2 Clinton Aides Testify Before Grand Jury

Two senior presidential aides with knowledge of former White House intern Monica S. Lewinsky’s controversial work history at the executive mansion testified Thursday before a federal grand jury.

Both Marsha Scott, the No. 3 staff member in the presidential personnel office, and Nancy Hernreich, director of Oval Office operations, are positioned to help explain how Lewinsky--unpaid as an intern--obtained a salaried job at the White House and why she later was involuntarily transferred to the Pentagon.

Scott, a Little Rock, Ark., native and friend of President Clinton’s since the 1960s, and Hernreich, who has worked for Clinton since the 1970s, are both expected to return to the grand jury for further testimony. They would not discuss their appearances as they left the courthouse.

Their testimony came on the same day that an attorney for Clinton and First Lady Hillary Rodham Clinton confirmed the discovery last summer of a duplicate set of law firm billing records of Mrs. Clinton’s.

The records were turned over to independent counsel Kenneth W. Starr last July after Lisa Foster, the widow of White House lawyer and longtime Clinton friend Vincent Foster, said that she had discovered the documents in the attic of their home in Little Rock. Vincent Foster committed suicide in July 1993, just half a year after coming to Washington from Little Rock, where he had been a partner of Mrs. Clinton’s at the Rose Law Firm.

Another set of the records was turned over to Starr in January 1996, after they appeared mysteriously in the residential quarters of the White House--after having been under subpoena for nearly two years.

The law firm records are of great interest to Starr because they document that Mrs. Clinton billed for 60 hours of work on a development south of Little Rock called Castle Grande. Mrs. Clinton performed the work on behalf of Madison Guaranty Savings & Loan, an Arkansas thrift that failed at a cost of more than $50 million to federal taxpayers.

Without directly impugning Mrs. Clinton, federal banking regulators have concluded that Castle Grande amounted to a series of “sham” transactions.

Mrs. Clinton had testified that she did little or no work on Castle Grande. Starr’s prosecutors are seeking to determine whether that testimony amounted to perjury and whether she or others hid the billing records.

David E. Kendall, the Clintons’ defense lawyer, suggested in a prepared statement that nothing untoward should be inferred from the discovery of the records in the Fosters’ attic.

Also Wednesday, a lawyer for a Washington bookstore said that records of certain purchases made by Lewinsky will be turned over to Starr’s office as soon as next Thursday.

The records are to be divulged in response to a subpoena delivered Monday to the store, Kramerbooks & afterwords Inc. The store sells a broad collection of books and serves food and beverages.

The subpoena, signed by Starr deputy Julie Corcoran, at first sought a loosely defined range of records--”all documents and things referring or relating to any purchase by Monica Lewinsky”--from Kramerbooks, located in the city’s Dupont Circle neighborhood.

According to people familiar with the matter, Starr’s office has significantly narrowed the demand for documentation--specifying up to five nonfood purchases made by Lewinsky, commencing in November 1995. It was during that same month, Lewinsky has told friends, that she first had sexual contact with Clinton.

Lewinsky is not cooperating with Starr, who is seeking to determine whether Clinton lied under oath about his dealings with the former intern or another woman and if the president directly or indirectly encouraged them to testify falsely.

But if prosecutors obtain records that document certain purchases by Lewinsky, it may strengthen their hand in verifying what she has told to acquaintances, including a former co-worker, Linda Tripp.

For instance, prosecutors are focusing on the gifts exchanged between Lewinsky and the president--and whether Lewinsky returned some of those items to thwart questions being posed by attorneys pressing a separate, sexual harassment lawsuit against Clinton. The suit, filed on behalf of former Arkansas government employee Paula Corbin Jones, is scheduled to go to trial in May.

These efforts come as lawyers for Starr and Lewinsky await a federal judge’s ruling on whether prosecutors are obligated to grant Lewinsky immunity in exchange for her testimony.

Lewinsky’s lawyers earlier had told prosecutors that, in exchange for immunity, she would be willing to testify that she engaged in oral sex with the president.

Starr’s office balked at the arrangement, under which Lewinsky had not signaled what she would say about whether Clinton or anyone on his behalf advised her to testify falsely about the alleged intimacy. Chief U.S. District Judge Norma Holloway Johnson is expected to rule on the dispute as soon as today.

In another development concerning Clinton’s personal dealings, Elizabeth Ward Gracen, a television actress and former Miss America who has eluded the subpoenas of Jones’ lawyers, said Thursday that she will describe publicly next week her experiences with Clinton a decade ago.

In comments issued through her publicist in Little Rock, Gracen offered no hint of what she would say about the nature of her dealings with then-Gov. Clinton.

“‘My family and friends are being harassed and intimidated every day,” Gracen said. “People claiming to be my ‘friends’ are giving false statements and are trying to sell their lies for profit.”

Times staff writer Richard A. Serrano contributed to this story.