How DNC Got Caught in a Donor Dilemma

It was a signal occasion, a milestone in the struggle of Asian immigrants to find their place in the American firmament. With the acuity of hindsight, it’s clear the elements of the eventual scandal were there too, wanting only more time to reach critical mass and explode.

The event itself was a model of its kind, an intimate California fund-raising dinner with all the trappings: a Brentwood address, tables nestled beneath a canopy, a string quartet playing as the fund-raisers moved among the guests. At every table, like a centerpiece--only better--was a United States senator primed to welcome wealthy Asian donors, both citizens and permanent residents, as valued participants in the Democratic Party.

The guests, elegant in black tie, included a pride of import-export lions, a brace of real estate developers, an antiques dealer, a successful jeweler.

When it was over, a $5,000 check from each of them was carefully logged in, bundled together with other such contributions and forwarded to Democratic Party functionaries in Washington.

Notwithstanding laws requiring disclosure, a note attached to one $5,000 check from an Asian American donor included in the bundle with those collected at the party and dated several days earlier said: “ . . . cannot report what appears on the check. He will be very upset if his name appears at anywhere.”

The Brentwood evening, which occurred on April 22, 1988, yielded $110,000 from a constituency more typically aligned with Republicans. More important, California Democrats, after years of exploration and development, were finally tapping into the political equivalent of the Spindletop oil gusher for their perennially underfunded party.

However, something else was also clear from the flirtation with deft bookkeeping: The Democrats and their new supporters were beginning to expose themselves to the welter of pressures and temptations that would one day produce a national debacle.

By the time President Clinton’s reelection campaign rolled around this year, the names of three of the dinner’s prime movers had become the stuff of unwelcome headlines: Host James T. Riady, a Clinton protege in Arkansas and eldest son of Mochtar Riady, the multi-billionaire patriarch of Indonesia’s giant Lippo Group conglomerate; John Huang, the self-effacing friend of Clinton and emissary of the Lippo Group who by now worked in Washington as a master fund-raiser. And Maria L. Hsia, credited with being the first person to make the Democrats’ long-sought Asian American connection work effectively and an organizer of the controversial Hsi Lai Buddhist temple fund-raiser attended by Vice President Al Gore in Hacienda Heights in April.

In a spectacle scarcely matched in the annals of American politics, the Democratic Party, which earlier this year had gloried in its Asian American fund-raising success, has struggled to throw the great machine into reverse.

Abashed officials who only yesterday had labored to suck money in, now labored to pump it back out, all the while striving to explain how the party seemed to have traded White House access for contributions, accepted improper or illegal foreign money and logged hefty donations under the names of people whose net worth seemed barely to exceed the gifts.

In simplest terms, the controversy that has already forced the Democratic National Committee to return more than $1.5 million--and some $600,000 in similarly questionable contributions returned by the president’s legal defense fund--arose because an insatiable itch met an irresistible urge to scratch.

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That is, the Democrats’ need for money to finance their electoral rebirth met up with parallel interests among Asian Americans. There was the well-meaning desire to gain a voice in the nation’s political system. There was also, for some with formidable overseas business ties, a craving for influence with top U.S. officials.

The story is more complex than that, of course.

It arises from circumstances unique to the run-up to the 1996 presidential election, in which a desperate president and his party needed to raise money early and fast to get ahead of a Republican tide. It encompasses new questions about the likelihood of foreign money influencing U.S. politics. And it embraces activities that range from possibly innocent technical errors to shell games so blatant they would embarrass a carnival pitchman.

In the latter category is the envelope full of defense fund contributions offered up by Yah Lin “Charlie” Trie, the former Arkansas restaurateur turned international deal maker whose activities are at the center of what promises to be the next act in the drama. In the envelope was a sheaf of money orders purportedly sent in by well-wishers from different parts of the country--but the serial numbers on the money orders were sequential.

Now, as Clinton prepares for his inauguration, all this has moved to the front rank of issues that threaten his second term.

Already, the Federal Election Commission, the Justice Department and assorted congressional committees have opened inquiries. Investigators are beginning to sort donors who are legitimate from those who might be fronts for others; which money came from this country and which came illegally from overseas; and, in some cases, whether the sources got influence or benefits inside government for their money.

Beneath that whole tortuous process lies a question that may determine the judgment on Clinton’s presidency.

