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�September 10, 1997, Sandler confirmed that in construing the Committee's subpoena for documents,
the DNC had concluded that it need not produce to the Committee any document created after April
9,1997. Sandler further confirmed that the fact that, because his handwritten notes, which indicated
that monies raised by the Vice President's calls had been deposited to hard money accounts, had
been produced, those notes had been prepared on or prior to April 9.
36
This sequence of events makes clear, then, that at least Sandler and Burson knew that monies
presumably raised by the Vice President's solicitationsfromhis office phone had been deposited into
hard money accounts before the Attorney General publicly stated her contrary factual assumption
37
in her April 14, 1997 letter to Senate Judiciary Committee Chairman Hatch. A question raised is
why, given this knowledge, Sandler or Burson (or Burson's client, the Vice President) never
undertook to make the Attorney General aware of the fallacy of her assumption in this regard after
her letter was released.
President Clinton
At a White House press conference on March 7, 1997 (four days following the Vice
President's press conference), and in response to questions of whether the President had made
telephone calls soliciting contributions to the DNC from the White House, the following exchange
took place:
Q:
Mr. President, your press secretary this week left open the
possibility that you, too, had made calls like the vice president did.
36
Sandler testimony, pp. 30-31.
37
Sandler also knew before April 9, 1997 that the telephone calls had been made on
the Vice President's official telephones in his White House office. Deposition of
Joseph Sandler, August 21, 1997, pp. 115-16, 123.
16
�Did you ever make those calls?
A:
I told him to leave the possibility open because I'm not
sure, frankly. I don't like to raise funds in that way. I never have
liked it very much. I prefer to meet with people face to face, talk
to them, deal with them in that way. And I also,frankly,was very
busy most of the times that it's been raised with me. But I can't
say, over all the hundreds and hundreds and maybe thousands of
phone calls I've made in the last four years, that I never said to
anybody while I was talking to them, "Well, we need your help,"
or " I hope you'll help us."
At his deposition before the Committee on June 26, 1997, Ickes testified that based on his review
of documents presented to him by Committee counsel, and based on his vague recollections and
assumptions, the President may have made a limited number of telephone calls to DNC donors
38
during 1994.
Based principally upon the information provided by Ickes and on "call sheets" apparently
prepared for the President by officials at the DNC, the Committee undertook a project with respect
to the President's telephone calls under the direction of Jerome 0. Campane, Supervisory FBI
detailee to the Special Investigation. As part of this project, the Committee contacted a number of
the potential donors listed on the call sheets to determine whether the President, in fact, had
38
Deposition of Harold Ickes, June 26, 1997, pp. 80-108; see also Ex. 3;
Memorandum from Harold Ickes to Leon Panetta, December 2, 1994 (Ex. 17);
Memorandum from Harold Ickes to Jack Quinn, December 2, 1994 (Ex. 18);
Memorandum from Harold Ickes to the President and the Vice President,
November 28, 1995 (Ex. 19); Memorandum from Harold Ickes to the President
with attached call sheets, February 7, 1996 (Ex. 20); Handwritten Notes of David
Strauss (Ex. 21); Electronic Mail from Karen Hancox to Kim Tilley, November
24, 1995 (Ex. 22); Memorandum from Nancy Hernreich & Rebecca Cameron to
the President, December 22, 1995 (Ex. 23); Fax Cover Sheet from Ann Braziel to
Karen Hancox with attached call sheets, March 7, 1996 (Ex. 24).
17
�contacted those individuals and, if so, what had been the results of the telephone calls. The results
39
of this project are outlined in the "Statement of Jerome 0. Campane," dated October 28, 1997.
As can be seenfromMr. Campane's statement, and the referenced letter dated October 21,
1997 from White House counsel Charles F.C. Ruff to Michael J. Madigan, Chief Counsel for the
40
Special Investigation, it was ultimately determined that telephone calls were made from the White
House residence to six of the nine individuals circled on the October 18, 1994 call sheet. Two of
the individuals (Jenrette and Frost) listed in Ruff s letter were among the five persons who were
interviewed in connection with their contributions.
Of these individuals, the Committee was able to determine that the President had called and
solicited a contribution to the DNC from at least one - Richard H. Jenrette, Chairman of the Board
and Chief Executive Officer of The Equitable Companies, Incorporated. Mr. Jenrette was
interviewed by telephone by the Committee, and testified before the Committee at a hearing on
October 29, 1997.
Jenrette testified that he received a telephone call from the President on October 18, 1994,
41
and that the President requested his assistance in raising two million dollars from forty friends.
Jenrette agreed to collect $50,000 to donate to the DNC as his share of that two million dollar goal.
In his orders to fulfill his $50,000 commitment, Jenrette wrote a personal check for $10,000 to the
DNC and collected an additional $40,000frombusinesses he helps manage, and then forwarded all
39
Statement of Jerome O. Campane, October 28, 1997 (Ex. 25).
40
Letter from Charles F.C. Ruff to Michael J. Madigan, October 21, 1997 (Ex. 26).
41
Testimony of Richard Jenrette, October 29, 1997, pp. 3-6.
18
�42
checks to the President on October 24, 1994.
In a letter accompanying the checks, Jenrette
described in detail his conversation with the President, especially the fact of the President's
solicitation. Jenrette provided the Committee copies of the five checks he collected in response to
43
the President's solicitation.
Later that day, White House counsel Ruff, along with his assistants Lanny A. Breuer and
Michael X. Imbroscio, testified before the Committee. In response to a request from Chairman
Thompson, Ruff agreed to compare entries in memoranda (referred to as a 'diary') regarding
President Clinton's activities to White House telephone logs to determine whether the President had
44
made other fund-raising telephone calls.
On November 17, 1997, Chief Counsel Madigan received a letter from Breuer, which set
forth the result of that work. According to that letter, the White House counsel's office was able to
determine that the President placed three other calls to individuals listed on DNC call sheets.
According to Breuer's letter, the White House could not determine that funds were raised as a result
45
of any of these calls. The Committee determined that the President's calls had all been made from
the White House residence.
Later in November, the Committee received documents which
42
Id.
43
Id ; Checks drawn on accounts of The Equitable Companies Incorporated, The
Equitable, Richard H. Jenrette, Alliance Funds Distributors, Inc., and Donaldson,
Lufkin & Jenrette, Inc. (Ex. 27).
44
Testimony of Charles F.C. Ruff, October 29, 1997, p. 220.
45
Letter from Lanny Breuer to Michael J. Madigan, November 17,1997 (Ex. 28).
19
�suggested that other White House officials may have made telephone calls soliciting funds for the
DNC.
46
46
This document, produced by the DNC in late November, after the Committee's
hearings concluded, reflects plans to have Ickes make fund-raising telephone calls
for significant amounts of money to a number of labor leaders. Because Ickes had
already been deposed and had testified before the Committee in public session,
the Committee never had the opportunity to ask him about the document.
Excerpts from October 11. 1996 DNC Memorandum:
Union
Caller
Request/Action Item
AFSCME
Harold Ickes
Reminder call. Rosenthal suggests
that AFSCME will hold $ 100,000 to
$200,000 for distribution to
coordinated campaigns "at the end."
Harold should confirm this.
AFT
Harold Ickes
List to be prepared by Jill Alper and
Jim Thompson for specific request.
Firefighters
Harold Ickes
Ask for $100,000 with list prepared
by Jill Alper and Jim Thompson . . .
Laborers
Harold Ickes
At the end of June, the Laborers had
$1 Million in the PAC account; ask
for contributions with list prepared
by Jill Alper and Jim Thompson . . .
Memorandum from Charlie Baker to Craig Smith, October 11, 1996 (Ex. 29).
The Committee's investigation has shown that at least two of these organizations
made contributions to the DNC after October 11, 1996. To the extent that Ickes
participated in effort cultivate potential donors, questions arise concerning 5
U.S.C. § 7323(b), prohibiting fund-raising by such employees. In fact, if Ickes
made the telephone solicitations that were the subject of the DNC's October 11,
1996 memorandum, quoted above, it would appear that he violated the criminal
provisions for the Hatch Act, prohibiting a federal employee from soliciting any
contributions at any time from any location. The Committee strongly
recommends further investigation of these matters.
20
�The Justice Department's Investigation
As discussed, the Attorney General refused to recommend the appointment of an independent
counsel to investigate the Vice President's telephone calls in April 1997, primarily due to her
assumption that only soft money was raised by those calls. The Committee's investigation, which
began long after the Justice Department's, had proven these assumptions incorrect by August 21,
1997, the date when Sandler testified to the Committee of his knowledge that the calls had raised
hard money.
In fact, even a consideration of evidence in the public domain should have caused the Justice
Department to realize that its assumptions were incorrect. This became clear on September 3,1997,
when an article in The Washington Post, based on information available to the public, determined
that the Vice President's telephone callsfromthe White House had raised $120,000 in hard money
47
for the DNC. The article set forth facts suggesting that at least 8 of the 46 donations that resulted
from the Vice President's calls were deposited into hard money accounts. One donor to whom the
reporter spoke stated that the call "was clearly focused on the reelection campaign of Clinton and
48
Gore," an impression consistent with the Vice President's own recollection of the nature of his
49
calls. There is no question that the Justice Department had not made any inquiry to determine
47
Bob Woodward, "Gore Donors' Funds Used as 'Hard Money,'" Washington Post.
Septembers, 1997, p. A l .
48
Id.
49
See supra, note 7 and accompanying text (discussing Vice President's
characterization of the content of his phone calls at March 3,1997 press
conference).
21
�whether the funds raised by the Vice President's telephone calls were hard money, despite the Justice
Department's novel view that the answer to that inquiry determined the legality of the solicitation.
"The first I heard of it was when I saw the article in 'The Washington Post,' Reno said .... It is my
50
understanding that is the first time that the public integrity section learned of it, as well." In these
circumstances, the public and the Congress are justified in questioning the competency and
51
credibility of the Justice Department's investigation.
50
Roberto Suro, "Justice Did Not Review Legality of Gore White House
Solicitations," Washington Post. September 6, 1997, p. A l .
51
Indeed, the Attorney General adopted a tortured interpretation ofthe Independent
Counsel Act, one which no prior Attorney General has adopted for the precise
reason that the statute cannot be so read. According to published reports, the
Attorney General will not begin an investigation of whether a covered person has
violated the law until specific and credible information has been presented to her
that such a violation has occurred, even though a prosecutor may begin an
investigation into anyone's conduct based on any information she receives. See
Susan Schmidt & Roberto Suro, "Troubled From the Start: Basic Conflict
Impeded Justice Probe of Fund-Raising," Washington Post. October 3, 1997, p.
A l . In short, she took the unprecedented position that unless she is presented
with sufficient evidence that would justify opening a preliminary investigation
under the independent counsel law, then she would not investigate the actions of
covered persons to see whether in fact specific and credible evidence of
wrongdoing existed. Consequently, the Justice Department's interpretation of the
Independent Counsel Act produced the incongruous result that it became harder to
investigate a covered person under that statute for wrongdoing than to investigate
non-covered persons for potentially crimes generally. Obviously, this
interpretation confers an immunity from investigation that non-covered persons
do not enjoy; if the Justice Department will not look for evidence of wrongdoing,
then no independent counsel will be appointed to fulfill that statutory role, unless
some third party presents specific and credible evidence of a criminal act by a
covered person. This result hardly fulfills the intent of the Independent Counsel
Act, which was designed to make sure that an authority not beholden to the
President could investigate any allegations of wrongdoing against high-level
officials.
22
�Prodded by the newspaper article, the Attorney General commenced a preliminary
investigation into whether an independent counsel should be appointed to investigate the Vice
President's fund-raising calls on October 3, 1997. On December 2, 1997, the Attorney General
notified the United States Court of Appeals for the District of Columbia Circuit, Independent
Counsel Division, that the Department of Justice had concluded its preliminary investigation, and
that she had determined that there were "no reasonable grounds to believe that further investigation
is warranted of allegations that the Vice President violated Federal law, 18 U.S.C. § 607, by making
fund-raising telephone calls from his office in the White House." In her notification, the Attorney
General stated the.basis for her determination:
My conclusion is supported by two
independent dispositive grounds. First, the evidence
that the Vice President may have violated Section 607
is insufficient to warrant further investigation.
Second, even if the evidence suggested a possible
violation of law, established Department of Justice
policy requires that there be aggravating circumstances
before a prosecution of a Section 607 violation is
warranted. There is no evidence of any aggravating
circumstances in this matter.
52
After recounting the factual and legal background for the preliminary investigation and
outlining the scope of the inquiry, the Attorney General's notification outlined the results of the
investigation. The Attorney General acknowledged that the fact that DNC contributions were
deposited to "hard" money accounts raised the "plausible inference" that the Vice President may
have asked the donor to make a hard money contribution. In this regard, the Attorney General
addressed the significance of one of the series of memoranda from Ickes and Marshall which were
52
Ex. 2, p. 1.
23
�directed to the President and the Vice President. This memorandum described the DNC's "splitting"
practice whereby the first $20,000 of money received annually from an individual donor would be
allocated to the DNC's hard money accounts, and only subsequently would additional sums raised
from those individuals be deposited into "soft" money accounts.
According to the Attorney General's notification, the Vice President stated in an interview
with Justice Department attorneys or FBI agents that he did not recall having seen the memorandum,
and that he tended not to read Ickes' memoranda that would be discussed at meetings. The Attorney
General concluded, however, that even if the Vice President had seen the memorandum, it would
have significance- only if it could be shown that the Vice President had independent, detailed
knowledge for the DNC's allocation or "splitting" practices. The notification states:
It is my conclusion that the memorandum,
standing alone and without independent knowledge
of the splitting practice, cannot reasonably be read as
putting anyone on notice that the DNC was engaging
in a practice of splitting contributions without the
donor's consent. Therefore, even if the Vice President
read the Marshall memorandum, it is my conclusion
that there is no evidence on which to base a conclusion
that the Vice President was aware ofthe DNC practice,
and thus may have been soliciting contributions
knowing that a portion of some contributions would end
up in hard money accounts."
The Justice Department also attempted to ascertain whether, in the course of his solicitations,
the Vice President had, in fact, solicited hard money. The notification states that the FBI
interviewed more than 200 of the 216 prospective donors identifiedfromcall sheets prepared for the
Vice President by the DNC. Of this number, the FBI was able to identify 45 who recalled actually
"
Id. at p. 10.
24
�receiving a telephone call from the Vice President during the period of late 1995 to mid-1996 in
which political contributions were discussed. According to the notification, "[n]one of these 45
persons state that the Vice President explicitly or implicitly asked them to give money to the DNC's
54
federal account or to any federal political campaign."
Accordingly, the Attorney General
concluded:
It is my view that there are no further grounds
to investigate whether any of these calls violated
Section 607 on the mere grounds that a portion of the
subsequent contributions were deposited into hard money
accounts. There is no evidence that the Vice President
was aware that part for the donations would be deposited into
hard money accounts, and the donors' own descriptions of
the solicitations makes it clear that they interpreted the
solicitations as being for soft money.
55
Beyond her conclusions relating to the Justice Department's factual investigation, the
Attorney General also rested her determination not to seek an independent counsel on the grounds
that Justice Department policy would, in any event, preclude a prosecution in the absence of
"aggravating circumstances" not presented in this case. The authority cited in the notification for
54
Id. at p. 13. The Attorney General's notification did not mention 11 C.F.R. §
102.5(a)(3), which states that if a federal campaign is referenced, the solicitation
will be presumed for federal election law purposes to be hard money unless the
solicitor makes an explicit statement that the funds are to be deposited into the
soft money account. Nor did she discuss the Vice President's own statements at
his March 3, 1997 news conference, in which he repeatedly made reference to his
making telephone calls on behalf o f t h e campaign" or "our campaign." A
reference to the use of the money for a media campaign is not the same as an
explicit disclaimer that the funds would be accounted for as soft money,
particularly given the Committee's conclusion that these advertisements were in
fact Clinton-Gore campaign advertisements.
55
Id. at p. 14.
25
�the Attorney General's reliance on this factor is a provision of the Independent Counsel Act, 28
U.S.C. § 592(c)(1)(B), which states:
In determining whether reasonable grounds exist to
warrant further investigation, the Attorney General shall
comply with the written or other policies of the Department
of Justice with respect to the conduct of criminal
investigations.
Relying on this authority, the Attorney General observed:
A number of different aggravating factors are
mentioned in the Departmental records concerning Section
607. They include, in addition to coercion, a demonstration
of specific intent to flout the law by one who has been put on
notice of its requirements; a substantial number of violations;
a substantial misuse of governmental resources or
property in conjunction with the prohibited solicitations;
and a substantial disruption of govemment functions
resulting from the solicitations.
We have conducted, as is explained above, an
extensive investigation of the Vice President's telephone
solicitation calls; and I find no evidence in the investigative
results that any of these aggravating factors is present.
There is no evidence that the Vice President was specifically
aware of the prohibitions of Section 607, and no evidence
that he was warned that his conduct would be in potential
violation of that or any other statute. There are at most five
telephone calls, even if we could draw every conceivable
speculative inference against the Vice President, that could
be constmed as hard money solicitations, and hence
potential violations for the law. The bulk of his calls were
not charged to the govemment, and the few that were have
been reimbursed. There is no suggestion that either the Vice
President or any of the few staff members who were involved
in these telephone solicitations neglected their official duties
as a result.
Beyond these factors that have been specifically
identified in Department of Justice records as potential
aggravating circumstances in a Section 607 case, I am
26
�unable to identify any other factors in this case that might
properly be regarded as aggravating.
56
•
Thus, the Attorney General concluded:
In short, the preliminary investigation has
established that, even if the Vice President were found to
have technically violated Section 607, there is no evidence
suggesting the presence of any aggravating factors of the
sort that might warrant consideration of prosecution under
established Departmental policy. Furthermore, I am unable
to identify any way in which further investigation might
lead to development of evidence of aggravating factors in
this case. Therefore, in light of the clearly established
policy of the Department of Justice that aggravating factors
are required before prosecution of a Section 607 matter can
be considered, it is my obligation under the Independent
Counsel Act to close this matter without seeking the
appointment of an independent counsel.
57
The Committee's Evaluation ofthe Legality of the Vice President's Phone Calls
The Committee believes that an independent counsel should be appointed to review a whole
range of possible illegalities in connection with fund-raising in the 1996 federal election campaigns,
including the telephone calls, to determine whether high-ranking federal officials violated federal
campaign finance laws, and to make such a determination through a process that would command
public respect.
56
Id. at pp. 27-28. A number of these conclusions are questionable. The fact that
the Vice President declined to make fund-raising telephone calls from the White
House in 1994, when he made such calls from the DNC, but did so in 1996,
suggests that he indeed was specifically aware of the prohibitions of section 607.
In addition, if the statute is not in fact limited to the raising of "hard money," as
discussed below, then the Vice President made 52 such calls that may have raised
as much as $795,000, certainly a "substantial number of violations."
57
Id. at p. 28.
27
�The primary federal criminal statute implicated by the fund-raising telephone calls is 18
U.S.C. § 607(a). The predecessor statute to current 18 U.S.C. § 607 wasfirstenacted in 1883 as part
of the Pendleton Act. Although telephones were new in 1883, the statute has not been allowed to
fall into disuse as modem communications developed. It was amended in 1980, and its existence
is both a known and constant reality for all members of Congress. The Committee concludes that
despite several arguments advanced to the contrary, telephone calls made by any person from an
official area of the White House to solicit campaign contributions violate the express prohibition of
section 607.
Vice President Gore stated at his press conference that no law prevented the President or Vice
President, as opposed to all other federal employees, from raising federal campaign contributions
58
from the White House. The Committee disagrees. On its face, the plain language of section 607
applies to all federal officers, indeed, to "any person" who violates the statute, including the
President and Vice President. Nothing in the legislative history or any court decision excludes the
president or vice president from its scope. Nor has any court case held either of these officials
exempt from any generally applicable federal criminal statute. In addition, the Attorney General's
April 14, 1997 letter declining to seek an independent counsel in response to the letter sent her by
Senate Judiciary Committee Republicans does not make the argument that these officials are exempt.
Because such an exemption would have been a dispositive response to a request for an independent
counsel, apparently the Attorney General was not then prepared to take the position that the
President and the Vice President are excluded from the operation of section 607.
58
Ex. 6, pp. 2-3.
28
�Nonetheless, more supports this conclusion than the statutory language and inferences from
the Department's failure to raise the argument. In 1979, the Justice Department's Office of Legal
Counsel issued an opinion which concerned whether the predecessor statute to section 607 was
violated when President Carter invited about 20 private persons to a dinner in the Family Dining
59
Room on the first floor of the White House, where some were solicited for campaign contributions.
In that opinion, the Department found that the term in the statute "no person" (now "any person")
was "broadly inclusive." Similarly, the statute then, as now, by reference to section 603, referred
to "an officer or employee of the United States or any .department or agency thereof, or a person
receiving any salary or compensation for services from money derived from the Treasury of the
United States
" That opinion found that the intent of Congress enacting the original 1883 statute
was that the "President [and a fortiori the vice president]. . . be included among the 'officers
governed by the bill.'" The Department concluded that since averting coercion to contribute was
the goal of the statute, then "[p]articularly where only criminal penalties were provided rather than
provision made for discharge or removal of an offending official, policy reasons for prohibiting such
abuses of power by the president as much as by any other Govemment official are clearly present."
The Justice Department's views cannot be squared with Vice President Gore's claim that the statute
does not apply to him or to President Clinton.
The Committee also concludes that the Attorney General erred in concluding that section 607
applies only to the raising of "hard money." Section 607 applies only when "contributions" within
the meaning of the Federal Election Act of 1971 are solicited or received in a federal building.
59
"The President -- Interpretation of 18 U.S.C. § 603 as Applicable to Activities in
the White House," 3 Op. O.L.C. 31 (1979).
29
�Section 607 references the definition of "contribution" contained in section 301(8) of the FECA.
Subject to various exceptions that do not include funding for media advertising, that legislation
defines the term "contribution" to mean "any gift, subscription, loan, advance, or deposit of money
or anything of value made by any person for the purpose of influencing any election for Federal
office...." Such definition does not permit "contribution" to refer only to "hard" and not to "soft
money," and the Attorney General cited no court case for her interpretation for the statute.
Even if the statutory definition were unclear, there are two reasons why "contribution" under
the FECA, as referenced in section 607, cannot be limited to."hard money." First, the FEC does not
equate "contribution" with "hard money." In its view, when coordinated with a candidate, a party's
"electioneering" activity" is subject to regulation as a "contribution." Although the Attorney
General purported to agree that "[ejlectioneering message" is the test when determining whether an
advertisement constitutes a "contribution," her April 14, 1997 letter erroneously appears to equate
60
"electioneering message" with "express advocacy." In actuality, the FEC defines "electioneering
message" more broadly than express advocacy to mean statements "designed to urge the public to
61
elect a certain candidate or party." The advertisements run by the DNC for which Vice President
Gore solicited funds contained electioneering messages, and because oftheir coordination with the
candidate, were "contributions" within the meaning of the FECA and section 607. "Express
advocacy" must be financed with hard money. By contrast, the FEC has determined that an
60
61
Ex. 8, p. 7.
