What was once an almost indecipherable set of wrid financial shenanigans involving the tiny elite of a small Southern state is now afull- blown White House story involving, most recent- ly, long-issing billing records suddenly found in a drawer in the First Lady’s offices. Those bills completed Whitewater’s journey north from the Ozarks to Washington, its transition from an impossible-to-follow land deal to an inside-the-Beltway scandal. And this is extremely bad news for Mr. and Mrs. Clinton. After all, the very Arkansasness of Whitewater has been of immense help to them. The Gordian knot of financial transactions involving a large cast of characters and an array of institutions centering around Little Rock during the Decade of Greed has proved as complicated as the plot of the movie Chinatown, and almost as hard to follow. And just like the friendly cop at the climax who tells the morally shattered Jack Nicholson to ignore the depravity he sees around him with the words “Forget it, Jake, it’s Chinatown,” so the sophisticated, pragmatic political view around Washington has been to say “Forget it, Jake, it’s Arkansas” whenever the word “Whitewater” is mentioned.
That view can be summed up as follows: Maybe the Clintons were in some proximity to some sleazy business practices. Who cares? Grow up, this is politics. And, for God’s sake, what does any of this admittedly regrettable stuff, much of it dating back 15years, have to do with Washington? Those who are harping on this ancient history are transparently doing so for partisan political reasons. Sure, we can fault the First Couple for their lack of total candor and lapses of judgment, but let us just say “mistakes were made” — – and leave it at that. As with many other self-consciously moderate, worldly assessments that exude a distinct air of self-congratulation, however, this one seems to tilt not toward the worldly middle, but distinctly toward the Clintons. White House counsel Mark Fabiani, the spin doctor on the Clinton scandals, loves it, since it assumes his conclusion about Whitewater: There’s no there there.
The evidence, such as it is, adduced in support of this position is that when you come right down to it, what’s come out so far isn’t really that bad — nothing more than a little political embarrassment. How can you say the Clintons or their pals obstructed justice when you’ve got an independent counsel investigating Whitewater to death, as well as a number of regulatory agencies and the hounds of Congress? And when you look at all the details that have emerged, they haven’t exactly brought down the administration. The Clinton problem, then, is supposedly aesthetic: Whitewater looks bad because the Clintons themselves are overly cautious, overly concerned with damage control. If they had only told all, released all, sooner, they could have put this matter to rest.
Maybe so. On the other hand, the revelations and disclosures of Whitewater, which have come in dribs and drabs over the three-year period since Bill Clinton began his 1992 election campaign, look like this:
The Clintons” 1978 and 1979 tax returns show a $ 100,000 profit on trades of cattle futures on the commodities exchange — a profit that occurred on an investment of a mere $ 1,000. In addition, there was an unusually consistent pattern to the trades — the purchase of a contract came at or near the day’s low, a sale came at or near the day’s high. And, as it happens, Mrs. Clinton didn’t really make the trades herself. She relied heavily on lawyer James Blair, counsel to Tyson Foods, the Arkansas poultry giant. The tax returns also show that the Clintons failed to report some $ 6,000 in commodities-trade gains on their 1980 income taxes — equivalent to about one-sixth of the governor’s salary at the time.
The Whitewater partnership was an investment in which the Clintons put up little cash, and a number of loans for which they were responsible were repaid entirely by their supposedly equal partner, James McDougal. Also, the Clintons improperly deducted on tax returns interest they did not pay.
Hillary Clinton had an ongoing relationship with McDougal’s Madison Guaranty Savings and Loan, whose failure cost the federal government $ 50 million. There was a $ 2,000-a-month retainer for the Rose law firm. She received $ 6,000 in f ees (at $ 125 an hour), while the firm received $ 21,000 in all. There were som e 50 meetings and phone calls she participated in concerning Madison, including an hour-long call to the state’s chief S&L regulator, who had been appointed by her husband. Had the feds or the state shut down Madis on when they first found it insolvent-before Hillary Clinton’s representation of it began — it would have cost taxpayers $ 10 million or so, but when the shutdown she delayed finally did occur, Madison had racked up an additional $ 40 million in losses.
