Bill Clinton photo

Press Briefing by George Stephanopoulos

May 21, 1993

The Briefing Room

4:10 P.M. EDT

MR. STEPHANOPOULOS: The White House has received a final report by the accounting firm of Peat, Marwick regarding its study of the White House Travel Office. We are making this report available to the FBI and the public this afternoon.

The FBI has determined from the information it has already obtained that additional criminal investigation of the operations of the White House Travel Office is warranted.

Before summarizing the findings of the Peat, Marwick report, which we will be handing out to you, let me begin by explaining why the White House has been moving aggressively to reform the operations of this office. The White House Travel Office is responsible for travel arrangements such as chartering aircraft for the members of the White House press corps and staff who accompany the President on trips. This office handled $11 million in the last 16 months, reimbursements from news organizations which participated in trips. It appears now that these funds were handled without adequate accounting procedures.

Even though these funds belonged to private corporations and not the public, the White House believes that this operation, like every other, must function with professional business practices, efficiency and integrity. We have and will continue to review all White House and Executive Branch operations, as we have done since the transition, to ensure that these offices are in compliance with all these standards.

In the course of working at the White House and reviewing our operations we began to accumulate information indicating that the White House Press Travel Office was not being run in a professional or efficient manner. For example, when arranging for travel by the White House press corps the Travel Office did not typically accept competitive bids from charter companies, the effect of which would have brought down the cost of this travel. We believe that is wrong and we have changed this practice.

Because we have moved to a competitive bidding process the White House press corps will travel with the President tomorrow on a better plane than the current company operates, with savings of $8,000. Such savings will multiply with each trip made by the press corps.

Similarly, as the Wall Street Journal reported this morning, in booking individual airline trips for White House staff, the Travel Office did not always or generally seek the lowest possible price for the tickets being purchased.

Because we have a fiduciary responsibility to the media operations whose money is spent by that office, and because the President has a responsibility to the public to ensure that all White House operations are run efficiently, we chose to engage an independent accounting firm whose job it was to verify whether the practices and procedures of the office met professional standards.

Given the nature of the initial information we had collected, the Office of the White House Counsel sought the advise of the FBI. After meeting with the accounting firm's representatives on Saturday, the FBI determined there was sufficient reason to pursue a criminal investigation. The next step in that investigation is for the FBI to review the report from Peat, Marwick.

Let me take a moment to review those findings. There is a lack of basic accounting systems or records you would expect to exist when you are handling money. The record keeping is informal, sloppy, and disorderly. The office had no general ledger, no cash receipts book, and no accounts payable system.

The office is missing documentation in several areas, in particular, petty cash transactions. Eight checks from 1992 to 1993 totaling $18,200 were written to cash. There is no supporting documentation available to determine the status of this money.

There was an absence of documentation between the White House Travel Office and the principal charter company. No contracts, nothing to spell the terms and conditions for the arrangement. Such documentation did exist with regard to international travel.

These and other findings are written into the Peak, Marwick report.

It is never easy to terminate people who serve at the pleasure of the President. Especially people who have served long tenures in their jobs. We could not, however, fail to act in the face of these findings. In fact, it would be irresponsible not to act. That is why we called for the review; that is why we acted upon the review; and that is why the FBI is investigating today. The White House has acted diligently and deliberately in dealing with problems that, at their minimum, suggest a long period of mismanagement in this office.


Q: Is there any indication that there's any criminal activity?

MR. STEPHANOPOULOS: The indication -- I would just refer you to the White House -- I mean, to the FBI statement, that, according to the FBI -- and I'm just quoting from the FBI statement -- that that contact produced sufficient information for the FBI to determine that additional criminal investigation is warranted.

Q: George, we're still left with the question that was asked here yesterday -- you can link two of the people in the office who had access to the bank account to these practices involving the funds. The other five, however, neither you, nor your associates who have been asked about this before have been able to say that they were fired because of these practices. Can you now say, anymore than you could two days ago, about the activities of the other five?

MR. STEPHANOPOULOS: I think we have to separate the issues of sloppy accounting, overall mismanagement, and possible criminal activity. David Watkins, the Assistant to the President for Administration, believed in the face of these findings, in the face of the overall performance review, and in the wake of all of his experience in, one, in business and also in the White House over the last several months, that the best way to proceed from a management perspective was to replace everyone in the office.

Q: I know George, but that leaves the question unanswered. Can you now say anymore than you could two days ago about the other five members of the Press Travel staff -- the White House Travel staff who did not have access to the bank account and who were not involved in the disposition of funds?

MR. STEPHANOPOULOS: I don't know who did what in the office specifically. The Peat, Marwick report documents the sloppy accounting procedures and throughout the office.

Q: Does it identify people by name other than the two who had access to the bank account?

MR. STEPHANOPOULOS: I don't believe so.

Q: George, can you clear up questions about Mr. Watkins' prior relationship, business relationship, with World Wide Travel; whether he had a vested interest in this outcome? The memo certainly suggests that there was a predetermination in February that the White House wanted to replace the Travel Office before this accounting procedure was looked into.

MR. STEPHANOPOULOS: Well let's take --

Q: And secondly, what the role of Harry Thomason was; whether there was any inside-outside influence by people close to the President?

MR. STEPHANOPOULOS: Right. Let me take them one at a time. First of all, I mean, let's talk about the memo to begin with. This is a memo by a low-level staffer --

Q: How low level? She's going to head the Travel Office.

