Whitewater surges on Republican tide

0 Comments | Insight on the News, Jan 2, 1995 | by Jerry Seper

Whitewater, the catchall word for the ongoing federal investigation into President Clinton's ties to a failed Arkansas thrift and a onetime Ozark land development, is expected to spill over again onto America's front pages in January when Republicans take control of Capitol Hill.

Armed with the power to set the agenda, call hearings and issue subpoenas, Republicans on the Senate and House banking committees -- headed by Sen. Alfonse M. D'Amato of New York and Rep. Jim Leach of Iowa -- will revisit the Whitewater affair, last dealt with in August during hearings severely limited in scope by the Democrats.

Independent counsel Kenneth W. Starr also has intensified his efforts in the ongoing investigation. Sources close to the probe say Starr and his investigators have told potential targets and witnesses in the Whitewater case to "get on board or get out of the way."

In his first major prosecutorial effort, Starr concluded a plea agreement on Dec. 5 with a former Little Rock appraiser, Robert W. Palmer, who pleaded guilty in U.S. District Court to conspiracy in the backdating and falsifying of appraisals for Madison Guaranty Savings and Loan Association.

Palmer -- who faces five years in prison on his guilty plea -- has agreed to cooperate with Starr in the Whitewater probe.

On Dec. 6, former Associate Attorney General Webster L. Hubbell, a longtime friend of the president and former law partner of first lady Hillary Rodham Clinton, pleaded guilty to mail fraud and income-tax evasion in a separate plea agreement with Starr. Hubbell is accused of improperly billing clients, including the federal government, for thousands of dollars in personal expenses.

Hubbell, sources said, has agreed to cooperate with Starr, whose investigation has targeted Madison and Whitewater Development Corp., a partnership involving the Clintons, Madison owner James B. McDougal and McDougal's wife, Susan. The McDougals since have divorced.

So begins the next chapter in a tangled tale that has dogged the Clintons for more than a year.

Ignored at first by much of the major news media and kept alive largely by talk-radio critics of the president, the Whitewater scandal thus far has prompted the appointment of an independent counsel, led to televised congressional hearings, claimed the jobs of several top administration officials and tarnished the public image of the first couple.

The weeks ahead don't look any brighter for the White House.

In addition to indictments expected from Starr against Clinton business associates, Clinton faces the prospect of further hearings on Capitol Hill aggressively chaired by members of the opposing party, although both D'Amato and Leach have promised that the hearings -- when scheduled -- will be measured, fair and responsible.

"The Whitewater hearings will be resumed ... but this will not be a wtich hunt," said D'Amato, who expects to call for new hearings beginning in late January or early February. He vowed that they will be "responsible and thorough" and held in stages to avoid any conflict with Starr's Whitewater investigation.

Under D'Amato, the first phases of new hearings are expected to focus on the removal of documents from the office of Deputy White House Counsel Vincent W. Foster Jr. the night of his July 20, 1993, suicide, and the suspension -- and later reinstatement -- of three Resolution Trust Corp., or RTC, investigators who initiated the Whitewater probe.

Leach has adopted a similar plan, perhaps even more cautious. "I feel very strongly that this is an issue that should be approached very cautiously and carefully. There will be no rush to judgment, and I will do my best to ensure there is no mean-spiritedness," he said. "If there is disclosure and accountability, my instinct would be largely to embrace it and not to have a water-torture approach.

"I've felt from the very beginning that the main issue involved in Whitewater is full disclosure and public accountability," he said. "Once that's established, it's an issue that can be put behind."

Leach, uncertain when Whitewater hearings will begin in the House, has vigorously sought records for several months outlining the financial dealings of Madison and Whitewater Development. He said he expects to make similar requests for documents soon after taking over the committee on Jan. 4.

Madison failed in 1989 at a cost to taxpayers of $50 million. McDougal is suspected of diverting funds from Madison to several prominent Arkansas politicians, including Clinton, and of using Madison funds for the Whitewater project. Most of the accusations are outlined in RTC investigative reports turned over to the Justice Department in nine criminal referrals.

The referrals identified the Clintons as "potential witnesses" and said money may have been diverted illegally from Madison to Whitewater. RTC investigators said they suspected that "numerous checks" were made payable to various Madison-related entities and had been routed through the Whitewater project, "all of which were signed by James or Susan McDougal."