Shadow of Doubt

By Richard Lacayo

Bill Clinton has always modeled himself after John F. Kennedy. But as the Whitewater scandal continues to plague him, it is increasingly the fading memories of Richard Nixon that keep cropping up in the White House. The current scandal seems to lack any of the deep seriousness of Watergate, but the handling of the questions still hanging over the strange little land deal in Arkansas 16 years ago has produced an outsize shadow of doubt over the Administration -- and prompted the resignation of a member of the President's and First Lady's inner circle.

The latest problem arose late Friday afternoon, when the phone rang in the office of associate White House counsel William Kennedy III. On the other end was an FBI official, calling to tell him that subpoenas ordered by special counsel Robert Fiske were about to be served on six White House officials and three Treasury Department staff members. Kennedy brought the bad news to chief of staff Mack McLarty, who gathered five of the targeted aides in the counsel's office at 6 to await the subpoenas.

The documents bore some of the Administration's biggest names, including White House counsel Bernard Nussbaum, senior adviser Bruce Lindsey, communications director Mark Gearan and deputy chief of staff Harold Ickes. They were ordered to Federal District Court in Washington to provide testimony for a grand jury in Little Rock. At issue is a series of meetings between White House aides and Treasury Department officials connected to the Whitewater investigation. Another subpoena ordered the White House to preserve any evidence relating to the meetings. Deputy counsel Joel Klein immediately barred the destruction of computer records or the removal of any burn bags and trash containers.

The subpoenas were one of the most embarrassing developments yet. At a time when the President is losing ground on health-care reform, his Administration's bobbling of the investigation brought on a week of painful disclosures, the FBI at the White House door -- and Nussbaum's resignation.

His departure, effective April 5, became official in an exchange of letters with the President. Nussbaum blamed "those who do not understand, nor wish to understand the role and obligations of a lawyer . . ." Clinton more diplomatically noted, "We have worked together in Washington at a time when serving is hard."

Prodded by stories in the Washington Post, the White House had acknowledged a few days earlier that Treasury Department officials had met twice with Nussbaum and other Administration aides for the unusual purpose of discussing the progress of a federal investigation of the Madison Guaranty Savings & Loan. Madison Guaranty is the failed Arkansas thrift once owned by James McDougal, the Clintons' partner in the Whitewater real estate development. Deputy Treasury Secretary Roger Altman, acting head of the Resolution Trust Corporation, admitted to the Senate banking committee that he had briefed Nussbaum and other top aides on the probe.

The most ill-advised contact was in late September, when Nussbaum met with Jean Hanson, general counsel at the Treasury Department. She told him that the RTC, the agency charged with cleaning up the S&L mess, would soon send a request to the Justice Department asking for a criminal investigation of Madison. Though the request does not charge the Clintons with wrongdoing, it names them as possible beneficiaries of illegal Madison transactions. For a regulatory body to disclose such a matter to any of the parties involved is a considerable departure from standard practice, to say nothing of a spectacular instance of bad political judgment.

At a second meeting in October, Nussbaum was joined by Gearan; Lindsey, a top Clinton aide who was the chief explainer of Whitewater; and Josh Steiner, Treasury Secretary Lloyd Bentsen's chief of staff. According to Gearan, they discussed how best to respond to press questions about Whitewater.

Faced with something that approached a regular kaffeeklatsch linking the White House with agencies looking into Whitewater, an embarrassed Clinton insisted at midweek that "no one has actually done anything wrong," but nonetheless added, "I think it would be better if the meetings and conversations hadn't occurred." The President ordered McLarty to issue a rule to senior Administration officials about Whitewater chats with federal regulators: Don't have them or, before you do, clear them with me.

