[Senate Report 105-167]
[From the U.S. Government Publishing Office]
105th Congress Rept. 105-167
SENATE
2d Session Vol. 2
_______________________________________________________________________
INVESTIGATION OF ILLEGAL OR IMPROPER ACTIVITIES IN CONNECTION
WITH 1996 FEDERAL ELECTION CAMPAIGNS
__________
FINAL REPORT
of the
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
together with
ADDITIONAL AND MINORITY VIEWS
Volume 2 of 6
March 10, 1998.--Ordered to be printed
INVESTIGATION OF ILLEGAL OR IMPROPER ACTIVITIES IN CONNECTION WITH 1996
FEDERAL ELECTION CAMPAIGNS--VOLUME 2
105th Congress Rept. 105-167
SENATE
2d Session Vol. 2
_______________________________________________________________________
INVESTIGATION OF ILLEGAL OR
IMPROPER ACTIVITIES IN CONNECTION
WITH 1996 FEDERAL ELECTION
CAMPAIGNS
__________
FINAL REPORT
of the
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
together with
ADDITIONAL AND MINORITY VIEWS
Volume 2 of 6
March 10, 1998.--Ordered to be printed
COMMITTEE ON GOVERNMENTAL AFFAIRS
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
ROBERT F. BENNETT, Utah
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
GOVERNMENT AFFAIRS COMMITTEE STAFF
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
----------
Page
Chapter:
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
The Hsi Lai Temple Fundraiser and Maria Hsia
The fundraiser attended by Vice President Gore on April 29,
1996 at the Hsi Lai Temple in Hacienda Heights, California, has
been the focus of considerable attention and controversy ever
since reports first surfaced in the national press revealing
that some of the donations given to the DNC in connection with
this event were unlawfully reimbursed.1 Over the
course of its investigation, the Committee has examined the
various allegations of illegality and impropriety that have
surfaced in connection with this event. Furthermore, the
Committee has conducted a broader inquiry into the unlawful
involvement of the Hsi Lai Temple in the 1995-96 election cycle
and the complex chain of events that produced this involvement.
---------------------------------------------------------------------------
\1\ See, e.g., Phil Kuntz, ``Instant Karma: Cash Gets to Democrats
Via Buddhist Temple,'' Wall Street Journal, Oct. 17, 1996 (recounting
allegations by Buddhist nun that DNC donation for Gore event was
reimbursed). This early coverage prompted the Christian Coalition to
file a complaint against the DNC with the Federal Election Commission
in connection with the Hsi Lai Temple fundraiser. See generally Colleen
Sealander, letter to Master Shing Yun, Oct. 29, 1996 (Ex. 1)
(forwarding complaint to Temple, with attachments).
---------------------------------------------------------------------------
As a result of these inquiries, it has become apparent that
the DNC's Hsi Lai Temple fundraiser on April 29, 1996 was
merely one instance--albeit the most significant one--in an
ongoing campaign of illegal Temple donation-laundering arranged
by a woman named Maria L. Hsia in support of Democratic
candidates. Nor was this campaign merely an aberration confined
to the 1995-96 election cycle. Rather, it had roots stretching
back to 1988, with the decision of James Riady, John Huang,
Maria Hsia, and others to organize themselves into a political
fundraising and lobbying organization in order to advance their
interests through U.S. politics.
The Temple-related issue that has hitherto received the
most attention in the press--Vice President Gore's knowledge
(or alleged lack thereof) with regard to the status of his
April 29 luncheon as a DNC fundraiser--is addressed in this
section. It will be obvious from the evidence recounted herein
that despite his various denials, the Vice President was well
aware that the event was one designed to raise money for his
party. Preoccupied by a narrow debate over the inconsequential
terminology of ``community outreach,'' ``finance-related
events,'' ``donor maintenance,'' and ``fundraisers,'' many
observers have missed the forest for the trees. The real
significance of the Temple incident lies not in the Vice
President's lack of candor, but in the ongoing relationship
this affair illustrates between him--and the Democratic Party--
and a small but influential political clique headed by Riady,
Huang, and Hsia.
As will become clear, despite the participation of Temple
monastics in criminal wrongdoing in connection with the April
1996 event and in Hsia's broader campaign of Democratic Party
donation-laundering, the Temple itself seems to have been only
a secondary actor in this drama. Indeed, Temple officials seem
to have known little--if anything--about the political
campaigns they illegally supported at Hsia's
direction.2 The real significance of the Temple
incident may therefore be found in what it reveals about the
activities and agenda of its key decision-makers--Maria Hsia
and John Huang.
---------------------------------------------------------------------------
\2\ Since the Hsi Lai Temple received electronic alarm services
from a corporation called ``DNC,'' many of the monastics solicited to
give money to the Democratic National Committee may have mistaken the
party for the company. Cf., e.g., IBPS check #1278, Jan. 5, 1996 (Ex.
2) ($50 payment to ``DNC,'' apparently for alarm services).
---------------------------------------------------------------------------
Hsia and Huang have both asserted their Fifth Amendment
privilege against self-incrimination and have refused to
cooperate with the Committee. Nevertheless, from documentary
evidence produced pursuant to subpoena and from interviews and
depositions of persons involved, the Committee has been able to
develop a detailed understanding both of the events at issue
and of the role of Hsia and Huang therein.
i. maria hsia
Hsia Ling--better known by the Anglicized version of her
name, Maria Lynn Hsia--was born in 1951 and first came to the
United States on a student visa in 1973. After returning
briefly to her native Taiwan in 1974, she returned to this
country to become a permanent resident in 1975. Not long after
her arrival, she began working as a case worker at Popkin &
Shamir, a personal injury and immigration law firm.3
She became a U.S. citizen in 1986.4
---------------------------------------------------------------------------
\3\ Maria Hsia, hearing transcript from Hsia v. Hom, Ca. Super.
Ct., No. BC 059523, Aug. 16, 1995, pp. 16-17 (Ex. 3).
\4\ James Sterngold, ``Political Tangle of Taiwan Immigrant,'' New
York Times, June 9, 1997.
---------------------------------------------------------------------------
Though not a lawyer, Hsia took up several successive
positions with various immigration law firms, leaving Popkin
for a firm headed by Patrick Fleming, working as a consultant
for Damrell, Damrell & Nelson, then joining Howard Hom &
Associates, and working with Arnold Malter, before going into
business under her own name as Hsia & Associates in
1991.5 Throughout this period, the immigration
services business generally treated Maria Hsia well. In the
late 1970s and early 1980s, providing immigration services to
Taiwanese citizens was an ``extremely lucrative''
field.6 Hsia, it appears, profited accordingly. Her
reported income in 1982, for example, was $637,000.7
---------------------------------------------------------------------------
\5\ Hsia's involvement with former INS lawyer Howard Hom began in
the summer of 1979, when they were both enrolled in Cantonese language
classes at the University of California in Los Angeles. Deposition of
Howard Hom, Aug. 27, 1997, pp. 8-9. They began living together in 1980,
and when the Fleming firm split up in 1986, Hom went into business with
Hsia as they took over most of Fleming's immigration clients. See
Memorandum of Interview of Howard Hom, Aug. 10, 1997, p.1. This
personal-cum-business relationship with Howard Hom lasted until late
1990. Howard Hom deposition, p.9.
\6\ See Trial Brief of Defendant and Cross-Complainant Howard Hom
in Hsia v. Hom, Ca Super. Ct., No. BC 059523, p. 6 (Ex. 4) (describing
immigration law as profitable ``largely due to tremendous uncertainty
in Taiwan over the future of the island nation'' caused by the U.S.
government's abrogation of formal diplomatic relations with Taiwan).
\7\ Ex. 3, p. 69. Her income in 1983 was $449,000. By 1986 it had
slipped to $362,000. Id. According to press reports, this stream of
revenue enabled her to purchase a Rolls Royce automobile and a home in
Beverly Hills. Sterngold, supra note 4.
---------------------------------------------------------------------------
Hsia's first contact with political fundraising came in
early 1982 at a cocktail party she attended with Howard Hom. At
that reception, they met briefly with March Fong-Eu, an Asian-
American woman who was then California's Secretary of State,
and Fong-Eu's son, Matthew Fong, who was then his mother's
campaign manager and subsequently became California's state
treasurer. At a subsequent meeting, Fong enlisted Hom and Hsia
to help with fundraising for his mother's re-election. As Hom
later recalled it, ``Maria offered to take over the fund-
raising activity and, in fact, she explained to Mr. Fong that
she felt that she and her friends could probably do a better
fund-raiser than Howard and his lawyer friends . . . . That was
the genesis of how fund-raising got started with
Maria.''8
---------------------------------------------------------------------------
\8\ Hom deposition, pp. 10-12.
---------------------------------------------------------------------------
It was her immigration work that helped propel Hsia into
the political arena. Her interest in political activity was
heavily mercenary: it provided her with contacts and friends in
government circles in ways that she believed helped her
immigration services business in at least two ways.
First, such contacts might be useful in helping her clients
with specific immigration matters. When she and Hom ran into
some difficulty with Immigration and Naturalization Services
(INS) officials in 1983 over a series of visas they had
obtained for clients through the U.S. consulate in American
Samoa, for example, Hsia decided that ``a political approach
might be useful'' to complement more conventional litigation
strategies.9 Through her political contacts, she
persuaded U.S. Senator Alan Cranston and U.S. Representatives
Mel Levine, Howard Berman, and Harry Reid to write letters to
the INS on her behalf. Cranston was already a recipient of
political contributions Hsia had raised through her contacts in
California's Asian community,10 and after their help
with this immigration issue Hsia began raising money for
Levine, Berman, and Reid as well.11 Their queries
forced the INS to undertake the unusual additional step of
publishing a report in December 1983 on its handling of these
particular cases.12 The message was not lost on Hsia
that political contacts and political fundraising could indeed
pay her concrete dividends.13
---------------------------------------------------------------------------
\9\ Id., p. 18.
\10\ Maria Hsia's fundraising efforts on Senator Cranston's behalf
continued, in fact, at least through May 1989. See Handwritten note by
Hsia's assistant Jeffrey Su listing attendees at Cranston fundraiser on
May 23, 1989, including Maria Hsia and John Huang (Ex. 5). As a result
of Hsia's longstanding contacts with Cranston, he invited her to
address a field hearing of the Senate Foreign Relations Committee's
Subcommittee on Asia and Pacific Affairs (which he chaired) at UCLA in
February 1989. See Alan Cranston, letter to Maria Hsia, Jan. 23, 1989
(Ex. 6); see generally Hom deposition, pp. 180-82.
\11\ Hom deposition, p. 20.
\12\ Sterngold, supra note 4.
\13\ See generally Hom deposition, p. 15 (``[E]specially on the
Federal level, when Maria started to meet Congressmen and Senators, she
realized that this was helpful to my immigration clients who, because
of the[ir] contact with the Federal Government, might have some need of
a letter from a Senator or a Congressman to get a case moving through
the red tape of the bureaucracy.'').
---------------------------------------------------------------------------
Apart from concrete help with specific immigration cases,
however, Hsia's political activity was useful to her business
in a second, more general sense: it helped her cultivate an
image of a ``connected'' political ``player'' who could ``make
things happen'' for her clients. As Hom put it,
[I]t was also good in the sense of a public relations
image where the Chinese newspapers would say, Here's
Howard Hom and Maria Hsia having a reception with the
particular Senator or Congressman, the implication
obviously being that we were well-connected and that
clients should view that, if anything happened to their
case, we had this kind of extra protection, so to
speak.14
---------------------------------------------------------------------------
\14\ Id.
Her political fundraising in California politics, for example--
which had begun with her involvement with Hom in March Fong-
Eu's campaign in 1982--quickly proved useful in this regard.
With help from fundraising beneficiaries March Fong-Eu and
California Lieutenant Governor Leo McCarthy, for example, Hsia
was appointed to several honorary state positions, the prestige
of which benefitted her immigration work.15
---------------------------------------------------------------------------
\15\ See, e.g., Ex. 3, p. 58 (``I was sitting on the California
Economic [Development] Commission, which gave me a lot of exposure and
[helped] to draw more [immigrant] investors [under the Immigration Act
of 1990] to come into this country.'') These state positions included
seats on the Commission for Economic Development and the California-
Taiwan Sister State Legislative Task Force, and received weighty titles
as March Fong-Eu's ``Honorary Deputy Secretary of State'' and ``Special
Assistant for Asian Affairs.'' See Maria Hsia biography, p. 2 (Ex. 7)
(listing positions); Hom deposition, pp. 12-13; Leo McCarthy, letter to
Maria Hsia, April 8, 1991 (Ex. 8) (discussing upcoming seminar for
Commission for Economic Development).
Hsia's early political activity also had national results. DNC
Chairman Ronald Brown, who would later supervise Hsia's friend John
Huang in his Department of Commerce, appointed Hsia to the DNC's
``National Convention Site Selection Committee.'' Cf. Ronald H. Brown,
letter to Maria Hsia, June 14, 1990 (Ex. 9).
---------------------------------------------------------------------------
As luck would have it, however, the synergy between Hsia's
political activity and her immigration business did not flow in
only one direction. Her immigration work may, in fact, have
introduced her to Indonesia's Lippo Group conglomerate. Having
been put in contact with the Indonesian section of Lippo Bank
by one of her clients, she acquired some further clients
through them.16
---------------------------------------------------------------------------
\16\Maria L. Hsia, deposition in Hsia v. Hom, California Superior
Court, No. BC 059523, May 18, 1994, pp. 29-31 (Ex. 10).
---------------------------------------------------------------------------
By the late 1980s, Hsia had begun to attempt on the
national stage what she had by then accomplished in California:
building close fundraising and political ties to prominent
politicians who were in a position to help her and her friends.
At least initially, however, this project--which was to
culminate with her efforts to involve the Hsi Lai Temple on
behalf of national Democratic candidates in the 1996
elections--could not be accomplished alone. To move more into
national politics, Hsia required some new friends.
The involvement of Hsia and the Hsi Lai Temple in donation-
laundering in support of the Clinton/Gore ticket in 1996 was
the culmination of a relationship between Hsia and Vice
President Gore that stretches back to 1988--the year that James
Riady, John Huang, Maria Hsia, Eddy Yang, Howard Hom, Fred
Hong, and others established the Pacific Leadership Council
(PLC) as a fundraising and lobbying organization to promote
their interests in U.S. politics.17
---------------------------------------------------------------------------
\17\ As Hom recalled it, the purpose was to build the group into a
powerful political organization; it was designed to give its charter
members ``the same kind of clout as, say, other organized groups . . .
like the Teamsters or the National Rifle Association . . . .'' Hom
deposition, p. 24.
---------------------------------------------------------------------------
From the beginning, it should be noted, the PLC was in
large part a vehicle for the advancement of Lippo interests.
James Riady, the son of Mochtar Riady and scion of the family
dynasty that ran the Lippo Group, was instrumental in the PLC's
founding and served alongside Hsia and Fred Hong as one of the
organization's first co-chairs.18 Indeed, James
Riady was perhaps the single most important figure in the PLC's
early political activity, hosting its first political
fundraiser on April 22, 1988,19 using his business
contacts to facilitate the group's fundraising,20
and employing his own money and that of Lippo employees to make
up for unanticipated shortfalls in PLC fundraising
efforts.21
---------------------------------------------------------------------------
\18\ Id.
\19\ Id. p. 26; see also Maria Hsia, facsimile transmission to John
Huang, March 30, 1988 (Ex. 11) (referring to upcoming event at
``James's house on 4/22/88'').
\20\ One document recounting contributions made to the Democratic
Senatorial Campaign Committee (apparently in 1988), for example, lists
13 persons or couples who had contributed between $5,000 and $10,000 to
that organization. Beside each name is listed the name of the person
who solicited that contribution. James Riady's name appears next to 11
of the 13 donations, suggesting that he was responsible for every
contribution but two (the ones that were made by Hsia and Hom
themselves). David Lang, memorandum to Mary Leslie, May 4, 1988 (Ex.
12); see also Hom deposition, p. 28 (explaining that handwritten
notations next to each name indicate solicitor). Another document
produced to the Committee, recounting solicitations for new membership
in the ``Leadership Circle/Business Round Table Circle,'' lists Maria
Hsia and James Riady as having each solicited $55,000. List of
Leadership Circle Solicitations, undated (Ex. 13).
\21\ John Huang, Riady's employee, was particularly active in this
regard. See Hom deposition, pp. 30-32 (recounting that John Huang
commonly ``stepped in to fill the slot'' if Hsia or others ``would fall
short of [their] goal and would have to look for other people to bail
her out . . . [by] making an extra contribution''); John Huang, note to
Maria Hsia, Dec. 16, 1989 (Ex. 14) (forwarding blank check drawn on
account at Lippo bank with handwritten instructions to use it for
either $500 or $1,000 donation to Fund for a Democratic Majority,
depending upon whether another contributor met anticipated commitment);
Jeff Su, letter to ``Pamela,'' April 15, 1991 (Ex. 15) (enclosing Huang
check to ``Mikulski for Senate'' in order to ``serve as a replacement
for Phillip So's check''); Maria Hsia, letter to Rick Weiland, April
28, 1988 (Ex. 16) (forwarding check from Huang which ``represents David
Yeh and Ossy Tirta's contributions''); Ex. 13 (listing solicitations by
Riady for ``New Members Leadership Circle/Business Round Table Circle''
with handwritten alterations replacing names of Ossy Tirta and David
Yeh with that of John Huang).
---------------------------------------------------------------------------
A ``wish list'' 22 James Riady submitted to Hsia
in April 1988 summarizing ``issues need[ing] to be followed
up,'' 23 for example, suggests Riady's role in
steering the PLC and interest in enlisting it, and through it
the Democratic Senatorial Campaign Committee (DSCC), as a
vehicle for the promotion of Lippo interests. This list,
prefaced by a handwritten memorandum on Bank of Trade/Lippo
Group 24 stationery, outlined Riady's plans for the
group's political activity in U.S. politics on a Senator-by-
Senator basis, outlining a specific ``agenda'' for six U.S.
Senators: Daniel Inouye, Tim Wirth, Kent Conrad, James Exon,
John Melcher, and Tom Daschle. More broadly, Riady suggested a
number of ``[o]ther issues'' that the PLC should pursue, among
them:
---------------------------------------------------------------------------
\22\ The term is Howard Hom's. See Hom deposition, p. 36.
\23\ James Riady, memorandum to Maria Hsia, April 26, 1988, p. 1
(Ex. 17).
\24\ The Bank of Trade was a Lippo-owned bank that is now known
simply as Lippo Bank.
---------------------------------------------------------------------------
``(i) The need for the Senators to impress upon
Taiwan to allow Asian-American banks (or at least Bank
of Trade) to be allowed to open a branch office in
Taiwan in the very near future.
(ii) Appointments of Asian-Americans to policy making
positions in the Federal Government.
(iii) Visit of US Senators on an ongoing and regular
basis to Indonesia, Hong Kong and Taiwan at our
invitation or with us as host.
(iv) Participation of Senators at specific Asian-
American community activities in California such as the
NACAB, The Asia Society, the Indonesian Business
Society and other similar bodies.
(v) Funds of various Federal Government Agencies or
government bodies as well as that of DSCC to be
deposited at the Asian-American banks in the U.S.
Perhaps the DSCC could start by making a deposit at
Bank of Trade.
(vi) Assistance for special, exceptional immigration
cases when and if it arises.'' 25
---------------------------------------------------------------------------
\25\ Ex. 17, p. 3.
---------------------------------------------------------------------------
Riady's role in personally directing such activity,
however, declined over time as it became difficult for him to
reconcile the broader responsibilities of helping run his
family's international business empire with day-to-day
involvement in U.S. politics. As a consequence, he found it
necessary to step down as co-chair of the PLC. To ensure that
Lippo's interests were still advanced by the organization,
however, Riady delegated his role to Huang, who was at that
time a top executive with the Lippo-owned Bank of Trade and
thus Riady's employee. Huang thereafter served as Riady's agent
``both on the PLC, taking over Riady's position as the
organization's co-chair, and more generally with regard to U.S.
political activity.26 As Maria Hsia herself
27 put it in a facsimile transmission to her PLC co-
chair Fred Hong, ``John Huang . . . is putting D.S.C.C.
together for James.'' 28
---------------------------------------------------------------------------
\26\ See Hom deposition, pp. 24-25.
\27\ As suggested by Riady's April 1988 ``wish list,'' Hsia was
apparently also expected to play a role in implementing James Riady's
agenda. See Ex. 17, p. 1 (noting that with regard to political agenda,
``it may be best to coordinate through a person--i.e., you.'').
\28\ Maria Hsia, facsimile transmission to Fred Hong, March 30,
1988 (Ex. 18).
---------------------------------------------------------------------------
The PLC swung its weight in behind Democratic Party
candidates in several of the major national races of 1988, most
prominently Michael Dukakis' campaign for President and Leo
McCarthy's campaign for the U.S. Senate.29 Both of
these campaigns, however, were conspicuously unsuccessful--
leading the PLC to cast around for a way to rekindle its
political fortunes. Ultimately, the PLC decided to try to
revive the organization's political activity by organizing a
high-profile trip to Asia for a group of U.S.
Senators.30 Significantly, it was this search for
new political opportunities in 1988-89 that helped bring Hsia
and the Riady/Huang group together, simultaneously, both with
Venerable Master Hsing Yun's Fo Kuang Shan Buddhist order and
with then-U.S. Senator Al Gore.
---------------------------------------------------------------------------
\29\ See generally Hom deposition, pp. 22-25, ``89 for 90,'' Los
Angeles Times Magazine, Jan. 1, 1989, p. 34 (identifying Hsia as ``at
the center of a predominantly Asian group of fund-raisers rapidly
emerging as a major force in the hotly competitive Los Angeles
political money scene. Last fall, the group raised substantial sums
for, among others, the Dukakis and McCarthy campaigns. Throughout 1989,
its' leading delegations of Senators and Congressmen on tours of the
far east''). Hsia was also a ``regional chair'' for the 1988 Democratic
Senate Dinner in Los Angeles and--along with Huang, Hom, and Fred Hong,
among others--co-chaired at least one Dukakis campaign fundraising
dinner in Los Angeles sponsored by the ``Asian-American Friends of
Dukakis.'' (The ``general chairman'' for the latter event was the now-
convicted campaign-finance violator Albert Lum.) See 1988 Democratic
Senate Dinner brochure, p. 1 (Ex. 19); Dukakis dinner program (Ex. 20).
\30\ As it turned out, this trip would be among the PLC members'
most important steps toward implementing the U.S. political agenda
James Riady had spelled out in April 1988, see supra text accompanying
note 25 (listing agenda item of having Asian-Americans appointed to
high office), until the success in 1994 of the group's efforts to have
Huang appointed to a high government position. See Hom deposition, p.
39; see also Ex. 21 (letters on behalf of John Huang: Howard Hom,
letter to Doris Matsui, Dec. 14, 1992; Sen. Paul Simon, letter to Susan
Brophy, Jan. 6, 1993; Sen. Thomas Daschle, letter to Richard Riley,
Jan. 8, 1993; Mike Wantanabe, letter to Melinda Yee, Jan. 19, 1993;
Sen. Kent Conrad, letter to Bruce Lindsey, Jan. 21, 1993; Nancy H. Au,
letter to Melinda Yee, Jan. 26, 1993; Kathleen Brown, letter to Jody
Franklin, Jan. 28, 1993; Maeley Tom, letter to John Emerson, Feb. 17,
1993; Leo McCarthy, letter to Bruce Lindsey, Feb. 22, 1993; Leo
McCarthy, letter to John Emerson, Feb. 22, 1993).
---------------------------------------------------------------------------
The connection between Hsia and her fellow PLC members and
the Fo Kuang Shan Buddhist order 31--the Taiwanese
parent organization of the International Buddhist Progress
Society (IBPS) and its Hsi Lai Temple in Hacienda Heights,
California--came about through Eddy Yang. Yang, also a founding
member of the PLC, headed the Sunlight Corporation a furniture
company and had been for many years an ``advisor'' to the Fo
Kuang Shan order in Taiwan.32 As Howard Hom
recalled, Yang stepped in and ``volunteered the temple's
auspices'' after Hsia had ``problems lining up a corporate
sponsor that she knew,'' making the temple available to help
underwrite the cost of the PLC's trip to Asia for Senator Gore
in early 1989.33
---------------------------------------------------------------------------
\31\ This Taiwanese-based sect was founded in 1969 by Li Kuo-Shen,
who subsequently took the name Hsing Yun (``Stars and Clouds'') as his
``Dharma name'' upon becoming a monk. By the mid-1990s, the Order had
developed into a worldwide network having some 130 temples, as many as
1.5 million adherents, and over $400 million in assets. See Kevin
Sullivan, ``Monk at Issue is an Icon in Taiwan,'' Washington Post, Oct.
25, 1996, p. A22; Geoff Spencer, ``Buddhism Blossoms in Australia's
Industrial Heartland.'' Ap Worldstream, Oct. 8, 1995.
\32\ See Hom deposition, pp. 49-50.
\33\ Id.
---------------------------------------------------------------------------
Involving the Fo Kuang Shan Order in the PLC's agenda was
in many ways an inspired choice, as it had acquired a
reputation for political activity in Taiwan.34
Master Hsing Yun saw himself as destined to play an important
role on the world stage as an unofficial advisor to political
leaders both in Taiwan and elsewhere.35 Not for
nothing, therefore, was Master Hsing Yun known as ``the
political monk.'' 36
---------------------------------------------------------------------------
\34\ Master Hsing Yun, for example, has since served 1988 on the
Central Advisory Committee to Taiwan's ruling Kuomintang Party (KMT),
supported an independent Buddhist candidate (Chen Lu-an) in Taiwan's
1995-96 presidential election campaigns, and in 1997 accepted an
appointment to the Taipei government's cabinet-level Overseas Chinese
Affairs Commission. Debbie Kuo, ``Master Hsing Yun Appointed
Commissioner of O'Seas Chinese Affairs,'' Central News Agency [Taiwan],
Feb. 16, 1997; Sullivan, supra note 31, p. A22; Tsong Ching, ``Master
Hsing Yun and Preceptor of State Yu Lin,'' Pacific Journal, May 3, 1996
(Ex. 22) (translated by Michael Yan for the Governmental Affairs
Committee). According to press reports, Hsing Yun's ``pattern of
influence building'' has given him ties to ``a number of world
leaders.'' Sullivan, supra note 31; see also generally Stuart
Chandler, Establishing Friendly Relations: The Fokuangshan Perspective
on the Hsi Lai Temple Political Donations Controversy (unpublished
monograph, June 14, 1997) (Ex. 23, p. 13).
\35\ Hsing Yun once wrote a novel about a Buddhist monk named Yu
Lin, who was appointed to political office as ``Preceptor of State'' by
an emperor of the Ch'ing dynasty. This story, which was made into a
movie and a television series in Taiwan, outlines Hsing Yun's
``critique and expectations of a religious-leader-turned-Preceptor-of-
State'' and suggests that he entertains similar ambitions for himself.
Ching, supra note 34; cf. Fu Chi-ying, Handing Down the Light: The
Biography of Venerable Master Hsing Yun (Hsi Lai University Press 1996)
(translated by Amy Lui-Ma) (Ex. 24, p. 106).
\36\ John Mintz, ``Fund-Raisers Pressured Temple After Gore Visit;
12 Donors Were Reimbursed,'' Washington Post, June 13, 1997, p. A20
(recounting that Hsing Yun has called himself ``political monk''); see
also Ching supra note 34.
---------------------------------------------------------------------------
To this end, in expanding his order to the United
States,37 Hsing Yun apparently hoped to continue
``spreading the Dharma,'' i.e., increasing popular receptivity
to Buddhist ideas and culture, through political fundraising in
U.S. politics.38 As he made clear to the Committee
when he was interviewed in Taiwan in June 1997,
---------------------------------------------------------------------------
\37\ The name of the elaborate temple complex constructed by the
IBPS to be the headquarters of the Fo Kuang Shan order's North American
operations illustrates its intended mission of spearheading the order's
expansion into the United States: Hsi Lai means ``Coming to the West.''
Hsing Yun's biographer describes the founding of the temple in Hacienda
Heights as ``a milestone that mark[ed] the Dharma coming to the Western
world.'' (Ex. 24, p. 342).
\38\ See Ex. 23, p. 4 (``As another means to establish Hsi Lai
Temple as a legitimate, fully accepted member of the [U.S.] community,
Master Hsing Yun and the temple's various abbots have consistently
sought to secure `friendly relations' with local and national political
leaders.''); id., p. 16 (describing order's political involvement in
Taiwan and noting that ``[i]n light of Master Hsing Yun's willingness,
even eagerness, to create `friendly relations' with government
officials, both in Taiwan and abroad, the fact that he invited Gore to
Fokuangshan in 1989, and subsequently honored him with a banquet as Hsi
Lai Temple, no longer seems so bizarre.'').
Speaking of political donations, I feel that, my
entire life, I have been a person who enjoys doing good
deeds and giving to others. . . . I give people
assistance. I am grateful for the economic aid that the
United States government gave to the Republic of China
thirty or forty years in the past. Having established
two-way communication with the United States, I feel
that I ought to express my gratitude and repay the
country.39
---------------------------------------------------------------------------
\39\ Hsing Yun, ``Statement to Governmental Affairs Committee Fact-
finding Team'' June 17, 1997 (Ex. 25, p. 2). (This document was
prepared by Hsing Yun for the Committee in advance of his interview on
June 17, 1997; it does not represent an account of this interview.)
This penchant for political involvement helped make Hsing Yun's
Fo Kuang Shan order an eager collaborator in Maria Hsia's
political activity.40 Over the next few years, Hsing
Yun's organization helped Hsia and her PLC co-founders in three
principal ways:
---------------------------------------------------------------------------
\40\ Ironically, however, according to Howard Hom, Maria Hsia was
generally contemptuous of persons who became involved in political
activity through political conviction; she believed that real political
power flowed from campaign contributions rather than passion and policy
activism. Hom interview, p. 3.
---------------------------------------------------------------------------
(1) The Fo Kuang Shan order helped pay for the PLC's
trip to Asia in early 1989 and hosted the PLC
delegation at its temple headquarters in Kiaoshung,
Taiwan;
(2) The order provided Maria Hsia with a lucrative
sideline in procuring ``religious worker'' visas and
green cards for Temple monastics and devotees coming to
the United States under provisions of the 1990
immigration act for the passage of which she had
successfully lobbied; and
(3) The order gave Hsia access to a deep reservoir of
money for illegally laundered political donations, upon
which she would draw heavily in the years to come.
In return, the Fo Kuang Shan order perceived itself as becoming
increasingly influential within the Democratic Party. By late
1996, brochures prepared by the Hsi Lai Temple had come to
describe Hsing Yun as an ``informal liaison to the White House
on Asian affairs.'' 41
---------------------------------------------------------------------------
\41\ Lena H. Sun, ``Gore `Community Outreach' Touched Wallets at
Temple: April L.A. Event Raised Funds and Questions,'' Washington Post,
Oct. 25, 1996, p. A1.
---------------------------------------------------------------------------
The PLC's trip to Asia in 1989 was organized by John Huang,
James Riady, and Maria Hsia, with Huang playing the lead role.
Here again, James Riady's enormous role in the PLC was visible:
according to a report on the preparations Huang gave to a PLC
meeting in November 1988, Riady and his employee Huang provided
$10,000 in seed money to help cover the trip's costs. This
money was deposited in an account controlled by Huang, Hsia,
and Fred Hong at Riady's own Bank of Trade.42
Overall sponsorship of the trip was ostensibly to be provided
by a ``non profit organization in Indonesia''; this was being
arranged by James Riady.43
---------------------------------------------------------------------------
\42\ Minutes of PLC Meeting, Nov. 10, 1988, p. 1 (Ex. 26).
\43\ Riady's role as perhaps the single most important figure
behind the 1989 trip is also suggested by a letter sent in July 1988 by
Huang's assistant to a member of Senator Kent Conrad's staff as part of
the PLC's efforts to organize the Asia trip. According to this letter,
Riady had picked the ``dignitaries, public officials and business
leaders in Taiwan, Hong Kong, Singapore and Indonesia'' who were to be
visited by the PLC delegation. Interestingly, this list included a
number of ``PRC Related Officials,'' including the head of the Xinhua
News Agency in Hong Kong, described as ``equivalent to PRC
Ambassador,'' and the head of China Resources, which was called ``PRC's
key foreign trading company.'' Virginia H. White, letter to Karen
Frederickson, July 28, 1988 (Ex. 27). (For more about China Resources,
see the sections of this report dealing with Lippo and with
intelligence matters.)
The Fo Kuang Shan order also contributed an additional $4,000
toward the PLC's expenses through its U.S. subsidiary, the
International Buddhist Progress Society. See Check #1938 from
International Buddhist Progress Society for $4,000 to ``Pacific
Leadership,'' Dec. 28, 1988 (Ex. 28).
---------------------------------------------------------------------------
Originally, the plan had been to invite as many as five
U.S. Senators, accompanied by 15 PLC members, on a trip to
Taiwan, Indonesia, and Hong Kong.44 All but one of
the Senators invited to participate, however, turned down the
Council's invitation.45 But Senator Gore faced re-
election in 1990, and had depleted his campaign funds in his
failed 1988 presidential bid.46 Having been told by
Senator Gore that he ``would like to know the Asian community
better and would like to be closer to them,'' 47
Maria Hsia explicitly promised Senator Gore her political
support, as well as that of PLC co-founders such as James Riady
and John Huang, if he would come join them in Asia. Indeed,
Hsia advised him bluntly that ``[i]f you decide to join this
trip, I will persuave [sic] all my colleagues in the future to
play a leader role in your future presidential race.''
48 Gore thereupon accepted, becoming the only
national-level U.S. politician to join the PLC in Taiwan.
---------------------------------------------------------------------------
\44\ Ex. 26, p. 2.
\45\ Hom deposition, p. 56.
\46\ See Al Gore, letter to Maria Hsia, May 23, 1989 (Ex. 29).
\47\ Maria Hsia, letter to Albert Gore, Nov. 22, 1988 (Ex. 30)
(recounting conversation with Gore during event at home of Pamela
Harriman). This Harriman event was probably not the same event
referenced in a document in the handwriting of Jeff Su--Maria Hsia's
political assistant--representing a fax transmission from Hsia to John
Huang at Bank of Trade. This document describes a dinner party for 25-
30 guests at Harriman's house costing $3,000 to $5,000 per person with
proceeds going to Friends of Al Gore. See Maria Hsia, memorandum to
John Huang (undated) (Ex. 31). According to Howard Hom, Jeff Su only
began working for Hsia in 1989, suggesting that the Harriman event
referenced in Hsia's November 22, 1988 letter was a prior fundraiser.
See Hom deposition, pp. 77-78.
\48\ Ex. 30. This letter is in the Committee's possession only in
``draft'' form, but Howard Hom recalls that it was ultimately sent as
written. See Hom deposition, p. 59.
---------------------------------------------------------------------------
Thanks to the partial financial sponsorship provided by
Hsing Yun, part of the Taiwan leg of the PLC's Asia trip
consisted of a visit to the Fo Kuang Shan temple in Kiaoshung.
Attending with a delegation that included James Riady and his
wife Aileen, John Huang and his wife Jane, Eddy Yang and his
wife Jenny, Fred Hong, Howard Hom, and Maria Hsia, as well as
Gore staff members Peter Knight and Leon Fuerth, 49
Senator Gore toured the Kiaoshung Monastery on January 11, 1989
and met with Hsing Yun.50
---------------------------------------------------------------------------
\49\ Pacific Leadership Council, attendance list for January 1989
trip (Ex. 32). Knight was then Gore's chief of staff, while Fuerth was
his foreign policy advisor. (This document was not a final list of
participants, but Howard Hom recalls it being accurate apart from
exceptions that are irrelevant for present purposes. See Hom
deposition, pp. 61-62.)
\50\ Indeed, during their meeting, Senator Gore and the Venerable
Master discussed the Senator's hopes to win the U.S. presidency.
According to Hsing Yun, when
Senator Gore visited Fo Kuang Shan . . . I said to him,
``You can become the president of the U.S.'' He was excited
upon hearing that and said, ``I will visit you when I
---------------------------------------------------------------------------
become the president.''
Hsing Yun, article in Universal Gates Monthly (May 1996) (Ex. 33, pp.
183-184) [translated from the Chinese by SA Becky Chan for the
Governmental Affairs Committee].
This was the start of an extremely close relationship
between Hsia and Senator Gore. After the January 1989 trip to
Taiwan, Hsia became an active fundraiser for the Senator's
reelection campaign.51 Over the next 22 months,
until his reelection to the Senate in November 1990, for
example, Hsia was involved with--with the help of her
``political assistant'' Jeffrey Su 52--numerous
fundraising events for the Gore campaign, working in
conjunction with campaign officials to refer her own friends
and fundraising colleagues to Gore events in Southern
California.53 Hsia also helped organize Asian-
Americans and Indo-Americans in Tennessee in support of Senator
Gore's re-election, forwarding lists of affluent Chinese-
Americans in Tennessee to the Senator's fundraising staff and
helping publicize Indo-American events among her PLC
fundraising colleagues.54
---------------------------------------------------------------------------
\51\ She and her colleagues also did fundraising for other
Senators. See, e.g., DSCC Tally Sheet (1989-1990) (ex. 34) (listing
DSCC recipients including Senators Paul Simon, Tom Harkin, John Kerry,
and Carl Levin); List of contributors to Sen. Howell Heflin dinner,
Nov. 27, 1989 (Ex. 35). Gore, however, was the particular object of
Maria Hsia's attentions.
\52\ Jeffrey Su was hired by Hsia in early 1989--after her return
from the trip to Taiwan--to help her run her various political
activities and particularly to assist her in working for Senator Gore.
Hom deposition, pp. 75 & 78.
\53\ See, e.g., Maria Hsia, memorandum to DSCC members, March 20,
1989 (Ex. 36) (list of upcoming Gore events); Debra Fried, memorandum
to ``Finance leadership and contacts/Friends of Al Gore,'' July 27,
1990 (Ex. 37) (forwarding list of upcoming Gore fundraisers on West
Coast in August 1990); Hari Lal, letter to Debra Fried, Aug. 14, 1990
(Ex. 38) (discussing Gore visit to Los Angeles); Handwritten memorandum
on ``Gore Reception 3/21'' chaired by Eddy Yang at home of PLC founding
member Tina Bow (otherwise undated) (Ex. 39); Jeff Su, fax transmission
to John Huang, Aug. 6, 1990 (Ex. 40) (discussing ``the Gore reception
on Thursday''); Jeff Su, fax transmission to Hari Lal, Aug. 15, 1990
(Ex. 41) (discussing upcoming Gore events).
