By Roberto Suro and George Lardner Jr.
Attorney General Janet Reno yesterday asked for an independent counsel to investigate allegations that Interior Secretary Bruce Babbitt lied to Congress about whether the White House pressured him to favor Democratic campaign contributors in his handling of a proposed Indian gambling casino.
Tribes opposed to the Hudson, Wis., casino project, which was rejected by the Interior Department in July 1995, contributed more than $350,000 to Democrats for the 1996 campaign.
Reno said the Justice Department had concluded that an independent counsel was needed to determine whether Babbitt perjured himself in his congressional testimony. But Reno acknowledged that an independent counsel might have to go further, and her statement left open the possibility of a wider investigation into allegations that White House or Democratic National Committee officials improperly influenced the Interior Department decision to block the proposed casino.
Reno's findings came in a 10-page petition for the appointment of an independent counsel filed yesterday afternoon with a special panel of three federal judges. They will select the outside counsel and have the final say on the scope of what could become a wide-ranging investigation into the casino controversy.
A 1988 presidential candidate who has served in President Clinton's Cabinet since 1993, Babbitt said in a statement yesterday that "obviously, I'm disappointed by the Attorney General's decision." Babbitt, who has consistently denied any wrongdoing, said the Interior officials who rejected the casino application "have testified unanimously that they were not influenced by improper political pressure."
In a statement yesterday President Clinton expressed his continued confidence in Babbitt.
"I have known Bruce Babbitt for many years. He is a man of the highest integrity and a dedicated public servant. I am convinced that when this matter is concluded he will be vindicated," said Clinton.
The independent counsel investigation of Babbitt is the first to arise from the allegations of fund-raising abuses by the 1996 Clinton-Gore reelection effort. Reno has previously rejected several requests for outside investigations of the campaign finance scandal.
Three other independent counsel inquiries are already examining Clinton administration figures. Kenneth W. Starr is investigating Whitewater, the Monica Lewinsky controversy and other matters, and other outside prosecutors are investigating allegations of misconduct by former agriculture secretary Mike Espy and former housing and urban development secretary Henry Cisneros. The Justice Department is conducting a preliminary inquiry of another Cabinet official, Labor Secretary Alexis M. Herman, that could also lead to an independent counsel.
The Babbitt controversy grew out of a proposal by the owner of a money-losing dog track in Hudson, Wis., and three poor Wisconsin Chippewa bands to install an off-reservation Indian gambling casino at the track.
Officials at the regional office of the Bureau of Indian Affairs in nearby Minneapolis recommended approval in the fall of 1994, prompting anti-casino forces to mount a determined campaign to defeat it in Washington.
Seeking to derail the casino application by depicting their clients as loyal Democrats, anti-casino lobbyists directly contacted President Clinton, presidential adviser Bruce Lindsey, then-deputy White House chief of staff Harold Ickes and then-DNC chairman Donald Fowler, among others.
The pro-casino forces enlisted as their lobbyist Arizona lawyer Paul Eckstein, a longtime friend, law school classmate and former campaign manager for Babbitt.
Eckstein lost the lobbying battle, and the conversation he had with Babbitt on July 14, 1995 -- the day the decision to reject the casino application was made -- is now the central reason for the independent counsel investigation because Babbitt and Eckstein have given contradictory accounts of their discussion.
In her court filing yesterday Reno said, "I conclude that there are reasonable grounds to believe that further investigation is warranted into whether Secretary Babbitt may have violated federal criminal law . . . in connection with his testimony about his conversation on July 14, 1995, with lobbyist Paul Eckstein."
While Reno proposed that an independent counsel should focus on determining whether Babbitt lied to Congress about the casino decision, she informed the three-judge panel, "We did not, however, attempt to resolve conclusively whether the underlying decision was criminally corrupted."
Reno suggested that the three-judge panel grant an independent counsel authority to investigate that decision "to the extent necessary to resolve the allegations that Secretary Babbitt made false statements."
In sworn statements Eckstein has said that when he asked for a delay, Babbitt told him that Ickes, then White House deputy chief of staff, had called and directed him to make a decision that day.
Babbitt, in testimony before the Senate Governmental Affairs Committee last fall, acknowledged having invoked Ickes's name at the meeting, but said he did so in an "awkward" effort to end the discussion and not because Ickes had in fact directed him to issue the decision that day.
"If Eckstein's testimony is true, Secretary Babbitt's testimony on those points would be false," Reno said in the court petition. Under the independent counsel process, which is designed to keep an attorney general from making prosecutorial judgments about fellow Cabinet officers, "I need conclude only that Eckstein's testimony is sufficiently specific and credible to warrant further investigation," Reno said.
Now, an independent counsel will have to determine whether, as Reno put it, "the evidence of falsity -- which in this case will necessarily be based almost exclusively on Eckstein's recollection of a one-on-one conversation -- is sufficient to prove beyond a reasonable doubt that Secretary Babbitt's testimony is untrue."
On another disputed element of the Eckstein-Babbitt conversation, Reno found there were no grounds for further investigation. Eckstein claimed Babbitt commented that tribes opposed to the Hudson casino had contributed approximately half a million dollars to the Democratic Party; Babbitt said he had no recollection of such a remark. Reno said no evidence suggested Babbitt was lying about his memory.
Babbitt yesterday construed the entire matter as "a disagreement between two people about the exact words spoken in a meeting they had alone more than two years ago."
Babbitt said in his statement, "We've each told our version and we disagree. . . . My attorney says it can't possibly form the basis of any legal charges."
Senate and House GOP investigators, however, have said there is strong circumstantial evidence that the decision to deny the Hudson application was caused in large part by improper political considerations.
"At a minimum," the Senate Governmental Affairs Committee said in a majority draft report completed this week, "it is clear that the opposition tribes and their lobbyists activated the DNC and, to some extent, the White House, to take action on their behalf. Financial support -- both past and future -- was crucial to this effort."
In a statement yesterday, Rep. Dan Burton (R-Ind.), chairman of a House committee investigating the casino controversy, said: "I regret that the attorney general focused her opinion so heavily on the perjury charge. However, she has left the door partially open to a broader investigation of the decision itself. I'm glad she did this. However, she should have done this more directly."
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