FBI Warned Feinstein of China Aim to Funnel Cash

The FBI warned Sen. Dianne Feinstein (D-Calif.) and several of her colleagues in Congress last year that the Chinese government might try to funnel illegal contributions to their campaigns, officials said Saturday.

“I was briefed, and we have been extremely cautious,” Feinstein said through a spokesman Saturday night.

Feinstein received the classified FBI briefing on June 14, 1996, in her Senate office, spokesman Bill Chandler said.

“This was a very short briefing,” Chandler said. “It was very, very matter of fact. They said, ‘California has a very large Asian community, and we want you to be aware of this.’ It was a general discussion. We didn’t view this as a red alert. It was an FYI.”

Feinstein regarded the FBI briefing as a general warning and has no evidence that the Chinese government was the source of any of the contributions accepted by her campaign, aides said.

Feinstein is a member of the Senate Foreign Relations Committee. She has expressed a strong interest in U.S.-China policy, and has been criticized by some for what is regarded as a generally pro-China stance.

In a story scheduled for publication today, the Washington Post reports that the FBI warned six lawmakers that the Chinese government might try to indirectly support their campaigns with money channeled through foreign corporations.

Rep. Nancy Pelosi (D-San Francisco), who has criticized the Clinton administration’s renewal of China’s most-favored-nation trade status, is known to have also received a similar briefing from the FBI as early as 1992.

Targeting members of Congress for campaign contributions is just part of what experts characterize as a wide-ranging effort by the Chinese government to influence politicians in North America.

Despite the FBI briefings, it is unknown whether China actually followed through with any contributions, which would be prohibited under laws banning foreign involvement in U.S. elections.

A spokesman for the Chinese Embassy in Washington could not be reached Saturday for comment, but embassy officials have denied previous reports that the Chinese government attempted to direct contributions to Democrats in 1996.

Peter Lund, a retired senior China analyst for the Canadian Intelligence Service, wrote in a paper he delivered last year that both the United States and Canada had been the “target of a sustained and very successful Chinese intelligence effort.”

“Not only have the Chinese obtained some of the United States’ most closely guarded secrets,” he wrote, “but there is a strong reason to believe that they have secured agents of influence in the government, the civil service, academia, the media and the private business sector.”

If President Clinton and his aides were aware of the effort, they took no special precautions to prevent their campaign from receiving illegal donations from Chinese sources. In fact, many of the $5,000 and $10,000 checks that were returned by the Democratic National Committee a week ago were from Chinese residents of the United States whose contributions far exceeded their apparent income levels.

The FBI’s concern about Chinese involvement in congressional politics demonstrates that the controversy over foreign-linked donations is beginning to envelop both ends of Pennsylvania Avenue. Some of the same controversial donors whose contributions have spawned a series of embarrassing disclosures for the Clinton White House and Democratic Party also have made donations to members of the House and Senate.

The Times reported last month that 10 of the key Democratic Party donors have given at least $158,160 in campaign money to lawmakers over the last eight years. Recipients include Senate Minority Leader Tom Daschle (D-S.D.), House Minority Leader Richard A. Gephardt (D-Mo.), Sen. Barbara Boxer (D-Calif.) and Feinstein.

Feinstein announced last month that to avoid even the appearance of impropriety, she would return donations tied to besieged Democratic National Committee fund-raiser John Huang and his wife, Jane, of Glendale. Feinstein officially returned $12,000 in donations on Friday.

“She believes the contributions to be legal but wants to avoid the controversy over Lippo-related money,” Chandler said.

Aides said Feinstein has implemented controls to detect improper contributions. She recently changed her policy to only accept contributions from U.S. citizens, although legal permanent residents are permitted by law to donate to campaigns. If a question is raised about a contribution, aides said, Feinstein campaign staffers are told to ask donors if the money they are giving is their own.

Indeed, one of the central questions raised by the fund-raising affair is whether foreign governments or corporations might have used U.S. intermediaries to launder donations to U.S. campaigns.

Several investigations are under way to sort out the web of donations, including probes by the Justice Department, the Senate Governmental Affairs Committee and various House panels. So far, Atty. Gen. Janet Reno has resisted recommending an independent counsel to look into the matter, citing a lack of firm evidence of wrongdoing.

Pressure on Reno grew last week with Vice President Al Gore’s admission that he made fund-raising calls from his White House office and reports that Margaret Williams, chief of staff to First Lady Hillary Rodham Clinton, accepted a $50,000 donation to the Democratic National Committee from Torrance businessman Johnny Chien Chuen Chung, one of the central figures in the ongoing inquiries.

This week, the Senate Judiciary Committee is expected to take up a resolution urging Reno to name an independent counsel. And the full Senate will debate the budget and scope of its investigation, which GOP leaders have defined as a $4.3-million inquiry of any illegal activities in the 1996 election cycle.

Although that would allow scrutiny of both presidential and congressional contests, Senate Democrats are pushing for an even broader review that would allow investigators to look at unethical or improper conduct that might fall within existing fund-raising laws. Sen. John Glenn (D-Ohio) suggests that some of his colleagues want to keep the investigation as narrow as possible to avoid scrutiny of their own fund-raising practices.

Times Washington Bureau Chief Doyle McManus contributed to this story.