George W. Bush learned at least one lesson from his father: You want your federal prosecutors to be team players who will throw a political elbow or two when the White House needs some help.

When George H.W. Bush faced a tough reelection battle in 1992, his administration tried to destroy Bill Clinton by implicating him in criminal investigations. But those plans collapsed when federal law enforcement officials, including a U.S. Attorney in Arkansas, resisted what they saw as improper White House political pressure.

Now, the younger George Bush is moving to ensure that he won’t be sabotaged by similarly independent-minded prosecutors. The Washington Post reported that the White House approved the firing of seven U.S. attorneys at the end of 2006 after the Justice Department identified them as insufficiently supportive of the President’s policies.

The Justice Department got input on the firings from congressional Republicans, including Sen. Pete Domenici of New Mexico who criticized the performance of U.S. Attorney David Iglesias, the Post reported. [Washington Post, March 3, 2007]

Iglesias has alleged that two New Mexico legislators – whom he says he will identify only under oath – pressured him to speed up indictments of Democrats before Election 2006. At the time, the Republican congressional majority was in jeopardy, in part, because of a series of GOP corruption scandals.

Some of the fired prosecutors handled those Republican corruption cases or served in offices that could play significant political roles in Campaign 2008. For instance, ousted San Diego U.S. Attorney Carol Lam oversaw the prosecution of Republican Rep. Randy “Duke” Cunningham, whose case had opened a window on Washington war profiteering.

President Bush also replaced the U.S. Attorney in Arkansas, which was a focal point of investigative activity during Campaign 1992 when George H.W. Bush’s reelection campaign was digging for dirt on Bill Clinton – and which could be mined again if Hillary Clinton becomes the Democratic presidential nominee.

In 1992, the elder George Bush found himself in an uphill battle against the upstart Arkansas governor who had impressed many Americans with his energetic plans for the future, especially when contrasted with Bush’s difficulty in articulating a clear rationale for a second term.

As the campaign clock ticked down, the hard-ball players in the Bush camp were looking for a disclosure about Clinton that would be so damning as to make him unelectable. One scheme had been to float a false rumor that Clinton had tried to renounce his citizenship while a college student during the Vietnam War. [For details, see Robert Parry’s Secrecy & Privilege.]

Whitewater’s Origins

Another idea was to get the U.S. Attorney in Arkansas, Charles Banks, to act on a dubious criminal referral related to the failed Madison Guaranty Savings & Loan, which had been owned by James McDougal, a partner in the Whitewater real estate deal with Bill and Hillary Clinton. The Madison criminal referral named the Clintons as witnesses.

That investigation dated back to a March 8, 1992, article by New York Times reporter Jeff Gerth about the Whitewater land deal and its connection to the failed thrift, Madison Guaranty. Jean Lewis, an investigator for the Resolution Trust Corp., the agency which oversaw S&L’s, was eager to follow up.

According to Lewis's chronology, the Gerth article prompted "inquiries regarding these [Whitewater/Madison] ties ... from RTC Investigations in Washington, D.C., and the former Director of the Tulsa (Oklahoma) Consolidated Office" to the Kansas City office where Lewis worked.

But questions have been raised about Lewis’s account. For instance, the Tulsa RTC director, Virginia Kingsley, told me that she had no recollection of either reading the Gerth story or ordering a follow-up.

Nevertheless, Lewis got her way. Though a criminal review of the Madison case was not scheduled until late 1992, it was advanced to April 1992 with a team of investigators dispatched to Little Rock.

Lewis, a conservative Republican who detested Clinton as a “lying bastard,” went to extraordinary lengths to link the Whitewater deal to Madison’s failure. For several weeks, she pored through warehoused Madison files in Little Rock, but could find nothing to connect Whitewater with the Madison’s collapse.

Despite Madison's small size compared to other RTC investigative priorities, Lewis returned for a second in-depth search in late April 1992.

Finally, Lewis discovered a tenuous link between Whitewater and Madison. "Included in one of the development work sheets marked 'Maple Creek Farms' was an item denoting a $30,000 charge to Whitewater for the cost of an engineering survey," Lewis wrote in her chronology. "This was the first indication of a relationship between [Madison] and Whitewater beyond the existence of the Whitewater checking account" at Madison.

