Diversion of Whitewater Funds Disputed : Inquiry: Lawyer for head of defunct S&L; says the only possible source of cash would have been an account subject to review by bank examiners.

The attorney for a key figure in the controversial Whitewater land deal on Sunday insisted that funds from a failed Arkansas savings and loan could not have been diverted into Bill Clinton’s gubernatorial campaign coffers without being noticed by a host of federal agents.

Sam Heuer, attorney for James B. McDougal, the president of the defunct Madison Guaranty Savings & Loan, said the only possible source of diverted funds would be Madison Guaranty’s “cash account”--a pot of money that Heuer said “is the first thing the (bank) examiners look at.”

Bank examiners, FBI agents and Justice Department attorneys “pored over” the account’s records and McDougal “would have been very quickly charged at that point in time with criminal activity had any money been diverted,” Heuer said on ABC-TV’s “This Week With David Brinkley.”

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Heuer was commenting on one of the central questions surrounding the tangled land deal in which President Clinton, his wife and McDougal were investors: whether Clinton’s 1984 gubernatorial campaign benefited financially from his relationship with McDougal.

But the remarks left unanswered some of the Whitewater deal’s other mysteries, including whether then-Gov. Clinton may have acted to shore up the failing thrift, which was seized by regulators in 1989, to help his business partner.

In another development, the Administration stepped up efforts to put the Whitewater affair behind it following a decision last week to ask Atty. Gen. Janet Reno to name a special counsel to investigate the Clintons’ role.

Speaking on NBC-TV’s “Meet the Press,” presidential counselor David Gergen, reviewing the White House’s handling of the Whitewater affair, acknowledged that “there are some things we would have done differently,” but he said that “we’ve dealt with it, we’re moving on.”

He added: “We really don’t plan to be talking about it very much from the White House. We don’t see the need for it.”

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Two key Republicans suggested that there will be limits to the GOP effort to probe the politically charged affair. Senate Minority Leader Bob Dole (R-Kan.), who has called for a congressional investigation into the matter, said that “we need to wait and see” who is appointed as special counsel. “That may change the attitude some.”

At the same time, Dole made clear that Republicans pressing for a congressional inquiry are seeking to turn the tables on congressional Democrats, who conducted a total of 18 investigations into alleged presidential wrongdoing during the Ronald Reagan and George Bush administrations.

“I think the bottom line here is the Democrats will investigate Republicans, as they did 18 times in 12 years . . . but Democrats in Congress aren’t going to investigate Democratic administrations,” he said.

Rep. Jim Leach (R-Iowa), who has been one of the key GOP figures raising questions about the Whitewater affair, pledged to proceed on his own if the Democrats refuse to create a bipartisan panel to investigate Whitewater.

But he said he will not seek testimony from First Lady Hillary Rodham Clinton, who was Madison Guaranty’s attorney at the time.

“Nothing would be more inappropriate than a congressional effort to embarrass Mrs. Clinton,” he said.

“We are looking at a prior elected official, a current elected official,” he said, referring to the President.

In pressing his case for a congressional probe, Leach, the ranking Republican on the House Banking Committee, noted that while a special counsel would focus on potentially criminal activity, Congress would be the appropriate body in which to air issues of “public trust.”

“This isn’t the largest issue. It’s somewhere between much ado about nothing and something might be a little rotten in part of the Ozarks,” he told CBS-TV’s “Face the Nation.” “There are possible breaches of law, but more importantly, there’s a public ethic here that’s at issue.”

However, Heuer disputed the suggestion that investigators will find breaches of law in documents turned over to investigators by McDougal and others involved in the Whitewater deal.

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Madison Guaranty’s books were examined by the Federal Home Loan Bank Board twice, once in 1984 and again in 1986, Heuer said. The institution was also investigated by the Federal Deposit Insurance Corp., the Federal Savings and Loan Insurance Corp. and two independent accounting firms, as well as by attorneys of the Justice Department and the FBI, he said.

“I don’t know of any real major secrets in any of the Whitewater materials, and I would suspect, were there some secrets, we would have known about them long before now,” Heuer said.

He likened public concern over the Clintons’ relationship with McDougal to anti-Communist hysteria, and he chided journalists, who he said are making mountains out of “molehill issues.”

“The linchpin of this whole thing seems to be the fact that Jim McDougal was a savings and loan executive, which is akin to being a Communist in the McCarthy era or a witch in the Salem era, and that’s ludicrous,” he said.