[House Report 104-484]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-484
_______________________________________________________________________


 
      REIMBURSEMENT OF FORMER WHITE HOUSE TRAVEL OFFICE EMPLOYEES

_______________________________________________________________________


 March 18, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


Mr. Smith of Texas, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2937]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 2937) for the reimbursement of legal expenses and 
related fees incurred by former employees of the White House 
Travel Office with respect to the termination of their 
employment in that Office on May 19, 1993, having considered 
the same, report favorably thereon with amendments and 
recommend that the bill as amended do pass.
  The amendments are as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. REIMBURSEMENT OF CERTAIN ATTORNEY FEES AND COSTS.

  (a) In General.--The Secretary of the Treasury shall pay, from 
amounts in the Treasury not otherwise appropriated, such sums as are 
necessary to reimburse former employees of the White House Travel 
Office whose employment in that Office was terminated on May 19, 1993, 
for any attorney fees and costs they incurred with respect to that 
termination.
  (b) Verification Required.--The Secretary shall pay an individual in 
full under subsection (a) upon submission by the individual of 
documentation verifying the attorney fees and costs.
  (c) No Inference of Liability.--Liability of the United States shall 
not be inferred from enactment of or payment under this section.

SEC. 2. LIMITATION ON FILING OF CLAIMS.

  The Secretary of the Treasury shall not pay any claim filed under 
this Act that is filed later than 120 days after the date of the 
enactment of this Act.

SEC. 3. REDUCTION.

  The amount paid pursuant to this Act to an individual for attorney 
fees and costs described in section 1 shall be reduced by any amount 
received before the date of the enactment of this Act, without 
obligation for repayment by the individual, for payment of such 
attorney fees and costs (including any amount received from the funds 
appropriated for the individual in the matter relating to the ``Office 
of the General Counsel'' under the heading ``Office of the Secretary'' 
in title I of the Department of Transportation and Related Agencies 
Appropriations Act, 1994).

SEC. 4. PAYMENT IN FULL SETTLEMENT OF CLAIMS AGAINST THE UNITED STATES.

  Payment under this Act, when accepted by an individual described in 
section 1, shall be in full satisfaction of all claims of, or on behalf 
of, the individual against the United States that arose out of the 
termination of the White House Travel Office employment of that 
individual on May 19, 1993.

  Amend the title so as to read:

      A bill for the reimbursement of attorney fees and costs 
incurred by former employees of the White House Travel Office 
with respect to the termination of their employment in that 
Office on May 19, 1993.

                          PURPOSE AND SUMMARY

    H.R. 2937 would reimburse the attorney fees and costs 
incurred by the former employees of the White House Travel 
Office whose employment in that office was terminated on May 
19, 1993. Upon submission of documentation verifying the former 
employees attorney fees and costs incurred as a result of that 
termination, the Secretary of the Treasury shall reimburse such 
fees and costs out of funds not otherwise appropriated.

