Attorney General Griffin B. Bell said yesterday that President Carter did not violate a rarely used federal law when he met secretly in the Oval Office last Aug. 10 with two businessmen who contributed $125,000 to the Democratic Party later the same day.
The Justice Department had been investigating an allegation that the Oval Office meeting and a White House luncheon for other major party contributors later that day might have violated federal law that prohibits soliciting or accepting campaign funds in a federal building.
Bell said he concluded, after a preliminary FBI investigation, that there was no evidence that Carter -- who was not questioned directly by the FBI -- or aide Joel McCleary asked for or received funds at the meetings.
Other Democratic Party officials did discuss a $1.5 million party debt at the luncheon, however, Bell said, and were aware of the law because a guest's offer of a donation was quickly turned aside.
The attorney general said the charge against the president was "so unsubstantiated," it didn't warrant further investigation, prosecution or the appointment of a special prosecutor.
The investigation was required under the "special prosecutor" provisions of the executive branch ethics law Congress passed last fall. The inquiry focused on Carter and McCleary because they were the only two executive branch officials at the meetings.
The luncheon also was attended by Sen. Edward M. Kennedy (D-Mass.), several party officials, large contributors and two labor union leaders.
A special court that hears reports on allegations of high executive branch corruption granted Bell's request to release the report.
The luncheon was reported last November in New York magazine in a little-noticed article by Jeff Gerth, a reporter for The New York Times, which was then closed by a strike.
FBI agents immediately began checking the allegation by interviewing several of the participants at the meetings, the report said. President Carter was not interviewed by the FBI, Justice officials said.
Instead, the FBI submitted a series of questions to Michael Cardozo, a White House counsel, about the day's events. Cardozo said yesterday that he talked to the president about the luncheon and the Oval Office meeting, and also questioned other White House officials. He declined to describe the FBI questions or Carter's responses during Cardozo's interview.
The FBI did question the three businessmen who chatted briefly with the president in the Oval Office before the luncheon, the report said. Sources said Lew A. Wasserman, head of Music Corp. of America, and Charles T. Mannett, finance director of the Democratic National Committee, denied that any solicitation or receipt of funds occurred at the meeting.
The third businessman, Richard J. O'Neill of Santa Ana, Calif., also was interviewed by the FBI about the luncheon that followed, but agents forgot to ask about the Oval Office meeting, sources said.
After the luncheon Wasserman contributed $100,000 and O'Neill $25,000 to the Democratic National Committee. Within a few weeks, two others who attended the luncheon contributed a total of $30,000 to the party.
The legal limit on individual contributions to national committees is $20,000 a year. But a Federal Election Commission ruling permits larger donations -- like Wasserman's -- toward the retirement of party debts incurred before the current ceilings were imposed.
The Wasserman gift was made at the Madison Hotel later that day, and O'Neill's at DNC headquarters, the report said. Neither is a federal building.
Philip B. Heymann, head of the Justice Department's Criminal Division, said last night that Carter wasn't interviewed personally by the FBI because "the president should not be personally required to submit to a series of interviews unless there are specific factual allegations that cannot be otherwise confirmed or rebutted."
Sources said Carter was interviewed by the FBI personally, however, Thursday about allegations that fugitive financier Robert Vesco sought to approach senior White House officials, through an intermediary, to buy his way out of his legal problems. A federal grand jury has been examining whether anyone involved in that matter tried to obstruct justice.
In another sensitive case a year ago that led to cries for a special prosecutor, President Carter wrote a letter to the Justice Department about his knowledge of the circumstances surrounding the dismissal of David W. Marston, then Republican U.S. attorney in Philadelphia.
Marston had claimed that he was being removed because his office was investigating since-indicted Reps. Daniel J. Flood and Joshua Eilberg, both Pennsylvania Democrats. Justice cleared the president and Bell of any improprieties.
Yesterday's report noted the sensitivity with which Democratic Party officials viewed the luncheon -- which was not listed on the Aug. 10 White House calendar.
The luncheon was arranged by John C. White, chairman of the DNC, and Evan Dobelle, the party treasurer, the report said, to thank contributors for helping reduce the party debt. Mannatt said he hoped the luncheon -- for which the DNC reimbursed the White House $414.87 -- would induce the participants to continue their support.
McCleary, a White House political liaison, said "the organizers were not looking for money at the luncheon," according to the report.
There was some discussion about the size of the remaining debt, however, and after the president left the luncheon one guest offered to pledge a contribution, but was told "such matters could not be discussed..."
The Justice Department report to the special court deliberately omitted names of those involved, spokesman Terry Adamson said yesterday. But sources identified Armand Hammer, chairman of Occidental Petroleum Corp., as the guest who made the offer and Dobelle as the official who shut off the conversation.
"It appears that the organizers of the luncheon deliberately structured the affair so as to avoid any violation of the law," the report said.
Sources said the investigation is continuing into whether anyone else may have illegally solicited funds at the luncheon.
The law was designed to protect government employes from being solicited in their offices. It was not used during the recent South Korean influence-buying scandal, though several members of Congress acknowledged accepting cash from lobbyist-businessman Tongsun Park in their offixes.
The report apparently is only the second referred to the special court under the new law. The three judges were appointed only last month, and the docket number on the report is 79-2. The nature of the other referral could not be learned, but sources said it was "inconsequential."
The law's requirement that referrals
The law's requirement that referrals be kept secret was bypassed "in the public interest" in yesterday's release, the court said.
Justice officials said they didn't have figures on how many allegations have been forwarded to the department that might trigger the investigation requirement. But they said most so far have been "crank" cases.
The attorney general has discretion, as in other investigations, to determine if the allegations are substantial enough to warrant further investigation or a special prosecutor. The case in question, Bell said, "is without merit."