[Senate Report 104-204]
[From the U.S. Government Publishing Office]



104th Congress 2d Session        SENATE                 Report
                                                       104-204
_______________________________________________________________________


 
PROGRESS OF THE INVESTIGATION INTO WHITEWATER DEVELOPMENT CORPORATION 
       AND RELATED MATTERS AND RECOMMENDATION FOR FUTURE FUNDING

                               __________

                              R E P O R T

                                 of the

                    SPECIAL COMMITTEE TO INVESTIGATE
                   WHITEWATER DEVELOPMENT CORPORATION
                          AND RELATED MATTERS

                             together with

                            ADDITIONAL VIEWS




                January 22, 1996.--Ordered to be printed
SPECIAL COMMITTEE TO INVESTIGATE WHITEWATER DEVELOPMENT CORPORATION AND 
                            RELATED MATTERS

  ALFONSE M. D'AMATO, New York, 
             Chairman
PAUL S. SARBANES, Maryland           RICHARD C. SHELBY, Alabama
CHRISTOPHER J. DODD, Connecticut     CHRISTOPHER S. BOND, Missouri
JOHN F. KERRY, Massachusetts         CONNIE MACK, Florida
RICHARD H. BRYAN, Nevada             LAUCH FAIRCLOTH, North Carolina
BARBARA BOXER, California            ROBERT F. BENNETT, Utah
CAROL MOSELEY-BRAUN, Illinois        ROD GRAMS, Minnesota
PATTY MURRAY, Washington             BILL FRIST, Tennessee
PAUL SIMON, Illinois                 ORRIN B. HATCH, Utah
                                     FRANK H. MURKOWSKI, Alaska
 Howard A. Menell, Staff Director
  Robert J. Giuffra, Jr., Chief 
              Counsel
 Philip E. Bechtel, Deputy Staff 
             Director
Steven B. Harris, Democratic Staff 
    Director and Chief Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Summary..........................................................     1
Preface..........................................................     2
Discussion.......................................................     2
A. Progress of the Committee's Investigation.....................     2
    1. Foster Phase..............................................     3
    2. Washington Phase..........................................     5
    3. Arkansas Phase............................................     9
B. Obstacles Faced by the Committee..............................    11
    1. Delays in the Production of Documents.....................    11
         (a) Telephone Records...................................    11
        (b) White House Delays...................................    14
        (c) Subpoena for William Kennedy's Notes.................    16
    2. Resistance of Witnesses...................................    18
        (a) Fifth Amendment Pleas................................    18
        (b) Motions to Quash the Committee's Subpoenas...........    18
    3. Objections by the Office of Independent Counsel...........    20
C. Recommendations for Additional Funds..........................    22
Exhibit I--Testimony of witnesses before the Special Committee to 
  Investigate Whitewater Development Corporation and Related 
  Matters........................................................    24
Exhibit II--Phase I: Handling of documents in Foster's office....    30
Exhibit III--Phase II: Washington and Arkansas...................    48
Exhibit IV--Additional document requests.........................    68
Additional views of Senators Sarbanes, Dodd, Kerry, Bryan, Boxer, 
  Moseley-Braun, Murray and Simon................................    90
    I. The Special Committee should adhere to S. Res. 120 and 
      complete its inquiry by February 29, 1996..................    90
        The Committee should complete its investigation by 
          February 29, 1996......................................    90
        The investigation should not be prolonged in an election 
          year...................................................    91
        Substantial public funds have already been expended......    92
        The Independent Counsel's investigation should not delay 
          the Committee's investigation..........................    92
        White House compliance with Committee document requests..    94
    II. The Majority's findings are incomplete and one-sided.....    95
    III. Conclusion..............................................    97
104th Congress                                                   Report
                                 SENATE

 2d Session                                                     104-204
_______________________________________________________________________


 PROGRESS OF THE INVESTIGATION INTO WHITEWATER DEVELOPMENT CORPORATION 
       AND RELATED MATTERS AND RECOMMENDATION FOR FUTURE FUNDING
                                _______


                January 22, 1996.--Ordered to be printed

_______________________________________________________________________


   Mr. D'Amato, from the Special Committee to Investigate Whitewater 
  Development Corporation and Related Matters, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                                Summary

    The Special Committee to Investigate Whitewater Development 
Corporation and Related Matters (the ``Committee'') has made 
significant progress toward completing the mandate of Senate 
Resolution 120. The Committee has sought to fulfill its mandate 
in a fair, thorough and impartial manner. In carrying out its 
constitutional oversight responsibility, the Committee has to 
date conducted 172 depositions, examined 95 witnesses in 29 
days of public hearings, and issued numerous requests and 
subpoenas for documentary evidence.\1\ This effort has 
uncovered many new and critical facts regarding the matters of 
inquiry specified in Senate Resolution 120.
    \1\ Exhibit 1 accompanying this report provides a comprehensive 
listing of the witnesses examined by the Committee under oath.
---------------------------------------------------------------------------
    Although the Committee has made significant progress, much 
work remains to be done. The Committee has confronted efforts 
to withhold relevant information from the Committee. The 
continuing pattern of hinderance by various parties has 
significantly impeded the progress of the Committee's 
investigation. The Committee's progress has also been slowed by 
consideration of the Office of Independent Counsel's concerns 
about the Committee's examination of witnesses, including 
witnesses involved in the trial of United States v. James B. 
McDougal, et. al. prior to its conclusion. That trial has been 
rescheduled twice. It is currently calendared to begin on March 
4, 1996, and is expected to last approximately two months.
    The Committee therefore does not believe that it can 
complete the mandate of Senate Resolution 120 by February 29, 
1996, and recommends that the Senate authorize the expenditure 
of $600,000 to continue its investigation beyond that date. The 
Committee is committed to completing its investigation at the 
earliest possible date.

                                PREFACE

    On May 17, 1995, the Senate, by a vote of 96 to 3, adopted 
Senate Resolution 120, which established the Committee, to be 
administered by the Committee on Banking, Housing, and Urban 
Affairs (the ``Banking Committee''). Section 9 of Resolution 
120 directs the Committee to evaluate the progress of the 
investigation, study and hearings authorized by the Resolution 
and to make recommendations to the Senate with respect to the 
authorization of additional funds for a period following 
February 29, 1996. This report to the Senate addresses: (A) the 
progress of the Committee's investigation into matters 
authorized by Resolution 120; (B) the obstacles the Committee 
has encountered during the course of its investigation; and (C) 
the Committee's recommendations as to the funding necessary to 
carry out fully the mandate of Resolution 120.

                               Discussion

              A. PROGRESS OF THE COMMITTEE'S INVESTIGATION

    The Committee has made significant progress in carrying out 
the mandate of Senate Resolution 120. The Resolution authorized 
the Committee to investigate and to hold public hearings into 
three general subject areas. Section 1(b)(1) authorized 
investigation into whether White House officials engaged in 
improper conduct in handling documents in Deputy White House 
Counsel Vincent Foster's office following his death on July 20, 
1993--the so-called Foster Phase of the Committee's inquiry. 
Section 1(b)(2) authorized investigation into whether the White 
House improperly interfered with any investigations or 
prosecutions by various federal agencies relating to, among 
other things, Whitewater Development Corporation 
(``Whitewater''), Madison Guaranty Savings & Loan Association 
(``Madison''), and Capital Management Services, Inc. (``CMS''). 
This is the Washington Phase of the inquiry. Finally, in the 
Arkansas Phase, Sec. 1(b)(3) of Resolution 120 authorized the 
Committee to investigate, among other things, the operations of 
Whitewater, Madison, CMS and the work and billing practices of 
the Rose Law Firm with regard to Madison.
    The Committee has conducted extensive investigation and 
public hearings in connection with the Foster and the 
Washington Phases. The Committee has completed the bulk of its 
inquiry into these matters and has uncovered numerous new and 
salient facts. However, in light of the scope of the Senate's 
mandate, the thoroughness with which the Committee has sought 
to conduct its inquiry and the delay and noncompliance by 
certain parties with the Committee's inquiry, the Committee has 
not yet concluded its investigation. The Committee is now 
analyzing all available evidence in order to identify any 
additional avenues of investigation with respect to the Foster 
and Washington Phases of its investigation and to make its 
final conclusions. With respect to the Arkansas Phase, the 
Committee is now well into its investigation and has begun to 
hold public hearings into matters authorized by Sec. 1(b)(3) of 
Senate Resolution 120.
    In total, the Committee has conducted 172 depositions, 
examined 95 witnesses in 29 days of public hearings, and issued 
numerous requests and subpoenas for documents and records. This 
report is accompanied by exhibits detailing the Committee's 
substantial efforts. The Committee has attempted to conduct its 
investigation in a bipartisan manner. The Chairman and Ranking 
Member have jointly issued the vast majority of the requests 
and subpoenas for documentary and testamentary evidence.

1. Foster phase

    The death of White House Deputy Counsel Vincent W. Foster, 
Jr., on July 20, 1993, marked the first time since Secretary of 
Defense James Forrestal died in 1949 that such a high-ranking 
U.S. official took his own life. Mr. Foster was a close friend 
of both the President and Mrs. Clinton and provided legal 
counsel to them on a number of sensitive personal matters, 
including Whitewater. In the days following his death, White 
House officials, in particular members of the White House 
Counsel's office, searched the contents of Mr. Foster's office 
and, at the same time, prevented law enforcement officials from 
conducting a similar search.
    Section 1(b)(1) of Senate Resolution 120 authorized the 
Committee to inquire ``whether improper conduct occurred 
regarding the way in which White House officials handled 
documents in the office of White House Deputy Counsel Vincent 
Foster following his death.'' The Committee conducted 69 
depositions and held 17 days of public hearings to investigate 
the actions of White House officials in the week following Mr. 
Foster's death. The Committee's investigation revealed, among 
other things, the following salient facts:

          Seven different persons recalled four separate 
        requests by law enforcement officials to White House 
        officials to seal Vincent Foster's office on the 
        evening of his death. The office was not sealed on that 
        night. (Braun, 7/20/95 Hrg. p. 20; Rolla, 7/20/95 Hrg. 
        pp. 31-32; Hines, 7/20/95 Hrg. p. 25; Mathews, 7/25/95 
        Hrg. pp. 73-74; Gergen, 7/12/95 Dep. p. 29-30; Gearan, 
        7/6/95 Dep. p. 48; Hubbell, 7/13/95 Dep. pp. 49-51).
          White House Counsel Bernard Nussbaum, Chief of Staff 
        to the First Lady Margaret Williams, and Deputy 
        Director of the White House Office of Administration 
        Patsy Thomasson conducted a search of Mr. Foster's 
        office on the night of his death. (Nussbaum, 8/9/95 
        Hrg. p. 11; Williams, 7/26/95 Hrg. p. 154; Thomasson, 
        7/25/95 Hrg. p. 199).
          Secret Service Officer Henry O'Neill testified that, 
        on the night of Mr. Foster's death, he saw Ms. Williams 
        remove file folders, three to five inches thick, from 
        the White House Counsel's suite and place them in her 
        office. (O'Neill, 7/26/95 Hrg. p. 22). Ms. Williams 
        testified that she did not remove any files from the 
        Counsel's suite, and submitted results of a polygraph 
        test corroborating her testimony. (Anderson, 7/31/95 
        Dep. Exh. 1).
          Department of Justice officials testified that they 
        agreed with Mr. Nussbaum on July 21, 1993, that they 
        would review documents in Mr. Foster's office jointly 
        with Mr. Nussbaum. (Heymann, 8/2/95 Hrg. p. 42; 
        Margolis, 8/10/95 Hrg. pp. 178-179; Adams, 6/29/95 Dep. 
        p. 32).
          Susan Thomases paged Mr. Nussbaum early morning on 
        July 22, after talking with Mrs. Clinton. (Williams & 
        Connolly Document 001; White House Document Z 000647). 
        Ms. Thomases then called back Mrs. Clinton. Associate 
        White House Counsel Stephen Neuwirth testified that Mr. 
        Nussbaum said later that morning that Mrs. Clinton and 
        Ms. Thomases were concerned about law enforcement 
        officials having ``unfettered access'' to Mr. Foster's 
        office. (Neuwirth, 8/3/95 Hrg. p. 75).
          Mr. Nussbaum then announced to the law enforcement 
        officials that he had decided to change the procedures 
        for searching Mr. Foster's office. Mr. Nussbaum alone 
        would review the documents contained in the office. 
        (Margolis, 8/10/95 Hrg., pp. 182-183). Justice 
        Department officials told Mr. Nussbaum that he was 
        making ``a terrible mistake.'' (Heymann, 8/2/95 Hrg. p. 
        46; Margolis, 8/10/95 Hrg. p. 185).
          Law enforcement officials testified that they were 
        dissatisfied with Mr. Nussbaum's cursory review of 
        documents in Mr. Foster's office on July 22. (Margolis, 
        8/10/95 Hrg. p. 191; Salter, 7/27/95 Hrg. p. 105; 
        Adams, 7/27/95 Hrg. p. 105; Park Police Document 37).
          Michael Spafford, an attorney representing the Foster 
        family, testified that he overheard Associate White 
        House Counsel Clifford Sloan tell Mr. Nussbaum after 
        the document review on July 22 that scraps of paper 
        remained at the bottom of Mr. Foster's briefcase. 
        (Spafford, 7/27/95 Hrg. p. 19).
          Ms. Williams and Mr. Nussbaum conducted a second 
        review of Mr. Foster's office and transported files to 
        the White House Residence on July 22. (Nussbaum, 7/12/
        95 Dep. p. 237; Williams, 7/26/95 Hrg. p. 220-221). 
        Special Assistant to the White House Counsel Thomas 
        Castleton testified that, as he helped carry the files 
        to the residence, Ms. Williams told him that ``the 
        President or the First Lady had to review the contents 
        of the boxes to determine what was in them.'' 
        (Castleton, 6/27/95 Dep. pp. 139-140).
          Deputy Attorney General Phillip Heymann testified 
        that, dissatisfied with Mr. Nussbaum's procedure for 
        reviewing the documents in Mr. Foster's office, Mr. 
        Heymann asked Mr. Nussbaum on the evening of July 22: 
        ``Bernie, are you hiding something?'' (Heymann, 8/2/95 
        Hrg. p. 50).
          White House officials did not discover a note written 
        by Mr. Foster until six days after his death and did 
        not disclose to law enforcement officials the discovery 
        of the note written by Mr. Foster until 28 hours after 
        the discovery. (Nussbaum, 7/12/95 Dep. pp. 278-279; 
        Heymann, 8/2/95 Hrg. p. 53).

