Part 7 (1/2)

At first, we were told that Hillary ”consulted with numerous people, and did her own research,” an aide to the first lady explained.*37 The American people were left with the image of Hillary, shrewd investor, thumbing through the Wall Street Journal.

Then the White House acknowledged that she had indeed received a small helping of advice, ”but not on a specific date or specific trade.”

The White House next conceded that Jim Blair--Springdale lawyer, former Fulbright aide, major figure in the Arkansas Democratic party, and the man Bill Clinton later married to Diane Kincaid--was one of several people who had given Hillary some advice in dealing with the market. When that story would no longer hold, Dee Dee Myers--always one of the most forthright, and therefore routinely humiliated, members of the Clinton team--said, bluntly, ”I think it's become clear that [James Blair] placed most of the trades.”*38 But surely he had been guided by the Wall Street Journal.

Blair, of course, also worked for Tyson Foods, the poultry giant and largest employer in Arkansas, and a major Clinton donor. He bought land and made deals on behalf of the corporate giant. He would later become the company's general counsel.

The company is run by ”Big Daddy” Don Tyson--a man who wears a khaki uniform, which is required of all employees, with his name st.i.tched on its breast; a political kingpin; a wheeler-dealer and corporate egoist. In keeping with his oversized persona, and perhaps the helping hand his general counsel gave to the president-to-be, Tyson's office is a replica of the Oval Office.

”It would be irresponsible to my company and my industry if I didn't have any influence,” Tyson said in a speech in Alabama. ”Clinton understands the needs of business. There were several times in our company's growth that we could have taken opportunities outside of the state, but we chose to stay in Arkansas because he understands the balance between economic development and environmental issues.”*39 Hillary's cattle futures were purchased through Robert L. ”Red” Bone of the brokerage firm of Refco, Inc. It was Jim Blair who had put her in touch with Bone--who had previously worked for Tyson for more than a decade. Bone was an inveterate gambler, a high-profile, high-stakes poker player well known to the pit bosses of Las Vegas.

He was a gambler at the office as well. The year before, Bone's sharp practices had led the Chicago Mercantile Exchange to accuse him of allocating trades to investors after determining the winners and losers, a practice known as ”straddling.” Bone was punished by having his license to trade pulled for one year.*40 The deal was arranged in the following way. All Hillary had to do was put $1,000 of her own money into a block of cattle futures at a time when her husband, then the attorney general, had a thirty point lead for the governors.h.i.+p.

How did Hillary make out?

From her initial investment of $1,000, she came away with $99,537.

Among the community of experts, there is general agreement that between 75 percent and 90 percent of commodity players lose. And no one turns $1,000 into $100,000. ”The average retail customer has about as much chance of that kind of success as I have of driving to Hawaii,” one Chicago-based investment advisor noted.*41 At one point in the trading, Hillary was $60,000 in the hole, with less than $40,000 in her account. Typically, an investor would be asked to pay the margin. Hillary was not, and she held on to the commodities until she hit pay dirt. (Later, the White House would explain that she quit at that point because she was pregnant with Chelsea, and just did not need the additional stress of investing.) On July 12, 1979, Hillary's relations.h.i.+p with Refco remained intact even though she owed more than $100,000; but poor Stanley Greenwood, a fellow Refco investor, had his investments terminated when he failed to post $50,000 to cover his losses.*42 By way of comparison, had Hillary instead invested $1,000 in the first offering of Microsoft stock in 1986, she would have made $35,839 by March 1994. The premier technology investment of our times, therefore, pales in comparison to what she had made on the world's oldest commodity: livestock. Hillary's cattle future investment gave her a 9,987 percent profit.*43 Later, when asked of her incredible success as a novice in the tough world of commodities trading, Hillary denied any preferential treatment with the illuminating statement: ”I was lucky.”

Unless you believe in good fairies, luck had nothing to do with it.

It is pretty obvious that Hillary had something better than luck.

