The Burden of Billy

COVER STORY

The Libyan caper has left the White House reeling

Once again, high drama in Washington. Television’s glaring floodlights may switch back on as early as next week in a Senate hearing room. Nine solemn Senators will lean into microphones to direct pointed questions across a massive table at some of the nation’s highest officials, including almost certainly the Attorney General, the President’s counsel and the President’s National Security Adviser. The select group of Senators may go off to the White House to grill the President himself, who has pledged to cooperate, and the questioning may also include his wife Rosalynn. But their most withering inquiries will be aimed at a babble-prone, 43-year-old country boy who would be unworthy of such lavish attention except for one fact over which he has no control: he is the President’s brother.

Driven by the pressures of election-year politics, the case of Billy Carter’s Libyan connections ballooned rapidly last week into a full-fledged Senate inquiry and a political cause célèbre. Operating under the most intense scrutiny by press and public since Watergate days, the Senators will try to find out why Carter accepted $220,000 from the Libyan government; what, if anything, he did in return for the money; and how he arranged a deal with an American oil company that could have —and still may—net him millions in broker’s fees for delivering Libyan crude. The inquiry will also explore National Security Adviser Zbigniew Brzezinski’s bizarre use of Billy as a secret intermediary to persuade Libya to pressure Iran into releasing the American hostages held in Tehran. And the hearings will dig for any evidence that Billy got improper help from the White House or lenient treatment from the Justice Department in avoiding criminal prosecution for failing to disclose details of his Libyan dealings earlier.

The tension—and the President’s predicament—grew steadily through the week. Day by day, there were fresh disclosures of questionable actions by top White House and federal officials. Trying to explain away the matter once and for all, the White House issued a paper outlining its dealings with Billy and his Libyan friends and flatly denying that anyone in the White House had ever discussed Billy’s failure to register as a foreign agent with anyone in the Justice Department. But that only made things worse—much worse. Three days later Attorney General Benjamin Civiletti had to recall publicly that he had, after all, discussed the subject briefly with the President himself on June 17. That statement touched off fresh Republican cries of a “coverup” and gave heart to the restless Democrats aiming at dumping Carter as their presidential candidate when the party convenees in Madison Square Garden on Aug. 11.

Whatever the Senators, and a hotly pursuing press, finally turn up, it is already clear that a vulnerable President, trailing Republican Presidential Candidate Ronald Reagan by 28 points in one national opinion poll last week, has suffered yet another blow to his re-election chances. Democrats who support Senator Edward Kennedy’s challenge to Carter’s renomination were hard at work using the Billy issue as a new wedge to pry Carter convention delegates loose from their commitment to vote for the President’s renomination.

Some disaffected Democrats even saw a growing possibility that the convention could be thrown open to draft Secretary of State Edmund Muskie or Vice President Walter Mondale.

Declared a pro-Carter Democratic chairman in a Southeastern state: “It’s terrible. It’s hurt our image and the party’s image. People are beginning to wonder, ‘Is the President any smarter than his brother is?’ ” Claimed George Shipley, a Democratic Party pollster in Texas: “To put it crudely, it looks like the Beverly Hillbillies in the White House.”

Jewish voters, who normally cast Democratic ballots, were particularly incensed at a member of the President’s family getting so cozy with Libya, one of Israel’s most vociferous Arab antagonists. Said Meyer Berger, a Pittsburgh businessman and leading Democratic fund raiser: “The Billy Carter connection is the killing blow. It finishes off President Carter with the Jewish vote all over the country. I’m sorry about that because he deserves better.”

Republicans could barely conceal their glee. Candidate Reagan sounded artfully sympathetic, saying, “You cannot confine relatives of elected officials to not having careers of their own.” A Reagan aide was more direct: “The thing is going along just fine without any help from us.”

