The Special Committee's Whitewater Report


On January 5, 1996, the Special Committee received computer printouts of the Rose Law Firm's billings to Madison Guaranty. These records were discovered under mysterious circumstances in the Book Room of the White House Residence.

The billing records constitute the best, and therefore most important, evidence concerning Mrs. Clinton's representation of Mr. McDougal's S&L in the mid-1980s--a relationship that was being investigated by at least three separate federal agencies. The records had been subject to several different federal subpoenas, besides that of the Special Committee, for nearly two years. When federal investigators served their subpoenas, some more than two years ago, the billing records were nowhere to be found. Despite extensive searches conducted by the Rose Law Firm, neither the originals nor copies were discovered.(115) They were not in the firm's computers, its client files, or its storage facility.(116) 1.

The Rose billing records provide the best evidence of the legal services performed by Mrs. Clinton for Madison Guaranty.

The billing records provide the best evidence of the legal services performed by Mrs. Clinton for Madison Guaranty and, as a result of the failed memories of many Rose Law Firm attorneys, are the only source of detailed information about the services that the Rose Law Firm provided to Madison Guaranty. The computerized billing records are thus an invaluable asset in reconstructing Mrs. Clinton's actual involvement in the matter. In total, Mrs. Clinton billed Madison Guaranty for 89 tasks, including 33 conferences with Madison Guaranty officials, on 53 separate days.(117)

Among the significant facts established by the billing records are the following, the significance of which are discussed more fully in the Special Committee's conclusions regarding the Arkansas Phase of its investigation:


Mrs. Clinton, and others on her behalf, repeatedly made statements that Richard Massey brought in Madison Guaranty as a client and, even though she was the billing partner on the matter, she was merely a "backstop" because the firm did not permit associates to bill clients directly.(118) Mr. Massey, however, directly contradicted Mrs. Clinton's account in sworn testimony before the Special Committee. The president of the S&L, John Latham, and a partner at the Rose law firm, David Knight, also contradicted Mrs. Clinton's account.

The billing records substantially resolve this dispute in favor of the testimony of Messrs. Massey, Latham and Knight.


During the 1992 campaign, allegations surfaced that Beverly Bassett Schaffer, who Governor Clinton appointed as Arkansas Securities Commissioner, gave preferential treatment to Madison Guaranty because of her relationship with the Governor and Mrs. Clinton. The Clinton campaign denied that Mrs. Clinton attempted to influence Commissioner Bassett.

The billing records show that Mrs. Clinton called Ms. Schaffer the day before the Rose Law Firm submitted Madison's proposal for its preferred stock offering to the Arkansas Securities Department.(119) The records reflect that Mrs. Clinton billed as much as one hour to the call.(120) Ms. Schaffer notified Mrs. Clinton of the approval of the proposal two weeks later in a letter addressed, "Dear Hillary."(121)

In testimony before the Special Committee, former Commissioner Schaffer directly contradicted Mrs. Clinton and stated that the proposal was discussed during the telephone call. Mr. Massey similarly disputed Mrs. Clinton's account for the telephone call to Ms. Schaffer.(122)


Mrs. Clinton has minimized her role in the Rose Law Firm's representation of Madison before the Arkansas Securities Department in connection with Madison's proposed stock offering. The billing records and Mr. Massey's testimony directly contradict Mrs. Clinton's claim that her role on the matter was merely to serve as a "backstop."

The billing records show that Mrs. Clinton billed Madison for a total of approximately 60 hours of work. Mrs. Clinton billed 6.2 hours on the preferred stock deal for conferences alone that she had with Mr. McDougal, with Mr. Latham and Davis Fitzhugh, two other Madison S&L officers involved in the stock offering.(123)

Mrs. Clinton had at least six conferences with Mr. Massey, the young Rose Law Firm attorney responsible for performing the associate type tasks on the matter.(124) Mrs. Clinton also reviewed the amendments to the application submitted to the Arkansas Securities Department.(125) Mr. Massey testified that he did his work under the supervision of Mrs. Clinton.(126) According to Mr. Massey: "Mrs. Clinton was the billing attorney and had a relationship with me such that she needed to know what I was doing so she could be prepared to update the client at any time."(127) When asked whether Mrs. Clinton's work on the stock proposal deal was "minimal," Mr. Massey responded, "In my own mind it's a significant amount of time."(128)


