Efficiency, Ethics of 1978 Independent Counsel Law Questioned : Congress: Critics who want to kill the measure cite the $33-million Iran-Contra case as example of excess.

In the aftermath of the Watergate scandal, a formal process for investigating executive branch abuses was enacted by Congress to ensure that no President would come as close as Richard M. Nixon had in placing official wrongdoing above the law.

But now, 14 years after the special prosecutor provisions were adopted as part of the Ethics in Government Act of 1978, critics are fighting to kill the law. Unless Congress votes to reauthorize the act, it will expire in December.

The critics contend that special prosecutors, known today as independent counsels, represent a noble experiment that did not work. They say the process has proved too costly, has achieved paltry results and has made criminal cases out of political judgment calls. They argue that seemingly interminable investigations have damaged innocent individuals and have permitted--even encouraged--independent counsels to operate free of the restraints that apply to other federal prosecutors.

“The problem with the (independent counsel) statute now is that there’s no accountability,” Atty. Gen. William P. Barr said. “Individuals are set up as a power unto themselves. There have to be some constraints.”

Advocates of the law insist that such a mechanism remains the only hope for impartial justice when the conduct of high government officials is called into question.

The independent counsel law “serves an essential role in helping maintain public confidence in the administration of justice,” said Samuel Dash, a Georgetown University law professor who served as chief counsel of the Senate Watergate committee.

Perhaps the most celebrated--and criticized--case is the Iran-Contra investigation headed by independent counsel Lawrence E. Walsh. While the Iran-Contra probe produced more indictments and convictions than any other, it also consumed the most time and money--nearly six years and $33 million. Walsh called a halt to the inquiry Thursday.

Walsh’s probe was stymied in part by the inability of prosecutors to crack the shield of “national security” that prevented them from presenting key evidence about the Ronald Reagan Administration’s arms sales to Iran and the diversion of profits to Nicaraguan Contras.

Critics also cite other, lesser-known investigations as examples of independent counsel excesses.

One involved Theodore B. Olson, a senior Justice Department official in the Reagan Administration who was accused of misleading Congress in 1983 about the handling of documents involved in an Environmental Protection Agency scandal over alleged mishandling of the federal Superfund program to clean up toxic waste.

The investigation lasted nearly three years. During that time Olson took to jogging by flashlight in the middle of the night to prevent the process from “consuming me emotionally.” Eventually, he was exonerated.

Some of the law’s defenders concede that the present system needs new safeguards. But they say the years since Watergate have been replete with instances, topped by the Iran-Contra affair, of high government officials violating federal laws or using their power to protect individuals whose conduct has been called into question.

Defenders of the law argue that only a prosecutor independent of the Justice Department has the credibility to investigate such politically sensitive allegations and to decide whether or not to bring charges. Indeed, veteran prosecutors say that deciding not to prosecute is often tougher than electing to file charges.

The very difficulties that Walsh and other independent counsel have sometimes encountered in building cases is in itself proof of the need for the current system or something like it, defenders say. Without the law, they argue, high officials could abuse their offices with little fear of being called to account.

“The independent counsel statute is essential to having a fair and publicly credible system for ensuring that the highest-level officials in the executive branch are held accountable for criminal wrongdoing and are subject to the rule of law,” declared Common Cause, the citizens lobby, in a recent fund-raising letter.

The concept of calling in a prosecutor from outside the system to probe major Administration figures predates the 1978 ethics law. Indeed, the two greatest White House scandals of this century--Teapot Dome and Watergate--were investigated by special prosecutors appointed by presidents under public pressure.

Teapot Dome, which came to characterize the cronyism and corruption of the Warren G. Harding Administration, involved the secret leasing of Naval petroleum reserve lands by Interior Secretary Albert B. Fall to private companies. The scandal was uncovered by a Senate committee after Harding’s death in 1923.

Fall tried to defend his actions, but the public was outraged by disclosures that he had accepted $400,000 from oilmen to whom he had awarded the leases. Harding’s successor, Calvin Coolidge, was forced to appoint special prosecutors to examine the affair.

Fall ultimately went to prison for accepting bribes. Wealthy oilman Harry Sinclair, who refused to cooperate with investigators, was sentenced for criminal contempt.

The Watergate investigation focused on efforts by top Nixon Administration officials to cover up the 1972 bugging of Democratic Party headquarters by Republican operatives. An embattled Nixon finally ordered the firing of Deputy Atty. Gen. William D. Ruckelhaus and special prosecutor Archibald Cox, who persisted in subpoenaing Oval Office tape recordings that revealed Nixon’s involvement in the cover-up.

