[Congressional Record Volume 142, Number 75 (Friday, May 24, 1996)]
[Extensions of Remarks]
[Pages E923-E925]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  FUNDRAISER ADMITS MISHANDLING OF ILLEGAL CAMPAIGN CONTRIBUTIONS FOR 
                             INDIAN EMBASSY

                                 ______


                          HON. PHILIP M. CRANE

                              of illinois

                    in the house of representatives

                         Thursday, May 23, 1996

  Mr. CRANE. Mr. Speaker, on Thursday, May 9, 1996, the Baltimore Sun 
ran an article reporting that Lalit H. Gadhia, a major political

[[Page E924]]

fundraiser in Maryland, confessed to laundering over $46,000 in illegal 
political contributions from the Indian Embassy. Gadhia, former 
campaign treasurer for Maryland Governor, Parris Glendening, and a 
Baltimore immigration lawyer, confessed to the scheme in the U.S. 
District Court in Baltimore, according to the report. According to the 
report, Mr. Gadhia used money provided by the Embassy through an 
operative named Devendra Singh to reimburse friends and associates for 
campaign contributions to pro-India members of Congress and a political 
action committee known as the Indian-American Leadership Investment 
Fund. It is illegal for anyone who is not a citizen to make a political 
contribution, and it is illegal to falsify the name of the contributor. 
Yet Indian Embassy spokesman Shiv Mukherjee is quoted in the article as 
saying that ``the Indian Embassy operates fully within the bounds of 
diplomatic propriety.'' The words of the Embassy are clearly at odds 
with its actions.
  The Embassy officials in charge of the scheme, former Ambassador S.S. 
Ray and former Embassy staffer Devendra Singh, have both returned to 
India. Mr. Ray was a losing candidate for Parliament in the recent 
elections and Mr. Singh holds a high-ranking position with the 
Rajasthan state police. The new ambassador, Naresh Chandra, brought his 
brother, Girish Chandra Saxena, to the Embassy with him. Girish Saxena 
is a former head of India's Research and Analysis Wing [RAW], which 
infiltrated Sikh temples throughout Punjab, Khalistan, in June 1984, in 
which over 20,000 Sikhs were killed. Ambassador Chandra himself has 
recently been implicated in illegal smuggling of CFC's from India to 
the United States, according to published reports. CFC's have been 
banned in the United States since January 1. According to the Customs 
Service, CFC's are now the No. 2 problem after illegal drugs.
  In a press conference on February 19, 1995, Indian foreign Minister 
R.L. Bhatia said, ``There is a strong anti-India lobby in the United 
States. We are spending large sums of money through Ambassador Ray to 
neutralize it.'' Now we know how the regime was spending that money. 
While the Members who received these contributions did not know that 
they were illegal, they know now, and I call upon those Members to 
return the money. I urge you to cosponsor House Concurrent Resolution 
32, which calls for self-determination for Khalistan, and H.R. 1425, 
which will cut off U.S. aid to India until human rights are respected.
  These illegal political activities are just one more demonstration of 
the moral bankruptcy of the recent regime. Some of us spoke out when 
former Ambassador Ray was caught endorsing a candidate in the South 
Dakota Senate race and attacking one in New Jersey. Once again the 
Embassy is inappropriately involved in U.S. politics. I know I speak 
for many members of this House when I say that I hope the new Indian 
Government will correct these practices. I am introducing into the 
Record articles from the May 9 issues of the Baltimore Sun and the 
Washington Times about the Gadhia case.

                 [From the Baltimore Sun, May 9, 1996]

                   Campaign Fund-Raiser Admits Guilt

                    (By Jim Haner and Mark Matthews)

