The Coelho Case
Several hours before sunrise on Friday, November 5, 1999, Mark Johnson entered Federal Building 3 in Suitland, Maryland, and went inside the ground-floor offices of the U.S. Census Monitoring Board. The previous evening, a subordinate had called Johnson, one of the board’s two executive directors, with the news that five badge-bearing federal agents had shown up at the office just before closing time and asked for him. The next morning, according to the building’s security logs, Johnson signed into the office at 3 a.m., signed out at 4:55 a.m., and signed back in just 20 minutes later, at 5:15 a.m. He was alone in the board’s offices until two other employees arrived at about 7:30 a.m.
The agents returned at 8:30 a.m. They handed Johnson a subpoena, took possession of his government-owned laptop computer, and questioned him for more than an hour behind closed doors. As soon as the agents had left, Johnson gathered his staff together in a conference room to explain, at least obliquely, what was going on. “I just want everybody to know it’s not about here,” he said. “It’s about Lisbon.”
Everyone in the room knew that Johnson was referring to the 1998 World Exposition in Lisbon, Portugal, where he had been the top deputy to Tony Coelho, the U.S. commissioner general. Three others on Johnson’s staff had worked for Coelho in Lisbon, too. For their loyal service to Coelho, all had been rewarded with high-paying positions at the Census Monitoring Board after Coelho was appointed by President Clinton to be its Democratic co-chairman. (The eight-member board, which was created to oversee the most politically contentious aspects of the 2000 decennial census, is split down the middle along partisan lines.) And all had stayed on even after Coelho had left in May to run Vice President Al Gore’s presidential campaign.
Later that day, Johnson canceled a meeting with a reporter in the Washington bureau of the St. Petersburg Times, saying that he had come down with the flu and was going home early. Johnson instead headed downtown to see Stanley Brand, a partner in the law firm of Brand & Frulla. Brand is Coelho’s personal attorney, and for more than a month Brand had been fielding questions from the news media “about Lisbon” — questions, for the most part, arising from an audit by the State Department’s Office of Inspector General that had detailed numerous financial irregularities, as well as potential violations of law, under Coelho’s watch as the U.S. commissioner general of Expo ’98.
The morning’s events, however, clearly signaled a dramatic new development. The men who had paid Johnson a visit were not accountants or auditors. They were criminal investigators — special agents, by official duty title — from the Inspector General’s Office of Investigations, and it was apparent that they were aggressively following up on what the auditors had uncovered. It was also apparent that the focus of their investigation was Tony Coelho.
From the laptop computer that Johnson had used in Lisbon, the special agents hoped to retrieve information about Coelho’s activities while he served as the U.S. commissioner general of Expo ’98, including the original electronic versions of some documents that had been destroyed in Lisbon, as well as even more-sensitive files that had not been meant for anyone else’s eyes. The agents had served a second subpoena that morning on Hank Hardesty, another employee of the Census Monitoring Board, and he later complied by surrendering a stack of documents and computer disks to them. Hardesty, who had been Coelho’s personal bookkeeping assistant in Lisbon, had not only prepared financial reports and forecasts for the U.S. Pavilion at Expo ’98 but had also kept the books for a private foundation that Coelho operated.
Linda Topping, a spokeswoman for the State Department’s Office of Inspector General, declined to discuss the Coelho case, and said that it is the office’s policy to neither confirm nor deny the existence of such investigations. Knowledgeable sources, however, said that the team of agents assigned to the case — headed by Brian Hess, a veteran of the office — is still at work. In the best case for Coelho, the investigation could dead-end with no adverse legal consequences; in the worst case, it could lead to criminal prosecution.
This report on the government’s criminal investigation of Coelho — the details of which have, until now, gone unreported — draws on scores of interviews with Coelho’s current and former subordinates and associates (many of whom were willing to speak only on the condition that they would not be identified); documents obtained under the Freedom of Information Act; correspondence with some of the principals in the story; and financial disclosure forms filed with the federal government by Coelho and others.
National Journal was unable to determine whether Coelho, who has been aware of the investigation since November, has told Vice President Gore about it. But Coelho and his attorney, Stanley Brand, see it as a serious legal threat. Brand, in an interview, characterized the investigation as being conducted “under the supervision of the Department of Justice” and said that Coelho had been served with at least one subpoena in connection with the probe. “We’ve provided them with whatever information we have,” Brand said.
