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President Bill Clinton's Whitewater Testimony

By The Associated Press -- Page 2 of 7

May 9, 1996

Q: Or Jim Guy Tucker?
A: No, I did not.

Q: Did you ever have any conversation with Jim McDougal wherein you were led to believe that you and Mr. McDougal could obtain financing or money from David Hale at any time?
A: No, Jim McDougal never talked to me about anything like that.

Q: Did you ever have any meetings with Jim McDougal at the governor's mansion in January of 1986?
A: We did have a meeting in January of 1986.

Q: And what was the topic of that meeting?
A: Well, it was more than 10 years ago, and I have had a lot of meetings. But my memory is that Jim wanted to talk to me about his concern that the state Health Department was not treating him fairly at one of his developments; not the Whitewater Development, he had another land operation. And as I recall, the area being developed was not connected to a municipal sewer system, so that in order to sell these lots and put houses on them, they had to have septic tanks there, and they had to get a permit. And I have a clear memory that he believed that the people the Health Department had assigned to look into this were not giving him fair treatment, and in fact, one of them was actively trying to undermine his attempt to sell this property to others. And he was upset about it, and he actually gave me a memorandum about it, you know, just outlining one or two items, and he asked me to look into it. And I did, I subsequently arranged for him to have a meeting about it.

Q: In that meeting, Mr. President, did there ever come a point where a discussion was had with you and Mr. McDougal about any plans involving David Hale providing financing in any shape, form, or fashion?
A: No, sir, it didn't - we didn't discuss that.

MR. HEUER: Your Honor, I would pass the witness at this time.
THE COURT: Mr. Collins or Mr. Brown?
MR. COLLINS: Mr. Brown, Your Honor.
MR. BROWN: Thank you, Your Honor. If the Court pleases, ladies and gentlemen of the jury, and Mr. President.
THE WITNESS: Mr. Brown.

EXAMINATION ON BEHALF OF GOV. JIM GUY TUCKER BY MR. BROWN:

Q: I will try to be as brief as I can and as precise as I can in asking you these questions. If I am unclear, please ask me to repeat the question. Mr. President, do you know Jim Guy Tucker?
A: I do.

Q: And when did you first meet Jim Guy Tucker, Governor Tucker?
A: I believe I met the governor almost 30 years ago here in Washington. I believe the first time I ever met him was in Senator Fulbright's office in the late '60s, and if my memory is correct, I believe that he had finished Harvard and was on his way to Vietnam as a war correspondent, or had just come back from Vietnam. And of course, after that, he went home to Arkansas, and then after I finished law school, I did, so I have known him ever since then. But I believe that's the first time I met him.

Q: All right. Can you describe your relationship with Governor Tucker over the years?
A: Well, it has changed a little from time to time.

Q: All right. I'll get you to tell us about that?
A: When I - first of all, I was very impressed with him when I first met him, and I liked him. But then he went home to Arkansas and I went - I went away, I lived in England for a couple of years and I went to law school. But while I was in law school, he was elected to prosecutor for Pulaski County. And then when I came home and made my race for Congress in 1974, that was the same year Mr. Tucker ran for attorney general. After he was elected attorney general and I was defeated for Congress and went back to teaching in the Arkansas Law School, he asked me to prepare for him an anti-trust brief on an issue involving the banking and interest rates in Arkansas that he wanted to file on behalf of our state before the U.S. Supreme Court. I prepared that brief, and in the course of doing it, had a lot more contact with him, and we became better friends. In 1975, late '75, when Hillary and I were married, we had a private wedding ceremony, but we had a larger party that night, and I invited Jim Guy to the party and I remember he flew up there to the party. Then in 1976, there was an opening for Congress in Little Rock, he ran for that job and got elected, and I ran for his job, I became attorney general. And again, we had a good relationship.

And in 1978, when he ran for the United States Senate after the death of Senator McClellan, along with Senator Pryor and Congressman Thornton, I ran for the governorship, and I was elected governor. He lost the Senate race, and he basically devoted himself after that, nearly as I could tell, to his own business interests and his law practice. So, I didn't see him so much then, but we were still friendly.

