    [Senate Report 104-204]
    [From the U.S. Government Publishing Office]

    104th Congress 2d Session        SENATE                 Report
                                                           104-204
    _______________________________________________________________________

    PROGRESS OF THE INVESTIGATION INTO WHITEWATER DEVELOPMENT CORPORATION
           AND RELATED MATTERS AND RECOMMENDATION FOR FUTURE FUNDING

                                   __________

                                  R E P O R T

                                     of the

                        SPECIAL COMMITTEE TO INVESTIGATE
                       WHITEWATER DEVELOPMENT CORPORATION
                              AND RELATED MATTERS

                                 together with

                                ADDITIONAL VIEWS

                    January 22, 1996.--Ordered to be printed
    SPECIAL COMMITTEE TO INVESTIGATE WHITEWATER DEVELOPMENT CORPORATION AND
                                RELATED MATTERS

      ALFONSE M. D'AMATO, New York,
                 Chairman
    PAUL S. SARBANES, Maryland           RICHARD C. SHELBY, Alabama
    CHRISTOPHER J. DODD, Connecticut     CHRISTOPHER S. BOND, Missouri
    JOHN F. KERRY, Massachusetts         CONNIE MACK, Florida
    RICHARD H. BRYAN, Nevada             LAUCH FAIRCLOTH, North Carolina
    BARBARA BOXER, California            ROBERT F. BENNETT, Utah
    CAROL MOSELEY-BRAUN, Illinois        ROD GRAMS, Minnesota
    PATTY MURRAY, Washington             BILL FRIST, Tennessee
    PAUL SIMON, Illinois                 ORRIN B. HATCH, Utah
                                         FRANK H. MURKOWSKI, Alaska
     Howard A. Menell, Staff Director
      Robert J. Giuffra, Jr., Chief
                  Counsel
     Philip E. Bechtel, Deputy Staff
                 Director
    Steven B. Harris, Democratic Staff
        Director and Chief Counsel

                                C O N T E N T S

                                  ----------
                                                                       Page
    Summary..........................................................     1
    Preface..........................................................     2
    Discussion.......................................................     2
    A. Progress of the Committee's Investigation.....................     2
        1. Foster Phase..............................................     3
        2. Washington Phase..........................................     5
        3. Arkansas Phase............................................     9
    B. Obstacles Faced by the Committee..............................    11
        1. Delays in the Production of Documents.....................    11
             (a) Telephone Records...................................    11
            (b) White House Delays...................................    14
            (c) Subpoena for William Kennedy's Notes.................    16
        2. Resistance of Witnesses...................................    18
            (a) Fifth Amendment Pleas................................    18
            (b) Motions to Quash the Committee's Subpoenas...........    18
        3. Objections by the Office of Independent Counsel...........    20
    C. Recommendations for Additional Funds..........................    22
    Exhibit I--Testimony of witnesses before the Special Committee to
      Investigate Whitewater Development Corporation and Related
      Matters........................................................    24
    Exhibit II--Phase I: Handling of documents in Foster's office....    30
    Exhibit III--Phase II: Washington and Arkansas...................    48
    Exhibit IV--Additional document requests.........................    68
    Additional views of Senators Sarbanes, Dodd, Kerry, Bryan, Boxer,
      Moseley-Braun, Murray and Simon................................    90
        I. The Special Committee should adhere to S. Res. 120 and
          complete its inquiry by February 29, 1996..................    90
            The Committee should complete its investigation by
              February 29, 1996......................................    90
            The investigation should not be prolonged in an election
              year...................................................    91
            Substantial public funds have already been expended......    92
            The Independent Counsel's investigation should not delay
              the Committee's investigation..........................    92
            White House compliance with Committee document requests..    94
        II. The Majority's findings are incomplete and one-sided.....    95
        III. Conclusion..............................................    97
    104th Congress                                                   Report
                                     SENATE

     2d Session                                                     104-204
    _______________________________________________________________________

     PROGRESS OF THE INVESTIGATION INTO WHITEWATER DEVELOPMENT CORPORATION
           AND RELATED MATTERS AND RECOMMENDATION FOR FUTURE FUNDING
                                    _______

                    January 22, 1996.--Ordered to be printed

    _______________________________________________________________________

       Mr. D'Amato, from the Special Committee to Investigate Whitewater
      Development Corporation and Related Matters, submitted the following

                                  R E P O R T

                                 together with

                                ADDITIONAL VIEWS

                                    Summary

        The Special Committee to Investigate Whitewater Development
    Corporation and Related Matters (the ``Committee'') has made
    significant progress toward completing the mandate of Senate
    Resolution 120. The Committee has sought to fulfill its mandate
    in a fair, thorough and impartial manner. In carrying out its
    constitutional oversight responsibility, the Committee has to
    date conducted 172 depositions, examined 95 witnesses in 29
    days of public hearings, and issued numerous requests and
    subpoenas for documentary evidence.\1\ This effort has
    uncovered many new and critical facts regarding the matters of
    inquiry specified in Senate Resolution 120.
        \1\ Exhibit 1 accompanying this report provides a comprehensive
    listing of the witnesses examined by the Committee under oath.
    ---------------------------------------------------------------------------
        Although the Committee has made significant progress, much
    work remains to be done. The Committee has confronted efforts
    to withhold relevant information from the Committee. The
    continuing pattern of hinderance by various parties has
    significantly impeded the progress of the Committee's
    investigation. The Committee's progress has also been slowed by
    consideration of the Office of Independent Counsel's concerns
    about the Committee's examination of witnesses, including
    witnesses involved in the trial of United States v. James B.
    McDougal, et. al. prior to its conclusion. That trial has been
    rescheduled twice. It is currently calendared to begin on March
    4, 1996, and is expected to last approximately two months.
        The Committee therefore does not believe that it can
    complete the mandate of Senate Resolution 120 by February 29,
    1996, and recommends that the Senate authorize the expenditure
    of $600,000 to continue its investigation beyond that date. The
    Committee is committed to completing its investigation at the
    earliest possible date.

                                    PREFACE

        On May 17, 1995, the Senate, by a vote of 96 to 3, adopted
    Senate Resolution 120, which established the Committee, to be
    administered by the Committee on Banking, Housing, and Urban
    Affairs (the ``Banking Committee''). Section 9 of Resolution
    120 directs the Committee to evaluate the progress of the
    investigation, study and hearings authorized by the Resolution
    and to make recommendations to the Senate with respect to the
    authorization of additional funds for a period following
    February 29, 1996. This report to the Senate addresses: (A) the
    progress of the Committee's investigation into matters
    authorized by Resolution 120; (B) the obstacles the Committee
    has encountered during the course of its investigation; and (C)
    the Committee's recommendations as to the funding necessary to
    carry out fully the mandate of Resolution 120.

                                   Discussion

                  A. PROGRESS OF THE COMMITTEE'S INVESTIGATION

        The Committee has made significant progress in carrying out
    the mandate of Senate Resolution 120. The Resolution authorized
    the Committee to investigate and to hold public hearings into
    three general subject areas. Section 1(b)(1) authorized
    investigation into whether White House officials engaged in
    improper conduct in handling documents in Deputy White House
    Counsel Vincent Foster's office following his death on July 20,
    1993--the so-called Foster Phase of the Committee's inquiry.
    Section 1(b)(2) authorized investigation into whether the White
    House improperly interfered with any investigations or
    prosecutions by various federal agencies relating to, among
    other things, Whitewater Development Corporation
    (``Whitewater''), Madison Guaranty Savings & Loan Association
    (``Madison''), and Capital Management Services, Inc. (``CMS'').
    This is the Washington Phase of the inquiry. Finally, in the
    Arkansas Phase, Sec. 1(b)(3) of Resolution 120 authorized the
    Committee to investigate, among other things, the operations of
    Whitewater, Madison, CMS and the work and billing practices of
    the Rose Law Firm with regard to Madison.
        The Committee has conducted extensive investigation and
    public hearings in connection with the Foster and the
    Washington Phases. The Committee has completed the bulk of its
    inquiry into these matters and has uncovered numerous new and
    salient facts. However, in light of the scope of the Senate's
    mandate, the thoroughness with which the Committee has sought
    to conduct its inquiry and the delay and noncompliance by
    certain parties with the Committee's inquiry, the Committee has
    not yet concluded its investigation. The Committee is now
    analyzing all available evidence in order to identify any
    additional avenues of investigation with respect to the Foster
    and Washington Phases of its investigation and to make its
    final conclusions. With respect to the Arkansas Phase, the
    Committee is now well into its investigation and has begun to
    hold public hearings into matters authorized by Sec. 1(b)(3) of
    Senate Resolution 120.
        In total, the Committee has conducted 172 depositions,
    examined 95 witnesses in 29 days of public hearings, and issued
    numerous requests and subpoenas for documents and records. This
    report is accompanied by exhibits detailing the Committee's
    substantial efforts. The Committee has attempted to conduct its
    investigation in a bipartisan manner. The Chairman and Ranking
    Member have jointly issued the vast majority of the requests
    and subpoenas for documentary and testamentary evidence.

    1. Foster phase

        The death of White House Deputy Counsel Vincent W. Foster,
    Jr., on July 20, 1993, marked the first time since Secretary of
    Defense James Forrestal died in 1949 that such a high-ranking
    U.S. official took his own life. Mr. Foster was a close friend
    of both the President and Mrs. Clinton and provided legal
    counsel to them on a number of sensitive personal matters,
    including Whitewater. In the days following his death, White
    House officials, in particular members of the White House
    Counsel's office, searched the contents of Mr. Foster's office
    and, at the same time, prevented law enforcement officials from
    conducting a similar search.
        Section 1(b)(1) of Senate Resolution 120 authorized the
    Committee to inquire ``whether improper conduct occurred
    regarding the way in which White House officials handled
    documents in the office of White House Deputy Counsel Vincent
    Foster following his death.'' The Committee conducted 69
    depositions and held 17 days of public hearings to investigate
    the actions of White House officials in the week following Mr.
    Foster's death. The Committee's investigation revealed, among
    other things, the following salient facts:

              Seven different persons recalled four separate
            requests by law enforcement officials to White House
            officials to seal Vincent Foster's office on the
            evening of his death. The office was not sealed on that
            night. (Braun, 7/20/95 Hrg. p. 20; Rolla, 7/20/95 Hrg.
            pp. 31-32; Hines, 7/20/95 Hrg. p. 25; Mathews, 7/25/95
            Hrg. pp. 73-74; Gergen, 7/12/95 Dep. p. 29-30; Gearan,
            7/6/95 Dep. p. 48; Hubbell, 7/13/95 Dep. pp. 49-51).
              White House Counsel Bernard Nussbaum, Chief of Staff
            to the First Lady Margaret Williams, and Deputy
            Director of the White House Office of Administration
            Patsy Thomasson conducted a search of Mr. Foster's
            office on the night of his death. (Nussbaum, 8/9/95
            Hrg. p. 11; Williams, 7/26/95 Hrg. p. 154; Thomasson,
            7/25/95 Hrg. p. 199).
              Secret Service Officer Henry O'Neill testified that,
            on the night of Mr. Foster's death, he saw Ms. Williams
            remove file folders, three to five inches thick, from
            the White House Counsel's suite and place them in her
            office. (O'Neill, 7/26/95 Hrg. p. 22). Ms. Williams
            testified that she did not remove any files from the
            Counsel's suite, and submitted results of a polygraph
            test corroborating her testimony. (Anderson, 7/31/95
            Dep. Exh. 1).
              Department of Justice officials testified that they
            agreed with Mr. Nussbaum on July 21, 1993, that they
            would review documents in Mr. Foster's office jointly
            with Mr. Nussbaum. (Heymann, 8/2/95 Hrg. p. 42;
            Margolis, 8/10/95 Hrg. pp. 178-179; Adams, 6/29/95 Dep.
            p. 32).
              Susan Thomases paged Mr. Nussbaum early morning on
            July 22, after talking with Mrs. Clinton. (Williams &
            Connolly Document 001; White House Document Z 000647).
            Ms. Thomases then called back Mrs. Clinton. Associate
            White House Counsel Stephen Neuwirth testified that Mr.
            Nussbaum said later that morning that Mrs. Clinton and
            Ms. Thomases were concerned about law enforcement
            officials having ``unfettered access'' to Mr. Foster's
            office. (Neuwirth, 8/3/95 Hrg. p. 75).
              Mr. Nussbaum then announced to the law enforcement
            officials that he had decided to change the procedures
            for searching Mr. Foster's office. Mr. Nussbaum alone
            would review the documents contained in the office.
            (Margolis, 8/10/95 Hrg., pp. 182-183). Justice
            Department officials told Mr. Nussbaum that he was
            making ``a terrible mistake.'' (Heymann, 8/2/95 Hrg. p.
            46; Margolis, 8/10/95 Hrg. p. 185).
              Law enforcement officials testified that they were
            dissatisfied with Mr. Nussbaum's cursory review of
            documents in Mr. Foster's office on July 22. (Margolis,
            8/10/95 Hrg. p. 191; Salter, 7/27/95 Hrg. p. 105;
            Adams, 7/27/95 Hrg. p. 105; Park Police Document 37).
              Michael Spafford, an attorney representing the Foster
            family, testified that he overheard Associate White
            House Counsel Clifford Sloan tell Mr. Nussbaum after
            the document review on July 22 that scraps of paper
            remained at the bottom of Mr. Foster's briefcase.
            (Spafford, 7/27/95 Hrg. p. 19).
              Ms. Williams and Mr. Nussbaum conducted a second
            review of Mr. Foster's office and transported files to
            the White House Residence on July 22. (Nussbaum, 7/12/
            95 Dep. p. 237; Williams, 7/26/95 Hrg. p. 220-221).
            Special Assistant to the White House Counsel Thomas
            Castleton testified that, as he helped carry the files
            to the residence, Ms. Williams told him that ``the
            President or the First Lady had to review the contents
            of the boxes to determine what was in them.''
            (Castleton, 6/27/95 Dep. pp. 139-140).
              Deputy Attorney General Phillip Heymann testified
            that, dissatisfied with Mr. Nussbaum's procedure for
            reviewing the documents in Mr. Foster's office, Mr.
            Heymann asked Mr. Nussbaum on the evening of July 22:
            ``Bernie, are you hiding something?'' (Heymann, 8/2/95
            Hrg. p. 50).
              White House officials did not discover a note written
            by Mr. Foster until six days after his death and did
            not disclose to law enforcement officials the discovery
            of the note written by Mr. Foster until 28 hours after
            the discovery. (Nussbaum, 7/12/95 Dep. pp. 278-279;
            Heymann, 8/2/95 Hrg. p. 53).

