By STEPHEN LABATON

May 12, 1998

WASHINGTON -- In becoming the fifth member of President Clinton's Cabinet to be examined by an independent counsel, Labor Secretary Alexis M. Herman will now face months of investigation and big legal bills.

What distinguishes Ms. Herman's case from most of the others, however, is that Attorney General Janet Reno found "no evidence clearly demonstrating" her involvement in a crime. In this instance, a businessman has accused Ms. Herman of an influence-peddling scheme, saying she received $4,500 and improperly steered contributions to the Democratic Party.

Ms. Reno's decision was announced late Monday after a long and by some accounts, painful, discussion among her aides over the merits of another special prosecutor, a debate that in many ways reflects the larger dialogue now raging in Washington about the strengths and flaws of the independent counsel law. The statute expires next year, and lawmakers on Capitol Hill say its future is in grave jeopardy, because of the way it has been used against both Democratic and Republican administrations in the last decade.

The debate also seeped through Ms. Reno's application Monday to the special court that appoints an independent counsel. The document is replete with double and triple negatives that reflect an attorney general wrestling to fit the facts within the law.

The application noted repeatedly that Justice Department investigators had found no evidence that Ms. Herman had done anything wrong. But the attorney general still asked for an independent counsel, citing these elements: Ms. Herman's chief accuser was credible; witnesses gave inconsistent testimony; and, she said, because, it was "not plausible" that Ms. Herman had no knowledge of a possibly improper campaign contribution solicited by a close friend.

The law sets a low threshold for the appointment of independent counsels -- specific evidence from a credible source of wrongdoing by a top official. Still, Justice Department officials Monday described Ms. Reno's decision as a close call that had divided the agency's top lawyers.

They said Ms. Reno had basically concluded that the administration would be unable to resolve the allegations against Ms. Herman by the businessman from Cameroon, Laurent J. Yene, within the 150 days that the law gives the department to conduct a preliminary investigation. If the charges remain unresolved at the end of that period, the law requires the attorney general to seek an independent counsel.

Some Justice Department officials had argued that Ms. Reno should decline to seek a counsel because investigators could not corroborate any specific evidence from a credible source of wrongdoing by Ms. Herman, as the independent counsel law requires.

But others had maintained that a close reading of the law required an independent counsel.

They maintained that the conflicting testimony of some of Ms. Herman's associates, combined with the possibility of improper campaign contributions, left little discretion to Ms. Reno. Those arguments ultimately prevailed.

In becoming the focus of an independent counsel, Ms. Herman joins President Clinton and three former cabinet members: Ron Brown, Mike Espy, and Henry G. Cisneros, as well as Interior Secretary Bruce Babbitt and Eli J. Segal, who headed the Americorps national service program. Espy and Cisneros have since been indicted, Brown died in a plane crash in Croatia two years ago, Segal was never prosecuted and the investigation of Babbitt began two months ago.

In several other instances, the attorney general has rejected an independent counsel. She refused to appoint counsels to investigate Hazel R. O'Leary, who was secretary of energy, and her successor in that post, Federico F. Pena, who also served as secretary of transportation. And she has repeatedly rebuffed Republican requests to investigate President Clinton and Vice President Gore for their campaign fund-raising practices.

At the same time, Ms. Reno has regularly shown a willingness not only to seek new independent counsels, but also to expand the jurisdiction of existing special prosecutors. Four months ago, she recommended the broad expansion of the inquiry of the Whitewater independent counsel, Kenneth Starr, so that he could examine whether there was a criminal cover-up of the relationship between President Clinton and Monica Lewinsky.

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May 12, 1998

WASHINGTON -- Following is an excerpt from Attorney General

Janet Reno's application to the U.S. Circuit Court of Appeals for the District of Columbia, Independent Counsel Division. The application was filed on Monday and released by the Department of Justice.

Application to the Court Pursuant to 28 USC 592 (c) (1) for the appointment of an independent counsel.

In accordance with the Independent Counsel Reauthorization Act of 1994 (the Act), I hereby apply for the appointment of an independent counsel to investigate whether any violations of Federal criminal law were committed by Secretary of Labor Alexis M. Herman, and to determine whether prosecution is warranted . . .

On Novs. 10, 1997, the Department of Justice received allegations from Laurent J. Yene, a Cameroon national residing and doing business in the United States, that Alexis M. Herman, while a White House aide, had an agreement pursuant to which she would receive a 10 percent share of any business she facilitated for a company called International Investments and Business Development , which was co-owned by Herman's close friend Vanessa Weaver and Yene.

Additionally, Yene claimed that Herman directed Weaver to obtain campaign contributions to the Democratic National Committee from I.I.B.D.'s clients, at least one of whom was a foreign national, to facilitate the favorable resolution of their business pending before the government. Based on these allegations, on Dec. 10, 1997, I notified this court that we had commenced a preliminary investigation. On March 10, 1998, I sought and received an additional statutory 60-day extension of the preliminary investigation.

During the initial inquiry and extended preliminary investigation, we focused on developing evidence to enable us to evaluate Yene's credibility, and on developing evidence on the following issues: 1) whether Herman received or had an agreement to receive money or other compensation from I.I.B.D. or its principals; 2) whether Herman took any direct or indirect actions to facilitate I.I.B.D. business; and 3) whether Herman played any role in the making of illegal campaign contributions to the D.N.C. in connection with Weaver or any of her clients.

Yene was interviewed extensively about his allegations. We also conducted an exhaustive document review and more than 100 interviews, including interviews of Secretary Herman, who was at all times fully cooperative with this investigation. The document review included a financial analysis of numerous bank accounts, and this aspect of our investigation uncovered financial transactions potentially corroborative of Yene's allegations, which require further investigation.

In the course of this investigation, we have spent significant time exploring the issue of Yene's credibility. While I cannot conclusively determine at this time that Yene's allegations are credible, much of the detail of the story he has told has been corroborated, though none of it clearly inculpates Herman.

Additional information developed in the course of the investigation, coupled with inconsistent and evolving explanations by other critical witnesses, leads me to conclude that further investigation of this matter is warranted.

Although our investigation has developed no evidence clearly demonstrating Secretary Herman's involvement in these matters, and substantial evidence suggesting that she may not have been involved, a great deal of Yene's story has been corroborated; we thus are unable to conclude that he is not credible. This, coupled with the strictures and limited investigative tools available under the Act, have led me to conclude that there are reasonable grounds to believe that further investigation is warranted, in order to determine whether Secretary Herman violated any Federal criminal

law other than a Class B or C misdemeanor or any infraction. I thereby apply to this court for the appointment of an independent counsel to conduct that investigation.