                               BACKGROUND

    On May 19, 1993, all seven White House Travel Office 
employees were fired (two of these employees were later 
permitted to retire and five of these employees were later 
transferred to other positions within the Executive Branch). 
The White House Travel Office provides travel and communication 
services for the Executive Office of the President (EOP), 
travel arrangements for members of the press corps who 
accompany the President on trips, and ticketing and travel 
services for EOP staff traveling on official business. The 
White House indicated that the firings were predicated by an 
audit performed pursuant to the Vice President's National 
Performance Review. According to the White House, the audit 
revealed mismanagement and unacceptable accounting practices 
within the Travel Office. At that time, the White House also 
stated that the Federal Bureau of Investigation (F.B.I.) was 
looking into possible criminal violations by the seven 
employees.
    After the May 19, 1993, firings, several months of 
independent review and oversight hearings uncovered the actual 
motivation for this action. Certain individuals, wishing to 
advance their own personal agendas and financial self-interest, 
attempted to destroy the reputations of these employees by 
accusations of kickbacks and wrongdoing. White House staff and 
volunteers apparently misused their authority and initiated an 
F.B.I. investigation using unorthodox methods. The 
investigation was based on accusations made by persons with a 
direct interest in Travel Office employment or Travel Office 
business.
    The following is a chronology of events leading to the 
firing of the White House Travel Office employees. It appears 
the firings were driven by the statements and actions of four 
people: Catherine Cornelius, a distant cousin of the President 
employed at the White House; Harry Thomason, a close personal 
friend of the President and First Lady, seeking business 
opportunities for his aviation consulting firm; Darnell 
Martens, Mr. Thomason's business partner, seeking a major 
aviation consulting contract with the Federal Government 
through his White House contacts; and David Watkins, the 
Assistant to the President for Management and Administration.
    As early as December 1992, discussions were taking place 
between Catherine Cornelius and World Wide Travel, the travel 
agency which served the Clinton/Gore '92 campaign, over a 
possible takeover of the White House travel business.
    In January 1993, David Watkins hired Catherine Cornelius 
and Clarissa Cerda as special assistants in the Office of 
Management and Administration. The day following President 
Clinton's Inauguration, the White House Travel Office began 
receiving calls asking for Catherine Cornelius, the ``new head 
of the White House Travel Office.'' Darnell Martens wrote a 
memo to Harry Thomason, a personal friend of the President and 
his partner in the aviation consulting firm of Thomason, 
Richland and Martens (TRM), suggesting that TRM be hired as a 
consultant on several government projects including the White 
House Travel Office.
    In February 1993, Catherine Cornelius and Clarissa Cerda 
provided David Watkins with a memo and ``Briefing Book and 
Proposal'' on the White House Travel Office. Under this 
proposal Cornelius and Cerda would be co-directors of travel 
and World Wide Travel would be the outside travel agency. 
During this period, Mr. Martens contacted Billy Dale, head of 
the White House Travel Office, about bidding on White House 
charter business and was told no outside company would get the 
business.
    In March 1993, Mr. Martens sent another memo to Mr. 
Thomason indicating that TRM should seek White House Travel 
Office business. During a trip to Los Angeles, Mr. Martens told 
Mr. Thomason about his conversation with Mr. Dale and said he 
heard a rumor that there was corruption in the Travel Office. 
Shortly thereafter, Mr. Thomason allegedly told the President 
that he had heard there was trouble in the White House Travel 
Office.
    In April 1993, Mr. Watkins assigned Ms. Cornelius to the 
White House Travel Office to make commercial arrangements for 
the White House staff and to ``keep her eyes open'' on Travel 
Office operations and report back to him by May 15. Harry 
Thomason called Mr. Watkins about the Travel Office employees 
and, according to Mr. Watkins' notes, told him ``(T)hose guys 
are a bunch of crooks. They have been on the take for years''. 
At this point, Ms. Cornelius began removing Travel Office files 
to make copies and then took them home. In the meantime, Mr. 
Martens and Mr. Thomason continued to promote their proposal 
that the White House hire TRM to perform an audit of government 
aircraft.
    In early May 1993, Mr. Martens, through Mr. Thomason, 
continued discussions with White House staff about TRM's 
conducting an audit of government aircraft. According to notes 
of one White House official, on May 7, Ms. Cornelius and Ms. 
Cerda met with Mr. Thomason. Then on May 10, David Watkins 
asked Ms. Cornelius if her memo reporting on the activities in 
the Travel Office was complete and told her to speak with Mr. 
Thomason for further information to place in that memo. That 
same day, Mr. Thomason met with Mr. Watkins and inquired as to 
what was being done about the White House Travel Office. At 
that meeting, Mr. Watkins indicated that he had placed Ms. 
Cornelius in that office to evaluate the situation.
    On May 12, Mr. Thomason met with Ms. Cornelius about the 
alleged wrongdoing in the White House Travel Office. At that 
time, she showed Mr. Thomason materials concerning the Travel 
Office and indicated that money seemed to be missing. Later 
that morning, in a meeting involving Mr. Watkins, Mr. Thomason 
and Deputy Director of the Office of Management and 
Administration Jennifer O'Connor, Mr. Thomason complained that 
the employees in the Travel Office were ``ripping us off'' and 
indicated that getting rid of the employees would make a great 
press story. At another meeting involving Mr. Thomason, Ms. 
Cornelius, and Mr. Watkins, Mr. Martens again discussed his 
conversation with Mr. Dale. According to notes taken by David 
Watkins, Mr. Thomason met that day with the First Lady who 
encouraged him to stay on top of the Travel Office situation. 
At lunch, Mr. Watkins told Ms. O'Connor that Mr. Thomason had 
dealings with a travel company, and that the Travel Office had 
solicited kickbacks. (That allegation was found to be baseless 
when the President of Miami Air, the company that supposedly 
made it, denied ever having done so. Furthermore, no evidence 
of any kickbacks whatsoever was ever found in the course of the 
Public Integrity investigation.) Later that day at a meeting 
including William Kennedy, Associate Counsel to the President; 
Vince Foster, Deputy Counsel to the President; Mr. Watkins; Ms. 
Cornelius; and Mr. Thomason; both Mr. Foster and Mr. Kennedy 
recommended that an internal audit be performed at the Travel 
Office. Mr. Watkins, however, indicated the White House had no 
audit capability. It was then decided that Mr. Kennedy, who 
handled internal security matters, should determine a course of 
action. That evening Mr. Kennedy called F.B.I. Headquarters to 
discuss what he called a problem in the White House that he did 
not know how to handle. In the meantime, Ms. Cornelius 