        During the Foster Phase, the Committee faced numerous
    instances where witnesses provided inconsistent or
    contradictory testimony to the Committee. Even more often,
    witnesses provided a rote response of ``I don't recall'' or ``I
    have no specific recollection or knowledge'' to the Committee's
    questions relating to crucial facts. The Chairman has asked the
    Committee's counsel to study whether the Committee should refer
    the testimony of certain witnesses to the Independent Counsel
    for him to pursue possible charges. This review, which requires
    examination of hundreds of pages of depositions and hearing
    transcripts, is not yet completed. Given the unreliability of
    the testimony of key witnesses, the Committee continues to
    pursue its investigation of the Foster Phase and to evaluate
    the evidence already gathered in this phase of its inquiry.

    2. Washington phase

        In 1992, federal officials began to investigate indications
    of financial improprieties and violations of federal laws
    related to the failure of Madison. From the beginning, there
    were allegations, at times well publicized, of improper conduct
    relating to, and political pressure being brought to bear on,
    the sensitive investigation. The Committee focused on these
    allegations in the Washington Phase of its investigation,
    deposing 82 witnesses and conducting 9 days of public hearings.
        Sections 1(b)(2)(A), (B), and (D) of Senate Resolution 120
    authorize the Committee to investigate the handling of the
    Resolution Trust Corporation's (``RTC'') investigation into
    Madison and Whitewater, including whether confidential RTC
    information was improperly handled and communicated to the
    White House and whether RTC investigators were improperly
    disciplined for pursuing the investigation of Madison and
    Whitewater. The Committee's investigation has revealed, among
    other things, the following significant facts:

              RTC criminal investigators based in Kansas City
            prepared 10 criminal referrals related to Madison
            Guaranty. Twelve of the 21 counts contained in the
            Independent Counsel's indictment of James McDougal,
            Susan McDougal, and Arkansas Governor Jim Guy Tucker
            are directly related to these criminal referrals.
              The first criminal referral was submitted to the
            Department of Justice on September 1, 1992. However,
            contrary to prior practice, this referral was not acted
            upon for over a year until U.S. Attorney Paula Casey
            declined it on October 27, 1993. (RTC Letter, Sept. 1,
            1992; DOJ Letter, Oct. 27, 1993).
              In January 1994, soon after the RTC reopened its
            civil investigation of Madison, RTC investigator Gary
            Davidson wrote that RTC attorney April Breslaw told him
            that ``there are some RTC people in management
            positions who would take a `dim view' of [him]
            investigating Madison Guaranty.'' (RTC Document
            RI0109). Breslaw had hired the Rose Law Firm to
            represent the Federal Deposit Insurance Corporation in
            its suit against Madison's former accountants.
            (Pillsbury Madison & Sutro LLP, A Report on the Rose
            Law Firm's Conduct of Accounting Malpractice Litigation
            pertaining to Madison Guaranty Savings & Loan, p. 8).
              Soon thereafter, on February 2, 1994, Ms. Breslaw in
            a taped conversation told another RTC investigator, L.
            Jean Lewis, that ``I think if they can say it honestly,
            the head people, Jack Ryan and Ellen Kulka, would like
            to be able to say `Whitewater did not cause a loss to
            Madison.' '' (Transcript of Conversation between L.
            Jean Lewis and April Breslaw, p. 59). In hearings
            before the Committee at which the tape of this
            conversation was played, Ms. Breslaw refused to confirm
            that she had made the statement or even that it was her
            voice on the tape. (Breslaw, 11/30/95 Hrg. pp. 54-57).
              Ms. Lewis testified that ``there was a concerted
            effort to obstruct, hamper and manipulate the results
            of our investigation of Madison.'' (Lewis, 11/29/95
            Hrg., Opening Statement, p. 1). Richard Iorio, her
            supervisor, testified that ``we have learned that the
            RTC is not above politics in its handling of
            investigations of high visibility failed banks. If
            important people are implicated, special procedures are
            employed.'' (Iorio, 10/20/95 Dep. p. 66).
              On August 15, 1994, the three RTC investigators who
            prepared the criminal referrals related to Madison were
            placed on administrative leave for two weeks without
            warning or explanation. (RTC Documents RI0003, RI0012,
            RI0017). The Independent Counsel is currently
            investigating this matter. (Noble, 10/20/95 Dep.)

        The RTC makes criminal referrals to the appropriate U.S.
    Attorney for further investigation and prosecution if
    warranted. With respect to Madison and Whitewater, RTC
    investigators forwarded to the U.S. Attorney for the Eastern
    District of Arkansas two sets of such criminal referrals.
    Section 1(b)(2)(C) authorized the Committee to investigate
    whether the Department of Justice has improperly handled these
    criminal referrals from the RTC. The Committee's investigation
    into this matter revealed, among other things, that:

              The first RTC criminal referral, Referral No. C0004,
            was made to Charles Banks, the U.S. Attorney for the
            Eastern District of Arkansas, in September 1992. Banks
            did not take action on the referral, but on January 27,
            1993, sent a recusal letter to the Executive Office of
            U.S. Attorneys, to which he never received a response.
            (DOJ Document A7049-7050; Banks dep. 91).
              High-level Justice Department officials believed that
            Paula Casey, Mr. Banks' successor, should have recused
            herself from the case because of her ties to the
            Clintons and Arkansas Governor Jim Guy Tucker. They
            communicated this view to her on several occasions.
            (DOJ Documents GEM-34, OIC 001127, FBI-1922). The
            director and agents of the Federal Bureau of
            Investigation similarly expressed concern that U.S.
            Attorney Casey should recuse herself from Madison-
            related matters. (DOJ Documents FBI-1287, FBI-1930).
            Nevertheless, Ms. Casey did not recuse herself until
            November 5, 1993 and only after declining the first RTC
            criminal referral C0004. (DOJ Document 5136).
              Randy Coleman, the attorney for CMS president David
            Hale, testified that he made an informal proffer during
            plea negotiations with Ms. Casey on September 7, 1993,
            but received no response. (Coleman, 11/9/95 Dep. p. 34)
            Mr. Hale offered to provide information on important
            Arkansas political figures, including President
            Clinton, in exchange for a negotiated plea. (Casey, 11/
            1/95 Dep. pp. 63-64)
              No plea agreement was reached, and David Hale was
            indicted on September 23, 1993. Ms. Coleman again
            suggested on September 24, 1993, that Casey recuse
            herself from the case, and that he be allowed to
            proffer Mr. Hale's information to the Department of
            Justice in Washington. (DOJ Document OIC 1074).
              Even after his recusal from the case in November 1993
            (DOJ Document 16848), Associate Attorney General
            Webster Hubbell, a close associate of the Clintons,
            possessed the Clinton's personal and campaign files on
            Whitewater and Madison and was involved in the review
            and transfer of these documents to the Clinton's
            personal attorney in November and December 1993
            (Hubbell, 10/26/95 Dep. pp. 96-99, 149-151).

        The Small Business Administration (``SBA'') was among the
    federal agencies investigating financial improprieties related
    to matters specified under Senate Resolution 120. CMS was a
    Specialized Small Business Investment Company owned and
    operated by David Hale. The SBA licensed and funded CMS to make
    business loans to socioeconomically disadvantaged persons.
    Instead, CMS allegedly engaged in a number of sham transactions
    and made a number of improper loans, including a loan for
    $300,000 to Susan McDougal--allegedly at the behest of then-
    Governor Clinton--that was used in part to prop Whitewater.
        Section 1(b)(3)(E) of Senate Resolution 120 authorized the
    Committee to investigate the supervision and regulation of CMS
    by the SBA. The Committee's investigation revealed the
    following:

              Former SBA Associate Administrator Wayne Foren
            testified that David Hale told him that he had access
            and influence with Governor Tucker and President
            Clinton. (Foren, 11/14/95 Dep. pp. 27-29). Mr. Hale
            also offered to arrange a meeting between Mr. Foren and
            Governor Tucker, which Mr. Foren refused. (Foren, 11/
            14/95 Dep. p. 107).
              Mr. Foren testified that he briefed SBA Administrator
            Erskine Bowles on May 5, 1993, about his investigation
            of CMS and David Hale. (Foren, 11/14/95 Dep. pp. 49-
            50). The next day, Mr. Bowles advised Mr. Foren that he
            had talked with White House Chief of Staff Thomas
            McLarty about the CMS/Hale matter. (Foren, 11/14/95
            Dep. p. 57).
              Associate White House Counsel Neil Eggleston
            contacted the SBA and requested confidential
            information relating to the investigation of CMS and
            David Hale. On November 16, 1993, the SBA's General
            Counsel, James Spotila, sent the documents to Mr.
            Eggleston.
              On the day that he had retrieved sensitive documents
            from the SBA, Mr. Eggleston left two messages for
            Lindsey, saying that it was important that the
            documents be reviewed. Mr. Eggleston testified that
            ``no one at the White House saw any of the underlying
            documents except me.'' (Eggleston, 11/28/95 Hrg., p.
            99). However, records produced to the Committee on
            January 14, 1996, indicate that Mr. Eggleston called
            Assistant to the President Bruce Lindsey on the same
            day that he received the documents. The message, taken
            at 4:58 p.m. on November 16, 1993, and marked
            ``Important,'' stated: ``Has some Whitewater documents
            to go over with you. Will come by about 6:00 p.m.''
            (White House Document S 012604). The documents remained
            in his office for two days until the Department of
            Justice asked that they be returned to the SBA.
            (Eggleston, 1/16/96 Hrg. p. 27-32, 89-93, 102-105).
              When Justice Department and FBI officials learned
            about the transfer, they asked the SBA to retrieve the
            documents and any copies. (DOJ Document JDA81).

