Hillary Rodham Clinton played an active role in the Whitewater investment, seeing it as a source of funds for her daughter's education even as her husband was agreeing to get out of the unsuccessful venture, according to a new book on the affair.
Excerpts from the book "Blood Sport: The President and His Adversaries" by James B. Stewart, appear in the March 18 issue of Time magazine and were released Saturday.
The Clintons' investment in the Arkansas land development known as Whitewater, in partnership with James B. McDougal, former head of the defunct Madison Guaranty Savings & Loan, and his then-wife, Susan, is at the center of investigations by an independent counsel and a Senate committee.
Blood Sport exposes no "smoking gun" in the Whitewater affair but attempts to make sense of a series of arcane and confusing issues that have been reported in the press.
In an introduction to the excerpts, Stewart writes that Susan Thomases, a Manhattan lawyer, approached him about doing a book in order to clear the Clintons' names.
He met with Mrs. Clinton, who he says initially agreed to cooperate, for about an hour and a half in April 1994.
According to the excerpts in Time, Hillary Clinton almost single-handedly managed the investment after 1986 and bristled when the McDougals, who carried most of the costs, tried to free the Clintons of it.
A White House spokesman, Mark Fabiani, said that "based on what we know about the book," it did not add any significant new facts about the four-year public record on Whitewater.
Stewart said that in 1985, with the investment a financial drain and being cited for tax delinquency, McDougal told then-Gov. Bill Clinton, "Let's just get you out of this." He suggested the best that could be hoped for was that Whitewater would "break even."
Clinton agreed, sounding relieved, according to the book, but when Susan McDougal brought a proposed transfer of ownership to the Rose Law Firm office, Hillary Clinton angrily refused to sign it, leaned over her desk and said: "Jim told me that this was going to pay for college for Chelsea [the Clintons' daughter]. I still expect it to do that."
At a later point, Susan McDougal asked Hillary Clinton for a financial disclosure statement needed for renewal of a bank loan on the property, but it was refused.
After reckoning that the McDougals had contributed almost $158,000 of the $200,000 that the partners had to contribute to cover shortfalls in income from the project, James McDougal told his wife: "You tell her, by God, you've given all this money to this project and, by God, you want the statement," the excerpt said.
Stewart said that in 1989, Bill Clinton told James McDougal that the Clintons wanted to get out of the investment, but Hillary Clinton kept them in, Stewart said, failing to call the McDougals' lawyer with her comments about dissolving the corporation.
When Clinton was running for president in 1992 and questions about Whitewater surfaced, Susan McDougal called Hillary Clinton to suggest that the Clintons sign over their interests to James McDougal, saying there was nothing left of value.
Hillary Clinton reportedly replied: "We own half of it and we are not getting out of it. It's incredible that partners would be asked to sign over their stock."
According to the book excerpt, Susan McDougal said: "You're terrible people, after all he [James McDougal] would and did do for you, that you wouldn't do this."
Hillary Clinton replied: "I will not be blackmailed. You can't force us by making some threat."
Stewart wrote that Susan McDougal "felt frightened" and wondered if someone else was on Hillary Clinton's end of the line or if the call was being taped.