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R E C E N T L Y
Rethinking Rodney King
By Lori Leibovich
A new book suggests that the beating that shook America may not have been as black-and-white a case as it appeared
(03/13/98)
Salon exclusive: Paula Jones' funny money
By Jonathan Broder and Murray Waas
Is Paula Jones fleecing the public -- and why is one of her big benefactors trying to be secret?
(03/12/98)
Paula Jones' Mysterious Benefactor
By Jonathan Broder and Murray Waas
Who's behind a secret $50,000 donation to the legal fund of Clinton's accuser?
(03/12/98)
The Falwell connection
By Murray Waas
How the Rev. Jerry Falwell and a California political organization helped finance and orchestrate an extensive anti-Clinton propaganda campaign
(03/11/98)
Secret agenda man
By David Corn
When Vernon Jordan speaks, people listen. But who is he talking for?
(03/10/98)
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CLINTON'S GHOST | PAGE 2 OF 2
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After McDougal's 1996 conviction, and his decision to cooperate with independent counsel Kenneth Starr in a desperate bid to avoid dying in prison, he began to tell interviewers that he'd lied at his trial to protect President Clinton. Now, he expounded, he was like Brutus, to Clinton's Julius Caesar. What a joke. In fact, McDougal had snatched his own defeat from the jaws of a prosecution that looked to be in very bad shape. Jurors later told reporters they hadn't believed a thing the independent counsel's star witness, David Hale, said. Enter McDougal, begged by his lawyers to remain silent, boasting to reporters that he would kick Starr's butt up between his shoulder blades. Fellow defendants were appalled. Susan McDougal insists that her ex-husband was unmedicated and delusional at the time.
McDougal's prosecutor, Ray Jahn, was delighted, shrewdly comparing McDougal's testimony with Clinton's. During Clinton's videotaped testimony, Jahn had led the president methodically through the history of the Whitewater Development Corporation, demonstrating at every turn that as his business partner's S&L began to totter in the mid-1980s (along with 745 others across the country), McDougal had begun a frantic fiscal juggling act, shifting money among his various business entities in a desperate attempt to save himself.
One of those entities was Whitewater. Without telling the Clintons or even asking them, McDougal, in May 1985, sold the company's real estate assets for pennies on the dollar. That sale, noted the Pillsbury Report, the $3.6 million study of Whitewater commissioned by the Treasury Department and all but universally ignored by the nation's high-dollar press, "marked the end of Whitewater as a project ... the company would continue to exist but there was never again any prospect that it might turn a profit."
Whitewater was gone, but the Clintons didn't know it. McDougal continued to ply them with upbeat letters. Nor, the documentary evidence shows, did Bill or Hillary know about the several ways in which McDougal used the shell of the company to make even more speculative plunges in the real estate market -- even after Susan McDougal left him in 1984, state and federal regulators had removed him from Madison Guaranty in 1986 and he'd suffered a subsequent heart attack and psychiatric hospitalization.
In December 1986, McDougal wrote the Clintons a letter to the effect that the company had lost $90,000, but that he was willing to absorb the loss for tax purposes. He enclosed a stock transfer certificate for them to sign over their share of the company. In effect, he was offering to buy their half of the company for the amount of the loss. Except he didn't propose to relieve his former partners of the remaining debt -- for which they were, jointly and severally, 100 percent responsible. Unaware that McDougal had liquidated the company's assets, Hillary Rodham Clinton apparently balked and demanded to see the books. Books? What books?
It was Hillary Clinton's refusal that rankled McDougal until the day he died. "While Hillary was technically correct about the mortgage," James B. Stewart wrote with amazing disingenuousness in "Blood Sport," "from McDougal's point of view he didn't see the problem." "Technically," indeed. I keep the company, you pay the debt. What a deal. So no, one guesses McDougal didn't see the problem. Any more than Stewart, famed investigative reporter, gave any evidence of having seen the Pillsbury report, where it's all spelled out in eight volumes of turgid details and exhibits.
"Why isn't [the president] on trial?" prosecutor Jahn asked in his closing argument at the Tucker-McDougal trial? "Because he didn't set up any phony corporations to get employees to sign for loans that were basically worthless ... The president didn't backdate any leases. He didn't backdate any documents ... He didn't come up with any phony reasons not to repay the property. He didn't lie to any examiners. He didn't lie to any investigators."
