Tracing Trails of Donors Leads Inquiry to New Level

The bits and pieces accumulate like the field notes and evidence bags from an unsolved mystery:

A cab receipt for a trip from the Chinese Embassy.

Footprints left by a far-flung Asian business family that run--among other places--to President Clinton and to an overseas trading company used as a cover for Chinese intelligence operatives.

An American citizen whose resume includes service in the Taiwan military and in the executive ranks of Indonesia’s giant Lippo Group, a man who also held a Commerce Department job that brought him regular intelligence briefings on sensitive information gathered by senior U.S. officials.

Records showing that a U.S. businessman with interests in China made campaign contributions to the Democratic Party that are puzzlingly huge, considering the modest size of his enterprise.

Taken together, such fragments of information have propelled the Democratic fund-raising controversy into new and potentially more-explosive terrain.

A team of FBI agents, exploring beyond the issue of deep-pocket political giving and sloppy fund-raising for Clinton’s reelection, has begun focusing on whether a foreign intelligence operation may also have been involved.

Although the evidence remains so sketchy that investigators cannot be sure exactly what they are looking at, some Republican lawmakers have voiced concern that the available road map may indicate a clandestine effort by China to bend U.S. policy its way.

Others are skeptical of that interpretation. A number of China experts in the U.S. point out that the best-documented foreign links to Democratic fund-raising are in Taiwan, not China. Some even suggest that political allies of Taiwan may be out to divert attention from Taipei and discredit its bitter rival, the mainland, at the same time.

China’s leaders “absolutely don’t do anything having to do with public relations or lobbying; they don’t have a clue,” said Chas W. Freeman Jr., a former deputy chief of what was then the U.S. Mission in Beijing. “And Taiwan has the most formidable lobbying operation in Washington after the Israelis.”

Latest Turn Raises Stakes

No matter which of these theories--or some other explanation for the puzzle--prevails, the latest turn in the fund-raising controversy has once more raised the stakes for Clinton and his aides. As congressional and Justice Department investigations probe deeper, the administration faces questions about whether its obsession with maximizing campaign contributions left vital U.S. interests exposed.

The mystery’s central figure remains John Huang, the former Commerce Department official and Democratic National Committee fund-raiser who had worked for the Lippo Group, which has extensive business interests in China as well as longtime ties to Clinton.

The focus on Huang arises from a combination of factors: his top-secret security clearance at the Commerce Department, which gave him regular access to intelligence information on China; his frequent contacts with Lippo while he was in the government; and his role in soliciting foreign-linked money--$1.2 million of which has been returned as suspect or illegal.

Investigators are also examining the activities of Arkansas restaurateur Yah Lin “Charlie” Trie, a Clinton friend who had his own dealings in China and brought in nearly $640,000 for the president’s legal defense fund--money that was subsequently rejected because its source could not be determined. Trie also escorted a prominent Chinese executive--who heads a company that manufactures arms in China--to the White House for coffee with the president.

The questions concerning China gained heightened attention last week when the Washington Post reported that a Justice Department probe into the Democrats’ fund-raising had uncovered evidence that representatives of the People’s Republic of China had sought to direct contributions to the Democrats before the 1996 campaign.

The story quoted unidentified officials as saying that the Chinese Embassy was used for planning contributions and that information on these activities had been obtained through electronic eavesdropping conducted by federal agencies.

The story provoked a strong response from the Chinese: “The reports about the so-called ‘involvement’ of the Chinese Embassy in political donations are sheer fabrications.”

A senior administration official said White House aides were perplexed by the reports because officials there probably would have been informed about a counterintelligence operation involving Huang and therefore would not have permitted his frequent visits to the White House.

“If there had been any knowledge that they had been running a counterintelligence operation against John Huang, we definitely would have adjusted our level of contact with him,” the official said.

But for House Rules Committee Chairman Gerald B.H. Solomon (R-N.Y.), who had urged the FBI to investigate possible “economic espionage” by Huang, the Post story was grounds to renew calls for Atty. Gen. Janet Reno to appoint an independent counsel to take over the inquiry.