The billing records indicate that Mrs. Clinton's involvement in Castle Grande was much more extensive than she has thus far owned up to. Before the billing records were discovered, little was known about the nature of the Rose Law Firm's representation of Madison Guaranty in connection with the Castle Grande land transaction. Perhaps because Mrs. Clinton had ordered the destruction of Madison-related records in 1988, the Rose Law Firm no longer possessed any file related to the Castle Grande deal.

Federal investigators described the Castle Grande transactions as a series of land flips and transactions that cost the American taxpayers $4 million.(129) In 1995, when the RTC asked about her knowledge of Castle Grande, Mrs. Clinton stated "I do not believe I knew anything about any of these real estate parcels and projects." (130)

The billing records identify Mrs. Clinton as the billing partner on the matter--even though Mrs. Clinton claimed that she has no idea how the Rose Law Firm became involved in the matter.(131) These records indicate that Mrs. Clinton billed more time on the Castle Grande matter--29.5 hours, or 54 percent of total billings on the matter--than any other lawyer at the Rose Law Firm. Indeed, nearly half of Mrs. Clinton's total billings to Madison were for work on Castle Grande. In the months following the initial transaction, Mrs. Clinton had at least 12 conferences with Mr. Ward and numerous meetings with Madison officials in connection with the subsequent sales that she billed to the IDC/Castle Grande matter.


More important, the billing records were perhaps most illuminating with respect to the nature of Mrs. Clinton's work on Castle Grande. For his role as the "straw man" and other related services to the project, Mr. Ward was owed a commission. On March 31, 1986, Madison Guaranty loaned Mr. Ward $400,000.(132) One week later, on April 7, 1986, Madison Financial executed two promissory notes, for $300,000 and $70,943, purporting to reflect loans from Mr. Ward to Madison Financial Corporation, Madison Guaranty's subsidiary service corporation.(133) At about this time, bank examiners were scrutinizing Madison Guaranty's books. Mr. James Clark, the chief examiner, asked whether the three notes were related.(134) He was assured by a Madison Guaranty official, probably Don Denton, that the notes were not related.(135) In fact, according to Madison official John Latham, the three notes were related, and the $400,000 March 31 loan from Madison Guaranty was intended to pay Mr. Ward's commissions.(136)

The Rose Law Firm billing records revealed that on April 7, 1986, the day the Madison Financial notes were executed, Mrs. Clinton billed 12 minutes to the IDC/Castle Grande matter for "Telephone conference with Don Denton."(137) A message slip produced by Mr. Denton reflects that Mrs. Clinton called him from the Rose Law Firm on April 7, 1986.(138) On a June 11, 1996 interview with FDIC investigators, Mr. Denton stated that Mrs. Clinton called seeking copies of the notes between Mr. Ward, Madison Financial, and Madison Guaranty.(139) Mr. Denton told investigators that during the conversation he cautioned Mrs. Clinton that a problem might exist with respect to the April 7 notes to Mr. Ward because "they constituted in effect a parent entity fulfilling the obligation of a subsidiary,"(140) a violation of the so-called direct investment rule. Mrs. Clinton, however, "summarily dismissed" that concern in a way that he took to mean that "he would take care of savings and loan matters, and she would take care of legal matters."(141)

And she did. The billing records showed that on May 1, 1986, Mrs. Clinton billed Madison Guaranty for two hours of time for the following work: "Conference with Seth Ward; telephone conference with Seth Ward regarding option; telephone conference with Mike Shauffler; prepare option."(142) Indeed, a May 1 option agreement between Mr. Ward and Madison Financial bore a word processing code ("0190g") that, according to the Rose Law Firm's counsel, indicates the document was created at the Rose Law Firm by or for Mrs. Clinton.(143)

Mr. Clark, the bank examiner told investigators that, after reviewing the records and in light of Mr. Denton' testimony, he believed that the May 1 option prepared by Mrs. Clinton "was created `in order to conceal the connection--whatever it was--between'" the March 31 and April 7 notes.(144)

