THE $135,000 QUESTION

By MICHAEL DUFFY

When it comes to creating jobs, the Clinton Administration is a standout in an unexpected area: special counsels. One of them is looking into the Whitewater land deal, another is probing former Agriculture Secretary Mike Espy's acceptance of gratuities, and the Justice Department is considering the appointment of one to see whether Housing Secretary Henry Cisneros misled the FBI about payments to his ex-mistress.

Next in line may be Commerce Secretary Ron Brown. Last week, at the urging of 14 Republican Senators, Attorney General Janet Reno asked the Justice Department's criminal division to look into allegations that Brown misled Congress by filing incomplete financial-disclosure statements. Meanwhile, Representative William Clinger, a Pennsylvania Republican who has dogged Brown for months, charged the Commerce Secretary with failing to disclose a partnership that paid him $135,000 in 1993. Other Republicans want to know why Brown's partner, Nolanda Hill, paid off more than $190,000 of Brown's debts. She made the payments two years after a company she owned had defaulted on a federally guaranteed loan, costing taxpayers $23 million.

Brown's attorney, Reid Weingarten, said that the controversy surrounding his client is essentially an accounting debate and that Brown has broken no law. ``Wouldn't a reasonable person conclude,'' he said, ``that the most important question is whether Brown disclosed his relationship with Hill and the amount of money involved and paid taxes on it--and the answer is that he did all those things.''

But in scandal-mad Washington, where technical legality is regarded as the last refuge of scoundrels, Brown's days are beginning to feel numbered. The Republicans, happy to see Brown's financial transactions shove Newt Gingrich's book deal off the front page, are unlikely to let go. And officials at the White House wonder privately how long Bill Clinton will allow the Administration to suffer by association.

Part of the problem is that Brown, a successful attorney before becoming Commerce Secretary, has a financial background that is anything but simple. While many Administration officials boast of having only a mutual fund or two, Brown's disclosure statement is filled with obscure references to many companies and holdings. That makes a big target for Clinger, who has focused on Brown's relationship with Hill, a Washington businesswoman with whom Brown was allied in several interlocking enterprises.

Last week Clinger asked how Brown came to own stock worth at least $250,000 in a Hill-run company known as First International Communications Corp., even though he had invested no money in the firm. Clinger's curiosity was piqued when Brown, who had come under some pressure in 1993 to eliminate potential conflicts of interest, liquidated his holdings in First International on Dec. 15, 1993, collecting between $250,000 and $500,000. Weingarten says Brown assumed the payout ``was because of successful business activity that generated income.''

But last Thursday Clinger released copies of three checks totaling $135,000 to Brown from an entity called First International Communications Limited Partnership, an outfit never mentioned on Brown's 1993 financial- disclosure form. On each check a handwritten notation reads partnership distribution. Weingarten says the previously undisclosed partnership was the same entity as First International Communications and that the payments were just part of the 1993 divestiture. Maybe so, but the distribution checks-- dated April 1993, July 1993 and October 1993--were all issued well before his Dec. 15 divestiture date.

Weingarten admitted that the timetable was ``confusing,'' but said it was of ``no legal or ethical significance.'' Clinger challenged this explanation: ``I think it is fair to ask how one receives a partnership distribution from a business entity unless one is a partner in it.'' Most of First International's income came from the interest on a promissory note issued by Corridor Broadcasting Corp., a firm formed by Hill during the 1980s. In 1986 Corridor borrowed $26 million from a Texas savings and loan to buy two TV stations. The thrift later failed and was taken over by the Federal Deposit Insurance Corp. Two years after Corridor's 1991 default, the FDIC sold off the loan for $3.1 million, declaring a $23 million loss to taxpayers in 1993. But in 1994 Hill paid more than $190,000 of Brown's debts, including legal bills and mortgage payments. Legally, Hill had no personal obligation to make good on Corridor's default; politically, it may not matter. The FDIC is now investigating.

Last week Brown's allies were looking into a possible exit to the private sector for the Secretary. Clinton gave Brown an endorsement, but it was not issued in the future tense. ``He has been,'' said the President on Friday, ``a great Commerce Secretary.''

--Reported by Adam Zagorin/Washington

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Brown's disclosure statement is filled with obscure references to many companies and holdings

With reporting by Adam Zagorin/Washington