Donor’s Claim of Altered O’Leary Letter Investigated

Federal investigators are looking into allegations that Energy Department officials may have covered up links between a $25,000 donation to the favorite charity of then-Secretary Hazel O’Leary and a meeting she agreed to have with a Chinese delegation, The Times has learned.

The donation by Democratic campaign donor Johnny Chien Chuen Chung to Africare, a charity O’Leary served as honorary chairwoman, preceded the meeting Chung arranged with the Energy secretary for visiting Chinese petrochemical officials in October 1995.

Chung, a Torrance-based businessman, has told congressional and Justice Department investigators that an original version of O’Leary’s letter confirming the meeting was altered to eliminate an invitation for the delegation to join her and President Clinton at an Africare fund-raiser.

According to Chung’s account to investigators, when a Department of Energy courier came to pick up Chung’s $25,000 donation to Africare the morning of the event, he also retrieved all copies of the O’Leary letter, explaining that the invitation was improper.

O’Leary was warned six months earlier to refrain from mingling government business with Africare fund-raising in a memorandum prepared by the Energy Department’s legal advisors.

Copies of a two-paragraph O’Leary letter, later released by the Energy Department after the fund-raising controversy broke, contain no references to the Africare fund-raiser. Chung, who supposedly helped draft language of the original letter, has told investigators that the original letter did contain an invitation to the event.

Disclosure of the cover-up allegations came a day after the Justice Department informed O’Leary that it will need more time to investigate whether the $25,000 donation to Africare was linked to her meetings with the Chinese delegation. The action could lead to appointment of a special prosecutor.

O’Leary has flatly denied that she traded access for the donation. She could not be reached Friday for comment.

The criminal probe was launched last month after Chung told NBC in a televised interview that the charitable donation was solicited by an aide to O’Leary when Chung sought to arrange a meeting for Hauren Sheng, the head of the giant China Petro-Chemical Corp.

Chung’s story also prompted current Energy Secretary Federico Pena to order an internal review by the department’s inspector general’s office. A spokeswoman for the department declined comment about the latest allegations, citing the pending internal inquiry.

“The IG’s doing the investigation. He’ll come up with whatever information there is about the letter,” said Energy spokeswoman Carmen MacDougall.

Will Dwyer II, a spokesman for the House Government Reform and Oversight Committee investigating campaign finance issues, said Friday that the Chung-O’Leary matter “falls under the whole question of foreign money that could have a corrupting influence on the American political process.”

Chung’s attorney, Brian Sun of Santa Monica, would not comment about the cover-up allegations. He acknowledged, however, that Chung “is cooperating with investigators” on the Energy Department probe. Chung had previously declined to aid investigators without a grant of immunity from prosecution.

Based on past interviews with Chung and more recent disclosures of the information he has provided privately to investigators, this is Chung’s account:

The Chinese delegation headed by Sheng arrived in Los Angeles in October 1995 as guests of American oil companies. Chung met them at the airport with flowers.

Chung had met Sheng months before in Beijing when Chung traveled to China on a personal mission to press Chinese officials to free detained dissident Harry Wu. Sheng had been instrumental in getting Chung an audience with a high-ranking official of the Chinese Foreign Ministry.

Sheng asked Chung, already well known in China for having access to the White House, if he could help arrange a meeting with the Energy secretary and Clinton.

Chung immediately contacted the Democratic National Committee, where he contributed nearly $400,000 during 1994-96. DNC Chairman Donald L. Fowler sent a letter urging O’Leary to meet Sheng and calling Chung “one of the top supporters” of the DNC.

During Chung’s stop at DNC headquarters in Washington, he also was introduced to Wilson Golden, a lobbyist for ICF Kaiser, an international engineering and construction firm with various projects involving the Energy Department. He offered to assist as well.

Within 90 minutes, Chung had an appointment with one of O’Leary’s top aides, Corliss Moody. In Moody’s office, Chung asked to arrange a Sheng-O’Leary meeting and said that he was told “no problem.”