Is this another of those “Clinton” scandals so eagerly exploited by the Republicans, an unseemly compote of blinkered judgments, ethical blindness, and even proven misdeeds by underlings that smudges the administration but never quite reaches the president himself?

Or will this prove to be, as some critics suggest, a deliberate attempt to infect the 1996 election with foreign money, a potentially mortal sin involving one of the nation’s most sacrosanct political taboos.

CHAPTER ONE: A Tapestry Changes

If the United States is a nation of immigrants and the Statue of Liberty a symbol of its welcoming ideals, the history of almost every new group includes stories of pain and discrimination. That certainly has been true of immigrants from Asia.

Even beyond the infamous treatment of Chinese laborers in the 19th century and the internment of Japanese Americans during World War II, it was not until 1952 that the California Supreme Court struck down laws barring immigrants from Asia from owning land. And not until the early ‘50s could most Asians become naturalized citizens.

“Such experiences affected people’s trust in government,” says UCLA political scientist Don T. Nakanishi. “Don’t stand out” was the motto for Nakanishi’s parents’ generation. Much the same was true for other Asian Americans of that time. Yet withdraw into their own communities as they might, they could not escape a hunger for recognition and respect from the larger society.

Politically, except for Japanese Americans who have remained staunchly Democratic, Asian Americans were evenly divided between Republicans and Democrats. Those wealthy few who had been active campaign contributors had tended to support the Republicans, since they shared the GOP’s social and economic conservatism.

Beginning in the mid-1960s, however, profound changes began to occur in the United States and in Asia. New opportunities were created for the Democratic Party, and a new climate developed in which people such as John Huang, Maria Hsia and James Riady could operate.

First, as the social barriers began to fall, powerful traditions of education and entrepreneurship helped the children of earlier immigrants begin moving up in the ranks in law, academia, medicine and business--positions that drew them closer to politics.

Second, in 1972, President Nixon opened the diplomatic door to Mao Tse-tung’s ChinaZedon. While a welcome step in many ways, it subtly called into question the permanence of a status quo on which many in Asia had built their lives--especially the wealthy families and giant businesses that had developed across Southeast Asia. Suddenly, many rich and powerful Asians moved to link themselves more directly to the economic and political systems of the Western superpower.

As a result, where most earlier immigrants had tended to be poor and uneducated, there soon came to America waves of quite different immigrants from such places as Taiwan, Hong Kong, Indonesia, South Korea and the Philippines.

These more affluent immigrants were more assertive, less fearful.

In business and in politics, which many viewed as parts of the same thing, they were eager to step up to the table and play. And they found an American society that was far more accepting.

They also added to the diversity of Asian Americans, now the country’s fastest-growing minority. And they brought with them an intense interest in the affairs of their homelands, unlike the scant attention paid to such matters by many second- or third-generation Asian Americans.

The arrival in the U.S. in 1977 of the handsome and personally winning James Riady reflected the changing scene. Initially, his family had sent him from Indonesia to Arkansas for a kind of internship with Stephens Inc., the giant Little Rock investment house. Then the Riadys had bought an interest in a small Little Rock financial institution, the Worthen Bank, to provide James with an apprenticeship and themselves with a point of entry into the U.S. financial and political world.

The bank was eventually sold. James and John Huang, a Taiwanese immigrant who came to U.S. in 1969 and eventually joined Riady’s operation, moved on to the family’s banking enterprise in Los Angeles. But by then, Riady had established close ties with Bill and Hillary Rodham Clinton, whom he had met when Clinton was attorney general in Arkansas in the late 1970s.

The particular activities of the Riady clan would prove important for President Clinton. But a much larger process was underway in California that would impact the Democratic Party as a whole.

CHAPTER TWO: Building a Money Machine

It was not as if Democrats had not seen the potential earlier. While Asian American households did not reach the very top of the median income chart in Los Angeles County until relatively recently, the accelerating growth of the community--with its burgeoning ties to the Pacific Rim--had been hard to miss for a long time.

But then-Sen. Alan Cranston seems to have been among the first major Democratic figures to find a systematic way of making Asian Americans a dependable source of campaign funding. Former Lt. Gov. Leo McCarthy was not far behind.

The trick was to develop a message that would resonate in the Asian American community, then assemble a team of messengers who could deliver it.

