August 09, 1995|By Susan Baer | Susan Baer,Washington Bureau of The Sun
WASHINGTON -- Amid extraordinarily bitter and raucous proceedings, the federal investigator who examined the failed Arkansas savings and loan with ties to President Clinton told a House committee yesterday that there was a "concerted effort to obstruct, hamper and manipulate" her probe by top government officials.
Testifying at the Banking and Financial Services Committee's Whitewater hearings, Jean Lewis, a criminal investigator with the Kansas City office of the Resolution Trust Corp., said she uncovered "rampant bank fraud" when she examined Madison Guaranty Savings and Loan.
The thrift, which cost taxpayers $60 million when it failed in 1989, was owned by James B. McDougal, Mr. Clinton's business partner in the Whitewater land deal.
Ms. Lewis, the GOP's star witness, said she concluded that about $88,000 in depositor funds from Madison were illegally pumped into the failing Whitewater deal and $12,000 into then-Governor Clinton's campaign fund, contributing to the collapse of the savings and loan.
And she alleged that her report of potential criminal conduct at Madison -- which named the Clintons as possible witnesses to or beneficiaries of the abuses -- was thwarted by Treasury and Justice Department officials, a U.S. attorney's office and RTC colleagues.
During hearings that at times included shouting and finger-pointing, Democrats countered that, although Ms. Lewis provided ample evidence of fraud at Madison, she provided no evidence that the Clintons were aware of such activities.
Democrats also charged that the committee's proceedings were unfair since the numerous officials accused of wrongdoing by Ms. Lewis were not invited to testify and defend themselves against her allegations.
"The notion that you can have the accusers and not those who can respond is absolutely McCarthyite," railed Rep. Barney Frank of Massachusetts. "The unfairness of this is shocking -- absolutely shocking."
An angry Rep. Luis Gutierrez of Illinois, wielding Ms. Lewis' 15-page prepared statement, said the witness "implicates almost everyone she has worked with in some sort of conspiracy. . . . It's a shame -- accusation and innuendo and speculation and none (( of these people here, Mr. Chairman, to answer the charges and to give the complete story to the American people."
Committee Chairman Jim Leach, an Iowa Republican, said he would allow witnesses who felt they had been "defamed" to appear before the panel at a later date.
In a lengthy statement, Ms. Lewis described how the criminal referral she submitted to the U.S. attorney's office in Little Rock and the FBI in 1992 was routed through the Justice Department, during the Bush administration, and then back to the U.S. attorney's office where it was rejected in October 1993.
She said a later set of criminal referrals -- which included evidence of seemingly illegal contributions from Madison to Mr. Clinton's gubernatorial campaign -- was "obstructed" by RTC officials who allegedly subjected it to an unprecedented legal review.
What's more, she testified, she was visited in February 1994 by April Breslaw, a Washington RTC investigator, who told her that "the people at the top would like to be able to say Whitewater did not cause a loss to Madison."
Ms. Lewis said she inadvertently tape-recorded the conversation with Ms. Breslaw. The tape was not played at the hearing; however, panel members will be permitted to listen to it today.
Ms. Breslaw told the committee at last year's hearings that she had "no recollection of saying that anyone hoped for a particular outcome."
Whitewater independent counsel Kenneth W. Starr is investigating the charges enumerated in Ms. Lewis' referral and has brought charges against a dozen people.
Under harsh questioning from Democrats, Ms. Lewis said she had no solid evidence that the Clintons were aware of illegal check-kiting schemes at Madison or that Madison funds were being illegally diverted to Whitewater and the Clinton gubernatorial campaign.
But she said it was her "common sense" view that they should have known where the money was coming from. And she said she listed the Bill Clinton Political Committee Fund as a "suspect" in the criminal referral because the fund was the recipient of funds she maintained were illegally funneled from Madison.
"Every member of this committee would stand accused under those circumstances," said Democratic Rep. Maxine Waters of California, noting that politicians often don't know the sources of campaign funds.
Democrats tried to portray Ms. Lewis and two other RTC investigators who testified yesterday as "obsessed" with the Madison case.
They introduced a letter in which a former Republican U.S. attorney, Charles A. Banks, told an FBI field office that his evaluation of the original RTC referral "indicates that there is not a prosecutable case capable of being proved beyond a reasonable doubt against any of the witnesses."
