Chapter Five Foreign Nationals and the Democratic National Committee

In 1995, Clinton was worried about the upcoming presidential election.

Democrats had been absolutely devastated in the 1994 midterm contest. Republicans had
seied control o! the "ouse and #enate !or the !irst time since 1954. $ot only was the
%&' well(positioned !or the upcoming race, it was developing a ma)or !undraising
advantage over Democrats. 'undits openly *uestioned whether Clinton even was
relevant !or policy debates anymore. "is de!eat in 199+ seemed inevitable given his
party,s debacle on health care and in the midterm elections.
-ollowing his party,s poor per!ormance in 1994, Clinton had !ired the consultant
team that had led him to victory in 199.. /nceremoniously dumped were strategist
0ames Carville, pollster #tanley %reenberg, and media advisor 1andy %runwald. $one
had ade*uately !oreseen the growing Republican electoral threat.
In their place came a !ormer advisor !rom Clinton,s 2r3ansas days, Dic3 1orris.
1orris was an odd duc3 in many respects. /nusual among political strategists, he had
wor3ed !or candidates o! both parties. 4ypically, consultants did not cross party lines.
$ot only was 1orris close to Clinton, but he maintained good ties with Republican
#enator 4rent 5ott, one o! the top %&' leaders in the #enate.
1orris had a tie to Clinton that none o! the 6ashington consultants could match.
6hen Clinton had lost an 2r3ansas re(election campaign, he had turned to 1orris to
salvage his !ailed political career. 6or3ing closely with 7ill and "ilary Clinton, 1orris
had resuscitated the governor,s career and helped position him as a centrist, not a liberal,
Democrat.
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-rom 1orris came the !ollowing recommendation. In order to win the 199+
presidential campaign, Clinton would have to run early television ads e8tolling his
record. Republicans in charge o! Congress had developed a bold new agenda 3nown as
the Contract with 2merica. It laid out an ambitious legislative pac3age designed to
downsie the !ederal government, create an opportunity society, and cut ta8es, among
other ob)ectives.
#uch an ambitious agenda was bound to provo3e a bac3lash among sectors o!
society hurt by massive change. 4he goal o! the early advertising barrage was to set up
Democrats as the bulwar3 against %&' e8tremism, develop an alternative agenda o!
protecting 1edicare, education, and the environment, and put li3ely Republican nominee
7ob Dole on the de!ensive !rom the very start because o! his ties to unpopular "ouse
#pea3er $ewt %ingrich.
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4here was only one problem with this strategy. It would cost a lot o! money and
endanger the president,s ability to stay within the election,s o!!icial spending limits. 9ach
general election nominee was re*uired to stay within a budget o! around :+5 to :;<
million. 98tra money could be spent through independent groups and issue ads, based on
court rulings that had been made since 199.. 7ut the !undraising drive would have to go
into high gear. 4he president would need more money than ever had been raised be!ore
in a presidential campaign.
4ypically, candidates did not li3e to spend their scarce dollars on early
advertising. Indeed, almost all o! Clinton,s 6ashington advisors spo3e out against
1orris, plan. %oing on television 1= months be!ore an election was ludicrous, they
argued, because the electorate wasn,t paying attention that !ar in advance. It was much
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more crucial to save money !or the very end when undecided voters did tune in and the
election hung in the balance.
4hese advisors conceded that some money could be spared !rom the spending cap
by using issue ads !inanced through the Democratic $ational Committee that would not
count against Clinton,s general election limit. 7etween court rulings on independent
e8penditures and issue advocacy, it was obvious cash could be !unneled to election ads
that would ma3e the Clinton case.
7ut the thrust o! 1orris, recommendation was clear to all involved. 4his would
not be a normal campaign. Clinton would need a lot o! cash and he would need it up(
!ront. 4he 6hite "ouse would have to get very serious about !undraising. It would have
to start a !undraising obsession that would engage the e!!orts o! everyone, !rom the
president and -irst 5ady to the vice(president and their sta!!s. $o one would be spared
!rom the !i8ation on raising money.
6here would Democrats get the 3ind o! money that was being envisioned> 4heir
party no longer controlled Congress so it would not be easy to raise !unds !rom interest
groups who wanted access to the legislative process. 4hey had no committee
chairmanships so they couldn,t o!!er !riendly amendments to corporations and wealthy
interests.
Instead, a new plan was unveiled. Democrats would develop a creative plan to
e8pand the pool o! donors. $ew types o! constituents who previously had not received
much attention would be mobilied. %roups such as 2sian(2mericans and !oreign
companies with 2merican subsidiaries would be tapped. 4heir resources would !und the
Clinton re(election e!!ort.
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&ver the course o! 1< months, Clinton attended .?; !und(raisers and garnered a
total o! :119.. million. 4his was more than twice the number o! !undraisers 'resident
7ush had organied in 199..
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Clinton would succeed in his !undraising e!!orts and win
re(election over Dole. 7ut in the process, he would become engul!ed in a !undraising
scandal that le!t a bad !eeling in the stomachs o! all o! the political leaders involved. 4he
early money strategy would come bac3 to haunt 'resident Clinton.
4he 2r3ansas Connection
In order to implement his !undraising plan, Clinton turned to some old !riends
!rom 2r3ansas. 0ames Riady owned a small ban3 in 5ittle Roc3 called the 6orthen 7an3
that did business with the Rose 5aw -irm. 2s part o! the ban3ing business, he had
become !riends with then %overnor Clinton and "ilary Clinton, a partner in the law !irm.
