[Senate Report 105-167]
[From the U.S. Government Publishing Office]

105th Congress                                            Rept. 105-167

 2d Session                                                      Vol. 1



                              FINAL REPORT

                                 of the


                          UNITED STATES SENATE

                             together with


                             Volume 1 of 6

                 March 10, 1998.--Ordered to be printed


105th Congress                                            Rept. 105-167
 2d Session                                                      Vol. 1

                      INVESTIGATION OF ILLEGAL OR


                       WITH 1996 FEDERAL ELECTION



                              FINAL REPORT

                                 of the


                          UNITED STATES SENATE

                             together with


                             Volume 1 of 6

                 March 10, 1998.--Ordered to be printed


                   FRED THOMPSON, Tennessee, Chairman
SUSAN COLLINS, Maine                 JOHN GLENN, Ohio
SAM BROWNBACK, Kansas                CARL LEVIN, Michigan
PETE V. DOMENICI, New Mexico         JOSEPH I. LIEBERMAN, Connecticut
THAD COCHRAN, Mississippi            DANIEL K. AKAKA, Hawaii
DON NICKLES, Oklahoma                RICHARD J. DURBIN, Illinois
ARLEN SPECTER, Pennsylvania          ROBERT G. TORRICELLI, New Jersey
BOB SMITH, New Hampshire             MAX CLELAND, Georgia
          Hannah S. Sistare, Staff Director and Chief Counsel
                 Leonard Weiss, Minority Staff Director
                       Lynn L. Baker, Chief Clerk

                             MAJORITY STAFF

                   Michael J. Madigan, Chief Counsel

                  J. Mark Tipps, Deputy Chief Counsel

                   Donald T. Bucklin, Senior Counsel

                     Harold Damelin, Senior Counsel

                 Harry S. Mattice, Jr., Senior Counsel

                  John H. Cobb, Staff Director/Counsel

                        K. Lee Blalack, Counsel

                         Michael Bopp, Counsel

                        James A. Brown, Counsel

                        Brian Connelly, Counsel

                       Christopher Ford, Counsel

                        Allison Hayward, Counsel

                      Matthew Herrington, Counsel

                        Margaret Hickey, Counsel

                          Dave Kully, Counsel

                        Jeffrey Kupfer, Counsel

                          John Loesch, Counsel

                   William ``Bill'' Outhier, Counsel

                         Glynna Parde, Counsel

                          Phil Perry, Counsel

                          Gus Puryear, Counsel

                Mary Kathryn (``Katie'') Quinn, Counsel

                         Paul Robinson, Counsel

                         John S. Shaw, Counsel

                       David Hickey, Investigator

                     Stephen J. Scott, Investigator

                     Matthew Tallmer, Investigator

                     Darla Cassell, Office Manager

                   Mary D. Robertson, Office Manager

                       Kenneth Feng, GAO Detailee

                      Mark Kallal, Legal Assistant

                   John W. M. Claud, Legal Assistant

                     Mike Marshall, Legal Assistant

                   Michael Tavernier, Legal Assistant

                     Michael Vahle, Legal Assistant

                     Amy Alderson, Staff Assistant

                    Kim Bejeck, Executive Assistant

                  Deborah Collier, Executive Assistant

                    Daniel Donovan, Staff Assistant

                      Leanne Durm, Staff Assistant

                 Michele Espinoza, Executive Assistant

              Cheryl Ethridge-Morton, Executive Assistant

                    Heather Freeman, Staff Assistant

                      John Gilboy, Staff Assistant

                   Janat Montag, Executive Assistant

                 Kathryn O'Connor, Executive Assistant

                     Wayne Parris, Staff Assistant

                     Jason Parrott, Staff Assistant

                    Sahand Sarshar, Staff Assistant

                       Jerome Sikorski, Archivist

                  Loesje Troglia, Executive Assistant

                  Sandra Wiseman, Executive Assistant


                   Frederick S. Ansell, Chief Counsel

                  Richard A. Hertling, Senior Counsel

              Curtis M. Silvers, Professional Staff Member

                 Paul S. Clark, Communications Director

                     Michal S. Prosser, Chief Clerk

                   Matthew Peterson, Assistant Clerk

              Christopher W. Lamond, Systems Administrator

                  Steve Diamond, Senator Susan Collins

                   Jim Rowland, Senator Sam Brownback

              Brian Benczkowski, Senator Pete V. Domenici

                  Michael Loesch, Senator Thad Cochran

                   Barbara Olson, Senator Don Nickles

                William J. Morley, Senator Arlen Specter

                   Rick Valentine, Senator Bob Smith

                Bill Triplett, Senator Robert F. Bennett

                             MINORITY STAFF

                   Alan Baron, Minority Chief Counsel

                  Pamela Marple, Deputy Chief Counsel

                   David McKean, Deputy Chief Counsel

                 Jeffrey Robbins, Deputy Chief Counsel

                         Alan Edelman, Counsel

                       Jonathan Frenkel, Counsel

                           Jim Lamb, Counsel

                        Deborah Lehrich, Counsel

                      Cassandra Lentchner, Counsel

                      Dianne Pickersgill, Counsel

                        Lisa Rosenberg, Counsel

                         Kevin Simpson, Counsel

                       Howard Sklamberg, Counsel

                          Beth Stein, Counsel

                     David Cahn, Assistant Counsel

                   Sarah Des Pres, Assistant Counsel

                   Peter Rosenberg, Assistant Counsel

                       Larry Gurwin, Investigator

                      Jim Jordan, Press Secretary

                          Holly Koerber, Clerk

                      Bill McDaniel, Investigator

                      Jay Youngclaus, Investigator

                  Caroline Badinelli, Staff Assistant

                     Ann Metler, Research Assistant

                   Jessica Robinson, Staff Assistant

                   Rachael Sullivan, Staff Assistant

                    Nichole Veatch, Staff Assistant

     Linda Gustitus, Governmental Affairs Committee, Senator Levin

       Elise Bean, Governmental Affairs Committee, Senator Levin

  Laurie Rubenstein, Governmental Affairs Committee, Senator Lieberman

      Nanci Langly, Governmental Affairs Committee, Senator Akaka

     Marianne Upton, Governmental Affairs Committee, Senator Durbin

 Matthew Tanielian, Governmental Affairs Committee, Senator Torricelli

    Bill Johnstone, Governmental Affairs Committee, Senator Cleland

                               FBI DETAIL

                       Anne Asbury, Investigator

             Jerome Campane, Investigator-FBI Detail Leader

                        Becky Chan, Investigator

                      Jeffrey Harris, Investigator

                    Steven Hendershot, Investigator

                       James Kunkel, Investigator

                       Kelli Sligh, Investigator

                     Vo ``Ben'' Tran, Investigator

                            C O N T E N T S

    1. Preface...................................................     1
    2. Procedural Background and Overview........................     5
    3. Summary of Findings.......................................    31
    4. The Thirst for Money......................................    51
    5. The White House Controlled the DNC and Improperly 
      Coordinated the Activities of the DNC and Clinton/Gore '96.   105
    6. The DNC Dismantled Its System for Vetting Contributions...   167
    7. DNC Fundraising in the White House: Coffees, Overnights, 
      and Other Events...........................................   191
    8. Fundraising Calls from the White House....................   499
    9. White House Vetting of Individuals with Access to the 
      President..................................................   751
    10. Johnny Chung and the White House ``Subway''..............   781
    11. The Contribution of Yogesh Gandhi........................   917
    12. Ted Sioeng, His Family, and His Business Interests.......   961
    13. John Huang's Years at Lippo..............................  1117
    14. John Huang at Commerce...................................  1153
    15. John Huang Moves from Commerce to the DNC................  1653
    16. John Huang's Illegal Fundraising at the DNC..............  1689
    17. The Hsi Lai Temple Fundraiser and Maria Hsia.............  1749
    18. The China Connection: Summary of Committee's Findings 
      Relating to the Efforts of the People's Republic of China 
      to Influence U.S. Policies and Elections...................  2499
    19. Charlie Trie's and Ng Lap Seng's Laundered Contributions 
      to the DNC.................................................  2517
    20. Charlie Trie's Contributions to the Presidential Legal 
      Expense Trust..............................................  2711
    21. The Saga of Roger Tamraz.................................  2905
    22. DNC Efforts to Raise Money in the Indian Gaming Community  3071
    23. The Hudson, Wisconsin Casino Proposal....................  3165
    24. The Cheyenne and Arapaho Tribes: Their Quest for the Fort 
      Reno Lands.................................................  3547
    25. The Offer of R. Warren Meddoff...........................  3623
    26. White House, DNC and Clinton-Gore Campaign Fundraising 
      Efforts Involving the International Brotherhood of 
      Teamsters..................................................  3655
    27. Compliance by Nonprofit Groups with Committee Subpoenas..  3833
    28. Role of Nonprofit Groups in the 1996 Elections...........  3993
    29. Allegations Relating to the National Policy Forum........  4195
    30. White House Document Production..........................  4277
    31. DNC Document Production..................................  4425
    32. Campaign Finance Reform Issues Brought to the Forefront 
      by the Special Investigation...............................  4459
    33. Recommendations..........................................  4503

                            Additional Views

    34. Additional Views of Chairman Fred Thompson...............  4511
    35. Additional Views of Senator Susan Collins................  4535
    36. Additional Views of Senator Arlen Specter................  4539
    37. Additional Views of Senator Robert Bennett...............  4545

                             Minority Views

    38. Additional Views of Senators Glenn, Levin, Lieberman, 
      Akaka, Durbin, Torricelli and Cleland......................  4557
    39. Additional Views of Senator Glenn........................  9507
    40. Additional Views of Senator Levin........................  9511
    41. Additional Views of Senator Lieberman....................  9525
    42. Additional Views of Senator Akaka........................  9559
    43. Additional Views of Senator Durbin.......................  9565
    44. Additional Views of Senator Torricelli...................  9571


    In mid-1995, the President and his strategists decided that 
they needed to raise and spend many millions of dollars over 
and above the permissible limits of the Presidential campaign 
funding law if the President was going to be reelected. They 
devised a legal theory to support their needs and proceeded to 
raise and spend $44 million in excess of the Presidential 
campaign spending limits.
    The lengths to which the Clinton/Gore campaign and the 
White House-controlled Democratic National Committee were 
willing to go in order to raise this amount of money is 
essentially the story of the 1996 Presidential campaign 
scandal. The President and his aides demeaned the offices of 
the President and Vice President, took advantage of minority 
groups, pulled down all the barriers that would normally be in 
place to keep out illegal contributions, pressured policy 
makers, and left themselves open to strong suspicion that they 
were selling not only access to high-ranking officials, but 
policy as well. Millions of dollars were raised in illegal 
contributions, much of it from foreign sources. When these 
abuses were discovered, the result was numerous Fifth Amendment 
claims, flights from the country, and stonewalling from the 
White House and the DNC.
    Over a brief period of three months of hearings, the 
Committee was able to fulfill its responsibility in laying out 
the available facts to the American people. A much clearer 
picture of what happened during the 1996 Presidential campaign 
has been developed and presented. However, many questions 
remain unanswered. It is now the responsibility of the Attorney 
General or, more appropriately, an independent counsel to take 
these facts and aggressively pursue any and all indications of 
criminal wrong-doing. Indeed, the three most important legal 
developments to come out of the 1996 campaign finance scandal 
are all attributable to the investigation conducted by the 
Committee on Governmental Affairs. First, Yah Lin ``Charlie'' 
Trie, an associate of the President, has been indicted for, 
among other things, obstruction of the Committee's 
investigation. Second, Maria Hsia, a prominent Democratic 
fundraiser, has been indicted for laundering campaign 
contributions that were a focus of the Committee's inquiry. 
Finally, the Attorney General has requested appointment of an 
independent counsel to determine whether Secretary of the 
Interior Bruce Babbitt lied to the Committee.

                   Procedural Background and Overview


    In the wake of numerous revelations in the news media of 
unusual, and possibly illegal, campaign contributions to the 
Democratic Party during the 1996 presidential campaign, the 
Senate Majority Leader announced during the first week of 
December 1996, that the Committee on Governmental Affairs would 
conduct an investigation on behalf of the Senate into 
fundraising practices of the Democratic National Committee 
(``DNC'') following the convocation of the 105th Congress in 
January 1997. The Majority Leader determined to centralize all 
aspects of the inquiry in the Governmental Affairs Committee 
(hereafter referred to simply as ``the Committee''), which has 
the broadest oversight jurisdiction and most extensive subpoena 
authority of any committee of the Senate.
    The investigation and its public hearings had three 
fundamental and interrelated purposes, consistent with the 
constitutional responsibilities of the Senate: informing the 
public, examining the operation of the law and of government 
officials, and developing a record to assist the Senate in 
considering legislation.
    The first of these purposes was to create a record of what 
occurred during the 1996 election cycle to inform the American 
people. A knowledgeable electorate is the cornerstone of 
democracy, and the public has a right to know what went on 
during the 1996 campaign. The people need to be informed of the 
operations of their government and the effectiveness or 
ineffectiveness of the laws in order to make informed judgments 
at the polls. Because all else flows from the people in a 
democracy, this purpose of informing the people must be ranked 
as the primary purpose of the investigation. In this regard, 
the Committee carried on the official inquiry, while the media 
fulfill their similar, but unofficial role, of informing the 
people of the facts. The Committee succeeded in laying before 
the American people a great deal of information that would 
never have become public in the absence of the Committee's 
investigation. It was not always the Committee itself that 
released the information, but it was the Committee that was 
responsible for the release. For example, the White House 
released a great deal of information to the media before 
producing it for the Committee. None of that information would 
have been publicly disclosed without the Committee's demands 
for the information from the White House. Vindicating the 
public's right to know, more than drawing its own conclusions 
or achieving partisan political goals, was the paramount 
purpose of the special investigation, and the Committee 
succeeded in satisfying this first purpose.
    A second purpose of the inquiry and hearings was to 
scrutinize the operation of the current legal and regulatory 
framework for federal elections. For Congress to legislate and 
govern effectively, it must conduct routine oversight to learn 
how the government is functioning. Congress also has a 
responsibility to examine the operation of current laws on the 
government and private parties. This Committee is particularly 
well-suited to conduct such a broad oversight inquiry into the 
multifarious elements of this scandal because it has the 
broadest oversight jurisdiction in the Senate: ``to study or 
investigate the efficiency and economy of operations of all 
branches of the Government.'' 1
    \1\ S. Res. 54, Section 13(d)(1), 143 Congressional Record S1421 
(daily ed. Feb. 13, 1997).
    The investigation reviewed the operations of a large number 
of disparate agencies. From the Commerce Department, which 
employed John Huang, to the Interior Department and the role of 
campaign contributions on the approval of off-reservation 
Indian casinos, to the Energy Department, senior officials of 
which were caught up in Roger Tamraz's effort to buy access and 
to secure a change in U.S. policy in return for political 
contributions to the Democratic Party, to the White House staff 
and its role in developing and implementing a scheme to evade 
the campaign expenditure limits during the President's re-
election campaign, the Committee probed into the often-ignored 
corners of government operations to shine light on the impact 
political contributions may have on the formulation and 
substance of government policy. The hearings informed the 
Committee, the Senate, and the American people of these matters 
and enhanced our knowledge, not always in a way that made us 
proud, but hopefully in a way that will improve our government.
    The third purpose of the hearings is the one on which the 
Senate's ability to conduct this type of investigation is 
founded, its constitutional role to legislate. The Senate 
cannot legislate without knowing what is happening. How do the 
laws the Congress passes work in the real world? What gaps 
exist in their coverage? What gaps exist in the government's 
enforcement capabilities? Are there situations where legal 
proscriptions do not work? These are the types of questions 
relevant to any congressional hearing, as they are central to 
the role of Congress in our constitutional republic. The 
Committee went forward always bearing in mind that its entire 
authority was premised on the underlying legislative 
responsibilities of Congress, even though the Committee itself 
lacked legislative jurisdiction over many of the items at issue 
in these hearings. For this reason, the Committee did not hold 
hearings on particular legislative proposals; it never examined 
what works and does not work with an eye towards developing and 
recommending a legislative solution, which is typically the 
responsibility of the legislative committee with legislative 
jurisdiction conferred by Rule XXV of the Standing Rules of the 
Senate. The hearings did, however, develop a factual record on 
which other committees with such jurisdiction can rely in 
formulating legislative proposals. Thus, it is the expectation 
of the Committee that the facts developed by its investigation 
and revealed in its hearings will be of use to the Committee on 
Rules and Administration, when it considers legislation to 
reform campaign finance laws, and to the other members of the 
Senate. Other information developed by the Committee should be 
relevant to other committees in the exercise of their 
legislative and oversight responsibilities. Finally, some of 
the issues investigated by the Committee touched on matters 
within the legislative jurisdiction of the Committee, such as 
potential violations of the Hatch Act.
    This report should be considered an interim report to the 
American people and the Senate on the results of the 
Committee's investigation. Because the time allotted to the 
Committee to conduct the inquiry was severely limited, the 
Committee was unable to complete the inquiry, leaving a number 
of questions unanswered. This report may serve as a starting 
point for other Senate committees, the House of 
Representatives, and the Department of Justice to continue the 
investigations into the multifaceted aspects of the issues 
broached by the Committee's investigation.

                         procedural chronology

    When the 105th Congress convened in early January 1997, 
Senator Fred Thompson (R-TN) was confirmed as the chairman of 
the Committee. On January 7, 1997, Chairman Thompson named 
Hannah Sistare as staff director of the Committee and hired 
Michael J. Madigan, a partner in the Washington, D.C., law firm 
of Akin, Gump, Strauss, Hauer & Feld, to serve as chief counsel 
for the special investigation into campaign fundraising abuses 
in the 1996 elections. Senator John Glenn (D-OH) was selected 
as the ranking minority member of the Committee, and he named 
former Senate Legal Counsel Michael Davidson to serve as 
minority chief counsel for the special investigation.
    Within a week of hiring Madigan, the Committee hired three 
additional lawyers to serve as senior counsel to assist in the 
supervision of the special investigation: Harold Damelin, 
former chief counsel of the Permanent Subcommittee on 
Investigations of the Committee on Governmental Affairs; J. 
Mark Tipps, former chief of staff to Senator Bill Frist (R-TN); 
and Harry S. Mattice, a partner in the Chattanooga, TN, law 
firm of Miller & Martin. In the spring, after a resolution 
providing additional funds to the Committee for the purpose of 
conducting the special investigation had been approved, the 
majority also hired Donald T. Bucklin, a partner in the 
Washington, D.C. law firm of Squire, Sanders & Dempsey, as 
senior counsel and promoted Tipps from senior counsel to deputy 
chief counsel. While some additional staff were hired in 
January and February, the hiring of most of the legal, 
investigative, and support staff to conduct the special 
investigation awaited the adoption by the Senate of a funding 
resolution to provide the necessary resources.
    On January 28, 1997, Chairman Thompson delivered his 
initial statement to the Senate explaining the purposes of the 
inquiry.2 The Chairman explained that the Committee 
would not be engaged in ``a criminal investigation,'' which is 
the constitutional responsibility of the executive. Chairman 
Thompson identified two central purposes appropriate for 
congressional committees, and these would set the parameters 
and tone for the investigation. First, the Committee would 
undertake an inquiry with a legislative purpose: to inquire 
into and lay out the facts to help inform Congress of the 
operation of the law and to assist the Senate in determining 
whether relevant laws need to be changed or repealed or new 
laws adopted. Second, the Committee would attempt to fulfill 
what President Wilson called ``the informing function of 
Congress,'' whereby the Committee would seek to find the facts 
and reveal them for the American people, so that they can make 
informed political choices.
    \2\ See 143 Congressional Record S 716-18 (daily ed. Jan. 28, 
    The Chairman made it clear that the inquiry would not be a 
partisan affair directed at the activities of only one 
political party. As he informed the Senate, the Committee's 
``work will include any improper activities by Republicans, 
Democrats, or other political partisans.'' The goal was to 
ensure that the American people perceive the investigation and 
subsequent hearings ``as being fair and evenhanded.'' The 
Chairman was clear, however, that a bipartisan investigation 
would not be governed by the need ``to create some false 
balance'' between the political parties. The investigation 
would examine ``activities . . . not political parties'' and 
the Chairman was prepared to let ``the chips fall where they 
    As the Committee sought to initiate its inquiry, three 
central issues had to be resolved: what was the precise scope 
of the inquiry; what resources were to be available to the 
Committee; and what time period would be allotted to the 
Committee to conduct its inquiry. These three issues consumed a 
great deal of time, longer than was anticipated, and, in light 
of the time limit ultimately imposed on the inquiry, the delays 
in resolving these issues had a significant effect on the 
conduct of the inquiry and the hearings.
    After consulting with his colleagues in the majority and 
reviewing the scope of similar inquiries, Chairman Thompson 
proposed an investigation that would examine illegal and 
improper campaign fund-raising and spending activities in the 
1996 federal election cycle. Chairman Thompson wanted to ensure 
that the investigation would not be tied up by partisan 
politics, as had occurred when the minority was able to tie up 
an extension in the authorization for the Senate Special 
Committee to Investigate Whitewater Development Corporation and 
Related Matters in the 104th Congress. He therefore sought a 
budget that would permit the Committee to conduct a thorough 
inquiry without requiring that the Committee seek additional 
funds from the Senate while pursuing the investigation. He also 
insisted that no deadline be imposed on the investigation, 
consistent with the recommendations of former Senators George 
Mitchell and Bill Cohen, which they developed in light of their 
experience with the Senate's 1987 investigation of the Iran-
Contra affair.
    On January 29, 1997, the Committee held its organizational 
meeting for the 105th Congress. In addition to its regular 
budget, Chairman Thompson proposed a budget of $6.5 million for 
the special investigation, which he proposed would look into 
illegal and improper activities during the 1996 elections. This 
budget was proposed after consulting on January 28 with the 
majority members of the Committee.3 No deadline on 
the special investigation was proposed. While the minority 
supported a broad scope for the investigation, it insisted on a 
deadline and refused to support a budget that would allow the 
Committee to carry on its work without coming back to the 
Senate for additional funding. The minority countered with a 
proposal that included a time-limited investigation with a 
broad scope and a budget of $1.8 million, which it argued would 
be adequate for commencing the inquiry, but which would clearly 
be inadequate for completing the inquiry.
    \3\ The proposed $6.5 million budget was based on an evaluation of 
the scope of the investigation the Committee was to pursue as well as 
comparisons with other major Senate investigations. For example, a 
review of the most analogous investigations showed that the 1973 
Watergate Committee spent $6.9 million in 1997 dollars; the 1987 Iran-
Contra Committee (a joint Senate-House committee) spent a little over 
$5 million in 1997 dollars; the 1995-96 Whitewater Committee spent $1.8 
million (not counting Banking Committee resources known to have been 
spent on that investigation). Other major congressional investigations 
consumed far more than $6.5 million sought by Chairman Thompson (the 
1975 Church Committee on the activities of the intelligence community 
spent $8.66 million; the 1957 McClellan Committee on improper labor 
activities spent $11.46 million; and the 1977 House Select Committee on 
Assassinations spent $15.31 million (all figures are in 1997 dollars)).
    Due to the strong disagreement between the majority and 
minority on the Committee, the Committee vote on the funding 
resolution for the investigation was put over to January 30 to 
allow members to try to work out a compromise, which proved 
elusive. While the minority supported Chairman Thompson in 
seeking a broad scope to the inquiry to allow investigation of 
both illegal and improper activities, it was unwilling to pay 
for such an expansive inquiry or allow sufficient time to 
conduct one. The funding proposed by the minority was grossly 
inadequate to support a thorough inquiry of the facts covered 
by the broad scope the minority proposed.
    When the Committee met on January 30, it unanimously 
approved a broad scope to allow the Committee to investigate 
illegal or improper activities in connection with 1996 federal 
election campaigns. By a 9-4 vote, the Committee then approved 
a proposed budget of $6.5 million for an investigation without 
a deadline.4 The Committee voted to include within 
the broad scope of its investigation:
    \4\ The three additional minority members of the Committee opposed 
the resolution by proxy, but proxy votes are not counted on a motion to 
report a measure to the Senate from the Committee. Rule 3C, Rules of 
the Committee on Governmental Affairs. See 143 Congressional Record 
S1195 (daily ed. Feb. 10, 1997) (reprinting the Committee Rules).
          Illegal or improper fund-raising and spending 
        practices in the 1996 federal election campaigns, 
        including but not limited to:
                  Foreign contributions and their effect on the 
                American political system;
                  Conflicts of interest involving federal 
                officeholders and employees, as well as misuse 
                of government offices;
                  Failure by federal government employees to 
                maintain and observe legal barriers between 
                fund-raising and official business;
                  The independence of the presidential 
                campaigns from the political activities pursued 
                for their benefit by outside individuals or 
                  The misuse of charitable and tax-exempt 
                organizations in connection with political or 
                fund-raising activities;
                  Unregulated (``soft'') money and its effect 
                on the American political system;
                  Promises and/or the granting of special 
                access in return for political contributions or 
                  The effect of independent expenditures 
                (whether by corporations, labor unions, or 
                otherwise) upon our current campaign finance 
                system, and the question as to whether such 
                expenditures are truly independent;
                  Contributions to and expenditures by entities 
                for the benefit or in the interest of public 
                officials; and
                  To the extent they are similar or analogous, 
                practices that occurred in previous federal 
                election campaigns.5
    \5\ See S. Rep. 105-7, Report of the Committee on Governmental 
Affairs to Accompany S. Res. 39, p. 3.
    As provided by the Standing Rules of the Senate, the 
proposed funding resolution was referred to the Committee on 
Rules and Administration. Due to controversy over the scope of 
the investigation, the amount of money being sought, and the 
lack of a deadline, the Rules Committee decided to consider the 
Committee's routine, recurring budget request with those of all 
other committees and then consider the budget request for the 
special investigation separately. On February 6, the 
Committee's recurring budget was to be considered by the Rules 
Committee, and the request for funding the special 
investigation was specifically put off and was not to be 
considered. On that date, Chairman Thompson testified in favor 
of the Committee's recurring budget request, but Senator Glenn 
opposed the request, arguing that the recurring budget for 
normal Committee activities not be approved until the 
disagreement over the funding for and scope of the special 
investigation was resolved. Nevertheless, the Rules Committee 
approved the Committee's recurring budget together with those 
of all other Senate committees. This recurring budget was 
adopted by the Senate in S. Res. 54.6
    \6\ S. Res. 54 was approved by the Senate by unanimous consent on 
February 13, 1997. 143 Congressional Record S 1418 (daily ed. Feb. 13, 
    Major issues surrounding the investigation's scope, 
duration, and funding remained. While discussions among the 
various parties were underway to resolve these issues, the 
Committee initiated its investigation. In January, the small 
majority staff of the special investigation started to put 
together a list of the central figures in the scandal from news 
media accounts in preparation for the issuance of subpoenas. 
The minority was asked in January to develop its own list of 
potential recipients of subpoenas. On February 7, 1997, the 
majority staff provided copies of proposed subpoenas to the 
minority staff pursuant to Rule 5C of the Rules of Procedure of 
the Committee on Governmental Affairs.7 Additional 
subpoenas were presented to the minority on February 10, 1997. 
That same day, a list of all subpoenas proposed by the majority 
was provided to all members of the Committee.
    \7\ See 143 Congressional Record S 1195 (daily ed. Feb. 10, 1997) 
(reprinting the Committee Rules).
    On February 13, 1997, the Committee held a business meeting 
to discuss the 54 proposed subpoenas. At that meeting, the 
Committee approved the issuance of 44 subpoenas by unanimous 
consent. The remaining 10 subpoenas were authorized to be 
issued by a vote of the Committee, but their issuance was 
deferred until February 19.
    Despite the fact that the minority had been asked in 
January to develop a list of individuals and groups it believed 
ought to be subpoenaed, no such minority list was ready by 
February 13. On that day, the minority directed its legal staff 
to start the task which the majority had proposed to the 
minority in January.
    Additional subpoenas were proposed to the minority on 
February 24, 1997, and the Committee staff moved ahead and 
began interviewing relevant persons on February 25, 1997. The 
next day, Michael Davidson was replaced as minority chief 
counsel by Alan Baron, a partner in the Washington, D.C. law 
firm of Foley, Hoag & Eliot.
    While these steps towards initiating the investigation were 
being taken, serious questions remained over whether the Senate 
would even conduct the inquiry, despite the serious allegations 
that had arisen in the media. On February 27, 1997, the Senate 
Minority Leader announced that the minority would filibuster 
the resolution to fund the special investigation unless 
agreement were reached on the amount of funding and a cut-off 
date for the probe and its scope. The Minority Leader also 
insisted on a firm date for Senate consideration of campaign 
finance reform legislation as a condition of allowing the 
special investigation to go forward.
    In an effort to move forward, on March 4, 1997, Chairman 
Thompson reduced the budget request for the investigation to 
$5.7 million, but continued to oppose the imposition of a 
deadline on the investigation to avoid delaying tactics 
designed to stretch the investigation out to the cutoff date.
    The proposed funding resolution was to come before the 
Rules Committee on March 6, 1997. While the Minority continued 
to seek a cut-off date and limited funding to allow them to 
control the investigation, many Republicans were concerned 
about the broad scope of the inquiry, which allowed the 
investigation to look into improper as well as illegal 
activities. Many Republicans feared that if that broad scope 
approved by the Committee were adopted, the investigation would 
lose its focus on the more serious illegal activities during 
the 1996 federal elections, and thus be sidetracked into 
possible activities that were improper but not illegal. Thus, 
as the Rules Committee moved to consider the issue, the 
possibility was strong that no investigation would take place.
    On March 5, 1997, the Majority Leader decided to strike 
what he thought would be an appropriate compromise. Under the 
Majority Leader's plan, the scope of the inquiry would be 
narrowed to encompass solely illegal activities. This change 
would meet Republican concerns. He also proposed a deadline of 
December 31, 1997, a change that would meet the Democrats' 
concerns. Finally, he proposed a budget of $4.35 million, an 
amount he thought adequate to conduct the investigation through 
the end of the year. Chairman John Warner (R-VA) of the Rules 
Committee agreed to offer the Majority Leader's proposal as a 
    On March 6, 1997, the Rules Committee heard testimony from 
Chairman Thompson and Senator Glenn on the funding resolution. 
Both Senators opposed the narrow scope of the proposed 
compromise, and Chairman Thompson argued against imposing a 
deadline on the inquiry. Nonetheless, Chairman Warner offered 
the compromise amendment developed by the Majority Leader to S. 
Res. 39, the funding resolution, which was approved by the 
Rules Committee on a party-line 9-7 vote.
    On March 10, 1997, the Committee filed its report, as 
required by Rule XXVI.9(a) of the Standing Rules of the Senate, 
justifying the Committee's request for non-recurring funding to 
support the special investigation.\8\ The Senate took up the 
funding resolution that day, and debate continued into March 
11. During the debate, Senators from both the majority and 
minority expressed concern over the narrowed scope of the 
inquiry. To meet these concerns, Chairman Warner and the 
Majority Leader offered an amendment that would have required 
the Committee to refer to the Rules Committee any evidence of 
improper activities in connection with the 1996 federal 
    \8\ See S. Rep. 105-7, Report of the Committee on Governmental 
Affairs to Accompany S. Res. 39, Authorizing Expenditures by the 
Committee on Governmental Affairs.
    \9\ See Amendment No. 22, as modified. 143 Congressional Record 
S2097 (daily ed. March 11, 1997).
    Because the distinction between what was illegal and what 
was merely improper was vague at the time and has continued to 
befuddle many acute observers, including the Attorney General 
of the United States, some members of the Committee took the 
position that this proposed amendment was not a satisfactory 
resolution. The Majority Leader thus offered Amendment No. 23 
for himself, Chairman Thompson, and Chairman Warner to amend S. 
Res. 39 as reported by the Rules Committee to broaden the scope 
of the investigation so that it would cover improper as well as 
illegal activities.\10\ Amendment No. 23 was approved by a vote 
of 99-0 with one senator voting ``present,'' \11\ and S. Res. 
39 was also approved, as amended, by the identical vote.\12\
    \10\ See 143 Congressional Record S2109 (daily ed. March 11, 1997).
    \11\ Id. at S2114.
    \12\ Id. at S2125.

                     Overview of the Investigation

    With the approval of $4.35 million in funding for the 
special investigation, the Committee was finally able to hire 
staff to conduct the investigation. Only nine and a half months 
remained for the Committee's investigation, which would now 
cover a broad scope. Two months into the Congress, the real 
work of the Committee could finally commence.
    Scores of allegations of wrongdoing, either illegal or 
improper activities, had been brought to the Committee's 
attention, primarily through the news media. The Committee 
staff had to analyze each of these allegations, prioritize them 
for the investigation, investigate them, prepare for hearings, 
and hold hearings all in the space of nine months.
    The first task was to complete the hiring of necessary 
staff. The majority staff eventually grew to include 23 lawyers 
(including the chief counsel, deputy chief counsel, and three 
senior counsel), two investigators, and necessary support 
staff. In addition, the majority staff included an investigator 
detailed from the General Accounting Office. The minority staff 
included 14 lawyers (including the chief counsel and deputy 
chief counsels), and necessary support staff. Both the majority 
and minority were able to use jointly the resources of nine 
special agents of the Federal Bureau of Investigation, who were 
detailed to the Committee. The work of these agents proved of 
invaluable assistance to the Committee, which could not have 
undertaken the extensive investigation it was able to conduct 
without these professional investigators, many of whom spoke 
relevant foreign languages, notably Chinese.
    Between March and the end of the year, a period of only 
nine and a half months, after hiring staff, the Committee 
conducted as thorough and complete an investigation as time 
permitted. During that span, the Committee issued 427 subpoenas 
requested by both the majority and minority either for 
documents or for testimony. The Committee received in response 
to its subpoenas over 1,500,000 pages of documents, all of 
which had to be reviewed and the relevance of each assessed. 
Committee staff took 200 depositions and conducted over200 
witness interviews. The Committee held 32 days of hearings, taking 
testimony from 72 witnesses. Finally, the Committee undertook to 
prepare this report as directed by the Senate.

                    The Conduct of the Investigation

    As the Committee started to hire staff, it also began in 
earnest to pursue the investigation into illegal and improper 
campaign fund-raising and spending activities during the 1996 
election cycle. In addition to the first 54 subpoenas issued in 
February, the Committee issued nine subpoenas on March 26, 
    Two weeks later, on April 9, 1997, the Committee issued 
another 10 subpoenas, including the first six requested by the 
minority. In doing so, the Committee demonstrated its 
willingness to follow the Chairman's commitment to proceed in a 
bipartisan manner to investigate illegal and improper 
activities that may have been committed by supporters of either 
political party.
    Also on April 9, the Committee sent its initial request for 
documents, video and audio tapes, e-mail, and other records to 
the White House. This request had been discussed in advance 
with the Counsel to the President and his staff to ensure 
prompt compliance. It contained the first 28 specific document 
requests the Committee would make of the White House. 
Unfortunately, it also led the White House to begin in earnest 
its efforts to obstruct and delay the investigation so as to 
run the Committee up against the deadline imposed by the 
Senate. The White House's production of records was so poor 
from the earliest stages of the investigation that on May 13, 
about one month after the first request was sent, Chairman 
Thompson called Erskine Bowles, Chief of Staff to the 
President, to express his concern over the slow pace of White 
House document production. Although Bowles promised improved 
performance, the White House's responses to the Committee's 
document requests remained so poor as to force the Committee to 
issue a subpoena to the White House on July 31 by unanimous 
vote. Even after it received the Committee's subpoena, however, 
the White House's production remained untimely and laggard, 
culminating in the belated production in October of relevant 
videotapes responsive to the Committee's April document 
request. The White House's obstructionism in this investigation 
brought discredit on the President and his staff.
    The Committee issued its first 17 subpoenas for bank 
records to seek to trace the source of political contributions 
on April 15 and April 17, 1997. On May 22, 1997, the Committee 
voted to issue 43 additional subpoenas, including one to the 
American Federation of Labor-Congress of Industrial 
Organizations (``AFL-CIO'') and several to individuals 
associated with the National Policy Forum (``NPF''), a think-
tank founded by the Republican National Committee (``RNC''). An 
additional 26 subpoenas, 23 of which were for bank records, 
were issued on June 3, 1997. The final subpoenas for documents 
and records issued by the Committee prior to the start of its 
public hearings were approved on June 12, when the Committee 
voted to issue 24 subpoenas.
    The votes on May 22 to issue subpoenas marked the first 
participation in the investigation by Senator Bob Smith (R-NH) 
and Senator Robert Bennett (R-UT), who had been selected to 
replace Senator Ted Stevens (R-AK) and Senator William Roth (R-
DE) on the Committee for the duration of the 
    \13\ See S. Res. 89. 143 Congressional Record S4915 (daily ed. May 
21, 1997).
    At the Committee business meeting on June 22, Chairman 
Thompson announced that the public hearings would begin on July 
8, despite the fact that the investigation had been ongoing in 
earnest only for a little over three months. Nonetheless, the 
existence of the December 31 deadline to complete the 
investigation demanded the start of hearings this early, 
particularly in the face of the upcoming August recess.
    From the time the investigation was authorized, the 
Committee was issuing subpoenas and receiving a large number of 
documents from many parties. The Committee had also started 
interviewing and deposing witnesses during the spring. The 
investigation was proceeding with a broad focus because of the 
large number of disparate allegations that had been raised 
concerning possibly illegal or improper activities during the 
1996 federal elections.
    To conduct a thorough and comprehensive inquiry into both 
illegal and improper activities, including the role of non-
profit groups in influencing federal elections, Chairman 
Thompson indicated during the spring that the Committee's 
inquiry would proceed in two phases. The first phase would 
focus on illegal activities engaged in by candidates and 
political parties. The emphasis of this first phase would be on 
trying to determine the amount of foreign money contributed to 
candidates and parties during the 1996 elections. An additional 
area of focus of the first phase of the inquiry would be the 
laundering of campaign contributions, as related to foreign 
contributions, which were often laundered through those who 
could lawfully contribute. Other areas of inquiry that would be 
covered by the first phase were the sale of access and policy 
decisions in return for political contributions. The second 
phase of the investigation would focus on the role of non-
profit and issue advocacy groups and labor unions in the 1996 
elections, particularly the issue of whether these groups 
illegally coordinated their expenditures with the White House, 
the parties, or particular candidates or otherwise engaged in 
improper activity.
    As the investigation proceeded and the Committee sought to 
prepare for the start of public hearings, it encountered 
significant obstruction to its inquiry from several sources. 
Despite promises of cooperation, the White House continued to 
produce little information, slowly, and what the White House 
did produce to the Committee was often released first to the 
news media, especially if the information was deemed 
embarrassing to the President. The DNC, whose 1996 campaign 
fundraising and spending practices had led directly to the 
Senate authorizing the investigation, was similarly 
recalcitrant in producing relevant documents in a timely 
manner. Both the White House and the DNC, which acknowledged 
acting in concert in formulating a strategy to respond to the 
1996 campaign fundraising improprieties,14 appeared 
to have developed a shared strategy based on the Senate's 
decision to impose a deadline on the investigation: they would 
produce information slowly, make any conceivable objection to 
its production, and then produce only a portion of it after 
requiring great exertion by the Committee in an effort to delay 
the inquiry until it ran out of time.
    \14\ The DNC even attempted to protect information by asserting the 
attorney-client privilege both over document production and in 
depositions based on discussions between the DNC witnesses and White 
House officials, including White House lawyers. In a June 6, 1997 
order, Chairman Thompson overruled the assertion of the attorney-client 
privilege as to discussions between DNC officials and White House 
    Despite the delaying tactics of the White House and DNC, 
the Committee developed a great deal of information in a 
relatively short period of time. Large numbers of documents had 
been received from many sources, and depositions and interviews 
were being conducted. In addition, on June 6, 1997, three 
members of the majority staff, two detailed FBI agents, and one 
member of the minority staff undertook an investigative trip to 
Hong Kong, Taiwan, Macao, and Indonesia to collect information 
and interview witnesses.15
    \15\ The Committee sought permission to send staff to the People's 
Republic of China (PRC) to interview witnesses there, but the PRC 
refused to issue visas to Committee staff for the purpose of conducting 
fact-gathering within the PRC. Accordingly, no staff traveled to the 
    Of perhaps equal importance to the information the 
Committee was gathering, however, was the information the 
Committee was unable to obtain. Thirty-five witnesses with 
information relevant to the Committee's investigation asserted 
the Fifth Amendment right against self-incrimination and 
refused to testify and/or produce documents in response to a 
Committee subpoena. In late June, the Committee began 
considering whether to grant immunity to some of the witnesses 
who had invoked their Fifth Amendment right. On June 27, the 
Committee voted to confer immunity on four witnesses. On July 
23, the Committee voted to immunize another five witnesses. 
Thus, the Committee voted to immunize nine witnesses, five of 
whom eventually testified in open session during the 
Committee's hearings. An additional ten potential witnesses 
fled the country and were beyond the Committee's ability to 
issue legal process. The Committee was unable to contact any of 
these individuals during the staff's foreign trip. While the 
Committee was able to interview a number of foreign witnesses 
during that trip, 12 potential foreign witnesses who were 
contacted refused requests for interviews, among whom were some 
of the most important, including James Riady and Ng Lap Seng.
    In addition to Committee's struggle with the obstructionist 
tactics of the White House and the DNC, it encountered 
resistance from a number of non-profit organizations that 
received subpoenas in July, when the Committee started planning 
to conduct the second phase of its investigation. Many of the 
non-profit organizations that refused to comply had reportedly 
played significant roles in the 1996 elections. The Committee 
was interested particularly in seeking to determine whether 
these organizations, which had primarily engaged in making 
allegedly independent expenditures to broadcast so-called issue 
advocacy advertisements, had coordinated their activities with 
candidates or political parties in violation of the Federal 
Election Campaign Act. The Committee subpoenaed a total of 31 
such organizations. Of these, a number refused to produce 
documents to the Committee, asserting a variety of 
constitutional objections, most of which were without any legal 

                       the impact of the deadline

    The inability of the Committee to procure large amounts of 
relevant information was largely attributed to the imposition 
by the Senate of the December 31, 1997, deadline. This deadline 
essentially invited witnesses and organizations to refuse to 
comply with subpoenas. The deadline also encouraged other 
witnesses and organizations, particularly the White House and 
the DNC, to produce documents and videotapes responsive to 
Committee subpoenas in a slow, drawn out manner in an effort to 
run the clock out on the Committee's investigation.
    Shortly after the Committee issued its first set of 
document subpoenas, several recipients informed the Committee 
that they were invoking their Fifth Amendment right against 
self-incrimination and would therefore not produce responsive 
documents. The Fifth Amendment privilege does not, however, 
protect the contents of documents. It can protect the act of 
producing documents when that act is itself testimonial (i.e., 
the act of production demonstrates the existence of a 
particular document). This ``act of production'' privilege 
under the Fifth Amendment only applies to personal documents; 
it does not apply to the act of producing business records, for 
example, that happen to be in the possession of the person 
    In the absence of the December 31 deadline, the Committee 
could have sought a judicial determination as to the 
appropriateness of various witnesses' efforts to assert broadly 
their Fifth Amendment privilege against self-incrimination with 
respect to all the documents in their possession. Due to the 
December 31 deadline, however, the Committee was essentially 
foreclosed at the outset from pursuing the routine course of 
seeking a judicial determination as to the appropriateness of 
the large number of Fifth Amendment claims. The deadline made 
it unlikely the Committee would have ever received the 
responsive documents in a timely manner. Had the Committee 
sought to enforce its subpoenas against Huang, Webster Hubbell, 
Yah Lin ``Charlie'' Trie, Mark Middleton, and the other central 
witnesses who refused even to produce documents, it is likely 
that the judicial subpoena enforcement actions would not have 
been completed in time to receive the documents had it 
prevailed in the enforcement actions. Even had the documents 
been received prior to the expiration of the deadline, they 
would have been received so late as to have been virtually 
    Had the Committee filed enforcement actions in April, 
responsive pleadings would have been due in May. The district 
judge would then have had to review the relevant documents in 
camera, a time-consuming task. Even with an expedited decision, 
the Committee staff determined it was unlikely to receive a 
decision before July, and any decision rendered by a district 
judge would have been subject to an appeal, which almost 
certainly would have taken to close to the end of the year.
    Because of this likely timeline, the Committee staff 
determined not to expend resources to litigate enforcement 
actions that would not benefit the investigation. Had the 
Committee chosen to pursue enforcement actions, its staff would 
have been expending its limited time on enforcement rather than 
on the investigation itself. Such a diversion of resources was 
not an option given the limited amount of time in which the 
Committee had to conduct its investigation and hold hearings. 
In effect, the Committee had no choice but to proceed without 
all the documents or testimony relevant to the investigation, 
or else it might have run out of time and could have conducted 
no investigation at all.
    The inability to pursue these initial enforcement actions 
was due directly and solely to the deadline imposed by the 
Senate on the duration of the investigation. Once the initial 
pattern hadbeen set whereby the Committee did not seek to 
enforce its lawful process, others were encouraged to flout the 
Committee's subpoenas. Most troubling of all were the organizations 
which had played significant roles and spent large sums of money during 
the 1996 election cycle. As was already noted, the Committee issued a 
subpoena to the AFL-CIO on May 22, 1997 requiring it to produce 
responsive documents to the Committee by the middle of June. Over two 
months late, on August 20, 1997, the AFL-CIO finally informed the 
Committee that it would not produce any documents in response to the 
subpoena, other than a few pages of documents that were already in the 
public domain. Again, the deadline prevented the Committee from seeking 
to enforce the subpoena.
    On July 31, 1997, before the AFL-CIO expressed its contempt 
for the lawful processes of the Senate, an additional 24 non-
profit organizations active in the 1996 federal election 
campaigns were subpoenaed to permit the Committee to determine 
whether these organizations had acted legally by making 
independent expenditures or illegally by coordinating their 
activities with candidates and political parties. With the 
example of the AFL-CIO and the Committee's powerlessness to 
proceed against the AFL-CIO set before them, a number of these 
24 non-profit organizations informed the Committee in late 
August and early September that they would not comply with the 
subpoenas they had received. Among these organizations that 
refused to comply was the Teamsters union, whose documents were 
clearly relevant to the Committee's inquiry, as three of its 
officials have pleaded guilty to a participating in a broad 
criminal conspiracy that included contribution swaps between 
the union and the DNC.16
    \16\ The investigation into the Teamsters has broadened and media 
reports indicate that the second-ranking figure of the AFL-CIO, Richard 
Trumka, has invoked his Fifth Amendment right against self-
incrimination in response to the grand jury. Trumka simply ignored a 
Committee subpoena seeking his deposition testimony, and the reason for 
that is now obvious: he wanted to delay the embarrassment to organized 
labor of having one of its most senior officials assert his Fifth 
Amendment rights.
    The deadline not only prevented the Committee from 
enforcing its subpoenas, but also encouraged other subpoena 
recipients to dribble documents out over months and months in 
an effort to run out the clock on the Committee. The parties 
that perfected this routine to a high art were the White House 
and the DNC. The particulars of the delays practiced by these 
entities are set out in detail in the body of the report. 
Suffice it to say here that the White House continued the 
pattern of delay, obstruction, and evasion that it had 
practiced in the House Travel Office and Senate Whitewater 
investigations. The DNC studied from the White House playbook 
and apparently learned its lessons well.
    It was not only these political entities that failed to 
produce relevant information to the Committee in a timely 
manner. Even though the possibility that foreign governments 
may have sought to influence U.S. elections was a central focus 
of the investigation, the FBI failed to find critical and 
relevant information in its own files until well after the 
hearings had started and, in one importance instance, not until 
after the hearings had ended.
    The deadline had one further important effect on the 
investigation. Because the work of the Committee had to be 
completed by the end of the year, the Committee was unable to 
proceed in the most orderly fashion of conducting and 
completing its investigation and then holding hearings to lay 
the facts before the Senate and the American people. Instead, 
the Committee had to begin holding hearings while the 
investigation was still quite new and ongoing. Many of the 
basic facts of several aspects of the investigation had not yet 
been developed when the hearings commenced.

                              the hearings

    Although its investigation had then been underway in 
earnest--with Senate-approved funding and an adequate staff--
only for three and a half months, the Committee started holding 
public hearings in July 1997. By the time public hearings had 
concluded at the end of October, the Committee had held 32 days 
of hearings at which 72 witnesses testified.17
    \17\ The Committee heard from 70 different witnesses; two witnesses 
appeared twice.
    With jurisdiction encompassing such a broad range of 
wrongdoing and with such little time available, the Committee's 
selection of witnesses and subject matter for its public 
hearings required making difficult choices. The choice of 
subject matter for individual days and segments of hearings at 
this early stage of the inquiry, as outlined by Chairman 
Thompson in his ``two-phase'' approach, was dictated both by a 
focus on campaign finance illegalities and by a process of 
issue triage, whereby the Committee restricted itself to the 
most serious matters it was capable of properly developing in 
the time available.
    Because much of the Committee's initial inquiry focused on 
the most troubling issues of foreign contribution-laundering, 
the first month of hearings focused largely on these matters. 
Much information relevant to this aspect of the inquiry 
remained unknown because of the large number of potential 
witnesses who chose to flee the country or invoke their Fifth 
Amendment rights. Furthermore, because it implicated sensitive 
U.S. intelligence and counter-intelligence activities, much of 
the relevant information was classified by executive branch 
agencies and could not be disclosed in open session. While 
Committee members obtained a picture of the U.S. intelligence 
and law enforcement communities'' understanding of such issues, 
it proved impossible for the Committee to convey more than the 
mere outlines of the situation to the American people. The 
Committee was able, however, to bring to light evidence that 
foreign-source contributions to the DNC were laundered through 
domestic ``straw donors'' during the 1996 election cycle.
    In addition to illegal foreign contributions and the 
laundering of such funds, the hearings focused on campaign 
fundraising that took place on government property. The 
Committee heard evidence, for example, of widespread 
fundraising in the White House. It also heard testimony 
regarding fundraising solicitations from government offices 
using government telephones, in violation of 18 U.S.C. 
Sec. 607. The hearings also inquired into whether the DNC, 
particularly its fundraising and advertising activities, were 
run out of the White House by federal employees.
    The Committee uncovered a donation-laundering scheme 
involving a prominent Democratic fundraiser and the 
exploitation of a foreign religious institution that began at 
least as early as 1993 and continued through the 1996 election, 
the principal architects of which have reportedly been linked 
to the intelligence service of a foreign government.
    Having discovered that part of the scheme to raise large 
contributions for the DNC involved the sale of access to senior 
government officials--thereby also offering major donors the 
concomitant opportunity to purchase policy concessions through 
an implicit quid pro quo arrangement, the Committee also turned 
its attention to these matters.
    The Committee also held hearings to explore the legal 
context in which the abuses of the 1996 elections occurred. 
Although the Committee lacks legislative jurisdiction over 
campaign finance reform legislation, its hearings had 
established a record of the operation of current laws. The 
Committee sought to explicate the legal and institutional 
context in which the abuses and evasion of law which its 
investigatory hearings were highlighting occurred, and it heard 
from leading experts on campaign finance issues, who helped 
explain what had gone wrong in 1996.American people. The 
Committee was able, however, to bring to light evidence that foreign-
source contributions to the DNC were laundered through domestic ``straw 
donors'' during the 1996 election cycle.
    In addition to illegal foreign contributions and the 
laundering of such funds, the hearings focused on campaign 
fundraising that took place on government property. The 
Committee heard evidence, for example, of widespread 
fundraising in the White House. It also heard testimony 
regarding fundraising solicitations from government offices 
using government telephones, in violation of 18 U.S.C. 
Sec. 607. The hearings also inquired into whether the DNC, 
particularly its fundraising and advertising activities, were 
run out of the White House by federal employees.
    The Committee uncovered a donation-laundering scheme 
involving a prominent Democratic fundraiser and the 
exploitation of a foreign religious institution that began at 
least as early as 1993 and continued through the 1996 election, 
the principal architects of which have reportedly been linked 
to the intelligence service of a foreign government.
    Having discovered that part of the scheme to raise large 
contributions for the DNC involved the sale of access to senior 
government officials--thereby also offering major donors the 
concomitant opportunity to purchase policy concessions through 
an implicit quid pro quo arrangement, the Committee also turned 
its attention to these matters.
    The Committee also held hearings to explore the legal 
context in which the abuses of the 1996 elections occurred. 
Although the Committee lacks legislative jurisdiction over 
campaign finance reform legislation, its hearings had 
established a record of the operation of current laws. The 
Committee sought to explicate the legal and institutional 
context in which the abuses and evasion of law which its 
investigatory hearings were highlighting occurred, and it heard 
from leading experts on campaign finance issues, who helped 
explain what had gone wrong in 1996.
    On October 1, 1997, as these ``policy'' hearings came to a 
close, the Committee learned that the White House had only 
recently discovered a large number of video and audio tapes 
responsive to requests for information the Committee had made 
as early as April and called for in the July subpoena as well. 
The story of the White House video tapes, the contents thereof, 
and the White House's failure to produce them in a timely 
manner would become a focus of the remaining month of public 
    As the first phase of the Committee's hearings moved 
towards completion, the Committee had to determine whether to 
proceed with the second phase, in which it had intended to 
focus on the political activities of various non-profit groups. 
Because most of the significant non-profits groups had failed 
to comply with the Committee's subpoenas, however, the 
Committee had little information beyond that already in the 
public domain. By October 1997, moreover, because of the 
deadline the Committee had neither the time nor the recourse to 
judicial proceedings that would have been necessary to acquire 
more information. As a result of the poor compliance or non-
compliance from many of the non-profit groups it subpoenaed, 
the Chairman decided not to hold hearings on the role of non-
profit groups, and it is accordingly inappropriate to reach 
conclusions about their activities in the 1996 
election.18 This phase of the investigation would 
surely have added significantly to the Senate's and the 
American public's understanding of campaign finance 
illegalities and improprieties. Because of the December 31 
deadline forced on the Committee, however, it was unable to 
undertake this task.
    \18\ Although investigative hearings on the political activities of 
non-profit groups were not held, the activities of some of these groups 
were outlined during the Committee's policy hearings in September.
    The Committee closed its public hearings by examining one 
particular quid pro quo, the clearest instance yet uncovered, 
on which it could obtain witness testimony, of a change of 
government policy undertaken in return for campaign 
contributions: the denial of a license to three Indian tribes 
in Wisconsin for an off-reservation casino. Secretary of the 
Interior Bruce Babbitt was one of the witnesses who testified 
on this matter. As a direct result of his testimony before the 
Committee, at the time of this writing the Justice Department 
is considering whether an independent counsel should be 
appointed to investigate Secretary Babbitt's role in this 
    After 32 days of hearings in July, September, and October, 
Chairman Thompson announced on October 31, 1997, that the 
Committee was suspending public hearings, although continuing 
its investigation through the end of the year. He determined 
that the most important information obtained by the Committee 
had already been the subject of public hearings, and that given 
existing time constraints and the Committee's lack of judicial 
recourse, the remaining material should not be pursued in 
public hearings. The Chairman left open the possibility that 
new hearings would be held if warranted by new information 
developed during the remaining two months of the investigation. 
Although certain investigative threads were followed during 
November and December and interviews and depositions were 
conducted, no additional public hearings were held. The 
Committee continued to receive documents and videotapes in 
December. The DNC's delivery of 15 boxes of documents on 
December 22, 1997, about one week before the expiration of the 
Committee's authority, marked the final production of 
information to the Committee as officially constituted. In 
January 1998, after its jurisdiction had expired, the White 
House produced documents on Johnny Chung, which were responsive 
to its April 1997 document request, to the Committee. Any 
relevant information developed after the public hearings were 
ended is included in this report.

                               the report

    S. Res. 39 required the Committee to complete its 
investigation by December 31, 1997, and to submit a report to 
the Senate by January 31, 1998. This report fulfills that 
directive. On March 5, 1998, the Committee held a business 
meeting, at which it voted 8-7 to approve this report and file 
it with the Senate. Voting with the majority were Chairman 
Thompson, Senator Collins, Senator Brownback, Senator Domenici, 
Senator Cochran, Senator Nickles, Senator Specter, and Senator 
Smith of New Hampshire. Voting in the negative were Senator 
Glenn, Senator Levin, Senator Liberman, Senator Akaka, Senator 
Durbin, Senator Torricelli, and Senator Cleland. Senator 
Bennett was not present for the vote but did submit additional 
    Among the subjects aired at the hearings and detailed 
within this report are the takeover of the DNC by the President 
and his staff at the White House, who operated the party 
apparatus as a slush-fund for the President's re-election 
campaign. Along with that takeover went the dismantling of any 
system of vetting contributions and contributors to the DNC to 
ensure compliance with the law. The theory was to take in as 
much money as possible to buy advertising and worry later about 
the Federal Election Commission (FEC), whose meager resources, 
in any event, were unequal to the task of policing wrongdoing 
on the massive scale engaged in by the DNC during the 1996 
election cycle. In effect, gripped by an overwhelming thirst 
for money driven by the fear that the Republican victories in 
the 1994 congressional elections presaged the defeat of 
President Clinton in 1996, the Democratic Party and the 
President stopped asking or caring about the sources of this 
    The Committee's investigation explored the DNC's and the 
President's enormous thirst for campaign contributions to 
support the President's re-election bid and outlined the abuses 
carried out in their pursuit, including selling access to the 
President and senior officials through ``coffees'' and White 
House ``overnights,'' and blatantly trading access to senior 
officials in return for campaign contributions. New sources of 
money had to be found. In this climate, the door was opened in 
1996 to contributions from unsavory figures, from foreign bank 
accounts, and possibly from foreign governments as well. The 
Committee's hearings exposed a number of these sources, 
particularly hitherto untapped foreign sources of money.

                          Summary of Findings

                         background and context

    On November 8, 1994, Americans shifted control of both 
houses of Congress to the Republican Party for the first time 
in 40 years. For a time, the election rendered President 
Clinton so weak in the polls that many experts questioned his 
``relevance,'' suggesting that he might face a primary 
challenge as he attempted to secure his re-election in 1996. 
The election results spurred great concern among the 
President's supporters that he might suffer a similarly 
disastrous defeat in 1996.
    In early 1995, the President began meeting with his closest 
advisors to develop a plan to ensure his re-election by 
``pulling out all the stops'' 1 in campaign 
fundraising. At this time, in an atmosphere of abject political 
desperation, the seeds were sown which would later grow into 
the DNC's variegated fundraising scandals of 1996. The 
President and his advisors determined that the key to their 
success in the 1996 elections would be to wage immediately a 
massive television political advertising campaign of 
unprecedented cost.
    \1\ George Stephanopoulos, ``The View From Inside,'' Newsweek, 
March 10, 1997, at 27.
    In the end, of course, their plan was an astonishing 
success: the Democratic Party raised three times as much money 
for the 1996 election as it had for the 1992 contest, and 
President Clinton was re-elected. The President's success, 
however, came at a steep price. In the frenzied drive to raise 
such large amounts of campaign money, the Democratic Party 
dismantled its own internal vetting procedures, no longer 
caring, in effect, where its money came from and who was 
supplying it. Worse, their campaign eviscerated federal 
fundraising laws and reduced the White House, key 
Administration offices, and the Presidency itself, to 
fundraising tools.
    This increasingly mercenary approach also led the 
Democratic Party to view America's ethnic communities as 
exploitable ``renewable resources'' for political fundraising. 
The DNC's recklessness in raising money from their community 
unfairly burdened Asian-Americans with the stigma of 
lawbreaking by fundraisers such as John Huang, Charlie Trie, 
and Maria Hsia.
    For the U.S. political process as a whole, the DNC and 
White House's reckless fundraising disregarded an obvious 
risk--the danger that powerful foreign nationals, or even 
governments, would attempt to buy influence through campaign 
contributions. The result of all this was foreseeable, 
including: the erosion of safeguards in U.S. election law 
designed to guard against political corruption, and 
unprecedented amounts of illegal foreign contributions making 
their way into Democratic coffers. The Committee uncovered 
strong circumstantial evidence that the Government of the 
People's Republic of China (PRC) was involved in funding, 
directing, or encouraging some of these foreign contributions.
    President Clinton has attempted to distance himself from 
these scandals by trying to distinguish his own ``official'' 
re-election campaign (Clinton/Gore '96) from the abuses the DNC 
carried out. Based on the evidence compiled by the Committee, 
however, this distinction is untenable. Indeed, no one has done 
more to erode this very distinction than the President himself, 
who with his staff effectively seized control of DNC operations 
and ran all Democratic party campaign and fundraising efforts 
out of the White House. During the 1996 campaign, the DNC was 
the alter ego of the White House.
    Deputy White House Chief of Staff Harold Ickes, for 
example, ran the DNC on a day-to-day basis and presided over 
weekly ``money meetings'' at the White House where he reviewed 
the DNC's fundraising and expenditures before passing this 
information along to the President and the Vice-President. This 
White House control made the DNC's national chairman, Don 
Fowler, in effect, subservient to Ickes. The Clinton/Gore and 
DNC advertising campaigns were also virtually inseparable, 
constituting a seamless web of White House-directed campaigning 
that employed all the same consultants, pollsters, and media 
producers. Ultimately, in fact, the President himself exercised 
total control over the DNC advertising. Having reduced the DNC 
into an arm of the White House, President Clinton and Vice 
President Gore are responsible for the actions it undertook in 
their names and at their direction.
    Late in the 1996 presidential campaign, public reports 
surfaced about foreign donations to the Democratic Party and 
the DNC's improper provision of White House access to well-
heeled foreign nationals. The White House succeeded in 
preventing the bubbling scandal from derailing the President's 
re-election, but these efforts could not prevent an ever more 
complex tale of campaign lawbreaking from coming to light, thus 
sparking an ongoing series of Congressional and criminal 
investigations that have so far involved the White House, the 
DNC, several government agencies, hundreds of witnesses, and 
several foreign countries. After the November 1996 elections, 
the U.S. Senate determined to investigate allegations of 
campaign finance wrongdoing. The resolution authorizing the 
investigation contained a significant flaw, however--a deadline 
set only nine months after the start of the investigation.
    The imposition of the December 31, 1997 deadline virtually 
invited witnesses to engage in obstructive tactics, perhaps 
none more so than the DNC and the White House. This 
obstruction, combined with the sheer complexity of the 
investigation, made this deadline the single greatest obstacle 
faced by the Committee's inquiry. Moreover, more than 45 
witnesses either fled the country or refused to cooperate by 
citing their Fifth Amendment privilege against self 
incrimination. Despite the Committee's request for help, 
President Clinton took no action whatsoever to persuade such 
individuals to cooperate. Nevertheless, the Committee was able 
to answer many important questions and to uncover evidence that 
strongly suggests answers to others. The following pages 
summarize the major findings of this inquiry.

      the dnc raised millions of dollars in illegal foreign funds

    Following the 1996 election, and in the wake of the growing 
DNC fundraising controversy, the DNC was ultimately forced to 
return $2,825,600 in illegal or improper donations.2 
Of this total amount, almost 80 percent was either raised or 
contributed by two men--John Huang and Charlie Trie. 
Strikingly, both men were longtime friends of President 
Clinton, and both were in positions to raise large campaign 
contributions because of their personal relationships with the 
President. Accordingly, the Committee began its hearings by 
focusing significant attention on Huang and Trie, hoping to 
answer two interrelated questions: what did President Clinton 
and his top aides know about their illegal fundraising 
activities, and why was nothing done to curb those activities. 
This particular inquiry faced significant obstacles because 
Trie fled to China soon after the controversy 
arose,3 Huang invoked the Fifth Amendment and 
refused to cooperate with the Committee, and the President 
declined the Committee's invitation to testify. Despite these 
obstacles, the evidence strongly suggests that, at a minimum, 
the White House and the DNC received clear signs of danger 
concerning both men and simply chose to ignore these warnings.
    \2\ This figure is according to a June 27, 1997, DNC press release. 
The DNC has failed to return additional contributions of questionable 
    \3\ Trie voluntarily surrendered to U.S. authorities in February 
1998, following his indictment on 15 counts including defrauding the 
FEC and obstructing the Committee's investigation.

John Huang

    Huang first met President Clinton in the early 1980's 
through their mutual friend, James Riady, the head of the Lippo 
Group, an Indonesian industrial conglomerate. By at least 1992, 
while employed by Lippo Bank in California, Huang began to 
raise illegal foreign money for the DNC through Lippo owned 
shell companies; these contributions were reimbursed with funds 
from Lippo's headquarters in Jakarta, Indonesia. His 
achievements as a fundraiser, coupled with his and Riady's 
close friendship with President Clinton, ultimately propelled 
Huang to the Commerce Department as a Deputy Assistant 
Secretary in 1993. Despite its accompanying security clearances 
and intelligence briefings, however, this job in the government 
apparently suited neither Huang nor his patron, Riady, as Huang 
was left with less real influence than he had enjoyed as a DNC 
fundraiser. By the summer of 1995, therefore, Huang sought to 
move to the DNC.
    Two things are clear about Huang's obtaining a job as a DNC 
fundraiser. First, it would not have occurred but for the 
President's personal interest and recommendation. Second, it 
took place even though Huang had already engaged in illegal 
fundraising from foreign sources while at the Commerce 
Department, and despite the DNC's awareness of clear 
indications that Huang would continue to raise funds illegally 
as the DNC's Vice Chairman for Finance.
    The story of Huang's move to the DNC, and the fundraising 
abuses that followed, began in the summer of 1995, when Lippo 
lobbyist C. Joseph Giroir began trying to persuade the DNC to 
hire Huang as a fundraiser specializing in the Asian-American 
community. On September 13, 1995, Giroir arranged a meeting 
between Huang, Riady, Fowler, and DNC Finance Director Richard 
Sullivan, at which they discussed the potential for DNC 
fundraising among the Asian-American community. Riady--a 
foreign national then living in Indonesia and therefore in a 
curious position to be consulted by senior DNC officials about 
how the Democratic Party could raise money for President 
Clinton's re-election--joined Giroir in telling Fowler that 
Huang would be the ideal person to organize an Asian-American 
fundraising effort for the DNC.
    That same afternoon, Giroir, Riady, and Huang met President 
Clinton and Presidential aide Bruce Lindsey in the Oval Office. 
Giroir and Lindsey claimed to remember little about this 
encounter, but Lindsey admitted that they had discussed Huang's 
desire to move to the DNC. After this Oval Office meeting, 
Lindsey told Ickes about Huang's interest in becoming a DNC 
fundraiser. The President himself asked Ickes to interview 
Huang regarding the move to the DNC. After meeting with Huang 
to discuss the move, Ickes asked DNC Finance Chairman Marvin 
Rosen to interview him for the job.
    While Fowler's ambivalence may have caused the DNC to not 
pursue Huang's services for most of that fall, Fowler's 
position changed very quickly after the President intervened to 
indicate his personal interest in Huang acquiring a DNC 
position. At a fundraiser on November 8, the President asked 
Rosen how Huang's move was progressing, and told Rosen that 
Huang had been ``highly recommended.'' The DNC interviewed 
Huang five days later, and Fowler hired him that same day.
    From the beginning, however, some DNC officials were 
privately concerned that Huang might illegally raise foreign 
money for the party. Sullivan, for example, worried that Huang 
might be another Johnny Chung--an Asian-American donor and 
friend of Huang's who had offered in March 1995 to pay the DNC 
$50,000 if Sullivan would arrange for five of his Chinese 
business clients to attend a radio address with the President. 
Because of his misgivings about Huang, Sullivan insisted that 
Huang be given an extensive special training session on U.S. 
election law by the DNC's general counsel, Joe Sandler. As 
Sullivan told Huang, this training session was designed to 
ensure that Huang knew laws restricting contributions from 
foreign nationals. Sandler, however, denied that he was ever 
asked to provide such training.
    However, the DNC never undertook the special ``training'' 
sessions for Huang that Sullivan had recommended. Making 
matters worse, despite its grave concerns about Huang, the DNC 
agreed to compensate him with an ``unprecedented'' incentive 
bonus plan clearly designed to encourage even more aggressive 
fundraising. The results were all too predictable: Huang 
immediately began illegally raising foreign money for the 
    Near the end of his tenure at the Commerce Department, 
Huang developed a relationship with Arief Wiriadinata--a 
landscape architect in Virginia who knew the Riadys because his 
father had worked for Lippo in Indonesia, and who, with his 
wife Soraya, ultimately contributed$450,000 to the DNC. On 
December 15, 1995, shortly after Huang arrived at the DNC, the 
President hosted a White House coffee to which Wiriadinata had been 
invited by Huang. As captured on one of the videotapes the White House 
belatedly released to the Committee in October 1997, Wiriadinata shook 
hands with the President and confided to him that ``James Riady sent 
    Huang's first fundraising event, for Asian-Americans at the 
Hay-Adams Hotel in Washington on February 19, 1996, also raised 
early warning signs that the DNC's initial concerns about Huang 
were well placed. By March 1996, the DNC discovered that two 
donations Huang had raised at this event were illegal 
contributions from foreign nationals. These checks, both for 
$12,500, were attributable to two individuals who live in China 
and run an international trading group based there. Although 
these donations were returned, DNC officials continued to rely 
on Huang. As the Committee subsequently discovered, the Hay-
Adams event raised at least another $25,000 in unlawful 
donations laundered through third-party ``straw donors'' from 
the Hsi Lai Temple outside Los Angeles.
    Among the prominent Asian businessmen who attended the Hay-
Adams event was Ted Sioeng, a foreign businessman who owns a 
pro-Beijing Chinese language newspaper in California and has 
close ties to the Chinese government. Though he sat next to the 
President at the head table at the Hay-Adams, Sioeng was not 
then a resident of the United States, could not speak English, 
and was ineligible to make political donations. Sioeng's 
presence at the fundraiser--as well as at the head table at the 
Hsi Lai Temple fundraiser Huang and Maria Hsia organized for 
Vice President Gore two months later, and at another Huang 
event with the President only two weeks after that--was 
apparently arranged through Huang.
    Throughout the remainder of 1996, Huang orchestrated 
numerous events from which illegal foreign money flowed to the 
DNC. On April 8, 1996, for example, Huang collected $250,000 
from John K. H. Lee, a South Korean businessman who had flown 
from Seoul to have dinner with the President--in return for a 
$250,000 donation in the name of a U.S. subsidiary of his South 
Korean business, formed shortly before the check had been 
written. Huang arranged this contribution after being told that 
Lee was merely ``thinking'' about opening a U.S. subsidiary in 
California, and knowing that Lee was a foreign national 
ineligible to contribute in his own name. This $250,000 
contribution was funded by a wire transfer from Lee's South 
Korean company. The DNC, however, found the donation 
unobjectionable--at least until the 1996 fundraising scandals 
first became public, at which point Lee's was the first 
contribution returned.
    Shortly thereafter, on May 13, 1996, Huang organized 
another major DNC event in Washington, D.C. Like his others, 
this affair was heavily attended by foreign nationals; Riady 
and Sioeng, in fact, each sat beside the President at the head 
table. During the course of the night, Huang arranged for 
Yogesh K. Gandhi to meet the President and present him with a 
bust of Mahatma Gandhi. Gandhi wanted a business associate to 
be photographed presenting the award to Clinton, but the White 
House had rebuffed his earlier attempts to arrange the meeting. 
In exchange for the May 13 photograph with the President, 
Gandhi donated $325,000 to the DNC. This money had, in fact, 
been wired from one of Gandhi's business associates in Japan.
    DNC officials admitted concerns during the 1996 campaign 
about the number of foreign nationals who attended Huang's 
fundraisers. It was not until July 1996, however, after an 
event attended principally by Asian businessmen and their 
families, that Rosen finally directed that Huang not manage any 
further presidential events. Despite this concern, however, the 
DNC was unwilling to forego Huang's fundraising: the party 
deprived Huang of his ability to sell access to President 
Clinton, but did nothing to check the money he generated.

The Hsi Lai Temple Fundraiser

    At a fundraising lunch held on April 29, 1996 at the Hsi 
Lai Temple in Hacienda Heights, California, and attended by 
Vice President Gore, Buddhist monastics illegally funneled 
$65,000 to the DNC through ``straw donors'' at the instigation 
of Hsia, a longtime fundraiser for the Vice President. When 
press accounts of this donation-laundering appeared, Temple 
officials altered and destroyed evidence to protect the Temple, 
Hsia, and the Vice President from embarrassment.
    Despite his repeated, albeit inconsistent, denials, it is 
reasonable to conclude that the Vice President was well aware 
that the Temple event was for the purpose of raising money. The 
event was organized by Huang and Hsia, who had longstanding 
relationships with Vice President Gore that revolved almost 
entirely around campaign fundraising. More specifically, in the 
weeks prior to his Temple visit, Vice President Gore was 
repeatedly reminded that the April 29 luncheon was a fundraiser 
and was even meticulously informed by Ickes of the DNC's 
``projected revenue'' for the event. The Vice President 
received the last of these notifications of the April 29 
lunch's ``projected revenue'' only 24 hours before he received 
his briefing notes for the Temple lunch.
    The Vice President's staff also knew that the Temple event 
was a fundraiser. In March 1996, Deputy Chief of Staff David 
Strauss had helped arrange a meeting in the White House with 
the head of the Temple, Master Hsing Yun--a meeting which 
Strauss believed would ``lead to a lot of $.'' The White House 
staff repeatedly referred to the event as a ``fundraiser'' in 
internal correspondence, and assigned to it a ``ticket price'' 
of ``1000-5000 [dollars per] head.''
    The Temple fundraiser was merely the most egregious episode 
in a longstanding pattern of illegal donation-laundering by 
Hsia and the Hsi Lai Temple that stretched back at least to 
1993. In that year, Hsia and Huang apparently collaborated in 
laundering $50,000 to the DNC from the Hsi Lai Temple and from 
Lippo Group sources overseas in connection with a meeting 
between Vice President Gore's chief of staff and the chairman 
of China Resources, a company linked in press reports to 
Chinese intelligence. From 1993 until the general elections of 
1996, over $140,000 in Temple money was illegally funneled to 
Democratic candidates at Hsia's direction.
    This pattern of donation-laundering in 1993-96 derived from 
a broader relationship between Hsia, Huang, and Vice President 
Gore that began in 1988 when Hsia, Huang, and Riady organized a 
trip to Taiwan for then-Senator Gore. Hsia thereafter became a 
significant fundraiser for the Senator. As early as 1989, her 
fundraising efforts for him involved both monastics from the 
Hsi Lai Temple and the illegal ``tallying'' of contributions 
through the Democratic Senatorial Campaign Committee 

Charlie Trie

    Trie first met the President in the late 1970's when he 
owned and operated a Chinese restaurant in Little Rock. After 
Clinton's election in 1992, Trie sold his restaurant and 
openedDaihatsu International Trading Company in Washington, D.C. Soon 
thereafter, Trie and his wife contributed large sums to the DNC, and by 
1994 he had become a DNC ``Managing Trustee''--a title reserved for the 
highest level of party contributor. From 1994 to 1996, Trie contributed 
or raised approximately $645,000 for the DNC. In 1994, he contributed 
$100,000 to the DNC while earning only approximately $30,000 as 
president of Daihatsu. Nor could his firm Daihatsu have made up the 
difference: throughout this period, it never made any profit.
    In reality, most of Trie's money came from his Asian 
business partner, Ng Lap Seng, a hotel tycoon in Macao with 
reputed links to organized crime who advises the Chinese 
government.4 Ng transferred approximately $1.4 
million to Trie from 1994 to 1996, with many of these transfers 
arriving through the Bank of China. Sometimes Trie contributed 
Ng's money directly to the DNC in his own name. In other 
instances, he laundered donations through other Asian-
Americans. Two of these ``straw donors'' made donations to the 
DNC so that Ng could attend a White House function. 
Accordingly, they donated a total of $25,000 to the DNC and 
were reimbursed with money from Ng's account.
    \4\ Ng refused to speak with Committee investigators who traveled 
to Macao.
    In addition to being a major fundraiser and close friend of 
the President, Trie visited the White House 31 times in 1994 
and 1995 alone. Intriguingly, Ng, who had no ties to the 
President except through Trie, also visited the White House 10 
times between June 1994 and October 1996. In one of the more 
egregious examples of its dilatory document production, 
however, the White House did not reveal Ng's still-unexplained 
visits until just hours after the conclusion of the Committee's 
public hearing on the activities of Trie and Ng.5
    \5\ Only after end of the Trie/Ng hearing did the White House 
release the ``WAVES'' records documenting Ng's frequent but unexplained 
visits to the White House. These records had been requested from the 
White House three months earlier.
    Trie's fundraising efforts won him numerous White House 
favors, including a Presidential appointment to the Commission 
on U.S. Pacific Trade and Investment Policy--an act requiring a 
new Executive Order to expand the size of the Commission. In 
February 1996, assisted by a $50,000 donation from his business 
partner Ernest G. Green, Trie arranged admission to a White 
House coffee for Wang Jun, a Chinese arms dealer and advisor to 
the Chinese government. Despite his connections to a major 
Chinese armaments firm whose plans to smuggle automatic weapons 
into the U.S. the Customs Service even then was investigating, 
Wang was not vetted by the National Security Council (``NSC'') 
and was admitted to the White House only on the strength of his 
relationship with Trie and Green.
    In March 1996, Trie wrote to the President on how to handle 
U.S.-China relations, which were then tense. This letter was 
faxed to the White House on the same day that Trie delivered 
almost $500,000 to the Presidential Legal Expense Trust 
(``PLET''). The Committee has been unable to determine whether 
Trie wrote this letter on his own or on behalf of foreign 
interests. Trie received a reply from the President prepared by 
NSC staff and personally reviewed by National Security Advisor 
Tony Lake.
    Trie also set about to help the President and First Lady 
defray the considerable personal legal expenses they had 
accrued in fending off previous scandals. To this end, Trie 
raised in excess of $700,000 from a controversial Buddhist sect 
devoted to a woman named Ching Hai, and conveyed this money to 
the PLET.
    The PLET, however, became suspicious about the source of 
Trie's funds. With White House approval, the PLET's executive 
director, Michael Cardozo, hired an investigative firm that 
determined that the money had been coerced from or laundered 
through members of the Ching Hai sect. Nevertheless, soon 
after, Trie sat next to the President at the head table of a 
$5,000 per person fundraising dinner.
    By June 1996, the PLET decided to return Trie's donations. 
Rather than publicly reporting his contributions under its 
regular practice, the PLET hid the fact that Trie had ever 
given money to it. Moreover, the White House knew and approved 
of this decision. Despite Ickes' and Lindsey's knowledge of 
Trie's suspicious fundraising, neither warned the DNC. As a 
result, while the PLET returned his donations, Trie's illegal 
contributions to the DNC continued; Trie delivered $110,000 to 
the DNC in August 1996 in honor of the President's 50th 
    Both the DNC and the White House claimed complete surprise 
that Huang and Trie raised substantial amounts of foreign 
money. It strains credulity, however, to suggest that these men 
could surreptitiously raise over $2.2 million for the DNC--much 
of it from foreign donors at major DNC events the President 
attended--without anyone suspecting the truth.

   The White House and the Presidency Itself Became Fundraising Tools

    The White-House inspired DNC drive for new sources of 
campaign cash caused more than just an unprecedented influx of 
foreign money into the 1996 campaign. More broadly, it debased 
the White House and the Presidency itself by employing both in 
constant efforts to raise money. Extensive DNC fundraising 
occurred because the President and his advisors, including Dick 
Morris, decided that the party's massive advertising campaign 
would cost more than could possibly be provided by the ``hard'' 
money in the President's ``official'' campaign treasury. To 
fill the gap, they turned to unregulated ``soft'' money even 
though such monies could not by law be used to help a 
candidate's campaign for office. Unlike official ``campaign'' 
contributions, however, DNC ``soft'' money could be raised from 
wealthy donors in unlimited quantities. By diverting DNC funds 
to campaign advertising controlled by the White House, the 
Democrats had the best of all possible worlds: de facto 
``hard'' money from key donors in unlimited quantities.
    Senior White House and DNC staff developed new ways to use 
the Presidency to raise campaign money. Among the favors 
merchandised were access to senior decision makers, perks such 
as ``overnights'' at the White House, Presidential coffees at 
the White House (even in the Oval Office), flights on Air Force 
One, seats in the President's box at Kennedy Center, and use of 
the White House pool and tennis courts.
    In this stampede to use the White House for every 
conceivable variety of fundraiser, a number of alarmingly 
unsavory characters gained access to the President in return 
for campaign contributions. One was Chinese arms dealer Wang 
Jun. Roger Tamraz, a major DNC donor, was allowed to meet with 
the President on several occasions despite the NSC's opposition 
and clear warnings that Tamraz might damage U.S. foreign policy 
interests in Central Asia. As noted, Ted Sioeng, a foreign 
national with suspiciously close ties to the Chinese 
government, sat at the head table with the President or Vice 
President at several fundraisers and lunched with Vice 
President Gore at the Hsi Lai Temple.

White House Coffees

    Perhaps nothing illustrates this merchandising of the 
Presidency better than the DNC's White House ``coffees''--
fundraising events at which major donors were provided access 
to the President in exchange for their campaign contributions.
    Between January 11, 1995 and August 23, 1996, the White 
House hosted 103 coffees. Most lasted at least an hour, and the 
President attended the vast majority of them. Approximately 60 
of these were DNC-sponsored coffees, 92 percent of the guests 
at which were major Democratic Party contributors. These guests 
made contributions during the 1996 election cycle of $26.4 
million, an average contribution of over $54,000 per person, 
with one-third of their total donations, some $7.7 million, 
given within a month of the donor's attendance at a White House 
coffee. For example, the five persons attending a coffee on May 
1, 1996, in the Oval Office itself each contributed $100,000 to 
the DNC one week later.
    White House and DNC officials have strenuously denied that 
the coffees were ``fundraisers.'' Numerous DNC documents, 
however, including detailed memoranda Ickes prepared for the 
President and Vice President, tell a different story, referring 
to these White House events as ``political/fundraising 
coffees.'' These documents carefully track the ``projected 
revenue'' that would be raised by each event--to the point of 
specifying amounts ``in hand'' (i.e., collected to date) and 
the proportion of each coffee's projected revenue that would be 
placed in the party's ``hard money'' and ``soft money'' bank 
accounts. While not every White House coffee was a fundraising 
event, most clearly were.
    The coffees also demonstrate the extensive amount of time 
the President was willing to spend with small groups of major 
donors, and the extraordinary influence such donors had over 
the White House and the President's schedule. The June 18, 1996 
coffee organized by John Huang is a case in point. The only 
guests who were originally to attend this coffee were three 
foreign nationals from the CP Group, a Thai conglomerate. They 
were clients of Pauline Kanchanalak, a DNC fundraiser and 
lobbyist from Thailand. When DNC officials raised concerns 
about the propriety of such a coffee, ``some people that might 
be potential [legal] donors, [i.e.,] American citizens,'' were 
invited at the last moment. It is clear that the coffee's 
essential purpose was to sell the President's time to 
Kanchanalak--who, with her mother-in-law, donated $235,000 in 
to the DNC the next day--to make her look good in front of her 
clients.\6\ Even worse, the only guests professing to have any 
memory of the event recall Huang openly soliciting DNC 
contributions, in the presence of the President. This was 
clearly illegal.
    \6\ Kanchanalak has since fled to Thailand, has refused to 
cooperate with the Committee, and is under investigation by the 
Department of Justice for possible obstruction of justice in connection 
with evidence subpoenaed by the Committee.

Telephone solicitations

    In addition to attending many major fundraisers and 
innumerable smaller events such as coffees, the President--and, 
particularly, the Vice President--were willing to use the power 
of their offices to make direct telephone solicitations for 
money. Vice President Gore made approximately 45 phone 
solicitations from his White House office. These calls may have 
raised as much as $800,000 for the DNC.
    Based upon the premise that these telephone calls raised 
only ``soft'' money, the Attorney General has rejected 
suggestions that she recommend the appointment of an 
independent counsel to investigate whether these calls violated 
a federal criminal law prohibiting the solicitation of campaign 
contributions on federal property. The Committee disagrees with 
her view that raising ``soft money'' on federal property is 
permitted, but significantly, even under the Attorney General's 
view, the solicitation of ``hard'' money on federal property is 
a crime. As DNC general counsel Joe Sandler revealed to the 
Committee, of the money raised by Vice President Gore's 
telephone solicitations from the White House, more than 
$100,000 was deposited into the DNC's ``hard money'' accounts. 
Indeed, the Vice President continued to make telephone 
solicitations even after being advised by a DNC memorandum in 
February 1996 that it was DNC policy to place a certain 
proportion of the money thus raised into ``hard money'' 
    \7\ Indeed, the DNC improperly allocated money between ``soft'' and 
``hard'' accounts without seeking the express permission of donors, as 
is required by federal law.

The all-consuming fundraising effort

    In some ways, the most troubling result of the White 
House's and DNC's ceaseless quest for campaign funding is the 
great amount of time the President and the Vice President 
themselves actually spent raising money. As Vice President Gore 
himself noted, ``we can raise the [necessary] money . . . ONLY 
IF--the President and I actually do the events, the calls, the 
coffees, etc. . . . And we will have to lose considerable time 
to the campaign trail to do all of this fundraising.''
    Simply put, 25 years after Congress passed election reform 
laws intended to insulate the President from an unseemly and 
potentially corrupting involvement with campaign money, 
President Clinton spent enormous amounts of time during the 
1996 election cycle raising money. In the ten months prior to 
the 1996 election, President Clinton attended more than 230 
fundraising events, which raised $119,000,000. The President 
maintained such a pace for over a year before the election, 
often attending fundraisers five and six days each week. 
According to Presidential campaign advisor Dick Morris, 
President Clinton ``would say `I haven't slept in three days; 
every time I turn around they want me to be at a fundraiser . . 
. I cannot think, I cannot do anything. Every minute of my time 
is spent at these fundraisers.' '' This frenzied pursuit of 
campaign contributions raises obvious and disturbing questions. 
Can any President who spends this much time raising money focus 
adequately upon affairs of state? Is it even possible for such 
a President to distinguish between fundraising and 

            Other Improper or Illegal Fundraising Activities

    The unfortunate results of the DNC's chase for money were 
not limited to its receipt of illegal foreign money and the 
merchandising of the White House itself. DNC pressures to 
change government policy developed in response to the wishes of 
major party donors.

The Roger Tamraz affair

    Lebanese-American businessman Roger Tamraz tenaciously 
pursued his agenda with the U.S. Government. ``If they kicked 
me from the door,'' Tamraz told the Committee, ``I will come 
through the window.'' Unfortunately, his eagerness to promote 
his business schemes and enlist the government's support 
against the vehement protests of U.S. national security experts 
found itself an ally in the cash-hungry DNC. The story of 
Tamraz demonstrates, perhaps better than any other episode of 
the Democratic fundraising scandals, that nothing was sacred in 
the President's desperate search for campaign funds: no corner 
of the U.S. Government--not even the Central Intelligence 
Agency (``CIA'') or the NSC--was off limits.
    An international businessman with significant involvement 
in the oil business, Tamraz was wanted by French police and 
faces an Interpol arrest warrant for embezzlement in Lebanon. 
Tamraz was willing to invest great energy, and significant sums 
of money, to secure U.S. backing for his oil pipeline project 
in the Caucasus. Rebuffed by officials at the NSC who regarded 
his schemes as untenable and harmful to U.S. foreign policy 
interests, he began making huge contributions to the DNC. As 
Tamraz had intended--and as he admitted to the Committee in his 
remarkably candid testimony--these contributions enabled him to 
enlist senior party officials like Fowler in helping Tamraz 
gain the access to senior U.S. officials that a high-level 
inter-agency working group had determined to deny him. His 
contributions--both directly to the DNC and to various state 
Democratic campaigns at Fowler's personal direction--also won 
Tamraz the DNC chairman's intercession in a series of highly 
inappropriate contacts with CIA officials. In at least two 
conversations with a CIA clandestine operative named ``Bob,'' 
\8\ to whom he had been referred by Tamraz and who had already 
been ``lobbying'' the NSC on Tamraz's behalf, Fowler asked the 
CIA officer to help him ``clear Tamraz's name.'' Fowler even 
telephoned NSC staffer Sheila Heslin to inform her that ``Bob'' 
would soon be sending her information about Tamraz. (Despite 
taking notes of his discussions with Tamraz about Bob, despite 
talking with ``Bob'' on at least two occasions, and discussing 
the CIA officer with NSC staffers Nancy Soderberg and Heslin, 
Fowler continued to deny any memory of his CIA contacts). After 
Tamraz was ``disinvited'' from an October 1995 event with Vice 
President Gore by the NSC, his DNC allies arranged for him to 
attend a dinner with the Vice President at the home of Senator 
Edward Kennedy. Despite the NSC's determined efforts to deny 
him access to President Clinton, Tamraz's DNC contributions 
bought him no fewer than six private meetings with the 
    \8\ At the request of the CIA, the full name of this clandestine 
officer (which is classified) had been withheld. In this report, he 
will be described simply by his first name, ``Bob.''
    Tamraz took the opportunity to discuss his pipeline with 
President Clinton at a White House dinner on March 27, 1996. 
The President assured Tamraz that someone would ``follow-up'' 
with him, and detailed Presidential advisor Thomas F. ``Mack'' 
McLarty to look into the matter the next day. Tamraz next met 
the President at a White House coffee on April 1, 1996, at 
which, Tamraz discussed his pipeline ideas with McLarty. 
McLarty asked Energy Department employee Kyle Simpson whether 
some reason could be found to support Tamraz's pipeline. When 
Simpson conveyed McLarty's instructions to his colleague John 
Carter, he told Carter that Tamraz had donated $200,000 to the 
DNC and was considering giving an additional $400,000.
    The nadir of the Tamraz episode occurred with Carter's 
subsequent call to NSC staff member Heslin, who chaired the 
inter-agency working group that had sought to deny Tamraz 
access to senior government officials and who had determined 
that the U.S. should not support his pipeline. Carter told 
Heslin that if she reconsidered her opposition to Tamraz, it 
``would mean a lot of money for the DNC'' because ``he's 
already given $200,000, and if he got [what he wanted] he would 
give the DNC another $400,000.'' Heslin refused, despite 
Carter's claim that ``the President really wanted'' this and 
threats that McLarty might exact reprisals against her.

The Indian Casino decision

    The DNC also targeted the Interior Department's Bureau of 
Indian Affairs (``BIA'') to influence a decision whether three 
bands of Wisconsin Indian tribes would be allowed to open a 
casino in Hudson, Wisconsin. A wealthy group of neighboring 
tribes in Minnesota, who operated a nearby casino that would 
face competition if the Hudson application were approved, 
opposed the proposal. Significantly, the opposing tribes had 
given large sums of money to the DNC, while the applicants had 
    After the BIA's Minneapolis office approved the applicant 
tribes' plan in late 1994, the opposing tribes hired Patrick 
O'Connor, a prominent lobbyist and former DNC treasurer, who 
spoke personally with President Clinton about this matter. Four 
days later, O'Connor, accompanied by other lobbyists and 
opposition tribal leaders, met with Fowler. As one participant 
recalled it, Fowler ``got the message: it's politics and the 
Democrats are against [the new casino] and the people for it 
are Republicans.'' Fowler promised that he would contact Ickes 
and have him talk with Secretary of Interior Bruce Babbitt, 
which he did a few days later.
    After making several calls herself to the Interior 
Department, Ickes' assistant Jennifer O'Connor, in June 1995 
asked a White House intern to get an update on the Hudson 
casino. Heather Sibbison, special assistant to Secretary 
Babbitt, told the intern ``it was 95% certain that the 
application would be turned down.'' Just two days later, 
however, a career BIA employee, wrote a 17-page analysis 
recommending approval of the Hudson application. Nevertheless, 
theassurances that Secretary Babbitt's staff conveyed to Ickes' 
office were correct: despite the BIA's recommendation that it be 
approved, a draft letter rejecting the application was prepared on June 
29, 1995, and the Interior Department formally denied the application 
on July 14.
    The opposing tribes apparently had little doubt as to how 
to show their gratitude for the Interior Department's decision 
to protect them from gaming competition. According to FEC 
records, in the four months following the Department's denial 
of the Hudson application, the opposition tribes contributed 
$53,000 to the DNC and the DSCC; they donated an additional 
$230,000 to the DNC and the DSCC during 1996, and gave more 
than $50,000 in additional money to the Minnesota Democratic 
    Another suspicious aspect of the Hudson episode involves 
the inconsistent positions taken by Secretary Babbitt when 
asked about the matter. According to Paul Eckstein, a longtime 
friend of Secretary Babbitt who had been retained by the 
applicant tribes, when Eckstein tried to persuade Secretary 
Babbitt to delay making a decision on the Hudson matter, 
Secretary Babbitt replied that Ickes had directed him to issue 
a decision that very day. Later in their conversation, Eckstein 
told the Committee, Secretary Babbitt turned the subject to 
political contributions, declaring to Eckstein: ``Do you have 
any idea how much these Indians, Indians with gaming contracts 
. . . have given to Democrats? . . . [H]alf a million 
    When asked about these comments by Senator John McCain, who 
then chaired the Senate Committee on Indian Affairs, Secretary 
Babbitt denied that he had ever told Eckstein anything about 
Ickes seeking a prompt decision on the Hudson matter. 
Nevertheless, several months later, in response to this 
Committee's inquiry, Secretary Babbitt changed his story, 
admitting that he probably did make such a remark to Eckstein 
about Ickes' request. Secretary Babbitt still claims to have 
``no recollection'' of making the comment Eckstein recalls 
about the opposing tribes' political contributions.\9\
    \9\ The Attorney General has requested the appointment of an 
independent counsel to investigate Secretary Babbitt's contradictory 
    The Hudson casino matter is, if anything, more sordid than 
the Tamraz story, as political donations to the DNC apparently 
succeeded in purchasing government policy concessions. In light 
of the opposing tribes' DNC contributions, the DNC's lobbying 
effort against the casino, the involvement of Ickes' staff in 
drawing Secretary Babbitt's attention to this issue, and 
Secretary Babbitt's remarkable comments to Eckstein, the Hudson 
casino matter raises serious questions about the propriety--and 
the legality--of the Interior Department's decision. And the 
DNC also took advantage of two Oklahoma tribes that sought the 
return of their former lands, and made contributions in the 
belief that their prospects for favorable action would be 

            Foreign Efforts to Influence the U.S. Elections

    The DNC's eagerness to raise unprecedented sums for 
President Clinton's re-election, its recklessness in ceasing to 
check the origin of such funds, and its entrusting its 
fundraising efforts among Asian-Americans to lawbreakers such 
as Huang, Trie, and Hsia led to numerous abuses. Among them, 
the DNC's heedless pursuit of contributions allowed wealthy and 
well-connected foreign nationals to arrange almost unlimited 
access to the President and other top U.S. policymakers. Time 
after time, figures such as Johnny Chung, who used access to 
the President to advance his private business interests, Ted 
Sioeng, Ng Lap Seng, Wang Jun, and Eric Hotung met privately or 
in small groups with the President, Vice President, or other 
senior Administration officials. Since this controversy began, 
concerns have been expressed that the flood of foreign money to 
the DNC during the 1995-96 election cycle and the access it 
purchased might have permitted interested foreign parties to 
influence the U.S. political process. Thus, the Committee made 
it a priority of its investigation to determine whether this 
had occurred.

PRC efforts

    The Committee's attempt to examine this issue was 
difficult. Many knowledgeable witnesses invoked the Fifth 
Amendment and refused to cooperate with the inquiry. Others 
fled the country, or were foreign nationals who remained abroad 
and refused to cooperate. Finally, much of the information 
relevant to this subject is classified and cannot be publicly 
    Despite these limitations, at the outset of the Committee's 
hearings, based on information gathered from law enforcement 
and intelligence agencies and open sources, Chairman Thompson 
reported that the PRC government had undertaken efforts to 
influence the U.S. electoral process during the 1995-96 
election cycle. Owing to the sensitive nature of the subject, 
it has not been possible until now to elaborate publicly upon 
this matter in any detail. The full version of the Committee's 
public findings are detailed elsewhere in this report.\10\ In 
brief, while the Committee cannot determine conclusively 
whether the PRC government funded, directed, or encouraged 
certain illegal contributions made in connection with the 1996 
election cycle, there is strong circumstantial evidence that 
the PRC was involved. The basis for this conclusion is in 
    \10\ See the section of this report on ``The China Connection.'' In 
addition, the Committee has prepared a separate, more detailed, and 
classified version of that chapter that will be maintained in secure 
     Ties between the PRC and prominent figures in the 
campaign finance investigation: The Committee has received 
information that several individuals who provided donations 
from foreign sources (principally in the greater China area) to 
the DNC and other causes have ties to the PRC. The Committee 
has learned that Maria Hsia has been an agent of the Chinese 
government, that she has acted knowingly in support of it, and 
that she has attempted to conceal her relationship with the 
Chinese government. The Committee has also learned that Ted 
Sioeng has worked, and perhaps still works, on behalf of the 
Chinese government. The Committee has further learned from 
recently-acquired information that James and Mochtar Riady have 
had a long-term relationship with a Chinese intelligence 
agency. Finally, an unverified single piece of information 
shared with the Committee indicates that John Huang himself may 
possibly have had a direct financial relationship with the PRC 
     Evidence of a ``China Plan'' and Other, Possibly 
Related Efforts: Against this backdrop, the Committee has 
received other information that high-level PRC government 
officials devised plans to increase China's influence over the 
U.S. political process and to be implemented by diplomatic 
posts in the U.S. Some of Beijing's efforts appear relatively 
innocuous, involving learning more about Members of Congress, 
redoubling PRC lobbying efforts in the U.S., establishing 
closer contacts with the U.S. Congress, and funding from 
Beijing. But the Committee has learned that Beijing expected 
more than simply increased lobbying from its diplomatic posts 
in the U.S. Indeed, as the Committee examined the issue in 
greater detail, it found a broad array of Chinese efforts 
designed to influence U.S. policies and elections through, 
among other means, financing election campaigns.
     Evidence of Implementation: The Committee has 
identified specific steps taken in furtherance of the these 
plans. Although some of the efforts were typical, appropriate 
steps foreign governments take to communicate their views on 
United States policy, others appear illegal under U.S. law. 
Among these efforts were the devising of a seeding strategy of 
developing viable candidates sympathetic to the PRC for future 
federal elections; the creation of a ``Central Leading Group 
for U.S. Congressional Affairs'' to coordinate China's lobbying 
efforts in this country; and PRC officials discussing financing 
American elections through covert means.
    In addition, the Committee notes that this report is being 
issued at a time in which there have been, and are likely to 
continue to be, significant developments in the ongoing 
investigation being conducted by the DOJ/FBI task force. If the 
Committee receives significant new information that it can 
disclose to the public, it may issue a supplemental report.

