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 TIME on politics Congressional Quarterly CNN/AllPolitics CNN/AllPolitics - Storypage, with TIME and Congressional Quarterly

Whitewater introduction

Whitewater has come to encompass many issues and controversies. But it began with a failed real estate venture that Bill and Hillary Rodham Clinton entered into with their friends Jim and Susan McDougal in 1979 -- 42 lots along the scenic White River in northern Arkansas. whitwater

Sales were dismal, and in 1992, the Clintons sold their remaining interest in Whitewater development to McDougal for $1,000. Arkansas business practices have historically been notoriously murky, however, and how the Clintons had managed their unfortunate investment was scrutinized briefly by a New York Times reporter who suggested the Clintons might have taken improper tax deductions, and that their losses might have been heavily subsidized by the McDougals. The Clinton campaign managed to quell the controversy quickly by showing the couple had lost $68,000 on the deal.

Then, on July 20, 1993, White House counsel and longtime Clinton associate Vincent Foster committed suicide in a Washington park. What caused Foster to kill himself, and the manner in which White House officials dealt with Park Service officials who sought access to Foster's office in the days following, thrust the smoldering Whitewater issue back onto the national stage. Republicans suspected Foster was depressed over controversies dogging the Clintons and might even have been murdered. They also suspected Clinton aides had removed incriminating documents from Foster's office in the days immediately following his death.

In an ensuing uproar, both Clintons went on national TV to answer questions about Foster, Whitewater, and the failure of Madison Guaranty, a savings and loan owned by Jim McDougal for which Mrs. Clinton performed legal work as a partner with the Rose Law firm. As pressure continued, the president asked Attorney General Janet Reno to appoint an independent counsel.

Reno chose New York attorney Robert Fiske, whose investigation concluded Foster's death was a suicide, and that Clinton aides had not improperly interfered with an investigation launched by the Resolution Trust Corporation (RTC) into Whitewater and Madison. That investigation, in turn, found no wrongdoing on the Clintons' part. Months of House and Senate investigations during the 103rd and 104th Congress yielded smoke but no real fire.

Yet the ongoing Whitewater investigation, now led by Independent Counsel Ken Starr, continues to cast a shadow over the White House. Starr was appointed in August 1994 to replace Fiske, whose investigation was viewed by some as lackluster. Starr has maintained active investigations in both Washington and Little Rock, Arkansas.

He's kept busy. In December 1994, former Associate Attorney General Webster Hubbell, previously a law partner of Hillary Clinton and golfing buddy of Bill Clinton, pleaded guilty to bilking the Rose Law firm of hundreds of thousands of dollars. In a stunning move, Starr subpoenaed Hillary Clinton in January 1996 to testify before a federal grand jury in Washington, after her Rose Law firm billing records -- under subpoena for two years -- mysteriously appeared in the Clintons' White House residence. In fact, court documents establish that Mrs. Clinton is a major ongoing focus of Starr's probe. trial.1

In May 1996, Starr's team prosecuted and won jury convictions for Jim and Susan McDougal (now divorced) and then-Arkansas Gov. Jim Guy Tucker on charges they defrauded the Small Business Administration. The government's star witness, Arkansas banker and former municipal judge David Hale, made the sensational claim that then-Gov. Clinton had discussed an illegal $300,000 loan with himself and McDougal. Though not a defendant, President Clinton denied the charge in videotaped testimony. trial.2

In another trial, longtime political supporters of Bill Clinton, Arkansas bankers Herby Branscum Jr. and Robert Hill, were charged with using bank deposits to reimburse themselves for contributions to Clinton's 1990 gubernatorial campaign and allegedly hiding $52,000 worth of campaign funds from tax authorities. In a setback for Starr, on Aug. 1, 1996, a jury acquitted Branscum and Hill on four charges and deadlocked on the rest.

Reno has twice enlarged the scope of Starr's mandate. First it was expanded to investigate whether the Clintons or other White House officials broke laws or obstructed justice during inquiries into the firing of seven longtime White House travel office workers (the controversy known as "Travelgate"), and the White House security office's improper collection of 900 FBI background files (AKA "Filegate").

More recently, and most notably, the attorney general in January 1998 authorized Starr to expand his probe to include perjury and obstruction of justice charges stemming from the president's relationship with former White House intern Monica Lewinsky. After nearly five years and nearly $40 million dollars, Starr's Lewinsky investigation yielded the independent counsel office's only known findings of impeachable offenses against Clinton. Starr sent his referral to Congress in September 1998. Three months later the House impeached the president on two articles. Both were rejected by the Senate in February 1999.

The independent counsel's justified his initial request to investigate the Lewinsky matter to Reno by saying it was another example of an alleged pattern of obstruction that Starr said stretched back to the Whitewater case. For instance, Starr believes that Vernon Jordan and other Clinton pals steered some $540,000 in consultant contracts to Hubbell in exchange for his silence about Whitewater. Starr saw the same pattern in Jordan's attempts to help find a job for Lewinsky.

In his congressional referral Starr repeats the Hubbell allegation but does not explore it, or any other aspect of Whitewater. He only he has not decided "what steps to take, if any," in referring any other matters to Congress. The report is also silent on Travelgate and the White House's alleged misuse of FBI files, implying that no impeachable offenses have been uncovered in those matters.

Starr has faced fierce criticism from supporters of the president, who charge that he is an overly-zealous and politically-motivated prosecutors out to get the Clintons. Starr denies the charge, saying his investigation has simply followed the evidence. Starr has given no word on when he expects his work to be wrapped up.


McDougal not guilty on one count; mistrial declared on other two charges

The trials and tribulations of Susan McDougal



Cast of Characters

Arkansas roots

The first trial

The second trial

The RTC investigation


Judge allows juror to remain; deliberations to resume monday

McDougal jurors ask judge about 'innocent reason' (4-8-99)

McDougal trial likely go to jury Thursday (4-7-99)

Prosecution rests in McDougal trial (4-5-99)

McDougal trial: Steele says she was punished for telling the truth (4-2-99)

McDougal attorneys given day off to prep for Steele testimony (4-1-99)

Witness: Jim McDougal wanted his ex to cooperate with Starr (3-31-99)

Steele allowed to testify (3-30-99)

Prosecutors play interview outtakes in McDougal trial (3-29-99)

McDougal says her ex-husband lied about Clinton's Whitewater involvement (3-24-99)

McDougal answers questions about Clinton for the first time (3-23-99)


McDougal jubilant after jury finds her not guilty (11-24-98)

McDougal 'in shock' after early release from prison (10-27-98)

McDougal likely to answer questions about Clinton during contempt trial (5-12-98)

Grand jury indicts McDougal for contempt (5-4-98)

McDougal blasts "hoodlum" Ken Starr (10-3-96)

McDougal charged with civil contempt (9-4-96)

Susan McDougal gets two years in prison (8-20-96)

Whitewater jury convicts defendants (5-28-96)


President Bill Clinton's Whitewater Testimony - First Trial (5-9-96)

Whitewater jury convicts defendants (5-28-96)

President Bill Clinton's Whitewater Testimony - Second Trial (7-18-96)

James McDougal on CNN's Larry King Live (4-21-97)

Starr, Jahn, McDougal Transcript (4-15-97)


The Independent Counsel

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