Whitewater scandal
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The Whitewater scandal was an American political scandal which developed in Bill Clinton's first term as president, after the death of deputy White House counsel Vincent Foster. After Foster's death it was learned that chief White House counsel Bernard Nussbaum had removed documents concerning the Whitewater Development Corporation from Foster's office. President Clinton and his wife had invested in this corporation; the Clintons were accused of fraud in connection with this investment during the U.S. Securities and Exchange Commission's investigation of the failure due to insolvency of Madison Guaranty, an Arkansas trust company.
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Preface to Whitewater
In 1978, Bill and Hillary Rodham Clinton created a business named Whitewater Development Corporation with friends and Little Rock, Arkansas residents James McDougal and his wife, Susan McDougal. As real estate values began a steep decline, their investment of over $200,000 and hopes of lucrative vacation property had deteriorated and the venture failed.
Seven years later, in 1985, Jim McDougal set his sights on investment into local residential construction, labeling the project "Castle Grande". With the sale cost floating around $1.75 million for the 1,000 acres (4 km²) he intended to purchase, McDougal was presented with a financial burden outside of his own means. Borrowing from his own Savings and loan, Madison Guaranty, he could only take a maximum of $600,000 to be compliant with the corresponding law.
McDougal subsequently involved several others to produce the additional funds, including Seth Ward, an employee of the bank who helped funnel the additional $1.15 million required. To avoid potential investigations, the money was moved back and forth amongst several other investors and intermediaries each with a different reason.
However, in 1986, their scheme was unveiled by federal regulators who realized that all the necessary funds for this real estate venture had come entirely from Madison. In July of that year, the McDougals were forced to resign; Seth Ward fell under investigation as well as the lawyer who helped him draft the agreement, Hillary Clinton.
The scandal
Relating to the Whitewater failure and the Clintons' legal involvement with Castle Grande, they were repeatedly questioned by reporters about the fiasco following Bill Clinton's bid for the presidency. Early in Clinton's presidency, one of his attorneys Vince Foster committed suicide (July 23, 1993). Documents regarding Clinton's personal information were then removed from Foster's office by three of Hillary Clinton's aides, reigniting an investigation.
At Clinton's request, a special prosecutor was appointed in 1994 by the Department of Justice to investigate the legality of Whitewater transactions. Two further accusations then surfaced: that Clinton had exerted pressure on a Little Rock, Arkansas businessman to make a loan that would benefit him and the owners of Madison Guaranty, and that an Arkansas bank had concealed transactions involving Clinton's gubernatorial campaign in 1990.
The Clintons were cleared of any wrongdoing in two reports subsequently prepared by the San Francisco law firm of Pillsbury Madison and Sutro for the Resolution Trust Corporation, which was overseeing the liquidation of Madison Guaranty.
When the Whitewater scandal first surfaced, Attorney General Janet Reno appointed a special prosecutor to investigate the matter. The prosecutor, Robert B. Fiske (a Republican and former United States Attorney) was subsequently replaced by independent counsel Kenneth Starr when the investigation was transferred to the jurisidiction of the Office of the Independent Counsel. Independent counsels are appointed by a panel of federal judges, to avoid a potential conflict of interest by the Attorney General (a Presidential political appointee).
On January 26, 1996 Hillary Clinton testified before a grand jury concerning her investments in Whitewater.
Over the course of the investigation, fifteen individuals -- including Clinton friends James McDougal and Susan McDougal, White House counsel Webster Hubbel and Arkansas Governor Jim Guy Tucker -- were convicted of federal charges. Four of these were pardoned by Clinton in the final hours of his presidency (see List of people pardoned by Bill Clinton).
Additional scandals
In 1994 Paula Jones had filed a sexual harassment lawsuit against Clinton which was unrelated to the Whitewater investigation. Clinton testified in this lawsuit in 1998 and stated in his testimony that he had not had an affair with an intern named Monica Lewinsky.
Unknown to either Lewinsky or Clinton, a former White House staffer Linda Tripp had recorded Lewinsky talking about her relations with Clinton. Tripp turned these tapes over to the Whitewater investigators who sought and received an expansion of the scope of the investigation to cover the President's Paula Jones testimony.
Starr Report
In 1998, the independent counsel Kenneth Starr sent a report to Congress in which he charged Clinton with perjury, obstruction of justice, witness tampering, and abuse of authority in the Paula Jones lawsuit. The report contained details, sometimes explicit, of Clinton's liaisons with Lewinsky. Detractors of the independent counsel criticized Starr for expanding the investigation beyond its initial scope and for the graphic nature of the report.
Clinton was impeached by the House of Representatives in December 1998, on charges of perjury and obstruction of justice, and tried by the Senate in January 1999. Clinton was acquitted by the Senate on both counts.
Clinton's supporters claimed that the charges made against Clinton did not rise to the severity required for the impeachment and removal of a sitting President since they had nothing to do with his official duties. They viewed the wide-ranging investigation as a "witch-hunt" based on the President's personal life. Clinton's detractors argued that the President was effectively the chief law enforcement officer and that false testimony in a court of law was grounds for removal. The heated clashes between Clinton supporters and detractors continued in the media throughout the investigation and impeachment and came to dominate the headlines during the period.
Republicans suffered a substantial political backlash in the wake of the investigations and impeachment. Clinton served his last two years in office without any further attacks of a serious legal nature but continued to be criticized by his detractors for the scandals. Clinton's job approval rating remained high throughout his term even though his personal approval ratings slipped.
In April 1999 Judge Susan Webber Wright found Clinton in civil contempt of court for misleading testimony in the Jones case but did not press for any criminal charge. Wright referred her ruling to the Arkansas Supreme Court. Rather than undergo a review by the Arkansas Supreme Court, Clinton voluntarily surrendered his Arkansas law license.
Ray Report
Kenneth Starr's successor, Robert Ray, released a report in September of 2000 that stated "This office determined that the evidence was insufficient to prove to a jury beyond a reasonable doubt that either President or Mrs. Clinton knowingly participated in any criminal conduct." Ray's report effectively ended the Whitewater investigation.
References
- Clinton, Bill (2005). My Life. Vintage. ISBN 140003003X.fr:Scandale Whitewater
