VIET DINH: Yes. And certainly should have known the
likely use it was going to be put to by Jim McDougal
and other officials at Madison-- that is, to present
to federal regulators as a means to conceal the
fraudulent nature of the underlying transaction.
PETER BOYER: Federal investigators believe that is why
those billing records went missing. The records
directly tie Hillary Clinton to legal work on Castle
Grande, a land deal that has already put two people in
prison: Jim McDougal and Judge David Hale. And former
Arkansas governor Jim Guy Tucker was convicted of
So a four-year investigation by two independent
counsels is narrowing to two people and what each did
in connection with Castle Grande. Regarding the
president, there had been a persistent story in
Arkansas that the reason Judge Hale gave that loan to
Susan McDougal was because he'd been asked to do so by
then governor Bill Clinton and during the Whitewater
trial Judge Hale testified that the story was true.
But when President Clinton was asked the question, he
said in sworn testimony it never happened.
1st READER: [attorney] All right, were you ever
present at Mr. McDougal's office on 145th Street
when a discussion occurred about financial
assistance from David Hale or his Capitol Management
Services Company involving any other business that
you or Mr. McDougal may have had?
2nd READER: [Bill Clinton] No, sir. Never.
1st READER: [attorney] Were you ever present at any
time for any meeting between Mr. McDougal and David
2nd READER: [Bill Clinton] Never. I never was
present at any meeting.
PETER BOYER: The independent counsel has anecdotal
evidence that President Clinton committed perjury when
he categorically said he was never present at any
meeting. There is the testimony of David Hale. He says
he met with Jim McDougal out here at the Castle Grande
sales offices. Then Governor Clinton arrived and asked
about that $300,000 Small Business Administration loan
3rd READER: [David Hale] I received a call from Jim
McDougal to meet he and Governor Clinton at the
Castle Grande office to talk about getting their
loan ready and consummated. And we met at the Castle
Grande office, in Jim's office.
4th READER: [Attorney Ray Jahn] When you arrived,
did you notice any cars in the parking lot?
3rd READER: [David Hale] Jim's Jaguar was there.
PETER BOYER: And there is the word of Jim McDougal. He
talked to us at the federal penitentiary in Lexington,
JIM McDOUGAL: Mr. Hale and I had a meeting to discuss
a shopping center he was proposing to build on
property at Castle Grande and then Governor Clinton
arrived, after we had concluded the meeting and gotten
out in the yard.
PETER BOYER: And you have no doubt that he knew that
there was such a thing as the Susan loan?
JIM McDOUGAL: Well, he inquired directly about it.
Yes, I believe he knew.
PETER BOYER: Who do you suppose told him about that?
JIM McDOUGAL: I'll let you draw your own conclusion.
PETER BOYER: Yes.
JIM McDOUGAL: I think we just need to understand that
there are certain things that I'm not going to say and
one thing I'm not going to say is anything which will
reflect badly on Susan McDougal. No matter what she
has to say about me, I wish her well. I'm very fond of
PETER BOYER: Susan McDougal is in a federal prison in
Los Angeles. She has been sent there for refusing to
answer any of the questions the independent counsel
wants to ask her. Was Bill Clinton at that Castle
Grande meeting? Did he know about her loan from Judge
Hale? Did she and the governor have a relationship at
[interviewing] To your knowledge, did the President
testify truthfully at your trial?
SUSAN McDOUGAL: I won't answer any questions that
might help the independent counsel in his
PETER BOYER: To your knowledge, how much did Bill
Clinton know about that $300,000 loan that--
McDOUGAL ATTORNEY: I'm sorry, but we can't go into
SUSAN McDOUGAL: I'll tell you what--
McDOUGAL ATTORNEY: This is something we talked about
SUSAN McDOUGAL: I can answer in the way that I
answered to them, is that I don't know of anything--
McDOUGAL ATTORNEY: She is not going to answer
anything related to Clinton (inaudible) relationship with
this $300,000 loan, with Whitewater, to any question that
Kenneth Starr would likely ask her before the
Whitewater grand jury. [crosstalk]
PETER BOYER: Let's not waste any more time on that.
I'm asking about--
SUSAN McDOUGAL: I've been in jail for a year about
this, a year. This is why I came to jail, because I
won't have anything to do with questions that have to
do with the investigation. I just won't.
PETER BOYER: Did you have a relationship with Bill
SUSAN McDOUGAL: No.
PETER BOYER: When he was governor?
SUSAN McDOUGAL: No.
PETER BOYER: So that leaves the word of Hale and
McDougal, two convicted felons. But that's not all the
independent counsel has. FRONTLINE has learned that
the independent counsel believes there was another
witness to the meeting.
[interviewing] Wasn't there at least one other
person in a position to say whether or not the Governor
had been out there that day?
