L.J. DAVIS INTERVIEW

L.J. Davis, author of an article offering a good look beneath the surface of Arkansas politics ("The Name of Rose", The New Republic, April 4, 1994), was interviewed by phone by David Inge of the local PBS-connected radio station on August 4, 1994. What follows is my transcription of that interview.

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DAVID INGE:
...Arkansas. Recently, in Washington, D.C., the people there on the hill have been consumed with this matter that has come to be called "Whitewater". But their investigations are largely limited to what has happened in Washington, after the Clintons came to Washington. What it sort of leaves out, and a big hole, we think, in the story, is getting a sort of a better understanding about how things worked in Arkansas before President Clinton became President.

We'll be talking with a guy, his name is L.J. Davis, who is a contributing editor to Harpers magazine, about politics in Arkansas, and some serious issues that are raised by an article that he wrote for The New Republic.

So that'll be in hour number 1. And in hour number 2 we'll be talking about a book entitled Who Owns Information? Our guest is Ann Branscom, a scholar in residence at Harvard University. That'll be in hour 2 [CN -- not covered here], after news. Stay with us.

[...]

Good morning, and welcome to this first hour of "Focus 580". This is our telephone talk program. My name's David Inge. Glad to have you listening.

In this part of "Focus 580", we will be talking about Arkansas politics, and about the matter that has come to be called "Whitewater". Last week and this, in Washington, members of Congress have been holding hearings into the Whitewater matter. What they are doing in their hearings is trying to determine whether or not the White House tried to influence the investigation of the failure of a savings and loan in Arkansas, Madison Guaranty. It went "belly up" in 1989.

The former owner of Madison was a man named James McDougal, who was a partner with the Clintons in the Whitewater development, an unsuccessful vacation home development in Arkansas, in northern Arkansas, along the White River.

And the focus of the hearings, and a lot of the discussion in Washington, has been: what happened after the Clintons came to Washington. And whether they, and people in the White House, tried to influence this investigation. There has not, so far, been very much discussion about what happened back in Arkansas -- either surrounding Whitewater or, in a more general sense, what politics are like in Arkansas. And knowing that may, indeed, shed some light into the conduct of the administration and some people who worked in the White House.

So, we have been casting around to find someone to talk a little bit about, to get this whole business with, and to get some more background on, Whitewater and Arkansas. And based on a suggestion from a listener, we set up the interview that we're doing this morning. And we're going to be talking with a journalist named L.J. Davis. He's a contributing editor to Harpers magazine. And much of our conversation this morning, here, will be based on an article that he wrote, that was published this past spring, in April [1994], in The New Republic, which takes a look at the influence of one particular, prominent, wealthy family in Arkansas, their connection with the Rose Law Firm (for which Hillary Clinton worked). And then, also, their ability of, the ability of a number of people, to influence policy to their benefit... largely to their financial benefit.

As we talk, you certainly should feel free to call in and be part of this conversation. Our number here in Champaign-Urbana: 333- 9455. We also have a toll free line (it's good anywhere you can hear us), and that is: 800-222-9455. 333-WILL and 800-222-WILL. Those are the numbers.

Mr. Davis, hello!

L.J. DAVIS:
Hey! Glad to be here.

INGE
Well, we appreciate you talking with us. It's good to have you with us.
DAVIS
Well, it beats workin'.
INGE
Uh well that's what I think. But I do try to maintain some semblance that this in fact is work. But, you know, I think most of the people that, at least, I work with see right through it [CN -- good example here of thigh-slapping Midwestern humor]. So far the audience hasn't.

Anyway, I appreciate your being here.

Um, in many ways this is obvious why this is a good story. Because it is a good story. And because it involves the President and it involves power and money and so forth. And at the same time, it seems that there hasn't been very much, very good, in-depth coverage, really, of the whole business. As much coverage as it's gotten, it's been rather superficial. Uh, aside from things... There has been some stuff written by reporters from the L.A. Times, from the New York Times [CN -- also Wall Street Journal and Washington Times]. You did this piece for New Republic.

How is it that you got interested in writing about this whole business?

-+- "Colleagues" Avoid Arkansas -+-

DAVIS
Well, I was puzzled by something back in 19-aught, '91, '92: the fact that we seem to be electing a man President of the United States who we didn't know the first useful thing about him. And I kept waiting for my colleagues -- and the L.A. Times was the honorable exception here -- to go to Arkansas and find out what kind of a place Arkansas was, and what kind of a political milieu it had, and what forces might have shaped William Jefferson Clinton. After all, he was a long-serving Governor. He was Governor for 12 years!

And so I went to Arkansas, in part, to discover what kind of a Governor Bill Clinton had been. And what kind of politics the state was dominated by.