Brand said that Coelho did not profit in any way from his stint as the unpaid U.S. commissioner general of Expo ’98, and likened some aspects of the government’s investigation of his client to a hunt for “who stole the strawberries?” Brand said that he has not been in contact with the investigators in the case since sometime late last year.
National Journal has learned that Brand recently retained a team of private investigators who, among other things, have collected derogatory personal information on at least one federal employee who has been cooperating with the government investigators. Brand said that the use of private investigators was “standard operating procedure” in such cases and that he hired them “to help understand and determine the nature of the allegations” against Coelho and “to assess the motives of potential witnesses.”
Helping Out Gore
On May 11, Gore surprised many of his aides and advisers by announcing that he had picked Coelho to reorganize and run his presidential campaign. Gore believed that his campaign was in deep trouble and that the organization under him was undisciplined and uninspired; in Coelho, he undoubtedly saw and heard a manager who knew exactly what needed doing and how to get it done. In taking the job, Coelho extracted a promise that he would have total control, and he has come through for Gore in a big way.
From the beginning, however, some of Gore’s aides and advisers feared that the candidate’s choice of Coelho could be a political time bomb. For starters, it was Coelho who, as the chairman of the Democratic Congressional Campaign Committee from 1981-86, had harvested bumper crops of unregulated “soft money” from agribusiness, the oil industry, savings-and-loan operators, tax-shelter syndicators, and other deep-pocketed interests in need of favors from Capitol Hill. There were all the stories, amply ventilated in the news media, about Coelho’s use of the High Spirits, a 112-foot luxury yacht owned by Donald Dixon, the chairman of the soon-to-collapse Vernon Savings and Loan Association, for dockside parties and cruises along the Potomac River. After federal regulators seized Dixon’s S&L, the DCCC and Coelho’s own campaign committee were forced to reimburse the insolvent institution a total of $48,451 for the use of the yacht in connection with 11 fund-raising events in 1985 and 1986. “Oversights were made in these instances which I genuinely regret,” Coelho said in a statement.
Then there was the matter of Coelho’s hasty exit from Congress in the middle of his sixth term. In June 1989, just two and a half years after he had been elected House majority whip, Coelho abruptly resigned amid questions about his personal financial dealings. The most-damaging revelations surrounded his 1986 purchase of a $ 100,000 junk bond from Thomas Spiegel, the chairman of Columbia Savings & Loan Association, a California thrift that was in trouble with federal regulators. Spiegel had bought the bond in his own name and then arranged for his S&L to lend Coelho, at below-market rates, half the money he needed to repurchase it. It later came out that Coelho had failed to report the loan from Spiegel on the financial disclosure form that he filed with the House and that he had misstated the date he had purchased the bond on his federal tax returns. Coelho blamed his accountant for both mistakes.
The Justice Department investigated Coelho’s junk-bond investment but decided not to prosecute him — a decision, Coelho has repeatedly said, that cleared him of any wrongdoing. And whenever he has been asked, in one form or another, whether there’s anything in his past that could damage Gore, Coelho has stuck to the same line. “Look,” he told Sam Donaldson last June on ABC’s “This Week,” “I’ve been investigated by the best, and there is nothing there.”
Gore was in such a hurry to announce that he was bringing Coelho aboard that he decided to go ahead without a routine background check; he instead relied on Coelho’s “nothing-there” assurances. After the announcement, Gore’s staff quickly came to realize that it would take weeks, maybe even months, to thoroughly examine Coelho’s past ethics entanglements, legal problems, and business affairs. (On the financial disclosure form that he filed with the State Department in 1998, Coelho reported serving as an officer or director of at least 33 corporations and other organizations, and he listed more than 85 sources of income. He reported earnings of at least $1.8 million in 1997 and a net worth of more than $10 million.)
On October 2, the Gore campaign was caught off guard by the disclosure that the State Department’s Office of Inspector General, in an audit report that had not yet been made public, had cited Coelho for a raft of irregularities at the 1998 World Exposition in Lisbon. Chief among them was that Coelho had exposed the U.S. government to liability for a $300,000 private loan — a loan, it was later disclosed, that had not yet been repaid. It also turned out that Coelho had leased for himself, at government expense, a four-bedroom, $18,000-a-month waterfront apartment (complete with swimming pool) in Lisbon, and that “certain records” were destroyed before the government’s auditors arrived in Lisbon for an on-site review. Coelho and his staff, the audit also found, had initiated numerous “questionable payments” to contractors and consultants; misused airline tickets and upgrade passes that Continental Airlines had donated to the U.S. government; hired Coelho’s niece as a $2,500-a-month assistant to his deputy; and hired two stepsons of the U.S. ambassador to Portugal at $3,200 and $2,700 a month.
