[EDITOR'S NOTE: On April 28, 1996, President Clinton testified behind closed doors for 4 hours as a defense witness in the trial of two of his partners in the failed Whitewater real estate deal.
Clinton, who is not accused of any wrongdoing in this proceeding, recorded his testimony on videotape at the White House for viewing later in the trial of James and Susan McDougal, who are charged with bank fraud and conspiracy.
The Clintons entered into a partnership with the McDougals in the Whitewater real estate venture in 1978. Although their investment lost money, questions have arisen about whether funds for the project were siphoned from the Madison Savings and Loan Association, which was also a McDougal holding.
The following is a transcript of the deposition.]
Whitewater Trial - Pres. Clinton Video Deposition Transcript
The transcript from President Clinton's videotaped testimony at
the fraud and conspiracy trial of James and Susan McDougal and Gov.
Jim Guy Tucker in Little Rock, Ark.:
James McDougal attorney Sam Heuer: Please state your name.
A: Bill Clinton.
Q: What is your occupation at this time?
A: President of the United States.
Q: President Clinton, please tell the jury about your career
leading up to the point in time that you became President of the
United States.
A: Well, I graduated from law school in 1973 and I went home to
Arkansas, and I found a position teaching at the university. And I
was there from 1973 until I assumed office as Attorney General in
1977, January.
During that time, I ran for Congress and lost, I married my
wife, and then made a successful race for attorney general. In
1978, I was elected governor; in 1980, our daughter was born and I
was defeated for governor. And I practiced law for a time, and then
in 1982, I was re-elected governor. I served as governor from 1982
until I was elected president in 1992.
Shortly after I was elected president, I resigned the office and
the lieutenant governor, now Governor Tucker, became governor. And
you know the rest.
Q: Mr. President, do you know defendant James McDougal?
A: I do.
Q: Please tell the jury when and how you got to know Mr.
McDougall
A: We met, oh, about 30 years ago when he was running Senator
Fulbright's office in Little Rock and I was a student at Georgetown
working for Senator Fulbright part-time on the staff of the Senate
Foreign Relations Committee here in Washington.
Q: Was there ever a time when Mr. McDougal worked for you while
you served as governor of the state of Arkansas?
A: Yes, there was. In my first term, he was my economic
development liaison. He had a lot of important responsibilities.
worked with the Arkansas Industrial Development Commission, he
worked with other agencies that dealt with economic matters. He was
kind of a troubleshooter on projects designed to advance our
economy and get more jobs for our people. And he worked for - not
the entire first term, not the whole two years, but for most of the
two-year period between '79 and '80 he was working in the
Governor's office.
Q: Have you ever been engaged in a business relationship with
Mr. McDougal?
A: Yes. We had two.
Q: Would you please tell the jury about those?
A: In 1977, Mr. McDougal, who was - at that time had been, I
think, for some time, engaged in various real estate development
projects, asked me if I wanted to invest a small amount of money in
one in Pulaski County. And I did, I invested, as I recall, about
$2,800 for about a year and a half, and I liquidated the investment
and made about $5,000. So I had a profit of $2,100, it was a nice
profit.
Then after that, Mr. McDougal invited Hillary and I to invest
with Jim and Susan in 230 acres of land in Marion County which was
unimproved land near the White River, and is now called Whitewater
land. And we did that. And we invested in that in 1978, and I was
in that investment until 1992.
Q: Were you aware of Mr. McDougal's purchase and ownership of a
savings and loan in Little Rock, Arkansas in the 1980s?
A: Yes. I became aware at some point that he bought a savings
and loan, I think it was maybe in Woodruff County, and then got
permission to move it down to Little Rock in the early 1980s.
Q: Mr. President, did you ever have any loan relationship with
Mr. McDougal's savings and loan known as Madison Guaranty
concerning your investments?
A: No, sir, I did not, I never borrowed any money from Madison
Guaranty.
Q: Did you ever cause anybody to borrow any money for your
benefit, Mr. President?
A: No, I did not.
Q: Did you ever have any personal loan with Madison Guaranty at
any time, Mr. President?
A: No, sir, I didn't.
Q: Did you ever campaign with or for Jim McDougal?
A: I did once. Mr. McDougal had, as I said, worked for Senator
Fulbright, that's what he was doing when I met him 30 years ago,
and had supported others who ran, but in 1982, he, himself, ran for
Congress in the third congressional district, the same district
where I had run eight years earlier in 1974. And it was also in
that year that, as I said previously, I ran for governor. Having
been defeated in 1980, I was trying to get back in office. He won
the Democratic primary, and after a very difficult battle, so did
I.
And so, in the general election, from time to time we would be
together when the Democratic Party would sponsor rallies in that
part of the state, I would be there, he would be there, we would be
campaigning together, we would be endorsing each other, and it was
an interesting campaign. But I remember that, I think - I think
that's the only time.
Q: Are you familiar with a former judge of Arkansas who now
lives in Conway called Jim Johnson?
A: Yes, I am.
Q: During the time that you served as governor of Arkansas, Mr.
President, was Mr. Johnson a supporter of yours?
A: Oh, no.
Q: Mr. President, please characterize your relationship with
Justice Jim Johnson while you were in politics in the state of
Arkansas, sir.
A: I think a fair characterization would be that it was one of
opposition, both his opposition to me and my opposition to him. The
first campaign I worked in, I supported a candidate for governor
who was running against Justice Johnson, that was 1966. In 1968,
Justice Johnson ran against Senator Fulbright, and I, along with
Mr. McDougal, worked against him then, in that we had severe
differences of opinion, and I vividly remember his characterization
of Senator Fulbright was soft on communism, for example, it was
that sort of emotional aspect to the campaign.
Then at some point in the 1980s, after I became governor,
Justice Jim Johnson became a Republican, and therefore, more
explicitly opposed to me. Now, if you would see him on the street,
he would be just as friendly as could be, you know, and you would
have a cordial conversation, but I was never under any illusions
that - he and I were basically polar opposites in terms of what we
thought was good for our state, good for our people, and good for
our future.
And then when I ran for president, he was exceedingly active
with some of the extremist groups that were stirring up negative
stories about me, my record as governor, and indeed trying to
create an impression of our state that was unfavorable. So, there
is almost an unbroken strand of opposition between me and Jim
Johnson that starts in 1966 and ends in 1992.
And I don't suppose it has ended, but at least that was the last
dramatic chapter in his vigorous involvement in the machine, that
sort of publicity machine against my candidacy for president in
1992.
Q: Has he continued to criticize you since you have obtained
the office of president of the United States?
A: I think he has, but to be honest, I haven't paid a lot
of attention to it.
Q: Okay. If you would, please, describe your relationship
with Jim McDougal in the 1980s.
A: Well, in the early '80s, I didn't see Jim much in the
first couple of years, because he didn't live in Little Rock.
But sometime after his race for Congress, which was 1982,
sometime after that, maybe 1983, he moved to Little Rock, he had
purchased the savings and loan, he had moved the S&L to Little
Rock, he set it up in downtown Little Rock, less than a mile
from the Governor's mansion. So, after he moved there and began
to get active in trying to rebuild that neighborhood and
establish relationships in the community, I would see him more
frequently.
Q: Are you familiar with a former municipal judge by the name
of David Hale?
A: Yes, I
am.
Q: Please tell the jury when you became acquainted with
him.
A: I think I met David Hale sometime in the mid-1970s, and I
believe it had something to do with the Jaycees. He had - at
some time in that period, he was the national president for the
Jaycees, he was from Arkansas. I was a member of the chapter at
Fayetteville, and as a candidate for office, I would, from time
to time, go to the conventions of the Jaycees. So, I believe I
met him at one of those, somehow in connection with his Jaycee
activities.
Q: Did you ever have a business relationship with Mr.
Hale, either personally or through his company, known as
Capital Management Services?
A: No.
Q: Did you ever receive any loan from Mr. Hale personally
or from his business known as Capital Management Services?
A: No, I
didn't.
Q: You said earlier that you ran for political office
in Arkansas in 1976, I believe; is that correct?
A: Yes, 1976, I was a candidate for attorney general. I won
the Democratic primary, and the only time in my life I had no
Republican opposition, so I was elected.
Q: Did you ever ask Mr. Hale at that time to serve as
your campaign manager?
A: No, I didn't do that. Now, let me say, Mr. Heuer, to make
a full disclosure, if, in fact, I saw David Hale in 1976, I knew
that he was an active Jaycee, I'm certain that I asked him for
his support if I saw him. I asked every person I saw in the
first half of 1976 to support me and do whatever they could for
me. So, I'm certain - I'm sure if I did see him, I asked him to
help me, but I didn't ask him to be my campaign manager.
Q: Was your opponent George Jernigan at that
time?
A: Yes, George Jernigan was one of my opponents. George
Jernigan and Clarence Cash were my opponents.
Q: Okay. In late '85 or 1986, were you aware of any plans that
Mr. Hale had to increase a capital base in his business known
as Capital Management Services?
