once upon a time in arkansas
Transcript of President Clinton's Video Deposition

Editor's Note:

On April 28, 1996, President Clinton testified for four hours as a defense witness in the trial of James and Susan McDougal. In April 1996, Jim and Susan McDougal, and then-Arkansas Governor Jim Guy Tucker, went to trial in what would become the Independent Counsel's first Whitewater convictions. Each defendant was convicted of multiple counts of financial fraud for their involvement in transactions related to the Castle Grande land deal.

Susan McDougal was convicted for fraudulently obtaining a $300,000 loan from a Small Business Administration-backed lending operation run by Little Rock Municipal Judge, David Hale. Loans from Hale's operation, Capital Management Services, Inc., were intended for minorities and the economically disadvantaged.

The loan to Susan McDougal, ostensibly for the purpose of creating an advertising agency called Master Marketing, was deposited directly into her and Jim's personal account at Madison Guaranty. Some of the proceeds from the loan went to pay off outstanding debts on other McDougal loans, including a $25,000 payment to cover overdrafts in the Whitewater account.

As a witness for the prosecution during the Tucker/McDougal trial, David Hale testified that in late 1985, and early 1986, then-Govemor Bill Clinton inquired on several occasions about the status of Susan McDougal's loan.

As a witness for the defense, President Clinton testified via videotape that he had never spoken to David Hale or either of the McDougals about the $300,000 loan to Susan. The President categorically denied having any knowledge about or involvement in the Susan McDougal loan. The testimony of the President follows:


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 Haleat 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?<p>

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, wecan 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.

A: 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 politicalwork 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 hadever gone to Mr. McDougal and sought financial aid from Madison Guaranty Savings and Loan concerning your joint business ventures; do you rememberthat, 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 institutioncontrolled 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 bottomleft-hand corner; is that correct?

A: That's correct, sir.

MR. JAHN: Your Honor, we would move the introduction of Government's Exhibit73.

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 l ast 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 wheremy 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 thatcorrect, 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 asthe 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 two, three, four, five, six, nine, 10, 11, 12, 14, 15, 16, 17, 18, 20, 22, 23, 24, 29, 30, 35, 37, 43, and 44 to an organization called the Ozark Air Services, Incorporated. Do you know who or what Ozark Air Services, Incorporated was, sir?

A: I don't believe I did know that, no.

Q: Did you know, sir, that these were the remaining unsold lots of Whitewater Development Corporation, Incorporated?

A: I don't believe I knew that at the time, no.

Q: Did Mr. McDougal consult with you, sir, prior to his transfer of the unsold lots of Whitewater Development in May of 1985?

A: No, sir.

Q: Did he ever tell you or did he tell you at that time, sir, as to what his - what he was receiving in exchange for these particular lots?

A: I don't believe he did, no.

Q: Did he ever talk to you, sir, concerning the obligations which you still, and you and Ms. Clinton still had, concerning the payments of debts in the name of Whitewater Development Corporation after 1985?

A: I'm not sure I understood that question, Mr. Jahn. Would you ask it again, please?

Q: Well, if Whitewater doesn't have any more real estate left over, where is the profit going to come from, Mr. President?

A: Well, presumably, sir, the real estate contracts were accompanied by the obligation to pay certain funds into Whitewater, that was the money that was going to be used to pay the bank notes off.

Q: Yes, sir. That's what you were going to break even on, or that's what Mr. McDougal told you?

A: That's what we hoped we would. And there were a period of several years within the early '80s where, at least I assume, that we were breaking even, or we were making the bank notes, the bank payments we were supposed to be making.

Q: Okay. And in fact, the profit that you and Ms. Clinton hoped to make was going to come from the sale of these excess lots, wasn't that a fact, sir?

A: Well, by then, sir, I had pretty much given up on making a profit, I was just hoping we could break even and not lose anything else.

Q: Well, now, Government's Exhibit 76, sir, is dated May 30th, 1985, and you still had the obligations reflected in the government's exhibits concerning the renewal of the loan which you signed in the fall of 1985. Do you remember that, sir?

A: Yes, sir.

Q: Did Mr. McDougal, when you renewed that loan in the fall of 1985, did he tell you, sir, that he had, in fact, sold or transferred all of the real estate assets of Whitewater Development Corporation to Ozark Air Services, Incorporated?

A: No, sir, he didn't.

Q: Sir, if you would, in October of 1985, Mr. Tucker purchased 35 acres, or 34 acres of property at that same location that you've discussed previously in your testimony, that is, at 145th Street and what later became known as the Castle Grande area. Were you aware of that, sir, in October of 1985?

A: No, sir, I was not.

Q: OK. You indicated that you had been to that area on one occasion, and your recollection was that it was in June of 1986. Do you remember that?

A: Yes, I do.

Q: OK. If you would, sir, your calendar also reflects that in October of 1985, more specifically, October 26th, 1985, you went to the Siemens-Allison plant for their 15th anniversary celebration. Do you remember, sir, going to the Siemens-Allison plant at that location where you described in October of 1985 to celebrate their 15th celebration - 15th anniversary?

A: I believe I did go there, yes, sir.

Q: All right. At the time that you went, sir, that was on a Saturday, do you recall whether or not you knew Mr. Tucker had, in fact, purchased some real estate in that particular area?