MR. STEPHANOPOULOS: On February 15th she was a lowlevel staffer who did a memo analyzing current operations. That memo was given to David Watkins and he filed it.

Q: A remarkably prescient memo, wouldn't you say, in light of the outcome of things? (Laughter.)

Q: Can you finish the answer?

MR. STEPHANOPOULOS: And I think that, to go further, that memo was filed. In fact, we did not act upon that memo. That memo was written on February 15th. We acted in May, after a review by an accounting firm and by six people in a highly respected accounting firm who went through all the operations of the office and after the FBI, after consulting with that accounting firm, determined that there was reason to go forward with a criminal investigation.

Q: Does David Watkins have a conflict of interest in this matter, and what was the role and the timing of the role of Harry Thomason?

MR. STEPHANOPOULOS: David Watkins had a relationship in the past when he was in the private sector with World Wide Travel. I believe World Wide Travel was a client. But subsequent to that, World Wide Travel, I would remind you, worked for the Clinton campaign, did a good job for the Clinton campaign. That is why we reached out to them.

As to the role of Harry Thomason, as I said yesterday, he did contact the White House Travel Office in the White House, it is my understanding, seeking information for charter companies. He is not bidding, to my knowledge, he is not bidding on any of the contracts.

Q: And when did he do that, and has he ever discussed this with the President?

MR. STEPHANOPOULOS: I don't know when the timing was. I don't know what the timing was of the contact with the White House. I don't know the specific nature of the contact. I believe that he was seeking information on behalf of other charter companies. He may have mentioned it to the President. He did not have any long detailed discussion. I believe his detailed discussions were with David Watkins.

Q: When you say he may have mentioned it to the President, clearly you know something -- you've asked the President whether this was discussed with him?

MR. STEPHANOPOULOS: It wasn't discussed. He had mentioned something about the Travel Office at some point, but it was just a brief passing reference.

Q: Is it a mistake really, though, to have Cathy Cornelius, who wrote this memo suggesting this, now helping to run the office that she suggested be abolished?

MR. STEPHANOPOULOS: Again, Cathy Cornelius worked in the travel office. She worked in the travel office during the campaign. She is taking a relatively low level -- she had a relatively low level position. She will not be running the Travel Office in any way. She is going to be helping coordinate the travel in this office. It will be run by the Director of Administration and another person from the OMB who will be handling the money. She is not going to be handling billing or financial procedures.

Q: What prompted the memo, her memo? And how come it came long before the national whatever review -- performance review, and so forth, and yet it was attributed to that -- this whole shakeup?

MR. STEPHANOPOULOS: We had reviews going on throughout the transition and beyond.

Q: She was assigned to look over the office and --

MR. STEPHANOPOULOS: I don't know she was assigned necessarily -- it may have been something she did on her own initiative.

Q: She did it on her own?

MR. STEPHANOPOULOS: I honestly don't know.

Q: Isn't that peculiar?

MR. STEPHANOPOULOS: Not necessarily. A lot of people, when they're going through looking for -- she had expressed an interest in working in the Travel Office. I think there's no question about that.

Q: Do you think it's purely a coincidence that what has happened now is so remarkably like the very prescriptions that she made in terms of which travel agency and who would be in charge and how it would be run? That's all a coincidence?

MR. STEPHANOPOULOS: What I'm suggesting is that we did not act on that memo.

Q: So the fact that things came out much as the memo suggested is a coincidence?

MR. STEPHANOPOULOS: Not exactly. I mean, I think that in her memo --

Q: I didn't say exactly, I said much --

MR. STEPHANOPOULOS: No, but it's -- she proposed that she run an office at a very high salary. Instead she is having a coordinator's job at half the salary.

Q: Why did she suggest that she run it at a high salary?


Q: You don't know?

MR. STEPHANOPOULOS: But it wasn't acted on.

Q: How do you suppose she proposes World Wide Travel and, lo and behold, here we have World Wide Travel? That just happened?

MR. STEPHANOPOULOS: First of all, I would remind you World Wide Travel is being done on an interim basis. We are putting out requests for proposals for a competitive bidding process. And that will be done over the next 90 days.

Q: How do you competitive bid a travel agent?

MR. STEPHANOPOULOS: Travel agents will come in and say how they can run the office and make a bid.

Q: There's been a suggestion that Cathy Cornelius, over the past month, has worked in that White House Travel Office, having access to all of the documents, all of the information included. Has she also been asked to be put on administrative leave while this FBI investigation is underway, and is she under investigation as well since she spent the last month working in this office?

MR. STEPHANOPOULOS: Not to my knowledge. She was put in that office doing a job that wasn't being done, that in the past had been done by advance people, and that was booking hotel rooms and other travel arrangements -- booking hotel rooms for staff traveling with the President.

Q: But there's some suspicion -- at least some of the people who were dismissed are raising the possibility that she, herself, might have done something that could have caused some of these irregularities that you're now suggesting.

MR. STEPHANOPOULOS: I know nothing about that.

Q: She was put in that office, George. Did she report to Billy Dale as head of the office, or to somebody else?

MR. STEPHANOPOULOS: Well, David Watkins is the Director of Administration; I believe he has overall responsibility for that.

Q: So she reported to David Watkins?

MR. STEPHANOPOULOS: I don't know who she specifically reported to. I know that David Watkins has ultimate responsibility for that.

Q: And can you say if you're responding in any way, or the President is, to the letter from Senator Bond?

MR. STEPHANOPOULOS: Certainly we will have a response. We don't have it now.

Q: Was Billy Dale ever asked about the $18,000?