Then in 1982, after I was defeated for governor in 1980, I ran for re-election in '82 in a very crowded Democratic primary field which included Governor Tucker. So, we ran against each other for the first and, thank goodness, the only time in our careers. It was a very difficult, very heated race, and it left some hard feelings. I was lucky enough to win it. But we were sort of estranged after that.

Although I always respected the way he handled it, he continued to support the Democratic Party, he continued to stand up for the things that I believed in, and from time to time, he even made contributions to my campaign. But we weren't really close. It got a little better as time went on, you know, time often heals some of those wounds, it got a little better.

Q: I understand.
A: Then in 1990, there was another brief period of tension, because Governor Tucker was considering running for governor and I was considering running for re-election. As it turned out, I ran for re-election, he ran for lieutenant governor, and we began to serve together. In my view, he had a hard job, because when I started running for president, under the Arkansas constitution, he is the governor, the lieutenant governor is the governor with all the powers of the office. So, I have had a cordial relationship with him since then.

Q: Now, Mr. President, understanding your relationship historically with Governor Tucker, particularly as it related to the political aspects of it, have you ever had any business relationships with Governor Tucker?
A: No, Mr. Brown, I never have.

Q: Now, let me focus, if you will, in the year 1985 and 1986. Were you ever aware that David Hale, in fact, had a company called Capital Management Systems? Were you ever made aware of that, Capital Management System --
A: I don't know.

MR. HEUER: Services.

BY MR. BROWN:

Q: Services, excuse me, I'm sorry, Services.
A: I don't know. My guess is that I did not know that he had a company by that exact name.

Q: All right.
A: I knew that David -- I want to make a full disclosure here.

Q: Okay.
A: I believe I knew that David Hale had a business of some kind, or was in business, as well as being a municipal judge, but I don't believe I knew that was the name of his company or what that company was, exactly.

Q: Well, apparently I had some problems repeating the name of that company, too. But it is Capital Management Services. Let me ask you this question: Did you ever request David Hale or any of his companies to make a loan to or for the benefit of Governor Tucker, to the best of your knowledge?
A: I did not.

Q: Are you aware of whether or not there was ever any agreement of any kind involving Governor Tucker, David Hale and Jim McDougal which concerned the making of loans for the mutual benefit of these persons or other persons?
A: If there ever was such an agreement, I had no awareness of it.

Q: Are you aware of whether or not there was ever any agreement of any kind involving Governor Tucker and David Hale through any of his companies which had the intent of increasing the capital of David Hale's small business investment company or any company that he might have been associated with?
A: If there was an agreement like that, I didn't know anything about it.

Q: Did Governor Tucker ever ask you to do anything at any time to help him obtain loans from David Hale or any of his companies?
A: No, sir, he did not ever ask for that kind of help.

Q: Did he ever ask you to do anything at any time to help obtain loans for any of Governor Tucker's companies?
A: No.

Q: All right. And I guess this question has been asked, but since we represent different individuals, I need to ask you this question as it relates to Governor Tucker.

Q: Did you ever pressure David Hale to do anything at any time to benefit - or for the benefit of Governor Jim Guy Tucker?
A: I did not.

Q: In late 1985 and early 1986, were you aware of whether or not there was ever any agreement involving Governor Tucker and David Hale and Jim McDougal involving Madison Guaranty loans in exchange for loans from David Hale's company, CMS, that we have referred to?
A: I was aware of no such agreement. I did not -

Q: Did you ever have - excuse me.
A: I want to make sure I made myself clear.

Q: All right.
A: I was not aware of that agreement if, in fact, it existed. If there was an agreement, I knew nothing about it.

Q: Thank you, Mr. President. Mr. President, did you ever have any conversation with Governor Tucker, in which he informed you that he would be arranging a loan through Madison Guaranty Savings and Loan which would enable David Hale to make loans to various other people?
A: No, sir, I never did.

MR. BROWN: Mr. President, I have no further questions.
THE WITNESS: Thank you.
THE COURT: Mr. McDaniel?
MR. McDANIEL: Yes, Your Honor.
THE COURT: Do you need a break?
MR. McDANIEL: I'm not going to be very long, Your Honor. At your will, we can either proceed or at the conclusion of my questioning, I will defer.
THE COURT: All right. Why don't you proceed?
MR. McDANIEL: Thank you, Your Honor.

