The ironies of history sometimes are excruciating. In the winter of 1974. Hillary Rodham and Bernie Nussbaum were both lawyers on the staff of the House Judiciary Committee’s inquiry into the impeachment of Richard Nixon. Although only the Clintons’ spiteful enemies equate Whitewater with Watergate, some of the parallels are obvious-and the questions about Hillary’s role are numerous. She has been accused of no crime. But she is a recurrent thread in the weave of deals, political friendships and business associations being examined by Whitewater special counsel Robert Fiske.
Four of the 10 officials subpoenaed to testify on their efforts to manage the Whitewater scandal are Hillary’s employees or allies: her chief of staff, Margaret Williams; her press secretary, Lisa Caputo; White House deputy chief of staff Harold Ickes, and Nussbaum. Fiske intends to re-examine the suicide of one of her closest confidants, Vincent Foster Jr., a White House deputy counsel who was working on the Clinton family finances when he died. Fiske is also looking at state business deals and legal work done in Arkansas by Associate Attorney General Webster Hubbell and associate White House counsel William Kennedy. Like Foster and Mrs. Clinton, both were partners at the respected Rose Law Firm in Little Rock, which is itself in turmoil-and fending off accusations that its clerks shredded documents relevant to Whitewater, including those belonging to Foster.
Since the beginning of her husband’s presidential campaign in 1991, Mrs. Clinton’s view was that her career and financial dealings were strictly private concerns. Throughout the campaign she refused to answer questions about them. Now, in Washington, her distrust of the press has become obsessive and politically risky. Her stonewalling has lent further credence to the speculation that the Clintons have something to hide. She had to be overruled by the president himself on the question of a special counsel. He made the decision on a transatlantic call while he was in Prague on Jan. 11.
Advisers say that no staffer wants to be the first to talk bluntly to Mrs. Clinton because of the “fear wall” around her, Friends say she can’t see-or won’t acknowledge-that her own actions contributed to the problem. “Where are our friends?” she lamented at a small dinner party recently. “Why isn’t anyone defending us?”
The reverse of voluntary disclosure is underway, as investigators and reporters sift through Hillary’s records for evidence of conflicts of interest in her law practice, misreported income on her tax returns or even funds funneled to her and her family by S&L owner James McDougal. “She’ll come out looking bad,” frets a White House aide. “The only question is how bad.”
The new controversies have left their mark, both on her personally and on the atmosphere at the White House. “For the first time, someone has questioned her skill as a professional,” says an administration official. “You can see the pain in her bearing. She’s lost a bit of her bounce.” As if to underscore the atmosphere of tension in the White House, late last week Hillary fired-with no notice-a seven-year veteran of the ushers’ staff because she reportedly felt “uncomfortable” with him. And her role in Whitewater is adding to White House friction between “Bill’s people” and “Hillary’s people.” There is growing resentment among her friends of what they call “the white boys” who constitute the president’s circle. “They’re not focused on spinning and protecting her,” complains one friend.
Even some of her admirers in Washington are searching for deeper causes for her secrecy. Hillary was exceedingly ambitious for herself and her husband, and was the main family breadwinner for years. Reared in a thrifty home, married to a spouse with a casual attitude about money, she developed a perhaps excessive concern for her family’s finances. In the ’80s, during the shakiest times in their marriage, her concern for financial security may have been even more urgent. The question now is whether any of those pressures led her to cross ethical lines in various legal and business deals-and whether she used her husband’s role as governor of Arkansas to help her do so.
Friends say that it was Bill’s idea to invest in Whitewater, the project of McDougal, a longtime Clinton political ally. But it was left to Hillary to help keep the project afloat. A $30,000 loan to build a model home on the site was taken out in her name in 1981.
Starting in the mid-’80s, Mrs. Clinton became involved in the gamy world of banking and S&L law. One former lawyer at Rose says Hillary was determined to earn her share of that booming business, despite the risk of being involved directly with contributors to and supporters of her husband. “It was where the action was, and she wanted part of it,” said the lawyer. Foster and Hubbell, with whom she had worked closely, oversaw much of that business-representing banks and S&Ls, and later representing the government in liquidating the same type of institutions.
The Clinton campaign denied it in 1992, but Hillary was involved in McDougal’s effort to win state permission in 1985 for a new financing plan for his thrift and a scheme to set up a brokerage house. Though the “vast majority” of the work was handled by another lawyer, White House aide Bruce Lindsey told NEWSWEEK, her name appeared on two Rose documents related to McDougal.
