[Congressional Record Volume 143, Number 140 (Thursday, October 9, 1997)]
[House]
[Pages H8817-H8825]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    A SCANDAL-RIDDEN ADMINISTRATION

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from Florida [Mr. Scarborough] is 
recognized for 30 minutes as the designee of the majority leader.
  The SPEAKER pro tempore [Mr. Thune]. Under the Speaker's announced 
policy of January 7, 1997, the gentleman from Florida [Mr. Scarborough] 
is recognized for 45 minutes as the designee of the majority leader.
  Mr. SCARBOROUGH. Mr. Speaker, I certainly appreciate the gentleman 
yielding me some time to discuss some very important issues regarding 
trade, and we certainly did find some agreement on that issue, and we 
have found agreement on several other issues.
  One area, though, where obviously I have been in disagreement with 
several friends on the other side of the aisle and that many of us have 
found disagreement with many of the other Members on the other side of 
the aisle has to do with some of the horrifying, more horrifying 
aspects of the current campaign fund-raising scandal that is gripping 
the White House and actually forcing them to engage in a bunker 
mentality that is really bringing about some pretty devastating 
results, and I would say could possibly be causing a constitutional 
crisis.

                              {time}  1930

  I say that because this scandal reaches far beyond the walls of the 
White House. We found over the past several years, mostly from very 
astute reporting from The Washington Post and from The New York Times 
and from other media outlets, print media outlets that had to 
investigate this because, regrettably, the Justice Department has not 
been doing the job, we found some very, very shady activities going on 
between the White House, the Democratic National Committee, the CIA, 
the FBI, the National Security Council, the INS, possibly the IRS, the 
Office of the Presidency, the Office of the Vice Presidency, the 
Commerce Department, the Energy Department, and just about every other 
administrative agency across Washington, DC.
  Mr. Speaker, what is causing a constitutional crisis is the Justice 
Department's apparent willingness to sacrifice its role as a fair and 
impartial observer of scandals that are swirling around the White 
House. In fact, in 1993, a more independent Janet Reno, the Attorney 
General, talked about the inherent conflict between the Attorney 
General and the President, saying that it was very hard for these two 
people to work together in investigations.
  Maybe that is why The New York Times wrote just last week that Bill 
Clinton and Janet Reno could no longer be trusted to investigate these 
matters. Now we find the President's past chief counsel coming to the 
Senate this past week talking about these coffees. Now, I think most 
Americans have heard about the infamous White House coffees where the 
President would bring in donors, they would have a coffee, then they 
would sort of get shaken down, they would get the finances, and there 
would be a fundraiser on Federal property, then they would leave and 
give the checks to the DNC.
  Well, it is very obvious that these were fundraisers. And, in fact, I 
hardly think there is a reputable member of the mass media or this 
Chamber that could tell my colleagues with a straight face that they 
were not fundraisers. But, unfortunately, the White House continues to 
underestimate the intelligence of the American people.
  Mr. Speaker, a headline in yesterday's newspaper talks about Harold 
Ickes. ``Ickes insists coffees were legal,'' says the headline, 
``testifies that the sessions were not fundraisers.'' The article says 
the following, ``Harold Ickes, the former White House aide who ran the 
Clinton-Gore reelection campaign, deflected questions from a Senate 
panel yesterday and insisted that the slew of Presidential coffees that 
raised more than $26 million were not fundraisers. `There was no 
admission charged,' said Ickes. `There were people who came to the 
coffees who never gave a dime.' ''
  Mr. Speaker, this strains all credibility. We know that $26 million 
was raised at those coffees. We also know that there is a Democratic 
Senator who, after investigating this, said that, yes, we Democrats 
have to admit that at least 103 of those coffees were fund-raisers. 
Over 100 of the coffees were fundraisers. A Democratic Senator admits 
on the investigating panel, and yet Mr. Ickes claims with a straight 
face that these were not fundraisers.
  There was a memo to the President of the United States talking about 
these fundraisers, explaining how they needed to have fund-raisers, 
more coffees, explaining how they needed to sell access to the Lincoln 
bedroom through fundraisers. Mr. Speaker, despite that, despite the 
fact that the President signed off on those memos approving fundraising 
coffees and fundraising sleepovers at the White House, they still come 
to us with a straight face and say they were not fund-raisers. How 
stupid do they think the American people are?
  I think most telling though, and I am going to ask the gentleman from 
Indiana [Mr. Souder] for some clarification here, perhaps most telling 
is the fact that we had a White House that obstructed justice, in my 
opinion, and in the opinion of many other people, by refusing to turn 
over tapes that they had in their possession for 7 months.
  Mr. Speaker, it is a tape scandal, and it smells an awful lot like 
the Watergate tape scandal of 20 years ago. But it is a tape scandal 
where they were asked to turn over the evidence, they claimed they did 
not have the evidence, just like the First Lady claimed she did not 
have billing records on

[[Page H8818]]

Whitewater issues and then they turned up mysteriously 2 years later.
  So they did a computer check to try to find out whether they had 
these tapes or not. When they did the computer check, they checked 
under ``coffees'' and what did they find? 40 hits? 43?
  Mr. SOUDER. Mr. Speaker, if the gentleman would yield, I think that 
they initially found 44, and now they found 140 allegedly under 
``Democratic fundraisers.''
  Mr. SCARBOROUGH. Mr. Speaker, reclaiming my time, but then The 
Washington Post editorializes, when they redid their search and typed 
in ``Democratic fundraisers,'' they came up with over 100 hits and over 
100 tapes. So we get these tapes turned over, and what do we find 
magically? That the tape with John Huang, a central figure in this 
investigation, mysteriously has the audio erased.
  Mr. Speaker, I think maybe they had Richard Nixon's secretary who 
erased 18 minutes or so of tape, possibly, 20 or 30 years ago working 
for the White House, because now we find that we have an entire coffee 
erased, and yet they come to us with a straight face and they say that 
these were not fund-raisers.
  It is absolutely unbelievable. So unbelievable is the charge that The 
Washington Post wrote an editorial earlier this week called, ``Giving 
faith a bad name.'' I have got to tell my colleagues, this is what is 
disturbing to me, a conclusion reached by The Washington Post, because 
as a student of history, as somebody who cites Harry Truman and Bobby 
Kennedy as two of my biggest heroes, I do not think it is in this 
country's best interest for us to have a failed presidency. It is not 
in my interest to have a failed presidency. It is not in anybody's 
interest in this Chamber to have a failed presidency.
  I think even more dangerous for us is if we allow the entire system 
of the United States Federal Government to fail. If we allow this 
constitutional crisis to come and go with the President, the Vice 
President, and other Members of the administration being able to do the 
bait and switch on the American people, being able to engage in cover-
ups, being able to engage in illegal activity and not at least be 
called on it.
  This is what The Washington Post said earlier this week: ``The 
attitude of the White House towards telling the truth whenever it is in 
trouble is the same: Don't tell it.''
  It is The Washington Post saying the White House's policy on telling 
the truth if it gets uncomfortable is to simply lie. That is not a 
lesson that I want my two boys to learn when reading American history.
  The Post goes on to say, ``Don't tell the truth or tell only as much 
of the truth as you absolutely must, only if it helps.''
  They go through a laundry list about the White House firing Travel 
Office officials in the first term, then they tried to get, and this is 
a direct quote, ``they tried to get the FBI to sign off on a press 
release suggesting that the firings had been a result of suspected 
wrongdoing.'' And why were they doing this? They were doing this 
because the President had a cousin and they had some friends in 
Hollywood and Arkansas that wanted to get the business. So when they 
got caught trying to divert business over to their buddies in Arkansas 
and Hollywood and to the President's cousin, they then pick up the 
phone, call the FBI, and try to pressure the FBI into saying these 
people were fired for wrongdoing. That is unbelievably shameful.

