April 23, 1997 in Nation/World

Possible Whitewater Cover-Up Cited Starr Says He Has Evidence Of ‘Concealment And Destruction Of Evidence’; Grand Jury Term Extended

Los Angeles Times
 

Independent counsel Kenneth W. Starr said Tuesday he has found “extensive evidence” of a possible cover-up in the case involving President and Hillary Clinton and asked for an extension of the term of the Whitewater grand jury.

Starr, whose request was immediately granted by U.S. District Judge Susan Webber Wright, said the grand jury has heard evidence of “concealment and destruction of evidence and intimidation of witnesses.”

Although Starr did not detail the evidence, the grand jury is known to be investigating allegations that Clinton lied about his role in the Whitewater case, that White House officials may have arranged “hush money” for former Associate Attorney General Webster L. Hubbell and that someone close to the president concealed records of the legal work that first lady Hillary Rodham Clinton did for Whitewater conspirator James B. McDougal’s savings and loan.

In addition, sources said Starr’s staff is investigating a previously undisclosed allegation that Sam Huer, the Little Rock, Ark., lawyer representing McDougal, may have conspired with Clinton aides and friends to pressure his client to protect the president.

Huer, who could not be reached for comment, declared in federal court in Little Rock last week that he had played no part in McDougal’s decision last August to cooperate with Starr’s investigation.

McDougal previously had supported Clinton’s testimony. But while cooperating with Starr, McDougal said he told the grand jury that the president lied under oath last year when he insisted that he played no role in arranging an illegal $300,000 loan for McDougal’s ex-wife, Susan.

The $300,000 loan initially caught the attention of investigators because some of the money passed through the account of an Ozark land venture, known as Whitewater, owned by the McDougals and the Clintons. But Starr has never found any evidence that Clinton himself benefited from the loan.

In exchange for his testimony in the case, McDougal last week received a reduced, three-year jail term for his conviction for conspiracy and fraud. He said that he decided to cooperate with Starr because he “got sick and tired of lying” for Clinton.

Starr’s request for a six-month extension of the current grand jury session to Nov. 7 appears to contradict the prevailing view among Whitewater witnesses that the investigation is winding down. Starr himself created that impression when he announced earlier this year that he had accepted a job at Pepperdine University in California.

But sources close to the inquiry said Starr has not yet decided whether to ask the grand jury to bring indictments against anyone on charges of obstruction of justice. In fact, no indictments have been brought in the Whitewater case in more than a year.

Both White House Chief of Staff Erskin Bowles and White House adviser Thomas “Mack” McLarty have testified before the grand jury in the last week about their efforts to assist Hubbell.

Hubbell received hundreds of thousands of dollars of payments from the president’s supporters - including the Riady family of Indonesia. Investigators believe that these payments were intended to silence Hubbell.

Under a plea bargain with Starr, Hubbell later pleaded guilty to charges of defrauding his law firm of nearly $500,000. But he did not to provide Starr with any information against Clinton.

The current Whitewater grand jury, which has been meeting since May 7, is the third panel to hear evidence since the investigation began more than three years ago. Starr’s petition said that an extension is necessary for the jury to “complete its consideration of the information and testimony provided by Jim McDougal.”

Starr added: “This grand jury has also heard extensive evidence of possible obstruction of the administration of justice relating to the matters within the independent counsel’s jurisdiction.”

McDougal has said he told the grand jury that then-Gov. Clinton attended a 1986 meeting at a land office trailer south of Little Rock in which they conspired with a third person, David Hale, to make an illegal loan of $300,000 to Susan McDougal.

Sources said James McDougal testified that Clinton was having an affair with his wife at the time and he encouraged Hale to make the loan from his government-financed small business investment corporation, Capital Management Corp.

McDougal and his wife were estranged at the time.

The $300,000 loan was one element in a massive conspiracy and fraud case that Starr won last year against McDougal, his ex-wife and former Arkansas Gov. Jim Guy Tucker. A jury found that Susan McDougal lied about the purpose of the loan, which was never repaid.

Starr told the judge he is still trying to obtain grand jury testimony from Susan McDougal, who is currently serving a two-year jail sentence on contempt of court charges for refusing to answer questions. Sources said that Starr hopes she will corroborate her ex-husband’s testimony about Clinton’s role in arranging the loan.

James McDougal also has provided Starr with information suggesting that Huer, acting at the request of unnamed White House officials and friends of the president, tried to stop him from cooperating with the independent counsel, according to knowledgeable sources close to the investigation.


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