Suzi Parker

Susan McDougal's moment of truth

Susan McDougal says Clinton told the truth about the Whitewater loan.

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LITTLE ROCK, Ark.As Susan McDougal entered the federal courthouse here Tuesday, she waved to supporters who had traveled from as far away as Minnesota, California and Kansas to watch her testify in her landmark trial on obstruction of justice charges. Soon she took the stand, pulled a tissue from a box and broke a costly silence that began four years ago.

Dressed in a white blouse, a long chestnut brown floral skirt and brown leather pumps, McDougal spent the day weaving for the jury a dark fairy tale that ended in a broken marriage to a manic-depressive, a failed land deal and a long ordeal with independent counsel Kenneth Starr. At times, she painted herself a victim, a wife who did as she was told by her mover and shaker husband, James McDougal, who died in March 1998. Mark Geragos, Susan McDougal’s lawyer, asked his client the questions she refused to answer when she appeared before a federal grand jury in September 1996 and again in April 1998. McDougal’s unwillingness to cooperate with Starr landed her in jail for 18 months and formed the basis of the obstruction of justice charge she’s on trial for today.

Often crying but quickly regaining control, McDougal denied that President Clinton had known about a fraudulent $300,000 loan to the McDougals, part of which went to the failing Whitewater real estate venture in which the Clintons and the McDougals were investors. Prosecutors have charged that Clinton pressured Arkansas businessman David Hale into making the fraudulent $300,000 loan to McDougal and her husband — the key to the Whitewater scandal. Hale, in turn, has been accused of lying about Clinton to get out of his own legal troubles and taking money from Clinton enemies, through the $2.4 million, Richard Mellon Scaife-funded Arkansas Project to investigate the president.

Within her first 45 minutes on the stand, Susan McDougal looked directly at the jury and told them that Clinton told the truth in videotaped testimony in her 1996 trial on Whitewater-related fraud and conspiracy charges when he said he knew nothing about the loan.

“Nothing he said was untrue to me,” said McDougal, who was convicted of four felonies in that case. “As I sat there that day, I did not hear anything untruthful.”

“I never discussed the loan with William Jefferson Clinton,” McDougal said emphatically.

As McDougal gave the long-awaited answers — always looking straight at the jury — prosecutor Mark Barrett complained to U.S. District Judge George Howard. In a heated argument, Barrett said that McDougal’s answers were “rehearsed” and “unresponsive.” Geragos denied the charge, and by the day’s end, he had cast a serious cloud over the independent counsel’s tactics.

McDougal’s family sat in the second row and watched as she cried just 10 minutes into her testimony, when she described the early days of her romance with James McDougal. She oozed Southern charm as she recounted her first meeting with McDougal when she was 20 and he was 35. After a year of courtship, they married, and she worked as her husband’s assistant.

“When he would tell me what to do, I’d go,” McDougal said. Her trouble began, she said, “the day I met Jim McDougal.”

When Clinton became governor in 1978, the McDougals’ marriage suffered. Jim McDougal worked in the Clinton administration and poured himself into politics. During that time, Susan McDougal first realized her husband’s obsessive behavior wasn’t normal. Jim McDougal left his wife with several land deals as she struggled, she said, to understand the nature of the real estate business.

With a marriage careening out of control, the McDougals continued buying land and then a bank in Kingston, Ark., with a front that “looked like a candy shop.” Susan McDougal said her husband became just as obsessed with banking as he had been with politics. Then he bought a bankrupt bank in Augusta, Ark., and renamed it Madison Guaranty Savings and Loan. McDougal testified that her husband said he wasn’t a banker, and would be better off in the savings and loan business. He told her they could roll the real estate business into the savings and loan. Susan McDougal lived with her in-laws while James McDougal stayed in Kingston and ran the bank there. One day he called his wife.

“Get on a dress and meet me in Little Rock. I just announced for Congress,” he told her.

From politics to banking and back, the McDougals rode a roller coaster: success one day, failure the next. In 1986, federal regulators forced them out of their failing savings and loan. By then the couple was estranged and in financial straits, and their troubles included the foundering Whitewater investment with the Clintons. McDougal said her husband’s health was poor and she struggled to solve the problems herself without letting on how bad things were.

“I didn’t want to tell Bill and Hillary Clinton,” she said in tears, because she was too proud.

The jury sat stone-faced as McDougal’s supporters shared in a tear or two as they listened to the testimony.

As James McDougal plummeted into deeper depression and attempted to bounce back from a stroke, he felt as if friends like Clinton and Arkansas Gov. Jim Guy Tucker — who was convicted with the McDougals on Whitewater-related fraud charges — had abandoned him during troubled times. “When trouble hits, everybody runs,” she said.

By the end of the day, she had cast doubt on her former husband’s motives for cooperating with Starr. She testified that James McDougal felt abandoned by Clinton, and told her “he was going to pay back the Clintons.” Republican activist and Little Rock lawyer Sheffield Nelson, James McDougal told her, was willing to “pay him some money” for talking to the New York Times about Clinton, and in 1992 he told her that, in fact, one of Clinton’s political enemies was paying him to tell the New York Times about Whitewater.

She said her husband also told her he discussed Clinton’s past “in a conference call with the Bush White House” during the presidential campaign, and felt the Bush administration would give him a job if they stayed in office. Eventually, James McDougal told prosecutors that Clinton lied in his videotaped testimony for the 1996 trial. James McDougal was a beaten man, his ex-wife said, until “he struck a deal with the independent counsel.”

Geragos attempted to show that the independent counsel had a history of striking deals with those who held information that it wanted. Those who didn’t agree were threatened with prosecution. Susan McDougal said she was offered a proffer of immunity in exchange for her testimony against the Clintons in 1996, but such a deal made her think “something was up.”

On Monday, Geragos won a skirmish over whether the judge would allow defense witness Steve Smith to say whether he believed Starr’s prosecutors were seeking the truth in using him in their investigation. Smith, who pleaded guilty in 1995 to a conspiracy charge in the Whitewater investigation in exchange for his testimony, told the jurors, “I think they were seeking truthful information that would conform with their theory of the case. They sort of had a story line about what happened.”

Smith said Starr’s deputies would listen if he had some information that conformed to their thinking, but they weren’t interested if his information didn’t fit their ideas. He testified that former associate independent counsel Amy St. Eve handed him a “script” to read to grand jurors, which he said contained inaccuracies that made him fear a perjury charge if he read it as written. Smith testified that he read the statement after he and St. Eve made changes to it. Starr’s office denies the charge.

McDougal told the jury that defying the independent counsel wasn’t easy for her, or her family.

“It’s been a long road, a very long road … and it was not an easy decision to make,” McDougal told the court.

Go home, Kenneth Starr

The independent counsel has shined a surreal spotlight on Little Rock.

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I‘ve never seen Kenneth Starr, but his presence is all over Little Rock.

The independent counsel has spent what seems like an eternity investigating the lives of my neighbors — the famous, and not so famous, citizens of Little Rock. Starr seems obsessed with Arkansas: Its shenanigans and scandals seem to have scorched his psyche permanently. Certainly this city is no more likely to forget Starr than the citizens of Atlanta are to forget William Tecumseh Sherman.

Starr’s investigation has bathed Little Rock in a surreal limelight. The city was previously best (or worst) known for its association with the 1957 Central High desegregation crisis, but until Gov. Bill Clinton announced his intention to run for president in 1991, many people didn’t know Arkansas’ location on the map. George Bush thought the state sat between Oklahoma and Texas. (It doesn’t.)

