Grand Jury in Ark. to Look at Whitewater

A federal grand jury that convened here Tuesday is likely to look into real estate investments in which President Clinton and his wife, Hillary Rodham Clinton, were partners with the owner of a now-failed savings and loan.

James B. McDougal, who co-owned Whitewater Development Co. Inc. with the Clintons, will testify before the grand jury Thursday, said McDougal’s lawyer, Sam Heuer.

Heuer said that the FBI has subpoenaed from McDougal documents related to Whitewater, a venture in which the Clintons were 50-50 partners with McDougal and his former wife, Susan.

Whitewater is only one of several matters expected to be brought before the grand jury, which meets monthly to consider a variety of criminal cases.

The U.S. Justice Department has been looking into the failure of McDougal’s Madison Guaranty Savings & Loan.

Assistant U.S. Atty. Michael Johnson, who is in charge of the session, said he could not comment on any aspect of the grand jury.

Betsey Wright, who managed Clinton’s 1984 gubernatorial campaign, said she has not been subpoenaed to appear before the panel.

“I received a call from the FBI last week telling me I was going to be subpoenaed,” Wright said Tuesday. “The next day they called and said it had been withdrawn. There was no explanation.”

McDougal was acquitted in 1990 of eight federal fraud charges in connection with the operation of the Little Rock-based S&L;, which failed in 1989. The failure cost taxpayers at least $47 million.

He left the S&L;’s operations in 1986 but continued to own it. Federal audits questioned practices of the S&L; when McDougal was chairman, but he has said it failed because of actions of his successors and federal regulators.

Federal investigators are trying to determine whether Madison funds were illegally diverted to Whitewater or to help pay off debts for prominent Arkansans, including the Clintons.

Clinton has been accused of no wrongdoing, and he has denied any. He has said he and his wife lost $68,900 in the Whitewater venture.