A Vast Conspiracy Page 9

  Still, she made an impression on her coworkers, who nicknamed her Minnie Mouse because of her tight dresses, hair bows, and peripatetic manner. In the early nineties, the Arkansas legislative session used to feature parties for legislators and lobbyists nearly every night of the week. Paula went to so many that the fellows in payroll never learned her name; they just called her “party girl.” Her good-natured spaciness made her something of a legend around the office long before she became famous. Once, in an oft-repeated tale, a coworker asked her to cash a check for him. Hours later, he asked Paula about his money. She put her hands on her hips, shook her head, and said, “I don’t know where that is!”

  In the months leading up to the conference at the Excelsior, it was possible to see that two sides of her character—her wild past and staid present, her flirtatious history and hopeful future with Steve—remained close to the surface. She had worked at AIDC for only two months when her boss, Clydine Pennington, asked her if she wanted to work at the registration desk at the Governor’s Quality Management Conference on May 8, 1991. It was far from an ordinary assignment for Paula. Pennington remembered her bubbling excitement as she reported for work that morning, before she headed over to the hotel. She had dressed for the occasion—short culottes, black hose, high heels, and a big bow in her hair. Just before she left for the short drive to the hotel, Paula asked Pennington, “Do you think this skirt is too short?”

  Pennington didn’t lie. “Actually, I do, Paula, but I guess there’s nothing you can do about it now.”

  Paula smiled and said, “I’ll just stay behind the table.” Then she was gone.

  In the spring of 1994, the events that took place at the Excelsior prompted Paula Jones to file a lawsuit against the president of the United States. The case—a private action against a sitting president for actions taken before he was elected—was often described as unprecedented, but that wasn’t exactly true. A few days before John F. Kennedy was elected president, several disgruntled delegates who had attended the Democratic National Convention in Los Angeles filed a lawsuit against him. The delegates had been standing in front of a hotel trying to flag down a taxi to go to a party given by the famous Washington hostess Perle Mesta. Kennedy saw them waiting and offered them his car and driver, which they accepted. Kennedy was not a passenger. During the subsequent ride, the car collided with another, and that accident became the basis for the suit. In a foreshadowing of the Jones case, the plaintiffs in Bailey v. Kennedy used the discovery process to try to obtain embarrassing information about the Kennedy family finances in interrogatories sent to Attorney General Robert F. Kennedy. Rather than answer such questions, the Kennedys settled the case for $17,750, a considerable sum in 1963.

  But though there had almost never been a case like Jones v. Clinton, presidential power has been one of the most controversial areas of constitutional law over the past several decades. In a series of cases, the Supreme Court was asked to weigh how and whether the laws that govern other citizens apply to the president. The most famous of these cases arose out of Watergate. In United States v. Nixon, the Court upheld Judge John Sirica’s subpoena of the White House tapes in the criminal trial against those charged in the Watergate cover-up. Because the subpoena was narrowly drawn and the material sought was indispensable to a fair trial, the Court unanimously ruled that Nixon had to produce the tapes. To rule otherwise, the Court held, would place the president above the law.

  It was a less-known case that created the real ideological divide over presidential power and immunity from court processes. In 1970, an Air Force management analyst named A. Ernest Fitzgerald had been fired after he gave testimony before Congress about cost overruns on Air Force projects. Fitzgerald sued President Nixon, and the case reached the Supreme Court in 1982. A bitterly divided Court ruled, five to four, that Fitzgerald had no right to bring his case.

  According to Justice Lewis Powell’s opinion for the Court, the president enjoyed absolute immunity from liability for acts within the “outer perimeter” of his official duties. “Because of the singular importance of the President’s duties,” he wrote, the “diversion of his energies by concern with private lawsuits would raise unique risks to the functioning of government.… The sheer prominence of the President’s office” would make him “an easily identifiable target for suits for civil damages. Cognizance of this personal vulnerability frequently could distract a President from his official duties, to the detriment of not only the President and his office but also the Nation that the Presidency was designed to serve.” In a dissenting opinion in which he was joined by the Court’s liberal wing, Justice Byron White thundered that the court’s decision “places the President above the law … [and] is a reversion to the notion that the King can do no wrong.”