But Starr has turned Little Rock into even more of a fishbowl than the president did. Last week, camera crews descended on the city again, to cover Susan McDougal as she whisked in and out of the federal courthouse for the start of her contempt trial. Key Whitewater witness David Hale’s trial starts next week. Media members continue to stake out the courthouse and hang out at Doe’s Eat Place, an infamous steak joint where Clinton often dined when he lived in Little Rock, or the Capital Bar, a dark, cozy hotel pub. Strange days, when CNN’s Bob Franken comes to the president’s home state more than the president.

Not to be left out, Clinton graced us with his presence this past weekend, when he dedicated his boyhood home in Hope as well as a memorial garden for his late mother. As I stood out in the miserable cold and blowing rain with mud oozing into my leather shoes, I listened to the state’s native son talk about his small town. He pointed to people in the crowd, singling out those who had been supporters since the 1970s. Briefly forgetting all the president’s mistakes, I basked in the home-town glow.

For years, my friends have suggested I leave Little Rock to join the media hordes in New York. Now the media hordes have come to me. Why would I leave? I like my compact Southern city of 184,000 people, with their nonstop curiosity about politics and other people’s sex lives. Little Rock knows sex sells, and no city, not even Savannah, sells sin wrapped in Southern graciousness and charm quite like this one. This place is like one big onion. Once you start peeling off layers, you don’t know what you could find. Just ask Ken Starr.

New York, Los Angeles, even Washington, have nothing on Little Rock. We’ve given the country not just Bill and Hillary, but Paula Jones, Webb Hubbell, David Hale, Vince Foster and Jim and Susan McDougal. And remember Wilbur Mills and Fannie Fox? He was the Arkansas congressman and she his girlfriend, who was rescued by park police after she and Mills had a fight in the Tidal Basin near the Jefferson Memorial? They were long before Bill and … well, insert name of choice here.

Even the civil rights crisis didn’t stir up this city the way the Starr investigation has. Everyone in Little Rock knows someone caught in the tangled web. Nobody’s a stranger here, so everyone’s had a brush with somebody Starr has subpoenaed, investigated or indicted. My dad recalls seeing Susan McDougal walk into Madison Guaranty in the early 1980s in white hot pants, brushing sweat from her forehead and tossing the keys to her convertible on a desk. I grew up watching commercials in which Susan McDougal rode a horse around a forest to sell suburban property.

Last week, two women I once traveled with to Ireland took McDougal on a shopping spree because they thought she needed new clothes. One night in a quaint Italian restaurant, I was discussing Whitewater with a friend. I noticed a man behind me leaning back to eavesdrop. When I turned, it was Webb Hubbell looking at me looking at him.

And you’ve heard of Connie Hamzy, the infamous rock ‘n’ roll groupie who was immortalized in Grand Funk Railroad’s song “We’re an American Band”? She once claimed Clinton propositioned her at a local hotel’s swimming pool. Yes, she lives here, too, and ran for city council a few years ago. I’ve seen her roller blading in a string bikini near the river, and once I dropped by her apartment to pick up a photo for a news story. She’s no Jane Doe to me.

Maybe my closest connection with the Clintons is that I belong to the same church as Hillary and Chelsea. She once popped in on a Sunday morning and sat silently with her Secret Service entourage. During the offering, Hillary, a former steward in the church, passed the plate around to the congregation. A few months back, a movement began to pray for the first family. Church members talked about sending flowers and care packages to Chelsea, and a few maintained constant prayer vigils for Hillary. Gossip about Hillary bubbles endlessly in Little Rock. Will she leave Bill? Will she run for the Senate in New York ? Will she come back home?

Of course, this soap opera with few, if any, commercial breaks can become complicated, not to mention messy. Sooner or later, the dating scene feels like a tiny bowl filled with Siamese fighting fish, but it’s certainly never dull. That ex-boyfriend you hate is no doubt dating a friend of a friend. Chances are you’ll all end up at a party along with three other old boyfriends and two of their ex-girlfriends. Yet I love the thrill of being able to track down someone’s history in mere minutes.

In Little Rock, any secret, however big or small, should never be told, not even whispered. Eavesdropping and gossiping, right behind attending church and volunteering, are favorite hobbies in the city. Forget Los Angeles. Cell phones work overtime in Little Rock. Rumors started at dawn are posted on electronic gossip bulletin boards by evening.

And if you plan to run for public office, it’s best to stay celibate and live in a cave. The president had to learn this lesson the hard way.

Yes, Little Rock is small; some may even say it suffocates. It has its flaws: Not enough art museums or theater. Rock stars don’t play the local arena. Foreign films don’t debut here. It’s hard to find good Thai food. And there are only a few — maybe two — all-night coffee shops.

But Little Rock makes up for what it lacks with more than its allotment of kooks, quacks and quirky places. Like the crazy bag lady wearing camouflage selling daffodils on a street corner in the prestigious Edgehill neighborhood where the president attended a private reception last weekend. Or the Jesus man who doesn’t believe in material possessions and roams through the city preaching the Gospel. Everybody knows them here — probably even Ken Starr.

I’m always surprised when friends do leave Little Rock, seduced by bright lights or better paying jobs. Once they are gone, they call and ask, “When are you leaving?” They haven’t gotten it yet. Why would I leave this slow-paced city with three-lane freeways and a mini-skyline, a place where I can be in the rolling hills in 20 minutes or cotton country in the same amount of time? Why would I give up a hometown where I can decide at the last moment to rush to a movie and not have to wait in line, where I can strike up conversations with strangers in the grocery line and realize within a few seconds we have a mutual friend, or that they know a player in Whitewater? For a politics and gossip addict like me, it’s heaven.

I’m staying. But I’m getting a new bumper sticker for my car. It says: Go Home, Kenneth Starr.

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Dumping scandal: The export of bad blood

Canadian victims to file lawsuit over bad blood exports from U.S.

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WASHINGTONA group of Canadian hemophiliacs who say they contracted hepatitis C and HIV from contaminated blood plasma originating in Arkansas and Louisiana prisons during the 1980s journeyed to Washington Wednesday to demand a criminal investigation by the United States Department of Justice into the scandal. Department officials did not immediately respond. The Canadians are asking why certain American prison systems, including one in Grady, Ark., during then-Gov. Bill Clinton’s tenure, continued to export plasma long after the sale of such products had ceased inside the U.S. itself.

“Why, if this dangerous plasma wasn’t safe enough for American use, was it suitable for your neighbors?” asked Michael McCarthy, a 39-year-old Canadian hemophiliac who says he contracted hepatitis C from using blood products in the early 1980s.

Last month, McCarthy and a group of about 1,000 Canadian hemophiliacs filed a $660 million class-action lawsuit against the Canadian government and two Canadian companies — Continental Pharma Cryosan, the importer of the plasma, and Connaught Laboratories Ltd., which used the plasma to make blood products.

Now, the Canadians are preparing a lawsuit against the alleged American participants in the scandal. David Harvey, lead counsel for the Canadians, said he is seeking a deposition of President Clinton into what occurred in the Arkansas prison system while he was governor during the 1980s.

The lawsuit, which may be filed within the next two weeks, will seek damages in the billion-dollar range, and will reportedly name the Food and Drug Administration, the states of Arkansas and Louisiana, the prison systems of those two states and the medical care providers of the inmates in those systems, including Health Management Associates. The suit could also name the president if evidence is found that Clinton knew about repeated FDA violations and international plasma recalls, yet failed to exercise his executive power to shut down the Arkansas Department of Correction plasma industry.

Attorneys are therefore seeking 400 cases of Clinton’s papers, which may shed further light on Arkansas’s plasma export scandal.

P.J. Crowley, a spokesman for the White House, said, “In the early ’80s, there was no testing for hepatitis C or AIDS. Those kind of testing methods came into being much later, so there was no way that the president could have known that the blood was tainted.”

