The framers were realists about human nature. Men are not angels, as James Madison wrote - that's why our constitutional structure is permeated with checks and balances. Although these checks and balances sometime make it difficult for the government to move forward expeditiously, they also circumvent abuses of power by officials who, as Madison and his colleagues knew, may not be angelic.
But - and this is important - the framers believed that people are not invariably scoundrels, either. They knew that a democratic government demands a degree of civic virtue. It demands this virtue on the part of elected officials and on the part of the citizens who choose the officials. Civic virtue must transcend party (or, as the framers would phrase it, "factions") and the vagaries of opinion and interest that inure to democratic governance. If people lack "sufficient virtue... for self-government," Madison wrote, then "nothing less than the chains of despotism can restrain them from destroying and devouring one another."
What did Madison and his colleagues mean by civic virtue? They meant that individuals, as they pursued their self-interested goals, would feel a commitment to justice, to civility, and, above all, to truthfulness. Without those traits, the individual cannot be a true citizen. And without virtuous citizens, the framers believed, self-government will ultimately self-destruct. In the 1990s as in the 1790s, civic virtue is an essential canopy over our public square....
This brings me to my topic for today: "Whitewater - A Perspective From Little Rock and Washington." The conventional wisdom is that Whitewater is unfathomably, eye-glazingly complicated. As Tony Snow of the Detroit News puts it, "Whitewater, with all its complexity, makes even the most devoted news hound woozy."
The details of the various matters that have been labeled "Whitewater" do have some Byzantine twists and turns. At heart, though, it's not difficult. I propose to offer a brief summary, one that I hope won't make anyone woozy.
The story has its roots during the 1992 primary season, when a New York Times report raised questions about Whitewater Development Corporation, a real estate partnership between then-Governor and Mrs. Clinton and James and Susan McDougal. The presidential campaign commissioned a report by James Lyons, a Denver attorney, which found no wrongdoing by any party to the Whitewater investment and concluded that the Clintons had, in fact, lost money on the deal. Whitewater, as a public issue, essentially disappeared for more than a year and a half. Then, in December 1993, published reports stated that Whitewater files had been removed from the White House office of Vincent W. Foster Jr. shortly after his death in July of that year.
With public interest renewed in Whitewater, the president in early 1994 asked the attorney general to appoint an independent counsel. She selected Robert Fiske. Later, I was appointed to the position when the independent counsel statute was reauthorized by Congress.
As Bob Fiske and I discovered, Whitewater is about several related things. It is, at its origins, about lying - false statements and fraud - that contributed to the demise of a federally-insured savings and loan in Little Rock, Madison Guaranty, co-owned by James and Susan McDougal. It is about lying and fraud to secure loans for wealthy and influential people from another financial institution chartered by the Small Business Administration to aid economically- and socially-disadvantaged small businesses.
Let me be more specific. Whitewater is about, among others, Susan McDougal, co-owner of Madison Guaranty and one of four partners in Whitewater Development. At trial the evidence established that using false and fraudulent information, Susan McDougal borrowed $300,000 from a federal program designed to benefit disadvantaged small businesses. The loan, ostensibly, was to finance her advertising business. She walked into the loan office, signed a few papers, and took home $300,000. According to her attorney, she said when she was handed the check, "Gee, this is fun. Can I come back tomorrow?"
That $300,000 went in a lot of directions. According to Mike Patkus, the FBI agent who carefully followed the paper trail, some of it went to pay Susan McDougal's clothing bills. Some went to renovate her house. Some went to pay her tennis club dues. Some was used to further her brother's political campaign. Some ended up on the account of Whitewater Development, and the balance went to other personal debts. Not one penny of the $300,000 aided a disadvantaged small business; and, not one penny was repaid.
This case - involving fraud and false statements - was tried before twelve men and women from the Eastern District of Arkansas. That Little Rock jury convicted Susan McDougal, along with her ex-husband. She was convicted on four felony counts, by her peers from Arkansas who sat through a three-month trial. The judge - Judge George Howard Jr. - imposed a two-year prison sentence. Since the trial, Ms. McDougal has refused to testify before a grand jury in Little Rock seeking to get to the bottom of Whitewater. She is now incarcerated for contempt of court.
That is part of the story. Whitewater is also about lawyers, judges, politicians and business people who, like Susan McDougal, borrowed money through lies and deceit for one purpose and used it for another. These are not people who, in a phrase used by the defense at the McDougal trial, just fell off the watermelon truck. They are well-educated and prominent.
Whitewater is about, among others, Webster Hubbell, the former chief justice of the Arkansas Supreme Court, mayor of Little Rock, and then associate attorney general of the United States. Judge Hubbell is serving 21 months in prison for having engaged in a fraudulent billing scheme involving hundreds of thousands of dollars from clients of the Rose Law Firm in Little Rock. He lied, consistently and systematically, over a long period of time, in order to enhance his income.