A: I did not know that.

Q: OK. Your telephone call, toll records, sir, reflect that on the following Monday, October 28th, 1985, you received a phone call from Mr. McDougall. Do you recall, sir, what it was that you spoke to Mr. McDougal about on October 28th, 1985?

A: I don't know that I did speak to him.

Q: Well, if you can, let me show you some - are you familiar with the record-keeping system by Ms. Dixon, sir?

A: Yes, sir, I am.

Q: OK.

MR. JAHN: If I may have a second, Your Honor.

(WHEREUPON, Government's Exhibit Number 71-B was marked for identification.)

BY MR. JAHN:

Q: I'm going to show what has been marked for identification as Government's Exhibit 71-B as in boy, reflecting a page of her records of October 28th, 1985. Do you see that before you, sir?

A: (Witness reviews document.) This appears to be just a series of notes that Linda Dixon made to herself, yes, sir.

Q: And reflects a Jim McDougal, 3 p.m., 374-7777; is that correct, sir?

A: Yes, sir. But it doesn't reflect whether he called for me or for Betsey Wright.

Q: OK. That's a good point, sir. But as far as the notation or the scratching out of the document, do you know what Ms. Dixon's practice was as far as calls which were either completed or returned as far as scratching out those particular document?

A: No, sir, I don't.

Q: OK. And Ms. Dixon was - what was her position at the time, sir?

A: She was my secretary.

Q: All right. And is she still employed with you, sir?

A: Yes, she is.

Q: OK. And what is her position now, sir?

A: She works in our office in Arkansas.

Q: OK. And as far as - but back to the question, sir. Do you recall receiving a phone call in October - October 28th, 1985 from Mr. McDougal?

A: No, sir. I have gotten a few phone calls since then. That was more than 10 years ago. I don't remember it, no.

Q: Sir, the records of the governor's mansion of the state of Arkansas reflect that on December 19th, 1985, Mr. McDougal and Senator Fulbright came by the mansion and visited with you. Do you remember that event, sir?

A: Yes, sir. I remember that Senator Fulbright was in town and he wanted to see me, I wanted to see him, and Jim was good enough to bring him by.

Q: OK. During the course of that visit, sir, did you and Mr. McDougal have any conversations concerning the development of his property called Castle Grande out at the 145th Street location that you've talked about?

A: No, sir. I believe it was just a social visit with Senator Fulbright.

Q: OK. In that case, then, do you recall any conversations you might have had concerning some property that he desired to purchase from International Paper Company, property that later became known as the Lorance Heights development?

A: No, sir, we never talked about that.

Q: Now, you testified on your direct, sir, that you recall an occasion in January of 1986 when Mr. McDougal came by the mansion and visited with you; is that correct?

A: Yes, sir, he did.

Q: And your recollection, sir, was that that was sparked by some difficulty that he was having with the state of Arkansas, with an agency within the state of Arkansas?

A: That's correct.

(WHEREUPON, Government's Exhibit Number 81 was marked for identification.)

BY MR. JAHN:

Q: Sir, if you would, I'm going to show you what has been marked for identification as Government's Exhibit 81. Government's Exhibit 81, sir, is a memo addressed to you; is that correct?

A: Yes, sir.

Q: And it reflects the discussion concerning that meeting on that Saturday in 1986, January 1986; is that correct?

A: Well, this is a memo to me from Nancy Hernreich, who was at that time my scheduler, and it has got my check on it in a handwritten notation, it is in my handwriting. It says Mr. McDougal wants to see me before Tuesday.

Q: OK. And it has the notation of 1-14 as the date, and then a notation of 1-18, `1 slash 18, Saturday, mansion''; is that correct, sir?

A: That's correct.

Q: And the handwriting at the bottom this "Saturday morning," that is your handwriting?

A: "Saturday morning," that is my handwriting.

MR. JAHN: Your Honor, we move the introduction of Government's Exhibit 81.

THE COURT: All right. Received.

(WHEREUPON, Government's Exhibit Number 81 was received into evidence.)

BY MR. JAHN:

Q: In that, sir, what is the stated purpose as far as Mr. McDougal's desire to see you on that Saturday, the 18th of 1986, sir?

A: Well, this says - I will just read it. May I read it?

Q: Yes, sir, please. It is in evidence.

A: This is a note from Nancy. It says, He needs to see you before Tuesday to get you to sign some personal business papers. The best time would be this weekend or next Monday, which is a state holiday. Any time is fine with Jim. Do you want me to have him come by?'' So, this is between 1-14 and the next Tuesday, and I said, "Saturday morning."

Q: Yes, sir. What were the personal papers that Mr. McDougal wanted you to sign, sir?

A: I don't know. I don't remember. And I'm not sure there were any.

Q: Well, Mr. McDougal at this time was a friend of yours; is that correct?

A: Yes.

Q: He was a political adviser to a certain extent; is that correct?

A: He gave me some political advice, yes.

Q: He was a business partner of yours; is that correct?

A: Yes.

Q: It wasn't necessary for him to fib to your staff in order to get to see you, was it, sir?

A: No.

Q: Do you recall, sir, whether or not you were asked to sign any personal papers on January 18th, 1986, by Mr. McDougal when he came to the mansion?