contacted World Wide Travel and told the firm to prepare to 
come to the White House.
    During conversations with the F.B.I. on May 13 and May 14, 
Mr. Kennedy stated several times that the request for any 
F.B.I. evaluation came from the ``highest levels'' of the White 
House. He also indicated that if the F.B.I. failed to respond 
quickly, he would call another government agency, such as the 
I.R.S. The F.B.I. originally indicated to the White House 
counsel's office that there was not enough evidence on which to 
go forward with a criminal investigation. After meeting with 
Ms. Cornelius, the F.B.I. concluded that there was a 
possibility of criminal wrongdoing that warranted an 
investigation. During that meeting, Ms. Cornelius informed the 
F.B.I. representatives that Mr. Martens told her of 
``kickback'' allegations made by Miami Air Charter. The F.B.I. 
suggested bringing in outside auditors, and several discussions 
were held to determine whether the F.B.I. should be present at 
the audit. It was decided that KPMG Peat Marwick would conduct 
a review and that that review would be identified as part of 
the Vice President's National Performance Review. Vincent 
Foster then informed the F.B.I. that it should not attend the 
review because of the potential for bad press. The F.B.I. 
acquiesced.
    The morning of the 14th, at a high-level meeting including 
Mr. Foster; White House Chief of Staff Mack McLarty; and the 
Deputy Assistant to the President and Director of Media Affairs 
Jeff Eller; the immediate firing of the White House Travel 
Office employees was discussed. That same day, Ms. Cornelius 
called World Wide Travel and informed the firm that the firings 
were imminent, and it should be prepared to send agents to 
Washington. Mr. Watkins noted that he talked to Foster--``who 
says he's getting more pressure from First Lady to act.'' 
(emphasis in original). Mr. Dale told Mr. Watkin's staff that 
he had already put in his retirement papers and wanted to 
retire.
    Ms. Cornelius showed documents she had taken from the White 
House Travel Office to KPMG Peat Marwick representatives and 
specifically pointed to checks made out to cash. That evening, 
at the urging of Vincent Foster, Mr. Watkins called the First 
Lady and according to his notes was told that ``Harry says `We 
can do the job with his assistance.' '' The First Lady 
indicated that Mr. Thomason had told her that he could put a 
more efficient structure in place in an hour's time to handle 
Travel Office business. That evening Patsy Thomasson ordered 
the locks to be changed on the White House Travel Office.
    On May 14, the KPMG Peat Marwick's management consultants 
came to the White House. On the morning of May 15, Ms. 
Cornelius informed World Wide Travel that the First Lady wanted 
the Travel Office employees out. Also, Patsy Thomasson, Special 
Assistant to the President for Management and Administration, 
called Brian Foucart, an assistant to Mr. Watkins, and told him 
to talk to the Travel Office employees about the scope of their 
work because they might be fired soon.
    On the afternoon of May 17, Mr. Watkins and Mr. McLarty 
decided to fire the employees. That evening, Mr. Dale informed 
Mr. Watkins that he wanted to retire. Mr. Watkins refused to 
accept Mr. Dale's resignation and told Mr. Dale to wait until 
after a meeting on May 19th at 10:00 a.m.
    On May 18, Mr. Watkins informed Mr. Foucart of the plan to 
fire the Travel Office employees and asked that he attend the 
firings as a witness.
    On the morning of May 19, Patsy Thomasson informed Mr. 
Kennedy that a decision had been made to dismiss the Travel 
Office employees. Mr. Watkins told the White House Press 
Secretary, Dee Dee Myers, about the firings and provided her 
with talking points. Mr. Kennedy called the F.B.I. about the 
imminent firings, and the F.B.I. warned him about the problems 
the firings could cause with the F.B.I. investigation. Later, 
he called the F.B.I. back to say the firings would go forward 
anyway.
    Also that morning, Mr. Martens called his friend Penny 
Sample of Air Advantage to come to the Travel Office on a 
volunteer basis to arrange Presidential press charters. After 
Mr. Foster held a meeting concerning the firings, he and Mr. 
Kennedy instructed Mr. Watkins to delete any reference to the 
F.B.I. investigation from talking points on the firings.
    At approximately 10:00 a.m. that morning, Mr. Watkins and 
Mr. Foucart informed the Travel Office employees that they were 
being dismissed because of a review that revealed gross 
mismanagement within their office. They were told they had two 
hours to clean out their desks and leave. That directive was 
later extended to the end of the day. Afterwards, Mr. Watkins 
spoke again with Ms. Myers and was informed that she had 
disclosed the F.B.I. investigation to the media. Later that 
afternoon, Ms. Myers gave a press briefing about the firings, 
referred to a KPMG Peat Marwick report as the basis for those 
firings, and denied that there was an F.B.I. investigation.
    It should be noted that KPMG Peat Marwick's first draft 
report, while dated May 17, 1993, was not presented to Mr. 
Kennedy in final form until late on May 21, 1993 (two days 
after the firings). It was accompanied by with a cover letter 
indicating that the procedures did not constitute an audit, and 
that KPMG was giving no assurances on the accuracy or 
completeness of the information in the report. The report was 
not given to the F.B.I. until late on the evening of May 21, 
1993. It was not provided to the F.B.I. Washington Metropolitan 
Field Office until May 24, 1993.
    In October 1993, a provision was placed in the 
Transportation Appropriations bill to pay $150,000 for the 
legal bills of the five White House Travel Office employees who 
were subsequently placed on administrative leave and 
transferred to other positions within the Federal government. 
However, the $150,000 was not enough to completely cover the 
five employees' legal expenses, and no provision was made for 
the two other employees' legal expenses, because they were 
still under investigation.
    In May 1994, the General Accounting Office (GAO) sent their 
report to Congress on White House Travel Office operations. In 
that report, GAO indicated that while senior White House 
officials said the terminations were based on ``findings of 
serious financial management weaknesses, we noted that 
individuals who had personal and business interests in the 
Travel Office created the momentum that ultimately led to the 
examination of the Travel Office operations.'' GAO also cited 
the White House Management Review's recognition that ``the 
public acknowledgment of the criminal investigation had the 
effect of tarnishing the employees' reputations, and the 
existence of the criminal investigation caused the employees to 
retain legal counsel, reportedly at considerable expense.''
    An investigation by the Public Integrity Section of the 
Criminal Division at the Department of Justice continued over 
the next two and a half years. After being indicted in December 
1994, Billy Dale was tried in October and November 1995. Mr. 
Dale was acquitted of all charges after a 13-day trial by a 
jury that deliberated only two hours.
    According to documents submitted by six of the seven former 
Travel Office employees with remaining legal expenses, their 
total attorney fees and costs are as follows:

