CLINTON KNEW ABOUT LOAN, MAGAZINE SAYS.

Byline: Associated Press 

Convicted Whitewater partner Jim McDougal is now telling independent counsel Kenneth Starr that then-Gov. Bill Clinton knew about an illegal 1986 loan issued to McDougal's wife at the time, according to The New Yorker magazine.

ABC News reported Sunday night that McDougal has told them the same thing.

Both McDougal and President Clinton have testified under oath that Clinton did not know about the loan and was not present at a 1986 meeting where it was discussed, as alleged - also under oath - by David Hale.

Hale is now serving a federal prison term after pleading guilty to charges stemming from his issuance of the loan, backed by the federal Small Business Administration, to Susan McDougal.

Both McDougals, along with former Arkansas Gov. Jim Guy Tucker, were convicted by a Whitewater jury in Little Rock, Ark., last year in a trial where Clinton's alleged involvement in the $300,000 loan was an issue.

Some of the money from the loan was used to purchase land for a real estate development near Little Rock that originally was purchased for the Whitewater Corp., in which Bill and Hillary Rodham Clinton were equal partners with Jim and Susan McDougal.

The development subsequently was transferred to a corporation owned solely by the McDougals, and The New Yorker says Susan McDougal took the lead role in attempting to sell and market the lots in a project called Lorrance Heights.

Clinton has testified, via videotape, that not only did he not pressure Hale to make the loan to Susan McDougal, but that he did not know about the loan and did not know about Lorrance Heights.

The New Yorker - in an article by Pulitzer Prize-winning reporter James B. Stewart, author of ``Blood Sport: The President and His Adversaries'' - reports that Starr's office has obtained telephone records showing numerous calls between Clinton's office and the Lorrance Heights development office at the time Susan McDougal was working on it.

Stewart reports that Susan McDougal has told him in previous interviews that Clinton was on the telephone nearly every day during that time, giving her much-needed emotional support.

The magazine says investors are eager to know what Susan McDougal and Clinton were talking about, what their relationship was at the time and whether Clinton had reason to know of the loan and how it was used.

The magazine says David Kendall, a lawyer representing the Clintons, declined to comment on assertions made in the article, as did representatives of Starr's office.

The independent counsel was in court in Little Rock last week seeking postponement of McDougal's sentencing until the summer on grounds that new and valuable evidence he has provided would take time to pursue.

Stewart writes that Starr is unlikely to move against Clinton based on Jim McDougal's word alone and that Susan McDougal remains adamant in her refusal to testify under oath about whether Clinton knew about the $300,000 loan.

Stewart based much of his 14-page article on a recent hourlong interview with Susan McDougal at the Sybil Brand Institute for Women near Los Angeles, where she is serving an 18-month contempt of court sentence for refusing to testify before a Whitewater grand jury even though she has been given immunity against further prosecution by Starr - except for perjury.