Whitewater Probe's Insufficient Evidence
Washington Post Staff Writer
Friday, November 20, 1998; Page A32
Independent counsel Kenneth W. Starr said yesterday that his office had strong reason to believe President Clinton lied under oath in testimony stemming from the Whitewater land deal but decided late last year not to file an impeachment report relying exclusively on the truthfulness of Clinton's former business partner James McDougal.
With a draft referral to Congress already prepared, Starr said his office kept hoping for a breakthrough in negotiations with two other potential witnesses who might corroborate McDougal's account former Arkansas governor Jim Guy Tucker and McDougal's former wife, Susan. That didn't happen, leaving his office in the risky position of basing its referral on a single witness.
Prosecutors decided they would have trouble "establishing the truth with a sufficient degree of confidence," Starr testified to the House Judiciary Committee.
Starr yesterday offered those details of an impeachment report that never happened as he essentially closed the books on the original focus of his investigation the Whitewater land deal and the corrupt practices of the failed Madison Guaranty Savings and Loan, which McDougal owned. Yesterday's hearing concentrated almost exclusively on Starr's conduct of the Monica S. Lewinsky probe, but his opening statement marked the independent counsel's first public status report on the progress of the Whitewater inquiry.
Although Democrats have criticized Starr for endlessly dragging out that investigation, they were critical of how he chose to announce that he had insufficient evidence to charge Clinton in the matter. Rep. Sheila Jackson Lee (D-Tex.) twice tried, unsuccessfully, to block that part of Starr's remarks, saying he was "denying the president and any other parties the constitutional right of due process under the First Amendment."
In his statement, Starr said his office has won 14 criminal convictions, including cases brought against former Associate Attorney General Webster L. Hubbell and Tucker, who resigned following his indictment. But Starr said his office also takes pride in its "decisions not to indict" including its rejection of a Senate Whitewater Committee criminal referral against Clinton friend Susan Thomases for possible perjury. She answered "I don't recall" 184 times in Senate testimony.
The investigation into the Whitewater land deal and the tangled affairs of Madison was Starr's original mandate, inherited from former special prosecutor Robert Fiske in 1994. Starr testified that his plan when he went to Little Rock that August was to sort through allegations made by former Arkansas municipal judge David Hale and to seek indictments against the McDougals and others involved in fraudulent transactions.
Hale, who had pleaded guilty to a fraud charge, had publicly claimed he arranged a fraudulent $300,000 federally backed Small Business Administration loan in the name of Susan McDougal that was partly used to benefit Whitewater, an Ozarks land partnership in which the McDougals and the Clintons were partners.
By pursuing criminal charges against the McDougals, Starr's staff reasoned that it could eventually determine whether the Clintons were involved in questionable Whitewater or Madison matters. This straightforward course soon veered into other areas. Hubbell, who had worked with Hillary Clinton on Madison S&L legal matters as an attorney at the Rose Law Firm, pleaded guilty to embezzling from the firm during Starr's first year and agreed to cooperate, though he was of little help.
The McDougals were indicted along with Tucker for fraud in 1995. All three were convicted in 1996, opening the door for Starr's office to win cooperation in exchange for sentencing leniency. James McDougal, convicted of 18 counts, was the first to cooperate. He told prosecutors that Clinton lied when he testified in McDougal's trial that he had no knowledge of the fraudulent federally backed loan that was partially used to benefit the Whitewater venture. He said Clinton participated in a meeting to discuss the loan. McDougal also provided evidence that Clinton himself received a loan from Madison, which McDougal headed.
But McDougal's credibility was questionable. He was a manic-depressive with an eccentric personality and frequent changes of heart in his long relationship with the Clintons. Prosecutors knew they would have to back up his assertions with other testimony. McDougal died of a heart attack in his prison cell in March.
Tucker, who resigned from office after his indictment and was battling major health problems, was initially reluctant to cooperate. When he finally went before the grand jury early this year, he testified that he had little knowledge of Susan McDougal's small business loan, Starr said. Tucker also exonerated Clinton on a possible obstruction of justice question by testifying that the president never talked with him at the White House in October 1993 about a set of criminal referrals involving Whitewater that were then circulating at federal agencies.
Susan McDougal went to jail rather than comply with a federal judge's order that she testify, causing "literally years of delay and expense to the investigation," Starr said. She is currently facing criminal contempt charges brought by Starr.
Hubbell never gave prosecutors the help they had hoped for. Starr noted that after Hubbell left the Justice Department, the White House helped arrange a series of highly paid consulting jobs for him. "Most of the $555,000 was given to Mr. Hubbell for little or no work. This rush of generosity obviously gives rise to an inference that the money was essentially a gift. And if it was a gift, why was it given?," Starr said.
By late 1997, Starr said, the office considered whether it had enough evidence to justify a referral to Congress a month before the Lewinsky investigation even began. "We drafted a report," Starr said. "But we concluded that it would be inconsistent with the statutory standard."
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