April 2, 1996 in Nation/World

Ex-Banker Says Plan Hatched To Benefit Arkansas Politicians Proceeds Allegedly Let Firm Lend Money To Whitewater Figures

Associated Press
 

The prosecution’s chief witness testified Monday that he and two Whitewater defendants devised a scheme to use his investment company to enrich themselves and also benefit “some members of the political family” in Arkansas.

David Hale was a small-time investment banker who claims President Clinton pressured him to make an illegal $300,000 loan to his Whitewater business partners. Clinton has denied the claim, calling it a “bunch of bull.”

Hale’s allegations are central to the Whitewater trial. Gov. Jim Guy Tucker and James and Susan McDougal - Clinton’s former Whitewater partners - are charged with fraud and conspiracy in a 21-count indictment.

Hale testified that he, Tucker and McDougal hatched the scheme in October 1985 to use proceeds from a bogus $825,000 land deal to infuse $500,000 into Hale’s small business investment company. The money would increase Hale’s lending limit, enabling the firm to make loans for McDougal and Tucker.

Hale said McDougal told him that he and Tucker needed money.

“(McDougal) said, ‘We’re going to have to clean up some members of the political family,”’ Hale testified.

McDougal did not identify anyone by name, Hale said. However, he said he believed McDougal was referring to then-Gov. Bill Clinton “and maybe some of his aides, and some of Jim’s associates, and Jim Guy Tucker.”

Hale did not specify what “clean up” meant, and Deputy Independent Counsel W. Hickman Ewing refused to comment after court on use of the phrase.

Deputy Independent Counsel W. Hickman Ewing Jr. said Clinton was “peripherally involved.” He said after court that later testimony would show that Clinton “was at a meeting where some of these transactions were discussed.”

Under questioning from the defense, Hale acknowledged that McDougal was good friends with several well-connected political figures.

Bill Watt, who did legal work for Hale in the 1980s, testified last week that Hale told him Clinton was pressuring him to close the $825,000 transaction. Watt quoted Hale as saying in 1985: “I’ve been to a meeting … and Gov. Clinton wants to get it done. He’s got to help his friends.”

Robert Palmer, the appraiser on the land deal, said Watt told him then that it would be OK to file false figures on the appraisal because “this goes all the way to the top.”

At Hale’s sentencing last week, prosecutors said Hale broke a “conspiracy of silence” in the Whitewater investigation.

Defense attorneys said Hale’s time on the stand represents an important week in the month-old case. The charges against Tucker and the McDougals were based largely on Hale’s allegations.

© Copyright 1996 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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