ON THE ROAD TO SCANDAL

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Much of what follows is being told for the first time: how the Clintons got into the investment, how the McDougals tried--and failed--to get them out of it, how Hillary all but single-handedly managed the investment after 1986, how she dealt with the banks that lent them money, including negotiating a loan renewal with a bank whose parent company was trying to get her husband to sign legislation it wanted. Much of what appears here will seem at odds with statements made by the President and First Lady, some of them under oath. At various times, they or their spokespeople have alleged that the Clintons had virtually nothing to do with Whitewater and were simply "passive" investors; that the McDougals didn't really absorb significantly more losses than the Clintons; that Hillary wasn't responsible for Madison Guaranty's becoming a client of the Rose firm; that she wasn't familiar with a real estate development called Castle Grande and didn't work on it.

Many of the events described in this excerpt are being investigated by independent counsel Starr. The bankers in Flippin, Arkansas, involved in the Whitewater loan, for example, have testified before the grand jury and have been instructed by Starr's staff not to speak about what they know. The Clintons' and McDougals' activities in Whitewater, involving federally regulated banks, savings and loans, federal taxes, favors bestowed and accepted, are areas covered by a network of criminal and civil laws. Under federal law Title 18, section 1344, for example, it may be a crime to submit a false financial-disclosure statement. Perjury and obstruction of justice are also crimes under investigation. Factual issues of knowledge and intent loom large in whether any laws were broken. Ultimately a grand jury and the independent counsel will consider that issue and decide whether any further charges should be filed, against either the President or First Lady, or others.

As the legal process unfolds, the question of whether specific laws were broken should not obscure the broader issues that make Whitewater an important story. How Bill and Hillary Clinton handled what was their single largest investment says much about their character and their integrity. It shows how they reacted to power, both in their quest for it and in their wielding of it. It shows their willingness to hold themselves to the same standards everyone else must--whether in meeting a bank's conditions for a loan, taking responsibility for their savings, investments and taxes, or cooperating with federal investigators. Perhaps most important, it shows whether they have spoken the truth on subjects of legitimate concern to the American public.