Mochtar Riady and his son, James, who control the Indonesian-based Lippo Group conglomerate and have been friends and supporters of President Clinton since his days as Arkansas governor, "have had a long-term relationship with a Chinese intelligence agency," according to an unclassified final draft of a report by the Senate committee that last year investigated campaign finance abuses.
The report was drawn from highly classified intelligence information supplied by both the CIA and the FBI that was not revealed during several months of public committee hearings last year, executive branch sources said yesterday.
The unclassified document contains few specifics on the nature of the relationship between the Riadys and Chinese intelligence. No one, including the committee, has alleged that Clinton or any of his senior White House or campaign aides were aware of any improper connection the Riadys or others may have had with the Chinese government.
Officials said that much of the specific intelligence information on which the report's conclusions are based was withheld from the document to protect sources and methods used to gather it. The report itself says that information on the Riadys was "recently acquired."
It describes their relationship with Chinese intelligence as appearing to be "based on business interests," with the Riadys obtaining Chinese assistance for international business opportunities "in exchange for large sums of money and other help."
As of two weeks ago, the 13-page report on the Chinese connection -- part of a much larger document compiled by the Senate Governmental Affairs Committee on the conclusions drawn from last year's hearings -- was the subject of bitter dispute between the committee and the CIA and the FBI, which feared it would compromise intelligence-gathering. Both agencies now have agreed to the final draft formulation, although the Justice Department has raised unspecified last-minute objections to its release.
The report describes what it calls "strong circumstantial evidence" that six individuals with strong ties to the Chinese, including the Riadys, may have funneled foreign money into political campaigns during the 1996 U.S. election cycle. It singles out one of the six, California immigration consultant and longtime Democratic fund-raiser Maria Hsia, as "an agent of the Chinese government," although it cites no specific actions taken in support of this alleged role.
Hsia's lawyer, Nancy Luque, angrily denied last night that Hsia was a Chinese agent or that she participated in any campaign fund-raising illegalities. "The allegations are false, and have been proven false. They are not under investigation by anyone, anywhere."
Concern about Chinese activities began in 1996, when the CIA determined that China, which worried that it lacked sufficient influence in U.S. politics and policymaking, planned to raise $3 million for an effort to buy influence with U.S. politicians, according to officials familiar with sensitive intelligence. These sources have said that most of the money was to be allocated to the Chinese Embassy in Washington and to various Chinese consulates across the United States.
The Washington Post first reported the investigation into the Chinese plan last February.
When the Senate committee began its hearings on the overall issue of alleged campaign fund-raising abuses last July, Chairman Fred D. Thompson (R-Tenn.) said the panel "believes that high-level Chinese government officials crafted a plan to increase influence over the U.S. political process." But by the time the hearings ended on Oct. 31, little evidence of such a plan had been publicly produced.
The report's conclusion that the Riadys and others have had ties to Chinese intelligence may focus new attention on the now 15-month-old Justice Department investigation into a wide range of allegations involving the abuse of campaign finance laws by both Democrats and Republicans. Although the overall Thompson committee report is noticeably partisan in nature and emphasizes the views of the committee's Republican majority -- committee Democrats wrote their own competing draft chapters -- the document concerning the Chinese connection appears understated and studiously nonpartisan.
The Riady relationship with Clinton stems from the early 1980s, when family patriarch Mochtar Riady's Lippo Group bought a minority interest in the Arkansas-based Worthen Bank. Riady dispatched his son James to learn the banking business in Little Rock. Soon after arriving, young Riady was introduced to then-Gov. Clinton at a Worthen luncheon.
In a 1984 interview with an Arkansas magazine, Mochtar Riady outlined his business philosophy: "Every network has to have its foundation laid on special, personal, human connections. What I am looking at is what my partners can offer in personal contacts and business connections."
The connection formed with Clinton continued after he began his run for the presidency in 1991 and was visible during the 1996 campaign. Since 1991, the Riadys and others connected to Lippo have contributed hundreds of thousands of dollars to the Democratic National Committee. The party has returned nearly half a million dollars contributed by an Indonesian couple with ties to Lippo.
James Riady attended a key Oval Office meeting on Sept. 13, 1995, when Clinton approved the transfer of former Lippo executive John Huang, who had been working in a sub-Cabinet Commerce Department position, to a DNC fund-raising post. In another Oval Office meeting with Clinton in September 1996, Riady lobbied for favorable trade relations with China.
