[Congressional Record Volume 140, Number 61 (Tuesday, May 17, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WHITEWATER
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. WALLOP. Madam President, 2 weeks ago 40 Republican Senators wrote
our leader asking him to convey to the majority leader our deep concern
over the seeming reluctance of the majority to set up a mechanism for
holding Whitewater hearings. It has been nearly 2 months since the
Senate passed 98-0 a resolution calling for hearings to be convened in
a timely fashion. In the interim, Senators on this side of the aisle
have been quite patient while the two leaders negotiated the guidelines
and parameters for such an inquiry.
Those negotiations appear to have proven fruitless. Perhaps that was
to be expected. Perhaps Senators on the other side of the aisle are not
eager to schedule or hold Whitewater hearings. Perhaps they would
prefer to stall as long as possible in the hope that interest will wane
and somehow hearings will no longer be deemed necessary. This Senator
believes they are mistaken.
Questions have been raised by the press, media analysts, and
political pundits about the Whitewater matter. Has the media coverage
been overblown from the start? Should it take precedence over other
issues of national concern? Has the administration satisfactorily
answered the questions, put the matter behind them? This Senator would
reply ``No'' to each of those questions.
This matter has not been overblown, in fact it has been largely
ignored by all but a few domestic news outlets. While this issue should
not take precedence over all other issues, neither is this an either or
proposition. Surely we can get to the bottom of the Whitewater matter
and still conduct the rest of the Nation's business, unless a dedicated
few truly do not want Whitewater investigated.
Finally, the White House has not put the Whitewater matter behind it
precisely because they have not answered fundamental issues raised by
the Clintons' actions and associations. Until that is done--either by
the Clintons, the special counsel, or by Congress--this matter will nip
at the administration's heels.
Madam President, in recent weeks the President and the First Lady
have each held a press conference to answer Whitewater questions and
allegations. While both press conferences were public relations
successes--and reportedly that was their true purpose--each failed to
answer legitimate questions about the Clintons' activities and
associations here and back in Arkansas. That is not simply the
conclusion of the Senator from Wyoming, Mr. President. It is also the
considered judgment or most independent observers.
After Mrs. Clinton's press conference, the New York Times
editorialized:
As political theater, Hillary Rodham Clinton's news
conference Friday afternoon was undeniably a smash hit . . .
but her performance, however deft, leaves plenty of troubling
issues for the special prosecutor and Congress to explore.
Mr. President, let me repeat that: leaves plenty of troubling issues
for the special prosecutor and Congress to explore. The New York Times
believes there are sufficient questions to necessitate congressional
inquiry.
The New York Times wrote that Mrs. Clinton failed to adequately
address the question of whether wealthy benefactors who did business
with the State government were padding the Clinton family income while
Mr. Clinton was attorney general and Governor. On the matter of the
commodities trading, the Times noted that Mrs. Clinton's dealings with
Tyson Foods lawyer James Blair might have raised an ethical red flag
with some people, but Mrs. Clinton said she saw no problem because Mr.
Blair and his wife are among our very best friends.
The New York Times also dismissed the First Lady's account of the
Clinton's involvement with the McDougals in the Whitewater Development.
The Times noted that Mrs. Clinton:
Could not explain why Mr. McDougal wound up losing a lot
more money than the Clintons did in what was supposedly a 50-
50 deal. Her only real answer was that for 10 years she had
no idea of what was going on and that she did not receive
``any documents until late in the 1980's.'' That was a
strange confession of ignorance from a woman who had spent
the previous hour insisting that she maintained hawklike
vigilance over her commodities trades and was deeply
concerned with building a family nest egg.
However, perhaps the most damning assessment of the First Lady's
performance was left for last. The Times lamented:
Nor was it comforting to find the First Lady slipping into
answers that seemed guarded or legalistic. When asked if her
commodities broker might have given her a favorable advantage
because of her position, she replied with a lawyerly
``there's really no evidence of that. I didn't believe it at
the time.'' . . . She said she knew ``nothing to support''
allegations that money was diverted from . . . Madison S&L
into Whitewater to benefit the Clintons.
