[Congressional Record Volume 140, Number 4 (Friday, January 28, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: January 28, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          IMPORTANT ISSUES RAISED BY WHITEWATER INVESTIGATION

  Mr. NICKLES. Mr. President, I rise today concerning a matter known as 
Whitewater--a 230-acre development in the Ozark Mountains of Arkansas 
that was partially owned by Bill and Hillary Clinton from 1978 until 
just after his election as President.
  They sold their interest to James McDougal, their partner in 
Whitewater and former owner of Madison Guaranty, a failed savings and 
loan institution, and they reported a $1,000 capital gains on their 
1992 tax returns. But since November, there has been intense media 
coverage of the web of relationships, and questionable actions which 
raised several serious issues and questions that point to the need for 
congressional hearings.
  As most of my colleagues know, congressional hearings concurrent with 
investigations by a special counsel are not without precedent. We all 
remember the Iran-Contra independent counsel and the joint committee of 
Congress which concurrently held hearings.
  Let me state at the outset that the President, both directly and 
through his spokesmen, have repeatedly denied any wrongdoing. And I 
hope for their sake, and for the sake of the Presidency and our Nation, 
that they are right.
  But Mr. President, several newspapers with national reputations for 
accuracy and credibility, including the New York Times, Wall Street 
Journal, Los Angeles Times, Chicago Tribune, the Associated Press, 
Washington Post, and the Washington Times, have published scores of 
reports on this matter. Several reports strongly suggest that 
procedures and rules were not followed, and yes, that laws were broken 
that resulted in millions of taxpayers' dollars being lost. Based on 
published reports, here are some of the serious issues that are being 
raised that I believe merit congressional hearings:
  First, the New York Times reported on March 8, 1992, that Bill and 
Hillary Clinton's 50-percent stake in Whitewater was the result of 
``little money'' being invested by them. Does this constitute a gift to 
Bill Clinton, who was then Arkansas's Attorney General, it's top law 
enforcement officer, and a candidate for Governor?
  This question is important: If a gift of money or a loan was made to 
help make Bill and Hillary Clinton full partners in the investment, 
then it might answer, in part, some of the other actions the special 
counsel is now investigating.
  Second, did Bill Clinton's 1984 reelection campaign receive money 
illegally from Madison Guaranty, so it could pay off a $50,000 debt 
owned by the candidate to another bank? In the late stages of his 1984 
reelection campaign, Governor Clinton took out a personal loan of 
$50,000 and lent it to his campaign.
  The New York Times on November 2, 1993, reported that Bill Clinton 
put McDougal in charge of paying off that debt. McDougal held a debt-
retirement fundraiser for Clinton in April 1985. Several published 
reports suggest that McDougal illegally diverted money from the Savings 
& Loan into Clinton's campaign. The Arkansas Democrat Gazette newspaper 
reported on January 15, 1994, that at least one person listed as having 
donated money at that event has denied contributing to Clinton.
  Third, did Governor Clinton pressure a lender to illegally issue an 
SBA-backed loan to Susan McDougal, the wife of his business partner? 
David Hale was the owner of Capital Management Services, a specialized 
small business investment company who by law was only allowed to lend 
money to disadvantaged business owners. He is now under indictment for 
defrauding the SBA on other loans not related to Whitewater.
  Mr. Hale has now stepped forward to allege that Governor Clinton not 
only pressured him into giving a $300,000 loan to Susan McDougal for 
Whitewater purposes, but that he met with the Governor and James 
McDougal to structure the loan. Let me quote from a Washington Times 
story of November 4, 1993:

       They all knew Mrs. McDougal did not legally qualify for the 
     SBA loan, Mr. Hale said, and at this second meeting Mr. 
     Clinton told him that the Clinton name could not be 
     associated with the deal, [quote], ``anywhere in this, 
     anywhere at all.''

  That is a very, very serious charge, Mr. President. This former 
county and municipal judge alleges that the Governor of Arkansas 
knowingly help defraud the Small Business Administration for a $300,000 
loan, a loan he stood to benefit from as coowner of Whitewater 
Development. Mr. Hale said he never saw Susan McDougal in the course of 
issuing the loan.
  It was this allegation, along with Mr. Hale's indictment on unrelated 
charges, that got Congress' attention. Not just that of Congressman Jim 
Leach but the chairman of the House Small Business Committee, 
Congressman John LaFalce, a Democrat. On November 5, he asked the SBA 
for a full report on the matter. I commend him for his leadership. He 
asked the SBA for their report by November 15. We have not yet seen 
that report.