Crowley added, “Whatever the arrangement was between the Arkansas prison system [and] HMA, I would defer to the state of Arkansas to comment.” Crowley would not say whether the president was even aware of the plasma program’s existence.

New York attorney Mark Bern is representing Arkansas inmates who say they were infected with hepatitis C and HIV while selling plasma in the prison. Because of unsanitary practices in the plasma center, workers in the program contaminated the donor by using dirty needles. He plans on filing a class-action lawsuit against the state of Arkansas and Health Management Associates, which ran the plasma program and provided inmate health care, and other participants in the scandal.

In other countries, tainted blood scandals have resulted in government officials standing trial. On Feb. 10, France put a former prime minister and two other former Cabinet members on trial on charges of manslaughter and criminal negligence in a scandal over HIV-tainted blood.

In the 1990s, two Japanese health ministers have issued formal apologies on behalf of their government, while senior executives in the country’s blood transfusion service were disciplined or dismissed and criminal charges of professional negligence were brought against five top officials.

Germany has also dealt with a blood scandal in recent years. In 1993, Health Minister Horst Seehofer recommended that anybody who had received blood products since 1982 undergo an HIV test.

The Canadians are now focusing on those who made money on the blood exports. “The billion-dollar players clearly knew the blood was unsafe,” said Judith Reitman, a journalist who wrote “Bad Blood: Crisis in the American Red Cross.” “There was, and is, a mind-set that profits are more important than public health and safety. This is a grave public concern and accountability must occur.”

The FDA says that it was perfectly legal to operate prison plasma centers and that for years no tests existed to screen for AIDS or hepatitis C, then known as non-A non-B hepatitis and a common indicator of HIV. But in 1982, the FDA ruled that prison plasma was too risky for domestic production of hemophilia products. Nevertheless, the plasma was still allowed to be exported to a Montreal broker, who in turn shipped the plasma throughout Canada and overseas. In Arkansas, numerous FDA violations and shut-downs at Cummins prison failed to permanently halt the drawing of plasma from inmates. Prison officials have stated that the inmates needed the money they earned (at $7 a pint) to buy cigarettes and toiletries.

“The plasma was sold on the ‘spot’ market,” explains Mike Galster, the author of a fictional account, called “Blood Trail,” about the Arkansas Department of Correction’s plasma program. “What is not to say it came back to the United States?”

An internal memo from pharmaceutical giant Cutter Laboratories (which had bought plasma from the Arkansas prisons for 20 years until 1982) illustrates the attitude of those involved in the blood trade at the time. “Take no extraordinary actions. There are no data to support the emotional arguments that prison plasma collected from adequately screened prisoners is ‘bad.’ To exclude such plasma from manufacturer of our coagulation product would only be a sop or gratuity to the Gay Rights [sic] and would presage further pressure to exclude plasma collected from the Mexican border and the paid donor.”

Inmates were considered a high-risk group because of previous intravenous drug use as well as the homosexual activities common in prisons. A 1984 information bulletin about prison plasma centers published by the American Correctional Association listed six states — Arizona, Arkansas, Louisiana, Tennessee, Nevada and Missouri — as running programs at that time. The Arkansas Department of Corrections continued running its plasma program for another 10 years — until 1994.

As a result, at least 1,000 people now say they are victims of diseases that could have been avoided.

“Why was it,” asks plaintiff Michael McCarthy, “that we became the dumping ground for your poison?”

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Blood money

An Arkansas prison-plasma business protected by Clinton cronies led to a scandal that almost toppled the government -- of Canada.

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Even the residents of Grady, Ark., call it “godforsaken.” It’s an enclave of poverty where rampant drug dealing contributes at least as much to the bleak economy as the main legitimate business — farming — does.

But looming among the rows of cotton outside this dismal Arkansas River Delta town, there used to be a more profitable form of agriculture: human plasma farming. At the Cummins Unit of the Arkansas penal system during the 1980s, while President Clinton was still governor, inmates would regularly cross the prison hospital’s threshold to give blood, lured by the prospect of receiving $7 a pint. The ritual was creepy to behold: platoons of prisoners lying supine on rows of cots, waiting for the needle-wielding prison orderly to puncture a vein and watch the clear bags fill with blood. Administrators then sold the blood to brokers, who in turn shipped it to other states, and to Japan, Italy, Spain and Canada. Despite repeated warnings from the Food and Drug Administration, Arkansas kept its prison plasma program running until 1994, when it became the very last state to cease selling its prisoners’ plasma.

In a year when Arkansas scandals dating back to his governorship have returned to haunt Clinton, this one nearly toppled the government — of Canada. Arkansas’ prison-blood business created a health crisis in Canada that nearly brought down the Liberal Party government last spring. At least 42,000 Canadians have been infected with hepatitis C, and thousands more with the HIV virus, thanks to poorly screened plasma. Some of it has been traced back to the Cummins prison in Arkansas. More than 7,000 Canadians are expected to die as a result of the blood scandal.

The Canadian Krever Commission, established in 1993 to investigate the tainted-blood epidemic, concluded the government did not adequately supervise the Red Cross of Canada, the agency responsible for making sure that blood suppliers maintained adequate screening standards. As a result of the scandal, the Red Cross has been stripped of responsibility for the blood system. Compensation was offered to 1,000 people with AIDS, but the Toronto Star estimates nearly 2,000 are suffering. More than 20,000 tainted-blood victims with hepatitis C filed a class-action suit against the Canadian government, alleging that sloppy screening protocols allowed tainted blood products from Arkansas prisons and elsewhere to make their way into Canada. Last week the Canadian government established a $1.1 billion (Canadian) fund to compensate some hepatitis C victims, but advocates say the fund won’t be enough.

Former Arkansas inmates who claim they contracted hepatitis C and AIDS as a result of improper procedures are also planning to bring a lawsuit against the Arkansas Department of Corrections, Health Management Associates Inc. (HMA), Pine Bluff Biologicals — the two companies that held the prison’s plasma contracts — the state of Arkansas, Clinton and his administration at the time. The White House did not return calls seeking comment on the lawsuits.

The scandals have received little media attention here, but they tainted Clinton’s years as governor. Some newspaper columnists at the time said it could jeopardize his reelection. Two longtime friends of Clinton’s were embroiled in the mess: Leonard Dunn, a former Pine Bluff banker and now chief of staff for Lt. Gov. Winthrop Rockefeller, served as HMA’s president; and Richard Mays, a Little Rock lawyer, judge and Clinton ally, was hired in 1985 as an “ombudsman,” an ill-defined position that was supposedly created to help bring the prison medical system into compliance with state standards. The exact payment Mays received, or what his duties were, was never established, and became the subject of a state police investigation because of allegations that it was actually a “bribe” paid to a Clinton supporter to allow the program to continue.

Problems with the prison plasma program were well known to Clinton throughout the 1980s. The FDA cited HMA for safety deficiencies and shut it down for over a year in 1983, following a recall of hepatitis B-tainted products that had been shipped to Canada and distributed to hemophiliacs. In 1984, the FDA revoked the center’s license to operate, and in 1985, an inmate filed a lawsuit against HMA for inadequate medical care. In 1986, Clinton’s state police investigated problems at the prison and found little cause for concern, while an outside investigator looked at the same allegations and found dozens of safety violations.

Now, more than a decade later, those old Arkansas scandals are getting new attention, thanks to lawsuits and agitation in Canada. To date, the scandal has gotten almost no media attention in the United States. While reporters are riveted by the Monica Lewinsky mess, they’ve ignored a real Clinton scandal, maybe because it involves two groups no one cares much about — people who aren’t Americans, and prisoners.

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The Arkansas prison system has been in near-perpetual crisis since at least 1970, when the U.S. Supreme Court found its solitary confinement practices unconstitutional. Inmates lived in a “dark and evil world,” Justice John Paul Stevens wrote in 1978, the year Clinton was first elected as governor. At the same time, a federal judge referred to the influence of “evil men” in authority in the prison system.

