Updated: Apr 13 1998 12:10PM

Ken Starr, investigate thyself. That was the tricky spot the independent counsel found himself in last week after Deputy Attorney General Eric Holder told Starr to probe charges that one of his main Whitewater witnesses took money originating from billionaire Clinton hater Richard Scaife. Happy to point out the awkwardness of this situation was presidential lawyer David Kendall. In a five-page letter, obtained by TIME, Kendall explained why Starr is the wrong man to investigate David Hale, who has accused the President of wrongdoing. Not only has Starr relied heavily on Hale's testimony, Kendall notes, but his own FBI agents are alleged to have driven Hale to the fishing cabin where he reportedly met with Scaife's agents. Kendall also points out Starr's connection to Scaife, a major underwriter of the post awaiting Starr at Pepperdine University, and the fact that Starr's good pal Ted Olson is Hale's lawyer and a board member of the American Spectator foundation through which the Hale payments allegedly flowed. The letter followed by a day what a Clinton-connected lawyer called the "diabolically clever" missive from Holder that put Starr in this box. Now Starr must either deny a conflict, or at least the appearance of one, and conduct the inquiry, or acknowledge a problem and pitch the matter back to the Justice Department, risking an outcry that his impartiality can be questioned on far more than this one piece of his wide-ranging investigation of Clinton. "He's hornswoggled," said a Clintonite.

-- Viveca Novak