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First Lady’s Aide Solicited Check to DNC, Donor Says

TIMES STAFF WRITERS

Contradicting accounts by the Clinton administration, one of the Democratic Party’s biggest campaign donors says he gave a $50,000 check to the first lady’s chief of staff on White House grounds in 1995 in direct response to solicitations by aides of Hillary Rodham Clinton.

Southern California entrepreneur Johnny Chien Chuen Chung said he was seeking VIP treatment for a delegation of visiting Chinese businessmen when he was asked to help the first lady defray the cost of White House Christmas receptions billed to the Democratic National Committee.

Chung, who has refused to cooperate with investigators unless granted immunity from prosecution, told The Times during interviews that he realized such special treatment hinged on his willingness to make a political contribution.

“I see the White House is like a subway: You have to put in coins to open the gates,” Chung said in his first public comments on the controversial episode.

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On Friday, White House Communications Director Ann Lewis disputed Chung’s account. She said of the first lady’s aides: “At no time did they solicit a contribution from Mr. Chung.”

Lewis also denied that the $50,000 check had anything to do with the White House perquisites extended to the Torrance businessman and the Chinese delegation. She said the first lady’s aides may have gotten Chung and his guests into lunch at the White House mess hall and arranged a photo with Hillary Clinton but that any such efforts on his behalf were “a courtesy we could do and have done for friends.”

Chung’s story may compound political embarrassment for the White House and raise serious legal questions, including whether Hillary Clinton’s closest aides violated the Hatch Act prohibiting federal employees from soliciting contributions, particularly in a government workplace.

And it poses new headaches for Margaret Williams, the first lady’s former chief of staff, who has acknowledged accepting Chung’s check. The Times has learned that she is the subject of a pending inquiry by the federal agency charged with enforcing the Hatch Act as well as scrutiny by congressional panels probing campaign finance abuses.

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“The main point is that you’re not supposed to use your government clout to raise money,” former White House Counsel Abner J. Mikva said in reference to restrictions on fund-raising by federal employees.

Chung’s detailed version of White House events, combined with other newly available information, challenges the president’s insistence that Williams played “a completely passive” role in relaying an unsolicited $50,000 check to the DNC.

Williams, who recently left the White House, and Evan Ryan, an aide in the first lady’s office who met with Chung and the Chinese delegation, declined to be interviewed.

In recent interviews, Chung, 43, also denied Republican allegations that he may have funneled Chinese government money to the DNC. GOP senators raised the issue in connection with the recent disclosure that $150,000 was transferred from Chinese beer makers via the Bank of China to Chung’s California bank account three days before his $50,000 donation.

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A partial review of Chung’s personal financial records shows that contrary to GOP assertions, Chung had in excess of $300,000 in various bank accounts at the time, indicating that he could have covered his $50,000 contribution without Chinese funds.

Chung emphasized that the transferred $150,000 was earmarked for creation of two companies to launch a business venture with the Beijing brewers, who had nothing to do with the March 1995 donation and Washington visit.

Chung also was critical of former DNC Finance Director Richard Sullivan, who told a Senate hearing this month that he had qualms about the origins of the March 1995 donation. Sullivan, he said, was never reluctant to take his money before the fund-raising controversy erupted last fall.

“Most of my contributions were solicited by Sullivan and the DNC,” Chung said, noting that just one month after the $50,000 donation, he gave Sullivan another $125,000 at a Hollywood fund-raiser with the president. “I hand my checks personally to Richard Sullivan. He never says he [was] worried about my money. Never.”

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Chung’s visit to Washington in March 1995 did raise some concerns in the Clinton administration. A National Security Council aide later described him in a memo as “a hustler” trying to exploit his contacts at the White House.

But this did not stop Chung from being admitted. Records show about 20 of his 49 visits to the White House occurred after the warning.

Chung, a Taiwan-born fax company owner-turned-international businessman, contributed $366,000 between mid-1994 and last November’s election. He said Sullivan was in frequent contact, advising him of upcoming fund-raising events and even visiting his Torrance office.

The DNC recently returned all of Chung’s donations because it said an internal audit could not confirm that the money actually came from the businessman. Chung and his attorneys have long insisted that the donations were funded from Chung’s financial reserves and that he represented no foreign interests.

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“They call Johnny a hustler and there’s no question he was hustling the DNC, the White House and anybody else who could help him,” said Chung’s Santa Monica attorney, Brian Sun. “But he was hustling business. He had absolutely no political agenda.

“Johnny Chung’s not promoting the policy interests of some foreign government; he’s promoting Johnny Chung,” he said. “That’s not a crime. It’s the American way.”

Chung Escorts Chinese Delegation to Capitol

By March 1995, Johnny Chung’s growing involvement in politics was earning him a reputation in Asian business circles. He squired the Chinese beer maker to a Clinton Christmas party in 1994. Then, Chung said, Zheng Hongye, chairman of the China Chamber of International Commerce, asked him to open the same doors for a delegation of major executives he was leading on a U.S. visit.