On June 13, 1996, the Special Committee requested that the First Lady attempt to refresh her recollection regarding the matters discussed by Mr. Denton and to inform the Committee of what she recalls about them.(145) On June 17, 1996 the Special Committee received an affidavit from Mrs. Clinton accompanied by a letter from Mr. Kendall. In the affidavit, Mrs. Clinton gave no answer to the question posed by the Special Committee; instead, she simply referred to Mr. Kendall's letter "addressing certain allegations recently made by Mr. Don Denton."(146) In his letter, Mr. Kendall maintained that Mr. Denton's recollection is "wholly unreliable"34 but gave no indication as to the recollection of the First Lady.(147) The First Lady therefore has neither confirmed nor denied Mr. Denton's testimony.

The significance of the billing records as they relate to Castle Grande is perhaps best illustrated by the activities of Mrs. Clinton's legal defense team immediately after the discovery of the records. A message slip from John Tisdale, the Clintons' Arkansas lawyer to Alston Jennings, Seth Ward's former attorney on Castle Grande, indicate that, on June 5, 1996, the day after Ms. Huber discovered the records in her White House office, Mr. Kendall called Mr. Tisdale and Mr. Jennings to arrange a meeting.(148) One week after the records were discovered, on January 11, 1996, Mr. Kendall flew to Little Rock and met first with Mr. Jennings and then with Mr. Ward.(149) The meeting with Mr. Ward lasted 30-40 minutes.(150) Curiously, Mr. Kendall had also contacted Mr. Jennings in August 1995. Subsequent to that contact, Mrs. Clinton summoned Mr. Jennings to the White House for a personal meeting on August 10, 1995, around the time that the billing records were placed in the Book Room of the White House residence. 2.

The disappearance and mysterious reappearance of the Rose Law Firm billing records was part of a larger pattern of removal, concealment and, at times, destruction of records concerning Mrs. Clinton's representation of Madison.

The mysterious discovery of the Rose billing records must be viewed in the context of the destruction and mishandling of other Rose Law Firm files concerning Madison between 1988 and 1992. In 1988, Mrs. Clinton ordered the Rose Law Firm to destroy records relating to her representation of Mr. McDougal's Madison S&L.(151) As described above, this was not a routine destruction of records because there was pending litigation relating to Castle Grande and federal regulators were investigating the operation and solvency of Madison in anticipation of taking over the troubled S&L.

The mishandling of Madison documents continued after the 1992 presidential campaign, when the firm's files on Madison, which were by now the property of the RTC as conservator of Madison, and files of other Rose clients for whom Mrs. Clinton had performed legal services, were secretly removed from the firm by another then-Rose Law Firm partner, Webster Hubbell. Mr. Hubbell removed these files, at times taking the firm's only copies,(152) without obtaining the consent of the firm or the client.(153) 3.

Vincent Foster is the last person known to have the billing records in his possession.

During the 1992 presidential campaign, on February 12, 1992, an unknown person printed out a set of the Rose Law Firm's computerized records of billings to Madison Guaranty.(154) Mr. Hubbell asserted that either he or former Deputy White House Counsel Vincent Foster, also a Rose partner, directed the Rose accounting department to print the billing records for Madison.(155) In addition to obtaining the computerized billing records, Mr. Hubbell also retrieved other files and documents relating to Mrs. Clinton's work for Madison.

According to Mr. Hubbell, Mr. Foster was the last person he saw handling the billing records.(156) Mr. Hubbell did not know who removed the records from the Rose Law Firm,(157) or how they came to be left in the White House Residence.(158) He claimed not to have spoken with anyone about the billing records since the 1992 presidential campaign.(159) 4.

The billing records mysteriously reappear in the Book Room of the White House Residence in August 1995.