  The first Senator to step forward was our colleague from North 
Carolina, Lauch Faircloth, who in early November had the foresight to 
ask for the appointment of a special counsel. I commend my colleague 
for pursuing this matter.
  Fourth, did Governor Clinton in 1984 pressure his Whitewater business 
partner, James McDougal, into hiring Hillary Rodham Clinton to handle 
some of Madison's legal business?
  The Los Angeles Times on November 7, 1993, reported McDougal said 
Clinton stopped by after a morning jog to tell him that family finances 
were tight and ask if he could please throw some of Madison Guaranty 
Savings' legal business to his attorney wife, Hillary Rodham Clinton. 
When asked how much they needed, Clinton said ``$2,000 a month,'' 
according to McDougal. Hillary Clinton, then with the Rose law firm, 
began accepting a $2,000-a-month retainer from Madison Guaranty.
  Several newspapers, including the Washington Post on January 24, 
1994, reported that Hillary Rodham Clinton in 1985 also helped prepare 
a stock reissue plan for Madison to a State securities commissioner, 
Beverly Bassett Schaefer, whom Governor Clinton had just appointed. The 
new commissioner's brother had been Clinton's campaign manager. The 
stock reissue plan was approved.
  Were any laws broken? Perhaps not. But it is important to know 
whether, and to what extent, this obvious conflict of interest 
contributed to Madison's failure, which cost the taxpayers of this 
country an estimated $47 million.
  Fifth, were Bill and Hillary Clinton passive stockholders in the 
management of Whitewater, as they claim? The President and White House 
spokesmen say yes. But several media reports suggest otherwise. The 
Washington Times on November 4, 1993 and other publications have 
outlined several financial transactions by Whitewater directly 
involving the Clintons.
  In that story, the Washington Times reported that in 1987, Hillary 
Rodham Clinton asked James McDougal to deliver Whitewater's records to 
the governor's mansion. In 1988, Hillary Rodham Clinton asked for power 
of attorney over all of Whitewater's affairs. That does not constitute 
passive involvement. Those records, by the way, are apparently missing.
  Sixth, the Washington Post reported on November 3, 1993, that in 
1989, the Rose law firm sought the FDIC's business to prosecute Madison 
Guaranty after it had failed, in hopes of recovering lost assets. The 
FDIC sought to capture $60 million. The Rose law firm settled for 
merely $1 million. The lead attorney was Rose's managing partner, 
Webster Hubbell, now Associate Attorney General of the United States.
  Why is that important? Remember that the Rose law firm, where Hillary 
Rodham Clinton was a partner, had represented Madison for 15 months, 
during 1984 and 1985. The Rose firm sought the FDIC's business in a 
letter signed by then-senior partner Vincent Foster. Foster said the 
following in that letter to the FDIC: ``The firm does not represent any 
savings and loan association in state or federal regulatory matters.''
  Webster Hubbell and the FDIC have a difference of opinion over 
whether Hubbell told them that he had a potential conflict of interest, 
including the fact his father-in-law, Seth Ward, had done substantial 
business with Madison. The Rose firm collected a fee of $400,000.
  Mr. President, the Rose firm had no business soliciting the FDIC for 
business to prosecute a savings & loan it had once represented. The 
FDIC clearly should not have given them that business. Just how they 
got the business, and why they sought it, given all the relationships 
involved, and given how much the taxpayers of this country lost as a 
result of Madison's failure, is an extremely important question.
  Needless to say, when they were only successful in obtaining $1 
million when FDIC was seeking $60 million, and of the $1 million that 
was obtained, $400,000 went to the law firm, and the fact that that law 
firm previously represented the S&L is an obvious conflict of interest, 
and needless to say the taxpayers really came out on the short end of 
the stick.
  Seventh, Paula Casey was nominated by President Clinton, and was 
confirmed by this body, as the U.S. attorney for the Eastern District 
of Arkansas. She has a long-standing relationship with the President. 
She was a law student of Bill Clinton's when he was a professor at the 
University of Arkansas in the 1970's. She had been a campaign 
volunteer.
  On November 9, 1993, the Associated Press and others reported that 
she recused herself from an RTC criminal referral to the Justice 
Department involving the use of Whitewater in a check-kiting scheme. 
The criminal referral targeted James and Susan McDougal, and mentioned 
that Bill and Hillary Clinton could have benefited from it, although 
there was no evidence to support that.
  But the Washington Post reported on November 11, 1993, that only 2 
weeks earlier, Casey wrote the RTC to concur with the Justice 
Department's decision that a criminal probe was not warranted. Why did 
she not recuse herself then?
