White House Fears Waves From Next Arkansas Trial

In December 1990, then-Arkansas Gov. Bill Clinton received $7,000 from a well-connected contributor; about a month later, he appointed the man’s business partner to head the state highway commission.

Although Clinton and the appointee, Herby Branscum, insist that the money did not buy the position, the timing has raised suspicions. Indeed, one Branscum acquaintance says he was told at the time that the contribution was intended “to get Herby on the highway commission.”

Under ordinary circumstances, the retelling of this political tale would be embarrassing to a prominent politician--especially one who has since gone on to be elected president of the United States. But in Clinton’s case, the story of Branscum’s appointment also has become an important element of the legal controversy known as Whitewater.

Not only will it be examined in its every detail during a Whitewater-related trial that begins in federal court here Monday, but Clinton will be called, as he was in a previous Whitewater-related trial, to answer questions about it. Aides say Clinton, whose testimony will be videotaped, will deny any wrongdoing.

The president has not been accused of any illegality in the case, which revolves primarily around the way the money was raised. Branscum and his co-defendant, Robert Hill, directors of the Perry County Bank in Perryville, Ark., are accused of illegally using bank deposits to contribute to Clinton and other politicians.

Nevertheless, Branscum’s attorney, Dan Guthrie, says the president will be a central figure in the trial. He says prosecutors will “go through every alley and side street and make every detour they can to bring Bill Clinton into this case.”

For this reason, White House aides fear that the trial of Branscum and Hill could prove to be even more damaging to Clinton than the first Whitewater trial that led to the recent convictions of Susan and James B. McDougal and Arkansas Gov. Jim Guy Tucker.

Among the panoply of complex allegations that constitute Whitewater, the Branscum-Hill affair seems to have a political potency that some of the other elements have lacked.

The simplicity of the alleged quid pro quo between Clinton and Branscum makes it more understandable than most aspects of Whitewater. And, unlike many of the other Whitewater-related allegations, these charges appear to involve Clinton directly--not just by implication, through the actions of his Arkansas associates.

Also enmeshed in the Branscum affair is one of Clinton’s closest aides, Bruce Lindsey, who was his 1990 campaign chief and now serves in the White House. Like Clinton, Lindsey will be called to testify.

The trial also commences at a time when the Whitewater episode is back at center stage, the result of the Tucker-McDougal convictions, the impending report of the Senate Whitewater committee and new revelations that White House aides obtained FBI files on some prominent Republicans.

The Whitewater matter began four years ago as a controversy over Clinton’s investment in an Ozark land-development venture, and it has grown wider with every new disclosure. The independent counsel’s investigation, led by Kenneth W. Starr, has kept expanding with it.

Clinton’s allies have privately expressed concern that the cumulative effect of these developments, combined with the political damage that Whitewater already has caused him, could begin to hamper his reelection campaign just as it is beginning to open throttle.

For its part, the prosecution would clearly like to persuade defendants such as Branscum and Hill to make plea bargains that would obtain their cooperation in the larger probe. Such cooperation could help make a case against Lindsey, who has long been a target.

But defense attorney Jack Lassiter, who represents Hill, says the defendants, who pleaded not guilty after they were indicted in March, are not interested in negotiating a plea bargain with Starr on offenses they did not commit.

Like Tucker and the McDougals, Branscum and Hill maintain that they are being prosecuted solely as a result of a politically motivated effort to bring down the president. “I think that this indictment is the result of an attempt to manufacture a crime where there is no crime,” Guthrie said recently.

To counter the defendants’ strong denials, Starr’s assistants--Hickman Ewing and Jackie Bennett, who will prosecute the Branscum-Hill case before U.S. District Judge Susan Webber Wright--will offer documentary evidence to back charges that the two persuaded friends and relatives to make campaign contributions, then misused bank funds to reimburse contributors.

On Wednesday, after a pretrial hearing before Wright, Ewing denied that Branscum and Hill were being tried in an effort to embarrass the president or his political allies. “There are going to be two people on trial,” he said. “The ’90 campaign is not on trial.”

By reimbursing friends and relatives for their contributions to Clinton and other candidates, according to the prosecution, Branscum and Hill managed to circumvent a state law that limits Arkansans from contributing more than $1,000 to any single candidate in a particular election.

But the element of this trial that most troubles the president’s advisors is the evidence that Hill personally delivered $7,000 to Clinton at a meeting arranged by Lindsey on Dec. 14, 1990, shortly after the then-governor had won reelection to a fifth term.

Starr is expected to introduce as evidence appointment books indicating that the subject of the meeting was Branscum’s impending appointment to the highway commission. Hill, a certified public accountant by training, was appointed to the state banking board about the same time.

Among the witnesses likely to be called by the prosecution is Richard Lee Tiago, former mayor of Perryville, who contributed $250 to Clinton in late 1990, allegedly at the behest of Branscum and Hill. Tiago told a federal grand jury that when he gave Hill his money for Clinton, he was told that the fund-raising effort was designed specifically “to help Herby get on the highway commission.”

According to attorneys in the case, Branscum and Hill will deny these allegations and offer evidence that the contributors were reimbursed for legitimate expenses related to bank business. Likewise, Lindsey is expected to say, as he has in the past, that the contributions and appointments were not linked.

But the most keenly anticipated testimony will come from Neal T. Ainley, former president of the Perry County Bank, who reached a plea agreement with Starr and became the prosecution’s star witness. He is expected to say that he acted on instructions from Branscum and Hill when he failed to file required federal reports on several cash withdrawals from the 1990 Clinton campaign’s bank account.

Under federal law, all such bank transactions of $10,000 or more must be reported.

Ainley has pleaded guilty to two misdemeanors as part of an agreement with the government and won a reduced sentence of two years’ probation, a $1,000 fine and 416 hours of community service.

The Clinton campaign withdrawals involved in this case, which totaled $52,500, helped pay for so-called get-out-the-vote activities on Election Day. Although Lindsey was investigated for his role in these activities, he has not been accused of criminal wrongdoing.