The Telegraph - London - 09/16/98
By Ambrose Evans-Pritchard in Washington
HILLARY Clinton is in imminent danger of indictment for perjury and obstruction of justice as the independent counsel, Kenneth Starr, shifts the focus of his four-year inquiry back to allegations of
financial misconduct in Arkansas.
Persistent reports of charges gained credence when Dick Morris, President Clinton's former confidant, said yesterday that the investigation was closing in fast.
Mr Morris, who had to resign as an adviser to the President because of his own sex scandal, said in an article in the New York Post that Mrs Clinton's actions in the Monica Lewinsky affair must be seen
through the prism of her own troubles.
He wrote: "If she is facing a conviction and he is facing impeachment and everything is going to hell, don't rule out the possibility that he might pardon her and then resign, knowing the jig is up. Bottom line: Bill Clinton would give up his presidency to save Hillary from prison. Bet on it. He isn't the most faithful husband, but he is one of the most loyal."
Last week's impeachment referral on the Lewinsky scandal contained a "threateningly specific" statement suggesting that Mr Starr's inquiries into possible fraud involving a bankrupt building society in
Arkansas was coming to a head.
Mr Starr noted that "evidence is being gathered and evaluated on, among other things, events related to the Rose Law firm's representation of Madison Guaranty Savings and Loan Association; events related to the firings in the White House travel office; and events related to the use of FBI files". He added the warning: "All phases of the investigation are now nearing completion."
In each of these cases Mrs Clinton is at the centre of the alleged wrongdoing, but it is the Madison Guaranty inquiry that is most ominous for her. Mr Starr's reference to the "Rose Law firm's
representation" of the bank is aimed directly at Mrs Clinton, who was a lawyer with the firm before moving to Washington.
The Telegraph has learned that Mr Starr is examining Mrs Clinton's role in three episodes of possible financial impropriety in the mid 1980s: a $2,000-a-month retainer paid by Madison Guaranty; her alleged
involvement in a sham land deal called Castle Grande; and the possibility that she hid money from bank regulators in a deal involving Flowerwood Farms.
In all the cases the statute of limitations for criminal activity has long passed. But Mrs Clinton could be vulnerable if she testified falsely to investigators, or subsequently before a grand jury.
An indictment of the First Lady would make for highly combustible politics in Washington. She has emerged as a figure of sympathy during the Lewinsky affair and is more popular now than at any stage of
her husband's presidency.
Mrs Clinton told government financial regulators that she and her husband had not solicited the $2,000 retainer and later repeated the denial before a grand jury. But all the other participants tell a different story.
They say that it was Mr Clinton who requested the retainer, virtually begging for the money when he called on Jim McDougal, the owner of Madison Guaranty and the Clintons' partner in the Whitewater
Corporation. The incident was recalled vividly because Mr Clinton, then governor of Arkansas, had been jogging and left a puddle of sweat on Mr McDougal's light blue orthopaedic leather chair.
When regulators said that Madison Guaranty should be closed because of insolvency, the Arkansas state government allowed it to remain open. This led to a $60 million loss guaranteed by the taxpayers.
One of the questions is whether Mr Clinton, as governor, intervened to keep the bank afloat while he and his wife benefited from Mr McDougal's fraudulent schemes to divert money from Madison Guaranty. In the case of Castle Grande, Mrs Clinton has sworn that she was not involved in the legal work.
Invoices from the Rose Law firm could not be found when Mr Starr subpoenaed them. They surfaced in the White House two years later, apparently with Mrs Clinton's fingerprints on them. They show that she
had 14 meetings or conversations about Castle Grande.
Mr Starr is being helped by a key witness, Jim Guy Tucker, a former governor of Arkansas. A source said: "He has made it quite clear that he's not going down to save the Clintons' skins."
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