Los Angeles Times Interview: James Leach : Viewing Whitewater as a Matter of Public Ethics

<i> Michael Ross covers Congress for The Times</i>

Not given to overstatement, Rep. James A. Leach of Iowa is the first to admit that, as scandals go, Whitewater is no Watergate. And yet by a twist of fate, Watergate was indirectly responsible for the fact that Leach now finds himself cast as President Bill Clinton’s chief congressional accuser in the controversy involving a failed Arkansas thrift and its ties to a real-estate venture half owned by the Clintons.

Two decades ago, it was Watergate and a confrontation with another President--Richard M. Nixon--that changed Leach’s life, propelling him into politics and setting him on a career path that would lead to the House Banking Committee, where he now sits as ranking Republican. Then a rising young diplomat with a masters degree in Russian studies, Leach had just been assigned to Moscow when Nixon fired Archibald Cox as special Watergate prosecutor in the Saturday Night Massacre. Outraged by the abuse of presidential power, Leach promptly resigned from the Foreign Service, saying his conscience no longer allowed him to serve in Nixon’s government.

Instead of Moscow, Leach went home to Davenport, Iowa, to help run the family propane-gas business. When he launched his first bid for Congress in 1974, only four people showed up for the rally. However, one of them, architect Elizabeth Foxley, became his wife the following year. They have two children. Elected on his second try in 1976, Leach has easily won reelection ever since.

Soft-spoken and almost priestly in demeanor--a colleague jokes that when Leach speaks, he expects “the words to come out in Latin"--Leach is, at first blush, an unlikely candidate to take on the President. Though a fiscal conservative, Leach is so liberal on social issues that his fellow Republicans frequently deride him as a “crypto-Democrat.” Indeed, Leach’s main targets have been Republicans--Nixon for Watergate, Ronald Reagan for Iran-Contra and the GOP leadership for its embrace of the religious right. He was a friend and defender of George Bush, but often voted against the latter’s positions.


Until now, Leach, 51, was perhaps best known for the crusade he waged in the Banking Committee during the 1980s, to stave off what he warned was an impending S&L; crisis by requiring thrifts to increase their capital and restrict speculative investments. At the time, he was widely ignored by both Democrats and GOP, who now ruefully admit they were wrong while he alone was right.

In Whitewater, Leach has an issue that friends say engages his two main passions: banking and public ethics. And in the party pariah, the GOP leadership has found an unlikely but useful champion--whose squeaky-clean record and history of nonpartisanship makes him nearly impervious to Democratic charges that he is only trying to embarrass Clinton for political reasons.


Question: The polls suggest Americans are still unsure what Whitewater is about and have trouble understanding the Clintons’ role in it. So to start with, what is Whitewater about and why should Americans care about it?


Answer: Whitewater is about conflicts of interest . . . involving a real-estate investment in which one-half of a partnership put in substantially more resources than the other half. They also involve the intermixing of taxpayer-guaranteed resources with a private venture, to the potential advantage of a public official. That is what makes the circumstance a public rather than simply a private interest. It should be stressed that on the public record is the fact that a failed savings and loan infused far more capital into Whitewater than then-Gov. (Clinton).

In a nutshell, you have a conflict of interest in multithousand-dollar proportions which may have contributed to multimillion-dollar losses for the taxpayer when the S&L; subsequently failed--due, in part, to its investment in Whitewater and other real-estate ventures of quasi-similar composition.

Q: You have been conducting your own Whitewater probe and have turned over the results to Special Counsel Robert B. Fiske Jr. What evidence did you find to show that money was diverted from Madison Guaranty to Whitewater?

A: We provided a series of check stubs that show money flowing (into Whitewater) from Madison-affiliated entities. Then there is on the public record the Madison Marketing $7,500 check that went to pay off a Clinton loan. Then (RTC investigator) Jean Lewis has indicated that she found approximately $70,000 going . . . into Whitewater over a six-month period alone.

So you have three precise sets of evidence. One is the $7,500 check; one is the $70,000 transfer, for which, by the way, there is also a check trail, and thirdly, the check stubs that relate to a series of small transfers in an earlier time period. That is the evidentiary circumstance laid on the table.

Q: And do you believe the Clintons were aware of at least some of these transfers?

A: If one views the former governor and former first lady of Arkansas as passive investors with little involvement in the deal-making ethos of the politics of the time in Arkansas, then it is credible to assume that they might not have known. On the other hand, if one’s assessment of (the Clintons) is a little more skeptical, one might reach a different conclusion. Those are judgmental elements at this time, not proven circumstances.

But let me stress that Whitewater also received an infusion of funds from a small-business investment corporation (Capital Management Services, Inc.) . . . and its former head, who has plea-bargained with the special counsel, has alleged that the governor urged him to make this particular loan and that the funds for this loan originally came from a substantial loan from the S&L; Madison Guaranty. So these are the allegations on the table, though they are by no means proven.


Q: Polls also indicate that most Americans believe the media is paying too much attention to Whitewater. How has the media handled it in your view?