MR. STEPHANOPOULOS: He went through this with the auditors over the weekend.

Q: And they were not satisfied with his answer?

MR. STEPHANOPOULOS: There was no documentation at all.

Q: I mean, did he have an answer?

MR. STEPHANOPOULOS: Again, I can only say that the report says that there was absolutely no documentation for these petty cash checks.

Q: Was there any explanation?

MR. STEPHANOPOULOS: Again, I don't know what the auditor said. It's not the auditor's job to evaluate explanations. Their job is to go over the accounting procedures, and they determined there was absolutely no documentation, no records of any kind.

Q: Sometimes you have to take someone's word.

MR. STEPHANOPOULOS: The problem here is that we had eight checks totally $18,200 that had no documentation whatsoever. There were, I think, approximately 56 other checks which had problems with the documentation as well, totally several thousand dollars. And it was running throughout the office; there was a problem with no documentation, no accounting procedures.

Q: Who were the checks written to?

MR. STEPHANOPOULOS: There were eight different checks for cash. And the other ones, the 56 were other checks for reimbursables which had inadequate accounting.

Q: When you say the memo was filed, what do you mean by that? Did David Watkins not even read the memo?

MR. STEPHANOPOULOS: He says he did not read it at the time, no.

Q: Did anyone else read the memo?

MR. STEPHANOPOULOS: Not to my -- I don't know where else it was circulated. David Watkins says it was given --

Q: She did it on her own.

Q: Has he read it yet?

MR. STEPHANOPOULOS: David Watkins? I don't know that he's read it.

Q: George, now that you've read the memo --

MR. STEPHANOPOULOS: I haven't really read it that closely.

Q: Well, I can read you a piece of it. There's a part where she talks about the Travel Office as being overly pro-press. Do you agree with that assessment, and if not, why is somebody who thinks the Travel Office is overly pro-press being put in a position of some authority there?

MR. STEPHANOPOULOS: All I can say is we're looking to run a travel office that is going to do the best job at the lowest possible cost for the press. And we see the evidence of that this weekend. This weekend we've done a competitive bid and we've come up with a plane that has more first-class seats than have been had in the past on press charters -- far more. In fact, I think it's all first class seats on the plane -- at a cost $8,000 less than the press organizations have been paying. I mean, I think that shows what we're trying to do is serve the press in the best way that we can -- best quality at the lowest cost. And that's what we're trying to provide.

Q: you respond to this memo to take people who have served from administration to administration and replace them with people who are politically loyal to the President, if not in fact hostile to the press or at least not accessible to the press or happy with the press? Why is that happening? And what do you say to people who talk about how you're trying to politicize a nonpolitical office?

MR. STEPHANOPOULOS: That's not what's happening. I think what you find when you look at the Peat, Marwick report is that we've had over long periods of time -- and this report only covers the last 16 months, but it's my understanding that there have been reviews like this in the past and these questions of mismanagement have come up in the past. And clearly now we have a report which shows that this operation is not being run in a professional manner, it's being run with sloppy accounting procedures, no accurate -- no ability to account accurately the money that your organizations are spending. And that's not the kind of thing we're going to tolerate. We're going to try and end that kind of mismanagement. We're going to try and do it better in the interests of serving the press.

Q: People look at this and it looks like you're politicizing the White House.

MR. STEPHANOPOULOS: Well, I think when people look at it what they see is that in the course of just a few days we've already saved $8,000 and come up with a better plane. What they're seeing is that we're trying to run it in a better, more efficient manner.

Q: You said that Harry Thomason mentioned something to the President about the Travel Office. What did he say, when did he say it to the President?

MR. STEPHANOPOULOS: I don't know. Dee Dee asked the President. He said that he may have mentioned something to me at sometime a long time ago. It wasn't a detailed conversation in any way.

Q: Did the President take any action or make any comments --

MR. STEPHANOPOULOS: Not to my knowledge. I know that Harry did have longer discussions with David Watkins and others in the Administration and Travel Offices.

Q: Can you tell us what others?

MR. STEPHANOPOULOS: I don't know who he specifically spoke to. I know there were contacts of some kind, just seeking information.

Q: David Watkins said --

Q: Can I ask about the original relationship with World Wide? The owner of the company who is the sole owner and has been for many years and who is the closest associate with David Watkins here, said she sort of carried the campaign in its early days when they didn't have any money and agreed to bill them on a delayed basis as their contributions came in. And Watkins has been quoted as saying that that enabled them to free up money to use for advertising in the Michigan and Illinois primaries at a time when they might not otherwise have been able to do so. That sounds like it treads perilously close to corporate contributions and FEC violations. I wonder if you'd explore that a little bit and that relationship. It sounds like it might be germane to the selection of this group.

MR. STEPHANOPOULOS: I know that World Wide Travel served the campaign well, served it in an efficient manner. I don't know about the specific questions that you're raising.

Q: Will Mr. Watkins be out here? He seems to know about them and he's commented on them in the past, but not to the people who are sitting in this room.

MR. STEPHANOPOULOS: I can take the question.

Q: George, does World Wide Travel give political donations to Mr. Clinton, as reported in The Times this morning?

MR. STEPHANOPOULOS: Oh, I think some individuals may have made donations. I don't think there was any corporate donation, as far as I know.

Q: How much?

MR. STEPHANOPOULOS: I don't have the exact number in front of me.

Q: Are you familiar with whether they withheld billing to permit the campaign financial leeway during some --

MR. STEPHANOPOULOS: I can't speak for the campaign. We can try and find out, but I just don't know.