    During the Foster Phase, the Committee faced numerous 
instances where witnesses provided inconsistent or 
contradictory testimony to the Committee. Even more often, 
witnesses provided a rote response of ``I don't recall'' or ``I 
have no specific recollection or knowledge'' to the Committee's 
questions relating to crucial facts. The Chairman has asked the 
Committee's counsel to study whether the Committee should refer 
the testimony of certain witnesses to the Independent Counsel 
for him to pursue possible charges. This review, which requires 
examination of hundreds of pages of depositions and hearing 
transcripts, is not yet completed. Given the unreliability of 
the testimony of key witnesses, the Committee continues to 
pursue its investigation of the Foster Phase and to evaluate 
the evidence already gathered in this phase of its inquiry.

2. Washington phase

    In 1992, federal officials began to investigate indications 
of financial improprieties and violations of federal laws 
related to the failure of Madison. From the beginning, there 
were allegations, at times well publicized, of improper conduct 
relating to, and political pressure being brought to bear on, 
the sensitive investigation. The Committee focused on these 
allegations in the Washington Phase of its investigation, 
deposing 82 witnesses and conducting 9 days of public hearings.
    Sections 1(b)(2)(A), (B), and (D) of Senate Resolution 120 
authorize the Committee to investigate the handling of the 
Resolution Trust Corporation's (``RTC'') investigation into 
Madison and Whitewater, including whether confidential RTC 
information was improperly handled and communicated to the 
White House and whether RTC investigators were improperly 
disciplined for pursuing the investigation of Madison and 
Whitewater. The Committee's investigation has revealed, among 
other things, the following significant facts:

          RTC criminal investigators based in Kansas City 
        prepared 10 criminal referrals related to Madison 
        Guaranty. Twelve of the 21 counts contained in the 
        Independent Counsel's indictment of James McDougal, 
        Susan McDougal, and Arkansas Governor Jim Guy Tucker 
        are directly related to these criminal referrals.
          The first criminal referral was submitted to the 
        Department of Justice on September 1, 1992. However, 
        contrary to prior practice, this referral was not acted 
        upon for over a year until U.S. Attorney Paula Casey 
        declined it on October 27, 1993. (RTC Letter, Sept. 1, 
        1992; DOJ Letter, Oct. 27, 1993).
          In January 1994, soon after the RTC reopened its 
        civil investigation of Madison, RTC investigator Gary 
        Davidson wrote that RTC attorney April Breslaw told him 
        that ``there are some RTC people in management 
        positions who would take a `dim view' of [him] 
        investigating Madison Guaranty.'' (RTC Document 
        RI0109). Breslaw had hired the Rose Law Firm to 
        represent the Federal Deposit Insurance Corporation in 
        its suit against Madison's former accountants. 
        (Pillsbury Madison & Sutro LLP, A Report on the Rose 
        Law Firm's Conduct of Accounting Malpractice Litigation 
        pertaining to Madison Guaranty Savings & Loan, p. 8).
          Soon thereafter, on February 2, 1994, Ms. Breslaw in 
        a taped conversation told another RTC investigator, L. 
        Jean Lewis, that ``I think if they can say it honestly, 
        the head people, Jack Ryan and Ellen Kulka, would like 
        to be able to say `Whitewater did not cause a loss to 
        Madison.' '' (Transcript of Conversation between L. 
        Jean Lewis and April Breslaw, p. 59). In hearings 
        before the Committee at which the tape of this 
        conversation was played, Ms. Breslaw refused to confirm 
        that she had made the statement or even that it was her 
        voice on the tape. (Breslaw, 11/30/95 Hrg. pp. 54-57).
          Ms. Lewis testified that ``there was a concerted 
        effort to obstruct, hamper and manipulate the results 
        of our investigation of Madison.'' (Lewis, 11/29/95 
        Hrg., Opening Statement, p. 1). Richard Iorio, her 
        supervisor, testified that ``we have learned that the 
        RTC is not above politics in its handling of 
        investigations of high visibility failed banks. If 
        important people are implicated, special procedures are 
        employed.'' (Iorio, 10/20/95 Dep. p. 66).
          On August 15, 1994, the three RTC investigators who 
        prepared the criminal referrals related to Madison were 
        placed on administrative leave for two weeks without 
        warning or explanation. (RTC Documents RI0003, RI0012, 
        RI0017). The Independent Counsel is currently 
        investigating this matter. (Noble, 10/20/95 Dep.)

    The RTC makes criminal referrals to the appropriate U.S. 
Attorney for further investigation and prosecution if 
warranted. With respect to Madison and Whitewater, RTC 
investigators forwarded to the U.S. Attorney for the Eastern 
District of Arkansas two sets of such criminal referrals. 
Section 1(b)(2)(C) authorized the Committee to investigate 
whether the Department of Justice has improperly handled these 
criminal referrals from the RTC. The Committee's investigation 
into this matter revealed, among other things, that:

          The first RTC criminal referral, Referral No. C0004, 
        was made to Charles Banks, the U.S. Attorney for the 
        Eastern District of Arkansas, in September 1992. Banks 
        did not take action on the referral, but on January 27, 
        1993, sent a recusal letter to the Executive Office of 
        U.S. Attorneys, to which he never received a response. 
        (DOJ Document A7049-7050; Banks dep. 91).
          High-level Justice Department officials believed that 
        Paula Casey, Mr. Banks' successor, should have recused 
        herself from the case because of her ties to the 
        Clintons and Arkansas Governor Jim Guy Tucker. They 
        communicated this view to her on several occasions. 
        (DOJ Documents GEM-34, OIC 001127, FBI-1922). The 
        director and agents of the Federal Bureau of 
        Investigation similarly expressed concern that U.S. 
        Attorney Casey should recuse herself from Madison-
        related matters. (DOJ Documents FBI-1287, FBI-1930). 
        Nevertheless, Ms. Casey did not recuse herself until 
        November 5, 1993 and only after declining the first RTC 
        criminal referral C0004. (DOJ Document 5136).
          Randy Coleman, the attorney for CMS president David 
        Hale, testified that he made an informal proffer during 
        plea negotiations with Ms. Casey on September 7, 1993, 
        but received no response. (Coleman, 11/9/95 Dep. p. 34) 
        Mr. Hale offered to provide information on important 
        Arkansas political figures, including President 
        Clinton, in exchange for a negotiated plea. (Casey, 11/
        1/95 Dep. pp. 63-64)
          No plea agreement was reached, and David Hale was 
        indicted on September 23, 1993. Ms. Coleman again 
        suggested on September 24, 1993, that Casey recuse 
        herself from the case, and that he be allowed to 
        proffer Mr. Hale's information to the Department of 
        Justice in Washington. (DOJ Document OIC 1074).
          Even after his recusal from the case in November 1993 
        (DOJ Document 16848), Associate Attorney General 
        Webster Hubbell, a close associate of the Clintons, 
        possessed the Clinton's personal and campaign files on 
        Whitewater and Madison and was involved in the review 
        and transfer of these documents to the Clinton's 
        personal attorney in November and December 1993 
        (Hubbell, 10/26/95 Dep. pp. 96-99, 149-151).

    The Small Business Administration (``SBA'') was among the 
federal agencies investigating financial improprieties related 
to matters specified under Senate Resolution 120. CMS was a 
Specialized Small Business Investment Company owned and 
operated by David Hale. The SBA licensed and funded CMS to make 
business loans to socioeconomically disadvantaged persons. 
Instead, CMS allegedly engaged in a number of sham transactions 
and made a number of improper loans, including a loan for 
$300,000 to Susan McDougal--allegedly at the behest of then-
Governor Clinton--that was used in part to prop Whitewater.
    Section 1(b)(3)(E) of Senate Resolution 120 authorized the 
Committee to investigate the supervision and regulation of CMS 
by the SBA. The Committee's investigation revealed the 
following:

          Former SBA Associate Administrator Wayne Foren 
        testified that David Hale told him that he had access 
        and influence with Governor Tucker and President 
        Clinton. (Foren, 11/14/95 Dep. pp. 27-29). Mr. Hale 
        also offered to arrange a meeting between Mr. Foren and 
        Governor Tucker, which Mr. Foren refused. (Foren, 11/
        14/95 Dep. p. 107).
          Mr. Foren testified that he briefed SBA Administrator 
        Erskine Bowles on May 5, 1993, about his investigation 
        of CMS and David Hale. (Foren, 11/14/95 Dep. pp. 49-
        50). The next day, Mr. Bowles advised Mr. Foren that he 
        had talked with White House Chief of Staff Thomas 
        McLarty about the CMS/Hale matter. (Foren, 11/14/95 
        Dep. p. 57).
          Associate White House Counsel Neil Eggleston 
        contacted the SBA and requested confidential 
        information relating to the investigation of CMS and 
        David Hale. On November 16, 1993, the SBA's General 
        Counsel, James Spotila, sent the documents to Mr. 
        Eggleston.
          On the day that he had retrieved sensitive documents 
        from the SBA, Mr. Eggleston left two messages for 
        Lindsey, saying that it was important that the 
        documents be reviewed. Mr. Eggleston testified that 
        ``no one at the White House saw any of the underlying 
        documents except me.'' (Eggleston, 11/28/95 Hrg., p. 
        99). However, records produced to the Committee on 
        January 14, 1996, indicate that Mr. Eggleston called 
        Assistant to the President Bruce Lindsey on the same 
        day that he received the documents. The message, taken 
        at 4:58 p.m. on November 16, 1993, and marked 
        ``Important,'' stated: ``Has some Whitewater documents 
        to go over with you. Will come by about 6:00 p.m.'' 
        (White House Document S 012604). The documents remained 
        in his office for two days until the Department of 
        Justice asked that they be returned to the SBA. 
        (Eggleston, 1/16/96 Hrg. p. 27-32, 89-93, 102-105).
          When Justice Department and FBI officials learned 
        about the transfer, they asked the SBA to retrieve the 
        documents and any copies. (DOJ Document JDA81).

