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Whitewater, March 1994 [Folder 5]
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NATIONAL AFFAIRS
Clinton's
BILL CLINTON: Looking to combat his
Whitewater blues, the president made a flurry of
spirited public appearances last week.
NGRY AND DRAINED BY
their campaign to force hearings on the Dem-
gation for misuse of House funds. won a
Whitewater. Bill Clinton
ocratic majority. Associate Attorney Gen-
hard-fought primary last Tuesday with
A
looked hard last week for an
eral Webster Hubbell, Clinton's best friend
Clinton's help and tried to return the favor
emotional elixir. He found
in Washington, resigned in a trail of ethics
by rallying support on Capitol Hill. "This
it in the Hogs. By making
questions. Although Hubbell's problems
president is popular." he told a meeting of
the NCAA basketball tourna-
are largely unconnected to Whitewater. his
Democratic leaders. repeatedly punching
ment, the University of Arkan-
loss only added to the general sense of
the air for emphasis. "He will stand by
sas Razorbacks enabled Clinton to fulfill
anguish and disarray. White House aides.
you if you stand by him." But earlier
every American boy's fantasy: not winning
yearning for some relief. actually
in the week he acknowledged
the presidency. but appearing on the cover
cheered Tonya Harding's plea
that congressional hearings on
of Sports Illustrated. He carried the maga-
bargain. "Anything that knocks
Stunned by
Whitewater were "inevitable."
zine around like a trophy, proud of the
Whitewater off the front pages
Although
Rostenkowski
picture that shows him gripping a basket-
is considered good news around
more bad
backtracked later. he was only
ball in one hand. "Can you believe I made
here." one aide said.
acknowledging political reality.
the cover?" he said to a friend staying in
Just as frustrating was the
news, the
The Senate voted to begin the
the White House. "I palmed the ball my-
conspicuous silence from most
groundwork. with dates left un-
self-that's not a trick photo!"
congressional Democrats. The
president
certain. Rep. Jim Leach. ranking
Clinton was grateful for diversion wher-
president's most vocal support-
minority member of the House
ever he could find it. The bad news contin-
er was Rep. Dan Rostenkow-
tries to
Banking Committee. will try to
ued last week. Senior aide George Stephan-
ski-embodiment of the club-
use Thursday's session on the
opoulos became the 11th top official to be
by. old-stvle politics Clinton
change the
SE-L bailout as a Whitewater
subpoenaed to answer questions related to
came to Washington vowing to
forum. He wants to discuss
Whitewater Congressional Republicans.
reform. The gruff Chicagoan.
subject
charges of political interference
energized by Whitewater. made progress in
himself under federal investi-
in a federal probe of Madison
18
MARCH
leak House
HILLARY CLINTON: The First Lady found
her own medicine in a trip to Denver to sell the
White House health- care plan.
Guaranty (page 20). the thrift once owned
without a bridge to the Oval Office. The
did you know it?'." Clinton recently told
by James McDougal. the Clintons' partner
resignation was handled through interme-
aides. "I say, 'Who are these people and
in the Whitewater home development.
diaries. and the Clintons made no effort to
what planet am I on?""
The New York Times opened another
talk Hubbell out of quitting. an indication of
Aides caucused for hours to debate
front last week by reporting that Mrs. Clin-
how serious his problems appear to be.
precisely how Clinton should respond pub-
ton made $100.000 in cattle futures in the
Former partners at the Rose Law Firm in
licly. Vice President Al Gore advised ad-
late 1970s. based on advice from a top attor-
Little Rock accuse him of overcharging the
ministration surrogates to project calm
ney for Tyson Foods. The report implied
firm for personal expenses and setting up a
reassurance. Clinton's political advisers
that Tyson. the largest employer in Arkan-
cozy billing arrangement for his father-in-
urged combativeness. The consensus strate-
sas, got state loans as a result. But the
law's parking-meter company. Hubbell has
gy could be called Operation Change the
White House brushed off the story.
denied any wrongdoing.
Subject: move the Clintons out of their
On a purely personal level, Hubbell's de-
'Utterly surreal': The latest events only
White House bunker and demonstrate that
parture was Clinton's worst news. Organi-
deepened the Clintons' resentment of their
they continue to care about "real" issues.
zational charts listed him as number three
treatment at the hands of political enemies
Hillary went to Denver. to kick off a series
at the Department of Justice. but he was
and the press. "Totally demoralized" is
of health-care forums. GIVE 'EM HEALTH.
also Bill Clinton's closest friend. It was
how one Arkansas friend described the
HILLARY banners began showing up to
Hubbell to whom the president turned for a
couple. The president erupted in an in-
drive the point. Bill did a town meeting in
round of golf. a college football game on TV
terview with Knight-Ridder newspaper re-
New Hampshire. the site of his political
or. in the old days. a quick drive from Little
porters last week. delivering an eye-bulg-
resurrection during the 1992 primary sea-
Rock to Memphis for a slab of ribs. "It
ing. finger-wagging tirade on the news
son. "Bless you." he said to a woman who
absolutely ripped his gut out for Webb to
media's "frenzy." When not enraged. he's
declared that Whitewater was for canoe-
leave." savs an adviser. Hubbell's abrupt
stunned by how "utterly surreal" his life
ing At a Boston fund-raiser he pounded
departure leaves the Justice Department in
has become. as one aide put it. "These
the lectern and shouted "no" nine times to
disarrav and Attorney General lanet Reno
people say. What did you know and when
purctuate his charge that Whitewater is
19
NATIONAL AFFAIRS
just another Republican ob-
paid their taxes over the years,
WHITEWATER METER
struction to the domestic agen-
and that it does not reflect
da. Asked the next day about
wrongdoing. Aides passed word
his outburst, Clinton replied
BACK TAXES: There's nothing trivial about the
that the Clintons' personal legal
with bizarre disingenuousness.
First Family owing back taxes. in 1992, the Clin-
team. headed by lawyer David
"I was not angry. I was happy."
tons paid back $4,000 for deductions Improp-
Kendall. will show the Clintons
Over the weekend, the Clin-
enty written off their personal taxes that
TRIVIAL
CRIMINAL
lost significantly less on White-
should have been written off the taxes of the
tons planned to try some humor
water than the $69,000 they had
at the annual Gridiron show, a
Whitewater Corp. But It's still unclear how much more the Clintons
claimed and that they owe back
dinner sponsored by Washing-
owe, and no evidence has surfaced yet of any Intent to underpay. To
taxes and penalties. But the
ton reporters. In a video pro-
prove tax evasion, the government requires clear evidence of Intent.
White House subsequently is-
duced with the help of a "Satur-
sued a statement that seemed to
HILLARY'S BANK WORK: She shouldn't have rep-
day Night Live" writer, the
back away from the possibility
resented Madison before a state regulator ap-
First Couple will appear as
of underpayment.
"Harry and Louise," stars of the
pointed by her husband. Still, It's not that sim-
The Clintons have clearly
commercials financed by insur-
ple. A Junior Rose lawyer's brief asserting
TRIVIAL
CRIMINAL
extended the life of the White-
Madison's right to Issue preferred stock was
ance interests opposed to the
water scandal through exces-
Clinton health plan.
copied to Hillary as supervising attorney. The regulator sent back a
sive secrecy and political mis-
Clintonites say Rostenkow-
"Dear Hillary" advisory, but the plan was never formally sought.
judgment. One mistake may
ski's victory showed that when
Although she did nothing illegal, she should have kept more distance.
have been underestimating re-
Clinton focuses on issues like
sidual public doubts about
health care and jobs. he is still
the president's "character"-a
an asset to Democrats. "It tells members
GOP debates Whitewater. "An ominous at-
product of campaign episodes like Gennifer
that [Whitewater] is not a political alba-
mosphere of health-care conciliation has
Flowers and revelations about his draft
tross." says Clinton adviser Paul Begala.
descended on the Capitol." Kristol wrote.
history. The longer Whitewater lingers, the
Ironically, one key GOP strategist argues
Still, the administration's efforts to get
more voters will be reminded that this is
that it is the Republicans who have become
past the story inevitably end up creating
not the first time the Clintons tried to
distracted by Whitewater. William Kristol
more muddle. In a series of selective leaks,
evade the truth. And the longer it will be
of the Project for the Republican Future
the White House had been preparing the
before they can get back to governing.
warned in a memo this week that Clinton's
press and the public for the idea that
ELEANOR CLIFT and Bos COHN
health-care bill could slip through while the
the Clintons may have inadvertently under-
in Washington
New Questions About Political Tampering
is investigating and some
Clinton supporters have a
vague sense of dread, Bill
N THE FIRST YEAR OF THE
reputation for bureaucratic
Office of Thrift Supervision
and Hillary Clinton are hiding
Clinton administration, two
fumbling and badly drafted re-
(OTS), also pushed unsuccess-
something says an adminis-
federal agencies looked into
ferrals; that may explain the
fully last year for an investiga-
tration official who has been
the Whitewater affair. Both
decision not to follow up. But
tion of Madison. McCormally
subpoenaed don't
investigations got nowhere.
last September, RTC investi-
"was told an investigation of
know what bad it
Last week new information
gators drafted another, broad-
Madison was just politically
is. All that seems clear now is
surfaced suggesting that some
er referral, again naming the
too hot to handle, and was told
that the initial investigations
of the obstacles investigators
Clintons. By then, political ap-
not to press for one," a knowl-
were either botched-or
encountered were political.
pointees at the Treasury De-
edgeable source close to the
squelched.
In late 1992, the Resolution
partment tightly controlled
OTS told NEWSWEEK. Now
MARK HOSENBALL
Trust Corporation (RTC) sent
the leaderless RTC. Accord-
special counsel Robert Fiske
RICH THOMAS in Washington
the Justice Department a 21-
ing to agency sources, Roger
page "criminal referral" on the
Altman, the second in com-
collapse of Madison Guaranty
mand at Treasury, sent word
Savings and Loan, the Arkan-
that he wanted to be informed
sas thrift run by James
about politically sensitive
McDougal, the Clintons' part-
cases. Altman denied that last
ner in Whitewater. The docu-
week. But Treasury sources
ment recommended an inves-
conceded that at least five oth-
tigation by Justice. It named
er top departmental officials
Bill and Hillary Clinton
rode herd on the RTC. Anoth-
as possible beneficiaries of
er, general counsel Jean Han-
alleged financial misdeeds
son, briefed the White House
by McDougal. but not as
on the second criminal refer-
targets of the criminal
ral. A few weeks later. the
investigation.
chief RTC investigator. Jean
After Clinton took office.
Lewis. was abruptly taken off
career officials at the Justice
the case.
Department decided not to act
Another veteran investiga-
on the referral. The RTC had a
tor. Brian McCormally of the
Treasury rode herd on the RTC: Deputy Secretary Altman
20
(Continued from page 341
But Hillary is one of the rea-
owned by the McDougals and
sons Gergen has failed to thrive.
the Clintons - may have con-
An incrementalist in all things.
tributed to Madison's eventual
he counseled compromise on
failure. Congressional sources
health-care reform to attract
say Lewis encountered resist-
GOP. support. and staved close
ance from the RTC attorney re-
to Rep. Jim Cooper. sponsor of
viewing the referral and that
a rival plan. As a Watergate sur-
she believes it may have been
vivor wary of drip-drip disclo-
the result of outside pressure.
sure. Gergen urged in January
Sources say the new referral.
that the Whitewater documents
passed to the Justice Depart-
be made public. The president
ment in September 1993. again
seemed to agree. but Mrs. Clin-
mentions the Clintons as poten-
ton objected. and she prevailed.
tial beneficiaries of McDougal's
Gergen's rehabilitation on
activities.
"Nightline" wasn't exactly a tri-
But sources sav that the
umph from his perspective. He
debate within the RTC became
has come to dislike his image as
so heated that both Lewis
spin doctor. In an October New
and the agency attorney in-
York Times Magazine story. he
volved were removed from the
DAVID GERGEN: A disappointed quest for a policy role
talked about his "guilt" over
case. Sources familiar with
helping to turn politics into a
the RTC's Kansas City office
RICK
public-relations game and how
say her reassignment came in November
Where Did
he hoped to change that in the Clinton White
1993. That would put it shortly after
House. But the author. Michael Kelly. ques-
a series of White House contacts with
tioned whether Gergen's mea culpa was just
Treasury Department officials regard-
ing the Madison probe now under investi-
David Gergen
another form of spin. Gergen was devastat-
ed by the portrait of himself and he became
gation by Fiske.
even more determined to become a substan-
Right now. evidence of political inter-
Go Wrong?
tive player. "He wants to be Jim Baker." says
ference is strictly circumstantial. The
a colleague. Baker. after all. rose from a
RTC turmoil may be attributable to
White House staff position to become secre-
honest disagreements among bureaucrats.
tary of state.
If Leach doesn't deliver credible witness-
Spin: A disappearing act
It was impossible. Gergen wasn't taken
es, it will only deepen voter suspicions
that the whole affair is primarily parti-
on Whitewater
seriously as a policymaker. Aides snicker
over how hard he fought to be listed as
san blood sport. The NEWSWEEK Poll
a member of the official delegation-not
shows that 64 percent of Americans
a communications adviser-on the presi-
believe that politics are driving Whitewa-
AVID GERGEN WAS HIRED LAST SPRING
dent's recent trip to Europe. After the Soma-
ter. Nearly three quarters think the White
D
to help Bill Clinton overcome the
lia debacle. Gergen. at the president's
House's preoceupation with the case is
growing public impression that he was
urging. sought a larger role in foreign at-
diverting attention from important is-
a bumbler. There was the controversy over
fairs. National-security adviser Anthony
sues like health-care and welfare reform.
gays in the military. the failed appointments
Lake resisted. believing another voice
"What scares me is that we're going to
and the infamous runway haircut. Gergen. a
would diminish his own: Gergen backed off.
put all our hopes into destroving the
veteran of three GOP administrations and
Lake jokingly rubbed his sweater sleeve
president." savs GOP polltaker Frank
the architect of Ronald Reagan's media im-
against Gergen's arm last week and de-
Luntz. "Republicans won't benefit unless
age. promised to improve relations with the
clared. "This is the only friction between us."
they're seen as offering something better."
press and to add luster to the public view of
There was some tension after the arrival in
But the White House has a
the president. But as the Clin-
December of New York lawver Harold Ick-
long way to go before it can
NEWSWEEK POLL
tons became mired in Whitewa-
es, a liberal Hillary ally. He and Gergen
get itself heard again. For the
ter and vulnerable to attacks
circled each other warily for weeks before
short term. the administration
Who is most re-
on health-care reform. Gergen
they reached what Gergen calls "a level of
faces a seriously diminished
sponsible for the
mysteriously disappeared from
understanding and collegiality." But young-
capacity to pursue its agenda.
problems the
view. Regarded with suspicion
er White House aides see Gergen's journey
Subpoenas. nightly news foot-
White House has
by Clinton loyalists. he was
of renewal as narcissistic "Davidism" and his
age of senior officials march-
had dealing with
the Whitewater
squeezed out of the high com-
West Wing office as a short stop on the way
ing to the grand jury room and
mand on both issues. He became
case?
to a big job. Gergen says he'll stay through
the probability of congressional
14% Bill Clinton
such a marginal figure that one
this year's legislative season and then reas-
hearings all stand in the way.
White House aide suggested
sess. He adds. partly in jest. "The best thing
For too long, it regarded
12% Hillary
Clinton
stashing the garbage bags of
for me psychologically and physically would
Whitewater as a minor irritant.
subpoenaed Whitewater mate-
be to find a university with a good gym."
Now it will pay the price for
11% Administra-
rial in his office. He finally re-
When Whitewater boiled over last week.
tion aides
that shortsightedness.
emerged last week to defend the
Gergen volunteered for TV duty. His ability
BILL TURQUE with ELEANOR
14% Partisan
Clintons on "Nightline." His
to offer reassurance about the Clintons
CLIFT. MARK HOSENBALL
Republicans
Boa COHN and HOWARD FINEMAN
performance won him a hug
reminded everyone including himself-
25% The media
Washington GINNY CARROLL
from Hillary and a standing
why he was there
Little
Rock
tion at a stati meeting
36
ethically wrong because it appears to be
an investigation that Private Citizen
wrong is circular reasoning. If the only
Clinton would never have been entitled
TRB
thing wrong with these meetings is how
to? What if Bernard Nussbaum had
they appeared, that is an ethical fail-
been the Clintons' private defense
ure of the press, not of the Clinton
lawyer and not White House counsel?
administration. The job of journalists is
Would these meetings then have been
to bring appearances in line with real-
verboten? In fact, the notion that offi-
ity, not to bring reality in line with
cials of federal agencies never meet with
appearances.
lawyers for potential subjects of their
A small box in the March 6 New York
investigations, or tell them the status of
Times-the only serious effort I've seen
such investigations, is simply mis aken
FROM WASHINGTON
to explain what was actually wrong with
I spoke with several lawyers who have
the meetings-cites two regulations of
worked on both sides of federal crimi-
the Resolution Trust Corporation (the
nal investigations in the financial area I
bank regulatory agency of which Deputy
put to them the circumstances of the
Altman is innocent
Treasury Secretary Roger Altman was
most controversial Whitewater meeting:
acting head). "One requires that federal
the September 28 briefing of Nussbaum
employees work on matters in which the
by Treasury general counsel Jean Han-
Pardon me for asking, but what exactly
government has an official interest." As
son. Would it be unthinkable for a law-
was wrong with those three meetings
a general principle, that is unob-
yer for a federal agency to meet
between Treasury and White House
jectionable. But as a case
with the lawyer for a private
officials over Whitewater? President
against these meetings, it's a
individual, and to inform
Clinton has conceded that "it would be
joke. Even if Whitewater
the private lawyer that the
better if the meetings had not
was not a "matter of offi-
matter he was concerned
occurred," which (God knows) is be-
cial interest," which is not
about had been referred
yond dispute. The White House also
at all clear, we surely are
to the Justice Department
seems to have decided, no doubt wisely,
not having this enormous
for criminal proceedings
that there is nothing to be gained by
fuss over the possibility
and that his client was
even trying to defend the meetings'
that Treasury officials were
identified as a "potential
propriety. But the question remains
distracted from their official
beneficiary" but not an
whether there was anything actually
duties for an hour or two.
investigative target?
improper about them, and the answer is
"The second" apposite regula-
They all agreed that, far from
far from obvious.
tion, according to the Times, "requires
unthinkable, such situations arise all the
To be sure, the Whitewater saga stinks
that officials act with complete impar-
time. The document itself. called a
in many ways. The investigation may yet
tiality. If, for instance, it is standard prac-
"criminal referral,"-officially transfer-
produce evidence of real wrongdoing by
tice for regulators not to inform people
ring the case from the agency to the Jus-
the First Lady or even the president
when cases are referred for criminal
tice Department-is confidential. But
himself. It is conceivable that conversa-
inquiry, then it may have been improper
investigators and prosecutors might
tions took place in these meetings that
for Treasury officials t.: have briefed
have any number of reasons to hold a
were illegal or unethical (Nussbaum to
officials representing the Clintons."
meeting and report the status of the
Altman: "Roger, how badly do you want
Here we get to the heart of the matter.
case. It might be to start the process of
to be treasury secretary. ?"), though
Did Clinton, as a result of these meet-
settlement, or to hear the other side
there is absolutely no evidence that they
ings, get some kind of unfair special
informally, or just to let someone know
did. But the mere fact that these meet-
treatment?
he's off the hook. Whatever. But there is
ings occurred is what finally pushed the
All these meetings were between gov-
certainly no hard-and-fast rule against
Whitewater story through some invisible
ernment officials. The Clintonites
such meetings. And the implication that
media barrier into Watergate territory.
claim-and there is no evidence to con-
these particular meetings were part of
And yet the media have been a bit
tradict them-that the purpose of these
some cover-up is unsupported by either
casual about explaining what, if any-
meetings was to help in the performance
facts or logic.
thing, was illegal or unethical about
of official functions: dealing with press
Watergate comparisons are every-
them.
inquiries and so on. There are all sorts of
where. The Wall Street Journal referred
The Washington Post editorialized that
perfectly legitimate reasons for why the
the other dav-in the news columns,
the meetings were "conduct most first-
White House might need to be aware of
not on the editorial page!-to "a series
year law students would immediately
the status of criminal investigations. Did
of meetings that recall President
recognize as improper"-then, a few
you know, for example-I didn't, until
Nixon's widely condemned meddling
days later, upped the ante to "impropri-
the other day-that the Justice Depart-
into the workings of independent agen-
eties a child of 4 could have figured
ment routinely reviews the guest lists for
cies." Oh, please. Just one small corner
out." I guess I'm a little slow. I guess I'm
presidential social functions and alerts
of Watergate involved a direct effort by
also "boneheaded" (The New York Times)
the White House if one of the guests is
the president to punish critics in the
for failing to see that such a "conclave"
about to be indicted? Perhaps that is
media by having the Federal Communi-
is "improper on its face."
improper, but it is traditional, and no
cations Commission take away their
It is not good enough to say, as some
one has ever raised a fuss about it.
licenses. (Watergate tapes, Nixon to
have, that the meetings were wrong
The difference about these Whitewa-
John Dean: "The [Washington] Post is
because they created "an appearance of
ter meetings, of course, is that they
going to have damnable, damnable
impropriety." That is a familiar cop-out
involved matters in which Bill and
problems out of this one. They have a
in ethical debates. How such things
Hillary Clinton, as private individuals,
television station.")
appear, after all. is largely determined
are entangled. Was President Clinton.
Now that's what I call a cover-up.
by the press coverage itself. To say that
by dint of his official position, gaining
some official action may be portrayed as
access to information about the status of
MICHAEL KINSLEY
THE NEW REPUBLIC MARCH 28, 1994
Cutler had minimized the scandal in a January Washing-
WHITE HOUSE WATCH
ton Post oped piece, White House aides urged T.V. book-
ers to pit him against the president's Whitewater critics.
Cutler told me at the time he hadn't authorized this.
Clinton's two Whitewater problems remain: the scan-
dal itself and Hillary Rodham Clinton. The president is
D
desperate to show that Whitewater isn't Watergate.
RIPS
"There is a huge difference here," he said on March 7.
"No. 1: we're not covering up or anything No. 2: no
one has accused me of any abuse of authority in
office No. 3: there is no credible evidence and no
By Fred Barnes
credible charge that I violated any criminal or civil fed-
eral law eight or nine years ago when most of these facts
or once Mack McLarty, the courtly White House
that are being bandied around are discussed." Maybe
F
chief of staff, was more impatient than President
not, but Whitewater has the trappings of Watergate: spe-
Clinton. He and Clinton discussed a replace-
cial prosecutor, shredding of documents, senior aides
ment for Bernie Nussbaum on March 5, the day
thrown overboard. appearance of a cover-up.
after Nussbaum was canned as White House counsel.
To refute the Watergate analogy, the White House
The next morning, a Sunday, they talked again.
mobilized the senior staff. With a negative press and
McLarty wanted action. He called the president that
hostile Republicans, a senior official says, "It would have
afternoon and urged a decision-now. Twenty minutes
been an enormous mistake for the administration to be
later Clinton called back. He'd decided on Lloyd Cut-
left without a spokesman." No chance of that. Clinton
ler, the old Washington hand who had become close to
aides dominated Sunday talk shows, the Monday morn-
White House officials, first as mentor to Zoe Baird, Clin-
ing news programs, even "Nightline" and "Larry King
ton's failed nominee for attorney general, then as
Live." Vice President Al Gore, on "Meet the Press," sug-
defender of the president on Whitewater. McLarty
gested Clinton is delighted with special prosecutor
rousted Cutler out of the Kennedy Center matinee of
Robert Fiske, who bombed the White House with sub-
Verdi's Un Ballo in Maschera, an opera of political
poenas. "There's a great deal of respect for Mr.
intrigue set in Boston, and arranged to drop by
Fiske and a willingness-indeed, an eager-
the lawyer's Georgetown home. Cutler was
ness-on the part of everyone in the White
favorably inclined, so they drove to the
House to comply fully and completely."
White House at 7:30 p.m. to meet with
What Gore implied-Clinton is the
C'inton. McLarty couldn't stay. He rushed
opposite of President Nixon, who fought
off to dinner with Larry King of CNN. Cut-
Watergate prosecutors-was made explicit
ler staved behind, agreed to become spe-
by Gergen, who worked in the Nixon
dai counsel and two days later began work.
White House. Then, "we also made the ter-
This is known as the insider ploy. The idea
rible, terrible mistake of refusing to comply
is to quell a crisis by bringing on board a Wash-
with various requests from legal authorities."
ington veteran who knows the media and hobnobs
he said. "In this case President Clinton has now
with leaders of the opposition. The press will be reas-
launched what I think is a very effective and aggressive
sured. the opposition quieted. If the insider brings
effort to comply with the special counsel." Gergen
along some clever plans, all the better. This is Cutler's
deftly disassociated himself from the true believers. "We
second stint as White House savior. Jimmy Carter, in
had a Whitewater team to deal with this. I was not part
political trouble, summoned him in 1979. Ronald Rea-
of that team." Gore did some distancing, too, saying he
gan used the insider ploy as Iran-contra raged in 1987,
hasn't grilled the Clintons on Whitewater. "I will readily
replacing chief of staff Donald Regan with former Sen-
acknowledge to you that I have not made it a practice to
ate Majority Leader Howard Baker. Clinton used it last
try to gather all the details about this matter."
May, hiring David Gergen as counselor. The joke then
Stephanopoulos reduced the scandal from Watergate
was that the youthful White House staff needed some-
proportions to a cheap partisan spat. On "Today," he
one old enough to buy beer.
declared Republicans "can't run on the economy. They
The ploy usually works for a spell. But it's a bandage,
can't run on health care They can't run on crime. So
not a cure. Cutler might attract the spotlight for a few
they're trying to exploit this issue." Political adviser Paul
days, taking it off Whitewater. He's more politically adroit
Begala's assignment wasn't clear. "The Clintons didn't
than his predecessor, Nussbaum. And his presence in the
have anything to do with the savings and loan that went
Oval Office will make the president feel better. At the
under," he told Larry King. (In truth, Hillary Rodham
announcement of Cutler's hiring on March 8 (at age 76,
Clinton was the lawver for the failed S&L, Madison Guar-
he agreed to stay only 130 days), Clinton called him "a
anty.) "They were just passive investors." (Rodham Clin-
firm. uncompromising and steady hand." He made it
ton built and sold a Whitewater model home.) On the
sound like Cutler was his father, not his lawyer. Clinton
suicide of deputy White House counsel Vince Foster,
already knew Cutler was supportive on Whitewater. After
Begala noted: "To the extent you can ever know the
12 THE NEW REPUBLIC MARCH 28. 1994
heart and soul and mind of a troubled person, you can
observe his work (or even interview him) and make
know that Whitewater was not on his mind at the time."
him an offer to change his loyalties that he will have dif-
(Foster was working on Whitewater the day of his death.)
ficulty refusing. But unlike their counterparts in the pri-
The Hillary problem is greater than the White
vate sector, these recruiters do not ask a candidate to
House lets on. Clinton responded with a non-denial de-
give up his old job. Instead, they insist that he maintain
nial when asked on March 7 about a Washington Times
two positions simultaneously: one for his own govern-
report that Rodham Clinton had ordered the shred-
ment, and one for his new, secret employer. If the
ding of documents in the Arkansas governor's mansion
recruit does not have access to the needed material, his
in 1992. The shredding came after The New York Times
secret employer takes on the task of managing his
published the first Whitewater exposé. "Law firms dis-
career, providing him with "successes" in the form of
pose of their documents all the time," the president
cases and information so that he can rise to a level
explained on March 7. That's true, but these weren't
where he can be useful. As the CLA'S Soviet bloc division
documents at the Rose Law Firm. They were docu-
noted in 1973 about its capabilities at career-managing
ments kept privately at home by Rodham Clinton. The
a potential mole recruited at a foreign embassy: "We are
newspaper said its three sources couldn't say if the doc-
prepared to guide and assist him in his career, running
uments were Whitewater-related. If they were and the
him in place until he develops the access we need."
shredding tale is true, she's in trouble.
Yet while CIA officials have the utmost confidence in
The president gave his wife a stirring defense, but it
their ability to successfully mount such grand plots
wasn't enough. She is embattled. The focus on White-
against Russia, many of these same officials have been
water, she told Elle magazine, "is a well-organized and
unable to accept that the KGB has a similar capacity for
well-financed attempt to undermine my husband, and
conspiracy. These officials placed great faith in the CLA'S
by extension, myself." That's paranoid. Reagan once
lie-detector tests and other routine security procedures
argued his enemies zinged his wife, Nancy, when he was
and derided those who were skeptical of these
their real target. But Rodham Clinton asserted the
defenses-notably Angleton and his counterintelli-
opposite: enemies were trying to get at her through
gence staff-as "paranoid," indulging in "sick-think" or
him. That's a new one.
otherwise out of touch with reality. The Ames case
It's also poor damage control. The Clintons' own
demonstrates that such faith was misplaced.
master of damage control, Gergen, plugged Rodham
Clinton ("an honest woman") on "Nightline." But he
he KGB clearly had the ability to compromise,
and the president's wife have rocky relations, having dis-
agreed on health care, naming à special prosecutor, etc.
T
recruit, career-manage, service and utilize
Ames for an extensive period of time. Accord-
"She and I can sometimes go at it," Gergen said. Her
ing to FBI affidavits, Ames had been in illicit liai-
allies hint Gergen is reluctant to defend her and the
son with the Soviet intelligence service since at least
president aggressively on Whitewater. They're right
1984-and, according to a former CIA counterintelli-
about that. But who can blame him?
gence executive, he may have been recruited much ear-
lier. Moreover, he had been, while a Soviet mole, head
of the CLA's Soviet counterintelligence unit. From this
Rick Ames's connections.
vantage point he could vet the secret information com-
ing into the CIA from its own spies in Russia and tell the
KGB what the CIA was learning.
The implications of this case are far-reaching. To
begin with, it casts new light on the intellectual prove-
ON THE TEAM
nance of the information supplied to the media by
retired KGB officers. For example, Oleg Kalugin, who
served as a major-general in the KGB until 1987, was cer-
tainly in a position to know the KGB'S success in pene-
trating the CLA. Yet he stated categorically in 1992 that
By Edward Jay Epstein
"no responsible politician or government employee was
ever recruited by the Soviets in Europe or America in
n considering Aldrich Ames's arrest as an alleged
the last twenty years." Kalugin added that the KGB had so
I
Soviet mole-and the serious questions it raises
little hard currency at its disposal that it had to open up
about the CLA's past and future as an intelligence
its archives to the foreign media and sell documents to
service-I thought back to what James Jesus Angle-
pay its operating expenses abroad. While this picture of
ton, the agency's former chief of counterintelligence,
KGB ineptitude and poverty has been welcome news
once told me: "Think of espionage service as a highly
inside the CLA, it hardly squared with the millions the KGB
specialized employment service." Recruiters, he said,
was paying to Ames to get leverage over CIA counterin-
aim to find foreign government officials with legitimate
telligence.
access to secret documents. Up to a point, like conven-
More important. Ames's work for the KGB calls into
tional corporate headhunters, they consult biographical
serious question the validity of the secret intelligence
files to find a candidate to fill an opening; they then
derived from Russia in the mid and late 1980s. Ames is
14 THE NEW REPUBLIC MARCH 28. 1994
NOTEBOOK
M
R. STAPLES'S PLANET: "I don't think Bellow's
work is sufficiently tainted with anti-black attitudes
W
that it poisons his whole work." Tainted, we are to
ISE MEN CAN JUMP: "If only Lloyd Cutler were
infer, but not sufficiently tainted. This, according to
alive. Wait a minute, he is alive. Get him on the
The Boston Globe a few weeks ago, was how Cam-
phone." It's easy to fantasize about the internal White
bridge novelist Paul Buttenweiser explained his deci-
House discussions that led to the hiring of Cutler to
sion not to withdraw an invitation to Saul Bellow to
replace White House counsel Bernard Nussbaum.
appear as a guest at a Boston Library dinner. In his
But one also wonders about the historical memory of
own eyes, no doubt, Buttenweiser is a hero of political
the aides who recommended him. As Washington's
incorrectness; but with friends like this, a writer needs
premier "liberal" lawyer, Cutler's specialty has been to
no enemies. The political corrector, in this case, was
get large corporations out from under the burden of
Brent Staples, whose recent memoir, Parallel Time,
regulations pro-
recounts his
posed by other
years as a gradu-
liberal lawyers.
OKAY, I'M
ate student at
(For starters, he
UNCOVERING
the University of
helped Ameri-
THE COVERUP,
Chicago, where,
can car manufac-
THEN YOU
among other dis-
turers dilute au-
tinctions, he
LET ME GO,
to safety rules.)
stalked Saul Bel-
RIGHT
Cutler is not a
low. This from a
crude influence-
writer who re-
peddler along
sents the suspi-
the lines of, say,
cion of other
Tommy Boggs;
WHITEWATER
people on the
he prefers to
street that he is
snow opponents
stalking them.
with fancy legal
"What would I
arguments. But
do when I
as a hired gun
caught him?"
who has made a
writes Staples,
fortune off the
with not quite
liberal adminis-
enough irony.
trative state, he is
"Perhaps I'd lift
hardly a moral
him bodily and
beacon in the
pin him against
Whitewater fog.
TOLES
YOU MAY
a wall. Perhaps
Perhaps more
301994 THE NEWREPUBLIC
DEARLY DEPART
I'd corner him
important, from
on the stairs and
Clinton's point of view, Cutler (like Nussbaum) is a
take up questions about 'pork chops' and 'crazy buf-
man with a political tin ear. In 1980, during his last
faloes' and barbarous black pickpockets. I wanted to
stint as White House counselor, he urged Jimmy Carter
trophy his fear. I stalked Dorchester Avenue for
(then facing Edward Kennedy's primary challenge) to
months before I caught him out. Those "pork
use the dedication of the JFK presidential library as the
chops" and "crazy buffaloes" come from Humboldt's
occasion for a lawyerly, point-by-point critique of
Gift, where they are the awful appellations for black
Kennedy's arms control record. (Carter ignored him
people uttered by a tawdry little hood named Rinaldo.
and delivered an encomium to JFK, which was a huge
Not Bellow; Rinaldo. No, Staples doesn't come right
success.) In 1987 Cutler advised Robert Bork to aban-
out and call Bellow a racist, but when The New York
don his long-held conservative convictions in order to
Times Magazine excerpted his book the damage was
save his Supreme Court nomination, an implausible
done. Staples objects that Bellow's novels include
move that backfired. Cutler also plotted and defended
depictions of black male sexuality and violence; and he
the wildly unpopular congressional pay raise of 1989
expresses this objection in a chapter that is itself rid-
(insisting that members of Congress would still be
dled with black pimps and black prostitutes, compared
underpaid compared with major league baseball play-
to whom Bellow's little menaces are quaint. "You had
ers-an argument only a $500,000-per-year lawyer could
to protect yourself in Bellow's presence," writes Sta-
love). We could go on and on. Cutler is a very smart
ples. In a city like Chicago it is grotesque to put a
man, has and a very good lawyer. But if Clinton thinks he
member of the Committee on Social Thought high on
again. acquired a political miracle-worker, he should think
the list of local dangers. Knowledge is supposed to be
pursued. It is not supposed to be stalked.
10 THE NEW REPUBLIC MARCH 20. 1994
NEW THE REPUBLIC
MARCH 28, 1994
SPEAK, HILLARY
Among the president's high command, the realization has
is not a formula for "putting Whitewater behind us." It is
slowh set in: they have taken what was a minor irritant and
a formula for vears of distraction, with periodic orgies of
turned it into their own national nightmare.
-The Washington Post
subpeona-compliance as the press waits eagerly for the
results of the investigation by Robert Fiske.
Just when a Democrat seems on the verge of a success-
There is a simpler and swifter way to get the facts out.
ful, productive presidency, the Whitewater affair blos-
There is no need to wait for Fiske. There is no need for
soms. Can this really be a coincidence? The answer is yes,
congressional hearings. The Clintons can take a few days
it can. Whitewater is not simply what Hillary Rodham
to meet with their lawyers and gather what evidence they
Clinton recently told Elle magazine she thinks it is,
can. Then they can hold a press conference. Let re-
namely, a "well-financed attempt to undermine my hus-
porters ask all the questions they want. Answer them.
band by people who have a different political
And then move on. Indeed, the press conference solu-
agenda." Republicans didn't make the Clintons involve
tion is so obvious that the Clintons' failure to hold one
themselves with a sleazy S&L operator. They didn't force
should itself be factored into the Tenth Planet theory.
Rodham Clinton to make monev by representing clients
A press conference featuring both Clintons would also
before Arkansas state officials who owed their appoint-
help resolve the troubling ambiguity in the status of the
ments to her husband. (Or was it to Rodham Clinton
First Lady. Until now she has tried to have it both ways,
herself: Who knows?) The idea that this whole business
playing a powerful, official public role but retreating
is just partisan politics is one of the comforting defenses
behind a traditional familial veil of privacy whenever the
Clinton's supporters will have to abandon if they want to
propriety of her actions is challenged. It is not anti-
cool the capital's feverish anticipation of scandal.
feminist to suggest that if Rodham Clinton wants the
There are other false comforts. The most popular is
power of a full-fledged politician she should behave like
the notion that "the cover-up is worse than the crime."
a normal politician, which means being accountable in
True. press coverage of Whitewater has been driven by a
public (not in Elle) if your integrity is put in doubt. When
sort of Tenth Planet theory of investigative journalism.
vice presidential candidate Geraldine Ferraro's integrity
Just as astronomers detect the presence of unknown
was challenged during the 1984 campaign, she faced the
planets by observing their gravitational effect on sur-
charges in a marathon press conference. Is Rod-
rounding orbs. so reporters have divined a major scandal
ham Clinton less capable than Ferraro?
be observing the surprisingly fierce protective reaction
Actually, there is a better precedent than the
of the Clintons. But this astronomical method has its
Ferraro press conference. It is the press confer-
virtues. The Clintons' behavior may simply be the result
ence with which President Jimmy Carter dis-
of an irrational inclination to secrecy, or foolishly zealous
patched the "Billygate" scandal in 1980. The
lawvering, or staff incompetence. But maybe not. Some-
breathless Washington Post quote at the beginning
times guilty behavior is the product of guilt. We won't
of this editorial was not written about Whitewater. It
know until the facts come out.
was written fourteen years ago, about Carter's troubles
It's also true, as the Clintons' defenders note, that
with his brother. Billygate, too, featured a febrile jour-
even at their worst, the Whitewater facts won't amount to
nalistic atmosphere with a lot of smoke, but not much
anything impeachable, because (unlike Watergate) they
fire. After a month of piecemeal revelations, Carter
mainly concern actions the president took before he
finally published a 13,000-word report (carefully labeled
became president. But, at their worst, those actions
as "not definitive"). He answered press questions for
might be pretty sleazy-in effect, the sale of a governor's
almost an hour. And the scandal, as a Post editor put it at
power and influence for personal and political profit.
the time, went "poof."
Sleazy enough to cripple Clinton's presidency? We doubt
By laying out the facts themselves. the Clintons may
it. But, again, nobody can know until the facts come out.
not be able to make Whitewater go "poof." But any
So the facts must come out. But the current strategy of
embarrassments they would reveal can't be large
slow-motion revelation-let the special counsel do its
enough to justify prolonging the administration's agony.
job"-hardly serves the interests of the administration. It
Can they:
MARCH 28. 1994 THE NEW REP 9
ethically wrong because it appears to be
an investigation that Private Citizen
wrong is circular reasoning. If the only
Clinton would never have been entitled
TRB
thing wrong with these meetings is how
to? What if Bernard Nussbaum had
they appeared. that is an ethical fail-
been the Clintons' private defense
ure of the press, not of the Clinton
lawyer and not White House counsel?
administration. The job of journalists is
Would these meetings then have been
to bring appearances in line with real-
verboten? In fact. the notion that offi-
ity. not to bring reality in line with
cials of federal agencies never meet with
appearances.
lawyers for potential subjects of their
A small box in the March 6 New York
investigations. or tell them the status of
Times-the only serious effort I've seen
such investigations, is simply mistaken.
FROM WASHINGTON
to explain what was actually wrong with
I spoke with several lawyers who have
the meetings-cites two regulations of
worked on both sides of federal crimi-
the Resolution Trust Corporation (the
nal investigations in the financial area. I
bank regulatory agency of which Deputy
put to them the circumstances of the
Altman is innocent
Treasury Secretary Roger Altman was
most controversial Whitewater meeting:
acting head). "One requires that federal
the September 28 briefing of Nussbaum
employees work on matters in which the
by Treasurv general counsel jean Han-
Pardon me for asking. but what exactly
government has an official interest." As
son. Would it be unthinkable or a law-
was wrong with those three meetings
a general principle, that is unob-
yer for a federal agency to meet
between Treasury and White House
jectionable. But as a case
with the lawyer for a private
officials over Whitewater? President
against these meetings, it's a
individual, and to inform
Clinton has conceded that "it would be
joke. Even if Whitewater
the private lawyer that the
better if the meetings had not
was not a "matter of offi-
matter he was concerned
occurred," which (God knows) is be-
cial interest," which is not
about had been referred
yond dispute. The White House also
at all clear, we surely are
to the Justice Department
seems to have decided, no doubt wisely,
not having this enormous
for criminal proceedings
that there is nothing to be gained by
fuss over the possibility
and that his client was
even trying to defend the meetings
that Treasury officials were
identified as a "potenial
propriety. But the question remains
distracted from their official
beneficiary" but not an
whether there was anything actually
duties for an hour or two.
investigative target?
improper about them, and the answer is
"The second" apposite regula-
They all agreed that, far from.
far from obvious.
tion. according to the Times, "requires
unthinkable. such situations arise all the
To be sure, the Whitewater saga stinks
that officials act with complete impar-
time. The document itself, called a
in many ways. The investigation may yet
tiality. If. for instance, it is standard prac-
"criminal referral,"-officially transfer-
produce evidence of real wrongdoing by
tice for regulators not to inform people
ring the case from the agency to the Jus-
the First Lady or even the president
when cases are referred for criminal
tice Department--is confidential. But
himself. It is conceivable that conversa-
inquiry, then it may have been improper
investigators and prosecutors might
tions took place in these meetings that
for Treasury officials 1.: have briefed
have any number of reasons to hold a
were illegal or unethical (Nussbaum to
officials representing the Clintons."
meeting and report the status of the
Altman: "Roger, how badly do you want
Here we get to the heart of the matter.
case. It might be to start the process of
to be treasury secretary. ?"), though
Did Clinton, as a result of these meet-
settlement, or to hear the other side
there is absolutely no evidence that they
ings, get some kind of unfair special
informally, or just to let someone know
did. But the mere fact that these meet-
treatment?
he's off the hook. Whatever. But there is
ings occurred is what finally pushed the
All these meetings were between gov-
certainly no hard-and-fast rule against
Whitewater story through some invisible
ernment officials. The Clintonites
such meetings. And the implication that
media barrier into Watergate territory.
claim-and there is no evidence to con-
these particular meetings were part of
And vet the media have been a bit
tradict them-that the purpose of these
some cover-up is unsupported by either
casual about explaining what, if any-
meetings was to help in the performance
facts or logic.
thing, was illegal or unethical about
of official functions: dealing with press
Watergate comparisons are every-
them.
inquiries and so on. There are all sorts of
where. The Wall Street Journal referred
The Washington Post editorialized that
perfectly legitimate reasons for why the
the other dav-in the news columns,
the meetings were "conduct most first-
White House might need to be aware of
not on the editorial page!-to "a series
year law students would immediately
the status of criminal investigations. Did
of meetings that recall President
recognize as improper"-then, a few
you know, for example-I didn't, until
Nixon's widely condemned meddling
davs later, upped the ante to "impropri-
the other day-that the Justice Depart-
into the workings of independent agen-
eties a child of 4 could have figured
ment routinely reviews the guest lists for
cies." Oh, please. Just one small corner
out." I guess I'm a little slow. I guess I'm
presidential social functions and alerts
of Watergate involved a direct effort by
also "boneheaded" (The New York Times)
the White House if one of the guests is
the president to punish critics in the
for failing to see that such a "conclave"
about to be indicted? Perhaps that is
media by having the Federal Communi-
is "improper on its face."
improper, but it is traditional, and no
cations Commission take away their
It is not good enough to say, as some
one has ever raised a fuss about it.
licenses. (Watergate tapes, Nixon to
have. that the meetings were wrong
The difference about these Whitewa-
John Dean: "The [Washington] Post is
because they created "an appearance of
ter meetings, of course, is that they
going to have damnable, damnable
impropriety." That is a familiar cop-out
involved matters in which Bill and
problems out of this one. They have a
in ethical debates. How such things
Hillary Clinton, as private individuals.
television station.")
appear, after all. is largely determined
are entangled. Was President Clinton.
Now that's what I call a cover-up.
by the press coverage itself. To say that
by dint of his official position, gaining
some official action may be portrayed as
access to information about the status of
MICHAEL KINSLEY
4 THE NEW REPUBLIC MARCH 28. 1994
NATIONAL AFFAIRS
The Unsink
SOITTE
adi ba
HILLARY CLINTON: The First
ROGER ALTMAN: Treasury
ROBERT FISKE: His 10 quick
MARGARET WILLIA
Lady finally broke her silence
deputy sees cabinet hopes slip
subpoenas set a grim tone
aide was the first st
LEFT TO RIGHT WALLY McNAMEE FOR NEWSWEEK. MIKE STEWART SYGMA. JEFF MITCHELL SYGMA
30
NEWSWEEK MARCH 21. 1994
WALLY McNAMEE FOR NEWSWEEK STEPHEN IAFFE IB PICTURES
able Scandal
W T E W A E R W 0 ID
VEN AFTER THE MOST HU-
of the failed Arkansas S&L. "We have done
miliating stretch of days in
everything possible." complained one frus-
the Clinton presidency-af-
trated aide. "We agreed to a special coun-
ter the parade of subpoenas,
sel. We spent two days going through our
the forced resignation of the
trash. We submitted our top aides to the
White House counsel, the Re-
grand jury. What is there left for us to do?"
publican charges of cover-up,
By the weekend, a counteroffensive be-
the spectacle of aides march-
gan to emerge. It was led by the White
ing into the federal courthouse to deliver
House's most tenacious opponent of disclo-
grand jury testimony-the White House
sure on Whitewater, Hillary Rodham Clin-
still simmered in an angry state of denial
ton. In an interview with NEWSWEEK (page
for much of last week. The president deliv-
35), the First Lady offered a disciplined and
ered a podium-thumping defense of his
high-minded reprise of the administration's
First Lady ("I have never known a person
line on Whitewater: that it was largely the
with a stronger sense of right and wrong
product of an overcharged press. the culture
") and then tried to soothe an
of Washington and political ene-
East Room assemblage of aides
mies bent on distracting the ad-
with an excerpt of children's
A
besieged
ministration from its agenda.
poetry from a book he once read
But she also admitted that "I
to Chelsea.
White
made mistakes," and conceded
The administration offered
that her own excessive concern
up a series of what it hoped
House
with secrecy ended up fueling
would be agenda-shifting
speculation about wrongdoing.
moves. Lloyd Cutler, 76-year-
moves
"I really have been pulled kick-
old Washington wise man and
ing and screaming to the conclu-
former Carter White House
from
sion that if you choose to run for
counsel. returned to his old post
public office you give up any
promising cooperation and dis-
denial to
zone of privacy at all." she said.
closure on all fronts. Message
In the same vein, she acknowl-
merchant David Gergen. who
counter-
edged that the administration
had been oddly absent as
had erred in not being more
Whitewater gained momentum
offensive
forthcoming after the suicide of
(page 36), materialized on tele-
Foster, her friend and former
vision to concede that matters
law partner. Mrs. Clinton said
could have been handled more efficiently
that in the end, Foster's demise will be
but that the worst was over. Clinton also
only the inexplicable tragedy of a man who
tried to turn the page. "Just tell them what
took his own life. "When all the wild sto-
happened," he said, when asked what ad-
ries and rumors and innuendo are finished,
vice he gave to aides preparing to appear
we are going to be left as we were with
before the grand jury. "Answer the ques-
Edwin Arlington Robinson's poem 'Rich-
tions and go on. Be very open."
ard Cory,' with an unanswered, very tragic
But the initiatives all seemed to evapo-
question," she said.
rate in a political environment edged with
On the substance of the Whitewater af-
suspicion and paranoia. A rumor about the
fair, however, Mrs. Clinton was unyielding
suicide of deputy White House counsel
in her position that neither she nor her hus-
Vincent Foster, carried in an obscure news-
band is guilty of wrongdoing. Her only real
letter, was picked up by Rush Limbaugh
misstep, she said, was a bad business deci-
and sent the stock market tumbling (page
sion made 16 years ago-investing in the ill-
32). A six-inch, 1,000-page pile of White
fated northern Arkansas vacation-home de-
House documents. delivered to special
velopment. If she had it to do again, she
counsel Robert Fiske under subpoena, only
said, "I never would have participated in
JAMS:
Hillary's
BILL CLINTON: He rallied the
raised the possibility that numerous admin-
the investment in the first place."
staffer
to
testify
troops with children's verse
istration officials may have been inappro-
The First Lady's new engagement with
priately involved in a federal investigation
the press, which probably will include a
MARCH 21. 1994 NEWSWEEK 31
AHEAIRS
prime-time television appearance this
On the House side, a "theme team" of
week, is the White House's most dramatic
Republicans, led by red-hot polemicists
signal yet that problems spawned by
like Rep. Robert Dornan, is mounting a
Whitewater have become impossible to ig-
daily barrage of charges and innuendo am-
Vince Foster
nore. There was mounting evidence last
plified by the conservative talk-radio cir-
week that the affair is beginning to harm
cuit. With the 1994 midterm election cycle
the administration. A NEWS-
underway, the GOP's House
The Rumor
WEEK Poll shows that only four
NEWSWEEK POLL
and Senate campaign commit-
in 10 Americans have a favor-
Is the Clinton
tees are turning Whitewater
able opinion of either Bill or
administration
into a centerpiece of their
Hillary Clinton. A slim majority
knowingly cover-
fund-raising drives. "There's
Media: From innuendo
(52 percent) believe that the
ing up informa-
no good news in Whitewater
White House is concealing in-
tion about White-
for the Democrats," says politi-
to partisan gibes to
formation that could be damag-
water that could
cal analyst Charles Cook. One
be damaging to
outright fantasy
ing to the Clintons.
GOP gambit last week fell flat.
On Capitol Hill, the Repub-
the president or
Hillary Clinton?
Eighty-one Republican House
licans labored overtime to
members charged that Mrs.
OU CANT BELIEVE EVERYTHING
deepen voter suspicions about
52% Covering up
Clinton attempted to manip-
20% Not
Y
you read about Vince Foster. In
Whitewater. "What did the
ulate the value of health-
some cases, you can't believe any
president know, and when did
covering up
care stocks while she chaired
of it. Last week rumors swirled
Hillary tell him?" demanded
THE NEWSWEEK POLL,
MARCH 11. 1904
the presidential commission on
from Washington to Wall Street
New York Sen. Al D'Amato,
health-care reform. The mem-
and back again about the 1993 suicide of
whose own shaky ethical back-
bers' principal piece of evi-
Bill and Hillary Clinton's White House
ground-he was nearly ruined in the
dence is Mrs. Clinton's holdings in a Little
lawyer. The tabloid New York Post
HUD scandals of several years ago-made
Rock investment partnership. They alleged
claimed that after Foster's death, adminis-
him a dubious standard-bearer for the
that James McDougal and the First Lady
tration officials "frantically scrambled" to
party's Whitewater crusade. The Republi-
benefited from sensitive financial informa-
remove from his office safe a previously
cans, belatedly realizing their tactical error,
tion about the portfolio. But William
unreported set of files, some of them relat-
changed players. By the end of the week,
Smith, the president of Smith Capital Man-
ed to the Whitewater affair. A financial
Senate GOP leader Bob Dole had pushed
agement, said that McDougal had no inter-
newsletter published an even more sensa-
Sen. William Cohen of Maine, clean-cut
est in the partnership. "I've had zero con-
tional-and equally unsubstantiated-re-
and press-friendly, out front.
tact with the McDougals. I've seen them on
port that Foster's body had been moved
from an apartment in Virginia to the subur-
ban park where it was found. On his radio
show, conservative blunderbuss Rush
Limbaugh embellished that report just a
bit; he said the newsletter "claims that
Vince Foster was murdered in an apart-
ment owned by Hillary Clinton."
Foster's friends swatted down the ru-
mors as fast as they could. One of his in-
laws begged reporters to "back off. Get out
of the zoo." But that didn't stop a flow of
lip-smacking stories that left the White
House on edge, and even unsettled the
financial markets. Last Thursday, after
Limbaugh's broadcast, stock and bond
prices tumbled-the Dow dropped nearly
23 points-largely because of worries
about Whitewater. Elaine Garzarelli, the
highly regarded Lehman Brothers market
analyst who predicted the 1987 crash, said
that European traders were particularly
spooked by the Foster case. "They were
afraid Hillary Clinton was involved in a
murder," she said. "They hate that."
No, Hillary Clinton was not involved in
a murder. In fact, there's still no credible
evidence that Foster's death was anything
but the depression-induced suicide that his
family believes it to have been. Then why
all the garish speculation? Partly because of
the clumsy behavior of Foster's boss, for-
mer presidential counsel Bernard Nuss-
LLOYD CUTLER: Seeking a 'Cutler
ALFONSE D'AMATO: He's seen ethics
baum, and other White House staffers im-
type,' Clinton got the man himself
scandals from both sides now
mediately after the suicide: leaving his
LARRY DOWNING-NEWSWEEK
WALLY McNAMEE FOR NEWSWEEK
32
NEWSWEEK MARCH 21. 1994
ter's Suicide:
photographs taken by investi-
gators. It said the "grim
and graphic" pictures-most
of which were not shown on
r Mill Churns
the air-dispelled speculation
that there was little blood
around the body. A close-up
of Foster's hand showed his
office unsealed and spiriting documents
o
thumb still resting on the trig-
away. Partly because of the enigmatic note
ger of the revolver that had
that Foster left behind-unsigned, ad-
fired into his mouth, with
dressed to no one, torn into pieces-
what ABC said were powder
lamenting his own "mistakes"
burns visible on the hand. The
and the poisonous atmosphere
network said it had seen a
of Washington, where "ruining
USIVE NEW YORK POST INVESTIGATION
medical examiner's report in
IING
people is considered sport."
DOUBTS RAISED OVER
which "the burns and other
C. In
Partly because the Whitewater
gunpowder residue are listed
any
affair, one of the items on his
rled
FOSTER'S 'SUICIDE'
as primary evidence that Fos-
desk, has resurged so dramati-
ter shot himself."
reet
cally. And partly because many
Why was he still
holding the gun
THE FOSTERS:
A 'hideaway'? The stories
le of
people in the news media sim-
Why so little blood?
Vince and
that Foster had a "safe house"
ouse
ply won't let Foster rest.
Lisa before the
in Virginia seemed even thin-
Post
Some of the stories are noth-
election, in
ner. On Wednesday, the John-
inis-
ing more than the cut and thrust of respon-
a strident
son-Smick report, an obscure
to
sible news coverage. But all along, others
headline,
financial newsletter with ties
usly
have seemed determinedly partisan. There
elat-
holding the
to the Republican Party, said
is continued grumbling from The Wall
fatal
the office of Sen. Daniel
cial
Street Journal editorial page, whose sting-
weapon in a
Patrick Moynihan was "put-
nsa-
ing criticism apparently contributed to Fos-
picture
ting the word out that Fos-
-re-
ter's depression ("WSJ editors lie without
shown by ABC
ter in fact committed suicide
ved
consequence," he complained in his note).
in a private apartment in Vir-
our-
There's a steady stream of innuendo from
dio
ginia." Moynihan's office la-
conservative New York Times columnist
death might not have been suicide spread
ush
beled the report "breathtakingly untrue."
William Safire, who implied at one point
like a bad odor. Roger Ailes, the former
Then the New York Post claimed that
st a
that "intelligence matters" might have had
Republican campaign consultant who is
that
Foster had shared a "secret apartment
something to do with the suicide. And on
now president of the CNBC cable TV
hideaway" in Virginia with other Clinton
art-
another level entirely, there is the florid
network, suggested in a radio interview
insiders. But a rival tabloid, the New
hype and fantasy of the tabloids, designed
with Don Imus that Foster's death could
York Daily News, which appears to be
ru-
more to entertain than inform. Some of the
have been murder. Right-wing televangel-
receiving leaks bearing out the adminis-
in-
most raucous of those excesses have come
ist Pat Robertson devoted a segment of
tration's version of events, said Foster
out
from overseas. In Britain, Rupert Mur-
his "700 Club" show to the subject. "Sui-
of
only considered renting a Virginia apart-
doch's Sun claimed, three days
cide or murder? That's the om-
ment when he first came to Washington;
nite
after the suicide, that Foster
NEWSWEEK POLL
inous question surfacing in the
instead, he stayed with relatives until his
the
had a "deep personal friend-
Whitewater swell of contro-
family arrived.
fter
ship" with Hillary Clinton.
Regarding the
death of White
versy concerning Vincent Fos-
nd
Still, legitimate questions about Foster's
Blood loss: Last week one of
trly
House aide Vincent
ter's mysterious death," he
death remain unanswered. Assuming he
the more overwrought Ameri-
ies
Foster, do
intoned.
did kill himself, why did he do it? It wasn't
can tabloids, the New York
you think:
Another major source of
clear that the note he left behind was
the
Post, charged that investiga-
11% It was a sui-
the rumors was conservative
ket
meant to be an explanation. If his suicide
tors "never took a crucial
cide for reasons
activist Floyd Brown and his
aid
was an act of private despair, why did the
crime-scene photo of Vincent
that have been
Citizens United group, which
White House urgently remove documents
rly
Foster's body before it was
pretty well
feeds information to the news
from his office-and then accept the scruti-
ere
moved" out of the park where
explained?
media and some Republicans.
ny of an independent counsel, rather than
a
it had been discovered. The
47% It was a sui-
Brown employs a full-time in-
make the papers public? Exactly what per-
tabloid, which has begun to put
cide for reasons
vestigator named David Bossie
in
sonal business was Vince Foster doing for
quotation marks around the
still not fully
to dig up dirt on Clinton. Last
ble
the Clintons at the time of his death? Why
word "suicide" in stories about
explained?
week Brown claimed to have
weren't police and medical reports on his
ng
Foster, also asserted that "lit-
15% It was not
"new clues that suggest Foster
his
death made public long ago? The adminis-
tle blood loss" was evident at
a suicide?
did not commit suicide."
hy
tration isn't answering any of those ques-
the scene-which could be tak-
FOR THIS NEWSWEEK
But the foul-play stories
of
tions in public. And as long as it hunkers
en as a sign that the fatal shot
POLL, PRINCETON SURVEY
RESEARCH ASSOCIATES
didn't stand up. Last Friday,
down behind its stone wall, the rumor-
or-
was fired into Foster's head
INTERVIEWED 604
ABC News, which apparently
SS-
somewhere else.
ADULTS BY TELEPHONE
mongers are free to exercise and exploit
MARCH 11. 1994 THE MAR-
had been fed by the adminis-
their lurid imaginations.
