Clearing up murky Whitewater


WASHINGTON - It went into the history books as "Whitewater," the name of a peaceful river in the Ozark mountains on which Bill and Hillary Rodham Clinton and their business partners hoped to sell dozens of rustic home sites. As the name for one of the murkiest and most complex scandals in political history, it should have been called the "Big Muddy."

By the time independent counsel Robert W. Ray wrapped up the loose ends and closed a six-year investigation into the Clintons' activities, the details had become so clouded that almost no one could remember what the original issues were.

Here is a primer on the seven questions addressed this week by Ray:

No. 1: Did President Clinton lie under oath when he said that he personally never borrowed money or had anyone else borrow money for him at Madison Guaranty, the scandal-ridden Arkansas savings and loan operated by the Clintons' Whitewater partners, James B. McDougal and his wife, Susan?

Documentary evidence was unclear.

Prosecutors alleged that Clinton had received a $27,600 loan from Madison. And, in the trunk of an abandoned car, investigators found a Madison cashier's check for $27,600 made out to Clinton and dated Nov. 15, 1982. They also produced microfilm of an August 1983 check for $5,081.82 made out to Madison by Susan McDougal with a note at the bottom "Payoff Clinton." McDougal's check exactly covered the amount prosecutors said would have been due on the alleged loan at that point. And the government had evidence both checks were used to help the Whitewater venture.

But Clinton's signature did not appear on the $27,600 check, and prosecutors could not establish that he had received the money or knew about either check. Moreover, James McDougal originally said Clinton was innocent. He became the president's accuser only after being convicted of fraud and having his sentence reduced in exchange for a promise of helping independent counsel Kenneth W. Starr.

No. 2: Did Clinton lie under oath when he denied knowing about another loan, for $300,000, that benefited the Whitewater project tangentially?

The Clintons' chief accuser on this issue was a former Little Rock judge named David Hale, who had been convicted of bilking the government in his own business dealings and had admitted lying to the government in the past. When Clinton was questioned for the McDougals' 1996 fraud trial, the government produced no independent evidence supporting Hale.

Moreover, while the McDougals were clearly engaged in chicanery while in partnership with the Clintons, the then-governor and his wife were not involved in the day-to-day operation of the project, making it hard to establish what, if anything, they knew about the McDougals' scheming.

No. 3: Did Clinton knowingly make false statements at the McDougals' trial about how Madison Guaranty came to hire the Rose Law Firm, where Hillary Clinton was a partner?

James McDougal claimed that Clinton had asked him personally to put Mrs. Clinton on retainer. But Clinton denied doing so. McDougal's credibility was subject to challenge at the time and he has since died.

No. 4: Did Hillary Clinton lie about the relationship between Madison and the Rose Law Firm and about her own work for the troubled S&L; when she talked to officials of the Resolution Trust Corp., the government agency that first investigated the Madison scandal and its cost to taxpayers?

Hillary Clinton, who worked at Rose while her husband was governor, denied any impropriety in the relationship between her firm and the S&L.; She said that she had not played a substantial role in the work done for Madison. Skeptical investigators subpoenaed the Rose billing records to determine the extent of her involvement.

After considerable delay, the records were produced. They showed that Mrs. Clinton had charged Madison for 60 hours of time over 15 months, not considered a large amount, given the scope of the S&L;'s legal problems.

No. 5: Did Hillary Clinton obstruct justice by withholding the billing records from her old Arkansas law firm?

Of all the questions raised by Whitewater, this one came closest to a whodunit.

The real estate deal in question, known as "Castle Grande," was actually an 1,100-acre trailer park. The project, in which the Clintons were not investors, was riddled with fraud and eventually cost taxpayers $4 million.

For almost two years after the billing records were subpoenaed, the White House said it could not find them. Then, in January 1996, the Clintons' lawyers suddenly produced the documents, saying that one of the first lady's aides had just found them in a storage box.

Hillary Clinton said she did not know how the billing records came to be found. And Carolyn Huber, the aide who said she found them, told a simple, if not entirely satisfying, story:

Huber, a former office manager in the Rose firm, worked on the first lady's staff. One day in August 1996, she said, she noticed a stack of papers on a table in the first family's private quarters. Assuming it had been put out for her to file, Huber said, she carted the documents off in a storage box. Months later, while tidying up her office, Huber said she noticed the box, delved into it and recognized the long-sought billing records.

Investigators were incredulous but found no proof to the contrary.

No. 6: Did Clinton supporters buy the silence of a potential Whitewater witness, Webster L. Hubbell, a long-time Clinton confidant, by lining up consulting jobs for him after he resigned a senior Justice Department post under a cloud?

As a Rose partner during the Whitewater period and a close friend of the Clintons, Hubbell was considered a potentially valuable witness against the president and first lady. Starr prosecuted and eventually convicted Hubbell of tax evasion and other illegal activity while at the Rose firm and sent him to federal prison. The prosecution was widely seen as an effort to force Hubbell to testify against the Clintons.

Hubbell refused to cooperate, however. And the pressure on him to do so was alleviated, Starr suggested, by tens of thousands of dollars in consulting fees he received before going to prison. The fees were paid by companies contacted by Clinton associates, including Clinton confidant Vernon Jordan and former U.S. Trade Representative Mickey Kantor.

Kantor and others acknowledged making calls to line up the consulting jobs, but said they were only helping a friend in need.

No. 7: Did contacts between the White House, the Treasury Department and the Resolution Trust Corp. during the Madison and Whitewater investigations constitute an effort to pressure the RTC on the Clintons' behalf?

Investigators established that there had been about 40 conversations and meetings related to Whitewater between the RTC and officials at Treasury and the White House. At one point, a senior Treasury official alerted the White House to the fact that the president's name had come up in the RTC investigation of Whitewater.

Moreover, administration officials admitted that their initial explanations of the contacts were not complete or accurate. That sparked angry exchanges with Congress, which was also investigating, and two senior Treasury officials resigned for misleading Congress.

But no substantial evidence was found that the RTC was pressured to shield the Clintons. The original Whitewater special counsel, Robert B. Fiske Jr., who was later replaced by Starr, concluded that nothing illegal or improper had occurred. Ray's investigators, who may or may not have reached a similar conclusion, determined that they would be unable to prove to a jury any wrongdoing by the Clintons.

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