    Hearings before the Banking Committee in 1994 revealed that 
a number of administration officials in the Treasury Department 
and the White House engaged in improper contacts and exchanged 
confidential law enforcement information relating to the RTC's 
investigation of Madison and Whitewater. As part of the 
investigation into these contacts, the Office of Government 
Ethics (``OGE'') issued a report on the matter. In light of 
questions about the handling of the OGE report and a related 
investigation by the Treasury and RTC Inspectors General, 
Section 1(b)(2)(B) authorized the Committee to investigate 
whether the White House engaged in improper contacts concerning 
confidential RTC information about Madison and Whitewater. 
Relatedly, section 1(b)(2)(E) authorized an investigation into 
whether the OGE report was improperly released to White House 
officials prior to their testimony before the Banking Committee 
or was used to communicate confidential RTC information to the 
White House. The Committee's investigation into these matters 
revealed the following:

          Despite the fact that Treasury Department General 
        Counsel Jean Hanson was a subject of the investigation, 
        Francine Kerner, a member of the General Counsel's 
        office, provided advance copies of investigation 
        transcripts to Ms. Hanson's staff. The transcripts were 
        then disseminated to other senior Treasury officials. 
        (Hrg. 11/8/95, p. 8).
          The transcripts contained confidential information 
        about RTC criminal investigations and referrals that 
        even Treasury Secretary Lloyd Bentsen should not have 
        been permitted to review. RTC Inspector General John 
        Adair testified that the transcripts contained 90% of 
        the substance of the confidential information in the 
        RTC criminal referrals. (Adair, 11/7/95 Hrg., p. 123).
            Ms. Kerner also provided Ms. Hanson's staff with 
        draft copies of the RTC Inspector General's conclusions 
        and asked Ms. Hanson's staff to edit the proposed OGE 
        report. (Hrg., 11/7/95, p. 124).
          The Treasury Inspector General's chief investigator, 
        James Cottos, objected to Ms. Kerner's attempts to 
        alter the draft investigative report. He testified that 
        ``I believe I made the comment we were not the Jean 
        Hanson defense team.'' In addition, ``I felt they were 
        slanting the facts or attempting to slant the facts.'' 
        (Cottos, 11/8/95 Hrg. p. 35-36).
          Clark Blight, the chief investigator for the RTC 
        Inspector General, testified that he was under the 
        impression that Ms. Kerner was ``an advocate for the 
        White House.'' (Blight, 11/7/95 Hrg. pp. 108-109).
          Patricia Black, Counsel to the RTC Inspector General, 
        testified that she was ``astonished'' that information 
        from such a meeting was being communicated back to the 
        Treasury General Counsel's office because ``they were 
        the subject of the investigation.'' (Black, 11/7/95 
        Hrg. p. 114).
          Confidential transcripts of investigative depositions 
        were given to the White House Counsel's office without 
        the knowledge or consent of the RTC Inspector General's 
        office. Mr. Adair, Mr. Blight and Ms. Black were 
        ``shocked'' by the communication of this information to 
        the White House (Hrg. 11/7/95, pp. 119-20).
          Stephen Potts, Director of the OGE, testified that, 
        contrary to statements made by White House Special 
        Counsel Lloyd Cutler to the Banking Committee in August 
        1994, the OGE did not ``informally concur'' in Mr. 
        Cutler's conclusion White House officials did not 
        violate ethical standards with regard to the 
        communication of confidential RTC information from the 
        Treasury Department to the White House. (Potts, 11/8/95 
        Hrg., pp. 226-27).
          Mr. Cutler admitted to the Committee that he may have 
        ``transgressed'' and ``may have gone too far when he 
        testified'' before the Banking Committee in August 
        1994. (Cutler, 11/9/95 Hrg. p. 34).

    Although the bulk of the Committee's work is done, the 
Washington Phase of its investigation is not concluded. Due to 
the repeated delays in the production of documents, the 
Committee continues to obtain evidence pertinent to its 
inquiry. For example, the Committee received documents highly 
relevant to its investigation into contacts between the SBA and 
the White House as recently as January 14, 1996.

3. The Arkansas phase

    Section 1(b)(3) authorizes the Committee to investigate and 
conduct public hearings into what lies at the heart of the 
Whitewater affair. Whereas the matters covered in the Foster 
Phase and the Washington Phase concern improper conduct or 
contacts related to investigations of Whitewater, Madison and 
CMS, the Arkansas Phase focuses on core allegations of 
improprieties and criminal activities relating to Whitewater 
and Madison. As explained below, the Committee's commencement 
of the Arkansas Phase was delayed by discussions with the 
Office of Independent Counsel, and the completion of the 
Committee's investigation is likely to be delayed by concerns 
expressed by Independent Counsel. Nevertheless, the Committee 
has to date conducted 21 depositions and held three days of 
public hearings concerning the Arkansas Phase. This 
investigation has uncovered the following facts thus far:

          Mrs. Clinton has stated publicly that Richard Massey, 
        then a young associate at the Rose Law Firm, and not 
        she, arranged to bring in Madison as a client to the 
        firm. However, Mr. Massey testified he did not bring in 
        Madison as a client of the Rose Law Firm. (Massey, 1/
        11/96 Hrg., pp. 230, 232-33).
          Mrs. Clinton has stated publicly and under oath that 
        she performed little or no work for Madison. However, 
        records of billings by the Rose Law Firm, recently 
        ``discovered'' in the personal quarters of the 
        President and Mrs. Clinton at the White House, indicate 
        that Mrs. Clinton accounted for approximately one-third 
        of the firm's total billings to Madison. (Rose Law Firm 
        Document RLF2 03030; Williams & Connolly Document 
        DKSN028928).
          Mrs. Clinton billed Madison for approximately 60 
        hours of work. The Rose Law Firm billed Madison 
        Guaranty more than $21,000.
          On April 29, 1985, Mrs. Clinton had a telephone 
        conference with Beverly Bassett, the Arkansas 
        securities commissioner who had been appointed to her 
        post by Governor Clinton. The next day, the Rose Law 
        Firm submitted to Ms. Bassett a request for approval of 
        Madison's plan to issue a series of preferred stock as 
        a capitalization measure.
          Mrs. Clinton billed Madison for more than a dozen 
        conferences with Seth Ward, the Madison employee who 
        was the ``straw'' purchaser of land from the Industrial 
        Development Corporation (``IDC''). Bank regulators have 
        described this transaction as a ``sham'' purchase that 
        was structured to evade regulations limiting the extent 
        to which Madison could invest in real estate.
          In connection with the IDC/Castle Grande matter, Mrs. 
        Clinton prepared an option agreement under which 
        Madison would have the right to purchase property from 
        Seth Ward for $400,000. The Committee is examining 
        whether the option was designed to be a way for Madison 
        to pay Ward commissions on this transaction without 
        having those commissions reclaimed by federal 
        regulators.

    The Special Committee continues to investigate the 
involvement of President and Mrs. Clinton in the affairs of 
Whitewater, Madison, and CMS, as well as other matters 
authorized by Section 1(b)(3) of Senate Resolution 120.

                  B. OBSTACLES FACED BY THE COMMITTEE

    Considerable progress has been made, but much work remains 
to be done. The Committee has confronted a number of unforeseen 
obstacles that have significantly hindered the progress of its 
investigation. The most notable and time-consuming of these 
obstacles have included (1) the withholding and delay by 
various persons and entities, including the White House, in the 
production of documents directly relevant to the Committee's 
investigation, (2) the noncooperation and resistance of a 
number of witnesses whose testimony is highly relevant to the 
Committee's investigation, and (3) the need to accommodate 
objections of the Independent Counsel that the Committee's 
inquiry into certain areas would hinder or impede his 
investigation.

1. Delays in the production of documents by the White House and other 
        witnesses

    Because the testimony of witnesses before the Committee was 
often contradictory as to important events and actions, the 
Committee has placed particular emphasis on available 
documentary evidence. Unfortunately, throughout the course of 
its inquiry, the Committee has been hindered by parties unduly 
delaying the production of, or withholding outright, documents 
critical to its investigation. Although the White House has 
most often and most notably engaged in this course of action, 
the pattern of noncooperation has not been limited to just one 
party.\2\
    \2\ Exhibits 2-4 accompanying this report provides a comprehensive 
accounting of the Special Committee's numerous document requests and 
subpoenas and the responses received from the various parties.
---------------------------------------------------------------------------
            (a) Telephone records
    On June 30, 1995, the Committee requested that the White 
House produce the residential telephone records of Margaret 
Williams, Chief of Staff to the First Lady, for the period July 
20-22, 1993. Receiving no response, the Committee repeated its 
request to Ms. Williams' personal counsel on August 10, 1995. 
On August 24, 1995, Ms. Williams' counsel represented to the 
Committee that the telephone company no longer retained the 
requested records: ``In sum, the telephone records cannot be 
obtained, and we expect to receive written confirmation of that 
fact very shortly.'' The Committee received no further 
confirmation from Ms. Williams. On September 13, 1995, the 
Committee contacted Ms. Williams' telephone company and was 
advised that records for Ms. Williams' residence were indeed 
available for July 1993. On September 14, 1995, the Committee 
issued a subpoena to the telephone company for those records, 
which were produced to the Committee approximately one week 
later. Ms. Williams then informed the Committee that she also 
had received her telephone records and would cooperate with its 
investigation.
    Also, on June 30, 1995, the Committee requested from the 
White House all records reflecting ``communications that took 
place between 5:00 p.m. on July 20, 1993 and 5:00 p.m. on July 
22, 1993 from or to Hillary Rodham Clinton.'' This request 
encompassed the telephone records of the Rodham residence in 
Little Rock, Arkansas, where Mrs. Clinton was visiting during 
this period. The White House, however, did not respond to this 
request until after the Committee specifically repeated it on 
August 9, 1995. On September 20, 1995, approximately three 
months after the Committee's initial request, the Clintons' 
personal attorney produced to the Committee records of Mrs. 
Clinton's telephone calls from the Rodham residence.
    On July 11, 1995, the Committee requested that the White 
House produce certain telephone records of Susan Thomases, a 
close confidant of the First Lady, for July 1993. Receiving no 
response, the Committee repeated the request to Ms. Thomases' 
personal counsel on August 9, 1995. On August 11, 1995, Ms. 
Thomases informed the Committee that neither she nor the 
telephone company retained any records of calls made from her 
residence or charged to her calling card. Ms. Thomases did 
produce to the Committee, on October 2, 1995, certain records 
of calls made from her office and vacation house.
    On December 6, 1995, shortly before Ms. Thomases was 
scheduled to appear before the Committee, counsel for Ms. 
Thomases advised that, in a routine search of records for an 
unrelated case, he had discovered certain responsive telephone 
records that Ms. Thomases had attached to an expense report in 
September 1993. The letter did not explain why Ms. Thomases had 
not advised her counsel or the Committee of their existence. 
Counsel for Ms. Thomases supplemented this production on 
December 11, 1995, enclosing even more responsive telephone 
records from Ms. Thomases' office.
    The various telephone records turned out to be highly 
relevant to the Committee's investigation into the handling of 
documents in Vincent Foster's office following his death. The 
records established the following:

          Hillary Rodham Clinton called Margaret Williams at 
        10:13 p.m. EDT, immediately upon hearing of Mr. 
        Foster's death on July 20, 1993. Immediately after 
        speaking with Mrs. Clinton, Ms. Williams proceeded to 
        Mr. Foster's office in the West Wing of the White 
        House.
          Mrs. Clinton then called Susan Thomases in New York 
        at 11:19 p.m. EDT.
          After searching Mr. Foster's office, Ms. Williams 
        called Mrs. Clinton in Little Rock at 12:56 a.m. EDT on 
        July 21, 1995, and talked for 11 minutes.
          At 1:10 a.m. EDT, after her conversation with Mrs. 
        Clinton, Ms. Williams called Ms. Thomases in New York.
          Early on the morning on July 22, 1993, Ms. Williams 
        called Mrs. Clinton at 7:44 a.m. EDT. After speaking 
        with Ms. Williams for seven minutes, Mrs. Clinton 
        called Ms. Thomases in her Washington, D.C. hotel.
          Immediately after hanging up with Mrs. Clinton, Ms. 
        Thomases paged White House Counsel Bernard Nussbaum, 
        who later told his associate that the First Lady and 
        Ms. Thomases were concerned about law enforcement 
        officials having ``unfettered access'' to Mr. Foster's 
        office.
          Ms. Thomases then called back Mrs. Clinton at 8:25 
        a.m. EDT on July 22.
          Ms. Thomases called Ms. Williams at 3:08 p.m. on July 
        22, right before Ms. Williams conducted a second review 
        of Mr. Foster's office with Mr. Nussbaum.

