Whitewater (controversy)

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The Whitewater controversy (also called the Whitewater scandal or simply Whitewater and sometimes colloquially Whitewatergate) was an American political controversy concerning the real estate dealings of Bill and Hillary Clinton and their associates, James and Susan McDougal in the Whitewater Development Corporation, a failed business venture in the 1970s and 1980s.

A New York Times article published during the 1992 U.S. presidential campaign reported that Clinton and his wife had invested in and lost money in the Whitewater development project.[1] A U.S. Securities and Exchange Commission investigation resulted in criminal charges against the two principals in the Whitewater project, but the Clintons themselves were never charged. Three separate inquiries found that there was insufficient evidence to charge the Clintons with criminal conduct.[2]

1 Background
2 Ray Report
3 See also
4 References
5 External links

[edit] Background

During Bill Clinton's first bid for the presidency, reporters from the New York Times asked him about the failure of the Whitewater development. After they published an article in March 1992 that was critical of the real estate dealings, Vince Foster, White House deputy counsel, who had been a former law partner of Hillary Clinton at the Rose Law Firm in Arkansas, completed and submitted several years' worth of delinquent tax returns for the project.

Upon taking office, Joseph E. Schmitz hired L. Jean Lewis, a Republican operative and whistleblower in the Whitewater.^[1] In September 1992, Lewis, a former Resolution Trust Corporation investigator, was a pivotal figure in publicizing the alleged financial misdeeds of President Bill Clinton and wife Senator Hillary Rodham Clinton. She marketed products with pictures of Mrs. Clinton and the logo "B.I.T.C.H.: Bill, I'm Taking Charge. Hillary." Schmitz eventually created the position of "Chief of Staff" for Lewis.

On July 20, 1993, at Fort Marcy Park in Virginia, Vince Foster was found dead from a bullet wound. His death was ruled a suicide by multiple investigations by the United States Park Police, the United States Congress, and Independent Counsels Robert B. Fiske and Kenneth Starr. After Foster's death, chief White House counsel Bernard Nussbaum removed documents concerning the Whitewater Development Corporation from Foster's office and gave them to Margaret Williams, who placed them in a safe in the White House. [3]

Because of the allegations made in the New York Times article, the Justice Department opened an investigation into the failed Whitewater deal. At Clinton's request, Attorney General Janet Reno appointed a special prosecutor Robert B. Fiske in 1994 to investigate the legality of the Whitewater transactions. Two allegations surfaced: 1) that Clinton had exerted pressure on an Arkansas businessman to make a loan that would benefit him and the owners of Madison Guaranty; and 2) that an Arkansas bank had concealed transactions involving Clinton's gubernatorial campaign in 1990.

In August 1994, Kenneth Starr was appointed by a three-judge panel to continue the Whitewater investigation, replacing Robert B. Fiske, who had been specially appointed by the Attorney General prior to the re-enactment of the Independent Counsel law. Fiske was replaced due to an apparent conflict of interest, having been chosen and appointed by Janet Reno, Clinton's Attorney General. In February 1997, Starr announced he would leave the investigation to pursue a position at Pepperdine University's law school. However, he "flip flopped" in the face of "intense criticism."[4]

The Clintons were purportedly cleared of all wrongdoing in two reports 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.

On January 26, 1996, Hillary Clinton testified before a grand jury concerning her investments in Whitewater. She noted they "never borrowed any money from the bank, nor had they caused anyone to borrow money on their behalf." Over the course of the investigation, fifteen individuals — including Clinton friends Jim McDougal and Susan McDougal, White House counsel Webster Hubbell and Arkansas Governor Jim Guy Tucker — were convicted of federal charges unrelated to Whitewater. Clinton pardoned four of them in the final hours of his presidency (see list of people pardoned by Bill Clinton).

There were also significant critics of the Starr report on the Whitewater matter, especially the death of White House aide Vincent Foster. Christopher Ruddy, a reporter for Richard Scaife's Pittsburgh Tribune-Review chronicled what he claimed was Starr's bungled handling of the case.^[2]

[edit] Ray Report

Kenneth Starr's successor, Robert Ray, released a report in September 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."[5] Ray nonetheless criticized the White House in a statement regarding the release of the report, saying delays in the production of evidence and "unmeritorious litigation" by the president's lawyers severely impeded the investigation's progress. Ray's report effectively ended the Whitewater investigation, with a total cost to American taxpayers of nearly $60 million.[6]