A: I do not remember signing any papers like that.

Q: All right. And no one has ever shown you any personal papers that bear a date of January 18th, 1986, that you signed for - on behalf of Mr. McDougal, have you, sir?

A: I don't remember doing it, and I have seen no documents that indicate that I did.

Q: All right. And as far as that particular visit, do you recall one particular reason that he came. Do you recall him bringing any personal papers with him when he came, sir?

A: I don't, no.

Q: Did he discuss with you, sir, any negotiations that he had concerning the purchase of property from International Paper Corporation in January of1986?

A: Absolutely not. He never talked to me about that.

Q: Did he discuss with you any hopes or expectations that he might have concerning his Castle Grande real estate development during that meeting in January of 1986?

A: I don't remember any such discussion.

Q: Did he discuss with you the prospect of, regardless of the names, of acquiring additional property south? You do know where Castle Grande is, right? I mean, you are familiar now with - that that was the name that was applied to the 145th Street development area by Mr. McDougal? I just want to make sure we are on the same wavelength.

A: I'm familiar with the fact that he had that property on 145th Street.

Q: Yes, sir. And are you familiar, then, that there was advertising concerning Castle Grande and that was the name that was applied to that particular real estate?

A: If you say so, I'll take your word for it.

Q: Well, I.m just asking you. OK. So, lefts talk about the 145th Street - let's just call it the Castle Grande property, if we can. We have to make sure you and I understand what we are talking about. Did he talk to you concerning any hopes and expectations that he had as far as developments of the Castle Grande property?

A: The only property he spoke with me about was the property that he was having trouble with the Health Department on. Now, I know that wasn't Whitewater property, I don't believe it was Castle Grande property, but it was some property where there was no municipal sewer system, and it had to be inspected by the state and approved for installation of septic tanks.

Q: Maybe I can help you -

A: And I don't know whether - now, maybe that was the Castle Grande property, but I don't know. I have no recollection of that. There was no discussion of property acquisition or finances or anything. He was upset because he thought the Health Department was not giving him a fair shake on this property. I have a very clear memory of that, and that's all I remember him talking to me about.

Q: Let's be more specific, then, and maybe I can help you. Do you remember Maple Creek Farms, do you remember that was the property where he was having the difficulty with the Health Department, was Maple Creek Farms?

A: I remember that he owned some property called Maple Creek, but I don't remember - if that's where it was, I'll take your word for it. I'm sure there are documents on that.

Q: But then you have no independent recollection, then, of any conversation on January 18th concerning either developments of Castle Grande is that correct, sir?

A: That's correct.

Q: You have no independent recollection, did he discuss with you purchases of the Castle Sewer and Water by Jim Guy Tucker during the course of that January 18th, 1986 meeting?

A: No, sir, I don't.

Q: OK.

A: Not at that meeting.

Q: And you have no recollection, then, concerning purchases of property from International Paper Corporation; is that correct?

A: Absolutely not. We never discussed anything having to do with International Paper Corporation.

Q: All right. Now, you, in exchange, or after having this meeting with Mr. McDougal, you personally, sir, set up a meeting, then, with representatives from the State Health Department, did you not, sir?

A: Well, that's - what I did was, I first had my staff look into it, give me a report, and then they arranged to have this meeting set up.

Q: Sir, back to the question. You personally, though, took a role in setting up that meeting; is that correct?

A: I don't believe I called the Director of the Department of Health to meet with him, but I - it's conceivable, but I don't believe I did.

Q: Do you know Tom Butler, sir?

A: I do know Tom Butler.

Q: Mr. President, you called Tom Butler and you specifically asked him, if he would, to come to the meeting, sir, and at that particular time, you told Mr. Butler that you were doing this because Mr. McDougal is a supporter.

Do you remember that, sir?

A: Have you got some documentation that would help me with that? That was a long time ago.

Q: Sure. I'm going to show you a report of interview with Mr. Butler, if you would, sir, dated March 8th, 1995.

MR. COLLINS: May we have a copy of that?

MR. JAHN: That's the only copy I've got.

MR. COLLINS: Will we get one?

MR. JAHN: Sure.

BY MR. JAHN:

Q: And I highlighted the particular portions, sir.

MR. KENDALL: May the witness be allowed to read the entire document?

MR. JAHN: Sure. Whatever. I just highlighted to try to speed things up.

THE WITNESS: (Witness reviews document.)

BY MR. JAHN:

Q: Have you finished it, sir?

A: Almost.

Q: OK.

A: I have now read the whole thing.

Q: OK. You personally set up that meeting, or took a role in setting up that meeting with a conversation with Mr. Butler, did you not, sir?

A: Well, according to this interview. First, let's talk about this. You have given me an interview done by the Office of Independent Counsel with Tom Butler, who was the number two person at the Department of Health when I was governor, and that was done in - last month, on March the 9th, in 1995. And Mr. Butler says that I called him and asked him to give Mr. McDougal an interview about his septic tank problems, and I stated to him that he had been a supporter of mine for years and had never before asked for anything from the state. And that might well have happened.

Q: OK.

A: I don't dispute that. Let me just say this, I remember very well the meeting that was held in the governor's office about this.

