FBI Collects Whitewater Documents

FBI agents are sweeping up land records that could provide authorities with the first complete financial portrait of a controversial real estate partnership between President Clinton, First Lady Hillary Rodham Clinton and the owner of a failed savings and loan.

County officials here said Wednesday that FBI agents had taken copies of deeds and other records of a project of the Whitewater Development Corp., the partnership at the center of the controversy.

By reconstructing the sale of 44 parcels of land in Whitewater’s 200-acre development here, the FBI could get the first complete picture of how much money flowed into and out of a deal that the Clintons say cost them nearly $69,000 in losses.

The records also will augment a report on Whitewater prepared for the Clinton campaign to rebut questions about the project that were first raised during the 1992 presidential race. Some experts contend that the campaign report does not represent a clear financial picture of the venture’s profitability.

Clinton, calling the Whitewater issue “ancient history,” said earlier this week that it had been thoroughly investigated. However, only in recent weeks has the FBI collected hundreds of documents on the project from county offices in Arkansas and begun to compile the project’s financial history.

Officials in the Marion County clerk’s and assessor’s offices said that FBI agents had visited them several times recently, examining and copying Whitewater documents.

“They come in, flash their badges and start going through records,” said Mary Jo Layton, the clerk of this rural county in the Ozark Mountains of northern Arkansas. “They are pulling all the deeds for Whitewater.”

The project was intended to create a resort community on the banks of the White River when it was started in 1978 by the Clintons and James B. McDougal, a Clinton political confidant who later acquired Madison Guaranty Savings & Loan.

Today, only a handful of houses have been built on the site and the deal has become the focus of questions about the relationship between the Clintons and McDougal, whose savings and loan failed in 1989 at a cost to taxpayers of $47 million. The White House asked Atty. Gen. Janet Reno Wednesday to appoint a special counsel to investigate Whitewater.

Republican critics of Clinton have claimed that the White House has not released documents that provide an accurate picture of Whitewater’s finances. Some of the Clintons’ personal Whitewater documents were in the office of Vincent Foster, the deputy White House counsel, when he committed suicide in July. Only recently have they been turned over to the Justice Department, which had requested that a grand jury subpoena them.

So far, the only financial picture of the Clintons’ involvement in the ill-fated project has come from the 1992 report prepared for the presidential campaign. But independent experts have raised questions about the accuracy and thoroughness of that document.

“The report is rife with gaps and inconsistencies,” said Bert Ely, a financial consultant in Alexandria, Va., who has been involved in many financial reconstructions. “The fact is that the numbers don’t add up.”

The report shows that the Clintons lost $68,900 on their investment in Whitewater. They sold their interest to McDougal for the nominal amount of $1,000 in December, 1992.

James Lyons, the Denver attorney and Clinton friend who commissioned the report in 1992, defended the document’s findings in an interview Wednesday.

“I feel absolutely confident that it is a credible and reliable document,” said Lyons. “It was the best we were able to do with the information we had at hand.”

Some records of the partnership were missing and Lyons had the report prepared by a forensic accounting firm in Denver that specializes in financial reconstructions in difficult cases.

Among the missing documents, he said, were records of a $550,000 land purchase involving Whitewater in the fall of 1986.

The White House has said that the purchase was undertaken by McDougal and his wife, Susan, without the Clintons’ knowledge.

Lyons said the working papers that he and the accounting firm used to prepare the report had been subpoenaed by the FBI and would be turned over next week.

Goodman is a special correspondent and Frantz is a Times staff writer.