The Whitewater Banking Hearings 1 Round Up the Usual Suspects
Adams, James Ring
Round Up the Usual Suspects by James Ring Adams When Independent Counsel Kenneth Starr began assembling his staff for the Whitewater investigation, he invited Sam Dash, the famed counsel for the...
...In Kanjorski's mind, this memo showed that Lewis and her panel couldn't be trusted...
...House Banking Chairman Jim Leach's investigation laid much broader groundwork, however, pro-voicing a flurry of Democratic claims that the hearings were both wildly overreaching and ridiculously partisan...
...These, said the report, "should have been questioned by FDIC managing attorney when the invoices were submitted for payment...
...It seems that Starr's people found the history lesson surprisingly useful...
...Breslaw came on at the last minute, demanded by Democrats who wanted to give her a chance to answer Lewis's accusations...
...Echoes of Watergate were all around Capitol Hill as Senator Alfonse D'Amato convened his Select Committee on Whitewater and the House Banking Committee got down to serious business on the case...
...The obvious retort was that April Breslaw, the Democrat's own witness, was the primary supervisor of Rose lawyers at both the RTC and the FDIC...
...Some of these were so egregious that Leach said they were "likely to be a case study of legal impropriety at law schools for decades to come...
...Lewis and her staff were the field workers who kept the Madison Guaranty case alive when Washington tried to shuffle it into oblivion...
...In their remarkable note, they said they had declined Kulka's offer "for the sole reason that the administrative leave of these three employees was, and remains, under active investigation...
...When Georgia Republican Barr interrogated Breslaw (continued on page 77) I Inspectors General of the Resolution Trust Corporation and Federal Deposit Insurance Corporation summarized their reports about conflicts of interest at the Rose Law Finn, Hillary's alma mater...
...One of the innumerable unfollowed leads from the hearings involved a file Hale had given to the FBI to photocopy...
...See "Whitewater Obstructionists," TAS, March-April 1994, and "Webb and Alice and Jean and Jack," TAS, October 1994...
...As chief counsel, Dash had to balance appeals from Watergate Special Prosecutor Archibald Cox not to interfere with his own criminal investigation, although Dash gave them far shorter shrift than the Whitewater hearings have given the Independent Counsels...
...It was partly Lewis's work that lay behind Starr's latest spate of charges against Jim and Susan McDougal and current Arkansas Governor Jim Guy Tucker...
...Lucille RoybalAllard of California argued cogently that the two-year delay until the 1989 closing of Madison Guaranty was a result not of Governor Clinton's political protection but of the national stall in resolving the savings-and-loan crisis...
...Hale, the first to take the Independent Counsel's plea bargain and now a star witness against Tucker, has charged that Clinton pressured him to make illegal loans to the McDougals...
...0 ne of the most suggestive events at the hearings, however, will never turn up in the transcripts...
...According to a source close to the committee, one leading Democrat was asked how Lewis's testimony had gone...
...But this coveryour-backside maneuver was refuted the following week—as it had been throughout the year—when Independent Counsel Starr issued another round of indictments based on the referrals...
...Attorney General Janet Reno to launch her own obstruction of justice inquiry...
...No one will say, but the report by the FDIC Inspector General pointed a finger directly at Breslaw...
...Shortly after placing the Kansas City Three on administrative leave a year ago, RTC General Counsel Ellen Kulka wrote a bizarre letter offering their services to Independent Counsel Starr...
...T hese hints and not so quiet whispers of active criminal investigations targeting the upper ranks of the RTC count among the most startling revelations of the Whitewater hearings...
...But that answer was too obvious, and Republicans saw the trap and avoided talking about the billings...
...A chorus of niggling objections about points of order, privilege, and information arose from the minority side of the dais, and reddened Leach's cheeks as he struggled to restore decorum...
...Hubbell had just entered a federal penitentiary in northern Maryland after pleading guilty to padding his legal billings...
...There was a token appearance by the previously missing New York Democrat Charles Schumer, one of the biggest microphone hogs on the committee, but he spoke for only ten minutes and then left for the week...
...At least $42,000 of his fraudulent receipts came from federal bank regulators, and almost all of these bills, going back to Hubbell's first assignment for the feds, were approved by April Breslaw.I When the beefy, sad-eyed Hubbell turned to extend a friendly greeting to Breslaw, however, the petite and overweeningly confident careerist turned her back on him and strode quickly away to the other end of the witness table...
...But Starr's chief aide refused the offer, and the RTC liaison reported that the Independent Counsel didn't want anything to do with them...
