Reprinted from The Washington Times , 5am -- April 17, 1998

Susan McDougal called before grand jury again


By Jerry Seper
THE WASHINGTON TIMES


Convicted Whitewater felon Susan McDougal has been ordered to appear before a federal grand jury in Arkansas next week in what could be a prelude to the filing of new charges of criminal contempt and obstruction of justice against President Clinton's former business partner.
      McDougal, who served 18 months in prison on a contempt citation and has since begun a two-year term on her felony convictions in the first Whitewater trial, is scheduled to appear before the Little Rock, Ark., grand jury on Thursday.
      Lawyers and others close to the grand jury probe said prosecutors seem likely to try once again to compel her testimony on whether Mr. Clinton lied under oath in the first trial when he said he knew nothing about an illegal $300,000 loan McDougal received in 1986.
      In January, prosecutors asked McDougal to testify on videotape and away from a federal grand jury but told her she risked further prosecution if she rejected what they called a "quite extraordinary" offer.
      McDougal, a partner with the Clintons and her late husband, James, in Whitewater Development Corp., an Arkansas real estate venture, refused in September 1996 to testify before the Whitewater grand jury on whether Mr. Clinton knew about the loan. At the time, she accused prosecutors of trying to force her to falsely incriminate Mr. Clinton in the loan deal, for which she was convicted in 1996 in the first trial.
      In a Jan. 21 letter to McDougal, associate independent counsel Michael W. Emmick said that prosecutors believed her reasons for refusing to testify were "unwarranted" but that because of "the unique circumstances present here," he and another lawyer from independent counsel Kenneth W. Starr's staff, who was not involved in the McDougal prosecution, would handle the questioning.
      He also promised that she would be allowed to consult with her attorneys during questioning if she agreed to "answer any and all questions put to her relating to matters within our jurisdiction."
      Mr. Starr has denied that prosecutors wanted her to implicate the president, saying only they wanted her to tell the truth. He has described her pending testimony as essential to the Whitewater probe.
      James McDougal, who died March 8 while serving a three-year sentence on his conviction in the first trial, corroborated accusations by David L. Hale that he was pressured by Mr. Clinton for the loan. Mr. Hale, a former Little Rock municipal judge, owned the Small Business Administration-licensed lending agency that approved the loan.
      In his letter, Mr. Emmick said if Susan McDougal accepted his offer, Mr. Starr's office would agree "not to prosecute Ms. McDougal for criminal contempt, obstruction of justice or any crimes related to her refusal to comply with the court's order" to testify in the case. He also said prosecutors would promise "not to make the final prosecutorial decision on any perjury charge" and they would "refer any such decision to an independent third-party prosecutor."
      McDougal rejected the offer outright. She is now serving her two-year federal sentence and awaiting trial on embezzlement charges in Los Angeles involving symphony conductor Zubin Mehta.
      In 1994, she offered to cooperate with Whitewater prosecutors in exchange for total immunity. The all-or-nothing proposal was rejected by Mr. Starr, who refused at the time to drop pending felony charges against the former co-owner of Madison Guaranty Savings and Loan Association.
      Facing an eight-count felony indictment on fraud and conspiracy charges, McDougal offered in November 1994 to testify before the grand jury on what she knew about Madison and Whitewater. Prosecutors then -- as now -- were seeking to question her about Mr. Clinton's role in obtaining the $300,000 loan from Mr. Hale. Part of the proceeds from that loan, which was never repaid, were used by Whitewater to buy property near Little Rock.
      U.S. District Judge Susan Webber Wright found McDougal in contempt on Sept. 4, 1996, after she refused to answer questions before the grand jury. The judge said at the time that McDougal's right to remain silent "does not extend to the grand jury," adding that she was seeking not to punish McDougal, but to compel her to testify in the interest of justice. She told McDougal she was "obligated to cooperate with a lawful inquiry."
      The grand jury had sought information on whether Mr. Clinton knew about the loan or the property it helped buy for Whitewater and whether he testified truthfully about it during the first Whitewater trial.
      Associate independent counsel W. Ray Jahn had sought the contempt citation, saying McDougal violated an order to testify before the grand jury. He described her as a "recalcitrant witness."
      McDougal was convicted of misusing the $300,000 loan she obtained from Capital-Management Services Inc., owned by Mr. Hale. About $25,000 of the loan was used to buy land known as Lorance Heights for the Whitewater project.

Copyright 1998 News World Communications, Inc.

Reprinted with permission of
The Washington Times.

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