The next day, Gore, in a Sunday-morning appearance on “Face the Nation,” dismissed the disclosures as nothing more than “inside baseball” and said that Coelho, whom he called “my close friend,” would be staying on the job. “I haven’t seen this report,” Gore told CBS News’ Bob Schieffer, “but I know him, and he is going to continue doing the terrific job he’s been doing as my campaign chair.”
Coelho, for his part, has referred all questions about his activities as U.S. commissioner general of Expo ’98, as well as questions about his business and financial affairs, to Brand. (In dealing with reporters, Brand does not volunteer the fact that in June 1998, his client put him in the government’s part-time employ, at the rate of $60,000 a year, as counsel to the Democratic members of the Census Monitoring Board.) Brand has acknowledged that there may have been some “management lapses” in Lisbon. (“You don’t hire Tony Coelho to balance the checkbook,” he explained to one reporter. “He makes the big decisions.”) Brand has insisted, however, that Coelho committed no crimes while serving as U.S. commissioner general.
The news stories soon faded, but the investigation, as it turns out, intensified. Within the State Department’s Office of Inspector General, the Office of Audits immediately turned its findings and files over to the Office of Investigations, which is in charge of investigating allegations of criminal misconduct. (Suspected criminal violations are referred to the Justice Department for prosecution.) A team of senior special agents was assigned to the case sometime in mid-October, and since then government investigators have been subpoenaing documents and questioning witnesses. Such investigative cases, according to a manual published by the Inspector General’s office, must be “based upon reasonable suspicion of misconduct” and can be initiated only with the express authorization of the State Department’s assistant inspector general for investigations. The focus of the investigation appears to be whether Coelho used government employees, property, and other resources to advance his own business and financial interests while he was the U.S. commissioner general of Expo ’98.
Ambassador Coelho
Coelho became the U.S. commissioner general of Expo ’98, the last world’s fair of the 20th century, on June 3, 1996, when Joseph Duffey, then the director of the U.S. Information Agency, appointed him to the position on orders from the White House. (The USIA was merged into the State Department late last year.) “You will be responsible,” Duffey’s letter to Coelho said, “for securing the necessary nonfederal funding and in-kind support to finance the U.S. Exhibition.”
Coelho drew no salary as U.S. commissioner general to Expo ’98, a political appointment that eventually made him Ambassador Coelho. The USIA designated him a “special government employee.” His first tour of duty in that classification officially began on April 20, 1997, and ended on April 19, 1998; his second began the next day, on April 20, 1998, and ended on October 31, 1998. The odd bifurcation of Coelho’s employment was designed chiefly to get around the rule that to be a special government employee, an individual’s length of service must be determined at the outset to be no more than 130 working days in a 365-day period. The distinction was important, because special government employees are not constricted by many of the same ethics rules that apply to regular government employees. Nonetheless, special government employees are prohibited from working on matters that will directly and predictably affect their financial interests, including those of their private employers.
It was widely assumed that Coelho’s appointment to be U.S. commissioner general of Expo ’98 had more to do with his prodigious record as a political fund-raiser and wheeler-dealer than with his background as a Portuguese-American. After leaving Capitol Hill, Coelho had landed a job on Wall Street at Wertheim Schroder & Company, an investment-banking firm where, drawing mostly on labor-union contacts from his DCCC days, he brought in billions of dollars in pension-fund investments. “I had a Rolodex,” he once told a reporter, “and I knew how to raise money.”
But when it came to rounding up commitments from big corporations and other private-sector sources for the U.S. Pavilion at Expo ’98 — the “necessary nonfederal funding” stipulated in his letter of appointment — Coelho was pretty much a flop. And so he turned to his friends in the Clinton Administration and on Capitol Hill, who bailed him out by unlocking a total of more than $6.6 million in federal funds for the U.S. Pavilion. It was only through this 11th-hour infusion of taxpayer money that the 14,000-square-foot U.S. Pavilion was able to open on time.
In taking the job as U.S. commissioner general of Expo ’98, however, Coelho seemed to have more than a world’s fair on his mind. “He was running a one-man show with Expo as a backdrop,” said a senior foreign service officer assigned to the U.S. Embassy in Lisbon at the time. “He used all the cachet and resources of his position to further his business interests.”
