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FOX NEWS NETWORK

SHOW: THE O'REILLY FACTOR (20:00 ET)

February 14, 2001, Wednesday

Transcript # 021401cb.256

SECTION: News; Domestic

LENGTH: 2364 words

HEADLINE: U.S. Attorney to Investigate Rich Pardon

GUESTS: Gary Aldrich, Michael McDonald

BYLINE: Bill O'Reilly

BODY:

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BILL O'REILLY, FOX NEWS: THE O'REILLY FACTOR is on.

Tonight, breaking news.  The Justice Department says it will investigate the Marc Rich pardon, but why is President Bush backing away from this case and the Jesse Jackson situation?  We'll talk with two former federal agents.

We'll have a report on that.

And what exactly did the Clintons take from the White House?  We'll separate fact from fiction.

Caution: You are about to enter a no-spin zone.  THE FACTOR begins in 90 seconds.

(NEWS BREAK)

O'REILLY: Hi.  I'm Bill O'Reilly.  Thank you for watching us tonight.

Big breaking story.  U.S. Attorney Mary Jo White is launching a federal investigation into the Marc Rich pardon.  We'll have details in a moment.

But, first, this evening's talking pointing memo.  The strange relationship between Presidents Clinton and Bush. investigations into his conduct, costing the taxpayer a bundle.  The pardon of Marc Rich was foolish, and Mr. Clinton's failure to explain himself is arrogant and destructive to the country.  By engaging in yet another example of inexplicable behavior, Mr. Clinton now joins James Buchanan as a president who did the most damage to his country.

On the surface, the pardon could be a simple case of bribery. Clearly, Mr. Rich did not deserve a presidential intervention.  The fugitive oil broker traded with America's embargoed enemies and was charged with evading millions in taxes.

But his former wife found her way into the Clinton inner circle by funneling millions in donations to the Democrats and pledging a half- million dollars to the Clinton library fund, itself a dubious enterprise. Make no mistake about it: Big money changed hands in this case.

And something else may be involved as well.  The conservative Web site newsmax.com is reporting that Denise Rich met with President Clinton perhaps a hundred times.  If true -- well, you get the picture.

The United States simply cannot accept an appearance of possible bribery at the highest level of government.  We are the nation's -- we are the world's leader, I should say, not some banana republic.  The credibility of our nation is at stake.

Enter President Bush who does not seem to care about all this.  He told reporters he wants to move ahead.  Apparently, he believes that Mr. Clinton, Janet Reno, and others should not be held accountable for their actions.

This is not the leadership Mr. Bush promised at the Republican convention. It is a continuation of the D.C. clubhouse mentality where one winks at possible corruption.

Mr. Bush needs to rethink his position immediately.  He should actively encourage probes into unexplained and damaging occurrences, like campaign finance, Chinese espionage, and shady pardons.

By the way, Attorney General Ashcroft praised Ms. Reno when she left office, which is absolutely incredible, since some of Ms. Reno's own investigators say she stonewalled probes into executive branch corruption.

What we have here is a massive ethical breakdown on the part of the federal government.  Mr. Clinton is the chief engineer of that breakdown, but Mr. Bush now bears some responsibility as well.  We'll see if he now publicly gets behind the DOJ's new investigation.

As an American, I'm outraged by Mr. Clinton's behavior, and I demand that President Bush uphold his oath of office to enforce the laws of the land.  It is time all Americans demand that that be done.

And that's a memo, which is posted on our Web site.

Now for the top story tonight.  Why the government will not aggressively pursue corruption investigations.

U.S. Attorney Mary Jo White did announce, as I said, just a few hours ago that she would look into the Rich pardon, but, as mentioned, President Bush and John Ashcroft have been timid regarding the issue.

Joining us now from Miami is Michael McDonald, former IRS investigator for 27 years, and from Washington, former FBI agent Gary Aldrich, the author of the bestseller "Unlimited Access: The FBI Agent Inside the Clinton White House."

We'll start with you, Mr. Aldrich.  Surely the FBI knows a lot about Marc Rich.  Surely they know a lot about Jesse Jackson and his finances. We don't hear a peep from Mr. Freeh and the FBI.  Why?