See FEC Advisory Op. 1985-14, 2 Fed. Election Camp. Fin. Guide (CCH) 1 5819
at 11,185 (April 12, 1985); FEC Advisory Op. 1984-15; FEC Advisory Op. 198423; FEC Advisory Op. 1984-62; MUR 3608; MUR 3918.
30
�advertisement can be a "contribution" if it contains an electioneering message. To the FEC, and
contrary to the Attorney General's letter, the two terms "hard money" and "contribution" are simply
not synonymous.
Under well-established administrative law principles, the FEC's view that "contributions"
include soft money used to fund electioneering messages prevails over the Attorney General's
position that "contributions" are limited to hard money. Where a statute is ambiguous, and Congress
charges a federal regulatory agency to interpret the statute, the agency's interpretation governs the
meaning of the ambiguous statute, even where another party has a plausible view of the statute.
Chevron Corn, v.-Natural Resources Defense Council. 467 U.S. 837 (1984). The Supreme Court
has held that the FEC "is precisely the type of agency to which deference should presumptively be
afforded." Federal Election Commission v. Democratic Senatorial Campaign Cmte.. 454 U.S. 27,
37 (1981). Thus, the Department of Justice is precluded as a matter of law from interpreting
62
"contribution" to mean "hard money."
A second reason why "contributions" under the FECA are not limited to "hard money" is
that, under the Attorney General's view, the statute would be rendered meaningless. The FECA's
62
Under Chevron, statutory terms that are unambiguous apply without regard to the
interpretation provided by an administrative agency. If this prong of Chevron
were to apply, the FEC's view of the meaning of "contribution" would also
govern, since it is consistent with the plain meaning of the statutory definition of
"contribution." S e Colgrado Rgpublican Campsign C m , v, FEC,
e
o m
U.S.
, 116 S. Ct. 2309, 2316 (1996) (recognizing that the "FECA permits
unregulated 'soft money contributions to a party for certain activities, such as ....
voter registration and ""get out the vote' drives.... Unregulated 'soft-money'
contributions may not be used to influence a federal campaign, except when used
in the limited, party building activities specifically designated in the statute"
(emphasis added)). As noted above, such limited activities do not include general
media advertising.
31
�prohibitions on various forms of illegal campaign funds are all triggered by those funds constituting
"contributions." For instance, the FECA prohibits campaign "contributions" greater than $1000 per
election, 2 U.S.C. § 441a(l); foreign "contributions," 2 U.S.C. § 441e; "contributions" made in the
name of another, 2 U.S.C. § 44If; and cash "contributions" in excess of $100, 2 U.S.C. § 44Ig.
Under the FEC's interpretation of "contribution," soft money from these prohibited sources would
be illegal. The DNC apparently agrees with the FEC that soft money from these sources is illegal;
otherwise, it would not have returned $2.8 million in soft money that came from foreign and/or
laundered sources.
- -
Under the FEC's view, "contribution" has the same meaning each time it appears in the
FECA. This approach is consistent with the "normal rule of statutory construction" that "identical
words used in different parts of the same statute are intended to have the same meaning." Gustafson
v. Allovd Corp.. 513 U.S. 561 (1995). By contrast, under the Attorney General's interpretation of
"contribution," all the sums the DNC returned would have been legal because they were "soft
money" and therefore fell outside the various FECA "contribution" prohibitions. It would be legally
incoherent that for some purposes in the same statute, "contribution" means hard money and for
others means "soft as well as hard money." Since "contribution" must have the same meaning each
time it appears in the FECA, then under the Attorney General's view, it logically follows that it
would be legal to raise foreign soft money in the name of another in unlimited cash sums. The
Committee rejects an interpretation of "contribution" that would lead to such absurd results.
Even if the Attorney General's view ofthe statute were correct, the Vice President in fact
raised hard money. The calls were made on a Clinton-Gore campaign credit card, which obviously
implies that the calls were made for the purpose of advancing these candidates. The letters he sent
32
�to donors following his calls state, "President Clinton and I thank you for your continued support
and contribution to the Democratic National Committee. We appreciate your dedication to our
63
Administration and your help at a time when needed." This ties the donations to the Clinton-Gore
Administration and its campaign for reelection. One letter of the Vice President's, to Frank Pearl,
64
reads, "President Clinton and I thank you for your continued support of our Administration." This
letter makes no reference to the DNC at all, and could not possibly be read as having raised soft
money.
In addition, the two memoranda cited above from Harold Ickes to the President, Vice
President, and others make clear that the first $20,000 of donations would be treated as "hard
money" and the rest deposited in non-federal accounts because of the campaign's shortage of federal
funds. Moreover, the FEC regulation cited above states that if the solicitor mentions a particular
candidate or campaign and does not expressly state that the funds being solicited will be deposited
in a "soft money" account, then the money donated will be presumed to be "hard money." Thus,
section 607 is not limited to "hard money," and even if it were, the Vice President raised hard
money.
For section 607 to apply, the solicitation must occur in a room occupied by federal employees
performing official duties. The Attorney General's April 14, 1997 letter declined to appoint an
independent counsel in the absence of evidence that the vice president made calls from official
63
Letter from Al Gore to Michael Adler, Dec. 11, 1995; Letter from Al Gore to
William Dockser, Feb. 5, 1995; and Letter from Al Gore to Robert L. Johnson,
Feb. 5, 1996 (Ex. 30).
64
Letter from Al Gore to Frank Pearl, Feb. 9,1996 (Ex. 31).
33
�places in the White House. The 1979 Office of Legal Counsel opinion exonerated President Carter
because the solicitation that prompted that opinion occurred in the family dining room. In OLC's
view, the statute did not apply to solicitations in the private residence and other areas of the White
House. OLC opined that "the statute is notframedin terms of property owned or held by the United
States; it rather adopts a functional test, focusing on areas used by Federal personnel while they are
conducting the Government's business." OLC's views therefore mean that section 607 would apply
to calls made from the official office of the Vice President. Sandler's deposition testimony made
clear that this is where Vice President Gore made his calls. The record also establishes that President
Clinton made his few calls from the White House residence, so section 607 would not apply to his
calls.
Although the Vice President went to great lengths at his press conference to state that he did
not solicit any federal employee, and that he did not solicit anyone who was in a federal building,
those two issues are irrelevant to determining whether section 607 has been violated. On the face
of the statute, this is irrelevant. As the statute unambiguously reads, it is a criminal offense to solicit
or receive contributions in a federal office. The 1979 Office of Legal Counsel opinion on which the
Attorney General relied for her view that the statute only applies to official areas of the White House
states that "solicitations of private citizens fall within the scope" of section 607. And the Justice
Department's prosecutorial manual states, "Section 607 makes it unlawful for anyone to solicit or
receive a contribution for a federal election in any room, area, or building where federal employees
are engaged in official duties. . . . The employment status of the parties to the solicitation is
34
�immaterial; it is the employment status of the persons who routinely occupy the area where the
65
solicitation occurs that determines whether section 607 applies."
If section 607(a) applied only to the solicitation of federal employees, then section 607(b)
would be meaningless in the federal criminal code. Under that provision:
The prohibition in subsection (a) shall not
apply to the receipt of contributions by persons on the
staff of a Senator or Representative
provided, that such
contributions have not been solicited in any manner which
directs the contributor to mail or deliver a contribution to
any room, building, or other facility referred to in
subsection (a), and provided that such contributions are
transferred within seven days of receipt to a political
committee....
As section 602 already makes it illegal for members of Congress to solicit federal employees, and
section 603 prohibits members of Congressfromsoliciting or receiving contributionsfromtheir own
employees, the exemption contained in section 607(b) would be unnecessary if Congress believed
that section 607(a) merely applied to the receipt of contributions from other federal employees in
their Congressional offices. Congress must have believed that without this exemption, funds
received in such offices from non-federal employees would nonetheless fall within the scope of
section 607. It is a basic rule of statutory construction that statutes should be read so as not to render
65
In neither her April 14,1997 letter to Senator Hatch nor her December 2, 1997
notification to the Special Division of the United States Court of Appeals for the
District of Columbia Circuit did the Attorney General make the argument that
section 607 did not apply to solicitations of non-federal employees by federal
employees in areas where official duties are performed. Since such an argument
would have been dispositive of the legality of the calls, it is clear that the Attorney
General would have relied on it if there were a basis for doing so.
35
�66
other parts of that statute surplusage. A reading that made section 607 apply only when federal
employees were solicited would render sections 602, 603, and 607(b) redundant. Thus, it is legally
irrelevant that the Vice President's calls were not made to federal employees, since he was in a room
in a federal building in which official duties are performed at the time he made those calls.
Finally, it is also incorrect that "there is no controlling legal authority" that section 607
renders criminal the telephone calls the Vice President made. It is true that no case has ever been
brought under section 607 for soliciting a non-federal employee from a federal building. But in a
statutory criminal law system such as ours, federal criminal statutes apply according to their
language as soon as they are enacted. Thus, the statute itself is the "controlling legal authority" that
prohibits federal employees from making telephone calls to non-federal employees from official
areas of federal buildings. The notion that a statute can apply to a particular set of facts only when
67
a court says that it does so is a feature of a common law criminal legal system, not ours.
66
"Judges should hesitate ... to treat [as surplusage] statutory terms in any setting,
and resistance should be heightened when the words describe an element of a criminal offense."
Bailev v. United States. 516 U.S. 137 (1995). quoting Ratzlaf v. United States. 510 U.S. 135
(1994)(brackets in original).
67
Thus, the only Supreme Court decision on the meaning of section 607, United
States v. Thaver. 209 U.S. 41 (1908), is irrelevant to the facts here at issue. In
Thayer, the defendant was outside the federal building when he mailed
solicitations of campaign contributions to employees at their federal building.
Some of the employees read those letters in their offices. In his defense, Thayer
argued that since he was not in the federal building, he could not have solicited in
the building. Unsurprisingly, the Supreme Court rejected that view. As the
Justice Department manual correctly notes, the holding in the case was that the
statute applies to solicitations made by mail as well as in person. The case simply
does not address the situation in which the person in the federal building is
making a call outside the building, and the case does not in any way constrict the
scope of the statute.
36
�The Committee therefore concludes that an independent counsel should be appointed to
evaluate the ample credible evidence of legal violations. Also, the Committee believes that the
making of these calls was inappropriate for our nation's highest elected officials. This amounted to
unsavory and unseemly activity that lessens the dignity of these offices, offices that should command
the greatest respectfromtheir occupants andfromcitizens. In addition, even without containing any
words that could be construed to amount to coercion, it would defy reality not to recognize that the
recipients of such calls, many of whom had business interests, would find it difficult to tum down
requests for fundsfrompersons who exercise such vast power. The Committee hopes that all future
Presidents and Vice Presidents will refrainfrommaking direct telephone solicitations for campaign
contributions.
Moreover, the decision does not stand for the proposition that the
solicitation occurs where the person solicited is located. The Court pointed out
that "[t]he time determines the place [of the solicitation]." Thus, if the letter is
written and mailed, but the letter bums, there is no solicitation in the federal
building. Only when the solicitation reached the employee in the federal building
did the prohibited solicitation occur. 209 U.S. at 43. In fact, until the time the
employee read the solicitation letter, no solicitation occurred. In Thaver. the
Court thus held that if the employee received the solicitation letter in a federal
building, but did not read the letter until he left the building, no solicitation
occurred: i.e., the time of the solicitation (when the employee read the letter)
determined whether the solicitation occurred in a federal building (thus, no
solicitation occurred if the employee did not read the letter until after leaving the
building). Here, by contrast, at the time the Vice President made his solicitations,
they occurred from a federal building's official space.
37
�White House Vetting of Individuals with Access to the President
Introduction
Since stories of its campaign finance improprieties first surfaced in the fall of 1996, the
Clinton Administration has been forced to acknowledge again and again that it was inappropriate
for particular unsavory individuals to have entered the White House or to have attended outside
1
political functions involving the President or the Vice President. The repeated instances of
White House failure to weed out problematic prospective invitees in advance of their arrival
suggested at least the existence of a fundamental deficiency in the White House's vetting
process. The Committee has determined that the problem was, in fact, even more severe.
Testimony of individuals familiar with the White House's creation and evaluation of its guest
lists revealed that a process for vetting proposed attendees was essentially nonexistent. White
House officials testified that they relied upon the United States Secret Service and the DNC to
vet invitees to or attendees at political events. DNC officials likewise testified that they too
principally relied upon the Secret Service to identify and remove undesirable individuals. The
i
See, e.g.. Deposition of Nancy Hernreich, June 20,1997, pp. 67-68 (conveying President
Clinton's opinion that the attendance with Johnny Chung of a delegation of Chinese
businessmen at a March 11, 1995 White House radio address was "inappropriate" and
that the White House "shouldn't have done that"); Kevin Sack, "From Restaurateur to
Intimate at the White House," New York Times, Jan 4. 1997, p. A8 ("Mr. Trie escorted a
leading Chinese arms dealer [Wang Jun] to a small gathering with Mr. Clinton. The
President has since described the arms dealer's presence as 'clearly inappropriate.'");
Glenn F. Bunting & Ralph Frammolino, "Cash-for-Coffee Events at White House
Detailed; Politics: Zeal to Raise Funds Transformed Once-modest Sessions into Major
Money-makers, Accounts Indicate," Los Angeles Times, Feb. 24, 1997, p. A l ("White
House spokesman Davis also has conceded that it 'was not appropriate' for the president
to sip coffee with Eric Wynn just a few months after his second conviction for
penny-stock fraud.").
�Secret Service, however, is charged only with identifying potential physical threats to the
President, and makes no other determination as to the overall suitability of invitees. Whether
through gross negligence or conscious design, the result of the absence of an organized vetting
system was the same: too many unsavory individuals were allowed entrance to the White House
and access to President Clinton.
White House Vetting Procedures During the 1996 Election Cycle
The White House Political Affairs Office was the designated recipient of the DNC's
proposed guest lists for White House fundraising coffees and other politically motivated events
2
attended by the President or Vie President. The Political Affairs Office was also supposed to
serve as the point of contact for the White House's system for vetting guests at political events to
3
ensure their "suitability." Former Deputy Political Director Karen Hancox testified that she
received the list of guests selected by the DNC for upcoming White House events by fax from
2
The White House Social Office played the primary, but essentially "functionary" role in
the creation of guest lists for White House events. See Deposition of Ann Stock, June 12,
1997, p. 21. Ann Stock, who headed the Social Office, explained that representatives of
the Political Affairs and other offices within the White House routinely submitted to
Stock's office the names of individuals they recommend for invitation to unspecified
future White House events, and each specific event's final guest list was compiled from
the running list of submitted names. Id. Stock testified that her office played no role in
vetting potential guests or deciding "who comes or who doesn't come." Id. She said that
she assumes that prospective guests are vetted by the offices submitting the guests'
names, but that she "could [not] care less" how the vetting is done. Id. at pp. 131-32.
She testified that it is her understanding that an invited guest's criminal background
would be caught by the Secret Service, which does a final review of an event's guest list
before any guests are admitted to the White House. Id. at pp. 133-34; see also discussion
of the role of the Secret Service, infra, footaotes 18-21 and accompanying text.
i
See Deposition of Karen Hancox, June 10,1997, pp. 55-56.
2
�4
Richard Sullivan, the DNC's National Finance Director. Hancox's typical practice involved
5
absolutely no vetting of Sullivan's suggestions. In fact, she testified that she "rarely ever
look[ed] at the list of names" submitted by Sullivan, and instead simply directed that the names
be forwarded to the appropriate offices for insertion into the President's briefing book and for
6
clearance by the Secret Service. Hancox took further steps only if Sullivan specifically
7
requested that she check on the suitability of a particular name on the DNC's list. In such an
event, Hancox would contact the appropriate authorities to determine whether the tentatively
proposed individual could remain on the guest list. Where the invitation of a foreign national
8
was at issue, the appropriate authority was the National Security Council ("NSC"). If the NSC
Deposition of Karen Hancox, June 9, 1997, pp. 52 (coffees); see also id. at p. 109
(overnights); id. at p. 113 (movie events at the White House); id. at p. 115 (state dinners).
Id., p. 53.
Id. at pp. 53-54.
See, e.g., id. at p. 70 ("Q: When would you call the NSC regarding attendees to coffees or
other events. A: If Richard would call me up and ask me about a name. Q: Was there
ever a time that you took it upon yourself to call the NSC regarding any attendees to any
of the coffee events or any events that Richard Sullivan sent you lists for? A: Not that I
ever remember, no." (emphasis added)); see also Deposition of Doug Sosnik, June 20,
1997, pp. 167-68.
See Deposition of Karen Hancox, June 9,1997, p. 101. Hancox could remember only
one instance in which she received a question about an prospective guest that was not
prompted by that individual's foreign nationality. On that occasion, Sullivan asked
Hancox to determine whether a particular individual was supportive of the President's
health care policies. Hancox recalls contacting the White House's Office of Public
Liaison to address Sullivan's concerns. See id at pp. 101-02.
�objected to the attendance of the proposed individual, Hancox's response was to contact Sullivan
9
and have him rescind the invitation.
Because the White House never raised "red flags" about his proposals unless he
"proactively asked about" particular guests, Sullivan understood that the White House "did not
conduct background checks" of his proposed guests, and that the obligation to weed out
10
unsuitable individuals rested primarily with the DNC. Sullivan, however, acknowledged a
carelessness in the DNC's own vetting, as he testified that he operated under the "false sense
11
. .. that truly bad things would have been picked up . . . by the Secret Service."
Sullivan
therefore suggested that the only category of potential guests that he felt the need to raise with
12
Hancox was "foreign nationals."
It is clear, however, that even foreign nationals did not necessarily receive proper scrutiny
under the White House's vetting "process." Hancox testified that Sullivan raised concerns about
13
a total of fewer than twelve individuals, and she has no recollection of discussing with Sullivan
See id. at pp. 104-05; see also Deposition of Doug Sosnik, June 20, 1997, p. 176.
Hancox also testified that the responsibility rested entirely with Sullivan and the DNC to
ensure that suspect individuals who had been identified and removed from an event on
one occasion did not accidentally reappear on a subsequent list. Deposition of Karen
Hancox, June 10, 1997, pp. 50-53, 62-63.
10
See Deposition of Richard L. Sullivan, June 4, 1997, pp. 104-05.
Deposition of Richard L. Sullivan, June 25, 1997, p. 85.
12
See Deposition of Richard L. Sullivan, June 4,1997, p. 109.
13
Deposition of Karen Hancox, June 9,1997, pp. 78-79; see also Testimony of Samuel R.
(Sandy) Berger, Sept. 11, 1997, p. 48 ("[T]here were a number, but not a huge number of
occasions in which the NSC was asked its judgment.").
�or the NSC the propriety of White House appearances by several prominent foreign subjects of
the Committee's investigation, including Arief Wiriadinata and a delegation of Thai businessmen
14
who accompanied Pauline Kanchanalak to a June 18, 1996 coffee. Moreover, Samuel "Sandy"
Berger, Assistant to the President for National Security Affairs, conceded to the Committee that
"[t]here obviously were some situations where foreign individuals . . . were invited to meetings
15
with the President where the NSC's judgment was not [sought]."
14
Deposition of Karen Hancox, June 9, 1997, pp. 72-74; see also the section of this report
on the activities of John Huang at the Commerce Department and the section on Coffees,
Overnights and other Fundraising Events, especially the discussion of Pauline
Kanchanalak and the June 18, 1996 coffee.
15
Berger testimony, p. 48. Berger also noted the President's determination that the existing
vetting procedures were inadequate, id. at p. 47, and explained that the NSC had adopted
procedures that would correct these inadequacies by requiring the input of NSC personnel
every time a foreign national is invited into the White House. Id. at pp. 72-73; see also
Memorandum from Samuel R. Berger to "All NSC Staff', June 13, 1997, pp. 1-3 (Ex. 1).
After receiving significant criticism for acceding to a DNC request for a photograph with
Eric Hotung, a Hong Kong businessman, British citizen and husband of a prominent
DNC contributor, Berger, in Ex. 1, also clarified NSC policy with respect to meetings
between NSC staff and individuals from outside of the U.S. govemment. After
promising in September 1995 to contribute $100,000 to the DNC, Hotung was granted a
meeting with Robert Suettinger of the NSC, and a photo opportunity with Berger. See
Memorandum from David Mercer to DNC Chairman Don Fowler, stating that "the
Hotungs ... will be contributing $100,000" and that "[w]e will be helping to set up a
meeting with the Hotungs at the [NSC]", Sept. 14, 1995 (Ex. 2); Schedule of Robert L.
Suettinger indicating a September 9, 1995 meeting with Eric Hotung (Ex. 3); electronic
mail message from Stanley Roth to Sandy Berger indicating that Fowler requested a
photo opportunity for the "fabulously wealthy" Hotung with Berger, Oct. 3, 1995 (Ex. 4).
Berger testified that he was not aware at the time of the photograph that the Hotungs were
contributors or even that the request was related to the Hotungs' contacts with the DNC.
Berger testimony, p. 24. Berger did acknowledge, however, that he knew that the request
originated with Fowler. Id.
�It is also clear that Sullivan was correct when he described as a "false sense" his ultimate
reliance upon the Secret Service to catch the unsavory individuals who fell through the cracks in
the White House's porous vetting system. As an initial matter, even the limited vetting
conducted by the Secret Service occurs only with respect to events held in the White House.
Hancox testified that with respect to events attended by the President that were held outside of
16
the White House, she would not even provide attendee lists to the Secret Service. In those
instances, Sullivan's unreliable inspection of the guest list for the inclusion of foreign nationals
17
served as the exclusive screen.
Colleen Callahan, the Special Agent in Charge of the Secret Service's White House
Division, also stated in an affidavit submitted to the Committee that the Secret Service plays no
18
role in determining the "suitability" of individuals for White House admittance.
Instead, the
Secret Service, which is responsible for the "physical security of the White House Complex and
19
Secret Service protectees within," seeks only to uncover "pertinent" criminal history of
individuals invited into the White House through a search for each invitee's name in a database
20
maintained by the National Crime Information Center. A criminal history does not necessarily
disqualify an individual from White House admittance. Only if the information uncovered by the
16
Deposition of Karen Hancox, June 10, 1997, pp. 9-10.
17
See id.
18
Affidavit of Colleen B. Callahan, Sept. 9, 1997, p. 1 (Ex. 5).
19
See id.
20
See id. at p. 3.
6
�database search "suggest[s] that the prospective visitor may be violent, dangerous or otherwise
pose a physical or security threat to a protectee or the White House Complex" will the Secret
21
Service limit or deny White House access. In other words, although the presence in the White
House of a nonviolent, unthreatening criminal is certainly inappropriate, this is not the type of
individual that the Secret Service would exclude.
The Lack of Proper Vetting Permitted a Series of Unsavory Individuals Access to the
President
As a result of the White House's admitted failure to properly vet its guest lists, several
unsavory individuals were allowed to enter the White House and to attend events with President
Clinton. The President's meetings with Ted Sioeng, Yogesh Ghandi, Roger Tamraz, and a
delegation of Chinese businessmen led by Johnny Chung are described in detail in other sections
22
of this report. The following is a summary of additional unsavory individuals whose White
House visits were permitted to proceed unimpeded.
