By D. Ian Hopper
Associated Press Writer
Tuesday, Aug. 22, 2000; 10:36 p.m. EDT

WASHINGTON –– The special prosecutor tasked to investigate Interior Secretary Bruce Babbitt released her final report Tuesday, explaining why she had previously found insufficient evidence to prosecute him.

The investigation stemmed from allegations that Babbitt rejected a proposed Indian casino because of campaign contributions and then lied to Congress about it.

The report, over 600 pages long, was met with sharp words from the chairman of the House committee Babbitt testified to, and relief from Babbitt's office that the ordeal is finally over.

Government Reform Committee Chairman Dan Burton, R-Ind., said he was disappointed at statements in the report that Babbitt conceded to a grand jury that some of his sworn statements "either were not entirely accurate or at least constituted 'overstatement.'"

"I am very disturbed that a cabinet official would come before my committee and give false testimony," Burton said in a statement.

To the grand jury, Babbitt described some of his testimony as hyperbole, and occasionally was "paraphrasing and summarizing and overstating in an argumentative way" to a hostile committee.

Independent Counsel Carol Elder Bruce, a veteran prosecutor who was assigned the case in March 1998, said in October that she would not seek indictments against Babbitt or anyone else involved in the controversy.

In the report, Bruce said she found "no evidence that there was a quid pro quo" in the Indian casino decision, and was left with a "marginal case of potential perjury," taking into account Babbitt's awkward statements trying to play down how he deceived an old friend – who was also a lobbyist for the pro-casino tribes – in an attempt to get him out of Babbitt's office.

Bruce noted that the friend, Paul Eckstein, and Sen. John McCain, R-Ariz., would also attest to Babbitt's "good character and reputation for truthfulness" in any potential perjury trial. McCain was also involved in the affair, as Babbitt said his office made some inaccurate statements in a letter to McCain, then later called the senator to apologize for them.

The investigation involved interviews or grand jury testimony of more than 450 people and 630,000 pages of documents, investigators said. Bruce was expected to close the case when she submits a lengthy report on her investigation to a special three-judge panel of the U.S. Court of Appeals, possibly within weeks.

Bruce was one of five independent counsel investigations of Clinton Cabinet officers besides Kenneth Starr's investigation of the president.

Attorney General Janet Reno asked for an independent counsel for Babbitt in February 1998. A month later Bruce was given the case by the special three-judge panel.

Babbitt complained he was being attacked for political reasons and that the allegations already had been thoroughly aired at hearings in both the Senate and House, and internally by the Justice Department.

When Bruce's conclusions were released in October, Babbitt said he was "gratified" at the outcome. Babbitt's office said Tuesday that the secretary is happy to put the issue behind him.

"We're just glad it's over," said spokesman Mike Gauldin.