New allegations in land deal cloud Clinton successes

December 21, 1993|By Susan Baer | Susan Baer,Washington Bureau

WASHINGTON -- With his approval ratings on the rise, a sack full of legislative successes and an economy that's steadily brightening, Bill Clinton should be coasting to the end of his first year as president in high spirits.

But nagging hints of financial and sexual scandal, the kind that percolated during the presidential campaign, have bubbled to the surface once again and threaten to dim the year-end glow at the White House.

New revelations have come to light involving a 1978 land deal between the Clintons and James McDougal, the president of a failed Arkansas savings and loan, and his wife, Susan.

The thrift, Madison Guaranty Savings & Loan, which was taken over by the federal government in 1989 at a cost to taxpayers of $60 million, is the subject of a Justice Department probe.

The investigation is said to include examination of whether depositor funds at Madison were improperly used to benefit then-Governor Clinton's 1984 re-election campaign.

Federal investigators are now trying to locate documents related to the Clintons' ties with the McDougals that are reported to have been in the office of deputy White House counsel Vince Foster just before his suicide in July, and removed just after the aide's death.

Mr. Foster handled the sale of the Clintons' interest in the land deal, known as Whitewater Development Corp., and filed the corporation's tax returns.

The file was not turned over to the U.S. Park Police officers who investigated the circumstances of Mr. Foster's death, nor was it listed on an inventory of papers and items found in Mr. Foster's office.

Mark Gearan, the White House communications director, acknowledged yesterday in a written statement that Mr. Foster's files pertaining to the land deal and other aspects of the Clintons' personal legal affairs were sent to the Clintons' personal attorney, David E. Kendall.

The White House spokesman also confirmed yesterday that Mr. Foster's personal files had been turned over to his attorney, James Hamilton. Those files reportedly included a diary that was removed shortly after his death by White House counsel Bernard Nussbaum.

Maj. Robert H. Hines of the U.S. Park Police said yesterday that officers investigating the suicide had read the diary and determined that there was nothing in it that shed any light on Mr. Foster's actions.

But Mr. Hines said he didn't know if the diary mentioned Whitewater or the McDougals since police were unaware at the time of its relevance.

When Mr. Clinton's ties to the S&L owner emerged during last year's presidential campaign, the candidate said he probably should have gotten out of the real estate partnership once he was elected governor but hadn't felt an ethical need to, since he lost money on the deal.

The Clintons' 1992 federal tax returns show they reported a $1,000 capital gain, rather than a loss, when they sold their share of Whitewater to Mr. McDougal last year.

Asked in a weekend TV interview about the apparent discrepancy, White House chief of staff Thomas F. "Mack" McLarty 3rd repeatedly dismissed it as "old news.

A White House official, who spoke on condition of anonymity, said yesterday that the Clintons were probably "erring on the side of caution to not report it as a loss."

Adding to the mystery and suspicion surrounding the Clinton-McDougal association was the assertion by an Arkansas businessman, who told the Washington Post that he never made a contribution to Mr. Clinton's 1984 campaign -- even though his name is on a $3,000 cashier's check to the campaign.

The check, collected at a fund raiser held by Mr. McDougal, is part of the Justice Department's investigation launched this fall at the urging of the Resolution Trust Corp., which oversees failed thrifts.

Another inquiry by the House Banking Committee lost some of its steam last week when its chairman, Rep. Henry B. Gonzalez, D-Texas, backed out of the Republican members' request for full congressional committee investigation of Madison.

While Republican Rep. Jim Leach of Iowa outlined in a letter to Mr. Gonzalez nearly a dozen possible improprieties meriting scrutiny -- including the continued use of Madison "as a private piggy bank despite its insolvent condition" -- the chairman said he would not engage in a "political fishing expedition."

In another controversial campaign subject still haunting Mr. Clinton, two Arkansas police officers in Mr. Clinton's former security detail told the conservative American Spectator magazine, as well as CNN last weekend, that they helped arrange extramarital affairs for the then-governor.

In the media interviews arranged by the troopers' attorney, Cliff Jackson, a well-known critic of the president, the officers say another trooper was offered a federal job in exchange for his silence.

White House officials called the allegations "ridiculous," saying similar charges had been made and answered during the presidential campaign.

But Dee Dee Myers, the White House spokeswoman, confirmed yesterday that as whispers about extramarital affairs started resurfacing in recent months, Mr. Clinton telephoned some state troopers who were members of the gubernatorial security team "to find out what was going on . . . but nothing improper or inappropriate happened."

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