4he Riady enterprise was part o! a world(wide business empire operating under
the name o! the 5ippo %roup. 4his business specialied in ban3s, real estate, and energy,
among other things. It was controlled by Riady,s !ather, 1ochtar Riady, who was a
wealthy Indonesian businessman.
2mong Riady,s many e8ecutives in the /nited #tates was a 51(year(old
man named 0ohn "uang. 7orn in China in 1945, "uang,s !amily had migrated to 4aiwan
in 1949 when communists too3 over the mainland. "is !ather was a ma)or general in the
Chinese $ationalist 2rmy. "uang graduated !rom 4atung Institute o! 4echnology in 19+;
and served as second lieutenant in the 4aiwanese 2ir -orce. "e moved to 2merica in
19+9 and obtained a master,s degree in business !rom the /niversity o! Connecticut.
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"uang became a naturalied /.#. citien in 19;+.
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"ired as a trainee at 2merican #ecurity 7an3 in 6ashington, D.C., "uang
eventually was promoted to assistant vice president. In19=5, he was hired as e8ecutive
vice president o! 5ippo,s world ban3ing division in "ong @ong. 2 year later, he was
promoted to president and chie! operating o!!icer o! the 5ippo 7an3 o! 5os 2ngeles,
which was owned by 0ames Riady.
"uang was a man on a mission. "e wanted to boost the political in!luence o!
2sian(2mericans. 5iving in 5os 2ngeles, he could see that 2sian(2mericans were rising
in in!luence locally, but were not ta3en very seriously in national politics. #pea3ing at a
meeting organied by Chinese 2mericans /nited !or #el!(9mpowerment, he urged
members to become engaged in the political process. ADon,t )ust ma3e money,A he said.
A%et involved. 4his is your country.A
5
In the 199. presidential contest, "uang organied a very success!ul !undraiser !or
Clinton in Cali!ornia that raised one(*uarter o! a million dollars !rom 2sian(2mericans in
the 5os 2ngeles area. It was the !irst time 2sian(2mericans had been so active in
presidential politics. #till, despite these e!!orts, Clinton lost the 2sian(2merican vote to
%eorge 7ush by 55 to ?1 percent.
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7y 1994, a!ter receiving an :=;9,<<< bonus, he le!t the 5ippo %roup !or a top
position in Clinton,s Department o! Commerce. "e was the administration,s highest(
ran3ing 2sian 2merican. 2t the Commerce Department, "uang served as deputy
assistant secretary !or international economic policy. -rom that )ob, he Ahad access to
embassy cables, intelligence reports and classi!ied in!ormation that is used to develop
/.#. trade policy. 4his includes the government,s positions in active negotiations,
discussions about trade sanctions and the activities o! !oreign governments and !oreign
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competitors.A
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&n a number o! occasions, "uang and 0ames Riady, had private meetings
with the president at the 6hite "ouse. "uang himsel! visited the 6hite "ouse 5.
separate times.
4he 199+ 'residential Campaign
In December, 1995, "uang moved to a !und(raising position with the Democratic
$ational Committee. 2ccording to D$C records described in the A$ational 2sian 'aci!ic
2merican Campaign 'lan,A the party hoped to raise :; million !rom 2sian(2mericans.
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9ven though 2sian(2mericans comprised about 1 percent o! the national vote, this e!!ort
was part o! the general move to mobilie new groups !or !undraising purposes and bring
them into the political process.
#oon a!ter "uang,s arrival, e8traordinary contributions started to come in. 2
#outh @orean corporation called Cheong 2m 2merica, Inc. donated :.5<,<<<. 2n event
at a 7uddhist temple garnered :14<,<<<. 2n Indonesian couple gave :4.5,<<< to the
D$C.
2 0uly, 199+ !und(raiser in 5os 2ngeles earned Clinton hal! a million dollars. 2
grate!ul president publicly ac3nowledged his D$C aide. AI,d li3e to than3 my longtime
!riend 0ohn "uang !or being so e!!ective,A Clinton said. A-ran3ly, he,s been so e!!ective I
was amaed you were all cheering !or him tonight.A
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In a short period o! time and
without any substantial e8perience in the political !undraising area, "uang had raised
several million dollars.
7ut news reporters were starting to learn troubling in!ormation. 4he #outh
@orean company that had donated the *uarter million dollars had no /.#. subsidiary and
did no business in 2merica. 4hat made the gi!t an illegal contribution. 2ccording to
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!ederal law, it was unlaw!ul !or !oreign citiens or !oreign companies to donate money to
a /.#. candidate or a political party. 2merican subsidiaries o! !oreign corporations could
contribute, as long as the money was made !rom company operations in the /nited
#tates. #o could !oreigners living legally in the /nited #tates, as long as they maintained
an 2merican residence, the money was theirs, and it did not come !rom overseas.
4he latter rule was a problem !or the Indonesian couple. 2rie! and #oraya
6iriadinata gave the D$C :4.5,<<< a!ter being as3ed by "uang 4he contribution
appeared suspicious because the man was a landscape architect who lived in a modest
Birginia townhouse. 4he wi!e, however, was the daughter o! a wealthy Indonesian
businessman, $ashim $ing, who owned part o! the 5ippo %roup.
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4hey made the gi!t
a!ter they had returned to live in 0a3arta.
