First Lady Stars in McDougal Trial

Jurors in Susan McDougal’s contempt trial heard from a surprise witness Tuesday as First Lady Hillary Rodham Clinton testified in a videotaped deposition--never before shown publicly--that she and the president had virtually no active role in the failed Whitewater real estate deal.

“We had no involvement in the running of the business and didn’t know anything about what went on on a day-to-day basis,” the first lady testified in a deposition taped last April at the White House and played a few days later for a grand jury collecting evidence in independent counsel Kenneth W. Starr’s investigation of the Ozarks land development.

Starr’s prosecutors used the deposition to make the case that, if Hillary Clinton could answer questions under oath about Whitewater, McDougal also should be expected to do so. McDougal and her late husband were partners with the Clintons in the Whitewater development.

McDougal, who now lives in Redondo Beach, is on trial in federal court for contempt and obstruction of justice for refusing to answer questions about Whitewater dealings at two grand jury appearances. She has maintained that Starr’s prosecutors want her to lie.

Hillary Clinton Says She Wasn’t Involved

Although Starr’s deputies have said repeatedly that they are not seeking to put the Clintons on trial in the McDougal case, the first couple was once again the center of attention on the trial’s fourth day of testimony.

The videotape’s release could prove awkward for Hillary Clinton, whose possible run for the U.S. Senate in New York has been the subject of intense speculation in recent weeks.

Starr’s deputies fought successfully Tuesday to introduce the deposition into evidence, despite the objections of McDougal’s defense attorney, Mark Geragos, who said that it was being sprung on his client at the last minute.

After three days of listening to dry and often complicated evidence about years-old financial transactions, several jurors appeared to perk up when they learned that they would be watching the first lady’s grand jury testimony.

Prosecutors played 35 minutes of excerpts from the deposition as Hillary Clinton answered more than two dozen questions from deputy independent counsel W. Hickman Ewing Jr. about Whitewater transactions.

Starr himself was present for the deposition. The Clintons’ dogged pursuer opened the proceeding with a somewhat strained note of appreciation, telling Hillary Clinton that “it is a beautiful spring day on the outside and so we are all the more grateful to you” for agreeing to testify. After a few introductions, he turned the questioning over to Ewing, who advised the first lady that her statements could be used against her in any criminal proceeding.

Beginning in the 1970s, the Clintons and the McDougals were partners in the failed residential development project. Prosecutors believe that some improper funds, including a fraudulent, government-backed $300,000 loan that McDougal received, may have been funneled into the project and they have sought to find out what the Clintons knew of several key transactions.

James B. McDougal, Susan McDougal’s husband, died last year in prison.

Hillary Clinton’s tone on the videotape was polite, but she maintained that her knowledge of the project was minimal. She acknowledged that the Clintons and the McDougals were 50-50 partners in the project but said that James McDougal “ran the corporation.”

She “never spent any significant time at all looking at the books and records of Whitewater,” she said.

At one point, the first lady was questioned about a 1983 check for $5,081 from Susan McDougal to the savings and loan company that the McDougals operated. Asked whether she knew why McDougal would have written “Payoff Clinton” in the note section at the bottom of the check, Hillary Clinton said: “I have no information whatsoever.”

Nor, she said, did she know anything about a $27,600 cashier’s check made payable to Bill Clinton in 1982, which was apparently used to pay off part of the Whitewater debt. “I’m sorry, Mr. Ewing. I don’t know anything about this,” she testified.

Disagreement and Bickering

Outside the courthouse after the videotape was played, Ewing refused to comment on the substance of Hillary Clinton’s testimony or to say whether prosecutors have any reason to doubt the credibility of her account.

“We want everyone’s version,” Ewing said.

But Geragos said that the testimony added nothing of value to the case. Starr’s prosecutors “weren’t doing anything here but stalking the president and the first lady and they were using Mrs. McDougal to get to that.”

Hillary Clinton’s deposition was not the only fireworks for the day in the McDougal trial.

During one break, prosecutor Mark Barrett angrily confronted Geragos in the hallway, saying that he was “sick of” McDougal making comments during testimony that could be heard by jurors.

He was angered by an episode during which a witness was searching for words to describe his feeling toward the independent counsel’s office. “Scared,” McDougal said from her seat.

Geragos later acknowledged that his client had made the remark, but he said the prosecutors had also been whispering repeatedly during testimony. The judge admonished both sides not to let it happen again.