John Huang

    Because of his central role in raising so much of the 
foreign money returned to date by the DNC, and because of his 
long relationship to the Lippo Group, the Committee examined in 
detail John Huang's fund-raising activities and his service at 
the Department of Commerce. Huang began involving himself in 
U.S. politics in 1988 while an official at LippoBank, working 
with James Riady, Hsia, and others to found the Pacific 
Leadership Council (``PLC''), an Asian-American interest group 
and political fund-raising organ, which organized a trip to 
Taiwan (and the Fo Kuang Shan temple there) for then-Senator 
Gore. Huang's colleagues at LippoBank--where he served as 
President and Director--never understood his corporate duties 
and described him as a ``mystery man.''
    After the election of 1992, with Riady's encouragement, the 
White House placed Huang on its list of ``high priority'' 
candidates for political appointment. In a letter to Deputy 
Director of Presidential Personnel John Emerson, Democratic 
activist Maeley Tom recommended Huang for a government 
position, describing him as:

        the political power that advises the Riady family on 
        issues and where to make contributions. [The Riadys] 
        invested heavily in the Clinton campaign. John is the 
        Riady family's top priority for placement because he is 
        like one of their own.

Huang was hired in 1993 as Deputy Assistant Secretary for 
International Economic Policy at the Department of Commerce.
    The work Huang actually performed in his new job, however, 
was apparently as perplexing to his colleagues at the Commerce 
Department as it had been to his associates at LippoBank. 
During the 18 months that Huang worked at the Department, in 
fact, he left virtually no mark; many of his colleagues found 
themselves wholly at a loss to explain what he did.
    Despite his superiors' attempt to ``wall off'' Huang from 
matters relating to China, Huang received regular classified 
briefings that included the greater China area. Without his 
superiors' knowledge, Huang received 37 intelligence briefings, 
viewing 10 to 15 intelligence reports at each session--a total 
of 370 to 500 items of ``raw intelligence'' during his tenure. 
Also unbeknownst to his superiors, Huang made multiple visits 
and telephone calls to the Chinese Embassy while at Commerce. 
And despite Huang's status as only a mid-level official at 
Commerce, he made at least 67 visits to the White House, often 
meeting with top officials and receiving briefings on trade 
    Equally mysterious were the over 400 contacts Huang had 
with Lippo officials while he worked at Commerce: 237 phone 
calls to LippoBank and affiliated entities in the United 
States, 29 calls and fax transmissions to Lippo's Indonesian 
headquarters, and an additional 107 calls to such countries as 
China, Indonesia, Taiwan, and Hong Kong. Huang may have made 
more such calls from the Washington office of Stephens, Inc.--
an investment banking firm based in Little Rock, partly owned 
by the Riady family, which had extended loans to help finance 
President Clinton's 1992 campaign--located across the street 
from the Commerce Department. Huang secretly used this Stephens 
office two or three times a week to make calls, pick up or 
deliver faxes, and send packages. Jeffrey Garten, Huang's 
superior at Commerce, and John Dickerson,the CIA liaison to 
Commerce who provided Huang's numerous classified briefings, were 
unaware of Huang's continuing contacts with Lippo.
    The full scope and import of Huang's activities while at 
Commerce may never be known: he has invoked the Fifth Amendment 
and refused to cooperate with the Committee, Riady has left the 
country, and many of his former LippoBank colleagues have 
returned to Indonesia. The volume of Huang's contacts with 
Lippo and the Chinese embassy, however, is cause for concern. 
The Committee has found no direct evidence that Huang passed 
classified information, but he had the opportunity to do so and 
his activities have not otherwise been adequately explained.

                        the abuse of soft money

    As part of its inquiry, the Committee had intended to 
investigate the role of nonprofit groups in the 1995-96 federal 
election cycle, particularly whether such nonprofit 
organizations were genuinely nonpartisan and acted 
independently of political parties or candidates, as required 
by federal law. In addition, the Committee planned to 
investigate whether political action committees evaded 
statutory limits on political contributions, and whether 
nonprofit organizations coordinated so-called ``issue 
advocacy'' advertising with political candidates to be 
considered in-kind campaign contributions limited and regulated 
under federal election law.
    To this end, the Committee subpoenaed 32 nonprofit 
organizations, not including the principal party committees and 
presidential campaigns. Although a number of these 
organizations did begin prompt compliance with the Committee's 
subpoenas, most of them, led by the AFL-CIO, refused to produce 
any documents or witnesses. Indeed, some groups simply cited 
the AFL-CIO's non-compliance as justification for their own 
non-compliance. Though the AFL-CIO ostensibly based its refusal 
upon various legal and ``constitutional'' grounds, its clear 
purpose was to obstruct and impede the Committee's 
investigation--as indeed the imposition of the December 31, 
1997 deadline virtually invited it to do by preventing the 
Committee from relying upon judicial contempt procedures, the 
usual means to assure compliance with subpoenas.
    In light of the poor cooperation received from most of 
these organizations, the Committee believes that it is 
generally inappropriate to draw conclusions about the role of 
non-profit groups in the 1995-96 election cycle. For the most 
part, the information available was insufficient to permit 
meaningful analysis: few documents were produced, witnesses 
were unavailable to explain the meaning and context of what 
documents did arrive, and key individuals with knowledge of the 
matters in question refused to testify before the Committee.
    Despite these obstacles, however, the Committee received 
information that the AFL-CIO coordinated its political 
activities with both the DNC and the Clinton/Gore campaign. 
Testimony from White House and DNC officials made clear that 
White House aides and the AFL-CIO carefully reviewed each 
other's advertisements and coordinated their timing and 
    With regard to conservative organizations, the Committee's 
investigation uncovered no evidence that Triad Management 
Services engaged in such coordination with the Republican 
Party, although Triad may have coordinated with individual 
candidates. The Committee also determined that while the 
Republican National Committee (``RNC'') donated funds to 
certain non- profit groups, this was in no way illegal or 
improper: no evidence existed that the recipients spent this 
money to influence federal elections at the RNC's request or 
    Finally, the Committee held extensive hearings on the 
National Policy Forum (``NPF''), a think-tank established by 
the RNC. The Committee was particularly concerned by 
allegations that the RNC knew that a loan it made to the NPF--
and upon which the NPF later defaulted amid much acrimony--had 
been guaranteed by foreign money through Hong Kong businessman 
Ambrose Young. Additionally, the Committee attempted to 
determine whether the loan guarantee proceeds were improperly 
funneled into federal election campaigns in 1994. Ultimately, 
however, the Committee determined that it is neither illegal 
nor improper for nonprofit organizations to receive money from 
foreign sources, provided that no such funds enter federal 
campaigns. No foreign money involved in NPF's loan guarantee 
was so used: none of these funds were diverted to Republican 
``hard money'' accounts, and their expenditure was not 
coordinated with political candidates; rather, the NPF used the 
money to repay a valid, pre-existing debt.11
    \11\ Nor, it should be added, did the Committee find any reason to 
conclude that testimony on this matter by RNC Chairman Haley Barbour 
was anything less than truthful. Witnesses who testified to the 
contrary all made inconsistent statements themselves, and Barbour's 
version of events is corroborated by contemporary documents.

                          The Thirst for Money

    The 1994 election results were a major setback for 
Democrats. For the first time in 40 years, Republicans 
controlled both houses of Congress. The Democrats' loss of 
Congress, along with the President's concern that he might face 
a primary challenge, fueled an urgent need for political money. 
The President and his top advisors decided to raise money early 
for his re-election campaign. To accomplish their goal, the 
President and his top advisors took control of the DNC and 
designed a plan to engage in a historically aggressive fund-
raising effort, utilizing the DNC as a vehicle for getting 
around federal election laws. The DNC ran television 
advertisements, created under the direct supervision of the 
President, which were specifically designed to promote the 
President's re-election. To fund this early advertising for the 
President's benefit, the DNC had to raise more than three times 
what it raised during the 1991-92 election cycle--and nearly 
three times what was raised during the 1993-94 cycle.
    The panoply of DNC fund-raising irregularities in the 1996 
election derived, directly or indirectly, from the 
unprecedented need for money to finance this ambitious 
advertising strategy.

       The President's Precarious Political Position in Late 1994

    In the wake of the 1994 congressional elections, the 
President was politically vulnerable. The President himself 
recognized as much when he was reduced to defending his 
``relevance'' in the political process during an extraordinary 
prime-time news conference, which was covered by only one 
network.1 The President's close political 
confidantes were also keenly aware of his weakened political 
    \1\ See Todd S. Purdum, ``Undertones of Relevance,'' The New York 
Times, April 20, 1995, p. A18.
    Terence R. McAuliffe, the DNC's National Finance Chairman 
from March 1994 to January 31, 1995, and later National Finance 
Chairman for Clinton-Gore '96, testified that ``for the 
Democrats, it was not a very optimistic time.'' 2 
McAuliffe was in a unique position to assess the mood of both 
the Democratic Party and its incumbent President. As DNC 
Finance Chairman, McAuliffe testified that he ``had a better 
feeling for the mood of the donors . . . than anybody else in 
the country.'' 3
    \2\ Deposition of Terence R. McAuliffe, June 6, 1997, p. 13.
    \3\ Id. at pp. 13-14.
    During his deposition, McAuliffe offered a candid 
assessment of the President's political position in December 

          I had just finished up as Finance Chairman of--told 
        the President I was leaving the party, and we had just 
        lost the House and the Senate for the first time in a 
        long time. So there was a general mood out there that 
        the President was in serious trouble. A lot of people 
        wondered if the President was even going to run again. 
        I can tell you the political mood at the time clearly 
        was that he had no chance of winning again, clearly 
        would not win re-election and would have a very tough 
        time with a primary. And there was a lot of talk that 
        people would run against him in a primary. It was a 
        very tough political time.4
    \4\ Id. at pp. 11-12.

McAuliffe's concern was shared by Harold Ickes, the Deputy 
Chief of Staff to the President from January 1994 until after 
the 1996 election:

          Q: Now, as we move forward--as you move forward from, 
        say, November [1994] through early 1995, did you have a 
        major concern about the ability of the President to be 
        re-elected for a second term because of what happened 
        in the November elections?
          A: If you're a Democrat, you're always concerned 
        about primaries, and having played a fairly significant 
        role in the Kennedy-Carter primary of 1980, I 
        appreciated what a divisive primary in connection with 
        a sitting President could do that, even if you were to 
        win the primaries, i.e., win the nomination--``win the 
        primaries'' is sort of shorthand for that--y[ou] could 
        be damaged enough to lose the general election. So the 
        answer is yes, I was concerned at that time because I 
        think it was--it's fair to say that there were people 
        within the party--using the party writ broad now--the 
        Democratic Party family who were questioning whether 
        the President could win re-election in a general 
        election, and there was certainly some loose talk 
        around about some people mounting a primary against 
        him. So the answer is--the short answer, after a long 
        answer, is I was concerned.5
    \5\ Deposition of Harold Ickes, June 26, 1997, pp. 21-22; see also 
infra, notes 28-29 and accompanying text.

This was the bleak outlook for the President as he contemplated 
his re-election campaign.

      An Early Emphasis on Money to Stave off Primary Challengers

    Two days after Christmas 1994, the President and McAuliffe 
ate breakfast in the President's personal study on the second 
floor of the White House.6 The breakfast lasted 
about two hours.7 The general discussion concerned 
what the President and McAuliffe needed to do to get ``ready 
for the '96 election.'' 8
    \6\ Deposition of Terence R. McAuliffe, June 6, 1997, pp. 10-11.
    \7\ Id. at p. 14.
    \8\ Id. at p. 12.
    When asked whether he and the President discussed the 
possibility of a primary challenge to the President, McAuliffe 

          You know, I can't recall if he talked about a primary 
        challenge, but, I mean, just pick up the newspapers, I 
        mean, I don't think we would have had to have talked 
        about it. I mean, it was evident that the President was 
        in a very precarious political situation. I think his 
        poll numbers, he was in the low thirties.9
    \9\ Id. at p. 13.

Nevertheless, McAuliffe, who by his own admission is ``not 
negative by nature,'' was ``optimistic and thought [the 
President] should be re-elected.'' 10 McAuliffe 
testified that he was ``willing to lead that fight.'' 
    \10\ Id. at pp. 12, 13.
    \11\ Id. at p. 13.
    Of course, the President would require money to wage that 
fight, a topic which he discussed with McAuliffe. In his 
deposition, McAuliffe tried to downplay the discussion of fund-
raising at the breakfast, stating that ``the fund-raising 
discussion probably took 32 seconds.'' 12 When they 
first sat down for breakfast, the President and McAuliffe 
talked about the mood of the donors. McAuliffe described them 
as ``depressed'' and ``demoralized.'' 13 
Nonetheless, McAuliffe volunteered to ``put this operation 
together,'' telling the President, ``Let's not talk about fund-
raising here, sir, I'll handle all that for you.'' 
14 McAuliffe continued:
    \12\ Id.
    \13\ Id. at p. 14.
    \14\ Id.

          Mr. President, you have broad support out there in 
        the donor community, which is what I represented as the 
        Finance Chair of the party. I'm going to be able to put 
        this operation together for you. The support of the 
        people will be there for you. Don't worry about it. 
        I'll handle it.
          And he--I think it took a tremendous burden off his 
        shoulders. I think he was worried. I think he was 
        probably worried that I wouldn't be his Finance 
        Chairman. I mean, they worry about--see, what you 
        worried about at the time is a lot of the donors and 
        political supporters would leak off and go to other 
        candidates. That was a big concern.
          Q: And when you say other candidates, you mean other 
        Democratic candidates?
          A: Yeah. You know, that potentially--you know, there 
        was talk out there that Bradley was looking at it, that 
        Gephardt was looking at it, that Jesse Jackson might 
        look at it. You know, the names you normally hear, you 
        hear them again today.
          Q: Did you commit to raise a specific amount of money 
        for the President in that meeting?
          A: I said I'd take care of the money, it would be no 
        problem: Don't you worry about it, sir, I'll take care 
        of it. I don't think I knew at the time what the limits 
    \15\ Id. at pp. 15-16.

According to McAuliffe, most of the remaining two hours were 
devoted to discussing ``issues,'' such as ``where this country 
was going.'' 16
    \16\ Id. at p. 14.
    At the end of the breakfast, the topic of fund-raising 
arose again. The discussion centered on what the President 
needed to do to help raise funds. The conversation helped set 
the stage for, among other things, the White House coffees:

          Q: Did you discuss with the President what his 
        involvement would be in the fund-raising operation?
          A: The only thing I discussed with him, I think at 
        the end of the meeting he said, What do I need to do? 
        And I said, Mr. President, you know, I need to get some 
        time with you to meet with some of the key supporters 
        who are demoralized out there so that you can get them 
        re-energized and ready for the '96 
    \17\ Id. at p. 16; see also the section of this report on White 
House coffees.

McAuliffe left the meeting knowing that he would be the Finance 
Chairman for the President's re-election effort. As McAuliffe 
put it, the President ``never said, Terry, will you be my 
Finance Chairman? It was clear that I was going to be the 
guy.'' 18
    \18\ Deposition of Terence R. McAuliffe, June 6, 1997, p. 11.
    McAuliffe did go on to lead Clinton/Gore's fund-raising 
effort; however, Clinton/Gore was limited by law to raising 
funds in certain increments (no more than $1,000 from an 
individual),19 and there was an overall spending 
limit. By the end of the summer of 1995, the re-election 
campaign had raised ``a good chunk'' of all the funds it could 
legally raise.20 No doubt, a strong motivating 
factor in quickly raising this money was the need to discourage 
potential primary challengers. Indeed, no additional funds 
could be raised for the general election due to federal 
restrictions.21 In any event, all of the re-election 
campaign's funds were expected to be raised by the end of 
    \19\ 2 U.S.C. Sec. 441(a)(6).
    \20\ Deposition of Terence R. McAuliffe, June 6, 1997, p. 50.
    \21\ 26 U.S.C. Sec. Sec. 9003(b)(2) & 9012(b).
    \22\ Deposition of Terence R. McAuliffe, June 6, 1997, pp. 50-51.

     Dick Morris' Early Advertising Blitz--The Need for More Money

    Still, a formidable re-election treasury, by itself, would 
not resuscitate the President's moribund political position. 
After the devastating 1994 mid-term Congressional elections, 
the President reached out to his old friend and former 
political consultant, Dick Morris, for political advice. 
Morris, one of the President's closest political 
consultants,23 explained to the President that, even 
to consider a chance at re-election in 1996, he must begin in 
1995 an advertising campaign unprecedented in scope, timing, 
and cost. The President ultimately seized upon Morris's plan, 
thereby creating a tremendous need for huge amounts of money to 
finance this media crusade.24
    \23\ After Morris graduated from Columbia College, he became 
involved in New York politics and worked for the Citizen's Budget 
Commission as a research analyst. Deposition of Richard Morris, August 
20, 1997, p. 6. His first political consulting company was the Public 
Affairs Research Organization, which provided issue consulting for New 
York Democrats. Id. at pp. 6-7. In 1977, he began a new political 
consulting firm, Dresner, Morris, which later changed names to Dresner, 
Morris, Tortorello, and has remained a full time political consultant 
since that time. Id. at p. 7.
    In 1977, when President Clinton was the Attorney General of 
Arkansas, he first engaged Morris to perform a variety of political 
consulting tasks, including polling, advertisement design, and speech-
writing. Id. at p. 8. Morris also assisted President Clinton with his 
failed 1980 re-election campaign for Governor of Arkansas and his 
successful 1982 bid for Governor. Id. at p. 13. Morris consistently 
performed consulting work for Governor Clinton from 1982 through 
January 1991. Id. at p. 14. In 1991, Morris terminated his consulting 
services for Governor Clinton and testified as follows:

        I had become more of a Republican at that point, and I 
      had handled his 1990 campaign as the only Democrat that I 
      was working for. And I told--I grandfathered him in, in a 
      sense, because I had a long relationship with him, and he 
      asked me to handle his 1990 campaign.

Id. at p. 14. Morris did not conduct any professional consulting 
services for Governor Clinton throughout his 1992 Presidential 
campaign. Id. at p. 15.
    \24\ Though familiar with the media blitz that gave rise to the 
White House's thirst for money, Morris had extremely limited knowledge 
of the DNC's and Clinton/Gore's fund-raising activity. He testified as 
follows: ``I had no involvement nor have I ever had with fund-raising 
for him [the President].'' Id. at p. 8. Morris also denied any 
knowledge of John Huang, Charlie Trie or James Riady other than what he 
had read in newspaper articles beginning in late 1996. Id. at pp. 8-9.
    In the spring of 1995, Morris explained to the President 
that he needed to advertise early to improve his approval 
ratings and give him a chance to win re-election.25 
The President agreed to some initial advertisements to 
determine if Morris' views were correct. The first ``flight'' 
of advertising released in July 1995 was paid for by the 
Clinton/Gore '96 re-election committee (hereinafter referred to 
as ``Clinton/Gore'').26 The results of the July 
media ``showed very significant movement'' for the President, 
which Morris used to convince the President to undertake the 
unprecedented advertising campaign Morris had 
    \25\ Id. at pp. 97-98, 271-72.
    \26\ Id. at pp. 130-31. These expenditures occurred prior to any 
discussions concerning ``the possibility of funding ads or running 
specific ads or the text of ads that would be run under the DNC 
label.'' Id. at p. 131.
    \27\ Id. at p. 132.
    As noted, Ickes, the White House deputy chief of staff in 
charge of the President's re-election campaign, was concerned 
that the President could face a primary contest.28 
Ickes believed that the President needed to save Clinton/Gore 
funds (which Morris wanted to spend on advertising) in the 
event that they were needed for a primary fight.29 
For precisely this reason, Ickes opposed Morris' early 
advertising campaign. When Ickes was asked whether he and 
Morris disagreed about spending money on advertising in 1995--
rather than closer to the election in 1996--Ickes testified:
    \28\ Id. at p. 126; see also supra, text accompanying note 5 
(quoting from Ickes' deposition before the Committee).
    \29\ Morris deposition, p. 126.

          There was a debate about that running over a period 
        of months, and different people had different 
        positions. My own position was that, depending upon 
        what money you were talking about--there are different 
        kinds of money, as I'm sure you know by now--that if it 
        were going to be Clinton-Gore campaign money, that I 
        was very reluctant to see that money spent that 
    \30\ Deposition of Harold Ickes, June 26, 1997, p. 31.

Morris, however, was convinced that without a massive 
advertising campaign prior to the primaries, the President 
would be so weak in the polls that he definitely would face a 
primary fight.31
    \31\ Morris deposition, p. 127.
    Although Morris was initially unaware of the financial 
condition of Clinton/Gore and the DNC at the time he was 
pressing for significant advertising expenditures, he learned 
that the Clinton/Gore Primary Committee was limited to spending 
approximately $30 million.32 Morris shared Ickes' 
concern that the media campaign likely would exceed the $30 
million limit placed on the Clinton-Gore Primary 
Committee.33 Confronted with these funding 
limitations, Morris searched for alternative methods to finance 
the President's re-election campaign.
    \32\ Id. at pp. 129-30.
    \33\ See id. at p. 132.
    Morris suggested that the President reject federal matching 
funds so as to increase the amount of contributions that could 
be legally accepted by Clinton/Gore (and provide the 
desperately needed additional funds for 
advertising).34 Morris presented this concept to the 
President and his top advisors in the March 2 and 16, and April 
27, 1995 weekly agendas.35 In July 1995, Erskine 
Bowles, then Ickes' counterpart as White House deputy chief of 
staff, told Morris that the President had decided not to reject 
federal matching funds.36 Bowles told Morris to come 
up with a ``plan B,'' i.e., a method for accomplishing his 
advertising objectives within the limits of the federal 
matching funds expenditures.37 Initially, Morris did 
not know how he would fund the advertising plan because the 
Clinton/Gore funds would have to be used for other campaign 
    \34\ Id. at pp. 97-100, 262-63. A presidential candidate who 
accepts federal matching funds agrees in return to limit campaign 
expenditures in primaries and in the general election. 2 U.S.C. 
Sec. 441a(b)(1).
    \35\ Morris deposition, pp. 262-63; see March 2 and 16, and April 
27, 1995 agendas (Exs. 1, 2 and 3). Morris produced portions of written 
agendas for the weekly strategy meetings beginning in February or March 
of 1995. See Morris deposition, p. 256. The meetings were chaired by 
Morris, and were regularly attended by the President, the Vice 
President, Chief of Staff Leon Panetta, Ickes, Bowles, and other top 
White House, Clinton/Gore, and DNC officials. Dick Morris, Behind the 
Oval Office, p. 26 (1997) (hereinafter ``Behind the Oval Office''). The 
weekly agendas were summaries of the advice Morris gave the President 
during those meetings. Morris deposition, p. 258.
    \36\ Id. at p. 133.
    \37\ Id.
    \38\ Id.

            hatching a scheme to evade federal election laws

    Ultimately, the White House found a ``Plan B'': running the 
advertisements through the DNC under the guise of issue 
advertising. Unlike Clinton/Gore, the DNC could raise unlimited 
amounts of non-federal, ``soft'' money, although such money can 
only be spent for ``party-building'' activities, such as voter 
registration and ``get out the vote'' efforts.39 
During the 1996 federal election cycle, these restrictions on 
the use of ``soft'' money were ignored; the DNC became a shadow 
re-election campaign, allowing the President to spend more than 
the federal limits to which he had agreed in accepting partial 
public financing for his campaign. In short, the President used 
the DNC for an end-run around restrictive federal campaign 
laws. Both Morris and Ickes claimed credit for this idea in 
their testimony before this Committee.
    \39\ Justice Breyer, writing for the Supreme Court, described the 
limited uses of ``soft money'':

        We recognize that FECA permits individuals to contribute 
      more money ($20,000) to a party than to a candidate 
      ($1,000) or to other political committees ($5,000). 2 
      U.S.C. Sec. 441a(a). We also recognize that FECA permits 
      unregulated ``soft money'' contributions to a party for 
      certain activities, such as electing candidates for state 
      office, see Sec. 431(8)(A)(i), or for voter registration 
      and ``get out the vote'' drives, see Sec. 431(8)(B)(xii). 
      But the opportunity for corruption posed by these greater 
      contributions is, at best, attenuated. Unregulated ``soft 
      money'' contributions may not be used to influence a 
      federal campaign, except when used in the limited, party-
      building activities specifically designated in the statute. 
      See Sec. 431(8)(B).

Colorado Republican Fed. Campaign Comm. v. FEC, ____ U.S. ____, 116 S. 
Ct. 2309, 2316 (1996).
    Morris testified that he first ``became aware of the 
existence of issue advocacy advertising'' in the spring or 
summer of 1995.40 Joseph Sandler, the DNC general 
counsel, and Lyn Utrecht, counsel for Clinton/Gore, provided 
Morris with his understanding of issue advocacy 
advertising.41 He testified that ``all the 
impressions that [he had] as to what you could or couldn't do 
and still qualify for . . . issue advocacy advertising comes 
from their legal opinion.'' 42 Morris explained his 
understanding of the legal guidelines concerning issue advocacy 
advertising as follows:
    \40\ Morris deposition, p. 134.
    \41\ Id. at pp. 140-41. Morris did not recall who first informed 
him of issue advocacy advertising, but he believed it was Utrecht, 
Sandler or Bill Knapp, a consultant with the firm Squier Knapp & Ochs. 
Id. at p. 134.
    \42\ Id. at p. 140.

        issue advocacy advertising had to relate to . . . a 
        legislative issue that was pending before Congress, 
        that was actively in play and in discussion before 
        Congress. It had to express a point of view on that 
        issue which was held by the President, the 
        administration in general . . . and the leadership of 
        the Democratic Party; that it had to be an issue 
        position in which the Republican Party leadership took 
        a generally different point of view, period. The 
        advertisement had to be related to the substantive 
        disagreements between the two camps and had to urge a 
        substantive point of view in connection--calling for 
        the adoption of the Presidential/Democratic views on 
        those issues . . . [t]he advertisements . . . could not 
        overly [sic] urge the re-election of the President or 
        the defeat of any particular Republican candidate . . . 
        that there were constraints on the extent to which the 
        President's picture could be used in the advertisements 
        or the picture of possible Republican opponents . . . 
        that there were restrictions on the proximity to 
        primary dates that such advertisements could be run in 
        different states . . . that there was a cut-off date of 
        Memorial Day '96 after which all advertising . . . had 
        to come from the campaign.43
    \43\ Id. at pp. 142-43.

Morris did not perform any independent research to determine 
the accuracy of Sandler's and Utrecht's advice.44 
Indeed, Morris relied heavily upon Sandler's advice regarding 
both DNC and Clinton/Gore advertisements, as evidenced by 
Sandler's presence during all media planning 
    \44\ Id. at p. 145.
    \45\ Id. at p. 160. Morris argued that his understanding of one 
instance where the RNC may have used issue advocacy advertising created 
a ``precedent'' for the DNC to run his massive media campaign. Id. at 
p. 298. His knowledge of RNC issue advocacy advertising was limited to 
second-hand information that, in 1983, ``the Republican Party ran 
extensive ads on its success in combating inflation'' unrelated to 
President Reagan's re-election. Id. at p. 296.
    Morris provided the following examples of how he used DNC 
funded issue advocacy advertising to further his advertising 
plan. From January through April 1996, Morris testified that 
advertisements concerning family and medical leave had to be 
done by Clinton/Gore because the issue currently was not before 
Congress.46 Advertisements on Medicare, however, 
could be paid for by either the DNC (through issue advocacy 
advertising) or Clinton/Gore because ``it was in play before 
the Congress.'' 47 Moreover, from August through 
December of 1995, all advertising funds came from the DNC 
because the advertisements allegedly pertained to the ``budget 
fight'' pending before Congress.48 During the period 
of the Republican primaries (approximately January through 
April of 1996), however, the funds for advertising were split 
between the DNC and Clinton/Gore depending upon the 
issue.49 Indeed, once Morris understood the concept 
of issue advocacy advertising, he regretted ``having spent the 
$2.4 million of campaign money on the crime ads'' Clinton/Gore 
ran in the spring of 1995.50 Morris admitted, 
however, that irrespective of the method of payment for these 
different advertisements, their ultimate goal was the 
President's re-election.51
    \46\ Id. at p. 158.
    \47\ Id. at pp. 158-59.
    \48\ Id. at pp. 152, 154.
    \49\ Id. at p. 153.
    \50\ Id. at pp. 134-35.
    \51\ Id. at p. 293.
    Ickes, however, also wished to claim credit for using DNC 
``issue'' advertising to circumvent federal election laws. He 
testified that he conceived of financing Morris' advertising 
campaign with ``soft'' money to run so-called ``issue ads'' on 
which unlimited money could be spent.52 Ickes 
volunteered that, ``Basically, it was my idea.'' 53
    \52\ See Deposition of Harold Ickes, June 26, 1997, p. 31.
    \53\ Id.
    Regardless of whether Ickes or Morris deserves the 
``credit'' for hatching a scheme to violate the laws, there is 
no doubt that this early spending of ``soft'' money was driven 
by the President's re-election. In testifying about the purpose 
of the early ``soft'' money advertising, Ickes offered another 
glimpse into a nervous President's thought process--a President 
bent on avoiding a repeat of the 1994 election debacle, 
deterring prospective primary challengers, and winning re-

          The idea was to try to--to use paid media, in 
        addition to what the President was saying publicly, to 
        used paid media to reinforce what he was saying 
        publicly, and I think that the theory was that through 
        well-placed, well-designed paid media, that you could 
        get more--you could educate the public more on what the 
        President had done and what he was trying to do in an 
        unfiltered way so that you could have direct contact 
        with potential voters as opposed to having it filtered 
        through the media. I think a lesson had been learned--
        well. . . .
          Q: And was part of the goal of this idea to 
        successfully avoid a primary in '96, a primary 
          A: I don't think there was a concern at that point, 
        but it depends what point you're talking about. Where 
        are we in terms of time frame?
          Q: In the '95, say from February through August, time 
          A: The focus was more--was less on avoiding a 
        primary, much more on the general election.
          Q: The 1996 general election?
          A: Yes. The use of--the use of paid media was focused 
        much more on the '96 general election, but the basic 
        focus was the President was concerned in '94, he had 
        not been able to reach, get through, or break through, 
        to use a campaign term, with the public about the 
        issues that he had been prosecuting in his agenda in 
        '93 and '94. He was very concerned about that, and I 
        think early on the basic thought was that the use of 
        paid money could help break through and you'd have 
        direct communication with voters on particular issues, 
        whether it be crime, welfare reform, or what have 
    \54\ Id. at pp. 36-37 (emphasis added).

To a President wishing to avoid repetition of the 1994 debacle, 
the strategy of using unregulated DNC ``soft'' money to ensure 
that his re-election message resonated with the voting public 
must have been welcome.

    The September 10, 1995 White House Meeting: Unveiling the Scheme

    The scheme for spending DNC ``soft'' money to run early 
advertising in support of the President's re-election under the 
control of the White House was unveiled to the DNC's National 
Chairman at a significant meeting at the White House. The 
meeting took place on Sunday, September 10, 1995, at 9:00 
PM.55 Those present included: the President, the 
Vice President, White House Chief of Staff Leon Panetta, Ickes, 
DNC National Chairman Don Fowler, and one of the President's 
pollsters.56 In addition, the First Lady may have 
been present.57 DNC General Chairman Christopher 
Dodd was supposed to participate by telephone, but did not, as 
he could not be located.58
    \55\ Deposition of Donald L. Fowler, May 21, 1997, pp. 290-92.
    \56\ Id. at p. 292.
    \57\ Id.
    \58\ Id.
    Ickes ran the meeting.59 The first topic of 
conversation concerned the need to communicate the President's 
accomplishments through an advertising campaign.60 
The White House's plan was for the DNC to buy this advertising. 
The advertising ``was to be funded by the party, but it would 
focus on the President's program for the party and what he had 
done.'' 61 According to Fowler, ``there was a 
general consensus that this was a good idea.'' 62
    \59\ Id. at p. 293.
    \60\ Id.
    \61\ Id.
    \62\ Id. at p. 294.
    The meeting then focused on whether there was enough money 
to pay for the proposed advertisements. As Fowler put it, ``The 
discussion was mostly could we raise enough money to do it, and 
the initial plan was 10 weeks at a million dollars a week or 
thereabouts, and the discussion was we could raise it.'' 
63 Everybody in the room discussed whether that 
amount of money could be raised.64
    \63\ Id.
    \64\ Id.
    Although no ``serious doubts'' were expressed in the 
meeting about the ability to raise the money, ``a number of 
people said it was going to take a lot of work and stuff like 
that.'' 65 Apparently, the meeting's participants 
also discussed the need for the President and Vice President to 
devote more time and effort to fund-raising if the plan was to 
be fulfilled.66 The meeting concluded sometime 
around 10:30 or 11:00 in the evening.67 The strategy 
was set in motion.
    \65\ Id. at pp. 294-95.
    \66\ Id. at p. 295.
    \67\ Id. at pp. 295-96.

    In His Own Words: The President's Knowing Subversion of Federal 
                              Election Law

    Clearly, the President and his aides devised a strategy to 
subvert the spending limits imposed by federal law on 
presidential candidates who agree to accept public financing. 
``Soft'' money was used for the express purpose of promoting 
the President's re-election. As documented elsewhere in this 
report, the money was raised and spent under the supervision of 
White House officials.68 The money was spent on ads 
that were produced by the firm handling the re-election 
campaign's ads, ads that the President himself edited and 
    \68\ See the section of this report on the White House's control of 
the DNC.
    The President knew that he was using DNC ``soft'' money to 
support his re-election campaign. He told a group of major 
contributors to the DNC:

          [W]e even gave up one or two of our fundraisers at 
        the end of the year to try to get more money to the 
        Democratic Party rather than my campaigns. My original 
        strategy had been to raise all the money for my 
        campaign this year, so I could spend all my money next 
        year being president, running for president, and 
        raising money for the Senate and House Committee and 
        for the Democratic Party.
          And then we realized that we could run these ads 
        through the Democratic Party, which meant that we could 
        raise money in twenty and fifty and hundred thousand 
        dollar lots, and we didn't have to do it all in 
        thousand dollars. And run down--you know what I can 
        spend which is limited by law. So that's what we've 
        done. But I have to tell you I'm very grateful to you. 
        The contributions you have made in this have made a 
        huge difference.69
    \69\ Transcribed Statement of President Bill Clinton, White House 
Communications Agency Videotape, Dec. 7, 1995 (Hay-Adams Dinner).

the ``bottom line'': pressure on the dnc to satisfy the campaign's need 
                               for money

    The President's massive media plan, combined with the DNC's 
operating costs, required Democrats to raise an unprecedented 
amount of money.70 Morris testified that the media 
team constantly needed additional money to fund fully the 
planned weekly media purchases. For example, the media team 
would plan $1.2 million in paid advertising for a week, but the 
DNC would have only $1 million available.71 
Consequently, Morris appealed to the President to hold 
additional fund-raising events on at least ten occasions, and 
to the Vice President on two or three occasions.72 
When Morris learned from Doug Sosnik 73 that the 
President was not giving fund-raisers enough priority on his 
schedule, he made open appeals at the weekly strategy meetings 
``for more time to be spent on scheduling fund-raisers.'' 
    \70\ Morris stated in his book that ``[n]o president had ever 
advertised even remotely this far in advance of an election. . . . Ten 
million dollars was about equal to what most president or candidates 
for the presidency spent on media ads for the entire primary season, 
from Iowa through the convention--yet here we were spending it on issue 
ads more than a year before the election began.'' See Behind the Oval 
Office, p. 150.
    \71\ Morris deposition, p. 241.
    \72\ Id. at pp. 241, 244. Either Marvin Rosen, Democratic Finance 
Chairman, or Terry McAuliffe once even asked Morris to meet with a 
potential donor. Id. at p. 249.
    \73\ Sosnik was the White House political affairs director.
    \74\ Id. at pp. 241-42.
    In November and December 1995, the DNC ``spent a vast 
amount of money'' on advertising to boost the President's poll 
numbers during the government shutdown.75 Ickes or 
Bowles informed Morris that the extended advertising that fall 
had ``functionally cleaned out the DNC money,'' and that there 
were insufficient funds to advertise in January.76 
In the agenda for the December 7, 1995 White House political 
strategy meeting, Morris informed the participants: ``Need to 
do phone calls and fund raising to turn around media as soon in 
January as possible--or as soon after deal is cut as 
possible.'' 77 Morris testified that, in the agenda, 
he was requesting the DNC to ``redouble'' its fund-raising 
efforts because it was critical that the advertising campaign 
on the President's behalf continue.78 Morris' 
concern over the lack of funding for advertising is emphasized 
in the agenda for the February 22, 1996 White House political 
strategy meeting, which warned participants that the 
``[f]ailure to advertise is, once again catching up with us.'' 
79 In the agenda for the March 6, 1996 meeting, 
Morris wrote that ``DNC fund raising is not now equipped to 
cope with the money needs. . . . We have had trouble getting 
this week's DNC money together. . . . Fund raising at DNC level 
must be improved.'' 80
    \75\ Id. at p. 324.
    \76\ Id. at pp. 324-25.
    \77\ See December 7, 1995 agenda, p. 2 (Ex. 4).
    \78\ See Morris deposition, p. 324.
    \79\ February 22, 1996 agenda, p. 3 (Ex. 5).
    \80\ March 6, 1996 agenda (Ex. 6); see Morris deposition, p. 347.
    Morris testified that the Vice President ``tended to favor 
the advertising that we were doing and . . . worked fairly hard 
at trying to raise the money.'' 81 In his book, 
however, Morris wrote that the President ``complained 
bitterly'' at having to raise the money required to run the 
advertisements.82 The fund-raising became so 
consuming that the President told Morris:
    \81\ Id. at p. 245.
    \82\ See Behind the Oval Office, p. 150. Morris testified that all 
the statements in his book, Behind the Oval Office, were true; 
``everything in the book is, as far as I know, true.'' See Morris 
deposition, pp. 28, 36-37.

          ``I can't think. I can't act. I can't do anything but 
        go to fund-raisers and shake hands. You want me to 
        issue executive orders; I can't focus on a thing but 
        the next fund-raiser. Hillary can't, Al can't--we're 
        all getting sick and crazy because of it.'' 
    \83\ Behind the Oval Office, p. 151. A recent study of the 
President's rigorous fund-raising schedule confirms that the President 
was severely taxed by these fund-raising demands. See Glenn F. Bunting, 
``A Hard and Fast Ride on Donation Trail,'' Los Angeles Times, December 
21, 1997, A1. The President's zeal for fund-raising placed a ``strain . 
. . on both the presidency and the operation of the White House.'' Id.

    The DNC also felt unprecedented pressure to raise money. As 
discussed at some length later in this report, Ickes took 
control of the DNC's Finance Division, and held weekly 
``Wednesday Money Meetings'' beginning in 1995 to control the 
DNC's fund-raising and budgeting.84 In these 
meetings, Ickes' emphasis on money was clear. DNC National 
Finance Director Richard Sullivan remembered well Ickes' 
concern with fund-raising. In discussing the regular money 
meetings, Sullivan recalled Ickes' questioning of DNC Chief 
Financial Officer Brad Marshall--and even employed some of 
Ickes' well-known profanity: ``All Harold cared about was the 
bottom line . . . Harold just cared about the bottom line as 
they applied to Brad [Marshall]'s numbers of spending 
projections. He just cared about what, you know, [`]Goddamn it, 
just tell me what's in the bank, Brad.[']'' 85 Ickes 
himself agreed that he had a ``bottom line'' focus on the DNC: 
``My focus . . . was the bottom line, as they like to say in 
the finance business.'' 86
    \84\ See Deposition of Harold Ickes, June 26, 1997, p. 55; see also 
the section of this report on White House control of the DNC.
    \85\ Deposition of Richard Sullivan, June 4, 1997, p. 90.
    \86\ Deposition of Harold Ickes, June 26, 1997, p. 62.
    Ickes wrote memoranda summarizing what went on at these 
``money meetings,'' and these memoranda prove the White House's 
intense involvement in all aspects of DNC fund-raising, and 
provide some glimpse into the pressure the DNC was under to 
raise funds.87
    \87\ See the section of this report on White House control of the 
    In fact, the amount raised by the DNC during the 1996 
election cycle vastly exceeded that raised in earlier years. 
McAuliffe characterized his 1994 DNC fund-raising effort as a 
much ``smaller operation'' when compared to the DNC's fund-
raising during the 1996 election cycle.88 The 
numbers support McAuliffe's description. In 1994, the DNC 
raised approximately $37 million.89 By December 
1995, a DNC draft budget for 1996 reflected a revenue 
projection of $110 million.90 Revenue from major 
donors alone in that draft budget was expected to total $80 
million--more than twice the entire amount raised by the DNC 
during 1994.91
    \88\ Deposition of Terence R. McAuliffe, June 6, 1997, pp. 20-21.
    \89\ Id. See also Deposition of Richard Sullivan, June 5, 1997, p. 
147 (estimating amount raised by the DNC in 1994 at $38 million).
    \90\ Democratic National Committee Proposed 1996 Budget, December 
21, 1995, p. 9 (Ex. 7). When DNC National Chairman Don Fowler first 
told Sullivan to plan to raise $120 million, Sullivan told Fowler that 
he (Sullivan) ``was expecting a request for a plan of 90 to 100, and I 
thought 100 was kind of best case.'' Deposition of Richard Sullivan, 
June 5, 1997, p. 154.
    \91\ See Ex. 7 at p. 9.
    But even that ambitious draft budget was not enough. In a 
February 9, 1996, memorandum from Ickes to the President and 
the Vice President, Ickes reported that Marvin Rosen, the DNC's 
Finance Chairman, was ``confident that $125 million can be 
raised during the first 10 months of 1996.'' 92 By 
July 5, 1996, Ickes could report in another memorandum to the 
President and Vice President that the DNC's fund-raising was 
``on target,'' and that the DNC was projecting revenue of 
$136.6 million by the end of October 1996.93
    \92\ Memorandum to The President and The Vice President from Harold 
Ickes, February 9, 1996, p. 1 (Ex. 8).
    \93\ Memorandum to The President and The Vice President from Harold 
Ickes, July 5, 1996, p. 2 (Ex. 9).
    The pressure to raise such enormous amounts of money was 
pervasive. DNC National Finance Director Richard Sullivan 
characterized the DNC in 1996 as engaged in ``an historic 
effort in terms of the aggressiveness of the fund-raising.'' 
94 Sullivan told the Committee that the DNC ``raised 
an enormous amount of money,'' adding that, in the 1995-96 
period, the DNC ``almost tripled the amount raised in the 1991-
92 election cycle.'' 95 DNC National Chairman Don 
Fowler stated that there were ``pressing needs during the 
campaign to raise large sums of money. . . .'' 96
    \94\ Deposition of Richard Sullivan, June 25, 1997, p. 120.
    \95\ Testimony of Richard Sullivan, July 9, 1997, p. 8.
    \96\ Testimony of Donald L. Fowler, Sept. 9, 1997, p. 6.


    The many scandals that will be chronicled elsewhere in this 
report flow, directly or indirectly, from this ``historic 
effort in terms of the aggressiveness of the fund-raising.'' 
97 The coordinated issue advertising campaign 
proposed by Dick Morris, managed by the President, and funded 
by the DNC to promote the President's re-election, set the 
stage for the scandals that became the Committee's 
investigatory focus. To promote the President's re-election, 
Morris devised the issue advertising scheme. To pay for this 
project became the consuming passion of the President, his 
staff, and the DNC. Due to the DNC's need to feed the 
advertising beast, it dismantled its process for vetting 
contributions to ensure their legality. From the thirst for 
advertising dollars developed the DNC's search to tap new veins 
for money, such as emerging political groups. From the need for 
funds to pay for issue advertising arose the willingness to 
sell access to senior government officials and to use 
government property to raise funds. The White House and the 
Presidency were reduced to tools for fund-raising. In sum, 
Morris wrote the script. It was now up to the President and his 
cast of supporting actors to implement it. Tales from its 
implementation follow.
    \97\ See Deposition of Richard Sullivan, June 25, 1997, p. 120.

   The White House Controlled the DNC and Improperly Coordinated the 
               Activities of the DNC and Clinton/Gore '96

    ``That was the other campaign that had problems with that, 
not mine.''--President Clinton, November 8, 1996 1
    \1\ News Conference of President Bill Clinton, November 8, 1996, 
CNN Special Event, Transcript # 96110801V06.

    In the wake of the President's re-election, questions were 
raised about allegations of improper fund-raising. The 
President's response was to shift blame away from himself (and 
his re-election campaign) and to the DNC. This response was 
disingenuous. During the 1996 election cycle, the White House, 
in its thirst for money, took control of the DNC.
    First, the White House took control of the DNC's finances, 
micro-managing how the DNC raised and spent money. Harold 
Ickes, Deputy Chief of Staff to the President, simply seized 
the reins of financial power at the DNC. The DNC could not 
spend any money without prior White House approval. Ickes also 
exerted direct control over the DNC's Finance Division, the 
division charged with fund-raising. DNC National Chairman Don 
Fowler was unsuccessful in contesting Ickes' assumption of 
power and asserting control over the DNC.
    The White House's financial control of the DNC was designed 
to fund the advertising strategy developed by Dick Morris. Yet 
White House control was not limited to financial control of the 
DNC; using the DNC as an adjunct to the re-election campaign 
led to unprecedented coordination between the DNC, Clinton/Gore 
'96, and the White House over the content, placement, and 
production of advertisements. This unprecedented coordination 
violated the letter and spirit of existing federal campaign 
    In short, the White House took control of the DNC, 
particularly its fund-raising apparatus, to squeeze as much 
money out of the DNC as it could. The purpose of this money was 
to fuel the White House's massive advertising campaign, which 
itself was the result of unprecedented illegal coordination. By 
the end of the campaign, any distinctions remaining between the 
White House, the DNC, and Clinton/Gore had been obliterated.

     ickes takes charge of the DNC as the president's ``designee''

    Despite his being a federal employee, Harold Ickes simply 
took control of the DNC and ran it from 1995 through the 1996 
election. In particular, he micro-managed the DNC's budget, 
deciding how much DNC money would be spent and on what 
projects. Moreover, he exercised independent control of the 
DNC's Finance Division, which controls fund-raising. Ickes did 
so with the approval of the President; indeed, Ickes was the 
President's ``designee'' for handling DNC issues. Ickes' 
control led to friction with the DNC's nominal head, Fowler.
    Fowler's involvement with the DNC began in 
1971,2 and as time passed and he remained involved, 
he developed ``an interest in being Chairman of the National 
Committee.'' 3 After the Democrats' devastating 
defeat in the 1994 elections, Fowler was given the chance. At 
that time, Ickes called Fowler and asked him if he would be 
interested in serving as the DNC's National 
Chairman.4 The position being offered to Fowler was 
unusual; he was to be part of a ``bifurcated'' chairmanship, 
the brain child of Harold Ickes.5 Senator 
Christopher Dodd (D-CT) would serve as the DNC's ``General 
Chairman,'' and be a spokesman for the party. Fowler, as 
``National Chairman,'' would be responsible for managing the 
day-to-day operations of the DNC.6 Fowler was 
initially uncertain about serving in this arrangement, but 
after several subsequent entreaties from Ickes and at least one 
meeting with the President, Fowler agreed.7 He began 
his tenure as National Chairman on January 21, 
    \2\ Deposition of Donald L. Fowler, May 21, 1997, p. 12.
    \3\ Id. at p. 26.
    \4\ Id. at p. 27.
    \5\ Deposition of Harold Ickes, June 26, 1997, p. 26.
    \6\ See generally Fowler deposition, pp. 26-27; Testimony of Donald 
L. Fowler, Sept. 9, 1997, pp. 9-10.
    \7\ Fowler deposition, pp. 27-32.
    \8\ Id. at p. 12.
    Fowler quickly learned the limits of his power as 
``National Chairman.'' He realized immediately that he and 
Ickes ``had differences of opinion about how things should be 
run'' at the DNC.9 They disagreed on an entire range 
of significant issues from ``budget matters'' to ``the 
operational thrust of the party.'' 10 Fowler 
testified that the disagreements ``generally [were] about 
budget matters.'' 11 According to Fowler, these 
disagreements arose as early as the spring or summer of 1995, 
and persisted until the very end of his service as National 
Chairman in January 1997.12
    \9\ Id. at p. 38.
    \10\ Id. at pp. 38-39; Fowler testimony, p. 20.
    \11\ Fowler deposition, p. 38.
    \12\ Id. at pp. 38-39. Although Fowler's deposition testimony about 
his disagreements and problems with Ickes was strongly worded and 
candid, Fowler tried to hedge his testimony during public hearings. For 
example, he preferred not to associate himself with his deposition 
testimony that he and Ickes had differences of opinion that started 
soon after Fowler arrived and continued until Fowler left. Instead, 
Fowler testified that he and Ickes had a relationship of ``dynamic 
tension.'' Fowler testimony, p. 20. In fact, Fowler even quibbled with 
some of the terms he used in his own deposition. See Fowler testimony, 
pp. 13-15 (disputing that the Finance Division ``ignored'' his 
directives, though such was his deposition testimony, and asserting 
that he ``might quibble a little bit with the use of that term on my 
    Fowler vividly remembered once such instance of his 
disagreeing with Ickes concerning the DNC's fund-raising, an 
incident in which Fowler was more cautious than Ickes. In the 
summer of 1995, the Chicago Sun-Times reported that the DNC was 
selling access to the President and to the White 
House.13 In response to this report, Fowler proposed 
that the DNC limit the contributions it would accept to $2,000 
per person.14 Ickes, however, disagreed with 
Fowler's proposal, and Fowler's recommendation was never 
implemented by the DNC, despite his nominal control over the 
organization.15 In this instance, Ickes demonstrated 
more enthusiasm than Fowler for raising large sums of money.
    \13\ Lynn Sweet, ``The President's Price List,'' Chicago Sun-Times, 
June 30, 1995, p. 1; see Fowler deposition, pp. 344-45;
    \14\ Fowler deposition, p. 343; Fowler testimony, p. 7.
    \15\ Fowler deposition, p. 346.
    Ickes' enthusiasm was not limited to raising money in large 
sums; he was also enthusiastic about controlling DNC 
expenditures. In fact, the extent of Ickes' control over the 
DNC is evident from an April 17, 1996 memorandum from Ickes to 
Fowler, which addresses the DNC's expenditures. The entire text 
of that memorandum reads:

          This confirms the meeting that you and I and [White 
        House political affairs director] Doug Sosnik had on 15 
        April 1996 at your office during which it was agreed 
        that all matters dealing with allocation and 
        expenditure of monies involving the Democratic National 
        Committee (``DNC'') including, without limitation, the 
        DNC's operating budget, media budget, coordinated 
        campaign budget and any other budget or expenditure, 
        and including expenditures and arrangements in 
        connection with state splits, directed donations and 
        other arrangements whereby monies from fundraising or 
        other events are to be transferred to or otherwise 
        allocated to state parties or other political entities 
        and including any proposed transfer of budgetary items 
        from DNC related budgets to the Democratic National 
        Convention budget, are subject to the prior approval of 
        the White House. It was agreed that a small working 
        committee would be established which would include 
        Chairman Fowler (or his representative), Chairman Dodd 
        (or his representative), B.J. Thornberry, Brad 
        Marshall, Marvin Rosen, Doug Sosnik, and others as may 
        be agreed to, to meet at least once weekly, and more 
        often if necessary, to implement this 
    \16\ See Memorandum from Harold Ickes to Don Fowler, April 17, 1996 
(Ex. 1) (emphasis in original).

Although Ickes was ``not sure'' whether he sent the memorandum 
to Chairman Fowler, he did affirm that it reflected the process 
in place during 1996 concerning the expenditure of funds by the 
DNC.17 The memorandum itself purports to memorialize 
an agreement struck in a conversation between Fowler, Ickes, 
and Sosnik. It is difficult to conceive of any more explicit 
evidence of Ickes' level of control over the DNC than the 
agreement memorialized in this memorandum.18
    \17\ Deposition of Harold Ickes, June 27, 1997, p. 24.
    \18\ Sosnik testified, ``I don't think I would have sent this 
memorandum.'' Deposition of Doug Sosnik, June 20, 1997, p. 65.
    Fowler, as nominal head of the party, thought that Ickes 
was usurping his authority. Fowler testified that, although he 
wouldn't necessarily describe Ickes' involvement as ``micro-

          I did feel that he was involved in the management of 
        the DNC in a fashion that I didn't appreciate, that I 
        didn't agree with, that I felt that I should have been 
        the instrument for a management effort and that the 
        management effort should have come through 
    \19\ Fowler deposition, pp. 61-62.

Fowler complained to Ickes about his undue involvement in the 
management of the DNC. Ickes, according to Fowler, 
``disagreed'' with Fowler's concern, and essentially 
``ignored'' Fowler's objections.20
    \20\ Fowler deposition at p. 62; Fowler testimony at pp. 22-23.
    Given that ``all matters dealing with allocation and 
expenditure of monies involving the'' DNC were subject to 
``prior approval of the White House,'' 21 it is 
obvious that the White House was most concerned with the DNC's 
financial condition. In fact, Ickes held regular meetings to 
discuss DNC operations with Senator Dodd and 
Fowler.22 In March 1995, he began weekly meetings 
held on Wednesday afternoons at the White House to discuss the 
DNC budget.23 White House representatives at these 
meetings included Ickes, Sosnik, and Karen Hancox, Sosnik's 
deputy. Fowler, Finance Chairman Marvin Rosen, Finance Director 
Richard Sullivan, Chief Financial Officer Brad Marshall, and 
Executive Director B.J. Thornberry attended on behalf of the 
DNC.24 Ickes ran the meetings.25
    \21\ Ex. 1.
    \22\ Deposition of Harold Ickes, June 26, 1997, p. 44.
    \23\ Id. at p. 44, p. 55. These meetings have been referred to as 
``money meetings'' and ``budget meetings.''
    \24\ Id. at p. 56.
    \25\ Deposition of Karen Hancox, June 9, 1997, p. 19; Sosnik 
deposition, p. 35.
    Ickes did a very thorough job keeping the President and 
Vice President informed on the daily finances of the DNC. Ickes 
prepared weekly memoranda to the President and Vice President 
(copied to various senior White House officials) summarizing 
the information gleaned from these weekly DNC money meetings. 
The memoranda generally identified deposits, projected fund-
raising, calculated actual fund-raising (including federal, or 
``hard'' dollars raised), documented expenditures, and reviewed 
the DNC's budget in detail. These memoranda demonstrated the 
President's concern with the DNC's fund-raising, and the level 
of control the White House asserted over such fund-raising.
    Some of these memoranda provide glimpses into Ickes' 
attention to the DNC's finances. For example, Ickes' January 2, 
1996, memorandum to the President and Vice President (among 
others) regarding the DNC's proposed 1996 budget notes that 
Ickes, Sosnik, and Hancox had met with Fowler, Rosen, and 
others ``to review the first draft of the proposed calendar 
1996 DNC budget as well as the proposed source of funds.'' 
26 The memorandum then analyzes the DNC budget in 
great detail, making comments and recommendations. Ickes'' 
January 31, 1996 memorandum to the President and Vice President 
also analyzes the DNC's budget, noting that ``Chairman Fowler 
was also asked to take a very hard look at the $25 million 
coordinated campaign's budget and see how much savings could be 
achieved there.'' 27 Like many of Ickes' memoranda, 
Ickes used the passive voice (``Chairman Fowler was also 
asked'') when recounting his instructions to Fowler. The 
memorandum goes on to note Ickes' suggestion for ``a meeting 
early next week including the President, Vice President, 
Chairman Dodd and Chairman Fowler to review the revised 
proposed DNC operating budget. . . .'' 28
    \26\ Memorandum from Harold Ickes to The President et al., January 
2, 1996, p. 1 (Ex. 2).
    \27\ Memorandum from Harold Ickes to The President and The Vice 
President, January 31, 1996, p. 2 (Ex. 3).
    \28\ Id.
    Collectively, Ickes' weekly memoranda document a White 
House that closely scrutinized all aspects of the DNC budget. 
Ickes' memoranda kept the President and the Vice President 
closely apprised of all details of the DNC's finances on a 
weekly basis, presumably to advise the President of the status 
of the fund-raising effort to support his re-election through 
the DNC's advertising.
    The White House's control of the DNC was especially evident 
in the ``special relationship'' that developed between the 
White House and the DNC's Finance Division--the division in 
charge of fund-raising.29 This relationship also had 
its roots in Ickes' involvement with the DNC, and the 
relationship may have infused the Finance Division with an 
attitude conducive to abuse and impropriety.
    \29\ See Fowler deposition, p. 80 (referring to Finance Division's 
``special relationship with the White House'').
    Fowler testified ``that the Finance Division had an 
independent relationship with the White House that sometimes 
bypassed what my office would do or would be involved in.'' 
30 The officials in the Finance Division believed 
they derived their authority directly from the White House; in 
fact, Fowler testified that the Finance Division ``thought it 
had a separate charter from the White House.'' 31 
Because of this ``separate charter,'' the Finance Division 
believed that it did not have to respond to Fowler's 
directives.32 In Fowler's view, the Finance Division 
had a ``disposition to ignore'' him.33
    \30\ Id. at p. 75.
    \31\ Id. at p. 79; see also Fowler testimony, p. 16.
    \32\ Fowler deposition, p. 80; Fowler testimony, p. 16.
    \33\ Fowler deposition, p. 80.
    Of course, organizations do not have ``relationships;'' 
people within organizations do. The people within the Finance 
Division who had the special, independent relationship with 
White House personnel were principally Rosen and 
Sullivan.34 From the White House, Ickes had the most 
authoritative relationship with Sullivan and Rosen, although 
Hancox also had frequent contact with them.35 Sosnik 
also had a relationship with Sullivan and Rosen.36
    \34\ Id. at p. 75.
    \35\ Id. at pp. 85-86.
    \36\ Fowler testimony, pp. 15-16.
    As a result of these relationships, Rosen and Sullivan both 
clearly understood that, if they wanted something to happen or 
not to happen, it was Ickes, not Fowler, who had the final 
authority to make a decision.37 Fowler even 
acknowledged that Rosen and Sullivan knew that, if they 
disagreed with Fowler, they could go to Ickes, and Ickes could 
``in every case overrule'' Fowler.38 Sullivan 
testified that he knew he could go around Fowler to the White 
    \37\ Id. at p. 86; See also Fowler testimony, pp. 23-24.
    \38\ Id.
    \39\ Sullivan testified that he knew that when Fowler disagreed 
with either Ickes or Doug Sosnik, Ickes' or Sosnik's position ``would 
usually prevail.'' Deposition of Richard L. Sullivan, June 4, 1997, p. 
    Ickes had a somewhat different view of his power. He ``absolutely'' 
denied that he circumvented Fowler and dealt directly with the DNC's 
Finance Division, and testified that Fowler ``ran the day-to-day 
operation of the DNC.'' Deposition of Harold Ickes, June 26, 1997, p. 
208; see also id. at pp. 208-10. When Senator Domenici read these 
portions of Ickes' deposition to him, Fowler dryly noted that he 
``perhaps would have described it a little differently.'' Fowler 
testimony, p. 247.
    Needless to say, the Finance Division's unique relationship 
with the White House created management problems. Fowler 
testified that ``having any division of an organization like 
that, not being fully integrated in the operations of the other 
divisions is a problem in the process.'' 40 Fowler 
was concerned that this attitude spawned a number of problems, 
including: insufficient notice to his office regarding events; 
41 failure to coordinate dates and participants for 
events; 42 and failure to follow the Chairman's 
    \40\ Fowler deposition, p.77; see also Fowler testimony, p.17. Had 
the Finance Division's independent relationship with the White House 
not existed, Fowler believed that he might have had a curative effect 
on some of the things that went wrong at the DNC during the 1996 
election cycle. See Fowler testimony at p. 18.
    \41\ Fowler deposition, pp. 57-58.
    \42\ Id. at p. 74.
    \43\ Id. at pp. 59-60. See generally Fowler testimony, pp. 12-13. 
The most striking example of the latter occurred during the summer of 
1996, when Fowler became aware that some DNC fund-raisers were listing 
the address of contributors as 430 S. Capitol Street, which is the 
DNC's headquarters. Fowler deposition, pp. 79-80. Fowler testified that 
he believed ``that would never have happened if we had more thorough 
control over the Finance Division.'' Id. at p. 79. Fowler circulated a 
memorandum, requiring DNC fund-raisers to obtain the actual address for 
donors. In the memorandum, Fowler noted, ``If you are able to get 
people to give you checks for thousands of dollars, you really should 
be able to get them to give you their addresses.'' Memorandum to DNC 
Fund-raisers from Don Fowler, August 1, 1996 (Ex. 4). Fowler later 
learned that the directive was disobeyed, and he blamed the Finance 
Division's special relationship with the White House for such 
disobedience. Fowler deposition, pp. 80-83.
    As nearly everyone was aware of the tension afflicting the 
relationship between Ickes and Fowler,\44\ including the Vice 
President,\45\ the question that naturally arises is whether 
the President was aware of the disagreements between Fowler and 
Ickes, and, if so, with whom the President usually sided. 
Fowler testified that he did not know what the President 
understood about Ickes' ability to prevail in the many 
disagreements between Ickes and Fowler, and he declined to 
venture an opinion.\46\
    \44\ Sullivan testified that ``there were times when there was 
tension exhibited between Fowler . . . and Harold Ickes and Doug 
Sosnik.'' Deposition of Richard Sullivan, June 4, 1997, p. 57. Sullivan 
recalled that Fowler and Ickes disagreed often over ``state splits,'' 
the amount of money the DNC would give to a state party or campaign 
when a fund-raising event was held within a state. Id. at pp. 58-59. 
Senator Dodd, the DNC's General Chairman, was also aware of the running 
disagreements between Fowler and Ickes. Fowler deposition, p. 63. Dodd, 
however, refrained from taking a position concerning these 
disagreements. Id. at 64. Deborah DeLee, Fowler's immediate predecessor 
at the DNC, also shared Fowler's concerns. She informed Fowler that 
``she had [had] some of the same problems'' with Ickes. Id. at 65.
    \45\ Fowler testified that the Vice President was aware of the 
running disagreement between Ickes and Fowler, as the Vice President 
made allusions to it in conversation. Fowler deposition, p. 64.
    \46\ Fowler testimony, pp. 243-44.
    Ickes was not so shy. Though he interspersed his comments 
with allusions to the ``latitude'' given to Fowler to run the 
DNC, Ickes' testimony makes clear that he was the President's 
``designee'' for running the DNC:

          Q: If in these Wednesday fund-raising meetings that 
        you chaired in the White House, if there were 
        disagreements about fund-raisers or amounts of money or 
        anything of that nature, did you make the final 
        decision, or how was the authority line there 
          A: The President is to have the party. He is the CEO 
        of the party. If the President says this is the way I 
        want it, it was up to me to see that it was done, and 
        the chairman understood that, but beyond that, the 
        chairman had great latitude, and there may--whatever 
        disagreements there were, we tried to work out 
        collectively . . .

           *         *         *         *         *

          Q: It turns out the way they structured that, I 
        understand the answer to be that basically the 
        President had ordered that you would be in charge and 
        if there were a disagreement, that you would be the one 
        to make the final decision?
          A: No, I didn't say that.
          Q: Okay.
          A: What I said was that the president of the party, 
        in this case the Democratic, is basically, some people 
        say, the titular leader of the party, but I think any 
        chairman would tell you that his president, that is the 
        party chairman's president, is the person who basically 
        has the last word.
          Now, from a very technical point of view, the party 
        is a separate entity and we all recognize that. It has 
        its own charter and all of that, but the President's 
        opinion has extraordinary weight within the party 
        apparatus, as it should. He is the party's leader. 
        Although we're not a parliamentary system, it's 
        basically, in some sense, similar to that.

           *         *         *         *         *

          But Fowler was a full-time real operational head of 
        the party and acted as such. That's not to say there 
        was not very close consultation with the White House; 
        there was, very close consultation with the White 
          Q: I was trying to get at, and I think you answered 
        in a round-about way, about if there were disagreements 
        and you tried to work it out and whatever, who made the 
        final decision? Was it you or----
          A: If there were disagreements, the President of the 
        United States wanted something, you know what? The 
        President of the United States got his way. And you 
        know what? That's the way it ought to be.
          Q: So you would make the final decision if there were 
        A: If the President of the United States wanted 
        something and there was a disagreement between the 
        President of the United States and the chairman of the 
        party, the President prevailed. That's the way it 
        should be.
          Q: And in this context of Wednesday meetings, it 
        would be through you as his designee?
          A: Through me as his designee. I kept the President 
        fully informed, as you can see by reams and reams and 
        reams of documents. . . .47
    \47\ Deposition of Harold Ickes, June 26, 1997, pp. 209-12 
(emphasis added).

    The President, who acknowledged using the DNC as a vehicle 
for running ads designed to assist his re-
election,48 had to know that the DNC was being run 
out of Ickes' hip pocket. The logical conclusion is that the 
President was comfortable with Ickes' serving as his 
``designee,'' which may explain why Fowler never went over 
Ickes' head to try to get any of his decisions 
overruled.49 Ickes was merely doing the President's 
    \48\ Transcribed statement of President Bill Clinton, White House 
Communications Agency videotape, December 7, 1995 (Hay-Adams dinner).
    \49\ Fowler testified, both in his deposition and hearings 
testimony, that the only people to whom he could have gone to overrule 
Ickes were the President, the Vice President, and Leon Panetta, Chief 
of Staff to the President. Fowler testified, however, that he never 
tried to go over Ickes' head to discuss his concerns about Ickes' 
intrusion into DNC affairs. Fowler testimony, p. 23; Fowler deposition, 
p. 64.

 Coordination in the Retention and Payment of DNC and Clinton/Gore '96 
                           Media Consultants

    While Ickes was busy controlling the DNC's purse strings, 
Dick Morris was busy controlling the closely-coordinated 
campaign activities of Clinton/Gore '96 and the DNC--the very 
purpose for which the DNC, under Ickes control, was raising 
funds. The close coordination commenced in December 1994, when 
the President made three commitments to Morris to get him to 
work on the President's behalf: (1) Penn & Schoen would be 
hired as polling consultants; (2) a White House staff member 
would be hired as personal liaison for Morris; and (3) Morris 
would get weekly meetings with the President.50 
These commitments marked the beginning of extensive 
coordination between the White House, the DNC and Clinton/Gore 
'96 on a massive advertising campaign to re-elect the 
President.51 The coordination included: (1) sharing 
and compiling consultants' work product between the White 
House, the DNC and Clinton/Gore for media purposes; (2) 
extensive contact between the DNC and Clinton/Gore '96 
consultants and the White House regarding advertising and 
polling issues; and (3) weekly strategy meetings held in the 
White House with DNC and Clinton/Gore '96 representatives 
specifically designed to coordinate and implement the 
President's re-election campaign. Moreover, the work of Morris 
and the other consultants was used for both political and 
official purposes.52
    \50\ Deposition of Richard Morris, August 20, 1997, p. 70: see Dick 
Morris, Behind the Oval Office (1997), pp. 24-25. Morris testified that 
all the statements in his book, Behind the Oval Office, were true, 
Morris deposition, pp. 28; 36-37.
    \51\ From April through June 1995, Morris described the substance 
to the consultants' work as follows:

       You decided whether you are going to advertise, what you 
      are going to advertise about, what goals you seek to 
      achieve in the advertisement. You poll the best ways of 
      presenting the ads. Then you try to think of creative and 
      attractive ways of presenting it. You write the ads. You 
      produce them. In general, sometimes you test them before 
      audiences . . . and then you have to decide what markets 
      you are going to run it in, how much money you are going to 
      spend, how many points you are going to buy, what programs 
      you are going to buy it on, and how long you are going to 
      run them.

See Morris deposition, p. 79.
    \52\ Id., at pp. 85-87. Morris defined political activity as 
activity ``designed to promote the re-election of the President or to 
assist the Democratic Party generically in the 1996 elections'' and 
official activity as activity ``undertaken by the President or a member 
of his staff in connection with his duties as President.'' Id. at p. 
    In early October 1994, the President hired Morris for the 
first time since 1991 to conduct a survey concerning issue 
positioning and strategy for the 1994 congressional 
elections.53 Morris did not have a written agreement 
concerning these services.54 In fact, from October 
1994 through January 1995, Morris was unaware of whether he was 
retained by the White House, Clinton/Gore '96 or the DNC, 
despite performing work that was used by all three 
entities.55 In addition, he did not recall receiving 
any invoices or Internal Revenue Service 1099 forms in 
connection with his consulting work during this time 
period.56 He billed the DNC and Clinton/Gore '96 in 
one of four different methods: (1) receipt of funds personally, 
whereupon he would pay a subcontracted ``interviewing house''; 
(2) the ``interviewing house'' was paid directly; (3) his 
company, Message Advisors, was paid directly; or (4) Penn & 
Schoen was paid directly.57 With regard to whether 
the DNC, Clinton/Gore '96, or the White House paid for his 
consulting services, Morris testified as follows:
    \53\ Id. at p. 25.
    \54\ Id. at p. 43. Morris and the President initially agreed to 
keep their consulting relationship a secret because of, among other 
reasons, Morris's work on behalf of Republican clients. Id. at p. 46. 
Morris used the code name ``Charlie'' to disguise his initial meetings 
with the President. Id. at p. 54.
    \55\ Id. at p. 62. Morris testified that he did not routinely send 
out client invoices and that, on occasion, he would receive checks 
without formally billing a client. Id. at pp. 30-32.
    \56\ Id.
    \57\ Id. at pp. 41-42.

          I did not understand--I did not know whether it was 
        being done on behalf of the DNC or the Re-Election 
        Committee for the President. I, again, assumed that it 
        was a poll for the President, but I don't know how he 
        elected to pay for it.58
    \58\ Id. at pp. 43, 60.

    At Morris's request, Penn & Schoen began working for the 
President and the DNC.\59\ Mark Penn reported to Ickes, whom 
Penn believed had the highest authority relative to the DNC and 
Clinton/Gore '96 work performed by Penn & Schoen.\60\ Penn was 
unsure whether his firm had been retained by the White House, 
the DNC, or Clinton/Gore '96.\61\ He testified as follows:
    \59\ Penn deposition, p. 8. In early 1995, Morris convinced the 
President to retain the polling firm of Penn & Schoen. Morris 
deposition, p. 64. For a period of time, Penn & Schoen paid Morris for 
his consulting work as a subcontractor, such that he received no 
compensation directly from the White House, the DNC or Clinton/Gore 
'96. Id. at pp. 64-66. Morris also was unaware of whether Penn & Schoen 
had a written agreement with the White House, the DNC, or Clinton/Gore 
'96, nor did he know which of those entities paid for their services. 
Id. at pp. 66-67. In July 1996, Morris finally negotiated a 
compensation arrangement consisting of a $15,000 monthly retainer from 
the Clinton/Gore Primary Campaign Committee and a percentage of the 
commissions from DNC and Clinton/Gore '96 media time buys. Id. at p. 
    \60\ Penn deposition, pp. 26-28.
    \61\ Id. at pp. 11, 18.

          Q: And at the time you conducted polling from the 
        spring of '95 through the election, you were not sure, 
        Penn & Schoen was not sure whether or not a specific 
        poll was for the Re-Elect or the DNC; is that correct?
          A: Right. We knew that we were doing polling that 
        would work--that would be work for both entities, but 
        we didn't know exactly which poll or part of polls 
        would be for which entity. \62\
    \62\ Id. at p. 32.

           *         *         *         *         *

          Q: Was there ever a time that you were aware of in 
        these creative meetings where you were working 
        simultaneously on a DNC ad and a Re-Elect ad?
          A: Yes. I think in '96--in '96 I think there were 
        some points where ideas relative to the DNC and ideas 
        relative to Clinton/Gore would have been on the table 
        at similar times.\63\
    \63\ Id. at p. 44.

           *         *         *         *         *

          Q: * * * But to the best of your understanding when 
        the bill [for consulting services] was actually--or the 
        invoice was submitted to Ickes, did your firm make an 
        effort to distinguish what work was performed on behalf 
        of either the DNC or the Re-Elect?
          A: Typically, no.\64\
    \64\ Id. at p. 48.

                The White House WEekly Strategy Meetings

    Representatives from the White House, the DNC, and Clinton/
Gore would meet at the White House approximately once a week at 
what became known as the weekly strategy meetings (which the 
President agreed to conduct pursuant to Morris' three 
conditions). The topics discussed at the weekly strategy 
meetings included media, polling, speech writing, and policy 
and issue positioning.\65\ All the attendees of the weekly 
strategy meetings were involved in the process of creating the 
advertising in various degrees.\66\ Morris listed the following 
individuals as a ``typical guest list'' for the White House 
weekly strategy meetings:
    \65\ See Morris deposition, p. 124.
    \66\ Id. at p. 187.

        the President; the Vice President; Leon Panetta, chief 
        of staff; Harold Ickes, deputy chief of staff; Evelyn 
        Lieberman, deputy chief of staff; George 
        Stephanopoulos, senior adviser; Don Baer, director of 
        communications; Doug Sosnik, political affairs 
        director; Ron Klain, vice president's chief of staff; 
        Sandy Berger, deputy national security adviser; Senator 
        Chris Dodd of Connecticut; John Hilley, legislative 
        director; Maggie Williams, First Lady's chief of staff; 
        Mike McCurry, press secretary; Henry Cisneros, 
        secretary of Housing and Urban Development; Mickey 
        Kantor, secretary of Commerce; Mack McLarty, adviser 
        and former chief of staff; Peter Knight, campaign 
        manager; Ann Lewis, deputy campaign manager and 
        director of communications; Ron Brown, secretary of 
        Commerce, until his death; Erskine Bowles, deputy chief 
        of staff, until his departure; Jack Quinn, vice 
        president's chief of staff until his appointment as 
        White House counsel; Dick Morris, consultant; Doug 
        Schoen, consultant; Mark Penn, consultant; Bob Squier, 
        consultant; Bill Knapp, consultant.\67\
    \67\ See Dick Morris, Behind the Oval Office (1997), p. 26, note.

The weekly strategy meetings, which ``became the central forum 
for campaign strategy and decisions,'' are a definitive example 
of the illegal and improper coordination between the White 
House, the DNC, and Clinton/Gore.\68\ Morris chaired the 
meetings, distributed his weekly agendas summarizing the advice 
the consultants and he planned on giving the President, and 
received substantive input from most of the attendees.\69\
    \68\ Id. at p. 26.
    \69\ Id.

    The Implementation of Morris' Advertising Campaign Resulted in 
  Unprecedented, Illegal, and Improper Coordination Between the DNC, 
                   Clinton/Gore, and the White House

    Ickes' management of the DNC, particularly its fund-raising 
operation, was designed in large part to quench the White 
House's thirst for advertising money. The flip side of the same 
coin was that the White House, the DNC, and Clinton/Gore '96 
engaged in extensive coordination to develop, fund, and run 
that advertising. Simply stated, all practical distinctions 
between the White House, the DNC, and Clinton/Gore were 
    The White House, the DNC, and Clinton/Gore '96 retained a 
number of media and advertising consultants, but made little 
distinction concerning which consulting work was being 
performed on behalf of each entity. The consultants' work was 
shared by all three entities, without regard to laws limiting 
coordination between the DNC and Clinton/Gore '96 or 
restrictions against White House participation in political 
activity. The improper coordination between the DNC and 
Clinton/Gore '96 is demonstrated by the failure of the 
political consultants to know which entity they were working 
for with respect to specific assignments. Moreover, these same 
consultants often were unaware of which entity was paying for 
their consulting work.
    According to Morris, DNC General Counsel Joe Sandler and 
Lyn Utrecht, Clinton/Gore '96's counsel, ``laid down the rules 
of what advertisements--of what the content of advertisements 
and the timing of the media buys could be in connection with 
the Democratic National Committee advertising and in connection 
with the Clinton-Gore advertising.'' 70 Morris did 
not receive any legal advice from Sandler or Utrecht, however, 
concerning the type of coordination between the White House, 
Clinton-Gore '96, and the DNC that was permissible when 
creating the issue advocacy advertisements.71 In 
fact, Morris testified that he ``never received any information 
from them which would have indicated any limitations on 
discussions with the President, the Vice President, or members 
of the White House staff concerning the advertising that was 
done by the DNC'' and that he was ``never advised that there 
were constraints on that.'' 72 Moreover, Morris 
testified ``there was no indication of any such constraints in 
connection with DNC coordination with the Clinton-Gore 
campaign.'' 73 He recalled a meeting at Utrecht's 
office where he specifically was informed that the identical 
pollsters, consultants, and media creators would be used to 
prepare advertisements paid for by the DNC and advertisements 
paid for by Clinton/Gore '96, and, ``since it was the same 
people [working on both DNC and Clinton/Gore '96 
advertisements], that the closest of coordination was perfectly 
acceptable legally.'' 74 Indeed, the coordination 
between the DNC and Clinton/Gore '96 was so extensive because 
the consultants used by each ``were the same people.'' 
    \70\ See Morris deposition, pp. 117-18. In the July 26, 1995 
agenda, Morris first explained that the campaign would use DNC funds to 
pay for advertisements. Id. at p. 288; see also July 26, 1995 meeting 
agenda (Ex. 5). Morris testified that:

        This agenda was issued after the President had approved 
      and, in fact, was airing crime ads funded by Clinton-Gore. 
      It was also subsequent to my conversation with Bowles in 
      which he advised me to come up with a plan B after I had 
      investigated DNC media and found that that was precisely 
      what I wanted to do anyway.
        So, this marks the beginning of the DNC phase of the 
      media campaign and here I recommend that we do media aimed 
      at swing Republican Senators on Medicare during the recess.

Morris deposition, p. 289.
    \71\ Id. at pp. 146-47.
    \72\ Id. at p. 147.
    \73\ Id. at p. 148.
    \74\ Id. Morris was never instructed by the DNC or Clinton/Gore '96 
attorneys that there are legal restrictions against coordinating the 
consultants and media team efforts with White House officials. Id. at 
p. 164. Indeed, at the time of his deposition on August 20, 1997, 
Morris still was unaware that such restructions existed. Id.
    \75\ Id. at p. 149.
    The coordination in the advertising campaign became so 
extensive that Mark Penn, a consultant at the firm Penn & 
Schoen who worked on the President's campaign with Morris, had 
a White House office from September through December of 1995 
located in a coat closet adjacent to Sosnik's 
office.76 Penn had access to a computer and a 
dedicated campaign telephone line.77 Eventually, 
Morris had the President ``evict'' Penn from the office, 
stating that he ``did not think it was appropriate for a 
political consultant to have an office in the White House, 
particularly not one that was located 40 or 50 feet away from 
where the speeches were being written when that consultant had 
a plethora of commercial clients who had interests in those 
speeches.'' 78
    \76\ Id. at p. 191; See Deposition of Mark J. Penn, June 19, 1997, 
pp. 131-33.
    \77\ See Morris deposition, p. 191.
    \78\ Id. at pp. 192-93.
    The coordination between the DNC and Clinton/Gore '96 
extended to the exact day the media team chose to run a DNC 
advertisement versus a Clinton/Gore '96 advertisement. For 
example, Morris testified as follows concerning coordination 
between placing a DNC or a Clinton/Gore '96 advertisement:

          Q: Now, did anyone ever caution you or advise you as 
        to whether or not a coordination of expenditures like 
        this by the DNC and Clinton/Gore would run afoul of any 
        laws or regulations?
          A: No, and indeed, Sandler and Utrecht advised us to 
        do this coordination because their view was that you 
        had to stop your DNC advertising four weeks before a 
        primary, and then you had to start again with Clinton-
          There were some States where we literally pulled an 
        ad off the air, and then the next day went on with a 
        Clinton-Gore ad so that we could continue our hit in 
        the State, but it was an entirely different ad because 
        it was funded differently.79
    \79\ Id. at pp. 339-40.

    Further demonstrating the close coordination between the 
DNC and Clinton/Gore '96, the July 26, 1995 meeting agenda 
states that, with regard to DNC issue advocacy advertising, 
``[u]se DNC to pay for it, we [the joint White House, DNC and 
Clinton/Gore media team] control production.'' 80 
Morris testified he was:
    \80\ See Ex. 5.

        afraid that there would be an effort made by Ickes to 
        make the DNC ads produced by a separate media creator 
        and I was making the point here that I wanted the same, 
        for us to control the creation of both ads so that we 
        [the November 5th Group] were not sending contradictory 
    \81\ Morris deposition, p. 296.

Moreover, specific media planning and fund-raising details were 
contained in virtually each weekly agenda produced to the 
Committee. Indeed, Morris testified that the February 22, 1996 
agenda contained ``the specific underlying factual detail as to 
how much money of Clinton-Gore we needed for each week'' and 
the need to use Clinton/Gore '96 money to pay for 
advertisements that could not be paid for by the 
    \82\ Id. at pp. 338-39; see also Feb. 22, 1996 meeting agenda (Ex. 
6). The coordination between the DNC and Clinton/Gore '96 extended to 
the budgeting of advertising expenditures. In order to project his 
advertising budget, Morris received periodic estimates of the incoming 
funds from both the DNC and Clinton/Gore '96. See Morris deposition, 
pp. 304-06. Morris testified that his ``proposal for advertising 
totaled 50 million,'' with $17 million from Clinton/Gore and $33 
million from the DNC. Id. at p. 304.
    Morris believed the use of issue advocacy to pay for the 
President's advertising throughout most of 1995 was appropriate 
because it ``had basically nothing to do with re-election 
advertising.'' 83 In support of that theory, Morris 
testified as follows:
    \83\ Id. at p. 138.

         I was not very concerned . . . throughout most of '95 
        with the President's reelection, per se, because I felt 
        that for the President to have a hope of being re-
        elected, he first had to win the fight over the budget. 
        He first had to defeat the agenda of the Gingrich-Dole 
        Congress and win the battle associated with the budget 
        and tax cut issues, and I felt that winning that battle 
        was a condition prior to being able to be re-elected 
        President. I felt that if he failed to win that fight, 
        there was no way that he would ever be re-
    \84\ Id. at p. 135.

Regarding whether the DNC issue advocacy advertisements would 
provide any benefit to the President's re-election effort, 
however, Morris testified:

. . . at any point in a presidency, any advertising, any issue 
advertising the President does whether for health care reform 
or for the stimulus package or to win the budget fight would 
eventually accrue to his benefit in the reelection.

           *         *         *         *         *

    I believe that once we won the budget fight, first of all, 
it was a very important victory for the party, it was a very 
important substantive issue the President was heavily invested 
in, and I believe that winning that fight, itself, was a 
prerequisite to being able to win the election.85
    \85\ Id. at p. 293.

    Another manner of coordination between the White House, the 
DNC and Clinton/Gore '96 occurred through the same consultants' 
use of information obtained for each respective entity in the 
planning and execution of advertisements. While Morris 
testified that the consultant team determined whether an 
advertisement was on behalf of the DNC or Clinton/Gore '96 
based on the results of mall tests and other forms of feedback, 
even the funding for these polls was shared between the DNC and 
Clinton/Gore '96.86 In addition, while the nature of 
a particular advertisement allegedly determined whether it was 
paid for by the DNC or Clinton/Gore '96, Morris conceded that 
advertisements originally planned as DNC ads were switched to 
Clinton/Gore '96.87 The advertisements were created 
in the same room, by the same consultants with identical 
information.88 In fact, Morris often was unaware of 
which entity actually paid for advertisements; 89 
apparently such distinctions were unimportant. Morris testified 
that the only thing separating DNC and Clinton/Gore '96 
materials ``was a bright line running through the middle of our 
conference table of DNC versus Clinton-Gore.'' 90
    \86\ Id. at pp. 160-61.
    \87\ Id. at pp. 157-60.
    \88\ Id. at p. 161.
    \89\ Id. at pp. 279-80.
    \90\ Id. at p. 161.
    Morris testified that ``[t]here was a review [of the 
polling] as to the extent to which it was related to the 
reelection campaign or the Democratic Party generically, but 
all of it was treated as political.'' 91 In fact, 
the only attempts to separate the polling data between the DNC 
and Clinton/Gore '96 came after the polling was 
completed.92 Morris understood that, after polls 
were conducted, Ickes and Utrecht reviewed them and apportioned 
the cost between the DNC and Clinton/Gore '96 based on the 
content of the questions.93
    \91\ Id. at p. 90.
    \92\ Id. at p. 90.
    \93\ Id. at p. 91.
    Ickes apparently was aware that this close coordination in 
advertising and polling created legal risks; indeed, he pressed 
Morris to sign an indemnification agreement so that Morris 
would be responsible for any FEC fines. Morris testified:

          Ickes was pressing for an indemnification .  .  . he 
        wanted an indemnification where basically, any 
        violation that the FEC found, we would be indemnifying 
        the campaign and saying, ``It's our fault guys.'' And 
        what we were offering was an indemnification where, if 
        there was any FEC fine of the campaign that resulted 
        from our refusal or inability to produce documentation 
        about the time buy that we would be liable, but that if 
        the FEC ruled that the underlying expenditures 
        themselves were illegal under FEC rule[s] and imposed a 
        fine, we took the position that we were doing this 
        pursuant to the legal advice we were given from Sandler 
        and Utrecht and the instruction we were given from 
        Ickes to follow their legal advice, and therefore, 
        there was no reason for us to indemnify 
    \94\ Id. at pp. 361-62.

  white house coordination in the design and implementation of issue 
                          advocacy advertising

    The relationship between Morris and Bill Curry provides an 
example of the coordination between the White House and the DNC 
and Clinton/Gore media consultants. Curry was the White House 
staff member specifically hired to work with 
Morris.95 The President suggested that Morris work 
with Curry to implement a ``series of principles'' to guide the 
President's ``comeback in the face of the Republican victory.'' 
96 Morris made it clear to the President, however, 
that he ``needed Curry to work directly with [him] to implement 
the entire strategy, not just a piece of it.'' Morris testified 
he and Curry:
    \95\ See Morris deposition, p. 72.
    \96\ Dick Morris, Behind the Oval Office (1997), pp. 37-38.

          would talk frequently, and he would give me his 
        thinking as to what he thought we should be saying in 
        our advertisements, and I would listen to it and I'd 
        take account of it, and I would--and it was one of a 
        number of inputs I received on that.97
    \97\ See Morris deposition, p. 74.

In addition to the advertising and consulting work, Morris and 
Curry worked on Presidential ``policy initiatives,'' the 
President's position on issues of national concern, 
congressional strategies, speech writing, polling results, and 
media plans on a regular basis.98 Morris also 
testified that ``a number of people at the White House [and] at 
the DNC . . . participated at one point or another in the 
process of thinking up ideas for a media.'' 99
    \98\ Id. at pp. 73-74.
    \99\ Id. at p. 76.
    As a result of the early advertising using Clinton/Gore '96 
funds and the subsequent use of DNC-funded issue advocacy 
advertisements, Morris divided White House involvement in 
campaign advertising into two distinct time periods: April 1995 
through June 1995; and July 1995 through August 
1996.100 From April through June 1995, the media 
consultants conducted polls and created advertisements 
primarily for Clinton/Gore '96 because they had not yet adopted 
the concept of using DNC funded issue advocacy 
advertising.101 From July 1995 through August 1996, 
the media consultants conducted polls and created 
advertisements using DNC funded issue advocacy advertising and, 
to a limited extent, Clinton/Gore '96 funds.102 
Thus, the coordination that occurred between White House 
officials, the DNC, and Clinton/Gore '96 is analyzed in these 
distinct time periods.
    \100\ Morris resigned during the Democratic National Convention in 
August 1996 due to a personal scandal. See Dick Morris, Behind the Oval 
Office (1997), pp. 331-34.
    \101\ Morris deposition, pp. 78-90.
    \102\ Id. at pp. 125, 154-55.
    Morris testified that among the White House officials who 
primarily coordinated with the DNC and Clinton/Gore '96 media 
consultants and representatives were: the President, the Vice 
President, Leon Panetta, Harold Ickes, George Stephanopoulos, 
Erskine Bowles, and Doug Sosnik.103 Morris described 
the involvement of each of these individuals as follows:
    \103\ Id. at p. 76.

The President

    The President had significant involvement with the Clinton/
Gore '96 and DNC media consultants in the areas of polling, 
advertising, speech-writing, legislation strategy, and general 
policy advice. The President: (1) reviewed, modified and 
approved all advertising copy; (2) reviewed, adjusted and 
approved media time buys; 104 (3) reviewed and 
modified polling questions; and (4) received briefings on and 
analyzed polling results.105 Indeed, a significant 
amount of the polling work the consultants performed for the 
President ``related to substantive issues in connection with 
his job as President, but it [also] could be considered 
political.'' 106
    \104\ Time buys are the ``list of markets . . . to buy ads in and 
how much you are going to spend in each media market.'' Id. at p. 83. 
For example, at the March 2, 1995 weekly strategy meeting, the 
President decided Clinton/Gore '96 would pay for the time buys during 
that period. Id. at pp. 84-86.
    \105\ Id. at pp. 80-84.
    \106\ Id. at p. 81.
    The President wanted to keep total control over the 
advertising campaign designed by Morris and the media 
consultants.107 From May through June 1995, Morris 
testified that the President ``insisted on seeing every 
question before [the consultants] asked it in the 
questionnaire.'' 108 In addition to the weekly 
strategy meetings, Morris met with the President privately to 
discuss the media campaign.109 For example, if the 
media team ``had to do an ad and there wasn't a strategy 
meeting scheduled conveniently,'' i.e., a rapid response to 
Republican advertisements, Morris would schedule a private 
meeting with the President.110
    \107\ Id. at p. 167.
    \108\ Id. at pp. 176-77.
    \109\ Id. at p. 190.
    \110\ Id.
    The President's participation began with initial 
discussions concerning the specific details of DNC and Clinton/
Gore '96 advertisements.111 He would review the 
story lines and scripts and occasionally make detailed and 
significant changes.112 Morris testified that the 
President was the ``day-to-day operational director'' of the 
media campaign.113 The President ``worked over every 
script, watched each ad, ordered changes in every visual 
presentation, and decided which ads would run when and where.'' 
114 Morris further testified that the President 
``was as involved [in the DNC and Clinton/Gore '96 media 
campaign] as any of his media consultants were,'' ``[e]very 
line of every ad came under his informed, critical, and often 
meddlesome gaze,'' such that ``[t]he ads [for both the DNC and 
Clinton/Gore '96] became . . . the work of the President 
himself.'' 115 From July 1995 through August 1996, 
Morris described the President's involvement in the media 
campaign as follows:
    \111\ Id. at p. 177.
    \112\ Id.
    \113\ Id. at pp. 182-83.
    \114\ Id. at p. 183.
    \115\ Id. at pp. 182, 183, 184-88, 189; see also Dick Morris, 
Behind the Oval Office (1997), p. 144.

          The President would be heavily involved in the first 
        issue, the discussion of the strategy, and he would 
        look at the ad--and we would present to him at each of 
        these strategy meetings the scripts of media that we 
        wanted to run and the visuals, the animatics that had 
        been tested, and would brief the assembled group, which 
        included the President and the Vice President, on the 
        results of the mall test. And armed with those results, 
        looking at the visual and looking at the script, the 
        President would make fairly specific suggestions as to 
        what he wanted or didn't want included in the final ad.
          We would then take those suggestions, and suggestions 
        that were also made by all the other people in the 
        group in the room, including Senator Dodd and 
        Stephanopoulos and a bunch of folks, and we would then 
        have a creative meeting, which was a group meeting of 
        the consultants, right after the-the day after the 
        strategy meeting.116
    \116\ See Morris deposition, pp. 168-69. Morris and the other 
consultants also assisted the President with speech writing. Id. at p. 

    Morris recounted a conversation with the President that 
demonstrates both the high level of White House coordination 
with the DNC and Clinton/Gore '96 advertising and its true 
purpose of supporting the President's re-election. Morris 
recalled a private Oval Office meeting with the President to 
discuss the use of comments by Speaker Gingrich and Senator 
Dole in advertisements.117 The President stated that 
he did not want to run ``the Dole Medicare quote in our 
national ad buy'' because he feared Senator Dole might lose the 
Republican nomination if he were associated with the proposed 
Medicare reforms.118 Because the President and 
Morris wanted to run against Senator Dole,119 Morris 
wrote an advertisement that ``in early November . . . featured 
Gingrich's quote but not Dole's,'' and this advertisement ran 
``for three weeks in about 40 percent of the country during the 
[federal government] shutdown.'' 120
    \117\ See Dick Morris, Behind the Oval Office (1997), p. 184.
    \118\ Id.
    \119\ Id.
    \120\ Id.
    Based on the evidence provided by Morris, it is evident 
that of all the White House officials involved in the 
advertising campaign, the President himself was the most 
actively and intimately involved.

The Vice President

    From April through June 1995, the Vice President was 
involved with the DNC and Clinton/Gore '96 concerning polling, 
advertising, speech-writing, legislation, policy and general 
advice to a lesser degree than the President.121 The 
Vice President reviewed, modified and approved 
advertisements.122 From July 1995 through August 
1996, the Vice President attended all the strategy meetings and 
would make suggestions to proposed 
advertisements.123 In placing the level of 
individual involvement in the media campaign and polling work 
on a scale from one to 100 (with 100 representing the 
President's level of involvement), the Vice President's 
participation was roughly 40 percent of the President's level 
of involvement.124
    \121\ See Morris deposition, pp. 187-88.
    \122\ Id.
    \123\ Id. at p. 186.
    \124\ Id. at pp. 187-88.

Leon Panetta

    From April through June 1995, he had essentially the same 
involvement in the media campaign as did the Vice President, 
which included polling, advertising, speech-writing, 
legislation, policy and general advice.125 From July 
1995 through August 1996, Morris placed Panetta's level of 
involvement at approximately 50 to 60 percent of the 
President's level of involvement.126
    \125\ Id. at pp. 95-96.
    \126\ Id. at p. 188.

Harold Ickes

    Morris believed that Ickes was in ``minute to minute 
control over all field activities in connection with the 
Clinton-Gore campaign or the DNC.'' 127 Morris 
understood that Ickes essentially ran the DNC and, until Peter 
Knight arrived, he also ran the Clinton/Gore '96 re-election 
campaign.128 Morris testified that:
    \127\ Id. at p. 236.
    \128\ Id.

          [Ickes] was the one who had to approve any 
        expenditure of money, and he was the one who had to be 
        informed of any polling and had to be informed of any 

           *         *         *         *         *

          I had the impression that he was in charge of every 
        aspect of the campaign except for the substance of the 
        message which I was in charge of.129
    \129\ Id. at pp. 236-37.

    Regarding Ickes' involvement with the advertising campaign, 
Morris testified that, from April through June 1995, Ickes had 
approximately the same level of involvement in the media 
campaign as did the President.130 Ickes did not have 
final approval (as the President did) and made fewer 
substantive changes than the President, but he ``focused with 
greater scrutiny than the President on the amount and the 
distribution of the time buy.'' 131 For example, 
Ickes approved every questionnaire, script, time buy or other 
campaign expenditure.132 He also chaired all the 
meetings with Sandler and Utrecht in which it was determined 
whether an advertisement should come from the DNC or Clinton/
Gore '96.133 In addition, Ickes was ``heavily 
involved'' in discussions concerning how much to spend on 
advertising and whether the President should accept Federal 
matching funds.134 From July 1995 through August 
1996, Ickes' level of involvement was roughly 10 to 20 percent 
of the President's level of involvement in the advertising 
    \130\ Id. at p. 96.
    \131\ Id.
    \132\ Id. at p. 221.
    \133\ Id.
    \134\ Id. at p. 97.
    \135\ Id. at p. 188.