Then there is the matter of Hillary’s participation in the legal work for Castle Grande, a trailer-park development that was the project of James McDougal and Seth Ward, the father-in-law of Hillary’s law partner Webster Hubbell — a project whose financing, federal investigators believe, was a sham designed to allow Madison to circumvent rules against S&Ls investing in real estate.
Then there is the fact that the Rose law firm failed to disclose to the federal government its potential conflicts of interest when it undertook action against bank deadbeats on behalf of Madison’s new owner, Uncle Sam. One of those deadbeats from whom the feds hoped to recover was Seth Ward — yes, the father-in-law of the currently jailed Hubbell who was also Hillary’s phone buddy on the Castle Grande project.
There are the possibly irregular unsecured personal loans Bill Clinton was able to take out at Arkansas financial institutions and the uncertain terms under which they were repaid. Also, the maximum-level campaign contributions garnered at a Madison fund-raiser from people who deny having made them.
There’s more, but let’s stop here because the other stuff is even more turgid. And let us ask those sophisticated analysts so bored and uninterested in the details of Whitewater: Would the Clintons indeed have been better off dumping this whole load at once, so that of a Monday morning, we could read the whole story in every newspaper in the country? No, to any reasonable adviser, at any time from the beginning of the Clinton presidential campaign to any day of his service as president, “full disclosure” would have been another way of saying “political suicide.”
What to do, then? Retire from the political arena in disgrace? Not likely. Maybe, upon winning election as president of the United States, you try instead to clean up the mess. Close down dirty relationships as quickly as possible. Put your people in key places to keep an eye on things. Disclose only what is necessary (“modified limited hangout” is the classic term) and spin the bejesus out of it. Be as vague as possible. Throw as many roadblocks as you can in front of official inquiries while professing complete cooperation. Find friendly media and work with them to control the blast of explosive information. Rely on your party’s majority in Congress to shut down congressional scrutiny. Make counter-allegations about the partisan motives of your critics. And when the going gets tough, hire the priciest lawyers you can find, and don’t hesitate to put as many working on this little project as you think you can get away with on the government payroll in the White House Counsel’s office.
These are the elements, then, of the Washington Clinton scandals. Some of them are now indisputably matters of record. Some can be inferred from matters of record. It is certainly possible that there are other elements currently unknown. We have good reason to suspect the candor of the principals and their associates, and thus it seems reasonable to suppose that, should one or more of them decide to be forthcoming, we are apt to learn a great deal more. But here are some of the highlights of what we know now about the way the Clintohs have tried to clean matters up:
A document produced during the campaign purporting to show the Clintohs” losses on Whitewater, the so-called Lyons report, was prepared by a Clinton partisan and offered an exculpatory gloss based on limited documentation. The Clintohs needed out of the partnership; James McDougal would buy them out for g $ i,000. But he didn’t have the money. James Blair — who managed Hillary Clinton’s $ 1,000 investment in cattle futures into $ 100,000 — 1ent McDougal the money in December 1992. There is no indication that it was ever repaid. The Clintohs insist they were “passive investors” with no knowledge of the loans repaid on their behalf.
Vince Foster continued to work on closing the books on Whitewater in the months before his suicide.
His handwritten notes indicate his worry about the finances of the project and his fears that the IRS might audit the Clintons” old tax returns.
The first criminal referral to the Justice Department on Madison Guaranty’s financial malfeasance came from the Resolution Trust Corporation (RTC) during the 1992 general election campaign. Shortly after taking office, President Clinton replaced all 93 U.S. attorneys, and in the process installed an associate of his named Paula Casey in Little Rock. She rejected that first referral after it had languished for a year (although filaments of it have since been used in criminal cases brought by Whitewater independent counsel Kenneth Starr).
Files on Whitewater and related matters gathered by a team at the Rose law firm during the campaign made their way to Washington in the custody of Webb Hubbell and Clinton aide Betsy Wright. Some files remained with Hubbell until November 1993 — in his basement — when Hubbell claims first to have learned of an RTC criminal referral to the Justice Department. Although he was then the third-ranking official at the Justice Department, he turned the files over to the Clintons” private lawyer, David Kendall.
The principal RTC investigator of Madison, L. Jean Lewis, taped a conversation in which her Washington colleague April Breslaw stated that Breslaw’s superiors wanted to be able to say Whitewater had caused no losses for Madison. Breslaw claimed subsequently there had been no pressure to reach any conclusion.