A: No, I wasn't.
Q: Are you familiar with an office that Jim McDougal
established sometime in 1986 in the south part of Pulaski County
on property that was commonly referred to as Castle Grande
Estates?
A: I know Mr. McDougal in 1986 had an office on 145th Street
Q: That's the same.
A: - at south Pulaski County. I don't know if that's the
same place, but I know he had an office out there.
Q: Did you ever visit him on 145th Street?
A: Yes, I did, one time.
Q: And tell me, you were known in Little Rock to enjoy
jogging; is that correct?
A: I did, I did then, I do now.
Q: Tell the jury if you've ever jogged from the mansion to
Mr. McDougal's office on 145th Street at any time.
A: No, sir, I didn't do that. In fact, I couldn't have
done that.
Q: Okay. When you visited Mr. McDougal at his office on
this singular occasion, were you wearing jogglng shoes?
A: No. I was dressed up, I had a shirt and tie on, coat and
tie. I remember the day quite well, because I was going to a
Siemens-Allison plant, it is a big German plant, they make
electrical motors in Arkansas, and they had announced an
expansion of the plant. They were going to hire about 200 more
people, as I recall, and they were good jobs, and we needed
them, and I had worked hard on that, and I was looking forward
to the day. And I had never been out that way before. I thought
I had been on every road in the state, but to the best of my
knowledge, I had never been out that way before.
And Mr. McDougal's office was in a trailer, as I recall, on
the way out there. And I stopped there for a few minutes,
either going to this event or coming from this event, but I
don't remember, to be honest, whether I was going to or coming
from, I just know I stopped there.
Q: Do you remember what date that was?
A: I have refreshed my memory by resorting to my own
records, and I know now it was in June of 1986.
Q: Okay. What was the weather like, if you
recall?
A: Well, as I recall, it was warm. It normally is in Arkansas
in June, and I remember it was a sunny day, because we - I
remember that from the Siemens-Allison event.
Q: Was anyone with you at that time?
A: I believe Bob Nash was with me, because he was my
principal economic development aide, and then the trooper who
was assigned to duty that day was driving us.
Q: Did you have any contact in any shape, form, or fashion
with David Hale at that visit to
A: No, I didn't. He wasn't there.
Q: All right. Were you ever present in Mr. McDougal's office
on 145th Street when a discussion occurred about financial
assistance from David Hale or his Capital Management Services
Company involving any other business that you or Mr. McDougal
may have had?
A: No, sir, never.
Q: Were you ever present at any time for any meeting between
Jim McDougal and David Hale?
A: Never, I never was present at any
meeting.
Q: Were you ever present when there was any discussion
of getting any kind of loan from David Hale or his SBIC?
A: No.
Q: Did you ever make a statement that your name could not
appear on any loan documents or financial documents related to
any type of loan from David Hale or his SBIC?
A: Absolutely not.
Q: Did you ever get assurance from Jim McDougal that your
name would be secreted from any loan documents pertaining to
any loan from David Hale or his SBIC?
A: No, we never had any conversation about it at all.
Q: Did you ever tell David Hale that you had property in
Marion County, Arkansas, that you could use as collateral or
security for a loan from him?
A: I did not do that,
no.
Q: Did you ever ask David Hale to make you a
loan?
A: No.
Q: Did you ever ask David Hale to make Jim McDougal a
loan?
A: No.
Q: Did you ever ask David Hale to make Susan McDougal a
loan?
A: No, I didn't.
Q: Did you ever ask David Hale to make Jim Guy Tucker a
loan?
A: No.
Q: Did you ever, in any shape, form or fashion, put any
pressure on David Hale for the purpose of obtaining a loan or
for the purpose of causing him to make loans through his SBIC?
A: I did not put any pressure on David Hale.
Q: Do you have any idea what he is talking about in regard
to these loans that he has come up with?
A: No, sir. I tried to keep - he has told two or three
different versions of this, and I've tried to keep up with these
different stories, but all I know is that any suggestion that I
tried to get any money from him or I tried to keep that a secret
or I put any pressure on him, these things are simply not true,
they didn't happen.
Q: In late 1985 or early 1986, were you aware or made known
of any purported agreement whereby Madison Guaranty Savings and
Loan would advance money to Mr. Hale or his company in some
shape, form, or fashion as agreed to between Mr. Hale and Jim
McDougal whereby Mr. Hale would then make loans to various
people?
A: That was a long question, Mr. Heuer.
Q: I understand.
A: It has got a short answer. No, I didn't know anything
about Mr. Hale's financial business.
Q: And the same question for Susan McDougal?
A: No, I did not.
Q: Or Jim Guy Tucker?
A: No, I did not.
Q: Did you ever have any conversation with Jim McDougal
wherein you were led to believe that you and Mr. McDougal could
obtain financing or money from David Hale at any time?
A: No, Jim McDougal never talked to me about anything like
that.
Q: Did you ever have any meetings with Jim McDougal at
the governor's mansion in January of 1986?
A: We did have a meeting in January of 1986.
Q: And what was the topic of that meeting?
A: Well, it was more than 10 years ago, and I have had a lot
of meetings. But my memory is that Jim wanted to talk to me
about his concern that the state Health Department was not
treating him fairly at one of his developments; not the
Whitewater Development, he had another land operation. And as I
recall, the area being developed was not connected to a
municipal sewer system, so that in order to sell these lots and
put houses on them, they had to have septic tanks there, and
they had to get a permit.
And I have a clear memory that he believed that the people
the Health Department had assigned to look into this were not
giving him fair treatment, and in fact, one of them was actively
trying to undermine his attempt to sell this property to others.
And he was upset about it, and he actually gave me a memorandum
about it, you know, just outlining one or two items, and he
asked me to look into it. And I did, I subsequently arranged for
him to have a meeting about it.
Q: In that meeting, Mr. President, did there ever come a
point where a discussion was had with you and Mr. McDougal
about any plans involving David Hale providing financing in any
shape, form, or fashion?
A: No, sir, it didn't - we didn't discuss that.
MR. HEWER: Your Honor, I would pass the witness at this
time.
THE COURT: Mr. Collins or Mr. Brown?
MR. COLLINS: Mr. Brown, Your Honor.
MR. BROWN: Thank you, Your Honor. If the Court pleases,
ladies and gentlemen of the jury, and Mr. President.
THE WITNESS: Mr. Brown.
EXAMINATION ON BEHALF OF GOV. JIM GUY TUCKER BY MR.
BROWN:
Q: I will try to be as brief as I can and as precise as I can
in asking you these questions. If I am unclear, please ask me to
repeat the question.
Mr. President, do you know Jim Guy Tucker?
A: I do.
Q: And when did you first meet Jim Guy Tucker, Governor
Tucker?
A: I believe I met the governor almost 30 years ago here in
Washington. I believe the first time I ever met him was in
Senator Fulbright's office in the late '60s, and if my memory is
correct, I believe that he had finished Harvard and was on his
way to Vietnam as a war correspondent, or had just come back
from Vietnam. And of course, after that, he went home to
Arkansas, and then after I finished law school, I did, so I have
known him ever since then. But I believe that's the first time I
met him.
Q: All right. Can you describe your relationship with
Governor Tucker over the years?
A: Well, it has changed a little from time to time.
Q: All right. I'll get you to tell us about that?
A: When I - first of all, I was very impressed with him when I
first met him, and I liked him. But then he went home to Arkansas
and I went - I went away, I lived in England for a couple of years
and I went to law school. But while I was in law school, he was
elected to prosecutor for Pulaski County. And then when I came home
and made my race for Congress in 1974, that was the same year Mr.
Tucker ran for attorney general.
After he was elected attorney general and I was defeated for
Congress and went back to teaching in the Arkansas Law School, he
asked me to prepare for him an anti-trust brief on an issue
involving the banking and interest rates in Arkansas that he wanted
to file on behalf of our state before the U.S. Supreme Court. I
prepared that brief, and in the course of doing it, had a lot more
contact with him, and we became better friends.
In 1975, late '75, when Hillary and I were married, we had a
private wedding ceremony, but we had a larger party that night, and
I invited Jim Guy to the party and I remember he flew up there to
the party. Then in 1976, there was an opening for Congress in
Little Rock, he ran for that job and got elected, and I ran for his
job, I became attorney general. And again, we had a good
relationship.
And in 1978, when he ran for the United States Senate after the
death of Senator McClellan, along with Senator Pryor and
Congressman Thornton, I ran for the governorship, and I was elected
governor. He lost the Senate race, and he basically devoted himself
after that, nearly as I could tell, to his own business interests
and his law practice. So, I didn't see him so much then, but we
were still friendly.
Then in 1982, after I was defeated for governor in 1980, I ran
for re-election in '82 in a very crowded Democratic primary field
which included Governor Tucker. So, we ran against each other for
the first and, thank goodness, the only time in our careers. It was
a very difficult, very heated race, and it left some hard feelings.
