The Chinese Connection

The Chinese Connection

The Chinese Connection

A cheat sheet for the news.
March 16 1997 3:30 AM

The Chinese Connection

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The latest twist in the campaign finance furor is the allegation that the Chinese government funneled money to President Clinton's re-election campaign in an effort to influence U.S. policy. What is the evidence linking Chinese government money to Clinton? Did the president know about such an initiative and was he or his staff influenced by it?

Franklin Foer Franklin Foer

Franklin Foer is a Slate contributing editor and the author of World Without Mind.

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No one (except for a Chinese Embassy spokesman) disputes that the Chinese government planned on contributing to the Democratic National Committee and 30 congressional campaigns. In early 1996, the National Security Agency eavesdropped on multiple conversations between the Beijing government and its Washington, D.C., embassy, describing its intention to spend $2 million on the upcoming election. Campaign contributions from foreigners, let alone foreign governments, are forbidden by U.S. election law.

According to most analyses, Beijing worried that Clinton would follow through on his 1992 campaign promise to revoke China's Most Favored Nation (MFN) trading status to punish human-rights abuses. In addition, China has grown increasingly concerned over the disparity between Taiwan's sophisticated Washington lobbying and public-relations operation and its own piecemeal setup.

So far, there is no hard evidence of whether the Chinese government followed through on any of its plans to influence American elections. The FBI has been unable to trace back any donations to the Chinese government. But there has been speculation about different channels the Chinese government could have used to funnel contributions. Media stories have focused on John Huang, Charles Trie, and Pauline Kanchanalak, three Asian-Americans who raised nearly $3 million for the Democratic National Committee. Ultimately, the DNC returned the money because of suspicion that it included laundered foreign cash.

Here are the grounds for suspicion:

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John Huang: The former deputy assistant secretary of commerce and DNC vice chair is said to be connected to China through his long-time employer, the Lippo Group, an Indonesian conglomerate. When Huang left Lippo to work at Commerce in 1994, he received a $788,750 severance package and continued his relationship with the firm. Huang's Commerce Department logs show that he made 70 phone calls from his government office to executives of a Los Angeles bank controlled by Lippo. In 1996, Huang raised $1 million in donations for the DNC from donors with ties to Lippo. The conglomerate has multiple investments in China. In 1993 Lippo even became the government's partner when it sold 50 percent of its holdings in a Honk Kong bank to a Chinese government corporation. During his 18-month stint at the Commerce Department, Huang met with Chinese government officials on three separate occasions.

Pauline Kanchanalak: The founder of the United States-Thai Business Council represents Thai industrialist Dhanin Chearavanont, whose conglomerates are among the largest outside investors in China and who is a partner in several Chinese government-run corporations. There has been speculation that the $235,000 Kanchanalak personally donated to the party originated with Chearavanont and his government partners.

Charles Yah Lin Trie: The Little Rock restaurateur raised $639,000 for the Clinton legal-defense fund. Of the three, Trie's links to Beijing are the clearest. On his resume he even boasts about his friendship with senior government officials. His major business partner in China is a government official in the southern city of Guangzhou. Also, last year Trie arranged for Chinese arms dealer Wang Jun, the head of a state-run corporation, to attend a White House coffee organized by the DNC.

Though all three were viable conduits for laundered Chinese government money, there is nothing more than highly circumstantial evidence to suggest they actually participated in a government scheme. But they also could have raised such large sums by laundering money from their foreign business contacts. These businesses all have dealings with Beijing that give them an independent incentive to influence U.S. policy toward China. (This second scenario would also be illegal.)

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The Lippo group also paid $100,000 to former Associate Attorney General Webster Hubbell last year, while he was waiting to begin a jail term for bilking clients of his former law firm. Hubbell is a close friend of both Clintons. At the least, he was hired in an attempt to influence administration China policy. That would not be unusual. But skeptics suggest a darker scenario: that the Lippo fee was a payoff to Hubbell to keep quiet about Whitewater.

There are assertions that Chinese donations to members of Congress swayed Congress' 1994 vote to renew MFN. The Wall Street Journal reported that in 1994, while at Commerce, John Huang consulted with Rep. Howard Berman of California, an influential Democrat on the House International Relations Committee. Their conversations took place at precisely the moment the House reconsidered China MFN. Lobbying Congress was not part of Huang's job at Commerce, and Huang had contributed to Berman's 1994 campaign. According to the Journal, nine other Democratic lawmakers who received contributions from Huang spoke with him during this same period. But again, there's no evidence linking Huang's involvement to the Chinese government.

Last June, the FBI told six members of Congress that the Chinese government intended to illegally contribute money to their campaigns. (The six were Sens. Barbara Boxer and Dianne Feinstein of California, Sen. Daniel Patrick Moynihan of New York, and Rep. Nancy Pelosi of California, all Democrats, plus two others not yet identified.) Apparently, none of these members received donations they could link to the Chinese government, though Feinstein did return a $12,000 check brought in by Huang. All known targets, except Pelosi, did vote for MFN and had been strong MFN supporters all along.

Clinton claims to have known nothing about the Chinese plans. In fact, the White House says that when the FBI briefed National Security Council staffers on the subject, the FBI told the staffers specifically not to pass information to higher-ups. The FBI denies this. According to Attorney General Janet Reno, the NSC staffers probably misconstrued the agents' instructions to treat the matter delicately.

Though nobody contests the president's assertion that he was kept in the dark, critics speculate that the atmosphere at the White House might have discouraged NSC staffers from informing their superiors. Previous NSC warnings about Huang and other Asian-American donors had been ignored, and fund raising was known to be a high priority.