The problems for Mrs. Clinton are these: she was a business partner of McDougal’s-not just his lawyer on a $2,000-a-month retainer. That in itself is a potential conflict, since she had a personal interest in keeping him solvent. More important, she was corresponding on the matter with a state banking regulator, Beverly Bassett Schaffer, who had been appointed by Hillary’s husband. Investigators also want to know if McDougal funneled bank money to Whitewater Development, of which Mrs. Clinton was part owner.
Two years later, Mrs. Clinton became involved in another thrift case that is now under scrutiny. She signed at least one document in a case the government was pursuing on behalf of a failed thrift in Illinois, which had invested money with a Little Rock bond brokerage. The brokerage had been owned by Dan Lasater, the “bond daddy” and friend of her husband who had won major state contracts. The suit, originally brought by private parties and later taken over by the government, sought to recover $3 million in damages from Lasater’s firm. The Rose Law Firm settled the case for a mere $200,000. The lingering question is whether Hillary, and Rose, went easy on the Lasater firm because it was owned by her husband’s friend.
Meanwhile, Hillary’s contacts were beginning to bring in business-some of it resulting from her husband’s policies. In 1986, encouraged by Governor Clinton with state financial support, private charities established the Southern Development Corp., to make business loans to the poor. Mrs. Clinton was one of its original directors. A worthwhile project, but there was something else in it for the Rose Law Firm. George Surgeon, Southern Development’s principal founder and current president, told NEWSWEEK last week that Hillary and the firm had earned between $100,000 and $150,000 in legal fees representing the corporation over the years. When the corporation was founded, Surgeon says, the directors worried about the appearance of a conflict of interest but hired Rose anyway. Mrs. Clinton remained on the board until after the 1992 election.
Hillary’s attention to income paid off. By the time her husband decided to run for president, Hillary was earning a six-figure salary at Rose and some $60,000 a year in director’s fees, plus income from an aggressively managed mutual fund she had invested in starting in 1986. The Clintons’ net worth, financial-disclosure forms showed in 1992, was about $700,000.
No matter how much they’ve saved. it may not be enough. Under current law, according to experts in the field, the Clintons can bill the government for virtually none of the costs of their legal defense. And, unlike senators, they can’t easily create a “defense fund” that accepts contributions from friends. The legal fees will be enormous. Their defense team is being assembled by their lawyers at Williams & Connolly-where Hillary once interviewed for a job. Outside estimates put the likely cost of the firm’s work at a minimum of $2 million-not necessarily because of any wrongs the Clintons may have committed but because of the sheer scope of Fiske’s inquiry. By law, the firm’s work can’t be donated. Besides, as Hillary knows, good lawyers don’t work for free.
< b>UPWARD MOBILITY
Most Americans know Hillary Rodham Clinton as the new-style First Lady, juggling her roles as mother and White House hostess with her highly visible position as chairwoman of the president’s health-care-reform task force. But now the Whitewater affair is focusing new attention on her 20-year professional career. Among the highlights of her legal and financial dealings:
Moves to Washington and becomes a staff attorney for the House impeachment committee investigating Richard Nixon. (Her mentor, New York lawyer Bernard Nussbaum, later becomes Clinton’s White House counsel.)
Interviews with the prestigious Washington law firm of Williams & Connolly and impresses Edward Bennett Williams. But Hillary decides to move to Fayetteville, Ark., to be with Bill Clinton and teach law at the University of Arkansas. They many in 1975.
Moves to Little Rock after Bill is elected attorney general. The Rose Law Finn hires her at $40,000 a year, considerably higher than Bill’s salary. In 1979, she makes full partner.
The year her husband is elected governor, Hillary and Bill become equal partners with Jim and Susan McDougal in a $200,000 investment in the Whitewater Development Corp. (The amount the Clintons actually invest is in dispute.)
Takes a leave of absence to head her husband’s education reform initiative. She and law partners Vince Foster and Webster Hubbell contribute $15,000 each to create Mid-life investment fund; Hillary calls regularly to inquire about its performance.
According to McDougal, Clinton tells him the family needs cash, and asks Madison Guaranty to put Hillary on retainer. He does, at $2,000 a month. She later helps represent McDougal’s business interests before a state bank regulator appointed by her husband.
Joins Wal-Mart’s board, the first of several such corporate affiliations. Invests heavily in Value Partners, an “aggressive” fund favored by Little Rock’s wealthiest.