Q: OK. So, you don't dispute, then, that you could have even because of your respect for Mr. McDougal and your relationship with Mr. McDougal, you could have even personally undertaken to set up that particular meeting; is that correct?

A: Yes, sir.

(WHEREUPON, Government's Exhibit Number 93 was marked for identification.)

BY MR. JAHN:

Q: OK. And Mr. Butler, in fact, here - I want to show you now Government's Exhibit 93. Do you see Government's Exhibit 93, sir?

A: Yes, sir.

Q: In order to speed things up, I'm going to do a little leading of you, if I could. That's your schedule for the date of March 4th, 1986; is that correct?

A: Yes, sir.

Q: And it reflects that you did, in fact, have such a meeting with Mr. McDougal and Mr. Butler at 2 o'clock on that day; is that correct?

A: Yes, sir.

MR. JAHN: Your Honor, we would move the introduction of Government's Exhibit 93.

THE COURT: All right. Received.

(WHEREUPON, Government's Exhibit Number 93 as received into evidence.)

BY MR. JAHN:

Q: At that meeting, sir, did Mr. McDougal tell you that on that very day, or effective that very day, he had signed a contract to purchase 200 acres of land from International Paper Corporation, sir?

A: No, sir, he did not. He was - as this report that you have given me points out and refreshes my memory, that day all he could talk about, according to this report that you have given me, and it is certainly consistent with my memory, was how upset he was about the Health Department on the land there. He never said anything about any purchase of the land.

Q: Did he tell you, sir, that he had made that purchase - I'm sorry, 800 acres, I have been corrected - of 800 acres in the name of Whitewater Development Corporation?

A: Absolutely he didn't. As a matter of fact, we were never even alone there. I had a big meeting there because he wanted a hearing from the Health Department, and he didn't say anything about any of that. Not - he didn't ever say anything about it, and he certainly didn't say anything that day, absolutely not. This was a meeting about, just as Tom Butler reports here in this document you have given me, this was a meeting about the problems he was having getting septic tanks approved.

Q: Had you, sir, by March the 4th, 1986, been informed by Mr. McDougal of his sale of other assets of Whitewater Development; that is, that at that day, on that date, Whitewater Development had no other real estate assets for sale? Had he ever told you about that transaction we talked about earlier, the one back in June of 1985?

A: First of all, Mr. Jahn, those are two different things. The answer to the second question is, no, I don't believe he ever told me about it. I don't believe I ever knew that. The answer to the first question, I don't think is quite accurate. If the lots were sold on escrow contracts, then the deed was withheld and they had to make the payments to Whitewater and then Whitewater would use the payments to pay off the bank notes. So, I don't think - the fact that the land was sold, it was a good thing for Whitewater, not a bad thing, sir.

Q: But those were the loans that you were hoping would break you even. As far as making any profit, there were no assets in March of 1986 to make your profit, were there, sir?

A: Well, I don't know the answer to that. That depends on - I don't know how much was outstanding on all those lots that had been sold. I don't know if they had paid it all off if it would have been enough to pay the bank notes off and more besides. I don't have a clue about that. I can't answer that question.

Q: In March of 1986, sir, the only way Whitewater Development Corporation could make money, the money that Mr. McDougal promised you, the profit, was to acquire new assets and make a profit on those assets; isn't that a fact, sir?

A: Sir, I would have to say no for two reasons. Number one is no and I don't know. Number one, Mr. McDougal never promised me any money. He asked me if I wanted to take a risk with him, a business venture, an investment. There is no such thing in the free enterprise system as a risk-free investment. We took a chance, we made what I thought was a prudent investment, and it didn't make money. I'm sorry about that, but he didn't violate any promise to me on that.

Number two, whether there was any way to make money or not depends upon a question that I don't know the answer to, which is, what was the total outstanding due on all the contracts that had been sold as of that time, and was that total sufficient to cover the bank note and leave something over besides? I don't know the answer to that, and I don't know that - if you do, I would be glad to hear it, but I don't have a clue whether that is true or not.

Q: And you don't know the answer because Mr. McDougal didn't tell you, he didn't sit down and talk to you concerning whether or not there was enough money or enough assets left to make a profit for Whitewater Development Corporation; is that your testimony, sir?

A: I was a passive investor, he was managing the land, that is my testimony.

Q: Exactly. He was managing the land, he was making the decisions; is that correct?

A: That is correct, he was making the decisions.

Q: And it is your testimony then that he never once told you about any great hopes or expectations or visions that he had for property that he was purchasing from International Paper Corporation?

A: Never once, he never discussed International Paper.

Q: Did he ever mention the name "Lorance Heights" to you, sir?

A: I don't believe so. I have no recollection of that.

Q: Did he ever mention the name "Master Marketing'' to you, sir?

A: No, sir.

Q: Did he ever ask you to make any more additional contributions to Whitewater Development Corporation in the spring of 1986?

A: I don't believe he did.

Q: Did Mr. McDougal make any statements to you concerning the development of roads on the Lorance Heights property, sir?

A: No.

Q: Did Ms. McDougal make any statements to you concerning the development of roads on the Lorance Heights property?

A: No.

Q: Do you know R.D. Randolph?

A: I do.

Q: OK. Did he ever talk to you about hiring R.D. Randolph to do work out at the Lorance Heights property, sir?