“We now have convincing evidence of economic espionage and violations of national security,” Solomon said. “Vital American interests have been compromised.”

Attorneys for Huang and Trie declined comment.

Huang, who worked for the Lippo Group for nine years, was its top U.S. executive before joining the Clinton administration. He had raised funds for Clinton in 1992.

After Clinton’s election, Huang wrote to the White House seeking jobs in the administration for both himself and Charles De Queljoe, another Lippo executive and Democratic donor. He mentioned the National Security Council, the State Department and the Commerce Department.

While Huang did join the Commerce Department, De Queljoe did not but was named to an unpaid post on a federal advisory panel.

Riady, Clinton Met 20 Years Ago

James T. Riady, the son of Lippo chairman Mochtar Riady, met Clinton when both were in Arkansas 20 years ago and became friends. James Riady and the company and its executives have contributed large sums to Clinton’s political campaigns and gave $100,000 for his 1993 inaugural.

Shortly after Clinton took office, Mochtar Riady wrote to the president as one of his “close friends,” advising him to extend most-favored-nation trading status as the best means to achieve political reforms in China. Clinton took this step, but aides say that the Indonesian billionaire was just one of many individuals--including U.S. business and political leaders--offering this counsel.

Huang received a severance package of nearly $789,000 from Lippo before he became a deputy assistant Commerce secretary for international economic policy in mid-1994. As part of his regular duties at the Commerce Department, Huang was scheduled to receive 37 intelligence briefings during his 18-month tenure, records show. At least several of those briefings concerned China. He also routinely received numerous classified reports.

How valuable could that intelligence have been?

“Extremely,” said an official familiar with the information available to Huang at briefings convened by the department’s Office of Intelligence Liaison. “If you were a business person, would knowing details about the country’s leadership, and who the other particular decision-makers are, be helpful to you? Of course it would be.”

Fueling suspicion, Huang made 70 telephone calls to Lippo offices in Los Angeles during his year and a half at the Commerce Department, according to his phone logs. In some cases, records show, he called the offices the same day that he received classified documents. Investigators must determine whether those were social calls to former colleagues--or something more troubling.

Investigators are also trying to establish the nature of a visit Huang apparently paid to the Chinese Embassy in 1995. Huang’s records show that he went to a reception at the Indonesian Embassy on Oct. 11, for which he submitted a $5 cab fare receipt for reimbursement of his ride from the Commerce Department. He did not submit another receipt for a return to the Commerce Department from the Indonesian Embassy; his next receipt was dated the following day and covered a $5 cab trip from the “Chinese ambassador’s residence” to the Commerce Department.

Congressional investigators have questioned whether this indicates that Huang spent the night at the Chinese Embassy; friends of Huang scoff at such a scenario and say it could just as easily mean that Huang got one-way rides with others each time, or that he went home after the Indonesian reception and simply failed to submit a receipt for his travel to the Chinese Embassy on the following day.

Top-Secret Security Clearance Extended

More unsettling to some was the extension of Huang’s top-secret security clearance that he received in December 1995, and that remained in effect during his tenure as a DNC fund-raiser. Commerce Department officials called this an oversight and said Huang received no intelligence briefings during this period.

De Queljoe, who heads Lippo’s securities division, was appointed in 1994 to the Investment and Services Advisory Committee, an unsalaried group that meets four times a year.

Mickey Kantor, who in 1994 was Clinton’s trade ambassador, approved De Queljoe’s appointment. Kantor, who left the administration last month after also serving as Commerce secretary, said De Queljoe’s appointment had been recommended by the White House staff.

Clinton’s policies toward China are of indisputable importance to the Lippo Group, whose executives have indicated that they intend to invest a significant amount of the conglomerate’s assets there by the end of the century. U.S. policy toward China is almost certain to affect the value of such investments. Lippo has also forged a major presence in Hong Kong, which reverts to China’s control in July.

