Memo shows bitter internal debate over fund-raising investigation

WASHINGTON - In a memo kept secret for 2 years, FBI Director Louis Freeh warned that the Justice Department was ignoring ''reliable evidence'' that conflicted with Al Gore's accounts of his fund-raising activities.

Freeh urged appointment of an independent counsel to investigate Democratic fund raising in the November 1997 memo to Attorney General Janet Reno, written by staff at his request.

''In the face of compelling evidence that the vice president was a very active, sophisticated fund-raiser who knew exactly what he was doing, his own exculpatory statements must not be given undue weight,'' the Freeh memo said.

Justice Department officials said the FBI's legal analysis was flawed. The dispute, and numerous others among campaign finance investigators, were laid bare in 61 FBI and Justice documents released Tuesday by a House committee.

With Gore campaigning for president and first lady Hillary Rodham Clinton running for the Senate, Republicans in both Houses of Congress on Tuesday investigated why no independent counsel for fund-raising was sought.

Freeh's memo preceded a better-known, and more scrutinized, memo by the chief prosecutor in the case, Charles LaBella, who accused his Justice superiors of contorting their investigation to avoid triggering an independent counsel.

In a later memo, Freeh recounted a meeting with Reno on Dec. 4, 1998.

''I ... argued once again that the Attorney General has and had had for some time an irrevocable political conflict of interest which makes it inapproprirate and - in my judgment - impossible for her ... to make legal ... decisions'' regarding a probe of President Clinton and Gore, Freeh wrote.

Both Freeh and LaBella have testified in Congress to disagreeing vigorously with Reno's decision not to request appointment of independent investigators. The new documents are the first with details of their suspicions about Gore's truthfulness.

Freeh and LaBella demanded an independent counsel to scour a wide range of accusations, from White House coffees for donors to millions of dollars in foreign contributions to the Democratic Party.

''Can you blame the American people or many in Congress for being cynical?'' asked House Government Reform Committee chairman Dan Burton, R-Ind.

But Rep. John Conyers, D-Mich., the senior Democrat on the House Judiciary Committee, called the LaBella memo ''perhaps the worst piece of legal analysis to ever come out of the Justice Department.''

Freeh argued that the Justice Department's preoccupation with bit players should be replaced by a top-down investigation starting with President Clinton and a ''core group'' of aides under the theory that ''most of the alleged campaign abuses flowed directly or indirectly from the all-out efforts by the White House and DNC (Democratic National Committee) to raise money.''

In his 94-page memo, LaBella also said the Republican Party ''had its fair share of abuses,'' including funneling $2 million in foreign money into the Republican National Committee in a single hidden transaction that may have been illegal.

''The RNC accomplished what it took the DNC over 100 White House coffees to accomplish,'' LaBella wrote.

LaBella said an independent counsel also should consider what Mrs. Clinton knew about foreign money brought in by fund-raisers Johnny Chung and Charlie Trie.

Reno has repeatedly said she based her decisions on the law and the facts and didn't feel pressured to protect Clinton.

''The documents in their entirety show that the attorney general made the right decisions,'' said Reno spokesman Myron Marlin. ''She had compelling reasons not to appoint an independent counsel and she received solid advice from many officials in the department.''

Freeh's memo focused in part on fund-raising phone calls Gore made from his government office. The vice president denied that he intended to raise ''hard money,'' which is regulated by federal laws prohibiting solicitations on federal property.

The director's memo suggested the Justice Department was ''relying almost exclusively on the vice president's own statements to draw inferences favorable to him even where those statement are contradicted by other reliable evidence.''

The conclusion that Gore's phone calls were to solicit ''soft money,'' outside the scope of the law, was based on ''hundreds of interviews with those who participated in the calls, and the examination of scores of documents,'' responded Lee Radek, the chief of the department's public integrity section who dealt with independent counsel issues.

LaBella complained that his Justice Department superiors were ''intellectually dishonest'' and practiced ''gamesmanship'' to avoid an independent counsel investigation.

Radek called those allegations ''preposterous.''

''The authors' attribution of bad faith to those of us who have disagreed with them on various issues is nothing short of shocking,'' Radek wrote.

LaBella said the Clinton-Gore re-election campaign ''was so corrupted by bloated fund raising and questionable 'contributions' that the system became a caricature of itself.''