Whitewater Case Ends; Clintons Not Charged


Ending a six-year investigation that has shadowed the Clinton White House, independent counsel Robert W. Ray reported Wednesday that he had found “insufficient” evidence to charge the president or his wife with criminal wrongdoing in the tangled financial dealings surrounding their 1980s Whitewater real estate venture.

But in writing an end to the complex investigation, Ray pointedly did not exonerate the Clintons, ensuring that their political opponents will continue to tar the couple with allegations of scandal and corruption.

Ray cited long-missing documents and the refusal of key witnesses to testify against the president or First Lady Hillary Rodham Clinton as key reasons for the anticlimactic ending to the costly and controversial investigation he inherited from Kenneth W. Starr.


Yet most observers saw in Ray’s findings--coming just seven weeks before election day--a political victory for the White House. By failing to bring a case against the Clintons, Ray spared both the first lady and Vice President Al Gore from a potentially serious obstacle to their respective bids for the U.S. Senate and the White House.

Mrs. Clinton said Wednesday that she had known all along there was “nothing there to report.”

A spokesman for Gore, who has fought vigorously to distance himself from the scandals of the Clinton administration, nevertheless downplayed Ray’s findings. “Al Gore’s campaign is about the future and not the past, and we don’t see this as having any effect at all,” said Jim Kennedy.

Republican presidential nominee George W. Bush declined to comment on Ray’s statement, and the president’s opponents in Congress kept publicly silent.

President Clinton also refused comment, ignoring a question as he strolled through the White House Rose Garden with Italian Prime Minister Guiliano Amato. But a day earlier, anticipating Ray’s statement, he said the fact that he and his wife had done nothing wrong should be “obvious” to most people.

“You know, even Mr. Starr said almost two years ago that there was nothing to any of that stuff. . . . So I think people are capable of drawing their own conclusions about that,” Clinton said.

Low-Key Response From White House

Issuing the official response for the White House, spokesman Joe Lockhart said: “Robert Ray is now the latest investigator to complete an examination of the transactions related to Whitewater Development Co. and conclude that there are no grounds for legal action.”

That low-key response was a careful effort to avoid antagonizing Ray while parts of his investigation, including a potential indictment of the president for actions related to his affair with Monica S. Lewinsky, continue, one official said.

While a more detailed Whitewater report containing still-secret grand jury evidence will be filed under seal with the U.S. Court of Appeals, Ray said in Wednesday’s six-page public summary that there remain many unresolved questions about the Clintons’ involvement in an unsuccessful Ozark land deal and its ties to a failed savings and loan.

“This office determined that the evidence was insufficient to prove to a jury beyond a reasonable doubt that either President or Mrs. Clinton knowingly participated in any criminal conduct [involving Whitewater] or knew of such conduct,” Ray said.

Ray has been attempting to wrap up the many-faceted Whitewater investigation since he succeeded Starr last October. His narrow, legal report contrasted with the harder, more zealous line often taken by Starr, whose report to Congress on the Lewinsky matter included his views that the president’s conduct might deserve impeachment.

Earlier this year, Ray filed final reports on two other investigations conducted by his office: the role of White House officials in obtaining hundreds of FBI personnel files early in the Clinton administration and testimony about the abrupt firings of White House Travel Office employees in 1993.

In neither of these cases did Ray find indictable offenses. His final task, to be completed after the president leaves office in January, will be to determine if Clinton should be indicted on perjury and obstruction of justice charges for actions related to his affair with Lewinsky, a former White House intern.

A new federal grand jury was impaneled this summer to review evidence in the Lewinsky matter, which led to the president’s impeachment by the House in 1998.

All the inquiries under the Whitewater umbrella have cost more than $52 million so far, making it the most expensive independent counsel investigation in history. Congress, citing the excessive costs of independent investigations as well as their length and the intrusion of partisan politics into many of them, last year allowed the independent counsel statute to expire.