A common Republican theme was expressed by Ernest Gallardo, executive assistant for the Oregon Republican Committee: “If Carter can’t keep tabs on his family, how can he be expected to run the country?” Mississippi Republican Chairman Mike Retzer took the analogy a step further, asking, “If the President can’t control Billy, how can he control Brezhnev?” In Cleveland, Cuyahoga County Republican Chairman Bob Hughes called the Billy episode “Watergate revisited,” adding: “The idea of America’s foremost beer drinker negotiating with Gaddafi or Hamilton Jordan negotiating with Panama over the Shah makes you wonder what the hell was the State Department doing.”

Even politically neutral observers felt the President had been badly hurt. Georgia Pollster Claibourne Darden predicted that, coming on top of the President’s other problems, the Billy factor would be especially harmful. Explained Darden: “If everything was going fine otherwise, the reaction would just be ‘It’s his stupid brother,’ but now Billy’s image transfers to Jimmy.” California Pollster Mervin Field felt that the Billy affair provides “a disturbing reminder” of the President’s previous embarrassing friendship for wheeler-dealer Banker and White House Insider Bert Lance. “The Billy thing puts President Carter on the defensive,” said Pollster Louis Harris. “He will not really be able to campaign in his favorite way with high moral dudgeon.”

About the only consolation Democrats could find in the President’s predicament was that Republicans might push too hard to evoke Watergate and create a backlash of sympathy for Jimmy. Noted former Massachusetts Governor Michael Dukakis: “We all have someone in our family tree who gets a little wild sometimes.” Argued Danny Cupit, a top Carter worker in Mississippi: “The acts of the brother should not be imputed to the President.” Observed New York Mayor Ed Koch: “The President is not his brother’s keeper.” But Koch, a Carter backer, went on to say that “the Billy Carter scandal is a serious matter and will have an adverse impact on President Carter’s chances for re-election.” Said Connecticut Governor Ella Grasso: “I would have spanked Brother Billy a long time ago.”

Republican charges and glib BILLYGATE headlines notwithstanding, the only comparisons turned up so far between the Billy affair and Watergate were surface trappings. A splurge of daily newspaper stories speculating on vague “intelligence” reports and plots, the convening of a special subcommittee of the Senate Judiciary Committee with power to subpoena White House documents, even the revival of the old question, “What did the President know and when did he know it?”—these all had the ring of Watergate. So did the repeated anticipation of things they “forgot” to say. The vow of Indiana Democrat Birch Bayh, who will head the committee, evoked Watergate when he said: “We will pursue the truth wherever the truth may lead and let the chips fall where they may.” Observed Tennessee Republican Howard Baker, one of the Watergate committee inquisitors: “I listened with an eerie feeling. Bayh said what I said at the beginning of the Watergate hearings.”

Despite the Watergate echoes, there was no evidence at all that the President had committed a single illegal or unethical act. But he had certainly shown himself unable, or unwilling, to deal decisively with an intimate who was callously abusing his ties to the Oval Office. And he had once again made it possible to ask troublesome questions about his judgment. It simply made no sense that a member of the President’s family had served as the agent of a foreign—and often unfriendly—nation. The President could and should have done something to stop it. Instead, the White House, perhaps accidentally, actually contributed to Billy’s role as a go-between with Libya.

In terms of substance, Watergate was a world apart. Rather than fighting off all inquiries, destroying or altering evidence, even coaching witnesses on how to testify falsely and paying large sums to others to keep quiet, the Carter White House vowed to cooperate fully with the Senate investigation. Presidential Press Secretary Jody Powell announced that he and his aides do not expect to assert claims of Executive privilege to avoid answering questions, that all relevant documents will be readily supplied, that even the President will make himself available for questioning “consistent with the responsibilities and time constraints of his office.” Powell explained that Carter might invite the Senators to the Oval Office rather than meet them on their own turf. Said Powell: “The President believes we will come out all right in the end because we have behaved in a proper manner. We have nothing to hide.”