È
Partisan, if not downright
GIN OF ERROR IS */ 5 PER-
is
CENTAGE POINTS. SOME
tration, said it had inspected a
RUSSELL WATSON with
malicious, speculation that the
RESPONSES NOT SHOWN.
gruesome set of crime-scene
THE NEWSWEEK POLL
MARK HOSENBALL in Washington
© 1994 BY NEWSWEEK. INC.
PHYLLIS BRANDON DEMOCRAT-GAZETTE
MARCH 21, 1994 NEWSWEEK 33
ABC NEWS (BOTTOM)
AFFAIRS
TV. but that's it." He added
that the Clintons stopped re-
TELL
AGNEW
cover federally insured depos-
its lost by insolvent S&Ls-had
ceiving information on the part-
THE
STOP
virtually written off any fur-
nership after March 1992. Their
ther criminal investigation of
assets have since been placed
TRUTH
THE LIES
Madison. But in March 1992.
in a blind trust. Smith. a Repub-
The New York Times published
lican. is angry at what he says is
its account of McDougal's rela-
a reckless partisan charge.
tionship with the Clintons.
"Here we have 81 U.S. repre-
which included the ill-fated
sentatives. They represent us.
Whitewater partnership. The
They're supposed to have some
IT'S ETHICS,
story's implication was that
sense of justice," he said. "But
McDougal had offered the
they made not one phone call to
politically powerful couple a
check and see if their informa-
tion might not be false."
STUPID!
sweetheart land deal in ex-
change for favorable regulatory
Meanwhile. the White House
treatment for his banking in-
still faces the inevitable pros-
terests. The RTC decided to
pect of congressional hearings
have another look, and put
on Whitewater. The NEWS-
Lewis in charge of the renewed
WEEK Poll shows that a small
investigation.
majority of the public-52 per-
THE POLITICAL TOLL: Partisan critics took on a more strident
By the summer of 1992,
cent-would like to see them.
tone, and some protesters gathered in Washington
according to sources, the RTC's
Fiske secured a partial vic-
Kansas City office had com-
tory last week, when Senate
CHARLES TASNADI-AP
piled a 21-page report targeting
GOP leaders agreed to hold off until after
Mo., field office, is expected to offer de-
McDougal and his wife, Susan. for crimi-
June 1, giving him time to wrap up at least
tailed testimony about her disputes with
nal investigation. Agency sources say
the White House phase of his investigation.
agency officials.
that the Clintons were not named as inves-
But the administration faces the immediate
Lewis, who would not return phone calls
tigative targets. but were nevertheless
problem posed by the House Banking
last week, is a key figure in the Madison
mentioned as potential beneficiaries of
Committee. where Republicans want to
investigation. The story begins in 1990,
possible illegal acts by the McDougals,
turn next week's routine hearing on sav-
when McDougal was acquitted on federal
including the draining of Madison ac-
ings and loan regulation into a Whitewa-
bank-fraud charges that grew out of Madi-
counts. A summary of the report reached
ter forum. The panel's ranking minority
son's 1989 failure. At that point the RTC-
top officials at the Justice Department
member, Rep. Jim Leach, released a list of
created by the Bush administration to re-
in early October 1992, but the Bush admin-
40 potential witnesses that
istration-already under fire
reads like a who's who of
WHITEWATER METER
for charges that State Depart-
Whitewater. from James and
ment officials had tampered
Susan McDougal to a Rose
This week, NEWSWEEK installs a meter to help gauge Whitewater rushing by.
with Clinton's passport file-
Law Firm courier who alleged
What looks trivial now may look criminal later-and vice versa:
elected to ignore a matter
last week that documents be-
bound to cause more trouble
longing to Vincent Foster were
5
SHREDDING: Shredding at law firms is routine. And
on the eve of a presidential
destroyed after Fiske had an-
the Rose Law Firm shredders say they saw nothing
election.
nounced that he would be re-
about Whitewater in the old documents they say
The case sat in the Jus-
viewing Foster's death.
TRIVIAL
belonged to Vincent Foster. Plus, it seems unlikely
tice Department's criminal di-
Leach will face a fight from
CRIMINAL
that in a genuine cover-up a 20-year-old courier
vision through the transition to
Democratic Banking chairman
would be enlisted to destroy evidence. But given Foster's suicide, why
the Clinton administration. In
Henry Gonzalez. who will at-
were any of his files destroyed? Anonymous sources claim that Hillary
March 1993. attorneys conclud-
tempt to bar Whitewater ques-
Clinton herself ordered shredding in 1992. If she did, the meter will move.
ed that the matter did not war-
tions. But if the hearing does
rant investigation, but left the
come off. it could raise new
5
6
RTC BRIEFINGS: Two briefings were merely improp-
final decision to federal prose-
questions about political inter-
er; one looks like something worse. On Sept. 29, 1993,
cutors in Little Rock, who
ference in the federal investiga-
Treasury general counsel Jean Hanson told White
quickly concurred. But it was
tion of Madison Guaranty.
several months before the RTC
Leach charged last week that
TRIVIAL
CRIMINAL
House counsel Bernard Nussbaum that the Clintons
would be named as beneficiaries of possible illegal
investigators in Kansas City
investigators in the Resolution
activity at Madison Guaranty S&L. Unlike the later meetings, that early
learned of Justice's decision
Trust Corporation (RTC) were
heads-up suggests political involvement in a legal proceeding. But there's
to bounce the referral. In
"gagged and possibly coerced"
no evidence right now that the White House tried to block a probe.
the interim, an RTC source
by agency lawyers who want-
says, Lewis and others con-
ed to delete mention of the
5
HILLARY'S STOCKS: This one looks like pure partisan-
tinued to gather information
Clintons from documents rec-
ship. Although the Clintons should have put their
for a new, expanded criminal
ommending the Madison case
holdings into a blind trust earlier, it's hard to imag-
referral.
to the Justice Department
ine that Hillary knew one of her investment funds
This time, according to con-
for possible criminal action.
TRIVIAL
CRIMINAL
was selling a few health-care stocks short before
gressional and RTC sources.
Leach refused to elaborate. But
her attack on drug companies. Besides, the fund lost more on health
Lewis had collected infor-
NEWSWEEK has learned that
stocks it held. Lawmakers making a stink routinely vote on health issues
mation suggesting that the
Jean Lewis, a criminal investi-
without divesting.
Whitewater land venture-co-
gator in the RTC's Kansas City,
(Continued on page 36)
34 NEWSWEEK MARCH 21. 1994
You uttered the magic phrase "mistakes
Hillary: 'I Made Mistakes'
were made." Do you regard yourself as hav-
ing been responsible for any of those?
Oh, sure. Hindsight's always 20-20. I nev-
Interview: Reflections on some missteps
er would have participated in the invest-
ment in the first place. Of course, I would
have tried to get everybody to focus on it
sooner and earlier to try to deal with. So I
think that of course I made mistakes.
W
ITH QUESTIONS ABOUT HER ROLE
in Whitewater threatening to de-
That's part of the learning process you go
rail her husband's agenda, Hillary
through when you've never been accused
Rodham Clinton agreed to an interview
of doing anything wrong before.
as long as it did not touch on specific
issues before a grand jury. She spoke with
So, if there was nothing wrong, why were
NEWSWEEK'S Eleanor Clift in the White
you so resistant to making records public?
House last week. Excerpts:
My theory is that you have a thing about
privacy.
NEWSWEEK: You came to Washington a gen-
I have a big thing about it. I really have
eration ago as a member of the Watergate
been pulled kicking and screaming to the
committee. Now your counterparts are
conclusion that if you choose to run for
working for Fiske. Do you see irony in that?
public office you give up any zone of pri-
CLINTON: Oh, I don't think there's any
vacy at all. I get my back up every so often
comparison. I think that the idea that
about even having to answer questions
there is is way overblown and should be
that I don't think are in any way connect-
debunked easily if anybody looks at his-
ed with the fact that my husband is in
tory and what was at stake in the whole
public life. That's what's going to be con-
Watergate investigation.
cluded about all this- people are going to
spend millions and millions of dollars and
I guess the only thing I see comparable is
they're going to conclude we made a bad
that a lot of people want to launch careers
land investment.
based on finding something.
Well, you can't control that. We don't
FIRST LADY: 'If you
run for public
The attacks against you are really about
worry about the outcome anyway. We
office you give up any zone of privacy'
more than Whitewater. They really go to the
want the special counsel to do his job as
whole role that you're taking on and wheth-
soon as possible so that we can get this off
ROBERT TRIPPETT- SIPA
er you can be the spouse of a president and
the country's radar screen and get on with
In trying to look at how this mess reached
a policymaker.
what my husband is trying to do for the
this level, it seems as though Vince Foster's
People have been doing that to women in
country.
death has a lot to do with it. Do you see a
this position since Martha Washington. I
connection there?
was not the first to testify before a con-
Sometimes those investigations take on a
I don't know. I think that mistakes were
gressional committee, I was not the first
life of their own. Fiske has taken out a lease
made along the way in handling this. I
to be criticized by the press, I was not the
for three years in Little Rock.
have learned a lot about the needs of the
first to have issues that I was involved in
I don't know what he's going to be doing
media and how they kind of make stories
questioned or attacked. I look at what was
for three years, but obviously we want
important. I suppose that in today's at-
said about Eleanor Roosevelt. There's al-
him to do his work and do it as expedi-
mosphere any unanswered questions are
ways the possibility that no matter what
tiously as possible.
going to be grist for the mill.
you do you're going to be criticized. I do
I've tried to learn a lot about suicide
think that the fact that I am involved in an
You present a rational face to the world.
and particularly about depression ever
issue [health care] of such magnitude with
How angry are you, about the way this has
since Vince's death-a lot of us here in
so many interests at stake has raised the
mushroomed from a little land scandal
the White House have. We've passed
visibility of my role and has caused some
It's not even a scandal-it's not a scandal.
around books. We don't have any an-
to question it for their own purposes.
A failed land transaction.
swers either. But we don't presume to try
to make up answers. I just want this to be
This White House has a different style than
into an allegation that you and your
put to rest for his family's sake and for the
what the city is used to.
husband are corrupt?
sake of all of us who were his friends. It is
I think that we have one of the most colle-
I'm very sad about it. But I
extremely painful to have this
gial, supportive White House environ-
also have a full life to live. I'm
NEWSWEEK POLL
used as a political football by
ments I have ever read about. Does that
still my husband's wife, I'm
What is your
people. It is really unfair to
mean everybody agrees with everybody
still Chelsea's mother. I'm still
opinion of Hillary
his family particularly. But I
else 100 percent of the time? Absolutely
involved in a lot of other activ-
Clinton?
guess I now understand why,
not. In fact, the president wouldn't want
ities that are important to me
CURRENT
in the face of a tragedy, some
us around if that were the case.
and my family. So I don't real-
38° Favorable
people will want to make up
ly get the luxury of expending
Unfavorable
their own answer because
Edward Bennett Williams used to say that
too much energy being angry
2/94
they can't deal with what
Washington likes to burn a witch every
with people who are being un-
50% Favorable
are often life's unanswerable
three months.
fair and untruthful.
Unfavorable
mysteries.
I think that's right.
THE NEWSWEEK POLL
MARCH 11. 1994
MARCH 21. 1994 NEWSWEEK 35
(Continued from page 34)
But Hillary is one of the rea-
owned by the McDougals and
sons Gergen has failed to thrive.
the Clintons-may have con-
An incrementalist in all things,
tributed to Madison's eventual
he counseled compromise on
failure. Congressional sources
health-care reform to attract
say Lewis encountered resist-
GOP support, and stayed close
ance from the RTC attorney re-
to Rep. Jim Cooper, sponsor of
viewing the referral and that
a rival plan. As a Watergate sur-
she believes it may have been
vivor wary of drip-drip disclo-
the result of outside pressure.
sure, Gergen urged in January
Sources say the new referral.
that the Whitewater documents
passed to the Justice Depart-
be made public. The president
ment in September 1993, again
seemed to agree, but Mrs. Clin-
mentions the Clintons as poten-
ton objected, and she prevailed.
tial beneficiaries of McDougal's
Gergen's rehabilitation on
activities.
"Nightline" wasn't exactly a tri-
But sources say that the
umph from his perspective. He
debate within the RTC became
has come to dislike his image as
so heated that both Lewis
spin doctor. In an October New
and the agency attorney in-
York Times Magazine story, he
volved were removed from the
DAVID GERGEN: A disappointed quest for a policy role
talked about his "guilt" over
case. Sources familiar with
helping to turn politics into a
the RTC's Kansas City office
RICK BLOOM-SABA
public-relations game and how
say her reassignment came in November
Where Did
he hoped to change that in the Clinton White
1993. That would put it shortly after
House. But the author, Michael Kelly, ques-
a series of White House contacts with
tioned whether Gergen's mea culpa was just
Treasury Department officials regard-
ing the Madison probe now under investi-
David Gergen
another form of spin. Gergen was devastat-
ed by the portrait of himself and he became
gation by Fiske.
even more determined to become a substan-
Right now, evidence of political inter-
Go Wrong?
tive player. "He wants to be Jim Baker," says
ference is strictly circumstantial. The
a colleague. Baker, after all, rose from a
RTC turmoil may be attributable* to
White House staff position to become secre-
honest disagreements among bureaucrats.
tary of state.
If Leach doesn't deliver credible witness-
Spin: A disappearing act
It was impossible. Gergen wasn't taken
es, it will only deepen voter suspicions
that the whole affair is primarily parti-
on Whitewater
seriously as a policymaker. Aides snicker
over how hard he fought to be listed as
san blood sport. The NEWSWEEK Poll
a member of the official delegation-not
shows that 64 percent of Americans
a communications adviser-on the presi-
believe that politics are driving Whitewa-
AVID GERGEN WAS HIRED LAST SPRING
dent's recent trip to Europe. After the Soma-
ter. Nearly three quarters think the White
to help Bill Clinton overcome the
lia debacle, Gergen, at the president's
House's preoccupation with the case is
growing public impression that he was
urging, sought a larger role in foreign af-
diverting attention from important is-
a bumbler. There was the controversy over
fairs. National-security adviser Anthony
sues like health-care and welfare reform.
gays in the military, the failed appointments
Lake resisted, believing another voice
"What scares me is that we're going to
and the infamous runway haircut. Gergen, a
would diminish his own; Gergen backed off.
put all our hopes into destroying the
veteran of three GOP administrations and
Lake jokingly rubbed his sweater sleeve
president," says GOP polltaker Frank
the architect of Ronald Reagan's media im-
against Gergen's arm last week and de-
Luntz. "Republicans won't benefit unless
age, promised to improve relations with the
clared, "This is the only friction between us."
they're seen as offering something better."
press and to add luster to the public view of
There was some tension after the arrival in
But the White House has a
the president. But as the Clin-
December of New York lawyer Harold Ick-
long way to go before it can
NEWSWEEK POLL
tons became mired in Whitewa-
es, a liberal Hillary ally. He and Gergen
get itself heard again. For the
ter and vulnerable to attacks
circled each other warily for weeks before
short term. the administration
Who is most re-
on health-care reform, Gergen
they reached what Gergen calls "a level of
faces a seriously diminished
sponsible for the
mysteriously disappeared from
understanding and collegiality." But young-
capacity to pursue its agenda.
problems the
view. Regarded with suspicion
er White House aides see Gergen's journey
Subpoenas, nightly news foot-
White House has
by Clinton loyalists, he was
of renewal as narcissistic "Davidism" and his
age of senior officials march-
had dealing with
the Whitewater
squeezed out of the high com-
West Wing office as a short stop on the way
ing to the grand jury room and
case?
mand on both issues. He became
to a big job. Gergen says he'll stay through
the probability of congressional
14% Bill Clinton
such a marginal figure that one
this year's legislative season and then reas-
hearings all stand in the way.
White House aide suggested
sess. He adds, partly in jest, "The best thing
For too long, it regarded
12% Hillary
Clinton
stashing the garbage bags of
for me psychologically and physically would
Whitewater as a minor irritant.
subpoenaed Whitewater mate-
be to find a university with a good gym."
Now it will pay the price for
11% Administra-
rial in his office. He finally re-
When Whitewater boiled over last week,
tion aides
that shortsightedness.
emerged last week to defend the
Gergen volunteered for TV duty. His ability
BILL TURQUE with ELEANOR
14% Partisan
Republicans
Clintons on "Nightline." His
to offer reassurance about the Clintons
CLIFT. MARK HOSENBALL.
BoB COHN and HOWARD FINEMAN
performance won him a hug
reminded everyone-including himself-
25% The media
in Washington and GINNY CARROLL
from Hillary and a standing ova-
why he was there.
THE NEWSWEEK POLL,
in Little Rock
MARCH 11. 1994
tion at a staff meeting.
ELEANOR CLIFT
36
NEWSWEEK MARCH 21. 1994
NATIONAL AFFAIRS
A Whitewater
Bill Clinton
Hillary Clinton
A former partner with
A former Whitewater and
Hillary and the
Rose partner. she has been
Portrait Gallery
McDougals in Whitewater
criticized for representing
Development Corp., an
Jim McDougal's Madison
unsuccessful vacation-
The Whitewater investigation has focused
Guaranty before a state
home development in the
regulator appointed by her
on a circle of Bill and Hillary Clinton's
Ozarks. The Clintons sold
husband. Once also invol-
political allies and business associates.
their interest in late 1992.
ved in a controversial legal
case with Dan Lasater.
THE ADMINISTRATION
THE PROSECUTOR
THE TREASURY/RTC
Harold Ickes
Bruce Lindsey
Vince Foster
Bernard Nussbaum
Robert Fiske
Roger Altman
The deputy chief of
Senior adviser learned of
A former Rose partner
White House counsel
A Republican prose-
The deputy Treasury
staff and Whitewater
Madison criminal referral
and deputy White House
resigned under pressure
cutor with a reputation
secretary and acting
damage-control
from Nussbaum: Clinton
counsel. His suicide in
two weeks ago; emptied
for toughness, he was
RTC chairman admits
strategist was present
said he was "probably"
July fueled speculation
Foster's office and
chosen by Attorney
he called a meeting of
at a meeting with
told of referral by Lindsey.
about the Clintons'
presided over all three
General Janet Reno to
White House officials
Treasury officials to
Attended meeting be-
finances, including
controversial Treasury/
investigate Whitewater.
to discuss Madison.
discuss Madison.
tween White House and
Whitewater, which
White House meetings.
Has recused himself
Treasury officials.
he had handled.
from further agency
THE ATTORNEY
deliberations.
Lloyd Cutler
Margaret Williams
Patsy Thomasson
Webster Hubbell
David Kendall
Jean Hanson
The former White
Hillary's chief of staff
Managed Dan Lasater's
Bill Clinton's close
Bill Clinton's personal
In critical meeting, the
House counsel to
attended a meeting of
assets during the FSLIC
friend, former Rose
lawyer received
Treasury and acting
Jimmy Carter was
Treasury and White
case while he was in jail on
partner and now the
Whitewater documents
RTC counsel told
appointed last week
House officials todiscuss
drug charges. Now a
No. 3 at Justice, he faces
from Foster's office;
Nussbaum that the
as Nussbaum's tem-
Madison. She was among
White House aide, she was
questions about whether
later negotiated a broad
Clintons were men-
porary replacement.
the first to go into Foster's
also among those who
he charged the Little
subpoena that had
tioned in a criminal
office after the suicide.
searched Foster's office.
Rock firm for personal
the effect of sealing
referral as potential
expenses and over-
more documents from
beneficiaries of
billed clients.
public inspection.
Madison misconduct.
THE CRITICS
THE ARKANSAS CROWD
Sen. AI D'Amato
Rep. Jim Leach
Beverly Bassett
James McDougal
Susan McDougal
William Roelle
Probed Altman about
Widely respected
Schaffer
Invited the Clintons to
An equal partner in
Sources say former
controversial
GOP moderate, he
Appointed state securities
invest as equal partners
Whitewater, she headed
RTC senior vice
Whitewater briefing:
led calls for special
regulator by Governor
with him and his wife,
the public-relations firm
president told Hanson
critics say his own
prosecutor and is
Clinton, she approved a
Susan, in the Whitewater
that took a controversial
and Altman of RTC's
ethics lapses make him
pushing for congres-
novel plan proposed by
Development Corp.
loan from David Hale's
plans to refer Madison
poor choice to lead
sional probe into
Madison's attorney, Hil-
McDougal later owned the
company and used part of
to Justice for criminal
the charge.
Whitewater affair.
lary Clinton. to prop up the
Arkansas thrift, Madison
it to buy a piece of
investigation.
thrift. Previously, Schaffer
Guaranty, which failed in
property, later deeded to
worked for a law firm that
1989 at a cost of $60 million
Whitewater. The loan was
represented Madison.
to taxpayers.
never repaid.
OVAL PORTRAITS OF CURRENT
OR ARKANSAS RESIDENTS
PHOTOS. LEFTTO RIGHT.TOPTO
BOTTOMEDOWNING-NEWSWEEK
COLBURN-PHOTOREPORTERS.
CHENET-NEWSWEEK.CHENET-
NEWSWEEK.STALEY-SYGMA
Floyd Brown
MARKOWITZ-SYGMA MeNAMEE
Robert Bartley
Dan Lasater
David Hale
Jeremy Hedges
FORNEWSWEEK TRIPPETT-
Conservative operative
The editorial-page
Bond broker and FOB was
A retired Little Rock judge,
A Rose Law Firm
SIPA.DOWNING-NEWSWEEK JEFF
and creator of Willie
editor of The Wall
sued by a failing Illinois
he claims Bill Clinton and
MITCHELL SYKES-ARKANSAS
courier, he told a Little
DEMOCRAT-GAZETTE.KLEPONIS
Horton TV ads
Street Journal pursued
thrift and FSLIC for alleged
Jim McDougal pressured
Rock grand jury that he
NEWSWEEK. MEYERS-NEW
for George Bush, he's
Whitewater story
unauthorized trading.
him into making a $300,000
and a colleague used a
YORK TIMES. JOHN P. CAVANAUGH
churning out faxes
before it was hot: in a
Hillary helped the Feds in
MeNAMEE FOR NEWSWEEK
loan to Susan McDougal's
shredder at the firm to
MeINTURF-CEDAR BAPIOS
encouraging reporters
suicide note, Foster said
the case, which Lasater
company in 1986 to solve
destroy Foster files after
GAZETTE KEESEE-ARKANSAS
to be more aggressive in
the WSJ editors "lie
managed to settle cheaply
Madison's financial prob-
Fiske was appointed
DEMOCRAT-GAZETTE TEDFORD-
covering Whitewater.
without consequence."
in 1987. Critics accuse Hil-
lems. Hale faces unrelated
special counsel.
SABA NOCREDIT
lary of conflict of interest.
loan-fraud charges.
TIMES. ARKANSAS DEMOCRAT
GAZETTE MITCHELL-SYGMA
38 NEWSWEEK MARCH 21, 1994
PUBLIC LIVES
Puffing Motes Into Dust Storms
Why no one will give the Clintons the benefit of the doubt
BYJOE KLEIN
N THE AFTERNOON LLOYD CUTLER WAS NAMED COUN-
acted in any way to impede the investigation, they should be
O
sel to the president. after Bill Clinton had exhausted
fried. But they have not yet been accused of anything remotely
every last question from the press about the Whitewa-
resembling that anything that begins to explain the hysteria
ter hysteria, the White House staff held a pep rally for
this case has evoked in the press.
the First Family in the East Room. This is becoming
Which raises an interesting question: what does explain the
something of a ritual. There was a rally to bolster the president's
hysteria? What justifies disingenuous banner headlines like The
spirits after his mother died. There will, no doubt, be many more
Washington Post's: CLINTON REJECTS LIKENING WHITEWATER
such before this strange ride is done. Both the president and Al
TO WATERGATE? That same day R. W. Apple offered a ridiculous
Gore addressed the troops-but the real passion came from
hyperinflation of the scandal in The New York Times, an
Hillary Rodham Clinton. She spoke about health care. She told
"analysis" that acknowledged Whitewater had produced "noth-
the story of a woman in New Orleans who had breast cancer, but
ing approaching" the abuses of power involved in Watergate but
no health insurance-the company she
then blithely compared such "similar-
worked for didn't offer it-and the doc-
ities" as the reluctance to respond to
tor told her that all he could do was
press inquiries and the president's
watch the tumor "and see what hap-
sounding as "defensive as Mr. Nixon
pens." That was why they had come to
used to in proclaiming the virtues of
Washington, she said: to help people
those who worked alongside him." (Ap-
like that woman. The crusade was all.
ple might easily have been comparing
The applause was tumultuous.
Clinton's early performance on NAFTA
There was, in the First Lady's re-
to Watergate.) And then there were the
marks-as there often is-an implicit:
television networks, giving time to an
How dare they question our motives?
ethical falling-rock zone like Sen. Al-
How dare they question our rectitude?
fonse D'Amato, simply because his
It's a familiar sound, the mating call of the
sound bites ("as great if not greater than
liberal elite in high dudgeon. It divides
Watergate!") were the most egregious.
the world between us and them, the high-
Sleazeballs: Hysteria, in this case, has
minded and the greedy. The First Lady's
many fathers. One is that a cancer on the
indignation seems particularly problem-
presidency is more sexy than health care
atic in the case of Whitewater, which
or welfare reform. Another is the fact
centers on a decision she made in the late
JAMES COLBURN-PHOTOREPORTERS
that the Clintons did do business with
1970s: to make money. Her choices were
The crusade is all: First Couple
some mortal sleazeballs down in Arkan-
never quite so simple as the ones she laid
sas and may have brought a few along
out, memorably, during the campaign: to make money
A cancer on
with them to Washington. A third, not to be underes-
or bake cookies. She could have done high-minded,
timated, is the suicide of Vince Foster, which adds
liberal work. She could have defended indigents in-
the presidency
immensely to the "something fishy here" quotient.
stead of banks. She chose to make money. Some of
is sexier than
But the real reason Whitewater has puffed so large is
her clients were not the sort of people who listen to
that very few people in Washington are willing to
National Public Radio; many of them were, perhaps,
health care
give the Clintons the benefit of the doubt. It's not just
aware that she was married to a high-ranking official
or welfare
the press; I haven't noticed many congressional
in the State of Arkansas. These were not moments
Democrats rushing to their defense, either.
she will dwell upon in her inevitable. best-selling
reform
Why not? In part, because the president's effort to
autobiography. In fact, she has never really discussed
finesse all sides is catching up with him. Nobody
her business career. The natural assumption is that she has
quite trusts him-liberals think he's a sellout; moderates think
something to hide, and she might: but she may just be embar-
he's a secret liberal. He has made deals but few friends. He has
rassed by the whiff of venality. And that embarrassment, the
sought shifting alliances and won disposable loyalties. As for the
involuntary cringe that occurs when names like McDougal or
press, the combination of loose morality and high ideals presents
Lasater are recalled, the desire to just forget about the welter of
a gloriously fat target. Clinton's truth-shaving during the cam-
smarmy transactions-to not even think about this because there
paign, especially about the draft, is well remembered-and the
is health care to discuss-may well be the mote of dust at the
First Family's (especially Mrs. Clinton's) apparent disdain for
heart of the White House's incredibly self-destructive reluctance
the less-than-pure rankles. Their administration is now in peril.
to face this problem squarely.
The time for Watergate comparisons may yet come, but what if it
So far, and despite the efforts of a brigade of intrepid investi-
doesn't? Do we, the righteous guardians of the truth, admit that
gative reporters. not much else has turned up. There was a series
we blew this all out of proportion-or do we continue to puff
of contacts between Treasury Department officials and the
motes into dust storms in order to justify our investment? The
White House staff. These were stupid, but-on the evidence as it
Clintons have earned their isolation. But they deserve a more
exists-not criminal. Of course. if it turns out that the Clintons
sober hearing than this lunatic caldron.
MARCH 21. 1994 NEWSWEEK 39
THE WHITE HOUSE
The Trials
Of Hillary
The First Lady's way of doing business and dealing with
others helps explain why Whitewater grew so messy
By NANCY GIBBS
Whitewater, but this was no charm offensive:
she met her guests from TIME not in the cus-
ILLARY RODHAM CLINTON HAS NEVER
tomary spots-the solarium or the family quar-
H
had much use for the national press
ters-but in a combat zone, the Map Room
corps, but by late last week, when the
where Franklin Roosevelt plotted troop move-
pressure for her to tell what she
ments throughout the Second World War.
knew about Whitewater was rattling
The First Lawyer came well prepared: to
the very walls of the White House,
even the softest questions she had a hard-
she finally agreed to let select reporters
boiled answer. "We made lots of mistakes; I'd
through the door. It was her first news inter-
be the first to admit that," she said. though just
view in weeks, and her first ever devoted to
about everyone else in the White House al-
ready has. If it turns out that she and her hus-
band underpaid their taxes on Whitewater
land deals. she said. they will make up the
difference. "We never should have made the
investment. But, you know. those are things
you look at in retrospect. We didn't do any-
thing wrong. We never intended to do any-
thing wrong.
It was great theater and good politics, but it
was also rather late. Even as the Clintons con-
tinued to insist that Whitewater wasn't really a
story; that they wanted everything out on the ta-
ble so they could prove their innocence, the
White House was grinding to a halt so that aides
could go out and find lawyers to help sort
through their garbage and assemble all the doc-
uments that will float past the grand jury and in-
evitable congressional committees for months
White House aides say the
crisis has brought the couple closer-more
phone calls, more talking, a hug in public
Diana
to come. A high-ranking Clinton official.
husband had appointed: for whom White
As Republicans shouted for congressional
distraught at seeing his name smeared,
House counsels Vince Foster and later Ber-
hearings, officials from Vice President Al
found himself reassuring his children that
nie Nussbaum acted as personal lawvers
Core on down fanned out to television
he is not going to jail. "Don't worry, Dad-
rather than public officials; whose chief of
shows to express their measured contri-
dy," said one child. "We still love you."
staff Maggie Williams, retrieved files from
tion. "Whitewater isn't about cover-ups,"
The polls, however, were especially un-
Foster's office after his suicide; who fought
said counselor David Gergen on Nightline.
loving last week. Only 35% of Americans
to the end the idea of appointing a special
"It's about screw-ups." Said policy adviser
surveyed in a TIME/CNN poll think they can
prosecutor. Williams (of whom one White
George Stephanopoulos: "Did the damage-
trust Bill Clinton, down from 40% in Janu-
House official said. hard to ollowhere
control team create a lot more damage than
ary. More than half of those polled think
Maggie ends and Hillary begins and Hil-
it controlled? I think that's probably right."
the Clintons are hiding some-
As for the First Lady, she
thing about Whitewater, and
struggled gamely through
a third think they broke the
How much attention are you
Did Bill or Hillary Clinton do
White House dinners and the
law. Even the financial mar-
paying to the Whitewater
anything illegal in these
endless health-care meetings,
kets decided they didn't like
issue?
matters?
"but I'm not sure anything is
what they saw: on Thursday
January
March
64
Hillary
happening," an official admit-
the bond market shuddered
Great deal/
Yes
ted. "She's not running them.
with rumors about new
48%
some
She's not talking, and she just
Whitewater bombshells,
No
sort of sits there." Friends pri-
prompting investors around
Little/
51%
Not sure
vately acknowledged that the
the world to dump their U.S.
none
attacks were taking a toll.
Treasury bonds and buy gold.
"She is too proud to call for
The sudden inflation of
Are the Clintons hiding some
Is Hillary Clinton more ethical
support," said Senator Jay
Whitewater from a nuisance
things about their role in
than most politicians?
Rockefeller, who has worked
into a crisis, Administration
at her side on health care for
officials insisted, was due
these matters?
Yes
the past year. "And you will
more to their colleagues' stu-
Yes
No
not catch a muscle of her jaw
pidity than to any new evi-
moving, but if I were her I
dence of misdeeds. The Pres-
No
The same
would be seething over
ident said it was all a problem
Whitewater." Hillary is care-
From
for
of perception. Desperate to
ful to keep her anger private,
move on, they could even joke about it; ad-
lary's press secretary, Lisa Caputo, sat in
but it is impossible to hide. "People can lie
viser Bruce Lindsey cracked that
front of grand last Thursday to ex
about you on a regular basis, and you have
Whitewater was the site of the future Clin-
pla in "whether by meeting at
to take it," she said. "That's very hurtful. To
ton presidential library. But the greatest
regulators
White
see the things that are said without any ref-
perceptual change had implications far be-
House
utation or correction most of the time is
yond Whitewater and its tributaries: the
very painful to your friends and your fam-
President's wife, the most unaccountable
its ties to the bankrupt Madison Guaranty
ily. I worry a lot about them."
member of any Administration, was being
Savings & Loan.
The whole thing, the First Lady insist-
called to account for her actions.
In the archaeology of scandals, nothing
ed, was a Republican plot to discredit her.
From the start, Whitewater has been
dug up so far has been ruinous, but all of it
That easy defense will not provide much
more about Hillary than her husband. She
is corrosive in a White House struggling to
comfort for long. Several polls last week
was the one who handled the family fi-
shield not one but two embattled leaders.
showed that most people agreed with Hil-
nances on the botched land deal; who rep-
After months of slippery evasions. the Ad-
lary that the Republicans were playing par-
resented clients in front of a regulator her
ministration abruptly changed strategies.
tisan games. But the public also didn't like
THE PLOT SO FAR
July 20, 1993
Sept. 29
October 8
November 9
Foster. now deputy to
Jean Hanson, general
The RTC officially
Republicans start
White House counsel
counsel at the Treasury
requests a Justice
calling on Attorney
March, 1992
Fall
December
Bernard Nussba
Department. informs
Department criminal
General Janet Reno
During the presidential
The Bush
The Clintons sell their
is found dead in a
Nussbaum that the
investigation of White-
to nominate a
campaign, the press
Administration's
Whitewater stake for
Virginia park, an
Clintons will be named
water and Madison. Six
special counsel to
begins asking about the
Justice Department
$1,000 to partner
apparent suicide.
in an inquiry by the
days later, Nussbaum
look into any ties
Clintons' investment in
balks at invest-
James McDougal. head
Nussbaum and Maggie
Resolution Trust
meets with Treasury
between Madison
the Whitewater real
igating Whitewater
of the failed Madison
Williams. Hillary
Corporation. the federal
officials over Whitewater.
and Whitewater.
estate venture. Clinton
during election
Guaranty Savings &
Clinton's aide. search
agency cleaning up the
Meantime, White House
commissions a report
time for fear an
Loan. Vincent Foster,
Foster's office, and
S&L mess. Deputy
adviser Bruce Lindsey
that says they made no
inquiry will smack
the Clintons' lawyer and
Nussbaum passes
Treasury Secretary
informs the President of
profit on a $69.000
of partisanship.
Hillary's law partner,
documents on to the
Roger Altman, a long-
the investigation. On
investment. but
discovers that White-
Clintons' personal
time atly of the Clintons,
Oct. 31. reports of the
incomplete records pre-
water has not filed tax
attorney.
belongs to the oversight
RTC investigation appear
vent a full examination.
returns for three years.
board of the RTC
in the press.
30
TIME
what little it knew about Whitewater. and
realize the dangers of
"I'm above the law.' It's
was not prepared to grant Hillary the auto-
moral hubris. particularly
almost Nixonian. And it's a
matic benefit of the doubt she seemed to
as revealed by a genera-
tragic flaw."
expect. "She's still in the mode of saying, 'I
tion of '60s reformers
didn't do anything wrong,`" said a White
who campaigned against
Whitewater has intro-
House source. "So why should she do a mea
the '80s as the Decade of
duced all sorts of ironies
culpa?" Said the First Lady last week: "I
Greed. "They think of
into the most interesting
have to admit, for the last two years I was
themselves as the most
marriage in America. The
bewildered by people's interest in this. It
ethical people in the
official word coming from
happened many years ago."
world." says an Adminis-
the White House was that
tration insider. "They
"this has brought them
For all her disdain for the national
think everything they do
closer together. There is
press, Hillary Rodham Clinton had a long
or say is aboveboard and
more phone calling dur-
honeymoon. By and large, reporters have
for the good of the coun-
ing the day, more talking
gently chronicled her reinvention of the
try. Therefore they can't
back and forth, a need to
First Lady's office as she added a major pol-
understand why some-
reach out to each other
icy role to the traditional portfolio of host-
one would doubt their in-
If everybody in
more," an official ob-
ess and cheerleader. The glowing press ac-
tegrity. That is a big part
served. "It is probably a
counts of her crusade for health-care
of the problem."
the country had a
natural reaction to stress
reform, full of charmed lawmkers and
It is a problem for the
President's bushy-tailed
character as strong
and adversity coming
cheering crowds, helped boost her popu-
from outside." The stress
larity higher than her husband's at times.
staffers, who last week
Profiles charted the spiritual journey that
were being called upon to
as hers, we wouldn't
cannot have been helped
by the President's having
inspired her social activism, the theolo-
explain why 15 top offi-
have half the
to fire Nussbaum, his
gians she read, the ministers she admired.
cials had been working
wife's early mentor, or in-
The New York Times Magazine dressed
for more than a year with-
problems we've got
vite a special prosecutor
her in white silk and pearls and captioned
out proper security clear-
ance. White House press
today.
to interrogate her closest
her St. Hillary. Her staff loved the picture.
allies.
secretary Dee Dee Myers
-President Bill Clinton
The Clintons' partner-
HIS WAS RISKY TERRITORY FOR A
admitted that she and
on his wife
ship has inspired unend-
T
public figure: if pride is bad. then
others have been working
ing speculation ever since
one doesn't dare seem proud of
on temporary passes since the Inaugura-
they peeled back the bedclothes a bit on 60
being good. Both Bill and Hillary
tion because, Myers says, she has been too
Minutes to respond to charges of his adul-
came to Washington promising an
busy to do the paperwork. "There are no
tery. Even friends who have known them
end to politics as usual, a rebirth of
excuses," she said. "I should have done it,
for many years have trouble explaining the
$
responsibility, a Politics of Meaning de-
and I just kept putting it off."
dynamic between them; but Whitewater
rived from the Golden Rule. Such a specific
Despite Clinton's evocation during the
confirms some eternal verities about why
claim to moral authority can hardly with-
campaign of a country that "works hard and
they are so different, and so dependent on
stand charges of tax chiseling and corner
plays by the rules," the rules don't always
each other.
cutting by Hillary and those closest to her.
apply in the Clinton White House. Critics
There is an old saying that Methodists
"Can a President credibly advance an ethic
recall the infamous haircut on the runway,
are always looking for a mission, while
of national service," asked Clinton's nem-
the summary firing of the travel staff, the
Baptists think they are the mission. Bill the
esis on the Hill, Congressman Jim Leach,
use of the FBI to investigate the travel opera-
Baptist was single-minded in his pursuit of
"if his own model is one of self-service?"
tion. "The Clinton message is Tm pure,'"
power; Hillary the Methodist made his
Even the President's friends came to
said a veteran of the Reagan White House,
success into her preoccupation. Their
December
January 20, 1994
Late January
February 2
February 25
March 4
March 7-8
Shortly before
After Clinton asks Reno
Following Fiske's
Altman bnefs senior
Under heavy criticism.
The FBI, looking kt
Clinton choses
Christmas, the Clintons
to appoint a special
appointment, an
White House aides cn
Altman removes
Whitewater and
Lloyd Cutler as
reluctantly agree to turn
prosecutor. she selects
employee of the Rose
the RTC'S procedur S
himself from all matters
Madison testimony 200
Nussbaum's interim
over all Whitewater
Robert Fiske, a
law firm is allegedly
At the meeting are
pertaining to Madison
documents. serves
replacement. White
records. The White
Manhattan lawyer, to
ordered to shred a box
Hanson, Nussbaum,
or Whitewater and
subpoenas on 10 White
House officials
House admits that
lead the investigation.
of documents from
Williams and deputy
resigns as head of RTC.
House aides. including
acknowledge there had
documents were taken
Fiske. vowing a -flat-
Foster's files.
chief of staff
effective March 30.
Nussbaum, Williams,
been additional
from Foster's office in
out" examination, antici-
Harold Ickes.
Altman and Ickes. The
conversations between
July. It takes several
pated that both Clintons
Altman would cumit to
next day Nussbaum
the White House and
weeks before all papers
would be deposed under
the meeting at a
Treasury officials
are turned over.
oath. Fiske also says he
Senate hear 1g later
regarding the
will look into Foster's
in the month.
RTC probe.
death.
TIME MARCH 21. 1994
31
friends observe that he
gest that he more than
Some call every day. even when nothing
needs her brains, her log-
owes her.
has changed. She was closer to the latter."
ic, her focus; she needs
Maybe it is because he
The Clintons' Whitewater partner,
his charisma, his humor,
grew up poor and she did
James Dougal, claims that when Bill
his ability to strike the
not that Hillary came to be
Clinton told him they were having money
deal that gets things done.
worried about their finan-
troubles, McDougal decided that his Madi-
"There's a poll saying that
cial security. Bill had al-
son Guaranty Savings & Loan would put
40% of the American peo-
ready known poverty, so it
Hillary on a $2,000 monthly retainer. Mac-
ple think Hillary's smart-
held no terror for him: he
Dougal, who in Arkansas' incestuous poli-
er than I am." Bill likes to
used to say he didn't "care
tics was also a Clinton fund raiser, got his
observe. "What I don't
a lick" about money. Hilla-
money's worth in 1985 when Hillary ar-
understand." he then
ry did not have that luxu-
gued before the state on behalf of measures
deadpans, "is how the
She's more fragile
ry. She had turned her
to keep Madison afloat. The thrift finally
other 60% missed it."
back on the lure of gold-
went under in 1989 at a cost to taxpayers of
But there is the twist:
than she appears.
plated Washington law
$47 million. Whitewater special prosecu-
in Whitewater the smart
firms in order to follow
one goofed-or presum-
And she's worried
tor Robert Fiske has also subpoenaed doc-
Bill to Arkansas and help
uments of a second failed real estate deal fi-
ably did. The other one
I can see it in her
steer him to the Gover-
nanced by Whitewater, this one the 810-
didn't. Like something out
nor's mansion, where he
acre Lorance Heights project outside Little
of Faulkner, the saint may
stiffness.
earned $23,000 a year. It
Rock, which ended with lawsuits by angry
have sinned. Two years
fell to Hillary to make
landowners, foreclosure and a $510,000
ago, Hillary stood stead-
top Clinton
ends meet, which
judgment against Whitewater.
fastly by her husband
administration official
made investments like
through allegations, and
Whitewater all the more
T IS NO SINGLE CHARGE, BUT THE
considerable evidence, of adultery, draft
beguiling. Friends in Little Rock acknowl-
steady accumulation of them, that has
dodging and drug use. Together they went
edge that "money was a real issue." In 1983
the White House reeling. Most dam-
through the grinder again at Christmas with
she and her law partners Vince Foster and
aging of all is the atmosphere of law-
new charges, by Arkansas state troopers, of
Webb Hubbell opened a joint stock-trad-
yerly evasion that suffuses an Admin-
philandering. Now, for once, it is he who
ing company called Midlife Investors. "She
istration so plump with law degrees.
must stand by his woman if he is to keep his
would call me all the time to see how her
The Whitewater "screw-ups," for all the ef-
presidency afloat. He is returning her favor,
stocks were doing," recalls broker Roy
forts to spin them as one-time blunders,
in many ways, though it might be fair to sug-
Drew. "Some investors I never hear from.
arose directly out of a White House power
Does Rose Have
Something to Hide?
By RICHARD LACAYO
HE ATTORNEYS AT THE ROSE LAW FIRM OF LITTLE ROCK
T
have always liked to operate near the center of power.
Their first woman partner was Hillary Rodham Clinton,
who got the title in 1979, the same year her husband be-
came Governor. When she became First Lady, she took three other
partners with her to Washington, where Vincent Foster and Wil-
liam Kennedy became White House counsels and Webster Hub-
bell was named Associate Attorney General. The future looked so
promising that Rose opened a one-man Washington operation to
explore opportunities for establishing a permanent office.
U.M. Rose, a founder of the American Bar Association. By the
But sometimes it doesn't pay to get too close to the seat of pow-
1980s, when its growth took off under the direction of C. Joseph
er. The lawyers at Rose have spent much of the past few weeks
Giroir, a securities specialist, it had long been the cream of Ar-
trying to contend with the tributaries of Whitewater that run
kansas firms. Its list of present and former clients includes some
straight through their firm-and the whirring noise of a shredder.
of the state's biggest businesses, including Tyson Foods, Wal-
Two college students employed as couriers in the Little Rock of-
Mart and TCBY, the national yogurt franchiser, as well as Little
fice say that in late January. after the special counsel began his
Rock Airport Commission and the Federal Deposit Insurance
Whitewater investigation. they shredded materials from the of-
Corporation. which oversees banks.
fice of Foster, who had handled some of the Clintons' Whitewater
That client roster, mixing businesses with government regu-
dealings, and who committed suicide last July. Senior attorneys
lators. sometimes led to conflict-of-interest accusations. In 1988
are said to be watching miserably as the firm's white shoes are
the firm and its insurer paid $3 million to settle a conflict charge
dragged through the mud. "Yeah. it's more tense." says Jeremy
stemming from the failure of FirstSouth Savings and Loan. At
Hedges. one of the shredders. "But then. it's always been tense.
the insistence of Senate Republicans. the FDIC has reopened a
With roots going back to 1820. the firm takes its name from
conflict-of-interest investigation involving Madison Guaranty:
ANSWERING SUBPOENAS: Chief of staff Maggie Williams, White House communications director Mark Gearan and press secretary Lisa Caputo
structure unlike any in history. Never be-
neously giddy and unnerving prospect of
House-meetings, from Office on
fore has the White House contained two
seeing the capture of such a powerful
down to the rooms and tiny impromp
such powerful figures, with rival staffs, in-
figure.
tu gatherings. official title is as
terlocking loyalties and a wall of protection
Though her public profile has waxed
sistant to the President which means she
surrounding the whole enterprise.
and waned, Hillary's access within the pri-
reports, to the President's bief of staff
Hillary functions in the White House
vacy of the White House is virtually unlim-
Mack Mcl early.on Williams told
rather like the queen on a chessboard. Her
ited. Staffers refer to the Clintons with a
friends that she considered herself McLar-
power comes from her unrestricted move-
sort of revolutionary equality as "the prin-
ty's counterpart, and she bristled when she
ment; but the risk of capture is great, and a
cipals" and chart her moods and interests
was not included in many of the same
player without a queen is at a fatal disad-
with as much care as his. Few were hired
meetings he attended. She told people
vantage. Clinton's presidency would be se-
without an audience with her; when the
that they had equal rank, Said # mAdminise
verely disabled by a direct hit to his wife.
President has a question about almost any
tration insider. "The only person who
So, as the Whitewater story has wound
sensitive issue that arises, the refrain is the
could have given her that impression was
tighter around her, opponents, supporters
same: "Run this past Hillary."
Hillary herself.'
and observers of the Clinton Administra-
The First Lady and her chief of staff
Washington conventional wisdom holds
tion alike have been faced with the simulta-
Williams have walk in rights to most White
that Hillary Clinton, her staff and their
ON TEAR? Clerks Lindsey
"Don't assume they were his documents." According to Hedges,
and Hedges, right, say
when he answered in turn that he was certain, Jones told him,
they were directed at the
"Don't assume that they have anything to do with the
Rose Law office, left, to
shred Foster's papers
investigation."
Rose partners shrug off the story, insisting, plausibly, that if
the failed S&L headed by
they had anything to hide, they would not have gotten two low-
James McDougal, the
er-rung employees to do their dirty work. Hedges says senior
Clintons' partner in
partners would be just as unlikely to risk attracting suspicion by
Whitewater. In 1989 the
doing something out of the ordinary-like their own shredding.
firm represented the FDIC
"People get suspicious."
in a suit against Madison's
Tired of the spotlight-and of being compared to the fishy
auditors, despite the fact
practitioners in The Firm-Rose is showing the strain. Some
that, four years earlier,
members of the firm have knives out for the big names whose
Hillary had dealt with
troubles have come back to haunt the firm. They leaked word
state regulators on Madi-
that Rose was conducting an internal review of Hubbell to de-
son's behalf.
termine whether he had overbilled clients and misused his ex-
Spokesmen for the
pense account. And politically conservative partners are also
firm say it began shredding to protect confidential client infor-
said to be itching to undercut Rose alumni attached to the Dem-
mation during the 1992 primary campaigns, when reporters
ocratic White House. The Washington Times reported last week
were discovered rummaging through office garbage. In late Jan-
that in connection with the expense-account questions, an un-
uary, after special counsel Robert Fiske announced the start of
identified group of partners is thinking of filing an ethics com-
his Whitewater investigation, Hedges and another courier,
plaint against Hubbell with the Arkansas Supreme Court.
Clayton Lindsey, say they spent an hour shredding documents
The Whitewater fallout is also being felt by Rose's man in
plainly marked VWF. The only lawyer at the firm with those ini-
Washington, Allen Bird II. But he predicts Rose will pursue
tials was Vince W. Foster. At a meeting with managing partner
plans to open "a legislative practice" in Washington, a term for
Ronald Clark and others a few weeks later, they were informed
lawyer-lobbyists. While he promises they won't be selling ac-
that they would have to answer FBI questions and testify before
cess, that won't keep them from picking up the phone: "We de-
the Whitewater grand jury. Hedges says they were told to tell
cided we would feel free to contact anyone in the Administra-
the truth and "not to do anything to protect the firm." But when
tion anytime we felt it was appropriate, legal and ethical." It's
Hedges informed senior partner Jerry Jones that he would tell
hard to know how much comfort to take from that. -Reported by
the FBI he had shredded Foster documents. Jones replied.
Richard Behar New York and Suneel Ratan/Little Rock
TIME MARCH
33
mostly female allies consti-
paign veterans the notion
Top Administration officials are now
tute one camp in the
that the best course is usu-
outspokenly critical of the White House
White House, while "the
ally denial and counterat-
staff for creating a fiasco that threatens to
white boys" around the
tack-hence the charge
derail the President's legislative agenda.
President lead another
that the Republicans are
"They have never had a strong staff, either
camp. Many blamed the
blowing up Whitewater
one of them," contends a longtime ally of
poor handling of
for their own advantage.
Hillary's. "They didn't have to have a first-
Whitewater on a split be-
But the two sects have not
rate staff in Arkansas. They didn't need one
tween the two teams. But
always agreed. It was
there. They just had to be first-rate them-
the Clinton White House
Ickes, a longtime Hillary
selves. When they got to Washington, they
is a far more complicated
confidant, who forced the
didn't go through the process of a nation-
place than that, a hive of
Clintons to accept a spe-
wide search to hire people for the White
many camps, linked by
cial counsel when Nuss-
House as they did for the Cabinet. They
bridges that make easy di-
baum and Susan Tho-
looked only at the campaign."
visions not only impossible
mases argued vehemently
but misleading. There are
against it.
LTHOUGH THERE WAS A LONG LIST
age camps, ideological
The hallmark of Hilla-
camps, long-standing
She is too proud
ry's staff seems to be an
A
of experienced Democrats ready
to help, the Clintons did not ap-
friendships and clusters
intense loyalty that bor-
point a single old Washington
around key officials that
to call for support.
ders on paranoia, and a
hand to the new staff. "They didn't
defy simple categories.
determination to guard
want any strong wills around
The best breakdown
And you will not
her privacy at all costs.
them," observed a prominent Democrat
isn't spousal but historical:
The very intensity of loy-
who has known both Clintons since college
there is a "campaign
catch a muscle of her
alty, in fact, may have
days. "They don't want anyone in the
camp" and a "governing
jaw moving, but if
done her harm. "A lot of
White House who knows where the skele-
camp." The first, inhabited
people believed last De-
tons are buried." Only when disaster struck
by Stephanopoulos, Har-
I were her I would be
cember that they could
did they reach out to the grownups: first
old Ickes, Paul Begala,
do Mrs. Clinton a favor
David Gergen and last week Lloyd Cutler,
Mandy Grunwald, James
seething.
by volunteering to go
a seasoned veteran of Washington's politi-
Carville and the swarm of
on television and talk
cal warfare.
communications minions,
to reporters about
The arm's-length strategy toward the
tend to be fighters. coun-
Whitewater." a White
press reflects her staff's careful manage-
terpunchers and by habit unconciliatory.
House veteran observes. "The idea was, do
ment of the First Lady's image-or rather,
The governing camp, by and large, came on
a little dirty work and get a merit badge."
images, as she veers between the high-pro-
board later, and is led by Gore, McLarty,
But Whitewater turned out to be full of
file policymaker and the casual sports fan
Gergen and others who, to some extent by
quicksand. "They get on TV and discover it
chatting with David Letterman's mom, live
accident, are more moderate, more Wash-
is not that easy. Rather than pleasing Hilla-
from Lillehammer. At times, in fact, her
ington, have closer ties to business, and
ry, they are going to piss her off. And so
staff seems to be trying to make her appear
have never associated with insurgent party
what starts as a big opportunity to score
less influential than she is. A year into the
politics.
some big brownie points with the boss, or
heavy health-care work, her staff still takes
A subset of the first group is Hillary's
his wife, ends up backfiring."
conspicuous pains to showcase her tradi-
many of Williams, Susan
Thomases, Ira Magaziner and, until las
week, Nussbaum-worked on the cam
paign. People love working for her." says
Anne Wexler, a senior officer in the Carter
White House who keeps in close touch with
the Clintons. "Her operation is the most or-
ganized. the most focused, the most coordi-
nated and the most disciplined in the White
House." And all the focus and discipline is
directed toward a single goal: protect Hilla-
ry. As a White House veteran put it, "They
are a force within a force within a force."
It is Hillary's camp, in alliance with the
campaign group, that has buttressed, rath-
er than sought to break down, her instinct
to stonewall her way through this mess.
Theirs is a lawyerly culture: attorneys by
training aren't forthcoming, they tell noth-
ing, give away little and generally plead the
alternatives, if just for fun. The First Lady
has been surrounded by like-minded legal
eagles for most of her adult life. and those
who remain believe in denial as a first
course of action. It is a legal outlook. not a
political one.
Hillary's advisers share with the cam-
WHITEWATER: The Clintons were expected to build a home by the bluff in the foreground
)W
tional First Lady doings, visiting schools
ise
and hospitals and entertaining. while keep-
INTEREST
to
ing the details of her private work schedule
By Michael Kramer
da.
from public view.
er
Such behavior inspires the conserva-
of
tives' charge that she is trying to have it
st-
both ways. hiding her power and her liber-
Caught in the Web
al agenda behind a traditional role. In a
ne
way, Hillary Clinton, the feminist champi-
HE PRESS ROUTINELY DESCRIBES HIM AS A "CENTRAL FIGURE" IN THE
È
.ey
on, has had a hard time living out that old
n-
feminist slogan "The personal is political."
T
scandal. "He should be fired," says Republican Senator Al D'Amato. Or
at least put "out of the picture" on an unpaid leave of absence, said Re-
ite
Politics is more personal for her than for
publican Senate Leader Bob Dole last Friday. The target of these attacks
any First Lady in modern memory. Some
is Deputy Treasury Secretary Roger Altman, the latest Clinton Administration
ey
of her defenders attribute the attacks
official caught in the Whitewater affair's web of fact and innuendo.
on her as the predictable assault on a
Political trouble threatens all in its path indiscriminately. Public officials
.ST
strong, outspoken feminist. "It's a small
served with subpoenas suffer tarnished reputations no matter the ultimate re-
dy
but pathetic gang of right-wingers who
sult-which is why distinctions should be drawn. Where does Altman fit?
hate Hillary not because of what she's
With impressive government experience already behind him, Altman prob-
&
done but because their mammas didn't
on
ably felt confident that he knew the rules of the game when he joined Clinton
n't
breast-feed them," said adviser Paul Be-
last year. As Jimmy Carter's Assistant Treasury Secretary, Altman helped engi-
nd
gala last week.
neer the Chrysler bailout. Thanks to his talent and good luck (he and Clinton
at
Some of Hillary's aides see her frustra-
became friends in college), Altman is
tion and exhaustion growing, especially as
ge
now Lloyd Bentsen's understudy. He is
he
the health-care marathon drags on and on,
also acting head of the Resolution Trust
le-
with ever diminishing chances of Con-
Corporation, an assignment he accept-
ick
gress's passing a program that even resem-
ed to fill a temporary vacancy in the
rst
bles the one she worked so hard to develop.
RTC'S chairmanship. This is the chore
"There have been days when we would
that has sullied him.
er,
iti-
tumble onto a plane at the end of a day," a
The job is particularly sensitive be-
CYNTHIA
staff member recalls. "and she would say, 'I
cause the agency is trying to recapture
the
hurt from the top of my head to the bottom
money lost from failed savings and
of my feet.'
loans like Madison Guaranty of Little
;e-
Most upsetting is the fact that her hus-
Rock, the institution with ties to the
er,
band's agenda, for which she too has fought
&
Clintons' hapless Whitewater Devel-
an
so hard, is embattled by a mess arising
opment Corp. As a result of Altman's
:ve
mostly from her own misjudgments. With
congressional testimony, the public
er
midterm elections looming, the effect of
now knows that Treasury officials held
ar
Whitewater on Congress will be to loosen
three meetings with White House
he
the President's already fleeting grip on par-
aides to discuss the RTC'S Madison in-
ty discipline and make it harder for him to
es
vestigation. Administration officials
di-
flex his legislative muscles. And it hands
confirm that Altman didn't know about
Altman's suffering unfairly
the defenseless G.O.P. a badly needed stick.
the first two. Those became public af-
"We don't want to be distracted from the
ter Altman acknowledged that he himself called the third for last Feb. 2, a ses-
big issues that we're working on," said Ste-
sion he describes as a "brief heads-up" designed to tell the White House what
phanopoulos. "That's not going to stop the
procedures the RTC would follow before the statute of limitations on potential
Republicans from trying. They can't run on
lawsuits involving Madison expired at the end of that month. (Congress extend-
the economy. They can't run on health
ed the statute's deadline shortly thereafter.) Altman has sworn that he didn't
care. They can't run on welfare. They can't
communicate anything about the substance of the RTC'S Madison inquiry. He
run on crime. So they're trying to exploit
couldn't have done so, he says, because he has purposely avoided knowledge of
this issue. We shouldn't make mistakes to
the RTC'S cases. So far, no evidence disputes his contention.
allow them to do that."
What's most significant in weighing Altman's culpability is his actions before
A politician who brought to the White
the White House meeting. Unlike those involved in the other White House ses-
House a reputation for slickness may have
sions, Altman sought to avoid any impropriety, or even its appearance, by clear-
particular trouble getting some moral
ing his meeting in advance with Treasury's ethics office. The question: Would it
traction-especially if those around him
be proper to convey the innocuous facts regarding the statute of limitations-
are afraid to confront his demons. A top
facts that had already been provided to inquiring congressional staff members?
