Murray Waas

Milas H. Hale II, the older brother of Whitewater witness David Hale, has asserted that his brother repeatedly pressured him to lie to federal law enforcement authorities on his behalf during the late summer and early fall of 1993, Salon has learned. Most importantly, David Hale asked his brother to falsely corroborate allegations of illegal misconduct by President Clinton that have been central to the Whitewater investigation of independent counsel Kenneth Starr.

Milas Hale has told confidants that he had no firsthand knowledge about whether David’s allegations regarding Clinton were true, and that he would be lying to the federal authorities if he corroborated his brother’s story, as he had been asked to do. Milas Hale ultimately refused to lie on his brother’s behalf, sources say.

This account of David Hale’s attempted subornation of perjury by his brother was provided to Salon by three people close to Milas Hale. Significant portions of those accounts have been independently corroborated by other sources and documents as well. Milas Hale himself declined to comment for this story, however.

The three sources who have confirmed the story for Salon declined to be identified because of their friendships with the Hale family, and also because of concerns that being named would lead to questioning by the Whitewater independent counsel. They say they have never been questioned by the independent counsel or any other federal law enforcement authorities.

Since March 1994, David Hale has been the central witness against Clinton in Starr’s Whitewater investigation. Hale alleged that in 1986 then-Arkansas Gov. Clinton had pressured him to make a fraudulent and illegal $300,000 loan to Susan McDougal, the Clintons’ partner in their failed Whitewater real-estate investment.

Informed of Salon’s new information, a federal law enforcement official who had worked for Starr commented: “If it turns out that David Hale had indeed attempted to suborn perjury from another potential witness to our investigation, that not only raises the most troubling questions about him as our witness … It also raises the most basic and fundamental questions about our own investigation.

“Someone should be made to answer as to how this could have come to pass as long as five years ago and we did not know a thing about it … After all, we’re talking about the attempted subornation of perjury regarding allegations of criminality about the president of the United States of America.”

During the time that David Hale is said to have asked his brother to lie for him, the Justice Department was on the verge of bringing criminal charges against David Hale for having defrauded the Small Business Administration of more than $3.2 million through a federally subsidized loan company that he then headed. In an attempt to escape criminal charges and a lengthy prison sentence, Hale offered information to prosecutors about alleged illegal conduct by Clinton and other Arkansas political figures.

It would have been extraordinarily significant to the Whitewater probe if Hale had been successful in recruiting his brother to falsely corroborate his story regarding Clinton. That is because Hale has not been able to produce for prosecutors any evidence other than his own word that his story about Clinton was true.

In the five years since Hale first leveled his charges against Clinton, Starr’s investigators have failed to uncover anything significant that might corroborate Hale’s account. As a result, Starr’s impeachment referral to the House of Representatives this summer was devoted entirely to the Monica Lewinsky affair and contained no material at all about Whitewater.

In recent days, Starr has signaled that he is not yet giving up on his Whitewater investigation. Friday, Starr’s office returned a 15-count indictment against Webster Hubbell, a former associate attorney general and close friend of President Clinton and the first lady. The new criminal charges allege that Hubbell, a former law partner of Hillary Rodham Clinton at the Rose Law Firm, engaged in perjury and obstruction of justice to conceal information about the first lady’s legal work on behalf of the Clinton’s Whitewater partner, Jim McDougal.

Meanwhile, a number of serious questions have arisen regarding Hale’s credibility as Starr’s central witness against the president. Most importantly until now, a federal grand jury began hearing testimony in August regarding allegations that conservative political activists had made numerous cash payments, paid legal fees and provided other gratuities to Hale in a possible attempt to influence his testimony as a Whitewater witness.

But the new information that David Hale attempted to influence his brother to give false information to federal investigators raises perhaps the most serious questions to date about his credibility as a witness against the president.