\54\ See Ju Hong Taur, letter to Maria Hsia, Feb. 9, 1989
(translated by SA Becky Chan for the Governmental Affairs Committee)
(Ex. 42) (forwarding list of Chinese persons for fundraising
solicitation and political organization); Ex. 43 (Maria Hsia, fax
transmission to John Huang, March 9, 1990 [RE: Reception for Senator
Gore by Indo-American community'']; Hari Lal, fax transmission to Maria
Hsia, Oct. 1, 1990 [advising Hsia of Indo-American plans for Gore
fundraisers in Tennessee]); see generally Hom deposition, pp. 78-81
(recounting Hsia's role in organizing Asian-Americans and Indian-
Americans).
---------------------------------------------------------------------------
The PLC organized a fundraiser of its own for Senator
Gore's campaign on May 21, 1989--a $250-per-person event held
at the California home of PLC founding member Tina Bow and
consisting of a ``private reception'' with the Senator for PLC
members and event sponsors followed by a ``general reception.''
55 The event was chaired by Fo Kuangshan advisor
Eddy Yang, but Hsia was one of its principal organizers,
designing and mailing the invitations for the affair, helping
arrange musical entertainment 56 and inviting ``DSCC
Members and Friends'' to participate, advising them that
Senator Gore was ``a likely candidate for president in 1992.''
57
---------------------------------------------------------------------------
\55\ Maria Hsia, letter to ``DSCC Members and Friends,'' May 5,
1989 (Ex. 44) (discussing May 21 fundraiser); R.S.V.P. return and from
Maria Hsia's computer file, May 3, 1989 (Ex. 45) (indicating $250
solicitation for event ``sponsors'').
\56\ See Ex. 45 (draft invitations from Maria Hsia's computer file,
with handwritten edits, and handwritten draft of invitation); Maria
Hsia, letter to Johan Sendjaja, May 3, 1989 (Ex. 46) (discussing
arrangements for band and public address system at May 21 Gore
reception); Handwritten notes from Maria Hsia's file detailing
preparations for May 21 reception (Ex. 47).
\57\ Ex. 44.
---------------------------------------------------------------------------
Nor were Hsia and her colleagues above using Fo Kuang Shan
monastics in their fundraising for Senator Gore. Underlining
the PLC's reciprocal commitments with the Senator, for example,
Eddy Yang helped arrange for several monks and nuns from the
Temple to attend the May 21, 1989 Gore fundraiser.\58\ This
event reportedly raised nearly $20,000 for Senator Gore; he
accordingly wrote a thank-you letter afterwards to one of the
monastics saying that he ``deeply appreciates your support and
the support of your congregation.'' \59\ Senator Gore
thereafter thanked Hsia for her support, assuring her that this
assistance was vital because
---------------------------------------------------------------------------
\58\ Hom deposition, p. 67 (``[T]he temple sent a team of monks and
nuns to the event, and as I recall, someone spoke as the representative
of that [organization], and because of that connection or linkage, Eddy
Yang was an event chair because of his connection initially with the
Buddhist temple that helped subsidize the trip to Taiwan.'').
\59\ William Rempel, Alan Miller & Henry Weinstein, ``Buddhist
Temple repaid some DNC Donations,'' Los Angeles Times, May 23, 1997, p.
A1.
my involvement in the Presidential race over the past
two years has delayed my efforts to raise money for the
1990 campaign and left our coffers empty for the
upcoming race. Your contribution at the early stage of
this effort has helped to replenish our account and
will allow me to build a strong organization. . . .\60\
---------------------------------------------------------------------------
\60\ Ex. 29
In addition to Gore-specific fundraising events, the DSCC's
political-contribution ``tally'' system proved to be a valuable
tool for Hsia as she swung her newfound fundraising clout
behind Senator Gore, representing as it did a convenient way
around limits on ``hard'' campaign finance contributions.\61\
Rather than limit their overall support of a particular
candidate to the $2,000 level specified for total individual
``hard'' donations, contributors to the DSCC arranged to
earmark much larger ``soft'' money contributions for particular
candidates. As Howard Hom remembered it,
---------------------------------------------------------------------------
\61\ By federal law, contributions to individual candidates for
Congress are limited to $1,000 per contributor for the primary and
general election campaigns, for a total of $2,000 per contributor.
The contributor donated under the name of DSCC, and
DSCC could do with it as they wished, but as the group
found out during the Leo McCarthy campaign for the U.S.
Senate in 1988, . . . we could request that all or a
portion of any donation be tallied or allocated to use
in a particular race. So we could say we want 90
percent to go to Al Gore and 10 percent to go to, say,
Leo McCarthy.\62\
---------------------------------------------------------------------------
\62\ Hom deposition, p. 71; see also id., p. 88 (noting that ``the
DSCC soft money tally would be separately allocated'' from ``the
individual contribution to the 2,000-per-year max[imum]'').
In other words, donors would give money to the DSCC itself in
large, unregulated ``soft'' money contributions, so that the
DSCC could funnel designated amounts of each personal total to
designated candidates with exactly the same result as if the
$1,000 limitations had never existed. This system was
ultimately found to be illegal--with the result that the DSCC
paid $75,000 in fines to the FEC \63\--but for several years
this ``tally'' system proved an invaluable means of skirting
federal election laws.
---------------------------------------------------------------------------
\63\ See Federal Elections Commission, Matter Under Review 3620,
conciliation agreement, Aug. 11, 1995.
---------------------------------------------------------------------------
After returning from the PLC's Taiwan trip, Hsia also
worked for Senator Gore's re-election campaign through this
DSCC tally system.\64\ As documented in files of her
fundraising activity kept by Hsia and Howard Hom, for example,
a donor named Michael Reyes became the frequent target of her
efforts to earmark his DSCC contributions for Gore's re-
election campaign.\65\ In the period before the 1990 elections,
the DSCC ``tallied'' at least $29,500 to Senator Gore's
campaign.\66\ Senator Gore was well aware of this work she
undertook on his behalf. As he put it in a letter he wrote to
Hsia in January 1989, for example,
---------------------------------------------------------------------------
\64\ Ex. 34 (``RE: DSCC tally to Senator Gore/Please check to see
if the DSCC did in fact tally money to Sen. Gore per our request'');
Jeff Su, fax transmission to Debra Fried, Aug. 22, 1990 (Ex. 48)
(``John Huang will be attending the DSCC 1990 Fall Dinner. Maria will
contact John and tell him [to] tally his $1,500 to Sen. Gore.'').
\65\ See, e.g., Maria Hsia, fax transmission to Michael Reyes, Dec.
2, 1988 (Ex. 49) (``I would like to tally your contribution to Senator
Al Gore if you have no objections since his reelection is coming.'').
\66\ Senator Paul Simon received even more DSCC money, being the
recipient of $36,500 in DSCC ``tallies.'' Other recipients included
Senators Howell Heflin ($7,500), Carl Levin ($2,500), Max Baucus
($1,000), John Kerry ($1,000), and Tom Harkin ($4,000). See Ex. 34.
I wanted to thank you for your generosity in
crediting by DSCC tally with the checks from Michael
Reyes and Tony Hsu. I have sent letters to both
thanking them and crediting you as the contact. Thanks
so much; it will help a great deal as we move into the
1990 Senate campaign. You are a wonderful friend.\67\
---------------------------------------------------------------------------
\67\ Al Gore, letter to Maria Hsia, Jan. 31, 1989 (Ex. 50); see
also Ex. 48 (``Senator Gore should call Michael [Reyes] and ask him to
tally the remaining $5,000 to his campaign once it is paid.'').
Another letter in December 1990 similarly thanked Hsia for
``your generous contribution to the Democratic Senatorial
Campaign Committee, which you had tallied to me.'' \68\
Throughout the 1989-90 re-election campaign, Hsia remained in
close contact about fundraising matters with Senator Gore and
campaign officials such as Debra Fried of Friends for Al Gore.
---------------------------------------------------------------------------
\68\ Albert Gore, letter to Maria Hsia, Dec. 5, 1990 (Ex. 51).
---------------------------------------------------------------------------
All of this fundraising support was, of course, part of the
rather explicit bargain Hsia had struck with Senator Gore in
inviting him to visit Taiwan in November 1988. Hsia approached
her political fundraising with clear objectives in mind, \69\
and Senator Gore's presidential ambition appears to have been
her most favored long-term prospect. As Hsia put it in a note
to one DSCC contributor, whom she was at that point trying to
persuade to ``tally'' an additional $5,000 to Friends of Al
Gore, help for Senator Gore was important because he had been
``willing to take the Lead role to travel [to] Asia and [was]
willing to work with us on a long term relationship for his
future presidency.'' \70\
---------------------------------------------------------------------------
\69\ Hsia advised Michael Reyes in January 1989, for instance, that
$5,000 should be allocated to Senator Paul Simon, ``since he sits on
the immigration sub-committee [and] he will be a very helpful source on
any immigration related issues.'' A final $5,000 should be reserved,
she said, for ``any [other] Senator who is responsive to our group's
needs.'' Maria Hsia, fax transmission to Michael Reyes, Jan. 18, 1989
(Ex. 52).
\70\ Id.
---------------------------------------------------------------------------
In fact, never a woman to say with circumspection what
might be put bluntly, Hsia made no secret of her expectations
even when writing to the Senator himself. Four days after the
PLC's first fundraiser for Al Gore on May 21, 1989, she wrote
to tell him that
We were so happy that you were able to spend some
time with members of the Asian Pacific American
community here in Los Angeles. . . . I appreciate your
willingness to provide an opportunity for people to get
to know you better. I would also like to see you become
one of the senators closest to the Asian Pacific
community. But for that to occur, we need time and a
special commitment from each other. If you share the
same sentiments, please allow my colleagues and I a
role in developing this relationship.\71\
---------------------------------------------------------------------------
\71\ Maria Hsia, letter to Albert Gore, May 25, 1989 (Ex. 53).
Because of her work in the immigration services business,
U.S. immigration law was another area of great personal
interest to Hsia. By February 1989, a major immigration reform
bill was being prepared in Congress,\72\ ultimately to become
the Immigration Act of 1990. As this bill moved through the
legislature during 1989, it became the subject of much lobbying
by immigration services providers such as Hsia and Howard Hom.
As finally adopted, the Act included a number of provisions of
great value to such persons. First, the Act restricted
deportation and provided work authorization for the spouse or
unmarried children of legalized aliens.\73\ Second, the Act
contained new provisions for what would become known as
``investor immigrants'' (persons who received special visa
preferences by virtue of their willingness to invest and/or
create jobs in the United States) \74\ and ``multinational
executive'' immigrants (persons employed by a foreign
corporation seeking to work for it in the United States).\75\
Third, the Act created an entirely new visa category for
``religious workers'' who belong to ``religious denomination[s]
having a bona fide nonprofit, religious organization in the
United States'' and who seek entry in order to work here for
their denomination.\76\
---------------------------------------------------------------------------
\72\ Tom Griffith & Steve Huefner, letter to Christopher A. Ford,
Aug. 18, 1997 (Ex. 54) (detailing legislative history of Immigration
Act of 1990).
\73\ P.L. 101-649, Sec. 301 [104 Stat. 4978, 5029]. As a result, an
immigration services provider could use one alien's legal residence in
the United States as a lever with which to secure visas (and ultimately
legal residency) for other members of his or her family. This often
enabled immigration services companies to develop an expanding ``tree''
of paying customers out of a single initial client contact. Hom and
Hsia did a lucrative business by such expedients; according to Hom,
losing the family reunification preferences ``would have wiped out a
certain percentage of the client base.'' See Hom deposition, p. 120.
\74\ P.L. 101-649 Sec. 121(b)(5) [104 Stat. 4978, 4989-90].
\75\ Id., Sec. 121(b)(1)(C) [104 Stat. at 4988]. By the nature of
these two categories, it was difficult to be both poor and eligible for
their visa preferences. Moreover, demand for such visas far exceeded
their supply--necessitating the development of a lottery system and
leading clients eagerly to seek any chance for a perceived special
advantage. See Hom deposition, pp. 128-129.
\76\ P.L. 101-649, Sec. 151 [104 Stat. at 5004-05]. Similar
provisions applied for temporary work visas, and these religious worker
nonimmigrants were exempted from the overall visa caps established
elsewhere in the legislation. Id. at Sec. Sec. 201(b)(1)(B) & 209 [104
Stat. at 4981 & 5027]. For a discussion of the new religious worker
rules, see Hom deposition, pp. 132-33.
---------------------------------------------------------------------------
All three of these visa categories were to become lucrative
parts of Hsia's business, especially after her association with
the Fo Kuang Shan order gave her and Howard Hom the job of
handling immigration work for foreign members of the Order
affiliating with its U.S. branches such as the Hsi Lai Temple
in Hacienda Heights, California.\77\ Hsia had long believed
that her political activity provided important intangible
advantages in her immigration services work, feeling that if
she were ``politically active,'' her clients would conclude
that she had ``more ability and more power to help them in
their cases.'' \78\ In 1989, with an immigration bill pending
in Congress that could provide a vehicle for visa provisions of
such value to her business, Hsia set about to use her political
ties to reap more concrete benefits as an immigration law
lobbyist.
---------------------------------------------------------------------------
\77\ When Hom and Hsia stopped living together, Hsia took the
Temple's immigration business with her, making it a major part of her
work with Hsia & Associates. Hom deposition, pp. 160-61; Deposition of
Man Ho, Aug. 6, 1997, pp. 51-54; Deposition of Yi Chu, Aug. 7, 1997, p.
24; see also Deposition of Matthew Gorman, Sept. 23, 1997, pp. 140-43;
(Ex. 55) (collection of illustrative immigration documents and invoices
for services rendered sent from Hsia & Associates to Temple in 1996);
Deposition of Man Ya Shih, Aug. 20, 1997, p. 16 (recounting that she
obtained green card through Hsia at Temple's expense); Deposition of
Siuw Moi Lian, Aug. 20, 1997, p. 11 (same); Deposition of Huei-Tsan
Huang, Aug. 20, 1997, pp. 11-12 (discussing Hsia's role in obtaining a
green card for her and in performing immigration services for Temple).
According to Hsia's assistant at Hsia & Associates, Matthew Gorman,
work for the Temple made up somewhere between 20 and 35 percent of
Hsia's immigration business. Gorman deposition, pp. 75-76. Maria Hsia
even handled immigration matters for Venerable Master Hsing Yun
himself. See Notice of Entry of Appearance as Attorney or
Representative for Hsing Yun, Oct. 28, 1996 (Ex. 56).
\78\ Ex. 3, p. 28. According to Hsia, political involvement
occasionally could lead to help with specific cases. Congressman Howard
Berman's office, she claimed, helped her develop ways to improve
client's chances in certain visa lotteries. Ex. 10, p. 26. Similarly,
when Hsia asked for help with a particular immigration case from DSCC
``tally'' recipient Senator Paul Simon, ``he made a phone call in front
of me to the immigration commissioner in Washington, DC.'' Maria Hsia,
deposition in Hsia v. Hom, Ca. Super. Ct., No. BC 059523, May 10, 1994,
p. 78 (Ex. 57). Senator Gore also apparently helped Hsia on at least
one occasion, by referring a particular case to her. See Hom
deposition, pp. 117-118; Leon Fuerth, memorandum to Maria Hsia, Dec.
14, 1989 (Ex. 58) (with attachments).
---------------------------------------------------------------------------
One of the principal objects of Hsia's attentions--and
fundraising support--in this respect was Congressman Bruce
Morrison of Connecticut, who was the immigration bill's sponsor
in the House of Representatives and the author of the religious
worker and ``employment-based'' immigrant provisions so
important to Hsia.\79\ Morrison was in the middle of a
difficult (and ultimately unsuccessful) gubernatorial bid in
Connecticut, and badly needed the funds with which Hsia and her
PLC colleagues set out to provide him. Significantly, among
other things, the PLC organized a fundraiser for Morrison at
the Hsi Lai Temple in Hacienda Heights on April 22, 1990.\80\
It was apparently not the first time Hsia had used the Temple
for a political fundraising event,\81\ and it was not to be the
last.
---------------------------------------------------------------------------
\79\ See Ex. 54, p. 2.
\80\ See Ex. 59 (Jeffrey Su, fax transmission to Pat Andrews, April
20, 1990 [enclosing press release announcing upcoming Morrison event at
Hsi Lai Temple]; Invitation to Asian-Pacific American Friends of United
States Congressman Bruce Morrison event at Hsi Lai Temple [giving price
as ``$500 per couple/$300 per person'']). Hsia was even able to turn
Morrison's Connecticut defeat to her advantage by hiring him as an
immigration ``consultant'' immediately after the election of 1990--for
a fee of $10,000 a month for six months. See Ex. 57 (containing as sub-
exhibit Consultancy Agreement between Bruce Morrison and Maria Hsia,
Jan. 22, 1991). As Hsia explained it, Morrison had written ``the
business provision which provides for the jo[b] creating investor
category,'' and ``[t]he definition of ``new entrepreneur' will depend
on Congressional intent and the implementation of the new
regulations.'' Maria Hsia, fax transmission to Jamie Yang, Nov. 26,
1990 (Ex. 60). Who better, therefore, to have on one's masthead and
payroll as an immigration consultant?
\81\ Eddy Yang apparently organized a fundraiser at the Hsi Lai
Temple for Leo McCarthy's campaign. See Debbie McConville, memorandum
to Maria Hsia, undated (Ex. 61) (listing ``Southern California Event
Fundraising'' and indicating that ``Eddie Yang Event/Budhist [sic]
Temple Event'' raised $10,450). Howard Hom also recalled that one of
Senator Paul Simon's several visits to the Hsi Lai Temple had been a
fundraiser. See Hom deposition, pp. 87-88; cf. Maria Hsia, fax
transmission to Floyd Fithian, June 23, 1990 (Ex. 62) (describing Simon
``event'' at Temple); Paul Simon, letter to Maria Hsia, Jan. 22, 1990
(Ex. 63) (thanking Hsia for ``our visit to the Hsi Lai Temple''); Hom
deposition, p. 172 (recalling that when Hsia described meeting with
politician as ``event'' it was most probably a fundraiser). Other
officials may also have benefited from fundraisers at the temple. Cf.
Jeff Su, fax transmission to ``Elka,'' Jan. 22, 1990 (Ex. 64)
(discussing opportunity for California State Controller Gray Davis to
meet with ``Master Hsing Yun and potential supporters at Hsi Lai
Temple'').
---------------------------------------------------------------------------
Part of Hsia's lobbying effort during the summer of 1989--
at the same time she and her colleagues were pushing DSCC
donors to earmark their unregulated ``soft'' money
contributions to Senators Simon and Gore--involved traveling to
Washington to lobby legislators in person on the pending
immigration bill. According to Hom, the delegation Hsia took to
Washington even included a pair of nuns from the Hsi Lai
Temple. The presence of these monastics was intended to remind
members of Congress of
the Al Gore sponsorship to the Temple in Taiwan and
what the group--the Temple--did subsequently to let
other Senators know that if they came on board on the
immigration issue and other Asian issues, then they
could expect the same reciprocation . . . [through]
[t]rips to Taiwan and fundraising in the U.S.\82\
---------------------------------------------------------------------------
\82\ Hom deposition, p. 153.
Hsia's group met with a number of U.S. Senators and
Representatives on July 10 and 11, 1989.\83\
---------------------------------------------------------------------------
\83\ See Maria Hsia, Schedule for July 10-11, 1989 (Ex. 65). See
also, e.g., Ex. 7 (noting that Hsia ``organized and led delegations . .
. to visit Washington, DC during debate on the bill in an effort to
preserve the family reunification categories'').
---------------------------------------------------------------------------
One of her contacts on this trip was with Senator Gore, who
joined staff members Peter Knight and Leon Fuerth in meeting
with Hsia on July 10. Her notes of the meeting recount that
they discussed his trip to Taiwan with her in 1989, and that
Gore ``want[ed] to involve [himself] in the Asian Community
more for [the] future.'' 84 With regard to a
particular amendment to the immigration bill which had by that
point been reported out of the Senate Judiciary Committee's
Subcommittee on Immigration and Refugee Affairs and was rapidly
approaching a full Senate vote 85 --``he said [he
had] no problem for co-sponsorship.'' 86 The
amendment they were discussing --the ``family unity''
provisions that were so important to Hsia's immigration
practice was, in fact, adopted by the Senate two days later.
Senator Gore was one of its co-sponsors.87
---------------------------------------------------------------------------
\84\ Maria Hsia, notes of meeting with Senators, July 10, 1989, p.
2 (Ex. 66); cf. Maria Hsia deposition in Hsia v. Hom, Ca Super. Ct.,
No. BC059523, apparently July 6, 1993, pp, 87-93 (Ex. 67) (discussing
lobbying trip and taking handwritten notes).
\85\ See Ex. 54, p.1.
\86\ Ex. 66 p. 2.
\87\ Ex. 54, pp. 1-2, On her Washington lobbying trip, Maria Hsia
employed a simple system of ``grading'' Senators on an A-to-F scale
based upon their responsiveness to her concerns; Senator Gore received
an ``A''. Ex. 66, pp. 1-2. In fact, to some extent, Hsia apparently
coordinated her lobbying on the pending immigration bill with Senator's
Gore office--as well as the offices of Senator Simon and Representative
Howard Berman--in promoting her favored legislative provisions. See
Maria Hsia, fax transmission to Leon Fuerth, Jan. 24, 1989 (Ex. 68);
see also generally Hom deposition. pp. 142-143.
---------------------------------------------------------------------------
Writing to Senator Gore upon her return to Los Angeles,
Hsia thanked him for ``your support on the recent immigration
bill,'' adding that ``[o]n behalf of the Pacific Leadership
Council and the communities we represent, I thank you for all
that you have done.'' 88 Writing back to her in
response, Senator Gore described himself as being ``pleased to
have been able to assist you'' on the immigration bill.
``Without your superb contribution,'' he said, ``it would have
been much more difficult to find my way in these matters. I
continue to value your good counsel.'' 89 As John
Huang himself later described it to then-Vice President
Gore,``you worked very hard on immigration issues; you worked
very hard for us.'' 90
---------------------------------------------------------------------------
\88\ Maria Hsia, letter to Albert Gore, July 17, 1989 (Ex. 69).
\89\ Albert Gore, letter to Maria Hsia, Aug. 28, 1989 (Ex. 70). By
all accounts, Maria Hsia appears to have been a significant ``player''
in crafting the Immigration Act of 1990--to the point that Senator Paul
Simon, one of the bill's sponsors, later presented her with the pen
used to sign the bill into law. See Hom deposition, pp. 158-159. So
important was this pen, in turn, to Hsia that she reported broke into
the offices of her law ``partner'' Arnold Malter in July 1995 in order
to retrieve it after their business relationship collapsed. See
Monterey Park Police, Crime Report for file number 95-4822, July 15,
1995 (Ex. 1995 (Ex. 71) (describing theft of pen as recounted by Malter
to police).
\90\ John Huang, opening remarks at Vice Presidential event in
Santa Monica, Sept. 27, 1993, on WHCA audiotape of Santa Monica event,
Sept. 28, 1993 [transcription by Government Affairs Committee stafff].
The White House Communications Agency apparently misdated this tape:
the event actually occurred on September 27. See John Huang, letter to
Jack Quinn, Oct. 7, 1993 (Ex. 72) (``We enjoyed meeting you again on
the following Monday, September 27 in Los Angeles. Vice President Gore
was just super.'').
---------------------------------------------------------------------------
In addition to more conventional communications thanking
her for her fundraising on his behalf,91 Senator
Gore sent effusive handwritten comments informing Hsia and
Howard Hom, for example, that ``I cannot thank you enough. You
two are great friends. See you soon. Al.'' 92 Hsia's
involvement with Senator Gore extended even to helping him
prepare his book Earth in the Balance: as Gore Chief of Staff
Peter Knight wrote to Hsia in March 1991,
---------------------------------------------------------------------------
\91\ See e.g., Ex. 51; Albert Gore, letter to Maria Hsia, Dec. 10,
1990 (Ex. 73); Ex. 29; Ex. 50; cf Invitation sent to Maria Hsia for
reception for swearing-in-ceremony on January 3, 1991 (Ex. 74).
\92\ Albert Gore, letter to Maria Hsia, Oct. 2, 1990 (Ex. 75); see
also Albert Gore, handwritten letter to Maria Hsia, undated (Ex. 76).
The materials you got for Al's book on the
environment were perfect. Thanks so much for taking the
time to do it. He would have been lost without your
efforts because the chapter on religion and the
environment is integral to his work.93
---------------------------------------------------------------------------
\93\ Peter Knight, letter to Maria Hsia, March 6, 1991 (Ex. 77).
As will be described below, the close relationship between
Maria Hsia and Al Gore continued at least through
1996.94
---------------------------------------------------------------------------
\94\ Even apart from DNC fundraiser and the April 29, 1996 Gore
fundraiser, for example, Maria Hsia interceded with Deputy Chief of
Staff David Stauss to procure a congratulatory message for the annual
conference of the Buddha's Light International Association (BLIA) in
Paris in August 1996. Compare Maria Hsia, letter to David Strauss, July
2, 1996 (asking for help in obtaining congratulations message), with
Albert Gore, letter to Maria Hsia, July 26, 1996 (extending
congratulations) (both Ex. 78. Hsia went so far as to invite President
Clinton to attend the conference, but be declined--opting instead
merely to send a congratulatory message of his own. See Ex. 79 (Maria
Hsia, letter to Bill Clinton, June 13, 1996, Stephanie Streett & Ann
Hawley, letter to Maria Hsia, Sept. 25, 1996; Bill Clinton, letter to
Buddha's Light International Association, Aug. 2, 1996). As recounted
by Temple official Man Hua during the deposition of her colleague Man
Ho, Hsia became involved in trying to arrange such favors for the BLIA
after learning that Yah Lin (``Charlie'') Trie was attempting to do so.
Protecting her exclusive relationship with the Temple by telling Hsing
Yun that Trie was ``not reliable,'' Hsia thereupon set about arranging
this herself. See Man Ho deposition, pp. 54-68.
---------------------------------------------------------------------------
Considerable publicity has surrounded the illegal
reimbursement of DNC donors by the Hsi Lai Temple in connection
with an April 1996 fundraiser organized by Hsia and Huang for
Vice President Gore. The pattern for this conduct, however, was
actually set at least three years earlier. Both Hsia and Huang
were involved in similar donation-laundering at least as early
as 1993, when they laundered contributions in connection with a
meeting they helped arrange between Vice President Gore's chief
of staff and the head of a company reportedly linked with the
intelligence apparatus of the People's Republic of China. On
Thursday, September 23, 1993, Huang wrote two checks to the
DNC--for $15,000 each--drawn against accounts at Lippo Bank
held in the name of two U.S. subsidiaries of James Riady's
Lippo Group, for which Huang still worked. Four days later, on
September 27, he wrote a third $15,000 check on the account of
a third Lippo subsidiary.95 Two days later, Hsia
arranged for three nuns from the Hsi Lai Temple to write checks
to the DNC totaling $5,000.96 All of these donations
were illegal, representing money from foreign sources or money
from ``straw donors'' illegally reimbursed by another party.
---------------------------------------------------------------------------
\95\ See Ex. 80 (Hip Hing Holding check #2626 for $15,000 on
September 23, 1993; San Jose Holding check #1692 for $15,000 on
September 27, 1993; Toy Center Holdings check #1458 for $15,000 on
September 23, 1993).
\96\ See Ex. 81 (DNC check tracking form for Pi Hsia donation of
$2,000 on September 27, 1993; DNC check tracking form for Hsin Kuang
Shih donation of $2,000 on September 27, 1993; DNC check tracking form
for Hsiu Chu Lin donation of $1,000 on September 27, 1993). Each check
tracking form lists Maria Hsia as the solicitor of the donation
described. On the ``memo'' position of Pi Hsia Hsio's check is written
``Maria Hsia.''
---------------------------------------------------------------------------
Huang's three DNC checks came from Lippo subsidiaries--Hip
Hing Holdings, San Jose Holdings, and Toy Center Holdings--each
of which had negative income at the time the checks were
written.97 In other words, they were losing money;
the money for his three $15,000 contributions actually came
from Lippo accounts overseas.98 With regard to the
$5,000 in DNC donations from Temple monastics arranged by Hsia,
each nun was reimbursed that same day for their donations,
through checks written on the Temple's general expenses account
by the Temple's treasurer, Yi Chu.99
---------------------------------------------------------------------------
\97\ See Ex. 82 (Hip Hing Holdings. Ltd., Income statement for
period ending December 31, 1993; San Jose Holdings, Inc., Income
statement for period ending December 31, 1993; Toy Center Holdings of
Ca., Inc., Income statement for period ending December 31, 1993). For
more information, see the section of this report dealing with John
Huang and Lippo.
\98\ Since the money clearly did not come from the U.S. operations
of these companies, this was a violation of federal election law. See
FEC A.O. 1992-16, Fed. Election Camp, Fin. Guide (CCH) para. 6059, at
11,811, June 26, 1992.
\99\ See Ex. 83 (IBPS check #8086 for #2,000 to Pi-Hsiao on
September 27, 1993; IBPS check #8087 for $2,900 to Hsing Kuang Shih on
September 27, 1993; IBPS check #8088 for $1,000 to H.C. Lin on
September 27, 1993). Temple treasurer Yi Chu's lay name Tsui-Hsueh
Hsueh appears on the checks. (The reimbursement to Hsing Kuang Shih was
apparently $900 more than her $2,000 DNC donation because she also
needed to be reimbursed for $900 in unrelated expenses she had also
borne on the Temple's behalf.) All three monastic ``straw donors''
received letters from DNC Chairman David Wilhelm thanking them for
their ``participation in the Los Angeles Vice Presidential Dinner on
September 27.'' See Ex. 84 (David Wilhelm, letter to Pi-Hsia Hsiao,
Oct. 15, 1993; David Wilhelm, letter to Ksing Kuang Shih, Oct. 15,
1993; David Wilhelm letter to Hsiu Chu Lin, Oct 15, 1993). Federal
election law prohibits funneling donations through third parties. See 2
U.S.C. Sec. 441f.
---------------------------------------------------------------------------
On Friday, September 24, 1993, the day after Huang's first
$30,000 in laundered Lippo donations to the DNC, Huang escorted
Shen Jueren, the head of a company called China
Resources,100 to the White House for a meeting with
Vice President Gore's top adviser, his then-chief of staff Jack
Quinn.101
---------------------------------------------------------------------------
\100\ China Resources is owned by the government of the People's
Republic of China, and is a major business partner of the Riady-owned
Lippo Group. For more information about China Resources, see the
sections of this report on John Huang's activities at Lippo Bank.
\101\ See Ex. 72 (``I want to thank you for having taken the time
out of your busy schedule to receive myself, Chairman Shen Jueren and
his assistant, Miss Liang of China Resoruces Group on September 24 at
your office.'') U.S. Secret Service WAVES list for June 7 through
September 24, 1993 (Ex. 85) (showing Huang appointment to enter White
House complex on September 24 with approval to enter both the Old
Executive Office Building and the East Wing). There is a possibility
that the Vice President may have also met Shen Jueren that day. The
Committee has an audiotape of a September 27, 1993 meeting for Asian-
Americans in Santa Monica, California, at which an individual
introduced himself to the Vice President by giving his name and saying,
``we met just last Friday, in your office.'' The Vice President
responded, ``Yes, of course, we just spoke.'' The Friday before this
meeting in Santa Monica was the day Shen Jueren met with Quinn in the
White House complex. The individual's name is not clearly intelligible,
but prior to this brief conversation a word that may be ``Shen'' can be
heard being spoken in the background of the audiotape. White House
Communications Agency audiotape of September 27, 1993 Santa Monica
event (misdated ``September 28, 1993'').
---------------------------------------------------------------------------
The involvement of Huang and Hsia with Shen Jueren and
China Resources raises an interesting and possibly troubling
issue. As is detailed elsewhere in this report,102
the Committee has learned that 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. In view of this information--coupled
with information suggesting that Huang may have had a direct
financial relationship with the Chinese government
103--the Committee has examined carefully the
longstanding efforts by Huang and Hsia 104 to
develop close ties to U.S. politicians and cultivate influence
in the U.S. political system. This information might raise
concerns regarding Huang and Hsia's involvement with China
Resources' Shen Jueren in 1993.
---------------------------------------------------------------------------
\102\ See chapter of report entitled, ``The China Connection.''
\103\ See id.
\104\ Nor should it be forgotten that James Riady himself played a
significant role in trying to put U.S. Senators in contact with the
head of China Resources in connection with the PLC's Asia trip during
the 1988-89 period. See supra note 43. As recounted more fully in the
report chapter, ``The China Connection,'' the Committee has learned
from recently-acquired information that James and Mochtar Riady have
had a long-term relationship with a Chinese intelligence agency.
---------------------------------------------------------------------------
Public sources have for some years linked China Resources
to the PRC's intelligence apparatus, describing it as an
important source of what in U.S. espionage parlance is known
as--non-official cover'' 105 for espionage and other
intelligence-related activities, e.g., covert influence
operations. As one Defense Intelligence Agency employee put it
in a book published in 1994, for example,
---------------------------------------------------------------------------
\105\ Intelligence officers operating under ``non-official cover''
are known as ``NOCs,'' and if caught will not have the protection of
diplomatic immunity. See, e.g., Norman Polmar & Thomas B. Allen, Spy
Book: The Encyclopedia of Espionage (New York: Random House, 1997), p.
400.
[Chinese] [c]ase officers make extensive use of
commercial covers. For example, a vice president of the
China Resources Holding Company (Hua Ren Jituan) in
Hong Kong is traditionally a military case officer from
Guangzhou. This officer coordinates the collection
activities of other intelligence personnel operating
under Hwa Ren [China Resources] cover.106
---------------------------------------------------------------------------
\106\ Nicholas Eftimiades, Chinese Intelligence Operations (Naval
Institute Press, 1994), p. 80.
The increased prestige in commercial and political circles that
could be derived from access to U.S. politicians would
presumably be of no small value to such an operation.
The link between Hsia and the Chinese government might also
cast into a different light certain other episodes in Hsia's
history of political activity in the United
States.107 Among these would be her ties to Ted
Sioeng, who as described elsewhere, has worked, and perhaps
still works, on behalf of the Chinese government.108
Sioeng sat at the head table next to Vice President Gore and
Hsia at the April 29, 1996 Hsi Lai Temple fundraiser. The
Committee has received information that Hsia worked with Sioeng
and Huang to solicit contributions from Chinese nationals in
the United States and abroad for Democratic
causes.109
---------------------------------------------------------------------------
\107\ For example, Hsia apparently considered lobbying for the
People's Republic of China on a commercial basis after the end of her
relationship with Howard Hom, and claimed to have become increasingly
involved with the PRC in immigration matters after 1992. See Ex 57
(containing as sub-exhibit Bruce Morrison, memorandum to Maria Hsia,
April 14, 1991); Ex. 3, p. 58; see also Hom deposition, p. 184. Though
she claimed in a November 1997 interview that ``I have never had a
single conversation with any Chinese government official about U.S.
politics,'' Hsia also invited four Chinese consular officials to a
reception in honor or Senator Tim Wirth in 1991, and hosted delegation
of Chinese government officials on a trip to Washington during the
summer of 1996. Compare David Johnston, ``Files on China Embarrass
F.B.I. and Reno, and Miff Subject,'' New York Times, Nov. 15, 1997, p.
A12 (quoting Hsia), with Jeff Su, memorandum to Paul DeNino, May 8,
1991 (Ex. 86) (listing consular officials at Wirth event), and Gorman
deposition, pp. 119-23; Matthew Gorman, sworn statement to Governmental
Affairs Committee, Aug. 27, 1997 (Ex. 87, p. 3, para. 17) (discussing
visit to Washington).
\108\ See chapter, ``The China Connection.''
\109\ See the section of this report entitled ``The China
Connection.''
---------------------------------------------------------------------------
Quite apart from these individuals' ties to the Chinese
government, however, it should be clear by now that if one is
to understand the Hsi Lai Temple's involvement in the 1995-96
election cycle, and even the issue of Vice President Gore's
knowledge with regard to the Temple fundraiser of April 29,
1996, one must first understand the breadth and depth of the
relationship between Maria Hsia and Vice President Gore. What
the Vice President knew and when he knew it is not a question,
in other words, that may be understood in isolation from the
past. Rather, it must be placed in context, as the outgrowth of
the long history of Vice President Gore's dealings with Maria
Hsia, John Huang, James Riady, and Hsing Yun's Fo Kuang Shan
Buddhist order.
As the preceding pages indicate, the relationship between
these five key figures was complex, but it was one firmly
grounded in mutual advantage and revolving around political
fundraising. Understood from the perspective of its
participants, therefore, this history places the events of 1996
in a new light. Ultimately, given the elaborate system of
reciprocal assistance among them and the considerable financial
investments the PLC's founding members had made in Vice
President Gore's political career, the Vice President had to
have understood that any DNC event organized at the Temple by
Maria Hsia and John Huang could only really be for one purpose.
Despite the political salience of this ``knowledge''
issue, however, the Temple incident involves much more than
simply a single fundraiser unwisely attended by the Vice
President and unlawfully supported by Hsia and Temple monastics
who had become accustomed to relying upon Hsia to steer their
illegal financial support to U.S. politicians. The DNC
donation-laundering arranged by Huang and Hsia in April 1996
was part of a broader pattern dating back at least to their
collaboration in the Shen Jueren affair of September 1993. In
some sense, the Temple episode of 1996 may even be understood
as the product of a mutually-reinforcing relationship between
Huang and Hsia that began in the late 1980s with their
involvement in the PLC and their fundraising for the DSCC.
Huang's appointment as a DNC fundraiser in early 1996
brought Huang and Hsia back together in ways familiar to both
of them, and with higher stakes than ever. As we have seen,
Huang had used Lippo resources to help Hsia make up for
unanticipated financial shortfalls in her political
fundraising.110 By early 1996, the tables had
turned, and Hsia had an opportunity to return the favor by
greatly expanding what had hitherto been a relatively small-
scale Hsi Lai Temple donation-laundering scheme into a potent
fundraising machine for the Clinton/Gore campaign. The infamous
Hsi Lai Temple fundraiser of April 1996 is thus only part of
this story; over the course of 1996, Hsia and Huang would raise
over $100,000 in laundered Temple donations to help keep Bill
Clinton and Al Gore in the White House.
---------------------------------------------------------------------------
\110\ See supra text accompanying footnote 24.