4he temple event also ran a!oul o! the law. $uns who had ta3en a vow o! poverty
told o! being handed thousands o! dollars in cash and then being as3ed to ma3e a
contribution in their own name to Democrats by superiors. $ot only did this not loo3
good politically, smac3ing as it did o! illicit !undraising, it was a clear violation o! the
!ederal law. 'eople were allowed to contribute money only i! it was their own. Cash
given to them by someone else could not be donated to a political campaign. 4wenty
years o! prosecutions o! men such as #teinbrenner and -ireman !irmly had established
that principle.
2s news o! the widespread campaign violations started to tric3le out a !ew wee3s
be!ore the general election because Democrats were re*uired to !ile pre(election
!undraising reports, Republican nominee 7ob Dole was very critical. A6e cannot allow
the political in!luence o! any 2merican to be outweighed by !oreign money,A he
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complained.
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It )ust was not right what Clinton was doing, he argued. -ederal laws
clearly prohibited gi!ts o! the sort that had been uncovered.
Democratic spo3esmen accused the %&' o! hypocrisy. 2ppearing on the C7#
interview show A-ace the $ation,A D$C national chairman Christopher Dodd CD,
ConnecticutD noted that these !undraising practices were things Athat both houses do.A
Continuing, he argued, Awe need to clean this up. 6e )ust wish the Republican $ational
Committee would have ta3en similar stepsE.I don,t hear a similar complaint E when the
Dole campaign gets :4<<,<<< !rom the 7rown F 6illiamson 4obacco Co. o! 5ondon.A
1.
4he charge was boldly disingenuous on the part o! Dodd. 7rown F 6illiamson
was an international company with a big 2merican subsidiary. Campaign gi!ts !rom that
corporation clearly were legal. 4here was no ambiguity about the law!ulness o! such
contributions. "owever, Dodd made it sound as i! Republicans were raising money
illegally !rom abroad by noting the 5ondon head*uarters o! 7rown F 6illiamson.
6hite "ouse Chie! o! #ta!! 5eon 'anetta was even more blunt. "e accused
Republicans o! having ta3en A:..4 million, :..5 million themselves !rom subsidiaries o!
!oreign corporations.A 4he subliminal message was clear. Democrats shouldn,t be
penalied !or what all parties do.
Get again, the rhetoric was designed to ob!uscate the truth. It was not illegal to
raise money !rom 2merican subsidiaries o! !oreign companies. 4he law was well(3nown
on this point.
4hen, see3ing to inoculate Clinton !rom any !urther political damage, 'anetta
noted that Dole !inance chairman #imon -ireman was Agoing to be sentenced this wee3
to about si8 months in )ailA !or campaign !inance violations.
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-ireman,s sentencing had
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been rushed through in record time, unusual !or campaign !undraising cases that
generally dragged on !or years in the courts. It was the one contribution case when
Democrats 3new Dole was vulnerable.
4o ma3e the point even more clearly, the Clinton campaign started airing
television ads accusing Dole o! Adesperate attac3sA on the campaign !inance !ront.
Republicans, the spot proclaimed, were guilty o! the same problems. 4he %&' was
raising money !rom overseas companies, such as A!oreign oil, !oreign tobacco, !oreign
drug companies.A
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6hile true, such gi!ts were not illegal because each o! these !oreign
companies had 2merican subsidiaries that were !unding the campaign contributions to
the Republican candidate.
"owever, despite these public de!enses, other problems emerged !or Democrats.
Gogesh %andhi, the great(grand nephew o! 1ahatma %andhi, contributed :?.5,<<< to the
D$C !ollowing a solicitation !rom "uang. 4he complication was that according to
Cali!ornia state records, the 4;(year(old man was :1<,<<< in arrears on bac3 ta8es, !ailed
to pay tra!!ic !ines, owed money to !riends, and was the sub)ect o! at least two legal
)udgments !or unpaid bills.
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In an 2ugust court proceeding, %andhi claimed that all his
income came !rom a !amily trust located in India. 4his was an illegal gi!t according to
/.#. !undraising laws.
In the end, none o! these campaign !inance controversies harmed 'resident
Clinton, although they did hold down Democratic margins and 3ept Republicans in
ma)ority control o! the "ouse and #enate. "e coasted to victory over Dole and raised his
share o! the 2sian(2merican vote !rom ?1 percent in 199. to 4? percent in 199+. Dole,
though, still beat him by garnering 4= percent !rom this group o! voters.
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7y accusing Republicans o! engaging in the same ne!arious !undraising practices
as Democrats, Clinton neutralied a problem that could have e8ploded in his !ace. 4he
only threat looming on the horion was a congressional investigation. 2!ter raising :15<
million more than Democrats, Republicans had retained control o! the "ouse and #enate.
Congressional members o! the %&' were tic3ed o!! because they !elt the president had
gained un!air advantage over their party through early ads !unded by illegal gi!ts. 4hey
were not going to ta3e this outrage lying down.
4he 'ost(9lection Investigation
-ollowing the election, the %&' *uic3ly moved towards a !ull(scale investigation.
In its eyes, what Democrats had done during this election was not )ust more o! the same
old thing. 4he D$C had suspended any bac3ground chec3s on party donors, which
previously had helped insure that money was coming !rom legitimate sources. 4he party
had raised millions !rom *uestionable !oreign sources. It was an open matter what had
been promised to these donors, although rumors abounded in 6ashington o! policy swaps
!or campaign contributions. In the end, the D$C returned :1.+ o! the :?.4 million that
had been raised by "uang.