JIM McDOUGAL: Yes.
PETER BOYER: And it's our information that that person
is known to the independent counsel.
JIM McDOUGAL: Yes.
PETER BOYER: And wouldn't that, in your view, suggest
that the president was lying in his videotaped
testimony in your trial?
JIM McDOUGAL: For that you'll want to read my book,
which I will-- where I will divulge the name of this
person and cover that episode in detail.
PETER BOYER: Investigators have been told that R.D.
Randolph, business partner to Jim McDougal and Jim Guy
Tucker, also witnessed Governor Clinton's presence at
the alleged Castle Grande meeting. Randolph is not
cooperating with the independent counsel, but he told
FRONTLINE that while such a meeting could have taken
place, he doesn't recall it.
What happened to that $300,000 loan Susan received from
Judge Hale? Twenty-five thousand dollars of it covered
a debt on that land development the Clintons and
McDougals got involved in back in the 1970's which
Susan called "Whitewater."
But while the independent counsel is pursuing the
perjury question, there's also the question of
possible obstruction of justice. Remember the '92
presidential campaign, when Gennifer Flowers, Bill
Clinton's draft record and Whitewater were dogging
him? His campaign officials wanted to know just how
much work Hillary Clinton had done for Jim McDougal.
So over at the Rose law firm, her billing records were
printed from the computer file and the computer file
itself-- well, it vanished.
VIET DINH: Somebody had erased the last remaining
complete record as to what work the Rose law firm
performed for Madison and also what lawyer performed
what work for Madison.
PETER BOYER: The printout of the billing records help
explain the Castle Grande tangle. That's why it has
become so important to prosecutors to determine how
those records went missing and whether the First Lady
had a hand in hiding them-- in other words, in
VIET DINH: Whoever had the documents themselves were
under a legal obligation to produce them. That much is
clear. And the failure of that production, if it is
conscious, if it's intentional, an intentional
withholding of documents subject to a federal
subpoena, would be obstruction of justice. The
question is who had the documents.
PETER BOYER: Webb Hubbell had been the managing
partner at Rose. He remembers reviewing the printout
during the '92 campaign.
WEBB HUBBELL: [Congressional hearing] The bills were
pulled and reviewed by myself and Mr. Foster.
RICHARD BEN-VENISTE, Committee Counsel: Did you
review them together with Mr. Foster?
WEBB HUBBELL: I believe at least that I reviewed
them and gave them to Mr. Foster.
RICHARD BEN-VENISTE: So to the best of your
knowledge, after the review by you and Mr. Foster,
Mr. Foster had possession of them, at least in early
WEBB HUBBELL: That's correct.
RICHARD BEN-VENISTE: And did you see them again
after that review?
WEBB HUBBELL: I don't believe so.
VIET DINH: We know that these billing records were in
Vince Foster's possession. He had made notations to
them specifically directed to the First Lady, questions like,
"HRC-- I believe there's a subsequent bill."
PETER BOYER: To help determine exactly who had the
billing records, the FBI checked for fingerprints. Indeed,
they found Vince Foster's prints right next to that April 7th
phone call to Don Denton. That was the call, Denton says,
in which Hillary Clinton brushes off his cautions about the
VIET DINH: One of the few places that Vince Foster had
his fingerprints on the billing records was exactly at
the entry where Mrs. Clinton billed for a 12-minute
phone call on April 7th, 1986, on a telephone
conference with Don Denton.
PETER BOYER: And the FBI also found Hillary Clinton's
VIET DINH: So Vince Foster certainly had them. Webb
Hubbell admits that he had them and reviewed them at
one point. And we know that Hillary certainly had them
at one point. The question is, who had them at the
PETER BOYER: The theoretical motive for hiding the
records is pretty simple.
VIET DINH: What they reveal is the extent and nature
of Mrs. Clinton's involvement and work in the Castle
Grande transaction. Without the billing records, we
would not have the full picture of the Castle Grande
transaction as we now know.
PETER BOYER: How the billing records got to the
Clintons' private quarters in the White House was a
key subject of Hillary Clinton's long session before
the grand jury.
HILLARY RODHAM CLINTON: I do not know how the
billing records came to be found where they were
found, but I am pleased that they were found because
they confirm what I have been saying.
PETER BOYER: Mrs. Clinton says the records show that
she did very little work for Madison Guaranty, so
little she doesn't remember the details. That's why
her attorney told us that the case of the missing
billing records is a "meaningless mystery." It's now
up to the Whitewater grand jury to decide whether or
not to accept the First Lady's account. The Senate
Whitewater committee has already reached its conclusion.
VIET DINH: I think there is significant evidence to
conclude that Mrs. Clinton was more likely than any
other known person to have placed the records in the
book room, or at least to have knowledge of how they
came to be there. And I think that that conclusion was
based on sound evidence.