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“I am trying to build new business in China, so I am happy to do my best to help,” said Chung, who touted the delegation as “very important and very powerful leaders” in a letter to the White House.

When he escorted the five-member delegation to Washington, his first stop was DNC headquarters. There, on Wednesday, March 8, 1995, DNC Chairman Donald L. Fowler welcomed them and posed for pictures with an arm around Chung’s shoulder.

But Chung had come with an ambitious wish list: a White House tour, a meeting with Hillary Clinton, lunch in the White House mess and admission to the taping of President Clinton’s Saturday morning radio address. And none of it was arranged. “I was on the limb,” Chung said.

After Sullivan said the party could do little for him, Chung said he offered to make another contribution to the DNC without specifying an amount.

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“I did not wave around a check,” Chung said. “That is not my style. That is not a businessman’s style.”

Sullivan testified before the Senate Governmental Affairs Committee this month that Chung had offered to donate $50,000 if he could get his Chinese associates into the presidential radio address. He said he turned Chung down because this was inappropriate and, moreover, “I had a sense that he might be taking money from them . . . and then giving it to us.”

Federal election law prohibits the acceptance of foreign contributions.

Sullivan’s attorney, Robert F. Bauer, said the former DNC official’s concern about Chung was limited to this episode.

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“As to Johnny’s other activities, Richard’s general recollection was that the DNC accepted his bona fides, knew he was an American citizen, knew that he had a recognized business in Los Angeles,” Bauer said. “His contributions were considered lawful. . . .”

DNC officials only agreed to arrange a standard White House tour. Dissatisfied, Chung headed for the White House alone.

He was admitted, and found his way to Room 100 of the Old Executive Office Building--the first lady’s office.

Chung felt he had a special relationship with Hillary Clinton because he says he had wrangled a meeting with her years earlier at the governor’s mansion in Little Rock, Ark., while touting his new fax service to state officials.

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Since then, he has been photographed with her on about a dozen occasions, from the White House to the U.S. Embassy in Beijing. One of the earliest fund-raising events showed Chung and his family with the Clintons at the president’s 48th birthday party. A few months later, he contributed $40,000 to attend a luncheon featuring Hillary Clinton in Los Angeles.

And in the first lady’s office that March day, according to Chung, he found another opportunity to be generous.

Here is Chung’s version of those disputed events:

Chung was greeted by Ryan, who was then a staff assistant. He showed her the business cards of his Chinese companions and asked if arrangements could be made for them to eat lunch in the White House mess and meet Hillary Clinton. Chung also asked if there was anything he could do to help the White House.

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Ryan left for about 15 to 20 minutes and returned, saying she had spoken with Williams. Then, she said: “Maybe you can help us.”

The aide told Chung that “the first lady had some debts with the DNC” from expenses associated with White House Christmas parties. Chung believes that Ryan mentioned a figure of around $80,000.

(The Times could not confirm such an expense specifically charged to Hillary Clinton. But DNC spokesman Steve Langdon said the DNC does pick up the tab on a number of White House holiday parties, amounting to a total of $300,000 to $400,000 a year.)

Ryan told him, Chung said, that she was relaying the request on behalf of Williams, who hoped Chung could “help the first lady” defray those costs.

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“Then a light bulb goes on in my mind. I start to understand,” Chung said. “I said I will help for $50,000.”

After making that commitment, Chung said, he left the White House confident that his wish list would be substantially fulfilled.

The next morning, Chung said, he went back to the White House and was escorted to Ryan’s desk in the reception area of the first lady’s office. He said he gave her an unsealed envelope.

According to Chung, Ryan lifted the flap and examined the contents. Inside was his check and a note to Williams, which he recalled said something like: “To Maggie--I do my best to help. Johnny Chung.”

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A short time later, Chung said, the chief of staff joined them and Ryan handed the envelope to her. Williams, he said, immediately led him into her private office and called to reserve a table for the Chinese delegation at the White House mess.

Williams has since told congressional investigators that she never looked at the check. Chung said there was no need for her to look inside the envelope. “I know she knew what was inside, because to me it was her idea that I help,” he said.

Before the delegation convened for lunch around a table of red, white and blue linens in the White House mess, Chung was advised that another wish list item had come true. The first lady could see them before addressing a teachers’ group that afternoon.

“Maggie set up everything,” Chung said.

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Later, waiting for Hillary Clinton in a White House reception room, Chung said he asked if the first lady had been informed of his donation and Ryan responded, “Yes, she definitely knows.”

Shortly before 4 p.m. the Chinese businessmen stood for the arrival of Hillary Clinton. And there, in front of the delegation Chung was bent on impressing, he said the first lady declared: “Welcome to the White House, my good friend.”

White House Denies It Violated the Hatch Act

White House officials confirm that Chung came to the first lady’s office on March 8 and 9, 1995. They have acknowledged that Williams was given a check for $50,000 from Chung in the White House and that Chung was seeking admission to the president’s radio address. And they say Williams may have arranged the lunch and the photo with Hillary Clinton.