•
Jorge Cabrera
In November 1995, Jorge Cabrera, a Cuban-bom U.S. citizen, made a $20,000
contribution to the DNC and attended a fundraising dinner in honor of Vice President Gore in
23
Miami. One month later, Cabrera attended a Christmas party at the White House and had has
21
See id. at pp. 3-4.
22
See the sections of this report on Ted Sioeng, Yogesh Ghandi, Roger Tamraz, and Johnny
Chung.
23
See Don Van Natta, Jr., "An R.S.V.P. to the President: Deep Regrets. I'm in Custody.'
New York Times, March 22, 1997, p. A l .
�24
picture taken with the First Lady.
At the time of Cabrera's White House visit, he had already
been convicted of two felonies and had served almost five years in prison. Cabrera pled guilty in
1983 of obstruction of justice for conspiring to bribe a grand jury witaess and again in 1988 for
25
26
filing a false income tax return. Both charges stemmed from arrests on drug charges. In
January 1996, Cabrera was arrested and charged with importing 6,000 pounds of cocaine into the
27
United States. He is presently serving a 19-year prison term.
•
28
Wang Jun
On February 6, 1996, Charlie Trie escorted a group of individuals including Wang Jun to
29
a White House coffee with President Clinton. Wang Jun's attendance at the coffee was
arranged primarily by Emest Green, managing director of the Washington, D.C. office of
30
Lehman Brothers and a prominent DNC fundraiser. Wang Jun is chairman of the China
24
See id.
25
See Anne Farris, "Secret Service Didn't Tell White House of Guest's Criminal
Background," Washington Post, Oct. 26, 1996, p. A14.
26
See id.
27
See Stanley Meisler, "Democrats Return Drug Smuggler's Check," Los Angeles Times,
Oct. 20,1996, p. A25.
28
See id.
29
See guest list for February 6, 1996 coffee with the President attached to "Coffee with
Supporters of the Democratic National Committee," Feb. 5, 1996, p. 2 (Ex. 6).
30
Although Green emphatically denied any role in Wang Jun's attendance at the February 6
coffee, see Deposition of Emest Green, June 18, 1997, pp. 269-70 ("I was not involved in
Wang Jun and coffees at the White House at a l l . . . . I was not involved at all in Wang
Jun and coffees."), the copy of Wang Jun's resume produced to the Committee by the
�International Trust and Investment Corporation ("CITIC"), afinancialand industrial
31
conglomerate reportedly controlled by the Chinese government. He is also the chairman of
32
Poly Technologies, a company that handles most of Communist China's arms exports. In 1996,
Wang Jun and other officials of Poly Technologies were implicated in a scheme to smuggle
thousands of Chinese-made machine guns and assault rifles to criminal elements in the United
33
States.
•
Eric Wynn
Eric Wynn attended a December 21, 1995 coffee at the White House with President
34
Clinton. At that time, Wynn wasfreeon bond pending appeal of his July 21, 1995 conviction
35
on thirteen counts of conspiracy, securitiesfraudand wire fraud. Wynn attended four
additional fundraisers with President Clinton in 1996, despite being arrested several additional
DNC indicates that its was transmitted to the DNC from a Lehman Brothers' fax
machine. Resume of Wang Jun (Ex. 7). Sullivan also testified that the DNC added Wang
Jun to the guest list for the coffee as a favor to Green. Testimony of Richard L. Sullivan,
July 9, 1997, p. 124. Finally, although Green did not attend the February 6 coffee, the
DNC attributed Green's $50,000 contribution on February 6, 1996 to the White House
coffee held on that day. See "DNC Finance Executive Summary," Oct. 17, 1996 (Ex. 8).
31
See Steven Mufson, "Chinese Firm Details Visit to White House; Arkansan is Cited as
Intermediary," Washington Post, March 18, 1997, p. A4.
32
See id.
33
See Howard Blum, "The Trail ofthe Dargon," Vanity Fair, December 1997, pp. 226-44
(discussing the discovery of a Chinese arms smuggling ring by U.S. Treasury agents).
34
See Bob Woodward & Charles R. Babcock, "Stock Manipulator Attended Coffee with
Clinton," Washington Post, Feb. 1, 1997, p. A l .
35
See id.
�times for offenses such as assaulting a police officer, resisting arrest, aggravated assault with a
36
motor vehicle and driving while intoxicated.
Conclusion
Whether by gross negligence or conscious design for fundraising purposes, the process in
place at the White House for the vetting of individuals granted access to the President was
incapable of keeping unthreatening criminals, inappropriate foreign citizens and other
disreputable characters out of the White House and away from the President. No White House
employees were specifically charged with evaluating guest lists submitted by the DNC for the
sorts of unsavory individuals who, in fact, later appeared at White House coffees and other
events with the President and Vice President. Instead, the White House left the responsibility
with the DNC, which took inappropriate comfort in the background checks performed by the
Secret Service, and therefore only haphazardly reviewed its lists for the appearance of foreign
nationals. As the Secret Service sought to weed out only those criminals who posed a physical
threat to the White House or the Secret Service's "protectees," convicted criminals that the Secret
Service deemed to be nonviolent or unthreatening were permitted to pass the White House gate
without comment. This was a system designed to fail, and it operated precisely as designed.
36
See Bob Woodward, "Felon Also Attended 4 DNC Events with Clinton," Washington
Post, Feb. 20, 1997, p. A4.
10
�JOHNNY CHUNG AND THE WHITE HOUSE "SUBWAY"
Introduction 1
Johnny Chung, a Taiwan-bom businessman and self-described "die hard Democrat," serves
as the Chairman and Chief Executive Officer of Automated Intelligent Systems, Inc. ("AISI") — a
2
California corporation based in Torrance. He became prominent as a DNC contributor and frequent
White House visitor during the 1995-96 election cycle. According to records of the FEC, Chung and
AISI began making substantial contributions to the DNC in August 1994 and continued such
3
contributions through August 1996. These Contributions during this two-year period totaled $
366,000." After stories began to appear in the press about Chung's activities, however, the DNC
returned all of this money, allegedly because he had provided the party with "insufficient
5
information" as to the source of the funds.
These DNC contributions helped Chung obtain access to the White House at least 49 times
6
between February 1994 and February 1996 — access that he used not only to further his interests
1
Letter from Johnny Chung to Doris Matsui, Jan. 4, 1995 (Ex. I).
2
See Biography of Johnny Chung (Ex. 2). AISI provides a fax broadcast service that can send faxes
simultaneously to thousands of locations.
3
See Chart of contributions by Johnny Chung and AISI, with attached checks (Ex. 3).
Id
5
See DNC press release dated June 27, 1997 (Ex. 4).
6
See White House Visitor Summary for Johnny Chung (Ex. 5); United States Secret Service
WAVES records for Johnny Chien Chuen Chung (Ex. 6). The WAVES records, it should be
noted, do not include some events that Chung is known to have attended. For example, these
WAVES records do not show Chung's attendance at the President's Radio Address on March 9,
1995. However, the White House produced a video tape and photograph contact sheet that
confirm his attendance.
�with foreign business clients, but also to sit in the vestibule of the First Lady's office and stare at
photographs of her. Though he had told DNC officials that he would be using the White House as
a means of entertaining his foreign clients, and though the National Security Council ("NSC")
regarded him as a "hustler," Chung was granted extraordinary access to the White House, and
especially the First Lady's office. There can be no question that Chung's contributions to the DNC
helped give him this access to the President and the First Lady. So close was the nexus between
Chung's donations and his visits, in fact, that White House officials actually collected money from
him in the First Lady's office in exchange for allowing him to bring a delegation of his clients to
White House events. This was, however, no surprise to Chung: as he phrased it, "[t]he White House
7
is like a subway: You have to put in coins to open the gates."
Johnny Chung's admiration for the First Lady
One of the reasons Chung spent so much time in the White House was his admiration for
First Lady Hillary Rodham Clinton. His first contact with the First Lady occurred at least as early
as April 1993, when she wrote Chung to thank him for the concern he had apparently expressed
8
9
during her father's illness. Chung and the First Lady apparently first met in Little Rock, Arkansas.
7
See Marc Lacey, "House Subpoenas Torrance Businessman," Los Angeles Times, Nov. 8, 1997,
p. A12.
LetterfromHillary Rodham Clinton to Johnny Chung, April 12, 1993 (Ex. 7). In a subsequent
letter written two weeks later, the First Lady wrote Chung to wish him luck with what she
described as his "innovative" fax broadcast business. See LetterfromHillary Rodham Clinton to
Johnny Chung, April 26, 1993 (Ex. 8).
According to Evan Ryan, special assistant to the First Lady's chief of staff, Chung once recounted
having met the First Lady in Arkansas. Deposition of Evan M. Ryan, Aug. 7, 1997, p. 57; see
also Ex. 7 (comment by First Lady that she hoped Chung enjoyed his visit to Arkansas).
�This attentionfromthe First Lady seemed to have sparked in Chung a remarkable fascination
10
with and admiration for her. Her chief of staff, Margaret A. ("Maggie") Williams, testified in her
deposition that Chung told her "how much he admired and respected" the First Lady and that he
11
believed that "her encouragement had been the turning point in his business."
As Chung's
admiration grew, on many of his visits to the White House he would simply sit in the vestibule of
the First Lady's office and stare at pictures of her, apparently without any other reason for being
12
there. Williams' assistant Evan Ryan, for example, testified that if Chung were "in the building"
13
visiting someone else, "he would stop by." The First La'dy's staff found these visits "disturbing,"
because Chung talked constantly during these visits — continually telling them about himself, his
14
business, and his admiration for the First Lady.
Williams, however, remained quite well disposed toward Chung. While she acknowledged
that he "could be irritating," she "didn't care how many times [Chung] wanted to come" to their
15
office. Rather, Williams felt strongly that
Chung be accorded respect in our office, and I realize I may have
pushed the limits, but my experience had been at the White House
that people of color and others in my view were not given overall the
10
Ryan, for example, testified that Chung told her that the First Lady "inspired him and he credited
that inspiration for getting his business and himself going." Ryan deposition, p. 57.
n
Deposition of Margaret Ann Williams, May 29, 1997, p. 154.
12
Williams deposition, pp. 158-59.
13
Ryan deposition, pp. 52 & 55.
14
Id, pp. 57-58.
15
Williams deposition, p. 158.
3
�kind of respect that white males were, and I decided I'm the boss of
this office. This is one office where I can run it the way I want to run
it, and the guy is genuinely, whether right or wrong, interested and
grateful to Mrs. Clinton and doesn't hurt, but he's a contributor to our
part [sic], and we are going to treat him as well as we would treat any
other irritable jerk who would show up.
16
Determined, therefore, to accord such a "contributor" the respect he deserved, Williams permitted
Chung to continue his visits.
Visit by Haomen Group
Chung may have admired the First Lady, but he was not above using his DNC contributions
— and Williams' indulgence — as a means to impress his business clients through displays of his
access to the President and First Lady. In a January 6, 1995 newsletter to the shareholders of AISI,
for example, Chung boasted of his political clout, claiming that he had "built up connections to
17
easily arrange visitations to the White House and meetings with the President." His activity in this
regard was well known to officials at the DNC. Indeed, Chung had even advised the DNC that his
foreign.business clients would be supporting the Democratic Party: in a letter to Doris Matsui in
January 1995, for example, Chung declared that over the next two years he would be "coordinating
a lot of visits from Asian business leaders to support [the] DNC."
18
16
Id. p. 168.
17
Letter from Johnny Chung to "All Shareholders," Jan. 6, 1995 (Ex. 9).
18
Ex. 1 (advising Doris Matsui of these plans); see also Letter from Johnny Chung to Richard
Sullivan, Dec. 14, 1994 (Ex. 10) (advising, in connection with visit of a Chinese businessman to
White House, that this businessman would "play an important role in our future party functions").
�One of the examples of White House access Chung cited in his January 1995 newsletter was
"the arrangement of a meeting for Chairman Chen of Tangshan Haomen Group, the second largest
19
beer manufacturer in China with President Clinton."
Chung arranged this meeting with the
assistance of Richard Sullivan, who was then the Finance Director of the DNC. In December 1994,
Chung wrote Sullivan to relate that he would be bringing a group of Chinese businessmen to the
20
White House, including Shi-Zeng Chen, the founder and president of Tangshan Haomen Group.
Chung requested Sullivan's assistance in arranging lunch at the White House Mess, and asked that
the delegation be allowed to have their photograph taken with President Clinton after his weekly
radio address.
To speed this process along, Chung made a $40,000 contribution to the DNC in the name of;
his company, AISI. Although Sullivan would later come to suspect that Chung was laundering
foreign money into the DNC — and although Chung explicitly told Sullivan that Chen would "play
21
an important role in our future party functions" — Sullivan was apparently unconcerned about this
AISI donation and accepted it without question. Chung was admitted to the White House on
22
December 19, 1995, the same day that FEC records show the DNC's receipt of his $40,000. The
next day, Chung, Shi-Zeng Chen, and the rest ofthe Haomen delegation were admitted to the White
19
Ex. 9.
2 0
Ex. 10.
21
Ex. 10.
22
The Committee never received the WAVES records of Shi-Zeng Chen, and was therefore unable
to determine whether he also entered the White House on this date.
�23
House residence for a holiday reception; they had their pictures taken with the President and the
24
First Lady.
The Radio Address
Despite Chung's $40,000 contribution, however, DNC Finance Director Richard Sullivan
had only partly fulfilled Chung's request: the Haomen group had not been able to attend the
President's radio address as Chung had requested. Two months later, Chung again requested
Sullivan's assistance in arranging visits to the DNC and to the White House for his business clients
25
— another group of Chinese business executives — this time presenting a longer and more specific
list of requested services. In a letter dated February 27, 1995, Chung requested that Sullivan help
arrange (1) a meeting with President Clinton, (2) a meeting with Vice President Gore, (3) lunch at
the White House mess, (4) a tour of the White House, and (5) a meeting with Commerce Secretary
26
27
Ron Brown. Chung sent an identical letter to Eric Sildon at the DNC, and faxed a letter to Ann
McCoy of the White House Visitor's Office requesting her assistance in arranging a White House
23
WAVES records for December 20, 1994 holiday reception (Ex. 11).
24
See AISI brochure containing picture of Chung and Shi-Zeng Chen with the President and the
First Lady (Ex. 12).
25
Letter from Johnny Chung to Richard Sullivan, Feb. 22, 1995 (Ex. 13) (providing list of people
who would be visiting the White House and the DNC).
26
Letter from Johnny Chung to Richard Sullivan, Feb. 27, 1995 (Ex. 14).
27
Letter from Johnny Chung to Eric Sildon, Feb. 27, 1995 (Ex. 15).
6
�28
tour. He apparently also asked Mark Middleton for help in setting up meetings with President
29
Clinton and Vice President Gore, and in arranging a luncheon at the White House Mess.
By now, at least, Sullivan was becoming suspicious, and did not help Chung as much as he
had for the Haomen delegation. According to Sullivan,
Johnny had showed up at the DNC and asked if I would get in — said
that he would make a contribution to us of $50,000 if I would get he
and five members of his entourage into a radio address with the
President. They were all for [sic] China.
30
This time, Sullivan later claimed, he was concerned about accepting moneyfromChung:
We had gotten money from Johnny previously. I think he had
contributed about 100,000 to that point over the past year, and the
fact that — him showing up with thesefivepeople from China, I had
a concern that he might-that they-he might be taking — I had a sense
that he might be taking money from them and then giving it to us,
you know. That was my concern.
31
Though Sullivan was unaware of it at the time, there were indeed some grounds for concern
in this respect. On March 6, 1995, three days before Chung made his next $50,000 contribution to
the DNC — in connection with the visit of this second group of Chinese executives — he received
32
a wire transfer from the Haomen Group in the amount of $150,000. Chung has claimed that he
28
Letter from Johnny Chung to Ann McCoy, Feb. 28, 1995 (Ex. 16).
29
Id.
30
Deposition of Richard Sullivan, June 4, 1997, p. 228.
31
Id.
32
Record of wire transfer from Haomen Group to Johnny Chung's California Federal Bank account
(Ex. 17); California Federal Bank sutement for account of Johnny Chung or Katharina T. Chung
for period ending March 26, 1995 (Ex. 18).
�made his DNC contribution entirelyfrompersonal funds, and that the wire transfer was made as part
of a joint venture with the Haomen businessmen." As of February 28, 1995, however, the balance
:)4
ofthe account upon which his check was drawn was only $9,860, and Chung was apparently never
engaged in any U.S. business with the Haomen Group.
Although Sullivan had concerns about accepting Chung's contribution, he was nevertheless
35
willing to arrange a meeting for Chung and his delegation with DNC Chairman Don Fowler. After
meeting with Chung and the delegation, Fowler sent a follow-up letter to one of the delegation
36
members, Zheng Hongye, describing Chung as "an excellent facilitator" and declaring that the
37
"Democratic Party is lucky to have him as one of our most ardent DNC members."
Despite
Fowler's enthusiasm, however, Sullivan did not accept Chung's preferred contribution and refused
to help him arrange the requested White House services.
33
Glenn Bunting and Alan Miller, "2 Donors to Democrats Linked to Asian Funds," Los Angeles
Times, July 11, 1997, p. A l . The Committee has received a detailed profferfromJohnny Chung
and his attorney, as part of their request for immunity in exchange for Chung's testimony after he
invoked his Fifth Amendment privilege against self-incrimination. The Committee, however,
declined to offer Chung immunity. The information contained in Chung's proffer has not been
used in the preparation of this report.
34
Ex. 18. Chung, however, claims that he had more than enough to afford the $50,000 in other
accounts. See William Rempel & Alan Miller, "First Lady's Aide Solicited Check to DNC, Donor
Says," Los Angeles Times, July 27, 1997, p. A l .
35
Memorandum from Richard Sullivan & Ari Swiller to Katherine, March 1, 1995 (Ex. 19)
(discussing scheduling request for Chairman Fowler on March 8); see also Ex. 14 (noting "meet
Don Fowler").
36
Deposition of Donald L. Fowler, May 21, 1997, p. 324; see also Letter from Don Fowler to
Zheng Hongye, March 14, 1995 (Ex. 20) (discussing their meeting the previous week).
3 7
Ex. 20.
�Stymied with the DNC, Chung then appealed directly to the First Lady's office for help with
his delegation's visit. On March 8, 1995, Chung requested Evan Ryan's assistance in obtaining four
benefits: (1) a tour of the White House; (2) lunch in the White House Mess; (3) a photo with the First
38
Lady; and (4) an invitation to attend the President's Radio Address for himself and his delegation.
To clarify his point, in making these requests, Chung told Ryan that he would also be making a
39
contribution to the DNC when he was in Washington, D.C. for this trip. Although Ryan did not
recall Chung mentioning a specific amount, she recalled learning at some point by March 10, 1995,
40
that he intended to give $50,000.
Although the DNC had turned him away, Chung had better luck at the White House. After
talking with Chung, Ryan immediately informed Maggie Williams of the requests to see if they
41
could be fulfilled. According to Ryan, Williams responded "that we would look into it [in order
42
to] see if we could arrange anything," and instructed Ryan to make the telephone calls necessary
to arrange a White House tour and lunch at the White House Mess for Chung's delegation of Chinese
43
businessmen.
38
Ryan deposition, p. 69. Chung did not request Ryan's assistance in arranging a meeting with
Secretary Ron Brown. Richard Sullivan and Ari Swiller's memorandum to Katherine mentioned
that Chung and the delegation from China would be meeting with Secretary Brown during the
afternoon of March 9, 1995. SeeEx. 19.
39
Ryan deposition, p. 75.
40
Id
41
Id. p.77.
42
Id.
43
Id. pp. 84-85.
�In this same conversation, Ryan also told Williams that Chung intended to make a
44
contribution to the DNC. Upon hearing this, Williams said that the DNC might be able to use this
money to pay debts it owed the White House, and told Ryan that she would accordingly speak to
45
Fowler about this matter. Williams apparently attempted to reach Fowler at least twice that same
day, because Fowler left two messages for Williams on March 8, 1995, indicating that he was
46
returning her calls.
Having been instructed by Williams to help arrange for his delegation to visit, Ryan informed
47
Chung that the First Lady's staff would try their "best" to fulfill his requests. According to Ryan,
this pleased Chung; he told Ryan that he hoped Williams would get "credit" for his DNC
48
contribution. After Chung left, Ryan set about making the necessary arrangements. Ryan called
49
the WTiite House Mess to make a reservation in Williams' name for Chung and his group, and
50
called Ann McCoy in order to arrange for a tour of the White House.
Ryan did not make the
44
Id. p. 77.
45
Id, pp. 80-81.
46
Telephone message slips to Maggie Williams from Don Fowler dated March 8, 1995 (Ex. 21).
47
Ryan deposition, p. 84.
48
Id, p. 86. Ryan also testified that at some point on March 8 or 9, 1995, Chung told her that "he
wanted this check to go to Maggie to be delivered to the DNC." Id, pp. 83-84.
49
Id, pp. 93-94.
50
Id. pp. 91-92.
10
�arrangements for the photo opportunity with the First Lady, however, because she understood this
51
to be Williams' responsibility.
Chung and his delegation arrived at Ryan's office around 11:30 a.m. on March 9, 1995.
52
Ryan then escorted them to the White House Mess for lunch, after which they were given a private
53
tour of the White House.
After the tour, Chung and his delegation returned at approximately
2:00 p.m. that afternoon and were escorted to the Map Room by Ryan for their photo opportunity
with the First Lady arranged by Williams.
54
After the photograph, Ryan returned with the group to her office, where Chung told her that
"he wanted to give his contribution to Maggie and wanted to have her get it to the DNC."
55
According to Ryan, when she stepped into Williams' office to inform Williams of Chung's desire ;
56
57
to do this, Williams asked Ryan to bring Chung into the office. As Ryan stood at the door of
Williams' office, Chung handed Williams an envelope containing a check for $50,000 made out to
58
the DNC. This contribution apparently made it possible for Chung to achieve what had hitherto
Id. p. 97.
Id. p. 103.
Id
Id. p. 105.
Id, p. 114.
Id. p. 116.
Id. p. 117.
I d , pp. 117-18; see also Williams deposition, pp. 173-74 (recounting accepting envelope given
her by Chung to pass along to DNC); copy of canceled check for $50,000 to the DNC dated
March 9, 1995 from Johnny Chung and Katharina Chung (Ex. 22). Chung also handed Williams
11
�been denied him: his clients' attendance at President Clinton's weekly radio address on March 11,
1995.
According to Chung, in fact, Williams and Ryan had actively solicited the donation. Upon
meeting Ryan on March 8, Chung recalled, he had asked whether hisfriendscould have lunch in the
White House Mess and meet the First Lady — and whether there was anything that he could do, in
return, to help the White House. Ryan told him that "the first lady had some debts with the DNC"
on account of expenses incurred through White House holiday festivities; Chung believes that Ryan
59
mentioned a figure of about $80,000. Ryan told him that she was relaying this request on behalf
of Williams, who hoped that Chung could "help the first lady" defray these costs. As Chung
remembers it, at that point "a light bulb goes on in my mind. I start to understand . . . I said I will;
60
help for $50,000."
