Donorgate: That Dog Won't Hunt, Either

Republicans are finally starting to get it: The Monica Lewinsky scandal won't do in Bill Clinton. But they're still hoping to snare him with Donorgate, the fund-raising shenanigans that triggered a string of investigations. Indeed, on Nov. 9, Justice Dept. lawyers questioned the President about his role in raising money for campaign ads.

Alas, Republicans are about to be disappointed again. Prospects for a chain of campaign-finance prosecutions that lead to the Oval Office look dim. Why? Federal election laws are so porous that it's nearly impossible to nail anyone for violating them. What's more, prosecutors are finding it difficult to prove that anyone intended to break the law.

On the surface, the probe of Clinton's 1996 reelection campaign continues to chug along, so far producing 14 indictments. Attorney General Janet Reno has until Dec. 7 to seek an independent counsel to determine if Clinton evaded spending limits with issue ads paid for by fat-cat donors--the subject of the interview with Justice lawyers. In late November, Reno will decide whether to name independent counsels to examine perjury allegations against Vice-President Al Gore and ex-White House Deputy Chief of Staff Harold M. Ickes.

NEW LOOPHOLE. But the courts have gutted two key cases involving "soft money"--unrestricted gifts to political parties--and money funneled from foreigners. In fact, most of the charges against Democratic fund-raiser Maria L. Hsia and Little Rock restaurateur Yah Lin "Charlie" Trie have been dismissed.

Justice alleged that Hsia disguised illegal soft-money gifts by using bogus donors--monks at a California Buddhist temple. But Federal Judge Paul L. Friedman tossed out charges that Hsia led campaign committees to file false statements about the money's source. Only a minor fraud count remains.

The case against Clinton chum Trie is even more problematic. Justice alleges he funneled overseas soft cash to Democrats via straw donors. But Friedman ruled that election laws bar only "hard-money" donations--gifts subject to strict limits--by foreigners. If upheld, the opinion opens up a broad loophole. It means future Presidential hopefuls can raise unlimited cash abroad--and that has serious implications for foreign policy. For example, a politician favoring an expansion of NAFTA might rake in Latin American donations. "It isn't a pretty picture," says Don Simon of the political watchdog group Common Cause.

Other cases ride on Justice's appeals of the lower court's decisions. They include similar charges of hiding donations to the Democrats brought Nov. 4 against Tennessee developer and Gore pal Franklin L. Haney. The rulings are "a setback, but not a fatality," insists a top Justice official.

Brave talk, but the situation could get even worse for campaign-finance cops. Both political parties are challenging a Federal Election Commission ruling that says they can pay for only 40% of issue ads with soft money. The parties want 100%. The U.S. Court of Appeals in Washington is expected to rule soon.

Soft cash was supposed to fund educational and get-out-the-vote efforts, not promote candidates. But lacking limits, it's easy to raise. The latest FEC figures show Republicans raked in $94 million in soft money for the '98 election, a 144% increase over '94. Democrats raised $79 million, an 84% hike.

The outlook: Few Donorgate prosecutions will get past the nuisance-suit phase. New loopholes will make the next election the money-grubathon of the century. Clinton and Gore will skip away from the one scandal that could have inflicted some damage. Meanwhile, the GOP will cry foul while rolling in a fresh snowfall of special-interest cash.