Whitewater trial prosecutor sets sights on Clinton

	International News	Electronic Telegraph
	Thursday May 30 1996	Issue 395

Whitewater trial prosecutor sets sights on Clinton
By Stephen Robinson in Washington

DESPITE frantic White House assertions that President Clinton is not a target of the widening Whitewater investigation, the special prosecutor's trail seemed yesterday to be leading directly to the Oval Office.

Mr Clinton needed to look no further than the grin on the face of Kenneth Starr, the jubilant prosecutor, to know that the Whitewater affair will haunt him all the way to the November election, and beyond. News of the guilty verdicts against three of Mr Clinton's associates sent a frisson through Washington on Tuesday afternoon.

The expectation had been that the Little Rock jury would refuse to convict three colourful local figures on charges put together by a carpet-bagging prosecutor from Washington. "At 5pm today, the cover-up began to unravel," said Tony Blankley, a spokesman for the House Speaker, Newt Gingrich, making clear that the Republicans would not shrink from making the Whitewater affair an election issue.

The White House image-makers spun into overdrive, distributing information kits explaining that Mr Clinton was a witness, not a defendant, in the fraud trial. That much was true, but there was no denying that the president's reputation had been further damaged by the conviction of three of his Arkansas associates.

Jim Guy Tucker, who succeeded Mr Clinton as governor of Arkansas, and James and Susan McDougal, the Clintons' partners in the Whitewater land investment, were convicted on multiple counts of fraud, and face lengthy jail terms. Mr Starr, who has been derided in an orchestrated White House campaign as a political opportunist whipping up trivial charges to discredit the Clintons, has won a major victory.

But there was little time for celebration, as prosecutors are working on yet another criminal trial in Little Rock next month. Two Arkansas bankers are accused of illegally diverting money to Mr Clinton's 1990 political campaign fund. Sources close to the Starr investigation say prosecutors are looking closely at the Clintons' involvement with the Madison Guaranty savings bank, which was owned and operated by McDougal.

Mrs Clinton did legal work for the bank, and it is those billing records that mysteriously disappeared, then reappeared in the White House living quarters this year

Michael Chertoff, the Republican counsel to the Senate Whitewater committee, said the convictions were highly significant. "These verdicts establish that there was in fact a network of cronies in Arkansas who operated the savings and loan as a criminal enterprise." He implied, without saying so directly, that Mr and Mrs Clinton were among the "cronies".

The American media have frequently shown a strange reluctance to give prominence to the Whitewater affair, but news of the convictions was spread across every front page yesterday. Mr Clinton gave 45 minutes of evidence in the trial, via a video link with the White House, as the star defence witness. He failed to sway the jurors, who apparently believed David Hale, a former judge and convicted felon, who was the star prosecution witness. Two jurors said afterwards that they found the president's testimony credible but were swayed by overwhelming documentary evidence.

The trial confirmed that McDougal ran Madison as a criminal operation. Mrs Clinton did legal work for the bank, and it is those billing records that mysteriously disappeared, then reappeared in the White House living quarters this year.

The weeks ahead could be extremely dangerous for the Clintons. Mr Starr has adopted a "bottom-up" strategy - securing convictions against small players, then offering shorter sentences in return for evidence against the bigger fish. The investigation is reported by one American newspaper to be planning a plea bargain with the McDougals if they will testify against the Clintons.

Mr Hale has claimed that Mr Clinton, when governor, pressed him to authorise a Ł200,000 government-backed loan to a company controlled by Mrs McDougal. If one of the McDougals were to testify in support of his claim, Mr Clinton could be in serious trouble.

Mrs Clinton is also potentially exposed. Prosecutors are investigating whether she knowingly resisted a subpoena for her Madison billing records. Mrs Clinton was recording a previously arranged television interview shortly before the verdicts were announced. Reiterating that she and her husband had nothing to fear in the Whitewater inquiry, she described the bunker mentality that had taken over the White House.

She said she dare not keep a diary for fear it would be seized by prosecutors. She lived in fear that political enemies would "persecute every friend of mine, everybody I've ever talked with, everybody I've had a conversation with . . . to try to make a case against somebody. It's very sad".

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