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Sept. 22 issue — The Bush Administration has quietly installed a surprising figure in a high-level Pentagon post: L. Jean Lewis, the former federal fraud investigator who kicked up major controversy in the ’90s over her allegations about the Clintons’ Whitewater dealings.
ALTHOUGH THERE’S BEEN no public announcement of her return to government, Lewis has been given a $118,000-a-year job as chief of staff in the traditionally nonpartisan Defense Department’s inspector general office. With 1,240 employees and a budget of $160 million, this office is the largest of its kind in the government.
It investigates fraud and audits Pentagon contracts, including the billions of dollars being awarded in Iraq to companies like Halliburton and Bechtel.
As an investigator for the now defunct Resolution Trust Corp. in 1993, Lewis drafted a criminal referral alleging illegal Whitewater dealings that eventually became the basis for Ken Starr’s probe. Republicans praised Lewis as a whistle-blower; Democrats blasted her as a partisan. (In a private letter on her computer, she once called Bill Clinton a “lying bastard.”) Lewis told NEWSWEEK she got her new job last year after interviewing with top administration officials at Defense. Although they were aware of her background, she says, “I would prefer to think it was my ability and skills they were interested in.
Jean Lewis flashback:
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Enter L. Jean Lewis. Lewis, who had grown up in a military family in Texas and proudly identified herself as a conservative Republican, was hired as an investigator for the federal Resolution Trust Corporation, although she was neither a lawyer nor an accountant, and had no training in law enforcement. The R.T.C. had been set up to hunt down crooks who in the Eighties had caused hundreds of savings and loan organizations to collapse, costing taxpayers an estimated $500 billion. From her office in Tulsa, Lewis sifted through the records of failed Arkansas thrifts looking for evidence of criminal fraud. At the top of her list of suspects were two thrifts that together had cost taxpayers $1.5 billion. At the bottom of her list – and properly so – was James McDougal’s Madison Guaranty, the failure of which had cost taxpayers one-twentieth as much.
That was until Lewis read Gerth’s Times story, when her priorities abruptly and radically altered. Although neither the Whitewater operation nor the Clintons had ever borrowed money from McDougal’s thrift, it now jumped to the top of her list, and she made a criminal referral of tiny Madison Guaranty, naming not only James and Susan McDougal as suspected felons but also every contributor to a 1985 Clinton fundraising event held at Madison Guaranty. Bill and Hillary Clinton were cited as "possible witnesses," as were former U.S. Senator J. William Fulbright and several other top Democrats.
Lewis filed her criminal referral just two months before the 1992 presidential election. The timing was so embarrassingly obvious that it pissed off the Little Rock F.B.I. office and the U.S. attorney. They told their bosses in D.C. that it looked like Lewis was playing politics, and that in their opinion there was "absolutely no factual basis to suggest criminal activity on the part of any of the individuals listed as witnesses," including the Clintons. But later Lewis tried again, this time charging that deposits in McDougal’s S&L had been illegally diverted to Clinton’s campaign fund. When, once again, her charges fell into a void, friendly reporters, who had been getting loads of leaks from her, began to imply that she was the victim of a bureaucratic cover-up. The cry of Cover-Up, once sounded, reverberates for a long time, and it made Lewis something of a heroine to the right wing. She was duly called to testify at the Senate’s Whitewater hearings, run by Republican Senator Alfonse D’Amato (also known as "Senator Shakedown," because of his own ways of raising money). But the Democrats were ready for Lewis. As they began reading the Justice Department’s low opinion of her grasp of the law, she began to tremble, and then fainted dead away. While thousands watching C-SPAN saw her swoon, the Times and Post reporters were apparently looking elsewhere, because neither paper reported it, nor mentioned the Justice Department’s stern judgment.