Billy Dale..............................................     $425,991.76
John McSweeney..........................................       30,234.23
Ralph T. Maughan........................................       11,476.06
Gary Wright.............................................        6,838.70
 Barney Brasseux........................................        6,298.82
 John P. Dreylinger.....................................        5,837.02

                        NEED FOR THE LEGISLATION

    Since May 19, 1993, several separate investigations have 
uncovered a concerted effort by former associates and friends 
of the President and First Lady to pursue travel and aviation 
business controlled within the White House. As a result of the 
accusations put forward by these associates and the subsequent 
F.B.I. investigation, these seven employees suffered public and 
private humiliation and incurred extensive legal expenses in 
their attempt to defend themselves.
    On the basis of these facts, the Committee feels in the 
interest of equity, these particular individuals' attorneys 
fees should be reimbursed by the United States.
    There has been discussion as to what type of precedent is 
being set by the payment of attorney fees in this bill. It is 
not the Committee's intent that this legislation set a 
precedent that the attorney fees of any individual fired for 
cause and later exonerated should be paid. This is a unique 
case and the Committee believes each monetary claim against the 
United States should be judged on a case-by-case basis.
    Another point of discussion has been the definition of 
attorneys fees. It is the Committee's intent that the 
guidelines for appropriate attorneys fees set out by Judge 
George MacKinnon, Presiding Judge of the U.S. Court of Appeals 
for the District of Columbia Circuit, Division for the purpose 
of Appointing Independent Counsels, in several independent 
counsel attorneys fees decisions should be applied to this 
situation. Therefore, the legislation uses the term ``attorney 
fees and costs'', the term that Judge MacKinnon was called upon 
to interpret in the independent counsel cases. This also 
conforms with the standards used by the Department of 
Transportation General Counsel in determining appropriate 
attorney fees when disbursing the previously appropriated 
$150,000 to five of the employees.

