Clinton Attended Meeting on Loan, Whitewater Witness Says

Then-Gov. Bill Clinton attended a meeting at which one of his Whitewater partners discussed work on a land development that later was completed by illegally using money from a $300,000 loan, a banker testified Wednesday.

In his third day on the stand, David Hale said President Clinton was present with Hale and James B. McDougal, Clinton’s Whitewater partner, in early 1986 when McDougal discussed developing land south of Little Rock. The meeting was in McDougal’s office in a trailer at one of McDougal’s land developments near Little Rock, Hale said.

Hale also testified that during the meeting the three talked about a $150,000 Small Business Administration loan which, at McDougal’s request, eventually grew to $300,000.

But Hale’s testimony did not indicate whether there was any discussion of using any of the federal loan for the land development--a use that would be illegal.

Hale testified in the fifth week of the trial of a 21-count indictment against Gov. Jim Guy Tucker, McDougal and McDougal’s ex-wife, Susan. The indictment says the three committed fraud and conspiracy in obtaining and using $3 million in federally backed loans.

The McDougals were partners with Clinton and his wife, Hillary Rodham Clinton, during 1978-92 in Whitewater Development Corp., a real estate development 100 miles north of Little Rock. All of the partners say they lost substantial sums in Whitewater.

The $300,000 loan was written to Susan McDougal’s advertising company, Master Marketing. But Hale testified Tuesday that the money actually went to McDougal and Clinton. Clinton lawyer David E. Kendall said Tuesday that in a deposition in another case last May, the president had given an “unequivocal denial” about any wrongdoing.

Hale has told investigators and reporters that Clinton pressured him to make the $300,000 loan in 1986 to Susan McDougal. Clinton has called his account “a bunch of bull.”

Hale testified Wednesday that after the loan was approved by the SBA as working capital for Susan McDougal’s firm, McDougal tried to substitute loan application documents in the files at Hale’s company. Hale said McDougal wanted to do this to show how the money actually had been spent.

Hale told the jury he wouldn’t switch the application. He said he already had sent the original paperwork to the SBA and McDougal’s new application listed uses--development of the land--that were barred by SBA policy.