  Yet, Mr. Speaker, I have yet to hear a Democrat in this House condemn 
that behavior. I have yet to hear a Democrat in this House once raise 
their voice in concern over the fact that later on this administration 
used Craig Livingstone to illegally seize 900 FBI files of their 
political opponents. I remember Chuck Colson being sent to jail two 
decades ago because he misused one FBI file. This administration 
illegally seizes and misuses 900 FBI files of average American citizens 
for their own political purposes, it was the President's political hit 
list, and yet nobody, not one person on the Democratic side raises 
their voice in concern.
  The Washington Post continues: ``It's still not clear who may have 
taken what and at who's orders out of the Office of Deputy White House 
Counsel Vince Foster after he committed suicide and while the police 
were still investigating it in 1993. Whitewater prosecutors want some 
of Mrs. Clinton's billing records having to do with her work at the 
Rose Law Firm before coming to Washington. They cannot be found,'' says 
The Washington Post. ``Then miraculously turn up one day in a box on a 
table in the White House. Webster Hubbell is driven to resign as 
Associate Attorney General and before he is being sent to jail, he is 
being pressed by prosecutors to tell what he may know regarding the 
looting of a savings and loan at the heart of the Whitewater affair. 
Lucrative jobs are found for him, which prosecutors think may have been 
to keep him quiet.''
  The Washington Post says, quote, ``First the White House says that no 
one there, including the President, even knew about the jobs. But then 
it turns out, yes, they knew, but, quote, `The key thing is that with 
regard to the main job, neither the President nor his top aides had,' 
quote, `any knowledge of Mr. Hubbell's retention prior to his being 
retained.' ''.
  As to the campaign stuff, The Washington Post continues, this week, 
``Their first reaction to the name of John Huang is to suggest they 
have never heard of him. That was before it turned out that he had 
visited the White House 78 times in 15 months.''
  The Washington Post continues. ``Vice President Gore first said he 
thought the purpose of the fund-raiser he attended in a Buddhist Temple 
in California in 1996 was community outreach. When his recollection was 
refreshed by documents to the contrary'' says The Washington Post, ``he 
authorized an aide to say he had known the event was, quote, `finance-
related' and should have said the purpose was, quote, `political 
outreach.' Later another aide said the purpose was donor maintenance.''
  And then The Washington Post asks the question, ``Who thinks of these 
things?'' And the Post concludes, ``and they go on and on. They keep 
asking,'' the White House, ``indignantly, even a little petulantly over 
there where they are not believed as to why they keep putting out their 
successive version of the story. Can anyone really believe they do not 
know the answer and can anyone believe that this is on the up and up?''
  Mr. Speaker, I have got to tell my colleagues when The Washington 
Post is writing things like this, when they write the attitude of the 
White House toward the truth is whenever it is in trouble, it is the 
same, ``Don't tell it,'' when The New York Times editorializes last 
week that you cannot trust the President or the Attorney General to 
investigate some of the most serious campaign-related charges in this 
republic's history, I have got to tell my colleagues, it causes me 
grave, grave concerns.
  If we read through this and read what the Post says and read what the 
Times says and then say why is there not a single Democrat standing up 
other than Joe Lieberman in the Senate, and saying that they have a 
concern? Is it because that maybe all of them are illegally profiting 
from this?
  I mean, when the New York Times on Wednesday September 10, 1997, 
writes in its headline, ``Democrats Skim $2 Million to Aid Candidates, 
Records Show,'' this is very serious. Even their own donors are 
concerned. Even good Democrats across the country who have contributed 
to this White House and to these Members in Congress are being set up. 
One was quoted in the New York Times as saying the following: ``Whoever 
did this should go it jail. This is illegal, and they knew it.''

                              {time}  1945

  This is illegal and they knew it. The Times said that was a 
Democratic Party contributor who requested that their name was not to 
be used.
  We go on and we find out on the same day, Wednesday, September 10, 
that the chairman of the Democratic National Committee admitted 
arranging access for donors. In fact, the DNC chairman admitted that he 
arranged for an international fugitive to get into the White House.
  Now, how did he do it? The first thing he did was he had a meeting 
with the international fugitive. The international fugitive said, ``I 
have this business deal, I want to get it through the White House.'' 
The international

[[Page H8819]]

fugitive goes to the DNC chairman, says, ``Can you get me in there?''
  The DNC chairman writes on his notes of this meeting that he is 
having with this international fugitive, ``Go to CIA.'' It is that 
clear. He said, ``Call CIA Bob.''
  The National Security Council in the meantime had an aide that said 
we should not be letting an international fugitive into the White House 
to meet with the President. But then the DNC chairman calls the 
National Security Council and says, ``Go ahead and let him in. We will 
have the CIA call you up and tell you that everything is okay.''
  In fact the White House aide testified that she was being pressured 
to let this international fugitive in. She also cited Energy Department 
officials and the CIA during her testimony before the Senate hearing. 
She was quoted as saying, ``I was shocked. I said, what the hell is 
going on? Why are you guys working with Fowler?'' Who is the Democratic 
National Chairman.
  Well, when we finally had the international fugitive come and testify 
before the committee, he admitted he got access by giving the Democrats 
money. And when he was asked if he had any concerns about it, he gave 
them $300,000, he said, ``Yes, I did have a concern. I think next time 
I will give $600,000.''
  So what did the New York Times say about the White House using the 
CIA, using the NSC, using the Energy Department and using the 
Democratic Chairman to get an international fugitive an audience with 
the President of the United States so he could give them $300,000? The 
New York Times editorialized that the international fugitive actually 
was affirming that in the shadowy regions of the international business 
world it was believed accurately that during 1996 dubious entrepreneurs 
could buy White House audiences, particularly if they did not quibble 
about the cost of the ticket.
  The Times went on to say, that so many high level people even took 
the party's role into consideration is one of the most shocking lapses 
of judgment. That is the New York Times, usually a friend of Democratic 
White Houses.
  Then we go on talking about the Democratic National Chairman's 
selective memory. Remember, this guy had sat down with an international 
fugitive. The international fugitive wanted access to the White House 
but the National Security Council would not let the international 
fugitive into the White House. So the international fugitive goes to 
the Democratic Chairman, ``I am an international fugitive. I need to 
get into the White House. I got a friend at the CIA. Can you give Bob a 
call?''
  So the DNC chairman says, ``Sure.'' Chairman of the Democratic 
National Committee, I guess he had contacts. He said, ``I will call the 
FBI or the CIA.'' So he calls the CIA. The CIA lets the international 
fugitive into the White House. They circumvent the NSC. International 
fugitive goes in.
  And then when he is asked by the Senators what happened, he says, ``I 
have no recollection.'' Now, that is going around in Washington these 
days. I think if you mix water from Washington, normal tap water from 
Washington with a subpoena regarding the White House, it is an instant 
formula for amnesia.
  And this is what the New York Times said about the DNC chairman who 
used improper contacts to get international fugitives into the White 
House: ``Yesterday's testimony yet again punctuates the fiction that 
abuses that occurred were solely the responsibility of the Democratic 
Party and not this White House.''
  I will say one more thing, and then I will yield to the gentleman 
from Indiana, who has some great points about this. This is what the 
Democratic National Chairman wrote on a paper he had during a meeting 
with the international fugitive. He said, ``Go to CIA.''
  Of course, the caption here says, ``Democratic National Committee 
Chairman Donald Fowler handwritten notes reminding himself to use the 
CIA to intervene on behalf of an international fugitive for Democratic 
Party fundraising.'' That is not New York Times language. That is my 
language on what ``go to CIA'' was all about. Go to CIA. Yet despite 
the fact he wrote this down, ``go to CIA,'' he claims he did not 
remember.
  Let me tell you something, Mr. Speaker, I have got to say, if I am 
the chairman of the largest political party in the United States of 
America and I am approached by an international fugitive, first of all, 
I stop right there. Say, ``Sorry, bud, we are not dealing in 
international fugitives this election. You can try another party.''
  But let us just say that we get past that. An international fugitive 
says, ``Okay, I have got this problem. So maybe I embezzled $3 billion 
from a Lebanese bank, but I have to get in to see the President because 
I have this pipeline deal and I think it is going to make me some good 
money. But I have to get in to see the President. Can you get me in to 
see the President?''
  If I were the chairman I would say, ``What is the problem? Why can 
you not get in to see the President?'' Then if he said to me, ``Because 
the National Security Council committee staff member told me I could 
not get in because I am an international fugitive,'' I would end the 
conversation there. I have got nothing to say. Go on your way.
  But he went on anyway. He said,
``I got this friend at the CIA called Bob.'' And so he wrote down, ``Go 
to CIA Bob,'' the Democratic Chairman did. And he called CIA Bob and he 
said, ``Bob, can you help this international fugitive get into the 
White House? He has got 300,000 to give.'' Bob says, ``Sure, no 
problem.''
  So Bob calls the National Security Council and tells this do-good 
staffer that she really needs to let this international fugitive in to 
talk to the White House. And just for good measure they call an Energy 
Department official to lean on this do-good staffer who thinks, I guess 
in 1996 this was a radical thought, but who thinks that there is 
something improper about allowing an international fugitive into the 
White House to give $300,000 to lobby on another shady international 
deal.
  Yet despite all of this, we have the chairman of Democratic National 
Committee going before the Senate panel and saying, ``I have no 
recollection.''
  I think I would remember if I wrote down ``go to CIA on behalf of an 
international fugitive.'' I think most people in my district would 
remember that. I can remember the last parking ticket I got. I can 
remember the last speeding ticket I got.
  This has nothing to do, my life is very boring. I have never had to 
try to get an international fugitive into the White House by 
circumventing the NSC or the using the CIA or the Energy Department. 
Maybe he lives in such a wheeler dealer international finance world 
that maybe this is all very boring and bland to him. But if it is, that 
is very disturbing to me.
  Mr. Speaker, I yield to the gentleman from Indiana [Mr. Souder]. 
Maybe this happens in Indiana. It does not happen in Florida.
  Mr. SOUDER. You are jumping to the conclusion that that is the famous 
CIA. It could be a local agency. It could be a grocery store with those 
initials or something.
  Mr. SCARBOROUGH. Commercial International Ant collectors.
  Mr. SOUDER. I had a couple of points that I wanted to make. I hope we 
can take a little bit of time tonight to review our first day of 
hearings in our Committee on Government Reform and Oversight. But one 
of the things that you have already referred to eloquently a few times 
is this problem of the videotapes, in particular the missing audio on 
the most critical tape thus far that we know.

