Untangling Whitewater

The Clintons (AP)

By Dan Froomkin
Washingtonpost.com Staff
Editor's Note: This special report is an archive of coverage and related background information on the Whitewater investigations. Some information has been updated, but most material here is intended for reference. The latest news on the aftermath of the investigations of President Clinton and his associates, including links to archived coverage of Clinton's impeachment and Senate trial, can be found in the Clinton Accused special report. Before Monica Lewinsky, there was Whitewater. The impeachment report that Kenneth Starr delivered to the House in September 1998 was the product of only one of many lines of inquiry the independent counsel has pursued in more than four years of probing the president. Originally appointed to investigate a failed Arkansas real estate deal involving the Clintons almost 20 years ago, Starr's scope expanded over time to include a bewildering range of accusations of fraud, obstruction of justice and abuse of power allegedly involving President Clinton and the first lady, as well as some of their closest friends and advisers. Our Clinton Accused archive contains background and breaking news about what happened once Starr began investigating allegations related to Monica Lewinsky in January 1998. This special report explores the vast web of allegations known as Whitewater. It includes key stories from The Post from 1998 and earlier, a time line of events and revelations, key legal documents and Web links and resources. These topics are covered in the following introduction:

The Beginnings

Key Elements

Major Questions

Where It Stands

The Beginnings It all started with a little real estate deal 20 years ago. In 1978, then-Arkansas Attorney General Bill Clinton and his wife, Hillary, joined a partnership with James and Susan McDougal to buy 220 acres of riverfront land and form the Whitewater Development Corp. The goal was to sell lots for vacation homes. But the partnership did poorly and finally dissolved in 1992, leaving the Clintons reporting a net loss of more than $40,000. James McDougal also owned a savings and loan association, for which Hillary Clinton did legal work. Due in part to a series of fraudulent loans, McDougal's Madison Savings and Loan was one of many thrifts that went bust at taxpayer expense in the 1980s. Some Clinton associates clearly broke the law during the Arkansas years. The McDougals, most notably, were both found guilty of fraud. Over time, the investigation known as "Whitewater" grew well beyond allegations related to the Clintons' financial and legal dealings in Arkansas. It also encompasses the Clintons' responses to the allegations – and such unrelated events as the firing of White House travel office clerks.

Susan McDougal (AP)

Key Elements Some of the key kinks in the Whitewater tangle:

• A fraudulent $300,000 federally backed loan to Susan McDougal, some of which went into Whitewater Development Corp. David Hale, a former Little Rock judge whose company issued the loan, told investigators that Bill Clinton pressured him to do so.
• The mysterious disappearance and rediscovery of billing records showing the extent of Hillary Clinton's legal work for McDougal's savings and loan. Missing and under subpoena for two years, they turned up in January 1996 in the Clintons' private quarters at the White House.
• The firing of seven members of the White House travel office in 1993, possibly to make room for Clinton friends – followed by an FBI investigation of the office, allegedly opened under pressure from the White House to justify the firings. Sometimes called "Travelgate."
• The 1993 suicide of White House counsel Vincent Foster, hard on the heels of the travel-office imbroglio and his filing of delinquent Whitewater Corp. tax returns.
• The collection of hundreds of confidential FBI files on prominent Republicans by a minor White House operative in 1993 and 1994. Sometimes called "Filegate."
• The more than $700,000 paid to former associate attorney general Webster L. Hubbell, most of it from friends of President Clinton and Democratic Party supporters, just as the former law partner of Hillary Clinton was coming under intense scrutiny by Whitewater investigators.

Until the Lewinsky matter, the Clintons came through allegation after allegation with their credibility shaken but not destroyed. The original Whitewater special prosecutor was Robert B. Fiske Jr., a moderate Republican selected in January 1994 by Attorney General Janet Reno, who had the authority to make the appointment because the independent counsel law had expired. In August 1994, with the law renewed and Fiske under fire from conservatives for being insufficiently aggressive in pursuit of the president, the three-judge panel in charge of appointing independent counsels abruptly replaced him with a conservative activist named Kenneth W. Starr. Starr had been a top aide in the Reagan Justice Department, a federal appeals court judge and then solicitor general under President George Bush.