The White House tactic will be a “choke-them-with-candor operation,” contended one senior presidential aide, in an unwitting reminder of the Nixon White House’s deceitful “Operation Candor,” launched as a desperate Watergate defense. But if the Republicans really want to “raise memories of things gone by,” Powell warned, “it would be worthwhile to compare this to Watergate in detail. The President has not attempted to obstruct justice or influence the Justice Department.” Actually, there is as yet no solid evidence that the Libyans got anything from Billy Carter of value for their money or that his friendship in any way influenced U.S. policy toward Libya. In its most serious interpretation, the evidence suggests that Libya’s Muammar Gaddafi might have skillfully got Billy into debt financially with the aim of gaining future benefits. In the most lenient interpretation, Billy had simply hoodwinked the Libyans into thinking he had more influence than he has—and happily taken the money and run without seeking any favors for Libya from his brother’s White House in return.

That said, the whole Billy Carter saga and the ways in which it peripherally entangled the White House add up to a sorry story of incompetence in high places. As pieced together by TIME correspondents, this is what happened:

At the beginning of 1978, Gaddafi’s Libya, once one of the more backward and impoverished of the Arab countries, had few friends abroad. A radical who considers the Palestine Liberation Organization too moderate, Gaddafi had vociferously opposed the peace overtures of Egypt’s Anwar Sadat. Egyptian and Libyan armies had even engaged in border skirmishes. A supporter of worldwide terrorist activities against governments he opposes, Gaddafi was considered unreliable by Soviet leaders, although they were generously plying him with sophisticated arms. While Gaddafi kept selling oil to the U.S., his relations with Washington had been strained ever since 1973, when President Nixon blocked the sale of eight C-130 Hercules military jet-transport planes to Libya. The Arab nation had paid Lockheed $60 million for the aircraft, but Nixon denied the required export license in hopes of restraining Libya’s encouragement of international terrorism.

The chain of events that led to the imminent Senate hearings began in January 1978, when an Atlanta businessman, Mario Leanza, visited the Grand Hotel Excelsior in Catania, Sicily. There Leanza met Michele Papa, an Italian who had formed a Sicilian-Libyan Friendship Association. Papa had been told by Ahmed Shahati, head of Libya’s foreign liaison office in Tripoli, that Gaddafi respected the tough American oilmen he had met, wanted to do more business with the U.S., and change Libya’s image in America —and get his hands on those C-130s. During the Carter Administration, the Libyans had also been unable to get delivery of three Boeing 747 airliners, two 727s and 400 heavy-duty trucks, for which they had paid a total of some $300 million.

“If only we could get someone close to the White House,” Shahati told Papa. “My American friends in the oil business tell me that this Billy Carter is approachable and likable.” Papa was surprised that Leanza, being from Georgia, did not know Billy, but he persuaded Leanza to carry an engraved invitation to Billy from the Libyan government to visit that country at its expense.

The Libyans considered Billy so potentially useful that Libya’s Ambassador to Italy, Gibrill Shalouf, twice flew to Georgia to urge him to make the trip. The first meeting in June 1978 went well, but Billy showed no great eagerness to rush off to Tripoli. When Shalouf returned to Georgia in September to press the invitation once again, Billy was more responsive. “I can’t go today because we have a softball game this Sunday,” he said. “How about Monday?”

Billy’s receptiveness to an offer of a free foreign trip was not surprising, since his lavish-spending, heavy-drinking life was turning sour. He had moved to Buena Vista, Ga., spent some $300,000 on a new house, installed an expensive softball field in Plains, but found his income slipping. His venture with “Billy” beer had failed, lucrative speaking invitations were getting scarce, and his stewardship of the family peanut business was under investigation. He had a heavy debt to a lumber company, owed hefty sums to his electrician, carpet and paint suppliers and faced a threatened foreclosure on his house.