She had well-placed friends who wanted her to have $100,000. The likelihood of such a return on such an investment was close to lottery odds, twenty-four chances in a million.*44 This was in a decade in which no speculator made more than $400 profit a day with one contract of cattle futures. Yet Hillary managed to make $5,300 a day. Such a return would have required her holding thirteen contracts, involving 232 tons of beef with a value of $280,000.

The New York Post explained, ”There is no way that the commodity exchange or a broker would permit a novice speculator to control $280,000 worth of cattle with a skimpy investment of $1,000. Not, that is, unless a friend, guardian or partner guaranteed her investment.”*45 It seems unlikely that Hillary could have been unaware of the magnitude of this straddle or that her wins were at the expense of others. (Blair himself was a designated loser, losing millions on the cattle deals.) Many commodities traders suspected Hillary of allocated trading--an illegal procedure in which a broker buys block trades, waits for the win, then allocates it to favored customers after the fact. Just a few months after Hillary's ”lucky” day in commodities trading, Refco--specifically Hillary's broker Red Bone--was disciplined by the Chicago Mercantile Exchange Board for ”serious and repeated violations of record-keeping functions, order-entry procedures, margin requirements and hedge procedures.”

One person who has done well during the Clinton years is the man who provided the nexus between Red Bone, Jim Blair, and Bill Clinton.

That man is Don Tyson. During the Clinton-era, Tyson's company benefited from millions of dollars in state loans, tax breaks, and the relaxation of environmental regulations. He received $8 million in tax concessions for plant and workforce concessions, as well as $900,000 in state grant monies to build roads and upgrade sites for a $40 million processing plant in Pine Bluff.*46 What was especially extraordinary, was the kid glove treatment Tyson received from a governor who at least affected a tough and uncompromising stance on protecting the environment.

Before Clinton was elected, the state had reissued a license for a Tyson plant with the proviso that the company had to work out a plan with Green Forest city officials to treat its wastes, tons of chicken feces that the plant dumped into nearby Dry Creek. With Clinton in office, it soon became clear that nothing would have to be done to clean up the plant and save the river. Unfortunately, the runoff of chicken feces ultimately filtered into the town drinking water, sickening local residents and forcing Governor Clinton to declare the locality a disaster area.*47 Tyson was not only an overt financial contributor to the Clintons.

As reported by Time magazine in 1994, allegations of envelopes of cash coming from Tyson's headquarters to the Clintons in the governor's mansion had surfaced by Independent Counsel Donald Smaltz.

These allegations were never pursued, however, because Smaltz's request to widen his probe was shot down by Attorney General Janet Reno.

However murky the background, what is clear is that Hillary and her husband did quite well during their personal decade of greed. But one could not say that they were entirely uncharitable. Journalist Lisa Schiffren learned that Hillary donated to the less fortunate.

Dozens of bags of old clothing she, Chelsea, and Bill had worn were given to charity, and Hillary valued these donations between $1,000 and $2,300 each year for tax deductions. She meticulously listed each item, and gave a value for them, including $10 for Bill's old running shoes and $1 for each pair of Bill's and Chelsea's old underwear.

THE LEADING MAN AND THE ROSE.

A key figure in the Clinton rise to power was a childhood friend of Bill Clinton--and Hillary Rodham's Rose Law partner--Vince Foster.

Before he had been old enough to go to school, Foster played cowboys and Indians with little Billy Blythe in Hope. Later Foster and Thomas ”Mack” McLarty III--future president of Arkla (Arkansas Louisiana Gas Company) and White House chief of staff--attended ”Miss Mary's kindergarten,” as Miss Marie's School for Little Folk was known around Hope, with Bill. Virginia soon moved Bill off to Hot Springs, and the two lost track of each other.