EXAMINATION ON BEHALF OF SUSAN McDOUGAL BY MR. McDANIEL:

Q: Good afternoon, Mr. President.
A: Good afternoon, Mr. McDaniel.

Q: We have been introduced, and I'm Bobby McDaniel, and along with Jennifer Horan, the federal public defender, represent Susan McDougal. And in that regard, I would like to ask you, do you know Susan?
A: I do.

Q: Can you tell us, sir, when and how did you meet Susan?
A: I met Susan through her relationship with Jim, I met them before they married, and if my memory serves me right, I think he taught a course at Ouachita University in Arkadelphia, and I believe she was a student there, I think that's how they met. But anyway, we met, therefore, it would have been somewhere either in the late '60s or the early '70s, some time in that area.

Q: All right, sir. To get right to the point, Mr. President -
A: And let me -

Q: All right, sir.
A: Also, they invited me to their wedding, I remember that, it was outside out in west Little Rock some place, or west of Little Rock some place, and I remember being there.

Q: All right, sir. And as I say, to get right to the point, Mr. President, did you ever request David Hale to make a loan to Susan McDougal?
A: No, sir, I did not.

Q: Mr. President, did you ever in any way try to pressure David Hale directly or indirectly, to make a loan to Susan McDougal?
A: I did not pressure David Hale to do that.

Q: All right, sir. And I want to focus for a minute on a time frame late 1985, early 1986, and again, we represent separate defendants, and it may be cumulative, but bear with me, I will be brief. Were you aware of any alleged agreement whereby - involving Susan McDougal and David Hale, involving loans that would be made with Madison Guaranty in exchange for loans being made for David Hale's company? Did you have any knowledge of any such agreement, if it existed?
A: If it did exist, I didn't know anything about it.

Q: Mr. President, likewise, in reference to that same time frame, early '85 - late '85, early '86, were you aware of any alleged agreement involving Jim Guy Tucker, Jim McDougal, David Hale, or Susan McDougal, involving Madison Guaranty loans in exchange for loans from David Hale's company?
A: No, sir.

Q: Were you aware in 1986 that on April 3rd, 1986 David Hale's small business investment company, Capital Management Services, made a $300,000 loan to Susan McDougal doing business as Master Marketing? Were you aware of that in 1986?
A: No, Mr. McDaniel, I was not.

Q: Mr. President, did you ever discuss a $300,000 loan to Susan McDougal with David Hale in any way?
A: I did not.

Q: Mr. President, did you urge David Hale to make any such loan?
A: No.

Q: Did you ever discuss a $300,000 loan to Susan McDougal from David Hale with Jim McDougal?
A: No.

Q: Did you ever discuss a $300,000 loan to Susan McDougal from David Hale with Susan McDougal?
A: I did not.

Q: Did you receive any of the proceeds from a $300,000 loan made to Susan McDougal by David Hale's company?
A: I did not receive any proceeds, sir.

Q: When, if you know, did you first become aware that Susan McDougal did receive a $300,000 loan from David Hale's company, if you know?
A: I believe it was when it broke in the press, when there were reports in the press, whenever that was, when was it, '92, '93, whenever.

Q: Okay.
A: But I didn't know anything about it before then.

Q: Mr. President, in 1986, were you aware that Jim and Susan McDougal were buying land in south Pulaski County from International Paper Realty Company for a project, real estate development project, later to be known as Lorance Heights? Were you aware of that in 1986?
A: No, sir. The only thing I knew about was what I testified, I stopped in on 145th Street at Mr. McDougal's office, in a suit, it is too far to jog, and that's all I know. I don't know where they got that property, I didn't know if they had any other property, I don't know where they got that.

Q: All right, sir. And were you aware in 1986, for a few months' period of time during that year, that Lorance Heights property was held in the name of Whitewater Development Company? Were you aware of that in 1986?
A: No, sir. In 1986, I did not know that.

Q: Were you aware, also, in 1986 that later in that year the Lorance Heights land was transferred out of Whitewater Development Company into another McDougal company? Were you aware of that, its going on?
A: No, sir. Since I didn't know it was ever in there in the first place, when it left, I was not aware of that, either.

Q: All right, sir. And did you know in 1986 how the McDougals financed the purchase of the land later known as Lorance Heights?
A: No, sir, I did not.

