Local News

Whitewater Verdict Could Pressure President

Posted May 28, 1996

— May 29, 1996 - 7:25 p.m.

President Clinton is on the defensive from Republican attacks after two former business partners and his successor as Arkansas governor were convicted on fraud charges Tuesday.

A Little Rock jury returned a string of guilty verdicts against James and Susan McDougal, who were Clinton's partners in the failed Whitewater real estate venture. James McDougal was convicted on 18 of 19 counts and his former wife on all four against her.

The jurors also found Arkansas Governor Jim Guy Tucker guilty on two of seven counts of fraud for his role in an alleged $3 million conspiracy to defraud two federally insured financial institutions. Tucker resigned hours after the verdict came in.

Clinton had testified on videotape on the defendants' behalf and the convictions could hurt his re-election bid by bringing renewed attacks, as well as deeper probes into his personal and political finances.

But Clinton got support from one juror in the trial who said late on Tuesday that the president was ``magnificent'' and that the verdicts were based on overwhelming documentary evidence against the three defendants.

Colin Capp said he and the other jury members were persuaded that Clinton had nothing to do with any of the illegal loans at the heart of the case, and that they did not believe the testimony of star prosecution witness David Hale.

``President Clinton was magnificent in his presentation. He cleared up a lot of things for us. He just added to the lack of credibility that we had for David Hale,'' Capp told Reuters.

During the trial, the president's word was against that of Hale, a former Little Rock investment banker who alleged that Clinton, then state governor, pressured him to give Susan McDougal a fraudulent $300,000 loan in 1986.

Both James and Susan McDougal were convicted on the four counts linked to the $300,000 loan, which was never repaid.

Next month suburban Little Rock bankers Herby Branscum and Robert Hill go on trial for allegedly diverting bank funds to Clinton's 1990 campaign for state governor. Clinton has also been subpoenaed to testify in that trial.

Republican critics lined up to take full political advantage of the verdicts.

``These convictions indicate the seriousness and depth of the Whitewater tragedy,'' said Senator Alfonse D'Amato, a New York Republican and chairman of the Senate Banking Committee and a fierce opponent of the president.

James Leach, chairman of the House Banking Committee, struck a similar tune. ``I have never suggested a legal context needed to be applied to the president, but in terms of the ethical aspects of this whole Whitewater circumstance, it is going to be very serious for him,'' Leach told CNN.

Clinton has not been charged with any crime in the ongoing Whitewater probe and few Americans understand, or apparently care about, the complex paper chain of his former partners' fraudulent business deals. But political analysts say the verdicts could leave Americans with the impression he was involved in something shady.

That Clinton's videotaped testimony did not help aquit his Whitewater partners makes it worse for the president, especially if Republicans can get hold of the tape and use it in campaign ads.

And the White House moved quickly to minimize the political fall-out of what has become a highly charged trial and investigation.

``There was one thing everyone involved with this trial -- prosecutors and defense -- could agree on: the president had nothing to do with the allegations that were the subject of the trial,'' White House special counsel Mark Fabiani said in a statement released soon after the verdict.

Copyright ©1996 Reuters. All Rights Reserved.


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