I was lucky enough to win it. But we were sort of estranged after
that.
Although I always respected the way he handled it, he continued
to support the Democratic Party, he continued to stand up for the
things that I believed in, and from time to time, he even made
contributions to my campaign. But we weren't really close. It got a
little better as time went on, you know, time often heals some of
those wounds, it got a little better.
Q: I understand.
A: Then in 1990, there was another brief period of tension,
because Governor Tucker was considering running for governor and I
was considering running for re-election. As it turned out, I ran
for re-election, he ran for lieutenant governor, and we began to
serve together. In my view, he had a hard job, because when I
started running for president, under the Arkansas constitution, he
is the governor, the lieutenant governor is the governor with all
the powers of the office. So, I have had a cordial relationship
with him since then.
Q: Now, Mr. President, understanding your relationship
historically with Governor Tucker, particularly as it related to
the political aspects of it, have you ever had any business
relationships with Governor Tucker?
A: No, Mr. Brown, I never have.
Q: Now, let me focus, if you will, in the year 1985 and 1986.
Were you ever aware that David Hale, in fact, had a company called
Capital Management Systems? Were you ever made aware of that,
Capital Management System -
A: I don't know.
MR. HEWER: Services.
BY MR. BROWN:
Q: Services, excuse me, I'm sorry, Services.
A: I don't know. My guess is that I did not know that he had a
company by that exact name.
Q: All right.
A: I knew that David - I want to make a full disclosure
here.
Q: Okay.
A: I believe I knew that David Hale had a business of some
kind, or was in business, as well as being a municipal judge,
but I don't believe I knew that was the name of his company or
what that company was, exactly.
Q: Well, apparently I had some problems repeating the name
of that company, too. But it is Capital Management Services.
Let me ask you this question: Did you ever request David Hale
or any of his companies to make a loan to or for the benefit
of Governor Tucker, to the best of your knowledge?
A: I did not.
Q: Are you aware of whether or not there was ever any
agreement of any kind involving Governor Tucker, David Hale and
Jim McDougal which concerned the making of loans for the mutual
benefit of these persons or other persons?
A: If there ever was such an agreement, I had no awareness
of it.
Q: Are you aware of whether or not there was ever any
agreement of any kind involving Governor Tucker and David Hale
through any of his companies which had the intent of increasing
the capital of David Hale's small business investment company or
any company that he might have been associated with?
A: If there was an agreement like that, I didn't know
anything about it.
Q: Did Governor Tucker ever ask you to do anything at any
time to help him obtain loans from David Hale or any of his
companies?
A: No, sir, he did not ever ask for that kind of help.
Q: Did he ever ask you to do anything at any time to help
obtain loans for any of Governor Tucker's companies?
A: No.
Q: All right. And I guess this question has been asked,
but since we represent different individuals, I need to ask
you this question as it relates to Governor Tucker.
Q: Did you ever pressure David Hale to do anything at any time
to benefit - or for the benefit of Governor Jim Guy Tucker?
A: I did not.
Q: In late 1985 and early 1986, were you aware of whether or not
there was ever any agreement involving Governor Tucker and David
Hale and Jim McDougal involving Madison Guaranty loans in exchange
for loans from David Hale's company, CMS, that we have referred to?
A: I was aware of no such agreement. I did not -
Q: Did you ever have -- excuse me.
A: I want to make sure I made myself clear.
Q: All right.
A: I was not aware of that agreement if, in fact, it existed. If
there was an agreement, I knew nothing about it.
Q: Thank you, Mr. President. Mr. President, did you ever have
any conversation with Governor Tucker, in which he informed you
that he would be arranging a loan through Madison Guaranty Savings
and Loan which would enable David Hale to make loans to various
other people?
A: No, sir, I never did.
MR. BROWN: Mr. President, I have no further questions.
THE WITNESS: Thank you.
THE COURT: Mr. McDaniel?
MR. McDANIEL: Yes, Your Honor.
THE COURT: Do you need a break?
MR. McDANIEL: I'm not going to be very long, Your Honor. At your
will, we can either proceed or at the conclusion of my questioning,
I will defer.
THE COURT: All right. Why don't you proceed?
MR. McDANIEL: Thank you, Your Honor.
EXAMINATION ON BEHALF OF SUSAN McDOUGAL BY MR. McDANIEL:
Q: Good afternoon, Mr. President.
A: Good afternoon, Mr. McDaniel.
Q: We have been introduced, and I'm Bobby McDaniel, and along
with Jennifer Horan, the federal public defender, represent Susan
McDougall And in that regard, I would like to ask you, do you know
Susan?
A: I do.
Q: Can you tell us, sir, when and how did you meet Susan?
A: I met Susan through her relationship with Jim, I met them
before they married, and if my memory serves me right, I think he
taught a course at Ouachita University in Arkadelphia, and I
believe she was a student there, I think that's how they met. But
anyway, we met, therefore, it would have been somewhere either in
the late '60s or the early '70s, some time in that area.
Q: All right, sir. To get right to the point, Mr. President -
A: And let me -
Q: All right, sir.
A: Also, they invited me to their wedding, I remember that, it
was outside out in west Little Rock some place, or west of Little
Rock some place, and I remember being there.
Q: All right, sir. And as I say, to get right to the point, Mr.
President, did vou ever request David Hale to make a loan to
Susan McDougal?
A: No, sir, I did not.
Q: Mr. President, did you ever in any way try to pressure
David Hale directly or indirectly, to make a loan to Susan
McDougal?
A: I did not pressure David Hale to do that.
Q: All right, sir. And I want to focus for a minute on a
time frame late 1985, early 1986, and again, we represent
separate defendants, and it may be cumulative, but bear with
me, I will be brief. Were you aware of any alleged agreement
whereby - involving Susan McDougal and David Hale, involving
loans that would be made with Madison Guaranty in exchange for
loans being made for David Hale's company? Did you have any
knowledge of any such agreement, if it existed?
A: If it did exist, I didn't know anything about it.
Q: Mr. President, likewise, in reference to that same
time frame, early '85 - late '85, early '86, were you aware
of any alleged agreement involving Jim Guy Tucker, Jim
McDougal, David Hale, or Susan McDougal, involving Madison
Guaranty loans in exchange for loans from David Hale's
company?
A: No, sir.
Q: Were you aware in 1986 that on April 3rd, 1986 David
Hale's small business investment company, Capital Management
Services, made a $300,000 loan to Susan McDougal doing
business as Master Marketing? Were you aware of that in 1986?
A: No, Mr. McDaniel, I was not.
Q: Mr. President, did you ever discuss a $300,000 loan to
Susan McDougal with David Hale in any way?
A: I did not.
Q: Mr. President, did you urge David Hale to make any such
loan?
A: No.
Q: Did you ever discuss a $300,000 loan to Susan McDougal
from David Hale with Jim McDougal?
A: No.
Q: Did you ever discuss a $300,000 loan to Susan McDougal
from David Hale with Susan McDougal?
A: I did not.
Q: Did you receive any of the proceeds from a $300,000 loan
made to Susan McDougal by David Hale's company?
A: I did not receive any proceeds, sir.
Q: When, if you know, did you first become aware that Susan
McDougal did receive a $300,000 loan from David Hale's company,
if you know?
A: I believe it was when it broke in the press, when there
were reports in the press, whenever that was, when was it, '92,
'93, whenever.
Q: Okay.
Q: But I didn't know anything about it before then.
Q: Mr. President, in 1986, were you aware that Jim and Susan
McDougal were buying land in south Pulaski County from
International Paper Realty Company for a project, real estate
development project, later to be known as Lorance Heights? Were you
aware of that in 1986?
A: No, sir. The only thing I knew about was what I testified, I
stopped in on 145th Street at Mr. McDougal's office, in a suit, it
is too far to jog, and that's all I know. I don't know where they
got that property, I didn't know if they had any other property, I
don't know where they got that.
Q: All right, sir. And were you aware in 1986, for a few months'
period of time during that year, that Lorance Heights property was
held in the name of Whitewater Development Company? Were you aware
of that in 1986?
A: No, sir. In 1986, I did not know that.
Q: Were you aware, also, in 1986 that later in that year the
Lorance Heights land was transferred out of Whitewater Development
Company into another McDougal company? Were you aware of that, its
going on?
A: No, sir. Since I didn't know it was ever in there in the
first place, when it left, I was not aware of that, either.
Q: All right, sir. And did you know in 1986 how the McDougals
financed the purchase of the land later known as Lorance Heights?
A: No, sir, I did not.
Q: Did you know in 1986 where the McDougals got the funds for
the down payment for this land from International Paper?
A: No.
Q: Were you aware that in the late 1980s there was litigation
involving the McDougals and International Paper Company whereby
International Paper eventually took back this land?
A: No, sir.
Q: When did you -
A: I don't remember knowing about that, either, in the 1980s. I
don't believe I knew anything about that.
