Contradicting former Republican Party Chairman Haley Barbour, another onetime GOP leader testified Friday that Barbour knowingly sought $2.1 million from a Hong Kong businessman to help Republican candidates for about 60 House seats in the closing weeks of the 1994 election.
Richard Richards, an associate of businessman Ambrous Tung Young and himself a former GOP chairman, also told the Senate committee investigating campaign finance abuses that in 1994 he informed Barbour that the money--in the form of a loan guarantee--was coming from Hong Kong.
Democrats said Richards' statements raise questions about important details of Barbour's account of the transaction, particularly his insistence that he did not know until this year that the money came from overseas and his testimony that it was intended for a GOP think tank and not Republican campaigns.
"These are two significant contradictions," said Sen. Carl Levin (D-Mich.), a member of the Senate Governmental Affairs Committee, which is conducting the hearings.
Along with several other witnesses with strong GOP ties, Richards' testimony directly clashed with Barbour's, posing a potentially embarrassing predicament for the former GOP chairman who still exerts influence in the party's inner circles.
The squabbling among Republican loyalists also leaves open to question whether Barbour can keep the fund-raising scandal, which had been focused on the Democrats, from tarnishing the GOP and his own reputation.
In high-profile testimony Thursday, Barbour sought to dispel what he called "outright false claims" of funds being channeled to the Republican Party from overseas sources. "The RNC never turned a blind eye to an activity that's not allowed," he testified.
Richards, who served as RNC chairman in the early 1980s, capped three days of hearings in which Democrats sought to show that Republicans had illegally funneled foreign funds into campaigns through a complicated business transaction orchestrated by Barbour.
One point of contention is why Barbour sought out Young, a Republican loyalist who is a citizen of Taiwan. Barbour arranged for a $2.1-million loan guarantee from Young Brothers Development, the Florida subsidiary of Young's Hong Kong-based real estate and aviation company, to support the National Policy Forum, a nonprofit GOP think tank launched by Barbour that closed its doors in December.
During the 1994 campaign, Barbour ran both the RNC and the forum, and Richards was chairman of Young's U.S. subsidiary.
Barbour said Thursday there was nothing improper about the loan guarantee and that he did not know until this year the funds had come from Hong Kong.
Even if the money had come from Hong Kong, he said, it didn't matter because it was not illegal for private groups to accept money from overseas. Political parties, however, are prohibited by federal election laws from receiving foreign funds.
Like other witnesses, Richards said he told Barbour in the final weeks before the 1994 election that the collateral for a bank loan would come from Hong Kong.
"The only thing I told him was that the money would be transferred from Young Brothers Hong Kong to Young Brothers [USA]," said Richards, now an attorney in Ogden, Utah.
Richards also said that shortly before the 1994 election Barbour described the RNC's need for the money as "an urgent thing."
"We have taken some political surveys, public opinion polls, and it appears that we have an opportunity to pick up as many as 60 seats in the House of Representatives," Richards recalled Barbour saying.
Friday evening, Barbour spokesman Ed Gillespie issued a brief statement, saying: "Haley Barbour never told Dick Richards that this loan guarantee was for the RNC to win 60 House seats."
After receiving the loan guarantee, the forum immediately transferred $1.6 million of the money to the RNC. Republican officials have said the $1.6 million was simply the repayment of a previous RNC loan to the forum and that the money went into an account designed to help the party in state races, not congressional contests.
But Democrats, citing how the 1994 elections gave the GOP control of both houses of Congress for the first time in 40 years, say federal contests were affected, since the money was used to urge voters to support the GOP.
Barbour said that the RNC had millions of dollars available to it and didn't need the $1.6 million from the forum. Eventually, the forum, which had trouble raising funds, defaulted on the loan and, with the help of the GOP, repaid Young about half the $1.6 million.
Asked by Sen. Richard Durbin (D-Ill.) about Barbour's contention that the money from the loan wasn't really needed by the GOP, Richards told the committee: "If we thought they were flush with money we probably would not have entered into the discussion."