But Ray put much of the blame for the drawn-out Whitewater investigation squarely on the White House, citing delays “involving both the production of relevant evidence and the filing of legal claims that were ultimately rejected by the courts.”

These delays in obtaining evidence, he said, included the refusal of Susan McDougal, a former investor with the Clintons in Whitewater, to testify under oath despite a court order requiring her to do so.

Susan McDougal Blasts Prosecutors

Another insider, Webster L. Hubbell, who pleaded guilty to a single felony charge last year, also said that he knew of no wrongdoing by the Clintons. Hubbell was a former law partner of Mrs. Clinton’s and a confidant of the president.

McDougal, who served 18 months in jail for refusing to testify on grounds that she did not trust Starr, expressed further contempt Wednesday for Starr and his successor.

“They didn’t come forward as men and say, ‘There is no evidence,’ ” said McDougal, who is now living in Arkansas and giving speeches around the country on the plight of women in jail. She was convicted in 1996 on mail fraud and other charges brought by Starr but was acquitted in 1999 of obstruction charges for her grand jury silence.

“These people have an obligation when they smear someone to come forward and say: ‘We don’t have one witness that there was any illegality by the president or Mrs. Clinton. After nearly $60 million, I think that’s the least they could do,” McDougal said in an interview.

The Whitewater issue first surfaced during Clinton’s 1992 presidential campaign because of his business ties to James B. McDougal, Susan McDougal’s ex-husband and the owner of Madison Guaranty Savings & Loan. The thrift had failed at a cost to the taxpayers of $73 million.

Probe First Begun by Resolution Trust Corp.

Clinton denied knowing that McDougal had funneled some of Madison’s assets into Whitewater Development Corp., in which Clinton, then governor, and his wife had been given shares at minimal cost.

There were also unproved allegations that Madison Guaranty funds had been used to support Clinton’s run for the presidency.

Efforts to pierce the Whitewater fog were first undertaken by career investigators of the Resolution Trust Corp. in early 1993.

The first lady told RTC investigators that her work for Madison Guaranty as a member of the Rose Law Firm had been minimal and denied that she knew about or had participated in any wrongdoing. Ray concluded that there was insufficient evidence “to prove beyond a reasonable doubt that her statements to the RTC regarding these matters were knowingly false.”

The RTC had subpoenaed Mrs. Clinton’s billing records for Madison Guaranty, but she said they had been misplaced during the Clintons’ move from Little Rock, Ark., to Washington.

Eighteen months later, copies of 116 pages of the billing records appeared on a table in the White House living quarters, according to Senate and grand jury testimony. The president and first lady said they could not explain how the documents turned up in the “book room” next to Mrs. Clinton’s private office. An aide, Carolyn Huber, said she found them in August 1995 and put them in a file before relinquishing them later when she discovered that they were under subpoena.

The records showed Mrs. Clinton had performed about 60 hours of legal work for Madison Guaranty over a 15-month period on a controversial land project known as Castle Grande. Bank examiners called the project a “sham” designed to improve the savings and loan’s financial picture but could point to no evidence linking the first lady with deliberate wrongdoing.

Ray reported that he could find no evidence the first lady or anyone else “was involved in any effort to obstruct this or other investigations by withholding relevant evidence or information in connection with Rose Law Firm billing records.”

He added: “The circumstances surrounding the 18-month delay in producing the billing records could not be established.”

Mrs. Clinton appeared before a Starr grand jury in January 1996 to answer questions about the billing records and other Whitewater matters. On several other occasions, both the president and first lady were questioned in the White House or replied to written interrogatories about financial aspects of Whitewater.

Later in 1996, the president provided videotaped testimony in two criminal trials, including one in which James B. and Susan McDougal and former Arkansas Gov. Jim Guy Tucker were convicted on charges of business fraud involving Whitewater-related transactions.

