[Congressional Record Volume 140, Number 47 (Tuesday, April 26, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 26, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                THE AMERICAN PEOPLE HAVE A RIGHT TO KNOW

  Mr. D'AMATO. Mr. President, I have a statement that I indicated last 
Friday I was going to make. It is a statement that will take about 10 
minutes. I have waited so I would not impede business. It deals with 
the Whitewater matter.
  Mr. President, last Friday, the press was given a 75-minute 
opportunity to ask Mrs. Clinton questions about her investments in the 
Whitewater Development Co. While 75 minutes may not seem like an 
adequate period of time to explore this complicated subject, it was 75 
minutes more than we in the Congress have been given to ask our 
questions. We, and the American people, must wait to get the facts 
because no Whitewater hearings have been scheduled.
  Until these hearings are held, Congress and the American people have 
no way to get the answers. While the American people wait for 
congressional hearings on Whitewater, I believe that Members of 
Congress have an obligation to at least raise the questions.
  Here are just some of the questions that should be answered for the 
American public:
  First, were federally insured deposits used to keep Whitewater 
afloat, and did the American taxpayers help pick up the tab for the 
Whitewater land deal?
  The President and Mrs. Clinton have portrayed Whitewater merely as a 
business venture in which they invested their own money and lost. But 
the American taxpayers want to know whether they also invested in 
Whitewater and lost.
  Mr. President, were federally insured deposits used to keep 
Whitewater afloat? The American people have a right to know.
  The President and Mrs. Clinton were business partners in Whitewater, 
with James and Susan McDougal. Jim McDougal owned Madison Guaranty 
Savings and Loan, which was federally insured by the Federal Savings 
and Loan Insurance Corporation. When Madison failed and was taken over 
by the Government in February 1989, it cost the American taxpayers an 
estimated $67.6 million. Did taxpayers lose money because federally 
insured deposits flowed from Madison into Whitewater?
  According to a March 1992 report prepared by Denver lawyer James 
Lyons and released by the Clinton campaign, Jim McDougal infused more 
than $268,000 into Whitewater. Did Jim McDougal use federally insured 
deposits from Madison to keep Whitewater afloat? The American people 
still do not know. But we do know that RTC lawyers who investigated the 
failure of Madison apparently found enough evidence to make a criminal 
referral to the Justice Department alleging a $1.5 million check-kiting 
scheme between Madison, McDougal and businesses under his control. Was 
Whitewater a part of the check-kiting scheme? Mr. President, the 
American people have a right to know.
  A second question is whether Whitewater was able to write bad checks 
because the Clintons' business partners owned the bank? Because 
President Clinton has refused to release Whitewater's records, very few 
of those records have become publicly available. But copies of the 
check registers of Whitewater's account at Madison indicate that 
Whitewater's account was overdrawn with some frequency. Was President 
Clinton's Whitewater Development Co. able to write bad checks on its 
account at Madison without having them bounce because the bank was 
owned by his business partner? The American people have a right to 
know.
  Not too long ago when it was discovered that some of our colleagues 
in the House bounced checks at a bank that they controlled, Congress 
certainly thought the American people had a right to know.
  Third, if federally insured deposits from Madison were used to keep 
Whitewater afloat, did the President and Mrs. Clinton benefit?
  The President and Mrs. Clinton owned half of Whitewater. According to 
the President, he and his wife invested about $47,000. According to the 
President's own report, the McDougals invested $92,000, almost twice 
the Clintons' actual investment. Yet, they were equal partners.
  If the President went into a business venture on a 50-50 basis with a 
political supporter who ended up putting in twice as much money, the 
American people have a right to know.
  What was it that the Clintons brought to the Whitewater deal that 
made their $47,000 investment equal in value to the McDougals' $92,000?
  But there are more questions. For instance, were the Clintons simply 
passive investors in Whitewater? The President and Mrs. Clinton have 
been portrayed simply as passive investors in Whitewater. But the few 
Whitewater records publicly available suggest otherwise.
  Did the President and Mrs. Clinton play a more active role in 
Whitewater? Why have they not been forthright as to the extent of their 
involvement? The American people have a right to know.
  On December 12, 1980, Whitewater transferred one of its lots to 
Hillary Clinton. Hillary Clinton then borrowed $30,000 from the Bank of 
Kingston, another bank owned by Jim McDougal. According to Whitewater 
Development Co.'s accountant, Charles James, the proceeds of the loan 
were used to build a model home on the lot that could be viewed by 
potential customers of Whitewater Development Co. Whitewater 
Development Co. recorded the loan as a debt owed to Hillary Clinton and 
treated the model home as a corporate asset.
  On November 10, 1981, the lot Hillary Clinton owned was sold for 
$27,500.
  On September 30, 1983, Bill Clinton borrowed $20,800 from Security 
Bank in Paragould, AR, and, according to the White House, the proceeds 
were used to pay Hillary Clinton's $30,000 loan from the Bank of 
Kingston.
  On September 14, 1988, Bill and Hillary bought back the lot and the 
home because the original purchaser went bankrupt. The Clintons paid 
$8,000. The Clintons were sold the lot and house on October 31, 1988.
  If the President and Mrs. Clinton were merely passive investors, why 
did Hillary Clinton take property from Whitewater and put it in her own 
name?
  Why did Hillary Clinton borrow money in her own name to build a model 
house for the Whitewater Development Co.?
  Why did Bill Clinton take out a personal loan to repay the debit 
taken out by his wife to build the model home?
  Why did the Clintons sell the lot and home, buy it back and resell it 
in their own names? After all, Whitewater's only business was the 
development and sale of property, so why did the Clintons, who were so-
called passive investors in a real estate company, undertake these 
activities in their own name? The American people have a right to know.
  Mr. President, I would like to make an observation; Mrs. Clinton 
indicated that there was more than a passive interest, but that was not 
until the late 1980's, and that was only an attempt to close the 
Whitewater operation down, since Mr. McDougal was no longer available. 
The incidents we have just spoken about occurred back in the early 
eighties--December 12, 1980, November 10, 1981, September 30, 1983--and 
would certainly seem to indicate that this was much more than a passive 
investment.
  After all, Whitewater's only business was land development, again. 
And so, if one of the investors was actually buying and selling land, I 
think the American people have a right to know how it was that they 
considered themselves to be passive investors.
  And the fifth area: Were federally insured deposits used for campaign 
contributions? Mr. President, there are also a series of allegations 
that funds from Madison were used to make campaign contributions to 
then Governor Clinton. During the final days of the 1984 gubernatorial 
campaign, Bill Clinton took out an unsecured $50,000 personal loan from 
the Bank of Cherry Valley. Mr. Clinton reportedly appointed Maurice 
Smith, who controlled the bank and served as Clinton's 1984 campaign 
finance chairman, to the Arkansas Highway Commission. Mr. Clinton 
reported the $50,000 as a personal contribution. However, his campaign 
report failed to disclose the source of these funds.
  Bill Clinton reportedly requested James McDougal to raise campaign 
funds to repay the $50,000 loan. On April 4, 1985, McDougal arranged a 
debt-retirement event at Madison. The RTC has reportedly asked the 
Justice Department to determine if $60,500 in Madison funds may have 
been diverted improperly to help retire Governor Clinton's 1984 
gubernatorial campaign debt.
  Mr. President, were federally insured deposits from Madison used to 
make campaign contributions to then-Governor Clinton? The American 
people have a right to know.
  Campaign contributions to Bill Clinton in February and October 1985 
allegedly came from the Whitewater Development Co., as well as Susan 
McDougal's company, Madison Marketing.
  Did these checks totaling $10,500 cause overdrafts on accounts at 
Madison? The American people have a right to know.
  Another question is whether federally insured SBA guaranteed loan 
funds were used by Whitewater.
  Mr. President, there are also indications that money from a federally 
insured SBA program was used by Whitewater to purchase property in 
Arkansas. David Hale, former Arkansas municipal court judge for Pulaski 
County, AR, appointed by Clinton, incorporated Capital Management 
Services, Inc., under Arkansas law in September 1978. The SBA licensed 
Capital Management Services, Inc., as a special small business 
investment company, the activities of which by law were limited to 
businesses at least 50 percent owned, controlled, and managed by 
``socially economically disadvantaged'' individuals.