Q: George, are you saying The Times was wrong in reporting corporate donations --

Q: George, can you identify the airlines that Harry Thomason interceded in the White House -- that he interceded with White House officials, on whose behalf he talked?

MR. STEPHANOPOULOS: I don't know, and I don't know that he did it himself.

Q: Well, you said yesterday that he called after being contacted by several airlines -- friends in the airline business, that he called David Watkins to --

MR. STEPHANOPOULOS: Or to the Travel Office. Yes, I just know that -- I don't know the specific nature of the contacts. I know there were contacts. I don't know exactly when the contacts were and what was in -- or what the calls were.

Q: Do you know which airlines he was acting on?

MR. STEPHANOPOULOS: I do not know the ones he was acting on. I know that he had gotten calls and was trying to get information.

Q: George, do you know anything about the nature of the relationship between Harry Thomason and the airlines companies on whose behalf he was calling? Were they companies in which he had any financial interest, or companies that were headed by people who were friends of his, or were they merely people who called him up because they knew that he was close to the President and said, hey, look, we want to get in on this?

MR. STEPHANOPOULOS: I honestly don't know exactly what the relationship is between Harry and the companies. I don't know the specific nature. I know that he is not bidding. He has said that he is not bidding on any White House business.

Q: Could you find out some more about what these companies are? Whether their companies -- I mean, he's not bidding, but are they companies in which he perhaps has some sort of financial interest even if he does not control them --

MR. STEPHANOPOULOS: I don't know. I just don't know.

Q: George, there's a report out that he may be picking up the tab for this personal services contract that the President and Mrs. Clinton have with the Beverly Hills hair stylist. Is that true, do you know?


Q: Do you know if he's the guy who located or recommended Cristophe to Clinton?

Q: Does he pay Cristophe?

MR. STEPHANOPOULOS: Does he pay Cristophe?

QQ: Does he, a, pay Cristophe, and did he, b, recommend or locate Cristophe for the Clintons?

MR. STEPHANOPOULOS: I think that he introduced them. As far as paying, they pay for their services.

Q: He doesn't cover that?

Q: Harry Thomason doesn't cover that?

Q: How much do they pay?

Q: There's a report that says he does.

Q: There's a report out that he --

MR. STEPHANOPOULOS: I will double-check. I mean, I just --

Q: You will take the question then?

MR. STEPHANOPOULOS: Yes, I'll take the question.

Q: And on the personal services contract, can you tell us what the size of it is, whether it's for fair market value -- Cristophe's expensive services?

Q: George, are you prepared to take another subject?


Q: No, wait a minute. George, you said earlier -- somebody asked earlier whether there was any evidence of criminal wrongdoing and I think you answered that the FBI was doing in investigation to determine if there was criminal wrongdoing.

MR. STEPHANOPOULOS: I'll read you the FBI statement.

Q: We've read it.

Q: We've read it. I'm just wondering if there's a distinction there -- if at this point you have any knowledge that there was criminal wrongdoing in the Travel Office.

MR. STEPHANOPOULOS: That's for the FBI to determine.

Q: So you don't have any information on this?

MR. STEPHANOPOULOS: I can -- again, I'll read you from the FBI.

Q: I've read it, but I just want to make sure I understand --

MR. STEPHANOPOULOS: The FBI determined that there was sufficient information to pursue additional criminal investigation.

Q: To pursue the investigation, but you don't then have any information showing that there was criminal activity going on in the Travel Office?

MR. STEPHANOPOULOS: That's for the FBI to determine. That is what they're doing. They are pursuing a criminal investigation.

Q: Okay. So were these people fired because of mismanagement or because of possible criminal activity?

MR. STEPHANOPOULOS: They're completely separate issues. I mean, and the termination was justified solely on the basis of mismanagement.

Q: Were they fired in any way --

MR. STEPHANOPOULOS: And also, I mean, and again, this was a management decision by David Watkins that once these findings were discovered that it was -- the best way for him to proceed was to clean out the office.

Q: Is there any chance these people would get their jobs back if they are found not to have committed any criminal activities?

MR. STEPHANOPOULOS: I believe, you know, we want to reorganize the office and make it run in a better way and that's what we're pursuing.

Q: That same memo had some language about them considering the needs of the press above and beyond the needs of the President. Is that the official attitude toward the old office? Do you agree with those assessment?

MR. STEPHANOPOULOS: Again, I can't assess the old office.

Q: Well, it's in the memo.

MR. STEPHANOPOULOS: But again, this is a memo by a lowlevel person that we just don't --

Q: Excuse me, then you have an opportunity to disavow the attitude if it's not yours.

MR. STEPHANOPOULOS: I can completely disavow the attitude in the memo. We are looking -- I thought that's what we are trying to do.

Q: She gets rewarded with a promotion.

MR. STEPHANOPOULOS: We are trying to come up with a system that is going to serve the press in the most cost-efficient and quality manner. That's -- and I think that that is the kind of attitude we're showing with the service we're providing this weekend.

QQ: The five people who were dismissed below the Director and Deputy Director, in the Peat, Marwick final report you're going to give us, or even in David Watkins' conversations with them, was any evidence provided to them or are you going to provide any evidence to us that they had any responsibilities for the mismanagement that you talk about? Is there any specific information about those five that we or they will see about why they were terminated?

MR. STEPHANOPOULOS: Again, I would remind you that these people serve at the pleasure of the President. The office is not being run in a way that was consistent with professional practice, consistent with good accounting standards, consistent with any kind of well-run operation. We believe that it has to be reorganized.

