February 26, 1999

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The Whitewater 'Oppo'

By Mollie Dickenson

Through the long Whitewater investigation and Monica Lewinsky scandal, the media focused on wrongdoing by President Clinton. But viewed from a different angle, the evidence shows another picture, one of a long-running political dirty trick.

That other picture, like a drawing hidden within a drawing, suggests that the original Whitewater criminal referral -- which started it all -- was not a legitimate investigative document, but a 1992 Republican scheme to help President Bush win re-election.

In fall 1992, only resistance from a few honest GOP officials thwarted the Bush strategy. But the idea of using Whitewater for partisan ends did not stop with the 1992 election.

In the early months of Clinton's presidency, the Republicans re-grouped and -- aided by stay-behind Bush officials and a credulous Washington press corps -- fashioned Whitewater into a devastating political weapon.

The evidence of this strategy can be found in unpublicized depositions generated by the congressional Whitewater inquiries. The documents reveal how the Bush re-election campaign expected to fix the outcome of a presidential election by using the government's police powers to plant misleading stories about Clinton, the Democratic nominee.

A parallel dirty trick was the drafting of a bogus criminal referral suggesting that Clinton had removed a letter renouncing his citizenship from his passport file. That supposedly confidential referral was leaked to the media in October 1992 and sparked a round of attacks on Clinton's patriotism.

The initial Whitewater criminal referral was submitted to law enforcement agencies in the same time frame and apparently was intended as another shoe to drop during the final weeks of the campaign.

The two scandals, combined with other concerns about Clinton’s character, might have sparked enough ethical questions about Clinton to salvage Bush’s re-election.

Bush had relied on similar campaign tactics -- known in the political trade as "opposition research" or "oppos" -- to overcome an early lead by Michael Dukakis, the Democrats' 1988 presidential nominee.

Early in that campaign, the conservative Washington Times published rumors about Dukakis undergoing psychiatric care, false stories that raised doubts about the Massachusetts governor's fitness. Later, Citizens United, a right-wing attack group, ran the racially provocative Willie Horton ads.

As president, Bush had reason to be confident that his administration could dig up dirt on Clinton for disclosure at some pivotal moment of the 1992 campaign.

The Whitewater issue first blipped onto the public's radar in March 1992 with a garbled New York Times account. The Times reported that Clinton and his wife Hillary had invested in a land development project with James McDougal, owner of a failed savings and loan.

"Clinton joined S&L operator in an Ozark real-estate venture," said the headline. But the story obfuscated that McDougal didn't buy the S&L, Madison Guaranty, until four years later, nor that, by March 1992, Madison had been investigated by three federal agencies and McDougal had been tried and acquitted on criminal charges.

Nevertheless, at the Republican-dominated Resolution Trust Corp., which oversaw failed S&Ls, an official named L. Jean Lewis stepped forward to reinvestigate Madison.

Lewis's supervisor at the RTC, Richard Iorio, testified to Congress in 1996 that Lewis's assignment was in response to the Times story. But that wasn't the whole story.

Lewis was not an impartial investigator. According to a letter that surfaced during the Senate hearings, she had written to a friend in February 1992 -- a month before the Times article -- that Clinton was a "lying bastard."

To jump on the politically sensitive case, Lewis and Iorio put Madison ahead of 10 other much larger failed Arkansas S&Ls that had never been investigated. In spring 1992, Lewis went to work full-time on Madison.

In late July, Clinton won the Democratic nomination and polls put him solidly ahead of Bush. The Bush re-election campaign was looking for what some operatives called "a silver bullet," a Clinton scandal so serious that it would doom his candidacy.

Lewis later told Sen. Alfonse D'Amato's Whitewater committee that she had set for herself a "self-imposed deadline" of Aug. 31, 1992, for her investigation, timing that fit Bush's campaign needs perfectly.

That seemed to be her goal. Little Rock FBI Agent Steve Irons said that Lewis, in a "very dramatic way," told him that she had "given up a job opportunity in D.C." so that she could "alter history" by completing a criminal referral before the presidential election.

Irons said Lewis's comments were clearly related to naming the Clintons in her criminal referral.

