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No.3 Justice Dept. Official, Clintons' Friend, Resigns

By John M. Broder and Ronald J. Ostrow
Los Angeles Times

Webster L. Hubbell, the third-ranking Justice Department official and a close friend of President Clinton and Hillary Rodham Clinton, resigned Monday amid allegations that he cost his former Little Rock law firm as much as $1 million in unbilled time and improper expenses.

Hubbell said in a statement that an investigation into his billing practices by his former partners at Little Rock's Rose Law Firm had become a burdensome distraction and that he did not want to do further damage to the administration by remaining in office.

The departure of Hubbell left a hole at the Justice Department, which has not yet filled the spot vacated by the departure last month of the department's second-ranking official, deputy Attorney General Philip B. Heymann, who quit in a personality clash with Hubbell and Attorney General Janet Reno.

The Hubbell resignation also intensified the growing cost to the Clintons of the Whitewater banking and real estate affair. His departure also leaves an impression of an administration in disarray.

"It could not have come at a worse time for him and for the administration," said a senior White House adviser.

Hubbell described the matters under dispute with his former firm as "private issues" relating to "compensation and reimbursement" that have nothing to do with the Whitewater affair or the president and his wife.

"I am confident that at the conclusion of these discussions all outstanding matters will be resolved satisfactorily," Hubbell said.

The Rose firm internal investigation "came to a very acute head" over the past several days, according to knowledgeable sources. Hubbell's former partners confronted him with how much money they believed he owed them and said they could not settle the matter amicably, the sources said.

Hubbell decided Sunday to resign, knowing that the dispute with Rose would spill over in the public arena, embarrass the Clintons and limit his effectiveness at Justice, a senior White House official said. "He did the honorable thing," the aide said. "He didn't want to ensnare the president and the first lady."

Numerous calls to attorneys at the Rose firm went unanswered Monday. The firm's outside counsel, Walter B. Stuart of the Houston firm Vinson & Elkins, did not return calls seeking comment.

Hubbell, Mrs. Clinton and the late deputy White House counsel Vincent W. Foster Jr., who committed suicide last July, all were senior partners and friends at the Rose firm before coming to Washington with the inauguration of Clinton.

Hubbell thus became the second casualty tainted by the roiling Whitewater controversy in the past 10 days, following the resignation of White House counsel Bernard Nussbaum on March 5, who quit after disclosures that he had met with federal regulators looking into the Clintons' role in the Whitewater case. Nussbaum, too, was a close friend of the first lady's, having worked with her 20 years ago on the House Judiciary Committee considering the impeachment of former President Nixon.

In his letter of resignation to the president, Hubbell wrote that dealing with "public speculation about me and my former law firm" would consume increasing amounts of his time and would limit his effectiveness in office.

Arriving in Boston for a political appearance, Clinton told reporters that Hubbell made "the right decision."

And while he praised Hubbell as a "good personal friend" and a lawyer who is "widely esteemed" by those who know him, Clinton left himself considerable distance in case the facts prove otherwise. "I haven't talked to him since this whole issue came up," Clinton said. He he repeated several times that he had "no knowledge of the facts."

Hubbell "strongly feels that he will be vindicated but it will take some time for him to do it and that he shouldn't be working at a public job while he's doing that," Clinton said. "I think he's right."

The Rose firm has been investigating Hubbell's billing practices since last year, when it discovered what it considered discrepancies in the hourly billings and expense accounts of the former senior partner. The internal review heated up last month when the monetary scale of the dispute became clear and when Whitewater Special Counsel Robert B. Fiske Jr. announced that he would investigate a broad range of activities at the Rose firm when Hubbell, Foster and Mrs. Clinton were essentially in charge.

The matters under scrutiny internally at Rose involved the business interests of Hubbell's father-in-law and brother-in-law, Seth Ward Sr. and Seth Ward Jr., as well as Hubbell's work for federal bank regulatory agencies, the Federal Deposit Insurance Corp. and the Resolution Trust Corp.