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 TIME CNN/AllPolitics CNN/AllPolitics with Congressional Quarterly

Are Hillary's brothers driving off course?

Hugh and Tony Rodham are Bill Clinton's in-laws, a connection that's brought them pain and gain


TIME magazine

November 1, 1999

They're known as "the boys." So close have Tony and Hugh Rodham been to their sister Hillary Rodham Clinton that they tagged along on the Clintons' 1975 honeymoon. Always overshadowed by their high-wattage sibling, they began a new chapter in their lives when Bill and Hillary moved to the White House. Was it a blessing or a curse, this kinship to the Leader of the Free World?

"It can go both ways," said Tony Rodham, who divides his time between Florida and Washington. "There's some wonderful things that have happened to me because of my relationship with Hillary and Bill, and there's been some really terrible things that have happened to me."

Usually it is the President's side of the family that attracts unwanted publicity--Roger Clinton, Neil Bush and Billy Carter come to mind. But in the two-for-one Clinton presidency, the First Lady's brothers have joined in the tradition. Some of their misadventures are known. Now TIME has uncovered new examples of the brothers' asking for--and receiving--White House meetings with top Administration officials on behalf of their business associates, including a scheduled drop-by visit from the President himself. So far, the Rodhams don't seem to have made much money from their White House connections, but their sister's expected run for the U.S. Senate means their business dealings could provide more fodder for the Clintons' many political foes.

By all accounts, Hillary's two brothers are colorful, likable men. At 45, Tony has a job history that includes stints as an insurance salesman, a prison guard, a sort of cable-service repo man (during which he drew gunfire at Chicago's Cabrini-Green housing project) and a private investigator. Five years ago, he married Nicole Boxer, daughter of California Senator Barbara Boxer, in an elegant Rose Garden ceremony. His big brother Hugh, 49, a bearlike man who once played football for Penn State, served as a Peace Corps volunteer and spent more than a decade as an assistant public defender, including several years defending clients in Miami's pioneering drug court (started by local prosecutor Janet Reno, whom Hugh commended to his brother-in-law for Attorney General).

The brothers for several years shared a bachelor pad in Coral Gables, Fla., but their first major business venture together was a $118 million plan to grow and export hazelnuts from the former Soviet republic of Georgia. This seemed attractive in light of a booming Western demand for hazelnut-flavored confections. Along with Stephen Graham, Tony's sometime partner and an occasional advanceman for Mrs. Clinton, the brothers flew to Georgia in August to look over the operation.

The first sign of trouble appeared when Georgian officials got upset that the group was going straight to Batumi, a stronghold in the western region of the country ruled by political potentate Aslan Abashidze, a powerful rival to Georgian President Eduard Shevardnadze, a U.S. ally. White House officials urged the group to make a stop in the Georgian capital of Tbilisi first and meet with Shevardnadze, which they did. The meeting "was absolutely great," said Tony. "He promised to help us." Then the group spent eight days in Batumi meeting with Abashidze, as well as with hazelnut farmers, the Orthodox bishop and others who feted them for the huge investment they were expected to bring.

The Rodhams had tumbled into the byzantine world of post-Soviet politics. According to Tony, Abashidze never exploited his newfound connection to the White House. But Shevardnadze sympathizers say Abashidze, who enjoys support from Georgia's much feared neighbor Russia, seized on the visit of President Clinton's in-laws to suggest that he had a seal of approval from the U.S. government in upcoming parliamentary and presidential elections. In fact, just after the Rodhams left, according to Georgian news reports, Abashidze trumpeted "the possibility of political support rendered to him by U.S. President Bill Clinton" and said the U.S. branch of the hazelnut investment firm would be located "next to the White House." The Rodhams' trip culminated with Tony's flying to Rome to become godfather to Abashidze's new grandson.

National Security Adviser Sandy Berger, who feared the Rodhams were being manipulated by Shevardnadze's foe, told the brothers in September that they should dump the hazelnut deal. The Rodhams resisted. The White House tried again, and according to officials, this time the brothers backed down. But in a recent interview, Tony would say only that he's "restructuring" the venture and complains that he and Hugh are victims of a pro-Shevardnadze disinformation campaign. Tony wouldn't say whether he had money invested in the venture or was acting on behalf of others; Hugh said he has no money at stake and was simply the company's lawyer.

The hazelnut imbroglio wasn't Tony's first dip into murky foreign political waters. In 1997, sources tell TIME, Tony--working as a consultant for a company trying to do business in Russia--arranged a White House meeting for Moscow's powerful Mayor Yuri Luzhkov. Rodham was working for Gene Prescott, who was involved in IBN, a start-up that wanted to bring "smart" credit-debit cards to Russia and was hoping for the support of Luzhkov. Prescott knew Luzhkov wanted to meet with Clinton and asked Tony if he could set it up, according to Tony. Former White House officials tell Time that this was touchy business; Luzhkov, a potential successor to Russian President Boris Yeltsin, has been accused of having links to Russian mobsters. Recently he had been involved in a dispute with an American businessman who was subsequently found murdered in Moscow. That it was Tony who was requesting the meeting with Luzhkov made things very uncomfortable for Berger, according to someone familiar with the episode. But on a Saturday in April 1997, when few people would notice, Berger agreed nonetheless to meet with Luzhkov, and Clinton arranged to come by.