On Sept. 2, 1992, Lewis and Iorio sent a criminal referral to Charles Banks, the Republican-appointed U.S. attorney in Little Rock. In it, Lewis named Bill and Hillary Clinton as "possible witnesses" to and "potential beneficiaries" of criminal wrongdoing in the failure of Madison Guaranty.

In violation of RTC policy, she began calling Banks and Irons. Irons testified that she left numerous messages asking "what the FBI was doing with the referral." Irons thought her calls were inappropriate and "refused to give her status reports."

Lewis responded by traveling from Kansas City to Little Rock on Sept. 18, 1992, and dropping in on Irons unannounced to press her case.

Little Rock FBI agents said they were "concerned about Lewis's objectivity and overall professionalism." Lewis told the FBI that "her boss, Richard Iorio, kept asking her to try to find out what it [the FBI] was doing."

Lewis's numerous phone calls to U.S Attorney Banks's office also struck him as "unusual. I saw no need for the sense of urgency except for who the witnesses were [the Clintons] ... so it caused me to be very circumspect about it." The calls "came between early September and Oct. 16," said Banks.

Assistant U.S. Attorney Floyd MacDodson recalled that Lewis made these calls "between the first of September and probably November, around election time ... I got the impression she thought I was not moving fast enough."

Lewis later swore under oath that she hadn't contacted the FBI or Banks's office until after the election, in December 1992 -- a statement that was refuted by the testimony and contemporaneous notes of Irons, Banks and other federal law-enforcement officials.

Sworn testimony also revealed that the Bush White House already knew about Lewis's supposedly confidential criminal referral and Lewis's failure to get Banks to act on it.

Bush's attorney general, William Barr, testified that on Sept. 17, 1992, during a flight on Air Force One, White House Cabinet Secretary Edith Holiday asked him whether he "was aware of an S&L matter involving Bill Clinton pending before the Justice Department."

Holiday was chief liaison between the Bush White House and the Bush re-election campaign. She also had been a senior official in Bush's 1988 campaign.

When Barr returned to his Justice Department office, he checked with the FBI on Holiday's assertion. The FBI responded that they "had no record of such a case."

Barr testified that when he reported this to Holiday, "She seemed surprised to hear this," making him wonder "if she had better information" than he. So Barr checked again and learned this time "that an RTC criminal referral mentioning the Clintons did indeed exist."

Holiday denied "any recollection" of the two contacts that Barr testified he had with her.

Barr said he was angry because he believed that Banks had "deliberately withheld" the referral. "Anything that involves a public personage, a celebrity [or] public officials," Barr testified, required "an urgent report" to the Justice Department.

On Oct. 8, 1992, Barr convened a joint FBI-Justice Department panel to examine the referral. But the panel concluded that the referral "failed to cite evidence of any federal criminal offense." The panel's comments about the referral ranged from "junky" and "half-baked" to that its allegations were "reckless, irresponsible" and "odd."

Nevertheless, Barr put a preliminary investigation into motion and ordered Banks to review it again and to report back by Oct. 16, two weeks before the Nov. 3 election.

But Banks had already concluded -- and the FBI in Little Rock had agreed -- that "no action should be taken on the referral at that time." Banks had prosecuted Jim McDougal in 1990 for alleged bank crimes and lost.

Banks said further that he believed "no prosecutable case existed against any of the witnesses," most notably the Clintons.

In a report to the Justice Department dated Oct. 16, 1992, Banks indicated that Barr's desire to expedite the Whitewater investigation smacked of improper political use of the federal judicial system.

"I know in investigations of this type," wrote Banks, "the first steps, such as issuance of ... subpoenas ... will lead to media and public inquiries of matters that are subject to absolute privacy. Even media questions about such an investigation all too often publicly purport to 'legitimize what can't be proven.'

"I must opine that after such a lapse of time, the insistence for urgency in this case appears to suggest an intentional or unintentional attempt to intervene into the political process of the upcoming presidential election. ...

“For me personally to participate in an investigation that I know will or could easily lead to the above scenario and to the possible denial of rights due to the targets, subjects, witnesses or defendants is inappropriate.

"I believe it amounts to prosecutorial misconduct and violates the most basic fundamental rule of Department of Justice policy. I cannot be a party to such actions and believe that such would be detrimental to the Department of Justice, FBI, this office and to the President of the United States," George Bush.

