Clinton Tells Bankers Why He Denied Milken Pardon
Boca Raton, Florida, Feb. 6 (Bloomberg) -- Former U.S. President Bill Clinton told a high-yield bond conference he didn't pardon Michael Milken, who helped create the $550 billion junk- bond market, because of protests from federal securities regulators, according to people who attended the speech.
Opposition from the Treasury Department, Justice Department and U.S. Securities and Exchange Commission prompted Clinton to refuse the Milken pardon, he told about 1,000 people at a dinner sponsored by Morgan Stanley Dean Witter & Co. Milken pleaded guilty in 1990 to federal charges of stock fraud and market manipulation.
During a question-and-answer session after his first speech since leaving the White House - which paid him $100,000 -- Clinton defended his pardon of commodities trader Marc Rich while deciding against Milken. Rich, charged with evading $48 million in taxes in 1983, fled the country while facing prosecution for allegedly violating sanctions against trading with Iran. Unlike Milken, Rich never stood trial and wasn't jailed.
``The difference between them is night and day,'' said Stanley Sporkin, a retired federal judge and former director of enforcement at the SEC. Sporkin is now a partner at Weil, Gotshal & Manges in Washington. ``Milken did his time while there's been no determination on Rich's guilt.''
Milken, who created the multibillion-dollar junk bond market in the 1980s, pleaded guilty to securities fraud in 1990. He served almost two years in prison and paid more than $1.1 billion to settle civil and criminal charges.
Opposition
Calls to Morgan Stanley in New York and to Clinton's spokesman weren't returned.
Clinton told investors at the firm's annual bond conference that the proposals to pardon Rich and Milken were different, saying a pardon for Milken would have sent the wrong message to the securities industry.
He also said that evidence of wrongdoing was clearer and opposition more vigorous to the Milken pardon, people said. Clinton, who spoke after a private dinner, said federal authorities didn't try to prevent a possible pardon for Rich, the people said. He also noted regulators could still file a civil lawsuit against Rich to recover any money owed, the people said.
Sporkin said Clinton probably would have faced stronger opposition to pardoning Rich had more people been aware that he was considering the possibility. The proposal had been discussed in the New York Times and other publications.
Federal regulators had voiced disapproval of a Milken pardon.
``It's no secret that the enforcement division wrote a letter to the White House on Dec. 15 opposing the pardon,'' said Richard Walker, the SEC's director of enforcement. ``That letter speaks for itself.''
The former president also suggested that the hundreds of thousands of dollars Rich's ex-wife, songwriter Denise Rich, donated to Democrats since the 1980s was not a factor in his decision. Among her contributions were $7,000 to Senator Hillary Rodham Clinton's campaign, $10,000 to Bill Clinton's legal defense fund, and $280,000 to the Democratic party in the last two years, according to campaign finance records.
But, Clinton told the audience, Milken and his supporters had contributed much more than Rich supporters, the people said.
In prepared remarks at the Boca Raton Beach Resort & Club, Clinton stressed the need for free trade in goods and services to boost economic growth. He said the U.S. must support developing countries when they face economic or health crises.
Autographs
Morgan Stanley said some individual investors who do business with its retail brokerage unit complained about the firm's decision to hire Clinton.
The controversy helped draw a record number of attendees, including investors from firms such as Trust Company of the West, and treasurers, chief financial officers and chief executives from companies that sell junk bonds, including Paxson Communications Corp., Nextel Communications Inc. and Northwest Airlines Corp.
Wearing a navy blue sports coat and a bright yellow tie, Clinton met with Morgan Stanley's heads of high-yield debt and the chairman of the firm's institutional securities unit, Joseph Perella, among others at a private cocktail party. The firm's Chief Executive Philip Purcell and outgoing President John Mack were in New York at a fund-raising event.
Clinton spoke for about 45 minutes as guests -- Morgan Stanley's corporate and mutual fund clients - finished a dinner of lobster and lamb. Following his speech, the former president answered questions, then shook hands and signed autographs until about 12:30 a.m.
At previous Morgan Stanley conferences, speakers have included Britain's former Prime Minister Margaret Thatcher to former Senator Robert Dole.
Feb/06/2001 17:20 ET
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