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Inquiry Focuses on Fees Paid To Hillary Clinton

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New York's state attorney general will decide soon whether to close or to widen a politically charged inquiry into compensation paid to Hillary Rodham Clinton and several prominent educators by a leading education think tank, a spokesman for his office said last week.

At issue is $102,000 earned by Mrs. Clinton in 1991 as a consultant for the National Center on Education and the Economy, a not-for-profit education-reform and policymaking group based in Rochester, N.Y.

State investigators are also examining payments made to Michael Cohen, now an adviser to U.S. Secretary of Education Richard W. Riley; David W. Hornbeck, now the Philadelphia schools superintendent; and Marc Tucker, the president of the center.

New York Democrats are calling the inquiry part of a Republican smear campaign to tarnish the first lady's image as President Clinton prepares for his re-election bid.

New York Attorney General Dennis C. Vacco is a political ally of U.S. Sen. Alfonse D'Amato, R-N.Y., who is heading a Senate investigation into President and Mrs. Clinton's Arkansas business dealings.

Questions about whether Mrs. Clinton actually worked for her fees from the think tank were first raised in an article in Newsday, a Long Island newspaper, two years ago.

"We had been asked those questions then," Neel Lattimore, a spokesman for Mrs. Clinton, said last week, "and we answered them."

Chris McKenna, a spokesman for Attorney General Vacco, said that the state examines the financial operations of about 400 nonprofit organizations in the state each year. "We do this routinely," Mr. McKenna said, "and we would characterize this inquiry as routine."

A decision about a more exhaustive investigation will be made "in the next couple of days," Mr. McKenna said last week.

Wrongdoing Denied

Laurie Miller, a lawyer for the National Center on Education and the Economy, said its financial arrangements with Mrs. Clinton and others cited in the inquiry were neither illegal nor improper.

The center contracted for Mrs. Clinton's services with the law firm where she was a partner at the time, the Rose Law Firm of Little Rock, Ark., and paid no fees directly to her.

Those fees were "absolutely not" inflated, Ms. Miller said. "The center has no qualms about whether the money was earned." Before President Clinton's election in 1992, Mrs. Clinton was widely known as an expert and advocate on children's issues, including education, both in Arkansas, where Mr. Clinton was governor, and at the national level.

Documents that the center turned over to Mr. Vacco indicate that Mrs. Clinton directed the day-to-day effort to promote the recommendations of its 1990 report, "America's Choice: High Skills or Low Wages." (See Education Week, June 20, 1990.)

Work Performed

Mrs. Clinton gave speeches about the report; met with leaders in business, labor, and education; and helped prepare draft legislation, the papers indicate. Mrs. Clinton was a member of the center's board of trustees, but she received no compensation in that role, according to the documents.

Mr. Vacco also asked for details of work done by Mr. Hornbeck and Mr. Cohen. In opening the inquiry, the attorney general's office noted that Mr. Hornbeck had received $162,000 for two-weeks-a-month consulting work in 1993. Mr. Cohen, it said, earned $86,913 in salary and $23,900 in benefits as a full-time center employee, but it is not clear what time period that covered.

In a written response to Mr. Vacco, Ms. Miller notes that Mr. Hornbeck was first a consultant for and later the co-director of the National Alliance for Restructuring Education, a group of school districts and states working with the center to promote standards-based school reform. Mr. Cohen was the director of the alliance and oversaw its operations.

Both Mr. Hornbeck and Mr. Cohen were traveling late last week, according to aides, and were unavailable for comment.

The attorney general also sought an explanation for why Mr. Tucker's pay as the center's president jumped from $32,500 in 1988-89 to $192,913 in 1993. In her written response, Ms. Miller explained that Mr. Tucker's salary through August 1990 reflected that he continued to work as a professor at the University of Rochester and was working only part time for the center.

Since then, his salary has grown considerably as the center has grown from a small group with a budget of less than $1 million to an organization with 50 employees and a $14.1 million budget in 1994, she said.

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