    The three-month delay in providing telephone records to the 
Committee cost the Committee considerable investigative time 
and caused the Committee to revisit its investigation into the 
handling of papers in Mr. Foster's office. Ms. Williams and Ms. 
Thomases had to be recalled to the Committee twice in order to 
explain the contradictions between their sworn testimony and 
the telephone records and other documentary evidence uncovered 
by the Committee.
    The pattern continues. On January 9, 1996, Ms. Thomases 
produced to the Committee more responsive records, apparently 
discovered, according to her counsel, after ``expending 
extraordinary efforts.'' Among the documents provided was a 
message taken at 1:30 p.m. EDT on July 27, 1993, asking Ms. 
Thomases to ``please call Hillary.'' (Willkie, Farr & Gallagher 
Document ST 131). Ms. Thomases had previously testified to the 
Committee that she did not recall seeing Mrs. Clinton on July 
27 and was not involved in Ms. Williams' transfer of Whitewater 
files from the White House Residence to Mrs. Clinton's personal 
lawyer, Mr. Robert Barnett--despite records showing that Mrs. 
Thomases entered and exited the White House Residence 
contemporaneously with Mr. Barnett and Ms. Williams.
    The fourth telephone call Mrs. Clinton made on the night of 
Mr. Foster's death--at 11:41 p.m. EDT, right after talking with 
Ms. Thomases--was to the number 202-628-7087. Mrs. Clinton's 
personal counsel represented to the Committee that Mrs. Clinton 
did not know the identity of the party whom she called, despite 
additional investigation by her counsel. The Committee then 
issued a subpoena to the telephone company, which responded 
that its records indicated that the number was not in service 
on July 20, 1993. On November 30, 1995, pursuant to 
Sec. 5(b)(7) of Senate Resolution 120, the Committee issued a 
set of written interrogatories to Mrs. Clinton to probe her 
knowledge of this unidentified number.
    The Committee, after conducting its own independent 
investigation, advised the White House that it had reason to 
believe that the number was a special secure White House 
telephone line. Mrs. Clinton's answer to the interrogatories 
stated that she did not recall calling 202-628-7087, but that 
``[i]t would not surprise me to learn that I had placed a call 
to the White House that evening.'' Also, on November 30, 1995, 
the White House confirmed to the Committee that the number was 
indeed ``an unlisted trunk line that rang on the White House 
switchboard.'' The line apparently was used to bypass the main 
White House number. Although the White House did not know to 
whom Mrs. Clinton was connected after she reached the White 
House switchboard, ``Bill Burton, Deputy White House Chief of 
Staff, remembers receiving a call in the Chief of Staff's 
office from Mrs. Clinton on the evening of July 20 and speaking 
with her about Vincent Foster's death.'' In light of this new 
information, the Committee called back Mr. Burton to testify 
about his telephone conversation with Mrs. Clinton on July 20, 
again causing the Committee to divert valuable resources to 
revisit a critical issue in light of newly uncovered evidence.
            (b) White House delays
    On August 25, 1995, the Committee requested from the White 
House all documents that reflect, refer, or relate to, among 
other things, matters specified in Sec. 1(b)(2) and 
Sec. 1(b)(3) of Senate Resolution 120--the Washington and 
Arkansas Phases of the investigation. That request indicated 
that, in order for the Committee to complete its work as 
expeditiously as possible, ``it is necessary that the Committee 
receive these documents by no later than September 7, 1995, and 
prior to that date, if possible.'' The White House made ``an 
initial production'' of records on September 15, 1995, and 
specifically noted that ``[o]ur response to Senator D'Amato's 
request is not complete.''
    On September 25, 1995, the Committee advised the White 
House that it was very concerned about the slow pace of the 
White House's response to the August 25, 1995, document 
request. In order to expedite the process, the Committee agreed 
to limit the scope of its initial document request. Three weeks 
later, the White House still had not completed its document 
production. On October 17, 1995, the Committee agreed to limit 
its request even further, going so far as to specify exactly 
which offices the White House needed to search for responsive 
documents. On the same day, Chairman D'Amato wrote to Judge 
Abner Mikva, then Counsel to the President, to reiterate that 
the Committee ``is very concerned about the slow pace of the 
White House's response to the Committee's August 25, 1995 
request for documents that are directly relevant to the 
Committee's investigation.'' Noting that the Committee had gone 
out of its way to accommodate the White House's concerns and to 
answer the White House's questions about that document request, 
Chairman D'Amato concluded: ``The White House's almost two 
month delay in producing documents has impacted negatively on 
the Committee's ability to conclude its investigation by 
February 1996.'' Still, little progress followed.
    On October 25, 1995, the Committee met to consider the 
inadequate response to the Committee's document request by the 
White House and other parties. Concerned with the undue delay 
in the production of documents, counsel to the Committee 
recommended that subpoenas be issued to all parties relevant to 
the investigation. A congressional subpoena, unlike a document 
request, carries with it the threat of civil and criminal 
penalties for noncompliance. On October 26, 1995, the Committee 
voted unanimously to issue subpoenas seeking all documents 
requested by the Committee to all parties by letter after 
August 25, 1995. With a few notable exceptions, the production 
of responsive documents to the Committee improved 
significantly.
    Among the records covered by the Committee's August 25, 
1995 letter request and its October 26, 1995 subpoena to the 
White House were electronic mail messages between certain White 
House officials relating to matters identified in Senate 
Resolution 120. These messages are a particularly valuable 
source of information to the Committee. Electronic mail 
messages generally are written contemporaneous to the events 
under investigation and provide the Committee with candid, 
unrehearsed and uncolored information concerning the actions 
and motives of key witnesses. For example, during the Foster 
Phase of the investigation, messages exchanged between two 
assistants in the White House Counsel's office provided 
critical information as to the activities of Bernard Nussbaum 
and his associates in the week immediately after the death of 
Vincent Foster. (White House Documents Z1209-Z1214).
    On September 15, 1995, the White House wrote to the 
Committee that ``we are unable to respond to your request as 
currently framed'' and asked for clarification of the 
Committee's request for electronic mail messages. The Committee 
agreed to limit its request for electronic mail messages to 
those messages (i) sent to or from particular White house 
officials, and (ii) containing certain ``key words'' highly 
relevant to the investigation. Finally, on January 19, 1996, 
after months of discussions with the Committee's counsel, the 
White House finally agreed to begin the process of searching 
for electronic mail. It is not clear when the White House will 
complete the lengthy process of searching for electronic mail 
responsive to the Committee's subpoena. In an October 24, 1995 
letter, the White House estimated that this process would take 
approximately twelve weeks. Other executive departments and 
agencies, including the Department of Justice, the Department 
of the Treasury, and the Resolution Trust Corporation have 
already complied with the Committee's requests for electronic 
messages.
    Among the records covered by the Committee's August 25, 
1995 request and its October 26, 1995 subpoena to the White 
House and the Clintons were the Rose Law Firm billing records 
relating services Mrs. Clinton and other attorneys at the firm 
performed for Madison. These records obviously are critical to 
the Committee's investigation and had been subpoenaed by other 
investigative bodies for almost two years. The White House and 
the Rose Law Firm have consistently maintained that they did 
not possess such records.
    On January 5, 1996, David Kendall, personal counsel for the 
President and Mrs. Clinton, produced copies of the Rose Law 
Firm's billing records for work performed for Madison Guaranty. 
In a statement, Mr. Kendall said that the records had been 
discovered the previous day at the White House by Special 
Assistant to the President Carolyn Huber. After further 
inquiries from the Committee, the White House advised that the 
records had not been stored in Ms. Huber's office, but rather 
in ``a work room in the White House Residence.''
    Ms. Huber testified that she first found the records in the 
``book room'' of the White House in the early part of August 
1995--during the Committee's hearings into the events 
subsequent to Vincent Foster's death. The book room is located 
within the private residence of the White House and access to 
it is extremely limited. The only persons with regular access 
to the room, according to Ms. Huber, are the First Family, 
herself, and Capricia Marshall. Ms. Huber testified that she 
had not seen the conspicuous billing records when she was in 
the book room just days prior to their discovery. Thinking that 
the records, which were folded over, had been left for her to 
file, Ms. Huber stowed them in a box containing presidential 
memorabilia. She rediscovered them on January 4, 1996, when she 
was going through the box and then realized what she had found. 
(Huber, 1/18/96 Hrg. p. 8-12).
    The Special Committee is now investigating who had 
possession of these documents prior to their discovery by Ms. 
Huber in August 1995 and whether they were taken from Vincent 
Foster's office following his death. In her testimony, Ms. 
Huber confirmed that the notes written in red ink on the 
records are in Mr. Foster's handwriting. (Huber, 1/18/96 Hrg. 
p. 25).
            (c) Subpoena for William Kennedy's notes
    In response to the Committee's October 26, 1995 subpoena 
for Whitewater-related documents, the White House notified the 
Committee on November 2, 1995, that it was refusing to produce 
a number of documents responsive to the subpoena on the grounds 
of privilege. Among the documents so identified were notes 
taken by former Associate White House Counsel William Kennedy 
at a November 5, 1993, meeting of White House officials and the 
Clintons' private attorneys relating to Whitewater.
    On December 5, 1995, Mr. Kennedy appeared before the 
Committee. He was questioned about the November 5 meeting, but, 
at the direction of counsel for both the Clintons and the White 
House, refused to answer any questions about the substance of 
the meeting. (Kennedy, 12/5/95 Hrg. pp. 42-47, 59-61). Mr. 
Kennedy stated only that ``I have been instructed that the 
meeting is covered by the attorney-client privilege and I've 
been instructed to abide by that privilege.'' (Kennedy, 12/5/95 
Hrg. p. 42).
    On December 8, 1995, the Committee issued a subpoena duces 
tecum to Mr. Kennedy directing him to ``[p]roduce any and all 
documents, including but not limited to, notes, transcripts, 
memoranda, or recordings, reflecting, referring or relating to 
a November 5, 1993 meeting attended by William Kennedy at the 
offices of Williams & Connolly.'' The Committee advised Mr. 
Kennedy that, if he had objections to the subpoena, he was 
invited to submit a legal memorandum to the Committee by 
December 12, 1995.
    Mr. Kennedy refused to comply with the Committee's 
subpoena. On December 12, 1995, the Committee received separate 
submissions from counsel for Mr. Kennedy, the President and 
Mrs. Clinton, and the White House raising objections to the 
Committee's subpoena. On December 14, 1995, the Chairman of the 
Committee convened a meeting of the Committee to rule on the 
various objections. After careful consideration, the Chairman 
overruled the objections to the subpoena, and the Committee 
voted to order Mr. Kennedy to produce the responsive documents 
by 9:00 a.m. on December 15, 1995. After Mr. Kennedy failed to 
comply with this order and after unsuccessful efforts to reach 
agreement with the White House, the Committee voted on December 
15, 1995, to report the matter to the Senate.
    On December 20, 1995, the full Senate adopted Senate 
Resolution 199, directing the Senate Legal Counsel to initiate 
a civil action in federal District Court under 28 U.S.C. 
Sec. 1365 (1994). That provision permits the Committee, upon 
authorization of the Senate, to apply to the United States 
District Court for the District of Columbia for an order 
requiring the witness to produce the subpoenaed documents. If 
the district court determines that the witness has no valid 
reason to withhold the subpoenaed documents, the court would 
direct the witness to produce them. If that order is ignored, 
the witness could be found in contempt of court. The district 
court, in its discretion, could order sanctions against the 
witness to induce compliance with its order to produce the 
documents.
    On December 22, 1995, before the Senate Legal Counsel 
initiated an action under 28 U.S.C. Sec. 1365, the White House 
reversed its position and Mr. Kennedy produced his notes to the 
Committee. The notes turned out to be highly relevant to the 
Committee's investigation. They contained details that 
identified numerous investigative avenues for the Committee. 
For example, Mr. Kennedy made the following notes:

          ``Try to find out what's going on in Investigation'' 
        (White House Document S 12517). This delegation of 
        legal defense tasks to White House officials falls 
        squarely within matters specified by Sec. 1(b)(2) of 
        Senate Resolution 120.
          ``July 20th: FBI issued subpena [sic] & took records 
        of municipal judge named Hale. Also the day that VF 
        killed himself Factor'' (White House Document S 12518). 
        The notation suggested a possible link between the 
        FBI's investigation of CMS, which allegedly made an 
        illegal loan to James and Susan McDougal in 1986 at the 
        behest of then-Governor Clinton, and the death of 
        President Clinton's friend and counsel, Vincent Foster.
          ``Blair could have knowledge Could be source of money 
        to allow McD to purchase stock'' (White House Document 
        S 12520). It was subsequently revealed that James 
        Blair, a close confidant of the Clintons, had provided 
        James McDougal with the $1,000 that McDougal used to 
        acquire the Clintons' Whitewater stock on December 22, 
        1992. (Mark Hosenball & Michael Isikoff, ``A Churning 
        Scandal,'' Newsweek, Jan. 8, 1996, p. 43).
          ``Vacuum Rose Law files WWDC docs--subpoena 
        *Documents--Never know go out quietly'' (White House 
        Document S 12523). This cryptic note suggests the 
        possibility of an effort to suppress records critical 
        to the Committee's investigation. William Kennedy 
        testified that this reference as related to a vacuum of 
        information concerning Whitewater and did not denote 
        any effort to destroy evidence.

    Needless to say, without the unnecessary months-long delay 
in obtaining Mr. Kennedy's notes, the Committee would have been 
able to pursue these additional investigative leads more 
expeditiously and more effectively. Moreover, former Associate 
Counsel to the President Neil Eggleston has testified that he 
continued to communicate with the Clintons' private attorneys 
after the November 5, 1993 meeting, even though that meeting 
was allegedly to delineate separate spheres of work for the 
White House lawyers and the Clintons' personal attorneys. 
Indeed, on November 10, 1993, the Clintons' private counsel 
shared with the White House a Whitewater chronology. 
(Eggleston, 1/16/96 Hrg. p. 111-112).
    Although the Committee ultimately was successful in 
obtaining Mr. Kennedy's valuable notes, it was only after a 
long and protracted process involving three different sets of 
opposing attorneys and the preparation of a lengthy report to 
the full Senate. The Committee had to divert considerable 
resources to this process of seeking information--information 
to which, in the view of the Committee and the Senate, the 
Committee was legally entitled. This diversion detracted from 
the Committee's investigative activities and therefore impeded 
the Committee's progress in fulfilling the mandate of Senate 
Resolution 120.

