[Congressional Record Volume 143, Number 27 (Wednesday, March 5, 1997)]
[Senate]
[Pages S1976-S1978]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NOMINATION OF MR. ANTHONY LAKE
Mr. SHELBY. Mr. President, I rise tonight to give to the Senate the
status on the confirmation process in the Intelligence Committee of
Anthony Lake, who has been nominated by President Clinton to be the
next Director of the Central Intelligence Agency.
As I have said on many occasions, I intend to treat the confirmation
of Anthony Lake, President Clinton's nominee to be Director of Central
Intelligence in a serious, thorough and fair manner.
The Central Intelligence Agency and the intelligence community
deserve a strong and independent leader to carry them into the 21st
century. I believe that everyone in the Senate recognizes that.
This leader must be able to guide the fine men and women that serve
our country and keep watch on our adversaries, sometimes under the most
trying and dangerous of circumstances.
And, this leader must be deserving of the confidence of the
President, the Congress, and the American people.
This is a controversial nomination, we have known this from the
beginning. And it is essential that we address all of the issues
associated with Mr. Lake's fitness to lead the intelligence community,
and his ability to make the transition from White House insider to
apolitical provider of intelligence information.
I'd like to comment on the six areas in which the committee has
considerable work to complete as we proceed with Mr. Lake's
confirmation hearings which will begin on Tuesday. We want to get the
process moving, but it is important that we have the fullest
cooperation from the White House.
These six areas are, among others: First, investigation of the role
the National Security Council, under Mr. Lake's leadership, had in
questionable DNC fund-raising practices, as well as any knowledge Mr.
Lake may have had, if any.
Second, Mr. Lake's use and interpretation of intelligence provided to
him as National Security Advisor, including how he helped translate
this intelligence into administration policy.
Third, the Justice Department's settlement of Mr. Lake's ethics
violations and the potential irregularities in this settlement.
Fourth, the way in which Mr. Lake handled the ``no instructions''
policy toward Iranian arms shipments through Croatia to Bosnia.
Fifth, review of Mr. Lake's FBI background investigation.
Sixth, review of written answers Mr. Lake provided to the committee's
questions for the record, many of which require further explanation
than was provided.
NSC Interactions with DNC Contacts
We will continue our investigation into the role of the NSC staff,
under Mr. Lake's direction, in the expanding controversy over foreign
campaign contributions.
At issue is the extent to which Mr. Lake knew of the ties the White
House was building with questionable fund-raisers and foreign
contributors and what effect this might have had on administration
foreign policy.
It is apparent that his staff had knowledge of the involvement, and
although on many occasions advised against it for either political or
foreign policy reasons, never seemed to raise the flag of illegality.
And if Mr. Lake was fully informed, did he participate in decisions
to continue this involvement or were any admonitions he might have
given regarding the nature of these meetings completely ignored?
This question goes to the heart of Mr. Lake's ability to be an
effective Director of the Central Intelligence Agency.
The committee must consider this issue in great detail and determine
if Mr. Lake could become embroiled in a potential independent counsel
investigation into these matters, as we read in the press.
The intelligence community deserves a leader that will not be
distracted by such an investigation, if it occurs.
The information supplied by Mr. Lake could be the tip of an iceberg,
and more inquiry is required. For example, Mr. Lake does not appear to
shed any light as to why his staff met with Pauline Kanchanalak, the
Thai businesswoman and lobbyist whose contributions to the DNC were
eventually returned.
New allegations about Ms. Kanchanalak appear in the press every day
all over America, and perhaps the world.
For example, last Tuesday, the New York Times reported, and I quote:
``One Justice Department official said subpoenas also were served on
the United States-Thai Business Council, a trade-promotion group formed
in part by Pauline Kanchanalak, a lobbyist who helped raise $250,000 in
political donations that have since been returned by the Democratic
National Committee.''
The article goes on to say: ``Government officials said the Justice
Department two weeks ago subpoenaed records from the Export-Import Bank
concerning Ms. Kanchanalak's efforts to help Thai investors * * *''
I ask for unanimous consent that this and other articles about Ms.
Kanchanalak be entered into the Record at this point in their entirety.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the New York Times, Feb. 25, 1997]
Inquiry Into Gifts to Democrats Widens
(By Christopher Drew)
The Justice Department today subpoenaed the records of
Johnny Chung, a California businessman who gave $391,000 to
the Democratic Party, and others who made large donations
while seeking access to the White House, Government officials
said.
One Justice Department official said subpoenas also were
served on the United States-Thai Business Council, a trade-
promotion group formed in part by Pauline Kanchanalak, a
lobbyist who helped raise $250,000 in political donations
that have since been returned by the Democratic National
Committee.
