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CIA Nominee Cleared as Hearings Loom

TIMES STAFF WRITERS

The Justice Department on Friday cleared Anthony Lake, President Clinton’s nominee to run the Central Intelligence Agency, of any potential criminal charges stemming from his personal stock dealings and his testimony to Congress about Iranian arms shipments to Bosnia.

The Justice Department action likely will ease the way for Lake to begin confirmation hearings before the Senate Intelligence Committee later this month--but does not guarantee smooth sailing once he gets there. The panel’s chairman, Sen. Richard C. Shelby (R-Ala.), has said he is skeptical of Lake’s qualifications to run the CIA and other U.S. intelligence agencies.

In settlement of the stock dispute, the Justice Department said that Lake had agreed to pay a $5,000 fine. The department said it concluded after an 18-month investigation that Lake inadvertently kept four petroleum and energy stocks for more than two years, all the while believing that he had divested his portfolio of them.

An administration official noted that the $5,000 settlement was the lowest amount allowed under Justice Department guidelines.

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“The president is obviously delighted that the Justice Department has reached this agreement,” White House spokesman Mike McCurry said. “The president fully expects that this information will now lay to rest any concerns that the Senate might have.”

But another White House official conceded that Lake’s confirmation is still not assured.

“We know that Tony is still going to face plenty of questions up there,” the official said.

The department’s ruling on Bosnia found there was no evidence that Lake had lied to a House subcommittee that investigated the Clinton administration’s decision to give a “green light” to the Iranian arms shipments even though they violated U.S. policy and a United Nations embargo.

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“We have found . . . no evidence that Mr. Lake was untruthful to the subcommittee or was part of a conspiracy to obstruct Congress,” Mark M. Richard, the acting assistant attorney general in charge of the Justice Department’s Criminal Division, said in a formal letter to Rep. Henry J. Hyde (R-Ill.), chairman of the subcommittee.

Richard said the department also found that Lake did not violate any law by participating in the “green light” policy, which Clinton approved as a means of making sure the beleaguered Bosnian Muslim government had enough weapons to defend itself.

However, the department did not examine the broader issue that Shelby has said he plans to raise: whether Lake acted improperly by failing to inform Congress that the administration was allowing Bosnia to receive arms shipments from Iran.

Congressional aides said that Shelby and other members of the Intelligence Committee are also concerned that Lake, as one of Clinton’s closest advisors, might find himself tempted to let political considerations influence the process of analyzing and presenting secret intelligence.

The Republican-controlled subcommittee asked the Justice Department last year to investigate whether Lake or any other administration witnesses had made false statements to the panel, a criminal offense.

Lake and several aides gave conflicting accounts of several details of the 1995 decision to allow Iranian arms shipments.

For example, a U.S. ambassador testified that one of Lake’s aides told him that if Croatian officials asked about the U.S. attitude toward the arms shipments, he was to respond that he had “no instructions.” But the aide added: “Tony was smiling when he said it.” The aide denied making that statement and Lake said he did not ask that his smile, if any, be conveyed to the ambassador.

The stock settlement said that Lake failed to follow advice from the White House counsel’s office in March 1993 to sell the stocks to avoid a potential conflict of interest arising from his duties as the president’s national security advisor.

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Nonetheless, there is no evidence during the two-year period Lake continued to hold the stocks that he ever took any official actions with the idea of enriching himself, the department said. In addition, “there is no evidence that Mr. Lake ever took any action to conceal or misrepresent his or his wife’s financial holdings,” the papers said.

Justice Department officials found inadvertence on Lake’s part because of these factors:

* After being advised to divest himself of the stocks, he gave his secretary a note to alert his broker to take action “but there is no evidence that Mr. Lake’s secretary ever sent” a memorandum or that Lake’s broker ever received one.

* Eight months later--in November 1993--when White House lawyers noted that Lake and his wife still owned the stocks, Lake asked for certificates of divestiture and apparently believed he had completed the action.

* It was not until June 1995 that the legal advisor to the National Security Council told Lake he still owned the stocks. Within 24 hours, Lake phoned his broker and instructed him to sell them, the department said.

The four stocks in question--Exxon Corp., Mobile Corp., Teco Energy Inc., and Duke Power Co.--were among more than 25 other issues in addition to bonds and U.S. Treasury notes in a portfolio held by Lake and his wife.

The legal papers further stated that as a result of his oversight, Lake wound up losing money.

“As a result of selling the four stocks on June 16, 1995, instead of on Nov. 30, 1993, he suffered a loss of more than $16,000,” the department said.

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