Q: When did you first find out, if you know, that Whitewater
Development Company briefly held title to this land known as
Lorance Heights?
A: When that information appeared in the press, whenever that
was. It was either in late - in '92 or '93, sometime in that time
frame, that information appeared in public, and that's how I became
aware of it.
MR. McDANIEL: Your Honor, as has previously occurred, and to Mr.
President a thank you. I have no further questions.
THE COURT: All right, Mr. Jahn, you might proceed with your
cross examination.
EXAMINATION ON BEHALF OF THE PLAINTIFF BY MR. JAHN:
Q: Mr. President, during the course of your direct examination,
sir, you made a reference to different versions of David Hale's
accounts. Can you tell us, sir, what is your source of information
concerning different versions of David Hale's accounts?
A: Well, just from press accounts and from reports that my
counsel have given me.
Q: Okay. Are you aware, sir, of what he testified to?
A: I believe he testified -
Q: I'm not asking you, sir, what he said. I'm saying, has anyone
related to you a version of what his testimony was under oath?
A: I read the press accounts of it.
Q: Okay. You read how - to what extent, sir, were they
quotations, were they direct quotations?
A: Well, I read - I don't remember, but I read the press
accounts, and of course, my counsel has briefed me. They said that
under oath he said that I was in jogging shorts in the cold weather
on 145th Street.
Q: Okay.
A: And some other things.
Q: So, you did receive, then, direct information concerning what
it was that Mr. Hale had apparently testified to under oath; is
that correct?
Q: You indicated, sir, that your counsel provided you
information concerning how Mr. Hale had testified. I believe you
indicated there was something along the line of wearing jogging
shorts while you were at the 145th Street. What other information
did you receive, not from the newspapers, but what other
information did you receive concerning the subject matter and the
content of Mr. Hale's testimony?
A: None, sir. I mean, my impression is that all of us were
talking about what we read in the paper.
Q: Were you aware, sir, or are you aware, sir, that the law firm
that was formerly - Mr. Lindsey was formerly associated with was
buying a transcript of the testimony provided in the court, sir?
A: No, sir, I was not aware of that.
Q: Is Mr. Lindsey still associated with the White House, sir?
A: He is.
Q: What is his current association with the White House?
A: Mr. Lindsey is one of my aides, he travels with me, and he
does political work for me.
Q: Has he ever related to you, sir, accounts as to what Mr. Hale
allegedly said under oath during the course of this trial?
A: I don't believe so.
Q: I believe the question, sir, was whether or not anyone other
than your attorney had related subject matter concerning what Mr.
Hale had allegedly testified during the course of his testimony?
A: No, sir. I believe that all of us, including my attorneys, I
believe we were all discussing what we read in the paper about Mr.
Hale's testimony.
Q: You, sir, in your position, receive extensive briefing
and briefing books concerning virtually every item that occurs
to you on your daily schedule; is that correct, sir?
A: Well, I get a national security briefing in the morning
and I get a scheduling book for the rest of the day, yes, sir.
Q: Have you received a briefing book concerning your
testimony, sir?
A: I have received a briefing book which contains what I have
said before in my interrogatories, and our notes on the three
times I have been interviewed already by the Special Counsel's
Office.
Q: Did that briefing book contain any accounts concerning
what Mr. Hale had allegedly said under oath during the course
of this trial, sir?
A: No, sir, it didn't.
Q: Okay. You were asked by Mr. Heuer, sir, concerning whether
or not you had ever gone to Mr. McDougal and sought financial
aid from Madison Guaranty Savings and Loan concerning your joint
business ventures; do you remember that, sir?
A: Yes, sir, I do.
Q: You and Ms. Clinton - well, perhaps maybe I'm misphrasing
it. There was, in fact, an occasion in which you did go to a
financial institution controlled by Mr. McDougal concerning
financial assistance to the Whitewater Development, was there
not, sir?
A: That's correct.
Q: All right. Can you tell the jury, sir, what arose, what
was the circumstances by which - first of all, who was it that
did it?
A: My memory is that when Mr. McDougal had the bank up in
Madison County, in the mountains of north Arkansas, Madison
County is a county that adjoins Marion County were the
Whitewater property was, that I had borrowed some money there,
either Hillary or I one borrowed some money there, but it was
our - our family, Hillary and I borrowed the money to build a
house on one of the lots, one of the Whitewater lots that Jim
thought would make it easier for us to sell the lots, make it
more attractive, make it more realistic. And he had called me
and said he had put some money into the developing of the lots
and I should build a house, and we agreed to that, and that's
what we did. I think that's what the loan was for.
Q: Okay. And that was the Bank of Kingston; is that correct, sir?
A: I believe that's right.
Q: All right. Later became called Madison Bank and Trust, I
believe. Were you familiar with the change in name at a later
date?
A: I am now, I don't know that I knew when it happened.
Q: And were you aware at the time, sir, that that was a
financial institution owned jointly by Mr. McDougal and
Stephen Smith?
A: I knew that Steve had an interest in the bank, yes.
Q: Okay. I believe the question was something along the line
of, kind of describe for the jury's benefit your knowledge of
Stephen Smith and your relationship with Stephen Smith.
A: I met Mr. Smith I believe in 1972 when he was a young
Arkansas state legislator from Madison County. And in 1974, when I
ran for Congress, Mr. Smith supported that effort, worked in my
campaign. He later came to work for me and he worked in my first
term as governor, in the governor's office. He left shortly before
the election of 1980, and that's the last time he ever worked for
me. I maintained a limited but occasional contact with Steve in the
years after that.
Q: And while he worked for you in the governor's office was the
same time that Mr. McDougal also worked with you in the governor's
office?
A: That's right, they worked there together.
Q: And was that also the same time that Mr. McDougal advanced to
you or sought you out concerning your investment in what later
became Whitewater Development Corporation? Was that also about the
same time?
A: Mr. Jahn, I think that was before that. I believe that Mr.
McDougal and Susan and Hillary and I invested in Whitewater in
1978, before I became governor.
Q: Okay. But in 1978, was Mr. Smith working for you as attorney
general, sir?
A: He was working in the attorney general's office.
Q: Okay.
A: But Mr. McDougal wasn't.
Q: Okay. Thank you. I'm sorry. Again, if I ask a question that's
not a hundred percent within the confines of your memory, please
correct me on that particular regard.
A: All right, sir.
Q: So, there did come an occasion then where you were
approached, or you and Mr. McDougal discussed obtaining some
financing for the benefit of Whitewater Development Corporation,
and Mr. McDougal made the arrangements, did he not, sir?
A: Well, I assume that we made them together, since we took out
the loan and we took it out from that bank.
Q: Do you recall you and your wife going to the Bank of Kingston
and executing notes and the like?
A: No, I think we signed the note without going up there.
Q: Okay. And so, at the time that you did it, you knew that it
was Mr. McDougal's institution?
A: I did.
Q: Okay. And you knew that he and Mr. Smith were basically in
control of that institution?
A: I did.
Q: Now, at the time that it was done, though, is it fair, and
I don't want to put words in your mouth that aren't fair, sir,
is it fair to say that you actually considered that to be a debt
of Whitewater Development Corporation, even though you were
personally, or perhaps your wife was personally responsible,
didn't you really consider that to be part of the Whitewater
Development Corporation Enterprise, itself?
A: Mr. Jahn, I think the fair way to characterize it was, I
considered that loan in the same light that I considered the
other loans that we had taken out to finance Whitewater. That
is, I had hoped that the company would generate enough income
from the sales of lots to repay those loans, but I was well
aware that if it did not generate that income that I would be
personally liable on them.
Q: Okay. And that hope, sir, was based upon representations
that Mr. McDougal made to you; is that correct, sir?
A: Yes, sir. He had been in the land development business
for some years, and he had enjoyed quite a bit of success in
that.
Q: And you and your wife had no experience in land
development; is that correct?
A: No. I had had that one very limited experience where I
had made an investment with him and it had returned a nice
profit in a modest amount of time.
Q: But as far as putting in roads and developing tracts
A: No.
Q: - and developing marketing programs and the like, that
was Mr. McDougal's expertise.
A: That's right. And that was the understanding, that we
would put in half of the money but that he would manage it.
Q: Okay. And you deferred to Mr. McDougal's expertise in
that particular area?
A: Yes, sir, I did.
Q: Did Ms. McDougal have any expertise in that particular
area?
A: Well, they worked together. I donit know exactly what
she knew, but they did work together, she was very active in
the business, and of course, she helped to promote it and
market it. She did some of the marketing.
Q: Okay. So, when there came occasions in which you had
questions for Mr. McDougal, and you couldn't contact Mr.
McDougal, was Ms. McDougal his alter ego as far as the
Whitewater Development Corporation itself was concerned?
A: I don't know if I would use that word, Mr. Jahn. There
were times when I talked to him over the years, times when I
talked to her. The truth is, we didn't - once the property
became more or less self-financing, we didn't talk much for
years about it.