Although Williams testified that she did not recall making arrangements for Chung and his
61
delegation to attend the radio address, a memorandum from Betty Currie, the President's personal
62
secretary, indicates that Williams had some involvement. More specifically, Chung recalls that
two sweaters for the First Lady on March 9, 1995. See White House Gift Register (Ex. 23); White
House gift tracking form for two sweaters presented by Johnny Chung to Maggie Williams on
March 9, 1995 (Ex. 24). Although Ryan testified that she did not remember seeing Chung present
the sweaters to Williams, she did remember seeing them on Williams' couch on either March 8 or
9. Ryan deposition, p. 124.
5 9
Rempel & Miller, supra note 34. Though Ryan did not supply afigure,this account of unpaid
DNC debts corresponds closely to Ryan's own recollection. See Ryan deposition, p. 81.
6 0
Rempel & Miller, supra note 34.
61
Williams deposition, p. 198.
6 2
According to this memorandum, Ceandra Scott of the DNC had been "concerned about Johnny
Chung" and informed Currie that
12
�after he handed his envelope to Williams, she immediately led him into her private office and
telephoned to reserve his group a table at the White House Mess.
64
played a role in setting up the radio address.
63
DNC officials apparently also
According to Fowler,
Johnny Chung called my office, not me but my office, and Carol
Khare talked to him. He said that he and some friends wanted to go
to a Saturday radio address. This was just a few weeks after I came
up there. Ms. Khare didn't know anything about — any more about
that process than I did. She went out to this open area where the
clerical people were and said, "This guy in here wants to go to the
White House address. Does anybody here know how to do that or
know anything about it?"
Sandra [sic] Scott, who was still there, said, "Yes, I know the
person at the White House who does that." And Ms. Khare said,
"Will you call and see i f it can be done?" She called her friend —
and I don't know how [sic] that person is, not at all — and said, "Can
you arrange this?" And she said, " I don't know. I will try."
Ms. Khare went back and reported that to Chung and that's
what I know about it and it's all hearsay.
63
we should have called them prior to their coming to the Radio Address.
Apparently they were in Maggie's office when request came and Maggie said
she didn't know, but to contact DNC.
MemorandumfromBetty Currie to Jon, March 28, 1995 (Ex. 25). According to Currie, she
meant by this that Nancy Hernreich should have called Scott prior to Chung's attendance, and that
Chung was in Williams' office when he requested an invitation to the radio address. Williams,
Currie explained, claimed not to know how to arrange Chung's attendance, but recommended
contacting the DNC. Deposition of Betty W. Currie, Aug. 7, 1997, pp. 95-102. (Currie could not
explain, however, why Scott would believe that someone at the White House needed to contact
her before Chung could attend the radio address. Currie did not have any other recollection of her
memorandum. Id., p. 103.)
63
Rempel & Miller, supra note 34.
64
See list of attendees at Radio Address (Ex. 26). Johnny Chung and the delegationfromChina are
listed under the category of "DNC Donors." (The list of attendees at the Radio Address also
includes what appears to be the President's left-handed check mark next to the "DNC Donors"
category.)
65
Fowler deposition, pp. 154-55.
13
�Indeed, according to an NSC e-mail message, it was Fowler himself who stepped in during
the evening before the March 11, 1995 radio address to ensure that Chung could attend. According
to this document, the
head of the DNC asked the President's office to include several
people in the President's Saturday Radio Address. They did so, not
knowing anything about them except that they were DNC
contributors.
66
In any event, it was the Office of Oval Office Operations that apparently made the final
67
arrangements for Chung's attendance at the radio address.
Despite the fact that Chung's requests had now been fulfilled, Sullivan informed Chung that
the White House — acting on the advice of NSC staff members — did not intend to release copies
68
of the photographs Chung's delegation had taken with the President. Displeased by this, Chung
69
faxed letters on April 5, 1995 to Williams seeking her assistance in obtaining these pictures.
According to an e-mail message sent to other NSC officials on April 7 by NSC staff member
66
E-mail from Melanie Darby to Roseanne Hill, Stanley Roth and Robert Suettinger, April 7, 1995
(Ex. 27).
67
See Deposition of Nancy Hernreich, May 21, 1997, p. 60. Hernreich testified that her assistant
schedules the attendees at radio addresses; at the time Chung and the delegation from China
attended, Hemreich's assistant was Kelly Crawford. I d According to press reports, Carol Khare
took Chung's call to Don Fowler requesting a face-to-face meeting with the President and referred
the request to Ceandra Scott. Scott contacted the Pint Lady's office, whereupon the request to let
Chung and the delegation attend the Radio Address was approved by Crawford. See, e.g., Marc
Lacey, "Missing Donor Still Target of Brickbats," Los Angeles Times, Nov. 14, 1997, p. A14.
68
See letter from Johnny Chung to Maggie Williams, April 5, 1995 (Ex. 28) (regarding photos from
Radio Address).
69
See id
14
�70
Melanie Darby, Darby soon thereafter spoke with or received a messagefromNancy Hernreich —
whose office had arranged Chung's attendance at the radio address and who now urgently needed
to know whether or not she could give Chung the photos from the radio address when he stopped
71
by her office the next day. Although Sullivan had by that point already told Chung of the problem
with the photographs, there is no evidence that the NSC was asked whether the photos could be
72
released until April 7, 1995. In fact — although Fowler's office reportedly wanted to release the
73
photographs because "these people are major DNC contributors" — it appears that the photos were
-
74
retained because of concerns expressed by the President himself.
Replying td Darby's query, however, NSC staff member Robert Suettinger cautioned her that
he thought Johnny Chung was a "hustler" who "should be treated with a pinch of suspicion" and
predicted that Chung would "become a royal pain, because he will expect to get similar treatment
70
Ex. 27.
71
Hernreich testified that she did not make this request to the NSC and does not know who did.
Hernreich deposition, pp. 64-65. This testimony directly contradicts a White House document
listing Chung's name and those of the members of his Chinese delegation, which also contains a
handwritten note to Nancy Soderberg of the NSC. Name List of Delegation (Ex. 29). This
handwritten note appears to be from Hernreich, because it is signed "NH" and was made with the
same type of calligraphy pen Hernreich customarily uses. See Hernreich deposition, p. 125.
Although a portion of this note is illegible, it references the Chung radio address and states that
"before photos are sent out we need to know if we should not send them." Ex. 29.
72
This was the date of Darby's e-mail message to other members of the NSC staff inquiring about
this matter. See Ex. 28.
Ex.28.
74
See id. (recounting Chung photograph issue to NSC staff). Moreover, Hernreich recounted that
the President had said, with regard to the attendance of Chung's group at the radio address, that
"[w]e shouldn't have done that." Hernreich deposition, p. 67. Hernreich understood this to mean
that Chung's clients were "inappropriate foreign people." Id, pp. 67-68.
15
�for future visits."
73
Nevertheless, Suettinger did not "see any lasting damage to U.S. foreign policy"
by giving Chung the photos and that "to the degree it motivates him to continue contributing to the
DNC, who am I to complain?"
given to Chung.
76
At some point thereafter, the photographs appear to have been
77
As Suettinger's comments suggest, White House officials were apparently willing to
overlook Chung's faults in light of his considerable contributions to the DNC. Indeed, after the radio
address episode, Chung was admitted into the White House at least 16 additional times, 12 of which
78
were at the request of Evan Ryan. "Hustler" or not, Johnny Chung was a source of money for the
DNC, and the White House granted him and his Chinese clients almost unquestioned access — even
to the point of actually considering hiring Chung's company to work for the White House and the
DNC.
79
White House and DNC officials, therefore, treated Johnny Chung, his business, and his
75
E-mailfromRobert Suettinger to Melanie Darby, April 7, 1995 (Ex. 30).
76
Id.
77
See White House contact sheet of photos with the First LadyfromMarch 9, 1995 (Ex. 31). On
April 11, 1995, in fact, Carol Khare apparently sent a fax to Chung exclaiming that, "[t]he White
House assures me that you now have the pictures — hurray! If you don't, give me a call."
Facsimile cover sheetfromCarol Khare to Johnny Chung sent April 11, 1995 (Ex. 32). Hernreich,
however, claimed to have been unaware that Chung had received the photos. See Hernreich
deposition, p. 66.
78
See White House Visitor Summary for Johnny Chung (Ex. 5). Despite Suettinger's warning,
Maggie Williams, who had instructed Ryan to admit Chung, testified that the NSC never infonned
her that Chung should be treated with a "pinch of suspicion." Williams deposition, p. 202.
79
As detailed in White House documents only produced to the Committee in mid-January 1998 —
after its investigation had been completed — Chung's contributions appear also to have persuaded
Harold Ickes and Erskine Bowles to urge the DNC to hire Chung's company. Ickes told the
DNC's Bobby Watson, for example, that he "strongly urge[d]" the DNC to acquire a broadcast
fax capability through AISI: "Johnny Chung's firm has such capability which should be
negotiated." MemorandumfromHarold Ickes to Bobby Watson, July 17, 1995 (Ex. 33). White
House officials also met with AISI representatives to inquire into the possibility of hiring the
16
�Chinese clients as favored guests, "not knowing anything about them except that they were DNC
80
contributors." That was, apparently, all that mattered.
company, although they ultimately concluded that there would be "legal concerns" were the White
House itself to hire Chung. See Memorandum from Brian Bailey for Distribution, March 8, 1995
(Ex. 34). According to Bailey, "[i]n prior administrations, similar proposals for mass
communications have been rejected by White House Counsel, which viewed such activities as
violations of anti-lobbvine rules." Memorandum from Brian Bailey for Erskine Bowles, March
21,1995 (Ex. 35) (emphasis in original). Because of these worries, Bailey recommended that the
DNC, rather than the White House pursue this matter with Chung.
8 0
Ex. 27.
17
�THE CONTRIBUTION OF YOGESH GANDHI
Introduction
Yogesh Kathari Gandhi arrived in Washington, D.C, on May 13, 1996 with a bust of
Mohandas K. Gandhi, an entourage of foreign spiritualists, his checkbook, and a keen desire to
meet the President. Gandhi was rebuffed in his attempts to gain access to the White House, and,
indeed, the White House staff concluded that Gandhi was "clearly disreputable." Nonetheless,
once the checkbook had been opened, Gandhi successfully arranged for his foreign backers to
present the bust to the President at a DNC fundraising dinner. In this instance, the contributor's
dogged tenacity, paired with the complicity of some DNC fundraising officials, prevailed over
attempts by White House staff to protect the President from an episode that led to the acceptance
of illegal foreign contributions which were ultimately returned by the DNC.
Yogesh Gandhi is a 48-year-old citizen of India and legal resident of California who
moved to the United States in 1988 and established the Gandhi International Memorial
Foundation ("the Foundation"), now located in Orinda, California. Yogesh Gandhi claims to be
a great grand-nephew of Mohandas K. Gandhi. He was bom Yogesh Kathari and changed his
surname to Gandhi only when he came to the United States. The Foundation, and Gandhi,
initially focused their efforts on the erection of statues of Gandhi in major cities around the
�world. In recent years, however, the presentation of an award given in the name of Mahatma
Gandhi ("the Prize") has become the principal, if not sole, activity of the Foundation.
The Prize has typically consisted of both a bust of Mahatma Gandhi and a cash award. It
has been presented to Mother Teresa, Nelson Mandela, and Mikhail Gorbachev, among others.
The Committee has concluded that the various recipients of the Prize, the Foundation, and
ultimately the legacy of Mohandas K. Gandhi have been exploited to increase the visibility and
stature of Yogesh Gandhi and his magnate patrons.
Hogen Fukunaga, a 52-year-old citizen of Japan who leads a religious sect called Tensei
was the beneficiary ofthe events of May 13, 1996. The scheme was structured as follows:
Yogesh Gandhi supplied the Gandhi name, which gained Fukunaga entree to a photo opportunity
with the President. Funding for the venture and the DNC contribution camefromYoshio
Tanaka, a 64-year-old Japanese health products tycoon. To complete the circle, the Committee
has learned - from Barry Flint, a United States-based associate of Tanaka - that Gandhi and
Tanaka were helping Fukunaga in the ultimate expectation that he, or his sect, would make a
1
large contribution to Tanaka's Earth Aid International Foundation.
1
Memorandum of Interview of Barry Flint, April 7, 1997. Indeed, Flint infonned the Committee
thatGandhi, Tanaka, and Fukunaga also attended a United Nations conference in Istanbul for wh
Gandhi had paid $100,000 in funds provided to him by Tanaka. Id.
�Gandhi's Statements to the Committee
On March 25, 1997, Committee staff met with Gandhi at the Foundation's office in
Orinda, California. During the interview, Gandhi provided demonstrably false and misleading
information as to the circumstances of the May 13, 1996 dinner, as well as the source of the
2
funds contributed to the DNC in connection with that event.
Gandhi stated in the interview that the Board of Directors of the Foundation decided to
present the Prize to President Clinton in late 1995 or early 1995. Gandhi contacted the White
House, which, he said, agreed to accept the bust of Gandhi but not the accompanying cash award.
Although the bust was ultimately presented at a DNC fundraising dinner, Gandhi insisted that
there was no connection between the opportunity to present the bust to the President and his
contribution to the DNC.
Gandhi acknowledged that he had paid $325,000 to attend a DNC fundraising dinner in
Washington on May 13, 1996. He told the Committee that he wanted to go to the dinner because
it was his 45th birthday and his mother was visiting from India. Gandhi brought a total of 13
guests, including Fukunaga and Tanaka, whom Gandhi identified as members ofthe
Foundation's International Advisory Board. For his party of 14, gandhi paid over $23,200 per
person to attend the dinner.
2
Memorandum of Interview of Yogesh Gandhi, March 29, 1997.
3
�Gandhi further stated in the interview that he had met with Charlie Trie the afternoon of
the dinner, that there was a disagreement about the price of admission, and that haggling ensued.
Gandhi thought the price fo the dinner was $12,500 for a table but told the Committee that Trie
wanted $12,500 per person. Either way, Gandhi paid more than the alleged ticket price.
Ultimately, Gandhi wrote a check for $325,000, which was more money than he had anticipated
spending. Gandhi acknowledged that he asked Trie to make sure that the check was not cashed
3
for ten days, so that he could move money into his bank account.
Gandhi said that while he was in Washington, it cjccurred to him that he could "kill two
birds with one stone" and present the Gandhi Prize at the DNC dinner. He stated that he kept a
spare bust of his eminent ancestor in New York, and made arrangements for an associate toflyit
to Washington that afternoon. At the dinner, Gandhi further claimed, he approached the Secret
Service with his request to present the Prize, and was allowed to make the presentation, with
Fukunaga and Tanaka, after the dinner.
Gandhi provided a number of inconsistent explanations as to the source of the funds that
he contributed to the DNC. During the course of the interview, he variously maintained that the
funds were: (1) family money which had been wired in from Egypt; (2) the proceeds of a
technology transfer transaction he had undertaken with a unnamed Australian firm; (3) an
3
As is discussed below, this portion of Gandhi's statement appears to be accurate. The DNC held
Gandhi's check until May 28, 1996, before cashing it.
�advance on such a deal; and/or (4) simply money that he had in the account. In the course of the
interview, Gandhi agreed to provide bank records from the relevant period (April-June 1996),
however, such records were never voluntarily supplied to the Committee.
Pursuant to an agreement with Gandhi, on July 1, 1997, Committee staff traveled to
Orinda, California, to take his deposition. Gandhi appeared with counsel, who stated that Gandhi
would decline to answer questions in reliance upon his Fifth Amendment right against self4
incrimination.
What the Committee's Investigation Established
Contrary to Gandhi's vanilla description ofthe events of May 13, 1996, the Committee
has established that the presentation of the Prize was arranged on a straightforward pay-to-play
basis. Only after Gandhi was rebuffed by the White House did he tum to the DNC, which
charged $325,000 for a few moments rental of the Presidency to a disreputable con man.
In February of 1996, Gandhi wrote to the White House with the news that President
5
Clinton had been selected to receive the Gandhi World Peace Award. Gandhi also arranged for
both Matin Royeen, a Clinton-Gore reelection campaign volunteer who wrote on campaign
letterhead to the First Lady, and Senator Charles S. Robb to contact the White House in support
4
Gandhi's attorney confirmed this assertion of the privilege in writing by correspondence dated July
1, 1997. Letter from Peter J. Coleridge, Esq., to Matthew J. Herrington, July 1, 1997 (Ex. 1).
5
Letter from Yogesh Gandhi to President Clinton, February 5, 1996, (Ex. 2).
5
�6
of the invitation. Through an examination of records produced by the White House, the
Committee has been able to reconstruct the events leading up to the rejection of Gandhi's
proposal to present the Prize to the President.
First, the invitation was referred to the National Security Council ("NSC"). Andrew
Sens, responding on behalf of the NSC, demurred, citing the fact that the Foundation was a
7
United States entity, with the implication that the matter was outside of the NSC's jurisdiction.
After the Gandhi matter became public, Sens informed Harold Ickes that the FBI considered
8
Gandhi "a fraud."
Second, the White House Office of Public Liaison, and specifically Doris O. Matsui and
her staff, undertook an investigation and found that Gandhi's Foundation "wasn't a reputable
9
organization." Indeed, the White House staff was informed that the Foundation was a "one-man
organization" that Gandhi "made a living out of," and that Gandhi would "take advantage o f a
10
meeting with the President, who would be "hurt" by the association.
Letter from Matin Royeen to Hillary Clinton, February 15, 1996 (Ex. 3); LetterfromSenator Charles
S. Robb to President Clinton, March 26, 1996 (Ex. 4).
Memorandum from Andrew Sens to Stephanie Streett, March 13, 1996 (Ex. 5).
Notes of Harold Ickes, October 20, 1996 (Ex. 6).
Deposition of Ann T. Eder, May 28, 1997, p. 201.
Undated, handwritten notes of the White House Office of Public Liaison Staff (Ex. 7).
6
�Finally, the White House staff conducted a LEXIS/NEXIS search which revealed that, in
addition to the luminaries cited by Gandhi, the Prize had been given to Ryoichi Sasakawa in
1987. In an article retrieved by the search, and produced to the Committee by the White House,
Sasakawa was described by the Los Angeles Times as a "billionaire former war crimes suspect
who made his fortune promoting motorboat gambling."" The same article stated that Sasakawa
12
"is known in Japan as 'The Godfather' because of his alleged connections to Gangsters."
13
On April 17, 1996, the White House formally regretted on behalf of the President.
There is no question that Gandhi misled the Committee as to the decision of the White House: he
maintained that the White House had agreed to accept the Prize and that it was happenstance that
the presentation occurred at a DNC event. In fact, the White House flatly turned down Gandhi,
which is why he had to scramble to arrange a DNC venue for the presentation of the Prize and,
moreover, the Fukunaga photo op.
To a less industrious huckster — or perhaps to a huckster under less pressure to produce
the President for his client -- the White House's April 17, 1996 "no" might have been the end of
the affair. In fact, it was only the beginning, and Gandhi soon found that John Huang and the
DNC would oblige his request ~ if the price was right. Huang has refused to answer the
1 1
1 2
1 3
Memorandum (with press clipping attachments) from Chrysanthe Gussis to Kathi Whalen, March 14,
1996 (Ex. 8).
Id.
Letter from Stephanie S. Streett & Anne Walley to Yogesh Gandhi, April 17, 1996, (Ex. 9).
7
�Committee's questions, but the documentary record and the deposition testimony of his DNC
colleagues demonstrate that he was the key DNC staffer responsible for Gandhi's contribution.
Contrary to Gandhi's assertion to the Committee that there was no connection between
his contribution and the presentation of the Prize to President Clinton, DNC General Counsel Joe
Sandler testified that the two were directly linked from the start: "Huang told me that Gandhi
expressed an interest in attending an event with the President and that he wanted to contribute to
the Democratic Party. He also wanted to, in connection with attending an event, present this
14
award to the President."
When Huang had settled on the May 13 Sheraton-Carlton dinner as
the appropriate venue, Huang arranged in advance with Craig Livingstone, who was the lead
White House advance person for the event, for the President to receive the Prize during a private
15
reception in a separate room at the dinner.
Deposition of Joseph E. Sandler, May 15, 1997, p. 108. Huang was apparently introduced to Gandhi through
Sharon Singh, a DNC activist in the Indian-American community. Id., 107-108. Because Huang, Trie, and
Gandhi have all declined to provide testimony, the Committee has been unable to establish the details of the
involvement of Huang and Trie in the Gandhi affair.
Sandler deposition, May 15, 1997, p. 111. Sandler's testimony not only betrays the duplicity of Gandhi's
statements to the Committee, but also calls into question the pronouncements of DNC spokesperson Amy
Weiss Tobe. Prior to the November 1996 elecrion, Tobe told the press that the DNC had not known in advance
that Gandhi intended to present the Prize to the President on May 13. Sfifi Alan Miller, "A Picture Worth
$325,000?," Los Angeles Times. Nov. 2, 1996, p. A l . The disjunct between Sandler's testimony and Tobe's
statements to the press is particularly jarring in that she apparently spoke with Sandler about the circumstances
of the Gandhi contribution prior to speaking with the press. Sfifi Deposition of Amy Weiss Tobe, June 16,
1997, p. 22. In her deposition, Tobe claimed that Huang told her at the time of the press inquiries that he had
not known about the Prize until the evening of the Sheraton-Carlton dinner. Id., pp. 21-22. At best, then,
Huang misled Tobe, and may have been in cahoots with Gandhi in attempting to obfuscate the pay-to-play
nature of the event.
�On May 13, 1996, Gandhi gave Huang and/or Trie a check in the amount of $325,000.
Although Trie, like Huang, has refused to cooperate with the Committee, his involvement in the
Gandhi affair is confirmed by the relevant DNC check tracking form, which lists Huang as the
16
"DNC Contact" and Trie as the "Solicitor." On the evening of May 13, after the public
program was complete, the President was taken to an adjoining room and Fukunaga presented
the bust to him. Although video and audio tapes of the May 13 event, as produced by the White
House, do not capture the President's side-door acceptance of the Prize, still photographs were
taken. Within a few weeks of the event, a photo of Fukunaga presenting the Gandhi bust to
President Clinton was featured on the Internet web site of Tensei, Fukunaga's religious
organization.
The DNC has publicly denied that any basis existed to be suspicious of the Gandhi
contribution in May of 1996, but the fact is that well before the Gandhi story hit the press in the
fall of 1996 ~ before the check had even been cashed ~ there was concern within the DNC about
the propriety of the Gandhi contribution. Richard Sullivan testified that, after the event, Huang
brought Gandhi's extraordinarily large check by his office, and that Sullivan inquired to ensure
17
that Huang would take the check personally to and review it with Sandler. Huang told Sullivan
that he was holding the check until that review had taken place, and later told Sullivan that
16
1 7
DNC Check Tracking Form (Ex. 10).
Deposition of Richard L. Sullivan, June 5, 1997, pp. 37-39.
