McDougal Reportedly Says Clinton Knew About Loan

In a bid to avoid prison, President Clinton’s former Whitewater business partner has changed his story and told prosecutors that Clinton attended a 1986 meeting in which an illegal loan was discussed, according to the New Yorker magazine.

James B. McDougal, Clinton’s former partner, told the New Yorker that he had told Whitewater prosecutors that Clinton was present at a 1986 meeting in which an illegal $300,000 loan to McDougal’s wife was discussed with David Hale, a businessman who specialized in brokering loans involving the Small Business Administration.

In the past, McDougal has repeatedly denied that Clinton attended any such meeting.

Hale has testified that Clinton pressured him to make the loan during the meeting and warned him not to speak about it.

In videotaped testimony last year in the fraud and conspiracy trial of McDougal and his former wife, Susan, Clinton denied that he was at the meeting with Hale and also denied that he ever sought to pressure Hale into making the loan. McDougal testified that the meeting with Clinton and Hale never took place.

A White House spokesman said Sunday that neither the White House nor Clinton’s attorneys would have any further comment.

Both James and Susan McDougal were convicted in last year’s trial, and James McDougal is now trying to cut a deal with the Whitewater prosecutors to avoid prison in exchange for his testimony against the president.

In the New Yorker article, McDougal said he failed five lie-detector tests, administered privately before his Whitewater conviction. During those tests, he denied that Clinton knew about the loan and said Clinton never met McDougal and Hale to discuss it.

McDougal has turned over the results of those lie-detector tests to Kenneth W. Starr, the Whitewater independent counsel.

Susan McDougal, who is now in jail at the Sybil Brand Institute for Women east of Los Angeles for her refusal to answer questions before the Whitewater grand jury in Little Rock, Ark., told the magazine that her ex-husband was “wildly excited” about giving the test results to the independent counsel.

She also said James McDougal tried to persuade her to testify against Clinton as well. But she still says that she does not know of any illegal activity by either Clinton or his wife, Hillary Rodham Clinton.

In a jailhouse interview, Susan McDougal told the New Yorker that she mistrusted the independent counsel and his investigators. She said she felt like a pawn in a politically motivated crusade to get the Clintons.

Her former husband, she said, nearly persuaded her to talk before her sentencing hearing last summer after her conviction. But she changed her mind after a conference call during which Ray Jahn, a member of Starr’s staff, mentioned their mandate to investigate the Clintons.

In the New Yorker article, James McDougal suggested that his ex-wife might have had another reason not to testify against Clinton. The two, he said, had an affair.

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McDougal claimed that in 1982, he called his home to see if Susan had arrived safely from a trip to Europe with her mother. The phone didn’t ring; instead, he said, he found himself listening to a phone conversation already in progress between Susan and Bill Clinton.

“How should I say this? They were intimate,” McDougal told the magazine. “There was no doubt in my mind.” McDougal also said he later asked Susan if she was having an affair with Clinton, and she acknowledged that she was.

In the same article, Susan McDougal denied her ex-husband’s charge. She told the New Yorker instead that her husband had wanted her to have an affair with Clinton.

Susan McDougal was found guilty of fraud and sentenced to two years in jail, a verdict she is appealing.