The plasma program began in the 1960s as a way for inmates and the prison system to make extra money. Dr. Francis “Bud” Henderson, a Pine Bluff pediatrician, formed Health Education Consultants in 1972, which became HMA in 1978 when the company entered the prison plasma business. At that time, Henderson persuaded John Byus, the prison system’s medical director, that HMA needed to run both the medical and the plasma programs. Arkansas became the only state to have a private agency running its prison medical program.

Byus and Henderson say the motive for the plasma program was two-fold: The inmates needed money to buy gum and toiletries, and the destitute prison system needed medical equipment. Arkansas is also one of the only states that refuses to pay prisoners for their labor. Each unit of plasma was sold by HMA, which was running the program under the prison’s FDA license, for at least $50, and half was handed over to the prison system. With hundreds of prisoners donating once, sometimes twice a week, plasma became a profitable enterprise.

But Mike Galster, who worked at Cummins as a medical practitioner between 1979 and 1983, calls the prison plasma program “a crime against humanity.” Galster grew up in Pine Bluff, a small Southern city swirling in secrets, where business deals were often finalized in either the stately country club or a shady nightclub called Nina’s Penthouse, which burned down years ago. His father was a state trooper, and Galster knew HMA’s Henderson as a youth, when he was the doctor to Galster’s junior high school football team.

The plasma program always bothered Galster. “I could see [prisoners] were being given illegal narcotics — several indicated that this was how they were being paid for their plasma,” he recalled. State investigations later confirmed this allegation, though the prison claimed it cracked down on illegal dispensation of pharmaceuticals. Galster says he saw inmates who “appeared jaundiced and very sick. When I would ask if they had just had a blood test, they would say, ‘No, I’ve just given plasma.’ It was clear they were sick.”

But while he knew the prison had problems, Galster never imagined that tainted plasma would find its way into the blood supply of other countries. “I assumed, stupidly, that our people selling this plasma had some process of cleaning it up,” Galster says.

Prisoners say they weren’t adequately screened for disease. “The prison program they had was pretty shoddy,” says John Schock, a burly ex-con with an assortment of tattoos who regularly gave blood at Cummins. “They had inmates doing things they shouldn’t have been doing. They would let people who was sick bleed … ain’t no telling what they had. They didn’t check all the time.”

Sitting in a lawn chair in a lower-class North Little Rock neighborhood, Schock resembles a bloated, jaundiced Robin Williams with facial hair. He lifts up his blue shirt and shows the jagged triangle of raised flesh — a liver transplant scar — stretching across his protruding belly. Since his release, doctors have told him a dirty needle from the plasma program could have infected him with hepatitis C, the disease that cost him his liver. He isn’t surprised.

“I am damn sure I got it (hepatitis C) in the prison,” Schock says. “I didn’t have it before I went in. I have never had needles stuck in my arm that wasn’t suppose to be there. I have never interacted with homosexuals. I love women too much. I didn’t get it those ways.” Hepatitis C often leads to liver failure, requiring a transplant. Victims suffer chronic fatigue and illness and are frequently unable to work.

Schock says he gave blood at Cummins for nearly two years and was only sporadically checked for hepatitis. Finally, after he’d gone a month between tests and had given blood at least weekly, he was tested again, and prison doctors discovered hepatitis. A doctor looked at Schock, told him his eyes weren’t yellow, and he didn’t look too bad. “He said, ‘If you start feeling bad, come back and see me,’” Schock says. “That’s just the way they were. They don’t care because you are dirt down there anyway.”

Most prison plasma programs shut down in the early 1980s, when the FDA and the Centers for Disease Control alerted the public about AIDS. In December 1982, the FDA asked companies that made blood products not to purchase prison plasma, since many inmates have either injected drugs or engaged in homosexual acts, making them high risk for AIDS. The large pharmaceutical companies that were buying from Cummins stopped buying inmates’ plasma, a once-valuable commodity because of the large volumes produced each week.

But AIDS didn’t scare Henderson. “There was a mentality that we didn’t have any AIDS in the central part of the country. The department (of corrections) said for years we didn’t have any AIDS cases. There was a subconsciousness that we just didn’t want to think we had those people around us.” Still, Henderson would later tell police investigators, “Historically, this [was] the worse possible time to [sell plasma]. I called all over the world and finally got one group in Canada who would take the contract.” That group was Continental Pharma Cryosan Ltd., the biggest blood broker in Canada.

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In 1983, the FDA initiated an international recall of plasma that might have been tainted with hepatitis B, which can also be an indicator of HIV infection. Several prisoners who had previously tested positive for hepatitis B were allowed to donate blood at Cummins, and the tainted units had been sold by HMA to Cryosan. Cryosan in turn sold the plasma to corporations in Switzerland, Spain, Japan and Italy, as well as to Toronto-based Connaught Laboratories, which pooled the plasma with other blood products needed by hemophiliacs to make their blood clot, and sold the blood throughout Canada.

It was only then, during the crisis over the recall, that the Canadians learned they were buying plasma collected from prison inmates. “The shipping papers accompanying the plasma had not revealed that the centre was located in a prison,” the Krever commission report revealed. “They had simply referred to the source as the ‘ADC Plasma Center, Grady, Arkansas,’ without any indication that ‘ADC’ stood for ‘Arkansas Department of Corrections.’”

After that screening lapse, the FDA shut down the plasma program for several months. During the shutdown, it was discovered that an inmate clerk in the plasma center had been selling the “right to bleed” to fellow inmates who otherwise would have been excluded because they were likely infected with hepatitis B.

In 1984, the FDA found that Health Management Associates had prematurely and improperly distributed plasma contaminated with hepatitis. Twelve ineligible donors had given blood in a breach of screening processes, and an international recall resulted. The FDA then revoked the center’s license to operate. An investigation revealed that the program allowed disqualified donors to bleed, altered records and stored plasma in ways that didn’t prevent contamination. It also found that plasma center staff wasn’t well-supervised, and discovered attempts by people in HMA “management positions” at the center to hide from FDA inspectors the fact that they had either “initiated or condoned the destruction or alteration of records concerning these activities.”

Within months, after promising to clean up its act, HMA applied for a new license. Henderson and Byus blamed the recall on a corrupt inmate clerk who’d been paid off by potentially infected donors. The inmate was removed, and some employees were fired. The program continued for “the good of the inmates,” Henderson says. “The prison needed money, too, you have to understand.” HMA got its license approved again.

But the plasma program wasn’t the only source of scandal within the Arkansas prison system. In 1985 inmates began complaining loudly about prison medical care and rights abuses, including rape. That year Arkansas prisons had the highest number of inmate complaints of any state in the country. State Rep. Bobby Glover, a Democrat, became a champion for prisoners with stories of abuse. His office collected a raft of allegations, ranging from rape and other forms of abuse to bid rigging, theft of state property and the use of state property for private work and gambling.

Glover pushed for answers, and eventually the Arkansas Board of Corrections hired the independent Institute for Law and Policy Planning in Berkeley, Calif., to conduct an investigation of HMA. Fifteen days after that announcement, Gov. Clinton ordered the state police to investigate reports of criminal conduct within the prison system. The results of these two inquiries would offer a case study of the difference in the way Arkansas insiders and independent evaluators viewed the prison system’s problems.

The state police prison investigation resulted in two misdemeanor charges and one felony charge for employees running a gambling operation. Only a few weeks into it, Clinton himself urged a speedy end to the probe. “I told them to get it done and get it over with,” Clinton told reporters. Complaints about poor health care and the plasma program resulted in no action, and Arkansas Department of Corrections director Art Lockhart, who had been at the center of the allegations, was not punished. Clinton said the prison system had been “studied to death” and refused to oust Lockhart.

