WASHINGTON -- Of all the "Friends of Bill" and "Friends of Hillary" who came to Washington after President Clinton's election, none was better connected than Webster L. Hubbell.
The former Little Rock mayor, chief justice of the Arkansas Supreme Court and University of Arkansas football star was Mr. Clinton's favorite golfing pal and confidant; he was also a law partner and one-time mentor of Hillary Rodham Clinton at the Rose Law Firm.
In Washington, Mr. Hubbell was the No. 3 official at the Justice Department, where, many career attorneys there have confided, essentially ran the department and reported directly to the Clintons.
Now, it appears that Mr. Hubbell may be headed for prison, a casualty of the spreading Whitewater investigation. Although Mr. Clinton and his aides refused to comment publicly yesterday, the news that Mr. Hubbell had agreed to plead guilty to two felony counts -- and to cooperate with Whitewater special prosecutor Kenneth W. Starr -- sent a shudder through the White House.
The criminal charges would be the first against a Justice Department official since Watergate and the first of any kind against a former Clinton administration official. The development also raised the prospect that Whitewater would further distract the White House's attention during the rest of Mr. Clinton's term, especially with the new Republican-led Congress poised to reopen Whitewater hearings.
Whitewater "is not going to go away," said an administration official who asked not to be identified. "There are people who don't want it to."
The word from the White House yesterday was to not talk about the Hubbell case. "The White House will have no comment," press secretary Dee Dee Myers said tersely.
In the legal community, reaction ran from sympathy for Mr. Hubbell, who is well-liked, to speculation about whether, as part of his expected plea bargain, he would turn on the Clintons.
"That's the big question," said Floyd Brown, a conservative gadfly of the Clintons who publishes a newsletter called Clinton Watch. "Is Webb Hubbell going to deliver to Kenneth Starr evidence against the Clintons?"
Mr. Hubbell abruptly left the Justice Department in March after ,, questions were raised by the Rose Law Firm's remaining partners about charges he billed when he was a partner. At the time, Mr. Hubbell insisted that the billing dispute had "nothing to do with Whitewater."
That might have been true at the outset of the Rose investigation into Mr. Hubbell's billings. But that probe apparently expanded into cases that had everything to do with Whitewater, according to attorneys who have followed the investigation.
The dispute began with unpaid bills from a lawsuit Mr. Hubbell was pursuing on behalf of his father-in-law, Seth Ward. The litigation was a patent-infringement case on behalf of a company owned by Mr. Ward.
Mr. Hubbell is reported to have run up hundreds of thousands of dollars in travel expenses, experts' testimony and other legal fees, which the Ward family agreed to pay but which were subsequently billed to the firm.
As the Rose partners went through previous billings by Mr. Hubbell, they said they found more evidence that Mr. Hubbell had overcharged clients, including the Federal Deposit Insurance Corp. -- in a case related directly to Whitewater.
When the Whitewater story broke in March 1992, the New York Times disclosed that Bill and Hillary Clinton had gone into business with James and Susan McDougal in a land-speculation venture called Whitewater Development Corp.
The McDougals later acquired Madison Guaranty Savings & Loan, which went belly up, at a cost to taxpayers of about $60 million.
Whitewater has taken numerous twists and turns since then. But one of the questions about the deal remains: Was money from the failed savings and loan funneled into the Whitewater deal or to Mr. Clinton's gubernatorial campaigns? In other words, did the Clintons benefit by manipulation of money at Madison?
One tantalizing thread was the fact that Mrs. Clinton, while at the Rose Law Firm, represented Madison Guaranty before state regulators appointed by her husband. The Clintons have maintained that her actions in support of Madison were minimal. But people close to the investigation say prosecutors have looked into that issue.
Prosecutors are also interested in how, after Madison failed, the Rose Law Firm showed up as counsel on the other side. In this litigation, Rose represented the government against Frost & Co., the accounting firm that gave Madison a clean bill of health.
Documents in Mr. Starr's possession show that Mr. Hubbell was an active participant in the case against Frost, which the government settled. According to published accounts, the Rose firm received $400,000 in fees for that case, and Mr. Hubbell is expected to plead guilty next week to overbilling the FDIC.
Earlier this year, Republicans on Capitol Hill were thwarted by the Democratic committee chairmen when they tried to have Mr. Hubbell testify about Whitewater. With the GOP in control of both houses, Mr. Hubbell is expected to be subpoenaed.
"It's not a question of 'if' as much as it's a question of 'when,' " said Rep. Jim Leach, an Iowa Republican who is in line to become the Banking Committee chairman.
Among the questions that Republicans are interested in asking Mr. Hubbell is whether he played a role in the Justice Department's decision not to pursue nine referrals by the Resolution Trust Corp., the S&L; cleanup agency, of possible criminal conduct at Madison. Republicans want to know whether Mr. Hubbell discussed these referrals with the president, the first lady or other White House officials.
In addition, Republicans will examine whether Mr. Hubbell influenced U.S. Attorney Paula Casey -- a former Clinton campaign worker -- to ignore leads supplied by David Hale, a former Arkansas judge who claimed that Mr. Clinton had urged him to make an improper loan.
The answer to those questions will help determine whether Whitewater is merely a long-failed Arkansas business deal or whether it threatens to becomes a Watergate-like scandal that dominates the second half of the Clinton presidency.