Whitewater was backed by the Madison Guaranty Savings and Loan, which went bankrupt in 1989. The controlling partners in both the land deal and the bank were friends of the Clintons, James and Susan McDougal. Vincent Foster, a Little Rock law partner of Mrs. Clinton, represented the Clintons in the buyout of their Whitewater shares. Accusations of impropriety against the Clintons and others soon surfaced, regarding improper campaign contributions, political and financial favors, and tax benefits. Claiming that relevant files had disappeared (they were found at the White House in 1996) and that they had in any case lost money on the Whitewater venture, the Clintons denied any wrongdoing.
When Foster, now White House counsel, committed suicide (1993), however, more questions arose. Strongly pursued in Washington, mainly by Republicans, but largely ignored by the general public, Whitewater was investigated by a special prosecutor beginning in 1994 and by congressional committees in 1995–96. Special prosecutor Kenneth Starr 's investigation included testimony from Mrs. Clinton (which was the first time a first lady was subpoenaed by a grand jury) and videotaped testimony from the president.
In a 1996 trial, the McDougals and Jim Guy Tucker, Clinton's successor as governor of Arkansas, were found guilty of fraud in the case, and in another decision the former municipal judge David Hale, who had pled guilty to fraud and had been a witness in the McDougal trial, received a jail sentence. In yet another trial the same year two Arkansas bankers were acquitted of some charges, and the jury deadlocked on others. Although nothing conclusive concerning the Clintons' involvement in the Whitewater deal was proved in the congressional or special prosecutor's inquiries, Republicans charged Hillary Clinton with having sought to suppress politically damaging information and accused Clinton administration officials of lying under oath.
In early 1998, Starr won authorization to expand his investigation to include the Lewinsky scandal , and questions about Monica Lewinsky's relationship with Clinton quickly overshadowed Whitewater matters. However, in late 1998, when Starr presented his case for impeachment of the president for his attempts to conceal the Lewinsky affair, he indicated that his office had no impeachable evidence in the Whitewater matters. Starr resigned in Oct., 1999, and was succeeded by Robert W. Ray, the senior litigation counsel in Starr's office. In Sept., 2000, Ray ended the Whitewater inquiry, stating there was insufficient evidence to prove that President Clinton or his wife had committed any crime in connection with the failed real estate venture or the independent counsel's investigation into it the final report was issued 18 months later. Susan McDougal was pardoned by President Clinton in Jan., 2001, shortly before he left office.
See J. B. Stewart, Blood Sport: The President and His Adversaries (1996) M. Isikoff, Uncovering Clinton (1999).
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.
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