THE COURT: All right, Mr. Jahn, you might proceed with your cross examination.
MR. JAHN: 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?
MR. CLINTON: Well, just from press accounts and from reports that my counsel have given me.
MR. JAHN: Okay. Are you aware, sir, of what he testified to?
MR. CLINTON: I believe he testified -
MR. JAHN: 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?
MR. CLINTON: I read the press accounts of it.
MR. JAHN: Okay. You read how - to what extent, sir, were they quotations, were they direct quotations?
MR. CLINTON: 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.
MR. JAHN: Okay.
MR. CLINTON: And some other things.
MR. JAHN: So, you did receive, then, direct information concerning what it was that Mr. Hale had apparently testified to under oath; is that correct?
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?
MR. CLINTON: None, sir. I mean, my impression is that all of us were talking about what we read in the paper.
MR. JAHN: 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?
MR. CLINTON: No, sir, I was not aware of that.
MR. JAHN: Is Mr. Lindsey still associated with the White House, sir?
MR. CLINTON: He is.
MR. JAHN: What is his current association with the White House?
MR. CLINTON: Mr. Lindsey is one of my aides, he travels with me, and he does political work for me.
MR. JAHN: Has he ever related to you, sir, accounts as to what Mr. Hale allegedly said under oath during the course of this trial?
MR. CLINTON: I don't believe so.
MR. JAHN: 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?
MR. CLINTON: 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.
MR. JAHN: 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?
MR. CLINTON: Well, I get a national security briefing in the morning and I get a scheduling book for the rest of the day, yes, sir.
MR. JAHN: Have you received a briefing book concerning your testimony, sir?
MR. CLINTON: 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.
MR. JAHN: Did that briefing book contain any accounts concerning what Mr. Hale had allegedly said under oath during the course of this trial, sir?
MR. CLINTON: No, sir, it didn't.
MR. JAHN: 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?
MR. CLINTON: Yes, sir, I do.
MR. JAHN: 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?
MR. CLINTON: That's correct.
MR. JAHN: 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?
MR. CLINTON: 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.
MR. JAHN: Okay. And that was the Bank of Kingston; is that correct, sir?
MR. CLINTON: I believe that's right.
MR. JAHN: All right. Later became called Madison Bank and Trust, I believe. Were you familiar with the change in name at a later date?
MR. CLINTON: I am now, I don't know that I knew when it happened.
MR. JAHN: And were you aware at the time, sir, that that was a financial institution owned jointly by Mr. McDougal and Stephen Smith?
MR. CLINTON: I knew that Steve had an interest in the bank, yes.
MR. JAHN: 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.
MR. CLINTON: 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.
MR. JAHN: 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?
MR. CLINTON: That's right, they worked there together.
MR. JAHN: 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?
MR. CLINTON: 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.
MR. JAHN: Okay. But in 1978, was Mr. Smith working for you as attorney general, sir?
MR. CLINTON: He was working in the attorney general's office.
MR. JAHN: Okay.
MR. CLINTON: But Mr. McDougal wasn't.
MR. JAHN: 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.
MR. CLINTON: All right, sir.
MR. JAHN: 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?
MR. CLINTON: Well, I assume that we made them together, since we took out the loan and we took it out from that bank.
MR. JAHN: Do you recall you and your wife going to the Bank of Kingston and executing notes and the like?
MR. CLINTON: No, I think we signed the note without going up there.
MR. JAHN: Okay. And so, at the time that you did it, you knew that it was Mr. McDougal's institution?
MR. CLINTON: I did.
MR. JAHN: Okay. And you knew that he and Mr. Smith were basically in control of that institution?
MR. CLINTON: I did.
MR. JAHN: 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?
MR. CLINTON: 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.
MR. JAHN: Okay. And that hope, sir, was based upon representations that Mr. McDougal made to you; is that correct, sir?
MR. CLINTON: Yes, sir. He had been in the land development business for some years, and he had enjoyed quite a bit of success in that.
MR. JAHN: And you and your wife had no experience in land development; is that correct?
MR. CLINTON: 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.
MR. JAHN: But as far as putting in roads and developing tracts -
MR. CLINTON: No.
MR. JAHN: - and developing marketing programs and the like, that was Mr. McDougal's expertise?
MR. CLINTON: That's right. And that was the understanding, that we would put in half of the money but that he would manage it.
MR. JAHN: Okay. And you deferred to Mr. McDougal's expertise in that particular area?
MR. CLINTON: Yes, sir, I did.
MR. JAHN: Did Ms. McDougal have any expertise in that particular area?
MR. CLINTON: Well, they worked together. I don't 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.
MR. JAHN: 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?
MR. CLINTON: 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.
MR. JAHN: 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?
MR. CLINTON: 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.
MR. JAHN: 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?
MR. CLINTON: We were paid less than the other southern states.
MR. JAHN: Okay.
MR. CLINTON: 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.
MR. JAHN: 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?
MR. CLINTON: 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.
MR. JAHN: 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?
MR. CLINTON: That's correct.
FORWARD: Cross-Examination by the Prosecutor, Ray Jahn (continued), with introduction of Exhibit 94