By PETE YOST

Associated Press

WASHINGTON – Independent Counsel Robert Ray concluded that first lady Hillary Rodham Clinton gave “factually inaccurate” testimony about her role in the White House travel office firings but should not be prosecuted.

Ray wrote in his final report released today, just three weeks before Election Day, that the evidence established beyond a reasonable doubt that Mrs. Clinton played a role in the 1993 firings of seven White House travel office workers.

But the prosecutor said he decided not to bring criminal charges against the first lady because she may not have understood her conversations with White House aides back in 1993 were interpreted as an impetus to fire the workers.

Mrs. Clinton flatly denies having a part in the firings, carried out in 1993 by then-White House administration chief David Watkins. The move prompted one of the earliest controversies of her husband’s presidency and a lengthy criminal investigation.

“The independent counsel concludes that Mrs. Clinton’s sworn testimony that she had no input into Watkins’ decision or role in the travel office firings is factually inaccurate,” the prosecutor wrote.

Ray cited “eight separate conversations in which Mrs. Clinton discussed the travel office with senior White House staff and advisers” as evidence the first lady was involved in the dismissals.

The report’s release, just 20 days before voters in New York decide whether to elect Mrs. Clinton to the U.S. Senate, contained few surprises because Ray had announced previously there would be no criminal charges.

Mrs. Clinton’s lawyer, David Kendall, objected to Ray’s conclusion as “highly unfair and misleading.”

“The suggestion that Mrs. Clinton’s testimony was ‘factually inaccurate’ as to her role in this matter is contradicted by the final report itself, which recognizes she may not have even been aware of any influence she may have had on the firing decision,” Kendall wrote in reply to the report.

Asked about the Ray report, Mrs. Clinton’s Republican opponent in the New York Senate race, Rep. Rick Lazio, said “we believe that character counts in public service,” adding that “the rule of law applies to all of us and not just to some of us.”

Ray had submitted his final report in June to the three-judge panel that oversees his investigation. The panel released the report after giving parties named in it time to review it and respond.

The White House travel office workers who were fired served at the pleasure of the president and could have been terminated without any reason. But a White House lawyer who worked for then-deputy White House counsel Vince Foster contacted the FBI to pass along rumors of financial improprieties before the workers were fired.

Republicans accused the White House of using the FBI to justify the firings.

The White House conducted an internal review and issued a public apology, saying the firings had been mishandled. It also recommended that five of the seven ex-employees be given new government jobs while it reprimanded four presidential aides. The former head of the office was prosecuted and acquitted of financial wrongdoing.

Ray’s predecessor, Kenneth Starr, zeroed in on the travel office in January 1996 when a memo by Watkins surfaced stating that Mrs. Clinton had been behind the firings.

Five months earlier, Mrs. Clinton testified to Starr’s investigators in a deposition taken at the White House that she had had no part in the purge. Portions of Mrs. Clinton’s testimony to Starr’s office were released today for the first time as part of Ray’s final report.

“Who ultimately made the decision, to the extent that you know, to fire the employees from the travel office?” Starr’s investigators asked Mrs. Clinton on July 22, 1995.

“Well, the best I know is David Watkins and (then-White House chief of staff) Mack McLarty, I assume, based on what I have learned since and read in the newspapers,” Mrs. Clinton said.

“Did you have any role in it?” Starr’s investigators asked Mrs. Clinton.

“No, I did not,” she replied.

“Did you have any input with either Mr. McLarty or Mr. Watkins as to that decision?” Mrs. Clinton was asked.

“I don’t believe I did, no,” the first lady said.

Watkins’ subsequently unearthed memo contradicted Mrs. Clinton.

“We … knew that there would be hell to pay if … we failed to take swift and decisive action in conformity with the first lady’s wishes,” Watkins wrote in his unaddressed memo, adding that he had been “as protective and vague as possible” in his own answers to investigators.

“Once this made it onto the first lady’s agenda, Vince Foster became involved, and he” and Hollywood producer Harry “Thomason regularly informed me of her … insistence that the situation be resolved immediately by replacing the travel office staff,” Watkins wrote. Thomason is a close friend of President and Mrs. Clinton.

The White House internal inquiry concluded Thomason’s business partner and friends in the air charter business stood to benefit by reorganizing the travel office, which makes travel arrangements for news reporters and technicians who cover the president.

Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.