The independent counsel investigating Whitewater concluded in his final report Wednesday that there was insufficient evidence to show that former President Bill Clinton and his wife, Sen. Hillary Rodham Clinton, engaged in criminal wrongdoing in the failed Arkansas land development.
In a five-volume document that marks the end of a decade-long political scandal, prosecutor Robert Ray found the Arkansas land deal involving then-Gov. Clinton and Hillary Clinton, a Little Rock lawyer at the time, benefited from the criminal activity of their real estate partners, Jim McDougal and his wife, Susan.
However, the report states: “Insufficient evidence exists to establish beyond a reasonable doubt that either Governor or Mrs. Clinton knowingly participated in the criminal financial transactions used by McDougal to benefit Whitewater.”
The report also said that “some of the statements given by both the president and the first lady during official investigations were factually inaccurate” but added that there was not enough evidence to prove either of the Clintons lied.
Susan McDougal and Jim McDougal, who died in prison in 1998, were both convicted of crimes stemming from the financial irregularities of their Madison Guaranty Savings and Loan Association and their investment in the stretch of land running along the White River in northern Arkansas.
Clinton lawyer David Kendall called the report “the most expensive exoneration in history. Their investigation was unprecedented in its seven-year length, $70 million expense and unremitting intensity. But it ends as it began: with no evidence of any wrongdoing by the Clintons.”
Rep. James Sensenbrenner (R-Wis.), chairman of the House Judiciary Committee, said: “The public trust in the decision not to prosecute should be at its highest level when that decision is made by a truly independent counsel, as it was in this case.
“I am satisfied that the independent counsel conducted a full, fair and non-partisan investigation.”
Earlier this month, Ray released a final report on his investigation into Bill Clinton’s relationship with White House intern Monica Lewinsky. In that report, Ray concluded he had enough evidence to prosecute and convict the former president but did not do so because Clinton had admitted on his final day in office that he “knowingly gave evasive and misleading answers” about Lewinsky. The Lewinsky investigation resulted in Clinton’s impeachment and subsequent acquittal in a Senate trial.
The release of the Whitewater report was authorized by a special three-judge panel of the U.S. Court of Appeals. It signals the close of an investigation that was conducted by two independent counsels and an additional special counsel.
Successor to Starr
Ray took over in 1999, when he succeeded Independent Counsel Kenneth Starr, who directed the bulk of the inquiry. The case began in 1994, when Clinton asked Atty. Gen. Janet Reno to name a special counsel to investigate the Madison Guaranty allegations. She chose New York attorney Robert Fiske; Starr was named independent counsel after Congress reauthorized the law on independent counsels.
The Whitewater prosecution resulted in three criminal convictions and 13 guilty pleas. Among those charged were former deputy attorney general and Clinton friend Webster Hubbell and Clinton’s successor as Arkansas governor, Jim Guy Tucker.
Whitewater became a political force unto itself, lacing Clinton’s presidency with partisan rancor and mistrust. The Clintons have long maintained their innocence and accused conservatives of driving the independent counsel’s efforts.
In a preface to his report, Ray acknowledged that discord and Clinton’s own sharp criticism of the long-running inquiry.
“Although no one would dispute the president’s right to defend his administration,” Ray wrote, “characterizing independent counsel investigations as `bogus’ and `just garbage’ simply is unwarranted.”
Allegations of criminal activity in the Whitewater land deal emerged during Clinton’s 1992 presidential campaign and swirled around him during his eight years in office. In 1994, the Clinton Justice Department authorized a special counsel’s investigation into what by then was a complex collection of real estate, banking and business transactions that all took place in Arkansas, all had some tie to the Clintons and all fell under the rubric “Whitewater.”
In 1978, the Clintons invested in a 230-acre piece of real estate along the White River in Arkansas with their friends, the McDougals. The two couples borrowed the $20,000 down payment and then $182,611 to pay for the rest. Eventually, the report states, the Clintons invested $30,000 and the McDougals $80,000.
When Whitewater began to suffer cash flow problems in 1980, the company secured a loan from the financial institution that would eventually be renamed Madison Guaranty S&L. Jim McDougal and his partners, including Tucker, had acquired the thrift just two months before making the loan.
The loan was in Hillary Clinton’s name, and it was secured by Whitewater Lot 13, though the Clintons did not own that property, the report says.
Eventually, regulators unraveled a pattern of borrowing by Jim McDougal that covered Whitewater’s mounting losses and compromised Madison Guaranty.
“Jim McDougal engaged in numerous financial transactions for the benefit of Whitewater Development involving Madison Guaranty and other corporate entities,” the report states. “Many of these transactions were fraudulent.”
Whitewater eventually failed and lost $80,000, the report says. The Clintons sold their interest back to the McDougals for $1,000 in 1992 while Clinton was running for the presidency.
Apart from Whitewater, the report also says there is “insufficient evidence” to prove that Hillary Clinton’s involvement in another Madison-related development involved wrongdoing.
In that project, known as Castle Grande, she helped draft an options agreement that Madison Guaranty and Castle Grande’s chief developer, Seth Ward, used to “deceive regulators,” the report states. There was insufficient evidence, the report says, to show that Hillary Clinton knew the agreement would be used that way.
Though the report essentially clears the Clintons of the primary Whitewater allegations, it does not resolve others.
Left unanswered, for instance, are questions about the disappearance and subsequent discovery of bills for legal work Hillary Clinton did for Madison Guaranty while a partner at Rose Law Firm in Little Rock.
Records found
In 1995, those records were discovered in a box in the White House’s room 319-A, according to the report. An aide, Carolyn Huber, found them and later turned them over to Kendall, the Clintons’ lawyer, in January 1996. Kendall, in turn, gave them to the independent counsel.
“Initially, Mrs. Clinton’s testimony about this work was vague and incomplete. She testified to a lack of recall of events,” Ray said.
After the Rose Law Firm billing records were found in the White House residence, her testimony became more detailed, Ray said.
“The independent counsel considered whether Mrs. Clinton’s lack of memory was an instance of feigned forgetfulness,” he said, adding that evidence was insufficient to prove she knowingly gave false statements.
Last week, Ray, who resigned after issuing the Lewinsky report, announced he is planning to run as a Republican candidate for a U.S. Senate seat from New Jersey.
