Are Hillary's brothers driving off course?Hugh and Tony Rodham are Bill Clinton's in-laws, a connection that's brought them pain and gain By VIVECA NOVAK and JAY BRANEGAN
November 1, 1999
Web posted at: 12:10 p.m. EST (1710 GMT)
They're known as "the boys." So close have Tony and Hugh Rodham
been to their sister Hillary Rodham Clinton that they tagged
along on the Clintons' 1975 honeymoon. Always overshadowed by
their high-wattage sibling, they began a new chapter in their
lives when Bill and Hillary moved to the White House. Was it a
blessing or a curse, this kinship to the Leader of the Free World?
"It can go both ways," said Tony Rodham, who divides his time
between Florida and Washington. "There's some wonderful things
that have happened to me because of my relationship with Hillary
and Bill, and there's been some really terrible things that have
happened to me."
Usually it is the President's side of the family that attracts
unwanted publicity--Roger Clinton, Neil Bush and Billy Carter come
to mind. But in the two-for-one Clinton presidency, the First
Lady's brothers have joined in the tradition. Some of their
misadventures are known. Now TIME has uncovered new examples of
the brothers' asking for--and receiving--White House meetings with
top Administration officials on behalf of their business
associates, including a scheduled drop-by visit from the
President himself. So far, the Rodhams don't seem to have made
much money from their White House connections, but their sister's
expected run for the U.S. Senate means their business dealings
could provide more fodder for the Clintons' many political foes.
By all accounts, Hillary's two brothers are colorful, likable
men. At 45, Tony has a job history that includes stints as an
insurance salesman, a prison guard, a sort of cable-service repo
man (during which he drew gunfire at Chicago's Cabrini-Green
housing project) and a private investigator. Five years ago, he
married Nicole Boxer, daughter of California Senator Barbara
Boxer, in an elegant Rose Garden ceremony. His big brother Hugh,
49, a bearlike man who once played football for Penn State,
served as a Peace Corps volunteer and spent more than a decade as
an assistant public defender, including several years defending
clients in Miami's pioneering drug court (started by local
prosecutor Janet Reno, whom Hugh commended to his brother-in-law
for Attorney General).
The brothers for several years shared a bachelor pad in Coral
Gables, Fla., but their first major business venture together was
a $118 million plan to grow and export hazelnuts from the former
Soviet republic of Georgia. This seemed attractive in light of a
booming Western demand for hazelnut-flavored confections. Along
with Stephen Graham, Tony's sometime partner and an occasional
advanceman for Mrs. Clinton, the brothers flew to Georgia in
August to look over the operation.
The first sign of trouble appeared when Georgian officials got
upset that the group was going straight to Batumi, a stronghold
in the western region of the country ruled by political potentate
Aslan Abashidze, a powerful rival to Georgian President Eduard
Shevardnadze, a U.S. ally. White House officials urged the group
to make a stop in the Georgian capital of Tbilisi first and meet
with Shevardnadze, which they did. The meeting "was absolutely
great," said Tony. "He promised to help us." Then the group spent
eight days in Batumi meeting with Abashidze, as well as with
hazelnut farmers, the Orthodox bishop and others who feted them
for the huge investment they were expected to bring.
The Rodhams had tumbled into the byzantine world of post-Soviet
politics. According to Tony, Abashidze never exploited his
newfound connection to the White House. But Shevardnadze
sympathizers say Abashidze, who enjoys support from Georgia's
much feared neighbor Russia, seized on the visit of President
Clinton's in-laws to suggest that he had a seal of approval from
the U.S. government in upcoming parliamentary and presidential
elections. In fact, just after the Rodhams left, according to
Georgian news reports, Abashidze trumpeted "the possibility of
political support rendered to him by U.S. President Bill Clinton"
and said the U.S. branch of the hazelnut investment firm would be
located "next to the White House." The Rodhams' trip culminated
with Tony's flying to Rome to become godfather to Abashidze's new
grandson.
National Security Adviser Sandy Berger, who feared the Rodhams
were being manipulated by Shevardnadze's foe, told the brothers
in September that they should dump the hazelnut deal. The Rodhams
resisted. The White House tried again, and according to
officials, this time the brothers backed down. But in a recent
interview, Tony would say only that he's "restructuring" the
venture and complains that he and Hugh are victims of a
pro-Shevardnadze disinformation campaign. Tony wouldn't say
whether he had money invested in the venture or was acting on
behalf of others; Hugh said he has no money at stake and was
simply the company's lawyer.
The hazelnut imbroglio wasn't Tony's first dip into murky foreign
political waters. In 1997, sources tell TIME, Tony--working as a
consultant for a company trying to do business in Russia--arranged
a White House meeting for Moscow's powerful Mayor Yuri Luzhkov.
Rodham was working for Gene Prescott, who was involved in IBN, a
start-up that wanted to bring "smart" credit-debit cards to
Russia and was hoping for the support of Luzhkov. Prescott knew
Luzhkov wanted to meet with Clinton and asked Tony if he could
set it up, according to Tony. Former White House officials tell
Time that this was touchy business; Luzhkov, a potential
successor to Russian President Boris Yeltsin, has been accused of
having links to Russian mobsters. Recently he had been involved
in a dispute with an American businessman who was subsequently
found murdered in Moscow. That it was Tony who was requesting the
meeting with Luzhkov made things very uncomfortable for Berger,
according to someone familiar with the episode. But on a Saturday
in April 1997, when few people would notice, Berger agreed
nonetheless to meet with Luzhkov, and Clinton arranged to come
by.
