Whitewater Witness Wasn’t Paid, Probe Finds

Closing out another chapter in the Whitewater inquiry, an investigator for independent counsel Kenneth W. Starr has concluded there is no evidence to support allegations that conservative activists gave financial assistance to chief Clinton opponent David Hale to influence his testimony against the president.

The yearlong inquiry by investigator Michael E. Shaheen Jr. examined allegations that the conservative magazine American Spectator, heavily backed by billionaire philanthropist Richard Mellon Scaife, gave aid to Hale to ensure his 1996 testimony.

Hale, a former municipal judge who pleaded guilty to Whitewater fraud charges, testified that President Clinton and business partner James B. McDougal urged him to make a fraudulent $300,000 loan with federal backing to shore up their Arkansas real estate deals in the 1980s. Hale ran an investment company at the time.

Clinton denied the charge under oath, and Starr was unable to prove the allegation.

Scaife and American Spectator acknowledged that they were financing extensive investigations into Clinton’s past activities, leading to accusations early last year by First Lady Hillary Rodham Clinton that “a vast right-wing conspiracy” was out to discredit the president.

Scaife gave American Spectator $2.4 million through the fall of 1997, $1.8 million of which was earmarked for obtaining information about the Clintons during their years in Arkansas, magazine officials said. But publisher Terry H. Eastland said last year that an audit produced no evidence that any money or other benefits went to Hale.

Supporters of the president noted that, since 1961, Scaife or his family foundation also had given $12.7 million to Pepperdine University in Malibu. Pepperdine offered Starr dual deanships, which Starr initially accepted, then turned down because of the length of his Whitewater investigation.

Shaheen, who conducted the Hale investigation without fee, is a retired Justice Department official who led the agency’s internal watchdog unit. He was chosen by both Starr and Atty. Gen. Janet Reno as an impartial investigator and had the use of FBI agents. Shaheen reported his findings to a panel of retired judges.

Details of Shaheen’s 168-page report were not disclosed. However, sources said that his principal finding was that American Spectator once paid about $8,000 to an attorney to represent Hale at a court appearance. But Hale never asked for the attorney and immediately dismissed him, Shaheen found.

The Associated Press reported in March 1998 that unnamed Clinton backers claimed Hale stayed rent-free in a fishing cabin, had the use of a car and received other assistance from conservative advocates while he was cooperating with Starr’s Whitewater investigation. But the official inquiry found little or nothing to support those allegations, sources said.

In a letter to Hale’s lawyer, Shaheen wrote he had concluded “that no prosecution be initiated” against Hale or anyone else. Shaheen added that “the conclusion has been accepted by the Office of Independent Counsel.”

Starr, who has disclosed that he has found no criminal wrongdoing by the president or his wife in connection with Whitewater transactions in Arkansas, is working hard to wrap up “loose ends” of which the Hale matter was one, a former associate said.