Chung Details Alleged Chinese Funding Scheme

Former Democratic donor Johnny Chung has provided new information to congressional investigators about his dealings with top Chinese intelligence officials, including claims that other politically connected figures were enlisted to bolster China’s interests in the United States.

Those claims, along with additional details about Chung’s previously disclosed dealings with the chief of China’s military intelligence, are expected to be aired next week when Chung is scheduled to testify publicly for the first time before the House Committee on Government Reform.

Chung’s accounts, gathered from a series of recent interviews with The Times, also are expected to shed new light on a possible China strategy to build relations with individuals who had special access to the White House and U.S. political leaders.

At the same time, Chung’s public testimony is likely to inflame partisan debate over long-standing Republican allegations of a Chinese plan to influence the U.S. election process.

Among the new information that Chung is expected to provide in testimony scheduled to begin Tuesday:

* He was told by an associate of Beijing’s military intelligence leader that China had funneled $500,000 to an international trading firm established by a former Clinton White House aide.

* A Beijing banker told Chung that a former Arkansas restaurateur who was a longtime friend of President Clinton approached the Chinese government sometime prior to February 1996 asking for $1 million to help support Clinton and the Democratic Party.

* Chung escorted the wife and son of the Chinese military intelligence chief to a political fund-raiser in Los Angeles in 1996 at which Democratic officials insisted on a $25,000 campaign contribution for the opportunity to introduce his guests to the president.

For more than two years, Justice Department and congressional investigators have sought to determine whether the Chinese government directed secret campaign contributions to U.S. election campaigns to enhance Beijing’s access to influential leaders, technology and information. Such allegations have generated bitter partisan debate, with Republicans alleging that China sought to influence the 1996 U.S. elections.

Now, Chung is poised to become the first prominent figure in the 1996 campaign finance scandal with ties to China to testify publicly before Congress.

“One of the serious problems we’ve had is that most of the key witnesses have refused to testify,” Government Reform Committee Chairman Dan Burton (R-Ind.) said Thursday. “We’ve had 121 people take the 5th [Amendment] or flee the country. I’m glad we are finally going to have the opportunity to hear from one of the central figures.”

Chung’s appearance will no doubt intensify growing scrutiny over the Clinton administration’s handling of Beijing. It comes amid allegations of Chinese espionage to steal U.S. nuclear secrets and as congressional committees are planning to release reports on alleged Chinese efforts to obtain sensitive U.S. technology.

Chung was subpoenaed by the House panel after The Times disclosed on April 4 that Chung had told federal investigators that Gen. Ji Shengde, the head of China’s military intelligence, had given the Torrance businessman $300,000 to subsidize campaign donations to support Clinton. Records show that Chung donated a total of $35,000 to the Democratic National Committee in September 1996; the remainder was transferred into Chung’s California bank account, and it is not known how the money was spent.

Overall, from 1994 through 1996, Chung contributed a total of $366,000 to the DNC and visited the White House about 50 times, often with Chinese associates in tow. He pleaded guilty last year to election law and tax violations and has been cooperating with the Justice Department’s campaign finance investigation arising from the 1996 election.

White House and DNC officials said they were unaware of the origin of Chung’s funds at the time he contributed them. All of the money was subsequently returned. The Chinese government has denied directing campaign funds to U.S. elections.

In two scheduled days of testimony, Chung, 44, also is expected to detail the history of his passage from obscure fax business entrepreneur to national poster boy for the campaign finance scandal. He told The Times he was a largely unwitting player in the geopolitical drama.

“I am Forrest Gump,” he said, referring to the movie character who finds himself in unlikely encounters with historic figures.

Chung says he met Ji at a restaurant in Hong Kong, where Chung was introduced as “a good friend of President Clinton” by Liu Chaoying, the daughter of China’s retired top general and a vice president of China Aerospace Corp.