                        COMMITTEE CONSIDERATION

    On February 29, 1996, the Subcommittee on Immigration and 
Claims met in open session and ordered reported the bill, H.R. 
2937, by a voice vote, a quorum being present. On March 12, 
1996, the Committee met in open session and order reported the 
bill H.R. 2937 with amendment by voice vote, a quorum being 
present.

                         VOTE OF THE COMMITTEE

    Four amendments were offered en bloc by Congressman Frank 
and adopted by voice vote. The first amendment restricted the 
time to file a claim under this bill to 120 days. The second 
amendment added a provision that payment of a claim under this 
Act would be in full satisfaction of all claims against the 
United States concerning this series of events. The third 
amendment clarified that any money previously disbursed by the 
United States to any of the claimants to pay their attorney 
fees are to be deducted from their total expenses, and the 
fourth amendment deleted the phrase ``legal expenses and 
related fees'' and inserted instead ``attorney fees and 
costs'', the term that Judge MacKinnon interpreted in the 
independent counsel cases.

                      COMMITTEE OVERSIGHT FINDINGS

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT FINDINGS

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

                        COMMITTEE COST ESTIMATE

    In compliance with clause 7(a) of rule XIII of the Rules of 
the House of Representatives, the Committee believes that the 
cost incurred in carrying out H.R. 2937 would be $486,676.59.

               NEW BUDGET AUTHORITY AND TAX EXPENDITURES

    Clause 2(l)(3)(B) of House rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    In compliance with clause 2(l)(C)(3) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the bill, H.R. 2973, the following 
estimate and comparison prepared by the Director of the 
Congressional Budget Office under section 403 of the 
Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 18, 1996.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 2937, a bill for the reimbursement of legal 
expenses and related fees incurred by former employees of the 
White House Travel Office with respect to the termination of 
their employment in that office on May 19, 1993. H.R. 2937 was 
ordered reported by the House Committee on the Judiciary on 
March 12, 1996. Based on documents submitted by the attorneys 
for the former employees of the White House Travel Office to 
the House Committee on Government Reform and Oversight, CBO 
estimates that the bill would require the Secretary of the 
Treasury to pay about $500,000 in legal expenses and fees. 
Assuming enactment of the bill by June 1, 1996, we estimate 
that this outlay would occur in fiscal year 1996. (If the bill 
is enacted late in fiscal year 1996, some of the reimbursement 
could occur in fiscal year 1997.) These payments would be 
direct spending, and pay-as-you-go procedures would apply.
    The bill contains no intergovernmental or private sector 
mandates as defined in Public Law 104-4 and would impose no 
direct costs on state, local, or tribal governments.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is John R. 
Righter.
            Sincerely,
                                         June E. O'Neill, Director.

                     INFLATIONARY IMPACT STATEMENT

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee estimates that H.R. 
2937 will have no significant inflationary impact on prices and 
costs in the national economy.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Reimbursement of certain attorney fees and costs

    Subsection (a) directs the Secretary of the Treasury to 
pay, out of funds not otherwise appropriated, to former 
employees of the White House Travel Office whose employment was 
terminated on May 19, 1993, reimbursement of attorney fees and 
costs they incurred with respect to that termination. 
Subsection (b) directs that the Secretary of the Treasury shall 
pay the individual upon submission of documentation verifying 
the attorney fees and costs. Subsection (c) states that there 
is no inference of liability of the United States by enactment 
of this legislation or payment under this legislation.

Section 2. Limitation on filing of claims

    This section directs that the Secretary of the Treasury 
will not pay any claim filed under this Act later than 120 days 
after its enactment.

Section 3. Reduction

    This section directs that any monies previously disbursed 
by the United States to any of the individuals to pay their 
attorney fees are to be deducted from their total attorney fees 
and costs.

Section 4. Payment in full settlement of claims against the United 
        States

    This section states that payment made to any individual 
under this Act shall be in full satisfaction of all claims of, 
or on behalf of, the individual against the United States with 
respect to the termination of their employment in the White 
House Travel Office on May 19, 1993.

                              AGENCY VIEWS

    At a January 30, 1996, press briefing, Press Secretary 
McCurry indicated that the President would sign legislation to 
reimburse Mr. Dale for his legal expenses. The Committee had 
asked the White House for confirmation that the President would 
sign legislation which also includes the other employees' legal 
expenses. At this time, the Committee has received no response 
from the Administration on this question.

         changes in existing law made by the bill, as reported

    Clause 3 of rule XIII of the Rules of the House of 
Representatives requires that changes in existing law made by 
the bill, as reported, be included in the report.
    This bill makes no direct amendments to any Act.