2. The resistance of witnesses

            (a) Fifth amendment pleas
    The Committee has been significantly hindered in its fact-
finding mission by the assertion by various witnesses of the 
Fifth Amendment privilege. After the Committee scheduled 
depositions of Herbert Branscum, Robert Hill, Rosalee Wade, and 
Chris Wade, counsel for those witnesses informed the Committee 
that they would invoke their right against self-incrimination 
if called to testify under oath.
    Herbert Branscum and Robert Hill are co-owners of Perry 
County Bank, the chief lending institution for Governor Clinton 
in his 1990 gubernatorial campaign, a matter specifically 
identified for investigation by Sec. 1(b)(3)(G) of Senate 
Resolution 120. The former president of the bank, Neal Ainley, 
has pled guilty to charges stemming from the failure to report 
cash deposits from Governor Clinton's campaign that totalled 
more than $10,000. The testimony of Mr. Branscum and Mr. Hill 
is especially important because, as explained below, the 
Independent Counsel has asked the Committee not to examine Mr. 
Ainley until the conclusion of the trial in United States v. 
James B. McDougal et. al., which is currently scheduled to 
start in March 1996. Without the testimony of these three 
critical witnesses, the Committee cannot practically 
investigate the matters specifically authorized by 
Sec. 1(b)(3)(G) of Senate Resolution 120.
    Chris Wade and his wife, Rosalee Wade, were co-owners of 
Ozarks Realty Company, the principal real estate agent for 
Whitewater. Their testimony is highly relevant to the 
Committee's investigation into several potentially questionable 
transactions involving Whitewater and the Clintons in the 
1980s. In addition, Mr. Wade was a principal in Ozarks Air 
Services, which purchased twenty-four unsold lots owned by 
Whitewater Development Corporation on May 4, 1985, and 
participated in James McDougal's real estate development at 
Campobello Island. Counsel for both Mr. and Mrs. Wade have 
indicated to the Committee that they are asserting the Fifth 
Amendment privilege to shield them from investigation or 
prosecution by the Independent Counsel.
            (b) Motions to quash the committee's subpoenas
    The Committee's investigation relies heavily on documentary 
evidence. Because witnesses before the Committee often offer 
conflicting or contradictory testimony and because the relevant 
financial transactions are highly complex, contemporaneous 
records play a disproportionately important role in the 
Committee's fact-finding mission. However, documents from three 
of the most important parties in the Arkansas Phase of the 
investigation--besides President and Mrs. Clinton--will not be 
available to the Committee until the end of April 1996 at the 
earliest, when the trial in United States v. James B. McDougal 
et. al. is expected to conclude.
    On December 22 and 27, 1995, the Committee issued subpoenas 
duces tecum to Arkansas Governor Jim Guy Tucker, James 
McDougal, and Susan McDougal, commanding the production, by 
January 5, 1996, of all documents relevant to its 
investigation. All three are defendants in United States v. 
James B. McDougal et. al. At the request of counsel for 
Governor Tucker and Ms. McDougal, the Committee agreed to 
extend the return date for their subpoenas to January 10, 1996. 
On January 9, 1996, Governor Tucker filed in the United States 
District Court for the Eastern District of Arkansas a motion to 
quash the Committee's subpoena or, in the alternative, to stay 
the court's proceedings in United States v. James McDougal et. 
al. The motion asserted that complying with the subpoena would 
``interfere with this Defendant's preparation for trial, in 
that his lawyers would necessarily be involved in the defense 
of the subpoena and not in trial preparation.'' Governor Tucker 
argued further that the publicity generated by the Committee's 
investigation would ``deprive the Defendant of his right to a 
fair trial by jurors unaffected by the propaganda of the 
majority.''
    On January 11, 1996, counsel for Susan McDougal filed a 
separate motion to quash the Committee's subpoena before the 
court. The motion asserted that the work required to comply 
with the Committee's subpoena would interfere with counsel's 
representation of Ms. McDougal. Although Mr. McDougal did not 
file a formal motion to quash the Committee's subpoena, the 
Committee understands that Mr. McDougal objected to the 
subpoena on the same grounds as Governor Tucker and Ms. 
McDougal.
    On January 12, 1996, the Committee, in deference to the 
views of the District Court and the Independent Counsel, agreed 
not to enforce the Committee's subpoenas until after the trial 
of the three defendants. The motions to quash were consequently 
withdrawn.
    The 44,000 pages of documents in the possession of these 
three witnesses are vital to the Committee's investigation into 
the matters prescribed in Senate Resolution 120. The McDougals 
played a pivotal role in the ``activities, investments, and tax 
liability of Whitewater Development Corporation'' (Senate 
Resolution 120, Sec. 1(b)(3)(B)) as well as ``the operations, 
solvency, and regulation of Madison Guaranty Savings and Loan 
Association.'' (Senate Resolution 120, Sec. 1(b)(3)(A)). The 
documents in their possession may be the only source of 
information critical to a true understanding of these subject 
matters--matters that are central to the mandate of Senate 
Resolution 120.
    Likewise, Governor Tucker was intimately familiar with 
``the sources of funding and the lending practices of Capital 
Management Services, Inc.'' (Senate Resolution 120, 
Sec. 1(b)(3)(E)). A report by the law firm of Pillsbury, 
Madison and Sutro on behalf of the RTC has documented that 
Castle Water and Sewer Corporation, a company in which Governor 
Tucker had a controlling interest, received $150,000 from 
Capital Management. In addition, a subsidiary of Castle Water 
and Sewer, Southloop Construction Company, received a $100,000 
loan from Capital Management. Documents in the possession of 
Governor Tucker may shed light on these and other potentially 
questionable transactions and therefore are critical to the 
Committee's investigation.

3. Objections by the Office of Independent Counsel

    Section 7(b)(2) of Senate Resolution 120 encouraged the 
Committee, to the extent practicable, to coordinate its 
activities with the investigation of the Office of the 
Independent Counsel. During the 103d Congress, the Banking 
Committee, pursuant to Senate Resolution 229, conducted an 
inquiry into Mr. Foster's death and the subsequent 
investigation by the Park Police. On July 15, 1994, Special 
Counsel Robert B. Fiske, Jr., advised the Chairman and the 
Ranking Member of the Banking Committee that ``public hearings 
on the subject of the handling of documents in Mr. Foster's 
office while this investigation is continuing could prejudice 
our investigation.'' The Banking Committee thus refrained from 
investigating that subject. By letter dated April 22, 1995, 
Independent Counsel Kenneth W. Starr notified the Chairman and 
the Ranking Member of the Banking Committee that his 
investigation would not be hindered or impeded by an inquiry 
into whether White House officials engaged in improper conduct 
in handling documents in Mr. Foster's office following his 
death. Accordingly, after the passage of Senate Resolution 120, 
the Committee began its investigation into the matters 
authorized by section 1(b)(1) of Senate Resolution 120, and 
held public hearings into those matters between July 18 and 
August 10, 1995.
    On August 22, 1995, the Committee advised the Office of the 
Independent Counsel that it intended to proceed with other 
aspects of its investigation under Senate Resolution 120, 
specifically, those matters specified in Section 1(b)(2) and 
Section (1)(b)(3) of the resolution. On September 27, 1995, Mr. 
Starr responded that investigations and hearings by the 
Committee into the following matters would impede his 
prosecutorial efforts:
           the operations, solvency, and regulation of Madison;
           the activities, investments, and tax liability of 
        Whitewater;
           the policies and practices of the RTC and other 
        federal banking agencies regarding the legal 
        representation of such agencies with respect to 
        Madison;
           the handling by the RTC and other federal banking 
        agencies of civil or administrative actions against 
        parties regarding Madison;
           the sources of funding and the lending practices of 
        CMS;
           the lending activities of Perry County Bank in 
        connection with the 1990 Arkansas gubernatorial 
        election.
In short, the Independent Counsel objected the Committee 
investigating ``six of the thirteen subject matters listed in 
Section 1(b) of Senate Resolution 120.''
    In order to accommodate the Independent Counsel's 
objection, as directed by Senate Resolution 120, the Committee 
focused its efforts at that time on the so-called Washington 
Phase of the investigation--which corresponded roughly with the 
subject matters specified in Section 1(b)(2) of Senate 
Resolution 120. The Committee conducted hearings into these 
matters from November 7 through December 6, 1995. Consistent 
with Mr. Starr's wishes, those hearings did not delve into 
matters specified in Section 1(b)(3) of Senate Resolution 120, 
the so-called Arkansas Phase.
    Nevertheless, the Committee notified the Independent 
Counsel that, notwithstanding his concerns, it would press 
forward with its investigation into the Arkansas Phase. By 
letter dated October 2, 1995, Chairman D'Amato and Senator 
Sarbanes explained to Mr. Starr that it was necessary to do so 
in order to fulfill the mandate of Senate Resolution 120 that 
the Committee make every reasonable effort to complete its 
investigation and public hearings by February 1, 1996. Although 
the Committee thereafter proceeded with its investigation into 
the Arkansas Phase, the negotiations with the Independent 
Counsel to ensure that the Committee would not unduly hamper 
his efforts delayed the Committee's commencement of this phase 
for over a month.
    As part of its investigation, the Committee submitted a 
list of potential witnesses to the Independent Counsel and 
sought his advice whether his investigation would be hindered 
or impeded if the Committee examined those witnesses. On 
December 4, 1995, the Office of Independent Counsel objected to 
the Committee examining, in any fashion, the following 
witnesses:
    1. Neal Ainley
    2. Lisa Aunspaugh
    3. Don Denton
    4. David Hale
    5. Larry Kuca
    6. John Latham
    7. Dean Paul
    8. R.D. Randolph
    9. Robert Palmer
    10. Stephen Smith
    11. Greg Young
    In addition, the Independent Counsel repeated his position 
that public hearings into any matter relating to the Arkansas 
Phase at that time would hinder and impede his investigations 
and prosecutions.
    The principal basis for the Independent Counsel's 
objections was the upcoming trial of United States v. James B. 
McDougal, et al. The Independent Counsel has repeatedly advised 
that any public hearings into matters authorized by Section 
1(b)(3) of Senate Resolution 120 prior to the completion of 
that trial would hinder and impede his prosecutorial efforts. 
In addition, he advised that the above-named individuals are 
anticipated witnesses at the trial and therefore should not be 
examined by the Committee before the trial is completed. The 
trial was scheduled to begin on October 20, 1995, but was moved 
to January 16, 1996.
    The Office of Independent Counsel has since advised the 
Committee that the trial of United States v. James B. McDougal, 
et al. had been delayed yet again, this time rescheduled to 
March 4, 1996. The prosecution puts on trial Arkansas Governor 
Jim Guy Tucker, Jim McDougal, and Susan McDougal--three of the 
major participants in activities involving Whitewater, Madison, 
and CMS. It is expected to continue through April 1996.
    Senate Resolution 120 charged the Committee with three 
primary mandates: (i) to conduct a full and thorough 
investigation into matters authorized by the Resolution; (ii) 
to coordinate with the Independent Counsel so as not to hinder 
or impede his investigation; and (iii) to complete the 
Committee's investigation, if possible, by February 1, 1996, 
and, at the latest, February 29, 1996. Unfortunately, certain 
circumstances, unforeseen at the time the Senate passed 
Resolution 120 and beyond the control of the Committee, has 
made the fulfillment of all three mandates unlikely.
    The Committee's investigation has been significantly 
hindered and delayed by the evasion and noncooperation of 
certain parties. The Committee found itself in the unique, and 
difficult, position of not only conducting an inquiry, but also 
of having to ensure continually that its investigation was not 
being hindered. In addition, deference to the Independent 
Counsel's ongoing investigation has significantly slowed the 
progress of the Committee's investigation. The repeated 
rescheduling of the trial in United States v. James B. 
McDougal, et al.--which centers on a number of witnesses 
critical to the Committee's investigation--has already delayed 
the Committee's investigation and hearings into the Arkansas 
Phase of its inquiry by approximately two months. The 
Independent Counsel persists in his strong objections to the 
Committee examining certain critical witnesses until after that 
trial ends. If the Committee continues to try to accommodate 
the Independent Counsel, as encouraged by Senate Resolution 
120, the Committee will not be able to complete a full and 
thorough investigation into matters authorized by Sec. 1(b)(3) 
of Resolution 120 by February 29, 1995.