A: I knew that R.D. Randolph worked with Jim McDougall I don't believe I knew what he did.

Q: I asked you about organizations that you had not heard about. Did you ever hear any reference to a company called Master Marketing, sir?

A: No.

Q: Did you ever discuss a Master Marketing with Jim McDougal?

A: No.

Q: Did you ever discuss Master Marketing with Susan McDougal?

A: No.

Q: On April the 3rd, 1986, Master Marketing received $300,000 from David Hale's corporation, Capital Management Services. Were you told in advance, sir, that such a loan was going to be made?

A: No.

Q: Were you told after such a loan was made that it had been made?

A: No.

Q: Were you told as to how the proceeds of that loan were used?

A: No, sir.

Q: were you aware, sir, that $25,000 of the proceeds of that loan was used for the down payment in the name of Whitewater Development Corporation of the International Paper Company property?

A: I was not aware of that.

Q: Were you aware, sir, of the need as to when the closing date was to be, as far as the purchase of that particular property?

A: No, sir, I wasn't.

Q: Did you have contact at all, during the year 1986, with either Mr. or Ms. McDougal concerning Whitewater Development Corporation, to your recollection, sir?

A: Yes, I believe I did, along toward the end of the year.

Q: All right. What happened along toward the end of the year, sir, in reference to the Whitewater Development Corporation and Mr. and Ms. McDougal?

Who was it, first of all, that contacted you?

A: I believe it was Mr. McDougal, along toward the end of the year.

Q: OK. And he contacted you, did he not, sir, and he wanted you and Ms. Clinton to basically abandon any interest in the property; is that correct - in the corporation; is that correct?

A: My recollection is he called me and he said to me, ''This thing has lost money. We've put a lot of money into it. It's never going to run a profit. I'd like for you to sign your stock over to me and we could use it for,'' I think, for "tax purposes" or something. I believe that's the request he made.

Q: And what was your response, sir?

A: Well, I discussed it with Hillary, and in the end we decided not to do it.

Q: OK. When he made that request of you, sir, did he tell you that there was, in fact, 800 acres of land in the name of Whitewater Development Corporation?

A: What 800 acres? You mean, different from the Whitewater land?

Q: Yes, sir.

A: I don't believe he did, no, sir.

Q: Did he tell you about any great hopes or expectations - at that time when he asked you to abandon your interest in Whitewater Development Corporation, did he tell you about any great hopes or expectations he had for the development of that property?

A: Mr. Jahn, my recollection is - and I believe he also wrote me a letter about this time - my recollection is that I had a conversation with him and I had a letter. And my recollection is that what he said was there were - Whitewater had lost money, it still lost money, there were losses on Whitewater that he had sustained, that if he had all the - if he were the sole stockholder, if he and Susan owned all the stock, that he could get some tax advantages from those losses, which means by definition he had some gains somewhere. But I had no idea what those gains were or what the tax considerations were. He didn't discuss it with me, and I didn't ask him.

Q: So, he didn't tell you anything at all about the assets that were then in existence of Whitewater Development Corporation?

A: He did not.

Q: He didn't tell you about any of his plans for development of the property in the name of Whitewater Development Corporation?

A: No, sir, he didn't.

Q: Didn't tell you anything at all about his plans for the future for Lorance Heights; is that correct?

A: That's correct.

Q: OK. Did he tell you, sir, that he was going to transfer assets from the name of Whitewater Development Corporation to Great Southern Land Company?

A: No, sir, he didn't.

Q: Are you familiar with the name "Great Southern Land Company," sir?

A: I am now.

Q: OK. Did you have any interest in the Great Southern Land Company in 1986?

A: No, sir, I didn't.

Q: What did you know Great Southern Land Company to be in 1986, sir?

A: I don't think I knew anything about it in 1986.

Q: OK. If you would, sir -

A: I might have, I just don't remember.

Q: All right.

(WHEREUPON, Government's Exhibit Number 80 was marked for identification.)

BY MR. JAHN:

Q: If you would, sir, I'm going to show you Government's Exhibit 80, that's a check from Ms. Clinton to Great Southern Land Company.

MR. McDANIEL: Give us just a moment, counsel.

MR. JAHN: Surely.

THE WITNESS: (Witness reviews document.)

I have reviewed the document, sir.

MR. JAHN: OK.

BY MR. JAHN:

Q: To Great Southern Land Company in December of 1978; is that correct, sir?

A: Yes, that's a check that my wife signed.

Q: OK. Do you know what Great Southern Land Company was, sir?

A: I'm assuming it is a company that Jim owned, but I don't -

Q: I'm sorry. Isn't it, in fact, a company that he was using back in 1978 at one time or another?

A: That's entirely possible and I've just forgotten it, that's right.

Q: And did he ever tell you, sir, that he intended to transfer real estate assets from Whitewater Development Corporation to his other company, Great Southern Land Company?

A: I don't believe so. I certainly have no memory of it.

Q: You indicated, sir, that you - or specifically denied having certain conversations with David Hale during the course of your testimony?

A: Yes, sir.

Q: Do you remember that line of questioning? How long have you known David Hale?

A: I believe I first met him, as I said, 20 years ago, perhaps a little more than 20 years ago, now.

