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RTC Investigation Fails to Satisfy GOP

Whitewater: Senators charge that official report by San Francisco law firm is flawed, limited. White House claims paper exonerates Clintons.


WASHINGTON — Republicans on the Senate Whitewater Committee charged Friday that there were flaws and limits in an official report the White House has claimed clears President and Mrs. Clinton of wrongdoing in the Whitewater case.

The focus of the committee's attention was a report prepared for the Resolution Trust Corp. at a cost of nearly $4 million by a San Francisco-based law firm that spent two years examining Madison Guaranty Savings & Loan, the failed Little Rock, Ark., savings and loan association at the heart of the Whitewater investigation.

Charles E. Patterson of Los Angeles, a senior partner at Pillsbury, Madison & Sutro, said that the report, released in December, "was neither a castigation nor vindication" of the Clintons' roles in Whitewater. But under questioning from Democratic senators, Patterson agreed with Richard Ben-Veniste, the panel's Democratic counsel, that the investigation had found no evidence of impropriety on the part of the Clintons.

The president and First Lady Hillary Rodham Clinton were investors in the unsuccessful Whitewater land venture in the Ozark Mountains in the late 1970s, and Mrs. Clinton and her Little Rock law firm later performed some legal work for their investment partner, James B. McDougal, who also owned Madison Guaranty.

Patterson said that the RTC, which the Treasury Department assigned to recover assets of failed thrifts, had asked his law firm to determine if there was evidence of "fraud or intentional misconduct" that would allow the government to win a civil damage suit against McDougal or members of the Rose Law Firm where Hillary Clinton once was a partner.

Patterson's testimony that no such evidence was found failed to satisfy Republicans on the panel, who claimed that the report was inadequate and that the White House had exaggerated its findings for political purposes.

"I find it troubling that you were very selective in interviewing witnesses, ignoring some persons who had intimate knowledge of certain events," said Sen. Frank H. Murkowski (R-Alaska).

Sen. Orrin G. Hatch (R-Utah) said: "Frankly, I hope the Clintons are vindicated in the end, but I don't think this report does it."

Patterson said that his firm interviewed enough witnesses to form its conclusions and noted that independent counsel Kenneth W. Starr kept some potential witnesses from being questioned in the RTC inquiry because of his criminal investigation.

Also testifying was the most prominent Republican who worked on the report, Jay B. Stephens, whose involvement in the investigation drew protests from the White House two years ago.

Stephens, a member of the San Francisco law firm and former Republican-appointed U.S. attorney for the District of Columbia, told senators that he had little to do with the inquiry--even though the White House had claimed that he was its author.

"I haven't read the full report," Stephens said. "I have no basis to challenge its findings."

In Little Rock, meanwhile, jurors were sent home for the weekend after failing to reach a verdict in their second day of deliberations on conspiracy and fraud charges against the McDougals and Arkansas Gov. Jim Guy Tucker. The Clintons are not charged in the case.

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