---------------------------------------------------------------------------
II. A PATTERN OF DONATION-LAUNDERING: 1993-1996
Hsia's involvement with illegally laundering money from the
Hsi Lai Temple to U.S. politicians began at least as early as
June 1993, with a donation made by Hsia herself to a longtime
Hsia fundraising beneficiary, California Secretary of State
March Fong-Eu. Hsia wrote a $500 check to March Fong-Eu's
campaign in June 1993, having been earlier given $500 for that
purpose by the Temple's treasurer.111 In September
1993, as indicated previously, Hsia also arranged to launder
$5,000 of the Temple's money through three monastic ``straw
donors'' to the DNC for an event with Vice President Al
Gore.112
---------------------------------------------------------------------------
\111\ See Ex. 88 (Form 490, List of Contributions Received by March
Fong Eu Campaign Committee '94 recording $500 contribution by Maria L.
Hsia in June 1993; IBPS check #7562 for $500 to Maria Hsia on June 4,
1993); Man Ho deposition, p. 214 (testifying that Temple supported
March Fong-Eu).
\112\ See supra text accompanying notes 96-99.
---------------------------------------------------------------------------
The September 1993 episode involving the Vice President set
a pattern for Temple donation-laundering that would persist
until the 1996 elections: Hsia would telephone a nun at the
Temple named Man Ho,113 who served as the Temple's
chief administrative officer during this period, to inform her
that she needed a certain sum of money in connection with a
particular political fundraising event or political campaign.
Man Ho would then pass along this request to the Temple's
Abbess or Abbot of the time. The Abbot or Abbess would, in
turn, approve a check request form prepared by Man Ho, who
would give this completed form to Yi Chu, the Temple's
treasurer.114
---------------------------------------------------------------------------
\113\ Because Temple officials and monastics invoked their Fifth
Amendment privilege against self-incrimination when asked about their
involvement in DNC fundraising, the Committee granted immunity to five
nuns in exchange for their testimony: Man Ho, Yi Chu, Man Ya Shih,
Hueitsan Huang, and Siuw Moi Lian.
\114\See Testimony of Man Ho, Sept. 4, 1997, pp. 48-49; Man Ho
deposition, pp. 85-86 (testifying that September 1993 was first time
Hsia asked Man Ho for political donations); id., p. 92 (affirming
repetition of same pattern with other contributions); id., pp. 199 &
211-13 (discussing pattern of calls from Hsia).
---------------------------------------------------------------------------
Unbeknownst to Man Ho until late in 1996,115
upon receiving the check request for political contributions,
Yi Chu would then approach Temple monastics or devotees and ask
them to write personal checks.116 The total amount
raised by means of these checks would be the total figure Hsia
had requested and the amount that Man Ho had indicated on the
check request form approved by the Abbot or
Abbess.117 Either the person who wrote the check or
Yi Chu would place the name of the political recipient on the
payee line of the check.118
---------------------------------------------------------------------------
\115\ Man Ho deposition, pp. 199-201.
\116\ Yi Chu deposition, pp. 69, 79, 84, & 92 (discussing pattern).
The reimbursement was not, however, unknown to Hsia: as noted above,
she herself was reimbursed for a donation to March Fong-Eu in June
1993.
\117\ Man Ho deposition, pp. 196-97.
\118\ Yi Chu testified that she did not know what ``DNC'' stood for
until the scandal broke in the press; she believed that few, if any, of
the individual reimbursed donors had a much understanding of to whom,
or for what purpose, their checks were being written. Yi Chu
deposition, pp. 77-79; Testimony of Chu, Sept. 4, 1997, pp. 46-47.
---------------------------------------------------------------------------
At about the same time she received each personal check
from the monastics whom she had solicited, Yi Chu would write a
check for the identical amount, drawn on the Temple's general
expenses account and made payable to the ostensible political
contributors.119 Hsia typically stopped by the
Temple to pick up the monastics' donation checks from Yi Chu or
Man Ho, while Yi Chu gave the Temple's reimbursement checks to
the donors so that they could cover the cost.120
---------------------------------------------------------------------------
\119\ Yi Chu deposition, pp. 86-87.
\120\ See, e.g., id., pp. 39-42 & 46 (recounting that reimbursement
checks were needed because monastics often could not afford
contributions otherwise).
---------------------------------------------------------------------------
The money used for these laundering transactions belonged
to the Hsi Lai Temple as a whole: the reimbursement checks were
all drawn upon the Temple's ``general expenses'' account, which
was in turn filled exclusively from an account into which
flowed donations made to the Temple and the Fo Kuang Shan order
by faithful Buddhist devotees in all walks of
life.121
---------------------------------------------------------------------------
\121\ Id., pp. 86-88; Yi Chu testimony, p. 47. Though some
monastics did keep so-called ``Futien accounts'' at the Temple, their
money being held by the institution in a form of private banking and
segregated for each monastic's own use, these Futien accounts were not
used to reimburse political donations. See generally Yi Chu deposition,
pp. 16-19; Yi Chu testimony, pp. 50-51.
---------------------------------------------------------------------------
The general pattern was simple: Hsia would select the
recipient politician, ask the Temple for money, and the Temple
would funnel its own institutional funds through monastic straw
donors to that politician's campaign. This scheme served Hsia
and a number of U.S. politicians quite well until the 1996
elections, by which point Hsia was using it so frequently that
Yi Chu complained to Man Ho that the requests left her too
little time to find monastic donors who could be
reimbursed.122
---------------------------------------------------------------------------
\122\ See Man Ho testimony, p. 48; Yi Chu deposition, p. 84. As a
result, for the last known Temple reimbursement--in October 1996--Yi
Chu simply gave Man Ho five blank Temple checks and left it for Man Ho
to solicit the donors/reimbursees herself.
---------------------------------------------------------------------------
Hsia's laundering of Temple donations to U.S. politicians
continued in 1994 with two separate episodes in which money was
funneled to Julia Wu, a local school board candidate. In the
first such instance, a monastic named Jou Sheng donated $2,000
to Wu's campaign in March 1994 and was reimbursed the next day
by Yi Chu.123 According to the Temple's attorneys,
another $3,000 was also laundered to Julia Wu at this time,
being passed through Pi-Hsia Hsiao and Nancy Mao, who were also
reimbursed with checks numbered sequentially with that written
to Jou Sheng.124 The Temple laundered money to Wu's
campaign again in May 1994, with at least $2,000 passing
through Temple Abbess Hsing Kuang Shih, as well as an
additional $3,000 through Pi-Hsia Hsiao and Hsiu Chu
Lin.125 In July 1994, Pi-Hsia Hsiao gave $900 to the
campaign of another local California official, Los Angeles
County Tax Assessor Kenneth Hahn, and was reimbursed by Yi Chu
for her efforts.126 Hsia and the Temple returned to
national-level fundraising in September 1994 by laundering
$5,000 to the campaign of Senator Edward Kennedy.127
---------------------------------------------------------------------------
\123\ See Ex. 89 (Jou Sheng check #187 for $2,000 to Friends of
Julia Wu on March 2, 1994; IBPS check #8880 for $2,000 to cash on March
3, 1994, endorsed on reverse by Jou Sheng).
\124\ See Ex. 90 (IBPS check #8881 for $2,000 to cash on March 3,
1994, endorsed on reverse by Pi-Hsia Hsiao; IBPS check #8882 for $1,000
to ``cash NANCY MAO'' on March 3, 1994, endorsed on reverse by Nancy
Mao). Interestingly, Man Ho--normally the conduit for Hsia's requests--
claimed not to have been involved in the Julia Wu donations, leaving
open the question of which other present or former Temple officials
have been involved in Hsia's donation-laundering schemes.
\125\ See Ex. 91 (Hsing Kuang Shih check #587 for $2,000 to Julia
L. Wu on May 4, 1994; IBPS check #9167 for $2,000 to Hsing Kuang Shih
on May 6, 1994); see also Ex. 92 (IBPS check #9168 for $2,000 to Pi-
Hsia Hsiao on May 6, 1994; IBPS check #9169 for $1,000 to Hsiu Chu Lin
on May 6, 1994).
\126\ Ex. 93 (Ph Hsia Hsiao check #174 for $900 to Committee to Re-
elect Assessor Kenneth Hahn on June 15, 1994; IBPS check #9397 for $900
to Pi-Hsia Hsiao on July 1, 1994).
\127\ See FEC Info database printout of individual contributor data
(Ex. 94) (listing total of $2,000 in contributions by Pi-Hsia Hsiao to
Kennedy for Senate, recorded by campaign on September 15, 1994); Id.
(listing $2,000 to Kennedy for Senate from Ling-Tzen Huang, recorded on
same date); id. (listing $1,000 to Kennedy for Senate from Hsiu-Chu
Lin, recorded on same date); Ex. 95 (Pi-Hsia Hsiao check #179 for
$2,000 to Kennedy for Senate on September 6, 1994; Hsiu Chu Lin check
#365 for $1,000 to Kennedy for Senate on September 6, 1994; IBPS check
#1034 for $2,000 to Pi-Hsia Hsiao on September 6, 1994; IBPS check
#1035 for $2,000 to Ling-Tzen Huang on September 6, 1994; IBPS check
#1036 for $1,000 to cash, endorsed on reverse by Hsiu Chu Lin).
---------------------------------------------------------------------------
The first recipient of laundered Hsi Lai Temple money
arranged by Maria Hsia in 1995, was apparently the DNC itself,
in connection with a Clinton/Gore event in September for which
Hsia reportedly raised $5,000 in unlawful Temple
donations.128 Los Angeles County Supervisor Don
Knabe and Senator Edward Kennedy also each received $3,000 in
laundered Temple donations arranged by Hsia in
1995.129
---------------------------------------------------------------------------
\128\ See Ex. 96 (IBPS check #2727 for $2,500 to Hsiu Chu Lin on
September 20, 1995; IBPS check #2729 for $2,500 to cash, endorsed on
reverse by what appears to be the name ``Tong Sew Long''; Jou Sheng
bank records for 09/09/95 through 10/10/95 showing deposit of $2,500 on
September 22, 1995 and debit of $2,500 on September 28 with cashing of
check #215). (On their ``memo'' lines, the IBPS check to Tong Sew Long
bears the Chinese characters for ``public relations''--the term Maria
Hsia used for political fundraising. See Yi Chu deposition, p. 106. The
check to Hsiu Chu Lin is strangely annotated with Chineses characters
and the English phrase ``birthday gift.'') According to the Temple's
attorneys, at least two additional $2,500 checks were filled out by Fo
Kuang Shan monastics in connection with this event--but the payee line
was left blank and Maria Hsia subsequently diverted it for her own
purposes, filling it out not to the originally-intended political
recipient but to a company called Shen He International, Inc. See Ex.
97 (Gin F.J. Chen check #405 for $2,500 on September 20, 1995; Jou
Sheng check #215 for $2,500 on September 20, 1995; IBPS check #2728 for
$2,500 to Jou Sheng on September 20, 1995).
\129\ See Ex. 98 (Shiwen W. Teh a.k.a. Shiwen Wang check #1772 for
$1,500 to Kanabe for Supervisor on October 25, 1995; Knabe for
Supervisor, list of Monetary Contributions Received for 10/01/95
through 12/31/95 period, indicating $1,500 contributions from Hsiu Chu
Lin and Shiwen Teh, both recorded on November 11, 1995; IBPS check
#2846 for $1,500 to cash, endorsed on reverse by Melissa Wang [a.k.a.
Shiwen Teh] on October 24, 1995; IBPS check #2847 for $1,500 to Hsiu
Chu Lin on October 24, 1995; Federal Election Commission, Selected
Receipts & Expenditures (95-96), showing $1,500 in contributions on
December 1, 1995 from Hsiu-Chu Lin and Shiwen W. Teh; Hsiu Chu Lin
check #623 for $1,500 to Edward M. Kennedy; Shiwen W. Teh a.k.a. Shiwen
Wang check #1776 for $1,500 to Edward M. Kennedy on November 13, 1995;
IBPS check #2923 for $1,500 to Melissa Wang [a.k.a. Shiwen Teh] on
November 10, 1995; IBPS check #2924 for $1,500 to Hsiu Chu Lin on
November 10, 1995).
---------------------------------------------------------------------------
As noted, however, Hsia's fundraising scheme for funneling
Temple money through ``straw donors'' expanded dramatically in
1996 after John Huang went to work at the DNC and began to
organize Democratic fundraisers among California's Asian
community. It was not by coincidence, therefore, that Hsia's
biggest foray yet into Temple donation-laundering occurred in
conjunction with the first significant event Huang organized
for the DNC: a fundraiser with President Clinton at the Hay-
Adams Hotel in Washington in February 1996. For this event,
Hsia telephoned Man Ho at the Temple to ask for $25,000 in
contributions,130 an amount which was duly collected
from nine monastic straw donors who were thereafter
reimbursed.131 Don Knabe also continued to receive
the Temple's support during 1996. At the end of February, Hsia
made a $1,500 donation to Don Knabe's campaign, being duly
reimbursed by the Temple for her pains.132
---------------------------------------------------------------------------
\130\ Man Ho deposition, pp. 196-97; Yi Chu deposition, pp. 69-73.
\131\ See Ex. 99 (DNC Check Tracking Form for Hsiu Chu Lin check
#667 for $3,000 to DNC on February 17, 1996; IBPS check #3286 for
$3,000 to Hsiu Chu Lin on February 14, 1996; DNC Check Tracking Form
for Jou Sheng check #223 for $3,000 to DNC on February 16, 1996; IBPS
check #3294 for $3,000 to Jou Sheng on February 16, 1996; DNC Check
Tracking Form for Pi-Hsia Hsiao check #194 for $2,500 to DNC on
February 16, 1996; IBPS check #3300 for $2,500 to Pi-Hsia Hsiao on
February 16, 1996; DNC Check Tracking Form for Suh-Jen Wu check #107
for $3,000 to DNC on February 16, 1996; IBPS check #3298 for $3,000 to
Suh-Jen Wu on February 16, 1996; DNC Check Tracking Form for Hsing
Kuang Shih check #600 for $3,000 to DNC on February 16, 1996; IBPS
check #3295 for $3,000 to Hsin Kuang Shih on February 16, 1996; DNC
Check Tracking Form for Gin F.J. Chen check #486 for $3,000 to DNC on
February 17, 1996; IBPS check #3299 for $3,000 to Gin F.J. Chen on
February 16, 1996; DNC Check Tracking Form for Hsin Cheng Shih check
#137 for $3,000 to DNC on February 19, 1996; IBPS check #3297 for
$3,000 to Hsing Cheng Shih on February 16, 1996; DNC Finance Executive
Summary of $2,500 contribution from Hsiao Jie Su on February 19, 1996;
IBPS check #3301 for $2,500 to Hsiao Jie Su on February 16, 1996; Hsiao
Jie Su check #304 for $2,500 to DNC; DNC Check Tracking Form for Jen
Chin Hsueh a.k.a. Gary Hsueh check #269 for $2,000 to DNC on February
16, 1996; IBPS check #3296 for $2,000 to Jen-Chin Hsueh on February 16,
1996. The Temple's computerized accounting records list this series of
payments by consecutively numbered checks as ``No Name'' payments. See
Hsi Lai Temple, Transaction Detail by Account (February 1996) (Ex.
100).
\132\ Ex. 101 (IBPS check #3318 for $1,500 to Maria Hsia on
February 29, 1996 with ``memo'' notation apparently reading ``re:
contribution of Don Knabe'' [sic]; Knabe for Supervisor, List of
Monetary Contributions Received for period 02/11/96 through 03/09/96,
indicating $1,500 contribution recorded on March 7, 1996).
---------------------------------------------------------------------------
At least four additional episodes of donation-laundering,
occurred between the April 1996 event and the general elections
in November 1996. In July 1996, Hsia contacted Man Ho at the
Temple, informing the nun that Hsia would need $50,000 in order
to purchase two tickets to an upcoming fundraising luncheon
with President Clinton at a private home. Hsia subsequently
changed her plans, however, deciding instead upon a less
expensive $5,000-per-person dinner at the Century Plaza
Hotel.133 In the end, two Temple monastics donated
$5,000 each for the Century Plaza event,--thereby making it
possible for Hsia to become one of its co-chairs, a status
contingent upon raising $10,000 134--and were
reimbursed by the Temple.135
---------------------------------------------------------------------------
\133\ Man Ho deposition, pp. 202-06; Yi Chu deposition, pp. 75-76.
\134\ See Invitation to July 22, 1996 Presidential Gala (undated)
(Ex. 102) (noting that status of ``Co-Chair for the Presidential Gala''
requires one personally to contribute $5,000 or to raise $10,000).
\135\ Ex. 103 (Bih-Yueh Jeng check #158 for $5,00 to DNC on July
22, 1996; Wang Chi Rung check #135 for $5,000 to DNC on July 22, 1996;
IBPS check #3894 for $5,000 to Wang Chi Rung on July 17, 1996; IBPS
check #3890 for $5,000 to Bih-Yueh Jeng on July 17, 1996).
---------------------------------------------------------------------------
In September 1996, two Temple monastics donated a total of
some $6,500 to the DNC and were reimbursed by the
Temple.136 Also that month, Hsia and her assistant,
Matthew Gorman, arranged for the nun Pi-Hsia Hsiao to donate
$1,000 to Don Knabe's re-election campaign,137 a
donation which was reimbursed by the Temple on the same day it
was made.138 Finally, Hsia arranged for $5,000 in
Temple funds to be laundered to the campaign of Representative
Patrick Kennedy for a fundraiser held in Los Angeles on October
5, 1996. For this event, the occasion on which an exasperated
Yi Chu finally refused to arrange to funnel the money through
monastic ``straw donors'' 139--Hsia used blank
Temple checks to reimburse herself and four friends for their
$1,000 contributions to Kennedy's campaign.140 These
laundered donations--along with another $100 check from Hsia's
friend Richard Choi--were handed to Rep. Kennedy and a campaign
aide as they emerged back onto the street at the end of a visit
to the Hsi Lai Temple on October 5.141
---------------------------------------------------------------------------
\136\ Ex. 104 (FECInfo database printout of individual contributor
data,showing $1,500 contribution to DNC from Hsiu Chu Lin on October 2,
1996; IBPS check #4119 for $1,500 to Hsiu Chu Lin). According to Yi
Chu, Chee Kien Koh (a.k.a the Rev. Hai Kai) also donated to the DNC at
this time, being reimbursed in cash ($3,000) and with a check made out
to cash ($2,000). See Yi Chu deposition, pp. 79-82; IBPS check #4118
for $2,000 to cash, with ``memo'' notation reading ``Chee Kien Koh''
(Ex. 105). It may be, however, that Koh failed to pass the $2,000 on to
its intended political recipient; he returned $2,000 to the Temple in
two $1,000 payments in December 1996 and January 1997. See IBPS, Chee
Kien Koh deposit check records (Ex. 106).
\137\ Ex. 107 Matthew Gorman, letter to Peter Kelly, Sept. 18, 1996
[forwarding Pi-Hsia Hsiao check #197 for $1,000 to Don Knabe for L.A.
County Supervisor dated September 18, 1996]; Knabe for Supervisor, List
of Monetary Contributions received for period 10/01/96 through 10/19/96
listing $1,000 contribution from Pi-Hsia Hsiao). Pi-Hsia Hsiao's check
was filled out improperly, however, and had to be reissued. See Matthew
Gorman, letter to Dardy Chen, Oct. 8, 1996 (Ex. 108) (forwarding
reissued check, also dated September 18, 1996).
\138\ IBPS check #4120 to Pi-Hsia Hsiao for $1,000 on September 18,
1996 (Ex. 109).
\139\ See Yi Chu testimony, p. 48.
\140\ The other reimbursees were Hilary Goldstone and Donald Burns,
two Los Angeles attorneys and longtime Kennedy family fundraisers, as
well as Hsia's business colleague Stephen Zhou and his wife May Lin
Zhou. See Ex. 110 (Federal Election Commission, Selected List of
Receipts & Expenditures [95-96], listing $1,000 contributions on
October 5, 1996 by Burns, Goldstone, Hsia, and the Zhous; IBPS check
#4193 for $1,000 to Hilary Goldstone on October 5, 1996; IBPS check
#4194 for $1,000 to Donald Burns on October 5, 1996; IBPS check #4195
for $1,000 to Maria Hsia on October 5, 1996; IBPS check #4196 for
$1,000 to May Lin Zhou on October 5, 1996; IBPS check #4197 for $1,000
to Stephen Zhou on October 5, 1996).
Stephen Zhou was the head of Zarks International, a company located
in the same office spaces as Hsia & Associates. Zhou also leased office
space to T&W Arts & Crafts--the U.S. subsidiary of a company from
Hangzhou, China, called Yalong Economics & Trade Corporation--as well
as apparently serving as an officer of T&W. See Ex. 111 (Commercial
Lease between Zarks International, Inc. and T&W Arts & Crafts dated
Feb. 14, 1996; Projected Organizational Chart of T&W Arts & Crafts
(USA), Inc. (undated), listing Stephen Zhou as vice president).
\141\ Having received this money just outside the door of the
Temple apparently enabled Representative Kennedy to claim later that
``our story could not be compared to the vice president's because we
never did a fundraiser at the temple.'' See John Mulligan, ``Grand Jury
probes Buddhist temple fundraising,'' Providence Journal-Bulletin, Oct.
20, 1997, pp. A1 & A6; John Mulligan, ``Kennedy explains his rationale
in returning money raised at temple,'' Providence Journal-Bulletin,
Sept. 9, 1997, p. A4. All of these funds have apparently been returned.
---------------------------------------------------------------------------
Counting the Temple fundraiser in April 1996, which yielded
at least $65,000 in unlawful Temple donations, this elaborate
system of donation-laundering, in which Temple officials
marshaled funds to political candidates and causes chosen by
Maria Hsia, may ultimately have funneled $146,400 to various
U.S. political candidates. Of this total, some $116,500 went to
the DNC in support of the Clinton/Gore ticket.
III. THE HSI LAI TEMPLE FUNDRAISER OF APRIL 29, 1996
The idea to hold a DNC fundraising event at the Hsi Lai
Temple appears to have had its beginnings in March 1996, when
Hsia persuaded Venerable Master Hsing Yun to meet with Vice
President Gore by visiting the White House. Although Temple
officials apparently understood ahead of time that some White
House trip was in the offing, arrangements for this visit seem
to have been hastily concluded at the last minute while Hsing
Yun and a delegation of Temple monastics were in New York City
on other business.142 On March 14, 1996, Hsing Yun
received a telephone call from Hsia in California, informing
him that the White House meeting had finally been arranged.
Temple administrator Man Ho thereupon made flight arrangements
to take Hsing Yun's delegation to Washington the next day, and
obtained for the White House the social security numbers of
those who would meet with the Vice President.143 The
Master was reportedly initially reluctant to rearrange his
schedule in order to accommodate this last-minute change, but
he was ultimately persuaded by Hsia's entreaties and by those
of former Temple abbess Hsing Kuang Shih enlisted by Hsia to
help in this regard.144
---------------------------------------------------------------------------
\142\ Man Ho deposition, pp. 94-95 & 101.
\143\ Id., pp. 88-96 & 110.
\144\ Man Ho deposition, p. 96; see also Transcript of Hsing Yun
interview by Governmental Affairs Committee Staff, June 17, 1997, p. 2
(Ex. 112) (recounting that Hsia had called him in New York to urge that
he meet with Gore, and that although ``reluctant to go'' Hsing Yun has
``said, `O.K., I'll go.' ''). (This transcription of the Committee
staff's interview with Hsing Yun was transcribed by Stuart Chandler,
who attended the meeting apparently on behalf of the Temple's
attorneys.)
---------------------------------------------------------------------------
John Huang played the central role in setting up the March
15 meeting with Vice President Gore. Even before Hsing Yun's
delegation left for New York on March 10, Huang had telephoned
Man Ho in order to obtain the Master's social security number
for the anticipated White House visit.145 It was
Huang who requested the Hsing Yun meeting,146 and he
both worked with Gore scheduler Kim Tilley in arranging it
147 and wrote the Vice President's briefing
notes.148
---------------------------------------------------------------------------
\145\ Man Ho deposition, p. 99. Maria Hsia called Man Ho later--
when the Temple delegation was in New York--to obtain social security
numbers from the other members of the delegation who would be visiting.
Id., p. 110.
\146\ John Huang, memorandum to Albert Gore, March 15, 1996
(describing meeting as having been ``requested by John Huang''). Hsing
Yun suggested that the meeting had been the idea of John Huang and
Maria Hsia. See Transcription of Hsing Yun interview, p. 2.
\147\ See John Huang, memorandum to Kim Tilley, April 11, 1996 (Ex.
113) (''You know we have together arranged Master Hsing Yun to visit
the Vice President Gore [sic] in the White House in March of this
year.''). The Vice President's schedule also listed John Huang as the
staff contact for the Hsing Yun meeting. Gore schedule for March 15,
1996 (Ex. 114).
\148\ John Huang, fax transmission to Eric Anderson, March 15, 1996
(Ex. 115) (forwarding briefing notes for Vice President ``prepared by
John Huang'').
---------------------------------------------------------------------------
On the morning before the March 15 meeting, Hsia spoke
personally with Vice President Gore by telephone from the
delegation's room at the Hay-Adams Hotel. Although the Vice
President had already agreed to the meeting, and the Temple
delegation was at that point waiting at their hotel, the Vice
President's staff had become concerned over the potential
political implications of a visit from Hsing Yun. Taiwan was
then in the midst of its 1996 presidential election campaign,
which involved, among others, an independent Buddhist candidate
named Lian Chien, who had been endorsed by Venerable Master
Hsing Yun. Vice President Gore's foreign policy advisors
worried that meeting Hsing Yun could be seen as an implicit
endorsement of Dr. Chien, and feared that the Master would
somehow interject Taiwanese politics into the White House
meeting.149 As Gore national security staffer John
Norris later recalled,
---------------------------------------------------------------------------
\149\ Man Ho deposition, pp. 106-07; Deposition of Kimberly Tilley,
June 23, 1997, p. 138.
After we became aware of the scheduling proposal [for
the Hsing Yun meeting], I checked with State and NSC
(Taiwan Coordination Staff) to get information on Hsing
Yun's background. Neither office thought there was a
high risk that the meeting would lead to an incident in
our relations with either China or
Taiwan.150
---------------------------------------------------------------------------
\150\ John Norris, memorandum, Oct. 16, 1996 (Ex. 116) (recounting
``my recollection of the two VP events involving Hsing Yun, the Taiwan
Buddhist leader, and the DNC'').
So concerned was Vice President Gore that despite having
received such a sanguine assessment from the State Department
and the NSC, he called Hsia personally at the Hay-Adams for
additional reassurances. As recounted by Man Ho, who was in the
room as Hsia spoke with him, the Vice President ``was afraid
that [M]aster might talk to him about political issues or
[M]aster might bring some message [from] Lian Chen [sic].''
Hsia assured Gore that Hsing Yun ``was not going to talk
[about] any political issue with the Vice President.''
151 The group then went to the White House to meet
with Vice President Gore, leaving Man Ho and one Temple devotee
behind at the hotel.152
---------------------------------------------------------------------------
\151\ Man Ho deposition, pp. 105-07; see also Ex. 116 (``[Y]ou or
(Bill [Wise]) expressed concern about the sensitivities to Scheduling.
As a result of those conversations, Hsia called the VP and assured him
the meeting would be nothing more than a courtesy call.''). Tilley
deposition, pp. 139-40 (recalling hearing about a talk between Gore and
Maria Hsia).
\152\ Man Ho deposition, p. 111. As used in this report,
``devotees'' of the Hsi Lai Temple are lay persons who nonetheless
worship there regularly and who take part in various Temple activities.
By contrast, Temple ``monastics'' are those who formally take religious
vows and join the Fo Kuang Shan order itself (i.e., monks and nuns)--
shaving their heads, adopting distinctive monastic clothing, and
usually living in the Temple complex.
---------------------------------------------------------------------------
The meeting involved little more than exchanges of
greetings and pleasantries and a ``photo op'' with the Vice
President. Hsing Yun, accompanied by three other Temple
monastics 153 as well as both Hsia and Huang, met
with the Vice President for approximately ten
minutes.154 At the end of this brief meeting, the
Master invited Gore to visit the Hsi Lai Temple.155
As to when this visit might occur, Hsing Yun told the Committee
staff that Gore had indicated that he would be in Los Angeles
at some point within the next six or seven weeks, i.e. in late
April 1996.156
---------------------------------------------------------------------------
\153\ Yumei Yang, Ke-Chun Hong, and Abbess Suh-Jen Wu (a.k.a. Tzu
Jung).
\154\ Ex. 113; Ex. 114.
\155\ Ex. 112, pp. 4-5; see also Ex. 113.
\156\ Memorandum of Interview of Hsing Yun, June 17, 1997, p. 2
(``At the close of this meeting the Master invited Gore to visit the
Hsi Lai temple in California. In reply, Gore indicated that he would be
traveling to California `in the near future' and would be glad to
accept the invitation. No specific date was discussed but the Master
recalled that Gore indicated he would be in LA within 6-7 weeks--that
is, late April.''). (In contrast to the document prepared by Chandler
purporting to be a near-verbatim transcription of the interview, this
memorandum was prepared by Governmental Affairs Committee Staff.)
---------------------------------------------------------------------------
Within a week of the White House meeting, Maria Hsia sent a
letter to Leon Fuerth at the White House, advising him that
``Master Hsing Yun . . . could be very helpful for Vice
President Gore's re-election.'' 157 The next day,
Hsia wrote the Vice President himself, informing him that
\157\ Maria Hsia, letter to Leon Forth [sic], March 22, 1996 (and
earlier drafts dated March 20 & 22) (Ex. 117); see also Progress Sheet
from Hsia & Associates (Ex. 118) (indicating ``sent final draft letters
to Gore & Forth [sic]'' on March 24, 1996).
John Huang has asked me to help with organizing a
fund-raising lunch event, with your anticipated
presence, on behalf of the local Chinese community.
After the lunch, we will attend a rally at the Hsi Lai
Temple where you will have the opportunity to meet
representatives from the Asian-American community to
visit again with Master Hsing Yun. The even is
---------------------------------------------------------------------------
tentatively scheduled for April 29. . . .158
\158\ Maria Hsia, letter to Albert Gore, dated March 23, 1996 (and
earlier drafts dated March 20 & 23) (Ex. 119). It should be noted,
however, that neither Hsia's March 22 letter to Feurth nor her March 23
letter to the Vice President was produced to the Committee by the White
House in the voluminous Temple-related records delivered to the
Committee pursuant to subpoena.
Though this letter did not make clear whether the ``fund-
raising lunch event'' being organized by Huang and Hsia would
take place at the Temple or at some other unspecified location,
unambiguous arrangements were worked out over the next few days
to have both the fundraising luncheon and the rally at the
Temple. By April 4, the DNC has apparently prepared invitations
to a Vice Presidential luncheon at the Hsi Lai Temple,
159 and Hsia's assistant Gorman had opened a file
specifically identifying April 29, 1996 as the date of the Vice
President's anticipated visit. This file was entitled ``Vice
President Gore Hsi Lai event April 29, 1996--DNC Fundraiser.''
160 By April 8, the Vice Presidential Protective
Division of the U.S. Secret Service had begun planning for
Gore's April 29 luncheon in Los Angeles.161
---------------------------------------------------------------------------
\159\ Maria Hsia, fax transmission to Ted Marino, April 4, 1996
(Ex. 120) (forwarding invitation on DNC letterhead for Vice
Presidential event at Hsi Lai Temple).
\160\ Ex. 121 (Photocopy of file header opened on April 4, 1996;
Maria Hsia, memorandum to Matthew Gorman of April 4, 1996 instructing
him to ``open file under V.P. Gore Hsi Lai Temple Visit 4/29/96'');
Gorman deposition, pp. 20-22 (confirming opening file on April 4,
1996).
\161\ U.S. Secret Service, VPPD Scheduling Document, April 8, 1996
(Ex. 122) (including William Pickle, letter to Sen. Fred Thompson,
Sept. 2, 1997 [explaining document]).
---------------------------------------------------------------------------
In late March 1996, Hsia notified the Master and others at
the Temple that the Vice President would visit on April 29,
1996. Immediately, Hsia set up meetings to plan the event. Hsia
requested, and it was accordingly decided that a luncheon would
be served in the Temple's dining hall.\162\ Both Man Ho and Yi
Chu testified that in one of these early planning meetings at
the Temple, the Abbess told to the monastics in attendance that
it would be ``acceptable'' or ``appropriate'' for the monastics
to contact devotees of the Temple to indicate that they could
attend the luncheon with the Vice President and, for $5,000,
have their photograph taken with him.163
---------------------------------------------------------------------------
\162\ Man Ho deposition, pp. 117-119.
\163\ Man Ho testimony, pp. 27-28; see also Man Ho deposition, pp.
125-31. In her deposition testimony, Man Ho recalled that the Abbess
might perhaps have said that the price for a photograph was $5,000 per
couple. Nor is it clear who suggested to the Abbess that she encourage
contributions in connection with the event, or how she arrived at this
$5,000 figure.
---------------------------------------------------------------------------
After one or two early planning meetings at the Temple, and
early in the month of April, both the Abbess and Hsia left the
U.S. for Taiwan, where they remained until very shortly before
the April 29 event. In their stead, Hsia and the Abbess left
Matt Gorman and Man Ho, their respectiveassistants, to take
care of the day-to-day planning and preparation for the
event.164 Most of Gorman's responsibilities consisted of
arranging for the invitation of special VIP guests, who did not have to
pay to attend the DNC fundraiser--at Hsia's direction.165
Among the nonpaying guests Hsia invited to the event were two senior
officials from the INS, Joseph Thomas and Daniel Hesse, and a federal
judge from Los Angeles, Robert Tagasuki.166 The VIP guest
list also included Monte Perez, chairman of the ``Nationwide
Citizenship Association,'' and Tom Byun, who headed the ``Radio Korea
Citizenship Nationwide Program.'' 167
---------------------------------------------------------------------------
\164\ Man Ho testimony, pp. 29-30; Man Ho deposition, pp. 132-33;
see also Gorman deposition, pp. 23 & 25.
\165\ Gorman deposition, pp. 22-25.
\166\ These three men were to have their invitations specially
hand-delivered. See Ex. 123 (Matthew Gorman, fax transmission to
Richard Choi, April 22, 1996 (forwarding to Choi copies of invitations
that were to be hand delivered to Thomas, Hesse, and Tagasuki); Matthew
Gorman, fax transmission to Man Ho, April 12, 1996 (advising Man Ho
that Thomas, Hesse, and Tagasuki will attend as ``V.I.P. guests''). It
is not clear, however, that Judge Tagasuki actually attended. Senator
Daniel Inouye and Congressman Matthew Martinez were also invited, but
neither official attended. See Ex. 124 (Matthew Gorman, fax
transmission to Mary Lou, April 12, 1996 [inviting Inouye]; Matthew
Gorman, fax transmission to Rev. Man Ho, April 12, 1996 [containing
invitation for Martinez]).
\167\ See Ex. 125 (Richard J. Soon Choi, letter to Matthew Gorman,
April 24, 1996 [responding to confirm acceptance of invitation by Perez
and Byun]; Matthew Gorman, fax transmission to Richard Choi, April 24,
1996 [advising Man Ho of attendance of Byun and Perez)].
---------------------------------------------------------------------------
At some point in mid- or late-April, Hsia telephoned Gorman
in order to request that he solicit money from a number of
individuals for the Gore luncheon. Many of these individuals
apparently did not speak English well, if at all, and Gorman
left the solicitation of these persons to another Hsia &
Associates employee, Betty Luk, because he did not speak
Chinese particularly well.168 Among these persons
were Huang Guang Miao, president of the U.S. subsidiary of a
Chinese company, and Joseph Chen,169 the head of a
Taoist religious organization called the Great Tao Foundation
of America and secretary-general of the World I-Kuan Tao
Headquarters in Taiwan.170
---------------------------------------------------------------------------
\168\ Gorman deposition, pp. 47-48; Matthew Gorman, memorandum to
Betty Luk (Ex. 126) (giving list of names for solicitation: ``Professor
Lo,'' Jennifer Tsai, Huang Guang Miao, Celia Wu, Joseph Chen, Zhou Buo,
Chan Ya Shery, & Jeffrey Lin).
\169\ Chan had written John Huang earlier in April to ask if Vice
President Gore could visit the anniversary celebrations of the Great
Tao Foundation after stopping at the Hsi Lai Temple on April 29. ``If
you could make arrangements so that the vice-president after the
luncheon at the Hsi Lai Temple could say a few congratulatory remarks
at our ceremony between 2:00 and 2:30 P.M., and pose for photos with
all attending Taoists,'' Chen wrote, ``the Great Tao Foundation will
respectfully donate $25,000 toward the campaign funds.'' Joseph Chen,
letter to John Huang, April 10, 1996 (Ex. 127) [translated by Michael
Yan for the Governmental Affairs Committee]. The Vice President did not
ultimately attend Chen's event on April 29, 1996, but Maria Hsia did
arrange to bring Chen to an event with President Clinton and Vice
President Gore in Los Angeles in September 1995. See Maria Hsia, letter
to Joseph Chen, Sept. 19, 1995 (Ex. 128) (forwarding details of event
to Chen, with handwritten note ``Thank you very much for everything
that you've done!'').
\170\ See generally Gorman deposition, pp. 49-52.
---------------------------------------------------------------------------
Gorman was not the only person soliciting funds for the
Vice President's Temple fundraiser, however. In addition to
funds solicited independently by Huang and perhaps
Hsia,171 Temple monastics, acting on the suggestion
by Abbess Tzu Jung that it would be ``appropriate'' for them to
do so, solicited a number of donations to the DNC from Temple
devotees in advance of the Vice President's visit. The checks
thereby obtained totaled $32,500.172
---------------------------------------------------------------------------
\171\ See infra note 202.
\172\ See Ex. 129 (Photocopied checks from files of Hsia &
Associates, reproducing, inter alia: $5,000 check from K-Stone
Industries, Ltd.; $5,000 check from Micro International U.S.A., Inc.;
$7,500 check from Ying-Chiu Tien; and $2,500 check from Min Hsiang
Teng; $5,000 check from Shu Woei Huang and Jan Yueh Lian Huang; $5,000
check from Henry J. Chen & Jessie F. Chen; $2,500 check from Marina
Chiu); see also Man Ho deposition, pp. 159-60 (recalling that ``Chiu
Tien'' and Marina Chu were on list summarizing Temple-solicited pre-
event donations).
