Susan Mcdougal Tells Her Side Of Story In Whitewater Trial -- $300, 000 Loan Was For Her, Not Clinton, Lawyer Says

LITTLE ROCK, Ark. - Susan McDougal, telling her story publicly for the first time, said yesterday through her attorney that the breakup of her marriage in the mid-1980s prompted her to take out a $300,000 loan - the loan that has become the focus of allegations that President Clinton benefited improperly from a joint investment with her and her husband.

Attorney Bobby McDaniel, speaking to the jury in a Whitewater-related trial, said McDougal borrowed the money because she wanted to invest in a real-estate development that would help her "survive economically" without her husband, who at the time was suffering from severe manic depression.

It was this loan that the government's central witness, David Hale, contends he made to Susan McDougal under pressure from Clinton. It is one of a number of allegedly improper transactions for which she is on trial, along with her former husband, James McDougal, and Arkansas Gov. Jim Guy Tucker.

Some of the money Susan McDougal borrowed later passed through the accounts of the Whitewater Land Development Co., which was owned jointly by the Clintons and the McDougals. As a result, investigators have long suspected - but never proved - that the Clintons benefited from this loan, which was never repaid.

"Whee ... this is fun!"

For their part, the Clintons strongly deny that they knew anything about the loan or gained any benefit from it. The president, who has been called to testify later in the trial, also insists he did not ask Hale to lend the money to Susan McDougal.

Susan McDougal was portrayed by her attorney as a woman who showed considerable ambition and skills in marketing and advertising the real-estate developments funded by her husband's thrift, Madison Guaranty Savings & Loan.

But Susan McDougal also lacked any aptitude for finances, according to her lawyer. To demonstrate her lax attitude toward money, he said she showed up to receive the $300,000 check from Hale wearing a "little tennis dress," signed the necessary documents without reading them and then said: "Whee . . . this is fun, can I come back tomorrow?"

Hale, a former municipal judge, lent the money to Susan McDougal from his government-backed small-business-investment corporation, known as Capital Management Services Inc. He claims he was later told by Clinton, who was then governor of Arkansas, that Susan McDougal had squandered the $300,000.

Attorney McDaniel insisted to the contrary that Susan McDougal was serious about making a success of a real-estate development known as Lorrance Heights that she began with some of the money borrowed from Hale.

At one point shortly after it was acquired, Lorrance Heights property was held by the Whitewater company, in which the McDougals and the Clintons shared an interest.

Jim McDougal told The Los Angeles Times that he put the property under Whitewater ownership briefly because he thought the Clintons were going to sign their portion of the investment over to him and because he hoped that Lorrance Heights could then reap the tax benefits of a $145,000 loss that had been sustained by the Whitewater partnership.

He said he then removed the Lorrance Heights property from Whitewater ownership shortly thereafter when the Clintons failed to give him their stock in the partnership. Therefore, he said, the Clintons enjoyed no benefit from the $300,000 loan in question.

She didn't track every dollar

Another $115,000 of the money Susan McDougal borrowed went to pay for bringing water to a previous development sponsored by the McDougals, known as Flowerwood Farms, McDaniel said.

McDaniel acknowledged, however, that Susan McDougal did not keep track of every dollar of the money she borrowed from Hale. Even though she and her husband were separated, he said, she put the check in a joint account over which her husband exercised primary control.

The prosecution has charged that much of the money was frittered away on renovations and household expenses by Susan McDougal. But McDaniel strongly denied that.