1996 United States campaign finance controversy
The 1996 United States campaign finance controversy was an alleged effort by the People's Republic of China to influence domestic American politics prior to and during the Clinton administration and also involved the fund-raising practices of the administration itself.
While questions regarding the U.S. Democratic Party's fund-raising activities first arose over a Los Angeles Times article published on September 21, 1996, China's alleged role in the affair first gained public attention when Bob Woodward and Brian Duffy of The Washington Post published a story stating that a United States Department of Justice investigation into the fund-raising activities had uncovered evidence that agents of China sought to direct contributions from foreign sources to the Democratic National Committee (DNC) before the 1996 presidential campaign. The journalists wrote that intelligence information had shown the Chinese Embassy in Washington, D.C. was used for coordinating contributions to the DNC in violation of United States law forbidding non-American citizens or non-permanent residents from giving monetary donations to United States politicians and political parties. A Republican investigator of the controversy stated the Chinese plan targeted both presidential and congressional United States elections, while Democratic Senators said the evidence showed the Chinese targeted only congressional elections. The Chinese government denied all accusations.
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According to the Senate report, Chinese officials eventually developed a set of proposals to promote their interests with the United States government and to improve China's image with the American people. The proposals, dubbed the "China Plan", were prompted by the United States Congress's successful lobbying of the president to grant a visa to Taiwan President Lee Teng-Hui. United States Secretary of State Warren Christopher had previously assured his Chinese counterpart Qian Qichen that granting a visa would be "inconsistent with [the United States'] unofficial relationship [with Taiwan]" and the Clinton Administration's acquiescence to the Congressional resolutions led China to conclude that the influence of Congress over foreign policy was more significant than it had previously determined. When formulating the so-called plan, Chinese officials acknowledged that, compared to other countries, it had little knowledge of, or influence over, policy decisions made in Congress, which had a sizeable pro-Taiwan faction under the influence of a more established "China Lobby" run by the Kuomintang.
The plan, according the Senate report, instructed Chinese officials in the U.S. to improve their knowledge about members of Congress and increase contacts with its members, the public, and the media. The plan also suggested ways to lobby United States officials.
Over the years, China repeatedly denied these lobbying efforts involved financial contributions of any kind:
|“||[S]ome people and media in the United States speculated… about so-called participation by Chinese individuals in political donations during the U.S. elections. It is sheer fabrication and is intended to slander China. [China] has never, nor will we ever, use money to influence American politics — China's Foreign Ministry spokesman, May 1998.||”|
Major fund-raising figures 
Charlie Trie 
The most significant activity by Trie was a $450,000 attempted donation by Yah Lin "Charlie" Trie to Clinton's legal defense fund, which Trie allegedly delivered in two envelopes each containing several checks and money orders. The fund immediately rejected $70,000 and deposited the remainder, but ordered an investigation of the source. The investigation found that some of the money orders were made out in different names but with the same handwriting, and sequentially numbered. The fund then rejected the donation entirely, and returned the deposited funds two months after the initial contribution.
Born in Taiwan, Trie emigrated to the U.S. in 1974. He eventually became an American citizen and co-owner of a restaurant in Little Rock, Arkansas where he befriended Clinton, then governor of Arkansas. In addition to the attempted donation to Clinton's defense fund, Trie and his immediate family donated $220,000 to the DNC which was also later returned.
Immediately after the donation to Clinton's defense fund, Trie sent a letter to President Clinton that expressed concern about America's intervention in tensions arising from China's military exercises being conducted near Taiwan. Trie told the President in his letter that war with China was a possibility should U.S. intervention continue:
...[O]nce the hard parties of the Chinese military incline to grasp U.S. involvement as foreign intervention, is [sic] U.S. ready to face such [a] challenge[?]... [I]t is highly possible for China to launch [sic] real war based on its past behavior in [sic] Sino-Vietnam War and Zhen Bao Tao war with Russia – Charlie Trie in a letter to President Clinton, March 21, 1996
After Congressional investigations turned to Trie in late 1996, he left the country for China. Trie returned to the U.S. in 1998 and was convicted and sentenced to three years probation and four months home detention for violating federal campaign finance laws by making political contributions in someone else's name and for causing a false statement to be made to the Federal Election Commission (FEC).