2s more in!ormation came to light about "uang,s activities, telephone logs and
appointment boo3s revealed that the !undraiser had devoted most o! his time at the
Commerce Department to economic relations with Indonesia, China, and other 2sian
nations where 5ippo had business interests. 2mong the activities in which "uang had
been engaged were Ameetings to develop commercial strategy between the /nited #tates
and the 'aci!ic Rim, to organie the annual 2sian 'aci!ic 9conomic Con!erence, to plan
!ormer Commerce #ecretary Ronald ". 7rown,s 1994 trade mission to China and to
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consult with o!!icials o! the /.#. 4rade Representative,s o!!ice.A &ver a 1?(month
interval, "uang had obtained at least ?5 brie!ings on /.#. !oreign intelligence, especially
that dealing with /.#. economic policy regarding China.
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-or a mid(level bureaucrat, "uang had remar3ably easy access to the 6hite
"ouse. "e lunched and tal3ed with 6ebster "ubbell, the !ormer associate attorney
general who had been !orced to resign over !inancial irregularities. "ubbell was a
consultant with 5ippo %roup be!ore he served a two(year )ail term. "uang also had
regular conversations with 1ar3 1iddleton, who was the 6hite "ouse liaison to the
business community. Bideotapes o! 6hite "ouse co!!ees show "uang as a !re*uent guest
whom Clinton described as his Agood !riend.A
4he Chinese connection, though, was one that particularly worried Congressional
Republicans. In one o! "uang,s visits to the 6hite "ouse !or a meeting with Clinton,
0ames Riady had urged the president Ato intensi!y HhisI e!!orts in China.A
1=
In particular,
Riady was eager !or the president Ato separate China,s trading privileges !rom human
rights concerns.A It was time to develop closer economic ties with China, he thought.
&thers were wor3ing towards the same end. 2r3ansas restaurant owner Charlie
Gah 5in 4rie, an old !riend o! Clinton,s, was interested in bridging the gap between the
/nited #tates and China. 2!ter contributing :+?9,<<< to Clinton,s legal de!ense !und,
4rie was appointed to a commission e8ploring /.#.(2sia trade. "e later arranged !or a
weapons dealer !rom China named 6ang 0un to meet 'resident Clinton at a private 6hite
"ouse co!!ee.
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2ll o! this greatly disturbed #enator -red 4hompson CR.(4enneseeD, who chaired
the #enate %overnment and &versight Committee investigating campaign !inance
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irregularities. 2long with other committee members, he had received brie!ings by the
-7I claiming the Chinese government had a systematic plan to in!luence the 199+
elections. /sing an e8pert who studied international businesses, the committee heard
testimony that 5ippo had Ashi!ted its strategic center !rom Indonesia to China.A 1uch o!
its current clientele centered around )oint ventures with China Resources, a company
owned by the Chinese government.
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2ccording to the e8pert, China employed that
company Aas an agent o! espionage (( economic, military and political.A
During his 1; months at the Commerce Department, "uang made more than 4<<
phone calls to the 5ippo %roup and also used a private o!!ice rented by an 2r3ansas
company with ties to 5ippo.
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2t one point, he wrote a memo as3ing 5ippo to wire
money !rom Indonesia so he could ma3e a :5<,<<< contribution to the Democratic party.
4his provided the most direct evidence that "uang had !unneled illegal money !rom
abroad into the 2merican campaign.
'roving the policy connection to China, though, was !ar more di!!icult and in the
end inconclusive in the committee report. /nli3e other countries, China would not ma3e
available to 2merican investigators any ban3ing or !inancial records. 6hile the
committee produced circumstantial evidence lin3ing "uang to 5ippo and the Chinese
government, it proved nearly impossible to !ind direct evidence o! the connection.
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#till,
the impression le!t by the investigation was not !avorable. 2s Democratic #enator 0oseph
5ieberman put it, Ai! you,re soliciting, there are going to be people who are prepared to
buy, and some o! them are not going to have good motives.A
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4he Cost to Clinton and the Country
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7y the time the campaign ended, Clinton had attended more than twice as many
!undraising events as his predecessor 7ush had done in 199.. &!ten(times, Clinton
would schedule two ma)or !undraising events in the same hotel an hour apart. 2s one
crowd departed, the ne8t would arrive. #enator 5ieberman compared it to Aa doctor
seeing patients in di!!erent waiting rooms.A 4ypical wee3s showed !undraising co!!ees
and dinners !ive or si8 days a wee3. In 1arch, Clinton organied .. such events. In
0une, there were ?< and in &ctober, there were .4 separate events.
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4o accommodate such a !renetic money(raising schedule, 6hite "ouse sta!!ers
were !orced to cancel o!!icial presidential meetings. -or e8ample, consultations with his
Council o! 9conomic 2dvisers were dropped !or long stretches at a time. 7rie!ings with
his own chie! o! sta!! and national security advisor o!ten gave way to brea3!ast
!undraisers and co!!ees.
