BILL CLINTON NEEDED MONEY. IN the fall of 1990, a blistering round of Republican attack ads calling Clinton a ""raise and spend'' governor had devastated his re-election campaign. With just days to go, Clinton wanted to retaliate -- and he knew just where to turn: his old friend Herby Branscum. A former Arkansas Democratic Party chairman, Branscum ran the Perry County Bank in the tiny town of Perryville, about an hour's drive west of Little Rock. That year he provided Clinton with $180,000 in unsecured personal loans; $50,000 went to finance a last-minute TV blitz that pushed Clinton over the top. Branscum helped save Clinton's political life.
The president may soon wish he'd turned to someone else. Those loans are now at the center of the latest Whitewater drama: a bank fraud and conspiracy trial that starts this week in Little Rock. Independent counsel Kenneth Starr charges that Branscum and his business partner Robert Hill used bank funds to make illegal contributions to the 1990 Clinton campaign -- and deliberately concealed the Clinton campaign's large cash withdrawals from federal regulators. Although Clinton isn't charged with any wrongdoing, he will again be forced to testify about his Arkansas past. Aides fear that the trial -- complete with testimony about money changing hands in the governor's office -- could become even more of a political embarrassment than last month's convictions of Whitewater partners James and Susan McDougal.
Though the facts in each case are entirely different, Clinton nonetheless finds himself in a depressingly familiar place: once again attempting to explain a suspicious relationship with a slick operator from back home. And, as usual, the timing couldn't be worse. This week, Sen. Al D'Amato will release a searing three-volume Whitewater report accusing senior White House aides of a ""pattern of highly improper conduct'' that includes stonewalling investigators and concealing files. The report's chief target: First Lady Hillary Clinton, whom the panel all but accuses of obstructing justice for failing to turn over the Rose Law Firm billing records. Last week D'Amato's staff claimed to have at long last uncovered the First Lady's motive for concealing the documents: that they recorded a 1986 conversation in which she was warned about the propriety of a real-estate deal that she worked on called Castle Grande.
But it's the Branscum trial that has the White House particularly on edge. Short and paunchy, Branscum is the archetype of the small-time Southern pol. Known around Perryville as ""Boss Hogg'' after the wily political boss on the ""Dukes of Hazzard'' TV show, he's not only the town banker but also the only full-time lawyer and owns the only real-estate company. Hill, his sidekick, is the town's only CPA and counts the ballots on Election Day. ""They control everything in town,'' says Jeff Glenn, a local businessman.
In 1990, what Branscum coveted most was a seat on the Arkansas Highway Commission, a prestige political appointment usually reserved for the most generous campaign contributors. Branscum certainly fit the description. Soon after Clinton was re-elected with the help of Branscum's loans, the governor picked him for the Highway Commission post. Starr's team will argue that Branscum arranged the loans for Clinton and raised campaign funds to get the job. Among other witnesses, the former mayor of Perryville is expected to testify that Hill solicited a $250 Clinton campaign contribution from him, saying he needed the money ""to help Herby get a seat on the Highway Commission.''
Clinton's lawyer David Kendall says the president will testify the appointment was made entirely ""on the basis of merit''; and Branscum calls any suggestion of a quid pro quo ""absolutely preposterous.'' Of course, it would hardly be a surprise to learn that Clinton chose Branscum for purely political reasons. If it were a crime for governors to hand out patronage jobs to their top rainmakers, Herby Branscums in all 50 states would be in prison.
Even so, this week's trial will provide an unvarnished look at the brazenness of Arkansas politics likely to make even Clinton's ardent supporters wince. Five weeks after the election, Branscum, Hill and former bank president Neil Ainley (now the star prosecution witness) withdrew $7,000 in bank funds, allegedly recording them as business ""expenses.'' State records show that they and members of their families, including Branscum's wife, daughter and two sons, then wrote checks totaling the same amount to the ""Clinton Campaign Fund.'' Three days later, Hill met with Clinton in Little Rock and hand-delivered the money to the governor. Campaign treasurer (and now senior White House aide) Bruce Lindsay helped arrange the meeting, sources close to the case say. The purpose of the conference: Branscum's appointment to the Highway Commission.
If Branscum is convicted, Lindsay is likely to be Starr's next target, bringing prosecutors that much closer to the Oval Office. Even Clinton loyalists admit that the president and Lindsay's dealings with Branscum were messy. As Betsey Wright, the president's longtime friend and Little Rock chief of staff, bluntly told the Whitewater Committee, ""They were stupid in the way they handled it.''