During the first two weeks of August 1995, Carolyn Huber, Special Assistant to the President and Special Director of Correspondence for the White House, saw the Rose Law Firm billing records for the first time.(160) The billing records were in the Book Room, a small room on the third floor of the First Family's private quarters in the White House Residence.(161)

In early August 1995, Ms. Huber was gathering newspaper and magazine clippings in the Book Room when she noticed the records in clear view on the edge of a table.(162) The records were folded in half, and Ms. Huber recognized the records, from her experience at the Rose Law Firm, to be billing records.(163)

For several months, Ms. Huber gave little thought to the records, which were moved in a box to her office. On the morning of January 4, 1996, Ms. Huber discovered the records when the table was removed that had concealed the box with the billing records for five months.(164)

Immediately, Ms. Huber realized the billing records were related to Madison Guaranty.(165) She was horrified because she understood their significance; she had seen several subpoenas calling for the production of Madison Guaranty records, including these very records.(166) 5.

Only a limited number of people had access to Book Room of the White House Residence.

The Special Committee's inquiry discovered that only a limited number of people had access to the Book Room, and no one admitted to placing the billing records in the Book Room of the White House Residence. Only a limited number of people had access. Moreover, it is highly unlikely that those with access would be leaving or disturbing documents in that private area of the White House.

The Special Committee rejects as fanciful the suggestion that construction workers or residence staff were somehow responsible for leaving the records in the Book Room. Similarly, the denials by overnight guests are highly credible because none of them would have been likely to be carrying records into the Book Room or to disturb materials in the Book Room.

Accordingly, the Special Committee concludes that most persons with access to the Book Room during the relevant period truthfully denied leaving the Rose billing records in the Book Room. They had neither the opportunity to possess the billing records nor the motive to conceal them from investigators for nearly two years. 6.

Very few people had motive to be handling or reading the Rose billing records in August 1995.

Few lay people would have understood the significance or content of the Rose billing records in August 1995. In fact, based on the evidence received by the Special Committee, only three people had previously shown an interest in and handled the billing records -- Mrs. Clinton, Mr. Foster and Mr. Hubbell. Of these, Mr. Foster passed away on July 20, 1993, and Mr. Hubbell reported to federal prison on August 7, 1995.(167)

Moreover, as discussed earlier in these Conclusions, the principal relevance of the billing records was to disclose the nature and extent of the legal work performed by Rose Law Firm partners for Madison Guaranty. As noted above, these records were particularly significant in evaluating work done by Mrs. Clinton. Again, this is an important factor in evaluating who would have had an interest in reviewing the records in August 1995. Finally, the Committee is impressed by the fact that these records appeared on the table of the Book Room within days after the RTC-IG issued its report critical of the Rose Law Firm and its conflict of interest over Madison. As evidenced by the memorandum of March 1, 1994 from Mr. Ickes to Mrs. Clinton, this particular issue was of concern to Mrs. Clinton in connection with her possible exposure to personal liability. 7.

Only a limited number of people were definitely within the chain of custody of the billing records.

Although the absence of fingerprints does not rule out that a person handled documents, the presence of fingerprints positively establishes that someone was in the chain of custody. Of individuals positively within the chain of custody on these documents, only Mrs. Clinton and Mr. Foster are likely to have been interested in reading the billing records. Indeed, in an affidavit submitted to the Special Committee on June 17, 1996, Mrs. Clinton stated: "I recall discussing some of this legal work in 1992 with Mr. Vincent Foster and Mr. Webster Hubbell, as I sought to answer press questions about the Madison Guaranty representation during the Presidential Campaign. Prior to the recent release of FBI fingerprint information, I had stated that I might have been shown billing records in 1992."(168) 8.

Mrs. Clinton is more likely than any other known individual to have placed the billing records in the Book Room in August 1995.

The Special Committee is mindful that the question of possession of the long lost and much sought Rose billing records has grave legal implications. Not surprisingly, no one has admitted to putting the documents in the Book Room. On the current state of the record, the Special Committee cannot state with certainty who put the records in the Book Room.

Nevertheless, the pattern of past behavior in handling documents, the limited number of persons with access to the Book Room, the question of motive, and the chain of custody evidence, taken together, suggest that very few people were likely to have placed the Rose billing records in the Book Room in August 1995. With these factors in mind, the Special Committee concludes that Mrs. Clinton is more likely than any other known individual to have placed the records in the Book Room. Certainly, Mrs. Clinton fits the above criteria most closely.35

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