New testimony released on Hillary Clinton role GOP discloses data 4 days before Senate probe ends

June 14, 1996|By NEW YORK TIMES NEWS SERVICE

WASHINGTON -- Four days before they are supposed to complete their investigation, Republicans on the Senate Whitewater Committee yesterday disclosed new testimony that they said raised fresh questions about the involvement of Hillary Rodham Clinton in structuring a land deal in 1986 that was later found to be fraudulent.

The testimony came from H. Don Denton, a former savings association executive who for months has been cooperating with the Whitewater independent counsel, but whose account of Hillary Clinton's legal work was unknown before this week.

In an interview with federal investigators taken Tuesday and made public yesterday afternoon, Denton provided details indicating that the first lady had played a greater role than she has acknowledged in constructing an important part of a 1986 land deal near Little Rock, Ark. That deal was later criticized by examiners as a sham and became one of the largest losses for a savings association that ultimately collapsed, costing taxpayers $60 million.

Denton said in the interview that in an April 1986 conversation, Hillary Clinton "summarily dismissed" a legal concern he had raised about a loan note that was at the center of the

transaction.

"He said that his caution was 'summarily dismissed' by Clinton in a manner which he took to mean that he was to take care of savings and loan matters, and she would take care of legal matters," the federal agents who interviewed Denton wrote.

Denton was the top loan executive at Madison Guaranty Savings and Loan Association. Madison had been owned and operated by James B. McDougal, the Clintons' business partner in the Whitewater land venture, who was recently convicted on 18 felony counts associated with the savings association and the very land development for which Hillary Clinton performed legal work.

Thursday evening, Senate Republicans asked the first lady to respond under oath to the questions raised by the testimony in time for her account to become part of the report the committee is to complete Monday and file with the full Senate.

Although the White House said it would consider responding to the questions, it also said the latest request reflected a last-ditch act of desperation by Republicans who had conducted a failed investigation.

"After 14 months and almost $2 million of hearings and a report due in three days, the committee has finally decided to ask questions of the first lady," said Mark Fabiani, an associate White House counsel. "This is final proof that the committee has produced nothing and has been a monumental waste of taxpayers' dollars."

Fabiani noted that the first lady had long ago volunteered to respond to the committee's questions, and that she had already been questioned under oath about the transactions in Denton's testimony.

She has said she has no recollection of helping to structure the Castle Grande land deal or any loans involved in the transaction.

A report issued in February by a law firm hired by regulators had found no evidence that Clinton did anything improper in her legal work involving Castle Grande. But lawyers at Pillsbury, Madison & Sutro, the law firm that wrote that report, never interviewed Denton about Mrs. Clinton's legal work or many of the other witnesses involved in the transaction, including McDougal.

Clinton was initially questioned about her role in the Castle Grande deal after two disclosures: her personal code appeared on a draft of a $300,000 Castle Grande option agreement that was part of what examiners believe to have been part of the fraudulent transaction, and a number of cryptic "Castle Grande" entries were found on billing records that mysteriously appeared in January at the White House, more than two years after investigators sought them.

Although the White House dismissed the new interview, Republicans said the new information could provide a number of important answers.

Pub Date: 6/14/96

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