Q: OK. And you're not representing that you can remember each and every conversation that you had with Mr. Hale; is that correct?

A: No. I don't believe I've ever had any kind of a substantive conversation with him. I don't believe we've ever sat down and had a long talk about

Q: Well, but have you ever sat down and had fairly short talks with him?

A: Not to my memory. But I mean, we have been in the same place, you know, on a few occasions over 20 years, so I can't remember every time I have ever seen him.

Q: Wasn't it a fact that at one point he was the judge that handled any crimes that arose within the capital complex? Did you ever have any occasion to see him, for instance, when he was lobbying for pay raises for state judges and things like that?

A: Well, if he was in the Capitol building, I might well have seen him. I was around the Capitol building, particularly during legislative sessions, I would sometimes visit committee hearings, and I saw hundreds, perhaps even a few thousand people during every legislative session.

Q: And you're not maintaining, though, that you can remember each and every conversation that you had with Mr. Hale?

A: Not at all. I wouldn't begin to say that.

Q: And you're not maintaining, sir, that you can recall whether - what Mr. Hale's reactions were to any conversations that he may or may not have had with you, are you, sir? You're not trying to say that you are clairvoyant or anything like that, are you?

A: What are you asking me, sir?

Q: Well, I'm just asking you, there is no way that you can get in and read Mr. Hale's mind, is there?

A: No. I certainly can't do that. I wouldn't presume to do that.

Q: You are not claiming that you can know the thoughts that went on within Mr. Hale's mind at the time that he may or may not have had conversations with you; is that correct?

A: First of all, sir, I'm not sure I ever had a conversation with him in the Capitol, so I can't even speculate about something I'm not even sure occurred.

Q: Well, I didn't say in the Capitol, I'm just saying any conversations. You must have had some conversation. Are you denying any conversations that you ever had with Mr. Hale at this time?

A: Absolutely not. If - I knew who he was, so if I were to run into him, I'd say Hello, how are you,'' but I don't recall any substantive conversation I ever had with him.

Q: All right. And it is your testimony that you don't recall putting any pressure on Mr. Hale; is that what you said, sir?

A: My testimony is that I did not put any pressure on Mr. Hale.

Q: Yes, sir.

A: That's my testimony.

Q: And you are adamant about that, aren't you, sir?

A: I am adamant about that.

Q: So that even if there were conversations which you can recall - or which you cannot recall which occurred between yourself and Mr. Hale, you know that it was not your nature to go about trying to place pressure on individuals with whom you had associations; is that correct?

A: I did not have any personal business conversations with Mr. Hale.

Q: Well, but I'm saying, as far as your adamancy as far as pressure is

concerned, what is that based upon, sir?

A: Based upon the fact that it didn't happen, sir.

Q: Well, is it based upon your recollection of all of your conversations with Mr. Hale?

A: It's based on the fact that I know that I never pressured David Hale to make a loan, just like I never ran in my jogging shorts out to 145th Street to see him in the cold. I know that I never did that. What he - it is not true that that happened, sir. It did not happen.

Q: Did you ever jog directly to Mr. McDougal's office space, sir?

A: I don't believe I ever jogged directly there, sir, but I - it was - as I testified earlier, Mr. McDougal's office in downtown Little Rock was on Main Street. I never jogged to any of his real estate offices, and certainly not to 145th Street, which was 12 miles or so, or 10 miles or something from downtown Little Rock.

Q: I don't know why you would want to change the question, Mr. President.

MR. HEWER: Your Honor, again

BY MR. JAHN:

Q: The question is, did you ever jog to Mr. McDougal's office space?

MR. HEWER: I'm going to object to the argument by counsel.

MR. JAHN: Have you ruled, Your Honor?

THE COURT: Was that responsive to your question?

MR. JAHN: The answer that the president gave? I will be more than happy to clarify, if he doesn't understand, Your Honor. I will be more than happy to rephrase.

THE COURT: Rephrase it.

BY MR. JAHN:

Q: Where was the Madison Guaranty Savings and Loan office space, sir?

A: As I testified, sir, it was on Main Street, less than a mile from the governor's mansion.

Q: And you didn't even need to jog, you could stroll from the mansion to Mr. McDougal's office space, could you not, sir?

A: I could.

Q: And, in fact, during 1985 and 1986, there were a number of occasions in which you basically just got in your car and drove around to various areas; isn't that correct, sir?

A: I don't know that that's true.

Q: Well, as far as reports - was there a Lincoln assigned to the mansion, sir?

A: The governor had a Lincoln, yes.

Q: Yes, sir. I believe the line of questioning, Mr. President, was, it was not far from the mansion to Mr. McDougal's office, was it, sir?

A: No, sir. And I've already testified that I often jogged by there, and that on one or two occasions, I actually went in. I've already testified to that effect a few hours ago.

Q: So, there would be nothing, then, to prevent you from either jogging, walking, or driving from the mansion to Mr. McDougal's office, is there, sir?

A: I could go to Mr. McDougal's office whenever I wished.

Q: That's right. And then there would be nothing that would prevent you from getting in Mr. McDougal's car and driving anywhere where you wanted to, was there, sir?

A: That would be highly unusual.

Q: Well, I'm asking you, sir, was there anything that would prevent you from doing it?