But Banks's report did not end the administration’s attempt to use the federal bureaucracy to damage its opponent. Albert Casey, RTC director, testified that he received a phone call from White House counsel C. Boyden Gray just before the election.

According to Casey's deposition to D'Amato's Whitewater committee, Gray asked Casey if he "knew anything about an RTC matter involving the Clintons." Casey said he did not, but that he "would look into it and call Gray back."

Casey soon learned from RTC executive William Roelle that "there was an RTC criminal referral involving the Clintons." Casey testified that Roelle told him he "should not provide the Bush White House with any information" about it. Casey said that before he could call Gray back, Gray called him again saying, "Al, forget my request. I don't want you to tell me a thing."

Gray swore under oath that he had no "memory of ever having spoken with Casey about an RTC criminal referral" involving the Clintons.

While the Whitewater criminal referral was stalled on one track, however, a similar "oppo" scheme was rolling down a parallel track.

During that September, White House aides were using the State Department to dig into Clinton's passport file to find something incriminating.

The passport gambit got moving in early September 1992 when Michael Hedges, a Washington Times reporter, approached David Tell, head of the Bush campaign's "opposition research" office, and asked for help expediting a Freedom of Information Act request seeking FBI records on Clinton's anti-Vietnam War activities.

Tell wrote a memo that reached senior Bush officials, including White House chief of staff James Baker, a wily campaign veteran. During the last half of September, Baker joined in pressing the inquiry.

On Sept. 30, State Department official Elizabeth Tamposi dispatched three subordinates to a government archive in Suitland, Md., to pore over Clinton's passport records. The Republicans hoped to find a rumored letter in which a young Clinton supposedly tried to renounce his citizenship.

Later, Tamposi admitted that she was under White House pressure to "dig up dirt on Clinton."

The search, however, found no letter, only a passport application with a tear and staple holes in one corner. Though the tear was easily explained by the stapling of a photo or money order to the application, Tamposi saw the tear as evidence that Clinton or an ally might have removed the rumored renunciation letter.

Tamposi fashioned the staple-hole mystery into a criminal referral and forwarded it to the Justice Department.

The confidential referral then was leaked to Newsweek, which published the story on Oct. 4, 1992, with the Bush-desired spin that Clinton might have tampered with his passport file to remove damaging evidence. Bush personally followed up the story with a new round of attacks on Clinton's patriotism. Clinton's poll numbers dropped, touching off panic within the candidate’s “war room.”

But the passport gambit backfired when congressional Democrats did their own investigation and discovered how flimsy the GOP's case was.

The State Department's inspector general Sherman Funk called for an independent counsel to investigate possible criminal acts by Tamposi and other administration officials.

"Passportgate" had boomeranged, reminding voters of Bush’s reputation for playing dirty politics. Meanwhile, Banks's refusal to play along on Lewis's criminal referral dashed Bush's hopes of using Whitewater as a second "oppo" against Clinton.

On Nov. 3, 1992, William Jefferson Clinton was elected the 42nd president of the United States.

[No Bush official was ever charged in "Passportgate." A conservative-controlled three-judge panel named Republican stalwart Joseph diGenova to investigate. The probe confirmed many of the facts in the case, but diGenova judged his GOP colleagues innocent and lashed out at Funk for seeing any crimes in the first place. Over the past year, diGenova has been a TV regular praising the work of Kenneth Starr. For more details on "Passportgate" see, iF Magazine, March-April 1998.]

After Clinton's inauguration, the fraud division of the Justice Department concluded that the RTC's Whitewater referral did not appear to "warrant any criminal investigation."

Trial attorney Mark McDougal wrote, "No factual claims can be found in the referral to support the designation of Mr. and Mrs. Clinton as witnesses to criminal conduct."

But the Republican drive to exploit Whitewater did not stop. In March 1993, Banks resigned to make way for a Clinton appointee, but Bush factions remained inside the Justice Department, the White House and the RTC, which reopened the investigation of Clinton’s Whitewater partnership.

By October 1993, Lewis and Iorio had developed nine new Whitewater referrals. Three named the Clintons as potential witnesses to and beneficiaries of criminal activities. The new referrals were soon leaked to Washington Post reporter Susan Schmidt.

