<@BodyText;FW700;AL0> Arkansas Alliances: Inside The Finance Authority April 7, 1994As featured on The 700 Club Newswatch <@BodyText> The Facts In 1985, then Governor Bill Clinton created the Arkansas Development Finance Authority (ADFA). The purpose of ADFA was to provide low-interest loans to the business community, expand industry in Arkansas and create jobs. "ADFA is just like a savings and loan," says Roy Drew, a financial consultant in Little Rock. Between 1985 and 1990, ADFA granted loans totalling more than $719 million. ADFA raised the money for the loans by authorizing the issuance of bonds. With the money raised from the bond offerings, below-market interest rate loans were given to companies. However, Drew points out there is one major difference between ADFA and a saving and loan: ADFA has no over-sight by regulators. "(ADFA) is a totally independently run corporation within the confines of the government of Arkansas of which the governor...has total veto power over anything they do, "says Drew. "If the governor wanted to use it as a cash cow, it would be." <@BodyText> In order to understand ADFA-and business and politics in Arkansas-one must understand what Drew calls the "tight nexus" of political, social, legal, business and financial leaders in Arkansas. <@BodyText> The business portion of the nexus included Tyson Foods, Lasater & Co. bond firm and Worthen Bank (the largest bank in Arkansas). The Rose Law Firm was also part of this nexus. Webster Hubble, the late Vincent Foster, William Kennedy and Hillary Clinton (all present or former key players in the Clinton White House) were top Rose Law Firm attorneys. Hubble helped write legislation that created ADFA. In politics, Bill Clinton was at the center. But According to former Arkansas State Supreme Court Justice Jim Johnson, the man wielding the most power in Little Rock is billionaire Jackson Stephens, chairman of Little Rock-based Stephens Corporation. Stephens Corporation-the largest securities firm out-side of Wall Street-and Lasater & Co. were among the underwriters of ADFA bonds. Stephens Inc. underwrote 78 percent of the ADFA bonds, which earned the company hundreds of thousands of dollars in fees. The Rose Law Firm also benefited, reportedly earning at least $175,000 in legal fees on ADFA work from 1985-1990. An example of how ADFA loans benefited members of Arkansas ' inner circle can be seen in loans made to Pine Bluff Warehouse Company, owned by the William Kennedy Company-the same William Kennedy who was a partner at the Rose Law Firm and currently serves as associate counsel for the White House. Pine Bluff Warehouse applied for ADFA loans of $720,000 in 1988 and $960,000 in 1989. The Rose Law Firm performed the legal work for the loans and reportedly collected more than $20,000 in legal fees. The Stephens Company-which owns significant interest in Pine Bluff Warehouse-underwrote the bonds needed to finance the loans. Worthen Bank served as trustee for the deal. Tyson Foods (more than $10 million in ADFA loans) and International Paper (more than $6 million ADFA loans ) also benefitted from below-market ADFA loans. Both companies made maximum allowable contributions to then Governor Clinton's 1986 and 1990 gubernatorial campaigns. The Stephens family and some of its companies also contributed handsomely to Clinton's gubernatorial campaigns (more than $15,000 in 1986 and $4,000 in 1990). Also, Worthen Bank (in which the Stephens family owns a controlling interest) helped Clinton at a key time during the 1992 Democratic presidential primary season. Following Clinton's defeat in New Hampshire, Worthen Bank loaned the Clinton campaign $2 million to help Clinton continue in the primaries. In the final analysis, ADFA did not accomplish its stated purpose, which was to create jobs. Despite issuing hundreds of millions of dollars of loans, ADFA created just 450 jobs per year from 1985 to 1990. This is compared with the success of ADFA's forerunner-the Arkansas Industrial Development Commission-which created 10,000 jobs per year without the benefit of bonding authority.