So far as a successful message was concerned, one ingredient was a pledge of recognition and respect. Another was a commitment to address the commercial needs of Asians and Asian Americans. The final element was support for Asian Americans’ views on immigration. As early as 1986, for example, when Congress began revising immigration laws, Democrats listened closely to the community’s opposition to a provision that would have eliminated preferences for reuniting families.

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When it came to the messengers, Maria Hsia first showed Cranston and McCarthy how it could be done.

Born in Taiwan in 1951, the daughter of a woman who enjoyed special ties to Madame Chiang Kai-shek, Hsia immigrated to the United States in her early 20s and found a niche as an “immigration counselor” at a law firm whose clients included many Chinese. She also found her way into politics.

Cranston recalls meeting Hsia about 1983, when she began raising money for Democratic get-out-the-vote efforts.

Hsia, like Riady and Huang, is not available for interviews these days. But Cranston remembers that “she was very effective and very efficient and had broad contacts in the community. This was the first time in my memory that it [fund raising in the Asian community] seemed to be done effectively.”

She helped Cranston finance his 1986 reelection campaign. Later she, together with Huang and Riady, marshaled Asian American support for McCarthy’s unsuccessful race for Senate and for other Democratic candidates.

To give their efforts more stature within the community, Hsia later joined with Huang, Riady, Los Angeles lawyer Fred Hong and others to organize the Pacific Leadership Council.

Bipartisan on such issues as immigration, the group was closely allied with the Democratic Senate Campaign Committee.

It was the Pacific Leadership Council that put on the Brentwood event in 1988, primarily to assist McCarthy’s Senate bid.

Reflecting the way PLC principals tended to intertwine political fund-raising, government policy and their business interests, one of the senators attending the Brentwood dinner was Kent Conrad of North Dakota, who later that year led a Lippo-sponsored trade mission to Asia. It produced a number of contracts for a research center at the University of North Dakota.

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According to Gerald Groenewold, an official of the research center, the Lippo Group “helped open some doors for us . . . John Huang was with us everywhere.”

Conrad’s campaign coffers benefited: he got about $6,000 from Huang, his wife, Riady and Hsia. And Lippo, which already had huge interests in Indonesia and China and hoped to expand into Vietnam, got itself another well-positioned contact in the U.S. government. And in 1994, Conrad helped boost Huang for the deputy assistant secretary’s job he got at Commerce.

An even more high-profile example of how the system worked was provided by a 1989 trip to Taiwan, Indonesia and Hong Kong led by McCarthy and prominent members of the PLC. Then-Tennessee Sen. Al Gore hooked up with the entourage for part of the tour. He met alone with the president of Taiwan and joined the group for a feast with the foreign minister.

The group also toured the massive Hsi Lai Buddhist temple and met with the venerable master, Hsin Yun. The temple paid for Gore’s trip from California.

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The sojourn combined elements of a policy fact-finding trip and a campaign-type foray (no fund-raising was discussed, but Gore later received contributions from seven PLC members). In reality, Democratic sources say, the primary reason for the trip was to reward Hsia, Huang and other PLC activists for their financial support of the Democratic Senate Campaign Committee. Hsia, Huang and the others had important private interests in the region and they stood to benefit substantially from traveling with so prominent an American as Gore, who had been a presidential contender the year before.

Though Hsia and Huang often worked in tandem, they were as different as could be in style. Together, however, they seemed an unbeatable combination.

Hsia, known as an unabashed go-getter, won contributions in part through her success as an in-your-face advocate of issues that mattered to businessmen and the Asian American community.

So forceful were her tactics on immigration, for instance, that one prominent Democrat recalls her threatening to pull contributions away from an important fund-raising event if she was not seated next to Massachusetts Sen. Edward M. Kennedy, whom she planned to lobby on immigration during the dinner.

Such moxie raised Hsia’s profile in the Asian American community. When the immigration reform bill was finally signed in 1991, it contained both the all-important family reunification feature and an arcane but critical provision affecting Buddhist monks such as those at the Hsi Lai temple. After such a triumph, who would quibble that along the way she had also expanded her contacts with potential clients?

Still, there were some who did not care for Hsia’s aggressiveness and too-blatant self promotion. For such people, Huang offered the perfect counter-weight. With his impeccable manners, his avoidance of the spotlight and his mastery of at least five Chinese dialects, he charmed more-traditional Asian Americans.

And his only public message was that no matter how materially successful Asian Americans might become, they would not count in this country unless they became politically active.