  The Fitzgerald case—and cases like it—defined the terms of the debate over presidential power for a generation, with conservatives seeking the protection of the president from the distractions of litigation and liberals believing that the chief executive should be treated more like an ordinary citizen. As a legal matter, the Paula Jones case followed in this tradition—posing the question of whether a sitting president should be forced to defend a private lawsuit. Of course, the analogy between the Jones case and that of Fitzgerald was close but not exact; the Pentagon employee’s civil suit against the president was based on Nixon’s official, not private, actions. Still, in the Jones case, if liberals and conservatives had stuck to their principles, the liberals would have supported Jones’s right to sue and the conservatives would have backed the president’s claim of immunity.

  Just the opposite occurred. In another example of how law and politics polluted each other in the course of this case, the Jones lawsuit found liberals feeling a president’s pain and conservatives speaking out for a lowly citizen. This hypocrisy was on vivid display in the genteel forum of the MacNeil/Lehrer NewsHour for May 24, 1994. Lloyd Cutler, the White House counsel and a stalwart Democrat, envisioned a legal quagmire for the president if the Jones case was allowed to proceed. “Suppose there were twenty libel suits filed against the president,” Cutler said. “Would he have to defend all those libel suits?”

  The conservative who embraced Paula Jones’s cause on the program could scarcely bring himself to pay lip service to Clinton’s obligations as president. “I think the dignity of the presidency and the rightful conduct of that office is of paramount importance and justifies protecting the president against the kinds of lawsuits that history tells us presidents are subjected to.” (Rightful conduct—an important qualification.) But this case—and this president—was something altogether different. “This is a novel situation, which suggests to me that we elect as president of the United States not perfect individuals but people who have conducted themselves in a way that at least thus far in our history has not given rise to private civil litigation against them.” It was a difficult sentence to parse, but the implication seemed to be that other presidents may not have been “perfect” but the Paula Jones case potentially represented a new and unprecedented level of presidential misfeasance. It was a thought that the spokesman for Paula Jones’s position on the program, a former Republican official named Kenneth W. Starr, would have ample opportunity to reflect upon in the months to come.

  4

  “I Love This Man”

  It’s not easy to make this kind of call, Cliff Jackson said.

  Jackson was agonizing once again about whether to supply a reporter with another damaging tale about Bill Clinton. But just as he had with the draft stories, the trooper stories, the Paula Jones stories, and his journeys to New Hampshire to campaign against his former Oxford schoolmate, Cliff Jackson said he had suffered through more purported sleepless nights. Then he decided that, well, yes, he would continue his campaign to destroy the president.

  “Bill,” Jackson said, “there’s someone on my dock who wants to talk about Whitewater.”

  That was how Jackson greeted the Los Angeles Times’s Rempel in a telepho
ne call in the fall of 1993. At the time, the two men were in touch almost daily, because Rempel was working on Jackson’s tip about the troopers and Clinton’s sex life. Now Cliff had something else for Rempel. He had Whitewater.

  The story—Whitewater—had existed on the periphery of the political world since March 8, 1992, just after the New Hampshire primary, when The New York Times’s Jeff Gerth published the first story about it. CLINTON JOINED S&L OPERATOR IN OZARK REAL ESTATE VENTURE, the headline read. The lead to Gerth’s story matched the neutral tone of the headline: “Bill Clinton and his wife were business partners with the owner of a failing savings and loan association that was subject to state regulation early in his tenure as Governor of Arkansas, records show.