Once again, Madam President, those quotes come from the New York
Times editorial 2 days after the First Lady's press conference.
The Washington Post editorial was only slightly less critical of the
First Lady's performance. In response to Mrs. Clinton's claim that she
had not received favorable treatment during her commodities dealings,
the Post noted that her flimsy rationalization about lack of margin
calls:
Along with her inability to explain how she was permitted
to enter the market with $1000 when a single contract cost
$1200, was better than not hearing anything from her at all.
But it probably won't halt speculation about the help she
received in ballooning her financial investments.
The Post concluded that ``[T]he central question of whether funds
from the failed-Madison Guaranty Savings and Loan were improperly
shifted to Bill Clinton's gubernational campaign or to the Clintons'
Whitewater real estate venture remains a live issue after the news
conference''--let me repeat--``Remains a live issue after the news
conference.''
Finally, the Washington Post alluded to the ``penetrating question''
posed by the Resolution Trust Corporation's senior investigator in the
Whitewater--Madison Guaranty case: ``If you [the Clintons] aren't
putting money into the venture, and you also know the venture isn't
cash flowing, wouldn't you question the source of the funds being used
for your benefit?'' To this, the Post wrote, ``Mrs. Clinton offered a
less than satisfying response: `Well, Shoulda, Coulda, Woulda, we
didn't.' '' The Post concluded: ``answers like that won't put away
Whitewater.''
Madam President, I ask unanimous consent that both the New York Times
and the Washington Post editorials be inserted in the Record in their
entirety following my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered. (See
exhibit 1.)
Mr. WALLOP. Madam President, if we are truly seeking answers, we must
face reality: We are not getting them. The Clintons are either
unwilling or unable to provide thorough, complete, and factually
accurate answers, even after being hounded and cajoled. As the
editorials I have just mentioned conclude, the press conferences have
not been enough. And as experience with this administration indicates,
we cannot rely upon the Clintons to be unilaterally candid and
forthcoming. That is also the common perception among the people,
according to polls. The American people may not believe each of the
specific aspects of Whitewater is of great consequence, but they are
disturbed by equivocation and dissembling with which the administration
has handled matters.
In an April 13 Washington Post OP-ED, liberal columnist Richard Cohen
gave voice to this concern in describing the advice he would have given
to the Clintons on Whitewater had they asked: ``Answer all the
questions, hold nothing back and--no matter what--tell the truth.''
Then, Mr. Cohen noted:
For some reason though, the Clintons have done nothing of
the sort. They have, in fact, given out stories that have
prompted the White House Press Secretary, Dee Dee Myers, to
resort to formulations not heard in Washington since
Watergate itself. An account of Hillary Clinton's dealings in
the futures market, for instance, is ``No longer operative.''
In other words, it wasn't true.
Richard Cohen's conclusion, I believe, aptly underscored a critical
issue now enmeshed in this whole affair. He wrote:
Whatever Whitewater--and related matters--might eventually
be about (maybe nothing), it is now about candor. The
Clintons--not the press and not some right-wing Daddy
Warbucks--have made it that. The White House seems incapable
of just coming out with it--the details, the facts, the
bloody truth. Maybe the Clintons think they are more clever
than the rest of us. Maybe they think that since the truth
and their preferred political image do not conform, it's okay
to monkey with the former to match the latter. Maybe Clinton
does have a character problem--an impulse to say whatever
will suffice at the moment, never mind the literal truth.
Maybe all of these speculations are true.
But the fact that they are raised at all has little to do
with the vaunted adversarial nature of the press and
everything to do with the way Bill and Hillary Clinton have
played cute with the truth. If they were children, they'd be
grounded. Since they are President and First Lady the most
the press can do is ask questions--and the least the Clintons
could do is answer them frankly. If they had done that from
the beginning, Whitewater would be about an obscure land deal
and not about the character of the First Family.
Madam President, some may believe this to be a rather harsh
indictment of the Clintons. But regrettably, Mr. Cohen's assessment is
borne out by the facts.
Simply look at the White House's handling of just about any of the
issues which have arisen to date--Travelgate, Vince Foster's suicide,
the First Lady's commodities trading, their involvement with James
McDougal in the Whitewater Development--and we are repeatedly
confronted with myriad claims, revised versions of events, and
continuous corrections.