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To many Asian Americans, Huang is an architect of their emergence as a political force, evidenced by a record turnout of Asian Americans in this year’s elections.

Even now, when he is embroiled in controversy and facing the possibility of serious legal problems, associates seem genuinely incredulous that he could be involved in anything unseemly.

Thomas T. Chan, founding partner of the nation’s largest Chinese American law firm, is a Republican, but he has supported some of Huang’s Democratic causes. “Republicans, Democrats and Independents (of Chinese ancestry) value John because of the kind of person he is,” says Chan, chairman of Chinese Americans United for Self-Empowerment, a Los Angeles-based business and professional group.

“John didn’t ask for money, but we wanted to contribute to his cause because we agreed with his message,” Chan said.

There was another side to Huang, however. He was more subtle than Hsia, but he, too, was not remote from the interests of his patrons, Lippo Group and the Riadys. When he moved to Washington and joined the Clinton administration in 1994, he was given a compensation package worth $879,000.

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And recent revelations about his frequent telephone calls to LippoBank while he was at the Commerce Department, and a government inquiry into his contacts with a federal regulatory official with authority over a pending LippoBank matter, have become a source of private concern for some of his earlier admirers.

Meantime, the fund-raising system Hsia and Huang took the lead in developing in California soon went national.

Illinois Sen. Paul Simon, a player in the immigration fight, became co-chair of the PLC. Other Democrats were also pleased to associate with--and to honor--their new-found friends among a group so able to help and so long closed to them.

Things came together on a shimmering night in July of this year when President Clinton attended a fund-raising dinner at the Century Plaza Hotel. Co-chaired by Huang, with tickets priced at $1,000 per plate--$5,000 to attend the VIP reception beforehand--it was an event designed specifically for Asian Americans. And by all accounts the response was spectacular.

People brought their cameras and clicked away, capturing images of red roses and white lilies at the head table, of James Riady and his wife, Aileen, sitting on the president’s left and on his right Ted Sioeng, owner of the Chinese language International Daily News and the Metropolitan Hotel in Hollywood.

Former Monterey Park mayor Lily Lee Chen remembers the warm glow she felt as she sat and listened to the Celestial String Quartet, four Asian American boys and girls playing Mendelssohn and Mozart and Bach for the president.

“I had a sense of pride,” said Chen. “The president had come specifically to Southern California to be with Asian Pacific people.”

CHAPTER THREE: A Hunger in the White House

Sometimes they would meet only a few steps from the Oval Office, clustered around the mahogany conference table of the Roosevelt Room. At other times, the group would assemble in the basement of the West Wing, holding their discussions in the pub-like Ward Room, just off the White House mess.

Wherever they met, the cast was almost always the same. Harold M. Ickes, the excitable and profane deputy chief of staff for politics, was in charge. Doug Sosnik, the White House director of political affairs, rode shotgun; Sosnik’s North Carolina drawl and his gift for wisecracks could sometimes ease the tension that seemed to follow Ickes like a thunderhead.

Across from the White House team, at least figuratively, would be Donald Fowler, the newly installed and not entirely happy co-chairman of the Democratic National Committee, and several of his lieutenants. Fowler, a tall, slow-talking Yellow Dog Democrat from South Carolina, had taken the DNC job with notions of doing more than just helping reelect a president; he also wanted to strengthen the party infrastructure nationally for the long haul, expanding such things as the small-donor program.

Part of Ickes’ and Sosnik’s mission, it seemed, was to stuff such ideas as far down into Fowler’s socks as possible.

These were the weekly “money meetings” of the Clinton reelection team. And beginning in late 1994, the pressure on Fowler to raise money was unabated.

Week after week, month after month, says one knowledgeable source, “No matter how much they raised, the beast wanted more.”

That one ineluctable fact turned out to be enough to close the circle--to set in motion the events that produced the destructive fund-raising controversy.

No possible source of big money was neglected in late 1994 and for much of 1995, because in those dark days following the seeming rejection of the president in the 1994 congressional elections, the possibility of raising a huge war chest was almost the only thing that kept hope alive inside the Clinton White House.

Money was the answer to the two most immediate problems Ickes, Fowler and the others faced.

First, some Democrats had begun to murmur about challenging Clinton for renomination, and that had to be stopped. The answer was to raise so much money so early that none would be left for others.

Second, Clinton, to stand a chance against the GOP nominee in ‘96, would have to narrow the perennial gap between his party and the far-richer Republicans. Ominously, the DNC had raised more money in 1994 than ever before in an off-year election but ended the year more than $4 million in debt.

