1996 United States campaign finance controversy

The 1996 United States campaign finance controversy was an alleged effort by the People's Republic of China to influence domestic American politics prior to and during the Clinton administration and also involved the fund-raising practices of the administration itself. While questions regarding the U.S. Democratic Party's fund-raising activities first arose over a Los Angeles Times article published on September 21, 1996, China's alleged role in the affair first gained public attention when Bob Woodward and Brian Duffy of The Washington Post published a story stating that a United States Department of Justice investigation into the fund-raising activities had uncovered evidence that agents of China sought to direct contributions from foreign sources to the Democratic National Committee (DNC) before the 1996 presidential campaign. The journalists wrote that intelligence information had shown the Chinese embassy in Washington, D.C. was used for coordinating contributions to the DNC in violation of United States law forbidding non-American citizens or non-permanent residents from giving monetary donations to United States politicians and political parties. A Republican investigator of the controversy stated the Chinese plan targeted both presidential and congressional United States elections, while Democratic Senators said the evidence showed the Chinese targeted only congressional elections. The Chinese government denied all accusations. Background: According to the Senate report, Chinese officials eventually developed a set of proposals to promote their interests with the United States government and to improve China's image with the American people. The proposals, dubbed the "China Plan", were prompted by the United States Congress's successful lobbying of the president to grant a visa to Taiwan President Lee Teng-Hui. United States Secretary of State Warren Christopher had previously assured his Chinese counterpart Qian Qichen that granting a visa would be "inconsistent with the United States' unofficial relationship with Taiwan" and the Clinton Administration's acquiescence to the Congressional resolutions led China to conclude that the influence of Congress over foreign policy was more significant than it had previously determined. When formulating the so-called plan, Chinese officials acknowledged that, compared to other countries, it had little knowledge of, or influence over, policy decisions made in Congress, which had a sizeable pro-Taiwan faction under the influence of a more established "China Lobby" run by the Kuomintang. The plan, according to the Senate report, instructed Chinese officials in the U.S. to improve their knowledge about members of Congress and increase contacts with its members, the public, and the media. The plan also suggested ways to lobby United States officials. Over the years, China repeatedly denied that their lobbying efforts involved financial contributions of any kind, e.g., stating "some people and media in the United States speculated… about so-called participation by Chinese individuals in political donations during the U.S. elections. It is sheer fabrication and is intended to slander China. China has never, nor will we ever, use money to influence American politics (a Chinese Foreign Ministry spokesperson, May 1998)." Major fund-raising figures- Yah-Lin "Charlie" Trie: The most significant activity by Yah-Lin "Charlie" Trie was a $450,000 attempted donation from him to Clinton's legal defense fund, which Trie allegedly delivered in two envelopes each containing several checks and money orders. The fund immediately rejected $70,000 and deposited the remainder, but ordered an investigation of the source. The investigation found that some of the money orders were made out in different names but with the same handwriting, and sequentially numbered. The fund then rejected the donation entirely, and returned the deposited funds two months after the initial contribution. Born in Taiwan, Trie emigrated to the U.S. in 1974. He eventually became an American citizen and co-owner of a restaurant in Little Rock, Arkansas. The 1997 special investigation describes Trie as having attempted to develop an international trading business (Daihatsu International Trading Corporation), having maintained or accessed accounts in Little Rock and Washington, D.C. into which Macau-based real estate businessman Ng Lap Seng wired >$1M USD from Macau and Hong Kong accounts, and as having never succeeded in the trading business (based on bank and tax records indicating substantive income only from Ng). In Little Rock, Trie befriended Clinton, then governor of Arkansas. In addition to the attempted donation to Clinton's defense fund, Trie and his immediate family donated $220,000 to the DNC which was also later returned. Immediately after the donation to Clinton's defense fund, Trie sent a letter to President Clinton that expressed concern about America's intervention in tensions arising from China's military exercises being conducted near Taiwan. Trie told the President in his letter that war with China was a possibility should U.S. intervention continue:...Once the hard parties of the Chinese military incline to grasp U.S. involvement as foreign intervention, is U.S. ready to face such a challenge... It is highly possible for China to launch real war based on its past behavior in Sino-Vietnam War and Zhen Bao Tao war with Russia. (Charlie Trie, letter to President Clinton, March 