Q: Did you know in 1986 where the McDougals got the funds for the down payment for this land from International Paper?
A: No.

Q: Were you aware that in the late 1980s there was litigation involving the McDougals and International Paper Company whereby International Paper eventually took back this land?
A: No, sir.

Q: When did you --
A: I don't remember knowing about that, either, in the 1980s. I don't believe I knew anything about that.

Q: When did you first find out, if you know, that Whitewater Development Company briefly held title to this land known as Lorance Heights?
A: When that information appeared in the press, whenever that was. It was either in late -- in '92 or '93, sometime in that time frame, that information appeared in public, and that's how I became aware of it.

MR. McDANIEL: Your Honor, as has previously occurred, and to Mr. President a thank you. I have no further questions.
THE COURT: All right, Mr. Jahn, you might proceed with your cross examination.

EXAMINATION ON BEHALF OF THE PLAINTIFF BY MR. JAHN:

Q: Mr. President, during the course of your direct examination, sir, you made a reference to different versions of David Hale's accounts. Can you tell us, sir, what is your source of information concerning different versions of David Hale's accounts?
A: Well, just from press accounts and from reports that my counsel have given me.

Q: Okay. Are you aware, sir, of what he testified to?
A: I believe he testified --

Q: I'm not asking you, sir, what he said. I'm saying, has anyone related to you a version of what his testimony was under oath?
A: I read the press accounts of it.

Q: Okay. You read how -- to what extent, sir, were they quotations, were they direct quotations?
A: Well, I read -- I don't remember, but I read the press accounts, and of course, my counsel has briefed me. They said that under oath he said that I was in jogging shorts in the cold weather on 145th Street.

Q: Okay.
A: And some other things.

Q: So, you did receive, then, direct information concerning what it was that Mr. Hale had apparently testified to under oath; is that correct?

Q: You indicated, sir, that your counsel provided you information concerning how Mr. Hale had testified. I believe you indicated there was something along the line of wearing jogging shorts while you were at the 145th Street. What other information did you receive, not from the newspapers, but what other information did you receive concerning the subject matter and the content of Mr. Hale's testimony?
A: None, sir. I mean, my impression is that all of us were talking about what we read in the paper.

Q: Were you aware, sir, or are you aware, sir, that the law firm that was formerly -- Mr. Lindsey was formerly associated with was buying a transcript of the testimony provided in the court, sir?
A: No, sir, I was not aware of that.

Q: Is Mr. Lindsey still associated with the White House, sir?
A: He is.

Q: What is his current association with the White House?
A: Mr. Lindsey is one of my aides, he travels with me, and he does political work for me.

Q: Has he ever related to you, sir, accounts as to what Mr. Hale allegedly said under oath during the course of this trial?
A: I don't believe so.

Q: I believe the question, sir, was whether or not anyone other than your attorney had related subject matter concerning what Mr. Hale had allegedly testified during the course of his testimony?
A: No, sir. I believe that all of us, including my attorneys, I believe we were all discussing what we read in the paper about Mr. Hale's testimony.

Q: You, sir, in your position, receive extensive briefing and briefing books concerning virtually every item that occurs to you on your daily schedule; is that correct, sir?
A: Well, I get a national security briefing in the morning and I get a scheduling book for the rest of the day, yes, sir.

Q: Have you received a briefing book concerning your testimony, sir?
A: I have received a briefing book which contains what I have said before in my interrogatories, and our notes on the three times I have been interviewed already by the Special Counsel's Office.

Q: Did that briefing book contain any accounts concerning what Mr. Hale had allegedly said under oath during the course of this trial, sir?
A: No, sir, it didn't.

Q: Okay. You were asked by Mr. Heuer, sir, concerning whether or not you had ever gone to Mr. McDougal and sought financial aid from Madison Guaranty Savings and Loan concerning your joint business ventures; do you remember that, sir?
A: Yes, sir, I do.

Q: You and Ms. Clinton - well, perhaps maybe I'm misphrasing it. There was, in fact, an occasion in which you did go to a financial institution controlled by Mr. McDougal concerning financial assistance to the Whitewater Development, was there not, sir?
A: That's correct.