If Billy was merely willing to go, the Libyans were eager to have him. Says an Arabic expert in the State Department: “It simply shows a standard Mideast mind-set—the back door to a leader is through his family.” Or, as one federal official put it, “The way to reach a king is through his brother.” Moreover, Libya had never understood U.S. politics, especially the role of Congress, and had the misguided notion, says a State official, that “a few cocktails and a couple of TV appearances would have an impact on American public opinion—and Billy probably didn’t do anything to dissuade them.” Actually, says this official, “we’ve urged their diplomats here to go out and make contacts in the press and on Capitol Hill the way everyone else on Embassy Row does. But, so far, their efforts have been minuscule.”

Billy made plans to go to Libya with a longtime Plains pal, Randy Coleman. Before leaving, either Billy or Coleman telephoned Phillip Wise, the President’s appointments secretary, to seek a briefing on Libya. Wise relayed the request to the National Security Council, where William Quandt, then chief Middle East specialist on the staff, agreed to talk to Billy and Coleman. This official involvement has already been singled out by the President’s critics.

Although such briefings for Americans traveling abroad are not uncommon, they gave Billy the misleading status of being a Washington insider. Billy could have boasted in Libya that he carried an implicit endorsement from the NSC, thus strengthening his credentials as an influence broker. But that is conjecture; whether Billy exploited his briefing is not known.

In his defense, Quandt argues that he tried to persuade Billy to postpone the trip until after the Camp David negotiations. “We were concerned that Gaddafi might attempt to exploit Billy Carter’s visit to damage the negotiations,” Quandt recalls. While Quandt was trying to explain this to Coleman, Billy grabbed the telephone to declare that he knew more about Libya “than the whole State Department,” and he did not need anyone in Washington telling him what to do there. But, as it turned out, Billy did not go until the Camp David talks were over, and indeed, the briefing may have restrained Billy’s social exuberance during his week-long stay in Libya. The State Department received reports from its embassy in Tripoli saying that Billy had been “polite and gracious—he was on his best behavior.”

It was on this trip that the Libyans asked Billy to help set up a group in the U.S. similar to the Sicilian-Libyan Friendship Association. Libya at the tune was selling nearly $4 billion worth of oil annually to the U.S. and was interested in investing some of its profits in American businesses, including real estate. A middleman group handling such investments could reap considerable profits. Billy did set up a Libya-Arab-Georgia Friendship Society on his return to the U.S., but it was never formally incorporated. The original plan, under which Billy was to control 40% of the shares and four other Georgians the rest, was never carried out.

Billy Carter insists that this society was formed only to be a nonprofit organization aimed at improving Libya’s relations with the U.S. public. His “public relations” work included setting up a reception on Jan. 9, 1979, for a group of visiting Libyan representatives in Atlanta. The affair was attended by some 350 prominent Georgians, including state legislators. Nevertheless, the FBI is still trying to determine whether the society was anything more than a p.r. group.

Billy’s well-publicized work on behalf of the Libyans led the Justice Department to send him on Jan. 12, 1979, the first of two letters asking him to register as a foreign agent. Under a 1938 law, anyone trying to influence U.S. policy toward another country must register and fully disclose the nature of his activities and any compensation received from that country. Billy ignored that letter, as well as a follow-up request.

What was more, Billy responded to criticism of his pro-Libyan activities with two provocative comments: “There’s a helluva lot more Arabians than there is Jews” and, referring to his Jewish critics, “They can kiss my ass.” On Feb. 27, 1979, the President publicly dissociated himself from his brother’s remarks and added: “I don’t have any control over what my brother says or what he does, and he has no control over what I say or do.” The President said that his brother was seriously ill, that he loved him, and that he knew he was not antiSemitic.

But Jimmy Carter failed to try to persuade his brother to quit the Libyans or to register as a foreign agent. Either act would have stopped the furor from sweeping over the White House 17 months later.

In March 1979, the FBI opened its investigation into whether Billy was violating any laws by his failure to register as a foreign agent. When asked by the agents, Billy said he was not getting any compensation from Libya. Apart from his free trip and receiving gifts worth some $3,000, there is still no evidence that he had been given anything of value for services rendered until that time. However, there were then, and still are, strong suspicions on the part of the investigators that he was seeking some kind of financial arrangement.

