The real blood sport: the Whitewater scandal machine.

• Author: Waldman, Amy
• Position: Cover Story

In 1983, Ronald Reagan's assistant attorney general Theodore Olson and the House Judiciary Committee faced off in a dramatic exchange over the administration's handling of environmental policy. After the committee demanded documents that Olson could not, or would not, provide, the committee produced a 3,100-page report about Olson's alleged obstruction. And then it got serious: The Democrats pressured Attorney General Edwin Meese to appoint an independent counsel to investigate Olson. After six months, independent counsel Alexia Morrison found no basis on which to prosecute Olson. But with the resources and purview of the independent counsel at her disposal, she pressed on--for four more years.

Understandably desperate, in 1987, Olson and two other former Justice Department officials went to court to argue that the Ethics in Government Act, which gave independent counsels virtually unlimited power to pursue wrongdoing, was unconstitutional. A federal appeals court agreed, with a judge writing that special prosecutors feel pressure to "justify" their appointment by bringing indictments and are therefore inherently biased against the people they investigate.

But the Supreme Court reversed the decision, and the investigations continued, finally concluding in 1988. Olson was never indicted, but six years of his life, and more than $1 million of his money, had been consumed by congressional and independent counsel investigations. When Olson recently testified before Congress on the flaws in the independent counsel law, he spoke with authority.

You would think, then, that he might feel at least some sympathy for Bill Clinton, who has spent the last three years enduring similar investigations over what's collectively known as Whitewater. To the contrary. Olson is instead representing the President's chief accuser, David Hale, on matters relating to the Senate investigation of Whitewater. Olson defends his representation of Hale, who has alleged that then-Governor Clinton pressured him to make an illegal loan, with the argument that he's always been willing to represent people being investigated by independent counsels--Olson was, for example, Ronald Reagan's attorney during the Iran-contra investigation. "[Hale] is someone who had charges brought against him in connection with the independent counsel's investigation, who has been investigated by the independent counsel," Olson says.

Saying David Hale is being "investigated" by the independent counsel, however, is a bit disingenuous. Hale has been investigated by the independent counsel only as a means to landing bigger targets, beginning with the President's former business and political associates, and ultimately, perhaps, the President himself. What seems more likely is that Olson, like many Republicans who condemned independent counsel investigations launched against Reagan and Bush administration officials and the accompanying press and congressional feeding frenzies, has found that things seem eminently more reasonable from the other side.

Once again, the "modern scandal production machine," as Suzanne Garment termed it in her book Scandal, has been revved up. Garment was referring to the unholy alliance of ideological interest groups, the press, congressional committees, and, sometimes, independent counsels that pursue executive branch officials and judicial nominees. What starts as a reasonable inquiry snowballs into something akin to the Salem witch trials. Initially legitimate questions about potential crimes or constitutional abuses give way to a potent alchemy of gossip upgraded to news by an eager press, an easily manipulated investigatory process, and artfully crafted political theater.

Throughout the eighties, conservatives bore the brunt of this persecutory zeal and were thus the most outspoken critics of its excesses; one of the first and at the time only, liberals to acknowledge the existence of the "machine" was columnist Juan Williams, during Clarence Thomas's confirmation hearings. Now, of course, Williams has company: Many liberals see a conservative "machine" at work in Whitewater and are outraged by it. And conservatives, who once condemned such tactics, are using them enthusiastically.

In Whitewater, the ratio of scandalmongering to real wrongdoing is especially disproportionate: Even if, at worst, President Clinton was somehow knowingly involved in the tangle of shady, decade-old transactions that sparked the original Whitewater stories, it has no bearing on his presidency. Watergate and Iran-contra, in contrast, did involve the commission of real crimes that related directly to performance in federal office. Yet Whitewater has been draped in all the trappings of its predecessor scandals, most notably a far-reaching independent counsel investigation and congressional hearings.

The Whitewater scandal may have been initiated by the Clintons' political opponents, but it has been legitimized and perpetuated by years of front-page press coverage. In part, that resulted from the media's misguided belief that fairness requires that every scandal be treated equally. But it also sprang from journalists' lust for scandal. And so a press hungry for scoops and a capital thirsting for juicy revelations plunged in.

Perspective, then, has been missing from much of the coverage of Whitewater. And so has an awareness that the acts committed in the investigation of potential wrongdoing are a story in themselves. In his book Blood Sport, for example, which is subtitled "The President and His Adversaries," James Stewart skewers the former but does little to probe the machinations of the latter; the book's reviewers have followed his lead. Until very recently, the national press has glossed over, or straight out ignored, the story of the scandal machine itself--how it works, and who drives it.

Making Hale White the Sun Shines

As various charges against the Clintons are disproved or dismissed, much of the Republican effort to tar Bill Clinton hinges on David Hale, the only person to accuse Clinton directly of breaking the law. Hale is the backbone of Kenneth Starr's investigation in Little Rock, and of the trial of Jim Guy Tucker and James and Susan McDougal that is currently underway (he provided information on 17 of the 21 counts being tried). Hale will be a star witness before Senator Alfonse D'Amato's Whitewater committee. And the frequent recycling of his charges against the President is, of course, a boon to Clinton's political opponents.

So you would think that Hale would have come under vigorous scrutiny from the press since he began making his unsubstantiated allegations about Clinton in 1993, when he was under investigation by the FBI for loan fraud. Hardly: To read most of the national and Washington press coverage of Hale is to acquire the impression that first, Hale is a victim of a vengeful Arkansas establishment; and second, that he is a soft-spoken Southerner who once had some trouble with the law and the truth but is now trying to "get right." In 1994, for example, The New Yorker's Peter J. Boyer described Hale as a "picture of sad-eyed contrition." Yes, Boyer conceded, Hale was under federal indictment in connection with his Small Business Administration dealings, "but [Hale] feels he is being made the `fall guy' for Arkansas politicians he helped with his investment company, including Clinton."

To read the Arkansas papers, however (both Republican- and Democrat-leaning), and to talk to people who have followed Arkansas politics and Hale's career for years, is to walk away with a somewhat different picture--a picture of a man with a fierce paranoid streak, a history of financial shenanigans, and an unbroken habit of playing fast and loose with the truth.

To start, Hale has had more than his fair share of trouble with the law. Most notable, of course, were Hale's management practices at Capital Management Services, the investment firm through which he loaned money to the McDougals. In return for matching funds from the SBA, Hale was supposed to administer loans to "disadvantaged" businesses. Hale has also admitted that of the 57 companies Capital financed, he secretly owned 13. As the judge who sentenced him to prison noted, "You are not a victim." Indeed. Hale was once sued successfully for swindling a girlfriend's grandparents out of their farm. Currently, he's under investigation on charges that he robbed an insurance company he owns of $150,000--money that...