Former Housing Secretary Samuel Pierce directed federal grants to political friends and later misled Congress about his involvement, congressional investigators said Thursday.

Their report stopped short of concluding Pierce committed perjury before a House panel or that he and others at the agency violated criminal laws. It said those questions would be left to the special prosecutor now investigating Pierce.An attorney for Pierce said the report was politically motivated and contained "spurious allegations."

The report, the result of a House subcommittee's 16-month investigation of the Reagan administration's Department of Housing and Urban Development, said Pierce concealed the extent of his involvement in the steering of federal housing grants.

"At best, Secretary Pierce was less than honest and misled the subcommittee about his invovlement in abuses and favoritism in HUD funding decisions," the report said. "At worst, Secretary Pierce knowingly lied and committed perjury during his testimony."

The report was released by the House Government Operations Committee, whose employment and housing subcommittee investigated the scandals involving favoritism, mismanagement and political abuse at HUD, where Pierce served as secretary throughout the Reagan years.

Pierce appeared before the panel in May 1989, then invoked his Fifth Amendment rights against self-incrimination in refusing to appear for further questioning.