Q: Now, you say "once the property became self-financing.''
Did there come an occasion, sir, in which you believed that the
properties had, in fact, become what you called self-financing?
A: I believe it was in - I believe in 1981, Mr. McDougal
informed me that he had sold enough lots and payments were
being paid on enough lots so that at least the bank notes
could be paid down. I believe that's right.
Q: How important was that to you and Ms. Clinton, sir? And at
this particular time, with all due respect, like most states, or
perhaps like most southern states, public officials aren't
overpaid in the state of Arkansas, are they?
A: We were paid less than the other southern states.
Q: Okay.
A: But - well, in 1981, I was a lawyer and making a pretty
good living. But when I was attorney general and governor, I
didn't make much. But Hillary made more money than I did, and
she did quite well and we were quite comfortable, but we didn't
want to be - we didn't want to lose all the money we had
borrowed, obviously, and I was pleased when the investment began
to pay out.
Q: And the representation then from Mr. McDougal that he had
these hopes and expectations and dreams that the properties
would start to sell and then they would become self-supporting,
that was an important feature of the decision to invest in the
first place, wasn't it, sir?
A: Yes, sir. But what happened to that property happened a
lot of times - in a lot of places, the market changed rather
dramatically in 1979 and '80 in our state, and in other places,
as well. I didn't blame Mr. McDougal or anyone else. The market
changed on us and we bore the consequences.
Q: But by 1981, I believe it was your testimony, though,
Mr. McDougal still represented to you that despite the market
change, there had been enough sales to make the property
basically self-sufficient; isn't that correct?
A: That's correct.
MR. HEWER: May it please the Court.
BY MR. JAHN:
Q: Sir, do you recall whether or not there was a name affixed
to that particular piece of property that we were talking about
as far as the loan from the Bank of Kingston?
A: No, sir, I don't.
Q: Okay. Does lot 13 ring a bell with you, sir?
A: That - it sort of rings a bell, that could have been it,
where the house was.
Q: And do you recall, sir, that there was subsequently a sale
of that particular piece of property to a man by the name of
Hillman Logan, do you remember that, sir?
A: I do remember that.
Q: Okay. And in connection with that particular sale, the
property had been placed in either your wife's name or you and
your wife's name, and it was necessary, then, for you to execute
certain documents and papers in connection with that sale; is
that correct?
A: That could be. I don't remember the documents, but I
will it could have been the case.
(WHEREUPON, Government's Exhibit Number 94 was marked
for identification.)
BY MR. JAHN:
Q: All right. I want to show you, if you will, sir, what
has been marked for
MR. JAHN: And Ms. Nance, I think we need some copies for
defense counsel.
MS. NANCE: (Complies.)
BY MR. JAHN:
Q: What has been marked for identification first as Government's
Exhibit 94. And I would ask you, if you would, to take a look at
this, sir.
A: (Witness reviews document.)
(WHEREUPON, Government's Exhibits numbered 94-A and 94-B were
marked for identification.)
MR. JAHN: Your Honor, if we could have a second, there
apparently was some confusion when copies were provided to counsel.
BY MR. JAHN:
Q: Have you had a chance, sir, to review the document that has
been identified as Government's Exhibit 94?
A: I have, sir.
Q: Does it have a signature, sir, on there that purports to be
your signature?
A: It does.
Q: Okay. Does it also have a signature on there that purports to
be the signature of James McDougal?
A: It does.
Q: Okay. Let me ask you, Mr. President, is the signature on
Government's Exhibit Number 94 -
A: Wait, wait. It does not have a signature.
Q: I'm sorry. It's a blank - is that one blank, then?
A: Well, I can't see. It looks like there is something down
there, but I can't tell, it may be Jim's.
Q: Okay.
A: And I can't see. It says ''Officer/Purchaser,'' but I can't
read it. The only signature that I see here - well, this could be
James McDougal, the Bank of Kingston. It is very - it could be. I
can't tell for sure because of the copying.
Q: Okay. Well, let's just go back, then, to your signature. You
can't see your signature; is that correct?
A: It is partially blocked, but I can see some of it.
Q: Okay. And then, also there is a signature that purports to be
the signature of your wife; is that correct?
A: That is correct.
Q: Sir, is that your signature?
A: I don't believe it is.
Q: All right. And as far as your wife's handwriting, sir,
does that appear to be your wife's handwriting?
A: I don't believe it is.
Q: Okay. I'm going to show you next Government's Exhibit 94-B,
as in boy, and I would ask you, sir, if you could, to review this
document.
A: (Witness reviews document.) All right.
Q: Have you had a chance, sir, to review that document?
A: (Witness reviews document.)
Q: And we are going to go just to the signature, Mr. President.
A: All right.
Q: If that will help speed things up.
A: All right.
Q: Okay. Once again, on the last page, sir, is there a signature
that purports to be your signature on that particular
document?
A: Yes.
Q: And is there a signature, sir, that purports to be
your wife's signature on that document?
A: Yes, yes.
Q: And is there a signature that purports to be Mr.
McDougal's on that document?
A: Yes, yes.
Q: And as far as the document itself is concerned, 94-B, sir,
is the signature on that document yours?
A: I don't believe it is.
Q: All right. And as far as the handwriting that appears
under the - for Ms. Clinton, sir, does it appear to be Ms.
Clinton's handwriting?
A: I don't think so, no.
Q: Okay. Now, as far as the document itself or the property
itself is concerned, these two documents are - can you tell us
what the heading is, as far as the title of the document?
A: It says ~~``Escrow Contract.''
Q: Okay. And can you give us a date? Is there an
approximate date on the contract, itself?
A: December 9th, 1981.
Q: Okay. And as far as the contracts to the property,
itself, did it, in fact, cover the property that was the
subject of the loan at the Bank of Kingston, or can you tell
from the legal description, sir?
A: Well, it says, "Tract 13 of the Whitewater Estates," and
it is being sold for $27,500. I believe that it was the subject.
I'm not positive, but I believe it is.
MR. JAHN: Your Honor, we would move the introduction
of Government's Exhibits 94 and 94-B.
BY MR. JAHN:
Q: Mr. President, you have identified those particular
documents, and I believe they are now in evidence. If you would,
sir, I'm going to show you next what has been marked for
identification only as Government's Exhibit 94-A, and would ask
you, sir, if you can, can you examine Government's Exhibit 94-A?
MR. COLLINS: You mean "B," I think.
THE WITNESS: Yes, I can. (Witness reviews document.)
BY MR. JAHN:
Q: If you would, sir, the signature that's on that particular -
first of all, what type of document is it as far as its heading is
concerned?
A: It says, "Warranty Deed."
Q: Okay. And can you give us an approximate date that appears at
the bottom of the document where it is executed?
A: December 14th, 1981.
Q: Okay. And as far as the signature that appears on that, sir,
does that appear to be your true signature?
A: Yes, it does.
Q: All right. And as far as the handwriting that appears on that
particular document, sir, does that appear to be your wife's true
handwriting?
A: It does.
MR. JAHN: Your Honor, we would move the introduction of
Government's Exhibit 94-A.
BY MR. JAHN:
Q: Mr. President, as far as the document itself is concerned, it
did, in fact, accurately reflect that you and your wife were
transferring that particular piece of property to Mr. Logan; is
that correct?
A: That's what the document says.
Q: All right.
A: It's a Warranty Deed.
Q: And can you explain, though, how your signature appears on
the escrow, the two versions of the escrow contract that was
presented to you as Government's Exhibits 94 and 94-B?
A: I believe that - no, I can't explain that, that's the first
time I have seen it.
Q: All right. Have you looked - well, I believe you have been
shown to it - you were shown during the course of your
interrogatories, I think you were questioned about it during that
time, during the course of your interrogatories, you also expressed
at that time the sentiment that it was not your signature. And so,
I'm asking now, if you would - that was just, what, 1994, 1995. Can
you explain - do you have any recollection as to how your signature
could have appeared on this particular document?
A: I have no recollections about it.
Q: Okay.
A: I just - I remember that we sold the house to Mr. Logan.
Q: Okay. Who was it that you looked to as far as the management
of the sale? Did you, in fact, negotiate with Mr. Logan?
A: No, I never met him.
Q: Did your wife even negotiate with Mr. Logan?
A: No.
Q: Who did you and your wife look to, sir, as far as
negotiations and the management of the sale of properties
located at Whitewater Development Corporation?
A: Mr. McDougall
Q: All right. So, as far as the particular document, then,
that bears a signature that purports to be your signature, do
you have an opinion, sir, as to who might have signed that
particular document?
A: I don't know that.
Q: Okay. Have you ever - was it ever brought to your
attention at that particular time that anyone was going to seek
your permission to affix your signature to a document, a legal
document?
A: I just don't remember.
Q: All right. Well, did you ever give Mr. McDougal
either expressed or implied permission to affix your
signature to any documents bearing - or relating to
Whitewater Development Corporation business?
A: I don't remember having such a discussion, but Mr.