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But they agree with little else from Chung’s version of events. They maintain that Williams and Ryan did not solicit the donation and did not provide any benefits as a result of it.

“Maggie Williams recalls that, on several occasions, Johnny Chung told her that he wanted to make a personal contribution to the Clintons,” Lewis said. “She told him that he could not make a personal contribution. She eventually told him he could give to other entities, such as the Democratic National Committee.”

Lewis said Chung was told the first lady’s office could not arrange his attendance at the president’s radio address.

And, Lewis said, Ryan “is sure that she had no discussion of financial contributions with Johnny Chung.”

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The Hatch Act prohibits a federal employee from “knowingly soliciting, accepting or receiving a political contribution from any person” and soliciting or collecting a donation “in any building occupied by a federal employee in the discharge of official duties.”

The White House maintains that Williams “absolutely did not” violate the law by taking Chung’s check because regulations allow a government official to accept a political contribution as long as it is forwarded immediately to a political party.

Chung’s account, if true, could constitute evidence of improper fund-raising, said attorneys familiar with election law.

“This information implicates the first lady’s chief of staff in activity that she knew, or should have known, was fund-raising at the White House, and that may be illegal,” said Jan Baran, an expert on campaign finance law and a former Republican National Committee general counsel.

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Louis Vega, a spokesman for the Office of Special Counsel, which investigates alleged Hatch Act violations, said the agency had opened “a general inquiry regarding Maggie Williams” and campaign fund-raising earlier this year. He declined to provide any details, including whether the inquiry concerned the $50,000 contribution from Chung.

Violation of the Hatch Act can result in employment-related penalties, ranging from a warning letter to dismissal.

The probe, Vega said, is on hold at the request of the Justice Department to avoid impeding an ongoing criminal investigation. He said that generally means the Justice Department inquiry involves the same subject or witnesses.

The Justice Department declined to comment on whether Williams is under scrutiny by its task force investigating fund-raising allegations.

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Williams, who has served Hillary Clinton for the past four years, has recently married and plans to move to France.

Chung’s Entourage Meets the President

March 9, 1995, had been a costly but very successful day for Chung and his entourage: A White House tour, lunch in the executive mansion and a photo op with the first lady.

Was the delegation impressed?

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“They were very happy, but they say to me, ‘Do you think we can see the president?’ ” Chung recalled. He determined to press again for entre to Clinton’s Saturday radio address.

On Friday, Chung returned to the White House, was admitted into the compound by the first lady’s office, and repeated his request to Ryan. He put in more calls to the DNC.

One call went to Carol Khare, assistant to DNC Chairman Fowler. Chung told her he was a friend of the first lady and wanted to take this important delegation of Chinese executives to the radio address. Khare said she would look into it.

That phone call is believed to be her first encounter with Chung. She later complained to colleagues that Chung became a nuisance, always asking for favors.

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“He doesn’t take ‘no’ very easily,” she told acquaintances. “He’s like a bulldog; if he wants something he keeps chewing on it until he gets it.”

On the eve of the radio address, Chung got what he wanted, with the DNC’s assistance.

Less clear is whether the $50,000 helped pave the way. Chung believes that he told Khare about his gift, but the former DNC official told others she only recalls his claim of friendship with Hillary Clinton.

That Saturday, after the president addressed the nation on radio, he posed for pictures in his office with the Chinese delegation. Afterward, he expressed concern about who they were and whether they had been screened to prevent embarrassment if the photos were released.

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Clinton’s uneasiness prompted a review by NSC officials who delayed giving the photos to Chung for a time. It was that reassessment that produced the memo calling the entrepreneur a hustler.

Chung is not offended by the label. It is, he believes, an attribute of aggressive American business people. What bothers him, he says, are accusations questioning his patriotism.

“I am American citizen,” Chung said. “My shareholders are [mostly] American citizens. I am all-American businessman.”

He has spent heavily on political campaigns, he said, to assure the kind of access that makes him appear to be “a big man in America” to prospective clients overseas.

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Despite his promotional efforts, Chung’s deal with the Chinese beer maker collapsed after a top-level management reorganization in Beijing. And Chung said no new business resulted from the delegation visit in 1995.

The Democratic Party, meanwhile, hasn’t forgotten Johnny Chung.

Barely a month ago, according to attorney Sun--even as the DNC was returning all of his donations--Chung received an invitation to join Clinton and Vice President Al Gore for a Broadway fund-raiser in New York.

This time, Chung declined.

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Rempel reported from Los Angeles and Miller from Washington. Times staff writer Ronald J. Ostrow and researcher Janet Lundblad in Washington contributed to this story.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Visit to the White House

Southern California entrepreneur Johnny Chien Chuen Chung says he gave this $50,000 check to a top aide of Hillary Rodham Clinton during a White House visit in 1995. He alleges the money was solicited by close aides of the first lady--a possible violation of the Hatch Act--and enabled him to favorably impress prospective business clients from China.

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