Paper Trail: The Origins of Whitewater

Of the thousands of stories written about the Whitewater scandal in the past four years, some 90 percent have concerned themselves with the cover-up question: if or how the Clinton White House suppressed evidence in the wake of Vince Foster's suicide. Almost all the remaining stories deal with the efforts of Governor Bill and the First Lady of Arkansas to keep their friend James McDougal's Madison Guaranty Savings & Loan afloat. Meanwhile, one of the great untold stories of Whitewater is the chummy nexus of the Clintons and big timber, which may have played a role in the original Whitewater Estates deal and certainly was evidenced in a subsequent transaction that amounted to a last-ditch effort to save the Whitewater Development Corporation from bankruptcy.

The WDC began its ventures with a land deal designed to channel fast money to Bill and Hillary. In 1978, state Attorney General Clinton was in the midst of his first campaign for the governorship when he and Hillary, along with Jim and Susan McDougal, bought 230 acres of riverfront land in the Ozark Mountains of northern Arkansas. Though title to the land was in the Clintons' name, the couple put down no money. McDougal did not yet have the S&L and was a financial fixer and property dealer. He fronted the money for the down payment on the loan.

And where did the land come from? Its previous owner-of-record was a partnership, 101 River Development, whose role appears to be strictly that of a conduit. 101 River Development held the property for only three days, and folded its tent within a couple of weeks of the sale. The previous owner had been a group of local businessmen. And prior to them, the last owner had been International Paper, Arkansas's largest landholder--a $16 billion a year timber giant with 7 million acres of land across the United States, and 800,000 acres in Arkansas. It had logged off the best timber on the site and then sold the riverfront acres cheap to the local partnership of Arkansas bankers and businessmen.

How long the local partners held the land, or the terms on which it passed from IP to them to 101 River Development to the Clintons and McDougals, is unclear. But it is evident that the Whitewater sale came at a time when the timber giant was holding a keen ear to the pronouncements of candidate Clinton. The young attorney general vowed that as governor he would restrict clearcutting on land held by companies such as International Paper, Georgia-Pacific, and Weyerhaeuser. These paper and timber companies had gone on a logging binge in the mid-1970s, clearcutting 1,000-acre chunks of forest at a time. Clinton promised to introduce legislation banning the practice as soon as he entered the governor's office.

Clinton won the governorship in November of 1979. Environmentalists eagerly awaited action from the new governor to stop clearcutting and to stem the flow of industrial poisons that suffused the state's water and air. But the promises of the campaign trail soon lost their fire. Clinton's commitment was pallid from the start; his two predecessors as governor, Dale Bumpers and David Pryor, had both tangled with the timber companies on the issue of clearcutting with far more vigor.

When the newly elected governor formed a task force on clearcutting stocked with conservationists, the panel swiftly took heat from loggers and from the boardrooms of Weyerhaeuser and Georgia-Pacific. A startled Clinton kicked off the conservationists, installed industry hacks in their place, and recommended voluntary compliance with soft regulations.

The Arkansas voters turned out Clinton at the end of his two-year term in 1980. He left the governor's mansion and went to work at the Little Rock law firm of Wright, Lindsey and Jennings. His office was in the Worthen Bank, controlled by the powerful Stephens family. Hillary was at the Rose law firm. Both firms represented the timber giants of Arkansas before state regulatory bodies such as the Pollution Control Board and the Department of Ecology. Meanwhile, Clinton was refashioning himself as a New Democrat, sensitive to the concerns of business and zealous to purge himself of all "progressive" taint.

Clinton recaptured the governor's office in 1982, the same year that McDougal bought Madison Guaranty Savings & Loan. Among those contributing to candidate Clinton's campaign treasury were International Paper, Georgia-Pacific, and Tyson Foods. Their investment was swiftly rewarded. Clinton redux was now equipped with a philosophical approach to regulation highly congenial to the resource industries and to the poultry factories.

Tyson in particular became a key ally of Clinton's after the latter learned his lesson from the trucking dispute. Tyson planes ferried the First Family on its travels and Tyson funds poured into Clinton's campaign coffers. In return, the poultry magnate received roughly $12 million worth of tax breaks during Clinton's years as governor. Nor was Clinton diligent in monitoring the environmental record of Tyson Foods or of the poultry industry in general.

But if the disastrous impact of Tyson's chicken farms on the Arkansas River is fairly well known, the pulp plants of International Paper, Georgia-Pacific, and James River were more toxic still. International Paper's mill at Pine Bluff is one of the most virulent in the nation, venting nearly 2 million tons of chemicals a year into the air and water.

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