#ta!!ers could see the personal drain on the president. &ne anonymous o!!icial
observed, Ahe lost E all his down time. "e started getting up earlier and going to bed
later. 2ll o! his rest was gone.A
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Campaign advisors worried about !atigue and its e!!ect on the president,s
)udgment. Consultant Dic3 1orris, the architect o! Clinton,s success!ul 199+ strategy
testi!ied under oath about the president,s complaints. A"e would say, ,I haven,t slept in
three daysJ every time I turn around they want me to be at a !und(raiserE.I cannot thin3,
I can,t do anything.,A
4he change in Clinton,s attitude on !undraising had come !ollowing the 1994
elections, when Democrats had been drubbed and lost control o! Congress. 7e!ore that
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time, D$C o!!icials described !undraising as Aa low priorityA and something that made
them Avery, very !rustrated.A
2!ter the $ovember losses, though, everything changed. 4ruman 2rnold, an oil
businessman and long(time Clinton !an, was brought into the D$C. "is mandate was to
raise :4. million in unrestricted so!t money contributions. 4he o!!icial Clinton(%ore
campaign set its goal on :.5 million. &verall, the D$C concluded it needed :1?<
million to be competitive in 199+.
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In order to do this, the party devised creative ways to attract donors. 2ll
presidents have played to contributors who in return !or time with the chie! e8ecutive,
were willing to ma3e a !inancial gi!t. 7ut Clinton, %ore, and the D$C too3 these
activities to new heights.
2mong the 3ey attractions were Astate dinner invitations, seats aboard 2ir -orce
&ne, tic3ets to the 6hite "ouse movie theater and gol! or )ogging outings with
Clinton.A
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5arge contributors even got to sleep overnight in the 5incoln bedroom. 4he
!undraising operation was systematic, calculated, and ruthlessly e!!icient.
&ccasionally, the strain would show on the president. 2t one event, he was so
tired, he gave the wrong speech, one on education rather than crime, as had been planned.
4he law en!orcement people standing behind him had to have been perple8ed by that one.
&ther times, he appeared to be going through the motions with donors, to the
disappointment o! those giving the large sums o! money. 6ith such a !renetic schedule, it
was hard !or him to stay on top o! the )ob day a!ter day.
It was not )ust Clinton who was a!!ected by the !undraising a!termath. 7y the end
o! the congressional investigation, the D$C was !orced to return more than :? million
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overall in 199; and 199=, hal! o! it raised by "uang. 1ore than a doen individuals were
indicted !or illegal !undraising, and a number were convicted.
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"uang himsel! was not
indicted, but was given immunity by Independent Counsel @enneth #tarr in return !or
testimony alleging that Clinton aide 6ebster "ubbell Aper!ormed little or no wor3A in
e8change !or a :1<<,<<< consulting contract !rom 0ames Riady.
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"ubbell was a 3ey
!igure in #tarr,s 6hitewater investigation, and the independent counsel hoped "ubbell
would turn against the president.
4he ill !eelings generated by the !undraising scandal among Republicans soon
!ound a new outlet. In the midst o! the 199+ campaign, Clinton had carried on an a!!air
with a young 6hite "ouse intern named 1onica 5ewins3y. 4he a!!air created a ma)or
crisis !or the country. 4hroughout most o! 199= and into early 1999, the nation was
sub)ected to the unprecedented scandal o! a president accused o! committing per)ury and
obstructing )ustice in an e!!ort to cover up the a!!air.
-eeling burned by what they viewed as Clinton,s dishonesty on campaign
!undraising, "ouse Republicans pushed !or impeachment on issues related to the se8
scandal. 1any %&' leaders believed his behavior on things such as 6hitewater and
199+ campaign !inance had crossed the line into impropriety. 4he 5ewins3y a!!air,
however, mar3ed the !irst time the %&' could prove Clinton had lied. 2lthough the
president survived politically, he paid a high cost with members o! Congress in terms o!
his personal credibility. Republican legislators no longer trusted him.
2s the "ouse debated impeachment o! the president, the country went through
enormous pain and emotion. #ome !elt the president was being railroaded over a se8
scandal and that right(wing groups were behind the e8traordinary investigations to which
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Clinton was sub)ected. &thers blamed the president and could not understand how his
public poll numbers indicated two(thirds o! 2mericans believed he was doing a good )ob
as president. It was one o! the most polariing episodes the country had endured in its
entire history.
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In the end, the "ouse impeached the president on nearly a straight, party(
line vote. "owever, Clinton survived the #enate trial. -i!ty #enators voted to remove
him !rom o!!ice due to obstruction o! )ustice, well short o! the +; needed to end his
presidency.
Get hard !eelings lingered between the two parties. Republicans believed that
Clinton had lied to them time and time again. "e had run in 199. as a $ew Democrat,
but then proposed a massive health care re!orm, with a ma)or role !or government. "e
had initiated serious conversation with Republicans about entitlement re!orm in 1995, but
as soon as they proposed speci!ic changes, he had devoted his re(election campaign to
complaining about Republican plans to cut 1edicare. 4he campaign !inance illegalities
were )ust the tip o! the iceberg, in their view.
/nresolved China Kuestions
6hen the !undraising investigation concluded, the most tantaliing sub)ect was
the unresolved *uestions concerning the China connection. 6as money !rom China
given in return !or sensitive military technology, as many "ouse Republicans believed>
2ccording to a ;<<(page, bipartisan report issued by a special "ouse panel chaired by
Representative Christopher Co8 CR(Cali!.D, the answer was yes. China had gone to
unusual lengths in their search !or new technology.
;+
&ver a period o! si8 months, the committee had held ?? closed hearings and heard
!rom a number o! e8perts in the military, satellite, and intelligence !ields. 4he nine(
member committee made up both o! Republicans and Democrats was disturbed at some
o! its !indings.