But investigators with the Institute for Law and Policy Planning reached very different conclusions. ILPP executive director Dr. Alan Kalmanoff highlighted 40 areas where HMA violated its state contract, including a conflict of interest in HMA’s operating both the medical department and plasma program. The report showed that HMA and the department of corrections had only recently developed procedures for handling AIDS cases, and were “only then developing a refined approach to AIDS screening and testing.”

The report also charged that HMA had failed to meet many significant professional standards. It had hired a large number of unlicensed, uncertified or legally unqualified medical staff. Tuberculosis was rampant in the prison. Eight inmate deaths were reviewed, and while the report said that the deaths probably could not have been prevented, it did note that “regular health assessment” and “complete” record-keeping had not occurred. And HMA director Henderson had not been spending the hours that he should on the medical program, the report alleged.

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The Arkansas Board of Corrections, run by a Clinton appointee, was repeatedly informed of problems with the prison medical program, including the plasma business. But it continued to return the contracts to HMA, despite other bidders.

How did HMA hold on to the contracts, despite the repeated scandals? It had the help of many high-profile Arkansans, including Leonard Dunn, who became HMA’s president. Dunn, a Pine Bluff banker, has deep roots in Arkansas politics. He worked closely with Arkansas political legends, including former U.S. Sen. David Pryor and Clinton. In fact, Dunn was a senior member of Clinton’s 1990 gubernatorial reelection team. While in the financial business, Dunn worked at several banks in Pine Bluff and Hot Springs, which served as HMA’s lenders. In 1990, he purchased Jim McDougal’s Madison Guaranty Savings and Loan, the notorious S&L whose involvement in an obscure land deal led to an investigation that culminated in President Clinton’s impeachment.

In recent interviews, Dunn has downplayed his role in HMA. Twelve years ago, he didn’t. In the state police investigation, an investigator wrote that Dunn “advised that he had been a former member of the State Claims Commission under Governor Pryor and that he was close to Governor Clinton as well as the majority of state politicians presently in office. Mr. Dunn explained that he was very fond of politics.” Dunn added that he was “the financial portion of the corporation as well as the political arm.” But in a recent interview, Dunn insisted, “I never took an active role in the company on a day to day operational basis.”

Yet Dunn took the lead in negotiating with state officials to get HMA’s contract renewed in 1985. One unique feature of that negotiation was the decision to hire an “ombudsman,” or compliance coordinator, to smooth problems between HMA and the state. During the state police investigation, however, the ombudsman contract was repeatedly described as a “bribe.” Arkansas Board of Corrections Chairman Woodson Walker told investigators that the ombudsman was his idea. “The governor [Clinton] was deeply concerned with HMA’s past performance,” Walker told investigators, and Clinton said “that I would be held personally responsible for the performance of whatever medical provider was chosen.” Woodson recommended renewing HMA’s contract, but with an ombudsman position added as a “safeguard” to ensure HMA’s good performance.

Both Walker and Clinton suggested HMA hire Richard Mays, an Arkansas lawyer and Clinton-appointed judge, HMA president Dunn told investigators. “Dunn stated that Walker advised him that Mays was black (a plus in a system where most of the inmates are black), had good qualifications and was an outstanding attorney,” according to investigators’ notes.

Mays is no stranger to Clinton scandals. He was accused of trying to quash the federal case against David Hale, Kenneth Starr’s key Whitewater informant whose personal credibility has been repeatedly challenged. Mays is also credited with leveraging Little Rock restaurateur-turned-international businessman Charlie Trie’s first $100,000 donation to Clinton’s 1992 presidential campaign. Trie, whose Chinese and Indonesian connections have been the subject of controversy and investigation, has been a conduit for several controversial donations to the Democratic National Committee.

Mays’ ties to Clinton continued in Washington. A former finance vice chairman of the DNC, Mays and his wife, Jennifer, stayed in the Lincoln Bedroom and attended White House state dinners. Mays did not return repeated calls from Salon about this story.

Dunn told investigators that HMA hired Mays for a two-year contract of $25,000. But during the investigation, no contract could ever be found, and the ombudsman position was considered by many within the prison system as a bribe. When asked about Mays’ contract, prison Health Services Administrator Sam Jordison “appeared to be quite uncomfortable,” investigators wrote. Jordison didn’t call the Mays contract a bribe, but he did say, “I’ve talked to Mr. Mays on two or three occasions, and I never really knew what the hell he wanted. I do feel there was something here between Mr. Walker, Mr. Mays and HMA.”

Henderson disputed that. He admitted to investigators that he “agreed to include the ombudsman so as not to endanger the continuing contract.” In fact, the only work Henderson recalls Mays doing was helping create an affirmative action program and an employee handbook — although affirmative action issues had not been at the center of allegations against HMA.

“[Mays] has met with us on three or four occasions and has mediated in some problem areas we have had,” Henderson told investigators. “For a person who I would really not have hired on my own, Mr. Mays had been an asset in the overall operation of HMA.” Ultimately, however, investigators were never able to find the contract that detailed Mays’ official duties, or any record of how much money he received. But whatever Mays’ official duties, hiring an ombudsman got HMA the contract, once again.

Not for long, however. The critical report by ILPP eventually drew blood. HMA was placed on probation following the report’s release, and a few months later, the firm lost its contract to provide prison health care. HMA dissolved in 1986. Henderson says he wanted out of the plasma business. “It was getting too difficult to sell,” he says. He still lives in Arkansas and works for a company that provides medical care in several Pennsylvania prisons.

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The plasma contract then went to Pine Bluff Biologicals, which took over the program and even expanded it, opening bleed units at the Wrightsville unit and the Diagnostic Unit — the prison’s hospital. “There is this whole thing about the high-risk population. I disagree with that. There’s no scientific proof to that,” says Jimmy Lord, former owner of Pine Bluff Biologicals.

Lord insists he had no connections with scandal-tainted HMA. “I never worked for HMA. I never had anything to do with HMA,” Lord says adamantly. “That center was shut down under HMA, and the center pulled some strings. Somehow they got it reinstated. I know how, but I wouldn’t say. Good Old Boy Network.” But documents show that in the early 1980s Lord did have connections with HMA, which shipped blood in the same trucks as Pine Bluff Biologicals. And Lord admits to selling blood to HMA.

“Yeah, I sold some street [non-prison] blood to him. There was an overabundance of Type O one year,” Lord says. “Instead of me cutting my donors off and losing them, I found an outlet through HMA. That was before they got in trouble. I had a good friend who worked for them, and he made sure I got paid. It was always a shaky thing dealing with them.”

Problems continued in Lord’s plasma program. In 1988, the red blood cells of one inmate were accidentally infused into the wrong person, the Arkansas Times reported. The next year, an FDA inspector said the center had inadequate control over screening new donors to prove they were not on a permanent reject list. Record keeping was also inadequate. As for AIDS, Lord says that it wasn’t a big concern in Arkansas — he thought it was an issue in places like New York and California — when he was running the program. “If anyone got caught in a homosexual act, we took them off the roster,” Lord says.

Prison system administrators never wanted to shut down the program. In 1991, Byus told a local reporter: “We plan to stick with it to the last day, to the last drop we’re able to sell.” That year, a group from New York took over the plasma program from Pine Bluff Biologicals.

In 1992, a new series of state police investigations into the system resulted in department of corrections director Lockhart’s resignation, after a barrage of allegations, including nepotism in the plasma program. He was found to have asked Lord to hire Lockhart’s son to work in the plasma program. A Little Rock grand jury charged Lockhart with four counts of mail fraud, but he turned state’s evidence, testified against then-state Rep. Lloyd George and was not convicted.

