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Whitewater losses may have gone to taxpayers

Published Oct. 4, 2005

The Clintons lost money on Whitewater, but much less than an equal partner who may have shifted losses to taxpayers, according to a new report on the controversial Arkansas land deal.

A report to the Resolution Trust Corp. prepared by former U.S. Attorney Jay Stephens found that President and Mrs. Clinton lost $42,192 on Whitewater, slightly less than the $46,635 Clinton said he lost on the deal, according to officials who have read it.

The report also showed that during a four-year period, the Clintons paid no money into Whitewater, while $134,294 was advanced by partner Jim McDougal, mostly from other accounts he controlled in a savings and loan that failed at a cost to taxpayers of $60-million.

Stephens' analysis could not reconstruct all the activity involving the Whitewater account because its records and those of the Madison Guaranty Savings and Loan, which McDougal owned, had been sloppily kept, its authors wrote.

The Clintons' attorney, David Kendall, said that he hadn't seen the report but that "the Clintons have cooperated fully." RTC spokesman Stephen Katsanos declined to comment.

The report generally confirmed the known outlines of the Whitewater controversy without resolving its central debate, according to those who have read it.

The president's supporters said it backed his claim to have been a financial loser and passive partner in the Whitewater land deal and therefore unlikely to have been involved in any misdeeds associated with it.

Critics said the report buttressed their view that the Clintons, by not paying their share of shortfalls on the project, shifted losses to McDougal and ultimately to taxpayers.

The report reached no conclusions about liability for losses to taxpayers from Madison. It was commissioned by the RTC, which is deciding whether to sue in an effort to recover the approximately $60-million lost to taxpayers when Madison failed.

According to Stephens' analysis, slow sales and rising interest rates doomed the Whitewater partnership of the Clintons and Jim and Susan McDougal to cash shortfalls that reached $193,189 through fiscal year 1986.

That shortfall was made up by advances of $35,970 by the Clintons _ all made in the early days of the equal partnership _ and about $158,000 by McDougal.

The discrepancy between the total cash shortfall and the sum of the Clintons' and McDougal's cash advances to cover the shortfall is not explained.

The report's conclusions were turned over to the RTC several months ago and recently circulated to House and Senate banking committees.

Independent Counsel Kenneth Starr is conducting a criminal investigation into Whitewater and Madison. McDougal has been informed that he is a target of possible criminal prosecution.