Administration source said there is only
Assured there was no problem, Altman proceeded.
one group capable of changing Clinton's
On Feb. 24, Altman told Congress about his Feb. 2 meeting. Republicans re-
mind about the way his White House runs:
sponded predictably, charging improper conduct. On the following day, Altman
"What it will take is for the Wise Owls-
recused himself from any further RTC decisions involving Madison, even though
Vernon Jordan, Warren Christopher and
Treasury and RTC ethics officials say he had no legal obligation to do so. Unsub-
Lloyd Cutler-to walk into the Oval Office
stantiated reports allege that Altman sought the advice of White House aides be-
and say, 'Get the amateurs out, or we're
fore his recusal. He denies that charge, and Administration officials support him.
going to lose the presidency.' The official
Where does Altman stand now? Under a cloud. Too few news reports mention
sighed deeply and continued. "I can't be-
that Altman's meeting was cleared by Treasury's ethics office: too many critics ig-
lieve we're at this point. It breaks your
nore his admission that despite such clearance. the meeting should not have OC.
heart."
Reported by Ann Blackman,
curred. So. fault Altman for political naivete but. unless new information surfaces.
Nina Burleigh and Michael Duffy/Washington
not for venality. A lot about Whitewater smells. Altman doesn't.
TIME MARCH 2L 1994
THE WHITE HOUSE
The Trials
Of Hillary
The First Lady's way of doing business and dealing with
others helps explain why Whitewater grew so messy
By NANCY GIBBS
Whitewater, but this was no charm offensive:
she met her guests from TIME not in the cus-
ILLARY RODHAM CLINTON HAS NEVER
tomary spots-the solarium or the family quar-
H
had much use for the national press
ters-but in a combat zone, the Map Room
corps, but by late last week, when the
where Franklin Roosevelt plotted troop move-
pressure for her to tell what she
ments throughout the Second World War.
knew about Whitewater was rattling
The First Lawyer came well prepared; to
the very walls of the White House,
even the softest questions she had a hard-
she finally agreed to let select reporters
boiled answer. "We made lots of mistakes; I'd
through the door. It was her first news inter-
be the first to admit that," she said, though just
view in weeks, and her first ever devoted to
about everyone else in the White House al-
ready has. If it turns out that she and her hus-
band underpaid their taxes on Whitewater
land deals, she said, they will make up the
difference. "We never should have made the
investment. But, you know, those are things
you look at in retrospect. We didn't do any-
thing wrong. We never intended to do any-
thing wrong."
It was great theater and good politics, but it
was also rather late. Even as the Clintons con-
tinued to insist that Whitewater wasn't really a
story, that they wanted everything out on the ta-
ble so they could prove their innocence, the
White House was grinding to a halt so that aides
could go out and find lawyers to help sort
through their garbage and assemble all the doc-
uments that will float past the grand jury and in-
evitable congressional committees for months
White House aides say the
crisis has brought the couple closer-more
phone calls, more talking, a hug in public
to come. A high-ranking Clinton official,
husband had appointed; for whom White
As Republicans shouted for congressional
distraught at seeing his name smeared,
House counsels Vince Foster and later Ber-
hearings, officials from Vice President Al
found himself reassuring his children that
nie Nussbaum acted as personal lawyers
Gore on down fanned out to television
he is not going to jail. "Don't worry, Dad-
rather than public officials; whose chief of
shows to express their measured contri-
dy," said one child. "We still love you."
staff, Maggie Williams, retrieved files from
tion. "Whitewater isn't about cover-ups,"
The polls, however, were especially un-
Foster's office after his suicide; who fought
said counselor David Gergen on Nightline.
loving last week. Only 35% of Americans
to the end the idea of appointing a special
"It's about screw-ups." Said policy adviser
surveyed in a TIME/CNN poll think they can
prosecutor. Williams (of whom one White
George Stephanopoulos: "Did the damage-
trust Bill Clinton, down from 40% in Janu-
House official said, "It's hard to tell where
control team create a lot more damage than
ary. More than half of those polled think
Maggie ends and Hillary begins") and Hil-
it controlled? I think that's probably right."
the Clintons are hiding some-
As for the First Lady, she
thing about Whitewater, and
struggled gamely through
a third think they broke the
How much attention are you
Did Bill or Hillary Clinton do
White House dinners and the
law. Even the financial mar-
paying to the Whitewater
anything illegal in these
endless health-care meetings,
kets decided they didn't like
issue?
matters?
"but I'm not sure anything is
what they saw: on Thursday
January
March
Bill
Hillary
happening," an official admit-
the bond market shuddered
Great deal/
Yes
ted. "She's not running them.
with rumors about new
48%
some
She's not talking, and she just
Whitewater bombshells,
No
sort of sits there." Friends pri-
prompting investors around
Little/
51%
none
Not sure
vately acknowledged that the
the world to dump their U.S.
attacks were taking a toll.
Treasury bonds and buy gold.
"She is too proud to call for
The sudden inflation of
Are the Clintons hiding some
Is Hillary Clinton more ethical
support," said Senator Jay
Whitewater from a nuisance
things about their role in
than most politicians?
Rockefeller, who has worked
into a crisis, Administration
at her side on health care for
officials insisted, was due
these matters?
Yes
the past year. "And you will
more to their colleagues' stu-
Yes
No
not catch a muscle of her jaw
pidity than to any new evi-
moving, but if I were her I
dence of misdeeds. The Pres-
No
The same
would be seething over
ident said it was all a problem
Whitewater." Hillary is care-
TIME
of perception. Desperate to
ful to keep her anger private,
move on, they could even joke about it; ad-
lary's press secretary, Lisa Caputo, sat in
but it is impossible to hide. "People can lie
viser Bruce Lindsey cracked that
front of a grand jury last Thursday to ex-
about you on a regular basis, and you have
Whitewater was the site of the future Clin-
plain whether, by meeting at least five
to take it," she said. "That's very hurtful. To
ton presidential library. But the greatest
times with Treasury regulators, White
see the things that are said without any ref-
perceptual change had implications far be-
House officials tried to interfere with the
utation or correction most of the time is
yond Whitewater and its tributaries: the
criminal investigation into Whitewater and
very painful to your friends and your fam-
President's wife, the most unaccountable
its ties to the bankrupt Madison Guaranty
ily. I worry a lot about them."
member of any Administration, was being
Savings & Loan.
The whole thing, the First Lady insist-
called to account for her actions.
In the archaeology of scandals, nothing
ed, was a Republican plot to discredit her.
From the start, Whitewater has been
dug up so far has been ruinous, but all of it
That easy defense will not provide much
more about Hillary than her husband. She
is corrosive in a White House struggling to
comfort for long. Several polls last week
was the one who handled the family fi-
shield not one but two embattled leaders.
showed that most people agreed with Hil-
nances on the botched land deal; who rep-
After months of slippery evasions, the Ad-
lary that the Republicans were playing par-
resented clients in front of a regulator her
ministration abruptly changed strategies.
tisan games. But the public also didn't like
THE PLOT SO FAR
July 20, 1993
Sept. 29
October 8
November 9
Foster. now deputy to
Jean Hanson, general
The RTC officially
Republicans start
White House counsel
counsel at the Treasury
requests a Justice
calling on Attorney
March, 1992
Fall
December
Bernard Nussbaum,
Department. informs
Department criminal
General Janet Reno
During the presidential
The Bush
The Clintons sell their
is found dead in a
Nussbaum that the
investigation of White-
to nominate a
campaign, the press
Administration's
Whitewater stake for
Virginia park, an
Clintons will be named
water and Madison. Six
special counsel to
begins asking about the
Justice Department
$1,000 to partner
apparent suicide.
in an inquiry by the
days later, Nussbaum
look into any ties
Clintons' investment in
balks at invest-
James McDougal, head
Nussbaum and Maggie
Resolution Trust
meets with Treasury
between Madison
the Whitewater real
igating Whitewater
of the failed Madison
Williams. Hillary
Corporation, the federal
officials over Whitewater.
and Whitewater.
estate venture. Clinton
during election
Guaranty Savings &
Clinton's aide, search
agency cleaning up the
Meantime, White House
commissions a report
time for fear an
Loan. Vincent Foster,
Foster's office, and
S&L mess. Deputy
adviser Bruce Lindsey
that says they made no
inquiry will smack
the Clintons' lawyer and
Nussbaum passes
Treasury Secretary
informs the President of
profit on a $69,000
of partisanship.
Hillary's law partner,
documents on to the
Roger Altman, a long-
the investigation. On
investment. but
discovers that White-
Clintons' personal
time ally of the Clintons,
Oct. 31, reports of the
incomplete records pre-
water has not filed tax
attorney.
belongs to the oversight
RTC investigation appear
vent a full examination.
returns for three years.
board of the RTC.
in the press.
30
TIME MARCH
what little it knew about Whitewater, and
realize the dangers of
"I'm above the law.' It's
was not prepared to grant Hillary the auto-
moral hubris, particularly
almost Nixonian. And it's a
matic benefit of the doubt she seemed to
as revealed by a genera-
tragic flaw."
expect. "She's still in the mode of saying, 'I
tion of '60s reformers
didn't do anything wrong,'" said a White
who campaigned against
Whitewater has intro-
House source. "So why should she do a mea
the '80s as the Decade of
duced all sorts of ironies
culpa?" Said the First Lady last week: "I
Greed. "They think of
into the most interesting
have to admit, for the last two years I was
themselves as the most
marriage in America. The
bewildered by people's interest in this. It
ethical people in the
official word coming from
happened many years ago."
world," says an Adminis-
the White House was that
tration insider. "They
"this has brought them
For all her disdain for the national
think everything they do
closer together. There is
press, Hillary Rodham Clinton had a long
or say is aboveboard and
more phone calling dur-
honeymoon. By and large, reporters have
for the good of the coun-
ing the day, more talking
gently chronicled her reinvention of the
try. Therefore they can't
back and forth, a need to
First Lady's office as she added a major pol-
understand why some-
reach out to each other
icy role to the traditional portfolio of host-
one would doubt their in-
If everybody in
more," an official ob-
ess and cheerleader. The glowing press ac-
tegrity. That is a big part
served. "It is probably a
counts of her crusade for health-care
of the problem."
the country had a
natural reaction to stress
reform, full of charmed lawmkers and
It is a problem for the
and adversity coming
cheering crowds, helped boost her popu-
President's bushy-tailed
character as strong
from outside." The stress
larity higher than her husband's at times.
staffers, who last week
Profiles charted the spiritual journey that
were being called upon to
as hers, we wouldn't
cannot have been helped
by the President's having
inspired her social activism, the theolo-
explain why 15 top offi-
have half the
to fire Nussbaum, his
gians she read, the ministers she admired.
cials had been working
wife's early mentor, or in-
The New York Times Magazine dressed
for more than a year with-
problems we've got
vite a special prosecutor
her in white silk and pearls and captioned
out proper security clear-
ance. White House press
today.
to interrogate her closest
her St. Hillary. Her staff loved the picture.
allies.
secretary Dee Dee Myers
-President Bill Clinton
The Clintons' partner-
HIS WAS RISKY TERRITORY FOR A
admitted that she and
on his wife
ship has inspired unend-
public figure: if pride is bad, then
others have been working
ing speculation ever since
one doesn't dare seem proud of
on temporary passes since the Inaugura-
they peeled back the bedclothes a bit on 60
being good. Both Bill and Hillary
tion because, Myers says, she has been too
Minutes to respond to charges of his adul-
came to Washington promising an
busy to do the paperwork. "There are no
tery. Even friends who have known them
end to politics as usual, a rebirth of
excuses," she said. "I should have done it,
for many years have trouble explaining the
S
responsibility, a Politics of Meaning de-
and I just kept putting it off."
dynamic between them; but Whitewater
rived from the Golden Rule. Such a specific
Despite Clinton's evocation during the
confirms some eternal verities about why
claim to moral authority can hardly with-
campaign of a country that "works hard and
they are so different, and so dependent on
stand charges of tax chiseling and corner
plays by the rules," the rules don't always
each other.
cutting by Hillary and those closest to her.
apply in the Clinton White House. Critics
There is an old saying that Methodists
"Can a President credibly advance an ethic
recall the infamous haircut on the runway,
are always looking for a mission, while
of national service," asked Clinton's nem-
the summary firing of the travel staff, the
Baptists think they are the mission. Bill the
esis on the Hill, Congressman Jim Leach,
use of the FBI to investigate the travel opera-
Baptist was single-minded in his pursuit of
"if his own model is one of self-service?"
tion. "The Clinton message is 'I'm pure,'
power; Hillary the Methodist made his
Even the President's friends came to
said a veteran of the Reagan White House,
success into her preoccupation. Their
December
January 20, 1994
Late January
February 2
February 25
March 4
March 7-8
Shortly before
After Clinton asks Reno
Following Fiske's
Altman briefs senior
Under heavy criticism,
The FBI, looking for
Clinton choses
Christmas. the Clintons
to appoint a special
appointment, an
White House aides on
Altman removes
Whitewater and
Lloyd Cutler as
reluctantly agree to turn
prosecutor. she selects
employee of the Rose
the RTC's procedures
himself from all matters
Madison testimony and
Nussbaum's interim
over all Whitewater
Robert Fiske, a
law firm is allegedly
At the meeting are
pertaining to Madison
documents. serves
replacement. White
records. The White
Manhattan lawyer, to
ordered to shred a box
Hanson, Nussbaum,
or Whitewater and
subpoenas on 10 White
House officials
House admits that
lead the investigation:
of documents from
Williams and deputy
resigns as head of RTC,
House aides. including
acknowledge there had
documents were taken
Fiske, vowing a "flat-
Foster's files.
chief of staff
effective March 30.
Nussbaum, Williams,
been additional
from Foster's office in
out" examination, antici-
Harold Ickes.
Altman and Ickes. The
conversations between
July. It takes several
pated that both Clintons
Altman would admit to
next day Nussbaum
the White House and
weeks before all papers
would be deposed under
the meeting at a
resigns.
Treasury officials
are turned over.
oath. Fiske also says he
Senate hearing later
regarding the
will look into Foster's
in the month.
RTC probe.
death.
TIME MARCH 21. 1994
31
friends observe that he
gest that he more than
Some call every day, even when nothing
needs her brains, her log-
owes her.
has changed. She was closer to the latter."
ic, her focus; she needs
Maybe it is because he
The Clintons' Whitewater partner,
his charisma, his humor,
grew up poor and she did
James McDougal, claims that when Bill
his ability to strike the
not that Hillary came to be
Clinton told him they were having money
deal that gets things done.
worried about their finan-
troubles, McDougal decided that his Madi-
"There's a poll saying that
cial security. Bill had al-
son Guaranty Savings & Loan would put
40% of the American peo-
ready known poverty, so it
Hillary on a $2,000 monthly retainer. Mac-
ple think Hillary's smart-
held no terror for him; he
Dougal, who in Arkansas' incestuous poli-
er than I am," Bill likes to
used to say he didn't "care
tics was also a Clinton fund raiser, got his
observe. "What I don't
a lick" about money. Hilla-
money's worth in 1985 when Hillary ar-
understand," he then
ry did not have that luxu-
gued before the state on behalf of measures
deadpans, "is how the
She's more fragile
ry. She had turned her
to keep Madison afloat. The thrift finally
other 60% missed it."
back on the lure of gold-
went under in 1989 at a cost to taxpayers of
But there is the twist:
than she appears.
plated Washington law
$47 million. Whitewater special prosecu-
in Whitewater the smart
firms in order to follow
one goofed-or presum-
And she's worried-
tor Robert Fiske has also subpoenaed doc-
Bill to Arkansas and help
uments of a second failed real estate deal fi-
ably did. The other one
I can see it in her
steer him to the Gover-
nanced by Whitewater, this one the 810-
didn't. Like something out
nor's mansion, where he
acre Lorance Heights project outside Little
of Faulkner, the saint may
stiffness.
earned $23,000 a year. It
Rock, which ended with lawsuits by angry
have sinned. Two years
fell to Hillary to make
landowners, foreclosure and a $510,000
ago, Hillary stood stead-
-A
top Clinton
ends meet, which
judgment against Whitewater.
fastly by her husband
administration official
made investments like
through allegations, and
Whitewater all the more
T IS NO SINGLE CHARGE, BUT THE
considerable evidence, of adultery, draft
beguiling. Friends in Little Rock acknowl-
steady accumulation of them, that has
dodging and drug use. Together they went
edge that "money was a real issue." In 1983
the White House reeling. Most dam-
through the grinder again at Christmas with
she and her law partners Vince Foster and
aging of all is the atmosphere of law-
new charges, by Arkansas state troopers, of
Webb Hubbell opened a joint stock-trad-
yerly evasion that suffuses an Admin-
philandering. Now, for once, it is he who
ing company called Midlife Investors. "She
istration so plump with law degrees.
must stand by his woman if he is to keep his
would call me all the time to see how her
The Whitewater "screw-ups," for all the ef-
presidency afloat. He is returning her favor,
stocks were doing," recalls broker Roy
forts to spin them as one-time blunders,
in many ways, though it might be fair to sug-
Drew. "Some investors I never hear from.
arose directly out of a White House power
Does Rose Have
Something to Hide?
By RICHARD LACAYO
HE ATTORNEYS AT THE ROSE LAW FIRM OF LITTLE ROCK
T
have always liked to operate near the center of power.
Their first woman partner was Hillary Rodham Clinton,
who got the title in 1979, the same year her husband be-
came Governor. When she became First Lady, she took three other
partners with her to Washington, where Vincent Foster and Wil-
liam Kennedy became White House counsels and Webster Hub-
bell was named Associate Attorney General. The future looked so
promising that Rose opened a one-man Washington operation to
explore opportunities for establishing a permanent office.
U.M. Rose, a founder of the American Bar Association. By the
But sometimes it doesn't pay to get too close to the seat of pow-
1980s, when its growth took off under the direction of C. Joseph
er. The lawyers at Rose have spent much of the past few weeks
Giroir, a securities specialist, it had long been the cream of Ar-
trying to contend with the tributaries of Whitewater that run
kansas firms. Its list of present and former clients includes some
straight through their firm-and the whirring noise of a shredder.
of the state's biggest businesses, including Tyson Foods, Wal-
Two college students employed as couriers in the Little Rock of-
Mart and TCBY, the national yogurt franchiser, as well as Little
fice say that in late January, after the special counsel began his
Rock Airport Commission and the Federal Deposit Insurance
Whitewater investigation, they shredded matérials from the of-
Corporation, which oversees banks.
fice of Foster, who had handled some of the Clintons' Whitewater
That client roster, mixing businesses with government regu-
dealings, and who committed suicide last July. Senior attorneys
lators, sometimes led to conflict-of-interest accusations. In 1988
are said to be watching miserably as the firm's white shoes are
the firm and its insurer paid $3 million to settle a conflict charge
dragged through the mud. "Yeah. it's more tense." says Jeremy
stemming from the failure of FirstSouth Savings and Loan. At
Hedges, one of the shredders. "But then. it's always been tense."
the insistence of Senate Republicans, the FDIC has reopened a
With roots going back to 1820. the firm takes its name from
conflict-of-interest investigation involving Madison Guaranty:
32
TIME MARK
ANSWERING SUBPOENAS: Chief of staff Maggie Williams, White House communications director Mark Gearan and press secretary Lisa Caputo
structure unlike any in history. Never be-
neously giddy and unnerving prospect of
House meetings, from the Oval Office on
fore has the White House contained two
seeing the capture of such a powerful
down to the war rooms and tiny impromp-
such powerful figures, with rival staffs, in-
figure.
tu gatherings. Williams' official title is as-
terlocking loyalties and a wall of protection
Though her public profile has waxed
sistant to the President, which means she
surrounding the whole enterprise.
and waned, Hillary's access within the pri-
reports to the President's chief of staff,
Hillary functions in the White House
vacy of the White House is virtually unlim-
Mack McLarty. But early on, Williams told
rather like the queen on a chessboard. Her
ited. Staffers refer to the Clintons with a
friends that she considered herself McLar-
power comes from her unrestricted move-
sort of revolutionary equality as "the prin-
ty's counterpart, and she bristled when she
ment; but the risk of capture is great, and a
cipals" and chart her moods and interests
was not included in many of the same
player without a queen is at a fatal disad-
with as much care as his. Few were hired
meetings he attended. "She told people
vantage. Clinton's presidency would be se-
without an audience with her; when the
that they had equal rank," said an Adminis-
verely disabled by a direct hit to his wife.
President has a question about almost any
tration insider. "The only person who
So, as the Whitewater story has wound
sensitive issue that arises, the refrain is the
could have given her that impression was
tighter around her, opponents, supporters
same: "Run this past Hillary."
Hillary herself."
and observers of the Clinton Administra-
The First Lady and her chief of staff
Washington conventional wisdom holds
tion alike have been faced with the simulta-
Williams have walk-in rights to most White
that Hillary Clinton, her staff and their
ON A TEAR? Clerks Lindsey
"Don't assume they were his documents." According to Hedges,
and Hedges, right, say
when he answered in turn that he was certain, Jones told him,
they were directed at the
"Don't assume that they have anything to do with the
Rose Law office, left, to
shred Foster's papers
investigation."
Rose partners shrug off the story, insisting, plausibly, that if
the failed S&L headed by
they had anything to hide, they would not have gotten two low-
James McDougal, the
er-rung employees to do their dirty work. Hedges says senior
Clintons' partner in
partners would be just as unlikely to risk attracting suspicion by
Whitewater. In 1989 the
doing something out of the ordinary-like their own shredding.
firm represented the FDIC
"People get suspicious."
in a suit against Madison's
Tired of the spotlight-and of being compared to the fishy
auditors, despite the fact
practitioners in The Firm-Rose is showing the strain. Some
that, four years earlier,
members of the firm have knives out for the big names whose
Hillary had dealt with
troubles have come back to haunt the firm. They leaked word
state regulators on Madi-
that Rose was conducting an internal review of Hubbell to de-
son's behalf.
termine whether he had overbilled clients and misused his ex-
Spokesmen for the
pense account. And politically conservative partners are also
firm say it began shredding to protect confidential client infor-
said to be itching to undercut Rose alumni attached to the Dem-
mation during the 1992 primary campaigns, when reporters
ocratic White House. The Washington Times reported last week
were discovered rummaging through office garbage. In late Jan-
that in connection with the expense-account questions, an un-
uary, after special counsel Robert Fiske announced the start of
identified group of partners is thinking of filing an ethics com-
his Whitewater investigation, Hedges and another courier,
plaint against Hubbell with the Arkansas Supreme Court.
Clayton Lindsey, say they spent an hour shredding documents
The Whitewater fallout is also being felt by Rose's man in
plainly marked VWF. The only lawyer at the firm with those ini-
Washington, Allen Bird II. But he predicts Rose will pursue
tials was Vince W. Foster. At a meeting with managing partner
plans to open "a legislative practice" in Washington, a term for
Ronald Clark and others a few weeks later, they were informed
lawyer-lobbyists. While he promises they won't be selling ac-
that they would have to answer FBI questions and testify before
cess, that won't keep them from picking up the phone: "We de-
the Whitewater grand jury. Hedges says they were told to tell
cided we would feel free to contact anyone in the Administra-
the truth and "not to do anything to protect the firm." But when
tion anytime we felt it was appropriate, legal and ethical." It's
Hedges informed senior partner Jerry Jones that he would tell
hard to know how much comfort to take from that. -Reported by
the FBI he had shredded Foster documents, Jones replied.
Richard Behar New York and Suneel Ratan Rock
TIME MARCH 21. 1994
33
mostly female allies consti-
paign veterans the notion
Top Administration officials are now
tute one camp in the
that the best course is usu-
outspokenly critical of the White House
White House, while "the
ally denial and counterat-
staff for creating a fiasco that threatens to
white boys" around the
tack-hence the charge
derail the President's legislative agenda.
President lead another
that the Republicans are
"They have never had a strong staff, either
camp. Many blamed the
blowing up Whitewater
one of them," contends a longtime ally of
poor handling of
for their own advantage.
Hillary's. "They didn't have to have a first-
Whitewater on a split be-
But the two sects have not
rate staff in Arkansas. They didn't need one
tween the two teams. But
always agreed. It was
there. They just had to be first-rate them-
the Clinton White House
Ickes, a longtime Hillary
selves. When they got to Washington, they
is a far more complicated
confidant, who forced the
didn't go through the process of a nation-
place than that, a hive of
Clintons to accept a spe-
wide search to hire people for the White
many camps, linked by
cial counsel when Nuss-
House as they did for the Cabinet. They
bridges that make easy di-
baum and Susan Tho-
looked only at the campaign."
visions not only impossible
mases argued vehemently
but misleading. There are
against it.
LTHOUGH THERE WAS A LONG LIST
age camps, ideological
The hallmark of Hilla-
camps, long-standing
She is too proud
ry's staff seems to be an
A
of experienced Democrats ready
to help, the Clintons did not ap-
friendships and clusters
intense loyalty that bor-
point a single old Washington
around key officials that
to call for support.
ders on paranoia, and a
hand to the new staff. "They didn't
defy simple categories.
determination to guard
want any strong wills around
The best breakdown
And you will not
her privacy at all costs.
them," observed a prominent Democrat
isn't spousal but historical:
The very intensity of loy-
who has known both Clintons since college
there is a "campaign
catch a muscle of her
alty, in fact, may have
days. "They don't want anyone in the
camp" and a "governing
jaw moving, but if
done her harm. "A lot of
White House who knows where the skele-
camp." The first, inhabited
people believed last De-
tons are buried." Only when disaster struck
by Stephanopoulos, Har-
I were her I would be
cember that they could
did they reach out to the grownups: first
old Ickes, Paul Begala,
do Mrs. Clinton a favor
David Gergen and last week Lloyd Cutler,
Mandy Grunwald, James
seething.
by volunteering to go
a seasoned veteran of Washington's politi-
Carville and the swarm of
on television and talk
cal warfare.
communications minions,
to reporters about
The arm's-length strategy toward the
tend to be fighters, coun-
Whitewater," a White
press reflects her staff's careful manage-
terpunchers and by habit unconciliatory.
House veteran observes. "The idea was, do
ment of the First Lady's image-or rather,
The governing camp, by and large, came on
a little dirty work and get a merit badge."
images, as she veers between the high-pro-
board later, and is led by Gore, McLarty,
But Whitewater turned out to be full of
file policymaker and the casual sports fan
Gergen and others who, to some extent by
quicksand. "They get on TV and discover it
chatting with David Letterman's mom, live
accident, are more moderate, more Wash-
is not that easy. Rather than pleasing Hilla-
from Lillehammer. At times, in fact, her
ington, have closer ties to business, and
ry, they are going to piss her off. And so
staff seems to be trying to make her appear
have never associated with insurgent party
what starts as a big opportunity to score
less influential than she is. A year into the
politics.
some big brownie points with the boss, or
heavy health-care work, her staff still takes
A subset of the first group is Hillary's
his wife, ends up backfiring."
conspicuous pains to showcase her tradi-
team, many of whom, like Williams, Susan
Thomases, Ira Magaziner and, until last
week, Nussbaum-worked on the cam-
paign. "People love working for her," says
Anne Wexler, a senior officer in the Carter
White House who keeps in close touch with
the Clintons. "Her operation is the most or-
ganized, the most focused, the most coordi-
nated and the most disciplined in the White
House." And all the focus and discipline is
directed toward a single goal: protect Hilla-
ry. As a White House veteran put it, "They
are a force within a force within a force."
It is Hillary's camp, in alliance with the
campaign group, that has buttressed, rath-
er than sought to break down, her instinct
to stonewall her way through this mess.
Theirs is a lawyerly culture: attorneys by
training aren't forthcoming, they tell noth-
ing, give away little and generally plead the
alternatives, if just for fun. The First Lady
has been surrounded by like-minded legal
eagles for most of her adult life, and those
who remain believe in denial as a first
course of action. It is a legal outlook, not a
political one.
Hillary's advisers share with the cam-
WHITEWATER: The Clintons were expected to build a home by the bluff in the foreground
TIME MARCHINE
DW
tional First Lady doings, visiting schools
ise
and hospitals and entertaining, while keep-
OTHE POLITICAL INTEREST
to
ing the details of her private work schedule
By Michael Kramer
da.
from public view.
Such behavior inspires the conserva-
of
tives' charge that she is trying to have it
rst-
both ways, hiding her power and her liber-
Caught in the Web
al agenda behind a traditional role. In a
ine
way, Hillary Clinton, the feminist champi-
HE PRESS ROUTINELY DESCRIBES HIM AS A "CENTRAL FIGURE" IN THE
È
on, has had a hard time living out that old
T
scandal. "He should be fired," says Republican Senator Al D'Amato. Or
ey
on-
feminist slogan "The personal is political."
at least put "out of the picture" on an unpaid leave of absence, said Re-
lite
Politics is more personal for her than for
publican Senate Leader Bob Dole last Friday. The target of these attacks
any First Lady in modern memory. Some
is Deputy Treasury Secretary Roger Altman, the latest Clinton Administration
ey
of her defenders attribute the attacks
official caught in the Whitewater affair's web of fact and innuendo.
on her as the predictable assault on a
Political trouble threatens all in its path indiscriminately. Public officials
ST
strong, outspoken feminist. "It's a small
served with subpoenas suffer tarnished reputations no matter the ultimate re-
dy
but pathetic gang of right-wingers who
sult-which is why distinctions should be drawn. Where does Altman fit?
hate Hillary not because of what she's
With impressive government experience already behind him, Altman prob-
P
done but because their mammas didn't
ably felt confident that he knew the rules of the game when he joined Clinton
on
n't
breast-feed them," said adviser Paul Be-
last year. As Jimmy Carter's Assistant Treasury Secretary, Altman helped engi-
nd
gala last week.
neer the Chrysler bailout. Thanks to his talent and good luck (he and Clinton
at
Some of Hillary's aides see her frustra-
became friends in college), Altman is
tion and exhaustion growing, especially as
now Lloyd Bentsen's understudy. He is
ge
he
the health-care marathon drags on and on,
also acting head of the Resolution Trust
le-
with ever diminishing chances of Con-
Corporation, an assignment he accept-
ick
gress's passing a program that even resem-
ed to fill a temporary vacancy in the
rst
bles the one she worked so hard to develop.
RTC'S chairmanship. This is the chore
"There have been days when we would
that has sullied him.
er,
iti-
tumble onto a plane at the end of a day," a
The job is particularly sensitive be-
staff member recalls, "and she would say, 'I
cause the agency is trying to recapture
the
hurt from the top of my head to the bottom
money lost from failed savings and
of my feet.'
loans like Madison Guaranty of Little
:e-
Most upsetting is the fact that her hus-
Rock, the institution with ties to the
er,
band's agenda, for which she too has fought
Clintons' hapless Whitewater Devel-
&
so hard, is embattled by a mess arising
opment Corp. As a result of Altman's
an
mostly from her own misjudgments. With
congressional testimony, the public
:ve
midterm elections looming, the effect of
now knows that Treasury officials held
er
Whitewater on Congress will be to loosen
three meetings with White House
ar
he
the President's already fleeting grip on par-
aides to discuss the RTC'S Madison in-
ty discipline and make it harder for him to
vestigation. Administration officials
es
di-
flex his legislative muscles. And it hands
confirm that Altman didn't know about
Altman's suffering unfairly
the defenseless G.O.P. a badly needed stick.
the first two. Those became public af-
"We don't want to be distracted from the
ter Altman acknowledged that he himself called the third for last Feb. 2, a ses-
big issues that we're working on," said Ste-
sion he describes as a "brief heads-up" designed to tell the White House what
phanopoulos. "That's not going to stop the
procedures the RTC would follow before the statute of limitations on potential
Republicans from trying. They can't run on
lawsuits involving Madison expired at the end of that month. (Congress extend-
the economy. They can't run on health
ed the statute's deadline shortly thereafter.) Altman has sworn that he didn't
care. They can't run on welfare. They can't
communicate anything about the substance of the RTC'S Madison inquiry. He
run on crime. So they're trying to exploit
couldn't have done so, he says, because he has purposely avoided knowledge of
this issue. We shouldn't make mistakes to
the RTC'S cases. So far, no evidence disputes his contention.
allow them to do that."
What's most significant in weighing Altman's culpability is his actions before
A politician who brought to the White
the White House meeting. Unlike those involved in the other White House ses-
House a reputation for slickness may have
sions, Altman sought to avoid any impropriety, or even its appearance, by clear-
particular trouble getting some moral
ing his meeting in advance with Treasury's ethics office. The question: Would it
traction-especially if those around him
be proper to convey the innocuous facts regarding the statute of limitations-
are afraid to confront his demons. A top
facts that had already been provided to inquiring congressional staff members?
Administration source said there is only
Assured there was no problem, Altman proceeded.
one group capable of changing Clinton's
On Feb. 24, Altman told Congress about his Feb. 2 meeting. Republicans re-
mind about the way his White House runs:
sponded predictably, charging improper conduct. On the following day, Altman
"What it will take is for the Wise Owls-
recused himself from any further RTC decisions involving Madison, even though
Vernon Jordan, Warren Christopher and
Treasury and RTC ethics officials say he had no legal obligation to do so. Unsub-
Lloyd Cutler-to walk into the Oval Office
stantiated reports allege that Altman sought the advice of White House aides be-
and say, 'Get the amateurs out, or we're
fore his recusal. He denies that charge, and Administration officials support him.
going to lose the presidency.' The official
Where does Altman stand now? Under a cloud. Too few news reports mention
sighed deeply and continued, "I can't be-
that Altman's meeting was cleared by Treasury's ethics office; too many critics ig-
lieve we're at this point. It breaks your
nore his admission that despite such clearance, the meeting should not have OC-
heart."
Reported by Ann Blackman,
curred. So. fault Altman for political naiveté but, unless new information surfaces.
Nina Burleigh and Michael Duffy /Washington
not for venality. A lot about Whitewater smells. Altman doesn't.
TIME MARCH 21. 1994
37
NATIONAL AFFAIRS
I'V. but that's it." He added
that the Clintons stopped re-
TELL
AGNEW
cover tederally insured depos-
its lost by insolvent SE-Ls-had
ceiving information on the part-
THE
STOP
virtually written off any fur-
nership after March 1992 Their
ther criminal investigation of
assets have since been placed
TRUTH
THE LIES
Madison. But in March 1992.
in a blind trust. Smith. a Repub-
The New York Times published
lican. is angry at what he saws is
its account of McDougal's rela-
a reckless partisan charge.
tionship with the Clintons.
"Here we have SI US repre-
which included the ill-fated
sentatives They represent us.
Whitewater partnership. The
They're supposed to have some
ETHICS
story's implication was that
sense of justice." he said. "But
McDougal had offered the
they made not one phone call to
politically powerful couple a
check and see if their informa-
STUPID!
sweetheart land deal in ex-
tion might not be talse."
change for favorable regulatory
Meanwhile. the White House
treatment for his banking in-
still faces the inevitable pros-
terests. The RTC decided to
pect of congressional hearings
have another look. and put
on Whitewater. The NEWS-
Lewis in charge of the renewed
WEEK Poll shows that a small
investigation.
majority of the public- per-
THE POLITICAL TOLL: Partisan critics took on a more strident
By the summer of 1992.
cent- would like to see them.
tone, and some protesters gathered in Washington
according to sources. the RTC's
Fiske secured a partial vic-
Kansas City office had com-
tory last week. when Senate
piled a 21-page report targeting
GOP leaders agreed to hold off until after
Mo., field office. is expected to offer de-
McDougal and his wife. Susan. for crimi-
June 1. giving him time to wrap up at least
tailed testimony about her disputes with
nal investigation. Agency sources say
the White House phase of his investigation.
agency officials.
that the Clintons were not named as inves-
But the administration faces the immediate
Lewis. who would not return phone calls
tigative targets. but were nevertheless
problem posed by the House Banking
last week. is a key figure in the Madison
mentioned as potential beneficiaries of
Committee. where Republicans want to
investigation. The story begins in 1990.
possible illegal acts by the McDougals.
turn next week's routine hearing on sav-
when McDougal was acquitted on federal
including the draining of Madison ac-
ings and loan regulation into a Whitewa-
bank-traud charges that grew out of Madi-
counts. A summary of the report reached
ter forum The panel's ranking minority
son's 1989 failure. At that point the RTC-
top officials at the Justice Department
member Rep. Jim Leach. released a list of
created by the Bush administration to re-
in early October 1992. but the Bush admin-
40 potential witnesses that
istration-already under fire
reads like a who's who of
WHITEWATER METER
for charges that State Depart-
Whitewater. from James and
ment officials had tampered
Susan McDougal to a Rose
This week, NEWSWEEK installs a meter to help gauge Whitewater rushing by.
with Clinton's passport file-
Law Firm courier who alleged
What looks trivial now may look criminal later-and vice versa:
elected to ignore a matter
last week that documents be-
bound to cause more trouble
longing to Vincent Foster were
5
SHREDDING: Shredding at law firms is routine. And
on the eve of a. presidential
destroved after Fiske had an-
the Rose Law Firm shredders say they saw nothing
election.
nounced that he would be re-
about Whitewater in the old documents they say
The case sat in the Jus-
viewing Foster's death.
belonged to Vincent Foster. Plus, It seems unlikely
tice Department's criminal di-
Leach will face a fight from
TRIVIAL
CRIMINAL
that in a genuine cover-up a 20-year-old courier
vision through the transition to
Democratic Banking chairman
would be enlisted to destroy evidence. But given Foster's suicide, why
the Clinton administration. In
Henry Gonzalez. who will at-
were any of his files destroyed? Anonymous sources claim that Hillary
March 1993. attorneys conclud-
tempt to bar Whitewater ques-
Clinton herself ordered shredding in 1992. If she did, the meter will move.
ed that the matter did not war-
Tons But it the hearing does
rant investigation. but left the
come off. it could raise new
5
RTC BRIEFINGS: Two briefings were merely improp-
final decision to federal prose-
questions about political inter-
er; one looks like something worse. On Sept. 29, 1993,
cutors in Little Rock. who
ference in the federal investiga-
Treasury general counsel Jean Hanson told White
quickly concurred. But it was
tion of Madison Guaranty.
Leach charged last week that
TRIVIAL
CRIMINAL
House counsel Bernard Nussbaum that the Clintons
several months before the RTC
would be named as beneficiaries of possible illegal
investigators in Kansas City
investigators in the Resolution
activity at Madison Guaranty S&L Unlike the later meetings, that early
learned of Justice's decision
Trust Corporation (RTC) were
heads-up suggests political Involvement in a legal proceeding. But there's
to bounce the referral. In
"gagged and possibly coerced"
no evidence right now that the White House tried to block a probe.
the interim. an RTC source
by agency lawvers who want-
savs. Lewis and others con-
ed to delete mention of the
5
HILLARY'S STOCKS: This one looks like pure partisan-
tinued to gather information
Clintons from documents rec-
ship. Although the Clintons should have put their
for a new. expanded criminal
ommending the Madison case
holdings into a blind trust earlier, it's hard to imag-
referral.
to the Justice Department
ine that Hillary knew one of her Investment funds
This time. according to con-
for possible criminal action.
TRIVIAL
CRIMINAL
was selling a few health-care stocks short before
gressional and RTC sources.
Leach refused to elaborate But
her attack on drug companies. Besides, the fund lost more on health
Lewis had collected infor-
NEWSWEEK has learned that
stocks it held. Lawmakers making a stink routinely vote on health issues
mation suggesting that the
lean Lewis. a criminal investi-
without divesting.
Whitewater land venture-co-
gator 11" the RTC's Kansas City
Continued
BETWEEN THE LINES
The Whitewater Media Arc
Denied many facts, the press rides its own mood swings
BY JONATHAN ALTER
FTER FOUR MONTHS OF STEADY STORIES, WE STILL
estate, law firms and state government led to huge losses for
A
have no idea if Whitewater is cancer or hemorrhoids.
taxpayers. Having mostly missed the $200 billion S&L fiasco in
Either way, the dynamics of the press coverage are
the '80s, editors figured the least they could do was break some
perfectly predictable. Regardless of the scale of wrong-
stories on the $60 million in Madison Guaranty losses in the '90s.
doing, the are of scandal moves from frenzy to boredom
After finally agreeing to a special counsel, Clinton aides
and back again. The media child naps, stirs, races around the
thought they would enter another lull in the cycle. But they forgot
room, loses attention, rests, then wakes in full cry. You can
something important. After pumping considerable resources into
almost set your watch by it. The pattern goes like this:
the story, news organizations were not likely to go away empty-
First comes the journalistic prophet, in this case Jeff Gerth of
handed. And so the return-on-investment phase began. The first
The New York Times, who in March 1992 broke the story of the
sign was that revelations that might otherwise have been small or
Whitewater investment and the Clintons' connection to the own-
medium-size news were played as earthshaking. Take the White
er of a failed savings and loan. (To this day the Gerth stories
House contacts with the Treasury Department. A valid story, but
comprise about 80 percent of what we know about Whitewater.)
worthy of page one day after day? Former FDIC chairman Wil-
But the Clinton campaign skillfully de-
liam Seidman writes in his memoirs
flected questions, and the story disap-
that C. Boyden Gray, George Bush's
peared altogether from the news for
White House counsel, did more I
more than a year.
receive a heads-up on the FDIC's
The lull sets up the frenzy phase.
probe of Bush's son Neil. He even tried
Though Vincent Foster's suicide note
for a change of venue. The press never
didn't even mention Whitewater. his
got near that story. But this time the
death lent lurid color to a dry story.
communication was treated like Wa-
The White House bungled the sui-
tergate. With the air full of the language
cide aftermath, raising some real-and
of scandal (resignations, subpoenas,
imaginary-areas for inquiry. Sud-
shredding, cover-ups, even "water").
denly journalism could read like mys-
the are of the story all but demanded it.
tery fiction-full of preposterous in-
The return-on-investment F e
nuendo (that Foster was murdered
WIN McNAMEE-REUTER
reached its peak last week in The New
and his note forged, to name just one).
The frenzy phase: Clinton besieged last week
York Times. Jeff Gerth and two col-
In this phase, good. aggressive stories
leagues spent two months investigating
and ridiculous ones whiz by at a furious pace. Did that
The media
Hillary Clinton's $100,000 profits in cattle futures in
come from The Washington Post or Rush Limbaugh?
child naps,
the late '70s. Hillary made legal and ethical trades in
Even news junkies can have trouble remembering.
commodities on the advice of a close friend. who is
As 1994 began, two elements ignited the frenzy.
stirs, races
outside counsel to a huge poultry business. Whatever
The first was the clear arrogance and political stu-
pidity of the Clintons themselves. Because a modi-
around, rests,
they were looking for, the reporters had to recoup
their investment of time with a flimsy angle-that the
fied stonewalling strategy had worked so well for
then wakes in
then Governor Clinton went easy on the poultry in-
the Clintons in the past, they thought they could
tough it out. Several aides tried to tell them the
full cry
dustry as a result of his wife's profits. But the econom-
ic future of Arkansas was tied to poultry. the state's
obvious-that this time it would just generate a
dominant industry. Most governors would have pur-
thousand more damaging stories. They refused to listen.
sued a similar policy. The story ran on page one and a full page
The second rocket booster for the media was a different Ar-
inside, all but shouting "Scandal" to readers. It was fun to learn
kansas story-the state troopers' allegations of sexual impropri-
about Yuppie Hillary, but the story belonged in the business
eties. The mainstream media disbelieved much of the tale. And
pages, or perhaps the food section, where the Times usually runs
ever since Gary Hart was driven from the 1988 campaign, many
its diagrams of cows.
editors have felt squeamish about sex stories. So-believing that
The newest phase of the Whitewater are is boredom. Little
they had given Bill Clinton a bit of a break during the campaign
Rock is clearing out. That's not good either. What's needed
(the Gennifer Flowers charges were never much pursued) and
instead is a hardheaded look at all the sludge that floats by.
again on the trooper story and Paula Jones sex charges-news
Reporters and editors should ask themselves whether the latest
organizations felt some need to show they could chase down the
charge is yet another recycled "question" about Whitewater (as
president's Arkansas past. Soon. legions of reporters and pho-
Suzanne Garment writes in her book "Scandal," questions are a
tographers made the trek to Little Rock. Deep Throat's old
common way for the press to keep the story boiling between
Watergate advice-"Follow the money!" became the war cry.
revelations) or is it. miracle of miracles. an answer. a real fact?
The frenzy phase may also have been driven by some uncon-
There's been plenty of good Whitewater reporting. and the press
scious guilt over how badly the press blew the huge SE-L scan-
must stay aggressive. But the are of coverage. which is almost a
dal. Some news organizations have used Whitewater almost as a
cliche now in Washington. should give way to a calmer. more
case study to explain the way cozy connections between real
challenging dynamic: context.
21
U.S.NEWS
Whitewater rapids
When will the Clintons stop taking on water from the nonstop scandal?
t was a rare moment at the White
The Whitewater affair is no horse, but
first couple that as far as he can tell they
House last week when hundreds of
it remains an albatross around the neck
have not seriously violated the law. All
aides assembled for a closed-to-the-
of the administration. Clintonites contin-
the Washington lawyer has found, they
press meeting in the East Room. Its
ue to insist there is little to fear. Insiders
say, is tax errors and improper deduc-
purpose was to buoy spirits as the
tell U.S. News that the Clintons' private
tions related to their investment in
Whitewater controversy grew and 10 ad-
attorney, David Kendall, has assured the
Whitewater Development Corp., the in-
ministration officials were subpoenaed
to testify before a criminal grand jury.
Chief of Staff Mack McLarty encour-
aged the crowd to be proud of its ac-
complishments. Hillary Rodham Clin-
ton reminded the group of its important
work by telling the story of an Arkansas
woman who had endured a double mas-
WHAT SHREDDING
tectomy and had no health insurance to
pay for it. (Some Clinton aides thought
SOUND?
this line. reminiscent of Mrs. Clinton's
health reform speeches, was a bit heavy-
handed.) The president himself best ex-
pressed the dazed and confused mood
of his staff. He quoted a bit of children's
verse that he read to his daughter. Chel-
sea. when she was younger:
I was standing there,
happy as can be.
When along came someone
Who tied a horse to me.
HAVE H
CAT
WHITE
30
CARTOON STEVE BENSON FOR SMAR
U.S.NEWS & WORLD REPORT MARCH 21. 1994
famous real-estate firm in which the
story bleed" out in one embarrassing ses-
Clintons say they lost money. Kendall
sion rather than have it drag on and on.
reportedly argues that the problems can
But that did not quell the controversy,
easily be fixed by paying back taxes and
and more TV appearances for the Clin-
penalties. Says one source: "[Kendall]
tons were being contemplated.
has said that at the end of the day, it's
More hits. The problem is that the
going to be an awful lot about nothing."
Whitewater story has "legs," as journal-
Perhaps. But even relatively small vio-
ists like to say. There are three main
THE PROSECUTOR'S BRIEF
lations of tax law can wreck careers in
segments of the complex scandal, and
Washington. Consider the failed nomi-
there are likely developments soon in
each of them. The first involves the Clin-
H
ere are some of the questions
nation of Zoë Baird to be attorney gen-
special counsel Robert Fiske
eral. More ominously for the Clintons,
tons' tangled investment in the
Jr. is likely to be asking about possi-
the Whitewater story seems like it will
Whitewater company with James
ble criminal or ethical problems
continue to fester, if not grow, despite
McDougal. Attorney Kendall reportedly
arising from the Whitewater affair:
the best efforts of the White House to
thinks the real problem centers here. The
get it off the front page.
second revolves around what kind of in-
Whitewater/Madison and the Clin-
Last week, Clinton tapped Lloyd Cut-
fluence if the White House had
tons. Were taxpayer-insured de-
ler, a distinguished Washington attorney,
on the probe of the Resolution Trust
posits from Madison Guaranty
to replace the hapless Bernard Nuss-
Corp. (RTC) into McDougal's affairs.
Savings & Loan diverted into the
baum as White House counsel. But Cut-
Fiske's Washington grand jury was look-
Whitewater accounts to help the
ler has agreed to serve only four to six
ing into that last week. The third is what
Clintons or the corporation?
months-long enough for him to help
some Republicans now allege in whispers
Was Madison money illegally di-
the Clintons comply with more subpoe-
might become a cover-up. It involves the
verted to pay off Bill Clinton's 1984
nas but not long enough to see the end of
destruction of documents and questions
gubernatorial campaign debt?
the estimated investigation by special
surrounding the death last summer of
Did the Clintons claim tax de-
counsel Robert Fiske Jr., who has been
Vincent Foster, the deputy White House
ductions for Whitewater interest
charged with examining the Whitewater
counsel and Clinton friend who helped
payments they did not make?
affair; Fiske's efforts are expected to last
handle some of the first couple's finan-
Was it improper for Mrs. Clin-
from one to two years. The president also
cial affairs. Senate GOP Leader Bob
ton to represent Madison in 1985
held an extraordinarily lengthy news con-
Dole said last week that the Foster death
as it was seeking approval for new
ference - an effort, said aides, "to let the
could be the most explosive aspect of the
capital from a state regulator ap-
story. Though rumors have swirled about
pointed by Bill Clinton?
the circumstances of Foster's death,
Vince Foster's death. Did White
ABC News aired photos from the
death scene that made a com-
House officials withhold docu-
pelling case that Foster had
ments found in the office of Vince
killed himself.
Foster. the deputy White House
One thing that might
counsel who died last July, relating
to Madison and Whitewater?
drive the story in coming
Did White House officials ob-
struct the U.S. Park Police investi-
gation of Foster's death?
Secret meetings. Did meetings
between Treasury Department
and White House officials affect
the Resolution Trust Corp.'s in-
vestigation of Madison Guaranty?
FOREIGN POLICY
Rose Law Firm. Did Hillary Clin-
ton's former law firm shred impor-
tant files after Fiske indicated the
scope of his probe?
Were there conflicts of interest
when Rose represented the feder-
al government in a suit against au-
ditors who gave an optimistic as-
sessment of Madison's finances?
And why were the concerns of
field officers about a possible con-
flict ignored by top brass at the
Federal Deposit Insurance Corp.?
David Hale. Did Clinton pressure
Hale. a government-investment
WATER
contractor. to make a fraudulent
$300.000 loan to Whitewater part-
ner Susan McDougal?
U.S.NEWS & WORLD REPORT. MARCH 21. 1994
31
U.S. NEWS
days is congressional hearings, which
could begin as soon as next week if the
House Banking Committee uses a hear-
GERGEN'S DYING DREAM
ing on the RTC to examine Whitewater.
But the issue of hearings is touchy. Fiske
W
hen David Gergen left U.S.
Gergen was widely blamed for the re-
does not want them to jeopardize his
News last year to join the Clin-
mark. He denies it.
probe, and he has asked GOP lawmak-
ton White House as counselor to the
Gergen has also crossed swords
ers to hold back. Republican Rep. Jim
president, the former Nixon-Ford-
with senior Clintonites, most notably
Leach, a leading critic of the Clintons on
Reagan aide said that he was doing so
Hillary Rodham Clinton. He favors a
Whitewater, wants to press ahead.
in a spirit of bipartisanship. But in the
far less sweeping health care reform
Leach aides are probing McDougal's
wake of the Whitewater scandal, it is
than the one devised by Mrs. Clinton's
loans and real-estate deals to see if they
becoming apparent that Gergen's
task force. And insiders say the 51-
might have ended up aiding the Clin-
dream of seeing Washington run as
year-old Southerner has had a
tons' investment in Whitewater.
cordially and nonideologically as the
strained relationship with Harold Ick-
The Iowa moderate has some 40 wit-
Renaissance Weekends he and the
es- partisan, tart-tongued New
nesses he wants to question. And what
president have long enjoyed won't
York lawyer who last year became
might turn up? "I have complete confi-
come true. Last week, for instance,
deputy chief of staff. Gergen is quick
dence that major
former Reagan aide Lyn Nofziger told
to note that Ickes has invited him to
character flaws will
be revealed and that
reporters of his delight at seeing Clin-
more health care meetings. "I'm glad
ton aides hauled into court: "Nice to
he's here," says Gergen. Still, Gergen
misdeeds have oc-
see the blood flow."
plays only a marginal role in the ad-
curred," Leach says.
Even though Gergen was brought
ministration's largest policy initiative.
He told U.S. News,
into the administration as a white
He expects that his role will grow as
though, that he has
knight, he has seen some of his own
the debate moves through Congress.
no intention of call-
blood flow. Younger Clinton aides
Not surprisingly, Gergen talks open-
ing the first lady to
who are proudly partisan see him as
ly about leaving the administration
testify. Democrat
an accommodationist who would like
some time before Congress goes home
Henry Gonzalez, the
to see the world run by blue-ribbon
for the elections or perhaps in early
Counsel. Cutler
panel chairman,
panels of Washington establishment
1995. A university setting-insiders say
could cancel the
types. "It's true," laughs Gergen. The
Harvard or Duke, most likely - is
whole enterprise, however. He said in a
youth brigade also take umbrage at
where Gergen might head, rather than
letter to Leach: "There is nothing more
his inviting Watergate figure John
straight back into journalism. Beyond
absurd even repugnant- than the
Ehrlichman to dine at the White
the question of Gergen's résumé,
spectacle of you bunch of Republicans
House. They also see Gergen as a
though, is the larger issue of whether
in fits and paroxysms of morality."
leaker. When an administration offi-
the capital culture can be as friendly as
In the Senate, interest is focused on
cial was recently quoted as describing
Dave's World. Last month, he wrote a
what happened in Washington, not back
the president's situation as "perilous,"
memo to the president urging him to
in the Ozarks. Republicans led by Sen.
keep a bipartisan focus in all his initia-
Alfonse D'Amato seem willing to delay
tives. As the Clinton health care plan
hearings until Fiske has finished depos-
gets pummeled and as Whitewater fur-
ing administration officials - process
Team turmoil.
ies grow, however, that approach
that could last until summer.
McLarty, Gergen,
seems increasingly unrealistic.
Overlying all of this, of course, is the
Stephanopoulos
usual cloud of Washington hypocrisy.
BY MATTHEW COOPER
The White House actively fought the ap-
pointment 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 Dem-
ocrats for meddling in the affairs of Ron-
ald Reagan's executive branch now insist
on congressional oversight.
Still, the drip, drip, drip of Whitewater
events is hurting Clinton. The most dam-
aging 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 ac-
32
U.S.NEWS & WORLD REPORT MARCH 21. 1994
U.S. NEWS
marked with Vincent Foster's
initials. Jeremy Hedges, a 20-
tivities by McDougal but did not
year-old college student who
say they were culpable.) Clinton
took part in the shredding, told
officials conceded the meetings
U.S. News he is sure the files
should not have taken place but
were Foster's because they were
vowed no influence was exerted
marked VWF, and "nobody
over the RTC probe.
else at the firm has those ini-
It turns out that several more
tials." Hedges says that he did
administration officials had
not see any references to
contacts with RTC authorities
Whitewater, McDougal or his
before the referral was made on
thrift, Madison Guaranty Sav-
Oct. 8, 1993, and many in the
ings & Loan. Ron Clark, a
upper echelons of the adminis-
spokesperson for the firm,
tration including the presi-
claims the papers were routine
dent-knew about the referral
internal memorandums.
before the first press leaks
The timing of the incident is as
about it were published by the
GOP pit bull. Jim Leach wants hearings on Whitewater.
crucial as the contents of the
Washington Post on October 31.
documents; if they contained in-
Republican Leach charged in a letter
White House, more high-publicity sub-
formation related to the scandal and the
last week that officials in the Kansas City
poenas are expected to come soon.
shredding took place after Fiske's ap-
branch of the RTC, which investigated
The word "shredding" is also driving
pointment, then Hillary Clinton's former
McDougal, "are being gagged and possi-
the Whitewater story. Two couriers for
firm could be guilty of obstructing jus-
bly coerced" by their Washington
the Rose Law Firm in Little Rock claim
tice. Although neither Hedges nor his
bosses. Even worse for the Clinton
that they shredded a box of documents
fellow shredder, Clayton Lindsey, can
partner of Hillary Clinton, hope
Clinton is not a White House
another alumnus of the Rose
employee." She gets no salary
Law Firm will come to his res-
and has no formal job title. But
cue. They're assuming that
he recalls that the public
associate White House
didn't see it that way when
THE WHITEWATER FILES
counsel William Kennedy,
Nancy Reagan tried to
who used to be managing
claim she was not subject
A
s the Clintons try to control the damage from the scandal
A
partner at the firm, will re-
to employee ethics rules
and Republicans hope to push it deeper into voters' minds.
fute allegations that Hub-
when she was donated
here are some of the sidelights and insights that have emerged
bell overbilled his clients.
expensive evening
as the Whitewater story continues to gather momentum:
gowns. "People care
Treasury Secretary
about the spirit of the
The probe by special coun-
Bush without filing charges,
Lloyd Bentsen is very
law, not the technical-
sel Robert Fiske Jr. into
Republicans first hoped to bar
anxious to protect the
ities, the lawyer says.
Whitewater has addled con-
special probers from casting
career of Jean Han-
gressional negotiators who are
aspersions on persons who
son, his department's
Most reports
trying to renew a law dealing
had not been indicted. Now
counsel. Others say
about Mrs. Clin-
with special prosecutors. An-
that Fiske is probing Demo-
she created prob-
ton's interview with
gry that Iran-Contra prosecu-
crats. insiders say the GOP
lems by meeting
Elle magazine
tor Lawrence Walsh criticized
will be more than willing to let
with White House
missed her most
Ronald Reagan and George
prosecutors say their piece
aides to discuss the
ironic quote: "I am
about the facts of a case. The
RTC probe of
just not interested in
ban on making accusations of
James McDougal's
spending my days
lawbreaking if no charges are
bankrupt S&L.
Nancy Reagan said
filed should stand.
she didn't fall under
falling into the trap
Bentsen believes she
government ethics
that the fomenters
is being unfairly
rules when dresses
of all this want us
Backers of Webb Hubbell,
tarred because she
were donated to her.
to-which is to be-
the No. 3 man at the Justice
was at one meeting
The public disagreed.
come isolated and
Department and former law
to make sure the dis-
on the defensive
cussions were ethical and
and diverted."
Webb Hubbell, one of Hillary
took part in another meeting
Clinton's law partners who
only after it was cleared by
Final thoughts from scandal
came to Washington, is now
Treasury's ethics officer.
watcher and ex-Sen. Warren
battling charges that he
Rudman: "This does not com-
overbilled clients at the firm.
One GOP attorney familiar
pare to Iran-Contra or Water-
with White House rules says:
gate. What you may have is evi-
"As a technical matter, Mrs.
dence of world-class stupidity."
34
U.S.NEWS & WORLD REPORT MARCH 21. 1994
ROSS D
THE
WASHINGTON
TIMES
pinpoint the exact date.
of a "war room" and their in-
Hedges says he's fairly certain
sistence upon seeing political
Fiske was on the job.
opponents as enemies led to
Both of the self-described
sloppiness and indiscretion. In
shredders will appear before a
all likelihood, White House of-
Little Rock grand jury this
ficials met with Treasury De-
week. Fiske's inquisitors no
partment officials overseeing
doubt will question the two
the investigation into Madison
about their previous work.
