No Rest for Clinton in Probe

After four years of investigations that scoured President Clinton’s home state of Arkansas, independent counsel Kenneth W. Starr’s grand jury in Little Rock went out of business this week--without indicting the president or First Lady Hillary Rodham Clinton on any charges stemming from their long-ago Whitewater land deals.

But that quiet end came as little comfort to the Clintons and their defenders, for Starr had long since moved his main base to Washington and shifted his focus--in the classic pattern of contemporary U.S. political scandals--from allegations of crime to charges of cover-up.

Both sides have settled in for a long struggle--one that may last until Clinton’s presidency ends in 2001, or even longer.

“There will be no end until [Clinton] leaves office,” predicted Harold M. Ickes, a close Clinton advisor. “This is World War I trench warfare. Everybody’s hunkered down. The mustard gas is out. We are fighting for every foot of ground. . . . The White House has resigned itself to the view that this is probably unending.”

Starr has brought lawyers and detectives to Washington--as well as hired a full-time press spokesman--to aid in his probe of whether Clinton or his aides obstructed justice by attempting to conceal a variety of alleged misdeeds.

His immediate goal now is to answer this question: Did Clinton encourage former White House intern Monica S. Lewinsky to lie under oath when she was asked whether they had a sexual relationship?

In a plot worthy of soap opera, Starr’s case now depends largely on whether he can persuade two women to testify against the president they served: Lewinsky, who is seeking immunity from prosecution, and Clinton’s private secretary, Betty Currie, who appeared before the grand jury for a second time on Wednesday.

And in a subplot worthy of a great novel, the dogged prosecutor must labor against a tide of public indifference toward presidential dalliances--and growing hostility toward his own undertaking.

Starr’s staff of 20 lawyers--plus dozens of FBI and IRS agents who assist him on temporary assignments--also is still considering whether the White House acted improperly in collecting hundreds of FBI files on political figures or in firing officials in the White House travel office in 1993.

It is a long way from the original question that launched the Whitewater investigation in 1994: Did the Clintons, long before they occupied the White House, knowingly participate in a scheme to obtain fraudulent loans from a federally insured savings and loan?

The quiet end of Starr’s Arkansas grand jury was an implicit acknowledgment that the lengthy investigation of Whitewater Development Corp. and Madison Guaranty Savings & Loan did not turn up any evidence that justified immediate criminal action against the president or his wife.

The probe did lead to the convictions of 14 Arkansans on fraud, conspiracy or bribery charges, including former Clinton business partners James B. and Susan McDougal--and, ironically, a longtime Clinton adversary, former Gov. Jim Guy Tucker.

White House aide Rahm Emanuel said he would like the lesson to read this way: “After four years and $40 million . . . there was no indictment of the first lady or the president. It has all come to naught.”

But Emanuel and other Clinton defenders acknowledged that their camp cannot breathe easy. The president still faces the potentially embarrassing Lewinsky matter. The first lady is still under scrutiny on whether she testified truthfully about her legal work on an Arkansas land deal separate from Whitewater and about law firm billing records that mysteriously disappeared--only to resurface in the White House residence quarters.

Lawyers said that despite the expiration of the Arkansas grand jury, Starr can still use the evidence it gathered--either by presenting it to the grand jury in Washington or convening a new grand jury in Little Rock.

Starr’s investigation can damage the president further, even if it produces no more criminal indictments. The independent counsel is required by law to report to Congress if he finds credible evidence that might prompt a president’s impeachment. He is also required to write a final report of his findings and is free to issue an interim report whenever he likes.

So the White House has spent considerable time and energy seeking to delegitimize Starr--in the eyes of the public and Congress, if not the courts--as a politically motivated ideologue and a mercenary super lawyer.

“He’s paid $100,000 [annually] by the taxpayers, but he also gets to collect $1 million plus from Big Tobacco and his other private clients,” charged White House aide Paul Begala, one of Clinton’s most enthusiastic defenders. “Why would he ever quit? I want a job like that.”

The attacks have had some effect: Public esteem for Starr, as measured in polls, has sunk precipitously; and Republican members of Congress who once professed to hope for an early report from the prosecutor have fallen conspicuously silent.

Until now, Starr has concentrated on the largely invisible work of assembling criminal cases against key Whitewater figures such as Webster L. Hubbell--the former No. 3 official in the Justice Department and longtime Clinton confidant--the McDougals and Hale. All those defendants were potential star witnesses against the Clintons; none has turned out to be. (Hubbell and Susan McDougal have refused to give testimony that would incriminate the Clintons; Hale and the late James McDougal made unconvincing witnesses.)