        Hearings before the Banking Committee in 1994 revealed that
    a number of administration officials in the Treasury Department
    and the White House engaged in improper contacts and exchanged
    confidential law enforcement information relating to the RTC's
    investigation of Madison and Whitewater. As part of the
    investigation into these contacts, the Office of Government
    Ethics (``OGE'') issued a report on the matter. In light of
    questions about the handling of the OGE report and a related
    investigation by the Treasury and RTC Inspectors General,
    Section 1(b)(2)(B) authorized the Committee to investigate
    whether the White House engaged in improper contacts concerning
    confidential RTC information about Madison and Whitewater.
    Relatedly, section 1(b)(2)(E) authorized an investigation into
    whether the OGE report was improperly released to White House
    officials prior to their testimony before the Banking Committee
    or was used to communicate confidential RTC information to the
    White House. The Committee's investigation into these matters
    revealed the following:

              Despite the fact that Treasury Department General
            Counsel Jean Hanson was a subject of the investigation,
            Francine Kerner, a member of the General Counsel's
            office, provided advance copies of investigation
            transcripts to Ms. Hanson's staff. The transcripts were
            then disseminated to other senior Treasury officials.
            (Hrg. 11/8/95, p. 8).
              The transcripts contained confidential information
            about RTC criminal investigations and referrals that
            even Treasury Secretary Lloyd Bentsen should not have
            been permitted to review. RTC Inspector General John
            Adair testified that the transcripts contained 90% of
            the substance of the confidential information in the
            RTC criminal referrals. (Adair, 11/7/95 Hrg., p. 123).
                Ms. Kerner also provided Ms. Hanson's staff with
            draft copies of the RTC Inspector General's conclusions
            and asked Ms. Hanson's staff to edit the proposed OGE
            report. (Hrg., 11/7/95, p. 124).
              The Treasury Inspector General's chief investigator,
            James Cottos, objected to Ms. Kerner's attempts to
            alter the draft investigative report. He testified that
            ``I believe I made the comment we were not the Jean
            Hanson defense team.'' In addition, ``I felt they were
            slanting the facts or attempting to slant the facts.''
            (Cottos, 11/8/95 Hrg. p. 35-36).
              Clark Blight, the chief investigator for the RTC
            Inspector General, testified that he was under the
            impression that Ms. Kerner was ``an advocate for the
            White House.'' (Blight, 11/7/95 Hrg. pp. 108-109).
              Patricia Black, Counsel to the RTC Inspector General,
            testified that she was ``astonished'' that information
            from such a meeting was being communicated back to the
            Treasury General Counsel's office because ``they were
            the subject of the investigation.'' (Black, 11/7/95
            Hrg. p. 114).
              Confidential transcripts of investigative depositions
            were given to the White House Counsel's office without
            the knowledge or consent of the RTC Inspector General's
            office. Mr. Adair, Mr. Blight and Ms. Black were
            ``shocked'' by the communication of this information to
            the White House (Hrg. 11/7/95, pp. 119-20).
              Stephen Potts, Director of the OGE, testified that,
            contrary to statements made by White House Special
            Counsel Lloyd Cutler to the Banking Committee in August
            1994, the OGE did not ``informally concur'' in Mr.
            Cutler's conclusion White House officials did not
            violate ethical standards with regard to the
            communication of confidential RTC information from the
            Treasury Department to the White House. (Potts, 11/8/95
            Hrg., pp. 226-27).
              Mr. Cutler admitted to the Committee that he may have
            ``transgressed'' and ``may have gone too far when he
            testified'' before the Banking Committee in August
            1994. (Cutler, 11/9/95 Hrg. p. 34).

        Although the bulk of the Committee's work is done, the
    Washington Phase of its investigation is not concluded. Due to
    the repeated delays in the production of documents, the
    Committee continues to obtain evidence pertinent to its
    inquiry. For example, the Committee received documents highly
    relevant to its investigation into contacts between the SBA and
    the White House as recently as January 14, 1996.

    3. The Arkansas phase

        Section 1(b)(3) authorizes the Committee to investigate and
    conduct public hearings into what lies at the heart of the
    Whitewater affair. Whereas the matters covered in the Foster
    Phase and the Washington Phase concern improper conduct or
    contacts related to investigations of Whitewater, Madison and
    CMS, the Arkansas Phase focuses on core allegations of
    improprieties and criminal activities relating to Whitewater
    and Madison. As explained below, the Committee's commencement
    of the Arkansas Phase was delayed by discussions with the
    Office of Independent Counsel, and the completion of the
    Committee's investigation is likely to be delayed by concerns
    expressed by Independent Counsel. Nevertheless, the Committee
    has to date conducted 21 depositions and held three days of
    public hearings concerning the Arkansas Phase. This
    investigation has uncovered the following facts thus far:

              Mrs. Clinton has stated publicly that Richard Massey,
            then a young associate at the Rose Law Firm, and not
            she, arranged to bring in Madison as a client to the
            firm. However, Mr. Massey testified he did not bring in
            Madison as a client of the Rose Law Firm. (Massey, 1/
            11/96 Hrg., pp. 230, 232-33).
              Mrs. Clinton has stated publicly and under oath that
            she performed little or no work for Madison. However,
            records of billings by the Rose Law Firm, recently
            ``discovered'' in the personal quarters of the
            President and Mrs. Clinton at the White House, indicate
            that Mrs. Clinton accounted for approximately one-third
            of the firm's total billings to Madison. (Rose Law Firm
            Document RLF2 03030; Williams & Connolly Document
            DKSN028928).
              Mrs. Clinton billed Madison for approximately 60
            hours of work. The Rose Law Firm billed Madison
            Guaranty more than $21,000.
              On April 29, 1985, Mrs. Clinton had a telephone
            conference with Beverly Bassett, the Arkansas
            securities commissioner who had been appointed to her
            post by Governor Clinton. The next day, the Rose Law
            Firm submitted to Ms. Bassett a request for approval of
            Madison's plan to issue a series of preferred stock as
            a capitalization measure.
              Mrs. Clinton billed Madison for more than a dozen
            conferences with Seth Ward, the Madison employee who
            was the ``straw'' purchaser of land from the Industrial
            Development Corporation (``IDC''). Bank regulators have
            described this transaction as a ``sham'' purchase that
            was structured to evade regulations limiting the extent
            to which Madison could invest in real estate.
              In connection with the IDC/Castle Grande matter, Mrs.
            Clinton prepared an option agreement under which
            Madison would have the right to purchase property from
            Seth Ward for $400,000. The Committee is examining
            whether the option was designed to be a way for Madison
            to pay Ward commissions on this transaction without
            having those commissions reclaimed by federal
            regulators.

        The Special Committee continues to investigate the
    involvement of President and Mrs. Clinton in the affairs of
    Whitewater, Madison, and CMS, as well as other matters
    authorized by Section 1(b)(3) of Senate Resolution 120.

                      B. OBSTACLES FACED BY THE COMMITTEE

        Considerable progress has been made, but much work remains
    to be done. The Committee has confronted a number of unforeseen
    obstacles that have significantly hindered the progress of its
    investigation. The most notable and time-consuming of these
    obstacles have included (1) the withholding and delay by
    various persons and entities, including the White House, in the
    production of documents directly relevant to the Committee's
    investigation, (2) the noncooperation and resistance of a
    number of witnesses whose testimony is highly relevant to the
    Committee's investigation, and (3) the need to accommodate
    objections of the Independent Counsel that the Committee's
    inquiry into certain areas would hinder or impede his
    investigation.

    1. Delays in the production of documents by the White House and other
            witnesses

        Because the testimony of witnesses before the Committee was
    often contradictory as to important events and actions, the
    Committee has placed particular emphasis on available
    documentary evidence. Unfortunately, throughout the course of
    its inquiry, the Committee has been hindered by parties unduly
    delaying the production of, or withholding outright, documents
    critical to its investigation. Although the White House has
    most often and most notably engaged in this course of action,
    the pattern of noncooperation has not been limited to just one
    party.\2\
        \2\ Exhibits 2-4 accompanying this report provides a comprehensive
    accounting of the Special Committee's numerous document requests and
    subpoenas and the responses received from the various parties.
    ---------------------------------------------------------------------------
                (a) Telephone records
        On June 30, 1995, the Committee requested that the White
    House produce the residential telephone records of Margaret
    Williams, Chief of Staff to the First Lady, for the period July
    20-22, 1993. Receiving no response, the Committee repeated its
    request to Ms. Williams' personal counsel on August 10, 1995.
    On August 24, 1995, Ms. Williams' counsel represented to the
    Committee that the telephone company no longer retained the
    requested records: ``In sum, the telephone records cannot be
    obtained, and we expect to receive written confirmation of that
    fact very shortly.'' The Committee received no further
    confirmation from Ms. Williams. On September 13, 1995, the
    Committee contacted Ms. Williams' telephone company and was
    advised that records for Ms. Williams' residence were indeed
    available for July 1993. On September 14, 1995, the Committee
    issued a subpoena to the telephone company for those records,
    which were produced to the Committee approximately one week
    later. Ms. Williams then informed the Committee that she also
    had received her telephone records and would cooperate with its
    investigation.
        Also, on June 30, 1995, the Committee requested from the
    White House all records reflecting ``communications that took
    place between 5:00 p.m. on July 20, 1993 and 5:00 p.m. on July
    22, 1993 from or to Hillary Rodham Clinton.'' This request
    encompassed the telephone records of the Rodham residence in
    Little Rock, Arkansas, where Mrs. Clinton was visiting during
    this period. The White House, however, did not respond to this
    request until after the Committee specifically repeated it on
    August 9, 1995. On September 20, 1995, approximately three
    months after the Committee's initial request, the Clintons'
    personal attorney produced to the Committee records of Mrs.
    Clinton's telephone calls from the Rodham residence.
        On July 11, 1995, the Committee requested that the White
    House produce certain telephone records of Susan Thomases, a
    close confidant of the First Lady, for July 1993. Receiving no
    response, the Committee repeated the request to Ms. Thomases'
    personal counsel on August 9, 1995. On August 11, 1995, Ms.
    Thomases informed the Committee that neither she nor the
    telephone company retained any records of calls made from her
    residence or charged to her calling card. Ms. Thomases did
    produce to the Committee, on October 2, 1995, certain records
    of calls made from her office and vacation house.
        On December 6, 1995, shortly before Ms. Thomases was
    scheduled to appear before the Committee, counsel for Ms.
    Thomases advised that, in a routine search of records for an
    unrelated case, he had discovered certain responsive telephone
    records that Ms. Thomases had attached to an expense report in
    September 1993. The letter did not explain why Ms. Thomases had
    not advised her counsel or the Committee of their existence.
    Counsel for Ms. Thomases supplemented this production on
    December 11, 1995, enclosing even more responsive telephone
    records from Ms. Thomases' office.
        The various telephone records turned out to be highly
    relevant to the Committee's investigation into the handling of
    documents in Vincent Foster's office following his death. The
    records established the following:

              Hillary Rodham Clinton called Margaret Williams at
            10:13 p.m. EDT, immediately upon hearing of Mr.
            Foster's death on July 20, 1993. Immediately after
            speaking with Mrs. Clinton, Ms. Williams proceeded to
            Mr. Foster's office in the West Wing of the White
            House.
              Mrs. Clinton then called Susan Thomases in New York
            at 11:19 p.m. EDT.
              After searching Mr. Foster's office, Ms. Williams
            called Mrs. Clinton in Little Rock at 12:56 a.m. EDT on
            July 21, 1995, and talked for 11 minutes.
              At 1:10 a.m. EDT, after her conversation with Mrs.
            Clinton, Ms. Williams called Ms. Thomases in New York.
              Early on the morning on July 22, 1993, Ms. Williams
            called Mrs. Clinton at 7:44 a.m. EDT. After speaking
            with Ms. Williams for seven minutes, Mrs. Clinton
            called Ms. Thomases in her Washington, D.C. hotel.
              Immediately after hanging up with Mrs. Clinton, Ms.
            Thomases paged White House Counsel Bernard Nussbaum,
            who later told his associate that the First Lady and
            Ms. Thomases were concerned about law enforcement
            officials having ``unfettered access'' to Mr. Foster's
            office.
              Ms. Thomases then called back Mrs. Clinton at 8:25
            a.m. EDT on July 22.
              Ms. Thomases called Ms. Williams at 3:08 p.m. on July
            22, right before Ms. Williams conducted a second review
            of Mr. Foster's office with Mr. Nussbaum.

