Updated 7/1/97

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Troubles For Thompson's Show Wily Democrats and G.O.P. skeletons gum up his campaign-fund probe. By Michael Weisskopf/TIME, 6/15/97

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In Focus

The Democratic Fund-Raising Flap

Background

What started out as a flap over political donations from non-U.S. citizens has mushroomed into a far-reaching imbroglio over Democratic fund-raising practices, with a daily stream of revelations prompting questions whether national security was jeopardized, whether government officials mixed politics with policy and whether President Bill Clinton traded access to the White House for campaign funds.

DNC

Reports surfaced in October 1996 of large, questionable donations to the Democratic National Committee from non-U.S. citizens and businesses, and unverifiable sources. Since then, the DNC has announced its intention to return over $3 million in questionable contributions.

Ratcheting up the seriousness are national security concerns related to China. Though Clinton says he only learned of it through news reports early this year, the FBI suspected as early as 1995 that the Chinese government sanctioned some $2 million to buy influence with U.S. politicians. Investigators are investigating Los Angeles-based Asian businessman Ted Sioeng for possible espionage for China, whose leaders have so far denied all allegations of interference.

Also raising temperatures are reports the White House ignored National Security Council warnings that DNC donors' trips to Beijing might jeopardize foreign policy.

At the center of the controversy is former DNC fund-raiser John Huang, who raised much of the money the DNC has promised to return from sources tied to the Lippo Group, an Indonesian business conglomerate with extensive ties in China. Born in China, Huang is now an American citizen. After being employed by Lippo, Huang worked at the Commerce Department before going to the DNC where he retained top security clearance. In October, Huang defied a judge's order to appear for testimony; more recently, he has refused to cooperate with congressional investigators.

Meanwhile, critics have accused the president and Democratic officials as using the trappings of the presidency, to an unprecedented extent, to woo Democratic contributors.

Clinton acknowledged that he had personally OK'd overnight stays at the White House Lincoln bedroom for Democratic donors, a group that collectively gave $5.4 million to the DNC. Documents have showed a strategy to reward donors with perks, and possibly even government jobs.

lippo

The vice president's aggressive fund-raising earned him the nickname "Solicitor-in-Chief," and his willingness to make calls from his White House office has raised eyebrows as did the creation of a government-funded computer database that tracked thousands of persons who contributed money to the Democratic party and Clinton's political campaigns.

Attendees at 100 White House coffees arranged by the DNC donated $27 million to the Democratic Party. Initially defended as policy sessions, the events, documents later established, were each projected to raise $400,000. One, attended by the president, included bank executives and Comptroller of the Currency Eugene Ludwig, the government's top financial regulator. Another White House coffee attended by Clinton included a Chinese arms dealer. More serious, perhaps, were revelations the DNC contacted the CIA in an effort to gain White House clearance for a controversial donor.

Move Over, Whitewater Justice Department attorneys and an FBI task force have been investigating Democratic fund-raising since early 1997. But Congressional Republicans, frustrated that the president has been unscathed by the various controversies dogging him, are smelling blood. They're angry at Attorney General Janet Reno for her continued refusal to appoint an independent counsel, despite FBI Director Louis Freeh's recommendation to do so.

thompson

Even some Democrats have joined the chorus for an independent investigation, including Sen. Daniel Patrick Moynihan (D-N.Y.), Sen. Russell Feingold (D-Wis.) and Rep. Henry Waxman (D-Calif.).

Meanwhile, congressional hearings are gearing up. Sen. Fred Thompson (R-Tenn.) has launched a $4.35 million investigation into fund-raising practices of both major political parties. The House Government Reform and Oversight Committee, chaired by Indiana Republican Rep. Dan Burton, is doing its own $3.8 million probe as well, though Burton has been hit by charges he engaged in questionable fund-raising practices himself. Both Burton and Thompson have issued a flurry of subpoenas.

Some of the questions investigators will focus on:

  • Was China engaged in an illegal scheme to funnel contributions to U.S. campaigns?
  • Did Democratic and Republican officials, on behalf of the their respective parties, knowingly solicit funds from illegal sources?
  • Were funds from Lippo and other international contributors illegally funneled into the Democratic Party in an effort to gain undue access to the Clinton White House, and maybe to influence international policy?
  • Did Huang break campaign laws by fund-raising while on the government payroll, and by coordinating a flow of questionable donations from non-U.S. citizens -- some with ties to Lippo -- and some with no apparent means to make large contributions? Did Huang compromise U.S. national security by any of his actions?
  • Did White House officials raise funds for the Democratic Party? Was the computer database a legitimate use of government funds, or was it used for political purposes?
  • Did the White House improperly use the FBI, the National Security Council or the CIA to pursue fund-raising?
  • Were domestic policy initiatives, meetings with the president, receptions at the White House and overnight stays in the Lincoln Bedroom offered in exchange for campaign donations?

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