In a possible conflict of interest, Hillary helps represent the FSLIC in a case involving a failed Illinois thrift that had invested with Dan Lasater, a friend of Bill’s. Patsy Thomasson, who managed Lasater’s assets during the case, is now a top White House aide.
Joins the board of TCBY Enterprises, Inc., a yogurt franchise based in Little Rock and a Rose client. TCBY’s chairman was a heavy contributor to Clinton campaigns.
Joins the board of Lafarge Corp., a French-owned cement manufacturer controversial for its handling of toxic waste-disposal contracts. By now, Hillary is making more than $60,000 a year from corporate boards, besides $150,000 from Rose. Bill’s salary is $35,000 plus perks.
Objects to suggestions by campaign aides that she and Bill be required to pay personally for a Whitewater report. Throughout, she objects to detailed questions on her business career. After Clinton’s nomination is secure, she quits all corporate boards.
As health-care reformer, she accuses drug companies of greed. Apparently without her knowledge, Value Partners, her investment fund, is “shorting” pharmaceutical stocks. The Clintons announce they are putting their investments, worth nearly $500,000, in a blind trust.
title: “Hillary S Trouble” ShowToc: true date: “2022-12-20” author: “Bryan Byler”
The ironies of history sometimes are excruciating. In the winter of 1974. Hillary Rodham and Bernie Nussbaum were both lawyers on the staff of the House Judiciary Committee’s inquiry into the impeachment of Richard Nixon. Although only the Clintons’ spiteful enemies equate Whitewater with Watergate, some of the parallels are obvious-and the questions about Hillary’s role are numerous. She has been accused of no crime. But she is a recurrent thread in the weave of deals, political friendships and business associations being examined by Whitewater special counsel Robert Fiske.
Four of the 10 officials subpoenaed to testify on their efforts to manage the Whitewater scandal are Hillary’s employees or allies: her chief of staff, Margaret Williams; her press secretary, Lisa Caputo; White House deputy chief of staff Harold Ickes, and Nussbaum. Fiske intends to re-examine the suicide of one of her closest confidants, Vincent Foster Jr., a White House deputy counsel who was working on the Clinton family finances when he died. Fiske is also looking at state business deals and legal work done in Arkansas by Associate Attorney General Webster Hubbell and associate White House counsel William Kennedy. Like Foster and Mrs. Clinton, both were partners at the respected Rose Law Firm in Little Rock, which is itself in turmoil-and fending off accusations that its clerks shredded documents relevant to Whitewater, including those belonging to Foster.
Since the beginning of her husband’s presidential campaign in 1991, Mrs. Clinton’s view was that her career and financial dealings were strictly private concerns. Throughout the campaign she refused to answer questions about them. Now, in Washington, her distrust of the press has become obsessive and politically risky. Her stonewalling has lent further credence to the speculation that the Clintons have something to hide. She had to be overruled by the president himself on the question of a special counsel. He made the decision on a transatlantic call while he was in Prague on Jan. 11.
Advisers say that no staffer wants to be the first to talk bluntly to Mrs. Clinton because of the “fear wall” around her, Friends say she can’t see-or won’t acknowledge-that her own actions contributed to the problem. “Where are our friends?” she lamented at a small dinner party recently. “Why isn’t anyone defending us?”
The reverse of voluntary disclosure is underway, as investigators and reporters sift through Hillary’s records for evidence of conflicts of interest in her law practice, misreported income on her tax returns or even funds funneled to her and her family by S&L owner James McDougal. “She’ll come out looking bad,” frets a White House aide. “The only question is how bad.”
Atmosphere of tension: The new controversies have left their mark, both on her personally and on the atmosphere at the White House. “For the first time, someone has questioned her skill as a professional,” says an administration official. “You can see the pain in her bearing. She’s lost a bit of her bounce.” As if to underscore the atmosphere of tension in the White House, late last week Hillary fired-with no notice-a seven-year veteran of the ushers’ staff because she reportedly felt “uncomfortable” with him. And her role in Whitewater is adding to White House friction between “Bill’s people” and “Hillary’s people.” There is growing resentment among her friends of what they call “the white boys” who constitute the president’s circle. “They’re not focused on spinning and protecting her,” complains one friend.