“If it could be shown that a cooperating witness to a federal investigation attempted to recruit someone else to falsely corroborate their testimony, that would be severely damaging to that witness’ credibility,” says John Q. Barrett, a former federal prosecutor who is now a professor at St. John’s law school. “Any ethical prosecutor would want to be aware of the baggage that their witness is carrying before they rely on that witness to testify for the government and send people to jail.”

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That such information has apparently not been uncovered by Starr also raises additional questions about the thoroughness and fairness of his probe of the president. In March, for example, Starr said that he and his staff were unaware of allegations that conservative political activists made covert payments of money to Hale until they were disclosed by Salon.

And several of Starr’s own prosecutors and FBI agents have privately criticized the conduct and judgment of Starr and his top deputy in Arkansas, W. Hickman Ewing Jr., in their handling of Hale as a witness to their Whitewater probe. These federal law enforcement officers have privately stated that Starr did not exercise the necessary skepticism regarding Hale that a more experienced prosecutor would have brought to the case. Charles Bakaly III, a spokesman for the Whitewater independent counsel, declined to comment for this story.

With little more than his own word to corroborate his charges against Clinton, David Hale asked Milas to lie on his behalf and say he had firsthand knowledge that they were true, according to three sources. David Hale also asked his brother to verify other information to federal investigators that Milas had no way of knowing was true, the same people said.

All three of the sources said that their knowledge was based on direct discussions with Milas Hale. Several other individuals close to the Hale family confirmed that these three people are indeed close friends of Milas.

Milas Hale, 63, presided over the municipal court in Sherwood, Ark., for more than 25 years, retiring from the bench in December 1996. He is currently a partner in the North Little Rock law firm of Hale and Young.

Milas used his position as judge all those years to build his own formidable political base. He was also a political ally and sometime confidant of Clinton’s throughout Clinton’s 12 years as governor of Arkansas. During legislative sessions, Milas would often lobby for Clinton’s agenda, skillfully making arguments to sympathetic legislators and twisting the arms of others who wanted Milas’ political support during election time.

“Milas has had an outstanding reputation in this community, for honesty and integrity, a standing that David Hale could and would never have,” said one person close to Milas. “No one from Arkansas would ever take David Hale’s word for anything,” this person added, “but Milas is a very different story. If he were to have corroborated David’s account, that would have surely given David a stronger hand in negotiating with prosecutors.”

Over the course of the last several months, Milas Hale has declined to comment about any aspect of this story. Reached at his law firm in April, Milas said that he might consider speaking to this reporter, but later refused to specifically comment as to whether his brother had ever pressured him to lie on his behalf. Telephone messages subsequently left for Milas with his law partner, his wife and a third brother, Randy Hale, went unreturned. An advance copy of the story with a list of questions left at his home went unanswered as well.

Tona De Mers, an attorney for David Hale, denied that her client has done anything wrong: “David has never asked anyone to lie for him. He has not suborned perjury, nor would he. I know the man. I know him well. This is not something that he would do.”

Two sources told Salon that David also asked Milas to use his political influence with Clinton and White House aides to have them attempt to thwart the 1993 federal investigation of David’s lending company. When Milas refused, David subsequently asked Milas to see if he could arrange for Clinton allies to intercede in some lesser way on David’s behalf. The two sources said that Milas refused to become involved in any such endeavor, and as a result the two brothers have barely spoken a word to each other since.

Six people close to the Hale brothers confirmed that they had become estranged from each other in 1993, when David allegedly pressured Milas to lie. Three of those people said that the estrangement was directly related to Milas’ refusal to do anything improper to assist David in his effort to avoid accountability for his Whitewater crimes. Three other sources, including two members of the Hale family, confirmed the brothers’ estrangement from each other, but said that they were unaware of the reasons for the falling out.

One close family friend recalled that during the 1996 funeral of David’s and Milas’ eldest brother, John Hale, the two brothers refused to speak to each other: “They [David and Milas] didn’t say a single word to one another during the service, or for that matter even acknowledge the presence of the other.”