George Stephanopoulos

    Stephanopoulos was a senior White House advisor. From April 
through June 1995, Stephanopoulos did not have any significant 
involvement in the media process.136 He became more 
involved in September of 1995 and remained actively involved 
through Morris' departure from the campaign in August of 
1996.137 On behalf of both the DNC and Clinton/Gore 
'96, he reviewed advertising copy before it was approved and 
suggested changes to advertising visuals and advertising 
themes.138 He also was in charge of the vetting 
process for factual accuracy for both DNC and Clinton/Gore '96 
advertisements.139 Beginning in May 1995, 
Stephanopoulos played a greater role in reviewing the polling 
conducted by Morris.140 By September 1995, 
Stephanopoulos' role ``evolved to a point where he received all 
questionnaires in advance and approved the questions and 
frequently made suggestions for modifications, additions, or 
deletions.'' 141 Morris also called Stephanopoulos 
``[e]ach morning at seven-twenty . . . with the data from the 
previous night's interviewing so he could report to the daily 
seven-thirty meeting that Leon [Panetta] held with the top 
White House staffers.'' 142 From July 1995 through 
August 1996, Stephanopoulos' level of involvement was roughly 
70 to 80 percent of the President's level of involvement in the 
media campaign.143
    \136\ Id. at p. 101.
    \137\ Id. at p. 103.
    \138\ Id. at p. 101-02.
    \139\ Id. at pp. 102, 106, 170.
    \140\ Id. at p. 107.
    \141\ Id.
    \142\ See Dick Morris, Behind the Oval Office (1997), p. 183.
    \143\ See Morris deposition, p. 188.

Erskine Bowles

    Bowles was a White House deputy chief of staff (and now 
serves as chief of staff). He attended the weekly strategy 
meetings and acted as a liaison between Morris and the 
President.144 Bowles also supported Morris' view 
that advertising should not be conducted on a piecemeal 
basis.145 At Bowles' suggestion, Morris divided the 
advertising plan into four components, each costing 
approximately $10 million.146 From July 1995 through 
August 1996, Morris placed Bowles' level of involvement at 
roughly 10 to 20 percent of the President's level of 
involvement in the media campaign.147
    \144\ Id. at p. 110.
    \145\ Id. at p. 111.
    \146\ Id.
    \147\ Id. at p. 188.

Doug Sosnik

    From July 1995 through August 1996, Sosnik's level of 
involvement was roughly 30 to 40 percent of the President's 
level of involvement in the media campaign.148
    \148\ Id.

 The President and Vice President Agreed to Limit the Amount of Money 
They Would Spend on Their Campaign, and the Violation of That Agreement 
            May Constitute a Violation of 18 U.S.C. Sec. 371

    In addition to the White House's coordination with and 
control of the DNC in producing and paying for ads containing 
electioneering messages on behalf of the President's 
reelection, there is a question as to whether the fundraising 
and expenditures necessitated by the desire to run those ads 
constitute a ``conspiracy to defraud the government.'' 
    \149\ Under 18 U.S.C. Sec. 371, ``[i]f two or more persons conspire 
either to commit any offense against the United States, or . . . to 
defraud the United States, or any agency thereof, and commit an overt 
act in furtherance of the conspiracy, then they have committed a 
federal criminal offense'' (emphasis supplied).
    Under the FECA, a presidential candidate who accepts 
federal matching funds cannot exceed the applicable expenditure 
limits for his campaign.150 To ensure that the 
statutory scheme and its purposes are complied with, the FECA 
requires that candidates who receive matching funds under 26 
U.S.C. Sec. 9037 certify that they will not exceed the FECA 
expenditure limits.151
    \150\ 26 U.S.C. Sec. 9035. The expenditure limits are set out at 2 
U.S.C. Sec. 441a(b)(1)(A).
    \151\ 26 U.S.C. Sec. 9033(b).
    Here, the certification was made, and the government wrote 
its check only after being told that what in fact was already 
occurring (the raising and spending of private money) would not 
occur. The foresworn fundraising and spending was undertaken 
using the DNC as a conduit.
    As pointed out above, the intent of the FECA in providing 
limited federal funding is to remove the candidate from the 
fundraising process and to prevent the raising of large private 
campaign contributions. The deal the taxpayers make with the 
candidate is that in exchange for their funding, the candidate 
will forswear outside money, thereby making it less likely that 
the election will be influenced or appear to be influenced by 
big money. Obviously, in the matter before us, the clear 
purpose of the law was circumvented. If a candidate can easily 
circumvent those limitations through coordination with a third 
party, such as by raising unlimited sums for a party committee 
the candidate controls, that objective of the statute is 
completely undermined.
    The ``defraud the United States'' portion of section 371 of 
title 18 is broad in scope and is applicable to any activity 
that has the effect of defrauding the government. This is the 
case even if no other criminal statute has been violated. In 
other words, under section 371 even an act that is not itself a 
violation of any statute can result in criminal liability if 
the government is defrauded. Accordingly, the quotation 
attributed to Attorney General Reno that ``a conspiracy has to 
be a conspiracy to violate specific laws'' is 
incomplete.152 That statement may be correct in 
regard to the portion of section 371 dealing with conspiracy 
``to commit an offense against the United States,'' but 
apparently does not address the conspiracy ``to defraud the 
United States,'' which is the other portion of section 371. So 
even though it appears that the FECA may have been violated, 
even if the FECA was not violated, the activity at issue may 
still constitute a conspiracy to defraud the United States.
    \152\ David Johnston, ``Campaign Finance: Wider Implications; 
Justice Dept. Reopens Campaign Plot Case,'' The New York Times, 
December 11, 1997, p. A24.
    For instance, in United States v. Touhey,153 the 
court decided a case in which the defendants conspired to gain 
control of a bank without reporting the transaction to the 
FDIC. Because each co- conspirator purchased less than 10% of 
the bank's stock, the group thereby evaded the reporting 
requirement. Violations of the reporting requirements carry 
only civil, not criminal penalties. The court held that the 
defendants' acts defrauded the government by interfering and 
obstructing the FDIC's lawful government function of 
administering the banking laws. Therefore, criminal sanctions 
were imposed even though the underlying acts were not criminal 
    \153\ 867 F.2d 534 (9th Cir. 1989).
    The Supreme Court has read section 371 even more broadly. 
It has consistently held that the participants in a conspiracy 
need not conspire to violate any particular criminal or civil 
statute if they conspire to defraud the government. In the 
leading case, Dennis v. United States,154 the 
defendants submitted false affidavits to the NLRB purporting to 
satisfy the requirement of federal labor law that union 
officials not be members of the Communist Party. Such an 
affidavit was required to be filed before the union could call 
upon the NLRB to investigate charges. The defendants were 
alleged to have falsely certified that they were not Communist 
Party members. The government charged the defendants with 
conspiracy to defraud the NLRB under section 371.
    \154\ 384 U.S. 855 (1966).
    The Supreme Court found that, unable to secure the benefits 
of the NLRB without submitting non-Communist affidavits, the 
union officers deliberately concocted a fraudulent scheme. In 
furtherance of that scheme, they submitted false affidavits, 
and then used the NLRB facilities made available to the 
union.155 The Court held that such a scheme was a 
conspiracy to defraud the United States, whether or not the 
affidavits were themselves violations of the false statements 
statute. As the Court found, section 371 covers ``any 
conspiracy for the purpose of impairing, obstructing or 
defeating the lawful function of any department of 
Government.'' 156 For the Court, the key facts of 
the conspiracy in Dennis were ``that petitioners and their co-
conspirators could not have obtained the Board's services and 
facilities without filing non-Communist affidavits; that the 
affidavits were submitted as part of a scheme to induce the 
Board to act; that the Board acted in reliance upon the fact 
that affidavits were filed; and that these affidavits were 
false. Within the meaning of section 371, this was a conspiracy 
to defraud the United States or an agency thereof.'' 
    \155\ Id. at p. 861.
    \156\ Id.
    \157\ Id. at p. 862.
    The advertisements themselves may be specific and credible 
evidence that overt acts were carried out in support of the 
conspiracy to evade the expenditure limits and other FECA 
requirements. The resulting interference and obstruction of the 
FEC's lawful function of administering the election laws as a 
result of either a civil or criminal violation of the FECA may 
form the basis for a criminal conspiracy to defraud the 
government under section 371.158
    \158\ In the most famous example of an attorney general's use of 
the discretionary provision of the Independent Counsel Act, Attorney 
General Meese sought the appointment of an independent counsel to 
investigate Col. Oliver North. The immediate issue presented in that 
case was whether any criminal law may have been violated by Col. 
North's diversion of CIA funds to the Nicaraguan contra rebels in light 
of the Boland Amendment which prohibited the use of CIA funds for that 
purpose. Violation of the Boland Amendment carried no civil or criminal 
    As far as the President's use of the DNC to run the money 
through, a person cannot protect himself from liability by 
doing something in another's name that he is not allowed to do 
himself. Direct criminal prohibitions are not skirted through 
indirect violation. Whittaker v. Whittaker Corp.159
    \159\ 639 F.2d 516 (9th Cir. 1981) (corporate insider violates 
section 6(a) of the Securities Act of 1934 by purchasing company stock 
for his mother's account over which he ``exercised complete control'' 
and selling stock for his own account within six months; this 
prohibition applies to such person's transactions ``for his benefit'').
    Also, ``[m]en must turn square corners when they deal with 
the Government.'' Rock Island & L.R.R. Co. v. United 
States.160 Ordinary American citizens dealing with 
the Internal Revenue Service, for example, come to learn this 
quickly. Under our system of law, the same obligation is placed 
on the President.
    \160\ 254 U.S. 141, 143 (1920).

Coordination Between the DNC, Clinton/Gore, the White House, and Union 

    Morris testified that in August 1995 Ickes organized and 
chaired a White House meeting in the Roosevelt Room between 
representatives of the DNC and Clinton/Gore '96 media team and 
approximately seven representatives of various labor 
unions.161 Morris recalled the meeting was attended 
by, among other individuals, representatives of the National 
Education Association, the American Federation of State, 
County, and Municipal Employees, the American Federation of 
Labor-Congress of Industrial Organizations, Sosnik, 
Stephanopoulos and Ickes.162 During the meeting, 
both the union representatives and the DNC and Clinton/Gore '96 
media team displayed advertisements each had run or were 
considering running.163 Morris testified that the 
union representatives:
    \161\ Id. at pp. 216, 223.
    \162\ Id. at pp. 216-17.
    \163\ Id. at p. 217.

          Spoke in turn about what their media plans were that 
        they were planning to advertise in States of Republican 
        Senators, they were going to spend $1 million over the 
        course of the next year on doing it, here are the ads 
        they had already run, here were the ads that they were 
        about to run. It was a full briefing of us by them on 
        their media plans.164
    \164\ Id. at p. 222.

    Morris testified that the union representatives ``suggested 
to us [Clinton/Gore '96 and the DNC consultants] that there be 
coordination of the advertising . . . issue-oriented ads about 
the budget.165 Morris also recalled the union 
representatives suggesting Clinton/Gore '96 should run 
advertisements in states where the unions were not advertising 
and, in particular, he recalled the following specific 
suggestion of coordination:
    \165\ Id. at p. 217.

         And I remember in particular they said, for example, 
        we're going to be on in Vermont to go after Jeffords, 
        and you don't care about winning Vermont politically, 
        so we'll do Vermont and you don't.166
    \166\ Id.

While Morris could not recall the name of the individual who 
suggested the coordination, he believed it may have come from 
the union representatives' time buyer (possibly affiliated with 
Vic Fingerhut's agency).167 Morris testified that 
Ickes was in favor of the coordination.168 In 
contrast, Morris testified that he rejected a coordinated 
advertising effort between the White House, the DNC, Clinton/
Gore '96, and the unions because he believed the union's media 
strategy was flawed.169
    \167\ Id. at p. 222.
    \168\ Id. at pp. 222, 224.
    \169\ Id.


    One does not expect government officials, with salaries 
paid by the taxpayers, to manage directly the day-to-day 
operations of a political party. Yet that is precisely what 
happened in 1995-96. Ickes ran the DNC as the President's 
    The White House's unprecedented level of control over the 
DNC arose because the DNC was not in any sense independent from 
the President's re-election effort; the DNC was merely a 
vehicle for financing Morris' advertising blitz. With the 
Democratic Party serving primarily as a re-election vehicle, 
the President wanted control. Ickes obliged that desire, and 
Fowler was unable to go over Ickes' head, because Ickes was 
merely doing the President's bidding.
    The nation's oldest political party simply became an arm of 
the White House with the primary mission of re-electing the 
President. The illegalities and improprieties discussed in this 
report stem from this simple fact. The President's attempt to 
slough responsibility for illegal and improper fund-raising by 
the DNC in 1995-96 by pinning blame on ``the other campaign'' 
rings hollow in the light of the facts uncovered by the 
Committee's investigation and outlined in this report.

        The DNC Dismantled Its System for Vetting Contributions

    As the DNC tried to slake the White House's historic thirst 
for campaign cash, it dismantled its system for reviewing 
contributions. The Committee concludes that the DNC, at a 
minimum, operated with a conscious disregard for the legality 
of contributions during the 1996 election cycle. Simply stated, 
the DNC knew how to implement procedures reasonably calculated 
to diminish the risk of accepting illegal or inappropriate 
contributions. The DNC had such procedures in place before the 
1996 election cycle, and the DNC has such procedures now. Yet 
during the 1996 election cycle, the DNC did virtually nothing 
to screen significant contributions.

                        The 1992 Vetting System

    The DNC was not always indifferent to the legality and 
appropriateness of large contributions. In preparation for the 
1992 election cycle, Rob Stein, a DNC consultant, and later Ron 
Brown's Chief of Staff at the Department of Commerce, worked 
with then-DNC General Counsel Carol Darr to ensure that the DNC 
had an effective procedure in place to vet 
contributions.1 Darr, who had worked on the 1988 
Dukakis presidential campaign, wanted to institute a system at 
the DNC resembling the one used by the Dukakis campaign. Darr 
and Stein thus met with Dan Small, who had been in charge of 
vetting for the Dukakis campaign.2
    \1\ Deposition of Robert J. Stein, June 17, 1997, p. 57.
    \2\ Id. at p. 58.
    Following this meeting, the DNC implemented a system 
similar to the Dukakis campaign's for vetting contributions 
over $10,000. Any check for $10,000 or more was to go through a 
vetting desk.3 This desk was supervised by Barbara 
Stafford, an attorney in the DNC's Office of General Counsel. 
Stafford had full-time responsibility for vetting 
contributions, as did her assistant, David Blank.4 
In fact, the 1992 vetting system involved an entire group of 
DNC staff, usually numbering between six and 10, who did 
nothing but vet major contributions.5 Current DNC 
Deputy General Counsel Neil Reiff has confirmed to the 
Committee that there was once a separate ``unit'' of about 
seven or eight people, supervised by Barbara Stafford, that 
vetted checks.6 Likewise, current DNC General 
Counsel Joseph Sandler testified that ``for the 1992 election a 
procedure known as Major Donor Screening Committee'' was in 
    \3\ Id.
    \4\ Id. at p. 81.
    \5\ Deposition of Melissa A. Moss, June 11, 1997, pp. 12, 17.
    \6\ Deposition of Neil Reiff, June 20, 1997, p. 30.
    \7\ Deposition of Joseph E. Sandler, May 15, 1997, p. 47.
    In short, the 1992 vetting system involved a special 
vetting desk, staffed by six to 10 people, directly supervised 
by the DNC's Office of General Counsel.

                          1994: Vetting Fades

    Carol Darr and Barbara Stafford were no longer in the 
Office of General Counsel during the 1994 election cycle. 
Darr's replacement, Sandler, was apparently somewhat less 
concerned with vetting contributions. Unlike the old vetting 
desk, supervised directly by the Office of General Counsel, the 
DNC began to rely on a less formal system involving one member 
of the DNC's Office of General Counsel and the part-time 
efforts of one member of the DNC's Research Division, Rumi 
Matsuyama, who was charged with helping DNC Deputy Counsel Neil 
Reiff vet checks larger than $25,000.8
    \8\ Deposition of Rumi Matsuyama, June 10, 1997, p. 21; see also 
Reiff deposition, p. 37.
    Matsuyama would receive a check and an attached form, 
entitled ``Major Donor Screening Form,'' from 
Reiff.9 She would then perform a NEXIS search using 
the information on the form; relevant information would be 
downloaded. In addition, she would search a CD-ROM of Federal 
Election Commission records to ascertain whether the donor made 
other, presumably legal and appropriate 
contributions.10 She would then prepare a memorandum 
summarizing her research.11 The memorandum, as well 
as the downloaded research, was attached to the Major Donor 
Screening Form, which was the same or substantially similar to 
the form used by the DNC's vetting desk in 1992, and all of 
these documents were returned to Reiff.12 Reiff 
would then review the information and decide whether the DNC 
should accept and deposit the contribution.13
    \9\ See, e.g., Major Donor Screening Form dated May 24, 1993 (Ex. 
1); Major Donor Screening Form dated April 17, 1993 (Ex. 2).
    \10\ Matsuyama deposition, pp. 11-13.
    \11\ Id. at pp. 14, 39.
    \12\ Id. at pp. 13-14, 39.
    \13\ Reiff deposition, pp. 27-28.
    Matsuyama testified that she spent approximately five to 10 
hours a month performing this vetting function; the remainder 
of her time was spent researching political 
issues.14 She left the DNC in May 1994.15 
She was not replaced, and the check-vetting process for large 
contributions essentially ceased.
    \14\ Matsuyama deposition, pp. 7, 22.
    \15\ Id. at p. 6.

             the 1996 election cycle: what really happened?

    The Committee's search for information about the DNC's 
vetting procedures following Matsuyama's departure in May 1994 
was difficult. In many respects, the Committee could learn 
little more than DNC National Chairman Don Fowler could:

    Q: What was your reaction to the vetting process that had 
been in place once that was explained to you?
    A: Well, at that point, it became--it was reasonably clear 
that we should explore some more thorough vetting process than 
we had, more systematic vetting process, and we put that in 

           *         *         *         *         *

    Q: And were you told during that explanation that in about 
the summer of '94, the DNC changed its process of doing Lexis-
Nexis research on potential contributors?
    A: I was told that the prior process was suspended and that 
the responsibility was given to the Finance Division. I think 
we're talking past each other. I don't think----
    Q: I think we're talking about the same. And how was it 
explained to you that the Finance Division carried out its 
vetting process?
    A: There was a lot of vagueness there.
    Q: Did you press for specifics in asking that question?
    A: Yes, and there were no specifics available.16
    \16\ Deposition of Donald L. Fowler, May 21, 1997, pp. 348, 350.

    The Committee encountered similar difficulties in trying to 
find out what vetting procedure, if any, was in place during 
the 1996 election cycle. As will be seen, much of the 
uncertainty stems from the testimony of those who should have 
been most responsible for ensuring that an adequate vetting 
procedures existed--the staff of the DNC's Office of General 
Counsel. The conclusion the Committee reaches is essentially 
the same as that reached by the DNC's National Finance 
Director, Richard Sullivan, who testified that it was his view 
that there was ``a poor compliance system and no legal 
vetting.'' 17
    \17\ Deposition of Richard Sullivan, June 25, 1997, p. 120.
    Two self-serving explanations have been offered by 
witnesses associated with the DNC's Office of General Counsel 
for the absence of any vetting procedures during the 1996 
election cycle. First, Joe Sandler and Neil Reiff essentially 
tried to shift blame to the Finance Division for poor vetting, 
by asserting that the vetting function had been transferred to 
that division. Second, they engaged in historical revisionism, 
attempting to segregate vetting for ``legality'' from vetting 
for ``appropriateness,'' and then asserting that the 1992 and 
1994 procedures--which plainly collapsed in 1996--related only 
to ``appropriateness'' vetting, while ``legality'' vetting 
continued throughout. At every turn, Sandler and Reiff 
attempted to exculpate themselves from any responsibility for 
failing to catch the approximately $3 million in illegal and 
inappropriate contributions that the DNC has itself 
    \18\ According to a June 27, 1997 DNC press release, the DNC had by 
that date returned $2,825,600 in suspect contributions accepted during 
the 1996 election cycle. The DNC has failed to return other 
contributions of questionable legality. See, e.g., the section of this 
report on the contributions of Ted Sioeng, his family, and related 
business interests.

  the explanation that vetting was transferred to the finance division

    At first, based on the sworn testimony of DNC officials, 
the Committee believed it would learn that someone within the 
DNC's Finance Division had taken over Matsuyama's 
responsibilities for researching contributors for purposes of 
vetting major contributions. During the first day of his 
deposition, Sandler testified that ``as of when Matsuyama left 
the DNC . . . a Nexis account number was given to the Finance 
Division, and . . . the Finance Division used that Nexis 
account from time to time . . . to screen donors. . . .'' 
19 Likewise, Sandler's deputy, Reiff, testified that 
``we approached Jeff King as a staffer on the finance 
department at the time, and . . . my recollection is that he 
did agree in principle to do this function of research.'' 
20 Reiff further testified that, at a meeting he 
attended with King, ``[m]y impression essentially was that the 
finance department in principle said they would do this 
function of research to continue some type of appropriateness 
vetting for donors.'' 21
    \19\ Deposition of Joseph E. Sandler, May 15, 1997, p. 59.
    \20\ Reiff deposition, pp. 39-40.
    \21\ Id. at p. 41. Reiff also told B.J. Thornberry, the DNC's Chief 
of Staff, that ``the vetting responsibility was moved to Finance'' when 
Matsuyama left the DNC. Deposition of B.J. Thornberry, May 20, 1997, p. 
78. Thornberry, who was attempting to respond to press inquiries, 
investigated the DNC's vetting procedures on her own during the fall of 
1996. She concluded that ``while the function was transferred to 
Finance, that clearly, if it was happening, it was happening on an 
episodic basis and it never became standard operating procedure.'' Id. 
at p. 79. The basis for this conclusion was that ``we were in the midst 
of beginning to return checks that had clearly not gone through any 
quality control procedures.'' Id. (emphasis added).
    This testimony was only partially truthful. The Committee 
concludes that, although there was discussion of moving 
Matsuyama's research function into the Finance Division, and 
although a Finance Division staffer originally agreed (subject 
to the approval of his superiors) to have a particular Finance 
Division employee perform that research, the employee who was 
to perform the research was laid off within a matter of days 
and the research function was never assumed by the Finance 
Division. Thus, the Finance Division never performed the 
research that Matsuyama previously undertook, and the DNC's 
Office of General Counsel simply fell out of the process of 
automatically reviewing major, new contributions.
    The Committee's conclusion is based on the testimony of 
Jeff King, who primarily handled operations issues within the 
Finance Division. He rebutted the attempt to shift 
responsibility to the Finance Division for the dismantling of 
vetting procedures by establishing that Reiff knew that the 
Finance Division had not undertaken the vetting function. King 
testified that he had a meeting with Reiff (and others) about 
the time that Matsuyama left, and in the course of that meeting 
King agreed to have Nicole Hecker, a Finance Division employee, 
perform the Nexis searches--so long as King's superiors 
agreed.22 Shortly after that meeting, the DNC laid 
off Hecker.23 As a result, ``the whole process never 
was implemented.'' 24 After Hecker's layoff, it was 
clear to King that the Finance Division could not assume the 
responsibility of conducting the NEXIS research.25 
More telling, King had a phone conversation with Reiff within 
six weeks of King's deposition, in which Reiff acknowledged 
that ``he knew [the Finance Division] just didn't have the 
manpower to do what was necessary and that [it] certainly did 
not have the resources to do it.'' 26 Thus, Reiff 
later admitted that he knew that the Finance Division was not 
undertaking the research associated with vetting contributions.
    \22\ Deposition of Jeffrey King, June 26, 1997, pp. 18-19, 23-24, 
    \23\ Id. at pp. 24, 43.
    \24\ Id. at p. 29.
    \25\ Id. at pp. 30, 43-44.
    \26\ Id. at p. 31; see also id. at pp. 30, 44.
    Richard Sullivan, the DNC's National Finance Director, 
confirmed King's account. Sullivan testified that he was never 
aware of any shift in responsibility for performing vetting 
research from the Office of General Counsel and Research 
Division to the Finance Division.27 It was always 
Sullivan's understanding that the General Counsel was 
responsible for screening contributions.28 Sullivan, 
the highest-ranking paid employee of the Finance Division, 
agreed that it was not conceivable that the Finance Division 
would assume responsibility for check vetting without his 
knowing about it.29 When Sullivan first heard the 
suggestion that the responsibility had been shifted to the 
Finance Division, he investigated and could not find any 
individual within the Finance Division who was aware of such a 
shift in responsibility.30 During 1997, however, he 
did learn from Jeff King that King had met in 1994 with Reiff 
and Sandler, and they discussed the possibility of an 
individual with the Finance Division assuming responsibility 
for screening in the light of DNC layoffs; however, King 
informed Sullivan that the individual (Hecker) had left within 
a few days of the meeting, and King ``told the people that were 
in the meeting with him that [the Finance Division] couldn't 
take that responsibility, so that [it] never took that 
responsibility.'' 31
    \27\ Deposition of Richard Sullivan, June 5, 1997, pp. 124, 128.
    \28\ Id. at pp. 120-21, 129-30.
    \29\ Id. at pp. 128-29.
    \30\ Id. at p. 129.
    \31\ Id. at p. 133.
    In addition to his pre-deposition admission to 
King,32 there is other evidence that Reiff knew that 
the DNC had stopped researching new contributions. He testified 
that he would review about five to 10 Major Donor Screening 
forms per week when Matsuyama was still a DNC 
employee.33 After she left, Reiff testified that 
``the [vetting] process that I knew, that I was running, was 
over.'' 34 Reiff simply was ``no longer involved in 
the vetting of donors for appropriateness at that point.'' 
35 At no point did Reiff testify as to any personal 
awareness that someone else was conducting the review of 
research materials that he had once conducted, nor did he 
testify that he trained anyone within the Finance Division to 
perform that review.
    \32\ See supra, text accompanying note 26.
    \33\ Reiff deposition, p. 36.
    \34\ Id. at p. 43.
    \35\ Id. 
    To the contrary, Reiff testified that Scott Pastrick, the 
DNC's Treasurer, ``complained to me that there was no process 
within the finance department'' for vetting.36 Reiff 
recalled that this conversation took place in the summer of 
1996.37 If the DNC's Treasurer--a volunteer, part-
time officer--could discern that the Finance Division was not 
vetting contributions, it strains credulity to suggest that the 
DNC's Office of General Counsel truly believed that research 
for purposes of vetting was being carried out by the Finance 
Division.38 In fact, the candor of both Sandler's 
and Reiff's claim that the Finance Division had agreed to 
assume the vetting research is called into question by Reiff's 
own testimony strongly implying that both Sandler and he were 
aware that vetting had essentially ``ended,'' and that this 
concerned both of them.39
    \36\ Id. at p. 50.
    \37\ Id.
    \38\ Pastrick testified that he spent ``about eight or ten hours a 
week'' at the DNC's offices. Deposition of Robert Scott Pastrick, May 
7, 1997, p. 46. The office of treasurer was voluntary and unpaid. Id. 
at p. 8.
    Interestingly, one of the primary functions of a national committee 
treasurer is to sign the committee's FEC reports. See Deposition of 
Richard Sullivan, June 4, 1997, pp. 46-47. Under federal election laws, 
only the treasurer or an assistant treasurer may sign the FEC reports. 
2 U.S.C. Sec. 434(a)(1) (treasurer must sign); 11 C.F.R. Sec. 102.7(a) 
(assistant treasurer acceptable). Pastrick never signed an FEC report 
on behalf of the DNC. Pastrick deposition, p. 15. Richard Sullivan's 
recollection of Pastrick's explanation for this is interesting:

        Q: Well, tell me what he [Pastrick] said in those 
        A: He said that he wasn't--he said that he was told by 
      Brad Marshall [DNC Chief Financial Officer] and Joe Sandler 
      that he was not allowed to sign the FEC reports.
        Q: Did he say why they had told him that?
        A: He said that he had a--I think I remember, you know, 
      insinuating or saying that they may not have wanted him to 
      be a witness to the spending report side of it.
        Q: Did he indicate what that was that they didn't want 
      him to be a witness to the spending?
        A: As I recall, he may have--as I recall, he talked about 
      the fact that they may have been spending money, making 
      expenditures that if he--that they didn't want him to know 
      about. My sense was--and I don't recall if he--my sense of 
      it is, and memory--I don't recall vividly him saying this, 
      is that, you know, they may have been giving contributions 
      to certain campaigns or they may have been--expenditures 
      that they just didn't know that--just didn't want him to 
      know about.
        And, again, my memory of it is that there may have been 
      expenditures that they didn't want Scott to know about 
      because Scott might tell people in the White House, Harold 
      [Ickes] or Doug [Sosnik].

Deposition of Richard Sullivan, June 4, 1997, pp. 48-49; see also id. 
at pp. 53-57. Sandler acknowledged that Brad Marshall, the DNC's Chief 
Financial Officer, was ``the designated assistant treasurer for FEC 
purposes.'' Deposition of Joseph E. Sandler, August 21, 1997, p. 38. 
Sandler denied, however, that he ever told Pastrick that he was not 
allowed to sign FEC reports. Id. at p. 47.
    \39\ Reiff testified as follows:

        Q: I also want to be clear. I think you answered before, 
      but I want to make sure we are clear on it.
        After the meeting with Mr. King, you don't recall having 
      any conversation with anyone at the DNC about what's going 
      on with this appropriateness screening other than the 
      Pastrick conversation and up until the press reports?
        A: I don't specifically--I am sure over a period of time 
      I probably expressed disappointment to Joe [Sandler] again 
      as we went along. I don't know how many times, if I did it 
      or not, but I'm sure I felt disappointed right after it 
      happened in terms of 1994. But no, I have no other 
      recollections of any other conversations.
        Q: What was Mr. Sandler's reaction when you expressed 
      that to him?
        A: I can't tell you anything specific. I don't recall 
      anything specific, but I think we were both generally 
      disappointed that the process ended, the one that I was 
      running. That's pretty much all I can tell you about that.
        Q: Did you suggest to Mr. Sandler he bring it up with the 
      higher-ups at the DNC?
        A: My impression is that I did. I couldn't tell you when, 
      how many times, but my impression is I probably mentioned 
      it on a couple of occasions.
        Q: What was his reaction to that?
        A: My impression, again, not remembering specifically, 
      I'm sure he expressed support of my view, but I never asked 
      him--I don't recall ever asking him specifically whether he 
      asked or what the response was to his request.
        Q: As you sit here today, do you know whether he brought 
      the issue up with anyone in the management structure of the 
        A: No, I don't really know anything about that. I don't 
      recall him relaying any information back to me, for that 

Reiff deposition, pp. 68-70 (emphasis added).
    King appears to have been worried that the DNC and its 
outside law firm would nevertheless exploit his 1994 meeting 
with Reiff and others in an attempt to heap blame on him for 
the DNC's inadequate vetting. According to Sullivan, King told 
him that Debevoise & Plimpton, the DNC's outside law firm, had 
``summoned'' King to come talk to them about the subject of 
vetting, and King ``stated that he felt like the blame for all 
of this was being placed on his shoulders because of this one 
meeting. . . .'' 40 King told Sullivan that he 
(King) ``felt like they were trying--that the DNC, Debevoise & 
Plimpton were trying to blame him.'' 41 In his 
deposition, though, King denied telling Sullivan that King 
believed that the DNC or Debevoise & Plimpton were trying to 
pin blame on him, characterizing Sullivan's sworn testimony as 
``inaccurate.'' 42 King later admitted, however, 
that he was ``concerned'' that an apparently incomplete 
memorandum in the DNC's files could be misinterpreted as 
stating that the Finance Division had assumed the NEXIS 
research responsibility, when, in fact, it had 
not.43 King testified that he might have shared this 
concern with Sullivan.44 In fact, Reiff also 
testified that he ``got the impression that he [King] was 
concerned about being blamed about something.'' 45
    \40\ Deposition of Richard Sullivan, June 5, 1997, p. 135.
    \41\ Id. at p. 139.
    \42\ King deposition, pp. 36-38.
    \43\ Id. at pp. 46-47; Memorandum from Jeff King to Stephen Goodin, 
June 7, 1994 (Ex. 3).
    \44\ King deposition, p. 47. Sullivan generally shared King's 
concern about the DNC's outside law firm, as Sullivan testified that, 
in his own meeting with Debevoise & Plimpton lawyers shortly after the 
election, the tone of questions addressed to him about vetting 
procedures at the DNC was ``accusatory,'' and he had the ``sense'' that 
Debevoise & Plimpton wished to lay blame at his feet. Deposition of 
Richard Sullivan, June 25, 1997, pp. 115-16. Sullivan went on to add 
that he felt that the Debevoise & Plimpton lawyers ``knew who they 
represented and who they didn't.'' Id. at p. 116. He continued:

        They represented the DNC as an institution, and the DNC 
      officers, Fowler, Dodd, and they--you know, and they 
      conveyed the sense that they--they conveyed the sense, you 
      know, that that included like the chief of staff and the 
      general counsel, too.
        Q: So, if there was blame to be laid, it would not be 
      laid at the feet of the officers of the higher-ups; is that 
        A: That was what--that was where they wanted to go.
        Q: But it was okay to lay the blame at some of the 
      subordinate employees----
        A: Sure.
        Q[continuing]: lay blame at the feet of some of the 
      subordinate employees?
        A: Correct.
        Q: You fell into that latter category?
        A: Yes.

Id. at p. 117 (emphasis added).
    \45\ Reiff deposition, p. 47.
    Whatever effort may have been made by the staff of the 
DNC's Office of General Counsel or the DNC's outside law firm 
to blame the Finance Division, the evidence is overwhelming 
that the Finance Division never in fact undertook to perform 
the limited vetting research previously done by Matsuyama, and 
that the Office of General Counsel knew this. The DNC's vetting 
process simply was allowed to collapse. While many expressed 
concerns about the collapse, no one thought to restore the 
vetting process, as that might slow or limit the money flowing 
to the DNC.

the explanation distinguishing between vetting for ``appropriateness'' 
                            and ``legality''

    Another supposedly exculpatory contention made only by 
Sandler and Reiff is that the DNC did not dismantle its system 
for vetting contributions for ``legality.'' To make this 
contention, Sandler and Reiff asserted that vetting for 
``legal'' issues was always the responsibility of the 
individual fundraiser receiving a contribution, and that the 
automatic vetting process in place in the 1992 and 1994 
election cycles was designed to screen only for 
    Sandler tried to explain the difference between screening 
for legality and appropriateness in the following manner:

          [F]irst of all, with respect to legality, throughout 
        the time period [February 1993 to October 1996] the 
        finance staff and the accounting staff were advised 
        that if there was any issue or question of legality, 
        that it should be brought to the Office of General 
        Counsel. The Finance staff was issued specific written 
        guidelines to that effect and there were also training 
        sessions held for that purpose.
          With respect to appropriateness, it is part of 
        legality, there was automatic screening for donor 
        limits. In other words, if somebody had written an 
        individual check and it was checked and it was not 
        clear if it was designated for the federal account, it 
        was checked to see if they had already given the 
        maximum. We routinely check to see if they had given 
        the maximum to the federal account. If they had, we 
        automatically put it in a non-Federal account. If they 
        hadn't, the procedures generally throughout this period 
        called for the appropriate redesignation form to be 
        sent out to the donor.
          So, I mean that is an aspect of legality. Other more 
        complicated questions of legality, the procedure was to 
        bring them to our office for discussion, which was done 
        routinely and consistently throughout this period.
          With respect to appropriateness, I described the 
        process that was in place until approximately May of 
        1994. It is my general understanding that as of when 
        Ms. Matsuyama left the DNC that the research position, 
        the position of the Research Division that she had, was 
        either not filled or was used for other research 
        purposes, and that a Nexis account number was given to 
        the Finance Division, and that the Finance Division 
        used that Nexis account from time to time, as they 
        found it necessary, to screen donors who were not 
        otherwise well-known to them or about whom they had 
        some concern for appropriateness.46
    \46\ Deposition of Joseph E. Sandler, May 15, 1997, pp. 58-59.

This distinction was also urged by Reiff,47 and 
Sandler reiterated it in his opening statement before the 
Committee in public hearings.48 The exculpatory 
nature of this distinction is that Reiff and Sandler can claim 
that vetting for issues of ``legality'' was not terminated on 
their watch.
    \47\ See, e.g., Reiff deposition, p. 19 (``There is political and 
appropriateness screening, and then there is legal, legality 
    \48\ Testimony of Joseph E. Sandler, September 10, 1997, pp. 4-8. 
Sandler stated that there ``are two distinct aspects to such screening: 
legality and appropriateness.'' Id. at p. 4. He then gave an 
explanation of the distinction similar to that offered in his 
    The attempt to describe the elaborate research of the 1992 
``vetting desk'' as mere ``appropriateness'' vetting is 
revisionist. Those who created that ``vetting desk'' were 
concerned with issues of legality--as well as broader concerns 
about the appropriateness of accepting certain contributions. 
Rob Stein testified that he and former DNC General Counsel 
Carol Darr looked to the 1988 Dukakis campaign because they 
``knew that they had [a] well-structured and [a] rigorous 
system . . . for complying with the laws governing campaign 
finance.'' 49 He testified that the system actually 
implemented by the DNC for the 1992 elections was one that 
``worked,'' adding that ``we had what we needed to assure that 
the laws were being complied with in terms of donor 
contributions. And it wasn't just the laws, we had concerns 
about conflicts of interest or tainted money or whatever.'' 
50 The old DNC ``vetting desk'' supplemented the 
DNC's training its fund-raisers to be sensitive to legal 
    \49\ Stein deposition, pp. 57-58.
    \50\ Id. at p. 59.
    \51\ Id. at pp. 59-60.
    Second, the ``appropriateness'' vetting described by 
Sandler and Reiff--Nexis searches and searches of FEC 
databases--could have triggered a review of contributions for 
both legality and appropriateness. After all, an illegal 
contribution would seem to be inappropriate, and the research 
gathered in assessing the ``appropriateness'' of a contribution 
could well be used to ascertain its legality. In fact, Neil 
Reiff testified as follows:

          Q: So hypothetically if you do a Nexis search on 
        someone and it turns out that person is a citizen of a 
        foreign country and the article goes on to state they 
        don't have any residence status in the United States, 
        therefore, take it from there they can't make a 
        contribution, you would be able to use that information 
        to make a legality decision?
          A: Hypothetically, yes.
          Mr. Best [DNC lawyer]: Or hypothetically be found 
        that he was a bankrupt.
          The Witness: There is [sic] a million things you 
        could find out. It is all part of the same process.
          By Mr. Kupfer [Counsel for the Committee]:
          Q: And so it seems that you stated that you can get 
        information that would go towards legality from the 
        appropriateness screening?
          A: Hypothetically you can, but it is not a foolproof 
          Q: I understand it is not a foolproof system. You 
        could get information that would assist you in making a 
        legality determination, is that correct?
          A: Hypothetically speaking, yes.52
    \52\ Reiff deposition, pp. 65-66.

Accordingly, the dismantling of the automatic 
``appropriateness'' vetting system--to use Sandler's and 
Reiff's characterization--removed information from the process 
that could have been informative to the potential legality of a 
    \53\ In fact, as discussed earlier, Reiff testified that, before 
Matsuyama's departure, he had been reviewing approximately five to 10 
Major Donor Screening Forms per week. Id. at p. 36. Obviously, this 
afforded Reiff, the DNC's Deputy General Counsel, an opportunity to 
apply his legal training to the Nexis and FEC research gathered by 
Matsuyama. But, as also discussed earlier, after Matsuyama left, the 
responsibility for vetting fell off Reiff's ``radar screen.'' Id. at p. 
    Despite Reiff's relatively straightforward testimony, Sandler 
attempted to assert in his public testimony before the Committee that 
the failure to re-assign the so-called ``appropriateness'' screening 
did not ``materially contribute to the receipt of the contributions the 
DNC has been required to return,'' because ``a routine Nexis check 
would not detect contributors serving as conduits for . . . foreign 
source contributions.'' Sandler testimony, p. 8. Sandler then offered, 
as one of several examples, the Yogesh Gandhi contribution, discussed 
elsewhere in this report. See the section of this report on Yogesh 
Gandhi. According to Sandler, Lexis-Nexis searches--had they been 
performed--would have disclosed ``a small claims court judgment and a 
routine State tax lien for a few thousand dollars.'' Sandler testimony, 
p. 9. This blithe dismissal of Gandhi's public record caused Senator 
Collins to wonder:

        First of all, I have to say, I don't think a tax lien of 
      any sort is routine. But putting aside that question, would 
      it not have struck you as at least somewhat unusual and 
      worthy of further investigation that an individual who has 
      never before made a political contribution in any amount, 
      comes in with a check for $325,000, and yet your own check, 
      your own quick review, your own Lexis-Nexis review, reveals 
      that he has a small claims judgment against him for unpaid 
      bills as well as a tax lien? When you couple a first-time 
      donor making a huge contribution with the existence of a 
      small claims court judgment and a tax lien, why wouldn't 
      that raise suspicions for you to want more information and 
      to clear this check and vet it more thoroughly?

Hearing Transcript, September 10, 1997, p. 82. No satisfactory answer 
was forthcoming, although the answer may underscore Sandler's complete 
lack of caution. To Sandler, the existence of unpaid small claims 
judgments and state tax liens was not something that raised ``red 
flags,'' or was ``unusual.'' Id. at p. 83.
    Even assuming that the revisionist explanation should be 
accepted, and further assuming that there was no 
interdependence between ``appropriateness'' and ``legality'' 
screening, the legality ``screening'' envisioned by Sandler, 
which called on the fund-raisers themselves to vet 
contributions, was fatally flawed. The first fatal flaw with 
this alleged process was that individual fund-raisers did not 
understand that they were to be the only line of defense 
against illegal contributions. For example, when the Committee 
deposed David Mercer, the DNC's Deputy National Finance 
Director, he was shown three consecutively-numbered Lippo Bank 
checks, each dated August 1, 1995, from Kenneth R. Wynn to the 
DNC, and each for $5,000.54 Each check was pre-
printed with a home address in Jakarta, Indonesia. Mercer 
filled out a check tracking form for these 
contributions.55 This provoked some of the following 
    \54\ Checks from Kenneth R. Wynn to the DNC, August 1, 1994, and 
accompanying DNC Check Tracking Form (Ex. 4).
    \55\ Deposition of David Mercer, May 14, 1997, p. 42. A check-
tracking form was a form usually filled out by the DNC fund-raiser to 
keep track of contributors, identify those responsible for soliciting 
the contribution, and ascribe the contribution to a particular event 
(if applicable).

          Q: Is there a procedure in place when receiving a 
        check with a foreign home address?
          A: I do not recall among the literature that we 
        received, among the guidelines, fund-raising 
        guidelines, that if you receive a check with a home 
        address or I don't even know if it's a home address, 
        but an address that has a foreign city and State in it 
        that you were to do X, Y or Z.
          Q: Were there any procedures in place if you 
        suspected a check was not from a U.S. citizen?
          A: Yeah. Yes.
          Q: What were those procedures?
          A: To inform the individual that we were unable to 
        accept contributions from noncitizens.
          Q: In this case, you did not, to your recollection, 
        attempt to contact the individual who made the 
        contribution; is that correct?
          A: That is correct.
          Q: Why not?

           *         *         *         *         *

          A: I don't recall contacting somebody to find out 
        where they lived or whatever else.
          To me, I filled out the check tracking form. A lot of 
        what we do, we receive thousands of checks. I think we 
        received more than a million checks last year. You'd 
        fill out the tracking form.
          If there's over--if there is--if it is drawn on a 
        U.S. bank account, that would suffice. If somebody had 
        a question about it as it went through the process, 
        they'd bring it back to me. . . .56
    \56\ Id. at pp. 218-19.

Later, Mercer continued:

          Q: Earlier when we were talking about his check-
        tracking process and we were talking specifically about 
        these checks that showed an Indonesian home address, if 
        I recall, you said you'd put down the information on 
        the check- tracking form and you'd send it through the 
        system, and if any red flags came up, you'd expect that 
        they'd bring it back to your attention; is that 
          A: Yeah, that's correct.
          Q: Who in your mind was the person who would raise 
        the red flags relating to the information on the check-
        tracking form and the checks?
          A: In my mind, it would be anybody that was of a 
        superior to me, or who I reported to or legal counsel 
        or--you know.57
    \57\ Deposition of David Mercer, May 27, 1997, p. 14.

In short, although Mercer plainly had received some training 
and was provided with legal guidelines, he still thought that 
someone, presumably in the Office of General Counsel, was 
reviewing new contributions as a matter of course. Needless to 
say, this understanding was incorrect.
    In fact, Mercer's immediate supervisor, Sullivan, always 
understood that a two-step screening process was supposed to be 
in place at the DNC: ``I was told that there was sort of a two-
step process. All checks of $10,000 and above are automatically 
run through a Lexis-Nexis check by staffers in the . . . 
Research Department, and that there was also additional review 
by the Legal Department . . . As you know, Lexis-Nexis was 
primarily appropriate/inappropriateness, you know, because it 
was explained to me Lexis-Nexis doesn't necessarily determine 
whether a check's legal or illegal, and so then there was then 
a review as to legality by the Legal Department.'' 
58 This understanding was essentially consistent 
with the 1994 vetting process, which involved the collaboration 
of Rumi Matsuyama of the Research Division and Neil Reiff from 
the Office of General Counsel.59 As discussed, even 
this modest system was dismantled. Although Sullivan knew that 
he was ``to use [his] best judgment in avoiding potential 
problems,'' he also believed that ``once the check was passed 
on, this process took place.'' 60 He was not aware 
of any change in this process until after the 1996 
election.61 Clearly, top DNC fund-raisers were 
unaware that they bore primary--indeed, exclusive--
responsibility for raising concerns about potentially illegal 
    \58\ Deposition of Richard L. Sullivan, June 5, 1997, pp. 92-93; 
see also id. at pp. 95, 120-21.
    \59\ See supra, notes 8-14 and accompanying text.
    \60\ Deposition of Richard L. Sullivan, June 5, 1997, p. 93.
    \61\ Id. at pp. 97, 124.
    The fact that Mercer and Sullivan were unaware that they 
bore exclusive responsibility for legal vetting is 
unsurprising; they were not told about the dismantling of the 
old research system. A short passage from Sandler's testimony 
confirms this:

          Q: Let me go back to my prior question and I believe 
        the answer, with all due respect, is a yes or no 
          At the time that Ms. Matsuyama left the DNC and was 
        no longer--and no one was any longer doing a NEXIS or 
        an FEC database research, were people within the 
        Finance Division apprised of the fact that these 
        searches were no longer being automatically done?
          A: Not that I'm aware of.
          Q: So, you yourself certainly never apprised them of 
        that; is that accurate?
          A: That's accurate.62
    \62\ Deposition of Joseph E. Sandler, August 21, 1997, pp. 95-96.

    Moreover, even assuming that individual fund-raisers were 
aware that they were the first and last line of defense against 
illegal contributions, charging them with such final 
responsibility would itself be reckless and unreasonable. Fund-
raisers seek funds. DNC fund-raisers obviously wanted credit 
for soliciting contributions.63 The DNC kept track 
of contributions credited to individual fund-
raisers.64 Presumably, successful fund-raisers could 
expect appropriate remuneration or recognition. Making the 
fund-raiser responsible for legal vetting of contributions 
creates a conflict of interest. Fund-raisers want to raise 
money, not reject it. And this common-sense proposition could 
never have been more true than it was in 1996 for the DNC, 
given the White House's enormous appetite for money.
    \63\ See, e.g., Deposition of David Mercer, May 27, 1997, p. 53.
    \64\ Id.
    This inherent conflict of interest is the second fatal flaw 
with the alleged ``legality'' screening described by Sandler 
and Reiff. Mercer's testimony underscores that a fund-raiser is 
not the best person to vet contributions for legality:

          My responsibility was to work within the parameters 
        of the guidelines that are outlined and you have copies 
        of, which I submitted via the subpoena. My job was not 
        to work in compliance and verify every single check, 
        its origin, the source of the money and everything 
        else. We work in this environment on the good faith and 
        the understanding of the people we work with. If 
        someone within our--within the DNC had responsibility 
        for checking into that, I don't know who it was. I 
        presumed that whether through legal counsel or others, 
        that those kinds of things would be detected or that 
        people would question or what have you. I had never 
        been--it had never been brought to my attention about 
        any question of checks prior to the stories breaking in 
        October. But my job was as a fund-raiser to raise the 
        money and to make sure that the check-tracking forms 
        were filled out and to submit the check-tracking 
    \65\ Id. at pp. 27-28 (emphasis added).

    Although Sandler would not agree that the alleged system 
for vetting contributions for ``legality'' at the DNC labored 
under an inherent conflict of interest, he recognized that ``in 
retrospect we've separated the function now.'' 66 He 
further acknowledged that ``as a matter of good policy and 
practice . . . it was appropriate to have those functions . . . 
in a separate Compliance Division rather than in the Finance 
Division.'' 67
    \66\ Deposition of Joseph E. Sandler, August 21, 1997, p. 77.
    \67\ Id. at 78.


    The Committee concludes, as any reasonable observer must, 
that the DNC's system for vetting contributions during the 1996 
election was wholly inadequate. Most DNC officials agree with 
this much of the Committee's conclusion. For example, Joe 
Sandler explained what the DNC perceived as deficiencies in its 
1996 system: ``[T]here was not automatic screening of 
contributions for appropriateness and legality of every donor 
not well-known to the DNC above a certain dollar threshold. It 
was instead a perceived deficiency . . . that it had instead 
been left to the judgment of individual members of the finance 
and/or accounting staffs to identify problems of that nature 
and bring them to the Office of General Counsel.'' 
    \68\ Deposition of Joseph E. Sandler, May 15, 1997, pp. 65-66. 
Sandler was even more explicit about the vetting deficiencies in his 
comments to the press. The following paragraphs from a July 1997 
article, which focused on Sandler, are interesting:

        What happened, Sandler says, is that ``the person who was 
      doing the research work wasn't replaced.'' That key job 
      involved ensuring that contributions were not coming from 
      inappropriate sources like ex-cons, foreign nationals, or 
      people with insufficient resources.
        Instead, says Sandler, the screening process came to 
      depend on members of the finance staff bringing questions 
      and problems to Sandler's office. ``That clearly was a 
      mistake, and the automatic background checks should have 
      been continued,'' he says.
        When asked whether anyone warned in some formal way that 
      fund-raisers should look more critically at the money they 
      were raising, Sandler demurs. ``This is an area I probably 
      should not comment on in detail because it's of interest to 
      the investigators,'' he says.

Timothy J. Burger, ``The DNC's Fall Guy?'' Legal Times, July 14, 1997, 
p. 16. As discussed earlier, the fund-raisers were not told that they 
were the last line of defense. The article also quotes an anonymous 
``knowledgeable Democratic operative'' as saying, ``I blame this whole 
thing on Joe.'' Id. at p. 15.
    DNC National Finance Director Richard Sullivan concurred, 
adding additional context:

          [T]here was not an adequate legal or compliance 
        system set up to back up in an historic effort in terms 
        of the aggressiveness of the fund-raising, and throw 
        into there the fact that . . . we throw John Huang into 
        an aggressive fund-raising operation with no--with a 
        poor compliance system and no legal vetting. This is 
        what happened.69
    \69\ Deposition of Richard Sullivan, June 25, 1997, p. 120.

Undoubtedly, the DNC should have been more vigilant and 
preserved its vetting procedures--especially in the face of 
such historic, aggressive fund-raising.70
    \70\ Furthermore, the DNC's non-existent vetting procedures were 
unique; Democrats cannot protest that ``everybody does it.'' When 
Senator Glenn questioned Richard Sullivan, the following colloquy took 

        Senator Glenn. Well, I guess what I am getting at is 
      this: I wondered if you had knowledge of what kind of a 
      system they [Republicans] had set up. Was the system on the 
      Democratic side very similar to theirs? Was ours more 
      extensive than theirs? Was theirs more extensive than the 
      one [on] the Democratic side? Do you have any opinion on 
        Mr. Sullivan. As to what kind of system, Senator?
        Senator Glenn. As to vetting these things, making sure 
      that campaign contributions were legal, deciding which ones 
      should be returned, deciding whether we are going to go 
      after foreign money or not . . . was the system that they 
      had set up similar to the one that you have been describing 
      a little bit here?
        Mr. Sullivan. Unfortunately, Senator, I'm sorry to tell 
      you, but their system was much more systematic, complex, 
      and thorough than our system.
          * * * * * * *
        Mr. Sullivan. In your question of comparing the legal 
      vetting of the two committees, it's my understanding that 
      the Republican National Committee's was much more thorough. 
      I don't know that for a fact, obviously, but that's just my 
        Senator Glenn. Okay. In that opinion, what would back 
      that up, what observation? Do they have different layers of 
      people that vetted these things? Do they have different 
      lawyers, different legal staffs? How would their system be 
      different from the one that the Democratic National 
      Committee used?
        Mr. Sullivan. I think you described it. I think they had 
      a much--I think they had a much more thorough--I think a 
      much more thorough system of vetting of a committee of 
      lawyers, as I understand it.

Testimony of Richard Sullivan, July 9, 1997, pp. 36-37, 40.
    The DNC now has a new compliance system, one very similar 
to the ``vetting desk'' in place during the 1992 election 
cycle. This may go a long way toward diminishing the risk of 
future fund-raising scandals--provided the DNC keeps its system 
in place. As for the 1996 federal elections, however, the new 
system came too late. As DNC Chairman Don Fowler testified, the 
new system ``was the equivalent of closing the door [of] the 
barn after the horse left. . . .'' 71
    \71\ Fowler deposition, p. 351.
    The interesting question is how the barn door was opened in 
the first place. Although it may be convenient to blame the 
DNC's Office of General Counsel for simple negligence, as 
Sullivan explicitly did,72 the conduct appears worse 
than negligent, and the responsibility vests at a level above 
the general counsel. After all, the members of the Office of 
General Counsel were concerned about the dismantling of the 
vetting system, and Reiff had ``the impression'' that Sandler 
had raised these concerns with higher-ups.73 It is 
no coincidence that vetting was dismantled during a period of 
historic need for money to pay for unprecedented advertising, 
resulting in huge amounts of foreign and other illegal money. 
In fact, it appears that the DNC made a decision to operate 
under a ``system'' that would turn a blind eye towards 
questionable contributions, allowing the DNC to receive large, 
illegal contributions without any accountability for their 
receipt in the event that they were detected. In the absence of 
any sanctions deterring such behavior,74 the DNC, 
run by the White House,75 consciously disregarded 
the prospect of illegal contributions.
    \72\ Deposition of Richard Sullivan, June 25, 1997, pp. 119-20.
    \73\ See supra, note 39.
    \74\ See the section of this report on the FECA for a discussion of 
the sanctions that should be available to the FEC to deter such 
activity in the future.
    \75\ See the section of this report on the White House's control of 
the DNC.

   DNC Fundraising in the White House: Coffees, Overnights and Other 


    The story of the Clinton Administration's use of the White 
House as a DNC fundraising tool had its origins in the panic 
that set in after the Republican party took control of the 
House of Representatives and the Senate in the November 1994 
elections. At the DNC, the general mood was nearly apocalyptic. 
As Terence McAuliffe recalled,

        the President was in serious trouble. A lot of people 
        wondered if the President was even going to run again. 
        I can tell you the political mood at the time clearly 
        was that he had no chance of winning again, clearly 
        would not win re-election and would have a very tough 
        time with a primary. And there was a lot of talk that 
        people would run against him in a primary. It was a 
        very tough political time.\1\
    \1\ Deposition of Terence R. McAuliffe, June 6, 1997, pp. 11-12. 
For further discussion of this issue, see the sections of this report 
on the White House's thirst for money and its control of the DNC.

Democrats realized that if the President were to be reelected, 
it would take an extraordinary amount of money, more than had 
ever before been raised in a presidential campaign. In an 
article subsequently published in Newsweek, George 
Stephanopoulos--who was at the time Senior Advisor to President 
Clinton--described the bleak atmosphere in the White House in 
late 1994, recounting that this extraordinary challenge was 
felt to require extraordinary responses. It was believed, he 
wrote, that reelecting Bill Clinton and Al Gore would

        take cash, tons of it, and everybody from the President 
        on down knew it. So money became a near obsession at 
        the highest levels. We pulled out all the stops: 
        overnights at the White House, coffees, intimate 
        dinners at Washington hotels, you name it.'' \2\
    \2\ George Stephanopoulos, ``The View From Inside,'' Newsweek, 
March 10, 1997, p. 27.

All of these DNC events--coffees, overnights, dinners, and so 
forth--would be aimed at raising money.
    One of the prime architects of this campaign to ``pull out 
all the stops'' was Terry McAuliffe, who met with the President 
on December 27, 1994, to discuss in general terms what needed 
to be done to prepare the Democratic Party for the 1996 
election and the prevailing mood of the donors upon whose 
contributions the party's efforts were to focus.\3\ Among other 
things, McAuliffe assured the President that he himself would 
organize the necessary fundraising and generally put ``the 
operation together.'' \4\ It became clear, even during this 
discussion, that the President's own commitment of time and 
energy to encouraging campaign contributors would be central to 
the party's fundraising effort. At the end of their meeting, 
the President asked McAuliffe what he needed to do,\5\ to which 
McAuliffe responded that he neeeded ``some time with you [the 
President] to meet with some of the key supporters who are 
demoralized out there so that you can get them re-energized and 
ready for the '96 election.'' \6\
    \3\ Deposition of Terrence R. McAuliffe, June 6, 1997, pp. 12-14.
    \4\ Id. at p. 14. McAuliffe told the President that ``you have 
broad support out there in the donor community, which is what I 
represented as the Finance Chair of the party. I'm going to be able to 
put this operation together for you. The support of the people will be 
there for you. Don't worry about it. I'll handle it.'' Id.
    \5\ Id. at p. 16.
    \6\ Id.
    A few days after meeting with the President, McAuliffe sent 
a follow-up memorandum to Nancy Hernreich, Director of Oval 
Office Operations, reiterating the ``projects'' he had 
discussed with the President.\7\ The first project was to 
organize breakfasts, luncheons, and coffees with the President 
for about twenty ``major supporters'' at a time--to ``offer 
these people an opportunity to discuss issues and exchange 
ideas with the President.'' \8\ McAuliffe's second project was 
to offer the very top supporters ``overnights'' at the White 
House.\9\ The third project in McAuliffe's memorandum was to 
include ``key supporters'' in various other activities with the 
President, including ``golf games, morning jogs, etc.''\10\ The 
key to all three of these projects was to give major donors 
``quality time for the President.'' \11\
    \7\ Terry McAuliffe, memorandum to Nancy Hernreich, Jan. 5, 1995 
(Ex. 1). This memorandum is dated January 5, 1993, but McAuliffe 
recalls sending it to Hernreich shortly after his meeting with the 
President in late December 1994. Deposition of Terrence R. McAuliffe, 
June 6, 1997, pp. 113-14.
    \8\ Ex. 1.
    \9\ Id. His memorandum does not say this explicitly, merely 
providing a list of the DNC's ten top supporters. Nancy Hernreich, 
however, apparently clearly understood the idea, because she added a 
handwritten note reading ``overnights'' to this part of McAuliffe's 
memorandum. Hernreich confirmed that she wrote ``overnights'' on the 
document, but could not recall whether this had been her idea or that 
of the President. Nancy Hernreich deposition, June 20, 1997, p. 126. 
Other senior officials also understood that McAuliffe's second project 
involved offering overnight visits at the White House to key 
supporters. A memorandum from Janice Enright to Harold Ickes enclosing 
a copy of McAuliffe's memorandum, to example, lists one of McAuliffe's 
three projects as ``overnights for top top [sic] supporters.'' Janice 
Enright, memorandum to Harold Ickes, Jan. 6, 1995 (Ex. 2) (discussing 
McAuliffe's request to the President).
    \10\ Ex. 1.
    \11\ Deposition of Terrence R. McAuliffe, June 6, 1997, p. 114.
    Hernreich forwarded this memorandum to President 
Clinton,\12\ asking him whether she should pursue McAuliffe's 
first project with Billy Webster, Deputy Assistant to the 
President and Director of Scheduling and Advance, whether she 
should try to arrange overnights through the First Lady and 
Carolyn Huber, and whether she should ``handle'' (i.e., 
include) top supporters in other activities.\13\ Hernreich also 
asked whether she should obtain approval for these three 
projects from Harold Ickes, Deputy Chief of Staff to the 
President.\14\ Meanwhile, according to McAuliffe, the White 
House obtained approval from its lawyers for the scheme: 
Hernreich's office
    \12\ See Ex. 1 (handwritten note in upper right-hand corner).
    \13\ Id.
    \14\ Id.

        scheduled the White House, whoever does what they do 
        over there, legal counsel, whatever, you know, decided 
        that we could do [events for donors] in the Map Room in 
        the White House, and I was given two or three dates to 
        bring our past supporters in to see him [the 
    \15\ Deposition of Terrence R. McAuliffe, June 6, 1997, pp. 113-

Officials apparently believed that there was nothing wrong with 
using the White House to cultivate campaign contributors ``for 
the upcoming campaign.'' \16\
    \16\ Id. at p. 113. For top Democratic decision-makers, the end 
apparently justified the means: after all, ``it was a very tough time 
for us.'' Id. at p. 114.
    As Vice President Gore himself apparently observed during a 
``political budget meeting'' with President Clinton, the DNC 
could raise the amount of money it needed ``ONLY IF--the 
President and I actually do the events, the calls, the coffees, 
etc.'' \17\ For his part, the President responded to 
McAuliffe's ideas with great enthusiasm, responding to 
Hernreich's note with one of his own: ``yes, pursue all 3 
[projects] and promptly--and get other names at 100,000 or 
more; 50,000 or more.'' \18\ The President wrote that he was 
``[r]eady to start overnights right away--give me the top 10 
list back along with the 100, 50 folks.'' \19\ With this note, 
President Clinton set into motion the use of the White House to 
host fundraising events for the DNC.\20\
    \17\ Albert Gore, ``Points for Political Budget Meeting with 
President,'' undated, p. 4 (Ex. 3); see also generally Testimony of 
Jerry Campane, Sept. 18, 1997, pp. 180-181. (The Vice Presidential 
notes were produced to the Committee in typewritten form with document 
production ``BATES'' numbers following consecutively from a memorandum 
to the President from Ron Klain. It is clear from their first-person 
voice and distinct typeface that the Vice Presidential notes are a 
different document.)
    \18\ Ex. 1. The President copied this message to Harold Ickes, Leon 
Panetta and Billy Webster, the Director of Scheduling.
    \19\ Id.
    \20\ See generally, e.g., Testimony of Jerry Campane, Sept. 18, 
1997, p. 176 (recounting reasons for his conclusion that coffees were 
fundraising events). As even Harold Ickes acknowledged, ``there was no 
question that these coffees were in part to facilitate fundraising.'' 
Testimony of Harold Ickes, Oct. 8, 1997, p. 155.

                          White House Coffees

    Documents released by the White House revealed that between 
January 11, 1995 and August 23, 1996, White House officials 
hosted 103 coffees.\21\ Most of these events were held in the 
Map Room or the Roosevelt Room at the White House itself.\22\ 
Some coffees were held in the Old Executive Office Building 
(``OEOB'') and others--some of the coffees hosted by the Vice 
President--were held at the Naval Observatory.
    \21\ Chart of White House Political Coffees, January 11, 1995-
November 5, 1996 (Ex. 4).
    \22\ Id. The Roosevelt Room is directly opposite the Oval Office. 
In fact, as described herein, at least one of the coffees ostensibly 
held in the Roosevelt Room actually occurred in the Oval Office itself.
    The White House divided these coffees into three 

                                                 Number of    Number of 
                   Category                       coffees       guests  
DNC Supporters................................           60          633
Clinton/Gore '96 Supporters...................           11          110
Political and Community Leaders...............           32          498
      Total...................................          103   \23\ 1,241

Because some persons attended more than one DNC-sponsored 
coffee, the 633 people listed as having attended the 60 DNC-
sponsored coffees actually numbered only 532. Checking these 
names against lists of campaign contributors available from the 
FEC reveals that 92 percent (488 out of 532) of the individuals 
who attended DNC-sponsored coffees at the White House 
contributed to the Democratic Party in 1995 or 1996. Their 
contributions to the DNC during the 1996 election cycle--given 
personally or through their businesses--in fact, totaled $26.4 
million, an average contribution of approximately $50,000.\24\ 
Moreover, many of these contributions were closely linked to 
the donor's coffee attendance: almost one-third of the total, 
some $7.7 million, was given to the DNC within one month of a 
donor's attendance at a White House coffee.\25\ Indeed, in 
keeping with the DNC's plan to cultivate ``top top'' 
contributors,\26\ at least 12 individuals contributed at least 
$100,000 on or around the dates of the coffees they attended: 
Miguell Lausell, David Bonderman, Robert Rubin, Derald 
Ruttenberg, Richard Lawrence, Paul Cejas, Peter Mathias, Robert 
Menschel, Samuel Rothberg, Barrie Wigmore, Lewis Manilow, 
Pauline Kanchanalak, and Melvyn Weiss.\27\
    \23\ This number does not include White House or DNC employees who 
attended the coffees.
    \24\ Testimony of Jerry Campane, Sept. 18, 1997, pp. 185-86.
    \25\ See generally Testimony of Jerry Campane, Sept. 18, 1997, p. 
    \26\ Ex. 2.
    \27\ Testimony of Jerry Campane, Sept. 18, 1997, p. 190; see also 
Chart of individual contributors of $100,000 or more to the DNC within 
one month of attending a coffee (Ex. 5).
    As compared to other fundraising tools, coffees were a 
highly effective way for the DNC to raise money. The DNC's 
direct mail solicitations during this period were customarily 
burdened by overhead costs of 42 percent,\28\ with the effect 
that only 58 cents out of each dollar solicited actually found 
its way into party coffers. By contrast, however, White House 
coffees required only minimal DNC expenditures, ensuring that 
almost all of the funds solicited in connection with such 
coffees could be pumped into campaigning against the 
Republicans. A memorandum Harold Ickes wrote to the President 
and Vice President, for example, did not even bother to list 
the DNC's expenses for White House coffees, describing such 
expenses as ``not applicable.'' \29\ Every cent of every dollar 
raised by the DNC through the White House coffees, therefore, 
was treated as income.\30\
    \28\ Testimony of Jerry Campane, Sept. 18, 1997, pp. 186-87.
    \29\ Harold Ickes, memorandum to the President and Vice President, 
Feb. 9, 1996 (attachment to Todd Stern & Phil Caplan, Memorandum for 
the President, Feb. 16, 1996), p. 6 (Ex. 6) (discussing DNC major donor 
fundraising events and requests); Testimony of Jerry Campane, Sept. 18, 
1997, p. 187. There must have been some minimal expenses associated 
with the coffees for the cost of the coffee and pastries served. See 
John O. Sutton, memorandum to Tracy B. LaBrecque, Jan. 23, 1995 (Ex. 7) 
(noting that ``[p]er Harold [Ickes], the DNC will pay for the 
coffees''). It is equally clear, however, that the party regarded these 
costs as negligible.
    \30\ Testimony of Jerry Campane, Sept. 18, 1997, p. 187.
    A number of White House and DNC documents underline the 
importance of the coffees as fundraising events. An e-mail 
message sent by Jennifer O'Connor, Special Assistant to the 
President, to Karen Hancox at the White House's Office of 
Political Affairs, for example, made clear that White House 
officials considered the coffees ``money tool[s]'' from which 
party funds could be raised even if no formal admission fee 
were charged.\31\ Ironically, White House officials believed 
that not explicitly charging an admission fee was the way 
``they could make the most money'' from the coffees.\32\ The 
bottom line, however, was simple: according to DNC Finance 
Director Richard Sullivan, for guests invited to DNC-sponsored 
White House coffees, ``[w]e want[ed] potential donors.'' \33\
    \31\ Jennifer O'Connor, e-mail to Karen Hancox, May 10, 1995 (Ex. 
8) (discussing event in New York and describing it as being ``[l]ike 
the President's coffees''); see also Testimony of Jerry Campane, Sept. 
18, 1997, p. 180.
    \32\ Ex. 8.
    \33\ Deposition of Richard L. Sullivan, June 4, 1997, p. 128.
    Although White House and DNC officials later resisted using 
the term ``fundraiser'' to characterize the coffees through 
which they had tried to raise political contributions in the 
White House,\34\ Ickes described them at the time--and in 
messages sent to and read by the President--as ``political/
fundraising coffees.'' \35\ Memoranda from Ickes to both the 
President and the Vice President also detailed the amounts 
raised by the White House coffees, comparing these sums to 
contributions obtained through other DNC fundraising 
events.\36\ In the first half of 1995, for example, the coffees 
raised $1 million for the DNC.\37\ Indeed, Ickes tracked the 
progress of the DNC's coffee fundraising on a coffee-by-coffee 
basis. Thus, for example, did his bi-weekly reports to the 
President and the Vice President list three Presidential 
coffees in December 1995 that raised $400,000 each,\38\ and a 
coffee in January 1996 that raised $500,000.\39\ For two 
coffees in June 1995 that between them raised $1 million, 
moreover, Karen Hancox, Deputy Assistant to the President for 
Political Affairs, wrote to inform Ickes of ``the coffee 
attendees (with POTUS) + amts. raised.'' \40\ Lest there be any 
doubt on this point, a 1995 list of ``DNC Fundraising Events'' 
contained an entry for ``Coffees''--noting that during the 
period in question they had already raised $1,000,000.\41\
    \34\ See, e.g., Ickes testimony, pp. 154-55.
    \35\ Harold Ickes, Memorandum to the President, May 14, 1996 (Ex. 
9) (using term three times). There is no question that the President 
actually read this document. The stamp at the top of the document 
indicates that the President saw it on May 15, 1996, and the 
President's name on the first page is checked with his unusual left-
handed check mark. The President also made a notation on this 
memorandum stating that he wished to discuss it ``once more'' with 
Harold Ickes. Id.
    It is also apparent that many of the contributors involved with 
White House coffees understood their intent. The ``memo'' portion of a 
check collected from Ernest Green on the morning before a White House 
coffee attended by his sometime business partner Charlie Trie and their 
would-be client Wang Jun, for example, was annotated ``Fundraiser.'' 
Phyllis Green & Ernest Green check #5072 for $50,000 to the DNC on 
February 6, 1996 (Ex. 10) (with accompanying DNC Finance Executive 
Summary indicating collection of $50,000 in connection with ``POTUS 
COFFEE 2/6/96'').
    \36\ Harold Ickes, Memorandum to the President and Vice President, 
June 28, 1995 (Ex. 11).
    \37\ Id. This memorandum has also been stamped that the President 
saw the document, it is marked with the President's left-handed check 
mark and contains a notation from the President to Ickes.
    \38\ Harold Ickes, Memorandum to the President and Vice President, 
Jan. 2, 1996, p. 4 (Ex. 12) (discussing bi-weekly DNC report dated 
December 22, 1995).
    \39\ Harold Ickes, Memorandum to the President and Vice President, 
Jan. 29, 1996, p. 11 (Ex. 13) (discussing bi-weekly DNC report dated 
January 19, 1996).
    \40\ Handwritten note and list of attendees from coffees on June 7 
and June 21, 1995 (Ex. 14). The coffee on June 7 raised $400,000, while 
the one on June 21 raised $600,000. Id.
    \41\ List of DNC events dated June 25, 1995 (Ex. 15).
    DNC briefing materials prepared for the President 
underscore the obvious fact that certain White House coffees 
were designed to be fundraising events and functioned as such. 
A DNC briefing paper entitled ``Democratic National Committee 
Budget/Fundraising Presentation to the President on 6 June 
1996,'' for example, contains, among other things, detailed 
information tracking various Presidential fundraising events, 
including White House coffees. Entries for individual events 
feature notations indicating:
          (a) the total projected amount to be raised;
          (b) how much of that amount had been collected as of 
        the time of the report's compilation;
          (c) the status of the DNC's cash flow into federal 
        (``hard money'') and non-federal (``soft money'') 
          (d) the proposed fund-raising schedule for the 
        President and Vice President; and
          (e) estimates of the DNC's ability to meet its fund-
        raising goals.\42\
    \42\ See June 6 Presidential Briefing (Ex. 16).
Also attached to the June 6 Presidential Briefing are monthly 
schedules containing information concerning specific events, 
including projected fundraising totals--i.e., projected federal 
contributions, corporate contributions, non-federal individual 
contributions. Also appearing in these materials are lists of 
contributions ``in hand,'' totals of federal contributions 
received, and both the projected and the actual costs of 
particular events.\43\
    \42\ Id.
    The June 6 Presidential Briefing schedules contain entries 
for 22 fundraising coffees and nine ``servicing'' coffees. Each 
of these fundraising coffees had projected revenues of 
$400,000, while the ``servicing'' coffees had no projected 
revenue.\44\ As indicated by these figures, the DNC drew a 
distinction between fundraising coffees (from which 
contributions were anticipated) and coffees at which no money 
would be raised. For those coffees designed to raise money for 
the DNC, the figures provided in the briefing were so specific 
that they identified the portion of each fundraising coffee's 
projected revenue that would be apportioned to federal dollars 
(i.e., ``hard money'' that would be available to Clinton/Gore 
'96 rather than simply to the DNC).\45\
    \44\ Id.
    \45\ Id.
    In portions dealing with events that had already occurred, 
moreover, the June 6 Presidential Briefing and other DNC 
memoranda also summarize contributions the DNC had received as 
a result of other White House coffees. A May 17, 1996 White 
House coffee, for example, had a projected revenue of 
$400,000--of which $300,000 was described as already being ``in 
hand.'' \46\ In a separate DNC memorandum listing 1996 
fundraising events, a White House coffee on February 22, 1996 
was described as having had a projected revenue of $400,000, 
with $340,000 ``raised to date''--while seven other 
Presidential coffees (``POTUS coffees'') were listed as having 
each raised all of their projected revenue totals of 
    \46\ Id. at p. 27
    \47\ See DNC 1996 events memorandum (Ex. 17).
    These documents make quite clear that while not all coffees 
were fundraisers, many coffees were designed specifically for 
that purpose. Such unequivocal accounts of ``projected 
revenue'' and the specific bank accounts into which money was 
to flow, for example, make irrelevant DNC and White House 
officials' reluctance today to employ particular terms or 
phrases. Despite these internal documents' clear focus upon 
coffee fundraising, DNC officials nonetheless went to some 
lengths to preserve the public fiction that the coffees were 
not fundraisers. Video footage shot by the White House 
Communications Agency (WHCA) of a December 13, 1995 coffee at 
the White House, for example, captured a DNC donor offering 
Donald Fowler five contribution checks. Fowler refused to 
accept this money on the spot, but told the donor that ``[a]s 
soon as this thing is over, I'll call you . . . . We'll get it 
done.'' \48\ Donors would have to give him their checks for the 
coffee outside the White House, in other words, in order to 
permit the Democratic Party to continue to pretend that the 
coffees were not ``fundraisers.'' This pretense, however, 
cannot survive the revelation of DNC internal documents 
detailing the party's organization and tracking of White House 
coffees under that very name and for that very purpose. 
Whatever their organizers might prefer to call them, many White 
House coffees were obviously ``fundraisers'' in the most 
elementary sense of the word.
    \48\ White House Communications Agency videotape, Dec. 13, 1995 
(footage of White House coffee).


    As with the coffees, the opportunity to spend a night at 
the White House was an important means by which the DNC raised 
funds from major contributors.\49\ White House records indicate 
that between 1993 and 1996, at least 938 individuals were 
overnight guests at the White House.
    \49\ Testimony of Jerry Campane, Sept. 18, 1997, p. 190.
    White House officials divided these guests into the 
following seven categories:

        Category                                        Number of guests
Arkansas Friends..................................................   370
Longtime Friends..................................................   155
Friends and Supporters............................................   111
Public Officials and Dignitaries..................................   128
Arts & Letters....................................................    67
Family............................................................    35
Chelsea's Friends.................................................    72
    Total.........................................................   938

    Some 760 of these guests fell into the categories of 
``family,'' ``Arkansas friends,'' ``longtime friends,'' Chelsea 
Clinton's friends, and ``public officials and dignitaries,'' 
making them seem unlikely targets for the DNC's ``overnights'' 
project.\50\ The remaining 178 individuals--from 114 different 
families--contributed a total of more than $5 million to the 
DNC, either personally or through their businesses, during the 
1996 election cycle.\51\ This amounts to an average 
contribution per family of over $44,000.\52\
    \50\ This is not to suggest, however, that none of these 760 
persons made contributions to the DNC. In fact, a number did. See 
Testimony of Jerry Campane, Sept. 18, 1997, pp. 190-91.
    \51\ Id. at p. 191.
    \52\ Id.
    Because the White House refused to provide a complete 
accounting of the dates of each guest's stay at the Executive 
Mansion, it has not been possible to analyze the nexus between 
overnight attendance and the date of individual 
contributions.\53\ The limited data the White House has seen 
fit to make available to the Committee, however, is highly 
suggestive: of 51 ``long time friends'' listed in one document 
as having attended a White House overnight,\54\ fully 49--that 
is, some 96 percent--contributed a total of $4,077,459 to the 
DNC during the 1996 election cycle.\55\ The only two 
individuals on this list who did not personally contribute were 
Terry McAuliffe himself and one other individual, a relative of 
John E. Connelly, whose company contributed $220,000 to the DNC 
in 1996.\56\ FEC records also show that 47 percent of these 51 
guests contributed, personally or through their businesses, a 
total of $882,840.00 to the DNC within one month of their stay 
at the White House.\57\ Moreover, if these 51 individuals are 
separated into their 38 different families, FEC records reveal 
that 97 percent of these families contributed to the DNC during 
the 1996 election cycle--for an average contribution of over 
$107,000 per family--with more than half of them giving a total 
of nearly $900,000 within one month of their stay at the White 
    \53\ The Committee asked for this information in mid-August 1997. 
The White House agreed in late November 1997 to produce only the names 
and dates of individuals who contributed at least $5,000 to the DNC 
during the 1996 election cycle. As of the time of writing, the White 
House still has not produced this information.
    \54\ As noted, these persons came from the White House's list of 
``longtime friends.'' Their contributions, therefore, are not included 
in the total given for the 178 individuals discussed above. See 
Testimony of Jerry Campane, Sept. 18, 1997, p. 192; List of some 
overnight guests with their dates of stay, released by the White House 
(Ex. 18).
    \55\ Id.; see also Chart of White House overnights as fundraising 
tools (Ex. 19).
    \56\ Testimony of Jerry Campane, Sept. 18, 1997, p. 193.
    \57\ Id.; see also Ex. 19.
    \58\ Testimony of Jerry Campane, Sept. 18, 1997, pp. 193-94.
    The existence of this list of 51 overnight guests makes 
clear that although not everyone who stayed at the White House 
did so because they had made a donation to the Democratic 
Party, White House and DNC officials kept separate records of 
overnight attendees from whom they had or intended to solicit 
campaign contributions. A certain proportion of the overnight 
stays, therefore, were obviously intended to be--and functioned 
as--DNC fundraisers.

                              Other Events

    In addition to the coffees and overnights undertaken by DNC 
and White House officials with the explicit approval of the 
President,\59\ the DNC and White House organized a number of 
other activities in order to reach the DNC's fundraising goals. 
In a memorandum written in May 1994, in fact, DNC Deputy Chief 
of Staff Martha Phipps listed no fewer than 19 different 
activities that she said the DNC wished to coordinate with the 
White House in order to meet its fundraising targets.\60\ These 
activities included a remarkable range of benefits or services 
that could be offered to campaign contributors:
    \59\ See Ex. 1 (with accompanying note by President Clinton urging 
officials to ``pursue all 3 [projects] and promptly'').
    \60\ Martha Phipps, Memorandum to Ann Cahill, May 5, 1994 (Ex. 20) 
(discussing White House activities).
           seats on Air Force One and Air Force Two;
           permission to play on White House tennis 
           seats at private White House dinners;
           admission to Rose Garden ceremonies and 
        official White House visits;
           invitations to join official delegations 
        traveling abroad;
           appointments to boards and commissions;
           meal privileges at the White House Mess;
           visits to and overnight stays in the White 
        House residence;
           ``guaranteed'' tickets to events at the 
        Kennedy Center;
           seats at the President's weekly radio 
           photo opportunities with the President, Vice 
        President, First Lady and Mrs. Gore;
           seats at the Presidential lunches with 
        corporate CEOs;
           ``phone time from the Vice President;''
           seats at White House screenings of popular 
           monthly lunches with the First Lady or with 
        White House officials such as Mack McLarty or Ira 
           use of the President's box at two local 
        theaters; and
           meetings with Vice President Gore.\61\
    \61\ Id.
According to Ari Swiller, director of the DNC's Trustee 
Program, at least some of these activities were indeed offered 
to contributors by the DNC, including the provision of tickets 
to the Kennedy Center and visits to the White House residence 
and overnight stays.\62\
    \62\ Deposition of Jacob Aryeh Swiller, May 6, 1997, pp. 55-56. 
Swiller also referred to a similar list of activities recounted in 
another list compiled in 1994. See also Memorandum to Martha Phipps, 
April 25, 1994 (Ex. 21). He also recalled that the DNC had received an 
allotment of tickets for White House tours and routinely submitted 
names to the White House for overnight stays. Swiller deposition, p. 
    Two particular White House coffees stand out as 
illustrations of this aspect of the DNC's fundraising scheme: 
the events organized on May 1 and June 18, 1996. These two 
coffees will be examined in more detail in the following pages.

The May 1, 1996 coffee

    On May 1, 1996, five men attended a DNC coffee in the Oval 
Office with President Clinton. Each of these five--Barrie 
Wigmore, Lewis Manilow, Peter Mathias, Robert Menschel, and 
Samuel Rothberg--agreed to give $100,000 to the DNC just before 
the White House coffee. Their checks were collected just after 
they visited the White House,\63\ and the DNC recorded their 
$100,000 contributions one week after the coffee occurred.\64\ 
This May 1 event is the first instance documented in which the 
President used the Oval Office for one of the DNC's ``money 
    \63\ Memorandum of Interview of Barrie Wigmore, Oct. 28, 1997, p. 
    \64\ See, e.g., FECInfo database printout of individual contributor 
data for Peter Mathias (Ex. 22) (indicating $100,000 contribution to 
DNC on May 8, 1996); FECInfo database printout of individual 
contributor data for Samuel Rothberg (Ex. 23) (same); FECInfo database 
printout of individual contributor data for Barrie Wigmore (Ex. 24) 
(same); FECInfo database printout of individual contributor data for 
Robert Menschel (Ex. 25) (same).
    Manilow does not appear in DNC records as a donor, but he told the 
Committee that he made $100,000 in contributions, which were paid in 
installments charged to his credit card in order to help him accumulate 
``frequent flier'' mileage. Memorandum of Interview of Lewis Manilow, 
Oct. 16, 1997, pp. 2-3 (recounting paying via credit card); Wigmore 
interview, p. 5 (recounting Manilow's receipt of ``frequent flier'' 
miles for credit card donation). FEC records show Manilow as having 
made $24,000 in contributions to various Democratic causes after the 
date of the coffee; the remaining $76,000 of his commitment to Wigmore 
may have ended up in the coffers of state Democratic parties. Cf. 
FECInfo database printout of individual contributor data for Lewis 
Manilow (Ex. 26) (showing contributions during 1995-96 election cycle). 
All in all, Manilow had contributed $145,000 to Democrats in the last 
three election cycles. See Testimony of Jerry Campane, Sept. 18, 1997, 
pp. 187-88.
    According to participants in this coffee interviewed by the 
Committee, these DNC donations originated with the decision--
apparently in early or mid-April 1996--of Barrie Wigmore, an 
investment banker with Goldman, Sachs in New York City, to 
contribute $100,000 to the Democratic Party. A longtime 
supporter of President Clinton, Wigmore said he had made this 
decision because he had been upset by the Republican primary 
campaigns of 1995 and 1996. He claimed that he had picked the 
$100,000 figure because it was a satisfyingly large and 
``round'' sum. Wigmore said this figure had no further 
significance, and that no one had suggested that he make a 
donation of that size.\65\
    \65\ Wigmore interview, p. 1.
    Having himself made this decision to donate, Wigmore 
recalled, he told his friend Robert Menschel--also at Goldman, 
Sachs--about his idea, and asked whether Menschel might be 
interested in making a similar commitment. After thinking about 
this proposal overnight, Menschel agreed that he, too, would 
give $100,000.\66\ Menschel had not previously been a major 
political contributor: his largest past contribution was no 
more than ``a couple thousand.'' \67\ Over the next few days, 
Wigmore persuaded the other three men to commit to identical 
$100,000 contributions.\68\ After the group had attended the 
Oval Office coffee, Wigmore collected their checks \69\--some 
of which had been written beforehand \70\--and passed them 
along to the DNC.\71\
    \66\ Wigmore interview, p. 1; Memorandum of Interview of Robert 
Menschel, Oct. 17, 1997, pp. 1-2.
    \67\ Menschel interview, p. 1. Indeed, gifts of this size appear to 
have been unprecedented for most of these men. See, e.g., FECInfo 
database printouts of individual contributor data in 1993-94 for Robert 
Menschel, Lewis Manilow, Barrie Wigmore, Peter Mathias, & Samuel 
Rothberg (Ex. 27). Manilow told the Committee, however, that he had 
given $100,000 during the 1987-88 election cycle. Manilow interview, p. 
    \68\ Wigmore interview, p. 2.
    \69\ As noted above, however, Lewis Manilow made his donations by 
means of a credit card. See supra note 64.
    \70\ See, e.g., infra note 75.
    \71\ See, e.g., Wigmore interview, p. 5.
    It is clear that the prospect of a White House visit played 
some role in inducing the members of this group to commit to a 
total of $500,000 in contributions to the DNC. Although one 
participant, Menschel, claimed that he would have made his 
$100,000 donation whether or not he had been invited to the 
White House,\72\ the prospect of a visit does seem to have 
affected the nature and timing of at least one of his 
colleagues' pledges. According to Lewis Manilow, Wigmore told 
him that if Manilow were going to make a large contribution 
anyway, ``a nice way to do it'' would be to do so as part of 
Wigmore's group, so that he could visit the President.\73\ 
Having been thus told, in effect, that his donation would buy 
him a Presidential audience, Manilow agreed. Making clear that 
he understood this connection, Manilow later compared the May 1 
visit to his attendance at a previous ``event like a coffee'' 
by noting that for the earlier trip, ``[t]here was not money at 
that point, that was not a money coffee.'' \74\ (It is also 
instructive that while some of the checks were written before 
the coffee,\75\ Wigmore himself, the principal organizer of 
this delegation, refrained from writing his own $100,000 
check--and from collecting those written by his colleagues--
until the day after the White House visit had actually 
    \72\ Menschel interview, p. 2.
    \73\ Manilow interview, p. 1. As to the existence of a causal 
connection between donation and invitation, Manilow said only that 
``you can draw your [own] conclusions.'' Id.
    \74\ Id. at p. 3.
    \75\ See, e.g., Robert Menschel check #1296 for $100,000 to DNC on 
April 22, 1996 (Ex. 28).
    \76\ See Barrie Wigmore check #4250 for $100,000 to DNC on May 2, 
1996 (Ex. 29); Wigmore interview, p. 5 (recounting collecting checks 
from other participants after coffee).
    The members of Wigmore's group seem to have very much 
desired a Presidential visit, and to have expected that, after 
agreeing to make such significant contributions, they should be 
able to meet personally with President Clinton to convey their 
messages of support. In discussing the contribution plan with 
Manilow, Wigmore recalled, the two men decided that they did 
indeed want to meet with President Clinton in order to ``tell 
the President how [they] feel, [and] what an important job he's 
doing.'' Accordingly, after securing these donation commitments 
from his friends, Wigmore promptly called his old friend Thomas 
F. (``Mack'') McLarty at the White House in order to ``see if 
we can do this.'' McLarty, in turn, put Wigmore in contact with 
Ann Braziel at the DNC. According to Wigmore, he told Braziel 
that he and his friends supported the President and would like 
to meet him. ``We all feel the same way,'' he recalls telling 
her, ``and [we] would like to tell the President'' in person. 
Braziel told him that ``we'll see what we can do.'' \77\
    \77\ Wigmore interview, p. 2.
    The evidence suggests that but for their contribution 
commitments, the Wigmore group would not have been invited to 
the White House on May 1, 1996. In Wigmore's conversation with 
Braziel, he told her that his colleagues would be giving money 
to the DNC. Soon after their conversation, Braziel called 
Wigmore back to suggest a date on which his group could visit 
the White House. After a series of discussions, they settled 
upon May 1 as the date for the event.\78\
    \78\ Id. at p. 2.
    Although Wigmore claimed not to recall whether he told 
Braziel the specific size of their donations,\79\ he apparently 
did so. The DNC, the White House staff, and President Clinton 
himself--as they planned the Wigmore coffee--were all soon well 
aware that these five men had each agreed to become $100,000 
donors.\80\ This appears to have been precisely what was 
needed: while many Americans may have wished to tell President 
Clinton their views, few had $100,000 each to offer the DNC for 
this privilege.
    \79\ Id. 
    \80\ On a document written by Sullivan on April 29, 1996 and 
personally reviewed by President Clinton on the day of the coffee, for 
example, White House aide Phil Caplan wrote: ``MR PRESIDENT: Per Doug 
[Sosnik], the five attendees of this coffee are $100,000 contributors 
to the DNC.'' Richard Sullivan, memorandum on May 1, 1996 coffee, April 
29, 1996 (Ex. 30) (memorandum marked ``THE PRESIDENT HAS SEEN 5/1/
    Despite the fact that this DNC coffee was originally 
planned to take place in the Roosevelt Room,\81\ it actually 
occurred in the Oval Office itself, with the President taking 
time to meet with Wigmore's five $100,000 donors between 
meetings with Palestinian leader Yasser Arafat and the Rev. 
Billy Graham.\82\ The use of the Oval Office for this DNC 
function was not revealed to the Committee until the 
production--after repeated requests for such records--of a 
videotape of a portion of this event taken by the White House 
Communications Agency.\83\ This tape clearly shows the 
delegation being taken into the Oval Office for coffee.\84\ 
This belatedly-released videotape thus makes the May 1 coffee 
the first documented instance in which the Oval Office was used 
for a fundraising event.
    \81\ ``Schedule of the President for Wednesday, May 1, 1996, 
Revised Final'', p. 3 (Ex. 31) (listing Roosevelt Room location).
    \82\ Wigmore interview, pp. 4-5 (discussing Arafat and Graham); 
Menschel interview, p. 3 (recounting Graham meeting).
    \83\ For discussion of the White House's delay in producing 
videotapes to the Committee, see the section of this report on delays 
in White House document production.
    \84\ White House Communications Agency videotape, May 1, 1996.
    As noted above, President Clinton had been made aware of 
the group's $100,000 commitments prior to this Oval Office 
meeting.\85\ In case he had forgotten their generosity to the 
DNC, however, one of the five, Samuel Rothberg, actually 
brought up the subject of fundraising in the Oval Office over 
coffee and pastries with President Clinton--telling the 
President that his speech at the funeral of Israeli Prime 
Minister Rabin had moved him to make his DNC contribution.\86\
    \85\ See supra text accompanying note 80.
    \86\ Wigmore interview, p. 4. DNC Chairman Donald Fowler and 
Finance Chairman Marvin Rosen were also present during this meeting, 
although they apparently did not contribute to the discussion. See id. 
at p. 5; Manilow interview, p. 2; Menschel interview, p. 3.
    Interestingly, the DNC appeared to have been sufficiently 
impressed with Barrie Wigmore's ability to raise huge sums for 
the Democratic Party from his wealthy friends that it invited 
him to become involved in arranging more meetings with the 
President for ``key people,'' as part of what Democratic 
campaign official Alan Patrikoff termed a ``fundraising 
methodology'' involving DNC breakfasts, coffees, dinners, and 
other events. At some point during the period just before the 
May 1 coffee, Wigmore received a telephone call from Patrikoff, 
who tried to persuade Wigmore to help the DNC arrange further 
Presidential meetings as a way of raising money from wealthy 
donors. Wigmore, however, was not interested in such work; 
after pledging $100,000, he felt he had contributed more than 
his share to the DNC already.\87\
    \87\ Wigmore interview, p. 3. Wigmore described Patrikoff as a 
friend of his who was a venture capitalist and prominent Clinton 
fundraiser, as well as the chair of the Democratic Leadership Council 
(DLC). Id.
    Wigmore's call from Patrikoff underscores the understanding 
Wigmore must have had--and the White House and the DNC clearly 
had--that the May 1, 1996 coffee with President Clinton was a 
DNC fundraising tool. Having already been informed by Patrikoff 
that DNC ``coffees'' were part of the party's ``fundraising 
methodology'' as a way of enticing contributions from ``key 
people,'' Wigmore recalls having been upset when Ann Braziel 
subsequently referred to the upcoming May 1 event as a 
``coffee.'' Wigmore claims to have bristled at this 
terminology; he ``thought the concept of a coffee was 
repugnant'' and preferred to think of his group as ``all 
serious players wanting to discuss the [Clinton 
Administration's] second term.'' \88\ Nevertheless, it is 
telling that the word ``coffee'' was used both by Braziel and 
in DNC and White House documents relating to the May 1 
event.\89\ Ultimately, Wigmore had understood Braziel's 
``repugnant'' usage correctly: he and friends were precisely 
the sort of ``key people'' from whom the DNC's ``coffee'' 
system had been designed to elicit campaign contributions. In 
Lewis Manilow's words, therefore, the May 1, 1996 event in the 
Oval Office was indeed a ``money coffee.'' \90\
    \88\ Id.
    \89\ See, e.g., Ex. 31 (listing ``coffee'' on May 1, 1996 with Doug 
Sosnik at DNC staff contact); Ex. 30 (discussing ``coffee with 
supporters of the Democratic National Committee'' on May 1, 1996). 
Sullivan's memorandum, in fact, described Wigmore's group by noting 
that they were ``[a]ll . . . new supporters of the DNC.'' Id.
    \90\ Manilow interview, p. 3.

The June 18, 1996 coffee

    The June 18th coffee illustrates not only the fundraising 
character of the White House coffees, but the extraordinary 
degree of control that an individual fundraiser could exert 
over the DNC decision-making process and over the personal 
schedule of the President himself. In pursuit of substantial 
campaign contributions, DNC Managing Trustee Pauline 
Kanchanalak and DNC Finance Vice Chairman John Huang prevailed 
over Sullivan's objections, and organized a DNC-sponsored White 
House coffee at which the President met with three foreign 
nationals for over one hour. The DNC and the White House 
permitted this coffee to go forward even though they knew that 
foreign nationals could not legally contribute to the DNC and 
that, given the presence of such individuals at the coffee, the 
coffee could not be cast as a ``community outreach'' event. In 
short, the June 18th coffee was a fundraiser held in the White 
House at which the President took time to hear the views of 
Kanchanalak's foreign clients in return for substantial 
contributions from Kanchanalak or her associates.
    The June 18, 1996 White House coffee also raises other 
serious questions, including:
           Why did the President spend over an hour 
        with three DNC contributors and a group of foreign 
        nationals without the knowledge of the NSC and over the 
        objections of DNC executives?
           Why did the coffee occur despite the strong 
        concerns expressed by the DNC's Finance Chairman that 
        Kanchanalak might be using the event for an improper 
           Why were foreign nationals the only persons 
        originally scheduled to attend the coffee if this event 
        were really a ``community outreach'' or ``donor 
        servicing event''?
           Did the President and/or the DNC believe 
        that they would receive contributions from foreign 
    An analysis of this coffee demonstrates the following: (a) 
individual DNC fundraisers exercised an enormous degree of 
control over the DNC, the White House, and the President's 
schedule; (b) the DNC's and the White House's claim that the 
coffee was merely a ``donor servicing'' or ``community 
outreach'' event is false because, as it was originally 
planned, no U.S. citizens were invited; (c) John Huang made an 
explicit solicitation for financial ``support'' at the coffee; 
(d) the coffee was a fundraiser in connection with which Huang 
was given credit for raising over $180,000 in contributions 
from Kanchanalak and her sister-in-law, Duangnet (``Georgie'') 
Kronenberg; and (e) the actions after the coffee of Kanchanalak 
and her company, Ban Chang International (USA) Inc. (BCI), 
suggest that evidence regarding the coffee has either been 
withheld from the Committee or destroyed.
    As so often during this investigation, the Committee has 
been hampered in its ability to learn all the relevant facts 
concerning this coffee. Huang and Kronenberg have asserted 
their Fifth Amendment right against self-incrimination in 
response to the Committee's inquiries, and Kanchanalak fled the 
United States and has remained in Thailand since approximately 
December 1996. The following pages recount what information is 
available about this event.

