Where Were the Media on HUD?

By Michael Riley

Big bucks. Heaps of hypocrisy. Influence peddling by prominent Republicans. The unfolding scandal at the Department of Housing and Urban Development is the kind of story that guarantees front-page play. It is also the kind of story that could guarantee brilliant future careers, perhaps even Pulitzer Prizes, for enterprising journalists. So reporters have pounced on Washington's latest example of sleaze. There is just one hitch: it's yesterday's news. All that murky bureaucratic back scratching and buck passing happened during the heyday of the Reagan Administration. Where was the ever vigilant press back then?

The short answer: sleeping. Almost 5,000 reporters prowl the nation's capital, and during the Reagan era, many Washington insiders knew what any inquisitive reporter should have known: HUD, with its million-dollar contracts, was a feeding trough. "Everybody who talked about HUD knew there was money to be made," says Republican political consultant David Keene. Despite recurring gossip about payoffs and even some hard evidence, the nation's best TV news organizations, newspapers and newsmagazines -- including TIME -- failed to report the corruption at HUD until last spring, when an internal investigation jump-started the story. The entire episode says a great deal about shortcomings in the way the press covers Government. "Somebody, an editor or a reporter, should have said, 'Where is the money going?' " says Bob Woodward, assistant managing editor of the Washington Post.

At least one reporter picked up the scent early on. In December 1986 Joan Jacobson, a housing reporter for the Baltimore Evening Sun, received a tip: Rhode Island developer Judith Siegel was throwing James Watt's name around HUD offices in Baltimore in connection with a low-income-housing rehabilitation project that Siegel wanted to develop in Essex, Md. Like any good reporter, Jacobson started asking questions. Why would the former Interior Secretary, now a Wyoming-based businessman and a professed enemy of Big Government, be involved in such a project? Jacobson started combing every public file on the 312-unit Kingsley Park development but could not turn up any references to Watt. Jacobson says Siegel flatly denied that Watt was involved. Since Jacobson could not confirm the story, she shelved it.

As it turned out, Jacobson's source was right. Watt had received a $300,000 consulting fee from Siegel for making eight telephone calls and holding a 30- minute meeting with HUD Secretary Samuel Pierce to ease the way for the project. Siegel claims she does not recall talking with Jacobson in 1987. "You think I'm going to risk five, six or seven hundred thousand dollars talking to somebody on the Baltimore ((Evening)) Sun?" asks the developer today. Local housing officials, curious about Watt's involvement, were cheering Jacobson along. "I wanted her to find the facts," says Maryland community-development administration director Trudy McFall. "But they just weren't there." Laments Jacobson: "I feel bad that I couldn't prove the story."

The Washington-based national press missed the warning signs altogether. In July 1988 Multi-Housing News, a trade publication, ran an extensive story on influence peddling in HUD's Moderate Rehabilitation program, spelling out, with almost every detail except the malefactors' names, the $2 billion scandal that has since emerged. Reports from HUD's own inspector general sounded similar tocsins. But none of Washington's investigative journalists seemed to be listening. Part of the reason was that news organizations had tired of HUD after reporting the massive Reagan budget cutbacks at the agency in the early 1980s; once most of the money was gone, so were the reporters. Only a few regularly covered the huge bureaucracy.

While sources went uncultivated and leaks dried up, the capital's best reporters were caught by other stories, like allegations against former Attorney General Ed Meese and the Iran-contra scandal. HUD remained the gulag of Washington journalism, a backwater with an obscure chief administrator they dubbed "Silent Sam" Pierce. There was a distinct lack of glitz and glamour about the HUD beat. "We were looking elsewhere," explains syndicated columnist Jack Anderson. "We don't have enough eyes to look at HUD. The very name HUD says dullness, dullness, dullness."

To complete the circle of neglect, Congress failed to monitor the enormous agency closely. For one thing, since hearings drew scant coverage, members of Congress sought public attention elsewhere. For another, the lawful political benefits of the pork barrel may have tempered criticism of HUD. Former Senator William Proxmire, who was chairman of the HUD subcommittee of the Senate Appropriations Committee, applauds the current congressional probe of the agency. Says he: "That's what we should have been doing. We didn't."

Even the most blatant instances of influence peddling went virtually unnoticed. Paul Manafort, later a leading campaign adviser to President Bush, used his connections at HUD to ensure funding for an unwanted $43 million rehabilitation of dilapidated housing in Seabrook, N.J. Not only was he a partner in the development firm involved on the project, but he also received $326,000 in fees for his trouble. The matter went unreported for three years. Are there any lessons to be learned from the HUD fiasco? Offered one Washington reporter: "Just because something's silent, that doesn't mean it's asleep."