In 1994, Lippo invested in a 300-acre tourist development off the coast of Fujian province, where Mochtar Riady was born. The Riadys’ strategy has included seeking business ventures with the Chinese government itself.

In 1993, the family sold half of its Hong Kong Chinese Bank to China Resources Holding Co., a government-affiliated trading company that supplies Hong Kong with water and food from China. More recently, China Resources has invested in a number of Lippo ventures within Indonesia, according to an associate of the Riadys.

In addition to its legitimate enterprises, intelligence experts say, China Resources is sometimes used by the Chinese government as a cover for spying. A U.S. intelligence source said China Resources was essentially owned and operated by the Chinese Army and that Chinese military intelligence officials were free to penetrate its operations for economic espionage.

An event that raised additional suspicion about Chinese involvement in Democratic fund-raising was the visit of Chinese business executive Wang Jun to the White House on Feb. 6, 1996.

Wang met with Clinton during a coffee intended for U.S. political supporters and campaign donors. White House officials claim they did not realize at the time that Wang was the chairman of Poly Technologies Inc., a Chinese arms company suspected of shipping cruise missiles to Iran. Wang is also chairman of China International Trade and Investment Corp., a prominent investment conglomerate.

Wang gained entry to the White House as a guest of Trie. Records obtained from the administration by congressional investigators show that both Trie and Ernest Green, another Arkansas friend of Clinton’s, wrote letters on Wang’s behalf to enable him to obtain a visa to visit the United States.

The day after Wang’s trip to the White House, Green gave $50,000 to the Democratic National Committee--by far the biggest he ever made. Green, a managing director of the Washington office of Lehman Brothers Inc., could not be reached for comment.

In addition to his involvement with Wang, Trie hosted 21 senior economic and trade officials from China who visited the United States in 1994.

Offered to Be Emissary to China

Then there is Johnny Chung, a modestly successful Torrance businessman who parlayed $366,000 in campaign contributions to the DNC into 49 White House visits and numerous photo opportunities with the president and First Lady Hillary Rodham Clinton. Chung offered to become an emissary to China and, at one point, to try to win the release of Harry Wu, a political prisoner in China. Although he was rebuffed, Chung received a letter of praise from Clinton in 1994. In 1995, DNC Chairman Donald L. Fowler gave Chung a letter for use in China.

Douglas H. Paal, senior director of Asian Affairs for the National Security Council from 1986 through 1993, said that, “based on past experience, China was probably not involved in trying to influence American politics directly through donations but that other persons were trying to do things for China” to further their own business interests there.

Other China specialists maintain that if a foreign government was meddling in U.S. domestic politics, it was more likely to be Taiwan than China.

These experts note that Huang, though born in China, was raised and educated in Taiwan, and, like all Taiwanese men, served in the military. He made three trips to Taiwan while he worked at the Commerce Department, where he had responsibility for enhancing business opportunities for U.S. companies in Taiwan. At the DNC, his sole overseas trip was to Taiwan, where he sought to raise money from U.S. business representatives and other legal U.S. residents, a party spokeswoman said.

The initial disclosures about foreign Democratic fund-raising focused on Taiwan. Among them were Huang’s trip and a fund-raiser attended by Vice President Al Gore in April at a Hacienda Heights, Calif., Buddhist temple with headquarters in Taiwan. And the Justice Department is investigating allegations that James C. Wood Jr., the former U.S. envoy to Taiwan, had pressured Taiwan businessmen to contribute to the Democratic Party.

Others involved in the fund-raising controversy, including Trie and Chung, are also Taiwanese American.

Ironically, sources say that one possible concern for the Chinese government is that some of the White House meetings involving Chinese, particularly Wang Jun, were brokered by Taiwanese or Taiwanese Americans. This could be considered a serious breach of Chinese security that would likely be investigated by Beijing.

Times staff writers Rone Tempest in Beijing and Sara Fritz, James Risen and Richard A. Serrano in Washington contributed to this story.