Johnny Chung 
Born in Taiwan, Chung went from being the owner of a "blastfaxing" business (an automated system that quickly sends out faxes to thousands of businesses) in California to being in the middle of the Washington, D.C. elite within a couple weeks of his first donations to the Democratic Party. Called a "hustler" by a U.S. National Security Council (NSC) aide, Chung made forty-nine separate visits to the White House between February 1994 and February 1996. One of his purposes in making these trips was to obtain photographs of himself with the Clintons, which he believed would help him to get business in China by giving people the impression that he had connections and influence in Washington—he used a brochure that included at least ten photographs of himself with Hillary Clinton along with a personal note from her. During one of the Commerce Department trade missions to China, Chung befriended former Chinese Lt. Col. Liu Chaoying, then an executive at China Aerospace International Holdings, Ltd. Hong Kong (中國航天國際控股有限公司), which is the Hong Kong-based subsidiary of the government-controlled CASC (中國航天科技集團公司), China's premier satellite launching company. She is the daughter of former General Liu Huaqing.
Between 1994 and 1996, Chung donated $366,000 to the DNC. Eventually, all of the money was returned. Chung told federal investigators that $35,000 of the money he donated came from Liu Chaoying and, in turn, China's military intelligence.
Specifically, Chung testified under oath to the U.S. House Committee investigating the issue in May 1999 that he was introduced to Chinese Gen. Ji Shengde, then the head of Chinese military intelligence, by Liu Chaoying. Chung said that Ji told him: "We like your president very much. We would like to see him reelect [sic]. I will give you 300,000 U.S. dollars. You can give it to the president and the Democrat Party." Both Liu and the Chinese government denied the claims.
Chung was eventually sentenced to 5 years probation and community service following an agreement to plea guilty to bank fraud, tax evasion, and two misdemeanor counts of conspiring to violate election law. Chung asserts that, after his guilty plea, the Chinese government attempted to assassinate him with "hit squads" three times, but the efforts were foiled by the FBI.
John Huang and James Riady 
John Huang (pronounced "Hwä[ng]"), was another major figure convicted. Born in 1945 in Nanping, Fujian, Huang and his father fled to Taiwan at the end of the Chinese Civil War before he eventually emigrated to the United States in 1969. A former employee of the Indonesian company Lippo Group's Lippo Bank and its owners Mochtar Riady and his son James (whom Huang first met along with Bill Clinton at a financial seminar in Little Rock, Arkansas in 1980), Huang became a key fund-raiser within the DNC in 1995. While there, he raised $3.4 million for the party. Nearly half had to be returned when questions arose regarding their source during later investigations by Congress.
According to U.S. Secret Service logs, Huang visited the White House 78 times while working as a DNC fund-raiser. James Riady visited the White House 20 times (including 6 personal visits to President Clinton).
Immediately prior to joining the DNC, Huang worked in President Clinton's Commerce Department as deputy assistant secretary for international economic affairs. His position made him responsible for Asia-U.S. trade matters. He was appointed to the position by President Clinton in December 1993. His position at the Commerce Department gave him access to classified intelligence on China. While at the department, it was later learned, Huang met 9 times with Chinese embassy officials.
Huang eventually pleaded guilty to conspiring to reimburse Lippo Group employees' campaign contributions with corporate or foreign funds. James Riady was later convicted of campaign finance violations relating to the same scheme as well, and was sentenced to pay a large fine. Shortly after Riady pledged $1 million in support of then-Governor Clinton's campaign for the presidency, contributions made by Huang had been reimbursed with funds wired from a foreign Lippo Group entity into an account Riady maintained at Lippo Bank and then distributed to Huang in cash. Also, contributions made by Lippo Group entities operating in the United States were reimbursed with wire transfers from foreign Lippo Group entities.
An unclassified U.S. Senate Committee on Governmental Affairs report issued in 1998 stated that both James Riady and his father Mochtar had "had a long-term relationship with a Chinese intelligence agency." According to journalist Bob Woodward, details of the relationship came from highly classified intelligence information supplied to the committee by both the CIA and Federal Bureau of Investigation (FBI).