There was a lot of interest in those RTC referrals, in any case. Treasury Department officials were sending multi-headed “heads up” messages about them to the White House in the fall of 1993, and White House meetings ensued. The administration has mainly characterized this activity as an effort to prepare to deal with press inquiries. In November 1993, however, a meeting took place among associate White House counsel William Kennedy (another former Rose partner), Clinton aide Bruce Lindsey, and one other White House official, as well as the Clintons’ private lawyers. Kennedy took notes during the meeting, which included the interesting statement “Vacuum Rose Law Firm files. Never know go out. Quietly.” The White House maintains that the notes describe a vacuum in the files — in other words, that they are missing, as, indeed, many Rose files seem to be. This interpretation is, in linguistic terms, the equivalent of bending your right leg into the shape ofa pretzel. Perhaps exhausted by their lexicographic efforts on behalf of “vacuum,” the White House has never offered an explanation of what the word “quietly” refers to.
Hillary Clinton has also tried to downplay her role in representing Madison. She told FDIC investigators that her role was “minimal” — contrary to what the billing records the White House suddenly “found” early in 1996 indicate. Susan Thomases, a New York lawyer close to the First Lady, also produced some notes in which she wrote that Richard Massey, another lawyer at Rose, “will say” he got Rose the Madison business. Last week before the Senate committee investigating Whitewater, Massey said under oath he did not bring in the business.
White House counsel Bernard Nussbaum agreed to allow Justice Department officials to review the documents in the office of Vince Foster following his suicide-and then rescinded. In the interim, there was a flurry of phone calls involving Hillary Clinton, Thomases, and her chief of staff Margaret Williams. Thomases and Williams profess to have absolutely no recollection of what might have been discussed during those calls.
One witness reported seeing Williams remove files from Foster’s office the night of his death — which Williams denies. She has said she removed files only after Nussbaum divided them up into piles, one for Foster’s personal material, one for White House counsel’s files, a third pertaining to the Clintons” private legal matters, including Whitewater. The last pile was to have been turned over to the Clintons” private lawyers. Before it was, however, that file spent some time in a closet at the White House residence.
The relatively bare recitation of facts here fails to do justice to the shifts in various story lines followed by the Clintons and their friends. Thus the billing records at first did not exist, then were missing, then were found — with the White House, the president, and the First Lady insisting all along the way that they had cooperated fully.
The larger picture here is not an Ozarks landscape with the White river running through it. It is, instead, an intimate West Wing interior, wherein are gathered the Clintons” closest friends, lawyers, fixers, and aidesde-camp. What are they doing? Well, they’re sitting around a table talking intently among themselves. Some have sheets of paper and file folders in front of them. Some are talking on telephones. Maybe they’re just talking political strategy. On the other hand, what would a picture of a group of people straightening out their stories look like?
This activity goes well beyond the realm of political damage control. Any rat ional person can see that. was up to his ears in the scandal. In his memo, Watk ins wrote that “once this made it onto the First Lady’s agenda, Vince Foster be came involved. , Foster regularly informed me that the First Lady was concerned and desired action.” Foster’s diary entries indicate he had doubts about the ac tions the White House took in firing the Travel Office workers; he also contact ed a lawyer about what he believed would be further investigation of the matter . And, unlike Whitewater, Travelgate is specifically mentioned several times in the note found torn up in Foster’s b riefcase: How much farther? Well, in the case of a sworn statement about ” minimal” legal work then contradicted by records showing some 50 hours of billing, the question of what the word “minimal” can be construed to mean is the question of whether perjury charges are in order for Hillary Clinton. It is difficult to imagine that a First Lady could be indicted — but it is a measure of how serious this has become that it is no longer irresponsible to mention the words “indictment” and “Hillary Clinton” in the same sentence.
All cover-ups seek to work their mystery through the agency of boredom and obscurity. What happened between Hillary Clinton, the Rose law firm, and Madison Guaranty Savings and Loan happened in the state of Arkansas several years ago. But the word “minimal” was spoken in Washington. The missing billing records were found, in 1996, in Washington. Papers disappeared, and then reappeared, in Washington. Whitewater is not an Arkansas affair any longer, an outgrowth of a small state and its crony elite. It’s a Washington story now, and for that reason alone no longer boring and obscure.