�18
Sandler had approved the contribution. Sandler, however, testified that he was nol consulted
about the Gandhi contribution prior to the funds being accepted; he testified instead that his first
19
discussion of it was after negative press reports. Confronted with this contradiction between
Sandler's sworn testimony and Huang's earlier statements, Sullivan weighed in on the side of
Huang. Sullivan believed that Sandler had "lied" in an attempt "to cast his performance in a
better light."
20
Although Sullivan claimed that the DNC "proactively" ran a LEXIS/NEXIS search on
21
Gandhi, such a search would have turned up stories relating to Gandhi's association with
22
Sasakawa, the 1987 recipient of the Prize. Because it is unclear whether Sandler actually prescreened the Gandhi contribution, the Committee cannot speculate as to whether or not this and
other red flags were ignored ~ or simply never uncovered
by the DNC. During the
Committee's public hearings, Sullivan conceded that the Gandhi case was "yet another example
23
of the DNC failing to do a sufficient job" in screening contributions. Likewise, Sandler
admitted that under the DNC's new post-1996 election screening regimen, Gandhi, as a first-time
contributor, would have been thoroughly investigated, and the contribution would not have been
21
2 2
2 3
Id., pp. 38-39.
See Sandler deposition. May 15, 1997, p. 107.
Sullivan deposition, June 5, 1997, p. 39. For other contradictions between Sullivan and Sandler, see
the section of this report on Huang's illegal fundraising at the DNC.
Id., p. 140.
See Ex. 8.
Testimony of Richard L. Sullivan, July 10, 1997, p. 46. See also the section of this report on the
dismantling ofthe DNC's vetting process.
10
�24
accepted. When White House Office of Public Liaison staff member Ann Eder learned that
Gandhi had managed to present the Prize to President Clinton at a DNC fundraising dinner, she
25
was "surprised" because the Foundation was "clearly not a reputable entity."
Finally, the extraordinary degree to which Huang and the DNC leadership were solicitous
of Gandhi is perhaps explained by the sheer size of the contribution. Gandhi's $325,000
26
contribution constituted more than half the funds raised at the May 13 event. Put another way,
if Gandhi had been rebuffed in his effort to get the Prize to the President and had not attended the
dinner, or if Sandler had decided afterwards not to accept the Gandhi contribution, Huang would
have fallen woefully short of the evening's fundraising goal.
Analysis of Gandhi's Bank Records
Bank records for Gandhi and the Foundation were obtained by the Committee pursuant to
subpoena. The records amply illustrate the cause for Gandhi's insistence that the DNC hold the
check for a few weeks. At the time the $325,000 check was issued on May 13, 1996, the account
27
on which it was drawn held less than $30,000. Furthermore, these bank records establish
beyond question that the source of the funds paid to the DNC was Yoshio Tanaka. The records
24
25
26
27
Sandler deposition, May 15, 1997, pp. 118-19.
Eder deposition, May 28, 1997, p. 202.
See Sullivan testimony, July 10, 1997, pp. 44-45.
Bank records of Yogesh Gandhi (Ex. 11).
11
�show a total of $500,000 in incoming wire transfers from Tanaka's Tokyo bank account between
28
the time that the May 13 check was written, and when it was cashed on June 3, 1996.
There is no question in this instance that the funds received by the DNC were both
laundered and originated overseas, and thus constituted an illegal contribution.
The Delay in the DNC's Return of Gandhi's Contribution
On October 25, 1996, a $325,000 refund check to Gandhi was drawn on the DNC's
account at Nationsbank. Ten days later - but more importantly, one day after the Presidential
29
election -- on November 6, 1996, the DNC sent the check to Gandhi. Sandler, who signed the
cover letter transmitting the refund check to Gandhi, has improbably testified that the check was
issued on October 25, 1996, as a preliminary step in an investigation that did not conclude until
30
the day after the election. Ickes' notes of meetings and conference calls held on October 20 and
28, however, establish that the DNC and White House knew before the election that: (1) the FBI
had described Gandhi as a "fraud;" (2) Gandhi had testified in court proceedings earlier in 1996
that he was unable to satisfy a $4000 default judgment against him; and (3) he was in arrears on
31
his taxes. Given that Sullivan himself has called into question the veracity of Sandler, it is
2 8
29
3 0
3 1
Id.
LetterfromJoseph Sandler (with copy of the check, DNC expenditure request form, and UPS mailing
information) to Yogesh Gandhi, November 6, 1996 (Ex. 12).
Sandler deposition. May 15, 1997, p. 115.
See Ex. 6 & Harold Ickes' notes of October 25, 1996 (Ex. 13).
12
�difficult to credit Sandler's testimony that it was simply a wild coincidence that the Gandhi
refund check -- cut days before --just didn't get into the mail until the day after the election.
Conclusion
The Committee shares the conclusion of White House lawyer Lanny J. Davis: "The
professional staff at the White House checked this matter out and made a correct determination"
32
as to the whether Gandhi should gain an audience with the President. That said, however, the
determination of the White House staff was either ignored or overridden when Gandhi coupled
his request with a $325,000 contribution to the DNC.
3 2
Glenn R. Simpson, "White House Got FBI Data on Party Donor," Wall Street Journal. June 10, 1997,
p. A20.
13
�Ted Sioeng, His Family, and His Business Interests
Part I. Introduction
Ted Sioeng, his family, and his business interests gave $400,000 to the DNC during the
1996 election cycle. Through extensive analysis of bank records, the Committee has determined
that at least half of this figure, or $200,000, was made with money wired into the U.S. from
accounts in Hong Kong. Where this money ultimately came from and why it was used for hefty
political contributions are two questions the Committee cannot answer conclusively. The reason
is that Sioeng and his family left the U.S. after the campaign finance scandal broke and, through
their lawyers, indicated they are unwilling to talk. The one family member who remains in the
United States, Sioeng's daughter Jessica Elnitiarta, was interviewed in June 1997 by Committee
1
staff but, since then, has indicated she would assert the Fifth Amendment if compelled to testify.
However, the Committee developed documentary and circumstantial evidence as to the answers
to the aforementioned questions. That evidence is discussed below.
In many senses, the story of Ted Sioeng is a microcosm of the Committee's investigation.
Sioeng is a wealthy Belize citizen in his early fifties who, prior to the campaign finance scandal,
spent brief periods in the United States. Sioeng controls a multinational business empire that
appears to generate substantial income, though not much of it within this country. Sioeng has
ties to the Govemment of China, but their full extent is unknown. Despite making modest
political contributions in 1992, 1993, and 1994 in this country, Sioeng became a major player in
1995 through a series of large contributions made by him, his family, and his business interests
Letter from Steven R. Ross and Mark J. MacDougall to The Honorable Fred Thompson,
September 17, 1997. (Ex. 1).
�to a variety of candidates and political entities, but mostly to the DNC. The contributions earned
Sioeng invitations to lavish fund-raisers attended by President Clinton or Vice President Gore.
The contributions, in some cases, were made with foreign money.
Ted Sioeng became known to the Committee early in its investigation. The first press
2
interest in Sioeng stemmed from his presence at DNC fimd-raisers. Since that time, the
Committee has learned of Sioeng's connections to other key figures in its investigation,
including Maria Hsia and John Huang, as well as his attendance at several DNC fund-raisers. In
the year leading up to the 1996 elections, Sioeng attended four major DNC fimd-raisers, each of
which Huang had a hand in organizing. To each event, Sioeng brought family members and/or
business associates.
Sioeng attended the February 19, 1996 Asian Pacific American Leadership Council fundraiser at the Hay-Adams Hotel in Washington, D.C. This was the first major DNC event
organized by Huang. On April 29, 1996, Sioeng attended a fund-raising luncheon at the Hsi Lai
Buddhist Temple in Los Angeles, California, where he sat next to Vice President Gore. On
May 13, 1996, Sioeng attended a dinner for President Clinton at the Sheraton Carlton in
Washington, D.C. where, again, he was seated at the head table. Two months later, on
July 22, 1996, Sioeng and 48friendsand/or business associates attended a DNC fund-raiser for
President Clinton at the Century Plaza Hotel in Los Angeles. At dinner, Sioeng sat to President
Clinton's immediate right. To the President's left was James Riady and his wife Aileen.
2
See, e.g., Richard T. Cooper, "How DNC Got Caught in a Donor Dilemma; Desire for
Dollars to Boost Clinton's Reelection Bid Helped Fuel Democrats' Pursuit of an
Emerging Money Source ~ Asian Americans with Strong Overseas Ties," Los Angeles
Times, December 23,1996, p. A l .
�The Committee's interest in Sioeng is not related solely to his attendance at DNC events.
It stems also from Sioeng's relationships with Huang and Hsia, as well as the Chinese
government, and it has been piqued by the evidence that some of Sioeng's political contributions
were made with foreign money.
Sioeng's relationship to the Govemment of the People's Republic of China has been the
3
subject of press speculation since early 1997. Based on its own investigation, as discussed more
fully elsewhere in the report," the Committee has learned that Sioeng worked, and perhaps still
works, on behalf of the Chinese govemment. Sioeng regularly communicated with PRC
embassy and consular officials at various locations in the United States, and, before the campaign
finance investigation broke, he traveled to Beijingfrequentlywhere he reported to and was
briefed by Chinese communist party officials.
The Sioeng story is a microcosm because it is a tale of foreign money and, possibly,
foreign influence. One familiar refrain encountered by the Committee during its efforts to
uncover the Sioeng story was a series of obstacles separating investigators from the truth behind
3
See, e.g., Mark Hosenball, "On the Trail of a 'China Connection,'" Newsweek, March 10,
1997, p. 30 (noting Sioeng's "close" connections to the PRC consulate in Los Angeles);
Daniel Klaidman and Mark Hosenball, "The Feds Explore a China-California Money
Trail," Newsweek, April 28, 1997, p. 40 ("The Sioeng money transfer is the first
'verifiable, direct link to the People's Republic of China,' one investigator told
Newsweek."); K. Connie Kang and David Rosenzweig, "Entrepreneur Formed Ties to
China, then Politicians," Los Angeles Times, May 18, 1997, p. Al (discussing Sioeng's
business and political ties to China in context of allegations that he is "working as
Beijing's political operative in the United States"); Daniel Klaidman, "Cracking a
Chinese Code," Newsweek, June 9, 1997, p. 46 (citing informationfrom"federal
investigators" that Sioeng was chosen as the "West Coast Representative" in the U.S. by
the Chinese communist party).
4
See the chapter of this report entitled "The China Connection."
3
�Sioeng's political activities. Most of what the Committee has learned about Sioeng derives from
bank records the Committee subpoenaed, an interview with Sioeng's daughter, Jessica Elnitiarta,
information provided to the Committee by Sioeng's attorneys, and references to Sioeng in other
documents produced to the Committee. The investigation, though, has been hampered by the
unavailability of wimesses and their unwillingness to speak to Committee staff. As noted,
Sioeng and most of his family have left the country. Elnitiarta has remained behind but has
asserted her Fifth Amendment privilege, as have the two Democratic fund-raisers, Huang and
Hsia, with apparent ties to the family. Moreover, business, associates of Sioeng generally proved
unhelpful. Early in the investigation. Committee staff spoke to Sioeng'sfriendand business
5
associate Kent La, but he also would not appear voluntarily for a deposition. The Majority
attempted to compel La's testimony, but the Minority objected to the subpoena. For months,
Sioeng's attorneys held out the promise that Sioeng would agree to be interviewed at a location
outside the United States. That promise was not kept.
The balance of this section is divided into two parts. Part II discusses Ted Sioeng, his
family, and his business interests. Only those activities relevant to the Committee's investigation
are discussed. Part III examines the major political contributions made by Sioeng, his family,
and his business interests during the 1996 election cycle. Through an analysis of bank records
produced to the Committee, an attempt is made to trace the origins of these various contributions.
One conclusion the Committee has drawn is that much of the money contributed by
Sioeng and his family is traceable to foreign sources ~ specifically, bank accounts in Hong
5
Memorandum of Interview of Kent La, May 14, 1997.
4
�6
Kong. This is significant because such contributions are illegal. Most of these contributions
were to the DNC, which purported to investigate the same and concluded the contributions were
7
legal and proper.
Part II. Sioeng's Activities Here and Abroad
A.
Sioeng md His gusinesses
Ted Sioeng, originally from Indonesia, is a citizen of Belize who splits his time between
Singapore and Hong Kong. Sioeng's daughter, Jessica Elnitiarta, is a permanent resident alien
8
who came to the United States in 1986. Most of her family (excluding her father) are now
permanent resident aliens. Other family members once or currently in the United States are her
9
sisters Laureen, and Sandra, her brothers Yopi and Yohan, and her mother. The
Sioeng/Elnitiarta family speaks Chinese (Mandarin and Cantonese), Bahasa, and some English.
See 2 U.S.C. §441 e.
DNC spokeswoman Amy Weiss Tobe was reported as saying the party decided not to
return the Sioeng family contributions because Jessica Elnitiarta is a legal permanent
resident of the United States and that Sioeng himself had not contributed to the DNC.
Paul Jacobs and Dan Morain, "State Treasurer Sends Back Campaign Contributions that
May Have Originated in China," Los Angeles Times, April 23,1997, p. A3.
Unless otherwise indicated, the information contained in Part II of this discussion derives
from an interview of Jessica Elnitiarta conducted by the Committee on June 19, 1997.
See Memorandum of Interview of Jessica Elnitiarta, Sept. 18, 1997.
The Committee has learned that all of Sioeng's family has left the country except Jessica
and possibly Yopi. The others have gone to Hong Kong. Parenthetically, the family uses
Elnitiarta, not Sioeng, as its surname. Elnitiarta is the mother's maiden name.
�Through the marriage of his daughter, Ted Sioeng's family is related to the Tanuwidjajas,
10
a family with substantial business interests in Indonesia. Sioeng's daughter, Laureen, married
Subandi Tanuwidjaja, son of Susanto Tanuwidjaja, in March 1996. Subandi has been identified
as "an Indonesian menswear manufacturer."" John Huang, a self-professed friend of the
Tanuwidjaja family, asked the White House for a letter congratulating Laureen and Subandi on
12
the occasion of their marriage. Huang may have become acquainted with the Tanuwidjaja's
when he worked with Susanto Tanuwidjaja at the Lippo Bank's San Francisco office.
13
Sioeng's business empire is centered in Asia. Most of the businesses are in greater
China, Macao, and Cambodia. The family has owned or currently owns several businesses in the
PRC, including a beer factory, a rebuilt machinery factory, and a portion of a hotel (in the
Yunnan province). Currently, the family's main business is a cigarette manufacturing and
distribution operation in Singapore, which is run by Chinois, a partnership between Sioeng,
Hong Kong businessman Bruce Ceung, and several companies. Chinois manufactures and
distributes Red Pagoda Mountain ("Hong Ta Shen") cigarettes. It holds manufacturing and
distribution rights granted by the PRC govemment, and is obligated to purchase raw materials
for the cigarettes from a govemment factory in Yu Xi, located in the Yunnan province.
10
Although the Committee knows little about the Tanuwidjaja's business holdings, here or
elsewhere, FEC records indicate that Subandi Tanuwidjaja is an architect in Diamond
Bar, CA and Suryanti is a writer/producer in La Habra Heights, California.
George Archibald, "Democrats Disclose Big Contributors," Washington Times, October
30, 1996, p. A13.
12
Facsimile from John Huang to Anne Edder, March 6, 1996. (Ex. 2).
13
See Deposition of Diane Poon, April 30, 1997, p. 25.
6
�The family has a growing U.S. business presence presided over by Jessica Elnitiarta. The
family holdings and interests include:
•
International Daily News, a Chinese language daily in Los Angeles. The paper is
discussed in more detail in the section that follows;
•
Metropolitan Hotel, a hotel and restaurant in Los Angeles;
•
Pacific Motel, a modest establishment in the Los Angeles area;
•
Panda Estates, a real estate firm that owns Doheny Estates, comprised of luxury rental
townhouses in Beverly Hills. The family purchased Doheny in 1993 in a foreclosure sale,
and completed construction on the townhouses in 1995;
•
Panda Industries, an import export business;
•
Loh Sun International, a company that distributes Red Pagoda Mountain cigarettes in the
United States. Jessica Elnitiarta told the Committee that the family does not "control"
Loh Sun, but simply does business with it. However, in a brief phone interview
conducted in May 1997, Loh Sun's president and registered agent, Kent La, indicated that
14
Jessica Elnitiarta is his supervisor; and
•
Grand National Bank, located in Alhambra, California. Jessica, Sandra, and Laureen
Elnitiarta are investors in the bank and own approximately 19 percent of its outstanding
stock. Jessica first purchased Grand National Bank stock in 1992 and owns 100,000
shares. Laureen and Sandra each own 45,000 shares, which they purchased in November
14
The Committee staffs telephone interview with Kent La took place on May 13, 1997.
During the interview, La indicated Jessica Elnitiarta is his boss.
�1995. It appears that most ofthe family's business and personal accounts are held at the
Grand National Bank.
Sioeng provides the working capital for all of his U.S. businesses, which receive regular
cash infusions through transfers of fundsfromoverseas accounts. Jessica told the Committee
that the sources of Sioeng's funds are his businesses abroad. The cash infusions typically
originate in Hong Kong, where funds are wired to the Grand National Bank account of Sioeng's
sister, Yanti Ardi. The money is then distributed to various business or family accounts as
necessary. Jessica, who holds power of attorney for Yanti Ardi's account, controls distribution
ofthe money. Sioeng regularly provides such funds, although Panda Estates and Metropolitan
Hotel have generated a non-trivial amount of cash flow.
B.
ImCTnational Daily N w
es
In October 1995, Sioeng and his family contracted to purchase the International Daily
News, a Chinese-language newspaper in Los Angeles. They paid between $3 and $4 million for
the paper, making payments over the next several months. The purchase was consummated on
July 1, 1996.
The paper was paid for largely through checks written on one of Yanti Ardi's accounts at
the Grand National Bank. Between October 1995 and July 1996, some $2,590,000 was
transferred from Ardi's account to the International Daily News and C. International
Publications, the company that owns the paper itself. Almost all of the purchase money appears
to derive from businesses located in Hong Kong. These businesses, Victory Trading Company,
Pristine Investments Limited, and R T Enterprises Limited, also funded some of the Sioeng
family's political contributions, as is discussed below.
8
�It is not entirely clear why the Sioeng family purchased the paper. Jessica recounted that
buying the paper was Sioeng's idea (in consultation with Jessica, who ended up overseeing it).
Sioeng had been a significant advertiser for the paper and was close to the former owner (Chen),
who started lobbying Sioeng to buy it back in 1993. According to Jessica, Sioeng purchased the
paper because (i) it would enhance the family's standing in the local community, (ii) it was
cheap, and (iii) there were tax advantages to assuming the paper's debt.
Another explanation is that Sioeng purchased the paper with the approval of or otherwise
to please the Chinese govemment. Prior to its purchase, the International Daily News was a proTaiwan publication. According to Newsweek, "Now the paper is breathlessly pro-Beijing."
15
Newsweek goes on to report from its sources that Sioeng's purchase of the paper may have been
16
encouraged or even bankrolled by the PRC. In any event, since the purchase, the paper has
consistently lost money and is subsidized by Sioeng with funds from overseas.
In a June 1996 letter to Sioeng, President Clinton praised the International Daily News
for "faithfully report[ing] both local and international issues" and for being "part of the lasting
17
heritage of the Chinese-American community." John Huang arranged for the letter at Jessica's
request.
The Committee has learned that the Sioeng family owns the International Daily News
through a series of companies. The newspaper is owned by Chen International Publications
15
16
17
Daniel Klaidman and Mark Hosenball, "Connecting the Dots," Newsweek, April 28,
1997, p. 40.
Id
Letter from President Clinton to Ted Sioeng, June 20, 1996. (Ex. 3).
9
�(U.S.A.), Inc., a California company in mm owned by Sioeng's Group, Inc. Sioeng's Group,
Inc. was described by Sioeng's attorneys as a holding company owned by Jessica Elnitiarta, her
four siblings, and their mother. Jessica holds the. largest share and is the sole director and officer
ofthe company. Jessica also serves as the Secretary and CFO of Chen International. Sieong Fei
Man is the newspaper's general manager.
In addition to purchasing the paper, Sioeng, it appears, supplements its operations with
cash infusions. While it is not clear whether the International Daily News generates a substantial
cash flow for Sioeng, it is apparent he has supplemented its income and that he has done so with
money transferred from Hong Kong accounts.
C.
SiQgng's Political ContribuUons
Since 1992, but starting in earnest during the 1996 election cycle, Sioeng and his family
have become prolific political contributors. The Committee has been able to determine that
Sioeng, his family, and his business interests have made the following contributions to political
18
candidates, parties, and affiliated non-profit entities:
Date
From
3/23/92
5/12/92
6/20/92
6/20/92
3/25/93
5/27/93
6/4/93
9/11/93
Sioeng San Wong
Sioeng San Wong
Sioeng San Wong
Sioeng San Wong
Jessica Elnitiarta
Jessica Elnitiarta
Sioeng San Wong
Jessica Elnitiarta
12
19
Amount
Friends of Bonnie Wai
A. Yung Hsiang Wu
Alfred Y. Wu
Yung Hsiang Wu
Mike Woo for Mayor
Mike Woo for Mayor
Michael Woo for Mayor
California Republican Party
$ 500
$10,000
$ 1,500
$ 5,000
$ 1,000
$ 1,000
$ 2,500
$ 2,000
18
There may be other contributions about which the Committee is unaware.
19
Sioeng San Wong is another version ofthe name "Ted Sioeng."
10
�1/26/94
4/16/94
9/28/94
3/11/95
3/25/95
4/20/95
4/28/95
7/18/95
12/14/95
2/15/96
2/19/96
7/12/96
7/29/96
7/29/96
7/29/96
7/29/96
9/9/96
9/16/96
9/19/96
Sioeng San Wong
Sioeng San Wong
Jessica Elnitiarta
Sioeng San Wong
Sioeng San Wong
Sioeng San Wong
Sioeng San Wong
Panda Industries, Inc.
Panda Estates Investment
Su/Sa/La Elnitiarta
Jessica Elnitiarta
Panda Estates Investment
Panda Estates Investment
Loh Sun International
Su/Sa/La Elnitiarta
Jessica Elnitiarta
Subandi Tanuwidjaja
Suryanti Tanuwidjaja
Subandi Tanuwidjaja
20
Friends to Elect Sam Kiang
Friends of Michael Woo
Matt Fong for Treasurer
Friends of Norman Hsu
Comm. to Elect Miu Mey Chang
Matt Fong for State Treasurer
Matt Fong
National Policy Forum
Matt Fong for State Treasurer
Dr. Daniel Wong
Democratic National Committee
Democratic National Committee
Democratic National Committee
Democratic National Committee
Gary Locke for Governor
Gary Locke for Governor
Democratic National Committee
Democratic National Committee
Democratic National Committee
Total:
$ 1,000
$ 1,000
$ 2,000
$ 7,500
$ 1,500
$ 20,000
$ 30,000
$ 50,000
$ 50,000
$ 5,000
$100,000
$100,000
$ 50,000
$ 50,000
$ 1,100
$ 1,100
$ 60,000
$ 20,000
$ 20,000
$593,700
While Sioeng made an impressive number of contributions throughout the 1994 and 1996
election cycles, the table above shows that Sioeng's largesse became far more prolific starting in
1995. John Huang's influence clearly had something to do with this. But whatever other
influences motivated Sioeng largely are unknown.