A: I don't recall ever doing it.

Q: Well, but sir, but I'm asking you, if you would, sir, the question is, was there anything that would prevent you from doing it?

A: I wouldn't do that unless there was some reason to do it, and I know of no reason why I ever did it.

Q: Mr. President, if you would, sir, the question is, was there anything that would prevent you from doing it?

A: Yes, there is something that would prevent me from doing it. If I were - if I had jogged by there and I were unaccompanied by the state trooper and he was going to drive me some place besides drive me home so that there wouldn't be the state trooper behind us going wherever we were going, then I wouldn't get in the car, I don't think, and go anywhere with him.

Q: You just threw up a reason why you couldn't. But is there anything that, under normal circumstances, would prevent you from either walking, jogging, or driving over to Mr. McDougal's place of business, getting in his car, and driving any place you wanted to?

MR. McDANIEL: Objection, Your Honor, it has been asked and answered now three times.

MR. JAHN: Your Honor, I submit it has -

THE WITNESS: I must not understand the question.

BY MR. JAHN:

Q: OK.

A: If you want to ask me about a specific example and if something happened, I will be glad to answer that. I have told you that I frequently ran on Main Street. On a couple of occasions, I went in to Mr. McDougal's office at the savings and loan. I felt free to see him whenever I wished to. Now, I don't know how else to answer your question. I have no recollection of riding anywhere in a car with him. If you think that there is a time when I did that or you want to ask me about it, sir, I will be glad to try to answer it, but I'm doing my best to tell you the truth, and all you're asking me to do is speculate.

Q: No, sir. All I'm asking you to do is to admit to the jury, sir, that there is no physical law, no spiritual law, no inconsistency that would prevent you from getting in Mr. McDougal's car and driving anywhere that you wanted to back in 1985 and 1986. That's all I'm asking you.

A: Well, and I explained to you what the facts were, what my practice was. I explained to you what my practice was. Could I physically do it without anyone restraining me? Yes, I could have done that.

Q: OK.

A: Was it my practice to do it? The answer to that is no.

Q: So, the answer is, there was no reason why you couldn't have done it, as far as no physical prevention, no moral prevention, no logical prevention that would have prevented you from having done it; is that correct?

A: There was a logical reason not to do it.

Q: All right.

A: Depending on where we were going. But nobody - I wasn't in handcuffs and chains, if that's what you are asking. No, I could have physically done it.

Q: Is there a reason that you didn't want to answer that question?

A: I didn't understand it.

Q: Oh, I'm sorry.

A: I still don't.

Q: If I don't make myself clear, please feel free to speak up. You've talked about jogging past Mr. McDougal's office. You're aware, sir, are you not, that Mr. McDougal has a recollection concerning an occasion in which you jogged past his office and had a conversation concerning Ms. Clinton?

A: I am aware of that.

Q: Are you aware of that?

A: Yes, I am.

Q: And you are aware, sir, that Mr. McDougal has a recollection of an event in which you jogged by and asked Mr. McDougal to place Ms. Clinton's law firm on a retainer. Do you remember that, sir? I'm saying, do you remember that that's one of Mr. McDougal's recollections?

A: I remember that - I am now aware that Mr. McDougal remembers that I asked - I believe he has testified that he thought I asked him to give Hillary some law business. I don't know about a retainer.

Q: And you're now aware that Mr. McDougal remembers that event occurring and you don't remember it; is that correct, sir?

A: I remember going in to see him. I do not remember asking him to do that, no.

Q: OK. But you don't recall asking him to place Ms. Clinton on a retainer; is that correct?

A: I do not, no.

Q: You don't recall - do you recall asking him to give her a specific amount per month in reference to that retainer?

A: No, I don't.

Q: Do you recall any - you say you remember going in to see him. Do you remember going in to see him and discussing Ms. Clinton and law business for Madison Guaranty Savings and Loan?

A: I do not.

Q: Is there any - I just want to make sure I'm asking you the right question, I'm not asking you a question that you don't understand. Is there any combination of facts that I can ask you that comes anywhere close to what Mr. McDougal recalls as far as that particular conversation is concerned?

A: Well, I don't remember the specific request. You know, we spoke in passing about a lot of things over the years. I don't know whether he asked me, How is Hillary doing?" ' How are we doing?" I'm just answering the question as I know it. I do not remember making that specific request.

Q: Do you remember the question, sir?

A: No.

Q: Will you at least concede, sir, that it is human nature that individuals remember events said differently from each other?

A: Depends on the significance of the events and how long ago they occurred. But obviously people's memory of specific things are different as time passes.

Q: OK.

A: Particularly if they are not especially important to them.

Q: OK. And if they are especially important, there are occasions in which individuals can remember, even on important issues, can remember conversations differently, one remembering it one way and one remembering it another. Isn't that a fair statement, sir?

A: Your definition of important'' and mine might be different. I think there are some times when people have different memories of exactly what was said, and both of them are doing their best to tell the truth.

Q: That's correct. And those events occur whether it is important or unimportant. You're the one that injected unimportant. I'm just trying to point out that those differences occur whether it is important or unimportant; isn't that correct?

A: Some things stick in your memory more than others, that's right, Mr. Jahn.