---------------------------------------------------------------------------
In addition to money openly raised from Temple devotees,
Man Ho and Yi Chu also helped arrange for two devotees
anonymously to give a total of $10,000 in cash to the DNC. This
money was deposited by the two anonymous donors into the
Temple's bank account, and three Temple monastics were chosen
to make corresponding contributions to the DNC.173
These three nuns were thereupon reimbursed by Yi Chu out of the
Temple's general expenses account.174
---------------------------------------------------------------------------
\173\ These persons were Jou Sheng, Shiwen The (a.k.a. Melissa
Wang), and Hsin Cheng Shih. See Yi Chu deposition, pp. 94-95 & 96-98;
Man Ho deposition, pp. 149-50. At least two of them, Jou Sheng and Hsin
Cheng Shih, are Fo Kuang Shan nuns.
\174\ See Ex. 130 (DNC Check Tracking Form for Jou Sheng check #227
for $5,000 to DNC on April 16, 1996; IBPS check #3523 for $5,000 to Jou
Sheng on April 16, 1996; DNC Check Tracking Form for Shiwen Teh check
#1808 for $2,800 to DNC on April 16, 1996; IBPS check $3521 for $2,800
to Melissa Wang [a.k.a. Shiwen Teh] on April 15, 1996; DNC Check
Tracking Form for Hsin Cheng Shih check $141 for $2,200 to DNC on April
18, 1996; Hsing Cheng Shih bank records for period 03/21/96 through 04/
19/96 [indicating cash deposit of $3,000 on April 18, 1966]); Yi Chu
deposition, pp. 100-01 (confirming reimbursement of these three
individuals). Each of the DNC check tracking forms for these straw
donations credit Hsia with having solicited the contribution.
---------------------------------------------------------------------------
Also as part of the preparations for the Vice President's
fundraiser, Huang visited the Hsi Lai Temple on three different
occasions during April 1996 prior to Gore's arrival. On the
last of these pre-event visits, on April 28, the day before the
luncheon, Huang, Hsia, and DNC fundraiser Maeley Tom worked
together in a room at the Temple, using their cellular
telephones to call guests and potential guests for the next
day's event. As Gorman recalled it, they spoke to these persons
in Chinese, and though he was far from fluent,
My impression was that they were kind of soliciting
contributions, soliciting guests maybe. I got the
feeling they were kind of--they were kind of urgent in
trying to get like as many people as possible. Maybe
they had not gotten as much--raised as much
contributions [sic] as they'd wanted. . .
.175
---------------------------------------------------------------------------
\175\ Gorman deposition, pp. 77-78; see also Ex. 87, p. 2, para.12.
At one point, Huang's telephone ran out of battery power, and
he began to pick up a nearby wired telephone--only to be
stopped by Maeley Tom, who admonished him that he should not
use the Temple's telephones.176
---------------------------------------------------------------------------
\176\ Gorman deposition, pp. 78-79. Hsia had previously warned that
``the telephones at the Hsi Lai Temple were not to be used for
`political purposes' because this would jeopardize the Temple's non-
profit (tax exempt) status.'' Ex. 87, p. 2, para. 11; cf. infra text
accompanying note 212 (discussing tax exempt status of Temple).
---------------------------------------------------------------------------
During this last-minute telephone effort by Huang, Hsia,
and Tom, Man Ho delivered to Huang a list of those guests
Temple officials expected to attend the fundraiser. Next to
each name was a notation of the amount of money each person
had, or was expected to, contribute to the DNC. When Huang saw
the list, he asked Man Ho if she knew of anyone else who would
like to attend the luncheon for $2,500. In response, Man Ho
called a friend, Catherine Chen, who agreed to contribute
$2,500.177 On top of the donations solicited by
monastics from Temple devotees, and the illegally laundered
$10,000 in anonymous contributions described above, Chen's
donation brought the total raised at the Temple prior to Gore's
visit to $45,000.178
---------------------------------------------------------------------------
\177\ Man Ho deposition, pp. 143-47 (discussing giving list to
Huang and identifying solicitation of Catherine Chen, ``Bill Chen's
wife,'' as the subsequent $2,500 donor); Yuh How Bill Chen and Nancy
Kainan Mao check #959 (Ex. 131). Catherine Chen's $2,500 check bore the
name of her husband, Bill Chen, as well as that of ``Nancy Kainan
Mao.'' This suggests that Catherine Chen is the same `'Nancy Mao'' who
was apparently reimbursed by the Temple for a donation made in early
1994. See supra Note 124.
\178\ Man Ho deposition, p. 148.
---------------------------------------------------------------------------
The Vice President arrived at the Temple at approximately
12:30 p.m. on April 29. A throng of invitees and a local high
school band were outside to meet him. Inside the entrance hall,
Hsia, Huang, Congressman Bob Matsui, and Donald Fowler were
among the official greeters. After meeting briefly in a holding
room with Master Hsing Yun, the Vice President walked up the
Temple's courtyard, between a phalanx of monastics, to the
Temple's Buddha shrine, to which the Vice President made a
flower offering. From there, the Vice President was escorted
downstairs to have his photograph taken with VIP attendees and
those who had contributed in connection with the event.\179\
---------------------------------------------------------------------------
\179\ See generally Man Ho deposition, pp. 176-82; Ex. 122, pp. 11-
13.
---------------------------------------------------------------------------
At lunch in the Temple's dining hall, the Vice President
sat at the head table with Master Hsing Yun, Hsia, and Ted
Sioeng, among others.\180\ John Huang apparently did not sit at
one of the tables, instead circulating amongst the tables
working with Temple officials and Gore's ``advance'' team to
ensure that things ran smoothly.\181\ As part of a brief series
of speeches after lunch that included remarks by Hsing Yun,
Huang and Fowler, Congressman Matsui, who then also served as
the DNC's treasurer, introduced Vice President Gore--who spoke
for a few minutes to the assembled guests as Hsia interpreted
his comments into Chinese.\182\ Immediately following his
speech, the Vice President posed outside with all Temple
monastics, and left the Temple at about 2:00 p.m. From there,
the Vice President departed for the airport, flying on Air
Force Two to San Jose, and ending up at a DNC fundraising
dinner that evening at a private home in Los Altos Hills,
California.\183\
---------------------------------------------------------------------------
\180\ According to the seating chart, at Gore's table were seated
Maria Hsia, Ted Sioeng, Don Knabe, Joseph Thomas, Yvonne Burke, and
Gary Shaw, among others. Dining Hall Guest List--April 29th Vice
President Gore Event (Ex. 132).
\181\ See, e.g., Photograph of Vice President Gore at lunch, April
29, 1996 [produced by Temple to the Committee] (seated with Hsing Yun,
Maria Hsia, and Ted Sioeng, with Huang in background talking to Bain
Ennis of the Vice President's advance staff).
\182\ Ex. 122.
\183\ Id., pp. 12-17. There were several other quick stops after
the Vice President flew to San Jose before his motorcade arrived at the
home of George and Judy Marcus in Los Altos Hills for this event.
---------------------------------------------------------------------------
At around 3:00 p.m., following the Vice President's
departure, the Master and Hsia held a press conference at the
Temple. A number of reporters were angry because they had not
been permitted to attend the event itself; some also questioned
the propriety of holding a political event at the Temple.
According to Man Ho,
some reporters say that it was not proper to have this
type of luncheon at the temple, but Maria told them
that someone has checked with the White House and
[they] say that it's okay to have luncheon at the
temple.\184\
---------------------------------------------------------------------------
\184\ Man Ho deposition, pp. 182-83.
Even on April 29, it had become apparent that the Hsi Lai
Temple fundraiser had not raised as much money as Huang and
Hsia had hoped. That evening, after the Vice President's
departure, Gorman spoke briefly with Hsia at the Temple while
she awaited an audience with Venerable Master Hsing Yun. Hsia
``seemed disappointed not so much as to how the event itself
went, but that they had not been able to raise the amount of
---------------------------------------------------------------------------
money that they wanted to raise.'' \185\ As Gorman recalled,
\185\ Gorman deposition, p. 86.
After the event, I asked Ms. Hsia how she felt the
Vice Presidential visit had gone. She responded to the
effect that they didn't raise as much [money] as they
wanted, but she had talked to the Master and he had
said ``he would take care of it.'' \186\
---------------------------------------------------------------------------
\186\ Ex. 87, p. 3, para. 14.
This need for more DNC donations, however, became an urgent
priority the next day when DNC officials in Washington began to
pressure Huang for more money.
As DNC Finance Director Richard Sullivan later recalled it,
he telephoned Huang the day after the Gore luncheon as part of
his ``general practice'' of trying to ``rally the troops at the
end of the month and ask them to get in money.'' He
``remember[ed] having a conversation with John'' in which he
told Huang that ``we need you to get some money in.'' \187\
According to Sullivan,
---------------------------------------------------------------------------
\187\ Deposition of Richard Sullivan, June 25, 1997, pp. 41-42.
I remember being disappointed . . . I remember just
fine, being somewhat personally disappointed--you know,
between San Jose and the fact that it [had been] so
important to somebody out there that the event be at
the temple, that . . . you would have thought . . . we
would get a big contribution out of somebody.\188\
---------------------------------------------------------------------------
\188\ Id., pp. 46-47.
Sullivan had ``expected that they were going to make some big
contributions.'' ``I was expecting . . . maybe some 15s and
20s'' \189\--i.e., individual contributions of $15,000 or
$20,000 each. Since this had not occurred, Sullivan asked Huang
---------------------------------------------------------------------------
\189\ Id., pp. 50-51.
Can you get some [more] funds in? Can you send some
money in? Don't you have some outstanding money out? .
. . I may have said, John, get some money in from your
people in Los Angeles, get some money . . . . I
probably did say, John, get some California money
in.\190\
---------------------------------------------------------------------------
\190\ Id., pp. 45-46.
Huang apparently wasted little time in passing this message
on to Hsia and to the Temple, for during a break in a seminar
program being conducted for the assembled monastics by Hsing
Yun, Man Ho received a telephone call from Hsia informing her
that Huang needed to raise more money. Huang, Hsia told her,
needed another $55,000, enough to bring the total raised at the
Temple to $100,000. Hsia also told Man Ho that Huang needed
this money before he returned to Washington that very
evening.\191\
---------------------------------------------------------------------------
\191\ Man Ho deposition, p. 183; Man Ho testimony, p. 41; Yi Chu
testimony, pp. 42 & 47 48. When Man Ho went to inform Hsing Yun and
Abbess Tzu Jung of this sudden need for more money, she discovered that
they had already been told. Man Ho deposition, p. 185.
---------------------------------------------------------------------------
Man Ho then contacted Yi Chu, telling her that ``we were a
certain number [of donations] short, and she wanted me to make
it up.'' What was needed, Man Ho informed her, was to add
another $55,000 to the $45,000 the Temple had collected
already.\192\ Accordingly, given the need for haste, Yi Chu
approached the first monastics she saw, soliciting donations
from the first 11 monks or nuns she encountered who happened to
have their checkbooks with them.\193\ Because many of them did
not have enough money to cover the $5,000 sum Yi Chu asked of
them \194\--and because after 1993 it was the Temple's standard
practice to reimburse monastics who made donations to political
causes \195\--Yi Chu reimbursed every one of these eleven
monastics.\196\
---------------------------------------------------------------------------
\192\ Yi Chu deposition, p. 51; Yi Chu testimony p. 43.
\193\ Yi Chu deposition, pp. 55-56; Yi Chu testimony, p. 43.
\194\ See, e.g., Yi Chu deposition, p. 60; Yi Chu testimony, pp.
45-46; Siuw Moi Lian deposition, pp. 31-32; Huei-Tsan Huang deposition,
pp. 21 & 25.
\195\ Yi Chu deposition, pp. 56-57.
\196\ See id., pp. 61-65; Yi Chu testimony, pp. 43-44 & 47-48. Some
of the donors even postdated their checks to the DNC so that the check
Yi Chu wrote them from the Temple's general expenses account would
clear first. See e.g., Yi Chu deposition, pp. 46-47 (discussing
postdated check from Siuw Moi Lian); Yi Chu testimony, pp. 45-46.
---------------------------------------------------------------------------
Hsing Yun was among those solicited and reimbursed in this
fashion. By his own admission, in fact, the Master appears to
have been well aware that in assuring Hsia that ``he would take
care of'' Huang's cash shortfall, he was authorizing monastics'
reimbursement for their DNC contributions. As Hsing Yun put it
to Committee staff who met with him at his temple in Kiaoshung
in June 1997,
In [the] Hsi Lai Temple there were some monastic and
lay disciples who, influenced by my own conduct, also
wanted to help Mr. Gore. In truth, they had only
limited funds since they ordinarily donate all of their
money to Hsi Lai Temple. However, when they want to use
some of it, Hsi Lai Temple ought to give it to them.
Therefore, when they did not have enough money to cover
the checks they were donating, I thought Hsi Lai Temple
could help these disciples.\197\
---------------------------------------------------------------------------
\197\Ex. 25, p. 4.
``Some devotees did not have enough money,'' he said, ``so the
temple, due their past good service, when they need money the
temple will give them the money they want.'' \198\ ``Influenced
by [the Master's] own conduct'' in making a contribution that
day, \199\ ten other monastics joined Hsing Yun in writing
$5,000 checks to the DNC--and in being reimbursed by Yi Chu for
the cost of these donations.\200\
---------------------------------------------------------------------------
\198\Id., p. 8.
\199\Id., p. 4.
\200\ Ex. 133 (DNC Check Tracking Form for Shing Yun check #102 for
$5,000 to DNC on April 30, 1996; IBPS check #3573 for $5,000 to Shing
Yun on May 1, 1996; DNC Check Tracking Form for Man Ya Shih check #509
for $5,000 to DNC on April 30, 1996; IBPS check #3576 for $5,000 to Man
Ya Shih on April 30, 1996; DNC Check Tracking Form for Hsiu Chu Lin
check #702 for $5,000 to DNC on April 30, 1996; IBPS check #3581 for
$5,000 to Hsiu Chu Lin on May 1, 1996; DNC Check Tracking Form for Suh-
Jen Wu check #121 for $5,000 to DNC on May 1, 1996; IBPS check #3574
for $5,000 to Suh-Jen Wu on May 1, 1996; DNC Check Tracking Form for
Pi-Hsia Hsiao check #195 for $5,000 to DNC on April 30, 1996; IBPS
check #3571 for $5,000 to Pi-Hsia Hsiao on May 1, 1996; DNC Check
Tracking Form for Siuw Moi Lian check #1016 for $5,000 to DNC dated May
6, 1996; IBPS check #3577 for $5,000 to Man Ya Shih on May 1, 1996; DNC
Check Tracking Form for Hueitsan Huang check #243 for $5,000 to DNC on
April 30, 1996; IBPS check #3575 for $5,000 to Hueitsan Huang on April
30, 1996; DNC Check Tracking Form for Hsiu Luan Tseng check #140 for
$5,000 to DNC dated May 6, 1996; IBPS check #3572 for $5,000 to Hsiu
Luan Tseng on May 1, 1996; DNC Check Tracking Form for Bor Yun Jeng
check #221 for $5,000 to DNC on April 30, 1996; IBPS check #3570 for
$5,000 to Bor Yun Jeng on May 1, 1996; DNC Check Tracking Form for Seow
Fong Ooi check #497 for $5,000 to DNC on April 30, 1996; IBPS check
#3578 for $5,000 to Seow Fong Ooi on May 1, 1996).
According to Yi Chu, Seow Fong Ooi actually contributed $10,000 to
the DNC. Yi Chu deposition, pp. 63-64. Thus, according to the Temple's
attorneys, Seow Fong Ooi's second $5,000 was actually paid to another
Fo Kuang Shan nun named Chia-Hui Ho. See DNC Check Tracking Form for
Chia-Hui Ho donation of $5,000 on May 1, 1996 (Ex. 134); Ex. 133, p. 19
7284 (IBPS check #3579 providing second Temple payment of $5,000 to
Seow Foing Ooi on April 30, 1996). The Temple's accounting records show
this series of payments in sequentially-numbered checks as ``No Name''
payments. See Hsi Lai Temple, Transaction Detail by Account, May 1996
(Ex. 135).
---------------------------------------------------------------------------
Hsia was at the Temple later that evening when Huang
stopped by briefly to pick up the checks, before leaving for
Washington.\201\ With this money, the amount of money raised by
the Temple for the DNC by the April 29 event now totaled
$100,000: $35,000 in donations solicited ahead of time by
Temple monastics, $10,000 in laundered donations by anonymous
devotees before the Vice Presidential luncheon, and $55,000 in
laundered donations in response to Huang's request for more
funds just after the event. Added to the sum Huang and perhaps
others apparently solicited independently of the Temple, the
Vice Presidential fundraiser raised $166,750 for the DNC.\202\
---------------------------------------------------------------------------
\201\ Man Ho deposition, pp. 183-84 & 187.
\202\ Democratic National Committee, DNC Contribution Review, Feb.
1997 (Ex. 136) (excerpts), p. 4 (listing ``[t]otal raised in connection
with event'' for ``Hsi Lai Temple Event'' as $166,750); cf. Man Ho
deposition, p. 149 (remarks of Man Hua) (explaining that Man Ho
``doesn't know what others contribute[d]'' beyond DNC donations
solicited by Temple officials). As described earlier, the Hsi Lai
Temple raised at least $146,400 in illegal reimbursed contributions for
local, state, and national political campaigns from 1993 through the
elections of 1996. Some $116,500 of this total went directly to the DNC
for events involving Bill Clinton, Hillary Clinton, and Al Gore; other
recipients included Senator Ted Kennedy and Representative Patrick
Kennedy. Sections 441e and 441f of Title 2 of the U.S. Code prohibit
knowingly accepting such unlawful donations, and therefore presumably
prohibit keeping donations that one discovers have been raised
illegally. See 2 U.S.C. Sec. 441c (``It shall be unlawful . . . for any
person to solicit, accept, or receive any such contribution from a
foreign national.''); id. at Sec. 441f (``No person shall . . .
knowingly accept a contribution made by one person in the name of
another.'').
Although the reimbursed monastic donations with regard to the April
29 event have been the subject of media reporting for months, the
Committee's depositions of actual straw donors who gave money to the
DNC suggests the DNC has not yet paid back all of the donations it
claims to have returned. Man Ya Shih and Siuw Moi Lian, for example,
testified in their depositions in August 1997 that although they each
gave $5,000 to the DNC, they have yet to receive their donations back.
Siuw Moi Lian deposition, p. 36; Man Ya Shih deposition, p. 44.
---------------------------------------------------------------------------
The repeated donation-laundering in which Hsia and Temple
officials, and perhaps Huang, engaged clearly violated federal
elections laws barring political contributions made through
``straw donors'' \203\ and meets the legal definition of a
``criminal conspiracy.'' \204\ Moreover, Temple officials have
admitted that at least two of the monastics who gave money in
connection with the Gore event, Chia-Hui Ho and Seow Fong Ooi,
were foreign nationals prohibited from making political
contributions \205\ at the time they made their donations.\206\
Nor were these two individuals the only foreign nationals
reimbursed by the Temple after making contributions to the DNC.
According to her responses to a DNC telephone survey,
reimbursed Temple donor Bih-Yueh Jeng was neither a U.S.
citizen nor a permanent U.S. resident at the time she made her
$5,000 contribution to the DNC in connection with the
Presidential event in Los Angeles in July 1996.\207\ Since
Temple officials made no efforts to ascertain the immigration
status of monastics or devotees solicited for political
contributions, or those selected to participate in ``straw
donor'' reimbursement schemes, it may have been no more than
blind luck that prevented even more foreign nationals from
making donations.\208\
---------------------------------------------------------------------------
\203\ 2 U.S.C. Sec. 441f (``No person shall make a contribution in
the name of another person or knowingly permit his name to be used to
effect such a contribution, and no person shall knowingly accept a
contribution made by one person in the name of another person.'').
\204\ United States v. Hopkins, 916 F.2d 207 (5th Cir. 1990)
(holding that conducting donation-laundering scheme can amount to
criminal conspiracy to defraud the United States and to make fraudulent
statements to Federal Elections Commission in violation of 18 U.S.C.
Sec. Sec. 371 & 1001); id. at 212 (describing elements of conspiracy,
and citing United States v. Medrano, 836 F.2d 861, 863-64 (5th Cir.
1988); United States v. Colwell, 764 F.2d 1070, 1072 (5th Cir. 1985)).
\205\ See 2 U.S.C. Sec. 441e(1) (``It shall be unlawful for a
foreign national directly or through any other person to make any
contribution of money or other thing of value, or to promise expressly
or impliedly to make any such contribution, in connection with an
election to any political office or in connection with any primary
election, convention, or caucus held to select candidates for any
political office; or for any person to solicit, accept, or receive any
such contribution from a foreign national.''). The term ``foreign
national'' is defined to mean persons who are neither U.S. citizens nor
permanent resident aliens See 2 U.S.C. Sec. 441e(b) (defining ``foreign
national'' to exclude ``any individual who is a citizen of the United
States'' and any person ``lawfully admitted for permanent residence'').
\206\ Man Ho deposition, pp. 232-33 (identifying Chia Hui-Ho and
Seow Fong Ooi as having been neither U.S. citizens nor permanent
residents at time of DNC donations); Yi Chu deposition, p. 96
(similarly identifying Seow Fong Ooi); Ex. 137 (Peter Kelly, letter to
Joseph Sandler, Nov. 15, 1996 [discussing Chia Hui-Ho's $5,000
contribution to DNC and noting that ``this individual's application for
legal permanent residence is still pending before the Immigration and
Naturalization Service'']; Immigration and Naturalization Service,
approval notice for Sec. 101(a)(27)(C)(ii) special immigration
[religious worker] status for Chia Hui-Ho, Oct. 7, 1996; James
Robinson, letter to INS, Nov. 7, 1996 [enclosing Chia-Hui Ho's
application for permanent resident status]).
\207\ Ex. 138 (Bih-Yueh Jeng, Debevoise & Plimpton survey response
via telephone interview, Dec. 17, 1996, p. DNC 1803698 [answering
``No'' to question ``Are you a United States citizen?'' and ``No'' to
question ``Are you a permanent resident of the United States?''].
Immigration and Naturalization Service, Petition for a Nonimmigrant
Worker, Sept. 27, 1996 [granting Bih-Yueh Jeng's petition for
nonimmigrant religious worker status several months after the Temple
event]).
\208\ See Yi Chu deposition, p. 95 (``Well, I didn't know whether
contributions were prohibited from the noncitizens or nonpermanent
residents. All I did was to encourage people to make donations.'').
Moreover, the Temple's donation-laundering scheme raises questions as
to the ultimate source of the monies that flowed into the DNC's coffers
over the 1993-96 period. As noted previously, the reimbursements were
all made out of the Temple's general expenses account, which in turn
got its money from the account into which Buddhist devotees made
donations to the Temple. Because Temple officials never screened
Buddhist contributors to the Temple for U.S. citizenship or permanent
resident alien status, there is no way of knowing whether or not the
money that ended up being funneled to the DNC by Hsia and Huang
ultimately came from foreign nationals. See id. (stating that ``[n]o
attempt was ever made'' to determine whether devotees were citizens or
permanent residents).
---------------------------------------------------------------------------
Richard Sullivan and the DNC clearly knew that it was
inappropriate to have a fundraiser at the Temple. As he told
John Huang when Huang first described his Temple plan, for
example, ``you know, . . . you can't do a fund-raiser at a
temple.'' 209 Nevertheless, faced with huge
pressures to raise money for the re-election of Bill Clinton
and Al Gore, Sullivan let Huang continue with the event even
though Huang admitted that ``he'd get money out of it'' and
``he'd get some money out of them.'' 210 But the
impropriety could not be erased simply because Huang promised
that he would not solicit all attendees for money.
211 As one of the DNC's own auditors noted after the
Temple affair had begun to appear in the national press,
contributions from the Temple should be returned because ``[i]t
was a temple, you idiot!'' 212
---------------------------------------------------------------------------
\209\ Sullivan deposition, June 25, 1997, p. 23.
\210\ Id., p. 24.
\211\ Id., pp. 24 & 26.
\212\ Democratic National Committee, list of contributions returned
since September 1996, Nov. 22, 1996 (Ex. 139) (listing $5,000 donation
from ``Buddhist Temple'' and noting as reason for refund that ``It was
a temple, you idiot!'').
---------------------------------------------------------------------------
One reason why it was wrong to hold the fundraiser there is
that the Hsi Lai Temple--in its corporate incarnation as the
International Buddhist Progress Society (IBPS)--is a
Sec. 501(c)(3) organization for federal income tax
purposes.213 Like all churches, therefore, it is
prohibited by law, not to mention its own organizational
charter, from engaging in political activity. As the Temple's
own articles of incorporation state, ``the corporation shall
not participate or intervene in any political campaign . . . on
behalf of any candidate for public office.'' 214
Political activity of the sort in which Temple officials
engaged, e.g., donating Temple money to political campaigns and
soliciting funds for such campaigns, is impermissible.
Moreover, contributions made by faithful Buddhists to the
Temple are tax deductible. On top of the various legal concerns
already discussed herein, this raises at least two additional
troubling issues.
---------------------------------------------------------------------------
\213\ See, e.g., Internal Revenue Service, Cumulative List of
Organizations, vol. 1, Sept. 30, 1995, p. 1049 (Ex. 140) (listing
``International Buddhist Progress Society, Hacienda Heights, Ca.'' as
tax-exempt organization). The IBPS was also exempt from California
taxes as a nonprofit organization. See International Buddhist Progress
Society, Statement by Domestic Nonprofit Corporation, March 15, 1996
(Ex. 141) (document signed by Hsing Huang Shin, Liang Yueh Fang, and
Tsui-Hsueh Hsueh [a.k.a. Yi Chu], listing Hsia as agent for service of
progress).
\214\ International Buddhist Progress Society, Articles of
Incorporation, Aug. 4, 1978, p. 1 (Ex. 142). This document was signed
by three Temple officials, two of whom were Hsing Yun himself and
former Temple Abbess Hsing Kuang Shih, id., p.3--both of whom were
subsequently involved in unlawful Temple donation-laundering in support
of various political causes.
---------------------------------------------------------------------------
First, the checks laundered through Temple monastics to the
DNC--over $100,000 worth in 1996 alone--apparently consisted of
money derived directly from tax-exempt charitable contributions
made to the Temple. In essence, therefore, this amounts to
taxpayer funding for political contributions to the DNC, which
is clearly prohibited.
Second, this use of Temple funds perpetuated a fraud upon
faithful Buddhists who donated to the Temple upon the
assumption that their money would be used to advance the
Temple's legitimate religious purposes and not be given to a
political party. Through the Temple's donation-laundering and
willingness to host political fundraisers for various
candidates, however, money given by faithful devotees to the
Temple was illegally diverted without their knowledge to
support the re-election of Bill Clinton and Al
Gore.215
---------------------------------------------------------------------------
\215\ Another potential consequence to the Temple from this
violation of its Section 501(c)(3) status relates to the validity of
visas and green cards Hsia obtained for Fo Kuang Shan religious workers
under the terms of the Immigration Act of 1990. Because the Temple had
apparently been engaged in unlawful political activity through hsia
since at least 1993, it is open to question as to whether the Hsi Lai
Temple qualifies as such a ``bona fide nonprofit'' organization. As
Hsia's assistant Matthew Gorman recognized, political activity by the
Temple might threaten the validity of all the religious worker visas
and green cards obtained for Temple affiliates since 1993. See Gorman
deposition, p. 75.
---------------------------------------------------------------------------
It is also worth noting that there is a problem here even
apart from the Temple's reimbursements of DNC donors. As the
Committee learned from Maura McManimon, the DNC's event
coordinator for the Temple luncheon, the DNC had no expenses in
organizing the Temple event apart from Huang's airfare to Los
Angeles. The DNC apparently did not even give McManimon a
budget for this event, and had absolutely no idea what the
Temple luncheon cost because the Temple paid for
everything.216 These expenditures alone amounted to
a large, in-kind contribution to the DNC by the Temple.
---------------------------------------------------------------------------
\216\ Deposition of Maura McManimon, July 25, 1997, pp. 49-50 & 58-
59.
---------------------------------------------------------------------------
Significantly, the DNC did not repay the Temple for this
significant in-kind contribution until the day after the first
stories about the Temple affair appeared in the Wall Street
Journal on October 17, 1996.217 It was only then
that the DNC decided to reimburse the Temple for the money it
saved the DNC in organizing the Gore event, by sending the
Temple a check for $15,000.218
---------------------------------------------------------------------------
\217\ Kuntz, supra note 1.
\218\ The DNC's check for this reimbursement was written on the
very day the first stories appeared. See Ex. 143 (Bradley Marshall,
letter to Man Ho, Oct. 18, 1996, enclosing $15,000 check to cover
estimated costs of April 29, 1996 event; DNC Services Corporation check
#025100 for $15,000 to Buddha's Light International Association on
October 17, 1996).
---------------------------------------------------------------------------
When press accounts of the Temple fundraiser and associated
donation-laundering by the Temple began to appear in the fall
of 1996, Temple officials became alarmed. Both Man Ho and Yi
Chu, in fact, ``panicked'' and set about destroying and
altering documents in their files which they felt were
``embarrassing.'' Man Ho destroyed a number of documents
relevant to the Temple's illegal donation-laundering,
including:
(1) The check-request forms that Man Ho had prepared
for the Abbess' signature after receiving calls from
Maria Hsia requesting political contributions;
(2) The list of attendees Man Ho gave to John Huang
on April 28 indicating guests who would attend the Gore
luncheon, who among them had agreed to donate money to
the DNC, and the amount of each contribution; and
(3) Most of the paperwork held at the Temple in
preparation for the Vice President's visit, including
invitations (including newspaper clippings of the
event). 219
---------------------------------------------------------------------------
\219\ See Man Ho deposition, pp. 155-58 & 219-20 (recounting
``panic,'' ``embarrassment,'' and document destruction).
---------------------------------------------------------------------------
Venerable Master Hsing Yun has subsequently claimed that
the destruction of these documents was merely part of an
ongoing process by which the Temple would ``regularly purge old
files in storage and add new ones'' and ``has nothing to do
with destruction of evidence.'' 220 It is clear from
Man Ho's testimony, however, that this is untrue. Furthermore,
when questioned by Senator Susan Collins during Committee
hearings, Yi Chu admitted that the nuns' document purge was
anything but ordinary:
---------------------------------------------------------------------------
\220\ Hsing Yun, statement in response to Governmental Affairs
Committee hearings, Sept. 6, 1997 (Ex. 144) [translated by Michael Yan
for the Governmental Affairs Committee].
Senator Collins. When the press stories appeared
regarding the temple fund-raiser and the
reimbursements, were you worried that the negative
publicity would hurt the temple's reputation?
Ms. Yi-Chu. Yes.
Senator Collins. And you also did not want to
embarrass the Vice President or . . . Maria Hsia; is
that correct?
Ms. Yi-Chu. Yes.
Senator Collins. So that was your motivation for
making these changes and altering these documents as
well as destroying other documents; is that correct?
Ms. Yi-Chu. Yes.221
---------------------------------------------------------------------------
\221\ Yi Chu testimony, Sept. 4, 1997, p. 65; see also id., pp. 34-
35 & 97 (confirming that motive for destruction was to avoid
embarrassment).
In addition to this campaign of document destruction, Yi
Chu testified that in approximately November of 1996, she
modified some of the cashed Temple checks used to reimburse
monastic donors on the day following the event. After stories
about the Temple incident began to appear in the press, she
added, often in Chinese characters, the words ``loan'' or
``Futien account'' on the previously-blank ``memo'' lines of a
number of checks.222 This, she hoped, would conceal
the actual origin of the reimbursements: while the checks had
actually come out of the Temple's general expenses account with
no expectation of repayment, she wanted to create the
impression they were either ``loans'' to the monastic donors or
had come from these donors' own funds held for them by the
Temple in so-called Futien accounts.223
---------------------------------------------------------------------------
\222\ These altered checks were the ones produced to the Committee
pursuant to its subpoena of the Temple, but the forgery can clearly be
seen if one compares the altered checks produced by the Temple with
photocopies kept by the bank when the checks were originally cashed in
their unaltered form. Exhibit showing ``Checks as produced by Temple''
alongside ``Checks as cashed by bank'' (Ex. 145) (reproducing
illustrative IBPS reimbursement checks to Hsiu Chu Lin, Hsiao Jie Su,
and Seow Fong Ooi).
\223\ See Yi Chu deposition, pp. 47-50, 83-84, & 108-09.
---------------------------------------------------------------------------
Yi Chu's alteration of these checks is significant not only
because of the cover-up it demonstrates, but because it
emphasizes the fact that while Yi Chu could have selected to
make contributions only monastics who had sufficient funds in
their personal ``Futien'' accounts to cover the cost--and
thereby create at least the basis for an argument that the
political contributions by these monastics were voluntary ones
made from personal monies--she instead followed her usual
pattern of immediately reimbursing the ostensible donors from
the Temple's general expenses account, which is funded with
tax-deductible contributions to the Temple itself. These
alterations underscore the fact that the Temple's numerous
reimbursements during the 1993-96 period were not done with the
donors' ``own'' money, and they make clear that Temple
officials clearly understood that it was wrong to reimburse
donors with the Temple's funds.
Temple monastics were also less than candid in responding
to press inquiries and official investigations of the Temple
affair. Man Ya Shih--whose false story about donation-
laundering had helped first bring the episode to light when it
was reported in the Wall Street Journal in October 1996
224--was the worst offender in this regard. In a
letter to Hsia apologizing for certain false statements she had
made to the Journal and seeking Hsia's approval of a proposed
written response to FEC inquiries, for example, Man Ya Shih
promised Hsia that ``I will cover the fact if I did help anyone
in laundering the money.'' 225 Thereafter, in a
signed and sworn statement to the FEC, Man Ya Shih did exactly
this--swearing that no one had given her the money she used to
make her $5,000 donation to the DNC.226
---------------------------------------------------------------------------
\224\ See Kuntz, supra note 1.
\225\ Ex. 146 (Man Ya Shih, letter to Maria Hsia, Nov. 7, 1996; Man
Ya Shih, excerpt from November 7, 1996 letter to Maria Hsia translated
from Chinese by Michael Yan for Governmental Affairs Committee).
\226\ Man Ya Shih, sworn declaration to Federal Elections
Commission, Nov. 30, 1996, p. 2 (Ex. 147), (``Please note that I was
not given money to donate to DNC. But money given to me from the past
years was used to be donated to DNC by my kind intention to support the
people to elect the right persons to the Government''.) Hsia apparently
also forwarded information to Man Ya Shih regarding the requirements of
federal election law, and attempted to arrange for Man Ya Shih to
receive legal representation from Hsia's own lawyer, James Robinson.
See Ex. 148 (Progress Sheet from files of Hsia & Associates [recounting
Man Ya Shih inquiry about election law, apparently on Nov. 1, 1996];
Maria Hsia, fax transmission to Jim Robinson, Nov. 6, 1996 [forwarding
``Statement of Designation of Counsel'' signed by Man Ya Shih]). As the
DNC attempted to assess the scope of its illegal-donation problem in
late 1996 and early 1997, Hsia apparently helped a company called
Matsunichi of America prepare a response to the DNC's questionnaire in
which it denied that its president, Pan Su Tong, had ever made any
contributions to the DNC. At the time, however, Hsia possessed both a
photocopy of Pan's $5,000 check to the DNC on July 22, 1996 and a copy
of the bank statement showing that it had been cashed by the DNC. Ex.
149 (Packet of materials forwarded to Matt Gorman by Matsunichi of
America, including: check in name of Pan Su Tong signed by Lance Zheng;
copy of bank statement for August 1996; draft letter denying
contribution written on letterhead of Matsunichi of America and
prepared for signature by Lance Zheng; copy of questionnaire sent to
Pan by Ernst & Young on behalf of DNC).
---------------------------------------------------------------------------
In early 1997, Maria Hsia also played a role in
coordinating monastics' responses to the Ernst & Young surveys
sent to contributors by the DNC as part of their review of
campaign finance problems--helping them respond to difficult
questions such as who had solicited their donations and whether
anyone else had provided them with money for this
purpose.227
---------------------------------------------------------------------------
\227\ See e.g., Matthew Gorman, fax transmission to Jan Yueh Lian
Huang, Jan. 9, 1997 (Ex. 150) (noting that ``I will ask Ms. Hsia about
item number 16.''); id. at SEN 00329 (enclosure of Ernst & Young DNC
donor survey). Question 16 of Huang's survey was an inquiry as to ``who
was the person who asked or solicited you to make this contribution.''
Moreover, this survey response contains a handwritten note by Matt
Gorman in the response portion of Question 15--which asks ``If this
money was not yours, we need to know whose mney it was. Please tell us
whose money was given to the DNC and give us his/her name.'' Gorman's
note, which was written in Chinese, indicates that he will ask Maria
Hsia about this question. Id.: see generally Gorman deposition, p. 92
(identifying authorship and content of handwritten note); Matthew
Gorman, fax transmission to Maria Hsia, Jan. 11, 1997 (Ex. 151)
(forwarding Huang's query about survey and requesting ``Please let me
know how you suggest she should respond.''); Ex. 87, p. 3, para. 15
(``In late 1996 or early 1997, Ms. Hsia asked me to help any persons
who had donated to the DNC in connection with the April 29, 1996 event
who needed help in responding to questionnaires sent by Ernst & Young
on behalf of the DNC.''). According to Gorman, he did indeed ask Hsia
about Huang's responses, but was told merely to ``say whatever is
true.'' Gorman deposition, p. 94. He could not remember whether he
helped other donors ``coordinate'' their responses with Hsia.
---------------------------------------------------------------------------
Another nun, Siuw Moi Lian--who donated $5,000 to the DNC
in connection with the Gore luncheon and was reimbursed by the
Temple--appears to have submitted a false response to the DNC
when asked about her role. When asked on behalf of the DNC by
the accounting firm of Ernst & Young whether anyone had
solicited her donation and what the source of the money for it
had been, Siuw Moi Lian wrote ``myself.'' 228
---------------------------------------------------------------------------
\228\ Siuw Moi Lian response, undated (Ex. 152).
---------------------------------------------------------------------------
Hsia barred reporters from viewing the videotape taken by
King & I Productions, videographers hired for the Vice
President's Temple luncheon, including that taken of the
speeches made by Vice President Gore and others to the
assembled guests.229 Within two days of the
luncheon, all copies of the videotape footage were gathered up
from the film company and quickly shipped to
Taiwan.230 Moreover, the monastic who took the tape
from the production company on May 3, 1996--a monk by the name
of Man-Chin 231--left the Fo Kuang Shan order
shortly after the Committee served Temple officials with a
subpoena for the videotape; he has since disappeared.