       A prominent fund-raiser for Maryland Democrats pleaded 
     guilty yesterday to election fraud in a scheme to launder at 
     least $46,000 in illegal campaign contributions he received 
     from an official at the embassy of India in 1994.
       Lalit H. Gadhia--a 57-year-old immigration lawyer and 
     former campaign treasurer to Gov. Parris N. Glendening--
     confessed in U.S. District Court in Baltimore to his role in 
     the scheme to influence congressional lawmakers involved in 
     foreign-policy decision affecting India.
       An immigrant from Bombay, India, who was active in 
     Baltimore's early civil rights movement, Gadhia now faces up 
     to five years in prison and $250,000 in fines. Sentencing is 
     scheduled for this summer.
       Prosecutors say the case against Gadhia is one of only a 
     handful of cases in which foreign citizens or governments 
     have been linked to illegal campaign contributions in a U.S. 
     political race, and may be the first time an official of a 
     foreign embassy has been implicated.
       ``The fact that the money came from the Indian Embassy and 
     that so many people were manipulated into participating in 
     the scheme takes this case to a higher level than we normally 
     see in these kind of investigations.'' said U.S. Attorney 
     Lynne A. Battaglia. ``Obviously, we have not seen a case like 
     this in Baltimore before.''
       Among those who received the illegal funds were four 
     members of the Maryland delegation and congressmen in 
     Pennsylvania, New York and Ohio. According to documents filed 
     in the case, federal authorities could find no evidence that 
     any of the recipients was aware of the true source of the 
     contributions.
       ``The campaign assumed that these were appropriate 
     contributions,'' said Jesse Jacobs, press secretary for Sen. 
     Paul S. Sarbanes, the Marylander who is the third-ranking 
     Democrat on the Foreign Relations Committee. Mr. Sarbanes 
     received $4,500 of the questionable contributions.
       Other Maryland Democrats who received $3,000 contributions 
     each were Reps. Benjamin L. Cardin and Steny H. Hoyer and 
     former Rep. Kwesi Mfume.
       In all, 19 Democratic candidates nationwide got the money 
     shortly before the 1994 elections through a network of 
     prominent Indian-American businessmen in Maryland, their 
     families and employees of their companies. The donors then 
     were reimbursed by Gadhia, who admitted yesterday that he 
     used money from a minister at the Embassy of India in 
     Washington.
       Under Federal Election Commission rules, it is illegal for 
     noncitizens to make political contributions or for anyone to 
     make donations in another person's name. But Gadhia never 
     informed donors that the money was coming from India--or told 
     them that it was a crime to accept reimbursement for a 
     donation.
       ``The vast majority of people in the Indian-American 
     community nationally are going to be appalled by this,'' said 
     Subodh Chandra, 28, a Los Angeles lawyer who heads a 
     political action committee that unwittingly received at least 
     $31,400 of the illegal contributions for Gadhia.
       ``We can only hope at this point that these were the acts 
     of a lone bumbler or group of bumblers and not some sort of 
     international intrigue involving the Indian government. 
     Whatever the case may be, it has harmed an immigrant 
     community in this country that has worked hard for political 
     recognition,'' Chandra said.
       The scheme first came to light last year after a two-month 
     investigation by The Sun into Chandra's PAC, the Indian-
     American Leadership Investment Fund. Federal campaign finance 
     records showed that almost all of the group's money came from 
     Baltimore donors with ties to Gadhia, who then was 
     Glendening's campaign treasurer.
       Donating mostly in $1,000 and $500 increments, contributors 
     ranged from prominent Indian-American engineers and doctors 
     to cooks, busboys, students and secretaries who never before 
     had made a political donation.
       A half-dozen contributors interviewed said they were paid 
     by Gadhia or his nephew to write the checks, but had no idea 
     the practice was illegal.
       Satish Bahl, a part owner of the Akbar Restaurant on 
     Charles Street--where kitchen employees made $13,000 in bogus 
     contributions--echoed other Baltimore donors in saying he now 
     feels badly used by his former friend.
       ``I had no idea--absolutely no idea,'' he said yesterday. 
     ``We were not aware of the consequences. We were only 
     involved thirdhand. We never thought about how far this could 
     go.''
       Gadhia denied the allegations at the time of The Sun's 
     investigation. But the case against him continued to build 
     last summer as FBI agents issued subpoenas to those who gave 
     to the PAC or who attended fund-raisers held by Gadhia for 
     Maryland congressional candidates, Baltimore Mayor Kurt L. 
     Schmoke and presidential aspirants Bill Clinton and Michael 
     S. Dukakis.


