Senate Campaign-Finance Hearings

Senate Campaign-Finance Hearings

Notes from different corners of the world.
July 24 1997 12:30 AM

Senate Campaign-Finance Hearings

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       This week the Democrats get a turn. They are taking the opportunity to explore what appears to be the closest Republican parallel to John Huang's illegal foreign fund raising--former Republican National Committee Chairman Haley Barbour's use of an independent group called the National Policy Forum. Today the Democrats presented evidence that Barbour was not just involved in soliciting foreign money, but actually swindled a wealthy foreigner out of a large amount of it.
       Barbour's mark was Ambrous Young, a wealthy Chinese businessman who lives in Hong Kong. Young voluntarily gave committee lawyers a deposition last month in London. But because he did not wish to travel to Washington, his American lawyer, Benton Becker, appeared on his behalf. A former adviser to Gerald Ford who teaches constitutional law at the University of Miami Law School, Becker was probably the most appealing witness the committee has questioned to date. Unlike most of those who testified last week, Becker was lucid, credible, even charming. Only Arlen Specter seemed not to like him. And Specter, as has long since become clear, likes no one.
       Becker's story goes like this. In 1994, Young, who had been an American citizen and a generous supporter of the GOP, was approached about lending a large amount of money to the NPF, a Republican group created by Barbour and the RNC. Barbour wanted the money urgently, he told Young, to help with the 1994 campaign. After assuring himself that his money would be safe (Barbour said the RNC stood fully behind it), Young agreed to guarantee a loan of $2.1 million to the NPF, depositing that amount as collateral in a Washington bank. The NPF held the money until October 20, the final Federal Election Commission disclosure date before the election, then passed it on to the RNC.
       In the summer of 1995, Barbour visited Hong Kong to try to persuade Young to forgive the loan. Young remained friendly but firm in rejecting Barbour's entreaties. Over cocktails on Young's yacht "Ambrosia," Young told Barbour that he could not forgive the debt even if he wanted to because giving his company's money away would violate the law, and Hong Kong auditors would surely notice. Eventually, Barbour decided to forgive the loan himself. His lawyers simply told the bank that the NPF would not be repaying the $1.6 million it still owed. Young was left holding the bag.
       Barbour's rip-off of Young was clearly reprehensible. But was it illegal? The $2.1 million in collateral came from Young's Hong Kong company, not from its American subsidiary. This would make it illegal if it were a normal "soft-money" contribution of the kind Huang solicited. But this assistance was softer than soft money. The NPF, as a nominally independent foundation, can accept whatever kind of money it wants, including foreign money, and is not obligated to disclose anything. Barbour only runs afoul of the law if the NPF can be shown to be synonymous with the RNC.
       Barbour will testify about that tomorrow or Friday. On the evidence presented today, Barbour set up the NPF in part to launder foreign money for the GOP. In a 1994 resignation memo to Barbour, former NPF president Michael Baroody objected to his "fascination" with raising funds abroad. Baroody also complained that Barbour had done little to keep the RNC and the NPF separate, which would prevent the NPF from receiving tax-exempt status. That's exactly what happened. The IRS denied the NPF the tax-exempt 501(c)4 status it sought in February 1997, a month after the NPF had already closed its doors. Barbour's lobbying partner Ed Gillespie was outside the hearing room spinning on his behalf, trying to maintain that the NPF was truly separate from the RNC, just as the Democratic Leadership Council is separate from the DNC. But that comparison doesn't wash. The DLC is the home for Democrats who are dissatisfied with the official Democratic organization. The NPF was set up and run as a front group by the chairman of the RNC.
       Republicans didn't poke many holes in the case against Barbour. Thompson scored one effective hit when he asked Becker about Young's trip to Beijing with Barbour in 1995, when Barbour was trying to talk Young into forgiving his debt. Young wondered why the head of the Republican Party was accorded what he described as "third-class treatment" by the Chinese leadership. Young, according to Becker, made discreet inquiries, and learned from Chinese friends that it was because Beijing wanted Bill Clinton to be re-elected in 1996.
       Young, who voluntarily flew from Hong Kong to be deposed by the committee's lawyers in London, came off as a rather appealing character in absentia. Joseph Lieberman, who continues to distinguish himself not only as the most independent member on the committee, but also as the one best able to extract telling details, asked Becker to try to explain his client's motives for contributing to the GOP. Becker, who described his client as a refugee from Communist China with a fierce belief in freedom, said Young wasn't looking for favors. He was burnishing his status. Young thought that giving such assistance to the GOP would, as he put it, "put powder on my face," an expression which, in Chinese, apparently means, roughly speaking, to raise one's social standing. Becker said Young felt that helping the Republicans "would allow him to walk among people he would not otherwise be able to walk among." Which, based on the meetings Barbour set up for Young with Newt Gingrich and Bob Dole in 1995, was a perfectly reasonable assumption.
       In the end, the powder on Young's face meant very little. Barbour never called him to apologize or explain why he was stiffing him. "From that particular moment, at that point on, it was lost," Young said in his deposition. "He never contacted me." Alan Baron, the Democratic chief counsel, asked Young whether anyone from the RNC had called. "Nothing," Young replied. "That's the saddest part. That's the saddest part."
       After months of negotiation, Young's lawyers got the NPF to agree to repay $800,000, half the NPF's outstanding debt to him. But Young got even less than that once the NPF decided it could deduct some $50,000 in interest that Young's money had earned while sitting in the bank as collateral. Sen. Lieberman, who said he'd been keeping a list of displays of extraordinary chutzpah in the hearings, told Becker that he thought that topped even the Buddhist monks who had taken vows of poverty making $5,000 contributions to Clinton's re-election campaign.
       Becker said that his client Mr. Young probably didn't know what "chutzpah" meant, but that in his own opinion, there was no better word for Haley Barbour's behavior "in jurisprudence or in Latin."

Jacob Weisberg is SLATE's chief political correspondent. His column, "Strange Bedfellow," appears weekly.