Without delay, the campaign’s finance director, Terence McAuliffe, geared up and managed to raise the maximum allowed for candidates receiving federal matching funds, about $37 million in Clinton’s case.

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But another problem appeared. Clinton political consultant Dick Morris persuaded the president he needed to go on the air to challenge the Republicans. So in June of 1995, far earlier than most other strategists thought wise, the reelection committee parted with $2 million for commercials portraying Clinton as tough on crime and the Republican Congress as obstructing his efforts to make America safer.

Morris followed the crime ads with successive barrages portraying Republicans as hostile to Medicare.

In the end, some judged the early blitz a stroke of genius--a prime reason for Clinton’s surge in the polls and Republican leader Newt Gingrich’s decline. Brilliant or not, the strategy put the campaign’s balance sheet in peril and an alternative funding source had to be found. There was only one: the so-called “soft money” raised by the DNC. Federal law puts no limits to how much such an organization could collect to aid the Clinton cause, so long as it did not specifically urge his reelection or get too close to his campaign organization.

Those rules were legal fictions; both parties sidestepped them at will.

But this time Clinton could use the device to better advantage than the GOP, which would not have its nominee until the summer of 1996.

Accordingly, in September of 1995, at almost the same time Clinton was approving the second big television assault, he held an Oval Office meeting with Huang, senior White House aide Bruce Lindsey and Clinton’s old friend from Arkansas days, James Riady.

In what the White House recently acknowledged was “clearly the most important part of the meeting,” Huang recommended he shift from Commerce, where he was legally barred from fund-raising, to the Democratic National Committee, where it would be his full-time job.

CHAPTER FOUR: Money In, Money Out

As with all great magicians, what made John Huang’s effects so amazing was that he did not appear to be doing anything at all. But then, in a sense, he was a giant performing for an audience of children.

His arrival at the DNC on Dec. 4, 1995, was characteristic. The top money people had offices on the third floor of the main headquarters building at 430 S. Capitol St. Huang was sent across the street to a drab annex for the committee’s overflow. He did not so much as blink.

Yet he began almost at once to produce rabbits that looked as big as elephants, contributions in quantities that had scarcely been seen before by Democrats. For example:

November 1995, two checks totaling $30,000. December 1995, $100,000; February 1996, $1 million; April, $140,000, with help from Hsia; May, $600,000; June, $90,000; July, $700,000 . . . from events and individuals.

Who could expect the DNC’s leaders, hounded as they were by the White House beast, to understand that the fortunes behind many of those checks were so immense, and the potential gains from sweeter relations with the U.S. government so immeasurable, that a few hundred thousand dollars was nothing?

“Walk-on” fund-raisers from the community added to the torrent of money. Johnny Chung, for instance, a Taiwanese American from Torrance, seemed to think he could build up a tottering fax broadcast business in part by running photo tours of the White House.

Chung’s specialty was guiding coveys of camera-toting Asian businessmen through the White House, suggesting along the way that he was an intimate of the president. The visitors seemed to place inordinate value on photos of themselves in the executive mansion, particularly with Clinton in the Oval Office or next to a White House Christmas tree.

Among Clinton aides, Chung’s pride in his own admittedly large photo collection was something of a joke. They kept opening the door, however, when he requested another tour. Perhaps that was because, despite a history of business troubles, Chung has donated $366,000 to the DNC since 1994.

Meanwhile, Huang continued his magic.

Part of the secret of his success was that, where campaigns were seasonal work for some operatives, politics was a permanent part of Huang’s life. Whether he hung his hat at the LippoBank or the Commerce Department or the DNC, he tended to be doing the same things:

He was trying to advance the cause of Asian Americans. He was seeking ways to help businessmen and government leaders satisfy their mutual needs. And he was never long out of touch with his friends in the Lippo Group and the Riady family.

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What made individual episodes of his life hard for some people to understand was that, to Huang, no real distinction existed among the three elements; like sugar and cream added to coffee, they formed a whole.

Consider the case of Pauline Kanchanalak.

Kanchanalak headed a highly successful firm called Ban Chang International, which matched companies in Thailand with joint venture partners in the United States. In the early 1990s, during the time Huang was a Lippo executive, he had helped her put together a bank deal in the Orient.

