Dole’s Own McDougal: Name of Former Advisor Resurfaces : GOP candidate’s past relationship with David Owen shows similarities to Clinton’s ties to his former Whitewater investment partner.

Politicians frequently have someone or something embarrassing in the past that haunts their careers.

For Bill Clinton, that person is his eccentric former investment partner James B. McDougal, whose past misdeeds spawned the Whitewater inquiry. For Republican presidential challenger Bob Dole, it is a local businessman and ex-politician named David C. Owen.

While Owen’s name is by no means as well known as that of McDougal, the two men’s stories have notable parallels.

McDougal, who was one of Clinton’s early Arkansas political mentors, is expected to be sentenced later this month to a jail term for crimes that came to light as a result of Clinton’s campaign for and subsequent election as president.

Owen, who for 20 years served as political advisor, campaign fund-raiser and personal financial advisor to Dole and his wife, Elizabeth, served six months in Leavenworth federal penitentiary after conviction on a tax charge that surfaced during Dole’s 1988 presidential bid.

In neither case has it been demonstrated that the Clintons or the Doles themselves violated the law.

But much as Clinton’s involvement with McDougal has spawned a series of allegations and investigations that have now dogged him for more than four years, Dole’s connections to Owen--and the questions that remain unanswered about their relationship--could well become fodder for the fall campaign.

The similarities are so obvious, in fact, that White House officials have collected a bulging file of information about Owen, which the president will have available to bring up during the fall presidential campaign if Dole or his surrogates emphasize Whitewater.

The major issue in Owen’s case, as in McDougal’s, involves the intersection of politics and investment. Investigatory records show that Owen, while seeking legislative and political favors from Dole, jointly invested with Mrs. Dole in several ventures in which the senator and his wife either realized a quick profit or were protected from losses sustained by other investors. At the same time, Owen raised large amounts of money for Dole’s campaigns, some of it in improper ways.

As with Whitewater, the story of the Owen-Dole relationship raises many unanswered questions: Was Dole entirely unaware of Owen’s questionable activities? Did Dole knowingly grant his fund-raiser political favors in exchange for the money Owen was raising for the senator’s campaigns as well as for his personal income? Was Dole entirely truthful in minimizing his relationship with Owen when his old friend got in trouble with the law?

Dole’s legal advisors do not acknowledge any similarity between the Owen story and Whitewater. Bob Davis, attorney for the Dole campaign, says he is satisfied the Doles did nothing wrong, and “that to me is the end of the story.”

Davis concedes that he is being questioned frequently these days by reporters who have begun digging into the Owen matter again as the election draws near. But he quickly adds: “That’s different from saying it’s becoming a campaign issue.”

Despite this renewed news media interest in the story, the Owen-Dole relationship has not been mentioned much in the press since 1988, perhaps because Dole never previously was his party’s nominee for president and also because he abruptly severed all ties with Owen when the charges first arose. In 1988, when Dole and George Bush were competing for the Republican presidential nomination, Bush’s campaign aides first brought the Owen matter to the attention of reporters. After Dole dropped out of the campaign, however, the story dropped as well.

For his part, Owen, 58, who has worked as an investment banker here since his release from prison in 1995, has tried to discourage renewed media attention of his travails by declining all recent requests for interviews.

In the past, however, he has made no secret that he feels Dole betrayed him by abruptly ending their friendship. “Am I bitter?” he quips. “Yes!”

Owen has said that Dole, who chaired the GOP during the Watergate era, handled allegations in roughly the same manner as the late President Nixon answered his critics--by blaming others.

“There are a lot of personality traits in Dole that parallel Nixon,” Owen says. “There’s a dark, brooding side. . . . He thinks everyone is out to get him.”

Before 1988, Owen was among Dole’s closest confidants. They talked by telephone almost daily, and Owen was widely known as Dole’s “bad cop” in his home state of Kansas. According to one insider’s account, Dole relied on Owen “if someone needed disciplining or taking to the carpet.” The two men had been allied politically since 1968, when Owen, running as an unopposed state Senate candidate, used his own organization to help Dole win reelection to the U.S. Senate.

In 1974, when Dole’s popularity in Kansas dipped as a result of his defense of Nixon during the Watergate scandal, Owen ran the Republican senator’s reelection campaign and was widely credited with devising the winning strategy. He then became primary fund-raiser for subsequent Dole campaigns, including his 1980 presidential bid and the start-up phase of his 1988 campaign.

In fact, Owen served a far more central role in Dole’s political career than McDougal did in Clinton’s. While McDougal was a contributor and held appointed office during Clinton’s first term as governor of Arkansas, he was never considered to be a key political advisor.

But analysts say the key similarity between the cases of Owen and McDougal is that, in addition to providing political support and seeking favors, Owen persuaded Elizabeth Hanford Dole and her financial trust to invest in his business projects, much as McDougal lured Bill and Hillary Rodham Clinton into his real estate venture.

Owen, who served as lieutenant governor of Kansas in the mid-1970s, has admitted that he freely traded on his access to Dole. He charged business clients large fees to put them together with the senator. He also used his access to Dole to press for legislation to help his own business ventures.

In 1984, Owen, acting as Mrs. Dole’s personal financial advisor, persuaded her to loan him $250,000 to help fund one of his ventures, known as Golfun Productions Inc., which produced golf videos for television syndication. When the business failed, Mrs. Dole was the only creditor or investor who was repaid. Owen had personally guaranteed her loan but had made no such promises to others who invested.

Politicians are usually advised by their lawyers to steer clear of all financial transactions with persons such as Owen who would be in a position to lobby them for political favors. This advice is based on a desire to avoid any conflict of interest.

But Davis denies that Mrs. Dole, then a senator’s wife and a White House employee, breached any ethical standard when she hired Owen, a fund-raiser and lobbyist, to act as her personal financial advisor. He says Mrs. Dole saw him only as an expert money manager, not as a partisan.

He said Mrs. Dole also was too busy at the time to pay any attention to her finances. In addition, he notes, the senator considered his wife’s money, most of which she had inherited, as “separate” from his and thus could not have been influenced by Owen’s success in increasing their family wealth.

A year later, when Mrs. Dole was named transportation secretary, she put her holdings in a blind trust for which Owen served as financial advisor. In that capacity, Owen also got the trust to buy the office building in this Kansas City suburb that housed his enterprises as well as Dole’s campaign headquarters.

The purchase price of $1.35 million was financed primarily with a $1-million loan from American Investors Life Insurance Co. of Topeka, of which Owen was a director. A short time later, the trust sold a half interest in the building for $804,000 to EDP Enterprises, which was founded by former Dole Senate aide, John Palmer, with money supplied by Owen.

According to the financial records of Mrs. Dole’s trust, she earned a quick profit of $63,182.

Meanwhile, by his own admission, Dole assisted Palmer, who is African American, in lobbying the Small Business Administration to win certification of EDP as a minority-owned business eligible for lucrative federal contracts, including a $26-million contract to supply food to an Army base in Missouri. Owen, Palmer’s financial backer, then received consulting fees and also profited by becoming a subcontractor to EDP.

The Doles have said repeatedly that they were unaware of any of these deals involving the blind trust and also unaware that Owen was profiting from them. But Davis acknowledged he thought Owen’s actions were “unusual for somebody with a fiduciary duty.”

The case that finally sent Owen to jail had no proven connection to the Doles. It involved improper contributions Owen made to the 1986 Kansas gubernatorial campaign of Mike Hayden, which Owen said were made at Dole’s request. But Owen has never offered any proof that Dole was aware of these activities.