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Clinton denies aide took hush money

Unrelenting as the Furies of Greek legend, the Whitewater affair has struck again at the White House, this time with allegations that top Presidential aides helped arrange "hush money" payments to a disgraced friend of the Clintons from their Arkansas days, to dissuade him from co-operating with Whitewater investigators.

The furore erupted on Tuesday evening when the White House disclosed that Mr Clinton's first chief of staff, Thomas "Mac" McLarty, and Erskine Bowles, who currently holds the job, helped find work for Webster Hubbell in 1994 after Mr Hubbell resigned as Associate Attorney General.

Within a few months of his departure, Mr Hubbell had been charged and convicted of swindling $480,000 (pounds 300,000) from the Rose Law Firm in Little Rock, Arkansas, where he had been a partner alongside Hillary Clinton, and was familiar with her work on behalf of Madison Guaranty, the failed savings bank at the heart of the Whitewater controversy.

But in his hour of supreme need - jobless, with a family to support, and staring at the prospect of a 16-month jail sentence for fraud - financial help miraculously emerged, in the shape of a clutch of business and legal consultancies worth more than $400,000 a year. Most of these were put together at the urging of close aides of the Clintons. Among these latter, it now emerges, were Mr McLarty and Mr Bowles.

Thus the central question emerges: were the payments to encourage Mr Hubbell, then under intense pressure from Whitewater prosecutors to co- operate in return for a lighter sentence, to keep his mouth shut? If so, as the Wall Street Journal pointed out yesterday, "a cover-up scandal not seen since Watergate" might be about to unravel.

At this stage, of course, the parallel is still fanciful, and the White House insists that Mr Clinton's associates were merely trying to help an old friend through his troubles. All three were pillars of the close- knit local establishment of the 1980s: Mr Clinton as Governor, Mr McLarty as head of the state energy company, Arkla, and Mr Hubbell as a former Mayor of Little Rock. People were "understandably concerned about Mr Hubbell's well-being," a White House spokesman said.

But, in Washington's ultra-partisan climate, such explanations are unlikely to suffice. At the very least, the latest revelations will generate more demands for testimony from the Republican-controlled Congressional committees that torment the Clinton White House.

Far more serious, they could become the "missing link" that allows Mr Starr to bring the scandal over 1996 Democratic campaign fundraising under the already broad umbrella of his Whitewater investigation. Among the providential benefactors of Mr Hubbell, with a $100,000 retainer, was the same Lippo group of Indonesia which made massive, allegedly improper, contributions to the Democratic party last year.

A few weeks ago, Mr Starr seemed ready to throw in the Whitewater towel. Now he is bringing witnesses to the Hub- bell consultancies before a Little Rock grand jury, to explore the "hush money" theory. Circumstantial evidence offers support. Mr Hubbell did go to prison, and has refused to help Mr Starr - to the point where prosecutors warn they may bring new charges against him.