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An Inquiry Swells From the Banks of Arkansas' White River

By David Maraniss
Washington Post Staff Writer
Wednesday, May 29, 1996; Page A06

The riddle of the Whitewater investigation is that virtually every important event related to it prompts the same seemingly odd question: What does this have to do with Whitewater? That became the central question again yesterday after a federal jury in Little Rock convicted James B. and Susan McDougal and Arkansas Gov. Jim Guy Tucker on fraud and conspiracy charges brought by the Whitewater special counsel's office.

In its original definition, Whitewater was only a real estate partnership along the White River in north-central Arkansas that the McDougals held with Bill and Hillary Clinton from 1978 to 1992. What appeared most interesting about the land partnership when it first entered the national consciousness during the last presidential campaign were the relationships of the key figures.

Bill Clinton was the governor of Arkansas for all but two of those years. Jim McDougal embarked on an ultimately reckless career as a savings and loan executive whose operations were regulated by the state. And Hillary Clinton briefly represented McDougal and his thrift as a lawyer with the Rose Law Firm, which later represented federal regulatory agencies seeking to recover money lost by failing S&L ventures, including some related to McDougal.

But in the four years since Whitewater first entered the political vernacular, its meaning has become at once more amorphous and encompassing. Whitewater now means everything from the original real estate investment, to the side dealings of McDougal and his savings and loan with various Arkansas politicians and businessmen, to the responses of the Clinton White House to federal inquiries into McDougal's thrift – even to such unrelated events as the first lady's role in the firing of White House travel office clerks.

Two main threads run through most of those events: money and politics. And it is money and politics that connect the convictions of the McDougals and Tucker to the larger Whitewater saga. The prosecution set out to prove that the McDougals and Tucker used McDougal's savings and loan and a small business loan company owned by David Hale, another Democratic Party loyalist, as political piggy banks, drawing up a series of phony loans to fund their various business ventures.

Some of the money from one of the illegal loans found its way into the Whitewater partnership account. One of the prosecution witnesses, Little Rock businessman Hale, charged that Clinton, as governor, had urged him to make that loan – an accusation that Clinton repeatedly denied, including once under oath in videotaped testimony shown at the trial. Hale had pleaded guilty to charges stemming from the criminal investigation before the trial of the McDougals and Tucker began.

The investigative trail leading to yesterday's convictions began long before Whitewater special counsel Kenneth W. Starr arrived on the scene in the summer of 1994. Two years earlier, during the campaign in the fall of 1992, some elements of the case against the McDougals and Tucker were included in criminal referrals sent to the Resolution Trust Corp.'s main headquarters in Washington by its regional investigators, who had begun a probe after the initial press account of McDougal and Whitewater, New York Times reporter Jeff Gerth's article in March 1992. The information in the criminal referrals became part of the documentary record compiled later by Starr and his predecessor as special counsel, Robert B. Fiske Jr.

Under Starr, there have been several lesser indictments and plea bargains stemming from the Whitewater investigation, but the indictments of Tucker and the McDougals in August 1995 took the probe into a new stage: The investigation was moving up the political ladder with the indictment of a sitting governor, and closer to the Clintons with the indictment of their former partners.

Starr and his assistants were careful to say that the case against the McDougals and Tucker did not imply wrongdoing on the part of the president. They minimized the importance of Hale's testimony regarding Clinton, arguing that their successful case was built more on documents than on testimony by a questionable witness.

But the verdicts yesterday evoke once again the other question that has haunted the Whitewater investigation from the start: Will the trail of trials ever lead to the White House?

Copyright 1997 The Washington Post Company

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