In addition, Atty. Gen. Elliot L. Richardson resigned rather than obey Nixon’s order, rounding out what became known as the Saturday Night Massacre. But Solicitor General Robert H. Bork agreed to carry out Nixon’s directive. He later defended his action by saying he was not bound by the promises of independence for Cox that Richardson and Ruckelshaus had made to the Senate. Bork argued that the upheaval in the Justice Department would have been even greater if he, too, had balked.

“It was this chaos, this blow to the system of justice and the resulting loss of public confidence in federal criminal investigations of persons close to the President that gave rise to the independent counsel law,” Sen. Carl Levin (D-Mich.) said recently. “This law authorized the first truly independent federal prosecutors our country has had to handle criminal cases involving top government officials.”

Levin, chairman of the Senate Governmental Affairs subcommittee that oversees independent counsel operations, has introduced legislation that would extend the law for another five years. Only a few weeks ago, the law seemed likely to expire in December without much of a fight. It now appears to have a solid prospect of renewal.

The 1978 law created a standard procedure for appointing special prosecutors.

First, if the attorney general receives specific information from a credible source concerning criminal misconduct by the President, vice president, Cabinet officers or top election campaign officials, he must conduct a preliminary investigation--without benefit of a grand jury, subpoena or other full-scale investigative tools.

If the facts gathered convince the attorney general that further investigation is warranted, he applies to a special three-member court for appointment of an independent counsel. The court picks the prosecutor and outlines his mandate, based on facts provided by the attorney general.

In the 14 years the law has been on the books, attorneys general have conducted 32 preliminary investigations, leading to the appointment of 11 independent counsels. But the law got off to a slow start, with no indictments being sought until Reagan’s second term.

The Iran-Contra investigation and a continuing probe of high-level corruption within the Department of Housing and Urban Development during the Reagan Administration have led to the bulk of the 27 indictments and 11 convictions obtained by independent counsels under the 1978 law. Both Walsh and Arlin Adams, who heads the HUD probe, are former federal judges.

Walsh’s Iran-Contra investigation has resulted in 14 indictments. Adams’ investigation, which is still very much under way, has led to the indictment of nine former HUD aides and private businessmen who benefited from their actions.

Much of the opposition to extending the independent counsel law focused on the Iran-Contra probe, particularly its cost, length and Walsh’s refusal to close the investigation long after most Americans seemed to have lost interest in the misdeeds of a prior Administration.

The costs reported by the 11 independent counsels range from a low of $3,300 in one short-lived investigation to $6.9 million for the HUD probe and $32.5 million for Iran-Contra. The Adams and Walsh inquiries are likely to incur substantial additional bills, with trials and appeals yet to be conducted.

Walsh offers no apologies for the costs he has incurred. More than 40% of his expenses were administrative in nature as he set up a new investigative and prosecutorial agency, largely independent of existing government machinery. Unlike most independent counsels, Walsh did not just investigate a single individual, but the White House and three major departments.

In the course of prosecuting former White House aide Oliver L. North, whose convictions were eventually overturned, Walsh said defense lawyers filed 108 pretrial motions--a “fantastic” number by Walsh’s reckoning. All of the motions had to be confronted, adding to the cost, he said.

“It’s always a question of judgment whether an investigation is too extensive,” Walsh said. “I made the decision that we were going to do a comprehensive investigation--not grab a small, runaway conspiracy.”

Walsh’s GOP critics have not been deterred by his impeccable Republican credentials: Walsh cut his investigative teeth under former New York Dist. Atty. and Gov. Thomas E. Dewey, was appointed to the federal bench by President Dwight D. Eisenhower and served in the Eisenhower Administration as deputy attorney general.

Senate Republican leader Bob Dole of Kansas, citing $5.6 million in office space costs as an example of what he characterizes as excessive expenditures, contends an independent counsel should be named to investigate Walsh.

But there is a genuine split over the wisdom of keeping the independent counsel law on the books that has nothing to do with partisan politics. That division is illustrated by the contrasting positions of two men at the center of the Watergate probe: Archibald Cox, the special prosecutor who was fired by Nixon, and Henry S. Ruth Jr., a Cox deputy who later became the third of the Watergate special prosecutors.

“I strongly believe it (the law) should be reauthorized,” said Cox, who teaches constitutional law at Boston University and maintains an office at Harvard Law School.

Cox said it troubles him deeply that Reagan “was such a popular President” that Americans did not react to the Iran-Contra disclosures of deceit by high officials with the same sense of outrage that greeted the earlier Watergate disclosures.

Ruth, on the other hand, contends that the nearly six years spent on the Iran-Contra probe was simply too much.

“Special means special, and six years is too regular to be special,” said Ruth, now in private practice. “I’m not sure that the prosecutive process has a critical role in controlling foreign policy abuses.”