Hugh D. Mason III, former District government economic development official, pleaded not guilty yesterday in federal court to charges that he conspired to bribe a city official and that he converted nearly $25,000 in government checks to his own use.

Mason, 43, said "not guilty" in response to the two-count indictment that was issued Nov. 4. In one count, Mason is charged with funneling gratuities to Alexander Exum, a former executive assistant to the D.C. lottery board.

Exum pleaded guilty in April 1986 to accepting $5,500 in illegal payments and the use of a new Honda automobile from Han Yong Cho, the owner of a wholesale distribution company, in return for Cho's receiving two lottery contracts.

In that transaction, according to the indictment against Mason and the earlier charges against Exum, Mason received $5,000 of a $5,500 payment that Cho had intended for Exum. Nicholas A. Balland, Mason's attorney, said at the time of Exum's plea that the $5,000 was actually a payment to Mason from Cho for consulting services Mason provided after he left his government employment.

In the second count, Mason was charged with bank fraud, bank larceny and theft involving allegations that he received almost $25,000 in government funds that were to be paid to a company Mason represented.

The indictment charged that Mason, as a vice president for Pace Setters Management Inc., a local janitorial supply and maintenance company, picked up at least four checks from the D.C. government and the Washington Convention Center.

Mason then deposited the checks into a secret bank account he had opened in the firm's name, the indictment said, and later withdrew the money for his own use.

The charges against Mason, for alleged offenses that occurred after he left the D.C. government in June 1983, are punishable by up 87 years in prison and fines up to $75,000.