Reno Takes Step Toward Inquiry Into Clinton Campaign

In another legal headache for the Clinton administration, Atty. Gen. Janet Reno has taken the first step toward appointing an independent counsel to determine whether the president’s reelection campaign exceeded federal spending limits through the use of so-called issue ads.

Reno said Thursday that “new information” had prompted her last month to open a 30-day review, the initial step toward seeking an outside prosecutor. She has until sometime next week to determine whether there is a specific allegation from a credible source that warrants further investigation.

Reno refused to disclose the information that triggered the review, but sources familiar with the matter said she was referring to an internal Federal Election Commission audit memorandum subpoenaed by the Justice Department. In the memo, a preliminary document that has yet to be considered by the commission, auditors maintained that ads financed by the Democratic National Committee advocated Clinton’s election and therefore should have been charged to the Clinton-Gore reelection committee.

Officials with the White House, the Clinton-Gore committee and the Democratic Party strongly disputed this point Thursday and contended that Reno rejected the same argument last year.

“The use of the issue ads was entirely legal and appropriate,” said White House spokesman James Kennedy. “The ads focused on real issues before Congress and the American people and they made clear the differences between Democrats and Republicans on balancing the budget, Medicare, welfare and other policy concerns. They were cleared by legal counsel. There was no violation of campaign spending limits.”

This is the third Justice Department review to surface in recent days that might lead to the appointment of independent counsels to look into allegations of wrongdoing by the 1996 Democratic campaign. In the other two matters--whether Vice President Al Gore and former senior Clinton aide Harold M. Ickes lied under oath to investigators--Reno has taken the second step of initiating 90-day inquiries.

Republican lawmakers long have demanded a wide-ranging investigation by an outside prosecutor and have turned up the heat on Reno in recent weeks.

Sen. Arlen Specter (R-Pa.) called on Reno to bypass such a “protracted delay” on the issue ads and immediately seek an outside prosecutor.

The newest question--a source of considerable controversy last year--is whether a $42-million television advertising campaign funded by the Democratic National Committee and state Democratic parties between August 1995 and August 1996 stepped over the legal line into “expressly advocating” Clinton’s reelection. Clinton accepted public financing in the presidential campaign and therefore agreed to abide by spending limits, including $37 million for the primary.

The hard-hitting ad campaign was funded largely with “soft money,” which is large corporate, labor union and individual donations to be used for party activities and not for individual campaigns. The Republican National Committee ran similar issue ads touting presidential candidate Bob Dole. Both parties’ ads stopped short of explicitly urging the election of their party’s candidate or their opponent’s defeat.

Republicans, along with the public-interest group Common Cause, maintained that the Democratic ad campaign violated the law because Clinton and the White House helped orchestrate it. But, in declining to pursue the matter, Reno said in April that the legal standard “depends not on the degree of coordination but rather on the content of the message.” She reiterated that policy Thursday.

Reno has emphasized that the Justice Department lacks the expertise to analyze the content of campaign ads and therefore relies on the FEC’s interpretation.

The attorney general decided to take another look at the matter in light of a memo prepared by FEC auditors during an ongoing review of spending by the 1996 Clinton campaign, sources said. The memo, which was sent to the Clinton-Gore campaign for comment, determined “that the ads contained an ‘electioneering’ message and, therefore, the money spent on the ads was an unlawful contribution to Clinton-Gore,” said Democratic General Counsel Joseph Sandler.

Officials familiar with FEC procedure described preparation of the document--formally known as “an exit conference memo”--as a preliminary step. After the staff receives comment from the campaign committees, it can add information before sending a draft report to the six-member commission, which can then reject, modify or accept it.

“The FEC itself hasn’t even reviewed this thing,” said Sandler, who has seen portions of the memo. “To the extent they are relying on this exit memorandum, it really isn’t evidence of any kind, never mind evidence of a possible criminal violation.”

In a joint statement, Sandler and Lyn Utrecht, general counsel to Clinton/Gore ‘96, said: “Based on the FEC’s rulings, opinions and regulations and on our combined experience of more than 30 years in campaign finance law, we advised our client--the DNC and Clinton/Gore ‘96--that these ads were lawful and proper. . . . Studying the issue independently, Republican lawyers reached exactly the same conclusions.”

Justice officials said David E. Kendall, the president’s private attorney, met with senior department officials Wednesday to make that argument and to contend that it would be wrong to shift a matter to an independent counsel without even establishing that a crime may have been committed.

FEC spokesman Ian Stirton said he could not comment on the memo or the audit until it is sent to the bipartisan commission. He said this is expected to happen by the end of the year.

It could not be determined Thursday whether Reno also was looking at the Republican Party’s issue ads. A GOP spokesman said his party is “not privy” to any FEC audit memo of Dole’s campaign spending.

Asked whether Justice also is looking at the Republican advertising campaign, Reno said: “We are following every lead.”