A: Yes, we have given too much attention to the issue. My own sense is that what you have here is an issue of public ethics that deserves being raised--and then deserves being resolved. All the minority ever requested almost five months ago was for a hearing on the subject. If that hearing had occurred, this would have been a one-to-three-week issue. As it worked out, the decision to deny public accountability piqued public interest, and particularly press interest, and the issue escalated . . . . It’s one of the reasons why I have repeatedly suggested that, with full public disclosure and full accountability, I am more than willing--in fact, I am quite eager--to bring this issue to resolution. It’s my view that accountability is in order, but that a constitutional crisis is not.

Q: Republicans say Democrats are trying to keep Whitewater from coming out. But didn’t Republicans try to do the same thing with Democratic-driven probes like Watergate, Iran-Contra and Iraqgate--which you yourself opposed?

A: Wait just a minute. I am on the public record as supporting the Iraqgate inquiry. I was also Congress’ leading critic on the legal and constitutional implications of the Iran-Contra policy. I supported every investigation in the House Banking Committee--including those critical of a number of Republicans. In fact, I suggested the investigation of Republican Gov. (Fife) Symington . . . . The only investigation I had doubts about was the so-called October Surprise, which is the one issue in which George Bush was somewhat vindicated.

Now, I didn’t draw the same conclusion that everyone did (about Iraqgate) . . . . But I supported the decision to go ahead with the inquiry.

Q: You’ve been described as moderate and nonpartisan. But now some Democrats are saying that ambition has driven you to the right; that you’re looking for a party- leadership position; that you’re much more partisan now. Who is Jim Leach, and why is he so fixed on Whitewater?

A: First, let me say that I’m perplexed at all of the motivational queries. In all of the major (congressional) probes of the last several decades, no one .. . . questioned the motives (for holding them). In terms of party leadership, I’m not a candidate for any House leadership position, and I’ve made that very clear.

But if you’re looking for motives, part of it relates to a strongly held conviction that public ethics are not an issue of the left, right or the center. I feel this very strongly. To paraphrase Barry Goldwater, “Moderation in the pursuit of truth is no virtue and vigilance in defense of public ethics no vice.”


In terms of happenstances, I came to be the ranking member of the committee of jurisdiction over the S&L; circumstance . . . in which state governments in a small number of states played a significant role in the losses that occurred.

I’ve argued that there is a tripod of responsibility for the largest, single, domestic public-policy mistake of the century--the quarter-trillion-dollar S&L; debacle.

One part of the tripod relates to loose laws passed by a loose Congress; a second part relates to ideological decision-making within the Reagan Administration on deregulating an industry that demanded certain standards, and the third part relates to a small number of states--in particular, Texas, Louisiana, Arkansas, and California--which failed both at the regulatory end and at the legislative and executive levels to recognize their responsibilities to the deposit-insurance system . . . .

In Arkansas, the percentage losses were as extraordinary as they were in any state . . . . While Whitewater started out as just a basic real-estate development effort, by the time it was over, it had become a real-estate development effort that included substantial infusions of taxpayer-guaranteed resources . . . . In the end, it was the taxpayer that picked up the tab for some of the speculative investments of a political figure.

So all I would suggest is that motivational aspersions are no substitute for full disclosure. They are not answers to the questions raised.

Q: Are you under pressure from the GOP leadership to press ahead with your probe?

A: No, sir.

Q: What about the motives of some of your more partisan colleagues?

A: I am very ill at ease with speaking about partisanship, but I will say this: It is a responsibility of all minority parties in all Western democracies to shine the spotlight of embarrassment on the ruling or governing parties when they breach the law or breach public ethics.

I also believe it’s the constitutional duty of a member of Congress to oversee the executive branch . . . . By chance, as the ranking member of the committee of jurisdiction, a little extra responsibility has fallen on my shoulders. Not by choice, but by circumstance.

Q: The Democrats say they will allow Whitewater hearings only if they don’t interfere with Fiske’s investigation. Are you confident that hearings will be held?

A: It’s more likely they will be held in the Senate than in the House . . . . But I have some doubts that full-blown hearings will be held.

Q: Will you press the issue when Congress returns from its spring recess?

A: This is a good time for a bit of a respite. There is no individual in America who would be happier to put this issue behind them more than I--with the possible exception of the President and the First Lady.

Q: Are you saying you are not going to press for hearings, that you’ve made your case and are ready to let things lie as they are for a while?

A: No, no . . . . But my own sense is that now would be a good time to give the special counsel a little bit of rope to proceed. While Congress has historically had in-tandem probes with U.S. attorneys or special prosecutors, there is no necessity that they occur at this time. A little slack isn’t inappropriate.

Q: Are you confident Fiske will do a thorough job in his investigation?

A: I firmly believe Fiske is a very honorable man and that he will do a very honorable job. If I were to give him any advice, it would simply be to give the President of the United States the benefit of the doubt at every turn.

Q: The Democrats fear Republicans will use Whitewater to sidetrack health care and other issues on Clinton’s legislative agenda. What is the likelihood that Whitewater will overshadow the congressional agenda?

A: I personally, totally and completely concur that it’s crucial we not let an issue like this sidetrack the three main agenda items of this year in Congress--which are health, welfare reform and crime legislation . . . . But the way you put Whitewater behind is to have full disclosure and full accounting. Unless and until you do, Whitewater will continue to have a momentum of its own.