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.
home |
castle grande |
seven friends |
key documents |
interviews |
foster's journal |
chronology |
pursuing whitewater |
viewer reaction |
press reaction |
tapes & transcripts |
web site copyright WGBH educational foundation