Q: All right. Can you tell the jury, sir, what arose, what was the circumstances by which - first of all, who was it that did it?
A: My memory is that when Mr. McDougal had the bank up in Madison County, in the mountains of north Arkansas, Madison County is a county that adjoins Marion County were the Whitewater property was, that I had borrowed some money there, either Hillary or I one borrowed some money there, but it was our - our family, Hillary and I borrowed the money to build a house on one of the lots, one of the Whitewater lots that Jim thought would make it easier for us to sell the lots, make it more attractive, make it more realistic. And he had called me and said he had put some money into the developing of the lots and I should build a house, and we agreed to that, and that's what we did. I think that's what the loan was for.

Q: Okay. And that was the Bank of Kingston; is that correct, sir?
A: I believe that's right.

Q: All right. Later became called Madison Bank and Trust, I believe. Were you familiar with the change in name at a later date?
A: I am now, I don't know that I knew when it happened.

Q: And were you aware at the time, sir, that that was a financial institution owned jointly by Mr. McDougal and Stephen Smith?
A: I knew that Steve had an interest in the bank, yes.

Q: Okay. I believe the question was something along the line of, kind of describe for the jury's benefit your knowledge of Stephen Smith and your relationship with Stephen Smith.
A: I met Mr. Smith I believe in 1972 when he was a young Arkansas state legislator from Madison County. And in 1974, when I ran for Congress, Mr. Smith supported that effort, worked in my campaign. He later came to work for me and he worked in my first term as governor, in the governor's office. He left shortly before the election of 1980, and that's the last time he ever worked for me. I maintained a limited but occasional contact with Steve in the years after that.

Q: And while he worked for you in the governor's office was the same time that Mr. McDougal also worked with you in the governor's office?
A: That's right, they worked there together.

Q: And was that also the same time that Mr. McDougal advanced to you or sought you out concerning your investment in what later became Whitewater Development Corporation? Was that also about the same time?
A: Mr. Jahn, I think that was before that. I believe that Mr. McDougal and Susan and Hillary and I invested in Whitewater in 1978, before I became governor.

Q: Okay. But in 1978, was Mr. Smith working for you as attorney general, sir?
A: He was working in the attorney general's office.

Q: Okay.
A: But Mr. McDougal wasn't.

Q: Okay. Thank you. I'm sorry. Again, if I ask a question that's not a hundred percent within the confines of your memory, please correct me on that particular regard.
A: All right, sir.

Q: So, there did come an occasion then where you were approached, or you and Mr. McDougal discussed obtaining some financing for the benefit of Whitewater Development Corporation, and Mr. McDougal made the arrangements, did he not, sir?
A: Well, I assume that we made them together, since we took out the loan and we took it out from that bank.

Q: Do you recall you and your wife going to the Bank of Kingston and executing notes and the like?
A: No, I think we signed the note without going up there.

Q: Okay. And so, at the time that you did it, you knew that it was Mr. McDougal's institution?
A: I did.

Q: Okay. And you knew that he and Mr. Smith were basically in control of that institution?
A: I did.

Q: Now, at the time that it was done, though, is it fair, and I don't want to put words in your mouth that aren't fair, sir, is it fair to say that you actually considered that to be a debt of Whitewater Development Corporation, even though you were personally, or perhaps your wife was personally responsible, didn't you really consider that to be part of the Whitewater Development Corporation Enterprise, itself?
A: Mr. Jahn, I think the fair way to characterize it was, I considered that loan in the same light that I considered the other loans that we had taken out to finance Whitewater. That is, I had hoped that the company would generate enough income from the sales of lots to repay those loans, but I was well aware that if it did not generate that income that I would be personally liable on them.

Q: Okay. And that hope, sir, was based upon representations that Mr. McDougal made to you; is that correct, sir?
A: Yes, sir. He had been in the land development business for some years, and he had enjoyed quite a bit of success in that.

Q: And you and your wife had no experience in land development; is that correct?
A: No. I had had that one very limited experience where I had made an investment with him and it had returned a nice profit in a modest amount of time.

Q: But as far as putting in roads and developing tracts --
A: No.

Q: -- and developing marketing programs and the like, that was Mr. McDougal's expertise?
A: That's right. And that was the understanding, that we would put in half of the money but that he would manage it.

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