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THE WHITEWATER CASE

7 Questions Addressed in Counsel's Statement Get to Heart of Matter

Probe: Major issues revolve around whether Clinton and his wife lied under oath. And did their backers buy the support of Webster L. Hubbell?

September 21, 2000|RICHARD T. COOPER | TIMES STAFF WRITER

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 Wednesday in Ray's statement:

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 suggestive.

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 that 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.

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, Ark., 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.

3. Did Clinton knowingly make false statements at the McDougals' trial about how Madison Guaranty came to hire the Rose Law Firm, where Mrs. Clinton was a partner?

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.

4. Did Mrs. Clinton lie about the relationship between Madison and the Rose 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?

Mrs. 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 (see No. 5), 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.

5. Did Mrs. 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 some $4 million.

For almost two years after the billing records were subpoenaed, the White House said that 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.

Mrs. 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:

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