Maria Hsia 
Taiwan-born Maria Hsia (pronounced "Shyä"), a long time fund raiser for Al Gore, California immigration consultant, and business associate of John Huang and James Riady since 1988, facilitated $100,000 in illegal campaign contributions through her efforts at Hsi Lai Temple, a Chinese Buddhist temple associated with Taiwan in Hacienda Heights, California. This money went to the DNC, to the Clinton – Gore campaign, and to Patrick Kennedy. After a trial, she was convicted in March 2000.
The Democratic National Committee eventually returned the money donated by the Temple's monks and nuns. Twelve nuns and employees of the temple, including the temple's abbess, refused to answer questions by pleading the Fifth Amendment when they were subpoenaed to testify before Congress. Two other Buddhist nuns admitted destroying lists of donors and other documents related to the controversy because they felt the information would embarrass the Temple. A Temple-commissioned videotape of the fund raiser also went missing and the nuns' attorney claimed it may have been shipped off to Taiwan.
The Temple event became particularly controversial, because it was attended by the Vice President Gore. In an interview on the January 24, 1997 edition of the Today show, Gore said:
I did not know that it was a fund-raiser. But I knew it was a political event, and I knew there were finance people that were going to be present, and so that alone should have told me, 'This is inappropriate and this is a mistake; don't do this.' And I take responsibility for that. It was a mistake.
In response, the U.S. Senate Governmental Affairs Committee that investigated the controversy said:
The Vice President's staff... knew that the Temple event was a fundraiser. In March 1996, Deputy Chief of Staff David Strauss had helped arrange a meeting in the White House with the founder of the temple, Hsing Yun – a meeting which Strauss believed would 'lead to a lot of $.' The White House staff repeatedly referred to the event as a 'fundraiser' in internal correspondence, and assigned to it a 'ticket price' of '1000–5000 [dollars per] head'.
John Huang's memo to Vice President Gore's assistant Kimberly Tilley specifically mentioned the Temple meeting was a fund-raising event. Mr. Gore later acknowledged he had known the visit was "finance-related."
In the U.S., religious organizations enjoy a tax exempt status. Political activity is prohibited for such tax exempt entities. The Senate Governmental Affairs Committee also said they learned that Hsia had served as an "agent" of the PRC government. Hsia denied the claim.
Ted Sioeng 
Another notable figure involved in the affair was Ted Sioeng, an Indoenesian entrepreneur, who illegally donated money to both Democrats and Republicans. Suspect contributions associated with Sioeng include $250,000 to the DNC, $100,000 to Republican California State Treasurer Matt Fong, and $50,000 to a Republican think tank. All the money was eventually returned.
Sieong sat with Bill Clinton or Al Gore at three fund-raising events.
Sioeng also joined Fong at a meeting with then Republican House Speaker Newt Gingrich in mid-1995. Gingrich called the meeting a "photo-op". Gingrich was the guest of honor at a Sioeng-organized luncheon the day after a Sioeng family company gave the $50,000 think-tank donation, solicited by a Gingrich adviser.
Attorney General Janet Reno and the directors of the FBI, CIA and National Security Agency (NSA) told members of the Senate committee they had credible intelligence information indicating Sioeng acted on behalf of China. A spokesman for Sioeng denied the allegations.
Department of Justice investigation 
The Justice Department opened a task force in late 1996 to begin investigating allegations of campaign fund-raising abuses by the Clinton/Gore re-election campaign. It expanded its internal investigation to include activities related to President Bill Clinton's legal defense fund in December 1996.
President Clinton announced in February 1997 that he thought there should be a "vigorous" and "thorough" investigation into reports that the People's Republic of China tried to direct financial contributions from overseas sources to the Democratic National Committee. The president stopped short of calling for an independent prosecutor, saying that was the decision of the Justice Department.
"[O]bviously it would be a very serious matter for the United States if any country were to attempt to funnel funds to one of our parties for any reason whatever," President Clinton said.
By July 1997, the administration determined that no evidence of any such thing had yet been proven.
"We have received the relevant [FBI] briefings," White House Press Secretary Mike McCurry said. "We believe there's no basis for any change in our policy toward China, which is one of engagement."
"I do not know whether it is true or not," President Clinton stated. "Therefore, since I don't know, it can't... and shouldn't affect the larger long-term strategic interests of the American people in our foreign policy."