       C. RECOMMENDATIONS FOR AUTHORIZATION OF ADDITIONAL FUNDS.

    For the reasons discussed in Section B above, the Committee 
does no anticipate that it can complete its investigation into 
matters authorized by Senate Resolution 120 by February 29, 
1996. The Committee thus anticipates that it likely will be 
necessary to seek authorization from the Senate for funding of 
the Committee's work for a period beyond that date. This 
section discusses the Committee's expenditures to date under 
Senate Resolution 120 and its recommendations for additional 
funding necessary to carry out fully the mandate of Senate 
Resolution 120.
    Efficient management and the hard work of its staff have 
enabled the Committee to conduct its investigation at a 
relatively low cost to taxpayers. Senate Resolution 120 
authorized the expenditure of $950,000 by the Committee. The 
Committee allocated that figure as follows: $200,000 for 
undesignated administrative expenses; $500,000 for the salary 
expenses of majority staff; and $250,000 for the salary 
expenses of minority staff. As of December 31, 1995, the 
Committee's expenditures were as follows:

 1. Administrative Expenses:
    Hearing and Deposition..............................        $241,000
    Witness Travel......................................          15,000
    Stationery and Supplies.............................          14,000
    Other Expenses 3...............................
3 Includes telecommunications, publications, mailing and delivery 
    services, audio-visual equipment, and Senate services.
                                                                  11,500
                    --------------------------------------------------------
                    ____________________________________________________
     Total Expenditures.................................         281,500
                    --------------------------------------------------------
                    ____________________________________________________
    Allocated...........................................         200,000
                    --------------------------------------------------------
                    ____________________________________________________
     Balance............................................        (81,500)
                    ========================================================
                    ____________________________________________________
2. Majority Salary Expenses:
    Total Salary and Expenses...........................         254,836
    Allocated...........................................         500,000
                    --------------------------------------------------------
                    ____________________________________________________
     Balance............................................         245,164
                    ========================================================
                    ____________________________________________________
3. Minority Salary Expenses:
    Total Salary and Expenses...........................         138,193
    Allocated...........................................         250,000
     Balance............................................         111,807

    As the above numbers demonstrate, the most significant 
expenditure by the Committee has been to cover the cost of 
preparing official transcripts of sworn depositions and public 
hearings. The $241,000 expenditure for that purpose alone 
through December 31, 1995, is well above the $200,000 allocated 
for total administrative expenses through February 29, 1996. 
Fortunately, the Committee has been frugal in expending 
resources for staff salaries and expenses--keeping the level at 
the minimum level necessary for a full and thorough 
investigation. The funds expended thus far on salary expenses 
consequently are well below the allocated amounts. The savings 
in salary expenses will enable the Committee to offset the 
unanticipated expenses for depositions and hearings. At this 
point, the Committee does not anticipate the need for any 
additional funds to continue its investigation through February 
29, 1996.
    However, as noted above, the Committee probably cannot 
complete its investigation into the matters authorized by 
Senate Resolution 120 by February 29, 1996. Consistent with 
Senate Resolution 120, the Committee will endeavor to finish 
its work as soon as practicable. However, any prediction about 
the eventual ending date of public hearings is premature 
because of the uncertainty surrounding when the trial in United 
States v. James McDougal et al., will conclude. Until that 
time, the Committee will not be able to examine a number of 
critical witnesses. In addition, at the conclusion of its 
public hearings, the Committee will require approximately two 
months in order to evaluate all the evidence gathered during 
its investigation and to prepare its report to the Senate, as 
directed by Senate Resolution 120.
    The Committee has identified at least 40 witnesses whom it 
intends to call to testify at public hearings related to the 
Arkansas Phase of the investigation. These witnesses are in 
addition to the 15 witnesses whose cooperation and testimony 
are contingent on the progress of the trial in United States v. 
James McDougal et al. The number of witnesses, of course, could 
change significantly as the Committee presses forward with its 
investigation into the Arkansas Phase. The time required for 
this phase of the investigation especially difficult to judge 
in light of the fact that many of the witnesses reside in 
Arkansas. Consistent with Senate Resolution 120, however, the 
Committee remains committed to conclude its investigation and 
hearings as soon as possible.
    Based on the Committee's best estimate of what is required 
to complete fully its investigation under Senate Resolution 
120, the Committee recommends that the Senate authorize the 
Committee to expend $600,000 after February 29, 1996.

  Exhibit I.--Testimony of Witnesses Before the Special Committee To 
   Investigate Whitewater Development Corporation and Related Matters

     A. Foster Phase: Matters authorized by Senate Resolution 120 
                              Sec. 1(b)(1)

                              depositions

Date, name and agency

    1. June 19, 1995, Cheryl Braun, Park Police.
    2. June 19, 1995, Brent Chinery, Secret Service.
    3. June 20, 1995, Robert Popik, Secret Service.
    4. June 20, 1995, John Rolla, Park Police.
    5. June 21, 1995, Donald Flynn, Secret Service.
    6. June 21, 1995, Robert Hines, Park Police.
    7. June 21, 1995, Michelle Macon, Secret Service
    8. June 21, 1995, Jimmy Young, White House.
    9. June 22, 1995, Paul Imbordino, Secret Service.
    10. June 22, 1995, Dennis Martin, Secret Service.
    11. June 22, 1995, John Skyles, Secret Service.
    12. June 23, 1995, Bruce Abbott, Secret Service.
    13. June 23, 1995, Thomas Collier, Department of Interior.
    14. June 23, 1995, Deborah Gorham, White House.
    15. June 23, 1995, John Magaw, Secret Service.
    16. June 23, 1995, Henry O'Neill, Secret Service.
    17. June 26, 1995, Marlene MacDonald, White House.
    18. June 26, 1995, Betsy Pond, White House.
    19. June 27, 1995, Thomas Castleton, White House.
    20. June 27, 1995, Robert Langston, Park Police.
    21. June 27, 1995, Sylvia Mathews, White House.
    22. June 27, 1995, Ronald Noble, Treasury.
    23. June 28, 1995, Dennis Condon, FBI.
    24. June 28, 1995, John Danna, Park Police.
    25. June 28, 1995, Peter Markland, Park Police.
    26. June 29, 1995, Phillip Adams, Department of Justice.
    27. June 29, 1995, Charles Hume, Park Police.
    28. June 29, 1995, Roy Neel, White House.
    29. June 30, 1995, Carolyn Huber, White House.
    30. June 30, 1995, Peter Markland, Park Police.
    31. June 30, 1995, Scott Salter, FBI.
    32. July 5, 1995, William Burton, White House.
    33. July 5, 1995, Joseph Phillips, Secret Service.
    34. July 5, 1995, George Stephanopoulos, White House.
    35. July 6, 1995, Mark Gearan, White House.
    36. July 6, 1995, Evelyn Lieberman, White House.
    37. July 6, 1995, Thomas McLarty, White House.
    38. July 6, 1995, Cynthia Monaco, Department of Justice.
    39. July 6, 1995, Dee Dee Myers, White House.
    40. July 7, 1995, Nancy McFadden, Department of Justice.
    41. July 7, 1995, Clifford Sloan, White House.
    42. July 7, 1995, Margaret Williams, White House.
    43. July 10, 1995, Lisa Caputo, White House.
    44. July 10, 1995, Craig Livingstone, White House.
    45. July 10, 1995, Stephen Neuwirth, White House.
    46. July 11, 1995, William Kennedy, White House.
    47. July 11, 1995, Michael Spafford, Private.
    48. July 11, 1995, Patsy Thomasson, White House.
    49. July 11, 1995, Linda Tripp, White House.
    50. July 11, 1995, David Watkins, White House.
    51. July 12, 1995, David Gergen, White House.
    52. July 12, 1995, Bruce Lindsey, White House.
    53. July 12, 1995, Cheryl Mills, White House.
    54. July 12, 1995, Bernard Nussbaum, White House.
    55. July 12, 1995, Howard Paster, White House.
    56. July 12, 1995, James Shea, Secret Service.
    57. July 12, 1995, Linda Tripp, White House.
    58. July 13, 1995, Webster Hubbell, Department of Justice.
    59. July 13, 1995, Bernard Nussbaum, White House.
    60. July 14, 1995, Terry Cobey, White House.
    61. July 14, 1995, Webster Hubbell, Department of Justice.
    62. July 14, 1995, Louis Hupp, FBI.
    63. July 14, 1995, John Quinn, White House.
    64. July 14, 1995, Diann Walters, White House.
    65. July 17, 1995, Susan Thomases, Private.
    66. July 24, 1995, William Anderson, FBI.
    67. July 24, 1995, Phillip Heymann, Department of Justice.
    68. July 31, 1995, Deborah Gorham, White House.
    69. July 31, 1995, Linda Tripp, White House.

                            public hearings

    1. July 18, 1995, Webster Hubbell, Department of Justice.
    2. July 19, 1995, Webster Hubbell, Department of Justice.
    3. July 20, 1995, Cheryl Braun, Park Police.
    4. July 20, 1995, Robert Hines, Park Police.
    5. July 20, 1995, John Rolla, Park Police.
    6. July 25, 1995, Mark Gearan, White House.
    7. July 25, 1995, Sylvia Mathews, White House.
    8. July 25, 1995, Patsy Thomasson, White House.
    9. July 25, 1995, David Watkins, White House.
    10. July 26, 1995, Evelyn Lieberman, White House.
    11. July 26, 1995, Henry O'Neill, Secret Service.
    12. July 26, 1995, Maggie Williams, White House.
    13. July 27, 1995, Phillip Adams, Department of Justice.
    14. July 27, 1995, Donald Flynn, Secret Service.
    15. July 27, 1995, Scott Salter, FBI.
    16. July 27, 1995, Michael Spafford, Private.
    17. August 1, 1995, Deborah Gorham, White House.
    18. August 1, 1995, Charles Hume, Park Police.
    19. August 1, 1995, Robert Langston, Park Police.
    20. August 1, 1995, Peter Markland, Park Police.
    21. August 1, 1995, Linda Tripp, White House.
    22. August 2, 1995, Phillip Heymann, Department of Justice.
    23. August 2, 1995, Louis Hupp, FBI.
    24. August 3, 1995, Thomas Castleton, White House.
    25. August 3, 1995, Carolyn Huber, White House.
    26. August 3, 1995, Stephen Neuwirth, White House.
    27. August 3, 1995, Clifford Sloan, White House.
    28. August 7, 1995, William Burton, White House.
    29. August 7, 1995, David Gergen, White House.
    30. August 7, 1995, Thomas McLarty, White House.
    31. August 7, 1995, John Quinn, White House.
    32. August 8, 1995, Bruce Lindsey, White House.
    33. August 8, 1995, Susan Thomases, Private.
    34. August 9, 1995, Bernard Nussbaum, White House.
    35. August 10, 1995, Bernard Nussbaum, White House.
    36. August 10, 1995, David Margolis, Department of Justice.
    37. November 2, 1995, Margaret Williams, White House.
    38. November 2, 1995, Susan Thomases, Private.
    39. December 11, 1995, Ingram Barlow, Williams & Connolly.
    40. December 11, 1995, Robert Barnett, Williams & Connolly.
    41. December 11, 1995, Linda Blair, Private.
    42. December 11, 1995, Margaret Williams, White House.
    43. December 13, 1995, William Burton, White House.
    44. December 13, 1995, Sylvia Mathews, White House.
    45. December 18, 1995, Susan Thomases, Private.

