Jury Indicts Susan McDougal

Former Whitewater business partner Susan McDougal was indicted Monday on new charges related to her refusal to tell a grand jury what she knows about President and Mrs. Clinton's business dealings.

The indictment, handed down by a grand jury here that is completing its last week of work, charged Mrs. McDougal with two counts of criminal contempt of court and one count of obstruction of justice.

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The charges come nearly two years after she first refused to testify before a federal grand jury after being convicted by a jury on fraud charges related to the failed savings and loan at the center of the original Whitewater investigation.

Mrs. McDougal has already served 18 months for civil contempt for refusing to answer questions before the grand jury, the maximum time a federal judge can order.

She was freed in March and is currently serving a prison sentence for the fraud charges stemming from her 1996 trial.

She was brought back before the grand jury again last month and again refused to answer prosecutors' questions.

William Henley, Mrs. McDougal's brother, said before the indictment that she expected to take any new charges to trial so that she can present evidence concerning recent allegations that a key prosecution witness may have received financial assistance from conservative critics of President Clinton.

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"I think it is going to give us an opportunity to show what a tainted investigation this wasÂ…If it will give us the opportunity bring evidence forward and to bring witnesses forward, Susan is more than willing to go through this," Henley said.

He said his sister had been informed by prosecutors in a letter that she would be indicted if she refused to talk by noon Monday.

The grand jury in Arkansas, which is set to expire Thursday after two years of work, reconvened Monday as Independent Counsel Kenneth Starr continued investigating Webb Hubbell, Mrs. McDougal and the first lady.

Starr has not said whether he would ask for a new grand jury, although he has said he was eager for the current panel's work to be complete.

The investigation has narrowed its focus in recent months to Mrs. Clinton's legal work for the savins and loan that Mrs. McDougal once owned with her former husband, the late James McDougal.

Prosecutors are trying to determine whether Mrs. Clinton, while a private Arkansas lawyer, assisted a series of fraudulent S&L land transactions in the mid 1980s carried out McDougal.