Guaranty to figure out how to
Hedges, for instance, recalls
"spin" the story in the news. It
shredding files belonging to
didn't help, either, that some
Hillary Clinton sometime "af-
participants have too many
ter the election," although he
roles to play. A case in point:
admits they "could've been
Roger Altman, the deputy
anything." Adding partisan
Treasury secretary and the act-
spice to the controversy,
ing head of the RTC and a fre-
Hedges and Lindsey are now
quent political war-room lead-
working with longtime Clin-
Different probes. Prosecutor Fiske (left) meets D'Amato.
er in the White House.
ton nemesis Floyd Brown in
So far, the known sins of the
trying to get their story out.
and in her legal work connected to
Clintonites seem far less serious than
Flaws exposed. While prosecutors and
McDougal's now defunct financial em-
those of the Nixon or Reagan eras. No
congressional scolds do their work,
pire. "Hillary has an intense desire to
one here planted illegal wiretaps or trad-
friends of the Clintons have their own
protect her reputation, the idea that she's
ed arms to terrorists. But what is clear:
explanation for where this is all going.
one of the 100 smartest lawyers in Ameri-
Bill Clinton, his wife and his underlings
They think small legal problems have ex-
ca," says a Clinton friend.
are not simply victims of Washington's
ploded to near disastrous proportions
But if her shortcomings have produced
cannibalistic culture as they claim. They
because of a baffling, even haughty de-
problems on the financial side of the sto-
tied this horse to themselves. No one did
fensiveness on the part of the Clintons
ry, the president and his political aides
it to them.
especially the first lady. Hubris, these
are more to blame for the maladroit way
friends say, is the problem: She refuses to
the scandal has been handled. Their per-
BY MATTHEW COOPER WITH GLORIA
admit she might have made mistakes in
manent campaign mentality, their pro-
BORGER. DAVID BOWERMASTER AND
her stewardship of the family's finances
pensity to see the world through the lens
GREG FERGUSON
Annual Now No
UP
42.48%
Total Return
12/31/91-12/31/93
18.59%
19.33%
1 year
since 12/31/91
Average Annual Total
Returns Ended 12/31/93
Dreyfus Growth and Income has more
than doubled the performance of the S&P 500 for
the period since its inception (12/31/91).*
This Fund is now concentrating on dividend-producing stocks
and convertible securities. In addition, with the Fund's flexibility,
the managers may shift small or large parts of the portfolio into bonds
or money market securities, if immediate prospects for the market change.
No sales load
Low $2,500 minimum investment $750 for
IRA.
For a Prospectus with complete information on management fees and expenses, call our toll-free number
below. Please read it carefully before you invest. Past performance is no guarantee of future results. Unlike
the Fund, which can invest in both debt and equity securities, the Standard & Poor's 500 Composite Stock Price
Transfer
Index is a widely accepted unmanaged index of stock market performance and is composed of only equity securities.
Your IRA!
Call for
Dreyfus Growth and Income Fund, Inc.
Details.
1-800-DREYFUS
(1-800-373-9387)
Ask for Extension 4357
Plan 401(k) provider!
SM
Net asset value and investment return of the Fund fluctuate so that upon redemption you may receive more or less than original investment.
"The Dreyfus Trust Company, as Custodian, is waiving its Dreyfus IRA annual maintenance fee for investments in the Drevfus Growth and Income Fund.
There are no minimum balance or special transaction requirements. If this waiver is terminated, Drevfus IRA investors will receive notice.
"Source: Lipper Analytical Services, Inc.; total returns for the S&P 500, 12/31/91-12/31/93 and 12:31 92-12:31:93: 18.43% and 10.06%. respectively.
Dreyfus Service Corporation. Distributor.
009
March 21
\
U.S. NEWS
Whitewater rapids
When will the Clintons stop taking on water from the nonstop scandal?
t was a rare moment at the White
The Whitewater affair is no horse, but
first couple that as far as he can tell they
House last week when hundreds of
it remains an albatross around the neck
have not seriously violated the law. All
aides assembled for a closed-to-the-
of the administration. Clintonites contin-
the Washington lawyer has found, they
press meeting in the East Room. Its
ue to insist there is little to fear. Insiders
say, is tax errors and improper deduc-
purpose was to buoy spirits as the
tell U.S. News that the Clintons' private
tions related to their investment in
Whitewater controversy grew and 10 ad-
attorney, David Kendall, has assured the
Whitewater Development Corp., the in-
ministration officials were subpoenaed
to testify before a criminal grand jury.
Chief of Staff Mack McLarty encour-
aged the crowd to be proud of its ac-
complishments. Hillary Rodham Clin-
ton reminded the group of its important
work by telling the story of an Arkansas
woman who had endured a double mas-
WHAT SHREDDING
tectomy and had no health insurance to
pay for it. (Some Clinton aides thought
SOUND?
this line, reminiscent of Mrs. Clinton's
health reform speeches, was a bit heavy-
handed.) The president himself best ex-
pressed the dazed and confused mood
of his staff. He quoted a bit of children's
verse that he read to his daughter, Chel-
sea, when she was younger:
I was standing there,
happy as can be.
When along came someone
Who tied a horse to me.
CAN HALL-H
SPPe
WHITE
30
CARTOON STEVE BENSON FOR USN&WR
U.S.NEWS & WORLD REPORT. MARCH 21. 1994
famous real-estate firm in which the
story bleed" out in one embarrassing ses-
Clintons say they lost money. Kendall
sion rather than have it drag on and on.
reportedly argues that the problems can
But that did not quell the controversy,
easily be fixed by paying back taxes and
and more TV appearances for the Clin-
penalties. Says one source: "[Kendall]
tons were being contemplated.
has said that at the end of the day, it's
More hits. The problem is that the
going to be an awful lot about nothing."
Whitewater story has "legs," as journal-
Perhaps. But even relatively small vio-
ists like to say. There are three main
THE PROSECUTOR'S BRIEF
lations of tax law can wreck careers in
segments of the complex scandal, and
Washington. Consider the failed nomi-
there are likely developments soon in
each of them. The first involves the Clin-
H
ere are some of the questions
nation of Zoë Baird to be attorney gen-
special counsel Robert Fiske
eral. More ominously for the Clintons,
tons' tangled investment in the
Jr. is likely to be asking about possi-
the Whitewater story seems like it will
Whitewater company with James
ble criminal or ethical problems
continue to fester, if not grow, despite
McDougal. Attorney Kendall reportedly
arising from the Whitewater affair:
the best efforts of the White House to
thinks the real problem centers here. The
get it off the front page.
second revolves around what kind of in-
Whitewater/Madison and the Clin-
Last week, Clinton tapped Lloyd Cut-
fluence if any the White House had
tons. Were taxpayer-insured de-
ler, a distinguished Washington attorney,
on the probe of the Resolution Trust
posits from Madison Guaranty
to replace the hapless Bernard Nuss-
Corp. (RTC) into McDougal's affairs.
Savings & Loan diverted into the
baum as White House counsel. But Cut-
Fiske's Washington grand jury was look-
Whitewater accounts to help the
ler has agreed to serve only four to six
ing into that last week. The third is what
Clintons or the corporation?
months-long enough for him to help
some Republicans now allege in whispers
Was Madison money illegally di-
the Clintons comply with more subpoe-
might become a cover-up. It involves the
verted to pay off Bill Clinton's 1984
nas but not long enough to see the end of
destruction of documents and questions
gubernatorial campaign debt?
the estimated investigation by special
surrounding the death last summer of
Did the Clintons claim tax de-
counsel Robert Fiske Jr., who has been
Vincent Foster, the deputy White House
ductions for Whitewater interest
charged with examining the Whitewater
counsel and Clinton friend who helped
payments they did not make?
affair; Fiske's efforts are expected to last
handle some of the first couple's finan-
Was it improper for Mrs. Clin-
from one to two years. The president also
cial affairs. Senate GOP Leader Bob
ton to represent Madison in 1985
held an extraordinarily lengthy news con-
Dole said last week that the Foster death
as it was seeking approval for new
ference - an effort, said aides, "to let the
could be the most explosive aspect of the
capital from a state regulator ap-
story. Though rumors have swirled about
pointed by Bill Clinton?
the circumstances of Foster's death,
Vince Foster's death. Did White
ABC News aired photos from the
House officials withhold docu-
death scene that made a com-
ments found in the office of Vince
pelling case that Foster had
killed himself.
Foster, the deputy White House
One thing that might
counsel who died last July, relating
to Madison and Whitewater?
drive the story in coming
Did White House officials ob-
struct the U.S. Park Police investi-
gation of Foster's death?
Secret meetings. Did meetings
between Treasury Department
and White House officials affect
the Resolution Trust Corp.'s in-
vestigation of Madison Guaranty?
FOREIGN POLICY
Rose Law Firm. Did Hillary Clin-
ton's former law firm shred impor-
tant files after Fiske indicated the
scope of his probe?
Were there conflicts of interest
when Rose represented the feder-
al government in a suit against au-
ditors who gave an optimistic as-
sessment of Madison's finances?
And why were the concerns of
field officers about a possible con-
flict ignored by top brass at the
Federal Deposit Insurance Corp.?
David Hale. Did Clinton pressure
Hale, a government-investment
WATER
contractor, to make a fraudulent
$300,000 loan to Whitewater part-
ner Susan McDougal?
U.S.NEWS & WORLD REPORT. MARCH 21, 1994
31
U.S. NEWS
days is congressional hearings, which
could begin as soon as next week if the
House Banking Committee uses a hear-
GERGEN'S DYING DREAM
ing on the RTC to examine Whitewater.
But the issue of hearings is touchy. Fiske
W
hen David Gergen left U.S.
Gergen was widely blamed for the re-
does not want them to jeopardize his
News last year to join the Clin-
mark. He denies it.
probe, and he has asked GOP lawmak-
ton White House as counselor to the
Gergen has also crossed swords
ers to hold back. Republican Rep. Jim
president, the former Nixon-Ford-
with senior Clintonites, most notably
Leach, a leading critic of the Clintons on
Reagan aide said that he was doing so
Hillary Rodham Clinton. He favors a
Whitewater, wants to press ahead.
in a spirit of bipartisanship. But in the
far less sweeping health care reform
Leach aides are probing McDougal's
wake of the Whitewater scandal, it is
than the one devised by Mrs. Clinton's
loans and real-estate deals to see if they
becoming apparent that Gergen's
task force. And insiders say the 51-
might have ended up aiding the Clin-
tons' investment in Whitewater.
dream of seeing Washington run as
year-old Southerner has had a
The Iowa moderate has some 40 wit-
cordially and nonideologically as the
strained relationship with Harold Ick-
Renaissance Weekends he and the
es-a partisan, tart-tongued New
nesses he wants to question. And what
president have long enjoyed won't
York lawyer who last year became
might turn up? "I have complete confi-
come true. Last week, for instance,
deputy chief of staff. Gergen is quick
dence that major
former Reagan aide Lyn Nofziger told
to note that Ickes has invited him to
character flaws will
be revealed and that
reporters of his delight at seeing Clin-
more health care meetings. "I'm glad
ton aides hauled into court: "Nice to
he's here," says Gergen. Still, Gergen
misdeeds have oc-
see the blood flow."
plays only a marginal role in the ad-
curred," Leach says.
Even though Gergen was brought
ministration's largest policy initiative.
He told U.S. News,
into the administration as a white
He expects that his role will grow as
though, that he has
knight, he has seen some of his own
the debate moves through Congress.
no intention of call-
blood flow. Younger Clinton aides
Not surprisingly, Gergen talks open-
ing the first lady to
who are proudly partisan see him as
ly about leaving the administration
testify. Democrat
an accommodationist who would like
some time before Congress goes home
Henry Gonzalez, the
Counsel. Cutler
to see the world run by blue-ribbon
for the elections or perhaps in early
panel chairman,
could cancel the
panels of Washington establishment
1995. A university setting-insiders say
types. "It's true," laughs Gergen. The
Harvard or Duke, most likely is
whole enterprise, however. He said in a
youth brigade also take umbrage at
where Gergen might head, rather than
letter to Leach: "There is nothing more
his inviting Watergate figure John
straight back into journalism. Beyond
absurd - even repugnant - than the
Ehrlichman to dine at the White
the question of Gergen's résumé,
spectacle of you bunch of Republicans
House. They also see Gergen as a
though, is the larger issue of whether
in fits and paroxysms of morality."
leaker. When an administration offi-
the capital culture can be as friendly as
In the Senate, interest is focused on
cial was recently quoted as describing
Dave's World. Last month, he wrote a
what happened in Washington, not back
the president's situation as "perilous,"
memo to the president urging him to
in the Ozarks. Republicans led by Sen.
keep a bipartisan focus in all his initia-
Alfonse D'Amato seem willing to delay
tives. As the Clinton health care plan
hearings until Fiske has finished depos-
Team turmoil.
gets pummeled and as Whitewater fur-
ing administration officials process
ies grow, however, that approach
that could last until summer.
McLarty, Gergen,
seems increasingly unrealistic.
Overlying all of this, of course, is the
Stephanopoulos
usual cloud of Washington hypocrisy.
BY MATTHEW COOPER
The White House actively fought the ap-
pointment 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 Dem-
ocrats for meddling in the affairs of Ron-
ald Reagan's executive branch now insist
on congressional oversight.
Still, the drip, drip, drip of Whitewater
events is hurting Clinton. The most dam-
aging 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 ac-
32
PHOTOS
(LEFT)
USN&WR
U.S.NEWS & WORLD REPORT MARCH 21. 1994
U.S. NEWS
marked with Vincent Foster's
initials. Jeremy Hedges, a 20-
tivities by McDougal but did not
year-old college student who
say they were culpable.) Clinton
took part in the shredding, told
officials conceded the meetings
U.S. News he is sure the files
should not have taken place but
were Foster's because they were
vowed no influence was exerted
marked VWF, and "nobody
over the RTC probe.
else at the firm has those ini-
It turns out that several more
tials." Hedges says that he did
administration officials had
not see any references to
contacts with RTC authorities
Whitewater, McDougal or his
before the referral was made on
thrift, Madison Guaranty Sav-
Oct. 8, 1993, and many in the
ings & Loan. Ron Clark, a
upper echelons of the adminis-
spokesperson for the firm,
tration including the presi-
claims the papers were routine
dent knew about the referral
internal memorandums.
before the first press leaks
The timing of the incident is as
about it were published by the
GOP pit bull. Jim Leach wants hearings on Whitewater.
crucial as the contents of the
Washington Post on October 31.
documents; if they contained in-
Republican Leach charged in a letter
White House, more high-publicity sub-
formation related to the scandal and the
last week that officials in the Kansas City
poenas are expected to come soon.
shredding took place after Fiske's ap-
branch of the RTC, which investigated
The word "shredding" is also driving
pointment, then Hillary Clinton's former
McDougal, "are being gagged and possi-
the Whitewater story. Two couriers for
firm could be guilty of obstructing jus-
bly coerced" by their Washington
the Rose Law Firm in Little Rock claim
tice. Although neither Hedges nor his
bosses. Even worse for the Clinton
that they shredded a box of documents
fellow shredder, Clayton Lindsey, can
partner of Hillary Clinton, hope
Clinton is not a White House
another alumnus of the Rose
employee." She gets no salary
Law Firm will come to his res-
and has no formal job title. But
cue. They're assuming that
he recalls that the public
associate White House
didn't see it that way when
THE WHITEWATER FILES
counsel William Kennedy,
Nancy Reagan tried to
who used to be managing
claim she was not subject
A
s the Clintons try to control the damage from the scandal
partner at the firm, will re-
to employee ethics rules
and Republicans hope to push it deeper into voters' minds,
fute allegations that Hub-
when she was donated
here are some of the sidelights and insights that have emerged
bell overbilled his clients.
expensive evening
as the Whitewater story continues to gather momentum:
gowns. "People care
Treasury Secretary
about the spirit of the
The probe by special coun-
Bush without filing charges,
Lloyd Bentsen is very
law, not the technical-
sel Robert Fiske Jr. into
Republicans first hoped to bar
anxious to protect the
ities, the lawyer says.
Whitewater has addled con-
special probers from casting
career of Jean Han-
gressional negotiators who are
aspersions on persons who
son, his department's
Most reports
trying to renew a law dealing
had not been indicted. Now
counsel. Others say
about Mrs. Clin-
with special prosecutors. An-
that Fiske is probing Demo-
she created prob-
ton's interview with
gry that Iran-Contra prosecu-
crats, insiders say the GOP
lems by meeting
Elle magazine
tor Lawrence Walsh criticized
will be more than willing to let
with White House
missed her most
Ronald Reagan and George
prosecutors say their piece
aides to discuss the
ironic quote: "I am
about the facts of a case. The
RTC probe of
just not interested in
ban on making accusations of
James McDougal's
spending my days
lawbreaking if no charges are
bankrupt S&L.
Nancy Reagan said
filed should stand.
she didn't fall under
falling into the trap
Bentsen believes she
government ethics
that the fomenters
is being unfairly
rules when dresses
of all this want us
Backers of Webb Hubbell,
tarred because she
were donated to her.
to-which is to be-
the No. 3 man at the Justice
was at one meeting
The public disagreed.
come isolated and
Department and former law
to make sure the dis-
on the defensive
cussions were ethical and
and diverted."
Webb Hubbell, one of Hillary
took part in another meeting
Clinton's law partners who
only after it was cleared by
Final thoughts from scandal
came to Washington, is now
Treasury's ethics officer.
watcher and ex-Sen. Warren
battling charges that he
Rudman: "This does not com-
overbilled clients at the firm.
One GOP attorney familiar
pare to Iran-Contra or Water-
with White House rules says:
gate. What you may have is evi-
"As a technical matter, Mrs.
dence of world-class stupidity."
34
U.S.NEWS & WORLD REPORT MARCH 21. 1994
ROSSD
THE
TIMES
pinpoint the exact date,
of a "war room" and their in-
Hedges says he's fairly certain
sistence upon seeing political
Fiske was on the job.
opponents as enemies led to
Both of the self-described
sloppiness and indiscretion. In
shredders will appear before a
all likelihood, White House of-
Little Rock grand jury this
ficials met with Treasury De-
week. Fiske's inquisitors no
partment officials overseeing
doubt will question the two
the investigation into Madison
about their previous work.
Guaranty to figure out how to
Hedges, for instance, recalls
"spin" the story in the news. It
shredding files belonging to
didn't help, either, that some
Hillary Clinton sometime "af-
participants have too many
ter the election," although he
roles to play. A case in point:
admits they "could've been
Roger Altman, the deputy
anything." Adding partisan
Treasury secretary and the act-
spice to the controversy,
ing head of the RTC and a fre-
Hedges and Lindsey are now
quent political war-room lead-
working with longtime Clin-
Different probes. Prosecutor Fiske (left) meets D'Amato.
er in the White House.
ton nemesis Floyd Brown in
So far, the known sins of the
trying to get their story out.
and in her legal work connected to
Clintonites seem far less serious than
Flaws exposed. While prosecutors and
McDougal's now defunct financial em-
those of the Nixon or Reagan eras. No
congressional scolds do their work,
pire. "Hillary has an intense desire to
one here planted illegal wiretaps or trad-
friends of the Clintons have their own
protect her reputation, the idea that she's
ed arms to terrorists. But what is clear:
explanation for where this is all going.
one of the 100 smartest lawyers in Ameri-
Bill Clinton, his wife and his underlings
They think small legal problems have ex-
ca," says a Clinton friend.
are not simply victims of Washington's
ploded to near disastrous proportions
But if her shortcomings have produced
cannibalistic culture as they claim. They
because of a baffling, even haughty de-
problems on the financial side of the sto-
tied this horse to themselves. No one did
fensiveness on the part of the Clintons
ry, the president and his political aides
it to them.
especially the first lady. Hubris, these
are more to blame for the maladroit way
friends say, is the problem: She refuses to
the scandal has been handled. Their per-
BY MATTHEW COOPER WITH GLORIA
admit she might have made mistakes in
manent campaign mentality, their pro-
BORGER. DAVID BOWERMASTER AND
her stewardship of the family's finances
pensity to see the world through the lens
GREG FERGUSON
Annual Now No Fee!*
UP
42.48%
Total Return
12/31/91-12/31/93
18.59%
19.33%
1 year
since 12/31/91
Average Annual Total
Returns Ended 12/31/93
Dreyfus Growth and Income has more
than doubled the performance of the S&P 500 for
the period since its inception (12/31/91).**
This Fund is now concentrating on dividend-producing stocks
and convertible securities. In addition, with the Fund's flexibility,
the managers may shift small or large parts of the portfolio into bonds
or money market securities, if immediate prospects for the market change.
No sales load
Low $2,500 minimum investment
$750 for IRA.
For a Prospectus with complete information on management fees and expenses, call our toll-free number
below. Please read it carefully before you invest. Past performance is no guarantee of future results. Unlike
the Fund, which can invest in both debt and equity securities, the Standard & Poor's 500 Composite Stock Price
Transfer
Index is a widely accepted unmanaged index of stock market performance and is composed of only equity securities.
Your IRA!
Call for
Dreyfus Growth and Income Fund, Inc.
Details.
1-800-DREYFUS
(1-800-373-9387)
Ask for Extension 4357
Plan 401(k) provider!
SM
Net asset value and investment return of the Fund fluctuate so that upon redemption you may receive more or less than original investment.
*The Dreyfus Trust Company, as Custodian, is waiving its Dreyfus IRA annual maintenance fee for investments in the Dreyfus Growth and Income Fund.
There are no minimum balance or special transaction requirements. If this waiver is terminated, Dreyfus IRA investors will receive notice.
*Source: Lipper Analytical Services, Inc.; total returns for the S&P 500, 12/31/91-12/31/93 and 12/31/92-12/31/93: 18.43% and 10.06%, respectively.
Dreyfus Service Corporation, Distributor.
009
INTERVIEW
all that and get to what the facts are.
TIME: If Congress asks you to testify,
"Yes, We Made
will you?
Clinton: We'll have to see if that's what Con-
gress decides to do.
TIME: Did you make any mistakes?
Lots of Mistakes"
Clinton: My goodness. We made lots of mis-
takes. We never should have made the in-
vestment for one. And I suppose the other big
mistake that I made was not appreciating
how other people view this when I knew we
Clearing the air with Hillary Rodham Clinton
had done everything we knew to make good
on obligations, like paying property taxes and
other things, to try to be as
The First Lady met for 30 minutes last
careful as possible. So yes, we
Saturday with TIME'S Ann Blackman and
made lots of mistakes and ob-
Nina Burleigh to discuss Whitewater and
viously wish we hadn't. But
its effect on herself and her family.
those are things you look at in
Excerpts:
retrospect. We didn't do any-
thing wrong. We never in-
TIME: As a private citizen, under a potential
tended to do anything wrong.
legal cloud, you have an interest in not
disclosing information. But as the First
TIME: Why did you oppose
Lady, you have a responsibility to be candid
naming a special counsel?
about Whitewater. Which comes first?
Clinton: Well, there were no
Clinton: We have been candid. We have
allegations of wrongdoing
been candid all the way through this. We
against the President or me.
made an investment decision that lost mon-
There were lots of wild and
ey. We did the best we could, always, to be
unsubstantiated stories that
as straightforward on this as we could,
are filled with hurtful claims
based on what we knew. We have fully co-
about people.
operated with the grand jury, with the spe-
cial counsel; we have been more than open
TIME: How do you and your
and candid. We have not denied any docu-
husband explain this to each
ments, we have claimed no privilege. But
other?
for years, now, we've been asked questions
Clinton: I just tell him that
that we don't know the answers to. We did
I'm very sad that this kind of
not run the company, we did not make its
situation has occurred and
decisions, we did not have its documents or
that I'm sure we could have
its record. So we could not answer many of
handled it differently or bet-
your questions anyway. We did the very
ter. I know when all is said
best we could with what we knew.
and done there's nothing in
this whole Whitewater situa-
TIME: Jim McDougal [head of the Madison
tion except a lot of confused
S&L] claims that your Whitewater
documents that will be
contribution was $13,000, not the $69,000
put into some sensible order
cited in the 1992 Lyons report on White-
and presented to the world
water commissioned by your husband.
thing about that have only recently been
when the special counsel gets done. So I
Clinton: Jim didn't have any documents. He
brought to our attention. And as we gather
don't even worry about that.
can recall only from his memory.
more information, we will act appropriate-
ly, as we did based on the information we
TIME: And Chelsea?
TIME: Do you think you may have
had at a previous time.
Clinton: She doesn't need an explanation.
overdeducted on your income tax in those
She is fully aware of what happens in poli-
years?
TIME: How do you respond to questions of
tics. With it comes a lot of the worst that hu-
Clinton: Well, we don't know. We don't be-
conflicts of interest raised by your
man nature has to offer. We've been telling
lieve so, but during the Lyons report, they
representation of Madison?
her that since she was six.
brought to our attention two deductions
Clinton: I don't know of any charges other
that were supported in documents which
than this incident arising out of a limited
TIME: What effect does this have on you?
we had but were contradicted in docu-
representation I had of Madison in which a
Clinton: I feel, on most days, good about
ments we had never seen until they were
request for a legal opinion was made to the
what I'm doing, but on other days I get
collected for that report. And once that was
[Arkansas] securities commissioner. I don't
down like anybody else. People can lie
brought to our attention, we paid back, be-
know of any other legitimate claims; now
about you on a regular basis and you have to
cause we're not out to take any advantage of
there are lots of illegitimate claims floating
take it. That's very hurtful. Then when you
anybody. We are only able to act on the
around these days. and apparently you can
stop and think that now that we're in public
knowledge we had at the time. But there
say anything these days and get somebody
life at the level we are, we have no protec-
were activities that we didn't know any-
to prove it. We're trying to break through
tion against any of that.
35
TIME MARCH 1994
PERSPECTIVE
Why It Isn't Watergate
There is no evidence of criminality in Whitewater-but that doesn't mean it's trivial
By GEORGEJ. CHURCH
calling for one thing that "Watergate" pointed to a whole pat-
tern of activity at the top of the government that former (later
ATERCATE. WHITEWATER. BOTH CONTAIN THE
jailed) Attorney General John Mitchell referred to as the
W
letters w-a-t-e-r. Adopt the fashion of attaching
"White House horror stories." The rifling of the safe in the of-
e
the suffix -gate to any scandal whatsoever (re-
fice of Daniel Ellsberg's psychiatrist, the creation of the
d
member Ice Cream-Gate? Doublebillingsgate?
plumbers' unit, the "dirty tricks" in the 1972 campaign, the
d
never mind, nobody else does either) and the second be-
surveillance of anti-Vietnam War protesters, the "enemies
comes Whitewatergate, identical to the first except for an
list"-these things had only a peripheral relationship, if that,
e
extraneous syllable. But do the two share any other
to the burglary of Democratic National Committee head-
similarities?
quarters at the Watergate complex, but they were part of a
Some, certainly, and not altogether superficial ones. Both
pattern of dictatorial and in some cases criminal behavior
n
concern allegations of impropriety directed at a President of
that has not found even alleged parallels in the Clinton White
the United States (though only Whitewater also involves the
House.
First Lady; one would have to look very long through the
As for "Watergate" proper, remember Richard Nixon,
mountain of Watergate clippings before coming across even
37th President of the United States, musing on tape about
a glancing mention of Pat
how much money would be
Nixon). Both triggered
required to buy the silence
probes by a special counsel,
of the burglars, and rum-
10
and both may yet lead to
bling that he knew where to
congressional investiga-
get it? Remember White
ie.
tions. Both touched off par-
House counsel John Dean
id
tisan howling for a Presi-
semi-joking that Nixon's
at
dent's head, and both
helpers were unschooled in
ns
featured official defenses of
such criminal activity as
said President by aides who
leaving the money for pay-
obviously had next to no
offs where it could not be
knowledge of what had hap-
traced, and one of his listen-
pened. George Stephano-
ers remarking plaintively
poulos and Ron Ziegler
that Mitchell ought to know
at
might equally resent that
how to find somebody
of
comparison, but there it is.
skilled in money launder-
nd
But what, if anything, is
ing? The onetime chief law-
ve
really similar? Right now,
enforcement officer of the
et-
an honest answer would
country being mentioned as
aid
have to be: We don't know.
a conduit to recruit a suc-
in
The identity of "Deep
cessful crook! What com-
ta-
Throat" is one of the few
REMEMBER WHEN? White House counsel John Dean, who became a
Watergate mysteries left.
chief accuser of Nixon, is sworn in by Senate probers
parison can be drawn be-
ed
tween that and meetings
be
We know not only the details of the cover-up but what it was
concerning the Madison investigation between Treasury of-
ler
that was covered up. In contrast, probers into Whitewater
ficers and White House aides that some commentators doubt
rld
have been sorely puzzled by the disparity between the inten-
can be considered improper at all?
I
sity of White House efforts to obfuscate the matter and what
Yet if Watergate-so far-surpasses Whitewater by light-
can be discovered so far about what might have been obfus-
years in seriousness, there are disturbing parallels. Both con-
cated. So what if the failed Madison Guaranty Savings &
cern whether what a President (and in the case of Whitewater,
Loan really was being operated as what Republican Con-
a First Lady) says can be believed. Whitewater, as Congress-
on.
gressman Jim Leach calls a "private piggy bank" for Arkansas
man Leach asserts, may be important "precisely because it is
oli-
politicians, including the then Governor? So what if Bill and
small [and] truth of character is more generally revealed in
hu-
Hillary Clinton did in fact take income-tax deductions to
small acts than large gestures." It mattered that Lyndon John-
ing
which they were not entitled, and underpaid their personal
son lied about small things because he eventually lied (to the
taxes? Admitting as much no doubt would be embarrassing.
nation and, probably, to himself) about a very big thing, the
Avoiding that embarrassment, however, is so far from being
Vietnam War. It matters if Bill and Hillary Clinton are telling
worth all the trouble that the Clinton White House is in now
the truth about Whitewater. How much they invested; how
out
as to stir suspicion that there must be something more wait-
much, if anything, they really lost; whether they were actually
get
ing to be unearthed.
entitled to all the tax deductions for interest they took. Be-
lie
This much, however, can be said. Whitewater has a very,
cause these things are very important in themselves? No. Be-
to
very long way to go before it can be considered within 16
cause if their veracity cannot be trusted on those matters. who
ou
miles of being equal in gravity to Watergate. Memories are
can believe them when they say their health-care plan will
blic
dimming. People voted in 1992 who were not yet born when
really cut costs, or improve the quality of medical care. or not
the Watergate break-in occurred 20 years earlier. or even
lead to rationing, or increase rather than narrow our choice of
when President Nixon resigned in 1974. But it is worth re-
which doctors to consult?
TIME
39
EDITORIAL
BY MICHAEL RUBY
CO-EDITOR
THE LAST WHITE HOUSE COUNSEL?
L
loyd Cutler, by all accounts, is an intelligent and
with new legislation. The current investigations related
honorable man who, as the new White House
to Whitewater may yield something beyond bonehead-
counsel, says he will serve the office of the presi-
edness, but if they do, the outcome won't reveal a short-
dency, particularly in matters related to the Whitewater
age of ethics cops: It will reveal a shortage of ethics.
affair. If the interests of the office diverge from the
The White House still requires legal advice on the
interests of the person occupying it, well, the latter will
people's business, but it doesn't need an in-house coun-
be sacrificed for the former. Cutler has signed on for 130
sel's office of a dozen or so lawyers to provide it. There is,
days (although it will test his resolve when the president
after all, the U.S. Department of Justice. According to
asks him, sometime in early July, to stay on till the end of
the department's annual report, its 23-lawyer Office of
the year). However long Cutler remains in the White
Legal Counsel is supposed to "assist the attorney general
House, he can do a world of good by giving concrete
in the role of legal adviser to the president and executive
meaning to one of Bill Clinton's favorite words: change.
branch agencies." If lawyers in the White House coun-
He can begin with a good hard look at
sel's office are doing these duties, what
the office he now holds and whether its
are these folks at Justice up to?
history and contradictions suggest that
Cutler should move beyond his prox-
it might best be eliminated.
If the current
imate mandate- a one-man ethics po-
Until the 1940s, no American presi-
dent apparently felt the need for a
investigations
lice force to offer other guidance to
his boss. He can tell Clinton, for exam-
White House counsel. Néither did
yield anything, it
ple, that the inevitable second round of
Franklin Delano Roosevelt, who creat-
won't be a shortage
political appointments should include
ed the position in 1943. Publicly, FDR
fewer Friends of Billary. Presidential
complained that the Department of
of ethics cops; it
politics may be democracy's ultimate
Justice and its chief lawyer, the attor-
will be shortage
spoils system, and the victor has every
ney general, were so overemployed
of ethics.
right to reward his pals. But Clinton,
that they couldn't possibly spare
who apparently never loses touch, has
enough time for White House legal
taken it to extremes and made a mock-
matters. This was, to put it charitably, a
ery of his promise of political diversity.
trifle disingenuous. In fact, Roosevelt
When Warren Christopher vacates the
wanted a spot to park Samuel Rosen-
State Department, can you imagine the
man, a New York judge and longtime political confidant
president reaching out to name Richard Lugar, a highly
who also was one of FDR's principal speechwriters.
regarded Republican on the Senate Foreign Relations
Since the beginning, then, presidents have used the
Committee, rather than his Oxford roommate Strobe
White House counsel in a variety of ways-speechwriter,
Talbott, now the deputy secretary of state?
troubleshooter, ethics cop, liaison to the Justice Depart-
Finally, Cutler might use his time in the White House
ment. In fact, a written description of the job does not
to educate his boss about the use and abuse of the
even exist, so it's sophistry to argue that there can be a
English language. Bill Clinton, so articulate on so many
tidy line between serving the president and serving the
matters, plagues us too often with the "I didn't inhale"
presidency. That's precisely why the job ought to be
syndrome his maddening propensity for splitting law-
eliminated. If the president has a personal legal prob-
yerly hairs when all that the citizens want is straight
lem, he can do what every other American can do: Hire a
talk. He also overdoes exaggeration: Hyperbole can be
lawyer. If he seeks a ruling on a question of ethics, he or
hard currency in politics, but not if the politician con-
members of his White House staff can consult the Office
stantly debases it. Somalia, Bosnia, gays in the military,
of Government Ethics; its brief, according to the U.S.
health care this president is always drawing lines in
Government Manual, is,to provide "overall direction of
the sand, then immediately blurring them with water.
executive branch policies in preventing conflicts of inter-
It would be a wise counselor indeed who can convey
est." If the office is "a toothless terrier on Valium," as
these things, then close the door on the White House
one congressman described it a few years ago, let's fix it
counsel's office for good.
98
U.S.NEWS & WORLD REPORT MARCH 21. 1994
97
PUBLIC LIVES
Puffing Motes Into Dust Storms
Why no one will give the Clintons the benefit of the doubt
KLEIN
N THE AFTERNOON LLOYD CUTLER WAS NAMED COUN-
acted in any way to impede the investigation. they should be
O
sel to the president. after Bill Clinton had exhausted
fried. But they have not yet been accused of anything remotely
every last question from the press about the Whitewa-
resembling that-o anything that begins to explain the hysteria
ter hysteria. the White House staff held a pep rally for
this case has evoked in the press.
the First Family in the East Room. This is becoming
Which raises an interesting question: what does explain the
something of a ritual. There was a rally to bolster the president's
hysteria? What justifies disingenuous banner headlines like The
spirits after his mother died. There will. no doubt. be many more
Washington Post's: CLINTON REJECTS LIKENING WHITEWATER
such before this strange ride is done. Both the president and Al
TO WATERGATE? That same day R. W. Apple offered a ridiculous
Gore addressed the troops-but the real passion came from
hyperinflation of the scandal in The New York Times. an
Hillary Rodham Clinton. She spoke about health care. She told
"analysis" that acknowledged Whitewater had produced "noth-
the story of a woman in New Orleans who had breast cancer, but
ing approaching" the abuses of power involved in Watergate but
no health insurance-the company she
then blithely compared such "similar-
worked for didn't offer it-and the doc-
ities" as the reluctance to respond to
tor told her that all he could do was
press inquiries and the president's
watch the tumor "and see what hap-
sounding as "defensive as Mr. Nixon
pens." That was why they had come to
used to in proclaiming the virtues of
Washington. she said: to help people
those who worked alongside him." (Ap-
like that woman. The crusade was all.
ple might easily have been comparing
The applause was tumultuous.
Clinton's early performance on NAFTA
There was. in the First Lady's re-
to Watergate.) And then there were the
marks-as there often is-an implicit:
television networks. giving time to an
How dare they question our motives?
ethical falling-rock zone like Sen. Al-
How dare they question our rectitude?
fonse D'Amato. simply because his
It's a familiar sound. the mating call of the
sound bites ("as great if not greater than
liberal elite in high dudgeon. It divides
Watergate!") were the most egregious.
the world between us and them. the high-
Sleazeballs: Hysteria. in this case. has
minded and the greedy. The First Lady's
many fathers. One is that a cancer on the
indignation seems particularly problem-
presidency is more sexy than health care
atic in the case of Whitewater, which
or welfare reform. Another is the fact
centers on a decision she made in the late
JAMES COLBURN- PHOTOREPORTERS
that the Clintons did do business with
1970s: to make money. Her choices were
The crusade is all: First Couple
some mortal sleazeballs down in Arkan-
never quite so simple as the ones she laid
sas and may have brought a few along
out. memorably. during the campaign: to make money
A cancer on
with them to Washington. A third. not to be underes-
or bake cookies. She could have done high-minded.
timated. is the suicide of Vince Foster. which adds
liberal work. She could have defended indigents in-
the presidency
immensely to the "something fishy here" quotient.
stead of banks. She chose to make money. Some of
is sexier than
But the real reason Whitewater has puffed so large is
her clients were not the sort of people who listen to
that very few people in Washington are willing to
National Public Radio: many of them were, perhaps.
health care
give the Clintons the benefit of the doubt. It's not just
aware that she was married to a high-ranking official
in the State of Arkansas. These were not moments
or welfare
the press: I haven't noticed many congressional
Democrats rushing to their defense. either.
she will dwell upon in her inevitable, best-selling
reform
Why not? In part, because the president's effort to
autobiography. In fact. she has never really discussed
finesse all sides is catching up with him. Nobody
her business career. The natural assumption is that she has
quite trusts him-liberals think he's a sellout: moderates think
something to hide. and she might: but she may just be embar-
he's a secret liberal. He has made deals but few friends. He has
rassed by the whiff of venality. And that embarrassment. the
sought shifting alliances and won disposable loyalties. As for the
involuntary cringe that occurs when names like McDougal or
press. the combination of loose morality and high ideals presents
Lasater are recalled. the desire to just forget about the welter of
a gloriously fat target. Clinton's truth-shaving during the cam-
smarmy transactions-te not even think about this because there
paign. especially about the draft. is well remembered-and the
is health care to discuss-may well be the mote of dust at the
First Family's (especially Mrs. Clinton's) apparent disdain for
heart of the White House's incredibly self-destructive reluctance
the less-than-pure rankles. Their administration is now in peril.
to face this problem squarely.
The time for Watergate comparisons may yet come. but what if it
So far. and despite the efforts of a brigade of intrepid investi-
doesn't? Do we. the righteous guardians of the truth. admit that
gative reporters. not much else has turned up. There was a series
we blew this all out of proportion-or do we continue to puff
of contacts between Treasury Department officials and the
motes into dust storms in order to justify our investment? The
White House staff. These were stupid. but-on the evidence as it
Clintons have earned their isolation. But they deserve a more
exists- not criminal Of course. if it turns out that the Clintons
sober hearing than this lunatic caldron.
39
A Whitewater
Bill Clinton
Hillary Clinton
\ former partner with
A former Whitewater and
Hillary and the
Rose partner. she has been
Portrait Gallery
McDougals in Whitewater
criticized for representing
Development Corp. an
Jim McDougal's Madison
unsuccessful vacation-
Guaranty before a state
The Whitewater investigation has focused
home development in the
regulator appointed by her
on a circle of Bill and Hillary Clinton's
Orarks The Clintons sold
husband Once also invoi-
political allies and business associates.
their interest in late 1992
ved in a controversial legal
case with Dan Lasater.
THE ADMINISTRATION
THE PROSECUTOR
THE TREASURY/RTC
Harold Ickes
Bruce Lindsey
Vince Foster
Bernard Nussbaum
Robert Fiske
Roger Altman
The deputy chief of
Senior adviser learned of
A former Rose partner
White House counsel
A Republican prose-
The deputy Treasury
staff and Whitewater
Madison criminal referral
and deputy White House
resigned under pressure
cutor with a reputation
secretary and acting
damage-control
from Nussbaum: Clinton
counsel. His suicide in
two weeks ago: emptied
for toughness. he was
RTC chairman admits
strategist was present
said he was "probably"
July fueled speculation
Foster's office and
chosen by Attorney
he called a meeting of
at a meeting with
told of referral by Lindsey.
about the Clintons'
presided over all three
General Janet Reno to
White House officials
Treasury officials to
Attended meeting be-
finances. including
controversial Treasury
investigate Whitewater.
to discuss Madison.
discuss Madison.
tween White House and
Whitewater. which
White House meetings.
Has recused himself
Treasury officials.
he had handled.
from further agency
THE ATTORNEY
deliberations.
Lloyd Cutler
Margaret Williams
Patsy Thomasson
Webster Hubbell
David Kendall
Jean Hanson
The former White
Hillary's chief of staff
Managed Dan Lasater's
Bill Clinton's close
Bill Clinton's personal
In critical meeting. the
House counsel to
attended a meeting of
assets during the FSLIC
friend. former Rose
lawyer received
Treasury and acting
Jimmy Carter was
Treasury and White
case while he was in jail on
partner and now the
Whitewater documents
RTC counsel told
appointed last week
House officials to discuss
drug charges. Now a
No. 3 at Justice. he faces
from Foster's office:
Nussbaum that the
as Nussbaum's tem-
Madison. She was among
White House aide. she was
questions about whether
later negotiated a broad
Clintons were men-
porary replacement.
the first to go into Foster's
also among those who
he charged the Little
subpoena that had
tioned in a criminal
office after the suicide.
searched Foster's office.
Rock firm for personal
the effect of sealing
referral as potential
expenses and over-
more documents from
beneficiaries of
billed clients.
public inspection.
Madison misconduct.
THE CRITICS
THE ARKANSAS CROWD
Sen. AI D'Amato
Rep. Jim Leach
Beverly Bassett
James McDougal
Susan McDougal
William Roelle
Probed Altman about
Widely respected
Schaffer
Invited the Clintons to
An equal partner in
Sources say tormer
controversial
GOP moderate. he
Appointed state securities
invest as equal partners
Whitewater. she headed
RTC senior vice
Whitewater briefing:
led calls for special
regulator by Governor
with him and his wife,
the public-relations firm
president told Hanson
critics say his own
prosecutor and is
Clinton. she approved a
Susan. in the Whitewater
that took a controversial
and Altman of RTC's
ethics lapses make him
pushing for congres-
novel plan proposed by
Development Corp.
loan from David Hale's
plans to refer Madison
poor choice to lead
sional probe into
Madison's attorney. Hil-
McDougal later owned the
company and used part of
to Justice for criminal
the charge.
Whitewater affair.
lary Clinton, to prop up the
Arkansas thrift. Madison
it to buy a piece of
investigation.
thrift. Previously, Schaffer
Guaranty, which failed in
property. later deeded to
worked for a law firm that
1989 at a cost of $60 million
Whitewater. The loan was
represented Madison.
to taxpayers.
never repaid.
Floyd Brown
Robert Bartley
Dan Lasater
David Hale
Jeremy Hedges
Conservative operative
The editorial-page
Bond broker and FOB was
A retired Little Rock judge,
A Rose Law Firm
and creator of Willie
editor of The Wall
sued by a failing Illinois
he claims Bill Clinton and
courier, he told a Little
Horton TV ads
Street Journal pursued
thrift and FSLIC for alleged
Jim McDougal pressured
Rock grand jury that he
for George Bush. he's
Whitewater story
unauthorized trading.
him into making a $300.000
and a colleague used a
churning out faxes
before it was hot: in a
Hillary helped the Feds in
loan to Susan McDougal's
shredder at the firm to
encouraging reporters
suicide note. Foster said
the case. which Lasater
company in 1986 to solve
destrov Foster files after
to be more aggressive in
the WSJ editors "lie
managed to settle cheaply
Madison's financial prob-
Fiske was appointed
covering Whitewater
without consequence."
in 1987. Critics accuse Hil-
lems. Hale faces unrelated
special counsel
lary of contlict of interest
loan-traud charges
THIS WEEK
National Affairs
Whitewater: The Unsinkable Scandal
30
Vince Foster and the Rumor Mill
32
Hillary Clinton: 'I Made Mistakes'
35
Gergen: Where Did He Go Wrong?
36
A Whitewater Portrait Gallery
38
'Public Lives': Why No One Gives the Clintons
the Benefit of the Doubt by loe Klein
39
California: Buying Into a Senate Race
40
International
TENNON MELENDON VP
'Jessica' being taken from home last year
China: Trade and Human Rights
42
Israel: The Settlers Who Want Out
44
Baby Anna, Happy at Last?
Bosnia: How Serbs Play the Spin Game
45
Last year. "Baby Jessica" was taken from the
Somalia: Not What America Had in Mind
46
couple who had raised her to live with natural
Russia: Nixon Deserved Yeltsin's Snub
51
parents she barely knew. lessica-now
by Carroll Bogert
named "Anna" appears happy in her new
Business
home. But the politics of adoption- already
Cigarettes: Fighting a Grim Backlash
52
That
caught up in racial and feminist issues may
AIDS: Insurers Take on Death Futures'
54
Anna. now
never be the same. Lifestyle: Page 60
Trucking: Riding the Data Highway
54
Auctions: Left-Wing Relics on the Block
55
'Capital Gains' Ghost Stories About Health
The Unsinkable Scandal
Reform by lane Bryant Quinn
58
Whitewater churned last week as every
Lifestyle
new answer seemed to arouse new suspi-
The Cover: She's Not Baby lessica Anymore 60
cion. Bill Clinton unveiled Washington
Learning to Live Without Jessi
63
wise man Llovd Cutler as his new White
The Politics of Adoption
64
House counsel and at the weekend a new
Kimberly's About-Face
66
counteroffensive began to emerge. led by
Justice: Who Pays the Menendez Lawyers? 70
Hillary Clinton. In an interview with
NEWSWEEK. the First Lady admitted that
The Arts
"I made mistakes." and reflected on mis-
Hollywood: From Muppets to Mogul
72
steps in the aftermath of aide Vince Fos-
Movies: News Junkies Race the Clock
74
TRIPPETT
ter's suicide. National Affairs: Page 30
Hillary: 1 made mistakes'
Music: Stranger in the Night
75
Society
Science: The Estrogen Complex
76
The Estrogen Complex
Technology: Schools' Computer Gap
78
Since 1938. sperm counts for men in the Unit-
'The Pursuit of Happiness': The World's
ed States and 20 other nations have declined
Biggest Diet Doctor by lerry Adler
81
by half, and rates of female breast cancer are
Basketball: Countdown to the Final Four
82
Religion: Pink Collars for Anglicans
83
climbing. Is there a connection? Researchers
suspect a link to pollutants, found in every-
Departments
thing from pesticides to plastic baby bottles,
Periscope
11
Newsmakers
59
PHILLIPS PHOTO RESEARCHERS
that resemble one of the body's most potent
My Turn
16
Transition
59
Where are the sperm?
hormones: estrogen. Society: Page 76
Letters
18
'The Last Word'
Perspectives
27
by George F. Will
84
COVER Photocos Melchior DiGracomo
ISSN
0028-9604)
Postal
Station
of
POSTMASTERS Send address changes to NEWSWEEK. The NEWSWEEK Building. Livingston. N.J. 07039-1666
Hillary: 'I Made Mistakes'
You uttered the magic phrase "mistakes
were made." Do you regard yourself as hav-
ing been responsible for any of those?
Oh. sure. Hindsight's always 20-20. I nev-
Interview: Reflections on some missteps
er would have participated in the invest-
ment in the first place. Of course. I would
have tried to get everybody to focus on it
sooner and earlier to try to deal with. So I
W
ITH QUESTIONS ABOUT HER ROLE
think that of course I made mistakes.
in Whitewater threatening to de-
That's part of the learning process you go
rail her husband's agenda. Hillary
through when you've never been accused
Rodham Clinton agreed to an interview
of doing anything wrong before.
as long as it did not touch on specific
issues before a grand jury. She spoke with
So, if there was nothing wrong, why were
NEWSWEEK'S Eleanor Clift in the White
you so resistant to making records public?
House last week. Excerpts:
My theory is that you have a thing about
privacy.
NEWSWEEK: You came to Washington a gen-
I have a big thing about it. I really have
eration ago as a member of the Watergate
been pulled kicking and screaming to the
committee. Now your counterparts are
conclusion that if you choose to run for
working for Fiske. Do you see irony in that?
public office you give up any zone of pri-
CLINTON: Oh. I don't think there's any
vacy at all. I get my back up every so often
comparison. I think that the idea that
about even having to answer questions
there is is way overblown and should be
that I don't think are in any way connect-
debunked easily if anybody looks at his-
ed with the fact that my husband is in
tory and what was at stake in the whole
public life. That's what's going to be con-
Watergate investigation.
cluded about all this people are going to
spend millions and millions of dollars and
I guess the only thing I see comparable is
they're going to conclude we made a bad
that a lot of people want to launch careers
land investment.
based on finding something.
Well. you can't control that. We don't
FIRST
LADY:
'If
you
run for public
The attacks against you are really about
worry about the outcome anyway. We
office you give up any zone of privacy'
more than Whitewater. They really go to the
want the special counsel to do his job as
whole role that you're taking on and wheth-
soon as possible so that we can get this off
ROBERT TRIPPETT
er you can be the spouse of a president and
the country's radar screen and get on with
In trying to look at how this mess reached
a policymaker.
what my husband is trying to do for the
this level, it seems as though Vince Foster's
People have been doing that to women in
country.
death has a lot to do with it. Do you see a
this position since Martha Washington. I
connection there?
was not the first to testify before a con-
Sometimes those investigations take on a
I don't know. I think that mistakes were
gressional committee. I was not the first
life of their own. Fiske has taken out a lease
made along the way in handling this. I
to be criticized by the press. I was not the
for three years In Little Rock.
have learned a lot about the needs of the
first to have issues that I was involved in
I don't know what he's going to be doing
media and how they kind of make stories
questioned or attacked. I look at what was
for three years, but obviously we want
important. I suppose that in today's at-
said about Eleanor Roosevelt. There's al-
him to do his work and do it as expedi-
mosphere any unanswered questions are
ways the possibility that no matter what
tiously as possible.
going to be grist for the mill.
you do you're going to be criticized. I do
I've tried to learn a lot about suicide
think that the fact that I am involved in an
You present a rational face to the world.
and particularly about depression ever
issue [health care] of such magnitude with
How angry are you, about the way this has
since Vince's death- lot of us here in
so many interests at stake has raised the
mushroomed from a little land scandal
the White House have. We've passed
visibility of my role and has caused some
It's not even a scandal-it's not a scandal.
around books. We don't have any an-
to question it for their own purposes.
A failed land transaction.
swers either. But we don't presume to try
to make up answers. I just want this to be
This White House has a different style than
into an allegation that you and your
put to rest for his family's sake and for the
what the city is used to.
husband are corrupt?
sake of all of us who were his friends. It is
I think that we have one of the most colle-
I'm very sad about it. But I
extremely painful to have this
gial. supportive White House environ-
also have a full life to live. I'm
NEWSWEEK POLL
used as a political football by
ments I have ever read about. Does that
still my husband's wife. I'm
What is your
people. It is really unfair to
mean everybody agrees with everybody
still Chelsea's mother. I'm still
opinion of Hillary
his family particularly. But I
else 100 percent of the time? Absolutely
involved in a lot of other activ-
Clinton?
guess I now understand why.
not. In fact. the president wouldn't want
ities that are important to me
CURRENT
in the face of a tragedy. some
us around if that were the case.
and my family. So I don't real-
38%Favorable
people will want to make up
lv get the luxury of expending
42%Unfavorable
their own answer because
Edward Bennett Williams used to say that
too much energy being angry
2/94
they can't deal with what
Washington likes to burn a witch every
with people who are being un-
50%Favorable
are often life's unanswerable
three months.
fair and untruthful.
29%Unfavorable
mysteries.
I think that's right.
EXCLUSIVE
Periscope
Drink or Dink?
HE ARREST OF ALLEGED CIA
mole Aldrich Ames has some
old colleagues thinking. Ron
Dwight. an ex-U.S. vice consul
who knew Ames in Mexico
Getting a jump on the '96 presidential campaign: Baker, Cheney
City, told NEWSWEEK an odd
story: in early 1982. Dwight and
POLITICS
other U.S. diplomats were off to
a monthly interembassy party.
Early Birds Out for Worms
this one hosted by the Soviets.
Ames approached them. saying
RE FORMER BUSH CABINET SECRETARIES AND
he was the CIA officer monitor-
Reagan in Normandy
A
friendly rivals James Baker and Dick Cheney posi-
ing the Soviets. and asked to go
tioning themselves for a showdown for the 1996 Re-
along. Ames even offered to
THE PRESIDENT
publican presidential nomination? Now in private law
drive. but-after a few pops at a
practice in Washington. Baker is sending out signals that he's
preparty party-spent more
Acting Lesson
considering a White House bid. He's lined up a heavy sched-
than an hour cruising the town.
ule of political speeches California, New Mexico. Texas.
unable to find the Soviet Em-
B
ILL CLINTON PERIODICALLY
Pennsylvania and Montana-which give him a chance to
bassy. This was the CIA's Sovi-
turns to the Reagan hand-
reach out to party leaders. And friends say that his Texas and
et expert? "We thought he was
book for tips on appearing pres-
corporate connections should help him to raise "early money,"
a Keystone Cop." says Dwight.
idential. He waxed Reagan-
a key to success in the new, foreshortened primary schedule.
The next day. they say, Ames
esque from time to time during
Meanwhile. the Beltway crowd is predicting former de-
begged them not to mention the
the 1992 campaign. And he bor-
fense secretary Cheney. a determined but undeclared candi-
incident. Now Dwight wonders
rowed some Reagan-like rheto-
date. as the likely GOP nominee. In a straw poll at a recent
if it was all an act.
ric for the State of the Union
Washington party given by CBS political director Marty
address. Now. sources close to
Plissner and his wife, PBS producer Susan Morrison, cam-
the former president say. the
paign consultants and pundits picked Cheney over (in de-
White House has requested
scending order) former HUD secretary Jack Kemp. South
videotapes from the Ronald
Carolina Gov. Carroll Campbell, former Tennessee governor
Reagan Presidential Library of
Lamar Alexander. Sen. Bob Dole-and Baker. Dan Quayle
Reagan's emotional speeches
finished last. The partygoers' record isn't too good: they called
on Normandy beach for the
Hubert Humphrey over Gerald Ford in 1975, Ted Kennedy
40th anniversary of D-Day.
over Ronald Reagan in 79 and George Bush over Mario
Clinton. it seems. is studying
Cuomo in '91.
every aspect of Reagan's trip
'Wrong Way' Ames? In cuffs
very closely since he'll be head-
ing there himself in June for the
NORTH KOREA
CONVENTIONAL WISDOM WATCH
50th anniversary.
New Missiles?
More Whitewater Edition
U
S. OFFICIALS WORRY OVER
Bill Clinton has been compared to Jimmy Carter, JFK, Lyndon
Bad Move
the fast pace of North Ko-
Johnson, Ronald Reagan and, this week-Richard Nixon. The
P
oor Bernie Nussbaum.
rea's long-range-missile devel-
media see Watergate, the public sees March Madness.
For months the White
opment. Intelligence sources
Players
Conventional Wisdom
House counsel dithered over
say Pyongyang is working on a
whether to buy a place in
two-stage missile called the
B. Clinton
Opens up, resumes N.H. primary model+but
Washington. He knew he'd
TD-2 which has a potential
Whitewater has better legs than Gennifer.
be returning to New York
range of more than 2.000 miles.
H. Clinton
and his Wall Street law
From Eleanor Roosevelt to Evita Perón.
making it capable of hitting the
practice after his stint of
U.S. naval base at Guam and
Don't cry for me, Arkansas.
government service, but he
countries as far away as Thai-
L. Cutler
CW poster boy is the new Gergen. But look
didn't want to stay on in his
land and the Philippines. A sec-
where he got Jimmy Carter.
rented flat. Late last year
ond missile. the TD-1. could
D. Gergen
friends say he finally made
reach more than 1,000 miles.
Old CW: Spinmeister General. New: Wrung
up his mind and purchased a
The TD-2 seems suspiciously
out in the spin cycle. Paging ABC News.
condo. Early this month Bill
similar to the Chinese-made
A. D'Amato
Ethical spokesman? That's like hiring Chris
Clinton fired Nussbaum for
"East Wind" intermediate-
Farley as your diet doctor.
his bungling of the
range missile. but sources say
V. Foster
Whitewater affair. Now
He did kill himself. He did have something to
it's not certain China is helping
Nussbaum will have to sell
hide He was right about how sick D.C. is.
the North Koreans.
the
ment
the
Wa-
Nussbaum
11
The Kno Hock Emes Bagazine
HISTORY
CRIME
Mil aukee Is
Small Favors
Talking
IONEL DAHMER'S BOOK
EXPRESS
about his son. mass murderer
Jetfrey Dahmer. has received
respectful reviews in part be-
cause Dahmer promises in his
BLOWBACK
preface "to donate a portion of
the proceeds from this book to
A switch in time: The new cover, part of the gatefold jeans ads
benefit victims families." But
Dahmer's publisher. William
Morrow. won't say what por-
tion of royalties will be given
Sorry, One of You Had to Go
awav. "He's waiting to see how
the book does first." savs a
UST HOW SENSITIVE IS THE NEW YORK TIMES THESE
Morrow spokesman. "His hope
J
days? Sensitive enough, it seems. to make a costly last-
is to break even after his tre-
With a photo of the lynching
minute cover switch on the Sunday magazine. Last
mendous legal expenses." So.
week's planned cover story was a debate between
unless "A Father's Story" is a
A
bout James Cameron, newly
prominent First Amendment lawyer Floyd Abrams and noted
monster best seller. the victims
found 80-year-old hero.
feminist Prof. Catharine MacKinnon, an outspoken advocate
families won't see much.
The only survivor of a 1930
of legal measures to restrict pornography. Shortly before the
lynching-when a white mob
press run. editors discovered that the magazine folded out to a
dragged Cameron and two ac-
four-page gatefold ad for Express Jeans, featuring scantily clad
complices in a robbery from the
models in provocative poses. The embarrassing juxtaposition
Marion. Ind.. jail he lived qui-
"made the magazine appear to be mocking one or the other."
etly in Milwaukee for years.
said editor Jack Rosenthal. Editors considered three alterna-
hoping to publish his memoirs.
tives: doing nothing; changing the ad; or switching covers.
After repeated rejections by
When changing the ad proved "impractical," the Times, rather
publishers. Cameron's book.
than "send a wrong signal." substituted a cover on Afghan
"A Time of Terror." appeared
terrorists that had been scheduled to run inside the magazine.
last month. National media at-
Lawyers first: Jeffrey Dahmer
tention followed. and the city
plans to name a day in his hon-
SCORE CARD
or. Cameron's next project: to
found a museum on American
Making the Scene on Hollywood's Biggest Night
racial violence. using artifacts
Swifty is gone and Spago is closed Oscar night in his memory. But the parties must go on. All over Los
he collected-like a piece of the
Angeles. hosts and hostesses are trying to win the rep as the hottest ticket. No invite? Fire your agent.
rope that killed his friends. Says
Cameron: "Good always comes
HOST
SITE
LOOK FOR
RATING
BUZZ
of evil. I feel God saved me to
New Yorker
Hotel
Michael Keaton. Gene
A week before the big night.
remind people to treat each oth-
Magazine
Bel-Air
Kellv. Emma Thomp-
this elegant Hollywood-meets-
er with respect and dignity."
son. Core Vidal.
the-highbrows sit-down dinner
Steven Spielberg
for 250 is a must-do.