Pauline Kanchanalak

    Born in Thailand in 1950, Pauline (Pornpimol) Kanchanalak, 
a Thai citizen and a legal U.S. resident, graduated from 
Stanford University in 1983 and first worked for the press 
section of the Thai Embassy. After leaving the Embassy, 
Kanchanalak worked in Washington for the Bangkok Post while 
both she and her husband, Chupong (``Jeb'') Kanchanalak, sought 
private clients for their new lobbying business. Kanchanalak 
applied for a position as a Washington lobbyist for the 
government of Thailand, but was rejected because Thai officials 
did not believe she had the proper connections. Kanchanalak 
subsequently became a lobbyist for Ban Chan Group, a Thai 
property development company, and President of Ban Chang 
International (USA) Inc., a Washington, D.C. based consulting 
    \91\ For additional information on Kanchanalak's background, see 
Raymond Bonner and Stephen Labaton, ``An Inquiry Clouds a Lobbyist's 
Success Story,'' New York Times, February 9, 1997, p. 26.
    An early example of Kanchanalak's attempts to use her 
political influence is the Blockbuster deal before the Ex-Im 
Bank. In 1996, Maria Haley,\92\ a director at the Ex-Im Bank, 
reportedly tried to push through an unusual $6.5 million 
financing deal sought by the Sun Tech Group.\93\ A Sun Tech 
subsidiary agreed to pay $7.7 million to the Blockbuster video 
rental company for the rights to operate more than 100 stores 
in Thailand that would be financed by Sun Trust Credit, the 
Little Rock unit of a large Florida banking chain. In an effort 
to obtain financing from the Ex-Im Bank for the franchise of 
Blockbuster video stores in Bangkok, Kanchanalak reportedly 
called Haley on June 25, 1996, met with her on July 16, 1996, 
and again called her on August 13 and 14, 1996. Allegedly, 
Huang also intervened on Kanchanalak's behalf regarding the 
status of the Ex-Im Bank's decision to provide financing for 
Sun Tech. Ex-Im Bank records show that Huang called Haley on 
June 18, 1996 (the date of the White House coffee and 
Kanchanalak's $85,000 contribution to the DNC). In August 1996, 
Haley was the host of a crucial meeting in her office attended 
by Ex-Im officials and Kanchanalak. Eventually, Haley won 
support from one of the two groups of Ex-Im Bank officials 
required for approval, but the Blockbuster deal collapsed amid 
unresolved questions about the franchise's operations.\94\
    \92\ Haley, a former Arkansas resident with strong political ties 
to the President dating back to 1979, assisted then-Governor Clinton 
with trade missions to Asia. In 1992, she became the President's trade 
advisor (pushing for Arkansas to enter Asian markets). In 1993, Haley 
was Deputy White House Personnel Director under Bruce Lindsey. Haley is 
credited with assisting the placement of Huang at the Department of 
Commerce. In 1994, the President appointed Haley as a Director of the 
Export-Import Bank.
    \93\ The Sun Tech Group is a Thai conglomerate controlled by 
Sawasdi Horrungruang (President of Hemaraj Land & Development Public 
Co., Ltd. and a member of the United States-Thailand Business Council), 
a wealthy Thai businessman who approached the Ex-Im Bank in late 1995.
    \94\ See generally Christopher Drew and Jeff Gerth, ``Appointee of 
Clinton Pushed Deal Sought by a Big Donor,'' New York Times, January 
23, 1997, p. 1.
    In 1994, in a second example of the questionable uses to 
which Kanchanalak put her political influence, at the request 
of Thai government, she helped form the United States-Thailand 
Business Council (``USTBC''). On September 30, 1994, telephone 
records indicate that Kanchanalak telephoned John Huang at the 
Department of Commerce.\95\ On that same day, Huang wrote a 
memorandum urging David Rothkopf,\96\ Assistant Undersecretary 
at the Commerce Department, to support the USTBC and to 
persuade the President to attend the inaugural ceremony.\97\ In 
early October 1994, furthermore, Kanchanalak apparently 
attended meetings at both the White House and the Department of 
Commerce, presumably in an attempt to win Clinton 
Administration support for the USTBC. Probably not by 
coincidence, within days of these meetings, she contributed 
$32,500 to the DNC.\98\ Although the USTBC never received the 
grant it wanted, on October 6, 1994, both the President and the 
Prime Minister of Thailand (Chuan Leek Pai) attended the 
USTBC's inaugural ceremony.
    \95\ See September 30, 1994 telephone message slips for Huang (Ex. 
    \96\ Rothkopf and Jeffery Garten, another Commerce official, met 
with a group of Indonesian businessmen at the home of James Riady 
during President Clinton's trade summit trip to Jakarta in October 
    \97\ See John Huang, Memorandum to David Rothkopf, Sept. 30, 1994 
(Ex. 33). Huang also used his Arkansas background to urge 
administration officials to approve projects in which he was involved. 
For example, in Rothkopf's September 30, 1994 memorandum, Huang wrote 
that ``[t]here are quite a few members in this proposed Council from 
Arkansas. They may want to utilize their contacts to get this matter 
squared away directly from the top even if they offend Sandy and NSC.'' 
    \98\ See FECInfo database printouts of individual contributor data 
for Pauline Kanchanalak (Ex. 34).
    As with so many other DNC contributors during this period, 
Kanchanalak's political contributions apparently provided her 
almost unquestioned access to the White House. Kanchanalak was 
invited to the White House approximately thirty-three times 
between January 1993 and November 1996.\99\ As a DNC Managing 
Trustee, in fact, she received assistance from DNC and White 
House officials in obtaining special access to the White House 
and arranging meetings with other influential individuals. A 
few examples of such access include: (1) membership in an 
October 1995 official Thailand government delegation that met 
with Commerce Secretary Ron Brown, in which Kanchanalak was 
listed as an advisor to then-Deputy Prime Minister Dr. Amnuay 
Viravan;\100\ (2) special White House access for business 
associates and friends (i.e., private White House tours);\101\ 
and (3) three scheduled meetings with Sandra J. Kristoff, a top 
Asia expert for then National Security Advisor Anthony 
    \99\ See Secret Service WAVES records for Kanchanalak (Ex. 35). 
Kanchanalak's WAVES records indicate that she was admitted into the 
White House complex under the names Pauline Kanchanalak and Pornpimol 
Parichattkul. Id.
    \100\ Memorandum for the Office of Security from Jean Kelly, 
Thailand Desk Officer for the Department of Commerce, Oct. 18, 1995 
(Ex. 36)
    \101\ See Ex. 37 (compilation of certain Kanchanalak requests for 
private and special White House tours).
    \102\ These visits also forced a delay in the consideration of 
Anthony Lake's nomination to be Director of the Central Intelligence 
Agency, which Lake later asked be withdrawn. See e.g. John Diamond, 
``Campaign financing issues cause new delay in Lake confirmation,'' 
Associated Press, February 12, 1997.
    Providing this access, however, was not simply an act of 
charity. In the early 1990s, Kanchanalak had become a 
significant DNC fundraiser, consistently holding the title of a 
DNC Managing Trustee on account of her success in these 
endeavors. Kanchanalak also served as a co-chair of the DNC's 
Women's Leadership Forum and was actively engaged with the 
DNC's Finance Board of Directors. As a result of this status in 
the DNC, she was invited to and attended numerous White House 
events (both official and political) and DNC fundraisers.
    Nevertheless, Kanchanalak's status as a significant DNC 
fundraiser was built upon shaky foundations. The DNC was forced 
to return approximately a quarter of a million dollars in 
improper campaign contributions which she helped arrange. These 
contributions, totaling $253,500, were made under the name P. 
Kanchanalak--and she was duly given credit for them--but were 
returned when it was discovered that the money actually came 
from her mother-in-law, Praitun Kanchanalak.\103\ The DNC also 
returned a contribution by Ban Chang International after it was 
discovered that this company was the U.S. representative of a 
foreign corporation.\104\
    \103\ See Flow chart contribution money trail credited to 
Kanchanalak and those of her sister-in-law, Duangnet (``Georgie'') 
Kronenberg (Ex. 38).
    \104\ See DNC Press Release, Nov. 20, 1996 (Ex. 39) (announcing the 
returned contributions).
    Moreover, the contributions credited to Kanchanalak may 
have been illegal because they originated from a foreign 
source. As detailed in Exhibit 38, the source of the funds used 
in Kanchanalak's and Kronenberg's DNC contributions was her 
husband, Chupong Kanchanalak. In early June 1996, less than two 
weeks before Pauline Kanchanalak's coffee at the White House, 
Chupong Kanchanalak sent $200,000 in wire transfers from a bank 
in Bangkok, Thailand, into the U.S. bank accounts of Praitun 
Kanchanalak and Duangnet Kronenberg. Shortly thereafter, he 
transferred an additional $275,510 from Thailand into the bank 
account of a company called AEGIS Capital Management--which in 
turn transferred $275,000 into the U.S. bank accounts of 
Kronenberg and Praitun Kanchanalak. This total transfer of 
$475,000 from Thailand to Praitun Kanchanalak and Duangnet 
Kronenberg funded the DNC donations these two women made to the 
DNC, ostensibly in the name of Pauline Kanchanalak, in 
connection with the June 18, 1996 White House coffee. Without 
this infusion, neither of their accounts could have afforded 
these donations.\105\
    \105\ Id.

The June 18, 1996 coffee

    The June 18, 1996 coffee provides an illustration of the 
extraordinary influence major DNC contributors had over the 
White House, the DNC and high ranking Administration officials. 
Several points stand out: (1) DNC documents indicate that the 
June 18 coffee was an illegal DNC-sponsored White House 
fundraiser planned and attended by high-level DNC and White 
House officials; (2) the timing of the contributions credited 
to Pauline Kanchanalak, and the DNC reporting method used by 
Huang, underline the fact that this coffee was a DNC 
fundraiser; (3) high-ranking DNC officials approved this coffee 
even though the only non-official attendees at the coffee were 
to be foreign nationals whom Kanchanalak was lobbying; (4) 
Huang openly solicited contributions during the June 18th 
coffee, asking for donations from foreign nationals in the 
presence of the President; and (5) the actions of Kanchanalak 
and her company, Ban Chang International (USA) Inc., after the 
coffee raise serious questions as to whether evidence regarding 
the coffee was withheld or destroyed.
            (1) Briefing materials
    As discussed above, DNC briefing materials prepared for the 
President make clear that the June 18, 1996 White House coffee 
was indeed a fundraiser. Among its detailed financial accounts 
of DNC specific fundraisers--containing information on each 
event's projected revenue, what funds had been sent to federal 
or non-federal bank accounts, and listings of how much money 
was ``in hand''--the briefing entitled ``Democratic National 
Committee Budget/Fundraising Presentation to the President on 6 
June 1996'' contains explicit information about the June 18, 
1996 coffee.\106\ Significantly, the DNC's entry for this 
event, which was scheduled to occur less than two weeks after 
the date of this briefing, made clear that it was a coffee of 
the fundraising variety. This entry contained the following 
    \106\ See Ex. 16, p. 32.

                                                                       Pro.                  Pro.                 In     Fed.    Pro.   Actual          
            Principal                Event/source         Date       revenue   Pro. Fed.    corp.     Pro. NFI   hand     in     cost    cost   Variance
POTUS...........................  Coffee............  18-Jun......   $400,000    $40,000   $200,000   $160,000      $0  ......     n/a     n/a       $0 

    Two weeks beforehand, therefore, the DNC anticipated that 
Pauline Kanchanalak's June 18 coffee would raise $400,000.\107\ 
As this chart indicates, these figures were so specific that 
they identified the portion the coffee's projected revenue that 
would be designated as federal dollars (i.e., ``hard money'' 
that would be available to Clinton/Gore '96 rather than simply 
to the DNC).\108\
    \107\ Id.
    \108\ Id.
    In other DNC documents, moreover, the DNC listed 
Kanchanalak's and Kronenberg's contributions as deriving from 
the June 18 coffee. A DNC document written on the day after 
this coffee entitled ``Directed-Donor Checks Received to-Date'' 
lists $130,000 in contributions from Duangnet Kronenberg and 
$142,500 from Pauline Kanchanalak--and recounts them as having 
been generated by the ``John Huang Coffee.'' \109\ All in all, 
there can be no question that the coffees were the culmination 
of Terry McAuliffe's ``project'' to raise money for the DNC 
through fundraising events at the White House, and no question 
that the June 18, 1996 event was part of this fundraising 
    \109\ See DNC list of ``Directed-Donor Checks Received to-Date'' 
(Ex. 40).
            (2) Contribution credits
    Both the timing of the contributions credited to 
Kanchanalak and her sister-in-law by the DNC and the DNC 
reporting methods used by Huang underline this conclusion that 
this coffee was a fundraiser. Kanchanalak received credit from 
the DNC for an $85,000 contribution on June 18, 1996.\110\ 
Significantly, the DNC Tracking Form used for this 
contribution--which confirms the coffee was a fundraiser by its 
use of a ``Fundraiser Code''--lists Huang as the ``DNC 
Contact'' and gives the ``Event Location'' as ``6/18/96 coffee 
WH.'' \111\ Duangnet Kronenberg also was credited with 
contributing $50,000 to the DNC on June 18,\112\ and the DNC 
credited Kanchanalak with contributing another $50,000 on June 
24.\113\ The DNC Tracking Form for this last contribution had 
the same ``Source Code,'' ``Revenue Code,'' and ``Fundraiser 
Code'' used for the June 18 contribution; this form, too, lists 
John Huang as the DNC contact.\114\
    \110\ See DNC Tracking Form for P. Kanchanalak donation of $85,000 
on June 19, 1996 (Ex. 41). The check for her $85,000 donation is dated 
June 19, 1996, but notations on the Tracking Form indicate that it was 
credited as of June 18. Id.
    \111\ Id.
    \112\ See Duangnet Kronenberg, check #211 for $50,000 to DNC on 
June 18, 1996 (Ex. 42).
    \113\ See DNC Tracking Form for P. Kanchanalak donation of $50,000 
on June 24, 1996 (Ex. 43).
    \114\ Id.
    The DNC Tracking Form is used by the DNC to credit the 
party representative responsible for soliciting an individual's 
contribution and to attribute that contribution to the correct 
event.\115\ Richard Sullivan, the DNC's Finance Director at the 
time of the June 18 coffee, testified he was aware Huang was 
the DNC representative responsible for Kanchanalak's 
contributions in and around June of 1996.\116\ The DNC briefing 
schedules covering the actual and projected contributions for 
the 22 fundraising coffees (including the June 18 coffee) and 
Huang's use of the DNC Tracking Form underline the conclusion 
that Kanchanalak's contributions were, in effect, a quid pro 
quo contribution in return for the DNC organizing a White House 
coffee for her clients.
    \115\ See Deposition of Richard L. Sullivan, June 4, 1997, pp. 161-
    \116\ Id. at pp. 124-25.
            (3) Only foreign nationals were expected to attend
    The original guests for the June 18 coffee included only 
the President, John Huang, Donald Fowler, Marvin Rosen and 
Pauline Kanchanalak and her guests--several top officials from 
Charoen Pokphand Group (``C.P. Group'') in Thailand: \117\ 
Dhanin Chearavanont (Chairman and CEO), Sumet Chearavanont 
(Vice Chairman and President) and Sarasin Virapol (Official and 
translator). Apart from DNC officials and the President 
himself, therefore, not a single U.S. citizen or permanent 
resident alien was expected to attend.\118\ Shortly before the 
coffee, however, Kanchanalak was forced to invite U.S. citizens 
after concerns were raised regarding the appearance of 
impropriety. After significant pressure from the DNC to invite 
at least someone from the United States, Kanchanalak finally 
invited two U.S. citizens, asking them to attend only on the 
day before the coffee. Sullivan was so concerned about the 
appearance of this coffee that he invited three additional 
people to attend: Beth Dozoretz, a DNC Managing Trustee, and 
Robert and Renee Belfer, also DNC Managing Trustees.\119\
    \117\ The C.P. Group is Thailand's largest multinational company 
and one of the largest foreign investors in the People's Republic of 
    \118\ See Deposition of Richard L. Sullivan, June 4, 1997, p. 127. 
Perhaps not coincidentally, Dhanin Chearavanont was the only private 
businessman with whom the President met on his subsequent trip to 
Thailand in November 1996.
    \119\ See Deposition of Beth Dozoretz, Sept. 2, 1997, pp. 88-90.
    Sullivan knew Kanchanalak to have been a DNC fundraiser 
since 1991,\120\ and after learning that Kanchanalak wanted to 
``help out in a big way,'' he talked with Marvin Rosen and 
Huang ``about working with Pauline to get her to come to the 
table, to make her contribution, to raise some money.'' \121\ 
According to Sullivan, in fact, DNC representatives were 
``always asking her [to] give something to come to this and 
that.'' \122\
    \120\ See Deposition of Richard L. Sullivan, June 4, 1997, pp. 124-
25. Sullivan also testified that ``the White House looked to her as 
some kind of advisor on Asian issues.'' Id. at p. 133.
    \121\ Id. at p. 125.
    \122\ Id.

          John [Huang] came . . . at some point in the late 
        spring of '96 and said that Pauline is ready to do her 
        part. She is thinking about doing between 300 and 500 
        [thousand dollars] in the next couple of months, do a 
        couple of events.\123\
    \123\ Id. at p. 126.

Principally, in or about the spring of 1996, Huang wrote to 
Kanchanalak to confirm setting up the June 18 coffee with 
President Clinton.\124\ Huang recommended that Kanchanalak 
``bring a couple of people to a coffee'' to this event.\125\
    \124\ See John Huang, Memorandum to Pauline Kanchanalak, undated 
(Ex. 44) (listing subject as ``Coffee'' on Tuesday, June 18m, 1996).
    \125\ Deposition of Richard L. Sullivan, June 4, 1997, p. 126. 
Huang's memorandum stated that ``[w]e look forward to seeing you and 
your guests at the White House coffee on Tuesday, June 18, 1996.'' Ex. 
    As noted, however, because Huang's original list of her 
invitees contained only three Thai executives from the C.P. 
Group,\126\ Sullivan grew concerned that Kanchanalak intended 
only to invite her foreign clients to the June 18 coffee. 
Sullivan expressed concern to Huang that Kanchanalak was using 
the coffee for an ``improper'' purpose by inviting only foreign 
businessmen,\127\ telling Huang that Kanchanalak needed to 
``invite potential donors, American citizens.'' \128\ Sullivan 
testified as follows:
    \126\ See Deposition of Richard L. Sullivan, June 4, 1997, p. 127.
    \127\ Id.
    \128\ Id. at pp. 127-28, 133.

        when John came up with a preliminary list of who she 
        was going to bring. It included--the list was her and 
        the three, the three people from Thailand. I said, John 
        that's not--I recall saying, John that's not what we're 
        looking for. I don't want to get--I said, I would 
        prefer--you know, I was thinking she was bringing in 
        some people, fellow people that she would be working 
        with in fund raising, some people that might be 
        potential donors, American citizens.

           *         *         *         *         *

          We want[ed] potential donors and to tell her to, at 
        least, get some more American citizens, more potential 
        donors, more people who are of greater use to us down 
        the road.\129\
    \129\ Id. at pp. 127-28.

    In response to these concerns, Sullivan recalled, Huang 
replied that the coffee was ``very, very important to 
[Kanchanalak],'' \130\ that he and Kanchanalak were ``adamant'' 
about having the coffee and ``insisted'' that the C.P. Group 
businessmen be permitted to attend.\131\ Indeed, the June 18 
coffee was the only time Sullivan could recall Huang 
``express[ing] some emotion'' about a particular event.\132\ 
According to Sullivan, Huang
    \130\ Id.
    \131\ Id. at pp. 128 & 132.
    \132\ Id. at pp. 129 & 135.

        said something to the effect of, you know, as you know, 
        Richard, Pauline has been a big contributor, a big 
        supporter. It goes back to Vic Rayier and Ron Brown and 
        she is very high maintenance. She has been good to us 
        and she is making a--she is going to be good to us and 
        help us into the fall. This is important to her and I 
        feel strongly about it.\133\
    \133\ Id. at 129-30.

In effect, therefore, Kanchanalak's continued contributions to 
the DNC rode upon whether or not she was permitted to entertain 
her Thai clients at the White House.
    Ultimately, however, Kanchanalak reacted to Sullivan's 
concerns by inviting two U.S. citizens to the coffee: Dr. Karl 
Jackson (the president of the USTBC) \134\ and Clarke Wallace 
(its executive director).\135\ Sullivan still had concerns 
about the propriety of Kanchanalak's coffee, suspecting--
correctly, as it turned out--that neither Jackson nor Wallace 
would contribute to the DNC.\136\ Despite Sullivan's continued 
reservations, however, Marvin Rosen approved the coffee.\137\
    \134\ Jackson--who in addition to being the president of the USTBC 
served as director of the Southeast Asia Program of the Johns Hopkins 
School of Advanced International Studies--had previously worked as 
Assistant to the Vice President for National Security Affairs from 1991 
to 1993. Prior to that, he was the Special Assistant to the President 
for National Security Affairs and Senior Director for Asian Affairs at 
the National Security Council (``NSC''). He also served as Deputy 
Assistant Secretary of Defense for East Asia from 1986-1989. Jackson 
has been employed by Foreign Exchange Concepts since January 1993. See 
Karl Jackson, Curriculum Vitae (Ex. 45). As President of the USTBC, Dr. 
Jackson worked with Wallace and Kanchanalak. Testimony of Dr. Karl 
Jackson, Sept. 16, 1997, pp. 4-5.
    \135\ Deposition of Richard L. Sullivan, June 4, 1997, pp. 129, 
    \136\ Id. at p. 144. Sullivan also expressed concerns that there 
might be negative press if the President had a small coffee with 
foreigners. See Deposition of Richard L. Sullivan, June 5, 1997, p. 81.
    \137\ Deposition of Richard L. Sullivan, June 4, 1997, p. 135.
            (4) Huang openly solicited contributions
    According to Jackson and Wallace, the two U.S. citizens 
invited at the last minute \138\ to the June 18 White House 
coffee by Pauline Kanchanalak in order to assuage Sullivan's 
concerns about fundraising impropriety, Huang explicitly 
solicited DNC contributions at this event in the presence of 
the President.
    \138\ Jackson received his invitation from Kanchanalak through 
Wallace approximately one or two days prior to the coffee. Jackson 
testimony, p. 5.
    Jackson, who had agreed to attend the coffee in the hope 
that he would have the opportunity to discuss with the 
President the possibility of a Presidential visit to 
Thailand,\139\ met Kanchanalak and Wallace outside the White 
House, where she introduced Jackson to Huang for the first 
time.\140\ While entering the White House security check point, 
Jackson overheard Kanchanalak and Huang discussing the 
DNC.\141\ In fact, Kanchanalak pulled Jackson aside before they 
entered the White House and explained to him that this coffee 
was sponsored by the DNC; \142\ prior to that point he had been 
unaware of any DNC role.\143\ While on their way to the Map 
Room--where the coffee was ultimately held--Jackson met 
Kanchanalak's clients from the C.P. Group: Khun Dhanin, Khun 
Sumet, and their interpreter, Khun Sarasin.\144\ At the Map 
Room, Jackson met Director of White House Personnel Bob Nash, 
Don Fowler, Marvin Rosen, Robert Belfer, and Beth 
Dozoretz.\145\ Jackson was surprised by the attendance of high-
level DNC representatives such as Fowler because, as a former 
official in the Bush Administration, Jackson was aware that it 
was illegal to conduct fundraising inside the White House.\146\
    \139\ Id. at p. 5.
    \140\ Id. at p. 6.
    \141\ Id. at p. 7.
    \142\ Id.
    \143\ Id.
    \144\ Id.
    \145\ Id. at pp. 8-9.
    \146\ Id. at pp. 14-15.
    Once they had been joined by the President and everyone was 
seated in the Map Room, Jackson recalled that Fowler stood up 
and welcomed everyone.\147\ Jackson then recalled the following 
sequence of events:
    \147\ Id. at pp. 10-11.

          Fowler said, ``It's a pleasure to welcome all of you 
        here to this coffee on behalf of the Democratic 
        National Committee, and these coffees are important so 
        that the President can maintain contact with people. 
        This is particularly--this is important, but it is 
        particularly important in an election year and this is 
        an election year, arguable [sic] the most important 
        since the one that brought Abraham Lincoln to this 
        house.'' \148\
    \148\ Id. at pp. 10-11.

After these introductory remarks by the DNC Chairman, Jackson 
testified, the party's Vice Chair for Finance gave some brief 
comments of his own:

          Huang stood up and said that he would like to 
        reiterate the welcome of Chairman Fowler and that he 
        agreed with Chairman Fowler that this was an election 
        year, and he went on to say, ``Elections cost money, 
        lots and lots of money, and I am sure that every person 
        in this room will want to support the re-election of 
        President Clinton.'' \149\
    \149\ Id. at pp. 10-11.

Wallace confirms the substance of these remarks.\150\ Jackson 
was shocked that the DNC had sponsored the June 18th coffee 
and, in particular, found Huang's statements entirely 
inappropriate.\151\ It seemed clear to him that Huang's 
comments were a solicitation for political contributions, and 
he was astounded such statements had been made in the presence 
of the President.\152\
    \150\ Wallace recalled, however, that Huang's statements may have 
been made toward the end of the coffee rather than at its outset. 
Testimony of Clarke Wallace, Sept. 16, 1997, pp. 105-07. Jackson's and 
Wallace's recollection of the timing of Huang's statements may differ, 
but their memory of the substance of his statements is entirely 
    \151\ Jackson testimony, pp. 10-12.
    \152\ Id. at pp. 14-15. This testimony is thus far the only direct 
evidence of DNC solicitations for money in the White House. Other 
solicitations may well have occurred. WHCA's videotape of an April 1996 
White House coffee, for example, shows DNC Chairman Fowler commencing 
his welcoming remarks to the guests by praising them as ``loyal and 
generous supporters.'' White House Communications Agency videotape, 
April 1, 1996. As it was WCHA's practice--in the 44 tapes of White 
House coffees hitherto released by the White House--to videotape only 
the first few moments of each coffee, however, no record is available 
of the rest of Fowler's comments to these ``generous'' donors assembled 
at the White House on that occasion.
    The coffee lasted for approximately 90 minutes, with the 
C.P. Group officials speaking for most of the time.\153\ 
Jackson also recalled that he and Kanchanalak spoke 
briefly.\154\ During the course of the coffee, Jackson recalled 
that someone raised the possibility that the President might 
stop in Thailand while in Asia to attend the upcoming APEC 
summit.\155\ After hearing this comment, Jackson passed an 
encouraging note to the President, stating that were this to 
occur, President Clinton would be the first President since 
Richard Nixon to visit Bangkok.\156\
    \153\ Jackson testimony, pp. 12-13.
    \154\ Id. at p. 13.
    \155\ Id. at pp. 13-14.
    \156\ Id.
    Jackson's recollection of the events at the June 18th 
coffee is supported by sworn affidavits submitted by two of his 
close associates, R. Roderick Porter and John Taylor, 
respectively the President and Chairman of Foreign Exchange 
Concepts--who recall Jackson's contemporaneous accounts of the 
coffee.\157\ According to Porter, just after Jackson returned 
from the coffee on June 18, 1996,
    \157\ See Affidavit of R. Roderick Porter, Sept. 15, 1997 (Ex. 46); 
Affidavit of John Taylor, Sept. 15, 1997 (Ex. 47). Porter has known 
Jackson personally and professionally since January 1993 and they 
shared the same office in the summer of 1996. See Ex. 46.

          [he] explained that he had just attended a small 
        White House coffee with, among other people, the 
        President, members of the Charoen Pokaphand Group 
        Company, Ltd. (``C.P. Group''), Don Fowler and other 
        gentlemen affiliated with the Democratic National 
          Dr. Jackson stated that he believed the event was an 
        improper solicitation for money by the DNC in the White 
        House. Dr. Jackson explained that he was upset because 
        one of the gentlemen affiliated with the DNC had 
        solicited money in the White House in the presence of 
        the President.\158\
    \158\ Id.

``[W]ithin a day or two of June 18, 1996,'' Taylor recounted, 
Jackson expressed the view that he ``believed that the White 
House coffee was an improper `shakedown' for money from the 
foreign businessmen in the presence of the President.'' \159\
    \159\ Ex. 47.
    The credibility of Jackson's testimony, which of course 
reflects badly upon Kanchanalak, is further bolstered by his 
continuing personal and professional relationship with 
her.\160\ He speaks with Kanchanalak over the phone a few times 
each month and believes they continue to have a good working 
relationship.\161\ Far from having any interest in hurting his 
colleague after the June 18 coffee, in fact, Jackson has gone 
out of his way to help Kanchanalak. After Kanchanalak told him 
that she was closing Ban Chang International because of 
negative publicity surrounding her participation in the June 18 
coffee, for example,\162\ Jackson opened a new company, Global 
Investments, Inc., with Kanchanalak as its only client.\163\
    \160\ See Jackson testimony, p. 19.
    \161\ Id. at pp. 15 & 19. At no point before giving his testimony 
before the Committee had Jackson spoken with Kanchanalak about what 
transpired at the June 18 White House coffee. Id. at p. 15.
    \162\ Id. at p. 18.
    \163\ Id. at pp. 112-13.
    Significantly, Wallace's \164\ recollection of the June 18 
coffee corroborates the essentials of Jackson's account. 
Wallace knew that Kanchanalak was a financial contributor to 
the DNC, and was told by Usma Kahn, a BCI employee, that 
Kanchanalak was also a DNC Managing Trustee.\165\ Indeed, 
building upon her relationship with the DNC, Kanchanalak 
occasionally provided Wallace and other employees the 
opportunity to attend White House events,\166\ among them a 
White House ceremony in the summer of 1995 on the occasion of 
the President's departure on a trip to Michigan.\167\ Wallace 
also knew that Duangnet Kronenberg dealt with the DNC on 
Kanchanalak's behalf, and that she would call the DNC to 
arrange for business associates and other individuals to attend 
White House events, among them White House tours, Presidential 
radio addresses, and the annual White House Easter Egg 
Roll.\168\ In addition, Wallace recalled that Susan Lavine and 
Lorin Supina, both DNC affiliates, frequently called for or 
visited Kanchanalak, and that Kanchanalak attended business-
related events at the White House attended by the President or 
the First Lady.\169\
    \164\ Clarke Wallace graduated from the University of Virginia in 
1990 and then taught English in Thailand for approximately eight 
months. After interviewing with Kronenberg and Kanchanalak, Wallace 
began working for the USTBC on March 1, 1995. See Deposition of Clarke 
Wallace, August 27, 1997, p. 5. The USTBC shared office space with 
Kanchanalak's company, Ban Chang International (``BCI''), which was 
engaged in the development of new business relating to Thailand (i.e., 
establishing franchises and joint ventures between U.S. and Thailand 
businesses) and which has the C.P. Group as one of its most important 
clients. (As a result of sharing offices, employees of USTBC helped 
with certain BCI matters, such as answering the phone and general 
clerical work.) For a period of time, BCI also shared office space with 
Ban Chang Group (owned by Chupong Kanchanalak) in Bangkok. Id. at pp. 
    \165\ Id. at p. 16.
    \166\ Id. at pp. 17-18.
    \167\ Id.
    \168\ Id. at pp. 18-20.
    \169\ Id. at pp. 21-22 & 26.
    Wallace also noted that Huang visited and called 
Kanchanalak at BCI's offices.\170\ In fact, Wallace remembered, 
Huang visited BCI's offices and had a private meeting with 
Kanchanalak only a day or two before the June 18 Coffee.\171\ 
After the meeting, Wallace learned from Kanchanalak that she 
was arranging a coffee at the White House for the chairman of 
the C.P. Group.\172\ She then asked Wallace to attend the 
coffee as well, and told Wallace to inform Jackson that he also 
was invited to attend.\173\ In instructing Wallace to invite 
Jackson, however, Kanchanalak behaved somewhat oddly, 
requesting that Wallace not follow the usual procedure of 
sending Jackson a written memorandum. Instead, Kanchanalak 
requested that Wallace telephone Jackson in order to discuss 
the White House visit.\174\
    \170\ Id. at p. 26.
    \171\ Id. at p. 31-32.
    \172\ Id. at p. 32. The C.P. Group delegation arrived in 
Washington, D.C. a day before the coffee and left D.C. approximately 
two days after the coffee. See Id. at pp. 58-59. It appears that the 
June 18 coffee was a primary reason the C.P. Group's executives came to 
    \173\ Id.
    \174\ Id. at p. 33. Jackson maintained a separate office from the 
USTBC in June of 1996.

          She said at some point not to fax information to Karl 
        but call him on the phone because this was a really 
        unique, special opportunity and not everyone gets to do 
        this sort of thing and just exercise caution by just 
        telling him on the phone.\175\

    \175\ Id. at pp. 32-33. Kanchanalak also indicated someone might 
have the opportunity to fly on Air Force One to Thailand. Id. at p. 34.

On the day of Kanchanalak's meeting with Huang, Wallace also 
saw a seating chart for the coffee in Kanchanalak's 
    \176\ Id. at p. 42.
    Most significantly, Wallace confirmed Jackson's 
recollection that Huang solicited contributions at the June 18 
coffee. Wallace had met Huang once or twice before the coffee 
and knew that he had worked for the Department of 
Commerce.\177\ At the coffee, Wallace learned that Huang no 
longer worked at the Department of Commerce, and that he was 
now working for the DNC--and least through the 1996 
election.\178\ Once inside the Map Room, Wallace also met 
Dozoretz, Rosen, Fowler and Nash,\179\ and recalls thinking at 
the time that Kanchanalak must have been very important to the 
DNC in order for Rosen and Fowler to attend.\180\ Wallace 
thought it odd to have so many DNC officials at the coffee, and 
had the (correct) impression that the coffee had been arranged 
in conjunction with the DNC.\181\
    \177\ Id. at pp. 30-31.
    \178\ Id. at pp. 43-44.
    \179\ Id. Wallace knew Fowler was Chairman of the DNC and he 
learned that Rosen was ``Chairman of Finance'' for the DNC at the 
coffee. Id. at pp. 45-46.
    \180\ Id. at p. 46.
    \181\ Id. at pp. 47-48.
    According to Wallace, after some opening remarks by Fowler, 
a brief statement by the President, and Kanchanalak's 
introductions of the Thai officials, C.P. Group Chairman Dhanin 
Chearavanont spoke for approximately 30 minutes.\182\ After 
this, Jackson and Belfer posed some brief questions.\183\ As 
Wallace later recounted, the President then introduced him to 
the assembled guests, describing Huang as ``someone who [was] a 
friend and someone who had done a lot of good work for the 
Democratic National Committee.'' \184\
    \182\ The topics discussed by Chearavanont included how U.S. 
companies could successfully conduct business in China and the pending 
transfer of Hong Kong to China. Id. at p. 53.
    \183\ Id. at pp. 52-54.
    \184\ Id. at pp. 54-55.

          And then John Huang spoke and he said that the 
        President, thank you very much for being here, 
        President, and I think speaking more to the table, he 
        said, as you know, he said, this President is the right 
        man to lead the country into the 21st century, into the 
        next millennium, and I think we have one small hurdle 
        or something like that, which is the election in 
        November and I'm sure you all will do everything you 
        can to support that, support the-everyone at this table 
        will do what they can to support the President.\185\
    \185\ Id.

Wallace also recalled that Huang probably made a comment about 
``how expensive elections were.'' \186\
    \186\ Id. at p. 56.
    To Wallace, as to Jackson, Huang's comments had very clear 
implications: the DNC was asking the President's coffee guests 
for campaign contributions. These remarks seemed to be aimed at

        [h]elping to either to help to raise the money or help 
        to strengthen the DNC somehow either through networking 
        to get people to support the President or to networking 
        to get people to give donations.\187\
    \187\ Id. at p. 55.

  After recounting the events of June 18 reviewing the relevant 
documentation, Wallace concluded that the coffee had been a 

          Q: Now, you've seen checks from a P. Kanchanalak the 
        day after the coffee for $85,000 and a week or so later 
        for $50,000 and you've now seen a DNC document 
        projecting incomes from a variety of different coffees, 
        you were at the coffee, you gained an impression and 
        sense of the things that were at the coffee. Seeing all 
        that, as you sit here today, do you have an 
        understanding of what exactly was going on at this 
        coffee, at this particular June 18th coffee you 
          A: It appears it was a Fundraiser.\188\
    \188\ Id. at pp. 85-86.

    After the coffee concluded and the C.P. Group executives 
left the White House, Jackson, Wallace and Kanchanalak went to 
the NSC offices in the Old Executive Office Building to visit 
Bill Wise, who had worked for Jackson when he was Assistant to 
the Vice President for National Security Affairs.\189\ Wise was 
surprised to hear that the President had just hosted a meeting 
with senior executives from Thailand's C.P. Group. Wise had no 
prior knowledge of this event or the visit of the Thai 
businessmen,\190\ and could find no mention of this event on 
the NSC's schedule for the President.\191\ Jackson found the 
NSC's ignorance of the meeting troubling; during the Bush 
Administration, it was his understanding that the NSC was kept 
informed of the President's schedule--and that policy-making 
and fundraising were considered separate activities.\192\ The 
NSC's ignorance in this case increased Jackson's suspicion that 
the DNC and the President had used the coffee to improperly--
perhaps even illegally--solicit campaign contributions in the 
White House.\193\
    \189\ See Jackson testimony, p. 30.
    \190\ Id. at pp. 30-31.
    \191\ Id. Richard Sullivan claims to have understood that Karen 
Hancox of the White House Political Affairs Office had vetted the June 
18th coffee attendees with the NSC. See Deposition of Richard L. 
Sullivan, June 4, 1997, p. 137. See also the section of this report on 
White House vetting procedures.
    \192\ Jackson testimony, pp. 91-92.
    \193\ Id. at pp. 49-50.
            (5) Other attendees' recollections
    The other persons attending at the June 18 Coffee--
Dozoretz, the Belfers, Rosen, Fowler, and Nash--claimed not to 
recall hearing Huang solicit DNC contributions in the Map Room. 
On this point, however, their memory may be influenced by their 
strong affiliations with the DNC, the White House, or both. 
More importantly, while they cannot recall Huang making the 
remarks recounted in detail by Jackson and Wallace, these other 
attendees recall so little else of substance concerning the 
coffee that their lack of memory in this particular respect is 
hardly surprising.
    Dozoretz was the DNC fundraiser responsible for the 
Belfers' invitation to the coffee. She was a successful DNC 
fundraiser and a personal friend of the President and the First 
Lady.\194\ She was a founding member of the Women's Council for 
the Senate, and had helped organize the DNC Women's Leadership 
Forum in 1993.\195\ Dozoretz and her husband raised 
approximately $120,000 for the Clinton/Gore campaign in 
1992.\196\ Between 1992 and 1996, Dozoretz and her husband 
personally contributed over $100,000 to Democratic campaigns 
and candidates and helped arrange corporate contributions to 
the Democratic Party totaling approximately $200,000.\197\ She 
consistently earned the status of DNC Managing Trustee between 
1992 and 1996, either by personally contributing more than 
$50,000 or by raising in excess of $250,000 annually. In fact, 
she chaired the DNC Managing Trustee program for approximately 
10 months.\198\ Dozoretz's other fundraising achievements 
include: raising approximately $100,000 at the kick-off event 
for Clinton/Gore '96; \199\ planning a tea event for the First 
Lady in October of 1995 for women who had raised a minimum of 
$5,000; \200\ and raising more than $2 million for Democratic 
gubernatorial, U.S. Senate, and Presidential candidates since 
1994.\201\ Dozoretz also spoke frequently with White House 
officials such as Harold Ickes, Maggie Williams,\202\ Doug 
Sosnik,\203\ Evelyn Lieberman,\204\ and Ron Klain \205\ about 
her DNC fundraising activities.
    \194\ See Dozoretz deposition, pp. 12-16. Indeed, Dozoretz played 
golf with the President the day before her deposition by the Committee 
and less than two weeks prior to her hearing testimony. Id. at p. 72.
    \195\ Id. at pp. 8, 12; see also Beth Dozoretz, personal statement 
and resume (Ex. 48).
    \196\ See Dozoretz deposition, p. 10.
    \197\ Id. at pp. 20-23. Dozoretz also is listed in the Vice 
President's DNC fundraising call sheets. See DNC Finance Call Sheet 
(Ex. 49).
    \198\ See Dozoretz Deposition, pp. 27, 29.
    \199\ Id. at pp. 32-33.
    \200\ Id. at p. 39.
    \201\ Id. at p. 43. Dozoretz also attended two gatherings at local 
D.C. hotels to review DNC television advertisements. The first meeting 
was in the fall of 1995 and consisted of less than twenty people 
(including the President, Rosen and Fowler). Id. at pp. 56-58. The 
group previewed advertisements, and Rosen explained the need to raise 
extra money to pay for them because of their extraordinary expense. Id. 
at p. 61. The second meeting was in the spring of 1996 and celebrated 
the success of the advertisements. Id.
    \202\ Id. at p. 47.
    \203\ Id. at p. 48.
    \204\ Id. at pp. 128-29.
    \205\ Id. at p. 129.
    In March or April of 1996, Robert and Renee Belfer agreed 
to contribute $100,000 to the DNC through Dozoretz.\206\ Belfer 
contributed the first $50,000 of this total in May of 
1996,\207\ contributing an additional $40,000 after the June 18 
coffee. Renee Belfer's sister contributed the final $10,000, 
which was credited toward the Belfers' $100,000 
commitment.\208\ At the time Robert Belfer made the $100,000 
commitment, Dozoretz told him it was possible he would be able 
to meet with the President. Belfer claimed not to have believed 
that this contribution was a quid pro quo for the meeting,\209\ 
but Dozoretz confirmed that although no specific amount was 
explicitly requested, guests at such coffees were expected to 
make substantial contributions:
    \206\ See Deposition of Robert Belfer, Sept. 6, 1997, pp. 8-9.
    \207\ Id. at p. 9.
    \208\ Id. at p. 70.
    \209\ Id. at p. 37.

          I don't think somebody would really be considered to 
        attend (a coffee) if they hadn't contributed at a 
        significant level. It could have been $25 (thousand). 
        It could have been 50 (thousand), but conversely, it 
        was not that if you--if you contributed X-amount of 
        dollars, you would go to one of these gatherings.\210\
    \210\ See Dozoretz deposition, p. 79.

    Richard Sullivan was aware of Dozoretz's fundraising 
endeavors on behalf of the DNC.\211\ Indeed, it was Sullivan 
who involved her in the June 18 event, calling Dozoretz 
approximately two weeks beforehand to inform her that she and 
the Belfers might be able to attend a White House coffee.\212\ 
At this point, however, Dozoretz was unsure of the event's 
exact location and time.\213\
    \211\ Id. at p. 46.
    \212\ Id. at pp. 88-89.
    \213\ Id. at pp. 89-90.
    In contrast to the specific recollections of Jackson and 
Wallace, in their testimony to the Committee, Dozoretz and the 
Belfers had only a vague memory of the details of the June 18 
coffee. The Belfers could not say, for example, how long in 
advance of the coffee Sullivan had first contacted them, and 
remembered few details of the coffee itself.\214\ Neither 
Dozoretz nor Belfer could recall Huang soliciting contributions 
at the June 18 coffee as recounted by Jackson and Wallace.\215\ 
Indeed, though she professed to be quite certain that Huang had 
not solicited money in the White House, Dozoretz could 
apparently remember nothing else about the remarks made at the 
coffee. She could not recall, for example, the substance of 
Fowler's opening remarks,\216\ anything of what Kanchanalak 
said to the assembled guests,\217\ anything of what Jackson 
said,\218\ or whether there were any closing remarks at 
all.\219\ Dozoretz could not even remember anything of what the 
President himself had said at the coffee.\220\
    \214\ See Belfer deposition, pp. 12-13.
    \215\ See Dozoretz deposition, pp. 116-17; Belfer deposition, p. 
25. Dozoretz testified that ``[i]f he said anything, it was 
inconsequential.'' See Dozoretz deposition, p. 117. She did not recall 
Huang saying anything about the election, id. at pp. 142-43, or 
expressing the hope that everyone at the coffee would ``support'' the 
President. Id. at p. 143. Dozoretz stated that if Huang had made those 
types of statements she would have been upset because she ``had two of 
[her] donors in the room'' and she ``would have been very sensitive to 
anything that would have been brought up about [her] donors being 
solicited by anybody but [her].'' Id. at p. 143.
    \216\ Id. at p. 108.
    \217\ Id. at pp. 109 & 118.
    \218\ Id. at p. 114.
    \219\ Id. at p. 116.
    \220\ Id. at p. 118.
    It is also noteworthy that Dozoretz had meetings with 
Robert and Renee Belfer and with White House attorneys before 
her interview and deposition before the Committee. Dozoretz had 
conversations with former Counsel to the President Jack Quinn 
and with White House Special Counsel Lanny Breuer for example, 
prior to her meetings with Committee staff.\221\ Dozoretz also 
admitted that she had spoken with the Belfers about the June 
18, 1996 coffee before they met with Committee staff.\222\
    \221\ Id. at pp. 68-72.
    \222\ Id. at pp. 148-49.
    For his part, DNC Finance Chairman Marvin Rosen recalled 
attending the June 18 coffee with Kanchanalak, Belfer, Dozoretz 
and Huang.\223\ As with Dozoretz and the Belfers, he could not 
recall anyone ``making any comment relating to solicitation of 
funds for the DNC and/or the Clinton/Gore campaign at that 
coffee,'' \224\ and did not remember Huang ``making any 
statement at the coffee.'' \225\ He also did not recall 
Kanchanalak making any remarks.\226\ His only recollection of 
the President's role was that the President addressed the 
group; he did not remember anything about what the President 
said.\227\ Rosen also testified that while he was not sure what 
he believed at the time of the June 18 coffee, he now believed 
that Kanchanalak may have used her clients attendance at the 
coffee to meet her commitment to raise a certain amount of 
funds for the DNC.\228\
    \223\ See Deposition of Marvin S. Rosen, May 19, 1997, pp. 48-49.
    \224\ Id. at p. 49.
    \225\ Id.
    \226\ Id. at p. 50.
    \227\ Id. at p. 51.
    \228\ Id. at p. 255.
    If anything, the memories of DNC Chairman Donald Fowler and 
White House Director of Presidential Personnel Bob Nash were 
worse than that of Dozoretz, the Belfers, and Rosen. Fowler 
remembered attending the June 18 coffee,\229\ but claimed to 
have no clear recollection of it.\230\ In fact, Fowler said 
that he could not recall whether Huang had attended this 
event--or even whether any of the other guests had done 
so.\231\ Like Fowler, Nash could recall essentially nothing 
about the coffee. He could not remember the date of the event 
or the names of all the attendees,\232\ he could not recall any 
of the specific topics discussed by the C.P. Group executives, 
and he did not know whether the President had made any opening 
statement.\233\ Since they could essentially recall nothing 
about the June 18 coffee at all, their failure to remember the 
Huang solicitation detailed by Jackson and Wallace is hardly 
surprising.\234\ Jackson's and Wallace's testimony about the 
June 18 coffee, therefore, stands uncontradicted.
    \229\ See Deposition of Donald L. Fowler , May 21, 1997, p. 135.
    \230\ Id. at p. 311.
    \231\ Id. at pp. 135-36.
    \232\ Deposition of Bobby Nash, June 25, 1997, p. 268.
    \233\ Id. at pp. 272-73.
    \234\ See, e.g., id. at p. 275.
            (6) Possible withholding or destruction of evidence
    On or about January 1, 1997, Ban Chang International was 
closed.\235\ In December 1996, FBI agents visited BCI's offices 
in the execution of a criminal search warrant, acting on 
information suggesting that the company may have been 
destroying documents sought by federal investigators.\236\ 
Before the company closed, BCI employee Usma Kahn removed 
information from Ban Chang files pertaining to projects 
intended for a new company called Global Investments.\237\ It 
is not known what happened to these files.\238\ In addition, an 
outside contractor (who was a friend of Kahn) removed certain 
related information from BCI's computer hard-drives, copying it 
onto diskettes.\239\ These also seem to have disappeared.\240\ 
According to Wallace, such removal of information from the hard 
drives was unusual.\241\ More ominously, after the FBI raid, 
Kanchanalak told Wallace that he would need a lawyer; she even 
offered to help pay for one. In a telephone conversation, 
    \235\ See Wallace deposition, p. 63.
    \236\ Id. at p. 71.
    \237\ Id. at p. 64.
    \238\ See id. at p. 65.
    \239\ Id. at pp. 65-66.
    \240\ Wallace did not know what Kahn did with the diskettes and did 
not have access to the diskettes when responding to the Committee's 
subpoena. Id. at pp. 66-68.
    \241\ Id. at p. 69.

        told her about the FBI raid, I told her about the 
        interest [in] the C.P. Group and our donations and she 
        mentioned the fact that I needed a lawyer to represent 
        me and she talked about how she may be able to help 
        financially and then we talked about the U.S. Thailand 
        Business Council projects like four or five things I 
        was working on. And she had some knowledge of them 
        because she was in Thailand and was working with Jeb.

           *         *         *         *         *

        [Kanchanalak then] told me . . . to be careful about, 
        you know, what I, be careful when I think about what I 
        remember about the coffee because it could end up being 
        very controversial or cause some problems for 
    \242\ Id. at pp. 72 & 74-76.

Furthermore, before Wallace was to testify before a federal 
grand jury inquiring into campaign finance abuses, Kanchanalak 
proposed helping him with financial expenses resulting from 
investigations into possible wrongdoing in connection with the 
June 18 coffee.\243\ Wallace, however, declined both this offer 
of money and Kanchanalak's suggestion that he ``be careful'' 
about ``what I remember about the coffee.''
    \243\ Id. at pp. 76-77.


    There can be no question that the DNC used White House 
coffees, overnight stays, and other White House perquisites as 
explicit fundraising events to pay for the extraordinarily 
expensive media campaign the Democratic Party deemed necessary 
to save President Clinton and Vice President Gore from 
electoral defeat in 1996. For this reason, as George 
Stephanopoulos put it, money ``became a near obsession at the 
highest levels'' of the DNC and in the White House. Driven by 
this ``obsession,'' the DNC and White House ``pulled out all 
the stops'' to raise money, and were not above using the White 
House for this purpose \244\--just as Terry McAuliffe had 
suggested in his 1994 proposal for various DNC fundraising 
``projects.'' \245\ While not every overnight visit and White 
House coffee served this purpose, DNC and White House documents 
and witness testimony show that the Democratic Party and the 
White House unquestionably organized certain coffees and other 
events in the White House specifically as fundraisers--even to 
the point of assigning ``projected revenue'' totals, assigning 
``Fundraiser Codes,'' and tracking contributions given in 
connection with each event.\246\ These events netted 
approximately $31.5 million for the DNC.
    \244\ Stephanopoulos, supra note 2.
    \245\ See also the section of this report on the White House's 
thirst for money during the 1995-96 election cycle.
    \246\ It is illegal to solicit campaign contributions on government 
property. See 18 U.S.C. ' 607.
    The May 1, 1996 coffee, was but one example of what Alan 
Patrikoff described as the DNC's use of coffees in its 
``fundraising methodology.'' There is no question, therefore, 
that the May 1, 1996 Oval Office coffee was a DNC fundraising 
event. Its participants were invited only after they had each 
pledged to give $100,000 to the Democratic Party; these 
commitments were well known to the event's DNC organizers, and 
the President himself was informed of them in advance of the 
meeting. Nor is there any serious question that these donations 
and the invitations to the May 1 group were causally connected. 
The organizer of the group, Barrie Wigmore, urged at least one 
of its participants, for example, to make a contribution as 
part of this group because doing so would make possible a visit 
with President Clinton. Wigmore, in turn, had himself been told 
by DNC fundraisers that the Democratic Party used White House 
coffees as part of its ``fundraising methodology''--as a way to 
elicit donations from ``key people''--and knew that the DNC 
considered the May 1 event to be just such a coffee. It was, in 
other words, what Lewis Manilow termed a ``money coffee,'' 
which occurred in the Oval Office itself, an undeniably 
``public'' space within the White House complex. This coffee 
constitutes, therefore, the first instance uncovered by the 
Committee of President Clinton's use of the Oval Office as part 
of his party's ``fundraising methodology.''
    If anything, the June 18, 1996 coffee was an even more 
blatant and inappropriate use of the White House for DNC 
fundraising. It was organized, over the objections of the DNC's 
finance director, in order to provide an opportunity for the 
President to meet with business executives from Thailand's C.P. 
Group in return for donations from and arranged by Pauline 
Kanchanalak, who herself funded these contributions with money 
from sources in Thailand. The specific details of how and why 
this coffee came about remain unclear because the three key 
figures--Huang, Kronenberg, and Kanchanalak--have either 
invoked their Fifth ``Amendment privilege against self-
incrimination or have simply fled the country.
    Moreover, when all the evidence is considered, it appears 
that at this June 18 coffee, Huang openly asked for DNC 
contributions in the Map Room at the White House, in the 
presence of the President. Jackson and Wallace had a clear, 
vivid, and consistent recollection of Huang's solicitation. The 
Minority has alleged that Jackson invented this story out of 
partisan animus supposedly originating in his status as a 
registered Republican and as a former assistant to former Vice 
President Dan Quayle. As recounted above, however, Jackson's 
testimony is supported by Wallace--who has never contributed to 
either party--and is corroborated by sworn statements from 
Jackson's business associates attesting to his consistent and 
contemporaneous memory of these events. Both Jackson and 
Wallace, in fact, continue to maintain personal friendships and 
business relationships with Kanchanalak. By contrast, Dozoretz 
and the Belfers are fervent supporters of the President and the 
DNC, and raised or contributed several hundred thousand dollars 
on behalf of the Democratic Party in 1996 alone. Moreover, 
neither Dozoretz nor any of the other guests apparently 
remember enough detail about the events of June 18 to be able 
to say anything about it with certainty--and certainly not 
enough to enable them to cast serious doubt upon the Jackson 
and Wallace accounts simply on the strength of their claimed 
inability to recall Huang's comments. At this point, the only 
people who might be able to clarify this matter have refused to 
cooperate with the Committee: Huang has invoked the Fifth 
Amendment, Kanchanalak has fled the country, and President 
Clinton has declined to testify.

                 Fundraising-Calls From the White House

    In the aggressive drive to raise funds to support the DNC's 
advertising on behalf of the President, new ways were found to 
solicit contributors, such as using the public facilities of 
the White House to host coffees and other fund-raising events. 
In addition, the President and the Vice President made fund-
raising telephone calls from the White House.\1\ In fact, 
evidence suggests that the Vice President himself was the 
originator of the idea that he make such calls.\2\ In 
furtherance of these plans, DNC Finance Chair Marvin Rosen, 
Finance Director Richard Sullivan, and others within the DNC's 
Finance Division prepared ``call sheets'' for the President, 
Vice President, and First Lady to suggest potential donors whom 
they might contact, and to encourage them to actually make the 
    \1\ There is evidence suggesting that the First Lady also may have 
made fund-raising phone calls. Memoranda received by the Committee from 
the DNC indicated that there was some consideration given to having the 
First Lady make fund-raising telephone calls in the period of late 
1995. Memorandum from Terence R. McAuliffe to Harold Ickes October 22, 
1994 (Ex. 1), and 12 additional call sheets were also received from the 
    The Committee interviewed by telephone a number of the potential 
donors listed on those call sheets. Based on this work, the Committee 
concludes that it was unlikely that the First Lady actually made any of 
the fund-raising telephone calls contemplated by the call sheets.
    \2\ In re Albert Gore, Jr., Notification to the Court Pursuant to 
28 U.S.C. Sec. 592(b) of Results of Preliminary Investigation, Dec. 2, 
1997, p. 7 (Ex. 2).
    \3\ Deposition of Marvin Rosen, May 19, 1997, pp. 107-29; 
Memorandum from Don Fowler et al. to Harold Ickes, November 20, 1995 
(Ex. 3); Memorandum from Harold Ickes to the President and the Vice 
President, November 28, 1995 (Ex. 4); Deposition of Richard Sullivan, 
June 4, 1997, pp. 178-99; Memorandum from John Raffaelli to Richard 
Sullivan (undated) (Ex. 5).
    The fund-raising calls became an issue in the investigation 
because a federal felony statute, 18 U.S.C. Sec. 607, prohibits 
soliciting or receiving political contributions in a federal 
workplace.\4\ In the early stages of the investigation, and as 
explained more fully below, the Committee discovered that the 
President and Vice President may have made fund-raising 
telephone calls from the White House, thereby potentially 
implicating section 607.
    \4\ 18 U.S.C. Sec. 607 is quoted and discussed infra.

                  Evidence of Fund-raising Phone Calls

Vice President Gore
    On March 2, 1997, an article by Bob Woodward entitled 
``Gore Was `Solicitor-in-Chief' in '96 Reelection Campaign'' 
appeared on the front page of The Washington Post. This was 
among the first of a series of articles in numerous 
publications that detailed the Vice President's fund-raising 
activities during the 1996 campaign. The picture that emerged 
from these articles was one of the Vice President being among 
the most aggressive, and enthusiastic, fund-raisers within the 
Clinton/Gore '96 re-election team. The Woodward article 
described a number of instances in which the Vice President 
made fund-raising telephone calls. One unidentified donor who 
received such a call described the Vice President's sales pitch 
as ``revolting.'' Another stated that the call that he received 
from the Vice President had ``elements of a shakedown.'' \5\
    \5\ Bob Woodward, ``Gore was `Solicitor-in-Chief' in '96 Reelection 
Campaign,'' The Washington Post, March 2, 1997, pp. A1, A18.
    On the afternoon of March 3, 1997, and in response to a 
number of press inquires regarding his fund-raising activities 
which had been posed earlier in the day to White House Press 
Secretary Mike McCurry, the Vice President went to the White 
House press room for an impromptu press conference. In this 
press conference, it was revealed for the first time that the 
Vice President made some of the fund-raising phone calls from 
his White House office. Vice President Gore stated that he had 
charged the calls to a DNC credit card.\6\ The Vice President 
also stated his belief that everything he did regarding the 
calls was legal, but that he had decided, as a matter of 
policy, not to make such calls ever again. In the course of the 
press conference, the Vice President stated several times that 
he had asked potential donors ``to help raise campaign funds,'' 
``to ask people to make lawful contributions to the campaign,'' 
to ask potential donors ``to support our campaign,'' to ``help[ 
] to raise funds for the campaign,'' and ``to help raise money 
for the campaign.'' \7\
    \6\ The Vice President's office later issued a correction, stating 
that the Vice President had in fact used a credit card issued by the 
Clinton/Gore '96 campaign, not one issued by the DNC. (Of course, 
Clinton/Gore '96 can only accept contributions of ``hard money.'') In 
addition, the Committee later learned that a number of the calls had 
not been charged to any credit card at all, but rather were charged to 
official White House telephone bills. The DNC later reimbursed the 
government for the costs of such fund-raising calls that were 
originally charged to official government telephones. See infra, text 
accompanying notes 17-18.
    \7\ White House Press Release, Press Briefing by the Vice 
President, Mar. 3, 1997, pp. 1-2, 7-8. (Ex. 6).
    The Vice President was questioned extensively about the 
legality of making political fund- raising calls from his White 
House office. In response, the Vice President repeated seven 
times that he had been advised by his legal counsel that there 
was ``no controlling legal authority'' or case that proscribed 
his conduct in making these calls.\8\ Nonetheless, the Vice 
President acknowledged that in the past, he had taken conscious 
steps to make prior fund-raising calls--presumably of private 
persons not located in federal buildings--away from official 
telephones in the White House. ``I went to the DNC on one 
occasion I believe in October of 1994 to help raise money for 
the party.'' \9\
    \8\ Id. at pp. 2-7.
    \9\ Id. at p. 6.
    Based on this press conference, the Vice President's 
telephone calls were one of a number of subjects that a 
majority of the members of the Senate Judiciary Committee asked 
Attorney General Reno to investigate as possibly warranting the 
appointment of an independent counsel.\10\ The Judiciary 
Committee members believed that the facts known to date 
constituted specific and credible evidence that a covered 
person may have committed a federal crime.\11\ Specifically, 
the Judiciary Committee members suggested that the Vice 
President's fund-raising telephone calls might constitute a 
violation of 18 U.S.C. Sec. 607(a), which provides:
    \10\ Letter from Senator Orrin Hatch et al. to Attorney General 
Reno, March 13, 1997 (Ex. 7); see 28 U.S.C. Sec. 592(g)(1).
    \11\ See Ex. 7; 28 U.S.C. Sec. 591(b).

          It shall be unlawful for any person to solicit or 
        receive any contribution within the meaning of . . . 
        the Federal Election Campaign Act of 1971 in any room 
        or building occupied in the discharge of official 
        duties . . . Any person who violates this section shall 
        be fined under this title or imprisoned not more than 
        three years, or both.

    On April 14, 1997, however, the Attorney General rejected 
the Judiciary Committee members' request that she appoint an 
independent counsel to investigate, among other things, the 
Vice President's telephone fund-raising calls. She listed two 
reasons to support her view that there was no specific and 
credible evidence that the Vice President's telephone calls 
were illegal. First, in her view, section 607 ``specifically 
applies only to contributions as technically defined by the 
Federal Election Campaign Act (FECA)--funds commonly referred 
to as `hard money.' '' \12\ Second, she stated that ``there are 
private areas of the White House that, as a general rule, fall 
outside the scope of the statute, because of the statutory 
requirement that the particular solicitation occur in an area 
`occupied in the discharge of official duties.' '' \13\ Since 
there was no evidence that the Vice President's calls had 
raised hard money, and no evidence that the calls had been made 
from areas of the White House that fall within the statutory 
prohibition of section 607, the Attorney General declined to 
seek the appointment of an independent counsel.
    \12\ Letter from The Honorable Janet Reno to The Honorable Orrin G. 
Hatch, Apr. 14, 1997, p. 4 (emphasis in original) (Ex. 8).
    \13\ Id. at p. 5 (quoting 3 Op. Off. Legal Counsel 31 (1979)).
    As explained later in this section, the Committee rejects 
the Attorney General's reading of section 607 with respect to 
the scope of ``contributions'' that fall within its 
prohibition. Nevertheless, only a few months after her letter 
to Senator Hatch, the Committee learned that both of the 
factual premises for the Attorney General's declination of the 
appointment of an independent counsel were wrong. The Justice 
Department had apparently assumed these facts without 
investigating them.
    DNC General Counsel Joseph Sandler provided the Committee 
with critical testimony regarding the Vice President's phone 
calls. Sandler's knowledge of these phone calls was unexpected, 
and came to the Committee's attention only by piercing the 
DNC's frivolous assertions of privilege. The Committee 
initially deposed Sandler on May 15 and May 30, 1997. At both 
of these sessions, Sandler refused to answer a number of 
questions, principally because the DNC was asserting the 
attorney-client privilege, or variations of it. In particular, 
Sandler refused to answer questions concerning meetings among 
lawyers for the White House, the DNC, and Clinton/Gore `96, 
based principally on the DNC's assertion of a ``common-interest 
doctrine'' theory of the attorney-client privilege.\14\
    \14\ See, e.g., Deposition of Joseph Sandler, May 15, 1997, pp. 
172-99; see also Deposition of Joseph Sandler, May 30, 1997, pp. 106-
    In response to these assertions of privilege, Chairman 
Thompson issued an Order on June 6, 1997, in which he rejected 
certain privileges previously asserted by, or on behalf of, 
Sandler, including any privileges based on the ``common-
interest doctrine,'' among the DNC, the White House, or any 
other third party.15 The ruling thus permitted the 
Committee to inquire into conversations that Sandler had with 
personnel and attorneys within the White House (including the 
Vice President's office) and the Clinton/Gore 
    \15\ Order of Chairman Fred Thompson, June 6, 1997 (Ex. 9).
    \16\ The White House must have been uncomfortable with the DNC's 
claim of ``common interest'' between the DNC and the White House, given 
President Clinton's public statement, made in an effort to deflect 
personal responsibility for the illegalities committed by the DNC in 
the course of its fund-raising, that such illegalities were not 
committed by the Clinton-Gore campaign, but by ``the other campaign.'' 
News Conference of President Bill Clinton, Nov. 8, 1997, CNN Special 
Event, Transcript # 96110801V06.
    At his resumed deposition on August 21, 1997, Sandler 
identified and discussed a bill for $24.20 from the ``Office of 
the Vice President,'' requesting ``Reimbursement to U.S. 
Treasury for DNC telephone expenses.'' 17 According 
to an attached check, the DNC paid the bill on the day it was 
presented, June 27, 1997. Sandler testified that the bill was 
for long distance fund-raising telephone calls that were 
presumed to have been made by the Vice President from one of 
his official telephones, but which had not been charged to a 
Clinton/Gore '96 credit card.18
    \17\ Deposition of Joseph Sandler, August 21, 1997, pp. 114-119; 
Invoice from Office of the Vice President to DNC, June 27, 1997 (Ex. 
    \18\ Deposition of Joseph Sandler, August 21, 1997, pp. 115-23.
    Sandler further testified that the bill and its payment 
were part of a project that he had worked on with the Vice 
President's counsel, Charles Burson and Buzz Waitkin, and with 
Lyn Utrecht, counsel to the Clinton/Gore '96 campaign, 
regarding the telephone calls.19 Sandler stated that 
the members working on the project determined that the Vice 
President had actually made at least 52 telephone calls 
soliciting funds, not including calls in which he was not able 
to reach the person he intended to solicit.20 The 
Vice President potentially raised $795,000 as a result of his 
telephone calls.21 Sandler was asked about legal 
issues that were discussed among the lawyers involved in the 
project. He described the focus of those discussions as 
    \19\ See generally id. at pp. 114-27; Deposition of Joseph Sandler, 
August 22, 1997, pp. 7-60.
    \20\ Deposition of Joseph Sandler, August 22, 1997, p. 37. At his 
press conference, the Vice President had indicated that he had raised 
funds by telephone ``on a few occasions'' E.g., Ex. 6, p. 1.
    \21\ Deposition of Joseph Sandler, August 22, 1997, p. 58.

          Q: Did your conversation with Mr. Burson or Ms. 
        Utrecht involve issues of legality of the calls?
           A: Yes, we did discuss that.
           Q: And what was said?
           A: There were--well, we talked about the question of 
        whether the statute that prohibits--assuming even for 
        the sake of discussion, which I believe is not the 
        opinion of the Office of the Vice President, that this 
        statute precludes solicitation of people out office 
        [sic] buildings used in performance of an official 
        duty, even assuming that, there is a question of 
        whether it applies to the solicitation of money for 
        non-Federal accounts of political parties, so-called 
        soft money. And we looked at the kind of money that was 
        raised from various donors and looked at the kind of 
        money that the Vice President would have likely thought 
        [he] was raising given what was on the call sheets and 
        that kind of thing. So we discussed that issue, 
        application of the statute.22
    \22\ Deposition of Joseph Sandler, August 21, 1997, pp. 117-18.

    On this issue, and as part of the project, Sandler 
conducted an analysis of the DNC accounts into which 
contributions potentially resulting from the Vice President's 
phone calls had been deposited.23 In the course of 
his work, Sandler discovered that some such contributions had 
been deposited into the DNC's federal, or ``hard money,'' 
accounts. Sandler's deposition testimony described this 
discovery as follows:
    \23\ As evidence of Sandler's work in this regard, the DNC produced 
a file of his handwritten notes. File of Joseph Sandler, entitled 
``VPOTUS Phone Calls'' (Ex. 11). These notes list all contributions 
received by the DNC during the period from October, 1995 to June, 1996 
which were determined to be potentially attributable to the Vice 
President's fund-raising telephone calls. These handwritten notes show 
that a number of these contributions were deposited into DNC federal 
accounts. The DNC's individual federal account is denoted by the symbol 
``FO1'' in Sandler's notes.

    Q: To your knowledge, has a donor solicited by the Vice 
President on an official phone call ever made a subsequent 
donation to the DNC where any portion of such donation was 
deposited in the DNC's Federal account?
    A: Yes.
    Q: Tell me about that.
    A: Well, subsequent--you mean--those were not necessarily 
result--donations resulting from the Vice President's 
solicitation, but there were donations that were made, you 
know, at some point subsequent to the calls. And we prepared a 
spread sheet--I prepared a spread sheet showing the Federal--I 
believe I prepared one spread sheet showing just the Federal 
donations that followed these phone calls by donors who were 
called by donors who called for some--you know, covering . . . 
some period of time. I don't know how far into '96 we went . . 

           *         *         *         *         *

    A: We talked about--I talked about that issue with Mr. 
    Q: In other words, the issue of whether or not the 
contribution had properly been deposited in the Federal account 
first came up in a conversation between yourself and Mr. 
    A: Well, the question of whether in these particular cases, 
if the donor had written one check in excess of the Federal 
amount and we deposited the--you know, a portion of the check 
in the Federal account and a portion in the non-Federal, that 
the DNC should have obtained specific--there's a procedure 
you're supposed to do obtain specific designation or 
authorization from the donor to do so, and that may not have 
been done in these cases. And that was checked at some point. 
    \24\ Deposition of Joseph Sandler, August 21, 1997, pp. 123-24; 

    Monies allocated to the DNC's federal accounts are, in the 
parlance of the federal campaign finance laws, ``hard'' 
dollars.25 Thus, under the analysis of Attorney 
General Reno in her April 14 letter to Senator Hatch, 'hard' 
dollars unquestionably constitute ``contributions'' within the 
meaning of the FECA, thus triggering the application of section 
607. The Attorney General, of course, had refused to initiate a 
preliminary investigation under the Independent Counsel Act at 
that time because of her assumption that the Vice President had 
raised ``soft,'' as opposed to ``hard money.'' Sandler's August 
21, 1997 disclosure to the Committee that certain contributions 
presumably resulting from the Vice President's phone 
solicitations were deposited into the DNC's ``hard money'' 
account eviscerated that assumption.
    \25\ Deposition of Joseph Sandler, August 22, 1997, p. 32.
    When asked about the Vice President's knowledge regarding 
the accounts into which these contributions had been deposited, 
Sandler acknowledged that he had never spoken with the Vice 
President about the matter, and was not aware whether the Vice 
President's counsel had done so.26 Sandler did 
volunteer, however, that he and Burson had discussed the matter 
among themselves and, based solely on circumstances surrounding 
the Vice President's telephone calls, had concluded that the 
Vice President must have thought he was raising ``soft 
money.''27 The principal circumstances relied on by 
Burson and Sandler in forming this conclusion were that the 
amount of money that the Vice President would typically ask for 
in these telephone calls was in excess of the $20,000 aggregate 
annual limit on individual ``hard money'' contributions imposed 
by the FECA, and the fact that the Vice President was asking 
for money to fund the DNC's media campaign.28
    \26\ Id. at pp. 27; 41-42.
    \27\ Id. at pp. 30-32; 41-42.
    \28\ Id.
    As part of his hearing testimony before the Committee on 
September 10, 1997, Sandler addressed these issues in the 
following exchange:

          Mr. Mattice [Senior Counsel to the Committee]. I 
        think you will recall, Mr. Sandler, in your deposition, 
        I asked you in the course of this project whether you 
        and Mr. Burson, the Vice President's counsel, had ever 
        had any discussions regarding what might have been the 
        Vice President's state of mind at the time he made 
        these calls with respect to how the monies were to be 
        used or into which accounts they might have been 
        deposited. Do you recall that?
          Mr. J. Sandler. Yes, I do.
          Mr. Mattice. Okay. I believe you told me in your 
        deposition that you personally have never discussed 
        that matter with the Vice President. Is that accurate?
          Mr. J. Sandler. That is correct.
          Mr. Mattice. I think you also testified that, to your 
        knowledge, you do not recall Mr. Burson ever telling 
        you that he had discussed that issue with the Vice 
        President. Is that accurate?
          Mr. J. Sandler. That is accurate.
          Mr. Mattice. All right. And I think that you had also 
        told me in your deposition that you and Mr. Burson did 
        discuss this issue, but the things that you relied on 
        were things such as the amounts of money that the Vice 
        President was asking for and the fact that at that 
        point in time, he was asking for money in connection 
        with the media campaign. Is that accurate?
          Mr. J. Sandler. Both that and the fact that the call 
        sheets given to the Vice President asked him to solicit 
        amounts in excess of the Federal limits in each of 
        these cases, in which we had determined that a 
        contribution resulted from a phone call made by the 
        Vice President and----
          Mr. Mattice. Okay. I just--oh, I am sorry. Go ahead.
          Mr. J. Sandler. And the fact that in each of those 
        cases--and there were five cases that we had 
        identified, and I know others can add and subtract and 
        so forth, but--and those five cases that we had 
        identified, not only did the Vice President's call 
        sheet ask him to solicit an amount in excess of the 
        Federal limits, in other words, soft money, but the 
        donor had written a single check for in excess of the 
        Federal limits.29
    \29\ Testimony of Joseph Sandler, September 10, 1997, pp. 34-36.

    At his testimony before the Committee on September 10, 
1997, Sandler confirmed his deposition testimony that some of 
the money raised by the Vice President's telephone calls was 
``hard money.'' Throughout his testimony, Sandler insisted that 
the Vice President had no knowledge of the DNC accounts into 
which contributions resulting from his telephone calls had been 
deposited. Sandler even alluded to the Vice President's state 
of mind in his opening statement, when he said:

          Even if the statute did apply in that way, it is 
        limited by its terms to the solicitation of 
        contributions subject to the Federal Election Campaign 
        Act, meaning, in the case of party committees, Federal 
        or so-called hard money. Though we don't think the fact 
        is relevant because of our view of--my view of the 
        application of the statute that I just mentioned, all 
        the materials that we have seen clearly indicate that 
        the Vice President was soliciting non-Federal money. 
        And that's true even though, because of internal DNC 
        procedures of which the Vice President would have no 
        reason to be aware, the DNC--after the fact and without 
        the Vice President's knowledge--deposited a small 
        percentage of a portion of those contributions that he 
        had solicited into our Federal Account.30
    \30\ Id. at pp. 15-16.

    At the September 10, 1997 Committee hearing, Sandler was 
asked about a series of memoranda prepared by then-White House 
Deputy Chief of Staff Harold Ickes that appeared to cast doubt 
on whether the Vice President had in fact made his telephone 
solicitations with the state of mind that Sandler and the 
others had attributed to him. These memoranda described the 
manner in which funds raised for the DNC would be allocated. 
These memoranda (which sometimes transmitted other memoranda 
prepared by Brad Marshall, Chief Financial Officer of the DNC) 
repeatedly highlighted the fact that, as a matter of DNC 
policy, the first $20,000 of money received annually by the DNC 
from an individual donor would be allocated to the DNC's 
federal (hard money) accounts, and that only after this 
allocation was made would any additional monies raised from 
such individual be allocated to the DNC's non-federal (soft 
money) accounts.31
    \31\ See, e.g, Memorandum from Harold Ickes to the President and 
the Vice President, February 22, 1996 (Ex. 12); Memorandum from Harold 
Ickes to the President and the Vice President, June 3, 1996 (Ex. 13); 
Memorandum from Harold Ickes to the President and the Vice President, 
July 15, 1996 (Ex. 14); Memorandum from Harold Ickes to the President 
and the Vice President, July 28, 1996 (Ex. 15); see also Memorandum 
from Bradley Marshall to Debra DeLee, July 12, 1994 (Ex. 16).
    Most, if not all of these memoranda from Ickes were 
directed to both the President and the Vice President. 
According to Heather Marabetti, then executive assistant to the 
Vice President, the Vice President received an overwhelming 
volume of memoranda, and was not able to read them all. Some 
memos received by the Vice President were moved, unread, 
directly to his ``out'' box. Others, which the Vice President 
intended to read, would remain in his ``in'' box. Marabetti 
testified that these memoranda from Ickes were the type of 
internal memoranda which ``stayed in [the Vice President's] in-
box,'' and, were, therefore, presumably reviewed by 
him.32 Obviously, these memoranda raise an 
implication that the Vice President had personal knowledge that 
a portion of monies he solicited on behalf of the DNC in his 
fund-raising telephone calls would be deposited into the DNC's 
hard money accounts.
    \32\ Deposition of Heather Marabetti, September 3, 1997, pp. 66-67 
and see Ex. 14.
    More important, the issue of the Vice President's precise 
mental state when making the calls is not necessary in 
evaluating whether his calls violated section 607. A Federal 
Election Commission regulation on this subject states:

          Any party committee solicitation that makes reference 
        to a federal candidate or a federal election shall be 
        presumed to be for the purpose of influencing a federal 
        election, and contributions resulting from that 
        solicitation shall be subject to the prohibitions and 
        limitations of the Act. This presumption may be 
        rebutted by demonstrating to the Commission that the 
        funds were solicited with express notice that they 
        would not be used for federal election 
    \33\ 11 C.F.R. Sec. 102.5(a)(3).

The effect of this regulation is to create a legal presumption 
that, in the absence of an explicit disclaimer to the contrary, 
contributions solicited for party accounts (such as those 
maintained by the DNC) are treated as a matter of law as ``hard 
money'' if there is a reference in the solicitation to a 
particular campaign or candidate. This presumption arguably 
renders the subjective state of mind of the solicitor 
irrelevant with respect to whether money raised is deposited 
into ``hard'' or ``soft'' accounts in an analysis of the 
applicability of a statute such as 18 U.S.C. Sec. 607; so long 
as the solicitor refers to a particular candidate or campaign, 
the resulting contribution is, as a matter of law, ``hard 
    At his deposition testimony on August 22, 1997, Sandler 
conceded that he and Burson had not considered the effect for 
this regulation in their discussions regarding the legality of 
the Vice President's telephone calls. He did, however, 
acknowledge the operative effect for the regulation:

    Q: Was this regulation discussed in the course of 
conversation you may have had with Mr. Burson or others in the 
course of this project or investigation we've been discussing?
    A: Not that I recall.
    Q: Okay. Tell me your understanding of what that subsection 
of the Code of Federal Regulations does.
    A: If money is solicited in a way that's earmarked for the 
election of a Federal candidate in the conception of the--the 
framework of the FEC rules, it will be treated as Federal money 
unless the donor has advised that it was--or indicated that it 
would be deposited in a non-Federal account.

           *         *         *         *         *

    Q: All right. Give me again--you're the expert at this sort 
of thing. Tell me, can you put in a little bit more layman's 
language for me your interpretation of this, of what is done by 
this particular regulation?
    A: Yes. If you solicit funds to a party account without 
indicating to the donor into what account it's going to be 
deposited, or if the donor doesn't indicate on the check what 
account to deposit to, and you say this is going to be used 
to--we're going to use this to elect Senator Smith, you know, a 
U.S. Senate race or a U.S. House race, Presidential race, the 
money will be presumed to be Federal unless the donor's advised 
    Q: Was there ever--in the course of the discussions you may 
have had with Mr. Burson or others in the course of this 
investigation, was there ever any discussion that the Vice 
President may have mentioned to any of these potential donors 
anything about the accounts into which their contributions 
would be deposited?
    A: No. I don't think--the Vice President isn't necessarily 
going to be familiar with those accounts, which you can tell I 
don't even know the codes, and I'm ultimately in charge of 
    \34\ Deposition of Joseph Sandler, August 22, 1997, pp. 44-45.

    The Committee concludes that the regulation is most 
probably applicable to the Vice President's solicitation calls, 
as he repeatedly volunteered during his March 3, 1997 press 
conference that he was raising funds for ``the campaign'' or 
for ``our campaign.'' 35
    \35\ See supra, text accompanying note 7.
    The timing of the Committee's discovery that monies raised 
by the Vice President had been deposited into hard money 
accounts is also significant. At his testimony before the 
Committee on September 10, 1997, Sandler confirmed that in 
construing the Committee's subpoena for documents, the DNC had 
concluded that it need not produce to the Committee any 
document created after April 9, 1997. Sandler further confirmed 
that the fact that, because his handwritten notes, which 
indicated that monies raised by the Vice President's calls had 
been deposited to hard money accounts, had been produced, those 
notes had been prepared on or prior to April 9.36
    \36\ Sandler testimony, pp. 30-31.
    This sequence of events makes clear, then, that at least 
Sandler and Burson knew that monies presumably raised by the 
Vice President's solicitations from his office phone had been 
deposited into hard money accounts before the Attorney General 
publicly stated her contrary factual assumption in her April 
14, 1997 letter to Senate Judiciary Committee Chairman 
Hatch.37 A question raised is why, given this 
knowledge, Sandler or Burson (or Burson's client, the Vice 
President) never undertook to make the Attorney General aware 
of the fallacy of her assumption in this regard after her 
letter was released.
    \37\ Sandler also knew before April 9, 1997 that the telephone 
calls had been made on the Vice President's official telephones in his 
White House office. Deposition of Joseph Sandler, August 21, 1997, pp. 
115-16, 123.

President Clinton

    At a White House press conference on March 7, 1997 (four 
days following the Vice President's press conference), and in 
response to questions of whether the President had made 
telephone calls soliciting contributions to the DNC from the 
White House, the following exchange took place:

          Q: Mr. President, your press secretary this week left 
        open the possibility that you, too, had made calls like 
        the vice president did.
          Did you ever make those calls?
          A: I told him to leave the possibility open because 
        I'm not sure, frankly. I don't like to raise funds in 
        that way. I never have liked it very much. I prefer to 
        meet with people face to face, talk to them, deal with 
        them in that way. And I also, frankly, was very busy 
        most of the times that it's been raised with me. But I 
        can't say, over all the hundreds and hundreds and maybe 
        thousands of phone calls I've made in the last four 
        years, that I never said to anybody while I was talking 
        to them, ``Well, we need your help,'' or ``I hope 
        you'll help us.''

At his deposition before the Committee on June 26, 1997, Ickes 
testified that based on his review of documents presented to 
him by Committee counsel, and based on his vague recollections 
and assumptions, the President may have made a limited number 
of telephone calls to DNC donors during 1994.38
    \38\ Deposition of Harold Ickes, June 26, 1997, pp. 80-108; see 
also Ex. 3; Memorandum from Harold Ickes to Leon Panetta, December 2, 
1994 (Ex. 17); Memorandum from Harold Ickes to Jack Quinn, December 2, 
1994 (Ex. 18); Memorandum from Harold Ickes to the President and the 
Vice President, November 28, 1995 (Ex. 19); Memorandum from Harold 
Ickes to the President with attached call sheets, February 7, 1996 (Ex. 
20); Handwritten Notes of David Strauss (Ex. 21); Electronic Mail from 
Karen Hancox to Kim Tilley, November 24, 1995 (Ex. 22); Memorandum from 
Nancy Hernreich & Rebecca Cameron to the President, December 22, 1995 
(Ex. 23); Fax Cover Sheet from Ann Braziel to Karen Hancox with 
attached call sheets, March 7, 1996 (Ex. 24).
    Based principally upon the information provided by Ickes 
and on ``call sheets'' apparently prepared for the President by 
officials at the DNC, the Committee undertook a project with 
respect to the President's telephone calls under the direction 
of Jerome O. Campane, Supervisory FBI detailee to the Special 
Investigation. As part of this project, the Committee contacted 
a number of the potential donors listed on the call sheets to 
determine whether the President, in fact, had contacted those 
individuals and, if so, what had been the results of the 
telephone calls. The results of this project are outlined in 
the ``Statement of Jerome O. Campane,'' dated October 28, 
    \39\ Statement of Jerome O. Campane, October 28, 1997 (Ex. 25).
    As can be seen from Mr. Campane's statement, and the 
referenced letter dated October 21, 1997 from White House 
counsel Charles F.C. Ruff to Michael J. Madigan, Chief Counsel 
for the Special Investigation,40 it was ultimately 
determined that telephone calls were made from the White House 
residence to six of the nine individuals circled on the October 
18, 1994 call sheet. Two of the individuals (Jenrette and 
Frost) listed in Ruff's letter were among the five persons who 
were interviewed in connection with their contributions.
    \40\ Letter from Charles F.C. Ruff to Michael J. Madigan, October 
21, 1997 (Ex. 26).
    Of these individuals, the Committee was able to determine 
that the President had called and solicited a contribution to 
the DNC from at least one--Richard H. Jenrette, Chairman of the 
Board and Chief Executive Officer of The Equitable Companies, 
Incorporated. Mr. Jenrette was interviewed by telephone by the 
Committee, and testified before the Committee at a hearing on 
October 29, 1997.
    Jenrette testified that he received a telephone call from 
the President on October 18, 1994, and that the President 
requested his assistance in raising two million dollars from 
forty friends.41 Jenrette agreed to collect $50,000 
to donate to the DNC as his share of that two million dollar 
goal. In his orders to fulfill his $50,000 commitment, Jenrette 
wrote a personal check for $10,000 to the DNC and collected an 
additional $40,000 from businesses he helps manage, and then 
forwarded all checks to the President on October 24, 
1994.42 In a letter accompanying the checks, 
Jenrette described in detail his conversation with the 
President, especially the fact of the President's solicitation. 
Jenrette provided the Committee copies of the five checks he 
collected in response to the President's 
    \41\ Testimony of Richard Jenrette, October 29, 1997, pp. 3-6.
    \42\ Id.
    \43\ Id.; Checks drawn on accounts of The Equitable Companies 
Incorporated, The Equitable, Richard H. Jenrette, Alliance Funds 
Distributors, Inc., and Donaldson, Lufkin & Jenrette, Inc. (Ex. 27).
    Later that day, White House counsel Ruff, along with his 
assistants Lanny A. Breuer and Michael X. Imbroscio, testified 
before the Committee. In response to a request from Chairman 
Thompson, Ruff agreed to compare entries in memoranda (referred 
to as a ``diary'') regarding President Clinton's activities to 
White House telephone logs to determine whether the President 
had made other fund-raising telephone calls.44
    \44\ Testimony of Charles F.C. Ruff, October 29, 1997, p. 220.
    On November 17, 1997, Chief Counsel Madigan received a 
letter from Breuer, which set forth the result of that work. 
According to that letter, the White House counsel's office was 
able to determine that the President placed three other calls 
to individuals listed on DNC call sheets. According to Breuer's 
letter, the White House could not determine that funds were 
raised as a result of any of these calls.45 The 
Committee determined that the President's calls had all been 
made from the White House residence. Later in November, the 
Committee received documents which suggested that other White 
House officials may have made telephone calls soliciting funds 
for the DNC.46
    \45\ Letter from Lanny Breuer to Michael J. Madigan, November 17, 
1997 (Ex. 28).
    \46\ This document, produced by the DNC in late November, after the 
Committee's hearings concluded, reflects plans to have Ickes make fund-
raising telephone calls for significant amounts of money to a number of 
labor leaders. Because Ickes had already been deposed and had testified 
before the Committee in public session, the Committee never had the 
opportunity to ask him about the document.
    Excerpts from October 11, 1996 DNC Memorandum:

        Union--Caller: Request/Action Item
        AFSCME--Harold Ickes: Reminder call. Rosenthal suggests 
      that AFSCME will hold $100,000 to $200,000 for distribution 
      to coordinated campaigns ``at the end.'' Harold should 
      confirm this.
        AFT--Harold Ickes: List to be prepared by Jill Alper and 
      Jim Thompson for specific request.
        Firefighters--Harold Ickes: Ask for $100,000 with list 
      prepared by Jill Alper and Jim Thompson . . .
        Laborers--Harold Ickes: At the end of June, the Laborers 
      had $1 Million in the PAC account; ask for contributions 
      with list prepared by Jill Alper and Jim Thompson . . .

    Memorandum from Charlie Baker to Craig Smith, October 11, 1996 (Ex. 
    The Committee's investigation has shown that at least two of these 
organizations made contributions to the DNC after October 11, 1996. To 
the extent that Ickes participated in effort to cultivate potential 
donors, questions arise concerning 5 U.S.C. Sec. 7323(b), prohibiting 
fund-raising by such employees. In fact, if Ickes made the telephone 
solicitations that were the subject of the DNC's October 11, 1996 
memorandum, quoted above, it would appear that he violated the criminal 
provisions for the Hatch Act, prohibiting a federal employee from 
soliciting any contributions at any time from any location. The 
Committee strongly recommends further investigation of these matters.

                 The Justice Department's Investigation

    As discussed, the Attorney General refused to recommend the 
appointment of an independent counsel to investigate the Vice 
President's telephone calls in April 1997, primarily due to her 
assumption that only soft money was raised by those calls. The 
Committee's investigation, which began long after the Justice 
Department's, had proven these assumptions incorrect by August 
21, 1997, the date when Sandler testified to the Committee of 
his knowledge that the calls had raised hard money.
    In fact, even a consideration of evidence in the public 
domain should have caused the Justice Department to realize 
that its assumptions were incorrect. This became clear on 
September 3, 1997, when an article in The Washington Post, 
based on information available to the public, determined that 
the Vice President's telephone calls from the White House had 
raised $120,000 in hard money for the DNC.47 The 
article set forth facts suggesting that at least 8 of the 46 
donations that resulted from the Vice President's calls were 
deposited into hard money accounts. One donor to whom the 
reporter spoke stated that the call ``was clearly focused on 
the reelection campaign of Clinton and Gore,'' 48 an 
impression consistent with the Vice President's own 
recollection of the nature of his calls.49 There is 
no question that the Justice Department had not made any 
inquiry to determine whether the funds raised by the Vice 
President's telephone calls were hard money, despite the 
Justice Department's novel view that the answer to that inquiry 
determined the legality of the solicitation. ``The first I 
heard of it was when I saw the article in `The Washington 
Post,' Reno said. . . . It is my understanding that is the 
first time that the public integrity section learned of it, as 
well.'' 50 In these circumstances, the public and 
the Congress are justified in questioning the competency and 
credibility of the Justice Department's 
    \47\ Bob Woodward, ``Gore Donors' Funds Used as `Hard Money,' '' 
Washington Post, September 3, 1997, p. A1.
    \48\ Id.
    \49\ See supra, note 7 and accompanying text (discussing Vice 
President's characterization of the content of his phone calls at March 
3, 1997 press conference).
    \50\ Roberto Suro, ``Justice Did Not Review Legality of Gore White 
House Solicitations,'' Washington Post, September 6, 1997, p. A1.
    \51\ Indeed, the Attorney General adopted a tortured interpretation 
of the Independent Counsel Act, one which no prior Attorney General has 
adopted for the precise reason that the statute cannot be so read. 
According to published reports, the Attorney General will not begin an 
investigation of whether a covered person has violated the law until 
specific and credible information has been presented to her that such a 
violation has occurred, even though a prosecutor may begin an 
investigation into anyone's conduct based on any information she 
receives. See Susan Schmidt & Roberto Suro, ``Troubled From the Start: 
Basic Conflict Impeded Justice Probe of Fund-Raising,'' Washington 
Post, October 3, 1997, p. A1. In short, she took the unprecedented 
position that unless she is presented with sufficient evidence that 
would justify opening a preliminary investigation under the independent 
counsel law, then she would not investigate the actions of covered 
persons to see whether in fact specific and credible evidence of 
wrongdoing existed. Consequently, the Justice Department's 
interpretation of the Independent Counsel Act produced the incongruous 
result that it became harder to investigate a covered person under that 
statute for wrongdoing than to investigate non-covered persons for 
potentially crimes generally. Obviously, this interpretation confers an 
immunity from investigation that non-covered persons do not enjoy; if 
the Justice Department will not look for evidence of wrongdoing, then 
no independent counsel will be appointed to fulfill that statutory 
role, unless some third party presents specific and credible evidence 
of a criminal act by a covered person. This result hardly fulfills the 
intent of the Independent Counsel Act, which was designed to make sure 
that an authority not beholden to the President could investigate any 
allegations of wrongdoing against high-level officials.
    Prodded by the newspaper article, the Attorney General 
commenced a preliminary investigation into whether an 
independent counsel should be appointed to investigate the Vice 
President's fund-raising calls on October 3, 1997. On December 
2, 1997, the Attorney General notified the United States Court 
of Appeals for the District of Columbia Circuit, Independent 
Counsel Division, that the Department of Justice had concluded 
its preliminary investigation, and that she had determined that 
there were ``no reasonable grounds to believe that further 
investigation is warranted of allegations that the Vice 
President violated Federal law, 18 U.S.C. Sec. 607, by making 
fund-raising telephone calls from his office in the White 
House.'' In her notification, the Attorney General stated the 
basis for her determination:

          My conclusion is supported by two independent 
        dispositive grounds. First, the evidence that the Vice 
        President may have violated Section 607 is insufficient 
        to warrant further investigation. Second, even if the 
        evidence suggested a possible violation of law, 
        established Department of Justice policy requires that 
        there be aggravating circumstances before a prosecution 
        of a Section 607 violation is warranted. There is no 
        evidence of any aggravating circumstances in this 
    \52\ Ex. 2, p. 1.

    After recounting the factual and legal background for the 
preliminary investigation and outlining the scope of the 
inquiry, the Attorney General's notification outlined the 
results of the investigation. The Attorney General acknowledged 
that the fact that DNC contributions were deposited to ``hard'' 
money accounts raised the ``plausible inference'' that the Vice 
President may have asked the donor to make a hard money 
contribution. In this regard, the Attorney General addressed 
the significance of one of the series of memoranda from Ickes 
and Marshall which were directed to the President and the Vice 
President. This memorandum described the DNC's ``splitting'' 
practice whereby the first $20,000 of money received annually 
from an individual donor would be allocated to the DNC's hard 
money accounts, and only subsequently would additional sums 
raised from those individuals be deposited into ``soft'' money 
    According to the Attorney General's notification, the Vice 
President stated in an interview with Justice Department 
attorneys or FBI agents that he did not recall having seen the 
memorandum, and that he tended not to read Ickes' memoranda 
that would be discussed at meetings. The Attorney General 
concluded, however, that even if the Vice President had seen 
the memorandum, it would have significance only if it could be 
shown that the Vice President had independent, detailed 
knowledge for the DNC's allocation or ``splitting'' practices. 
The notification states:

          It is my conclusion that the memorandum, standing 
        alone and without independent knowledge of the 
        splitting practice, cannot reasonably be read as 
        putting anyone on notice that the DNC was engaging in a 
        practice of splitting contributions without the donor's 
        consent. Therefore, even if the Vice President read the 
        Marshall memorandum, it is my conclusion that there is 
        no evidence on which to base a conclusion that the Vice 
        President was aware of the DNC practice, and thus may 
        have been soliciting contributions knowing that a 
        portion of some contributions would end up in hard 
        money accounts.53
    \53\ Id. at p. 10.

    The Justice Department also attempted to ascertain whether, 
in the course of his solicitations, the Vice President had, in 
fact, solicited hard money. The notification states that the 
FBI interviewed more than 200 of the 216 prospective donors 
identified from call sheets prepared for the Vice President by 
the DNC. Of this number, the FBI was able to identify 45 who 
recalled actually receiving a telephone call from the Vice 
President during the period of late 1995 to mid-1996 in which 
political contributions were discussed. According to the 
notification, ``[n]one of these 45 persons state that the Vice 
President explicitly or implicitly asked them to give money to 
the DNC's federal account or to any federal political 
campaign.'' 54 Accordingly, the Attorney General 
    \54\ Id. at p. 13. The Attorney General's notification did not 
mention 11 C.F.R. Sec. 102.5(a)(3), which states that if a federal 
campaign is referenced, the solicitation will be presumed for federal 
election law purposes to be hard money unless the solicitor makes an 
explicit statement that the funds are to be deposited into the soft 
money account. Nor did she discuss the Vice President's own statements 
at his March 3, 1997 news conference, in which he repeatedly made 
reference to his making telephone calls on behalf of ``the campaign'' 
or ``our campaign.'' A reference to the use of the money for a media 
campaign is not the same as an explicit disclaimer that the funds would 
be accounted for as soft money, particularly given the Committee's 
conclusion that these advertisements were in fact Clinton-Gore campaign 

          It is my view that there are no further grounds to 
        investigate whether any of these calls violated Section 
        607 on the mere grounds that a portion of the 
        subsequent contributions were deposited into hard money 
        accounts. There is no evidence that the Vice President 
        was aware that part of the donations would be deposited 
        into hard money accounts, and the donors' own 
        descriptions of the solicitations makes it clear that 
        they interpreted the solicitations as being for soft 
    \55\ Id. at p. 14.

    Beyond her conclusions relating to the Justice Department's 
factual investigation, the Attorney General also rested her 
determination not to seek an independent counsel on the grounds 
that Justice Department policy would, in any event, preclude a 
prosecution in the absence of ``aggravating circumstances'' not 
presented in this case. The authority cited in the notification 
for the Attorney General's reliance on this factor is a 
provision of the Independent Counsel Act, 28 U.S.C. 
Sec. 592(c)(1)(B), which states:

          In determining whether reasonable grounds exist to 
        warrant further investigation, the Attorney General 
        shall comply with the written or other policies of the 
        Department of Justice with respect to the conduct of 
        criminal investigations.