INGE
One of the questions that...
DAVIS
Or characterized by.
INGE
...you raise in this piece that you wrote, and I think comes into a lot of people's minds as one tries to weigh what Whitewater was all about, who did what, and just how serious it is: the... In Washington, the Democrats (obviously), it is their interest to try to protect the President, because he is a Democrat. And the Republicans are doing what they can to try to make the President look bad. And that's clearly partisan politics.

Now there are also some serious issues involved here. And so we wouldn't want to belittle that. But as one is trying to puzzle out just what happened and how serious it all is, and one seems to sort of be leaning in the direction of thinking that, well, relatively speaking it's not terribly serious -- the question that does come up (and you raise it and I think other people have raised it) is: If, indeed, it's not such a big deal, why is it that the Clinton administration has worked so hard to try to keep the lid screwed on so tightly?

-+- A "Flexible Attitude" -+-

DAVIS
I can't give a definitive answer to that, because I don't know the President's thinking. On the other hand, he has consistently, throughout his career, shown a -- I'm going to choose my words very carefully here, because I neither like nor dislike Clinton. I don't know the man. -- but uh, shown a somewhat "flexible attitude" toward the truth. And the "book" on him in Arkansas is that Bill Clinton absolutely believes anything that he's saying at any given moment. Even if it contradicts what he said about 10 minutes ago. And this is coming from friends and enemies alike.

Arkansas is a rather peculiar place, but you're right to put this into some kind of perspective. Let's have a brief look at, or try to do a brief overview here: Look who's investigating this um, "small mess". (I again choose my words carefully.)

-+- Honor Among Thieves -+-

Whitewater appears to me to be, after a long study of the situation, a fairly minor -- yeah, highly questionable -- but a fairly typical S&L deal from the rogue years of the 1980s. If you shift your sights across the country to Arizona, Governor Fife Symington(sp?) was involved in a highly questionable S&L deal that netted him millions of dollars. And then, amongst the inquisitors of course, we forget that Senator Riegle was one of the "Keating 5"! The people outside New York may not be aware that Senator D'Amato is widely known as one of the greatest practitioners of "pecksniffery" in the United States Senate. And Senator Gramm got himself messed up in a sweetheart deal with a cratered S&L in his own state of Texas, where he ended up with -- oh, let's see -- Bill Clinton claims to have lost $60,000 in Whitewater. Senator Gramm got himself $50,000 worth of free cabinet work out of a cratering S&L owned by a former political associate friend of his. {1}.

DAVID INGE:
There is this question -- and perhaps eventually it will be resolved -- about whether or not federal money that was earmarked to help bail out the S&Ls somehow managed to go into the Clinton campaign fund. Is that something that you have any insight on, or you think at some point there will, indeed, be an answer to that question?

L.J. DAVIS:
I think that there probably already exists an answer to that question in the examination reports in the RTC [Resolution Trust Corporation]. In order to find this out, however, the senators and congressmen are going to have to stop posturing and start asking the right sorts of questions.

-+- Charles Keating Did It -+-

Federal money (to the tune of, according to one very reliable estimate) that was poured down the ratholes of the S&Ls in the 1980s, may have eventually cost the country 2 trillion bucks, or approximately the cost of World War II. So remember, they are federally insured funds that we're dealing with.

And then there was also the possibility of a bank like, of an S&L, like Whitewater, drawing upon its regional home loan bank for additional emergency funds to shore itself up. The thing was cratering almost from day one. It had all the signs of an S&L going out of control -- for one thing, it was growing exponentially. Now this might be real good news if we were talking about General Motors, say, or IBM, were growing at this rate. But when a financial institution begins to grow at this rate, it's a sure danger sign.

The question is: Why wasn't it stopped earlier? The answer is: Why weren't all of them stopped earlier? We have hundreds across the country that were doing exactly the same thing.

INGE
Let me re-introduce our guest: We're talking this morning with L.J. Davis. He's a contributing editor to Harpers magazine. He is also the author of an article that appeared this past spring, in April, in The New Republic, about Arkansas politics. And we will get into that in a moment, and also will invite people who are listening -- if you have questions, comments, we will involve as many people as we can. All we ask is that people try to be brief so that we can accomodate as many different callers as possible. But, in any case, your questions are welcome -- 333- WILL; 800-222-WILL.

Well, talking about Arkansas here: In the article you make a point that while Arkansas is one of the poorest states in the country, it has, indeed, some of the richest families in the country. And if you're gonna understand Arkansas politics, you need to know one name -- and that is the name of Stephens. The Stephens family, that has made a lot of money in various kinds of business and has a lot of important friends in politics in Arkansas.

Tell us about the Stephens family.