The impression being left with the American people is that either the
Clintons have something to hide--and thus all the prevarication--or
they are simply incapable of distinguishing or telling the truth. When
the Clintons provide answers to inquiries, the answers tend to be
purposely vague and guarded or simply incorrect. This pattern has been
repeated time and again and it is increasingly difficult to ascribe
these inconsistencies to innocuous or innocent motives.
Madam President, in 1992 the New York Times first raised questions
about Whitewater. At that time, the Clinton campaign had a Denver
attorney and old friend of Bill Clinton's, James M. Lyons, hire an
accounting firm to prepare a report which ostensibly ``exonerated the
Clintons of any misrepresentations.'' The Lyons report was released by
the Clinton campaign to diffuse questions about the Clintons'
involvement in Whitewater.
Now, very troubling press stories are emerging with respect to the
Lyons report. Claims contained in the Lyons report conflict with the
very financial records upon which the report was purportedly based.
According to the Los Angeles Times article which appeared on April 15,
1994--Tax Day, ironically:
Newly released tax returns for the Whitewater Development
Corp. raise fresh questions about the assertion by President
Clinton * * * that they poured tens of thousands of dollars
into the losing venture and received nothing in return.
Yet the corporate tax returns of the Whitewater
Development, made public for the first time earlier this
week, do not show evidence of payments anywhere near as large
as the Clintons have said they made. Instead of documenting
the $46,636 that the Clintons say they lost on the Whitewater
project, the tax records and supporting documents show only
about $13,000 * * * in such payments.
Madam President, in the interest of time, I would ask that a series
of additional passages from this article be printed in the Record at
this point and that the full text of the article be placed in the
Record following my remarks.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Selected Passages From 4/15/94 L.A. Times Article on Lyons Report
[The Clintons] have consistently defended themselves . . .
by arguing that they lost $46,636 on the land development
project during the 1970's and 1980's. Most of the money they
spent, they have said, [was] large interest payments made for
Whitewater Development from their personal funds.
The corporate tax records seem to support assertions made
in recent months by [James] McDougal . . . [who] claimed that
the Clintons only invested about $13,000 in the Whitewater
Project, not the larger amounts cited by the President.
The Clintons' personal tax returns for the years in
question show that they claimed $46,636 as tax deductions,
though no canceled checks or bank statements have been
released to substantiate the deductions. The Clintons have
said the payments they claimed on their personal returns were
made directly to banks holding Whitewater Mortgage or to
other corporations owned by James B. McDougal, the Clintons'
partner in the Whitewater venture. In that case, the payments
also should have shown up on Whitewater Development's
corporate tax returns, according to independent tax
accountants who reviewed the corporation's financial records.
Tax experts said the corporate tax returns should have
included entries corresponding with the payments listed in
the personal returns, but they do not. The White House
declined to comment on the discrepancies. A source familiar
with the Clintons' tax records said he could not explain why
the full $46,636 was not reflected in Whitewater
Development's corporate returns.
The Whitewater Development tax returns also call into
question findings contained in [the Lyons] report issued by
the Clinton Presidential campaign in March, 1992, in response
to disclosures about the Whitewater controversy. . .
.financial information in the corporate tax returns conflicts
sharply with the figures in that report. For example, the
[Lyons] report stated that the Whitewater venture suffered
losses during the years in which the corporation's tax
returns show that it made money. And the corporate returns
indicate that Whitewater Development was bringing in as much
as $60,000 annually from land sales during years in which the
Lyons report said that no land was sold.
The accounting firm that prepared the 1992 [Lyons] report
clearly had access to the Whitewater Development tax returns.
The campaign [Lyons] report said the analysis was based on
the returns and many of the line entries in both the report
and the Whitewater Development tax returns are identical.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 2.)
Mr. WALLOP. I thank the Chair.