    Relying on this authority, the Attorney General observed:

          A number of different aggravating factors are 
        mentioned in the Departmental records concerning 
        Section 607. They include, in addition to coercion, a 
        demonstration of specific intent to flout the law by 
        one who has been put on notice of its requirements; a 
        substantial number of violations; a substantial misuse 
        of governmental resources or property in conjunction 
        with the prohibited solicitations; and a substantial 
        disruption of government functions resulting from the 
          We have conducted, as is explained above, an 
        extensive investigation of the Vice President's 
        telephone solicitation calls; and I find no evidence in 
        the investigative results that any of these aggravating 
        factors is present. There is no evidence that the Vice 
        President was specifically aware of the prohibitions of 
        Section 607, and no evidence that he was warned that 
        his conduct would be in potential violation of that or 
        any other statute. There are at most five telephone 
        calls, even if we could draw every conceivable 
        speculative inference against the Vice President, that 
        could be construed as hard money solicitations, and 
        hence potential violations for the law. The bulk of his 
        calls were not charged to the government, and the few 
        that were have been reimbursed. There is no suggestion 
        that either the Vice President or any of the few staff 
        members who were involved in these telephone 
        solicitations neglected their official duties as a 
          Beyond these factors that have been specifically 
        identified in Department of Justice records as 
        potential aggravating circumstances in a Section 607 
        case, I am unable to identify any other factors in this 
        case that might properly be regarded as 

    \56\ Id. at pp. 27-28. A number of these conclusions are 
questionable. The fact that the Vice President declined to make fund-
raising telephone calls from the White House in 1994, when he made such 
calls from the DNC, but did so in 1996, suggests that he indeed was 
specifically aware of the prohibitions of section 607. In addition, if 
the statute is not in fact limited to the raising of ``hard money,'' as 
discussed below, then the Vice President made 52 such calls that may 
have raised as much as $795,000, certainly a ``substantial number of 
    Thus, the Attorney General concluded:

          In short, the preliminary investigation has 
        established that, even if the Vice President were found 
        to have technically violated Section 607, there is no 
        evidence suggesting the presence of any aggravating 
        factors of the sort that might warrant consideration of 
        prosecution under established Departmental policy. 
        Furthermore, I am unable to identify any way in which 
        further investigation might lead to development of 
        evidence of aggravating factors in this case. 
        Therefore, in light of the clearly established policy 
        of the Department of Justice that aggravating factors 
        are required before prosecution of a Section 607 matter 
        can be considered, it is my obligation under the 
        Independent Counsel Act to close this matter without 
        seeking the appointment of an independent 
    \57\ Id. at p. 28.

  The Committee's Evaluation of the Legality of the Vice President's 
                              Phone Calls

    The Committee believes that an independent counsel should 
be appointed to review a whole range of possible illegalities 
in connection with fund-raising in the 1996 federal election 
campaigns, including the telephone calls, to determine whether 
high-ranking federal officials violated federal campaign 
finance laws, and to make such a determination through a 
process that would command public respect.
    The primary federal criminal statute implicated by the 
fund-raising telephone calls is 18 U.S.C. Sec. 607(a). The 
predecessor statute to current 18 U.S.C. Sec. 607 was first 
enacted in 1883 as part of the Pendleton Act. Although 
telephones were new in 1883, the statute has not been allowed 
to fall into disuse as modern communications developed. It was 
amended in 1980, and its existence is both a known and constant 
reality for all members of Congress. The Committee concludes 
that despite several arguments advanced to the contrary, 
telephone calls made by any person from an official area of the 
White House to solicit campaign contributions violate the 
express prohibition of section 607.
    Vice President Gore stated at his press conference that no 
law prevented the President or Vice President, as opposed to 
all other federal employees, from raising federal campaign 
contributions from the White House.58 The Committee 
disagrees. On its face, the plain language of section 607 
applies to all federal officers, indeed, to ``any person'' who 
violates the statute, including the President and Vice 
President. Nothing in the legislative history or any court 
decision excludes the president or vice president from its 
scope. Nor has any court case held either of these officials 
exempt from any generally applicable federal criminal statute. 
In addition, the Attorney General's April 14, 1997 letter 
declining to seek an independent counsel in response to the 
letter sent her by Senate Judiciary Committee Republicans does 
not make the argument that these officials are exempt. Because 
such an exemption would have been a dispositive response to a 
request for an independent counsel, apparently the Attorney 
General was not then prepared to take the position that the 
President and the Vice President are excluded from the 
operation of section 607.
    \58\ Ex. 6, pp. 2-3.
    Nonetheless, more supports this conclusion than the 
statutory language and inferences from the Department's failure 
to raise the argument. In 1979, the Justice Department's Office 
of Legal Counsel issued an opinion which concerned whether the 
predecessor statute to section 607 was violated when President 
Carter invited about 20 private persons to a dinner in the 
Family Dining Room on the first floor of the White House, where 
some were solicited for campaign contributions.\59\ In that 
opinion, the Department found that the term in the statute ``no 
person'' (now ``any person'') was ``broadly inclusive.'' 
Similarly, the statute then, as now, by reference to section 
603, referred to ``an officer or employee of the United States 
or any department or agency thereof, or a person receiving any 
salary or compensation for services from money derived from the 
Treasury of the United States . . .'' That opinion found that 
the intent of Congress enacting the original 1883 statute was 
that the ``President [and a fortiori the vice president] . . . 
be included among the `officers governed by the bill.' '' The 
Department concluded that since averting coercion to contribute 
was the goal of the statute, then ``[p]articularly where only 
criminal penalties were provided rather than provision made for 
discharge or removal of an offending official, policy reasons 
for prohibiting such abuses of power by the president as much 
as by any other Government official are clearly present.'' The 
Justice Department's views cannot be squared with Vice 
President Gore's claim that the statute does not apply to him 
or to President Clinton.
    \59\ ``The President--Interpretation of 18 U.S.C. Sec. 603 as 
Applicable to Activities in the White House,'' 3 Op. O.L.C. 31 (1979).
    The Committee also concludes that the Attorney General 
erred in concluding that section 607 applies only to the 
raising of ``hard money.'' Section 607 applies only when 
``contributions'' within the meaning of the Federal Election 
Act of 1971 are solicited or received in a federal building. 
Section 607 references the definition of ``contribution'' 
contained in section 301(8) of the FECA. Subject to various 
exceptions that do not include funding for media advertising, 
that legislation defines the term ``contribution'' to mean 
``any gift, subscription, loan, advance, or deposit of money or 
anything of value made by any person for the purpose of 
influencing any election for Federal office. . . .'' Such 
definition does not permit ``contribution'' to refer only to 
``hard'' and not to ``soft money,'' and the Attorney General 
cited no court case for her interpretation for the statute.
    Even if the statutory definition were unclear, there are 
two reasons why ``contribution'' under the FECA, as referenced 
in section 607, cannot be limited to ``hard money.'' First, the 
FEC does not equate ``contribution'' with ``hard money.'' In 
its view, when coordinated with a candidate, a party's 
``electioneering activity'' is subject to regulation as a 
``contribution.'' Although the Attorney General purported to 
agree that ``[e]lectioneering message'' is the test when 
determining whether an advertisement constitutes a 
``contribution,'' her April 14, 1997 letter erroneously appears 
to equate ``electioneering message'' with ``express advocacy.'' 
\60\ In actuality, the FEC defines ``electioneering message'' 
more broadly than express advocacy to mean statements 
``designed to urge the public to elect a certain candidate or 
party.'' \61\ The advertisements run by the DNC for which Vice 
President Gore solicited funds contained electioneering 
messages, and because of their coordination with the candidate, 
were ``contributions'' within the meaning of the FECA and 
section 607. ``Express advocacy'' must be financed with hard 
money. By contrast, the FEC has determined that an 
advertisement can be a ``contribution'' if it contains an 
electioneering message. To the FEC, and contrary to the 
Attorney General's letter, the two terms ``hard money'' and 
``contribution'' are simply not synonymous.
    \60\ Ex. 8, p. 7.
    \61\ See FEC Advisory Op. 1985-14, 2 Fed. Election Camp. Fin. Guide 
(CCH) para. 5819 at 11,185 (April 12, 1985); FEC Advisory Op. 1984-15; 
FEC Advisory Op. 1984-23; FEC Advisory Op. 1984-62; MUR 3608; MUR 3918.
    Under well-established administrative law principles, the 
FEC's view that ``contributions'' include soft money used to 
fund electioneering messages prevails over the Attorney 
General's position that ``contributions'' are limited to hard 
money. Where a statute is ambiguous, and Congress charges a 
federal regulatory agency to interpret the statute, the 
agency's interpretation governs the meaning of the ambiguous 
statute, even where another party has a plausible view of the 
statute. Chevron Corp. v. Natural Resources Defense Council, 
467 U.S. 837 (1984). The Supreme Court has held that the FEC 
``is precisely the type of agency to which deference should 
presumptively be afforded.'' Federal Election Commission v. 
Democratic Senatorial Campaign Cmte., 454 U.S. 27, 37 (1981). 
Thus, the Department of Justice is precluded as a matter of law 
from interpreting ``contribution'' to mean ``hard money.'' \62\
    \62\ Under Chevron, statutory terms that are unambiguous apply 
without regard to the interpretation provided by an administrative 
agency. If this prong of Chevron were to apply, the FEC's view of the 
meaning of ``contribution'' would also govern, since it is consistent 
with the plain meaning of the statutory definition of ``contribution.'' 
See Colorado Republican Campaign Comm. v. FEC, ____ U.S.____, 116 S. 
Ct. 2309, 2316 (1996) (recognizing that the ``FECA permits unregulated 
`soft money contributions to a party for certain activities, such as . 
. . voter registration and `get out the vote' drives . . . Unregulated 
`soft-money' contributions may not be used to influence a federal 
campaign, except when used in the limited, party building activities 
specifically designated in the statute'' (emphasis added)). As noted 
above, such limited activities do not include general media 
    A second reason why ``contributions'' under the FECA are 
not limited to ``hard money'' is that, under the Attorney 
General's view, the statute would be rendered meaningless. The 
FECA's prohibitions on various forms of illegal campaign funds 
are all triggered by those funds constituting 
``contributions.'' For instance, the FECA prohibits campaign 
``contributions'' greater than $1000 per election, 2 U.S.C. 
Sec. 441a(1); foreign ``contributions,'' 2 U.S.C. Sec. 441e; 
``contributions'' made in the name of another, 2 U.S.C. 
Sec. 441f; and cash ``contributions'' in excess of $100, 2 
U.S.C. Sec. 441g. Under the FEC's interpretation of 
``contribution,'' soft money from these prohibited sources 
would be illegal. The DNC apparently agrees with the FEC that 
soft money from these sources is illegal; otherwise, it would 
not have returned $2.8 million in soft money that came from 
foreign and/or laundered sources.
    Under the FEC's view, ``contribution'' has the same meaning 
each time it appears in the FECA. This approach is consistent 
with the ``normal rule of statutory construction'' that 
``identical words used in different parts of the same statute 
are intended to have the same meaning.'' Gustafson v. Alloyd 
Corp., 513 U.S. 561 (1995). By contrast, under the Attorney 
General's interpretation of ``contribution,'' all the sums the 
DNC returned would have been legal because they were ``soft 
money'' and therefore fell outside the various FECA 
``contribution'' prohibitions. It would be legally incoherent 
that for some purposes in the same statute, ``contribution'' 
means hard money and for others means ``soft as well as hard 
money.'' Since ``contribution'' must have the same meaning each 
time it appears in the FECA, then under the Attorney General's 
view, it logically follows that it would be legal to raise 
foreign soft money in the name of another in unlimited cash 
sums. The Committee rejects an interpretation of 
``contribution'' that would lead to such absurd results.
    Even if the Attorney General's view of the statute were 
correct, the Vice President in fact raised hard money. The 
calls were made on a Clinton-Gore campaign credit card, which 
obviously implies that the calls were made for the purpose of 
advancing these candidates. The letters he sent to donors 
following his calls state, ``President Clinton and I thank you 
for your continued support and contribution to the Democratic 
National Committee. We appreciate your dedication to our 
Administration and your help at a time when needed.'' \63\ This 
ties the donations to the Clinton-Gore Administration and its 
campaign for reelection. One letter of the Vice President's, to 
Frank Pearl, reads, ``President Clinton and I thank you for 
your continued support of our Administration.'' \64\ This 
letter makes no reference to the DNC at all, and could not 
possibly be read as having raised soft money.
    \63\ Letter from Al Gore to Michael Adler, Dec. 11, 1995; Letter 
from Al Gore to William Dockser, Feb. 5, 1995; and Letter from Al Gore 
to Robert L. Johnson, Feb. 5, 1996 (Ex. 30).
    \64\ Letter from Al Gore to Frank Pearl, Feb. 9, 1996 (Ex. 31).
    In addition, the two memoranda cited above from Harold 
Ickes to the President, Vice President, and others make clear 
that the first $20,000 of donations would be treated as ``hard 
money'' and the rest deposited in non-federal accounts because 
of the campaign's shortage of federal funds. Moreover, the FEC 
regulation cited above states that if the solicitor mentions a 
particular candidate or campaign and does not expressly state 
that the funds being solicited will be deposited in a ``soft 
money'' account, then the money donated will be presumed to be 
``hard money.'' Thus, section 607 is not limited to ``hard 
money,'' and even if it were, the Vice President raised hard 
    For section 607 to apply, the solicitation must occur in a 
room occupied by federal employees performing official duties. 
The Attorney General's April 14, 1997 letter declined to 
appoint an independent counsel in the absence of evidence that 
the vice president made calls from official places in the White 
House. The 1979 Office of Legal Counsel opinion exonerated 
President Carter because the solicitation that prompted that 
opinion occurred in the family dining room. In OLC's view, the 
statute did not apply to solicitations in the private residence 
and other areas of the White House. OLC opined that ``the 
statute is not framed in terms of property owned or held by the 
United States; it rather adopts a functional test, focusing on 
areas used by Federal personnel while they are conducting the 
Government's business.'' OLC's views therefore mean that 
section 607 would apply to calls made from the official office 
of the Vice President. Sandler's deposition testimony made 
clear that this is where Vice President Gore made his calls. 
The record also establishes that President Clinton made his few 
calls from the White House residence, so section 607 would not 
apply to his calls.
    Although the Vice President went to great lengths at his 
press conference to state that he did not solicit any federal 
employee, and that he did not solicit anyone who was in a 
federal building, those two issues are irrelevant to 
determining whether section 607 has been violated. On the face 
of the statute, this is irrelevant. As the statute 
unambiguously reads, it is a criminal offense to solicit or 
receive contributions in a federal office. The 1979 Office of 
Legal Counsel opinion on which the Attorney General relied for 
her view that the statute only applies to official areas of the 
White House states that ``solicitations of private citizens 
fall within the scope'' of section 607. And the Justice 
Department's prosecutorial manual states, ``Section 607 makes 
it unlawful for anyone to solicit or receive a contribution for 
a federal election in any room, area, or building where federal 
employees are engaged in official duties. . . . The employment 
status of the parties to the solicitation is immaterial; it is 
the employment status of the persons who routinely occupy the 
area where the solicitation occurs that determines whether 
section 607 applies.'' 65
    \65\ In neither her April 14, 1997 letter to Senator Hatch nor her 
December 2, 1997 notification to the Special Division of the United 
States Court of Appeals for the District of Columbia Circuit did the 
Attorney General make the argument that section 607 did not apply to 
solicitations of non-federal employees by federal employees in areas 
where official duties are performed. Since such an argument would have 
been dispositive of the legality of the calls, it is clear that the 
Attorney General would have relied on it if there were a basis for 
doing so.
    If section 607(a) applied only to the solicitation of 
federal employees, then section 607(b) would be meaningless in 
the federal criminal code. Under that provision:

          The prohibition in subsection (a) shall not apply to 
        the receipt of contributions by persons on the staff of 
        a Senator or Representative . . ., provided, that such 
        contributions have not been solicited in any manner 
        which directs the contributor to mail or deliver a 
        contribution to any room, building, or other facility 
        referred to in subsection (a), and provided that such 
        contributions are transferred within seven days of 
        receipt to a political committee. . . .

As section 602 already makes it illegal for members of Congress 
to solicit federal employees, and section 603 prohibits members 
of Congress from soliciting or receiving contributions from 
their own employees, the exemption contained in section 607(b) 
would be unnecessary if Congress believed that section 607(a) 
merely applied to the receipt of contributions from other 
federal employees in their Congressional offices. Congress must 
have believed that without this exemption, funds received in 
such offices from non-federal employees would nonetheless fall 
within the scope of section 607. It is a basic rule of 
statutory construction that statutes should be read so as not 
to render other parts of that statute surplusage.66 
A reading that made section 607 apply only when federal 
employees were solicited would render sections 602, 603, and 
607(b) redundant. Thus, it is legally irrelevant that the Vice 
President's calls were not made to federal employees, since he 
was in a room in a federal building in which official duties 
are performed at the time he made those calls.
    \66\ ``Judges should hesitate . . . to treat [as surplusage] 
statutory terms in any setting, and resistance should be heightened 
when the words describe an element of a criminal offense.''  Bailey v. 
United States, 516 U.S. 137 (1995), quoting Ratzlaf v. United States, 
510 U.S. 135 (1994)(brackets in original).
    Finally, it is also incorrect that ``there is no 
controlling legal authority'' that section 607 renders criminal 
the telephone calls the Vice President made. It is true that no 
case has ever been brought under section 607 for soliciting a 
non-federal employee from a federal building. But in a 
statutory criminal law system such as ours, federal criminal 
statutes apply according to their language as soon as they are 
enacted. Thus, the statute itself is the ``controlling legal 
authority'' that prohibits federal employees from making 
telephone calls to non-federal employees from official areas of 
federal buildings. The notion that a statute can apply to a 
particular set of facts only when a court says that it does so 
is a feature of a common law criminal legal system, not 
    \67\ Thus, the only Supreme Court decision on the meaning of 
section 607, United States v. Thayer, 209 U.S. 41 (1908), is irrelevant 
to the facts here at issue. In Thayer, the defendant was outside the 
federal building when he mailed solicitations of campaign contributions 
to employees at their federal building. Some of the employees read 
those letters in their offices. In his defense, Thayer argued that 
since he was not in the federal building, he could not have solicited 
in the building. Unsurprisingly, the Supreme Court rejected that view. 
As the Justice Department manual correctly notes, the holding in the 
case was that the statute applies to solicitations made by mail as well 
as in person. The case simply does not address the situation in which 
the person in the federal building is making a call outside the 
building, and the case does not in any way constrict the scope of the 
    Moreover, the decision does not stand for the proposition that the 
solicitation occurs where the person solicited is located. The Court 
pointed out that ``[t]he time determines the place [of the 
solicitation].'' Thus, if the letter is written and mailed, but the 
letter burns, there is no solicitation in the federal building. Only 
when the solicitation reached the employee in the federal building did 
the prohibited solicitation occur. 209 U.S. at 43. In fact, until the 
time the employee read the solicitation letter, no solicitation 
occurred. In Thayer, the Court thus held that if the employee received 
the solicitation letter in a federal building, but did not read the 
letter until he left the building, no solicitation occurred: i.e., the 
time of the solicitation (when the employee read the letter) determined 
whether the solicitation occurred in a federal building (thus, no 
solicitation occurred if the employee did not read the letter until 
after leaving the building). Here, by contrast, at the time the Vice 
President made his solicitations, they occurred from a federal 
building's official space.
    The Committee therefore concludes that an independent 
counsel should be appointed to evaluate the ample credible 
evidence of legal violations. Also, the Committee believes that 
the making of these calls was inappropriate for our nation's 
highest elected officials. This amounted to unsavory and 
unseemly activity that lessens the dignity of these offices, 
offices that should command the greatest respect from their 
occupants and from citizens. In addition, even without 
containing any words that could be construed to amount to 
coercion, it would defy reality not to recognize that the 
recipients of such calls, many of whom had business interests, 
would find it difficult to turn down requests for funds from 
persons who exercise such vast power. The Committee hopes that 
all future Presidents and Vice Presidents will refrain from 
making direct telephone solicitations for campaign 

    White House Vetting of Individuals with Access to the President


    Since stories of its campaign finance improprieties first 
surfaced in the fall of 1996, the Clinton Administration has 
been forced to acknowledge again and again that it was 
inappropriate for particular unsavory individuals to have 
entered the White House or to have attended outside political 
functions involving the President or the Vice 
President.1 The repeated instances of White House 
failure to weed out problematic prospective invitees in advance 
of their arrival suggested at least the existence of a 
fundamental deficiency in the White House's vetting process. 
The Committee has determined that the problem was, in fact, 
even more severe. Testimony of individuals familiar with the 
White House's creation and evaluation of its guest lists 
revealed that a process for vetting proposed attendees was 
essentially nonexistent. White House officials testified that 
they relied upon the United States Secret Service and the DNC 
to vet invitees to or attendees at political events. DNC 
officials likewise testified that they too principally relied 
upon the Secret Service to identify and remove undesirable 
individuals. The Secret Service, however, is charged only with 
identifying potential physical threats to the President, and 
makes no other determination as to the overall suitability of 
invitees. Whether through gross negligence or conscious design, 
the result of the absence of an organized vetting system was 
the same: too many unsavory individuals were allowed entrance 
to the White House and access to President Clinton.
    \1\ See, e.g., Deposition of Nancy Hernreich, June 20, 1997, pp. 
67-68 (conveying President Clinton's opinion that the attendance with 
Johnny Chung of a delegation of Chinese businessmen at a March 11, 1995 
White House radio address was ``inappropriate'' and that the White 
House ``shouldn't have done that''); Kevin Sack, ``From Restaurateur to 
Intimate at the White House,'' New York Times, Jan 4. 1997, p. A8 
(``Mr. Trie escorted a leading Chinese arms dealer [Wang Jun] to a 
small gathering with Mr. Clinton. The President has since described the 
arms dealer's presence as `clearly inappropriate.' ''; Glenn F. Bunting 
& Ralph Frammolino, ``Cash-for-Coffee Events at White House Detailed; 
Politics: Zeal to Raise Funds Transformed Once-modest Sessions into 
Major Money-makers, Accounts Indicate,'' Los Angeles Times, Feb. 24, 
1997, p. A1 (``White House spokesman Davis also has conceded that it 
`was not appropriate' for the president to sip coffee with Eric Wynn 
just a few months after his second conviction for penny-stock 

     White House Vetting Procedures During the 1996 Election Cycle

    The White House Political Affairs Office was the designated 
recipient of the DNC's proposed guest lists for White House 
fundraising coffees and other politically motivated events 
attended by the President or Vice President.2 The 
Political Affairs Office was also supposed to serve as the 
point of contact for the White House's system for vetting 
guests at political events to ensure their ``suitability.'' 
3 Former Deputy Political Director Karen Hancox 
testified that she received the list of guests selected by the 
DNC for upcoming White House events by fax from Richard 
Sullivan, the DNC's National Finance Director.4 
Hancox's typical practice involved absolutely no vetting of 
Sullivan's suggestions.5 In fact, she testified that 
she ``rarely ever look[ed] at the list of names'' submitted by 
Sullivan, and instead simply directed that the names be 
forwarded to the appropriate offices for insertion into the 
President's briefing book and for clearance by the Secret 
Service.6 Hancox took further steps only if Sullivan 
specifically requested that she check on the suitability of a 
particular name on the DNC's list.7 In such an 
event, Hancox would contact the appropriate authorities to 
determine whether the tentatively proposed individual could 
remain on the guest list. Where the invitation of a foreign 
national was at issue, the appropriate authority was the 
National Security Council (``NSC'').8 If the NSC 
objected to the attendance of the proposed individual, Hancox's 
response was to contact Sullivan and have him rescind the 
    \2\ The White House Social Office played the primary, but 
essentially ``functionary'' role in the creation of guest lists for 
White House events. See Deposition of Ann Stock, June 12, 1997, p. 21. 
Ann Stock, who headed the Social Office, explained that representatives 
of the Political Affairs and other offices within the White House 
routinely submitted to Stock's office the names of individuals they 
recommend for invitation to unspecified future White House events, and 
each specific event's final guest list was compiled from the running 
list of submitted names. Id. Stock testified that her office played no 
role in vetting potential guests or deciding ``who comes or who doesn't 
come.'' Id. She said that she assumes that prospective guests are 
vetted by the offices submitting the guests' names, but that she 
``could [not] care less'' how the vetting is done. Id. at pp. 131-32. 
She testified that it is her understanding that an invited guest's 
criminal background would be caught by the Secret Service, which does a 
final review of an event's guest list before any guests are admitted to 
the White House. Id. at pp. 133-34; see also discussion of the role of 
the Secret Service, infra, footnotes 18-21 and accompanying text.
    \3\ See Deposition of Karen Hancox, June 10, 1997, pp. 55-56.
    \4\ Deposition of Karen Hancox, June 9, 1997, pp. 52 (coffees); see 
also id. at p. 109 (overnights); id. at p. 113 (movie events at the 
White House); id. at p. 115 (state dinners).
    \5\ Id., p. 53.
    \6\ Id. at pp. 53-54.
    \7\ See, e.g., id. at p. 70 (``Q: When would you call the NSC 
regarding attendees to coffees or other events. A: If Richard would 
call me up and ask me about a name. Q: Was there ever a time that you 
took it upon yourself to call the NSC regarding any attendees to any of 
the coffee events or any events that Richard Sullivan sent you lists 
for? A: Not that I ever remember, no.'' (emphasis added)); see also 
Deposition of Doug Sosnik, June 20, 1997, pp. 167-68.
    \8\ See Deposition of Karen Hancox, June 9, 1997, p. 101. Hancox 
could remember only one instance in which she received a question about 
a prospective guest that was not prompted by that individual's foreign 
nationality. On that occasion, Sullivan asked Hancox to determine 
whether a particular individual was supportive of the President's 
health care policies. Hancox recalls contacting the White House's 
Office of Public Liaison to address Sullivan's concerns. See id at pp. 
    \9\ See id. at pp. 104-05; see also Deposition of Doug Sosnik, June 
20, 1997, p. 176. Hancox also testified that the responsibility rested 
entirely with Sullivan and the DNC to ensure that suspect individuals 
who had been identified and removed from an event on one occasion did 
not accidentally reappear on a subsequent list. Deposition of Karen 
Hancox, June 10, 1997, pp. 50-53, 62-63.
    Because the White House never raised ``red flags'' about 
his proposals unless he ``proactively asked about'' particular 
guests, Sullivan understood that the White House ``did not 
conduct background checks'' of his proposed guests, and that 
the obligation to weed out unsuitable individuals rested 
primarily with the DNC. 10 Sullivan, however, 
acknowledged a carelessness in the DNC's own vetting, as he 
testified that he operated under the ``false sense . . . that 
truly bad things would have been picked up . . . by the Secret 
Service.'' 11 Sullivan therefore suggested that the 
only category of potential guests that he felt the need to 
raise with Hancox was ``foreign nationals.'' 12
    \10\ See Deposition of Richard L. Sullivan, June 4, 1997, pp. 104-
    \11\ Deposition of Richard L. Sullivan, June 25, 1997, p. 85.
    \12\ See Deposition of Richard L. Sullivan, June 4, 1997, p. 109.
    It is clear, however, that even foreign nationals did not 
necessarily receive proper scrutiny under the White House's 
vetting ``process.'' Hancox testified that Sullivan raised 
concerns about a total of fewer than twelve 
individuals,13 and she has no recollection of 
discussing with Sullivan or the NSC the propriety of White 
House appearances by several prominent foreign subjects of the 
Committee's investigation, including Arief Wiriadinata and a 
delegation of Thai businessmen who accompanied Pauline 
Kanchanalak to a June 18, 1996 coffee.14 Moreover, 
Samuel ``Sandy'' Berger, Assistant to the President for 
National Security Affairs, conceded to the Committee that 
``[t]here obviously were some situations where foreign 
individuals . . . were invited to meetings with the President 
where the NSC's judgment was not [sought].'' 15
    \13\ Deposition of Karen Hancox, June 9, 1997, pp. 78-79; see also 
Testimony of Samuel R. (Sandy) Berger, Sept. 11, 1997, p. 48 (``[T]here 
were a number, but not a huge number of occasions in which the NSC was 
asked its judgment.'').
    \14\ Deposition of Karen Hancox, June 9, 1997, pp. 72-74; see also 
the section of this report on the activities of John Huang at the 
Commerce Department and the section on Coffees, Overnights and other 
Fundraising Events, especially the discussion of Pauline Kanchanalak 
and the June 18, 1996 coffee.
    \15\ Berger testimony, p. 48. Berger also noted the President's 
determination that the existing vetting procedures were inadequate, id. 
at p. 47, and explained that the NSC had adopted procedures that would 
correct these inadequacies by requiring the input of NSC personnel 
every time a foreign national is invited into the White House. Id. at 
pp. 72-73; see also Memorandum from Samuel R. Berger to ``All NSC 
Staff'', June 13, 1997, pp. 1-3 (Ex. 1). After receiving significant 
criticism for acceding to a DNC request for a photograph with Eric 
Hotung, a Hong Kong businessman, British citizen and husband of a 
prominent DNC contributor, Berger, in Ex. 1, also clarified NSC policy 
with respect to meetings between NSC staff and individuals from outside 
of the U.S. government. After promising in September 1995 to contribute 
$100,000 to the DNC, Hotung was granted a meeting with Robert 
Suettinger of the NSC, and a photo opportunity with Berger. See 
Memorandum from David Mercer to DNC Chairman Don Fowler, stating that 
``the Hotungs . . . will be contributing $100,000" and that ``[w]e will 
be helping to set up a meeting with the Hotungs at the [NSC]'', Sept. 
14, 1995 (Ex. 2); Schedule of Robert L. Suettinger indicating a 
September 19, 1995 meeting with Eric Hotung (Ex. 3); electronic mail 
message from Stanley Roth to Sandy Berger indicating that Fowler 
requested a photo opportunity for the ``fabulously wealthy'' Hotung 
with Berger, Oct. 3, 1995 (Ex. 4). Berger testified that he was not 
aware at the time of the photograph that the Hotungs were contributors 
or even that the request was related to the Hotungs' contacts with the 
DNC. Berger testimony, p. 24. Berger did acknowledge, however, that he 
knew that the request originated with Fowler. Id.
    It is also clear that Sullivan was correct when he 
described as a ``false sense'' his ultimate reliance upon the 
Secret Service to catch the unsavory individuals who fell 
through the cracks in the White House's porous vetting system. 
As an initial matter, even the limited vetting conducted by the 
Secret Service occurs only with respect to events held in the 
White House. Hancox testified that with respect to events 
attended by the President that were held outside of the White 
House, she would not even provide attendee lists to the Secret 
Service.16 In those instances, Sullivan's unreliable 
inspection of the guest list for the inclusion of foreign 
nationals served as the exclusive screen.17
    \16\ Deposition of Karen Hancox, June 10, 1997, pp. 9-10.
    \17\ See id.
    Colleen Callahan, the Special Agent in Charge of the Secret 
Service's White House Division, also stated in an affidavit 
submitted to the Committee that the Secret Service plays no 
role in determining the ``suitability'' of individuals for 
White House admittance.18 Instead, the Secret 
Service, which is responsible for the ``physical security of 
the White House Complex and Secret Service protectees within,'' 
19 seeks only to uncover ``pertinent'' criminal 
history of individuals invited into the White House through a 
search for each invitee's name in a database maintained by the 
National Crime Information Center.20 A criminal 
history does not necessarily disqualify an individual from 
White House admittance. Only if the information uncovered by 
the database search ``suggest[s] that the prospective visitor 
may be violent, dangerous or otherwise pose a physical or 
security threat to a protectee or the White House Complex'' 
will the Secret Service limit or deny White House 
access.21 In other words, although the presence in 
the White House of a nonviolent, unthreatening criminal is 
certainly inappropriate, this is not the type of individual 
that the Secret Service would exclude.
    \18\ Affidavit of Colleen B. Callahan, Sept. 9, 1997, p. 1 (Ex. 5).
    \19\ See id.
    \20\ See id. at p. 3.
    \21\ See id. at pp. 3-4.

 The Lack of Proper Vetting Permitted a Series of Unsavory Individuals 
                        Access to the President

    As a result of the White House's admitted failure to 
properly vet its guest lists, several unsavory individuals were 
allowed to enter the White House and to attend events with 
President Clinton. The President's meetings with Ted Sioeng, 
Yogesh Ghandi, Roger Tamraz, and a delegation of Chinese 
businessmen led by Johnny Chung are described in detail in 
other sections of this report.22 The following is a 
summary of additional unsavory individuals whose White House 
visits were permitted to proceed unimpeded.
    \22\ See the sections of this report on Ted Sioeng, Yogesh Gandhi, 
Roger Tamraz, and Johnny Chung.

Jorge Cabrera

    In November 1995, Jorge Cabrera, a Cuban-born U.S. citizen, 
made a $20,000 contribution to the DNC and attended a 
fundraising dinner in honor of Vice President Gore in 
Miami.23 One month later, Cabrera attended a 
Christmas party at the White House and had his picture taken 
with the First Lady.24 At the time of Cabrera's 
White House visit, he had already been convicted of two 
felonies and had served almost five years in prison. Cabrera 
pled guilty in 1983 of obstruction of justice for conspiring to 
bribe a grand jury witness and again in 1988 for filing a false 
income tax return.25 Both charges stemmed from 
arrests on drug charges.26 In January 1996, Cabrera 
was arrested and charged with importing 6,000 pounds of cocaine 
into the United States.27 He is presently serving a 
19-year prison term.28
    \23\ See Don Van Natta, Jr., ``An R.S.V.P. to the President: Deep 
Regrets. I`m in Custody.'' New York Times, March 22, 1997, p. A1.
    \24\ See id.
    \25\ See Anne Farris, ``Secret Service Didn't Tell White House of 
Guest's Criminal Background,'' Washington Post, Oct. 26, 1996, p. A14.
    \26\ See id.
    \27\ See Stanley Meisler, ``Democrats Return Drug Smuggler's 
Check,'' Los Angeles Times, Oct. 20, 1996, p. A25.
    \28\ See id.

Wang Jun

     On February 6, 1996, Charlie Trie escorted a group of 
individuals including Wang Jun to a White House coffee with 
President Clinton.29 Wang Jun's attendance at the 
coffee was arranged primarily by Ernest Green, managing 
director of the Washington, D.C. office of Lehman Brothers and 
a prominent DNC fundraiser.30 Wang Jun is chairman 
of the China International Trust and Investment Corporation 
(``CITIC''), a financial and industrial conglomerate reportedly 
controlled by the Chinese government.31 He is also 
the chairman of Poly Technologies, a company that handles most 
of Communist China's arms exports.32 In 1996, Wang 
Jun and other officials of Poly Technologies were implicated in 
a scheme to smuggle thousands of Chinese-made machine guns and 
assault rifles to criminal elements in the United 
    \29\ See guest list for February 6, 1996 coffee with the President 
attached to ``Coffee with Supporters of the Democratic National 
Committee,'' Feb. 5, 1996, p. 2 (Ex. 6).
    \30\ Although Green emphatically denied any role in Wang Jun's 
attendance at the February 6 coffee, see Deposition of Ernest Green, 
June 18, 1997, pp. 269-70 (``I was not involved in Wang Jun and coffees 
at the White House at all. . . . I was not involved at all in Wang Jun 
and coffees.''), the copy of Wang Jun's resume produced to the 
Committee by the DNC indicates that it was transmitted to the DNC from 
a Lehman Brothers' fax machine. Resume of Wang Jun (Ex. 7). Sullivan 
also testified that the DNC added Wang Jun to the guest list for the 
coffee as a favor to Green. Testimony of Richard L. Sullivan, July 9, 
1997, p. 124. Finally, although Green did not attend the February 6 
coffee, the DNC attributed Green's $50,000 contribution on February 6, 
1996 to the White House coffee held on that day. See ``DNC Finance 
Executive Summary,'' Oct. 17, 1996 (Ex. 8).
    \31\ See Steven Mufson, ``Chinese Firm Details Visit to White 
House; Arkansan is Cited as Intermediary,'' Washington Post, March 18, 
1997, p. A4.
    \32\ See id.
    \33\ See Howard Blum, ``The Trail of the Dargon,'' Vanity Fair, 
December 1997, pp. 226-44 (discussing the discovery of a Chinese arms 
smuggling ring by U.S. Treasury agents).

Eric Wynn

    Eric Wynn attended a December 21, 1995 coffee at the White 
House with President Clinton. 34 At that time, Wynn 
was free on bond pending appeal of his July 21, 1995 conviction 
on thirteen counts of conspiracy, securities fraud and wire 
fraud. 35 Wynn attended four additional fundraisers 
with President Clinton in 1996, despite being arrested several 
additional times for offenses such as assaulting a police 
officer, resisting arrest, aggravated assault with a motor 
vehicle and driving while intoxicated.36
    \34\ See Bob Woodward & Charles R. Babcock, ``Stock Manipulator 
Attended Coffee with Clinton,'' Washington Post, Feb. 1, 1997, p. A1.
    \35\ See id.
    \36\ See Bob Woodward, ``Felon Also Attended 4 DNC Events with 
Clinton,'' Washington Post, Feb. 20, 1997, p. A4.


    Whether by gross negligence or conscious design for 
fundraising purposes, the process in place at the White House 
for the vetting of individuals granted access to the President 
was incapable of keeping unthreatening criminals, inappropriate 
foreign citizens and other disreputable characters out of the 
White House and away from the President. No White House 
employees were specifically charged with evaluating guest lists 
submitted by the DNC for the sorts of unsavory individuals who, 
in fact, later appeared at White House coffees and other events 
with the President and Vice President. Instead, the White House 
left the responsibility with the DNC, which took inappropriate 
comfort in the background checks performed by the Secret 
Service, and therefore only haphazardly reviewed its lists for 
the appearance of foreign nationals. As the Secret Service 
sought to weed out only those criminals who posed a physical 
threat to the White House or the Secret Service's 
``protectees,'' convicted criminals that the Secret Service 
deemed to be nonviolent or unthreatening were permitted to pass 
the White House gate without comment. This was a system 
designed to fail, and it operated precisely as designed.

              Johnny Chung and the White House ``Subway''


    Johnny Chung, a Taiwan-born businessman and self-described 
``die hard Democrat,'' 1 serves as the Chairman and 
Chief Executive Officer of Automated Intelligent Systems, Inc. 
(``AISI'')--a California corporation based in 
Torrance.2 He became prominent as a DNC contributor 
and frequent White House visitor during the 1995-96 election 
cycle. According to records of the FEC, Chung and AISI began 
making substantial contributions to the DNC in August 1994 and 
continued such contributions through August 1996.3 
These contributions during this two-year period totaled 
$366,000.4 After stories began to appear in the 
press about Chung's activities, however, the DNC returned all 
of this money, allegedly because he had provided the party with 
``insufficient information'' as to the source of the 
    \1\ Letter from Johnny Chung to Doris Matsui, Jan. 4, 1995 (Ex. 1).
    \2\ See Biography of Johnny Chung (Ex. 2). AISI provides a fax 
broadcast service that can send faxes simultaneously to thousands of 
    \3\ See Chart of contributions by Johnny Chung and AISI, with 
attached checks (Ex. 3).
    \4\ Id.
    \5\ See DNC press release dated June 27, 1997 (Ex. 4).
    These DNC contributions helped Chung obtain access to the 
White House at least 49 times between February 1994 and 
February 1996 6--access that he used not only to 
further his interests with foreign business clients, but also 
to sit in the vestibule of the First Lady's office and stare at 
photographs of her. Though he had told DNC officials that he 
would be using the White House as a means of entertaining his 
foreign clients, and though the National Security Council 
(``NSC'') regarded him as a ``hustler,'' Chung was granted 
extraordinary access to the White House, and especially the 
First Lady's office. There can be no question that Chung's 
contributions to the DNC helped give him this access to the 
President and the First Lady. So close was the nexus between 
Chung's donations and his visits, in fact, that White House 
officials actually collected money from him in the First Lady's 
office in exchange for allowing him to bring a delegation of 
his clients to White House events. This was, however, no 
surprise to Chung: as he phrased it, ``[t]he White House is 
like a subway: You have to put in coins to open the gates.'' 
    \6\ See White House Visitor Summary for Johnny Chung (Ex. 5); 
United States Secret Service WAVES records for Johnny Chien Chuen Chung 
(Ex. 6). The WAVES records, it should be noted, do not include some 
events that Chung is known to have attended. For example, these WAVES 
records do not show Chung's attendance at the President's Radio Address 
on March 9, 1995. However, the White House produced a video tape and 
photograph contact sheet that confirm his attendance.
    \7\ See Marc Lacey, ``House Subpoenas Torrance Businessman,'' Los 
Angeles Times, Nov. 8, 1997, p. A12.

              johnny chung's admiration for the first lady

    One of the reasons Chung spent so much time in the White 
House was his admiration for First Lady Hillary Rodham Clinton. 
His first contact with the First Lady occurred at least as 
early as April 1993, when she wrote Chung to thank him for the 
concern he had apparently expressed during her father's 
illness.8 Chung and the First Lady apparently first 
met in Little Rock, Arkansas.9
    \8\ Letter from Hillary Rodham Clinton to Johnny Chung, April 12, 
1993 (Ex. 7). In a subsequent letter written two weeks later, the First 
Lady wrote Chung to wish him luck with what she described as his 
``innovative'' fax broadcast business. See Letter from Hillary Rodham 
Clinton to Johnny Chung, April 26, 1993 (Ex. 8).
    \9\ According to Evan Ryan, special assistant to the First Lady's 
chief of staff, Chung once recounted having met the First Lady in 
Arkansas. Deposition of Evan M. Ryan, Aug. 7, 1997, p. 57; see also Ex. 
7 (comment by First Lady that she hoped Chung enjoyed his visit to 
    This attention from the First Lady seemed to have sparked 
in Chung a remarkable fascination with and admiration for 
her.10 Her chief of staff, Margaret A. (``Maggie'') 
Williams, testified in her deposition that Chung told her ``how 
much he admired and respected'' the First Lady and that he 
believed that ``her encouragement had been the turning point in 
his business.'' 11 As Chung's admiration grew, on 
many of his visits to the White House he would simply sit in 
the vestibule of the First Lady's office and stare at pictures 
of her, apparently without any other reason for being 
there.12 Williams' assistant Evan Ryan, for example, 
testified that if Chung were ``in the building'' visiting 
someone else, ``he would stop by.'' 13 The First 
Lady's staff found these visits ``disturbing,'' because Chung 
talked constantly during these visits--continually telling them 
about himself, his business, and his admiration for the First 
    \10\ Ryan, for example, testified that Chung told her that the 
First Lady ``inspired him and he credited that inspiration for getting 
his business and himself going.'' Ryan deposition, p. 57.
    \11\ Deposition of Margaret Ann Williams, May 29, 1997, p. 154.
    \12\ Williams deposition, pp. 158-59.
    \13\ Ryan deposition, pp. 52 & 55.
    \14\ Id., pp. 57-58.
    Williams, however, remained quite well disposed toward 
Chung. While she acknowledged that he ``could be irritating,'' 
she ``didn't care how many times [Chung] wanted to come'' to 
their office.15 Rather, Williams felt strongly that
    \15\ Williams deposition, p. 158.

          Chung be accorded respect in our office, and I 
        realize I may have pushed the limits, but my experience 
        had been at the White House that people of color and 
        others in my view were not given overall the kind of 
        respect that white males were, and I decided I'm the 
        boss of this office. This is one office where I can run 
        it the way I want to run it, and the guy is genuinely, 
        whether right or wrong, interested and grateful to Mrs. 
        Clinton and doesn't hurt, but he's a contributor to our 
        part [sic], and we are going to treat him as well as we 
        would treat any other irritable jerk who would show 
    \16\ Id., p. 168.

Determined, therefore, to accord such a ``contributor'' the 
respect he deserved, Williams permitted Chung to continue his 

                         visit by haomen group

    Chung may have admired the First Lady, but he was not above 
using his DNC contributions--and Williams' indulgence--as a 
means to impress his business clients through displays of his 
access to the President and First Lady. In a January 6, 1995 
newsletter to the shareholders of AISI, for example, Chung 
boasted of his political clout, claiming that he had ``built up 
connections to easily arrange visitations to the White House 
and meetings with the President.'' 17 His activity 
in this regard was well known to officials at the DNC. Indeed, 
Chung had even advised the DNC that his foreign business 
clients would be supporting the Democratic Party: in a letter 
to Doris Matsui in January 1995, for example, Chung declared 
that over the next two years he would be ``coordinating a lot 
of visits from Asian business leaders to support [the] DNC.'' 
    \17\ Letter from Johnny Chung to ``All Shareholders,'' Jan. 6, 1995 
(Ex. 9).
    \18\ Ex. 1 (advising Doris Matsui of these plans); see also Letter 
from Johnny Chung to Richard Sullivan, Dec. 14, 1994 (Ex. 10) 
(advising, in connection with visit of a Chinese businessman to White 
House, that this businessman would ``play an important role in our 
future party functions'').
    One of the examples of White House access Chung cited in 
his January 1995 newsletter was ``the arrangement of a meeting 
for Chairman Chen of Tangshan Haomen Group, the second largest 
beer manufacturer in China with President Clinton.'' 
19 Chung arranged this meeting with the assistance 
of Richard Sullivan, who was then the Finance Director of the 
DNC. In December 1994, Chung wrote Sullivan to relate that he 
would be bringing a group of Chinese businessmen to the White 
House, including Shi-Zeng Chen, the founder and president of 
Tangshan Haomen Group.20 Chung requested Sullivan's 
assistance in arranging lunch at the White House Mess, and 
asked that the delegation be allowed to have their photograph 
taken with President Clinton after his weekly radio address.
    \19\ Ex. 9.
    \20\ Ex. 10.
    To speed this process along, Chung made a $40,000 
contribution to the DNC in the name of his company, AISI. 
Although Sullivan would later come to suspect that Chung was 
laundering foreign money into the DNC--and although Chung 
explicitly told Sullivan that Chen would ``play an important 
role in our future party functions'' 21--Sullivan 
was apparently unconcerned about this AISI donation and 
accepted it without question. Chung was admitted to the White 
House on December 19, 1995, the same day that FEC records show 
the DNC's receipt of his $40,000.22 The next day, 
Chung, Shi-Zeng Chen, and the rest of the Haomen delegation 
were admitted to the White House residence for a holiday 
reception; 23 they had their pictures taken with the 
President and the First Lady.24
    \21\ Ex. 10.
    \22\ The Committee never received the WAVES records of Shi-Zeng 
Chen, and was therefore unable to determine whether he also entered the 
White House on this date.
    \23\ WAVES records for December 20, 1994 holiday reception (Ex. 
    \24\ See AISI brochure containing picture of Chung and Shi-Zeng 
Chen with the President and the First Lady (Ex. 12).

                           the radio address

    Despite Chung's $40,000 contribution, however, DNC Finance 
Director Richard Sullivan had only partly fulfilled Chung's 
request: the Haomen group had not been able to attend the 
President's radio address as Chung had requested. Two months 
later, Chung again requested Sullivan's assistance in arranging 
visits to the DNC and to the White House for his business 
clients--another group of Chinese business executives 
25--this time presenting a longer and more specific 
list of requested services. In a letter dated February 27, 
1995, Chung requested that Sullivan help arrange (1) a meeting 
with President Clinton, (2) a meeting with Vice President Gore, 
(3) lunch at the White House mess, (4) a tour of the White 
House, and (5) a meeting with Commerce Secretary Ron 
Brown.26 Chung sent an identical letter to Eric 
Sildon at the DNC,27 and faxed a letter to Ann McCoy 
of the White House Visitor's Office requesting her assistance 
in arranging a White House tour.28 He apparently 
also asked Mark Middleton for help in setting up meetings with 
President Clinton and Vice President Gore, and in arranging a 
luncheon at the White House Mess.29
    \25\ Letter from Johnny Chung to Richard Sullivan, Feb. 22, 1995 
(Ex. 13) (providing list of people who would be visiting the White 
House and the DNC).
    \26\ Letter from Johnny Chung to Richard Sullivan, Feb. 27, 1995 
(Ex. 14).
    \27\ Letter from Johnny Chung to Eric Sildon, Feb. 27, 1995 (Ex. 
    \28\ Letter from Johnny Chung to Ann McCoy, Feb. 28, 1995 (Ex. 16).
    \29\ Id. 
    By now, at least, Sullivan was becoming suspicious, and did 
not help Chung as much as he had for the Haomen delegation. 
According to Sullivan,

          Johnny had showed up at the DNC and asked if I would 
        get in--said that he would make a contribution to us of 
        $50,000 if I would get he and five members of his 
        entourage into a radio address with the President. They 
        were all for [sic] China.30
    \30\ Deposition of Richard Sullivan, June 4, 1997, p. 228.

This time, Sullivan later claimed, he was concerned about 
accepting money from Chung:

          We had gotten money from Johnny previously. I think 
        he had contributed about 100,000 to that point over the 
        past year, and the fact that--him showing up with these 
        five people from China, I had a concern that he might--
        that they--he might be taking--I had a sense that he 
        might be taking money from them and then giving it to 
        us, you know. That was my concern.31
    \31\ Id.

    Though Sullivan was unaware of it at the time, there were 
indeed some grounds for concern in this respect. On March 6, 
1995, three days before Chung made his next $50,000 
contribution to the DNC--in connection with the visit of this 
second group of Chinese executives--he received a wire transfer 
from the Haomen Group in the amount of $150,000.32 
Chung has claimed that he made his DNC contribution entirely 
from personal funds, and that the wire transfer was made as 
part of a joint venture with the Haomen 
businessmen.33 As of February 28, 1995, however, the 
balance of the account upon which his check was drawn was only 
$9,860,34 and Chung was apparently never engaged in 
any U.S. business with the Haomen Group.
    \32\ Record of wire transfer from Haomen Group to Johnny Chung's 
California Federal Bank account (Ex. 17); California Federal Bank 
statement for account of Johnny Chung or Katharina T. Chung for period 
ending March 26, 1995 (Ex. 18).
    \33\ Glenn Bunting and Alan Miller, ``2 Donors to Democrats Linked 
to Asian Funds,'' Los Angeles Times, July 11, 1997, p. A1. The 
Committee has received a detailed proffer from Johnny Chung and his 
attorney, as part of their request for immunity in exchange for Chung's 
testimony after he invoked his Fifth Amendment privilege against self-
incrimination. The Committee, however, declined to offer Chung 
immunity. The information contained in Chung's proffer has not been 
used in the preparation of this report.
    \34\ Ex. 18. Chung, however, claims that he had more than enough to 
afford the $50,000 in other accounts. See William Rempel & Alan Miller, 
``First Lady's Aide Solicited Check to DNC, Donor Says,'' Los Angeles 
Times, July 27, 1997, p. A1.
    Although Sullivan had concerns about accepting Chung's 
contribution, he was nevertheless willing to arrange a meeting 
for Chung and his delegation with DNC Chairman Don 
Fowler.35 After meeting with Chung and the 
delegation, Fowler sent a follow-up letter to one of the 
delegation members, Zheng Hongye,36 describing Chung 
as ``an excellent facilitator'' and declaring that the 
``Democratic Party is lucky to have him as one of our most 
ardent DNC members.'' 37 Despite Fowler's 
enthusiasm, however, Sullivan did not accept Chung's proferred 
contribution and refused to help him arrange the requested 
White House services.
    \35\ Memorandum from Richard Sullivan & Ari Swiller to Katherine, 
March 1, 1995 (Ex. 19) (discussing scheduling request for Chairman 
Fowler on March 8); see also Ex. 14 (noting ``meet Don Fowler'').
    \36\ Deposition of Donald L. Fowler, May 21, 1997, p. 324; see also 
Letter from Don Fowler to Zheng Hongye, March 14, 1995 (Ex. 20) 
(discussing their meeting the previous week).
    \37\ Ex. 20.
    Stymied with the DNC, Chung then appealed directly to the 
First Lady's office for help with his delegation's visit. On 
March 8, 1995, Chung requested Evan Ryan's assistance in 
obtaining four benefits: (1) a tour of the White House; (2) 
lunch in the White House Mess; (3) a photo with the First Lady; 
and (4) an invitation to attend the President's Radio Address 
for himself and his delegation.38 To clarify his 
point, in making these requests, Chung told Ryan that he would 
also be making a contribution to the DNC when he was in 
Washington, D.C. for this trip.39 Although Ryan did 
not recall Chung mentioning a specific amount, she recalled 
learning at some point by March 10, 1995, that he intended to 
give $50,000.40
    \38\ Ryan deposition, p. 69. Chung did not request Ryan's 
assistance in arranging a meeting with Secretary Ron Brown. Richard 
Sullivan and Ari Swiller's memorandum to Katherine mentioned that Chung 
and the delegation from China would be meeting with Secretary Brown 
during the afternoon of March 9, 1995. See Ex. 19.
    \39\ Ryan deposition, p. 75.
    \40\ Id.
    Although the DNC had turned him away, Chung had better luck 
at the White House. After talking with Chung, Ryan immediately 
informed Maggie Williams of the requests to see if they could 
be fulfilled.41 According to Ryan, Williams 
responded ``that we would look into it [in order to] see if we 
could arrange anything,'' 42 and instructed Ryan to 
make the telephone calls necessary to arrange a White House 
tour and lunch at the White House Mess for Chung's delegation 
of Chinese businessmen.43
    \41\ Id., p. 77.
    \42\ Id.
    \43\ Id., pp. 84-85.
    In this same conversation, Ryan also told Williams that 
Chung intended to make a contribution to the DNC.44 
Upon hearing this, Williams said that the DNC might be able to 
use this money to pay debts it owed the White House, and told 
Ryan that she would accordingly speak to Fowler about this 
matter.45 Williams apparently attempted to reach 
Fowler at least twice that same day, because Fowler left two 
messages for Williams on March 8, 1995, indicating that he was 
returning her calls.46
    \44\ Id., p. 77.
    \45\ Id., pp. 80-81.
    \46\ Telephone message slips to Maggie Williams from Don Fowler 
dated March 8, 1995 (Ex. 21).
    Having been instructed by Williams to help arrange for his 
delegation to visit, Ryan informed Chung that the First Lady's 
staff would try their ``best'' to fulfill his 
requests.47 According to Ryan, this pleased Chung; 
he told Ryan that he hoped Williams would get ``credit'' for 
his DNC contribution.48 After Chung left, Ryan set 
about making the necessary arrangements. Ryan called the White 
House Mess to make a reservation in Williams' name for Chung 
and his group,49 and called Ann McCoy in order to 
arrange for a tour of the White House.50 Ryan did 
not make the arrangements for the photo opportunity with the 
First Lady, however, because she understood this to be 
Williams' responsibility.51
    \47\ Ryan deposition, p. 84.
    \48\ Id., p. 86. Ryan also testified that at some point on March 8 
or 9, 1995, Chung told her that ``he wanted this check to go to Maggie 
to be delivered to the DNC.'' Id., pp. 83-84.
    \49\ Id., pp. 93-94.
    \50\ Id., pp. 91-92.
    \51\ Id., p. 97.
    Chung and his delegation arrived at Ryan's office around 
11:30 a.m. on March 9, 1995. Ryan then escorted them to the 
White House Mess for lunch,52 after which they were 
given a private tour of the White House.53 After the 
tour, Chung and his delegation returned at approximately 2:00 
p.m. that afternoon and were escorted to the Map Room by Ryan 
for their photo opportunity with the First Lady arranged by 
    \52\ Id., p. 103.
    \53\ Id.
    \54\ Id., p. 105.
    After the photograph, Ryan returned with the group to her 
office, where Chung told her that ``he wanted to give his 
contribution to Maggie and wanted to have her get it to the 
DNC.'' 55 According to Ryan, when she stepped into 
Williams' office to inform Williams of Chung's desire to do 
this,56 Williams asked Ryan to bring Chung into the 
office.57 As Ryan stood at the door of Williams' 
office, Chung handed Williams an envelope containing a check 
for $50,000 made out to the DNC.58 This contribution 
apparently made it possible for Chung to achieve what had 
hitherto been denied him: his clients' attendance at President 
Clinton's weekly radio address on March 11, 1995.
    \55\ Id., p. 114.
    \56\ Id., p. 116.
    \57\ Id., p. 117.
    \58\ Id., pp. 117-18; see also Williams deposition, pp. 173-74 
(recounting accepting envelope given her by Chung to pass along to 
DNC); copy of canceled check for $50,000 to the DNC dated March 9, 1995 
from Johnny Chung and Katharina Chung (Ex. 22). Chung also handed 
Williams two sweaters for the First Lady on March 9, 1995. See White 
House Gift Register (Ex. 23); White House gift tracking form for two 
sweaters presented by Johnny Chung to Maggie Williams on March 9, 1995 
(Ex. 24). Although Ryan testified that she did not remember seeing 
Chung present the sweaters to Williams, she did remember seeing them on 
Williams' couch on either March 8 or 9. Ryan deposition, p. 124.
    According to Chung, in fact, Williams and Ryan had actively 
solicited the donation. Upon meeting Ryan on March 8, Chung 
recalled, he had asked whether his friends could have lunch in 
the White House Mess and meet the First Lady--and whether there 
was anything that he could do, in return, to help the White 
House. Ryan told him that ``the first lady had some debts with 
the DNC'' on account of expenses incurred through White House 
holiday festivities; Chung believes that Ryan mentioned a 
figure of about $80,000.59 Ryan told him that she 
was relaying this request on behalf of Williams, who hoped that 
Chung could ``help the first lady'' defray these costs. As 
Chung remembers it, at that point ``a light bulb goes on in my 
mind. I start to understand . . . I said I will help for 
$50,000.'' 60
    \59\ Rempel & Miller, supra note 34. Though Ryan did not supply a 
figure, this account of unpaid DNC debts corresponds closely to Ryan's 
own recollection. See Ryan deposition, p. 81.
    \60\ Rempel & Miller, supra note 34.
    Although Williams testified that she did not recall making 
arrangements for Chung and his delegation to attend the radio 
address,61 a memorandum from Betty Currie, the 
President's personal secretary, indicates that Williams had 
some involvement.62 More specifically, Chung recalls 
that after he handed his envelope to Williams, she immediately 
led him into her private office and telephoned to reserve his 
group a table at the White House Mess.63 DNC 
officials apparently also played a role in setting up the radio 
address.64 According to Fowler,
    \61\ Williams deposition, p. 198.
    \62\ According to this memorandum, Ceandra Scott of the DNC had 
been ``concerned about Johnny Chung'' and informed Currie that

      we should have called them prior to their coming to the 
      Radio Address. Apparently they were in Maggie's office when 
      request came and Maggie said she didn't know, but to 
      contact DNC.

Memorandum from Betty Currie to Jon, March 28, 1995 (Ex. 25). According 
to Currie, she meant by this that Nancy Hernreich should have called 
Scott prior to Chung's attendance, and that Chung was in Williams' 
office when he requested an invitation to the radio address. Williams, 
Currie explained, claimed not to know how to arrange Chung's 
attendance, but recommended contacting the DNC. Deposition of Betty W. 
Currie, Aug. 7, 1997, pp. 95-102. (Currie could not explain, however, 
why Scott would believe that someone at the White House needed to 
contact her before Chung could attend the radio address. Currie did not 
have any other recollection of her memorandum. Id., p. 103.)
    \63\ Rempel & Miller, supra note 34.
    \64\ See list of attendees at Radio Address (Ex. 26). Johnny Chung 
and the delegation from China are listed under the category of ``DNC 
Donors.'' (The list of attendees at the Radio Address also includes 
what appears to be the President's left-handed check mark next to the 
``DNC Donors'' category.)

          Johnny Chung called my office, not me but my office, 
        and Carol Khare talked to him. He said that he and some 
        friends wanted to go to a Saturday radio address. This 
        was just a few weeks after I came up there. Ms. Khare 
        didn't know anything about--any more about that process 
        than I did. She went out to this open area where the 
        clerical people were and said, ``This guy in here wants 
        to go to the White House address. Does anybody here 
        know how to do that or know anything about it?''
          Sandra [sic] Scott, who was still there, said, ``Yes, 
        I know the person at the White House who does that.'' 
        And Ms. Khare said, ``Will you call and see if it can 
        be done?'' She called her friend--and I don't know how 
        [sic] that person is, not at all--and said, ``Can you 
        arrange this?'' And she said, ``I don't know. I will 
          Ms. Khare went back and reported that to Chung and 
        that's what I know about it and it's all 
    \65\ Fowler deposition, pp. 154-55.

    Indeed, according to an NSC e-mail message, it was Fowler 
himself who stepped in during the evening before the March 11, 
1995 radio address to ensure that Chung could attend. According 
to this document, the

        head of the DNC asked the President's office to include 
        several people in the President's Saturday Radio 
        Address. They did so, not knowing anything about them 
        except that they were DNC contributors.66
    \66\ E-mail from Melanie Darby to Roseanne Hill, Stanley Roth and 
Robert Suettinger, April 7, 1995 (Ex. 27).

In any event, it was the Office of Oval Office Operations that 
apparently made the final arrangements for Chung's attendance 
at the radio address.67
    \67\ See Deposition of Nancy Hernreich, May 21, 1997, p. 60. 
Hernreich testified that her assistant schedules the attendees at radio 
addresses; at the time Chung and the delegation from China attended, 
Hernreich's assistant was Kelly Crawford. Id. According to press 
reports, Carol Khare took Chung's call to Don Fowler requesting a face-
to-face meeting with the President and referred the request to Ceandra 
Scott. Scott contacted the First Lady's office, whereupon the request 
to let Chung and the delegation attend the Radio Address was approved 
by Crawford. See, e.g., Marc Lacey, ``Missing Donor Still Target of 
Brickbats,'' Los Angeles Times, Nov. 14, 1997, p. A14.
    Despite the fact that Chung's requests had now been 
fulfilled, Sullivan informed Chung that the White House--acting 
on the advice of NSC staff members--did not intend to release 
copies of the photographs Chung's delegation had taken with the 
President.68 Displeased by this, Chung faxed letters 
on April 5, 1995 to Williams seeking her assistance in 
obtaining these pictures.69 According to an e-mail 
message sent to other NSC officials on April 7 by NSC staff 
member Melanie Darby,70 Darby soon thereafter spoke 
with or received a message from Nancy Hernreich--whose office 
had arranged Chung's attendance at the radio address and who 
now urgently needed to know whether or not she could give Chung 
the photos from the radio address when he stopped by her office 
the next day.71 Although Sullivan had by that point 
already told Chung of the problem with the photographs, there 
is no evidence that the NSC was asked whether the photos could 
be released until April 7, 1995.72 In fact--although 
Fowler's office reportedly wanted to release the photographs 
because ``these people are major DNC contributors'' 
73--it appears that the photos were retained because 
of concerns expressed by the President himself.74
    \68\ See letter from Johnny Chung to Maggie Williams, April 5, 1995 
(Ex. 28) (regarding photos from Radio Address).
    \69\ See id. 
    \70\ Ex. 27.
    \71\ Hernreich testified that she did not make this request to the 
NSC and does not know who did. Hernreich deposition, pp. 64-65. This 
testimony directly contradicts a White House document listing Chung's 
name and those of the members of his Chinese delegation, which also 
contains a handwritten note to Nancy Soderberg of the NSC. Name List of 
Delegation (Ex. 29). This handwritten note appears to be from 
Hernreich, because it is signed ``NH'' and was made with the same type 
of calligraphy pen Hernreich customarily uses. See Hernreich 
deposition, p. 125. Although a portion of this note is illegible, it 
references the Chung radio address and states that ``before photos are 
sent out we need to know if we should not send them.'' Ex. 29.
    \72\ This was the date of Darby's e-mail message to other members 
of the NSC staff inquiring about this matter. See Ex. 28.
    \73\ Ex. 28.
    \74\ See id. (recounting Chung photograph issue to NSC staff). 
Moreover, Hernreich recounted that the President had said, with regard 
to the attendance of Chung's group at the radio address, that ``[w]e 
shouldn't have done that.'' Hernreich deposition, p. 67. Hernreich 
understood this to mean that Chung's clients were ``inappropriate 
foreign people.'' Id., pp. 67-68.
    Replying to Darby's query, however, NSC staff member Robert 
Suettinger cautioned her that he thought Johnny Chung was a 
``hustler'' who ``should be treated with a pinch of suspicion'' 
and predicted that Chung would ``become a royal pain, because 
he will expect to get similar treatment for future visits.'' 
75 Nevertheless, Suettinger did not ``see any 
lasting damage to U.S. foreign policy'' by giving Chung the 
photos and that ``to the degree it motivates him to continue 
contributing to the DNC, who am I to complain?'' 76 
At some point thereafter, the photographs appear to have been 
given to Chung.77
    \75\ E-mail from Robert Suettinger to Melanie Darby, April 7, 1995 
(Ex. 30).
    \76\ Id.
    \77\ See White House contact sheet of photos with the First Lady 
from March 9, 1995 (Ex. 31). On April 11, 1995, in fact, Carol Khare 
apparently sent a fax to Chung exclaiming that, ``[t]he White House 
assures me that you now have the pictures--hurray! If you don't, give 
me a call.'' Facsimile cover sheet from Carol Khare to Johnny Chung 
sent April 11, 1995 (Ex. 32). Hernreich, however, claimed to have been 
unaware that Chung had received the photos. See Hernreich deposition, 
p. 66.
    As Suettinger's comments suggest, White House officials 
were apparently willing to overlook Chung's faults in light of 
his considerable contributions to the DNC. Indeed, after the 
radio address episode, Chung was admitted into the White House 
at least 16 additional times, 12 of which were at the request 
of Evan Ryan.78 ``Hustler'' or not, Johnny Chung was 
a source of money for the DNC, and the White House granted him 
and his Chinese clients almost unquestioned access--even to the 
point of actually considering hiring Chung's company to work 
for the White House and the DNC.79 White House and 
DNC officials, therefore, treated Johnny Chung, his business, 
and his Chinese clients as favored guests, ``not knowing 
anything about them except that they were DNC contributors.'' 
80 That was, apparently, all that mattered.
    \78\ See White House Visitor Summary for Johnny Chung (Ex. 5). 
Despite Suettinger's warning, Maggie Williams, who had instructed Ryan 
to admit Chung, testified that the NSC never informed her that Chung 
should be treated with a ``pinch of suspicion.'' Williams deposition, 
p. 202.
    \79\ As detailed in White House documents only produced to the 
Committee in mid-January 1998--after its investigation had been 
completed--Chung's contributions appear also to have persuaded Harold 
Ickes and Erskine Bowles to urge the DNC to hire Chung's company. Ickes 
told the DNC's Bobby Watson, for example, that he ``strongly urge[d]'' 
the DNC to acquire a broadcast fax capability through AISI: ``Johnny 
Chung's firm has such capability which should be negotiated.'' 
Memorandum from Harold Ickes to Bobby Watson, July 17, 1995 (Ex. 33). 
White House officials also met with AISI representatives to inquire 
into the possibility of hiring the company, although they ultimately 
concluded that there would be ``legal concerns'' were the White House 
itself to hire Chung. See Memorandum from Brian Bailey for 
Distribution, March 8, 1995 (Ex. 34). According to Bailey, ``[i]n prior 
administrations, similar proposals for mass communications have been 
rejected by White House Counsel, which viewed such activities as 
violations of anti-lobbying rules.'' Memorandum from Brian Bailey for 
Erskine Bowles, March 21, 1995 (Ex. 35) (emphasis in original). Because 
of these worries, Bailey recommended that the DNC, rather than the 
White House pursue this matter with Chung.
    \80\ Ex. 27.

                   The Contribution of Yogesh Gandhi


    Yogesh Kathari Gandhi arrived in Washington, D.C., on May 
13, 1996 with a bust of Mohandas K. Gandhi, an entourage of 
foreign spiritualists, his checkbook, and a keen desire to meet 
the President. Gandhi was rebuffed in his attempts to gain 
access to the White House, and, indeed, the White House staff 
concluded that Gandhi was ``clearly disreputable.'' 
Nonetheless, once the checkbook had been opened, Gandhi 
successfully arranged for his foreign backers to present the 
bust to the President at a DNC fundraising dinner. In this 
instance, the contributor's dogged tenacity, paired with the 
complicity of some DNC fundraising officials, prevailed over 
attempts by White House staff to protect the President from an 
episode that led to the acceptance of illegal foreign 
contributions which were ultimately returned by the DNC.
    Yogesh Gandhi is a 48-year-old citizen of India and legal 
resident of California who moved to the United States in 1988 
and established the Gandhi International Memorial Foundation 
(``the Foundation''), now located in Orinda, California. Yogesh 
Gandhi claims to be a great grand-nephew of Mohandas K. Gandhi. 
He was born Yogesh Kathari and changed his surname to Gandhi 
only when he came to the United States. The Foundation, and 
Gandhi, initially focused their efforts on the erection of 
statues of Gandhi in major cities around the world. In recent 
years, however, the presentation of an award given in the name 
of Mahatma Gandhi (``the Prize'') has become the principal, if 
not sole, activity of the Foundation.
    The Prize has typically consisted of both a bust of Mahatma 
Gandhi and a cash award. It has been presented to Mother 
Teresa, Nelson Mandela, and Mikhail Gorbachev, among others. 
The Committee has concluded that the various recipients of the 
Prize, the Foundation, and ultimately the legacy of Mohandas K. 
Gandhi have been exploited to increase the visibility and 
stature of Yogesh Gandhi and his magnate patrons.
    Hogen Fukunaga, a 52-year-old citizen of Japan who leads a 
religious sect called Tensei was the beneficiary of the events 
of May 13, 1996. The scheme was structured as follows: Yogesh 
Gandhi supplied the Gandhi name, which gained Fukunaga entree 
to a photo opportunity with the President. Funding for the 
venture and the DNC contribution came from Yoshio Tanaka, a 64-
year-old Japanese health products tycoon. To complete the 
circle, the Committee has learned--from Barry Flint, a United 
States-based associate of Tanaka--that Gandhi and Tanaka were 
helping Fukunaga in the ultimate expectation that he, or his 
sect, would make a large contribution to Tanaka's Earth Aid 
International Foundation.1
    \1\ Memorandum of Interview of Barry Flint, April 7, 1997. Indeed, 
Flint informed the Committee that Gandhi, Tanaka, and Fukunaga also 
attended a United Nations conference in Istanbul for which Gandhi had 
paid $100,000 in funds provided to him by Tanaka. Id.

                  Gandhi's Statements to the Committee

    On March 25, 1997, Committee staff met with Gandhi at the 
Foundation's office in Orinda, California. During the 
interview, Gandhi provided demonstrably false and misleading 
information as to the circumstances of the May 13, 1996 dinner, 
as well as the source of the funds contributed to the DNC in 
connection with that event.2
    \2\ Memorandum of Interview of Yogesh Gandhi, March 29, 1997.
    Gandhi stated in the interview that the Board of Directors 
of the Foundation decided to present the Prize to President 
Clinton in late 1995 or early 1995. Gandhi contacted the White 
House, which, he said, agreed to accept the bust of Gandhi but 
not the accompanying cash award. Although the bust was 
ultimately presented at a DNC fundraising dinner, Gandhi 
insisted that there was no connection between the opportunity 
to present the bust to the President and his contribution to 
the DNC.
    Gandhi acknowledged that he had paid $325,000 to attend a 
DNC fundraising dinner in Washington on May 13, 1996. He told 
the Committee that he wanted to go to the dinner because it was 
his 45th birthday and his mother was visiting from India. 
Gandhi brought a total of 13 guests, including Fukunaga and 
Tanaka, whom Gandhi identified as members of the Foundation's 
International Advisory Board. For his party of 14, Gandhi paid 
over $23,200 per person to attend the dinner.
    Gandhi further stated in the interview that he had met with 
Charlie Trie the afternoon of the dinner, that there was a 
disagreement about the price of admission, and that haggling 
ensued. Gandhi thought the price for the dinner was $12,500 for 
a table but told the Committee that Trie wanted $12,500 per 
person. Either way, Gandhi paid more than the alleged ticket 
price. Ultimately, Gandhi wrote a check for $325,000, which was 
more money than he had anticipated spending. Gandhi 
acknowledged that he asked Trie to make sure that the check was 
not cashed for ten days, so that he could move money into his 
bank account.3
    \3\ As is discussed below, this portion of Gandhi's statement 
appears to be accurate. The DNC held Gandhi's check until May 28, 1996, 
before cashing it.
    Gandhi said that while he was in Washington, it occurred to 
him that he could ``kill two birds with one stone'' and present 
the Gandhi Prize at the DNC dinner. He stated that he kept a 
spare bust of his eminent ancestor in New York, and made 
arrangements for an associate to fly it to Washington that 
afternoon. At the dinner, Gandhi further claimed, he approached 
the Secret Service with his request to present the Prize, and 
was allowed to make the presentation, with Fukunaga and Tanaka, 
after the dinner.
    Gandhi provided a number of inconsistent explanations as to 
the source of the funds that he contributed to the DNC. During 
the course of the interview, he variously maintained that the 
funds were: (1) family money which had been wired in from 
Egypt; (2) the proceeds of a technology transfer transaction he 
had undertaken with a unnamed Australian firm; (3) an advance 
on such a deal; and/or (4) simply money that he had in the 
account. In the course of the interview, Gandhi agreed to 
provide bank records from the relevant period (April-June 
1996), however, such records were never voluntarily supplied to 
the Committee.
    Pursuant to an agreement with Gandhi, on July 1, 1997, 
Committee staff traveled to Orinda, California, to take his 
deposition. Gandhi appeared with counsel, who stated that 
Gandhi would decline to answer questions in reliance upon his 
Fifth Amendment right against self-incrimination.4
    \4\ Gandhi's attorney confirmed this assertion of the privilege in 
writing by correspondence dated July 1, 1997. Letter from Peter J. 
Coleridge, Esq., to Matthew J. Herrington, July 1, 1997 (Ex. 1).

             What the Committee's Investigation Established

    Contrary to Gandhi's vanilla description of the events of 
May 13, 1996, the Committee has established that the 
presentation of the Prize was arranged on a straightforward 
pay-to-play basis. Only after Gandhi was rebuffed by the White 
House did he turn to the DNC, which charged $325,000 for a few 
moments rental of the Presidency to a disreputable con man.
     In February of 1996, Gandhi wrote to the White House with 
the news that President Clinton had been selected to receive 
the Gandhi World Peace Award.5 Gandhi also arranged 
for both Matin Royeen, a Clinton-Gore reelection campaign 
volunteer who wrote on campaign letterhead to the First Lady, 
and Senator Charles S. Robb to contact the White House in 
support of the invitation.6 Through an examination 
of records produced by the White House, the Committee has been 
able to reconstruct the events leading up to the rejection of 
Gandhi's proposal to present the Prize to the President.
    \5\ Letter from Yogesh Gandhi to President Clinton, February 5, 
1996 (Ex. 2).
    \6\ Letter from Matin Royeen to Hillary Clinton, February 15, 1996 
(Ex. 3); Letter from Senator Charles S. Robb to President Clinton, 
March 26, 1996 (Ex. 4).
    First, the invitation was referred to the National Security 
Council (``NSC''). Andrew Sens, responding on behalf of the 
NSC, demurred, citing the fact that the Foundation was a United 
States entity, with the implication that the matter was outside 
of the NSC's jurisdiction.7 After the Gandhi matter 
became public, Sens informed Harold Ickes that the FBI 
considered Gandhi ``a fraud.'' 8
    \7\ Memorandum from Andrew Sens to Stephanie Streett, March 13, 
1996 (Ex. 5).
    \8\ Notes of Harold Ickes, October 20, 1996 (Ex. 6).
    Second, the White House Office of Public Liaison, and 
specifically Doris O. Matsui and her staff, undertook an 
investigation and found that Gandhi's Foundation ``wasn't a 
reputable organization.'' 9 Indeed, the White House 
staff was informed that the Foundation was a ``one-man 
organization'' that Gandhi ``made a living out of,'' and that 
Gandhi would ``take advantage of'' a meeting with the 
President, who would be ``hurt'' by the 
    \9\ Deposition of Ann T. Eder, May 28, 1997, p. 201.
    \10\ Undated, handwritten notes of the White House Office of Public 
Liaison Staff (Ex. 7).
    Finally, the White House staff conducted a LEXIS/NEXIS 
search which revealed that, in addition to the luminaries cited 
by Gandhi, the Prize had been given to Ryoichi Sasakawa in 
1987. In an article retrieved by the search, and produced to 
the Committee by the White House, Sasakawa was described by the 
Los Angeles Times as a ``billionaire former war crimes suspect 
who made his fortune promoting motorboat gambling.'' 
11 The same article stated that Sasakawa ``is known 
in Japan as `The Godfather' because of his alleged connections 
to Gangsters.'' 12
    \11\ Memorandum (with press clipping attachments) from Chrysanthe 
Gussis to Kathi Whalen, March 14, 1996 (Ex. 8).
    \12\ Id.
    On April 17, 1996, the White House formally regretted on 
behalf of the President.13 There is no question that 
Gandhi misled the Committee as to the decision of the White 
House: he maintained that the White House had agreed to accept 
the Prize and that it was happenstance that the presentation 
occurred at a DNC event. In fact, the White House flatly turned 
down Gandhi, which is why he had to scramble to arrange a DNC 
venue for the presentation of the Prize and, moreover, the 
Fukunaga photo op.
    \13\ Letter from Stephanie S. Streett & Anne Walley to Yogesh 
Gandhi, April 17, 1996 (Ex. 9).
    To a less industrious huckster--or perhaps to a huckster 
under less pressure to produce the President for his client--
the White House's April 17, 1996 ``no'' might have been the end 
of the affair. In fact, it was only the beginning, and Gandhi 
soon found that John Huang and the DNC would oblige his 
request--if the price was right. Huang has refused to answer 
the Committee's questions, but the documentary record and the 
deposition testimony of his DNC colleagues demonstrate that he 
was the key DNC staffer responsible for Gandhi's contribution.
    Contrary to Gandhi's assertion to the Committee that there 
was no connection between his contribution and the presentation 
of the Prize to President Clinton, DNC General Counsel Joe 
Sandler testified that the two were directly linked from the 
start: ``Huang told me that Gandhi expressed an interest in 
attending an event with the President and that he wanted to 
contribute to the Democratic Party. He also wanted to, in 
connection with attending an event, present this award to the 
President.'' 14 When Huang had settled on the May 13 
Sheraton-Carlton dinner as the appropriate venue, Huang 
arranged in advance with Craig Livingstone, who was the lead 
White House advance person for the event, for the President to 
receive the Prize during a private reception in a separate room 
at the dinner.15
    \14\ Deposition of Joseph E. Sandler, May 15, 1997, p. 108. Huang 
was apparently introduced to Gandhi through Sharon Singh, a DNC 
activist in the Indian-American community. Id., 107-108. Because Huang, 
Trie, and Gandhi have all declined to provide testimony, the Committee 
has been unable to establish the details of the involvement of Huang 
and Trie in the Gandhi affair.
    \15\ Sandler deposition, May 15, 1997, p. 111. Sandler's testimony 
not only betrays the duplicity of Gandhi's statements to the Committee, 
but also calls into question the pronouncements of DNC spokesperson Amy 
Weiss Tobe. Prior to the November 1996 election, Tobe told the press 
that the DNC had not known in advance that Gandhi intended to present 
the Prize to the President on May 13. See Alan Miller, ``A Picture 
Worth $325,000?,'' Los Angeles Times, Nov. 2, 1996, p. A1. The disjunct 
between Sandler's testimony and Tobe's statements to the press is 
particularly jarring in that she apparently spoke with Sandler about 
the circumstances of the Gandhi contribution prior to speaking with the 
press. See Deposition of Amy Weiss Tobe, June 16, 1997, p. 22. In her 
deposition, Tobe claimed that Huang told her at the time of the press 
inquiries that he had not known about the Prize until the evening of 
the Sheraton-Carlton dinner. Id., pp. 21-22. At best, then, Huang 
misled Tobe, and may have been in cahoots with Gandhi in attempting to 
obfuscate the pay-to-play nature of the event.
    On May 13, 1996, Gandhi gave Huang and/or Trie a check in 
the amount of $325,000. Although Trie, like Huang, has refused 
to cooperate with the Committee, his involvement in the Gandhi 
affair is confirmed by the relevant DNC check tracking form, 
which lists Huang as the ``DNC Contact'' and Trie as the 
``Solicitor.'' 16 On the evening of May 13, after 
the public program was complete, the President was taken to an 
adjoining room and Fukunaga presented the bust to him. Although 
video and audio tapes of the May 13 event, as produced by the 
White House, do not capture the President's side-door 
acceptance of the Prize, still photographs were taken. Within a 
few weeks of the event, a photo of Fukunaga presenting the 
Gandhi bust to President Clinton was featured on the Internet 
web site of Tensei, Fukunaga's religious organization.
    \16\ DNC Check Tracking Form (Ex. 10).
    The DNC has publicly denied that any basis existed to be 
suspicious of the Gandhi contribution in May of 1996, but the 
fact is that well before the Gandhi story hit the press in the 
fall of 1996--before the check had even been cashed--there was 
concern within the DNC about the propriety of the Gandhi 
contribution. Richard Sullivan testified that, after the event, 
Huang brought Gandhi's extraordinarily large check by his 
office, and that Sullivan inquired to ensure that Huang would 
take the check personally to and review it with 
Sandler.17 Huang told Sullivan that he was holding 
the check until that review had taken place, and later told 
Sullivan that Sandler had approved the 
contribution.18 Sandler, however, testified that he 
was not consulted about the Gandhi contribution prior to the 
funds being accepted; he testified instead that his first 
discussion of it was after negative press reports.19 
Confronted with this contradiction between Sandler's sworn 
testimony and Huang's earlier statements, Sullivan weighed in 
on the side of Huang. Sullivan believed that Sandler had 
``lied'' in an attempt ``to cast his performance in a better 
light.'' 20
    \17\ Deposition on Richard L. Sullivan, June 5, 1997, pp. 37-39.
    \18\ Id., pp. 38-39.
    \19\ See Sandler deposition, May 15, 1997, p. 107.
    \20\ Sullivan deposition, June 5, 1997, p. 39. For other 
contradictions between Sullivan and Sandler, see the section of this 
report on Huang's illegal fundraising at the DNC.
    Although Sullivan claimed that the DNC ``proactively'' ran 
a LEXIS/NEXIS search on Gandhi,21 such a search 
would have turned up stories relating to Gandhi's association 
with Sasakawa, the 1987 recipient of the Prize.22 
Because it is unclear whether Sandler actually pre-screened the 
Gandhi contribution, the Committee cannot speculate as to 
whether or not this and other red flags were ignored--or simply 
never uncovered--by the DNC. During the Committee's public 
hearings, Sullivan conceded that the Gandhi case was ``yet 
another example of the DNC failing to do a sufficient job'' in 
screening contributions.23 Likewise, Sandler 
admitted that under the DNC's new post-1996 election screening 
regimen, Gandhi, as a first-time contributor, would have been 
thoroughly investigated, and the contribution would not have 
been accepted.24 When White House Office of Public 
Liaison staff member Ann Eder learned that Gandhi had managed 
to present the Prize to President Clinton at a DNC fundraising 
dinner, she was ``surprised'' because the Foundation was 
``clearly not a reputable entity.'' 25
    \21\ Id., p. 140.
    \22\ See Ex. 8.
    \23\ Testimony of Richard L. Sullivan, July 10, 1997, p. 46. See 
also the section of this report on the dismantling of the DNC's vetting 
    \24\ Sandler deposition, May 15, 1997, pp. 118-19.
    \25\ Eder deposition, May 28, 1997, p. 202.
    Finally, the extraordinary degree to which Huang and the 
DNC leadership were solicitous of Gandhi is perhaps explained 
by the sheer size of the contribution. Gandhi's $325,000 
contribution constituted more than half the funds raised at the 
May 13 event.26 Put another way, if Gandhi had been 
rebuffed in his effort to get the Prize to the President and 
had not attended the dinner, or if Sandler had decided 
afterwards not to accept the Gandhi contribution, Huang would 
have fallen woefully short of the evening's fundraising goal.
    \26\ See Sullivan testimony, July 10, 1997, pp. 44-45.

                   Analysis of Gandhi's Bank Records

    Bank records for Gandhi and the Foundation were obtained by 
the Committee pursuant to subpoena. The records amply 
illustrate the cause for Gandhi's insistence that the DNC hold 
the check for a few weeks. At the time the $325,000 check was 
issued on May 13, 1996, the account on which it was drawn held 
less than $30,000.\27\ Furthermore, these bank records 
establish beyond question that the source of the funds paid to 
the DNC was Yoshio Tanaka. The records show a total of $500,000 
in incoming wire transfers from Tanaka's Tokyo bank account 
between the time that the May 13 check was written, and when it 
was cashed on June 3, 1996.\28\
    \27\ Bank records of Yogesh Gandhi (Ex. 11).
    \28\ Id.
    There is no question in this instance that the funds 
received by the DNC were both laundered and originated 
overseas, and thus constituted an illegal contribution.

         The Delay in the DNC's Return of Gandhi's Contribution

    On October 25, 1996, a $325,000 refund check to Gandhi was 
drawn on the DNC's account at Nationsbank. Ten days later--but 
more importantly, one day after the Presidential election--on 
November 6, 1996, the DNC sent the check to Gandhi.\29\ 
Sandler, who signed the cover letter transmitting the refund 
check to Gandhi, has improbably testified that the check was 
issued on October 25, 1996, as a preliminary step in an 
investigation that did not conclude until the day after the 
election.\30\ Ickes' notes of meetings and conference calls 
held on October 20 and 28, however, establish that the DNC and 
White House knew before the election that: (1) the FBI had 
described Gandhi as a ``fraud;'' (2) Gandhi had testified in 
court proceedings earlier in 1996 that he was unable to satisfy 
a $4,000 default judgment against him; and (3) he was in 
arrears on his taxes.\31\ Given that Sullivan himself has 
called into question the veracity of Sandler, it is difficult 
to credit Sandler's testimony that it was simply a wild 
coincidence that the Gandhi refund check--cut days before--just 
didn't get into the mail until the day after the election.
    \29\ Letter from Joseph Sandler (with copy of the check, DNC 
expenditure request form, and UPS mailing information) to Yogesh 
Gandhi, November 6, 1996 (Ex. 12).
    \30\ Sandler deposition, May 15, 1997, p. 115.
    \31\ See Ex. 6 & Harold Ickes' notes of October 25, 1996 (Ex. 13).


    The Committee shares the conclusion of White House lawyer 
Lanny J. Davis: ``The professional staff at the White House 
checked this matter out and made a correct determination'' as 
to the whether Gandhi should gain an audience with the 
President.\32\ That said, however, the determination of the 
White House staff was either ignored or overridden when Gandhi 
coupled his request with a $325,000 contribution to the DNC.
    \32\ Glenn R. Simpson, ``White House Got FBI Data on Party Donor,'' 
Wall Street Journal, June 10, 1997, p. A20.

           Ted Sioeng, His Family, and His Business Interests

                          Part I. Introduction

    Ted Sioeng, his family, and his business interests gave 
$400,000 to the DNC during the 1996 election cycle. Through 
extensive analysis of bank records, the Committee has 
determined that at least half of this figure, or $200,000, was 
made with money wired into the U.S. from accounts in Hong Kong. 
Where this money ultimately came from and why it was used for 
hefty political contributions are two questions the Committee 
cannot answer conclusively. The reason is that Sioeng and his 
family left the U.S. after the campaign finance scandal broke 
and, through their lawyers, indicated they are unwilling to 
talk. The one family member who remains in the United States, 
Sioeng's daughter Jessica Elnitiarta, was interviewed in June 
1997 by Committee staff but, since then, has indicated she 
would assert the Fifth Amendment if compelled to testify. \1\ 
However, the Committee developed documentary and circumstantial 
evidence as to the answers to the aforementioned questions. 
That evidence is discussed below.
    \1\ Letter from Steven R. Ross and Mark J. MacDougall to The 
Honorable Fred Thompson, September 17, 1997. (Ex. 1).
    In many senses, the story of Ted Sioeng is a microcosm of 
the Committee's investigation. Sioeng is a wealthy Belize 
citizen in his early fifties who, prior to the campaign finance 
scandal, spent brief periods in the United States. Sioeng 
controls a multinational business empire that appears to 
generate substantial income, though not much of it within this 
country. Sioeng has ties to the Government of China, but their 
full extent is unknown. Despite making modest political 
contributions in 1992, 1993, and 1994 in this country, Sioeng 
became a major player in 1995 through a series of large 
contributions made by him, his family, and his business 
interests to a variety of candidates and political entities, 
but mostly to the DNC. The contributions earned Sioeng 
invitations to lavish fund-raisers attended by President 
Clinton or Vice President Gore. The contributions, in some 
cases, were made with foreign money.
    Ted Sioeng became known to the Committee early in its 
investigation. The first press interest in Sioeng stemmed from 
his presence at DNC fund-raisers.\2\ Since that time, the 
Committee has learned of Sioeng's connections to other key 
figures in its investigation, including Maria Hsia and John 
Huang, as well as his attendance at several DNC fund-raisers. 
In the year leading up to the 1996 elections, Sioeng attended 
four major DNC fund-raisers, each of which Huang had a hand in 
organizing. To each event, Sioeng brought family members and/or 
business associates.
    \2\ See, e.g., Richard T. Cooper, ``How DNC Got Caught in a Donor 
Dilemma; Desire for Dollars to Boost Clinton's Reelection Bid Helped 
Fuel Democrats' Pursuit of an Emerging Money Source--Asian Americans 
with Strong Overseas Ties,'' Los Angeles Times, December 23, 1996, p. 
    Sioeng attended the February 19, 1996 Asian Pacific 
American Leadership Council fund-raiser at the Hay-Adams Hotel 
in Washington, D.C. This was the first major DNC event 
organized by Huang. On April 29, 1996, Sioeng attended a fund-
raising luncheon at the Hsi Lai Buddhist Temple in Los Angeles, 
California, where he sat next to Vice President Gore. On May 
13, 1996, Sioeng attended a dinner for President Clinton at the 
Sheraton Carlton in Washington, D.C. where, again, he was 
seated at the head table. Two months later, on July 22, 1996, 
Sioeng and 48 friends and/or business associates attended a DNC 
fund-raiser for President Clinton at the Century Plaza Hotel in 
Los Angeles. At dinner, Sioeng sat to President Clinton's 
immediate right. To the President's left was James Riady and 
his wife Aileen.
    The Committee's interest in Sioeng is not related solely to 
his attendance at DNC events. It stems also from Sioeng's 
relationships with Huang and Hsia, as well as the Chinese 
government, and it has been piqued by the evidence that some of 
Sioeng's political contributions were made with foreign money.
    Sioeng's relationship to the Government of the People's 
Republic of China has been the subject of press speculation 
since early 1997.\3\ Based on its own investigation, as 
discussed more fully elsewhere in the report,\4\ the Committee 
has learned that Sioeng worked, and perhaps still works, on 
behalf of the Chinese government. Sioeng regularly communicated 
with PRC embassy and consular officials at various locations in 
the United States, and, before the campaign finance 
investigation broke, he traveled to Beijing frequently where he 
reported to and was briefed by Chinese communist party 
    \3\ See, e.g., Mark Hosenball, ``On the Trail of a `China 
Connection' '' Newsweek, March 10, 1997, p. 30 (noting Sioeng's 
``close'' connections to the PRC consulate in Los Angeles); Daniel 
Klaidman and Mark Hosenball, ``The Feds Explore a China-California 
Money Trail,'' Newsweek, April 28, 1997, p. 40 (``The Sioeng money 
transfer is the first `verifiable, direct link to the People's Republic 
of China,' one investigator told Newsweek.''); K. Connie Kang and David 
Rosenzweig, ``Entrepreneur Formed Ties to China, then Politicians,'' 
Los Angeles Times, May 18, 1997, p. A1 (discussing Sioeng's business 
and political ties to China in context of allegations that he is 
``working as Beijing's political operative in the United States''); 
Daniel Klaidman, ``Cracking a Chinese Code,'' Newsweek, June 9, 1997, 
p. 46 (citing information from ``federal investigators'' that Sioeng 
was chosen as the ``West Coast Representative'' in the U.S. by the 
Chinese communist party).
    \4\ See the chapter of this report entitled ``The China 
    The Sioeng story is a microcosm because it is a tale of 
foreign money and, possibly, foreign influence. One familiar 
refrain encountered by the Committee during its efforts to 
uncover the Sioeng story was a series of obstacles separating 
investigators from the truth behind Sioeng's political 
activities. Most of what the Committee has learned about Sioeng 
derives from bank records the Committee subpoenaed, an 
interview with Sioeng's daughter, Jessica Elnitiarta, 
information provided to the Committee by Sioeng's attorneys, 
and references to Sioeng in other documents produced to the 
Committee. The investigation, though, has been hampered by the 
unavailability of witnesses and their unwillingness to speak to 
Committee staff. As noted, Sioeng and most of his family have 
left the country. Elnitiarta has remained behind but has 
asserted her Fifth Amendment privilege, as have the two 
Democratic fund-raisers, Huang and Hsia, with apparent ties to 
the family. Moreover, business associates of Sioeng generally 
proved unhelpful. Early in the investigation, Committee staff 
spoke to Sioeng's friend and business associate Kent La,\5\ but 
he also would not appear voluntarily for a deposition. The 
Majority attempted to compel La's testimony, but the Minority 
objected to the subpoena. For months, Sioeng's attorneys held 
out the promise that Sioeng would agree to be interviewed at a 
location outside the United States. That promise was not kept.
    \5\ Memorandum of Interview of Kent La, May 14, 1997.
    The balance of this section is divided into two parts. Part 
II discusses Ted Sioeng, his family, and his business 
interests. Only those activities relevant to the Committee's 
investigation are discussed. Part III examines the major 
political contributions made by Sioeng, his family, and his 
business interests during the 1996 election cycle. Through an 
analysis of bank records produced to the Committee, an attempt 
is made to trace the origins of these various contributions.
    One conclusion the Committee has drawn is that much of the 
money contributed by Sioeng and his family is traceable to 
foreign sources--pecifically, bank accounts in Hong Kong. This 
is significant because such contributions are illegal.\6\ Most 
of these contributions were to the DNC, which purported to 
investigate the same and concluded the contributions were legal 
and proper.\7\
    \6\ See 2 U.S.C. Sec. 441e.
    \7\ DNC spokeswoman Amy Weiss Tobe was reported as saying the party 
decided not to return the Sioeng family contributions because Jessica 
Elnitiarta is a legal permanent resident of the United States and that 
Sioeng himself had not contributed to the DNC. Paul Jacobs and Dan 
Morain, ``State Treasurer Sends Back Campaign Contributions that May 
Have Originated in China,'' Los Angeles Times, April 23, 1997, p. A3.

              Part II. Sioeng's Activities Here and Abroad

A. Sioeng and his businesses
    Ted Sioeng, originally from Indonesia, is a citizen of 
Belize who splits his time between Singapore and Hong Kong. 
Sioeng's daughter, Jessica Elnitiarta, is a permanent resident 
alien who came to the United States in 1986.\8\ Most of her 
family (excluding her father) are now permanent resident 
aliens. Other family members once or currently in the United 
States are her sisters Laureen, and Sandra, her brothers Yopi 
and Yohan, and her mother.\9\ The Sioeng/Elnitiarta family 
speaks Chinese (Mandarin and Cantonese), Bahasa, and some 
    \8\ Unless otherwise indicated, the information contained in Part 
II of this discussion derives from an interview of Jessica Elnitiarta 
conducted by the Committee on June 19, 1997. See Memorandum of 
Interview of Jessica Elnitiarta, Sept. 18, 1997.
    \9\ The Committee has learned that all of Sioeng's family has left 
the country except Jessica and possibly Yopi. The others have gone to 
Hong Kong. Parenthetically, the family uses Elnitiarta, not Sioeng, as 
its surname. Elnitiarta is the mother's maiden name.
    Through the marriage of his daughter, Ted Sioeng's family 
is related to the Tanuwidjajas, a family with substantial 
business interests in Indonesia.10 Sioeng's 
daughter, Laureen, married Subandi Tanuwidjaja, son of Susanto 
Tanuwidjaja, in March 1996. Subandi has been identified as ``an 
Indonesian menswear manufacturer.'' 11 John Huang, a 
self-professed friend of the Tanuwidjaja family, asked the 
White House for a letter congratulating Laureen and Subandi on 
the occasion of their marriage.12 Huang may have 
become acquainted with the Tanuwidjaja's when he worked with 
Susanto Tanuwidjaja at the Lippo Bank's San Francisco 
    \10\ Although the Committee knows little about the Tanuwidjaja's 
business holdings, here or elsewhere, FEC records indicate that Subandi 
Tanuwidjaja is an architect in Diamond Bar, CA and Suryanti is a 
writer/producer in La Habra Heights, California.
    \11\ George Archibald, ``Democrats Disclose Big Contributors,'' 
Washington Times, October 30, 1996, p. A13.
    \12\ Facsimile from John Huang to Anne Edder, March 6, 1996. (Ex. 
    \13\ See Deposition of Diane Poon, April 30, 1997, p. 25.
    Sioeng's business empire is centered in Asia. Most of the 
businesses are in greater China, Macao, and Cambodia. The 
family has owned or currently owns several businesses in the 
PRC, including a beer factory, a rebuilt machinery factory, and 
a portion of a hotel (in the Yunnan province). Currently, the 
family's main business is a cigarette manufacturing and 
distribution operation in Singapore, which is run by Chinois, a 
partnership between Sioeng, Hong Kong businessman Bruce Ceung, 
and several companies. Chinois manufactures and distributes Red 
Pagoda Mountain (``Hong Ta Shen'') cigarettes. It holds 
manufacturing and distribution rights granted by the PRC 
government, and is obligated to purchase raw materials for the 
cigarettes from a government factory in Yu Xi, located in the 
Yunnan province.
    The family has a growing U.S. business presence presided 
over by Jessica Elnitiarta. The family holdings and interests 
          International Daily News, a Chinese language daily in 
        Los Angeles. The paper is discussed in more detail in 
        the section that follows;
           Metropolitan Hotel, a hotel and restaurant 
        in Los Angeles;
           Pacific Motel, a modest establishment in the 
        Los Angeles area;
           Panda Estates, a real estate firm that owns 
        Doheny Estates, comprised of luxury rental townhouses 
        in Beverly Hills. The family purchased Doheny in 1993 
        in a foreclosure sale, and completed construction on 
        the townhouses in 1995;
           Panda Industries, an import export business;
           Loh Sun International, a company that 
        distributes Red Pagoda Mountain cigarettes in the 
        United States. Jessica Elnitiarta told the Committee 
        that the family does not ``control'' Loh Sun, but 
        simply does business with it. However, in a brief phone 
        interview conducted in May 1997, Loh Sun's president 
        and registered agent, Kent La, indicated that Jessica 
        Elnitiarta is his supervisor; 14 and
    \14\ The Committee staff's telephone interview with Kent La took 
place on May 13, 1997. During the interview, La indicated Jessica 
Elnitiarta is his boss.
           Grand National Bank, located in Alhambra, 
        California. Jessica, Sandra, and Laureen Elnitiarta are 
        investors in the bank and own approximately 19 percent 
        of its outstanding stock. Jessica first purchased Grand 
        National Bank stock in 1992 and owns 100,000 shares. 
        Laureen and Sandra each own 45,000 shares, which they 
        purchased in November 1995. It appears that most of the 
        family's business and personal accounts are held at the 
        Grand National Bank.
    Sioeng provides the working capital for all of his U.S. 
businesses, which receive regular cash infusions through 
transfers of funds from overseas accounts. Jessica told the 
Committee that the sources of Sioeng's funds are his businesses 
abroad. The cash infusions typically originate in Hong Kong, 
where funds are wired to the Grand National Bank account of 
Sioeng's sister, Yanti Ardi. The money is then distributed to 
various business or family accounts as necessary. Jessica, who 
holds power of attorney for Yanti Ardi's account, controls 
distribution of the money. Sioeng regularly provides such 
funds, although Panda Estates and Metropolitan Hotel have 
generated a non-trivial amount of cash flow.

