Reno Denies 3rd Call for Counsel on Donations

Atty. Gen. Janet Reno on Friday rejected the last outstanding congressional request that she seek an independent counsel to investigate possible criminal wrongdoing in the way Democratic National Party officials allegedly sought and received campaign money from foreign contributors.

The rejection, the third in recent weeks, sets the stage for congressional hearings likely to begin soon after the new Republican-controlled Congress convenes in January.

Reno and her aides based their decision on two points. They said none of the alleged wrongdoers were of sufficiently high rank--the president, vice president and Cabinet members--to require invoking the Independent Counsel Act.

And they said “general assertions” that President Clinton or Vice President Al Gore sought the donations and that foreign contributors benefited by giving money to the Democratic National Committee “fall far short of the sort of specific facts and reasonable inferences” that Clinton or Gore “may have violated federal criminal law.”

Instead, a recently created task force within the public integrity section of the Justice Department’s Criminal Division will review allegations of questionable fund-raising practices in the 1996 election, officials said. They will consider whether federal prosecutors should bring criminal charges and whether the matter should ultimately go to an independent counsel after all.

The Justice Department revealed its decision in a letter approved by Reno and written by Deputy Assistant Atty. Gen. Mark M. Richard to Sen. John McCain (R-Ariz.) and four House committee chairmen who had requested an independent counsel.

The department had earlier rejected two similar requests, one from McCain and the four House chairmen, and one from the citizens’ lobby Common Cause. The third rejection on Friday is by far the most sweeping.

“There is no specific, credible evidence at this time that any individual covered by the provisions of the Independent Counsel Act has committed any federal crime,” the letter said. “To the extent that there are allegations of wrongdoing that may warrant criminal investigation, at this time they relate only to lower-ranking public officials, DNC employees and contributors.”

Reno said career Justice Department prosecutors have demonstrated that they can conduct “thorough and fair investigations and prosecutions even of politically powerful members of the incumbent party. You have my commitment that they will do so in this case.”

Reno, who has been criticized by White House aides for being too ready to request appointment of independent counsels to investigate alleged Clinton administration wrongdoing, has made it known that she hopes to keep her job in Clinton’s second term.

But Republicans steered clear of suggesting that Reno was trying to save her job.

“I can’t accuse her of that,” McCain said in an interview Friday. “She’s been good on so many of these issues.”

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The foreign fund-raising affair is the first major controversy in which she has rebuffed appeals for an outsider to look into charges of official wrongdoing. Three independent counsels are investigating charges against Clinton in the Whitewater affair and against former Agriculture Secretary Mike Espy and departing Housing and Urban Development Secretary Henry G. Cisneros.

Another independent counsel probe into the financial affairs of Commerce Secretary Ronald H. Brown was dissolved after Brown was killed in a plane crash.

McCain said he was disappointed by Reno’s decision Friday. Senate Republican leaders will meet here next week, he said, to decide what shape congressional hearings into the matter will take. He said a special committee could be set up to air the allegations, or the task could be left to the Commerce Committee and the Governmental Affairs Committee.

“The first thing I would do is get this together and do this thing fairly quickly and in a bipartisan fashion,” said McCain, who is expected to be named Commerce Committee chairman next week.

Noting that the decision on how to proceed is up to Senate Majority Leader Trent Lott (R-Miss.), McCain said: “If he wants me to do it, I’ll do it in a New York minute.”

He added that he would design the hearings not only to look into alleged Democratic abuses, but also to craft new legislation governing political fund-raising.

“I would hope there would be mounted pressure for campaign finance reform,” he said. “Just like there was after Watergate. I hope we would move on that right away.”

At the White House, spokesman Mike McCurry indicated that Clinton administration officials would cooperate with the in-house Justice Department review as well as any congressional investigations.

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“The White House will continue to answer questions related to financial contributions candidly and forthrightly,” he said, “as the president has directed.”

With the Justice Department’s own task force now investigating, sources said FBI agents would probably be dispatched to interview both donors and DNC officials.

Of particular concern are $450,000 in contributions from an Indonesian couple and $250,000 from a South Korean company, both of which the DNC returned in response to news stories. There is also the matter of a Buddhist temple in Hacienda Heights that was used for a fund-raising event attended by Gore.

Reno has won praise from outside the Clinton administration for seeking a special federal court to appoint independent counsels in all four of the other matters in which she had received such requests.

But sentiment has changed since her last decision, and a growing number of legal scholars are arguing that there are too many independent investigations. Just a week ago, a group of former independent counsels meeting here agreed that the law was being applied too broadly and too often.

Times staff writer Sara Fritz contributed to this story.