Members of Congress of both parties reached opposite conclusions. According to the Washington Post, Senator Fred Thompson (a Republican from Tennessee) and chairman of the committee investigating the fund-raising controversy, said he believed the Chinese plan targeted presidential and congressional elections while Democratic Senators Joe Lieberman and John Glenn said they believed the evidence showed the Chinese targeted only congressional elections."
Congressional investigations 
A House investigation, headed by Republican Dan Burton focused on allegations of campaign finance abuse, including the contributions channeled through Chung, Huang, and Trie. The investigation was lengthy, spanning both the 105th and 106th Congresses, and according to a Democratic report had cost over $7.4 million as of August 31, 1998, making it the most expensive Congressional investigation ever (the Senate Watergate investigation cost $7 million in 1998 dollars).
Norman Ornstein, a Congressional expert at the American Enterprise Institute said in May 1998, "Barring some dramatic change, I think the Burton investigation is going to be remembered as a case study in how not to do a congressional investigation and as a prime example of investigation as farce." In a May 5, 1998 letter to other Republicans on the committee, Burton admitted that "mistakes and omissions were made" in tape transcripts released to the public of phone calls made by Webster Hubbell. A committee investigator who was an advocate of releasing the tapes resigned at Burton's request.
The U.S. Senate Committee on Governmental Affairs also held public hearings into the campaign finance issues from July to October 1997. During the hearings, there was considerable acrimony between the chair Fred Thompson and the ranking minority member John Glenn, which reached a level of public disagreement between the two leaders of a Congressional committee seldom seen in recent years. The Thompson committee adopted a Republican written final report on a straight party-line 8-7 vote in March 1988. Thompson described the findings as "There's not any one real big thing. It's a lot of things strung together that paint a real ugly picture." The Democrats published a minority report dissenting with most of the conclusions of the final report, stating the evidence "does not support the conclusion that the China plan was aimed at, or affected, the 1996 presidential election."
Congressional investigators said that the investigations were hamstrung due to lack of co-operation of witnesses. Ninety-four people either refused to be questioned, pled the Fifth Amendment, or left the country altogether.
Calls for an independent counsel 
President Clinton's FBI Director Louis Freeh wrote in a 22-page memorandum to then Attorney General Janet Reno in November 1997 that "It is difficult to imagine a more compelling situation for appointing an independent counsel."
In July 1998, the Justice Department's campaign finance task force head, Charles La Bella, sent a report to Janet Reno also recommending she seek an independent counsel to investigate alleged fund-raising abuses by Democratic party officials. The media reported that La Bella believed there was clearly an appearance of a conflict of interest by Reno. In his report to Reno he wrote: " [A] pattern [of events] suggests a level of knowledge within the White House—including the President's and First Lady's offices—concerning the injection of foreign funds into the reelection effort." Additionally, La Bella stated: "If these allegations involved anyone other than the president, vice president, senior White House or DNC and Clinton-Gore '96 officials, an appropriate investigation would have commenced months ago without hesitation."
Janet Reno declined all requests:
|“||I try to do one thing: what's right. I am trying to follow the independent counsel statute as it has been framed by Congress. If you had a lower threshold, then any time somebody said 'boo' about a covered person, you'd trigger the independent counsel statute — Janet Reno, December 4, 1997.||”|
A CNN/TIME poll taken in May 1998 found 58 percent of Americans felt an independent counsel should have been appointed to investigate the controversy. Thirty-three percent were opposed. The same poll found that 47 percent of Americans believed a quid pro quo existed between the Clinton administration and the PRC government.
Criticism of investigation 
In addition to partisian complaints from Republicans, columnists Charles Krauthammer, William Safire, and Morton Kondracke, as well as a number of FBI agents, suggested the investigations into the fund-raising controversies (which some dubbed Chinagate) were willfully impeded.
