White House Suggested IRS Probe of Travel Office, FBI Says

WASHINGTON — Associate White House Counsel William Kennedy last month discussed the possibility of using the Internal Revenue Service to investigate allegations of wrongdoing in the White House travel office if the FBI did not “immediately” begin doing it, an internal FBI summary shows.

The reference to a possible IRS investigation was made in a May 13 telephone conversation with an FBI supervisor. It appears to show the urgency with which White House officials were seeking evidence of possible criminal wrongdoing in the travel office in the days leading up to their May 19 decision to fire seven workers in the office.

That decision later provoked controversy and charges that the White House had improperly used the FBI in an effort to establish that criminal activity--not political cronyism--prompted the firings.

On May 21, eight days after Kennedy’s comment, three IRS auditors armed with an administrative summons appeared at the Smyrna, Tenn., office of UltrAir, a charter company that had been receiving the bulk of the White House travel business, to begin an unannounced civil audit.

White House, Treasury Department and IRS officials have denied that there were any contacts from the White House that led to the audit of UltrAir. Kennedy did not return phone calls. The FBI internal chronology was prepared May 24 and distributed to top Justice Department officials. Three sources who have had access to the summary said it states that on May 12, Kennedy called James Bourke, an FBI supervisor who heads the unit that conducts background checks of Administration appointees, to report allegations of financial wrongdoing at the White House.

Sources said that Kennedy called Bourke twice and in the second call he “commented that the matter had to be handled immediately or the matter will be referred to another agency, the IRS.”

Justice Department officials who have seen the FBI summary have expressed two concerns about Kennedy’s comment: It raised the possibility of abuse of the IRS and suggested that the White House lawyer was pressuring the FBI.