Whitewater was a failed business venture in Arkansas involving Bill and Hillary Clinton, James and Susan McDougal. McDougal’s fraudulent activities led to an investigation, and the Clintons were exonerated, but others were indicted.
The political scandal that became known as Whitewater reached a boiling point during former President Bill Clinton’s first term. Ultimately, several business associates and personal friends of the Clintons were indicted on various counts of fraud and other financial wrongdoing, but neither President Clinton nor First Lady Hillary Clinton ever faced formal charges for their involvement in what was essentially a failed business venture in Arkansas.
The Whitewater controversy is a very large topic to cover, so this article will only present a general outline of the chain of events and the people involved in the scandal. There are a number of excellent resources both online and in libraries that can provide more specific details if desired.
In the late 1970s, Bill Clinton was the junior governor of Arkansas and Hillary Rodham Clinton was a paralegal at a small but prominent law firm. Neither position offered a substantial salary commensurate with the title and responsibility attached to it. Governor Clinton wanted to supplement his $35,000 US dollar annual salary through legitimate investment opportunities, such as the purchase of real estate for future resale and profit.
Clinton knew of a friend from his college days who might be in a financial position to assist with such an investment in Arkansas real estate. That college friend was a man named James McDougal. McDougal and his wife Susan were also looking for investment opportunities, so the idea of pooling all their financial assets into one property seemed logical to the McDougals and the Clintons. The property that caught their eye was several hundred acres of undeveloped land located on the banks of the White River in Arkansas.
The four investors decided to form a legal business partnership called the Whitewater Development Corporation, named after the river that runs alongside the property. The hope was to develop the land by building hunting lodges and vacation homes that would attract outdoor sportsmen and others to Arkansas. Whitewater’s investment would eventually pay off handsomely for the original four investors, or so they had hoped.
Instead of making a substantial profit on the Whitewater investment, however, a downturn in the general economy and an apparent lack of interest from potential lot buyers turned the entire project into a major loss. The Clintons decided to cut their financial losses and became little more than passive partners in the Whitewater Development Corporation. Their names would still be associated with the business on paper, but they would no longer be involved in any future business ventures.
When Bill Clinton was elected in 1992, the Whitewater Development Corporation and his McDougal cronies were apparently more a remnant of the Clintons’ past life in Arkansas than a part of their current political or social lives. Their direct associations with the failed Whitewater project were little more than names on legal documents dating back to the 1970s. However, the Clintons failed to understand the extent to which certain political rivals and journalists would delve into their past affairs and personal histories once they became national public figures.
James McDougal remained actively involved in the Whitewater Development Corporation even after the Clintons retired, and began looking for more complex but rewarding ways to boost its profits from a variety of dubious investments and financial schemes. Eventually he found himself under investigation for committing financial fraud and violating other banking and investment rules. During the forensic accounting portion of the McDougal investigation, the names Bill and Hillary Clinton appeared on a number of documents relating to Whitewater.
Even though the Clintons had effectively distanced themselves from the Whitewater Development Corporation years before James McDougal’s alleged criminal actions, the discovery of these documents triggered the investigation later called the Whitewater scandal by the press. It was unclear to investigators whether the Clintons knew about McDougal’s illegal activities or, worse yet, whether they actively participated in or profited from the illicit financial transactions.
Eventually the Clintons were exonerated, since investigators could not prove any active participation in the Whitewater Corporation during the years McDougal was a suspect. The Arkansas lieutenant governor at the time was indicted, however, along with James and Susan McDougal. In a controversial move, President Bill Clinton has officially pardoned Susan McDougal for her peripheral involvement in her husband’s financial affairs.
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