Madam President, these facts and details have gone largely unreported
in much of the media, but they have not been ignored by everyone. The
New Republic magazine in its May 9 issue discussed these revelations
and their import:
The [Los Angeles] Times reports that whitewater's own
corporate documents suggest that the Clinton's invested a
mere $13,000 in Whitewater--not several times that amount, as
they first claimed. The Clinton's own tax returns claim
$46,636 in payments. There are two possible explanations:
either the Whitewater documents are in error or the Clintons
dissembled the amount on their tax returns. More
interestingly, the original Lyons report, put out by the
Clinton campaign two years ago to lay Whitewater to rest, had
access to the development corporation's documents--yet it
concluded that the venture took a far greater loss than the
documents show, as well as claiming that it was taking losses
in years the newly released documents show it to have been
making profits. For example, the corporate returns indicate
that Whitewater was bringing in as much as $60,000 annually
from land sales during years in which the Lyons report said
no sales were made. Once again, there are two possible
explanations: Either the Clinton campaign and Mr. Lyon's team
of accountants simply misread the returns, or they
deliberately dissembled about their contents.
Madam, President, why is this particular facet of the Whitewater
controversy important? Obviously, if the Clinton's claimed tax
deductions to which they were not entitled, they will have to rectify
their mistakes--as they recently did in the case of the previously
unreported profits from Mrs. Clinton's commodities trading. However,
there is a larger issue at stake, best described by columnist William
Safire in an April 11, 1994, New York Times op-ed:
Why pursue this old story to its source? Because when
Whitewater was first exposed by the New York Times in early
1992, candidate Clinton effectively squelched it with a
legal-accounting report that was at least misleading, and may
turn out to be a tissue of lies. If so, President Clinton
should be held accountable. * * * Would it weaken this
Presidency? Sadly, yes. But for one party government to
condone a campaign cover-up would damage the American system
far worse--which is why the truth about Whitewater must be
flushed out.
Madam President, the charge of a campaign coverup is certainly a
serious one--both in the damage it could cause if proven true and in
the cost to the country if true but not investigated or pursued. While
it is premature to accuse the Clinton campaign of deliberately using
the Lyons report to dissemble the facts, it may be equally premature to
totally dismiss such speculation.
On ABC's Nightline, April 19, 1994, Clinton campaign strategist James
Carville tried to deflect press and public attention from the
Whitewater matter by proclamining:
Well, my word is that this is an overblown story. It is not
a very good time for the media. The American people are
turning, the story is turning in favor of the President, and
it's time to get off of it and move to something else. Or if
you've got something, you want to say there's some
wrongdoing, come forward with it. But there is an onslaught
of opinion that the mainstream media has overplayed its hand
on this story.
To this, Max Frankel, executive editor of the New York Times
responded:
In all of 1992, we who started this particular string
going, we had one story on Whitewater. * * * We were
confronted by a massive blockade: Detectives, public
relations experts, lawyers. No more answers, no more
documents. We met a stone door, and for us this became
unfinished business. We have had one or two, at the height of
it I think three reporters on this out of 350, 400. The
charge that this is overtaking our coverage of patiently
ridiculous. * * * And what could have been a three-day story
if it was really innocent has become now a three-month story
because every day a new fact is dribbled out, only to be
contradicted the next day. We got very little help on this
particular strand of the Clinton's background, and the
chickens are coming home to roost.
So this pattern--``We were confronted by a massive blockade * * * no
more answers, no more documents * * * every day a new fact is dribbled
out, only to be contradicted the next day''--is not new, it was the
modus operandi of the Clinton campaign and is now apparently that of
the Clinton administration.
Mr. Carville's comments are curious indeed when juxtaposed with
comments attributed to him in a recent Newsweek magazine article. Let
me quote from the April 11, 1994, article which described a particular
situation on the 1992 campaign trail:
After the Illinois primary [Hillary Clinton] said in
response to a reporter's question that she had never, ever
profited from state business. The [campaign] staff was
horrified to discover that this was not entirely true, when
it turned up a 1986 memo detailing her decision to give up
the bond profits. The [campaign] war room was plunged into
gloom as it tried to decide what to do with the information.
This is a disaster, said campaign strategist James Carville
at the time * * * Carville & Co. were furious with the
Clintons for failing to come clean with their own advisers.