        The three-month delay in providing telephone records to the
    Committee cost the Committee considerable investigative time
    and caused the Committee to revisit its investigation into the
    handling of papers in Mr. Foster's office. Ms. Williams and Ms.
    Thomases had to be recalled to the Committee twice in order to
    explain the contradictions between their sworn testimony and
    the telephone records and other documentary evidence uncovered
    by the Committee.
        The pattern continues. On January 9, 1996, Ms. Thomases
    produced to the Committee more responsive records, apparently
    discovered, according to her counsel, after ``expending
    extraordinary efforts.'' Among the documents provided was a
    message taken at 1:30 p.m. EDT on July 27, 1993, asking Ms.
    Thomases to ``please call Hillary.'' (Willkie, Farr & Gallagher
    Document ST 131). Ms. Thomases had previously testified to the
    Committee that she did not recall seeing Mrs. Clinton on July
    27 and was not involved in Ms. Williams' transfer of Whitewater
    files from the White House Residence to Mrs. Clinton's personal
    lawyer, Mr. Robert Barnett--despite records showing that Mrs.
    Thomases entered and exited the White House Residence
    contemporaneously with Mr. Barnett and Ms. Williams.
        The fourth telephone call Mrs. Clinton made on the night of
    Mr. Foster's death--at 11:41 p.m. EDT, right after talking with
    Ms. Thomases--was to the number 202-628-7087. Mrs. Clinton's
    personal counsel represented to the Committee that Mrs. Clinton
    did not know the identity of the party whom she called, despite
    additional investigation by her counsel. The Committee then
    issued a subpoena to the telephone company, which responded
    that its records indicated that the number was not in service
    on July 20, 1993. On November 30, 1995, pursuant to
    Sec. 5(b)(7) of Senate Resolution 120, the Committee issued a
    set of written interrogatories to Mrs. Clinton to probe her
    knowledge of this unidentified number.
        The Committee, after conducting its own independent
    investigation, advised the White House that it had reason to
    believe that the number was a special secure White House
    telephone line. Mrs. Clinton's answer to the interrogatories
    stated that she did not recall calling 202-628-7087, but that
    ``[i]t would not surprise me to learn that I had placed a call
    to the White House that evening.'' Also, on November 30, 1995,
    the White House confirmed to the Committee that the number was
    indeed ``an unlisted trunk line that rang on the White House
    switchboard.'' The line apparently was used to bypass the main
    White House number. Although the White House did not know to
    whom Mrs. Clinton was connected after she reached the White
    House switchboard, ``Bill Burton, Deputy White House Chief of
    Staff, remembers receiving a call in the Chief of Staff's
    office from Mrs. Clinton on the evening of July 20 and speaking
    with her about Vincent Foster's death.'' In light of this new
    information, the Committee called back Mr. Burton to testify
    about his telephone conversation with Mrs. Clinton on July 20,
    again causing the Committee to divert valuable resources to
    revisit a critical issue in light of newly uncovered evidence.
                (b) White House delays
        On August 25, 1995, the Committee requested from the White
    House all documents that reflect, refer, or relate to, among
    other things, matters specified in Sec. 1(b)(2) and
    Sec. 1(b)(3) of Senate Resolution 120--the Washington and
    Arkansas Phases of the investigation. That request indicated
    that, in order for the Committee to complete its work as
    expeditiously as possible, ``it is necessary that the Committee
    receive these documents by no later than September 7, 1995, and
    prior to that date, if possible.'' The White House made ``an
    initial production'' of records on September 15, 1995, and
    specifically noted that ``[o]ur response to Senator D'Amato's
    request is not complete.''
        On September 25, 1995, the Committee advised the White
    House that it was very concerned about the slow pace of the
    White House's response to the August 25, 1995, document
    request. In order to expedite the process, the Committee agreed
    to limit the scope of its initial document request. Three weeks
    later, the White House still had not completed its document
    production. On October 17, 1995, the Committee agreed to limit
    its request even further, going so far as to specify exactly
    which offices the White House needed to search for responsive
    documents. On the same day, Chairman D'Amato wrote to Judge
    Abner Mikva, then Counsel to the President, to reiterate that
    the Committee ``is very concerned about the slow pace of the
    White House's response to the Committee's August 25, 1995
    request for documents that are directly relevant to the
    Committee's investigation.'' Noting that the Committee had gone
    out of its way to accommodate the White House's concerns and to
    answer the White House's questions about that document request,
    Chairman D'Amato concluded: ``The White House's almost two
    month delay in producing documents has impacted negatively on
    the Committee's ability to conclude its investigation by
    February 1996.'' Still, little progress followed.
        On October 25, 1995, the Committee met to consider the
    inadequate response to the Committee's document request by the
    White House and other parties. Concerned with the undue delay
    in the production of documents, counsel to the Committee
    recommended that subpoenas be issued to all parties relevant to
    the investigation. A congressional subpoena, unlike a document
    request, carries with it the threat of civil and criminal
    penalties for noncompliance. On October 26, 1995, the Committee
    voted unanimously to issue subpoenas seeking all documents
    requested by the Committee to all parties by letter after
    August 25, 1995. With a few notable exceptions, the production
    of responsive documents to the Committee improved
    significantly.
        Among the records covered by the Committee's August 25,
    1995 letter request and its October 26, 1995 subpoena to the
    White House were electronic mail messages between certain White
    House officials relating to matters identified in Senate
    Resolution 120. These messages are a particularly valuable
    source of information to the Committee. Electronic mail
    messages generally are written contemporaneous to the events
    under investigation and provide the Committee with candid,
    unrehearsed and uncolored information concerning the actions
    and motives of key witnesses. For example, during the Foster
    Phase of the investigation, messages exchanged between two
    assistants in the White House Counsel's office provided
    critical information as to the activities of Bernard Nussbaum
    and his associates in the week immediately after the death of
    Vincent Foster. (White House Documents Z1209-Z1214).
        On September 15, 1995, the White House wrote to the
    Committee that ``we are unable to respond to your request as
    currently framed'' and asked for clarification of the
    Committee's request for electronic mail messages. The Committee
    agreed to limit its request for electronic mail messages to
    those messages (i) sent to or from particular White house
    officials, and (ii) containing certain ``key words'' highly
    relevant to the investigation. Finally, on January 19, 1996,
    after months of discussions with the Committee's counsel, the
    White House finally agreed to begin the process of searching
    for electronic mail. It is not clear when the White House will
    complete the lengthy process of searching for electronic mail
    responsive to the Committee's subpoena. In an October 24, 1995
    letter, the White House estimated that this process would take
    approximately twelve weeks. Other executive departments and
    agencies, including the Department of Justice, the Department
    of the Treasury, and the Resolution Trust Corporation have
    already complied with the Committee's requests for electronic
    messages.
        Among the records covered by the Committee's August 25,
    1995 request and its October 26, 1995 subpoena to the White
    House and the Clintons were the Rose Law Firm billing records
    relating services Mrs. Clinton and other attorneys at the firm
    performed for Madison. These records obviously are critical to
    the Committee's investigation and had been subpoenaed by other
    investigative bodies for almost two years. The White House and
    the Rose Law Firm have consistently maintained that they did
    not possess such records.
        On January 5, 1996, David Kendall, personal counsel for the
    President and Mrs. Clinton, produced copies of the Rose Law
    Firm's billing records for work performed for Madison Guaranty.
    In a statement, Mr. Kendall said that the records had been
    discovered the previous day at the White House by Special
    Assistant to the President Carolyn Huber. After further
    inquiries from the Committee, the White House advised that the
    records had not been stored in Ms. Huber's office, but rather
    in ``a work room in the White House Residence.''
        Ms. Huber testified that she first found the records in the
    ``book room'' of the White House in the early part of August
    1995--during the Committee's hearings into the events
    subsequent to Vincent Foster's death. The book room is located
    within the private residence of the White House and access to
    it is extremely limited. The only persons with regular access
    to the room, according to Ms. Huber, are the First Family,
    herself, and Capricia Marshall. Ms. Huber testified that she
    had not seen the conspicuous billing records when she was in
    the book room just days prior to their discovery. Thinking that
    the records, which were folded over, had been left for her to
    file, Ms. Huber stowed them in a box containing presidential
    memorabilia. She rediscovered them on January 4, 1996, when she
    was going through the box and then realized what she had found.
    (Huber, 1/18/96 Hrg. p. 8-12).
        The Special Committee is now investigating who had
    possession of these documents prior to their discovery by Ms.
    Huber in August 1995 and whether they were taken from Vincent
    Foster's office following his death. In her testimony, Ms.
    Huber confirmed that the notes written in red ink on the
    records are in Mr. Foster's handwriting. (Huber, 1/18/96 Hrg.
    p. 25).
                (c) Subpoena for William Kennedy's notes
        In response to the Committee's October 26, 1995 subpoena
    for Whitewater-related documents, the White House notified the
    Committee on November 2, 1995, that it was refusing to produce
    a number of documents responsive to the subpoena on the grounds
    of privilege. Among the documents so identified were notes
    taken by former Associate White House Counsel William Kennedy
    at a November 5, 1993, meeting of White House officials and the
    Clintons' private attorneys relating to Whitewater.
        On December 5, 1995, Mr. Kennedy appeared before the
    Committee. He was questioned about the November 5 meeting, but,
    at the direction of counsel for both the Clintons and the White
    House, refused to answer any questions about the substance of
    the meeting. (Kennedy, 12/5/95 Hrg. pp. 42-47, 59-61). Mr.
    Kennedy stated only that ``I have been instructed that the
    meeting is covered by the attorney-client privilege and I've
    been instructed to abide by that privilege.'' (Kennedy, 12/5/95
    Hrg. p. 42).
        On December 8, 1995, the Committee issued a subpoena duces
    tecum to Mr. Kennedy directing him to ``[p]roduce any and all
    documents, including but not limited to, notes, transcripts,
    memoranda, or recordings, reflecting, referring or relating to
    a November 5, 1993 meeting attended by William Kennedy at the
    offices of Williams & Connolly.'' The Committee advised Mr.
    Kennedy that, if he had objections to the subpoena, he was
    invited to submit a legal memorandum to the Committee by
    December 12, 1995.
        Mr. Kennedy refused to comply with the Committee's
    subpoena. On December 12, 1995, the Committee received separate
    submissions from counsel for Mr. Kennedy, the President and
    Mrs. Clinton, and the White House raising objections to the
    Committee's subpoena. On December 14, 1995, the Chairman of the
    Committee convened a meeting of the Committee to rule on the
    various objections. After careful consideration, the Chairman
    overruled the objections to the subpoena, and the Committee
    voted to order Mr. Kennedy to produce the responsive documents
    by 9:00 a.m. on December 15, 1995. After Mr. Kennedy failed to
    comply with this order and after unsuccessful efforts to reach
    agreement with the White House, the Committee voted on December
    15, 1995, to report the matter to the Senate.
        On December 20, 1995, the full Senate adopted Senate
    Resolution 199, directing the Senate Legal Counsel to initiate
    a civil action in federal District Court under 28 U.S.C.
    Sec. 1365 (1994). That provision permits the Committee, upon
    authorization of the Senate, to apply to the United States
    District Court for the District of Columbia for an order
    requiring the witness to produce the subpoenaed documents. If
    the district court determines that the witness has no valid
    reason to withhold the subpoenaed documents, the court would
    direct the witness to produce them. If that order is ignored,
    the witness could be found in contempt of court. The district
    court, in its discretion, could order sanctions against the
    witness to induce compliance with its order to produce the
    documents.
        On December 22, 1995, before the Senate Legal Counsel
    initiated an action under 28 U.S.C. Sec. 1365, the White House
    reversed its position and Mr. Kennedy produced his notes to the
    Committee. The notes turned out to be highly relevant to the
    Committee's investigation. They contained details that
    identified numerous investigative avenues for the Committee.
    For example, Mr. Kennedy made the following notes:

              ``Try to find out what's going on in Investigation''
            (White House Document S 12517). This delegation of
            legal defense tasks to White House officials falls
            squarely within matters specified by Sec. 1(b)(2) of
            Senate Resolution 120.
              ``July 20th: FBI issued subpena [sic] & took records
            of municipal judge named Hale. Also the day that VF
            killed himself Factor'' (White House Document S 12518).
            The notation suggested a possible link between the
            FBI's investigation of CMS, which allegedly made an
            illegal loan to James and Susan McDougal in 1986 at the
            behest of then-Governor Clinton, and the death of
            President Clinton's friend and counsel, Vincent Foster.
              ``Blair could have knowledge Could be source of money
            to allow McD to purchase stock'' (White House Document
            S 12520). It was subsequently revealed that James
            Blair, a close confidant of the Clintons, had provided
            James McDougal with the $1,000 that McDougal used to
            acquire the Clintons' Whitewater stock on December 22,
            1992. (Mark Hosenball & Michael Isikoff, ``A Churning
            Scandal,'' Newsweek, Jan. 8, 1996, p. 43).
              ``Vacuum Rose Law files WWDC docs--subpoena
            *Documents--Never know go out quietly'' (White House
            Document S 12523). This cryptic note suggests the
            possibility of an effort to suppress records critical
            to the Committee's investigation. William Kennedy
            testified that this reference as related to a vacuum of
            information concerning Whitewater and did not denote
            any effort to destroy evidence.

        Needless to say, without the unnecessary months-long delay
    in obtaining Mr. Kennedy's notes, the Committee would have been
    able to pursue these additional investigative leads more
    expeditiously and more effectively. Moreover, former Associate
    Counsel to the President Neil Eggleston has testified that he
    continued to communicate with the Clintons' private attorneys
    after the November 5, 1993 meeting, even though that meeting
    was allegedly to delineate separate spheres of work for the
    White House lawyers and the Clintons' personal attorneys.
    Indeed, on November 10, 1993, the Clintons' private counsel
    shared with the White House a Whitewater chronology.
    (Eggleston, 1/16/96 Hrg. p. 111-112).
        Although the Committee ultimately was successful in
    obtaining Mr. Kennedy's valuable notes, it was only after a
    long and protracted process involving three different sets of
    opposing attorneys and the preparation of a lengthy report to
    the full Senate. The Committee had to divert considerable
    resources to this process of seeking information--information
    to which, in the view of the Committee and the Senate, the
    Committee was legally entitled. This diversion detracted from
    the Committee's investigative activities and therefore impeded
    the Committee's progress in fulfilling the mandate of Senate
    Resolution 120.

