Could Clinton Still Settle With Jones?

By Jay Branegan And Viveca Novak With Reporting By Margaret Carlson/Washington

Why didn't Nixon burn the tapes?" One of the great political puzzles of the late 20th century has been joined by another: "Why didn't Clinton settle with Paula Jones before Monica Lewinsky hit the headlines?" It was, after all, the search for "other women" who could support Jones' story that brought Monica to light in the first place. And yet, even as the Lewinsky saga has strengthened Jones' public posture, it has not helped her prospects in court. Sources tell TIME that the Jones team has put out quiet feelers to see whether Clinton might want to talk again about settlement, only to find that the President may want a trial after all.

The last serious attempt at a deal, which included a proposed $700,000 payment and a carefully hedged statement from Clinton, foundered in September when Jones demanded a full apology. By the time the Lewinsky story broke, disclosing an alleged pattern of exploitive sexual behavior by the President, the price tag had jumped to more than $2 million, a figure too embarrassing for the White House to entertain. But the legal and perceptual ground has shifted since then, mostly when Judge Susan Webber Wright ruled last month that the whole Lewinsky saga could not be admitted in the Jones case.

Now another key witness could end up doing Jones more harm than good. Her team was hoping that the testimony of former White House volunteer Kathleen Willey would help their case. Willey has reportedly said in a videotaped deposition that Clinton made an uninvited pass at her in the White House in November 1993, when Willey came to talk with the President about job opportunities. But sources tell TIME that Julie Hiatt Steele, once a close friend of Willey's, signed an affidavit last Friday, at the request of Clinton's lawyers, suggesting that the encounter may have been more innocent than Willey claims and that Willey asked her to lie about it.

According to Steele's lawyer, John West, Steele got a call one day in early 1997 from Willey, who was talking with Newsweek reporter Michael Isikoff. Could Isikoff come to interview her about Willey's visit to the Oval Office? Steele agreed but wondered why. While Isikoff was on his way to Steele's house, Willey called her again and told her what to say--that Willey had come to her house after returning from Washington that day, described a sexual advance by Clinton and was in great distress.

In reality, West says, there was no such visit, and Steele didn't even learn of Willey's session with the President until weeks later. When she did, West told TIME, she was left with the impression that there was nothing more than "mutual affection" between Willey and Clinton, not a sexual encounter and nothing in any way upsetting. Willey, according to a source, sent Clinton a book on dealing with loss shortly after his mother died and less than two months after the encounter. She also sent the President friendly notes and asked him to arrange a visit for a friend of hers with a brain tumor. These are hardly the actions of an aggrieved woman. Further, last year Willey called Nancy Hernreich, director of Oval Office Operations, to warn the White House that Isikoff was nosing around, but she assured Hernreich that she had nothing to divulge.

Steele's affidavit is obviously a help for Bob Bennett and All the President's Lawyers; the President doesn't hit on women, the argument will go, he just comforts them in distress, and they may misunderstand or exaggerate that gesture. In fact, says a source close to Clinton, it was the President who was upset by the whole Willey affair. She and her husband Edward, a lawyer, were longtime supporters who had run into serious trouble: Edward was accused of embezzling nearly $300,000 from clients. Penniless and publicly humiliated, Willey came to see Clinton, weeping and distraught, and he felt her pain, the source says, only to find himself accused two years later of harassing her. While Willey was in Washington, she learned the next day that her husband had put a bullet through his head.

If Steele's affidavit undermines Willey's testimony, it becomes just one more reason the White House may be wanting a trial and the Jones camp may be looking for a deal. At this point, some aides argue, Clinton has little more to lose; the damage to his reputation has been done, and if the jury rules against him, he can blame the poisonous atmosphere around Kenneth Starr's investigation. If he were to win, he could spin the victory into a vindication against all accusations against him.

Though Jones' lawyers maintain that their case is strong even without the Lewinsky evidence, their bargaining position may have weakened and their calculation changed accordingly. Courtesy of Starr, Jones has already won a large share of the credibility she wanted from a jury verdict. An associate describes her as "tired" and eager to avoid the kind of public savaging Lewinsky has suffered. Book deals should make her wealthy. If she were to get out of the case now, she might well be selling at the top.

If, on the other hand, the case goes to trial, she faces some high hurdles. Jones' investigators have found no new lovers beyond the dozen or so already alleged in the tabloids. Six, whose depositions were subpoenaed by Starr, have denied under oath any affairs with Clinton. The case would be tried in Little Rock, where Clinton is still a favorite son, before 12 jurors, and Jones would need a unanimous verdict to win. That's a big gamble, especially against a man with record approval ratings, whose capacity to get in trouble is exceeded only by the charm he can deploy in getting out of it.

--With reporting by Margaret Carlson/Washington