PETER BOYER: The prosecutors' view is that the billing
records are part of a larger pattern of concealment
beginning in 1988 with the destruction of Madison
Guaranty files and the vanishing computer records in
1992, the removing of files from Vince Foster's office
in 1993. From the vantage point of a prison cell in
Kentucky, Mrs. Clinton's former client and friend has
JIM McDOUGAL: If they had been forthcoming, if they
had told the absolute truth from the outset, this
story would have died a long, long, long time ago.
It's the-- it's the lying about it, just-- and it is
following the Watergate scenario to a T, right down to
the fellow being reelected by an overwhelming majority
and then it getting worse and worse and worse.
PETER BOYER: But it might have all been different.
There had been a moment, back when McDougal so
desperately hoped for redemption and a helping hand
from his friend, Governor Bill Clinton, when there was
still a chance for a happy ending.
SUSAN McDOUGAL: It would've changed Jim's life and in
doing that, this Whitewater, this entire episode would
never have happened. It would have been a different
destiny for Jim McDougal.
PETER BOYER: She believes at that exact moment when
Clinton promised McDougal's mother a job, but didn't
call except to ask for $3,000-- at that moment Jim
McDougal felt betrayed. A course of action presented
itself: revenge. Back in the summer of 92-- Gennifer
Flowers, the draft allegations, when the billing
records from Rose were disappearing:
BILL HENLEY: He was feeling a great deal of anger and
animosity toward Bill Clinton and he was seething in
Arkadelphia, Arkansas, while he saw this young man
running for president and not offering any kind of a
hand to him.
PETER BOYER: That's when Jim McDougal paid a visit to
a Little Rock lawyer named Sheffield Nelson, who
happened to be a Republican and one of Bill Clinton's
worst political enemies. Nelson was, at the time,
acting as a source for the first "New York Times"
stories which ignited Whitewater.
SUSAN McDOUGAL: His bitterness is what led him to meet
with the "New York Times" writer that wrote the first
story on Whitewater. I saw Jim moments before he met
with Jeff Gerth. It was meant.
BILL HENLEY: He gave Jeff Gerth my name and number as
a source to back up what he was saying to Jeff Gerth
about Whitewater and the Clintons and I never spoke
with Jeff Gerth. This young man, running for the
presidency of the United States, who grew up 30 miles
from my home and had a chance to win and Jim McDougal
wanting to-- wanting to do anything he could to
sabotage that chance and I was not going to be a part
of it. You have to understand that Jim McDougal felt
he had nothing to lose.
JIM McDOUGAL: I went to Sheffield Nelson and,
actually, that's how all of this Whitewater thing got
PETER BOYER: Because you said?
JIM McDOUGAL: I think he asked me something about
Clinton and at that point I wasn't in a very good
humor with either of them, probably much worse than I
am now. And he said, "There's a fellow here investigating
some business that involves you." And I said, "Oh," and he said,
"Yes, Jeff Gerth of `The New York Times.' "
PETER BOYER: Sheffield Nelson recorded McDougal's
conversation and this is what McDougal said.
JIM McDOUGAL: [audiotape] "I can sink it quicker than
they could lie about it, if I could get in a position so I
wouldn't have my head beaten off. And Bill knows that."
PETER BOYER: "I can sink it quicker than they could
lie about and Bill knows that."
SUSAN McDOUGAL: Although I don't think he calculated
the harm that it did do. I don't think he, in his
wildest dreams, knew that this would happen. In fact,
the people decimated by what he did was himself and
me. And so, of course, in his usual way of kicking
down a door, he never thought about the end result of
what was going to happen.
PETER BOYER: Could it be that simple? All the
illegalities, the troubles-- could they have stayed
covered up if only Bill Clinton had helped Jim
McDougal once upon a time in Arkansas?
Pres. FRANKLIN DELANO ROOSEVELT: There is a mysterious
cycle in human events--
SUSAN McDOUGAL: It would've changed his entire
destiny. I absolutely believe that.
Pres. FRANKLIN DELANO ROOSEVELT: --of other
generations much is expected. This generation of
Americans has a rendezvous with destiny.
ANNOUNCER: Still interested? Check out FRONTLINE
on the Web for a closer look at President Clinton's taped
deposition in the Jim McDougal trial, a synopsis of
the Castle Grande deal, a special report on how the
media covered Whitewater and more of our exclusive
interviews. Explore FRONTLINE on line at www.pbs.org.
(Audio During the credits)
Next time on FRONTLINE:
HARRISON FORD: For anyone who's ever questioned what
can one person do comes a story of one man who brought
relief to Ethiopia, water to Sarajevo and tried
desperately to bring peace to Chechnya. I'm Harrison
Ford. Join me for the complex life and mysterious
disappearance of an American hero next time on
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