Tax Documents Raise New Questions on Whitewater : Inquiry: Real estate company’s returns do not reflect losses claimed by President Clinton and his wife.
Newly released tax returns for the Whitewater Development Corp. raise fresh questions about the assertion by President Clinton and his wife that they poured tens of thousands of dollars into the losing venture and received nothing in return.
The Clintons have consistently defended themselves against critics by arguing that they lost $46,636 on the land development project during the 1970s and 1980s. Most of the money they spent, they have said, consisted of large interest payments made for Whitewater Development from their personal funds.
Yet the corporate tax returns of Whitewater Development, made public for the first time earlier this week, do not show evidence of payments anywhere near as large as the Clintons have said they made. Instead of documenting the $46,636 that the Clintons say they lost on the Whitewater project, the tax records and supporting documents show only about $13,000 in such payments by the Clintons.
Tax accountants said the corporation would have been obligated to reflect the full amount if it was adhering to standard accounting practices.
The Clintons’ personal tax returns for the years in question show that they claimed $46,636 as tax deductions, though no canceled checks or bank statements have been released to substantiate the deductions.
The Clintons have said the payments they claimed on their personal returns were made directly to banks holding Whitewater mortgages or to other corporations owned by James B. McDougal, the Clintons’ partner in the Whitewater venture. In that case, the payments also should have shown up on Whitewater Development’s corporate tax returns, according to independent tax accountants who reviewed the corporation’s financial records.
“If a good job of bookkeeping was being done, you would find some record or some notation in the tax returns that the corporation was being relieved of its obligations,” by the Clintons, said Mark Rogers, a Little Rock, Ark., accountant hired by The Times to review the Whitewater Development returns.
The apparent discrepancy between the personal and corporate tax returns raises more questions about central issues posed by the Clintons’ chief GOP critics: Did the President and First Lady Hillary Rodham Clinton actually lose large sums of money on the Whitewater project, as they have said, and did they receive tax benefits to which they were not fully entitled?
The corporate tax records seem to support assertions made in recent months by McDougal. McDougal has claimed that the Clintons only invested about $13,000 in the Whitewater project, not the larger amounts cited by the President. (Clinton originally had said that he and his wife contributed $68,900 to the Whitewater endeavor, but he later revised the figure.)
So far, the White House has released no supporting materials, such as canceled checks or bank statements, to document the payments listed in the Clintons’ personal tax returns. Tax experts said the corporate tax returns should have included entries corresponding with the payments listed in the personal returns, but they do not.
The White House declined to comment on the discrepancies. A source familiar with the Clintons’ tax records said he could not explain why the full $46,636 was not reflected in Whitewater Development’s corporate returns.
There could be several possible explanations for the discrepancies between the personal and corporate tax returns. Whitewater Development bookkeepers could have failed to properly record all of the payments made by the Clintons or a tax preparer might have overlooked them. Similarly, the Clintons’ records might have been faulty. Indeed, the Clintons and McDougal have characterized Whitewater Development’s record-keeping practices as somewhat haphazard.
Whitewater Development’s corporate returns show that in 1980, Hillary Rodham--the name used by the First Lady at the time--made $10,131 in interest payments on behalf of Whitewater Development. In 1979, the returns show, Bill Clinton made a loan to Whitewater Development of $2,900.
In 1981, however, Hillary Clinton received $15,185 back from Whitewater Development, according to the corporate tax records. The entry indicates that the payment was in the form of land owned by the corporation and not in cash.
Hillary Clinton took out a $30,000 loan from a McDougal-controlled bank to build a model home on one Whitewater lot, according to documents released by McDougal along with the corporate tax returns. But the corporate returns indicate that the property was not considered an asset of the corporation. Hillary Clinton later sold the property herself.
The Whitewater Development tax returns also call into question findings contained in a report issued by the Clinton presidential campaign in March, 1992, in response to disclosures about the Whitewater controversy. The report, prepared by an accounting firm hired by James M. Lyons, a Denver attorney and old friend of Clinton, exonerated the Clintons of any misrepresentations.
Financial information in the corporate tax returns conflicts sharply with the figures in that report. For example, the report stated that the Whitewater venture suffered losses during years in which the corporation’s tax returns show that it made money. And the corporate returns indicate that Whitewater Development was bringing in as much as $60,000 annually from land sales during years in which the Lyons report said that no land was sold.
The accounting firm that prepared the 1992 report clearly had access to the Whitewater Development tax returns. The campaign report said the analysis was based on the returns and many of the line entries in both the report and the Whitewater Development tax returns are identical.
The White House has distanced itself from the 1992 report in recent months but still uses many of its basic findings to defend the President and Hillary Clinton.
Rogers said there is nothing in the Whitewater Development tax returns, the Clintons’ personal tax returns as released by the White House or the campaign report that explains the discrepancies between the documents.
