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MAKING CONTACT

Transcript: #50-98 Above the Law? Washington Power Brokers
December 16, 1998

Program description at http://www.radioproject.org/archive/1998/9850.html

Phillip Babich: Welcome to Making Contact, an international radio program seeking to create connections between people, vital ideas and important information. This week on Making Contact-

Bob Parry: The Conservatives have become very accustomed to controlling the Executive branch. And Clinton was a very adept politician despite his other weaknesses, he was a very smart clever tireless politician who was able to wrestle control of the White House from them, and they deeply resented it.

Phillip Babich: There’s much talk about morality these days in Washington, D.C. Lambasting sordid affairs seems to be the order of the day. But flip over a few rocks, and it turns out the key players behind the impeachment hearings have something to hide. On this program we take a look at Congressman Henry Hyde’s involvement in a failed Savings & Loan, which cost taxpayers nearly 70 million dollars. We’ll also hear about power struggles behind the investigation into President Clinton’s private and public life. I’m Phillip Babich, your host this week on Making Contact.

Larry White: (singing) "You can’t hide, Henry Hyde, you can’t run. You can’t hide, Henry Hyde, from what you done. Took a wife from her man, a mother from her kids. You can’t hid, Henry Hyde, ‘cause we all know what you did."

Phillip Babich: "Hide Henry Hyde" by the Beatnicks from Mars, written by Larry White. Hyde, Chairman of the House Judiciary Committee, which has been in charge of the impeachment process, asked in November, as hearings got under way, "Does the law apply to some people with force and ferocity, while the powerful are immune. An interesting question, given the Congressman’s past. Most of us have probably heard about his extramarital affair, same years back. But perhaps more pertinent to his position as head of the Judiciary Committee, is the Congressman’s role in a failed Savings & Loan. As correspondent Dennis Bernstein reports, Hyde avoided paying any penalties after federal investigators found him and the other bank directors responsible for the Illinois-based Clyde Federal Savings & Loan. And Hyde hired a private investigator to intimidate a whistle blower who was pursuing the matter.

Dennis Bernstein: Henry Hyde was one of twelve directors of the Clyde Federal Savings & Loan of North Riverside Illinois which failed to the tune of 68 million dollars in 1990. In 1993 federal banking investigators filed a 17 million dollar suit against the firms directors, including Hyde, citing a long list of questionable banking practices and complaining of mismanagement, gross negligence, breach of fiduciary duties, and breach of contract. Ultimately all directors except for Hyde contributed to an 850 thousand dollar settlement of the case in 1997. Hyde never paid a penny. He denied responsibility, saying he had relied on the judgment of professionals. But Hyde’s view was strongly challenged by Timothy J. Anderson, an independent banking consultant in the Chicago area, and a former Republican precinct captain. Anderson was furious that Hyde got off scott free, and took it upon himself to hold the Republican power broker accountable. Anderson said Hyde was definitely in the loop at Clyde, and led the charge for the bank’s demise. He said, "Clyde’s board relied on Hyde for guidance, not just as a lawyer and the future head of Judiciary, but as a former member of the House banking Committee, with considerable expertise. It was Hyde," Anderson testified before a federal commission, "who got them to invest millions of dollars into a Dallas office project that could not go forward. Hyde was the ringleader," Anderson said. He was the board member who was controlling management. Hyde was the man in the middle. For his part, Hyde mounted a spirited defense against the feds. Unknown at the time, Hyde also took the extreme measure of hiring a well known private investigator, Ernie Rizzo, and launched an undercover investigation designed to discredit Anderson. Anderson explained in a recent interview how Rizzo approached him.

Timothy Anderson: A gentleman named Ray (I can’t remember his last name at this time) called me and said he was an independent producer, and a local TV station wanted to know more about this Henry Hyde issue. This was almost three years ago...two and a half...two...nine months. Somewhere in that period of time. I met with him at a restaurant and gave him the 388 page book on Henry Hyde, the minutes of the board meeting, and all the documentation. I gave him some videotapes of two TV shows I’d done on the issue. And he kept assuring me that he just couldn’t find anything there that was important enough to continue with the idea of a TV station running with this material. I kind of wrote him off as just an inept guy. I didn’t realize who he was until he gave me his cell phone number, and when I tried to call one time and he wasn’t in, I got directed to an answering machine, and the answering machine answered, "Ernie Rizzo." And I recognized the voice. When I finally did get a hold of this guy Ray, I said, "Who’s Ernie Rizzo?" He said, "Oh, that’s just an alias I use for my undercover work." And then, after three and a half, four weeks, I just gave up and asked him to give all the material back, because I thought I’d better send it to someone who could use it. And I, sort of after two and a half years, had written Ernie Rizzo off as just an inept person, forgot about him, until I got a call from a Chicago Tribune reporter who wrote the story that Ernie Rizzo was hired by Henry Hyde to spy on me.