  I wanted to read a little bit from an opening statement of the 
chairman of the Subcommittee on National Security, International 
Affairs, and Criminal Justice, when he was talking about the White 
House communications agency better known as WHCA. A clear picture is 
emerging and it has four distinct components: the utter lack of 
internal controls at WHCA, the problem of WHCA mission creep, the 
absence of accountability, and the disturbing pattern of White House 
obstructionism. Because it is most disturbing, I want to start with 
White House obstructionism we have encountered in this investigation.
  Now, the reason I wanted to open with that, because I am vice 
chairman of this subcommittee, at the time this was Congressman Bill 
Zeliff's opening remarks. This hearing was over a year ago. The agency 
we are talking about,

[[Page H8820]]

WHCA, one of things we were raising a concern about, little did we know 
what we were up against here and why, was the White House Audiovisual 
Unit, with 111 personnel, which provides sound and light systems, 
lecterns, flags, seals and teleprompter support for White House media 
events. It also makes audio and video recordings of all presidential 
events for the national archives.
  Now, we thought we were dealing, we had no idea that there were tapes 
of coffees marked supposedly as democratic fund-raisers in their own 
system. But these were the statements written a long time ago, long 
before we knew about these particular tapes.
  Beginning in March 1994, the White House stubbornly opposed an audit 
as a potential breach of national security. When Congress pointed out 
that most of the information involved was not classified in any way, to 
my dismay, now that we have an audit report and are conducting 
hearings, the White House again is doing its best to obstruct and 
hinder these hearings by withholding witnesses and by altering 
testimony.
  We had the person they sent change his testimony several times. The 
GAO did a study that said that one of the problems was a separation of 
the accountability of this division, which is funded by the Department 
of Defense, and control, which was under the White House, to the point 
of writing and editing the statements of the Defense people we had.
  It is time for our subcommittee to have investigations where we call 
in the Defense personnel and say, where are the tapes? The tapes that 
were played on C-SPAN were clearly edited. They clearly were only short 
parts, key audio is missing.
  Mr. SCARBOROUGH. If the gentleman would just say, what does it say on 
the tape?
  Mr. SOUDER. ``Sorry, audio missing.'' In other words, even in their 
editing they showed part of a tape with John Huang, who in this case is 
the person who allegedly made the statements about fund-raising there, 
and miraculously, like the missing Rosemary Woods section in the 
Watergate tapes, it is gone.
  We need to have immediate investigations into what has happened to 
these tapes because my impression, although we had a different 
impression at the time, was that what we were looking into, which was 
some purchases that were questionable and procedures in the WHCA 
office, that the reason the administration may have been stonewalling 
us long before this committee, the full Committee on Government Reform 
and Oversight ever looked at it, is they knew these tapes were in there 
and they have been stonewalling us long before March 4. They were 
stonewalling us way back to June.
  One of the things I also wanted to point out tonight is that one of 
the concerns that we have had is what are the linkages. As we talk 
about today's first hearing, we are going to be dealing with little 
pieces here and there that are hard to understand in the big picture.
  The big picture really has two parts. One is, has foreign money 
penetrated our system and what did we lose because that foreign money 
penetrated? And secondly, the other party keeps throwing up things, 
``Dole did this.'' If Dole was President, first off, if anybody 
violated the law, they should be found guilty, as is the case with some 
people who contributed to the Dole campaign. If Dole was President, we 
would be asking questions of him. But nobody is even saying there is a 
fraction of the amount of money that dealt with the Dole campaign that 
is dealing with others.
  When we looked, as I have pointed out, in the past at other scandals 
in American history, you do not say, this one or this one could have 
been, you look at what is in front of you.
  We have a second problem, not just the foreign money but what else is 
for sale in our government. I want to give you the example of one case 
that I would like to insert into the Record, the full article. It has 
to do with the man who was recently nominated for Ambassador to 
Singapore.
  He is a friend of Mark Middleton, who certainly has been involved in 
this and called, because Mark Middleton has been tied to the Indonesian 
Riady family who have given hundreds of thousands of dollars of 
questionable contributions to Democrats; to Charlie Trie, an Arkansas 
restauranteur suspected of funneling campaign money from China; and to 
disgraced former associate attorney and Clinton friend Webster Hubbel. 
He had been in the White House prior to this. Then post-White House he 
went on the payroll of Steve Green. Steve Green has been a long time 
friend of the President of the United States. He has been a fund-
raising star for him, worked for Mack McLarty, a boyhood friend and 
right hand man.
  He has given lots of funds to the Democratic Party, $11,000 at one 
point and others. He has slept in the Lincoln bedroom. He and his wife 
spent the night of their 28th anniversary in the Lincoln bedroom. If 
you are a friend of the President and you have given legal money, I am 
not complaining that you stayed in the Lincoln bedroom. We are a little 
concerned that there seems to be some tit-for-tat there, but okay, that 
is going to happen currently.
  But it is really interesting because this man has several times asked 
for favors, which included Samsonite luggage, of which his conglomerate 
is a primary owner. He flew on three of the late Commerce Secretary Ron 
Brown's overseas trade missions. He also happened to sit with Ron Brown 
at the swearing in of the President last time. Furthermore, just 
recently, just recently the company that he heads, actually it is not 
just recently, it was about a year ago, they announced that Samsonite, 
which has an 80 percent controlling interest in Luggage Distributors of 
Singapore, has decided to expand into Asia and that Singapore is now 
going to be their launching point for expanding Samsonite.
  I want to reestablish this point because this stuff gets confusing, 
but it is here and this is the type of thing we are looking for. I am 
not saying there is guilt here, but I am saying this is why time after 
time after time people are becoming suspicious. This man is a friend of 
Bill's. He stays in the Lincoln bedroom on his anniversary night. He 
gives $11,000 to the committee. He flies with Ron Brown overseas on 
several missions. He sits with Ron Brown at the inauguration. Then his 
company that he is working with targets Singapore and moves into 
Singapore. Now he is nominated for Ambassador to Singapore.
  What do we have for sale in our country? It is one thing to say you 
gave to the President so we are going to give you an ambassadorship. We 
have had that problem for a long time. It would be nice if we could 
clean up our government that way. But usually we do not give 
ambassadorships to people who have direct business interests in the 
country they are about to head to, and what we have done is seen this 
system, which was marginal in the beginning, and I, for one, favor 
reform of the system, taken to a degree that we have never seen before. 
It is shocking.
  Mr. SCARBOROUGH. It is shocking that we now have a White House that 
sells access not only to the Lincoln bedroom, not only fund-raises on 
Federal property, which is illegal, but allows business people who are 
trying to muscle in to a new market to get ambassadorships.
  The thing is, I have heard about this moral equivalency that 
everybody does. That is the most cynical, cynical tack I think I have 
heard. Everybody does not do it. The Bush administration never sold 
access like this. The Reagan administration never sold access like 
this. You see piles and piles and piles of newspapers, independent 
newspapers, and the New York Times, the Washington Post, talking about 
unprecedented financial campaign abuses. Yet it is just their tack.
  They talk about how we are somehow partisan. Yesterday in the 
hearing, the opening day of the hearing, they said we were evil, that 
it was a witch-hunt, that it was a fishing expedition, the same thing 
they were saying when they got frantic when we found out that they had 
illegally seized 900 FBI files of the President's enemy list about a 
year or so ago.
  Another thing, they talked, yesterday, they are doing anything they 
can to change the subject. Yesterday in the opening testimony we 
actually heard that because we were investigating the President in that 
one committee, that children were starving and that children were 
freezing to death and going

