
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, July 14, 1994                   TAG: 9407140082
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

POLITICAL GIFTS MAY HAVE PAID OFF CLINTON LOANS

While governor of Arkansas in the mid-1980s, Bill Clinton borrowed at least $220,000 - and perhaps twice that - to promote his legislative agenda, then asked aides to solicit donations from supporters and special interests to pay off the loans.

The loans had never been disclosed, and some of the donations hadn't been either, officials close to Clinton acknowledged in interviews. The arrangement exposed Clinton to considerable financial risk at a time when his salary as governor was $35,000 a year.

The Clinton loans came from the Bank of Cherry Valley, a tiny institution owned by a friend, according to an Associated Press review of Clinton's finances during the years of his Whitewater investment.

Many of the biggest donors were members of Arkansas' corporate elite, from poultry giant Tyson Foods and TCBY yogurt chain owner Frank Hickingbotham to state-regulated banks and utilities.

Clinton's chief of staff at the time, Betsey Wright, says she controlled both the spending and the fund-raising for the political funds, which were used to retire Clinton's unsecured personal debt at Cherry Valley.

The money was used to push a broad legislative agenda that ranged from education to ethics reform. Included were extensive television, radio and newspaper advertising; direct mail efforts; consultants who crafted legislation, travel and polling expenses. The funds generally were kept separate from Clinton's re-election money, so donors were not subject to the $1,500 limit on campaign contributions. Some supporters gave $10,000 or more, Wright indicated, including Hickingbotham of TCBY at $25,000.

Scott Trotter, executive director of the Arkansas chapter of Common Cause, said such an arrangement was ``an end run'' around campaign finance laws.

``Wealthy special interests were offered another opportunity through unlimited contributions to influence Governor Clinton and his administration,'' said Trotter, who worked on utilities reform for Clinton before a falling out. The White House referred questions to Wright, who bristled at any suggestion of impropriety.

``There were no slush funds,'' she said. ``Those people contributed to specific programs that they believed in and that they had a stake in.'' At the time of the loans, the Clintons' personal credit was stretched. They were liable for the mortgages taken out for the Whitewater land venture, which at one point totaled more than $200,000. And Clinton also had a separate $50,000 loan from Smith's bank for his 1984 re-election campaign.

Experts asked by AP to review the arrangement said Clinton had no obligation to report these donations as taxable income.

Wright said donors were approached because Clinton did not want to use state tax dollars for his political activities.

by CNB