Wading Into Whitewater

WERE Bill and Hillary Rodham Clinton involved in the web of apparent wrongdoing surrounding the Whitewater Development Company? Or were they "passive investors" who were unaware of what was going on?

Three investigations - one in the Senate, one in the House, and one by special prosecutor Kenneth Starr - are trying to answer those questions.

The story begins in 1978, when the Clintons joined James and Susan McDougal in borrowing $202,000 to buy 203 acres of land along the White River in Arkansas for development as a resort. But Whitewater never took off, and the company ended up losing about $200,000. The Clintons contributed about $42,000 to the firm, according to a Resolution Trust Corporation report, while the McDougals and their companies furnished the rest. (The RTC is the federal agency charged with cleaning up the savings-and-loan mess from the 1980s.) It appears that Mr. McDougal covered the Clintons' losses on the deal; the Clintons sold their interest in Whitewater in 1992 for $1,000.

McDougal also headed Madison Guaranty Trust, an Arkansas Savings and Loan that collapsed in 1989 at a cost of more than $60 million to the federal government. RTC investigators charge that McDougal siphoned funds from Madison Guaranty to cover Whitewater debts and improperly diverted S&L funds to a Clinton gubernatorial campaign. Congressional Republicans, led by House Banking Committee chairman Jim Leach of Iowa, allege that Governor Clinton in return gave McDougal political favors.

In addition, three regional RTC investigators say their superiors and the Clinton Justice Department interfered with their investigation of Madison Guaranty for political reasons. And former Arkansas municipal judge David Hale has admitted improperly approving a $300,000 Small Business Administration loan to Mrs. McDougal that was used to buy land for Whitewater. He claims Clinton pressured him to make the loan.

McDougal was tried on several charges in 1990 and acquitted. In 1992 the US attorney in Little Rock, a Republican, recommended against further prosecution of McDougal or anyone else connected with Madison Guaranty. The Rose Law Firm, in which Mrs. Clinton was a partner, handled Madison Guaranty as a client. Although Mrs. Clinton has denied doing much work for Madison, one bill shows the firm attributing 42 percent of the amount - some $7,600 - to work performed by her.

The Clintons have denied all the allegations of wrongdoing and say they were unaware of their business partner's machinations.

The entire affair has become even more entangled by the odd behavior of the White House staff following the suicide of deputy counsel Vincent Foster. Foster handled several personal matters for the Clintons, including wrapping up Whitewater.

In Senate testimony last week, various witnesses said that files were removed from Foster's office the night of his death, and that White House counsel Bernard Nussbaum agreed to let Justice Department lawyers search the files and then reneged because Mrs. Clinton was said to be concerned about an unfettered police search of the papers.

In addition, it took six days for senior staff to find Foster's suicide note, which lay torn in pieces at the bottom of his briefcase, although support staff had observed the shreds days earlier. In Senate testimony Wednesday, Mr. Nussbaum argued that it would have been unethical for him, as the president's lawyer in chief, to allow law-enforcement authorities to rifle through Foster's papers without looking at them first.

The White House and Democrats insist that the congressional Whitewater hearings are simply a partisan show. Despite the bickering, however, valuable information and documents have come to light in the process.

Still, the burden of proof must remain on those making the allegations. To put the best light on the information available so far, the Clintons may be guilty only of some very bad bookkeeping - including a confused sense of what was a personal loan and what was Whitewater money - and some improper tax deductions.

It remains to be seen whether Mr. Leach and others can back up their charges of potentially criminal behavior with a "smoking gun," especially since federal investigators who looked into Madison Guaranty in the 1980s found no evidence the Clintons bore any responsibility for its collapse.

Meanwhile, in Arkansas, special prosecutor Starr has filed 21 charges against 14 people and reached plea bargains with nine. Charges are reportedly pending against current Gov. Jim Guy Tucker. Webster Hubbell, the former No. 3 man at Justice and a partner of Mrs. Clinton's at Rose, has just started serving a 21-month prison sentence for bilking the law firm and clients out of some $500,000.

Given the nearness of next year's presidential elections, the ultimate judge in Whitewater may turn out to be American voters. Whether they are listening is another matter.

Although Democrats call the hearings a partisan show, valuable information has emerged.

You've read  of  free articles. Subscribe to continue.
QR Code to Wading Into Whitewater
Read this article in
QR Code to Subscription page
Start your subscription today