232 Despite the repeated assurances of Temple
officials that they are looking for this missing tape--and
despite the fact that Temple officials have used short excerpts
from this tape in making a brief publicity video that appeared
on the Cable News Network--the full videotape record of the
event with Vice President Gore on April 29, 1996 remains hidden
to this day.
---------------------------------------------------------------------------
\229\ See Memorandum of Interview of Anonymous Chinese newspaper
reporter, May 16, 1997, pp. 1-2.
\230\ Hank Tseng, letter to Christopher Ford, Aug. 27, 1997 (Ex.
153); Hearing testimony, Sept. 4, 1997, pp. 167-69 & 173-81.
\231\ See Ex. 153.
\232\ Hearing testimony, Sept. 4, 1997, pp. 174-75 & 179 (remarks
of Man Ho, Senator Fred Thompson, and Brian Sun).
---------------------------------------------------------------------------
It has continued to be difficult to establish precisely
what the Vice President claims to have known about the nature
of the Temple fundraiser. At first, he claimed that he believed
the Templelunch was only a ``community outreach''
event.233 Later, Vice President Gore said that he had
believed it to be a ``finance-related'' event,234 a term
that the White House apparently now uses to describe a range of events
including, but not limited to, fundraisers. More recently--after it
became apparent to the Committee that no one at the White House or the
DNC could ever recall seeing or using the term ``finance-related''
prior to the point at which the Hsi Lai Temple story first broke in the
press in October 1996 235--Vice President Gore adjusted his
position again. On the day before Committee hearings on this subject,
White House officials told reporters that the Vice President had
actually believed it to be a ``donor-maintenance'' event, by which they
apparently meant that he felt it to be an affair for DNC contributors
at which money was not to be raised.236 The Vice President
has said that ``no money was offered or collected or raised at the
event,'' 237 and he has insisted that ``[i]t was not a
ticketed event.'' 238 According to his spokeswoman Ginny
Terzano, ``[a]ny money collected was without our knowledge.''
239
---------------------------------------------------------------------------
\233\ Albert Gore, interview by Nina Totenberg for National Public
Radio, Oct. 22, 1996 (``It was billed as a community outreach event . .
.'')
\234\ See Brian McGrory, ``Gore says he knew Buddhist event was
fund-raiser; He earlier cited `community outreach,' '' Boston Globe,
Jan. 15, 1997, at A9.
\235\ According to the Vice President's scheduler Kim Tilley, in
fact, the term ``Finance-related event'' was never used at all. Tilley
deposition, p. 128 (``We would not call them DNC Finance-related
events.'').
\236\ See David Stout, ``Gore's Presence at Fund-Raiser Called
Innocent,'' New York Times, Sept. 3, 1997, p. A19.
\237\ Albert Gore interview, supra note 233.
\238\ See Dan Balz, ``For Vice Presdent Gore, a Term of
Transition,'' Washington Post, Jan. 20, 1997, p. E31.
\239\ See John Mintz, ``Fund-Raisers Pressured Temple After Gore
Visit,'' Washington Post, June 13, 1997, p. A20.
---------------------------------------------------------------------------
Virtually everyone at the DNC and on the Vice President's
staff, however, not only clearly understood the Hsi Lai Temple
event to be a ``fundraiser,'' but also freely and repeatedly
described it as such. Indeed, the Vice President himself once
referred to his DNC engagement in Los Angeles that day as a
``fundraiser''--and did so at a point after which he had
already accepted Hsing Yun's invitation to visit the Temple.
Moreover, it is clear that both the Vice President himself and
his staff members understood that whatever the event was
ostensibly called, its purpose was to raise money for the DNC.
The Vice President was advised of this, for example, by
Harold Ickes, who described the event's anticipated fundraising
total to the Vice President on the day before the Vice
President received his briefing notes from the DNC for the
Temple visit. In fact, at least two of the guests who attended
the event in Hacienda Heights on April 29, 1996 recall
fundraising actually being discussed from the lectern--in the
presence of the Vice President. While there are obvious reasons
for the Vice President to wish to distance himself from the
Temple event by claiming that he had no idea fundraising was
involved, such a claim is improbable.
To understand what the Vice President really knew about the
Temple, one must first understand the ``dire financial
situation'' that faced the DNC after Republicans won majorities
in Congress in 1994.240 Without vast new infusions
of money, felt the Democrats in the White House, they could not
afford the expensive media campaign needed to save themselves
from a similar defeat in 1996.241 With this very
much in mind, Vice President Gore resigned himself to a long
and arduous season of fundraising, concluding that ``we can
raise the money--BUT 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.'' 242
---------------------------------------------------------------------------
\240\ Deposition of David Strauss, June 30, 1997, p. 254.
\241\ According to one DNC Trustee, for example, the DNC
established a special media fund because the ``the media campaign was
going to be expensive.'' Deposition of Beth Dozoretz, Sept. 2, 1997, p.
56. Ultimately, the DNC spent many millions of dollars on this
campaign, which the President himself identified in videotaped comments
produced to the Committee by the White House,
\242\ Albert Gore, ``Points for Political Budget Meeting with
President,'' undated, p. 4 (Ex. 154).
---------------------------------------------------------------------------
The DNC's April fundraiser in Los Angeles was a direct
result of the fundraising campaign that grew out of the
perceived importance of financing the DNC's massive media
campaign on behalf of the President's re-election. Since the
beginning of 1996, in fact, DNC and White House officials had
been planning a fundraiser for the Vice President in April of
that year. In early January, for example, Ickes sent a
memorandum to the Vice President outlining the DNC's proposed
events for 1996. This memorandum outlined, among other things,
a plan to hold a $200,000 fundraiser for Vice President Gore in
Los Angeles in April; it was to be the Vice President's only
one in the city that month.243
---------------------------------------------------------------------------
\243\ This document also outlined the DNC's plan for another
$200,000 April fundraiser for Gore in San Jose. This Ickes memorandum
is the first planning document which the Committee has been able to
locate the two April 29, 1996 fundraisers attended by the Vice
President, Harold Ickes, memorandum to the President and Vice
President, Jan 2, 1996, p. SCGA-00286 (Ex. 155) (identifying VPOTUS
events in April listed as intended to raise ``$ AMOUNT[[s]'' of 200 K''
in Los Angeles and another ``200K'' in San Jose). This document is
stamped ``THE PRESIDENT HAS SEEN,'' with a handwritten notation
appearing next to this reading ``1/8/96.''
---------------------------------------------------------------------------
This initial DNC proposal for Vice President Gore's only
April 1996 event in Los Angeles became increasingly specific
over time in additional Ickes memoranda forwarding fundraising
targets to the Vice President. On February 9, for example,
another Ickes memorandum raised the anticipated fundraising
goal from Gore's planned April trip to Los Angeles to $250,000,
and projected its likely expense as $25,000.244 At
least by early March 1996, it appears, John Huang--now the
DNC's top fundraiser among Asian-Americans--had been given
responsibility for some of the upcoming events in
California.245 By March 12, Vice President Gore's
scheduling staff had begun specifically to discuss possible
dates for the event, referring in internal memoranda to
upcoming ``DNC fundraisers in San Jose & LA'' on ``April 27-
29.'' 246
---------------------------------------------------------------------------
\244\ Harold Ickes, memorandum to the President and Vice President,
Feb. 9, 1996, at EOP 041361 (Ex. 156). This document is marked to
indicate that the President read it on February 22.
\245\ On March 7, for example, the Vice President's deputy chief of
staff, David Strauss, had a telephone conversation with Huang about
``events in Cal[ifornia].'' David Strauss, telephone memorandum, March
7, 1996 (Ex. 157).
\246\ Lisa A. Berg, e-mail to Kimberly H. Tilley, March 12, 1996
(Ex. 158) (discussing ``Up-coming travel of the Vice President'').
---------------------------------------------------------------------------
No specific location was set or even discussed for the Vice
President's April fundraiser in Los Angeles, however, for some
time after the initial Ickes memorandum in January that
outlined the need for such an event. The first connection of a
specific location to the Los Angeles fundraising trip, as we
have seen, apparently came from the Vice President himself when
he met at the White House with Venerable Master Hsing Yun on
March 15. Vice President Gore's reference during this meeting
to an upcoming trip to Los Angeles, apparently in April, could
only have been to the $250,000 fundraising trip of which Ickes
had advised the Vice President in his January and February
memoranda: he had no other trips to Los Angeles planned between
March 15 and April 29. This meeting was therefore the first
time anyone at the White House had discussed a specific
location in connection with Vice President Gore's April visit
to Los Angeles.
Indeed, Huang and Hsia, at least, may even have intended
the March 15 meeting with Hsing Yun to lay the groundwork for a
Vice Presidential fundraiser at the Hsi Lai Temple. There is
little other way, in fact, to explain the involvement of both
Huang and Hsia in this meeting: Huang's job was to raise money
for the DNC among Asian-Americans, and he and Hsia had been
raising money together for Al Gore since 1989. Huang both
requested and organized the Vice President's March 15 visit
with Hsing Yun, and it was he who wrote the Vice President's
briefing notes for the meeting. Furthermore, on March 13, two
days before the White House meeting, the Vice President's
deputy chief of staff, David Strauss, had a telephone
conversation with Huang. Strauss claimed not to remember any
specifics of this conversation, but he testified that it was
related to the upcoming Hsing Yun visit at the White
House.247 Significantly, his notes of this
conversation include the notation ``John Huang . . . lead to a
lot of $.'' 248
---------------------------------------------------------------------------
\247\ Strauss deposition, June 30, 1997, pp. 56 & 59 (identifying
telephone memorandum and adding that ``in my head . . . I have this
linked with the Vice President's meeting with the Venerable Master.'');
id., p. 68 (``[T]his is connected to the meeting with the Vice
President. That's the linkage.''); see generally id., pp. 56-68.
\248\ David Strauss, telephone memorandum, March 13, 1996 (Ex.
159).
---------------------------------------------------------------------------
Vice President Gore also clearly knew on March 15, 1996
that the DNC hoped to have him attend a fundraiser in Los
Angeles at the end of April. Just after his meeting with Hsing
Yun, his scheduler Kim Tilley asked the Vice President in an e-
mail message about whether he would be interested in adding
another stop on his April 29 itinerary on top of ``the two
fundraiser[s] in San Joe [sic] and LA.'' In this same message,
she informed the Vice President that ``[w]e've confirmed the
fundraisers for Monday, April 29th.'' 249 The Vice
President responded--also that afternoon, by this point still
only some four hours after having discussed his upcoming trip
to Los Angeles with Hsing Yun in accepting the Temple's
invitation to visit--that ``if we have already booked the
fundraisers, then we have to decline'' invitations to add
additional stops on the trip.250
---------------------------------------------------------------------------
\249\ Kimberly H. Tilley, e-mail message to Albert Gore, March 15,
1996 (Ex. 160).
\250\ Albert Gore, e-mail message to Kimberly Tilley, March 15,
1996 (Ex. 160). Both Tilley and David Strauss have said that when the
Vice President sent this e-mail, he understood the April 29 event to be
a fundraiser. Strauss deposition, June 30, 1997, p. 83; Tilley
deposition, pp. 147-48.
---------------------------------------------------------------------------
The March 15 meeting at the White House thus set in motion
the process of picking the Hsi Lai Temple as the location for
Vice President Gore's April 29 fundraiser in Los Angeles.
Within two weeks, the DNC had confirmed the Temple as the
location and notified the Office of the Vice President of this
fact: by April 3, Maura McManimon had already sent a memorandum
to the White House that described the location of this event as
``Hsi Lai Temple (Buddhist Temple presided over by Hsing Yun,
whom the Vice President has met).'' 251
---------------------------------------------------------------------------
\251\ Maura McManimon, memorandum to Jackie Dycke, April 3, 1996
(Ex. 161) (outlining for White House luncheon in Los Angeles). The very
next day, as we have seen, Hsia asked Gorman to open a file entitled
``Vice President Gore Hsi Lai event April 29, 1996--DNC Fundraiser.''
See supra note 160.
---------------------------------------------------------------------------
Although Vice President Gore had been sufficiently
concerned about possible foreign policy embarrassments to call
Hsia for reassurances before meeting Hsing Yun at the White
House in March 1996, the Vice President appears to have pressed
ahead with the April 29 Temple event despite the misgivings of
the NSC and his own national security advisors. As the
fundraiser approached, the NSC again urged ``great, great
caution.'' 252 Because of these concerns, the
Department of State was consulted; it suggested certain
criteria to govern the event in the interest of preventing
``political exploitation by people from Taiwan.'' According to
these rules, the Temple event was not to be billed as a
``Taiwan'' event but rather one ``for the Chinese community of
Southern California.'' No ``Taiwan flags or KMT symbols or
other signs that would be embarrassing for the VP'' could be
displayed at the Hsi Lai Temple, and ``no Taiwan politician
should be allowed to exploit the event.'' 253
Despite the imposition of these criteria, however, the Vice
President's own national security staff suspected that the
event's DNC organizers would be unable to meet them. As one
aide put it, ``I think it may be difficult for the sponsors to
meet the three criteria suggested by State.'' 254 As
one of Vice President Gore's national security aides, Bill
Wise, warned in mid-April, ``I tend to seek the safer course in
these situations, but I suspect the VP might opt to go ahead''
anyway.255
---------------------------------------------------------------------------
\252\ Robert Suettinger, e-mail message to John Norris, April 19,
1996 (Ex. 162) (``This is terra incognita to me. Certainly from the
perspective of Taiwan/China balancing, this would be clearly a Taiwan
event, and would be seen as such. I guess my reaction would be one of
great, great, caution. They may have a hidden agenda.''). Gore's
schedulers had consulted with the Vice President's national security
staff in order ``to find out if there are any problems/ramifications
with the use of the Hsi Lai Temple [sic] for the VP's DNC Lunch while
in LA.'' Jackie Dycke, e-mail message to Tyler S. Beardsley, April 15,
1996 (Ex. 163); see also Jackie Dycke, e-mail message to Kimberly
Tilley, April 16, 1996 (Ex. 164) (``Did you ever hear back from Bill
[Wise] on Hsi Lai Temple?'').
\253\ John Norris, memorandum to Bill [Wise], April 16, 1996 (Ex.
165).
\254\ Bill Wise, handwritten addendum to John Norris memorandum of
April 16, 1996 (Ex. 165).
\255\ Id.
---------------------------------------------------------------------------
It has been suggested--in accounts attributing this
information to Hsia after stories about the Temple scandal
began to appear in the press--that Huang had planned to hold
his April 29 Vice Presidential fundraiser at the Harbor Village
Restaurant in Monterey Park, California, but that this
fundraiser was relocated to the Temple ``several days before
Gore's trip.'' 256 Such claims of a ``last-minute''
switch in location are false. As the restaurant's management
declared in a sworn statement given to the Committee, no one
ever contacted the Harbor Village about holding an event there
on April 29, 1996.257 Even had the event initially
been planned for another site, in fact, no specific location
for the April 29 fundraiser other than the Hsi Lai Temple was
ever discussed by or with anyone at the White
House.258
---------------------------------------------------------------------------
\256\ See Rich Connell and Alan C. Miller, ``Principals Say Temple
Event was Explicit Fund-raiser,'' Los Angeles Times, Nov. 3, 1996, p.
A21 (recounting claims by ``Hsia and others'' that Harbor Village
Restaurant fundraiser was changed to Temple ``several days before
Gore's trip'').
\257\ Diana So, letter to Special Agent Gayle Jacobs, May 20, 1997
(Ex. 166) (``Per your request, we have looked into our reservation book
back to the period between February 1996 and May 1996, [and] our record
shows that there was not any party organized by John Huang, Maria Hsia
or Matthew Gorman in our restaurant.''). A review conducted at the
request of the Committee by the Vice Presidential Protective Division
(VPPD) of the U.S. Secret Service also showed no ``records that would
relate to a planned or actual visit by the Vice President to the Harbor
Village Restaurant located in Monterey Park, California. No VPPD record
reflects a planned or actual visit to that site.'' Ex. 122, p. 2.
\258\ Hsia at one point apparently possessed a draft invitation on
what appeared to be DNC letterhead for a DNC event on April 29 at the
Harbor Village. Invitation to DNC APALC Event (Ex. 167). This document,
however, was produced to the Committee only by Hsia & Associates, and
apparently exists nowhere in the files of either the DNC or the White
House (suggesting that no one beside Hsia ever saw it). Moreover,
Gorman could not recall when he first saw this document. Indeed, Gorman
admitted that he may only have seen it after the Gore fundraiser, and
may indeed only have learned anything about the purported Harbor
Village plan from Hsia herself--or from newspaper accounts quoting her
that appeared after the Temple scandal had begun to break in the press.
See Gorman deposition, pp. 187-90. No other document or testimony
suggests any other specific location for the April 29 fundraiser apart
from the Hsi Lai Temple itself, and there is no evidence that any such
information was ever transmitted to the White House.
---------------------------------------------------------------------------
It is clear, therefore, that the Hsi Lai Temple was the
only specific location ever discussed with White House
officials. Documentary evidence also makes clear that after DNC
event coordinator Maura McManimon sent her April 3 memorandum
to the White House specifically identifying the Temple as the
location for the DNC luncheon, the White House knew that the
purpose of the April 29 stop in Los Angeles was to raise money.
On April 10, for example, Harold Ickes sent the Vice President
another memorandum, advising him that the April 29 event would
raise $250,000 and would be organized by John
Huang.259 Ickes specified further that for this
event, as well as for the event in San Jose that same day,
``all proceeds [would go] to [the] DNC.'' 260
---------------------------------------------------------------------------
\259\ Harold Ickes, memorandum to the President and the Vice
President, April 10, 1996 (Ex. 168), p. EOP 040782 (identifying VPOTUS
event in Los Angeles on ``29-Apr'' having ``Projected Revenue'' of
$250,000 and ``Huang'' as the staff contact). Later, this same
memorandum again listed events for April as including a $250,000
fundraiser on April 29. Id., p. EOP 040791.
\260\ Id., p. EOP 040808.
---------------------------------------------------------------------------
Ickes sent the Vice President another memorandum on April
25, 1996, once again describing the DNC as planning a
fundraising event in Los Angeles on April 29--again listing
John Huang as the organizer, but now describing it in more
detail as a luncheon and raising its ``projected revenue'' to
$325,000.261 Within 24 hours of receiving this
memorandum, Vice President Gore was given briefing materials
from the DNC informing him that the DNC luncheon he would
attend on April 29 was at the Hsi Lai Temple.262 The
conclusion could scarcely have been more obvious.263
From these memoranda alone, it is clear that Vice President
Gore understood the Temple event to be a DNC fundraiser.
---------------------------------------------------------------------------
\261\ Harold Ickes, memorandum to the President and the Vice
President, April 25, 1996 (Ex. 169), p. SCGA-01213 & -01223 (listing
fundraiser in sections describing projected April events).
\262\ DNC Finance, memorandum to Office of the Vice President,
April 26, 1996 (Ex. 170) (briefing notes prepared by Richard Sullivan,
John Huang, and Maura McManimon), pp. D 0000027-28 (last set of notes
phrased in second person [i.e. ``you''] for Vice President Gore
discussing DNC luncheon at Hsi Lai Temple).
\163\ Nor is there any question that the Vice President received
this and other memoranda from Ickes. As Gore's executive assistant
Heather Marabetti testified, while the Vice President's staff generally
culled his ``inbox'' in order to remove documents that were not of the
utmost importance, Ickes' memoranda always ``stayed in the inbox'' so
as to receive personal Vice Presidential attention. Deposition of
Heather Marabeti, Sept. 3, 1997, pp. 66-67.
---------------------------------------------------------------------------
The Vice President's staff also clearly understood that the
April 29 event at the Temple was a fundraiser, as attested by
the numerous internal messages and memoranda discussing the
upcoming April 29 ``fundraiser'' in Los Angeles. On April 11,
in fact, his staff held a meeting in Kimberly Tilley's office
to discuss the upcoming ``fundraising events on April 29.''
264 Despite later White House claims that the Temple
fundraiser was ``not a ticketed event,'' 265 at this
April 11 meeting, Vice Presidential scheduler Jackie Dycke
handed out copies of a document she had prepared showing that
the upcoming April 29 luncheon at the Temple in Hacienda
Heights had a ``ticket price'' of $1,000 to $5,000 a head.
266 This document was prepared on the basis of
information given her by the DNC. Throughout the rest of April,
internal White House e-mail traffic continued to refer to the
upcoming Los Angeles ``fundraiser,'' 267 the last of
such references being on April 24, less than a week before the
event was to occur. 268
---------------------------------------------------------------------------
\264\ See, e.g., Jackie A. Dycke, e-mail to R. Martinex et al.,
April 10, 1996 (Ex. 171) (``As you know, the VP is going to San Jose
and LA for DNC fundraising events on April 29. . . . We are going to
have a meeting at 2:15 p.m. TOMORROW (Thursday) in Kim Tilley's office
(Room 285) to discuss everything that is out there for this California
trip.''). This e-mail was sent to no fewer than 11 people on Vice
President Gore's staff: R. Martinez, John Emerson, Kim Tilley, Julie
Payne, Karen Skelton, Ellen Ochs, Wendy Hartman, Caren Solomon, Dennis
Alpert, David Thomas, and Kim Hopkins.
\265\ See supra text accompanying note 238.
\266\ Current Schedule for April 29, April 11, 1996 (Ex. 172), p.
EOP 056497 (describing ``DNC Luncheon in LA/Hacienda Heights: 1000-5000
head/150-200 people'' and ``Reception in San Jose 150-200 guests/ticket
price working out''); Deposition of Jacqueline Dycke, Aug. 8, 1997, p.
66.
\267\ See, e.g., Ex. 162 (John Norris, e-mail message to Robert
Suettinger, April 15, 1996) (``Hsing Yun has invited the VP to visit
the Hsi Lai Temple in LA. Hsing Yun would host a fundraising lunch for
about 150 people in the VP's honor.'').
\268\ John B. Emerson, e-mail to Bill [Wise], April 24, 1996 (Ex.
173) (listing Vice Presidential travel ``LA-- . . . DNC funder for
lunch; then to San Jose for TV workshop event and funder'').
---------------------------------------------------------------------------
Everyone on the Vice President's staff involved with the
Temple event thus knew exactly what was to occur. Despite the
Vice President's claim that the staffers who accompanied him
did not know that the event was a fundraiser,269
Gore staffer Caren Solomon, who accompanied him on this
trip,270 had been sent an e-mail by scheduler Jackie
Dycke discussing the upcoming ``fundraiser'' and inviting her
to the meeting at which Dycke's ``ticket price'' memo had been
distributed.271
---------------------------------------------------------------------------
\269\ Albert Gore interview supra note 233 (``I did not know that
at the time. The people with me did not.'').
\270\ Schedule for the Vice President, April 29, 1996 (Ex. 174), at
EOP 007195-96 (showing Solomon on manifest for Marine II, Air Force II,
and Los Angeles motorcade).
\271\ Ex. 171 (reference to ``LA . . . DNC fundraising event[ ] on
April 29'' and invitation to meeting to discuss trip, sent to Solomon).
The Minority has tried to argue that a line-by-line analysis of the
briefing notes and the daily schedule given to the Vice President for
the Temple event--and a comparison between these documents and those
that accompanied certain other DNC events--would have suggested to him
that it was not, in fact, a fundraiser. This reasoning is entirely
spurious. As Deputy Chief of Staff David Strauss testified, the Vice
President's briefing materials for fundraisers did not always include
information indicating that they were fundraisers and did not always
indicate the amount to be raised. See Deposition of David Strauss
deposition, Aug. 14, 1997, p. 240. Gore scheduler Ladan Manteghi
testified similarly, conceding that not all fundraisers were described
as such on the Vice President's schedule and that this schedule would
usually not include indication of monetary amounts to be collected at
fundraising events. Deposition of Laden Manteghi, Aug. 26, 1997, p. 33.
---------------------------------------------------------------------------
Moreover, Vice President Gore was apparently reminded that
the April 29 luncheon was a fundraiser at the Temple itself. At
least two of the guests who ate lunch with the Vice President
in the Temple's dining hall on April 29 recall specifically
that DNC fundraising was actually discussed from the podium
after lunch. Daniel Hesse, for example--one of the two INS
officials invited by Matthew Gorman as a non-paying ``VIP
guest'' of Hsia--told the Committee that at some point during
the Vice President's introductions by Don Fowler and Bob
Matsui, ``one speaker commented that `they had raised X amount
of dollars.' '' 272 More explicitly, Sherry Shaw,
who sat at Table 8,273 recalls that one of the
luncheon speakers took the podium and reassured the assembled
guests that ``they'' had ``double-checked,'' and that it was
``O.K. to give contributions at the Hsi Lai Temple.''
274 She said that the man who made this comment
``had a Japanese last name.'' 275 Vice President
Gore was thus reminded of the event's fundraising purpose at
the event itself, by the very DNC official who introduced
him.276
---------------------------------------------------------------------------
\272\ Memorandum of Interview of Daniel Hesse, Aug. 5, 1997, p. 2.
\273\ Ex. 132, p. 3. According to this list, Sherry Shaw's husband
Gary sat at the head table with Vice President Gore. (Shaw is a
naturalized U.S. citizen from the People's Republic of China, and gave
$5,000 to the DNC at this Temple event.)
\274\ Sherry Shaw, sworn statement submitted to the Governmental
Affairs Committee, Aug. 21, 1997 (Ex. 175). This story of ``double-
checking is generally corroborated by several other sources, among them
Man Ho, Yi Chu, and Man Ya Shih--who have stated that the Temple had
been advised prior to the event that the DNC had indicated that the
Temple could host the luncheon even and that the holding of the event
would not jeopardize the Temple's tax-exempt status because it was not
unprecedented to hold such activities at a religious venue.
Joint Statement of Venerable Man-Ho Shih, Venerable Man-Ya Shih,
and Venerable Yi-Chu on Behalf of Themselves and the Hsi Lai Temple/Fo
Kuang Shan Order, Sept. 4, 1997, p. 10 (Ex. 176). According to Man Ho,
furthermore, Maria Hsia told a press conference after the Vice
President's visit on April 29, 1996 that the White House had
specifically approved holding this sort of event at the Temple. See Man
Ho deposition, pp. 182-83. This account of Hsia's comments at the press
conference is also corroborated by contemporaneous Chinese-language
press coverage. See ``Gore visits Hsi Lai Temple on the 20th'' April
24, 1996 [translation of newspaper article by SA Becky Chan for the
Governmental Affairs Committee], p. 1 (Ex. 177), (``After being
briefed, the White House saw no conflict in Gore attending a fund
raiser at a religious facility.''); Wong Mei, television news broadcast
[translation and transcription from videotape produced by Hsi Lai
Temple by SA Becky Chan for the Governmental Affairs Committee] (Ex.
178) (``After being briefed, the White House saw no inappropriateness
in a fundraiser held at a religious institution; therefore, the White
House agreed on Gore's visit.''); see also Memorandum of Interview of
Anonymous Chinese newspaper reporter, May 16, 1997, p. 2 (giving
similar account).
\275\ Ex. 175 (Noting that man who made comments had ``a Japanese
name''). This presumably identifies the speaker as DNC Treasurer Robert
Matsui, the only Japanese-American to address the assembled guests and
the official who introduced Vice President Gore. Representative Matsui,
however, citing ``constitutional'' considerations, has refused to
discuss with the Committee any comments he may have made at any point.
See Stanley Brand, letter to Paul Robinson, June 9, 1997 (Ex. 179).
\276\ See April 29 Lunch: Event Procedures, undated (``Bob Matsui
will introduce Vice President after Don Fowler's speach [sic].'') (Ex.
180); Handwritten note from Hsia & Associates files, undated (Ex. 181)
(``Order of speeches: (1) M Hsing Yun (2) Don Fallow [sic] (Chairman)
(3) Bob Mats. (4) VP Gore''). These remarks at the Vice President's
luncheon may help explain the mysterious disappearance of the videotape
taken by King & I Productions of the of the April 29 event at the Hsi
Lai Temple. As Man Ho explained in her testimony before the
Governmental Affairs Committee, the videographers were told not to
videotape the speeches after lunch but apparently exceeded their
instructions. See Man Ho testimony, pp. 176-77. After the company did
record the speeches however--apparently including the abovementioned
discussions of DNC fundraising that clearly show the Vice President to
have known the nature of the Temple event--the Temple may have found it
necessary to conceal the tape.
* * * * * * *
---------------------------------------------------------------------------
In sum, it was or should have been obvious to everyone
involved, including the Vice President, that the Hsi Lai Temple
luncheon on April 29, 1996 was a DNC fundraiser. It is also now
clear that most of the fundraising that occurred in connection
with the Temple event was illegal--and that the donation-
laundering orchestrated by Maria Hsia and carried out by Temple
officials in connection with the Vice President's visit was not
an aberration. Rather, it was part of a longstanding pattern of
illegality undertaken in support of Democratic candidates in
national elections that was established at least as early as
September 1993 with the laundering of donations to the DNC in
connection with another Vice Presidential event organized by
Hsia and John Huang. More broadly, the Temple donation-
laundering in 1996 was the culmination of a longstanding
relationship of mutual assistance between Maria Hsia, John
Huang, and the Vice President having its origins in the trip to
Taiwan organized in late 1988 as part of James Riady's agenda
for the Pacific Leadership Council.277
---------------------------------------------------------------------------
\277\ This close relationship between Hsia and covered persons
under the Independent Counsel Act creates a ``political conflict of
interest'' for the Attorney General that warrants the seeking of the
appointment of an independent counsel under 28 U.S.C. Sec. 591(c)(1).
See the section of the report on Charlie Trie and Ng Lap Seng's illegal
fundraising.
The China Connection: Summary of the Committee's Findings Relating to
Efforts of the People's Republic of China to Influence U.S. Policies
and Elections
Introduction
From its earliest stages, the Committee's investigation
uncovered instances of political contributions made with
foreign money. Either contributing or soliciting this money
have been individuals with business or political ties to the
PRC, who have escorted PRC officials and businessmen to
meetings with President Clinton and Vice President Gore, and
who have otherwise facilitated efforts to shape United States
policy towards China. The intelligence portion of the
Committee's investigation sought to determine whether the
foreign contributions and the PRC ties were mere coincidence,
or if the PRC was in some way behind any foreign political
contributions.
What the Committee learned was derived not from cooperative
witnesses or the PRC, but from gathering information from our
law enforcement and intelligence agencies and open sources, and
piecing it together. Although the Committee received and
reviewed a vast amount of information, there are nevertheless
gaps in what the Committee has gathered. And describing these
gaps might lead to the inadvertent disclosure of certain
sources and methods used to obtain information about Chinese
efforts. Mindful of these gaps, the Committee has endeavored to
report what it has learned faithfully and accurately.
The Committee's investigation in this area of necessity
proceeded behind closed doors. Virtually all of the information
gathered by the Committee was classified, much of it at top
secret and compartmented levels. The Committee took
extraordinary steps to protect the information from disclosure,
including limiting access to the information to Members and a
very small number of appropriately cleared staff, using secured
facilities to maintain materials and to hold briefings,
meetings, and hearings, and acceding to numerous special
restrictions placed by the intelligence agencies regarding the
handling of the information. The Committee was also restricted
as to what could be presented in public hearings because of the
classified status of much of the relevant information. The same
restrictions constrain what can be shared in this report.
Although hampered by time constraints and spotty
cooperation from some federal agencies, the Committee has
gathered significant information. The Committee determined from
U.S. law enforcement and intelligence agencies and open sources
that the PRC government fashioned a plan before the 1996
elections and that its goal was to influence our political
process, ostensibly through stepped-up lobbying efforts and
also funding from Beijing. Over time, the plan evolved and the
PRC engaged in much more than simply ``lobbying.'' Indeed,
discussions took place and actions were taken that suggest more
than the original plan was being executed, and that a variety
of PRC entities were acting to influence U.S. elections.
What follows is a discussion of the Majority staff's work
and the Committee's findings in this area. The discussion first
provides context for why the Committee pursued this subject, by
describing early media accounts of alleged foreign activities
and briefings provided in 1996 by the FBI to Members of
Congress and the White House. Next, it addresses in abbreviated
form some of the significant connections between the campaign
finance investigation and the Greater China area \1\, including
the ties specific figures have to the PRC government. It then
lays out what the Committee learned about the existence of a
``China plan,'' and about other, possibly-related activities
undertaken by the PRC government, as well as information
regarding the implementation of the plan. Throughout the
discussion, the Committee describes the significance it sees in
all of this.
---------------------------------------------------------------------------
\1\ For the purposes of this report, the term ``Greater China''
encompasses territories claimed or recently acquired by the PRC,
including Hong Kong, Macao, and the Republic of China on Taiwan.
---------------------------------------------------------------------------
Owing to the sensitivity of the subject, the Committee has
been unable to share with the American people most of the
documentary or testimonial evidence that supports the following
discussion, nor can it do so now. Moreover, the Committee will
be unable to address the subject matter publicly much beyond
the precise wording of the discussion that follows. However, a
longer, more detailed, and classified account of the
Committee's findings has been prepared and will be maintained
in secure environs.
Initial Indications of Chinese Efforts to Influence the 1996 Campaigns
During the investigation's earliest stages, several
seemingly well-sourced press reports described the fund-raising
efforts of overseas Chinese in this country and speculated on
their possible relationships to the PRC. On February 13, 1997,
the Washington Post first reported a link between foreign
campaign money and the PRC government.\2\ Citing ``officials
familiar with the inquiry,'' the article alleged, ``A Justice
Department investigation into improper political fund-raising
activities has uncovered evidence that representatives of the
People's Republic of China sought to direct contributions from
foreign sources to the Democratic National Committee before the
1996 presidential campaign.'' The Post observed that criminal
investigators ``suspected a Chinese connection to the current
fund-raising scandal because several DNC contributors and major
fund- raisers had ties to Beijing,'' and identified, in
particular, Yah Lin ``Charlie'' Trie and John Huang.
---------------------------------------------------------------------------
\2\ Bob Woodward and Brian Duffy, ``Chinese Embassy Role in
Contributions Probed,'' Washington Post, February 13, 1997, p. A1.
---------------------------------------------------------------------------
Other media stories preceding the start of the Committee's
public hearings in July reported additional details on covert
Chinese plans to fund political contributions in this country.
The New York Times on March 13, 1997 wrote that
``surreptitiously monitored'' conversations between Chinese
officials here and in Beijing ``suggested that Beijing was
prepared to take a drastic step: illegally funneling money to
American politicians.'' \3\ Time reported in March that
``provocative'' communications among Chinese officials picked
up by American intelligence ``indicated that front companies
for the Chinese government might try to funnel cash.'' \4\ Who
might have directed this? According to the Washington Post,
``top'' Chinese officials approved plans ``to attempt to buy
influence with American politicians,'' and the plans continued
through 1996 and to the present.\5\
---------------------------------------------------------------------------
\3\ David Johnston, ``U.S. Agency Secretly Monitored Chinese in '96
on Political Gifts,'' New York Times, March 13, 1997, p. A1.
\4\ Richard Lacayo, ``What Did China Want?'', Time, March 24, 1997,
p. 48.
\5\ Bob Woodward, ``Top Chinese Linked to Plan to Buy Favor,''
Washington Post, April 25, 1997, p. A1.
---------------------------------------------------------------------------
Additional stories indicated the FBI had commenced a
foreign counterintelligence probe of the matter in 1996,
briefing six Members of Congress regarding the Bureau's belief
``that thegovernment of China may try to make contributions to
Members of Congress through Asian donors.'' \6\ The Bureau later
briefed a seventh Member in October 1996. The FBI also told the White
House about the Chinese plan in June 1996, when FBI agents briefed two
representatives of the National Security Council. The FBI briefings
described illegal plans for the clandestine funding of American
political campaigns.
---------------------------------------------------------------------------
\6\ Brian Duffy and Bob Woodward, ``FBI Warned Six on Hill About
China Money,'' Washington Post, March 9, 1997, p. A1. See also Lacayo,
supra, p. 49.
---------------------------------------------------------------------------
Initial Indications were Consistent with What the Committee was
Discovering About Foreign Money Being Funneled into the 1996 Elections
Early in the investigation, Committee staff discovered a
number of money trails that led from the DNC and other
Democratic causes back overseas, and, particularly, to Greater
China. The trails wend their way from foreign countries through
one bank account after another, ending up mainly in DNC
coffers. Committee staff traced some of these trails backwards
as far as the transaction--generally a wire transfer--that
brought into the United States funds eventually used to make
political contributions.\7\
---------------------------------------------------------------------------
\7\ Although in several cases Committee staff members identified a
foreign account that served as the source of a contribution to the DNC,
they could not continue back to the actual trailhead when it was
located overseas since the Committee held no authority to compel
production of foreign bank records. Hence, whether a contribution that
entered the U.S. from an account in China, Hong Kong, Taiwan, Macao,
Indonesia, or some other country was connected in some way to the PRC
government could not be determined from an examination of the records.
---------------------------------------------------------------------------
Committee staff identified several instances of foreign
money donations connected to six individuals with ties to the
PRC. As noted below, John Huang, Maria Hsia, Ted Sioeng, and
James and Mochtar Riady each have been associated in some way
with the Government of China. The sixth, Yah Lin ``Charlie''
Trie, is a business partner of Ng Lap Seng, a Macao businessman
with alleged ties to the PRC. Trie, who recently was indicted
and arrested, escorted Wang Jun, head of China's principal arms
trading company, Polytechnologies, to a February 6, 1996 coffee
with President Clinton and a meeting the same day with Commerce
Secretary Ron Brown.
In 1996, John Huang solicited some $3.4 million in
contributions to the DNC. Nearly half this amount has been
returned as the contributions were determined by the DNC to
have been made with actual or suspected foreign funds. In
September 1993, Huang wrote three checks to the DNC, each in
the amount of $15,000, each paid with foreign money. The checks
were drawn on the accounts of three Lippo Group subsidiaries--
Hip Hing Holdings, San Jose Holdings, and Toy Center Holdings.
At the time the checks were written, all of the companies were
losing money and operating in the red. Hearing testimony from a
Huang coworker indicates the money for the three contribution
checks came from Lippo accounts in Jakarta.\8\ In short, the
1993 checks Huang signed were paid with foreign money.
---------------------------------------------------------------------------
\8\ Testimony of Juliana Utomo, July 15, 1997.
---------------------------------------------------------------------------
Huang's $45,000 in DNC contributions was made in close
proximity to occasions when Huang may have arranged for Vice
President Gore to meet Shen Jueren, the head of a commercial
enterprise wholly owned and operated by the PRC's Ministry of
Foreign Trade and Economic Cooperation. Called China Resources
Holdings, Shen's company has been identified as a PRC
intelligence-gathering operation; one with reported ties to the
People's Liberation Army.\9\ On Friday, September 24, 1993--the
day after Huang wrote the first two $15,000 checks to the DNC--
Huang escorted Shen Jueren to the White House, where Shen met
with Gore's chief of staff, Jack Quinn, and may have met with
Gore as well. The following Monday, September 27, 1993, Huang
wrote another $15,000 check to the DNC. On the same day, at a
Santa Monica event organized by Huang and Maria Hsia, Shen
Jueren may have met again with Vice President Gore.
