September 5, 1996 in Nation/World

Susan Mcdougal Held In Contempt For Silence

Los Angeles Times

Susan McDougal, a former Whitewater investment partner of President Clinton’s and first lady Hillary Rodham Clinton’s, refused to testify before a federal grand jury Wednesday about the Clintons’ role in the celebrated case.

McDougal promptly was found in contempt of court and faces a sentence of 18 months. She already has been sentenced to two years in prison for her conviction earlier this summer in a Whitewater-related case.

Wednesday, McDougal said she was asked three questions in front of the grand jury before being ushered out for refusing to answer:

“Did you discuss your loan with David Hale with William Jefferson Clinton?” “Did you discuss Lorance Heights with William Jefferson Clinton?” “To your knowledge, did William Jefferson Clinton testify truthfully?”

Although in an interview broadcast nationally Wednesday night McDougal said she believes the Clintons have not lied about Whitewater, her refusal to answer the question about Clinton’s truthfulness is likely to be cited by his Republican critics as evidence that Democrats have been covering up details of the Whitewater saga. So far, however, Whitewater has not been an issue in the presidential campaign.

McDougal’s lawyer, Bobby McDaniel, said that his client is being pressured by Whitewater Independent Counsel Kenneth W. Starr to “lie for leniency.” She received the grand jury subpoena Aug. 20 - the day she was sentenced to two years in prison.

The president was a defense witness earlier this year at the trial of McDougal, her ex-husband, James B. McDougal, and then-Gov. of Arkansas Jim Guy Tucker. All were convicted in connection with a conspiracy to bilk two federally backed financial institutions.

James McDougal recently agreed to cooperate with Starr and, as a result, his sentencing has been delayed until November.

Both McDougals have said repeatedly over the last few years that they had no information to offer that would incriminate the Clintons. They also have expressed strong feelings of contempt for Starr, whom they have accused of conducting a politically inspired witch hunt.

The McDougals, who owned an Arkansas savings and loan until the mid-1980s, were joint investors with the Clintons in an Ozarks resort development known as Whitewater. Investigators have long suspected - but never proved - that Whitewater was intended by the McDougals as a way to compensate Clinton for political favors.

U.S. District Judge Susan Webber Wright, who on Tuesday refused McDougal’s request to quash the grand jury subpoena, found her in contempt of court shortly after her appearance before the grand jury. The judge decreed that she would begin her sentence for contempt next Monday, unless she decides to answer the questions.

Wright indicated that she might entertain a motion from McDougal’s lawyer to subtract the time she serves in prison for contempt from her two-year sentence for the Whitewater-related conviction. Another hearing is scheduled for Monday. McDougal was to begin serving the sentence for her Whitewater conviction on Sept. 30.

McDougal refused to testify before the grand jury even though Starr had assured that she would get immunity for her testimony if it was truthful. Despite these assurances, she said that she feared Starr still would prosecute her for perjury if she gave testimony that conflicted with other evidence.

McDougal, who played a minor role in the Whitewater saga, received a stiff sentence - second only to the 28-month prison term given to the alleged mastermind of the plot, David Hale, who was a government witness. She noted that others who, like Hale, agreed to cooperate were given less punishment.

“I have already received an excessive sentence because I exercised my right to remain silent and refused to cooperate with independent counsel,” she said. “I should not be punished a second time for continuing to exercise my constitutional rights.”

McDougal was convicted of misusing $300,000 that she had borrowed from a government-backed small business investment corporation owned by Hale. Part of the money was used to buy a tract of land that was held briefly by the Whitewater corporation.

Hale has claimed that he loaned the money to McDougal under pressure from her husband and Clinton, who was then governor of Arkansas. But Clinton has insisted that he knew nothing about the loan or the property.

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