2lthough the speci!ic contents o! the report were classi!ied as secret, news stories
indicated that China had been trying to steal sensitive /.#. military and satellite
technology !or more than two decades. It was not an e!!ort uni*ue to the Clinton 6hite
"ouse, but rather one that had ta3en place under both Republican and Democratic
administrations.
"owever, one aspect o! the investigation was uni*ue to Clinton. 4he president,s
Commerce Department was accused o! !ailing ade*uately to monitor 5oral Corporation
and "ughes 9lectronics when they delivered missile technology to China. 5oral, in
particular, was a large Democratic contributor. Its chairman, 7ernard #chwart, long had
given large contributions to Democratic candidates. Indeed, in 199+, he had been one o!
the D$C,s largest so!t money donors.
6hile the report did not systematically e8amine the China !undraising
connection, the committee did e8plore the actions o! a Chinese aerospace o!!icial named
5iu Chao(ying. 2ccording to the 4hompson committee, 1rs. 5iu had been involved in
!unneling China money to the D$C, while with her !ather, a general in the Chinese
military, also trying to gain access to new satellite technology.
?1
4he tie was purely
circumstantial, but partisans !elt it might be signi!icant.
&ne thing was clear. 2!ter a !ailed Chinese roc3et launch o! a /.#. satellite, 5oral
had sent China the results o! a detailed assessment o! the accident. "ouse #pea3er $ewt
;;
%ingrich immediately criticied Clinton. Commenting on the close ties between the
president and 5oral, %ingrich said the China deal was Athe closest thing to an
impeachable o!!ense.A
?.

4he problem was that in!ormation on commercial roc3et launches was similar to
that employed !or military roc3ets. 4he !ear not only was that China was using this new
in!ormation !or its own military advantage, but that it had sold e*uipment !eaturing the
sensitive material to 'a3istan and Ira*, two countries that the /nited #tates viewed as
ma)or security threats.
??

2!ter the disclosure o! committee !indings, #enator 4hompson, the chair o! the
#enate Committee on %overnmental 2!!airs, indicated his group might hold additional
hearings into the charge that China had tried illegally to in!luence the 199+ election
through campaign contributions. 4he news was Ae8tremely troubling,A 4hompson
indicated. A7ut it should come as no surprise to those who have been !ollowing our
e8port policies and the activities o! the Chinese. It,s been well 3nown !or some time that
China has been actively involved in trying to obtain technology in!ormation, and I
believe that our policies have played into their e!!orts.A
In 1999, the China connection burst bac3 onto the national agenda when press
reports uncovered allegations that China Astole nuclear secrets !or bombsA !ollowing
espionage at the 5os 2lamos $ational 5aboratory in $ew 1e8ico.
?4
2ccording to the
investigation, China in the mid(19=<s had ta3en /.#. in!ormation on miniature warheads
and used it to develop its own capacity to launch small warheads !rom a single missile.
#ince this spying had ta3en place prior to Clinton 2dministration, no one blamed
the 2r3ansas man !or that disaster. 7ut critics charged that when told o! the Chinese
;=
spying in the summer o! 199;, the 6hite "ouse had not ta3en the allegations very
seriously because o! its e!!orts to open a dialogue with China. &ne /.#. o!!icial pointed
out that Athis con!licted with their China policy. It undercut the 2dministration,s e!!orts
to have a strategic partnership with the Chinese.A
?5

#hortly a!ter the press report sur!aced, the Clinton 2dministration !ired a Chinese
2merican scientist, 6en "o 5ee, who wor3ed at 5os 2lamos a!ter he !iled a polygraph
test.
?+
7ut Congressional critics demanded more in!ormation. Republican Curt 6eldon o!
'ennsylvania said, A4hey,re trying to spin this thing to get the best play !or themselves
and avoid !urther embarrassment. 4hey want to drag it out as long as they can. I,m so
mad I can,t see straight.A
?;
6hat as3ed about the matter, Clinton denied any impropriety. A6e did not ignore
evidence. Kuite the contrary, we acted on it,A he said.
?=
Continuing, he pointed out that
/.#. involvement with China was good policy because it helped to integrate the world,s
most populous country into the international order.
&utside observers were not persuaded. $ew Gor3 4imes Columnist 6illiam
#a!ire raised the specter that Clinton went so!t on the Chinese because Athey raised
millions !or the Clinton campaign.A
?9
9ncouraged by big contributor 0ames Riady, the
6hite "ouse had eased trade restrictions on satellites and computers. Clinton did not
want detailed scrutiny into the alleged spying activities !or !ear it would upset his China
opening, critics charged.
#uch claims !ound some credence when !ormer Democratic !undraiser 0ohhny
Chung admitted Athat he had !unneled tens o! thousands o! dollars !rom two high(level
Chinese military o!!icials to 'resident Clinton,s re(election e!!ort in 199+.A
4<
2ccording
;9
to newspaper accounts, Chung in!ormed 0ustice Department investigators as part o! a
plea bargain that %eneral 0i #hengde, chie! o! China,s military intelligence agency, had
wired :?<<,<<< to Chung,s account !or use in Clinton,s campaign and that Chung gave
:?5,<<< o! that amount to the president,s re(election !und.
Chung long had been o! interest to Congressional o!!icials. 2n old !riend o!