In addition to the subpoenas to Nussbaum, Lindsey and Gearan, who attended one or all of the meetings, and Ickes, who has lately been handling Whitewater damage control for the White House, two others went to aides of Hillary Rodham Clinton. Her chief of staff, Maggie Williams, attended at least one meeting. Press secretary Lisa Caputo had heard last fall from an RTC official about press inquiries involving the case. Four more subpoenas went to former Bentsen aide Jack DeVore and Altman, Hanson and Steiner at Treasury.

Senate Republicans could hardly contain their glee as Whitewater appeared to turn into the kind of consuming issue that paralyzes an Administration; 43 G.O.P. members promised that until the Senate banking committee holds hearings on the suspect meetings, they will block the Administration's nomination of Ricki Tigert to head the Federal Deposit Insurance Corporation. "You're asking for big, big trouble and showing some stunningly bad judgment when you start mixing politics with law enforcement," clucked Senate minority leader Bob Dole.

This realization came too late to Nussbaum, who brought to Washington the truculent manner of a big-city courtroom litigator and the political instincts of a country parson. His involvement in several notable White House debacles, including the travel-office uproar, the extended search for an Attorney General and the choice of an easily targeted Lani Guinier for a top Justice Department post, earned him the reputation of a Beltway naif and worse. Until last week the most serious charges against him involved his actions after the apparent suicide last year of White House lawyer Vincent Foster, when Nussbaum interfered in investigators' attempts to examine Foster's office and removed some records, including files pertaining to Whitewater. It was an odd notion of propriety for a man who did his first stint in Washington on the staff of the House Watergate committee.

As soon as news of the Nussbaum meetings with Treasury officials emerged, pressure built within the White House to dump him. By last Friday, Clinton's most influential advisers -- McLarty, David Gergen, George Stephanopoulos and Vice President Al Gore -- all agreed he had to go.

For a while, there was resistance from Nussbaum, who wanted the resignation postponed to avoid the appearance that he had been forced out, and from a dwindling number of supporters. However, fed up with Washington and its rough handling of her husband, Nussbaum's wife Toby was relieved to see him leave the job. On Friday afternoon, tellingly, Clinton passed up two opportunities to defend Nussbaum in public. That evening he called his old friend into the Oval Office to discuss how the deed would be done. A reluctant Nussbaum agreed to go. His view, as a senior White House official put it, was "I'll be the lightning rod. I'll take the hits."

So far, the damage has not reached Treasury Secretary Bentsen. Scrambling to distance himself from the rising muck, he ordered his employees to have no more contact with the White House about Whitewater and asked the Office of Government Ethics to review the earlier contacts.

When the Whitewater focus wasn't on Nussbaum, it turned toward the Rose Law Firm of Little Rock, where Foster, the First Lady, Associate Attorney General Webster Hubbell and White House lawyer Kennedy were all once partners, known collectively as "the Famous Four." Last week the firm added to the Whitewater saga that piece of office equipment vital to any full-fledged political scandal: a shredder. The New York Times reported that a college student who works at Rose told the federal grand jury convened by Fiske that in late January he and another employee were ordered to shred a box of documents that appeared to have come from the files of Foster, whose legal work on behalf of the Clintons included handling the sale of their parts of the Whitewater acreage. The story was denied by representatives of the firm, who had some logic on their side: Would they select a part-time college kid to deep-six something really damaging when they could have done the deed themselves? That flap followed in the wake of a Washington Post report that Hubbell was the subject of an internal investigation by his old firm into alleged overbilling of clients, including the RTC. Hubbell denied any wrongdoing, and was stoutly defended by Attorney General Janet Reno.

In the tangled Whitewater case, even what seemed like settled questions keep coming unsettled. In a letter filed in U.S. District Court in New York, Fiske let it be known that his investigation will also re-examine the conclusion that Foster's death last year was a suicide. He asked the court to keep the reports secret until his probe is completed. But if last week is any indication, the steady drip, drip, drip of Whitewater disclosures is likely to afflict the Clintons for months to come.

With reporting by Nina Burleigh, James Carney, Julie Johnson and Suneel Ratan/Washington