Q: The answer is no, right?

Q: The answer is no.

MR. STEPHANOPOULOS: The answer -- I just can't speak to the specifics right now. I can just tell you --

Q: I know, but that's a specific question and you could answer the question, or not.

MR. STEPHANOPOULOS: We believe that this office would be better run if we have an entirely new system.

Q: We understand that. But his question is something else, isn't it, Mike?

Q: Yes. I'm asking if there is any specific evidence tying those five people to the mismanagement you are citing as the reason for their dismissal.

MR. STEPHANOPOULOS: I can't say that there is not. I can just say that the whole office -- no, Brit, I mean, that's exactly -- I can say that when Peat, Marwick looked --

Q: You take action against people because you don't know that there is not evidence against them? I mean, I don't understand that.

MR. STEPHANOPOULOS: We took action because we are reorganizing the office; an office that has not been run well at all.

Q: That's what it comes down to, though, isn't it?

MR. STEPHANOPOULOS: No, it comes down to both.

Q: It was all reorganization, isn't it?

MR. STEPHANOPOULOS: That's simply not true. We did not act until after the Peat, Marwick report and other suggestions. I mean, you can't say that we wouldn't have done things differently. We're looking at reorganization; we've reorganized every office. And that is the right thing to do. It is right to find ways to reorganize offices in a more efficient manner.

Q: What reason did you give those five people and also Billy Dale and Gary Wright? What reason were they given for their termination?

MR. STEPHANOPOULOS: The office isn't being run the way we -- the way it should be run, it is being run in a sloppy manner. The procedures are not consistent with the kind of activity we want in the White House. We are going to reorganize. We've been looking at all offices to reorganize. We then gave these people two weeks notice. We also gave them an extra month to devote towards their retirement. We treated them in a professional manner.

Q: Was that required by law or was that just something you were doing out of the goodness of your heart?

MR. STEPHANOPOULOS: I don't know what the requirements are. Do you want to follow?

Q: Yes, I actually want to follow up because it's related to this. Is it your view and the President's view that even though people can be fired at will, that it's appropriate to terminate people without giving them an opportunity to state their side of the case and to hear them out?

MR. STEPHANOPOULOS: Well, I would say that we did not fire them at will, we fired them after --

Q: At will meaning you can fire them without -- for any reason that you want, that they serve at the pleasure of the President.

MR. STEPHANOPOULOS: They certainly do serve at the pleasure of the President, but in this case we acted only after complete reviews. One, we had analysis by our own office. Number two, we then called in, after questions were raised, an independent accounting firm, going above and beyond the call so that no questions could be raised about this being done in a political manner. We hired an outside firm, which then looked at the entire operations of the office to the extent they could; found extensive documentation of improper procedures, sloppy practices, and mismanagement.

Q: Who is paying the outside firm?

MR. STEPHANOPOULOS: We're going to pay the firm.

Q: How much?

MR. STEPHANOPOULOS: I don't know the cost. We have a letter of engagement.

Q: What about her question, though, about whether they got a word in, whether they ever got their say?

MR. STEPHANOPOULOS: Let me finish. I'm trying to finish. And as far as I know, either four or five of the members were in discussions with the auditors and with David Watkins. There were two who I believe were overseas or on other trips. But again, that was a management decision consistent with the findings.

Q: I'm curious if that was consistent with Bill Clinton's theory of how companies and other employers should treat their workers.

MR. STEPHANOPOULOS: Well, I think that one of the things that he wants to do is to make sure that the operations are run in a professional manner. Here you have a situation where they clearly were not run in a professional manner. When the President's staff discovered this they made a management decision. I think that David Watkins has 25 years experience in business. He has said that there are several different ways to move and often the best way is to move quickly once you find procedures that cannot be rectified. And I think that especially in this kind of a case where you are dealing with records not found and other improper procedures, it was important to move quickly.

Q: George, could you tell me the -- she was first -- Miss Cornelius was first described as a cousin and then as a distant cousin. I'd like to know the exact relationship she is to the President. And secondly --

MR. STEPHANOPOULOS: Her great-grandmother was the sister of his great-grandfather. So I think, by that standard, I think I'm related to most of the people in Greece. (Laughter.)

Q: A follow-up question. There are about -- a conservative estimate --

Q: If she's so distant, George, why does she pass herself off as his cousin?

MR. STEPHANOPOULOS: I can't speak to that. I don't know what --

Q: George, there are about 20 people in the administration who are related -- are married to other people in the administration or married to prominent Democrats on the Hill. And I've been looking at this all week. This is not unheard of in other administrations. It seems to be much more prevalent --

MR. STEPHANOPOULOS: It certainly isn't,

Q: in this administration. And my question --

MR. STEPHANOPOULOS: How do you make that case? Do you have any documentation of that? How can you say it's more prevalent? Do you know that?

Q: I think so. I've been looking at it.

MR. STEPHANOPOULOS: Well, how do you know?

Q: Well, I haven't looked at all 3,500 political appointees for the last 10 administrations, but I called and asked people who were in previous administrations and got them to list for me every person. And my question is, is there any question in your mind that there's a perception that in an administration which insider contacts and connections seem to be important, that having people who are married or daughters or sons of prominent Democrats creates an impression that this is an insider's game, that connections are more important than achievement to landing a White House job?