[[Page H8821]]

homeless, because we wanted to do what the New York Times, the 
Washington Post, and every other reputable media outlet has said we 
should do.

                              {time}  2002

  One other thing. I started out talking about how I thought Ickes 
played us all for fools. I guess they think anybody between flyover 
space between New York, D.C. and L.A. are somehow hayseed fools, and a 
lot of them really do believe that, by the way. They are talking about 
how it is legal to raise money in the White House; that the Republicans 
are making something out of nothing and that the media is making 
something out of nothing.
  I wanted to read to my colleague what was in Investor's Business 
Daily yesterday. This is a quote from the President's first counsel, 
Bernie Nussbaum, not a Republican loving man. Very partisan. This is 
what he wrote to the White House. And this was on July 12, 1993, well 
before all this mess started. So they were on notice. This was from 
Bernard Nussbaum to all the White House officials. ``A number of 
criminal statutes prohibits the use of Federal programs, property or 
employment for political purposes.''
  Nussbaum went on to explain, ``This means that fund-raising events 
may not be held in the White House; that no fund-raising calls or mail 
may emanate from the White House or any other Federal buildings.''
  Nussbaum went on to explain to the President and his people. ``No 
campaign contributions may be accepted at the White House or in any 
other Federal building.''
  Maggie Williams did that. We find out now the President, the Vice 
President, the First Lady made official phone calls, made campaign 
phone calls from the White House.
  And he concluded by saying, ``White House telephones must not be used 
even locally for regular committee activities such as recruiting 
volunteers or fund-raising.'' That was Bernie Nussbaum.
  Judge Abner Mickva said the same thing a year later when he came on. 
He said it was very illegal. He said stay away from it or it is going 
to get you an independent counsel.
  Mr. SOUDER. So if the gentleman will yield. What the gentleman is 
saying is that Vice President Gore, who was a member of this body and 
knew full well he could not use any Federal buildings for fundraising, 
had been through that here, and Vice President Gore had been a United 
States Senator and knew that he could not use Federal buildings for 
fundraising, was also told by two legal counsel at the White House that 
he could not do it? So he has ignored four warnings?
  Mr. SCARBOROUGH. He ignored an explicit warning, as did the 
President, according to Washington Post reports. They ignored explicit 
warnings from their own attorneys: Do not raise money by making phone 
calls from the White House.
  And, of course, we remember their first tact was, well, we cannot 
remember making calls; do not think we made the calls. Later on they 
said they did make the calls. The Vice President said he made the 
calls, he was proud of what he did, and he promised never to do it 
again. Of course, he had that pathetic legalistic excuse that there was 
no controlling authority.
  But it is a shameful episode. They think Americans are stupid. While 
they obstruct justice, they think Americans are stupid. While they 
ignore the advice of their own counsel, they think Americans are so 
stupid, and they think that there are so many scandals swirling around 
this White House, that Americans will simply lose interest and turn on 
the baseball game. I do not underestimate the American people as much 
as the White House does.
  I just wish they would have followed their own attorneys' advice. I 
remember the day we were first sworn in, even before then. It was the 
gentleman from California, Mr. Bill Thomas, who talked to us in the 
Cannon Caucus Room, the entire incoming Republican class. What is the 
first thing he told us? Do not raise money on Federal property. Do not 
make fund-raising phone calls from Federal property. He said if we 
needed to do that, to walk across the street. It is illegal.
  Our people were saying that, the President's attorneys were saying 
that, the Vice President's attorneys were saying that. Janet Reno 
cannot hide behind her legalistic excuse, cannot continue to 
politically obstruct justice for this White House. She needs to read 
the memo and the law that Bernie Nussbaum and the President's other 
attorneys read and expressed to the President and the Vice President 3 
or 4 years ago.
  Mr. SOUDER. If the gentleman will continue to yield, I ask if he 
could put my Charlie Trie picture up. We started today our first 
hearings that will be broadcast, I am not sure when, here on C-SPAN. In 
actuality, I have to correct myself. They are not going to be 
broadcast, because the witnesses invoked an old rule that says they did 
not want to be filmed. So we will see little bits and pieces and hear 
some in the news.
  So I will tell my colleague briefly some of what happened. We started 
to put some of the pieces out there that we are going to focus on. And 
one of the big pieces is Charlie Trie.
  And I wanted to acknowledge tonight that I actually have a colored 
picture, because we have had trouble and some criticism because we have 
had black and white and grainy pictures. This is a little grainy 
because this is from a magazine, because the White House does not want 
to send us color pictures of the President with Charlie Trie either.
  So if we can get a clear photo, and if they can see fit to send us 
one, we will be happy to print it. But up until now these things are 
going to be a little grainy and I apologize. I am not trying to say 
they are criminals because they are grainy, I am saying they are not 
really cooperating very much.
  Today we had Manlin Foung, Charlie Trie's sister, and her boyfriend, 
in what to me was pretty shocking testimony. In other words, usually 
people, when given $12,500, in the first case of each one, when they 
did not have it in the bank account and told to send it to the 
Democratic National Committee, they would think twice about that. And 
is it not even illegal to cut a check. They said they knew Charlie was 
going to get them the money right away. He had always been good before.
  Furthermore, we saw another 10,000 come in that way. These are people 
who had never been to a political event, who did not know anything 
about politicians, who did not know what the Democratic National 
Committee was. But she was trustingly laundering money for her brother.
  Furthermore, as it was brought out from numerous members' testimony, 
her name also appears with her sister and her mother, who have also 
never been involved before, in giving $2,000 checks, $1,000 each, one 
for primary and one for general election, all on the same date, to 
Senator Tom Daschle, minority leader of the other party. This is a web 
that is spreading farther and farther, and it is very disconcerting.
  Interestingly, rather than express outrage and shock, the minority 
attacked the chairman, they attacked the hearing, they attacked the 
witnesses, they attacked the staff. And rather than seeking the truth, 
it seems to be to try to obscure the truth or to blame it on other 
people or say maybe this has happened before. This is shocking stuff.