Whitewater is about, among others, Chris Wade, the Whitewater real estate agent who admitted hiding assets in a bankruptcy court proceeding and pleaded guilty to two counts of fraud. Whitewater is about David Hale, a lawyer and former judge who, to his credit, has confessed to his past lies, pleaded guilty to serious felonies, for which he received 28 months in prison, and cooperated with the investigation. Whitewater is about Jim Guy Tucker, the governor of Arkansas who resigned after his conviction by a jury of Arkansans on felony counts of conspiracy and fraud.
But Whitewater is not solely about events and crimes in Little Rock. It is also about questions - and I stress that they are only questions, which we are very far along in examining - about the integrity of the official processes of government in Washington. It is about whether participants in Washington later deceived federal investigators trying to reconstruct those processes of government. It is about the White House Travel Office and the subsequent investigations into the firings of those seven individuals, including, most prominently, Billy Dale. It is about contact between the Treasury Department and the White House concerning law-enforcement matters affecting Madison Guaranty in Little Rock and the subsequent investigations into those contacts. It is, in short, about public trust.
And who is it investigating Whitewater? First, a brief historical note. Most independent counsels (or special prosecutors) have come from the party out of power. The whole independent counsel mechanism is designed to alleviate perceived or actual conflicts of interest which might inhibit a very small category of criminal investigations, primarily those involving high-level federal officials. That is our tradition - go outside the Justice Department and the U.S. Attorney's offices for that small category of investigations.
Why is it thought wise and prudent to transfer these investigations outside the usual Justice Department channels? As Watergate Special Prosecutor Archibald Cox once explained, "The pressures, the divided loyalty are too much for any man, and as honorable and conscientious as any individual might be, the public could never feel entirely easy about the vigor and thoroughness with which the investigation was pursued. Some outside person is essential." In short, if the subject of the investigation is the president or persons close to him, you seek an outsider not interested in currying favor with those in high office.
Choosing that outside person from the other political party has traditionally been seen as a way of further reducing even the appearance of possible favoritism, or turning a blind eye to possible wrongdoing. This safeguard has not been applied in every instance - the Iran-Contra independent counsel was a Republican - but it has been applied in most cases. The paradigm example, Prof. Cox, was a lifelong Democrat who had held positions in three administrations, including the post I was later fortunate to hold, solicitor general. In 1960 he had taken a leave from Harvard Law School to work full-time on John F. Kennedy's presidential campaign against Richard Nixon. In 1974, when Prof. Cox was named to investigate the Nixon administration as special prosecutor, one newspaper praised him as "an excellent choice" because he was - note the order - "a Democrat, former top government lawyer and Harvard law professor."
When I was first appointed independent counsel in August 1994, much of the commentary was reasonably favorable. Over the months that followed, as the indictments and convictions have mounted, there have been increasing accusations of a partisan agenda. As history teaches us - and as the lawyers on my staff who have investigated and prosecuted official malfeasance will tell you - attacks and accusations are routine in public integrity cases. As to this investigation, the charge is utterly wrong.
Of course, every law enforcement investigation must hold itself to the highest professional and ethical standards, especially an investigation into possible public corruption or violation of the public trust. Ralph Waldo Emerson once remarked of someone, "The louder he talked of his honor, the faster we counted the spoons." So I'm not going to do that. Instead, I want to make three points about this investigation.
First, I am enormously aided by a superb, highly professional team. I have recruited highly experienced lawyers, mostly from the top ranks of the Justice Department and U.S. Attorney's offices. We have also called on skilled investigators from the FBI and the IRS. They are, in every sense of the word, professionals. They are battle-tested public servants who are following the standards of their professions as they set about unearthing the facts and analyzing the law. These are not partisans. They are not spin doctors. They are professionals in a system built on law, not on politics.
Second, every major decision in our office entails careful, collegial deliberation. We meet and hash out each significant prosecutorial question, including each possible indictment. The individual attorneys have their respective areas of primary responsibility, but everyone participates actively in these deliberative discussions. We operate, to an extraordinary degree, on broadly shared professional judgments.
Finally, I want to stress that we are conducting a law enforcement investigation. Our principal function is to determine whether prosecutable crimes have been committed. We must leave to others - to congressional investigators, journalists and, ultimately, citizens - the task of making judgments about those Whitewater allegations that do not result in actions called for by the independent counsel statute.
I earnestly wish I could give you a final report on our investigation today. As much as I enjoy life in Little Rock, I would rather be home with my wife of 26 years and our three children. But we are not yet at that stage. I can tell you that we are making very substantial progress on all fronts, with active grand jury inquiries under way in Washington and Little Rock.
The investigation is at a critical juncture now, and we are proceeding as expeditiously as possible. We will continue to do so in the interests of justice and fairness to all concerned - not only to the subjects of the investigation but ultimately to the American people.