1.
Contributions to the DNC
John Huang solicited all of the family's contributions to the DNC. In total, Sieong's
family and business interests contributed $400,000 to the DNC in 1995 and 1996. Most of this
was given in connection with specific fund-raising events to which Sioeng, his family, and
business associates were invited. These events provided Sioeng an opportunity to impress his
20
These checks were written on an account held jointly in the names of Sundari, Sandra,
and Laureen Elnitiarta.
11
�guests and to meet President Clinton or Vice President Gore. The family put great value on such
meetings and on having their pictures taken with political leaders. Jessica considered the
family's attendance at such events a way to honor her father.
A member ofthe Chinese-American community in Los Angeles first introduced Huang to
the Sioeng family in 1995. According to Jessica, Huang is not a close family friend, but instead
a prominent person in the Chinese-American community whom they came to know reasonably
well. Regardless, it is clear Huang was treated by Sioeng's family with familiarity and respect.
For example, in correspondence relating to the Sheraton Carlton fund-raiser Huang helped
21
organize, Jessica referred to him as "Uncle Huang."
Huang first mentioned political fund-raising to Jessica in January 1996, when he
indicated that he could arrange for the family to meet President Clinton at a fund-raiser in
Washington in February. This turned out to be a February 19,1996 fiind-raiser at the Hay
Adams Hotel. After some back and forth among the family and with Huang, it was agreed that
22
eight people ~ family and business partners ~ would attend, including Sioeng, who flew in
from the Far East for the event. Jessica Elnitiarta paid $100,000 (figured at $12,500 per attendee,
in accordance with the "price" of the event described by Huang in advance) by personal check.
Her sister delivered the check to Huang at the event, making sure of the correct amount with
Huang before filling it in. All eight attendees had their picture taken with President Clinton.
21
Memorandum from Jessica to Uncle Huang, undated. (Ex. 4).
22
The attendees were: Sioeng; Sandra Elnitiarta and husband; Yopi Elnitiarta; Jimmy
Tsang, a business partner, and his wife; Lie Kwee Kei, a Hong Kong business partner;
and Bruce Cueng, the Chinois partner.
12
�Because the family decided to attend so late, however, they had poor seats for the dinner, a
matter that caused Huang to apologize afterwards. Jessica told the Committee that the source of
the contributions was revenue from Panda Estates. By analyzing relevant bank records, the
Committee determined that Jessica's statement is incorrect, and that the $100,000 camefroman
account in Hong Kong.
23
Huang next contacted Jessica to see if the family would like to attend the April 29, 1996
Hsi Lai Temple fund-raiser. He made it clear that he would "comp" the family's attendance as a
way to make up for their poor seats at the Hay Adams event in February. Jessica explained that
one of her sisters is Buddhist and was very excited at the prospect of meeting the Venerable
Master of the Temple; for the family, this was of equal importance to meeting Vice President
24
Gore. Sioeng again flew from the Far East, and the family brought five attendees to the event.
Huang made sure that Sioeng sat next to Vice President Gore, which the family considered a
huge honor. The family paid nothing to attend.
Huang later called in May 1996 about another event where the family could see President
Clinton. He explained that it would be a small dinner in Washington, and asked whether the
family would like to participate. Jessica communicated this to Sioeng, who was very excited,
viewing it as a good opportunity to impress some of his business partners from overseas. They
23
See discussion below on Jessica's $ 100,000 contribution to the DNC of February 19,
1996.
24
Sioeng and wife, Jessica Elnitiarta, Laureen Elnitiarta, and Sioeng Fei Man, general
manager of the International Daily News.
13
�accepted, and in this case, Jessica sent Huang a list of invitees in advance. The dinner was held
on May 13, 1996, at the Sheraton Carlton in Washington. The family's attendees were:
•
Ted Sioeng;
•
Chio Ho Cheong, President, Ang-Du International Corporation
Ltd.;
•
Guo Zhong Jian, Deputy General Manager, China Construction
Bank, Hong Kong Branch;
Lin Fu Qiang, Managing Director, Everbrite Asia Limited, Hong
Kong;
Chan Elsie Y.Z., Managing Director, Ang-Du International
Corporation Ltd.;
•
Kent La, President, Loh Sun International; and
23
He Jian Shan.
It appears Sioeng met and spoke to President Clinton at the Sheraton Carlton event. By
letter dated May 28, 1996, the President thanked Sioeng for attending the fund-raiser and, more
26
generally, "for being there when you are asked to help." President Clinton noted that he had
"enjoyed having the chance to talk" with Sioeng, and expressed hope that Sioeng would
27
"continue to share [his] advice and insight."
25
Ex. 4.
26
Letter from Bill Clinton to Ted Sioeng, May 28, 1996. (Ex. 5).
27
Id. Note that Sioeng is not a citizen or legal permanent resident of the United States and,
therefore, he cannot legally contribute to the DNC or any other national political parties.
14
�Jessica told the Committee she knew that she would need to pay for the May dinner, but
Huang did not push her. He invited - begged actually, as Jessica recalls -- the family to attend
an additional event in July at the Century Plaza Hotel in Los Angeles. The event, which was
larger than the previous dinners, was held on July 22, 1996, and Huang indicated that he was
having difficulty finding people to attend. He encouraged Jessica to bring as many people as she
would like. Sioeng flew in for this event, bringing one business associate (Lam Kwok Man,
from Hong Kong), and the family came with approximately 48 localfriends.Jessica Elnitiarta
made a $100,000 contribution to the DNC (from the account of Panda Estates) on July 12, 1996
to cover the seats for the May fund-raiser, figuring the price at $12,500 per seat. Later, on
July 29, 1996, Jessica wrote an additional $50,000 check ~ also on the Panda Estates account ~
to the DNC to cover the July Century City event. Jessica considered the price-per-head for the
Century City event significantly less than that for the Sheraton Carlton fund-raiser in May.
Jessica disclaimed any involvement in several other contributions. One was a Loh Sun
International contribution of $50,000 to the DNC on July 29,1996 (the same day as the Century
City fund-raiser and the $50,000 contribution from Panda Estates to the DNC). Jessica stated
that she knew nothing about this until she read about it in the papers. Jessica's seeming attempt
to distance the Sioeng family from Loh Sun is belied by the obvious financial relationship
between them. As described below, a wire transfer to Loh Sun from R T Enterprises ~ one of the
businesses that often wired fundsfromHong Kong to Sioeng family accounts in the United
States ~ may have funded some or all of Loh Sun's $50,000 contribution to the DNC. In
addition, a check signed by Kent La, Loh Sun's president, was deposited into Sioeng's account
and may have been used to fund Panda Industries' 1995 contribution to the National Policy
15
�Forum, also discussed in more detail below. Moreover, in December 1995 and January 1996,
28
Jessica wrote two checks to Kent La totaling $58,000. In the memo line of these checks is
written, "Hong ta Shan," the brand of cigarettes Loh Sun distributes.
Other contributions Jessica disclaimed knowledge of were made by the Tanuwidjajas, her
family's in-laws, who wrote three checks totaling $100,000 to the DNC in 1996. Jessica claimed
to know nothing about these contributions. However, the Tanuwidjaja family attended at least
one fund-raiser with Jessica, and two of the three Tanuwidjaja contributions were solicited by
29
John Huang.
. -
Huang called later in 1996 about other events in Chicago and San Francisco, but by that
time Jessica had lost interest in the process. She felt she had adequately honored her father and
30
did not need to participate further.
28
See December 1995 check to Kent La from Jessica Elnitiarta for $50,000 (Ex. 6).
29
Curiously, DNC check-tracking forms indicate that Huang attributed three Sioeng-related
checks to a small, July 30, 1996 dinner at the Jefferson Hotel attended by President
Clinton. A July 29, 1996 Panda Estates Investment check for $50,000 (Ex. 7), a
September 9, 1996 Subandi Tanuwidjaja check for $60,000 (Ex. 8), and a July 29, 1996
Loh Sun International check for $50,000, (Ex. 9), are all listed by Huang as connected to
the July 30,1996 dinner. Among the intimate dinner's attendees were President Clinton,
Huang, DNC Chairman Donald Fowler, James Riady, Taiwanese businessmen Eugene
T.C. Wu and James L.S. Lin of the Shin Kong Group, and Sen Jong "Ken" Hsui, a
Taiwanese-American businessman who is president of Prince Motors. See Alan C. Miller
and David Rosenzweig, "Clinton Dinner Gives Probes Some Questions to Chew On,"
Los Angeles Times, February 7, 1997, p. A l . No one from the Sioeng or Tanuwidjaja
families attended the dinner.
30
Jessica told the Committee she has spoken only once to Huang since the campaign
finance story broke in October 1996, and then only in passing at a community event.
16
�2.
Contributions to Matt Fong
Sioeng and Panda Estates made three contributions to Matt Fong in 1995, totaling
$100,000. At the time, Fong was running for Treasurer of the State of California. Sioeng
contributed a total of $50,000 in April 1995. Later, in December 1995, Jessica Elnitiarta
contributed $50,000 more through Panda Estates.
According to Jessica, the contributions were the result of some intense fund-raising
appeals from Fong personally, and others on his behalf. Faye Huang (a local activist not related
to John Huang) participated in a fund-raiser the Sioeng family held for a local candidate (Julia
Wu) at the Metropolitan Hotel in 1994. Faye Huang subsequently approached the family for
contributions on behalf of Fong. She courted both Sioeng and Jessica aggressively, and Sieong
eventually made his contributions in April 1995. The checks were filled out in part by Faye
Huang.
. On April 22, 1997, after press stories had appeared linking Sioeng to the campaign
finance scandal, Fong returned the contributions from Sioeng and Panda Estates. Fong had
31
requested that Sioeng and Jessica verify that the contributions were not from foreign sources.
When Sioeng and his daughter failed to respond within a 24-hour deadline, Fong returned the
contributions, stating, " I want absolutely no cloud, no suspicion, no doubt about my campaign
conduct or my performance in public office."
32
31
See Paul Jacobs and Dan Morain, "Fong Returns $100,000 in Gifts," Los Angeles Times,
April 23, 1997, p. A3.
32
Id
17
�By letter dated May 27, 1997, attorneys for Jessica and Panda Estates responded to
Fong." The letter criticizes "Mr. Fong and his campaign [for joining] in the shameful rhetoric
34
directed at Asian-Americans." It states further that Jessica relied "upon the direct
representations made by the Fong campaign . .. that Panda Estates could properly contribute to
33
Mr. Fong's campaign." Although the letter notes that Panda Estates operated the Doheny
Estates condominium complex in Beverly Hills, it does not represent - let alone prove - that the
source of the Panda Estates contribution to Fong was its domestically-generated income. In fact,
the Committee has determined that at least a portion of one Sioeng contribution to Fong was
made with foreign money.
3.
Contribution to the National Policy Forum
On July 18, 1995, Panda Industries made a $50,000 contribution to the National Policy
Forum (NPF). Exactly how this came about is uncertain, though it appears Sioeng's acquaintance
with the NPF began with Matt Fong. Perhaps in gratitude for Sioeng's earlier contributions,
Fong arranged in June 1995 for Sioeng to have his picture taken with Speaker Gingrich in
Washington, DC. Later, Fong sent a letter in support of a Los Angeles badminton tournament
Sioeng underwrote, and arranged for Gingrich to send a similar letter.
33
Letter from Mark J. MacDougall and Steven R. Ross to William R. Turner, May 27,
1997. (Ex.10). The letter indicates that it was sent after Fong's deadline because "Ms.
Elnitiarta was traveling at the time [Fong's] letter arrived."
34
Id.
35
Id.
18
�Around the same time, Sioeng and Elnitiarta took steps to host a fall 1995 fund-raiser
featuring Speaker Gingrich at their Los Angeles hotel. They thought such an event would add to
the hotel's prestige. The fund-raiser ended up occurring at another Los Angeles hotel, but
Sioeng and family members nevertheless attended the event. The July 18, 1995 contribution of
$50,000 to the NPF was solicited by a fund-raiser named Steve Kinney. Elnitiarta characterized
it as a gesture of gratitude for the photo with the Speaker and also an attempt (unsuccessful, as it
turns out) to persuade people to hold the fund-raiser at the family hotel.
36
Although discussed in detail elsewhere in the report, some brief background information
on the NPF is warranted. The NPF was an independent 501(c)(4) organization created by Haley
Barbour to serve as a grass roots organization for the Republican exchange of ideas. It had no
PAC, donated no money, and did not advocate the election or defeat of any candidate. It was not
legally prohibited from accepting foreign money.
Part III. Analysis of Sioeng/Elnitiarta/Tanuwidjaja Political Contributions Made with
Foreign Money: 1995-96
Ted Sioeng, Jessica Elnitiarta, the family's businesses, and their in-laws, the
Tanuwidjajas, made a number of significant political contributions in 1995 and 1996. In total,
the Sioeng family and businesses spent over half a million dollars on the 1996 elections.
The Committee has examined bank records relevant to most of family's large political
contributions and discovered a recurring pattern: wire transfers from Hong Kong companies to
Sioeng & Co. accounts in the United States. Five companies ~ Pristine Investments Limited, R
T Enterprises Limited, Dragon Union Limited, Mansion House Securities, and Victory Trading
36
See the section of this report on the National Policy Forum. See also infra note 84.
19
�Company -- believed to be based in Hong Kong, are the apparent source of funding for many of
the Sioeng family's activities in this country. In 1995 and 1996, these companies transferred
millions of dollars from Hong Kong banks into U.S. accounts held by Sioeng's sister, Yanti
37
38
Ardi. Jessica Elnitiarta, who held a durable power of attorney over Ardi's account, distributed
money from the account to other Sioeng family accounts and directly to Sioeng- related
businesses and interests. Funds from Ardi's account eventually were used to make political
contributions, to purchase and subsidize the International Daily News, and to fund other
activities in this country.
- -
Jessica's use of Yanti Ardi's U.S. bank account as a holding pen for funds wired in from
Hong Kong raises questions about the origins ofthe Sioeng family's money as well as its
intended use in the United States. As noted, the Committee has discovered that millions of
dollars were wired into the U.S. from Hong Kong bank accounts held in the names of foreign
37
The account in Ardi's name was not the only one used as a conduit for foreign funds. On
November 13, 1995, the Sioeng family set up another such account at the Grand National
Bank, this one in the name of Nanny Nitiarta, an Indonesian citizen of unknown relation
to the family. Like Ardi's account, Nanny's appears to have been used to shift money
from overseas to various Sioeng-family accounts and business interests. For example, on
November 5, 1996, Nanny's account was credited with a $700,000 wire transferfroma
Hong Kong account held by R T Enterprises Limited. (Ex. 11). A day later, Jessica
wrote a check on Nanny's account for $140,000 to the International Daily News. (Ex.
12). The check was reversed because Jessica did not have signature authority over the
account (Ex. 13) (though she had signed other checks and authorized other transfers that
were not reversed). On November 8, 1996, $700,000 was transferredfromNanny's
account to Yanti's. (Ex. 14). Jessica remedied the signature problem by executing a
durable power of attorney over Nanny's account on November 20,1996. (Ex. 15).
Nanny's account was closed on March 14, 1997.
38
Grand National Bank Durable Power of Attorney to Jessica G. Elnitiarta, December 20,
1995. (Ex. 16).
20
�firms. Because of the Committee's inability to compel production of bank records located
•
outside U.S. borders, the Committee cannot determine the source of the dollars wired into Sioeng
family accounts in this country.
The Committee's analysis of Sioeng family bank records reveals that at least $200,000 in
contributions to the DNC derived from foreign sources. In addition, some $16,000 in
contributions to Matt Fong are linked to foreign money. The Majority staff has determined that
39
the following contributions derive in whole or in part from foreign funds:
Account Nam?
DOIISS
Check Date
Check Amount
Panda Estates Investment
Jessica Elnitiarta
Panda Estates Investment
Subandi Tanuwidjaja
Subandi Tanuwidjaja
Matt Fong
DNC
DNC
DNC
DNC
12/14/95
2/19/96
7/12/96
9/9/96
9/19/96
$ 50,000
$100,000
$ 50,000
$ 60,000
$ 20,000
Only the Fong contribution has been returned. The DNC has refused steadfastly to give back any
ofthe Sioeng family contributions.
The sections that follow discuss in detail the Sioeng family contributions listed on
Exhibit 17. The discussion largely revolves around bank records produced to the Committee
pursuant to subpoenas. The records support the conclusions drawn above; namely, that a
substantial portion of the Sioeng family contributions were made with foreign money.
A.
D C Contributions
N
l.
2119/96
39
Jessica Elnitiarta
$ 100,000
See chart listing the largest Sioeng family contributions (Ex. 17).
21
�40
On February 19, 1996, Jessica Elnitiarta wrote a check for $100,000 to the DNC. A
DNC check tracking form indicates the contribution related to a dinner held on the same date at
41
the Hay Adams hotel. Although the $100,000 check is dated February 19, 1996, it was not paid
42
until February 26, 1996.
43
As of February 19, 1996, Elnitiarta's account carried a balance of less than $10,000.
However, on February 22, 1996, Elnitiarta transferred $200,000 to her account from Yanti
44
Ardi's. Days later, half of this money was used to satisfy the check Elnitiarta wrote to the DNC
on February 19, 1996. The source of funds in Yanti Ardi's account at that time appears to be a
$518,433.56 wire transfer from an account maintained at the Hong Kong branch of the Dutch
45
ING Bank by a company called Pristine Investments, Ltd. The wire transfer took place on
46
February 12, 1996. Prior to the transfer, Ardi's account carried a balance of less than $3,000.
There were no additional deposits into Ardi's account between February 12 and 22, 1997.
In short, bank records indicate that Jessica Elnitiarta's February 19, 1996 contribution of
$100,000 to the DNC was made with substantially all foreign funds.
40
$100,000 check from Jessica G. Elnitiarta to the DNC, Feb. 19,1996. (Ex. 18).
41
DNC Check Tracking Form for Jessica G. Elnitiarta (Ex. 19).
42
Grand National Bank account statement for account number 210473306, Feb. 1 -29, 1996.
(Ex. 20).
43
Id.
44
Grand National Bank Funds Transfer Authorization, Feb. 22,1996. (Ex. 21).
45
Grand National Bank Miscellaneous Credit form, Feb. 12, 1996. (Ex. 22).
46
Grand National Bank account statement for account number 240417614, Feb. 1-29, 1996.
(Ex. 23).
22
�II12/96
Panda Estates (family business)
$ 100,000
Panda Estates Investment Inc. contributed $ 100,000 to the DNC on July 12, 1996froman
47
account the report will refer to as "Panda 801." At the time, the Panda account had a negative
48
balance of $598.55. The check to the DNC was paid on July 25, 1996, leaving the Panda
49
account with a negative balance of $100,124.75.
On July 26, 1996, $100,000 was transferred
50
from a second Panda account ("Panda 814") to Panda 801, bringing the balance of Panda 801 to
51
negative $2,351.29. Hence, the Panda 814 account was the source ofthe contribution from
Panda 801.
The sources ofthe funds for Panda 814's $100,000 transfer to Panda 801 appear to be (1)
rental income received by Panda Estates and (2) a $60,000 transfer from Yanti Ardi's U.S.
account. On July 25, 1996, Panda 814 carried a balance of approximately $50,000," or not
enough to cover a $100,000 transfer. On July 26, 1996, a $60,000 check from Yanti Ardi was
deposited in Panda 814 - a check whose source appears to be funds received by wire transfer
47
$ 100,000 check from Panda Estates Investment, Inc. to DNC, July 12, 1996. (Ex. 24).
48
Grand National Bank account statement for account number 200739801, June 29 - July
31, 1996. (Ex.25).
49
Id.
50
Grand National Bank Customer Authorization for Funds Transfer, July 26, 1996.
(Ex. 26).
51
Ex. 25.
52
Grand National Bank account statement for account number 200739814, June 29 - July
31, 1996. (Ex.27).
23
�from a bank in Hong Kong." On June 28, 1996, Yanti Ardi's U.S. account was credited with
$1,652,479.98, which had been transferred by R. T. Enterprises Ltd. from the ING bank in Hong
54
55
Kong. On June 27, 1996, Ardi's account balance was under $5,000. After the large R. T.
Enterprises transfer, there were no additional deposits into Ardi's account until after the July 26,
56
1996 $60,000 transfer to Panda 814.
In short, at least $50,000 of Panda Estate's $100,000 July 12, 1996 contribution to the
57
DNC can be traced to foreign money.
53
$60,000 check from Yanti Ardi to Panda Estates Investment, Inc., July 26, 1996.
(Ex. 28).
54
Grand National Bank Miscellaneous Credit form, June 28,1996. (Ex. 29).
55
Grand National Bank account statement for account number 240417614, June 1-28, 1996.
(Ex. 30).
56
Grand National Bank account statement for account number 240417614, June 29 - July
31, 1996. (Ex.31).
57
Panda Estates Investment Inc. contributed $50,000 to the DNC by check dated July 29,
1996 and drawn on the Panda 801 account. (Ex. 7). At the time the check was written,
the Panda 801 account carried a negative balance. (Ex. 25). The check was not paid until
August 6, 1996, the same day two wire transfers totaling $50,000 were deposited into the
Panda 801 account. Grand National Bank Account statement for account number
200739801, Aug. 1-Aug. 30, 1996 (Ex. 32). One transfer, in the amount of $40,000,
came from the Panda 814 account. Grand National Bank Funds Transfer Authorization,
Aug. 6, 1996 (Ex. 33). The other transfer, this for $10,000, camefromCode 3 U.S.A.
Grand National Bank account statement for account number 200739814, Aug. 6,1996
(Ex. 34), which the Committee understands to be a gun shop run by Elnitiarta's husband.
The $40,000 from Panda 814 was funded by a number of small deposits, which appear to
be rental payments made to Panda Estates. Grand National Bank account statement for
account number 200739814 (Ex. 35). The Committee does not know the source of the
$10,000 wired from Code 3. Hence, from the documents reviewed by the Committee, the
July 29, 1996 Panda Estates contribution cannot be traced to foreign money.
24
�3.
9/9/96
9/19/96
Subandi Tanuwidjaja
Subandi Tanuwidjaja
$60,000
$20,000
The Tanuwidjaja's contributed $100,000 to the DNC through three checks dated in
58
September 1996. Contributions dated September 9 and 19, 1996 and totaling $80,000 were
from Subandi Tanuwidjaja, son of Susanto Tanuwidjaja, and the man who married Ted Sioeng's
daughter, Laureen. A contribution of $20,000 dated September 16, 1996 was made by Suryanti.
The September 9 and 19 contributions from Subandi appear to be covered by a $100,000
59
check from Susanto dated September 6, 1996, and a $20,000 wire transfer on September 18,
1996 from Dragon Union Ltd.'s account at the Hua Chiao Commercial Bank Ltd. in Hong
60
Kong. It is clear from markings known as "imad" characters on the lower left of the wire
61
transfer report that the funds were, in fact, transferred from Hua Chiao's Hong Kong branch.
