Prosecutors are questioning current and former presidential aides to learn why intern Monica Lewinsky received a salaried White House job, then was transferred within months to the Pentagon.

The aides were called before a grand jury Wednesday as independent counsel Kenneth Starr sought clues to any connection between the job change and Lewinsky's allegations of an affair with President Clinton and a cover-up.The grand jury met again Thursday.

Clinton aide Sidney Blumenthal returned to the court Thursday. Prosecutors wanted to question whether he was behind the spreading of negative information about investigators in Starr's office.

The focus on Lewinsky's job temporarily turned attention away from behind-the-scenes attempts by the White House and Starr to avoid a court showdown over executive privilege.

Wednesday's witnesses were Nancy Hernreich, who as director of Oval Office operations saw nearly everyone who had contact with the president; and former White House aides Timothy Keating and Patsy Thomasson.

"I made the decision to hire her because she had performed her assignments well as an intern," said Keating, Lewinsky's former supervisor in the White House office of legislative affairs. "She was transferred because of dissatisfaction with her performance in the correspondence section.

"In neither situation did I take or recommend any personnel action because of any suggested relationship with the president. In fact I had and have no knowledge of any such relationship," Keating told reporters.

Lewinsky is reported to have told a colleague at the Pentagon, Linda Tripp, in secretly taped conversations that she had a sexual affair with Clinton and that he asked her to lie about it under oath to lawyers in Paula Jones' sexual harassment lawsuit against the president.

Clinton has denied any affair with Lewinsky and said he never told her to lie.

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Meanwhile, Jones' lawsuit against Clinton came close to settlement earlier this month, her attorneys said, but a private lawyer for the president called the account "erroneous and misleading."

Lawyers from the Dallas firm of Rader, Campbell, Fisher & Pyke, said Wednesday that Clinton's lawyer made the settlement overture on Jan. 30 - about a week after the Lewinsky allegations became public. The two sides came within $150,000 of an agreement, the lawyers contended, with Clinton's side suggesting as much as $750,000 and the Jones lawyers countering a week later with $900,000.

The second-in-command of Clinton's legal team in the Jones case, Mitchell Ettinger, denied the claim by Jones' lawyers. "At no time did I make a settlement offer to Paula Jones' lawyers on behalf of President Clinton, nor did I have authority to do so," said Ettinger.

"Indeed, I specifically advised them that I had no such authority. Paula Jones' press release is erroneous and misleading in all material respects."

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