Poor, sick Jim McDougal, on the other hand, did all of the above and more. While the vaunted scribes from the Times and the Post evidently snoozed, Jahn walked the jury through an explanation of how McDougal scammed the Clintons over Whitewater -- just as he scammed everybody else he dealt with as the house of cards he'd built at Madison Guaranty began to collapse. McDougal may never have intended to cheat his partners. But the evidence showed that he did. Jahn described his attempt to hide behind the president as "an act of desperation."
What kind of witness would McDougal have made had he survived to testify against the president? The worst witness in the world. Even when McDougal tried to put his ex-wife in bed with Clinton, it was obvious that his heart really wasn't in it. First he told James B. Stewart in the New Yorker an improbable tale about overhearing Susan McDougal and the then-governor whispering sweet nothings after a long distance operator mistakenly patched him into a phone conversation. On "Larry King Live" a few days later, he said that while he'd heard rumors about intimacy between the pair, he'd seen no evidence. Even the relentlessly prosecutorial Jeff Gerth concedes, with regard to Whitewater, that McDougal "had no new documents, and his last encounter with the Clintons was more than a decade old." (Actually, McDougal and the president met under formal circumstances at the White House in 1996 on the occasion of Clinton's videotaped testimony.)
So what does it all mean? "In 1995," Gerth's obituary finally admits after years of murky, hyperbolic accusations, "a law firm hired by the RTC found no wrongdoing by the Clintons in Whitewater. But they also affirmed the politically damaging point Mr. McDougal was trying to make when he leaked the documents -- the McDougals had absorbed far more of Whitewater's losses than their equal partners, the Clintons."
Is it really possible that we've spent almost six years and more than $30 million for that?
SALON | March 16, 1998
Gene Lyons last piece for Salon was "The New York Times: All the facts that are fit to omit." He is the author of "Fools For Scandal: How the Media Invented Whitewater" (Franklin Square Press).

T A B L E+T A L K San Francisco's 70 percent minority solution: Reading list without color, or school board without a clue? Join the discussion in Education. R E C E N T L Y Rethinking Rodney King By Lori Leibovich A new book suggests that the beating that shook America may not have been as black-and-white a case as it appeared (03/13/98) Salon exclusive: Paula Jones' funny money By Jonathan Broder and Murray Waas Is Paula Jones fleecing the public -- and why is one of her big benefactors trying to be secret? (03/12/98) Paula Jones' Mysterious Benefactor By Jonathan Broder and Murray Waas Who's behind a secret $50,000 donation to the legal fund of Clinton's accuser? (03/12/98) The Falwell connection By Murray Waas How the Rev. Jerry Falwell and a California political organization helped finance and orchestrate an extensive anti-Clinton propaganda campaign (03/11/98) Secret agenda man By David Corn When Vernon Jordan speaks, people listen. But who is he talking for? (03/10/98) - - - - - - - - - - - - - - - - Browse the Newsreal Archives - - - - - - - - - - - - - - - -
		CLINTON'S GHOST \| PAGE 2 OF 2 - - - - - - - - - - - - - - - - - - - - - - After McDougal's 1996 conviction, and his decision to cooperate with independent counsel Kenneth Starr in a desperate bid to avoid dying in prison, he began to tell interviewers that he'd lied at his trial to protect President Clinton. Now, he expounded, he was like Brutus, to Clinton's Julius Caesar. What a joke. In fact, McDougal had snatched his own defeat from the jaws of a prosecution that looked to be in very bad shape. Jurors later told reporters they hadn't believed a thing the independent counsel's star witness, David Hale, said. Enter McDougal, begged by his lawyers to remain silent, boasting to reporters that he would kick Starr's butt up between his shoulder blades. Fellow defendants were appalled. Susan McDougal insists that her ex-husband was unmedicated and delusional at the time. McDougal's prosecutor, Ray Jahn, was delighted, shrewdly comparing McDougal's testimony with Clinton's. During Clinton's videotaped testimony, Jahn had led the president methodically through the history of the Whitewater Development Corporation, demonstrating at every turn that as his business partner's S&L began to totter in the mid-1980s (along with 745 others across the country), McDougal had begun a frantic fiscal juggling act, shifting money among his various business entities in a desperate attempt to save himself. One of those entities was Whitewater. Without telling the Clintons or even asking them, McDougal, in