...These delaying tactics backfired quickly, however...
...It's still a mystery who at the Department of Justice in Washington tried to shuffle away the first Kansas City criminal referrals about Madison Guaranty...
...When Roth, a loose cannon among the committee majority, noted Breslaw's old friendship with Hubbell, Chairman Leach quickly gaveled him quiet...
...D'Amato grabbed most of the early August airtime as key witnesses flatly contradicted each other about James Ring Adams, an American Spectator investigative writer, is at work on a book on the decline of the American republic...
...The committee turned up some hastily written Justice Department memos saying the referrals lacked prosecutive merit...
...It now looks like less of a coincidence that the day the FBI received a search warrant for Hale's office, July 20, was also the day of Vincent Foster's death...
...This managing attorney, who took hercaseload over to the RTC, was April Breslaw...
...There are striking parallels between the two criminal investigations of sitting presidents, especially now that Whitewater is producing serious congressional hearings...
...48 The American Spectator October 1995 JAMES RING ADAMS (continued from page 48) thoroughly about her telephone contacts with Rose and Hubbell, looking for a line of communication to the White House, he studiously avoided bringing up the padded bills—they are under active investigation by several government agencies and, presumably, Starr himself...
...B ut it was the House Democrats' attempts to derail the hearings that were ridiculously partisan...
...Democrats such as Ken Bentsen of Texas (a cousin of the former senator and treasury secretary) and Joseph P. Kennedy II emphasized that none of the witnesses tied the Clintonsdirectly to the rampant criminality at Madison Guaranty or the Rose Law Finn...
...Attorney Paula Casey had targeted him as a fall guy for the Arkansas elite...
...Yet a Watergate style breakthrough has yet to occur, and Hubbell showed that he is more of a G. Gordon Liddy than a James McCord...
...Paul Kanjorski of Pennsylvania flashed a sheaf of documents from RTC headquarters of the genre known as "cover-yourbackside" memos...
...Rose failed to disclose conflicts of interest in its work on seven of the seventeen institutions it handled...
...From the beginning he claimed that the SBA and U.S...
...The hearings revealed many gaps and inconsistencies in the White House cover story, and released volumes of documents rife with leads...
...We got killed...
...But the new majority stuck with an elaborate round-robin, each member yielding his time to a designated questioner so that coherent lines of thought were interrupted only by Democrats...
...More of the criminal cases may have to run their course before we get a John Dean...
...Barr was so offended by this apparent attempt of the RTC brass to intimidate its own witnesses that he interrupted his questioning to release formal letters demanding that U.S...
...The strategy worked, thanks to a large crop of militant freshmen, including Robert Barr (R-Georgia), a former U. S. attorney, and a one-time New York City policeman who worked on the Serpico case for the mid-1960s Knapp Commission, Fred Heineman (R-N.C...
...Round Up the Usual Suspects by James Ring Adams When Independent Counsel Kenneth Starr began assembling his staff for the Whitewater investigation, he invited Sam Dash, the famed counsel for the Senate Watergate Committee, to give a talk...
...One of the most striking is the way partisan support for the White House erodes as time goes by...
...Could it be that Leach got the message not to jeopardize a possible criminal case by over-exposing the evidence the way the Iran-contra committee did...
...Nearly $30,000 of the questionable Rose billing, it said, involved higher than agreed on rates, miscalculated fees, and non-billable expenses that were obvious from the face of the bill...
...They're getting the early returns from their districts and it's not good," whispered one reporter...
...And Jean Lewis pointed to a glaring contradiction: She testified that she had been told that the referrals and an accompanying report had gone as high as Bush Attorney General William Barr, but Barr claimed, in a subsequent interview with the press, that they had been "hidden" from him...
...The IG audits questioned $603,000 of the payments—more than 25 percent of the billing...
...It also emerged from the hearings that the White House was tracking the Small Business Administration's case against Little Rock Judge David Hale and his Capital-Management Services, a federally funded Small Business Investment Corporation...
...These themes could have come straight from the Watergate defense, and for good measure, House Democrats threw in tactics from Joe McCarthy...
...Whitewater investigations were wasting the taxpayers' money, they argued when the hearings convened on Monday, August 7. The witness list was one-sided, they said, stacked with field-level personnel who were obsessed with the case...
...For obvious reasons it would be wholly inappropriate for this Office to hire or employ a witness to matters under investigation...