-+- Real Rich Guys -+-

DAVIS
Well, you know, we've been talking a lot -- not just now, but the country's been talking a lot -- about all the back scratching that seems to go on in Arkansas. It's fairly typical of virtually any state. But Arkansas is unique amongst states, because thanks to the Stephens family it possesses the only major investment bank in the country that is not headquartered on Wall Street, called Stephens, Inc., in downtown Little Rock. In Wall Street terms, it would be a mid-tier to lower-bracket firm, but in a place like Arkansas it has, apparently, enormous economic clout. Thanks to the Stephenses, for example -- or if it hadn't been for the Stephenses, for example -- Sam Walton might be known locally as the "most inventive retailer in Bentonville, Arkansas". But they handled his original stock offering that enabled him to go national and has been instrumental in, of course, the fortunes of Tyson Foods and the other companies that are located in Arkansas. (Which I also pointed out in the article, is a state that has no reason to be poor. It is abundantly endowed with natural resources.)

The story of Stephens, Inc. is in some ways a saga of American capitalism, a true rags to riches story. Witt Stephens, the elder of the two brothers that came to dominate the place, started his career by selling Bibles, belt buckles, and municipal securities out of a buckboard during the Depression. And eventually [he] realized, of course, that municipal securities were going to be a bonanza when their values revived after the Depression was over. And that was the foundation for the fortune. They were heavily into bonds throughout much of their professional career, but then moved on to a whole spectrum of investment banking activities -- underwriting stocks, participating in deals, that sort of thing. In addition to which, the Stephens family itself privately owns a bewildering variety of, or has shares of a bewildering variety of investments.

In other words, they're real rich guys.

INGE
Huh, yeah. Real rich guys.

Let's talk about how Worthen Banking Corporation came to be. This was a bank holding company that was set up by, I guess, Jack, Jack Stephens, who is now the, sort of the head of the family. Witt, the older brother, is dead now. But Jack is the one who is now running things.

DAVIS
Yeah. "Mr. Witt" has now passed on to his reward.
INGE
And so they became involved with an Indonesian investor, apparently a very wealthy man, who wanted to get into American banking. And the Stephenses, Jack Stephens, set up this deal involving this Indonesian man, the Stephens company, and also the man who is the head of the prominent Rose Law Firm, in Little Rock, where (incidentally) also Mrs. Clinton worked as an attorney. And everybody got rich on the deal. And also, another sort of interesting side feature is that, to make this happen, a couple of laws needed to be changed. And that required the signature of the Governor, who happened to be married to this woman who was an important employee of the Rose Law Firm.

And so everybody seemed to get rich on the deal; the laws got changed. And it starts one thinking about, you know, whether there aren't some rather glaring conflicts of interest going on here.

DAVIS
Well it didn't quite work out to the satisfaction of everybody involved. Yes, a good deal of money was made. But they had a lot of trouble with that bank.

Now the fact that the Indonesian, Mochtar Riady, an Indonesian investor named Mochtar Riady, was there, occurred at a very interesting moment in the history of the Stephens investment bank. Bert Lance had come to them with a... Remember him?

INGE
Was director of OMB [Office of Management and Budget] under Jimmy Carter until he got himself into some trouble and, with his bank dealings in Georgia, and then had to resign.

-+- "Follow the Bouncing Ball" -+-

DAVIS
Absolutely beautiful trouble. And as a matter of fact, he was virtually bankrupt and his fortune was facing the [unclear] yard, back in 1979. His principle asset was a bunch of stock in the National Bank of Georgia. But the stock had been hammered in the market and if he sold it he couldn't possibly get himself out of his problem.

So it was to the Stephens family of Little Rock that he turned to solve this problem -- which attracted the attention of both the Indonesians, and a bunch of Pakistanis who ran an institution called BCCI [Bank of Credit and Commerce International].

When the smoke had cleared, the Pakistanis had been effectively, and in defiance of the very clear instructions of the comptroller of the currency, inserted into the American banking system by means of Bert Lance's stock and some other stock the Stephenses were disposing of in a snit, um, in Financial General that later became First American Bank Corporation, with results that we all know.

As for the Indonesians, they went into business with them, in the Worthen Bank Holding Company, which, depending on any, the state of banking in Arkansas at any given moment, is either the largest bank holding company in the state or the second largest bank holding company in the state.

It didn't require the signature of Bill Clinton exactly, but it required his passivity to allow this to come into existence despite the fact that his wife's boss, C. Joseph Giroir, had joined with his clients, the Stephens family -- the Rose Law Firm was one of the principle outside firms for the Stephenses -- in forming this bank holding company. And he [Giroir] is one of the one's, of course, who initially "made out like a bandit". I can't remember the exact figures, but he received several million dollars worth of forgiven debt, stock, and cash. That does look a little like a conflict of interest, if you're goin' into business with your client. And furthermore, your law firm now has a whole new client: a large bank holding company that you happen to own a hunk of.