WHITE HOUSE
Women
Regent
Angela Bassett.
Promotes. well. women in film.
in Film
Out of bounds: Hillary Clinton
Beverly
Anthony Hopkins.
Wilshire
11
Not the A list. but points for
Winona Ryder, Marisa
gender sensitivity.
for firing White House usher
Tomei, Queen Latifah
Chris Emery because he kept in
touch regularly with Barbara
Vanity Fair/
Mortons
Tom Cruise. Clint
The place to be-and don't for-
Bush. Sharing First Family se-
Steve Tisch
Restaurant
Eastwood. Liam Nee-
crets? No-giving Bush advice
son. Nancy Kerrigan.
IIII
get to bring Oscar! Could you
look again? I'm sure I'm on the
about her laptop computer.
Roseanne Arnold
list. Please?
White House sources say Clin-
El Rescate
Mondrian
ton apparently distrusts long-
Susan Sarandon.
Human-rights org. proves P.C.
Hotel
time residence staff and doesn't
Tim Robbins, Spike
Lee, Rosie Perez,
care to spend time winning loy-
Cheech Marin
II
doesn't have to be a snooze.
Hip Hollywood rocks to cool
bands. Can get rowdy.
alties. The staffers. too. proba-
bly miss the Bushes' "members
Elton John
Maple Drive
Tom Hanks. Dennis
AIDS benefit was one of last
of the family" attitude toward
Restaurant
Quaid. Meg Ryan.
III
year's hot tickets. Not to be con-
the help.
Alec Baldwin.
fused with competing AIDS
GREGORY CERIO and
Whoopi Goldberg
benefit at Directors Guild.
LUCY HOWARD with bureau reports
Governor's
Dorothy
Anvone who has a tux.
Official post-Oscar bash-and
Ball
Chandler
naturally the least interesting
Pavilion
"I wouldn't stand too
Perspectives
NOT NOW.
close to her."
HILLARY!
ROGER AILES
former GOP political
"I believe I'm a better
consultant. noting that.
authority than anybody
of the three lawyers brought
else in America on my
into the White House on
wife. I have never known
Hillary Clinton's advice. one
a person with a stronger
committed suicide. one has
sense of right and wrong
resigned and the other is
in my life-ever."
under investigation
BILL CLINTON
defending Hillary Rodham
"Washington is Salem. If
Clinton against charges
we're not lynching
of ethical misconduct
somebody 24 hours a day
in the Whitewater affair
in this wretched town.
we're not happy."
"What did the president
TOM KOROLOGOS
know. and when did
Washington lobbvist and
Hillary tell him?"
CHANDO
Nixon White House veteran.
SEN. ALFONSE
on the ethos of the
D'AMATO
nation's capital
mimicking the famed
IVE BEEN
Watergate questions to
SUBPOENAED!
"He is puzzled. He is
explain his view of the issues
disappointed. But
he
is
in Whitewater
a big boy and he has had
000
his share of
"Whitewater is not about
NATEWATER
disappointments in life.
cover-ups. it's about
Some of them more
screw-ups."
(g
serious than this one."
DAVID GERGEN
DIMITRI SIMES
White House adviser. on the
spokesman for Richard
difference between Watergate
SOCKS
Nixon. on Nixon's reaction
and Whitewater
after Russian President Boris
Yeltsin announced he would
"You have to remember
1994 CAMMUSO-SYRACL HERALD-JOURNAL
not meet Nixon because he
the position that all
had first visited Russian
Republicans have been in
opposition leaders
for 12 years. where we
SEXUAL HARASSMENT
were investigated.
HAVE ZERO
"Who will give something
sometimes frivolously If
TOLERANCE FOR
to bring about a situation
THAT SORT OF
we get a chance to point a
THING.
such as this that all
finger. why. it requires a
human beings will live in
saintlessness that is
peace. will not murder
superhuman.
and will not covet the land
supernatural to act
of one's neighbor?"
with restraint."
BARUCH GOLDSTEIN
REP. HENRY HYDE
WANT YOU,
who massacred dozens of
on his party's aggressiveness
SWEETCAKES
Arabs at prayer in the West
on Whitewater
Bank city of Hebron last
month. in a grade-school
essay written in 1970
SINNE
ON POLITICS
BY MICHAEL BARONE
Is she a liability to feminism?
W
hile Hillary Rodham Clinton was dodging ques-
of the coverage of other first ladies, stressing noncontrover-
tions about Whitewater last week, two dozen
sial good works and admirable personal qualities. But some
members of the National Organization for
of it came from reporters eager to persuade the public to
Women demonstrated against her critics outside the
share their admiration for a feminist icon. "As much as we
White House. Well they might, for like the first lady they
try to think otherwise, when you're covering someone like
have a lot at stake in Whitewater and related charges. In
yourself, and your position in life is insecure, she's your
our national life, every movement has a stake in the indi-
mascot," Time's Margaret Carlson told the Washington
viduals who come to symbolize it, and Mrs. Clinton - "a
Post. "I try to get that bias out, but for many of us it's there."
good wife, a good mother, an effective person in the White
The recent negative press and public dismay are proof
House," in the words of Clinton consultant Mandy Grun-
of the adage that nothing is free in politics; the only ques-
wald-has become the personification of the ideas and
tion is when you pay the price. It is fueled not just by the
personal choices suggested
MILLS
growing Whitewater scandal
by the label feminist.
but by agreement with the
To some extent it is
criticism leveled in this col-
healthy for political move-
umn two weeks ago that
ments to organize around
Mrs. Clinton has shown
particular individuals. That
poor political judgment-
is one way a cause's ideas
some of the fallout from
and priorities can be vividly
which has become even
portrayed. But there can be
NATIONAL
more apparent since that
a danger for a movement in
column. Her bad judgment
identifying too closely with
on health care is evident
an individual if he or she
makes mistakes that can dis-
Support
daily: Neither of the House
health subcommittees writ-
credit the cause.
ASTRONG
ing health bills is using her
That happened in the past
massively complicated re-
when conservative men
WOMAN
form scheme as the basis for
showed loyalty as blind and
its efforts. Moreover, her in-
steadfast to flawed leaders
CHITERNATIONAL
sistence on quotas in ap-
as that of the liberal women
HOMENS
PAY
pointments, which has left
now lashing out at Mrs.
many government posts un-
Clinton's critics. The cause
Feminists who stake their
filled or filled by less than
of anticommunism was un-
movement on Hillary Clinton's
optimum appointees, has
der a pall for four decades
cast doubt on the earlier
because of the false and
reckless charges of Sen. Jo-
success are taking a serious risk.
raves about her. And her
possible involvement in
seph McCarthy. Similarly, if
questionable activity in
conservatives succeed in
Whitewater could under-
electing Oliver North to the Senate in Virginia this year,
mine the ideas with which she has been identified.
they will have chosen as a national symbol a man proved a
The last refuge of Mrs. Clinton's defenders is the sug-
liar in court (his Iran-Contra conviction was overturned on
gestion that critics are motivated by a distaste for power-
other grounds) and in a devastating article in the June 1993
ful women. "I want to know what it is that you have as a
Reader's Digest. Richard Nixon made himself a champion
party and as an individual against the idea of a woman
of patriotism and traditional American values, promising
who is in power," consultant Grunwald said to Republi-
an administration of law and order. His disgrace in the
can Sen. Alfonse D'Amato on ABC's "Nightline." Intel-
Watergate scandal helped discredit these ideas and
lectually, this is bankrupt- an admission that one has run
launched the nation on a binge of mocking cynicism in the
out of arguments on the merits.
1970s, which led us to undervalue critical national
Perhaps more important, Grunwald has it exactly
strengths until they were reasserted in the 1980s.
wrong: The people who had trouble with a powerful wom-
Afawning press. Mrs. Clinton has become a hugely impor-
an were the journalists and politicians who gushed uncriti-
tant symbol for feminists because many women and men
cally over Mrs. Clinton, not those who have tried to judge
were captivated by her pre-White House life as an attorney
her by the same standards we apply to others with similar
and by her White House work making policy on major
power and responsibilities. She has shown, at the least,
issues. Many others joined in the cheers raised by the press,
dreadful judgment in what is now clearly a scandal. The
one of America's most pro-feminist institutions. In the first
question is how much this will damage the Clintons and
year of the Clinton presidency, except in adversarially con-
whether it will discredit the cause of which Mrs. Clinton is
servative media, the first lady was the subject of one gushing
inevitably a symbol as much as Watergate discredited the
portrait after another. Some of this was appropriate, typical
ideas associated with Richard Nixon.
38
U.S.NEWS & WORLD REPORT. MARCH 21, 1994
WASHINGTON WHISPERS
allow them to bow out gracefully by taking
early retirement. Not only will this give the
officials a face-saving way to leave the
agency but they can do so with a comfort-
able financial settlement. Another advan-
SUPPORT staff turmoil adds to Clintons' Whitewater woes
tage of Woolsey's action: It will permit him
to answer CIA critics who have demanded
that heads must roll at the agency.
AMES spy fallout further strains FBI-CIA tensions
Oh, brother! "Are you for or against
MOSCOW angers Iran with sale of flawed subs
Bush?" To Republican pollster Fred
Steeper, the answer depends on which
Bush and which mean.
TAYLOR JONES FOR USN&WR
Upstairs, downstairs. The Whitewater
Steeper, who worked on George Bush's
firestorm (Page 30) is not the only source
1992 re-election campaign, is now the
of turmoil inside the White House these
campaign pollster for George W. Bush,
days. Well-placed sources say that as a
the former president's son who last
result of growing tensions between the
week won the Texas GOP gubernatorial
Clintons and the usher's office which is
nomination. But in the race for the GOP
responsible for support and housekeep-
gubernatorial nod in Florida, Steeper is
ing functions-many of the executive
polling for state Insurance Commission-
mansion's 130 full-time permanent em-
er Tom Gallagher, a potential primary
ployees fear for their jobs. The problems
opponent of Jeb Bush, George W.'s
began early last year when Mrs. Clinton
younger brother. Polls show both broth-
blamed them for having leaked a story
claiming she had thrown a lamp at her
INTELLIGENCE
ers trailing incumbent Democrats.
husband during a domestic tiff. Al-
though both the Clintons and the staff
Damaged goods? Moscow is in hot wa-
agree that the tale had no foundation in
ter with Tehran over a $500 million ship-
fact, the incident continued to irk the
ment of two Russian Kilo-class subma-
first lady and exacerbated her relations
rines to the Iranian Navy. West European
with chief usher Gary Walters. Deter-
intelligence sources report that the Irani-
mined to assert control over domestic
ans have discovered serious flaws in the
operations in what essentially is her
subs' electronic and radar systems that
home, Mrs. Clinton earlier this month
"almost caused a major tragedy" when
fired Chris Emery, the popular assistant
one of the subs attempted to surface. The
usher. Staffers contend that the only
CIA Director James Woolsey
Iranians are so angry that they have de-
possible reasons for Emery's ouster were
Grace under pressure
layed accepting a third Kilo sub and have
his Republican leanings and an overly
turned to India for technical and mainte-
loud dispute in February with a member
nance help. They are also expected to de-
of Mrs. Clinton's personal staff. Rela-
nage cases since 1991. Bryant and FBI Di-
mand compensation from Moscow. Nev-
tions between upstairs and downstairs
rector Louis Freeh were asked to explain
ertheless, the Pentagon is still worried
were further vexed by the Clintons' re-
why CIA officer Aldrich Ames hadn't been
because it believes the subs are capable of
cent decision to clean out the kitchen by
unmasked sooner as an alleged Russian
laying mines in the Persian Gulf.
demanding the resignations of Pierre
mole. One possible reason: the failure of
Chambrin, the executive chef, two assis-
the FBI and CIA to get along. Bryant told
tant chefs and a young pot-scrubber
the Senate Intelligence Committee that be-
Renaissance man. On most campuses,
whose still-unexplained dismissal ran-
cause of the agency's lack of cooperation,
the description "triple threat" applies
kled the entire staff. Such firings are rare
the bureau recently pulled its resident agent
to football halfbacks, but at Illinois
among the historically loyal, discreet and
from the counterintelligence center at CIA
Wesleyan University this September, it
nonpolitical staff. Not surprisingly, many
headquarters in Langley, Va. Later, in an-
could be used to describe the Renais-
of them are afraid of the first lady's
other closed-door hearing, CIA Director
sance man performance of Sir Edward
wrath. Explains one staffer: "You don't
James Woolsey fired back, blaming the
Heath. During a busy two-day stint at
know what mood you'll catch her in.
FBI for the friction and citing, among oth-
the Bloomington campus, the former
She's quick-tempered and wants things
er incidents, the bureau's decision to re-
British prime minister is scheduled to
now." A spokesman for Mrs. Clinton
move its agent. The senators demanded
lecture on Japanese art, conduct the
says that he is not aware of any rift.
that both institutions provide rundowns on
university orchestra and give "a master
investigations that had been hampered by
class" on statesmanship. In addition,
their conflict. Meanwhile, to avoid further
Heath could offer a master class in sea-
Finger pointing. In secret congressional
damage to CIA morale, Woolsey has de-
manship. He once captained a British
testimony last week, Robert "Bear" Bry-
cided not to force the resignation of about
national sailing team.
ant, the FBI's counterintelligence chief, al-
a dozen senior officials considered respon-
leged that the CIA had failed to cooperate
sible for letting the accused spy go unde-
with the bureau in nearly a dozen espio-
tected for eight years. Instead, Woolsey will
EDITED BY CHARLES FENYVESI
U.S.NEWS & WORLD REPORT. MARCH 21. 1994
27
OUTLOOK
Where's the cheering press?
eorge Bush was recently asked what he missed
When Whitewater first surfaced during the 1992 cam-
least about Washington. "Dealing with the press,"
paign, it was dismissed by the press as too complicated.
he snapped. That answer reflects an article of faith
When the story was revived last fall, Team Clinton thought
among Republicans: that a left-leaning, pro-Democratic
the same thing would happen. But that assumption mis-
press corps cost Bush the 1992 election by leading the
judged the difference between the way the press covers a
cheers for Bill Clinton.
campaign and an administration. Events that seem small in
ONE WEEK
Those cheers have clearly faded. If
a political context take on new size and meaning when
there ever was a pro-Clinton cast to
viewed through the magnifying lens of the White House.
press coverage, it has been washed away by Whitewater.
Moreover, a campaign ends in a few months. An adminis-
Washington journalists have only two enduring biases:
tration lasts four years, giving editors more time, and incen-
against entrenched power and in favor of a good yarn. Both
tive. to invest resources in investigative projects.
prejudices are now hurting the president.
Almost 20 years after Richard Nixon's resignation, the
8
U.S.NEWS & WORLD REPORT. MARCH 21. 1994
CHARLIE ARCHAMBAULT USN&WR
Washington press corps is still inspired by Watergate. It was
Whitewatered. The press's two enduring biases - against
the "good war" of the journalistic fraternity. A whole genera-
entrenched power and in favor of a good yam - are hurting.
tion, now filling the major beats and editing slots at many
news organizations, grew up dreaming of being the next
Woodward and Bernstein, of the day when Dustin Hoffman
The Republicans are doing their part, playing on the guilt
and Robert Redford (or Tom Cruise or Denzel Washington
feelings of a press corps that had gotten a bit too cozy with the
or Holly Hunter) would play them in the movies.
Clintons, by demanding equal-opportunity cynicism. And
One of the biggest mistakes the White House made in
many journalists are willing, if unindicted, coconspirators,
handling Whitewater was to set those dreams racing. As
thrilled to be setting up their satellite trucks outside the federal
Clinton adviser George Stephanopoulos admits, the admin-
courthouse where White House aides were summoned to ap-
istration's damage-control operation did more damage than
pear. With Nancy Kerrigan at Disney World and Tonya Har-
it controlled. Suddenly, the story was no longer about bor-
ding in the background, something had to fill the news vacuum.
ing bank records and intricate land deals in an obscure ru-
Last December, Bill Clinton was already starting to sour
ral state. The old words. like the lyrics from a half-forgotten
on the press, complaining to Rolling Stone magazine that he
battle anthem, were echoing again through the newsrooms
had "not gotten one damn bit of credit from the knee-jerk
of the capital: subpoena, shredding machine, grand jury, burn
liberal press." George Bush, or any ex-president. would cer-
bag. And the most resonant of all: cover-up.
tainly nod in sympathy.
STEVEN V. ROBERTS
U.S.NEWS & WORLD REPORT MARCH 21. 1994
9
Hard Times For
Hillary Whitewater is
clouding her image.
How much is
12
she to blame?
MARCH 21, 1994
TIME
VOL. 143 NO. 12
THE WEEKLY SMAGAZINE
TO OUR READERS
4
LETTERS
9
CHRONICLES
21
MILESTONES
26
COVER: Hillary Under Fire
28
The most unaccountable member of the government is
suddenly being called to account for her actions. A close look
at how she operates helps explain why Whitewater became
such a mess.
Rose Law Firm: Shredding a reputation
The Woman in Question: An interview with the First Lady
Terrorism: Iran's hunt for
The Political Interest: Roger Altman on the spot
China: Another warning to
dissidents abroad
stop using prison labor
Perspective: Watergate versus Whitewater
ESPIONAGE: Questions at an Inquisition
40
After the Ames arrest, Congress demands tighter security
LAW: Asylum from a Culture of Pain
45
A woman fights deportation-and female "circumcision"
SUPREME COURT: A Good Rap for Parody
46
David Souter finds for 2 Live Crew's send-up of Roy Orbison
ROBE TRIPPE TIME
CHINA: Cold Shoulder
47
Beijing shows no inclination to coddle dissidents-or the U.S.
SOUTH AFRICA: The Bloody End in Bophuthatswana
48
White extremists fail to rescue a vestige of apartheid
TERRORISM: The Tehran Connection
50
An exclusive report on how Iran hunts down its opponents abroad
BUSINESS: Building a Hospital Empire
58
Rick Scott's Columbia/HCA has its own health-reform plan
TAKEOVERS: First Blood in the Fight for Grumman
60
Two traders come up short in what looks like an inside deal
Finance: Goldman Sachs made a ton of money last year
DEVELOPMENT: The New Battle for Manassas
61
Disney may succeed where the Grand Army of the Potomac failed
HEALTH: Should Cigarettes Be Treated as Drugs?
62
The addictive nature of nicotine may lead to tighter regulation
THE ARTS & MEDIA
Cinema: Who's that Irish prisoner? Who's that Manhattan
dandy? Oscar nominee Daniel Day-Lewis is a cool virtuoso 66
Cover: Has the First Lady's inner circle overprotected her?
Tabloid troubles in Ron Howard's The Paper
71
Belle Epoque, a sunny Spanish Oscar nominee
71
Music: Why Sinatra just won't quit
72
The solo beat of drummer Evelyn Glennie
73
THAIN
ZZ Top has a gloriously gritty new album
74
Sarah McLachlan writes songs from love's ragged edges
74
Books: Ethan Canin plumbs man-to-man combat
76
Television: The magazine shows go crazy for crime
77
PEOPLE
79
ESSAY
80
Development: When Mickey
Show Business: Daniel Day-
COVER: Photograph for TIME by Dirck Halstead
comes marching home
Lewis, chameleonic star
TIME
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For
subscription
cueries.
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CHRONICLES
THE WEEK
MARCH 6 12
NATION
Gray Eminence to the Rescue
Lloyd Cutler, venerable pillar
of the Washington establish-
ment, was tapped by Presi-
dent Clinton to take control
of the increasingly ominous
Whitewater affair as interim
White House counselor. Cut-
ler, who held the same posi-
tion for Jimmy Carter, em-
phasized that he would take
the job for no more than 130
days and would serve with-
out pay.
More Whitewater
At a White House press con-
ference the President lashed
out at questions about the role
of Hillary Rodham Clinton in
the affair, saying, "I have nev-
er known a person with a
stronger sense of right and
wrong in my life-ever." As
the first three of six subpoe-
naed White House officials
appeared before a grand jury,
Republican Senators ap-
peared willing to let the inves-
tigation continue for several
months before demanding
public hearings.
Oh, Pretty Parody
A unanimous Supreme Court
opinion has broadened the
application of "fair use" in
copyright law. Writing for the
court in favor of the rap
group 2 Live Crew, which
IN THE SPOTLIGHT: Washington lawyer Lloyd Cutler-seasoned, venerable, not a
MARK FREDRICKSON FOR TIME
had produced a raunchy ver-
former crony of Hillary's-answers the White House call for help
sion of the 1964 classic Oh,
Pretty Woman, Justice David
Souter said parody "can pro-
YOX P07
HURTS SO GOOD
vide social benefit by shed-
ding light on an earlier work
and, in the process, creating
Did you tell a
" know something about Hillary and
a new one."
lie last week?
Bill Clinton right now. I know how their
4 Sale, Cheap! Satellite Pix!
YES
38%
stomachs churn I know their inability
After months of debate
among intelligence agencies,
the Pentagon and the Com-
57%
to sleep at night and their reluctance to
NO
merce Department, the Clin-
ton Administration an-
rise in the morning
I know all this, and
nounced that it will permit
NOT SURE
5%
commercial firms to market
the thought of it makes me happy.
advanced spy-satellite tech-
-RACHEL ABRAMS, WIFE OF FORMER ASSISTANT SECRETARY OF
From a telephone poll of 800 adult Amencans
nology to customers around
taken for on Mar 9.10 by Tankelovich
STATE ELLIOT ABRAMS (CONVICTED OF IRAN-CONTRA-RELATED PER-
the world. Some experts fear
Partners Inc Sampling error is : 35
JURY); FROM A WASHINGTON TIMES OP-ED PIECE ON WHITEWATER
TIME MARCH 21. 1994
21
CHRONICLES
the move could compromise
national security.
WINNERS
LOSERS
The High Cost of Writing
The U.S. Postal Board of
DAVID
LESLIE
Governors approved a 10.3%
SOUTER
ABRAMSON
DIANA FOR TIME
increase in rates, a move that
He pleases media élite
Menendez attorney
would boost the price of
by supporting parody in
won't collect any
copyright case
taxpayer-funded fees
RICHARD
Perot-aligned Texan
Missing from his criti-
MARC GIBOUX GAMMA LIAISON
mailing a letter to 32c.
JAMES
Butting Out
FISHER
BROOKS
In a decree that will affect
2.6 million uniformed and
spends big $ to gain
cally lauded Critic TV
Senate primary runoff
show: an audience
civilian personnel, the De-
fense Department banned
CHRISTIAN
FRANCES
smoking from the military
FUNDAMENTALISTS
LEAR
workplace. And Maryland
Takeover of Baptists
Her eponymous mag
became the first state to stub
continues as moderate
for over-40 women
seminary prez is fired
folds with April issue
out smoking in all work-
places-including bars,
restaurants and convention
facilities as well as offices. In
MAP
People Who Eat Hostess Twinkies
Washington, 20,000 angry
smokers and tobacco-industry
Nationwide, an average 13.5% of Americans say they eat Twinkies, the renowned snack cakes. Twinkie eaters tend to
live in rural areas and are more likely than other Americans to enjoy bacon, aerosol-can cheese, Kool-Aid and malt
workers demonstrated against
liquor. Ironically, the San Francisco Bay Area, home of the famed "Twinkie defense," ranks low on Twinkie consumption.
an Administration proposal to
raise the federal excise tax
from 24c a pack to 99c.
High
Above
Below
Low
average
average
Throwing Away the Key
The controversial sentencing
bill known as "three strikes,
you're out" was signed into
law by California Governor
Pete Wilson. Enacted in the
wake of a national furor over
the kidnapping and murder
of 12-year-old Polly Klaas, al-
legedly by a parolee, the
measure would lock up third-
time violent felons for life
without parole.
Parade Rest
The veterans group that
sponsors Boston's St.
Patrick's Day parade said it is
From LATITUDES AND ATTITUDES An Atlas of American Tastes,
canceling this year's march,
Trends, Politics and Passions : 1994 ty Vichael Weiss Little.
Brown (forthcoming) Claritas Inc Simmons Market Research Bureau
rather than accede to a ruling
by the Massachusetts
Supreme Judicial Court that
Senator Pothole Calls the Kettle Black
a gay group be allowed to
join the parade.
U.S. Senator Alfonse D'Amato of New York is leading the G.O.P. charge on
Whitewater. As a stiff-backed ethicist, he is something of a rookie:
ASHE FOR TIME
Tonya Again
1975 D'Amato denies under oath knowing about the "1% rule," by which
Tonya Harding is free to
government workers in Nassau County, New York, were coerced into kick-
compete in the world cham-
ing back 1% of their salaries as contributions to the Republican Party.
pionships in Chiba, Japan,
1981 Accepts campaign contributions from John Shad, who was seeking the chairmanship
next week. A hearing before
of the Securities and Exchange Commission. D'Amato was chairman of the Senate sub-
a panel of the U.S. Figure
committee that oversees the SEC. Shad won the chairmanship.
Skating Association that
might have ended her skat-
1985 Is forced to admit he was aware of the Nassau County kickbacks, with the emergence
ing career was postponed by
of a 1971 letter he wrote on his personal stationery in which he referred to the practice.
a federal judge, who said
1992 Senate ethics committee criticizes D'Amato for letting his brother (later convicted of
Harding's lawyers had not
fraud) use his office and his official stationery to lobby for a defense contractor.
had enough time to prepare
her case.
22
TIME MARCH 21 1994
18A THE CHARLOTTE OBSER VER Friday, March 18, 1994
The Charlotte Observer
ROLFE NEILL, Chairman and Publisher
JENNIE BUCKNER, Editor JOHN LUBY, General Manager
GENE WILLIAMS, Executive Vice President
ED WILLIAMS, Editor of the Editorial Pages FRANK BARROWS, Managing Editor
ToM BRADBURY, JACK BETTS, Associate Editors
Editorials
Whitewater witch hunt
unfair to Clintons
The recent spate of activity in-
volving the investigation of the
Clintons' roles in the Whitewater
development represents a gross
injustice to the
man as well as
$
the office. I am
d
3
saddened to see
e
the degradation
in our society
S
that would al-
e
low a partisan
group to cause
our government
SI
to spend thou
sands of man-
hours and mil-
Erwin
h
lions of tax
payer dollars when, to my knowl-
edge, no charges have been
brought forward to link the Clin-
ir
tons to any wrongdoing
I have known the Clintons for
many years to be people of the
ie
highest integrity. They are intelli-
gent, sensitive, caring people who
are trying to make improvements
do
to our society for the benefit of
ny
future generations. We need to
confine the debate to the legiti-
ful
mate issues of society, rather than
allowing this witch hunt at the
D
expense of the American public.
ht
MARK W. ERWIN
1.
Charlotte
Chicago Undecided on Eve
Of Rostenkowski's Primary
By ISABEL WILKERSON
Special to The New York Times
Ex-Partner of Clintons
CHICAGO, March 14 - The North
Mr. Cullerton but is supporting Mr.
Side commuters waiting blankly for
Rostenkowski for what she said he
the el train this morning in their trench
Seeks Money for Fees
brings to Chicago. "He's only done
coats and earmuffs did not look as
good by us. We have to stand by him,"
though the country's future was resting
she said.
on their shoulders, even though some
Special to The New York Times
Democrats say it is.
The campaign season got off to a
LITTLE ROCK. Ark., March 14 - A
There were few campaign buttons
distracted start as events like the Cali-
former partner of the Clintons in the
and little spontaneous talk of politics.
fornia earthquake, the record snow and
Whitewater real estate venture ap-
There was a lot of indecision just 24
cold here, and the Olympic saga of
Tonya Harding and Nancy Kerrigan
peared here today to solicit donations
hours before perhaps the most impor-
to cover her legal expenses in the in-
tant primary of the year, the one that
claimed the voters' attention. This
year, the number of people registered
vestigation of the venture.
will determine whether Daniel Rosten-
The partner, Susan McDougal, said
kowski, the larger-than-life chairman
to vote in Chicago has dropped to the
second lowest level in 70 years.
during a news conference that neither
of the House Ways and Means Commit-
she nor her former husband, James B.
tee, will be renominated and whether,
Even the gubernatorial campaign
some say, the President's health care
with a woman, state comptroller Dawn
McDougal, violated any laws when
plan can be passed or welfare reform
Clark Netsch, and a black, State Attor-
they invested in Whitewater Develop-
ment Corporation with President Clin-
can take shape.
ney General Roland Burris, as the top
ton and his wife, Hillary, or managed a
If these things are true, then the
contenders for the Democratic nomi-
nation received sparse attention until
failed savings and loan, Madison Guar-
country's fate lies in the hands of peo-
the last month. Mrs. Netsch leads going
anty.
ple like Josephine Barzowski, a hair-
dresser. and Jennie Podbielski, a sec-
into Tuesday's primary and could be-
Ms. McDougal refused to comment
on the Clintons' involvement in the 1978
retary, and Fred Gibson, a refrigera-
come the first woman to be governor tf
Arkansas resort development except to
tion plant worker, along with the thou-
she can win an uphill battle in Novem
ber against the incumbent, Jim Edgar,
say that recent Federal investigations
sands of other mostly working-class
a Republican.
into Whitewater and Madison were un-
people who live in Rostenkowski coun-
dertaken simply because Mr. Clinton
try. While they might give him a grade
Mr. Rostenkowski has spent much of
of "D" in ethics but an "A" in pork.
his campaign time appearing with VIS-
was elected President.
Her lawyer. Bobby McDaniel, said
"He's not the only crook," said Jane
iting Democrats and announcing Fed.
Karsakow, a billing clerk chafing from
eral financing for local projects, like-
Ms. McDougal had no knowledge of
helicopter for the Chicago Fire Depart
any inappropriate investments or ille-
the cold on the platform this morning.
ment, which was delivered today -
gal transfer of money from Madison to
"He just got his hand caught in the
Whitewater. Federal investigators are
kitty. They're all doing something."
Meigs Field downtown.
also examining whether money from
About 600 campaign workers will be
Fight for Political Life
Madison was illegally diverted to Mr.
out on Tuesday, knocking on doors 10.
Clinton's 1984 campaign for governor.
Ms. Barzowski was less forgiving. "I
get out the vote for Mr. Rostenkowskt:
Mr. McDaniel said Ms. McDougal
think that he's been in office too long
To compete, Mr. Cullerton sent OUL.
had no financial documents relating to
and that we need someone fresh and
50,000 mailings, each with a spent but-
Whitewater or Madison. He said Ms.
new in there," she said as she gave
Mrs. Podbielski a permanent. "I think
let casing to make a point about the
McDougal, at Mr. Clinton's request,
need for gun control. But the tactic
delivered one box of Whitewater
that all these allegations about him are
records to the Governor's Mansion
true and that it's about time he got
seems to have backfired: Some votere
caught and that he's going to have to
thought it was invasive; some mistook
sometime in 1991. Ms. McDougal also
face the music, basically."
it for a death threat. An all-star cast of
gave all five boxes of Madison records
After 35 years in Congress, this has
Democrats, including House Majority
to Federal regulators and investiga-
Leader Richard A. Gephardt, Secre-
tors in the late 1980's, Mr. McDaniel
become the toughest fight in the chair-
man's political life. Not only was a
tary of Labor Robert B. Reich, former
said.
tonier lakefront section added to his
vice presidential candidate Geraldine
Ms. McDougal has pleaded not guilty
district, giving him a whole new set of
M. Ferraro and President Clinton him-
to separate unrelated charges of forg-
less sympathetic yuppies to win over,
self, have come to Chicago in the last
ery and grand theft in California.
but he is fighting a Federal investiga-
two weeks to impress upon voters how
tion into possible embezzlement and
important Mr. Rostenkowski is to
payroll padding as well apathy and a
Washington and why maybe they--
general anti-incumbent orneriness
should overlook for now the cloud of
among voters.
Federal investigations for the good of
A Chicago Tribune poll published
the country.
last week had Mr. Rostenkowski lead-
But it has made little impression on
ing his main challenger, State Senator
Nancy Zornes, a secretary in running
John Cullerton, by a narrow margin.
shoes, carrying a tote bag onto the el.
The third main candidate, Dick Simp-
who said she had not made up her mind
son, a political science professor and
yet.
former alderman who mounted a
"I was going to do some thinking
strong primary challenge against the
about it today," she said. "I saved up
chairman in 1992. was far behind in the
that thing in the paper. the ballot thing
poll.
they print. I know everybody's hot and
According to the poll, as many as one
heavy for Rostenkowski, but I just
in three voters is undecided. "My hus-
don't know."
band says Rostenkowski brings a lot of
'He's Just One Man'
money to the city and he's learned his
lesson now," Mrs. Karsakow said. "I
All the talk about power and the
don't know what to think. I'll have to
collapse of Government if the chair-
listen to what my husband says tonight
man loses worries Mary Gremmler, an
to convince me. I probably won't know
office manager. "He's just one man."
till I get in the booth."
Ms. Gremmler said. "God forbid that
Few Signs of Campaign
one country depends on one man and a
corrupt one at that. That's one of the
The chairman's home base is a dis-
problems that one man could wield
trict shaped like a caterpillar that ex-
that much power."
tends from the sliver of high-rise con-
dominiums and espresso bars on the
Others said they would "hold their
lakefront to the bungalows that consti-
nose and vote for Rosty." Pamela
tute most of the district further west
Hewett, a florist in the trendy Buck-
and in the bordering suburbs.
town section, is one of them. "I want
Along the main thoroughfares, past
this health thing passed," Ms. Hewet
the beauty schools and bike shops on
said. "He's an old boy, and he does
THE NEW YORK TIMES. TUESDAY. ARCH 15. 1994
Irving Park Avenue, the lofts and tav-
things the old way. You can't expect a
erns on Clybourn. the warehouses on
politician to be a role model."
Elston and the galleries and tortilla
That IS in keeping with Chicago-style
shops on Milwaukee Avenue, there are
politics, some would say. "Chicago has
few blue Rostenkowski campaign post-
always had a high tolerance for ethical
ers taped to lampposts or peeking from
deviance," said Don Rose, a political
picture windows.
consultant who is a Cullerton ally. Chi-
But then people know him already,
cago voters, he added, are like long.
and some Democratic regulars feared
time owners of a cat. "It's like I have a
that too nign a profile could actually
cat, and don smell anything, ne
turn off voters.
said. "Someone comes in from the out-
"It's a race that's so touchy, it cuts to
side, and says, 'My God, your litter box
the bone." said Patricia Jo Cullerton
needs changing.' It's like I'm used to a
the 38th Ward committeewoman. who
certain level of stench from my litte:
IS a second cousin. once removed. of DOX. and so I don't notice it.'
Observer
RUSSELL BAKER
Mired in Stardom
A writer named Neil Postman pub-
The reason this rickety construc-
lished a book a few years ago arguing
tion of innuendo and circumstance
that America was entertaining itself
occupies the media so intensely is
to death. It was an entertaining book,
that Presidents are central to the
which undercut the force of its argu-
American need to be entertained.
ment. If Postman was really afraid
Government is too complicated to
we were being entertained to death,
be entertaining: those 535 characters
what was the idea of writing an enter-
in Congress, all those mysterious reg-
taining book about it? Was he trying
ulatory agencies, lobbies, Pentagon,
to speed us into the hearse?
State Department. It is a pandemo-
Still, he had a point. Cassandras
nium of incomprehensible realities.
howl about drugs, tobacco and high-
Worse than that, it is dull. Dull, dull,
fat diet. but it's entertainment that
dull! A country dying for and of enter-
has us all hooked. Drug-free, tobacco-
tainment can't stand for dullness,
cleansed, dietetically approved by the
doesn't want incomprehensible reali-
American Dreary Dining Association
millions of us may be, but cut off our
daily entertainment fix and you will
see an entire nation writhing in Pro-
The President
methean agonies.
No, I am not about to beat up on
as entertainment.
poor old television one more time.
Television has our minds by the
throat, and we all know it, and it's
useless sermonizing about it because
we are as powerless to stop gaping at
ties, doesn't want hundreds of Con-
it five, seven, thirty-two hours a day
gresspeople, thousands of lawyers,
as the pathetic nicotine fiend is pow-
hundreds of thousands of mind-glaz-
erless to stop himself from lighting
ing complications.
just one more.
It wants entertainment. This is why
It's the so-called Whitewater busi-
almost all media coverage of govern-
ness that brings Postman's thesis to
ment centers on the President, his
mind. The likelihood that Whitewater
wife, his family and his entourage
amounts to more than a hill of beans
They provide a manageably small
- or at the most, two or three hills of
cast for a national sitcom, or soap
THE NEW YORK TIMES. TUESDAY. MARCH 15. 1994
beans - seems very slight to me.
opera, or docudrama, making it easy
Whatever was done seems to have
for media people to persuade them-
been done on the small-bore Arkan-
selves they are covering the news
sas scale, involving a small-bore sav-
while mostly just entertaining us.
ings and loan and some two-bit mon-
The Whitewater business is a natu-
ey transactions with Bill Clinton back
ral for a press that needs to be enter-
when he was Governor of Arkansas, a
taining. The realities of Clinton gover-
small-bore statesman in the kind of
nance - health care and welfare re-
environment where the Establish-
forms, declining standards of living,
ment usually consists of the local
alarming trade imbalances - are
real-estate speculator, two lawyers, a
hard to cover in the press and impos-
feed-grain capitalist and the town's
sible to cover on television in ways
white undertaker.
that entertain.
If there was dirty pool, obviously it
Whitewater. on the other hand, is a
should not be excused. With a high-
script writer's delight. We have fear-
powered counsel on the job, it obvi-
less reporters going jaw-to-jaw with
ously won't be. Obviously. the Clin-
the star of the show. We have bush-
tons will pay dearly for it.
league Richelieus like Dole and D'A-
Still, Washington reporters, who
mato playing the Suave Forces of
are in a lather about "in Water-
Righteousness on camera. We have
gate mode," George Bush might have
justification for endless pondering
said - must have enough experience
about the First Lady. Love her or
of their own state legislatures to
hate her, she's everybody's favorite
know that state capitols are natural
female character in this show.
breeding cultures for cheesy little
No, Watergate it's not, nor even
back-scratcher deals.
Iran-contra, both of which were about
Not that there is any evidence yet
criminal abuses of Presidential pow-
that Whitewater involved the Clintons
er. Big stuff, really great shows,
in such stuff. So far there is no evi-
those. Still. Whitewater is the best
dence of anything except White
news in Washington now that Barbra
House bumbling. There is only "May-
Streisand no longer guests at the
be" followed by, "If so, then maybe."
White House.
Al What's News-
A U.S. Air Force plane grashed off
Kenya's coast en route to Somatia, killing at
least one crew member and leaving 10 others
Convex Computer plans to unveil
Business and Finance
unaccounted for, the Pentagon saki. At
today a long-awaited supercomputer
three crew members survived.
based on massively parallel process-
G
E CAPITAL launched a $2.2 bil-
ing. in a bid to revive its growth pros-
Adm. Jeremy Boorda was nominated by
lion takeover bid for Kemper, but
pects and return to profitability.
Clinton to succeed Adm. Frank Kelso as the
the money management, brokerage
(Article on Page B6)
Navy's top officer. Boorda, commander of
and insurance company rejected the
NATO forces in southern Europe, # d
offer. GE's financial services unit ap-
J.P. Morgan will back a restructur-
become the first chief of naval operations to
ing plan by the new management of
rise from the enlisted ranks if he is
pears to be moving toward what could
Banesto, the Spanish bank that was
firmed. Kelso announced his retirement
become an outright hostile bid, saying
it could sweeten its $55-a-share bid if it
seized and in which Morgan has a big
month, citing the Tailhook controversy.
obtained additional information about
stake, people close to the plan said.
Thousands of small communities lack the
Kemper's finances. Kemper shares
(Article on Page A12)
funds necessary to meet federal drinking
soared $16.125, or 39%, to $57.
water requirements and need help finding
(Article on Page A3)
Two large pension funds joined a
cheaper ways to make their water safe, a
nonprofit builder and three big Cali-
congressional report said. Separately. an
Disney agreed to spend about $750
fornia financial institutions to launch
environmental group, the National Re-
million to bail out its 49%-owned Euro
an affordable-housing initiative.
sources Defense Council, said the las
Disney affiliate, apparently ending a
(Article on Page A8)
cities use outdated filtration technology.
threat to close the theme park.
Markets-
Georgia's Senate gave final legislative
(Article on Page A3)
Stocks: Volume 260,138,940 shares. Dow
approval to Gov. Miller's proposal to
Jones industrials 3862.98, up 0.28; transpor-
criminals to prison for life without parole for
Breast-implant makers and plain-
tation 1726.12. up 5.08; utilities 208.61, off
a second violent-crime conviction. For the
tiffs reached an accord on all major re-
1.18.
measure to take effect, voters must approve
maining issues in the $4 billion sili-
Bonds: Lehman Brothers Treasury index
a constitutional amendment in a November
cone-implant settlement, the largest
5270.39, down 22.23.
referendum. Georgia would then become the
product-liability pact in U.S. courts.
Commodities: Oil $14.49 a barrel. up five
first state with a "two-strikes" policy.
(Article on Page A2)
cents. Dow Jones futures index 145.28, up
0.41: spot index 132.09, up 0.51.
Secretary of State Christopher urged
Eight former Honda sales and ad-
Dollar: 106.10 yen. up 1.1; 1.6900 marks,
Russia's Foreign Minister Kozyrev to his
vertising executives pleaded guilty to
up 0.0075.
influence to bring Bosnia's Serbs into a
peace accord reached by Croats and Mus-
bribery-related charges. They admit-
lims. Separately, France chastised U.N.
ted they took bribes from dealers in
World-Wide
civilian officials for failing to order air
exchange for generous supplies of hot-
attacks on Serb gunners who fired at French
selling cars and coveted dealerships.
peacekeepers over the weekend.
HUBBELL RESIGNED abruptly from
(Article on Page A4)
his senior Justice Department post.
The Inkatha Freedom Party said it
Associate Attorney General Hubbell,
Deloitte & Touche agreed to pay
still take part in South Africa's elections
locked in a billing feud with his former law
$312 million to settle government
the balloting would have to be postponed to
firm. resigned. His departure leaves the
claims linking the accounting firm to a
give the party time to campaign. Inkatha
leadership of the Justice Department reeling
leader Buthelezi urged "flexibility
the
number of costly thrift failures.
from its second top-level resignation in
resolution of the date problem." The rival
(Article on Page A6)
recent weeks. While Hubbell's decision to
African National Congress has ruled out
leave stemmed from the billing dispute
delay in the April 26-28 voie.
A top strategist in IBM's multi-
with the Rose Law Firm, his announcement
media effort quit to join Blockbuster
drew attention to the Whitewater contro-
Tuberculosis was found in the body of a
Entertainment, the corporate partner
versy. (Article on Page A22)
1,000-year-old woman in Peru, giving strong
he had recruited to work with IBM.
Hubbell has come under fire for his
evidence that a disease lethal to the
is
representation of the RTC after it took
(Article on Page B10)
of American Indians was in the New World
over Madison Guaranty. Hubbell and the
before Columbus and not a plague brought
Rose Law Firm represented the RTC in a
Grumman agreed to deliver this
by Europeans. A report on the study is to be
suit against Madison's auditor.
week to unwanted suitor Northrop.
published in today's issue of Proceedings of
which is offering $2.04 billion for the
the National Academy of Sciences.
China has transferred advanced missile
company, the same detailed financial
technology to North Korea. according to U.S.
information that it has given to its pre-
intelligence reports, posing another stum-
ferred partner, Martin Marietta,
bling block for renewal of China's trade
which made an earlier $1.93 billion
status. The reports contend that the diame-
bid. according to Northrop officials.
ter of a new long-range missile being devel-
oped by the North Koreans is evidence of
(Article on Page A4)
China's assistance. (Article on Page A3)
Apple expects to unveil a deal this
Israel pressed its crackdown against
year licensing its Macintosh operating
Jewish extremists by focusing on Hebron,
system to another computer maker.
site of last month's mosque massacre. Police
(Article on Page B6)
confiscated automatic weapons from Jews
and briefly detained a leading rabbi. Sepa-
Merrill Lynch's run of bullish earn-
rately. a U.S. envoy met with Arafat in
ings buoyed the 1993 pay packages of
Tunisia but failed to win the PLO leader's
its top four executives to more than $6
consent for resuming talks with Israel.
million apiece, signaling another rec-
Prime Minister Rabin signed an agree-
ord year for Wall Street pay.
ment to add the religious Shas party to his
coalition, giving him a-majority in Israel's
(Article on Page C1)
parliament. The accord will go into effect
after approval by Rabin's Labor party.
U.S. Shoe should be broken up into
three separate companies, said Alfred
Sen. Packwood conceded defeat in a legal
Kingsley, an investor who is drum-
fight over his diaries, agreeing to turn them
ming up support for the proposal.
over to the Senate Ethics Committee for its
(Article on Page A5)
investigation into allegations of sexual and
THE WALL STREET JOURNAL TUESDAY, MARCH 15, 1994
official misconduct. The Oregon Republican
said he was ending a challenge to a district
court order that directed him to give the
panel the diaries it subpoenaed last year.
Officials from G-7 nations discussed
global unemployment during a conference in
Detroit. President Clinton urged the Group
of Seven officials to focus on ways to
2
create jobs. (Article on Page A2)
Inner Circle
Minding the Institution
Is Shrinking
This week, the First Lady, already
feeling angry and defensive about
questions about her role in the White-
are Webb Hubbell and Mack McLarty
water matter, saw the legal pyramid
Then, there's a big gap before you get
Clintons See Another
she had put in place largely dismantled
to Gergen and Stephanopoulos. And
and her lieutenants disappearing. In-
then a very large gap before you get to
Little Rock Friend Go
stead of being surrounded by old men-
anybody else.'
tors and law partners, Mrs. Clinton
Clinton advisers acknowledge their
now has the new White House counsel,
problems in fitting into the capital cul-
Al
Mr. Cutler, whose very presence IS an
ture, but they blame it partly on what
By MAUREEN DOWD
implicit rebuke to the Clintons that
they see as prejudice against outsiders.
Special to The New York Times
they had neither the experience nor
"Any institution, and you can call
WASHINGTON, March 14 It was a
wisdom to operate in Washington with
political Washington an institution, is
small, golden group, the Friends of Bill
their own set of old friends.
always going to act in its own interests
When the Senate Finance Committee
and be suspicious of outsiders," said
and the Friends of Hillary, and for a
chairman, Daniel Patrick Moynihan of
Paul Begala, a Clinton political advis-
time it ruled supreme, operating al-
New York, said on "Face the Nation" a
er. "I think there is a great deal of
most as a White House within the White
week ago, before Mr. Cutler's appoint-
prejudice showing here from, let us
House. But now, as the Ad-
ment, that Mr. Nussbaum's successor
say, the sort of people who refer to
ministration reels from
should be "someone who is not a friend
Washington as 'this town.''
News
departure to sudden de-
of anybody working there now, but is a
"Here's my prediction at this point,"
Analysis
parture, there is an eerie
friend of the institution of the Presiden-
Mr. Begala added. "If the Arkansas
sense of subtraction that
cy," his remark was taken as a caution
Razorbacks lose in the N.C.A.A., people
recalls the Agatha Christie mystery
to the First Couple that they should
here are going to find a way to blame it
"And Then There Were None."
stop running the White House with a
on the First Lady."
This was the first Administration
small group of friends who were seen
At the Danger Point
as being overprotective of the Clintons
built on baby-boomer networking, with
and their past, sometimes at the ex-
The danger that the Clintons face
the primary example being Hillary
pense of the institution.
right now, say many inside and outside
Rodham Clinton's fiel
the Administration is that they are at a
where top jobs were given to her
departure emotionally painful, their
us
suit
that
aides said. Yet, their relationship with
the Carter Administration.
friends and former law partners.
The essential quality of those in the
their friends is now so convoluted that
What once seemed fresh now seems
Clintons' inner circle was the shared
White House officials put out word 10.
simply unsophisticated; where the
intimacy of past times together. But
day that Mr. Hubbeli and not even CO:
intons and their voung team used to
now, that very intimacy is claiming
sult the Clintons as he agonized over
seem brainy, now they just seem inex-
whether to go or stay, only sending
perienced and stumbling. Where the
them, one by one, creating a chain of
messages through Mickey Kantor, an
Arkansans once won praise for their
casualties that has left the survivors in
establishment lawyer who is now the
outside-the-beltway populism, they
the White House feeling shaken and
United States Trade Representative.
now are censured for very sort of cro-
besieged.
Increasingly, there is a sense in
nyism and elitism that they criticized
Washington that the Arkansas political
in the Bush Administration.
A Dwindling Band
culture does not work in the White
Republicans are happy to capitalize
In May, Harry Thomason, the Holly-
House, especially when it is combined
on the new conventional wisdom.
wood producer who served as the Clin-
with the combative campaign culture
"Their White House screams lack of
tons' theatrical and image adviser,
experience, lack of capacity and lack of
gave up his White House pass when
understanding," said Eddie Mahe, a,
accusations of cronyism surfaced after
Another
Republican consultant. "The only way
the First Lady involved herself in the
they can solve their problems is to try
to get people in there for whom the
dismissal of White House travel office
employees. In July, Vincent W. Foster
subtraction from
learning curve is a lot shorter."
Mr. Mahe is partisan, but he has
Jr., the deputy White House counsel
a circle of
point.
who had been Mrs. Clinton's law part-
Mr. Stephanopoulos, the campaign-
ner in Little Rock, Ark., committed
Arkansans.
strategist-turned-White-House-advis-
suicide. Ten days ago, Bernard W.
er, said, "One of the lessons we all
Nussbaum, the White House counsel
learned is that coming to Washington,
and a close friend of Mrs. Clinton,
coming to the White House, as in no
resigned amid criticism that he may
that produced many of the younger
other place, the personal is the politi-
have bent ethical standards to protect
breed of Clinton aides.
cal. We've come to deeply understand
the Clintons on Whitewater.
The Little Rock culture was rooted in
that over the last year, and that has
an informal way of doing business, in
been one of the toughest realities for us
And finally today. Webster L. Hub-
which behind-the-scenes relationships
to deal with."
bell, another of Mrs. Clinton's partners
played at least as large a role as the
That was in January, before the
in the Rose Law Firm who was being
evident formal structure of power. The
Treasury Department's meetings with
investigated by the firm for his billing
1992 Presidential campaign taught the
the White House about Whitewater
Clintons that a combative, tightly com-
were disclosed and Mr. Nussbaum was
Continued From Page Al
partmentalized operation could tri-
forced out, and before Mr. Hubble's
umph over a messy past and an inquisi-
personal legal problems became such
live press.
a political liability that he had to re-
and expense practices, resigned as As-
sign.
sociate Attorney General.
Circles of Influence
"This is a blow to the Clintons, par-
In Washington, the Clintons drew on
ticularly to Hillary," said a top Admin-
the lessons of both Arkansas politics
istration official who is close to the
and their campaign successes to build
couple. "Once again. it casts a bad light
a government based. as one former
on their private lives 11. Litue ROC.
The seaminess of that place attaches
circles 01 knowledge and influence.
itself to the Clintons through Hubbell,
"Think of a circle in the middle with
somebody they brought with them, who
just the two of them, Bill and Hillary,"
acted as their eyes and ears at the
the ex-official said recently.
Justice Department."
"Bruce Lindsey is in the next closest
The departure of the burly down-
ring," he said, referring to the Presi-
home Arkansan, combined with the ar-
dent's longtime friend and counselor
rival of the éminence grise of the
from Arkansas. "Then in the next ring
Washington establishment. Lloyd N.
Cutler, has meaning far beyond most
Administration staff shake-ups.
Mr. Hubbell, like Mr. Foster and Mr.
Thomason, represented the Arkansas
past and the political culture that the
Clintons took with them to Washington.
Mr. Nussbaum. too, had a link with the
THE NEW YORK TIMES. TUESDAY. MARCH 15. 1994
past: He was Mrs. Clinton's mentor
when she was a young lawyer on the
Watergate impeachment committee
and he was the New York lawyer who
threw business her way when she was
trying to be a rainmaker for the Rose
Law Firm.
A SENIOR OFFICIAL
Continued From Page Al
family and my former law firm elevat-
ed to public speculation," but he ex-
ond-in-command, who left in late Janu-
pressed confidence that his dispute
ary citing differences in managerial
with the law firm would be "resolved
QUITS JUSTICE POST
approach with Attorney General Janet
satisfactorily."
A Rose partner. Herbert Rule. de-
Reno.
clined to comment tonight after a
Today, some of his associates traced
meeting at the firm's downtown Little
AS PRESSURE RISES
his conflict with Rose to a bitter feud
Rock headquarters.
that developed when a group led by
In his statement, Mr. Hubbell said,
him and Mrs. Clinton pushed other
"After a thoughtful weekend. I believe
partners aside when Mr. Clinton be-
that my continued service will not be as
came Governor in 1978. The immediate
effective as it has been: that the dis-
ETHICS ARE QUESTIONED
factor that pushed him to resign, they
tractions on me at this time will inter-
said, was a meeting the Rose partners
fere with my service to the country and
held tonight to decide whether to refer
the president's agenda: and that my
Webster Hubbell, an Old Friend,
a dispute over Mr. Hubbell's billing and
family, although totally supportive, is
expenses to the state bar association
being harmed."
after negotiations to settle it broke
Mr. Hubbell's departure has left Ms.
Leaves to Spare the Clintons
down.
Reno without the person who she
Turbulence of Departures
turned to after Mr. Heymann's depar-
Further Embarrassment
ture to run the agency day to day and
His resignation comes little more
who was deeply involved in supervising
Al
than a week after the exit of Bernard
civil rights, antitrust and immigration
W. Nussbaum, the White House coun-
matters. Mr. Hubble's resignation also
By DAVID JOHNSTON
sel, who announced that he was step-
severs the agency's direct link to the
Special to The New York Times
ping down a little more than a week
White House.
WASHINGTON, March 14 - Web-
ago. Mr. Nussbaum, a New York law-
yer who first worked with Mrs. Clinton
No Departure Date Set
ster L. Hubbell, one of the inner circle
20 years ago, was forced out after it
Mr. Hubbell did not set a precise date
that the Clintons brought from Arkan-
was disclosed that he met with Treas-
for his departure, but he will be hard
sas, abruptly resigned today from a top
ury Department officials preparing a
for Ms. Reno to replace. She had relied
Justice Department job in the latest of
complaint involing Madison Guaranty.
on him for his judgment and his ability
string of Administration efforts to
In recent days the Administration
fraund
your comroversies over emics.
was suught (Cgails its balance alima
nonsmp with Clinton aides who have
Mr. Hubbell said he was leaving his
the turbulence that surrounded Mr.
times regarded Ms. Reno as a grand-
job as associate attorney general to
Nussbaum's departure. A newly
standing loner.
spare the President and Hillary Rod-
named White House counsel. Lloyd N.
He leaves Ms. Reno still trying to
Cutler. said that the White House would
organize her agenda and manage the
nam Clinton further embarrassment
,
take a newly open approach to Con-
80,000-person criminal justice agency
over charges that he overbilled the law
without the two top aides on whom
firm where he and Mrs. Clinton were
Attorneys General have historically
once partners.
depended to supervise criminal and
Administration officials said today
civil law issues on a daily basis.
that Mr. Hubbell had taken the initia-
Another old
The firm first raised questions about
tive to step down. But senior officials at
Mr. Hubbell's billings in mid-1993, ask-
the White House did nothing to dis-
friend of the
ing him to provide further documenta-
suade him from resigning, and one
tion of expenses related to a lawsuit
White House adviser said that it had
Clintons leaves
filed by P.O.M. Inc., a parking meter
THE NEW YORK TIMES. MARCH 1994
been made clear to Mr. Hubbell that his
company, headed by Mr. Ward, who
departure would be helpful.
their side.
was later succeeded at the company by
Mr. Ward's son, also named Seth Ward.
Setback for Clintons
The unsuccessful suit charged another
Whatever the White House role, Mr.
parking meter manufacturer with pat-
ent infringement and antitrust viola-
Hubbell's exit was a setback to Mr.
gressional inquiries. and Mrs. Clinton
tions.
Clinton and especially Mrs. Clinton.
said over the weekend and again today
Mr. Hubbell was slow to provide the
Mr. Hubbell was a regular golf partner
that she had made "mistakes" in her
supporting documents and his former
of Mr. Clinton's, and he and Mrs. Clin-
handling of the Whitewater controvery.
partners grew increasingly impatient,
ton worked closely at the Rose Law
The Clintons never spoke to Mr. Hub-
especially as the firm became em-
Firm, which has been near the center
bell on the matter, an Administration
broiled in Whitewater as prosecutors
of an independent prosécutor's inquiry
official said. Mickey Kantor the United
subpoenaed documents and ordered
into the Clinton's real estate invest-
States Trade Representative, emerged
the firm not to destroy any papers
as a broker in Mr. Hubbell's weekend
ment in Arkansas. Mrs. Clinton, a dom-
related to the issue.
discussions with his family, friends and
inant behind-the-scenes force in shap-
In February the partners insisted on
associates. On Sunday, Mr. Kantor tele-
a fuller accounting of his billings and
ing the Administration's approach to
phoned Thomas F. McClarty 3d, the
expenses. But by then, said one official,
legal matters, played a major role in
White House chief of staff, to inform
Mr. Hubbell and his old associates
selecting Mr. Hubbell - a former may-
him that Mr. Hubbell was on the verge
were barely on speaking terms and Mr.
or of Little Rock and State Supreme
of a decision to quit.
Hubbell was reluctant to provide any
Court Justice - for his Justice Depart-
Wistful and Bitter
information to former associates he no
ment post.
Early today, Mr. Kantor, who
longer trusted.
Mr. Hubbell's departure, coming as
worked with Mr. Hubbell in Little Rock
Some appeared to be upset because
the White House is struggling to cope
Mr. Hubbell had entered into an un-
when Mr. Kantor was Mr. Clinton's
with a widening inquiry into the Clin-
usual arrangement for a large firm,
campaign chairman, again telephoned
tons' investment in the Whitewater De
Mr. McClarty to advise him that Mr.
agreeing to represent P.O.M. on a con-
velopment Company, a real estate ven-
Hubbell had made his decision. Mr.
tingency fee basis, meaning that the
Clinton phoned Mr. Hubbell this after-
company would pay the firm only if
ture that went bad, was another exam:-
noon while the President was aboard a
P.O.M. prevailed in the case. Because
ple of old problems reaching from the
ferryboat in Boston harbor.
P.O.M. lost, the law firm had to absorb
past in Little Rock to trip up a high-
what some lawyers following the case
ranking Administration official.
Another former Rose partner, Vin-
estimated were up to $1 million in time
Mr. Hubbell's problems have little to
cent W. Foster Jr., who was the deputy
White House counsel, died of a single
charges and other litigation expenses,
do with the Whitewater deal, although
like the cost of expert witnesses.
gunshot wound to the head in July 1993.
some of the disputed bills could involve
Some of Mr. Hubbell's friends have
Mr. Nussbaum found himself in the
work on the Madison Guaranty Savings
said that he has told them the dispute
middle of a furor when it was disclosed
and Loan Association owned by James
that he turned over some Whitewater
over his billings center on small misun-
B. McDougal, who was the Clintons'
files Mr. Foster had kept in his office to
derstandings, over amounts of no more
than a few hundred dollars. In one
partner in Whitewater.
the Clinton's personal lawyer.