FBI agent Ivian Smith wrote a letter to FBI Director Freeh that expressed "a lack of confidence" in the Justice Department's attorneys regarding the fund-raising investigation. He wrote: "I am convinced the team at... [the Department of Justice] leading this investigation is, at best, simply not up to the task... The impression left is the emphasis on how not to prosecute matters, not how to aggressively conduct investigations leading to prosecutions." Smith and three other FBI agents later testified before Congress in late 1999 that Justice Department prosecutors impeded their inquiry. FBI agent Daniel Wehr told Congress that the first head U.S. attorney in the investigation, Laura Ingersoll, told the agents they should "not pursue any matter related to solicitation of funds for access to the president. The reason given was, 'That's the way the American political process works.' I was scandalized by that," Wehr said. The four FBI agents also said that Ingersoll prevented them from executing search warrants to stop destruction of evidence and micromanaged the case beyond all reason.
FBI agents were also denied the opportunity to ask President Clinton and Vice President Gore questions during Justice Department interviews in 1997 and 1998 and were only allowed to take notes. During the interviews, neither Clinton nor Gore were asked any questions about fund-raisers John Huang, James Riady, nor the Hsi Lai Buddhist Temple fund-raising event led by Maria Hsia and attended by John Huang and Ted Sioeng.
See also 
- Miller, Alan C., "Democrats Return Illegal Contribution", Los Angeles Times, September 21, 1996
- Woodward, Bob and Duffy, Brian, "Chinese Embassy Role In Contributions Probed", Washington Post, February 13, 1997
- Ross, Robert S.,"The 1995–1996 Taiwan Strait Confrontation: Coercion, Credibility, and Use of Force", International Security, 25:2, pp. 87–123, Fall 2000, Retrieved: April 14, 2006 (PDF file)
- Investigation of Illegal or Improper Activities in Connection with 1996 Federal Election Campaigns, Minority Report, Chapter 2, United States Senate, Retrieved: April 14, 2006
- Pomfret, John, "China Denies Contribution Charges", Washington Post, May 20, 1998
- Campaign Finance Key Player: Yah Lin 'Charlie' Trie Washington Post, March 4, 1998
- "Summary of Findings." 1997 Special Investigation in Connection with 1996 Federal Election Campaigns, Section 3, pp. 11–14. U.S. Senate. Retrieved: October 8, 2011.
- "Charlie Trie's Contributions to the Presidential Legal Expense Trust." 1997 Special Investigation in Connection with 1996 Federal Election Campaigns: Section 20, page 13. U.S. Senate.
- "Fund-raiser Charlie Trie pleads guilty under plea agreement". CNN. May 21, 1999. Archived from the original on August 5, 2006.
- Jackson, David and Sun, Lena H., "Liu's Deals With Chung: An Intercontinental Puzzle", Washington Post, May 24, 1998
- Isikoff, Michael (February 9, 2004). "Cash and Kerry". Newsweek. Retrieved October 7, 2011.
- Bunting, Glenn F.; Alan C. Miller, and Rich Connell (November 28, 1996). "Donor Enjoyed Broad Access to White House". Los Angeles Times. Retrieved October 7, 2011.
- Johnston, David, "Committee Told Of Beijing Cash For Democrats ", New York Times, May 12, 1999
- "Chinese Aerospace Official Denies Giving To Dems". CNN. May 21, 1998. Archived from the original on May 24, 2008.
- "James Riady Pleads Guilty", Department of Justice, press release, January 11, 2001, Retrieved: April 14, 2006
- Chung, Johnny, "The Real Johnny Chung", WorldNetDaily, April 7, 2000
- "Campaign Finance Key Player: John Huang", Washington Post, July 27, 1997
- "The Democratic Fund-Raising Flap: Timeline", CNN.com, July 1, 1997
- "The Democratic Fund-Raising Flap: Cast of Characters", CNN.com, July 1, 1997
- "Highlights of U.S. report on alleged China spying", CNN.com, May 25, 1999
- "Former Democratic fund-raiser John Huang pleads guilty", CNN.com, Aug. 12, 1999
- Woodward, Bob, "Findings Link Clinton Allies to Chinese Intelligence", Washington Post, Feb. 10, 1998
- Eskenazi, Michael, "For both Gore and GOP, a guilty verdict to watch", CNN.com, March 3, 2000
- Lewis, Neil A. (February 8, 2000). "Veteran Gore Fund-Raiser Goes on Trial". New York Times. Retrieved January 3, 2009. "The real donors were ineligible to give the money either because the amount of their donations exceeded legal limits or they were foreign nationals who were prohibited from giving campaign contributions."
