JIM LEHRER: Now a Whitewater update and to Margaret Warner.
MARGARET WARNER: Two months ago Whitewater Independent Counsel Kenneth Starr said he had accepted a new job beginning in September. Though he later retracted that decision, the incident prompted widespread speculation that Starr's inquiry was nearing an end. But yesterday Starr sought and won a six-month extension of the Whitewater grand jury in Arkansas. In his petition to the court Starr said he had found "extensive evidence of possible obstruction of justice" and needed more time to concludes his probe. Here to give us some perspective on all this is Los Angeles Times reporter Sara Fritz, who's been covering the Whitewater story. Welcome back, Sara. Has new life been injected into this investigation?
SARA FRITZ, Los Angeles Times: I think the best way to put it is that the Whitewater investigation is now in a new phase and what looks to be the final phase of this very long investigation. Mr. Starr is no longer looking at the underlying crimes in this case, but he's looking at what he believes was a cover-up of those crimes. And so in his petition he says he has found evidence of a possible obstruction of justice by unnamed people, presumably at the White House. And so in that sense it really has gotten new life.
MARGARET WARNER: So the obstruction of justice, though, what supposedly--what does Kenneth Starr think, what are the underlying cases to which he thinks justice was obstructed or covered up?
SARA FRITZ: Well, he didn't say in his petition precisely what he thinks, but we know about at least three areas that he's looking into. First is that the President is accused of having lied in his testimony before the Whitewater trial last summer. The second is an allegation of hush money that was arranged by White House officials for former Associate Attorney General Webster Hubbell.
MARGARET WARNER: That's the allegation.
SARA FRITZ: Right. An allegation. And finally there's the question of mysterious billing records, the records of Mrs. Clinton's legal work that she did for Madison Guaranty, the savings & loan at Little Rock, which disappeared and mysteriously reappeared last--two years ago at the White House.
MARGARET WARNER: Now, last week at the sentencing of Whitewater, the convicted Whitewater partner of Bill Clinton, James McDougal, Kenneth Starr said that he had cooperated tremendously with prosecutors. Has McDougal--is he one of the factors in this new light? And if so, how? Explain that.
SARA FRITZ: Very much so. McDougal has given them a lot of new information, particularly McDougal told them that the President lied last year when he denied on the witness stand that he was not present at a 1986 meeting at a trailer, real estate land trailer, south of Little Rock. That is the meeting at which McDougal and his co-conspirator, David Hale, decided to give--arrange a $300,000 loan for McDougal's ex-wife, Susan. And McDougal said at the trial last year he supported Clinton's contention that he was not there, and now he's told the grand jury that the President--then the governor--was at that meeting.
MARGARET WARNER: Now, if McDougal told one version and now he's telling another one, why do prosecutors believe the second version, and do they think it would stand up in court?
SARA FRITZ: Well, because McDougal has changed his story, the prosecutors know that he would not be a good witness in an obstruction of justice case against the President. And so that's why they're scrambling and trying to find additional evidence and additional witnesses to corroborate McDougal's testimony. And that's why they very much want testimony from McDougal's ex-wife, Susan. They think that she can corroborate and say that she was told that Clinton was at that meeting.
MARGARET WARNER: And she, of course, is in jail right now on contempt of court for refusing to testify. All right. Now go on to the other new area--the Webster Hubbell--these allegations about payments made to him after he left the Justice Department. Two close Clinton aides came to testify before the Arkansas grand jury last week. What do you know about what they said? Why were they chosen? What do you know about what they said?
SARA FRITZ: Erskine Bowles, the chief of staff, and Mack McLarty both were called before the grand jury last week. And they told the grand jury that, yes, indeed, they arranged for Web Hubbell to get some payments, some legal work, from a variety of Democratic supporters of the President, including the Lippo Group in Indonesia, which has been at the center of this most recent controversy. But they said that they did it out of friendship and not as hush money. The allegation is that they were trying to arrange these payments to keep Hubbell from cooperating with Starr's investigation while Hubbell was under investigation. And from what we know right now, from what I know from talking to prosecutors, they're very skeptical at this point that they can prove that this was a hush money arrangement.
MARGARET WARNER: And why do they want--would they want Web Hubbell to cooperate with them, which Kenneth Starr has said he has not done? But what is it that Webster Hubbell knows, they think?
SARA FRITZ: They think that Web Hubbell knows more than he is saying about the legal work that Mrs. Clinton did for Madison Guaranty, which is the savings & loan owned by the McDougals.
MARGARET WARNER: Finally, Sara, Kenneth Starr has been very tight-lipped all of these months about the progress of his investigation. Yet, he really seemed to tout his progress in going for--in filing this petition. Did he need to say so much to get this extension?
SARA FRITZ: It was an unusually revealing statement for the Starr team to put in. I'm told that the judge in the case, Susan Weber Wright, insisted that he file a complete petition, but it's also interesting to note that ever since this incident that you referred to in the opening, when Starr was embarrassed by his resignation, or his decision to take the job at Pepperdine, his staff--he and his staff have been a lot more open with the press and a lot more chatty about their case.
MARGARET WARNER: Well, thank you very much.