Another intimate of the Hale family said that although the brothers were estranged from one another, Milas “would still do just about anything to protect his brother … Milas has been taught since he was young that you do anything to protect, to look after your family, at all costs. Milas isn’t going to say or do anything that is going to get his brother into further legal trouble … unless him and his family is really pushed to the wall.”

But the same family intimate said he believed that Milas has been torn between “protecting his brother” on the one hand, and on the other “protecting the rest of the family from David” and “restoring the family’s good name.”

“Milas Hale would do just about anything for his family,” explained a person close to the Hale family. “That is, except commit perjury against the president of the United States. That he was not going to do.”

An intimate of Milas Hale said, “David believed that he had this ‘bullet-proof’ attitude. He thought that he could talk or charm his way out of anything … and that if you did get caught, there was always a political fix to be had. When the SBA was warned that there was something wrong [with David Hale's lending company], David was able to convince them that nothing was wrong. When he got caught with that deal at the courthouse, he was able to rely on Milas’ political clout to get out of trouble again.”

(As Salon disclosed in August, while David Hale was a Little Rock municipal court judge, he received illegal kickbacks from a private company that he allowed to operate rent-free from his courthouse to collect bad checks. But Hale was able to escape prosecution and disciplinary action at the time because of his political connections.)

“David didn’t understand fear the way the rest of us do,” the same source said. “He thought that things worked in Washington the same way they worked in Arkansas. He thought that Milas could just call someone and there would no longer be a problem.”

Not long after David Hale’s failed attempt to convince Milas to intervene with Clinton on his behalf, David instructed his attorney, Randy Coleman, to make a similar approach to White House officials, according to the findings of a congressional investigation.

The final report of the Senate Whitewater Committee revealed that on Aug. 17, 1993, Coleman called William Kennedy, then the associate counsel to President Clinton, to give him a “heads-up” about the federal investigation of Hale and discuss the “mutual interests of our clients.”

During that conversation, Coleman let it be known that if the federal investigation of Hale’s lending company were to continue, President Clinton himself might be vulnerable. The Senate report relates: “The conversation was brief. Mr. Coleman told Mr. Kennedy that the FBI had raided Mr. Hale’s CMS office, and confiscated records containing information on the Clintons, Gov. Tucker, the McDougals, Whitewater and Madison. Mr. Coleman told Mr. Kennedy that if Heidi Fliess was the ‘madam to the stars, David Hale was the lender to the political elite in Arkansas.’ Mr. Kennedy’s notes indicate that Mr. Coleman specifically mentioned President Clinton and Gov. Tucker.”

Coleman, who no longer represents Hale nor practices law, declined to comment. Kennedy also did not return phone calls from Salon.

White House aides, afraid that they were being set up by Coleman to do something improper, did not pursue the matter much further, according to the congressional investigative records.

Two sources close to David Hale said that when he failed to get the help
he was seeking from his brother, the White House and other Democrats, he
made a conscious decision to approach conservative opponents of the
president instead. From this point on, Hale began to work closely with the
Arkansas Project, the $2.4 million effort associated with the American
Spectator magazine to undermine President Clinton. A federal grand jury has
heard testimony that a representative of the Arkansas Project made covert
payments to Hale and attempted to influence his testimony against Clinton
in the Whitewater matter.

David Hale told federal investigators that he and Clinton were alone during two of three purported conversations in which Clinton pressured Hale to make the loan to Susan McDougal. During the first purported conversation about the loan, Hale said that Jim McDougal was also present.

For several years, Jim McDougal adamantly denied Hale’s account, and testified under oath during his own Whitewater trial that the meeting never took place. Only after having been found guilty of 18 felonies, and potentially facing as many as 84 years in prison, did Jim McDougal change his story. After Starr’s office offered him a significantly reduced sentence, McDougal asserted that he had committed perjury during his trial, and indeed was present while Clinton discussed with Hale a loan to his former wife, Susan.