[[Page S1977]]
The subpoenas show that a Justice Department task force is
continuing to widen its investigation into alleged
improprieties in the Democrats' drive to raise huge sums for
last year's elections.
The committee also is reviewing the donations made by Mr.
Chung and others. It has already returned nearly $1.5 million
in questionable donations. And one Democrat familiar with
that review said today that the party is likely to return an
additional $1 million, either because it could not verify the
sources of the money or because the donations seemed
improper.
Mr. Chung and Ms. Kanchanalak have declined to speak to
reporters, and their lawyers could not be reached for comment
last night.
Mr. Chung, an engineer who was born in Taiwan and is now an
American citizen, has captured attention for his intense
efforts to exploit his donations for commercial gains. Since
mid-1994, he has visited the White House at least 50 times,
sometimes bringing business associates from China and other
Far East places that he wanted to impress.
Mr. Chung took two Chinese beer executives to a White House
Christmas party in 1994, where they were photographed with
President and Mrs. Clinton. The beer company later placed the
photo in a glass display case promoting its product in one of
Beijing's main shopping districts.
It could not be learned exactly what records were sought in
the subpoenas issued today. But Justice Department officials
have said they were examining whether any foreign money might
have been improperly funneled into Democratic Party coffers.
Mr. Chung's lawyer, Brian A. Sun, told The New York Times
last week that his client, who runs a fax-services business
in Torrance, Calif., had received more than $3 million from
investors over the last three years. Mr. Sun estimated that
nearly $1.5 million of that total had come from foreigners as
Mr. Chung expanded into consulting for foreign businessmen
who wanted to make deals in the United States.
Mr. Sun said that Mr. Chung had done nothing wrong, and
that Mr. Chung's foreign partners were not involved in his
decisions to make the contributions. But it also is likely
that the Justice Department investigators would want to trace
the flow of money into Mr. Chung's accounts.
California records show that Mr. Chung incorporated seven
companies with investors from China and Hong Kong over the
last two years, and Federal election records show that
several of his largest political donations were made at about
the same time as the incorporations.
Mr. Chung also donated $50,000 to the Democratic Party in
March 1995, shortly after he took high-level Chinese
businessmen to watch Mr. Clinton give a radio address. Aides
to Donald L. Fowler, then the national chairman of the
Democratic Party, have said they arranged that White House
visit at Mr. Chung's request. Mr. Fowler has said he was not
personally involved and did not solicit a donation from Mr.
Chung in return for the favor.
Ms. Kanchanalak, a Thai citizen who lives in Virginia, got
help from John Huang, the former Democratic fund-raiser who
is at the center of the Federal inquiry, in setting up the
United States Thai-Business Council.
Government officials said the Justice Department two weeks
ago subpoenaed records from the Export-Import Bank concerning
Ms. Kanchanalak's efforts to help Thai investors win
financing to build 105 Blockbuster video stores in Thailand.
Ms. Kanchanalak has denied doing anything wrong.
____
[From the Wall Street Journal, Feb. 27, 1997]
FBI Inquiry on Funding Is Widening
(By David Rogers and Edward Felsenthal)
Washington.--A Federal Bureau of Investigation inquiry into
foreign influence in Democratic fund raising could lead
Director Louis Freeh to ask Attorney General Janet Reno to
seek appointment of an independent counsel for the case.
Mr. Freeh briefed senior senators yesterday on the
investigation, and officials later described the continuing
FBI investigation as larger than previously reported and
carried on outside the purview of the White House.
Serious evidence has been found of China's potential
involvement in steering money to Democrats. That involvement
appears to have been driven largely by business interests
seeking influence and following the model of rival Taiwanese.
Pauline Kanchanalak, a major Democratic fundraiser who has
represented Thai companies with large investments in China,
has emerged as a key figure in the probe, officials said.
While refusing to comment on details of the briefing, senate
Intelligence Committee Chairman Richard Shelby said the
evidence of foreign influence was ``deep and disturbing.''
``We need an independent counsel if we ever needed an
independent counsel,'' the Alabama Republican said.
The Justice Department last night painted a less dire
picture of Mr. Freeh's briefing, and Attorney General Reno
continued to say that career prosecutors in the department
can handle the fund investigation. Neither Sen. Shelby nor
other officials familiar with the briefing were prepared to
say what Mr. Freeh's final recommendations would be. But
lawmakers of both parties said the investigation is regarded
very seriously by the director, who has committed substantial
resources to it.
FBI spokesman John Collingwood last night would say only
that it is ``a matter that is entirely within the purview of
the attorney general.''