There really is no such thing as an Indonesian multi-millionaire who is not, in some way, connected with General Suharto and -- the dictator of the country. As I pointed out in the article: As dictators go, General Suharto is a fairly decent chap. He hasn't felt obliged to slaughter too many of his citizens since he came to power in a massacre of 200,000 of them! (With the possible exception of the [unclear] war, that the world is not paying any attention to.)

But didn't anybody bother to question whether this was a real good idea? That the boss of the wife of the -- you know, it's like "The House That Jack Built", you've got to "follow the bouncing ball" here -- of the Governor of the state happens to be in partnership with his own client and an associate of the dictator of Indonesia?

It gets even more interesting when the Worthen Bank Corporation then proceeded -- very early in its career -- to gamble away $52 million of the Arkansas state treasury in a blatantly fraudulent bond scheme!

DAVID INGE:
And that's... It's interesting also, because it [Worthen Bank] very narrowly went under. And...

L.J. DAVIS:
Very nearly. And if the Stephenses hadn't written a rather large check, it would've gone under.

INGE
And so you also wonder why it is that no one... It seems that no one was ever really called to account for this, for that happening. And you know, there was sort of a similar event in Ohio that resulted in federal intervention and a serious run on the banks. In fact, the Governor had to declare a bank holiday, and it was the first time that that had happened in, I don't know, "x hundred" number of years?

-+- The Great Non Reaction -+-

DAVIS
And uh... Since the Great Depression.

And furthermore, Jimmy Carter's former ambassador to Switzerland, Marvin Warner, who was deeply involved in it, went to the "pokey" [i.e., prison]. Lengthy prison sentences were doled out in Ohio to the people that had caused this. No such thing occurred in Arkansas, as a matter of fact. In part, well, as somebody said when I was asking that question about "Why wasn't there any reaction?" (and Arkansas is the place of "the great non reaction" to a bunch of stuff, as I documented in my article). And the answer was, "Well, maybe there was no reaction because the Stephens family wrote that check." In other words, Worthen [Bank] didn't go down.

INGE
I suppose, you know, someone might say... particularly, not so much about that particular matter: the loss of $52 million in state, Arkansas state tax receipts. But the formation of Worthen in the first place: I guess one might say, in any state, the people who are in power, the influential people in politics and in banking and in business, know each other very well, there are close associations. Now Arkansas, being a small state, this is a small group of people. They all know each other. They all live in Little Rock. So maybe it's a smaller circle than in other states. But in any state, this kind of activity is going to go on. And further, I suppose people might say, "Well, you know, the appearance of conflict of interest and impropriety is not necessarily the genuine article." I mean, we can infer a lot of things, but is this really any worse than what we can see in probably any other state, including this one?
DAVIS
Well, as I pointed out earlier, a certain amount of back scratching goes on in any state. And certainly, a lot of very interesting things happen in Illinois! But I mentioned "the great non reaction" to events in Arkansas.

What would happen, locally, in Champaign-Urbana, if Pakistanis and Indonesians with a lot of money began getting off of the planes at the local airport? Wouldn't somebody notice?

INGE
I would like to think so.

-+- A Teeny Bit Unusual -+-

DAVIS
I mean, wouldn't Champaign-Urbana be a rather odd place for a bunch of Pakistanis and Indonesians to suddenly start showing up?

And similarly, Illinois is a sophisticated, large and populous state. And you're quite right: everybody in Little Rock knows everybody else. Why wasn't there a heck of a lot of commentary on the fact that they were getting off the plane at Little Rock? As a matter of fact, one standing joke in Arkansas is, "Just who would have to get off a plane at Adams Field before the attorney general and long-time Governor would notice that something a teeny bit unusual was going on?"

INGE
Particularly if they seemed to be interested in buying into the local banks. Not just that they showed up, but that obviously they were interested in, having an interest in, some of the state's most important financial institutions.

-+- Yet Another Strange Person Shows Up -+-

DAVIS
Well I... BCCI [Bank of Credit and Commerce International]: possibly the largest banking scandal in modern world history, if not world history, was materially abetted in Little Rock. At the same time, of course, the Riady family had an idea that they could turn Worthen into a major international banking presence. Well this is a really good idea and seems like kind of an odd place to do it.

But yet again, another strange person shows up, effecting the introductions between the Riady's and the Stephenses -- and that's Robert Anderson, President Eisenhower's former secretary of the treasury.

Well nobody seems to have done a thing called "due diligence", that is to say, find out just who everybody is now, not who they were or who they say they are. Mr. Anderson was later sentenced by a compassionate judge to not very long in prison for running an illegal offshore bank in the Caribbean, that catered to money launderers and tax evaders, that he nonetheless managed to crater. And he also had some interesting, if not highly questionable (the judge seemed to feel that they were highly questionable), relations with Reverend Moon's Unification Church. Is this really the guy you want introducing an Indonesian of doubtful provenance to the largest investment bank in the state? And then allowing him to begin to use it as a major investment vehicle?