Even some of her admirers in Washington are searching for deeper causes for her secrecy. Hillary was exceedingly ambitious for herself and her husband, and was the main family breadwinner for years. Reared in a thrifty home, married to a spouse with a casual attitude about money, she developed a perhaps excessive concern for her family’s finances. In the ’80s, during the shakiest times in their marriage, her concern for financial security may have been even more urgent. The question now is whether any of those pressures led her to cross ethical lines in various legal and business deals-and whether she used her husband’s role as governor of Arkansas to help her do so.
Friends say that it was Bill’s idea to invest in Whitewater, the project of McDougal, a longtime Clinton political ally. But it was left to Hillary to help keep the project afloat. A $30,000 loan to build a model home on the site was taken out in her name in 1981.
Starting in the mid-’80s, Mrs. Clinton became involved in the gamy world of banking and S&L law. One former lawyer at Rose says Hillary was determined to earn her share of that booming business, despite the risk of being involved directly with contributors to and supporters of her husband. “It was where the action was, and she wanted part of it,” said the lawyer. Foster and Hubbell, with whom she had worked closely, oversaw much of that business-representing banks and S&Ls, and later representing the government in liquidating the same type of institutions.
The Clinton campaign denied it in 1992, but Hillary was involved in McDougal’s effort to win state permission in 1985 for a new financing plan for his thrift and a scheme to set up a brokerage house. Though the “vast majority” of the work was handled by another lawyer, White House aide Bruce Lindsey told NEWSWEEK, her name appeared on two Rose documents related to McDougal.
The problems for Mrs. Clinton are these: she was a business partner of McDougal’s-not just his lawyer on a $2,000-a-month retainer. That in itself is a potential conflict, since she had a personal interest in keeping him solvent. More important, she was corresponding on the matter with a state banking regulator, Beverly Bassett Schaffer, who had been appointed by Hillary’s husband. Investigators also want to know if McDougal funneled bank money to Whitewater Development, of which Mrs. Clinton was part owner.
Two years later, Mrs. Clinton became involved in another thrift case that is now under scrutiny. She signed at least one document in a case the government was pursuing on behalf of a failed thrift in Illinois, which had invested money with a Little Rock bond brokerage. The brokerage had been owned by Dan Lasater, the “bond daddy” and friend of her husband who had won major state contracts. The suit, originally brought by private parties and later taken over by the government, sought to recover $3 million in damages from Lasater’s firm. The Rose Law Firm settled the case for a mere $200,000. The lingering question is whether Hillary, and Rose, went easy on the Lasater firm because it was owned by her husband’s friend.
Meanwhile, Hillary’s contacts were beginning to bring in business-some of it resulting from her husband’s policies. In 1986, encouraged by Governor Clinton with state financial support, private charities established the Southern Development Corp., to make business loans to the poor. Mrs. Clinton was one of its original directors. A worthwhile project, but there was something else in it for the Rose Law Firm. George Surgeon, Southern Development’s principal founder and current president, told NEWSWEEK last week that Hillary and the firm had earned between $100,000 and $150,000 in legal fees representing the corporation over the years. When the corporation was founded, Surgeon says, the directors worried about the appearance of a conflict of interest but hired Rose anyway. Mrs. Clinton remained on the board until after the 1992 election.
Net worth: Hillary’s attention to income paid off. By the time her husband decided to run for president, Hillary was earning a six-figure salary at Rose and some $60,000 a year in director’s fees, plus income from an aggressively managed mutual fund she had invested in starting in 1986. The Clintons’ net worth, financial-disclosure forms showed in 1992, was about $700,000.
No matter how much they’ve saved. it may not be enough. Under current law, according to experts in the field, the Clintons can bill the government for virtually none of the costs of their legal defense. And, unlike senators, they can’t easily create a “defense fund” that accepts contributions from friends. The legal fees will be enormous. Their defense team is being assembled by their lawyers at Williams & Connolly-where Hillary once interviewed for a job. Outside estimates put the likely cost of the firm’s work at a minimum of $2 million-not necessarily because of any wrongs the Clintons may have committed but because of the sheer scope of Fiske’s inquiry. By law, the firm’s work can’t be donated. Besides, as Hillary knows, good lawyers don’t work for free.
UPWARD MOBILITY Most Americans know Hillary Rodham Clinton as the new-style First Lady, juggling her roles as mother and White House hostess with her highly visible position as chairwoman of the president’s health-care-reform task force. But now the Whitewater affair is focusing new attention on her 20-year professional career. Among the highlights of her legal and financial dealings:
