Guilty judge may shed light on Clintons

DAVID HALE, a former judge, pleaded guilty to two charges of fraud in Little Rock, Arkansas, yesterday opening the way for him to testify before a grand jury on what he knows about the Clintons' business affairs. In the past he has alleged that Mr Clinton twice put pressure on him in 1987 to make an illegal loan of dollars 300,000 ( pounds 200,000) to Susan McDougal, a business partner of the Clintons.

The plea bargain with Mr Hale was reached at the request of Robert Fiske, the special prosecutor, who is looking into Whitewater. Mr Fiske, confirming that he had first approached Mr Hale's lawyer about a deal a month ago, said his investigation would be better able to proceed because 'Mr Hale is now available to us as a co-operating witness'.

In Congress Democratic and Republican leaders meeting yesterday agreed to hold talks about the time and place of hearings on Whitewater. Tom Foley, the speaker of the House, said: 'We are going to engage in a dialogue with the Republicans.' The Democrats have insisted that Congress should do nothing that would interfere.

Although Mr Fiske looked pleased at securing Mr Hale's co-operation there are doubts about the credibility of the former municipal judge. Jim McDougal, the man who ran the Whitewater land company and the Madison Guaranty savings and loan firm, said on television that Mr Hale was 'a con and a cheat' who had dragged the Clintons into his affairs to cut a better deal with the Justice Department.

Mr Hale, 53, a suave-looking, small-time political operative who doubled as a businessman and judge, has a shady reputation in Little Rock. As a municipal judge handling traffic violations and minor charges he had a reputation for always doing the bidding of the sheriff's office.

In 1979 Mr Hale set up the only company in Arkansas licensed to make loans backed by the Small Business Administration to minorities; 16 per cent of the state's 2.3 million population are black. In practice Mr Hale's company made loans to political allies including dollars 250,000 to Jim Tucker, governor of Arkanas. A government report says that he also set up shell companies to whom he secretly loaned money causing losses of dollars 3.4m to the SBA.

In 1987 Mr Hale made a loan of dollars 300,000 to a company owned by Mr McDougal's wife Susan. Over the last year he has said he did so after twice being approached by Mr Clinton, then governor of Arkansas. He did so even though she did not appear to qualify for the loan 'but we were friends and that is the way business is done in Arkansas'.

Mr Clinton denies knowing anything about the loan to Mrs McDougal. Mr Hale's co-defendants in the fraud case also say Mr Hale never told them that Mr Clinton was involved.