McDougal was clearly managing the property and doing what he
thought that he could to move the property.
Q: Okay.
A: But I don't remember any specific discussion of that, sir.
Q: And you entrusted Mr. McDougal, or you trusted Mr.
McDougal to do what was necessary for the benefit of the joint
venture between yourself and your wife; is that correct?
A: I did trust him, yes, sir.
Q: All right. And were there occasions, for instance, where
Mr. McDougal would send you documents to sign, such as loan
renewals and extensions, that you would sign and return to him?
A: Well, I signed some renewals and extensions over
time, perhaps he sent them to me. I don't remember
specifically.
Q: Well, did you ever initiate or undertake an active role
in obtaining the financing for Whitewater Development
Corporation, itself?
A: No, sir, I did not.
Q: All right. As far as the initial loans that Whitewater,
can you explain to the jury basically how Whitewater
Development Corporation was initially financed?
A: Yes, sir. When we bought the 230 acres of land, we - the
price was $200,000, and we paid $20,000 down, which we financed
with a loan, I think from Union Bank of Little Rock, but
anyway, from another bank, and then we borrowed the $180,000
amount from the local bank in Marion County, the bank in
Flippin, it has had several different names over the last 15
years, I think it has had three different names, but anyway, it
is the only bank in town.
Q. Okay
A. We borrowed the money from that bank, the principal
amount. And it was - and our hope, I will say again, was that we
could sell enough lots so that the income from the lots would at
least be sufficient to pay off the bank notes when they came
due, and then hopefully, some day, we would actually make a profit.
Q: Okay.
A: It was a vain hope, as it turned out.
Q: As far as the land itself, let's take it one step at a
time, you talked about the purchase of the land. Did you and
Ms. Clinton ever even go and look at the land before it was
acquired, sir?
A: No, sir. We saw some pictures of it, and I was very, very
familiar with that county, with the White River, that's where I
had run for Congress, I had lived in northwest Arkansas for
three years before I moved to Little Rock, and so I was - when
Jim described it to me, and I saw a couple of pictures, I knew
where it was and what it was.
Q: Okay.
A: And I made the judgment it was a good business risk.
Q: Sure. So, you, again - he showed you photographs, he
described it to you, he told you what his hopes were for the
property, he told you what his expectations were for the
property; is that correct, sir?
A: That's correct.
Q: Okay. And did he tell you what his dreams and visions
were for the property, for the area?
A: Well, I was familiar with the work that he was doing,
and with the fact that he had done quite well in the 1970s, as
land values had escalated and retirees had flooded into our
state, and it seemed like a good risk to me, because I was
familiar with the experience of the last several years.
Q: Is the answer yes, sir? Did he tell you what his dreams
or visions were for this particular property?
A: Well, he told me what he hoped - he told me what he
hoped would happen to the business ventures.
Q: Okay.
A: And I thought it was a good risk, and so I joined him.
Q: And you placed your trust, and your wife placed your trust
in Mr. McDougal's abilities and his integrity; is that correct?
A: Yes. But we also had an independent judgment about what
the market would probably do. Turned out our judgment was wrong.
Q: Now, you had a situation involving Mr. Logan's property.
You indicated you got some financing at Union National Bank. Do
you know who the loan officer was at Union National Bank that
made that loan?
A: I don't remember that, sir.
Q: Did you ever know or meet a Harry Don Denton that worked
at Union National Bank?
A: I know who Don Denton was. I'm not sure I met him at
that time or whether he was the loan officer on the note.
Q: Did you have anything to do with acquiring the
initial financing from Union National Bank?
A: I'm not sure. I might have, because I had some friends
who worked there and I knew the people who owned the bank, but
I'm not sure.
Q: As far as the major financing from the only bank in
Flippin, and I'm with you, I can't keep the names straight, so
let's just refer to them, to the bank in Flippin, as far as the
major financing, did you have anything to do with that major
financing?
A: Well, I knew the people at the bank, and I was aware
that they were willing to finance it, but I believe Mr.
McDougal made the contact.
Q: Okay. So, again, you were deferring to Mr.
McDougal's expertise and Mr. McDougal's leadership
A: That's right.
Q: - in terms of establishing this particular transaction?
A: That's correct.
Q: Now, let's just jump ahead. You indicated in 1981 there
was a representation made to you by Mr. McDougal that the bank,
in and of itself - I mean, the land, in and of itself, was now
generating enough income to become self-sufficient. Do you
remember that, sir?
A: I believe, to be specific, Mr. Jahn, I believe that the
representation was that enough lots had been sold so that the
cash flow on the lots would at least cover the bank notes when
they came up.
Q: Okay.
A: And I think that that's - by then, I had already invested
some money, I didn't think I would ever get it back because of
the changes in the economy, and I was simply relieved to know
that the bank note would be able to be paid as it came up. And
so, I remember being very relieved about it.
Q: Did there come a time, sir, where you were called upon,
though, to execute another note, a note that was what has been
referred to as the interest refinancing note? Did there come an
occasion in which you were required or requested to execute
another note to pay for interest payments that had not been made
on the initial purchase loan?
A: Can you refresh my memory, do you have some specific
evidence here?
MR. JAHN: Do we have the document, itself?
MS. NANCE: (Complies.)
MR. JAHN: Counsel, do you want to look at it first? I'm
just going to show it to him for memory recollection.
(WHEREUPON, Government's Exhibit Number 91 was marked
for identification.)
BY MR. JAHN:
Q: If you would, Mr. President, I'm going to show you only
for the purpose of refreshing your recollection, Government's
Exhibit 91.
A: (Witness reviews document.)
Q: Mr. President, have you had a chance, sir, to look at
the document?
A: Yes, I have.
Q: Does it refresh your recollection, sir, concerning the
date in which a loan was made to refinance the interest on the
bank in Flippin's note?
A: No, it does not.
Q: Let me ask you this final question, sir. Is that
your signature at the bottom of the document, sir?
A: Mr. Jahn, as has been pointed out, it is a little smudged,
and I can't be sure. It might - it might or might not be, and it
might well be my wife's signature there, I just can't tell. I
think I ought to point out for the benefit of the Court and the
jury that this - that this date is November 1st, 1982, that was
just a couple of days before the general election for governor,
and that it would be the last thing on my mind to be involved in
this. I do not have any recollection of it. But I cannot say for
sure that the signatures at the bottom are not mine or
Hillary's. I'm confident the others weren't, I'm not so
confident on these. It might be mine and it certainly might be
hers, I'm just not sure.
Q: Okay. Mr. President, if we could, sir, let's move on to
the time frame of 1985 and 1986. And at that particular time, I
believe you testified that Mr. McDougal had, in fact, moved back
into town and had opened a savings and loan within Little Rock;
is that correct?
A: That's correct, sir.
Q: Okay. Do you recall at this time, sir, the financial
obligations which you and Ms. Clinton had toward the Whitewater
Development Corporation's investments and its obligations
financial institution - obligations at other financial
institutions?
A: Well, the bank note in Flippin was still outstanding at
some level, I don't know that I knew what level, and we may or
may not have paid off the loan for - that we took out to pay for
the house. I don't remember whether it had been paid off by then
or not. It was
(WHEREUPON, Government's Exhibits Numbered 87 and 89 were
marked for identification.)
BY MR. JAHN:
Q: Okay. If you would, sir, I'm going to show you what has
been first marked for identification as Government's Exhibit
89, and then I'm also going to show you Government's Exhibit
87.
MR. JAHN: Ms. Nance, if you could provide
those.
MS. NANCE: (Complies.)
THE WITNESS: (Witness reviews document.)
MR. JAHN: Counsel, are we ready?
MR. McDANIEL: Yes.
BY MR. JAHN:
Q: Government's Exhibit 87, sir, I would like to ask you, do
you have that before you?
A: Yes, sir, I do.
Q: The signature which appears on the bottom of
Government's Exhibit 87, can you identify that, sir, as being
your signature?
A: Yes, it is mine.
Q: All right. And can - well, can you tell us as far as the
type of document, what is the document itself, sir?
A: This appears to be a loan extension agreement with
the Security Bank of Paragould with the amount extended,
$13,800.
Q: Did there come an occasion, sir, in which the bank loan
that we discussed previously, the Bank of Kingston, later
Madison Bank and Trust, did there come an occasion, sir, when
that loan was moved out of that financial institution to
another financial institution?
A: Yes, sir.
Q: Okay.
A: It did.
Q: And at the time that that was moved, did you execute a note,
then, at the other institution?
A: I believe I did.
Q: All right. And that was the Security Bank of Paragould; is
that correct?
A: That's correct, yes, sir.
Q: Now, did you make the arrangements as far as that particular
note is concerned as far as negotiating for that particular loan?
A: Mr. Jahn, I honestly don't remember, it was a long time ago.
I don't remember.
Q: All right. But as far as the loan itself was concerned, it
was the loan you made in connection with the Whitewater Development
Corporation?