Prison medical director Byus, who still works for the system, stated in a police interview that Lockhart showed “an inordinate amount of concern for the success of Pine Bluff Biological in their plasma unit program,” and would even have security officers “recruit” inmates to give plasma. Byus said that Lockhart “was interested in seeing large numbers of inmates participate in the program.”

Finally, in 1994, the plasma program ended.

But Mike Galster, the medical practitioner, never forgot the grim images he witnessed in those years. Galster used the pseudonym Michael Sullivan to write “Blood Trail,” a thinly veiled fictional account of tainted blood in the Arkansas prison system. In Canada, the book has become a bestseller and fueled more investigations into Cummins. “In so many ways it reminds you of Nazi Germany,” Galster says. “If it had been the typical Arkansas scam, where we are talking about pigs, tractors, even land, that would be one thing. These guys had the power over a captive audience to make money from human beings.”

Galster left HMA in 1983 after he rejected a typical Arkansas ploy — a demand by an HMA associate that he kick back part of his earnings. “The way Arkansas works is that once you are working within the system, the people in charge make it clear that it is a privilege to have that state contract,” Galster says. “Ultimately, you are expected to pay for that privilege.”

“This I know,” Galster continues. “Without the governor’s support and protection, this disease-riddled system would have been shut down by 1982.”

In Canada, Michael McCarthy, a hepatitis C sufferer from Stratford, Ontario, is understandably bitter. “I think it is devastating to the victims of the blood disaster in Canada,” says McCarthy, who is married with one child and can no longer work thanks to third stage liver failure. “It shows it wasn’t God that was running the blood system. It was people who were making bad decisions based on money.”

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Blood money

An Arkansas prison-plasma business protected by Clinton cronies led to a scandal that almost toppled the government -- of Canada.

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Even the residents of Grady, Ark., call it “godforsaken.” It’s an enclave of poverty where rampant drug dealing contributes at least as much to the bleak economy as the main legitimate business — farming — does.

But looming among the rows of cotton outside this dismal Arkansas River Delta town, there used to be a more profitable form of agriculture: human plasma farming. At the Cummins Unit of the Arkansas penal system during the 1980s, while President Clinton was still governor, inmates would regularly cross the prison hospital’s threshold to give blood, lured by the prospect of receiving $7 a pint. The ritual was creepy to behold: platoons of prisoners lying supine on rows of cots, waiting for the needle-wielding prison orderly to puncture a vein and watch the clear bags fill with blood. Administrators then sold the blood to brokers, who in turn shipped it to other states, and to Japan, Italy, Spain and Canada. Despite repeated warnings from the Food and Drug Administration, Arkansas kept its prison plasma program running until 1994, when it became the very last state to cease selling its prisoners’ plasma.

In a year when Arkansas scandals dating back to his governorship have returned to haunt Clinton, this one nearly toppled the government — of Canada. Arkansas’ prison-blood business created a health crisis in Canada that nearly brought down the Liberal Party government last spring. At least 42,000 Canadians have been infected with hepatitis C, and thousands more with the HIV virus, thanks to poorly screened plasma. Some of it has been traced back to the Cummins prison in Arkansas. More than 7,000 Canadians are expected to die as a result of the blood scandal.

The Canadian Krever Commission, established in 1993 to investigate the tainted-blood epidemic, concluded the government did not adequately supervise the Red Cross of Canada, the agency responsible for making sure that blood suppliers maintained adequate screening standards. As a result of the scandal, the Red Cross has been stripped of responsibility for the blood system. Compensation was offered to 1,000 people with AIDS, but the Toronto Star estimates nearly 2,000 are suffering. More than 20,000 tainted-blood victims with hepatitis C filed a class-action suit against the Canadian government, alleging that sloppy screening protocols allowed tainted blood products from Arkansas prisons and elsewhere to make their way into Canada. Last week the Canadian government established a $1.1 billion (Canadian) fund to compensate some hepatitis C victims, but advocates say the fund won’t be enough.

Former Arkansas inmates who claim they contracted hepatitis C and AIDS as a result of improper procedures are also planning to bring a lawsuit against the Arkansas Department of Corrections, Health Management Associates Inc. (HMA), Pine Bluff Biologicals — the two companies that held the prison’s plasma contracts — the state of Arkansas, Clinton and his administration at the time. The White House did not return calls seeking comment on the lawsuits.

The scandals have received little media attention here, but they tainted Clinton’s years as governor. Some newspaper columnists at the time said it could jeopardize his reelection. Two longtime friends of Clinton’s were embroiled in the mess: Leonard Dunn, a former Pine Bluff banker and now chief of staff for Lt. Gov. Winthrop Rockefeller, served as HMA’s president; and Richard Mays, a Little Rock lawyer, judge and Clinton ally, was hired in 1985 as an “ombudsman,” an ill-defined position that was supposedly created to help bring the prison medical system into compliance with state standards. The exact payment Mays received, or what his duties were, was never established, and became the subject of a state police investigation because of allegations that it was actually a “bribe” paid to a Clinton supporter to allow the program to continue.

Problems with the prison plasma program were well known to Clinton throughout the 1980s. The FDA cited HMA for safety deficiencies and shut it down for over a year in 1983, following a recall of hepatitis B-tainted products that had been shipped to Canada and distributed to hemophiliacs. In 1984, the FDA revoked the center’s license to operate, and in 1985, an inmate filed a lawsuit against HMA for inadequate medical care. In 1986, Clinton’s state police investigated problems at the prison and found little cause for concern, while an outside investigator looked at the same allegations and found dozens of safety violations.

Now, more than a decade later, those old Arkansas scandals are getting new attention, thanks to lawsuits and agitation in Canada. To date, the scandal has gotten almost no media attention in the United States. While reporters are riveted by the Monica Lewinsky mess, they’ve ignored a real Clinton scandal, maybe because it involves two groups no one cares much about — people who aren’t Americans, and prisoners.

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The Arkansas prison system has been in near-perpetual crisis since at least 1970, when the U.S. Supreme Court found its solitary confinement practices unconstitutional. Inmates lived in a “dark and evil world,” Justice John Paul Stevens wrote in 1978, the year Clinton was first elected as governor. At the same time, a federal judge referred to the influence of “evil men” in authority in the prison system.

The plasma program began in the 1960s as a way for inmates and the prison system to make extra money. Dr. Francis “Bud” Henderson, a Pine Bluff pediatrician, formed Health Education Consultants in 1972, which became HMA in 1978 when the company entered the prison plasma business. At that time, Henderson persuaded John Byus, the prison system’s medical director, that HMA needed to run both the medical and the plasma programs. Arkansas became the only state to have a private agency running its prison medical program.

Byus and Henderson say the motive for the plasma program was two-fold: The inmates needed money to buy gum and toiletries, and the destitute prison system needed medical equipment. Arkansas is also one of the only states that refuses to pay prisoners for their labor. Each unit of plasma was sold by HMA, which was running the program under the prison’s FDA license, for at least $50, and half was handed over to the prison system. With hundreds of prisoners donating once, sometimes twice a week, plasma became a profitable enterprise.

But Mike Galster, who worked at Cummins as a medical practitioner between 1979 and 1983, calls the prison plasma program “a crime against humanity.” Galster grew up in Pine Bluff, a small Southern city swirling in secrets, where business deals were often finalized in either the stately country club or a shady nightclub called Nina’s Penthouse, which burned down years ago. His father was a state trooper, and Galster knew HMA’s Henderson as a youth, when he was the doctor to Galster’s junior high school football team.