Ms. Kanchanalak's role is important both because of her
foreign clients and past access to National Security Council
staff at the White House. As such, her prominence could pose
additional problems for former NSC adviser Anthony Lake,
whose nomination to direct the Central Intelligence Agency
already faces opposition in the Senate. Ms. Kanchanalak
couldn't be reached for comment.
Critics of the Clinton administration have recently stepped
up their demands for an independent counsel, particularly
with the disclosure this week that the president himself
played a role in encouraging the use of the White House as a
fundraising vehicle. Federal law requires the attorney
general to ask the federal appeals court here to appoint an
independent counsel when there are ``credible'' and
``specific'' allegations of criminal wrongdoing against an
official. The law explicitly applies to the president,
cabinet members and some campaign officials; the attorney
general has the discretion to apply it to others as well.
Some say that threshold has clearly been crossed. ``I
thought [Ms. Reno] had gotten past the point where she didn't
have much choice under the statute some time ago,'' said
Theodore Olson, a Washington lawyer who was assistant
attorney general during the Reagan administration. Several
lawmakers--including Senate Majority Leader Trent Lott of
Mississippi, GOP Sen. John McCain of Arizona and Democratic
Sen. Daniel Patrick Moynihan of New York--have called for an
independent counsel.
Ms. Reno said yesterday in a hearing before a House
committee that she still hasn't seen enough evidence to
justify such an appointment. She added that she is still open
to the idea if sufficient evidence emerges ``as we proceed
with the very comprehensive investigation that we now have
under way.'' Ms. Reno has appointed a task force of career
prosecutors to monitor the matter and to alert her if they
conclude an independent counsel is necessary.
Lawyers agree that the independent-counsel law is fairly
straightforward, requiring only a barebones determination by
the attorney general of whether further investigation is
necessary. But the question of what makes up a ``credible''
allegation is obviously a judgment call. In addition, given
the complexities of the campaign-finance laws, it isn't
always clear what constitutes a violation.
Some lawyers believe that the attorney general should err
on the side of naming an independent counsel and leave it to
the appointee to decipher the law.
But Justice Department officials maintain that Ms. Reno has
very little discretion. People think that ``whenever there's
a mess, there's [supposed to be] an independent counsel,''
said a spokesman for Ms. Reno. ``Congress could have written
the law that way, but they didn't.''
At a news conference yesterday, President Clinton
reiterated his position that the decision was up to Ms. Reno.
``It's a legal decision the attorney general has to make,''
he said. ``I'm not going to comment.''
Mr. SHELBY. Mr. President, these allegations about Ms. Kanchanalak,
coupled with her interactions with the National Security Council, are
very troubling to me and other members of the Committee. We must fully
understand what part, if any, Mr. Lake played.
And while Mr. Lake has said that the NSC involvement with the
individuals in question was ``from a foreign policy rather than a
domestic political point of view,'' the material he provided to the
committee gives some indications otherwise.
For example, Mr. Lake advised the President against a meeting with
Chinese nationals set up by Charlie (Tree) Trie, a major DNC
fundraiser, based on the recommendation of his staff that it not take
place for political reasons.
And when asked about providing photos of the President with Chinese
nationals identified as major DNC contributors, a member of Mr. Lake's
staff commented on balancing foreign policy considerations against
domestic politics. He did not seem to be bothered by the fact that
Chinese nationals were identified as major DNC contributors. Clearly,
this is an indication of possible illegal activity.
Before questioning Mr. Lake about his leadership in these areas, we
intend to question his staff further as to the role the NSC played in
interactions with and vetting of these DNC contributors and foreign
nationals.
Senator Kerrey, vice chairman of the Intelligence Committee, and I
have requested that the NSC staff be available for the interviews on
the record prior to the formal hearings, which will begin, as I have
said earlier, next Tuesday. We reserve the right to call NSC staff
members to testify under oath, if we deem that in order.
[[Page S1978]]
The use of intelligence is another area.
One of the key responsibilities of the Director of Central
Intelligence is to provide unbiased intelligence to the President and
to the Congress. Thus, it is very critical that we examine Mr. Lake's
record as a consumer of such intelligence.
How did he translate intelligence into policy at the NSC? Did he
ignore intelligence estimates, spin them to fit administration policy,
or raise the standards of evidence?
We have concluded our investigation surrounding the administration's
use of intelligence in shaping policy toward China, and there are some
serious inconsistencies. We are prepared to discuss these with Mr. Lake
in the closed session of the committee.
