Whitewater Figure Refuses Order to Testify

Susan McDougal, a former Whitewater investment partner of President Clinton and First Lady Hillary Rodham Clinton, refused a judge’s order to testify before a federal grand jury Wednesday about the Clintons’ role in the celebrated case.

McDougal was promptly found in contempt of court by U.S. District Judge Susan Webber Wright and faces a sentence of 18 months in prison. She already has been sentenced to serve two years for her conviction earlier this summer in a Whitewater-related case.

Afterward, McDougal said she was asked three questions in front of the grand jury before being ushered out for refusing to answer.

One question, she said, was: “Did William Jefferson Clinton testify truthfully at your trial?” She said the other two dealt with whether Clinton knew about a loan and property in which the Whitewater corporation had an interest.

In an interview broadcast Wednesday night McDougal said she believes the Clintons have not lied about Whitewater. Her refusal to answer the question about Clinton’s truthfulness could be used by his Republican critics as a charge that details of the Whitewater saga have been covered up. So far, however, Whitewater has not been an issue in the presidential campaign.

McDougal’s lawyer, Bobby McDaniel, said his client is being pressured by Whitewater independent counsel Kenneth W. Starr to “lie for leniency.” She received the grand jury subpoena on Aug. 20--the day she was sentenced to two years in prison.

The president was a defense witness earlier this year at the trial of McDougal, her ex-husband, James B. McDougal, and then-Arkansas Gov. Jim Guy Tucker. All were convicted in connection with a conspiracy to bilk two federally backed financial institutions.

James McDougal recently agreed to cooperate with Starr and, as a result, his sentencing has been delayed until November.

Both McDougals have said repeatedly during the past few years that they had no information to offer that would incriminate the Clintons. They also have expressed strong feelings of contempt for Starr, whom they have accused of conducting a politically inspired witch hunt.

The McDougals, who owned an Arkansas savings and loan until the mid-1980s, were joint investors with the Clintons in an Ozarks resort development known as Whitewater. Investigators have long suspected--but never proved--that Whitewater was intended by the McDougals as a way to compensate Clinton for political favors.

Judge Wright, who on Tuesday refused Susan McDougal’s request to quash the grand jury subpoena, found her in contempt of court shortly after her appearance before the grand jury. The judge decreed that she would begin her sentence for contempt next Monday unless she decides to answer the questions.

Wright indicated that she might entertain a motion from McDougal’s lawyer to subtract the time she serves in prison for contempt from her two-year sentence for the Whitewater-related conviction. Another hearing is scheduled for Monday. McDougal was to begin serving the sentence for her Whitewater conviction on Sept. 30.

McDougal refused to testify before the grand jury even though Starr had assured her that she would get immunity for her testimony if it was truthful. Despite these assurances, she said she feared that Starr would still prosecute her for perjury if she gave testimony that conflicted with other evidence.

Instead of answering the questions, she said she tried unsuccessfully to read a four-page statement prepared by her lawyers. She was permitted to read the statement when she appeared later in Wright’s courtroom.

“My truthful testimony would reveal no illegality or impropriety on my part, for I have committed no crime,” she said. “Nevertheless, because I believe that my truthful answers to the grand jury’s inquiries would be inconsistent with the testimony or statements of others and/or inconsistent with independent counsel’s view of the facts, it is my belief that my answers would and could be used against me in a future criminal prosecution.”

McDougal said she intends to appeal both her original conviction and her contempt sentence, but would testify if compelled to do so by the Supreme Court. She said she feared her grand jury testimony could be used against her in her appeal or leaked to the media by Starr.

McDougal, who played a minor role in the Whitewater saga, received a stiff sentence--second only to the 28-month prison term given to the alleged mastermind of the plot, David Hale, who was a government witness. She noted that others who, like Hale, agreed to cooperate were given less punishment.

“I have already received an excessive sentence because I exercised my right to remain silent and refused to cooperate with independent counsel,” she said. “I should not be punished a second time for continuing to exercise my constitutional rights.”

McDougal was convicted of misusing $300,000 that she had borrowed from a government-backed small-business investment firm owned by Hale. Part of the money was used to buy a tract of land that was held briefly by the Whitewater corporation.

Hale has claimed that he loaned the money to McDougal under pressure from her husband and Clinton, who was then governor of Arkansas. But Clinton has insisted that he knew nothing about the loan or the property.

In an interview for broadcast Wednesday on ABC-TV’s “Prime Time Live,” McDougal said she has considered cooperating with Starr.

“It is tempting every time they put the carrot before my eyes,” she said. “It’s very tempting. It’s tempting when I see my mother crying. When I see my family hurting.”

She insisted that the Clintons have not lied about their role in the Whitewater venture, but added she thought they could have been more forthcoming. As she put it, “I have wondered why they couldn’t tell . . . everything just out open and honest and simple and easy.”

Times special correspondent Kenneth Miller contributed to this story.