The long-running Whitewater drama will play on the imposing stage of the White House Sunday when President Clinton stars in a witness role that will stir up old questions about his character and credibility.
Though Clinton’s testimony will be narrow and he isn’t charged with any wrongdoing, the actors, the setting and the plot will elevate his deposition in the criminal trial of his former Arkansas business partners, Jim and Susan McDougal, to an event of major political significance.
He will deny allegations that he improperly used his influence as Arkansas governor to help obtain government-backed loans for the Whitewater land development scheme. “A bunch of bull,” he has called the accusations.
But the question is not so much whether a jury believes him but whether most Americans will be convinced that he’s telling the truth. When he testifies, there will be more than one audience.
The McDougals are scheduled to be on hand in the Map Room of the White House on Sunday afternoon when Clinton is questioned by the couple’s lawyers, and then cross-examined by attorneys representing independent counsel Kenneth Starr. It will be videotaped for showing at the Little Rock trial sometime in May.
“Credibility is the larger issue that the White House is worried about,” said Charles Jones, presidential scholar at the University of Wisconsin. “The Whitewater thing has gone on for so long and is so mind-numbing that it’s lost some of its impact.”
The White House is keenly aware of the broader effect Clinton’s testimony could have on attitudes toward the president and on the presidential campaign. For Clinton, Whitewater lurks as an unknown factor with voters.
Senate Majority Leader Bob Dole (R-Kan.), the presumptive GOP nominee, has not publicly targeted Whitewater or Clinton’s character. But that could change.
The political importance that Clinton attaches to his testimony is underscored by the fact that he does not want the tape to be released for rebroadcast, lest it be, in his word, “abused.” The administration fears it could be used in campaign commercials by Republicans or by Floyd Brown, a Clinton foe who was behind the “Willie Horton” ads used in the 1988 campaign against Democratic nominee Michael Dukakis.
Nine people have pleaded guilty so far in the Whitewater prosecution, with the McDougals and Arkansas Gov. Jim Guy Tucker on trial. But White House officials emphasize the president’s willingness to cooperate and insist that since Whitewater was first disclosed four years ago, no documents have turned up to implicate the president or First Lady Hillary Rodham Clinton in a crime.
Jones said the White House’s effort to control the damage from Whitewater is taking on the aspects of a political campaign.
Nevertheless, the political climate has turned into a poisonous one. While Sen. Alfonse D’Amato (R-N.Y.), chairman of the Senate Whitewater Committee, has sharply criticized the Clintons for dragging their feet in releasing Whitewater material, most Democrats, and even some Republicans, have said the D’Amato probe is running out of steam.
A sideshow to the testimony is mounting criticism over alleged conflicts of interest by Starr, a Republican. He is a $1 million-a-year, Washington-based partner in the Chicago law firm of Kirkland & Ellis, his client list includes many of Clinton’s opponents, from tobacco firms to conservative foundations.
In addition, Kirkland & Ellis settled a lawsuit brought against it by the Resolution Trust Corp. at the same time that Starr’s Whitewater staff was investigating the corporation’s oversight of an Arkansas thrift that has figured in the Whitewater case.
Clinton took a veiled shot at Starr last week. Asked if Starr should step down because of alleged conflicts, Clinton said Starr’s record speaks for itself.
But the main event is the Whitewater case. In Clinton’s favor is that the public has paid little attention to the twists and turns of the intricate case. But it is also to Clinton’s detriment.
Asked his biggest fear about the testimony, White House associate counsel Mark Fabiani said: “It’s that people will misinterpret what is going on. Most people don’t follow what has been going on (with Whitewater). Now they are hearing the president is providing testimony. We want people to know what it’s about.”
Among the roughly 35 attorneys, technicians and court personnel in the room will be Clinton’s partners in the ill-fated Whitewater real estate development, the McDougals. Once close friends, Clinton and Jim McDougal have been estranged for more than a decade.
U.S. District Court Judge George Howard Jr. has barred those attending the deposition from revealing “any aspect” of the proceeding, including what Clinton says. The judge will monitor the proceeding Sunday via a satellite link between the White House and his Little Rock chambers.
Clinton will be questioned by Little Rock attorney Darrell Brown, who also represents Tucker. The president will be represented by his personal attorneys, David Kendall and Nicole Seligman, and by White House counsel Jack Quinn and special counsel to the president Jane Sherburne.
Lawyers for Tucker and the McDougals have indicated they will limit questions to the allegation from the key prosecution witness, Little Rock loan broker David Hale, that Clinton pressured him to make an illegal loan.
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Once Darrell Brown is done, Starr’s assistant, W. Ray Jahn, will cross-examine Clinton.
Hale, who pleaded guilty to defrauding the Small Business Administration by funneling hundreds of thousands of dollars in federal loans to himself and his partners, is scheduled to report to prison next month to begin serving a 28-month sentence.
Hale first detailed his claims against Clinton in dozens of 1993 media interviews and then again during the nine days of testimony he gave earlier this month in the Little Rock fraud trial of Tucker and the McDougals.
The convicted swindler said that one evening in early 1986, he, Clinton and McDougal met in McDougal’s makeshift mobile home sales office and conspired to secretly funnel $300,000 into Whitewater Development Co., the failing Ozark Mountains investment in which the Clintons and McDougals were 50-50 partners.
Hale said when he arrived at the office at the Castle Grande real estate development in South Little Rock, “Jim and the governor were, um, standing around and basically cussing (Republican gubernatorial candidate) Frank White and talking politics and this sort of thing.”
Clinton and McDougal said they needed a loan “as soon as possible,” Hale testified.
“At one point, the governor (Clinton) said, `My name cannot show up on this,’ ” Hale said, and so the three men agreed to post the loan to a shell corporation controlled by McDougal’s wife, Susan.
Bank records and partnership files released so far by federal investigators have yielded no evidence that Clinton took part in a fraudulent loan. Hale did make a $300,000 loan to a shell company controlled by Susan McDougal, records show, and that money was deposited into the McDougals’ joint checking account.
McDougal shifted the cash through the accounts of several real estate projects, and purchased some land that was briefly held in the name of the Whitewater company. But records show that McDougal did not inform the Clintons of his activities and gave them misleading data when he did offer them financial statements about their partnership.
Hale’s trial testimony about Clinton’s alleged involvement was marred by inconsistencies.
He testified that the alleged meeting with Clinton occurred in the months before the loan was made on Feb. 28, 1986, for example. The meeting, he said, was held in McDougal’s Castle Grande sales office because federal bank examiners had moved into McDougal’s Madison Guaranty Savings & Loan.
But the examiners didn’t arrive at the bank until March 4, after the loan was made, records show, and testimony has shown that McDougal did not use the Castle Grande office before that.
Hale’s credibility is brought into question not only by his guilty plea in the Small Business Administration fraud case, but also by his admission that he lied to federal investigators who were probing his businesses and misled the judge who accepted his March 1994 guilty plea. Hale is facing a state prosecution for insurance fraud as well.