Mr. President, given the allegations mentioned in every newspaper
about Chinese involvement in DNC fundraising, this is an area for some
serious questioning about potential influences on policy, and it should
be.
For example, there are still documents we wish to review as to the
role intelligence played in our policy toward the Government of Haiti.
The administration has consistently refused to transmit this
information to Congress. Senator Kerrey and I have requested these
documents, and we are still awaiting the National Security Council's
response.
We are also reviewing United States knowledge and assessment of
recent events in Iraq and their impact on our policy there and how Mr.
Lake used this knowledge in formulating that policy. We are pursuing
similar questions in areas relating to Cuba, Somalia, Bosnia, and
Pakistan.
Ethics violations is another area we are pursuing.
While the Justice Department has reached a settlement with Mr. Lake
regarding his failure to sell energy stocks that were deemed to create
a conflict of interest for him, resulting in a payment of a $5,000 fine
by Mr. Lake, the Committee on Intelligence has been investigating this
matter further.
Although Mr. Lake claims that the failure to sell stocks was a simple
oversight, Justice Department investigators interviewed by the
committee documented 14 occasions over a 2-year period on which Mr.
Lake was reminded that he still owned the stocks. It was only after a
White House ethics officer discovered the stocks on his financial
disclosure form for a third time that Mr. Lake did divest himself of
the investments. Thus, a key question is whether this violation
represents financial mismanagement on the part of Mr. Lake or a
complete disregard for the seriousness of the ethics standards applied
to all Federal employees.
Additionally, what example does this set for the intelligence
community professionals who must be held to the highest standards of
personal conduct?
The Intelligence Committee is also investigating the thoroughness of
the Justice Department's investigation into Mr. Lake's stocks,
particularly those energy-related stocks which created a conflict of
interest and subsequent fine. Given that Mr. Lake garnered a profit of
over $25,000 on these investments, I have trouble, as other members of
the committee do, understanding the Justice Department's arbitrary fine
of $5,000, which is the maximum allowed, I understand, for a potential
misdemeanor offense.
If the case, on the other hand, had been referred to the Justice
Department's civil division, a much greater fine of up to $50,000 per
offense could have been imposed. Why wasn't this course taken? We do
not know, but we will pursue it.
Iran-Bosnia and the ``no instructions'' policy.
A key criterion for a Director of Central Intelligence is the extent
to which he or she can gain the confidence of the Congress in keeping
Members fully and currently informed of intelligence community actions.
Mr. Lake's role in the execution of the secret ``no instructions''
policy toward Croatia allowing Iranian arms to flow into Bosnia and the
decision, Mr. President, not to inform Congress of this action has
called into question Mr. Lake's ability to be forthright with the
Congress.
The distinguished former chairman of the Intelligence Committee, my
colleague and an expert in the area, Senator Specter, has raised
serious questions regarding this matter which we intend to explore
fully during our hearings.
While Mr. Lake has admitted that it was wrong not to inform Congress
of the ``no instructions'' policy, there remains a number of
inconsistencies in testimony before both Houses of Congress as to the
extent of the policy decision and its implementation. The Intelligence
Committee is working with other congressional committees to review
pertinent testimony and decide on an appropriate panel of witnesses to
pursue this matter during Mr. Lake's confirmation hearings. The Senate
confirmation hearings will represent the first time that Mr. Lake will
testify under oath on his role in the development and execution of this
policy.
As to the FBI background investigation, there has been no resolution
regarding requests made by me and a large number of my colleagues to
review Mr. Lake's complete FBI background file. Negotiations between
White House Counsel Charles Ruff, Senator Kerrey, and I are continuing.
A significant number of my colleagues have written the distinguished
majority leader stating that they need to review the complete
background investigation before they would be prepared to vote on this
nomination. Our thorough review of Mr. Lake's background investigation,
I believe, is key to a fundamental understanding of Mr. Lake's
character and integrity, as it would be for anyone else.
Finally, the committee is reviewing information provided by Mr. Lake
in response to questions propounded by the committee earlier. We
require some clarifications to Mr. Lake's answers, and therefore
additional questions have been put forward that must be addressed.
There are some areas where we are requesting additional supporting
documentation to Mr. Lake's answers, such as his financial disclosures
and issues associated with a potential conflict of interest, and we
will request for the committee a review of material that was redacted
for various reasons.
I thank you, Mr. President, for this opportunity to provide the
Senate with a status of the Lake confirmation process and an
opportunity for me to lay out some of the concerns that I and some of
my colleagues have about this nomination. We intend to work through
each of these issues in a fair and a thorough manner and look forward
to questioning Mr. Lake and others beginning next Tuesday, March 11.
____________________