Whitewater evidence a `bunch of bull'

RUPERT CORNWELL

Washington

If there is a Whitewater criminal case against Bill Clinton, then this was it: the charge by a former banker and municipal judge that the then Governor of Arkansas, now 42nd President of the United States, helped arrange an illegal $150,000 loan (pounds 97,000) to help a tottering savings bank owned by one of his friends.

That friend was James McDougal, Little Rock entrepreneur and Mr and Mrs Clinton's partner in the original Whitewater property venture, established in 1979, and currently on trial for embezzlement and fraud in the first case brought to court by the Government-appointed prosecutor probing the Whitewater affair. The former banker and judge is David Hale, a convicted felon who is now the President's prime accuser.

This week Mr Hale repeated, under oath, his story of a meeting between himself, Mr Clinton and Mr McDougal in January 1986 to finalise the $150,000 loan to be made by a Government-backed investment company run by Mr Hale.

Theoretically, the company was supposed to lend only to disadvantaged businesses. This time, according to Mr Hale, the money would be channelled directly to Mr Clinton and to a company owned by Mr McDougal's wife, to help prop up her husband's Madison Guaranty bank, under scrutiny by federal investigators and already close to collapse.

At one point, said Mr Hale, Mr Clinton even offered to put up land as security for the loan, but was told that was unnecessary. But the then Governor did insist: "My name cannot appear on this." To which Mr McDougal is said to have replied: "Don't worry." Ultimately the loan increased to $300,000, which was lost when Madison finally went under in 1989. A damning indictment - except for one small problem: Mr Hale may not be telling the truth.

Two years ago, when the charge surfaced, Mr Clinton called the Hale story, "a bunch of bull", and the White House yesterday made clear the President will say so again when he gives evidence by videotape on 28 April. Mr McDougal flatly denies the meeting took place, and on the witness stand Mr Hale was embarrassingly unable to remember details about it.

Most damaging of all to his credibility, Mr Hale has struck a plea-bargain with prosecutors to testify against Mr McDougal in exchange for a reduced sentence. Last month he was sentenced to 28 months in jail after admitting his company defrauded the Government of some $2 million. "Bill Clinton is simply David Hale's meal ticket to a shorter sentence," said a lawyer for the McDougals.

So it will be a sitting President's word against that of a future prison inmate, hardly an even match. But the Whitewater enigma will remain, nurtured by the impossibility of proving a negative.