The plasma program always bothered Galster. “I could see [prisoners] were being given illegal narcotics — several indicated that this was how they were being paid for their plasma,” he recalled. State investigations later confirmed this allegation, though the prison claimed it cracked down on illegal dispensation of pharmaceuticals. Galster says he saw inmates who “appeared jaundiced and very sick. When I would ask if they had just had a blood test, they would say, ‘No, I’ve just given plasma.’ It was clear they were sick.”

But while he knew the prison had problems, Galster never imagined that tainted plasma would find its way into the blood supply of other countries. “I assumed, stupidly, that our people selling this plasma had some process of cleaning it up,” Galster says.

Prisoners say they weren’t adequately screened for disease. “The prison program they had was pretty shoddy,” says John Schock, a burly ex-con with an assortment of tattoos who regularly gave blood at Cummins. “They had inmates doing things they shouldn’t have been doing. They would let people who was sick bleed … ain’t no telling what they had. They didn’t check all the time.”

Sitting in a lawn chair in a lower-class North Little Rock neighborhood, Schock resembles a bloated, jaundiced Robin Williams with facial hair. He lifts up his blue shirt and shows the jagged triangle of raised flesh — a liver transplant scar — stretching across his protruding belly. Since his release, doctors have told him a dirty needle from the plasma program could have infected him with hepatitis C, the disease that cost him his liver. He isn’t surprised.

“I am damn sure I got it (hepatitis C) in the prison,” Schock says. “I didn’t have it before I went in. I have never had needles stuck in my arm that wasn’t suppose to be there. I have never interacted with homosexuals. I love women too much. I didn’t get it those ways.” Hepatitis C often leads to liver failure, requiring a transplant. Victims suffer chronic fatigue and illness and are frequently unable to work.

Schock says he gave blood at Cummins for nearly two years and was only sporadically checked for hepatitis. Finally, after he’d gone a month between tests and had given blood at least weekly, he was tested again, and prison doctors discovered hepatitis. A doctor looked at Schock, told him his eyes weren’t yellow, and he didn’t look too bad. “He said, ‘If you start feeling bad, come back and see me,’” Schock says. “That’s just the way they were. They don’t care because you are dirt down there anyway.”

Most prison plasma programs shut down in the early 1980s, when the FDA and the Centers for Disease Control alerted the public about AIDS. In December 1982, the FDA asked companies that made blood products not to purchase prison plasma, since many inmates have either injected drugs or engaged in homosexual acts, making them high risk for AIDS. The large pharmaceutical companies that were buying from Cummins stopped buying inmates’ plasma, a once-valuable commodity because of the large volumes produced each week.

But AIDS didn’t scare Henderson. “There was a mentality that we didn’t have any AIDS in the central part of the country. The department (of corrections) said for years we didn’t have any AIDS cases. There was a subconsciousness that we just didn’t want to think we had those people around us.” Still, Henderson would later tell police investigators, “Historically, this [was] the worse possible time to [sell plasma]. I called all over the world and finally got one group in Canada who would take the contract.” That group was Continental Pharma Cryosan Ltd., the biggest blood broker in Canada.

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In 1983, the FDA initiated an international recall of plasma that might have been tainted with hepatitis B, which can also be an indicator of HIV infection. Several prisoners who had previously tested positive for hepatitis B were allowed to donate blood at Cummins, and the tainted units had been sold by HMA to Cryosan. Cryosan in turn sold the plasma to corporations in Switzerland, Spain, Japan and Italy, as well as to Toronto-based Connaught Laboratories, which pooled the plasma with other blood products needed by hemophiliacs to make their blood clot, and sold the blood throughout Canada.

It was only then, during the crisis over the recall, that the Canadians learned they were buying plasma collected from prison inmates. “The shipping papers accompanying the plasma had not revealed that the centre was located in a prison,” the Krever commission report revealed. “They had simply referred to the source as the ‘ADC Plasma Center, Grady, Arkansas,’ without any indication that ‘ADC’ stood for ‘Arkansas Department of Corrections.’”

After that screening lapse, the FDA shut down the plasma program for several months. During the shutdown, it was discovered that an inmate clerk in the plasma center had been selling the “right to bleed” to fellow inmates who otherwise would have been excluded because they were likely infected with hepatitis B.

In 1984, the FDA found that Health Management Associates had prematurely and improperly distributed plasma contaminated with hepatitis. Twelve ineligible donors had given blood in a breach of screening processes, and an international recall resulted. The FDA then revoked the center’s license to operate. An investigation revealed that the program allowed disqualified donors to bleed, altered records and stored plasma in ways that didn’t prevent contamination. It also found that plasma center staff wasn’t well-supervised, and discovered attempts by people in HMA “management positions” at the center to hide from FDA inspectors the fact that they had either “initiated or condoned the destruction or alteration of records concerning these activities.”

Within months, after promising to clean up its act, HMA applied for a new license. Henderson and Byus blamed the recall on a corrupt inmate clerk who’d been paid off by potentially infected donors. The inmate was removed, and some employees were fired. The program continued for “the good of the inmates,” Henderson says. “The prison needed money, too, you have to understand.” HMA got its license approved again.

But the plasma program wasn’t the only source of scandal within the Arkansas prison system. In 1985 inmates began complaining loudly about prison medical care and rights abuses, including rape. That year Arkansas prisons had the highest number of inmate complaints of any state in the country. State Rep. Bobby Glover, a Democrat, became a champion for prisoners with stories of abuse. His office collected a raft of allegations, ranging from rape and other forms of abuse to bid rigging, theft of state property and the use of state property for private work and gambling.

Glover pushed for answers, and eventually the Arkansas Board of Corrections hired the independent Institute for Law and Policy Planning in Berkeley, Calif., to conduct an investigation of HMA. Fifteen days after that announcement, Gov. Clinton ordered the state police to investigate reports of criminal conduct within the prison system. The results of these two inquiries would offer a case study of the difference in the way Arkansas insiders and independent evaluators viewed the prison system’s problems.

The state police prison investigation resulted in two misdemeanor charges and one felony charge for employees running a gambling operation. Only a few weeks into it, Clinton himself urged a speedy end to the probe. “I told them to get it done and get it over with,” Clinton told reporters. Complaints about poor health care and the plasma program resulted in no action, and Arkansas Department of Corrections director Art Lockhart, who had been at the center of the allegations, was not punished. Clinton said the prison system had been “studied to death” and refused to oust Lockhart.

But investigators with the Institute for Law and Policy Planning reached very different conclusions. ILPP executive director Dr. Alan Kalmanoff highlighted 40 areas where HMA violated its state contract, including a conflict of interest in HMA’s operating both the medical department and plasma program. The report showed that HMA and the department of corrections had only recently developed procedures for handling AIDS cases, and were “only then developing a refined approach to AIDS screening and testing.”

The report also charged that HMA had failed to meet many significant professional standards. It had hired a large number of unlicensed, uncertified or legally unqualified medical staff. Tuberculosis was rampant in the prison. Eight inmate deaths were reviewed, and while the report said that the deaths probably could not have been prevented, it did note that “regular health assessment” and “complete” record-keeping had not occurred. And HMA director Henderson had not been spending the hours that he should on the medical program, the report alleged.

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The Arkansas Board of Corrections, run by a Clinton appointee, was repeatedly informed of problems with the prison medical program, including the plasma business. But it continued to return the contracts to HMA, despite other bidders.

How did HMA hold on to the contracts, despite the repeated scandals? It had the help of many high-profile Arkansans, including Leonard Dunn, who became HMA’s president. Dunn, a Pine Bluff banker, has deep roots in Arkansas politics. He worked closely with Arkansas political legends, including former U.S. Sen. David Pryor and Clinton. In fact, Dunn was a senior member of Clinton’s 1990 gubernatorial reelection team. While in the financial business, Dunn worked at several banks in Pine Bluff and Hot Springs, which served as HMA’s lenders. In 1990, he purchased Jim McDougal’s Madison Guaranty Savings and Loan, the notorious S&L whose involvement in an obscure land deal led to an investigation that culminated in President Clinton’s impeachment.