It was Hillary, not Bill, who drew Vince Foster into the Clinton orbit. Hillary and Vince Foster developed a longstanding relations.h.i.+p, complex, intellectual, touched with sparks of romance and intrigue, that would ultimately prove fatal to one of them, and devastating to the other.*48 In the fall of 1976, Foster, handsome and dignified, a graduate of Vanderbilt Law School, chaired the Arkansas Bar a.s.sociation's meeting on legal aid clinics in Northwest Arkansas, where he heard the impa.s.sioned testimony of Hillary Rodham.

Over the course of these Fayetteville meetings that went on and off for several weeks, a deep connection was established. Foster came back from Fayetteville singing the praises of the young law professor, arguing that it was time for Rose to open its door to women and determined that that woman should be Hillary Rodham.*49 This was a big break for a brash, Yankee lawyer who was so new to Arkansas--a woman who once outraged Arkansans by sitting next to her husband at a Razorback game--engrossed in a book. When Foster, with some help from Hubbell, brought Hillary on as an a.s.sociate, it was a move viewed with decidedly nixed sentiments at Rose.

Bill Clinton was well known and intensely disliked by at least one partner. Some partners were Republicans who did not like the growing identification of Rose with Arkansas's one-party state. All shared some apprehension about possible conflicts of interest that could be generated by making the attorney general's wife an a.s.sociate. In many states, this would have been an impediment fatal to Hillary's career. In Arkansas, the attorney general handles criminal cases and acts as a consumer advocate in rate cases before the Public Service Commission.*50 But because Rose was a civil firm that did no utility business, there were no immediate conflicts. Foster and Webb Hubbell pressed the case for Hillary hard so that no partner would stand in their way. The offer was extended.

Concerns about conflicts of interest intensified, however, after she was hired, and it became clear that Bill Clinton was moving further and faster than many expected--becoming the ”boy governor” in 1978.

By then, however, Hillary was entrenched, and there was little that could be done. One of the governor's responsibilities was allocating state bond work to law firms. Now, some of the partners saw Hillary as a potential ticket to increased fees.

If greed kept her in her job, fear almost lost it for her, after her husband was defeated in the 1980 gubernatorial election by Frank White, a Republican. Webb Hubbell was asked to persuade Hillary to resign if her husband's defeat cost the firm business, or to make up any potential loss in the state bond business by billing more hours and attracting other clients. Hillary was not the resigning type.

The partners at Rose had been disturbed by something else about Hillary. Her office attire of casual clothes, her utter lack of concern for cosmetics, and her frumpish appearance were not the look Rose Law Firm wanted to show its clients. She had a framed speech on the Equal Rights Amendment from the Congressional Record in her office, a political stance that made some wonder at the likely reaction of Rose's more conservative clients, not to mention partners.

For her part Hillary believed that s.e.xism was pervasive at Rose. A secretary, confided to Hillary that her boss, a partner, said she'd get a raise if she'd wear tight jeans more often.*51 Of course, Hillary's jeans were another matter. One day Hillary was caught by a senior partner wearing jeans to the office, a sight that threw him into a quiet fit.

But there were likely other reasons why Hillary was so controversial.

If the men were traditionalists, the women of Rose were downright catty.

”When Miss Rodham came, she gave me all this personal work,” Carolyn Cruce, one former secretary a.s.signed to Foster, told the Tallaha.s.see Democrat in a 1993 interview. ”She was very political even then.”

One day, when Foster demanded to know why Cruce took so much time to process his work, Cruce told him of Hillary's demands. Foster immediately walked into Hillary's office and ordered her not to heap personal work on his secretary Within a few moments, Rodham came out of her office and ripped into Cruce.*52 A former Rose Law Firm colleague told the New Yorker about Hillary's temper: ”It's not so much that she screams--it's more the tone in her voice, the body language, the facial expressions. It's The Wrath of Khan.”*53 Hillary gave Cruce the full Wrath treatment. By her account, Cruce responded coolly: ”I just looked at her and said, 'Is this what the woman's movement is all about? So a few of you can get ahead and then lord it over the rest of us?'”*54 The continued ascendence of the Clinton family ultimately took the Rose firm on a wild ride. Like so many others who found their fates intertwined with the Clintons, the Rose partners had an opportunity to rise to the very top, even opening a Was.h.i.+ngton office to take advantage of their solid Clinton connections. Ultimately, however, the Clinton touch dragged them back to the bottom, and the firm was forced to disband.