  We heard today the first connections, because while Charlie Trie set 
it up and called his sister, the money came from Antonio Pan, who is a 
former Lippo executive. What we are going to see over the next months, 
and we have another pending immunity proffer out to us from the Lums, 
who tie together and who have worked with Pauline Kanchanalak, they 
have worked with Charlie Trie, they have worked with----
  Mr. SCARBOROUGH. These are all people that have fled the United 
States?
  Mr. SOUDER. These are people that have fled the United States and 
will not testify. And we are having to get fairly small fish, 
documenting how their money is going through. And we know the Lums are 
the next step in this process.
  Mr. SCARBOROUGH. Reclaiming my time for one second. All these people 
that have fled. How many have fled?
  Mr. SOUDER. I believe between 25 and 30 that have fled and 60 that 
have pleaded the fifth amendment.
  Mr. SCARBOROUGH. And the White House and Justice Department will do 
absolutely nothing, will they? Will not lift their finger to bring 
these possible

[[Page H8822]]

international fugitives to justice because of what it might do to the 
White House; is that correct?
  Mr. SOUDER. And the quote that is on there, ``Trie bragged on NBC 
that he could continue to hide out in Asia for 10 years. They will 
never find me.'' He said. His sister today said that she talks to him 
when she needs to; that she had not had a direct conversation, but that 
there had been a discussion that when the statute of limitation runs 
out, he will come back.
  And that seems to be the other mark of the way things are going. It 
is why this investigation is so hard. We will stay at this, but we 
could really use some help from the other side, rather than trying to 
say everybody does it, to get to the bottom of this.
  One last point that came up today. Miss Foung said that she felt that 
Asian citizens had a right to speak out and they were being picked on. 
My comment to her was very simple. This has been an incredible abuse of 
Asian Americans. Because what we have seen, for example, in the case of 
her brother putting approximately a half million dollars of illegal 
money, it looks like, in all cases certainly laundered money if not 
illegal foreign money into this, that he has a right to speak up.
  And he, right after he gave the $500,000, sent a letter, which was 
responded to by a personal letter from the President; also notes from 
Anthony Lake to the President explaining why they needed to respond to 
Charlie Trie about why we should not overreact to the so-called 
People's Republic of China's threats to Taiwan when they were 
threatening their coastal waters.
  Mr. SCARBOROUGH. And also when they threatened to nuke Los Angeles, 
California.
  Mr. SOUDER. And part of the problem here is that as we see these 
interconnections relate to policy, the question was we do not see the 
systematic abuse of Latin Americans or of African Americans or of Greek 
Americans. We did not hear how other groups were manipulated, but we 
saw Asian Americans basically being told if they want to have influence 
in the White House, as Johnny Chung says, ``It is like a subway; you 
have to put the coins in,'' and it is unfortunate that many of these 
people are Asian Americans, but it is not our fault. It is who abused 
them, who used them, who sold democracy to them.
  And they should be so angry right now and so irate at this 
administration for how they abused Asian Americans in these instances.
  Mr. SCARBOROUGH. And, regretfully, we cannot just say it was a couple 
of Asian Americans who abused the democratic process, because the White 
House is sort of doing the nod and wink, ``Yeah, Charlie Trie and John 
Huang, we just never knew what was going on here.'' And yet the Los 
Angeles Times reported earlier this week that in 1991, then chairman of 
the Democratic National Committee, Ron Brown, actually had memos sent 
to him and he sent memos around talking about how they needed to start 
raising money and basically exploiting Asia. Said there were a lot of 
great opportunities for 1992.
  We saw him later on move to the Commerce Department from his position 
at the Democratic National Committee. And of course that is where some 
of the most shameful episodes of this type of behavior occurred, where 
we actually had John Huang getting security clearance in the Commerce 
Department so he could get Commerce Department and CIA top-secret 
briefings, and then he would jump into a cab, drive to the Chinese 
Communist Chinese embassy and have meetings with them supposedly to 
tell them all that was revealed to him during those briefings.

                              {time}  2015

  As Newsweek said a year ago, this may be more than campaign finance 
scandal, this may be espionage.
  Mr. SOUDER. And we are committed to getting to the bottom of this, 
regardless of the smears that are done on our committee or the 
chairman, because we must for the preservation of American democracy.
  Mr. Speaker, I include for the Record the following:

  Federal Document Clearing House--Testimony June 13, 1956--House of 
 Representatives, Government Reform, National Security, International 
                      Affairs and Criminal Justice


            white house communications agency mismanagement

       Opening Remarks of Chairman Bill Zeliff.
       Oversight Hearing on White House Communications Agency.
       Good morning. Four weeks ago we began oversight hearings of 
     the White House Communications Agency, or WHCA. As most of 
     you know, this subcommittee initiated a thorough 
     investigation of WHCA's operations two years ago. We met 
     three times with the White House to try to get the White 
     House to agree that GAO could do this investigation. For 
     reasons that remain unclear, even now, the White House 
     objected and prevented GAO from investigating. We then sought 
     an IG's investigation and, after overcoming further 
     objections, we got the IG into the White House. The result is 
     the first comprehensive audit of WHCA in 55 years.
       A clear picture is emerging and it has four distinct 
     components: the utter lack of internal controls at WHCA, the 
     problem of WHCA mission creep, the absence of accountability, 
     and the disturbing pattern of White House obstructionism. 
     Because it is most disturbing, I want to start with the White 
     House obstructionism we have encountered in this 
     investigation.
       Without reason or legal argument, this White House 
     continuously opposed any congressional oversight of WHCA. 
     Even though WHCA had never been comprehensively audited in 
     over half a century of existence--and was clearly in need of 
     some oversight--the White House did its best for almost two 
     years to prevent an audit.
       Beginning in March of 1994, the White House stubbornly 
     opposed an audit as a potential breach of national security. 
     When Congress pointed out that most of the information 
     involved was not classified in any way--and that there were 
     routine mechanisms for auditing defense organizations which 
     deal with classified information--the White House still 
     refused to allow an audit by the General Accounting Office. 
     We finally got the DOD IG involved.
       To my dismay, now that we have an audit report and are 
     conducting hearings, the White House, again, is doing its 
     best to obstruct and hinder these hearings by withholding 
     witnesses, and by altering testimony. Let's get some basic 
     facts straight: WHCA takes its orders from the White House 
     Military Office, or WHMO, whose director is a Mr. Alan 
     Sullivan. Mr. Sullivan directs the mission of WHCA, and he 
     also writes the Officer Evaluation Report for the Commander 
     of WHCA, which means that he determines that Commander's 
     future career prospects. Mr. Sullivan, in tern, reports to 
     Ms. Jodie Torkelson, who is the Assistant to the President 
     for Management and Administration. Together, these two 
     individuals--Mr. Sullivan and Ms. Torkelson--hold the 
     figurative whip over WHCA, and so we requested their 
     testimony today.
       Obviously, when a government agency has problems in need of 
     correction, it is absolutely essential to hear from the folks 
     in charge. However, both Mr. Sullivan and Ms. Torkelson have 
     repeatedly refused to attend these hearings, and Mr. Quinn, 
     the President's lawyer, has written letters seeking to block 
     their appearance. The White House political appointees have, 
     instead, sent Colonel Joseph Simmons the Commander of WHCA, 
     as their surrogate. The truth is fairly obvious: when it is 
     time to use WHCA and benefit from it on a day-to-day basis, 
     the White House is perfectly ready to do that. But when it is 
     time to take a hard look at problems with the agency's 
     mission and its execution of that mission, the White House 
     sends its regrets. We have deferred the subpoena decision 
     today, but I would direct anyone interested in more 
     information on this obstructionism to the letters on the back 
     table.
       Lastly, as many of you will recall, we appear to have had 
     some serious monkeying around with the prepared testimony of 
     Colonel Simmons, who is here to testify today. First we 
     received a version of his prepared testimony which made it 
     absolutely clear that WHCA takes its order from the White 
     House. That is something we all knew anyway. Then we received 
     a second version of Colonel Simmons' testimony which left out 
     the parts about White House control, and proceeded to blame 
     all of WHCA's shortcomings on the Defense Information Systems 
     Agency, or DISA. Later still, Colonel Simmons and the White 
     House told us that they didn't know anything about the first 
     version of the testimony; but we subsequently learned that 
     Colonel Simmons' office did deliver the testimony--both the 
     first and second versions--and he is now prepared to live 
     with either one. That was the clarification we needed and why 
     we recessed the hearing four weeks ago.
       Now, let's turn to the internal controls. When it comes to 
     managing its property and finances, WHCA has unfortunately 
     been, in a word, a disaster. For years it has ignored the 
     laws and regulations which govern its contracting property 
     management, and maintenance activities, with the result that 
     millions of dollars in taxypayers' money has been wasted.
       For example, WHCA has consistently failed to submit 
     spending requests to authorized contract officers for proper 
     approval, as required by law. Instead, WHCA has effectively 
     approved its own contracts, or sometimes even made purchases 
     without a contract. The most notable recent result of this 
     approach was the expenditure of 4.9 million dollars on two 
     mobile communications systems which are almost never used, 
     because

