Clinton Testifies, Denies Role in Alleged Fraud

President Clinton, testifying under oath Sunday in a criminal trial stemming from the Whitewater scandal, denied--as he has previously in press interviews--allegations linking him to an alleged conspiracy to defraud two federally backed lending institutions.

The president, whose videotaped testimony will be played at a later date in the U.S. District Court case in Little Rock, Ark., was questioned for nearly 4 1/2 hours by defense and prosecution attorneys behind closed doors at the White House.

Even though Clinton will never set foot in the courtroom, he is the key defense witness in the trial on fraud and conspiracy charges of Arkansas Gov. Jim Guy Tucker and James B. and Susan McDougal, who were investment partners with Clinton and First Lady Hillary Rodham Clinton in the Whitewater resort development.

The president’s exact words under oath will not be known until the tape is played, perhaps as soon as next week. Under orders from U.S. District Judge George Howard Jr., the videotape is being kept under seal and attorneys who attended the interview are barred from discussing it.

However, witnesses to the questioning at the White House said the president’s answers did not diverge from his previous statements on the key question of whether he put pressure on David Hale, the key prosecution witness, to make an improper loan from his government-backed small-business investment corporation.

“I did not see that he made any inconsistent statements,” said James McDougal after leaving the White House. He said Clinton seemed at ease throughout the questioning.

“There won’t be any surprises,” predicted White House spokesman Mark Fabiani, referring to the reaction of those who will see the videotape when it is played in the courtroom. “The president has said, both in public statements and in previous interviews, his views about David Hale’s allegations.”

In the past, Clinton has called Hale’s story “a bunch of bull.”

Hale, who was a municipal judge at the time of the alleged plot in the mid-1980s, testified earlier in the trial that then-Gov. Clinton and James McDougal asked him to make a $300,000 loan to Susan McDougal. Contrary to statements made on the loan application, the money was spent on the McDougals’ real estate ventures, and one parcel purchased with the loan was held briefly by the McDougal-Clinton partnership that also owned Whitewater.

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According to Hale, the $300,000 loan was part of a complex, $3-million conspiracy involving Clinton, the McDougals and Tucker that succeeded in defrauding both Hale’s lending firm, known as Capital Management Services Inc., and Madison Guaranty Savings & Loan, a Little Rock thrift then owned by the McDougals.

For his part, Clinton insists that he did not participate in meetings at the McDougals’ land-sales trailer south of Little Rock in which Hale claims the deal was struck.

Government prosecutors have acknowledged that they do not have sufficient evidence of Clinton’s involvement for the president either to be charged in the case or to be named as an unindicted co-conspirator.

The questioning took place in the Map Room, a first-floor parlor in which President Franklin D. Roosevelt followed the progress of the Allied forces during World War II. White House officials said the session began at 1:12 p.m. EDT and ended at 5:38 p.m. According to Bobby McDaniel, attorney for Susan McDougal, the defense questioned Clinton directly for only 45 minutes, but the cross-examination by the government took 3 1/2 hours.

The participants included the McDougals, who are now divorced, their three attorneys, four attorneys representing Tucker, eight members of the prosecution staff, two of the president’s personal attorneys, five attorneys from the White House counsel’s office and three representatives of the Justice Department, as well as court reporters and camera operators.

Tucker, who was lieutenant governor under Clinton, did not attend.

Two cameras recorded the president’s answers. One was linked to a satellite that allowed Judge Howard to monitor the proceedings from his Little Rock office. The other camera made the official videotape.

It is by no means unusual for a president to serve as a trial witness. Although no sitting president has testified in person, many of Clinton’s predecessors, beginning with James Madison, have been deposed on matters at issue in criminal trials.

Defense attorneys for Tucker and the McDougals contend that Hale, who is facing a 28-month prison term for his conviction on charges of defrauding the government, concocted a story about the president to gain leniency from Whitewater independent counsel Kenneth W. Starr.

Lawyers for the defendants are betting that the president’s videotaped denials will carry more weight with the jury than the testimony of Hale, who has admitted that he lied to the government on more than one occasion.

Although a transcript of the president’s testimony is likely to be released after the testimony is played in court, White House attorneys have urged the judge to restrict access to the videotape to prevent its “misuse” in political ads attacking Clinton.

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Also on Sunday, Newsweek magazine reported that the fingerprints of the first lady were found on copies of her law firm’s billing records that turned up at the White House not long ago.

The billing records, which had been under subpoena for two years before they were found, are being treated as evidence in the government’s investigation of alleged obstruction of the Whitewater investigation by the first lady. She insists that she has no knowledge of where the documents were before they were found in the East Wing of the White House.

The report said that FBI experts had identified fingerprints on the documents, which are billing records from the Rose Law Firm in Little Rock, as those of Mrs. Clinton.

The White House said the fact that Mrs. Clinton’s fingerprints may be on the papers is not a surprise, adding that her lawyer had said this might be the case in January.

“In January we said that it was possible that Mrs. Clinton handled these records during the 1992 [presidential] campaign,” Fabiani said. “So this report should not be surprising.”