All In the Family, For Now

Allen and Stockman struggle to hang on to their jobs

“This is not an Administration that is unraveling.” So insisted White House Communications Director David Gergen last week, trying to dispel a sprouting impression in Washington that what he was denying might well be true. But if not unraveled, the White House was at least beleaguered. Just as the Administration was stamping out the flames from Budget Director David Stockman’s disparaging comments on Reaganomics in the Atlantic Monthly, it found itself plagued by a scandal of much greater dimensions. The problem seemed at first to be a penny-ante one: National Security Adviser Richard Allen’s acceptance of a $1,000 honorarium from a Japanese magazine for an interview with Nancy Reagan. But the White House got caught in a tangle of confusing and inaccurate statements as it tried to explain away the incident. Far more than Stockman’s indiscretions, the affair raised serious questions both about White House credibility and possible conflict-of-interest charges against Allen.

Allen’s trouble began last January, when he was approached by Chizuko Takase. The wife of Allen’s longtime Japanese friend, Business Consultant Tamotsu Takase, she asked him to set up an interview with Nancy Reagan for a Japanese women’s magazine, Shufu-no-Tomo (Housewives’ Friend). He agreed, and on Jan. 21 a reporter and an editor, along with Allen and Mrs. Takase, met with the First Lady for about 15 minutes in the White House. The group mostly exchanged pleasantries, since nearly all the questions had been submitted beforehand and answers were provided after the interview. After the meeting, according to Reporter Fuyuko Kamisaka, Mrs. Takase handed Allen a brown envelope containing $1,000 in cash.

The gift, according to the magazine’s executive editor, was meant for Mrs. Reagan. In her article, published last March, Kamisaka said she had been told the money would be given to charity. But Allen instead placed the money in a safe in his office in the Old Executive Office Building; he now says that he accepted the money to avoid offending his visitors, since he believed it was common practice for Japanese journalists to pay honorariums for interviews. Allen also insisted that he intended to turn over the money to the Treasury Department but simply forgot. A few weeks after the interview, he moved out of that office and into the White House, leaving the safe behind.

There the money stayed until one day in early September, when a staff member of the Office of Policy Development discovered the cash. That evening, the staffer notified White House Counsellor Edwin Meese; next day Meese told other senior

White House aides and Reagan himself about the money. Meese decided that the Justice Department should conduct an investigation, and asked Attorney General William French Smith to look into the matter. Allen only learned about the inquiry when agents from the FBI questioned him about the money in the safe.

The cash gift was made public two weeks ago, when a Tokyo newspaper disclosed that Japanese police, at the request of the FBI, had completed their own inquiry into the affair. Next came a series of contradictory statements from the White House that elevated what might have been a minor flap into a major embarrassment. The White House first announced that the FBI had finished its investigation; the Justice Department promptly denied that the inquiry had been completed. Then Allen claimed he had not set up the interview; the next day he admitted that the magazine’s initial request had in fact come to him. But he steadfastly denied ever asking for an honorarium. The White House claimed that Reagan only learned about the payment two weeks ago; Meese had failed to tell Gergen that he had informed Reagan last September, and the red-faced spokesman had to correct the record. And only after a Japanese newspaper reported it did the White House acknowledge that Mrs. Reagan had accepted a black lacquered stationery box, valued at $75, from the Japanese visitors. As required by law, the gift had been placed in Government archives.

Faced with a yawning credibility gap, White House aides agreed not to comment further on the case until the investigation was finished. But last Wednesday, as he was taking part in a Rose Garden ceremony, Reagan was asked if he had indeed known about the cash since September. To the dismay of his aides, Reagan casually replied, “Yes, and then it was investigated, and it was reported that everything was fine.” Everything was fine? How did Reagan know that, if the FBI was still conducting its inquiry? It turned out that Meese had called Attorney General Smith on Nov. 6 to ask about the progress on the case. Smith in turn asked FBI Director William Webster to call Meese, and Webster told the White House aide that there was no reason to suspend or fire Allen. Meese passed that information along to Reagan. The exchange showed questionable judgment on Meese’s part, since a call from the White House on such a sensitive matter could risk prejudicing the investigation.

Justice Department officials have already recommended that the investigation of Allen be closed and no special prosecutor be appointed, since the FBI uncovered no evidence that Allen intended to keep the money for his own use. Nevertheless, in an attempt to leave “no stone unturned,” as one department official put it, FBI agents were ordered last week to interview more witnesses. Questions do still remain. Reporter Kamisaka, for example, has told TIME that the honorarium was arranged by Allen, the Takases, and the magazine; it was her impression that its editors had agreed to cancel the interview if the amount requested was too much. At week’s end, allegations surfaced about yet another gift: Kamisaka bought two Seiko Quartz digital watches, costing about $135 each, and gave them to Mrs. Takase to present to

Allen and his wife. After explaining himself to senior Reagan aides Saturday morning, Allen issued a statement acknowledging that he had accepted the watches. But he insisted that they were gifts from personal friends before the Inauguration, and therefore legal and appropriate.

The flap has focused attention on Allen’s past ties with Tamotsu Takase. In October 1980, Allen was forced to resign as a campaign adviser to Reagan. Reason: charges made by the Wall Street Journal that Allen, while serving as a member of the President’s Commission on International Trade and Investment Policy in 1970, had leaked confidential decisions to Takase, who has a reputation in Japan as a political operator. Allen was reinstated after the election when Reagan’s advisers cleared him of the accusations.

The White House had to make still another awkward admission last week: Allen, a former consultant to Nissan Motor Corp., which manufactures Datsun automobiles, had met with Takase and the president of Toyota Motor Sales last March at a time when the Administration was deciding whether to seek lower import quotas for Japanese cars. The next day Allen attended a meeting with Reagan and Japan’s Foreign Minister, Masayoshi Ito, to discuss import quotas. Worried about a possible conflict of interest, White House officials asked Allen to review his records for past contacts with Japanese businessmen.

Reagan is furious that his wife’s name has been dragged into the controversy. “Nancy is horrified,” said one intimate. “It’s a bad dream for her.” Some staffers are especially nettled since Allen, unlike Stockman, is not considered central to the making of policy; they believe that, even if Allen is cleared, the incident gives them the chance to jettison him on grounds of bad judgment. Said one top official: “Allen presents an opportunity. David presents a problem.”

The “problem,” meanwhile, was working at his usual feverish pace last week. Badly shaken and somewhat moody in the days following his “woodshed” session with Reagan two weeks ago, Stockman is now committed to salvaging his credibility—and his job. Ignoring the advice of aides, he is embarking this week on a four-day swing through the Midwest and West to speak at fund raisers for G.O.P. Congressmen. “If the President has suffered from Dave’s indiscretions, and Dave thinks he has, then he’s determined to make it up to him, one Congressman at a time,” said an Administration insider.

If Stockman stays in his job, it may be thanks to Allen, whose problems have pushed the OMB Director’s woes off the front pages. As one White House adviser who favors axing Allen put it: “I think we can make our point by only one head rolling.”

—By James Kelly. Reported by Douglas Brew/Washington and S. Chang/Tokyo