[[Page H8823]]

     they do not fit on the airplane as originally intended. This 
     is the kind of mistake which can only be made in the absence 
     of White House oversight.
       WHCA has also ignored regulations requiring competitive 
     bidding in government contracting. It has spent millions of 
     dollars per year on sole-source contracts which give no 
     guarantee that the American taxpayers are getting their 
     money's worth.
       From an accounting standpoint, WHCA has not kept track of 
     its financial obligations and expenditures, and recently had 
     14.5 million dollars in invalidated obligations. The IG found 
     that due to this lack of oversight, WHCA has been paying for 
     some equipment and services which are no longer necessary; 
     and has been paying for some items which were never even 
     delivered to the agency; and has occasionally paid for the 
     same items twice. In addition, the IG found that WHCA was 
     only paying 17% of its bills on time, which means that the 
     taxpayer is paying for interest and penalties on the 
     remaining 83%.
       Nor has WHCA followed regulations governing maintenance 
     management. According to the IG, WHCA spent $303,000 on a 
     maintenance control system in 1993, but the system was 
     generally not used.
       WHCA has also failed to keep track of its own property. The 
     IG found that WHCA acquired a great deal of equipment--for 
     example, $555,000 worth of computers--without recording it in 
     the unit property book, which is the central record of all 
     the unit's property.
       Now, let me give you a snapshot of WHCA's mission creep. 
     Today, WHCA spends over $122 million dollars a year. It has 
     an authorized strength of roughly 950 military personnel, 
     with about 850 actually on duty at the present time. 
     Moreover, the WHCA mission has expanded to include a whole 
     list of services provided to the President, the Vice-
     President, the First Lady, and the entire White House staff.
       Far from its early telecommunications mission, consider a 
     few of the tasks now performed by WHCA:
       WHCA provides stenographic services--a steno pool--for all 
     White House events and functions.
       WHCA runs a frame shop, where pictures are framed for White 
     House personnel.
       WHCA provides camera equipment, and developing and printing 
     services, to White House photographers.
       WHCA provides comprehensive wire services--including the AP 
     wire, UPI, Reuters, etc.--to White House staffers.
       And so on. The point is that this White House agency, 
     without proper oversight, has gotten well off the 
     reservation.
       Finally, there is a real accountability problem. Call it--
     problem number four--which helps to cause problems two and 
     three. There is a complete separation of accountability from 
     control. DOD has to spend all of the money requested by WHCA, 
     and it is technically responsible for ensuring that WHCA 
     follows all the laws and regulations governing DOD 
     activities. However, WHCA is actually controlled by White 
     House staffers, who have gotten used to using WHCA for all 
     sorts of non-military jobs, because they are not held 
     accountable for the expense. In other words, the White House 
     holds the credit card, and DOD has to pay the bills.
       In closing, let me say that it is time for common sense to 
     return, and that's why we are here today.
                                  ____


                   Today's Hearing Is Not Duplicative

       The Minority has claimed that today's hearing is 
     duplicative of the Senate testimony of Xiping Wang 
     (pronounced Zipping Wang) and Yuefang Chu (pronounced You-
     Fang Chew). The Minority's charges are false because Manlin 
     Foung and Joseph Landon are testifying about completely 
     different matters, and have offered the Committee important 
     new evidence.
       Xiping Wang and Yuefang Chu both testified about conduit 
     payments they made to the DNC. So have Joseph Landon and 
     Manlin Foung. The similarities end there. Neither Xiping Wang 
     nor Yuefang Chu ever met Charlie Trie or Antonio Pan. Rather, 
     they were asked by a receptionist for Daihatsu International 
     Trading Corporation, Keshi Zhan, to make the contributions.
       The present witnesses, Manlin Foung and Joseph Landon, have 
     established Charlie Trie's direct involvement in the 
     solicitation and direction of conduit payments to the DNC.
       Foung and Landon have also established a link between 
     Antonio Pan and Charlie Trie, showing they were involved in 
     illegal fundraising practices together. This link had not 
     been established in the Senate testimony of Yuefang Chu or 
     Xiping Wang.
       These hearings have provided critical new evidence. Under 
     the standard erected by the Minority, this panel would be 
     prohibited from ever investigating or discussing other 
     conduit payments made to the DNC. Considering that conduit 
     payments are (1) illegal and (2) the apparent method by which 
     Charlie Trie directed money to the DNC, this standard would 
     effectively keep this Committee from uncovering the crimes 
     committed in last year's elections.
                                  ____


                    Mother Jones--Thursday, 17, 1997


   A probe not taken: Congress should take a look at OPIC's taxpayer-
 backed sweetheart deals. We did. (Overseas Private Investment Corp.) 
                     (includes related information)

                (By Rachel Burstein, Janice C. Shields)