I mean, forgive me, but I think this is a rather strange sequence of events. And I find the lack of investigation on the part of the Arkansas banking authorities to be yet another one of those omissions that characterizes the state.

INGE
Well we have several callers here. We want to bring them into the conversation. We will do that in a moment: continue to talk with our guest, L.J. Davis. He is a contributing editor to Harpers magazine. And if you're interested in reading the article that we have been talking about, you'll have to seek it out. But certainly you can find it. It was published in The New Republic in April of this year.

And questions are welcome, and we'll get to them in just a moment.

[...tape break...]

DAVID INGE:
Again, our guest is L.J. Davis. He's a contributing editor to Harpers magazine.

We'll go to the phones here, starting with a local caller, in Urbana, on line 1. Hello.

CALLER #1:
Hello. The rhetorical question you posed about Indonesians and Pakistanis arriving in Urbana-Champaign probably didn't take a good location. It probably wouldn't create much excitement here because if Pakistanis and Indonesians aren't arriving every day, they are, very, very frequently, along with Taiwanese, Koreans, and mainland Chinese. So...

L.J. DAVIS:
Carrying bags of money, of course.

CALLER #1:
Uh, sometimes a fair amount, I should expect. At least the Saudis.

But anyway... The question was good. I think, perhaps, the location wasn't.

But it seems to me, the case you're making is that there are a lot of muddy feet and not simply in the Clinton administration. There's more in the previous two administrations and that it's going to be very difficult to get Congress to come to pointing fingers.

DAVIS
Well they're, they're certainly trying. You know, a congressman or a senator loves nothing more than a television camera, and they certainly have had a lot of them recently, haven't they?

CALLER #1:
Um-hmm. Yes, they have.

-+- A Fat Man in a Fez -+-

DAVIS
But you know, going back to Little Rock, you know, I mean after I'd been there for awhile, considering the milieu and considering the strange people that did show up there, I wouldn't have been surprised if I encountered a fat man in a fez, Peter Lorre, and a Maltese falcon! It was that sufficiently strange.

We haven't talked about the involvement of many of these same people, including Hillary Clinton's boss, in the first, billion dollar S&L failure in the country, which happened to occur in Pine Bluff, Arkansas, where all the world seemed to come together! You had the corrupt Prudential-Bache branch in Dallas involved. You had Bob Straus's law firm involved. You had the son of the mayor of Dallas involved. It was an incredible mess.

CALLER #1:
It still sounds to me as though this is a very pervasive condition which doesn't affect a single administration but, regrettably, sounds as though it affects everything during the last 25 years!

-+- For a Long Time to Come -+-

DAVIS
I would say that the world changed rather considerably during our lifetimes. And [for] our younger listeners, of course, this has been their lifetime. They don't remember that it was ever different. {2}.

One of the examples that I frequently use is that, before the regulations were hauled off to the knackers' yards -- starting in the Carter administration -- from the crash of '29 until the 1980s, there has been precisely one major stock scandal (that everybody forgets), the salad oil scandal, in the 1960s. Afterwards, everything went haywire.

Your point is an excellent one. We're gonna be recovering from this for a long time to come.

CALLER #1:
I agree with you, very much so.

How do we get back to the position of considering regulation not to be a dirty word?

DAVIS
Well we have to acknowledge something: It seems to me that on inaugural day in 1981, the purport of the President's message was that human nature had just been repealed!

CALLER #1:
This never happens, of course.

-+- A "Miraculous" Reappearance -+-

DAVIS
Exactly. Some regulations were foolish, of course. Others were strangling, yes. But to... Nobody seemed to think, to realize, that those regulations were put in place by "fiends" like Franklin Delano Roosevelt because they had a rather cynical view of human nature: they believed that people, when placed in the vicinity of a large sum of money, might be tempted to steal it. And I have repeatedly pointed out, in articles that I've been writing over the last decade or so, that before you repeal a regulation you ought to examine the purpose of that regulation and see just exactly what it was designed to prevent! All too often, once the regulations were repealed, the very abuses they were designed to prevent made a "miraculous" reappearance in our society.

CALLER #1:
I really think we need to re-read the history of the period of Teddy Roosevelt, and just preceding that, to see what we're headed back for.

DAVIS
Well, or a thing that, another period that I would call to our attention, is the Grant administration.

CALLER #1:
Yes.

DAVIS
A time that bears an eerie similarity to what we've been going through for the last 15 to 20 years.

CALLER #1:
Of course that's what set up the conditions that led to the reforms of the liberal Republicans at the end of the century and the beginning of this century.

DAVIS
And then the liberal Republicans turned into liberal Democrats. In fact it was, you know, two members of the same family that led the charge! Uh, "Teddy" and Franklin.

CALLER #1:
Yeah. And in my home state, the LaFollettes...

DAVIS
And the LaFollettes.

CALLER #1:
...ultimately migrated to the Democrats.

