THE WEEK

By NICK CATOGGIO, LINA LOFARO, MICHAEL QUINN, JEFFERY C. RUBIN, ALAIN L. SANDERS AND SIDNEY URQUHART

NATION

OKLAHOMA SUSPECTS INDICTED

Four months after the nation's deadliest terrorist attack, a federal grand jury indicted the two prime suspects in the Oklahoma City case, Timothy McVeigh and Terry Nichols, on bombing and murder charges that could bring the death penalty to both. The indictment identified McVeigh as the driver who detonated the truck bomb. As part of a deal with prosecutors, Michael Fortier, a close Army buddy of McVeigh's, pleaded guilty to lesser charges, including lying and failing to notify authorities about the crime. He is expected to become the government's star witness.

DECLARING WAR ON TOBACCO

President Clinton launched a dramatic new assault against the sale of tobacco to children. The President approved a groundbreaking decision by the Food and Drug Administration that classifies cigarettes as a type of "medical device" capable of delivering an addictive drug--nicotine. The decision triggers FDA regulation, and will be used to impose anti-tobacco rules to protect children. Among them: a strict prohibition of sales to minors, a ban on cigarette-vending machines and stringent curbs on ads aimed at youngsters. The tobacco industry immediately filed suit to stop the measures.

VETO NO. 2

As he promised, President Clinton vetoed legislation that would have unilaterally ended American participation in the U.N. arms embargo against Bosnia. The President expects to use the congressional summer recess to wheedle enough members to change their votes and sustain his veto.

TIME-OUT FOR WELFARE REFORM

Faced with stiff opposition from both the right and the left, Senate majority leader Bob Dole reluctantly put off action on the G.O.P. leadership's much touted welfare-reform plan (which has already passed the House). Conservative Republicans, including rival presidential aspirant Phil Gramm, are demanding tougher provisions penalizing unwed mothers, especially those who are teenagers. Democrats are insisting on more generous job-training and child-care provisions.

MORE WHITEWATER

There were dueling Whitewater hearings on Capitol Hill. Federal bank investigator L. Jean Lewis told a House panel that government higher-ups engaged in a "concerted effort to obstruct, hamper and manipulate" her investigation of alleged wrongdoing at the S&L that is at the heart of the Whitewater case. At the Senate hearings, former White House counsel Bernard Nussbaum adamantly told skeptical Senators that his controversial search of the late Vincent Foster's files was but one of the many "right calls" he made to protect legitimate confidences and was not a Whitewater cover-up.

PACKWOOD: MINOR DETAILS

The sexual-misconduct case against Senate Finance Committee chairman Bob Packwood became even graver when reports surfaced that one of two recent complaints accused him of kissing a minor in 1983, a 17-year-old who worked in his office. Packwood said he took "strong exception" to the new accusation.

REYNOLDS' ACCUSER TESTIFIES

It took 11 days in jail, the threat of a contempt charge and finally a broad grant of immunity for Beverly Heard to testify against Congressman Mel Reynolds at his sexual-misconduct and obstruction-of-justice trial. Once on the stand, Heard took back a previous recantation and testified that the Illinois Democrat began having frequent sex with her when she was 16 and that he often paid her as much as $100 for the encounters. She said the relationship was consensual.

NEWT'S TROOPERGATE?

"Trash" and "tabloid psychobabble" was the response from Speaker Newt Gingrich's office to a scorching article in the latest issue of Vanity Fair magazine alleging that the family-values-flogging politician engaged in a series of affairs during his first marriage.

AN EXECUTION STAYED

Convicted Philadelphia cop killer Mumia Abu-Jamal, a journalist active in radical black politics, obtained an indefinite stay of execution so he can pursue an appeal. Abu-Jamal, whose claims of innocence have become an international cause celebre, maintains he was railroaded by the criminal-justice system because of his politics.

ROE VS. ROE

The pro-choice movement has taken a serious hit, at least symbolically: Norma McCorvey--the Jane Roe of the Supreme Court decision that legalized abortion--joined the antiabortion group Operation Rescue, and was baptized by its leader. It was only a partial conversion, however: McCorvey says she still supports the right to an abortion during the first trimester, but not beyond.

THE SIMPSON TRIAL

At the urging of the O.J. Simpson legal-defense team, a North Carolina appeals court issued a ruling that could prove quite damaging to the credibility of one of the prosecution's key witnesses. The panel decided that a screenwriter's taped conversations with Los Angeles police detective Mark Fuhrman, in which Fuhrman reportedly used the word nigger and talked of framing black defendants, could be turned over to the defense. Judge Lance Ito will now have to rule on the tapes' admissibility.

FAULKNER MARCHES IN

After the Supreme Court turned down two last-minute appeals by the Citadel, Shannon Faulkner won her fight to become the first female cadet in the school's 152-year history. Amid protesters and supporters, she finally enrolled on Saturday.

WORLD

CROATIA RETAKES KRAJINA

Nearly 200,000 Serb refugees streamed out of the Krajina region in Croatia after the territory was retaken from the Serbs by Croatian forces. As joyous Croats celebrated, bitter Serbs denounced Serbian President Slobodan Milosevic, whom they faulted for not coming to their aid. Yugoslav officials, struggling to cope with the huge influx of refugees, announced plans to send thousands of them to Kosovo, a region that is 90% ethnic Albanian and that many fear will be the next Balkan powder keg.

U.S. SEES SERB MASS KILLINGS

U.S. Ambassador to the United Nations Madeleine Albright showed classified spy-satellite photos to the Security Council that she said made a "compelling case that there were wide-scale atrocities committed in the area against defenseless civilians." The photos showed large patches of freshly dug earth near Srebrenica--believed to be mass graves--that had not been there earlier. Six thousand men and boys are still missing after the Serb capture of the "safe areas" of Srebrenica and Zepa in Bosnia.

SADDAM'S DAUGHTERS DEFECT

Two of Iraqi President Saddam Hussein's daughters and their husbands--high-ranking military leaders--received political asylum in Jordan, along with other senior army officers. The defections are a potential intelligence windfall for the U.S. and signal deep divisions in Saddam's ruling clique

SRI LANKAN BOMBING KILLS 22

A suspected suicide bomber detonated explosives outside a government building in the Sri Lankan capital of Colombo, killing 22 people and wounding 50 others. The police said the blast was set off by a Tamil separatist fighting for a homeland in the northeast of the country.

THE UNTOUCHABLES

Thanks to an Italian law passed in 1993 that prevents people with AIDS from being thrown in jail, a group of HIV-infected bank robbers in Turin were freed after their fourth holdup in three weeks. The three men, described by police as heroin addicts with full-blown AIDS, have carried out dozens of heists. Said a police spokesman: "They know they can't be imprisoned, so they take no precautions...They robbed the last bank in full view of the security cameras, armed only with a pocket knife."

BUSINESS

NBC CARRIES TORCH

NBC pre-empted an expected bidding war by securing the broadcasting rights to the 2000 Summer and 2002 Winter Olympic Games for a combined $1.27 billion. The offer, which carried a weekend deadline and a proviso forbidding solicitation of counterbids, set a record for Olympic broadcasting.

LEAVING WINDOWS OPEN

The Justice Department announced it will take no antitrust action against Microsoft Corp.'s Windows 95 software before its Aug. 24 launch. The news came hours after the company set prices and imposed an initial 500,000-member ceiling for the controversial new online network it will package with Windows.

--By Nick Catoggio, Lina Lofaro, Michael Quinn, Jeffery C. Rubin, Alain L. Sanders and Sidney Urquhart