   B. Washington Phase: Matters authorized by Senate Resolution 120 
                              Sec. 1(b)(2)

                              DEPOSITIONS

Date, name, and agency

    1. October 10, 1995, Clark Blight, RTC-IG.
    2. October 10, 1995, Stephen Switzer, RTC-IG.
    3. October 11, 1995, Jane Ley, OGE.
    4. October 11, 1995, Robert Mueller, Department of Justice.
    5. October 11, 1995, Stephen Potts, OGE.
    6. October 12, 1995, Patricia Black, RTC.
    7. October 12, 1995, Douglas Frazier, Department of 
Justice.
    8. October 12, 1995, Anthony Moscato, Department of 
Justice.
    9. October 13, 1995, Robert Cesca, Treasury-IG.
    10. October 13, 1995, Joseph Gangloff, Department of 
Justice.
    11. October 13, 1995, Donna Henneman, Department of 
Justice.
    12. October 17, 1995, Allen Carver, Department of Justice.
    13. October 17, 1995, Laurence McWhorter, Department of 
Justice.
    14. October 17, 1995, Donald Pettus, FBI.
    15. October 18, 1995, John Arterberry, Department of 
Justice.
    16. October 18, 1995, James Cottos, Treasury-IG.
    17. October 18, 1995, Mac Dodson, Department of Justice.
    18. October 18, 1995, Don Mackay, Department of Justice.
    19. October 18, 1995, Richard Pence, Department of Justice.
    20. October 19, 1995, James Dudine, RTC.
    21. October 19, 1995, Fletcher Jackson, Department of 
Justice.
    22. October 19, 1995, Randy Knight, RTC.
    23. October 19, 1995, Gerald McDowell, Department of 
Justice.
    24. October 19, 1995, Stephen McHale, Treasury.
    25. October 20, 1995, C. Boyden Gray, Private.
    26. October 20, 1995, Richard Iorio, RTC.
    27. October 20, 1995, John Keeney, Department of Justice.
    28. October 20, 1995, Patrick Noble, RTC-IG.
    29. October 20, 1995, Kenneth Schmalzbach, Treasury.
    30. October 23, 1995, April Breslaw, RTC.
    31. October 24, 1995, Charles Banks, Department of Justice.
    32. October 24, 1995, Michael Johnson, Department of 
Justice.
    33. October 24, 1995, Robert McNamara, Treasury.
    34. October 24, 1995, James Thompson, RTC.
    35. October 25, 1995, Karen Carmichael, RTC.
    36. October 25, 1995, Edward Knight, Treasury.
    37. October 25, 1995, Keith Mason, White House.
    38. October 26, 1995, John Adair, RTC-IG.
    39. October 26, 1995, Wayne Foren, SBA.
    40. October 26, 1995, Webster Hubbell, Department of 
Justice.
    41. October 26, 1995, Ira Raphaelson, Department of 
Justice.
    42. October 27, 1995, Ellen Kulka, Treasury.
    43. October 27, 1995, Irvin Nathan, Department of Justice.
    44. October 27, 1995, Kenneth Schmalzbach, Treasury.
    45. October 30, 1995, Kevin Kendrick, FBI.
    46. October 30, 1995, Jean Lewis, RTC.
    47. October 30, 1995, Mark Stephens, SBA.
    48. October 31, 1995, Erskine Bowles, SBA.
    49. October 31, 1995, Jean Lewis, RTC.
    50. October 31, 1995, Jane Sherburne, White House.
    51. October 31, 1995, Fred Verinder, FBI.
    52. November 1, 1995, Paula Casey, Department of Justice.
    53. November 1, 1995, William Kennedy, White House.
    54. November 1, 1995, Francine Kerner, Treasury-IG.
    55. November 1, 1995, Marsha Scott, Private.
    56. November 2, 1995, Neysa Day, Treasury-IG.
    57. November 2, 1995, Richard Doery, Treasury-IG.
    58. November 2, 1995, James Lyons, Private.
    59. November 2, 1995, Julie Yanda, RTC.
    60. November 3, 1995, Albert Casey, RTC.
    61. November 3, 1995, Steven Irons, FBI.
    62. November 3, 1995, Bruce Lindsey, White House.
    63. November 4, 1995, Neil Eggleston, White House.
    64. November 6, 1995, Lloyd Cutler, White House.
    65. November 6, 1995, David Dougherty, SBA.
    66. November 6, 1995, Thomas McLarty, White House.
    67. November 6, 1995, Peter Rittling, Treasury.
    68. November 6, 1995, John Spotila, SBA.
    69. November 7, 1995, Sharon Conaway, White House.
    70. November 9, 1995, Dennis W. Aiken, FBI.
    71. November 9, 1995, Randy Coleman, Private.
    72. November 9, 1995, Larry Potts, FBI.
    73. November 13, 1995, William Barr, Department of Justice.
    74. November 13, 1995, Charles Shepperson, SBA.
    75. November 17, 1995, Martin Teckler, SBA.
    76. November 20, 1995, James Blair, Private.
    77. November 20, 1995, Brent Bumpers, Department of 
Justice.
    78. November 20, 1995, Cecilia Seay, SBA.
    79. November 21, 1995, Bruce Lindsey, White House.
    80. November 27, 1995, Sarah Hawkins, SBA.
    81. November 27, 1995, Edith Holiday, White House.
    82. December 5, 1995, Mitchell Stanley, SBA.

                            PUBLIC HEARINGS

    1. November 7, 1995, John Adair, RTC-IG.
    2. November 7, 1995, Lloyd Bentsen, Treasury.
    3. November 7, 1995, Patricia Black, RTC-IG.
    4. November 7, 1995, Clark Blight, RTC-IG.
    5. November 7, 1995, Stephen Switzer, RTC-IG.
    6. November 8, 1995, Robert Cesca, Treasury-IG.
    7. November 8, 1995, John Cottos, Treasury-IG.
    8. November 8, 1995, David Dougherty, Treasury.
    9. November 8, 1995, Francine Kerner, Treasury-IG.
    10. November 8, 1995, Edward Knight, Treasury.
    11. November 8, 1995, Jane Ley, OGE.
    12. November 8, 1995, Stephen McHale, Treasury.
    13. November 8, 1995, Robert McNamara, Treasury.
    14. November 8, 1995, Stephen Potts, OGE.
    15. November 8, 1995, Kenneth Schmalzbach, Treasury.
    16. November 9, 1995, Llyod Cutler, White House.
    17. November 9, 1995, Jane Sherburne, White House.
    18. November 28, 1995, John Spotila, SBA.
    19. November 28, 1995, Martin Teckler, SBA.
    20. November 28, 1995, Neil Eggleston, White House.
    21. November 28, 1995, Bruce Lindsey, White House.
    22. November 28, 1995, Erskine Bowles, SBA.
    23. November 28, 1995, Charles Shepperson, SBA.
    24. November 28, 1995, Wayne Foren, SBA.
    25. November 29, 1995, Richard Iorio, RTC.
    26. November 29, 1995, Jean Lewis, RTC.
    27. November 30, 1995, April Breslaw, RTC.
    28. November 30, 1995, Karen Carmichael, RTC.
    29. November 30, 1995, Julie Yanda, RTC.
    30. December 1, 1995, Paula Casey, Department of Justice.
    31. December 1, 1995, Randy Coleman, Private.
    32. December 1, 1995, Webster Hubbell, Department of 
Justice.
    33. December 1, 1995, Fletcher Jackson, Department of 
Justice.
    34. December 1, 1995, Michael Johnson, Department of 
Justice.
    35. December 5, 1995, Charles Banks, Department of Justice.
    36. December 5, 1995, Douglas Frazier, Department of 
Justice.
    37. December 5, 1995, Steven Irons, FBI.
    38. December 5, 1995, Kevin Kendrick, FBI.
    39. December 5, 1995, William Kennedy, White House.
    40. December 5, 1995, Donald Pettus, FBI.
    41. December 6, 1995, Allen Carver, Department of Justice.
    42. December 6, 1995, Joseph Gangloff, Department of 
Justice.
    43. December 6, 1995, John Keeney, Department of Justice.
    44. December 6, 1995, Gerald McDowell, Department of 
Justice.

    C. Arkansas Phase: Matters authorized by Senate Resolution 120 
                              Sec. 1(b)(3)

                              DEPOSITIONS

Date, name, and agency

    1. December 4, 1995, Lex Dobbins, Arkansas Dept. of Health.
    2. December 4, 1995, William Teer, Arkansas Dept. of 
Health.
    3. December 5, 1995, Tom Butler, Arkansas Dept. of Health.
    4. December 5, 1995, Janice Choate, Arkansas Dept. of 
Health.
    5. December 12, 1995, William Brady, Arkansas Securities 
Dept.
    6. December 12, 1995, Bobby Nash, ADFA.
    7. December 14, 1995, William Lyon, Private.
    8. December 18, 1995, Russell Webb, Private.
    9. December 19, 1995, Charles Handley, Arkansas Securities 
Dept.
    10. December 21, 1995, Lisa Caputo, White House.
    11. January 5, 1996, Sam Bratton, Public Service 
Commission.
    12. January 5, 1996, Ronald Clark, Rose Law Firm.
    13. January 7, 1996, Neil Eggleston, White House.
    14. January 10, 1996, Bruce Lindsey, White House.
    15. January 15, 1996, Davis Fitzhugh, Madison Guaranty/
Private.
    16. January 15, 1996, William Kennedy, White House.
    17. January 16, 1996, Charles Peacock, Private.
    18. January 17, 1996, Carolyn Huber, White House.
    19. January 18, 1996, Treeca Dyer, Private.
    20. January 19, 1996, Charles Singleton, Private.
    21. January 22, 1996, Lance Miller, Private.

                            PUBLIC HEARINGS

    1. January 11, 1996, Richard Massey, Rose Law Firm.
    2. January 16, 1996, Neil Eggleston, White House.
    3. January 16, 1996, William Kennedy, White House.
    4. January 16, 1996, Bruce Lindsey, White House.
    5. January 18, 1996, Ronald Clark, Rose Law Firm.
    6. January 18, 1996, Carolyn Huber, White House.

Total Depositions Taken: 172.
Total Witnesses who Testified at Hearings: 95.
Total Number of Hearings: 29.


   Additional Views of Senators Sarbanes, Dodd, Kerry, Bryan, Boxer, 
                    Moseley-Braun, Murray and Simon

  Democratic Views on Completion of the Investigation Into Whitewater 
              Development Corporation and Related Matters

i. the special committee should adhere to s. res. 120 and complete its 
                         inquiry by february 29

    On May 17, 1995, the Senate adopted Senate Resolution 120, 
creating the Special Committee to Investigate Whitewater 
Development Corporation and Related Matters and providing 
$950,000 to fund the Committee through February 29, 1996. The 
Majority has stated that it will recommend additional funding 
of $600,000 for an unlimited period of time. This proposed 
additional funding would bring Senate expenditures on 
investigation of Whitewater matters to $2 million.
    The Committee should complete its investigation within the 
timetable established by the Senate, without the authorization 
of additional funds or extension of time. There is sufficient 
time and money to complete this investigation within the 
timetable and budget established by the Senate in Resolution 
120.
    The Committee has an obligation to the Senate and to the 
public to move forward, without delay, in developing the facts 
relating to the so-called ``Whitewater'' matter. Failure to do 
so will prolong this investigation well into a presidential 
election year and will contribute to a public perception that 
this investigation is being conducted for political purposes.
The committee should complete its investigation by February 29
    It is well within the ability of the Committee to complete 
its investigation by the February 29 date provided for in the 
resolution. The Committee should undertake a schedule for the 
next six weeks that will enable it to meet that objective.
    On January 17 the Senate Leadership announced that the 
Senate will not go to regular voting sessions until February 
20. With no competing legislative business in the month leading 
up to February 20, the Committee can devote its full attention 
to this investigation.
    By meeting four or five days a week between now and the end 
of February (a pace the Committee has on occasion previously 
followed) the Committee can hold 25 to 30 days of public 
hearings. Even if only three or four witnesses a day appear 
before the Committee, this timetable would allow for 
appearances by well over 75 witnesses (far more than any 
current projection). The Committee has substantially completed 
two out of three phases of its work (the ``Foster Papers 
Phase'' and the ``Washington Phase''). Document production from 
the White House is now essentially complete (the electronic 
mail records referenced by the majority are being provided to 
the Committee). Only the ``Arkansas Phase'' remains to be 
completed. If the Committee works at this pace over the next 
six weeks, it can complete that phase within the timeframe 
originally set out by the Senate.
    The Committee has demonstrated in the past that it can work 
at this pace. Between July 18 and August 10, 1995, at a time 
when the Senate was in session and its Members were handling 
extensive legislative business, the Special Committee held 13 
days of public hearings and examined 34 witnesses. In the past 
other special committees have accelerated their hearing 
schedules and completed their work in a timely fashion.
    For example, between July 7 and August 6, 1987, the Iran-
Contra Committee held 21 days of hearings, permitting the 
Committee to conclude its hearings on August 6. The Iran-Contra 
comparison is instructive. In that investigation the Committee 
was established on January 6, 1987, and completed its hearings 
on August 3, 1987, seven months after its creation. The 
investigation involved complex transactions, numerous cabinet-
level and other high government officials, and problems related 
to classified national security information and the conduct of 
foreign policy. This investigation does not involve matters of 
that complexity and gravity. This Committee has already heard 
from 83 witnesses over 29 days of hearings and, as noted above, 
another 75 or more witnesses could be heard before February 29.
    This schedule would enable the Committee to complete its 
investigation and adhere to the timetable set forth in Senate 
Resolution 120. The Committee also has adequate funding to 
complete its work. The Majority's Report indicates that 
$275,471 of the $950,000 appropriated in Resolution 120 remains 
available for completion of the investigation. Appropriating 
additional public funds would not be necessary.

The investigation should not be prolonged in an election year

     There is an important reason for the Committee to complete 
the investigation by February 29--this investigation should be 
completed before the country enters into the presidential 
campaign. By authorizing funding only through February 29, 
1996, Senate Resolution 120 accomplished this objective. The 
Resolution states that the purposes of the Committee are ``to 
expedite the thorough conduct of the investigation, study, and 
hearings'' and ``to engender a high degree of confidence on the 
part of the public regarding the conduct of such investigation, 
study, and hearings.'' 1 Extending the life of the 
Committee beyond February 29 would undermine both those 
purposes.
    \1\ S.Res. 120, sec. 7(a).
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    As Chairman D'Amato stated in January 1995, when funding 
for the Committee was addressed: ``We wanted to keep it out of 
that political arena, and that is why we decided to come 
forward with the one-year request.'' 2 That was the right 
approach, and was reflected in the action taken by the full 
Senate. The Majority's proposal for another $600,000 and an 
open-ended period of time will project the investigation into 
the election season, thereby inevitably diminishing public 
confidence in the impartiality of the inquiry.
    \2\ Senate Committees Funding Resolution for 1995-1996: Hearings 
before the Senate Committee on Rules and Administration, 103d Cong., 2d 
Sess. 80 (Jan. 19, 1995).
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    Six weeks of hearings (well in excess of the number held on 
either the Foster Papers Phase or the Washington Phase) should 
be more than adequate for the ``Arkansas Phase'' of this 
investigation. This phase concerns events that occurred in 
Arkansas some ten years ago, events which have been widely 
reported on since the 1992 presidential campaign and about 
which much is already known.

