Reno Rejects Call for Outside Probe of Fund-Raising

WASHINGTON —  Atty. Gen. Janet Reno declined Tuesday to seek appointment of an independent counsel to investigate allegations of illegal campaign fund-raising by the Democratic Party and President Clinton’s reelection committee.

In a letter to Sen. John McCain (R-Ariz.), Reno said that his request was vague and did “not contain specific, credible evidence” that anyone covered by the Ethics in Government Act had committed a crime. Under that law, the attorney general may petition a panel of federal appellate judges to appoint an independent counsel to examine allegations of wrongdoing.

In a related development, Democratic National Committee Chairman Donald L. Fowler on Tuesday unveiled a new screening process that is intended to weed out the kind of illegal or suspect foreign donations that the party accepted in the recent national campaign.

In his first extensive comments on the monthlong fund-raising controversy, Fowler acknowledged that the party had eased its safeguards for checking large contributions in 1994 and that serious problems had arisen as it sought to cope with the demands of processing more than 1 million donations during 1996 alone.

The new program reinstitutes practices that the party scrapped two years ago but does so with more resources and thoroughness, officials said.

Fowler said that he was unable to answer numerous questions about the activities of John Huang, the fund-raiser who solicited many of the suspect donations. He said that he had not questioned Huang directly about fund-raising matters, including his solicitation of $250,000 from a South Korean company and $325,000 from a Northern California entrepreneur. Both contributions were returned.

“I haven’t felt it was appropriate to query him in that fashion,” Fowler said. Regarding conversations of committee officials with Huang, Fowler said: “I don’t know specifically what questions were asked of him.”

Huang brought in four donations, totaling $590,000, that have been refunded. Altogether, the Democratic committee has returned 10 checks for $762,000 and is reviewing two others, officials said. The party raised $120 million, Fowler said.

Huang, who previously served in a sensitive Commerce Department post and as an executive for an Indonesian conglomerate with ties to Clinton, has not answered questions publicly in recent weeks. He was suspended from his fund-raising duties last month.

Reno’s decision, conveyed in a letter signed by Acting Assistant Atty. Gen. Mark M. Richard, is good news for the beleaguered Democratic committee. But it seemed likely to infuriate congressional Republicans who have vowed to investigate Democratic fund-raising practices.

The response appears significant because Reno, who has said publicly that she wants to retain her job in Clinton’s second term, has been criticized privately by some White House officials for her previous quickness to turn allegations over to independent counsels.

Reno’s decision was in response to a request forwarded by McCain on Oct. 11. Justice Department sources cautioned that a subsequent request sent by McCain and four House committee chairmen on Oct. 29 contained more detailed information and conceivably could produce a different response. But it has been two weeks since the five Republicans forwarded the more specific request, and department officials presumably were familiar with its contents when they rejected McCain’s initial appeal.

The attorney general is not required to respond to the second request until Nov. 29.

In the response, the Justice Department said that an independent counsel cannot “assume the role of the independent regulatory agencies, such as the Federal Election Commission, to determine whether campaign financing by political organizations was in conformity with the law.” The FEC is already investigating various controversial DNC contributions.

It said that McCain should be assured that a special task force created last week within the department’s public integrity section would examine all fund-raising allegations.

McCain expressed disagreement with Reno’s decision, citing his “strong belief that the facts before us meet the test” for appointment of an independent counsel. He said the rejection is “further proof that congressional hearings may be needed to . . . investigate these serious allegations.” Meanwhile, Fowler insisted that no Democratic official had sought to circumvent the law.

“We’ve made mistakes,” he said in his first national news conference since the fund-raising flap surfaced. “But I believe we have acted honorably and ethically.”

Fowler, a former South Carolina Democratic chairman who took over day-to-day operations of the national committee in 1995, said that he takes full responsibility for the fund-raising missteps, which some view as contributing to the Democrats’ failure to regain control of Congress. But he noted that the decision to relax standards to examine contributions was made before he came to the committee. That step, which DNC officials said was intended to save funds, left the responsibility for checking contributions largely to the fund-raisers who solicited them.

The Democratic committee will establish a new compliance division to perform an initial donor screening. The unit will request special checks on any donor who has given more than $10,000 in a calendar year and fails to provide complete information, or who is not well-known and does not have a “well-established contribution history.” Researchers will perform computer checks of such donors. Another process will be adopted to review contributions that are legal but raise “questions of acceptability.”

Also Tuesday, the Commerce Department turned over to its inspector general documents “which appear to present questions” concerning Huang’s conduct while he was employed as principal deputy assistant Commerce secretary for international economic policy, according to a brief statement.

The referral does not automatically infer any wrongdoing on Huang’s part but was taken as a precaution to determine whether he had engaged in inappropriate behavior, said a Commerce source, who declined to be identified.

Times staff writer Glenn F. Bunting contributed to this story.