Clinton,s !rom 2r3ansas and a !re*uent 6hite "ouse visitor, Chung had attracted
controversy during the campaign !or his :4<<,<<< donations to the Democratic $ational
Committee and Clinton re(election !und, money which later was returned by party
o!!icials. Contributions !rom !oreign governments were e8pressly prohibited !or
2merican political races. $o one wanted !oreign o!!icials !inancing 2merican elections
due to the blatant con!lict o! interest in policyma3ing which would ensue.
Chung also testi!ied that his Chinese business partner, 5iu Chao(ying, an
aerospace e8ecutive and lieutenant colonel in the Chinese 'eople,s 5iberation 2rmy,
bragged to him that Clinton !undraisers Charlies Gah 5in 4rie and 0ohn "uang were
Adirected in their !und(raising activities by the Chinese government.A
41
4hese charges
and the damaging trail o! !oreign money which resulted, remained the most troubling
element o! the 199+ campaign !inance controversy.
Conclusion
4he 199+ Democratic !undraising scandal illustrates a !undamental ris3 !acing
!uture elections in regard to the international money problem. 2s overseas mergers and
ac*uisitions propelled by the !orces o! globaliation !urther blur the boundaries between
/.#. and !oreign corporations, the problem o! illegal !oreign contributions is li3ely to get
more severe. 4he growing interconnections o! the international political economy ma3e it
=<
more and more di!!icult to police gi!ts !rom abroad, especially in countries whose
ban3ing laws lie outside the realm o! /.#. investigations.
In addition, the controversy demonstrates the political ris3s o! how Democrats
responded to the scandal. 7y engaging in care!ul spin control, the 6hite "ouse shielded
itsel! !rom the worst political bac3lash by implying Republicans were doing the same
thing, even though no evidence ever documented that candidate Dole had bro3en
!undraising laws. 2lthough Clinton won re(election in 199+, his party paid a price in the
bad !eelings that emerged which contributed to the partisan rancor that mar3ed the
impeachment controversy. Republicans !elt Clinton had sti!!ed them on the !undraising
charges and that he could not be trusted. #uch !eelings encouraged the %&' to pursue the
5ewins3y scandal with great vigor and enthusiasm.
4his se*uence o! events illustrates how important the rules o! the game are
to 2merican politics. 'oliticians must have !aith that their opponents are playing by the
same rules as themselves. &therwise, there is no trust and that is damaging to the system
as a whole.
4his is especially important in regard to campaign !inance. 1oney is such an
important part o! electioneering that it deserves unusual care. Cash is vital to electoral
strategies and communications, and sharply in!luences who does well with voters. I! one
party gains an advantage over the other, it wea3ens support !or the political system and
creates ill will all the way around.
7y pushing the envelope much !urther than it ever had been pushed be!ore, the
Democratic $ational Committee set a bad precedent !or !uture elections. It created vast
seeds o! mistrust !rom the opposition party. It had policy conse*uences. 6hen the dust
=1
had settled, the whole controversy over unethical campaign !undraising le!t a legacy that
reverberated !or years to come in the 2merican political system.


=.
9ndnotes
=?
1
Dic3 1orris, 7ehind the &val &!!ice, $ew Gor3L Random "ouse, 199;.
.
Dic3 1orris, 7ehind the &val &!!ice, $ew Gor3L Random "ouse, 199;, chapter eight.
?
%lenn 7unting, AClinton,s "ard and -ast Ride on Donation 4rail,A 5os 2ngeles 4imes, December .., 199;, p. 21.
4
%lenn 7unting and @. Connie @ang, A-rom "ero to "ot 'otato,A 5os 2ngeles 4imes, &ctober 19, 199+, p. 21 and 7rian
Du!!y, A2 -und(Raiser,s Rise and -all,A 6ashington 'ost, 1ay 1?, 199;, p. 21.
5
%lenn 7unting and @. Connie @ang, A-rom "ero to "ot 'otato,A 5os 2ngeles 4imes, &ctober 19, 199+, p. 21.
+
4im 6einer and David #anger, ADemocrats "oped to Raise :; 1illion !rom 2sians in /.#.,A $ew Gor3 4imes, December
.=, 199+, p. 1.
;
%lenn 7unting and @. Connie @ang, A-rom "ero to "ot 'otato,A 5os 2ngeles 4imes, &ctober 19, 199+, p. 21.
=
4im 6einer and David #anger, ADemocrats "oped to Raise :; 1illion !rom 2sians in /.#.,A $ew Gor3 4imes, December
.=, 199+, p. 1.
9
%lenn 7unting and @. Connie @ang, A-rom "ero to "ot 'otato,A 5os 2ngeles 4imes, &ctober 19, 199+, p. 21.
1<
Ruth 1arcus and Charles 7abcoc3, ABisit #purred Indonesians, %i!t, #ays D$C,A 6ashington 'ost, &ctober 1., 199+, p.
2.1.
11
David #anger and 0ames #terngold, A-und(Raiser !or Democrats $ow -aces "arsh #potlight,A $ew Gor3 4imes, &ctober
.1, 199+, p. 21.
1.
6illiam Clayton, 0r., A7oth 'arties 4rade 2ccusations &ver -oreign 'olitical Contributions,A "ouston Chronicle, &ctober
.1, 199+, p. 9.
1?
6illiam Clayton, 0r., A7oth 'arties 4rade 2ccusations &ver -oreign 'olitical Contributions,A "ouston Chronicle, &ctober
.1, 199+, p. 9.
14
0ohn "arris, A'resident #idesteps -unds -lap,A 6ashington 'ost, &ctober .., 199+, p. 21.
