"Payoff Clinton."
May 5, 1998
Susan McDougal Is Indicted on Charges
Of Obstruction and Contempt of Court
By GLENN R. SIMPSON
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- Susan McDougal, President Clinton's former
investment partner in the Whitewater real-estate deal, was indicted in Little
Rock, Ark., on charges of obstruction of justice and contempt of court.
Following the indictment, Whitewater prosecutors disclosed that they
asked President Clinton several times last year to urge Ms. McDougal to
cooperate with their investigation. Mr. Clinton refused.
Independent Counsel Kenneth Starr's request to Mr. Clinton was
extraordinary, as was the president's rebuff. President Clinton and his
aides have repeatedly pledged to cooperate with Mr. Starr's inquiry, but
intense animosity toward the prosecutor has developed as the investigation
has dragged on and placed the president in a seemingly permanent state of
political and legal peril.
Charles Bakaly, the spokesman for Mr. Starr's office, disclosed the
petition for Mr. Clinton's assistance following Ms. McDougal's indictment.
He suggested Mr. Clinton may be improperly hindering the probe. David
Kendall, the president's lawyer, said the suggestion of impropriety was
"wholly false," and said Ms. McDougal should get her legal advice from
her own lawyer.
'Not Appropriate' to Intervene
"The president has always urged everyone to tell the truth," White House
counsel Charles Ruff said. "At the same time, he understands that it is not
appropriate for him to intervene personally in this matter. Any suggestion
by the office of independent counsel or its public-relations adviser that the
president should do otherwise is reckless and irresponsible."
Mr. Starr first asked Mr. Ruff for the president's help in February 1997,
but Mr. Ruff replied it would be "entirely inappropriate" for the president
to do so. An increasingly bitter exchange of letters followed, with Mr.
Starr finally writing last October that sympathetic comments by Mr.
Clinton about Ms. McDougal, and his refusal to rule out a pardon, "could
reasonably have had the effect of bolstering Ms. McDougal's obstinacy,
thereby impeding this federal investigation."
The three-count indictment of Ms. McDougal, who was convicted in 1996
on fraud charges related to the collapse of her husband James McDougal's
Madison Guaranty savings and loan, had been expected. Mr. McDougal
died in March. The indictment is one of the two-year-old Whitewater
grand jury's last acts before its mandate expires on Thursday. Prosecutors
are wrapping up the Arkansas end of their sprawling probe and may not
call a new panel, using a Washington grand jury instead.
She Was Granted Immunity
Ms. McDougal has refused to testify about President Clinton's involvement
in Whitewater-related matters despite a grant of immunity from Mr. Starr,
saying she doesn't trust him. Mr. Starr has said Ms. McDougal has nothing
to fear so long as she tells the truth. Since 1996, Ms. McDougal has been
serving a lengthy jail term for civil contempt of court. She is also under
indictment in Los Angeles on charges of defrauding the wife of conductor
Zubin Mehta.
Mark Geragos, Ms. McDougal's attorney, said he will demand a jury trial
and intends to call Mr. Starr and one of his deputies as witnesses so that
he can expose their political motives.
The indictment discloses a new piece of evidence -- a $5,081 check Ms.
McDougal wrote in 1983 bearing the notation "Payoff Clinton." The check
was written to Madison, which Mr. McDougal used to help finance the
Whitewater project in which the Clintons and McDougals were investors.
But prosecutors are most interested in hearing from Ms. McDougal about
Mr. Clinton's involvement, if any, in an illegal $300,000 government loan
that Ms. McDougal obtained.
Separately, Rep. Dan Burton's Government Reform and Oversight
Committee released tapes of former associate attorney general Webster
Hubbell's jailhouse telephone calls in an effort to quell a controversy over
his selective release of excerpts last week. Democrats have attacked Mr.
Burton (R., Ind.) because some remarks by Mr. Hubbell exculpatory to
the president or first lady were withheld.
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