Very good points! Thank you.

INGE
Thank you for the call. Let's go to Champaign county on line number 4. Hello.

CALLER #2:
Yeah. The wider context: I'm wondering whether you're familiar with the Houston reporter, Peter Brouton's(sp?) book, is that?

DAVIS
Uh, I know Mr. Brouton. I know him by telephone. We have been telephone friends over the years.

CALLER #2:
Right. And you've seen some of his clippings and some of his articles and that sort of stuff?

DAVIS
I have seen... I at one point leaned, some of my stories leaned, rather heavily on Mr. Brouton's findings.

His book, unfortunately, is, shall we say, "dense"?

CALLER #2:
Yeah. Yeah, I guess that's... I have not read it. I do know that it has a title, and in the foreward, he says that he could easily have put Lloyd Bentsen's name at the end of it, instead of George Bush's, 'cause he's basically looking at underworld ties to S&L failures in Texas. And both of those gentlemen are implicated fairly well, I understand.

-+- "America's Switzerland" -+-

DAVIS
Um basically what he... I think that book is mis-titled. Basically what he's got is a "good 'ol boy" network of the sort that we all too frequently see in the "Bubba Belt", as I call it, throughout American... well let's see, the "Gulf Band", as it were, you know. The most egregious state is probably Louisiana -- "America's Switzerland", you know? I mean, in Louisiana, things that are against the law everywhere else in the world, including Switzerland, are perfectly legal. But, you know, you sort of get the impression after awhile that the telegraph line between those states and Washington has been down since 1861!

CALLER #2:
Well he [Brouton] does talk about CIA connections. It is in the title. I forget...

L.J. DAVIS:
He does talk about CIA connections, and about... (sighs) I didn't want to get on to this, but he too discovered some airports that the CIA was apparently using -- one at Iron Mountain.

CALLER #2:
That's what I wanted to get to, was the Mena situation...

DAVIS
Ah! The big "M" word.

CALLER #2:
Yeah. Um-hmm [affirmative]. The under-reported story, I think, as well as some of these details, is the... and one that annoys me most about this "new Democrat" we have, is his willingness to aid in the Contra war and wink at a lot of stuff that was going on.

Apparently the Gennifer Flowers revelation came from a guy who was disgruntled because he was "cut loose" and "left to twist in the wind" because he was in charge of the National Guard liaison with Oliver North's operation. {3}. Is that your understanding?

-+- Larry Nichols -+-

DAVIS
I think the person who brought out Gennifer Flowers was a guy named Larry Nichols, who was an official at a rather peculiar bonding agency, set up by Bill Clinton and Webb Hubbell, called ADFA [Arkansas Development Finance Authority]. And he was "sacked" from the job because he made... He tells various stories on this. He's told me one story; he's told other people other stories. In fact, I can't quite tell... Mr. Nichols is not exactly the kind of Arkansan who is such a, has such a fast and loose way with the truth that he has to hire somebody to call his dog! But he... He's something of a moving target in terms of his accusations. Sometimes (and I was cautioned by some highly reliable people in Arkansas, people whose information and insights proved to be invaluable), sometimes, however, you'd better listen to Larry Nichols. Because he knows something. And then sometimes you shouldn't. {4}. You know they're currently going off on the mortality rate of the people around Bill Clinton, which I regard as a completely false line of inquiry. {5}.

-+- Another "Good 'Ol Boy" -+-

Now what was goin' on at Mena, basically, was a cocaine operation being run by a guy, by a fat guy, named Barry Seal. Not the Black Panther [i.e. Bobby Seale] but another "good 'ol boy" who had once been one of the most talented pilots in TWA and the youngest man ever to certify to fly a 747.

And he was operating out of Mena under very considerable surveillance, interestingly, by the Arkansas State Police and the County Sheriff! The question we have to ask there is, whatever was going on at Mena (and we know that drugs were), once again -- How could the Governor of the state allow something like this to occur on his watch?? We've been talking about these complicated financial peccadillos and suspicious circumstances. They're a little hard to follow, but that's what I happen to specialize in. Here's a fairly simple and straightforward situation with C-123 cargo planes flying out at all hours of the night and bringing in all sorts of strange cargo!

CALLER #2:
And going down with arms, too. Right?

DAVIS
Well, you remember the plane that Eugene Hasenfus was caught on?

CALLER #2:
Flew out of Mena, right?

DAVIS
It came out of Mena, yeah.

CALLER #2:
[Unclear] is it my recollection that you were roughed up? Who do you attribute that to, if that's the case?

-+- Man Gets Lump On Head -+-

DAVIS
Uh, well I don't know. We did not... We weren't gonna talk about that. I mean, let's say the magazine and I weren't gonna talk about that, largely because -- it sounds self-serving, but -- because when you get knocked on the head by "whatever", as hard as I got knocked, you sometimes suffer a period of amnesia. And I just happened to have done so. I don't know what happened. I've certainly enjoyed the ratcheting that my reputation has taken ever since that, then. But I can remember goin' into the room, and the next thing I knew I woke up on the floor with a concussion over my left ear.

