[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.
____________________