Dennis Bernstein: Later when the Chicago Tribune asked Hyde about Rizzo, he insisted that a friend had paid for and directed the investigation. The congressional accountability project quickly demanded an investigation to determine if Rizzo’s fee, estimated at $10,000 amounted to an unreported gift. Hyde altered his explanation and announced that his lawyer had hired Rizzo, and that he, Hyde, had reimbursed the lawyer. The noted Chicago based gumshoe acknowledged that he was hired to do a total and complete investigation of Anderson, and Rizzo boldly confirmed that he posed as an independent television producer working on a documentary about the Clyde case.

Ernie Rizzo: I didn’t identify myself to Mr. Anderson, but I used a technique that’s used by law enforcement and FBI agents for years. Certain techniques work better on certain people.

Dennis Bernstein: And what exactly was the technique that you employed in this case.

Ernie Rizzo: Well, Mr. Anderson apparently liked to talk to reporters, and I was purportedly a reporter and he spoke to me fluently.

Dennis Bernstein: Uh, huh. And so you purported to be a reporter, and were you asking him questions about his investigations about this failed S & L that had on its board Henry Hyde.

Ernie Rizzo: Yes, yes I did.

Dennis Bernstein: What was motivating your client? What was your client’s fear? Why did he want a private investigator to investigate Mr. Anderson?

Ernie Rizzo: Well, no one knew who Anderson was, why he kept appearing in court, why he kept appearing in the judge’s chambers, and he wanted to see the Savings & Loan thing resolved. And apparently my client wanted to know what his position was, who he was and who he was doing in this case.

Dennis Bernstein: And what did you ascertain?

Ernie Rizzo: Well, he apparently had some sort of dealings with Clyde Federal Savings & Loan, and he felt that he did not want Mr. Hyde and his directors to go unpunished for what he believed was the failing of the Savings & Loan by Hyde.

Dennis Bernstein: So you might characterize him as an independent citizen with some knowledge of banking, who was concerned as a citizen about what had happened, what might have gone wrong, at this particular, sort of sleepy S & L?

Ernie Rizzo: Right. He apparently had some knowledge and apparently was blaming Hyde and the directors for the Savings & Loan failure, and we wanted to see what he was talking about.

Dennis Bernstein: And so your investigation found that essentially Mr. Anderson was who he said he was this independent expert on banking that was trying to hold this particular group of directors accountable.

Ernie Rizzo: That’s right.

Dennis Bernstein: How did Henry Hyde get a copy of the report, if you only gave it to one person?

Ernie Rizzo: Well, I mean, I guess you’ll have to ask Henry Hyde.

Dennis Bernstein: (laughing) All right. And how much time...Can I ask you how much you were paid for this investigation?

Ernie Rizzo: I don’t really want to comment on that. It was a two month investigation.

Dennis Bernstein: A two month investigation, and did you call other people besides Mr. Anderson to find out if he was credible and if you was who he said he was?

Ernie Rizzo: We made a complete and total investigation of Mr. Anderson.

Dennis Bernstein: In your investigation, were you able to confirm certain aspects of the claims that Mr. Anderson was making? He said at one point that while the board was sued for $850,000, Henry Hyde himself paid nothing.

Ernie Rizzo: I believe that was correct.

Dennis Bernstein: And did you find anything in terms of what Mr. Anderson was saying that seemed to be made up, false, a bald-faced lie, misleading?

Ernie Rizzo: No, not really.

Dennis Bernstein: In terms of the documentation, who examined the documentation that you collected?

Ernie Rizzo: My clients.

Dennis Bernstein: Uh huh. And is your client based in Illinois?

Ernie Rizzo: Yes, he is.

Dennis Bernstein: And was your client one of the members of the banking board?

Ernie Rizzo: We can dance with this all day, but I cannot tell you who the client was.