Was Rodham using his pull to line his own pocket? Rodham says he
had no money invested in IBN, although he was paid by Prescott, a
Florida hotel owner, for his work on the company's behalf. "I
called the Russia desk at the White House, at the nsc, as anybody
in this country can do," said Rodham in an interview. But is it
possible his request was treated differently from the way it
might have been if his name were, say, Jones? Indeed, another
prominent American working in Russia relations, who asked not to
be named, made a similar call on Luzhkov's behalf and had no luck
at all.
If Tony Rodham's business dealings might benefit from some
scrutiny, the same might be said about some of his business
associates--like a Georgian wheeler-dealer named Vasili
Patarkalishvili. He was the one who thought up the smart-card and
hazelnut ventures. Patarkalishvili has had other brushes with
controversy. In the early 1990s he opened Liberty Bank,
ostensibly to operate in Georgia and the U.S. But in 1994 the
Comptroller of the Currency issued a warning that the bank was
not authorized to operate on American soil. The bank shut down in
the U.S. Now Patarkalishvili and several partners are being sued
by two men who claim that Liberty, IBN and several other
enterprises amounted to a Ponzi scheme in which they lost
hundreds of thousands of dollars. And they claim in the suit that
one of the partners, Robert Kay, told them Tony Rodham and
President Clinton "were behind the [IBN] project and that Clinton
was going to approach Russian President Boris Yeltsin personally"
to support it. Kay and Patarkalishvili could not be reached for
comment; Rodham denies saying anything that would lead to such a
statement, or knowing about Liberty Bank's problems.
And what of brother Hugh? He too appears to have discovered that
being a First Brother-in-Law has its advantages. He left the
Miami public defender's office and ran in 1994 in a
doomed-from-the-start bid to unseat popular Republican Senator
Connie Mack. He then parlayed his family fame into a radio show.
It was Hugh's involvement, despite his having little relevant
experience, with a group of plaintiffs' lawyers fighting Big
Tobacco that led to his most high-profile public castigation,
this one from the President's foes in Congress. The lawyers'
massive class action against cigarette makers on behalf of
injured smokers was dismissed in 1996. But the attorneys, known
as the Castano group, elbowed their way into separate ongoing
negotiations between the cigarette companies and state attorneys
general, who had their own lawsuits going against the tobacco
firms. How did these lawyers manage to get involved? Largely
because of Hugh's presence, others in the settlement talks said.
"We felt we had to keep [the Castano lawyers] because of Rodham"
and his famous kin, said one of the attorneys representing the
states. Hugh helped arrange some White House meetings for some of
the negotiators with deputy White House counsel Bruce Lindsey and
others. And the Castano group won a potentially lucrative
provision in the $368.5 billion settlement that could have
awarded them millions in fees from an arbitrator. Ultimately,
Hugh and the Castano lawyers came up empty-handed after the
settlement foundered on Capitol Hill.
But not before the Senate Republicans made an issue out of Hugh's
role. His name was invoked on the floor as a symbol both of rich
trial lawyers (though he had yet to become one) and of the
G.O.P.'s archenemy, Bill Clinton. A Republican dubbed him "the
$50 million man," an inflated estimate of what Rodham might have
made from the deal. Hugh maintains, and at least one other lawyer
confirms, that he and his law partner Gary Fine were invited into
the original Castano class action by a Pennsylvania lawyer who
was an old friend--and they paid a $100,000 admission fee for the
privilege. "It was totally unforeseen, when we joined...that
there would be any connection with politics," Hugh said in
written responses to TIME.
But Hugh stands to do well if the Castano group prevails in suits
the lawyers have filed on behalf of five cities against the
firearms industry--the new frontier of class-action litigation.
Sources tell TIME that Hugh was one of several lawyers who began
negotiating a possible settlement with a gun-industry trade group
earlier this year. Robert Ricker, former head of the group, said
Hugh helped arrange a White House meeting in early May with
Lindsey, domestic-policy adviser Bruce Reed and others. "He took
me aside once and told me he'd...filled [the Clintons] in on the
status of the talks," says Ricker. "He was a serious player." And
Hugh and several of the other Castano lawyers still meet from
time to time with Clinton Administration aides on the gun issue,
a White House source said.
Tony says he and Hugh are no Billy Carter. When he's approached
by those who want to exploit his family ties, Tony says, "I tell
them to take a hike. I don't do business that way." But the
brothers themselves might be well advised to hike away from a few
more business opportunities. When you're related to the White
House, a deal isn't always just a deal.
--THE WHITE HOUSE told the two to quit their hazelnut deal in
the former Soviet republic of Georgia for fear it could hurt
U.S. foreign policy
--TONY ARRANGED a White House visit for a controversial Russian
politician to benefit a business venture
--HUGH DREW FIRE for his role in negotiating a potentially
lucrative tobacco settlement, and he is now targeting the gun
industry
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Cover Date: November 1, 1999
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