McDougal answers questions about Clinton for the first time

She says president was truthful in his testimony

March 23, 1999
Web posted at: 6:27 p.m. EST (2327 GMT)

LITTLE ROCK, Arkansas (AllPolitics, March 23) -- Finally answering the questions that cost her 18 months in jail and has her on trial for criminal contempt and obstruction of justice, Whitewater figure Susan McDougal testified Tuesday that President Bill Clinton, as far as she knows, testified truthfully in 1996 about the controversial land deal.

"Nothing that he said was untrue to me. As I sat there that day, I did not hear anything untruthful," she said when asked by her attorney Mark Geragos if Clinton told the truth in his videotaped deposition in her 1996 Whitewater trial.

Independent Counsel Ken Starr's office pursued the current charges against McDougal after she refused to answer the same questions about Clinton and first lady Hillary Rodham Clinton in September 1996 and again last April.

McDougal spent most of Tuesday on the stand and was expected to resume her testimony Wednesday.

During the afternoon session McDougal told jurors that she believes her late ex-husband, James, had been paid off by political opponents of then-candidate Clinton to make the original Whitewater disclosures in 1992.

But Tuesday morning McDougal's legal team took the opportunity to respond directly to Starr's charges, by publicly asking their client the questions she refused to speak to in the closed-door grand jury.

McDougal began by testifying that she never spoke with Clinton about a fraudulent $300,000 loan in her name.

David Hale, another Whitewater witness, has testified that Clinton had pressured him to make that loan.

Earlier in the trial FBI agent Mike Patkus testified that a $27,600 check made out to then-Arkansas Governor and Whitewater partner Bill Clinton was paid in a complicated series of financial transactions that led to the illegal loan that sent McDougal to prison in a previous trial.

The cashier's check to Clinton in 1982 was used to retire existing debt on the original loan to buy Whitewater land, but did not bear Clinton's endorsement nor any identifiable fingerprints, the agent testified.

The president testified at McDougal's 1996 Whitewater trial that he knew nothing about the SBA loan and never had any financial transactions or loans from Madison Savings & Loan, a failed savings and loan owned by the McDougals.

In the past the president's lawyers have indicated that if there was a loan, Clinton was unaware of it.

What did Clinton know?

McDougal was also asked if Clinton knew about another of her real estate developments south of Little Rock called Lorance Heights.

"I might have in a social sense told him I was working out there. But certainly I never discussed any substantial thing about Lorance Heights with Bill Clinton," McDougal said.

Lorance Heights is also under investigation by prosecutors following the Whitewater paper trail.

McDougal has called the trial a "personal vendetta" by Starr. She has already served 18 months for civil contempt for refusing to answer grand jury questions about the Clintons.

She has said she refused to answer questions because she believes Starr would twist her words to suit his purposes and may charge her with perjury if he doesn't get the testimony he wants.

Testimony delayed over jury question

McDougal's testimony was delayed a day as Geragos argued unsuccessfully Monday to have a juror removed for possible bias against his client.

According to Geragos, juror Charles Adams expressed disdain for President Clinton and for Mrs. McDougal, a partner of Clinton in the Whitewater land development.

"I will not dismiss this juror," Judge George Howard Jr. concluded following arguments from both sides in his chambers, away from the jury.

In court, Geragos won a separate skirmish over whether the judge would allow defense witness Steve Smith to say whether he believed Starr's prosecutors were seeking the truth in using him in their investigation.

Smith, who pleaded guilty in 1995 to a conspiracy charge in the Whitewater investigation in exchange for his testimony, was allowed to answer the question after the prosecution grilled him about his knowledge of the law.

Smith told the jurors, "I think they were seeking truthful information that would conform with their theory of the case. They sort of had a story line about what happened."

A communications professor at the University of Arkansas at Fayetteville, Smith said Starr's deputies would listen if he had some information that conformed with their thinking but they weren't interested if his information didn't fit their ideas.

Rick Holiman, a Little Rock attorney who had represented two other McDougal associates including one of Susan McDougal's brothers, also testified for the defense that the Independent Counsel's office had used inappropriate tactics to pressure his clients.

The McDougals were partners with the Clintons in the Whitewater real estate venture in northern Arkansas.

If convicted, McDougal could face as much as 10 years in prison and a $750,000 fine.

CNN's Terry Frieden, Bob Franken and The Associated Press contributed to this report.

TRIAL STORIES

Judge refuses to dismiss juror in McDougal trial (3-22-99) Deputy independent counsel says he wrote 'rough draft indictment' of Hillary Clinton (3-18-99) Grand juror testifies Starr's prosecutors were not out to get the Clintons (3-17-99) Hillary Rodham Clinton testimony played at McDougal trial (3-16-99) FBI agent traces money trail at McDougal trial (3-11-99) Opening statements begin in McDougal trial (3-10-99)

BACKGROUND
McDougal jubilant after jury finds her not guilty (11-24-98) McDougal 'in shock' after early release from prison (10-27-98) McDougal likely to answer questions about Clinton during contempt trial (5-12-98) Grand jury indicts McDougal for contempt (5-4-98) McDougal blasts "hoodlum" Ken Starr (10-3-96) McDougal charged with civil contempt (9-4-96) Susan McDougal gets two years in prison (8-20-96) Whitewater jury convicts defendants (5-28-96)