Dennis Bernstein: And of course you understand the significance, in this case, if Henry Hyde himself hired a private investigator to go and investigate an independent citizen, the citizen could construe this as intimidation.

Ernie Rizzo: Well, I don’t know. Investigations are conducted all day long one way or the other by private investigators. I don’t know if Hyde has any protection under the law nor does a citizen. I don’t know if Hyde was being sued in his capacity as a politician, or his capacity as a private individual who was director of a bank.

Dennis Bernstein: As you heard, Rizzo, with more than 30 years experience as a investigator, ultimately found Anderson to be exactly what he claimed to be: a knowledgeable citizen who was mad as hell because Henry Hyde used the trust of the people to the tune of 70 million dollars and was never held accountable. In short, that Hyde acted as if he were above the law. Anderson, for his part, says he is pleased that Rizzo gave him a clean bill of health. But he says he will not rest until Hyde is held accountable like any other citizen, even if they are one of the most powerful members of Congress.

Timothy Anderson: I’m pleased that he found me to be an upstanding citizen, an honest person. Unfortunately, the beneficiary of the study has an integrity problem.

Dennis Bernstein: For Making Contact, this is Dennis Bernstein.

Phillip Babich: As a side note, the Chicago Tribune, in a November 19th editorial, called for an investigation into Hyde’s hiring of Rizzo, and the congressman’s failure to pay his share of the penalties related to the S&L. Bernstein has written an article on Henry Hyde’s S&L in the on-line publication, The Consortium. We’ll be telling you later in this program how to get a copy.

Shereen Meraji: You are listening to Making Contact, a production of the National Radio Project. If you want more information about the subject of this week's program, or you would like to learn how to get involved with Making Contact, please give us a call. It's toll free, 800-529-5736. Call that same phone number for tapes and transcript orders.

Phillip Babich: When President Clinton moved into the White House in 1993, the 12-year long conservative hold on the executive branch ended. But, says investigative journalist Bob Parry, Clinton’s arrival didn’t end the conservative apparatus which is still very much in place in Washington. Parry is the editor of I.F. Magazine and the On-line publication, The Consortium. He’s covered Washington, D.C. politics for Newsweek Magazine and Associated Press. Along with Brian Barger, Parry broke the Iran-Contra story for AP in the 1980s. I spoke with Parry about the power struggle behind the impeachment hearings. He begins by talking about what he terms "the establishment" in Washington.

Bob Parry: Washington, like any powerful city, has people that are friends with each other, who hang out together, go to their fancy dinner parties together, who come to sort of like each other. Often it crosses party lines and to some degree even ideological lines. And Washington does have that kind of a community. When I was at Newsweek, it was quite clear how that worked. I was sort of introduced to it. Once when we were having a Newsweek dinner with Brent Skowcroft and Dick Cheney (at that point in ‘87 Skowcroft had just finished the Tower report on Iran-Contra, and Cheney was the Congressman who was handling on the Republican side of the Iran-Contra investigation). And there was a lot of common view among Newsweek editors about how this really wasn’t that big a deal, how it should be handled very expeditiously, and sort of gotten out of the way. It was not good for the country for this to proceed too far. There was a recent piece by Sally Quinn in the Washington Post (Sally Quinn, of course, is married to Ben Bradlee, the long-time executive editor of the Washington Post, and both of them are very much a part of this establishment). And she wrote about why she and her friends hold President Clinton in such disdain. She also pointed out how Kenneth Starr, the special prosecutor, was a member of this establishment. How people know him because he goes to the same events and his children go to the same private schools that their children go to. It’s those kinds of relationships that are the sinews of this establishment, and it’s why some people get a much easier time with the establishment media in Washington than others do. If you’re with the crowd, you’re basically not held to the same standards.

Phillip Babich: Under President Clinton, what sort of power structure does he represent? He’s certainly no pawn he founded the Democratic leadership council. What does he represent in Washington?