15
2lan 1iller, %lenn 7unting, and 1aura Dolan, A:?.5,<<< %i!t to Democrats Raises $ew #et o! Kuestions,A 5os 2ngeles
4imes, &ctober .?, 199+, p. 21.
1+
4im 6einer and David #anger, ADemocrats "oped to Raise :; 1illion !rom 2sians in /.#.,A $ew Gor3 4imes, December
.=, 199+, p. 1.
1;
%lenn 7unting, ARecords #how 6ider Role on 2sia !or -und(Raiser,A 5os 2ngeles 4imes, $ovember ;, 199+, p. 21.
1=
David #anger, A'resident 2dmits he and Indonesian had 'olicy 4al3s,A $ew Gor3 4imes, $ovember 1+, 199+, p. 1.
19
4im 6einer and David #anger, ADemocrats "oped to Raise :; 1illion !rom 2sians in /.#.,A $ew Gor3 4imes, December
.=, 199+, p. 1.
.<
David Rosenbaum, A#enate 'anel Is 4old "uang @ept 4ies to Company 5in3ed to China,A $ew Gor3 4imes, 0uly 1+,
199;, p. 21.
.1
1ar3 %ladstone and 1arc 5acey, A#enate 'robes Contacts 1ade by "uang,A 5os 2ngeles 4imes, 0uly 1=, 199;, p. 21..
..
5ena #un, A'robe -ails to 5in3 "uang, China 'lan,A 6ashington 'ost, 0uly .<, 199;, p. 2+.
.?
%lenn 7unting, AClinton,s "ard and -ast Ride on Donation 4rail,A 5os 2ngeles 4imes, December .., 199;, p. 21.
.4
%lenn 7unting, AClinton,s "ard and -ast Ride on Donation 4rail,A 5os 2ngeles 4imes, December .., 199;, p. 21.
.5
%lenn 7unting, AClinton,s "ard and -ast Ride on Donation 4rail,A 5os 2ngeles 4imes, December .., 199;, p. 21.
.+
%lenn 7unting, AClinton,s "ard and -ast Ride on Donation 4rail,A 5os 2ngeles 4imes, December .., 199;, p. 21.
.;
%lenn 7unting, AClinton,s "ard and -ast Ride on Donation 4rail,A 5os 2ngeles 4imes, December .., 199;, p. 21.
.=
Robert 0ac3son and Ronald &strow, A'rimary 4arget Charged in 'robe o! Clinton Donors,A 5os 2ngeles 4imes, 0uly 14,
199=, p. 21.
.9
2lan 1iller and Ronald &strow, A-und(Raiser "uang 2ids #tarr Case, #ources #ay,A 5os 2ngeles 4imes, $ovember 11,
199=, p. 215 and David 0ohnston, ADemocratic 1oney 1an "as Immunity -rom #tarr,A $ew Gor3 4imes, $ovember 11,
199=, p. 2.4.
?<
9lia $ewlin Carney, A'it!alls !or the 'robes,A $ational 0ournal, 1ay 1;, 199;, pp. 991(99..
?1
0e!! %erth and 9ric #chmitt, A"ouse 'anel #ays Chinese &btained /.#. 2rms #ecrets,A $ew Gor3 4imes, December ?1,
199=, p. 21.
?.
0ohn 1int, AChina 2id "urt /.#. #ecurity, 'anel #ays,A 6ashington 'ost, December ?1, 199=, p. 21.
??
'aul 1agnusson, A2 7ac3lash 2gainst 7ei)ing is 7uilding,A 7usiness 6ee3, 0anuary 1=, 1999, p. 55.
?4
0ames Risen and 0e!! %erth, AChina #tole $uclear #ecrets !or 7ombs, /.#. 2ides #ay,A $ew Gor3 4imes, 1arch +, 1999,
p. 1.
?5
0ames Risen and 0e!! %erth, AChina #tole $uclear #ecrets !or 7ombs, /.#. 2ides #ay,A $ew Gor3 4imes, 1arch +, 1999,
p. 1. 2lso see 0ames Risen, A6hite "ouse #aid to Ignore 9vidence o! China,s #pying,A $ew Gor3 4imes, 2pril 1?, 1999, p.
214.
?+
6alter 'incus, A#py #uspect -ired at 5os 2lamos 5ab,A 6ashington 'ost, 1arch 9, 1999, p. 21.
?;
0e!! %erth and 9ric #chmitt, A'olitical 7attleL 6hat to Reveal on China 2rms,A $ew Gor3 4imes, 1arch 1<, 1999, p. 21.
?=
0ohn 7roder, A'resident Denies Ignoring 9vidence o! $uclear #pying,A $ew Gor3 4imes, 1arch 1., 1999, p. 21.
?9
6illiam #a!ire, A2merican De!eat,A $ew Gor3 4imes, 1arch =, 1999, p. 219.
4<
Don Ban $atta 0r., A"ouse 'anel #ubpoenas Democratic -und(Raiser,A $ew Gor3 4imes, 2pril 1;, 1999, p. 211. 4his
story originally was bro3en by 6illiam Rempel, "enry 6einstein, and 2lan 1iller in A4estimony 5in3s 4op China &!!icial,
-unds !or Clinton,A 5os 2ngeles 4imes, 2pril 4, 1999, p. 1.
41
0erry #eper, A'52 Is 4ied to Campaign,A 6ashington 4imes $ational 6ee3ly 9dition, 2pril 1.(1=, 1999, p. 1.