62
On September 8, 1996, Subandi's account carried a balance of less than $5,000. On
63
September 9, 1996, the $100,000 check from Susanto was deposited into Subandi's account.
58
$60,000 check from Subandi Tanuwidjaja to the DNC, Sept. 9, 1996. (Ex. 8). $20,000
check from Subandi Tanuwidjaja to the DNC, Sept. 19,1996 and $20,000 check from
Suryanti Tanuwidjaja to the DNC, Sept. 16,1996. (Ex. 36).
59
$100,000 check from Susanto Tanuwidjaja to Subandi Tanuwidjaja, Sept. 6, 1996.
(Ex. 37).
60
Reprint of Incoming Wire Traffic, Sept. 18, 1996. (Ex. 38).
61
Id.
62
Western State Bank account statements for account number 033100-153947, Aug.-Oct.
1996. (Ex. 39).
63
Id.
25
�64
On the same day, Subandi wired $38,000 to a bank in Singapore, leaving a balance of
$66,049.99, or enough to cover Subandi's $60,000 check to the DNC, also dated September 9,
65
1996. On September 18, 1996, Subandi's account was credited with the $20,000 wired by
66
Dragon Union Ltd, increasing the balance to $86,039.99. Thereafter, the two DNC checks were
67
cashed; the $60,000 check on September 27 and the $20,000 check on October 4, 1996.
The $100,000 check from Susanto to Subandi can be traced in large part to a foreign
68
source. Susanto's account carried a balance of less than $3,000 when it was credited with a
wire transfer in the amount of $99,985 from an account maintained by Subandi in Jakarta,
69
Indonesia. Again, it is clear from the "imad" characters on the left side of the wire transfer
70
report that the funds were transferred from Subandi's United City Bank account in Jakarta.
There were only two other deposits into Susanto's account between August 22 and September 9,
64
Memorandum and report of outgoing wire traffic from Subandi Tanuwidjaja to Western
State Bank, Sept. 9, 1996. (Ex. 40).
65
Ex. 39.
66
Id.
67
Id.
68
Western State Bank account statements for account number 033200-055538, Aug.-Oct.
1996. (Ex.41).
69
Report of incoming wire traffic, August 22, 1996. (Ex. 42).
70
Id.
26
�71
1996 -- one for $20,000 on August 30 and onefor$10,000 on September 3, 1996. These two
72
deposits, however, appear connected to debits in similar amounts.
In any event, it is clear that Subandi's $80,000 in contributions to the DNC derived
mostly -- if not entirely— from foreign funds.
The Majority staff has obtained corporate records for Dragon Union Ltd. in Hong Kong
73
and have attached them as an exhibit. The records show that Subandi Tanuwidjaja's links to
the company; he was made a director of Dragon Union on January 27, 1997. Subandi's
connection to Dragon Union would tend to suggest he may have been aware that foreign money
was being used to .make contributions to the DNC.
71
72
74
Ex.41.
Id.
73
The Companies Ordinance of Dragon Union Limited, Dec. 11, 1996 (Ex. 43).
74
Two other large Sioeng-family contributions to the DNC bear mention, although it the
Committee has not been able to determine whether or not they were made with foreign
money. By check dated September 16,1996, (Ex. 36), Suryanti Tanuwidjaja contributed
$20,000 to the DNC. Suryanti's contribution to the DNC was not paid until September
30, 1996. Bank of America statement of Suryanti Tanuwidjaja, Oct. 30,1996 (Ex. 44).
On September 18, 1996, Suryanti's savings account was credited with a $20,000 wire
transfer from Dragon Union Ltd.'s account at the Hua Chiao Commercial Bank Ltd. in
Hong Kong. Funds Transfer History, Sept. 18, 1996 (Ex. 45). On the same day, Suryanti
transferred $24,000 from her savings to her checking account at Bank of America. Bank
of America statement of Suryanti Tanuwidjaja, Sept. 27, 1996 (Ex. 46).
Although the timing appears suspicious, the Committee has not been able to identify
conclusively the $20,000 wire transfer from Dragon Union as the source of Suryanti's
contribution to the DNC in the same amount. There were sufficient additional funds in
Suryanti's savings account to cover the $24,000 transfer to checking. (Id.). Likewise,
there were sufficient additional funds in Suryanti's checking account to cover the DNC
check on September 30, 1996, the day it was paid. (Ex. 44).
Loh Sun International, Inc. contributed $50,000 to the DNC by check dated July 29,1996
27
�B.
Matt Fong Contribution
12/14/95
Panda Estates (family business)
$50,000
The Committee has determined that one of three Sioeng-family contributions to Matt
Fong was made, in part, with foreign money. Fong returned all of the contributions in April
1997.
Panda Estates Investment Inc. contributed $50,000 to Matt Fong for State Treasurer on
75
December 14, 1995. The check was signed by Jessica Elnitiarta and paid on December 18,
76
1995. The balance in Panda Estates' account at that time was only $7,000, and the check to the
77
Matt Fong (and one other check) left Panda with a negative balance of $43,888.SS.
On December 19, 1995, $50,000 was transferred to the Panda account from one of Yanti
78
Ardi's Grand National Bank accounts. On December 11, 1995, Ardi's account was credited
and signed by Kent La. (Ex. 9). The check was not paid until August 5, 1996, at which
point the Loh Sun account carried a balance of more than $250,000. Union Pacific Bank
Records for Loh Suh International, Aug. 30, 1996 (Ex. 47). On July 24, 1996, the Loh
Sun account was credited with $97,555, which had been wired by R T Enterprises
Limited from an account at a Hong Kong branch of the Dutch ING Bank. Union Pacific
Bank records for Loh Suh International, Inc., July 31,1996 (Ex. 48). Although this was
the largest deposit made into Loh Sun's account in 1996 and the only one that, on its face,
clearly was made with foreign funds, the Committee was unable to determine whether the
money wired to Loh Sun by R T Enterprises was used to make the DNC contribution.
There was simply too much other money in Loh Sun's account.
75
$50,000 Grand National Bank check from Panda Estates Investment Inc. to Matt Fong for
State Treasurer, Dec. 14, 1995. (Ex. 49).
75
Grand National Bank account statement for account number 200739801, Dec. 1 - 29,
1995. (Ex.50).
77
Id.
78
Grand National Bank Customer Authorization for Funds Transfer, Dec. 19, 1995.
(Ex. 51).
28
�with a wire transfer of $150,000 from a Hong Kong account maintained by Pristine Investments
79
80
Limited. At the time, Ardi's account carried a balance of approximately $34,000, which, in
81
tum, was the remainder of a $562,500 deposit into Ardi's account on November 15, 1995. The
$562,500 deposit was from a check written on an account held in the name of Sandra and
82
Laureen Elnitiarta, an account the Committee does not have records for.
In sum, the records reviewed by Committee staff show that at least $16,000 of the
83
$50,000 contribution from Panda Estates to Matt Fong derived from a foreign source.
79
Grand National Bank Miscellaneous Credit form, Dec. 11, 1995. (Ex. 52).
80
Grand National Bank account statement for account number 240979814, Dec. 1 - 29,
1995. (Ex.53).
81
Grand National Bank account statement for account number 240979814, November 13 30, 1995. (Ex.54).
82
$562,500 Grand National Bank check from Sandra and Laureen Elnitiarta to Yanti Ardi,
November 15, 1995. (Ex. 55). Laureen Elnitiarta's signature appears on the check.
83
The Committee examined two other Sioeng-family contributions to Fong that cannot be
traced to foreign sourcesfromthe information at hand. Sioeng San Wong (a.k.a. Ted
Sioeng) contributed $20,000 to Matt Fong by check dated April 20,1995. Check 671 to
Matt Fong for State Treasurer from Sioeng San Wong, Apr. 20,1995 (Ex. 56). The
check was paid on April 27,1995. Grand National Bank account statement for Sioeng
San Wong, Apr. 1-Apr. 28, 1995 (Ex. 57). Two days earlier, Sioeng's account carried a
balance of near zero. It appears that the Fong check was covered by a $30,000 transfer on
April 26,1995 from Sundari and Laureen Elnitiarta. Statement of Transfer, Apr. 26,
1995 (Ex. 58). Referred to as a "loan advance," the $30,000 transfer represented the only
funds in Sioeng's account at the time his check to Matt Fong was paid. (Ex. 57). The
Committee does not know the source of the $30,000 transferred from Sundari and
Laureen to Sioeng.
Sioeng San Wong wrote another check to Matt Fong - this one for $30,000 - on April
28,1995. Grand National Bank check from Sioeng San Wong to Matt Fong for State
Treasurer for $30,000, Apr. 28,1995 (Ex. 59). This check was paid on May 2,1995.
Grand National Bank account statement of Sioeng San Wong, Apr. 29-May 31, 1995
(Ex. 60). At the time, Sioeng's account still had roughly $10,000 left from Sundari and
29
�84
Other Contributions and Questionable Transactions
Laureen's loan advance and an additional $30,000 from a check written on the account of
a Glenville A. Stuart. Grand National Bank check from Glenville Stuart to Sioeng San
Wong for $30,000, Apr. 28,1995 (Ex. 61). The check was deposited on April 28, 1995.
(Ex. 57).
Committee staff spoke to Mr. Stuart about the $30,000 check on November 3, 1997.
Stuart, who said he has known Ted Sioeng for ten years, claimed the check was written in
partial satisfaction of a loan Ted Sioeng had extended to him. Stuart said no one gave
him the money to give to Sioeng and that he does not recall Sioeng asking him for it. He
said that Jessica Elnitiarta, however, may have asked him for the money. Stuart declined
to discuss what line of business he is in.
Committee staff asked Stuart about Sioeng and his family more generally. Stuart
characterized Sioeng as a kind, good-hearted, and generous man with lots offriendsfrom
all over the world. Sioeng, who Stuart knows as "Sioeng San Wong," isfrightenednow,
according to Stuart, who has not seen Sioeng in quite some time. Stuart also knows
Jessica Elnitiarta,who he said handles the Sioeng family businesses in this country.
84
Note that the Committee could not determine whether Panda Industries' $50,000
contribution to the National Policy Forum (NPF) was made with domestic or foreign
money. The Committee's analysis follows.
Panda Industries, Inc. contributed $50,000 to the NPF. Grand National Bank check from
Panda Industries signed by Jessica Elnitiarta (Ex. 62). The check was paid on Aug. 3,
1995. Grand National Bank statement of Panda Industries, Account number 240539301,
Aug. 1-Aug. 31, 1995. (Ex. 63).
Because of multiple deposits into and withdrawals from the Panda Industries account
during the relevant timeframe,the Committee has been unable to pinpoint one particular
source - domestic or foreign - for Panda's contribution to the NPF. That said, there are
two potential sources of funds for the $50,000 contribution. On July 17, 1995, Panda
Industries deposited a $50,000 check written the same day on Sioeng San Wong's
account. Grand National Bank check from Sioeng San Wong to Panda Industries, Inc. for
$50,000 (Ex. 64). Prior to this deposit, the Panda Industries account carried a balance of
roughly $1,300. Grand National Bank statement of Panda Industries, Inc. account
number 240539301, July 1-July 31, 1995 (Ex. 65). Also on July 17,1995, $70,000 was
deposited into Sioeng San Wong's account. The $70,000 derived from a check written on
Vinh B. La's account at the United Pacific Bank. United Pacific Bank check written by
Vinh B. La to Cash, July 17, 1995 (Ex. 66). This $70,000 appears to be the source of
Sioeng's $50,000 transfer to Panda Industries as, save for the $70,000, Sioeng's account
30
�•
PRC Consulate in Los Angeles - two $20,000 checks, both dated November 15, 1996 and
consecutively numbered, were written on Jessica Elnitiarta's account to the PRC
carried a balance of less than $5,000. Grand National Bank statement for Sioeng San
Wong, account 210459806, July 1-July 31, 1995 (Ex. 67).
It is difficult to trace the source ofthe $70,000 transferredfromVinh La's account. On
the day the check was paid (July 18, 1995), La's account carried a balance of
$101,326.93. United Pacific Bank Statement of Vinh Binh La, account 001-017438, July
25, 1995 (Ex. 68). Half of this amount is attributable to a July 14, 1995 deposit of
$50,000 withdrawnfroma savings account maintained by Loh Sun International at the
United Pacific Bank. United Pacific Bank deposit slip for account of La Vinh Binh, July
14, 1995 (Ex. 69). The savings withdrawal request was signed by Kent La, who later
signed a contribution checkfromLoh Sun to the DNC. Id.
The source of the $50,000 withdrawalfromLoh Sun's United Pacific Bank savings
account appears to be a transferfroma Loh Sun checking account maintained at the same
bank. Loh Sun's savings account was opened with a deposit of a $200,000 check, dated
January 4,1995, written on Loh Sun's checking account. United Pacific Bank statement
of Loh Sun International, Inc. account 001-409204, Jan. 31, 1995 (Ex. 70). An
examination of the quarterly statements for Loh Sun's savings accountfromthe time it
was opened until the $50,000, July 1-July 31,1995 withdrawal was made on July 14,
1995 reveals that the withdrawal derivedfromthe $200,000 deposited on January 4,
1995. United Pacific Bank statement of Loh Sun International, Inc., account 001-720806, Mar. 31, 1995 (Ex. 71). There were no other significant deposits made into the
account during this time period. Id The Committee does not know the source of the
$200,000 transferredfromLoh Sun's checking account.
The second potential source of Panda Industries' contribution to the NPF was an $80,000.
telephone transfer into the Panda Industries' account. The transfer was made on July 24,
1995 and increased the balance in the account to $124,877.52. (Ex.65). The Committee
has learned that the telephone transfer was requested by Jessica Elnitiarta and made from
another account maintained in the name of Panda Industries ("PI 314"). Customer
Authorization for Funds Transfer, July 24,1995 (Ex. 72). However, the Committee
could not determine with the information at hand the source of the $80,000 transferred
from PI 314.
In sum, the Committee cannot determine whether any portion of Panda Industries'
$50,000 contribution to the NPF derivedfroma foreign source.
31
�85
Consulate General in Los Angeles. The checks were deposited by the Consulate in its
"Education Section" account; an account that appears to have been opened with
86
Elnitiarta's money. The purpose behind these checks -- and why two were written
instead of one — is not known.
•
Overseas Chinese Friendship Association - a $ 10,000 check was written on Sioeng San
87
Wong's account to the "O.C. Chinese Friendship Ass." on April 15, 1995. The memo
line the check indicates that it was meant as a donation. The Committee could not
determine the nature of the donation. The check may have been intended for an
organization called the Overseas Chinese Friendship Association. The association was
set up at the direction of the PRC's Communist Party apparatus, specifically, the National
Committee of the Chinese People's Political Consultative Conference ("CPPCC"), and
was meant to forge and strengthen ties between the United Front Work Department of the
88
CPPCC Central Committee and overseas Chinese in this country and elsewhere.
85
Two $20,000 checks from Jessica G. Elnitiarta to the Consulate General of the PRC
(Education Section), November 15,1996. Grand National Bank check number 442 &
443 from Jessica G. Elnitiarta to Consulate General of the PRC (education section) for
$20,000, Nov. 15,1996 (Ex. 73).
86
Bank of China account statement for account number 5011 -0600059-000, December 31,
1996. (Ex. 74). The two $20,000 checks were credited to the L.A. Consulate's
Education Section account as a $4,000 and a $36,000 deposit. A Bank of China
representative could not explain why the two checks were credited in that way.
87
$10,000 Grand National Bank check from Sioeng San Wong to the O.C. Chinese
Friendship Ass., April 15, 1995. (Ex. 75).
BBC Summary of World Broadcasts, January 20,1995.
32
�•
Dr. Daniel Wong - a $5,000 check was written to Wong on the account of Sundari,
89
Sandra, and Laureen Elnitiarta on February 15, 1996. Wong is a Republican who ran
for the California State Assembly.
•
Norman Hsu - a $7,500 check was written on Sioeng San Wong's account to Friends of
90
Norman Hsu on March 1 1, 1995.
Hsu is a former president of the Chinese-American
Association.
•
PRC Consulate in Los Angeles to Hollywood Metropolitan Hotel - a $3,000 check, dated
March 22, 1996, was written on the PRC Consulate's account at the Bank of China, Los
Angeles branch to the Hollywood Metropolitan Hotel, a business owned and operated by
91
the Sioeng family. Three days later, the check was deposited into a Grand National
92
Bank account maintained by Panda Hotel Investment, Inc. Nothing on the check itself
or told to the Committee by Jessica helps explain the instrument's purpose.
Part IV. Conclusion
The story of Ted Sioeng and his family is a fascinating glimpse at how quickly an
individual or family — even one with markedly limited U.S.-based income and with the vast
majority of its wealth overseas - can become an influential figure with a political party or in an
89
$5,000 Grand National Bank check from Sundari, Sandra, and Laureen Elnitiarta to Dr.
Daniel Wong, February 15, 1996. (Ex. 76).
90
$7,500 Grand National Bank check from Sioeng San Wong to Friends of Norman Hsu,
March 11, 1995. (Ex.77).
91
$3,000 Bank of China check from the Consulate General of the People's Republic of
China to the Hollywood Metropolitan Hotel, March 22, 1996. (Ex. 78).
92
Id.
33
�election. In Sioeng's case, some $400,000 in contributions to the DNC in 1995 and 1996 earned
him remarkable access to the President and Vice President of the United States, and not just for
him, but for his family andfriendsas well.
The Sioeng story, though, has only been partially told by the Committee. Still to be
answered are many questions, among them the following:
•
Was money sent by Sioeng from Hong Kong to the United States for the express purpose
of making political contributions;
•
What was the ultimate source of the funds Sioeng wiredfromHong Kong to accounts in
this country;
•
What was the nature of Sioeng's relationship with the Govemment of China; and
•
Why did Sioeng and his family decide to start making large political contributions during
the 1996 election cycle.
It is clear that Sioeng and his family became major Democratic donors during the 1996 election
cycle and that they did so with money wired from overseas. The questions above take the
analysis to a new level - one that focuses less on the Sioeng family's contributions and more on
their motives for making them. Until the questions are answered, Sioeng, like Charlie Trie, John
Huang, Maria Hsia, and others, will remain a mysterious figure who was embraced all-too
eagerly by a money-hungry DNC.
34
�JOHN HUANG'S YEARS AT LIPPO
In the fall of 1996, John Huang was brought out ofthe obscurity of the DNC fundraising
operation and into the media spotlight as a central character in the DNC fundraising scandal. A
prominent figure through the course of the Committee's investigation, Huang appeared as a key
player in numerous questionable fundraising ventures, including the Hsi Lai Temple fundraiser
1
and the Yogesh Gandhi imbroglio. Huang solicited approximately $1.6 million that has been
returned to date by the DNC. Further, Huang apparently violated the Hatch Act in that certain
solicitations were undertaken during his tenure at the Commerce Department.
Huang's connections to his long-time patrons, the Riady family, at Indonesia's Lippo
Group linked his past with his questionable fundraising practices. Two further discoveries
pushed an examination of the Lippo Group and its U.S. activities to the top ofthe Committee's
investigative agenda: First, the Committee learned that Huang obtained a security clearance in
connection with his appointment to the Commerce Department and received classified briefings
on sensitive trade issues of importance and value to Lippo, despite his exceedingly modest policy
2
portfolio. Second, extensive evidence emerged of Huang's continuing contacts with Lippo after
he had left its employ. The following discussion sets forth the Committee'sfindingsconcerning
the history and structure ofthe Lippo Group, Huang's role as the U.S. representative of Lippo,
1
S££ the sections of this report on the Hsi Lai Temple fundraiser and Yogesh Gandhi.
2
See generally the section of this report on Huang's tenure at Commerce.
1
�and Huang's role in laundering Lippo and Riady monies into the U.S. political system. In brief,
the evidence accumulated by the Committee establishes a pattern of John Huang undertaking
questionable and illegal activities in the service of his Lippo Group sponsors.
The Lippo Group
The Committee heard expert testimony on the history and structure ofthe Lippo Group
from Thomas R. Hampson, an investigator who specializes in advising U.S. corporations
considering international acquisitions and joint ventures. Hampson, using publicly available
sources as well as documents produced to the Committee pursuant to subpoena, developed the
following profile of the Lippo Group, which was presented to the Committee in public hearings
3
held July 15, 1997.
The Lippo Group is a multi-billion dollar confederation of companies controlled by the
Riady family of Indonesia. Starting from a retail banking base in Indonesia, the Lippo Group has
grown over three decades to encompass banking,finance,insurance, property-development, and
manufacturing interests concentrated in Indonesia, China and the United States.
The Chairman of the Lippo Group is Dr. Mochtar Riady, an Indonesian of Chinese
descent. Today, Lippo Group is managed by his two sons, Stephen and James. Stephen Riady is
responsible for Lippo Limited and the Hong Kong Chinese Bank Co., which are based in Hong
Kong and concentrate on banking and property development in Hong Kong and mainland China.
3
Testimony of Thomas R. Hampson, July 15,1997, pp. 60-73. Except as otherwise
noted, the following background information on Lippo is drawnfromthe Hampson's
testimony.
�James Riady is responsible for theflagshipLippo Bank of Indonesia, and he also manages Lippo
Land, a corporation constructing two new cities on the outskirts of Jakarta. Throughout the
1980s and early^ 1990s, John Huang was the chief representative of the Lippo Group in the
United States.
Over the past five years, the Lippo Group has shifted its strategic center from Indonesia
to the People's Republic of China. Lippo is currently involved in dozens of large-scale joint
ventures in the PRC, involving the construction and development of apartment complexes, office
buildings, highways, ports, and other infrastructure. Lippo'-s principal partner on the mainland is
China Resources, a company wholly-owned and operated by the PRC govemment. The
interrelationship between Lippo and Chinese government-sponsored companies such as China
Resources (and China Travel, another Lippo partner) has grown markedly in the last three years.
Indeed, in the spring of 1997, Stephen Riady announced that the name of Lippo's Hong Kong
Chinese Bank would be changed to the Lippo China Resources Bank, to reflect that China
Resources is now an equal partner with Lippo in the bank. Additionally, when Indonesia-based
Lippo Land faced a cash flow crisis that threatened a run on Lippo Bank, China Resources
injected tens of millions of dollars into Lippo Land and became a substantial partner in that
entity as well.
Hampson testified that China Resources is widely reported to be a corporate agent of
economic and political espionage serving the govemment of China. Intelligence officials have
confirmed in the press that the Chinese intelligence establishment is heavily involved in the
�operation of China Resources, and that China Resources selects overseas business partners in
4
part on the basis oftheir value as potential intelligence gatherers.
LippoBank California
In addition to heading-up Lippo Bank and Lippo Land, James Riady owns 99% of
LippoBank California, a federally insured institution headquartered in Los Angeles. LippoBank
is a small California-chartered bank with less than one hundred million dollars in assets. The
bank has experienced chronic asset-quality and management problems, and has been served with
numerous "cease and desist" orders by the F.D.I.C. The-bank has consistently generated losses.
