China Funds Suspected in State Politics

From Associated Press

Federal investigators tracing the movement of hundreds of thousands of dollars from mainland China into California banks suspect the money came directly from the Communist government and went partially to the campaigns of California politicians, Newsweek magazine reports.

According to the magazine, the focus of the investigation is Ted Sioeng, an Indonesian businessman now living in Los Angeles who has donated $250,000 to the Democratic National Committee at the behest of his friend John Huang, a key figure in the DNC money-raising controversy, and $50,000 to California state Treasurer Matt Fong, a Republican now running for the U.S. Senate.

Sioeng owns two hotels, a strip mall and a Chinese-language newspaper in Los Angeles that he switched from a pro-Taiwan posture to a pro-Beijing orientation after purchasing it last year. He also has business ties with China, including exclusive rights to distribute Red Pagoda Mountain cigarettes in the United States.

Newsweek quoted sources as saying the newspaper purchase was encouraged--and maybe bankrolled--by the Chinese government.

The report in the magazine's April 28 edition, which appears on newsstands today, says funds were wired from China in late 1994 or early 1995 into an Asian-owned bank in Los Angeles where the Chinese Consulate has its accounts.

It reports that investigators think some of the money was transferred shortly thereafter to another Asian bank, partially owned by the Sioeng family, where it was deposited into the account of the Sioeng family's Hollywood Metropolitan Hotel.

In April of 1995, Sioeng wrote two checks totaling $50,000 on the hotel's account, then donated the money to Fong's campaign.

One investigator was quoted by Newsweek as saying the Sioeng money transfer is the first "verifiable direct link to the People's Republic of China."

"As far as we know, these are legal contributions," Fong spokesman Richard Turner told Newsweek. "If we hear differently, we'll take the appropriate steps."

The Justice Department declined to comment on the story Sunday.

Newsweek said Sioeng, who once made frequent public appearances, has dropped out of sight and that neither his daughter nor his business partner responded to requests for comment.

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