Justice Department officials supervising the investigation defend their failure to take action then on the ground that they could build a criminal case only if they could prove that Billy had been paid or was working under a signed agreement.

Carter, moreover, was not hiding his Libyan connection. He was telling his inquisitors: “I ain’t a foreign agent. I’m entitled to have friends. If you don’t like my friends, tough luck.” Carter’s openness might well have convinced a jury that he had not been deceitful. The Justice Department also points out that prosecutions have been exceedingly rare under the registration law. The intent of Congress in passing the act, claims Justice, was to force disclosure of otherwise secret activities, not to put anyone in jail.

On March 6, 1979, Billy voluntarily entered an alcoholic rehabilitation center in Long Beach, Calif., emerging seven weeks later as an avowed teetotaler. (Asked last week if he had merely undergone treatment to avoid the investigation, Billy firmly denied it, adding with a smile: “Baby, I was about as big a drunk as you want to find.”)

Sober now, he set out to seek some income on April 26, 1979, by looking up an old Marine buddy, Jack McGregor, who was then executive vice president of Carey Energy Corp. Billy told McGregor that he could help Carey Energy secure Libyan oil. McGregor explained that his company was being purchased by a conglomerate named the Charter Co. and suggested that Carter make his pitch to the new owners.

On Aug. 17, 1979, Lewis Nasife, president of Charter Crude Oil, responded to Billy’s invitation and visited Carter’s Buena Vista home. They talked oil—and big bucks. Charter at the time was getting about 125,000 bbl. of crude a day from Libya. Billy said he thought he could get the company up to an additional 100,000 bbl. If he did so, Carter wondered, what kind of broker’s commission would Charter pay? The two men worked out a verbal agreement that was later confirmed in a short “Dear Billy” letter by Nasife. If Billy succeeded in providing 100,000 bbl. per day in the tight oilmarket, Carter would be paid 55¢ per bbl.—$20 million a year. If oil became more plentiful, Billy still would get 5¢ per bbl.—$1.8 million a year.

All Billy had to do was to persuade his Libyan friends to make the oil available. “Wishing you much success on your trip to Libya,” was the way Nasife pointedly concluded the letter of agreement. Billy flew to Tripoli again at the end of August for a visit that coincided with the tenth anniversary of Libya’s revolution. He returned without any commitment from Libya to make more oil available to Charter. Instead, Libya was cutting back its oil production and later reduced Charter’s allotment to 60,000 bbl. per day.

That sequence raises some intriguing questions for Senate investigators to probe: Was it possible that the Libyans tried to trap Billy in a Machiavellian scheme based on his potential commissions? The Libyans at some point promised to loan Billy $500,000, and the only way he could pay back that kind of money would be through his oil-sale commissions. But the Libyans controlled the sale of oil to Charter; by turning off the flow, they could also put the squeeze on Billy—and perhaps drive him to work harder in their behalf.

There is, however, the other school of thought: that Billy, whose home-town friends insist is “not as dumb as he appears,” conned the Libyans into giving him—or loaning him—the money although he knew he had no influence over U.S. foreign policy at all.

While Billy was in Tripoli, the Justice Department was investigating a vague plot by Libya to get its eight impounded C-130s released by bribing U.S. officials with up to $1 million per plane. One source the department regarded as unreliable said Billy was involved in the scheme. Fugitive Financier Robert Vesco was also named. “We approached the charges with great skepticism,” recalls one Justice Department official. “We pursued it at very great length and found nothing. There continues to be great skepticism, but the case has not been dismissed.”

On Nov. 4,1979, the militants in Tehran stormed the U.S. embassy, seizing its occupants as hostages. Apparently without any prompting from the U.S., Libya’s foreign ministry on Nov. 20 publicly called on the Khomeini government to release the Americans.