                          FORMER MD. OFFICIAL

       Gadhia was at the height of his political influence, having 
     been rewarded by Glendening with an $80,000-a-year post as 
     his deputy secretary of international economic development. 
     Within days, the governor demanded his resignation.
       The allegations of wrongdoing stunned Baltimore's close-
     knit Indian-American community because Gadhia was its de 
     facto political leader--the man with the golden Rolodex who 
     could produce thousands of dollars in contributions with a 
     round of telephone calls.
       Then, on May 8, 1995, FBI agents seized documents from 
     Gadhia's Charles Street office that quickly expanded the 
     investigation beyond the PAC contributions: copies of 66 
     personal checks attached to an Airborne Express bill of 
     lading.
       According to records released yesterday by the U.S. 
     attorney's office in Baltimore, the courier bill was 
     addressed to a minister named Devendra Singh at the ``Embassy 
     of India'' and it contained checks not only to the PAC but to 
     12 Democratic lawmakers.
       The records enabled the FBI to trace some $46,000 in 
     illegal contributions back to Singh at the embassy, Battaglia 
     said.
       Singh, who now is a high-ranking police official in 
     Rajasthan state in India, was minister for personnel and 
     community affairs at the embassy at the time. Among his 
     duties was to reach out to prominent Americans who had 
     immigrated from India and seek their support for the 
     government.


                        no ``such contribution''

       The current minister for community affairs, Wajahat 
     Habibullah, denied that the embassy is involved in trying to 
     influence U.S. foreign policy through campaign contributions.
       ``I have not made any such contributions,'' he said, adding 
     that diplomats at the embassy have a budget for entertaining 
     dignitaries but not for political donations. ``Certainly it 
     is not part of our work.''
       But it is not the first time the issue has come up.
       India's current ambassador has been in Washington only 
     since April. But his predecessor, Siddhartha Ray, who is now 
     running for Parliament in India, drew harsh criticism from 
     Indiana Republican Rep. Dan Burton for his statements backing 
     certain members of Congress who were known to be strong 
     supporters of India.

[[Page E925]]

       ``We are very concerned about political activities at the 
     Indian Embassy,'' Burton's chief of staff, Kevin Binger, said 
     of the Gadhia guilty plea. ``We feel very strongly that it 
     should stay out of political races. Any allegation that this 
     is going on should be investigated and made an issue with the 
     Indian government.''
       Said embassy spokesman Shiv Mukherjee: ``The Indian Embassy 
     operates fully within the bounds of diplomatic propriety.''
       Officially, the State Department had no comment. Privately, 
     however, officials chalked up the illegal contributions that 
     were funneled through Gadhia's Maryland political network to 
     a lack of sophistication in how to influence the American 
     political system.
       One official said the Indians had made a fumbling start in 
     their attempt to copy the formidable clout wielded on Capitol 
     Hill by such countries as Greece and Israel, which are 
     aligned with powerful and well-financed Washington lobbies.
       India and its supporters in Washington have been extremely 
     vocal in trying to limit U.S. military assistance to India's 
     longtime adversary, Pakistan--most recently, the sale of 38 
     F-16 fighters.
       As the Clinton administration has tried to improve trade 
     and political ties with India while not damaging relations 
     with Pakistan; much of this debate had played itself out 
     before the Senate Foreign Relations Committee and House 
     International Relations Committee.
       Federal Election Commission records show that the committee 
     members have become magnets for campaign contributions from 
     Pakistani and Indian immigrants living in the United States--
     and for Gadhia's laundered contributions.
       In addition to Sarbanes, other Democratic committee members 
     targeted were Sen. Charles S. Robb of Virginia, $2,000; Rep. 
     Gary L. Ackerman of New York, $3,000; Rep. Sherrod Brown of 
     Ohio, $3,000; Rep. Lee H. Hamilton of Indiana, $3,000; Rep. 
     Eliot L. Engel of New York, $3,000; Robert E. Andrews of New 
     Jersey, $3,000; and Rep. Howard L. Berman of California, 
     $2,800.
       State Department officials said yesterday's revelations 
     were unlikely to do serious damage to U.S.-Indian relations. 
     Nor does the Gadhia case appear to rise to the level of other 
     campaign financing scandals involving foreign nationals.
       The Justice Department is investigating the campaign 
     finances of Rep. Jay Kim, a California Republican and the 
     first Korean-American member of Congress.
       Since December, four Korean companies--Hyundai Motor 
     America, Korean Air Lines, Daewoo International (America) 
     Corp. and Samsung America--have paid a total of $1.2 million 
     in fines in connection with illegal campaign contributions to 
     Kim that were laundered through company employees.
       In 1994, a number of Japanese citizens and corporations 
     paid a $162,225 civil penalty to the FEC for making more than 
     $300,000 in illegal contributions in Hawaii during the 1980s.
       Perhaps the most famous episode of foreign intervention in 
     recent history was the Korean scandal of the 1970s, in which 
     a wealthy South Korean businessman funneled hundreds of 
     thousands of dollars in bribes and contributions to U.S. 
     politicians.
       Among those caught in the scandal, which implicated more 
     than 30 members of Congress, was Hancho C. Kim, a Maryland 
     businessman. He was sentenced to six years in prison in 1978 
     for accepting $600,000 in funds from the Korean government to 
     influence members of Congress.