May 1985, sold the company's real estate assets for pennies on the dollar. That sale, noted the Pillsbury Report, the $3.6 million study of Whitewater commissioned by the Treasury Department and all but universally ignored by the nation's high-dollar press, "marked the end of Whitewater as a project ... the company would continue to exist but there was never again any prospect that it might turn a profit." Whitewater was gone, but the Clintons didn't know it. McDougal continued to ply them with upbeat letters. Nor, the documentary evidence shows, did Bill or Hillary know about the several ways in which McDougal used the shell of the company to make even more speculative plunges in the real estate market -- even after Susan McDougal left him in 1984, state and federal regulators had removed him from Madison Guaranty in 1986 and he'd suffered a subsequent heart attack and psychiatric hospitalization. In December 1986, McDougal wrote the Clintons a letter to the effect that the company had lost $90,000, but that he was willing to absorb the loss for tax purposes. He enclosed a stock transfer certificate for them to sign over their share of the company. In effect, he was offering to buy their half of the company for the amount of the loss. Except he didn't propose to relieve his former partners of the remaining debt -- for which they were, jointly and severally, 100 percent responsible. Unaware that McDougal had liquidated the company's assets, Hillary Rodham Clinton apparently balked and demanded to see the books. Books? What books? It was Hillary Clinton's refusal that rankled McDougal until the day he died. "While Hillary was technically correct about the mortgage," James B. Stewart wrote with amazing disingenuousness in "Blood Sport," "from McDougal's point of view he didn't see the problem." "Technically," indeed. I keep the company, you pay the debt. What a deal. So no, one guesses McDougal didn't see the problem. Any more than Stewart, famed investigative reporter, gave any evidence of having seen the Pillsbury report, where it's all spelled out in eight volumes of turgid details and exhibits. "Why isn't [the president] on trial?" prosecutor Jahn asked in his closing argument at the Tucker-McDougal trial? "Because he didn't set up any phony corporations to get employees to sign for loans that were basically worthless ... The president didn't backdate any leases. He didn't backdate any documents ... He didn't come up with any phony reasons not to repay the property. He didn't lie to any examiners. He didn't lie to any investigators." Poor, sick Jim McDougal, on the other hand, did all of the above and more. While the vaunted scribes from the Times and the Post evidently snoozed, Jahn walked the jury through an explanation of how McDougal scammed the Clintons over Whitewater -- just as he scammed everybody else he dealt with as the house of cards he'd built at Madison Guaranty began to collapse. McDougal may never have intended to cheat his partners. But the evidence showed that he did. Jahn described his attempt to hide behind the president as "an act of desperation." What kind of witness would McDougal have made had he survived to testify against the president? The worst witness in the world. Even when McDougal tried to put his ex-wife in bed with Clinton, it was obvious that his heart really wasn't in it. First he told James B. Stewart in the New Yorker an improbable tale about overhearing Susan McDougal and the then-governor whispering sweet nothings after a long distance operator mistakenly patched him into a phone conversation. On "Larry King Live" a few days later, he said that while he'd heard rumors about intimacy between the pair, he'd seen no evidence. Even the relentlessly prosecutorial Jeff Gerth concedes, with regard to Whitewater, that McDougal "had no new documents, and his last encounter with the Clintons was more than a decade old." (Actually, McDougal and the president met under formal circumstances at the White House in 1996 on the occasion of Clinton's videotaped testimony.) So what does it all mean? "In 1995," Gerth's obituary finally admits after years of murky, hyperbolic accusations, "a law firm hired by the RTC found no wrongdoing by the Clintons in Whitewater. But they also affirmed the politically damaging point Mr. McDougal was trying to make when he leaked the documents -- the McDougals had absorbed far more of Whitewater's losses than their equal partners, the Clintons." Is it really possible that we've spent almost six years and more than $30 million for that? SALON \| March 16, 1998 Gene Lyons last piece for Salon was "The New York Times: All the facts that are fit to omit." He is the author of "Fools For Scandal: How the Media Invented Whitewater" (Franklin Square Press).