FBI Probes Donations to California Officials

As part of its expanded investigation into campaign fund-raising abuses, the FBI is now looking at contributions made to elected state officials in California including members of the Legislature, The Times has learned.

A federal source, while not providing details of which donors or campaign committees are being investigated or how many might be affected, made it clear that the increased federal investigative presence in California goes far beyond tracking down possible illegal contributions to the Democratic National Committee during the 1996 campaign.

A review by The Times of state campaign finance records shows that many of the same people connected to improper contributions to national campaign funds--along with their business associates and relatives--have contributed to state figures.

The contributions reviewed by The Times that are from sources who are now involved in the federal campaign finance controversy come to at least $229,000 since 1987. Among the recipients are Republican Gov. Pete Wilson, Democratic Lt. Gov. Gray Davis and the state Democratic Party.

None of the contributions made to any state official or political party have been determined at this point to have been improper. That is apparently the focus of federal investigators.

Asked about the contributions, the California recipients of the money said their campaign committees at this point have no reason to believe that any of the state contributions were improper.

Generally, state laws governing campaign contributions have been far less restrictive than federal laws. However, federal law bars all political contributions from foreign nationals who are not legal residents of the United States. It does not matter whether the candidate receiving the funds is running at the local, state or federal level.

The national Democratic Party is in the process of returning $3 million in campaign contributions because the money came from foreign nationals, the identified donor was not the true source of the money or the contribution was deemed “inappropriate.”

It would be possible for a person to have given an improper contribution to the DNC and still give a legitimate contribution to a state official. For example, some of the donations to the DNC that were returned were improper because the donors appear to have not given their own funds, and may have been funneling money from other sources who were barred from contributing. But if those same donors gave state figures money that was actually theirs, no law would have been violated.

At the state level, the biggest beneficiary of contributions from sources who are now involved in the federal campaign finance controversy was the California Democratic Party, which received $72,000. Davis received $20,749. Sen. Dianne Feinstein (D-Calif.) received $4,750 for her unsuccessful race for governor.

Among Republicans who collected campaign cash from these sources were state Treasurer Matt Fong, who received $20,000 over the years, and Wilson, $4,900.

Among the largest state contributions from figures involved in the federal campaign finance controversy was $54,500 to the state Democratic Party received Sept. 19, 1996, in checks of $30,000 from Duagnet Kronenberg of McLean, Va., and $24,500 from “P. Kanchanalak,” also of McLean, Va.

In both instances, the Democratic National Committee directed that the money be sent to the California party to help with state campaigns, party officials said.

“It was directed to us by the DNC as part of their commitment to the state party,” said Kathy Bowler, executive director of the state Democratic Party. “They raised money directly for us.”

Late last year the national party returned $253,000 to Praitun Kanchanalak, identified in records as a Virginia housewife, said DNC spokeswoman Amy Weiss Tobe. Kanchanalak is a legal U.S. resident.

In returning the money, the Democratic National Committee explained that it was a “contribution in the name of another.”

Kanchanalak’s daughter-in-law, Pauline Kanchanalak, a Thai businesswoman, has visited the White House at least 26 times since President Clinton was elected in 1992. Kronenberg is a business associate of Pauline Kanchanalak.

Kronenberg declined to comment. Pauline Kanchanalak’s lawyer could not be reached.

Bowler said that unlike the Democratic National Party, the state party has no plans to return any of the funds.

“We’ve researched all the money, and we’ve been advised that we don’t have to return any of the money, as of this point,” she said.

Wilson’s deputy chief of staff, Sean Walsh, said: “This is the first these names have been brought to our attention. We will review these organizations and individuals to determine the appropriateness of the contributions.”

Garry South, Davis’ chief of staff, said: “There has been absolutely no suggestion that any of these donors tried to improperly influence state officials. If evidence is brought forward that calls into question one or more of these contributions, we’ll take a look at it at that time.”

South, like most of the other spokesmen, said the bulk of the donations to Davis, a likely candidate for governor next year, were made long before the current controversy over donations from Asia-related sources arose.

Feinstein spokeswoman Susan Kennedy said, “The campaign is long since finished, and we see no reason to return these contributions. . . . We have no reason to believe there was anything improper about them.”

Similarly, Richard Temple, a political consultant for Fong, said Fong’s campaign had no reason to return the money. “The DNC is returning money for various reasons, both for legal reasons and the way it was solicited,” Temple said. “We didn’t sell the Lincoln bedroom.”

He said that many of the contributions being questioned by the Democratic National Committee were from Asians, but that in Fong’s case some of the same individuals were giving to Fong, who is Asian American, “out of ethnic pride.” Some of those individuals had been longtime contributors to his mother, former California Secretary of State March Fong Eu.

Many of the central players in the unfolding saga of high-stakes fund-raising by the Democratic Party show up as contributors in California.

A substantial amount of the contributions returned by the Democratic National Committee were solicited by John Huang, a one-time banker and Commerce Department official who was a top DNC fund-raiser until he left his party job last year.

Since 1987 in California, Huang and his wife, Jane, contributed $58,650 to candidates in state races, the records show. John Huang was an official with the Indonesia-based Lippo group, which is the parent of Lippo Bank in Los Angeles, from 1986-88 and from 1990-94.

Another contributor to state political races is American International Bank, which has chipped in $17,905 to state candidates since 1987, records show.

The DNC has returned $5,000 donated to the national party from the bank along with $32,500 from the CHY Corp., a company named for the bank’s former chairman, Chun Hua Yeh.

The Democrats said the money was returned because of “insufficient information.”

Times staff writer Marc Lacey contributed to this story.

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Campaign Donation Inquiry

The Democratic National Committee has acknowledged receiving about $3 million in improper contributions during the 1996 election cycle. Some of the same donors have also given money to California state campaigns in recent years. None of the California donations are known to be improper. Here are some major recipients.

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Recipient Amount Years California Democratic Party $72,000 1993-1996 Lt. Gov. Gray Davis $20,749 1987-96 Treasurer Matt Fong $20,005 1990-95 Gov. Pete Wilson $4,900 1989-94 Sen. Dianne Feinstein $4,750 1989-90

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Sources: Legitech; secretary of state’s office