    2. The resistance of witnesses

                (a) Fifth amendment pleas
        The Committee has been significantly hindered in its fact-
    finding mission by the assertion by various witnesses of the
    Fifth Amendment privilege. After the Committee scheduled
    depositions of Herbert Branscum, Robert Hill, Rosalee Wade, and
    Chris Wade, counsel for those witnesses informed the Committee
    that they would invoke their right against self-incrimination
    if called to testify under oath.
        Herbert Branscum and Robert Hill are co-owners of Perry
    County Bank, the chief lending institution for Governor Clinton
    in his 1990 gubernatorial campaign, a matter specifically
    identified for investigation by Sec. 1(b)(3)(G) of Senate
    Resolution 120. The former president of the bank, Neal Ainley,
    has pled guilty to charges stemming from the failure to report
    cash deposits from Governor Clinton's campaign that totalled
    more than $10,000. The testimony of Mr. Branscum and Mr. Hill
    is especially important because, as explained below, the
    Independent Counsel has asked the Committee not to examine Mr.
    Ainley until the conclusion of the trial in United States v.
    James B. McDougal et. al., which is currently scheduled to
    start in March 1996. Without the testimony of these three
    critical witnesses, the Committee cannot practically
    investigate the matters specifically authorized by
    Sec. 1(b)(3)(G) of Senate Resolution 120.
        Chris Wade and his wife, Rosalee Wade, were co-owners of
    Ozarks Realty Company, the principal real estate agent for
    Whitewater. Their testimony is highly relevant to the
    Committee's investigation into several potentially questionable
    transactions involving Whitewater and the Clintons in the
    1980s. In addition, Mr. Wade was a principal in Ozarks Air
    Services, which purchased twenty-four unsold lots owned by
    Whitewater Development Corporation on May 4, 1985, and
    participated in James McDougal's real estate development at
    Campobello Island. Counsel for both Mr. and Mrs. Wade have
    indicated to the Committee that they are asserting the Fifth
    Amendment privilege to shield them from investigation or
    prosecution by the Independent Counsel.
                (b) Motions to quash the committee's subpoenas
        The Committee's investigation relies heavily on documentary
    evidence. Because witnesses before the Committee often offer
    conflicting or contradictory testimony and because the relevant
    financial transactions are highly complex, contemporaneous
    records play a disproportionately important role in the
    Committee's fact-finding mission. However, documents from three
    of the most important parties in the Arkansas Phase of the
    investigation--besides President and Mrs. Clinton--will not be
    available to the Committee until the end of April 1996 at the
    earliest, when the trial in United States v. James B. McDougal
    et. al. is expected to conclude.
        On December 22 and 27, 1995, the Committee issued subpoenas
    duces tecum to Arkansas Governor Jim Guy Tucker, James
    McDougal, and Susan McDougal, commanding the production, by
    January 5, 1996, of all documents relevant to its
    investigation. All three are defendants in United States v.
    James B. McDougal et. al. At the request of counsel for
    Governor Tucker and Ms. McDougal, the Committee agreed to
    extend the return date for their subpoenas to January 10, 1996.
    On January 9, 1996, Governor Tucker filed in the United States
    District Court for the Eastern District of Arkansas a motion to
    quash the Committee's subpoena or, in the alternative, to stay
    the court's proceedings in United States v. James McDougal et.
    al. The motion asserted that complying with the subpoena would
    ``interfere with this Defendant's preparation for trial, in
    that his lawyers would necessarily be involved in the defense
    of the subpoena and not in trial preparation.'' Governor Tucker
    argued further that the publicity generated by the Committee's
    investigation would ``deprive the Defendant of his right to a
    fair trial by jurors unaffected by the propaganda of the
    majority.''
        On January 11, 1996, counsel for Susan McDougal filed a
    separate motion to quash the Committee's subpoena before the
    court. The motion asserted that the work required to comply
    with the Committee's subpoena would interfere with counsel's
    representation of Ms. McDougal. Although Mr. McDougal did not
    file a formal motion to quash the Committee's subpoena, the
    Committee understands that Mr. McDougal objected to the
    subpoena on the same grounds as Governor Tucker and Ms.
    McDougal.
        On January 12, 1996, the Committee, in deference to the
    views of the District Court and the Independent Counsel, agreed
    not to enforce the Committee's subpoenas until after the trial
    of the three defendants. The motions to quash were consequently
    withdrawn.
        The 44,000 pages of documents in the possession of these
    three witnesses are vital to the Committee's investigation into
    the matters prescribed in Senate Resolution 120. The McDougals
    played a pivotal role in the ``activities, investments, and tax
    liability of Whitewater Development Corporation'' (Senate
    Resolution 120, Sec. 1(b)(3)(B)) as well as ``the operations,
    solvency, and regulation of Madison Guaranty Savings and Loan
    Association.'' (Senate Resolution 120, Sec. 1(b)(3)(A)). The
    documents in their possession may be the only source of
    information critical to a true understanding of these subject
    matters--matters that are central to the mandate of Senate
    Resolution 120.
        Likewise, Governor Tucker was intimately familiar with
    ``the sources of funding and the lending practices of Capital
    Management Services, Inc.'' (Senate Resolution 120,
    Sec. 1(b)(3)(E)). A report by the law firm of Pillsbury,
    Madison and Sutro on behalf of the RTC has documented that
    Castle Water and Sewer Corporation, a company in which Governor
    Tucker had a controlling interest, received $150,000 from
    Capital Management. In addition, a subsidiary of Castle Water
    and Sewer, Southloop Construction Company, received a $100,000
    loan from Capital Management. Documents in the possession of
    Governor Tucker may shed light on these and other potentially
    questionable transactions and therefore are critical to the
    Committee's investigation.

    3. Objections by the Office of Independent Counsel

        Section 7(b)(2) of Senate Resolution 120 encouraged the
    Committee, to the extent practicable, to coordinate its
    activities with the investigation of the Office of the
    Independent Counsel. During the 103d Congress, the Banking
    Committee, pursuant to Senate Resolution 229, conducted an
    inquiry into Mr. Foster's death and the subsequent
    investigation by the Park Police. On July 15, 1994, Special
    Counsel Robert B. Fiske, Jr., advised the Chairman and the
    Ranking Member of the Banking Committee that ``public hearings
    on the subject of the handling of documents in Mr. Foster's
    office while this investigation is continuing could prejudice
    our investigation.'' The Banking Committee thus refrained from
    investigating that subject. By letter dated April 22, 1995,
    Independent Counsel Kenneth W. Starr notified the Chairman and
    the Ranking Member of the Banking Committee that his
    investigation would not be hindered or impeded by an inquiry
    into whether White House officials engaged in improper conduct
    in handling documents in Mr. Foster's office following his
    death. Accordingly, after the passage of Senate Resolution 120,
    the Committee began its investigation into the matters
    authorized by section 1(b)(1) of Senate Resolution 120, and
    held public hearings into those matters between July 18 and
    August 10, 1995.
        On August 22, 1995, the Committee advised the Office of the
    Independent Counsel that it intended to proceed with other
    aspects of its investigation under Senate Resolution 120,
    specifically, those matters specified in Section 1(b)(2) and
    Section (1)(b)(3) of the resolution. On September 27, 1995, Mr.
    Starr responded that investigations and hearings by the
    Committee into the following matters would impede his
    prosecutorial efforts:
               the operations, solvency, and regulation of Madison;
               the activities, investments, and tax liability of
            Whitewater;
               the policies and practices of the RTC and other
            federal banking agencies regarding the legal
            representation of such agencies with respect to
            Madison;
               the handling by the RTC and other federal banking
            agencies of civil or administrative actions against
            parties regarding Madison;
               the sources of funding and the lending practices of
            CMS;
               the lending activities of Perry County Bank in
            connection with the 1990 Arkansas gubernatorial
            election.
    In short, the Independent Counsel objected the Committee
    investigating ``six of the thirteen subject matters listed in
    Section 1(b) of Senate Resolution 120.''
        In order to accommodate the Independent Counsel's
    objection, as directed by Senate Resolution 120, the Committee
    focused its efforts at that time on the so-called Washington
    Phase of the investigation--which corresponded roughly with the
    subject matters specified in Section 1(b)(2) of Senate
    Resolution 120. The Committee conducted hearings into these
    matters from November 7 through December 6, 1995. Consistent
    with Mr. Starr's wishes, those hearings did not delve into
    matters specified in Section 1(b)(3) of Senate Resolution 120,
    the so-called Arkansas Phase.
        Nevertheless, the Committee notified the Independent
    Counsel that, notwithstanding his concerns, it would press
    forward with its investigation into the Arkansas Phase. By
    letter dated October 2, 1995, Chairman D'Amato and Senator
    Sarbanes explained to Mr. Starr that it was necessary to do so
    in order to fulfill the mandate of Senate Resolution 120 that
    the Committee make every reasonable effort to complete its
    investigation and public hearings by February 1, 1996. Although
    the Committee thereafter proceeded with its investigation into
    the Arkansas Phase, the negotiations with the Independent
    Counsel to ensure that the Committee would not unduly hamper
    his efforts delayed the Committee's commencement of this phase
    for over a month.
        As part of its investigation, the Committee submitted a
    list of potential witnesses to the Independent Counsel and
    sought his advice whether his investigation would be hindered
    or impeded if the Committee examined those witnesses. On
    December 4, 1995, the Office of Independent Counsel objected to
    the Committee examining, in any fashion, the following
    witnesses:
        1. Neal Ainley
        2. Lisa Aunspaugh
        3. Don Denton
        4. David Hale
        5. Larry Kuca
        6. John Latham
        7. Dean Paul
        8. R.D. Randolph
        9. Robert Palmer
        10. Stephen Smith
        11. Greg Young
        In addition, the Independent Counsel repeated his position
    that public hearings into any matter relating to the Arkansas
    Phase at that time would hinder and impede his investigations
    and prosecutions.
        The principal basis for the Independent Counsel's
    objections was the upcoming trial of United States v. James B.
    McDougal, et al. The Independent Counsel has repeatedly advised
    that any public hearings into matters authorized by Section
    1(b)(3) of Senate Resolution 120 prior to the completion of
    that trial would hinder and impede his prosecutorial efforts.
    In addition, he advised that the above-named individuals are
    anticipated witnesses at the trial and therefore should not be
    examined by the Committee before the trial is completed. The
    trial was scheduled to begin on October 20, 1995, but was moved
    to January 16, 1996.
        The Office of Independent Counsel has since advised the
    Committee that the trial of United States v. James B. McDougal,
    et al. had been delayed yet again, this time rescheduled to
    March 4, 1996. The prosecution puts on trial Arkansas Governor
    Jim Guy Tucker, Jim McDougal, and Susan McDougal--three of the
    major participants in activities involving Whitewater, Madison,
    and CMS. It is expected to continue through April 1996.
        Senate Resolution 120 charged the Committee with three
    primary mandates: (i) to conduct a full and thorough
    investigation into matters authorized by the Resolution; (ii)
    to coordinate with the Independent Counsel so as not to hinder
    or impede his investigation; and (iii) to complete the
    Committee's investigation, if possible, by February 1, 1996,
    and, at the latest, February 29, 1996. Unfortunately, certain
    circumstances, unforeseen at the time the Senate passed
    Resolution 120 and beyond the control of the Committee, has
    made the fulfillment of all three mandates unlikely.
        The Committee's investigation has been significantly
    hindered and delayed by the evasion and noncooperation of
    certain parties. The Committee found itself in the unique, and
    difficult, position of not only conducting an inquiry, but also
    of having to ensure continually that its investigation was not
    being hindered. In addition, deference to the Independent
    Counsel's ongoing investigation has significantly slowed the
    progress of the Committee's investigation. The repeated
    rescheduling of the trial in United States v. James B.
    McDougal, et al.--which centers on a number of witnesses
    critical to the Committee's investigation--has already delayed
    the Committee's investigation and hearings into the Arkansas
    Phase of its inquiry by approximately two months. The
    Independent Counsel persists in his strong objections to the
    Committee examining certain critical witnesses until after that
    trial ends. If the Committee continues to try to accommodate
    the Independent Counsel, as encouraged by Senate Resolution
    120, the Committee will not be able to complete a full and
    thorough investigation into matters authorized by Sec. 1(b)(3)
    of Resolution 120 by February 29, 1995.