Bob Parry: I had always expected that Clinton would have been well-received by the establishment, in that he did have Ivy League credentials, he did, as you’ve pointed out, work with some of these centrist Democrats, and was not a person who rocked the boat. In fact, he’s been pretty accommodating for most financial interest groups, during his six years in office. But he apparently got under the skin of this establishment. As Sally Quinn points out, during his inaugural address in 1993, he made a remark about how Washington often is a place of intrigue, where people only care about who’s up and who’s down, who’s in and who’s out, rather than what really matters to the average America. And I guess that was considered very offensive to Sally Quinn and others in the establishment, and they never quite forgave Clinton. Plus, I think you saw developing during the 80s a tremendous growth in the conservative media and the conservative power structure in Washington. Vast sums of money were pumped in by conservative foundations, by Reverend Moon for the Washington Times. And there was a building up of that element in Washington, with all the money and all the people that were involved in that, many of them who were very well-dressed, very well-spoken, went to the right schools. There was a kind of a merging of the conservative establishment, if you will, and the more mainstream establishment. So I think the establishment that we saw in Washington when Clinton came in, in ‘93, was a far more conservative establishment than most people might think. The conservatives had really bought their way in. And they resented Clinton because he had taken the White House away from the Republicans. So I think Clinton was always a bit on the defensive, and that’s why many of these mini-scandals, like Travelgate, and Filegate, had much greater resonance than they would have if similar scandals had broken during the Reagan-Bush years, when stories of that type wouldn’t have even been covered, let alone become major scandals.

Phillip Babich: I’m curious. These two forces, if you can call them two, I’m sure it’s more complicated than that...but they do apparently tend to be in alliance when it comes to business interest or financial interests or corporate interests. How does that play into the equation?

Bob Parry: Well, I think that’s where Clinton probably has maintained some support, where he’s been very good for corporations. He’s been very good for business. He had tried to follow the business approach toward international trade. He of course pushed NAFTA. This was in line with much of the conservative establishment as well as the centrist establishment. So Clinton was on board on many of those issues, and in fact was leading the pack in some cases. So I think he has not been bad for business, in fact it helped him in staying in power at all. One would hate to think what his situation might be, had he also offended those power brokers. But still, despite the fact that he’s been good for the stock market and good for business in that way, he has not translated into being favored by the Washington establishment. He’s...and I didn’t fully grasp this until reading Sally Quinn’s rather lengthy piece about the real animosity many of these folks in that group feel toward him, and how they applied standards towards him in terms of his morality and his truthfulness that they never would apply to one another. As I pointed our in her article, Sally Quinn herself was involved in a very notorious extramarital affair with Ben Bradlee when he was married to somebody else. And there is that attitude that ‘what we do in the establishment is okay because it’s us. We’re all nice people, we all dress well, we all go to the same parties. If some outsider does the same thing, well, that’s really outrageous and needs to be condemned.’ There a very deep-seated double standard...hypocrisy, you might say, that applies.

Phillip Babich: Well, what do they have to fear? What can President Clinton possibly do to them, or take away from them?

Bob Parry: Well, I think, what he did was take away the White House from the conservatives. The executive branch was something that the conservatives had felt very much was their territory. They’d held it for much of the post war period, going from the Eisenhower years. There was the period of Kennedy and Johnson, but then the Nixon-Ford administration, there was one term of Jimmie Carter, and then twelve years of Reagan-Bush. So the conservatives have come to be accustomed to controlling the executive branch, and Clinton was a very adept politician. Despite his other weaknesses he was a very smart, clever, tireless politician who was able to wrest control of the White House from them, and they deeply resented it. You could feel that, in the way Washington was developing through the ‘80s into the ‘90s when the conservative forces had become not only so well financed and well-organized, but also really relentless and vicious. They would go after anyone who got in their way, and they felt it was righteous to do it that way, because they felt so strongly that their brand of anti-communism, their brand of morality was the right brand, that they went after members of Congress or people in the press, or others who got in their way. We could really see that developing even out of the ‘70s, where the attacks on Senators Church and Bill and Clark and others, who had gotten in the way of the Central Intelligence Agency. They came under heavy fire that grew even stronger during the ‘80s, when reporters, for instance, Raymond Bonner of the New York Times would get in the way on some policies on Central America, or the efforts by Senator Kerry on Contra drugs. The venom that was directed at people who were really just doing their jobs in getting...in bringing out the truth was very intense. And this attack strategy had become a way for the conservatives to really maintain control. And when Clinton ran in ‘92, especially with his vulnerabilities in his personal life, there was a sense that he would become the latest victim of what is called opposition research, or ‘oppo’...this strategy of tearing down your opponent. And he was subjected to a great deal of that. Especially going into the fall campaign, when, for instance, there was an effort to go through his passport files. State department went through his passport files to dig up dirt about him. When nothing was really found, a phony criminal referral was developed and sent to the FBI suggesting Clinton must have cleansed his file, because they couldn’t find anything. When that was leaked to Newsweek and published, there was a mini-scandal about Clinton maybe had renounced his citizenship. It was that kind of hard balled strategy, which the Bush people thought would bring them to victory. That one blew up in their faces because it was sort of clumsily handled, and actually ended up becoming a mini-scandal against Bush. But that was the feeling...if one could use that kind of tactic, Clinton would go down and be defeated. But he persevered and he won the presidency. But there was enormous animosity toward that, which then just spilled out when he took over and he really was very quickly targeted by the same conservative media that had been protecting Reagan and Bush for 12 years. It just went from playing very aggressive defense to playing aggressive offense. And really off we went.

