Clinton ordered to testify in Whitewater trial

RUPERT CORNWELL

Washington

Another Whitewater embarrassment was heaped upon the Clintons last night, as a federal judge in Little Rock ordered the US President to testify in an forthcoming fraud trial in which the defendants are the first couple's former partners in the ill-fated Arkansas real-estate venture.

The subpoena had been sought by lawyers for Susan McDougal, the divorced wife of James McDougal, prime mover in the Whitewater project and owner of Madison Guaranty, the Arkansas savings bank which collapsed in 1989, at a cost to taxpayers of an estimated $60 million (pounds 39m).

Ms McDougal is accused of improperly obtaining a US Government-backed $300,000 loan in 1986, whose proceeds went to shore up the already tottering Whitewater and Madison enterprises. But the Arkansas banker who approved the loan, and has also been indicted in the Whitewater investigation, says he only did so under pressure from Bill Clinton, then Governor of Arkansas. As such, say Ms McDougal's attorneys, the President is a key witness who can clear her name.

Last night US District Judge George Howard agreed, and ordered Mr Clinton to appear at the trial, which is scheduled to begin on 4 March. Apart from the McDougals, Jim Guy Tucker, the current Governor of Arkansas, is also a defendant in the case. No indictment has been sought against the President over the handling of the $300,000 loan, and Mr Clinton insists on his complete innocence, as in other aspects of the tangled Whitewater affair.

Nonetheless, coming just 10 days after his wife's unprecedented appearance before a federal grand jury in Washington to answer questions on a separate aspect of Whitewater, the latest subpoena is the last thing the President would have liked as he gears up for this year's election campaign.

There was no immediate reaction from the White House. Privately, however, aides were saying that Mr Clinton's own lawyers would seek to have the President testify by video recording rather than in person in court - a precedent set by other sitting presidents who have testified in cases arising from events before they took office. Jimmy Carter and Gerald Ford both gave evidence in this manner. So too did Ronald Reagan in prosecutions stemming from the Iran-Contra affair.

Whatever happens, and however confusing the Whitewater case, the US public will be reminded of the Clintons' earlier involvement with dubious business figures - and, indirectly, of the broader "character" question which has dogged the President since he entered the White House in 1993.