With the suicide of Mr. Foster and
instance they said he mistakenly
'The Right Decision'
charged the firm for first class airfare
the subsequent departures of Mr. Hub-
bell and Mr. Nussbaum, Mrs. Clinton
rather than paying the difference be-
In comments this afternoon, Mr.
Clinton said Mr. Hubbell had per-
has lost three principal allies with
tween coach and first class according
to what they said was his customary
formed a valuable service at the Jus.
whom she had hoped to shape the jus
tice Department, but "made the right
tice system.
practice.
in a written statement that Mr. Hub
But others suggest the dispute is
decision" to resign to deal with an
bell and the Justice Department re
potentially far more serious. These
investigation into his billings while in
vised throughout the day, he sounded
people, who have closely followed the
private law practice.
issue, said that Mr. Hubbell has been
alternatively wistful and bitter as he
At the Justice Department, Mr. Hub-
unable to account for $50,000 to $100,000
confirmed that he was engaged in dis
bell's resignation leaves another gap in
cussions with his former law firm over
in expenses and has failed to provide
the senior ranks after the forced resig-
"compensation and reimbursement
backup receipts or documentation for
matters."
his expenditures. Much of the money
nation of Philip B. Heymann, the sec-
was withdrawn from a Rose law firm
He expressed regret that he had seer
account and much of it was spent for
Continued on Page B7. Column I
"private issues between me and my
travel.
40
Rose partners are also unhappy about
Hubbell Resigns
Mr. Hubbell's unsuccessful representation
of P.O.M. Inc.. owned by his brother-in-
law, Seth "Skeeter" Ward. The firm has
Key Justice Post
had to absorb about $500,000 in litigation
costs that P.O.M. said it couldn't pay.
according to a person at the firm. And
In Surprise Move
because Mr. Hubbell agreed to take the
case on a contingency-fee basis, the firm
was forced to swallow roughly another
$500,000 in unbilled time.
"Public Speculation' Is Cited;
Rose's managing partner. Ronald
A Planned Vote at Rose
Clark. didn't return phone calls yesterday,
but previously said the firm hadn't con-
Also Believed Influential
cluded anything as a result of its review. A
person at the firm yesterday said, "We do
not contemplate [Mr. Hubbell's] return to
By JOE DAVIDSON
the firm."
And ELLEN JOAN POLLOCK
Mr. Hubbell has also come under fire
Staff Reporters of THE WALL STREET JOURNAL
for his representation of the Resolution
WASHINGTON Associate Attorney
Trust Corp. after it took over Madison
General Webster Hubbell, locked in a feud
with his former law firm, abruptly re-
Guaranty Savings & Loan, which was
signed, adding to the chaos in a Clinton
owned by James McDougal. Bill and Hil-
administration beset with Whitewater
lary Rodham Clinton were partners with
troubles.
Mr. McDougal and his ex-wife Susan
The resignation, which surprised even
in Whitewater Development Co. Mr. Hub-
senior Justice Department officials, leaves
bell and the Rose Law Firm represented
the leadership of the department reeling
the RTC in a suit against Madison's audi-
from the second top-level resignation in
tor.
recent weeks. In January, Philip Heymann
quit as deputy attorney general, citing bad
There have been allegations that Mr.
"chemistry" with Attorney General Janet
Hubbell and the firm failed to reveal to the
Reno.
RTC that the firm had previously repre-
An administration official said Mr.
sented Madison, and that Mr. Hubbell's
Hubbell's decision was influenced by the
father-in-law had been involved in tangled
knowledge that his former partners at the
litigation with the thrift. In addition, RTC
Rose Law Firm, Little Rock, Ark., would
auditors are in Little Rock reviewing the
meet last night to vote on whether to refer
firm's bills to make sure that all charges
the dispute to the Arkansas Bar Associa-
have been documented.
tion. The escalating feud involves Mr.
Hubbell's expenses and billing practices at
Praise From Attorney General
the firm and his representation of a com-
A subdued Ms. Reno highly praised Mr.
pany owned by his brother-in-law.
Hubbell at a news conference called to
In his resignation letter to President
announce his resignation, which he didn't
Clínton, Mr. Hubbell said, "Unfortunately,
attend. "There are no words capable of
because of public speculation about me and
my former law firm, I will have to spend a
fully conveying to you my deep respect and
significant amount of my personal time on
admiration for Webb Hubbell or how sad
an internal matter with my former part-
this event makes me," she said. "He has
ners." The publicity diminishes his effec-
been a tireless crusader for doing justice,
tiveness, he said, and "distracts from your
for doing the right thing." She added, "I
agenda."
don't believe he did a thing wrong."
'Did the Right Thing'
She credited him with opening up the
In a letter to Mr. Hubbell, Mr. Clinton
department's information policy, increas-
said: "I know your accomplishments in
ing the staffs of the civil rights and anti-
office will outlast any interest in the
trust divisions, and pushing "major issues
private matters that have arisen from your
in immigration and environmental en-
prior law practice." The president later
forcement and equality for the disabled."
THE WALL STREET JOURNAL TUESDAY. MARCH 15. 1994
told reporters in Boston that Mr. Hubbell
"did the right thing" in resigning, but
Mr. Hubbell's role has long been the
added that he found it "hard to believe"
target of speculation. A close friend of Mr.
that his longtime friend had done anything
Clinton and former law partner of Mrs.
wrong.
Clinton. Mr. Hubbell was assigned to the
While Mr. Hubbell's resignation
department from the first days of the
stemmed from the dispute with his law
administration. well before Ms. Reno took
firm, his announcement drew attention
yesterday to Whitewater. Mr. Hubbell's
office in March last year. Several critics
name has been linked to the Whitewater
speculated that he ran the department
controversy, which has engulfed the ad-
before Ms. Reno took office and has since
ministration and led to the recent resigna-
been the real power, because of his ties to
tion of White House Counsel Bernard Nuss-
the White House. But Mr. Hubbell, Mr.
baum.
Heymann and other department officials
White House aides said U.S. Trade
have insisted Ms. Reno is the real boss.
Representative Mickey Kantor, a friend of
Separately, a lawyer for Susan McDou-
Mr. Hubbell, talked with Chief of Staff
gal said she no longer had any Whitewater
Thomas McLarty on Sunday to alert him
or Madison records in her possession.
that Mr. Hubbell was seriously considering
resigning. Mr. Hubbell felt that he needed,
Bobby McDaniel, the lawyer, said at a
time to deal with the Rose conflict. Mr.
news conference in Little Rock yesterday
McLarty informed the president, but Mr.
that Ms. McDougal had one of her brothers
Clinton didn't talk with Mr. Hubbell. Yes-
deliver a box of Whitewater documents to
terday morning, Mr. Kantor called Mr.
the guard house at the Arkansas gover-
McLarty to tell him that Mr. Hubbell would
nor's mansion in 1991 at the request of
indeed resign.
then-Gov. Clinton. She also turned over
Rose has asked Mr. Hubbell to turn
five full boxes of documents to the Federal
over backup documentation for his ex-
Home Loan Bank Board in the late 1980s,
pense reports, in an effort to discover if he
Mr. McDaniel said. He said the Clintons
billed personal charges to the firm or its
clients. Mr. Hubbell wrote himself checks
had never returned her documents and
on a firm bank account without sufficient
that she had no copies.
documentation. a person at Rose has
said.
A Rose Firm Deal, Revisited
The
following
is
reprinted
with
per-
Needles and the Supreme Court sided
Chapler. who was the finance authority's
mission from the Des Moines Register
with county assessors in concluding that
general counsel when the bond sale was
June
13,
1993.
A
related
editorial
appears
Care Initiatives did not meet the tests of a
approved by the group's board and Gov.
nearby.
charitable institution.
Terry Branstad.
By JONATHAN Roos
Said Needles, "Care Initiatives is a
Care Initiatives employs 2,800 workers
When Hillary Rodham Clinton
'shell' nonprofit corporation used by Bruce
in Iowa. Its nursing homes have 3,200 res-
plained in a recent speech about profiter
Whitehead and the bond underwriters
idents.
ing in the health care industry, she could
to obtain the financing necessary to enable
The sale of 36 nursing homes tn
have found a ready example in the role one
them to make millions of dollars of exces-
Arkansas was to be financed in the same
of her former Arkansas law partners
sive profits.
way, using $81 million in revenue bonds
played in an Iowa nursing-homes deal that
Whitehead and lawyers for Care Initia-
and another nonprofit corporation that
made millions for the deal-makers.
tives contended that the profits were rea-
had been set up for Whitehead. He stood
William H. Kennedy III. a partner in
sonable, given the size of the deal and the
to gain $4 million from the transaction.
the Rose Law Firm of Little Rock and
financial risk involved.
But during the fall of 1989 the deal unrav-
now associate counsel to President Clin-
Court records and transcripts of testi-
eled.
ton. shepherded the deal for Beverly En-
mony by Whitehead and his lawyer show
The Arkansas Development Finance
terprises. a giant nursing-home company
that Kennedy looked after the interests of
Authority, which had become an impor-
that paired up with a Texas banker to
tant economic tool for then-Gov. Bill
sell its Iowa and Arkansas nursing
Clinton, initially supported the proposed
homes.
Other Rose Law
bond sale but backed away as criticism
Forty-one Iowa homes were acquired
Firm partners who now
of the deal mounted. When Bob Nash.
four years ago by a nonprofit corporation,
president of the Arkansas agency, rec-
now known as Care Initiatives, that was
work in the Clinton ad-
ommended rejecting the deal. Whitehead
effectively controlled by the banker,
challenged him to a fist fight, according
Bruce Whitehead. The deal was financed
ministration may have
to Little Rock news accounts. Whitehead
by $86 million in tax-exempt revenue
been involved, too. Web-
later testified in the Iowa property-tax
bonds.
case that he lost over $2 million in
Whitehead and the bond underwriters
ster Hubbell listed Bev-
Arkansas.
took up-front profits exceeding $15 mil-
Clinton, who had the last word in killing
lion.
erly Enterprises among his
the deal. was brushed by the controversy
Beverly, which needed cash to reduce
26 Rose Law Firm clients.
but suffered no lasting political damage.
its crippling debt, made about $10 million.
He was re-elected governor in 1990.
"Kennedy was involved in the whole
There have been changes in Iowa since
thing, period. He was the point man for
Beverly Enterprises. He prepared the fi-
the deal. Last year. Care Initiatives sev-
Beverly," says Frank Pechacek, a Council
nancial documents and negotiated with
ered its ties with Whitehead and his nurs-
Bluffs lawyer who investigated the deal for
Whitehead and other parties to the Iowa
ing-home management company. Duncan
county assessors. The assessors were con-
and Arkansas nursing-home deals.
Graham, the firm's president, says Care
testing Care Initiatives' claim to property-
Whitehead testified that the nation's
Initiatives now is managing the nursing
tax exemptions for its nursing homes in
largest operator of nursing homes "was
homes itself.
about 30 counties.
having severe financial difficulty. They
He says the move should strengthen the
Kennedy could not be reached for com-
needed to raise cash desperately because of
firm's new bid for property-tax exemp-
ment.
the financial problems they were having."
tions for its Iowa homes. That's expected
Other Rose Law Firm partners who
In 1988, Beverly sought to sell off its
to touch off another court battle.
now work in the Clinton administration
nursing homes in Iowa, South Dakota, Ne-
may have been involved. too. Webster
braska and Arkansas. But finding a buyer
Hubbell, who holds the No. 3 slot in the
and conventional financing for the sale
Justice Department [Mr. Hubbell resigned
would be difficult.
yesterday]. listed Beverly Enterprises
Whitehead, the Texas banker. was in-
among his 26 Rose Law Firm clients.
terested in only the Iowa and Arkansas
Vincent Foster Jr., deputy counsel to
homes. A proposed sale agreement pre-
the president. represented Stephens Inc.,
pared by Kennedy called for a company
a Little Rock investment-banking firm
controlled by Whitehead to buy Beverly's
that owns 10% of Beverly's stock. Beverly
Iowa and Arkansas homes for about $115
hired Stephens to find a buyer for many of
million.
its nursing homes. The search led Beverly
The Iowa portion of the deal was sealed
to Whitehead.
in the summer of 1989. Whitehead's Ven-
"There was absolutely no way that
tana Investments bought the Iowa nursing
these people didn't know what was going
homes for $57 million as part of a two-step
on." said Roy Drew. a former Stephens
transaction that left Whitehead a hefty
broker and an independent investment ad-
profit. The homes were then sold to non-
viser whose criticism of a similar nursing-
profit Care Initiatives (known then as
home transaction in Arkansas involving
Mercy Health Initiatives) for $63.5 million.
Beverly, Whitehead and a nonprofit corpo-
The money was borrowed through the
ration helped touch off a political furor
sale of $86 million in tax-exempt revenue
that scuttled the deal.
bonds that the Iowa Finance Authority, a
No one is saying that nursing-home
public agency, agreed to issue.
company executives, lawyers, bankers or
The Iowa Finance Authority served as
others involved in the Iowa homes' sale
a conduit; no state money was loaned.
acted illegally. In fact. great care was
Nursing-home revenue is used to repay in-
taken to dot the i's and cross the t's on the
vestors who purchased the bonds.
contracts.
The Iowa transaction caused no ripples.
But critics of the transaction have com-
At a public hearing. Whitehead assured
plained of profiteering.
the Iowa Finance Authority board that the
Said Drew: "Rose Law Firm made it le-
Beverly employees in Iowa would keep
THE WALL STREET JOURNAL TUESDAY, MARCH 15, 1994
gal. but it didn't have anything to do with
their jobs. At a follow-up meeting con-
what was right or fair to taxpayers or peo-
ducted over the telephone. the board voted
ple in nursing homes. It had only to do with
unanimously to authorize the bond.sale.
getting Beverly and Stephens Inc. off the
"There was the belief that there was a
hook.'
danger that some of those [nursing homes)
Last month. the Iowa Supreme Court
could have closed." said Ted Chapler. ex-
upheld District Judge Gene Needles's de-
ecutive director of the Iowa Finance Au-
nial of Care Initiatives' request for an ex-
thority.
emption from paying property taxes on its
The lost jobs would have dealt an eco-
nursing homes. Total taxes on the homes
nomic blow to the rural communities
exceed $800,000 a year.
where the nursing homes are located, said
72
THE WALL STREET JOURNAL TUESDAY, MARCH 15, 1994
AL TUESDAY. MARCH 15, 1994
Clinton Plan's Perverse Incentives
By CRAIG RICHARDSON
pothetical firms and showed that the size
since the company pays a constant 5.3%
The year is 1995. President Clinton's
of the health care subsidy could vary
of its total payroll during this interval.
health care plan was recently passed.
tremendously, ranging from $159 to $1,706
But hiring the 50th worker causes health
making it mandatory for all businesses,
per worker per year.
care costs to suddenly balloon by $7,545,
large and small, to provide health care to
What has been overlooked, however, is
since mandated health care costs now
their employees.
a crucial fact: Businesses are not static en-
climb to 6.2% of total payroll. rather
The owner of Company A is trying to
tities-rather, they grow and shrink. And
than 6.2% of the additional worker's
decide whether to hire an additional
as they hire the 25th, 50th or 75th worker,
salary. On the other side of the coin. if
worker, increasing the total number of
the payroll caps abruptly change. The re-
Company A employed 50 workers. it
employees to 50. Upon examining the mat-
sult: Employee health care costs spike dra-
would gain $7,545 in federal subsidies by
ter more closely, she decides against the
matically upward, as seen in the accom-
firing a worker and thus falling into a
hire. Because of a quirk in the health
lower payroll cap category.
plan. annual health care costs will zoom
Expensive Employ
It gets worse as the company expands
by $7,545 upon hiring the 50th employee,
and eventually moves into the next payroll
assuming the employees earn $15,000 a
Annual health Insurance cost
cap category. After paying $930 for the 51st
year on average. Given the true cost of
employee, under the Clinton
through the 75th worker (that is, 6.2% of
the 50th employee is now $22,545 rather
TO EMPLOYER
$15,000). the additional cost of hiring the
than $15,000. the owner buys another com-
76th worker skyrockets by a staggering
1-24
puter instead.
$660
$20,310, since health costs suddenly jump
Meanwhile, the owner of Company B,
25th
$4,035
to 7.9% of total payroll.
employing 76 employees. and paying an
One answer is to model the payroll caps
average salary of $17,000, does some in-
26-49
$795
after income-tax brackets. That is, as a
vestigation of his own into the details of
50th
company increases the number of employ-
the Clinton health plan. He concludes that
$7,545
ees and enters a higher payroll cap, the
he should fire an employee. Upon doing so,
51-75
$930
higher cap should apply only to additional
he now qualifies as a federally approved
employees, rather than to all of them. The
"small business" and thus is eligible for
78th
$20,310
only problem here is that all companies
an $11.543 subsidy.
77+
would then receive some subsidies from
$1,185
These examples demonstrate some of
the government, just like all workers pay
the bizarre economic incentives hidden in
"Assumes
each
employee's
$15,000
income tax.
the Clinton administration's health care
Source:
You may ask if this issue is really such
plan. Ironically, these hiring hazards are
a big deal. The spikes occur only at certain
a direct result of the administration's be-
panying chart. If a company is to the left
intervals, and how many companies are
nign attempt to make health care premi-
of a "cost spike," there is a sizable hurdle
even near these intervals?
ums more affordable for small busi-
in hiring the next worker. To the right of a
Wrong Path
nesses.
spike, the firm stands to gain a large
The answer is that dangling $20,000 of
Escape Valves
amount of money in federal subsidies by
subsidies in front of small-business own-
As most readers know, the keystone of
firing workers.
ers will make them stand up and take
the Clinton plan is the requirement that all
The reason for these costs spikes is that
notice, even if they aren't initially af-
businesses pay 80% of their employees'
the payroll percentage caps are con-
fected. Companies with more than 75 em-
health insurance
structed differently from. say, income-tax
ployees may split into two smaller com-
premiums. This is
rates. When a person earns more money,
panies. fire employees or explore other
unpopular with most
PRICING
and thereby enters a higher income-tax
creative options. And smaller companies
small business own-
bracket, the increased tax rate falls only
will think twice about taking out loans
ers, who fear these
HEALTH
on those dollars earned in the higher
for business expansion, if they see enor-
mandated costs will
bracket. If the higher income-tax rate
mous health cost spikes looming down
drive them out of
business. To win
CARE
were applied to all earned dollars, the per-
the road.
son might actually take home less money
Since the beginning of the health care
them over. the Clin-
after taxes, causing obvious work disin-
debate, the question has been: Who will
ton health plan later included a series of
centives.
pay for the health care plan? Of course,
escape valves; depending on the average
The same perverse incentives operate
we all will, in one way or another. But
salary and the number of employees, own-
here-that is, the percentage payroll caps
instituting a complicated set of regula-
ers are guaranteed never to pay more than
operate at average, rather than mar-
tions that create perverse incentives for
a given percentage of their payroll. If the
ginal. levels. So when a company crosses
small businesses is not the path we
premiums exceed this percentage, the gov-
into a higher category. it is responsible
should take. In doing so. we make an ex-
ernment kicks in the difference.
for paying a higher percentage of its pay-
pensive proposition even costlier, in
Most analysts agree that small, low-
roll on health costs for all its employees,
terms of lost jobs. lower output and
paying businesses stand to gain the most
not just the additional hire. (Pay raises
wages, and more time spent by business
under this plan, since they receive the
can produce the same result, since the
owners on outmaneuvering the govern-
largest subsidies. In fact, coverage in the
subsidies operate on this dimension as
ment's illogical regulations.
press has focused on comparing the differ-
well.)
ences in the benefits. rather than a closer
For example. Company A, used in
Mr. Richardson is an assistant professor
examination of the costs. For example. an
the introduction. pays a flat health care
of economics at Salem College, Winston-
article in this newspaper analyzed four hy-
fee of $795 for each of its 49 workers.
Salem, N.C.
74
THE WALL STREET JOURNAL TUESDAY. MARCH 15. 1994
A20
REVIEW & OUTLOOK
Who Was Webster Hubbell?-I
Needless to say, we don't think
Janet Reno, announcing the
Webster Hubbell's resignation closes
Hubbell resignation yesterday, said:
the book on any aspect of this affair.
"He has been a tireless crusader for
An anonymous White House official
doing justice, for doing the right
tried to spin the story toward closure
thing." Incredibly, she then added:
when news was dribbling out yester-
"Webb was directly responsible for
day afternoon about a resignation by
changes in the Justice Department's
the presidential golfing partner-Rose
information policy, which had made
Law Firm partner-Associate Attorney
the Justice Department and govern-
General. "It's a private individual's
ment more open and accountable."
problems that arose prior to his gov-
This is Orwellian doublespeak, or
ernment service, problems with his
perhaps Ms. Reno has just been out of
prior law firm," said the official. That
the loop. After Ms. Reno loosened the
won't wash.
rules governing requests under the
It was just over a year ago that we
Freedom of Information Act last Octo-
first raised a flag in an editorial titled
ber, Mr. Hubbell tightened the rules
"Who Is Webster Hubbell?" (March 2,
the following month for White House-
1993). The Clinton Administration was
related requests. Most pointedly, his
less than two months old. It had no At-
order expanded the act's coverage to
torney General of its own, no Deputy
include the activities of the First Lady,
Attorney General and few quality peo-
specifically her top-secret health-care
ple in top positions. Instead it stuffed
task force.
the White House with cronies from Lit-
Ms. Reno's euphoria over Web-
tle Rock. notably putting two of
ster Hubbell leaving a legacy of
Hillary's Rose Law Firm partners in
"more open and accountable" gov-
the general counsel's office and send-
ernment is so much blather. With in-
ing a third Rose partner named Web-
terest in Whitewater now running at
ster Hubbell to be their "liaison" at
full tide, we have a public informa-
the Justice Department.
tion blackout that has turned into an
The issue then was Webster
unbridgeable moat around the Clin-
Hubbell's interventions into Justice
ton presidency. As we editorialized
Department policy
yesterday, our own FOIA request for
toward the federal
the Park Police report on the suicide
legal troubles of
of former Rose partner Vincent Fos-
Rep. Harold Ford, a
ter has now hit the ultimate contrac-
prominent member
tion with Special Counsel Robert
of the Black Cau-
Fiske's blanket suppression of all
cus. We wrote at
documents and information relating
the time: "We
to Whitewater/Madison.
seem to have the
Rose Partner No. 1, Hillary Clin-
spectacle of Hillary
ton, is now appearing in news-
Clinton's former
magazine interviews to announce that
law partner fixing
Whitewater has been blown out of pro-
meetings between
Webster Hubbell
portion. That script may still play in
Justice officials and demand-waving
various journalistic backwaters, but
pols, with the pols getting Justice to do
the more likely scenario is that there
their bidding." And concluded, "We
will be growing pressure to expose
are left to wonder what kind of Justice
Arkansas mores to more public
Department this will be, and what
scrutiny.
kind of administration."
Moreover, someone should put out
We have pursued this initial ques-
a protective order for the Justice De-
tion for 12 months now. So we were not
partment. After former deputy Philip
shocked when it came out that the
Heymann threw in the towel, the
Treasury and White House counsel's
White House nominated as his re-
office were holding "heads up" meet-
placement Defense Department gen-
ings over Bill and Hillary's potential
eral counsel Jamie Gorelick, a Belt-
problems with Resolution Trust inves-
way criminal lawyer whose client
tigations, the parties to which are now
list included BCCI celebrities Clark
subject to special subpoenas.
Clifford and Robert A. Altman. Indi-
Nominally, Mr. Hubbell's resigna-
ana basketball coach Bobby Knight
tion has to do with allegedly unethical
drew boos for benching his first-
billing practices while back at the
string for a whole half this year, but
Rose firm. But we draw your attention
Bill and Hillary Clinton seem intent
to the nearby article, published last
on keeping their party's best people
summer by the Des Moines Register.
on the bench for the entire presi-
It's a fascinating tale of transactions
dency. Why are they doing this?
involving a string of Iowa nursing
With Webster Hubbell's resigna-
homes, an effort that was brokered by
tion. this administration has lost its
then-Rose partner William Kennedy
Bert Lance, the Jimmy Carter confi-
III. who is now Associate White House
dante who at least brought animal
Counsel. Two Iowa court rulings re-
survival skills to a floundering ad-
fused to allow what the district judge
ministration. There's an important
called the deal's "excess profits,"
difference, though. Jimmy Carter
though the Rose firm's efforts kept its
and Bert Lance were on different
clients skating along the defensible
planets. The Little Rock crowd trav-
side of the law. Once in the White
els in a fixed orbit around the same
House, William Kennedy's name sur-
Sun. Webster Hubbell's saying he
faced for playing fast and loose with
quits doesn't change that. We still
the FBI and IRS over Travelgate.
want to know who these
Clintons' friend quits Justice job
By Adam Nagourney
Al
was a partner that he used
ports the firm appears to have
day. "He did the right thing"
and Bill Nichols
firm money for personal ex-
been paid twice by the govern-
Later, at a Democratic fund-
USA TODAY
penses and overbilled clients.
ment for the same work
raiser in Boston, Clinton ac-
Hubbell said the "distrac-
against a savings and loan tied
cused Republicans of practic-
The third-ranking official in
tions" of fighting his firm,
to Whitewater; Hubbell super-
ing "politics of personal
the Justice Department
which also claims he gave fa-
vised the work. The double-bill-
destruction" on Whitewater.
President Clinton's golfing bud-
vorable billing arrangements
ing apparently totaled $30,000.
And at her first uncontrolled
dy stepped down Monday,
to cases involving relatives,
Clinton learned from an aide
"press opportunity" in Denver,
as the Clintons took the offen-
would "interfere with my ser-
Sunday Hubbell was consider-
Hillary Clinton targeted the
sive on Whitewater.
vice to the country and the
ing quitting. Neither Clinton
media: "We lost money. Good-
Associate Attorney General
president's agenda."
tried to dissuade him, a clear
ness knows what you would be
Webster Hubbell quit to fight
The firm is expected to file
signal he should leave.
saying if we made money."
charges by Rose Law Firm -
formal charges imminently.
"We just have to take him at
where Hillary Rodham Clinton
The Associated Press re-
his word," Clinton said Mon-
Trouble at Justice, 5A
By Jayne O'Donnell
Credit shift
USA TODAY
Al
The popular GM Card got
TB here
that way partly by switching
consumers from other credit
cards without their knowledge.
drove
Household Credit Services,
prior to
which runs the card program
for General Motors, dumped
"several hundred thousand
Columbus
reasonably inactive or unprof-
GM card
Itable" accounts from its own
By Doug Levy
cards onto GM, says Household
USA TODAY
Al
Credit CEO Joseph Saunders.
He says Household made the
People can no longer blame
swaps late last year and now is
Columbus for bringing tubercu-
"not doing any more forced
losis to the New World.
Consumers unknowingly
conversions."
A 1,000-year-old mummy
The move is legal, but em-
has given scientists hard evi-
barrassing to the firms and ag-
dence that TB existed in the
helped fuel rapid success
gravating to some consumers.
Americas long before Europe-
GM downplayed the conver-
ans- and their diseases- ar-
sions, saying they were a small
rived in 1492.
percentage of the cardholders.
And the same genetic tech-
Saunders says Household's
nique used to find TB infection
consumers got letters saying
in a mummy also could pro-
they would be switched to the
vide clues to origins of AIDS,
Slow snow
GM Card unless they protested.
malaria and other diseases, say
But many apparently dis-
scientists in today's Proceed-
melt eases
carded the notices as junk mail
ings of the National Academy
and were surprised when GM
of Sciences.
Card statements arrived show-
DNA unique to the TB-caus-
flood fears
ing a balance transferred from
ing bacteria was found in lung
their previous credit cards.
tissue taken from the woman's
By Jack Williams
Al
"I guess some people don't
mummy, which was entombed
USA TODAY
read their mail very much,"
in southern Peru around the
Saunders says.
year 954.
Slowly melting snow contin-
The swaps triggered com-
"It means that TB was pre-
ues to reduce the flood risk for
plaints to the Federal Trade
sent in this hemisphere before
areas hit hardest by the Great
Commission: "All these years
Columbus came," says Dr. Wil-
Flood of 1993.
we've taught consumers that
mar Salo, University of Minne-
"That was a once-in-a-life-
they shouldn't be getting unso-
sota, lead author of the paper.
time event," says Frank Rich-
licited cards - then all of a
The researchers studied TB
ards of the National Weather
sudden millions were," says
first because they don't know
Service's flood office.
David Medine of the FTC.
exactly why the disease period-
But hydrologists say other
GM introduced the card in
ically resurges.
areas may not be as lucky.
September 1992, signing up 1
It had been on the decline in
Along the Minnesota-Dako-
million users in less than a
this century, even before effec-
TUESDAY, MARCH 15, 1994 USA TODAY
tas border and in the North-
month record time. And it
tive drugs were developed, and
east, the severe winter and
continues to grow fast, claim-
re-emerged as a major disease
deep snow has set the stage for
ing 9.1 million U.S. holders.
during the 1980s despite those
possible flooding this spring.
The GM Card is a Master-
drugs, says Salo.
In danger: parts of Pennsyl-
Card that gives discounts on
Without genetic evidence,
vania, New York, New Jersey
GM vehicles 5% of the
scientists have only been able
and New England.
amount charged on the card
to speculate about when TB
"This area has tremendously
each year, up to $3,500.
epidemics occurred, basing es-
large amounts of water sitting
Saturn cars aren't included;
timates on physical signs such
on the ground,' Richards says.
about 140,000 vehicles have
as the presence in human re-
been bought using discounts.
And any abnormally heavy
mains of lesions and spinal de-
rain in the next few weeks
GM Card's fast start attract-
formities linked to the disease.
could push streams just about
ed Ford, which teamed with
Now scientists are able to
anywhere east of the Rockies
Citibank the USA's largest
study tiny fragments of DNA
- including the Midwest
credit card issuer - last year
using a technique called "gene
out of their banks, he says.
to offer Visa or MasterCard.
amplification," or polymerase
Luckily, this week's dry, cool
Citibank gave the Ford card
chain reaction.
weather is reducing the flood
to many inactive Citibank cus-
The technique was devel-
danger in many places by
tomers, getting those nuisance
oped by Kary Mullis of La Jol-
"bleeding off the snow pack in
accounts off its books, accord-
la, Calif., who won last year's
bits and pieces," Richards says.
ing to credit-industry analysts.
Nobel Prize in chemistry for it.
Adding to the luck: The
Neither Ford nor Citibank
Using the technique on other
Weather Service's monthly
would comment.
diseases would require locat-
forecast says the odds favor
The swapping "makes busi-
ing and excavating ancient
drier than normal weather in
ness sense, but it's not very
burial sites so that tiny
much of the Midwest.
good from a PR perspective,"
amounts of tissue from numer-
says Robert McKinley of credit
ous bodies could be studied.
Mapping flood risk, 3A
card newsletter RAM Re-
"The potential is there to do
search. "Consumers don't like
it, but it is a difficult and c y
you to make their decisions."
undertaking." says Salo.
USA TODAY TUESDAY, MARCH 15, 1994 5A
WHITEWATER
Arkansas pals
Suddenly, for Reno,
find capital
it's lonely at the top
By Tony Mauro
tional Legal Center for the
USA TODAY
Public Interest.
inhospitable
As associate attorney gen-
The sudden departure of
eral, Hubbell oversaw most
Webster Hubbell on Monday
non-criminal aspects of the de-
leaves Attorney General Janet
partment's functions, including
Reno nearly alone at the top of
By Adam Nagourney
enforcement of civil rights, im-
poulos as he prepared to fly
and Bill Nichols
the Justice Department.
migration, tax, antitrust and en-
last-minute to New Hampshire
Hubbell was the No. 2 offi-
vironmental statues.
USA TODAY
to assist Clinton for a meeting
cial at the department. Reno's
"It's a very important posi-
with citizens where this subject
By title, Webster Hubbell
No. 3, Philip Heymann, re-
tion," says Boston lawyer
might well come up.
signed in January in a person-
was only the third-ranking offi-
Wayne Budd, who held the
Added Arkansas Democrat-
ality dispute.
cial at the Justice Department,
Gazette columnist John Brum-
same post during the Bush ad-
Defense Department coun-
ministration.
a world away from the White
mett: "Webb is a kind of fun-
House and President Clinton's
sel Jamie Gorelick, named to
"When you lose your No. 2
loving former jock - and
inner circle of advisers.
replace Heymann, has Senate
and 3 person in fairly rapid
Clinton's a sucker for people
In fact, the associate attor-
Judiciary Committee confir-
like that."
succession, it cuts your effec-
ney general, who quit Monday
mation hearing Wednesday.
Hubbell left in the expecta-
tiveness to some degree."
to fight complaints by his Little
Top department officials are
tion the Rose Law Firm was
While crime has occupied
Rock law firm of pilfering, was
described as traumatized by
much of the department's at-
about to bring charges against
Reuters
more than that: presidential
the turmoil, but Reno insists
him for overbilling clients and
tention, Hubbell was working
golfing buddy, the White
FACING FIGHT IN ARKANSAS: Associate Attorney General Webster Hubbell, right, with Attorney
the department "will go for-
on beefing up civil rights and
charging personal expenses
General Janet Reno and then-deputy Phil Heymann, quit Monday.
House's political point-man in
ward" nonetheless.
anti-trust enforcement after
against the law firm.
the Justice Department - and
Reno, who arrived in the job
The White House argued this
the Reagan-Bush years.
churning. It is no help that Hub-
Rose members - seem to
friend, said he had - with the
the person Clinton once said he
to accolades last year, has been
latest blemish had nothing to
He also was handling the po-
bell so much lends himself to
have been so befuddled by
death of his close friend Foster
most enjoys being with.
do with the White House or
unable to shake problems in
litically thorny issue of "civil
the Southern caricature that
Washington.
and now this - been wonder-
His departure at the best of
Whitewater. The Clintons
filling top positions - includ-
justice reform," aimed at re-
Washington always seem to be
"It's all these people here
times would have been a strike
about those same questions.
hadn't talked to Hubbell since
ing civil rights enforcement, a
ducing litigation and delay in
looking for: the backslapping,
who call it this town," said
"I don't think it's unfair to
at the presidential psyche. In
job unfilled until an appoint-
the courts. Some reform mea-
accusations surfaced March 1.
slightly shifty pol who finds the
Paul Begala, a consultant to
this supercharged environ-
put it that way," he said.
ment last month.
sures ruffle the feathers of the
And when Hubbell had his
big city unforgiving.
Clinton, in a disdainful remark
"It is unfair to make more out
Hubbell had two main roles:
ment, with the White House en-
friend U.S. Trade Ambassador
legal profession.
It smothered Clinton's ef-
about the establishment's ques-
of this than it is. Life some-
meshed in the Whitewater in-
An old Arkansas friend of
Mickey Kantor call the White
Hubbell, one-time mayor of
forts to change the subject, on
tioning of the trouble with Ar-
times has these kinds of occur-
vestigation, the difficulties
the Clintons, he was viewed as
House Sunday to say Hubbell
Little Rock and chief justice of
Monday, to job creation. And it
kansans: "It's just wrong to try
rences that are disappointing."
the White House's most trusted
encountered by yet another
was thinking about quitting,
the Arkansas Supreme Court,
raises yet again the question of
to use the fact that Webb Hub-
Said a somber Clinton: "This
member of the Little Rock
neither Clinton nor the first
person in the 96,000-employee
faced controversy when was
why Clinton's Arkansas friends
elite Clinton brought with him
bell had to go home and fight
is to me more of a personal
lady tried to dissuade him.
department. He won Reno's
first named to the Justice job.
who came to Washington - in-
out a fight with his partners to
deal for Webb Hubbell and his
took on a special resonance.
trust as well.
When criticized for his
No matter: The resignation
cluding Vincent Foster, the as-
cut up Arkansas."
"This is a sad day," said se-
many, many friends."
is, fairly or not, guaranteed to
"The White House is going to
membership in a country club
sociate counsel who killed him-
Chief of staff Thomas
nior adviser George Stephano-
keep the Whitewater story
sorely miss Webb Hubbell,"
that had no black members, he
self, and Hillary Clinton, both
McLarty, Clinton's boyhood
Hubbell resigns, 1A
says Ernest Heuter of the Na-
resigned his membership.
Antidote sought
for ailing poison
control centers
By Barbara Nachman
USA TODAY
INSIDE TV / BY PETER JOHNSON
They save lives. But the na-
tion's poison control centers
Ailes' Whitewater jokes
could use some life preservers
of their own.
don't amuse White House
The telephone network of 38
certified poison control centers
handle more than 2 million
To CNBC President Roger Alles, his remarks last week
calls a year involving acciden-
on a New York radio show were in good fun. "A joke and a
tal poisoning, drug overdose
non-issue," is all he'll say on the subject (via a spokesman).
and suicide attempts. About
But to White House officials, the former GOP consultant's
70% of the accidental poison-
flip comments - to shock jock Don Imus about President
ing calls are handled on the
and Hillary Rodham Clinton - warranted a call from Chief
phone by counselors. Others
of Staff Thomas McLarty to NBC President Bob Wright.
are referred to local hospitals.
Wright and NBC News execs were said to be concerned
But the centers from Wash-
because Alles' comments came at a time when all the net-
ington, D.C., to Fresno, Calif.,
work newsmagazines want-
are plagued by financial cut-
ed a prime-time interview
backs and are being forced to
with the Clintons to discuss
reduce services and even shut
the Whitewater case.
down. Originally most were
As the newsmags are
hospital-backed but now seek
scrambling for top inter-
funds from many sources, in-
views, execs worried that
cluding tax money. Their plight
even though Ailes has no
is the focus of a news confer-
role within NBC News, It
ence in Washington, D.C., this
could affect the chances of
morning marking National
Dateline NBC and Now.
Poison Prevention Week.
Alles - who joked about
"We've hit the crisis mode,"
the Whitewater case and
says Dr. Tom Kearney, direc-
the Vince Foster suicide -
tor of the San Francisco Bay
spoke with Wright and NBC
Area Regional Poison Control
News President Andy Lack
Center. "This is not a threat,
about his remarks.
he says. "It's not hypothetical.
In the end, the White
AILES: He says his radio
It's happening."
House opted to have Hillary
remarks are 'a non-issue.'
The center in Washington,
Clinton talk to newsmaga-
D.C., may close later this year.
zines and White House counsel Lloyd Cutler make the
Unless a new sponsor is
rounds on all three network Sunday morning news shows.
found, the center in Fresno will
Alles' comments "were said in the context of a comedy ra-
close in the spring of 1994.
dio show," said NBC spokeswoman Mary Neagoy. "That's
The Irvine, Calif., center
the way we're treating it here."
closed in 1993, leaving 5.5 mil-
lion people without services.
PETE & TOM, PRIMOS: ABC's Peter Jennings
In 1992, the American Asso-
and NBC's Tom Brokaw are in a dead heat as the nation's
ciation of Poison Control Cen-
most popular news anchors, a new Harris Poll of 1,252
ters reported 2.4 million calls
adults shows. Jennings slipped from last year but Brokaw
concerning poison exposures.
has climbed. CBS' Dan Rather is third, but is positioned to
More than 1 million involved
challenge if either slips. In 1992 and 1993 polls, Jennings
children under 6. About 70% of
was the most popular - 11 points ahead of his nearest rival
those children were treated at
in '92 and 8 points ahead in '93. In those years, Brokaw and
home. All but 30 survived.
Rather were in a virtual tie for second. Now, 30% prefer
Jennings, 29% Brokaw and 24% Rather. CNN's Bernard
Success stories, 4D
Shaw has slipped slightly. Only 10% prefer him, compared
with 13% in '92 and 12% in '93. The poll has as margin of
error of plus or minus 3 percentage points.
IRONY DEPT.: CNN's Peter Arnett, long on record
as opposing any muzzling of the press by the military, found
that his speech at a conference on media-military relations
was closed to the media. An official at the Naval War Col-
lege in Newport, R.I., said the ban was imposed so that lec-
turers could speak more freely. Arnett, who spoke there
last week, gave a copy of his March 10 speech to a reporter
for the Newport Daily News. Said Arnett: "In a world
where information is proliferating and eagerly dispensed
and sought, it seems to me pathetic that United States mili-
TUESDAY, MARCH 15, 1994 USA TODAY
tary authorities sometimes are so hostile to the press."
BRIEFLY: Nancy Kerrigan's appearance gave NBC's
Saturday Night Live its highest overnight ratings in six
years, with 30% of viewers tuning in. CBS says David
Letterman's Late Show will have 83% live clearance, airing
immediately after the late local news, by April, up from
67% when Late premiered last fall Meanwhile, comedi-
an Rosie O'Donnell says Fox offered her Chevy Chase's
late-night slot, Buena Vista wanted her for a syndicated talk-
er and NBC talked to her about taking over for Bob Costas.
O'Donnell tells Glamour the one show she would've taken
- but was never offered - was Letterman's old gig NBC's
Late Night. Finally, we move from Glamour to Allure,
where Katie Couric says she still shops the outlets "but I
don't go to Loehmann's as much. They have communal
dressing rooms and now that I'm recognized I'd just as soon
not be checked out in my underwear.'
87
Hubbell resigns post,
cites 'distractions'
Sen. Alfonse M. D'Amato, New
His Rose Law Firm billing
York Republican, said yesterday
that Mr. Hubbell's resignation was
necessary.
remains under investigation
"All these FOBs. as the press
calls them, came here from Little
Rock; what they have really
By Jerry Seper
A
HUBBELL
brought is a cloud over the White
House.
The smelly aroma of
and Michael Hedges
Little Rock has now clouded the
THE WASHINGTON TIMES
From page Al
Justice Department and has cer-
tainly tainted it, and has brought
Associate Attorney General
in what administration sources
real problems to the credibility of
Webster L. Hubbell, under fire
said was an effort to "buck him up,"
the White House as well," said Mr.
over his billing practices while a
said his longtime friend "wants to
D'Amato, who has called for Sen-
partner at Little Rock's Rose Law
go home and defend himself and
ate hearings in the Whitewater-
Firm. yesterday became the sec-
work through this thing."
Madison affair.
ond key Clinton administration of-
Accusations against Mr. Hub-
House Minority Whip Newt
ficial to fall as a result of the
bell for overbilling magnified last
Gingrich, Georgia Republican,
ongoing Whitewater-Madison in-
Wednesday when investigators
said yesterday that the Hubbell
vestigation.
from two federal regulatory agen-
resignation underscores the need
Mr. Hubbell's resignation, effec-
cies went to the Rose firm for an
for congressional hearings into
tive "as soon as possible," was an-
"entrance meeting" to set up pro-
Whitewater-Madison.
nounced yesterday by Attorney
cedures for a review of bills
Madison, owned by James B.
General Janet Reno.
signed by Mr. Hubbell in a case
In recent days, pressure had
McDougal, was seized by federal
involving Madison Guaranty Sav-
regulators in 1989 at a cost to tax-
been building on Mr. Hubbell -
ings and Loan Association, offi-
whose Rose partners included
payers of $50 million. Mr. McDou-
cials said.
first lady Hillary Rodham Clinton
The investigators, from the Res-
gal and his then-wife, Susan, were
and former White House Deputy
olution Trust Corp. (RTC) and the
partners with the Clintons in
Counsel Vincent W. Foster Jr.
Federal Deposit Insurance Corp.
Whitewater Development Corp., a
over his suspected overbilling of
north Arkansas real estate ven-
(FDIC), were to begin analyzing
Rose clients. including the federal
the bills in the next few days, the
ture.
government.
officials said. The investigators al-
Special counsel Robert B. Fiske
"There are no words capable of
ready had received one specific
Jr. is looking into suspected finan-
fully conveying to you my deep re-
accusation of a $30,000 double bill-
cial irregularities involving both
spect and admiration for Webb
Madison and Whitewater, includ-
ing involving Mr. Hubbell.
Hubbell or how sad this event
"We have heard about the dou-
ing the diversion of funds by Mr.
makes me." Miss Reno d. "I can
ble billing, including that $30,000
McDougal to Mr. Clinton's 1984 gu-
say unequivocally that Webb Hub-
allegation, and we are following
bernatorial campaign.
bell gave fully of himself o make
that up in our audit," said one fed-
Mr. Fiske's 115 subpoenas in-
America a better place."
eral regulator. Overall, several
clude one seeking material on Mr.
Mr. Hubbell. in a statement, said
hundred thousand dollars worth of
Hubbell's father-in-law, Seth Ward,
he decided over the weekend that
bills signed by Mr. Hubbell were
who borrowed $587,000 from Mad-
his continued service in the Jus-
ison and was an officer of a Madi-
to be scrutinized by regulators.
tice Department's No. 3 post would
A review by The Washington
son subsidiary, Madison Financial
A source at the firm told The
not be effective because the "dis-
Corp.
Times last week that several part-
Times of some of Mr. Hubbell's
Mr. Ward's name also has sur-
ners believe Mr. Hubbell has
tractions on me at this time" would
government bills in a case involv-
interfere with "my service to the
faced in an internal audit of Mr.
"stonewalled" them in their efforts
ing Madison shows that on at least
country and the president's agen-
two occasions he charged the gov-
Hubbell's billing by Rose part-
to get information on his billings,
da."
ners, disclosed last week by The
and about his involvement in the
ernment for a full day's work at
$125 an hour while he actually was
Times and the Minneapolis-St.
1989 FDIC lawsuit
"It is with deep regret that I
have seen private issues between
Paul Star Tribune.
Frustration over the matter
playing golf at the Little Rock
me and my family and my former
Country Club.
The Wall Street Journal re-
built to the point that the par
law firm elevated to public specu-
ported yesterday that the partners
have talked with Houston lawyer
According to at least one accu-
lation," he said.
Walter Stuart IV to discuss the
sation federal regulators are prob-
had questioned $1 million in ex-
Nine days ago. White House
possibility of filing an ethics c
ing, Mr. Hubbell - as the lead at-
Counsel Bernard W. Nussbaum
penses and unbilled time charges
plaint against Mr. Hubbell with the
torney submitted a bill in the
and had additional concerns about
also resigned after it wa: learned
Arkansas Supreme Court's c
Madison-related case for $2,400.
he had attended secret meetings
Mr. Hubbell's personal expenses.
mittee on Professional Conduct.
The firm later included the same
between government regulators
The Journal said the partners
The most dissatisfied group re-
$2,400 as part of a larger $27,000
were upset about Mr. Hubbell's
looking into the Whitewater-
mains Mr. Hubbell's former part-
bill to the government. That
representation of P.O.M. Inc., a
ners. ho paid him more than
Madison affair and White House
$27,000 was resubmitted in yet an-
parking-meter firm in Russell-
$100.00 и hen he cashed in his in-
officials.
other bill for $80,000, covering an
ville, Ark., established by Mr.
President Clinton said yester-
terest If the firm before coming to
extended period.
Ward - with the help of a $2.75
Washington in late 1992, then dis-
day that Mr. Hubbell did the right
Beginning in 1989, Mr. Hubbell
million tax-exempt bond approved
thing in resigning and then said
covered the extent of the billing
handled the court case for the
by Gov. Clinton.
problems
four times: "I hope it was the right
FDIC against Madison's Little
P.O.M. Inc., now run by Mr.
Mr. Hubbell has denied any
decision."
Rock auditors, Frost & Co., in
Ward's son, Seth Ward II, was in-
Speaking to reporters at Bos-
wrongdoing in connection with
which the government settled for
cluded in the Fiske subpoenas.
overbilling accusations. If found to
ton's Logan Airport as he arrived
much less than it sought and less
The Rose firm's internal audit,
have billed clients or his firm for
for a political rally, Mr. Clinton
than the firm's insured coverage.
which Mr. Hubbell described in
said. "I just think we have to take
personal expenses, he would face
The suit said the Frost audit of
his statement as "disputes over
him at his word. give him a chance
Madison was bogus. In 1985, Hil-
consequences ranging from pro-
compensation and reimbursement
to deal with this and see what hap-
fessional sanctions to criminal
lary Rodham Clinton and the Rose
matters," began after some part-
fraud prosecution.
pens.
firm represented Madison in ef-
ners suggested he had failed to
"I have no knowledge of the
forts to block its closure by Arkan-
document hundreds of thousands
facts. but based on my knowledge
sas bank regulators who were un-
of dollars in expenses billed to cli-
I find [any wrongdoing] hard to
der the dominion of Gov. Clinton,
ents.
believe," he said. "He's one of the
using the Frost audit to justify
most widely esteemed people that
keeping the S&L open.
I've ever known."
Records released by federal
Mr. Clinton. who called Mr. Hub-
regulators earlier this year show
bell from a ferry in Boston Harbor
Mr. Hubbell signed all the Rose
The Washington Times TUESDAY, MARCH 15, 1994
bills sent to the government on the
see HUBBELL. page A9
Madison-Frost case. The firm was
paid $400,000 to represent the
FDIC.
92
HUBBELL AT JUSTICE
A chronology of Webster L. Hubbell's troubles
as associate attorney general.
February 1993: While serving a temporary 120-day appointment with
no title at the Justice Department, Hubbell is accused of intervening in
the retrial of Rep. Harold E. Ford, Tennessee Democrat, reversing the
department's position on a jury-selection issue.
April 1: Attorney General Janet Reno announces the selection of
Hubbell as associate attorney general, calling him "one of the great
men in America."
April 19: On the day of the government's tear-gas assault on the
Branch Davidian compound near Waco, Texas, Reno says that Hubbell,
and not she, was in communication with President Clinton about the
assault.
May 18: Hubbell tells the Senate Judiciary Committee that he resigned
his membership from the exclusive Country Club of Little Rock because
it allowed only one black member to join during his 15-year
membership.
May 18: The Washington Times reports that over a 90-day period in
1983, Hubbell made a $3,500 profit from a $9,100 investment in the
stock of Arkansas-Louisiana Gas Co., a firm whose executive vice
president was Thomas F. "Mack" McLarty, now the White House chief of
staff.
Sept. 29: The Washington Times reports that Hubbell helped engineer
a nursing home deal that lowa authorities criticized as a profiteering
scheme.
Nov. 10: Hubbell recuses himself and his staff from the Justice
Department's Whitewater investigation. Hubbell's father-in-law, Seth
Ward, was an executive at a Madison real estate subsidiary, and
defaulted on two Madison loans, totaling $587,793. In 1989, Hubbell
served as the Rose Law Firm's lead attorney representing the Federal
Deposit Insurance Corp. in a suit against the accounting firm Frost &
Co. Frost had prepared the audit of Madison Guaranty used by Rose
lawyers four years earlier in successfully arguing the case for Madison's
continued operations.
The Washington Timestuesday, MARCH 15, 1994
March 2, 1994: The Washington Post reports that the Rose Law Firm
has been investigating whether Hubbell overbilled clients and then
used the money for personal expenses. Hubbell confirmed that his
former partners questioned him about his billing practices. but he
denied ever overbilling any clients.
March 5: The Washington Times reports that Hubbell billed taxpayers
more than $20,000 for work on a Madison Guaranty Savings and Loan
Association matter during one 20-day period in August 1990, despite
his contention that he had only "indirect" involvement in the case
March 11: The Washington Times reports that Hubbell's former
partners at the Rose Law Firm are considering filing ethics charges
against him after an internal probe found that he failed to document
hundreds of thousands of dollars in expenses billed to clients.
The Washington Times
Letters note no end to friendship
THE WASHINGTON TIMES
"I am proud of the reputation
"It is with profound sadness
Text of Associate Attorney
I have established over the past
and regret that I accept your res-
General Webster L. Hubbell's let-
20 years as a private lawyer, Ar-
ignation as Associate Attorney
ter of resignation to President
kansas Supreme Court Justice,
General.
Clinton, dated yesterday:
public official, and private citi-
zen. Unfortunately, because of
"I know better than anyone the
"For over a year, I have had the
public speculation about me and
spirit of citizenship and devotion
privilege of serving you, the At-
my former law firm, I will have
to the law that inspired you to join
torney General, and the nation at
our Administration and to take
to spend a significant amount of
the Department of Justice. I am
part, as Holmes said, in the ac-
my personal time on an internal
deeply grateful and honored for
matter with my former partners.
tions and passions of our time. In
this opportunity to serve as the
I am confident of the outcome.
the last year, these values came
Associate Attorney General of
"I will leave the Department of
shining through as you worked
the United States. I have tried to
Justice with great admiration for
for civil justice reform and immi-
serve with honor and distinction
the attorney general, high regard
gration enforcement, fought to
and to follow your lead in trying
for the professionalism and dedi-
end discrimination in public
to make a difference in the every
cation of its employees, and with
housing, and to protect the civil
day lives of the American people.
great pride in the Department's
and voting rights of all Amer-
icans.
"As a public servant, I owe it to
accomplishments during the
you and to the American people
past year.
"In these tasks you affirmed
to evaluate constantly whether
"Public service has always
our commitment to justice, al-
my continued service can be as
been one of the greatest joys of
ways with keen judgment and
effective as you would expect of
my professional life. It is my sin-
good humor, especially at vital
me, whether it furthers or dis-
cere hope and belief that by de-
times of challenge for the De-
tracts from your agenda, and
voting sufficient time and en-
partment. The Attorney General
what effect being in the public
ergy now to my family and other
and I will miss the service and
eye is having on my family and
private issues, I will reenter pub-
advice you gave us. And I know
colleagues. Over the past week-
lic service in the future. Thank
your accomplishments in office
end I have undertaken such an
you for allowing me such a won-
will outlast any interest in the
evaluation, and I have decided to
derful opportunity and, most of
private matters that have arisen
submit my resignation as Associ-
all, thank you for your friend-
from your prior law practice and
ate Attorney General. My resig-
ship."
that motivated the difficult de-
nation shall be effective as soon
Text of President Clinton's let-
cision you announced today.
as possible, allowing the At-
ter, dated yesterday, accepting
"Like you, I hope that you will
torney General the time to effect
a smooth transition at the Justice
the resignation of Associate At-
return one day to public service.
Department.
torney General Webster L. Hub-
I remain, as always, grateful for
bell:
your long and lasting friendship."
93
Whitewater issue won't wash away
By Paul Bedard
by it," said a senior administration
A
tum yesterday with the surprising
and Mrs. Clinton to Colorado to
THE WASHINGTON TIMES
official. "Whitewater has been a
and embarrassing resignation of
tout the Clinton health care reform
distraction to those who work in
Associate Attorney General Web-
The White House is desperately
plan - but they were confronted
this building."
ster L. Hubbell - President Clin-
trying to keep its focus on Pres-
with more questions about White-
NEWS
"There's a
ton's golfing pal and close adviser
ident Clinton's domestic policy
water-Madison and the Hubbell
recognition
and a former partner of Hillary
agenda, but top aides conceded
ANALYSIS
casualty.
Whitewater is
Rodham Clinton's in Little Rock's
yesterday that they are losing out
The resignation knocked Mr.
going to be a
Rose Law Firm.
to the growing Whitewater-
Clinton's summit off the front page
continued problem," said senior
The Clintons took to the road
Madison affair.
Clinton counselor David Gergen.
and again trained the media spot-
yesterday - Mr. Clinton to an in-
"Everybody has been consumed
That concern gathered momen-
ternational jobs summit in Detroit
see ISSUE, page 10
ISSUE
doing in the Whitewater-Madison
ivete and a lack of experience here
tons' personal attorney, who
Mr. Gergen, a former aide to
ident telling his aides.
affair, a senior administration offi-
that we're trying to fix," a senior
authorities said committed sui-
President Reagan, said the White
Mr. Clinton has taken steps to
From page Al
cial said. Mr. Hubbell, who had
Clinton administration official
cide. White House officials, led by
House staff "is rallying around"
keep to his agenda. Before leaving
been at Justice for more than a
said.
Mr. Nussbaum, removed White-
the Clintons.
for the Detroit jobs summit Sun-
light on Mrs. Clinton and her Rose
year, was considered Mrs. Clin-
Mr. Gergen said in a telephone
water files from Mr. Foster's office
He rejected any description
day, for example, he invited
colleagues just a day after White
ton's department watchdog.
interview that no staff changes are
shortly after his death.
that the White House was reeling
Uruguay's president into the Oval
House officials thought they had
The resignation also fueled Re-
planned, but another official said
Administration officials said
from Whitewater-Madison. "Reel-
Office for a meeting that delayed
turned the corner in fighting
publican attacks on the Clinton
"it's too early to tell what changes
yesterday it has become clear that
ing is panic, and that's not what I
his departure to Andrews Air
Whitewater-Madison reports.
White House and calls for congres-
are in store."
the Little Rock "mafia" closely as-
sense here," he said.
Force base 30 minutes.
Mr. Hubbell's resignation came
sional hearings into Whitewater-
Other sources said that Mrs.
sociated with the first lady has ex-
To overcome the Whitewater-
amid a flurry of reports about his
Madison, which have thus far been
Clinton's power in the West Wing
ploded, leaving her somewhat iso-
Madison hurdle, Mr. Clinton has
"He's told us not to get too pre-
representation of the federal gov-
blocked by Democrats in the
was being diluted because of
lated.
told aides in senior staff meetings
occupied with what's going on in
ernment in a lawsuit against Ar-
House and Senate.
the focus on her part in the
Her remaining Rose ally, White
to ignore the burgeoning contro-
the press," said a national security
"All the resignations in the
aide.
kansas' failed Madison Guaranty
Whitewater-Madison affair. In ad-
House Associate Counsel William
versy and push his programs to
Savings and Loan Association and
world will not lift the dark specter
dition, senior Clinton advisers be-
Kennedy III, has been under fire
reform health care and welfare.
Mr. Gergen said that the latest
overbilling of clients. Madison's
that has settled over the Clinton
lieve she has hurt the president
for months and has seen his influ-
During an East Room rally last
efforts in the White House to deal
owner was a partner of the Clin-
presidency," said Sen. Lauch Fair-
with her stubbornness in resisting
ence dry up as a result, according
week announcing Lloyd Cutler as
with the Whitewater-Madison cri-
tons' in Whitewater Development
cloth, North Carolina Republican.
calls for a Whitewater-Madison
to the officials.
Mr. Nussbaum's replacement, Mr.
sis shows "we've turned the page
Corp.
The political hemorrhaging of
special counsel, compounded by
But sources close to Mrs. Clin-
Clinton told White House staffers
in how we're handling White-
The Hubbell resignation, com-
the Whitewater-Madison affair has
her close relationships to Mr.
ton disputed reports that the first
that he did not want them to be-
water."
ing nine days after the resignation
left Mr. Clinton's top aides ques-
Nussbaum and Mr. Hubbell.
lady was seeing her role lessened.
come discouraged or divert atten-
But other aides said it is un-
of White House Counsel Bernard
tioning their handling of the grow-
Added to those problems is the
They noted that she has led the
tion from the agenda.
likely they can stem the daily bar-
Nussbaum, "splatters mud on us"
ing controversy and considering
July death of White House Deputy
latest effort to explain the Clinton's
"I'm not going to do anything to
rage of Whitewater-Madison news
and "feeds the suspicion" that the
changes.