...How about hearings on unequal income distribution, asked Vermont Socialist Bernard Sanders, offering an agenda that made one glad Whitewater was wasting so much of his time...
...The people weren't interested and wanted Congress to turn to more pressing social problems...
...The RTC liaison, who was dating Ellen Kulka's daughter, had misunderstood the conversation, however, and by 46 The American Spectator October 1995 the next day of hearings, Starr and his chief aide had written Leach to set the record straight...
...Meanwhile, the handling of the criminal-referrals and the prosecution of David Hale all left their own questions...
...The big break in Watergate, nevertheless, came in the courtroom, when Judge John Sirica imposed harsh sentences on the Watergate burglars, and one of them, James McCord, made a dramatic decision to cooperate with the Senate...
...Madison Guaranty, owned by Bill Clinton's business partner James McDougal, was a third-rate savings-and-loan failure...
...Democrat Barney Frank, the chief irritant, jibed after one spate of gavel-pounding that the chairman had reserved the right to reply whenever his feelings were hurt...
...Democrats continued their attempt to discredit Lewis, which had begun fourteen months earlier when they controlled the first, farcical set of Whitewater hearings...
...he replied...
...At the hearings, SBA officials lent some credence to Hale's charge when they revealed that SBA Administrator Erskine Bowles—now a senior White House aide—had given advance warning of the investigation to then—White House Chief of Staff Mack McLarty around May 5, 1993...
...An apparent political accident put Webster Hubbell together on the last panel with RTC counsel April Breslaw,the Washington official accused by Jean Lewis of trying to manipulate the Kansas City investigation...
...But the real investigation of Whitewater has just begun, offering constant potential for a collapse in the stone wall...
...Students of Watergate will remember that the final blow to the Nixon White House, the disclosure of the Oval Office tapes, came during the routine debriefing of a witness who wasn't expected to have much to say...
...These appointees, he gabbled, "did a lousy job of protecting the federal government...
...A s Democratic troops melted away, Chairman Leach, reputedly one of the least partisan members of Congress, presided over a remarkable display of Republican discipline...
...Rose, which handled a larger caseload for RTC and the FDIC than any other law firm, billed the latter for $1,050,000 and the former for $1,424,000...
...The cheating at the Rose Law Firm, he said, was "a selective example of the incompetence of the Reagan and Bush appointees" at the FDIC and the RTC...
...By the end of the day, ABC's "Nightline" had blown the White House game, when correspondent Jeff Greenfield showed the cameras a sheet of White House "talking points" that had been closely followed in Democratic opening statements...
...Beyond the question of the bills, Starr acknowledged that he was actively looking at the administrative leave imposed on the Kansas City three...
...Republicans on the Senate Watergate Committee coordinated their defense with the Nixon White House, complained at every turn about procedural fairness, and tried to limit the hearings to a short period of time so the country could get on with its other business...
...Not that the Democrats didn't make some serious points...
...By Wednesday, however, that corner had been turned...
...Even Joe Kennedy called Rose "obviously a corrupt firm...
...Yet the hearings revealed overwhelming signs of a cover-up...
...Stunned by the unflappable Lewis, Democratic ranks were growing unmistakably thinner...
...What do you mean...
...When it was returned, Hale says, it was missing a handwritten note from McDougal that allegedly read, "Bill will take care of this...
...Wisconsin Republican Toby Roth said fine, so long as the Democrats named all the White House lawyers and political aides who were coordinating their defense...
...T uesday brought highly damaging testimony from Jean Lewis and her two superiors at the Resolution Trust Corporation criminal investigations office in Kansas City...
...House committee hearings are usually disjointed and repetitious, because the rules allot each member five minutes for statements and questions in order of seniority...
...But Breslaw also could have said a lot about Webster Hubbell, leading light of the Rose Law Firm and Clinton's man at the Justice Department...
...At the outset, hoping to pull off a diversion similar to the flap over the use of a National Rifle Association staffer at the Waco hearings, senior Democrat John LaFalce of New York demanded a listof all the paid and unpaid consultants Republicans were utilizing during the hearings...
...events in Vince Foster's White House office the night he died...
...This report is on the desk of FDIC Vice Chairman Andrew Hove and FDIC General Counsel William Kroener for unspecified further action, but the Banking Committee could see clearly, even through the muffled bureaucratese, that the Rose Law Firm billing contains multiple hot potatoes...
...CI...
...Before Breslaw took her oath, Barney Frank gave the Republicans one of his extra-special goads...
Vol. 28 • October 1995 • No. 10