GARY ALDRICH, FORMER FBI SPECIAL AGENT: Well, because Director Freeh is feeling his way into a new administration, and I'm not sure he feels empowered to speak publicly about these investigations, but I think that Attorney General Ashcroft will do exactly what he said he would do during the Senate confirmation hearings because, if he doesn't, his reputation will be -- will be in tatters. He said that he's going to enforce the law. I'm going to take him at his word and...

O'REILLY: Why?  Why would you?  Why would you take him at his word? Because we -- you know, we -- he was asked the other day, "What do you think about the Marc Rich pardon?" No comment.  "I have no comment."

See, what I -- I don't believe that right now in America the federal investigative agencies are aggressively seeking wrongdoers at the highest level in our government.  I don't believe that.  Can you convince me they are?

ALDRICH: Well, no, I can't, actually.  In fact, I run a foundation here in Washington, D.C., because federal government employees who are honest and need to come forward are terrified to do so...

O'REILLY: That's right.

ALDRICH: ... and, therefore, a lot of the conduct isn't reported.

O'REILLY: Why?  Now why?  What is the climate in Washington, Mr. Aldrich, that makes people terrified to tell the truth about wrongdoing in the federal government?

ALDRICH: Well, the reflex in the federal government these days is to attack the messenger immediately and try to undermine their credibility and -- and conduct a counterinvestigation against them to silence them, and it's reflexive. We have to stop this.  We have to bring honesty to our federal government and...

O'REILLY: Well, I don't know how we're going to do that.  We have a new president, and that new president has disappointed many observers by his -- I don't know what you want to call it.  "Reticence," I guess, is the best word.

All right.  Mr. McDonald, you have a lot of experience in the IRS investigating white-collar crime.  Jesse Jackson, we here on THE FACTOR reported last week, raised $12 million in 1989 -- 1998 -- I'm sorry -- 1998, 1999 -- $12 million for his Citizenship Education Fund.  He spent $47,000 on education. Isn't that a red flag?

MICHAEL MCDONALD, FORMER IRS INVESTIGATOR: Well, it's -- it's a huge red flag, but you've got realize that the United States under our laws, when you start getting involved with anything that has a religious overtone it to,
whether it's clear cut or gray, that poses significant problems for agencies like the IRS.  There are laws in place.  There are internal requirements that they have to go over that far exceed what it would take if it was a trade or business that you or I would be engaged in.

Jackson has had a lot of problems with money and accounting for it, the IRS hasn't really seen fit to investigate him.  Why?

MCDONALD: Well, that's true.  That -- as far as we know, they haven't seen fit to investigate him.  Keep in mind that Congress made the law that the IRS can neither confirm or deny that they've looked into these types of things.

But the IR -- historically -- and this is nothing new.  What's going on in Washington right now, it's -- has been going on for decades.  Back 30 years ago, I can recall investigations in South Florida probing the connection of the Mafia down here with corruption.  It was shut down by Wa -- people in Washington. Probes...

O'REILLY: So you say that...

MCDONALD: ... in...

O'REILLY: All right.  But why is it shut down?  Is it embarrassment, corruption at the top?  Why?

MCDONALD: The business of America is business, and, as you approach business at high levels, the rich and the powerful take care of themselves. That's how they got there to begin with.  I do think there's a protective influence there.

Corruption?  Yes.  Whether it's business corruption or whatever.  I'm not saying that it's blatant bribery at high levels, but I think there's a economically.

O'REILLY: All right.  And also powerwise because with Jackson's concern -- I mean, he has power in almost every area in America.

We'll have more with Mr. McDonald and Mr. Aldrich in a moment.

And then, what exactly did the Clintons take from the White House in their last hours?  Plenty of rumors.  We'll try to get the facts in just a few moments.

(COMMERCIAL BREAK)

O'REILLY: Continuing now with former IRS investigator Michael McDonald and former FBI special agent Gary Aldrich.

Mr. Aldrich, Mr. McDonald made an interesting point -- and I -- I believe he's correct here -- by saying this has been going on for decades in Washington. As we know, Jay Edgar Hoover kept files on almost every powerful American politician for his own power.  He would -- you know, he would leak it that -- to them that he knew what they were doing, but would never give it -- make it public so that things could be cleaned up.

ALDRICH: Well...

O'REILLY: Do you believe the same system exists right now in the United States?