Counsel Vincent W. Foster Jr., an-
involvement in Whitewater-Madi-
screw up this job," a senior admin-
reports and politically charged
White House is involved in wrong-
"There has been a level of na-
other Rose partner and the Clin-
son.
istration official recalled the pres-
attacks.
The Washington Times TUESDAY, MARCH 15, 1994
H bbell Resigns
erable upheaval. Hubbell had almost
singlehandedly managed large por-
At Justice Dept. in
tions of Justice, developing a close
working relationship with Reno and
emerging as the principal source of
contact with the White House on
Law Firm Dispute
major policy issues ranging from the
crime bill to immigration reform.
Within the Justice Department,
"the reliance [on Hubbell] was close
By Michael Isikoff
Washington Post Staff Writer
Al
ners have lingering discussions and
to complete for everything that in-
even disputes over compensation
volved the White House," said Hey-
and reimbursement matters; the
mann. Although Heymann had previ-
Associate Attorney General Web-
Rose Law Firm and I are having
ously complained about some
ster L. Hubbell abruptly resigned
such discussions now. I am confident
aspects of Hubbell's role, he said
yesterday after he was unable to re-
that at the conclusion of these dis-
yesterday his former colleague was
solve disputes with his former part-
cussions all outstanding matters will
an "honorable man" and that his res-
ners at the Rose Law Firm in Little
be resolved satisfactorily."
ignation "will leave a big hole in the
Rock, Ark., over allegations he over-
Hubbell and his lawyer, John
Department of Justice."
billed clients and charged the firm
Nields, sought to negotiate a resolu-
Hubbell appeared at the Justice De-
for hundreds of thousands of dollars
tion with the Rose firm over the
partment auditorium yesterday and
in improper expenses.
weekend, but were jolted when they
said it had been a "great honor" to
The resignation of Hubbell, 46, a
found the Rose partners refusing to
serve at Justice. He received an emo-
close friend and frequent golfing
budge, according to knowledgeable
tional and prolonged standing ovation
partner of President Clinton and a
sources. Fearing that the dispute,
from largely career lawyers. Many of
former law partner of Hillary Rod-
which was made public in The Wash-
the lawyers were "angry and bitter"
ham Clinton, stunned officials at the
ington Post March 2, would quickly
over "whatever it is in this town that
Justice Department where the for-
escalate and embarrass the adminis-
is forcing him to leave," said one offi-
mer Little Rock mayor had been a
tration, Hubbell alerted special trade
cial close to Hubbell.
preeminent figure and, according to
representative Mickey Kantor on
But Republicans were less chari-
officials there, a major stabilizing
Sunday that he might step down.
table. Sen. Alfonse M. D'Amato (R-
force.
After hearing reports from Nields
N.Y.), a leading critic of the adminis-
Hubbell, who said the Rose firm
on his talks with the Rose partners,
billing dispute would become a dis-
Hubbell concluded "it was going to
tration handling of Whitewater,
traction from his public duties, is the
be virtually impossible to resolve
called the president's friend "a politi-
this while he was still in the public
cal hack" and said of his departure:
third high-ranking administration
lawyer to resign in recent weeks.
eye," said one source close to Hub-
"good riddance
He has certainly
White House counsel Bernard Nuss-
bell. "He found it hard to believe that
tainted the Justice Department. The
baum departed after bringing heavy
John [Nields] was not able to get this
stench that started in Little Rock
criticism on the White House with
thing over with. There was this
has made its presence felt here."
his handling of the Whitewater affair
sense that there was something go-
At first, the Rose firm's inquiry
and the suicide of his one-time depu-
ing on in Little Rock that he couldn't
focused on Hubbell's role in handling
ty, Vincent Foster, also a former
control."
a complex patent infringement case
Rose firm partner. Last month, Dep-
After The Post story, Hubbell as-
on behalf of P.O.M. Inc, a parking
uty Attorney General Philip B. Hey-
sured senior White House officials and
meter manufacturer owned by his
TUESDAY, MARCH 15. 1994 WASHINGTON POST
mann resigned, L. ng bad "chemis-
Reno that the law firm dispute was
try" with Attorney General Janet
relatively minor and that he had done
in-laws, on a contingency fee basis.
nothing wrong. Those assurances
Hubbell ran up several hundred
Reno.
thousand dollars in travel and other
Foster and Nussbaum were par-
were accepted without question and
ticularly close to the Clintons as
yesterday, top administration officials
expenses. But after the firm was al-
well, and the controversies sur-
rallied to praise Hubbell.
legedly assured that Hubbell's in-
rounding all three men have been
Reno called Hubbell a "tireless
laws would take care of the expens-
especially painful for the president
crusader for doing the right thing,"
es, Rose partners were upset to lat-
and Hillary Rodham Clinton. The
and said she was confident he had
er learn that was not the case and
First Lady said yesterday she was
done nothing wrong.
that they were being stuck with oth-
"personally deeply saddened for
Initially viewed largely as a crony
er unpaid bills for patent lawyer and
Webb and his family." The president,
of the president's, Hubbell was in-
expert witnesses Hubbell had hired
volved in a series of controversies at
to assist in the case.
according to a senior administration
the Justice Department last year and
official, spoke briefly with Hubbell
The firm later began looking into
was repeatedly accused by Republi-
and tried to "buck him up." Clinton
other Hubbell billing arrangements
cans of injecting politics into such
and found instances that it believed
earlier told reporters that Hubbell
decisions as the mass dismissal of
made "the right decision."
showed their former partner had ov-
U.S. attorneys last March. But since
Knowledgeable sources said Hub-
erbilled other clients and spent law
being confirmed last spring as asso-
bell, the Justice Department's No. 3
firm money to pay for personal ex-
ciate attorney general, Hubbell was
official, reached his decision after
widely seen as a stabilizing influence
penses-allegations that Hubbell
has denied.
learning that the Rose firm partners
in a department experiencing consid-
were planning to discuss at a regular
monthly meeting yesterday whether
WEBSTER L. HUBBELL
to file a complaint against him with
1973: Receives law degree from University of
the Arkansas Bar Association and a
Arkansas; joins Rose Law Firm.
lawsuit seeking compensation for
the disputed expenses and billings.
1979-1981: Mayor of Little Rock.
-
The results of that meeting were
1984: Chief justice of Arkansas Supreme Court for
unclear, but among the issues in dis-
four months, appointed by then-Gov. Bill Clinton.
pute, sources said, were allegations
1985: Rose Law Firm (including partner Hillary
that Hubbell overcharged a federal
Rodham Clinton) represents Madison Guaranty
agency, the Resolution Trust Corp.,
Savings & Loan seeking state regulatory approval
and improperly charged the firm for
for plans to raise new capital, using Frost & Co.
more than $500,000 in litigation ex-
audits to make case.
penses relating to an unsuccessful
1989: Madison fails at estimated $60 million cost to taxpayers. Rose
contingency fee lawsuit he filed on
firm (with Hubbell as lead attorney) hired by RTC to seek damages
behalf of a firm headed by his father
from Frost & Co. relating to audits. RTC staff raises questions of
in law, Seth Ward.
possible conflict of interest.
"It is with deep regret that I have
seen private issues between me and
1993: May 28-Sworn in as assistant attorney general.
Nov. 3-Recuses himself from Whitewater investigation.
my family and former law firm ele-
vated to public speculation," Hubbell
1994: March 2-The Washington Post reports Rose Law Firm probe of
said in his statement. "From time to
Hubbell client billing and expenses.
time law firms and departing part-
Yesterday-Hubbell resigns.
-Compiled by Margot Williams
THE WASHINGTON
Clinton Angrily Denounces Republicans
Party Is 'Committed to Politics of Personal Destruction,' President Says
By Ruth Marcus
Al
resignation of one of his closest
'No, No. No, No. No, No. No. No,
Washington Post Staff Writer
friends, Webster L. Hubbell. as associ-
No,' Clinton asked, his voice rising
ate attorney general. Hubbell said he
and his fist pounding the lectern with
BOSTON, March 14-President
left because of his inability to resolve
increasing power with each of the nine
Clinton lashed out tonight at his Re-
a dispute with former law partners
"No's."
publican critics, assailing them as
over allegations he overbilled clients
Clinton said there had been some
members of a party "committed to a
and was reimbursed for improper ex-
politics of personal destruction" who
cooperation from Republicans on is-
penses.
would "rather take off after" First La-
sues like crime and for a while on
Clinton started tonight's speech
dy Hillary Rodham Clinton than come
health care. But he then said, "This
sounding subdued and almost de-
up with a health plan of their own.
pressed. but frustration and anger
overriding, negative, intensely per-
Clinton's outburst came at a
quickly flashed through. The country
sonal, devoid-of-principle attack is not
$1,000-a-plate Democratic Party
is facing "profound problems" that
good for the country. It is inconsistent
fund-raiser here that ended a day in
"beg for debate," he told the audience
with the tradition of Abraham Lincoln
which the president tried to talk about
of 900.
and Theodore Roosevelt."
creating jobs but again found his mes-
"Why, then. are we confronted in
Clinton contrasted this Republican
sage drowned out by another problem
this administration with an opposition
partisanship with what he said was the
in his administration-this time the
party that just stands up and says,
See PRESIDENT, A8, Col 1
PRESIDENT, From A1
cooperative stance he had maintained
with his Republican predecessors.
"When I was a Democratic gover-
nor and they had the White House I
constantly sought them out, engaged
them in debate, offered to work with
them on issues from education to wel-
fare reform to you name it," Clinton
said, slashing his hand through the air.
"I never did them the way they are do-
ing us in Washington, D.C. It is wrong
and it is not good for the United
States of America."
Clinton's temper is renowned
among those who work for him, and it
occasionally surfaces in public. During
the campaign. for example, he was
captured on camera assailing the Rev.
Jesse Jackson for a "back-stabbing
thing to do" when he believed, incor-
rectly as it turned out, that Jackson
had endorsed his primary opponent,
Sen. Tom Harkin (D-Iowa).
The appearance of his temper to-
night followed weeks of news reports
about his Whitewater real estate in-
vestment and related matters, and
Republican demands, first for a special
counsel to investigate Whitewater is-
sues and now for congressional hear-
TUESDAY. MARCH 15, 1994 WASHINGTON POST
ings. Six senior White House officials
have been subpoenaed by special
FINAL
counsel Robert B. Fiske Jr., and Hilla-
ry Clinton has come under increasing
scrutiny over her role, both as a law-
yer in Arkansas and as a political pow-
er at the White House.
The frustration that Clinton ex-
pressed was evident among his fellow
Democrats here last night as well.
Sen. John F. Kerry (D-Mass.), declar-
ing himself "amused" by the Republi-
cans' choice of Sen. Alfonse M. D'A-
mato (R-N.Y.) as their "spokesman on
ethics," added, "I guess Bob Packwood
was busy," a reference to the Oregon
Republican who finds himself facing an
ethics committee inquiry into charges
of sexually harassing aides and others.
2
I illary Clinton
Madison Guaranty Savings & Loan, which was owned
by the Clintons' business partner.
Throughout her visit, which included speeches at
the University of Colorado in Boulder and to a health
Steps Back From
care reform conference, she was greeted by enthusi-
astic crowds, who appeared to have little interest in
the issue that has dominated the news in Washington
$69,000 Figure
recently.
She said the public never asks her about White-
water and predicted that the growing political war-
fare over Whitewater would not hamper the adminis-
First Lady Says Couple Lost
tration's efforts to pass health care reform in
'Bunch of Money' on Whitewater
Congress.
"The overwhelming majority of Americans want
health care reform and they want it now," she said.
By Dan Balz
Asked today whether she stands by a report pre-
Washington Post Staff Writer
pared for the campaign in 1992 that said she and the
president lost $69,000 on Whitewater, she said, "We
DENVER, March 14-First Lady Hillary Rodham
know we lost money and lost a bunch of money for
Clinton today appeared to back away from previous
us. We're trying to get exact figures and will be giv-
assertions that she and President Clinton lost
ing information we come across
to the special
$69,000 on their investment in the Whitewater land
counsel. That's what we believe our primary obliga-
development company, but insisted they "lost a
tion is, and that's what we're doing."
bunch of money" and maintained they have consis-
Over the weekend, there were reports that the
tently told the truth about the matter.
Clintons may have additional tax liabilities because of
On a one-day visit to Colorado to promote the ad-
certain deductions they claimed. Asked to explain
ministration's health care reform plan, the First Lady
why they might owe more taxes on a losing invest-
once again acknowledged that she has mishandled
ment, she said, "You're just going to have to wait
the issue.
along with everybody else as we work this through
"I have tried to be as understanding as I can about
with the special counsel and try to figure out what we
the concerns and questions of the press," she said
are obligated to give him and what kinds of questions
during a brief news conference, "and I've admitted
we have to answer in that process."
that I made mistakes in how I have perceived this
At her appearances, she was given something of a
and handled it."
hero's welcome by cheering students and health care
But she asserted: "When this is over it's going to
professionals. Ren. Patricia Schroeder (D-Coln) in
Jesse Jackson for a "back-stabbing
thing to do" when he believed. incor-
rectly as it turned out, that Jackson
had endorsed his primary opponent,
Sen. Tom Harkin (D-Iowa).
The appearance of his temner tn-
survy mary, and defended her as someone who "on-
Clinton's trip here today marked her first outing
ly wanted power to help somebody, not to be some-
since White House aides were subpoenaed by special
body."
counsel Robert B. Fiske Jr. and came amid growing
She said Hillary Clinton has "a heart the size of a
questions about her role in the Whitewater develop-
washtub," compared to most others in Washington
ment firm and in her representation of the failed
who have one "the size of a swollen pea."
Environment Unit Impropriety Rejected
By Jim McGee
oversight and investigations that Sep-
view will be addressed at the appro-
Washington Pint Staff Wrate
tember, the department was accused
priate time."
of "failure to pursue aggressively a
Last Friday, the subcommittee
A nine-month internal review at
number of significant environmental
subpoenaed various Justice docu-
the Justice Department has rejected
cases."
ments relating to the six cases and in-
charges made by the Clinton-Gore
In October 1992, the Clinton-Gore
ternal department documents related
campaign in 1992 that the Bush ad-
campaign charged the Bush adminis-
to the congressional inquiry.
ministration had undermined prosecu-
tration with "letting criminals off the
tions against alleged environmental
hook after they pollute our air and our
Although the department's review
polluters. But the inquiry concluded
water and our land
[and]
letting
largely vindicated the professional
that "pervasive distrust" among pros-
politics get in the way of prosecu-
judgments of Environmental Crimes
TUESDAY. MARCH 15. 1994 WASHINGTON POST
ecutors has become so severe that se-
tions, protecting their rich corporate
Section chief Neil S. Cartusciello and
mor managers should step in.
friends."
other supervisory officials whose de-
Prosecutors and their supervisors
Asked about the controversy a
cisions were challenged in six cases, it
in the department's environmental
year ago at her confirmation hearing,
called upon senior managers to inter-
crimes program "suffered from a fre-
Attorney General Janet Reno said she
vene in what it portrayed as an unten-
quent absence of teamwork and mu-
was looking forward to building an ef-
able situation."
tual respect which has led to ac-
fective environmental crimes unit.
"The Justice Department and the
cusations that prosecution decisions
Last week, Reno said she had not yet
Environmental Division should use
[by supervisors] have been made on
made any changes in the unit pending
the managerial authority at its dispos-
an improper basis," said the 325-page
completion of the internal inquiry.
al to bring the current dispute be-
report released yesterday.
The report released yesterday was
The report was prepared by four
sharply critical of an ongoing investi-
tween ECS management and the ob-
career government attorneys who
gation by the House subcommittee.
jecting attorneys to a prompt close,"
were asked to provide an independent
"Our review reveals that the sug-
said the report. Noting that the "ob-
review of a number of allegations, in-
gestions of incompetence, improper
jecting attorneys" represent the "mi-
cluding specific claims that SIX major
motivation and wrongdoing are base-
nority view" in the unit. the report
environmental cases in the 1980s had
less," it said. "The subcommittee re-
said "their transfer appears more like-
been undermined by decisions in
bed on dubious sources and incom-
ly to resolve the current discord
Washington.
plete analyses to question the ability
The report urged senior Justice of-
The inquiry determined that both
and integrity of career attorneys who
ficials to more precisely define the
general and specific "accusations are
made entirely appropriate prosecu-
mission of ECS, and to take a more
unfounded and that they arise primar-
tive decisions."
active role in setting national policy
ily from innuendo and unsubstantiated
Within hours of the report's re-
for environmental prosecutions.
suspicions," said the report. "We have
lease, the House subcommittee. led
It also noted a lack of trust be-
found no evidence substantiating the
by Chairman John D. Dingell (I)-
tween ECS and the Environmental
allegations that Justice Department
Mich.). criticized the report.
officials or employees rehed on um-
Protection Agency, some of whose in-
"It should come as no surprise to
proper criteria in prosecuting or de-
anyone familiar with bureaucratic be-
vestigators originated charges of po-
clining to prosecute environmental
liticization of environmental cases at
havior that an internal agency re-
cases."
view-in this case, conducted by the
Justice.
Charges that Bush appointees at
Justice Department-found little
"The most important challenge.
Justice had interfered in environmen-
wrong within the agency." said the
however, is to overcome the existing
tal prosecutions first arose in 1992.
statement.
The subcommittee's
distrust that is reflected in the Sub-
ART BUCHWALD
History in the Remaking
T
he reason the White House is in
such trouble over Whitewater is
that no one working there has
THE FEDERAL DIARY
ever heard of Watergate.
I discovered this when I was sitting in
a laundromat with an administrative
aide from President Clinton's office. He
had just been subpoenaed to appear
before the special prosecutor for
Full Raises Appear Likely
Whitewater to answer questions about
apparent White House interference in
the case.
By Mike Causey
factor in the calculations. Also,
"I don't understand it," he said. "Why
Washington Post Staff Writer
the Treasury Department,
which already has programmed
are they upset because we wanted to
espite efforts to
D
its check-printing computers for
know what was going on in an
force-feed "diet COLAs"
insignificant S&L land development? If
the higher amount, needs to
to the area's 150,000
the president is involved, it's our job to
know very soon if that is going
federal and military retirees, it
put out the fire."
to be changed. Officials of the
appears they will be getting the
"Perhaps the media was afraid of
National Association of Retired
full 2.6 percent cost-of-living
another Watergate," I suggested.
Federal Employees say it looks
raises due them in their April
"What is a Watergate?" he asked.
good for the 2.6 percent raise,
checks.
"It was a major scandal involving
because the Kerrey-Brown
President Nixon and his aides-many of
House and Senate budget
amendment is on hold. But at
whom went to jail."
cutters voted last year to delay
congressional budget hearings
"That was before my time," he said.
the 1994 civilian and military
last week, NARFE President
"That's impossible. Everyone in the
retiree COLA, which was due in
Charles W. Carter said that any
country remembers Watergate. Don't
January, until April. That
time Congress appears to be
the names Haldeman, Ehrlichman,
three-month delay will be in
effect for the next two years for
quiet, "federal retirees get
Colson and Liddy mean anything to
you?"
the 3 million civilian federal
nervous, for good reason."
He shook his head. "They don't ring a
retirees.
Union Shop?
bell. I was playing in the sandbox back
Military retirees will get
More government employees
then."
their COLAs in April. But from
(34 percent) belong to unions
I could see he was serious.
1995 through 1998, their raises
than do their counterparts in
"You know who President Nixon was,
will be delayed until October,
the private sector, where only
don't you?"
unless groups representing
11 percent of the work force is
"Yeah. We learned about him in
retired officers and enlisted
unionized. Data from the
American history."
personnel can get Congress to
Bureau of Labor Statistics for
"Well, his people broke into the
put them back on the civilian
Democratic Party offices in the
1993 show that 7 million state,
payout schedule. That won't be
Watergate building and were caught. It
local and federal government
wasn't the crime itself but the coverup
easy.
workers belong to unions,
that caused such a furor. All the forces
Congress did not tamper with
compared with 9.6 million union
of the White House were put into play to
the COLA due date for people
members in the private sector.
protect the president. It was a failed
getting Social Security benefits
Most of the union members in
effort, however, because in the end
for two reasons: 1) The average
the federal service are in the
Nixon lost everything."
Social Security benefit is much
U.S. Postal Service and the
"What has Watergate got to do with
smaller than the average civil
Tennessee Valley Authority.
me?"
service benefit. 2) More
"Nothing, except the perception is
important, 1 of 6 Americans
Buyout Update, Day 142
that this White House staff is doing the
gets a Social Security check.
Senate-House conferees may
same thing. There are reports that you
Tampering with the benefits of
meet today to work on a
are all shredding papers, hindering the
that many people would be the
compromise buyout bill. Both
investigation and hiding evidence. You
equivalent of suicide for most
bills call for paying selected
people have learned nothing from
politicians.
workers up to $25,000 to quit
Watergate."
Early this year, several
or retire.
"How could we? We were too young
attempts were made to trim the
The Senate bill applies
to know that the Justice Department
federal-military COLA to 1.3
money from cutting 252,000
didn't belong to us."
percent. There was another
federal jobs to the proposed
"Listen, Haldeman and Ehrlichman
effort to skip two of the next
Violent Crime Reduction Trust
went to jail so that future White House
five COLAs. Another plan,
Fund. The Congressional Black
staff members would know right from
which is alive but apparently
Caucus doesn't want that
wrong. Don't you realize that
dormant, is the amendment
considered as part of a buyout
interfering in the country's legal system
proposed by Sens. Bob Kerrey
plan. Three members of the
can give a president heartburn?"
(D-Neb.) and Hank Brown
caucus are on the conference
"But if we do have something to hide
(R-Colo.). One feature of the
committee.
it doesn't make sense to let it leak out to
Kerrey-Brown amendment
The House has instructed its
the press," he said. "Whitewater could
would have trimmed the 1994
conferees to accept that Senate
affect Clinton's reelection, and if the
COLA to 1.3 percent, but that
financing plan. Three House
staff doesn't sweep it under the
has been tabled.
members who voted for it also
rug-who will?"
Timing is important for a
are on the conference
I told him, "That's what the
couple of reasons: Many
committee, which has five
Watergate people said. They refused to
retirees who pay taxes
Senate and 14 House members.
acknowledge that they had lost their
quarterly are trying to estimate
Getting that many busy people,
moral compass. All I'm trying to do is
their liability for the 1994 year.
plus staff members, into the
save you from going to a minimum
Obviously, any increase they
same room at the same time
security prison like Allenwood where
get-or don't-is an important
will be a chore.
they have nice tennis courts."
"Okay, so you've warned me, but that
doesn't mean I believe every word of
what you say."
"What don't you believe?"
"That part about an American
president being driven from office over
a third-rate burglary at the
Watergate-I don't know anybody in
the White House who would be that
stupid."
TUESDAY, MARCH 15, 1994 WASHINGTON POST
€ 1994. Los Angeles Times Syndicate
29
TUESDAY,
ARCH
15,
1994
TON POST
Solid Arkansas Image
FINAL
Wilts in Capital Heat
would have no personal liability on a loan to
buy about half of Madison's 1.100-acre Castle
Grande project south of Little Rock. Fiske has
By Howard Schneider
listed as significant, other lawyers involved
subpoenaed Castle Grande records as part of a
and Sharon Walsh
said Hubbell played either a minor role or
broad look at Madison's activities.
Washington Post Staff Writers
the cases themselves were not significant.
Hubbell, who recused himself from the
Hubbell told the Judiciary Committee he
On documents submitted to the
Madison investigation late last year, said
handled for then-governor Bill Clinton a chal-
through a spokesman that he does not recall
Senate Judiciary Committee last
lenge to a ballot initiative setting new ethics
helping draft the terms of the loan for Ward, a
year, Associate Attorney General
disclosure requirements for public officials.
retired businessman who was hired by
Webster L. Hubbell listed among his
But-Scott Trotter, who worked with Hubbell
McDougal in 1985 to put together real estate
"ten most significant litigated mat-
to defend the proposal, said, "There is no
deals.
ters" a complicated patent dispute
way that any of those ballot title challenges
"He has no clear recollection of drafting it,"
involving Hunter Engineering and
can be considered major litigation."
said Justice Department spokesman Carl
the F.M.C. Corp.
In a case involving a roof collapse at a Lit-
Stern. "He doesn't believe he did it, but it's
"I was the lead trial counsel," Hub-
tle Rock car dealership, Hubbell represented
been a long time," Stern said.
bell wrote to the senators reviewing
a subcontractor while most of the case fo-
Ward has declined to be interviewed. His
his career and fitness to take over
cused on the general contractor and the ar-
attorney, Alston Jennings, said: "As far as
the No. 3 job at the Justice Depart-
chitect. Some lawyers described it as a stan-
[Ward] knows, Webb Hubbell had nothing
ment.
dard construction dispute; Hubbell portrayed
whatsoever to do with the transaction."
But the Hunter Engineering case
it to the Judiciary Committee as the "longest
Ward's loan was repaid through the sale of
never went to trial, and other law-
civil trial in Pulaski County history."
Castle Grande lots. Madison, which fully fi-
yers involved in the 18-month dis-
"I'd be very much surprised if Webb Hub-
nanced those sales, was unable to collect on
pute have a different recollection of
bell ever did a dollar's worth of work for
most of the loans. The Castle Grande project
Hubbell's involvement. "I wasn't ev-
Ensco," said H. Clay Robinson, former presi-
was harshly criticized in a confidential 1986
er in the same room with him," said
dent, board member and outside counsel for
federal bank examination. which found that it
Greg Upchurch. the St. Louis attor-
Environmental Systems Co. of Little Rock.
was "purchased and sold in a series of ficti-
ney who handled the case for Hunter
Current Ensco officials declined comment.
tious transactions" that generated $1.8 mil-
Engineering and remembers only
Hubbell had listed Ensco on a list of clients
lion in inflated profits and payments to Madi-
minimal involvement by Hubbell's
from whom he said he received more than
son owners and employees.
firm.
$5,000 in recent years.
Three years later, when Madison failed
In the narrow world of Arkansas
Hubbell's role in the Clinton administra-
and the RTC wanted to file suit against the
law and politics, few lawyers could
tion was controversial from the beginning.
thrift's accountants for malpractice, Hubbell
top Hubbell's public image. A cham-
On paper, he served as associate attorney
was hired without informing the government
pion University of Arkansas line-
general, the No. 3 person in the bureaucracy
that his father-in-law had been a Madison in-
backer who became Little Rock's
overseeing the prosecution of civil laws. But
sider who was in the midst of his own legal
mayor at 31, he headed the litigation
Clinton's critics suspected Hubbell's power
dispute with the RTC over Madison funds.
section at the Rose Law Firm and
went beyond his formal appointment, with
In June 1989, after federal officials
accumulated a net worth of nearly
Hubbell serving as a sort of de facto attorney
learned of Hubbell's connection to Ward.
$1 million before following his long-
general, the real power at the Justice De-
they sought and received a letter from him in
time friend and golf partner Bill Clin-
partment.
which he stated, "I have not represented Mr.
ton and law partner Hillary Rodham
But it was the Whitewater controversy
Seth Ward in connection with any issue or
LAWYERS, From A1
and the Justice Department's investigation
matter relating to his disputes with Madison
of the failed Madison Guaranty Savings &
Guaranty." Hubbell further pledged he had
Clinton to Washington. "You'd have to go a
Loan that proved most troublesome for Hub-
"no intention" of representing Ward.
long way in my state to find anybody who
bell.
commands more respect, both professionally
After Madison was taken over by federal
Four months later. Hubbell-still repre-
and as a person, than Webb Hubbell," said
regulators in 1989, Hubbell and other Rose
senting the RTC-informed Ward's lawyer
Sen. Dale Bumpers (D-Ark.) as Hubbell
lawyers were hired by the FDIC to repre-
of a key court development, according to tes-
eased through the Senate confirmation pro-
sent the agency in a malpractice suit against
timony by the lawyer. That information led
cess with glowing recommendations from
Madison's accountants.
the lawyer to obtain $400,000 in disputed
the White House.
Hubbell secured the legal work for the
RTC funds.
But in recent weeks, as Hubbell's legal ac-
Rose firm despite several possible conflicts:
Under a side contract never made part of
tivities came under scrutiny-by his own law
The owner of the thrift, James B. McDou-
the S&L's records, Madison owner McDou-
firm, the federal agencies that had used his
gal, was a partner with the Clintons in the
gal had agreed Madison would pay Ward a
services and the press-a less clear picture
Whitewater Development Corp.-the land
10 percent commission on all commercial
of Hubbell emerged. In an internal inquiry,
deal that along with the collapse of Madison
land sold at Castle Grande, no matter who
the Rose firm raised serious questions about
is being investigated by special counsel
possible improprieties in Hubbell's client bil-
Robert B. Fiske Jr. In addition, the Rose
actually sold it. Ward claimed $356,840 in
lings and expense reports that may have re-
firm had earlier been hired by McDougal to
commissions on commercial land sales at
sulted in hundreds of thousands of dollars in
help salvage Madison's finances-an effort
Castle Grande.
losses for the firm and excessive bills to
that involved Hillary Clinton representing
Ward sued Madison in Arkansas state
some of its clients.
the thrift before regulators appointed by
court and won; $400,000 was placed in an
Both the Federal Deposit Insurance Corp.
her husband.
escrow account while the case was appealed.
and Resolution Trust Corp. recently began
Finally, Hubbell's father-in-law was an em-
After the RTC stepped in and moved the
reexamining Rose firm bills from the time
ployee and was involved in one of the land
case to federal court, the state appeal was
that Hubbell served as supervising attorney
projects criticized repeatedly by federal bank
dismissed.
on savings and loan cases. Rose firm part-
investigators.
ners have been preparing to take the matter
Though the FDIC recently cleared Hub-
Hubbell advised Alston Jennings. Ward's
to the state bar and are considering bringing
bell of ethics violations, his Madison involve-
lawyer. about the state court decision. That
a lawsuit against Hubbell, according to
ment is likely to become an issue not only for
gave Jennings an opportunity to take the
sources close to the firm. Rose firm partners
Fiske's investigators, but also for the RTC
$400,000 out of escrow- setting off yet an-
were meeting last night and were expected
inspector general who is conducting an audit
other court dispute with the RTC.
to discuss how to proceed. They could not be
of his work.
"I guess it must have been Wednesday
reached last night for comment.
Former Madison executive Harry Don Den-
morning of last week I was advised
by
For his Senate Judiciary hearings, Hubbell
ton, who served as senior vice president and
Web Hubbell, who is Seth Ward's son-in-law
submitted a 26-page questionnaire that in-
loan officer, said in an interview that Hubbell
drafted language for a $1.15 million Madison
that the [state] Court of Appeals had dis-
cluded his description of the 10 most signifi-
cant litigated matters that he handled per-
loan for his father-in-law that was used to fi-
missed the appeal in this case,
I decided
sonally. Among the matters he successfully
nance a real estate deal in a project now under
that Mr. Ward was entitled to his money and
litigated were cases for the Audubon Society
federal investigation.
I went down to Worthen Bank and got it,"
of Little Rock and the Arkansas-based Tyson
The wording in the 1985 loan to Seth
Jennings testified on Oct. 31. 1989. He said
Foods Inc. James B. Blair, Tyson's general
Ward, an employee of Madison's real estate
he also read an item in the local newspaper
counsel, said, "In all my relations with Webb
subsidiary, said Ward could not be held per-
about the dismissal.
Hubbell, he's been a competent lawyer and a
sonally liable for repayment, according to
Ward's victory was overturned in federal
nice guy."
Denton.
court, and he ended up returning most of the
However, in roughly half of the cases he
"Hubbell
structured
the
wording
for
money in a settlement with the RTC.
Seth's non-recourse note," said Denton in an
interview. "There wasn't anyone obligated to
Staff writer Susan Schmidt contributed to
repay it."
Denton said he met with Hubbell in the fall
this report.
of 1985, and that Hubbell prepared the lan-
guage in a promissory note under which Ward
3
Mr. Hubbell Goes
I
ASSOCIATE Attorney General Webster
of the money Madison had lost, so there would be
Hubbell had been an official of, say, the
less for the taxpayers to pay. The issue is partly
Agriculture Department, perhaps he could
whether Mr. Hubbell properly disclosed to the
have remained in government while trying to
RTC that his father-in-law had a Madison tie (and
fight free of his other troubles, which are consid-
in fact, was still trying to extract a sizable fee he
erable. The issue would have been mainly a
claimed that Madison owed him). Mr. Hubbell
political one-whether his continued presence in
says he did make proper disclosure; a more basic
the administration was an embarrassment to his
question is whether he should have taken the
friend the president who appointed him.
case even so, because of the potential conflict-of-
But the Justice Department as the government's
interest it created for him.
principal law enforcement agency is different. It is
Mr. Hubbell is also in a dispute with the Rose
charged with upholding some of the very standards
firm over certain expenses incurred while he was
that Mr. Hubbell is accused by his various critics of
there. Some of these were run up in the course of
having violated. Mr. Hubbell, Hillary Rodham Clin-
a lawsuit that he agreed to file on behalf of his
ton's former partner in the Rose Law Firm of Little
father-in-law on a contingency-fee basis. Rose
Rock, is said to have done a good job in his tenure
was to get paid only if it won; instead it lost, and
at Justice, for which he was praised yesterday by
has had to absorb the costs itself.
Attorney General Janet Reno. He still needed to
Mr. Hubbell has not been fully heard from on
resign, and should probably have done it or been
either of these matters. Nor has he been officially
asked to do it earlier.
or frontally charged with doing any wrong. But
His troubles arise from two cases that he
he can't simultaneously defend himself on these
handled while a Rose partner, both involving his
flanks, where he may or may not be vulnerable,
father-in-law, Seth Ward. Mr. Ward was in turn
and still do the No. 3 job in a Justice Department
an employee of the real estate arm of Madison
that already has lost its No. 2 official and has
Savings & Loan, the failed institution whose
management and policy problems enough. The
president was a business partner of then-Gover-
place is hurting. The administration is hurting,
nor and Mrs. Clinton. Mr. Hubbell at one point
too. The last thing it needed was what Mr.
represented the federal Resolution Trust Corp
Hubbell had become-a further reminder of the
in a lawsuit involving Madison; the RTC was
Madison Savings & Loan-Whitewater real estate
trying to recover from an accounting firm some
venture story, inside the Justice Department.
Much More Than Research
Fortunately for the American
when they mate with fertile, native
people, the agricultural research pro-
female flies, the eggs will not hatch.
jects recently listed in the "Congres-
This technology, already used to
sional Pig Book" ["Highlights of 1994
control other insect pests, is envi-
Pig Book List," Feb. 17] received far
ronmentally safe and eliminates the
better evaluation for their scientific
need for chemical controls.
merit before they were funded than
The screwworm fly lays its eggs
was the analysis rendered by Pig
in open sores of warm-blooded ani-
Book's sponsor, Citizens Against
mals, including humans. When these
Government Waste (CAGW).
eggs hatch, the larvae eat the flesh
Let me cite one project as an
of their hosts, eventually causing
example: the $34.6 million labeled as
death. If CAGW's members could
screwworm research. Actually, those
see these larvae eating into a live
funds would finance operations of the
animal-or in the nostrils or scalps
jointly managed U.S./Mexico/Central
of young children, as has been well
American screwworm eradication
documented-I'm sure they would
program-not research. The goal is
change their tune.
to eliminate this vicious pest from
The screwworm eradication pro-
North and Central America down to
gram saves U.S. livestock producers
the Isthmus of Panama, where a
$400 million annually, returning to
natural geographic barrier can be
consumers and taxpayers more than
maintained. Because NAFTA will al-
$10 in benefits for every dollar
low the free exchange of livestock
spent. The program will help secure
across the U.S./Mexico border, this
the economic viability of the U.S.
program is essential to protecting
livestock industry, keep food prices
the United States from a screwworm
low and preserve the health and
reinfestation.
safety of both humans and animals.
The technology to eradicate the
So the next time CAGW decides
screwworm was developed by two
to make headlines about a topic
U.S. Department of Agriculture sci-
about which it has little knowledge,
entists who won the 1993 World
it had better check its facts.
Food Prize for their achievement.
R. D. PLOWMAN
Carefully measured doses of irradia-
Acting Assistant Secretary
Science and Education
tion are used to sterilize artificially
Department of Agriculture
raised male screwworm flies so that
Washington
TUESDAY, MARCH 15, 1994 WASHINGTON POST
38
Mr. Hubbell Goes
I
ASSOCIATE Attorney General Webster
of the money Madison had lost, so there would be
Hubbell had been an 'official of, say, the
less for the taxpayers to pay. The issue is partly
Agriculture Department, perhaps he could
whether Mr. Hubbell properly disclosed to the
have remained in government while trying to
RTC that his father-in-law had a Madison tie (and
fight free of his other troubles, which are consid-
in fact, was still trying to extract a sizable fee he
erable. The issue would have been mainly a
claimed that Madison owed him). Mr. Hubbell
political one-whether his continued presence in
says he did make proper disclosure; a more basic
the administration was an embarrassment to his
question is whether he should have taken the
friend the president who appointed him.
case even so, because of the potential conflict-of-
But the Justice Department as the government's
interest it created for him.
principal law enforcement agency is different. It is
Mr. Hubbell is also in a dispute with the Rose
charged with upholding some of the very standards
firm over certain expenses incurred while he was
that Mr. Hubbell is accused by his various critics of
there. Some of these were run up in the course of
having violated. Mr. Hubbell, Hillary Rodham Clin-
a lawsuit that he agreed to file on behalf of his
ton's former partner in the Rose Law Firm of Little
father-in-law on a contingency-fee basis. Rose
Rock, is said to have done a good job in his tenure
was to get paid only if it won; instead it lost, and
at Justice, for which he was praised yesterday by
has had to absorb the costs itself.
Attorney General Janet Reno. He still needed to
Mr. Hubbell has not been fully heard from on
resign, and should probably have done it or been
either of these matters. Nor has he been officially
asked to do it earlier.
or frontally charged with doing any wrong. But
His troubles arise from two cases that he
he can't simultaneously defend himself on these
handled while a Rose partner, both involving his
flanks, where he may or may not be vulnerable,
father-in-law, Seth Ward. Mr. Ward was in turn
and still do the No. 3 job in a Justice Department
an employee of the real estate arm of Madison
that already has lost its No. 2 official and has
Savings & Loan, the failed institution whose
management and policy problems enough. The
president was a business partner of then-Gover-
place is hurting. The administration is hurting.
nor and Mrs. Clinton. Mr. Hubbell at one point
too. The last thing it needed was what Mr.
represented the federal Resolution Trust Corp
Hubbell had become-a further reminder of the
in a lawsuit involving Madison; the RTC was
Madison Savings & Loan-Whitewater real estate
trying to recover from an accounting firm some
venture story, inside the Justice Department.
Much More Than Research
Fortunately for the American
when they mate with fertile, native
people, the agricultural research pro-
female flies, the eggs will not hatch.
jects recently listed in the "Congres-
This technology, already used to
sional Pig Book" ("Highlights of 1994
control other insect pests, is envi-
Pig Book List," Feb. 17] received far
ronmentally safe and eliminates the
better evaluation for their scientific
need for chemical controls.
merit before they were funded than
The screwworm fly lays its eggs
was the analysis rendered by Pig
in open sores of warm-blooded ani-
Book's sponsor, Citizens Against
mals, including humans. When these
Government Waste (CAGW).
eggs hatch, the larvae eat the flesh
Let me cite one project as an
of their hosts, eventually causing
example: the $34.6 million labeled as
death. If CAGW's members could
screwworm research. Actually, those
see these larvae eating into a live
funds would finance operations of the
animal-or in the nostrils or scalps
jointly managed U.S./Mexico/Central
of young children, as has been well
American screwworm eradication
documented-I'm sure they would
program-not research. The goal is
change their tune.
to eliminate this vicious pest from
The screwworm eradication pro-
North and Central America down to
gram saves U.S. livestock producers
the Isthmus of Panama, where a
$400 million annually, returning to
natural geographic barrier can be
consumers and taxpayers more than
maintained. Because NAFTA will al-
$10 in benefits for every dollar
low the free exchange of livestock
spent. The program will help secure
across the U.S./Mexico border, this
the economic viability of the U.S.
program is essential to protecting
livestock industry, keep food prices
the United States from a screwworm
low and preserve the health and
reinfestation.
safety of both humans and animals.
The technology to eradicate the
So the next time CAGW decides
screwworm was developed by two
to make headlines about a topic
U.S. Department of Agriculture sci-
about which it has little knowledge,
entists who won the 1993 World
it had better check its facts.
Food Prize for their achievement.
R. D. PLOWMAN
Carefully measured doses of irradia-
Acting Assistant Secretary
Science and Education
tion are used to sterilize artificially
Department of Agriculture
raised male screwworm flies so that
Washington
TUESDAY. MARCH 15. 1994 WASHINGTON PINT
38
Madison questions pursue first lady
She asserts commitment to press ahead with reform of health care
that the Whitewater-Madison im-
that she would release all informa-
podium. Afterward, one guard
By Valerie Richardson
broglio had not detracted from her
tion surrounding the matter after
said the order to remove it came
THE WASHINGTON TIMES
campaign to implement universal
the investigation by Whitewater-
from the first lady's staff.
DENVER - First lady Hillary
health coverage.
Madison special counsel Robert B.
Shariar Ghalam, one of several
Rodham Clinton tried doggedly to
"I don't think it [Whitewater]
Fiske Jr.
men who brought the sign, d he
stick to the subject of health care
matters at all," said Mrs. Clinton,
"We lost money - goodness
was not satisfied with the White
during her visit here yesterday,
flanked by about 30 uniformed Na-
knows what you all would be say-
House's explanation of Mr. Fos-
but questions on the Whitewater-
tional Guard medical personnel
ing if we made money," Mrs. Clin-
ter's suicide.
Madison matter would not leave
outside a makeshift medical unit.
ton said. "I'm glad we lost money."
His friend, Kendall Collins of
her alone.
"I've been talking about health
Reporters were not the only
Boulder, added: "At the pinnacle of
In Colorado, Mrs. Clinton pro-
care for more than a year, and I'll
ones with questions about Mrs.
his career, it's hard to believe that
moted her proposed national
keep talking about it 'til I get it
Clinton's involvement in the White
he committed suicide."
health care proposal, gave a
done."
water-Madison affair. At her
Mrs. Clinton's health care pro-
speech at the University of Colo-
As for Mr. Hubbell's resigna-
speech at the Boulder campus, a
gram drew some challenges, as
rado at Boulder, explained the
tion, she said he would be "missed
group of local men held up an
well. While the 5,000 students and
finer points of her health plan at a
greatly."
enormous banner with the mes-
local residents who attended
forum in Denver and toured a Na-
Mr. Hubbell, a former senior
sage: "What Did Vince Foster
cheered at several points in
tional Guard medical unit operat-
partner with Mrs. Clinton's at Lit-
Know?" The words "Vince Foster"
speech, several dozen held signs
ing in Denver's inner city.
tle Rock's Rose Law Firm and
were painted in dripping red let-
with messages such as "Colorado
When she finally agreed to field
close friend of the Clintons', was
ters.
Wants Single-Payer," New
questions from reporters at the
mired in questions about his han-
Mr. Foster, the former White
Taxes," Reduce Government" and
end of the day, however, she was
dling of a federal lawsuit aimed at
House deputy counsel, Clinton
"Please Save Us, Hillary, We're
deluged by queries on the Clin-
Madison Guaranty Savings and
personal attorney and former
Helpless Without the Govern-
tons' involvement in Whitewater-
Loan Association and possible
Rose colleague of Mrs. Clinton's,
ment."
Madison and the resignation of As-
overbilling of Rose clients.
died in July in what authorities
Rep. Patricia Schroeder, Colo-
sociate Attorney General Webster
"I am personally deeply sad-
have termed a suicide at a North-
rado Democrat, took a swipe at
L. Hubbell.
dened for Webb and his family,"
ern Virginia park. White House of-
Mrs. Clinton's detractors during
At one point, the discrepancy
she said. "But I'm also very sad for
ficials removed records from the
the Denver summit, one of several
between her agenda and that of
this country because he has and
Clintons' partnership - White-
health care forums sponsored na-
reporters became so stark that
had done a lot of very good work
water Development Corp. -
tionwide by the Columbia Insti-
Colorado Gov. Roy Romer, a fellow
at Justice."
shortly after his death.
tute. Some congressional Republi-
Democrat, stepped in and banned
She repeated remarks released
A few seconds into her speech,
cans, she said, have done
further cuestions unrelated to
over the weekend about her own
campus security guards ordered
"everything they could do to stop
health care.
involvement with the failed S&L.
the men to put down the banner,
Hillary" from succeeding in 't.l-
Even so, Mrs. Clinton insisted
saying she had made mistakes and
which was about 50 feet from the
acting health care reform.
Federal employee buyout bill
stalls over how to spend savings
By Greg Pierce
vent government," would provide
five Senate conferees will oppose
THE WASHINGTON TIMES
up to $25,000 each to those wishing
the crime provision, despite over-
to leave government. However, it
whelming support in that cham-
House and Senate conferees
may be too late to be cost-effective
ber.
will meet today to hash out the fed-
in this fiscal year, which ends Sept.
Sen. William V. Roth Jr. of Dela-
eral employee buyout bill.
30.
ware, ranking Republican on the
The main issue, according to
The Office of Personnel Man-
Governmental Affairs Committee
staffers in the House and Senate,
agement already has begun laying
and original author of the crime
will be how to spend the savings
off employees. NASA, the U.S. In-
amendment, is a member of the
resulting from reducing the fed-
formation Agency and the Interior
conference committee.
eral work force by 252,000 over the
Department also are said to be
"He's still of the hope that we
next few years.
considering layoffs this year.
can reach agreement quickly and
Today's conference "may not be
On Friday, the Senate voted 90-2
promptly to get this bill approved,"
the end of it," according to a Senate
in favor of the crime amendment
Mr. Roth's press secretary, Verna
staffer.
to the buyout bill. Later that day,
Hensley, said yesterday. "The
Both bodies have endorsed a
the House voted 231-150 to in-
greater question is whether the
provision to use the estimated $22
struct its conferees to accept the
conferees will follow the wishes of
billion in savings to finance the
measure.
both the House and Senate that
Senate's crime trust fund, which
"This could go on and on," the
were expressed on Friday."
President Clinton supports.
Senate staffer said, because one or
Mr. Roth has said he would be
However, the Senate staffer said
both chambers will vote to recom-
willing to use the savings from the
the majority of conferees from
mit the bill to the conference com-
work-force reduction to cut the
both chambers are opposed to the
mittee and reinstate the crime
deficit, should the House refuse to
anti-crime fund, which would go
amendment.
accept the crime amendment.
for prison construction and to
A House staffer agreed that the
"That would be a reasonable
train 100,000 additional police.
big issue "is earmarking the sav-
compromise, one that would be
"I guarantee it will not have the
ings," meaning the crime trust
hard to argue with," Mrs. Hensley
crime trust fund in it" when the
fund.
said.
bill comes out of conference com-
"It's hard to get a reading on
However, it remains to be seen
mittee today, the staffer said.
something like this," but "I'm kind
whether such a compromise
"They're just going to delay this
of optimistic this will be resolved
would be acceptable to House con-
another couple of days," because
in some reasonable period of
ferees.
the Senate, if not the House, "will
time" - a couple of days at most,
Rep. William L. Clay, Missouri
not stand for it."
the House staffer said.
Democrat and chairman of the
The buyout bill, intended to tar-
Only three of the 14 House con-
Post Office and Civil Service Com-
get middle managers as part of the
ferees backed the crime measure
mittee, will lead the House delega-
administration's attempt to "rein-
in Friday's floor vote. Three of the
tion.
The Washington MARCH 15. 1994
98
Nothing at law firm is smelling like a rose
its role in the Whitewater-Madison
assure jittery clients that the over-
you have to spend an enormous
By Rod Dreher
THE WASHINGTON TIMES
affair and a possible cover-up,
billing was an isolated phenom-
amount of time in meetings re-
threatens to hobble its practice.
enon.
lated to the investigation, d ing
The news keeps getting worse
"It's obviously gone south about
There is evidence that this is al-
with lost clients and questioning
for Little Rock's beleaguered Rose
as fast and as bad as a situation
ready happening. Dean Cannon,
the decisions of one another, peo-
Law Firm.
could," said David Williams, re-
president of Cannon Trucking in
ple inside the institution have to
Yesterday's resignation under
cent past president of the Arkan-
Little Rock, checked his billing
ask themselves: 'Is this the I
eI
fire by Associ-
sas Bar Association. The latest de-
records after reading press re-
need to be?'
NEWS
ate Attorney
velopments, he speculates, "are
ports about the internal investiga-
Mr. Hubbell returns to Arkan-
General Web-
intended to salvage whatever they
tion at the firm. He found no prob-
sas with the possibility of ethics
ANALYSIS
ster L. Hubbell,
can as early as they can."
lems, and his Rose lawyer, Richard
charges hanging over his I
If
a senior partner
Ronald Clark, the firm's manag-
Massey, called Mr. Cannon to
the Rose Law Firm files a for
at Rose before joining the Clinton
ing partner, did not return a re-
assure him there would never be a
complaint with the state Supreme
administration, guaranteed the
porter's phone call seeking com-
problem.
Court Committee on Professional
prestigious firm would have its
ment.
"I don't feel like it's a company
Conduct and the committee finds
erstwhile white shoes further
The Washington experience has
problem. as much as an individ-
Mr. Hubbell guilty, the former No.
stained as the story splashes
taken a particular personal toll on
ual," Mr. Cannon said. "The people
3 man at the Justice Department
across the nation's TV screens and
the four Rose senior partners who
that we've dealt with there on a
could face disbarment pro
front pages.
came to Washington to serve in the
regular basis are very reputable,
ings in a court of law.
On Friday, The Washington
Clinton administration.
straight-up people."
Mr. Hubbell was appointed by
Times reported that the Rose firm
Two are no longer in the govern-
One knowledgeable Arkansas
Gov. Clinton as chief justice of the
is considering filing ethics
ment. Vincent W. Foster Jr. died in
lawyer predicts most of the firm's
Arkansas Supreme Court, and was
charges against Mr. Hubbell after
what authorities termed a suicide,
established clients will, like Mr.
mayor of Little Rock from 1979 to
an internal investigation found he
and Mr. Hubbell resigned under
Cannon, stick with the Rose law-
1981.
could not account for hundreds of
an ethical cloud.
yers with whom they have built a
Unless charges of extreme
thousands of dollars in expenses
Assistant White House Associ-
relationship. Yet if the $1 million
overbilling can be proven. Mr. Wil-
billed to clients. Monday's Wall
ate Counsel William Kennedy III
figure proves true, the lawyer
liams thinks his old friend will
Street Journal put the figure at
is reportedly unhappy in the White
says, all bets are off.
land on his feet back home.
more than $1 million.
House. And the leader of Rose's
The danger of client defections
Others aren't so sure.
In his resignation letter to Pres-
"Gang of Four" Hillary Rodham
couples with the risk of lawyer de-
"You've got to be kidding," one
ident Clinton, Mr. Hubbell said
Clinton - is widely considered to
fections as the federal investiga-
prominent Little Rock lawyer said.
publicity generated by the escalat-
be at the center of the Whitewater-
tion continues, said a well-known
"I don't see how he can come back
ing controversy with his old firm
Madison affair.
Washington lawyer.
here and be received with any-
hamstrings his effectiveness at the
If the massive overbilling accu-
"The thing that holds a law firm
thing but disdain, particularly by
Justice Department. The continu-
sations against Mr. Hubbell prove
together isn't just the collegial na-
the Clinton crowd. Webb Hubbell
ing crisis at the Rose firm, which
true, Rose firm lawyers will no
ture of institution. It's a part-
will soon be the Jim McDougal of
includes a federal investigation of
doubt have to work overtime to re-
nership," he said. "To the extent
the Arkansas Bar."
More lawyers find overbilling has legal limit
government that said he worked
By Nancy E. Roman
More hours in a year than any-
and many 24-hour days in 1991.
THE WASHINGTON TIMES
without a day off. through three
nephysically could have worked.
Records showed that in 1991,
weekends, averaging more than
Mr. Simon told of one case in
Mr. Perrone billed the city for a
Lawyers increasingly are being
eight hours a day at a fee of $125
which a woman reported overbill-
total of 3,755.75 hours of work -
prosecuted for overbilling their
an hour.
ing to the firm's senior partners.
more than 10 hours every day of
clients, ethics lawyers say.
John J. Marquess, founder and
They fired her, and she sued. win-
the year.
"Five years ago it was a very
general counsel of Legalgard Inc.,
ning a handsome jury verdict.
He was suspended from taking
oddball story to read anything
a company that audits legal bills,
Mr. Simon said he uses a stop-
further appointments. and court
about a lawyer defrauding a client
said overbilling is commonplace.
watch when talking with a client
officials were ordered not to pay
by charging some fantastic sum
"Our experience since 1987
on the phone. "But you don't see
any of his pending bills.
for legal bills. Now I probably run
and we have seen between 4 and 5
many lawyers in practice who are
Lawyers bill in four ways: the
across a story like this once every
million legal bills when you find
billing in that way.
contingency fee, the flat
the
month or two," said Roy Simon, a
fat it can be as high as 30 percent,"
"Usually, they are on the train
statutory fee and the hourly fee.
law professor who teaches ethics
said Mr. Marquess. "I'm not saying
the next morning trying to recon-
With a contingency fee, the client
at Hofstra University in New York.
that every legal bill is full of 30
struct the previous day: If you
agrees to pay a percentage of the
The Rose Law Firm is investi-
percent fat, but four out of five
know that you got to the office at
money won in the lawsuit. A stat-
gating reports that Webster L.
bills we see have some problem."
8:30 and didn't leave until 7:30. that
utory fee is set by law or a judge.
Hubbell overbilled clients.
Mr. Marquess left private prac-
sounds like 11 hours. But that
However, most business attor-
He is accused of writing checks
tice to start Legalgard after wit-
doesn't account for chats in the
neys charge by the hour.
on a client account to pay for per-
nessing unchecked abusive bill-
hall, or stopping to read a mag-
This month the ABA Journal
sonal trips and credit-card bills,
ing. "I did some research into what
azine on a reception table. Those
has a cover story on hourly billing
crediting to himself hours worked
we were hearing and found out that
five and 15 minutes add up."
called "When Alternative Billing
by salaried associates, and billing
a lot of it was real," he said.
Ultimately. he said. 11 hours are
Beats the Clock." which concludes
taxpayers more than $20,000 for
He said most of the fat is inef-
billed for eight hours work.
that clients do not like to be billed
work on a Madison Guaranty Sav-
ficiency, but about 5 percent is out-
Philadelphia lawyer William
on an hourly basis but prefer a
ings and Loan Association matter
right fraud, which includes billing
Perrone was suspended last year
results-oriented pay scheme.
during one 20-day period.
for:
from handling court-appointed
Mr. Simon says he will bring all
As managing partner of Little
Expenses not incurred.
work after the Philadelphia In-
this up with his ethics classes.
Rock's Rose Law Firm. Mr. Hub-
More hours than were spent.
quirer reported the 43-year-old
"I wouldn't be able to resist
bell submitted a bill to the federal
Attending events not attended.
lawyer had billed three 30-hour
bringing this up," he said.
The Washington Times TUESDAY. MARCH 15, 1994
99
By Maria Recio
Gonzalez
to the Banking Committee chair-
manship after years of defying the
FORT WORTH STAR TELEGRAM
Democratic leadership.
In the tensely partisan atmos-
Mr. Gonzalez denies that he is
phere on Capitol Hill, Republicans
are demanding hearings on the
is chief foe
under pressure from the leader-
ship. Asked about reports that
burgeoning Whitewater affair
House Speaker Thomas S. Foley,
while the Democratic beachhead
Washington Democrat, put out the
against a congressional inquiry is
of hearings
word that there were to be no hear-
being held by, of all people, Rep.
ings, Mr. Gonzalez said: "I haven't
Henry B. Gonzalez.
heard from him."
The Texas Democrat. who in
But in early February, Mr. Gon-
five years as chairman of the
zalez said in a televised exchange
House Banking Committee led the
Fort Worth Star-Telegram
with two Republicans on the
investigative charge on everything
House floor that there would be
from the savings and loan crisis to
the funneling of U.S. aid to Iraq,
gime," he said, meaning before
hearings on Whitewater. Congres-
sional sources say Mr. Foley "went
has never let politics get in his way.
Congress passed stricter banking
ballistic" and Banking Committee
But in an increasingly bitter dis-
rules.
Mr. Leach has been a strong ally
staffers immediately denied that
pute with the ranking Republican
the chairman meant that there
on the committee, Rep. Jim Leach
of Mr. Gonzalez on all the inves-
would be anything other than the
of Iowa, Mr. Gonzalez is fending
tigations, including one into the
semiannual RTC review on March
off the same kind of investigative
role of Neil Bush, son of then-
24.
hearing on Whitewater that has
President Bush, as a director of a
failed Denver thrift.
"The maverick." said one for-
been the San Antonio maverick's
For now, Mr. Leach will say only
mer Democratic banking expert,
trademark.
"I don't know what's gotten into
that he respects Mr. Gonzalez for
"is playing ball."
Leach," Mr. Gonzalez said in an in-
his "distinguished career of inde-
As a result, Republicans are
terview "I don't know if he wants
pendence." But sources say Mr.
striking out.
to be Mickey Spillane or what."
Leach is weighing upping the ante
Mr. Leach's ploy in requesting
Republicans are trying to turn a
in his struggle with the chairman
that 40 persons associated with
March 24 House Banking Commit-
by suing the thrift regulatory
Whitewater - including White
tee hearing on the oversight of the
agencies for documents that Mr.
House Chief of Staff Thomas F.
Resolution Trust Corp. (RTC) into
Gonzalez withheld from Mr.
"Mack" McLarty appear as wit-
an expose of the dealings of Pres-
Leach.
nesses at the March 24 hearing
ident and Hillary Clinton with a
Republican staffers mutter that
may backfire.
failed Arkansas thrift and an in-
Mr. Gonzalez and his aides are
"When we get to that day, I'll
vestment property known as
suddenly worried about holding on
make a ruling," Mr. Gonzalez said.
Whitewater Development Corp.
Mr. Gonzalez, 77, is having none
of it.
"I'm not going to get side-
tracked." he said firmly. "We have
Former
no legislative purpose in looking at
Whitewater. If something hap-
pened with respect to the S&L, we
have laws."
And that means that if there was
partner
any wrongdoing, he believes it is
up to special counsel Robert Fiske
to find it. Mr. Fiske opposes hear-
mum on
ings into Whitewater.
Both Democratic and Republi-
can Banking Committee watchers
note that Mr. Gonzalez has pur-
Clintons
sued his high-profile inquiries
even in the face of opposition from
all levels of law enforcement.
LITTLE ROCK, Ark. (AP) - A
Richard Thornburgh as attorney
former Whitewater partner of
general tried unsuccessfully to
President and Mrs. Clinton's
quash hearings into the scandal-
passed up an opportunity yester-
ridden Banco Nazionale de La-
day to say she thinks the Clintons
oro, accused of concealing U.S.
have done nothing wrong in the
aid to Iraq before the Persian Gulf
Whitewater-Madison affair.
Susan McDougal
war.
At a news conference, Susan
Mr. Gonzalez first catapulted to
McDougal read a brief statement
prominence with the 1989 Keating
that declared simply that she and
client never asked for any reason.