Although it gives few details about Hsia, the report says, "The Committee has learned that Hsia has been an agent of the Chinese government, that she acted knowingly in support of it, and that she has attempted to conceal her relationship with the Chinese government. The committee has also learned that Hsia has worked in direct support of a PRC [People's Republic of China] diplomatic post in the U.S."
The report does not attempt to tie any specific Hsia fund-raising activities to the Chinese. A lengthy portion of the overall committee document, which runs some 1,500 pages, details her connection with the Hsi Lai Buddhist Temple in Hacienda Heights, Calif. Using temple monastic personnel as straw donors, the larger report alleges, Hsia "illegally laundered" more than $130,000 in political contributions to Democrats beginning in 1993, including thousands of dollars from a temple event attended by Vice President Gore in the early spring of 1996.
The overall report notes that "any link between Hsia and PRC intelligence would raise new questions about Hsia's involvement in funneling money from the Hsi Lai Temple to a number of both local and national political candidates in the United States from at least as early as 1993 through the presidential election of 1996. Were such alleged intelligence reports to be true, Hsia's long relationship to the Vice President of the United States would raise grave new questions about the extent to which Chinese intelligence operatives have been able to influence U.S. politics during the Clinton administration."
Three other individuals are named in the report, although few details are provided in support of its conclusions about them.
The report says that Ted Sioeng, a former California businessman who controls an empire worth about $500 million, "worked, and perhaps still works, on behalf of the Chinese government." The report says that $200,000 of the $400,000 given to the Democrats by Sioeng and his family was "funded by transfer from overseas accounts." The committee, which has no authority to compel production of foreign bank records, said it traced the money to "Hong Kong but no further."
Sioeng's attorneys have flatly denied the allegations.
The report touches very lightly on John Huang, who has been a focus of public attention in the campaign finance controversy since the beginning. It says the committee has "unverified information" that Huang, the former Lippo executive and Democratic fund-raiser, may have a direct financial relationship with the Chinese government. Last year, the DNC returned more than half of some $3 million Huang collected for the party, saying its origins could not be established. Huang has denied any wrongdoing through his attorney.
The sixth person identified in the report is Yah Lin "Charlie" Trie, a Little Rock friend of Clinton who on Jan. 28 became the first person indicted as part of the Justice Department investigation. Last week, he pleaded not guilty to charges of obstruction of justice and campaign finance violations.
Trie is a former Little Rock restaurateur who set up an international trading business after Clinton was elected president. The report says that some of Trie's money -- although not necessarily the more than $1.2 million in contributions to the DNC and Clinton's legal defense funds with which he was involved -- was traced from Taiwan and Cambodia, but no further.
Sources said that a significant portion of the information on which the conclusions in the report are based comes from electronic intercepts of international phone calls or other communications obtained by the National Security Agency or from FBI counterintelligence wiretaps in this country. These were the parts of the report that were deleted or watered down from the initial draft, which was classified Top Secret/codeword.
For example, the report says "PRC officials discussed financing American elections through covert means" but gives no specifics about who, when or what was discussed. Some of this information was available in classified form, but officials said it would not prove a direct link between these individuals and specific contributions.
In another reference to what sources said is sensitive intelligence, the report says, "The committee has received information that Hsia worked with Ted Sioeng and John Huang to solicit contributions from Chinese nationals in the U.S. and abroad for Democratic causes." It is illegal for foreign nationals to give to U.S. political campaigns.
Until Trie returned to this country and appeared in court last week, all six of those cited in the report had either stayed abroad or declined to testify before the committee. In addition, the report noted that China "has denied the committee's request for assistance."
In brief form, the report summarizes previously reported information about how the Chinese developed a plan in 1995 to influence U.S. politicians. By 1996, it included efforts to make political contributions in congressional elections. In June 1996, the FBI warned six senators and congressmen that they might be targeted for Chinese contributions. The FBI informed two members of the National Security Council staff, but the information was not passed to Clinton, who later expressed public irritation at the lapse.
The Thompson report describes the Chinese plan as "a broad array of Chinese efforts designed to influence U.S. policies and elections through, among other means, financing election campaigns." The report says the information that the Chinese wanted to influence the 1996 presidential contest is "fragmentary" but cites no example.
In a summary, the report says: "Illegal foreign contributions were made to the DNC and . . . these contributions were facilitated by individuals with extensive ties to the PRC."
The report mildly criticizes the Justice Department for "a failure to share relevant classified information," as well as for delays and a lack of coordination between the FBI divisions and the Justice Department.
The report says the deletions by the U.S. intelligence agencies were justified to protect sources. "That protection is a legitimate concern," the report says, "but it has come at the cost of curtailing public knowledge and debate."