I've had blind dates with women I've known more about than I
know about Clinton, said Carville. The arrogance, exclaimed a
senior adviser that night. The arrogance that they--because
they are smarter than most people--can talk their way out of
any problem.
Frankly, Madam President, that article actually begs the question of
whether Newsweek deliberately sat on this story during the campaign to
keep from embarrassing the Clintons and possibly hurting the Clinton-
Gore election effort. But if the Newsweek report is accurate, what does
it tell us about the mores of the Clintons and their campaign
operatives? We can certainly dismiss out of hand Mr. Carville's
incredulity at the media attention Whitewater has received.
Madam President, let me conclude. There apparently is a feeling in
the country that the reason there is so little interest in the details
surrounding Whitewater is that the electorate simply believes that this
is nothing out of the ordinary with politicians--it is ``politics as
usual.'' Well, Madam President, this Senator does not believe the
electorate at large truly knows the complete details surrounding the
various aspects of the whole Whitewater saga. If they understood the
magnitude and the gravity of matters at issue, I do not believe they
would simply shrug it off in a matter-of-fact fashion.
Madam President, if this is politics as usual, then our society
suffers from a moral and political deterioration much more grave than
this Senator believed. If, as this Senator firmly believes, this is not
politics as usual, but we do nothing; we thereby give the impression of
our acquiescence or, even worse, our approval, and we are ultimately
responsible for the continued debasement of our political process, our
institutions, and our heritage.
Therefore, Madam President, due to the apparent impasse over
convening Whitewater hearings, those of us who do not believe this is
``politics as usual'' are compelled to come to the floor and delineate
why we believe there are legitimate issues at stake and questions that
need to have answers--real answers, Madam President, not the variety to
which we have been treated in the last couple of months.
Hearings are necessary, Madam President. Our democracy will not be
shattered by a public hearing on this matter. But democracy without
truth is a fatal deceit upon which its future cannot survive.
Madam President, I yield the floor.
Exhibit 1
[From the New York Times, Apr. 24, 1994]
Mrs. Clinton Steps Forward
As political theater, Hillary Rodham Clinton's news
conference Friday afternoon was undeniably a small hit. She
serenely answered an hour's worth of aggressive questions on
her complex adventures in the commodities and Arkansas real
estate market. She was also forthrightly remorseful about her
earlier resistance to the press and to the appointment of a
special counsel.
The First Lady, declaring she had decided to emerge from
her ``zone of privacy,'' seemed finally to grasp a central
truth that has eluded the White House staff and her husband
for months: In presidential behavior, unanswered questions
create a vacuum that sucks everything into it--including the
energies of the press, the legislative vitality of Congress
and the attention of the chief executive.
It is of course up to Robert Fiske, the special counsel, to
determine whether the Clintons' financial dealings broke the
law or whether they merely reflected the fluid ethical mores
of Arkansas. But from the beginning, the White House's
inability to provide a consistent factual narrative of the
Clinton's financial history has made the entire business seem
suspicious. Mrs. Clinton's appearance, even this late in the
game, was a welcome if belated antidote to months of
stonewalling.
Mrs. Clinton did not, however, adequately dispense with one
central issue: whether wealthy benefactors who did business
with the state government were padding the Clinton family
income while Mr. Clinton was Attorney General and Governor.
She conceded that most of her highly profitable commodities
trades were executed on the advice of James Blair, a lawyer
for Tyson Foods, a large company that was heavily regulated
by and received substantial tax credits from the Arkansas
government. That might have raised an ethical red flag with
some people, but Mrs. Clinton said she saw no problem because
Mr. Blair ``and his wife are among our very best friends.''
Mrs. Clinton likewise insisted that James McDougal, the
Clintons' partner in the Whitewater land deal and the owner
of a savings and loan regulated by the state, and provided no
special favors. But she could not explain why Mr. McDougal
wound up losing a lot more money than the Clintons did in
what was supposedly a 50-50 deal. Her only real answer was
that for 10 years she had no idea of what was going on and
that she did not receive ``any documents until late in the
1980's.'' That was a strange confession of ignorance from a
woman who had spent the previous hour insisting that she
maintained hawklike vigilance over her commodities trades and
was deeply concerned with building a family nest egg.
