Investor's Business Daily editorial suggested Dem contributor improperly influenced Pres. Clinton -- but DOJ probe cleared him

A November 2 Investor's Business Daily editorial suggested that Bernard Schwartz, then-head of Loral Space and Communications Corp., donated "$600,000 in campaign cash" to President Bill Clinton in 1996 in exchange for "the traitorous transfer of missile technology to Beijing." The editorial stated, "Schwartz claims the favorable treatment he got from the Clinton administration was merely a 'coincidence,' " adding, "Yes, it's all just a coincidence." However, while the editorial mentioned that the Justice Department "investigated Schwartz," it did not note that the department exonerated him. According to a May 23, 2000, Los Angeles Times article [subscription required], one document related to the investigation stated that the "team of federal prosecutors turned up 'not a scintilla of evidence -- or information -- that the president was corruptly influenced by Bernard Schwartz.' "

From the editorial:

As head of Loral Space and Communications, Schwartz lobbied for the traitorous transfer of missile technology to Beijing -- and got it with Clinton's blessing. In 1996, after Schwartz stuffed his pockets with more than $600,000 in campaign cash, the president personally approved the launch of four communication satellites on Chinese rockets.

He [Clinton] did this despite objections from the Pentagon and even the Justice Department, which investigated Schwartz. U.S. intelligence feared Loral was helping Beijing improve the accuracy and reliability of its ballistic missiles.

Intelligence was right. China's recent downing of a satellite with a ground-based missile would not have been possible without Loral's technical assistance.

Schwartz claims the favorable treatment he got from the Clinton administration was merely a "coincidence."

Yes, it's all just a coincidence.

Just like when months before he won a prized seat on a Commerce Department trade junket to China, Schwartz wrote a check to Democrats for $100,000. It was on that trip that Schwartz scored a meeting with China's top telecom poobah, which led to Loral winning a $250 million cell phone deal.

After the junket, Schwartz wrote a thank you note to his Commerce Department contact. "These are exciting times," he said, "but you know what the Chinese said about that!"

The Justice Department investigation of the campaign finance allegations regarding Schwartz was headed by Charles La Bella, chief of the Campaign Finance Task Force from 1997 to 1998. La Bella delivered a memorandum on the inquiry to then-Attorney General Janet Reno in the summer of 1998. Documents related to the La Bella memo were first obtained by the Los Angeles Times, which, in the May 23, 2000, article reported that, according to one document, the "team of federal prosecutors turned up 'not a scintilla of evidence -- or information -- that the president was corruptly influenced by Bernard Schwartz.' " Further, one former task force investigator told the Times that "[p]oor Bernie Schwartz got a bad deal. ...There was never a whiff of a scent of a case against him." After the House Government Reform and Oversight Committee made public the memo and an "addendum" from La Bella, The New York Times reported in a June 9, 2000, article, that the "documents ... show that Mr. La Bella never believed there was any evidence against Mr. Schwartz and concluded that Mr. Schwartz had not broken the law."

Beginning in 1997, the Justice Department also investigated allegations that Loral had violated U.S. export control laws by sharing information with the Chinese regarding a technical review of a 1996 incident in which a Chinese rocket crashed while carrying a Loral satellite. In 2002, Loral agreed to pay a $14 million fine. In a statement announcing the agreement, the company asserted that it was paying the fine "without admitting or denying the government's charges." In a January 10, 2002, article, The Washington Times reported that a "senior Bush administration official said the deal for Loral to pay a fine was reached after the Justice Department declined to bring criminal charges."

From the Los Angeles Times article:

When Sen. Arlen Specter recently obtained the internal Justice Department memo of former campaign finance task force chief Charles G. LaBella, the Pennsylvania Republican used it to resurrect a favorite partisan target: President Clinton's approval for Loral Space and Communications Corp. to launch a satellite from China two years ago. At the time, Loral Chairman Bernard L. Schwartz was among the Democratic Party's biggest individual donors.

During a May 2 hearing, Specter commented that LaBella had pushed, in his still-sealed memo, to have an independent counsel investigate the Loral matter, suggesting that the case remained ripe for serious criminal inquiry. And Specter reinforced that impression, urging the Senate to subpoena Loral-related documents.

But the impression was wrong.

The LaBella report and related documents, which were obtained earlier this year by The Times, tell quite a different story. In fact, by the time LaBella delivered his report to Atty. Gen. Janet Reno in the summer of 1998, the task force had effectively excused Schwartz and Loral from the campaign finance investigation.

LaBella's team of federal prosecutors turned up "not a scintilla of evidence -- or information -- that the president was corruptly influenced by Bernard Schwartz," according to one internal document.

Far from urging an investigation of Schwartz, the documents show, LaBella regarded the Loral executive as a victim of Justice Department overreaching. He criticized ranking Justice officials for relying on "a wisp of information" to justify their initial Schwartz inquiry.

And in an addendum to his original report, LaBella flatly advised that the Schwartz case "was a matter which likely did not merit any investigation."

"Poor Bernie Schwartz got a bad deal," one former task force investigator said in an interview. "There never was a whiff of a scent of a case against him."

[...]

While advising that a Schwartz investigation was unmerited from the outset, LaBella did recommend that the case be disposed of by a special counsel. He told Reno that, because the underlying allegations of a possible quid pro quo ultimately involved the president, an independent prosecutor should act on the matter to spare Justice from accusations of "a political motive for its determination."

LaBella reserved his harshest criticism on the matter for Justice officials who ordered the Schwartz probe while specifically excluding Clinton from the investigation.

From the New York Times article:

For years, Mr. Schwartz, who contributed about $1.5 million in 1996, has lingered under a shadow of a Justice Department investigation. That was because Mr. Schwartz's donations to the Democratic Party came as Loral was seeking White House support for a waiver that would allow the company to export satellite technology to China. The inquiry into Mr. Schwartz was not closed until 1999.

A month ago, Senator Arlen Specter, Republican of Pennsylvania, suggested at a hearing that the former head of the Justice Department's campaign finance unit, Charles G. La Bella, had, in a 1998 memorandum to Attorney General Janet Reno, urged the appointment of an independent counsel to investigate Mr. Schwartz's dealings with President Clinton.

But Mr. La Bella's memorandum of July 16, 1998, and an addendum on Aug. 12, 1998, cast a fuller light on the matter. The documents, which were made public by the House Government Reform and Oversight Committee, show that Mr. La Bella never believed there was any evidence against Mr. Schwartz and concluded that Mr. Schwartz had not broken the law.

''This was a matter which likely did not merit any investigation,'' Mr. La Bella wrote in his addendum. Portions of Mr. La Bella's memorandums about Mr. Schwartz were first reported by The Los Angeles Times.

Today, a Loral spokesman expressed satisfaction that the documents had finally come to light. ''We are pleased that the facts in this case have now been made public and that Mr. Schwartz and Loral are shown to be innocent of any wrongdoing,'' said Thomas B. Ross, a company vice president.

Mr. Specter said in an interview that he did not realize at the hearing that Mr. Schwartz had been exonerated by the Justice Department because he had not seen Mr. La Bella's addendum. ''When I was questioning him it was from his initial report,'' Mr. Specter said. ''I did not know at that time there was a supplemental report.''

[...]

Mr. La Bella said in an interview that he never believed that there was concrete evidence against Mr. Schwartz. He said he cited the matter in his memorandum because of what he had concluded was a double standard in which the Justice Department began an inquiry into Mr. Schwartz over the contributions but refused to open an investigation of President Clinton.