowed to oversee what amounts to an investigation of himself? Can he impartially gather information about events that, according to Ms. Mann and Mr. Rand, took place under the noses of the F.B.I. agents on his own staff, who accompanied Mr. Hale on his visits to Mr. Dozhier’s premises? Should he be trusted to examine the role of foundations controlled by Mr. Scaife, his Pepperdine benefactor?

The conflicts of interest in which Mr. Starr is implicated are too obvious for the Attorney General to ignore. As independent counsel, Mr. Starr is empowered by a law that was intended to prevent even the appearance of such conflicts. It would be strange indeed if he were allowed to proceed as if they did not exist. Justice Department Eyes the ‘Arkansas Project’