B. International Daily News

    In October 1995, Sioeng and his family contracted to 
purchase the International Daily News, a Chinese-language 
newspaper in Los Angeles. They paid between $3 and $4 million 
for the paper, making payments over the next several months. 
The purchase was consummated on July 1, 1996.
    The paper was paid for largely through checks written on 
one of Yanti Ardi's accounts at the Grand National Bank. 
Between October 1995 and July 1996, some $2,590,000 was 
transferred from Ardi's account to the International Daily News 
and C. International Publications, the company that owns the 
paper itself. Almost all of the purchase money appears to 
derive from businesses located in Hong Kong. These businesses, 
Victory Trading Company, Pristine Investments Limited, and R T 
Enterprises Limited, also funded some of the Sioeng family's 
political contributions, as is discussed below.
    It is not entirely clear why the Sioeng family purchased 
the paper. Jessica recounted that buying the paper was Sioeng's 
idea (in consultation with Jessica, who ended up overseeing 
it). Sioeng had been a significant advertiser for the paper and 
was close to the former owner (Chen), who started lobbying 
Sioeng to buy it back in 1993. According to Jessica, Sioeng 
purchased the paper because (i) it would enhance the family's 
standing in the local community, (ii) it was cheap, and (iii) 
there were tax advantages to assuming the paper's debt.
    Another explanation is that Sioeng purchased the paper with 
the approval of or otherwise to please the Chinese government. 
Prior to its purchase, the International Daily News was a pro-
Taiwan publication. According to Newsweek, ``Now the paper is 
breathlessly pro-Beijing.'' 15 Newsweek goes on to 
report from its sources that Sioeng's purchase of the paper may 
have been encouraged or even bankrolled by the 
PRC.16 In any event, since the purchase, the paper 
has consistently lost money and is subsidized by Sioeng with 
funds from overseas.
    \15\ Daniel Klaidman and Mark Hosenball, ``Connecting the Dots,'' 
Newsweek, April 28, 1997, p. 40.
    \16\ Id.
    In a June 1996 letter to Sioeng, President Clinton praised 
the International Daily News for ``faithfully report[ing] both 
local and international issues'' and for being ``part of the 
lasting heritage of the Chinese-American community.'' 
17 John Huang arranged for the letter at Jessica's 
    \17\ Letter from President Clinton to Ted Sioeng, June 20, 1996. 
(Ex. 3).
    The Committee has learned that the Sioeng family owns the 
International Daily News through a series of companies. The 
newspaper is owned by Chen International Publications (U.S.A.), 
Inc., a California company in turn owned by Sioeng's Group, 
Inc. Sioeng's Group, Inc. was described by Sioeng's attorneys 
as a holding company owned by Jessica Elnitiarta, her four 
siblings, and their mother. Jessica holds the largest share and 
is the sole director and officer of the company. Jessica also 
serves as the Secretary and CFO of Chen International. Sieong 
Fei Man is the newspaper's general manager.
    In addition to purchasing the paper, Sioeng, it appears, 
supplements its operations with cash infusions. While it is not 
clear whether the International Daily News generates a 
substantial cash flow for Sioeng, it is apparent he has 
supplemented its income and that he has done so with money 
transferred from Hong Kong accounts.

C. Sioeng's political contributions

    Since 1992, but starting in earnest during the 1996 
election cycle, Sioeng and his family have become prolific 
political contributors. The Committee has been able to 
determine that Sioeng, his family, and his business interests 
have made the following contributions to political candidates, 
parties, and affiliated non-profit entities: 18
    \18\ There may be other contributions about which the Committee is 

                   Date                                From                           To                 Amount 
3/23/92..................................  Sioeng San Wong \19\........  Friends of Bonnie Wai.......       $500
\19\ Sioeng San Wong is another version                                                                         
 of the name ``Ted Sioeng.''                                                                                    
5/12/92..................................  Sioeng San Wong.............  A. Yung Hsiang Wu...........     10,000
6/20/92..................................  Sioeng San Wong.............  Alfred Y. Wu................      1,500
6/20/92..................................  Sioeng San Wong.............  Yung Hsiang Wu..............      5,000
3/25/93..................................  Jessica Elnitiarta..........  Mike Woo for Mayor..........      1,000
5/27/93..................................  Jessica Elnitiarta..........  Mike Woo for Mayor..........      1,000
6/4/93...................................  Sioeng San Wong.............  Michael Woo for Mayor.......      2,500
9/11/93..................................  Jessica Elnitiarta..........  California Republican Party.      2,000
1/26/94..................................  Sioeng San Wong.............  Friends to Elect Sam Kiang..      1,000
4/16/94..................................  Sioeng San Wong.............  Friends of Michael Woo......      1,000
9/28/94..................................  Jessica Elnitiarta..........  Matt Fong for Treasurer.....      2,000
3/11/95..................................  Sioeng San Wong.............  Friends of Norman Hsu.......      7,500
3/25/95..................................  Sioeng San Wong.............  Comm. to Elect Miu Mey Chang      1,500
4/20/95..................................  Sioeng San Wong.............  Matt Fong for State              20,000
4/28/95..................................  Sioeng San Wong.............  Matt Fong...................     30,000
7/18/95..................................  Panda Industries, Inc.......  National Policy Forum.......     50,000
12/14/95.................................  Panda Estates Investment....  Matt Fong for State              50,000
2/15/96..................................  Su/Sa/La Elnitiarta \20\....  Dr. Daniel Wong.............      5,000
\20\ These checks were written on an                                                                            
 account held jointly in the names of                                                                           
 Sundari, Sandra, and Laureen Elnitiarta.                                                                       
2/19/96..................................  Jessica Elnitiarta..........  Democratic National             100,000
7/12/96..................................  Panda Estates Investment....  Democratic National             100,000
7/29/96..................................  Panda Estates Investment....  Democratic National              50,000
7/29/96..................................  Loh Sun International.......  Democratic National              50,000
7/29/96..................................  Su/Sa/La Elnitiarta.........  Gary Locke for Governor.....      1,100
7/29/96..................................  Jessica Elnitiarta..........  Gary Locke for Governor.....      1,100
9/9/96...................................  Subandi Tanuwidjaja.........  Democratic National              60,000
9/16/96..................................  Suryanti Tanuwidjaja........  Democratic National              20,000
9/19/96..................................  Subandi Tanuwidjaja.........  Democratic National              20,000
                                             Total.....................  ............................    593,700

While Sioeng made an impressive number of contributions 
throughout the 1994 and 1996 election cycles, the table above 
shows that Sioeng's largesse became far more prolific starting 
in 1995. John Huang's influence clearly had something to do 
with this. But whatever other influences motivated Sioeng 
largely are unknown.
            1. Contributions to the DNC
    John Huang solicited all of the family's contributions to 
the DNC. In total, Sieong's family and business interests 
contributed $400,000 to the DNC in 1995 and 1996. Most of this 
was given in connection with specific fund-raising events to 
which Sioeng, his family, and business associates were invited. 
These events provided Sioeng an opportunity to impress his 
guests and to meet President Clinton or Vice President Gore. 
The family put great value on such meetings and on having their 
pictures taken with political leaders. Jessica considered the 
family's attendance at such events a way to honor her father.
    A member of the Chinese-American community in Los Angeles 
first introduced Huang to the Sioeng family in 1995. According 
to Jessica, Huang is not a close family friend, but instead a 
prominent person in the Chinese-American community whom they 
came to know reasonably well. Regardless, it is clear Huang was 
treated by Sioeng's family with familiarity and respect. For 
example, in correspondence relating to the Sheraton Carlton 
fund-raiser Huang helped organize, Jessica referred to him as 
``Uncle Huang.'' 21
    \21\ Memorandum from Jessica to Uncle Huang, undated. (Ex. 4).
    Huang first mentioned political fund-raising to Jessica in 
January 1996, when he indicated that he could arrange for the 
family to meet President Clinton at a fund-raiser in Washington 
in February. This turned out to be a February 19, 1996 fund-
raiser at the Hay Adams Hotel. After some back and forth among 
the family and with Huang, it was agreed that eight people--
family and business partners 22--would attend, 
including Sioeng, who flew in from the Far East for the event. 
Jessica Elnitiarta paid $100,000 (figured at $12,500 per 
attendee, in accordance with the ``price'' of the event 
described by Huang in advance) by personal check. Her sister 
delivered the check to Huang at the event, making sure of the 
correct amount with Huang before filling it in. All eight 
attendees had their picture taken with President Clinton. 
Because the family decided to attend so late, however, they had 
poor seats for the dinner, a matter that caused Huang to 
apologize afterwards. Jessica told the Committee that the 
source of the contributions was revenue from Panda Estates. By 
analyzing relevant bank records, the Committee determined that 
Jessica's statement is incorrect, and that the $100,000 came 
from an account in Hong Kong.23
    \22\ The attendees were: Sioeng; Sandra Elnitiarta and husband; 
Yopi Elnitiarta; Jimmy Tsang, a business partner, and his wife; Lie 
Kwee Kei, a Hong Kong business partner; and Bruce Cueng, the Chinois 
    \23\ See discussion below on Jessica's $100,000 contribution to the 
DNC of February 19, 1996.
    Huang next contacted Jessica to see if the family would 
like to attend the April 29, 1996 Hsi Lai Temple fund-raiser. 
He made it clear that he would ``comp'' the family's attendance 
as a way to make up for their poor seats at the Hay Adams event 
in February. Jessica explained that one of her sisters is 
Buddhist and was very excited at the prospect of meeting the 
Venerable Master of the Temple; for the family, this was of 
equal importance to meeting Vice President Gore. Sioeng again 
flew from the Far East, and the family brought five attendees 
to the event.24 Huang made sure that Sioeng sat next 
to Vice President Gore, which the family considered a huge 
honor. The family paid nothing to attend.
    \24\ Sioeng and wife, Jessica Elnitiarta, Laureen Elnitiarta, and 
Sioeng Fei Man, general manager of the International Daily News.
    Huang later called in May 1996 about another event where 
the family could see President Clinton. He explained that it 
would be a small dinner in Washington, and asked whether the 
family would like to participate. Jessica communicated this to 
Sioeng, who was very excited, viewing it as a good opportunity 
to impress some of his business partners from overseas. They 
accepted, and in this case, Jessica sent Huang a list of 
invitees in advance. The dinner was held on May 13, 1996, at 
the Sheraton Carlton in Washington. The family's attendees 
           Ted Sioeng;
           Chio Ho Cheong, President, Ang-Du 
        International Corporation Ltd.;
           Guo Zhong Jian, Deputy General Manager, 
        China Construction Bank, Hong Kong Branch;
           Lin Fu Qiang, Managing Director, Everbrite 
        Asia Limited, Hong Kong;
           Chan Elsie Y.Z., Managing Director, Ang-Du 
        International Corporation Ltd.;
           Kent La, President, Loh Sun International; 
           He Jian Shan.25
    \25\ Ex. 4.
    It appears Sioeng met and spoke to President Clinton at the 
Sheraton Carlton event. By letter dated May 28, 1996, the 
President thanked Sioeng for attending the fund-raiser and, 
more generally, ``for being there when you are asked to help.'' 
26 President Clinton noted that he had ``enjoyed 
having the chance to talk'' with Sioeng, and expressed hope 
that Sioeng would ``continue to share [his] advice and 
insight.'' 27
    \26\ Letter from Bill Clinton to Ted Sioeng, May 28, 1996. (Ex. 5).
    \27\ Id. Note that Sioeng is not a citizen or legal permanent 
resident of the United States and, therefore, he cannot legally 
contribute to the DNC or any other national political parties.
    Jessica told the Committee she knew that she would need to 
pay for the May dinner, but Huang did not push her. He 
invited--begged actually, as Jessica recalls--the family to 
attend an additional event in July at the Century Plaza Hotel 
in Los Angeles. The event, which was larger than the previous 
dinners, was held on July 22, 1996, and Huang indicated that he 
was having difficulty finding people to attend. He encouraged 
Jessica to bring as many people as she would like. Sioeng flew 
in for this event, bringing one business associate (Lam Kwok 
Man, from Hong Kong), and the family came with approximately 48 
local friends. Jessica Elnitiarta made a $100,000 contribution 
to the DNC (from the account of Panda Estates) on July 12, 1996 
to cover the seats for the May fund-raiser, figuring the price 
at $12,500 per seat. Later, on July 29, 1996, Jessica wrote an 
additional $50,000 check--also on the Panda Estates account--to 
the DNC to cover the July Century City event. Jessica 
considered the price-per-head for the Century City event 
significantly less than that for the Sheraton Carlton fund-
raiser in May.
    Jessica disclaimed any involvement in several other 
contributions. One was a Loh Sun International contribution of 
$50,000 to the DNC on July 29, 1996 (the same day as the 
Century City fund-raiser and the $50,000 contribution from 
Panda Estates to the DNC). Jessica stated that she knew nothing 
about this until she read about it in the papers. Jessica's 
seeming attempt to distance the Sioeng family from Loh Sun is 
belied by the obvious financial relationship between them. As 
described below, a wire transfer to Loh Sun from R T 
Enterprises--one of the businesses that often wired funds from 
Hong Kong to Sioeng family accounts in the United States--may 
have funded some or all of Loh Sun's $50,000 contribution to 
the DNC. In addition, a check signed by Kent La, Loh Sun's 
president, was deposited into Sioeng's account and may have 
been used to fund Panda Industries' 1995 contribution to the 
National Policy Forum, also discussed in more detail below. 
Moreover, in December 1995 and January 1996, Jessica wrote two 
checks to Kent La totaling $58,000.28 In the memo 
line of these checks is written, ``Hong ta Shan,'' the brand of 
cigarettes Loh Sun distributes.
    \28\ See December 1995 check to Kent La from Jessica Elnitiarta for 
$50,000 (Ex. 6).
    Other contributions Jessica disclaimed knowledge of were 
made by the Tanuwidjajas, her family's in-laws, who wrote three 
checks totaling $100,000 to the DNC in 1996. Jessica claimed to 
know nothing about these contributions. However, the 
Tanuwidjaja family attended at least one fund-raiser with 
Jessica, and two of the three Tanuwidjaja contributions were 
solicited by John Huang.29
    \29\ Curiously, DNC check-tracking forms indicate that Huang 
attributed three Sioeng-related checks to a small, July 30, 1996 dinner 
at the Jefferson Hotel attended by President Clinton. A July 29, 1996 
Panda Estates Investment check for $50,000 (Ex. 7), a September 9, 1996 
Subandi Tanuwidjaja check for $60,000 (Ex. 8), and a July 29, 1996 Loh 
Sun International check for $50,000, (Ex. 9), are all listed by Huang 
as connected to the July 30, 1996 dinner. Among the intimate dinner's 
attendees were President Clinton, Huang, DNC Chairman Donald Fowler, 
James Riady, Taiwanese businessmen Eugene T.C. Wu and James L.S. Lin of 
the Shin Kong Group, and Sen Jong ``Ken'' Hsui, a Taiwanese-American 
businessman who is president of Prince Motors. See Alan C. Miller and 
David Rosenzweig, ``Clinton Dinner Gives Probes Some Questions to Chew 
On,'' Los Angeles Times, February 7, 1997, p. A1. No one from the 
Sioeng or Tanuwidjaja families attended the dinner.
    Huang called later in 1996 about other events in Chicago 
and San Francisco, but by that time Jessica had lost interest 
in the process. She felt she had adequately honored her father 
and did not need to participate further.30
    \30\ Jessica told the Committee she has spoken only once to Huang 
since the campaign finance story broke in October 1996, and then only 
in passing at a community event.
            2. Contributions to Matt Fong
    Sioeng and Panda Estates made three contributions to Matt 
Fong in 1995, totaling $100,000. At the time, Fong was running 
for Treasurer of the State of California. Sioeng contributed a 
total of $50,000 in April 1995. Later, in December 1995, 
Jessica Elnitiarta contributed $50,000 more through Panda 
    According to Jessica, the contributions were the result of 
some intense fund-raising appeals from Fong personally, and 
others on his behalf. Faye Huang (a local activist not related 
to John Huang) participated in a fund-raiser the Sioeng family 
held for a local candidate (Julia Wu) at the Metropolitan Hotel 
in 1994. Faye Huang subsequently approached the family for 
contributions on behalf of Fong. She courted both Sioeng and 
Jessica aggressively, and Sieong eventually made his 
contributions in April 1995. The checks were filled out in part 
by Faye Huang.
    On April 22, 1997, after press stories had appeared linking 
Sioeng to the campaign finance scandal, Fong returned the 
contributions from Sioeng and Panda Estates. Fong had requested 
that Sioeng and Jessica verify that the contributions were not 
from foreign sources.31 When Sioeng and his daughter 
failed to respond within a 24-hour deadline, Fong returned the 
contributions, stating, ``I want absolutely no cloud, no 
suspicion, no doubt about my campaign conduct or my performance 
in public office.'' 32
    \31\ See Paul Jacobs and Dan Morain, ``Fong Returns $100,000 in 
Gifts,'' Los Angeles Times, April 23, 1997, p. A3.
    \32\ Id.
    By letter dated May 27, 1997, attorneys for Jessica and 
Panda Estates responded to Fong.33 The letter 
criticizes ``Mr. Fong and his campaign [for joining] in the 
shameful rhetoric directed at Asian-Americans.'' 34 
It states further that Jessica relied ``upon the direct 
representations made by the Fong campaign . . . that Panda 
Estates could properly contribute to Mr. Fong's campaign.'' 
35 Although the letter notes that Panda Estates 
operated the Doheny Estates condominium complex in Beverly 
Hills, it does not represent--let alone prove--that the source 
of the Panda Estates contribution to Fong was its domestically-
generated income. In fact, the Committee has determined that at 
least a portion of one Sioeng contribution to Fong was made 
with foreign money.
    \33\ Letter from Mark J. MacDougall and Steven R. Ross to William 
R. Turner, May 27, 1997. (Ex.10). The letter indicates that it was sent 
after Fong's deadline because ``Ms. Elnitiarta was traveling at the 
time [Fong's] letter arrived.''
    \34\ Id.
    \35\ Id.
            3. Contribution to the National Policy Forum
    On July 18, 1995, Panda Industries made a $50,000 
contribution to the National Policy Forum (NPF). Exactly how 
this came about is uncertain, though it appears Sioeng's 
acquaintance with the NPF began with Matt Fong. Perhaps in 
gratitude for Sioeng's earlier contributions, Fong arranged in 
June 1995 for Sioeng to have his picture taken with Speaker 
Gingrich in Washington, DC. Later, Fong sent a letter in 
support of a Los Angeles badminton tournament Sioeng 
underwrote, and arranged for Gingrich to send a similar letter.
    Around the same time, Sioeng and Elnitiarta took steps to 
host a fall 1995 fund-raiser featuring Speaker Gingrich at 
their Los Angeles hotel. They thought such an event would add 
to the hotel's prestige. The fund-raiser ended up occurring at 
another Los Angeles hotel, but Sioeng and family members 
nevertheless attended the event. The July 18, 1995 contribution 
of $50,000 to the NPF was solicited by a fund-raiser named 
Steve Kinney. Elnitiarta characterized it as a gesture of 
gratitude for the photo with the Speaker and also an attempt 
(unsuccessful, as it turns out) to persuade people to hold the 
fund-raiser at the family hotel.
    Although discussed in detail elsewhere in the report, 
36 some brief background information on the NPF is 
warranted. The NPF was an independent 501(c)(4) organization 
created by Haley Barbour to serve as a grass roots organization 
for the Republican exchange of ideas. It had no PAC, donated no 
money, and did not advocate the election or defeat of any 
candidate. It was not legally prohibited from accepting foreign 
    \36\ See the section of this report on the National Policy Forum. 
See also infra note 84.

     part iii. analysis of sioeng/elnitiarta/tanuwidjaja political 
             contributions made with foreign money: 1995-96

    Ted Sioeng, Jessica Elnitiarta, the family's businesses, 
and their in-laws, the Tanuwidjajas, made a number of 
significant political contributions in 1995 and 1996. In total, 
the Sioeng family and businesses spent over half a million 
dollars on the 1996 elections.
    The Committee has examined bank records relevant to most of 
family's large political contributions and discovered a 
recurring pattern: wire transfers from Hong Kong companies to 
Sioeng & Co. accounts in the United States. Five companies--
Pristine Investments Limited, R T Enterprises Limited, Dragon 
Union Limited, Mansion House Securities, and Victory Trading 
Company--believed to be based in Hong Kong, are the apparent 
source of funding for many of the Sioeng family's activities in 
this country. In 1995 and 1996, these companies transferred 
millions of dollars from Hong Kong banks into U.S. accounts 
held by Sioeng's sister, Yanti Ardi.37 Jessica 
Elnitiarta, who held a durable power of attorney over Ardi's 
account,38 distributed money from the account to 
other Sioeng family accounts and directly to Sioeng-related 
businesses and interests. Funds from Ardi's account eventually 
were used to make political contributions, to purchase and 
subsidize the International Daily News, and to fund other 
activities in this country.
    \37\ The account in Ardi's name was not the only one used as a 
conduit for foreign funds. On November 13, 1995, the Sioeng family set 
up another such account at the Grand National Bank, this one in the 
name of Nanny Nitiarta, an Indonesian citizen of unknown relation to 
the family. Like Ardi's account, Nanny's appears to have been used to 
shift money from overseas to various Sioeng-family accounts and 
business interests. For example, on November 5, 1996, Nanny's account 
was credited with a $700,000 wire transfer from a Hong Kong account 
held by R T Enterprises Limited. (Ex. 11). A day later, Jessica wrote a 
check on Nanny's account for $140,000 to the International Daily News. 
(Ex. 12). The check was reversed because Jessica did not have signature 
authority over the account (Ex. 13) (though she had signed other checks 
and authorized other transfers that were not reversed). On November 8, 
1996, $700,000 was transferred from Nanny's account to Yanti's. (Ex. 
14). Jessica remedied the signature problem by executing a durable 
power of attorney over Nanny's account on November 20, 1996. (Ex. 15). 
Nanny's account was closed on March 14, 1997.
    \38\ Grand National Bank Durable Power of Attorney to Jessica G. 
Elnitiarta, December 20, 1995. (Ex. 16).
    Jessica's use of Yanti Ardi's U.S. bank account as a 
holding pen for funds wired in from Hong Kong raises questions 
about the origins of the Sioeng family's money as well as its 
intended use in the United States. As noted, the Committee has 
discovered that millions of dollars were wired into the U.S. 
from Hong Kong bank accounts held in the names of foreign 
firms. Because of the Committee's inability to compel 
production of bank records located outside U.S. borders, the 
Committee cannot determine the source of the dollars wired into 
Sioeng family accounts in this country.
    The Committee's analysis of Sioeng family bank records 
reveals that at least $200,000 in contributions to the DNC 
derived from foreign sources. In addition, some $16,000 in 
contributions to Matt Fong are linked to foreign money. The 
Majority staff has determined that the following contributions 
derive in whole or in part from foreign funds: 39
    \39\ See chart listing the largest Sioeng family contributions (Ex. 

         Account name                Donee       Check date     amount  
Panda Estates Investment......  Matt Fong.....     12/14/95      $50,000
Jessica Elnitiarta............  DNC...........      2/19/96      100,000
Panda Estates Investment......  DNC...........      7/12/96       50,000
Subandi Tanuwidjaja...........  DNC...........       9/9/96       60,000
Subandi Tanuwidjaja...........  DNC...........      9/19/96       20,000

Only the Fong contribution has been returned. The DNC has 
refused steadfastly to give back any of the Sioeng family 
    The sections that follow discuss in detail the Sioeng 
family contributions listed on Exhibit 17. The discussion 
largely revolves around bank records produced to the Committee 
pursuant to subpoenas. The records support the conclusions 
drawn above; namely, that a substantial portion of the Sioeng 
family contributions were made with foreign money.

A. DNC contributions

1. 2/19/96; Jessica Elnitiarta; $100,000

    On February 19, 1996, Jessica Elnitiarta wrote a check for 
$100,000 to the DNC.40 A DNC check tracking form 
indicates the contribution related to a dinner held on the same 
date at the Hay Adams hotel.41 Although the $100,000 
check is dated February 19, 1996, it was not paid until 
February 26, 1996.42
    \40\ $100,000 check from Jessica G. Elnitiarta to the DNC, Feb. 19, 
1996. (Ex. 18).
    \41\ DNC Check Tracking Form for Jessica G. Elnitiarta (Ex. 19).
    \42\ Grand National Bank account statement for account number 
210473306, Feb. 1-29, 1996. (Ex. 20).
    As of February 19, 1996, Elnitiarta's account carried a 
balance of less than $10,000.43 However, on February 
22, 1996, Elnitiarta transferred $200,000 to her account from 
Yanti Ardi's.44 Days later, half of this money was 
used to satisfy the check Elnitiarta wrote to the DNC on 
February 19, 1996. The source of funds in Yanti Ardi's account 
at that time appears to be a $518,433.56 wire transfer from an 
account maintained at the Hong Kong branch of the Dutch ING 
Bank by a company called Pristine Investments, 
Ltd.45 The wire transfer took place on February 12, 
1996. Prior to the transfer, Ardi's account carried a balance 
of less than $3,000.46 There were no additional 
deposits into Ardi's account between February 12 and 22, 1997.
    \43\ Id.
    \44\ Grand National Bank Funds Transfer Authorization, Feb. 22, 
1996. (Ex. 21).
    \45\ Grand National Bank Miscellaneous Credit form, Feb. 12, 1996. 
(Ex. 22).
    \46\ Grand National Bank account statement for account number 
240417614, Feb. 1-29, 1996. (Ex. 23).
    In short, bank records indicate that Jessica Elnitiarta's 
February 19, 1996 contribution of $100,000 to the DNC was made 
with substantially all foreign funds.

2. 7/12/96; Panda Estates (family business); $100,000

    Panda Estates Investment Inc. contributed $100,000 to the 
DNC on July 12, 1996 from an account the report will refer to 
as ``Panda 801.''47 At the time, the Panda account 
had a negative balance of $598.55.48 The check to 
the DNC was paid on July 25, 1996, leaving the Panda account 
with a negative balance of $100,124.75.49 On July 
26, 1996, $100,000 was transferred from a second Panda account 
(``Panda 814'') to Panda 801,50 bringing the balance 
of Panda 801 to negative $2,351.29.51 Hence, the 
Panda 814 account was the source of the contribution from Panda 
    \47\ $100,000 check from Panda Estates Investment, Inc. to DNC, 
July 12, 1996. (Ex. 24).
    \48\ Grand National Bank account statement for account number 
200739801, June 29-July 31, 1996. (Ex. 25).
    \49\ Id.
    \50\ Grand National Bank Customer Authorization for Funds Transfer, 
July 26, 1996. (Ex. 26).
    \51\ Ex. 25.
    The sources of the funds for Panda 814's $100,000 transfer 
to Panda 801 appear to be (1) rental income received by Panda 
Estates and (2) a $60,000 transfer from Yanti Ardi's U.S. 
account. On July 25, 1996, Panda 814 carried a balance of 
approximately $50,000,52 or not enough to cover a 
$100,000 transfer. On July 26, 1996, a $60,000 check from Yanti 
Ardi was deposited in Panda 814--a check whose source appears 
to be funds received by wire transfer from a bank in Hong 
Kong.53 On June 28, 1996, Yanti Ardi's U.S. account 
was credited with $1,652,479.98, which had been transferred by 
R. T. Enterprises Ltd. from the ING bank in Hong 
Kong.54 On June 27, 1996, Ardi's account balance was 
under $5,000.55 After the large R. T. Enterprises 
transfer, there were no additional deposits into Ardi's account 
until after the July 26, 1996 $60,000 transfer to Panda 
    \52\ Grand National Bank account statement for account number 
200739814, June 29-July 31, 1996. (Ex. 27).
    \53\ $60,000 check from Yanti Ardi to Panda Estates Investment, 
Inc., July 26, 1996. (Ex. 28).
    \54\ Grand National Bank Miscellaneous Credit form, June 28, 1996. 
(Ex. 29).
    \55\ Grand National Bank account statement for account number 
240417614, June 1-28, 1996. (Ex. 30).
    \56\ Grand National Bank account statement for account number 
240417614, June 29-July 31, 1996. (Ex. 31).
    In short, at least $50,000 of Panda Estate's $100,000 July 
12, 1996 contribution to the DNC can be traced to foreign 
    \57\ Panda Estates Investment Inc. contributed $50,000 to the DNC 
by check dated July 29, 1996 and drawn on the Panda 801 account. (Ex. 
7). At the time the check was written, the Panda 801 account carried a 
negative balance. (Ex. 25). The check was not paid until August 6, 
1996, the same day two wire transfers totaling $50,000 were deposited 
into the Panda 801 account. Grand National Bank Account statement for 
account number 200739801, Aug. 1-Aug. 30, 1996 (Ex. 32). One transfer, 
in the amount of $40,000, came from the Panda 814 account. Grand 
National Bank Funds Transfer Authorization, Aug. 6, 1996 (Ex. 33). The 
other transfer, this for $10,000, came from Code 3 U.S.A. Grand 
National Bank account statement for account number 200739814, Aug. 6, 
1996 (Ex. 34), which the Committee understands to be a gun shop run by 
Elnitiarta's husband.
    The $40,000 from Panda 814 was funded by a number of small 
deposits, which appear to be rental payments made to Panda Estates. 
Grand National Bank account statement for account number 200739814 (Ex. 
35). The Committee does not know the source of the $10,000 wired from 
Code 3. Hence, from the documents reviewed by the Committee, the July 
29, 1996 Panda Estates contribution cannot be traced to foreign money.

3. 9/9/96; Subandi Tanuwidjaja; $60,000
9/19/96; Subandi Tanuwidjaja; $20,000

    The Tanuwidjaja's contributed $100,000 to the DNC through 
three checks dated in September 1996.58 
Contributions dated September 9 and 19, 1996 and totaling 
$80,000 were from Subandi Tanuwidjaja, son of Susanto 
Tanuwidjaja, and the man who married Ted Sioeng's daughter, 
Laureen. A contribution of $20,000 dated September 16, 1996 was 
made by Suryanti.
    \58\ $60,000 check from Subandi Tanuwidjaja to the DNC, Sept. 9, 
1996. (Ex. 8). $20,000 check from Subandi Tanuwidjaja to the DNC, Sept. 
19, 1996 and $20,000 check from Suryanti Tanuwidjaja to the DNC, Sept. 
16, 1996. (Ex. 36).
    The September 9 and 19 contributions from Subandi appear to 
be covered by a $100,000 check from Susanto dated September 6, 
1996,59 and a $20,000 wire transfer on September 18, 
1996 from Dragon Union Ltd.'s account at the Hua Chiao 
Commercial Bank Ltd. in Hong Kong.60 It is clear 
from markings known as ``imad'' characters on the lower left of 
the wire transfer report that the funds were, in fact, 
transferred from Hua Chiao's Hong Kong branch.61
    \59\ $100,000 check from Susanto Tanuwidjaja to Subandi 
Tanuwidjaja, Sept. 6, 1996. (Ex. 37).
    \60\ Reprint of Incoming Wire Traffic, Sept. 18, 1996. (Ex. 38).
    \61\ Id.
    On September 8, 1996, Subandi's account carried a balance 
of less than $5,000.62 On September 9, 1996, the 
$100,000 check from Susanto was deposited into Subandi's 
account.63 On the same day, Subandi wired $38,000 to 
a bank in Singapore,64 leaving a balance of 
$66,049.99, or enough to cover Subandi's $60,000 check to the 
DNC, also dated September 9, 1996.65 On September 
18, 1996, Subandi's account was credited with the $20,000 wired 
by Dragon Union Ltd, increasing the balance to 
$86,039.99.66 Thereafter, the two DNC checks were 
cashed; the $60,000 check on September 27 and the $20,000 check 
on October 4, 1996.67
    \62\ Western State Bank account statements for account number 
033100-153947, Aug.-Oct. 1996. (Ex. 39).
    \63\ Id.
    \64\ Memorandum and report of outgoing wire traffic from Subandi 
Tanuwidjaja to Western State Bank, Sept. 9, 1996. (Ex. 40).
    \65\ Ex. 39.
    \66\ Id.
    \67\ Id.
    The $100,000 check from Susanto to Subandi can be traced in 
large part to a foreign source. Susanto's account carried a 
balance of less than $3,000 68 when it was credited 
with a wire transfer in the amount of $99,985 from an account 
maintained by Subandi in Jakarta, Indonesia.69 
Again, it is clear from the ``imad'' characters on the left 
side of the wire transfer report that the funds were 
transferred from Subandi's United City Bank account in 
Jakarta.70 There were only two other deposits into 
Susanto's account between August 22 and September 9, 1996--one 
for $20,000 on August 30 and one for $10,000 on September 3, 
1996.71 These two deposits, however, appear 
connected to debits in similar amounts.72
    \68\ Western State Bank account statements for account number 
033200-055538, Aug.-Oct. 1996. (Ex. 41).
    \69\ Report of incoming wire traffic, August 22, 1996. (Ex. 42).
    \70\ Id.
    \71\ Ex. 41.
    \72\ Id.
    In any event, it is clear that Subandi's $80,000 in 
contributions to the DNC derived mostly--if not entirely--from 
foreign funds.
    The Majority staff has obtained corporate records for 
Dragon Union Ltd. in Hong Kong and have attached them as an 
exhibit.73 The records show that Subandi 
Tanuwidjaja's links to the company; he was made a director of 
Dragon Union on January 27, 1997. Subandi's connection to 
Dragon Union would tend to suggest he may have been aware that 
foreign money was being used to make contributions to the 
    \73\ The Companies Ordinance of Dragon Union Limited, Dec. 11, 1996 
(Ex. 43).
    \74\ Two other large Sioeng-family contributions to the DNC bear 
mention, although the Committee has not been able to determine whether 
or not they were made with foreign money. By check dated September 16, 
1996, (Ex. 36), Suryanti Tanuwidjaja contributed $20,000 to the DNC. 
Suryanti's contribution to the DNC was not paid until September 30, 
1996. Bank of America statement of Suryanti Tanuwidjaja, Oct. 30, 1996 
(Ex. 44). On September 18, 1996, Suryanti's savings account was 
credited with a $20,000 wire transfer from Dragon Union Ltd.'s account 
at the Hua Chiao Commercial Bank Ltd. in Hong Kong. Funds Transfer 
History, Sept. 18, 1996 (Ex. 45). On the same day, Suryanti transferred 
$24,000 from her savings to her checking account at Bank of America. 
Bank of America statement of Suryanti Tanuwidjaja, Sept. 27, 1996 (Ex. 
    Although the timing appears suspicious, the Committee has not been 
able to identify conclusively the $20,000 wire transfer from Dragon 
Union as the source of Suryanti's contribution to the DNC in the same 
amount. There were sufficient additional funds in Suryanti's savings 
account to cover the $24,000 transfer to checking. (Id.). Likewise, 
there were sufficient additional funds in Suryanti's checking account 
to cover the DNC check on September 30, 1996, the day it was paid. (Ex. 
    Loh Sun International, Inc. contributed $50,000 to the DNC by check 
dated July 29, 1996 and signed by Kent La. (Ex. 9). The check was not 
paid until August 5, 1996, at which point the Loh Sun account carried a 
balance of more than $250,000. Union Pacific Bank Records for Loh Suh 
International, Aug. 30, 1996 (Ex. 47). On July 24, 1996, the Loh Sun 
account was credited with $97,555, which had been wired by R T 
Enterprises Limited from an account at a Hong Kong branch of the Dutch 
ING Bank. Union Pacific Bank records for Loh Suh International, Inc., 
July 31, 1996 (Ex. 48). Although this was the largest deposit made into 
Loh Sun's account in 1996 and the only one that, on its face, clearly 
was made with foreign funds, the Committee was unable to determine 
whether the money wired to Loh Sun by R T Enterprises was used to make 
the DNC contribution. There was simply too much other money in Loh 
Sun's account.

B. Matt Fong contribution

12/14/95; Panda Estates (family business); $50,000

    The Committee has determined that one of three Sioeng-
family contributions to Matt Fong was made, in part, with 
foreign money. Fong returned all of the contributions in April 
    Panda Estates Investment Inc. contributed $50,000 to Matt 
Fong for State Treasurer on December 14, 1995.75 The 
check was signed by Jessica Elnitiarta and paid on December 18, 
1995.76 The balance in Panda Estates' account at 
that time was only $7,000, and the check to the Matt Fong (and 
one other check) left Panda with a negative balance of 
    \75\ $50,000 Grand National Bank check from Panda Estates 
Investment Inc. to Matt Fong for State Treasurer, Dec. 14, 1995. (Ex. 
    \76\ Grand National Bank account statement for account number 
200739801, Dec. 1-29, 1995. (Ex. 50).
    \77\ Id.
    On December 19, 1995, $50,000 was transferred to the Panda 
account from one of Yanti Ardi's Grand National Bank 
accounts.78 On December 11, 1995, Ardi's account was 
credited with a wire transfer of $150,000 from a Hong Kong 
account maintained by Pristine Investments 
Limited.79 At the time, Ardi's account carried a 
balance of approximately $34,000,80 which, in turn, 
was the remainder of a $562,500 deposit into Ardi's account on 
November 15, 1995.81 The $562,500 deposit was from a 
check written on an account held in the name of Sandra and 
Laureen Elnitiarta,82 an account the Committee does 
not have records for.
    \78\ Grand National Bank Customer Authorization for Funds Transfer, 
Dec. 19, 1995. (Ex. 51).
    \79\ Grand National Bank Miscellaneous Credit form, Dec. 11, 1995. 
(Ex. 52).
    \80\ Grand National Bank account statement for account number 
240979814, Dec. 1-29, 1995. (Ex. 53).
    \81\  Grand National Bank account statement for account number 
240979814, November 13-30, 1995. (Ex. 54).
    \82\ $562,500 Grand National Bank check from Sandra and Laureen 
Elnitiarta to Yanti Ardi, November 15, 1995. (Ex. 55). Laureen 
Elnitiarta's signature appears on the check.
    In sum, the records reviewed by Committee staff show that 
at least $16,000 of the $50,000 contribution from Panda Estates 
to Matt Fong derived from a foreign source.83
    \83\ The Committee examined two other Sioeng-family contributions 
to Fong that cannot be traced to foreign sources from the information 
at hand. Sioeng San Wong (a.k.a. Ted Sioeng) contributed $20,000 to 
Matt Fong by check dated April 20, 1995. Check 671 to Matt Fong for 
State Treasurer from Sioeng San Wong, Apr. 20, 1995 (Ex. 56). The check 
was paid on April 27, 1995. Grand National Bank account statement for 
Sioeng San Wong, Apr. 1-Apr. 28, 1995 (Ex. 57). Two days earlier, 
Sioeng's account carried a balance of near zero. It appears that the 
Fong check was covered by a $30,000 transfer on April 26, 1995 from 
Sundari and Laureen Elnitiarta. Statement of Transfer, Apr. 26, 1995 
(Ex. 58). Referred to as a ``loan advance,'' the $30,000 transfer 
represented the only funds in Sioeng's account at the time his check to 
Matt Fong was paid. (Ex. 57). The Committee does not know the source of 
the $30,000 transferred from Sundari and Laureen to Sioeng.
    Sioeng San Wong wrote another check to Matt Fong--this one for 
$30,000--on April 28, 1995. Grand National Bank check from Sioeng San 
Wong to Matt Fong for State Treasurer for $30,000, Apr. 28, 1995 (Ex. 
59). This check was paid on May 2, 1995. Grand National Bank account 
statement of Sioeng San Wong, Apr. 29-May 31, 1995 (Ex. 60). At the 
time, Sioeng's account still had roughly $10,000 left from Sundari and 
Laureen's loan advance and an additional $30,000 from a check written 
on the account of a Glenville A. Stuart. Grand National Bank check from 
Glenville Stuart to Sioeng San Wong for $30,000, Apr. 28, 1995 (Ex. 
61). The check was deposited on April 28, 1995. (Ex. 57).
    Committee staff spoke to Mr. Stuart about the $30,000 check on 
November 3, 1997. Stuart, who said he has known Ted Sioeng for ten 
years, claimed the check was written in partial satisfaction of a loan 
Ted Sioeng had extended to him. Stuart said no one gave him the money 
to give to Sioeng and that he does not recall Sioeng asking him for it. 
He said that Jessica Elnitiarta, however, may have asked him for the 
money. Stuart declined to discuss what line of business he is in.
    Committee staff asked Stuart about Sioeng and his family more 
generally. Stuart characterized Sioeng as a kind, good-hearted, and 
generous man with lots of friends from all over the world. Sioeng, who 
Stuart knows as ``Sioeng San Wong,'' is frightened now, according to 
Stuart, who has not seen Sioeng in quite some time. Stuart also knows 
Jessica Elnitiarta, who he said handles the Sioeng family businesses in 
this country.

C. Other contributions and questionable transactions 84

    \84\ Note that the Committee could not determine whether Panda 
Industries' $50,000 contribution to the National Policy Forum (NPF) was 
made with domestic or foreign money. The Committee's analysis follows.
    Panda Industries, Inc. contributed $50,000 to the NPF. Grand 
National Bank check from Panda Industries signed by Jessica Elnitiarta 
(Ex. 62). The check was paid on Aug. 3, 1995. Grand National Bank 
statement of Panda Industries, Account number 240539301, Aug. 1-Aug. 
31, 1995. (Ex. 63).
    Because of multiple deposits into and withdrawals from the Panda 
Industries account during the relevant time frame, the Committee has 
been unable to pinpoint one particular source--domestic or foreign--for 
Panda's contribution to the NPF. That said, there are two potential 
sources of funds for the $50,000 contribution. On July 17, 1995, Panda 
Industries deposited a $50,000 check written the same day on Sioeng San 
Wong's account. Grand National Bank check from Sioeng San Wong to Panda 
Industries, Inc. for $50,000 (Ex. 64). Prior to this deposit, the Panda 
Industries account carried a balance of roughly $1,300. Grand National 
Bank statement of Panda Industries, Inc. account number 240539301, July 
1-July 31, 1995 (Ex. 65). Also on July 17, 1995, $70,000 was deposited 
into Sioeng San Wong's account. The $70,000 derived from a check 
written on Vinh B. La's account at the United Pacific Bank. United 
Pacific Bank check written by Vinh B. La to Cash, July 17, 1995 (Ex. 
66). This $70,000 appears to be the source of Sioeng's $50,000 transfer 
to Panda Industries as, save for the $70,000, Sioeng's account carried 
a balance of less than $5,000. Grand National Bank statement for Sioeng 
San Wong, account 210459806, July 1-July 31, 1995 (Ex. 67).
    It is difficult to trace the source of the $70,000 transferred from 
Vinh La's account. On the day the check was paid (July 18, 1995), La's 
account carried a balance of $101,326.93. United Pacific Bank Statement 
of Vinh Binh La, account 001-017438, July 25, 1995 (Ex. 68). Half of 
this amount is attributable to a July 14, 1995 deposit of $50,000 
withdrawn from a savings account maintained by Loh Sun International at 
the United Pacific Bank. United Pacific Bank deposit slip for account 
of La Vinh Binh, July 14, 1995 (Ex. 69). The savings withdrawal request 
was signed by Kent La, who later signed a contribution check from Loh 
Sun to the DNC. Id.
    The source of the $50,000 withdrawal from Loh Sun's United Pacific 
Bank savings account appears to be a transfer from a Loh Sun checking 
account maintained at the same bank. Loh Sun's savings account was 
opened with a deposit of a $200,000 check, dated January 4, 1995, 
written on Loh Sun's checking account. United Pacific Bank statement of 
Loh Sun International, Inc. account 001-409204, Jan. 31, 1995 (Ex. 70). 
An examination of the quarterly statements for Loh Sun's savings 
account from the time it was opened until the $50,000, July 1-July 31, 
1995 withdrawal was made on July 14, 1995 reveals that the withdrawal 
derived from the $200,000 deposited on January 4, 1995. United Pacific 
Bank statement of Loh Sun International, Inc., account 001-720-806, 
Mar. 31, 1995 (Ex. 71). There were no other significant deposits made 
into the account during this time period. Id. The Committee does not 
know the source of the $200,000 transferred from Loh Sun's checking 
    The second potential source of Panda Industries' contribution to 
the NPF was an $80,000. telephone transfer into the Panda Industries' 
account. The transfer was made on July 24, 1995 and increased the 
balance in the account to $124,877.52. (Ex. 65). The Committee has 
learned that the telephone transfer was requested by Jessica Elnitiarta 
and made from another account maintained in the name of Panda 
Industries (``PI 314''). Customer Authorization for Funds Transfer, 
July 24, 1995 (Ex. 72). However, the Committee could not determine with 
the information at hand the source of the $80,000 transferred from PI 
    In sum, the Committee cannot determine whether any portion of Panda 
Industries' $50,000 contribution to the NPF derived from a foreign 
     PRC Consulate in Los Angeles--two $20,000 checks, 
both dated November 15, 1996 and consecutively numbered, were 
written on Jessica Elnitiarta's account to the PRC Consulate 
General in Los Angeles.85 The checks were deposited 
by the Consulate in its ``Education Section'' account; an 
account that appears to have been opened with Elnitiarta's 
money.86 The purpose behind these checks--and why 
two were written instead of one--is not known.
    \85\ Two $20,000 checks from Jessica G. Elnitiarta to the Consulate 
General of the PRC (Education Section), November 15, 1996. Grand 
National Bank check number 442 & 443 from Jessica G. Elnitiarta to 
Consulate General of the PRC (education section) for $20,000, Nov. 15, 
1996 (Ex. 73).
    \86\ Bank of China account statement for account number 5011-
0600059-000, December 31, 1996. (Ex. 74). The two $20,000 checks were 
credited to the L.A. Consulate's Education Section account as a $4,000 
and a $36,000 deposit. A Bank of China representative could not explain 
why the two checks were credited in that way.
     Overseas Chinese Friendship Association--a $10,000 
check was written on Sioeng San Wong's account to the ``O.C. 
Chinese Friendship Ass.'' on April 15, 1995.87 The 
memo line the check indicates that it was meant as a donation. 
The Committee could not determine the nature of the donation. 
The check may have been intended for an organization called the 
Overseas Chinese Friendship Association. The association was 
set up at the direction of the PRC's Communist Party apparatus, 
specifically, the National Committee of the Chinese People's 
Political Consultative Conference (``CPPCC''), and was meant to 
forge and strengthen ties between the United Front Work 
Department of the CPPCC Central Committee and overseas Chinese 
in this country and elsewhere.88
    \87\ $10,000 Grand National Bank check from Sioeng San Wong to the 
O.C. Chinese Friendship Ass., April 15, 1995. (Ex. 75).
    \88\ BBC Summary of World Broadcasts, January 20, 1995.
     Dr. Daniel Wong--a $5,000 check was written to 
Wong on the account of Sundari, Sandra, and Laureen Elnitiarta 
on February 15, 1996.89 Wong is a Republican who ran 
for the California State Assembly.
    \89\ $5,000 Grand National Bank check from Sundari, Sandra, and 
Laureen Elnitiarta to Dr. Daniel Wong, February 15, 1996. (Ex. 76).
     Norman Hsu--a $7,500 check was written on Sioeng 
San Wong's account to Friends of Norman Hsu on March 11, 
1995.90 Hsu is a former president of the Chinese-
American Association.
    \90\ $7,500 Grand National Bank check from Sioeng San Wong to 
Friends of Norman Hsu, March 11, 1995. (Ex. 77).
     PRC Consulate in Los Angeles to Hollywood 
Metropolitan Hotel--a $3,000 check, dated March 22, 1996, was 
written on the PRC Consulate's account at the Bank of China, 
Los Angeles branch to the Hollywood Metropolitan Hotel, a 
business owned and operated by the Sioeng family.91 
Three days later, the check was deposited into a Grand National 
Bank account maintained by Panda Hotel Investment, 
Inc.92 Nothing on the check itself or told to the 
Committee by Jessica helps explain the instrument's purpose.
    \91\ $3,000 Bank of China check from the Consulate General of the 
People's Republic of China to the Hollywood Metropolitan Hotel, March 
22, 1996. (Ex. 78).
    \92\ Id.

                          part iv. conclusion

    The story of Ted Sioeng and his family is a fascinating 
glimpse at how quickly an individual or family--even one with 
markedly limited U.S.-based income and with the vast majority 
of its wealth overseas--can become an influential figure with a 
political party or in an election. In Sioeng's case, some 
$400,000 in contributions to the DNC in 1995 and 1996 earned 
him remarkable access to the President and Vice President of 
the United States, and not just for him, but for his family and 
friends as well.
    The Sioeng story, though, has only been partially told by 
the Committee. Still to be answered are many questions, among 
them the following:
     Was money sent by Sioeng from Hong Kong to the 
United States for the express purpose of making political 
     What was the ultimate source of the funds Sioeng 
wired from Hong Kong to accounts in this country;
     What was the nature of Sioeng's relationship with 
the Government of China; and
     Why did Sioeng and his family decide to start 
making large political contributions during the 1996 election 
    It is clear that Sioeng and his family became major 
Democratic donors during the 1996 election cycle and that they 
did so with money wired from overseas. The questions above take 
the analysis to a new level--one that focuses less on the 
Sioeng family's contributions and more on their motives for 
making them. Until the questions are answered, Sioeng, like 
Charlie Trie, John Huang, Maria Hsia, and others, will remain a 
mysterious figure who was embraced all-too eagerly by a money-
hungry DNC.

                      John Huang's Years at Lippo

    In the fall of 1996, John Huang was brought out of the 
obscurity of the DNC fundraising operation and into the media 
spotlight as a central character in the DNC fundraising 
scandal. A prominent figure through the course of the 
Committee's investigation, Huang appeared as a key player in 
numerous questionable fundraising ventures, including the Hsi 
Lai Temple fundraiser and the Yogesh Gandhi 
imbroglio.1 Huang solicited approximately $1.6 
million that has been returned to date by the DNC. Further, 
Huang apparently violated the Hatch Act in that certain 
solicitations were undertaken during his tenure at the Commerce 
    \1\ See the sections of this report on the Hsi Lai Temple 
fundraiser and Yogesh Gandhi.
    Huang's connections to his long-time patrons, the Riady 
family, at Indonesia's Lippo Group linked his past with his 
questionable fundraising practices. Two further discoveries 
pushed an examination of the Lippo Group and its U.S. 
activities to the top of the Committee's investigative agenda: 
First, the Committee learned that Huang obtained a security 
clearance in connection with his appointment to the Commerce 
Department and received classified briefings on sensitive trade 
issues of importance and value to Lippo, despite his 
exceedingly modest policy portfolio.2 Second, 
extensive evidence emerged of Huang's continuing contacts with 
Lippo after he had left its employ. The following discussion 
sets forth the Committee's findings concerning the history and 
structure of the Lippo Group, Huang's role as the U.S. 
representative of Lippo, and Huang's role in laundering Lippo 
and Riady monies into the U.S. political system. In brief, the 
evidence accumulated by the Committee establishes a pattern of 
John Huang undertaking questionable and illegal activities in 
the service of his Lippo Group sponsors.
    \2\ See generally the section of this report on Huang's tenure at 

                            the lippo group

    The Committee heard expert testimony on the history and 
structure of the Lippo Group from Thomas R. Hampson, an 
investigator who specializes in advising U.S. corporations 
considering international acquisitions and joint ventures. 
Hampson, using publicly available sources as well as documents 
produced to the Committee pursuant to subpoena, developed the 
following profile of the Lippo Group, which was presented to 
the Committee in public hearings held July 15, 
    \3\ Testimony of Thomas R. Hampson, July 15, 1997, pp. 60-73. 
Except as otherwise noted, the following background information on 
Lippo is drawn from the Hampson's testimony.
    The Lippo Group is a multi-billion dollar confederation of 
companies controlled by the Riady family of Indonesia. Starting 
from a retail banking base in Indonesia, the Lippo Group has 
grown over three decades to encompass banking, finance, 
insurance, property-development, and manufacturing interests 
concentrated in Indonesia, China and the United States.
    The Chairman of the Lippo Group is Dr. Mochtar Riady, an 
Indonesian of Chinese descent. Today, Lippo Group is managed by 
his two sons, Stephen and James. Stephen Riady is responsible 
for Lippo Limited and the Hong Kong Chinese Bank Co., which are 
based in Hong Kong and concentrate on banking and property 
development in Hong Kong and mainland China. James Riady is 
responsible for the flagship Lippo Bank of Indonesia, and he 
also manages Lippo Land, a corporation constructing two new 
cities on the outskirts of Jakarta. Throughout the 1980s and 
early 1990s, John Huang was the chief representative of the 
Lippo Group in the United States.
    Over the past five years, the Lippo Group has shifted its 
strategic center from Indonesia to the People's Republic of 
China. Lippo is currently involved in dozens of large-scale 
joint ventures in the PRC, involving the construction and 
development of apartment complexes, office buildings, highways, 
ports, and other infrastructure. Lippo's principal partner on 
the mainland is China Resources, a company wholly-owned and 
operated by the PRC government. The interrelationship between 
Lippo and Chinese government-sponsored companies such as China 
Resources (and China Travel, another Lippo partner) has grown 
markedly in the last three years. Indeed, in the spring of 
1997, Stephen Riady announced that the name of Lippo's Hong 
Kong Chinese Bank would be changed to the Lippo China Resources 
Bank, to reflect that China Resources is now an equal partner 
with Lippo in the bank. Additionally, when Indonesia-based 
Lippo Land faced a cash flow crisis that threatened a run on 
Lippo Bank, China Resources injected tens of millions of 
dollars into Lippo Land and became a substantial partner in 
that entity as well.
    Hampson testified that China Resources is widely reported 
to be a corporate agent of economic and political espionage 
serving the government of China. Intelligence officials have 
confirmed in the press that the Chinese intelligence 
establishment is heavily involved in the operation of China 
Resources, and that China Resources selects overseas business 
partners in part on the basis of their value as potential 
intelligence gatherers.4
    \4\ See, e.g., James Wood, ``Article Details Chinese Intelligence 
Network in Hong Kong,'' BBC Summary of World Broadcasts, March 9, 1995, 
p. 3.

                          lippobank california

    In addition to heading-up Lippo Bank and Lippo Land, James 
Riady owns 99% of LippoBank California, a federally insured 
institution headquartered in Los Angeles. LippoBank is a small 
California-chartered bank with less than one hundred million 
dollars in assets. The bank has experienced chronic asset-
quality and management problems, and has been served with 
numerous ``cease and desist'' orders by the F.D.I.C. The bank 
has consistently generated losses. From 1986-1988, James Riady 
served as the CEO of LippoBank. Although Riady continues to own 
a house in Los Angeles, he moved back to Jakarta some time 
before 1990.
    The Committee heard testimony from Harold Arthur, a 
director of LippoBank and its former CEO. Arthur testified that 
the bank is part of the Indonesia-based Lippo 
Group.5 James Per Lee, the current CEO, insisted in 
deposition testimony that the relationship was limited to a 
licensing agreement which allowed the bank to use the Lippo 
name.6 James Alexander, another former CEO of the 
bank, stated that the bank was not only part of the Lippo 
Group, but was under the direct control of Indonesia-based 
Lippo executives.7
    \5\ Testimony of Harold R. Arthur, July 15, 1997, pp. 93-94.
    \6\ Deposition of James Per Lee, May 2, 1997, pp. 11-19. Arthur was 
called to testify at public hearings rather than Per Lee because the 
focus of the Committee's inquiries was not the LippoBank per se, but 
the activities of John Huang at the bank. Arthur worked directly with 
Huang for more than five years.
    \7\ Memorandum of Interview of James A. Alexander, July 7, 1997. 
Per Lee's position that the bank is not part of the Lippo Group is 
simply not tenable on the facts. In addition to the statements of 
former CEOs Arthur and Alexander, the Committee found that (I) 
LippoBank is listed as part of the Lippo Group in its promotional 
materials, and even in the date book carried by Per Lee, see Per Lee 
deposition, pp. 11-19; (ii) Per Lee and his predecessor CEOs attended 
bi-annual Lippo Group meetings in Jakarta, see id.; (iii) Per Lee's own 
appointment was announced in the Lippo Group Executive Express 
newsletter, which holds itself out as a news source ``exclusively for 
senior Lippo Group executives,'' see id.; and (iv) LippoBank receives 
an annual budget for community and political affairs directly from the 
Lippo Group in Jakarta, see Deposition of David Sugita, May 16, 1997, 
pp. 30-33. The distinction is of import to regulators because it bears 
on the veracity of representations which the bank has made to the 
F.D.I.C. and state banking authorities, but also bespeaks the reach of 
the Riady empire. Further, a true understanding of the relationship 
between the LippoBank and the Lippo Group is necessary to a 
consideration of the continuing communications between Huang and the 
bank after he joined the Commerce Department. In a nutshell, calling 
the LippoBank offices in Los Angeles--which Huang did hundreds of times 
after he entered government service--was the functional equivalent of 
calling Jakarta.

                           Huang at LippoBank

    The Committee interviewed and deposed several of Huang's 
LippoBank colleagues in an effort to gain an understanding as 
to his activities and responsibilities while affiliated with 
    Alexander told the Committee staff that Huang was James 
Riady's ``man in America,'' and that he kept his activities 
largely to himself.8 This latter assessment is borne 
out by the testimony Arthur, who, although he worked in the 
same office suite with Huang and claimed to have had a ``close 
business relationship for many years,'' testified that he had 
no idea how Huang passed his day.9 Per Lee, when 
asked what Huang did, replied cryptically ``I don't know, I 
don't know.'' 10 Despite the length of his 
employment at Lippo, Huang's colleagues offered little insight 
into his activities there and seemed to consider him something 
of a mystery. The Committee has, however, been able to cast 
some light into Huang's activities at LippoBank.
    \8\ Alexander interview, p. 1.
    \9\ Arthur testimony, p. 97.
    \10\ Per Lee deposition, p. 34.
    First, perhaps the most concise piece of evidence available 
to the Committee as to John Huang's activities at Lippo was a 
letter written by Maeley Tom, a Californian lobbyist and Lippo 
consultant, to John Emerson, then the Deputy Director of 
Presidential Personnel.11 In recommending Huang for 
a position in the Administration, Tom opined that: ``John Huang 
. . . is the political power that advises the Riady Family on 
issues and where to make contributions. They invested heavily 
in the Clinton campaign. John is the Riady family's top 
priority for placement because he is like one of their own.'' 
12 This description is consistent with Alexander's 
description of Huang as a ``fixer'' who operated in high 
political circles.13
    \11\ Letter from Maeley Tom to John Emerson, February 17, 1993 (Ex. 
    \12\ See Ex. 1. As discussed below, the ``investments'' the Riady 
family made in the campaign appear to have been funded with illegal 
overseas monies laundered by Huang through U.S. holding companies.
    \13\ See Alexander interview, p. 2. Alexander had left the bank by 
the time Huang joined the Commerce Department. In discussions with a 
director of the bank, Alexander was told about Huang's position and 
that things were going well for the Riadys in Washington. The director, 
apparently joking, said that Riady had ``his own office in the White 
House.'' Id.
    Second, Huang's activities can be reconstructed in part 
through his correspondence, particularly a letter dated October 
7, 1993 that Huang sent to the Office of the Vice President, 
thanking the Vice President's Chief of Staff, Jack Quinn, for 
meeting in the White House with Shen Jueren, the Chairman of 
China Resources.14 China Resources, as discussed 
above, is a PRC-owned entity widely reported to serve as a 
front for Chinese intelligence services. China Resources is 
also an important Lippo partner. It appears from Huang's 
letter, as well as from a White House audio tape of the Los 
Angeles function referenced in the letter, that Vice President 
Gore may have met with Shen Jueren in the White House and also 
exchanged words with him at a subsequent DNC 
event.15 China Resources was no doubt impressed that 
the Riady's ``man in America'' could gain an audience for its 
Chairman with senior administration officials.16 
Furthermore, as discussed later, it appears that Huang paid 
Jueren's way into the White House with laundered Lippo Group 
    \14\ Letter from John Huang to Jack Quinn, Oct. 7, 1993 (Ex. 2).
    \15\ White House Communications Agency audio tape, Sept. 27, 1993. 
See the section of this report on The Hsi Lai Temple Fundraiser and 
Maria Hsia at notes 95-103 and accompanying text.
    \16\ This was apparently not Huang's first connection with China 
Resources, Alexander told the Committee that in 1991, Huang was sent to 
Beijing to negotiate with China Resources over the Lippo proposal to 
join forces to purchase the Hong Kong branch of B.C.C.I. See Alexander 
interview, p. 2.
    \17\ See footnote 31 infra.
    Third, whatever the precise scope of Huang's services, it 
is clear that he was well compensated for his achievements. 
Like his salary, the generous severance payment Huang received 
when he left Lippo's employ to join the Clinton Commerce 
Department was paid through Hip Hing Holdings, Inc., a Riady 
real estate holding company.\18\ Huang's total compensation for 
1993-1994 was in excess of seven hundred and fifty thousand 
    \18\ Memorandum from Roy Tirtadji to John Huang, June 27, 1994 (Ex. 
    \19\ Testimony of Juliana Utomo, July 15, 1997, pp. 15-19.
    Finally, Huang's services for the Lippo Group clearly 
extended beyond his formal period of employment. As is 
discussed in detail elsewhere in this report, Huang had 
hundreds of phone calls--well more than one per business day--
with Lippo-related persons and entities after he joined the 
Commerce Department.20 LippoBank's CEO, Per Lee, 
conducted his own inquiry after press reports of Huang's Lippo 
contacts surfaced in the fall of 1996.21 To his 
surprise, Per Lee found that his own secretary, Juwati 
Judistira, was the originator of the bulk of the calls to Huang 
from the bank. Per Lee was surprised because he had only talked 
to Huang on one occasion to his recollection. Of note, 
Judistira, who has left the United States and declined to speak 
with the Committee staff, had never been Huang's secretary, but 
rather she had been James Riady's secretary when he served as 
President of the bank. Furthermore, when Per Lee asked 
Judistira why she had placed so many calls to Huang, she said 
she was ``relaying messages'' for him.22
    \20\ See the section of this report on Huang at Commerce.
    \21\ Per Lee deposition, pp. 93-97.
    \22\ Id. at 97-99.
    In sum, the evidence strongly suggests that Huang remained 
in day-to-day contact with Lippo throughout his government 
service.23 Because neither Huang nor virtually any 
of the recipients of these calls has made themselves available 
to answer the Committee's questions, the content of these 
conversations and the information imparted therein remain 
    \23\ Indeed, as discussed elsewhere in this report, Huang was cagey 
in his efforts to hide his continued communications with Lippo, even 
making use of a spare office at Stephens, Inc., across the street from 
his Commerce Department office.
    Huang was a long-standing and loyal emissary of the Riady 
family, and was well compensated for his efforts. While his 
undertakings cannot be catalogued in detail, he was responsible 
for maintaining the political profile of his patrons. His 
duties extended from shepherding China Resources' Chairman into 
the White House, to positioning himself for an administration 
position by becoming a player in Democratic politics. This last 
effort involved using Riady money to fund favored candidates 
and causes, and would appear to have accustomed Huang to the 
use of foreign money in the domestic politics of the United 

                Lippo and Riady Political Contributions

    Huang was well versed in the ways of skirting United States 
campaign finance laws before he joined the DNC, and, indeed, 
before he had even left California. The Committee has 
established that Huang funneled foreign-source monies through 
three different Riady-controlled entities to the DNC during 
1992 and 1993. The facts and documents underlying these 
violations were presented during the Committee's public 
hearings on July 15, 1997.
    Juliana Utomo, a former colleague of Huang's, appeared 
before the Committee and testified that Hip Hing Holdings, 
Inc., and San Jose Holdings, Inc., are real estate holding 
companies owned and/or controlled by James Riady and managed by 
Huang.24 Utomo worked for Hip Hing Holdings and San 
Jose Holdings from 1988 through late 1996. Utomo testified that 
Huang made all decisions regarding political contribution 
expenditures, and that Huang likewise approved all requests 
which were made to the Lippo Group in Jakarta for operating 
funds and expense reimbursement. Requests for funds were 
frequent, typically monthly, because the expenses of the Hip 
Hing entities generally exceeded their income.25
    \24\ Utomo testimony, pp. 14-15.
    \25\ Id.
    Utomo identified three (and the records in total show four) 
DNC contributions which were funded with monies from Indonesia 
at Huang's direction.
    The first contribution was evidenced by a $50,000 Hip Hing 
Holding check dated August 12, 1992, made payable to the ``DNC 
Victory Fund.'' 26 In a memorandum to the Lippo 
Group dated August 17, 1992, Huang requested reimbursement for 
the contribution, and several weeks later a wire transfer was 
received from LippoBank Jakarta in the amount requested in the 
August 17 memorandum.27 In 1992, the year of the 
$50,000 DNC Victory Fund contribution, Hip Hing Holdings 
actually lost $482,395.33.28 Utomo testified that 
the entire shortfall was made up with funds transferred to the 
United States from Jakarta.
    \26\ $50,000 check from Hip Hing Holdings to DNC Victory Fund, 
August 12, 1992 (Ex. 4).
    \27\ Memorandum from John Huang & Agus Setiawan to Ong Bwee Eng, 
August 17, 1992 (Ex. 5).
    \28\ Hip Hing Holdings 1992 Earnings Statement (Ex. 6).
    The second overseas-funded contribution was evidenced by a 
Hip Hing check, dated September 23, 1993, for $15,000 made 
payable to the DNC.29 Huang's signature, as well as 
that of Hip Hing's Comptroller, Agus Setiawan, appears on the 
check. In 1993, Hip Hing Holdings actually lost 
    \29\ Composite of checks from Hip Hing Holdings, San Jose Holdings, 
and Toy Center Holdings (Ex. 7).
    \30\ Composite of 1993 Earnings Statements of Hip Hing Holdings, 
San Jose Holdings, and Toy Center Holdings (Ex. 8).
    Third, Utomo also identified a $15,000 check written on the 
San Jose Holdings account and made payable to the ``DNC'' dated 
September 27, 1993.31 In 1993, San Jose Holdings 
lost $65,177.32.32
    \31\ See Ex. 7.
    \32\ See Ex. 8.
    A fourth check, dated September 23, 1993, from another 
Riady company, Toy Center Holdings, Inc., was also drawn 
payable to the DNC in the amount of $15,000.33 In 
1993, Toy Center Holdings lost $26,886.67.34
    \33\ See Ex. 7.
    \34\ See Ex. 8. Thus, Huang drew two checks for a total of $30,000 
on September 23, 1993, and a check for $15,000 on September 27, 1993. 
See Ex. 7. It cannot escape notice that on September 24, 1997, Huang 
brought China Resources Chairman Shen Jueren to the White House, as 
discussed above, and on September 27, Huang and Shen Jueren attended a 
DNC event in Los Angeles. See Ex. 2.
    In the course of the Committee's July 15, 1997, hearing, 
the Minority attempted to downplay the significance of these 
foreign contributions, claiming that so long as U.S. income 
(rather than profits) was sufficient to cover the 
contributions, such contributions were legal, regardless of 
reimbursement from overseas.35 This position simply 
mis-states the law. In order for the subsidiary of a foreign 
corporation to make legal political contributions, the funds 
must be derived from U.S. profits. As the FEC opined in June 
1992: `'The domestic subsidiary of a foreign corporation may 
make political contributions even though it receives subsidies 
from its foreign parent if the contributions are made from 
domestic profits.'' 36
    \35\ Comments of Minority Chief Counsel Alan I. Baron, July 15, 
1997, pp. 35-38.
    \36\ See Federal Election Commission Advisory Opinion 1992-96: 
Contributions by Domestic Subsidiary of Foreign National, June 26, 1992 
(emphasis added) (Ex. 9).
    The information developed by the Committee relating to 
these contributions constitutes a compelling case that Huang 
broke the law in furtherance of the Riadys' political agenda. 
Certainly in the case of Hip Hing's $50,000 contribution, there 
could be no more compelling evidence than Huang's own 
memorandum request for reimbursement from overseas. To the 
knowledge of the Committee, the Department of Justice has not 
pursued these apparent violations, and, indeed, the Department 
may have allowed the statute of limitations to lapse on at 
least one of the illegal contributions identified by the 
    In addition to the four Lippo holding company contributions 
discussed above, the Committee also identified a large number 
of 1992 contributions from James Riady and his wife, Aileen, to 
the DNC and various Democratic state party 
organizations.37 The checks total $465,000 and were 
produced pursuant to a Committee subpoena from the files of Hip 
Hing Holdings, suggesting that Huang may have directed these 
contributions as well. Notably, while Riady has claimed in the 
press that he possesses a green card and was thus eligible to 
make contributions in the 1992 election cycle, it is 
uncontested that he moved back to Indonesia in 1990, and has 
not been a resident of the United States since that time. 
Because Riady declined the Committee's invitation to explore 
these and other issues when Committee staff were in Indonesia, 
the Committee has been unable to reach a final determination. 
The legality of these contributions remains in doubt.
    \37\ Composite of checks from James & Aileen Riady to various 
Democratic state party organizations (Ex. 10).


    The record developed by the Committee establishes that 
Huang was well accustomed to the use of political giving--and 
the laundering of funds--to further the interests of the 
Riadys. The Riadys and their Lippo empire, in turn, have become 
increasingly intertwined with Chinese government-owned 
enterprises. In the case of Shen Jueren's White House visit, 
Huang's value to Lippo was demonstrated by the combination of 
money laundering and political string pulling--all for the sake 
of the president of China Resources, the Riadys' business 
partner. As discussed in detail in other sections of this 
report, the evidence uncovered by the Committee pertaining to 
Huang's tenure at the LippoBank California, and his political 
activities there, set a pattern which was often repeated.

                         John Huang at Commerce

    Throughout the Committee's investigation, John Huang has 
persisted as one of the most central figures in the campaign 
finance scandal. Huang's involvement was evident from the 
earliest inkling that there was systematic illegality in the 
way the DNC raised money during the 1996 election cycle. The 
first sign was a Los Angeles Times story about an illegal 
$250,000 contribution to the DNC from Cheong Am America. Mr. 
Huang raised that money. Huang proved to be a prodigious fund-
raiser for the DNC in 1996, bringing in $3.4 million to DNC 
coffers. Nearly half of that amount has been returned to date, 
and there are serious questions about much of the balance not 
    \1\ See, for example, the report section regarding DNC 
contributions raised by Huang from Ted Sioeng, Sioeng's family, and his 
businesses, totaling $400,000. The DNC has not returned these 
    Huang is linked through his fund-raising activities to many 
other important figures in the scandal, including Maria Hsia, 
Ted Sioeng, Charlie Trie, Mark Middleton, Pauline Kanchanalak, 
Antonio Pan, and Huang's patrons and former employers, the 
Riadys. Before he went to the DNC, Huang worked as a political 
appointee at the Department of Commerce. The press has written 
often about Huang's activities at Commerce, including how he 
got a job there, what security clearances he held, what 
classified or other sensitive information he had access to in 
the course of his employment, whether he leaked or mishandled 
any such information, and whether he engaged in political fund-
raising there.
    In an effort to address questions regarding Huang's 
activities at Commerce, the Committee held hearings on July 16 
and 17, 1997. The hearings were the culmination of intense 
investigative work performed by Committee staff, which 
conducted dozens of interviews and depositions and reviewed 
hundreds of thousands of documents in connection with this 
phase of the hearings. Although its work was complicated by 
Huang's refusal to cooperate, the Committee received excellent 
cooperation from the Commerce Department. The Department 
appears to have undertaken a diligent and thorough search for 
materials responsive to the Committee's subpoena. The 
Department also made employees readily available for interviews 
and depositions.2 For the most part, the Committee's 
dealings with Commerce were free of the problems encountered 
with the White House and the DNC.3
    \2\ The Committee notes in particular the efforts of Kent Hughes, 
Associate Deputy Secretary of Commerce, and Susan Truax, Office of 
General Counsel, in accommodating the Committee's many requests for 
    \3\ Other sections of this report detail the Committee's 
frustrating dealings with the White House and DNC.
    What emerges from the Committee's investigation is a 
picture of Huang both complex and vexing, which raises as many 
questions as it answers. He was a valuable fundraiser for the 
1992 and 1996 Clinton campaigns and a ``must hire'' candidate 
who knew President Clinton personally, yet he obtained only a 
mid-level appointment in the Administration. Despite his modest 
position and the fact that he was purposely excluded from any 
real policy work at Commerce, Huang received classified 
intelligence briefings, and he appears to have met often with 
high ranking White House officials, including, on occasion, the 
President himself. In addition, he met with various Chinese 
diplomatic officials with some frequency, even though he was 
suppose to be ``walled off'' from substantive China policy at 
    While at Commerce, Huang maintained constant contact with 
representatives of his former employer the Lippo Group, and his 
patrons, the Riadys, and was often in contact with other 
leading figures in the campaign finance scandal. It seems clear 
that he engaged in political fund-raising in violation of the 
Hatch Act, working closely with DNC officials to do so. The 
illegality of his fund-raising was compounded by the fact that 
at least some of the money Huang raised while at Commerce was 

                   I. Huang's Appointment to Commerce

    On his way from Lippo to the DNC, Huang made an eighteen-
month stopover at the Department of Commerce. The Committee 
examined the circumstances surrounding Huang's arrival at 
Commerce, seeking answers to two principal questions in that 
regard: How did Huang secure an appointment in the Clinton 
administration, and why at Commerce? The Committee found only 
partial answers to each.
    Huang was a prominent Democratic fundraiser and activist in 
the Asian-American community during the 1992 election. His 
efforts were focused largely in California. Through them, Huang 
forged significant ties to the DNC and other Democratic groups; 
ties he would rely on later for help in securing an appointment 
with the Clinton administration.
    Before joining Commerce, Huang was employed by the Lippo 
Bank. Located in Los Angeles, the Lippo Bank is a wholly-owned 
subsidiary of the Riady-controlled Lippo Group, which is based 
in Jakarta, Indonesia. At the Lippo Bank, Huang participated in 
many fund-raising activities, both independently and on behalf 
of the Riady family. For example Huang, together with Maeley 
Tom, formed the Asia/Pacific Leadership Council, a political 
fund-raising group that raised thousands of dollars for the 
Clinton/Gore campaign.4 Although the extent to which 
Huang's fund-raising activities facilitated his appointment to 
Commerce is not clear, it is certain that they played a role.
    \4\ Maeley Tom, who, like Huang, is Chinese by birth, has spent two 
decades in Democratic politics in Sacramento, California. She served as 
a part-time consultant for the Lippo Bank while John Huang worked 
there. In 1994, Tom was an active fund-raiser in the Asian-American 
community in California and a contributor to the Democratic party.
    After the 1992 election, Huang became interested in a 
position with the Clinton administration. His name first came 
to the attention of the White House Priority Placement Office 
in 1992 when he was placed on a ``must-consider'' list compiled 
by the DNC.5 Michael Whouley, who received the 
``must consider'' list, was the head of White House Priority 
Placement at the time, and it was Whouley's job to sort through 
various candidates who received particularly strong support, 
and to determine which of these candidates would then be 
considered a priority for the administration.6 Huang 
was placed on this list as a ``must-consider'' candidate for 
several positions, including ``Under or Assistant Secretary for 
International Affairs'' at the Department of Treasury, 
``Undersecretary for International Trade'' at the Department of 
Commerce, and a ``sub-cabinet'' position at the Department of 
State.7 Huang's resume was also submitted to the 
White House Personnel Office.8
    \5\ Interoffice Memorandum from Paul Carey and Rick Lerner to 
Michael Whouley, December 21, 1992, pp. 5, 11 (Ex. 1).
    \6\ Testimony of Gary Christopherson, July 16, 1996, p. 14.
    \7\ Id.
    \8\ Resume of John Huang, undated (Ex. 2).
    Over the course of the next few months, several letters 
were submitted on Huang's behalf. These letters included 
recommendations from Senators Paul Simon, Tom Daschle, and Kent 
Conrad, California State Treasurer Kathleen Brown,9 
and lobbyist and Asian-American fundraiser Maeley Tom.
    \9\ Letters of recommendation for John Huang, December 1992-
February 1993 (Ex. 3).
    Maeley Tom's letter, written to Deputy Director of 
Presidential Personnel John Emerson, is remarkable in the way 
it touts several Asian-Pacific Americans (``APA'') for 
administration positions.10 In her letter, Tom 
adopts a very personal, emotive tone in imploring Emerson and 
the administration to ``use this window of opportunity to 
cultivate (recruit) [the APA] community's loyalty by 
demonstrating that the true party of inclusion is the 
Democratic Party,'' and, more specifically, by appointing those 
Tom recommended.11 Although the recommendations were 
clearly hers and, purportedly, those of the APA community, Tom 
wrote on the stationery of her boss, David Roberti, President 
Pro Tempore of the California State Senate.
    \10\ Letter from Maeley Tom to John Emerson, Feb. 17, 1993 (Ex. 4). 
Two versions of Tom's letter to Deputy Director of Presidential 
Personnel John Emerson were produced to the Committee by the White 
House. The first version is heavily redacted and bears a handwritten 
notation on the cover page indicating it was copied to Bruce Lindsey 
who was then Director of Presidential Personnel at the White House. The 
cover page of the second version contains a different handwritten 
notation--``Asian Appointments.'' Otherwise, the two versions appear 
    \11\ Id. at p. 1.
    Tom's letter is heavily salted with references to political 
fund-raising and Democratic party-building efforts. Her 
recommendation of Huang relies mainly on Huang's connection to 
the Riadys, major Democratic donors. Tom's letter characterized 
Huang as ``the political power that advises the Riady Family on 
issues and where to make contributions.'' 12 She 
wrote, ``[The Riady's] invested heavily in the Clinton 
campaign. John is the Riady Family's top priority for placement 
because he is like one of their own. The family knows the 
Clintons on a first-name basis. . . .'' 13
    \12\ Id. at p. 6.
    \13\ Id.
    After being labeled ``high priority'' by the White House 
Priority Placement office, Huang's file was sent over to the 
Personnel office and placed in a job bank.14 Here, 
Huang's application foundered for several months, until his 
name eventually came to the attention of Gary Christopherson, 
who served as the Associate Director of the White House Office 
of Presidential Personnel from May 1993 to September 
1994.15 It was Christopherson's responsibility to 
recruit candidates for the administration, and then match 
people with positions.16
    \14\ Deposition of Gary A. Christopherson, June 4, 1997, pp. 25-26.
    \15\ Id. at p. 14.
    \16\ Id. at p. 12.
    According to Christopherson, Huang was raised as a ``high 
priority placement'' candidate by various members of the Asian-
American community.17 The Asian Outreach section 
18 within the Personnel Office also weighed in on 
Huang and advocated his placement because it would represent an 
``important symbol to the Asian community.'' 19
    \17\ Id. at p. 41.
    \18\ Christopherson testified in his deposition that the White 
House Personnel Office had ``outreach'' groups advising the staff and 
providing them with names of candidates for administration jobs. Huang 
was identified by the Asian Outreach group as a priority. This group 
included Maria Haley, Martha Watanabe, Melinda Yee and Ginger Lew. (Id. 
at p. 40).
    \19\ Christopherson testimony, p. 8.
    Huang was on the priority list for a ``good period of 
time.'' 20 White House Personnel was having 
difficulty in placing Huang in an appropriate position because 
Huang was considered lacking in the necessary qualifications 
for higher level posts.21 When the Deputy Assistant 
Secretary position at the Department of Commerce became 
available, Christopherson felt that he had finally found an 
acceptable match.22
    \20\ Christopherson deposition, p. 49.
    \21\ Id. at p. 42.
    \22\ Id. at p. 51.
    Christopherson drafted a ``decision memo'' recommending 
Huang for an appointment as Principal Deputy Assistant 
Secretary for International Economic Policy.23 This 
recommendation was sent to Bruce Lindsey for final 
review.24 Christopherson's memorandum to Lindsey 
stated, among other things, that ``John Huang has been a major 
Democratic supporter and expert in banking policy. He was 
extremely active in the Clinton/Gore campaign. . . .'' 
25 In addition, the letter noted that Huang had been 
recommended by Senators Paul Simon and Kent Conrad, and Maria 
    \23\ Id. at p. 32. See also Decision Memorandum from Gary 
Christopherson to Bruce Lindsey, Dec. 6, 1993 (Ex. 5).
    \24\ Christopherson testimony, pp. 12-13.
    \25\ Ex. 5 at p. 1.
    Christopherson remembered speaking to someone at the 
Commerce Department regarding Huang's placement 
there.26 Although he was unable to recall specifics, 
Christopherson concluded that during this time, he would have 
been in regular contact with the White House Liaison Office at 
Commerce, which would have received the John Huang decision 
memo approved by Bruce Lindsey.27 Christopherson's 
recollection of the specifics of Huang's placement was vague. 
He speculated that Huang's placement was routine and uneventful 
and that as a result, the events did not stand out in his 
memory. According to Christopherson, there was little 
disagreement between the White House or Commerce regarding 
Huang's placement within Commerce.28
    \26\ Christopherson deposition, p. 49.
    \27\ Id.
    \28\ Id.
    The Committee found scant indication that the White House 
personnel office vetted Huang before sending its recommendation 
over to Commerce. According to Christopherson, Presidential 
Personnel essentially left the due diligence work on Huang to 
the Commerce Department. The personnel office's decision to 
place Huang at Commerce was based solely upon Huang's resume 
and his status as a priority placement for the APA 
Community.29 Once Presidential Personnel made what 
it considered to be an appropriate fit, vetting the applicant 
and reviewing his credentials and experience fell to the 
individual department--in this case, Commerce.
    \29\ Id. at pp. 54-55.
    Christopherson testified as to why Presidential Personnel 
relied so heavily on the receiving agencies to vet appointees. 
He explained that the office was ``incredibly busy at this 
time,'' and that, ``by the time we got around October of 1993, 
we were running a very streamlined, thin process and were very 
much more depending on the agencies to play roles there. . . 
.'' 30 In short, Christopherson relied on Commerce 
to identify problems with the Huang appointment.31
    \30\ Id. at p. 63.
    \31\ Id. at pp. 63-64.
    Vetting aside, the Committee determined that Huang's fund-
raising efforts on behalf of the DNC and the Clinton campaign 
were important factors in Huang's placement on the priority 
list.32 In his deposition, Bruce Lindsey testified, 
``I think we always had a preference to appoint people who were 
supportive of the campaign, either financially or because they 
worked, you know, but there was always a preference if two 
people were qualified to take someone who had been active and 
involved in the campaign at one point or the other.'' 
    \32\ Deposition of Bruce Lindsey, July 1, 1997, p. 62.
    \33\ Id. at p. 62.
    In Huang's case, the fund-raising continued right up until 
his appointment and beyond. Indeed, once Huang had finally been 
matched to an appropriate position, Christopherson's notes 
reflect that the appointment was delayed in order that Huang 
could participate in a fund-raising dinner held on December 4, 
1993 in California.34 The delay was needed since 
Huang would be a political appointee and thus prevented from 
fund-raising after his appointment to Commerce.35 As 
Christopherson put it, ``Once you become a political appointee, 
you stay out of the fund-raising part of the business, 
period.'' 36
    \34\ Christopherson deposition, p. 101. Memorandum from Gary 
Christopherson to Bruce Lindsey, Oct. 18, 1993 (Ex. 6). 
Christopherson's notes on the memo stated as follows: ``Check Ethics 
with Bueno re. fund-raiser on December 4th. Check proximity of job 
decision in fund-raiser . . . Draft with Bruce to discuss timing.''
    \35\ Christopherson deposition, p. 101.
    \36\ Id.
    In late 1993, Huang's name was sent over to Commerce along 
with several other candidates by the White House Personnel 
Office. This list was sent to Jeffrey Garten, who was the 
Undersecretary of Commerce for International Trade during most 
of Huang's tenure there. Once Garten received the list, he 
forwarded it to the assistant secretaries below him at the 
International Trade Administration (ITA), including Charles 
Meissner.37 Meissner, the Assistant Secretary for 
International Economic Policy, made the decision to hire Huang 
as his principal deputy. According to Garten, ``Meissner came 
to me and said here's what I would like to do, and he wanted 
to--he was suggesting that we hire Huang, and I think the major 
reason was that Secretary Brown was quite adamant that we have 
ethnic diversity.'' 38 According to Garten, the 
White House Liaison list contained two Asian-Americans, and 
Garten and Meissner discussed where these candidates would best 
fit within the structure at Commerce.39 The two 
``jointly came up with the idea that Huang ought to be [the] 
principal deputy, because of the two, we felt Huang was the 
least qualified to do something substantive, and therefore, we 
felt we could make that an administrative position so that we 
could satisfy Brown's objective--it wasn't just Brown; I 
supported it, too--of having some ethnic diversity but at the 
same time, not putting somebody in a position of policy 
responsibility that [he wasn't] qualified for.'' 40
    \37\ Deposition of Jeffrey Garten, May 16, 1997, p. 12.
    \38\ Id. at p. 14. It should be noted that according to Meissner's 
administrative assistant Halina Malinowski, Meissner did not want to 
hire Huang but felt that he had no choice.
    \39\ Id. at p. 16.
    \40\ Id. at p. 16.
    Garten concluded that Huang lacked the professional 
qualifications to handle substantive trade and export policy, 
and reached an agreement up front with Meissner that Huang's 
responsibilities would be confined to administrative matters. 
Huang was to act as an administrative assistant to Meissner. 
According to his agreement with Meissner, Garten understood 
``that Huang had no--was to have no policy responsibilities. . 
. . To the best of my knowledge, he had no responsibility for 
any policy, and he was there to handle administrative issues.'' 
41 As a result of this decision, Huang ultimately 
joined the Department of Commerce as the Principal Deputy 
Assistant Secretary (PDAS) for International Economic Policy on 
July 18, 1994.
    \41\ Id. at pp. 25, 28.

      II. Huang's Job Responsibilities and Performance at Commerce

    It is fair to say that from the perspective of his 
contributions to policy and administrative matters at Commerce, 
Huang was very nearly an invisible man. In his eighteen months 
as Principal Deputy Assistant Secretary for International 
Economic Policy (IEP), he left virtually no mark. Indeed, in 
interviews and depositions conducted by the Committee, many of 
Huang's subordinates, colleagues, and supervisors were at a 
loss to explain what occupied his time, apart from routine 
bureaucratic meetings and some light administrative work.
    Huang served as the Principal Deputy Assistant Secretary 
for IEP at Commerce from July 18, 1994 until December 3, 1995, 
when he left to join the DNC.42 Huang's office, IEP, 
fits within Commerce's ITA. Huang's immediate supervisor was 
Charles Meissner, the Assistant Secretary for IEP; Meissner's 
immediate supervisor was Garten. Meissner died in the April 
1996 plane crash that took the lives of Secretary Brown and 
other Commerce officials.
    \42\ It appears that Huang remained a Commerce employee on leave 
without pay from December 4, 1995 through January 17, 1996. Interview 
of Elizabeth Stroud, June 11, 1997.
    ITA was perhaps the most high profile organization at 
Commerce while Huang was there. Its primary function--to 
promote the export of American goods and services abroad--was 
the cornerstone of a Clinton administration initiative to make 
America's economic interests an important consideration in our 
foreign policy. Garten was appointed Undersecretary in order to 
invigorate the ITA and make it a significant player in the 
commercial diplomacy effort envisioned by the Clinton 
administration. By many accounts, the activity level and 
profile of ITA picked up significantly during Garten's tenure. 
One thing Garten did at ITA was to ignore organizational 
charts, instead selecting ITA officials who he thought were 
best able to complete various tasks. This caused some friction, 
as described below.
    When Huang was at Commerce, IEP was one of the four 
operating units that comprised ITA. 43 IEP was 
arranged geographically. Assistant Secretary Meissner sat atop 
IEP's structure; beneath him were four deputy assistants with 
responsibility for different regions of the world; beneath them 
were ``country desks'' staffed primarily by career officials. 
Huang, as Meissner's principal deputy, had no specific 
geographical responsibility.
    \43\ The others were Trade and Development, the U.S. and Foreign 
Commercial Service, and the Import Administration. IEP has since been 
reorganized and is now called MAC, or Market Access and Compliance.
    When occupied by Huang's predecessors, the PDAS position 
had three basic job functions. First, it was designed to be a 
day-to-day manager for IEP, handling administrative matters--
personnel, budget, space and office resources, and parking--on 
behalf of the Assistant Secretary. Second, the PDAS was also 
intended to fill in for the Assistant Secretary when that 
person was away from the office. Third, the PDAS carried a 
policy portfolio, which varied from one Assistant Secretary to 
another. Huang's immediate predecessor, for example, was the 
lead official at Commerce staffing the United States's 
involvement in the Asian-Pacific Economic Cooperation forum. 
    \44\ Interview of Rick Johnston, June 12, 1997.
    By all accounts, the initial agreement about Huang reached 
by Garten and Meissner stuck. Throughout his Commerce tenure, 
Huang was never trusted to handle substantive policy 
responsibilities, and he had none to speak of. This reflected 
not personal animus--Huang was remembered as a kind and 
deferential colleague 45--but instead a widely-held 
assessment of Huang's inability to handle substantive policy in 
a reenergized ITA. From the start, for example, Garten had 
misgivings about Huang. ``I was uncomfortable with Huang, 
because one doesn't have a lot of time in these situations, but 
my instinct, as someone who had lived and worked in Asia, was 
that he wasn't the kind of person who ought to represent the 
American government.'' 46 Garten considered Huang 
``totally unqualified, in my judgment, for the kind of Commerce 
Department that we were establishing.'' 47
    \45\ See Deposition of Alan Neuschatz, May 22, 1997, p. 22; 
Deposition of David Rothkopf, June 2, 1997, p. 34.
    \46\ Deposition of Jeffrey Garten, May 16, 1997, p. 17.
    \47\ Testimony of Jeffrey Garten, July 16, 1997, p. 125.
    Garten considered certain policy areas to be of sufficient 
priority that he brought them into the Undersecretary's office 
and ran them himself through hand-picked ITA officials. 
48 Several of these involved ``big emerging market'' 
countries in Asia. This, combined with Garten's broader 
decision to ignore the bureaucratic structures within ITA in 
tasking out important work, led to some disagreements between 
Garten and Meissner. Meissner wrote Garten a memo in September 
1994, complaining about the situation and offering that Huang 
and another deputy assistant secretary at IEP could handle 
Asia. Garten's response was blunt: ``John Huang and Nancy Linn 
Patton [the other deputy assistant secretary] are not up to 
what I need at this time. I am not running a training program, 
so I have to be brutal in terms of getting results. . . . I can 
tell you one thing: neither John Huang nor Nancy Linn Patton 
are up to handling Asia in any way, shape or form at this 
time.'' 49 Eventually, one exception was permitted, 
and Huang took on a very modest policy role assisting Meissner 
with Taiwan.50
    \48\ David Rothkopf, Garten's deputy, described this as a process 
where the top ITA officials decided to create a ``company within a 
company'' on certain issues instead of attempting a wholesale 
reformation of ITA and IEP.
    \49\ Memorandum from Jeffrey Garten to Charles Meissner, October 4, 
1994, pp. 1, 3 (Ex. 7).
    \50\ Garten deposition, May 16, 1997, p. 28.
    Garten's view that Huang could not handle substantive 
policy matters was widely shared at ITA. Tim Hauser, a Garten 
deputy and the top career official at ITA, recalls ``a general 
view across the senior management ranks'' that Huang lacked the 
necessary attributes for substantive policy work.51  
Garten's other deputy, David Rothkopf, while more diplomatic, 
likewise ``was not particularly struck by [Huang's] 
effectiveness.'' 52 Career officials shared these 
    \51\ Deposition of Timothy Hauser, May 22, 1997, p. 39.
    \52\ Rothkopf deposition, p. 34.
    \53\ E.g., Interview of Don Forest, April 29, 1997. Alan Neuschatz, 
the Director of Administration, observed that Huang was ``as uninvolved 
a player as [he] had seen in ten years at ITA.'' Neuschatz deposition, 
p. 17.
    In light of his frequent access to classified information 
relating to China, the Committee paid particular attention to 
whether Huang held any policy responsibility regarding that 
country, and if not, why. As it turns out, Huang was 
specifically walled off from China because his superiors 
concluded he was not capable of doing the work. Garten, who 
handled China in large measure himself, remembered, ``Well, 
generally, I didn't want Huang working on anything, and since 
China was such a high priority, there was no chance that, with 
my knowledge, he would have gotten close to it.'' 54 
A second reason Garten walled Huang off was Garten's sense that 
for diplomatic reasons, you ``did not mix people'' working on 
Taiwan and China.55 
    \54\ Garten deposition, May 16, 1997, pp. 35-36; see also Garten 
testimony, p. 126.
    \55\ Garten deposition, May 16, 1997, p. 36.
    Although he was permitted, and indeed expected, to handle 
administrative matters at IEP, Huang's colleagues held a 
similarly dim view of his abilities in that regard. Alan 
Neuschatz, ITA's Director of Administration, interacted 
frequently with Huang on administrative matters, finding Huang 
unsure of himself even as to routine decisions and 
``requir[ing] constant reinforcement.'' 56  
Neuschatz would have given Huang a grade of ``low C'' as an 
administrator and noted that Huang was ``fortunate'' to have an 
``experienced and energetic and capable'' career assistant, 
Halina Malinowski, to help him.57 
    \56\ Neuschatz deposition, p. 22.
    \57\ Id. at p. 80.
    On the whole, the image developed of Huang is that of a 
shy, kindly, somewhat reclusive ``light weight'' who was out of 
his depth at Commerce. The only piece of evidence found by the 
Committee running counter to this image is a favorable job 
performance for Huang prepared by Charles Meissner. Meissner's 
October 1995 appraisal scores Huang a possible 485 out of 500, 
and grades him as ``outstanding.'' 58  Yet according 
to the witnesses with whom the Committee spoke, the appraisal 
is meaningless. Garten recounted: ``This document has no 
significance in my mind. All of these reports are totally 
inflated. Reports written on political appointees are not worth 
the paper they are written on.'' 59  When asked why 
Meissner would write such a positive review for someone not 
held in high professional esteem, Garten surmised, ``My guess 
is that he felt sorry for Mr. Huang because I had so clearly 
eclipsed any role that [Huang] could have, and he wrote the 
report knowing that it really made no difference. He couldn't 
promote Mr. Huang. He couldn't expand his range of policy 
responsibilities. . . . So under those circumstances, the more 
friendly thing to do was to give him a high rating.'' 
    \58\ Classification and Performance Management for John Huang, 
October 1995 (Ex. 8).
    \59\ Garten testimony, p. 135.
    \60\ Id. at p. 138. Others shared Garten's view that Huang's job 
appraisal was an innocuous--and meaningless--gesture of kindness by 
Meissner. Tim Hauser, for example, considered the appraisal ``more 
inflated'' (Hauser deposition, p. 42) than his view of Huang, noting 
that political appointees almost always get high ratings. Id. at pp. 
47-50. Rothkopf was unfamiliar with Huang's specific appraisal but 
observed that ``generally [ ] these things are baloney. . . . [The 
genre] is not high in nutritive content.'' Rothkopf deposition, p. 109. 
Neuschatz noted that Meissner was ``extremely nurturing,'' and 
supportive of all of his subordinates; he was also ``an easy grader.'' 
Neuschatz deposition, pp. 19-20.
    Much of the media coverage that preceded the Committee's 
hearings suggested Huang had an active hand in directing 
Commerce's international trade policy. The Committee's 
investigation indicates that this was not so. Huang was 
inconsequential at Commerce, and he was precluded from having 
much of a role in substantive policy. He was specifically 
prohibited from handling matters involving China. That said, 
Huang nevertheless had frequent access to classified and 
proprietary information relating to trade policy that was 
valuable to companies and foreign governments. He received much 
of that information notwithstanding the fact that he lacked a 
``need to know'' it, in violation of a bedrock principle for 
controlling the dissemination of classified information. Why 
that happened, and what he might have done with that 
information, are discussed below.

