When will the Clintons stop taking on water from the nonstop scandal?
by Matthew Cooper, Gloria Borger, David Bowermaster, Greg Ferguson
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It was a rare moment at the White House last week when hundreds of aides assembled for a closed-to-the-press meeting in the East Room. Its purpose was to buoy spirits as the Whitewater controversy grew and 10 administration officials were subpoenaed to testify before a criminal grand jury. Chief of Staff Mack McLarty encouraged the crowd to be proud of its accomplishments. Hillary Rodham Clinton reminded the group of its important work by telling the story of an Arkansas woman who had endured a double mastectomy and had no health insurance to pay for it. (Some Clinton aides thought this line, reminiscent of Mrs. Clinton's health reform speeches, was a bit heavy-handed.) The president himself best expressed the dazed and confused mood of his staff. He quoted a bit of children's verse that he read to his daughter, Chelsea, when she was younger:
I was standing there, happy as can be. When along came someone Who tied a horse to me. The Whitewater affair is no horse, but it remains an albatross around the neck of the administration. Clintonites continue to insist there is little to fear. Insiders tell U.S. News that the Clintons' private attorney, David Kendall, has assured the first couple that as far as he can tell they have not seriously violated the law. All the Washington lawyer has found, they say, is tax errors and improper deductions related to their investment in Whitewater Development Corp., the infamous real-estate firm in which the Clintons say they lost money. Kendall reportedly argues that the problems can easily be fixed by paying back taxes and penalties. Says one source: "[Kendall] has said that at the end of the day, it's going to be an awful lot about nothing."
Perhaps. But even relatively small violations of tax law can wreck careers in Washington. Consider the failed nomination of Zoe Baird to be attorney general. More ominously for the Clintons, the Whitewater story seems like it will continue to fester, if not grow, despite the best efforts of the White House to get it off the front page.
Last week, Clinton tapped Lloyd Cutler, a distinguished Washington attorney, to replace the hapless Bernard Nussbaum as White House counsel. But Cutler has agreed to serve only four to six months --long enough for him to help the Clintons comply with more subpoenas but not long enough to see the end of the estimated investigation by special counsel Robert Fiske Jr., who has been charged with examining the Whitewater affair; Fiske's efforts are expected to last from one to two years. The president also held an extraordinarily lengthy news conference -- an effort, said aides, "to let the story bleed" out in one embarrassing session rather than have it drag on and on. But that did not quell the controversy, and more TV appearances for the Clintons were being contemplated.
More hits. The problem is that the Whitewater story has "legs," as journalists like to say. There are three main segments of the complex scandal, and there are likely developments soon in each of them. The first involves the Clintons' tangled investment in the Whitewater company with James McDougal. Attorney Kendall reportedly thinks the real problem centers here. The second revolves around what kind of influence -- if any -- the White House had on the probe of the Resolution Trust Corp. (RTC) into McDougal's affairs. Fiske's Washington grand jury was looking into that last week. The third is what some Republicans now allege in whispers might become a cover-up. It involves the destruction of documents and questions surrounding the death last summer of Vincent Foster, the deputy White House counsel and Clinton friend who helped handle some of the first couple's financial affairs. Senate GOP Leader Bob Dole said last week that the Foster death could be the most explosive aspect of the story. Though rumors have swirled about the circumstances of Foster's death, ABC News aired photos from the death scene that made a compelling case that Foster had killed himself.
One thing that might drive the story in coming days is congressional hearings, which could begin as soon as next week if the House Banking Committee uses a hearing on the RTC to examine Whitewater. But the issue of hearings is touchy. Fiske does not want them to jeopardize his probe, and he has asked GOP lawmakers to hold back. Republican Rep. Jim Leach, a leading critic of the Clintons on Whitewater, wants to press ahead. Leach aides are probing McDougal's loans and real-estate deals to see if they might have ended up aiding the Clintons' investment in Whitewater.
The Iowa moderate has some 40 witnesses he wants to question. And what might turn up? "I have complete confidence that major character flaws will be revealed and that misdeeds have occurred," Leach says. He told U.S. News, though, that he has no intention of calling the first lady to testify. Democrat Henry Gonzalez, the panel chairman, could cancel the whole enterprise, however. He said in a letter to Leach: "There is nothing more absurd -- even repugnant -- than the spectacle of you bunch of Republicans ... in fits and paroxysms of morality."
In the Senate, interest is focused on what happened in Washington, not back in the Ozarks. Republicans led by Sen. Alfonse D'Amato seem willing to delay hearings until Fiske has finished deposing administration officials -- a process that could last until summer.
Overlying all of this, of course, is the usual cloud of Washington hypocrisy. The White House actively fought the appointment of a special counsel in the Whitewater case; now, it is using the Fiske investigation to try to avoid the public scrutiny of congressional hearings. On Capitol Hill, Republicans who spent the 1980s chastising congressional Democrats for meddling in the affairs of Ronald Reagan's executive branch now insist on congressional oversight.
Still, the drip, drip, drip of Whitewater events is hurting Clinton. The most damaging headlines last week focused on the 10 administration officials who marched into court past a throng of reporters to testify before Fiske's grand jury about meetings they held before the RTC sent a criminal referral of its findings against McDougal to the Justice Department. (These ended up naming the Clintons as possible beneficiaries of questionable activities by McDougal but did not say they were culpable.) Clinton officials conceded the meetings should not have taken place but vowed no influence was exerted over the RTC probe.
It turns out that several more administration officials had contacts with RTC authorities before the referral was made on Oct. 8, 1993, and many in the upper echelons of the administration --including the president -- knew about the referral before the first press leaks about it were published by the Washington Post on October 31. Republican Leach charged in a letter last week that officials in the Kansas City branch of the RTC, which investigated McDougal, "are being gagged and possibly coerced" by their Washington bosses. Even worse for the Clinton White House, more high-publicity subpoenas are expected to come soon.
The word "shredding" is also driving the Whitewater story. Two couriers for the Rose Law Firm in Little Rock claim that they shredded a box of documents marked with Vincent Foster's initials. Jeremy Hedges, a 20-year-old college student who took part in the shredding, told U.S. News he is sure the files were Foster's because they were marked VWF, and "nobody else at the firm has those initials." Hedges says that he did not see any references to Whitewater, McDougal or his thrift, Madison Guaranty Savings & Loan. Ron Clark, a spokesperson for the firm, claims the papers were routine internal memorandums.
The timing of the incident is as crucial as the contents of the documents; if they contained information related to the scandal and the shredding took place after Fiske'