In an interview with The Times last month, Chung said Moody immediately added: “It would be nice if you provide a donation to Africare.” Although Chung was not familiar with the charity, he said he was willing to donate if it meant he could confirm a meeting for the visiting Chinese oilmen.

“I asked, ‘How much?’ and she said $25,000 for a table” at a fund-raising dinner the next night, Chung said.

MacDougall says that Moody has denied soliciting “any type of donation to Africare.” The Energy aide has declined interview requests.

The president also was scheduled to attend a reception prior to the Africare dinner. Moody suggested that the visitors could meet Clinton at the reception, Chung said.

Meanwhile, the Chinese delegation was traveling throughout the country. They were scheduled to fly from Houston to Chicago on the morning of Oct. 19 in the corporate jet of an American oil company. Chung reportedly wanted firm commitments of an O’Leary meeting, a White House tour and a presidential meeting before asking Sheng and his group to alter that itinerary.

Conferring by phone with Moody late into the evening of Oct. 18, Chung arranged for a written invitation from O’Leary.

According to the account given to federal investigators, Moody provided a three-paragraph letter confirming their afternoon meeting for the next day and inviting Sheng “to join me with President Bill Clinton” and leaders of African nations at the Africare dinner.

The reference to Clinton was important to Chung’s effort to persuade the Chinese delegation that the last-minute change of plans was justified.

According to Chung’s accounts to investigators, Moody faxed an unsigned copy of the letter from her Energy Department office to Chung’s Washington apartment late that night. Chung forwarded the message by fax to the delegation in Houston.

The next morning, Chung reportedly called Moody early to press for a formal, signed version of the letter. It was faxed to his apartment about 9:30 a.m. and promptly forwarded to Houston too.

Based on that correspondence, Chung asserts, the Chinese delegation rerouted the corporate jet and arrived at Washington’s National Airport in the early afternoon.

But later that same morning, while Chung was still in his bathrobe awaiting word of the decision from Houston, an Energy Department employee arrived at his apartment, saying he was sent by Moody.

“He asked for the [$25,000 Africare] check,” Chung recalled in the interview last month. “Then he said he needed the two faxes.”

The unidentified courier explained to a surprised Chung that the Energy Department general counsel considered the letter improper.

In fact, the department’s legal staff had earlier advised O’Leary that she could serve as honorary national chairwoman of Africare as long as “you do not personally solicit funds or other support” from people doing business with the department. The opinion, by Ralph D. Goldenberg, assistant general counsel, also warned against “use of your official title, position or . . . public office to further the fund-raising effort.”

According to Chung, he asked no questions of the courier and handed over the $25,000 and both copies of the letter.

“I don’t care so long as my guy gets his meeting,” Chung said.

The Chinese delegation did arrive later that afternoon and met with O’Leary between 3:30 and 4:30. The delegation then went on a White House tour and were introduced to Clinton aide George Stephanopoulos.

The Africare reception and dinner that night attracted a large crowd, disappointing the Chinese delegation. Chung, a veteran of photo-op reception lines, pushed his way to the front of Clinton’s line and told him about the VIPs. As a result, a private meeting was arranged in the deserted hotel ballroom a floor below.

According to Chung’s account, a handful of presidential aides, security personnel and a White House photographer were the only others present when he brought Sheng and an interpreter to the ballroom.

Chung recalled that Clinton said, “Johnny is a good friend” who has been “doing good things for the United States and China.” He said Clinton also thanked Sheng, presumably for helping Chung on the Wu visit, he said. Pictures were snapped. And the brief encounter was over.

The Chinese delegation flew off to Chicago without waiting for dinner. Chung said he and lobbyist Golden dined at the otherwise empty table for which Chung had paid $25,000. At one point, he said, O’Leary came by the table to thank him for his support.

O’Leary, who stepped down as Energy secretary in January, has since joined the boards of directors of both Africare and ICF Kaiser.

Rempel reported from Los Angeles and Miller from Washington.

* SENATE INVESTIGATION: Floridian claims a White House aide told him how to make a $1-million donation. A15