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Whitewater Prosecutors Raise the Pressure: Mrs. McDougal Held in Contempt

September 5, 1996

LITTLE ROCK, Ark. _ President Clinton’s former business partner has until Monday to tell a grand jury whether the president lied under oath or go to jail.

Susan McDougal, held in contempt Wednesday, said she refused ``as a matter of principle″ to answer Whitewater prosecutors’ questions that took dead aim at Clinton.

After prosecutor W. Ray Jahn called her a ``recalcitrant witness,″ U.S. District Judge Susan Webber Wright ordered Mrs. McDougal held at a local jail until she agrees to testify or until the grand jury disbands, but no longer than 18 months.

``Some of her arguments are interesting but they’re not the law,″ Wright said before declaring Mrs. McDougal in contempt.

Mrs. McDougal and her lawyer, Bobby McDaniel, renewed charges that Whitewater independent counsel Kenneth Starr had targeted her as a way to bring Clinton down.

``Susan has stood up to them and she will continue to stand up to them,″ McDaniel said. ``The independent counsel has an agenda. They don’t care about Susan McDougal being in jail. They want Bill and Hillary Clinton.″

Mrs. McDougal said a Whitewater prosecutor had asked her whether Clinton knew anything about a fraudulent $300,000 loan, some of which went toward the purchase of land for the Whitewater venture.

A prosecutor also asked, she said, ``To your knowledge, did William Jefferson Clinton testify truthfully before your trial?″

In videotaped testimony played to jurors May 9, Clinton said he knew nothing about the loan or the land deal.

In a statement Mrs. McDougal read at her contempt hearing, she said she didn’t want to testify because she could be charged with perjury if her truthful testimony was inconsistent with that of other witnesses or conflicted with prosecutors’ perception of the truth.

Also, she argued, she should not be compelled to answer the questions of Whitewater prosecutors in a proceeding closed even to her lawyers. Grand jury proceedings are routinely closed to defense attorneys.

The judge gave her until Monday to work with her lawyers on an appeal. Wright will decide whether any jail time imposed for contempt will be added to her prison term or served at the same time.

Mrs. McDougal and her former husband, Jim, were partners with Clinton and his wife in the Whitewater development project from 1978 until December 1992, shortly before Clinton was sworn in as president in January 1993.

The McDougals, along with former Gov. Jim Guy Tucker, were convicted May 28 on bank fraud and related charges.

Mrs. McDougal, 41, was sentenced to two years in prison in connection with a $300,000 loan she received from David Hale, who once accused Clinton of pressuring him to make the loan. The McDougals used $25,000 of the loan as a down payment on land bought for the Whitewater project.

Also on Wednesday, Starr issued a statement that his office is not using a tax investigation of Mrs. McDougal by the U.S. Attorney’s office in Los Angeles to encourage her to cooperate. That probe is independent of Starr’s investigation, the statement said.

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