WAXMAN: Thank you very much, Mr. Chairman. I want to thank the three witnesses for being here at this late hour.


Mr. Libby, I want to ask some questions of you, because you've had a long involvement with Mr. Rich, and probably better than any other witness that we've had before us, would understand the merits of the case that Mr. Rich was offering in his defense.


The president of the United States wrote an op-ed in the New York Times. And in that op-ed, he said--or implied that you had advocated for a pardon. And I understand that's wrong. And you've stated you had no involvement in the effort for a pardon. Is that correct?


LIBBY: It's correct that it's wrong, sir.


WAXMAN: OK. The first--but the president gave other reasons. And the first reason the president gave was, and I quote, "I understood that the other oil companies that had structured transactions like those in which Mr. Rich and Mr. Green were indicted, were instead sued civilly by the government," end quote. Was the president right about this statement?


LIBBY: Yes, sir. There were other companies which had similar transactions. And to the best of my knowledge, those were generally handled civilly.


WAXMAN: The second reason the president gave, was--and then I quote again from him--"I was informed that in 1985, in a related case against a trading partner of Mr. Rich and Mr. Green, the Energy Department, which was responsible for enforcing the governing law, found that the manner in which the Rich-Green companies had accounted for these transactions was proper."


Was the president right about this statement?


LIBBY: Yes, sir, I believe he was. And that would be the Arco proposed remedial order, issued by the Department of Energy.


WAXMAN: The third reason the president gave was, quote, "two highly regarded tax experts, Bernard Wolfman of Harvard Law School, and Martin Ginsberg of Georgetown University Law Center, reviewed the transactions in question, and concluded that the companies were correct in their U.S. income tax treatment of all of the items in question, and that there was no unreported federal income, or additional tax liability attributable to any of the challenged transactions," end quote. Was the president correct about this?


LIBBY: Yes, sir.


WAXMAN: The fourth reason the president gave, was, quote, "in order to settle the government's case against them, the two men's companies had paid approximately $200 million in fines, penalties and taxes, most of which might not even have been warranted under the Wolfman-Ginsberg analysis that the companies had followed the law, and correctly reported their income," end quote. Was the president correct on this statement?


LIBBY: Yes sir.


WAXMAN: The fifth reason the president gave was, quote, "The Justice Department, in 1989, rejected the use of racketeering statutes in tax cases like this one," end quote. Was the president right about this?


LIBBY: That's my understanding of the Justice Department manual.


WAXMAN: Well, Mr. Libby, it appears that you agree with most of the points that the president made. Let me ask you the bottom-line question.


President Clinton apparently concluded that Mr. Rich had not committed the crimes he had been accused of. Do you agree with this? Do you think that Mr. Rich is a tax fraud and a criminal, or do you agree with President Clinton's assessments of the merits of the case?


LIBBY: I believe, sir, that based on all of the evidence available to defense counsel, the best interpretation of the evidence is that they did not any civil--any tax, even as a civil matter. That would be the interpretation given by the two tax professors.


WAXMAN: And therefore, that there should not have been a criminal liability.


LIBBY: Based on the evidence available to the defense, that would be correct, sir.