Ken Starr's Secret

The conventional wisdom debunked.
June 22 1997 3:30 AM

Ken Starr's Secret

How he knows that Whitewater is bunk.

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For many of us home folks, the greatest irony of the Clinton presidency has been the export of traditional slapstick Arkansas political theater to an unexpectedly gullible nation. Who could have predicted that down-home buncombe artists like Judge David Hale and Jim and Susan McDougal would take center stage in a national melodrama partly scripted by a washed-up segregationist?

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Yes, we're talking Whitewater. But before you mouse-click away, consider the tale of the Dog That Didn't Bark in the Night. According to the Official Whitewater Press--those who take their leaks directly from the office of independent counsel Kenneth Starr--the heart of the matter is supposed to be a bogus $300,000 loan made by Hale's Capital Management Services to a nonexistent marketing company owned by Susan McDougal. Last year, both McDougals were convicted of fraud for having misapplied the proceeds of the so-called "Master Marketing" loan.

H ale testified at the trial that he, Jim McDougal, and Bill Clinton had had a surreptitious meeting at which the then-governor urged him to make the loan and offered collateral in the form of real estate in the famous, misbegotten Whitewater development. According to Jeffrey Rosen's recent, Starr-approved version of the story in the New York Times Magazine, "almost $50,000 of the $300,000 loan ultimately wound up paying for expenses for the Whitewater land venture, in which the Clintons and McDougals were partners." According to Hale, Clinton told him, "My name cannot show up on this.".

At his own trial, Jim McDougal repeatedly denied that any such meeting between himself, Hale, and Clinton had taken place. Now, after being convicted of conspiracy and bank fraud in crimes not involving the Clintons, McDougal says the meeting did occur. Susan McDougal, as the world knows, isn't talking. Her story is that she fears the independent counsel will stick her with a perjury charge if she fails to confirm the lies of David Hale and her ex-husband. In his own videotaped trial testimony, Clinton not only denied any knowledge of the Master Marketing loan but also contended that he'd never had a substantive conversation on any topic with Hale--any time, anywhere.

Clinton didn't get to be president of the United States by telling thunderous, easily exposed whoppers where a cunning equivocation would have sufficed. "Sure, I asked Hale to help Jim and Susan out," the president might have testified, "but I didn't think they were going to default on the loan and steal the money." Nor did the independent counsel present any evidence to contradict his total denial.

Clinton's claim to be barely acquainted with Hale does not strike local observers as improbable. Appointed to a municipal judgeship by Gov. Frank White, Clinton's Republican predecessor, Hale was a longtime associate of Sheffield Nelson, the president's bitterest GOP rival. Also known as something of a nut case, Hale was once successfully sued to the tune of $486,000 by his mistress for having swindled her grandparents out of the family farm.

So here's the non-barking hound I promised: In a recent interview with Associated Press reporter Pete Yost, Hale claimed that he once had documentary evidence of Clinton's participation in the bogus Master Marketing loan, but that federal investigators stole it! FBI agents executed a search warrant on his office on July 21, 1993. "The file on the $300,000 loan was 3 to 4 inches thick when the FBI took it," Hale claimed. "But when my attorney and I asked to see it a month or so later, the U.S. attorney's office gave us maybe an inch of stuff."

Supposedly the key purloined document was a handwritten letter from Jim McDougal to Hale promising that Clinton would make good on the Master Marketing loan. Not that a letter from one con man to another would prove anything, but it would certainly make a dandy stage prop. So why were you unaware of this until now? Here, after all, is Special Prosecutor Starr's ace witness against the president of the United States accusing federal investigators of filching the evidence. Where are Ted Koppel and Jeff Greenfield on this explosive story? Where, for that matter, is the New York Times' Whitewater Nostradamus, William Safire?

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A nswer: No one is pursuing this story because no one believes it--including Kenneth Starr's prosecutors. Also, the allegation isn't new. Hale first made it four years ago, when he was facing indictment for embezzling $2.04 million from the Small Business Administration. That episode involved dozens of phone calls with a jackleg Arkansas pol and professional Clinton-phobe named "Justice Jim" Johnson. The FBI and the Senate Whitewater Committee have already looked into this charge and apparently found it empty.

The point is that even Starr can't possibly believe what David Hale says. But to fully grasp how poor a witness Hale would make in a case against Bill Clinton, it's also helpful to know a bit more about what the FBI and U.S. attorney had on Hale back in 1993, when his accusations against the president helped initiate the first full-scale Whitewater media freakout.

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