ALDRICH: Well, I -- in defense of Jay Edgar Hoover, I would say that the politicians created their own paperwork from the messes they made, and some of those papers went to the FBI and other papers went to the IRS.

O'REILLY: All right, but, I mean, that -- you're making excuses for Jay Edgar Hoover?  He's supposed to be protecting the laws of the United States...

ALDRICH: No, I...

O'REILLY: ... and he's blackmailing politicians.  Come on.

ALDRICH: Actually, I don't believe that he kept secret files.  I -- I worked for the FBI for 26 years, and I think there were files, but I don't believe they were kept for that purpose, Bill, but...

O'REILLY: All right.

ALDRICH: ... I would just simply say that, yes, money breeds power, and power in this town is impressive, and politicians look at that kind of money and that kind of power, and they are persuaded, and that's the problem.

O'REILLY: All right.  On the case of Jesse Jackson, the FBI knows all about this man, and they know what he's up -- been up to.  Yet we don't hear a peep or -- there's nothing going on.  Now the FBI -- shouldn't they be enforcing the laws of this country, or do they have to sit on their hands waiting for some politician to tell them what to do?

ALDRICH: Well, in the case -- in the case of the FBI, you will recall that they will be working with the United States attorneys who are appointed by the president, and -- and, for the last eight years, we've had U.S.  attorneys appointed by Bill and Hillary Clinton and Janet Reno.  I -- we're going to see a whole new flock now of U.S. attorneys, about 93 of them, I think, and I think we're going to see a change in the complexion.

O'REILLY: Well, I hope so, but -- but the last eight years, Director Freeh has allowed things to go on he knew were wrong, and I think that's wrong.  Is it not wrong?

ALDRICH: Well -- well, I have always said that, at a point in time, Director Freeh could have come up to the microphone.  He would have been considered...

O'REILLY: Sure.

ALDRICH: ... insubordinate and perhaps could have been fired, but I think he could have moved -- moved Washington forward a little bit on looking into...

O'REILLY: Right.  He's looking out for himself and his own political career rather than the country. I'm really angry about this Jesse Jackson situation, Mr. McDonald. The IRS has a fiduciary responsibility to enforce the law and to have equal justice under the law.  Here we have clearly a case of a man who can't explain millions of dollars going into his organizations, and the IRS does flat-out nothing. Should I not be angry as a citizen?  Am I overdoing it here?

MCDONALD: No, you should be angry.  Absolutely.  But also keep in mind that -- I've seen many, many situations where individuals flaunt their money, where they claim and allege that they've gotten this and they've -- they have no
money, yet they're living high on the hog, and if you look behind the scenes, you find out that they do report millions of dollars, that they do account for that from the IRS, and the IRS...

O'REILLY: But we have -- we have his reports, Mr. McDonald.  We have them, OK, in our hands.  Twelve million raised.  Forty-seven thousand going to education.  That's bupkus.  You know that's wrong.  As a 27-year investigator,
you know that's not right, and it should be -- he should be investigated to the full extent of the law, should he not?

MCDONALD: Absolutely, and that's why you need team approaches in these things.  That's why you've got to bring disciplines from a variety of agencies in to look at these things, so you remove...

O'REILLY: But they're not doing it, Mr. McDonald.  They are not doing it. The IRS is stonewalling this thing, hiding behind a law of non- disclosure, but we know the IRS hasn't looked at him at all.

MCDONALD: Well, I can't answer that because I don't know if the IRS saying that what happened in the past can't happen again in the future.  We have a new attorney general, we have a new administration, and it's time for them to step up to the plate and address...

O'REILLY: It sure is.

MCDONALD: ... these issues right now because corruption is a -- the United States is the only country in the world where laundering corrupt proceeds is legal.

O'REILLY: I -- listen, I'm with you.  I mean, if it gets any worse, we're going to be Bolivia.  That's what we're going to be.

And, Mr. Aldrich, Mr. McDonald, we thank you very much.

And coming next, a guy who could help with this corruption investigation, Congressman Chris Shays.  He's really teed off about the Marc Rich pardon. We'll talk with him.

And later on, the son of the late Commerce Secretary Ron Brown will be

Back in just a few moments with those reports.

(COMMERCIAL BREAK)

LOAD-DATE: February 15, 2001