CLINTON WATCH

          THE WHITE HOUSE formula for containing the skein of scandals surrounding the Clintons has long been clear: By stonewalling and delaying, keep the worst news from bubbling to the surface until the 1996 campaign season ends--and then dismiss any investigative attacks on the Clintons' ethics as just so much election-year politicking. This cynical stratagem counted heavily on the American electorate's short attention span, and it seems to have worked. Ten months ago polls showed that a majority of the public deemed the Whitewater-related messes and their cover-up important, but now only one in 10 voters say these matters will affect their November decision.

          But damning new evidence emerged last week from a source that cannot be dismissed as partisan, and it deepens the legal jeopardy of the First Family. A report from the Federal Deposit Insurance Corporation (FDIC) found that Hillary prepared and backdated a legal document that was used by Jim and Susan McDougal "to deceive Federal bank examiners" investigating the McDougals' Madison Guaranty Savings and Loan. The document concerned Castle Grande, a failed real estate Ponzi scheme cooked up by the McDougals that cost taxpayers nearly $4 million. Castle Grande figured prominently in the indictments on which a Little Rock grand jury convicted Susan McDougal and former Arkansas Governor Jim Guy Tucker of felony fraud, and one of the Madison insiders who profited handsomely from the scam was Seth Ward, father-in-law of Hillary's jailed law partner, Webster Hubbell, and the man who secured for Hillary her first important client at the Rose Law Firm. Ward held part of the Castle Grande property as a straw man for Madison, which bought back from Ward for $400,000 land that the RTC later valued at only $47,000.

          The new FDIC report says that Hillary and Hubbell "performed work that appears to have facilitated the payment of substantial commissions to Ward." Hillary continues to claim she has "no recollection" of preparing the backdated document, but the Rose billing records that mysteriously
disappeared for two years while under subpoena and magically resurfaced just after the RTC statute of limitations on Madison had run out, show that Hillary billed her client for preparing the fraudulent instrument. Among those who have testified that the document was backdated are Hubbell's secretary, Madison's former president and chief loan officer, and Ward himself.

          The document was meant to conceal from the bank examiners some $300,00 in phony commissions payments to Ward, so whomever prepared it was guilty of fraud. Moreover, the backdating constitutes forgery. And if Hillary's sworn assertions to the RTC (and, presumably, to the Whitewater grand jury) that she knew nothing of all this are proven wrong, she would be guilty of perjury.

          Hillary has already admitted to having shredded her files on Castle Grande in 1988, at a time when the Madison scams were still under investigation by Federal bank examiners. Two weeks ago we learned that the Whitewater special prosecutor is investigating the 1992 disappearance of confidential financial records on Madison from a Little Rock warehouse where they'd been stored after the feds closed Madison in 1989. The records are said to have disappeared after the first disclosures by the New York Times about Whitewater during the '92 campaign. There's a legal term for these goings-on: obstruction of justice.

          With Republicans last week joining Democrats in a unanimous House Ethics Committee vote to investigate whether Newt Gingrich lied to the committee in its probe of tax fraud, and a raft of White House aides already facing perjury charges, 1997 promises to bring a bumper crop of indictments at the highest levels of power that will paralyze our nation's governance. Perhaps then we'll see a genuine revolt against the bipartisan ethical sewer in Washington--one that doesn't depend on a crazed Texas billionaire's checkbook. CP

A damning new FDIC report connecting the First Lady to implications of fraud, forgery, and perjury looks to be a big issue--in 1997.