AllPolitics - TIME This Week

Foreign Money And Democratic Damage Control

[TIME Magazine]

By Kevin Fedarko

(TIME, October 28) -- When a South Korean businessman expressed interest last April in being photographed with Bill Clinton, the Democratic National Committee was only too happy to sell him a $50,000 ticket to a presidential fund raiser. At first the deal worked precisely the way these things are supposed to. John Lee's company bought not one ticket but five; then Lee attended the dinner with several associates and walked away with his pictorial reward. All seemed fine until two weeks ago, when a reporter from the Los Angeles Times phoned the D.N.C. with a question. Why, the reporter wanted to know, had a foreign national been permitted to contribute to a U.S. campaign? Was the D.N.C. not aware that this sort of thing violates campaign-financing laws? The D.N.C. immediately returned Lee's $250,000 donation and admitted that its process of vetting contributions had "broken down." As for Lee, he vanished: last week his office suites in Los Angeles' Century City and Seoul were deserted.

In disappearing, Lee unintentionally handed Bob Dole a gift. Lee's cash-and-carry approach exposed one of the most glaring loopholes in campaign-finance law and gave the Republican candidate fresh ammunition to use in his effort to scare up questions about the President's alleged corruptibility. "Here's a President who often talks about a bridge to the future; more often it seems it's a bridge to wealthy political donors,'' said Dole. "It goes through a Laundromat first and takes a left at the Democratic National Committee and then rolls all the way down to the Oval Office."

Even before they heard Dole's feisty rhetoric, officials at the D.N.C. were spooked enough to go into damage control. On Friday they asked the Federal Election Commission to begin investigating the matter. Then they suspended John Huang, the maverick D.N.C. vice chairman who had not just drummed up Lee's contribution but made a Washington career out of raising small fortunes, $4 million to $5 million this year alone, from his network of Asian contacts. Two years ago, he made a smart landing at the Commerce Department, where, as a trade official, he cultivated a group of Asian businessmen. That put him in a perfect spot to solicit from them when he moved on to the D.N.C. In this job he was praised by Clinton himself for being wonderfully "aggressive." So it's no wonder that Huang was unlikely to police any questionable donations; he had arranged them. Last week several more dubious contributions set up by Huang came to light, each raising the question of why party officials are given the job of regulating themselves:

The Chinese Daily News reported that Vice President Al Gore attended an April luncheon and fund raiser at a Buddhist temple in Hacienda Heights, California, an event that offered the unusual (and highly improper) spectacle of a tax-exempt religious institution appearing to endorse a political party. After the lunch, a group of Asian businessmen reportedly donated $140,000 to the D.N.C. Several contributions were given in the names of monks and nuns, despite their vow of poverty. The setup was apparently designed to ensure that the foreign donors' names would not appear on D.N.C. lists. A woman named Man Ya Shih, who is connected with a branch of the temple in Texas, told reporters that she was approached at the fund raiser by a "Democratic activist" who gave her $5,000 in small bills and asked her to write a check for that amount to the D.N.C. Last week the committee offered to reimburse the temple $15,000 for holding the fund raiser. But the party said it intended to keep the $140,000.

Yogesh Gandhi, a businessman from Orinda, California, related to the Indian leader Mohandas K. Gandhi, gave $325,000 to the D.N.C. in May after presenting Clinton with the Mahatma Gandhi World Peace award. It would be legal for Gandhi as a naturalized citizen to make such a contribution, as long as it was his own money. Gandhi claims to be independently wealthy, but tax records obtained by ABC News indicate that he and his foundation owe more than $10,000 in back taxes and that he does not even own his home. Whom could he be representing? The Wall Street Journal reported that Gandhi has close ties to an Indian political fund raiser who wants to expand India's business links with the U.S.

Last week Dole and his G.O.P. colleagues cast indignant scrutiny on the most ornate of the foreign-money controversies, in which donors connected with an Indonesian conglomerate gave large sums to the D.N.C. While no money-for-favors linkage was immediately apparent, House Speaker Newt Gingrich and other Republicans called for a probe into the curious circumstances. Among them: Last year the White House sent a routine get-well card to Hashim Ning, co-founder and major shareholder of the Lippo Group, a $6 billion insurance, banking and real estate empire controlled by Indonesian patriarch Mochtar Riady. Not long after the card was received, Hashim's daughter and son-in-law, Soraya and Arief Wiriadinata, donated $425,000 to the D.N.C. The Wiriadinata couple, who were living in suburban Virginia, had been U.S. residents for only a short time. They have since returned to Indonesia, where several of the checks they contributed may have been signed.

Lippo's connection to Clinton goes back a long way. When Mochtar Riady's son James headed up a local bank in Little Rock in the 1980s, the Riadys discovered that the back-scratching political culture that prevails in Indonesia meshed perfectly with the cozy world of Arkansas. Within a few years, James Riady was part of Governor Clinton's inner circle of friends. When Clinton became President, that helped James become a minor player in U.S.-Indonesia relations. In 1993 he assisted in setting up a meeting between Clinton and Indonesian President Suharto. This has led human-rights activists and Republicans to accuse Lippo of using its money to persuade the Administration to soften its policy of using trade sanctions to press for better conditions for Indonesian factory workers. While relations between the two countries have warmed up, experts attribute the trend mostly to Clinton's interest in focusing on trade in this rapidly expanding region instead of human rights.

For their part, the Riady family may have been seeking what most Asian businessmen want when they give money to U.S. politicians--prestige at home. "The idea is to look good over there," says Stanford University economist Lawrence Lau. "You want to be able to tell people you are a big man in Washington. You have dinner with the President, and your picture is taken with him. People back home will then say, 'Ah, this guy is well connected.'" In Indonesia last week, as news of the controversy spread, the Riadys were variously reported by their secretaries as being "out of the office," "on a business trip" or "on the other line."

--Reported by Sandra Burton/Hong Kong, Michael Shari/Jakarta, Douglas Waller/Washington and James Willwerth/Los Angeles

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