21, 1996)." After Congressional investigations turned to Trie in late 1996, he left the country for China. Trie returned to the U.S. in 1998 and was convicted and sentenced to three years probation and four months home detention for violating federal campaign finance laws by making political contributions in someone else's name and for causing a false statement to be made to the Federal Election Commission (FEC). Johnny Chung: Born in Taiwan, Johnny Chung went from being the owner of a "blastfaxing" business (an automated system that quickly sends out faxes to thousands of businesses) in California to being in the middle of the Washington, D.C. elite within a couple weeks of his first donations to the Democratic Party. Called a "hustler" by a U.S. National Security Council (NSC) aide, Chung made forty-nine separate visits to the White House between February 1994 and February 1996. One of his purposes in making these trips was to obtain photographs of himself with the Clintons, which he believed would help him to get business in China by giving people the impression that he had connections and influence in Washington—he used a brochure that included at least ten photographs of himself with Hillary Clinton along with a personal note from her. During one of the Commerce Department trade missions to China, Chung befriended former Chinese Lt. Col. Liu Chaoying, then an executive at China Aerospace International Holdings, Ltd. Hong Kong (中國航天國際控股有限公司), which is the Hong Kong-based subsidiary of the government-controlled CASC (中國航天科技集團公司), China's premier satellite launching company. She is the daughter of former General Liu Huaqing. Between 1994 and 1996, Chung donated $366,000 to the DNC. Eventually, all of the money was returned. Chung told federal investigators that $35,000 of the money he donated came from Liu Chaoying and, in turn, China's military intelligence. Specifically, Chung testified under oath to the U.S. House Committee investigating the issue in May 1999 that he was introduced to Chinese Gen. Ji Shengde, then the head of Chinese military intelligence, by Liu Chaoying. Chung said that Ji told him: "We like your president very much. We would like to see him reelect. I will give you 300,000 U.S. dollars. You can give it to the president and the Democrat Party." Both Liu and the Chinese government denied the claims. Chung was eventually sentenced to 5 years probation and community service following an agreement to plea guilty to bank fraud, tax evasion, and two misdemeanor counts of conspiring to violate election law. Chung asserts that, after his guilty plea, the Chinese government attempted to assassinate him with "hit squads" three times, but the efforts were foiled by the FBI. John Huang and James Riady: John Huang (pronounced "Hwäng"), was another major figure convicted. Born in 1945 in Nanping, Fujian, Huang and his father fled to Taiwan at the end of the Chinese Civil War before he eventually emigrated to the United States in 1969. A former employee of the Indonesian company Lippo Group's Lippo Bank and its owners Mochtar Riady and his son James (whom Huang first met along with Bill Clinton at a financial seminar in Little Rock, Arkansas in 1980), Huang became a key fund-raiser within the DNC in 1995. While there, he raised $3.4 million for the party. Nearly half had to be returned when questions arose regarding their source during later investigations by Congress. According to U.S. Secret Service logs, Huang visited the White House 78 times while working as a DNC fund-raiser. James Riady visited the White House 20 times (including 6 personal visits to President Clinton). Immediately prior to joining the DNC, Huang worked in President Clinton's Commerce Department as deputy assistant secretary for international economic affairs. His position made him responsible for Asia-U.S. trade matters. He was appointed to the position by President Clinton in December 1993. His position at the Commerce Department gave him access to classified intelligence on China. While at the department, it was later learned, Huang met 9 times with Chinese embassy officials. Huang eventually pleaded guilty to conspiring to reimburse Lippo Group employees' campaign contributions with corporate or foreign funds. James Riady was later convicted of campaign finance violations relating to the same scheme as well, and was sentenced to pay a large fine. Shortly after Riady pledged $1 million in support of then-Governor Clinton's campaign for the presidency, contributions made by Huang had been reimbursed with funds wired from a foreign Lippo Group entity into an account Riady maintained at Lippo Bank and then distributed to Huang in cash. Also, contributions made by Lippo Group entities operating in the United States were reimbursed with wire transfers from foreign Lippo Group entities. An unclassified U.S. Senate Committee on Governmental Affairs report issued in 1998 stated that both James Riady and his father Mochtar had "had a long-term relationship with a Chinese intelligence agency." According to journalist Bob Woodward, details of the relationship came from highly classified intelligence information supplied to the committee by both the CIA and Federal Bureau of Investigation (FBI). The most well-known of John Huang's fund-raisers involved Vice President Al Gore, Maria Hsia, and the Hsi Lai Buddhist Temple in California. Maria Hsia: Taiwan-born Maria Hsia (pronounced "Shyä"), a long time fund raiser for Al Gore, California immigration consultant, and