In summer 1992, as Clinton won the Democratic nomination and built a double-digit lead over Bush, Lewis put the finishing touches on the Madison criminal referral. The new referral sought a full-scale federal investigation of "an alleged $1.5 million check-kiting scheme between McDougal and/or McDougal business partners controlled entities, including Whitewater," Lewis wrote.

The referral, which was sent to the FBI and to U.S. Attorney Banks on Sept. 2, 1992, listed the Clintons as prospective witnesses. Lewis soon began pestering the FBI in Little Rock to pursue her referral.

Political Intrigue

Concerned about the political implications of the case, U.S. Attorney Banks and local FBI officials decided that no investigation should be started until after the November 1992 presidential election.

“Banks thought the reason for the push [to investigate] was the high-profile witnesses named – the Clintons in particular – and the RTC was angling for an overt investigation before the imminent presidential election because the inquiry would become public,” according to the final Whitewater report, which was released in 2002.

Banks, a Republican who did not consider himself a friend of Bill Clinton and opposed Clinton’s political views, kept the Madison referral inside his office in Little Rock, but word still spread to Washington.

“Not long after the referral arrived in Little Rock – and some weeks before [Banks’s office] officially notified officials at Main Justice of its existence – high-level Bush administration officials heard rumors about the referral from other sources,” the Whitewater report said.

One of those contacted about the rumors was Attorney General William P. Barr, who “learned about the possible existence of the referral on Sept. 17, 1992” from Edie Holiday, Bush’s secretary to the Cabinet, the report said.

According to Barr’s account, “Holiday asked if Barr would be aware of a pending matter in Justice – she may have said it was a criminal referral – about a presidential candidate or a family member of a presidential candidate,” the Whitewater report said. “Holiday said she was talking about a savings and loan matter, and it became clear to Barr she was referring to Governor Clinton. Holiday did not say where she heard the rumor, and Barr did not ask.”

The inquiry from Holiday convinced Barr to begin a discreet search to see if an investigation of Clinton was underway.

“Barr did not want anyone in the Justice Department to know he was inquiring about the matter, to avoid the perception that he was trying to interfere with a sensitive case,” the Whitewater report said. The inquiry soon led Barr to Banks and caused Banks to conclude that he was getting pressure from Washington to launch a formal investigation that would mention the Clintons.

Holiday gave the Whitewater prosecutors a starkly different version when she was questioned in 1995.

In a deposition then, she said she “did not remember knowing about an RTC criminal referral involving the Clintons,” the Whitewater report said. “Holiday did not remember seeking Barr out to ask him questions about the referral; she claimed that she did not know of [the Madison Guaranty referral] when it came out, nor did she know of anyone else who did.”

Bank’s Memo

Still, within weeks of the purported Barr-Holiday conversation and a subsequent flurry of messages from Washington, Banks felt under mounting pressure to begin a pre-election investigation. On Oct. 16, Banks fired back a memo refusing to do so.

“There is absolutely no factual basis to suggest criminal activity on the part of any of the individuals listed as witnesses in the referral,” Banks said in a teletype. Banks also wrote a letter saying that “neither I personally nor this office will participate in any phase of such an investigation … prior to Nov. 3, 1992.”

Banks added that he considered the referral an attempt to influence the election and that to do so would be “prosecutorial misconduct.”

Back in Washington, Barr was “upset” with Banks’ reply because Barr felt that he had not suggested that Banks do anything improper, the Whitewater report said.

The Whitewater report noted, too, that another senior Bush aide, White House counsel Boyden Gray, appeared to have been in the know about the Madison case.

Albert Casey, then Resolution Trust Corp. chairman, “recalled receiving a call from Gray about the referral’s status,” the report said. “Casey went to William Roelle, executive vice president of the RTC, and asked about the status. Roelle told Casey the Clintons were not named as targets, but simply as potential witnesses.”

When questioned by Whitewater investigators, Gray said he “did not remember a telephone conversation with Casey, along the lines discussed above,” the report said. Gray “believed he first learned about the referral from Casey, but he thought it may have been at a dinner party. Gray might also have heard about the referral from a journalist.”

