LITTLE ROCK, Ark. -- Flashing streaks of her famed defiance, Whitewater defendant Susan H. McDougal sparred with one of Kenneth W. Starr's deputies from the witness stand yesterday and drew repeated rebukes from the judge for her reluctance to answer the prosecutor's questions directly.

"I want you to understand you are expected to respond to these questions," an increasingly frustrated U.S. District Judge George Howard Jr. told McDougal as she began cross-examination at her trial. "I'm not about to let anybody manipulate this system."

McDougal's refusal to answer questions before the Whitewater grand jury that led to her trial here on contempt and obstruction charges.

McDougal also served 18 months in prison for refusing to talk about Whitewater, but the problem yesterday was that prosecutors and the judge often couldn't get her to stop talking.

In her most tantalizing allegation, McDougal testified that her late former husband, James B. McDougal, told her in 1996 that Starr's people wanted to "get Clinton on a sex charge" before that year's presidential election.

The independent counsel would help Mrs. McDougal solve her legal problems. "All you have to say is that you had a sexual affair with Bill Clinton," she quoted her former husband as saying.

Prosecutors labeled the claim "outrageous," saying no such conversation ever took place.

Mrs. McDougal said prosecutors made clear they were looking for damaging evidence against the Clintons in a conversation before her 1996 Whitewater sentencing on charges growing out of a fraudulent $300,000 loan she'd signed for.

"You know who the investigation is about. You know who we want," she quoted a prosecutor as saying.

But Mrs. McDougal testified that she had no damaging information on the Clintons and that she was not willing to lie -- even if it meant giving up the chance to "have my life back."

After she was sentenced to prison for her Whitewater conviction, McDougal said she was content knowing that she had not lied about anyone and had not let her words be "twisted" to harm the Clintons.

"Even though I was going to jail, I felt I had a clearer perspective of what my life was supposed to be. I felt I could live with myself," she said.

McDougal's testimony drew occasional sobs from family members in the audience, but associate independent counsel Mark Barrett objected repeatedly to her long, tangential responses, and the judge lost patience as well.

"Do not give us a speech. Is that clear?" Howard admonished McDougal as her attorney finished his questioning.

Pub Date: 3/25/99