Clinton's records vanished after warning of 'very serious' problems

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By Jerry Seper

Hillary Rodham Clinton's Rose Law Firm billing records, found in the White House residence in January 1996 two years after they had been subpoenaed by government regulators, disappeared shortly after the first lady was warned that the firm's billing problems were "very serious" and the then-ongoing Whitewater investigation could result in criminal charges, newly obtained records show.

More than 1,100 pages of grand jury testimony, investigative reports, memos, charging documents, chronologies, narratives and draft indictments, previously undisclosed but now being "processed" at the Library of Congress, say Mrs. Clinton knew considerably more about the firm's billing problems and their potential ramifications than she publicly acknowledged at the time.

According to the documents, given to the Library of Congress by the estate of Sam Dash, former ethics adviser to Whitewater Independent Counsel Kenneth W. Starr, Mrs. Clinton also knew that her former Rose partner Webster L. Hubbell was both the focus of the firm's billing concerns and a federal conflict-of-interest investigation, in which he was suspected of lying in a sworn statement to regulators about the firm's representation of a failed Arkansas savings and loan.

While Mrs. Clinton told the public at the time that Mr. Hubbell's March 14, 1994, resignation as associate attorney general involved an "internal billing dispute" with his Rose partners that "likely would be resolved," three months earlier she had been advised by another Rose partner, Allen Bird, that the "billing problems were very serious," according to the newly disclosed records.

The records also said Mrs. Clinton was aware that the Federal Deposit Insurance Corp. (FDIC) and the Resolution Trust Corp. (RTC) had begun an investigation in December 1993 into a suspected conflict of interest involving a $400,000 payment to the Rose firm to defend the business practices of Little Rock's Madison Guaranty Savings and Loan Association. At the time, Mrs. Clinton was publicly dismissing the seriousness of accusations against Mr. Hubbell, which were being widely reported by the media.

Madison was at the heart of the Whitewater investigation, which persisted through most of the eight years of the Clinton administration but eventually was shut down without charges against either President Clinton or Mrs. Clinton. Fourteen other persons pleaded guilty or were convicted.

Mrs. Clinton is now the junior senator from New York and a Democratic presidential-primary candidate. Her campaign has dismissed the new documents.

"This is a baseless accusation which was looked into over a decade ago in an investigation that took $71.5 million and eight years to determine there was no case," said spokesman Jay Carson.

A Feb. 28, 1994, memo by White House Associate Counsel W. Neil Eggleston described Mr. Hubbell's extensive role in the Rose firm's legal representation of Madison, contradicting his sworn testimony to the RTC.

The memo, forwarded to Mrs. Clinton on March 1, 1994, by White House Deputy Chief of Staff Harold Ickes, noted concerns by the FDIC and the RTC as to whether the Rose firm had disclosed its prior legal representation of Madison in an FDIC lawsuit against the thrift's former auditors.