                 III. John Huang's Security Clearances

    Since his name first appeared in media accounts regarding 
the campaign finance scandal, there has been enormous public 
interest in the security clearance Mr. Huang held at Commerce, 
including questions regarding why he was granted a clearance, 
how long he held it, and whether an adequate examination of his 
background was conducted before its issuance. This section 
examines the security clearances Huang was granted prior to and 
during his tenure at the Commerce Department.
    In connection with his appointment to Commerce, Huang was 
granted a top secret security clearance. More precisely, Huang 
was issued three security clearances in succession, each at the 
top secret level. Although Huang's first day at Commerce was 
July 18, 1994, he was granted his first security clearance in 
January 1994. During that month, the DOC Office of Security 
(OS) conducted preliminary records checks on Huang and, on 
January 27, 1994, granted him an interim top secret clearance. 
On August 9, 1994, approximately three weeks after Huang joined 
Commerce, the Office of Security sent Huang's file to OPM for 
it to conduct a full background investigation. OPM reached a 
favorable determination on October 18, 1994; the Office of 
Security concurred seven days later and Huang's final top 
secret clearance was granted.
    Huang's top secret clearance was taken from him on January 
25, 1996, shortly after he left for the DNC. However, on 
December 14, 1995, he already had been granted his third 
clearance, a top secret consulting clearance, by the Defense 
Industrial Security Clearance Office (DISCO) in connection with 
an unsuccessful effort to make Huang a consultant to the 
Department while he worked for the DNC. Huang's DISCO clearance 
was not taken away until December 1996.
    Huang's first clearance, his interim top secret, was 
granted by Commerce's Office of Security on January 27, 1994. 
At the time, Huang was still Vice Chairman of the Lippo Bank, 
and he would remain at Lippo until July 1994. Huang received 
the interim clearance based on a records check alone and no 
interviews or other investigation of his background. Why was 
Huang granted a top secret clearance six months before he began 
at Commerce? Since shortly after the campaign finance scandal 
broke, the press has provided ample speculation, but no 
answers.61 The Committee has found no evidence that 
Huang actually saw classified materials before joining the 
Department. That possibility, however, was not ruled out by 
witnesses with whom the Committee spoke. For example, Joe 
Burns, an information specialist in the OS who worked directly 
on Huang's clearance, said Huang may have been granted access 
to classified information based upon his representation that he 
held a clearance. ``They may say, hey, I'd like you to see 
this; by the way, do you have a clearance? If you say yes, they 
[may] take you at face value.'' 62
    \61\ See, e.g., Brian Duffy & Bob Woodward, ``FBI Warned 6 on Hill 
About China Money; Officials Say Lawmakers, Others Targeted in $2 
Million Plan to Buy Influence,'' Washington Post, March 9, 1997, p. A1 
(``For five months while he was still employed at Lippo Group, before 
he joined the Commerce Department, Huang received a top-secret security 
clearance that could have allowed him to review classified U.S. 
intelligence documents. . . .''); James Adams, ``Chinese Spies Had Open 
Door to Oval Office,'' Sunday Times, November 10, 1996 (noting that 
Huang's interim clearance ``gave him access to vital American 
intelligence''); Bill Gertz, ``Huang Frequent White House Visitor; Also 
Got Unusual Security Clearance Waiver,'' The Washington Times, October 
31, 1996, p. A1.
    \62\ Deposition of Joseph J. Burns, May 23, 1997, p. 115.
    The answer to why Huang was granted a clearance prior to 
joining the DOC appears to lie in a policy set in place during 
the changeover of administrations in early 1993. In past 
administrations, Commerce followed a policy under which a 
political appointee's supervisor had to demonstrate the 
appointee's ``need to know'' and ``critical need'' for 
classified information before an interim clearance would be 
    \63\ This point was circuitously made by Paul Buskirk during the 
Committee hearing of July 16, 1997. Buskirk testified that, under pre-
1993 policy, (and under the policy in place as of March 1997), OS would 
not issue an interim clearance ``until management justifie[d] the need-
to-know classified information,'' (Testimony of Paul Buskirk, July 16, 
1997, p. 71) and again, that ``before 1993, if a position required 
access to classified information, what we required was that there be a 
justification for a clearance. Otherwise, if that request came in, they 
were requested to wait until the background investigation was completed 
before the clearance was issued.'' Buskirk testimony, p. 65. Joe Burns 
told the Committee it was the employee's supervisor who had to 
demonstrate the requisite need to know. Burns deposition, p. 16.
    The Clinton Administration ushered in a new policy at 
Commerce. Under the new policy, all political appointees at 
Commerce were granted interim top secret clearances after a 
short series of pre-appointment checks. All appointees were 
later subjected to full field investigations, but that was 
because the Clinton Administration eliminated the requirement 
that management justify each appointee's ``need to know'' prior 
to the granting of an interim clearance. The new policy was, 
``everybody gets one.''
    This policy change is itself an interesting story. It was 
effected in early 1993 to accommodate the roughly 200 political 
appointees who soon would be joining the 
Department.64 The idea was to design a system that 
would allow appointees to have access to classified information 
the day they walked into the Commerce Department. While meeting 
that goal, the system was beset by a variety of problems. 
Perhaps the most significant stemmed from the government 
requirement that interim clearances can only be granted where 
there is a ``critical need'' for one. An interim clearance is 
granted only after a determination is made to waive the normal 
background checks that precede the granting of a ``final'' 
clearance. For a waiver to be granted, a particularized 
determination must be made of a ``critical need'' for the 
person in question to have access to classified information in 
short order.65 In the Clinton Commerce Department, 
hundreds of waivers were granted--and interim top secret 
clearances conferred--without particularized determinations of 
critical need. As noted earlier, under prior policy, interim 
clearances were granted only for those employees whose 
supervisors specifically requested such action.
    \64\ Deposition of Steve Garmon, May 23, 1997, p. 26.
    \65\ Id. at p. 45.
    Stephen Garmon, the former Director of Commerce's OS, 
claims much of the responsibility for the system put in place 
in January 1993. Faced with a flood of new Commerce appointees, 
Garmon had to figure out what to do, how to ``facilitate the 
institutionalization . . . of a new administration.'' 
66 As he put it:
    \66\ Id. at p. 34.

          So I suggested very pointedly that we treat them all 
        as candidates for top secret clearances, and with that 
        as a decision as sort of a bottom line, we'd give them 
        the full blast as far as investigations were concerned, 
        and then it would not make that much difference who was 
        going to be in what position on any given day. The 
        powers that be, whoever they may have been didn't 
        resist that and accepted it, and we proceeded on that. 
        The intention was to sort of back out of that once they 
        got enough people in key positions that they could 
        operate with any sort of effectiveness, and the 
        unfortunate part is we didn't turn the spigot off 
        probably as fast as we should have within security. 
        That's one of those things that happens. You just don't 
        do it.67
    \67\ Id. at p. 27.

Garmon recalls that he proposed his idea in a January 1993 
meeting with the DOC's Director of Human Resources and two 
presidential transition team members, one of whom, Carol Darr, 
``was part of the Democratic National Committee.'' 
68 Garmon called the two transition team members 
``emissaries from the administration.'' 69 Garmon 
received what he recalls to be ``a nod of approval'' from 
    \68\ Id. at p. 30.
    \69\ Id.
    \70\ Id. at p. 31.
    One of the reasons Garmon conceived of the ``everybody gets 
one'' system and ran it by representatives of the Clinton 
administration was to pre-empt pressure from the administration 
to grant its appointees access to classified material. Garmon 
testified, ``My experience . . . had been such that I was 
sensitized to the fact that if I didn't find some way to 
expedite this activity, I was going to feel that pressure. I 
was trying to be on the front end of it, if you will, and avoid 
the pressure by taking care of it before it arose as an 
issue.'' 71
    \71\ Id. at p. 34.
    The system Garmon conceived was implemented soon 
thereafter. The most obvious problem with the system was its 
evisceration of the mandated ``critical need'' standard. No 
particularized determination of ``critical need'' was 
undertaken for the Clinton Administration's appointees to 
Commerce.72 OS assumed that a ``critical need'' 
existed for all political appointees to receive a background-
check waiver by virtue of the fact ``they were coming on 
board.'' 73 Commenting that he knew of no other 
agency that granted an interim secret clearance to each 
political appointee, Joe Burns testified: ``I don't think that 
anyone did it quite the way we did, which was the blanket 
boilerplate.'' 74
    \72\ Id. at p. 40.
    \73\ Id. at p. 45.
    \74\ Burns deposition, p. 36.
    When the 1993 change was put in place, it was meant to last 
only until a ``critical mass'' of Commerce appointees were in 
the door and could access classified information, at which 
point OS would return to the more particularized, involved 
process. But this is not how things worked out. The 1993 policy 
change lived on for four years; Commerce Secretary Daley put an 
end to the practice in early 1997 as a result of the 
Committee's investigation.75 Paul Buskirk, who 
became Acting Director of the OS when Garmon retired, believes 
the policy instituted by Secretary Daley--the same policy in 
place before the Clinton administration--``clearly is 
preferable.'' 76 Joe Burns agrees: ``I can 
understand why we went the way we did based on the possibility 
[of] facing an onslaught of hundreds of people, a lot of chaos 
going on with trying to process everybody and making sure that 
everybody had a clearance who needed one. But, in retrospect, I 
think the way we're doing it now is the best way, which is 
you've got to justify each person.'' 77
    \75\ See Deposition of Paul Buskirk, June 3, 1997, pp. 25-26.
    \76\ Id. at p. 27.
    \77\ Burns deposition, pp. 35-36.
    Reverting to the old clearance process was not the sole 
course of action pursued by Secretary Daley on the subject. In 
response to the Committee's investigation, he also created a 
security task force to study the Department's handling of 
security clearances and classified information.78 
The task force's recommendations on the granting of security 
clearances emphasize the inadequacy of the procedures set in 
place in 1993 and suggest even stricter controls than those 
reinstituted by Secretary Daley.
    \78\ The task force's recommendation and Secretary Daley's 
instructions to implement them are attached as an exhibit to this 
report. See Memorandum from William M. Daley to Raymond G. Kammer, Jr., 
June 27, 1997 (Ex. 9).
    Several aspects of John Huang's case are typical of 
clearances issued by the Clinton Commerce Department. In early 
January 1994, OS was notified Huang would be hired by the 
Department. Shortly thereafter, pursuant to the procedures in 
place at the time, Joe Burns made a standard series of pre-
appointment checks on Huang. The checks, documented on an OS 
form referred to by Burns as a ``case cover sheet,'' 
79 were made largely over the course of one 
day.80 Essentially, they entailed checking various 
computer databases for information on Huang. Hence, Burns ran a 
National Crime Information Center (``NCIC'') check, a credit 
check, and checks utilizing OPM and Department of Defense 
databases.81 Through all but the NCIC check, Burns 
found no adverse information on Huang.
    \79\ Burns deposition, p. 53.
    \80\ Case Coversheet [title derived], file no. 207, 427, undated 
(Ex. 10).
    \81\ The Defense Department database is known as the Defense 
Central Investigations Index.
    The NCIC check revealed that Huang had been arrested or 
detained by INS agents in Baltimore in 1972.82 No 
follow-up work was done to determine the nature of the arrest 
or detention or its resolution prior to granting Huang his 
interim clearance.83 Instead, OS officers assumed 
the incident was insignificant based on Huang's representation 
(on his SF-86) that he became a U.S. citizen four years later. 
Specifically, when he was notified that an NCIC check revealed 
a ``hit'' for John Huang, Burns went to see Paul Buskirk for 
guidance. Buskirk told him not to do any follow-up work and to 
grant the interim clearance.84 Looking back, Burns 
thinks OS probably should have followed up on the NCIC hit to 
determine the nature of the immigration action.85
    \82\ NCIC report, Jan. 13, 1994 (Ex. 11).
    \83\ Garmon deposition, p. 48.
    \84\ Burns deposition, p. 56.
    \85\ Burns deposition, p. 67.
    Huang was granted an interim top secret clearance on 
January 27, 1994, some six months before he joined the DOC. 
Whether Huang was notified at the time that he had been granted 
an interim clearance is not certain. A notification letter, 
dated January 27, 1994,86 and informing Huang that 
he has been granted an interim top secret clearance, is 
unsigned but initialed by Burns.87 Both Burns and 
Buskirk (the author listed in the letter) are reasonably 
certain Huang was never sent or shown a copy of the 
    \86\ Letter to John Huang from Paul A. Buskirk, Jan. 27, 1994 (Ex. 
    \87\ Burns deposition, p. 69.
    \88\ Id., p. 70; Buskirk deposition, pp. 44-45.
    According to Burns, the letter would have been sent to 
Huang only when Huang entered into service at the Department 
and was ``briefed in''; that is, provided instructions 
regarding the handling of classified information and shown and 
made to sign a non-disclosure agreement (SF-312).89 
The ``briefing in'' process is supposed to occur before actual 
access to classified information is granted.90 
However, once an interim clearance has been granted, the DOC 
Office of Personnel is notified and OS updates its computer 
system to reflect the occurrence.91 Hence, while it 
is unlikely that Huang became aware that he received an interim 
clearance around the time it was granted, it is ``possible'' 
that he did.92 As Garmon put it, ``I do not know 
that he was [notified of his clearance]. I do not know for 
certain that he was not. I am reasonably comfortable that he 
wasn't, but there's no guarantee.'' 93 It should be 
noted that, in terms of access to classified information, there 
is no difference between an interim and a final 
    \89\ Burns deposition, pp. 70, 75-76. The Committee never received 
from Commerce a dated and signed copy of Exhibit 12, the letter 
notifying Huang of his interim top secret clearance. Such a letter, if 
it exists, falls clearly within the scope of the Committee's subpoena 
to the DOC.
    \90\ Id.
    \91\ Id., pp. 72-73.
    \92\ Id., p. 72.
    \93\ Garmon deposition, p. 52.
    \94\ Id., p. 35.
    In order to issue Huang an interim top secret clearance, 
the Office of Security had to grant him a background 
investigation waiver. This was done by a waiver memorandum in 
January 1994.95 The memo states that Huang was 
granted a waiver of background investigation ``due to the 
critical need for his expertise in the new Administration for 
Secretary Brown.''
    \95\ Memorandum from Paul Buskirk to H. James Reese, Jan. 31, 1994 
(Ex. 13).
    It is clear that this ``critical need'' language, and, for 
that matter, language concerning Secretary Brown's purported 
involvement in the decision to grant Huang the waiver, is a 
misleading by-product of the Commerce Department's clearance 
process. Burns characterized this language as ``boilerplate,'' 
observing, ``Take out Huang's name, and if Mr. Burns was a new 
political, you put in Burns' name. I mean, you just--it was 
boilerplate. Every political waiver is going to look like 
this.'' 96 According to Steve Garmon, neither 
Secretary Brown nor anyone in his office notified OS that the 
Secretary had a ``critical need'' for John Huang's expertise 
such that he needed an interim top secret 
clearance.97 Paul Buskirk has a similar 
recollection. Buskirk testified no one in Secretary Brown's 
office informed OS that the Secretary had a critical need for 
Huang's expertise.98 Buskirk was not aware of anyone 
within the Department who had a critical need for Huang's 
expertise that would require Huang to have immediate access to 
classified information.99 Indeed, in January 1994, 
Buskirk ``didn't know where Huang was going to be assigned.'' 
    \96\ Burns deposition, p. 46.
    \97\ Garmon deposition, p. 41.
    \98\ Buskirk deposition, p. 38.
    \99\ Id.
    \100\ Id.
    The six-month lag between the granting of an interim top 
secret clearance to Huang and his entering into service at the 
Department is difficult to understand. Back in 1994, when Huang 
joined the Department, it was not uncommon for an interim top 
secret clearance to be issued weeks before an appointee 
started. Huang's six-month lag, however, was 
    \101\ Burns deposition, p. 42. As Burns told the Committee, ``[I]f 
Personnel says to do this waiver, [we just assume] that they want it 
done because the person's coming on board fairly quickly. Why it took 
six months for Huang to come on board, I don't know.'' Id.
    After Huang's arrival at Commerce, the DOC Office of 
Security granted him his second successive clearance, a final 
top secret clearance, on October 25, 1994.102 The 
final clearance was not based on a background investigation 
conducted by OS. Rather, as was its custom, OS farmed that task 
out to the Office of Personnel Management (``OPM''), which 
conducted what is known as a Special Background Investigation 
on Huang. Once OPM had completed its investigation, OS reviewed 
the results, 103 and Buskirk then issued the final 
top secret clearance, which states that it is ``valid only 
while Huang occupies the position [of Deputy Assistant 
Secretary within the International Trade Administration].'' 
    \102\ Ex. 10.
    \103\ Certification of Investigation, Oct. 25, 1994 (Ex. 14).
    \104\ Id.
    The OPM commenced its background investigation of John 
Huang on August 9, 1994, completing it on October 18, 1994. In 
the course of the investigation, OPM decided not to conduct an 
overseas background check on Huang despite Huang's years 
abroad. OPM claims that its guidelines neither required nor 
precluded such an investigation in Huang's case.105 
The Committee interviewed Scott Kaminski, a former investigator 
reviewer at OPM, about Huang's case.106 Kaminski 
reviewed the background investigation of Huang before 
forwarding the completed report to the DOC. Kaminski told the 
Committee that under OPM rules then in existence, overseas 
investigative coverage was only required if the appointee lived 
overseas more than six months in the three years prior to being 
appointed to a government agency. After reviewing Huang's OPM 
file, Kaminski concluded that Huang had not lived overseas in 
the previous three years and decided, within his discretion, 
not to schedule an overseas investigation.
    \105\ In his October 30, 1996 letter (Ex. 15) to Representative 
Larry Combest, James King, Director of OPM, claimed that the 
investigation of Huang ``met the coverage standards for the type of 
investigation conducted.''
    \106\ Memorandum of Interview of Scott Kaminski, May 12, 1997.
    Kaminski did identify a potential security issue with 
Huang, however, and he communicated it to Commerce. Kaminski 
told the Committee that when he learned Huang still traveled 
frequently to Asia and had a number of contacts there, 
including at least one bank account, he made a character level 
``E'' notation on his reviewer action sheet for Huang. The 
``E'' notation signified a potential security problem and was 
used to alert Commerce OS officials, who nevertheless failed to 
act upon it.107
    \107\ Id.
    After the OPM report was forwarded to Commerce, neither 
Burns nor Buskirk returned the file to OPM to request an 
overseas check. Hence, the overseas check did not happen, and 
Huang was granted a final top secret clearance on October 25, 
    Buskirk knew at the time that OPM did not do an overseas 
background check on Huang.108 That did not trouble 
him then, but it does now. ``Because now we have an issue that 
if we had gone to Hong Kong and done the neighborhood checks, 
we probably would have picked up or possibly would have picked 
up some issues that we didn't pick up in the investigation.'' 
109 The issue for Buskirk: ``Was [Huang] an agent 
for Chinese intelligence?'' 110 That issue was not 
resolved to Buskirk's satisfaction.111
    \108\ Buskirk deposition, p. 60.
    \109\ Id. at p. 60.
    \110\ Id. at p. 61.
    \111\ Id. at p. 62.
    Shortly before Huang left Commerce, an effort was 
undertaken to make him a consultant to the Department 
notwithstanding the fact that he was leaving to join the DNC as 
a political fund-raiser. As part of the consulting arrangement, 
Huang was to have been granted the third of his top secret 
clearances, this one reflecting his status as a Commerce 
consultant. Although, ultimately, Huang was not made a 
consultant, he was nevertheless granted a top secret consultant 
clearance by DISCO in December 1995.112 This 
clearance was not taken away for a year, or long after Huang 
had departed Commerce for the DNC. As far as Buskirk knows, no 
other consultant on the DOC payroll was ever granted a top 
secret security clearance.113
    \112\ DISCO clearance, Dec. 14, 1995 (Ex. 16).
    \113\ Buskirk deposition, pp. 66-67.
    Garmon testified to the process through which Huang was 
granted a top secret clearance by DISCO. According to Garmon, 
DISCO granted the clearance based on the fact that Huang, at 
the time, held a top secret clearance at Commerce. DISCO did 
not conduct a separate background investigation of 
Huang.114 OS was notified by DISCO that Huang had 
been granted a clearance but failed to tell DISCO that Huang 
would not become a consultant (i.e., that no clearance was 
needed for Huang). According to Garmon, ``My office can be 
faulted.'' 115 As a result of the snafu, OS changed 
its procedures so that now, all requests to DISCO for 
clearances must go through OS.116
    \114\ Garmon deposition, p. 66.
    \115\ Id. at p. 66.
    \108\ Id. at p. 68.
    Though not directly involved with the granting of a 
consulting clearance to Huang, Buskirk and Burns both of OS 
became aware that the clearance had been issued. Buskirk told 
us that the request for Huang's consulting clearance was 
handled by the ITA security office, not OS.117 
Specifically, Bob Mack, an ITA security officer, submitted the 
paperwork to DISCO.118 Buskirk recalls a 
conversation he had with Mack in which Mack told him that 
Halina Malinowski, Meissner's administrative assistant, pushed 
him to secure a top secret consulting clearance for Huang. 
Buskirk recalls the conversation as follows: ``What Bob Mack 
told me was, because I am asking him if he remembers John 
Huang, he goes, no, I don't remember John, but I remember 
Halina calling me saying this guy needs a clearance, and no is 
not an acceptable answer.'' 119 The Committee 
interviewed Mack, who denied that Malinowski applied undue 
pressure on him. For her part, Malinowski clearly recalls that 
Meissner wanted Huang to get the clearance. In fact, she told 
the Committee that Meissner pushed for the consulting 
arrangement, and a consulting clearance, as a favor to Huang.
    \117\ Buskirk deposition, p. 65.
    \118\ Id. at pp. 65-66.
    \119\ Id. at p. 68.
    Burns testified that he became aware Huang held a DISCO top 
secret clearance in December 1996, during a conversation Burns 
and Buskirk were having with ITA security officer Bob Mack. As 
Burns puts it, ``Bob Mack and Buskirk and I were having a 
conversation, and Huang's name came up, nothing to do with him 
having a consultant clearance, and Mack said, `you know, he 
still has a DISCO T[op] S[ecret],' and Buskirk's eyes got wide 
as saucers and [he said]--`What?' So it caught us off guard.'' 
120 Burns testified that OS ``screwed up'' by not 
entering Huang's DISCO clearance on its database.121 
As with his interim top secret clearance, it is unclear whether 
Huang was notified of the DISCO clearance issued in December 
    \120\ Burns deposition, p. 86.
    \121\ Id. at p. 87.
    \122\ When asked in his deposition whether Huang was notified of 
his DISCO clearance, Steve Garmon replied, ``I don't know that he was 
not.'' Garmon deposition, p. 84.
    The more important question is whether Huang had access to 
classified information during the periods when he held a top 
secret clearance but did not work at the DOC. Although the 
Committee found no evidence that Huang did, in fact, secure 
such access to classified information, opportunities to do so 
may well have existed. When asked whether Huang had access to 
any classified information at Commerce between January 1994, 
when he received his interim clearance, and July 1994, when he 
started work, Buskirk observed, ``I don't know the answer to 
that, but it would have been a breach if someone had given him 
access.'' 123 As for access after leaving Commerce, 
although John Huang began working at the DNC on December 5, 
1995, he did not turn in his Commerce ID, keys, and passcard 
until January 22, 1996. Huang therefore had unfettered access 
to the building for almost two months after he left the 
Department.124 In addition, Buskirk testified that 
Huang visited Commerce headquarters four or five times in the 
period February-May 1996.125
    \123\ Buskirk deposition, pp. 45-46.
    \124\ Id. at pp. 73-74.
    \125\ Id. at p. 74.

             IV. The Effort to Make John Huang a Consultant

    The effort to make Huang a Commerce Department consultant 
after he had announced his departure for the DNC is perhaps the 
most mysterious aspect of the Department's experience with 
Huang. It appears that Charles Meissner and, presumably, Huang, 
were behind the effort, but it is not clear why either wanted 
this done. What is clear is that Meissner signed off on 
paperwork to (1) place Huang on leave without pay starting 
December 4, 1995 and (2) make him a consultant effective 
December 3, 1995. In addition, Meissner directed his 
administrative assistant, Malinowski, to request Huang's third 
top secret clearance, which was granted by DISCO on December 
14, 1995.
    The paperwork requesting Huang be made a consultant 
contains a statement concerning why Commerce purported to need 
Huang. It reads, ``Mr. John Huang will help the Assistant 
Secretary for International Economic Policy during the 
transition time of the Principal Deputy Assistant Secretary's 
position in IEP.'' 126 The forms further represent 
that Huang was needed to fill a position ``requiring a high 
degree of expertise not available from the regular work force'' 
and that ``Huang's expertise on the Asia Pacific region will be 
used by IEP in commercial policy formulation.'' To put it 
mildly, these representations are at odds with the negligible 
policy role Huang played as Principal Deputy to Meissner.
    \126\ Request for Approval of Advisory and Assistance Services, 
undated (Ex. 17).
    The effort to make Huang a consultant entailed more than 
paper shuffling. Meissner met with at least three Commerce 
officials to enlist their support. In early December 1995, 
Meissner walked down the hall at Commerce headquarters to 
Deputy Undersecretary Tim Hauser's office and found Hauser and 
ITA's Director of Administration, Alan Neuschatz. Meissner 
pitched his idea to Hauser and Neuschatz, who, at this point, 
were aware of Huang's impending move to the DNC. Bemused, 
Hauser and Neuschatz told Meissner they thought making Huang a 
consultant was a terrible idea and unsupportable. Undeterred, 
Meissner informed Hauser and Neuschatz that he might raise the 
issue to a higher level, which he did.
    Sometime in early December 1995, Meissner also paid a visit 
to Will Ginsberg, who was then Secretary Brown's Chief of 
Staff. As Ginsberg recalls, Meissner raised several issues, one 
of which was adding John Huang to the ITA consultant's list. 
Ginsberg remembers asking whether the move would be politically 
sensitive. He also asked why Meissner wanted to make Huang a 
consultant. Ginsberg's notes from the meeting reflect 
Meissner's reply: to ``keep his [Huang's] security clearance.'' 
    \127\ Notes of William Ginsberg, week of Dec. 6, 1995 (Ex. 18).
    On the effort to hire Huang as a Commerce consultant, the 
Committee deposed several of Huang's former colleagues at 
Commerce. The perspectives of those we spoke to, as discussed 
below, were largely consistent. In short, those who became 
aware of the proposal to make Huang a consultant were at a loss 
to understand--given Huang's move to the DNC and his 
inconsequential performance at Commerce--why such an effort 
would be undertaken.
    Tim Hauser, a career civil servant, served as Deputy 
Undersecretary for International Trade. Huang's boss, Meissner, 
reported to Hauser. In early December 1995, Meissner strolled 
into Hauser's office, where Hauser was talking to Neuschatz, 
ITA's Director of Administration. According to Hauser, the 
conversation went as follows: ``Meissner said, you know John 
Huang is leaving. I said, yes, I had heard that. He said he 
would like to keep him on as a consultant.'' 128 
Hauser had the impression that Meissner was seeking permission 
from him and Neuschatz,129 although Meissner did not 
bring any documents for Hauser and Neuschatz to 
sign.130 At the time of this proposal, Hauser was 
aware that Huang had already accepted a fund-raising position 
with the DNC.131
    \128\ Hauser deposition, p. 59.
    \129\ Id. at p. 61.
    \130\ Id. at p. 66.
    \131\ Id. at pp. 59-60.
    Hauser made clear to Meissner that the idea of retaining 
Huang as a consultant was ``unnecessary and inappropriate'' 
132 because Huang was going to the DNC 
133 and because Huang's expertise and knowledge of 
the Asia Pacific region were not unique.134 Hauser 
testified, ``I felt the organization could survive Mr. Huang's 
departure.'' 135 What Hauser thought, though, and 
out of respect for Meissner, did not say, was that the proposal 
was ``lunacy.'' 136 Meissner did not have the 
authority on his own to make Huang a consultant. Hauser 
believed that, because Huang was a political appointee, the 
chief of staff (Ginsberg) would have had to authorize Meissner 
to make such a decision.137 When Hauser told 
Meissner that he could not support bringing Huang on as a 
consultant, Meissner said that he might ``want to talk to the 
people upstairs;'' 138 Hauser understood this to 
mean Meissner might speak Ginsberg.139
    \132\ Id. at p. 59.
    \133\ Id. at pp. 59-60.
    \134\ Id. at p. 65. Although Garten was unaware at the time of 
Meissner's proposal to retain Huang as a consultant, he shares Hauser's 
view that hiring Huang would have been a waste. ``Huang was so totally 
ineffective, in [my] view.'' Garten deposition, May 16, 1997, pp. 40-
41. Garten went on to state, ``[l]ooked at rationally, Huang made 
virtually no contribution that I can think of to national policy, and 
so, I would consider it totally irrational to want to keep him on.'' 
Id. at p. 40.
    \135\ Hauser deposition, p. 61.
    \136\ Id. at p. 63.
    \137\ Id. at pp. 58-59.
    \138\ Id. at p. 60.
    \139\ Id. The paperwork requesting Huang's consulting state in 
part, ``Mr. John Huang will help the Assistant Secretary for 
International Economic Policy during the transition time of the 
Principal Deputy Assistant Secretary's position in IEP.'' Ex. 17, p. 1. 
In his eighteen years of employment at the Department of Commerce, 
Hauser was unaware of any occasion where a Department employee was made 
a consultant to ease the transition of the person taking over for him 
or her. Hauser deposition, p. 64. Hauser further testified that he was 
unaware of any employee who was made a consultant upon leaving the 
Department, and he characterized Meissner's request as ``unusual'' in 
that sense. Id. at p. 112.
    The consulting paperwork represented that Huang would be 
assuming a consulting position ``requiring a high degree of 
expertise not available from the regular work force.'' 
140 Hauser was not aware of any expertise John Huang 
had that was shared by no one else in the Commerce work force 
141 and stated that he believed Huang did not serve 
a significant role in any policy matters.142 
Moreover, Hauser characterized the principal deputy position 
held by Huang as ``perhaps an unnecessary layer of 
management.'' 143
    \140\ Ex. 17, p. 2.
    \141\ Hauser deposition, p. 65.
    \142\ Id. at p. 23.
    \143\ Id. At the bottom of Ex. 17 is a box to be signed by the 
``certifying official.'' Although his title was typed in the box and 
there is a blank line for his signature, Hauser was never asked to sign 
this document and would not have signed it had he been asked. Hauser 
deposition, pp. 18-22, 23, 66.
    The Committee also spoke about the proposed consultancy to 
Neuschatz, who recounted that he and Hauser were ``somewhat 
surprised and a little aghast'' by Meissner's suggestion; 
neither saw the necessity of such a move and both were 
concerned that Huang was going to the DNC.144 
Neuschatz recalled telling Meissner ``it would be a Hatch Act 
violation'' for Huang to work at the DNC and remain a Commerce 
    \144\ Neuschatz deposition, p. 42.
    \145\ Id. Neuschatz confirmed Hauser's recollection that Meissner 
said he needed Huang in order to ease the transition period that would 
result from his departure and that Meissner believed Huang going to the 
DNC did not matter. Id.
    After striking out with Hauser and Neuschatz, Meissner was 
true to his word and, in early December 1995, ``took the matter 
upstairs,'' meaning to Will Ginsberg, Secretary Brown's chief 
of staff. Meissner visited Ginsberg's office to discuss, among 
other things, Meissner's desire to make Huang a consultant. At 
that time, Ginsberg had never met Huang. Meissner did not ask 
Ginsberg to take any action in this regard; rather, Meissner 
was ``simply seeking to make [Ginsberg] aware of [his plan].'' 
146 Ginsberg later learned that Meissner had already 
approached Hauser and Neuschatz about making Huang a consultant 
and ``the idea was not being greeted warmly. . . . It basically 
wasn't going anywhere.'' 147
    \146\ Deposition of William Ginsberg, June 17, 1997, p. 65. One of 
Ginsberg's duties as chief of staff was overseeing personnel issues for 
the Department of Commerce's political appointees. Id. at p. 91.
    \147\ Id. at p. 59.
    Although Ginsberg does not specifically recall a discussion 
about Huang with Meissner, his notes reflect that Huang was 
discussed.148 Ginsberg believes that the three lines 
highlighted in his notes refer to Meissner's proposal to make 
Huang a consultant.149
    \148\ Id. at pp. 45-47. During his tenure at the Department of 
Commerce, Ginsberg took some twelve volumes of notes, four while he was 
Chief of Staff. Ginsberg's notes are organized chronologically. 
According to Ginsberg, ``[t]he purpose of the notes was to remind 
myself of anything that I needed to know. . . . These were all memory 
joggers in one sense or another.'' Id. at p. 29. The Department 
produced portions of Ginberg's volumes including entries from the week 
of December 4-8, 1995, which is where the notes of the Meissner meeting 
are found. See Ex. 18.
    \149\ Id. at p. 52. See Ex. 18.
    The second line of the highlighted portion of Ginsberg's 
notes read, ``political sensitivity?'' According to Ginsberg, 
the notation reflects his conclusion that it would be 
problematic to make Huang a consultant because he was going to 
the DNC.150 Ginsberg had learned that Huang was 
going to the DNC either prior to or during his meeting with 
Meissner,151 and it struck him as odd that Huang, a 
Commerce employee he had heard ``almost nothing about'' was 
being placed in a high-level position at the DNC.152
    \150\ Id. at p. 54.
    \151\ Id. at p. 55.
    \152\ Id. at p. 57.
    On the third line of Ginsberg's highlighted notes, he wrote 
``why? keep his security clearance.'' In his deposition 
Ginsberg stated, ``I take that to mean that I asked Chuck 
Meissner why he wanted Huang to be on the ITA consultants list 
and that he said to keep his security clearance. He may have 
said other things as well, but he said that at least part of 
the reason was so that Huang could keep his security 
clearance.'' 153 Ginsberg's general impression is 
that Meissner was seeking to make Huang a Commerce Department 
consultant as a favor to Huang.154
    \153\ Id. at pp. 55-56.
    \154\ Id. at p. 66.

    v. huang's access to classified and other sensitive information

    ITA's senior officials regularly receive classified 
information about political and economic developments abroad. 
The information comes from CIA materials, State Department 
cables, and working papers and reports that contain classified 
information. In addition, those officials have access to 
proprietary information about American trade policies and 
individual business deals. Public officials, including ITA 
officials like Huang, are supposed to receive classified 
information only if they hold the requisite clearances and only 
if they have a ``need to know'' the information. The Committee 
has found no evidence that Huang received information for which 
he did not hold the proper clearance, but there is significant 
evidence that Huang had no need to know, and indeed had no 
business receiving, whole areas of classified information made 
available to him.
    Expecting that Huang's marginalized policy role would have 
greatly limited his access to classified information, the 
Committee was surprised to learn that Huang enjoyed frequent 
and routine access to such information. In fact, Huang's 
virtual freeze out from substantive matters did not hinder his 
ability to see that information at all. In summary, the 
Committee determined that Huang obtained classified and other 
sensitive information routinely from the following sources:
           First, he received regular intelligence 
        briefings from a CIA detailee who worked in Commerce's 
        Office of Intelligence Liaison (OIL).155 
        Between October 1994, when they began, and November 
        1995, when they ended, Huang received a total of 37 
        one-on-one briefings.
    \155\ After Huang left Commerce, the Office of Intelligence Liaison 
was renamed the Office of Executive Support. For clarity's sake, in 
this report we will refer to the office by its former name, OIL.
           Second, Huang received a flow of classified 
        and unclassified cables from foreign diplomatic posts 
        relating to trade and economic matters.
           Third, by virtue of being Meissner's 
        principal deputy, Huang had routine access to reports 
        and briefing materials that would have contained 
        classified and other sensitive information.
    Because much had been written in the press about whether 
Huang had received intelligence briefings at Commerce, the 
Committee examined that issue in detail. The topic involves the 
Commerce Department's Office of Intelligence Liaison. Owing to 
the nature of the topic, much of the Committee's work is 
classified. However, in the interest of making as much 
information as possible available to the public, an 
unclassified version is provided below.
    As the Committee learned, OIL is Commerce's window to the 
intelligence community. It ``provides information on foreign 
governments to the Secretary and his senior executives,'' and 
much of [that information] is classified.'' 156 
OIL's main responsibility is to review classified material and 
then provide regular briefings to senior Commerce 
officials,157 doing so through a small cadre of 
officials drawn from Commerce and other government agencies. 
Those OIL officers are assigned particular Commerce officials 
to brief and then establish ``client'' relationships with them, 
attempting to tailor the classified information available to 
OIL to a particular ``client's'' job responsibilities.
    \156\ Deposition of Robert P. Gallagher, May 30, 1997, p. 5. The 
Committee deposed Gallagher and Dickerson on May 30, 1997, bifurcating 
each deposition into unclassified and classified portions. In the case 
of Gallagher, the Committee has obtained declassification of excerpts 
of his previously-classified testimony. In order to keep references to 
Gallagher's deposition testimony precise, subsequent citations to 
Gallagher's deposition will distinguish between the ``unclassified'' 
and ``declassified'' portions.
    \157\ Id.
    Huang was one such OIL client. Robert Gallagher, the head 
of OIL, assigned Huang to John Dickerson, one of Gallagher's 
OIL officers. Dickerson was in fact an employee of the Central 
Intelligence Agency (CIA) detailed to OIL. Dickerson was 
undercover at Commerce, posing as a Department of Energy 
official, so Huang thus would not have known of Dickerson's CIA 
affiliation. Because Dickerson's cover was compromised in 1997 
by media coverage of a FOIA lawsuit involving the Commerce 
Department, the CIA decided to roll back his cover. Dickerson 
testified before the Committee as an openly-acknowledged 
employee of the CIA.
    Although Huang started at Commerce in July 1994, he did not 
have his first contact with OIL until early October 1994, when 
Gallagher and Dickerson first approached him.158 At 
the time, Dickerson was providing classified briefings to 
Meissner, Huang's supervisor. Meissner mentioned to Dickerson 
that Huang should be receiving such briefings as well. 
Dickerson discussed the matter with Gallagher, and they agreed 
that Dickerson should start briefing Huang.159 
Notwithstanding Meissner's request that they brief Huang, the 
ultimate decision regarding the scope of his briefings resided 
with OIL. As the holder of the classified information to be 
imparted, OIL has a ``fair amount of autonomy'' in deciding 
which areas briefings for particular officials would 
    \158\ Id. at p. 6.
    \159\ Deposition of John H. Dickerson, May 30, 1997, p. 5.
    \160\ Gallagher unclassified deposition, p. 11.
    In his deposition Gallagher recalled the process for 
deciding the scope of Huang's briefings in some detail, 
possibly because Gallagher remembered Huang fitting an OIL 
briefing void so neatly. At the time, no senior official at 
Commerce was receiving and digesting the full range of 
intelligence available regarding the greater China 
area.161 Gallagher perceived that such a person was 
needed to provide ``steady, continuous executive following'' of 
that information.162 Gallagher and Dickerson 
identified Huang as a good candidate to provide that coverage, 
to serve as a ``safety net'' on China,163 and they 
decided to shape his intelligence briefings accordingly to 
focus on the greater China area.164 They did not 
consult his personnel file in making this decision, instead 
relying on ``getting a feel from him'' in person 165 
and also relying on their own experience in such 
    \161\ Gallagher declassified deposition, p. 34.
    \162\ Id.
    \163\ Id.
    \164\ Id. at p. 37.
    \165\ Id. at p. 36.
    \166\ Gallagher unclassified deposition, pp. 10-11; see also 
Gallagher declassified deposition, p. 34. Dickerson believed that 
Meissner mentioned to him that Huang ``would be his Asia specialist and 
I assumed that I should bring him intelligence in that area.'' 
Dickerson deposition, pp. 5-6. At the hearing, both Dickerson and 
Gallagher testified that they briefed Huang on Asia because Meissner 
specifically directed them to do so. Testimony of John Dickerson, July 
16, 1997, p. 218.
    What drew them to Huang still stands out in Gallagher's 
mind. Huang had ``an obvious cultural background. There was a 
sensibility about things Chinese that you just don't get even 
if you're a Chinese scholar from Yale.'' 167 Huang 
``would go into interesting vignettes about how people have to 
got to understand how to deal with the Chinese.'' 
    \167\ Gallagher declassifed deposition, pp. 36-37.
    \168\ Id. at p. 35.
    Having thus determined for itself the appropriate scope for 
Huang's briefings, OIL commenced Huang's briefings. As 
Dickerson and Gallagher explained, the briefing process 
consisted of one-on-one meetings in Huang's office, where 
Dickerson would take intelligence materials to Huang, Huang 
would read them, and the two would occasionally discuss the 
significance of particular documents.169 Dickerson 
typically called Huang to arrange their briefings; Janice 
Stewart, Huang's secretary, noted that he treated these as 
important meetings.170
    \169\ Gallagher unclassified deposition, pp. 5-7.
    \170\ Deposition of Janice Stewart, May 16, 1997, p. 48.
    Dickerson briefed Huang a total of 37 times. Dickerson 
estimated that he showed Huang between 10 and 15 pieces of 
intelligence per briefing. Thus, the best estimate of how many 
separate pieces of intelligence Huang saw was between 370 to 
    The great bulk of materials Huang saw was ``field 
reporting,'' or raw intelligence, that is considered more 
sensitive--largely because it may contain information about 
sources and methods of intelligence gathering--than other kinds 
of classified information. The field reports Dickerson took 
Huang were sufficiently sensitive that Huang was forbidden from 
keeping the materials or taking notes about them. Likewise, 
owing to the sensitivity of the material, after a briefing 
Dickerson would destroy the materials shown 
Huang.171 Thus, for nearly all of what Huang saw 
there is no record, apart from what Dickerson (and, presumably, 
Huang) can reconstruct from memory.
    \171\ Dickerson testimony, July 17, 1997, p. 160.
    Consistent with OIL practice, however, Dickerson wrote down 
any substantive comments Huang made on the field reporting that 
Dickerson showed him. There are 15 field reports total that 
reflect Dickerson's transcription of Huang's 
comments.172 Of that 15, three bear the special 
designation ``MEM DISSEM,'' which according to a CIA 
representative who testified at the hearing, reflects ``an 
exceptionally sensitive bit of information or an exceptionally 
sensitive source. . . . [T]he MEM DISSEMS are much more 
sensitive than our ordinary field reporting.'' 173
    \172\ Dickerson testimony, p. 158; Gallagher deposition, p. 11.
    \173\ Testimony of William H. McNair, July 17, 1997, p. 171.
    On occasion, in addition to the field reports, Dickerson 
would provide Huang with ``analytical'' classified reports on 
various topics, which Huang could retain. Under OIL protocols, 
Huang had to sign receipts for those materials if they were 
classified at a secret level or higher. Records reflect that he 
received 12 such ``finished'' intelligence 
reports.174 There are receipts for 10 of the 12 
documents.175 The other two, which are classified as 
``confidential,'' a level below secret, are known only because 
they were found in Huang's safe after he left 
    \174\ Gallagher unclassified deposition, p. 11.
    \175\ Classified Material Receipts, various dates (Ex. 19).
    \176\ Memorandum from Robert P. Gallagher to John Sopko, June 24, 
1997 (Ex. 20).
    Owing to classification restrictions, the Committee could 
not elicit public testimony regarding the specific documents or 
briefing areas covered with Huang. However, in a series of 
hypotheticals, Dickerson recounted the kinds of information 
that the CIA might have shared with Huang, assuming for the 
sake of the questions that the CIA even possessed it:

    Q: If you had information on economic issues which 
confronted Taiwan and China, is that the sort of information 
that you might have given to Mr. Huang?
    A: Again, hypothetically, if the CIA had information on 
these issues, I might have made that available to him.
    Q: And, hypothetically, if you had information on 
investment opportunities in China, is that the sort of 
information that you might have made available to Mr. Huang?
    A: If--again, hypothetically, if the CIA had information on 
this issue, I might have made that available to Mr. 
    \177\ Dickerson testimony, pp. 164-165.

           *         *         *         *         *

    Q: Again, hypothetically, Mr. Dickerson, if you had 
information on the assessment of action by China to assure 
continuing investment by Taiwan in China, is that the kind of 
information that you might have made available to Mr. Huang?
    A: Yes, if the CIA had--hypothetically had such 
information, I might have made that available to Mr. 
    \178\ Id. at p. 167.

    The Committee was struck by how little the OIL 
representatives knew about the true nature of Huang's job 
responsibilities. As former Undersecretary Garten testified, 
Huang was walled from China policy specifically, and had very 
little policy responsibility at all. When Garten learned for 
the first time during his Committee deposition that Huang was 
provided information on China by OIL, he was surprised: ``I 
certainly didn't know it was happening. . . . He was in a 
position where he had the right to access and what I didn't 
realize, if what you're saying is right, the indiscriminate 
nature of the way the intelligence was passed around. . . it 
was clearly a mistake.'' 179 Garten would have 
``preferred for [Huang] not to receive intelligence briefings 
that touched on the general topic of the People's Republic of 
China.'' 180
    \179\ Garten deposition, June 3, 1997, pp. 73-74.
    \180\ Id. at p. 74.
    Just as Garten had no idea that OIL was briefing Huang on 
Asia with emphasis on China, Gallagher and Dickerson were 
ignorant of Huang's exceedingly modest policy role. Neither 
Huang nor Garten (nor, apparently, Meissner) ever described 
Huang's actual policy portfolio to them. In his deposition, 
when he first heard about Huang's actual job responsibilities, 
Gallagher became visibly annoyed. ``If any of them had it 
probably definitely would have changed the way--I mean it would 
have been nice if Jeff [Garten] had communicated such a policy 
to us. I mean I can't read minds.'' 181 Although 
Dickerson was more measured, he, too, was unhappy: ``At a 
minimum, I would have sat down with Mr. Garten and asked him 
exactly why he was doing this or at least said to Mr. Garten, 
``Mr. Garten, are you aware that we are briefing Mr. Huang on 
China?'' In fact, this is the first I've heard of that.'' 
182 Gallagher agreed that there was a ``disconnect'' 
between Huang's policy responsibilities and his intelligence 
briefings.183 As for Huang's input, Gallagher only 
recalled Huang telling Gallagher and Dickerson of his interest 
in China.184 Gallagher could not remember whether 
Huang ever indicated that he had a policy portfolio relevant to 
    \181\ Gallagher unclassified deposition, p. 19.
    \182\ Dickerson deposition, p. 13.
    \183\ Gallagher unclassified deposition, pp. 19-20.
    \184\ Gallagher declassified deposition, p. 36.
    \185\ Id.
    The upshot of the ``disconnect'' between Huang's job and 
his intelligence briefings is that in all likelihood, Huang saw 
significant amounts of intelligence information that he lacked 
a need to know. Gallagher and Dickerson defended the nature of 
the OIL briefings to Huang, with Gallagher opining that OIL was 
``100 percent correct in what we showed him.'' 186 
However, the simple facts about Huang's actual policy 
responsibilities reflect otherwise. A clear mistake was made in 
briefing Huang on China and probably other areas as well.
    \186\ Testimony of Robert P. Gallagher, July 16, 1997, p. 224. As 
mentioned previously, Dickerson recalls that Meissner told him Huang 
would be his Asian specialist and that therefore Dickerson should brief 
him. (E.g., Dickerson testimony, p. 180). At the Committee's hearings, 
both Dickerson and Gallagher clung to this remark as a justification 
for providing Huang with so much briefing on matters he did not need to 
know. There two problems with the comment as offered. First, it is 
contradicted by Gallagher's recollection--at his deposition and earlier 
interview--that he and Dickerson decided for themselves the appropriate 
scope of Huang's briefings, making the call that Huang should serve as 
the China ``safety net.'' Second, the remark attributed to Meissner 
makes no sense in light of events at the time. Meissner already had an 
``Asia specialist'' in Nancy Linn Patton, the Deputy Assistant 
Secretary for Asia. More importantly, by this time Undersecretary 
Garten had made it clear to Meissner that neither Patton nor Huang were 
to handle Asia policy. See Ex. 7. Regarding China in particular, Garten 
made it exceedingly clear to Meissner that Huang was to have no role 
whatsoever. Garten testimony, p. 126. Based on this unrefuted 
testimony, it would defy logic for Meissner to then tell Dickerson and 
Gallagher what they say he told them.
    Apart from his intelligence briefings, Huang had frequent 
access to other sources of sensitive and classified 
information. First, he routinely received classified diplomatic 
cables sent to Commerce through an electronic cable system 
employed by the federal government. Commerce's access to the 
cable system is maintained at ITA's Communication 
Center.187 The center keeps ``reader profiles'' for 
senior positions at Commerce, and through a program that 
automatically reads and selects cables responsive to the 
profiles, the center gathers and holds such cables for 
distribution to appropriate officials.188
    \187\ A limited number of cables with special dissemination 
strictures are handled separately at Commerce by OIL.
    \188\ Interview of Lewis Williams, June 11, 1997; Neuschatz 
deposition, pp. 29-31.
    Huang had a reader profile, which meant cable traffic was 
automatically set aside for him by the ITA Communications 
Center. Because the Communications Center only keeps records 
for 90 days of which cables it distributes, there are no 
records of the cables Huang saw.189 Thus, in the 
absence of Huang's own recollection, no one will ever know what 
exactly he saw. However, through the testimony of his former 
secretary, Janice Stewart, the Committee has established a 
fairly clear record of at least how often he received such 
cables. Stewart recounted that she signed for Huang's cables 
from the Commerce communication center each 
morning.190 The cables Huang received often numbered 
from about 25 to 100 per pick up.191 The cables were 
classified as ``confidential'' and ``secret.'' Once Huang 
finished a review of a cable, he would either direct Stewart to 
file them in a safe maintained in Huang's office (or a similar 
one for Stewart), 192 or dispose of 
them.193 Stewart is sure Huang had her make copies 
of classified cables for filing in her safe.194 She 
cannot recall if Huang ever directed her to send copies of 
cables or other classified information to others,195 
but she is not confident Huang returned to her all of the 
cables he received for either disposal or filing.196
    \189\ Williams interview.
    \190\ Stewart deposition, pp. 14-15.
    \191\ Id. at p. 16.
    \192\ Id. at pp. 22-23.
    \193\ Id. at p. 21.
    \194\ Id. at p. 28.
    \195\ Id. at p. 18.
    \196\ Id. p. 23.
    In addition to cables, Huang routinely had classified and 
sensitive briefing papers and memoranda cross his desk. Again, 
Stewart provided the best informed account of how that worked 
day-to-day. Stewart would sign ``classified material receipts'' 
for reports Huang received from the OIL,197 as well 
as for secret level reports, briefing materials, and 
correspondence received in the ordinary course of 
business.198 In addition, Huang reviewed classified 
materials sent to Charles Meissner,199 and could 
keep copies of these documents if he chose to do so. Stewart, 
however, does not recall if Huang ever requested such copies to 
be made.200 Stewart's recollection that classified 
information crossed Huang's desk frequently is borne out by the 
general impressions of his other co-workers.201
    \197\ Id. at p. 57.
    \198\ Id. pp. 57-58.
    \199\ Id. at pp. 39-40.
    \200\ Id. at p. 40.
    \201\ E.g., Interview of Don Forest, April 29, 1997; Neuschatz 
deposition, pp. 28-34; Hauser deposition, pp. 5455.
     An obvious question regarding Huang's access to classified 
information is whether he mishandled or improperly disclosed 
any of it. The press has reported on the prospect that Huang 
might have shared such information 
inappropriately,202 including with his former 
employer, Lippo, which has extensive business interests 
throughout Asia and thus might have found the information 
    \202\ According to one press account, ``reliable but unconfirmed'' 
FBI reporting indicates that Huang passed a classified document to the 
Chinese government while he was at Commerce. Bob Woodward, ``FBI Had 
Overlooked Key Files in Probe of Chines Influence,'' Washington Post, 
Nov. 14, 1997, p. A1.
    None of Huang's coworkers noticed anything unusual or 
inappropriate in his handling of classified information. That 
said, the Committee has found that Huang had ample opportunity 
to mishandle that information if he chose to do so, including 
significantly a secret office across the street from Commerce 
at Stephens Inc. to which he frequently repaired. That access, 
combined with Huang's unusually frequent contact with Lippo 
officials worldwide while at Commerce, at a minimum raises the 
threshold question of whether Huang passed along classified 
information to those who should not have received it. The 
Committee is unable to answer the question to its satisfaction. 
On this key question, as on so many others, it would have been 
extremely helpful to receive testimony from Huang himself.
    As explained by Stewart, Huang had a safe in his office for 
the storage of classified materials.203 Huang's 
office suite (which he shared with Meissner and others) 
contained 8 or 9 safes, and every morning each safe would be 
opened by the secretaries for the day.204 Each safe, 
at the end of the day, would be locked by the last secretary to 
leave, unless a professional was still working with materials 
from a personal safe.205 Huang would frequently stay 
later than Stewart, and thus would be responsible for locking 
his safe.206 Stewart recalls a few occasions when 
Huang would be the last person in the office.207 In 
addition, as one might expect, there were plenty of phones, 
facsimile machines, and copiers in Huang's suite of offices to 
which he had access.
    \203\ Stewart deposition, pp. 25, 29.
    \204\ Id. at pp. 26-27.
    \205\ Id., p. 27.
    \206\ Id. at pp. 27-28.
    \207\ Id. at p. 34. According to the Department, there are no 
surviving records reflecting occasions when the office suite safes, 
including Huang's were opened and closed.
    Much more striking than his Commerce facilities, however, 
was the Committee's discovery that while at Commerce, Huang 
maintained access to a separate office across the street at 
Stephens, Inc. Huang used this office regularly, including its 
phone and facsimile facilities, and he frequently received 
packages at the office. No one at Commerce--not his secretary, 
not his supervisors, not his coworkers, nobody--knew that he 
had such an office.

                      VI. Huang and Stephens, Inc.

    During his tenure at the Commerce Department, Huang made 
frequent use of a second office across the street in the D.C. 
office of the Arkansas-based brokerage house Stephens, Inc. 
(``Stephens D.C.'') Huang's use of the office is cloaked in 
mystery. The Committee knows he visited the office, but for 
what purposes is unclear. He visited Vernon Weaver there, a 
former Stephens official who is now U.S. Ambassador to the 
European Union, but what they discussed is not known. Huang 
received faxes and overnight packages at the office, but the 
Committee doesn't know their substance or who sent them. Huang 
sometimes appeared at Stephens carrying an envelope or small 
briefcase, but the Committee does not know what they contained 
and what Huang did with the contents. Finally, no one the 
Committee spoke to at Commerce was aware of Huang's frequent 
visits to the Stephens D.C. office. Indeed, Huang's secretary, 
Janice Stewart, testified she had ``never heard of Stephens, 
    \208\ Stewart deposition, p. 83.
    On July 17, 1997 the Committee heard the testimony of Paula 
Greene, who, from early 1993 until January 1996, worked as an 
administrative assistant and secretary at Stephens D.C. 
Stephens, Inc. is Arkansas' largest brokerage firm and has 
significant business ties to the Lippo Group and the Riady 
family. During the time Greene worked there, its Washington, DC 
offices were located on the 6th floor of the Willard Building, 
1455 Pennsylvania Avenue, NW, just across the street from the 
Department of Commerce.
    Stephens D.C. maintained a spare office for use by friends 
of the firm and visitors from out of town.209 Greene 
testified that Huang infrequently used that office when he 
worked for Lippo Bank in California and more often when he 
moved to the Department of Commerce.210 When Greene 
worked at Stephens D.C., the office included three other 
employees: J.W. Rayder, Greg Eden, Vernon Weaver; later, Celia 
Mata, a secretary and receptionist, joined the 
    \209\ Testimony of Paula Greene, July 17, 1997, p. 12. A Committee 
chart reflecting Mr. Green's recollection of the Stephens D.C. office 
layout is attached as Ex. 21.
    \210\ Id. at pp. 14-15.
    \211\ Id.
    Greene testified that Stephens D.C. made its spare office 
available to visiting Stephens' employees, as well as to 
friends of Weaver, Rayder, and Eden.212 Any visitors 
using that office were also permitted to use the fax machine, 
copier, and telephone, which had no special access or security 
codes. There were no records kept of incoming or outgoing 
faxes, nor of what copies were made and by whom.213
    \212\ Deposition of Paula Greene, July 2, 1997, p. 18.
    \213\ Greene testimony. p. 13.
    While he worked at Commerce, Huang regularly received 
faxes, packages, and correspondence at Stephens 
D.C.214 Greene had specific instructions from 
Ambassador Weaver to alert Huang when this occurred, and Huang 
would routinely come by and pick these items up.215 
Sometimes, Huang would show up at the Stephens office 
unprompted by a call from Greene.216 Generally, when 
documents or packages addressed to Huang were received in the 
Stephens D.C. office, Greene placed those in an in-out box 
located on the desk in the spare office, which she referred to 
as ``Mr. Huang's desk.'' She then called Huang to let him know 
something had arrived.217
    \214\ Id. at app. 21, 36. We also know that Huang received faxes at 
Stephens Inc. prior to joining the Commerce Department. See Facsimile 
to John from the Committee of 100, a New York based group of Chinese 
Americans who favor strong U.S. relations with China, May 5, 1994 (Ex. 
    \215\ Greene testimony, p. 16.
    \216\ Id. at pp. 21-22.
    \217\ Id. at p. 21.
    Greene testified that, while at Commerce, Huang used the 
spare office more frequently than anyone other than visiting 
Stephens, Inc. employees. Huang used the office ``perhaps two, 
three times a week, . . . not every week, but sometimes it 
would be two or three times.'' 218 When Huang 
visited the office he would meet with Weaver if he was 
around.219 Greene does not know what Huang and 
Weaver discussed.220 Following these meetings, Huang 
would walk back to the spare office. Huang made use of the 
Stephens phones and copier machine as well.
    \218\ Id.
    \219\ Deposition of Celia Mata, August 1, 1997, p. 50; Greene 
testimony, p. 18.
    \220\ Greene deposition, p. 40.
    Huang would not come to Stephens D.C. office empty-handed. 
On this point the Committee deposed Celia Mata, who worked as a 
Stephens D.C. secretary and receptionist.221 She 
testified as follows:
    \221\ Mata depositing, p. 6.

          Q: What would John Huang bring with him to the 
        office, if anything?
          A: He would have like a yellow envelope or a folder 
        sometimes or a very small, like a legal-size 
    \222\ Id. at p. 52.

Mata does not know what Huang may have brought into the 
Stephens office in the evelope or folder, or what he carried 
    \223\ Id. at p. 52.
    Greene testified she was not able to see whether Huang used 
the fax or copy machines when he visited the office, but, like 
every other visitor, he was entirely permitted to do 
so.224 Although from her desk she could not see 
whether Huang used the telephone, Greene could tell he did so, 
based on the phone lights at the receptionist's 
    \224\ Greene testimony, pp. 13, 21.
    \225\ Id. at p. 22.
    Greene described an unusual set of instructions she was 
given by Ambassador Weaver. Weaver, would ask Greene to call 
Huang on his behalf, often to alert Huang that Weaver wanted to 
speak or meet with him.226 Huang was the only person 
Weaver asked her to call on his behalf. Greene understood that 
Weaver asked her to do this because ``[h]e did not want his 
name to appear on [Huang's telephone] logs very frequently.'' 
227 At the hearing, Greene responded to Senator 
Collins' questioning as follows:
    \226\ Id. at p. 18.
    \227\ Id. at p. 19.

          Senator Collins. Did Mr. Weaver also ask you on 
        occasion to call Mr. Huang and indicate that Mr. Weaver 
        wanted to speak with him?
          Ms. Greene. Yes.
          Senator Collins. And then would Mr. Huang meet on 
        occasion with Mr. Weaver at Stephens, Inc.?
          Ms. Greene. Yes.
          Senator Collins. Did Mr. Weaver also tell you he 
        wanted you to call Mr. Huang on his behalf? In other 
        words, Mr. Weaver didn't call directly very often. He 
        would ask you to call for him; is that correct?
          Ms. Greene. Yes.
          Senator Collins. Did he say why he wanted you to call 
        for him?
          Ms. Greene. Yes, he did.
          Senator Collins. Could you tell us why that was?
          Ms. Greene. He did not want his name showing up on 
        the message logs very frequently.
          Senator Collins. So he asked you to call for him 
        because he didn't want his name showing up on the 
        message logs of the Department of Commerce for Mr. 
        Huang; is that correct?
          Ms. Greene. Yes, that's correct.228
    \228\ Id. at pp. 18-19.

    In addition, Weaver instructed Greene to speak directly 
with Huang, and in the event that Huang was not available, 
simply to leave a message for him to call her. She was 
specifically instructed not to leave a detailed message:

          Ms. Greene. As best as I remember, I was told that if 
        any faxes or anything came in for Mr. Huang, I was to 
        contact him directly . . . in regards to letting him 
        know that he had something to pick up at the office. If 
        he was not there, then I was just to leave a message 
        for him to call me.
          Senator Collins. Did Mr. Weaver specifically instruct 
        you not to leave a detailed message with Mr. Huang's 
          Ms. Greene. To my knowledge, yes.
          Senator Collins. He did? He told you, in other words, 
        that if you couldn't talk to Mr. Huang directly, to 
        just leave your name and have him call back, to not 
        leave a message saying that there was a package for him 
        or he had received faxes, but just to leave your name. 
        Is that correct?
          Ms. Greene. Yes, that's correct.
          Senator Collins. In your experience in working with 
        Mr. Weaver, this was the one case where you were told 
        not to leave a detailed message?
          Ms. Greene. Yes.229
    \229\ Id. at pp. 16-17.

    The Committee documented twenty-six messages left for Huang 
at Commerce by either Weaver or Greene. Greene told the 
Committee that each of these messages would have been left to 
alert Huang that he had received a fax or a package or that Mr. 
Weaver wanted to speak to him.230 The message slips 
represent only unsuccessful calls, and thus do not tally all of 
the calls to Huang.231
    \230\ Id. at pp. 19-20. See also Chart of phone messages to John 
Huang from Stephens, Inc. (Ex. 23).
    \231\ Id. at p. 20.
    Huang's purpose in visiting Stephens D.C. so regularly 
remains a mystery. Any speculation that Huang faxed Commerce-
derived classified or proprietary materials from the Stephens 
D.C. facsimile remains just that, speculation. Given that 
proviso, attached as Exhibit 24 is a spreadsheet prepared by 
the Committee listing by date (1) the 37 intelligence briefings 
John Dickerson gave Huang, (2) the nine classified material 
receipts covering ten pieces of finished intelligence receipted 
to Huang, and (3) phone calls and facsimile transmissions from 
Stephens D.C. to various Lippo entities.232
    \232\ Committee spreadsheet, Calls and Fax Transmissions from 
Stephens, Inc. and Receipt of Intelligence Information, October 1997 
(Ex. 24). The spreadsheet also contains one phone call from Stephens 
D.C. extension 6774 to Huang's home in Glendale, California. It appears 
that 6774 is the extension of the visitor's office Huang used.
    As one can see, there are no telephone or fax transmission 
entries after January 1995. Counsel for Stephens has informed 
the Committee that, some time in early 1995, Stephens D.C. 
changed its long distance carrier, and the Committee could not 
obtain records from the new carrier. The spreadsheet contains 
no records of calls made after the change.
    Although the Committee has no specific information about 
the contents of Huang's communications from Stephens D.C. to 
Lippo, a number of these communications took place in close 
proximity to his intelligence briefings. Among the more notable 
are the following:
           On October 5, 1994 at 9:00 a.m., John 
        Dickerson briefed Huang. At 5:49 p.m. on the same day, 
        a fax was sent from Stephens D.C. to Lippo Ltd. in Hong 
        Kong. At 4:20 p.m. the next day, a fax was sent from 
        Stephens D.C. to the Director of Lippo Bank in 
           On January 12, 1995 at 10:30 a.m., John 
        Dickerson briefed Huang. At 5:03 p.m. on January 16, 
        1995, a fax was sent from Stephens D.C. to Lippo 
        Pacific in Indonesia;
           On January 25, 1995 at 11:00 a.m., John 
        Dickerson briefed Huang. At 5:21 p.m. on January 30, 
        1995, a fax was sent from Stephens D.C. to Lippo 
        Pacific in Indonesia.
    Huang's primary professional contact at Stephens D.C. 
appears to have been Vernon Weaver, who is now the U.S. 
Ambassador to the Economic Union. In an effort to place that 
relationship more fully into context, the Committee staff 
interviewed Ambassador Weaver on June 10, 1997. Huang's 
relationship with Ambassador Weaver has spanned a decade, 
extending through Huang's tenure at Lippo, the Commerce 
Department, and the DNC. Weaver met Huang for the first time in 
the Spring of 1986 when they both attended a trade mission to 
Hong Kong with a group from Arkansas.233 From that 
time until 1989 or so, Weaver was in frequent contact with 
Huang regarding Lippo matters. Weaver characterized Huang as a 
``personal friend'' and noted their wives are friendly.
    \233\ Memorandum of Interview of Ambassador Vernon Weaver, July 4, 
1997. Unless noted otherwise, the following discussion is based on that 
    According to Weaver, Huang was involved in Lippo's ``day-
to-day'' activities ``but not the important stuff.'' Huang 
served as an ``intermediary'' between the Riadys and Stephens. 
Weaver did not recall how he first learned of Huang's 
appointment to the DOC but noted, ``we have a lot of common 
friends.'' He did not help Huang secure the Commerce 
appointment. Weaver said that, after 1989, he ``had relatively 
small amounts of dealings with John Huang.''
     A review of documents obtained by the Committee shows that 
Weaver and J.W. Rayder (a Stephens D.C. tax attorney) were in 
contact with Huang in 1993, while Huang was at the Lippo Bank 
in California. In September 1993, Weaver faxed Huang a report 
on former President Carter's summer 1993 trip to 
Africa.234 And some time in or before the same year, 
Rayder sent Huang a handwritten note thanking him for attending 
a meeting with California State Senator Roberti.235
    \234\ Facsimile from Vernon Weaver to John Huang, Sept. 1, 1993 
(Ex. 25).
    \235\ Note from J.W. Rayder to John Huang, undated (Ex. 26). 
Roberti was Maeley Tom's employer at the time.
    Weaver could not explain fully the sixteen written phone 
messages he left for Huang at Commerce. Weaver said he may have 
called to congratulate Huang on his appointment and that he met 
Huang ``for lunch and so forth, from time to time.'' Weaver 
said he may have had ten lunches with Huang. Weaver never met 
Huang at the DOC and does not recall meeting with Huang (while 
Huang was at Commerce) for anything other than a meal. However, 
Weaver did say Huang may have come to see him at Stephens D.C. 
to ask about a business deal. Weaver does not know of any fund-
raising Huang may have done while he was at Commerce.
    After Huang joined the DNC in December 1995, Weaver saw 
Huang once or twice for lunch.236 The last time 
Weaver recalled seeing Huang was on July 16, 1996, at Weaver's 
ambassadorial swearing-in ceremony. Weaver said he doesn't know 
why Huang left the DOC for the DNC.
    \236\ Weaver's contact with Huang after he joined the DNC was not 
limited to lunches. Among the documents produced to the Committee by 
the DNC is a May 31, 1996 facsimile from Vernon Weaver to John Huang. 
(Ex. 27). Pages 3 and 4 of the fax are copies of articles from the 
South China Morning Post. There are two fax lines on each of these 
articles: one from Stephens Inc. to Huang at the DNC; the other from 
Lippo Hong Kong to the number 202/234-0015. We learned 202/234-0015 is 
the fax number at the Sheraton Hotel on Woodley Road in the District. 
Who was there to receive the fax is unknown.
    Weaver told us he did not actually send the fax but that he 
directed it be sent ``for Huang's information.''
    Weaver recalled that when Huang worked at Lippo, he 
sometimes used the Stephens D.C. guest office. Huang was 
permitted to do so because he was a ``friend'' of Stephens. 
Weaver was ``quite sure'' that Huang continued to use the guest 
office after he joined Commerce. Weaver doesn't know what Huang 
did during his visits from Commerce. Weaver's ``impression is 
that [Huang] did not'' use the guest office after he joined the 
DNC.237 However, Weaver never told Huang to stop 
using the guest office.
    \237\ Celia Mata has a different recollection. She recalls that 
Huang continued to visit Stephens D.C. until early spring, 1996, or 
around the time when Weaver made known his interest in the E.U. 
ambassadorship. Mata deposition, pp. 40-43. Huang stopped calling the 
office after Weaver moved to Belgium in July 1996. Id. at p. 40.
    When asked why Paula Greene left a number of phone messages 
for Huang at Commerce, Weaver said she was probably alerting 
Huang he had received a fax or message at Stephens D.C. Weaver 
``suppose[d], probably'' that Huang received faxes and messages 
at Stephens D.C., an arrangement that was in place before Huang 
joined the DOC.
    Weaver's relationship with Huang was not a one-way street. 
Indeed, it is clear that, while Huang was at Commerce, he did 
at least one major favor for Weaver and Stephens, Inc. He 
introduced Weaver to Matt Fong, who had recently been elected 
California State Treasurer, helping Stephens obtain bond 
business with the State of California. Before Fong became 
Treasurer, Stephens, Inc. had been on California's ``bid list'' 
for bond issues and had received business from the State. Six 
to eight months before Fong was elected, Huang told Weaver he 
knew Fong and that he could introduce Weaver to Fong if Fong 
won the election.
    Huang arranged a meeting with Fong for January 20, 1995 at 
1:30 p.m.238 The meeting which took place in Fong's 
old office in Los Angeles, was attended by Fong, Weaver, Huang, 
and perhaps J.W. Rayder.239 As a result of the 
meeting and a follow up meeting, (on March 24, 1995 between 
Weaver and Fong), Stephens ended up with bond work from the 
State of California.
    \238\ Note that, according to Huang's travel itinerary, he arrived 
in Los Angeles on a flight from Tokyo on Friday, January 20, 1995 at 
9:10 a.m. Huang was scheduled to take the red-eye from Los Angeles to 
D.C. on Monday, January 22, 1995.
    \239\ Memorandum from Paula Greene to Vernon Weaver, et al., Jan. 
13, 1995 (Ex. 28).

vi. huang's fund-raising, white house access, and frequent contact with 
                   lippo and others while at commerce

    In light of unanimous testimony that Huang did little 
substantive work at Commerce, and in light of early indications 
that Huang might have engaged in political fund-raising on the 
job, the Committee undertook an examination of what Huang 
actually did at the Commerce Department. That examination was 
substantially complicated by Huang's refusal to testify before 
the Committee. However, the Committee was able to draw back the 
curtain on at least some of his activities by reviewing phone 
records, appointment books, work product, and other documents 
that create a paper portrait of his actions. This paper trail, 
when augmented by relevant testimony from officials at the DNC 
and Stephens D.C., shows that much of what Huang did at 
Commerce bore little relation to his job. Specifically, the 
records and relevant testimony indicate that while at Commerce, 
Huang probably raised political contributions illegally, stayed 
in contact with Lippo officials to an extraordinary degree, 
enjoyed frequent access to the White House unexplained by his 
substantive job responsibilities, and had frequent contacts 
with various foreign embassy officials, including PRC 
    \240\ A description of the Committee's work on this project and 
summaries of some of the information about Huang's activities were 
presented during the Committee's July 17, 1997 hearing.
    In compiling the paper record of John Huang's activities 
from July 1994 to January 1996 (his period of service at 
Commerce), the Committee relied on the following records 
subpoenaed or voluntarily produced from the following sources:
           long distance telephone records from Huang's 
        office at the Commerce Department;
           international long distance records from a 
        calling card issued to Huang by the Commerce 
           handwritten telephone message slips 
        reflecting unsuccessful calls placed to Huang at his 
        Commerce Department office;
           daily appointment calendars kept by his 
        Commerce secretary;
           expense reports reflecting Huang's Commerce-
        related travel;
           long distance telephone records from Huang's 
        residences in Silver Spring, Maryland, and Glendale, 
           call detail from his California cellular 
           call detail from Huang's former employer, 
        Lippo Bank of California.
           Secret Service WAVE and E-Pass records, 
        reflecting Huang's appointments and visits to the White 
        House compound; and
           Records from the Financial Crimes Center 
        (FinCen), which track Huang's entry and exit history to 
        and from the United States during 1994 to 1996.
    The Committee staff compiled the data of each of the 
separate components into computer spreadsheets and, using 
various software applications, sorted and searched the data to 
provide ``snapshots'' of Huang's activities by day, by category 
of activity, or by keyterm. The overall product of these labors 
and a brief description of the methodology and work behind it 
is attached as exhibits 29 and 30.241
    \241\ These are two versions, one sorted chronologically and one by 
field of information, that set forth all of the data on Mr. Huang's 
activities revealed from the paper record. The voluminous back up 
materials--hard copies of the message slips, phone records, and the 
like--have been retained in the Committee's records.

A. Possible Fund-raising at Commerce

    The Committee's analysis shows that while at Commerce, 
Huang was in frequent contact with several DNC finance 
officials, thus raising the threshold question of whether he 
was involved in fund-raising on behalf of the DNC. Such fund-
raising would constitute a criminal violation of the Hatch 
Act,242 which prohibits federal government employees 
from soliciting or receiving political contributions. Huang's 
message logs and telephone records indicate he spoke often with 
David Mercer, Mona Pasquil, Marvin Rosen, Ari Swiller, David 
Wilhelm, and Richard Sullivan, all prominent members of the 
DNC's finance staff.243
    \242\ 5 U.S.C. Sec. 7323.
    \243\ Because local calls successfully placed between the DNC and 
the Commerce Department would not appear on Commerce telephone records, 
the Committee likely has an incomplete picture of how many calls there 
were. Message slips and long distance calls alone, however, reveal 
scores of calls between Huang and DNC officials. See Exs. 29 and 30.
    The Committee was able to piece together sequences of 
events surrounding four different DNC donors that suggest Huang 
actively (and successfully) solicited each donor while he was 
at Commerce. Described below are the four instances.
    As a predicate to the four examples, it is important to 
understand that more broadly, Huang seemed to discuss potential 
donors and particular fund-raising events with DNC officials 
when he was with Commerce. The DNC Deputy Finance Director, 
David Mercer, testified to a standing arrangement between Huang 
and him, that ``if you [Huang] know or if anybody that you know 
is interested in attending or participating in the [fund-
raising] events, have them give me a call. I don't recall, you 
know, specifically, you know, whether as a foreward (sic) or 
follow up, people did or not. But in any event, that's the 
nature of our contact.'' 244 Mercer recalled talking 
to Huang a total of 10 to 15 times at Commerce.245
    \244\ Deposition of David Mercer, May 14, 1997, p. 88.
    \245\ Id. at p. 87. Mercer left Huang 17 phone messages at 
Commerce. See Exs. 29 and 30.
    Huang became involved while at Commerce in organizing a DNC 
fund-raising apparatus, the Asian-Pacific American Leadership 
Council (APALC), and apparently in soliciting contributions 
through its auspices.246 It is unclear who at the 
DNC recommended the creation of such a council, which according 
to DNC staffer Mona Pasquil, was intended to track how much 
money Asian-Americans were contributing to the 
DNC.247 The kick-off event for APALC was a November 
2, 1995 fund-raising dinner with Vice President Gore as the 
featured guest. Pasquil was tasked with organizing the dinner. 
Pasquil was not in the DNC's financial division and had not 
organized a fund-raiser previously. Accordingly, the DNC tasked 
a fund-raiser, Sam Newman, to help her.248 Newman 
explained that in early October 1995, Richard Sullivan asked 
Newman to ``help [Pasquil] set up the venue, help her produce 
any sort of materials she needed, work with her to track the 
contributions and to strategize about who to contact and, you 
know, anything she needed.'' 249 Because Newman is 
not Asian-American, the actual fund-raising calls were left to 
Pasquil to make or to arrange through others in the Asian-
American community she knew.250
    \246\ The contributions discussed below from the Wiriadinatas were 
raised in connection with the APALC kick-off dinner on November 2, 
    \247\ Deposition of Mona Pasquil, July 30, 1997, p. 17.
    \248\ Id. at p. 20.
    \249\ Deposition of Sam Newman, July 17, 1997, p. 13.
    \250\ Id. at p. 24-25; Pasquil deposition, pp. 23-24.
    Pasquil encountered trouble raising money for the event, 
and as a result, David Mercer stepped in to assist. So, too, 
did Huang. Pasquil had lunch with Huang and Newman before the 
November 2 APALC event. According to Newman, they discussed 
particulars about the upcoming dinner, including the location, 
price, and donors. Huang ``seemed interested'' in the APALC 
dinner.251 Pasquil acknowledged that as of her lunch 
with Huang, she was ``scared'' that despite her hard work, the 
dinner ``might flop'' because few donors had expressed 
interest.252 When she expressed her concerns to 
Huang, he mentioned that he ``might be leaving Commerce and to 
come work at the DNC and that he could be helpful once he came 
over to the DNC.'' 253 As discussed further below, 
Huang made himself ``helpful'' before leaving Commerce by 
raising money for the event.
    \251\ Newman deposition, p. 33.
    \252\ Pasquil deposition, p. 86.
    \253\ Id. at p. 45.
    Huang also met with Mercer directly before and immediately 
after the APALC dinner. Mercer provided evasive testimony 
regarding the substance of the pre-event meeting, explaining 
that he simply ``ran into [Huang] at the Willard Hotel'' and 
did no more than exchange pleasantries.254 The 
Committee is left to wonder whether Huang might have discussed 
particulars about fund-raising with Mercer. Mercer's actions 
after the meeting suggest that whatever was discussed, the 
meeting was more than a chance encounter. He submitted a 
Willard Hotel parking receipt, dated October 27, 1995, to the 
DNC for reimbursement, providing as justification for the 
expense a ``John Huang meeting.'' 255
    \254\ Mercer deposition, May 14, 1997, pp. 115-16.
    \255\ Id. at pp. 117-20.
    Immediately after the November 2 dinner, Huang had dinner 
with Mercer, Charlie Trie, and a fourth, unidentified person. 
What was discussed at dinner presaged the foreign money 
questions that would arise the next year:

          To be honest, it was more in Chinese or Mandarin, or 
        whatever, to the point that I was focused on eating and 
        don't know really what subject matters were discussed. 
        And again, it was just a--for me at least, it was a 
        break after a long evening, and just sharing in the 
        breaking of bread with John and Charlie. . . . [M]ost 
        of the conversation that night was in 
    \256\ Id. at pp. 47-48.

Perhaps Mercer, who does not speak Chinese, should have 
wondered at that point about the possibility of foreign 
contributions coming to the DNC, but he apparently did not.

1. Mi Ryu Ahn (Pan Metal)

    Phone records and other documents suggest that John Huang 
solicited a large DNC contribution from Pan Metal, Inc. Exhibit 
31 summarizes contacts between Huang and the Pan Metal's 
president, Mi Ryu Ahn.257 Huang's message logs and 
telephone records indicate the following sequence of calls 
between Huang and Mi Ryu Ahn as follows: On May 26, 1995, there 
were 4 calls between Huang and Mi Ahn and, on June 5, 1995, 
another message from Mi Ahn, which Huang later returned. Four 
days later, on June 9, 1995, a message left for Huang at the 
Commerce Department from Mercer reads: ``Have talked to Mi. 
Thank you very much.'' Six days later, a $10,000 contribution 
from Pan Metal was received by the DNC, for which ``Jane 
Huang'' is listed as the solicitor.
    \257\ Huang Fundraising at Commerce? Mi Ryu Ahn (Pan Metals) (Ex. 
    What seems so apparent from the paper record--Huang 
illegally raised $10,000 for the DNC from Mi Ahn and then the 
DNC made a transparent attempt to disguise this by crediting 
the donation to ``Jane Huang'' instead of John Huang as the 
solicitor--was corroborated by David Mercer and Mi Ryn Ahn. 
Mercer, told the Committee that Huang referred Mi Ahn to Mercer 
for a contribution to the DNC.258 Mercer, however, 
would not state ``for a fact'' whether Huang or his wife 
solicited the Mi Ahn contribution, nor would he rule either of 
them out.259 In an interview with the Committee, Mi 
Ahn said that she could not recall ever speaking to Jane 
Huang.260 Ahu did recall that John Huang asked her 
to get involved with the DNC and to continue to be 
    \258\ Mercer deposition, May 14, 1997, pp. 210-213.
    \259\ Mercer deposition, May 27, 1997, p. 9.
    \260\ Memorandum of interview of Mi Ryu Ahn, July 1, 1997, pp. 2-3.
    \261\ Id. at p. 5. A Los Angeles Times story cited Mi Ahn as saying 
that Huang made this request as well as other similar ones, in the 
spring and summer of 1995. Glenn Bunting and Alan Miller, ``Haung 
Helped Raise Money While at Agency,'' Los Angeles Times, May 25, 1997, 
p. A1. Mi Ahn affirmed that Huang made such a request in her interview 
with Committee staff, but placed it after her June 1995 contribution. 
Ahn interview; p. 5.

2. Kenneth Wynn, President of LippoLand Ltd.

    Exhibit 32 summarizes several contacts between Huang and 
Kenneth Wynn, President of a Lippo subsidiary, LippoLand. 
During the month of August, 1994, records indicate 31 calls 
between John Huang and the Lippo office where Wynn worked. On 
August 18, 1994, Wynn and his wife contributed a total of 
$15,000 to the DNC.262 ``Jane Huang'' was listed as 
the solicitor of these contributions. Mercer admitted to 
filling out the check tracking form that credited John Huang as 
the solicitor, but he professed not to know that Huang was a 
Commerce employee when the donation was made.263
    \262\ Exhibit 32 understates the total contribution(s) by $5,000. 
DNC records reveal three checks written by the Wynns on August 18, 
1994, for a total of $15,000. See checks from Kenneth R. and A. 
Sibwarini Wynn to the DNC, August 18, 1994, with DNC check tracking 
form. (Ex. 33).
    \263\ Mercer deposition, May 27, 1997, pp. 10-11, 14.
    Similarly, between October, 1995 and November 1995, there 
were 23 calls between Huang and the Lippo office where Wynn 
worked.264 On October 12, 1995, Kenneth Wynn 
contributed another $12,000 to the DNC, for which ``Jane 
Huang'' was also listed as the solicitor.265 Mercer 
confirmed that he also filled out the DNC check tracking form 
for the November 1995 contribution, and credited Jane Huang 
with the solicitation. Mercer could not recall why he listed 
her so.266 Mercer observed that it was possible that 
John Huang delivered the check to him.267 As with 
the Mi Ahn solicitation, it is apparent to the Committee that 
Jane was substituted for John in an effort to conceal John's 
illegal role in soliciting the contribution.
    \264\ The Committee cannot determine from phone records how many of 
those calls were made to Wynn. Because the Wynns refused to meet with 
Committee investigators, the Committee was unable to confirm a number 
    \265\ Check from Kenneth R. and A. Sihwarini Wynn to DNC, Oct. 12, 
1995, with DNC check tracking form. (Ex. 34).
    \266\ Mercer deposition, May 27, 1997, p. 17.
    \267\ Id.

3. Arief and Soraya Wiriadinata

    Exhibit 35 depicts a series of events between Huang and the 
Wiriadinatas.268 On June 19, 1995, after Soraya's 
father, Hashim Ning, a wealthy business partner of the Riady 
family, had a heart attack, Huang helped to arrange a ``get 
well'' note from President Clinton, which was hand delivered by 
Mark Middleton. Between June and August 1995, Huang visited 
Ning twice in the hospital and encouraged the Wiriadinatas to 
donate money to the DNC. On November 5 and November 7, 1995, 
Ning wired a total of $500,000 from Indonesia to the 
Wiriadinatas' account in the U.S. The following day, November 
8, 1995, Huang helped arrange for another get well note for 
Ning from President Clinton. The day after that, November 9, 
1995, the Wiriadinatas contributed $30,000 to the DNC. In 1995 
and 1996, the Wiriadinatas contributed a total of $450,000 to 
the DNC, all of which has been returned.
    \268\ Huang Fundraising at Commerce? The Wiriadinatas (Ex. 35).
    The Wiriadinatas, who returned to Indonesia in December 
1995, corroborated the paper record during their interview with 
Committee staff on June 24, 1997, in Jakarta, Indonesia. In the 
interview, Arief Wiriadinata made clear that John Huang 
directed all of their political contributions. Arief 
acknowledged that Huang's solicitations began in 1995, when 
Huang was still a Commerce official.269 In return 
for contributions, Huang promised to introduce Arief to 
prominent American businessmen, especially Asian-
Americans.270 In fact, Huang once arranged a meeting 
between Arief and the Chancellor of the University of 
California at Berkeley regarding Arief's fledgling computer 
    \269\ Memorandum of Interview of Arief and Soraya Winiadinata, July 
13, 1997, p. 3.
    \270\ Id.
    \271\ Id.
    Arief recounted that Huang solicited the November 9, 1995 
contributions in connection with a Washington, D.C. fundraising 
event. That event was the November 2 APALC dinner Huang had 
helped plan with DNC officials. Moreover, on November 20, 1995, 
both Arief and Soraya contributed $1,000 to the congressional 
campaign of Jesse Jackson, Jr., again at the specific direction 
of Huang.272 As for Jane Huang, the solicitor 
credited on DNC check tracking forms for their November 1995 
contributions, both Wiriadinatas denied ever meeting or 
speaking to her.273
    \272\ Id.
    \273\ Id.
    Mercer prepared the DNC check tracking for the 
Wiriadinatas' November 1995 contributions that listed Jane 
Huang as the solicitor.274 When asked why, Mercer 
provided the following tortured response:
    \274\ Mercer deposition, May 27, 1997, pp. 32-33.

          Q: How did you know to credit this to Jane Huang as 
          A: Through an understanding prior of the Wiriadinatas 
        having association with the Huangs.
          Q: How did that understanding come about?
          A: I don't recall.
          Q: But you understood that the Wiriadinatas and the 
        Huangs were associated. How did you understand that 
        they were associated?
          A: I don't recall.
          Q: Why didn't you put John Huang down as solicitor?
          A: I don't recall why I--you know, I don't recall. I 
        didn't you know--I don't . . . I don't recall. Jane 
        could have--I could have been told that Jane was the 
        one that brought these checks in. I don't 
    \275\ Id. at pp. 33-34.

    In a fitting coda to the Wiriadinata contributions 
solicited illegally by Huang, Arief appears in the videotape of 
a December 15, 1995 White House coffee being greeted by 
President Clinton. On the tape, Mr. Wiriadinata tells President 
Clinton, ``James Riady sent me.'' The President responds ``Yes 
. . . I'm glad to see you. Thank you for being here.'' Portions 
of the tapes were presented at the Committee's hearing on 
October 7, 1997.

 4. Pauline Kanchanalak and the U.S.-Thai Business Council

    Contacts suggesting that Huang solicited Pauline 
Kanchanalak, then head of the U.S. Thai Business Council, are 
detailed in Exhibit 37.276 Huang's Commerce message 
logs indicate that Kanchanalak left five messages for Huang 
between September 7, 1994 and October 21, 1994. On September 
30, 1994, Huang wrote a memo to David Rothkopf, Deputy 
Undersecretary for International Economic Policy, urging that 
President Clinton host the U.S. Thai Business Council inaugural 
at the White House.277 Seven days later, on October 
6, 1994, the U.S. Thai Business Council inaugural was held at 
the White House, attended by President Clinton and Thai Prime 
Minister. Later that month, Huang attended a U.S. Thai Business 
Council meeting. Two days following that meeting, Kanchanalak 
contributed $32,500 to the DNC.
    \276\ Huang Fundraising at Commerce? Pauline Kanchanalak (U.S.-Thai 
Business Council) (Ex. 37).
    \277\ Memorandum from John Huang to David Rothkopf, September 30, 
1994 (Ex. 36). Huang's memo reads in part, ``My personal observation is 
that President Clinton will be very upset if he finds out what's going 
on behind the scene. It could really damage his personal relationship 
between him and [Thai] Prime Minister Chuan; and the relationship 
between U.S. and Thailand.'' In his Committee deposition, Rothkopf 
testified to being bemused and puzzled by the memo: Huang had no policy 
responsibility for Thailand; Rothkopf thought it odd that Huang would 
send him such a document; and Rothkopf considered strange for Huang to 
speak for how President Clinton might view the matter. Rothkopf 
deposition, pp. 42-47. Nevertheless, over Rothkopf and Garten's 
objections, the U.S. Thai Business Council held its inaugural ceremony 
at the White House, with President Clinton and the Thai Prime Minister 
in attendance.
    Between November 1994 and December 1995, 17 messages were 
left for Huang at the Department from Kanchanalak or her 
office. Because calls between the two were local, the messages 
likely reflect only a portion of the total calls placed between 
them. In the 1995-1996 election cycle, Kanchanalak, who is now 
in Thailand, and her business partners contributed $253,500 to 
the DNC, all of which has been returned.

B. Huang's White House visits

    One of the still unexplained aspects of Huang's tenure at 
Commerce is the frequent access he enjoyed to the White House. 
His access was unknown to his co-workers at the Commerce, 
including his secretary and supervisors. White House ``WAVES'' 
and E-Pass records, which reflect appointments and entries into 
the White House, show Huang went there at least 67 times while 
he was at Commerce.278 The Committee was unable to 
determine what happened during most of those meetings. The 
officials Huang was scheduled to visit were varied, including 
political affairs officials, National Security Council 
employees, highly placed aides to President Clinton and Vice-
President Gore, and on at least one occasion, President Clinton 
himself. Moreover, Huang's meetings were scheduled for many 
different locations in the Old Executive Office Building, the 
West Wing, and, at least once, the Oval Office.
    \278\ The Secret Service has explained to the Committee that 
``WAVES'' and E-Pass records are two parallel and separate systems for 
tracking entry and exit from the White House complex. A visitor to the 
White House might appear in either or both (or occasionally neither) 
system, depending on the particulars of the visit. In tallying Huang's 
visits, the Committee took this into account, and counted only once 
multiple E-Pass and WAVES entries that might reflect a single visit. 
Nor did the Committee count any visits unless there was confirmation 
that Mr. Huang in fact entered into the White House complex. The WAVES 
and E-Pass records have been retained in the Committee's files.
    Nevertheless, when information was presented about Huang's White 
House visits at the Committee's July 17, 1997 hearing, the White House 
complained bitterly that the number of Huang's visits had been 
overstated. In fact, quite the opposite is true. The Committee staff 
used a conservative methodology to ensure that any miscalculation would 
err on the side of understatement.
    One such meeting was the intimate September 13, 1995 
conversation, described more fully elsewhere, in the Oval 
Office among Huang, President Clinton, James Riady, Joseph 
Giroir, and Bruce Lindsey. At the meeting, Huang or Riady 
requested of the President a ``transfer'' for Huang from 
Commerce to the DNC, and President Clinton obliged the request.
    The truth is, no one will ever know who Huang saw at the 
White House or what matters he might have discussed there. 
However, the September 13, 1995 meeting should suffice to make 
the point that Huang had incredible access at the White House, 
especially for a midlevel political appointee at Commerce with 
no policy portfolio. Huang's WAVES entry that day nowhere 
discloses that he sat in the Oval Office with President 
Clinton, had a lengthy chat, and succeeded in securing a new 
job at the DNC. Instead, the record simply recounts that Huang 
had a 5:15 pm appointment that day in the West Wing. The 
``visitee'' is listed as Nancy Hernreich; the requestor is 
Rebecca Cameron, Hernreich's assistant. No one at Commerce had 
the slightest idea that Huang had this sort of access.

C. Huang's contacts with Lippo employees, offices and consultants

    Telephone records reviewed by the Committee show nearly 
constant contact between Huang and Lippo officials, as well as 
with several individuals who had close ties to Lippo and the 
Riady family. Call detail records disclose approximately 232 
calls between Huang and his former employer, Lippo Bank, during 
the 18 months he worked at Commerce, and at least 29 calls or 
faxes between Huang and Lippo's headquarters in Indonesia. 
While the sheer volume of calls raises many concerns, the 
situation invites further scrutiny given Lippo's generous 
severance package just weeks before his arrival at Commerce, 
Huang's access to classified and proprietary business 
information, and the fact that the Riadys and Huang were major 
donors and fund-raisers for the Democratic party.
    Among those associated with Lippo with whom Huang had 
frequent contact was a Lippo consultant, Maeley Tom. Records 
reveal 61 calls that Huang placed during his Commerce 
employment period to Tom. Tom wrote on Huang's behalf in 1993 
to support his appointment.279
    \279\ See Ex. 4.
    Huang's telephone records also show 72 calls to Arkansas 
lawyer and Lippo joint venturer C. Joseph Giroir. Giroir, a 
former Rose Law firm partner and board member of the Worthen 
Bank, was present at the small Oval Office meeting held on 
September 13, 1995 attended by President Clinton, Huang, and 
James Riady and at which the decision was made to move Huang 
from Commerce to the DNC. According to former DNC Finance 
Director Richard Sullivan, Giroir lobbied vigorously for 
Huang's position at the DNC, particularly at a meeting between 
DNC Chairman Don Fowler and Mr. Riady just prior to the White 
House meeting with the President.280
    \280\ Testimony of Richard Sullivan, June 4, 1997, p. 219.
    Records also demonstrate Huang was often in contact with 
other Lippo business associates.281 Huang had at 
least 21 calls and one meeting with Mark Middleton, a former 
White House aide who later became a Lippo business agent, 14 
calls and 4 meetings with Mark Grobmyer, a Lippo attorney, and 
10 calls and one meeting with Webster Hubbell, a former DOJ 
official hired by Lippo.
    \281\ In addition, Huang's telephone records show 4 calls placed by 
Huang to David Chan, President of the Hong Kong Chinese Bank, an 
interest jointly owned by Lippo and China Resources.

D. Huang's embassy contacts

    Because calls to embassies or representative offices in 
Washington are local, documents available to the Committee 
regarding Huang's contact with embassies are incomplete since 
there are no records that would reflect calls successfully 
placed between Huang and such offices. Huang's message slips 
and appointment calendars are the primary source of information 
about his contacts with these offices. The documents reveal 
that Huang received 35 calls from officials of the PRC, Korean, 
Singapore embassies, that he visited the PRC embassy six times, 
and that he met on three other occasions with PRC embassy 
officials. Other records show that Huang visited other 
embassies at least 15 times, and had 8 meetings with and 4 
calls from representatives of Taiwan's unofficial embassy, the 
Taiwan Economic and Cultural Representative Office.
    When questioned about such contacts by Huang, Jeffrey 
Garten was ``taken aback'' to learn that Huang ever dealt with 
anyone from the PRC embassy, the White House, or Congress on 
anything.282 ``There was nothing about him; there 
was nothing he ever said; there was nothing that he ever did 
that I saw or anyone told me that would have evidenced activity 
in the White House, on the Hill or in the Embassy of China.'' 
    \282\ Garten deposition, May 16, 1997, p. 42.
    \283\ Id.

                            VII. Conclusion

    Huang's stopover at Commerce lasted only eighteen months. 
Looking at Huang's career to date, one might expect that this 
period offered Huang a respite from political fund-raising and 
a unique opportunity to shape U.S. international trade policy 
from the inside. While, due to Huang's refusal to testify, it 
is unclear why he sought the Commerce position, it was a sharp 
diversion from both his prior years as an executive at a small 
Los Angeles bank and his subsequent stint at the DNC. The two 
constants in Huang's career at Lippo and forward were his 
relationships with the Riadys and the Democratic party.
    By all accounts, Huang and the International Trade 
Administration were not a good match. Huang's tenure as a 
political appointee at Commerce makes clear that he held a job 
he was ill-prepared to handle and received it at least in part 
because of his demonstrated fund-raising prowess. Huang was 
shut out of substantive policy work and was specifically 
prohibited from working in the area where he held the most 
interest--China. As a result, there is little among the several 
hundred thousand pages of documents produced by the Commerce 
Department to the Committee that evidence Huang's mark on 
policy matters. Likewise, Huang's colleagues in the ITA could 
point to almost no policy matters on which Huang worked. As one 
of them testified, Huang was ``as uninvolved a player'' as he 
had seen in his ten years at the Department.284 
Indeed, the clearest record of Huang's activity at Commerce 
might well relate to his fund-raising. Information developed by 
the Committee strongly suggests that Huang raised money for the 
DNC at Commerce in violation of the Hatch Act.
    \284\ Neuschatz deposition, p. 17.
    Huang's job at Commerce included largely administrative 
duties. But the ITA had an administrative office separate and 
in addition to the departmental office of administration. And 
the head of the ITA administrative office graded Huang's 
handling of administrative matters a ``low C.''
    What did Huang do at the Commerce Department? One answer 
might provide a clue as to why Huang sought and took the 
position. Huang saw a great deal of classified, business 
proprietary, and other valuable material. From regular 
intelligence briefings, to daily classified cables, to ITA 
reports containing proprietary material on any number of 
businesses, Huang had access to very sensitive information. 
Although the Committee found no direct evidence that Huang 
passed any such information to his former employers or anyone 
else, he clearly had the opportunity to do so. Huang made 
frequent use of a spare office at Stephens D.C., which was 
located across the street from Commerce headquarters. There, 
Huang had free and unmonitored access to a telephone, copier, 
and fax machine. He also received mail and packages there, but 
precisely what is not known.
    At bottom, Huang's stint at Commerce is difficult to 
understand. The Committee attempted meticulously to reconstruct 
what Huang did there in the hopes of determining why he sought 
the position and what he hoped to accomplish in accepting it. 
Ultimately, and only after attempting to retain his top secret 
security clearance, Huang quietly left Commerce for a position 
more suited to his qualifications, at the DNC.

