Oil Slick

By Jacob V. Lamar Jr.

Pipeline problems for Hatfield

Few U.S. Senators enjoy the reputation for personal integrity that Mark Odom Hatfield, the courtly, square-jawed Oregon Republican, has earned in his 18 years on Capitol Hill. A deeply religious Baptist, Hatfield, 62, was one of the first Senators to oppose the Viet Nam War and was in the forefront of the nuclear-freeze movement. But last week, to the dismay of friends and colleagues, Hatfield found himself under investigation by the Senate Ethics Committee and the FBI. The issue: whether four payments totaling $40,000 to Hatfield's wife constituted a bribe to win the Senator's backing for an oil pipeline across Central Africa. And if they were not, what were they?

The pipeline was the brainchild of a Greek financier, Basil Tsakos. While Tsakos did not need American money or approval, an endorsement by U.S. officials would lend his plan credibility. He arrived in Washington in 1980 and began courting the capital's top lawyers, bankers and politicians. His pitch: the $6 billion, privately financed pipeline would allow Saudi Arabia to transport oil through Sudan, the Central African Republic and Cameroon. The oil could then be shipped across the Atlantic to the U.S., detouring the Persian Gulf. Hatfield, chairman of the Senate Appropriations Committee, found the idea appealing. Said Hatfield last week: "I maintain the fierce conviction that an oil pipeline through Africa would substantially reduce the potential for conflict in the Persian Gulf--a conflict which could trigger World War I I I." Hatfield introduced Tsakos to Energy Secretary Donald Hodel and Exxon President Howard Kauffmann. Hatfield also discussed the project with Defense Secretary Caspar Weinberger and Sudanese President Gaafar Nimeiri.

The controversy erupted when Columnist Jack Anderson publicized Tsakos' financial relationship with Hatfield's wife Antoinette, a prominent real estate broker. The Senator initially said that the payments to his wife, which were listed in his financial-disclosure report,* were for locating and supervising the renovation of an apartment in the Watergate complex that Tsakos bought for $520,000. When the seller of the apartment said he had never met Mrs. Hatfield and had sold the apartment to Tsakos directly, the Senator elaborated. Mrs. Hatfield, he said, had been paid $15,000 for showing Tsakos several apartments, including some in the Watergate that he did not buy, another $15,000 for giving the entrepreneur's wife decorating tips and $10,000 for suggesting investment properties for Tsakos. The financier claims he paid Mrs. Hatfield $30,000 for telling him about the Watergate apartment and $10,000 for lending him furniture and contracting decorators. Tsakos says he did not pay her for investment advice.

To quiet the controversy, the Hatfields turned over their records to the Senate Ethics Committee. Former associates of Tsakos also filed sworn statements to the committee, charging that the financier had tried to buy Hatfield's support for the pipeline. The chronology of events is awkward for the Hatfields: the final check for $10,000 was delivered only days after the Senator wrote a letter to Tsakos supporting the project.

Complicating matters further is the shady background of Tsakos. Washington Attorney Carl Shipley resigned last year as president of Tsakos' Trans-Africa Pipeline Corp. when he received an intelligence report from the Greek secret police alleging that Tsakos had a criminal record and once worked as an arms dealer. U.S. intelligence sources, Shipley says, largely confirmed the report. It is also believed that Tsakos may have sold American-made helicopters to Iran. Shipley passed along the charges to Hatfield. The Senator confronted Tsakos, but was satisfied with the financier's denial of the charges.

Running for re-election to a fourth term, Hatfield is having his integrity called into question for the first time in his career. He stoutly denies any wrongdoing. Says Hatfield: "There was not, is not, and never will be any connection between her real estate dealings and my senatorial responsibilities, including my support for a trans-African pipeline."

--By Jacob V. Lamar Jr. Reported by Neil MacNeil/Washington

* Hatfield reported his spouse's income under the same provision of the Ethics in Government Act from which Geraldine Ferraro has claimed exemption.

With reporting by Neil MacNeil