This was an ironic outcome, for until the 1970s, Rose advertised its character by staying in a drab, nondescript location at Third and State, the message being: In this colorful sea of crooks and characters called Little Rock, we are a bastion of low-key competence and integrity.

The history of Rose reads more like that of a distinguished liberal arts college than a law firm. The oldest law firm west of the Mississippi, Rose was older than Arkansas itself, founded in 1820 by Chester Ashley, a contemporary (and rival) of Stephen F. Austin.

The firm had been renamed for U.M. Rose, a delegate to the Hague Peace Conference, whose likeness stands in Statuary Hall in the U.S.

Capitol.*55 Rose was a hushed place, where young lawyers worked under the watchful gaze of oil portraits. Law degrees from the most prestigious universities were common and several of the older partners had been Rhodes scholars.

Until the early 1970s, Rose had succeeded in keeping itself small and discreet. There were ten partners and six a.s.sociates. Its small size also allowed it to operate in a collegial, democratic manner, one in which the distinctions between partners and a.s.sociates were glossed over. It took a majority vote to make a major decision. It took a unanimous vote to admit a new member.*56 Given its aura of history and discretion, it was a mysterious place, almost sepulchral. In his memoirs, Webb Hubbell described Rose in poetic terms.

”It was as though that big gla.s.s-top table was the tip of some unfathomable iceberg, and as these men sat in their morning meetings in their fine suits and cufflinked s.h.i.+rts, their hands on that cool surface connected them to something very deep and broad and hidden,”

he wrote.”*57 He added that any close connection to politics was frowned on.

But Arkansas began to change, and Rose to change with it. The firm grew from sixteen lawyers to fifty-three. The partners moved out of their humble, but historic, office and into a renovated downtown YWCA, an elegant red brick building with hardwood floors and an indoor swimming pool.

Inside the walls of Rose, the older, mannered elders of the firm were entering their emeritus phase. Young bulls had entered the partners.h.i.+p, determined to remake the place in their own image.

Leading them was Joe Giroir, smooth, elegant, cultivated, and tough as nails. He soon became the firm's top rainmaker in the financial services division. In time, he established a separate compensation structure within Rose, one that rewarded those who worked with him on the extremely profitable bond deals. This, in turn, gave Giroir the power to eventually shove aside Rose tradition and egalitarian sensibility to have himself declared the first chairman in the law firm's history.*58 It was Giroir who successfully lobbied the legislature to loosen the state's usury laws and restrictions on bank holding companies.

Giroir soon became less of a lawyer and more of a financial tyc.o.o.n, buying four banks and selling them to a holding company owned by one of the Stephens brothers from Stephens, Inc., the Arkansas banking family, and the billionaire Riady family of Indonesia, owners of the LippoBank of Los Angeles. Giroir, as deal-maker, pocketed tens of millions of dollars, as well as stock in the new holding company, Worthen.*59 When Worthen (and by implication, the Riadys) became a major client of Rose, it did not take long for the money culture to invade the inner workings of the firm.

In time, Giroir would be on the outs with his partners. The Worthen deal went south on a bad loan, costing Giroir himself tens of millions of dollars. Giroir's Worthen partners accused him of taking illegal profits in a stock deal, forcing him off the Worthen board.

It was only a matter of time before the Stephenses cut Rose loose as well.

Giroir was besieged from within. The dual system of rewards at Rose had destroyed the last vestiges of collegiality, sowing widespread resentment. A triumvirate of litigators, Foster-Hubbell-Rodham, forged an alliance with Giroir's lieutenant, William Kennedy III.

When Kennedy--a future Rose chairman--agreed to betray his mentor, the ouster of Giroir was as good as done.