Five case, in which five senators-
he ex-husband - James B.
Madison is suspected of being a
four Democrats and one Repub-
McDougal, owner of the failed
conduit for campaign funds for Ar-
lican - were accused of using
Madison Guaranty Savings and
kansas politicians, including Mr.
their influence with regulators on
Loan Association are innocent
Clinton.
behalf of California thrift owner
of any wrongdoing.
"Susan McDougal is aware of no
Charles Keating. He now says that
Mrs. McDougal said the investi-
inappropriate financial transac-
case was altogether different from
gation of Whitewater-Madison
tions in which she was directly inc
Whitewater.
special counsel Robert B. Fiske Jr.
volved and she has no knowledge
"That was under the old re-
is politically motivated and then
of any improper transfer of funds
declined to answer questions.
to a Clinton political campaign,"
In an appearance Sunday on
Mr. McDaniel said.
ABC-TV's "This Week with David
He said he would advise Mrs.
Brinkley," Mr. McDougal, who co-
McDougal not to give a sworn
owned Whitewater Development
statement to Mr. Fiske or testify
EUROSTUESDAY, MARCH 1994
Corp. with his ex-wife and the Clin-
before a grand jury here unless
tons, said Mr. Clinton is "guilty of
she is given access to all of here
committing no crime."
financial records that are being
And he said Hillary Rodham
held by various government agen-
Clinton is guilty of nothing other
cies.
than "poor bookkeeping."
Mrs. McDougal, 38, who faces
But Mrs. McDougal's attorney,
fraud charges in an unrelated Cali-
Bobby McDaniel, repeatedly re-
fornia case, is unemployed, Mr.
fused to characterize the Clintons'
McDaniel said.
role in Whitewater-Madison.
Mr. McDaniel, in response to a
The McDougals and Clintons
question about the Clintons' guilt,
were 50-50 partners in White-
said, "Susan just does not want to
water, the Ozarks real estate proj-
address the Clinton" question.
ect that is part of Mr. Fiske's crim-
He noted that his client deliv-
inal investigation. He is leading a
ered all her Whitewater records to
federal grand jury probe into
the Arkansas governor's mansion
whether Madison depositors'
in 1991 at then-Gov. Clinton's re-
money from Madison benefited
quest and has not gotten them
the Clintons and was siphoned to
back.
political campaigns. Mr. Fiske also
Mrs. McDougal said previously
is probing Mr. Foster's death and
the records were requested by
accusations that Little Rock's
Mrs. Clinton, who had written a
Rose Law Firm has shredded
letter in November 1988 seeking
Whitewater documents.
power of attorney for Whitewater
Among the accusations is that
and all the records.
$110,000 of a $300,000 federally
The Clintons intially said the
backed loan Mrs. McDougal re-
records were missing. but the
ceived from Little Rock business-
White House later turned over
man David L. Hale wound up in the
Whitewater records to federal in-
Whitewater account. Mr. Hale said
vestigators after searching the of-
Mr. Clinton and Mr. McDougal
fice of former White House
pressured him to give the loan to
Deputy Counsel Vincent W. Foster
Mrs. McDougal. The loan was
Jr. soon after his body was found
never repaid.
in a park in July in what author-
Mr. Hale, a former county mu-
ities termed a suicide.
nicipal judge, goes on trial March
Mr. McDaniel said Mr. Clinton
28 in Little Rock on charges of de-
100
had given no reason for wanting
frauding the Small Business Ad-
the records in 1991 and that his
INSIDEATHE
BELTWAY
jacket for the men, with contem-
Ask her new chef
porary necktie and cufflinks. And
"Dear Inside the Beltway,"
for the women, a combination of
writes Larry Zupan of Vienna,
Lauren fragrance and fur imi-
Va. "Is it true that Hillary Rod-
tation, of course.
ham Clinton's favorite breakfast
cereal is Shredded Wheat?"
Ridiculous politics
Live from Chicago, where he is
Double take
fighting for political survival,
Just sitting in the lobby of
Rep. Dan Rostenkowski was
President Clinton's hotel in De-
asked his thoughts on the
Whitewater-Madison affair yes-
No Polo shirts for Roger
troit yesterday, Debbie Godfrey
terday on CBS-TV's "This Morn-
Kennedy's park rangers.
shook up the Secret Service,
White House press, hotel security
ing."
"I'm not interested in having a
and at least one guest.
New York Republican, as a "par-
Debbie Godfrey, you see, is a
[congressional] hearing," the Illi-
tisan pit bull."
nois Democrat told interviewer
dead ringer for Hillary Rodham
Harry Smith. "I mean, it's gotten
Clinton, and she knows it.
Counting chickens
"It's all in the cheekbones," the
so political that it's almost ridic-
ulous. There was a poll done just
Political analyst Kevin Phillips
Ohio woman told our White
yesterday. Seventy percent of the
tells us that Republicans in Con-
House correspondent, Frank J.
Murray, as she waited with her
American people don't really
gress had better be careful about
care whether or not there's a
premature gloating over Mr. Clin-
sister to attend a theater event
hearing; as a matter of fact, they
ton's Whitewater troubles. They
that brought her to Detroit. She
aren't even concerned about
could end up looking stupid if the
claimed it was pure coincidence
Whitewater."
president's protestations of inno-
that she registered in the Omni
Mr. Smith countered: "But at
cence bear out.
International Hotel, where Mr.
the same time, that doesn't mean
"A lot of these (Republican)
Clinton was also a guest.
It seemed the same kind of co-
that what's at issue is not neces-
guys aren't exactly the reincarna-
sarily important."
tion of Machiavelli," Mr. Phillips
incidence gave her a Hillary hair-
Mr. Rostenkowski: "Oh, I think
muses. "They make a good herd,
cut and the trim business suit of
but I'm not so sure there's a lot of
the type Mrs. Clinton generally
it's important. But I think more is
wears. She is younger, 35 years
being made of the quote-unquote
candlepower there."
old, but close enough in appear-
'cover-up' than the actual incident
that took place 10 or 12 years
All aboard the PC train
ance to the real thing to fool even
the skeptical White House pho-
ago."
Following the example of the
tographers who see Mrs. Clinton
U.S. government, the Washington
often.
Pit bull named Alfonse
Metropolitan Area Transit
At one point, when a gullible
Authority is currently advertis-
The MARCH 15. 1994
guest asked if she was Mrs. Clin-
While most Democrats display
ing a position vacancy for a "Cul-
ton, Mrs. Godfrey replied: "Yes, I
a reluctance to conduct congres-
tural Diversity Specialist."
am. I'm the woman they love to
sional hearings into Whitewater-
Hurry the deadline for ap-
Madison any time soon, lawyer
hate."
plications is Friday.
Posing with the lady guest, she
Joseph Califano, who held high-
added: "I have to keep an eye on
ranking posts in two previous
Democratic administrations, be-
But what a prize!
my husband. A hotel's a great
lieves the Clintons would benefit
The Arlington County Republi-
place to have an affair."
from such hearings.
can Committee, recently crit-
Mr. Califano, domestic policy
icized on this newspaper's edito-
Oh, Yogil
analyst in the Johnson adminis-
rial page for its comments on
tration and secretary of the De-
behalf of single-member districts
Could word circulating around
partment of Health, Education
for elected school boards, has
the halls of the Interior Depart-
and Welfare during the Carter
taken our editor's characteriza-
ment be true? Did National Park
years, said it's important for the
tion of "bean counters" to heart.
Service Director Roger Kennedy
president "to get the word out"
"We thought the editorial was
really contact pal Ralph Lauren
on Whitewater.
unfair but we decided to have
about designing dress uniforms
"The president may benefit by
a little fun with it," the county's
for his rangers?
having congressional hearings,"
GOP chairman, Deb Phillips, rea-
Yes, confirmed a high-ranking
Mr. Califano said, adding that
soned yesterday for holding a
Interior official, who spoke on the
Rep. Jim Leach, Iowa Republican
"Guess the Number of Beans in
condition of anonymity, "it's true
who's been leading the House call
the Jar" contest at tonight's
until Kennedy was told we
for hearings, "is not a partisan."
monthly meeting.
didn't have dress uniforms here."
By contrast, Mr. Califano de-
The prize? A one-year sub-
Shucks. We were going to sug-
scribes Mr. Leach's counterpart
scription to The Washington
gest a Ralph Lauren camel's-hair
in the Senate, Alfonse D'Amato,
Times.
Off welfare rolls and into the business world?
By James W Brosnan
a business, the plan proposes loans
an experimental Small Business
said. "People would have to be
MEMPHIS COMMERCIAL APPEAL
of up to $25,000.
Administration microloan pro-
bright and motivated."
Currently families on welfare
gram from $16 million to $32 mil-
The individual develop 1 ac-
The White House task force on
cannot have savings of more than
lion.
counts are a broader proposal to
welfare reform has big goals for
$1,000. If they do, the thinking
Agriculture Secretary Mike
encourage long-term savings. Un-
welfare families - it hopes to
goes, they don't need welfare.
Espy also was a proponent of
der a plan envisioned by Mr. Sher-
make some of them homeowners
Mr. Clinton is expected to unveil
microloans and individual devel-
raden, the government would
and get others to start their own
his welfare reform package next
opment accounts when he was in
match or subsidize deposits for the
businesses.
month. Most of the attention has
Congress.
poor in interest-bearing accounts.
According to a task force offi-
focused on plans to allow women a
Michael Sherraden, a professor
He compares IDAs to the 160
cial. one recommendation to Pres-
maximum of two years on welfare
of social work at Washington Uni-
acres of land his great-grandpar-
ident Clinton will be that the na-
and then require them to take a job
versity in St. Louis and a longtime
ents were given in the West under
tion's 4.7 million welfare families
- government-provided or pri-
advocate of such accounts, es-
the Homestead Act after the Civi'
be allowed to set up savings ac-
vate.
timated that fewer than 5 percent
War.
counts - individual development
But Mr. Clinton also has ex-
of those on welfare would be
"Accumulation of assets is th
accounts, or IDAs.
pressed the view that many of
equipped to start a business right
key to development of poor house
They could use the money to
those on public assistance could
away, even if given the money to do
holds," Mr. Sherraden said, addin:
start a business. buy a house or get
qualify for small loans to start
it.
that assets lead to a different wa
an education.
their own businesses.
"It takes a fair amount of gump-
of thinking.
To help those who want to start
Last year he doubled the size of
tion to start a small business." he
Distributed by Scripps Howard
104
The Washington Times
TUESDAY, MARCH 15, 1994
marks from veterans of other
Illinois today
probes, "has a reputation for
Aside from a decision on Rep.
day's Illinois primary is likely to
offer other historic results.
Inside Politics
fierce independence and is stay-
Dan Rostenkowski's suddenly
ing clear of the web of social and
uncomfortable incumbency, to-
professional connections that
helped spawn the Whitewater
controversy in the first place."
For the first time, state Demo-
crats are expected to nominate
The Robb prospect
either a woman or a black for
governor. Comptroller Dawn
A shoe has dropped on
Clark Netsch led Attorney Gen-
Charles S. Robb, Virginia Demo-
eral Roland Burris 42 percent to
crat, and Democrats are asking
35 percent in the most recent
whether The Washington Post
poll.
story on memos written by Robb
Democrats are also expected
staffers is the footgear that will
to nominate a woman either
end his career, said Charles E.
Penny Severns or Sheila Smith -
Cook in Roll Call.
for lieutenant governor. Likely re-
authority with equanimity in a
ciated Press reported. Library
The Post revealed memos pre-
sult: two Democratic women run-
capital where almost everything
spokesman Kevin Cartwright
pared several years ago by Robb
ning against two Republican men
is relative, braced by a $21.15
attributes the increase to a re-
staffers investigating behavior
in the general election.
package of cologne on his desk,
newed curiosity about Watergate,
that, as the senator said in a
In suburbs northwest of Chi-
'White Water for Men,' a gift from
inspired by the Whitewater inves-
ter to the state's party leaders,
cago, conservative Rep. Philip M.
the Senate Minority Leader, Bob
tigation of President Clinton.
demonstrated he had participated
Crane has been pounded hard by
Dole."
Mr. D'Amato "summed up his
The counterattack
in activities "not appropiate for a
state Sen. Peter Fitzgerald in the
married man."
GOP primary in which Judy
mission tersely the other day:
The Democratic National Com-
"Privately, many Democrats
McCracken Svenson and Gary
'Howard Baker, I think, asked the
mittee meetings over the
who like and respect Robb
Skoien are also running.
right question duing the days of
weekend in Cleveland offered an
a great deal nevertheless wish he
Watergate, and it applies here
insight into the party's strategy
would step aside and allow an-
with a little bit of a twist. What
Good for the game
for responding to the hammering
other Democrat to step forward
did the president know, and when
it is getting on Whitewater.
one who, given [his likely GOP
Former Sen. Eugene J.
did Hillary tell him?'
USA Today described the game
opponent Oliver] North's neg-
McCarthy - poet, politician,
plan:
atives, would very likely hold the
presidential aspirant - said on
Audit: 'Clintons owe'
"Dismiss it as a partisan ploy
seat," Mr. Cook wrote.
USA Today's op-ed page that a
by
Republicans
to
bring
Clin-
Will The Post decide to go into
"great service could be done for
An in-depth examination of
ton down; attack the personal
greater detail about some of the
the United States and for base-
President and Mrs. Clinton's fed-
eral income tax returns for the
ethics of Republicans leading the
allegations? What is to stop the
by choosing Fidel Castro as
years 1980 to 1992 suggests
Whitewater charge; organize
former Robb staff member who
baseball commissioner.
women's public forums to defend
has copies of these memos from
Among other beneficial results
underpayment of their income
to the nation resulting from this
taxes by $16,358, Money mag-
the first lady."
shopping them around to other
azine said.
Republican National Commit-
news organizations who may not
move, he said, would be U.S.
As a result, the first couple
tee Chairman Haley Barbour dis-
share The Post's "reticence to get
access to Cuban rum and cigars
may have a total liability of
missed the Democratic charges
down and dirty?"
as well as the elimination of the
of partisan excess: "It's just not
He concludes: "The next 30
last communist country in the
$45,411 when IRS interest
charges are added to the under-
true, and I'm not going to abet
days will be the most important
Western Hemisphere.
payment, Money said.
them in that fraudulent defense."
in Robb's political career. If he
At the same time it would "give
can weather this storm, he ia
the game what most baseball ex-
Money added they may have
perts say it needs - an experi-
Divided Fiske view
decent shot at beating North. But
commited the three mistakes
if anything else happens, or if a
enced dictator."
common in cases of professional
and financial success:
As Ellen Joan Pollock reported
strong Democrat enters the pri-
in the Wall Street Journal yester-
Though both are sophisticated
mary, this campaign could
Infobyte
day that special counsel Robert
even more colorful."
lawyers, they didn't keep ade-
Fiske Jr. was off to an aggressive
Four of five Americans do not
quate records, tended to overesti-
know enough about medical con-
mate certain deductions and re-
start on all Whitewater fronts,
lied far too much on their tax
the paper's editorial page was de-
Recall and hit
cepts to make intelligent choices
cidedly less optimistic.
about their own health care, a
preparer to get it right, reported
In Quartzsite, Ariz., the mayor
The editorial asserted that Mr.
study sponsored by the National
Teresa Tritch and Mary L.
has been arrested on charges he
Institutes of Health says.
Sprouse.
Fiske's probe is "beginning to
tried to hire a hit man for $10,000
This week's Time quoted Hil-
look less like an effort to get the
to kill a political rival.
lary Rodham Clinton as saying
facts and more like a sophisti-
Mayor Rex Byrd, 70, and body-
The new ethicist
cated exercise in political dam-
she and the president are pre-
shop owner Robert Bacon, 51,
age control. In a word, like a
Sen. Alfonse M. D'Amato these
pared to pay back taxes if it turns
were charged with conspiring to
days has the role of his life: lead-
out they underpaid.
cover-up."
murder former Mayor Richard
U.S. News & World Report said
This may not be Mr. Fiske's in-
Oldham, who was ousted in an
ing inquisitor into the aftermath
the Clintons were told by their
tention, the editorial said, but it is
August recall election in this
of the land deal that has engulfed
the White House in Whitewater,
personal lawyer, David E. Ken-
a result of his opposition to con-
town of fewer than 1,000 resi-
the New York Times reported.
dall, that all he finds are some
gressional hearings, unwilling-
dents.
ness to respond to Freedom of In-
Capt. Mike Denny of the state
Writer Todd S. Purdum ob-
tax errors and improper deduc-
served that the fact the New York
tions.
formation Act requests and
public safety department could
decision to prosecute David Hale,
not immediately offer a motive,
Republican "himself happens to
have been the repeated subject of
Nostalgia
who claims being pressured by
but residents say Mr. Byrd and
then-Gov. Clinton into making an
Mr. Oldham, who remains active
inquiries into his conduct in of-
In Yorba Linda, Calif., there
improper federally sponsored
in politics, have been feuding for
fice for most of the last decade
was a 20 percent jump in visitors
loan to a Whitewater partner.
at least five years.
troubles him not at all."
to the Richard Nixon Library &
Still, Ms. Pollock wrote, the Re-
"He wears the mantle of moral
Birthplace this month, the Asso-
publican Mr. Fiske gets good
Compiled by Alan McConagha.
The Washington Timestuesday. MARCH 15. 1994
Pruden on
been. that the distractions on me at this time will
interfere with my service to the country and the
president's agenda, and that my family, although to-
Politics
itally supportive, is being harmed."
The spin doctoring began at once. This had noth-
By Wesley Pruden
ing to do with Whitewater, only "private matters."
Alas, the private matters have everything to do with
the Rose Law Firm, which had everything to do
Some of our lawyers
with Hillary's manipulation of the levers of power
that the voters of Arkansas, in their curious judg-
ment, assigned to her husband. The Clintons and
seem to be missing
their friends. in Congress and in the media, have
been attempting the spin that, well, yes, maybe the
White House has been trying to cover up something
One dead, three down, and one on fire. The ides
here, and that's not nice, but they didn't really do
of March have not been kind to Bill and Hillary
anything bad in Arkansas. This begs the question -
Clinton and their friends.
and at last nearly everybody gets it, even in Wash-
One is dead, done in by someone's hand, perhaps
ington - that if there was nothing bad to cover
his own, and the White House is suddenly going
up in Arkansas, why have Bill and Hillary risked
through lawyers like an Arkansas governor goes
the Clinton presidency to cover it up?
The Washington Timestuesday, MARCH 15, 1994
through bimbos.
Shredding, subpoenas, White House limousines at
And now Hillary is on fire, threatening to set the
the curb at the U.S. courthouse, and now resigna-
woods ablaze.
tions following resignations.
The sacking of Webster Hubbell, leaving the Jus-
The wicked flee, when no man pursueth.
tice Department with only Janet Reno as the figure-
head in charge, has all the marks of being the work
of Lloyd Cutler, the presidency's new lawyer - not,
as he insists, the president's lawyer.
Embassy
Mr. Cutler has taken considerable pains to make
Row
it plain that he has not put his own considerable
reputation on the line for this particular president.
Who can blame him?
And this particular president declines to put his
reputation for truth-telling, such as it may be, on
the line for his wife's former law partner. As Mr.
Hubbell's personal friend, Mr. Clinton said yester-
T
he Cuban American National
funded by nongovernmental U.S.
Foundation is warning
sources.
day, he finds it "hard to believe" that he is guilty of
against the latest campaign
The observers will form groups
doing anything wrong. (How can children of the
for easing U.S. restrictions on
that will spread across the country
'60s, the best generation in the history of person-
Cuba, noting that pressure has in-
to oversee the first presidential
creased since Washington lifted
kind. be guilty of anything wrong when they're so
polls since a peace agreement put
the U.S. embargo on Vietnam.
an end to a protracted civil
smart and so sincere?)
Jose Cardenas, of the Washing-
that has killed 75,000 Salvadorans.
Mr. Clinton no doubt finds everything "hard to be-
ton-based foundation, criticized
Main contenders for the presi-
lieve," which may be why he changes what he be-
calls for the removal of the em-
dency are Armando Calderon Sol,
lieves as often as he changes the underwear that
bargo on travel and the export of
a member of the right-wing Na-
Hillary takes as deductions on the family income-
communications technology.
tionalist Republican Alliance, and
tax return. (He is the president of change, after all.)
In a new position paper, Mr.
Ruben Zamora of the former
Cardenas argued that such posi-
Marxist rebels of the Farabundo
Mr. Hubbell returns the ambiguous compliment,
tions are based on the "fallacious"
Marti National Liberation F1 L
remarking that the 20-year friendship with the Clin-
assumptions "that Western travel
tons "has been a never-ending source of pride and
undermined communism in the
former East Bloc" and that the
U
billionaire philanthro-
sustenance."
pist George Soros
-
"Pride and sustenance" is the way the Renais-
United States blocks all communi-
day said he was "in active
sance Weekend big-chill boomers actually talk, but
cation services with Havana.
negotiations" to buy the archives
The Cuban government has re-
and research unit of Radio Free
Mr. Hubbell and his one-time partners at the Rose
jected U.S. proposals for certain
Europe, but denied he planned to
Law Firm ought to be grateful to the the Clintons
communications improvements,
buy the radio station itself.
for sustenance (if not necessarily pride) if half the
such as upgraded telephone sys-
"Those rumors are false or
tales told in Little Rock are true.
tems and U.S. mail delivery, to the
rather they are distorted," Mr.
With Hillary's connec-
island, he said.
Soros said at a news conference in
tions to the man who ap-
"An inherent and equally dubi-
Moscow, where he announced new
ous assumption is that Cubans
pointed the state reg-
funding for Russian scientists.
need to mix with Americans to
"But we are in active negoti-
ulatory agencies, how
understand they are not free and
ations to acquire the archives and
could the clients of Mr.
that their system does not work,"
the institute connected with Radio
Hubbell and his partners
Mr. Cardenas wrote.
Free Europe," he said.
lose? You might think they
"The averge Cuban citizen is
The radio station and the I
would be grateful to pay
well aware of these facts and
ciated Radio Liberty, which broad-
double.
doesn't need to watch American
cast to Eastern Europe and the So-
tourists enjoying themselves at
This cozy Little Rock
viet Union during the Cold War,
tourist resorts to figure these
have suffered severe budget cuts
way of doing business was
points out.
and are likley to lose 1,500 employ-
not easily transplanted to
"Unlike many of his former CO-
ees.
Washington, but Hillary
horts in Moscow, [Fidel] Castro
Mr. Soros has been called the
tried, first with the White
continues to adhere to policies that
"philosopher-king of speculators."
House travel office, then
are an utter anathema to demo-
U.M. Rose
cratic principles," he added.
His Wall Street investment
the now-aborted attempt
"And letting American tourists
fund, the Quantum Group,
e
to seize the health-care industry and with it one-
frolic on Cuban beaches -
$1 billion in currency speculation
sixth of the American economy, even the pots and
beaches ruled off-limits to Cuban
last year but lost $600 million in
pans of the White House kitchen. Reach exceeded
citizens - will do nothing to
one day in February betting incor-
grasp.
change the nature of that regime."
rectly that the dollar would appre-
ciate against the Japanese yen.
Mr. Hubbell has been in Washington long enough
to recognize that first inkling that he was in trou-
F
our Democratic members of
He recently joined forces with
the House of Represent-
ble, Janet Reno's vote of confidence, expressed last
the GE Capital Corp. to invest in
atives will head a group of
electric power plants in develop-
week. Mr. Hubbell's farewell dripped with deeply
500 American observers to mon-
ing countries.
felt self-regard.
itor presidential elections in El
Their new Global Power Invest-
He could "stand and take the blows from wher-
Salvador Sunday.
ments will raise at least $2.5 bil-
ever they came" if they affected only him, but he
Reps. Dan Hamburg and Xavi-
"believes too much in this country, the president,
er Becerra, both from California,
lion to build or operate privately
Nydia Velazquez of New York and
owned power plants in Mexico and
the attorney general, the Justice Department, my
Luis Gutierrez of Illinois are
in Asia, particularly China, India
wife and family. and my colleagues." (He excluded
and Indonesia.
scheduled to travel to the Central
only the Metro, the Domino's Pizza deliveryman and
American nation Friday.
the new coach of the Redskins.)
The trip is organized by the U.S.
"After a thoughtful weekend, I believe that my
Citizens Elections Observer Mis-
continued service will not be as effective as it has
sion to El Salvador. a coalition of
114
24 private, voluntary groups
Whitewater's second casualty
T
hese are dangerous days to be a close lawyer
of "chemistry" between him and Miss Reno. The bad
friend of Hillary Rodham Clinton: Lani Guinier
blood may actually have been between Mr. Heymann
is licking her wounds, Vince Foster is dead,
and Mr. Hubbell, who regularly acted as a sort of sur-
Bernie Nussbaum is out of a job and has been sub-
rogate attorney general, running the department
poenaed by Robert Fiske Jr., and now Webster
according to the Clintons' druthers while Miss Reno
Hubbell has left the Justice Department under a
looked on.
cloud. The No. 3 man at Justice, Mr. Hubbell was on
Miss Reno is now going to have to run the frac-
the receiving end of a one-two scandal punch. He is
tured Justice Department all by herself, a task few
being scrutinized for his role in the Whitewater
think she is up to. She has shown little interest in
affair - for starters, did his work for the Federal
the crucial day-to-day tasks of deciding what suits
Deposit Insurance Corp., as custodian of the failed
to bring and which to settle. Mr. Heymann handled
Madison Guaranty Savings and Loan, constitute a
most of those questions involving criminal cases
conflict of interest in light of his own firm's former
and Mr. Hubbell took care of the civil cases. Expect
representation of Madison and in light of the fact that
the Justice Department to come to a screeching
his father-in-law had won a large judgment against
halt.
Madison that the government was appealing? And he
Mr. Hubbell's fate must also bring beads of sweat
is being investigated by his former partners at the
to the Clintons' brows, because it was precipitated
Rose Law Firm in Little Rock for overbilling. Yes-
by the much-buffeted Rose Law Firm. If the wall of
terday he resigned his position as associate attorney
silence around Rose is compromised by more than
general insisting that he would be thoroughly vin-
just the couriers who were pressed into shredding
dicated.
service, far more about the Whitewater fiasco may
Maybe. But his hasty departure makes little sense
become known. The aggressive assault by Rose
unless Mr. Hubbell knows he has some particular-
partners on Mr. Hubbell suggests that some lawyers
ly difficult rapids to negotiate. The billing question
in the firm are fed up. Consider the position of young
is not a niggling one: no small change here. The
partners, those 35-year-olds who have slaved for
money at issue may total more than $1 million. Such
years as associates at Rose and expected the eleva-
an embarrassing squabble would under normal cir-
tion of the Clintons to mean open partner slots and,
cumstances have elicited little more than Page 18
finally, the Little Rock gravy train. Turning on Mr.
news, but add to it the fact that the White House is
Hubbell may signal that the younger guard at Rose
already taking on water, and Mr. Hubble becomes
is no longer going to stand idly by while their careers
a true liability. Mr. Hubbell became just so much
are washed away in a scandal that has nothing to do
cargo to be jettisoned by the Clintons in the storm.
with them.
The most immediate affect of Mr. Hubbell's res-
Mr. Hubbell's bug-out is particularly revealing as
ignation is at an already rudderless Justice Depart-
regards the first lady. Much of her power was based
ment. Attorney General Janet Reno is now all alone
in her control over key appointments. Mr. Hubbell
in the executive offices of the department. The depar-
and Mr. Nussbaum were two such, and they are gone.
ture of Mr. Hubbell follows on the heels of Philip
The point is that Mrs. Clinton is unable to protect her
Heymann's resignation. Mr. Heymann, who was sec-
closest friends when they need her, which may be
ond in command, left Justice last month citing a lack
the most damaging revelation of all.
Robb VS. Robb
"I
believe 'character' is critically important in
ments from the senator. "I chose my words with
an elected official. Before I take the time to
care," the senator told The Post. "I previously said I
learn where a candidate stands on the issues
hadn't slept with anyone, hadn't had an affair."
or what a candidate's philosophy is, I want to know
This is the sort of casuistry that makes one cringe
about a candidate's integrity - and you ought to
while listening to President Clinton. (Asked whether
know mine too."
he had used drugs, Mr. Clinton responded that he had
So writes Sen. Charles S. Robb in a letter to Demo-
broken no U.S. laws.) Reporters on Mr. Robb's trail
cratic Party leaders seeking their support for his re-
weren't asking him for the specifics of his sexual acro-
election campaign. The letter concedes that over the
batics. They simply wanted to know if he was
years he has engaged in behavior unfit for a married
involved with someone who wasn't Mrs. Robb,
man. And it acknowledges he failed to destroy an ille-
regardless of the manner. And it is not a little disin-
gal recording of a car phone conversation of former
genuous now for the senator to claim he was telling
Washington MARCH 15, 1994
Gov. L. Douglas Wilder. But the senator strongly
the truth all along.
denies having used drugs or even having attended
So it is that in this controversy, as in other earlier
parties where others used them.
controversies, Mr. Robb finds himself having to
The letter left a lot of people slackjawed in amaze-
answer less to, say, Tai Collins, a beauty queen from
ment, given that it appeared just days before he for-
whom he claims to have received a back rub in the
mally announced for re-election: Why bring up all this
nude, or to Doug Wilder than to the public Chuck
stuff again, since a lot of it is old news? A Robb
Robb, whose image the senator and staff have care-
spokesman says he was not just trying to put an early
fully cultivated. The latter is the milk-drinking, ram-
"spin" on expected news stories in The Washington
rod straight ex-Marine, the one who served as Vir-
Post, which apparently obtained damaging office
ginia governor and the one who stood up to liberals
memos from a disaffected staffer ousted in the con-
in his own party and voted for Clarence Thomas. The
troversy over the Wilder tape. He just wanted to resolve
other, private Robb is the one can't justify his activ-
any lingering questions about past controversies.
ities to his own staff, much less the public.
Unfortunately, what the letter really did was
One memo to Mr. Robb complained that "you have
remind people why they are lingering. At one point,
not offered a credible explanation to the public or the
rumors about the senator's conduct at Virginia Beach
press as to why a man of your caliber, discipline and
parties apparently were spreading so quickly that
integrity was in Virginia Beach in the first place
staff members quietly went down there to find out
socializing with these men and women, and why you
what their boss was doing. What they heard, among
continued to do so after you were warned by others
other things, were allegations that on numerous
that there were possible problems ahead if you kept
occasions he associated with drug users and people
going to the beach."
who had served federal prison time on drug-related
If the term of President Clinton has proved any-
charges. The staff also heard and ultimately con-
thing so far, it is that character really does count. It
cluded that he had been having sexual relations,
is going to count in Mr. Robb's re-election cam-
including oral sex, with women half his age.
paign, and it is going to count in Oliver North's cam-
Such particulars are interesting primarily because
paign for the Republican nomination against Jim
they don't seem to square with earlier public state-
Miller. Mr. Robb is finding that out the hard way.
115
bc-hubbell times - a1739
(ATTN: National editors) (Includes optional trims)
No. 3 Justice Dept. Official, Close Clinton Friend Resigns (Washn)
By John M. Broder and Ronald J. Ostrow= (c) 1994, Los Angeles Times=
WASHINGTON Webster L. Hubbell, the third-ranking Justice Department
official and a close friend of President Clinton and Hillary Rodham Clinton,
resigned Monday amid allegations that he cost his former Little Rock law firm
as much as $1 million in unbilled time and improper expenses.
Hubbell said in a statement that an investigation into his billing
practices by his former partners at Little Rock's Rose Law Firm had become a
burdensome distraction and that he did not want to do further damage to the
administration by remaining in office.
The departure of Hubbell left a hole at the Justice Department, which has
not yet filled the spot vacated by the departure last month of the
department's second-ranking official, deputy Attorney General Philip B.
Heymann, who quit in a personality clash with Hubbell and Attorney General
Janet Reno.
The Hubbell resignation also intensified the growing cost to the Clintons
of the Whitewater banking and real estate affair. His departure also leaves an
impression of an administration in disarray.
It could not have come at a worse time for him and for the
administration, said a senior White House adviser.
Hubbell described the matters under dispute with his former firm as
private issues'' relating to compensation and reimbursement'' that have
nothing to do with the Whitewater affair or the president and first lady.
I am confident that at the conclusion of these discussions all
outstanding matters will be resolved satisfactorily, Hubbell said.
The Rose firm internal investigation came to a very acute head'' over
the past several days, according to knowledgeable sources. Hubbell's former
partners confronted him with how much money they believed he owed them and
said they could not settle the matter amicably, the sources said.
Hubbell decided Sunday to resign, knowing that the dispute with Rose would
spill over in the public arena, embarrass the Clintons and limit his
effectiveness at Justice, a senior White House official said. He did the
honorable thing, the aide said. He didn't want to ensnare the president
and the first lady.
Numerous calls to attorneys at the Rose firm went unanswered Monday. The
firm's outside counsel, Walter B. Stuart of the Houston firm Vinson & Elkins,
did not return calls seeking comment.
Hubbell, Mrs. Clinton and the late deputy White House counsel Vincent We
Foster Jr., who committed suicide last July, all were senior partners and
close friends at the Rose firm before coming to Washington with the
inauguration of Clinton.
Hubbell thus became the second casualty tainted by the roiling Whitewater
controversy in the past 10 days, following the resignation of White House
counsel Bernard Nussbaum on March 5, who quit after disclosures that he had
met with federal regulators looking into the Clintons' role in the Whitewater
case. Nussbaum, too, was a close friend of the first lady's, having worked
with her 20 years ago on the House Judiciary Committee considering the
impeachment of former President Nixon.
In his letter of resignation to the president, Hubbell wrote that dealing
with public speculation about me and my former law firm'' would consume
increasing amounts of his time and would limit his effectiveness in office.
Arriving in Boston for a political appearance, Clinton told reporters that
Hubbell made the right decision.
And while he praised Hubbell as a good personal friend'' and a lawyer
who is widely esteemed'' by those who know him, Clinton left himself
considerable distance in case the facts prove otherwise. I haven't talked
to him since this whole issue came up, Clinton said. He he repeated several
times that he had no knowledge of the facts.
(20
Hubbell strongly feels that he will be vindicated but it will take some
time for him to do it and that he shouldn't be working at
a public job while he's doing that,'' Clinton said. I think he's right.
(Optional add end)
The Rose firm has been investigating Hubbell's billing practices since
last year, when it discovered what it considered discrepancies in the hourly
billings and expense accounts of the former senior partner. The internal
review heated up last month when the monetary scale of the dispute became
clear and when Whitewater Special Counsel Robert B. Fiske Jr. announced that
he would investigate a broad range of activities at the Rose firm when
Hubbell, Foster and Mrs. Clinton were essentially in charge.
The matters under scrutiny internally at Rose involved the business
interests of Hubbell's father-in-law and brother-in-law, Seth Ward Sr. and
Seth Ward Jr., as well as Hubbell's work for federal bank regulatory agencies,
the Federal Deposit Insurance Corp. and the Resolution Trust Corp. The firm is
trying to determine whether Hubbell properly accounted for personal expenses
paid out of firm funds and whether there was any impropriety involved in
litigation costs borne by the firm in matters Hubbell handled.
Hubbell took on an unsuccessful copyright infringement suit that
a parking meter manufacturing company the Wards owned filed against
a competitor, according to White House and Justice Department sources. Hubbell
assumed the case on a contingency basis, an unusual arrangement for large
corporate law firm, meaning that if he lost the case his firm would bear the
expenses of the litigation.
Hubbell lost the case but didn't disclose the contingency fee deal to his
partners until after he joined the administration, the sources said. As a
result, Rose will receive none of the $500,000 in hourly billings amassed
during the litigation.
What's more, the firm was stuck with as much as $500,000 in additional
costs related to the case.
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121
bc-whitewater times - a1743
(ATTN: National editors) (Includes optional trims)
Susan McDougal Offers Little New on Whitewater (Little Rock)
By William c. Rempel= (c) 1994, Los Angeles Times=
LITTLE ROCK, Ark. Susan McDougal, the former real estate partner of Bill
and Hillary Rodham Clinton, broke the long silence that has made her the
mystery woman of Whitewater, but in a sometimes emotional press conference
here Monday she shed little light on that mystery.
Refusing to answer questions about the critical transactions that have
plunged the White House into controversy, McDougal instead declared her
innocence and accused the Republicans of persecuting her and her former
husband, Madison Guaranty Savings & Loan executive James B. McDougal.
I know that Jim McDougal did not ever knowingly violate any laws and
neither have I," she said, her voice quivering at times as she read a brief
statement from handwritten notes.
Left unanswered, despite repeated questions from reporters, was whether
Bill Clinton, while he was governor of Arkansas, played a role helping her
obtain a $300,000 loan in 1986 from the Small Business Administration-backed
investment fund of former judge David Hale.
Hale, who goes to trial on federal fraud charges later this month, says he
made the loan, intended for minority and disadvantaged borrowers, at the
specific request of the governor. James McDougal and the White House have
denied Clinton this.
Also unanswered was why she borrowed the money and what she did with it.
James McDougal has acknowledged spending about $110,000 of the Hale loan to
purchase land in the name of the Whitewater Corporation, the Clinton-McDougal
partnership that in 1978 bought 230 acres of raw land on the White Riversto
develop an Ozark Mountain resort.
In 1989, three years after the McDougals were forced out of the S&L by
federal regulators, James McDougal and two of Susan McDougal's brothers were
indicted on multiple counts of federal fraud violations. All three were
acquitted after a brief trial.
(Optional Add End)
On Monday she said the jury verdict should have ended the controversy but
that Clinton's election had renewed it.
Her attorney, Bobby McDaniel, said that the McDougals' Whitewater records
were all delivered to the governor's mansion in
a box at some time in 1991, before or possibly around the time that Clinton
declared his candidacy for president. The attorney said that Bill Clinton
personally requested the records and that Susan McDougal had one of her
brothers deliver the box to the Clinton residence.
She expected to get them back in a relatively short period of time,''
McDaniel said, but Susan and James McDougal say they have not seen those
documents since.
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(23
Next, Hillary Clinton is right to charge that partisanship is at work
here. She blames it on Republicans and others who have political or financial
reasons for opposing her husband's programs, but here she is off the mark. The
passionate rage with which the opposition party and its writers pursue the
Clintons comes from of 20 years of being told by Democrats that Republicans
and people who like the private sector are slimeballs.
In the years after Watergate, many of the Clintons' comrades, who in their
own lives were not known as notable sticklers for the rules, used the issue of
ethics as a tool against Republicans and conservatives. The ethics enthusiasts
encouraged journalists in the habit of thinking of scandal as the center of
political news.
Now the news media is hooked, with an addict's craving for scandal
politics. Republicans have come into possession of a satisfying fix. To ask
them now to stop in their tracks, assume the mantle of statesmen, and proclaim
this an occasion for both parties to kick the scandal habit is useless and
perhaps even counterproductive: The current scandal-mongering will probably
not stop until both parties have had their noses rubbed in it.
Yet perhaps the strongest subterranean stream feeding this scandal is
ambivalence about the first lady. This resentment is somewhat unexpected.
Hillary Clinton is admired by many for embodying the idea of the new, more
assertive woman who shares in her husband's career without sacrificing her own
individual work, interests and open access to political power.
Some people doubtless hate her for precisely this reason: She is
a woman exercising unprecedented female political authority. Others probably
dislike her certitude men because they think it pushy, women because it
refuses to acknowledge the tensions and ambivalence of their own lives as
workers, wives and mothers.
Most important, Hillary Clinton has run afoul of the deep American animus
toward nepotism. We hate the practice because it announces that power will be
distributed not according to rules by which all can compete but within
unbreachable walls of blood and kinship. Also, it enables some people in power
to escape the normal channels of accountability. Mrs. Clinton has so far not
been forced to give direct answers to questions about Whitewater. Each public
appearance she makes, answering only what she chooses to answer, delivers the
reminder that some politicians under scandal fire are more equal than others.
Whitewater shows us a scandal machine, built of multiple rules and the
large-scale urge to exploit them, that is expert in magnifying public figures'
sins. It also shows us that some of the designers of this machine did not take
it seriously either as a threat or as a guide to their own conduct.
The scandal displays a generation, finally come to power in the White
House, seemingly incapable of the self-discipline necessary to build an
organization that might present a reasoned response to
a crisis like Whitewater. Finally, it reveals a first lady who does not
understand that she must sometimes be governed by the rules and attitudes
that constrain more ordinary politicians.
We have seen the 1960s all grown up, and the sight makes a depressing
prediction about the course of the Whitewater scandal and the future of the
Clinton administration from here on in.
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138
bc-whitewater-comment - a0929
(ATTN: Editorial Page editors)
The Damage of Damage Control
Garment is a resident scholar at the American Enterprise Institute.
She is the author of Scandal: The Culture of Mistrust in American
Politics'' (Times Books).
By Suzanne Garment= Special to the Los Angeles Times=
Around Washington last week, political types have two major reactions to
the continuing Whitewater uproar. Some people express highly vocal
astonishment at how the still-unknown, probably-not-so-big Whitewater offenses
have acquired all the trappings of a major scandal. Other folks are just
tickled at the Clintons' troubles and opine righteously about the first
couple's arrogance of power. Neither school seems to see that a big part of
Whitewater's fascination is its role as a mirror to the entire bitter
politics of the past 25 years.
Clinton defenders are surely right about one thing: The underlying
offenses now laid at the door of the Clintons, especially of Hillary Rodham
Clinton, are sins often committed in state politics with only minor comment.
Money may have moved illegally between Bill Clinton's Arkansas campaign funds
and the Whitewater Development Corp. but so far we've heard no evidence that
the Clintons knowingly violated the law. It may also be that indebtedness to
Clinton swayed an Arkansas banking regulator's decision about whether to
sanction the practices of Madison Guaranty Savings and Loan, but such crimes
are notoriously hard to prove.
True, it was not just these allegations that made Whitewater fester and
spread. There was also what is now known as the cover-up. The Clinton
administration has behaved almost inexplicably in reacting to this scandal.
Recently ousted White House Counsel Bernard W. Nussbaum and Hillary Rodham
Clinton both worked for the House Judiciary Committee during Watergate in a
successful attempt to bring down President Nixon. In other words, they helped
create the climate of pervasive political mistrust without which Whitewater,
at least in its current bloated form, could not happen. No wonder people are
asking how these same two people could be so blind to the moral and practical
dangers of stonewalling?
But the puzzle is broader than that. In the time since Watergate, we have
seen scandal after scandal follow the same pattern: exposure of wrongdoing,
cover-up, exposure of cover-up, conflagration. In other words, we have had 20
years of training in the difference between successful and self-destructive
damage control. Where were the Clintonites while all this was going on?
Yet the facts are unmistakable: In the wake of Vincent W. Foster Jr.
suicide, some of the Clintons' papers were removed from his office and sent to
their outside personal lawyer rather than remaining available to federal
investigators. The first couple strenuously resisted giving the Justice
Department documents in their control. Other documents were shredded by
Hillary Clinton's old law firm. White House aides met with regulators to
discuss an investigation in which the Clintons were involved.
So what is going on here? Well, one factor at work is that the Clinton
White House has been operating with an insufficient amount of adult
supervision.
The tales of White House staff behavior are numerous and consistent:
Meetings called on the spur of the moment. Often anyone can walk into a
meeting and ask a question. Whenever crisis strikes, everyone drops what he or
she is doing and races in that direction. As one administration official
described, They're like little kids just learning soccer. They don't know
how to play their positions: When the ball moves, the whole team just follows
it.''
From time to time an outsider, like David R. Gergen or Lloyd N. Cutler, is
brought in as savior and legitimator. But the White House insiders resist
acculturation. Thus it is no surprise that some of the Whitewater mess is due,
just as administration spokesmen have said, to dumb mistakes.
137
From Boston Globe Page 1
Clinton aide
quits in rift
with firm
in Arkansas
No. 3 official at Justice Dept.
denies any Whitewater link
By Ana Puga
said Hubbell made the decision to resign on his own.
GLOBE STAFF
"This is not something the White House asked him
to do," she said.
WASHINGTON - Associate Attorney General
Attorney General Janet Reno's voice shook as
Webster L. Hubbell resigned suddenly yesterday,
she briefly appeared before reporters yesterday
adding to the turmoil in the Clinton administration,
afternoon to announce Hubbell's departure. Aides
amid reports of a deepening dispute between
said the decision had come as a shock to her.
Hubbell and his former Little Rock law partners
"There are no words capable of fully conveying to
over past billing practices.
you my deep respect and admiration for Web
The dispute with the Rose Law Firm appeared to
Hubbell or how sad this event makes me," Reno said.
be only tangentially related to the Whitewater
Besides adding to Whitewater-related
controversy plaguing both the administration and
speculation, Hubbell's departure creates a larger
the firm. But an aide to Hubbell said the longtime
vacuum at the top of the Justice Department. The
Clinton adviser had decided on his own last weekend
No. 2 slot has been empty since last month, when
that he needed to focus full time on clearing himself
Deputy Attorney General Philip B. Heymann
of allegations that he had cost his former law firm
resigned, citing management-style differences with
more than $1 million in unbilled time and that he had
Reno. Heymann's designated replacement, Pentagon
not properly accounted for his expenses.
counsel Jamie Gorelick, has not yet been approved
In resigning, Hubbell said his effectiveness as
by the Senate.
the Justice Department's No. 3 official was being
Reno said she has not yet decided who will
compromised. adding in a statement, "It is with deep
replace Hubbell and does not know when his
regret that I have seen private issues between me
resignation will become effective. A longtime Clinton
and my family and my former law fi:m elevated to
adviser, Hubbell had served as the main link
public speculation."
between the Justice Department and the president.
Hubbell's resignation followed within 10 days
but Reno denied that his departure would affect
that of White House counsel Bernal d Nussbaum, a
Justice-White House communications.
central figure in accusations that administration
Hubbell's responsibilities also included civil
officials had met improperly with federal regulators
rights, antitust and immigration policy.
during their investigation of the Whitewater land
According to a Wall Street Journal article
deal.
yesterday, partners in the Rose firm are questioning
The two resignations have contributed to an
Hubbell's decision to represent his brother-in-iaw,
atmosphere of disorder and instability, damaging
Seth Ward, on a contingency-fee basis. Because
Clinton's attempts to carry on with his legislative
Hubbell lost the case, Rose could not charge for
agenda. Clinton, in Detroit yesterday for a jobs
$500,000 in time spent on the matter.
conference among industrialized nations, ignored
In his statement, Hubbell insisted that the
questions about Hubbell, but later said in Boston
dispute with his former employer is unrelated to the
that the decision to step down was "the right thing to
Whitewater case, in which the Rose Law Firm
do."
played a role, and unrelated to the question of
Clinton said he did not believe his old ally had
whether the Clintons had improperly used their
done anything wrong. "Based on my knowledge of
influence in the matter.
him. I find that hard to believe. We just have to
Hubbell said it was "unfortunate that private
give him a chance to go home and deal with this and
issues between me and my firm have been cast. by
see what happens." Clinton said.
some, as being part of a broad political net called
Dee Dee Myers, the White House spokeswoman,
Whitewater
These private issues have nothing to
1
do with Whitewater," be said.
Hubbell's spending broke this month, Reno
But questions have been raised as to whether the
suggested the matter was a minor query on some
Rose Law Firm behaved properly in representing
past expenses. She insisted that Hubbell had done
first Madison Guaranty Savings and Loan and then
nothing wrong. Reno yesterday conceded she did not
the Resolution Trust Corp., after it took over the
know the details. but continued to defend him.
failed thrift. Robert Fiske, the Whitewater special
"I don't believe he did a thing wrong, and I think
counsel, has subpoensed documents relating to the
ultimately that that will be clear to everyone," she
cases.
said.
Although Hubbell said Whitewater was a
Later she added, "I don't have any knowledge of
separate matter, Justice Department sources said
the facts. I base it on my judgment of his character:"
privately that the associate attorney general felt
pressured by the bue and cry surrounding that case.
When news of the Rose tirm's investigation into
(43
BC-CLINTON-NORMALCY (SCHEDULED)
CLINTON SEEKS NORMALCY BUT TROUBLES STALK HIM
By Susan Cornwell
BOSTON, March 15 (Reuter) - It was supposed to be the day the Clinton
White House got back on track, but it was interrupted by something like a
train wreck as the administration was hit by the resignation of another top
official under a cloud.
President Clinton's Monday began in Detroit with Clinton speaking about a
favourite subject, the reviving U.S. economy.
By late afternoon a saddened president was in Boston trying to explain
his latest personnel problem and minimise the damage to his administration.
An old friend of Clinton's from Arkansas, Associate Attorney General
Webster Hubbell, unexpectedly resigned. The resignation came amid questions
about billing practices at the Rose Law Firm in Little Rock, Arkansas, where
he was an associate of first lady Hillary Rodham Clinton.
It was another setback to an administration already staggering from the
Whitewater affair and trying to refocus attention on policy.
As I said, I have no knowledge of this, Clinton told reporters in
Boston who asked about possible harm to his administration. ``This is, to me,
more of a personal deal for Webb Hubbell.
But White House officials were clearly crestfallen that the week during
which they hoped to get attention back on domestic issues had started so
badly.
The president launched a three-day trip Sunday that was supposed to
concentrate on the economy, including a speech at the international jobs
conference in Detroit, and to get away from Washington and two weeks of
unseemly Whitewater headlines.
`Whitewater'' takes its name from the Whitewater Development Corp, a now
defunct Arkansas real estate venture in which then-Arkansas Governor Clinton
and his wife invested.
A special counsel is investigating Whitewater's ties to the failed
Madison Guaranty savings and loan in the 1980s.
The scandal exploded in Washington this month with word that 10
administration officials had been subpoenaed to testify about several
meetings between White House and Treasury Department staff concerning a
federal probe into the Whitewater affair.
The Republicans cried `coverup'' and on March 5, White House counsel
Bernard Nussbaum was forced to resign after admitting he took part in the
meetings on the investigation with Treasury aides.
His was the latest in a string of high-profile departures from the
administration that were unrelated to Whitewater, including Les Aspin,
Clinton's first defence secretary, and Deputy Attorney General Philip
Heymann, who quit over a personality clash with Attorney General Janet Reno.
There has been a barrage of bad press lately, White House spokeswoman
Dee Dee Myers acknowledged to reporters Monday morning in Detroit, just before
Clinton addressed the labour and finance ministers of the leading industrial
nations on a global approach to growth.
We'll do everything we can to get attention back on the things that
matter, Myers said.
But when Hubbell's resignation burst into the headlines in the afternoon,
it bumped Clinton's remarks about global growth and jobs right out of the
spotlight.
Television newscasts Monday evening focused on the president's problems
again, including rehashes of the Whitewater scandal, even though the
administration asserted there was no link between the affair and Hubbell's
decision to step down.
Hubbell's name, however, has been linked to Whitewater. His father-in-law
is said to have borrowed money from Madison and was an executive of a Madison
real estate subsidiary.
There had also been questions on whether the Rose Law Firm where Hubbell
worked had misled the government about previous work done for the failed
Madison thrift. In November, Hubbell removed himself from any involvement in
Whitewater matters.
As Clinton sought to distance himself from Hubbell's resignation Monday,
a senior White House official admitted, ``We can't always control the timing
of these things.
If the president had any bad feelings about Hubbell's resignation, ``he
didn't express them, the official said.
But by Monday evening the president was sounding defensive, charging that
Republicans opposed to his policies were `committed to the politics of
personal destruction.'
``I never did them (the Republicans) the way they are doing us today in
Washington D.C., he told a Democratic fundraiser in Boston. ``It is wrong,
and it is not good for the United States of America.
REUTER
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bc-hubbell-career - a1933
(ndy) (ATTN: National editors) (Includes optional trims)
A Tangled Web of Questions About Hubbell (Little Rock)
By John Riley= (c) 1994, Newsday=
LITTLE ROCK, Ark. Associate Attorney General Webster Hubbell is President
Clinton's golfing buddy. He was Hillary Rodham Clinton's former law partner at
the Rose Law Firm, and her partner in an investment group as well. And as the
Justice Department's third-ranking official, he was a trusted loyalist at one
of the most sensitive agencies in the federal bureaucracy.
But despite his ties to the first family, by the time of his resignation
Monday Hubbell had also become a potentially serious political liability his
billing practices for government and other clients under scrutiny at Rose, and
his sensitivity to possible conflicts of interest under investigation by two
federal banking agencies.
From the time of his confirmation hearings in 1992, controversy has
surrounded Hubbell, an affable former football lineman at the University of
Arkansas and former Little Rock mayor known here more for his connections and
his ability to bring in clients than for his lawyering skills.
A corporate lawyer, he listed some of Arkansas' most powerful companies
Stephens Inc., Worthen Bank, Wal-Mart and Tyson Foods among his major
clients, along with several out-of-state Fortune 500 companies and two federal
banking agencies, the Resolution Trust Corp. and the Federal Deposit Insurance
Corp. He made more than $300,000 his last year at the firm.
To get confirmed, he had to agree to resign from an all-white country
club, where Clinton had also golfed, to counter complaints about his racial
sensitivity. And he also denied accusations from a local stockbroker that some
of his personal stock purchases appeared to rely on unusually astute inside
knowledge about the affairs of one of his corporate clients.
Hubbell became embroiled in the sprawling Whitewater controversy last
year, following disclosures that he had been the lead lawyer at Rose
representing the FDIC and Resolution Trust in a 1989 suit against the former
accountants of Madison Guaranty Savings and Loan, after the agencies took
over the failed thrift. The $10 million suit was eventually settled for $1
million, and Rose received $400,000 in fees.
The problem: There was, and is, no written evidence that Hubbell advised
the two agencies of Rose's previous links to Madison. First, Madison, which
cost taxpayers more than $47 million when it failed, had been owned by James
McDougal. McDougal was a partner of the Clintons in the Whitewater land
development scheme.
McDougal had put Hillary Clinton on a $2,000-a-month retainer in the
mid-1980s to try to convince a state securities commissioner appointed by
then-Gov. Bill Clinton to approve an unusual financing scheme and she had
relied on reports by the very accountants Rose sued in 1989.
That, ethics experts say, raised questions about whether Hubbell could
aggressively pursue allegations of faulty audits against the accountants
without risking embarrassment to his own law firm. Among other problems, Rose
itself might be subject to a suit by the FDIC or RTC if evidence surfaced that
it knew in the mid-'80s that the accountants had painted a too-rosy picture of
Madison.
Second, Hubbell's father-in-law, Seth Ward, the former owner of
a major Arkansas parking-meter manufacturer called P.O.M. Inc., had been
involved in some of the real estate deals at Madison that federal banking
regulators were questioning. In fact, he was suing Madison and the agencies
for real estate commissions that he claimed were owed.
Hubbell and Hillary Clinton were representing P.O.M., owned by his
brother-in-law Seth Ward II at the time. And, while Hubbell promised
regulators who raised questions not to represent relatives in disputes with
Madison, court records showed that he later called Ward's lawyers to give
them a piece of helpful information (gleaned from a newspaper) in the suit
against the agencies. That, according to ethics experts, raised questions
about his loyalty to his own client.
Last month, with the FDIC and Resolution Trust still studying possible
sanctions against Rose for those conflicts, Hubbell came under fire again with
reports that his former firm was investigating his billing practices, and was
considering reporting him to the Arkansas bar association.
(Optional add end)
Among other problems, Hubbell apparently had handled a patent infringement
case for P.O.M. under an unusual fee agreement that required Rose rather than
the client to pay a reported $500,000 in fees to expert witnesses. That,
sources said, didn't set well with the partners left behind in Little Rock
after Hubbell went to Washington.
Rose also raised questions about possible overbilling by Hubbell,
including charging personal expenses to client accounts and billing for the
work of others.
Although the billing issues were primarily focused on Hubbell, they had
potential ramifications for the Clinton administration as well. According to
some reports, the Rose investigation of his billing practices began in 1992,
raising questions about whether Hillary Clinton and former Rose managing
partner William Kennedy, now deputy White House counsel, knew about it and
failed to report it to Congress and the FBI when Hubbell was being confirmed.
Distributed by the Los Angeles Times-Washington Post News Service=
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BC-USA-HUBBELL (SCHEDULED)
WHITE HOUSE STRESSES HUBBELL WASN'T FORCED OUT
By Irwin Arieff
WASHINGTON, March 15 (Reuter) - The White House is stressing that
Associate Attorney General Webster Hubbell acted on his own when he resigned
his Justice Department post in a move that both Hubbell and the White House
agree has no connection to the Whitewater affair.
This is, to me, more of a personal deal for Webb Hubbell, President
Clinton told reporters Monday when asked whether Hubbell's decision was a
setback for his administration as it sought to dig itself out from Whitewater.
``I'm just hoping that it works out for him and I think he made the right
decision, Clinton said, stating that he had not been involved in Hubbell's
decision.
Hubbell said he had to resign to deal with an ugly billing dispute with
his former law partners at the Rose Law Firm in Little Rock, Arkansas.
In his resignation letter, he said he could no longer be effective as the
Justice Department's third-ranking official because of the time he had to
spend dealing with questions about his billing and expenses at the Arkansas
firm.
But the timing could not have been worse for the Clinton administration,
which has been struggling to shift the national focus back to policy and away
from Whitewater.
``It
is unfortunate that private issues between me and my firm have
been cast, by some, as being part of the broad political net called
Whitewater, Hubbell said in a statement issued along with his resignation
letter.
Hubbell had been a partner of first lady Hillary Rodham Clinton at the
law firm, and he has been a longtime friend and golfing companion of the
president.
His resignation marked the third recent departure of a senior
administration official. The others were:
-- White House counsel Bernard Nussbaum -- also a close friend of the
first lady -- who was forced to resign earlier this month after admitting he
met with Treasury Department officials concerning a federal probe into
Whitewater.
Deputy Attorney General Philip Heymann, who quit due to a personality
clash with Attorney General Janet Reno.
In Little Rock, 15 partners of the Rose firm met privately into the
evening hours to discuss the Hubbell matter.
Afterward, the partners left the firm offices without responding to
reporters' questions on whether they would seek disciplinary action against
him from state legal authorities.
Hubbell said he was `confident'' that his dispute with his law firm
will be resolved satisfactorily'' and left open the possibility of returning
later to government service.
This is not something the White House asked him to do, White House
spokeswoman Dee Dee Myers said, referring to Hubbell's decision to resign.
Clinton had not spoken with Hubbell from the time his troubles with the
Rose Law Firm came to light two weeks ago until after his decision to resign
was announced Monday, a senior administration official insisted.
Asked if he was aware of any Hubbell wrongdoing involving the Rose firm,
Clinton said, I have no knowledge of the facts. Based on my knowledge of
him, I find that hard to believe.
Speaking with reporters on a trip to Boston, a sad-looking Clinton
predicted Hubbell would be vindicated but added, ``I think he did the right
thing.
Though Hubbell's private dispute with his old law firm was unrelated to
Whitewater, his name has figured in the affair.
His father-in-law had borrowed hundreds of thousands of dollars from
Madison and was an executive of a Madison real estate subsidiary.
Hubbell in November removed himself from any involvement in Whitewater
matters after questions were raised about a possible Rose Law Firm conflict of
interest in work it performed for the government and for the failed Madison
bank.
REUTER
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