Jim McDougal told investigators that at the time Clinton and Susan McDougal were romantically involved with each other. Some federal law enforcement officials say that they have always tended to believe Hale’s account in part because it fit Clinton’s pattern involving other women with whom he had affairs.

These law enforcement officials say that Clinton has a history of assisting the women he was involved with — such as Gennifer Flowers and Monica Lewinsky — helping them obtain jobs and other financial benefits in an effort to conceal those relationships: “Asking David Hale to help out Susan McDougal would have fit that pattern,” said one of the law enforcement officials.

For his part, Clinton denied under oath that he had ever discussed with David Hale any loan to Susan McDougal, let alone pressured Hale to make the loan. Clinton has asserted that Hale fabricated the entire story.

But the president also has some obvious credibility problems of his own to overcome, in the view of some federal Whitewater investigators. Starr’s impeachment referral to the House of Representatives alleges that there is “substantial and credible” evidence that Clinton “lied under oath” in the Paula Jones sexual harassment case and during his federal grand jury testimony about Lewinsky.

“The problem with trying to evaluate Hale’s account is that we’re dealing with three people — David Hale, Jim McDougal and Bill Clinton — who have shown that they do not have the slightest compunction about lying under oath,” says one law enforcement official. “It’s immensely frustrating, especially for those of us who still try and have an open mind as to what might have transpired between these various people.”

When the nation’s largest and most influential gay rights organization, the Human Rights Campaign (HRC), last week endorsed Sen. Alfonse D’Amato, R-N.Y., in New York’s closely contested Senate race, it stunned the gay rights community. It also led one HRC board member, Marylouise Oates, to resign in protest, citing Sen. D’Amato’s “long record of hostility and indifference to women’s issues and to the fundamental issues of civil rights to African-Americans and other minorities.”

But HRC officials didn’t know the whole story about D’Amato’s record on AIDS. Salon has uncovered new details about the New York senator’s role in carrying water for a major corporate campaign contributor, a maneuver that jeopardized thousands of AIDS victims in Zimbabwe, a country that suffers from one of the world’s worst HIV infection rates. At the behest of the New York-based multinational insurance conglomerate the American International Group (AIG), D’Amato threatened to introduce an amendment to the Senate foreign operations appropriations bill in 1996 that would have dramatically reduced U.S. aid for Zimbabwe, over a dispute between the Zimbabwe government and an AIG subsidiary. Both the State Department and the Agency for International Development (AID) opposed D’Amato’s move. The tale is described in confidential AIG documents.

In the spring of 1996, AIG executives were concerned that its subsidiary in Zimbabwe, Unity Insurance Co., would be forced to sell a majority of its stake to local owners if it wanted to continue to do business there. AIG, which is one of the top 100 political party contributors in the United States, turned to its influential friends in Washington to press the Zimbabwean government to drop its plan. According to the Center for Responsive Politics, AIG, its subsidiaries and its officers gave nearly $160,000 to Republican and Democratic candidates during the 1995-96 election cycle, as well as $428,000 in so-called soft money contributions to both parties. In January 1996, AIG gave $25,000 to the Republican Senatorial Campaign Committee, which D’Amato chaired. The New York senator also has received more than $20,000 in PAC and individual contributions from AIG since 1991.

AIG’s largesse was to be rewarded. On May 30, 1996, Rep. Charles Rangel, D-N.Y., the ranking Democrat on the House Ways and Means Committee, wrote a letter of protest to Zimbabwe Ambassador Amos Bernard Muvengwa Midzi: “As I and other members of Congress continue to promote U.S. investments and trade in Africa, I encourage you to reconsider this policy that may effectively discourage investors,” wrote Rangel.

