Whitewater Controversy - History - The Kenneth Starr Investigation

The Kenneth Starr Investigation

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 because he had been chosen and appointed by Janet Reno, Clinton's Attorney General, creating an apparent conflict of interest.

David Hale, the key witness against President Clinton in Starr's Whitewater investigation, alleged in November 1992 that Clinton, while governor of Arkansas, pressured him to provide an illegal $300,000 loan to Susan McDougal, the partner of the Clintons in the Whitewater land deal.

Hale's defense strategy, as proposed by attorney Randy Coleman, was to present himself as the victim of high-powered politicians who forced him to give away all of the money. This self-caricature was undermined by testimony from November 1989, wherein FBI agents investigating the failure of Madison Guaranty had questioned Hale about his dealings with Jim and Susan McDougal, including the $300,000 loan. According to the agents' official memorandum of that interview, Hale described in some detail his dealings with Jim Guy Tucker (then an attorney in private practice, later Bill Clinton's lieutenant governor), both McDougals, and several others, but never mentioned Governor Bill Clinton. Nor did Clinton's name come up when Hale testified at McDougal's 1990 trial, which ended in an acquittal.

Clinton denied that he pressured Hale to approve the loan to Susan McDougal. By this time, Hale had already pleaded guilty to two felonies and secured a reduction in his sentence in exchange for his testimony against Clinton from prosecutors. Charges were made by Clinton supporters that Hale received numerous cash payments from representatives of the so-called Arkansas Project, a $2.4 million campaign established to assist in Hale's defense strategy, and to investigate Clinton and his associates between 1993 and 1997. These charges were subsequently the topic of a separate investigation by former Department of Justice investigator Michael E. Shaheen Jr. Shaheen filed his report in July 1999 to Starr, who summarized the findings in that there was insufficient evidence of Hale having been paid in hopes of influencing his testimony, with such allegations being "unsubstantiated or, in some cases, untrue," and that no charges would be brought against Hale or Arkansas Project outlet The American Spectator. Writers from Salon.com complained that the full, 168-page, unleaked report had not been made public, a complaint still being reiterated by Salon.com as of 2001.

The state prosecutors went ahead and signed an arrest warrant against Hale in early July 1996. Criminal charges filed by the state prosecutors charged that Hale had made misrepresentations to the state insurance commission regarding the solvency of an insurance company that he had owned, National Savings Life. The prosecutors also alleged in court papers that Hale had made those misrepresentations to conceal the fact that he had looted the insurance company. Hale said that any infraction was a technicality and that no one lost any money. In March 1999 Hale was convicted of the first charge, with the jury recommending a 21-day jail sentence.

Starr drafted an impeachment referral to the House of Representatives in the fall of 1997, alleging that there was "substantial and credible evidence" that Clinton might have committed perjury regarding Hale's allegations.

Theodore B. Olson, who with several associates launched the plan that later became known as the "Arkansas Project", wrote several essays for The American Spectator accusing Clinton and many of his associates of wrongdoing. The first of those pieces appeared in February 1994, alleging a wide variety of criminal offenses by the Clintons and others, including Webster Hubbell. These allegations led to the discovery that Hubbell, a Hillary Clinton friend and former Rose Law Firm partner, had committed multiple frauds, mostly against his own firm. Hillary Clinton, instead of being complicit in Hubbell's crimes, had been among his victims. In December 1994, one week after Hubbell pleaded guilty to mail fraud and tax evasion, Associate White House Counsel Jane Sherburne created a "Task List" which includes a reference to monitoring Hubbell's cooperation with Starr. Hubbell was later recorded in prison saying "I need to roll over one more time" regarding the Rose Law firm lawsuit. In his next court appearance, he pleaded the Fifth Amendment against self-incrimination (see United States v. Hubbell).

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", and new evidence of sexual misconduct.

By April 1998, diverted to some degree by the burgeoning Lewinsky scandal, Starr's investigations in Arkansas were winding down, with his Little Rock grand jury about to expire in the following month. Webster Hubbell, Jim Guy Tucker, and Susan McDougal had all refused to cooperate with Starr. Tucker and McDougal were later pardoned by President Clinton. When the Arkansas grand jury did conclude its work in May 1998, after 30 months in panel, it came up with only a contempt indictment against Susan McDougal. Although she refused to testify under oath regarding the Clintons' involvement in Whitewater, Susan McDougal did make the case in the media that the Clintons had been truthful in their account of the loan, and had cast doubt on her former husband's motives for cooperating with Starr. She also claimed that James McDougal felt abandoned by Clinton, and told her "he was going to pay back the Clintons." She also, again not under oath, claimed to the press that her husband had told her that Republican activist and Little Rock lawyer Sheffield Nelson was willing to "pay him some money" for talking to The New York Times about Clinton, and in 1992 he told her that, in fact, one of Clinton's political enemies was paying him to tell The New York Times about Whitewater.

From the beginning, Susan McDougal charged that Starr offered her "global immunity" from other charges if she would cooperate with the Whitewater investigation. McDougal told the jury that refusing to answer questions about the Clintons and Whitewater wasn't easy for her, or her family. "It's been a long road, a very long road ... and it was not an easy decision to make," McDougal told the court. McDougal refused to answer any questions while under oath, leading to her being imprisoned by the judge for civil contempt of court for the maximum 18 months including eight months in isolation. Starr's subsequent indictment of McDougal for criminal contempt of court charges resulted in a jury hung 7-5 in favor of acquittal. President Clinton later pardoned her, shortly before leaving office.

In September 1998 Independent Counsel Starr released the famous Starr Report, concerning offenses alleged to have been committed by President Clinton as part of the Lewinsky scandal. As it dealt exclusively with the Lewinsky scandal, it mentioned Whitewater only in passing, save for a glancing reference that longtime Clinton friend and advisor Vernon Jordan had both tried to find Monica Lewinsky a job after her removal from White House internship and tried to help Webster Hubbell financially with "no-show" consulting contracts while he was under pressure to cooperate with the Whitewater investigations. Indeed it was on this basis that Starr took on the Lewinsky investigation under the umbrella of the Whitewater Independent Counsel mandate in the first place.

There was much acrimony from the most fervent critics of the Clintons after release of the Starr report on the Foster matter and after Starr's departure and return to the case. The death of Foster had been the source of many conspiracy theories. Christopher Ruddy, a reporter for Clinton critic Richard Scaife's Pittsburgh Tribune-Review helped fuel much of this speculation with claims that Starr had not pursued this line of inquiry far enough.

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