  In March 1986, Whitewater entered into a contract to purchase an 810-
acre tract of land south of Little Rock from International Paper Realty 
Co.
  In April 1986, Capital Management made Susan McDougal's company, 
Master Marketing, a $300,000 SBA-backed loan. According to a document 
provided by David Hale, $193,000 of the $300,000 loan was apparently 
intended to be used to develop the land purchased from International 
Paper Realty.
  In October 1986, Whitewater Development Corp. purchased the property 
from International Paper Realty for $550,950. Jim McDougal paid $80,190 
at closing, and Whitewater Development Corp. signed promissory notes 
totaling $470,760.
  In December 1986, Whitewater Development Corp. paid International 
Paper Realty another $30,000 and transferred the property to Great 
Southern Land Co., Inc., another McDougal-owned company. Although the 
property was transferred, Whitewater Development remained liable on a 
$440,760 promissory note. The $300,000 loan to Susan McDougal's company 
was never repaid and the SBA closed Capital Management in 1993. The SBA 
estimates that the insolvency of this company will cost the American 
taxpayers $3.4 million.
  Was the money from the SBA loan used by Whitewater to purchase 
property? The American people have a right to know.
  And the final question, for now. Did Mrs. Clinton's cattle futures 
transactions comply with the commodities laws?
  Mr. President, according to the Wall Street Journal, Mrs. Clinton's 
account almost never met the margin requirements.
  For example, her account statements show that she made a cash deposit 
of $1,000 and closed out her position the next day with a profit of 
$5,300, increasing her original investment by over 500 percent.
  To make that kind of profit, she would have had to own about 17 
contracts at about $22,000 for each contract, or a total of $374,000 
worth of cattle future contracts.
  John Damgard, President of the Futures Industry Association said, 
``Significant undermargining raises the question of whether somebody 
was arranging her trades.''
  Even the spokesman chosen by the White House, Marvin Chirelstein, of 
Columbia University Law School, reportedly saw ``no evidence of hard 
risk.''
  If you or I tried to trade $374,000 worth of commodity contracts with 
only a thousand dollars to back up the trade, it could not be done. 
And, if the broker agreed to place the trades, he would be in serious 
trouble.
  Mr. President, Mrs. Clinton's commodity trading raises several 
questions:
  Who provided the funds for the trading in those accounts?
  Why was not Mrs. Clinton's account called to meet its margin 
requirements?
  Just how much did Mrs. Clinton rely on James Blair to make decisions 
and place trades for her account?
  Did Bill Clinton repay James Blair by giving special treatment to 
Tysons?
  How did a novice trader turn $1,000 into $100,000 in such a short 
time in such a risky and volatile market?
  Mr. President, today I have raised only some of the questions that 
have not been answered. There are many other questions that remain 
unanswered.
  For example, did the Rose law firm shred any documents that are 
relevant to the Whitewater investigation?
  What documents were removed from Vince Foster's office?
  Were law enforcement authorities blocked from searching that office?
  Where did all the money that the Federal Government invested in David 
Hale's SBA-backed company go?
  When did then Governor Clinton learn that Dan Lasater, a political 
supporter who did business with the State, was under investigation for 
possible Federal narcotics offenses?
  Why did then-Governor Clinton grant Lasater a conditional pardon for 
his Federal drug felony conviction?
  Did the Rose firm overcharge Federal agencies for legal work and fail 
to disclose possible conflicts of interest?
  Mr. President, as the New York Times pointed out in an editorial last 
Sunday:

       The First Lady's willingness to open herself to questions 
     is welcome, but her performance, however deft, leaves plenty 
     of troubling issues for the special prosecutor and Congress 
     to explore.

  Congressional hearings are the only way to get straight answers to 
the serious questions about the entire Whitewater controversy. The 
American people have a right to know the answers. The sooner the 
hearings occur, the sooner Congress can fulfill the American people's 
right to know.
  Mr. President, I yield the floor.
  Mr. BURNS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Mathews). The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. RIEGLE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. RIEGLE. Mr. President, let me address a question to the Chair. Am 
I correct in my assumption that the pending business is now the 
interstate banking bill?

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