Friend of Clinton Aides Offered Help to Milosevic Politics: Businessman secretly said he could act as contact between Serb leader, White House, officials say.
By JAMES RISEN, Times Staff Writer
WASHINGTON--A Little Rock, Ark., attorney and international businessman with close ties to senior advisors to President Clinton met secretly with Serbian President Slobodan Milosevic in 1994 and offered to act as an intermediary between Serbia and the United States, according to U.S. officials. Larry C. Wallace, a 54-year-old Little Rock lawyer and friend and former business associate of longtime Clinton aide Thomas "Mack" McLarty, met with Milosevic in Belgrade, when civil war was raging in what had been Yugoslavia. At the time, Wallace was attempting to gain entree to the Greek cable television market, and he said in an interview that his meeting with Milosevic was arranged by the Greek government, which has close relations with nearby Serbia.
Wallace's activities on the international stage put him in a category that includes several other Arkansas lawyers and businessmen who, as private citizens, apparently represented themselves abroad as friends of the president and who may have used their connections in Washington to advance their business interests. In this group is Mark E. Middleton, a special assistant to McLarty when McLarty was White House chief of staff at the beginning of Clinton's presidency. Middleton, whom Wallace describes as a friend, became an international deal maker after leaving the White House in early 1995, and he is now a central figure in the campaign finance controversy.
But more broadly, Wallace's tangled tale suggests that, in pursuit of his business interests, he was willing to trade on his ties to the Clinton White House at the behest of a foreign country--namely, Greece. In the process, he seems to have become a player in a complex international drama of war and peace.
Wallace's meeting with the Serbian president, widely regarded in the West as one of the primary aggressors in the Yugoslav civil war, triggered a highly sensitive investigation by the Central Intelligence Agency, which learned of the meeting only when informed of it by Serbian intelligence, according to CIA sources. The CIA's inspector general is still examining how the matter was handled within the agency, CIA officials said. Wallace confirmed in an interview that he met privately with Milosevic and discussed the Balkans crisis, but he insisted that he never told anyone at the White House about it.
Wallace said he told Milosevic during their private meeting in Belgrade that he could act as a messenger to the Clinton White House, but only if he sought permission from Washington first. He said that Milosevic did not give him any message to take back to Washington and that he never heard from the Serb president again.
In their meeting, Wallace said, Milosevic conducted a nearly hourlong monologue, insisting that he was working for peace and stability in the region, that he was tolerant of ethnic minorities and that he considered himself a friend of the United States. Above all, Wallace said, Milosevic expressed concern about the international economic sanctions imposed on his country.
"I hardly said five words," Wallace recalled. At the end of the meeting, Wallace said, he pointedly asked Milosevic what he wanted from him.
"I said to Milosevic, 'I don't know if you are expecting me to deliver a message, but if you are, you have got to let me know. And if you do want me to take a message, I've first got to seek permission to do that.' So I did offer, but it was in the way of being polite." Wallace said that he has never had any business dealings in Serbia and did not discuss business opportunities in Serbia with Milosevic.
After their meeting, Wallace said: "I wrote the man a thank-you note and I never heard from him again. And I never discussed this with anybody at the White House." Wallace's visit came to the CIA's attention after the Serb government contacted the agency's station in Belgrade to check up on Wallace, agency sources said. Eventually, the CIA learned that Wallace's meeting with Milosevic had been arranged through the Serbian ambassador to Greece.
CIA officers were told by the Serbs that Wallace "was there to offer his services to attempt to solve the problems of Yugoslavia," said a former CIA official. The CIA was told by the Serbs that Wallace claimed that "he had all these high-powered connections, and could do all kinds of things to ease the [international] sanctions" that were then in place against Serbia, the former CIA official added.
Wallace is a lifelong friend of McLarty and more recently, a Clinton political ally, serving in 1992 as a member of the Clinton-Gore Arkansas Finance Council. Since 1992, Wallace has contributed a total of $47,000 to Clinton-Gore campaigns and the Democratic National Committee, according to Federal Election Commission records.
