Probing the Peanut Puzzle

Did Billy Carter cook the books of the family warehouse? ou know what the problem is? Yankees can't keep up with a fast-talking Georgia boy."

With that burst of regional pride, Jimmy Hayes, 32, tried to explain last week why a visiting reporter from the Washington Post, way up north, had interviewed him at length and then printed such a story. Hayes had good reason to be groping for an explanation: the Post had quoted him as saying that he and Billy Carter had deliberately falsified records concerning loans from the National Bank of Georgia to the family's peanut warehouse in Plains.

Hayes' differing interpretation of what Billy had done only further muddied an already murky situation. Since last fall, federal investigators have been examining the Carters' business records and the N.B.G.'s loan accounts to see if any illegal activity was involved in handling loans of more than $4.6 million to the Carter business. The loans were arranged by then N.B.G. President Bert Lance, the close friend whom Jimmy Carter later made Director of the Office of Management and Budget in Washington. One question was whether any of the funds had been used illegally in Jimmy Carter's campaign for the presidency. So far, no evidence has turned up that any money from the loans found its way into Carter's campaign or that he was involved in any bookkeeping irregularities.

Although a dozen FBI agents were assigned in January to probe the circumstances surrounding the bank loans, they bypassed Hayes until he had given a series of taped interviews to the Washington Post, which printed them last week. The Atlanta FBI chief immediately got a hotwire telephone call from Washington. Hours later, a pair of agents were on their way to interview the talkative source.

For eleven months in 1975 and 1976, Hayes worked for a collateral-monitoring firm that checked on the supply of peanuts held in the Carter warehouse. The peanuts served as collateral for the bank loans. As the peanuts were shipped out of the warehouse, Hayes was supposed to make sure that fixed portions of the loan were paid back to N.B.G.

Hayes told the reporter that frequently, after peanuts had left the warehouse, Billy Carter would put off signing the checks to the bank. Then, to cover up the lateness of payments, Hayes said, he and Carter would change the dates on warehouse release documents and date checks for weekends and holidays.

In a transcript of the Post interview, Hayes told Reporter Ted Gup: "That's what I call 'kitin' money.' "

Gup: You call it...

Hayes: Kitin' money

Gup: Gotten money?

Hayes: Kitin'. K-I-T-E-I-N-G [sic].

You know, like writing a bad check and beating it to the bank.

In addition, the Post quoted Hayes as saying that Carter had concealed a $500,000 deficit in payments on the N.B.G. loan.

But the day after the interview appeared, Hayes said that the Post had asked him a series of hypothetical questions and then misinterpreted his answers. Said Hayes: "Nothing was done wrong. There was no scheme or backdating or negative balance." The Post stuck by its story. Billy Carter was unavailable for comment; he was confined to Long Beach (Calif.) Naval Medical Center for treatment of alcoholism. When questioned six months ago by an Atlanta grand jury about the loans, he took the Fifth Amendment a number of times.

Charles Kirbo, the Atlanta attorney and old family friend who is trustee for President Carter's majority interest in the peanut business, also denied any wrongdoing. But Kirbo did admit that warehouse records "do reflect that there were delays in billing and collecting accounts receivable and transmitting the checks to the National Bank of Georgia." A special committee of the bank's directors concluded two months ago that the loan had been "poorly managed." Kirbo acknowledged that "on the bank's recommendation," the warehouse had hired an outside agency to expedite collections and payments.

Jimmy Hayes' statements prompted Republicans on Capitol Hill to increase pressure on the Justice Department to appoint a special prosecutor to get to the bottom of both Lance's activities and the problems with the Carter loan. The 1978 Ethics in Government Act, noted Maryland's Senator Charles Mathias, authorizes the appointment of an outsider to handle such explosive issues. Presidential Candidate Robert Dole called for the appointment, as did Senate Minority Leader Howard Baker, who is also expected to join the race for the White House.

The man who would choose the special prosecutor was still considering his decision, although he clearly began with serious reservations about the idea. Attorney General Griffin Bell, trying to raise morale in the Justice Department, told

Republicans that he favored having career prosecutors handle such cases. Bell argued that it was poor practice to name an outsider every time a key figure's integrity was challenged on a sensitive issue.

Justice Department officials also pointed out that a newcomer would have to start again on the Lance investigation, which has already taken 18 months, longer than it took the Watergate special prosecutors to investigate and indict Nixon Administration officials.

Still, the political pressures might induce Bell to change his mind. At week's end the Justice Department acknowledged that it had begun to sound out some lawyers about taking the post. Bell has promised that he would decide this week whether an insider at Justice or an outsider would look into the financial affairs of his old friends from Plains. --

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