But in recent weeks, Starr has reacted to White House attacks with an unusual series of public statements of his own, insisting that he is merely following the law’s dictates.

And, for the first time, he has hired a full-time press spokesman, Los Angeles lawyer and former Ronald Reagan aide Charles G. Bakaly III. Associates said Bakaly’s hiring reflected a belated recognition on Starr’s part that the case is being waged in the courts of public opinion and Congress, as well as in the grand jury rooms--and that the prosecutor was losing on those battlefields. Some White House aides reacted with fury to the prosecutor’s public relations offensive--although a few admitted privately that he was merely responding to their sallies.

“There’s certainly a different tone and visibility to his activities,” White House Counsel Charles F. C. Ruff said in an interview. “I suppose all prosecutors have the duty in some respects to alert the public to those matters which are appropriate, but it’s always delicate whether they divert into inappropriate discussion of investigative matters.”

Clinton’s private lawyer on Wednesday accused Starr’s office of leaking new sealed information to the press and has asked U.S. District Judge Norma Holloway Johnson to review the matter.

The lawyer, David E. Kendall, charged that Starr’s office revealed a judge’s sealed ruling rejecting Clinton’s use of executive privilege to allow two presidential aides to refuse to answer questions.

Starr spokesman Bakaly denied the charge as “categorically false.” “This is yet another effort to publicly discredit this investigation,” he said.

In sealed motions, the White House reportedly has argued that officials cannot be compelled to testify about some of their conversations with either of the Clintons.

Judge Johnson, who is overseeing the Washington grand jury, ruled that the aides cannot invoke executive privilege, a doctrine that protects official presidential business from judicial scrutiny.

The White House has not said whether it will appeal the ruling to higher courts. But presidential aides described the claim of executive privilege as a matter of deep principle, which seemed to imply that an appeal is probable.

The president refused to comment on the issue at a brief news conference on Wednesday--except to rebut the suggestion, raised by Starr, that his claim of executive privilege was reminiscent of President Nixon’s similar claim during the Watergate scandal in 1974. “The facts are quite different in this case,” Clinton said with a hint of irritation.

The impasse over executive privilege is significant because it is slowing Starr’s attempt to amass evidence about a possible White House-directed effort to silence Lewinsky.

The independent counsel has been trying to persuade Lewinsky to testify about such an effort. Some lawyers have suggested that he might even indict the 24-year-old former intern and threaten her with prison if she continues to balk.

Members of Clinton’s camp expect Lewinsky to testify, sooner or later--with results that could be damaging to the president. Several friends of Lewinsky have said she told them she maintained an illicit sexual relationship with the president, meeting him for quick assignations in the Oval Office. But she has never spoken in public about the alleged relationship.

Despite that bracing prospect, Clinton aides insist that they are not deliberately waging a strategy of slowing Starr’s probe.

“It is in the president’s interest to get this resolved,” Begala said. “Justice delayed is justice denied.”

Still, they say, they are operating under the premise that Starr will be part of their landscape for the rest of the Clinton presidency--and perhaps even later. (Independent counsels are not required to stop when their targets leave office; several investigations into the Reagan administration continued for years after his second term was over.)

“He has no incentive to stop,” noted Begala, a member of the White House team that meets twice a day to formulate the president’s public response to the charges against him.

“It’s like a farmer and the rain,” he shrugged. “It has a great effect on your life, but there’s nothing you can do about it.”

Times staff writer Elizabeth Shogren contributed to this story.

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Summary of Court Actions

Court actions taken so far against major figures in Whitewater case:

FELONY CONVICTIONS

WEBSTER L. HUBBELL, former associate attorney general, former law partner of Hillary Clinton, and friend of both Clintons. Pleaded guilty to mail fraud, income-tax evasion and embezzling $394,000. Sentenced to 21 months and $135,000 restitution. Last week, he was again indicted on nine felony counts of conspiracy and income tax evasion. His wife, accountant and one of his lawyers were also indicted.

JAMES B. MCDOUGAL, operator of Madison Guaranty Savings & Loan and business partner in Whitewater land development with the Clintons. Convicted of conspiracy, fraud, making false statements (18 counts). Sentenced to three years, fined $10,000 and $4.2 million restitution. He died in prison in March.

