[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.
____________________