                          How the Money Moved

       Aug. 16, 1993: Indian-American Leadership Investment Fund 
     registers as a political action committee (PAC) with the 
     Federal Election Commission. In first 13 months, it raises 
     $700.
       October 1994: Lalit H. Gadhia sends 41 checks totaling 
     $34,900 written by various individuals to the PAC. Between 
     Oct. 30 and Nov. 3, the PAC sends $34,800 to 14 congressional 
     candidates and to the Massachusetts Democratic Party's 
     Victory '94 fund. Federal prosecutors say that Gadhia 
     selected the candidates to receive contributions and that he 
     reimbursed the authors of most of the checks, suing money 
     obtained from an official at the Indian Embassy in 
     Washington.
       October-November 1994; Another $15,000 in contributions 
     from individuals is made directly to 12 candidates, including 
     eight who also received money from the PAC. The contributors 
     are reimbursed by Gadhia, using money from the Indian Embassy 
     official.
       Dec. 1, 1994: Gadhia sends a report on the use of the 
     campaign funds to the embassy official Devendra Singh.
       May 3, 1995: Gadhia resigns as Gov. Parris N. Glendening's 
     campaign treasurer following a report in The Sun describing 
     his fundraising activities. He also takes leave of absence 
     from his $80,000 post as assistant secretary of international 
     economical development in the Maryland Department of Economic 
     and Employment Development.
       May 8, 1995: FBI searches Gadhia's law office and finds 
     evidence of the scheme to launder illegal campaign 
     contributions.
       June 30, 1995: Gadhia resigns his state job.
       Yesterday: Gadhia appears in federal court and admits his 
     role in the scheme.
                                                                    ____


                [From the Washington Times, May 9, 1996]

              Democrat Guilty of Laundering Contributions

                          (By Mary Pemberton)

       Baltimore.--A Democratic Party activist pleaded guilty 
     yesterday to devising a scheme to funnel $46,000 in illegal 
     contributions to a political action committee and several 
     federal election campaigns.
       Lalit H. Gadhia, 57, who had been Gov. Parris Glendening's 
     campaign treasurer, pleaded guilty in federal court to one 
     count of causing a false statement to be made to the Federal 
     Election Commission, U.S. Attorney Lynne A. Battaglia said. 
     He faces up to five years in prison and a $250,000 fine at 
     sentencing Aug. 6.
       None of the money in question went to the governor's 
     campaign. But Maryland Republican Party Chairman Joyce Lyons 
     Terhes said Gadhia's activities are indicative of the type of 
     people Mr. Glendening surrounds himself with.
       ``I think it is one more example of the flawed 
     administration of Glendening,'' she said.
       But a state Democratic Party spokesman said it has nothing 
     to do with Mr. Glendening and, if anything, reflects 
     positively on the party.
       ``It is very unfortunate that he became overzealous, but 
     the Clinton administration does not back off...even though 
     this guy has been a strong supporter of Democrats,'' David 
     Paulson said.
       The FBI said Gadhia approached the Indian-American 
     Leadership Fund in the fall of 1994 and persuaded the New 
     Mexico PAC to contribute to candidates other than Indian-
     Americans, as long as he did the fund raising.
       For three weeks in October 1994, Gadhia presented the PAC 
     with checks totaling $34,900, which he said were 
     contributions from a number of individuals. He also provided 
     names, addresses and occupations for those individuals so 
     that the PAC could file the required reports with the FEC.
       The PAC, in return, made political contributions to federal 
     candidates selected by Gadhia in the November elections.
       For the most part, the money donated to the PAC did not 
     come from the contributors, prosecutors said. At least 
     $31,400 of the funds provided to the PAC were laundered by 
     individuals who issued checks to the Indian-American 
     Leadership Fund and then were reimbursed in cash for their 
     contributions by Gadhia or his intermediaries, according to 
     the FBI.
       Prosecutors said Gadhia used the same type of scheme to 
     launder $15,000 in illegal contributions that he provided 
     directly to a number of federal election campaigns.

                          ____________________