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Friend of Clinton Aides Offered Help to Milosevic

Politics: Businessman secretly said he could act as contact between Serb leader, White House, officials say.


WASHINGTON — A Little Rock, Ark., attorney and international businessman with close ties to senior advisors to President Clinton met secretly with Serbian President Slobodan Milosevic in 1994 and offered to act as an intermediary between Serbia and the United States, according to U.S. officials.

Larry C. Wallace, a 54-year-old Little Rock lawyer and friend and former business associate of longtime Clinton aide Thomas "Mack" McLarty, met with Milosevic in Belgrade, when civil war was raging in what had been Yugoslavia.

At the time, Wallace was attempting to gain entree to the Greek cable television market, and he said in an interview that his meeting with Milosevic was arranged by the Greek government, which has close relations with nearby Serbia.

Wallace's activities on the international stage put him in a category that includes several other Arkansas lawyers and businessmen who, as private citizens, apparently represented themselves abroad as friends of the president and who may have used their connections in Washington to advance their business interests.

In this group is Mark E. Middleton, a special assistant to McLarty when McLarty was White House chief of staff at the beginning of Clinton's presidency. Middleton, whom Wallace describes as a friend, became an international deal maker after leaving the White House in early 1995, and he is now a central figure in the campaign finance controversy.

But more broadly, Wallace's tangled tale suggests that, in pursuit of his business interests, he was willing to trade on his ties to the Clinton White House at the behest of a foreign country--namely, Greece. In the process, he seems to have become a player in a complex international drama of war and peace.

Wallace's meeting with the Serbian president, widely regarded in the West as one of the primary aggressors in the Yugoslav civil war, triggered a highly sensitive investigation by the Central Intelligence Agency, which learned of the meeting only when informed of it by Serbian intelligence, according to CIA sources. The CIA's inspector general is still examining how the matter was handled within the agency, CIA officials said.

Wallace confirmed in an interview that he met privately with Milosevic and discussed the Balkans crisis, but he insisted that he never told anyone at the White House about it.

Wallace said he told Milosevic during their private meeting in Belgrade that he could act as a messenger to the Clinton White House, but only if he sought permission from Washington first. He said that Milosevic did not give him any message to take back to Washington and that he never heard from the Serb president again.

In their meeting, Wallace said, Milosevic conducted a nearly hourlong monologue, insisting that he was working for peace and stability in the region, that he was tolerant of ethnic minorities and that he considered himself a friend of the United States. Above all, Wallace said, Milosevic expressed concern about the international economic sanctions imposed on his country.

"I hardly said five words," Wallace recalled.

At the end of the meeting, Wallace said, he pointedly asked Milosevic what he wanted from him.

"I said to Milosevic, 'I don't know if you are expecting me to deliver a message, but if you are, you have got to let me know. And if you do want me to take a message, I've first got to seek permission to do that.' So I did offer, but it was in the way of being polite." Wallace said that he has never had any business dealings in Serbia and did not discuss business opportunities in Serbia with Milosevic.

After their meeting, Wallace said: "I wrote the man a thank-you note and I never heard from him again. And I never discussed this with anybody at the White House."

Wallace's visit came to the CIA's attention after the Serb government contacted the agency's station in Belgrade to check up on Wallace, agency sources said.

Eventually, the CIA learned that Wallace's meeting with Milosevic had been arranged through the Serbian ambassador to Greece.

CIA officers were told by the Serbs that Wallace "was there to offer his services to attempt to solve the problems of Yugoslavia," said a former CIA official. The CIA was told by the Serbs that Wallace claimed that "he had all these high-powered connections, and could do all kinds of things to ease the [international] sanctions" that were then in place against Serbia, the former CIA official added.

Wallace is a lifelong friend of McLarty and more recently, a Clinton political ally, serving in 1992 as a member of the Clinton-Gore Arkansas Finance Council. Since 1992, Wallace has contributed a total of $47,000 to Clinton-Gore campaigns and the Democratic National Committee, according to Federal Election Commission records.

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