Wallace became involved in a wide variety of business ventures, including the acquisition of real estate, a frozen yogurt franchise and a Little Rock television station. He also had his share of business setbacks, including the demise of the Little Rock law firm that he had helped found, and he suffered through a long-running financial dispute with his former partners in an ill-fated arms company.
A White House spokesman said records show that Wallace visited the White House at least a few dozen times from 1993 through 1997, primarily to see his friends from Arkansas, including McLarty and Middleton.
McLarty said through a White House spokesman that while he and Wallace "have been friends for over 20 years," he had "no knowledge of Mr. Wallace's activities in Serbia."
Robert Luskin, an attorney for Middleton, said Wallace's visits to Middleton were "primarily social. . . . Mr. Middleton was never asked by Wallace to do anything on a visit to Yugoslavia."
But it didn't take long after the 1992 presidential election for Wallace to realize the business value of his Arkansas political connections.
In 1993, Wallace began to commute frequently to Washington to work as a lobbyist, operating out of the offices of the Washington law firm of Ackerson & Bishop. In an April 1993 Associated Press interview, Wallace was candid about how he took advantage of his White House ties on behalf of his clients.
"I have asked Mack, 'Mack, would you be receptive to having a meeting in the office with the chairman of some company or having lunch with him?' And he says, 'Yeah,' " Wallace told AP.
"What I've done is find out through the chief of staff's office who is responsible in the administration" for specific policy decisions. "I set up an appointment and get an idea what the plans are--see what way they're leaning on policy and how we could assist them."
In 1993 he also began to take advantage of his White House connections to make international business and political contacts. "I was trying to get into the television business in Greece," Wallace said in the interview with The Times. "I did a lot of research on cable television there."
In the process, Wallace met then-Greek Prime Minister Andreas Papandreou, who soon began to ask Wallace for small favors in Washington. Among other things, Wallace said, the ailing prime minister, who died in 1996, asked Wallace to help him gain access to experimental drugs in use in the United States and to try to arrange for him to receive care at Walter Reed Army Hospital in Washington. Wallace said he passed on Papandreou's requests to the State Department.
Before long, however, Wallace said he began to receive more difficult requests. Wallace said an official close to Papandreou asked him to go to Macedonia, a republic formed from the splintered Yugoslavia, to try to convince its leaders to change the name of their country and the design of their flag. Greece and Macedonia have battled over both issues for years, and the Greeks apparently hoped Wallace's White House connections would increase pressure on Macedonia. Wallace said he refused to go to Macedonia. But in 1994, while he was in Athens trying to develop his cable television deal, he said a Greek government official asked him to visit the Greek Foreign Ministry. He said he was escorted to the office of George Papandreou, the deputy foreign minister and the son of the prime minister.
But George Papandreou wasn't there. Papandreou said through a Greek government spokesman that he had never heard of Larry Wallace and knew nothing of his visit to Milosevic.
Instead, Wallace said, he found Greek government officials who did not identify themselves. "They said, 'Could you go to Serbia and visit with the president of Serbia?' I didn't know what they were talking about," Wallace said.
But Wallace, clearly hoping to please the Greek government at a time when he was hoping for a cable television deal, agreed. The next morning a Greek official took him to the Athens airport and put him on a plane to Serbia.
In Belgrade, Wallace said, a driver from the Greek Embassy took him to meet Milosevic and picked him up again afterward.
"I didn't get any instructions from the Greeks about what I was supposed to do when I saw Milosevic, and I didn't get any instructions from Milosevic on what he wanted, either," Wallace said.
"He just poured out his heart about his efforts to bring peace and stability, and what a friend his country had been to the U.S.," Wallace recalled of his meeting with Milosevic. "And I said thank you very much, and I never had one phone call to follow up. It beats me what I was doing there."
Yet as he left Serbia, Wallace recalled, he began to realize that the meeting with Milosevic might "not have been the right thing to do." And he began to wonder whether he had been caught up in some complex international game that he didn't understand. And so Wallace kept the story to himself, unaware that the CIA investigated the matter until he was contacted by The Times.
"I never considered telling anyone at the White House," he said. "There was nothing that Milosevic said that I thought anybody really needed to hear. It was just self-serving talk."
Would that be TCBY, the company on whose board Hillary Clinton "served"?