---------------------------------------------------------------------------
\9\ Nicholas Eftimiades, Chinese Intelligence Operations, p. 80
(1994). Eftimiades writes that China Resources traditionally has a PRC
military officer installed as a vice president. It should be noted
that, in 1993, China Resources purchased a 50% share of the Hong Kong
Chinese Bank from the Lippo Group.
---------------------------------------------------------------------------
The Riadys were Huang's patrons and supporters throughout
his careers at Lippo and later the Department of Commerce and
the DNC. In fact, James Riady attended a small meeting in the
Oval Office on September 13, 1995, at which President Clinton
was asked if he would help Huang move from Commerce to the DNC.
President Clinton acceded to the request, and by the end of the
year, Huang became the DNC's vice-chairman of finance, a
position created especially for him. The Riadys were also for
many years generous supporters of President Clinton and the
DNC.
Maria Hsia was involved in soliciting contributions to the
DNC that were laundered through several Buddhist monks and may
have derived from foreign sources. Once the figures had been
tallied for the April 29, 1996 Hsi Lai Temple fund-raiser
attended by Vice President Gore, it became apparent that the
event had not generated the level of contributions expected by
the DNC. As a result, DNC Finance Director Richard Sullivan
asked Huang to ``get some California money in.'' \10\ Huang
turned to Maria Hsia, who engineered a scheme whereby some
$55,000 was contributed to the DNC by temple monastics who, in
turn, were reimbursed out of the Temple's general expense
account. The source of the Temple's money is believed to be
Buddhist devotees and may derive from overseas.
---------------------------------------------------------------------------
\10\ Deposition of Richard Sullivan, June 25, 1997, pp. 45-46.
---------------------------------------------------------------------------
Ted Sioeng was one of the DNC's largest contributors during
the 1996 federal election cycle. He is also distinguished as
the DNC donor whose contributions are linked perhaps the most
clearly to foreign sources. Sioeng, his family, and his
business enterprises contributed $400,000 to the DNC in 1995
and 1996. Through a review of bank records, the Committee has
determined that at least half, or $200,000, of the DNC
contributions was funded by transfers from overseas accounts.
In each case, money was wired into a Sioeng family account in
the U.S. from the account of a Hong Kong company. Although the
Committee knows little about the foreign companies that funded
Sioeng's operations in this country, one of the businesses,
Mansion House Securities, is believed to be owned in part by
the Chinese government.
Yah Lin ``Charlie'' Trie also solicited large amounts of
foreign money. In Trie's case, the cause was the Presidential
Legal Expense Trust, set up to help satisfy the legal bills
incurred by President and Mrs. Clinton. In March 1994, Trie
brought nearly half a million dollars in small-denomination
checks and money orders to the law office administering the
Trust. The checks and money orders, it turned out, were written
by followers of a Buddhist Sect called Suma Ching Hai. Many of
the followers were reimbursed in the amount of their
contributions. Ultimately, the reimbursement money came from
accounts in Taiwan and Cambodia.
None of the aforementioned individuals would speak to the
Committee about their fund-raising activities. Sioeng left the
country soon after the campaign finance scandal broke. The
Riadys likewise have stayed out of the United States, and
declined to meet with Committee staff working in Indonesia.
Huang and Hsia have remained in this country but have both
asserted their Fifth Amendment privilege against self-
incrimination. Trie initially left the country but recently
returned and was arrested. He was indicted on January 28, 1998
and charged on 15 counts, including conspiracy to defraud the
DNC and the United States. The indictment charges Trie with
participating in the conspiracy by, among other things,
purchasing access to high level government officials through
contributions made to the DNC.
Campaign Contributors' PRC Connections
Information obtained by the Committee reveals close ties
between the PRC and many of the individuals who produced or
facilitated foreign campaign contributions. And these
individuals--Ted Sioeng, Maria Hsia, John Huang, and James and
Mochtar Riady--interacted with one-another with some frequency.
Their paths appear to have crossed most often when they were
engaged in fund- raising or contributing money to the
Democratic National Committee.
Ted Sioeng.\11\ 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 scandal broke, he traveled to
Beijing frequently where he reported to and was briefed by
Chinese communist party officials.
---------------------------------------------------------------------------
\11\ See also chapter of report on Ted Sioeng.
---------------------------------------------------------------------------
The Committee is aware of a handful of activities Sioeng
undertook at the request of or with support from the PRC
government. Perhaps the most significant of these activities
was Sioeng's purchase in late 1995 of The International Daily
News, a Chinese-language newspaper based in Los Angeles. Prior
to Sioeng's purchase of a controlling interest in the paper,
The International Daily News had a pro-Taiwan slant. Sioeng
changed that by bringing in new people and altering the paper's
ideology to conform with the views of the PRC government. After
purchasing the paper, Sioeng subsidized it heavily, which was
necessary due to its operating losses. Sioeng financed the
purchase and subsidization of the paper through transfers of
funds from Hong Kong accounts.
Sioeng and his family and business interests played a large
role in the 1996 elections. They spent over $550,000 on
political campaigns and organizations in 1995 and 1996,
including $400,000 on the Democratic National Committee and
$50,000 on the National Policy Forum. As discussed in greater
detail elsewhere,\12\ the Committee has subpoenaed and reviewed
voluminous bank and business records relating to Sioeng, his
family, and their businesses. The Committee has traced much of
the money for these contributions to bank accounts in Hong Kong
but no further. Hence, the Committee does not know whether
these contributions derived from or were directed by the PRC
government. Records reveal that the PRC consulate in Los
Angeles paid Sioeng's Hollywood Metropolitan Hotel $3,000 by a
check dated March 22, 1996.\13\ The Committee has concluded
that the PRC consulate provided Sioeng the money for the
purpose of making or reimbursing a political contribution to
Dr. Daniel Wong, a Republican who ran for the California State
Assembly. It appears that the PRC money was in fact used to
make or reimburse a contribution to Wong in the amount of
$5,000.\14\ Committee staff have no means to determine what
other funds might have been provided to Sioeng by the PRC
government through transfers among foreign accounts.
---------------------------------------------------------------------------
\12\ Id.
\13\ $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. 1).
\14\ $5,000 Grand National Bank check from Sundari, Sandra, and
Laureen Elnitiarta to Dr. Daniel Wong, February 15, 1996. (Ex. 2).
---------------------------------------------------------------------------
Ted Sioeng controls a business empire estimated to be worth
approximately $500 million. The Committee has learned that
Sioeng considered spending a portion of his considerable wealth
to support lobbying efforts approved by PRC officials.
Maria Hsia.\15\ The Committee has learned that 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 Hsia has worked in direct
support of a PRC diplomatic post in the U.S.
---------------------------------------------------------------------------
\15\ See also chapter of report on Maria Hsia and the Hsi Lai
Temple.
---------------------------------------------------------------------------
As described elsewhere in the report, Hsia has been a
significant figure in the Committee's investigation, and the
Committee has conducted numerous interviews and depositions and
examined voluminous records relating to her. Hsia first met
Vice President Gore in the late 1980s, and organized a trip he
attended to Taiwan in 1989. She has raised money for the
Democratic Senatorial Congressional Committee (``DSCC''), and
lobbied to have DSCC contributions earmarked for then-Senators
Gore and Simon. On September 27 1993, she attended the Santa
Monica, California event with John Huang where Shen Jueren may
have met Vice President Gore. In connection with that meeting,
Hsia contributed $5,000 in money illegally laundered through
the Hsi Lai Temple.
Hsia has a long standing relationship with the Hsi Lai
temple. She, with Huang, organized the April 1996 fund-raiser
held there and attended by Vice President Gore, and laundered
thousands of dollars illegally through temple clerics in
connection with the event. The Committee has identified over
$130,000 in political contributions illegally laundered through
temple monastics at Hsia's direction.
The Committee has received information that Hsia worked
with Ted Sioeng and John Huang to solicit contributions from
Chinese nationals in the United States and abroad for
Democratic causes. Hsia and Huang, in particular, worked
together to identify non-U.S. citizens overseas who might
contribute money to Democratic causes.
John Huang.\16\ Since well before its hearings began, the
Committee focused on John Huang. The goal was to understand why
an executive at a small California bank (owned by a large
Indonesian conglomerate), who raised money prolifically for the
Democratic party and was rewarded with a political appointment
at the Department of Commerce, was so often and well received
by President Clinton and his staff. The Committee's interest
was further piqued by the fact that to date, the DNC has
returned half of the money Huang raised in 1996. The DNC has
been unable to verify that these funds derived from a legal,
domestic source.
---------------------------------------------------------------------------
\16\ See also chapters of report on the Lippo Group, John Huang at
the Department of Commerce, and Huang's hiring by the DNC.
---------------------------------------------------------------------------
The Committee has examined in detail Huang's activities at
Lippo, Commerce, and the DNC. A single piece of unverified
information shared with the Committee indicates that Huang
himself may possibly have had a direct financial relationship
with the PRC government. The Committee's information is not
corroborated, but nevertheless it adds to concerns regarding
Huang's activities at Commerce, which were a focus of Committee
hearings in July 1997 and are discussed elsewhere in this
report.\17\
---------------------------------------------------------------------------
\17\ See chapter of report on John Huang at the Department of
Commerce.
---------------------------------------------------------------------------
James and Mochtar Riady.\18\ The Committee has learned from
recently-acquired information that James and Mochtar Riady have
had a long-term relationship with a Chinese intelligence
agency. The relationship is based on mutual benefit, with the
Riadys receiving assistance in finding business opportunities
in exchange for large sums of money and other help. Although
the relationship appears based on business interests, the
Committee understands that the Chinese intelligence agency
seeks to locate and develop relationships with information
collectors, particularly persons with close connections to the
U.S. government.
---------------------------------------------------------------------------
\18\ See also chapters of report on the Lippo Group, John Huang at
the Department of Commerce, and Huang's hiring by the DNC.
---------------------------------------------------------------------------
The Riadys are central figures in the campaign finance
scandal for several reasons. First, they have close ties with
President Clinton. James and Mochtar Riady have known President
Clinton since the mid-1980s when they held a controlling
interest in the Worthen Bank. The Riadys have visited Clinton
in the White House on several occasions. Second, the Riadys
were heavy contributors to the DNC and other Democratic causes.
They made and solicited significant contributions directly in
connection with the 1992 elections; subsequently, various Riady
businesses, associates, and employees did likewise. Third, they
were the employers of John Huang, whom they helped place at the
Department of Commerce, then the DNC.
The Committee Learns of a ``China Plan'' and Other, Possibly Related
Efforts
The foregoing indicates that large amounts of money were
funneled from accounts in Greater China into the DNC by
individuals who had close ties to the PRC. This activity takes
on greater import when viewed in light of the fact that the PRC
government had developed and implemented plans to influence the
U.S. political process before most of the aforementioned
contributions were made. The Committee first learned of these
efforts early in the investigation.\19\
---------------------------------------------------------------------------
\19\ Senator Thompson made a public statement on July 8, 1997,
disclosing the existence of a China plan and related activities. The
CIA and FBI edited the statement and authorized its public disclosure.
---------------------------------------------------------------------------
To understand the plan one needs to appreciate the context
from which it emerged. The plan is intertwined with the state
of America's relationship in recent years with the PRC and the
Republic of China on Taiwan. Although the United States
maintains no official ties with the government on Taiwan,
Taipei's views have long influenced U.S. diplomatic relations
with the PRC. This is largely because Beijing considers Taiwan
a rogue province and suspects it of seeking independence from
the mainland.
In May 1995, Lee Teng-hui, President of the Republic of
China on Taiwan, was granted a visa to visit the United States.
Caught off-guard, Beijing was quick to voice its outrage and to
engage in a series of overt retaliatory measures. China
suspended arms control talks with Washington, postponed cross-
Strait talks with Taiwan, canceled official visits to and from
the United States, amassed troops along the coast facing
Taiwan, and recalled its ambassador to the United States.
But not all of China's reactions were overt. Secretly,
Beijing worked to prevent similar diplomatic surprises from
occurring in the future. After President Lee's visit, high-
level PRC government officials devised plans to increase
China's influence over the U.S. political process and to be
implemented by PRC 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.
The Committee's understanding of the plan derives from U.S.
law enforcement and intelligence agencies, open sources, and
the Committee's own investigative efforts. It is important to
understand that there is no consensus among the agencies
concerning where the plan ends and other PRC activities in this
country begin. The Committee has learned in sobering detail of
a wide range of covert PRC efforts in the U.S. and overseas
designed to influence elections in this country. Many of these
activities may or may not have been part of a single,
coordinated effort. Regardless, a coordinated approach may have
evolved over time. Other efforts, though undertaken by PRC
government entities, have been characterized as rogue
activities. Such fine distinctions fall beyond the scope of
this report.
Evidence Emerges that the Plan Was Implemented and Other Efforts Were
Undertaken by the PRC
The Committee has identified specific steps taken in
furtherance of the plan. Implementation of the plan has been
handled by PRC government officials and individuals enlisted to
assist in the effort. Activities in furtherance of the plan
have occurred both inside and outside the United States.
Through the plan and related efforts, the PRC government
aimed to increase China's influence in the United States. Some
of the efforts were typical, appropriate steps foreign
governments take to communicate their views on United States
policy. They included retaining lobbying firms, inviting more
Congresspersons to visit China, and attempting to communicate
Beijing's views through media channels in the United States.
However, other efforts appear illegal under U.S. law. Although
most discussion of PRC activities focused on Congress, the
Committee's investigation suggests that China's efforts
involved the 1996 Presidential race and state elections as
well. The Committee has received information that the
government of China may have allocated millions of dollars in
1996 alone to achieve its objectives.
The Committee has learned of several activities China
undertook to influence our political processes during the 1996
election cycle. Some of these include:
A PRC government official devised a seeding
strategy, under which PRC officials would organize
Chinese communities in the U.S. to encourage them to
promote persons from their communities to run in
certain state and local elections. The intent behind
the seeding program was to develop viable candidates
sympathetic to the PRC for future federal elections;
The Government of China established the
``Central Leading Group for U.S. Congressional
Affairs'' to coordinate China's lobbying efforts in
this country. President Jiang Zemin approved the
Group's creation;
A U.S. agency received fragmentary reporting
relating to China's efforts to influence the U.S.
Presidential election. The information is considered
part of a criminal investigation and cannot be
discussed with the Committee further;
PRC intelligence officials discussed
increasing China's lobbying efforts in the United
States and planned to raise millions of dollars to
support those efforts. PRC officials met with one or
more Chinese businessmen residing outside of mainland
China to discuss raising the money and how it would be
spent;
PRC officials discussed financing American
elections through covert means;
A politically-sensitive transfer of funds
may have occurred to a PRC-controlled account in the
U.S.;
A PRC official involved in a discussion
concerning Chinese lobbying efforts indicated an
awareness that money placed in U.S. banks can be traced
by U.S. law enforcement officials;
A PRC official encouraged Chinese-Americans
to make political contributions and contact their
Congressmen; and
Beijing was angered that its diplomatic
officials in the U.S. failed to forewarn the Mainland
about the burgeoning campaign finance scandal and that
those officials were not aware of Chinese who went to
Washington, D.C. for the purpose of lobbying or making
political contributions.
These activities show that several different PRC government
entities joined the effort to involve themselves in U.S.
elections and that the PRC went well beyond lobbying to achieve
its goals. Whether or not all of this was contemplated at the
outset by high-ranking Chinese officials or simply evolved over
time, it nevertheless happened, and in a clandestine manner.
Summary
It is clear that illegal foreign contributions were made to
the DNC and that these contributions were facilitated by
individuals with extensive ties to the PRC. The original
sources of many of these contributions were bank accounts in
the Greater China area.
It is also clear that well before the 1996 elections,
officials at the highest levels of the Chinese government
approved of efforts to increase the PRC's involvement in the
U.S. political process. There are indications that the plan or
parts of the plan and possibly-related PRC activities were
implemented covertly in this country. The individuals who
facilitated the contributions have either elected to take the
Fifth Amendment or flee the country. Beijing has denied the
Committee's request for assistance. Moreover, after its
hearings concluded, the Committee learned that the Chinese
leadership was pleased no PRC agencies have yet been implicated
in the campaign finance scandal.
While the Committee still cannot determine conclusively
whether the PRC funded, directed, or encouraged the illegal
contributions in question, all of the information related
herein, taken together, constitutes strong circumstantial
evidence that the PRC government was involved. In addition,
there are indications that Chinese efforts in connection with
the 1996 elections were undertaken or orchestrated, at least in
part, by PRC intelligence agencies. It is likely that the PRC
used intermediaries, particularly with regard to political
contributions. This is so because only U.S. citizens or legal
permanent residents can contribute lawfully to political
parties and campaigns. Moreover, the use of businesses and
individuals as intermediaries is increasingly common among
Chinese intelligence and military organizations.\20\ Given the
way the PRC exercises control over certain businesses and
individuals, it hardly would be surprising to learn that the
PRC directed overseas Chinese to contribute to particular
parties or candidates. In addition to furthering the goals of
the PRC plan, such actions would seem within the capabilities
of a government able to implement private espionage and
intelligence-gathering activities.
---------------------------------------------------------------------------
\20\ Eftimiades, supra, pp. 27-43. It is also well-established that
the PRC wields influence over a wide range of entities and individuals,
many of whom conduct business directly with the PRC. One area in which
the PRC employs businesses is economic espionage. State-owned or
controlled companies--particularly those controlled by the People's
Liberation Army--are used increasingly as part of a Chinese network to
acquire Western technology in the United States and other countries.
Jane's Defense Weekly, December 17, 1997, p. 1. Another area is
intelligence-gathering, where the PRC government has attempted to
cultivate members of the overseas Chinese community as information
sources.
---------------------------------------------------------------------------
Throughout its investigation, the Committee has firmly
believed it is important for the American people to be made
aware of as much of the information set forth in this section
of the report as possible. Yet, getting to the bottom of such
matters and also sharing the Committee's findings has been an
extremely difficult process. The first difficulty derives from
the nature of the information itself. Some of the information
provided to the Committee requires the protection of sources
and methods used to gather it, which has placed significant
limits on the Committee's ability to discuss these matters
publicly. That protection is a legitimate concern, but it has
come at the cost of curtailing public knowledge and debate. The
Justice Department for the most part would not reveal matters
that were the subject of its ongoing criminal investigation.
While Justice's concern is understandable, it limits
Congressional oversight and makes it even more important that
prosecutorial decisions be handled in a way that ensures public
confidence.
The second difficulty is more complex and, ultimately, more
troublesome. The Committee dealt at length with various law
enforcement and intelligence agencies in developing portions of
the information set forth above and observed a recurring
problem: the failure to share relevant, classified information.
The failure meant that no one agency had a complete picture of
all the relevant information in a particular area and, indeed,
a given agency might be unaware of all the relevant information
it held within its various sections or departments. The
clearest example of this involved the FBI and the Justice
Department. In two major instances FBI headquarters and Justice
were unaware of crucial information located in FBI field office
files, information months and sometimes years old. The
information came to light only as a result of persistent
Committee probing. These lapses are currently the subject of a
Department of Justice Office of Inspector General (OIG)
investigation. The Committee has cooperated with OIG
investigators and will continue to monitor their progress. The
inability of the Bureau to locate certain intelligence
information denied the campaign finance criminal task force
timely access to important classified materials. By the time
the information was surfaced and passed along, some or all of
it might have grown stale.
It is the Committee's hope that, for the sake of future
criminal investigations, steps are taken by intelligence and
law enforcement agencies to ensure that such lapses do not
reoccur. In that regard, the Committee intends to review any
recommendations made by the OIG on improving how such
information is shared.
Charlie Trie's and Ng Lap Seng's Laundered Contributions to the DNC
Introduction
Former Little Rock, Arkansas, restaurateur Yah Lin
``Charlie'' Trie and Macau-based businessman Ng Lap Seng
collaborated in a scheme to contribute hundreds of thousands of
dollars in foreign funds to the DNC. Ng wired over one million
dollars from accounts he maintains in Macau and Hong Kong to
accounts maintained by or accessible to Trie in Little Rock and
Washington, D.C. Although Trie held himself out as an
international trader (and, in fact, actively sought to develop
an international trading business he called Daihatsu
International Trading Corporation), he was never successful.
Trie's bank records and tax returns reveal that he received
little or no income from sources other than Ng Lap Seng.
Although he failed to establish a successful, income-
generating international trading business, Trie, his wife and
his businesses managed to contribute a total of $220,000 to the
DNC between 1994 and 1996. Trie and Ng also reimbursed the
contributions made by a number of other DNC contributors who
were recruited by Trie in order to further disguise the
ultimate source of the contributions. As Trie earned little
money through his own business activities, the Committee
concludes that Trie used the foreign-source funds wired from Ng
to make his (and his wife's and businesses') DNC contributions
and to reimburse the conduit contributors. The Justice
Department indicted Trie for these illegal activities on
January 28, 1998.1
---------------------------------------------------------------------------
\1\ Indictment, United States v. Yah Lin ``Charlie'' Trie & Yuan
Pei ``Antonio'' Pan, Criminal No. 98-0029 (D.D.C.), Jan. 28, 1998; see
also Roberto Suro & Toni Locy, ``Indictment Returned in Fund Probe;
`Charlie' Trie Charged With Funneling Foreign Money to Democrats,''
Washington Post, Jan. 29, 1998, p. A1.
After the Committee prepared its report, Trie returned to the
United States to surrender to FBI agents on February 3, 1998. He was
subsequently arraigned in federal district court.
---------------------------------------------------------------------------
Trie's contributions purchased access for himself and Ng to
the highest levels of our government. Documents produced by the
White House and DNC reveal that both Trie and Ng attended DNC-
sponsored events with President Clinton and made a number of
visits to the White House. The Committee also concludes that
Trie's contributions and fundraising purchased his otherwise
unwarranted appointment in 1996 to the Commission on U.S.-
Pacific Trade and Investment Policy.
While a review of subpoenaed records of Trie's businesses
and bank accounts, interviews with individuals familiar with
Trie and his businesses, and testimony of two conduit
contributors have revealed much about the activities of Trie
and Ng, but since the Committee's subpoena power ``stops at the
Pacific Ocean line,'' it is possible that this information
merely scratches the surface and further details remain
undiscovered.2
---------------------------------------------------------------------------
\2\ Testimony of Jerry Campane, July 29, 1997, p. 28.
---------------------------------------------------------------------------
Moreover, virtually all key witnesses have been unavailable
to Committee investigators. Trie himself fled the country and,
in an interview with NBC News in June 1997, boasted that
Congressional investigators would ``never find me.''
3 Committee investigators traveling in Asia
successfully reached Ng through a surprise call to his cellular
phone, but Ng refused to meet with or answer the investigators'
questions, and instead simply referred them to his attorney. A
number of individuals with knowledge of Trie and Ng's
activities have also asserted their Fifth Amendment right not
to testify without immunity. For instance, Trie's Arkansas-
based secretary/bookkeeper, Maria Mapili, who made handwritten
explanatory notes on the statements of a bank account
maintained by Trie's company, Daihatsu International Trading
Corporation,4 asserted the Fifth Amendment and
refused to decipher her notes for the Committee. On July 23,
1997, the Committee voted to immunize Keshi Zhan, Ng's
Washington-based bookkeeper, and soon thereafter called her for
deposition. However, because Zhan demonstrated an unwillingness
to testify with any reasonable degree of candor (even with
respect to the relatively noncontroversial issues on which she
was questioned), the Committee elected to terminate her
deposition and allow the Department of Justice to proceed with
its investigation and possible criminal prosecution of
Zhan.5
---------------------------------------------------------------------------
\3\ See Leslie Wayne, ``State Department Asks China to Help Find
Former Fund-Raiser,'' New York Times, July 24, 1997, p. A21. The
government of the People's Republic of China also prohibited Committee
investigators traveling in Asia from entering the country to find Trie.
\4\ See Maria Mapili's explanatory notes on Daihatsu International
Trading Corporation's First Commercial Bank statements (Ex. 1); see
also Memorandum of Interview of Charlotte Duncan, July 9, 1997, p. 1
(``Mapili would write where each deposit came from and what each
payment was for.'').
\5\ In order to avoid any conceivable ``taint'' on a future
prosecution of Zhan, the Committee (1) terminated Zhan's deposition
before questioning her about those subjects that would most likely be
the subject of any possible future Department of Justice prosecution
and (2) directed the court reporter not to even transcribe her
testimony.
---------------------------------------------------------------------------
Finally, among the fifteen counts in the Justice
Department's January 28, 1998 indictment of Trie was a count
alleging that Trie obstructed the Committee's investigation by
instructing unnamed individuals to ``alter, destroy, mutilate,
conceal and otherwise fail to produce documents responsive to a
subpoena issued by the United States Senate Committee on
Governmental Affairs.'' 6 These allegations suggest
that Trie's employees withheld documents responsive to the
Committee's February 13, 1997 subpoena to Daihatsu
International Trading Corporation that could have furthered the
Committee's investigation of Trie and Ng's
activities.7
---------------------------------------------------------------------------
\6\ Indictment, United States v. Yah Lin ``Charlie'' Trie & Yuan
Pei ``Antonio'' Pan, Criminal No. 98-0029 (D.D.C.), Jan. 28, 1998, p.
36.
\7\ FBI agents acting at the direction of federal prosecutors
investigating Trie's activities executed search warrants at Trie's
Watergate office and Trie's home and office in Little Rock and
discovered documents that had not previously been produced to the
Committee.
---------------------------------------------------------------------------
Background on Yah Lin ``Charlie'' Trie
Yah Lin ``Charlie'' Trie was born August 15, 1949, in
Taiwan.8 Trie is a United States
citizen.9 He is married to Wang Mei Trie and has one
daughter.10
---------------------------------------------------------------------------
\8\ See ``Biographic Information'' form submitted by Trie to the
Immigration and Naturalization Service (Ex. 2).
\9\ See Trie's United States Passport (Ex. 3).
\10\ See ``Bio-Data of Yah Lin Trie'' (Ex. 4); Ex. 2.
---------------------------------------------------------------------------
Trie immigrated to the United States, and in the late
1970's settled in Little Rock, Arkansas, where his older
sister, Dailin Outlaw, ran a number of Chinese
restaurants.11 Trie worked with his sister until
1984, when she left Little Rock and turned over to Trie control
of a restaurant she called (and Trie subsequently continued to
call) Fu Lin.12
---------------------------------------------------------------------------
\11\ See Kevin Sack, ``From Restaurateur to Intimate at the White
House,'' New York Times, Jan. 27, 1997, p. A8.
\12\ See Memorandum of Interview of Dewey Glasscock, July 1, 1997,
p. 2.
---------------------------------------------------------------------------
Fu Lin flourished during the latter half of the 1980's,
when it became a popular gathering place for local political
officials.13 Local patrons described Trie as a
gracious host who befriended many important customers and
assisted favored political candidates by hosting fundraisers at
his restaurant.14
---------------------------------------------------------------------------
\13\ See Memorandum of Interview of James Dailey, June 10, 1997, p.
1.
\14\ See Memorandum of Interview of Julia Hughes Jones, June 19,
1997, p. 2; Memorandum of Interview of Martha Shaffner, June 10, 1997,
p. 1; Dailey interview, p. 4; Kevin Sack, ``From Restaurateur to
Intimate at the White House,'' New York Times, Jan. 27, 1997, p. A8.
---------------------------------------------------------------------------
Among the politicians who frequented Fu Lin and became
friends with Trie was then-governor Bill Clinton. Trie was a
strong and vocal Clinton political supporter throughout the
President's years as governor,15 and Trie was
extremely proud when his friend Bill Clinton became President
of the United States.16
---------------------------------------------------------------------------
\15\ See Trie's contributions to Clinton's 1982 Arkansas Governor's
race and related correspondence (Ex. 5); Shaffner interview, p. 3;
Dailey interview, p. 4.
\16\ See Shaffner interview, p. 3.
---------------------------------------------------------------------------
By the early 1990's, Trie began to tire of the restaurant
business and considered exploring international trading
opportunities with China.17 Trie mentioned his ideas
to Governor Clinton who told Trie that he thought that Trie's
idea was a good one because China was evolving politically and
would soon be expanding its markets.18 Clinton
encouraged Trie to get in on the ground floor and develop a
Chinese-American trading business.19 Trie then sold
Fu Lin and focused exclusively on cultivating various trading
opportunities.20
---------------------------------------------------------------------------
\17\ See Memorandum of Interview of Julia Hughes Jones, June 19,
1997, pp. 2-3 ; Memorandum of Interview of Jody Webb, June 20, 1997, p.
2.
\18\ See Webb interview, p. 2.
\19\ See id.
\20\ See id.
---------------------------------------------------------------------------
Trie formalized his new Asian trading efforts by
incorporating a company he called Daihatsu International
Trading Corporation.21 In early November 1992, Trie
received from newly elected President Bill Clinton a letter of
congratulations and encouragement for Trie's new
company.22 Daihatsu, however, never developed into a
successful international trading operation. In one of
Daihatsu`s earliest business ventures, Trie sought to
coordinate the Chinese manufacture of a unique wrench and the
subsequent sale of that wrench to American chain stores such as
Wal-Mart.23 This venture ultimately proved
unsuccessful, and Trie lost his investment--the better part of
the profits from the sale of Fu Lin.24 Trie later
pursued trading opportunities involving products as varied as
safe deposit boxes and chickens, but few, if any, of these
ventures ever developed into successful business
deals.25 Trie`s most profitable export venture
(selling cotton to a manufacturing plant in China) brought Trie
a broker's commission of only $30,000.26
---------------------------------------------------------------------------
\21\ See Daihatsu information summary (Ex. 6).
\22\ Letter from Bill Clinton to Yah Lin ``Charlie'' Trie, November
10, 1992 (Ex. 7).
\23\ See Memorandum of Interview of Lorin Fleming, May 30, 1997, p.
1.
\24\ See id., pp. 1-3; Glasscock interview, p. 3.
\25\ See id.
\26\ See Webb interview, p. 2.
---------------------------------------------------------------------------
Trie also incurred ``extraordinary'' expenses promoting
these ultimately unsuccessful international trading
efforts.27 For instance, on a number of occasions,
Trie escorted delegations of Little Rock businesses and
governmental officials to various cities in China in an effort
to establish business ties that would benefit
Daihatsu.28 Those traveling with Trie on these trips
explained to the Committee that Trie, who insisted on staying
in expensive hotels and eating at the best restaurants, paid
for all expenses associated with the trips except air
fare.29 Trie's expenses are reflected in his monthly
credit card payments of often close to $20,000.30
Trie also routinely withdrew thousands of dollars--in cash--
from his personal and business bank accounts.31
---------------------------------------------------------------------------
\27\ Testimony of Jerry Campane, July 29, 1997, p. 33.
\28\ See, e.g., Letter from Julia Hughes Jones to Charlie Trie,
October 12, 1992, thanking Trie for including her in the ``Arkansas
delegation'' on a recent China trip (Ex. 8).
\29\ See Jones interview, p. 2; Fleming interview, p. 1.
\30\ See Memorandum of Interview of Charlotte Duncan, July 9, 1997,
p. 2; see also, e.g., Daihatsu expense reports indicating substantial
payments to a number of credit cards (Ex. 9).
\31\ Testimony of Jerry Campane, July 29, 1997, p. 34.
---------------------------------------------------------------------------
The combination of Trie's significant expenses and his
inability to complete successful international trading deals
meant that ``Daihatsu made little or no money at any time.''
32 Daihatsu's corporate tax returns for 1992 through
1995 indicate that its gross income was never more than
$250,000, its net income was negligible, and Trie's income as
president of the company was approximately $30,000 per
year.33 The Committee also determined that ``Trie
and his wife had very little income from other sources.''
34
---------------------------------------------------------------------------
\32\ Id., p. 12.
\33\ See Daihatsu's tax returns, 1992-95 (Ex. 10); Duncan
interview, p. 2.
\34\ Testimony of Jerry Campane, July 29, 1997, p. 12.
---------------------------------------------------------------------------
In early 1994, Trie submitted an ultimately unsuccessful
bid on behalf of himself and two partners to buy and refurbish
the dilapidated Camelot Hotel in downtown Little
Rock.35 Trie's partners were Mana Han Xiao, owner of
the Haili Restaurant in the Capitol Hotel in Beijing (and, one
witness believed, a relative of Trie 36), and Ng Lap
Seng.37 None of the Little Rock residents
interviewed by the Committee who were involved in the
preparation of Trie's bid knew specifically how or why Ng
became involved in the Camelot project.38 The
Committee has also been unable to uncover any evidence of prior
business dealings between Trie and Ng or of when and how Trie
and Ng first met.
---------------------------------------------------------------------------
\35\ See Cover to ``Rebirth of the Camelot--A Proposed Four Star
Hotel'' submitted in the name of Daihatsu International by Trie and his
partners (Ex. 11).
\36\ See Webb interview, p. 3.
\37\ See Ex. 11.
\38\ See Webb interview, p. 3.
---------------------------------------------------------------------------
In September 1994, Trie opened a branch office of Daihatsu
in Washington, D.C., in a leased residential cooperative
apartment at the Watergate.39 Although Trie was
advised that the Watergate rent was more than his business
could afford, appearance was important to Trie and he believed
a Watergate address gave him a certain stature as a
businessman.40 He used his Watergate venue to host
delegations of visiting Chinese businessmen who gathered for
receptions and parties with Trie's local friends and political
contacts.41 Ng Lap Seng, Ng's bookkeeper Keshi Zhan,
and former Lippo Group executive and Trie business associate
Antonio Pan 42 also used the Watergate Office while
in Washington.43
---------------------------------------------------------------------------
\39\ See Shaffner interview, p. 2; Lease Agreement for Watergate
South apartment, August 15, 1994 (Ex. 12).
\40\ See Shaffner interview, p. 2.
\41\ See Lena H. Sun, ``Pacific Trade Commission Appointee Was
Considered a White House `Must'; Trie, a Longtime Democratic Fund-
Raiser, Says He Didn't Seek Post,'' Washington Post, Dec. 18, 1996, p.
A20; Memorandum of Interview of Charles Chiang, July 21, 1997, p. 2.
\42\ See Business Card identifying Antonio Pan as Senior Vice
President of Tati Group--China division of the Lippo Group (Ex. 13);
Business Card identifying Antonio Pan as Chief Executive Officer of
Daihatsu International Trading, Inc. (Ex. 14); Business Card
identifying Antonio Pan as Executive Director of America-Asia Trade
Center Inc. (Ex. 15); Deposition of David Mercer, May 14, 1997, pp. 20-
21.
\43\ See Memorandum of Interview of Sam Chang, July 11, 1997, pp.
2-3.
---------------------------------------------------------------------------
In addition to Daihatsu International Trading Corp., Trie
was also responsible for the incorporation of additional
businesses in Little Rock and Washington. In October 1994, Trie
incorporated a company in Little Rock for Ng Lap Seng called
San Kin Yip International Trading Corp.44 Trie
explained to the Washington Post that San Kin Yip International
Trading Corp., which possessed the same mailing address as
Daihatsu, was related to Ng's Macau-based real estate
development and investment companies called the San Kin Yip
Group.45 The Washington Post also reported that San
Kin Yip International Trading Corp. was created to ``import
textiles and other goods and export chemicals, machinery and
advanced technology.'' 46 Subpoenaed San Kin Yip
International Trading Corp.'s bank records, however, revealed
``neither earnings nor any genuine business activity.''
47
---------------------------------------------------------------------------
\44\ See Letter from Daihatsu employee ``Jennifer'' to Ng employee
``Miss Chen,'' Oct. 11, 1994 (Ex. 16).
\45\ Lena H. Sun, ``DNC Donor Admits `Mistake'; Fund-Raiser's Own
Company Contributed Foreign Generated Money,'' Washington Post, Dec. 7,
1996, p. A11.
\46\ Lena H. Sun & Dan Morgan, ``Asian Firm's First U.S. Ties
Included DNC; Contribution Followed 10 Days in Arkansas,'' Washington
Post, Dec. 1, 1996, p. A1.
\47\ Testimony of Jerry Campane, July 29, 1997, pp. 11-12.
---------------------------------------------------------------------------
After relocating to Washington, D.C., Trie incorporated a
second San Kin Yip entity called San Kin Yip (U.S.A.)
Inc.48 After reviewing San Kin Yip (U.S.A.) Inc.'s
bank records, however, the Committee concluded that (like San
Kin Yip's Little Rock branch) San Kin Yip (U.S.A.) Inc. neither
made money nor engaged in any actual business
activity.49
---------------------------------------------------------------------------
\48\ See Chang interview, p. 1.
\49\ Testimony of Jerry Campane, July 29, 1997, pp. 11-12.
---------------------------------------------------------------------------
Finally, Trie incorporated American Asia Trade Center in
Washington in 1996, intending to purchase a building a few
blocks from the White House that would house a Chinese
restaurant on the first floor and offices of companies engaging
in Asian trade on the remaining floors.50 Trie,
however, never actually bought the property and never opened
the restaurant.51 Thus, American Asia Trade Center,
like the two San Kin Yip entities incorporated by Trie, also
never made money.52
---------------------------------------------------------------------------
\50\ See Chang interview, p. 2.
\51\ See id.
\52\ Testimony of Jerry Campane, July 29, 1997, pp. 11-12.
---------------------------------------------------------------------------
Background on Ng Lap Seng
In 1979, Ng Lap Seng (who is often referred to by the name
``Mr. Wu,'' the Mandarin pronunciation of his name) bribed a
police officer on the Chinese border with the Portuguese
enclave of Macau in 1979, and entered Macau with virtually no
money to his name.53 Today, Ng, who travels under a
Portuguese passport, 54 is chairman of the Macau-
based San Kin Yip Group, a commercial and residential
development conglomerate.55 Ng reported in the bid
submission for the Camelot Hotel renovation project that his
conglomerate's annual gross sales are $250
million.56
---------------------------------------------------------------------------
\53\ See Lena H. Sun & John Pomfret, ``The Curious Cast of Asian
Donors; Some Sought Access to Clinton, Others' Motives' Remain Murky,''
Washington Post, Jan. 27, 1997, p. A1.
\54\ See Ng Lap Seng's Portuguese Passport (Ex. 17).
