Bill Clinton keeps insisting that no crimes were committed and no wrongs done, but the clouds of the so-called Whitewater affair continue to gather around his administration. Last week's disclosures that White House Counsel Bernard Nussbaum had been briefed privately on the Whitewater investigation heightened the controversy -- and may have been the episode that sealed Nussbaum's fate.
The White House was roiled further at week's end by a surprise subpoena for Whitewater-related documents. At issue is whether the president and Hillary Rodham Clinton profited improperly from the land investment or failed to declare and pay sufficient taxes. Amid a firestorm of criticism, Clinton himself called the Nussbaum meetings a mistake. But that's just the beginning. A grand jury's investigation of documents shredded by Hillary Clinton's former partners at the Rose Law Firm in Little Rock has fueled talk of a cover-up. Although the late Vincent Foster's initials appeared on the documents, Rose partners deny that any of Foster's papers were destroyed.
Foster committed suicide last year, but his legal work may yet prove relevant to the inquiry. U.S. News has learned that Foster workedfor James McDougal's Madison Bank & Trust as early as 1981. Madison lent Hillary Clinton $30,000 to build a model home at Whitewater. That lot was later sold. Whitewater transactions are at the heart of the current investigation by special prosecutor Robert Fiske Jr.
No deal. Past investigators have been less vigorous than Fiske. After his Little Rock offices were raided last June, David Hale, a former judge now accused of fraud, offered to wear a hidden microphone. Hale told U.S. Attorney Paula Casey that Bill Clinton and Jim Guy Tucker, Clinton's successor as governor, were involved in the fraud, which entailed $900,000 in federal loans. By aiding the investigation of fraud and other business related to Whitewater, Hale hoped to cut a deal.
Standard prosecutorial practice in such cases is to secure cooperation of minor defendants and go after bigger fish. Casey refused Hale's offer of cooperation, however. A longtime supporter and an appointee of Bill Clinton, she finally recused herself from the Whitewater inquiry in November -- after Hale had been indicted and his opportunity to assist with an investigation had diminished. Casey did not return phone calls to discuss the Hale case.
Hale could still hurt the president. At a pretrial hearing last week, witnesses testified that he boasted of Clinton's involvement in his loan schemes. And sure to come up in Hale's trial later this month is a $300,000 loan made to a McDougal shell corporation called Master Marketing. Hale says Clinton pressured him into making the loan; the president denies it.
QUESTIONS FOR THREE ARKANSAS FIGURES CASEY. Why did the U.S. Attorney in Little Rock reject David Hale's plea bargain offer to act as an undercover informant against Arkansas's political elite?
HALE. Did the former municipal judge funnel to political friends $900,000 in government loans that were supposed to go to disadvantaged entrepreneurs?
TUCKER. Did the current governor of Arkansas profit improperly from loans that were made by Hale and subsequently falsify financial statements?
