Reno told the special court that selects independent counsels that further investigation was needed "although our investigation has developed no evidence clearly demonstrating Secretary Herman's involvement in these matters."
Although five months of preliminary inquiry by Justice prosecutors and FBI agents did not conclusively implicate Herman, Reno wrote, "a great deal of [her accuser, Laurent] Yene's story has been corroborated."
She said an independent counsel using such tools as grand jury subpoenas and immunity grants is needed to see whether Herman was actually involved. The Justice Department is barred by law from using those tools in preliminary inquiries.
"I'm obviously very disappointed and extremely baffled by this decision today," Herman told reporters outside the Labor Department. She said the allegations "have been false from the very beginning" and insisted she will not let them distract her from her job.
In a White House statement, President Clinton stood behind Herman and added, "I am confident that in the end, investigators will also conclude that Ms. Herman did nothing wrong."
Yene, a Cameroon citizen doing business here, told the Justice Department last Nov. 10 that Herman, while a White House aide, had an agreement to receive a 10 percent kickback for aiding the clients of International Investments and Business Development, a company co-owned by Herman's close friend, Vanessa Weaver, and by Yene, Reno wrote.
He also claimed Herman directed Weaver to solicit campaign contributions to the Democratic National Committee from the company's client, one of whom was a foreign national and thus barred from contributing to U.S. election campaigns. These donations were allegedly to facilitate favorable government action on the clients' business.
After reviewing numerous bank account and other documents and more than 100 interviews, including some with Herman, Reno said her investigators "uncovered financial transactions potentially corroborative of Yene's allegations which require further investigation."
Reno, describing Herman as fully cooperative with the investigation, said alternate, innocent interpretations of the transactions had varied over the course of the five-month inquiry.
"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," Reno wrote.
Reno's investigators could find no evidence that Herman "took any steps to influence any government decision on IIBD's behalf" but she did meet the company's clients and potential clients, entertaied one client at a White House lunch and had other meals with them.
"There is evidence that IIBD ... did benefit from its access to Herman, and through her, the White House, in impressing its clients," Reno said.
The firm operated from July 1995 to September 1996 and made only $45,000, Reno said, which would have made Herman's alleged kickback $4,500.
She said financial records are not inconsistent with Yene's story although they do not conclusively corroborate it. The innocent explanations of these transactions supplied during the inquiry "either cannot be independently corroborated or doubt is cast on them because they are inconsistent with other known facts," Reno wrote.
Yene alleged that Herman encouraged Weaver to ask a foreign client to make a campaign contribution and that the client thereafter paid $250,000 in contributions through Weaver's other company, Alignment Strategies Inc., to help in obtaining a Federal Communications Commission license and to meet Clinton.
He also alleged that Weaver told him Herman wanted him to get a $10,000 contribution to the Democratic National Committee from the president of a company seeking the FCC license.
Written by Michael J. Sniffen
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