  Mr. President, the Department of Justice Manual for U.S. attorneys is 
quite specific about recusals. Recusals are required if a conflict of 
interest exists, and I quote, ``because a U.S. attorney has a personal 
interest in the outcome of the matter or because he/she has or had a 
professional relationship with parties or counsel; or for other good 
cause * * *.''
  If she found reason to recuse herself on November 9, as Whitewater 
was publicly unraveling, why didn't she recuse herself before it began 
hitting the front pages of the Nation's newspapers? It appears she 
violated Department of Justice rules, and we deserve an explanation.
  Eighth, it was not revealed until December 21, in the Wall Street 
Journal, just before Christmas, that two White House political aides, 
including the Chief of Staff for Mrs. Clinton, had entered Vince 
Foster's office shortly after he committed suicide to remove files 
related to Whitewater. For 5 months, the White House and the Clinton's 
attorney not only had possession of records, but kept it a secret.
  Unlike the other issues, this one does involve the President of the 
United States and the White House staff. What happened to the files 
after they were removed from Vince Foster's office? Why were the 
records not turned over to the Park Police as part of their initial 
investigation? Did they mislead the Park Police in the course of an 
official investigation?
  Why the secrecy? What was the White House trying to hide?
  This is clearly an ethical matter which should be looked into. We 
need to know whether the White House violated ethics rules or broken 
the law in the handling of these files from the time of Vince Foster's 
death until they were supposedly turned over to the Justice Department 
just last week.
  President Clinton stated on December 23 he would turn over the 
documents to the Justice Department. They were not turned over until 
the week of January 18--over 3 weeks had transpired--and then only 
after they were issued under the quise of a subpoena, which keeps those 
records from being made public. Again, why is there secrecy? This is 
not some transaction that has a great deal of insight and intrusion 
into a family matter. This is a real estate transaction. Why the 
secrecy? Why are the trying to hide? Why not make these records public 
and answer these questions and get this issue totally behind us?
  Ninth, how much did the Clintons actually make or lose from their 
Whitewater investment?
  Why is this important? It raises a question whether the American 
people were deliberately mislead by the Clinton campaign in 1992 on 
Whitewater; whether as early as March 1992, a coverup was underway.
  In the 1992 campaign, after the New York Times first broke the story 
about Whitewater, candidate Bill Clinton on March 12 commissioned a 
full financial review of the land deal. He asked a Denver attorney and 
friend, James Lyons, to lead the effort along with a Denver forensic 
accounting firm.
  The Lyons report said the Clintons lost more than $60,000 in 
Whitewater. But the Lyons report has come under assault for not 
mentioning some very important facts, which have been outlined in a 
Wall Street Journal story of January 4, 1994.
  But Time magazine on January 24, 1994, after reviewing land records 
in Madison County, AK, came up with some new information: The Clintons 
and the McDougals originally brought the land for about $882 per acre 
in 1978. A year later, they sold the land to Whitewater Development for 
$1,087 an acre. Who owned Whitewater? James and Susan McDougal and Bill 
and Hillary Clinton. This transaction strongly suggests that the 
Clintons made thousands of dollars off Whitewater.
  If the Clinton's lost so much money, Mr. President, why did they not 
claim that loss on their tax returns? In their 1992 tax returns, they 
actually claimd a $1,000 capital gains from the sale of their 
Whitewater investment to partner James McDougal. McDougal himself has 
said the loss probably totaled about $9,000. We deserve to know the 
truth.
  There are a few other things the Lyons report glossed over.
  It failed to even mention Whitewater's single largest transaction, 
the purchase of over 1,000 acres from International Paper Corp.
  It failed to mention a highly unusual airplane-for-land swap between 
Whitewater and James McDougal involving Webster Hubbell's father-in-
law, a Madison subsidiary employee.
  And it forgot to mention that Whitewater failed to file tax returns 
for 3 years.
  That is issue No. 10. Why did Whitewater not file tax returns for 3 
years?
  Now Mr. President, you and I file tax returns. It is no secret that 
every working American, every family, every corporation in this 
country, by law, must file a tax return, even if they do not owe any 
taxes, even if they lost money. Failure to file is a crime.
  It was not revealed until December 19, 1992, in the Washington Post 
that the Clintons discovered after the election that Whitewater had not 
paid taxes for 3 years. Keep in mind, the President's friend, Mr. 
Lyons, had conducted a Whitewater review in 1992, to investigate the 
entire Whitewater episode. But it was not discovered until after the 
election that they had not paid taxes.
