CNN/TIME AllPolitics Vote '96

Starr Power

Victorious at the polls, the Clintons still await their fate at the hands of Whitewater investigators

(TIME, November 6, 1996) -- Who would ever have believed that Whitewater, the money-losing land deal that has dogged the Clintons since the last campaign, would deliver a political payoff? But the more Bob Dole mentioned it, even when delicately veiling the subject in the broader "character" issue, the more it seemed to make Dole look meanspirited.

Yet Clinton's resounding re-election all but guarantees that Whitewater and its many progeny, from Travelgate to Filegate, will continue to haunt this presidency. The election may have diminished Whitewater as a purely political issue. But the investigation of independent counsel Kenneth Starr marches on, divorced from electoral politics, its recent invisibility a measure not of weakness but of gathering strength.

Consider that Attorney General Janet Reno has formally recommended that Starr's jurisdiction be expanded on at least five separate occasions. Starr's mandate extends from the original Whitewater land deal to the activities of the failed Madison Guaranty Savings and Loan run by the Clintons' partners Jim and Susan McDougal, to other real estate ventures like Castle Grande, which Hillary Clinton allegedly worked on at the Rose law firm. That's just what is known within the independent counsel's office as the "Arkansas phase" of the investigation. In the "Washington phase," focusing on events that have occurred since the Clintons have occupied the White House, there are the death of former deputy White House counsel Vincent Foster, the discharge of the travel-office workers, the disappearance and reappearance of various documents under subpoena, the procurement of hundreds of FBI files, and the truthfulness of testimony about all these matters by everyone from the President and First Lady to friends and advisers like Susan Thomases and Bernard Nussbaum to low-ranking aides. Possible crimes being investigated range from an array of financial frauds in Arkansas to perjury and obstruction of justice in the White House. Starr is already presiding over so many investigations that there may have to be a separate independent counsel if Reno recommends an investigation into Clinton's role in Democratic Party fund raising by John Huang, the go-between with foreign interests who recently resigned from the Democratic National Committee.

Meanwhile, in Arkansas one of the main witnesses to the Whitewater transactions, Jim McDougal, is cooperating with Starr, and his ex-wife Susan remains under intense pressure to do so. While Jim's credibility will be assailed, whatever he has told prosecutors thus far has been deemed sufficiently important for Jim to have been moved into a "safe house," as he puts it, and he has cut off contact with the press and much of the outside world while he is being groomed for future testimony. This is much the same treatment previously accorded David Hale, the Arkansas lender who proved to be the government's star witness last summer at the McDougals' trial.

Susan McDougal is in jail for contempt after refusing to answer Starr's questions before a grand jury. Having been granted immunity for anything other than perjury, Susan can no longer invoke the Fifth Amendment privilege. In various interviews since her conviction, including an appearance on ABC's 20/20, Susan has cited her fear and distrust of Starr and his prosecutors as her reason for silence. That distrust seems genuine, but it is hardly the full explanation.

Apart from her contempt problems, which could lead to 18 months in prison, Susan's immediate future is bleak. Susan was sentenced to two years for her Whitewater felonies--to be served after her contempt sentence--and faces trial in California on charges of embezzling money from her former employers, the conductor Zubin Mehta and his wife. Thus, the prospect of a presidential pardon--a prospect President Clinton pointedly kept alive during the campaign--looks particularly bright, however remote the likelihood of such a step may seem to everyone but Susan. Moreover, she doesn't want to answer questions she knows she will be asked. She has already refused to respond when asked if the President testified truthfully at her trial. Susan's determination to remain silent has already been remarkable, but 18 months in jail is a long time--especially if no pardon materializes now that the election is over.

Asked about the possibility of pardon, a White House spokesman quoted President Clinton saying "no one will receive any special treatment."

The McDougals are only the most visible of the witnesses cooperating with the government or under pressure to do so. There have been other grants of immunity, most of them secret. Little noticed at the McDougals' trial, for example, was the revelation that R.D. Randolph, a paving contractor for McDougal real estate developments and a strong Clinton supporter, was given immunity in return for testimony.

David Hale, of course, has been cooperating for years, and he recently told an editorial writer for the Wall Street Journal that a postelection indictment of Hillary Clinton was a "certainty." But Hale tends to make no distinction between facts known from firsthand experience and those gleaned from hearsay. It's safe to say that Hale cannot know, though he may believe, that Hillary Clinton is going to be indicted. More ominous for the Clintons is Hale's assertion that he personally had conversations with Hillary about the dubious Castle Grande deal, which, if corroborated, is a further contradiction of the First Lady's sworn testimony that she had never heard of the development. (The First Lady subsequently said she knew the Castle Grande property by a different name.)

Given the stream of witnesses still appearing before grand juries in both Washington and Little Rock--some of them making return visits--it seems obvious that Starr's investigation hasn't yet reached the juncture at which a decision to seek an indictment of either the First Lady or the President would be made. Starr's prosecutorial discretion will no doubt be exercised with the utmost gravity, and a decision to seek an indictment would presumably be based on overwhelming evidence. Starr has already lost one case (the trial of Arkansas bankers Herby Branscum and Robert M. Hill), and would hardly want to risk the same result when dealing with the President and First Lady. Thus it's still impossible to predict what Starr and his staff of prosecutors will ultimately decide. (A spokeswoman for Starr declined to comment.)

