Reno Sets 90-Day Clinton Probe
Washington Post Staff Writers
Wednesday, September 9, 1998; Page A1
Attorney General Janet Reno yesterday opened a preliminary investigation of President Clinton that could lead to an independent counsel probe of allegations that he orchestrated a plan to violate spending limits for his 1996 reelection campaign.
Reno, who has repeatedly resisted demands for a wide-ranging outside probe of 1996 Democratic fund-raising, yesterday ordered a 90-day inquiry into a specific campaign finance issue for the third time in two weeks. In Clinton's case, the Justice Department will investigate whether he helped plan the financing of a $44 million Democratic National Committee advertising blitz in an effort to improperly benefit his own campaign.
"I have commenced a preliminary investigation ... involving President of the United States William Jefferson Clinton concerning political advertisements during the 1996 election cycle," Reno said in a formal notification to the special panel of three federal judges that oversees the independent counsel process.
Regardless of the outcome, the investigation poses a serious political problem for Clinton as he prepares to defend himself against an expected impeachment report from independent counsel Kenneth W. Starr on the Monica S. Lewinsky matter, spotlighting Republican complaints that the president played a hands-on role in a thinly veiled plot to circumvent spending limits.
Reno pressed forward with the investigation despite an entreaty last week from Clinton's personal lawyer, David E. Kendall, who argued that there was no basis to believe that the president deliberately broke the law. But senior Justice Department officials said the attorney general had no choice but to open the investigation under provisions of the Independent Counsel Act that would not permit her to examine Clinton's intent until the 90-day probe officially begins.
The opening of the inquiry alone does not involve any finding of wrongdoing by the president or any other individuals. Kendall said yesterday that "when the Department of Justice's review process finally concludes, it will determine that the ... ads were entirely proper."
In an unexpected flurry of activity over the past two weeks, the Justice Department has launched three separate preliminary investigations into issues related to 1996 Democratic fund-raising. The two other probes involve allegations that Vice President Gore and former deputy White House chief of staff Harold M. Ickes made false statements during earlier campaign finance inquiries. Reno could decide to merge the investigations if she decides an independent counsel is warranted.
Reno has previously rejected demands that she seek an independent counsel for campaign finance, and last December she officially closed investigations of fund-raising phone calls by Clinton and Gore. In recent months, Reno has faced tremendous pressure from congressional Republicans to revisit the issue, especially after she received forceful memos arguing for an independent counsel from FBI Director Louis J. Freeh and Charles G. LaBella, the former head of her campaign finance task force.
The new Clinton inquiry was triggered by a preliminary report last month from Federal Election Commission auditors. The auditors concluded that DNC ads about issues such as Medicare and the budget amounted to "electioneering" on the president's behalf, and that the Clinton-Gore campaign should be required to reimburse the government the entire $13.4 million it received in federal matching funds. Now the Justice Department is wading into this complex area of election law, reviewing whether the "issue ads" were tantamount to Clinton campaign ads that should count against the strict spending limits placed on candidates for federal office.
The DNC has long insisted that the ads simply promoted the party's positions in vital debates, even though Clinton was the only candidate featured and has credited the ads with boosting him to an early lead in the 1996 race. The president's defenders yesterday insisted that the ad campaign was legal, and emphasized that since Democratic lawyers had repeatedly told Clinton it was legal, he could not have had an intent to break the law.
"As we have stated on numerous occasions in the past, the DNC issue ads were reviewed by counsel and were fully in compliance with FEC rules," said Lyn Utrecht, general counsel of the '96 Clinton-Gore campaign. "Although we believe that the [Justice] Department and the FEC upon full review will conclude that these ads were entirely lawful, we do not believe that anything has changed from the last time the Department reviewed this issue to warrant such a decision."
White House counsel Charles F.C. Ruff sounded the same themes: "All of the DNC's ads were carefully reviewed by both DNC and Clinton-Gore counsel. In short, these ads were not only lawful, they were completely appropriate."
Congressional Republicans have been calling for an outside probe of Democratic fund-raising for two years, and they described yesterday's move as too little, too late. They complained that the 90-day investigation will simply postpone Reno's decision on whether to seek an independent counsel until after the November elections.
"Janet Reno has taken the art of delay to a new level," said Sen. Arlen Specter (R-Pa.). Senate Governmental Affairs Committee Chairman Fred D. Thompson (R-Tenn.) complained that after months of hearings, "there is no reason to take another 90 days to further belabor the obvious."
But Reno was clearly spurred by the FEC auditors' report, written early in a routine review of 1996 presidential campaign fund-raising and expenditures and subpoenaed by Justice Department investigators. Such reports are often the subject of negotiations between attorneys for the FEC and the campaigns before they are brought to the FEC commissioners for final judgment.
The FEC auditors, while concluding the DNC advertisements were improper efforts on the Clinton campaign's behalf, did not address whether this constitutes a criminal offense.
The Justice Department will now press the FEC to reach a final conclusion as to the seriousness of the allegations raised by the DNC advertisements and will be guided by its findings under a 20-year-old policy of deferring to the FEC on matters of election law, said a senior department official. The six-member commission, however, is evenly split between Democrats and Republicans and has often deadlocked on matters of intense partisan interest.
Utrecht argued that the Justice Department should have waited until the FEC administrative process was complete before launching its own investigation. "It is the FEC and the FEC alone that has the authority to determine whether Clinton-Gore exceeded its spending limit, subject only to review in the U.S. Court of Appeals," she said.
An FEC audit of Robert J. Dole's 1996 presidential campaign raised similar allegations regarding Republican Party ads, according to a Justice Department official. Dole and the GOP campaign are not subject to the provisions of the Independent Counsel Act, but the Justice Department is now separately examining their activities in a review that has not yet risen to the level of a criminal investigation, the official said.
Meanwhile, in a separate matter, Reno announced yesterday that she had decided against seeking an independent counsel following a previously undisclosed preliminary investigation of Housing and Urban Development Secretary Andrew M. Cuomo. Cuomo's former business partners in a Florida thrift had accused him of conspiring to influence federal regulators in an effort to drive them out of business, allegations that Reno rejected yesterday.
In court documents, Reno said she had "determined that there were no reasonable grounds to believe that further investigation was warranted and that, therefore, no independent counsel need be appointed."
Not only did Reno exonerate Cuomo, she decided that the Justice Department would represent him and two other federal officials in a lawsuit filed last month by the owners of Oceanmark Bank. They claim that Cuomo and his fellow investors conspired to seize control of the troubled $60 million thrift, and that Cuomo enlisted two allies at the Treasury Department's Office of Thrift Supervision to help them.
"This complaint was made as a last-ditch attempt to prevent a federal takeover of a failing bank," a senior HUD official said.
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