A: Yes, sir, that's right.
MR. JAHN: Your Honor, we would move the introduction of
Government's Exhibit 87.
BY MR. JAHN:
Q: And if you would, sir, Government's Exhibit 89, do you have
that in front of you, as well?
A: Yes, sir, I do.
Q: And we are back to the bank in Flippin; is that
correct?
A: That's correct.
Q: Now, this particular document, does it have a date in the
upper right-hand corner, sir, as far as the date that the
document was executed?
A: Yes, it says, November 26th, 1984.''
Q: And does it have underneath a maturity date as far as
how long this note was good for?
A: December 3rd, 1986.
Q: Okay. And as far as the document itself, the borrowers on
the left-hand, upper left-hand portion, can you tell us who was
the obligors under the document in the upper left-hand corner?
A: Whitewater Development, Inc., James B. McDougal, Susan
H. McDougal, Bill Clinton, Hillary Rodham Clinton.
MR. JAHN: Your Honor, we would move the introduction
of Government's Exhibit 89.
BY MR. JAHN:
Q: Mr. President, if you would, going back to Government's
Exhibit 87, can you tell us what the amount was - at the
renewal executed on September 30th, 1985, what was the amount
of that renewal?
A: The amount extended was $13,800.
Q: Okay. And as far as Government ts Exhibit 89, as far as
the renewal in November of 1986 due on December 3rd, 1986, what
was the loan amount in that particular instance?
A: $100,121.
Q: Okay. And these were both Whitewater Development
Corporation obligations; is that correct?
A: Well
Q: I mean, from your state of mind, from your point of view,
these were both Whitewater Development Corporation obligations;
is that correct, sir?
A: They were Whitewater Development obligations if Whitewater
Development had the money to pay them. Otherwise, they were our
obligations, personally. The four of us were jointly and
individually obligated on the big bank note, and I was obligated
on the small one.
Q: And it was your expectations and hopes and dreams and
visions, though, that Whitewater Development Corporation would
still be the entity that would be responsible for paying this
note; is that correct?
A: I hoped eventually we could at least break even, that's right.
Q: All right. Now, in 1985 and 1986, sir, you still had - I
believe you indicated Mr. McDougal had moved back into town. Did
you have fairly frequent contact with him during the year 1985,
for instance?
A: I'm not sure. Itm sure I saw him a few times. I donit know
how - I hate to use the word "frequent," because I don't know
how many times. But I had some contact with him in 1985 over
various things.
Q: Okay. You talked about your jogging, and if you can, I
think it is on the record, but how far was Madison Guaranty
Savings and Loan from the mansion at that particular time?
A: It was less than a mile from the Governor's mansion.
Q: All right. And there would be occasions, then, on which
you would go out jogging on the streets of Little Rock; isn't
that correct?
A: That's correct.
Q: And when you would go jogging on the streets of Little
Rock, quite often, unlike today, sir, you had a lot more
personal freedom, did you not, as far as being able to move
without the necessary requirements of security?
A: Yes. And particularly if I was downtown in daylight, I
would run sometimes on Main Street, that was one of the streets
I regularly ran on.
Q: Okay. And you were free to run on your own and to go out
and run and go by and visit people and talk to people and the
like?
A: That's correct.
Q: And did you, in fact, on occasion jog past or jog to
Madison Guaranty Savings and Loan?
A: On occasion, I did jog past it, yes.
Q: Okay. And on occasions, did you actually jog to it and
go inside and stop and visit with people, sir?
A: I believe that once or twice I actually went in, yes.
Q: Okay. Now, during, again, the year 1985, were there
occasions, sir, in which you, as governor of the State of
Arkansas, would seek out advice from Mr. McDougal?
A: It's possible. Could you refresh my memory? Have you
got a specific issue you want to raise?
Q: Yes, sir, I've got one. If you would, I want to
(WHEREUPON, Government's Exhibit Number 73 was marked
for identification.)
MR. JAHN: Could we have Government's Exhibit 73?
MS. NANCE: (Complies.)
MR. JAHN: May I approach the witness, Your Honor?
THE COURT: You may.
BY MR. JAHN:
Q: I want to show you what has been marked for
identification purposes as Government's Exhibit 73.
A: (Witness reviews document.)
Q: Mr. President, I was showing you Government's Exhibit 73.
And perhaps to speed things up a little bit, sir, I will try a
little leading questions. That's a memo directed to you dated
February 7th, 1985; is that correct, sir?
A: That's what it says, yes, sir.
Q: All right. And it is from Jim McDougal; is that correct?
A: Yes, it is all typed, there is no signatures on it, but
it is typed, it says, ''To Governor Bill Clinton from Jim
McDougall''
Q: Okay. And it is at the bottom left-hand side, sir, as far
as the slug, I believe is what they call it, the initials, it
says, JRM/SS on the bottom left-hand corner; is that correct?
A: That's correct, sir.
MR. JAHN: Your Honor, we would move the introduction of
Covernment's Exhibit 73.
THE COURT: All right. Received.
(WHEREUPON, Government's Exhibit Number 73 was received into
evidence.)
BY MR. JAHN:
Q: Mr. President, in Government's Exhibit 73, Mr. McDougal
is writing to you concerning a request from someone in your
office, i that correct, someone named Kathy?
A: Yes, sir.
Q: And who is Kathy, sir?
A: I'm not sure, but it could be Kathy McNatt, it probably
is someone who worked in the - in the appointments section of
the governor's office.
Q: All right. And in it, it talks about recommendations for
two people to fill the vacancies on the State Savings and Loan
Board.
A: Yes.
Q: Can you tell the jury, sir, what is the State Savings
and Loan Board?
A: The State Savings and Loan Board is a board - let me say,
Arkansas has a lot of these boards, hundreds of them. The
legislature at one point in history created a board to advise
the person who is in charge of overseeing the state chartered
savings and loan. The board, by statute, has to be comprised of
people who, themselves, are in the savings and loan business,
except there is a consumer position by law and there might or
might not be a position for a senior citizen, I just don't
remember. But otherwise, the vast majority of the board members
have to come out of the state S&Ls, and I think at the time
there were just a handful of them left in Arkansas.
Q: And were you aware, sir, that Madison Guaranty Savings
and Loan was, in fact, a state chartered savings and loan?
A: Yes, sir, I was.
Q: And if you would, sir, second paragraph, in the second
paragraph, Mr. McDougal recommends John Latham, who was Chairman
of the Board of Madison Guaranty Savings and Loan. Did you know
John Latham, sir?
A: I did.
Q: And did you, in fact, appoint Mr. Latham to the Savings
and Loan Board based upon Mr. McDougal's recommendation?
A: Well, first of all, Mr. Jahn, let me say, I'm not sure I
ever saw this memo, but we did appoint Mr. Latham, and Mr.
McDougal, I believe, did recommend him, and I wouldn't be
surprised if he wasn't the only person that wanted to be on the
board. It was hard, we had to go scare up people to be on some
of these boards by the mid-1980s. So I believe he was appointed.
Q: Okay. But you are saying you're not sure you ever saw the
memo. If you saw the memo, though, would you follow Mr.
McDougal's recommendation?
A: Well, I might have, might have done it if I hadn't seen
it.
Q: Okay.
A: But in this case, I'm not sure that - as I've explained
to you, this was a board with relatively little power, that had
- the membership requirements included the requirement that
people would be involved in the S&L business. We didn't have
many state savings and loans left by then, and I wouldn't be
surprised if Mr. Latham wasn't the only person that asked to be
on this board.
Q: Okay. It had limited power, you indicated, but at the
same time it did have some power, did it not, as far as
branch regulations?
A: I expect it did.
Q: For instance, within the savings and loan institution?
A: Sure. I believe that's right.
Q: And were you familiar, sir, with a limitation that was
placed upon savings and loans, or state chartered savings and
loans concerning their investment in private businesses or their
investment in service corporations limiting their investment to
three percent?
A: I don't believe I was.
Q: Okay. Do you know whether or not Mr. McDougal was aware
of any such limitation?
A: I don't know.
Q: Do you know whether or not Mr. McDougal was having any
difficulty within his institution concerning any such
limitation?
A: I do not.
Q: You indicated you know John Latham. Did you know Greg
Young at the Madison Guaranty Savings and Loan?
A: I don't remember him, no, sir.
Q: Okay. If you would, sir, can you, for the benefit of the
jury, read the last paragraph on Government's Exhibit 73, the
memo from Mr. McDougal to yourself.
A: It says, Bill, we are down to only about 15 state
chartered savings and loan institutions, and I'm about the only
one around who has any interest in this board.''
Q: Now, as far as a memo from Mr. McDougal where it contains
a personal sentiment such as this, Bill,'' do you feel, sir,
that if you probably would have received a memo such as that,
your staff probably would have brought that to your attention?