SUSAN H. MCDOUGAL, investor in both Whitewater and Madison Guaranty. Convicted of mail fraud, making false statements, and misapplication of funds (four counts). Sentenced to two years in prison, community service and fined $5,000. Also sentenced to 18 months for contempt for refusing to answer Starr’s questions. Last week, she was indicted on two counts of criminal attempt and one count of obstruction of justice for again refusing to cooperate with investigators.

JIM GUY TUCKER, Arkansas Governor after Bill Clinton moved on to Washington. Convicted of mail fraud and conspiracy (two counts). Sentenced to 18 months in jail, four years probation, community service, and fined $25,000 and $150,000 restitution. Pleaded guilty to a scam of avoiding income tax by pretending financial failure; awaiting sentencing.

WILLIAM J. MARKS SR., McDougal business associate. Pleaded guilty to conspiring to avoid paying taxes. Awaiting sentencing.

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THE MISDEMEANORS

DAVID HALE, former Little Rock judge. Pleaded guilty to two counts of misdemeanor fraud. arges for trying to defraud the Small Business Administration. Sentenced to 28 months in prison, fined $10,000 and ordered to pay more than $2 million in restitution.

EUGENE FITZHUGH, Little Rock lawyer. Pleaded guilty to attempting to bribe David Hale. Sentenced to 10 months in prison, one year in a release program, and fined $3,000.

ROBERT PALMER, real estate appraiser. Pleaded guilty to conspiracy for doctoring the books of Madison Guaranty. Sentenced to three years probation and fined $5,000.

NEAL T. AINLEY, former bank president. Pleaded guilty to two counts of concealing cash payments to Clinton’s 1990 campaign for governor. Sentenced to two years’ probation, community service fined $1,000.

STEPHEN A. SMITH, former aide to Gov. Clinton. Pleaded guilty to one count of conspiring to misapply a loan. Sentenced to 100 hours community service.

LARRY E. KUCA, McDougal’s former business associate. Pleaded guilty to one count of conspiracy to misapply loan funds. Sentenced to two years’ probation, community service and ordered to pay $65,000 in restitution.

JOHN HALEY, lawyer for Jim Guy Tucker. Pleaded guilty to aiding and abetting others in failing to supply information to the Internal Revenue Service. Awaiting sentencing.

Compiled by TRICIA FORD / Los Angeles Times

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The Ever-Growing Inquiry

January 1994: Responding to building media and political pressure, President Clinton asks Atty. Gen. Janet Reno to appoint a special prosecutor to investigate his Whitewater dealings. Robert B. Fiske Jr. is named.

February 1994: A federal grand jury meeting in Little Rock, Ark., begins hearing evidence.

August 1994: After the independent counsel law is reinstated by Congress, a panel of appeals judges names Kenneth W. Starr the new independent counsel.

January 1996: First lady Hillary Rodham Clinton discloses that her long-sought, mid-1980s legal billing records have turned up in the White House residence. Two weeks later, Starr subpoenas her to testify before a federal grand jury meeting in Washington.

March 1996: Starr’s probe is expanded to include an investigation into whether a former presidential aide made false statements to cover up the role of first lady Hillary Rodham Clinton in the 1993 firing of White House travel office employees.

June 1996: Starr is authorized to investigate possible criminal wrongdoing by White House aides who btained sensitive FBI files on more than 400 former employees of Republican administrations.

October 1997: Starr concludes that Foster’s death was a suicide.

January 1998: A grand jury meeting in Washington begins examining allegations that Clinton lied under oath or tried to otherwise cover up the nature of his dealings with former White House intern Monica S. Lewinsky.

May 5: The Arkansas Whitewater grand jury is dismissed. Its unfinished business will be turned over to the Washington panel. In Washington, U.S. District Judge Norma Holloway Johnson denies a White House claim of executive privilege, opening the door to complete grand jury testimony by two key Clinton aides.

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WHITEWATER REFRESHER

Whitewater was a failed Arkansas real estate project jointly owned by Bill and Hillary Clinton and James B. and Susan McDougal. The McDougals also owned Madison Guaranty Savings and Loan, a thrift that was seized by federal regulators in 1989. Investigators began trying to determine, among other things, whether federally insured deposits from the savings and loan were siphoned off through Whitewater to benefit Bill Clinton’s 1994 gubernatorial campaign. The independent counsel was also given latitude to look into Clinton’s Arkansas business dealings and the July 1993 suicide of White House Deputy Counsel Vincent Foster.

Compiled by TRICIA FORD / Los Angeles Times