Shortly thereafter, Rep. Benjamin Gilman, R-N.Y., chairman of the House International Relations Committee, and Rep. Ileana Ros-Lehtinen, R-Fla., chair of its subcommittee on Africa, followed up with their own letter of protest to the Zimbabwe ambassador: “A free and open insurance market is a key component to any successful financial system and builds confidence among foreign investors,” they wrote on June 3, 1996. “We believe that the Zimbabwean Government should reconsider this policy and encourage reinvestment instead of disinvestment in its economy.”

Despite such pressure, President Robert Mugabe’s government stood its ground, informing AIG that he would not grant preferential treatment to AIG over other insurance companies wanting to do business in Zimbabwe. It was then that AIG decided to play hardball, turning to its friends on Capitol Hill.

“Based on our experience in this region, this situation is a form of expropriation,” stated one AIG memo dated July 9, 1996. It continued, “After 23 years of investing substantial human and capital resources to build a profitable company, we do not want to be forced to sell our operations and lose management control.”

Only three days later, on July 12, 1996, AIG made a $10,000 donation to an obscure campaign committee called New York Salute 1996, the sponsor of major fund-raising events hosted by D’Amato and New York Gov. George Pataki. The fund-raisers also were attended by then-Republican presidential nominee Bob Dole, whose campaign was co-chaired by D’Amato.

Shortly after making this contribution, AIG executives discussed the Zimbabwe problem with aides to Sen. Mitch McConnell, chairman of the Senate Appropriations Foreign Operations Subcommittee, which oversees the funding of U.S. foreign aid to Zimbabwe. Edmund Lee, AIG’s director of international and corporate affairs, wrote to Robin Cleveland, staff director of the Foreign Operations Subcommittee on July 17, 1996:

“Dear Robin, I want to thank you again for taking time out of your schedule to meet with us yesterday afternoon on an extremely important issue to AIG. Attached for your review and consideration, is draft language of the amendment we discussed during our meeting. It would cap AID funding to Zimbabwe in FY 1997 at $10 million, roughly a 50% cut from 1996 expenditures, unless Zimbabwe waives the localization requirement for U.S. insurance companies.”

In an interview, Cleveland said, “I don’t remember anything about it,” adding, “I don’t know anyone from AIG.” (Both AIG and Lee declined to respond to inquiries from Salon.) Cleveland
insisted that her committee does not accept amendments from corporations and that such amendments are never used in drafting legislation. “I have the same rule I do about having lunch with them,” she said. “It never happens.”

But documents obtained by Salon clearly contradict those claims. They show that AIG’s corporate affairs staff even drafted its own proposed amendment for McConnell and D’Amato. It read:

“To amend H.R. 3540, as reported on June 27, 1996, by the Committee on Appropriations of the United States Senate, by inserting at Title II a new subheading, entitled ‘Zimbabwe’ that reads:

“Of the funds appropriated by this Act, the amount available to Zimbabwe or to support activities in that country shall not exceed $10,000,000 unless and until the government of Zimbabwe has repealed or permanently waived the application of any and all measures requiring the sale of equity in subsidiaries of US financial services companies located in Zimbabwe to nationals of that country.”

In Lee’s letter to Cleveland, he downplayed the impact this aid cut would have on the African country. “It is not our intention to deny humanitarian assistance to Zimbabwe or jeopardize US-Zimbabwe bilateral relations. Under our amendment, AID would still have the ability to finance high-priority humanitarian projects with the remaining $10 million, while Zimbabwe would know it cannot expect more US assistance until such time as it waived the localization requirement. “

But U.S. State Department and Agency for International Development officials were concerned about cutting the level of aid to Zimbabwe, which they had proposed at about $26 million for fiscal year 1997. Zimbabwe has stagnant infant and child mortality rates, and immunization rates have fallen significantly in recent years. The State Department was particularly concerned about the AIDS problem in Zimbabwe:

“USAID is just beginning to play a larger role in helping Zimbabweans face and fight the HIV/AIDS epidemic,” U.S. officials wrote in a confidential “talking points” memo prepared by the State Department for congressional staff. “Over 25% of Zimbabwean adults are now HIV seropositive and AID efforts will help motivate other donors to play supporting roles in fighting an epidemic that is out of control and has global implications.”