Q: That's correct. And sometimes it is a direct function of time. You can remember something which occurred yesterday but you can't remember something that occurred a year ago and vice versa; isn't that correct, sir?

A: Yes, sir.

Q: All right. And you're not saying that Mr. McDougal is necessarily wrong concerning his recollection of the event, are you, sir?

A: No. All I'm saying is what I remember. That's all I can do.

Q: OK. And as of now, sir, you cannot remember having a conversation with Mr. Hale concerning how Master Marketing was going to be funded; is that correct?

A: I can remember that I never had such a conversation.

Q: Well, you can remember specifically that you never had that conversation?

A: I never had that conversation.

Q: OK. Did you ever have any conversation with Mr. McDougal concerning how Whitewater Development Corporation was going to be funded in 1986, sir?

A: No, sir.

Q: Did you ever have any conversation with Susan McDougal concerning how Master Marketing funds were going to be spent in 1986?

A: No, sir.

Q: And those conversations you also specifically recall; is that correct?

A: No.

Q: Or the lack of those conversations?

A: No, there were no such conversations.

Q: You indicated, sir, that you know R.D. Randolph?

A: I do.

Q: OK. How long have you known R.D. Randolph?

A: A long time. Maybe almost as long as Mr. McDougal I think that Mr. Randolph worked with Mr. McDougal in Senator Fulbright's office in Little Rock back in the '60s. So, I've known him a long time.

Q: OK. And known him both personally as well as through politics; is that correct, sir?

A: Well, I know him personally, if that's - I mean, I know him by his first name, I've known him for many years.

Q: And he was also -

A: Knew his father, knew he was from Logan County, and they supported me up there. I knew him.

Q: And then you also knew that he was very active in politics; did you not, sir?

A: Yes, I do. Well, that's how I met him, through Senator Fulbright.

Q: OK. And you were - and in fact, you were active in obtaining his employment with the state, were you not, sir?

A: I believe that he got a job with the state at some time before I left the governor's office, and I think he asked me to support that. And we had someone in the governor's office that actually tried to help place people with state jobs, so I might well have done that.

Q: Mr. President, if you would, sir, during the spring of 1986, sir, did you know, or did Jim McDougal talk to you about arranging a loan to benefit Larry Kuca and a firm called Campobello Realty?

A: No, sir.

Q: In the early part of 1986, did Mr. McDougal talk to you concerning arranging a loan for the benefit of Stephen Smith, your former employee, and his company, The Communication Company?

A: No, sir.

Q: Did he talk to you, sir, concerning arranging a loan to benefit Jim Guy Tucker in a firm called Castle Sewer and Water?

A: No.

Q: Did you have any conversations, sir, I believe it's already been covered, but I'll ask it again, concerning arranging a loan to benefit a firm called Master Marketing?

A: No, sir.

Q: And lastly, sir, did you ever have any conversations with Mr. Tucker concerning arranging a loan with David Hale to benefit a firm called Southloop Construction Company?

A: No, I did not.

Q: Sir, you indicated that you had - or that you recall that you did not have any conversations in depth, or any substantive conversations with Mr. McDougal during the year 1986. Do you remember that, sir?

A: No, I remember saying that I didn't recall ever having any substantive conversations with David Hale.

Q: I'm sorry, David Hale. I'm sorry.

A: I testified that I did talk to Mr. McDougal in January of '86 for sure, and I stopped by to see him in June at his trailer on 145th Street.

Q: OK. But as far as conversations with Mr. Hale, that you testified affirmatively that you did not have those; is that correct?

A: I have no recollection of any kind of conversations with David Hale in 1986.

Q: Isn't it a fact, sir, that in your interrogatories to the Resolution Trust Corporation you indicated that you could not remember any such conversations?

A: That's correct, I don't remember having them.

Q: OK. Does that preclude, then, sir, conversations which you no longer recall?

A: Well, if you mean could David Hale have said, Hello, Governor,'' when he was in the Capitol or something like that, I suppose that could have occurred. There were no substantive business-related conversations.

MR. JAHN: May I have a second, Your Honor?

THE COURT: Yes.

MR. JAHN: Pass the witness, Your Honor.

THE COURT: Mr. Heuer?

MR. HEWER: Your Honor, can we have a five-minute break at this point in time?

THE COURT: Yes. We'll give you 10.

MR. HEWER: Thank you, Your Honor.

THE WITNESS: Thank you, Your Honor.

MR. HEWER: May it please the Court.

THE COURT: All right, Mr. Heuer.

MR. HEWER: I have absolutely no questions on redirect, Your Honor.

THE COURT: Mr. Collins or Mr. Brown?

MR. BROWN: May it please the Court, on behalf of Governor Tucker, we have no further questions. Thank you, Mr. President.

THE COURT: Mr. McDaniel?

MR. McDANIEL: Yes, Your Honor. Thank you. And on behalf of Susan McDougal, no further questions. Thank you, Mr. President.

THE COURT: All right. The Court would like to express its thanks to the attorneys, the president, and the excellent staff people you have who have worked with us diligently in setting up these facilities, and, listen, they have really impressed the staff, and they have an open - an open invitation to return to this facility whenever they are in the Arkansas area.

THE WITNESS: Thank you, Your Honor.

THE COURT: That being the case, we will bring this to a close.

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