President Clinton and Vice President Gore during the 1996 campaign. Related Links Money Machine: The Fund-Raising Frenzy of Campaign '96 (Post Series, February 1997) Primer on Campaign Finance Laws On the Web FEC Audit Reports (From FECInfo)

By Roberto Suro
Washington Post Staff Writer
Saturday, December 5, 1998; Page A2

Top Justice Department officials yesterday advised that Attorney General Janet Reno not seek an independent counsel investigation of President Clinton's 1996 campaign fund-raising when she faces a deadline next week, and she appears likely to accept the recommendation, according to senior officials.

At a meeting of top aides and officials from the department's criminal division, Reno heard arguments that the laws Clinton allegedly transgressed were murky at best, and that there is convincing evidence the president attempted to ensure that his campaign did nothing wrong, the officials said.

Under a timetable set by law, Reno is due to announce Monday whether she has found enough indication Clinton may have committed crimes that she is obligated under the independent counsel act to seek an outside investigator. Allegations that the president had dodged federal campaign spending limits by misusing Democratic Party funds launched the department's massive campaign finance investigation 25 months ago, and have remained the premise of virtually every accusation that a criminal conspiracy tainted the president's reelection.

The allegation that Clinton illegally benefited from party funds gained new currency in the summer after Justice Department investigators subpoenaed a Federal Election Commission audit of the 1996 Clinton campaign. The audit found violations of the complex rules that determine when television advertisements paid for by political parties can be charged against general party-building funds, and when they are covered by the strict spending limits imposed on individual candidates.

Although such matters have always been handled as civil regulatory violations in the past, Reno on Sept. 8 started a 90-day preliminary criminal investigation to determine whether an independent counsel should be appointed.

Since then, the president, his top political aides and lawyers for both the Democratic National Committee and the 1996 Clinton campaign have told Justice Department investigators that they had carefully reviewed every advertisement and the way its financing was accounted for to ensure that it was legal. Because Clinton was acting on the advice of knowledgeable attorneys who themselves appear to have been acting in good faith, several top Justice Department officials believe there is no way to allege the knowing and willful intent to violate a law that would be an essential element of any criminal prosecution.

Reaching the conclusion that Clinton intentionally broke the law became significantly more difficult for Reno when a majority of the members of the FEC publicly questioned whether the legal standards in this area were comprehensible enough to be enforced.

After examining the regulations that Clinton allegedly violated, "you come away scratching your head," said Scott E. Thomas, a Democrat who is acting commissioner of the FEC, a six-member panel split between Democrats and Republicans.

The commissioners met on Thursday to begin formally considering the Clinton audit, which recommends the repayment of $7 million in federal funds received after the president agreed to adhere to spending limits. A separate report found similar violations by former senator Robert J. Dole's campaign and recommended a $17.7 million repayment.

But before they began considering the auditors' unprecedented recommendations -- which suggest a civil violation of the rules rather than a crime -- the commissioners assailed the regulations that the two presidential campaigns are alleged to have broken.

"I don't think this rule is self-evident," said Karl J. Sandstrom, a Democrat.

"Constitutionally impermissible," said David M. Mason, a Republican.

"I don't think the law supports it," said Lee Ann Elliott, also Republican.

As the commissioners debated whether even the most well-informed and best-intentioned presidential campaign could follow the rules -- with a final decision on whether they will accept the audit still pending -- four attorneys from the Justice Department's public integrity section sat in the audience listening attentively. Within hours, Reno's top aides received a report on the commissioners' misgivings, and it started to become apparent at the Justice Department that the attorney general would be unlikely to authorize an independent counsel investigation when it is so difficult to decide what constitutes a violation of the law.

The coming decision regarding Clinton will be the third time in as many weeks that Reno has weighed whether to seek an independent counsel on matters related to the 1996 presidential campaign.

Last month, she decided against further inquiry into whether Vice President Gore had made false statements to investigators about Democratic Party finances. Earlier this week, in an investigation into alleged false statements by former deputy White House chief of staff Harold M. Ickes, Reno sought a 60-day delay in making a final decision.

Last night, the Los Angeles Times reported that Reno delayed the Ickes decision because Carol E. Bruce, the independent counsel investigating allegations that Interior Secretary Bruce Babbitt lied about the rejection of an Indian casino license application, had requested authority to probe "transactions" involving Ickes and others.