Mr Mcdougal, who was 57, died of a heart attack in a Texas prison hospital on Sunday while serving a three-year sentence for fraud. An Arkansas businessman, he was the architect of the money-losing Whitewater deal in which the Clintons had invested while Mr Clinton was governor of Arkansas.
Following his conviction two years ago, he had been co-operating with the inquiry launched by the independent prosecutor, Kenneth Starr, into allegations that Mr Clinton used his position as state governor to obtain an illegal loan.
A long-time friend and political ally of Mr Clinton's, Mr McDougal made headlines last year when he explained his decision to co-operate with the Whitewater inquiry by saying: "I just got sick and tired of lying for the fellow [Clinton]."
The four-year-old Whitewater inquiry is not complete and Mr McDougal's death deprives Mr Starr of an important witness. Yesterday Mr Starr was with advisers, trying to assess how far his inquiry might be damaged. Last week there was good news for Mr Starr, when another Whitewater player and former Arkansas governor, Jim Guy Tucker, decided to co-operate with the investigation in return for a lighter fraud sentence but the death of Mr McDougal could more than outweigh that benefit.
Any setback for the Whitewater inquiry may also affect the investigation into Mr Clinton's relationship with the former White House trainee, Monica Lewinsky. The only reason why this inquiry was entrusted to Mr Starr was the alleged involvement in both cases of Vernon Jordan, a well-connected Washington businessman and Mr Clinton's golfing partner.
The question is whether Mr Jordan, who admits using his influence to help both a disgraced ex-Whitewater player and Ms Lewinsky to obtain private- sector jobs, was doing them a personal favour, or whether he was acting at Mr Clinton's behest to silence potentially awkward witnesses. Were the Whitewater investigation to collapse, the much-criticised Mr Starr's right to investigate the Lewinsky case could be challenged.Reuse content