  “The partnership, a real estate joint venture that was developing land in the Ozarks, involved the Clintons and James B. McDougal, a former Clinton aide turned developer. It started in 1978, and at times money from Mr. McDougal’s savings and loan was used to subsidize it. The corporation continues to this day, but does not appear to be active.” Gerth’s story was as notable for what it didn’t say as for what it did: there was no allegation of illegal conduct on the part of the then governor.

  While Gerth was working on his article for the Times, the Clintons’ side of the story was presented by an old friend of theirs named Susan Thomases, a New York lawyer who was quoted extensively in the piece. According to James B. Stewart’s book on Whitewater, Blood Sport, when, at long last, Gerth’s piece was published, “Thomases was thrilled. She thought it was incomprehensible.”

  Thomases had a lot of company in that view. The same phrases would reappear in the continuing coverage of the Whitewater story—“conflicts of interest,” “failed savings and loan,” “subject to state regulation”—yet no one could ever say with precision, much less with the specificity required for a criminal case, what Bill and Hillary Clinton had done wrong. Many of the stories invoked two familiar phrases of this accusatory era, words that had in common both their ubiquity and their meaninglessness: “appearance of impropriety” and “unanswered questions.” Indeed, with an almost comic circularity of reasoning, the very existence of the inquiries about Whitewater was seen as proof that they were justified. The New York Times editorial page often spoke this way. “Much as President Clinton might wish,” the editors wrote in a typical passage, “the curious saga of his and his wife’s dealings with the owner of a failed Arkansas savings and loan association just won’t go away. It keeps popping up in Congressional inquiries and newspaper accounts.…” Or on another occasion, the eve of one of the many congressional hearings on Whitewater, the paper intoned: “Mr. Clinton came to Washington promising to end the casual conflicts, favoritism and insider deals of the Reagan-Bush years. The very existence of these hearings attests that he has done little to honor that commitment.”

  One thing, however, was clear from the start. The Whitewater development itself, about two hundred acres located in a remote and inaccessible region of north Arkansas, had been a failure. Bill Clinton had not even been elected governor yet when, on an evening in early 1978, he and Hillary first discussed the purchase of the property with Jim and Susan McDougal, over dinner at a restaurant in Little Rock called the Black-eyed Pea. Later that year, the Clintons began investing in the project, and they eventually sank about $70,000 into the venture, although the precise amount was in dispute. At one point, in a rather pathetic attempt to generate interest in the area, Hillary Clinton paid for a small model house to be built on the property. The idea succeeded only in drawing a horde of photographers to the doorstep of the luckless souls who lived there at the time Clinton became president. Eventually, the homesteaders grew so fed up with serving as backdrops for the endless Whitewater stories that they hung a large banner that said, GO HOME, IDIOTS! (To this day, the Clintons have never visited the Whitewater property.)

  Still, the story never exactly went away. It received a smattering of attention in the press, and investigators in various bureaucracies of the federal government kept an eye on Whitewater as well. After Clinton was elected, the Whitewater case (if it was a case) remained in the same sort of limbo, the subject of occasional attention in the press but little sustained interest by law enforcement. In the Clinton White House, the Whitewater investigation belonged in the bailiwick of a lawyer named Vincent W. Foster, Jr., a former partner of Hillary Clinton’s in the Rose Law Firm. Foster actually spent most of his first months on the job as deputy White House counsel dealing with inquiries about another so-called scandal—the firing of several workers in the White House travel office in May 1993. Alerted to possible improprieties in the operation of that office, the White House had moved swiftly to replace the career officials who worked there. But the Clinton administration figures who handled the matter, including Foster, blundered. Based on the way the story was covered in the press, it looked as if the Clinton people had mistreated the long-serving incumbents, who had close ties to many White House reporters; worse, it seemed that the Clinton people were trying to replace the travel office with individuals with personal and financial ties to the first family. (Years of investigation of “Travelgate” produced no criminal charges against any Clinton appointees.)