- Abse, Nathan, "A Look at the 94 Who Aren't Talking", Washington Post, June 9, 1998
- "Buddhist Nuns Admit Destroying Documents". CNN. September 4, 1997. Archived from the original on April 24, 2009.
- "Gore Admits Temple Fund-Raiser Was A 'Mistake'". CNN. January 24, 1997. Archived from the original on April 24, 2009.
- "Senate Governmental Affairs Committee's Majority Report Executive Summary", Washington Post, March 8, 1998
- Huang, John, "Memo for Kim Tilley", April 11, 1996
- Lewis, Neil A. (March 3, 2000). "THE 2000 CAMPAIGN: CAMPAIGN FINANCE; Longtime Fund-Raiser for Gore Convicted in Donation Scheme". New York Times. Retrieved January 3, 2009.
- "The China Connection: Summary of Committee's Findings Relating to the Effort of the People's Republic of China to Influence U.S. Policies and Elections." 1997 Special Investigation in Connection with 1996 Federal Election Campaigns, Section 18, p. 9. U.S. Senate.
- "FBI Probes Businessman As Possible Chinese Agent". CNN. May 12, 1997. Archived from the original on April 23, 2009.
- "Response To Majority Report". Fas.org. Retrieved March 19, 2010.
- Woodward, Bob and Duffy, Brian "Senate Panel Is Briefed on China Probe Figure", Washington Post, September 12, 1997
- "Justice To Expand Inquiry To Clinton's Legal Fund", CNN.com, December 19, 1996
- "Clinton Wants Probe Of Possible Chinese Involvement", CNN.com, February 13, 1997
- Harris, John F., "White House Unswayed By China Allegations", Washington Post, July 20, 1997
- Cost of Congressional Campaign Finance Investigations to the U.S. Taxpayer, Minority Report: page 8, U.S. House of Representatives, Retrieved: April 14, 2006
- Lacey, Marc, "House Probe of Campaign Fund-Raising Uncovers Little, Piles Up Partisan Ill Will", Los Angeles Times, May 2, 1998
- "Burton Apologizes In Hubbell Tapes Furor: House committee investigator quits; Democrats want Burton out, CNN, May 8, 1998
- Anger Flares as Focus Shifts to Campaign Remedies New York Times, Sep 4 1997.
- Crowley, Candy, "Thompson Committee Wraps Up Its Work" CNN. March 5, 1998.
- Remarks by Senator Fred Thompson before the Senate Governmental Affairs Committee, Washington Post, October 8, 1997
- Lewis, Neil A., "Freeh Says Reno Clearly Misread Prosecutor Law", New York Times, June 16, 1998
- Thomas, Pierre, "Reno Aide Recommends Independent Campaign Finance Probe", CNN.com, July 23, 1998
- Politics and Prosecution Discussion, NewsHour with Jim Lehrer, transcript, PBS, August 4, 1998, Retrieved: April 14, 2006
- La Bella, Charles, La Bella Memo, Introduction, page 14, July 16, 1998, Retrieved: April 19, 2006
- Fund-raising Investigation Discussion, NewsHour with Jim Lehrer, transcript, PBS, June 23, 2000, Retrieved: April 14, 2006
- "Reno Defends Independent Counsel Decision", CNN.com, December 4, 1997
- Holland, Keating, "Poll: Independent Counsel Should Investigate China Policy Decisions", CNN.com, May 20, 1998
- Krauthammer, Charles, "Reno's Humiliation" (Opinion), Washington Post, October 10, 1997
- Safire, William, "Those Chinese Agents" (Opinion), New York Times, October 7, 1999
- Kondracke, Morton, "GOP must launch new probe of Chinagate" (Opinion), Jewish World Review, August 9, 1999
- "FBI agents criticize Justice Department", Associated Press, September 22, 1999
- "Justice's Clinton, Gore inquiry criticized", Associated Press, December 16, 1999
- Senate Committee on Homeland Security and Governmental Affairs Report in full: 1997 Special Investigation in Connection with 1996 Federal Election Campaigns
- Washington Post overview of campaign finance
- Washington Post archives of campaign finance controversy stories, 1998–2002