MR. STEPHANOPOULOS: I think when you look at our appointments, when you look at the breadth and the diversity of the President's Cabinet appointments, when you look at the breadth and diversity of his appointments throughout the government, when you look at the thousands of people he's gone through, when you look at the extensive personnel system that we've set up to make sure that we get people of the highest quality, highest standards of excellence from across the country, you find that we have far greater diversity and a far greater commitment to excellence and merit than we've seen in the past. And we're going to continue to pursue that.

Q: Cornelius cites in her memo an article to buttress her point that the Travel Office served the press above and beyond the needs of the President. You haven't provided that article. Can you?

MR. STEPHANOPOULOS: I can find it. I don't have it. But again, let me speak to that. We are trying to do everything we can to make sure that this office works in a way that works for you. And we're going to continue to do that. And her --

Q: Since there's no evidence to support her argument at all, this article would be helpful.

MR. STEPHANOPOULOS: I can try and find the article.

Q: If I could just follow up on Matt's question. In addition to the article, the original copy of the Cornelius memo also included her resume and I think one other resume and maybe a couple of other pages, too. I didn't get a chance to look through the whole thing, but the copy that you all released are missing those. Is there some reason why those pages were left out?

MR. STEPHANOPOULOS: I don't know anything about that. I'll find out.

Q: And are there other things other than the resume and the article that were left out?

MR. STEPHANOPOULOS: I'll have to check.

Q: I asked you yesterday if the travel agency -- I said the travel agency had approached Watkins and Cornelius about this. You said you'd look into it and you didn't know about it at the time. Having not read this memo, was he, in fact, approached in advance by Mrs. Carney or Steve Davidson of World Wide?

MR. STEPHANOPOULOS: Was who approached?

Q: Watkins or Catherine. They said that they were both approached and --

MR. STEPHANOPOULOS: I can't deny that they were --

Q: You said yesterday you didn't know about it but would find out.

MR. STEPHANOPOULOS: I don't know the exact nature of the contacts. I believe that they did work with World Wide Travel throughout the campaign and I wouldn't -- I can't deny that they probably look into ways of organizing the office, for advice and ways to replicate it in the White House.

Q: The World Wide people said they did an analysis of the Travel Office last year that showed some of the very things that were used here as rationales for doing away with it -- overstaffed, underworked was the argument. And that they moved on implementing that during the transition, to suggest that this happen.

MR. STEPHANOPOULOS: I said that we looked at every office during the transition. We will continue to look at the offices and have them work in the best way.

Q: The specific overtures -- you can't confirm the specific overtures which they say were made?

MR. STEPHANOPOULOS: I'm certain that they talked to World Wide Travel as they were reviewing the operations.

Q: In the next 90 days when you put this service out to competitive bid, is World Wide Travel going to be barred from bidding on it?

MR. STEPHANOPOULOS: Barred from bidding on the final contract?

Q: Yes.

MR. STEPHANOPOULOS: I don't believe so. I can take the question --

Q: If they're going to be doing it in the interim and they'll also be allowed to bid for the permanent contract?

MR. STEPHANOPOULOS: I think so, but I'm not positive.

Q: Wouldn't that be a conflict?

MR. STEPHANOPOULOS: How is it a conflict for them to go for the --

Q: Because they know how to put in the lowest bid. They're working there already.

MR. STEPHANOPOULOS: They won't have the --

Q: Of course, they will. That's an insider information situation.

Q: Inside track.

MR. STEPHANOPOULOS: Let me check on the specifics on how the bidding is going to go.

Q: Given Cornelius' questionable connections to Clinton and the Clinton administration --

MR. STEPHANOPOULOS: What are her questionable connections to Clinton?

Q: Those are connections about which people raise a lot of questions. (Laughter.)

Q: And World Wide's questionable connections to the Clinton campaign, at best you have a perception problem. Have you given any thought to simply dismissing World Wide and dismissing Cornelius and starting over here?

MR. STEPHANOPOULOS: One thing I would, first of all, go back to the facts. And the facts here is there's been a Peat, Marwick report which showed extensive irregularities in the Travel Office.

Q: That's the problem. The question is about the remedy.

Q: You have a perception problem, George. At best you have a perception problem. At worst you have a real conflict of interest problem with both of these parties.

MR. STEPHANOPOULOS: I don't know you can necessarily lump all that together. We're going to continue to review everything in this matter and when we have further announcements, we'll make them.

Q: So the answer to his question is, no, you haven't considered doing something to remedy the perception problem?

MR. STEPHANOPOULOS: No, my answer is that, number one, we've released the Peat, Marwick report which shows in great detail why this action was taken.

Q: We don't have it --

MR. STEPHANOPOULOS: Well, the copies are being made. We will continue to review the operations of the office and do what we think is appropriate.

Q: George, what has the President's reaction been to the way the travel story and the hair story have been played in the press this week?

MR. STEPHANOPOULOS: I think that it says -- I think it does raise questions about what's important in Washington and what's important in the rest of the country. And I think that when you look at the important things that are happening in this country and that we're trying to get down a huge budget deficit and come forward with an investment program that makes a difference in the real lives of real people out in the country, and there seems to be some sort of obsession with side issues -- particularly when, in this case, the President acted pursuant to independent reviews, something that had never been -- that is not usually done in the White House, and made sure that before any action were taken, that this was done in an appropriate manner. I think it does raise questions.

Q: George, could you describe Larry Herman's relationship with the White House? He's the Peat, Marwick auditor who was in charge.