Since October of last year, the special agents from the State Department’s Office of Inspector General have been investigating a number of areas related to Coelho’s conduct as U.S. commissioner general of Expo ’98. Among them is whether he improperly or illegally used his office to promote LoanNet, a high-technology mortgage-processing venture that he helped to form in early 1998. In less than a year, Coelho managed to raise more than $ 6 million for LoanNet from a bipartisan roster of prominent figures — far more than the $1.2 million in private money he was able to raise for the U.S. Pavilion at Expo ’98.
LoanNet was Coelho’s bid to get in on the Internet boom. It was supposed to be, in the realm of mortgage-loan processing, technologically state-of-the-art, extraordinarily efficient, and highly profitable. A prospectus that Coelho gave potential investors promised that LoanNet would be able to cut in half the typical costs of processing, underwriting, and closing residential mortgage loans, and that it could do everything in a fraction of the industry’s typical working time of 45 to 60 days.
Coelho’s drive to round up investors in LoanNet came at the same time Expo ’98 was under way. He persuaded the U.S. ambassador to Portugal, Gerald McGowan (who had been Bill Clinton’s roommate at Georgetown University), to become one of his investors. McGowan declined to answer questions about his investment in LoanNet, but a financial disclosure form that he filed with the State Department in June 1999 shows that he invested more than $250,000, and perhaps as much as $500,000, in LoanNet. McGowan made the investment on October 7, 1998, one week after Expo ’98 officially ended.
Coelho also asked two prominent Washington lobbyists — William Cable, a partner in the firm of Timmons & Company, and Charles Manatt, a former chairman of the Democratic National Committee and then a partner in the law firm of Manatt, Phelps & Phillips — to become investors in LoanNet, and both did. Manatt, who has since become the U.S. ambassador to the Dominican Republic, ran the DNC while Coelho was at the helm of the DCCC; Cable has long been a member of Coelho’s inner circle. Acting as the U.S. commissioner general of Expo ’98, Coelho invited Manatt and Cable and their spouses to Portugal, and he arranged for the Cables to use round-trip airline tickets that had been donated to the U.S. government by Relvas Vacations, one of the private sponsors of the U.S. Pavilion. (Hank Hardesty, Coelho’s personal bookkeeper, recorded the 75 plane tickets donated by Relvas Vacations as a $60,000 contribution to the U.S. Pavilion.) Cable told National Journal that the airline tickets he and his wife used were in the nature of a thank-you from Coelho for his help in lining up corporate sponsors for the U.S. Pavilion. “Tony told me that he had access to charter tickets,” Cable said, “and that he would be happy to make them available to us.” Manatt’s attorney said that the tickets the Manatts used had no connection to Expo ’98 and were paid for by one of Manatt Phelps’ clients in connection with other law firm business.
Coelho’s government-paid Portuguese chauffeur, Samuel Silva, picked up the Manatts and the Cables at the Lisbon airport. The two couples stayed gratis for at least part of their trips in Coelho’s $18,000-a-month luxury apartment, which had been restocked at his direction with Johnnie Walker whisky, Bacardi rum, vodka, gin, and other bar essentials — all of it purchased on government accounts at the Naval Exchange on the grounds of the U.S. Embassy. Coelho rolled out the red carpet for his guests, at one point having his chauffeur take them on a sight-seeing trip to the town of Sintra, the fairy-tale village that Lord Byron called a “glorious Eden.”
Manatt and Cable later invested $200,000 apiece in LoanNet, though both told National Journal that Coelho did not mention the venture to them while they were in Portugal. “The two facts happened in a sequence that might lead to a conclusion, but there was no mention of LoanNet,” Cable said.
The State Department’s Office of Inspector General has issued at least one subpoena to collect LoanNet investor lists, financial records, and other documents, and its investigators have extensively questioned a former employee of the company, Tracy Botelho, who also worked for Coelho at Expo ’98. The State Department investigators have obtained the U.S. Pavilion’s telephone records, which, a knowledgeable source told National Journal, contain hundreds of LoanNet-related calls that Coelho made from Lisbon to the United States — calls that were paid for by the U.S. government.
Another part of the inspector general’s investigation deals with Coelho’s activities in Portugal on behalf of Service Corporation International, a Houston-based “death services” conglomerate that, at last count, operated more than 4,500 funeral homes, cemeteries, and crematoriums worldwide. According to the financial disclosure form that he filed in 1998, Coelho received more than $283,000 in director’s fees and other compensation from the company in the previous year and also held more than $1 million in SCI stock. As Expo ’98 opened in Lisbon, SCI was in the midst of a major expansion in Portugal.