       As Republicans convene hearings on foreign contributions to 
     the Clinton campaign, attention has drifted away from big 
     domestic donors and what they might have gained from their 
     investments--apart from a coffee or a (reportedly bad) 
     night's sleep at the White House.
       And while everyone knows that political donors often 
     ``happen'' to receive impressive diplomatic appointments, or 
     their firms wind up with lucrative government contracts, 
     Mother Jones has discovered an even more direct way the 
     politically well-connected can cash in: multimillion-dollar 
     overseas investments backed by taxpayer dollars. These 
     private investments, set up through the government's Overseas 
     Private Investment Corp., are often made in developing areas 
     expected to become boom markets--such as Eastern Europe, 
     southern Africa, and India. ``The idea behind the funds is to 
     replace direct foreign aid,'' says Mildred Callear, OPIC's 
     acting president.
       To do that, OPIC has launched 24 ``private'' investment 
     funds that, on average, are matched 2-to-1 by OPIC in 
     guaranteed loans. Many of these funds are insured against 
     loss. As OPIC's then-president Ruth Harkin said in 1995, when 
     the funds started taking off, ``If you're an investor in an 
     OPIC-supported fund, the worse you can do is get your money 
     back at the end of 10 years.''
       For the past two decades, OPIC has been one of the 
     government's best-kept secrets. Before Clinton, the agency 
     was little more than a small insurance company for U.S. firms 
     willing to set up shop in countries with unstable regimes or 
     fledgling markets. As late as the Bush administration, the 
     agency's venture funds totaled less than $100 million. By 
     1996, however, OPIC's investment funds had ballooned to $3 
     billion.
       So who exactly gets in on these ``private'' deals? Even 
     though these investors are in partnership with a government 
     agency, OPIC maintains that revealing their names would 
     violate both their privacy and the Trade Secrets Act. But a 
     Mother Jones investigation of some of these equity funds 
     suggests another possible reason for OPIC's silence: The 
     funds appear to benefit not only corporate heavyweights, but 
     also people linked to President Clinton and at least two 
     Republican senators.
       Not surprisingly, when we looked at these OPIC deals, we 
     found a connection to at least one character at the center of 
     the Democrats' fundraising scandal: former White House 
     administrative aide Mark Middleton, who has been alleged to 
     have peddled his Democratic connections in order to set up 
     his own foreign investment deals. Evidence suggests that 
     Middleton also may have had his eye on OPIC's ash-rich 
     foreign investment opportunities, having forged ties to a 
     financier and friend of Clinton's who was setting up a $240 
     million fund.
       It's impossible to know just how big a part political 
     nepotism plays in getting OPIC deals, since they won't 
     disclose all of its investors. Still, we decided to do some 
     digging.
       How good a deal are OPIC's exclusive investors getting? One 
     private equity fund investing in Africa reportedly has had 
     earnings that would make the most buttoned-down broker's head 
     spin: a $9.50 return on every $1 invested. Meanwhile, 
     projects financed by a Russian fund reportedly provided 
     returns in the 30 to 50 percent range. That sure beats 
     current CD rates of 5.7 percent.
       In order to see what it takes to get a piece of this kind 
     of action, we dressed up in our high-finance best and made 
     several house calls to Washington, DC, firms managing OPIC 
     funds. Along the way, we found several notable political 
     connections:
       The contact for the South America Private Equity Growth 
     Fund, which landed $100 million in OPIC-guaranteed loans in 
     1995, is Westsphere Equity Investors' John Lugar, son of Sen. 
     Richard Lugar (R-Ind.). Luger was put off by our visit, 
     grilling us repeatedly about the nature of this article. He 
     refused to share a copy of the fund's annual report, saying 
     that the fund had stopped accepting investments in 1995 and 
     had been open only to ``sophisticated'' investors anyway.
       At the address for the Poland Partners Management Co., we 
     discovered the law firm Landon Butler & Co., which runs the 
     fund. According to the man answering the door, the Poland 
     Partners fund closed to further investment three years ago. 
     ``The minimum investment,'' he added with a sneer, ``[was] $1 
     million.'' He also said that although he knew who the 
     investors were, it was privileged information. And he refused 
     to provide an annual report, saying it was only available to 
     investors in the $65 million fund, which has received OPIC 
     loan guarantees. (OPIC acting president Callear later 
     informed Mother Jones that the fund's initial investors 
     included the pension funds of the AFL-CIO and other unions--
     big Democratic heavyweights.)
       Neither the Bancroft Eastern Europe Fund nor its manager, 
     the Bancroft Group, was in the directory of the building 
     listed as the fund's address in the phone book. A concierge 
     directed Mother Jones to the eighth-floor office of the law 
     firm Perkins Coie. According to a receptionist, the Bancroft 
     Group had moved to Italy; OPIC's address for Bancroft is in 
     France. The fund received $70 million in OPIC financing in 
     1995.
       Mother Jones later learned that Bancroft's president is 
     Fred Martin, who founded the group in 1989--right after 
     serving as campaign manager for Al Gore's 1988 presidential 
     bid. Martin also served as a special assistant to Walter 
     Mondale during Mondale's vice presidency.

[[Page H8824]]