Nor was it comforting to find the First Lady slipping into
answers that seemed guarded or legalistic. When asked if her
commodities broker might have given her a favorable advantage
because of her position, she replied with a lawyerly
``There's really no evidence of that. I didn't believe it at
the time.'' Often she denied awareness of events without
quite denying the events themselves, as when she said she
knew ``nothing to support'' allegations that money was
diverted from the troubled Madison S. & L. into Whitewater to
benefit the Clintons.
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.
____
[From the Washington Post, Apr. 25, 1994]
Mrs. Clinton Meets the Press
The Hour or so Hillary Rodham Clinton devoted last Friday
to fielding Whitewater-related questions from the White House
press corps was time well spent. She appeared and sounded as
confident and unflappable as Bill Clinton did during his
prime-time televised news conference last month. The
setting--Mrs. Clinton was seated casually in a chair and
spoke without notes--conveyed an openness and eagerness to
engage in a full give and take about her business moves as
well as the other Arkansas affairs that now occupy the
attention of a special counsel, Republicans in Congress and,
of course, the press. This was an event that could well have
happened long ago.
Many people have been having trouble sorting out what to
make of Mrs. Clinton's successful venture into the
commodities markets. White House disclosures about her
trading activities clearly had a hide-and-seek quality that
didn't help. Mrs. Clinton accepted blame for the shifting
stories coming out of the White House. ``I'm not in any way
excusing any confusion that we have created,'' she said. ``I
don't think that we gave enough time or focused enough.'' But
beyond that concession and her acknowledgment that she had
been a chief foe of the appointment of a special counsel--for
reasons of precedent--Mrs. Clinton held her ground that she
crossed no ethical lines as the governor's wife in trading
cattle futures on the advice of a close friend who also
served as outside counsel for Arkansas's biggest employer.
She maintained that she never received ``any favorable
treatment'' in her commodity dealings because of who she was
or her husband's position. In explaining why she wasn't
required by her broker to meet ``margin calls'' or to put up
additional money to cover losses in her account, as is
customary, Mrs. Clinton speculated that the company was
either backed up with paperwork or she was too good a
customer for them to worry about. That answer, along with her
inability to explain how she was permitted to enter the
market with $1,000 when a single contract cost $1,200, was
better than not hearing anything from her at all. But it
probably won't halt speculation about the help she received
in ballooning her financial investments.
The central question of whether funds from the failed-
Madison Guaranty Savings and Loan were improperly shifted to
Bill Clinton's gubernatorial campaign or to the Clintons'
Whitewater real estate venture remains a live issue after the
news conference. Mrs. Clinton flatly declared that she knows
nothing about any such diversion. To the penetrating question
raised by the Resolution Trust Corp.'s senior investigator:
``If you [the Clintons] aren't putting money into the
venture, and you also know the venture isn't cash flowing,
wouldn't you question the source of the funds being used for
your benefit?'' Mrs. Clinton offered a less than satisfying
response: ``Well, shoulda, coulda, woulda, we didn't.''
Answers like that won't put away Whitewater. But as Friday
demonstrated, fielding questions is better than going in the
bunker.
Exhibit 2
[From the Los Angeles Times, Apr. 15, 1994]
Tax Documents Raise New Questions on Whitewater; Inquiry: Real Estate
Company's Returns Do Not Reflect Losses Claimed by President Clinton
and His Wife
(By James Risen)
Newly released tax returns for the Whitewater Development
Corp. raise fresh questions about the assertion by President
Clinton and his wife that they poured tens of thousands of
dollars into the losing venture and received nothing in
return.
The Clintons have consistently defended themselves against
critics by arguing that they lost $46,636 on the land
development project during the 1970s and 1980s. Most of the
money they spent, they have said, consisted of large interest
payments made for Whitewater Development from their personal
funds.
Yet the corporate tax returns of Whitewater Development,
made public for the first time earlier this week, do not show
evidence of payments anywhere near as large as the Clintons
have said they made. Instead of documenting the $46,636 that
the Clintons say they lost on the Whitewater project, the tax
records and supporting documents show only about $13,000 in
such payments by the Clintons.