Kenneth Starr (AP)

Major Questions Starr's Little Rock grand jury, which was investigating the Arkansas aspects of Whitewater, disbanded in early May 1998, and activity moved to Washington. Among the major non-Lewinsky questions investigated by Starr and his allies:

• Did the White House arrange payments to Hubbell in an effort to buy his silence about things he might have learned while he and Hillary Clinton were partners at the Rose Law Firm?
• Did the White House pressure the McDougals not to talk during their fraud trial?
• Did Hillary Clinton obstruct the investigation by lying or hiding her records?
• Did Bill Clinton lie in sworn testimony in 1996 when he denied any knowledge of the fraudulent $300,000 loan to Susan McDougal?

One question Starr answered to most people's satisfaction:

• Was the 1993 shooting death of Vincent Foster, the White House counsel and former law partner of Hillary Clinton, actually a murder? (Three investigations, including an exhaustive one by Starr, have ruled it a suicide. See Starr's Foster Report.)

Where It Stands In the first Whitewater trial, which ended in May 1996, the McDougals and Arkansas Gov. Jim Guy Tucker (D) were convicted of most of the fraud and conspiracy charges brought against them by Starr. The charges were related to the complex loan-swapping schemes that eventually helped destroy McDougal's savings and loan. President Clinton testified on videotape about one of the loans but was not accused of wrongdoing. James McDougal received a reduced sentence of three years for cooperating with Whitewater investigators after his trial. He died in March of a heart attack, only a few months before he hoped to be released from prison. Susan McDougal, convicted of much lesser charges, was sentenced to two years. She started serving that sentence in May 1998, after 18 months in jail on a contempt of court citation for refusing to testify before Starr's Little Rock grand jury. She was then indicted again – this time for criminal contempt and obstructing Starr's investigation. In April 1999, after a five week trial, an Arkansas jury acquitted McDougal of obstructing justice in the Whitewater investigation and deadlocked on the two other charges, resulting in a mistrial. That May, Starr announced that he would not seek a retrial of McDougal. Tucker, who succeeded Clinton as governor, was convicted of conspiracy and mail fraud, and was sentenced to 18 months of home detention because of poor health. He resigned after the verdicts. At the second Whitewater trial, which ended in August 1996, a federal jury cleared two Arkansas bankers of four felony charges involving their bank and donations to Clinton's 1990 statewide campaign. The jury deadlocked on seven other counts. The marathon, 13-month-long Senate Whitewater hearings, which ended in June 1996, accomplished little. Republicans, in their report, accused the Clinton White House of stonewalling and obfuscating but uncovered no clear evidence of illegal conduct; Democrats claimed the Clintons had been unfairly victimized. In February 1997, Starr suddenly announced that he would resign as special prosecutor to take a job as a law school dean. He unresigned days later, but his original announcement was interpreted as a sign that his investigation was not going well. The Whitewater case made it to the Supreme Court several times, twice on procedural issues related to attorney-client privilege. In June 1997, the court sided with Starr and ordered the White House to turn over notes taken by White House lawyers in discussions with Hillary Clinton. But a year later, the court rebuffed Starr's effort to obtain notes made by the lawyer for Vincent W. Foster Jr. shortly before the deputy White House counsel committed suicide. In January 1998, Starr suddenly requested and received permission to expand his investigation again. The new area of inquiry: whether Clinton and his close friend Vernon E. Jordan Jr. encouraged Monica Lewinsky to lie under oath about whether she had an affair with the president. A three-judge appeals court panel authorized Starr to examine allegations of suborning perjury, false statements and obstruction of justice, in part because Starr was already investigating Jordan's arrangement of a $60,000 retainer for Hubbell. The resulting investigation turned into another marathon expedition. And while some of Starr's tactics have come under fire, his case against the president eventually led to Clinton's impeachment.

  The Hubbell matter continued throughout Clinton's impeachment and Senate trial, with various charges against the former associate attorney general thrown out and reinstated by different courts. On June 30, 1999, Starr accepted a plea bargain with Hubbell that allowed him to proclaim -- as he had all along -- that he knows of no wrongdoing by either of the Clintons. Hubbell pleaded guilty to a felony charge that he misled federal regulators involving legal work he did for McDougal's Madison Savings and Loan. At the same time, he pleaded guilty to a misdemeanor charge to end a tax evasion case. Hubbell was sentenced to a year's probation. Almost a year later, the Supreme Court threw out Hubbell's tax evasion conviction, ruling that Starr improperly built the case on records and documents he obtained from Hubbell under a grant of immunity. As a result of the court's 8-1 decision, the tax conviction was erased from Hubbell's record.

  In October 1999, Starr officially relinquished control of his five-year investigation of Clinton, passing the baton to a top assistant, Robert W. Ray. Dan Froomkin can be reached at froomkin@washingtonpost.com © Copyright 2000 The Washington Post Company