Zimbabwe’s skyrocketing incidence of HIV infection is one of the world’s highest. According to a working group of the United Nations and the World Health Organization, 90 percent of the 16,000 new HIV infections worldwide occur in developing countries. Zimbabwe has one of the worst rates: More than a quarter of the adult population is infected with HIV and life expectancy is expected to plummet soon to the 40s.

In the talking points memo, State Department and AID officials praised the USAID assistance program to Zimbabwe as “one of the most impressive on the continent, achieving successes in agricultural markets liberalization, advancing low cost housing development, enhancing wildlife conservation, and decreasing population pressures. Cuts to the program proposed by [the] amendment will have a negative impact on the sectors in which USAID works.” The memo also suggested that “reliance on US diplomatic channels offers a more reasoned approach to solving this problem than cutting US assistance to Zimbabwe which has been beneficial to the US, Zimbabwe and the region as a whole.”

Disregarding the objections of AID and the State Department, congressional sources say, D’Amato played the leading role on behalf of AIG, threatening to insert the amendment restricting aid to Zimbabwe into the final appropriations bill. The government of Zimbabwe received the message. “After the threat of reduction in aid, the government looked at the issue more critically and changed its mind,” says Lloyd Sithole, counsel for the Zimbabwe Embassy in Washington. “Our government later agreed it made sense based on a cost-benefit analysis.”

McConnell acknowledged Zimbabwe’s change of mind on the Senate floor on July 25, 1996. “We congratulate the government of Zimbabwe for its constructive actions and hope there will be no further need for this committee to review this matter nor contemplate action to remedy complaints by U.S. citizens,” he said in a floor speech. In this case, of course, the “citizens” were big-time contributors to political war chests.

Sithole defends Zimbabwe’s change of mind, but added, “When Congress pushes our government directly, it tends to instill a sense of urgency. American companies are very effective at pushing their representatives.” Sithole acknowledges that a greater than 50 percent cut in aid to Zimbabwe would have had drastic repercussions. “It would have had a very serious impact on women and children and AIDs,” he says. “The threat worked.”

USAID officials agree such a reduction would have had dire consequences. “Certainly a 50 percent cut in funding would have reduced the impact and reduced the effectiveness of these programs,” says Maureen Dugan, deputy director of AID’s Office of Southern Africa Affairs. “The AIDS problem in Zimbabwe is enormous and one of the fastest growing in the world.”

Others in the AIDS community say U.S. assistance is crucial to countries battling HIV infection. “We need to do more, not less, to support programs in African countries, especially in places like Zimbabwe,” says Daniel Zingale, executive director of AIDS Action in Washington. “We can’t just fight AIDS within our own borders.”

D’Amato’s office has not returned repeated phone calls from Salon about this matter. When Time magazine disclosed portions of this story in the fall of 1996, a D’Amato spokeswoman told the publication he was proud to have assisted a New York company “unfairly treated by a foreign country.” Les Munson, a legislative aide to Rep. Gilman’s International Relations Committee, said “I’m not going to help you with this story,” and then abruptly hung up on a Salon reporter.

But Jeanean Mann, a retired State Department legislative officer, remembers when D’Amato raised the threat of cutting aid to Zimbabwe. “The State Department and AID agreed the funding shouldn’t be cut,” she says. “The issue wasn’t that clear-cut.” Mann adds that the State Department never took it that seriously since the Zimbabwe government backed down anyway. These kinds of political tactics “are more common than we like,” she says. “But the threat occurs more often than the fact.”

For D’Amato and his political allies, the political threats had their intended effect. Fortunately, say AIDS experts, they were never put to the test.