Now we did not report this because (1) we haven't got anything to report. Uh, "Man Gets Lump On Head. Cannot Remember How It Happened." That's not news. Somehow it got out anyway, and the whole situation was complicated when the Wall Street Journal mis-reported that four pages from my notebook were missing. Four pages from my notebook were not, and are not, missing.

CALLER #2:
At least you don't remember they were.

DAVIS
No! They're not missing.

CALLER #2:
[Chuckles] Well, if you had amnesia it's hard to say, I suppose though!

DAVIS
No I know what's exactly in my notebook! Some of the pages are partially detached, but as I pointed out to the Wall Street Journal, I could've done that when I stuffed the damn thing back in my shoulder bag.

CALLER #2:
Well, I appreciate your work. And do be careful and...

-+- A Base Calumny -+-

DAVIS
Well it was regrettable that the incident was made, uh so much was made of that incident!

I do, I'd like to go on record here in Illinois, however, as saying that I consider a base calumny has been uttered against me: it's been suggested that I can possibly get drunk on 4 drinks. That is to say, so drunk that I would go upstairs and hit myself over the head!

DAVID INGE:
And you want to deny that, categorically.

DAVIS
I want to deny categorically that a mere *4* drinks... Why, heavens to Betsy! I mean, my reputation has been blackened in another way here.
INGE
We have a little bit less than 10 minutes left. Our guest is L.J. Davis. He's a contributing editor to Harper's magazine. And we're talking about Arkansas politics. And this is something, again, if you would like to read the article that we have been talking about -- this appeared in The New Republic in April of this year. So you'll probably have to go down to the library. But certainly it's something you could find if you wanted to take a look at.
DAVIS
You'll have to go down to the library! We sold out!
INGE
All right. Well you'll have to go down to the library. But we found it in the library so I'm sure other people can if they wanted to read it.

And we have 2 other people here we'll try to get to in the time that we have remaining. 333-WILL. 800-222-WILL.

Our next caller is on line number 2, in Eureka. Hello.

CALLER #3:
Good morning. Given the fact that politics seems to be an inter- related web of mutual self-interests and that the media often times emphasizes such "specks" and small little items -- Could it be that there is more legitimate corruption that Mr. Clinton (as you were just talking about in that story about Mena) has engaged in that's not even come to the fore or will never even get reported?

DAVIS
Well I'm not suggesting that Mr. Clinton was at all corruptly involved in what was going on in Mena.

CALLER #3:
Well you were talking... Or say, the Stephens family and some of the other shennanigans going on there.

DAVIS
Right. Well he's possibly standing by while it's all going on. And... well yeah. For example, for Harpers magazine right now I'm doing a major piece on (it's by definition "major", it's in Harpers magazine), on medical insurance fraud. And it is startlingly pervasive. I mean, even I was startled by the... And I thought I knew something about the subject before I began researching it.

All of this has been goin' on under everybody's nose, in Arkansas, and everywhere else, and there's a whole lot of culpability all over the place -- including culpability on the part of my colleagues and myself for not having caught it!

CALLER #3:
Uh-huh [understands]. Is that issue not even being addressed in the medical, the proposed medical health care reform?

-+- All People Are Good -+-

L.J. DAVIS:
Um, it... The proposed medical health care reform, despite the interest of the Justice Department in stamping out medical fraud -- attorney general Reno's number 2 priority, and rightly so... But the legislation appears to be being written (hasn't been written yet, so we don't know) as though, once again, "All people are good". That... No investigator, federal or local, that I have talked to (and I've been talkin' to a lot of them) thinks that this health care bill is gonna be anything but an invitation to keep right on looting.

By the way, this goes on to such an extent that on a yearly basis, according to the most conservative estimates that I've got from the officials, we could fight between 8 and 13 Gulf Wars every year!

CALLER #3:
Well the Gulf War cost what? $50 or $60 billion?

DAVIS
Um, not really. We... George Bush actually did something that Sergeant Bilko had long wanted to do -- run the war for a slight profit? A lot of that bill was paid for by our allies, including the non-participating Japanese.

CALLER #3:
What specific amount are you talking about then?

DAVIS
I'm talking about, if you factor out how much it cost to keep...

CALLER #3:
I mean, how much would the amount be? For the medical insurance fraud.

DAVIS
Oh! Between... going from the conservative to the high? Between $80 and close to $200 billion a year.

CALLER #3:
And the total national health care bill is estimated at what? $900 billion?

DAVIS
It's gonna hit a trillion this year.

CALLER #3:
So you're talking maybe anywhere between 10 and 20 percent...