               John Huang Moves From Commerce to the DNC

    This section of the report summarizes John Huang's movement 
from the Department of Commerce to the DNC. In examining the 
hiring of Huang, at least three important themes arise that are 
revisited later in the 1996 campaign fund-raising matter. 
First, there is evidence that the President of the United 
States personally played a central role. President Clinton not 
only spoke to Huang and others about the potential of raising 
money in the Asian-American community, but the President 
recommended to the DNC that it hire Huang. Second, there is 
evidence that even before his hiring, DNC officials were 
concerned that Huang might not comply with federal campaign 
finance laws, and thus they insisted on an unprecedented, 
individualized training session with the DNC's general counsel. 
These concerns may have been prompted, in part, by DNC 
officials' probable knowledge that Huang had violated the Hatch 
Act while he was an employee of the Department of 
Commerce.1 Third, despite these concerns, the DNC 
established a structure that could promote fund-raiser abuses, 
in part by offering Huang an incentive bonus for raising large 
amounts of money.
    \1\ While Huang was still at the Commerce Department, he solicited 
contributions for the DNC, thereby violating the Hatch Act. Recognizing 
this violation of the law, the DNC tried to protect Huang by falsely 
attributing contributions to his wife, Jane Huang. Certain DNC 
officials, including Deputy National Finance Director David Mercer, 
were probably aware of Huang's illegal fund-raising and helped conceal 
it by using Jane Huang's name, rather than John Huang's, for tracking 
DNC contributions solicited by John Huang. See the section of this 
report concerning Huang's fund-raising at the Commerce Department.
    In compiling information on this topic, the Committee's 
task was made significantly more difficult by Huang's refusal 
to cooperate. Without his testimony, the Committee has been 
forced to piece together the specifics of Huang's move to the 
DNC from various sources. Many of the witnesses provide only 
partial information and claim not to have much recollection of 
specific events or dates. Some of the witnesses provide 
conflicting testimony. Moreover, there is very little 
documentary evidence on this topic. The Committee has received 
only a few relevant calendars or phone logs and a handful of 
meeting notes.

                     The DNC Is Asked to Hire Huang

    C. Joseph (``Joe'') Giroir has known the President and 
First Lady since the mid-1970s, when Hillary Rodham Clinton 
joined the Rose Law Firm in Little Rock, Arkansas.2 
Giroir was the Managing Partner of the Rose Firm and was 
credited with a great deal of its growth in the 1970s and 
1980s.3 He was also one of the first securities 
lawyers in Arkansas, and helped take public some of Arkansas' 
best-known companies, such as Tyson Foods, Wal-Mart, Inc., and 
Beverly Enterprises.4
    \2\ Deposition of C. Joseph Giroir, Jr., April 30, 1997, p. 26
    \3\ Id. at p. 11.
    \4\ Id.
    One of Giroir's biggest clients was Stephens Inc., a 
prominent investment banking firm in Little Rock. It was 
through Giroir's role as attorney for Stephens that he first 
met Mochtar and James Riady.5 In 1978, Mochtar Riady 
hired Stephens to assist in the Lippo Group's acquisition of an 
American banking institution. In 1983, Giroir and Stephens 
helped the Riadys acquire a controlling interest in Worthen 
Banking Corporation, a bank holding company based in Little 
Rock.6 As a result of that acquisition, Giroir and 
Mochtar Riady became members of the board of directors of 
Worthen Bank and James Riady was named the bank's 
president.7 Giroir also first met John Huang during 
this period, after James Riady hired Huang to serve as the 
bank's vice president.8
    \5\ Id. at p. 32.
    \6\ Id. at pp. 33-34.
    \7\ Id. at pp. 37-38.
    \8\ Id. at p. 41.
    Giroir's business association with the Riadys and the Lippo 
Group ended in 1987 or 1988 after the Riadys sold their 
interest in Worthen Bank and moved Lippo's banking operation to 
the West Coast. Until early 1993, Giroir maintained a purely 
social relationship with the Riadys and spoke to them only two 
or three times a year.9
    \9\ Id. at pp. 47-48.
    Following the 1992 election of Bill Clinton, however, 
Giroir and the Riadys became very close business partners. Even 
though Giroir had never been an international businessman, he 
and the Riadys established several joint ventures designed to 
match Lippo with American companies that wanted to invest in 
East Asia. The first of these joint ventures was Arkansas 
International Development Corporation (``AIDC I''), which 
Giroir incorporated in Arkansas on April 20, 1993.10 
Giroir owned all of the stock of AIDC I, but the company was 
merely a nominee for an operating entity named Arkansas Joint 
Venture Company (``AJVC''). Giroir and P.T. Masindo, a 
subsidiary of the Lippo Group, jointly owned AJVC.11 
The Committee has learned that Lippo, acting through P.T. 
Masindo, provided all of the $50,000 capitalization for 
Giroir's company (AIDC I).12 In addition, between 
1993 and 1995, Lippo funded all the developmental expenses for 
the joint venture, including entertainment and travel expenses. 
Giroir estimated that these expenses totaled $300,000 to 
$400,000 in 1993, $400,000 to $600,000 in 1994, and $600,000 to 
700,000 in 1995.13 Giroir testified that he also 
performed services for Lippo for which he was compensated 
outside of the joint venture. Giroir indicated that, in the 
aggregate, he received roughly $500,000 per year in 
compensation from Lippo.14
    \10\ Id. at p. 15.
    \11\ See Id. at pp. 16-20.
    \12\ Id. at pp. 15-16.
    \13\ Id. at pp. 15-19. Giroir testified that these developmental 
expenses also included personal loans that he was authorized to take 
from the joint venture and that the largest of these loans was 
$350,000. He indicated that he has since paid the joint venture back 
for those loans and currently owes approximately $50,000. Id. at p. 19.
    \14\ Id. at pp. 17, 19.
    In 1995, Giroir incorporated a second joint venture with 
the Lippo Group in the Cayman Islands, Arkansas International 
Development Corporation, II (``AIDC II'').15 P.T. 
Masindo, the Lippo subsidiary, again provided essentially all 
of the start-up capital for the joint venture. In exchange for 
Giroir providing AIDC II all of his rights to the assets of 
AIDC I, the Lippo subsidiary agreed to fund AIDC II with $1 
million in 1995, $1 million in 1996 and $500,000 in 
1997.16 AIDC II, and therefore Lippo, paid Giroir a 
salary of $360,000 per year. In addition, Lippo gave Giroir the 
authority to take a discretionary bonus whenever he 
    \15\ Id. at p. 20.
    \16\ Id. at pp. 20-21. Giroir testified that he contributed only 
$30,000 to the initial capitalization of AIDC II. Id. at p. 20.
    \17\ Id. at p. 21.
    Through Giroir and AIDC II, Lippo attempted to gain 
influence by hiring people with access to the Clinton 
Administration. For example, on May 23, 1995, AIDC II hired 
Paul Barry, an old friend of President Clinton's from Little 
Rock, who was a registered lobbyist in Washington, 
D.C.18 Giroir ostensibly hired Barry to ``seek out 
and make preliminary investigations concerning business deals 
that people he had contact with desired to enter into . . . to 
enter the Asian market.'' 19 Giroir testified, 
however, that AIDC II never entered a joint venture with a 
company sponsored by Barry. Nevertheless, Lippo--through AIDC 
II--paid Barry a $7,000 per month retainer from July 13, 1995 
until January of 1997.20
    \18\ Id. at p. 228.
    \19\ Id. at p. 229.
    \20\ Id. at pp. 229-31. In 1997, Giroir reduced Barry's retainer to 
$2,000 per month. Id.
    Similarly, in July 1995, Lippo hired--through AIDC II--Mark 
Middleton.21 From January 1993 until February 1995, 
Middleton served as Special Assistant to President Clinton and 
Deputy to White House Chief of Staff, Thomas ``Mack'' McLarty. 
After Middleton established his own international business 
consulting firm, Commerce Corp. International, AIDC II hired 
Middleton to perform the same prospecting function for which 
Barry had been hired. Lippo paid Middleton a retainer of 
$12,500 per month.22 As with Barry, AIDC II never 
consummated a joint venture with any of the clients that 
Middleton recommended.23
    \21\ Id. at p. 232.
    \22\ Id. at p. 234.
    \23\ Id. at pp. 234-35.
    During the summer of 1995, Huang spoke to Giroir about his 
desire to become more involved in the fund-raising for the 
Presidential campaign. Giroir summarized, ``I don't remember 
the exact evolution of the conversation, but it was that he 
[Huang] was unhappy, would like to be involved in the fund-
raising aspect of the campaign and thought that he would be 
more effective, and either he asked or I volunteered to help 
him try to make a move to an appropriate position.'' 
    \24\ Id. at p. 76.
    Giroir followed through, contacting his friend from 
Arkansas, Truman Arnold. At that time, Arnold, who is a 
successful businessman and longtime friend of President 
Clinton, was the Finance Chairman of the Democratic National 
Committee. During their meeting, which took place in June or 
July 1995, Giroir recommended to Arnold that the DNC hire Huang 
as a fund-raiser specializing in the Asian-American 
community.25 Giroir told Arnold that there was a 
``reservoir of support in the Asian American community . . . 
[that] could also be translated into financial support'' and 
that Huang was the person to coordinate it.26 Arnold 
remembered the meeting differently, testifying that Giroir just 
mentioned that Huang would be available to assist the DNC as a 
volunteer, but saying nothing about fund-raising in the Asian-
American community.27 Regardless of whether the 
Asian-American community was discussed, Arnold thought that it 
was important enough to pass information about Huang on to Don 
Fowler, National Chairman of the DNC, and Richard Sullivan, 
National Finance Director of the DNC.28
    \25\ Id. at p. 77.
    \26\ Id.
    \27\ Deposition of Truman Arnold, May 16, 1997, pp. 163-65.
    \28\ Deposition of Richard Sullivan, June 4, 1997, pp. 216-17; 
Arnold deposition, p. 166.
    Giroir subsequently learned that Arnold had resigned his 
DNC position, and in August 1995, he visited Fowler in 
Washington, D.C.29 Giroir informed Fowler about his 
previous discussion with Arnold, and requested to speak to the 
new DNC finance chairman as soon as one had been 
selected.30 During a 15 minute meeting with Fowler 
and Sullivan in Fowler's office, Giroir pointedly advocated 
that the DNC hire Huang as a fund-raiser, mentioning Huang's 
successful fund-raising during the 1992 campaign.31 
Sullivan had the clear sense that Giroir had come to Fowler's 
office for the sole purpose of recommending that the DNC hire 
Huang.32 Despite Giroir's presentation, Fowler did 
not commit to hiring Huang and told Giroir that they would 
think about it.33 Sullivan explained in his 
deposition that Fowler's noncommittal response to Giroir's 
proposal may have been motivated by Fowler's personal feelings 
towards Giroir.34
    \29\ Giroir deposition, p. 108.
    \30\ Id. at pp. 108-109.
    \31\ Deposition of Richard Sullivan, June 4, 1997, pp. 212-216.
    \32\ Id. at pp. 213-214.
    \33\ Deposition of Don Fowler, May 21, 1997, p. 170.
    \34\ Deposition of Richard Sullivan, June 4, 1997, p. 219.
    Sullivan's characterization of Fowler's reaction to Giroir, 
while not particularly significant, is a good example of the 
difference in tone and substance between Sullivan's deposition 
testimony and his hearing testimony. In his deposition, 
Sullivan testified that Giroir was ``too strong in his 
recommendation, and it just rubbed Don the wrong way.'' 
35 Sullivan also testified that Fowler told him that 
he did not like Giroir.36 However, in his hearing 
testimony, Sullivan told a different story. Sullivan first 
characterized Giroir's presentation as a ``soft sell'' rather 
than a ``hard sell.'' 37 He then said that Fowler 
took Giroir's presentation ``in stride.'' 38 Asked 
directly if Fowler felt that Giroir was ``too strong in his 
recommendation,'' Sullivan avoided giving a direct answer. He 
    \35\ Id.
    \36\ Id.
    \37\ Testimony of Richard Sullivan, July 9, 1997, p. 17.
    \38\ Id. at p. 18.

          He--I would say that he--he just wasn't enthu--he 
        just wasn't--wasn't enthusiastic. I wouldn't say that--
        Mr. Giroir had a very direct manner about him, and I 
        think that I would characterize it as Mr. Giroir was 
        very direct and to the point. And that may have thrown 
        Chairman Fowler a little bit, but I wouldn't say that--
        I would say that he was--I would just say that he took 
        it in stride and said we'll look into it.39
    \39\ Id.

    Later in his hearing testimony, Sullivan was confronted 
with his deposition testimony. Only then did Sullivan 
acknowledge that ``the pushing of Mr. Giroir in that meeting 
was pretty strong.'' 40
    \40\ Id. at p. 148.
    On September 13, 1995, two important meetings occurred 
regarding Huang moving to the DNC. In the morning, Giroir 
hosted a meeting between James Riady, the head of Lippo Group, 
and Fowler at Riady's suite at the Four Seasons Hotel in 
Washington, D.C. Fowler was accompanied by Sullivan. There is 
some disagreement about whether Huang attended. Giroir stated 
that Huang was not at the meeting.41 However, 
Sullivan believed that Huang was present, recalling that Huang 
stood in the back of the room.42 Fowler concurred, 
testifying that he was ``almost certain'' that Huang was 
    \41\ Giroir deposition, p. 135.
    \42\ Deposition of Richard Sullivan, June 4, 1997, p. 241.
    \43\ Fowler deposition, p. 186.
    According to Giroir, the purpose of the meeting was for 
Riady to ``get to know and intermix'' with Fowler.44 
Sullivan testified that the meeting was ``clearly between Don 
and James [Riady] . . . my interpretation was that James wanted 
to get to know Don; that he thought Don was a player.'' 
    \44\ Giroir deposition, p. 131.
    \45\ Deposition of Richard Sullivan, June 4, 1997, p. 241.
    While introductions may have been one purpose of the 
meeting, much of the discussion in Riady's suite revolved 
around fund-raising--both the need for the DNC to raise money 
for its upcoming advertising campaign and about untapped Asian-
American support for the Democratic Party. Fowler indicated 
that the DNC had ``an immediate need to raise money.'' 
46 Giroir recalled that Fowler mentioned a DNC 
advertising campaign that was going to cost more than $5 
million.47 In addition, Giroir testified that they 
had a 15-20 minute conversation in which both he and Riady 
expressed their view that ``there was a reservoir of support in 
the Asian-American community, votes as well as financial 
support, and that if they could focus their attention on that 
reservoir, that it would be beneficial to the Democratic 
Party.'' 48 Giroir told Fowler that he believed that 
Huang would be the person best able to ``orchestrate'' the 
Asian-American effort.49 Fowler did not recall much 
about the meeting, except that it was a ``pleasant meeting'' 
and that Giroir expressed his desire that the DNC hire 
Huang.50 Fowler testified that he was noncommittal 
about hiring Huang, since the DNC did not have any openings at 
that time.51
    \46\ Giroir deposition, pp. 135-136.
    \47\ Id. at pp. 136-37.
    \48\ Id. at p. 97.
    \49\ Id. at p. 98.
    \50\ Fowler deposition, p. 170.
    \51\ Id.
    In the late afternoon of September 13, Giroir, the Riadys, 
and Huang met with President Clinton and Bruce Lindsey in the 
Oval Office.52 The meeting lasted for about 20 
minutes.53 Giroir described the meeting as a social 
call, and said that he could not recall any of the topics 
discussed during the meeting.54 Giroir testified, 
for instance, that he did not hear any discussion about DNC 
fund-raising, but also acknowledged that the meeting was 
``bifurcated [with] different people talking to different 
people.'' 55
    \52\ Deposition of Bruce Lindsey, July 1, 1997, pp. 106-107; Giroir 
deposition, pp. 78-79. Giroir's unusual account of how he arranged this 
meeting bears noting. According to Giroir, several days before the 
meeting, he attended some White House event and, while shaking the 
President's hand, informed him that James and Eileen Riady were part of 
an Indonesian trade group that would be in Washington, and that the 
President may want to visit with them. Clinton asked Giroir to call 
Nancy Hernreich, the President's secretary, and schedule such a visit, 
if possible. Giroir did so, and, on the day of Riady's visit to 
Washington, was able to get a visit scheduled. Giroir then called the 
Riadys, who was staying at the Four Seasons, and drove over to pick 
them up for the meeting. John Huang just happened to be in the Four 
Seasons' lobby, and he accompanied the group to the Oval Office 
meeting. See Giroir deposition, pp. 79-86; 110-17.
    \53\ Schedule of the President, September 13, 1995 (Ex. 1).
    \54\ Giroir deposition, p. 87.
    \55\ Id. at pp. 89-90.
    Lindsey, who was the only other meeting participant deposed 
by the Committee, stated that the only thing that he could 
remember about the Oval Office meeting was that ``something was 
said'' about Huang's desire to leave the Commerce Department 
and move to the DNC.56 Either Riady or Huang 
indicated that he thought that Huang ``could do a good job at 
the DNC, [p]rimarily . . . working with the Asian-Pacific 
American community.'' 57 Lindsey recalled that 
during the discussion about Huang moving to the DNC, the 
``President indicated that it sounded like a good idea to 
him.'' 58
    \56\ Lindsey deposition, p. 114.
    \57\ Id. at p. 115.
    \58\ Id. at p. 118.
    Lindsey's recollection that Huang or Riady told the 
President about Huang's desire to move to the DNC is backed up 
by Huang himself. In October 1996, Huang had a conversation 
with DNC General Counsel Joe Sandler about this September 13, 
1995 White House meeting. Sandler testified, ``[Huang] 
indicated to me that the basic purpose of the meeting was to 
visit, social in nature, and that the main substantive point 
that he recalled being discussed--he gave me the impression 
that the point that Mr. Riady wanted to convey to the President 
was . . . that Mr. Huang's abilities were being wasted at 
Commerce. In effect, he [Riady] said something to the effect 
that he was a pencil pusher and that he should be utilized in 
some other way.'' 59
    \59\ Deposition of Joseph Sandler, May 30, 1997, p. 21.
    Either on his own, or prompted by the President, Lindsey 
called Huang the next day. After asking Huang if he really 
wanted to move to the DNC, Lindsey scheduled a meeting with 
Huang for the following day, September 15.60 The 
meeting occurred at the White House from about 11:00 to 11:30 
a.m.61 Lindsey again asked Huang if he wanted to 
leave Commerce and go to the DNC. Lindsey testified that 
``[Huang] said yes. Well he said if that's where the President 
thinks I would be the most good, you know, do the most good, 
and I said well, John, that's not my question. I'm trying to 
find out what you want, you know, where you want to go, and he 
said yes, he did want to go.'' 62 Lindsey recalled 
that ``John may have indicated at some point that he thought he 
could raise money in the Asian-Pacific community . . . It was 
just one of the talents he thought he had and one of the things 
he thought he could bring to the DNC.'' 63 Lindsey 
also said that he could not recall whether James Riady's name 
came up, but opined, ``it's hard to imagine that somehow James' 
name wouldn't have come up.'' 64 Before the end of 
the meeting, Lindsey told Huang that he would mention this 
conversation to White House Deputy Chief of Staff Harold 
    \60\ Lindsey deposition, pp. 120-123.
    \61\ Entry Report Electronic Mail to Bruce Lindsey, September 15, 
1995 (Ex. 2).
    \62\ Lindsey deposition, pp. 122-23.
    \63\ Id. at p. 129.
    \64\ Id. at p. 123.
    \65\ Id. at p. 124.
    Afterwards, Lindsey went to see Ickes and told him that 
Huang ``had indicated an interest in going to the DNC.'' 
66 At the same time, Ickes was also hearing about 
Huang's interest from the President. According to Ickes, at 
around the same time, September 1995, the President 
specifically mentioned that he had spoken to Huang. Ickes 
remembered the President telling him that Huang was ``prepared 
to go to work at the DNC or the Reelect, wherever the President 
or any of his people felt that he could be best used.'' 
67 According to Ickes, the President then asked 
Ickes ``to follow up on it with John Huang.'' 68 
Following those instructions, Ickes called Huang and set up a 
meeting at the White House for October 2, 1995.
    \66\ Id.
    \67\ Deposition of Harold Ickes, June 26, 1997, p. 115.
    \68\ Id.
    Meanwhile, Giroir continued to push for Huang's move to the 
DNC. After learning that Marvin Rosen would be the new DNC 
Finance Chair, Giroir had Middleton set up a meeting with 
Rosen. Rosen recalled that Middleton called him and asked if he 
``would meet with him and a person who was possibly interested 
in helping the DNC raise some money.'' 69 They set 
up a meeting for September 26, 1995.
    \69\ Deposition of Marvin Rosen, May 19, 1997, p. 129.
    In the afternoon before the Rosen meeting, Giroir made an 
impromptu visit to the DNC to see Fowler.70 Fowler 
had only a vague recollection of the meeting, stating that they 
discussed ``the possibility of [Giroir's] making a 
contribution, and while I have no specific clear memory, I 
think we probably discussed Mr. Huang again.'' 71 
Giroir's follow-up letter to Fowler mentions ``pending 
matters'' and also assures Fowler that when Fowler's daughter 
travels to Indonesia, the Riadys' Lippo Group ``would like to 
host her and give her whatever assistance possible.'' 
    \70\ Schedule for Don Fowler, September 26, 1995 (Ex. 3); Fowler 
deposition, pp. 184-185.
    \71\ Fowler deposition, p. 186.
    \72\ Letter from Joseph Giroir to Don Fowler, September 27, 1995 
(Ex. 4). Fowler did not remember talking with Giroir about the Lippo 
Group. Fowler deposition, p. 182.
    Later that day, Giroir, Middleton, and Huang met Rosen in 
the lobby of the Willard Hotel in Washington D.C. At the 
meeting, which Rosen said lasted about 15-20 minutes, Giroir 
repeated his pitch about Huang.73 Rosen testified 
that he was told, ``that [Huang] had been helpful in '92, and 
that [he] had various connections in the Asian-American 
community that he felt he could be very helpful in getting 
money from.'' 74 Rosen recalled that Huang said very 
little during this meeting.75 Giroir followed this 
meeting with a letter, dated September 27, 1997, reiterating 
his belief that Huang ``would be an excellent selection for an 
assistant to you.'' 76
    \73\ Giroir deposition, p. 103.
    \74\ Rosen deposition, p. 134.
    \75\ Id. at p. 135.
    \76\ Letter from Joseph Giroir to Marvin Rosen, September 27, 1995 
(Ex. 5).
    On October 2, 1995, Ickes met with Huang at the White 
House. While Ickes recalled that the meeting lasted ``at the 
most 10 to 15 minutes,'' WAVES records show that Huang was in 
the White House for about an hour, from 3:22 p.m. to 4:21 
p.m.77 Ickes testified that Huang talked about his 
background, and indicated that he would go to the DNC or the 
Clinton/Gore campaign, whichever Ickes thought was best. Ickes 
said that ``given the nature of the situation, it was probably 
better for him to go to the DNC.'' 78 Ickes and 
Huang also talked about Huang's current Commerce salary and the 
fact that a DNC salary would be significantly lower. Huang, 
according to Ickes, ``did not seem concerned about salary.'' 
79 Ickes testified that he had no recollection of 
any discussion with Huang about a bonus for raising more than a 
certain amount of money.80
    \77\ WAVES records for John Huang, October 1995 (Ex. 6); Deposition 
of Harold Ickes, June 26, 1997, p. 117.
    \78\ Deposition of Harold Ickes, June 26, 1997, p. 118.
    \79\ Id. at p. 120.
    \80\ Id.
    According to Ickes' notes of this meeting, Huang told him 
that he had already met with Rosen.81 Huang was 
likely referring to the September 26 meeting at the Willard 
Hotel. Ickes explained to Huang that he would call both Rosen 
and Fowler and tell both of them that Huang was interested in 
coming to the DNC. Ickes testified that he is sure he spoke to 
Rosen but cannot recall if he successfully reached Fowler. 
According to Ickes, ``I am confident I talked to Marvin because 
I think I recall Marvin saying to me that he knew John Huang 
and thought that he would be a real asset in dealing with Asian 
Americans, both from a political point of view as well as 
raising money.'' 82 Rosen also remembers his 
conversation with Ickes, stating, ``He [Ickes] asked me if I 
would interview John Huang.'' 83 Rosen recalled that 
Ickes might have indicated that he had already called Fowler 
about Huang.84
    \81\ Notes of Harold Ickes, October 2, 1995 (Ex. 7).
    \82\ Deposition of Harold Ickes, June 26, 1997, pp. 125-26.
    \83\ Rosen deposition, p. 138.
    \84\ Id.
    After his meeting with Huang, Ickes reported back to the 
President. Ickes could not remember whether he made a ``formal 
report,'' but he ``undoubtedly said to [the President], look I 
met with John, he's interested in going over there . . . he's 
working it out.'' 85
    \85\ Deposition of Harold Ickes, June 26, 1997, p. 128.
    During the latter half of October 1995, Rosen had a number 
of conversations with Middleton about Huang. According to a 
letter from Middleton to Giroir, dated October 19, 1995, Rosen 
called Middleton on October 18 and asked about Huang's starting 
date.86 In the letter, Middleton characterized his 
conversation with Rosen as follows: ``In short, it appears that 
the arrangement is moving forward and there is strong interest 
in John becoming a part of the team.'' Middleton also informed 
Giroir that he had relayed the inquiry to Huang, who was 
``going to call Marvin.'' 87 A few days after that 
conversation, on Monday, October 23, Middleton called Rosen at 
the DNC, leaving a message that he would like to set up a 
meeting between himself, Rosen, Giroir, and Huang.88 
According to Rosen's DNC call sheet, the meeting was set for 
Middleton's office on October 24.89 Rosen testified 
that he recalled being in Middleton's office, but does not know 
if it was for this meeting.90 Rosen also stated that 
he does not remember meeting Giroir a second time and he is not 
sure if he met Huang a second time before Huang's coming to the 
    \86\ Letter from Mark Middleton to Joe Giroir, October 19, 1995 
(Ex. 8).
    \87\ Id.
    \88\ Rosen call sheet, October 24, 1995 (Ex. 9).
    \89\ Id.
    \90\ Middleton refused to cooperate with the Committee's 
investigation, and asserted his Fifth Amendment privilege against self-
incrimination in refusing to testify, so his memory of events could not 
be probed.
    \91\ Rosen deposition, pp. 156-57.
    By early November 1995, the DNC had still not hired Huang, 
nor had Huang come to the DNC for any type of formal job 
interview. That all changed very quickly. On November 8, 1995, 
the DNC held a fund-raising event at the Historic Car Barn in 
Washington D.C. During that event, President Clinton asked 
Rosen about Huang's status.92 Rosen told the 
Committee that when he responded to the President that the DNC 
was in the process of interviewing Huang, the President said 
something to the effect of ``good'' or ``Huang comes highly 
recommended.'' 93 In his deposition, Rosen testified 
that he had a brief conversation with the President about 
Huang. Asked whether the President ``spoke approvingly about 
Mr. Huang,'' Rosen replied, ``I believe as part of a 
conversation, [the President said] something along the lines 
that he come highly recommended or something, but I did believe 
that it was an approving comment at the time.'' 94 
Rosen immediately told Fowler and Sullivan about the 
President's comment.95
    \92\ Don Van Natta, ``President Is Linked to Urgent Enlisting of 
Top Fund-Raiser,'' New York Times, July 7, 1997, p. A1. In his 
deposition, Rosen could not recall exactly where the event was at which 
the President inquired about Huang. Rosen deposition, p. 140.
    \93\ Memorandum of Interview of Marvin Rosen, April 25, 1997, p. 
    \94\ Rosen deposition, p. 141.
    \95\ Deposition of Richard Sullivan, June 4, 1997, p. 222.
    While the President had already mentioned Huang's hiring to 
Lindsey and Ickes, this appeared to be the first time that he 
had communicated directly with DNC officials. According to 
Fowler, Rosen said that the White House was in favor of the DNC 
hiring Huang.96 As would be expected, the 
President's interest brought the immediate attention of 
Sullivan and Fowler.97 Fowler instructed Rosen and 
Sullivan to bring in Huang for an interview.98 
According to Sullivan, this response from Fowler appeared to be 
a change of heart from his earlier position with respect to 
Huang. Sullivan described how when Rosen had previously brought 
up Huang's name after Ickes had called, Fowler had said ``I 
didn't like that guy Giroir.'' 99 Sullivan inferred 
that Fowler had not wanted to hire Huang because he did not 
like Giroir.100 That all changed after the 
President's personal interest became even clearer.
    \96\ Fowler deposition, p. 188.
    \97\ Deposition of Richard Sullivan, June 4, 1997, pp. 222-223.
    \98\ Id. at p. 223.
    \99\ Id. at p. 222.
    \100\ Id.
    It appears that one day after the President made his 
comment about Huang, Rosen called Huang to arrange an 
interview. According to Rosens call sheets, Rosen received a 
phone message from Huang on November 9, 1995.101 
Rosen explained that he called Huang to set up an interview, 
and that is what the November 9 phone call was probably 
about.102 On November 13, 1995, Huang came to the 
DNC and met with Rosen and Sullivan.103 Rosen 
testified that the meeting lasted about a half 
hour.104 When asked in his deposition what was said 
at the meeting, Rosen responded, I don't recall specifically 
what was said, but we went into the--Mr. Huang's coming to the 
DNC and fund-raising for the DNC, and I believe what was said 
to Mr. Huang was a reiteration that in mine and Mr. Sullivan's 
mind that neither of us had the ability to offer him a job and 
that decision had to be made by Mr. Fowler.'' 105 
Rosen did not describe the meeting in any greater detail. 
Fowler wasted no time following the interview. According to 
Sullivan, Fowler made a decision on the same day, November 13, 
1995, to hire Huang.106 Huang formally started at 
the DNC about three weeks later.107
    \101\ Rosen Call Sheet, November 9, 1995 (Ex. 10).
    \102\ Rosen deposition, p. 153.
    \103\ Testimony of Richard Sullivan, July 9, 1997, p. 101.
    \104\ Rosen deposition, p. 141.
    \105\ Id.
    \106\ Testimony of Richard Sullivan, July 10, 1997, p. 108.
    \107\ The precise date on which Huang started working for the DNC 
is in dispute; in any event, it appears that Huang started working as a 
fund-raiser for the DNC prior to leaving the Commerce Department's 
payroll. See the section of this report on Huang's fund-raising at the 
Commerce Department.
    Even before Huang became a part of the DNC fund-raising 
team, senior officials of the DNC had concern about Huang's 
ability to understand and comply with the various fund-raising 
guidelines. Sullivan traced his nervousness about Huang to a 
few different factors. He recalled that in 1992, an Asian 
individual had embarrassed the Republican National Committee by 
borrowing $500,000 and then donating it to the RNC in order to 
sit next to President Bush at an event.108 When 
pressed during his deposition, Sullivan also stated that his 
previous dealings with another Asian-American donor, Johnny 
Chung, had made him ``nervous.'' 109 Sullivan 
explained that in March 1995, Chung ``showed up at the DNC and 
. . . said that he would make a contribution to us of $50,000 
if I would get he and five members of his entourage into a 
radio address with the President. They were all from China . . 
. I had a sense that he might be taking money from them and 
then giving it to us, you know. That was my concern. So I 
said--I said--I said I wouldn't do it.'' 110 
Sullivan linked the Chung incident to Huang, in part, because 
Sullivan remembered that he had heard Chung mention Huang's 
name and so he assumed that the two men knew each 
    \108\ Deposition of Richard Sullivan, June 4, 1997, p. 227.
    \109\ Id. at p. 228.
    \110\ Deposition of Richard Sullivan, June 4, 1997, pp. 228-29.
    \111\ Id. at pp. 229-30.
    In his deposition, Sullivan recounted that he rejected this 
offer from Chung despite the fact that the DNC had previously 
accepted, according to Sullivan, about $100,000 from Chung 
during the past year.112 As is described in another 
section of the report, Sullivan's principled stance regarding 
Chung was fruitless, as Chung simply bypassed Sullivan and used 
Chairman Fowler's office to get himself and his group into the 
radio address. Chung contributed $50,000 to the DNC at the time 
of the address, and ultimately contributed $366,000 to the DNC, 
all of which has been returned.113
    \112\ Id. at p. 228.
    \113\ See the section of this report on Johnny Chung.
    Sullivan apparently felt so strongly about his concerns 
that he communicated them to Rosen even before the two of them 
met with Huang. In his deposition, Rosen stated that he could 
not recall the substance of his conversations about Huang, nor 
did he identify any concerns about hiring him.114 
Notwithstanding Rosen's purported lack of memory, Sullivan 
recalled that Rosen himself enunciated another concern about 
Huang--that he was coming from the Commerce Department. 
According to Sullivan, ``Ron Brown was an aggressive Commerce 
Secretary. There was always this criticism that we were getting 
about, you know, the ties between the DNC and Commerce . . . 
[M]y interpretation was Marvin had a sense that we need[ed] to 
be careful with somebody coming from Commerce, also.'' 
115 Accordingly, Sullivan proposed, and Rosen 
agreed, that Huang should have an extensive training session 
with the DNC's general counsel, Joseph Sandler.116
    \114\ Rosen deposition, pp. 141-43.
    \115\ Deposition of Richard Sullivan, June 4, 1997, p. 235.
    \116\ Id. at p. 230.
    When Huang came to the DNC for his November interview, 
Sullivan communicated this proposal to Huang. Sullivan 
explained, ``In that very meeting, I also vividly remember--I 
think I said, John, the first thing we want--if you should come 
to work here, the first thing we want to do is sit down and 
have an extended training and briefing period for a number of 
hours with our counsel, Joe Sandler, as to what's right, what's 
wrong, what's appropriate, what's inappropriate, what's legal, 
what's illegal, and I want you to work with Joe to be careful 
on that front.'' 117
    \117\ Id. at pp. 226-27.
    Sullivan further testified, ``We talked then and there 
about it--if you [Huang] had any question, you know, please 
work closely with Joe Sandler. I mean, Marvin and I both had a 
sense that--that he needed to be trained well and needed to 
be--you know, that an--Asian effort both made us a little 
nervous at that point.'' 118 When asked in his 
deposition, ``Was it unusual for you to make such a big point 
about a new fund-raiser being--needing to have extensive 
training and discussions with the general counsel?'' Sullivan 
responded, ``Yes.'' 119
    \118\ Id. at p. 227.
    \119\ Id. at p. 228.
    When asked about his concerns about Huang, Sullivan yet 
again was much less forthcoming in his hearing testimony than 
he had been in his deposition testimony. During his hearing 
appearance, Sullivan stated that he was not concerned about 
Huang's potential actions in raising illegal contributions, and 
that his request for ``special training'' was motivated by 
other reasons.120 Asked to describe those other 
reasons, Sullivan simply stated that Huang did not have ``full-
time experience raising money on a professional level.'' 
121 It was only later in his testimony, after being 
confronted with his deposition transcript, that Sullivan 
acknowledged that he was concerned about Huangs understanding 
of the law.122 Sullivan also admitted at that point 
that the incident with Chung had played a role in his 
insistence on training for Huang.123
    \120\ Testimony of Richard Sullivan, July 10, 1997, p. 45.
    \121\ Id. at p. 46.
    \122\ Id. at p. 68.
    \123\ Id. at p. 70.
    In any event, Rosen and Sullivan then met with Fowler in 
order to discuss the Huang situation. Once again, Rosen 
testified that he could not recall the 
conversation.124 According to Sullivan, the 
conversation was primarily between Rosen and Fowler, with 
Sullivan listening.125 Sullivan testified that Rosen 
explained to Fowler that both Sullivan and he felt that it was 
worth giving Huang ``a shot.'' 126 Rosen also told 
Fowler that ``the first thing he wanted [Huang] to do was to 
sit down and have an extensive training session with a lawyer, 
lawyers.'' 127 Fowler, who according to Sullivan, 
shared some of their concerns about Huang, agreed with that 
    \124\ Rosen deposition, pp. 142-43.
    \125\ Deposition of Richard Sullivan, June 4, 1997, p. 233.
    \126\ Id.
    \127\ Id.
    \128\ Id. at p. 234.
    Fowler met personally with Huang, and then told Sullivan 
that the DNC should make the formal offer to 
Huang.129 Once again, Huang came to the DNC to meet 
with Rosen and Sullivan.130 At this meeting, the DNC 
confirmed the specifics of Huangs compensation and title. There 
was also more discussion about the need for Huang to meet with 
Sandler. Sullivan testified that Rosen and he told Huang, ``We 
want you to have extensive discussions as to what's legal and 
what's illegal, what kind of legal contributions you can take 
and what's illegal, what's appropriate, what's inappropriate. 
And we want you to--anything--if there is any kind of--you 
know, anything that has any possibility of a question to check 
with Joe. 131 According to Sullivan, Huang 
    \129\ Id. at pp. 236-37.
    \130\ Id. at pp. 237-38.
    \131\ Id. at pp. 239-40.
    \132\ Id. at p. 240. As will be discussed, Sullivan later confirmed 
that this private session never took place. Sandler, however, 
maintained that no one asked him to provide extensive training for 
Huang, nor did he ever do so.
    DNC Finance officials were harping on the need for Huang to 
have special, extensive training with Sandler; however, they 
also approved an arrangement that, at a minimum, encouraged 
Huang to cut corners in raising money. That arrangement 
included an incentive bonus if Huang was successful in raising 
money. Besides the troubling nature of this compensation 
package, the Committee finds it disturbing that no DNC official 
mentioned the incentive until Sullivan's deposition in early 
June 1997.
    The Committee deposed Rosen on May 19, 1997,133 
but Rosen said that he could not recall much of the substance 
of his November interview with Huang. However, a few weeks 
later, when the Committee took Sullivan's deposition, the 
Committee learned additional facts about this meeting, 
including details of Huang's compensation.
    \133\ Rosen had been interviewed by the Committee on April 9, 1997.
    In contrast to Ickes' testimony that Huang ``did not seem 
concerned about salary,'' 134 Sullivan remembered 
that Huang asked to be paid approximately what he was making at 
the Commerce Department.135 In response, Rosen 
offered Huang an incentive plan--that Huang would receive a 
base salary and then a bonus payment based on his success at 
raising money. Sullivan testified in his deposition:

    \134\ Deposition of Harold Ickes, June 26, 1997, p. 120.
    \135\ Deposition of Richard Sullivan, June 5, 1997, p. 6.
          Somehow it was his salary, potential salary was 
        discussed, and Marvin came up with the idea that of--
        John said that he wanted to be paid somehow, some way 
        be paid what he was making at Commerce. He didn't 
        mention exactly how much. Marvin said, well, what if 
        we--somehow they came to the consensus agreement that 
        he would be paid a salary of $60,000 and that if he 
        were successful at some point, he would be given a lump 
        sum payment of whatever needed to get him to his 
        Commerce Department salary.136
    \136\ Deposition of Richard Sullivan, June 4, 1997, p. 226.

    Sullivan understood that Huang was making between $80,000 
and $120,000 at Commerce and so the difference between those 
amounts and $60,000 (Huang's base DNC salary) would comprise 
the incentive portion of Huang's DNC compensation 
package.137 In other words, Huang would have an 
incentive component ``somewhere in the $50,000 to $60,000 
range'' if he was successful in raising money for the 
    \137\ Deposition of Richard Sullivan, June 5, 1997, p. 5.
    \138\ Id.
    Besides talking about salary, Rosen, Sullivan, and Huang 
discussed other issues relating to Huang's employment with the 
DNC at this November interview. Huang explained, for instance, 
that he wanted a ``special title, given his status, age, unique 
position.'' 139 Rosen testified that Huang ``felt he 
needed some credibility.'' 140 After some 
discussion, they all agreed that Huang would be the Vice 
Finance Chairman, a title created for Huang that no other DNC 
employee held.
    \139\ Id. at p. 226.
    \140\  Rosen deposition, p. 148.
    Following this meeting with Huang, Rosen informed Fowler 
about Huang's request for a special title and the details of 
Huang's incentive compensation package. Fowler approved both 
items.141 Sullivan admitted in his deposition that 
he thought it was ``little odd'' that Fowler approved Huang's 
compensation arrangement without any further 
discussion.142 Nevertheless, Sullivan did not say 
anything. He testified, ``It was above my head. I mean, what 
was I to say.'' 143 Huang returned to the DNC again, 
and the specifics of his compensation and title were 
confirmed.144 Sullivan indicated that the incentive 
portion of Huang's compensation package was never reduced to 
    \141\ Deposition of Richard Sullivan, June 4, 1997, pp. 235-36.
    \142\ Id. at p. 236.
    \143\ Id.
    \144\ Id. at pp. 237-38.
    \145\ Deposition of Richard Sullivan, June 5, 1996, p. 8.
    Confirmation of the existence of the incentive 
arrangement--and its importance to Huang--is shown by what 
occurred after Huang left the DNC. Even after the controversy 
burst and accusations swirled around Huang, he still sought to 
collect his lump sum payment. Sullivan testified, for instance, 
that in the ``past couple of months'' (referring to the months 
before Sullivan's June 1997 deposition), Sullivan heard from 
his former assistant Scott Freda that Huang was asking for his 
bonus payment. 146 Sullivan also recounted an 
inquiry from B.J. Thornberry, the Executive Director of the 
DNC, ``I remember her [B.J. Thornberry] calling down after John 
sort of went into hiding or whatever you want to--went 
underground--whatever you want to call it. She asked--I vaguely 
remember her asking me was there an agreement where he would 
get a--was there an agreement between he and Marvin where he 
would get a lump sum payment after the election. I said, yes.'' 
    \146\ Id. at p. 7. Freda still works at the DNC, and is currently 
the Chief of Staff of its Finance Division.
    \147\ Id.
    Sullivan changed his testimony concerning Huang's 
compensation between his deposition and his hearing appearance. 
In his deposition, Sullivan emphasized just how unusual was the 
incentive compensation arrangement. He volunteered that it was 
``unprecedented.'' 148 In his hearing testimony, 
however, Sullivan told a different story. First, he avoided 
confirming that Huang was the person who asked for the 
incentive arrangement, instead testifying that salary was not 
an issue for Huang, and that Rosen simply volunteered it ``out 
of respect to John's situation in life.'' 149
    \148\ Deposition of Richard Sullivan, June 4, 1997, p. 230.
    \149\ Testimony of Richard Sullivan, July 10, 1997, p. 64.
    Sullivan then downplayed the significance of the 
arrangement. He described it as ``merely that at some point 
later in the year, if things were working out, the DNC would 
pay him a share to get him up to whatever he was making at the 
Commerce Department.'' 150 Asked what ``working 
out'' meant, Sullivan avoided giving a direct answer. He 
testified, ``I didn't--I didn't--I'm not sure. You should ask--
Marvin made the agreement with him. I was an observer, and I'm 
not sure what exactly I [sic] meant.'' 151 Later, 
when he was asked directly if the arrangement was ``unusual,'' 
Sullivan ducked the question. He answered, ``Senator, you have 
to take it in larger context of which I touched upon, which was 
that salary wasn't important to John.'' 152
    \150\ Id. at p. 63.
    \151\ Id.
    \152\ Id. at p. 64.
    During the hearing, Sullivan also minimized his reaction to 
the salary structure. Asked if he was comfortable with the 
compensation package, Sullivan replied, ``I was--sure. I mean, 
it was not a common arrangement, but I was comfortable with 
it.'' 153
    \153\ Id. at p. 63.


    The circumstances surrounding Huang's hiring by the DNC 
were unusual. DNC officials were lobbied by close associates of 
the President, such as Giroir and Middleton, to hire Huang. 
Ultimately, the President himself intervened to help Huang move 
from the Commerce Department to the DNC, after meeting with 
Huang and James Riady, Huang's patron and long-time friend and 
supporter of the President.
    Top DNC officials were sufficiently concerned about the 
possibility that Huang's fund-raising could run afoul of the 
law that they requested special, individualized legal training 
for Huang. Whether this training occurred is a matter of 
controversy, as will be seen.
    Although prudently directing that Huang be given special 
training, DNC officials conferred an ``unprecedented'' 
incentive compensation package on Huang, one likely to 
encourage aggressive fund-raising. As will be seen, Huang was 
an extraordinarily aggressive fund-raiser who violated a 
variety of federal laws.

              John Huang's Illegal Fundraising at the DNC

    This chapter covers a number of events that occurred during 
John Huang's tenure at the DNC. It does not attempt to paint a 
comprehensive picture of Huang's activities at the DNC; rather, 
it illustrates some important points. First, as discussed 
previously, DNC Finance officials were concerned enough about 
Huang's potential to raise funds illegally that they insisted 
that he receive a personal training session from DNC General 
Counsel Joe Sandler. Although Richard Sullivan declares that he 
was informed that such training occurred, Sandler claims that 
no one ever asked him to provide such training, nor did he do 
so. These contradictory accounts are typical of the confusion 
and lack of responsibility or accountability in the DNC's fund-
raising operation.
    Second, the concerns about Huang were not just theoretical, 
but arose in reality as early as his first fund-raising event 
in February 1996. At that time, DNC Treasurer Scott Pastrick 
was concerned about foreign nationals at the event, and asked 
Sandler to review checks from it. Subsequently, the DNC 
returned two checks from the event in March 1996. These 
returns--which stood out on the DNC's Federal Election 
Commission report for the relevant time period--should have put 
DNC officials on notice that their early concerns about Huang 
had materialized quickly. Not only did the DNC ignore this 
warning sign, but DNC officials also did not volunteer any 
information about these early returns in this investigation. It 
was not until a few days before the opening of the Committee's 
hearings in July 1997--and months after the Committee had 
served the DNC with its subpoena--that the Committee received 
documentary evidence of the return of funds that Huang had 
raised in February 1996. Until July 1997, none of the DNC 
officials who had been deposed--such as Richard Sullivan, 
Marvin Rosen, or Joe Sandler--had mentioned anything about 
these returns.
    Third, Huang's solicitation and collection of a $250,000 
contribution from Cheong Am America in April 1996 should have 
provided even more warning signs for DNC officials. It was 
clear to anyone who cared enough to look that this contribution 
was illegal. Nevertheless, DNC officials were so obsessed with 
raising money that, at a minimum, they failed to ask obvious 
questions about the source of the money collected. The story of 
the Cheong Am contribution shows the unprofessional manner in 
which Huang operated. It also demonstrates the shameless 
selling of the President--as the DNC arranged a five minute 
photo-op in exchange for a quarter million dollar contribution.
    Fourth, DNC officials were uncomfortable with the guest 
list for a July 30, 1996 event organized by Huang. The guest 
list consisted of a small group of foreign nationals and the 
President. Nevertheless, DNC officials allowed the event to go 
forward. Only afterwards did they make the decision not to 
allow Huang to organize any more fund-raising events attended 
by the President.
    Fifth, Huang attempted to launder political contributions 
to the DNC. In August 1996, a time when there was significant 
pressure on Huang to perform, Huang approached a Washington 
area businessman and asked to use his organization to launder 
contributions, the source of which was not disclosed. Although 
Huang was rebuffed, and the deal was never consummated, the 
incident demonstrates how far Huang would go to raise money for 
the DNC.
    Finally, even at the conclusion of this investigation, 
there is still little known about what Huang did on a day-to-
day basis. The Committee deposed numerous people at the DNC, 
including Huang's supervisors, co-workers, and office-mates. 
These individuals claimed to have little or no interaction with 
Huang, and in any event, shed little light on what he did every 
day. Huang did not have an assistant or a secretary, nor did he 
leave many documents at the DNC.1 As discussed, 
Huang himself refused to speak to the Committee. Accordingly, 
it is still not possible for the Committee to paint a 
comprehensive picture of Huang's activities at the DNC.
    \1\ Sam Newman, a DNC fund-raiser who shared an office with Huang 
for a few months, testified that Huang sat at a desk, but did not use 
any of the drawers, or any other space in the office, to maintain files 
or documents. Newman stated that Huang recorded all his notes and 
meetings in a bound writing tablet, which he carried with him. 
According to Newman, when Huang left the office each day, he left 
behind no notes, files, or any possessions whatsoever. Deposition of 
Samuel Newman, July 17, 1997, pp. 111-122.

        Contradictory Testimony on Whether Sandler Trained Huang

    As described previously, DNC Finance Director Richard 
Sullivan, among others, was concerned enough about John Huang 
to insist on an individual training session between Huang and 
DNC General Counsel Joseph Sandler. Sullivan also testified 
that he was informed by both Huang and Sandler that such a 
session took place soon after Huang began work at the DNC. 
Nevertheless, Sandler insisted that such a session never 
    According to Sullivan, immediately after Sullivan and Rosen 
had interviewed Huang for the first time in November 1995, 
Rosen asked Sandler to come to Rosen's office.2 
Sullivan and Rosen informed Sandler that, pending Don Fowler's 
approval, it looked like Huang would be coming to the DNC. They 
explained to Sandler that they had told Huang that the first 
thing they wanted him to do was to have an extensive training 
session with Sandler, so that Huang would learn the rules 
governing fund-raising.3 Sullivan explained, ``We 
asked Joe [Sandler] to make sure that happened and expressed 
our desire for that. Joe said certainly.'' 4
    \2\ Deposition of Richard Sullivan, June 5, 1997, p. 24.
    \3\ Id. at pp. 24-25.
    \4\ Id. at p. 25.
    A few days after Huang started at the DNC, Sullivan went to 
Sandler's office and inquired whether Sandler had, in fact, sat 
down with Huang and discussed fund-raising rules. According to 
Sullivan, Sandler answered yes, and indicated that he had spent 
an hour or two with Huang.5 Sullivan testified: ``He 
[Sandler] said that he had had an extensive session with John; 
that he felt comfortable with his knowledge of the rules; with 
the way he described his future conduct and was comfortable 
with his general knowledge of fund-raising rules and 
regulations.'' 6 Asked whether Sandler provided any 
more detail about his session with Huang, Sullivan responded, 
``I believe that he [Sandler] mentioned that he had obviously 
emphasized to him that the thing that you had to be careful 
about was, the foreign subsidiary rule and just making sure 
that you were not taking contributions from non-U.S. citizens 
or green card holders.'' 7
    \5\ Id. at p. 27.
    \6\ Id. at p. 26.
    \7\ Id. at pp. 26-27.
    Sullivan heard about this training session from Huang as 
well as from Sandler. Within a week after Huang started working 
at the DNC in December 1995, Sullivan asked Huang if he had 
already sat down with Sandler, whether Huang felt comfortable 
with the rules as they related to foreign subsidiaries and non-
U.S. citizens, and whether Huang was comfortable in taking any 
questionable contributions to the counsel's office for 
review.\8\ Sullivan testified that Huang responded ``[v]ery 
positively. He said, absolutely I had a great session. We got 
along well. I feel very comfortable. I mean, John was not a man 
of great words, but--I feel comfortable and I see no problem 
with working closely with Joe to answer any questions that may 
arise.'' \9\
    \8\ Id. at pp. 27-28.
    \9\ Id. at p. 28.
    The uncommon nature of the individual training session 
further enhanced Sullivan's memory about this issue. After 
explaining that Huang was the only ``student'' in the training 
session with Sandler, Sullivan remarked that it was ``very 
uncommon'' for a fund-raiser to have a private training session 
with the general counsel.\10\ Sullivan testified, ``I don't 
remember anyone else ever having a private session with the 
general counsel.\11\ Rosen also confirmed Huang's private 
session with Sandler. Rosen testified, ``I knew that early on, 
Mr. Huang had met with Mr. Sandler about the rules of getting 
money from foreign owned corporations in the United States or 
resident aliens or whatever.'' \12\
    \10\ Id. at p. 29.
    \11\ Id.
    \12\ Deposition of Marvin Rosen, May 19, 1997, p. 268.
    Sullivan testified that in the ensuing months, both Sandler 
and Huang confirmed that they were following up on their 
initial session. Sullivan testified that on ``random times'' in 
the ``first couple months of [Huang's] employment,'' he asked 
Sandler if Huang was vetting his checks with him, and Sandler 
responded ``yes.'' \13\ Sullivan also stated that during that 
same time period, he asked Huang on numerous occasions if he 
was working with Sandler to vet all checks that were of 
questionable legality. Huang responded affirmatively.\14\
    \13\ Deposition of Richard Sullivan, June 5, 1997, p. 37.
    \14\ Id. at p. 33. The issue of vetting at the DNC is fully 
discussed in another chapter of this report. See the section of this 
report on the DNC's dismantling of its vetting procedures.
    Sandler told the Committee a completely different story. 
During his deposition, Sandler was asked in seriatim whether 
Richard Sullivan, Marvin Rosen, Don Fowler, or ``anyone else in 
the world'' asked him to give Huang specialized or 
individualized training at the time that Huang came to the DNC. 
Sandler responded, ``no'' to each query.\15\ Sandler then 
testified that regardless of whether anyone asked him to give 
such training, he did not, in fact, conduct any specialized 
training for Huang in the beginning of December 1995.\16\
    \15\ Deposition of Joseph E. Sandler, August 21, 1997, pp. 13-14.
    \16\ Id. at pp. 14-15.
    When confronted with Sullivan's conflicting testimony, 
Sandler's only explanation was that in February 1996 he met 
with Huang and reviewed checks collected in connection with 
Huang's first event, an Asian-American fund-raiser at the Hay-
Adams Hotel in Washington, D.C.\17\ Sandler explained that he 
may have had a conversation with Sullivan following this 
meeting with Huang. Sandler testified that he ``probably would 
have referred to my feeling that Mr. Huang . . . seemed to 
understand the rules applicable to fund-raising for the DNC, in 
particular, in connection with issues of citizenship and 
legality on contributions from U.S. subsidiaries of foreign 
corporations or foreign-owned corporations.'' \18\ This 
explanation, however, cannot resolve the discrepancy between 
Sullivan and Sandler's accounts, as this February 1996 meeting 
occurred nearly three months after Sullivan alleged that the 
individual training session took place.
    \17\ Id. at p. 15.
    \18\ Id. at p. 17.
    Not only is there a dispute about whether Huang received 
any private training from Sandler, but the DNC general 
counsel's office cannot even confirm that Huang received any 
group training about fund-raising regulations and guidelines. 
Neil Reiff, DNC deputy general counsel and the person who 
organized group training for Finance Division employees, 
testified, ``I can't recall ever being involved in a training 
session with Mr. Huang. I couldn't even tell you whether he 
attended one of our training sessions. I cannot tell you right 
here I know that he ever participated in any training that I 
was involved in.'' \19\ Sandler pointed to a copy of DNC fund-
raising guidelines found in Huang's files, but otherwise could 
not confirm any training of Huang. He testified that he was not 
aware of any particular training that Huang received.\20\
    \19\ Deposition of Neil Paul Reiff, June 20, 1997, pp. 111-112.
    \20\ Deposition of Joseph E. Sandler, May 30, 1997, p. 129.

  Concerns about Huang Materialize: DNC Returns Checks from His First 

    As mentioned above, Huang's first event was an Asian-
American fund-raiser at the Hay-Adams Hotel in Washington, D.C. 
on February 19, 1996. The event raised a significant amount of 
money (over $700,000, though budgeted for $500,000) and was 
considered a success. Nevertheless, the event also raised early 
warning signs which should have put DNC officials on notice 
that their initial concerns about Huang were not misplaced. 
First, a top DNC official not only noticed, but also expressed 
concern about, this event's potential for producing illegal 
contributions from foreign nationals to the DNC. Second, two 
checks raised in connection with the event were returned a 
month later, apparently because the checks were from foreign 
sources and thus violated campaign laws.
    Following this February event, DNC Treasurer Scott Pastrick 
approached Sandler and requested that Sandler meet with Huang 
to review checks from the event. Asked why Pastrick recommended 
this meeting, Sandler testified, ``I think that he had some 
concern to make about the foreign national--potential foreign 
national issues in this group because it had not been well 
known to the DNC.'' \21\ In his deposition, Pastrick never 
mentioned anything about this conversation with Sandler or 
about any concerns that he had about Huang. Asked if he 
participated in or overheard any conversations regarding 
concerns about Huang, Pastrick pointed to an ``odd'' comment by 
Rosen in mid to late October 1996 that Huang's activities were 
being checked by the DNC General Counsel's office.\22\ 
Otherwise, Pastrick testified, he had no other such 
    \21\ Id. at p. 101.
    \22\ Deposition of Robert Scott Pastrick, May 7, 1997, pp. 97-98.
    \23\ Id. at p. 98.
    As for the actual meeting, Sandler explained that he sat 
down with Huang for about 45 minutes and systematically 
discussed the checks that Huang had brought with him. Sandler 
stated that Huang had ``firsthand knowledge'' of the donors, 
and so Sandler felt that there was no need to do any additional 
review of the particular checks.\24\ Sandler said that he 
relied on Huang's explanation about the citizenship status of 
individuals or the ownership of a corporation.\25\ According to 
Sandler, there was no request at that time for him to go over 
general fund-raising gudelines with Huang, nor did he do 
so.\26\ Sandler admitted that he took some notes of his meeting 
with Huang, but stated that he had looked for the notes and 
could not find them.\27\
    \24\ Deposition of Joseph E. Sandler, May 30, 1997, pp. 102-103.
    \25\ Id. at p. 103.
    \26\ Deposition of Joseph E. Sandler, August 21, 1997, p. 19.
    \27\ Deposition of Joseph E. Sandler, May 30, 1997, pp. 133-134.
    Sandler testified that ``he could not recall any other 
occasion where he [Huang] came to me with a group of checks.'' 
\28\ Sandler's testimony differs from the testimony of his 
deputy, Neil Reiff, who explained that he passed by Sandler's 
office ``on a couple of occasions'' in the spring of 1996, and 
saw Huang meeting with Sandler.\29\ While Reiff did not 
participate in these meetings, he understood them to be for the 
purpose of reviewing specific contributions, ``because I saw 
John with checks in his hands when I walked by Joe's office. 
You could see him holding checks.'' \30\
    \28\ Id. at p. 127.
    \29\ Reiff deposition, p. 113.
    \30\ Id. at p. 114.
    In fact, the DNC soon returned checks that Huang raised 
from the Hay-Adams event. A few days before the start of the 
Committee's public hearings in July 1997, the Committee 
received documents showing that some of the Huang-solicited 
contributions had been returned as early as March 1996. The 
documents received reflected that, in connection with the Hay-
Adams event, Huang had collected two separate $12,500 checks 
made payable to the Democratic National Committee. Both checks 
were dated February 26, 1996, and were written on an account at 
General Bank in California. According to DNC check tracking 
forms, which appear to have been filled out by Huang, one 
contribution is attributed to Shu-Lan Liu and one is 
attributable to Yun-Liang Ren. The address and telephone number 
is the same for both: 410 S. San Gabriel Blvd. Suite 10, San 
Gabriel, CA 91776 and (818) 821-5338.\31\
    \31\ DNC check tracking forms for Shu-Lan Liu for $12,500 and Yun-
Liang Ren for $12,500 (Ex. 1).
    About one month later, on March 26, someone at the DNC 
filled out two expenditure request forms to have the DNC issue 
checks refunding these contributions.\32\ While it is unclear 
who actually filled out the forms, they indicate that the two 
separate $12,500 expenditures were requested by Huang. On the 
line for ``purpose of expenditure,'' the same description is 
written for both--``Contribution Refund (see attached).'' \33\ 
It is unclear, however, what may have been attached to these 
requests. Photocopies of the checks and check tracking forms 
are numbered consecutively, but there also may have been a 
written internal note or other document explaining why the 
contributions were to be refunded.\34\ Nothing of the sort was 
produced to the Committee. On the expenditure request for Ren, 
there is a handwritten notation ``Neil'' which likely refers to 
DNC deputy general counsel Neil Reiff. It is unknown who made 
that notation, and, because the documents had not been produced 
before Reiff's deposition, he was not asked about the forms.
    \32\ DNC Expenditure Request Forms, March 26, 1996 (Ex. 2).
    \33\ Id.
    \34\ Id.
     The Committee also obtained the relevant DNC report to the 
Federal Election Commission. On the Itemized Disbursements 
Schedule B page of the report, which was for the first quarter 
of 1996, the DNC listed both of these returned 
contributions.\35\ ``Contribution refund'' is listed as 
``purpose of disbursement.'' However, there is no further 
explanation. The DNC also listed seven other contribution 
refunds on the Schedule. These two $12,500 refunds clearly 
stand out from the seven other entries. One of the seven was 
for $2,000 and the remaining were all for under $500.\36\
    \35\ FEC Schedule B (Ex. 3).
    \36\ Id.
    The Committee learned that Ren and Liu are a married 
couple, and that they run an international trading group based 
in China. According to a family member in California, both Ren 
and Liu are currently living in China. Attempts to reach them 
by telephone in California and China were unsuccessful.
    Until July 1997, the Committee was under the impression 
that the first check raised by Huang and returned by the DNC 
was the Cheong Am contribution, which was solicited in April 
1996 and returned in September 1996. In its public statements, 
the DNC had never made reference to any Huang-solicited 
contributions that were returned earlier. Moreover, in all the 
interviews and depositions conducted by the Committee until the 
Committee's receipt of the documents--and these depositions 
included almost all of the major DNC officials--no witness had 
made any reference whatsoever to any Huang-solicited 
contributions that were returned before the widely reported 
return of the Cheong Am contribution.
    During the first two sessions of Sandler's deposition in 
May 1997, for instance, he described the meeting that he had 
with Huang after Huang's first event. In his testimony, Sandler 
explained that Huang had firsthand knowledge of the donors, and 
Sandler did not ask Huang to return any of the checks that they 
discussed. During those sessions of his deposition, Sandler did 
not identify any contributions from the event that the DNC 
returned before the Debevoise & Plimpton review of all DNC 
contributions in the fall of 1996.\37\
    \37\ Debevoise & Plimpton was the principal outside law firm 
retained by the DNC to defend it in this investigation.
    The Committee deposed Reiff on June 20, 1997, before the 
Committee had received the Ren and Liu documents, so Reiff was 
not asked directly about them; however, Reiff was asked 
numerous questions about his interaction with Huang, and all of 
his answers suggested that he had no involvement in the Ren and 
Liu contributions. Reiff testified, ``Other than passing him 
[Huang] in the hall politely, I had pretty much no interaction 
with Mr. Huang direct [sic],'' and ``[o]ther than the social 
interaction, I never provided any legal advice to Mr. Huang.'' 
\38\ Reiff also stated that he never participated in any 
meetings with Huang, nor could he recall ever being involved in 
a training session with Huang.\39\ Moreover, Reiff acknowledged 
in his deposition that he had primary responsibility for the 
final preparation of FEC reports.\40\ The fact that these two 
contributions stand out on the FEC report and that Reiff's name 
(``Neil'') is listed on the documents leave the Committee to 
wonder what Rieff may have known about these returned 
    \38\ Reiff deposition, p. 111.
    \39\ Id.
    \40\ Id. at p. 12.
    During the third session of his deposition, which took 
place on August 21, 1997, and thus after the Committee received 
the documents, Sandler was confronted with the Ren and Liu 
returned contributions. After acknowledging that he had 
reviewed these particular documents in preparation for this 
session of his deposition, Sandler testified, ``I don't know 
much about the circumstances surrounding these, but it is 
apparent that from the face of the documents that they were 
checks that Mr. Huang attributed to the Hay-Adams event; that 
they were initially deposited, but then within a month, maybe 
three weeks, Mr. Huang requested that the checks be refunded.'' 
    \41\ Deposition of Joseph E. Sandler, August 21, 1997, p. 23.
    Asked whether the Ren and Liu checks were among the checks 
that Sandler reviewed after the Hay-Adams event, Sandler 
responded, ``I don't specifically recall. It's possible, but I 
don't specifically recall. It's very possible that it was.'' 
\42\ Sandler also said that he did not remember whether Huang 
had consulted with him in March 1996 about the Ren and Liu 
    \42\ Id. at p. 24.
    \43\ Id.
    While no one at the DNC admitted to having contemporaneous 
knowledge of these returned contributions, the fact remains 
that these Huang-solicited contributions were returned by the 
DNC in March 1996, only a few months after Huang had arrived at 
the DNC, and within a month of Huang's first fund-raising 
event. Nevertheless, DNC officials did not institute any closer 
monitoring of Huang's fund-raising, allowing him to continue to 
raise money unabated until the fall of 1996. Because of the 
intense pressure emanating from the White House to raise money, 
the DNC ignored these early indications and failed to screen 
subsequent Huang-solicited contributions until it was too late. 
In fact, within weeks of the return of these contributions, 
Huang solicited another illegal contribution--$250,000 from 
Korean citizen John K.H. Lee, a topic that will be discussed 
    Additionally, these Ren and Liu contributions tie into 
another aspect of the Committee's investigation--the 
coordination between the DNC and various nonprofit groups.\44\ 
The Committee subpoenaed bank records for Ren and Liu, which 
show that on May 13, 1996, they jointly wrote a $25,000 check 
to a non-profit group, Vote '96.\45\ It seems more than just 
coincidental that the check is not only for $25,000, which is 
the total of the two returned contributions, but it is dated 
May 13, which is the date of Huang's second major fund-raiser--
an event at the Sheraton Carlton Hotel.
    \44\ See the section of this report on misuse of nonprofit 
    \45\ Check to Vote '96 from Shu-Lan Liu and Yun-Liang Ren, May 13, 
1996 (Ex. 4).

                The Return of the Cheong Am Contribution

    On April 8, 1996, Huang collected for the DNC a $250,000 
contribution from John K.H. Lee, a South Korean businessman. 
The contribution technically came from Lee's newly incorporated 
U.S. company, Cheong Am America, Inc. The intermediary between 
Huang and Lee was Michael Mitoma, an international business 
consultant and, at the time of the contribution, the mayor of 
Carson, California.
    After the Los Angeles Times inquired about the legality of 
the Cheong Am contribution in September 1996, the DNC 
acknowledged that it was illegal, and returned it. The return 
of this contribution led to additional press attention, and is 
generally noted as the beginning of the 1996 campaign finance 
scandal that triggered the Committee's investigation.
    The DNC has pointed to the return of this contribution as 
an example of how it swiftly reacted to any indicia of illegal 
contributions. At the time of the return, a DNC spokesperson 
also explained the illegal contribution by commenting, ``Our 
fund-raiser understood that the company had been in existence 
in the U.S. for some time, and was led to believe that the 
company's principals, including its chairman, were U.S. 
citizens or permanent residents.'' \46\
    \46\ Alan C. Miller, ``Democrats Return Illegal Contribution,'' Los 
Angeles Times, September 21, 1996, p. A16.
    The actual facts reveal a much different story. It was 
obvious to anyone who cared to look that Cheong Am America, 
Inc. was a newly-formed U.S. company with no current 
operations. It was also obvious that the company's chairman, 
John K.H. Lee, was a Korean citizen. Nevertheless, the 
acceptance of this contribution, and the way the DNC both 
solicited and vetted it, reveals the DNC's standard operating 
procedure. In their zeal to raise money, DNC officials at best 
neglected to ask the obvious questions, and at worst 
deliberately looked the other way. Furthermore, the Cheong Am 
contribution provides a good overview of the selling of the 
President, as John Huang and his colleagues at the DNC 
shamelessly arranged a photo-op with the President in exchange 
for a $250,000 contribution from a foreign national.
    This contribution had its genesis in the desire of an 
elected official to provide economic development for his 
community. In March 1996, Michael Mitoma heard from a friend 
about a South Korean businessman who was thinking about opening 
an electronics factory in California. As the mayor of Carson, 
California, a small city located adjacent to Los Angeles, 
Mitoma saw an opportunity to bring much needed jobs to his 
city. Mitoma traveled to South Korea and met with the Korean 
businessman, John K.H. Lee. According to Mitoma, Lee 
``constantly talked about meeting the President, asked if I 
knew the President personally, and if I could assist in 
arranging a meeting between he and President Clinton.'' \47\ 
Mitoma needed an interpreter to speak to Lee, as Mitoma did not 
speak Korean and Lee did not speak English.
    \47\ Testimony of Michael Mitoma, September 5, 1997, p. 126.
    Mitoma realized that successfully arranging a meeting with 
President Clinton would enhance the chances of convincing Lee 
to locate a factory in Carson. Accordingly, upon his return to 
the U.S., Mitoma tried the direct approach. He called the White 
House three times, but never received a return call.\48\ Faced 
with this lack of response, Mitoma began to explore other 
avenues. Mitoma explained, ``One of the suggestions was why 
don't you talk to the DNC because there's a series of fund-
raisers that are being held, and that might be a way to meet 
the President. So I did call the DNC to see about that 
possibility.'' \49\ Mitoma was referred to Huang.
    \48\ Id. at pp. 126-127.
    \49\ Id. at p. 127.
    Mitoma explained to Huang that he had a South Korean 
businessman who was interested in meeting the President. Huang 
responded by listing a ``menu'' of events, from large dinners 
of several hundred people at $5,000 per person to ``exclusive'' 
dinners at ``$50,000 a plate.'' \50\ When Mitoma relayed this 
information to Lee, Lee stated that he wanted to buy all the 
seats, even at $50,000 each, so that he could have a one-on-one 
dinner with the President.\51\ Huang rejected this proposal, 
telling Mitoma that others would need to attend the dinner.\52\ 
At that time, Huang also explained that he was working on 
setting up a small dinner and that there were five seats 
remaining. After checking with Lee, Mitoma confirmed to Huang 
that Lee would pay $250,000 for the five seats.\53\ Eventually, 
Huang informed Mitoma that the date of the dinner would be 
April 8, 1996.
    \50\ Id. at p. 128.
    \51\ Id. at p. 129.
    \52\ Id.
    \53\ Id. at pp. 129-130.
    In early April, Huang asked for, and Mitoma sent him, 
information on the five attendees.\54\ Besides Lee and Mitoma, 
the other three attendees were Won Ham, Lucy Ham and Young 
Chull Chung. Lucy Ham was the friend who had put Mitoma in 
touch with Lee. She and her husband, Won, were both U.S. 
citizens living in Los Angeles. Chung was Lee's partner and 
lived in South Korea. Mitoma explained that he was concerned at 
that time because he had received no written materials for this 
event, and had also not been informed about the time, place, or 
dress code.\55\ Since Lee was flying from Korea to Washington, 
D.C. for the sole purpose of meeting the President, Mitoma 
wanted to make sure that the event was actually going to 
happen.\56\ Even without the final details or confirmation, 
Lee, Chung, the Hams, and Mitoma all met in Washington, D.C. on 
April 7, 1996. Mitoma finally succeeded in contacting Huang 
during the morning of April 8, 1996, which was the same day as 
the planned dinner. After telling Mitoma to be at the Sheraton 
Carlton Hotel at 6:00 p.m., Huang began ``hedging on the 
dinner'' and suggested that instead of dinner, Lee may just 
have a private meeting with the President.\57\ In any event, 
Mitoma, Lee, and the others arrived at the Sheraton Carlton at 
about 5:45 p.m. There was no one there to greet them, nor were 
there any signs announcing the event. Lee's group waited in the 
lobby for over an hour, unclear about what was happening, 
before Huang arrived to greet them.\58\ After some brief 
pleasantries, Huang collected the $250,000 check and said that 
he would return. About 15 minutes later, Huang brought over 
Fowler, Sullivan, and Peter Knight to meet Lee.\59\ Lucy Ham 
translated, as Lee spoke no English.
    \54\ Faxes to John Huang from Michael Mitoma, April 3, 1996 (Ex. 
    \55\ Mitoma testimony, p. 132.
    \56\ See Fax to John Huang from Mike Mitoma, April 4, 1996 (Ex. 6).
    \57\ Mitoma testimony, p. 134.
    \58\ Id. at p. 137.
    \59\ Id. at p. 138.
    After another 15 minute wait, Lee's group was ushered into 
a smaller room, and then, all of a sudden, the President 
appeared.\60\ Mitoma testified, ``[The President] was being 
briefed by John Huang and several other people. And then he 
came over to our group and we chatted briefly with the 
President. You know, I explained to him the same thing, you 
know, that Chairman Lee is going to establish a factory . . . 
in Carson.'' \61\ A photographer then took a series of 
    \60\ Id. at p. 139.
    \61\ Id.
    \62\ Id. at p. 140.
    After the President moved along, Huang told Mitoma that 
they had just had their private meeting with the President and 
that there would be no dinner. As Mitoma explained, he was able 
to convince Lee that ``it was not such a great idea to eat 
American food and sit with a bunch of stuffy people for 45 
minutes in a conversation that he would not understand.'' \63\ 
Mitoma, Lee, and the others left the hotel and went out for 
dinner by themselves.
    \63\ Id.
    While Lee seemed content with his brief conversation and 
picture with the President, Mitoma was deeply disappointed by 
the way that he had been treated. He described the experience 
to the Committee as ``the most unprofessional thing I've ever 
seen,'' and added that he felt that Huang had been 
``unscrupulous'' and had strung him along simply to get Lee's 
$250,000 check.\64\
    \64\ Interview of Michael Mitoma, September 4, 1997.
    A review of relevant documents confirms Mitoma's view of 
the haphazard nature of the Lee event. On April 8, the day of 
the scheduled dinner, Huang faxed Sullivan two pages of 
handwritten notes about Lee, Cheong Am, and the other 
participants.\65\ Sullivan then wrote a memo from himself and 
Huang to Doug Sosnik and Karen Hancox at the White House. 
Sullivan wrote, ``Mayor Michael Mitoma, Mayor of Carson, 
California, and the following would like to meet with POTUS 
this evening before our first dinner.'' After identifying the 
others and explaining that the purpose of the meeting was to 
discuss the possibility of Cheong Am establishing a factory in 
Carson, Sullivan concluded, ``Mayor Mitoma has requested five 
minutes.'' \66\ In addition to demonstrating that the DNC was 
aware that Cheong Am was merely considering establishing a 
factory in the U.S., Sullivan's memorandum also shows that as 
of the day of the ``dinner,'' the DNC had not even cleared any 
meeting with the White House. Moreover, there is no mention of 
an exclusive dinner with the President--there is just a request 
for ``five minutes.''
    \65\ Fax from John Huang to Richard Sullivan, April 8, 1996 (Ex. 
    \66\ Memorandum to Doug Sosnik and Karen Hancox from Richard 
Sullivan and John Huang, April 8, 1996 (Ex. 8).
    It is also clear that the DNC simply tried to fit the Lee 
meeting into a evening already crowded by two fund-raising 
dinners. According to Fowler's schedule for April 8, 1996, 
there were two scheduled dinners at the Sheraton Carlton that 
night--an earlier Presidential dinner for Gala co-chairs and 
vice chairs, and a later Presidential dinner with a smaller 
group of contributors.\67\ The schedule allotted a ten minute 
travel break, from 7:40 to 7:50 p.m., between the two 
dinners.\68\ While Sullivan's memo asked for a meeting before 
the first dinner, it appears that Mitoma and Lee were shoe-
horned into this ten minute period between the two dinners.
    \67\ April 8, 1996 schedule of Donald L. Fowler, p. 3 (Ex. 9).
    \68\ Id.
    The Cheong Am contribution also demonstrates that Huang and 
others at the DNC never raised any questions about the 
contribution's foreign origin. Mitoma had explained to Huang 
that Lee was a Korean businessman who was considering starting 
a business in Carson. Mitoma explained further that his efforts 
to arrange for a meeting between Lee and the President were 
directly connected to his larger endeavor to secure Lee's 
investment in Carson. Mitoma told the Committee that he was 
certain that Huang understood that Lee was both a foreign 
national and had not yet begun to conduct business in the 
United States.\69\ Moreover, the information that Mitoma sent 
to Huang on April 4, 1996, also should have cast doubt on the 
legality of the contribution. While the information on Won and 
Lucy Ham specifically indicates that they are American 
citizens, Lee's resume gives a Korean address and makes no 
mention of citizenship or U.S. immigration status.\70\ Huang, 
however, raised no questions at the time.
    \69\ Mitoma interview, September 4, 1997.
    \70\ Ex. 5.
    Huang's knowledge of Lees citizenship, and therefore his 
inability to contribute legally to the DNC, is further 
demonstrated by Huang's record keeping on the contribution. In 
filling out the DNC's check tracking form for the $250,000 
contribution, Huang does not include any reference to Lee, 
despite the fact that Lee was clearly the principal of Cheong 
Am, and signed the check to the DNC.\71\ Instead, Huang listed 
Won Ham--someone he knew was an American citizen--as the 
    \71\ Copy of check and check tracking form for donation by Cheong 
Am America to DNC, April 8, 1996, (Ex. 10).
    \72\ Id.
    Besides these indications, a simple check of the California 
incorporation records would have shown that Cheong Am was 
incorporated at the end of February 1996.\73\ Thus, even 
without the bank records showing that the Cheong Am America 
bank account was funded by a transfer of $1.3 million from 
Korea on March 26, 1996,\74\ it was obvious that Cheong Am 
America had not been in operation long enough to generate the 
U.S. income needed to make a U.S. political contribution.
    \73\ State of California Certificate of Incorporation for Cheong Am 
America, February 28, 1996 (Ex. 11).
    \74\ Assorted bank records of Cheong Am America. (Ex. 12). Bank 
records reflect the following money trail: On March 26, 1996, Cho Hung 
Bank in Seoul, South Korea wired $1.3 million to the California Cho 
Hung Bank. On April 4 & 5, it appears that the $1.3 million was 
deposited into a newly opened Cheong Am America, Inc. account at 
California Cho Hung Bank. On April 5, $300,000 (minus a $3 service fee) 
was wired into a new Cheong Am America, Inc. account at Hanmi Bank in 
Los Angeles. The $250,000 contribution to the DNC, as well as other 
related checks such as payment for the group's stay at the Four Seasons 
and for photos, came from this account.
    A few days after the April 8 event, Huang showed the 
$250,000 Cheong Am check to Sullivan. Sullivan was surprised, 
since he had been expecting personal contributions from the 
Hams, who were American citizens, and not a corporate 
check.\75\ Sullivan testified: ``I remember looking at it with 
him [Huang] and saying, are you okay with this and have you 
vetted this with Sandler and he responded, yes.'' \76\ In the 
fall of 1996, after the news accounts of the Cheong Am 
contribution broke, Sullivan called Huang again and asked him 
the same question. According to Sullivan, Huang reiterated that 
he had vetted the check with Sandler immediately after 
receiving it in April 1996.\77\
    \75\ Deposition of Richard Sullivan, June 5, 1997, p. 52.
    \76\ Id.
    \77\ Id. at p. 53.
    Sullivan testified that he did not speak to Sandler about 
the Cheong Am check in April 1996. It was not until November 
1996 that Sullivan and Sandler discussed it. At that time, 
Sullivan asked Sandler if he had vetted the Cheong Am check, 
and Sandler responded no. Moreover, in something that Sullivan 
``found odd,'' Sandler told Sullivan that he was not even aware 
of the Cheong Am check.\78\ When Sullivan asked Sandler whether 
he had seen the check on the FEC report, Sandler, in Sullivan's 
words, ``just shorted it off. He [Sandler] said, you know, I 
just don't recall ever knowing about Cheong Am . . . John never 
brought it to my attention and I was never aware of Cheong Am 
America, Inc.'' \79\
    \78\ Id. at p. 54.
    \79\ Id.
    Asked whether he believed Sandler or Huang was telling the 
truth, Sullivan was reluctant to accuse either one of lying. 
``I'd rather not have to answer that question directly. . . .'' 
\80\ Without being direct, however, Sullivan did made it clear 
which person he believed. He stated, ``I guess I want to think 
about why John would lie at the time, given the concerns that 
had been expressed earlier in the year. Let me state that. I 
can't think of--I am also perplexed by why John would have lied 
at the time. Let me also state that, I am perplexed why Joe 
would not acknowledge the existence of this contribution, given 
the fact that it was reported on the Federal Election Committee 
report.'' \81\
    \80\ Id. at p. 58-59.
    \81\ Id. at p. 55.

                  July 1996--Even More Warning Signals

    As with all DNC fund-raisers, there was constant pressure 
on Huang to raise additional money. On July 4, 1996, Fowler 
wrote a handwritten note to Huang, stating, ``John, We're 
making progress, but we have to do better. Thank you for your 
good work. Best Wishes, Don.'' \82\ In his deposition, Fowler 
stated that he could not recall why he wrote this note to 
Huang, and that the phrase ``we're making progress but we have 
to do better'' was ``just a general admonition.'' \83\ Fowler 
also maintained that it was not unusual for him to write this 
type of note, and that at the time, he still believed that 
Huang ``was better than an average fund-raiser for the DNC.'' 
    \82\ Handwritten note from Don Fowler to John Huang dated July 4, 
1996 (Ex. 13) (emphasis added).
    \83\ Deposition of Don Fowler, May 21, 1997, p. 207.
    \84\ Id. at p. 208; see also id. at p. 198.
    During the month of July 1996, Huang was responsible for 
organizing two different DNC fund-raising events--a July 22 
event at the Century City Hotel in Los Angeles and a July 30 
dinner at the Jefferson Hotel in Washington D.C. Neither of 
these events turned out the way DNC officials had hoped. In 
fact, DNC officials were so troubled by the latter event--
including the list of guests at the event--that they made a 
decision not to give Huang any more events with the President.
    The July 22 event was designed to be a large fund-raising 
event with Vice President Gore as the featured guest. The 
ticket price was approximately $500 or $1,000. Many of the 
attendees were the same people who attended the Hsi Lai Temple 
fund-raiser in April 1996. 85 Huang had predicted 
that the event would raise about $1 million. In fact, in 
response to Harold Ickes asking in late June how fund-raising 
looked for July, Sullivan responded, ``We've got a couple of 
things going. One of them is big. John Huang said that he's 
real excited about raising $1 million through a big Asian 
community event in Los Angeles.'' 86
    \85\ Another chapter of this report provides a detailed discussion 
of the Hsi Lai Temple event.
    \86\ Deposition of Richard Sullivan, June 5, 1997, p. 88.
    Despite Huang's predictions, the Century City event turned 
out to be much less successful. According to Sullivan, by the 
end of July, the DNC had only collected $200,000 to $300,000 
from it. 87
    \87\ Id. at p. 70.
    Huang also had agreed to organize another fund-raiser 
scheduled for July 30. Sullivan recalled that Karen Hancox of 
the White House had called with some dates for fund-raising 
dinners with the President, and Sullivan and Rosen approached 
Huang. They asked him, ``Do you think you want to take on 
another dinner? Do you think you can pull together another four 
to 500 [thousand dollars]?'' 88 Huang replied that 
he could ``do another dinner.'' 89
    \88\ Id. at p. 66.
    \89\ Id. at p. 67.
    Based on his conversation with Huang, Sullivan expected a 
dinner ``along the lines of [Huang's] previous ones, about 
five, $10,000 a couple.'' 90 However, that is not 
what occurred. A few days before the July 30 dinner, Huang gave 
Sullivan the invitation list. Dismayed to see that it only 
included a small group of people, many of whom appeared to be 
foreign nationals, Sullivan showed the list to Rosen. According 
to Sullivan, Rosen looked at the list and then stated, ``That's 
fine. It's kind of too late to do anything else. Make sure you 
send the list over to the White House.'' 91 It is 
clear that, despite DNC officials' concerns about potential 
illegalities, they opted to proceed with the Jefferson Hotel 
dinner, apparently in the belief that raising some amount of 
money was better than none. Sullivan recalled that there was 
not enough time to cancel the Huang event and to organize 
another event in its place.92 Apparently, White 
House officials felt the same way. Sullivan recounted that he 
did, in fact, send the attendee list to the White 
House.93 Hancox then called Sullivan back and said 
that the list was fine.94
    \90\ Id.
    \91\ Id.
    \92\ Id. at p. 72.
    \93\ Id. at p. 68.
    \94\ Id. at p. 83.
    While the Committee has not received copies of any 
correspondence between the White House and the DNC with respect 
to this event, the DNC has produced the list of attendees at 
the event.95 Besides President Clinton and DNC 
officials Fowler, Sullivan, Rosen, and Huang (and Mrs. Huang), 
four businessmen and their families attended. They were Mr. Ken 
Hsui, along with his wife Betty and daughter Dorothy; Dr. James 
L.S. Lin, along his wife Zu-Ying and son Thomas; Mr. James 
Riady and his wife Aileen; and Mr. Eugene Tung-Chin Wu, and his 
wife Shirley.96
    \95\ DNC list of attendees for July 30 event at The Jefferson Hotel 
(Ex. 14).
    \96\ Id.
    Sullivan and Rosen both made brief appearances at the 
dinner. Sullivan said that he went for about five minutes, said 
hello to Huang, and made sure that everything was okay. 
Sullivan believed that he may also have met James Riady at the 
event.97 Rosen recounted that he also was introduced 
to Riady at this event.98
    \97\ Deposition of Richard Sullivan, June 5, 1997, p. 69.
    \98\ Rosen deposition, p. 97.
    Either the next day, or within a few days of the event, 
Sullivan and Rosen discussed their displeasure with Huang. 
First, they were upset because the dinner was not 
``productive.'' 99 Instead of a larger dinner at 
five or ten thousand dollars per couple, the Jefferson Hotel 
event had been a private gathering that could not satisfy the 
party's need for federal money. Sullivan explained, ``The fact 
that it was a small dinner meant that it was our sense that 
John would not produce a lot of--I didn't think a lot of 
dollars were going to come out of that event anyway just by the 
nature of who was there. It wasn't along the lines of what we 
were really pushing for in July and August of 1996.'' 
100 Compounding their distress that the Jefferson 
event simply would not generate enough money, Rosen and 
Sullivan felt that Huang had let them down. Both men believed, 
according to Sullivan, that ``John is not living up to what he 
had voluntarily come to us and said he could do.'' 
101 Sullivan elaborated, ``[Huang's] about $700,000 
down on what he said he'd do from Los Angeles . . . as the days 
stretched on from that event and the funds didn't come in as 
they normally do, I became more and more dubious as to whether 
that would come anywhere near to what he said he could do.'' 
    \99\ Deposition of Richard Sullivan, June 5, 1997, p. 70.
    \100\ Id. at p. 60.
    \101\ Id. at p. 73.
    \102\ Id. at p. 72.
    Second, Sullivan and Rosen were concerned by the actual 
attendees at the dinner. As Sullivan explained, ``[W]e are not 
all that pleased with the fact that he put a couple of foreign 
nationals into a small dinner with the President . . . we were 
not happy with that because of the possible perception. The 
press has made a big deal about, oh, you know, why did you have 
them in when you knew you weren't going to get money from them. 
Well, we knew that too, but we were just worried about the 
perception.'' 103 This was not the first time that 
Rosen and Sullivan had such a discussion. Sullivan testified 
that after Huang's second major event, the May 13, 1996 fund-
raising dinner at the Sheraton Carlton Hotel in Washington, 
D.C.,104 Rosen and he had a conversation about the 
fact that ``there may have been some foreign nationals in the 
room.'' 105 According to Sullivan, ``I think there 
was a little concern from the May dinner, but we said . . . 
people have the right to bring a guest with them to the dinner 
if they are making the contribution. The important thing is 
that John is vetting his checks with Joe.'' 106
    \103\ Id. at p. 73.
    \104\ See the section of this report on Yogesh Gandhi.
    \105\ Deposition of Richard Sullivan, June 5, 1997, p. 62.
    \106\ Id. at p. 63.
    In the light of these concerns, Sullivan said that Rosen 
made the decision after the July 30 Jefferson Hotel event not 
to give Huang any additional events with the 
President.107 Rosen, who was deposed before 
Sullivan, provided the Committee with much less detail about 
the conversations surrounding the Jefferson Hotel event. While 
he recalled having a conversation with Sullivan after the 
dinner, Rosen did not mention any concern about foreign 
nationals or any decision to stop giving Huang events with the 
President. For instance, when asked if he recalled any concerns 
being expressed before the dinner, Rosen said no. When asked if 
he recalled any concerns after the event, Rosen stated that the 
press coverage tended to ``cloud'' his memory. He then went on 
to testify, ``I can remember discussing the fact that what 
struck me at the event, there were a number of--two or three 
young children there, and talking to Richard after the event 
that we needed to reach out a little more and get more 
involvement of various people and I remember that discussion. 
That was the sum and substance of it.'' 108 Rosen 
agreed with the metaphor that the DNC would have hoped to get 
``more bang for the buck'' out of a fund-raising event attended 
by the President.109
    \107\ Id. at p. 70.
    \108\ Rosen deposition, p. 98.
    \109\ Id. at p. 99.

                Huang Seeks to Launder DNC Contributions

    It is unclear whether Huang knew that he was being 
restricted from handling more Presidential events. It is 
likely, however, that Huang knew at a minimum that his Century 
City and Jefferson Hotel events were not generating the 
predicted amounts of money. Accordingly, Huang either knew, or 
could readily surmise, that his DNC superiors were not pleased 
with his recent performance. Moreover, at this time period, 
there was increasing pressure on DNC fund-raisers to raise hard 
money. Without discussing the specifics of election financing, 
the fact that it was getting closer to election day meant that 
hard money was becoming much more valuable than soft money. DNC 
staffers certainly knew about that priority. As Sullivan 
explained, Huang was as ``aware as anybody on the staff about 
our federal dollars, about our federal dollar push. Marvin and 
I had held staff meetings and talked about it.'' 110
    \110\ Deposition of Richard Sullivan, June 5, 1997, p. 67.
    It is in this environment that Huang had lunch with Rawlein 
Soberano, a Washington, D.C. businessman and the head of the 
Asian American Business Roundtable (``AABR''), a group in 
Washington that assisted Asian-Americans in procuring contracts 
with the federal government. At a lunch in late July or early 
August 1996, Huang asked Soberano to launder campaign 
contributions through his association (and its members) in 
exchange for a fifteen percent kickback. If successfully 
laundered, these contributions could be turned into the much 
desired hard money or federal contributions. In any event, 
Soberano quickly terminated the conversation and never took up 
Huang on his offer.
    Soberano provided background in his testimony to the 
Committee. He stated that he had met Huang on a few occasions 
before 1996.111 Then, in late June 1996, at an 
Organization of Chinese Americans conference in San Francisco, 
Soberano saw Huang and learned that Huang had moved from the 
Commerce Department to the DNC.112 During the summer 
of 1996, Soberano was in the process of trying to identify 
sponsors or people who could provide names of potential 
sponsors for the upcoming AABR annual event.113 In 
connection with that responsibility, Soberano called Huang and 
set up a lunch with him at the Mayflower Hotel in Washington, 
D.C. Soberano could not identify the exact date of the lunch, 
but recalled that it was either the last week of July or early 
August 1996. This range of dates is supported by Huang's travel 
schedule. DNC records indicate that Huang was in California 
from July 10 through July 23 and in New York City from August 
10 through August 19.114 During the interim few 
weeks, Huang was likely in Washington, D.C., especially since 
he planned and attended the Jefferson Hotel event on July 30, 
    \111\ Testimony of Rawlein Soberano, September 16, 1997, p. 199.
    \112\ Id. at p. 200.
    \113\ Id. at p. 201.
    \114\ DNC expense reports and receipts (Ex. 15).
    Soberano testified that the conversation at the lunch 
centered around the AABR. In response to questions from Huang, 
Soberano described the organization's purpose and membership, 
which at that time numbered approximately 360.115 
Huang then asked about AABR's budget, to which Soberano 
responded, ``[Y]ou won't believe this. We are on a shoestring 
budget.'' 116 Soberano explained to Huang, for 
instance, ``We really did not have a budget, per se, because we 
all depended on the volunteer work of our membership. As a 
matter of fact, the location of the organization moves 
regularly on the generosity of the members to provide it 
space.'' 117
    \115\ Soberano testimony, pp. 202 & 225.
    \116\ Deposition of Rawlein Soberano, May 13, 1997, p. 33.
    \117\ Soberano testimony, p. 203.
    Near the end of the lunch, Huang made his money laundering 
proposal. Soberano testified, ``I remembered that it was during 
the discussion about the budget when he mentioned--and I 
remember this as if it was yesterday. He said, `Perhaps we can 
help you out,' and that's when I looked at him and I said, 
`How?,' and he said categorically and plainly, ``We can give 
you $300,000 and you can give it back to us later, and you can 
give 15 percent for the organization,'' but that is when I told 
him, ``John, this conversation never took place.'' 
    \118\ Id.
    At first, Soberano testified, he thought that Huang was 
kidding. But as Huang continued, and when Soberano told him 
that the conversation never took place, Soberano saw Huang's 
``face drop'' and knew that Huang was serious.119 
Soberano explained to the Committee, ``In the Asian culture, we 
have what we call the nonverbal communication, and sometimes--
and we are very concerned about people losing face. I made him 
to lose face when I turned him down.'' 120 Soberano 
and Huang had no further conversation about Huang's proposal 
and they awkwardly ended the lunch a few minutes later. 
Soberano has not spoken to Huang since their 
    \119\ Id. at p. 204.
    \120\ Id.
    \121\ Id. at p. 205.
    Soberano cut off the conversation immediately, and thus he 
never asked Huang to elaborate on his offer. In his deposition 
and hearing testimony, Soberano resisted making any assumptions 
about Huang's reference to ``we,'' particularly since Huang 
never explicitly mentioned the DNC or the Democratic 
Party.122 At the same time, however, Soberano 
conceded the obvious. He testified, ``But when you look at it, 
I mean I know what he meant, but I wouldn't want to put words 
in his mouth.'' 123 Soberano acknowledged that he 
knew that at the time of the lunch, Huang was working as a 
``major fund-raiser'' at the DNC.124
    \122\ Soberano deposition, p. 116.
    \123\ Id.
    \124\ Soberano testimony, pp. 200 & 225.
    The fact that Soberano had lunch with Huang is corroborated 
by Jerry Parker, the Vice-President of the PrinVest Corp. 
During the relevant time period, Soberano was consulting for 
PrinVest, and working in its office, which is located near the 
Mayflower Hotel. During an interview with Committee staff, 
Parker stated that there is no doubt in his mind that Soberano 
walked by his office one day and mentioned a meeting with John 
Huang. Parker was less sure about whether Soberano's comment 
took place before or after the meeting with Huang, but he 
thinks that it was before, and that Soberano said he was going 
to a meeting with Huang. Soberano's comment stuck in Parker's 
memory, because Parker knew Huang, having trained him at a 
local Washington, D.C. bank during the 1970's.125
    \125\ Interview of Jerry Parker, July 1, 1997.


    Huang's approach to Soberano should not be viewed with 
surprise--it is the logical outgrowth of his fund-raising 
odyssey. Huang came to the DNC amid curious circumstances, and 
his tenure at the DNC was rife with warning signs--which were 
recognized but then ignored. These signs were ignored because 
DNC officials were consumed by raising an unprecedented amount 
of money under pressure from the White House.
    The evidence shows that at the same time that the President 
of the United States was prodding DNC officials to hire Huang, 
Huang was already raising money in violation of the Hatch Act. 
DNC officials apparently recognized the illegality and took 
steps to cover the paper trail by substituting Jane Huang's 
name for John Huang's on DNC check tracking 
forms.126 Moreover, DNC officials expressed concern 
about Huang right from the start. They were nervous that Huang 
did not understand, and would not comply with, the various 
fund-raising laws. Accordingly, they insisted that he have a 
private training session with DNC general counsel Joe Sandler. 
Nevertheless, they also offered Huang an incentive arrangement 
for raising money.
    \126\ See the section of this report on Huang's fund-raising at the 
Department of Commerce.
    Once Huang arrived at the DNC, DNC officials continued 
their schizophrenic behavior. On the one hand, they were 
worried about the large number of foreign nationals that Huang 
seemed to have at his events. On the other hand, they 
recognized that Huang was raising a large amount of 
contributions and so they were reluctant to take any actions--
until it was too late. The Cheong Am contribution is a good 
example of how the DNC had to know that the contribution was 
from a foreign source, and thus illegal, but still accepted it 
because it was too easy to pass up--$250,000 for a five minute 
photo-op with the President.
    Finally, the Committee is troubled by the discrepancies in 
testimony from DNC officials. Senior DNC officials directly 
contradict each other on such important points as whether Huang 
ever received individualized training. Moreover, there are 
various examples, including the return of Huang-solicited 
contributions in March 1996, where DNC officials did not 
provide the Committee with highly relevant information in a 
timely manner. Even recognizing that memories fade over time, 
it would seem that DNC officials who were closely involved in 
the events the Committee was investigating should have a 
greater command of detail than they claim to have. Huang's 
assertion of his fifth amendment privilege against self-
incrimination made the Committee's investigation of his 
activities difficult, and this difficulty was magnified by DNC 
officials' conflicting accounts and alleged failures of memory.