       Locating Newbridge Andean Partners was even more 
     confounding. The address, ``1429 G St. N.W., Suite 410,'' 
     turned out to be a Mail Boxes Etc. store. When asked for 
     directions to ``Suite 410,'' a helpful clerk pointed to one 
     of the small mailboxes lining the wall.
       ACON Investments, the fund's manager, requires a minimum 
     investment of close to $1 million. ACON's chairman is Bernard 
     Aronson, another longtime politico, who has connections to 
     presidents Bush and Clinton (assistant secretary of state 
     from 1989-93) and was a speechwriter for President Carter 
     (1977-79).
       Each of the other funds we visited (Global Environment 
     Emerging Markets Fund II, Aqua International Partners) cited 
     enormous minimum investments ($2 million and $5 million, 
     respectively) that would prohibit all but the wealthiest 
     people and institutions from investing.
       Since these OPIC investments are shrouded in secrecy, few 
     of us will ever even hear about them. Because the deals are 
     set up as private placements--limiting public involvement--
     the funds are exempt from much oversight by the Securities 
     and Exchange Commission, as well as from public disclosure 
     requirements.
       The companies that manage these funds have a serious reason 
     to keep a low profile: competition from other potential fund 
     sponsors. Agribusiness Partners International, for example, 
     generated more than $3 million in commissions from sales to 
     15 investors. Apax-Leumi Partners Inc., the general partner 
     of the Israel Growth Fund, collects an annual investment 
     advisory fee of 2.5 percent of the fund's gross proceeds, and 
     the first installment totaled $1 million. With such 
     staggering proceeds, why let others in on the secret?
       The more we looked at the funds, however, the more we found 
     that many of those who were in on the secret had one notable 
     qualification in common: powerful political ties. The $150 
     million South Asia Integration Fund, for example, is run by 
     Ziff Bros. Investments, whose co-chair, Dirk Ziff, is one of 
     the largest Democratic contributors in the country (No. 6 on 
     the Mother Jones 400; see May/June). Another Democratic 
     contributor, Maceo Sloan, received $120 million in guaranteed 
     loans from OPIC for his New Africa Opportunities Fund. The 
     North Carolina millionaire also received help from his 
     senator, Republican Jesse Helms, who, according to a 
     September 1996 Barron's report, asked OPIC officials about 
     Sloan's application.
       And when we took a close look at one of OPIC's largest 
     private equity funds, we found businessman Steven J. Green, a 
     close friend of Bill Clinton's who seems to have mastered the 
     use of government access for professional gain.
       Green was a crucial early supporter of Clinton. As a 
     result, he has enjoyed the conventional presidential perks 
     (he and his wife spent the night of their 28th wedding 
     anniversary in the Lincoln Bedroom) without having given the 
     Democrats enormous amounts of money recently ($11,000 to the 
     DNC in 1995-96).
       Green sits on the influential President's Export Council, 
     along with 10 members of Congress and the secretaries of 
     Commerce, Labor, Agriculture, State, and the Treasury. The 
     council advises the president on government policies and 
     programs that affect trade. Green's right-hand man, Noel 
     Gould, serves as national director of the Virtual Trade 
     Mission Program, a project launched by the council and 
     Clinton's special adviser Mack McLarty to educate high school 
     and junior college students about trade issues.
       Green's business ventures have been flying high--with 
     considerable help from the Clinton administration. Green or 
     other executives from his Astrum conglomerate, which included 
     Samsonite luggage and Culligan Water Technologies, flew on 
     three of the late Commerce Secretary Ron Brown's overseas 
     trade missions, including trips to Russia and the Middle 
     East. Green also traveled on four overseas OPIC investment 
     missions. Deals blossomed along the way, leading to a 
     development in Russia and a water-bottling contract for 
     Culligan in the Gaza Strip.
       Then Green went into business with OPIC, setting up the 
     Central and Eastern European Newly Independent States fund 
     (CEENIS). The fund needs to raise $80 million in order for 
     OPIC to finance $160 million in double-matching funds. 
     Green's real estate firm, Auburndale Properties--which has 
     offices in Florida, Massachusetts, New Jersey, Washington, 
     D.C., Bucharest, and Warsaw--is the fund's manager and a 
     primary investor.
       In the fall of 1994, before he secured OPIC's approval for 
     the fund, Green reportedly went scouting for investors among 
     some of his big-name former business partners--including 
     media baron Rupert Murdoch and convicted S&L swindler Michael 
     Milken's family trust. He also attracted the attention of 
     Mark Middleton, who at the time was a White House 
     administrative aide looking to branch out on his own.
       Nicknamed the ``Aryan Rotarian'' for his blond good looks 
     and business acumen, Middleton, a 34-year-old Clinton 
     fundraising star, came to Washington to become the protege of 
     Mack McLarty, a boyhood friend and former right-hand man of 
     President Clinton. After McLarty stepped down as Clinton's 
     chief of staff in mid-1994, Middleton reportedly decided 
     against a run for Arkansas attorney general and prepared to 
     move to the private sector.
       He subsequently has been connected in news reports to 
     virtually every aspect of the Democratic National Committee's 
     fundraising scandal. It was Middleton who apparently 
     passed out his White House business card to Asian 
     businessmen during trips overseas--months after resigning 
     from his post. The card listed his still-active White 
     House voicemail number--which also allowed callers to 
     leave messages for McLarty. Most controversially, during 
     one of these trips Middleton is alleged by foreign reports 
     to have received an illegal $15 million campaign pledge 
     from the chief financial officer of a conglomerate run by 
     Taiwan's ruling party.
       Middleton has also been tied to the Indonesian Riady 
     family, which gave hundreds of thousands of dollars in 
     questionable contributions to the Democrats; to Charlie Trie, 
     an Arkansas restaurateur suspected of funneling campaign 
     money from China; and to disgraced former associate attorney 
     general and Clinton friend Webster Hubbell.
       But before the controversies--before Middleton had even 
     left the White House--he managed to secure a job with Steve 
     Green. According to a close associate of Green's, Middleton 
     approached Green in November 1994 and asked to discuss job 
     opportunities. ``He pretty much said, `I want to be just like 
     you when I grow up,'' ' says the associate.
       In January 1995, President Clinton announced OPIC's 
     approval of CEENIS. It appears that around the same time, 
     Middleton may have been prematurely representing Green. 
     According to a source close to the congressional 
     investigation into Democratic fundraising, Middleton received 
     at least one letter addressed to him as a representative of 
     Green's Astrum conglomerate in January 1995--before he left 
     the White House on February 17.
       It also appears, from what Middleton has told the press, 
     that he wanted in on Green's OPIC deal. Just before leaving 
     the White House in February, Middleton told the Arkansas 
     Democrat-gazette that he was going to work for Green and 
     would be ``putting together large international 
     infrastructure deals in emerging countries . . . such as 
     central and Eastern Europe.'' Green adviser Noel Gould 
     confirms that Middleton went to work at Auburndale.
       By March, Middleton had escorted Green to the White House. 
     And by June, Green had formally secured enough funding for 
     CEENIS to begin operations.
       But there is no evidence Middleton ever actually got in on 
     the CEENIS deal. Both Gould and OPIC officials say he was not 
     involved. And a former Astrum associate maintain that 
     Middleton took advantage of the company. When Middleton went 
     to work for Green, according to the source, he asked for a 
     salary advance to take a foreign vacation--which was the 
     start of Middleton's now-controversial trips to Asia. When he 
     returned, the source says, Middleton told Green he had found 
     clients for his own fledgling overseas investment firm, 
     CommerceCorp International, which he intended to pursue while 
     working for Green. Feeling used, the source says, Green asked 
     Middleton to leave.
       Middleton, who has refused to testify before House 
     investigators, declined to the interviewed for this story.
       Astrum has since broken up into several separate companies, 
     and Green now appears to be focusing solely on his real 
     estate ventures, including CEENIS. CEENIS has yet to formally 
     begin any of its projects, and it remains cagey about its 
     investors. Initially, CEENIS managers told Mother Jones that 
     there were no private investors, only corporate ones, 
     including MCI and Bank Boston. But Gould says that the 
     initial backers also included Green's Auburndale and ``two to 
     three private investors'' who were longtime Green associates.
       Green, according to his agreement with OPIC, can invest up 
     to $40 million of his own money in the project. Since 
     January, Gould says, Auburndale has opened the fund to new 
     investors.
       OPIC maintains that anybody can apply for the private funds 
     and that it doesn't play favorites. ``Lots of times we would 
     meet with people and it didn't go anywhere, even if they 
     invoked the names of very important members of Congress,'' 
     says Susan Levine, a former OPIC senior vice president for 
     investment development and policy and a former friend of the 
     Clintons'. But she concedes, ``Odds are that knowing people 
     helps you get in the door.''
       The OPIC deals continue. In April, a bipartisan bill in the 
     House, the Africa Growth and Opportunity Act, proposed that 
     OPIC back new funds in Africa valued at $650 million. Unless 
     OPIC can be prodded into opening its books, investors can 
     continue to escape public scrutiny--while walking away with 
     millions.
       Rachel Burnstein is a Mother Jones investigative reporter 
     Janice C. Shields is a researcher and coordinator of the 
     Corporate Wealthfare Project & TaxWatch. Romesh Ratnesar 
     also contributed reporting for this story. All are based 
     in Washington, D.C.
       Where did the $3 billion go?
       OPIC (headquarters at right) is a federal agency that helps 
     U.S. companies invest in developing overseas markets. OPIC 
     chooses from among plans submitted by companies and private 
     investors and finances $3 billion worth of opportunities that 
     don't exist in the regular marketplace, such as providing 
     insurance against political risks or loans for risky, long-
     term projects. OPIC matches its ``private'' funds 2-to-1 and 
     often insures the investments against loss. The funds 
     generate a huge profit for OPIC--$209 million last year--and 
     their lucky investors. But these private funds like to remain 
     just that--private.

[[Page H8825]]

       Our search for the NEWBRIDGE ANDEAN fund led to a Mail 
     Boxes Etc. store. When we asked for ``Suite 410,'' a clerk 
     showed us this mailbox.
       WESTSPHERE EQUITY INVESTORS manages a fund that is only for 
     ``sophisticated'' investors.
       The GLOBAL ENVIRONMENT EMERGING MARKETS FUND II is open to 
     anyone able to cough up a minimum investment of $2 million.
       We found the POLAND PARTNERS MANAGEMENT CO. fund at the law 
     firm Landon Butler. The fund's investors include the AFL-CIO.


                              The Managers

       OPIC-backed investments are shrouded in secrecy--and for 
     good reason: Many of the funds appear to be cash cows for the 
     politically well-connected. A look at the people who run them 
     reveals a high-finance jobs program for Washington players, 
     including a former speechwriter, a campaign manager, and a 
     White House staffer. And, of course, big political 
     contributors are well-represented.
       DIRK ZIFF is co-chair of Ziff Bros. investments, which 
     manages a $150 million South Asia fund that received OPIC 
     loan guarantees. Ziff, a prominent Democratic donor, was No. 
     6 on the Mother Jones 400.
       JOHN LUGAR is Sen. Richard Lugar's (R-Ind.) son. His South 
     America Private Equity fund, which has received $100 million 
     in loan guarantees from OPIC, stopped accepting investments 
     in 1995.
       BERNARD ARONSON is chairman of ACON Investments, which runs 
     the OPIC-supported Newbridge Andean fund. He was an assistant 
     secretary of state under Bush and a speechwriter for Carter.

  Mr. SCARBOROUGH. I thank the gentleman from Indiana [Mr. Souder]. He 
is exactly correct. When Newsweek is talking about espionage, when the 
Washington Post is talking about how the White House does not tell the 
truth, as they editorialized yesterday, when the New York Times writes, 
``It is obvious we can no longer trust the President or the Attorney 
General,'' then something has to be done. There has to be an oversight 
function.
  I just hope that one Democrat will have the moral courage to stand up 
and break through and step forward and be a hero, like Howard Baker, a 
Republican Senator, who back during the Watergate hearings had the guts 
to stand up and say, ``What did the President know and when did he know 
it?'' And by doing that, he broke the logjam, brought down a very 
corrupt administration, a Republican administration, and American 
democracy is better for it today.
  I just pray to God that, for the sake of this country, Americans can 
see a Democrat step forward and do the same thing and that they will 
stop the political obstruction of justice in what clearly has become 
the largest fund-raising scandal in the history of this great Republic.

                          ____________________