Clinton testified that he had no involvement in or knowledge of fraudulent dealings. A prosecution witness, former Municipal Judge David Hale, testified that Clinton had approved the misapplication of a $300,000 federally supported loan. The president denied it in his videotaped testimony.

Clinton said that he never had any loans or financial dealings with Madison Guaranty.

Cashier’s Check Found in Abandoned Car

In Susan McDougal’s contempt trial last year, prosecutors said that they found a $27,600 cashier’s check from 1982 in the trunk of an abandoned car made payable to “William Jefferson Clinton.” They suggested this check, bearing the notation “Payoff Clinton” had been intended as a loan from Madison Guaranty, but it had never been endorsed.

Clinton also provided videotaped testimony on behalf of two Arkansas bankers in 1996 whom Starr was prosecuting for banking violations in connection with past Clinton campaigns. They were acquitted.


6 Years, 21 Indictments

Prosecutors found there is “insufficient” evidence that President Clinton or his wife committed a crime in the Whitewater case, bringing the investigation to an anticlimactic end four months before the president leaves office.


The Whitewater investigation of President Clinton and First Lady Hillary Rodham Clinton:

Cost: More than $52 million

Length: 6 years

Indictments: 21

Convictions: 14


Key Events in the Whitewater Investigation:

1978: Bill and Hillary Rodham Clinton, along with James B. and Susan McDougal, purchase 200 acres for an Arkansas resort development.

1979: Whitewater Development Co. is formed, with the Clintons as half-owners with the McDougals.

1989: Madison Guaranty S&L;, operated by the McDougals, fails at a cost to taxpayers of $73 million.

1994: January: President Clinton asks Atty. Gen. Janet Reno to appoint a special prosecutor to investigate whether he and his wife knowingly participated in a scheme to obtain fraudulent loans from Madison Guaranty. Robert B. Fiske Jr. is named.

August: After Congress reauthorized the independent cousel law, Kenneth W. Starr is named independent counsel to replace Fiske.

1995: The McDougals and Arkansas Gov. Jim Guy Tucker are indicted on fraud and conspiracy charges.

1996: January: Hillary Clinton’s mid-1980s legal billing records are found in the White House.

March: Starr begins investigating the first lady’s role in the firing of seven employees in the White House Travel Office.

May: Tucker and the McDougals are convicted.

June: Starr begins investigating White House aides who obtained FBI background files on former employees of Republican administrations.

1997: October: Starr finds that the 1993 death of former White House Deputy Counsel Vincent Foster was a suicide.

1998: January: Clinton testifies in Paula C. Jones’ sexual harassment lawsuit and denies a sexual relationship with former White House intern Monica S. Lewinsky. Starr authorized to investigate the matter.

April: Webster L. Hubbell, who pleaded guilty in 1994 to defrauding the Arkansas law firm where he worked with Mrs. Clinton, is charged with evading taxes on income he received from Clinton friends who sought to assist him after he resigned as associate attorney general.

September: Starr delivers Lewinsky report to Congress, saying he has evidence that may constitute grounds for impeachment.

November: Clinton agrees to pay Jones $850,000 to settle her sexual harassment lawsuit.

December: Clinton impeached by the House on one article of perjury and one of obstruction of justice.

1999: February: In impeachment trial, Senate fails to convict Clinton.

June: Hubbell pleads guilty to a felony and a misdemeanor.

October: Starr resigns and is replaced by Robert W. Ray.

2000: March: Ray concludes “Filegate” investigation, saying there was no credible evidence that Mrs. Clinton or senior White House officials were involved in case involving FBI files.

June: Ray wraps up “Travelgate” investigation with no indictments but says he found “substantial evidence” that Mrs. Clinton played a role in the dismissals.

July: Ray empanels a new grand jury to determine whether President Clinton should be indicted after he leaves office for his conduct in the Lewinsky scandal.

Sept. 20: Ray announces completion of the original Whitewater investigation.

Sources: Wire reports and Times research