  The President-elect and Mrs. Clinton directed Vince Foster, working 
with Whitewater accounts, to prepare the returns. They were filed in 
June of last year.
  Mr. President, Whitewater was involved in the failure of a federally 
insured savings and loan, a failure that cost taxpayers at least $47 
million. Whitewater was involved in the apparent defrauding of the 
Small Business Administration. Whitewater failed to file Federal income 
tax for 3 years. Whitewater was the subject of a criminal referral by 
the Resolution Trust Corporation. And now Whitewater records under 
Vince Foster's control may have been mishandled, even hidden from those 
investigating his death.
  Mr. President, the Clintons own, or reported that they own one-half 
of Whitewater.
  Mr. President, how long have we been hearing President Clinton talk 
about the last 12 years? How many times have we heard the 1980's being 
referred to as the decade of greed when the rich benefited at the 
expense of middle-class Americans? How many times have we heard in this 
very Chamber the savings and loan debacle being the symbol of the 
1980's? How many times did the Members call for investigations and 
independent counsels and actually conduct hearings?
  Where are they now, Mr. President? Where are the Senate Banking 
Committee hearings and investigations into wrongdoing involving cozy 
relationships and sweetheart deals between public officials, lawyers, 
and insiders, and sweetheart deals paid for by the rest of us? The 
silence is deafening.
  Mr. President, this matter demands not just special counsel; it 
demands congressional hearings. We need to do our job. We need to find 
out the facts. We owe it to the American people. We owe it to middle-
class Americans who live by the rules, who pay the taxes, who file tax 
returns, and who deserve to know the truth.
  Again, Mr. President, I compliment my friend and colleague, Senator 
D'Amato from New York, and Senator Dole. I would urge that the Banking 
Committee would follow on their request and have an expeditious 
hearing, not to slander anyone, but just to find out the facts and to 
answer these questions that are being asked, not just by myself but 
they are being asked by countless Americans who want to know the truth 
about Whitewater so we can close this episode.
  Mr. President, I thank you for your indulgence, and I yield the 
floor.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. D'AMATO. Mr. President, I commend Senator Nickles, my colleague, 
for putting forth a number of questions that I think the American 
people have a right to know.
  Let me add that we have been unable to ascertain even the most basic 
facts. It seems ludicrous to me that the Resolution Trust Corp. could 
not tell us when the statute of limitations runs out--incredible. Let 
me say unbelievable. Let me go further and say it is not worthy of 
belief that after all this time they cannot say that the civil statute 
of limitations on actions that might be brought against those people 
who may have been principals in Madison is X, Y, Z period of time.
  They said they were studying it 2 weeks ago--2 weeks ago. Do you mean 
to tell me that is how you conduct an investigation? You do not even 
look to see when an action may or may not be capable of being brought?
  Then, again, when they get back to us 2 weeks later, they begin to 
suggest and play games and say, well, we think it may be February 28. 
We are not sure. We are going to send you a letter. One day goes by. 
Two days go by. Now we will be in the month of February when we come 
back here. And what happens when we ask for documents? We are told the 
Privacy Act precludes documents that a Congressman or Senator or his 
staff might want access to.
  That is why it is absolutely imperative that we have the Senate 
Banking Committee review these documents so that it takes it out of 
that area in which a privilege is asserted. We do not want anybody to 
break the law. We do not want the Privacy Act violated and it is 
alleged that only a committee has the right to review these documents.
  I can assure this body that this Senator does not intend to remain 
silent, that when we reconvene Tuesday I will come back to the floor to 
bring this up with some more explicit information, and hopefully we 
will have an answer to our simple question by the RTC by that time. I 
say hopefully, but I do not believe it.
  When I get that letter telling me exactly when the statute of 
limitations runs out, then I will believe it. We have not been dealt 
with squarely. We have been given the bum's rush. And I do not intend 
to sit by and allow this to take place.
  It does not take more than 2 weeks. Again, our first letter went out 
January 11, and here we are the end of January. Our second inquiry by 
way of letter was January 25. In the interim we had numerous phone 
conversations with staff, personal visits with RTC staffers.
  This is being stonewalled, and the clock is ticking, time is running. 
So now we have maybe 30 days after this weekend. Oh, by the way, we 
have the President's holiday. We may just about come back on the 28th. 
And at that point someone will say: Oh, my gosh, why did you not tell 
us before? The clock is ticking and the time has run out. It is too 
late.
  We are serving notice that we want people to know that the clock is 
ticking and that the time is running out and the American people are 
entitled to answers.
  I yield the floor.
  The PRESIDING OFFICER. The clerk will call the roll.

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