\55\ See Lena H. Sun & Dan Morgan, ``Asian Firm's First U.S. Ties
Included DNC; Contribution Followed 10 Days in Arkansas,'' Washington
Post, Dec. 1, 1996, p. A1; see also Ng's business card (Ex. 18).
\56\ See Summary of Ng's business activities included in Camelot
Hotel submission (Ex. 19).
---------------------------------------------------------------------------
Press reports have tied Ng to both the government of the
People's Republic of China and to criminal activity in Macau.
According to the Washington Post, a directory of Chinese
government officials and press reports identifies Ng as a
member of the Chinese People's Political Consultative
Conference, an advisory board for the Chinese government and
ruling Communist Party.57 Newsweek also reported
that Ng was convicted in Macau in 1991 for relabeling Chinese-
made clothing in order to circumvent U.S. import quotas on
Chinese products.58
---------------------------------------------------------------------------
\57\ Lena H. Sun & John Pomfret, ``China Adviser's Gift to DNC
Under Review; After Audit, Party Will Return More Donations,''
Washington Post, Feb. 25, 1997 p. A1.
\58\ C.K. Binswanger, ``Tracking `Mr. Wu's' Fortune,'' Newsweek,
Aug. 11, 1997 p. 6.
---------------------------------------------------------------------------
Trie's Political Contributions
In spite of Trie's lack of success as an international
trader (and the significant expenses associated with his
unsuccessful ventures), Trie, his family, and businesses still
managed to contribute a total of $220,000 to the DNC between
1994 and 1996.
The contributions are specifically identified in the
following chart:
------------------------------------------------------------------------
Amount in
Date Contributor dollars
------------------------------------------------------------------------
5/14/94.......................... Charlie Trie........ \59\ $20,000
\59\ $20,000 check to ``D.N.C.''
drawn on First Commercial Bank
account maintained by Yah Lin or
Wang Mei Trie, May 14, 1994 (Ex.
20).
5/14/94.......................... Charlie Trie........ \60\ 60,000
\60\ $60,000 check to ``D.N.C.''
drawn on First Commercial Bank
account maintained by Yah Lin or
Wang Mei Trie, May 14, 1994 (Ex.
21).
5/25/94.......................... Wang Mei Trie....... \61\ 20,000
\61\ $20,000 check to ``D.N.C.
(Non Federal)'' drawn on First
Commercial Bank account
maintained by Yah Lin or Wang Mei
Trie, May 25, 1994 (Ex. 22).
6/21/94.......................... Daihatsu............ \62\ 7,500
\62\ $7,500 check to ``D.N.C.''
drawn on First Commercial Bank
account maintained by Daihatsu
International Trading Corp., June
21, 1994 (Ex. 23).
8/1/94........................... Yah Lin Trie........ \63\ 20,000
\63\ $20,000 check to ``D.N.C.''
drawn on First Commercial Bank
account maintained by Yah Lin or
Wang Mei Trie, August 1, 1994
(Ex. 24).
10/20/94.......................... San Kin Yip......... \64\ 15,000
\64\ $15,000 check to ``D.N.C.''
drawn on First Commercial Bank
account maintained by San Kin Yip
International Trading Co., Oct.
20, 1994 (Ex. 25).
6/21/95.......................... Daihatsu............ \65\ 50,000
\65\ $50,000 check to ``D.N.C.''
drawn on First Commercial Bank
account maintained by Daihatsu
International Trading Corp., June
21, 1995 (Ex. 26).
2/29/96.......................... Daihatsu............ \66\ 12,500
\66\ $12,500 check to ``Democratic
National Committee'' drawn on
First Commercial Bank account
maintained by Daihatsu
International Trading Corp., Feb.
29, 1996 (Ex. 27).
5/12/96.......................... Yah Lin Trie........ \67\ 10,000
\67\ $10,000 check to ``D.N.C.''
drawn on First Commercial Bank
account maintained by Yah Lin
Trie or Wang Mei Trie, May 12,
1996 (Ex. 28).
7/31/96.......................... American Asia Trade \68\ 3,000
Center.
\68\ $3,000 check to ``D.N.C.''
drawn on Riggs National Bank
account maintained by American
Asia Trade Center, Inc., July 31,
1996 (Ex. 29).
9/28/96.......................... Yah Lin Trie........ \69\ 2,000
-------------------------------------
\69\ $2,000 check to ``Victory
'96'' drawn on Riggs National
Bank account maintained by Yah
Lin Trie, Sept. 28, 1996 (Ex.
30).
Total............... $220,000
------------------------------------------------------------------------
The DNC allocated the first $20,000 in contributions made
personally by both Trie and his wife in May 1994 to its
``federal'' or ``hard money'' account.70 The DNC has
since returned the entire $220,000.71
---------------------------------------------------------------------------
\70\ See DNC Finance ``Executive Summary'' of Trie's 1994
contributions identifying that Trie's $20,000 contribution in May 1994
was allocated to the DNC's federal (i.e., ``hard money'') account, and
that his $60,000 May 1994 contribution was allocated to the DNC's non-
federal (i.e., ``soft money'') account (Ex. 31); DNC Finance
``Executive Summary'' of Wang Mei Trie's contribution identifying that
her $20,000 contribution was also allocated to the DNC's federal
account (Ex. 32). See also Deposition of Joseph E. Sandler, Aug. 22,
1997, p. 16 (``Q: . . . [W]hat does the code F01 refer to? A: Federal
account.''). Although Wang Mei Trie's $20,000 check expressly states
that it is a contribution to the DNC's ``Non-Federal'' account (Ex.
22), the DNC obtained her certification that she ``inadvertently
designated'' her contribution and that it was her ``intention that
[the] contribution of $20,000 was to be deposited into the DNC's
federal account.'' See Letter from Neil Reiff to Wang Mei Trie, June 3,
1994 (Ex. 33).
\71\ See ``Contributions Refunded 6/27/97'' (Ex. 34).
---------------------------------------------------------------------------
the source of funds used by trie for his contributions
Given the failure of Trie's businesses to make money in an
amount that could have permitted Trie to contribute $220,000,
the Committee concludes that Trie used ``foreign-source money
that he obtained primarily from [Ng Lap Seng]'' to fund all of
his DNC contributions.72
---------------------------------------------------------------------------
\72\ Testimony of Jerry Campane, July 29, 1997, p. 36.
---------------------------------------------------------------------------
Between 1994 and 1996, Trie and his businesses received a
total of approximately $1.5 million by wire transfer from
foreign sources.73 Trie received over $1.1 million
of this $1.5 million from Ng Lap Seng.74 Ng wired
this money from accounts he maintained at branches of the Bank
of China in Hong Kong and Macau and an account with Hong Kong
Shanghai Banking to three domestic accounts maintained by or
accessible to Trie.75 Trie then shuffled the money
among a total of six domestic accounts, four of which
ultimately served as the source of a contribution to the
DNC.76
---------------------------------------------------------------------------
\73\ See ``Foreign Source Wire Transfers to Trie and Trie-related
Entities'' (Ex. 35).
\74\ Jerry Campane (a FBI supervisory special agent on detail to
the Committee for this investigation) testified on July 29, 1997 that
Trie received $905,000 in wire transfers from Ng. Testimony of Jerry
Campane, July 29, 1997, pp. 12-13. Campane also noted, however, that
``our records show an August 7, 1996, transfer of $200,000 from the
Bank of China, Macau from an account held in the name of a trading
company with a name very similar to some of [Ng's] companies. However,
because we were not able to definitively establish that this particular
company was indeed controlled by [Ng], I have not included this
transfer in the total . . . .'' Id., p. 13. Since then the Committee
has confirmed that this company, Cia de Investimento e Fomento Predial
Goodwill Lda, is associated with Ng. See Facsimile from Liz Wheeless to
Theodore Kavowras attaching corporate information on Compania de
Investimento e Fomento Predial Goodwill, Limitada'' (Ex. 36). This
confirmation increases the total wired from Ng to Trie to $1.105
million. See ``Ng Lap Seng's Wire Transfers to Charlie Trie (1994-
1996)'' (Ex. 37).
\75\ See ``Flow of Funds from Ng Lap Seng Among Accounts
Associated with Charlie Trie'' (Ex. 38). Although Trie does not
maintain signature authority over San Kin Yip's First Commercial Bank
account (an account identified in the center column of Ex. 38), Trie's
secretary/bookkeeper, Maria Mapili, does possess such authority. See
Testimony of Jerry Campane, July 29, 1997, pp. 30-31. It is also clear
that Trie understood that he possessed authority over the funds in the
account, regardless of his technical lack of authority to sign checks
drawn on the account. When questions arose as to the source of San Kin
Yip's $15,000 contribution to the DNC, Trie told the Washington Post
that he was uncertain whether he, his wife or his secretary was
responsible for signing San Kin Yip's check to the DNC. Lena H. Sun,
``DNC Donor Admits `Mistake'; Fund-Raiser's Own Company Contributed
Foreign-Generated Money,'' Washington Post, Dec. 7, 1996, p. A11.
\76\ See Ex. 38.
---------------------------------------------------------------------------
Because Trie appears to have earned little or no money from
his international trading businesses, the Committee has
concluded generally that all of Trie's contributions were made
with foreign funds received by wire transfer from Ng Lap Seng
and other foreign sources. The following specific contributions
to the DNC (a total of $135,000), however, can be definitively
traced to particular wire transfers of foreign funds.
Yah Lin and Wang Mei Trie's May 1994 Contributions Totaling $100,000
On May 6, 1994, a Hong Kong-based company (in this case,
apparently not affiliated with Ng Lap Seng) named Lucky Port
Investments, Limited, wired $100,000 to an account maintained
by Trie and his wife at First Commercial Bank in Little
Rock.77 LippoBank Los Angeles served as an
intermediary for the transaction.78
---------------------------------------------------------------------------
\77\ See Confirmation of the wire transfer of $100,000 from Lucky
Port Investments Ltd.'s account at the Hong Kong Chinese Bank Ltd. to
Yah Lin Trie's account at First Commercial Bank in Little Rock, May 6,
1994 (Ex. 39).
\78\ See ``Advice of Transfer of Funds'' confirming transfer of
$99,985 from Lippo Bank, Los Angeles to Yah Lin Trie's account at First
Commercial Bank in Little Rock, May 6, 1994 (Ex. 40).
---------------------------------------------------------------------------
Prior to receipt of the $100,000 from Lucky Port, the
balance in Trie's First Commercial account was only
$3,759.79 In the weeks following receipt of the wire
transfer from Lucky Port Investments, Trie and his wife
contributed a total of $100,000 to the DNC. Trie wrote checks
of $60,000 and $20,000 on May 14,80 and his wife,
Wang Mei Trie, wrote a $20,000 check on May 25.81
---------------------------------------------------------------------------
\79\ See May 24, 1994 bank statement for account maintained by Yah
Lin Trie or Wang Mei Trie indicating an account balance on May 4, 1996
(prior to the $100,000 wire transfer) of $3,759.64 (Ex. 41); see also
June 23, 1994 bank statement for the same account (Ex. 42). While these
bank statements reveal that approximately $8,500 was deposited into the
account after the May 6, 1994 wire transfer from Lucky Port
Investments, but before Trie's three contribution checks had cleared,
this $8,500 was insufficient to cover any of the three contribution
checks. Trie and his wife therefore could not have made their $100,000
in contributions without receipt of the wire transfer from Lucky Port
Investments.
\80\ Ex's 20 & 21.
\81\ Ex. 22.
---------------------------------------------------------------------------
As Lucky Port is based in Hong Kong and not independently
incorporated in the United States,82 the Committee
has discovered only that it maintains a telephone number in
Hong Kong 83 and that former Lippo Group executive
and Trie business associate Antonio Pan served as a director of
the company at the time that the wire transfer was
made.84
---------------------------------------------------------------------------
\82\ See Testimony of Jerry Campane, July 29, 1997, p. 39.
\83\ See Facsimile from Phillip Layton to Liz Wheeless, July 28,
1997 (Ex. 43).
\84\ See ``Notice of change of directors . . .'' submitted to the
Hong Kong Registrar of Companies, Oct. 4, 1993 (Ex. 44).
---------------------------------------------------------------------------
Yah Lin Trie's August 1, 1994 Contribution of $20,000
On August 1, 1994, Trie wrote another $20,000 check to the
DNC.85 The ultimate source of this contribution was
a $100,000 wire transfer on July 26, 1994 from an account
maintained at the Bank of China, Macau branch, by Ng Lap Seng
to Daihatsu International Trading Corp.'s account at First
Commercial Bank in Little Rock.86 The balance in
Daihatsu's account at the time it received the wire transfer
was only $472.87 One day after Ng wired the money to
Daihatsu, Wang Mei Trie wrote a $25,500 check on Daihatsu's
account to Yah Lin Trie.88 Before the deposit of the
$25,500 check, the balance in Trie's account was only
$414.89 Trie deposited the check into his First
Commercial account and, four days later, on August 1, 1994,
made his $20,000 contribution to the DNC.
---------------------------------------------------------------------------
\85\ Ex. 24.
\86\ See ``Advice of Transfer of Funds'' confirming a $99,985 wire
transfer from Ng Lap Seng's account at the Bank of China, Macau branch,
to Daihatsu's account at First Commercial Bank in Little Rock (Ex. 45).
\87\ See July 29, 1994 bank statement for account maintained by
Daihatsu International Trading Corp. indicating a balance in the
account on July 25, 1994 (prior to receipt of the $99,985 wire
transfer) of $472.03 (Ex. 46).
\88\ See $25,500 check to ``Yah Lin Trie'' drawn on First
Commercial Bank account maintained by Daihatsu International Trading
Corp., July 27, 1994 (Ex. 47).
\89\ See Aug. 24, 1994 bank statement for account maintained by
Yah Lin Trie indicating a ``beginning balance as of 7-26-94'' (prior to
receipt of the $25,500 check from Daihatsu) of $414.64 (Ex. 48).
---------------------------------------------------------------------------
San Kin Yip International Trading Corporation's October 21, 1994
Contribution of $15,000
On October 11, 1994, Trie had an account opened at First
Commercial Bank in Little Rock in the name of San Kin Yip
International Trading Corp.90 The account was opened
with a $500 deposit.91 On October 20, 1994, Ng Lap
Seng wired $100,000 from his Bank of China, Macau branch,
account into the newly opened San Kin Yip account in Little
Rock.92 One day later, on October 21, 1994, a
$15,000 check with an unidentifiable signature was written from
San Kin Yip to the DNC.93 Trie himself has admitted
to the press that this contribution was made with Ng's funds
wired from abroad.94
---------------------------------------------------------------------------
\90\ Ex. 16.
\91\ See id.; see also Oct. 31, 1994 bank statement for account
maintained by San Kin Yip International Trading Co. indicating a
``beginning balance as of 10-10-94'' of ``.00'' and a $500 deposit on
October 11, 1994 (Ex. 49).
\92\ See confirmation of $99,985 wire transfer from Ng Lap Seng's
Bank of China, Macau Branch account to San Kin Yip International
Trading Corp.'s First Commercial Bank account, Oct. 20, 1994 (Ex. 50).
\93\ Ex. 25.
\94\ See Lena H. Sun & John Pomfret, ``The Curious Cast of Asian
Donors; Some Sought Access to Clinton, Others' Motives' Remain Murky,''
Washington Post, Jan. 27, 1997, p. A1.
---------------------------------------------------------------------------
Trie's Fundraising
In addition to contributing personally (and through his
family and businesses) to the DNC, Trie was also involved in
raising funds for the party.95 In 1996 alone, Trie
made a commitment to the DNC to raise $350,000.96
---------------------------------------------------------------------------
\95\ Trie was also responsible for the solicitation of almost
$700,000 in illegal contributions to the Presidential Legal Expense
Trust (``PLET''). See the section of this report on Trie's fundraising
for the PLET.
\96\ See Letter from Marvin Rosen to Charlie Trie, Feb. 21, 1996
(Ex. 51).
---------------------------------------------------------------------------
Trie's adoption of the role as fundraiser in addition to
that of donor did not mean a significant change in tactics.
Where Trie relied on Ng's wire transfers to make his own
contributions, funds wired from Ng were used to reimburse third
parties from whom contributions were solicited. These third
parties simply served as alternate conduits for the flow of
Ng's foreign-source funds to the DNC.
The Committee received the only first-hand account of these
tactics from two women, Yue Chu and Xiping Wang, who testified
that their political contributions were reimbursed by Ng's
bookkeeper, Keshi Zhan. Further conduit contributors, including
Zhan, have been identified only through a review of bank
records.
Yue Chu and Xiping Wang each emigrated from China in the
past ten years 97 and both are presently resident
aliens (i.e., green-card holders) in the United
States.98 Yue Chu is married to Ming Chen, who
manages a Beijing restaurant that is owned by Ng Lap
Seng.99 Yue Chu is a close personal friend of
Zhan.100 Xiping Wang is married to Zhengwei Cheng, a
cousin of Ming Chen.101
---------------------------------------------------------------------------
\97\ Testimony of Yue Chu, July 29, 1997, p. 126; Testimony of
Xiping Wang, July 29, 1997, p. 140.
\98\ Yue Chu testimony, p. 150; Xiping Wang testimony, p. 150.
\99\ Yue Chu testimony, pp. 126-28.
\100\ Id., p. 128.
\101\ Xiping Wang testimony, pp. 140-41.
---------------------------------------------------------------------------
Yue Chu testified that on November 14, 1995, Zhan came to
her home and asked Yue Chu for a $3,000 loan.102 Yue
Chu agreed without either asking for or receiving any
explanation for Zhan's request.103 Zhan then
directed Yue Chu to make out a $2,000 check to the DSCC and a
$1,000 check to Zhan.104 Yue Chu testified that she
did not know what DSCC stood for.105
---------------------------------------------------------------------------
\102\ Yue Chu testimony, p. 131.
\103\ Id., p. 132.
\104\ Id., pp. 131-32; see $2,000 check to ``DSCC'' drawn on Ming
Chen and Yue F. Chu's Chevy Chase Bank account, Nov. 14, 1995 (Ex. 52);
$1,000 check to Keshi Zhan drawn on Ming Chen and Yue F. Chu's Chevy
Chase Bank account, Nov. 14, 1995 (Ex. 53).
\105\ Yue Chu testimony, p. 132.
---------------------------------------------------------------------------
Yue Chu further testified that Zhan immediately reimbursed
her by providing her with a $3,000 check payable to her
husband, Ming Chen, drawn on a Riggs National Bank account
maintained jointly by Ng Lap Seng and Charlie
Trie.106 Zhan possessed signature authority over the
joint Ng/Trie account.107 The memo line on the check
states ``consulting.'' Yue Chu testified that she does not
speak or read English and therefore did not understand the
notation.108
---------------------------------------------------------------------------
\106\ Id., pp. 132-33; see $3,000 check to ``Ming Chen'' drawn on
Ng Lap Seng and Charlie Trie's Riggs National Bank account, Nov. 14,
1995 (Ex. 54).
\107\ See ``Power of Attorney (Durable),'' Dec. 20, 1994 (Ex. 55).
\108\ Yue Chu testimony, p. 133.
---------------------------------------------------------------------------
Yue Chu further testified that in February 1996 her
husband, Ming Chen, told her that his boss, Ng Lap Seng,
requested a $25,000 loan so that he could buy a ticket and
``pass the gate'' to a political function.109 Yue
Chu testified that she understood the ``gate'' to be the gate
to the White House.110 Because Yue Chu and Ming Chen
possessed only a combined total of $20,000 in their two bank
accounts at that time, they decided to provide the $20,000 and
to call on Ming Chen's cousin, Zhengwei Cheng, for the
remaining $5,000.111
---------------------------------------------------------------------------
\109\ Id., pp. 133-34.
\110\ Id., p. 134.
\111\ Id., p. 135; see $12,500 check to ``DNC'' from Yuefang Chu's
Bank-Fund Staff Federal Credit Union account, Feb. 19, 1996 (Ex. 56);
$7,500 check to ``DNC'' from Ming Chen & Yue F. Chu's Chevy Chase Bank
account, Feb. 19, 1996 (Ex. 57).
---------------------------------------------------------------------------
On February 19, 1996, Zhan again came to Yue Chu to collect
Yue Chu's portion of the funds requested by Ng. Zhan directed
Yue Chu to sign a check from each of Yue Chu's two accounts,
and Zhan then filled in the payee and the amounts ($12,500 and
$7,500).112 Yue Chu testified that she did not pay
any attention to the payee--the DNC--designated by
Zhan.113 Zhan then provided Yue Chu with two checks
written on the account maintained jointly by Ng and
Trie.114 Yue Chu testified that the DNC reimbursed
her for her $20,000 contribution.115 She has not,
however, returned the $20,000 to Ng Lap Seng.116
---------------------------------------------------------------------------
\112\ Yue Chu testimony, pp. 135-36.
\113\ Id., p. 137.
\114\ Id., pp. 138-40; see $12,500 and $7,500 checks to ``Ming
Chen'' drawn on Ng Lap Seng and Charlie Trie's Riggs National Bank
account, Feb. 19, 1996 (Ex. 58).
\115\ Yue Chu testimony, p. 140.
\116\ Id., p. 148.
---------------------------------------------------------------------------
Yue Chu's husband, Ming Chen, then went to his cousin's
(Zhengwei Cheng's) house and asked for a $5,000 loan from
Xiping Wang, his cousin's wife.117 Xiping Wang
testified that Ming Chen explained that he needed the money in
order to help his boss (Ng Lap Seng) ``pass a gate'' to the
White House.118 Xiping Wang complied and wrote a
$5,000 check to the DNC.119 At the time that she
wrote the check, however, her account did not contain
sufficient funds to cover the amount of the
check.120 Her husband therefore called Ming Chen the
next day, and asked Ming Chen for reimbursement.121
Xiping Wang testified that Ming Chen personally deposited a
$5,000 check drawn on Trie and Ng's joint account (and signed
by Zhan) into their bank account.122 Xiping Wang
testified that she has not been reimbursed by the DNC for her
contribution.123
---------------------------------------------------------------------------
\117\ Xiping Wang testimony, pp. 140-41.
\118\ Id., p. 141.
\119\ Id.; see $5,000 check to ``DNC'' drawn on Zhengwei Cheng's
and Xiping Wang's Bank-Fund Staff Federal Credit Union account, Feb.
19, 1996 (Ex. 59).
\120\ Xiping Wang testimony, p. 142.
\121\ Id.
\122\ Id.; see $5,000 check to ``Zhengwei Cheng'' drawn on Ng Lap
Seng and Charlie Trie's Riggs National Bank account, Feb. 19, 1996 (Ex.
58).
\123\ Xiping Wang testimony, p. 148.
---------------------------------------------------------------------------
The bank records for Trie and Ng's joint Riggs account
indicates that Zhan could not have reimbursed Yue Chu and
Xiping Wang without funds provided by wire transfer from Ng. On
February 14, 1996, five days before Yue Chu and Xiping Wang
made their contributions to the DNC, Ng wired $150,000 from an
account maintained in the name of San Kin Yip Holdings Co. Ltd.
at the Bank of China, Hong Kong branch, to the Riggs National
Bank account maintained jointly by Ng and Trie.\124\ The
balance in that account prior to the wire transfer was
$10,459.55, significantly less than the $25,000 in reimbursed
contributions.\125\
---------------------------------------------------------------------------
\124\ See confirmation of $149,985 wire transfer from San Kin Yip
Holdings Co. Ltd.'s Bank of China, Hong Kong branch, account to Ng Lap
Seng and Charlie Trie's Riggs National Bank account, Feb. 14, 1996 (Ex.
60).
\125\ See March 5, 1996 bank statement for account maintained by Ng
Lap Seng and Charlie Trie indicating a balance on Feb. 13, 1996 (prior
to receipt of the $149,985 wire transfer) of $10,459.55 (Ex. 61).
---------------------------------------------------------------------------
Yue Chu testified to the Committee that she had no
knowledge of the overseas source of the funds used to reimburse
her for her contributions.\126\ Xiping Wang testified that she
knew ``even less.'' \127\
---------------------------------------------------------------------------
\126\ Yue Chu testimony, p. 145.
\127\ Xiping Wang testimony, p. 145.
---------------------------------------------------------------------------
Yue Chu also testified to a third reimbursed contribution,
this one for $1,000 to the ``Gephardt Congress Committee'' on
June 15, 1996.\128\ She testified that on that day, Zhan came
to her house and asked for a $1,000 loan.\129\ Again, Zhan did
not tell Yue Chu the purpose of the loan.\130\ Yue Chu wrote
the check as directed by Zhan and immediately received a $1,000
reimbursement, this time from Zhan's own account.\131\ Yue Chu
testified that the Gephardt Congress Committee returned her
contribution in March 1997, but that she had not yet repaid
Zhan.\132\
---------------------------------------------------------------------------
\128\ See $1,000 check to ``Gephardt Congress Committee'' drawn on
Ming Chen and Yue F. Chu's Chevy Chase Bank account, June 15, 1996 (Ex.
62).
\129\ Yue Chu testimony, pp. 148-49.
\130\ Id., p. 149.
\131\ Id.; see $1,000 check to ``Chen Ming'' drawn on Keshi Zhan's
Bank-Fund Staff Federal Credit Union account, June 15, 1996 (Ex. 63).
\132\ Yue Chu testimony, p. 150.
---------------------------------------------------------------------------
On July 23, 1997, the Committee voted to immunize Zhan, the
bookkeeper for Ng Lap Seng who possessed signature authority
over the account maintained jointly by Ng and Trie.\133\ As
discussed above, Zhan used this authority to sign checks on Ng
and Trie's account reimbursing Yue Chu and Xiping Wang for
their contributions to the DNC and Representative Gephardt's
campaign committee.
---------------------------------------------------------------------------
\133\ Eric Schmitt, ``In a Rebuff to Justice Dept., Senate Inquiry
Immunizes 5,'' New York Times, July 24, 1997, p. A1.
---------------------------------------------------------------------------
Pursuant to the use immunity provided by the Committee's
July 23, 1997 vote and a July 30, 1997 order of Chief Judge
Norma Holloway Johnson of the United States District Court for
the District of Columbia,\134\ Zhan appeared for deposition on
August 14 and 15, 1997. However, in spite of her immunity (and
contrary to the proffer on which the Committee's decision to
immunize her was based), Zhan proved from the beginning of her
deposition to be an entirely uncooperative witness. The
Committee therefore decided to terminate her deposition before
reaching several critical areas of inquiry.\135\ The Department
of Justice was notified of the Committee's decision.
---------------------------------------------------------------------------
\134\ Order of Chief United States District Judge Norma Holloway
Johnson in case captioned Senate Committee on Governmental Affairs,
Misc. No. 97-226 (D.D.C.), July 30, 1997 (Ex. 64).
\135\ In order to avoid any possible taint on a possible future
criminal prosecution of Zhan, the Committee also directed the court
reporter not to prepare a transcript of her deposition.
---------------------------------------------------------------------------
The following information about Zhan's conduit contribution
is derived entirely from bank records independently obtained by
the Committee pursuant to subpoenas directed to the banks at
which the relevant accounts are maintained.
On February 19, 1996, Zhan not only collected contribution
checks from Yue Chu and Xiping Wang, she also wrote a $12,500
check on her own account,\136\ and reimbursed herself with a
check drawn on Ng and Trie's joint Riggs account.\137\ Zhan's
bank statement for February 1996 indicates that she possessed
sufficient personal funds to make the $12,500 contribution
without reimbursement.\138\ However, in light of the identical
Yue Chu and Xiping Wang transactions on the same day, the
Committee concludes that this is another example of the
laundering of Ng's foreign funds to make a contribution to the
DNC.\139\
---------------------------------------------------------------------------
\136\ See $12,500 check to ``DNC'' drawn on Zhan's Bank-Fund Staff
Federal Credit Union account, Feb. 19, 1996 (Ex. 65).
\137\ See $12,500 check to ``Keshi Zhan'' drawn on Ng Lap Seng and
Charlie Trie's Riggs National Bank account, Feb. 19, 1996 (Ex. 66).
\138\ See Feb. 29, 1996 bank statement for account maintained by
Keshi Zhan indicating a balance on Feb. 16, 1996 (prior to receipt of
the $12,500 check) of $15,229.82 (Ex. 67).
\139\ Testimony of Jerry Campane, July 29, 1997, pp. 17-18; see
also id., p. 72 (``Senator Smith: Does that sound like money laundering
to you? Mr. Campane: That is what we call in the business a slam-dunk,
Senator.'').
---------------------------------------------------------------------------
Manlin Foung, a sister of Trie, also made a DNC
contribution after receiving funds originating from one of Ng's
overseas bank accounts. On August 15, 1996, Foung received
$10,000 by wire transfer from a Riggs National Bank account
maintained by San Kin Yip International Trading Company.\140\
Prior to receipt of the wire transfer, Foungs account had a
balance of almost $5,379.\141\ Foung used the check to make a
$10,000 contribution to the DNC in the name of the ``Birthday
Victory Fund.'' \142\
---------------------------------------------------------------------------
\140\ See confirmation of $10,000 wire transfer from San Kin Yip
International Trading Corporation's Riggs National Bank account to
Manlin Foung's Travis Federal Credit Union account, Aug. 15, 1996 (Ex.
68).
\141\ See Aug. 31, 1996 bank statement for account maintained by
Manlin Foung indicating a balance on Aug. 15, 1996 (prior to receipt of
the $10,000 wire) of $5,378.95 (Ex. 69).
\142\ See $10,000 check to ``Birthday Victory Fund'' drawn on
Manlin Foung's Travis Federal Credit Union account, August 15, 1996
(Ex. 70). Foung testified to this and another conduit contribution in
an October 5, 1997 hearing before the House Government Reform and
Oversight Committee. ``Three Witnesses Say That They Helped to Launder
Contributions to Democrats,'' Wall Street Journal, Oct. 6, 1997, p. A4.
Foung's other DNC contribution, $12,500 on February 18, 1996 (Ex. 71),
was reimbursed by Amerasia Bank cashier's checks (Ex. 72) purchased in
cash by former Lippo Group executive and Trie associate Antonio Pan
(Ex. 73). The Committee has been unable to determine the source of the
cash used by Pan for the purchase of the cashier's checks.
---------------------------------------------------------------------------
The ultimate source of the funds used by San Kin Yip for
its wire transfer to Foung was a $200,000 wire transfer on
August 7, 1996, from the Bank of China, Macau branch account of
Cia de Investimento e Fomento Predial Goodwill Limitada, an Ng-
affiliated company, to Trie and Ng's joint account at Riggs
National Bank.\143\ The balance in Trie and Ng's joint account
prior to the wire transfer was only $1,118.\144\ $90,000 was
then transferred, in two installments, from Trie and Ng's
account to San Kin Yip's account.\145\ The balance in San Kin
Yip's account before the deposit of $90,000 was only
$1,029,\146\ obviously insufficient to cover the $10,000 wire
transfer to Foung.
---------------------------------------------------------------------------
\143\ See confirmation of $200,000 wire transfer from Cia de
Investimento e Fomento Predial Goodwill Lda's Bank of China, Macau
branch, account to Ng Lap Seng and Charlie Trie's Riggs National Bank
account, Aug. 7, 1996 (Ex. 74); see also discussion of the Committee's
confirmation of a connection between Cia de Investimento e Fomento
Predial Goodwill Lda and Ng Lap Seng, supra, footnote 74.
\144\ See Sept. 5, 1996 bank statement for account maintained by Ng
Lap Seng and Charlie Trie indicating a balance on Aug. 5, 1996 (prior
to receipt of the $200,000 wire) of $1,118.32 (Ex. 75).
\145\ See confirmation of $40,000 transfer from Ng and Trie's Riggs
National Bank account to San Kin Yip International Trading
Corporation's Riggs National Bank account, Aug. 7, 1996 (Ex. 76);
confirmation of $50,000 transfer from Ng and Trie's Riggs National Bank
account to San Kin Yip International Trading Corporation's Riggs
National Bank account, Aug. 15, 1996 (Ex. 77); see also Aug. 31, 1996
bank statement for account maintained by San Kin Yip International
Trading Corporation indicating deposits of $40,000 on Aug. 7, 1996 and
$50,000 on Aug. 15, 1996 (Ex. 78).
\146\ Ex. 78.
---------------------------------------------------------------------------
Attempts to Convert Political Connections to Personal Gain
According to the Little Rock residents interviewed by the
Committee, Trie's contributions and fundraising were motivated
by his expectation that important political connections would
ultimately prove of financial benefit.\147\
---------------------------------------------------------------------------
\147\ See Webb interview, p. 1; Shaffner interview, p. 2.
---------------------------------------------------------------------------
Trie's efforts appear to have established at least the
important political connections that he sought. White House
WAVES records indicate that Trie visited the White House at
least twenty-two times from the period 1993 to 1996 \148\ and
that Ng Lap Seng also visited the White House ten times between
1994 and 1996.\149\
---------------------------------------------------------------------------
\148\ See White House WAVES records for Charlie Trie's White House
visits, 1993-1996 (Ex. 79).
\149\ See White House WAVES records for Ng Lap Seng's White House
visits, 1994-1996 (Ex. 80). Although the Committee requested White
House WAVES records for Ng on May 21, 1997, the White House delayed
production of this information until the afternoon of July 29, 1997,
after the completion of testimony relating to the Ng-funded DNC
contributions made by Trie. See section of this Report on the
uncooperative and manipulative tactics adopted by the White House in
its production of documents to the Committee.
---------------------------------------------------------------------------
Trie contributions and fundraising made him a DNC Managing
Trustee \150\ and member of the DNC's National Finance Board of
Directors,\151\ and afforded him VIP treatment at DNC
events.\152\ His contributions also purchased admission to a
number of fundraising events attended by President Clinton. His
May 1994 contribution of $100,000, for instance, purchased two
tables at a June 1994 DNC dinner and fundraiser at the
Mayflower Hotel in Washington.\153\ Ng Lap Seng and a number of
Chinese and Taiwanese businessmen and their spouses attended
the event as Trie's guests.\154\ Trie also co-chaired a
Presidential Birthday Celebration at the Sumner Wells Estate in
August 1994,\155\ and attended a February 1996 presidential
fundraiser at the Hay-Adams Hotel in Washington.\156\ Finally,
Trie and Ng organized an October 18, 1995 reception for former
Commerce Secretary Ron Brown and several prominent Asian
businessmen at the Shangri-La Hotel in Hong Kong.\157\
---------------------------------------------------------------------------
\150\ See Letter from Ari Swiller to Charlie Trie welcoming Trie to
the DNC's Trustee Program, June 30, 1994 (Ex. 81).
\151\ See Letter from Terry McAuliffe to Yah Lin Trie inviting Trie
to become a member of the National Finance Board of Directors,
September 21, 1994 (Ex. 82).
\152\ See Memorandum from David Mercer to John O'Hanlon summarizing
requests from VIPs such as Yah Lin Trie, June 18, 1994 (Ex. 83).
\153\ See Memorandum from Charlie Trie/Jody Webb to David Mercer
identifying Trie's invitees to next day's dinner, June 21, 1994 (Ex.
84).
\154\ See id.
\155\ See Letter from Bill Clinton to Yah Lin ``Charlie'' Trie,
October 3, 1994 (Ex. 85).
\156\ See Letter from Vanessa Weaver to Yah Lin Trie, February 21,
1996 (Ex. 86).
\157\ See, e.g., Memorandum of Interview of Edmund Ho, July 27,
1997, p. 2. Press reports have suggested that Trie solicited
contributions for the DNC at the reception. See, e.g., Kevin Sack,
``From Restaurateur to Intimate at the White House,'' New York Times,
Jan. 4, 1997, p. A8. The Committee, however, interviewed several of the
individuals who attended the reception, and none reported that they had
been solicited for a contribution. The event simply offered Trie and Ng
an opportunity to demonstrate to prominent Asian business associates an
intimate level of access to the Clinton Administration.
---------------------------------------------------------------------------
After establishing political connections through
contributions and fundraising, Trie sought to convert those
connections to personal gain.\158\ Trie sought to use his
political connections to secure financing for a real estate
development project planned by Ng in Macau. The Committee also
believes that Trie's efforts led to his otherwise unwarranted
appointment by the President to the Commission on United
States-Pacific Trade and Investment Policy.
---------------------------------------------------------------------------
\158\ To the extent that the political connections established
through Trie's contributions and fundraising motivated Ng to continue
his financial support of Trie, this would appear to be Trie's most
successful conversion of political access to personal financial gain.
Cf. Hearing Transcript, July 29, 1997, pp. 88-89 (``Senator Bennett: .
. . I think Mr. Wu got what he paid for here. He was not particularly
interested in making money in Little Rock. He was interested in
establishing his own credentials or the credentials of his man in the
United States, if Mr. Trie would be so characterized, as having very
high-level contacts. It has been my personal experience that this is
very valuable. It can open a lot of doors in a lot of places in ways
that American business people simply do not understand because we do
not do business that way in the United States. I can understand why Mr.
Wu was willing to put that much money into Mr. Trie's hands, and I can
clearly understand why Mr. Wu was perfectly willing to allow Mr. Trie
to use that money to make a series of political contributions in order
to keep the invitations to the White House open.'').
---------------------------------------------------------------------------
On April 22, 1996, President Clinton announced the
appointment of sixteen individuals to the newly created
Commission on the United States-Pacific Trade and Investment
Policy (``the Commission'').\159\ Among the sixteen individuals
was Charlie Trie.\160\ Several circumstances surrounding Trie's
appointment to and involvement with the Commission, however,
indicate that Trie's political contributions and fundraising
were critical factors in the Administration's decision.\161\ As
discussed below, after Trie expressed his interest in joining
the Commission, even the existence of an already full slate of
candidates, a disqualifying financial interest in the business
of the Commission, and (according to several Commission members
interviewed by Committee investigators) a lack of substantive
merit did not prevent Trie from participating.
---------------------------------------------------------------------------
\159\ See List of Commission Appointees, April 22, 1996 (Ex. 87).
\160\ Id.
\161\ At the time of Trie's appointment to the Commission, he had
contributed a total of $205,000 to the DNC. (Trie contributed an
additional $15,000 to the DNC between his appointment to the Commission
and the November 1996 federal elections.) See supra, footnotes 59-69
and accompanying chart. The announcement of Trie's appointment to the
Commission also fell only one month after Trie delivered his first
installment of contributions (a delivery totaling $460,000) to the
Presidential Legal Expense Trust (``PLET''). The Committee believes
that Trie's successful solicitation of contributions for the PLET may
also have played a prominent role in Trie's appointment to the
Commission. See section of this Report on Trie's involvement as a
fundraiser for the PLET.
