The Barrett Report: 'Serious Corruption'

The long-awaited final report by Independent Counsel David Barrett, to be released today, was severely censored by court order but not enough to sufficiently obscure its importance. As long forecast, it alleges serious corruption in the Clinton administration’s Justice Department and Internal Revenue Service (IRS). The question is what was contained in 120 pages removed by the judges.

These allegations explain why Barrett finally has closed down after 10 years the last prosecution under the lapsed independent counsel statute. Its target, Henry Cisneros, long ago resigned as secretary of Housing and Urban Development in a plea bargain after admitting he lied to FBI interrogators to gain Senate confirmation. What kept Barrett in business was what he and his prosecutors contend is a Clinton administration cover-up of income tax evasion charges against Cisneros.

Not only Barrett’s stubbornness but also a tip from an IRS whistle-blower in San Antonio, Texas, meant the case did not end with Cisneros’s personal disgrace. But for now, the cover-up has succeeded. No tax prosecution was brought against Cisneros, and IRS conduct has not been questioned. Friends describe Barrett, a Republican lawyer from Washington, as feeling at age 68 that he has failed fully to uncover the scandal and that it is now up to Congress to get out the truth.

This probably would have been just another undiscovered scandal had the whistle not been blown by John J. Filan, chief of the IRS’s Criminal Investigation Division in the South Texas District. In a March 31, 1997, memo, Filan expressed outrage that the IRS chief counsel’s office in Washington on Jan. 15 had pulled a tax evasion case out of San Antonio because it required "centralized review." Told to "box up" his evidence and send it to Washington, Filan wrote: "I am not aware of any other criminal tax cases that have been pulled from experienced District Counsel attorneys."

With the case now in Washington, the IRS declined to prosecute. In a second memo on April 25, Filan said IRS Assistant Chief Counsel Barry Finkelstein’s conclusions "are just plain wrong." Payments to Cisneros’s former mistress and money spent for other purposes exceeded declared income, said the whistle-blower, and "clearly proves Cisneros knowingly and willingly signed and filed false and fraudulent income tax returns" for 1991, 1992 and 1993.

That launched Barrett on four frustrating years of attempting tax evasion prosecution in the face of Attorney General Janet Reno’s obstructions. Permitted by Reno to focus on only one year, the independent counsel could not make the case of extended tax evasion.

According to people with access to Barrett’s draft, it goes into intense detail about this obstruction and on the unprecedented seizure of the Cisneros tax case by the IRS in Washington. That much in the 400-page report has survived the three senior federal appellate judges with supervising authority over the independent counsel.

Nevertheless, the question remains what three judges — David Sentelle (D.C.), Thomas Reavley (Texas) and Peter Fay (Florida) — blacked out in 120 pages worth of redactions. Even after the report is released, Barrett and his lawyers would face judicial sanctions if they disclosed anything that was redacted.

The three judges have lawyer-like arguments in favor of suppressing so much material. For example, they claim the Barrett report on Cisneros should not contain evidence that was collected after the plea bargain with Cisneros.

However, the judges have established an exception, or rather 535 exceptions, to the rule that nobody can see what has been redacted. Any member of Congress can read it merely by asking. Any such lawmaker, who believes American taxpayers should see the product of $23 million in expenditures, presumably could then publish the material without fear of legal sanction.

But will any senator or House member do it? Nobody is interested in further prosecution of Henry Cisneros, an exceptional public figure who might well have become the first Hispanic-American governor of Texas and perhaps even president of the United States. Rather, an unredacted Barrett report is an opportunity to observe how the Internal Revenue Service decides when to prosecute, a place where Congress until now has feared to venture.