While the world’s fair was under way, Coelho, representing himself as the U.S. commissioner general of Expo ’98, arranged meetings in which he introduced SCI executives to Portuguese government officials who were key to the company’s expansion plans. At the same time he was doing such favors for the company in Portugal, Coelho was soliciting Robert Waltrip, SCI’s chairman — a key financial backer of Gore’s GOP rival, Gov. George W. Bush of Texas — to invest in LoanNet.
Among other investors with political connections that Coelho brought into LoanNet were Fred Malek and Terence McAuliffe, two of his partners in EuroAmer Sociedade Imobilaria, a Lisbon-based real-estate development firm that was among the corporate underwriters of the U.S. Pavilion at Expo ’98. Malek, the president of Thayer Capital Partners, worked in the Nixon White House and managed President Bush’s 1992 re-election campaign; McAuliffe, the legendary Democratic fund raiser, got his start as Coelho’s protege at the DCCC and later became his banker and partner in several business ventures.
After the world’s fair ended in September 1998, Coelho set up offices in LoanNet’s newly opened headquarters in downtown Washington. For the next six months, much of the money Coelho had raised from investors flowed west to Schaumburg, Illinois, where LoanNet had opened its state-of-the-art processing center. There was, however, little in the way of loans to process. “The volumes just didn’t arrive,” said John Quillen, a mortgage-industry veteran who was brought in to get the center up and running. “I knew that eventually somebody was going to pull the plug.”
That occurred in early 1999. “The investors,” Quillen said, “felt there was no sense throwing more money down the rathole.” In January of that year, Coelho had been identified, on the official guest list for a state dinner at the White House, as LoanNet’s chairman; in April, the Schaumburg facility was shut down. By the time Coelho joined the Gore campaign in May, only a few employees remained at LoanNet (down from a peak of more than 30), and within a few months only one would be left. Conspicuously absent from the Gore campaign’s news release about Coelho, which described him as “a successful businessman,” was any mention of LoanNet.
The special agents from the State Department’s Office of Inspector General are also investigating another of Coelho’s private ventures, the Luso-American Wave Foundation, to determine, among other things, whether Coelho used government employees and resources to help repay a private loan. The chief mission of the not-for-profit operation was to finance the construction of a 60-foot-long stainless-steel-and-blue-tile memorial, the “Luso-American Wave of Honor,” a block and a half or so from the grounds of Expo ’98. “The Wave,” as it came to be called, was to be inscribed with the names of Portuguese families who had immigrated to the United States, or at least those who had made contributions of $100 to $10,000 to Coelho’s foundation. Coelho hired artist , the husband of his longtime personal assistant, to design the wave-shaped sculpture.
Coelho publicly announced the formation of the Luso- American Wave Foundation on April 22, 1998, in an official Expo ’98 news release that identified him as the foundation’s chairman. Even though the foundation had no official connection to the U.S. Pavilion, its fund-raising appeals were prominently featured on the pavilion’s Internet site (“Contribute to the Wave and Have Your Name Engraved on the Monument”) and in its packet of promotional materials. And on April 28, during an Expo-related reception at the U.S. ambassador’s residence in Lisbon, Coelho himself made an explicit pitch for contributions to his foundation, according to individuals who attended the event. The memorial was unveiled on May 25, 1998.
From the beginning, Coelho had told members of his staff at Expo ’98 that, to build the Wave, he had obtained a $300,000 loan from Banco Espirito Santo, a Lisbon-based bank that was also a major sponsor of the U.S. Pavilion. It soon became apparent, though, that the Luso-American Wave Foundation was in deep financial trouble and that Coelho himself might have to make good on the loan.
The auditors from the State Department’s Office of Inspector General who arrived in Lisbon on June 22, 1998, expressed concerns that Coelho was using the U.S. Pavilion and its staff to subsidize the activities of the Luso-American Wave Foundation. Nevertheless, as soon as the audit team left on July 1, Coelho threw a big fund-raising reception for the Wave that was held on government property (his $18,000-a-month apartment), paid for with government funds, and arranged, from beginning to end, by members of the U.S. Pavilion’s staff. At about the same time, according to informed sources, a half-dozen or so Expo ’98 employees-all of them on the public payroll — were ordered to attend daily fund-raising meetings for the Wave in the conference room of the U.S. Pavilion. Coelho typically took part, in person or by speakerphone, in the meetings, which started promptly at 4 each weekday afternoon. But in the wake of complaints about the nature of the meetings, the sources said, Fred Hatfield, one of Coelho’s top deputies, ordered the sessions removed from the official daily schedule. (Hatfield, in an interview, disputed this account, saying that there was no such schedule for Expo ’98.)