  This minor flap turned into a tragedy on July 20, 1993, six months into Clinton’s presidency, when Vince Foster was found dead of a self-inflicted gunshot wound in a park outside Washington. In an apparent suicide note that was found torn in pieces at the bottom of Foster’s briefcase in his White House office, the lawyer wrote, “I made mistakes from ignorance, inexperience and overwork.… No one in the White House, to my knowledge, violated any law or standard of conduct, including any action in the travel office. There was no intent to benefit any individual or specific group.… The public will never believe the innocence of the Clintons or their loyal staff.…” In the aftermath of the suicide, many reporters decided to take a fresh look at all the subjects that had been within Foster’s jurisdiction, including Whitewater. Still, the problem remained: there wasn’t a witness who could say that the Clintons had done anything illegal in connection with Whitewater.

  Then, at last, there was a witness. His name was David Hale, and he was sitting on the dock outside Cliff Jackson’s house.

  In the Ozark Mountains of north Arkansas, not far from the Booger Hollow Trading Post and the seven-story-tall statue of Jesus Christ in Eureka Springs, the biggest summertime crowds used to gather at Dogpatch U.S.A., the amusement park based on the Al Capp comic strip. Visitors sipping Kickapoo Joy Juice strolled past the statue of General Jubilation T. Cornpone among actors dressed as Li’l Abner and Daisy Mae. The hillbilly theme even extended to the food signs. “Onbelievublee delishus Fish Vittles Kooked fo’ Sail,” boasted one offering. The park opened in 1968 and at one point drew as many as a million visitors a year, but once Capp stopped drawing the cartoon in 1977, the appeal of Dogpatch waned. In 1993, it went out of business for good.

  The closing represented more bad news for David Hale that year. He had helped to found the park, but it represented just one of his many business interests. In some respects, David Hale was the consummate small-state wheeler-dealer who dabbled in politics, law, and finance, the kind of enthusiastic booster who would wind up (as Hale did) as national president of the Jaycees. He was the chief judge on the small claims court of Little Rock and a friend to virtually all of the state’s political establishment. (As the journalist Murray Waas has pointed out, Hale was also a devout Baptist who frequently noted that one of his businesses manufactured church pews.) Hale even ran a bank of sorts, a company called Capital Management Services, which was authorized by the federal Small Business Administration to make loans to disadvantaged and minority borrowers. Among his many obligations, Hale also found time to be a professional thief.

  In 1986, Hale’s friends Jim and Susan McDougal came to him with a business proposition. (As it happened, this conversation also took place at Little Rock’s Black-eyed Pea.) As operators of Madison Guaranty Savings & Lo
an, they wanted Hale’s company to lend $300,000 to Susan McDougal for the husband-and-wife team to use in their various business ventures. Hale did make the loan, and it was never repaid. What happened to the money has always been something of a mystery. Jim McDougal said that $110,000 of it went to the Whitewater investment that he shared with Bill and Hillary Clinton. (Madison went bankrupt in 1989, costing taxpayers more than $49 million, which made it a rather modest failure by the standards of the S&L era.)

  It was the story of this $300,000 loan that was at the heart of what David Hale told the Los Angeles Times’s Bill Rempel after Cliff Jackson introduced them, and one part of Hale’s tale was especially significant. Hale told the reporter that Bill Clinton had personally asked him to make the loan to Susan McDougal. In that conversation, according to Hale, the then governor said that his name could not appear on any of the loan documents. To the extent that there has ever been an accusation of criminal wrongdoing against Clinton on Whitewater, this was—and is—it. Hale suggested that Clinton urged him to make a loan under false pretenses; according to Hale (though this was never entirely clear), Clinton knew that the money for the McDougals was really going to their shared Whitewater investment, even though Susan was ostensibly borrowing it for her marketing business. It was something less than an earth-shaking crime, and even if Hale’s story was true, Clinton’s actions may not have been a crime at all. But virtually the entire long investigation of Whitewater flows from this single purported conversation between Hale and Clinton in February 1986. (From the beginning, Clinton denied that any such conversation ever took place.)