Phillip Babich: Then let me ask you this. How are these power struggles, these enormous power struggles affecting democracy in this country, in your opinion?

Bob Parry: Oh, I think it’s having a terrible effect. I think the idea of...you’re looking at a new system of government in Washington that is very different from what the founding fathers intended. And a lot of it is a combination of developments out of the 1980s, when these well-funded attack groups come on the scene. Many of them filed civil suits against people they don’t like. They basically dream up reasons to drag you into court, take your deposition, try to entrap you, to get you to say something that can be called perjury. That’s at one level. Then there’s the right wing media, which is now extremely well-financed and powerful, and they will put these stories on page one of the Washington Times. They’ll run stories about you in the Weekly Standard or the American Spectator and just lacerate you with the most...the harshest kinds of attacks. Then there’s also in the Federal courts, where President Reagan was very effective in putting some very conservative judges on the Federal Court of Appeals, in particular in D.C. And one of them, David Sintell was made one of the three judge panel to pick special prosecutors. So since ‘92 Sintell has been picking aggressive right wing prosecutors looking to anybody who comes across... who’s referred to that three judge panel. And also with the Republican controlled Congress. You have a very receptive audience there. And there are more investigations that are being...that are done out of those committees. And often into areas that have not even been looked at in the 12 years of Reagan and Bush, because these scandals were so petty. So you have this combination of hounding people who get in the way, all this very powerful conservative movement, virtually hounding them out of public life, or force them into paying such huge legal fees that they are ruined. It’s a strategy...it’s a strategy basically to veto who is going to be allowed to have a voice of any significance in national politics. That itself is a frightening development. And if it were to consolidate, it would mean we’d entered a different kind of government, one where this right wing establishment would have effective veto power over who would have say in our political life. And those who cross this power structure could expect to face personal ruin. And that’s very different from the more traditional give and take of American politics. We obviously have often seen periods of our history, like the McCarthy era, where tactics like this have been used. But what we’ve seen in the ‘80s and now into the ‘90s is essentially a kind of consolidation of this network, which, I think, had it not been for the electoral results on November 3rd, would have been much more emboldened having the public weigh in on election day, essentially not be very supportive of this approach, did give some Republicans pause. But this is still a very powerful apparatus that is not about to let go of what it’s developed in the last 15 years.

Phillip Babich: We’ve been speaking with Bob Parry, he is a long-time investigative journalist. He’s now the editor of I.F. Magazine and the on-line publication The Consortium. Bob, thanks so much for joining us on Making Contact.

Bob Parry: Thank you, Phillip.

Phillip Babich: You can find out more about The Consortium at the web site <WWW.consortiumnews.com> or call 800-738-1812.

That’s it for this edition of Making Contact, A Look at the Washington Establishment. Thanks for listening. We had production help this week from Susan Celli and Shereen Meraji. I’m Phillip Babich.

If you want more information about the subject of this week’s program, call the National Radio Project, at 800-529-5736. Call that same phone number for tapes and transcripts or if you’d like to make a comment or a suggestion for future programs. Making Contact is an independent production funded by individual contributors. We’re committed to providing a forum for voices and opinions not often heard in the mass media. Our National Producer is David Barsamian, Phillip Babich is our Managing Producer, our Senior Advisor is Norman Solomon, Shereen Meraji is our Production Assistant, Peggy Law is our Executive Director. Our theme music is by the Charlie Hunter Trio. For everyone at Making Contact, thanks for listening.