Whitewater committee shuts down, for now

Report backs first lady

March 1, 1996
Web posted at: 10:15 a.m. EST

WASHINGTON (CNN) -- The Senate Whitewater Committee halted its work, at least temporarily, on Friday as funding expired for the probe into the failed Arkansas land development deal.

Senate leaders will try to negotiate a compromise to allow the panel to continue its inquiry into matters related to the deal including allegations involving President Clinton and Hillary Rodham Clinton.

Republicans are requesting that the Whitewater Committee receive another $600,000 and that its hearings be allowed to continue indefinitely.

Democrats, who have offered only a five-week extension, claim the Republicans want to use the inquiry to embarrass the Clintons in an election year.

Republicans counter that Democrats are afraid of what the committee might find.


"Let me ask the question: What are you hiding? What are you afraid of? Why don't you want the facts to come out?" asked Sen. Alfonse D'Amato, R-New York, chairman of the Whitewater committee. (77K AIFF sound or 77K WAV sound)

In a separate matter, a Whitewater report released Thursday said there are insufficient grounds for a lawsuit against Mrs. Clinton's former law firm over its work for the savings and loan institution at the heart of the Whitewater land deal.

Democrats seized on the report, by the Pillsbury, Madison and Sutro law firm to the Federal Deposit Insurance Corp., as an exoneration of the Clintons.


"On and on it deals with every one of the major allegations and disposes of them in a way that supports what the president and first lady have said all along," said Deputy White House Counsel Mark Fabiani. (77K AIFF sound or 77K WAV sound)

But Republicans said that the report exonerated no one.

"They were unable to reach a conclusion based on all the facts," D'Amato said.

The report examined the relationship between Mrs. Clinton's old employer, the Rose Law Firm, and its client, Madison Guaranty Savings and Loan.

Rose law firm

A special prosecutor has been trying to determine whether deposits from two bankrupt Arkansas lending institutions were improperly channeled to the failed Whitewater real estate development, in which the Clintons were partners, and to Clinton's political campaigns.

The report concludes that Mrs. Clinton's legal work for the Castle Grande project and a purchase agreement she drafted on behalf of Madison were not improper. "The circumstances of the work point strongly toward innocent explanations," the report said.

"There was no substantial evidence that the Rose Law Firm aided and abetted whatever wrongdoing (James) McDougal might have engaged in," the report concluded.

McDougal, former head of Madison Guaranty Savings and Loan and the Clintons' partner in the Whitewater land deal, his former wife, Susan McDougal, and Arkansas Gov. Jim Guy Tucker are charged with conspiracy and fraud. Their trial is to begin Monday in Little Rock, Arkansas.

Bankers linked to Clinton plead not guilty

Two Arkansas bankers Thursday pleaded not guilty to charges of bank fraud and conspiracy in connection with their handling of bank funds that went into then-Gov. Bill Clinton's 1990 re-election campaign.

Herby Branscum Jr. and Robert Hill appeared before a federal magistrate in a federal courtroom in Little Rock. The trial was set to begin April 1.

Branscum told reporters as he left the courtroom that he was confident he would be exonerated. "We're anxious to get this matter before a jury of Arkansas citizens," Branscum said. "And we feel very confident that when we bring out the truth we'll be acquitted, exonerated and vindicated."

Independent Counsel Kenneth Starr's Whitewater investigation led to 11-count indictments of Branscum and Hill by a federal grand jury in Little Rock last week.

The indictments say the two men, who own the Perry County Bank in Perryville, Arkansas, attempted to hide withdrawals which were made to the Clinton campaign. The indictments allege that they used phony vouchers to obtain funds which were used as political contributions. They also charge the two men with conspiring to hide the withdrawals from the Internal Revenue Service.

Starr denies conflict of interest

Starr responded curtly Thursday to published reports alleging a conflict of interest on his part in the investigation.

Starr essentially repeated what he said in a written statement earlier, that his ethics adviser, former Watergate Counsel Sam Dash, had advised him it was not a conflict to conduct the Whitewater inquiry while some of the same federal banking officials he was investigating were suing his law firm.

The Resolution Trust Corp. sued Starr's firm for alleged misdeeds in its representation of a failed Colorado Savings and Loan.

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