Then in September of 1994, while Huang was at the Commerce Department, Kanchanalak had placed a series of calls to him seeking help with an urgent business problem.

She was involved in organizing an umbrella group called the U.S.-Thai Business Council. The White House, she told Huang, had agreed to host the council’s inaugural meeting, scheduled for Oct. 6. The Thai foreign minister was to attend, and a session with the president had been promised. Now, some White House aides were having second thoughts.

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On Sept. 30, 1994, the same day Kanchanalak placed one of her calls, Huang wrote a memo urging one of his superiors, Asst. Undersecretary David Rothkopf, to support the Thai Council and its planned event. Rothkopf said that at the time he was astounded both at receiving unsolicited advice from a subordinate and by the way the memo purported to know the mind of the president of the United States.

The president, Huang cautioned Rothkopf, would probably be unhappy if his chat with the Thai foreign minister fell through. Moreover, he added, “Quite a few” members of the proposed council hailed from the president’s home state and “they may want to utilize their contacts to get this matter squared away directly from the top. . . .”

Rothkopf insists he did not have the authority to act on Huang’s letter, but Kanchanalak’s council got its White House ceremony and the visit with Clinton.

Twelve days later, Kanchanalak visited Huang’s office at Commerce. Two days later, she is listed in federal records as giving $32,500 to the DNC; that brought her total for the year to $62,500. Kanchanalak says the money actually came from her wealthy mother-in-law living in Virginia, and that the DNC listed her as the donor in error.

Whoever provided the money, it flowed even faster once Huang moved to the DNC. Records show “Pauline Kanchanalak” contributed a total of $150,000 between February and July of this year.

If the Kanchanalak connection reflects the traditional symbiotic relationship between business and politics, the case of Soraya and Arief Wiriadinata adds a personal strand to the fabric.

The sequence began in June 1995 when Hasjim Ning, an Indonesian businessman whom Huang knew as a partner of the Riadys, suffered a heart attack during a visit to the Washington area. At the request of James Riady, Clinton sent a letter of concern to Ning, hand-delivered by White House aide Mark Middleton.

“I was so sorry to learn of your health problems,” the president wrote. “You are in my thoughts and prayers during this difficult time.”

Huang visited Ning at the hospital too, and met Ning’s daughter and son-in-law, Soraya and Arief Wiriadinata. At the time, the couple lived modestly in northern Virginia, where Arief was a landscape architect.

Somehow, conversations that began with Ning’s health worked around to campaign contributions. “They expressed an interest in supporting the Democratic Party and the president and I suggested that they contribute to the DNC,” Huang explained simply, replying to written questions.

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Later in the year, the Wiriadinatas began to send in checks, starting with $30,000 for tickets to a Gore fund-raiser in November 1995, and following with $100,000 in December, when Arief attended a DNC-sponsored breakfast with Clinton at the White House.

Ning died before year’s end and the couple returned to Indonesia. But they continued to give--an additional $320,000 by the end of July 1996.

Huang was also working his magic with a South Korean businessman named John K.H. Lee.

Lee was seeking to establish a branch plant in Southern California.

Nothing would bless his enterprise more than a snapshot of himself with the president of the United States. Better yet, personal meetings with Clinton to talk business man to man.

When someone put Lee in touch with the DNC, Huang rolled into action:

Would Lee care to attend a small dinner with the president at the Sheraton Carlton Hotel in Washington on April 8? Absolutely, said Lee. He would even bring a few friends; put him down for $250,000.

By the way, he wondered, might it be possible for him to play the piano and sing gospel tunes at the dinner, accompanied by Clinton on the saxophone?

The duet never happened, but Huang handled Lee so deftly that in August, Lee gave $10,000 more to become an official sponsor of the gala celebration of Clinton’s renomination in Chicago. Lee shepherded a flock of Korean visitors around town, boasting that he could show them the inner workings of the American political system.

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Under U.S. law, noncitizens may contribute to political campaigns only if they have resident status, and subsidiaries of foreign businesses can give only if they earn profits here. In September, The Times reported that Lee’s affiliate in Century City, Cheong Am America Inc., had not generated any revenue and that Lee was not a legal resident.

The unraveling began at once. In case after case, questions arose over who were the real sources of the money Huang and company had collected, whether it was truly U.S. money or laundered money from overseas, and what the givers might be expecting for their generosity. Over the past several weeks, the contributions from Kanchanalak, Lee, the Wiriadinatas and others were returned by the DNC--a total of $1.5 million and mounting.