With Banks refusing to act on the Jean Lewis’s criminal referral – and after another administration criminal referral relating to Clinton’s rumored renunciation of citizenship backfired on the Bush campaign – the Arkansas governor held on and defeated George H.W. Bush in November 1992.

New Life

Ironically, Lewis got more traction with her criminal referral after Clinton was in the White House and Banks was no longer U.S. Attorney in Little Rock.

After Bill Clinton became President, Lewis groused about the failure of the Little Rock U.S. Attorney’s office to "offer any standard response to the [Madison] referral." But on March 19, 1993, Justice's criminal division agreed with Banks that the RTC referral did not "appear to warrant initiation of a criminal investigation."

But Lewis saw a cover-up. According to her chronology, rather than back off the Madison case, the RTC intensified its probe in spring 1993 by diverting investigators from other cases.

On Oct. 8, 1993, this intense RTC investigation prompted nine more criminal referrals against the McDougals and various business associates. Those referrals were leaked to the Washington Post, which disclosed them on Oct. 31, 1993. A press frenzy followed.

By the end of 1993, the Whitewater scandal had become a Washington cause celebre, with dark suspicions about murdered witnesses and dirty secrets in the hills of Arkansas. When a Republican special prosecutor, Robert Fiske, poured cold water on some of the overheated theories, conservatives in Washington demanded his removal.

A conservative-dominated three-judge panel in Washington complied, replacing Fiske with a conservative legal activist named Kenneth Starr, who had served as George H.W. Bush’s Solicitor General.

Meanwhile, Lewis decided to develop her own evidence of a cover-up. To that end, one of her assistants lured an RTC official from the civil division to Lewis's Kansas City office, where Lewis secretly tape-recorded the largely innocuous conversation. Lewis turned the tape over to Starr, and Republicans made a public issue out of some ambiguous language.

Inside the RTC, however, the trickery caused Lewis some grief. She was disciplined for secretly tape-recording a colleague. She responded by claiming that the tape recorder had turned itself on. Lewis later repeated this implausible claim under oath before Congress.

By early 1994, however, the Republicans felt they finally had their "silver bullet" to neutralize Clinton and grievously wound his presidency. When I called a senior Republican staff aide on Capitol Hill, the aide boasted about Whitewater's potential.

"We think we can indict and convict everybody who was close to Clinton in Arkansas," the GOP aide said.

Failed Probe

In the end, the Whitewater scandal never reached its ultimate goal of implicating the Clintons in criminal wrongdoing. However, Starr’s investigation branched off into other issues, including whether Bill Clinton lied about a sexual relationship with former White House intern Monica Lewinsky, a case that led the House to impeach Clinton although he was eventually acquitted by the Senate.

The Whitewater investigation also never weighed the possibility that the scandal had started as a political dirty trick intended to help George H.W. Bush win reelection, as U.S. Attorney Banks suspected.

The Republican-dominated three-judge panel that set the parameters for the Whitewater probe never authorized an examination into the possible political origins of the case.

The panel, headed by conservative U.S. Appeals Court Judge David Sentelle, a protégé of Sen. Jesse Helms, R-North Carolina, permitted only a review of “whether before or after the 1992 election of President Clinton, any action that had the effect of delaying or impeding the investigation could raise the question of whether anyone in the Department of Justice unlawfully obstructed the investigation,” the Whitewater report said.

In other words, the Bush I administration was never under investigation for instigating a politically motivated – and potentially illegal – criminal probe of the Clintons. Rather, Banks was investigated for possibly obstructing justice when he refused to go along.

In the end, Starr’s office chose not to pursue Banks and the other Little Rock investigators who had gotten in the way. “The evidence was insufficient to prove that any Department of Justice official obstructed justice by engaging in conduct intended to delay or impede the investigation of the RTC’s criminal referral,” the report said.

By the time the Whitewater report was finished in 2002, however, the Bush family was ensconced once again in the White House. And the new President Bush had learned an important lesson about the value of having federal prosecutors who see things your way.

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Secrecy & Privilege: Rise of the Bush Dynasty from Watergate to Iraq, can be ordered at secrecyandprivilege.com. It's also available at Amazon.com, as is his 1999 book, Lost History: Contras, Cocaine, the Press & 'Project Truth.'

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