First Lady Testifies Before Grand Jury on Billing Records

First Lady Hillary Rodham Clinton, the first wife of a president subpoenaed to testify in a criminal investigation, answered questions before a federal grand jury Friday about the unexplained discovery in the White House private residence of records sought for two years by authorities.

As she left the courthouse following her four-hour, closed-door appearance, a smiling and apparently relaxed Mrs. Clinton told reporters she had been asked primarily about the discovery of the records. The documents were copies of billing records of legal work conducted on behalf of Madison Guaranty Savings & Loan, a now-defunct Little Rock thrift that was owned by the Clintons’ partner in the Whitewater land venture, James B. McDougal.

Mrs. Clinton said she told the 23-member grand jury: “I do not know how the billing records came to be found where they were found but I am pleased that they were found, because they confirm what I have been saying. . . . I, like everyone else, would like to know how these documents showed up after all these years.”

The questioning, directed by Whitewater independent counsel Kenneth W. Starr, also veered into “other matters,” according to Mrs. Clinton. But she did not explain what other questions were asked and noted that most of the questioning focused on the billing records.

White House aide Mark Fabiani said later that Mrs. Clinton had answered every question put to her and was not directed to return for further testimony. He also confirmed that Mrs. Clinton had autographed a copy of her new book for a member of the grand jury, but added that she did so “in the presence of independent counsel Starr.”

The first lady’s willingness to talk to the news media outside the courthouse--both going into and coming out of the building--was in marked contrast to the highly defensive style she adopted in the early years of the Whitewater investigation. Indeed, her departure from the building appeared timed for the network evening news programs.

On her arrival to testify, she was confronted by a crowd outside that included supporters and critics.

“We’re with you, Hillary,” said one sign.

“Liar, liar, pants on fire!” said another.

The Whitewater real estate development in the Ozarks was jointly owned by the Clintons and McDougal. Starr is investigating whether Whitewater caused losses at Madison Guaranty and whether federally insured deposits from the savings and loan were siphoned off through Whitewater to benefit then-Gov. Bill Clinton’s 1984 gubernatorial campaign.

Mrs. Clinton had done legal work for Madison Guaranty while a partner at the Rose Law Firm in Little Rock, Ark., in the 1980s.

The first lady’s court appearance culminated weeks of public attention since the missing billing documents were discovered by Carolyn Huber, her correspondence secretary.

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Huber, a former office manager at the Rose firm, told the Senate Whitewater investigating committee last week that she found the records last August in the so-called “book room” of the Clintons’ private residence.

Not realizing the importance of the records, she tossed them in a box that was then stored in her office. When she reopened the box a few weeks ago, she recognized the records as important to the Whitewater case and they were promptly turned over to investigators.

Starr told Mrs. Clinton’s attorneys before her appearance that he wanted to find out why the billing records had not been found two years earlier in response to a subpoena his office had sent to the White House.

It is against the law to withhold information sought in a criminal investigation. However, there is no indication that investigators suspect Mrs. Clinton intentionally withheld evidence. She has not been notified that she is a target of the investigation, which would be customary if Starr intended to charge her.

Discovery of the documents prompted Republicans on the Senate Whitewater investigating committee to focus more attention on the work that Mrs. Clinton did in the mid-1980s for Madison Guaranty as well as other instances in which she has been accused of failing to fully explain details of matters under investigation by Starr.

Mrs. Clinton has contended that she did very little work for Madison Guaranty, whose collapse from financial mismanagement cost the American taxpayers about $60 million.

According to the records, Mrs. Clinton did about 60 hours of work for the thrift over a 15-month period. This included 21 contacts with Madison Guaranty executives and lawyers on a proposal for Madison Guaranty to issue preferred stock.

But the most controversial issue raised by the billing records concerns a legal document drawn by Mrs. Clinton that played an important part in what investigators have described as a sham real estate deal, known as Castle Grande. The deal lost nearly $4 million of the thrift’s money. The transaction was financed illegally by the thrift, which paid large commissions to Arkansas businessmen who served as straw investors, investigators have said.

According to testimony before the Senate Whitewater committee, Mrs. Clinton withdrew as Madison Guaranty’s lawyer just two weeks after Bill Clinton learned that McDougal was to be removed from control of the thrift by federal regulators. She later left the Rose firm to assist in her husband’s campaign for president.

The billing records in question were printed from Rose Law Firm computers by the late Vincent Foster, also a partner in the firm, in February 1992--shortly after national political reporters arrived in Little Rock and began asking about the Clintons’ relationship with McDougal. Foster, who committed suicide in 1993, is believed to have supplied the records to Clinton campaign workers who were answering questions posed by reporters.

It is not known how the records found their way to the White House.

The grand juror who obtained Mrs. Clinton’s autograph on a copy of her book showed it to David Shuster, a reporter for KATV in Little Rock, Ark., during a break in the proceedings while both were in talking at a sink in the courthouse bathroom.

Shuster told other reporters that the man opened the book to show him an inscription from the first lady that read “To Donald” and either “best wishes” or “warmest wishes.” It was signed “Hillary Rodham Clinton,” he said.

Shuster said the man offered this opinion of Mrs. Clinton: “Oh, she is a very smart lady.”

Mrs. Clinton had been questioned three times earlier by the independent counsel but never previously before a grand jury. She also has volunteered to answer written questions from the Senate Whitewater Committee about the discovery of the documents. According to investigative sources, Starr was eager to question her before she responds to the committee.

At the White House, aides said the first lady spent part of Friday morning with the president before leaving in her limousine for the courthouse about 30 minutes before her scheduled 2 p.m. testimony.

“The president reassured her, told her that he loves her, that she would do a good job,” White House Press Secretary Mike McCurry said.

At a reception after his wife finished her testimony, the president told supporters: “I feel a lot better than I did when I got here. . . . I am going home to take care of my lovely wife and daughter.”

According to several recent public opinion polls, Mrs. Clinton’s popularity has dropped since the discovery of the billing documents. The polls have shown that a majority of Americans apparently do not believe she has told the whole truth about her roles in both controversies.

In the days ahead, the grand jury will also hear from Mrs. Clinton’s private attorney, David E. Kendall, presidential lawyer Jane Sherburne, a White House usher and others who might have information about the discovery of the billing records.