Reno's Dilemma

FOR MONTHS, REPUBLICANS IN Congress have hectored Attorney General Janet Reno to appoint an independent counsel to investigate the Democratic campaign-finance scandal. Reno's answer: she won't do it unless there is ""credible'' evidence that a ""high level'' government official broke the law. That evidence may hit her desk soon. Last week Johnny Chung, the Chinese-American entrepreneur who gave nearly $400,000 to the Democratic Party and visited the White House 49 times, made a stunning allegation. In late 1995, Chung says, an aide to the then energy secretary Hazel O'Leary asked him for $25,000 for a favorite charity. In exchange, Chung got a meeting with the secretary. O'Leary denies the charge.

Still, the Chung accusation is a potential bombshell. It could force Reno to invoke the independent-counsel law--and lead to a boundless probe of the entire Democratic-money scandal. In fact, NEWSWEEK has learned that the Justice Department isn't waiting around. It has already launched a preliminary investigation of Chung's allegations and plans to dispatch FBI agents to interview witnesses. If investigators turn up credible evidence that substantiates Chung's claim, Reno will be pressured to accede to the GOP.

Why did Chung's contribution to O'Leary finally trigger a preliminary investigation? According to the arcane language of the special-prosecutor statute, cabinet members are considered ""covered'' under the law's scope. As a result, O'Leary sets the law in motion, while someone like former deputy chief of staff Harold Ickes, once a power player, doesn't make the cut.

Reno seems to have little leeway. In an NBC interview, Chung said he was seeking an audience with O'Leary in October 1995 when an Energy Department official suggested ""it might be nice'' if he made a contribution to Africare--a charity O'Leary raised funds for. As it happened, Chung was already getting help in his quest from Democratic National Committee Chairman Don Fowler. In an Oct. 17, 1995, letter to O'Leary, Fowler described Chung as ""one of the top supporters'' of the DNC and urged her to meet with Chung and his business associate. But Chung says he left nothing to chance. He says he wrote a check to Africare, which an O'Leary aide picked up at his Washington apartment one night ""around 11 o'clock.'' The Energy Department denies any of its officials were so dispatched.

To be sure, Chung is hardly an impeccable witness. At the moment he is trying to win immunity from congressional and Justice Department investigators. But whatever his motives, if his tale forces Reno to appoint an independent counsel, the Clintonites may lose any chance of containing the scandal. The reality of special prosecutors is that once they start investigating, they don't stop until they've chased down every lead. And in the case of Johnny Chung, the path leads through the campaign-finance mess to the White House.

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