Tax accountants said the corporation would have been
obligated to reflect the full amount if it was adhering to
standard accounting practices.
The Clintons' personal tax returns for the years in
question show that they claimed $46,636 as tax deductions,
though no canceled checks or bank statements have been
released to substantiate the deductions.
The Clintons have said the payments they claimed on their
personal returns were made directly to banks holding
Whitewater mortgages or to other corporations owned by James
B. McDougal, the Clintons' partner in the Whitewater venture.
In that case, the payments also should have shown up on
Whitewater Development's corporate tax returns, according to
independent tax accountants who reviewed the corporation's
financial records.
``If a good job of bookkeeping was being done, you would
find some record or some notation in the tax returns that the
corporation was being relieved of its obligations,'' by the
Clintons, said Mark Rogers, a Little Rock, Ark., accountant
hired by The Times to review the Whitewater Development
returns.
The apparent discrepancy between the personal and corporate
tax returns raises more questions about central issues posed
by the Clintons' chief GOP critics: Did the President and
First Lady Hillary Rodham Clinton actually lose large sums of
money on the Whitewater project, as they have said, and did
they receive tax benefits to which they were not fully
entitled?
The corporate tax records seem to support assertions made
in recent months by McDougal. McDougal has claimed that the
Clintons only invested about $13,000 in the Whitewater
project, not the larger amounts cited by the President.
(Clinton originally had said that he and his wife contributed
$68,900 to the Whitewater endeavor, but he later revised the
figure.)
So far, the White House has released no supporting
materials, such as canceled checks or bank statements, to
document the payments listed in the Clintons' personal tax
returns. Tax experts said the corporate tax returns should
have included entries corresponding with the payments listed
in the personal returns, but they do not.
The White House declined to comment on the discrepancies. A
source familiar with the Clintons' tax records said he could
not explain why the full $46,636 was not reflected in
Whitewater Development's corporate returns.
There could be several possible explanations for the
discrepancies between the personal and corporate tax returns.
Whitewater Development bookkeepers could have failed to
properly record all of the payments made by the Clintons or a
tax preparer might have overlooked them. Similarly, the
Clintons' records might have been faulty. Indeed, the
Clintons and McDougal have characterized Whitewater
Development's record-keeping practices as somewhat haphazard.
Whitewater Development's corporate returns show that in
1980, Hillary Rodham--the name used by the First Lady at the
time--made $10,131 in interest payments on behalf of
Whitewater Development. In 1979, the returns show, Bill
Clinton made a loan to Whitewater Development of $2,900.
In 1981, however, Hillary Clinton received $15,185 back
from Whitewater Development, according to the corporate tax
records. The entry indicates that the payment was in the form
of land owned by the corporation and not in cash.
Hillary Clinton took out a $30,000 loan from a McDougal-
controlled bank to build a model home on one Whitewater lot,
according to documents released by McDougal along with the
corporate tax returns. But the corporate returns indicate
that the property was not considered an asset of the
corporation. Hillary Clinton later sold the property herself.
The Whitewater Development tax returns also call into
question findings contained in a report issued by the Clinton
presidential campaign in March, 1992, in response to
disclosures about the Whitewater controversy. The report,
prepared by an accounting firm hired by James M. Lyons, a
Denver attorney and old friend of Clinton, exonerated the
Clintons of any misrepresentations.
Financial information in the corporate tax returns
conflicts sharply with the figures in that report. For
example, the report stated that the Whitewater venture
suffered losses during years in which the corporation's tax
returns show that it made money. And the corporate returns
indicate that Whitewater Development was bringing in as much
as $60,000 annually from land sales during years in which the
Lyons report said that no land was sold.
The accounting firm that prepared the 1992 report clearly
had access to the Whitewater Development tax returns. The
campaign report said the analysis was based on the returns
and many of the line entries in both the report and the
Whitewater Development tax returns are identical.
The White House has distanced itself from the 1992 report
in recent months but still uses many of its basic findings to
defend the President and Hillary Clinton.
Rogers said there is nothing in the Whitewater Development
tax returns, the Clintons' personal tax returns as released
by the White House or the campaign report that explains the
discrepancies between the documents.
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