Clintons still in thrall to Whitewater

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The Independent Online
They have certainly not exposed the Conspiracy of the Century - for many indeed they remain a futile partisan witch-hunt by Republicans, with an eye to the 1996 election. But the latest Congressional probe of Whitewater may finally have revealed the core of the controversy. This, it seems increasingly likely, is improper tax returns by the Clintons concerning their investment in the hapless Arkansas real estate venture.

The four weeks of overlapping hearings, initially by a special Senate Committee and then joined by the House Banking Committee under Capitol Hill's grand inquisitor of Whitewater, Republican Jim Leach of Iowa, have been like most aspects of the affair: complex, often contradictory and invariably hard to follow.

But on two issues they have left little doubt. First, as the Washington Post observed yesterday, President and Mrs Clinton have not come clean about the full extent of their dealings with James McDougal, their partner in Whitewater and owner of the failed Madison Guaranty bank. Second, when White House aide Vincent Foster died in July 1993, he was worried by - in his own words -the "can of worms" that a full-scale tax audit might open.

In all, the venture lost some $200,000 (pounds 125,000). Documents and testimony at the hearings suggest that the Clintons, who legally were equal 50-50 owners of Whitewater, met only $42,000 of that sum. The remaining loss of $158,000 was taken by Mr McDougal.

From the documents produced, it appears as if the Clintons did not report as income money he contributed to the venture on their behalf. But they do show that the then Governor and his wife claimed tax deductions of $13,000 on "losses" which had been covered by Mr McDougal. "Smart people like the Clintons," noted the New York Times, "could not have been totally ignorant of where the money was coming from."

The White House maintains these charges are just "the same shopworn allegations" of the past, repackaged by Mr Leach and his zealous staff. What they have unearthed, however, is strong evidence that Hillary Clinton's dealings on Whitewater with Mr McDougal, when she was a partner in the Rose law firm in Little Rock, were much more than the "limited" communications she claimed.

On the positive side for the White House, the hearings produced no proof that Whitewater was kept afloat by money siphoned from Madison Guaranty, which in 1989 would collapse at a cost to taxpayers of up to $60m. Nor did anything emerge to support allegations that Governor Clinton "protected" Mr McDougal's bank from federal investigators in return for financial favours, either to himself or his re-election campaigns during the Eighties.

Similarly, the emotional, sometimes tearful testimony of former colleagues to the Senate hearings, only re-inforced the theory that Foster, then White House Deputy Counsel but handling some of the Clintons' personal legal matters, was a deeply depressed man who, overwhelmed by the pressures of his job, took his own life.

But there is no doubt that his colleagues, led by then White House Counsel Bernard Nussbaum, impeded the investigation of Foster's office. For Republicans, this was to keep highly embarrassing tax documents pertaining to Whitewater out of the wrong hands.

Mr Leach and his opposite number in the Senate, Republican Alfonse D'Amato of New York, are now pondering their next move. But the likelihood of further hearings this autumn has increased, and demands for Mrs Clinton to testify may grow. Try as they may, the Clintons cannot lay Whitewater to rest.