           C. RECOMMENDATIONS FOR AUTHORIZATION OF ADDITIONAL FUNDS.

        For the reasons discussed in Section B above, the Committee
    does no anticipate that it can complete its investigation into
    matters authorized by Senate Resolution 120 by February 29,
    1996. The Committee thus anticipates that it likely will be
    necessary to seek authorization from the Senate for funding of
    the Committee's work for a period beyond that date. This
    section discusses the Committee's expenditures to date under
    Senate Resolution 120 and its recommendations for additional
    funding necessary to carry out fully the mandate of Senate
    Resolution 120.
        Efficient management and the hard work of its staff have
    enabled the Committee to conduct its investigation at a
    relatively low cost to taxpayers. Senate Resolution 120
    authorized the expenditure of $950,000 by the Committee. The
    Committee allocated that figure as follows: $200,000 for
    undesignated administrative expenses; $500,000 for the salary
    expenses of majority staff; and $250,000 for the salary
    expenses of minority staff. As of December 31, 1995, the
    Committee's expenditures were as follows:

     1. Administrative Expenses:
        Hearing and Deposition..............................        $241,000
        Witness Travel......................................          15,000
        Stationery and Supplies.............................          14,000
        Other Expenses 3...............................
    3 Includes telecommunications, publications, mailing and delivery
        services, audio-visual equipment, and Senate services.
                                                                      11,500
                        --------------------------------------------------------
                        ____________________________________________________
         Total Expenditures.................................         281,500
                        --------------------------------------------------------
                        ____________________________________________________
        Allocated...........................................         200,000
                        --------------------------------------------------------
                        ____________________________________________________
         Balance............................................        (81,500)
                        ========================================================
                        ____________________________________________________
    2. Majority Salary Expenses:
        Total Salary and Expenses...........................         254,836
        Allocated...........................................         500,000
                        --------------------------------------------------------
                        ____________________________________________________
         Balance............................................         245,164
                        ========================================================
                        ____________________________________________________
    3. Minority Salary Expenses:
        Total Salary and Expenses...........................         138,193
        Allocated...........................................         250,000
         Balance............................................         111,807

        As the above numbers demonstrate, the most significant
    expenditure by the Committee has been to cover the cost of
    preparing official transcripts of sworn depositions and public
    hearings. The $241,000 expenditure for that purpose alone
    through December 31, 1995, is well above the $200,000 allocated
    for total administrative expenses through February 29, 1996.
    Fortunately, the Committee has been frugal in expending
    resources for staff salaries and expenses--keeping the level at
    the minimum level necessary for a full and thorough
    investigation. The funds expended thus far on salary expenses
    consequently are well below the allocated amounts. The savings
    in salary expenses will enable the Committee to offset the
    unanticipated expenses for depositions and hearings. At this
    point, the Committee does not anticipate the need for any
    additional funds to continue its investigation through February
    29, 1996.
        However, as noted above, the Committee probably cannot
    complete its investigation into the matters authorized by
    Senate Resolution 120 by February 29, 1996. Consistent with
    Senate Resolution 120, the Committee will endeavor to finish
    its work as soon as practicable. However, any prediction about
    the eventual ending date of public hearings is premature
    because of the uncertainty surrounding when the trial in United
    States v. James McDougal et al., will conclude. Until that
    time, the Committee will not be able to examine a number of
    critical witnesses. In addition, at the conclusion of its
    public hearings, the Committee will require approximately two
    months in order to evaluate all the evidence gathered during
    its investigation and to prepare its report to the Senate, as
    directed by Senate Resolution 120.
        The Committee has identified at least 40 witnesses whom it
    intends to call to testify at public hearings related to the
    Arkansas Phase of the investigation. These witnesses are in
    addition to the 15 witnesses whose cooperation and testimony
    are contingent on the progress of the trial in United States v.
    James McDougal et al. The number of witnesses, of course, could
    change significantly as the Committee presses forward with its
    investigation into the Arkansas Phase. The time required for
    this phase of the investigation especially difficult to judge
    in light of the fact that many of the witnesses reside in
    Arkansas. Consistent with Senate Resolution 120, however, the
    Committee remains committed to conclude its investigation and
    hearings as soon as possible.
        Based on the Committee's best estimate of what is required
    to complete fully its investigation under Senate Resolution
    120, the Committee recommends that the Senate authorize the
    Committee to expend $600,000 after February 29, 1996.

      Exhibit I.--Testimony of Witnesses Before the Special Committee To
       Investigate Whitewater Development Corporation and Related Matters

         A. Foster Phase: Matters authorized by Senate Resolution 120
                                  Sec. 1(b)(1)

                                  depositions

    Date, name and agency

        1. June 19, 1995, Cheryl Braun, Park Police.
        2. June 19, 1995, Brent Chinery, Secret Service.
        3. June 20, 1995, Robert Popik, Secret Service.
        4. June 20, 1995, John Rolla, Park Police.
        5. June 21, 1995, Donald Flynn, Secret Service.
        6. June 21, 1995, Robert Hines, Park Police.
        7. June 21, 1995, Michelle Macon, Secret Service
        8. June 21, 1995, Jimmy Young, White House.
        9. June 22, 1995, Paul Imbordino, Secret Service.
        10. June 22, 1995, Dennis Martin, Secret Service.
        11. June 22, 1995, John Skyles, Secret Service.
        12. June 23, 1995, Bruce Abbott, Secret Service.
        13. June 23, 1995, Thomas Collier, Department of Interior.
        14. June 23, 1995, Deborah Gorham, White House.
        15. June 23, 1995, John Magaw, Secret Service.
        16. June 23, 1995, Henry O'Neill, Secret Service.
        17. June 26, 1995, Marlene MacDonald, White House.
        18. June 26, 1995, Betsy Pond, White House.
        19. June 27, 1995, Thomas Castleton, White House.
        20. June 27, 1995, Robert Langston, Park Police.
        21. June 27, 1995, Sylvia Mathews, White House.
        22. June 27, 1995, Ronald Noble, Treasury.
        23. June 28, 1995, Dennis Condon, FBI.
        24. June 28, 1995, John Danna, Park Police.
        25. June 28, 1995, Peter Markland, Park Police.
        26. June 29, 1995, Phillip Adams, Department of Justice.
        27. June 29, 1995, Charles Hume, Park Police.
        28. June 29, 1995, Roy Neel, White House.
        29. June 30, 1995, Carolyn Huber, White House.
        30. June 30, 1995, Peter Markland, Park Police.
        31. June 30, 1995, Scott Salter, FBI.
        32. July 5, 1995, William Burton, White House.
        33. July 5, 1995, Joseph Phillips, Secret Service.
        34. July 5, 1995, George Stephanopoulos, White House.
        35. July 6, 1995, Mark Gearan, White House.
        36. July 6, 1995, Evelyn Lieberman, White House.
        37. July 6, 1995, Thomas McLarty, White House.
        38. July 6, 1995, Cynthia Monaco, Department of Justice.
        39. July 6, 1995, Dee Dee Myers, White House.
        40. July 7, 1995, Nancy McFadden, Department of Justice.
        41. July 7, 1995, Clifford Sloan, White House.
        42. July 7, 1995, Margaret Williams, White House.
        43. July 10, 1995, Lisa Caputo, White House.
        44. July 10, 1995, Craig Livingstone, White House.
        45. July 10, 1995, Stephen Neuwirth, White House.
        46. July 11, 1995, William Kennedy, White House.
        47. July 11, 1995, Michael Spafford, Private.
        48. July 11, 1995, Patsy Thomasson, White House.
        49. July 11, 1995, Linda Tripp, White House.
        50. July 11, 1995, David Watkins, White House.
        51. July 12, 1995, David Gergen, White House.
        52. July 12, 1995, Bruce Lindsey, White House.
        53. July 12, 1995, Cheryl Mills, White House.
        54. July 12, 1995, Bernard Nussbaum, White House.
        55. July 12, 1995, Howard Paster, White House.
        56. July 12, 1995, James Shea, Secret Service.
        57. July 12, 1995, Linda Tripp, White House.
        58. July 13, 1995, Webster Hubbell, Department of Justice.
        59. July 13, 1995, Bernard Nussbaum, White House.
        60. July 14, 1995, Terry Cobey, White House.
        61. July 14, 1995, Webster Hubbell, Department of Justice.
        62. July 14, 1995, Louis Hupp, FBI.
        63. July 14, 1995, John Quinn, White House.
        64. July 14, 1995, Diann Walters, White House.
        65. July 17, 1995, Susan Thomases, Private.
        66. July 24, 1995, William Anderson, FBI.
        67. July 24, 1995, Phillip Heymann, Department of Justice.
        68. July 31, 1995, Deborah Gorham, White House.
        69. July 31, 1995, Linda Tripp, White House.

                                public hearings

        1. July 18, 1995, Webster Hubbell, Department of Justice.
        2. July 19, 1995, Webster Hubbell, Department of Justice.
        3. July 20, 1995, Cheryl Braun, Park Police.
        4. July 20, 1995, Robert Hines, Park Police.
        5. July 20, 1995, John Rolla, Park Police.
        6. July 25, 1995, Mark Gearan, White House.
        7. July 25, 1995, Sylvia Mathews, White House.
        8. July 25, 1995, Patsy Thomasson, White House.
        9. July 25, 1995, David Watkins, White House.
        10. July 26, 1995, Evelyn Lieberman, White House.
        11. July 26, 1995, Henry O'Neill, Secret Service.
        12. July 26, 1995, Maggie Williams, White House.
        13. July 27, 1995, Phillip Adams, Department of Justice.
        14. July 27, 1995, Donald Flynn, Secret Service.
        15. July 27, 1995, Scott Salter, FBI.
        16. July 27, 1995, Michael Spafford, Private.
        17. August 1, 1995, Deborah Gorham, White House.
        18. August 1, 1995, Charles Hume, Park Police.
        19. August 1, 1995, Robert Langston, Park Police.
        20. August 1, 1995, Peter Markland, Park Police.
        21. August 1, 1995, Linda Tripp, White House.
        22. August 2, 1995, Phillip Heymann, Department of Justice.
        23. August 2, 1995, Louis Hupp, FBI.
        24. August 3, 1995, Thomas Castleton, White House.
        25. August 3, 1995, Carolyn Huber, White House.
        26. August 3, 1995, Stephen Neuwirth, White House.
        27. August 3, 1995, Clifford Sloan, White House.
        28. August 7, 1995, William Burton, White House.
        29. August 7, 1995, David Gergen, White House.
        30. August 7, 1995, Thomas McLarty, White House.
        31. August 7, 1995, John Quinn, White House.
        32. August 8, 1995, Bruce Lindsey, White House.
        33. August 8, 1995, Susan Thomases, Private.
        34. August 9, 1995, Bernard Nussbaum, White House.
        35. August 10, 1995, Bernard Nussbaum, White House.
        36. August 10, 1995, David Margolis, Department of Justice.
        37. November 2, 1995, Margaret Williams, White House.
        38. November 2, 1995, Susan Thomases, Private.
        39. December 11, 1995, Ingram Barlow, Williams & Connolly.
        40. December 11, 1995, Robert Barnett, Williams & Connolly.
        41. December 11, 1995, Linda Blair, Private.
        42. December 11, 1995, Margaret Williams, White House.
        43. December 13, 1995, William Burton, White House.
        44. December 13, 1995, Sylvia Mathews, White House.
        45. December 18, 1995, Susan Thomases, Private.

       B. Washington Phase: Matters authorized by Senate Resolution 120
                                  Sec. 1(b)(2)

                                  DEPOSITIONS

    Date, name, and agency

        1. October 10, 1995, Clark Blight, RTC-IG.
        2. October 10, 1995, Stephen Switzer, RTC-IG.
        3. October 11, 1995, Jane Ley, OGE.
        4. October 11, 1995, Robert Mueller, Department of Justice.
        5. October 11, 1995, Stephen Potts, OGE.
        6. October 12, 1995, Patricia Black, RTC.
        7. October 12, 1995, Douglas Frazier, Department of
    Justice.
        8. October 12, 1995, Anthony Moscato, Department of
    Justice.
        9. October 13, 1995, Robert Cesca, Treasury-IG.
        10. October 13, 1995, Joseph Gangloff, Department of
    Justice.
        11. October 13, 1995, Donna Henneman, Department of
    Justice.
        12. October 17, 1995, Allen Carver, Department of Justice.
        13. October 17, 1995, Laurence McWhorter, Department of
    Justice.
        14. October 17, 1995, Donald Pettus, FBI.
        15. October 18, 1995, John Arterberry, Department of
    Justice.
        16. October 18, 1995, James Cottos, Treasury-IG.
        17. October 18, 1995, Mac Dodson, Department of Justice.
        18. October 18, 1995, Don Mackay, Department of Justice.
        19. October 18, 1995, Richard Pence, Department of Justice.
        20. October 19, 1995, James Dudine, RTC.
        21. October 19, 1995, Fletcher Jackson, Department of
    Justice.
        22. October 19, 1995, Randy Knight, RTC.
        23. October 19, 1995, Gerald McDowell, Department of
    Justice.
        24. October 19, 1995, Stephen McHale, Treasury.
        25. October 20, 1995, C. Boyden Gray, Private.
        26. October 20, 1995, Richard Iorio, RTC.
        27. October 20, 1995, John Keeney, Department of Justice.
        28. October 20, 1995, Patrick Noble, RTC-IG.
        29. October 20, 1995, Kenneth Schmalzbach, Treasury.
        30. October 23, 1995, April Breslaw, RTC.
        31. October 24, 1995, Charles Banks, Department of Justice.
        32. October 24, 1995, Michael Johnson, Department of
    Justice.
        33. October 24, 1995, Robert McNamara, Treasury.
        34. October 24, 1995, James Thompson, RTC.
        35. October 25, 1995, Karen Carmichael, RTC.
        36. October 25, 1995, Edward Knight, Treasury.
        37. October 25, 1995, Keith Mason, White House.
        38. October 26, 1995, John Adair, RTC-IG.
        39. October 26, 1995, Wayne Foren, SBA.
        40. October 26, 1995, Webster Hubbell, Department of
    Justice.
        41. October 26, 1995, Ira Raphaelson, Department of
    Justice.
        42. October 27, 1995, Ellen Kulka, Treasury.
        43. October 27, 1995, Irvin Nathan, Department of Justice.
        44. October 27, 1995, Kenneth Schmalzbach, Treasury.
        45. October 30, 1995, Kevin Kendrick, FBI.
        46. October 30, 1995, Jean Lewis, RTC.
        47. October 30, 1995, Mark Stephens, SBA.
        48. October 31, 1995, Erskine Bowles, SBA.
        49. October 31, 1995, Jean Lewis, RTC.
        50. October 31, 1995, Jane Sherburne, White House.
        51. October 31, 1995, Fred Verinder, FBI.
        52. November 1, 1995, Paula Casey, Department of Justice.
        53. November 1, 1995, William Kennedy, White House.
        54. November 1, 1995, Francine Kerner, Treasury-IG.
        55. November 1, 1995, Marsha Scott, Private.
        56. November 2, 1995, Neysa Day, Treasury-IG.
        57. November 2, 1995, Richard Doery, Treasury-IG.
        58. November 2, 1995, James Lyons, Private.
        59. November 2, 1995, Julie Yanda, RTC.
        60. November 3, 1995, Albert Casey, RTC.
        61. November 3, 1995, Steven Irons, FBI.
        62. November 3, 1995, Bruce Lindsey, White House.
        63. November 4, 1995, Neil Eggleston, White House.
        64. November 6, 1995, Lloyd Cutler, White House.
        65. November 6, 1995, David Dougherty, SBA.
        66. November 6, 1995, Thomas McLarty, White House.
        67. November 6, 1995, Peter Rittling, Treasury.
        68. November 6, 1995, John Spotila, SBA.
        69. November 7, 1995, Sharon Conaway, White House.
        70. November 9, 1995, Dennis W. Aiken, FBI.
        71. November 9, 1995, Randy Coleman, Private.
        72. November 9, 1995, Larry Potts, FBI.
        73. November 13, 1995, William Barr, Department of Justice.
        74. November 13, 1995, Charles Shepperson, SBA.
        75. November 17, 1995, Martin Teckler, SBA.
        76. November 20, 1995, James Blair, Private.
        77. November 20, 1995, Brent Bumpers, Department of
    Justice.
        78. November 20, 1995, Cecilia Seay, SBA.
        79. November 21, 1995, Bruce Lindsey, White House.
        80. November 27, 1995, Sarah Hawkins, SBA.
        81. November 27, 1995, Edith Holiday, White House.
        82. December 5, 1995, Mitchell Stanley, SBA.