Later that month, Zbigniew Brzezinski, the President’s National Security Adviser, committed one of the more ill considered acts in the whole affair. He asked Billy to use his friendship with the Libyans to get Gaddafi to lean harder on Khomeini to free the hostages. After talking to Brzezinski, Billy called on Ali Houderi, a recently acquired friend who happened to be Libya’s chargé d’affaires in Washington. Billy set up a meeting on Nov. 27 between Houderi and Brzezinski and went along to the White House to make the introduction.

Up to a point, this ploy seems to have been successful. Gaddafi did send a personal note to Khomeini urging once again that the hostages be freed. But the request had no impact at all on the Ayatullah for a reason that should have been quite clear to the White House: Gaddafi had no influence with Khomeini. Even more baffling was Brzezinski’s use of the unorthodox Billy channel when State Department routes for approaching Gaddafi had been carefully cultivated.

By turning to Billy Carter, Brzezinski greatly strengthened his image among the Libyans as a power broker in Washington. And all of this at a time when Brzezinski knew that the President’s brother was under investigation for his failure to register as a Libyan agent.

When the U.S. embassy in Tripoli was stormed by mobs on Dec. 2, it was obvious that none of the U.S. channels to Gaddafi, whether official or secret, were having much effect. Four days after the embassy attack, Brzezinski called Houderi directly to protest the lack of Libyan security for Americans. Jimmy Carter asked Brzezinski to bring Houderi to the Oval Office, where the President chewed out the Libyan for 10 minutes. Billy was not involved in these sessions.

Billy Carter got his first cash from the Libyans, so far as is known, in January, when he received an installment on his $500,000 “loan”: a check for $20,000. FBI agents quizzed Billy that month and he denied getting any cash from Tripoli. Whether this was before or after he got his check is not clear, but at that point it would seem he knew the cash was coming.

In March, Brzezinski learned through an intelligence report that Billy had a deal with Charter that could make him millions. The National Security Adviser telephoned Billy to warn him that he “should not engage in any activity that could cause embarrassment to the Administration.” Zbig told the President about this call. In April, Billy received his biggest bonanza yet: a $200,000 check.

On June 2, through sources it refuses to reveal, the Justice Department learned about the cash payments to Billy. Department lawyers then moved rapidly to wrap up the case. Before informing Billy of what they had discovered, however, they were surprised on June 10 when Carter called the department and asked if he could talk to the attorneys handling the case on the next day. They agreed, and Billy went to Washington to volunteer the information that he had accepted “loans” from Libya.

This episode, of course, suggests that someone may have tipped Billy off that the Justice Department had learned about the payments. Press Secretary Jody Powell insists that no one in the White House did so; he speculates that the FBI’s questioning of many of Billy’s associates or banking acquaintances could easily have aroused Billy’s suspicions about the agents’ knowledge. Anyone in the White House or elsewhere who warned Billy risked prosecution for obstructing justice.

After his telephone call to the Justice Department on June 10, Billy asked to see Brzezinski the following day to inquire whether he could reveal all his dealings with the Libyans, including his role in seeking Libya’s help on the hostages, without violating any national security considerations. Brzezinski quickly summoned Counsel Cutler, and the two advised Billy that he was free to tell the Justice Department about the meetings.

Cutler understandably was appalled that Billy was being quizzed by Justice Department lawyers without the help of his own counsel, and, getting the White House even further involved in the case, referred him to a number of Washington-based lawyers. Cutler recommended, among others, Henry Ruth, the former Watergate prosecutor, and Stephen Pollack, who had successfully defended Hamilton Jordan, the White House chief of staff, against charges of using cocaine.

Finally, the President broke his long silence and briefly telephoned Billy twice. On June 28, in a three-minute call, Jimmy asked Billy how he was dealing with the investigation. Billy assured his brother that he had good lawyers and was responding to the Justice Department’s questions. Billy’s lawyers, meanwhile, were keeping Cutler advised on the case. When they told Cutler that Billy still did not want to register as a foreign agent, Cutler told the President, and on July 1, Jimmy called Billy again to urge him to make a full disclosure of his Libyan connections.

