Finance probe continues without special counsel

WASHINGTON - Attorney General Janet Reno declined Tuesday to seek an independent counsel investigation of telephone fund raising by President Clinton and Vice President Al Gore, concluding they did not violate election laws. Her long-expected decision drew jeers from Republicans.

Under strong pressure for months from all sides, Reno told a news conference, "The decision was mine and it was based on the facts and the law, not pressure, politics or any other factor."

She stressed that the investigation will continue and her decision Tuesday should not be viewed as an exoneration.

Pointing out that FBI Director Louis J. Freeh dissented from her ruling, Republicans criticized Reno's decision as too narrow and suggested she may have been affected by loyalty to the White House. Democrats called her correct and courageous.

Reno also rejected a special prosecutor to investigate former Energy Secretary Hazel O'Leary, concluding that O'Leary was unaware that a contribution to one of her favorite charities may have been solicited in return for her meeting Chinese businessmen.

Reno said the only fund-raising calls investigators found by Clinton came in October 1994 and were made from the White House private quarters, not the president's offices. "This places the calls outside the scope ... of (federal election law) which applies only to solicitations for hard-money contributions occurring within the federal workplace," she wrote.

Reno told a news conference that her campaign finance task force continues to investigate Democratic fund-raising practices that - without Gore's knowledge - diverted some of the money he raised into questionable accounts. And she said the department would continue investigating others involved in the O'Leary incident.

"Any decision not to ask for an independent counsel does not mean that a person has been exonerated or that the work of the campaign finance task force has ended," Reno said.

Reaction from the three officials was muted.

In a single-sentence statement, Clinton said, "The attorney general made her decision based on a careful review of the law and the facts and that's as it should be."

Gore, traveling in Connecticut, said, "Now that there's been a full and independent review, we can put this issue of the phone calls behind us once and for all."

"I am relieved but not surprised," O'Leary said.

But Sen. Fred Thompson, R-Tenn., chairman of the Senate committee investigating campaign finance, accused Reno of "misinterpreting the law" and said that her focus on telephone solicitations was too narrow.

At the same time, he said, "I don't think any of us are surprised" by her conclusion. Thompson said Reno's interpretation of the law had "hamstrung" the FBI in its investigation.

Reno denied that: "I want to make clear to everyone I am not imposing any constraint on the task force." She and Freeh acknowledged their split, but traded compliments late in the day.

Freeh pushed for an independent counsel on grounds Reno has a conflict of interest investigating top administration officials. Reno said, "I value highly" Freeh's advice. "We may not always agree. ... However, the decision to ask for an independent counsel is mine and I alone am responsible for that under the law."

Freeh said he appreciated the opportunity to fully express the FBI's views, noted that "lawyers and investigators can and often do disagree" and said he still has "a strong and amicable relationship" with Reno.

Rep. Dan Burton, R-Ind., who chairs a House committee investigating campaign funding, said he would call Reno and Freeh to a hearing Tuesday.

Senate GOP leader Trent Lott called Reno's decision a tragedy. Sen. John Glenn, D-Ohio, said she had acted courageously despite "tremendous political pressure" from Republicans.

Among Reno's findings:

-"There is no evidence that any calls were made from the Oval Office or any other official White House work space" by Clinton while soliciting money. One likely Oval Office call was a "thank you" for $100,000 already pledged.

-Gore was unaware that some of the contributions he raised were diverted by party officials from so-called soft money accounts that pay for party and issue ads to hard money accounts that supported the Clinton-Gore re-election directly. Investigators identified 45 people he obtained money from, but only 5 of these contributions were diverted.

Evidence from those contacted supported Gore's claim he intended to raise soft money. "There is no evidence that the Vice President was aware that part of the donations would be deposited into hard money accounts, and the donors' own descriptions of the solicitations make it clear that they interpreted the solicitations as being for soft money," Reno wrote.

Even though there is a legal question whether a 114-year-old law banning solicitation in federal offices applies to these calls, Reno said she assumed it did. Nevertheless, she said, Gore's actions were not covered because the law bars only solicitation of hard money contributions. She also said there were no aggrevating factors like coercion, which the department traditionally demands before prosecuting under this statute.

The telephone fund-raising inquiry was pushed into the spotlight by demands from Republicans on Capitol Hill, newspaper disclosures and the timetables set by the independent counsel law. It led to questioning of Clinton and Gore by Justice Department lawyers and FBI agents.

But it was always just part of a broader investigation by 120 lawyers and FBI agents into numerous campaign fund-raising transactions and figures, including possible Chinese and other foreign donations and use of the White House as a fund-raising tool. Some Republicans, including Burton, also are under scrutiny.

Indictments of at least two Democratic fund-raisers for concealing the identities of real donors are expected later this month.

And Reno must decide by Dec. 15 whether further investigation is needed into what role, if any, Clinton played in the Interior Department's denial of an Indian casino which was opposed by other tribes who contributed to the Democrats.

By The Associated Press

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