                                PUBLIC HEARINGS

        1. November 7, 1995, John Adair, RTC-IG.
        2. November 7, 1995, Lloyd Bentsen, Treasury.
        3. November 7, 1995, Patricia Black, RTC-IG.
        4. November 7, 1995, Clark Blight, RTC-IG.
        5. November 7, 1995, Stephen Switzer, RTC-IG.
        6. November 8, 1995, Robert Cesca, Treasury-IG.
        7. November 8, 1995, John Cottos, Treasury-IG.
        8. November 8, 1995, David Dougherty, Treasury.
        9. November 8, 1995, Francine Kerner, Treasury-IG.
        10. November 8, 1995, Edward Knight, Treasury.
        11. November 8, 1995, Jane Ley, OGE.
        12. November 8, 1995, Stephen McHale, Treasury.
        13. November 8, 1995, Robert McNamara, Treasury.
        14. November 8, 1995, Stephen Potts, OGE.
        15. November 8, 1995, Kenneth Schmalzbach, Treasury.
        16. November 9, 1995, Llyod Cutler, White House.
        17. November 9, 1995, Jane Sherburne, White House.
        18. November 28, 1995, John Spotila, SBA.
        19. November 28, 1995, Martin Teckler, SBA.
        20. November 28, 1995, Neil Eggleston, White House.
        21. November 28, 1995, Bruce Lindsey, White House.
        22. November 28, 1995, Erskine Bowles, SBA.
        23. November 28, 1995, Charles Shepperson, SBA.
        24. November 28, 1995, Wayne Foren, SBA.
        25. November 29, 1995, Richard Iorio, RTC.
        26. November 29, 1995, Jean Lewis, RTC.
        27. November 30, 1995, April Breslaw, RTC.
        28. November 30, 1995, Karen Carmichael, RTC.
        29. November 30, 1995, Julie Yanda, RTC.
        30. December 1, 1995, Paula Casey, Department of Justice.
        31. December 1, 1995, Randy Coleman, Private.
        32. December 1, 1995, Webster Hubbell, Department of
    Justice.
        33. December 1, 1995, Fletcher Jackson, Department of
    Justice.
        34. December 1, 1995, Michael Johnson, Department of
    Justice.
        35. December 5, 1995, Charles Banks, Department of Justice.
        36. December 5, 1995, Douglas Frazier, Department of
    Justice.
        37. December 5, 1995, Steven Irons, FBI.
        38. December 5, 1995, Kevin Kendrick, FBI.
        39. December 5, 1995, William Kennedy, White House.
        40. December 5, 1995, Donald Pettus, FBI.
        41. December 6, 1995, Allen Carver, Department of Justice.
        42. December 6, 1995, Joseph Gangloff, Department of
    Justice.
        43. December 6, 1995, John Keeney, Department of Justice.
        44. December 6, 1995, Gerald McDowell, Department of
    Justice.

        C. Arkansas Phase: Matters authorized by Senate Resolution 120
                                  Sec. 1(b)(3)

                                  DEPOSITIONS

    Date, name, and agency

        1. December 4, 1995, Lex Dobbins, Arkansas Dept. of Health.
        2. December 4, 1995, William Teer, Arkansas Dept. of
    Health.
        3. December 5, 1995, Tom Butler, Arkansas Dept. of Health.
        4. December 5, 1995, Janice Choate, Arkansas Dept. of
    Health.
        5. December 12, 1995, William Brady, Arkansas Securities
    Dept.
        6. December 12, 1995, Bobby Nash, ADFA.
        7. December 14, 1995, William Lyon, Private.
        8. December 18, 1995, Russell Webb, Private.
        9. December 19, 1995, Charles Handley, Arkansas Securities
    Dept.
        10. December 21, 1995, Lisa Caputo, White House.
        11. January 5, 1996, Sam Bratton, Public Service
    Commission.
        12. January 5, 1996, Ronald Clark, Rose Law Firm.
        13. January 7, 1996, Neil Eggleston, White House.
        14. January 10, 1996, Bruce Lindsey, White House.
        15. January 15, 1996, Davis Fitzhugh, Madison Guaranty/
    Private.
        16. January 15, 1996, William Kennedy, White House.
        17. January 16, 1996, Charles Peacock, Private.
        18. January 17, 1996, Carolyn Huber, White House.
        19. January 18, 1996, Treeca Dyer, Private.
        20. January 19, 1996, Charles Singleton, Private.
        21. January 22, 1996, Lance Miller, Private.

                                PUBLIC HEARINGS

        1. January 11, 1996, Richard Massey, Rose Law Firm.
        2. January 16, 1996, Neil Eggleston, White House.
        3. January 16, 1996, William Kennedy, White House.
        4. January 16, 1996, Bruce Lindsey, White House.
        5. January 18, 1996, Ronald Clark, Rose Law Firm.
        6. January 18, 1996, Carolyn Huber, White House.

    Total Depositions Taken: 172.
    Total Witnesses who Testified at Hearings: 95.
    Total Number of Hearings: 29.

       Additional Views of Senators Sarbanes, Dodd, Kerry, Bryan, Boxer,
                        Moseley-Braun, Murray and Simon

      Democratic Views on Completion of the Investigation Into Whitewater
                  Development Corporation and Related Matters

    i. the special committee should adhere to s. res. 120 and complete its
                             inquiry by february 29

        On May 17, 1995, the Senate adopted Senate Resolution 120,
    creating the Special Committee to Investigate Whitewater
    Development Corporation and Related Matters and providing
    $950,000 to fund the Committee through February 29, 1996. The
    Majority has stated that it will recommend additional funding
    of $600,000 for an unlimited period of time. This proposed
    additional funding would bring Senate expenditures on
    investigation of Whitewater matters to $2 million.
        The Committee should complete its investigation within the
    timetable established by the Senate, without the authorization
    of additional funds or extension of time. There is sufficient
    time and money to complete this investigation within the
    timetable and budget established by the Senate in Resolution
    120.
        The Committee has an obligation to the Senate and to the
    public to move forward, without delay, in developing the facts
    relating to the so-called ``Whitewater'' matter. Failure to do
    so will prolong this investigation well into a presidential
    election year and will contribute to a public perception that
    this investigation is being conducted for political purposes.
    The committee should complete its investigation by February 29
        It is well within the ability of the Committee to complete
    its investigation by the February 29 date provided for in the
    resolution. The Committee should undertake a schedule for the
    next six weeks that will enable it to meet that objective.
        On January 17 the Senate Leadership announced that the
    Senate will not go to regular voting sessions until February
    20. With no competing legislative business in the month leading
    up to February 20, the Committee can devote its full attention
    to this investigation.
        By meeting four or five days a week between now and the end
    of February (a pace the Committee has on occasion previously
    followed) the Committee can hold 25 to 30 days of public
    hearings. Even if only three or four witnesses a day appear
    before the Committee, this timetable would allow for
    appearances by well over 75 witnesses (far more than any
    current projection). The Committee has substantially completed
    two out of three phases of its work (the ``Foster Papers
    Phase'' and the ``Washington Phase''). Document production from
    the White House is now essentially complete (the electronic
    mail records referenced by the majority are being provided to
    the Committee). Only the ``Arkansas Phase'' remains to be
    completed. If the Committee works at this pace over the next
    six weeks, it can complete that phase within the timeframe
    originally set out by the Senate.
        The Committee has demonstrated in the past that it can work
    at this pace. Between July 18 and August 10, 1995, at a time
    when the Senate was in session and its Members were handling
    extensive legislative business, the Special Committee held 13
    days of public hearings and examined 34 witnesses. In the past
    other special committees have accelerated their hearing
    schedules and completed their work in a timely fashion.
        For example, between July 7 and August 6, 1987, the Iran-
    Contra Committee held 21 days of hearings, permitting the
    Committee to conclude its hearings on August 6. The Iran-Contra
    comparison is instructive. In that investigation the Committee
    was established on January 6, 1987, and completed its hearings
    on August 3, 1987, seven months after its creation. The
    investigation involved complex transactions, numerous cabinet-
    level and other high government officials, and problems related
    to classified national security information and the conduct of
    foreign policy. This investigation does not involve matters of
    that complexity and gravity. This Committee has already heard
    from 83 witnesses over 29 days of hearings and, as noted above,
    another 75 or more witnesses could be heard before February 29.
        This schedule would enable the Committee to complete its
    investigation and adhere to the timetable set forth in Senate
    Resolution 120. The Committee also has adequate funding to
    complete its work. The Majority's Report indicates that
    $275,471 of the $950,000 appropriated in Resolution 120 remains
    available for completion of the investigation. Appropriating
    additional public funds would not be necessary.

    The investigation should not be prolonged in an election year

         There is an important reason for the Committee to complete
    the investigation by February 29--this investigation should be
    completed before the country enters into the presidential
    campaign. By authorizing funding only through February 29,
    1996, Senate Resolution 120 accomplished this objective. The
    Resolution states that the purposes of the Committee are ``to
    expedite the thorough conduct of the investigation, study, and
    hearings'' and ``to engender a high degree of confidence on the
    part of the public regarding the conduct of such investigation,
    study, and hearings.'' 1 Extending the life of the
    Committee beyond February 29 would undermine both those
    purposes.
        \1\ S.Res. 120, sec. 7(a).
    ---------------------------------------------------------------------------
        As Chairman D'Amato stated in January 1995, when funding
    for the Committee was addressed: ``We wanted to keep it out of
    that political arena, and that is why we decided to come
    forward with the one-year request.'' 2 That was the right
    approach, and was reflected in the action taken by the full
    Senate. The Majority's proposal for another $600,000 and an
    open-ended period of time will project the investigation into
    the election season, thereby inevitably diminishing public
    confidence in the impartiality of the inquiry.
        \2\ Senate Committees Funding Resolution for 1995-1996: Hearings
    before the Senate Committee on Rules and Administration, 103d Cong., 2d
    Sess. 80 (Jan. 19, 1995).
    ---------------------------------------------------------------------------
        Six weeks of hearings (well in excess of the number held on
    either the Foster Papers Phase or the Washington Phase) should
    be more than adequate for the ``Arkansas Phase'' of this
    investigation. This phase concerns events that occurred in
    Arkansas some ten years ago, events which have been widely
    reported on since the 1992 presidential campaign and about
    which much is already known.

