The Electronic Telegraph Sunday 6 February 1994 World News
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IT HAS been the worst week of scandal for the Clintons since they moved into the White House, as allegations of unethical practice, conflict of interest and outright criminality rained down from all quarters. Ominously for the administration, a number of Democrats are now saying that televised congressional hearings may be inevitable.
Copies of cheques in the possession of The Sunday Telegraph reveal that the controversial Whitewater Development Corp, now under investigation by a special counsel, paid off personal bank loans contracted by Bill Clinton and Hillary Rodham (Mrs Clinton) in the 1980s. A leading Congressman has already described the transactions as suggesting questionable, and possibly criminal, behaviour.
One cheque, dated 11-7-85, is a payment of $7,322.42 to the Security Bank of Paragould, with Re Bill Clinton, and the loan number, in the bottom left hand corner. A second, dated 1-8-82, pays off a $6361.65 loan on behalf of Hillary Rodham.
The White House says that these cheques were reimbursing the Clintons for money they had already spent paying off Whitewater's corporate debts.
Whitewater was a land company the Clintons owned with an Arkansas wheeler-dealer, Jim McDougal, and his wife, Susan. Mr McDougal also owned a savings and loan institution, Madison Guaranty, that made a large number of loans to people in the inner circle of the Arkansas Democratic establishment, many of them never repaid.
When federal regulators recommended Madison should be closed for gross irregularities, Mr Clinton used his powers as state Governor to keep it open. Hillary Clinton received a $2,000-a-month retainer from the institution and represented Madison as the bank's lawyer before state regulators appointed by Mr Clinton in his role as Governor. Madison went bankrupt in 1989, costing taxpayers about $60 million.
The vice-chairman of the House Banking Committee, Representative Jim Leach, is concerned that Whitewater served as a "conduit of funds" to the Clintons.
"It appears that conflicts of interest were developed with the Governor, with novel techniques not only for contributing to a campaign but for rewarding the Governor through a real estate venture," he said. "The impropriety is extraordinary. Whether it goes beyond the kind of civil remedy to the criminal dimension is one of the great questions."
Those who have followed the scandal closely believe that the most immediate danger for the Clintons concerns a $300,000 loan granted to Susan McDougal by the Small Business Administration, a government agency that makes soft loans to minorities and the under-privileged. About $110,000 ended in the Whitewater account. The rest disappeared. No money was repaid. The man who authorised the loan was a Mr David Hale, now facing charges for conspiring to defraud the government.
He alleges that Mr Clinton and Mr McDougal cooked up the whole scheme together at a meeting in March 1986 and put pressure on him to make the loan. According to a report in the Washington Times, he claims that Mr Clinton told him to ensure that his name did not appear "anywhere in this, anywhere at all". He also claims to have documented proof for these charges, which he is holding back for his defence.
Jim Johnson, a former Arkansas Supreme Court Justice who is familiar with the documents in the case, said Mr Hale's allegation was devastating. "Bill Clinton conspired to defraud the government of the United States. He stretched the rules and he committed a felony," said the judge.
"I look for Clinton to resign. I don't think he would dare go through the impeachment process because it would destroy the Democratic Party."
In its next edition, due out on Wednesday, the American Spectator magazine has a long article on the money trail and devotes three pages to listing names, alleged felonies and potential jail sentences.
Only half in jest, the magazine's lawyers speculate that Mr Clinton may have violated 12 criminal statutes, with a cumulative penalty of 178 years in prison. The First Lady gets off more lightly. They would have her locked up for just 47 years.
Investigative reporters, gathered in ever greater numbers at the Capital Hotel in Little Rock, joke that all the key documents will have vanished before the federal authorities can put together a case. The records of a 1984 Clinton fund-raiser are already missing from the Pulaski County Clerk's office. The other set of copies is missing from the Arkansas secretary of state's office. The microfilm back-up of Clinton's campaign records has been, literally, oxidised.
"All that stuff was kept in a boiler room to generate steam heat," the records officer told the New Yorker magazine. "They had all that stuff back there in the catacombs. Bingo! It was ruined."
So eyebrows were raised when the 14th floor of the Worthen Tower in Little Rock caught fire 12 days ago, gutting the outer office of the accounting firm KPMG Peat Marwick. Peat Marwick did the 1986 audit of Madison Guaranty, the "piggy bank" at the centre of the scandal.
No documents were destroyed, but the fire department found it strange that the security personnel at the Worthen Tower waited for 25 minutes before calling.
When I tried to investigate, I was telephoned by an irate Curt Bradley, chairman of the Worthen Bank, the biggest bank in Arkansas which played an important role in financing Mr Clinton's presidential campaign. "Have you no shame?" he said. "You've got a twisted mind."
The atmosphere is increasingly tense in Little Rock. Sources prefer not to discuss delicate matters on the telephone. One lawyer dedicated to the downfall of Mr Clinton told me he had installed a state-of-the-art device on his phone. A red light flashes when the line is bugged.
The wildest rumours centre on the death in September of the former chief of security at the Clinton Campaign headquarters in Little Rock, Jerry Parks. He was gunned down at an intersection. It was not a random "drive-by" shooting. The gunman made sure Parks was dead, pumping a few extra bullets into him at short range. Police say they have no explanation for the crime.
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