April 13, 1999
Mopping Up Whitewater
By Micah Morrison, a Journal editorial page writer.
LITTLE ROCK, Ark.--Presented with a check she signed in 1983 with the notation "Payoff Clinton" in her handwriting, Susan McDougal told her latest jury here that the money was for a land purchase in the hamlet of Clinton, Ark. Never mind that among the documents prosecutors introduced were a list of loans noting one "B Clinton" and a sheet of interest calculations ending with the figure "$5081.82"--the exact amount of the putative Clinton, Ark., check.
Yesterday Ms. McDougal's trial ended with the jury unable to agree on criminal contempt charges, and acquitting her of obstruction of justice. The Clinton camp's elation at this outcome was no doubt diminished a few hours later when Judge Susan Webber Wright cited the president himself for civil contempt for "willful failure" to follow her instructions to testify truthfully in the Paula Jones case. Independent Counsel Kenneth Starr still has three more trials on deck and owes a final report, but these mop-up decisions attest that Whitewater is winding down in the legal arena. What remains is a tissue of lies and evasions still frustrating Mr. Starr's search for the truth about whether the Clintons participated in banking fraud schemes and then used the powers of the presidency to abort investigations.
Mr. Clinton is of course still president, though held in contempt in the Jones case and impeached over issues involving Monica Lewinsky. For others involved in Whitewater, the Clintons have been, as Ms. McDougal's former husband, the late James McDougal, once observed, "like tornadoes moving through people's lives." Ms. McDougal served 18 months for civil contempt and four months (before being released on medical grounds) on her 1996 fraud conviction in a $300,000 loan scheme. Then-Arkansas Gov. Jim Guy Tucker and James McDougal were convicted on other fraud charges at the Whitewater trial, a major milestone in Mr. Starr's inquiry. Mr. McDougal died in prison in 1998 while serving time on the charges.
On the other side of the controversy Whitewater figure David Hale, a witness against the president, last month faced a county prosecution a few blocks away for making false statements to state insurance regulators, but escaped with only a 21-day jail sentence. No one in Arkansas had ever been prosecuted on such charges before, and Mr. Hale says the case was ginned up as payback for his cooperation in the Whitewater probe. The charges were first raised in the tense period of the McDougal-Tucker case by a local prosecutor who made no secret of his yearning for higher political office. Mr. Hale was a key witness in the McDougal-Tucker trial. In a plea bargain with Mr. Starr, he served 24 months in federal prison for fraud charges involving his small business investment company, which had loaned the $300,000 to Ms. McDougal.
The latest charges against Ms. McDougal arose because she had refused to answer grand jury questions in Mr. Starr's probe of Bill Clinton. Mr. Starr's original mandate, of course, was to investigate Whitewater, the real estate development company owned by the McDougals in partnership with Bill and Hillary Clinton. Ms. McDougal refused to answer whether Mr. Clinton knew about the $300,000 loan and whether he testified truthfully at her trial. Called as a defense witness at that trial and testifying via videotaped deposition, President Clinton had said he was not aware of the $300,000 scheme and that he had never received a loan from the McDougals' S&L, Madison Guaranty. The president's 1996 trial testimony was contradicted by Mr. Hale, and later by Mr. McDougal, who changed his testimony following his conviction on multiple fraud counts. Their all-important claim: that they had met with then-Gov. Clinton to cook up the $300,000 loan.
At the just-concluded trial, Ms. McDougal finally did offer answers to the questions. She testified that she "never discussed" the $300,000 loan with Mr. Clinton and that to her knowledge he had testified truthfully at her 1996 trial. But Ms. McDougal's credibility, already strained by her felony Whitewater convictions and civil contempt jailing, was further undermined by her preposterous lie about the "Payoff Clinton" check going to pay off a land loan in Clinton, Ark. The only apparent motive for this fairy tale would be to cover up for the Clintons in the face of new evidence that they indeed were beneficiaries of illegal loans.
Prosecutors introduced two key checks at the trial: one, for $27,600, from Madison Guaranty, payable to Bill Clinton; and a second--the "Payoff Clinton" check, for $5081.82--signed by Ms. McDougal and payable to Madison Guaranty. The $27,600 check, the prosecution said, was a loan to Mr. Clinton to retire the balance of an earlier $30,000 loan to Whitewater from Madison Bank, a separate McDougal-controlled entity. The check, however, was not endorsed by Mr. Clinton before its deposit at Madison Bank.
The $5081.82 "Payoff Clinton" check was combined with a nominee loan for $25,000 by Mr. McDougal to a Madison associate. The $25,000 check and the $5081.82 check paid off the principal and interest of the $27,600 Clinton loan. Prosecutors supported the theory of the Clinton loan with other evidence: FBI testimony about a Madison employee who saw Mr. Clinton's name on a printout of outstanding loans; minutes of a Madison Bank board meeting; the list of S&L borrowers noting "B Clinton"; and the sheet of monthly interest calculations with "$27,600" written at the top and "$5,081.82" at the bottom.
Nothing can be proved beyond a reasonable doubt at this point, but the new evidence in the "Payoff Clinton" loan scheme meshes with the general pattern of fraudulent practices detailed in the 1996 trial and the original Resolution Trust Corp. criminal referrals issued in 1992 and 1993, which named the Clintons as possible beneficiaries of illegal practices. Ms. McDougal's current trial also revealed other new details, including confirmation that the Office of Independent Counsel had drawn up a draft indictment of Mrs. Clinton--presumably related to fraud at Madison Guaranty in the Castle Grande land deals.
Later this year, Whitewater and the Washington coverup will get another examination when former Associate Attorney General Webster Hubbell goes on trial on charges related to Mrs. Clinton and Castle Grande. But while new evidence accumulates at every trial, an impeached president holds power in the Oval Office. Finding the truth about the Clintons is rapidly passing out of the domain of the courts and into the hands of history.
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