In the audit report released in October, the State Department’s Office of Inspector General said that Coelho had inappropriately “intermingled [the] financial obligations of a nonprofit organization with U.S. Pavilion activities”; it went on to note that the U.S. government “may be responsible for the payment of this loan if the foundation does not raise sufficient funds to pay it back.”
In the days after the audit report became public, Coelho’s attorney, Brand, offered a variety of explanations for the $300,000 loan. Brand initially told reporters that the loan “was paid off with donations from people donating to the memorial, including a large contribution from Tony himself.” Two days later, he said that Coelho was “in the process of paying off” the loan and still owed $109,000. Finally, he said that Coelho had paid off the loan by wiring $119,000 to a Portuguese bank. Brand told National Journal that the U.S. government has subpoenaed records pertaining to the loan from Banco Espirito Santo.
As for the Luso-American Wave Foundation, it apparently expired on September 7, when the District of Columbia government revoked its certificate and articles of incorporation “for having failed and/or refused to file” any of the reports required by law.
Smudges of the Past
In his heyday as the chairman of the Democratic Congressional Campaign Committee, Coelho achieved great success with a “Speaker’s Club” that offered big-ticket donors everything from “a durable set of luggage tags” to “personal assistance in Washington.” For Expo ’98, Coelho and his aides dusted off the concept and offered major sponsors a 12-item package of perquisites that began with “complimentary membership in the U.S. Commissioner General’s Club” and ended with “recognition in the Final Report of the U.S. Pavilion to be presented to President Clinton and the U.S. Congress.”
In its audit report, however, the Office of Inspector General noted the absence of “any amount obligated or forecast specifically for the publication of a final report on U.S. participation in Expo ’98.” Following up on the audit, the OIG’s special agents are now investigating whether Coelho and Johnson tried to have the U.S. Census Monitoring Board pay for printing the final report.
Early in March 1999, the investigators have learned, Johnson at Coelho’s behest personally arranged to have the final reports printed, and he proceeded to direct Nathan Austin, his director of operations, to settle the printing bill with board funds. According to knowledgeable sources, Austin, who had been Coelho’s special assistant at Expo ’98, then did what almost no one in Coelho’s inner circle ever does: He not only refused Johnson’s directive, but proceeded to notify the board’s three other presidentially appointed members of what had happened.
At that point Brand, stepping into his role as counsel to the Democratic side of the board, initiated an “internal review.” Within a week, he was done. His conclusion: There had been no wrongdoing on Coelho’s part.
Brand, however, did not bring out the fact that Johnson, who had borrowed at least $50,000 and perhaps as much as $100,000 from Coelho, might not have been in much of a position to say no to his longtime boss and benefactor. (The loan from Coelho is listed on a financial disclosure report that Johnson prepared in connection with his employment at the Census Monitoring Board.) Nor did Brand, in transmitting the results of his inquiry, make clear to the Democratic members of the board that he was Coelho’s personal attorney.
Brand told National Journal that the costs of printing the final report were “paid with personal funds of Mr. Coelho and Mr. Johnson.”
Coelho resigned from the Census Monitoring Board two days after becoming the general chairman of Gore 2000, in the face of criticism that it was inappropriate for the manager of a presidential campaign to be in such a position. Sometime after that, Johnson, according to a colleague, placed Austin in the bureaucratic equivalent of solitary confinement and installed Hank Hardesty in his position. (Johnson, Austin, and Hardesty declined requests to be interviewed for this story.)
Ironically, the final report on Coelho’s tenure as the U.S. commissioner general will not be the one he tried to have printed by the Census Monitoring Board, but the one that is yet to be written by the State Department’s Office of Inspector General or the Justice Department.
And the outcome of the government’s criminal investigation may well help to answer a larger question: whether Gore made the right decision in picking Coelho to run the most important political campaign of his career. As the two men talked about the road to the White House on a Sunday afternoon last May, it was Gore, The New York Times recently reported, who told Coelho that if he did his job well, “the smudges of the past would take care of themselves.”
Washington journalist Bill Hogan is a former National Journal editor. In October, as director of investigative projects at the Center for Public Integrity, a nonpartisan group that investigates the role of money in politics, he broke the story of the State Department’s audit of Expo ’98.
This article was originally published in the March 25, 2000, issue of National Journal.
Bill Hogan