Justice holds on to fund probe Attorney general rejects new requests for special prosecutor

Demand called 'far short'

Agency declares it can objectively investigate donations to Clinton

November 30, 1996|By Carl M. Cannon and Mark Matthews | Carl M. Cannon and Mark Matthews,SUN NATIONAL STAFF

WASHINGTON -- The Justice Department rejected yesterday, for a third time, a request to turn over to a special prosecutor the investigation into Democratic fund-raising from wealthy foreign donors.

In a decision reviewed by Attorney General Janet Reno, the department said it was capable of carrying out its own investigation of possible wrongdoing without the "conflict of interest" concerns raised by five Republican members of Congress who filed the latest complaint.

In a letter to Sen. John McCain and four Republican House members, Mark Richard, an assistant attorney general, argued that the only people named in the complaint whose actions are automatically covered by the independent counsel law are President Clinton and Vice President Al Gore. And the allegations against them, Richard wrote, fall "far short" of the proof required to seek a special prosecutor.

"To the extent that there are allegations of wrongdoing that may warrant criminal investigation at this time, they relate only to lower-ranking public officials, Democratic National Committee employees and contributors," Richard wrote.

Richard's letter concedes that, under the law, the attorney general has discretion to appoint a special prosecutor to investigate such lower-ranking officials. But the Justice Department said there was not "sufficient" reason to appoint a special prosecutor to investigate any of them now.

This was the second such request by Republican officials to be rejected by Reno. Another request, by the citizen's group Common Cause, was also turned down. Under the law, if Reno agreed that a special counsel was warranted, she would ask a three-judge panel to appoint one.

Yesterday's decision does not preclude the Justice Department from seeking a special prosecutor later if its own review of fund raising during the 1996 political campaign uncovers evidence to warrant one.

$1 million questioned

The Republican complaint concerns more than $1 million in questionable fund-raising by the Democratic National Committee this year -- and possible attempts by foreign companies to influence Clinton administration policy.

At the center is the connection between Clinton and several associates from Arkansas and the Lippo Group, an Indonesian-based conglomerate with interests in the United States and Asia.

A former employee of the Lippo Group, John Huang, raised at least $2.5 million for the Democratic National Committee after leaving the administration last December -- with the president's approval -- to join DNC.

Among those Huang subsequently solicited for donations, and mentioned in the Republican complaint, was a subsidiary of a Korean company that contributed $250,000.

According to the complaint, this company "had little or no domestic income, in direct violation" of the law covering campaign contributors.

Federal election law permits U.S. subsidiaries of foreign companies to donate to U.S. political campaigns, provided that the money they contribute is earned in the United States.

The complaint also cites an Indonesian couple with close ties to Lippo who donated a total of $450,000 -- including close to $300,000 after returning to Indonesia.

Foreign nationals can contribute to American political campaigns, but only if they are legal residents of the United States.

Before joining the DNC, Huang held a politically appointed trade post at the Commerce Department that gave him top-secret security clearance and access to information and meetings that might have been of interest to Lippo. The Lippo conglomerate, which has an array of subsidiaries, has been involved in joint ventures with U.S. companies that do business abroad.

Huang has denied working on any matter involving Lippo while while at Commerce. But phone logs and other evidence show that he kept in contact with the company and on one occasion joined his former boss at Lippo, James Riady, in a White House meeting with the president.

Riady became acquainted with Clinton more than a decade ago, while helping run an Arkansas bank that was partly owned by Lippo.

Campaign event also cited

The Republican complaint also cites a campaign event that Huang organized at a Buddhist temple in Los Angeles. Later, monks told reporters that they wrote checks at the behest of individuals they believed to be Democratic fund-raisers -- and then were reimbursed in cash.

Even though Gore was the featured speaker at the temple, Richard said yesterday that this did not necessarily mean that Gore knew about the contributions.

Yesterday's decision was embraced by the White House and was denounced by Common Cause and McCain.

"The American public needs and deserves an impartial investigation into the numerous well-publicized allegations of campaign finance violations," said Deborah Povich, executive director of the Maryland chapter of Common Cause. "Unfortunately, the attorney general has just eliminated that possibility. Undoubtedly, they will be looked into by Congress, but that will be seen as partisan."

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