WASHINGTON – Lawyers are fighting to suppress a potentially embarrassing final report from the investigation that found the Clinton administration housing chief lied to the FBI about paying $250,000 in hush money to his former mistress, the New York Daily News has learned.

Housing and Urban Development Secretary Henry Cisneros paid a $10,000 fine after he was found guilty in 1999 and was later pardoned by President Clinton.

Though neither Hillary Clinton nor her husband was targeted by independent counsel David Barrett, his 420-page final report sent to a special court 13 months ago will include alleged abuses of power by the Clinton administration, sources told The News.

After Cisneros was convicted, Barrett started looking into allegations that the IRS and Justice Department aides stymied a tax fraud case against the disgraced HUD secretary and audited Clinton critics.

Former IRS Commissioner Peggy Richardson, who remains a close friend of the Clintons, is among the officials cited in the report, sources said.

Lawyers at the Washington firm Williams and Connolly who work for Cisneros and both Clintons have argued to judges overseeing the case that allegations of illegal activity, for which no charges were filed, should be snipped before the report is made public.

The court granted another delay last month, a source said.

Barrett refused to comment on the case, but told The News that he’s eager to wrap things up.

“The report was filed over a year ago, but there are still matters … that have to be resolved by the judges before they decide when it can be published,” he said. “The decision rests entirely with the court.”

In April, Sens. John Kerry, D-Mass.; Dick Durbin, D-Ill.; and Byron Dorgan, D-N.D., tried to ax the probe – which has cost $22 million, including $1 million for the first six months of this year – by cutting Barrett’s budget, saying it’s a waste of money, but Republicans stopped their effort.

Williams and Connolly has since tried to quash the report, which probably would be released amid Clinton’s 2006 Senate re-election bid.

Clinton lawyer David Kendall declined comment.


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