In the weeks before the election, the Clinton campaign faced with plummeting poll numbers in what had been a cake-walk, declared itself shocked at the possibility of wrongdoing--at the DNC, it added pointedly.

Clinton, of course, was reelected handily. For their part, DNC officials called in a team of independent auditors and tried to batten the doors. But as the Federal Election Commission, Justice Department and assorted congressional committees opened inquiries, it became apparent that the fund-raising scandal of 1996 would track the Clinton White House into 1997 as well.

BACKGROUND: The Rules on Contributions

Regulations governing contributions to federal campaigns and the political parties went into effect in 1974, following public uproar over revelations of secret cash donations to the Richard Nixon reelection campaign. Presidential candidates who want federal matching funds must accept only individual contributions, which are capped at $1,000 each and must be reported to the Federal Election Commission. Their general election campaigns are fully funded by the U.S. Treasury. But political parties may accept unlimited contributions from individuals and corporations if they report the donations to the FEC. The parties may not take money from foreign governments or residents, or from foreign corporations unless the money comes from the operations of U.S. subsidiaries. It is these latter restrictions that are the locus of the controversy now engulfing the Democratic National Committee.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

THE MONEY PIPELINE

The Asian American fund-raising effort for the Democratic Party that culminated in a damaging controversy during the 1996 presidential campaign had its roots in Little Rock, Ark., and Southern California many years earlier. Here is a chronological sketch of some of the milestones along the way.

1977

James T. Riady, scion of an Indonesian billionaire, befriends Arkansas Atty. Gen. Bill Clinton after enlisting as a trainee at a Little Rock investment firm.

1986

Maria Hsia, a Taiwanese American businesswoman in Los Angeles, solicits funds for California Democratic Senate candidates. John Huang moves to Los Angeles to serve as president and chief operating officer of James Riady’s LippoBank.

APRIL 1988

Hsia and Riady gain standing within the Democratic Senate Campaign Committee (DSCC) as leaders of the Pacific Leadership Council (PLC), a group formed to raise money and lobby for Asian American interests. PLC holds an inaugural fund-raising event at Riady’s Brentwood home that brings in about $110,000 for California Lt. Gov. Leo McCarthy’s U.S. Senate campaign.

JAN. 1989

Tennessee Sen. Al Gore and McCarthy join Hsia, Huang and other PLC members on a trip to Taiwan at the behest of the DSCC as a reward for fund-raising for McCarthy. Group visits Hsi Lai temple headquarters.

OCT. 1992

John Huang raises $250,000 among Southern California’s Asian American community at a dinner for Arkansas Gov. Bill Clinton’s presidential campaign at the Sam Woo Seafood restaurant in San Gabriel.

NOV. 1992

Bill Clinton is elected president; Al Gore vice president. Huang sends a memo to the head of Clinton’s transition team seeking administration posts for himself and a Lippo colleague.

MAY 1993

At the urging of James and Mochtar Riady, Clinton surprises his advisors by agreeing to meet with Indonesian President Suharto at a summit of world leaders in Tokyo.

JULY 1994

Huang begins work at Commerce Department as deputy assistant secretary for international economic policy. He receives about $879,000 in compensation upon leaving the Riadys’ Lippo Group.

AUGUST 1994

Johnny Chung, owner of a struggling Torrance business, co-hosts a fund-raiser for Clinton’s 48th birthday. Over the next two years, he contributes a total of $366,000 and makes at least 49 visits to the White House.

SEPT. 1994

Huang writes an urgent Commerce Department memo on behalf of Thai businesswoman Pauline Kanchanalak and her efforts to land a White House ceremony featuring President Clinton. Kanchanalak and her business later donate $253,500, records show. Kanchanalak claims the money came from her wealthy mother-in-law.

JUNE 1995

Clinton sends a note of concern to Hasjim Ning, a Riady business partner who becomes ill during a U.S. visit. At the hospital, Huang meets Ning’s daughter and son-in-law, Soraya and Arief Wiriadinata. They donate $30,000 in November before returning to Indonesia and giving an additional $420,000 to the DNC.

SEPT. 1995

In an Oval Office meeting with Clinton and Riady, Huang asks to move over to the DNC. On Dec. 4, he begins work as a fund-raiser focusing on the Asian American community.