On July 11, still not sure they could successfully bring a criminal action against Billy because of the rigid terms of the registration act, Justice Department lawyers worked out a settlement. In the agreement, Billy admitted that he had been acting as an agent of the government of Libya and that he had received a “loan” from the Libyans, although there are no supporting papers. “Under protest,” Carter registered as a foreign agent on July 14. He has since said that he has no plans to work for the Libyans, but he could still make money from his contract with Charter. He will need every cent. In April, the Internal Revenue Service clamped a lien for back taxes on 38.6 acres that are part of the 58-acre site of his home in Buena Vista, Ga.

On July 15, Billy angered his brother by telling reporters that he had never talked to the President about the status of his case. Jimmy told newsmen on July 17 that he had talked to Billy one time earlier, apparently forgetting his first brief call on June 28. The President told his aides that his brother must have thought the denial would protect him, when, in fact, it embarrassed him.

The news that Billy had admitted accepting $220,000 from his Libyan friends and had agreed to register as a foreign agent broke in front-page headlines on July 15. The criticism grew slowly at first, then quickened as skeptical newsmen sought more detail from the White House. On Monday some newspapers printed the first details of Billy’s curious White House meetings with Brzezinski and Cutler.

On Tuesday, Powell, who had broken off his vacation and hurried back to town, issued the White Paper that was intended to end all of the critical questioning. It did not. Most notably, the document contended that “at no time has there been any contact in either direction between the White House and the Department of Justice concerning the conduct of this investigation, except for the FBI interviews with Phillip Wise.” The paper cited only one meeting between Brzezinski and Libya’s Houderi. There was no mention of any role played by Rosalynn Carter.

On Tuesday the President also ended his public silence on Billy’s Libyan antics. Said he in a prepared statement: “I do not believe it’s appropriate for a close relative of the President to undertake any assignment on behalf of a foreign government.” That pronouncement was obviously true, but it was also overdue—and too mild for the situation.

Now there were rising demands on Capitol Hill for a congressional investigation. Six Republican members of the Senate Judiciary Committee voted to ask the full Judiciary Committee to hold hearings on Billy’s Libyan relations. Said Kansas Senator Robert Dole, with a partisan flourish: “It ought to be cleared up before the Democratic Convention —I think a lot of delegates might like to know what the facts are before they cast their vote.”

By this time, the Senate’s Democratic leaders saw no way to stall or squelch an inquiry—even if they had wished to. Majority Leader Robert Byrd and Minority Leader Howard Baker met repeatedly to find the best way to proceed. Since he is challenging the President’s renomination, Senator Edward Kennedy, chairman of the Judiciary Committee, excused himself from any role in the inquiry.

On Thursday a solution was found. Called a special subcommittee of the Judiciary Committee, the panel will consist of five Democrats and four Republicans, including one each from the Senate Foreign Relations Committee. While those two members had not yet been selected, the Judiciary Democrats will be Indiana’s Birch Bayh, acting as chairman; Arizona’s Dennis DeConcini; Montana’s Max Baucus and Vermont’s Patrick J. Leahy. The Republican Judiciary members will be South Carolina’s Strom Thurmond, Maryland’s Charles Mathias, and Dole. The committee plans to meet this week to set up a timetable and rules of procedure. President Carter promptly promised to cooperate fully with the panel. Senator Byrd later encouraged him to lay it all out “on top of the table.” Said he: “It shouldn’t have to be extracted day by day, tooth by tooth.”

The same day that presumably candid White Paper began to look tattered. Reporters revealed that Brzezinski had held three meetings rather than just one with Libya’s Houderi. The fact that the President had joined the meeting with Houderi after the raid on the U.S. embassy in Tripoli was also disclosed.

