Report to Reno Urges Independent Counsel on Fund-Raising

In the coming weeks, Atty. Gen. Janet Reno and her top advisors will be weighing a strong new recommendation from the former head of the illegal donations inquiry that she turn over the controversial probe to an independent counsel.

In a report summarizing his analysis of the law and facts he gathered as lead prosecutor in the investigation, Charles G. LaBella has greatly intensified political pressure on Reno to change her position and recommend appointment of an outside prosecutor to explore evidence against high-level government officials and Democratic Party fund-raisers.

Added to an earlier recommendation by FBI Director Louis J. Freeh that the Justice Department step aside, LaBella’s report shows that two of the attorney general’s most trusted investigators on the matter agree with Republican critics that the time is overdue for an outside prosecutor to take over the politically charged case.

The recommendation by LaBella, now acting U.S. attorney in San Diego, prompted a request for him, Freeh and James V. Desarno Jr., the FBI’s chief political fund-raising investigator, to testify Thursday before the House Government Reform and Oversight Committee.

Confirming that she was reviewing LaBella’s report, which was submitted July 16, Reno said: “I review all new information or conclusions or anything that is relevant to the issue of whether an independent counsel should be appointed and the statute triggered. . . . When I determine that it is triggered, I will trigger it.”

At the same time, Reno made clear at her weekly briefing for reporters that she also would consult other department officials, who have counseled against appointing an independent prosecutor in the past.

“There are a range of lawyers within the department who have had long experience with the Independent Counsel Act,” Reno said. “What we do is hear from everybody, not just one lawyer, but everybody. And we make sure that we try to consider all arguments and reach the best decision.”

Government sources, even those speaking anonymously, declined to provide specifics on LaBella’s report, which runs more than 100 pages. But one source who had read the report said it represents “a fresh approach to everything he [LaBella] has seen” and called for legal conclusions and steps that had not been advanced earlier.

Although the report does not recommend the investigation of specific individuals, it does analyze the activities of top government officials and their knowledge of possible wrongdoing, including President Clinton, Vice President Al Gore and others involved in Clinton’s 1996 campaign.

LaBella’s report contends that the mandatory provisions of the Independent Counsel Act, which deal with administration officials covered by the law, and its discretionary provisions, which allow Reno to go outside her department to avoid a conflict of interest in investigating the administration she serves, call for an outside prosecutor in this case.

Reno brought in LaBella, a San Diego federal prosecutor with a reputation for hard-charging initiative, in October to revitalize the investigation.

The Justice Department’s campaign fund-raising task force has brought charges against 11 people, most of them Democratic fund-raisers, for allegedly channeling illegal foreign contributions and other questionable funds into Clinton’s reelection effort.

LaBella’s report, one source said, reflects the frustration he encountered in arguing against veteran officials of the department’s public integrity section--including its chief, Lee Radek, and Robert Litt, formerly in the Justice Department’s criminal division and now a principal in the deputy attorney general’s office.

The dispute over seeking an independent counsel, according to sources supporting LaBella’s view, mirrors the traditional strains between Washington managers and often more aggressive field prosecutors. LaBella contended that Reno was given “bad advice” by those who advocated a more restrained, cautious approach.

Sen. Orrin G. Hatch (R-Utah), who long has pushed Reno to turn over the investigation to an independent counsel, said he did not believe Reno could ignore LaBella’s recommendation. The chairman of the Senate Judiciary Committee, Hatch emphasized Freeh’s own call for such action.

Freeh’s recommendation went to Reno in a memorandum in November, but it regained attention last week when Sen. Fred Thompson (R-Tenn.) quoted its conclusion, based on an oral summary the FBI director had given him, at a Senate hearing. “It is difficult to imagine a more compelling situation for appointing an independent counsel,” Freeh said, according to Thompson.

Times staff writer Marc Lacey contributed to this story.