McDougal Defends Clinton Testimony

Breaking her 2 1/2-year silence on Whitewater, an emotional Susan McDougal finally answered questions Tuesday about a series of Byzantine land deals here in the 1980s, telling a jury that President Clinton had been truthful about his involvement.

As the 44-year-old McDougal took the witness stand in her own defense in the third week of her contempt trial, her lawyer wasted no time in asking her some of the questions posed to her by independent counsel Kenneth W. Starr’s prosecutors in a combative 1996 grand jury session.

McDougal refused to answer the questions before the grand jury--and as a result spent 18 months in prison and is being tried on criminal contempt and obstruction of justice charges. She has said that Starr’s office wanted her to lie to the grand jury to smear the Clintons. On Tuesday, she answered her own lawyer without hesitation.

The key question: Did Clinton testify truthfully in a deposition videotaped for McDougal’s 1996 trial on Whitewater-related charges?

“Nothing he said was untrue to me,” said McDougal, who was a business partner of Clinton and his wife, Hillary Rodham Clinton, in the failed Whitewater real estate development in the Ozarks.

After objections by the prosecution, McDougal was asked the same question a few minutes later and she again supported the president’s sworn assertions that he had no knowledge of any criminal conspiracy in Whitewater.

“I did not hear anything untruthful” in Clinton’s 1996 testimony, McDougal testified. “If I had, I would have said something then. I would not sit in a room where people were telling lies.”

Mark Geragos, McDougal’s Los Angeles attorney, will continue questioning her today, and then Starr’s prosecutors will begin their cross-examination.

Prosecutor W. Hickman Ewing Jr. said after court recessed that he found several of McDougal’s answers “very interesting,” adding that prosecutors would probe several discrepancies in her account.

Ewing stressed that McDougal’s new-found willingness to answer questions about Whitewater should not make up for her earlier intransigence.

“This is not a substitute for what would have happened in the grand jury,” he said.

The question before the McDougal jury, Ewing said, is a narrow one: “Did she on the certain dates . . . refuse to obey the court order” by failing to cooperate with a grand jury, first in 1996 and again in 1998?

Geragos said that McDougal found her testimony “cathartic.”

“Obviously she’s waited a long time to tell her story,” he said.

McDougal turned her chair and spoke directly to the jury for most of her more than three hours on the stand. She gave long, animated descriptions of her business dealings in Arkansas, and she wept numerous times when discussing her failed marriage to business partner James B. McDougal, a former Clinton friend who died in prison last year while serving time for conspiracy, fraud and other Whitewater-related crimes.

Although she acknowledged playing an active role in several controversial land deals, McDougal portrayed her former husband as the decision-maker.

Often, she said, she was simply following his instructions with little knowledge of what was actually happening--as in the case of a fraudulent $300,000 government-backed loan that she accepted and that led to her conviction on fraud and other charges. Prosecutors have sought to determine whether Clinton was involved in the loan.

McDougal testified Tuesday that she never discussed that loan with Clinton, nor did she have any “substantive” discussions with him about Lorance Heights, another controversial development owned by her and her late husband.

After the McDougal-owned Madison Guaranty Savings & Loan collapsed in the 1980s, costing taxpayers about $60 million, a bitter James McDougal believed the Clintons had abandoned him, Susan McDougal testified. And she suggested that the Whitewater-related allegations of financial impropriety were largely concocted by her ex-husband during the 1992 presidential campaign as a way of getting back at the Clintons.

She quoted her ex-husband as saying that an Arkansas lawyer and political opponent of Clinton had arranged to pay James McDougal for meeting with a New York Times reporter to help “derail” the Clinton campaign. The payment totaled five figures, Geragos said later. The newspaper published an investigative account in March 1992 that stirred interest in Whitewater, ultimately leading to the appointment of an independent counsel.

She said that she had wanted to tell what she knew about Whitewater but, after seeing herself and other witnesses bullied by prosecutors in Starr’s office, came to “distrust them unbelievably.”

In a 1995 meeting with officials from the independent counsel’s office and the FBI, the interrogators seemed interested in learning only what information she could provide against the Clintons, she testified. In exchange, they offered to “fix” her pending legal troubles, she testified.