MR. STEPHANOPOULOS: Right. Larry Herman, as you know, is a senior auditor with Peat, Marwick. He's run, as far as I know, the performance reviews for the state of North Carolina, the state of Kentucky, and the District of Columbia and dozens of others in cities and counties. He's a specialist in government accounting practices. In that role as a senior accounting official on government practices, he has briefed the members of the Vice President's performance review and he has also been an advisor just reviewing -- helping to review their work. And that was -- he was called in, as he's been called in by many states and counties and cities, because he is one of the foremost experts in the country on government accounting practices.

Q: Were two of the accountants volunteers on the Vice President's performance review commission?

MR. STEPHANOPOULOS: I know that -- I don't know about that. I know that Larry Herman was called in to brief the trainees of the performance review because he's an expert in this, which is perfectly -- I mean, it's perfectly appropriate. And he was also called in to review their work through a toll gate session.

Q: This is a question about sloppy management, I guess basically at best. Maybe there's criminal behavior. But the fact that David Watkins hired, at least on an interim basis, a company that used to be a client of his in the advertising business -- isn't that sloppy management as well?

MR. STEPHANOPOULOS: I think what he hired was a company that we had long experience with in the campaign who had done a good job for the presidential campaign. And again, look at the results. This week they've put out a charter that is saving you all money.

Q: You guys have said from the get-go here that you were going to observe the absolute highest, most scrupulous ethical standards. That always has included questions of appearance. Isn't it manifestly clear that for this chap to turn to this former client of his for the business, even on an interim basis, creates an obvious appearance problem? Just an appearance problem.

MR. STEPHANOPOULOS: We are going to do requests for proposals on --

Q: George, that isn't the question. The question is whether you believe that it creates an appearance problem, or whether you're ready to stand on this platform and say it does not.

MR. STEPHANOPOULOS: I am saying we're going to continue to review everything in this matter.

Q: So you're not going to answer that question.

Q: George, one quick follow-up --

Q: George, you promised me that I could have the floor.

MR. STEPHANOPOULOS: Sarah, go ahead.

Q: As long as there is anybody out there who is homeless tonight and children, one out of four are hungry, and other people need jobs, this is a bunch of silly foolishness, is it not, for us to be spending so much time --

MR. STEPHANOPOULOS: I think a lot of the American people would agree with what you're saying, yes.

Q: haircuts of both the President and the First Lady. And I will call your attention to the fact that there is absolute proof now that the Bush administration had committed treason during the Gulf War and congressmen are trying now to get the White House and the Justice Department to go ahead with prosecutions which they failed to do during the Bush administration.

MR. STEPHANOPOULOS: I don't know anything about that, but I think the first part of your statement made a lot of sense. (Laughter.) That's right. You've got to go top to bottom. (Laughter.)

Q: Back to what you were saying about the dismissals of the people, can you clarify a point as to what you're saying? Were these people fired at will or for cause?

MR. STEPHANOPOULOS: Everybody who works in the White House serves at the pleasure of the President. We are engaged in a performance review of every office. We are engaged in reorganizing every office. In pursuit of that investigation, we also came upon questionable practices in the White House Travel Office. Seeing this weight of evidence, the need to reorganize, the need to run it in an efficient manner, the questions raised by the internal -- by the review of Peat, Marwick, and the questions raised by the idea that the FBI is going to pursue a criminal investigation, a judgment was made.

Q: Would these people, under your review, given this memo, likely have been out anyway?

MR. STEPHANOPOULOS: I can't say that. I mean, I don't --

Q: You can't tie but two of them to the alleged mismanagement, so isn't it obvious that the rest of them would have been out anyway?

MR. STEPHANOPOULOS: That's not necessarily true. We acted after the Peat, Marwick report.

Q: George, can we switch to the budget?

Q: I had the first switch.

Q: All right. Go ahead, Andrea.

MR. STEPHANOPOULOS: Are you on this or --

Q: No, I wanted to talk about a different subject.

Q: I want to ask a question for the first time back here. How about -- before we keep working on the front.

Q: Thank you.

MR. STEPHANOPOULOS: Mitch, go ahead.

Q: George, this was supposed to be a two-week period when the President and the White House was going to get back focused on big issues -- the economy and health care, and where he added a deputy to pay more attention to day-to-day issues. Why has this week been such a public relations disaster for the White House? (Laughter.) Who has not been minding the store and say, hey, this haircut may not be a good idea, or perhaps there may be some changes needed in the Travel Office, but we have to get the evidence together before we fire people?

MR. STEPHANOPOULOS: The evidence was got together and there was a review done by the Peat, Marwick report. And I would say the President is focused on getting his budget through the Congress. The President is focused on Bosnia. The President is focused on the issues that matter.

Q: Can you see at least why it looks bad?

Q: Excuse me, I'd like to follow-up on your statement about the interest that your office has in the welfare of the White House Press Corps. (Laughter.) Over the course of -- and the only reason I ask it is because of some of the things we've seen over the course of some weeks here -- we've had an occasion with one staffer telling a reporter in the pool that he was going to remove him because he didn't like his attitude. We've had a case of another staffer, Rabinowitz, trying to get a television reporter to stop asking questions of the President in the pool situation. We've had a situation last night out here in the driveway where Vickie RivasVazquez attempted to physically block cameras taking pictures of people who were leaving the White House. And we have a memo here from Catherine Cornelius who is worried about a Travel Office being overly press. How concerned for our welfare can you really be?

