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Funds Probe Unfairly Spared White House, '98 Report Says

Donations: Revelations from long-sealed report show internal dissension on Reno's refusal to appoint counsel.


WASHINGTON — A confidential report by the Justice Department's former chief campaign finance investigator, kept sealed by Atty. Gen. Janet Reno for nearly two years, accused senior Justice officials of engaging in "gamesmanship" and legal "contortions" to avoid an independent inquiry into Clinton-Gore campaign fund-raising abuses.

According to an edited version of the 94-page document, former task force supervisor Charles G. LaBella also faulted Reno's top advisors for using "intellectually dishonest" double standards: endorsing independent counsels to investigate Cabinet-level administration officials while opposing them for similar or stronger cases involving senior White House figures.

Among those getting special treatment, the report said, were President Clinton, Vice President Al Gore, First Lady Hillary Rodham Clinton and former White House aide Harold M. Ickes. It is the first indication that the task force was considering Mrs. Clinton's conduct in the fund-raising scandal.

The bluntly worded July 1998 report also called for a sweeping outside investigation into "the entire landscape" of campaign finance allegations, referring to the possibility of broad schemes "conjured up by sophisticated political operatives to circumvent" election finance laws during the 1996 presidential race.

Senior Justice Department officials strongly rejected LaBella's assertions, saying that the report leaped to "outrageous" conclusions and personalized policy differences. According to Justice Department spokesman Myron Marlin, Reno "based her decision on the facts and the laws without regard to politics, the pundits or pressure."

It has long been known that LaBella, as well as FBI Director Louis J. Freeh, supported the appointment of an independent counsel, but the previously undisclosed documents provide an extraordinary glimpse behind the scenes of a Justice Department storm that swirled around Reno's controversial rejections of outside counsels.

They also include LaBella's stinging indictment of a campaign finance system that he said encourages abuse by both major parties and of enforcement of fund-raising laws that he said is so weak it is "a bad joke" on the American public.

Since receiving the report, Reno has kept it within the Justice Department and defied congressional pressure to release it, even under threat of contempt action. A handful of Congress members and aides have been allowed to read the report under strictly controlled circumstances. The Times reviewed an excised version of the report and related documents.

Ammunition for Reno's Critics

The disclosures are certain to provide Reno's critics, including Republican lawmakers, with powerful ammunition to renew charges that she acted to protect the White House. Already, last week's conviction of longtime Gore fund-raiser Maria Hsia on campaign finance violations resurrected Republican charges that the Justice Department has failed to get to the bottom of the scandal.

And questions raised about Gore and Hillary Clinton in the long-sealed documents could ricochet across the 2000 political landscape as well, as Gore seeks the Democratic presidential nomination and the first lady bids for a U.S. Senate seat in New York. Ickes, a former White House deputy chief of staff who spearheaded the Clinton-Gore reelection effort, is a key figure in Mrs. Clinton's Senate campaign.

LaBella's accusations are particularly troubling for the Clinton administration because the career prosecutor was hand-picked in September 1997 to bolster public confidence in the Justice Department-controlled investigations of political fund-raising abuses.

It was Reno who chose LaBella to head the Campaign Financing Task Force and salvage much-criticized investigations then run by the department's Public Integrity Section. He arrived with a reputation as an aggressive prosecutor from high-profile cases in New York and San Diego, where he served under both Republican and Democratic U.S. attorneys in such positions as chief of the criminal and public corruption divisions.

"The failure of Reno to listen to LaBella seems to me to put a cloud on the impartiality of the top of the Justice Department in what was supposed to be the most ethical administration in the history of the United States," said Henry Ruth, a former Watergate special prosecutor and criminal defense attorney. "I can't remember . . . someone at that level, plus the FBI, saying 'go' and the attorney general vetoing it without satisfactory explanation."

Responding on behalf of Clinton, Gore and the first lady, White House spokesman Jim Kennedy said: "We're not going to comment on selectively leaked information that's allegedly from a sealed report we've never seen. However, this whole matter has been investigated repeatedly at a cost of millions of dollars with absolutely no finding of wrongdoing on the part of the president, the vice president or the first lady."

LaBella Stands by His Conclusions

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