Substantial public funds have already been expended

    Since the Committee can complete this investigation with 
the funds already appropriated, the Senate should not authorize 
further expenditure of public funds. If an additional $600,000 
should be authorized for this investigation, as the Majority 
has proposed, it will bring the total amount spent by the 
Senate alone to investigate Whitewater matters to $2 million. 
3
    \3\ This total includes $400,000 expended in 1994 pursuant to 
S.Res. 229 (103d Congress), $950,000 expended pursuant to S.Res 120, 
and the additional $600,000 the Majority has proposed.
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    Approximately $30 million of taxpayer funds have already 
been expended on Whitewater investigations. The Independent 
Counsel alone has spent some $23 million through 1995, while 
the Resolution Trust Corporation has spent almost $4 million, 
and congressional investigative committees in both the House 
and Senate have spent millions more. The Independent Counsel 
recently indicated that he expected his investigation to get 
all of the facts out before the 1996 presidential election. 
4 A comprehensive report by an independent law firm 
retained by the RTC has now been made public, and its key 
findings are available. 5
    \4\ C-SPAN Interview with Kenneth W. Starr, (C-SPAN Television 
Broadcast, Dec. 1995).
    \5\ Pillsbury Madison & Sutro, Madison Guaranty Savings & Loan and 
Whitewater Development Company, Inc., April 25, 1995 (preliminary 
report) and December 13, 1995 (supplemental report).
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    Furthermore, there are many other issues before the 
Congress to which the necessary time, attention, and resources 
should be devoted. As Senator Dole observed in January 1987, 
when discussing the Iran-Contra investigation, ``We may never 
have all the facts 
. . . [t]here are too many other problems, domestic and 
foreign, that are not going to go away. They cannot, and should 
not, be swept aside because of an obsession with this Iranian 
affair.'' 6 The same is true today about the ``Whitewater 
affair.''
    \6\ The New York Times, Jan. 7, 1987, p. A8.
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The Independent Counsel's investigation should not delay the 
        Committee's investigation

    When the Senate passed Resolution 120, creating the Special 
Committee and defining its powers and responsibilities, the 
Independent Counsel's investigation was already well underway. 
7 The Senate recognized this fact and provided for it in 
the Resolution. 8 It was not the intent of the Senate that 
the Special Committee's work be delayed or put on hold because 
of the activities of the Independent Counsel.
    \7\ Special Counsel Robert B. Fiske, Jr. began his investigation in 
January 1994. Independent Counsel Kenneth W. Starr succeeded Mr. Fiske 
in August 1994.
    \8\ For example, section 5(b)(6) requires the Committee to inform 
the Independent Counsel in writing before granting a witness immunity.
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    The Independent Counsel has raised concerns in the past 
about the Committee's investigation, and the Committee has 
declined to suspend its work in order to accommodate those 
concerns. On October 2, 1995, the Chairman and Ranking Member 
wrote to Independent Counsel Kenneth Starr and advised him that 
the Committee intended to proceed with its investigation, 
contrary to the Independent Counsel's wishes as expressed in a 
September 27, 1995 letter:

          [W]e believe that the concerns expressed in your 
        letter do not outweigh the Senate's strong interest in 
        concluding its investigation and public hearings into 
        the matters specified in Senate Resolution 120 
        consistent with Section 9 of the Resolution [by 
        February 29, 1996]. 9
    \9\ October 2, 1995 letter from Chairman Alfonse M. D'Amato and 
Senator Paul S. Sarbanes to Independent Counsel Kenneth W. Starr.

    The Independent Counsel has brought a criminal case in 
Arkansas against three individuals (United States v. McDougal). 
The trial now is scheduled to begin on March 4. This should not 
affect the Committee's assignment to carry forward and complete 
its inquiry by February 29.
    Four witnesses have informed the Committee that they will 
invoke their right against self-incrimination and refuse to 
testify. The Senate did not intend for this Committee to allow 
assertions of Fifth Amendment privileges by witnesses to derail 
its investigation. The fact that four witnesses have asserted 
their Fifth Amendment privilege is no reason to extend this 
investigation into the political season, a result the Senate 
avoided when it provided funding for this investigation only 
through February 29, 1996.
    There is another important reason that witnesses' 
assertions of the Fifth Amendment privilege against self-
incrimination do not justify delaying the Committee's 
investigation until the conclusion of the McDougal trial: the 
outcome of that trial will not affect the ability of witnesses 
to assert their privilege against self-incrimination. These 
four witnesses are not on trial in that case, and whatever the 
outcome of that trial, it will give them no assurance that they 
could not be prosecuted at some future time by the Independent 
Counsel or some other federal or state prosecutorial authority. 
Thus they can be expected to continue to assert their Fifth 
Amendment privilege after the trial concludes.
    The availability of even the defendants in the McDougal 
trial will not be affected by the trial's outcome. If the 
defendants are convicted, appeals likely will follow, probably 
on numerous grounds, and will take months or even years to 
conclude. During that time the defendants will retain their 
Fifth Amendment privilege, notwithstanding the prior trial 
conviction. In fact, even if the defendants are acquitted at 
trial they will retain their Fifth Amendment privilege for 
charges other than those on which they were tried.
    These two points demonstrate that the Committee should not 
await the conclusion of the McDougal trial to complete its 
investigation. The trial already has been rescheduled twice, 
once from October 1995 to January 1996, and again from January 
to March 1996. The trial could be further delayed, and once the 
trial finally begins there is no assurance of how long it will 
last. The Committee should move promptly to complete its 
hearings by February 29 and avoid the problem of having public 
hearings ongoing at the same time as the trial.

White House compliance with Committee document requests

    The Majority report's description of the ``Obstacles Faced 
by the Committee'' in obtaining documents and testimony from 
the White House does not allow for the breadth and complexity 
of the Committee's various document requests. In a number of 
instances the White House experienced difficulties in complying 
with document requests because some of the Majority's requests 
were extremely broad and burdensome. A good example of this 
problem is the document request the Majority sent to the White 
House in September calling for the production of, among other 
things, any record of any communications, contacts, or meetings 
over an eighteen-month period between anyone in the White 
House, on the one hand, and anyone on a list of approximately 
fifty people on any subject matter whatsoever. This extremely 
broad and onerous request ultimately was narrowed in October, 
but in the interim it slowed down the document production 
effort.
    The Majority's request for electronic mail records 
encountered the difficulty that the White House did not have an 
existing capability to retrieve all e-mail messages potentially 
encompassed by the Committee's request. The White House 
attorneys explained that the e-mail system implemented by the 
Bush Administration and inherited by the Clinton Administration 
did not save e-mail records in retrievable form. Under the Bush 
Administration system only weekly ``back-up tapes'' for the 
entire computer network were maintained up until the Clinton 
Administration put a new system in place in July 1994. (The 
White House has produced responsive e-mail created after July 
1994.) The White House attorneys therefore confronted a problem 
as to how to proceed under the technical constraints imposed by 
the Bush Administration system. This matter has now been 
resolved through a more specific definition by the Committee of 
the e-mail requests and by the White House committing to major 
outside computer contractual assistance.
    Finally, the request for the production of the Kennedy 
notes raised important questions of lawyer-client privilege. 
Prominent legal scholars stated that the White House had a 
legitimate and persuasive claim of privilege, and would have 
prevailed in litigation seeking to compel production of the 
notes. 10 The privilege concerns raised by the White House 
prior to producing the notes were reasonable. In the end a way 
to address the privilege question was worked out, the notes 
were produced, and the Committee held a hearing with respect to 
them.
    \10\ December 14, 1995 letter to John M. Quinn from Professor 
Geoffrey C. Hazard, Jr.
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        II. THE MAJORITY'S FINDINGS ARE INCOMPLETE AND ONE-SIDED

    The Majority has submitted partial findings of the Special 
Committee's investigation to date. We think it is unwise to 
make findings before the issuance of the Committee's Final 
Report.
    We are particularly troubled by the Majority's supposed 
findings because they are incomplete and one-sided. A few 
examples of this problem are set forth below.
    In its discussion of the handling of documents in Vincent 
Foster's office, the Majority fails even to mention a most 
important aspect of the testimony of former Deputy Attorney 
General Philip Heymann. Heymann told the Committee that 
although Bernard Nussbaum may have made an error in political 
judgment by declining to allow law enforcement officials to 
conduct their own search of Foster's office, White House 
officials did nothing either illegal or unethical:

          Senator Simon. In terms of Bernie Nussbaum, is it a 
        fair characterization to say that what he did was not 
        illegal, not unethical, but unwise?
          Mr. Heymann. I think that's basically a fair 
        characterization, Senator Simon. (8/2/95 Hrg. p. 136)

    The Majority's discussion of the RTC criminal referrals is 
similarly incomplete and one-sided. The Majority, for example, 
makes no mention of the consistent testimony of career federal 
prosecutors that the 1992 referral lacked merit. Gerald 
McDowell, a career official in charge of the Justice 
Department's Fraud Section, told the Committee that the 
referral was ``half-baked'' and ``junky.'' (McDowell, 10/19/95 
Dep. pp. 115, 119) Assistant United States Attorney Michael 
Johnson called the allegations in the referral ``reckless,'' 
``irresponsible'' and ``odd'' and noted that the allegations 
were not supported by the evidence. (Johnson, 10/24/95 Dep. pp. 
67, 197) Fraud Section attorney Mark MacDougal, who wrote an 
analysis of the referral in February 1993, concluded, ``No 
factual claims can be found in the referral to support the 
designation of Mr. or Mrs. Clinton as witnesses.'' (DOJ 006680)
    The evidence also established no impropriety in the way the 
RTC referrals were handled by the Department of Justice and the 
United States Attorneys Office in Little Rock. United States 
Attorney Charles Banks--a Republican appointee--properly 
declined to act on the 1992 referral prior to the presidential 
election, despite unusual and persistent pressure from the RTC 
investigator to open a grand jury investigation. As Banks wrote 
in an October 16, 1992 letter to the Special Agent in Charge of 
the local FBI office:

          While I do not intend to denigrate the work of the 
        RTC, 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. You and I know in investigations of this 
        type, the first steps, such as issuance of grand jury 
        subpoena for records, will lead to media and public 
        inquiries of matters that are subject to absolute 
        privacy. Even media questions about such an 
        investigation in today's modern political climate all 
        too often publicly purports to ``legitimize what can't 
        be proven.'' . . . 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. (DOJ 
        006688-006689)

    Chairman D'Amato praised Banks and told him that he ``did 
absolutely the right thing'' by resisting pressure to open a 
grand jury investigation shortly before the 1992 Presidential 
election. (12/5/95 Hrg. pp. 221, 222-223) Senator Sarbanes 
agreed, telling Banks:

          I think this letter and the positions you took 
        reflected a determined effort to sustain the integrity 
        of the criminal justice system. I think that ought to 
        be recognized. And I think it's this kind of courage 
        that makes this system work, and I commend you for it. 
        (12/5/95 Hrg. p. 226)

    Contrary to the Majority's assertion, the evidence also 
established that in 1993 newly-appointed United States Attorney 
Paula Casey properly handled plea negotiations with David Hale 
and his attorney, Randy Coleman. Coleman demanded that Casey 
give Hale an extraordinarily lenient plea bargain--to a 
misdemeanor rather than a felony--without requiring that Hale 
first provide law enforcement officials with a proffer of facts 
relevant to the pending investigation. Casey repeatedly invited 
Hale to make a detailed proffer, but consistent with long-
standing Department of Justice policy, she declined to reach 
any plea bargain with Hale without obtaining his proffer in 
advance. Career Department of Justice prosecutors uniformly 
approved of Casey's actions and testified that to accede to 
Coleman's unreasonable demands would have been the equivalent 
of ``buying a pig in a poke.'' (Carver, 10/17/95 Dep. p. 130; 
Nathan, 10/27/95 Dep. p. 105; McKay, 10/18/95 Dep. pp. 92-93)
    When career officials at Main Justice took over the Hale 
case in November 1993, they approached plea negotiations just 
as Casey had before them. Specifically, the career officials at 
the Department of Justice refused to make any deal with Hale 
absent a detailed factual proffer of Hale's information and an 
opportunity to evaluate it. (Keeney, 10/20/95 Dep. p. 40) Hale 
continued to refuse to make a proffer and instead took his 
allegations to the press. Ultimately, Independent Counsel 
Robert Fiske required Hale to accept a guilty plea to two 
felony counts, while Casey had insisted upon a plea to only one 
felony.

                            III. CONCLUSION

    For the reasons set forth above, the Committee should 
complete its investigation of Whitewater matters by February 
29, 1996, the date established by Senate Resolution 120. The 
investigation should not be perceived by the public as 
influenced by election year politics. The American people 
deserve to have this matter pursued promptly and fairly.

                                   Paul Sarbanes.
                                   Chris Dodd.
                                   John F. Kerry.
                                   Richard H. Bryan.
                                   Barbara Boxer.
                                   Carol Moseley-Braun.
                                   Patty Murray.
                                   Paul Simon.