CNN - Whitewater court to hear Clinton testimony

Whitewater court to hear
Clinton testimony Thursday

Prosecution bears down on McDougal

May 9, 1996
Web posted at: 12:30 a.m. EDT

LITTLE ROCK, Arkansas (CNN) -- The defense in Little Rock's Whitewater trial is expected to play President Clinton's videotaped deposition Thursday after defendant James McDougal leaves the stand.

While the contents of Clinton's testimony have been kept mostly secret, defense attorneys say that the president helps their case. Clinton is a witness in the trial, and is not charged with any wrongdoing.

In a harsh cross-examination Wednesday, Whitewater prosecutors confronted McDougal with a sheaf of memos they said prove he was involved in more than $1 million in alleged fraudulent loans.

McDougal, testifying at his fraud trial for a second straight day, said he had little to do with many of the memos, which he said simply passed along instructions handed to him by his superiors. All of the loans authorized by the memos were legitimate, he said.

He also said that key parts of prosecutor Ray Jahn's case were based on flawed testimony from those he called "admitted criminals" like David Hale, who has pleaded guilty to making fraudulent loans from a government-backed lending company he once owned. Hale agreed to give testimony against the McDougals and Arkansas Gov. Jim Guy Tucker as part of a plea bargain.

Tucker and the McDougals were indicted in August on fraud and conspiracy charges for allegedly misusing $3 million in federally backed loans obtained before Tucker became governor in 1992. Tucker and James McDougal are accused of conspiring to defraud McDougal's savings and loan and David Hale's government-backed lending company of more than $2.5 million in loans, while Susan McDougal is charged in connection with a $300,000 loan that was never repaid.

McDougal, who suffers from a partially blocked artery, said he was testifying even though his doctor said the stress could trigger a heart attack. "I'm stubborn," he told reporters. Nevertheless, he accepted U.S. District Judge George Howard's offer of a break in the midst of questioning and was escorted off the stand by an aide. He returned to the stand Wednesday afternoon to continue the cross-examination.

Media won't get copy of Clinton testimony yet

Judge Howard declined to release the videotaped testimony to the media for the time being, saying it was not fair for the defense to have to deal with the side issue of the request for access to it at this point in the trial. Lawyers from several television networks are asking that the tape be made public when it is played in the courtroom.

The White House, fearing that Clinton's political opponents would use the tape for political campaign ads, wants it to remain sealed.

Senate probe hears Denton testimony

Also Wednesday, the Senate Whitewater committee heard testimony Wednesday from Don Denton, the former top officer of the Union National Bank of Little Rock, now at the center of their investigation. He told prosecutors that he approved a $20,000 loan in 1978 to Clinton, then the state's attorney general, because the owner of his bank told him that Clinton wanted it.

Clinton, along with business partners James and Susan McDougal, used the money as a down payment on a $182,000 loan from another bank to purchase the Whitewater real estate. All lost money in the deal.

Although the $20,000 was not paid off in a timely manner, Denton said, he extended it several times, in large part because Clinton was seen as a rising star in Arkansas politics and had clout.

White House spokesman Mark Fabiani told CNN that Denton was told by his boss at the bank to make the loan, and that neither the Clintons or the McDougals pressured anyone to make the loan. All of the loans were eventually paid in full. Fabiani also said that the Clintons got no preferential treatment on the interest rate for the loan, and that the McDougals were responsible for the repayment schedule.

Related stories:

McDougal maintains Whitewater innocence - May 7, 1996
Judge drops some Whitewater charges against Tucker, Susan McDougal - May 6, 1996
Whitewater background - May 6, 1996
AllPolitics - Whitewater prosecutors rest their case - May 3, 1996
AllPolitics - Hillary Clinton's Sworn Statements Questioned - May 1, 1996