HEARINGS RESUME ON WHITEWATER.

Byline: Pete Yost Associated Press 

An Arkansas regulator testified Wednesday that he strongly objected to giving a $300,000 state lease to Bill Clinton's Whitewater business partner a decade ago but that the then-governor allowed the state contract to be approved.

As Whitewater hearings resumed after a two-month delay, Senate Republicans also focused on a third-hand memo from 1986 that suggested that Clinton may have promised the lease in return for an earlier campaign contribution.

However, two people associated with the memo testified they either could not recall the conversations or were unaware of any scheme to trade state business for donations - an act that would be criminal.

Nonetheless, Republicans called Clinton's support for the $300,000 state lease to Whitewater partner James McDougal a case of ``influence peddling'' while Democrats continued their attacks on the year-old hearings as wasteful and partisan.

Former state housing official Wooten Epes testified that he told the then-Gov. Clinton that space being offered by McDougal's savings and loan was inadequate and was in a section of town where employees would worry about safety.

Despite Epes' objections, Clinton's ``statement was that he didn't see the necessity to overrule the decision'' of another state official who wanted to lease part of McDougal's Madison Guaranty Savings & Loan on Main Street in Little Rock, Ark., Epes said.

Epes testified he was unaware that Clinton and McDougal were business partners when Epes initiated the meeting with the governor in 1984.

The lease is an illustration of ``influence peddling,'' said Sen. Rod Grams, R-Minn. But the committee's ranking Democrat, Sen. Paul Sarbanes, said the governor did not inject himself into the debate over leasing space from McDougal - but rather allowed state bureaucrats to make their own decision.

White House spokesman Mark Fabiani called the committee's focus on an 11-year-old issue ``a pretty anemic start'' to renewed hearings.

``There's nothing new,'' Fabiani added.

Republicans pulled out a memo quoting Arkansas attorney Greg Hopkins as saying that in return for a substantial campaign contribution by a client, businessman Charles Peacock, the governor assured McDougal that a state agency would lease space from McDougal's S&L.

Peacock said he never made such an allegation, and Hopkins says he doesn't recall ever doing so.

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PHOTO Helen Herr, a former leasing administrator for the Ar kansas Housing Development Finance Authority, testifies Wednesday.

Associated Press