Controversy Swirling Around Gandhi Donation Grows

New questions emerged Wednesday about the background and financial resources of Yogesh K. Gandhi, the Orinda, Calif., entrepreneur whose $325,000 donation to the Democratic Party has added to concerns about foreign influence on U.S. political campaigns.

The party also announced its own inquiry into the contributor. Democratic National Committee spokeswoman Amy Weiss Tobe said that Gandhi’s was among a number of controversial contributions that the DNC had asked the Federal Election Commission to investigate last week.

Gandhi, a distant relative of Mahatama Gandhi and president of the Gandhi Memorial International Foundation, made the large donation at a May 13 dinner. At a separate room at the site, he presented President Clinton with a life-size bust of Mahatma Gandhi on behalf of the foundation.

Officials at the DNC and at the White House, which had declined Gandhi’s earlier request to make the presentation, say there was no link between the campaign funds and the opportunity to meet the president.

Among the additional issues that arose Wednesday were contradictory assertions that Gandhi has made about whether he is a U.S. citizen, the sources of funding for the foundation and a claim by the foundation that a former New York governor once served on its board.

But the central issue surrounding the political contribution, Yogesh Gandhi’s first ever, remained the question of where the 47-year-old entrepreneur came up with so much money. The state of California claims Gandhi owes $10,000 in back taxes, his driver’s license has been revoked because he failed to pay traffic fines and he testified in court in August that he has no U.S. assets.

The DNC has said it had no reason to question whether the $325,000 was his own money. Gandhi is permitted to contribute to U.S. campaigns because he has a green card certifying that he is a legal resident of the United States.

Gandhi, who answered questions from The Times at length on Tuesday, did not return phone calls Wednesday. He has said that he has been supported by his family in India but that he made the donation from more than $500,000 in profits from undisclosed international business ventures in April. By August, he said, most of the funds were gone.

He said he gave $325,000 so his mother, who was visiting from India, as well as friends could join him at a glittery fund-raiser with the president at a Washington hotel. When Gandhi and others affiliated with the foundation went to the event, they took the Mahatma Gandhi bust with them. DNC officials said the group approached party staff members with a request to give the bust to Clinton, and a private ceremony was arranged.

Gandhi said he purchased 13 tickets for the event at $25,000 per couple. The DNC says Gandhi did give a total of $325,000 through the event, although Tobe said Wednesday the ticket price was $5,000 per person. The dinner dinner drew 100 people and raised $600,000, she said.

The Mahatma Gandhi World Peace Award itself, which has gained a certain stature in light of such illustrious recipients as Mother Teresa, Ronald Reagan and Mikhail S. Gorbachev, has also been presented to two controversial Japanese figures: a billionaire who had alleged ties to organized crime and a Japanese religious leader who some former adherents claim bilked them of large sums of money, according to published accounts.

Gandhi said that most of the $3 million to $5 million he has raised for the foundation came from the Indian community. But the foundation’s largest contribution in the last decade--$500,000--came from the Japan Shipbuilding Industry Foundation in 1988, according to annual reports filed with the Internal Revenue Service.

The company was headed by billionaire Ryoichi Sasakawa, who received the Gandhi award the year before. Gandhi said Sasakawa was honored “as a Japanese philanthropist.”

The company has generated considerable revenue administering legalized gambling on speedboat races. After the indictment of some company officials on corruption charges, the Japanese government forced the company to make reforms in 1994 that reduced Sasakawa’s influence.

Sasakawa was arrested after World War II by U.S. occupation forces as a suspected war criminal. He was imprisoned for three years but never prosecuted.

Sasakawa gave huge amounts to numerous charities and causes. Among the many honors he received was the Gandhi foundation’s award in 1987 at a ceremony in Japan. Gandhi said Sasakawa was honored “as a Japanese philanthropist.”

Jitu Somaya, a director and benefactor of the foundation since 1989, said he was not familiar with the decision to give the award to Sasakawa. But he said there has been no connection between any award recipients and their financial support for the foundation.

The 1995 award recipient was Hogen Fukunaga, the wealthy head of a Japanese religious group known as Ho no Hana Sanpogyo. Among the books Fukunaga has written is one that says the shape of a person’s navel can be used to diagnose one’s ills.

Some adherents in Japan have alleged that they were financially exploited when they joined his group. The Far Eastern Economic Review reported last month that 900 people claim to have lost money since November 1992.

Somaya said that the foundation recognized Fukunaga for “his humanitarian work he was doing about the environment.” He acknowledged that he knew few specifics about the recipient.

Regarding Gandhi’s immigration status, DNC officials said Wednesday that he told the party that he was a naturalized U.S. citizen.

But Gandhi said in a municipal court proceeding in Contra Costa County on Aug. 26 that he was not an American citizen. That statement is supported by Gandhi’s possession of a green card, a copy of which he provided to The Times on Tuesday. Under immigration law, individuals are required to return their green cards to the INS upon gaining citizenship.

Tobe said the DNC’s inquiry would include looking into “questions that have arisen about his citizenship.”

In addition, former New York Gov. Hugh L. Carey contradicted the foundation’s statement that he was a director in 1987. That claim was made in an annual financial report filed with the IRS.

Carey said he met Gandhi when he was seeking funds to put a statue of Mahatma Gandhi in New York’s Union Square shortly after he left the governorship in 1983. But Carey said he never served on the foundation board.

“This man Gandhi pleaded with me to go see the dedication so I did,” Carey said. “That’s the last I saw of this gentleman.”

In a separate matter, Peter Kelly, an attorney representing the Hacienda Heights, Calif., Buddhist temple swept up in the fund-raising controversy, said Wednesday that another contribution to the Democratic Party apparently will have to be returned.

The contribution, which he described as between $3,000 and $5,000, was made by a temple devotee who had a green card application pending but was not yet a permanent resident, Kelly said.

“If that’s the case, they should not have made the contribution and it should be returned,” Kelly said.

The DNC has already returned $15,000 to the temple for expenses incurred in staging the April fund-raiser, which brought in $140,000. A $5,000 contribution was returned to the U.S. Treasury Department after a Buddhist nun said she had been given cash by a Democratic activist and asked to write a check to the committee.

Kelly said temple officials have now identified a total of 15 monks, nuns and devotees who made contributions in connection with the event. He said all indications are that the remaining donations were proper.

Times staff writers Glenn F. Bunting in Washington and Dan Morain in Sacramento contributed to this story.