DAVIS
That's right.

CALLER #3:
...of all health insurance costs are in the area of fraud?

DAVIS
That's right.

CALLER #3:
They're doing relatively nothing about it.

DAVIS
Uh, the Justice Department is, as I say, doing its best. But the Justice Department is dealing with an FBI that was fairly gutted during the Reagan and Bush years.

CALLER #3:
Uh-huh [understands]. Thank you very much.

DAVID INGE:
One more caller here. Line number 3. This is in Urbana. Hello?

CALLER #4:
Hello!

INGE
Yeah.

CALLER #4:
Yes. I am Pakistani! And I am a doctor. And you can get drunk on 4 drinks. And...

DAVIS
Well, yeah. You can! I've...

-+- A Racist Alcoholic -+-

CALLER #4:
...To continue: I think that you're probably an alcoholic! And if anybody notices me when I get off the plane here -- all of the people who get off the plane, we... some of us... my dear colleague, Dr. Singh, wears a turban. I hope we don't, don't cause some kind of a "whatever it is"!! I think you are... I think your whole racism is absolutely disgusting!!! And I...

DAVIS
Doctor, may I point out...

CALLER #4:
...think absolutely ridiculous!

-+- A Call From A Scotsman -+-

DAVIS
Doctor, may I point out that these are not any of your countrymen, just any of your countrymen that are getting off the plane. These are people that the comptroller of the currency of the United States has specifically stated must never be allowed to enter the American banking system.

As for the Indonesians getting off, they are not just any Indonesians. They are known associates of the dictator of the country.

We're not talking ordinary people. I mean, if a Scotsman who happened to own a, or be associated with, an immense, corrupt, or questionable financial institution got off the plane, I suppose we'd have a call from somebody named "Mr. McLaren" accusing me of not liking Scotsmen!

I'm talking about a very specific kind of guy!

INGE
Well we're down to the point here... We have maybe a minute and a half. And I guess...
DAVIS
I guess that [unclear] of mine backfired!
INGE
Well. We'll have to leave that, I guess.

Um. How does... You know, what do you come away with? Maybe I can just ask you, you know, personally, as you think about President Clinton and the Clinton administration... I mean, as a result of what you have done, what (and other people, they can read what you've written and they can make their own judgement) -- What do you come away with?

-+- Very Serious Questions -+-

DAVIS
What do I come away with. I come away with very serious questions about the President's character. Very serious questions about his judgement and the judgement of his wife, in the associations that they have. We never even got into the family's association with the state, a prominent investment banker who was also the state's most flamboyant cocaine addict! Talk about addicts! I mean, a guy that no Governor in his right mind should be associating with.

And this has been a pattern, throughout the political history of now-President Clinton. Yes, I'm disturbed and I have questions! I can't draw conclusions, because, as I say, we do not know the man's mind. (And the Congress is certainly not helping us work out his thought processes.)

INGE
Well, I guess at that we will have to leave it. I want to thank you very much for talking with us. We appreciate it. And you know, perhaps sometime in the future we might get a chance to talk again.
DAVIS
O.K.!
INGE
We thank you for your time, very much.
DAVIS
Listen, thanks so much for having me on!
INGE
O.K.
DAVIS
O.K.

--------------------------<< Notes >>---------------------------- {1} Note that all headings (e.g. "Honor Among Thieves") have been added by me and were not part of the actual broadcast.

{2} "They don't remember that it was ever different." Exactly. For many, having an obviously corrupt Presidency is normal. They have no memory of what it was like to have a President that (at least in theory) you could look up to. For those growing up today, what can they aspire to? To be like George Bush? To be like Bill Clinton?

{3} Caller #2 seems to have a composite of Larry Nichols and Terry Reed (and possibly other(s)) in mind when he makes this statement. The person he attempts to describe has aspects of Reed ("liaison with Oliver North's operation") and Nichols ("the Gennifer Flowers revelation"). No blame to caller #2 for being confused, given the shoddy news coverage of Mena, etc. The fact that he even knows "the 'M' word" speaks well of him.

{4} Regarding Larry Nichols: I personally find him to be quite credible and have found nothing to make me think otherwise.

{5} With all respect to Mr. Davis, I think he is wrong here when he doubts the significance of the mortality rate (a.k.a. "body count") around Clinton. I think, at the least, it is statistically significant. You may recall a movie called "Executive Action". That movie, with a similar situation, hired an actuary to examine the statistical significance of so many deaths of potential witnesses related to the JFK assassination.

Note also that Mr. Davis does not tell us why he considers it a false line of inquiry. Is it perhaps because it is an area that gets a bit scarey to consider? With all respect to Mr. Davis, is he perhaps afraid to really look at it?

Brian Francis Redman bigxc@prairienet.org "The Big C"

"Justice" = "Just us" = "History is written by the assassins."