Ji, who used the false name “Xu” for their first meeting, told Chung: “We like your president. I will give you 300,000 U.S. dollars. You can give it to the president and the Democratic Party. We hope he will be reelected,” Chung recalled.

Later, in front of Chung, Ji informed Liu that he would wire $300,000 to her and she was to transfer it to Chung. Chung said that Ji also told Liu that he required a receipt “in order for me to report [the expenditure] to the [intelligence] agency.”

According to Chung, he told Liu, with whom he had an independent business relationship, that he objected.

“She said, ‘Take it. It makes no sense to spend your own money. Use ours,’ ” Chung recalled.

And, in an apparent effort to further reassure Chung, Liu said, “We’ve done this before.” According to Chung, Liu cited others with American political ties who she said also received support from China.

Chung said Liu told him that China steered business to a Hong Kong aerospace executive with controversial links to the Republican Party. She also said that “we gave a Singapore group $500,000” intended for former Clinton aide and Arkansas attorney Mark E. Middleton “to do good things for China.” Chung testified before the grand jury that Liu also mentioned the involvement of a “Mr. Wong.”

Liu has been unavailable for comment.

Middleton, who raised funds for Clinton’s 1992 campaign, came to the White House as an assistant to Thomas F. (Mack) McLarty, Clinton’s first chief of staff. He left the White House in early 1995 to set up an international trading company.

Financial documents show that in 1996 Middleton received a wire transfer of $499,985 from a bank in Asia. And congressional investigators have obtained a note written by Middleton to Singapore billionaire Yip Yan Wong in which the former White House aide thanks Wong for “the update on Ms. Liu.”

However, Middleton attorney Robert D. Luskin disputed any claim that the fund transfer was linked to the People’s Republic of China or Wong. He said Middleton does not recall ever meeting Liu and “he knows to a certainty that he never had a substantive discussion with her.”

Luskin added: “Mark never worked in any way, directly or indirectly, with the PRC or anybody associated with it. Period.”

The 1996 wire transfer was from an Indonesian company that is a Middleton client, according to a document provided by Luskin.

Luskin said Middleton has fully cooperated with Justice Department investigators and has been assured that “they have no reason to think that Mark is a subject or target of any investigation.” Middleton had previously invoked his 5th Amendment protection against self-incrimination when the Burton committee sought his testimony.

Chung, in interviews and statements to FBI investigators, said Liu identified the Hong Kong aerospace executive as Ambrose Tung Young, a major Republican backer who has written pro-China articles for a GOP think tank.

In 1994, Young worked with then-Republican Party Chairman Haley Barbour to help arrange a loan of $2.1 million to the Republican National Policy Forum. Shortly thereafter, that group repaid $1.6 million to the Republican National Committee before the GOP’s sweep of Congress.

Young’s attorney, Benton Becker, took issue with Chung’s account, saying that Liu was describing a different businessman named Young. “Ambrose Young has never accepted any money from the PRC for any purposes such as she’s describing,” Becker said.

According to Chung, Liu also acknowledged a relationship with Yah Lin “Charlie” Trie, the former Arkansas restaurateur and longtime Clinton friend.

Intriguing to investigators is likely to be Chung’s account of a February 1996 car ride with a Beijing banker who asked Chung if he knew that Trie “asked my government for $1 million to help the president and the Democrats?” A surprised Chung said that the banker offered no further information.

Trie’s attorney could not be reached for comment.

In October 1996, Chung made his last appearance at a DNC fund-raiser with Ji’s wife and son. At Universal Studios, Chung sought a photograph of Clinton with the Ji family. Chung said he agreed to pay $25,000 for such access.

But campaign officials mistakenly escorted Chung’s chauffeur and secretary to meet the president and then refused to make time for Chung and the Ji family. Chung barged to the front of the receiving line and introduced Clinton to “the wife of a very important Chinese official.” No photo was taken.

Chung then refused to donate the promised $25,000.

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* TAX TRIAL BEGINS: The tax fraud trial of a figure in the Democratic campaign financing case began in L.A. B3