The Post stories touched off a media uproar and demands for an independent counsel. Because the special-prosecutor law had lapsed, Attorney General Janet Reno chose Republican Robert Fiske in January 1994.

But Fiske disappointed Republicans when he issued an interim report on June 30, 1994, knocking down several anti-Clinton allegations.

Another serious threat to Republican plans arose in July when the RTC drew up charges against Lewis and Iorio for improper disclosure of confidential documents, for secretly taping RTC employees, for keeping confidential documents at home and for using government equipment for personal gain.

In a deposition, Lewis admitted that she had used her office to market T-shirts and coffee mugs lettered "B.I.T.C.H. -- Bubba, I'm Taking Charge, Hillary." Lewis said the use of the word "bitch" was "in no way intended to denigrate the first lady" and refused to admit that it was improper to market a product that disparaged a witness named in her criminal referral.

Iorio, her superior, was accused of permitting Lewis to do all of the above.
With those moves against Lewis and Iorio, the RTC edged toward exposing one of the GOP’s political secrets: the Bush administration's hand in the original 1992 criminal referrals naming the Clintons.

Enter Kenneth W. Starr.

On Aug. 5, 1994, with the special-prosecutor law revived and key Republicans complaining about Fiske’s interim report, the conservative-controlled three-judge panel ousted Fiske and replaced him with Bush's Solicitor General Kenneth Starr.

On Aug. 12, the RTC put Lewis and Iorio on administrative leave. But the agency moved too late to investigate the pair's participation in the political “oppo” against Clinton.

On Aug. 22, in his first official act, Starr subpoenaed the RTC's records on Lewis. On Sept. 27, he ordered the RTC to suspend its investigation of her.

Starr also impaneled a grand jury to investigate those at the RTC who were investigating Lewis. Lewis and Iorio were reinstated at the RTC, and testified against the Clintons in November l995 Senate hearings.

Before the Senate Whitewater committee, Lewis was confronted with her "lying bastard" letter. She also was exposed as having lied about surreptitiously tape recording another RTC lawyer. [Lewis insisted that her tape-recorder had "turned itself on."]

Lewis collapsed in tears, was briefly hospitalized and has since dropped from sight. Starr continued to protect her -- and his Bush colleagues -- by keeping the RTC investigation under wraps.

A 1996 investigation by the law firm -- Pillsbury, Madison & Sutro -- later "found no evidence to support" even a charge of civil fraud against anyone named in Lewis's original referral. To this day, Starr has brought no criminal charges based on that referral.

In his November 1998 testimony before the House Judiciary Committee, Starr acknowledged that he had failed to develop sufficient evidence to bring charges against the Clintons on Whitewater. He also found nothing to implicated the Clintons in the firing of Travel Office employees and the delivery of FBI files to the White House.

After some $50 million over five years, the Whitewater case had come up empty on the Clintons. But Starr did win convictions against some lesser figures, including Arkansas Gov. Jim Guy Tucker and the Clintons’ Whitewater partners, Jim and Susan McDougal.

Starr’s aggressive investigation succeeded, too, in protecting the other level of the story, the use of the Whitewater allegations for political purposes.

Starr's success in containing that Republican scandal, however, would not have been possible without the misleading and selective reporting of the national news media.

Starr and his associates regularly spun reporters, particularly from prestige publications such as The Washington Post, The New York Times and the New Yorker.

The never-ending Clinton scandal stories also were a testament to the conservative success in building a permanent political infrastructure in Washington, a network of ideological operatives who had permeated the capital's insular social class.

When Clinton came to Washington in 1993, he apparently did not appreciate that a large, hostile and very sophisticated Nixon-Reagan-Bush government- in-exile had resentfully decamped to join Washington law firms, P.R. firms, think tanks and the news media.

They had burrowed, too, into the bureaucracy. They were positioned to protect their past sins and primed to do Clinton as much damage as possible. To this day, they remain in place -- waiting to take over the White House and federal bureaucracy again in 2001.

Mollie Dickenson has reported extensively on the savings-and-loan scandal and is author of Thumbs Up, a biography of Ronald Reagan’s first press secretary, Jim Brady.

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