In recent interviews, Dunn has downplayed his role in HMA. Twelve years ago, he didn’t. In the state police investigation, an investigator wrote that Dunn “advised that he had been a former member of the State Claims Commission under Governor Pryor and that he was close to Governor Clinton as well as the majority of state politicians presently in office. Mr. Dunn explained that he was very fond of politics.” Dunn added that he was “the financial portion of the corporation as well as the political arm.” But in a recent interview, Dunn insisted, “I never took an active role in the company on a day to day operational basis.”

Yet Dunn took the lead in negotiating with state officials to get HMA’s contract renewed in 1985. One unique feature of that negotiation was the decision to hire an “ombudsman,” or compliance coordinator, to smooth problems between HMA and the state. During the state police investigation, however, the ombudsman contract was repeatedly described as a “bribe.” Arkansas Board of Corrections Chairman Woodson Walker told investigators that the ombudsman was his idea. “The governor [Clinton] was deeply concerned with HMA’s past performance,” Walker told investigators, and Clinton said “that I would be held personally responsible for the performance of whatever medical provider was chosen.” Woodson recommended renewing HMA’s contract, but with an ombudsman position added as a “safeguard” to ensure HMA’s good performance.

Both Walker and Clinton suggested HMA hire Richard Mays, an Arkansas lawyer and Clinton-appointed judge, HMA president Dunn told investigators. “Dunn stated that Walker advised him that Mays was black (a plus in a system where most of the inmates are black), had good qualifications and was an outstanding attorney,” according to investigators’ notes.

Mays is no stranger to Clinton scandals. He was accused of trying to quash the federal case against David Hale, Kenneth Starr’s key Whitewater informant whose personal credibility has been repeatedly challenged. Mays is also credited with leveraging Little Rock restaurateur-turned-international businessman Charlie Trie’s first $100,000 donation to Clinton’s 1992 presidential campaign. Trie, whose Chinese and Indonesian connections have been the subject of controversy and investigation, has been a conduit for several controversial donations to the Democratic National Committee.

Mays’ ties to Clinton continued in Washington. A former finance vice chairman of the DNC, Mays and his wife, Jennifer, stayed in the Lincoln Bedroom and attended White House state dinners. Mays did not return repeated calls from Salon about this story.

Dunn told investigators that HMA hired Mays for a two-year contract of $25,000. But during the investigation, no contract could ever be found, and the ombudsman position was considered by many within the prison system as a bribe. When asked about Mays’ contract, prison Health Services Administrator Sam Jordison “appeared to be quite uncomfortable,” investigators wrote. Jordison didn’t call the Mays contract a bribe, but he did say, “I’ve talked to Mr. Mays on two or three occasions, and I never really knew what the hell he wanted. I do feel there was something here between Mr. Walker, Mr. Mays and HMA.”

Henderson disputed that. He admitted to investigators that he “agreed to include the ombudsman so as not to endanger the continuing contract.” In fact, the only work Henderson recalls Mays doing was helping create an affirmative action program and an employee handbook — although affirmative action issues had not been at the center of allegations against HMA.

“[Mays] has met with us on three or four occasions and has mediated in some problem areas we have had,” Henderson told investigators. “For a person who I would really not have hired on my own, Mr. Mays had been an asset in the overall operation of HMA.” Ultimately, however, investigators were never able to find the contract that detailed Mays’ official duties, or any record of how much money he received. But whatever Mays’ official duties, hiring an ombudsman got HMA the contract, once again.

Not for long, however. The critical report by ILPP eventually drew blood. HMA was placed on probation following the report’s release, and a few months later, the firm lost its contract to provide prison health care. HMA dissolved in 1986. Henderson says he wanted out of the plasma business. “It was getting too difficult to sell,” he says. He still lives in Arkansas and works for a company that provides medical care in several Pennsylvania prisons.

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The plasma contract then went to Pine Bluff Biologicals, which took over the program and even expanded it, opening bleed units at the Wrightsville unit and the Diagnostic Unit — the prison’s hospital. “There is this whole thing about the high-risk population. I disagree with that. There’s no scientific proof to that,” says Jimmy Lord, former owner of Pine Bluff Biologicals.

Lord insists he had no connections with scandal-tainted HMA. “I never worked for HMA. I never had anything to do with HMA,” Lord says adamantly. “That center was shut down under HMA, and the center pulled some strings. Somehow they got it reinstated. I know how, but I wouldn’t say. Good Old Boy Network.” But documents show that in the early 1980s Lord did have connections with HMA, which shipped blood in the same trucks as Pine Bluff Biologicals. And Lord admits to selling blood to HMA.

“Yeah, I sold some street [non-prison] blood to him. There was an overabundance of Type O one year,” Lord says. “Instead of me cutting my donors off and losing them, I found an outlet through HMA. That was before they got in trouble. I had a good friend who worked for them, and he made sure I got paid. It was always a shaky thing dealing with them.”

Problems continued in Lord’s plasma program. In 1988, the red blood cells of one inmate were accidentally infused into the wrong person, the Arkansas Times reported. The next year, an FDA inspector said the center had inadequate control over screening new donors to prove they were not on a permanent reject list. Record keeping was also inadequate. As for AIDS, Lord says that it wasn’t a big concern in Arkansas — he thought it was an issue in places like New York and California — when he was running the program. “If anyone got caught in a homosexual act, we took them off the roster,” Lord says.

Prison system administrators never wanted to shut down the program. In 1991, Byus told a local reporter: “We plan to stick with it to the last day, to the last drop we’re able to sell.” That year, a group from New York took over the plasma program from Pine Bluff Biologicals.

In 1992, a new series of state police investigations into the system resulted in department of corrections director Lockhart’s resignation, after a barrage of allegations, including nepotism in the plasma program. He was found to have asked Lord to hire Lockhart’s son to work in the plasma program. A Little Rock grand jury charged Lockhart with four counts of mail fraud, but he turned state’s evidence, testified against then-state Rep. Lloyd George and was not convicted.

Prison medical director Byus, who still works for the system, stated in a police interview that Lockhart showed “an inordinate amount of concern for the success of Pine Bluff Biological in their plasma unit program,” and would even have security officers “recruit” inmates to give plasma. Byus said that Lockhart “was interested in seeing large numbers of inmates participate in the program.”

Finally, in 1994, the plasma program ended.

But Mike Galster, the medical practitioner, never forgot the grim images he witnessed in those years. Galster used the pseudonym Michael Sullivan to write “Blood Trail,” a thinly veiled fictional account of tainted blood in the Arkansas prison system. In Canada, the book has become a bestseller and fueled more investigations into Cummins. “In so many ways it reminds you of Nazi Germany,” Galster says. “If it had been the typical Arkansas scam, where we are talking about pigs, tractors, even land, that would be one thing. These guys had the power over a captive audience to make money from human beings.”

Galster left HMA in 1983 after he rejected a typical Arkansas ploy — a demand by an HMA associate that he kick back part of his earnings. “The way Arkansas works is that once you are working within the system, the people in charge make it clear that it is a privilege to have that state contract,” Galster says. “Ultimately, you are expected to pay for that privilege.”

“This I know,” Galster continues. “Without the governor’s support and protection, this disease-riddled system would have been shut down by 1982.”

In Canada, Michael McCarthy, a hepatitis C sufferer from Stratford, Ontario, is understandably bitter. “I think it is devastating to the victims of the blood disaster in Canada,” says McCarthy, who is married with one child and can no longer work thanks to third stage liver failure. “It shows it wasn’t God that was running the blood system. It was people who were making bad decisions based on money.”

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