business associate of John Huang and James Riady since 1988, facilitated $100,000 in illegal campaign contributions through her efforts at Hsi Lai Temple, a Chinese Buddhist temple associated with Taiwan in Hacienda Heights, California. This money went to the DNC, to the Clinton – Gore campaign, and to Patrick Kennedy. After a trial, she was convicted in March 2000. The Democratic National Committee eventually returned the money donated by the Temple's monks and nuns. Twelve nuns and employees of the temple, including temple abbess Venerable Yi Kung (who resigned her post after being subpoenaed), refused to answer questions by pleading the Fifth Amendment when they were subpoenaed to testify before Congress. Two other Buddhist nuns admitted destroying lists of donors and other documents related to the controversy because they felt the information would embarrass the Temple. A Temple-commissioned videotape of the fund raiser also went missing and the nuns' attorney claimed it may have been shipped off to Taiwan. The Temple event became particularly controversial, because it was attended by the Vice President Gore. In an interview on the January 24, 1997 edition of the Today show, Gore said: I did not know that it was a fund-raiser. But I knew it was a political event, and I knew there were finance people that were going to be present, and so that alone should have told me, 'This is inappropriate and this is a mistake; don't do this.' And I take responsibility for that. It was a mistake. In response, the U.S. Senate Governmental Affairs Committee that investigated the controversy said: The Vice President's staff... knew that the Temple event was a fundraiser. In March 1996, Deputy Chief of Staff David Strauss had helped arrange a meeting in the White House with the founder of the temple, Hsing Yun – a meeting which Strauss believed would 'lead to a lot of $.' The White House staff repeatedly referred to the event as a 'fundraiser' in internal correspondence, and assigned to it a 'ticket price' of '1000–5000 dollars per head'. John Huang's memo to Vice President Gore's assistant Kimberly Tilley specifically mentioned the Temple meeting was a fund-raising event. Mr. Gore later acknowledged he had known the visit was "finance-related." In the U.S., religious organizations enjoy a tax exempt status. Political activity is prohibited for such tax exempt entities. The Senate Governmental Affairs Committee also said they learned that Hsia had served as an "agent" of the PRC government. Hsia denied the claim. Ted Sioeng: Ted Sioeng, an Indonesian entrepreneur who donated money to both Democrats and Republicans, was the sixth individual whose donations were investigated by the Senate committee. Suspect contributions associated with Sioeng include $250,000 to the DNC and $100,000 to Republican California State Treasurer Matt Fong. Fong returned the money in April 1997. Sieong sat with Bill Clinton or Al Gore at two fund-raising events. Sioeng also joined Fong at a meeting with then Republican House Speaker Newt Gingrich in mid-1995. Gingrich called the meeting a "photo-op". Gingrich was the guest of honor at a Sioeng-organized luncheon the day after a Sioeng family company gave the $50,000 think-tank donation, solicited by a Gingrich adviser. Attorney General Janet Reno and the directors of the FBI, CIA and National Security Agency (NSA) told members of the Senate committee they had credible intelligence information indicating Sioeng acted on behalf of China. A spokesman for Sioeng denied the allegations. Sioeng left the country shortly thereafter, and no charges were filed. Investigations- Department of Justice investigation: The Justice Department opened a task force in late 1996 to begin investigating allegations of campaign fund-raising abuses by the Clinton/Gore re-election campaign. It expanded its internal investigation to include activities related to President Bill Clinton's legal defense fund in December 1996. President Clinton announced in February 1997 that he thought there should be a "vigorous" and "thorough" investigation into reports that the People's Republic of China tried to direct financial contributions from overseas sources to the Democratic National Committee. The president stopped short of calling for an independent prosecutor, saying that was the decision of the Justice Department. "Obviously it would be a very serious matter for the United States if any country were to attempt to funnel funds to one of our parties for any reason whatever," President Clinton said. By July 1997, the administration determined that no evidence of any such thing had yet been proven. "We have received the relevant [FBI] briefings," White House Press Secretary Mike McCurry said. "We believe there's no basis for any change in our policy toward China, which is one of engagement." "I do not know whether it is true or not," President Clinton stated. "Therefore, since I don't know, it can't... and shouldn't affect the larger long-term strategic interests of the American people in our foreign policy." Members of Congress of both parties reached opposite conclusions. According to the Washington Post, Senator Fred Thompson (a Republican from Tennessee) and chairman of the committee investigating the fund-raising controversy, said he believed the Chinese plan targeted presidential and congressional elections while Democratic Senators Joe Lieberman and John Glenn said they believed the evidence showed the Chinese targeted only congressional elections."