From 1986-1988, James Riady served as the CEO of LippoBank. Although Riady continues to
own a house in Los Angeles, he moved back to Jakarta some time before 1990.
The Committee heard testimony from Harold Arthur, a director of LippoBank and its
5
former CEO. Arthur testified that the bank is part of the Indonesia-based Lippo Group. James
Per Lee, the current CEO, insisted in deposition testimony that the relationship was limited to a
6
licensing agreement which allowed the bank to use the Lippo name. James Alexander, another
4
See, e.g.. James Wood, "Article Details Chinese Intelligence Network in Hong
Kong," BBC Summary of World Broadcasts, March 9, 1995, p. 3.
5
Testimony of Harold R. Arthur, July 15, 1997, pp. 93-94.
Deposition of James Per Lee, May 2,1997, pp. 11-19. Arthur was called to testify
at public hearings rather than Per Lee because the focus of the Committee's inquiries
was not the LippoBank per se, but the activities of John Huang at the bank. Arthur
worked directly with Huang for more than five years.
�former CEO of the bank, stated that the bank was not only part of the Lippo Group, but was
7
under the direct control of Indonesia-based Lippo executives.
Huang at LippoBank
The Committee interviewed and deposed several of Huang's LippoBank colleagues in an
effort to gain an understanding as to his activities and responsibilities while affiliated with
LippoBank.
Alexander told the Committee staff that Huang was James Riady's "man in America,"
8
and that he kept his activities largely to himself. This latter assessment is borne out by the
testimony Arthur, who, although he worked in the same office suite with Huang and claimed to
Memorandum of Interview of James A. Alexander, July 7,1997. Per Lee's position
that the bank is not part of the Lippo Group is simply not tenable on the facts. In
addition to the statements of former CEOs Arthur and Alexander, the Committee
found that (I) LippoBank is listed as part of the Lippo Group in its promotional
materials, and even in the date book carried by Per Lee, sss. Per Lee deposition, pp.
11 - 19; (ii) Per Lee and his predecessor CEOs attended bi-annual Lippo Group
meetings in Jakarta, S S i i ; (iii) Per Lee's own appointment was announced in the
S.
Lippo Group Executive Express newsletter, which holds itself out as a news source
"exclusively for senior Lippo Group executives," SS£ i i ; and (iv) LippoBank
receives an annual budget for community and political affairs directlyfromthe Lippo
Group in Jakarta, S S Deposition of David Sugita, May 16,1997, pp. 30- 33. The
S.
distinction is of import to regulators because it bears on the veracity of
representations which the bank has made to the F.D.I.C. and state banking
authorities, but also bespeaks the reach of the Riady empire. Further, a true
understanding of the relationship between the LippoBank and the Lippo Group is
necessary to a consideration of the continuing communications between Huang and
the bank after he joined the Commerce Department. In a nutshell, calling the
LippoBank offices in Los Angeles - which Huang did hundreds of times after he
entered govemment service - was the functional equivalent of calling Jakarta.
Alexander interview, p. 1.
�have had a "close business relationship for many years," testified that he had no idea how Huang
9
passed his day. Per Lee, when asked what Huang did, replied cryptically " I don't know, I don't
10
know." Despite the length of his employment at Lippo, Huang's colleagues offered little
insight into his activities there and seemed to consider him something of a mystery. The
Committee has, however, been able to cast some light into Huang's activities at LippoBank.
First, perhaps the most concise piece of evidence available to the Committee as to John
Huang's activities at Lippo was a letter written by Maeley Tom, a Califomian lobbyist and Lippo
11
consultant, to John Emerson, then the Deputy Director of Presidential Personnel. In
recommending Huang for a position in the Administration, Tom opined that: "John Huang . . .
is the political power that advises the Riady Family on issues and where to make contributions.
They invested heavily in the Clinton campaign. John is the Riady family's top priority for
12
placement because he is like one of their own." This description is consistent with Alexander's
13
description of Huang as a "fixer" who operated in high political circles.
9
Arthur testimony, p. 97.
10
Per Lee deposition, p. 34.
1 1
Letter from Maeley Tom to John Emerson, February 17, 1993 (Ex. 1).
S££ Ex. 1. As discussed below, the "investments" the Riady family made in the
campaign appear to have been funded with illegal overseas monies laundered by
Huang through U.S. holding companies.
12
13
See Alexander interview, p. 2. Alexander had left the bank by the time Huang joined
the Commerce Department. In discussions with a director of the bank, Alexander
was told about Huang's position and that things were going well for the Riadys in
Washington. The director, apparently joking, said that Riady had "his own office in
the White House." IsL
�Second, Huang's activities can be reconstructed in part through his correspondence,
particularly a letter dated October 7, 1993 that Huang sent to the Office of the Vice President,
thanking the Vice President's Chief of Staff, Jack Quinn, for meeting in the White House with
14
Shen Jueren, the Chairman of China Resources. China Resources, as discussed above, is a
PRC-owned entity widely reported to serve as afrontfor Chinese intelligence services. China
Resources is also an important Lippo partner. It appearsfromHuang's letter, as well asfroma
White House audio tape of the Los Angeles function referenced in the letter, that Vice President
Gore may have met with Shen Jueren in the WTiite House and also exchanged words with him at
15
a subsequent DNC event. China Resources was no doubt impressed that the Riady's "man in
America" could gain an audience for its Chairman with senior administration officials.
16
Furthermore, as discussed later, it appears that Huang paid Jueren's way into the White House
17
with laundered Lippo Group funds.
14
Letter from John Huang to Jack Quinn, Oct. 7, 1993 (Ex. 2).
15
White House Communications Agency audio tape, Sept. 27,1993. SfiS the section
of this report on The Hsi Lai Temple Fundraiser and Maria Hsia at notes 95-103 and
accompanying text.
16
This was apparently not Huang's first connection with China Resources, Alexander
told the Committee that in 1991, Huang was sent to Beijing to negotiate with China
Resources over the Lippo proposal to join forces to purchase the Hong Kong branch
of B.C.C.I. Sfie Alexander interview, p. 2.
17
See footaote 31 infra.
�Third, whatever the precise scope of Huang's services, it is clear that he was well
•
compensated for his achievements. Like his salary, the generous severance payment Huang
received when he left Lippo's employ to join the Clinton Commerce Department was paid
18
through Hip Hing Holdings, Inc., a Riady real estate holding company. Huang's total
19
compensation for 1993-1994 was in excess of seven hundred and fifty thousand dollars.
Finally, Huang's services for the Lippo Group clearly extended beyond his formal period
of employment. As is discussed in detail elsewhere in this report, Huang had hundreds of phone
calls - well more than one per business day ~ with Lippo-related persons and entities after he
20
joined the Commerce Department. LippoBank's CEO, Per Lee, conducted his own inquiry
21
after press reports of Huang's Lippo contacts surfaced in the fall of 1996. To his surprise, Per
Lee found that his own secretary, Juwati Judistira, was the originator of the bulk of the calls to
Huang from the bank. Per Lee was surprised because he had only talked to Huang on one
occasion to his recollection. Of note, Judistira, who has left the United States and declined to
speak with the Committee staff, had never been Huang's secretary, but rather she had been James
Riady's secretary when he served as President of the bank. Furthermore, when Per Lee asked
19
Memorandum from Roy Tirtadji to John Huang, June 27, 1994 (Ex. 3).
1 9
Testimony of Juliana Utomo, July 15, 1997, pp. 15-19.
2 0
See the section of this report on Huang at Commerce.
2 1
Per Lee deposition, pp. 93-97.
8
�Judistira why she had placed so many calls to Huang, she said she was "relaying messages" for
him.
22
In sum, the evidence strongly suggests that Huang remained in day-to-day contact with
23
Lippo throughout his govemment service. Because neither Huang nor virtually any of the
recipients of these calls has made themselves available to answer the Committee's questions, the
content of these conversations and the information imparted therein remain unknown.
Huang was a long-standing and loyal emissary of the Riady family, and was well
compensated for his efforts. While his undertakings cannot be catalogued in detail, he was
responsible for maintaining the political profile of his patrons. His duties extended from
shepherding China Resources' Chairman into the White House, to positioning himself for an
administration position by becoming a player in Democratic politics. This last effort involved
using Riady money to fund favored candidates and causes, and would appear to have accustomed
Huang to the use of foreign money in the domestic politics of the United States.
Lippo and Riady Political Contributions
Huang was well versed in the ways of skirting United States campaign finance laws
before he joined the DNC, and, indeed, before he had even left California. The Committee has
established that Huang funneled foreign-source monies through three different Riady-controlled
2 2
I i at 97-99.
23
Indeed, as discussed elsewhere in this report, Huang was cagey in his efforts to hide
his continued communications with Lippo, even making use of a spare office at
Stephens, Inc., across the streetfromhis Commerce Department office.
�entities to the DNC during 1992 and 1993. The facts and documents underlying these violations
were presented during the Committee's public hearings on July 15, 1997.
Juliana Utomo, a former colleague of Huang's, appeared before the Committee and
testified that Hip Hing Holdings, Inc., and San Jose Holdings, Inc., are real estate holding
24
companies owned and/or controlled by James Riady and managed by Huang. Utomo worked
for Hip Hing Holdings and San Jose Holdings from 1988 through late 1996. Utomo testified that
Huang made all decisions regarding political contribution expenditures, and that Huang likewise
approved all requests which were made to the Lippo Group-in Jakarta for operating funds and
expense reimbursement. Requests for funds werefrequent,typically monthly, because the
23
expenses of the Hip Hing entities generally exceeded their income.
Utomo identified three (and the records in total show four) DNC contributions which
were funded with moniesfromIndonesia at Huang's direction.
The first contribution was evidenced by a $50,000 Hip Hing Holding check dated August
26
12, 1992, made payable to the "DNC Victory Fund." In a memorandum to the Lippo Group
dated August 17, 1992, Huang requested reimbursement for the contribution, and several weeks
later a wire transfer was received from LippoBank Jakarta in the amount requested in the August
24
26
Utomo testimony, pp. 14-15.
$50,000 checkfromHip Hing Holdings to DNC Victory Fund, August 12,1992 (Ex.
4).
10
�27
17 memorandum. In 1992, the year of the $50,000 DNC Victory Fund contribution. Hip Hing
28
Holdings actually lost $482,395.33. Utomo testified that the entire shortfall was made up with
funds transferred to the United States from Jakarta.
The second overseas-funded contribution was evidenced by a Hip Hing check, dated
29
September 23, 1993, for $15,000 made payable to the DNC. Huang's signature, as well of that
of Hip King's Comptroller, Agus Setiawan, appears on the check. In 1993, Hip Hing Holdings
30
actually lost $493,809.93.
Third, Utomo also identified a $15,000 check written on the San Jose Holdings account
31
and made payable to the "DNC" dated September 27, 1993. In 1993, San Jose Holdings lost
32
$65,177.32.
27
Memorandum from John Huang & Agus Setiawan to Ong Bwee Eng, August 17,
1992 (Ex. 5).
28
Hip Hing Holdings 1992 Earnings Statement (Ex. 6).
2 9
Composite of checks from Hip Hing Holdings, San Jose Holdings, and Toy Center
Holdings (Ex. 7).
30
Composite of 1993 Earnings Statements of Hip Hing Holdings, San Jose Holdings,
and Toy Center Holdings (Ex. 8).
31
S££Ex.7.
32
SfiaEx. 8.
11
�A fourth check, dated September 23, 1993, from another Riady company, Toy Center
•
33
Holdings, Inc., was also drawn payable to the DNC in the amount of $15,000. In 1993, Toy
34
Center Holdings lost $26,886.67.
In the course of the Committee's July 15, 1997, hearing, the Minority attempted to
downplay the significance of these foreign contributions, claiming that so long as U.S. income
(rather than profits) was sufficient to cover the contributions, such contributions were legal,
35
regardless of reimbursement from overseas. This position, simply mis-states the law. In order
for the subsidiary of a foreign corporation to make legal political contributions, the funds must
be derived from U.S. profits. As the FEC opined in June 1992: "The domestic subsidiary of a
foreign corporation may make political contributions even though it receives subsidiesfromits
foreign parent if the contributions are made from domestic profits."
36
The information developed by the Committee relating to these contributions constitutes a
compelling case that Huang broke the law in furtherance of the Riadys' political agenda.
33
SS£Ex.7.
34
S££ Ex. 8. Thus, Huang drew two checks for a total of $30,000 on September 23,
1993, and a check for $15,000 on September 27,1993. Ssa Ex. 7. It cannot escape
notice that on September 24,1997, Huang brought China Resources Chairman Shen
Jueren to the White House, as discussed above, and on September 27, Huang and
Shen Jueren attended a DNC event in Los Angeles. S££ Ex. 2.
35
Comments of Minority Chief Counsel Alan I. Baron, July 15, 1997, pp. 35-38
S££ Federal Election Commission Advisory Opinion 1992-16: Contributions by
Domestic Subsidiary of Foreign National, June 26,1992 (emphasis added) (Ex. 9).
36
12
�Certainly in the case of Hip Hing's $50,000 contribution, there could be no more compelling
evidence than Huang's own memorandum request for reimbursement from overseas. To the
knowledge of the Committee, the Department of Justice has not pursued these apparent
violations, and, indeed, the Department may have allowed the statute of limitations to lapse on at
least one of the illegal contributions identified by the Committee.
In addition to the four Lippo holding company contributions discussed above, the
Committee also identified a large number of 1992 contributionsfromJames Riady and his wife,
Aileen, to the DNC and various Democratic state party organizations." The checks total
$465,000 and were" produced pursuant to a Committee subpoenafromthe files of Hip Hing
Holdings, suggesting that Huang may have directed these contributions as well. Notably, while
Riady has claimed in the press that he possesses a green card and was thus eligible to make
contributions in the 1992 election cycle, it is uncontested that he moved back to Indonesia in
1990, and has not been a resident of the United States since that time. Because Riady declined
the Committee's invitation to explore these and other issues when Committee staff were in
Indonesia, the Committee has been unable to reach a final determination. The legality of these
contributions remains in doubt.
37
Composite of checks from James & Aileen Riady to various Democratic state party
organizations (Ex. 10).
13
�Conclusion
The record developed by the Committee establishes that Huang was well accustomed to
the use of political giving — and the laundering of funds ~ to further the interests of the Riadys.
The Riadys and their Lippo empire, in tum, have become increasingly intertwined with Chinese
government-owned enterprises. In the case of Shen Jueren's White House visit, Huang's value
to Lippo was demonstrated by the combination of money laundering and political string pulling - all for the sake of the president of China Resources, the Riadys' business partner. As discussed
in detail in other sections of this report, the evidence uncovered by the Committee pertaining to
Huang's tenure at the LippoBank California, and his political activities there, set a pattern which
was often repeated.
14
�JOHN HUANG AT COMMERCE
Throughout the Committee's investigation, John Huang has persisted as one ofthe most
central figures Ln the campaignfinancescandal. Huang's involvement was evident from the
earliest inkling that there was systematic illegality in the way the DNC raised money during the
1996 election cycle. The first sign was a Los Angeles Times story about an illegal $250,000
contribution to the DNC from Cheong Am America. Mr. Huang raised that money. Huang
proved to be a prodigious fund-raiser for the DNC in 1996, bringing in $3.4 million to DNC
coffers. Nearly half of that amount has been returned to date, and there are serious questions
about much of the balance not returned.'
Huang is linked through his fund-raising activities to many other important figures in the
scandal, including Maria Hsia, Ted Sioeng, Charlie Trie, Mark Middleton, Pauline Kanchanalak,
Antonio Pan, and Huang's patrons and former employers, the Riadys. Before he went to the
DNC, Huang worked as a political appointee at the Department of Commerce. The press has
written often about Huang's activities at Commerce, including how he got a job there, what
security clearances he held, what classified or other sensitive information he had access to in the
course of his employment, whether he leaked or mishandled any such information, and whether
he engaged in political fund-raising there.
In an effort to address questions regarding Huang's activities at Commerce, the
Committee held hearings on July 16 and 17, 1997. The hearings were the culmination of intense
'
See, for example, the report section regarding DNC contributions raised by Huang from
Ted Sioeng, Sioeng's family, and his businesses, totaling $400,000. The DNC has not
returned these contributions.
�investigative work performed by Committee staff, which conducted dozens of interviews and
depositions and reviewed hundreds of thousands of documents in connection with this phase of
the hearings. Although its work was complicated by Huang's refusal to cooperate, the
Committee received excellent cooperation from the Commerce Department. The Department
appears to have undertaken a diligent and thorough search for materials responsive to the
Committee's subpoena. The Department also made employees readily available for interviews
2
and depositions. For the most part, the Committee's dealings with Commerce werefreeof the
problems encountered with the White House and the DNC.
3
What emerges from the Committee's investigation is a picture of Huang both complex
and vexing, which raises as many questions as it answers. He was a valuable fundraiser for the
1992 and 1996 Clinton campaigns and a "must hire" candidate who knew President Clinton
personally, yet he obtained only a mid-level appointment in the Administration. Despite his
modest position and the fact that he was purposely excluded from any real policy work at
Commerce, Huang received classified intelligence briefings, and he appears to have met often
with high ranking White House officials, including, on occasion, the President himself. In
addition, he met with various Chinese diplomatic officials with somefrequency,even though he
was suppose to be "walled off' from substantive China policy at Commerce.
2
The Committee notes in particular the efforts of Kent Hughes, Associate Deputy
Secretary of Commerce, and Susan Truax, Office of General Counsel, in accommodating
the Committee's many requests for information.
3
Other sections of this report detail the Committee'sfrustratingdealings with the White
House and DNC.
�While at Commerce, Huang maintained constant contact with representatives of his
former employer the Lippo Group, and his patrons, the Riadys, and was often in contact with
other leading figures in the campaign finance scandal. It seems clear that he engaged in political
fund-raising in violation of the Hatch Act, working closely with DNC officials to do so. The
illegality of his fund-raising was compounded by the fact that at least some of the money Huang
raised while at Commerce was foreign.
I.
Huang's Appointment to Commerce
On his way from Lippo to the DNC, Huang made an eighteen-month stopover at the
Department of Commerce. The Committee examined the circumstances surrounding Huang's
arrival at Commerce, seeking answers to two principal questions in that regard: How did Huang
secure an appointment in the Clinton administration, and why at Commerce? The Committee
found only partial answers to each.
Huang was a prominent Democratic fundraiser and activist in the Asian-American
community during the 1992 election. His efforts were focused largely in California. Through
them, Huang forged significant ties to the DNC and other Democratic groups; ties he would rely
on later for help in securing an appointment with the Clinton administration.
Before joining Commerce, Huang was employed by the Lippo Bank. Located in Los
Angeles, the Lippo Bank is a wholly-owned subsidiary of the Riady-controlled Lippo Group,
which is based in Jakarta, Indonesia. At the Lippo Bank, Huang participated in many fundraising activities, both independently and on behalf of the Riady family. For example Huang,
together with Maeley Tom, formed the Asia/Pacific Leadership Council, a political fund-raising
�4
group that raised thousands of dollars for the Clinton/Gore campaign. Although the extent to
which Huang's fund-raising activities facilitated his appointment to Commerce is not clear, it is
certain that they played a role.
After the 1992 election, Huang became interested in a position with the Clinton
administration. His name first came to the attention of the White House Priority Placement
5
Office in 1992 when he was placed on a "must-consider" list compiled by the DNC. Michael
Whouley, who received the "must consider" list, was the head of White House Priority
Placement at the time, and it was Whouley's job to sort through various candidates who received
particularly strong support, and to determine which of these candidates would then be considered
6
a priority for the administration. Huang was placed on this list as a "must-consider" candidate
for several positions, including "Under or Assistant Secretary for International Affairs" at the
Department of Treasury, "Undersecretary for International Trade" at the Department of
7
Commerce, and a "sub-cabinet" position at the Department of State.
submitted to the White House Personnel Office.
Huang's resume was also
8
Maeley Tom, who, like Huang, is Chinese by birth, has spent two decades in Democratic
politics in Sacramento, California. She served as a part-time consultant for the Lippo
Bank while John Huang worked there. In 1994, Tom was an active fund-raiser in the
Asian-American community in California and a contributor to the Democratic party.
5
Interoffice MemorandumfromPaul Carey and Rick Lemer to Michael Whouley,
December 21,1992, pp. 5,11 (Ex. 1).
6
Testimony of Gary Christopherson, July 16, 1996, p. 14.
Id.
8
Resume of John Huang, undated (Ex. 2).
�Over the course ofthe next few months, several letters were submitted on Huang's
behalf. These letters included recommendations from Senators Paul Simon, Tom Daschle, and
9
Kent Conrad, California State Treasurer Kathleen Brown, and lobbyist and Asian-American
fundraiser Maeley Tom.
Maeley Tom's letter, written to Deputy Director of Presidential Personnel John Emerson,
is remarkable in the way it touts several Asian-Pacific Americans ("APA") for administration
10
positions. In her letter, Tom adopts a very personal, emotive tone in imploring Emerson and
the administration to "use this window of opportunity to cultivate (recruit) [the APA]
community's loyalty by demonstrating that the true party of inclusion is the Democratic Party,"
and, more specifically, by appointing those Tom recommended." Although the
recommendations were clearly hers and, purportedly, those of the APA community, Tom wrote
on the stationery of her boss, David Roberti, President Pro Tempore of the California State
Senate.
Tom's letter is heavily salted with references to political fund-raising and Democratic
party-building efforts. Her recommendation bf Huang relies mainly on Huang's connection to the
Letters of recommendation for John Huang, December 1992-February 1993 (Ex. 3).
10
Letter from Maeley Tom to John Emerson, Feb. 17,1993 (Ex. 4). Two versions of
Tom's letter to Deputy Director of Presidential Personnel John Emerson were produced
to the Committee by the White House. The first version is heavily redacted and bears a
handwritten notation on the cover page indicating it was copied to Bruce Lindsey who
was then Director of Presidential Personnel at the White House. The cover page of the
second version contains a different handwritten notation ~ "Asian Appointments."
Otherwise, the two versions appear identical.
11
Id. at p. 1.
�
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Title
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Michael Waldman
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<p>Michael Waldman was Assistant to the President and Director of Speechwriting from 1995-1999. His responsibilities were writing and editing nearly 2,000 speeches, which included four State of the Union speeches and two Inaugural Addresses. From 1993 -1995 he served as Special Assistant to the President for Policy Coordination.</p>
<p>The collection generally consists of copies of speeches and speech drafts, talking points, memoranda, background material, correspondence, reports, handwritten notes, articles, clippings, and presidential schedules. A large volume of this collection was for the State of the Union speeches. Many of the speech drafts are heavily annotated with additions or deletions. There are a lot of articles and clippings in this collection.</p>
<p>Due to the size of this collection it has been divided into two segments. Use links below for access to the individual segments:<br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+1">Segment One</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+2">Segment Two</a></p>
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Michael Waldman
Office of Speechwriting
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Segment One contains 1071 folders in 72 boxes.
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Clinton Presidential Records: White House Staff and Office Files
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Thompson Report Volume I [Binder] [3]
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