Was Rodham using his pull to line his own pocket? Rodham says he had no money invested in IBN, although he was paid by Prescott, a Florida hotel owner, for his work on the company's behalf. "I called the Russia desk at the White House, at the nsc, as anybody in this country can do," said Rodham in an interview. But is it possible his request was treated differently from the way it might have been if his name were, say, Jones? Indeed, another prominent American working in Russia relations, who asked not to be named, made a similar call on Luzhkov's behalf and had no luck at all.

If Tony Rodham's business dealings might benefit from some scrutiny, the same might be said about some of his business associates--like a Georgian wheeler-dealer named Vasili Patarkalishvili. He was the one who thought up the smart-card and hazelnut ventures. Patarkalishvili has had other brushes with controversy. In the early 1990s he opened Liberty Bank, ostensibly to operate in Georgia and the U.S. But in 1994 the Comptroller of the Currency issued a warning that the bank was not authorized to operate on American soil. The bank shut down in the U.S. Now Patarkalishvili and several partners are being sued by two men who claim that Liberty, IBN and several other enterprises amounted to a Ponzi scheme in which they lost hundreds of thousands of dollars. And they claim in the suit that one of the partners, Robert Kay, told them Tony Rodham and President Clinton "were behind the [IBN] project and that Clinton was going to approach Russian President Boris Yeltsin personally" to support it. Kay and Patarkalishvili could not be reached for comment; Rodham denies saying anything that would lead to such a statement, or knowing about Liberty Bank's problems.

And what of brother Hugh? He too appears to have discovered that being a First Brother-in-Law has its advantages. He left the Miami public defender's office and ran in 1994 in a doomed-from-the-start bid to unseat popular Republican Senator Connie Mack. He then parlayed his family fame into a radio show.

It was Hugh's involvement, despite his having little relevant experience, with a group of plaintiffs' lawyers fighting Big Tobacco that led to his most high-profile public castigation, this one from the President's foes in Congress. The lawyers' massive class action against cigarette makers on behalf of injured smokers was dismissed in 1996. But the attorneys, known as the Castano group, elbowed their way into separate ongoing negotiations between the cigarette companies and state attorneys general, who had their own lawsuits going against the tobacco firms. How did these lawyers manage to get involved? Largely because of Hugh's presence, others in the settlement talks said. "We felt we had to keep [the Castano lawyers] because of Rodham" and his famous kin, said one of the attorneys representing the states. Hugh helped arrange some White House meetings for some of the negotiators with deputy White House counsel Bruce Lindsey and others. And the Castano group won a potentially lucrative provision in the $368.5 billion settlement that could have awarded them millions in fees from an arbitrator. Ultimately, Hugh and the Castano lawyers came up empty-handed after the settlement foundered on Capitol Hill.

But not before the Senate Republicans made an issue out of Hugh's role. His name was invoked on the floor as a symbol both of rich trial lawyers (though he had yet to become one) and of the G.O.P.'s archenemy, Bill Clinton. A Republican dubbed him "the $50 million man," an inflated estimate of what Rodham might have made from the deal. Hugh maintains, and at least one other lawyer confirms, that he and his law partner Gary Fine were invited into the original Castano class action by a Pennsylvania lawyer who was an old friend--and they paid a $100,000 admission fee for the privilege. "It was totally unforeseen, when we joined...that there would be any connection with politics," Hugh said in written responses to TIME.

But Hugh stands to do well if the Castano group prevails in suits the lawyers have filed on behalf of five cities against the firearms industry--the new frontier of class-action litigation. Sources tell TIME that Hugh was one of several lawyers who began negotiating a possible settlement with a gun-industry trade group earlier this year. Robert Ricker, former head of the group, said Hugh helped arrange a White House meeting in early May with Lindsey, domestic-policy adviser Bruce Reed and others. "He took me aside once and told me he'd...filled [the Clintons] in on the status of the talks," says Ricker. "He was a serious player." And Hugh and several of the other Castano lawyers still meet from time to time with Clinton Administration aides on the gun issue, a White House source said.

Tony says he and Hugh are no Billy Carter. When he's approached by those who want to exploit his family ties, Tony says, "I tell them to take a hike. I don't do business that way." But the brothers themselves might be well advised to hike away from a few more business opportunities. When you're related to the White House, a deal isn't always just a deal.

--THE WHITE HOUSE told the two to quit their hazelnut deal in the former Soviet republic of Georgia for fear it could hurt U.S. foreign policy

--TONY ARRANGED a White House visit for a controversial Russian politician to benefit a business venture

--HUGH DREW FIRE for his role in negotiating a potentially lucrative tobacco settlement, and he is now targeting the gun industry


Cover Date: November 1, 1999

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