Rosalynn’s involvement became known on Thursday. Reporters had kept pushing Powell to find out if she had played any part. When he finally did so, she recalled telephoning Billy to ask if his friendship with the Libyans could be used in any way to apply pressure on Iran to free the hostages. She said she could not remember whether this call was made before or after Brzezinski had summoned Billy’s help. A White House aide sugggested: “A decent surmise is that Rosalynn mentioned the idea to the President and that he called Brzezinski, and asked him to check it out.” Senator Bayh hopes his committee will ask Mrs. Carter to appear at the Senate hearings.

On Friday afternoon, Civiletti held his press conference and dropped his bombshell. Despite repeated White House claims that his department had never discussed Billy’s case with the White House—and despite Civiletti’s own declaration on the day before that he had not personally done so—his memory had now been jogged. He had, in fact, talked to the President about the sensitive subject. It had been a brief chat on June 17, he said, at the end of a 20-minute meeting on judicial appointments. That was six days after Billy had told Justice Department lawyers about getting his $220,000 from Libya.

According to Powell, the President had also forgotten this short talk with Civiletti. Carter had been reviewing some Oval Office records on Thursday, Powell said, when he came across a note he had made about a “casual exchange” with the Attorney General. The President called Cutler, his counsel, on Thursday afternoon and told him to remind Civiletti of their talk. Cutler did so. But the White House was a bit stunned when Civiletti made the disclosure so public without first warning the President or his staff.

Civiletti insisted at his press conference that his “informal, brief exchange” with the President did not amount to a “discussion” of Billy’s case. Remembered Civiletti: “I said that I could not discuss the investigation of his brother under the Foreign Agents Registration Act. I added, however, that in my view Billy was foolish for not having registered long ago. As I recall, the President said something to the effect that his brother is stubborn. The President then asked me what would be likely to happen, under this statute, if his brother registered. Based on my understanding of department practice, I told him that if a person tells the truth and registers, the previous failure to register has not been prosecutable.” That had, of course, been the department’s long-standing attitude toward Billy and this law.

On Capitol Hill, Senator Dole rose to exploit the opening. He termed the contact between the Executive and Judicial branches “as blatant a violation of confidentiality as one can imagine” and predicted: “This clearly will hurt the President, perhaps fatally.” At the Justice Department, top officials were appalled at what their boss had done. The department’s Office of Professional Responsibility announced that it will investigate the Attorney General’s conduct as a possible obstruction of justice, even if it had been committed unwittingly. Said one such of ficial: “Intentional or not, it was incredibly improper.”

At the very least, Civiletti’s willingness to talk about Billy’s case was bad judgment, as Civiletti almost conceded. Said he: “In hindsight, I disserved the President by bringing it up.” It was clearly just as inappropriate for the President to ask the Attorney General what might happen to Billy. Suddenly next month’s Democratic Convention had the potential of turning into a roiling party brawl.

Bold and sassy as ever, Billy went on WABC-TV’s Good Morning, New York last week to maintain he had done nothing wrong. As for the President’s statement that Billy’s activities had not been “appropriate” for “a close relative of the President,” Billy snapped: “I’m not going to argue with my brother. I might argue with him when I get him home. But I’m not going to argue with him on the air.”

And there it was, at the heart of the matter, the old frictions between two brothers who had caused each other so much discomfort over the years. Inevitably, and painfully, the investigation will have to examine the strained relationship between two brothers from Plains, Ga., who rose to nation al prominence, or notoriety, in such separate ways. Yet the brotherly feelings are relevant to understanding how a President could let his kid brother get into such a fix. Said a senior White House aide last week: “There was no shortage of top people here telling the President he had to do something about Billy. But he wouldn’t even talk about it. When it was brought up, he would shut it off with that icy stare.”

For all their blood ties, the deep differences between Jimmy and Billy Carter helped to escalate what should have been a minor problem, easily solved in its early stages, into a major political up roar. In a year of political troubles that threaten to drive him from the White House, the President last week faced the most ironic threat of all — one posed by a kid brother who used to tag along after him on the farm back home in Plains.