Funds Probe Panel
Seeks Freeh's Memo
Roberto Suro and Susan Schmidt
Washington Post Staff Writers
Saturday, December 6, 1997; Page A01
Congressional Republicans triggered a legal confrontation with Attorney General Janet Reno yesterday by issuing a subpoena for a confidential memorandum by FBI Director Louis J. Freeh. The memo unsuccessfully sought to persuade her to seek an independent counsel in the campaign finance scandal.
Reno rejected demands that she voluntarily turn over the memorandum to the House Government Reform and Oversight Committee, arguing that to do so would compromise the investigation and violate the confidentiality of the decision-making process in the attorney general's office.
Freeh's memorandum, officials familiar with its content said yesterday, argues that investigators should pursue allegations of a conspiracy to violate campaign laws by the 1996 Clinton-Gore reelection effort. The director said that an independent counsel should handle the inquiry because Reno would face an unavoidable conflict of interest investigating the administration she serves, according to officials familiar with the document.
However, in making those points the memorandum does not contain startling new evidence of wrongdoing or novel theories about how a criminal case could be brought against the Clinton White House and Democratic fund-raisers, the officials said. The memorandum cites several fund-raising transactions involving illegal foreign donations and allegations of influence-peddling as well as a theory that excessive White House control over Democratic Party spending might constitute a criminal violation of campaign laws.
Also Friday, the committee subpoenaed Donald C. Smaltz, the independent counsel investigating former agriculture secretary Mike Espy, to appear at a hearing Tuesday with Freeh and Reno. Republicans hope to show the Justice Department has not only tried to rein in the FBI investigation, but has broadly hindered independent counsel investigations as well. Smaltz this week blasted the Justice Department for trying to block the prosecution of Espy's former chief of staff, Ronald H. Blackley.
On Monday, Smaltz won a conviction of Blackley on charges he lied to investigators about receiving cash payments from Mississippi agribusiness associates who received large Agriculture Department subsidies. The Justice Department's public integrity section the same section pursuing the campaign finance investigation refused to prosecute Blackley and refused Smaltz's request that the matter be referred to him.
Smaltz was forced to litigate the issue, and the special federal panel that oversees independent counsels ruled he did have jurisdiction to pursue Blackley.
"DOJ's opposition significantly delayed our investigation and prosecutions," Smaltz said.
As soon as Reno revealed last Tuesday that she had decided against an independent counsel investigation of fund-raising telephone calls by President Clinton and Vice President Gore, Rep. Dan Burton (R-Ind.) chairman of the House committee now seeking the memorandum, attacked Reno's competence and impartiality, suggesting she was "protecting" the president.
In a letter to Reno yesterday, Burton said "it is highly unusual that the Attorney General and the Director of the FBI would disagree on a matter which is so wide ranging and is of great national significance. . . . The public must be assured that the investigation is thorough, vigorous and not tainted by politics." Burton sent a supporting memorandum from the Congressional Research Service that says the department has been required in the past to turn over to Congress information about pending criminal investigations.
Freeh's memorandum went to Reno Nov. 25. While she rejected his advice that there are already grounds for an independent counsel prosecution, Reno has allowed the Justice Department campaign finance task force to pursue several of the investigative avenues he suggested. These include whether the White House was misused for fund-raising purposes by the Democratic National Committee and whether illegal donations were solicited with the knowledge of top officials, including perhaps the president, officials said.
However, many officials in the Justice Department reject Freeh's central argument that Reno faces an inescapable conflict of interest.
"The need to protect the confidentiality and independence of an ongoing investigation, and our prosecutorial decision-making is fundamental to the responsibilities Director Freeh and I have under the criminal justice system," Reno wrote to Burton. She said that during administrations of both parties the Justice Department had declined to provide Congress with access to documents related to ongoing investigations.
Reno said that "Director Freeh has expressed to me his complete agreement with my judgment" on the need to preserve the confidentiality of his memorandum.
The Burton committee said it was willing to accept a memo in which sensitive legal material had been edited out.
"There was definitely an effort on this end of the street and at the FBI to work it out, but the Justice Department is taking the position that every word is protected," said Richard Bennett, chief counsel to committee Republicans. "To the extent they are worried about grand jury secrecy, we would accept a redacted version," he said.
© Copyright 1997 The Washington Post Company
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