    Substantial public funds have already been expended

        Since the Committee can complete this investigation with
    the funds already appropriated, the Senate should not authorize
    further expenditure of public funds. If an additional $600,000
    should be authorized for this investigation, as the Majority
    has proposed, it will bring the total amount spent by the
    Senate alone to investigate Whitewater matters to $2 million.
    3
        \3\ This total includes $400,000 expended in 1994 pursuant to
    S.Res. 229 (103d Congress), $950,000 expended pursuant to S.Res 120,
    and the additional $600,000 the Majority has proposed.
    ---------------------------------------------------------------------------
        Approximately $30 million of taxpayer funds have already
    been expended on Whitewater investigations. The Independent
    Counsel alone has spent some $23 million through 1995, while
    the Resolution Trust Corporation has spent almost $4 million,
    and congressional investigative committees in both the House
    and Senate have spent millions more. The Independent Counsel
    recently indicated that he expected his investigation to get
    all of the facts out before the 1996 presidential election.
    4 A comprehensive report by an independent law firm
    retained by the RTC has now been made public, and its key
    findings are available. 5
        \4\ C-SPAN Interview with Kenneth W. Starr, (C-SPAN Television
    Broadcast, Dec. 1995).
        \5\ Pillsbury Madison & Sutro, Madison Guaranty Savings & Loan and
    Whitewater Development Company, Inc., April 25, 1995 (preliminary
    report) and December 13, 1995 (supplemental report).
    ---------------------------------------------------------------------------
        Furthermore, there are many other issues before the
    Congress to which the necessary time, attention, and resources
    should be devoted. As Senator Dole observed in January 1987,
    when discussing the Iran-Contra investigation, ``We may never
    have all the facts
    . . . [t]here are too many other problems, domestic and
    foreign, that are not going to go away. They cannot, and should
    not, be swept aside because of an obsession with this Iranian
    affair.'' 6 The same is true today about the ``Whitewater
    affair.''
        \6\ The New York Times, Jan. 7, 1987, p. A8.
    ---------------------------------------------------------------------------

    The Independent Counsel's investigation should not delay the
            Committee's investigation

        When the Senate passed Resolution 120, creating the Special
    Committee and defining its powers and responsibilities, the
    Independent Counsel's investigation was already well underway.
    7 The Senate recognized this fact and provided for it in
    the Resolution. 8 It was not the intent of the Senate that
    the Special Committee's work be delayed or put on hold because
    of the activities of the Independent Counsel.
        \7\ Special Counsel Robert B. Fiske, Jr. began his investigation in
    January 1994. Independent Counsel Kenneth W. Starr succeeded Mr. Fiske
    in August 1994.
        \8\ For example, section 5(b)(6) requires the Committee to inform
    the Independent Counsel in writing before granting a witness immunity.
    ---------------------------------------------------------------------------
        The Independent Counsel has raised concerns in the past
    about the Committee's investigation, and the Committee has
    declined to suspend its work in order to accommodate those
    concerns. On October 2, 1995, the Chairman and Ranking Member
    wrote to Independent Counsel Kenneth Starr and advised him that
    the Committee intended to proceed with its investigation,
    contrary to the Independent Counsel's wishes as expressed in a
    September 27, 1995 letter:

              [W]e believe that the concerns expressed in your
            letter do not outweigh the Senate's strong interest in
            concluding its investigation and public hearings into
            the matters specified in Senate Resolution 120
            consistent with Section 9 of the Resolution [by
            February 29, 1996]. 9
        \9\ October 2, 1995 letter from Chairman Alfonse M. D'Amato and
    Senator Paul S. Sarbanes to Independent Counsel Kenneth W. Starr.

        The Independent Counsel has brought a criminal case in
    Arkansas against three individuals (United States v. McDougal).
    The trial now is scheduled to begin on March 4. This should not
    affect the Committee's assignment to carry forward and complete
    its inquiry by February 29.
        Four witnesses have informed the Committee that they will
    invoke their right against self-incrimination and refuse to
    testify. The Senate did not intend for this Committee to allow
    assertions of Fifth Amendment privileges by witnesses to derail
    its investigation. The fact that four witnesses have asserted
    their Fifth Amendment privilege is no reason to extend this
    investigation into the political season, a result the Senate
    avoided when it provided funding for this investigation only
    through February 29, 1996.
        There is another important reason that witnesses'
    assertions of the Fifth Amendment privilege against self-
    incrimination do not justify delaying the Committee's
    investigation until the conclusion of the McDougal trial: the
    outcome of that trial will not affect the ability of witnesses
    to assert their privilege against self-incrimination. These
    four witnesses are not on trial in that case, and whatever the
    outcome of that trial, it will give them no assurance that they
    could not be prosecuted at some future time by the Independent
    Counsel or some other federal or state prosecutorial authority.
    Thus they can be expected to continue to assert their Fifth
    Amendment privilege after the trial concludes.
        The availability of even the defendants in the McDougal
    trial will not be affected by the trial's outcome. If the
    defendants are convicted, appeals likely will follow, probably
    on numerous grounds, and will take months or even years to
    conclude. During that time the defendants will retain their
    Fifth Amendment privilege, notwithstanding the prior trial
    conviction. In fact, even if the defendants are acquitted at
    trial they will retain their Fifth Amendment privilege for
    charges other than those on which they were tried.
        These two points demonstrate that the Committee should not
    await the conclusion of the McDougal trial to complete its
    investigation. The trial already has been rescheduled twice,
    once from October 1995 to January 1996, and again from January
    to March 1996. The trial could be further delayed, and once the
    trial finally begins there is no assurance of how long it will
    last. The Committee should move promptly to complete its
    hearings by February 29 and avoid the problem of having public
    hearings ongoing at the same time as the trial.

    White House compliance with Committee document requests

        The Majority report's description of the ``Obstacles Faced
    by the Committee'' in obtaining documents and testimony from
    the White House does not allow for the breadth and complexity
    of the Committee's various document requests. In a number of
    instances the White House experienced difficulties in complying
    with document requests because some of the Majority's requests
    were extremely broad and burdensome. A good example of this
    problem is the document request the Majority sent to the White
    House in September calling for the production of, among other
    things, any record of any communications, contacts, or meetings
    over an eighteen-month period between anyone in the White
    House, on the one hand, and anyone on a list of approximately
    fifty people on any subject matter whatsoever. This extremely
    broad and onerous request ultimately was narrowed in October,
    but in the interim it slowed down the document production
    effort.
        The Majority's request for electronic mail records
    encountered the difficulty that the White House did not have an
    existing capability to retrieve all e-mail messages potentially
    encompassed by the Committee's request. The White House
    attorneys explained that the e-mail system implemented by the
    Bush Administration and inherited by the Clinton Administration
    did not save e-mail records in retrievable form. Under the Bush
    Administration system only weekly ``back-up tapes'' for the
    entire computer network were maintained up until the Clinton
    Administration put a new system in place in July 1994. (The
    White House has produced responsive e-mail created after July
    1994.) The White House attorneys therefore confronted a problem
    as to how to proceed under the technical constraints imposed by
    the Bush Administration system. This matter has now been
    resolved through a more specific definition by the Committee of
    the e-mail requests and by the White House committing to major
    outside computer contractual assistance.
        Finally, the request for the production of the Kennedy
    notes raised important questions of lawyer-client privilege.
    Prominent legal scholars stated that the White House had a
    legitimate and persuasive claim of privilege, and would have
    prevailed in litigation seeking to compel production of the
    notes. 10 The privilege concerns raised by the White House
    prior to producing the notes were reasonable. In the end a way
    to address the privilege question was worked out, the notes
    were produced, and the Committee held a hearing with respect to
    them.
        \10\ December 14, 1995 letter to John M. Quinn from Professor
    Geoffrey C. Hazard, Jr.
    ---------------------------------------------------------------------------

            II. THE MAJORITY'S FINDINGS ARE INCOMPLETE AND ONE-SIDED

        The Majority has submitted partial findings of the Special
    Committee's investigation to date. We think it is unwise to
    make findings before the issuance of the Committee's Final
    Report.
        We are particularly troubled by the Majority's supposed
    findings because they are incomplete and one-sided. A few
    examples of this problem are set forth below.
        In its discussion of the handling of documents in Vincent
    Foster's office, the Majority fails even to mention a most
    important aspect of the testimony of former Deputy Attorney
    General Philip Heymann. Heymann told the Committee that
    although Bernard Nussbaum may have made an error in political
    judgment by declining to allow law enforcement officials to
    conduct their own search of Foster's office, White House
    officials did nothing either illegal or unethical:

              Senator Simon. In terms of Bernie Nussbaum, is it a
            fair characterization to say that what he did was not
            illegal, not unethical, but unwise?
              Mr. Heymann. I think that's basically a fair
            characterization, Senator Simon. (8/2/95 Hrg. p. 136)

        The Majority's discussion of the RTC criminal referrals is
    similarly incomplete and one-sided. The Majority, for example,
    makes no mention of the consistent testimony of career federal
    prosecutors that the 1992 referral lacked merit. Gerald
    McDowell, a career official in charge of the Justice
    Department's Fraud Section, told the Committee that the
    referral was ``half-baked'' and ``junky.'' (McDowell, 10/19/95
    Dep. pp. 115, 119) Assistant United States Attorney Michael
    Johnson called the allegations in the referral ``reckless,''
    ``irresponsible'' and ``odd'' and noted that the allegations
    were not supported by the evidence. (Johnson, 10/24/95 Dep. pp.
    67, 197) Fraud Section attorney Mark MacDougal, who wrote an
    analysis of the referral in February 1993, concluded, ``No
    factual claims can be found in the referral to support the
    designation of Mr. or Mrs. Clinton as witnesses.'' (DOJ 006680)
        The evidence also established no impropriety in the way the
    RTC referrals were handled by the Department of Justice and the
    United States Attorneys Office in Little Rock. United States
    Attorney Charles Banks--a Republican appointee--properly
    declined to act on the 1992 referral prior to the presidential
    election, despite unusual and persistent pressure from the RTC
    investigator to open a grand jury investigation. As Banks wrote
    in an October 16, 1992 letter to the Special Agent in Charge of
    the local FBI office:

              While I do not intend to denigrate the work of the
            RTC, I must opine that after such a lapse of time the
            insistence for urgency in this case appears to suggest
            an intentional or unintentional attempt to intervene
            into the political process of the upcoming presidential
            election. You and I know in investigations of this
            type, the first steps, such as issuance of grand jury
            subpoena for records, will lead to media and public
            inquiries of matters that are subject to absolute
            privacy. Even media questions about such an
            investigation in today's modern political climate all
            too often publicly purports to ``legitimize what can't
            be proven.'' . . . For me personally to participate in
            an investigation that I know will or could easily lead
            to the above scenario and to the possible denial of
            rights due to the targets, subjects, witnesses or
            defendants is inappropriate. I believe it amounts to
            prosecutorial misconduct and violates the most basic
            fundamental rule of Department of Justice policy. (DOJ
            006688-006689)

        Chairman D'Amato praised Banks and told him that he ``did
    absolutely the right thing'' by resisting pressure to open a
    grand jury investigation shortly before the 1992 Presidential
    election. (12/5/95 Hrg. pp. 221, 222-223) Senator Sarbanes
    agreed, telling Banks:

              I think this letter and the positions you took
            reflected a determined effort to sustain the integrity
            of the criminal justice system. I think that ought to
            be recognized. And I think it's this kind of courage
            that makes this system work, and I commend you for it.
            (12/5/95 Hrg. p. 226)

        Contrary to the Majority's assertion, the evidence also
    established that in 1993 newly-appointed United States Attorney
    Paula Casey properly handled plea negotiations with David Hale
    and his attorney, Randy Coleman. Coleman demanded that Casey
    give Hale an extraordinarily lenient plea bargain--to a
    misdemeanor rather than a felony--without requiring that Hale
    first provide law enforcement officials with a proffer of facts
    relevant to the pending investigation. Casey repeatedly invited
    Hale to make a detailed proffer, but consistent with long-
    standing Department of Justice policy, she declined to reach
    any plea bargain with Hale without obtaining his proffer in
    advance. Career Department of Justice prosecutors uniformly
    approved of Casey's actions and testified that to accede to
    Coleman's unreasonable demands would have been the equivalent
    of ``buying a pig in a poke.'' (Carver, 10/17/95 Dep. p. 130;
    Nathan, 10/27/95 Dep. p. 105; McKay, 10/18/95 Dep. pp. 92-93)
        When career officials at Main Justice took over the Hale
    case in November 1993, they approached plea negotiations just
    as Casey had before them. Specifically, the career officials at
    the Department of Justice refused to make any deal with Hale
    absent a detailed factual proffer of Hale's information and an
    opportunity to evaluate it. (Keeney, 10/20/95 Dep. p. 40) Hale
    continued to refuse to make a proffer and instead took his
    allegations to the press. Ultimately, Independent Counsel
    Robert Fiske required Hale to accept a guilty plea to two
    felony counts, while Casey had insisted upon a plea to only one
    felony.

                                III. CONCLUSION

        For the reasons set forth above, the Committee should
    complete its investigation of Whitewater matters by February
    29, 1996, the date established by Senate Resolution 120. The
    investigation should not be perceived by the public as
    influenced by election year politics. The American people
    deserve to have this matter pursued promptly and fairly.

                                       Paul Sarbanes.
                                       Chris Dodd.
                                       John F. Kerry.
                                       Richard H. Bryan.
                                       Barbara Boxer.
                                       Carol Moseley-Braun.
                                       Patty Murray.
                                       Paul Simon.