Freeh, House Panel Sidestep Legal Fight

WASHINGTON —  FBI Director Louis J. Freeh appeared to defuse a dispute Wednesday between the Justice Department and the House panel investigating campaign finance abuses, but committee Republicans called another witness in their effort to portray the department as soft on Clinton administration officials accused of wrongdoing.

Continuing his testimony before the House Government Reform and Oversight Committee, Freeh said he and Atty Gen. Janet Reno might be willing to release a memo he wrote to Reno outlining his arguments in favor of seeking an independent counsel to investigate the fund-raising scandal. But he suggested that portions of the memo dealing with the ongoing Justice Department investigation would be redacted.

Committee Chairman Dan Burton (R-Ind.), who subpoenaed the Freeh memo, said ongoing negotiations over the memo put off the need to consider citing Reno and Freeh for contempt of Congress.

Reno’s decision last week not to seek the appointment of an independent counsel to investigate President Clinton, Vice President Al Gore and former Energy Secretary Hazel O’Leary created a political firestorm among GOP critics, who accused her of misreading the facts and the law and protecting the president.

One of their prime pieces of evidence is the opinion of Freeh, who has told Reno behind closed doors--and in writing--that he believes an independent counsel is needed.

In later testimony, independent counsel Donald C. Smaltz condemned the Justice Department for interfering with his probe of former Agriculture Secretary Mike Espy. But Smaltz was forced to spend much of his time responding to Democratic attacks of his costly, 3-year-old inquiry.

Committee Republicans called Smaltz as a witness to buttress their case that the Justice Department is not equipped to handle sensitive political investigations and ought to recommend an outside review of the fund-raising scandal.

Smaltz testified that his probe of illegal gratuities received by Espy was delayed for months when the Justice Department objected to his pursuit of Espy’s chief of staff, Ronald H. Blackley. A court later sided with Smaltz, who won a conviction of Blackley last week on three counts of filing false statements with the government.

Espy, who resigned three months after Smaltz was appointed in late 1994, has been charged with accepting more than $35,000 in gifts and favors from companies that did business with his department.

While Smaltz characterized the dispute as evidence of outside interference by the Justice Department, Reno said in her testimony Tuesday that government prosecutors merely believed they--rather than an outside prosecutor--should investigate the Blackley case.

Smaltz’s harsh words for Reno’s department were met with even harsher criticism of his own work by Rep. Tom Lantos (D-San Mateo).

Lantos first condemned Smaltz for downplaying in his testimony his ties to the GOP. Asked about his political affiliation, Smaltz had remarked that he had been president of the College Democrats at Penn State University in the 1950s.

Lantos compared Smaltz’s response to former United Nations Secretary Kurt Waldheim’s failure to reveal that he had been a member of the Nazi Party during World War II. Smaltz, who is from Los Angeles, switched to the Republican Party in the 1960s and has made donations to GOP candidates in California.

“I take umbrage with being compared with anyone in the Nazi Party,” Smaltz shot back.

The two men continued to spar as Lantos questioned the cost and tactics of Smaltz’s investigation and cited court cases in which Smaltz had been criticized or overruled.

Rep. Christopher Cox (R-Newport Beach), vice chairman of the committee, came to Smaltz’s defense, saying his numerous indictments and convictions in the Espy case have brought in millions of dollars in fines.

“I apologize to you for the scurrilous attacks on your character and integrity,” Burton added.