03/11/98 WED 17:41 FAX 


March 11, 1998


Mr. Charles R. Smith

Dear Mr. Smith:

                I am writing with regard to the article you
propose to publish in Insight Magazine on the administration's
encryption policy, and particularly with respect to your
references to White House Deputy Chief of Staff John Podesta.

                The draft article you provided us is filled with
gross inaccuracies and misleading characterizations.

                Contrary to your report, John Podesta holds no
ownership or interest in Podesta Associates and undertook no
efforts to provide special access to Podesta. Associates and/or

                In January 1993, when he joined the White House
as Staff Secretary, Mr. Podesta resigned from Podesta Associates
and divested himself of all ownership interests. When he left
the White House and rejoined Podesta Associates on a
part-time basis in July 1995, he did not reacquire any ownership
interest. While at Podesta Associates, Mr. Podesta did not lobby
the White House or the Executive Office of the President on
behalf of any firm client.

                In January 1997, Mr. Podesta resigned his
part-time position at Podesta Associates and returned to the
White House as Deputy Chief of Staff. Mr. Podesta was requested
by Senior Administration Officials to undertake certain
responsibilities with respect to encryption policy. He did not
however undertake these responsibilities until he received
specific approval from the White House Counsel's Office with
respect to his involvement in these matters. He has in all
events recused himself from all contacts with Podesta Associates
on these issues.

                At all times Mr. Podesta has proceeded in
strict accordance with all statutory and regulatory requirements
on ethics and conflicts of interest. Your accusations to the
contrary are devoid of any basis in fact or law. We respectfully
suggest that you not proceed to publication.


Michael B. Waitzkin
Special Counsel to the President

cc:     Paul Rodriguez, Insight Magazine

Charles R. Smith

March 11, 1998

Mr. John Podesta
The White House
CC:  Michael B. Waitzkin  (WHITE HOUSE)
     Podesta & Assoc.

Attn:  Sarah Latham

Times Group)


Dear Mr. Sirs:

Thank you for taking the time to respond.  I, however, note that
Mr. Podesta has chosen NOT to respond to any of my questions.
It is within my right to publish these question without his
comment in total.  

I also note that your responses indicate that Mr. John Podesta
was employed at Podesta & Assoc. starting in July 1995.  This
claim has also been confirmed directly to me by fax sent from
Podesta & Assoc. in response to your request to them.  However,
Federal Election Commission records indicate that MR.  John
Podesta donated campaign monies using Podesta & Assoc. as his
employer PRIOR to JULY 1995.  This contradiction with facts
presented by the Federal Election Commission raises the question
of exactly WHEN did Mr. Podesta take employment with Podesta &

Finally, I also note that in your disclaimer you state that Mr.
Podesta did not get approval from White House Counsel on this
matter until 1997.  I assume that waiver was in response to 5
CFR 2635.502 where a notification and waiver from conflict of
interest on matters involving relative, employer or partners.
Since Mr. Podesta's first term of service started in the White
House in 1993 I note the extreme time difference between his
terms of service and issuance of waiver by Counsel.  Please, if
you can, provide an exact copy of that waiver.

Best of Wishes,

Charles R. Smith SOFTWAR

Charles R. Smith


March 2, 1998

Mr. John Podesta
The White House
Attn:  Sarah Latham

Times Group)


Dear Mr. Podesta:

Thank you for taking the time to answer my questions.  My editor
is Doug Burton 202/636-8836.  You may contact him for
confirmation of publication and/or me on the following

1.  What is your current position and previous term(s) of
service at the White House?

2.  Are you currently working on encryption policy?

3.  Can the current "Key Recovery" design as proposed by the
Clinton administration be used against political opponents or
dissidents by oppressive governments such as China or Iraq?

4.  Do you deny that Vince Foster and Webb Hubbell were involved
in encryption policy and the CLIPPER project?  If so please
explain their documented meeting at NSA Ft. Meade in May, of

5.  I have obtained documents that describe meetings between
George Tenet and Webster Hubbell in reference to project CLIPPER
which took place inside the White House in 1993.  Please explain
Mr.  Hubbell's role in CLIPPER and Mr. Hubbell's role in
encryption policy.

6.  What meetings have you had with the Computer Systems
Policy Project (CSPP)?

7.  What was the role of the Computer Systems Policy Project in
Mrs. Clinton's Health Care Reform initiative?

8.  What is your relationship with Ken Kay, Director of the

9.  Has the CSPP met in the White House, Old Executive Office or
the Commerce Dept?  If so, when and on what subjects?

10.  I have documented evidence of three exports of encryption
technology to China; HUA MEI, Motorola and RSA/SDI.  Please
describe the role of the Clinton administration in helping these
exports take place.

11.  Explain why meetings between the CSPP and the US Government
should not come under the FACA (Federal Advisory Committee Act)

12.  Please explain Al Gore's role in CLIPPER and inside the
Inter-Agency Working Group for encryption. 

13.  Please explain Ron Brown's role in CLIPPER and inside the
Inter-Agency Working Group.  Did Ron Brown discuss encryption
with representatives of China?

14.  Was the CLIPPER design or Skipjack algorithm disclosed to
any foreign government or representative?

15.  What kind of encryption policy did you discuss with CIA
Director Deutch, George Tenet and NSA Director McConnell in late
December of 1993?

16.  What role did the Federal government play in the merger of
Silicon Graphics and CRAY?

17.  Please describe the Clinton administration's role in the
"accidental" export of Silicon Graphics super-computers to a
Russian nuclear weapons lab and the exports of some 46 supers to

18.  What role did the Federal government play in dealings with
Andrew Logan in 1993?  Did Mr. Logan get paid to not
sue the US Government over the CLIPPER design?

19.  What role did the Federal government and specifically AL
GORE play in the 1994 negotiations to purchase the DSA patents
from Mr. Bidzos, CEO of RSA Inc.?

20.  Please explain how you can serve on policy and still remain
part owner of Podesta & Associates without conflict?

21.  Were there or are there any plans to mandate government
encryption and nationalize the industry?

22.  Why would the Commerce Dept. reference the US government
DSA (Digital Signature) algorithm when I requested all
information on back doors or special software to monitor US
domestic financial transactions?  Does DSA contain some back
door or other exploitable feature?

23.  Explain the role of the FORTEZZA smart card as the proposed
national health care card during the 1993 Health Care reform.

24.  Does the White House hold closed meetings with other groups
covered under the FACA rules?  For example I have documents that
reference closed meetings with Dr. Willis Ware of the Computer
System Security and Privacy Advisory Board.

25.  Explain the role of AT&T and CLIPPER?  Please note I have
documents which detail the 1991 and 1992 meetings between
Scrowcroft and AT&T to purchase the initial batch of AT&T 3600
phones.  I also have details of the substitution contract to
AT&T issued in 1993 to remove the DES chips and put CLIPPER in

26.  Explain the role of Mrs. Hillary Clinton in encryption
policy and project CLIPPER.

27.  Explain the relationship between the administration,
Mr. Stephens of Arkansas, his company Systematics and the
lawsuit over PROMIS software.

Again, thank you for taking the time to answer my questions.  I
would like the opportunity to follow up if possible.

Best of Wishes,

Charles R. Smith SOFTWAR


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