A: I just don't know, sir. There is no check here. My mail
was opened by other people. It is quite possible that I would
send an appointment form, a recommendation, with just some note
saying, Jim McDougal recommended him.'' I just don't know what
happened. But I certainly can't tell from this memo that I ever
saw it, because when I saw things, I nearly always checked
where my name was.
Q: Okay. I asked you concerning the status of Whitewater
Development Corporation, and as far as the trust and faith that
you put in Mr. McDougall Did Whitewater Development Corporation
in 1985 have a checking account, to your knowledge?
A: I don't know one way or the other. I never wrote any
checks from it or received any checks from it.
Q: Okay. That was the next question. Did you have any
authority over any checking accounts that bore the name
Whitewater Development Corporation''?
A: I had - we, I was a passive investor, Mr. McDougal
was managing the property.
Q: Okay. Did he ever talk to you, sir, concerning the status
of their particular investments or concerning the status of the
checking account in the spring of 1985?
A: I don't recall any conversations with Mr. McDougal
about Whitewater in 1985.
Q: Directing your attention to March 29, sir, 1985, were you
aware that the Whitewater Development Corporation checking account
was overdrawn approximately $25,000?
A: If it, in fact, was overdrawn, I was unaware of that.
Q: Now, in - you indicated that in the spring of 1985, let's
just go back, in the spring of 1985, did there come an occasion,
sir, in which Mr. McDougal raised funds for your campaign?
A: Yes, sir, there did.
Q: All right. Can you tell the jury, as far as - first of all,
spring of 1985 was not a campaign year, was it, sir?
A: No.
Q: Okay. What type of debt was Mr. McDougal assisting you on?
A: I had been re-elected Governor in the fall of 1984, in a
campaign that I was fortunate enough to win handily, I got over 60
percent of the vote, but I owed about a $100,000 when the race was
over, and I was having to pay it off. And Mr. McDougal volunteered
to have a fund raiser to pay a portion of the debt off.
Q: Okay. Is it fair to say, sir, as far as a debt that is
incurred and exists after a campaign, sometimes those are the
hardest ones to get rid of?
A: Not if you are a Governor that won with over 60 percent of
the vote, it is not hard.
Q: Okay. But as far as the assistance that Mr. McDougal gave to
you, you appreciated it, did you not?
A: I sure did. I appreciate everybody that contributed to my
campaign .
Q: You made a comment, in fact, during the course of your direct
testimony that as a candidate, it is quite second nature to ask
people for their assistance; isn't that correct?
A: It is.
Q: Either their vote, perhaps some volunteering on the campaign;
is that correct, sir?
A: Yes, sir.
Q: Perhaps putting a sign, even something as small as putting a
sign up in their front yard can become something of importance to
you; is that correct?
A: Very important, yes.
Q: Then, of course, money is also important; is that correct?
A: It is.
Q: And also actually physically working in the campaign, going
door to door, knocking on the door and the like, that becomes very
important?
A: Yes, sir. It is.
Q: Is it fair to say, then, as a campaign, you are asking quite
a lot of people then, "Can you help me out?"
A: That ts the only way you can prevail is thousands of people
helping you.
Q: All right. And in fact, because as you indicated, as your
success in all your years in Arkansas, you must have asked
thousands and thousands and thousands of people for their help?
A: I certainly did.
Q: Now, as far as the campaign itself is concerned, you did, in
fact, attend a campaign fund raiser, it was located at Madison
Guaranty Savings and Loan; is that correct?
A: Yes, sir.
Q: And it was on April 4th, 1985; is that correct, sir?
A: I don't remember the exact date, but it was in the spring of
'85 sometime.
(WHEREUPON, Government's Exhibit Number 83 was marked for
identification.)
BY MR. JAHN:
Q: Okay. Let me, if you can, for the purpose of refreshing
your recollection only, I'm going to show you what has been
marked for identification as Government's Exhibit 83, and I
believe I can represent, sir, that this was your schedule for
the day of April the 4th, I believe, 1985.
A: (Witness reviews document.)
Q: And to be specific, sir, does it refer, ''At 4:15
Jim McDougal's fund raiser for the Governor''?
A: Yes, sir. This is a Thursday, April 4th, 1985, and it says
one of the things I did on this day was to leave the office at
4:15 to go to a fund raiser which Jim McDougal hosted.
Q: Okay. And does that refresh your recollection, then, as
far as the date of the fund raiser itself?
A: Yes, sir.
Q: Okay. And if
A: I mean, I don't - this appears to be one of my schedules,
and so - I do know it was in the spring of '85, so it probably
was on April 4th.
Q: All right. And if you would, sir, during the course of
that fund raiser, did you receive contributions from - either
directly or indirectly, from certain individuals that were at
that fund raiser?
A: Well, there were people who were there who contributed.
I don't believe I received them, I don't believe they handed
me the checks, but there were people there who contributed.
Q: Mr. President, during the course of your direct
examination, you were questioned concerning your relationship
with Mr. Tucker back during the time in which you and he ran
against each other. Do you remember that line of questioning,
sir?
A: I do.
Q: And I believe you've indicated that your relationship
was estranged to a certain extent during the course of that
campaign, which was in 1982; is that correct?
A: That's correct, sir.
Q: Now, did it begin to improve, though, shortly thereafter?
A: Well, as I said, when we discussed this before, or when I
testified to this before, it was strained, but Governor Tucker,
as a private citizen, continued to support the Democratic Party
in Arkansas, continued to support my policies, and from time to
time gave me contributions, which I very much appreciated.
So, there was a distance between us throughout the 1980s
that had not been there before when we were younger and when
we were very close, but as time went on, and as I said
before, it got better. You know, time tends to heal those
kinds of wounds.
Q: By 1985 and 1986, sir, was there still a distance
between yourself and Mr. Tucker, or had you, in fact, become
closer together?
A: Well, he contributed to my campaigns in the '80s a couple
at least twice that I know of, but I think it would be fair to
say that we had not recovered the kind of close relationship we
had when we were young men.
Q: Had you gotten to a point, sir, where Mr. Tucker would
confide in you concerning his business relationships in 1985
and 1986?
A: No, sir, we had not.
Q: Were you aware, sir, that he was doing business with
Mr. McDougal during that period of time?
A: No, sir, I was not.
Q: Were you aware, sir, that he was seeking and obtaining loans
from Mr. Hale during that period of time?
A: No, sir, I was not.
Q: Did he talk to you concerning his financial status during
the years 1985 and 1986?
A: No, he didn't.
Q: Did he ever share with you any hopes or dreams or
expectations that he had concerning his business future during
the year 1985 and 1986?
A: I don't believe we ever had a conversation like that.
Q: All right. Now, as far as getting back to 1985, if you
would, sir, I want to show you what has already been admitted as
Government's Exhibit
MR. JAHN: I'm sorry, has this one been admitted?
MS. NANCE: What number?
MR. JAHN: 533-B, I think.
MS. NANCE: No.
BY MR. JAHN:
Q: I won't show you that particular check, sir. Were you
aware, did Mr. McDougal ever talk to you, sir, concerning a
development called Flowerwood Farms in the spring of 1985?
A: I'm not aware that he did, sir. But perhaps you could
help me, maybe you know something I don't know. But I have no
recollection of that.
Q: In the spring of 1985, Mr. McDougal, the documents will
show, borrowed $135,000 from a Stephens Security Bank in
Arkansas, a man by the name of Richard Smith made the loan. Did
Mr. McDougal ever discuss with you, sir, the need to make a loan
during the spring of 1985? We are talking about spring of 1985.
A: No, sir.
Q: Were you aware, or did he ever tell you, sir, that some
of the proceeds from that loan were utilized to make payments
or deposited in the account of Whitewater Development
Corporation?
A: No, he did not.
Q: Okay. Again, back to the spring of 1985, who were
you trusting as far as the management of Whitewater
Development Corporation?
A: As I have said repeatedly, Mr. Jahn, Mr. McDougal
was managing the property and had since we first bought
it.
(WHEREUPON, Government's Exhibit Number 76 was marked
for identification.)
BY MR. JAHN:
Q: I'm going to show you next, sir, what is marked as
Government's Exhibit 76, being a Warranty Deed bearing a file
stamp of the 10th day of June, 1985.
MR. JAHN: And Your Honor, we would move the introduction
of Government's Exhibit 76 based upon the understanding we
had concerning deeds that were filed in public - in court.
THE WITNESS: (Witness reviews document.)
MR. JAHN: May I assume it has been admitted, Your Honor,
without objection?
THE COURT: Yes, received.
(WHEREUPON, Government's Exhibit Number 76 was received
into evidence.)
BY MR. JAHN:
Q: Mr. President, do you need more time to look at it, sir?
A: No, sir, I have looked at it.
Q: All right. Mr. President, this Warranty Deed reflects that
on the 3Oth day of May, 1985, James B. McDougal, as President of
Whitewater Development, Incorporated, also with a signature of
Susan H. McDougal, as Secretary of Whitewater Development,
Incorporated, transferred certain lots, and specifically lots