Still, the Whitewater investigation has long passed the point where it could be dismissed as a press-driven witch hunt or based on partisan fabrication. It may be premature to predict that Whitewater will be "Watergate II," as Ross Perot put it in the waning days of the campaign. But no one should be incredulous if charges against either or both Hillary and Bill Clinton result, and if that happens, a constitutional crisis could be in the offing. It remains an open question whether a sitting President can be indicted by a grand jury, or whether the grand jury is required to deliver its findings to the House of Representatives for possible impeachment proceedings. (President Nixon resigned on the eve of being indicted, making the issue moot.)

Within the relatively small circle of people with some direct knowledge of the Starr investigation, there has been much speculation about what could happen in the next few months, especially on the part of a White House emboldened by re-election. Will the McDougals be pardoned, thereby eliminating pressure to cooperate with Starr or testify against the Clintons? Or, for that matter, will Hillary? After all, George Bush, in the waning days of his presidency, pardoned Caspar Weinberger and five other former Reagan officials, effectively ending the Lawrence Walsh-led investigation of Iran-contra. Or could there be the modern-day equivalent of Watergate's Saturday Night Massacre, in which Clinton would direct the Attorney General to dismiss Starr, allegedly for "good cause"?

But such a bold--and highly unlikely--effort by Clinton to pit his recent popularity against the institution of the independent counsel would surely ignite a public outcry more akin to Watergate than Iran-contra, which was nearing its end in any event. Americans may be confused about Whitewater, and may be giving the Clintons a deserved benefit of the doubt pending the results of Starr's investigation. But any interference with the administration of justice would surely be perceived as a direct challenge to the rule of law. That is what ultimately brought down Richard Nixon--not the "second-rate burglary" that did little to arouse voters in the 1972 election.

Nor would such a strategy necessarily prove effective in ending the Whitewater investigation. Removing Starr would simply lead to the appointment of a replacement. Despite complaints from the White House about Starr's conservative Republican credentials, his continued work for his law firm and for cigarette interests hostile to the Administration, Starr has scrupulously stayed within the bounds of the independent-counsel statute and adhered to the Justice Department manual for U.S. Attorneys. There's no reason to believe the investigation would have been any less thorough or aggressive had the initial Whitewater counsel, moderate Republican Robert Fiske, not been replaced.

As Starr's investigation continues, it seems worth remembering that it was Clinton who called for the appointment of an independent counsel in January 1994, in the midst of a furor over the removal of files from Vince Foster's office. The President's thinking was that by removing Whitewater from the political arena and putting it into the hands of an independent counsel, he would buy time for his legislative agenda and eliminate the burgeoning scandal as an issue in the midterm congressional elections and, if necessary, in his own re-election campaign.

The strategy has paid off. The investigation defused public criticism, crippled congressional hearings by making crucial witnesses unavailable and hobbled the press by silencing potential sources. Starr took no significant steps during the fall campaign, thus ensuring that his investigation remained untainted by what might have appeared to be partisan politics. No wonder Whitewater never took on any significance as a campaign issue.

But having reaped the benefits of the compromise he struck in calling for an independent counsel, President Clinton must now bear the risks. Had the Clintons been able to leave Whitewater in the political arena, it would at least be over with this election. As it is, the second Clinton term begins with an ominous shadow hanging over it. Unburdened by electoral politics, Starr is free to conclude his investigation. Perhaps the Clintons will be exonerated. Surely no one but their most partisan opponents hopes for charges, or for any ensuing ordeal that would distract Congress and the White House from the business of governance. But history suggests that if a re-elected President gets into deep legal trouble, his mandate at the polls will not shield him from justice.

Stewart is the author of Blood Sport, the best seller about the Clintons' financial dealings.

It's Not Just Whitewater

Though Kenneth Starr's initial focus was Whitewater, his investigation has expanded to include Hillary Clinton's role in the firing of travel-office workers and questions about the hiring of Craig Livingstone, the former White House security chief who improperly obtained FBI files. Independent counsels have also been investigating several Administration officials, and another may be appointed soon:

Mike Espy An investigation is under way of Agriculture Secretary Espy, who resigned almost two years ago amid allegations he accepted improper gifts. The probe has so far produced a conviction against a California agribusiness for giving Espy nearly $6,000 in gifts, but no indictment of Espy.

Henry Cisneros An investigation of HUD Secretary Cisneros is focusing on misstatements he made about payments to a former mistress during his Cabinet background check, and whether they had a "material" effect on his being named to the Cabinet.

Ron Brown An independent counsel probe was begun to look into the Commerce Secretary's business affairs, including a deal in which he allegedly made $400,000 while investing no money. The probe has been dropped since Brown's death.

John Huang Fund raiser Huang is at the center of a growing controversy over foreign contributions to the Democrats. The Justice Department is considering naming an independent counsel to probe possible campaign-finance-law violations.

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