MR. STEPHANOPOULOS: Catherine Cornelius does not work for the press office. I mean, I think you've picked up three isolated incidents. I don't know the facts of all of them. They sound like something we need to look into, and if you'd like to document them, I'd be happy to look into it, talk to you about it and get it fixed. No question about it. Those kinds of things will not be tolerated. I think that we try to do our best. I think that there is often a lot of tension -- I think you know that -- on both sides. And we're all trying to do our best.

Q: What's the explanation for Ms. Rivas-Vazquez's action last night?

MR. STEPHANOPOULOS: I don't know, but we'll find out.

Q: Did some report --


Q: Can I ask a new subject?

MR. STEPHANOPOULOS: Sure. Are you on this subject?

Q: No, I want to ask --

MR. STEPHANOPOULOS: Andrea and then Mark.

Q? Following the lunch with Christopher, can you give us any context for the President's remarks this morning which seemed to be very spectacle of the Russian proposal, whether there is now this new track that's being brought to the French and the British over the weekend?

MR. STEPHANOPOULOS: I just don't have a read on that at this point.

Q: There have been people in the administration that have been critical of what Boren is doing, and I was wondering if there was any concern that there could be some sort of repeat of the Shelby incident in which Boren becomes --

MR. STEPHANOPOULOS: Hold on. The President is --

QQ: Would you please repeat the question? We can't hear. You're having a private conversation up there and we are part of this briefing as well. Thank you.

MR. STEPHANOPOULOS: I apologize. Mark, did you want to speak up?

Q: My question was whether or not there would be a repeat of the Shelby problem in which -- with David Boren in which Boren is actually becoming a hero because he's opposing the President and whether or not you're concerned with that?

MR. STEPHANOPOULOS: I would certainly hope not. I think the President has had good conversations with Senator Boren. We have a disagreement over substance. The President believes that the Boren alternative is misguided, because it lowers taxes on the rich at the expense of Social Security recipients and other people who are near the poverty line. We just think that's the wrong way to go. But it's not a personal battle; it's a substantive battle.

Q: Have they talked today?

MR. STEPHANOPOULOS: No. I know they talked yesterday. I don't know if they've talked today.

Q: The President of Cyprus was saying earlier today that he wanted the United States to get more directly involved --take a role as a guarantor, suggesting that that might break the gridlock on Cyprus. Is that something that the White House has any interest in --

MR. STEPHANOPOULOS: We'll have a read afterwards. We support the U.N. process. We'll have a read afterwards.

Q: Can you answer that question?

Q: One follow-up question on the San Diego town hall meeting. The first questioner, the gentleman who lectured the President on taxes -- people who don't want to pay a lot of taxes -- it turns out is somebody who has himself not paid state, local, or federal taxes for several years. (Laughter.)


Q: Or his child support. Do you have any reaction to --

MR. STEPHANOPOULOS: The President thinks that everybody should pay their taxes. (Laughter.)

Q: Lots of them.

Q: Exon and Kerrey spoke favorably today about the Boren proposal. Are you concerned -- is this evidence that more Democrats are running away from the President's proposal?

MR. STEPHANOPOULOS: We think that the overwhelming majority of Democrats will support the President's proposal and believe, like we do, that the Boren proposal is misguided because it simply goes in the wrong direction.

Q: Are you talking to Kerrey and Exon?

MR. STEPHANOPOULOS: I think that Senator Bentsen has talked to an awful lot of Senators on an off the Finance Committee, and others are in contact. I don't know that the President has.

Q: What happens to the President's plan if the energy tax is knocked out? Is there any acceptable alternative?

MR. STEPHANOPOULOS: That's a hypothetical. We're going to move forward and get the President's plan passed.

Q: George, to follow on that, yesterday we were told that you could get the energy tax out of the Finance Committee, even if it were a 10-10 tie. We were told from the Hill that that is not possible.

MR. STEPHANOPOULOS: That's not exactly right. There's a couple of different procedural alternatives. Obviously people have the -- you're not certain that everybody is going to be there, number one. Number two, if the Senate Finance Committee is not able to report out a proposal, the responsibility for that falls to the Budget Committee.

Q: I was told that's not correct. I was told that by another White House official, but I'm told by the Hill that reconciliation -- that any tax bill has to come through Finance, and that the Budget option is not an option.

MR. STEPHANOPOULOS: I'll double-check. I've heard it the other way. I will double-check. And there are other ways to get it out.

Q: George, when is the FBI supposed to get this Peat, Marwick report?

MR. STEPHANOPOULOS: I assume they'll get it today, but their investigation will probably take several weeks if not longer.

Q: Given all the perception problems that Mr. Stevens raised earlier, would you at least be willing to concede that the last two days would have been friendlier and easier here if the President had gotten a normal haircut and that if you had hired a travel agency to do this thing at some length that was somewhat removed from the White House -- that a lot of the questions that seem to be hostile and a lot of the hostility in this room might have been dissipated and that might have been to your advantage and ultimately to the country's advantage? Would you at all allow that as a thought?

MR. STEPHANOPOULOS: I think that what we would say is look at the facts. We obviously would like every day to go as easy as possible.

Q: George, I think the question is can you -- do you at least see why this looks bad -- the haircut on the plane and the hiring of this travel agency? Even if your motivations were completely benevolent, can you see why it looks bad?

MR. STEPHANOPOULOS: And we'll do everything we can to make sure that that doesn't happen in the future.

Q: That he's not going to get another haircut? (Laughter.)

THE PRESS: Thank you.

END 4:57 P.M. EDT

William J. Clinton, Press Briefing by George Stephanopoulos Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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