FEB. 1996

Huang organizes an event for Asian American donors featuring Clinton at a Washington hotel that raises $1 million.

APRIL 1996

John K.H. Lee of Cheong Am America Inc., a South Korean company with a bare office in Century City, contributes $250,000 to meet Clinton at a Washington fund-raiser. Hsia and Huang solicit $140,000 at Hsi Lai Buddhist temple in a Hacienda Heights fund-raiser featuring Vice President Gore. Gore insists he was unaware the luncheon was a fund-raiser.

MAY 1996

California entrepreneur Yogesh Gandhi gives $325,000 to attend a Washington fund-raiser organized by Huang and presents Clinton the Gandhi peace award. Huang flies to Taiwan on a DNC fund-raising trip--a mission Clinton later says he disapproved of.

JULY 1996

Clinton praises Huang for arranging a fund-raiser for Asian American donors at the Century Plaza in Los Angeles that brings in about $700,000.

SEPT. 1996

DNC returns a $250,000 Cheong Am contribution when The Times reports that the donation was illegal because the money came from the South Korean parent company. Over the next two months, the DNC returns $325,000 to Gandhi, $253,500 to Kanchanalak and $450,000 to the Wiriadinatas after problems with the donations come to light. Total returned: nearly $1.5 million, including $1.2 million raised by Huang.

OCT. 1996

DNC asks the Federal Election Commission to investigate newspaper reports of fund-raising irregularities and suspends Huang from fund-raising activity.

NOV. 1996

The Clinton administration discloses that James Riady visited the White House at least 20 times, including talks with Clinton on U.S. trade policy toward Indonesia and China. Clinton and Gore are reelected. The foreign-money controversy is widely viewed as damaging the Democrats’ efforts to regain Congress. The DNC hires an outside law firm and accounting agency to conduct its own review of questionable contributions.

DEC. 1996

Clinton’s legal defense team discloses that six months earlier it had rejected more than $600,000 in questionable donations from Yah Lin “Charlie” Trie, a friend of the president’s from Little Rock.

Sources: Democratic National Committee, White House, Federal Election Commission, Los Angeles Times.

Donations Returned

Contributions the Democratic National Committee says it has refunded as part of an ongoing review of allegations of questionable fund-raising. So far, more than $1 million has been returned.

Donor: Cheong Am America

Amount Refund: $250,000

Date: 9/20/96

Reason: Foreign

*

Donor: John K.H. Lee

Amount Refund: $10,000

Date: 10/16/96

Reason: Foreign

*

Donor: Man Ya Shih

Amount Refund: $5,000

Date: 10/21/96

Reason: Not Real Donor

*

Donor: Jorge Cabrera

Amount Refund: $20,000

Date: 10/16/96

Reason: Inappropriate

*

Donor: Gulf Canada Resources

Amount Refund: $10,000

Date: 10/28/96

Reason: Foreign

*

Donor: Onex Corp.

Amount Refund: $2,000

Date: 10/28/96

Reason: Foreign

*

Donor: Richard Tienken

Amount Refund: $25,000

Date: 10/29/96

Reason: Inappropriate

*

Donor: Interactive Wireless

Amount Refund: $50,000

Date: 10/31/96

Reason: Inappropriate

*

Donor: Carolina PCS

Amount Refund: $15,000

Date: 10/29/96

Reason: Inappropriate

*

Donor: Yogesh Gandhi

Amount Refund: $325,000

Date: 11/7/96

Reason: Source Unsubstantiated

*

Donor: Psaltis Corp.

Amount Refund: $50,000

Date: 11/5/96

Reason: Foreign

*

Donor: Hsi Lai Temple

Amount Refund: $15,000

Date: 11/3/96

Reason: Religious organizations are generally prohibited from holding fund-raising events

*

Donor: Chia Hui Ho

Amount Refund: $5,000

Date: 11/18/96

Reason: Her legal residency status is still pending

*

Donor: Praitun Kanchanalak

Amount Refund: $253,500

Date: 11/20/96

Reason: Concealed source of funds

*

Donor: Jao Yi Lu

Amount Refund: $1,000

Date: 11/20/96

Reason: No known address

*

Donor: Ban Chang International

Amount Refund: $300

Date: 11/20/96

Reason: Foreign corporation

*

Donor: Arief and Soraya Wiriadinata

Amount Refund: $450,000

Date: 11/22/96

Reason: Foreign

Source: Associated Press