---------------------------------------------------------------------------
The 15-member Commission on United States-Pacific Trade and
Investment Policy was created on June 21, 1995, when President
Clinton issued Executive Order 12964 \162\ and fulfilled a
promise made to Senator Jeff Bingaman who insisted on the
formation of the Commission in return for his support of the
creation of the World Trade Organization.\163\ The purpose of
the Commission was to prepare a report that would advise the
President ``on the steps the United States should take to
achieve a significant opening of Japan, China and other Asian
and Pacific markets to U.S. business.'' \164\
---------------------------------------------------------------------------
\162\ 31 Weekly Comp. Pres. Doc. 1095.
\163\ Id.; see also Memorandum of Interview of Clyde Prestowitz,
Jr., June 13, 1997, p. 1. Prestowitz, president of Washington's
Economic Strategy Institute, told the Committee that he recommended to
Senator Bingaman the idea of insisting on the creation of the
Commission in return for his vote in favor of the Uruguay Round GATT
agreement.
\164\ Executive Order 12964, Section 2, 31 Weekly Comp. Pres. Doc.
1095.
---------------------------------------------------------------------------
In the months following the creation of the Commission, the
White House selected a group of chief executives, academics and
Asian specialists to fill the fifteen available slots.\165\
Trie's name, however, was not included among the individuals
initially considered for appointment.\166\ Rather, Trie's name
was added in the fall of 1995 only after he expressed an
interest in participating, and only after White House officials
made it clear that Trie's selection was a priority.\167\ Trie's
appointment also carried with it the endorsement of the
DNC,\168\ to which Trie and his businesses had contributed
$192,500 in 1994 and 1995.\169\
---------------------------------------------------------------------------
\165\ Glenn F. Bunting, ``White House Helped Boost Trie onto Asia
Trade Panel; Donations: Clinton Friend Won New Spot with a Padded
Resume. Subject of Fund-raising Inquiry Now in China,'' Los Angeles
Times, July 20, 1997, p. A1.
\166\ Id.; see also Memorandum from Ira S. Shapiro to Mickey
Kantor, January 20, 1995 (Ex. 88).
\167\ Id.; see also Memorandum from Phyllis Jones to Mickey Kantor
attaching list of appointees to the Commission, November 21, 1995 (Ex.
89).
\168\ See Electronic Mail Message from Phyllis Jones to Jennifer
Hillman, September 21, 1995 (Ex. 90).
\169\ Trie and his businesses contributed an additional $27,500 to
the DNC in 1996. See supra, footnotes 66-69 and accompanying chart.
---------------------------------------------------------------------------
In order to accommodate the White House's interest in the
inclusion of Trie without eliminating any of the fifteen
individuals originally selected for appointment to the
Commission, the President issued Executive Order 12987 on
January 31, 1996, expanding the membership of the Commission to
``up to 20.'' \170\
---------------------------------------------------------------------------
\170\ 32 Weekly Comp. Pres. Doc. 134.
---------------------------------------------------------------------------
After completion of a preliminary background check on each
of the individuals considered for appointment to the
Commission,\171\ the appointees were asked to submit a
financial disclosure report in order to identify potential
conflicts with the Commission's work.\172\ Trie's financial
disclosure report revealed that he received a total annual
salary of $97,500 from his Little Rock-based international
trading company, Daihatsu International Trading, and from Ng
Lap Seng's San Kin Yip International.\173\ Trie also reported
ownership of $22,000 worth of stock in Walmart.\174\ Officials
of the United States Trade Representative's office who reviewed
Trie's disclosure report found that Trie's position on the
Commission could have a ``direct and predictable effect'' on
his interests in Daihatsu, San Kin Yip, and Walmart and that he
thus possessed ``a disqualifying financial interest.'' \175\
---------------------------------------------------------------------------
\171\ See Memorandum from Winston Allen to Marvin Krislov
requesting a preliminary background investigation of Trie, December 15,
1995 (Ex. 91). The FBI's investigation of Trie (a ``name check'' of
criminal and intelligence databases) did not uncover any information to
cause the White House to reconsider Trie's appointment. See Memorandum
from Marvin Krislov to Bob Nash announcing completion of Trie's
background investigation, February 5, 1996 (Ex. 92).
\172\ See Confidential Financial Disclosure Report of Yah Lin Trie,
March 11, 1996 (Ex. 93). USTR Assistant General Counsel Barbara
Fredericks noted Trie's failure to sign the report and promised to
correct the deficiency. See Letter from Barbara Fredericks to Laura
Sherman, April 17, 1996 (Ex. 94). A signed version of the report,
however, has not been produced to the Committee.
\173\ Id.; see the discussion of these companies above.
\174\ Id.
\175\ See Letter from Laura Sherman to Charlene Barshefsky, May 9,
1996 (Ex. 95); see also 18 U.S.C. Sec. 208(a) (prohibiting Government
employees from rendering advice with respect to issues in which they
have a financial interest).
---------------------------------------------------------------------------
U.S. Trade Representative Charlene Barshefsky, however,
possessed the authority to waive Trie's conflict upon a finding
that the ``need for [Trie's] services outweigh[ed] the
potential for a conflict of interest created by the financial
interest involved.'' 176 USTR officials therefore
drafted a waiver memo for Barshefsky's signature stating that
Trie ``possesse[d] special expertise vital to the work of the
Commission,'' and that his participation was ``essential to the
United States.'' 177
---------------------------------------------------------------------------
\176\ 18 U.S.C. Sec. 208(b)(3).
\177\ Ex. 95.
---------------------------------------------------------------------------
Although Barshefsky refused to sign the memo waiving Trie's
conflict, Trie was ultimately permitted to participate as a
member of the Commission without a waiver (or other resolution
of the potential conflict).178 According to the Los
Angeles Times, a USTR official explained that the paperwork on
Trie simply ``fell through the cracks.'' 179
---------------------------------------------------------------------------
\178\ Glenn F. Bunting, ``White House Helped Boost Trie onto Asia
Trade Panel; Donations: Clinton Friend Won New Spot with a Padded
Resume. Subject of Fund-raising Inquiry Now in China,'' Los Angeles
Times, July 20, 1997 p. A1.
\179\ Id.
---------------------------------------------------------------------------
Trie attended most of the early Commission meetings and
traveled with Commission members on a member-funded, 10-day
trip to Asia in September 1996.180 While Commission
members acknowledged that Trie's contacts in and familiarity
with many of the Asian cities they visited made him a valuable
addition to their fact-finding trip,181 most were
far less complimentary of Trie's substantive input to the work
of the Commission.182 Trie submitted a report to the
Commission containing his own recommendations 183
that members dismissed as superficial, grammatically deficient,
and generally unhelpful.184
---------------------------------------------------------------------------
\180\ See Memorandum of Interview of Dr. Meredith Woo-Cummings,
June 25, 1997, pp. 1-2.
\181\ See, e.g., Prestowitz interview, p. 2.
\182\ See Woo-Cummings interview, p. 1 (Trie was ``clearly [in]
`over his head' on the Commission''); Memorandum of Interview of Bruce
Stokes, June 30, 1997, p. 2 (``Trie did not contribute very much to the
Commission's efforts.''); Memorandum of Interview of Jason S. Berman,
p. 2 (``Trie was not involved in any way in drafting the final
report.'').
\183\ See ``Recommendations for what we can do in U.S.-Asia Trade
Policy Formulation,'' August 1, 1996 (Ex. 96). As the face of Trie's
report reflects, the report was actually drafted by Chu Lei, not by
Trie himself. Chu Lei is an American citizen currently residing in
Taiwan. In addition to assisting Trie with his report to the
Commission, Chu also introduced Trie to Master Suma Ching Hai, the
leader of the Buddhist sect that was the source of the almost $700,000
in contributions that Trie brought to the PLET. See Memorandum of
Interview of Chu Lei, July 8, 1997, pp. 1-2; see also section of this
Report on Trie's involvement as a fundraiser for the PLET.
\184\ See, e.g., Woo-Cummings interview, p. 2 (describing Trie's
report as ``completely incomprehensible'').
---------------------------------------------------------------------------
Trie's active participation on the Commission ended in late
1996 when his name surfaced in connection with campaign
fundraising improprieties.185 After Trie fled the
United States for China, he sent a letter to the Commission
apologizing for the impact of the scandal on the Commission's
work and expressly stating that he would no longer be
participating in Commission activities.186 However,
in spite of the well-publicized allegations about Trie's
fundraising improprieties and his withdrawal from participation
on the Commission, the Administration never formally revoked
Trie's appointment, and he remained a member until the
Commission submitted its final report in April 1997.
---------------------------------------------------------------------------
\185\ See Glenn F. Bunting, ``White House Helped Boost Trie onto
Asia Trade Panel; Donations: Clinton Friend Won New Spot with a Padded
Resume. Subject of Fund-raising Inquiry Now in China,'' Los Angeles
Times, July 20, 1997 p. A1.
\186\ See id.
---------------------------------------------------------------------------
Finally, Trie sought to use his DNC contributions to
benefit Ng financially. In a letter to Ng dated June 4, 1995,
Trie expressly stated his belief that his involvement in the
DNC could ``assist in the development and success'' of a real
estate development project planned by Ng in
Macau.187 Trie's DNC contacts, in fact, worked
precisely as Trie envisioned. DNC Deputy Finance Chairman David
Mercer and Department of Commerce employee Jude Kearney
introduced Trie to Ernest Green of Lehman
Brothers,188 and Trie later discussed with Green
Lehman Brothers'' interest in financing a development project
planned by Ng in Macau.189 In early 1995, Mercer
again sought to assist Trie with further potential investment
banking connections.190 While Trie's lack of
business success indicates that he was ultimately unable to use
these connections to his financial advantage, he did try.
---------------------------------------------------------------------------
\187\ See Letter from Yah Lin ``Charlie'' Trie to Ng Lap Seng,
June 4, 1995 (Ex. 97).
\188\ See Deposition of Ernest Green, June 18, 1997, pp. 11-13.
\189\ See id., pp. 17-18.
\190\ See Memorandum from David Mercer to Charlie Trie, January
30, 1995 (Ex. 98). Mercer testified that he provided this sort of
personal assistance to Trie because Trie was a DNC ``supporter,'' and
that to be an effective fundraiser for the DNC, he always sought to be
``responsive'' to supporters. Deposition of David Mercer, May 14, 1997,
pp. 23-24. Mercer also testified that he attended social events with
Trie, including a party at Trie's Watergate apartment celebrating the
opening of the 1996 Olympics. Id., pp. 43, 45.
---------------------------------------------------------------------------
Need for an Independent Counsel
Three individuals have now been indicted on charges based
wholly or in part on their dealings with this Committee or from
evidence revealed by this Committee. At least two of these
individuals, Yah Lin ``Charlie'' Trie and Maria Hsia, have
close ties to covered persons under the Independent Counsel
Act. As noted above, Trie contributed $220,000 to the DNC and
reimbursed the contributions of other contributors Trie
recruited to disguise the original source of the contributions,
and he did the same with respect to the Presidential Legal
Expense Trust. Trie visited the White House twenty-two times.
Trie also attended numerous fundraisers at which the President
or Vice President were present, access purchased through his
sizeable contributions and used to further his personal
business. This access seeking formed one of the bases for the
Justice Department's indictment of Trie on conspiracy charges.
Maria Hsia was a personal friend and political supporter
and fundraiser for the Vice President since 1988. Hsia was
instrumental in inviting then-Senator Gore on a trip to Taiwan
through the partial auspices of the Fo Kuang Shan Order. Hsia
raised tens of thousands of dollars for Gore's 1990 Senate
reelection campaign. Hsia also used the ``tally'' system to
direct DNC funds to Gore's Senate reelection campaign. After
Gore became Vice President, Hsia laundered funds through Hsi
Lai Temple monastics to arrange for Vice President Gore's chief
of staff to meet with the head of China Resources. In 1996,
Hsia was a prominent arranger of the DNC fundraiser that Vice
President Gore attended at the Hsi Lai Temple. The Justice
Department's indictment lists as part of Hsia's conspiracy to
defraud the Federal Election Commission Hsia's money laundering
at that event, as well as other events attended by Vice
President Gore or President Clinton.
Both Hsia and Trie have close relationships with the
Chinese government and/or intelligence agencies, according to
the United States intelligence or investigative agencies.
Based upon the record before this Committee, we can only
assume that many more indictments will be forthcoming. These
indictments of people with close ties to the Administration
illuminate an inherent problem that the Justice Department has
in trying to pursue these cases--a problem that has come into
fruition. These cases present an inherent conflict of interest
and an appearance of a conflict of interest that the Department
of Justice cannot escape.
In these cases, the Justice Department will be faced with
the following considerations, considerations that are present
in all federal criminal prosecutions;
--deciding whether to enter into plea bargaining
negotiations and whether to accept a plea bargain;
--deciding whether the defendant is cooperating fully and
fulfilling the plea bargain, and specifically, deciding whether
the defendant is telling all that he or she knows;
--deciding whether to grant immunity and, if so, deciding
whether or not the defendant is telling all that he or she
knows pursuant to that immunity agreement.
In any such case, when the citizens of this country have
returned an indictment, it is the prosecutor's obligation to be
fair to the defendant but to be tough in representing the
public interest. For example, in any such case where any deal
has been struck, the prosecutor must ask the defendant tough
questions and use appropriate prosecutorial resources to
determine whether the defendant is cooperating fully. If the
defendant's superior or close associate is the subject of
accusations or well-placed suspicions, the prosecutor must be
aggressive in determining whether or not the defendant has any
information about such an individual. And the prosecutor cannot
usually accept a simple denial without further inquiry. Should
the individual about whom the defendant may have information be
a public official, the above process is even more important.
This is true whether the public official in question is a
mayor, a governor, a member of Congress or the President. That
fact forms the basis for the existence of a ``public integrity
section'' in the Justice Department.
The problem in these cases is that the Attorney General
works for the President. This is the very kind of situation
that is addressed in the ``political conflict'' provision of
the Independent Counsel Act. 28 U.S.C. Sec. 591(c)(1). As the
public sees these defendants processed and sees any deals
worked out by the Justice Department and the defendants, the
Justice Department will bear a very heavy burden in convincing
the American people that the decisions the Department made were
appropriate and fully protective of the interest of justice.
For this reason, an independent counsel should be appointed
to remove the Department of Justice from this clear ``political
conflict of interest'' which burdens the Justice Department and
for which Congress provided a solution.
conclusion
As a result of generous contributions and successful
fundraising, Charlie Trie established himself as a key player
in the DNC's finance operation, opened the doors of the White
House for himself and Ng Lap Seng, and secured for himself an
appointment to the Commission on U.S.-Pacific Trade and
Investment Policy.\191\ The Committee has concluded, however,
that Trie's unsuccessful international trading business could
not support the contributions that allowed him the access that
he obtained. Rather, Trie relied on a continuous stream of
illegal funds that he received by wire transfer from Ng Lap
Seng's bank accounts in Hong Kong and Macau. The source of Ng's
funds and what he or those behind him hoped to gain through
Trie remain unknown.
---------------------------------------------------------------------------
\191\ See section of this Report on Trie's involvement as a
fundraiser for the PLET.
Charlie Trie's Contributions to the Presidential Legal Expense Trust
I. INTRODUCTION
Charlie Trie's contributions to the Presidential Legal
Expense Trust (the ``Trust'') further illustrate the manner in
which Trie raised foreign money, as well as his close ties to
the White House and the President. Unlike contributions to the
Clinton/Gore campaign or the DNC, contributions to the Trust
inured directly to the personal financial benefit of President
Clinton and the First Lady. The money was used to pay their
personal legal bills. Because such contributions are even more
susceptible to abuse than ordinary campaign contributions, the
Committee looked closely at Trie's activities with respect to
the Trust and the White House's knowledge of and response to
those activities.
In March 1996, Trie personally delivered almost one half
million dollars in checks and money orders to the Trust. Trust
representatives and White House officials recognized almost
immediately that the donations were highly questionable and
appeared, at least in part, to have been coerced from members
of a controversial Buddhist sect. However, rather than simply
returning the suspect donations and publicly reporting such
returns--which had been the Trust's historical practice--the
Trust, in consultation with senior White House officials, hid
the returned donations by changing the format of the Trust's
bi-annual public disclosure form. This avoided public
disclosure of any information concerning the Trie donations
prior to the 1996 presidential election.
Moreover, when the Trust finally sent the donations back to
the Trie-related contributors, it did so with a twist. It
invited these contributors to recontribute their money,
notwithstanding the fact that they knew a substantial amount of
the money had been coerced from these very donors in the first
place. Not surprisingly, once Charlie Trie's close association
with James Riady, John Huang and the entire DNC fundraising
matter became public through press reports in October 1996, the
Trust and White House senior officials quickly determined that
the ``recontributions'' should also be returned--this time with
no strings attached. However, neither the White House nor the
Trust publicly disclosed the Trie/Trust connection or the
strange origin of the donations until after the election and
even then only because they were forced to do so by a
threatened press story.
These questionable facts alone were cause for concern by
the Committee, but the Committee also found other equally
disturbing facts concerning Trie's relation to the Trust and
the White House. For example, despite the fact that the Trust,
with White House permission, had hired a private investigative
firm to investigate the Trie donations, the one person the
investigative firm was instructed not to speak with was Charlie
Trie. This, despite the fact that Trie was obviously the
central figure, and his office and the private investigative
firm were located only blocks apart in Washington, DC, making
an interview with him a simple matter. Likewise, even though
they were well aware of the suspicious nature of his
fundraising for the Trust, no one at the White House took any
action prior to the election to inquire about Trie's
simultaneous fundraising for the DNC.\1\ This despite the fact
that (a) Trie was known to be a major DNC donor (a Managing
Trustee); (b) he had told Trust representatives in his first
visit that he was organizing a major DNC fundraiser; and (c) he
was a frequent guest at the White House. This was particularly
strange with respect to Deputy White House Chief of Staff
Harold Ickes who helped manage the DNC on a daily basis, knew
Trie was involved in raising money for the Democratic party and
was one of the first to know about Trie's involvement with the
Trust.
---------------------------------------------------------------------------
\1\ The DNC ultimately returned $645,000 either contributed or
raised by Charlie Trie.
---------------------------------------------------------------------------
Perhaps most alarming was the fact that the senior White
House officials who were being consulted about Trie's
involvement with the Trust claimed to know little or nothing
about Trie, while at the very same time Trie was receiving
several favors from the White House and socializing with the
President. For example, in February 1996, just weeks before
Trie collected the Trust donations from the Buddhist sect, he
was successful in gaining admission to a White House coffee
with the President for Wang Jun, a Chinese arms merchant. The
President subsequently admitted his meeting with Wang Jun was
highly improper. Likewise, during this same time frame, Trie
was being considered for a Presidential appointment to the
Commission on U.S. Pacific Trade and Investment Policy. In
fact, he was named to the Commission within four weeks after he
delivered the first batch of donations to the Trust. Finally,
on the very same day that he delivered the first batch of
donations to the Trust, a letter authored by Trie was sent by
former White House aide Mark Middleton to the President
expressing Trie's concern and advice regarding Taiwan/China
relations. The letter sparked a flurry of activity at the
National Security Council and eventually resulted in a detailed
written response signed by the President. This was particularly
curious given the fact that Middleton apparently was the person
who directed Trie to the Trust in the first place. Middleton
has asserted his Fifth Amendment rights and has refused to
cooperate with the Committee.
II. The Presidential Legal Expense Trust--Background
The Trust was established on June 28, 1994 to raise funds
to help the President and First Lady pay personal legal bills
arising from lawsuits and investigations initiated after Mr.
Clinton became President.\2\ The Trust was governed by a number
of guidelines concerning the source and types of contributions
that could be accepted. The guidelines generally followed
Federal Election Commission rules governing donations to
federal candidates. The following is a list of some of the
requirements regarding donations to the Trust as included in
the February 22, 1996 bi-annual report of the Trust:
---------------------------------------------------------------------------
\2\ July 1996 Bi-annual Report of the Trust, August 13, 1996 (Ex.
1). On December 31, 1997 the Trust ceased operations as a result of a
lack of contributions sufficient to cover its expenses.
---------------------------------------------------------------------------
1. Contributions are accepted only from individual
U.S. citizens, other than federal employees or
registered lobbyists. Each person must make his or her
own contribution using personal funds. Each
contribution must be made voluntarily.
2. Contributions are not accepted from corporations,
labor unions, partnerships, political committees or
other entities.
3. Individual contributions are limited to a maximum
of $1,000 per eligible individual per calendar year.
4. Anonymous contributions will not be accepted.
5. Each contributor should provide his or her name,
address and telephone number. In addition, a donor
contributing $200 or more should provide his or her
occupation and employer's name.
6. The Trust will acknowledge contributions and make
periodic public reports of the Trust contributors.\3\
---------------------------------------------------------------------------
\3\ January 1996 Bi-annual Report of the Trust, February 22, 1996
(Ex. 2).
---------------------------------------------------------------------------
Once the Trust was established, a distinguished group of
trustees was chosen to administer the Trust. The individuals
named as Co-Chairs of the Trust were Rev. Theodore M. Hesburgh,
President Emeritus of Notre Dame University, and former
Attorney General Nicholas deB. Katzenbach. The other Trustees
named were John Brademas, former Indiana Congressman and
President EmeritusNew York University; Barbara Jordan, former
Texas Congresswoman; Ronald L. Olson, Los Angeles lawyer; Elliot L.
Richardson, former Attorney General, Secretary of Defense and Secretary
of Health, Education and Welfare; Michael Sovern, President Emeritus of
Columbia University; and John C. Whitehead, former Deputy Secretary of
State.
Michael Cardozo was named Executive Director of the Trust
in June, 1994 after being contacted by White House counsel
Lloyd Cutler and meeting with the President to discuss the job.
Cardozo had been active in Democratic politics for many years.
He was a former Deputy White House Counsel under President
Carter, served on the Credentials Committee of the 1972
Democratic Convention, and was Vice-Chair of the Clinton-Gore
Inaugural Committee in 1993 and again in 1997. Currently he is
the managing director of G. William Miller & Co., an investment
banking firm. 4
---------------------------------------------------------------------------
\4\ Deposition of Michael Cardozo, May 7, 1997, pp. 5-7.
---------------------------------------------------------------------------
Cardozo's role was primarily to assist in the submission of
quarterly and bi-annual reports to the President and First
Lady, oversee the public release of the bi-annual report, keep
the Trustees informed of the activities of the Trust, act as a
liaison between the Trust and the White House, and oversee the
day-to day work of the Trust, most of which was delegated to
the Administrative Assistant, Sally Schwartz. 5
Schwartz's responsibilities primarily consisted of reviewing
contributions, maintaining a data base, sending out
acknowledgments, preparing reports both for the Trustees and
the Executive Director and also for the public briefings.
6
---------------------------------------------------------------------------
\5\ Ms. Schwartz served as Administrative Assistant from August
1995 until the Trust was closed. The Administrative Assistant was the
only full time, paid employee of the Trust. Deposition of Sally
Schwartz, May 6, 1997, p. 11.
\6\ Id.
---------------------------------------------------------------------------
As of the period ending December 31, 1995, the Trust had
received a total of $993,476 in donations since its inception
and had paid a total of $541,134.24 of the President's legal
expenses. As of that time $1,360,063.95 in legal expenses
remained outstanding. 7
---------------------------------------------------------------------------
\7\ See Ex. 2.
---------------------------------------------------------------------------
III. Charlie Trie's March 21, 1996 Visit to the Trust
Trie's first visit to the Trust on March 21, 1996 is
important in several respects. The amount of donations Trie
delivered, nearly half a million dollars, represented almost
fifty percent (50%) of the money raised by the Trust since its
inception and, thus, as Cardozo acknowledged was an
``enormous'' event in the life of the Trust. Additionally, in
the first meeting Trie represented that he was an acquaintance
of the President from Little Rock, was organizing a DNC
fundraiser expecting to raise $1 million, and was also in the
process of being appointed to a federal commission by the
President. Trie also repeatedly insisted on confidentiality
concerning his role in delivering the donations.
According to Cardozo's testimony, Trie first called Cardozo
on March 20, 1996 at his business office to set up the initial
meeting. 8 Cardozo informed Trie that he could
answer any questions about the Trust over the telephone, but
Trie insisted that they meet in person. The two met the next
day at Cardozo's office at G. William Miller & Co., which was
located across the street from the offices of the Trust. Trie
began their meeting by telling Cardozo about his personal
background and the fact that he had owned a Chinese restaurant
in Little Rock that was frequented by then-Governor Clinton.
Trie told Cardozo that he had heard about Mr. Clinton's
mounting legal bills and had set about trying to help. Trie
then retrieved a manilla envelope from beside his chair, turned
it up over the table, and according to Cardozo, ``out came a
mound of checks and money orders.'' 9 According to
Trie the total amount of the checks and money orders was
$460,000. 10
---------------------------------------------------------------------------
\8\ Trie's background and connection to the DNC are discussed above
in the section on Charlie Trie's fundraising for the DNC.
\9\ Deposition of Michael Cardozo, May 7, 1997, p. 34.
\10\ Id.
---------------------------------------------------------------------------
After seeing the ``mound'' of checks and money orders,
Cardozo called Ms. Schwartz at the Trust's offices and asked
her to come to the meeting so that he could have another
witness. At Cardozo's request, Ms. Schwartz brought with her a
fact sheet, a sample of the Trust's bi-annual publication of
donors and several other documents which reflected how the
Trust reported donations. 11 Cardozo wanted to show
these documents to Trie to impress upon him that the donations
would be made public. 12
---------------------------------------------------------------------------
\11\ Id. at p. 35.
\12\ Id. at pp. 38-39.
---------------------------------------------------------------------------
Schwartz arrived at the meeting in less than five minutes.
During the meeting, Trie told Cardozo and Schwartz that he was
helping to organize a major fund raiser for the DNC which would
raise $1 million. 13 Trie told Cardozo and Schwartz
that he had a lunch appointment at the Palm Restaurant next
door and that he would return after the lunch. Cardozo and
Schwartz used this period of time to review the checks and
money orders more closely. 14
---------------------------------------------------------------------------
\13\ Id. at pp. 43-44.
\14\ Id. at p. 38.
---------------------------------------------------------------------------
While Trie was at lunch, Cardozo conducted a conference
call with Mr. Katzenbach, co-chair for the Trust, and Bernard
Aidenoff, counsel to the Trust. The three decided that if the
checks appeared to be valid on their face they should be
deposited into the Trust's bank account. 15 Cardozo
and Schwartz studied the checks and money orders and determined
that approximately $70,000 were deficient. For example, some of
the checks were missing names, addresses, or were for an amount
in excess of the Trust's guidelines. 16
---------------------------------------------------------------------------
\15\ Id. at p.48.
\16\ Id. at p.54-55; Deposition of Sally Schwartz, May 6, 1997,
p.40.
---------------------------------------------------------------------------
Upon Trie's return from his lunch at the Palm, Cardozo and
Schwartz returned the deficient checks to him. Trie appeared
confident that he could cure the deficiencies. 17
During this discussion, Trie stated that he did not want his
name mentioned in connection with the contributions. Trie told
them that he was going to be appointed to a federal commission
and was not sure that he was eligible to make a donation.
18 Trie even balked at the idea of mailing the valid
checks and money orders to the bank because he did not want to
put his name and return address on the envelope. Accordingly,
Trie and Schwartz personally delivered the contributions to the
Trust's lock box at NationsBank. 19 After depositing
the funds in the Trust's lock box, the Trust decided to put
them into an interest bearing money market account, commingled
with other contributions. The donations were listed as
``unrestricted'' on internal Trust accounting documents, and
were deemed accepted according to the Trust's own accounting
procedures. 20
---------------------------------------------------------------------------
\17\ Deposition of Michael Cardozo, May 7, 1997, pp. 54-55.
\18\ Id. at pp. 41-42.
\19\ Deposition of Sally Schwartz, May 6, 1997, pp. 41-42.
\20\ Deposition of Michael Cardozo, May 7, 1997, pp. 241-245;
Profit and Loss Statement for the Trust, June 12, 1996 (Ex. 3).
---------------------------------------------------------------------------
A. The Role of Mark Middleton/White House favors for Trie
At some point during the March 21st meeting, Trie stated
that he had gotten Cardozo's name from Susan Levine and had
been directed to Levine by Mark Middleton.21 Susan
Levine is an acquaintance of Cardozo's, and has worked at both
the DNC and the White House during the Clinton
Administration.22 Middleton formerly worked at the
White House as an advisor to former White House Chief of Staff
Thomas ``Mack'' McLarty. After leaving the White House,
Middleton formed Commerce Corp., International, a company
focused on international trade with Asia. Middleton is
currently under investigation regarding his business
transactions in Asia, his fund raising for the Clinton
Birthplace Foundation and his connections to Trie. It has been
widely reported in the press that Middleton and Trie were very
close and traveled together to Taiwan.23
---------------------------------------------------------------------------
\21\ Deposition of Loren Berger, June 23, 1997, pp. 44-45.
\22\ Deposition of Michael Cardozo, May 7, 1997, pp. 30-31.
\23\ ``Mark Middleton; White House Staff,'' USA Today, February 27,
1997, p. 6A.
---------------------------------------------------------------------------
It is unknown whether Middleton knew--at the time he
directed Trie to the Trust--of the questionable nature of the
donations Trie would deliver. He has asserted his Fifth
Amendment rights and refused to talk with Committee
investigators. However, if he did know of the questionable
origin of the contributions, it would explain why he directed
Trie to the Trust as opposed to Clinton/Gore '96, or the DNC,
where the contributions would have received much greater
scrutiny and been subject to FEC guidelines.
In addition to steering Trie to the Trust, Middleton also
helped Trie communicate with the President concerning China/
Taiwan policy. Although Trie did not tell Cardozo or Schwartz
with whom he was having lunch at the Palm on March 21st,
National Security Council documents obtained by the Committee
indicate that his appointment was almost certainly with
Middleton.24 Trie's lunch appointment at the Palm
was at noon. Middleton's office is across the street from the
Palm. At 1:14 pm on the 21st--minutes after Trie's lunch
ended--Middleton faxed a letter from Trie addressed to the
President to Maureen Lewis at the White House who handles the
President's personal correspondence. The letter was faxed from
Middleton's office. These facts suggest that the letter was
passed from Trie to Middleton at the Palm. The cover sheet of
the fax stated in part, ``Dear Maureen: As you likely know,
Charlie is a personal friend of the president from LR. He is
also a major supporter. The president sat beside Charlie at the
big Asian function several weeks ago.'' 25
---------------------------------------------------------------------------
\24\ Letter from Charlie Trie to the President with fax cover sheet
from Mark Middleton, March 21, 1996 (Ex. 4).
\25\ Id. at p. 1.
---------------------------------------------------------------------------
In the letter, Trie expressed concern over U.S.
intervention in tensions arising from military exercises being
conducted by China near the coast of Taiwan. Trie told the
President in his letter that war with China was a possibility
should U.S. intervention continue,
. . . once the hard parties of the Chinese military
incline to grasp U.S. involvement as foreign
intervention, is U.S. ready to face such challenge . .
. it is highly possible for China to launch real war
based on its past behavior in Sino-Vietnam war and Zhen
Bao Tao war with Russia.26
---------------------------------------------------------------------------
\26\ Id. at pp. 2-3.
The National Security Council prepared a draft response to
Trie's letter which was personally reviewed by National
Security Advisor Anthony Lake and forwarded to the President
for his signature. In his response letter, the President
explained the U.S. objectives in the area and tried to ease
Trie's concerns about the situation.27
---------------------------------------------------------------------------
\27\ Letter from the President to Charlie Trie and supporting
memoranda, April 22, 1996 (Ex. 5).
---------------------------------------------------------------------------
While thousands of people write the President and receive
reply letters carrying his signature, few people write letters
that receive the kind of activity and attention within the NSC
that Trie received. Without the testimony of Trie and
Middleton, however, the Committee cannot determine whether the
letter had any connection to the donations to the Trust and/or,
more importantly, whether Trie was acting at someone else's
direction when he wrote the letter to the President.
In addition to this exchange on China/Taiwan policy, Trie
also received two other favors from the White House at or about
the time of his donations to the Trust. First, as discussed in
more detail above in the section on Charlie Trie, Trie was
appointed by the President to the Commission on U.S. Pacific
Trade and Investment Policy--an act which required the
President to expand the Commission's size by signing an
executive order. Trie was appointed to the Commission despite
the fact that his qualifications did not remotely match those
of the other members named to the Commission.28
Trie's appointment was also not made official until four weeks
after his delivery of the donations to the Trust.
---------------------------------------------------------------------------
\28\ List of names and occupations of members of the Commission,
November 8, 1995 (Ex. 6).
---------------------------------------------------------------------------
Additionally, and as discussed more fully above, Trie was
also successful in gaining admission to a White House coffee
with the President for Chinese arms dealer Wang
Jun.29 The coffee took place on February 6, 1996,
just weeks before Trie began gathering the donations from the
Buddhist sect that he would eventually deliver to the Trust.
When it was revealed that the President had entertained Wang,
who also serves as an advisor to the Chinese government, the
President admitted that the meeting was ``clearly
inappropriate.'' 30 Without the cooperation of Trie
or Wang Jun the Committee cannot determine whether Trie's
fundraising for the Trust was connected in any way to Wang
Jun's visit.
---------------------------------------------------------------------------
\29\ See previous portion of the section regarding Charlie Trie's
fundraising for the DNC.
\30\ ``Sen. Thompson to Subpoena Delayed White House Files,'' The
Washington Post, July 31, 1997.
---------------------------------------------------------------------------
IV. April 4, 1996 White House Meeting with the First Lady and Harold
Ickes
Following Trie's first visit on March 21, 1996, Cardozo and
the Co-chairs of the Trust decided that the President and First
Lady should be informed of the visit in order to notify them of
the contributions as well as to see if they knew Trie.\31\
Accordingly, Cardozo scheduled a meeting on April 4 with Harold
Ickes, White House Deputy Chief of Staff and the White House
supervisor of the President's re-election effort, and Mrs.
Clinton to discuss the Trie-related contributions to the Trust.
Cardozo began the meeting by telling the First Lady that
someone from Arkansas had delivered a large number of checks to
the Trust and asked her to guess who it was. When she failed to
do so, Cardozo mentioned the name Charlie Trie. Mrs. Clinton
hesitated, then recalled him as the owner of a restaurant in
Little Rock frequented by then Governor Clinton. Cardozo
explained that the donations were primarily from Asian-
Americans and that the co-chairs had decided to deposit the
money and determine whether or not the checks and money orders
were indeed eligible. Mrs. Clinton agreed that the Trust should
be diligent in determining the eligibility of the
contributions.\32\ In this regard, Cardozo mentioned that he
had learned through his experiences during Watergate to be wary
of individuals carrying bags of money in Washington,
---------------------------------------------------------------------------
\31\ Id. at p. 50.
\32\ Deposition of Michael Cardozo, May 7, 1997, p. 102.
. . . when people drop large sums of money off in
manila envelopes in Washington, D.C., you've got to be
very careful about how you handle those funds.\33\
---------------------------------------------------------------------------
\33\ Id. at p. 73.
Both he and Mrs. Clinton discussed their Watergate experiences
during this April 4 meeting.\34\
---------------------------------------------------------------------------
\34\ Id. at pp. 73, 75.
---------------------------------------------------------------------------
Cardozo testified that he probably took a copy of the
Trust's bi-annual report to the meeting.\35\ He concluded this,
in part, because Harold Ickes' notes of the April 4th meeting
include the notation ``Total contributions Less ineligible.''
\36\ The bi-annual report which the Trust released to the press
every six months contained the following reporting line:
---------------------------------------------------------------------------
\35\ Id. at p. 78.
\36\ Handwritten notes of Harold Ickes, April 4, 1996 (Ex. 7).
---------------------------------------------------------------------------
Statement of Receipts and Expenditures
July 1, 1995-December 31, 1995
Receipts:
Total Contributions................................... $107,739
Less Ineligible Receipts.............................. (2,202)
--------------------------------------------------------------
____________________________________________________
Net Receipts...................................... 105,537
This entry noted the total contributions received in the six
month reporting period as well as the contributions which were
ineligible and, thus, returned. The existence of that
particular language in the Ickes' notes is important because it
likely indicates that at the April 4 meeting Ickes, Cardozo and
Mrs. Clinton discussed the fact that even if the Trie-related
contributions were returned, their existence would be easy to
ascertain from the bi-annual report scheduled to be released in
July 1996. Cardozo admitted that the returned contributions, if
publicly disclosed, would have been a major press story.\37\ As
discussed more fully below, the Trust, with White House
knowledge, subsequently changed its reporting format to omit
any disclosure of returned contributions.
---------------------------------------------------------------------------
\37\ Deposition of Michael Cardozo, May 7, 1997, pp. 141-142.
---------------------------------------------------------------------------
Cardozo could offer few other details about the April 4
White House meeting. He testified that he did not tell Ickes or
the First Lady about Trie's Presidential appointment to the
federal commission or his involvement in organizing the DNC
fundraiser because he did not think they were important.\38\
Significantly, at the meeting Ickes apparently did not indicate
any knowledge of Trie despite the fact that by most accounts
Ickes ran the DNC from the White House and Trie was a DNC
Managing Trustee.\39\
---------------------------------------------------------------------------
\38\ Testimony of Cardozo, July 30, 1997, p. 28.
\39\ Meaning that he raised or contributed at least $100,000; see
section of the report regarding White House control of the DNC.
---------------------------------------------------------------------------
V. The Trust Investigates the Trie Donations
In the weeks following Trie's initial visit and Cardozo's
April 4 meeting at the White House, Sally Schwartz reviewed the
checks and money orders more closely to determine whether they
met the Trust's guidelines. She found that some of the money
orders were sequentially numbered (meaning they had been
purchased at one location), but were filled out by people from
different parts of the country. In addition, a number of the
checks had the same misspelling of the word ``presidential,''--
spelled instead ``presidencial.'' She also found that some of
the checks were written by one person on behalf of another in
violation of the Trust's guidelines.\40\
---------------------------------------------------------------------------
\40\ Deposition of Sally Schwartz, May 6, 1997, pp. 66-67.
---------------------------------------------------------------------------
Schwartz telephoned some of the donors directly to
determine whether they had in fact given their own money. She
was told about large meetings at which the contributions were
gathered. Eventually she learned about a Buddhist organization,
Ching Hai, which had hosted the meetings, and she became
concerned that some of the donors may have been coerced into
making donations.\41\ The more Schwartz looked into the Trie-
related donations, the more it became apparent that the Trust
needed outside help to investigate the matter.
---------------------------------------------------------------------------
\41\ Id. at p. 137.
---------------------------------------------------------------------------
A. The Trust Hires Investigative Group Inc.
As a result of Schwartz's internal investigation, Cardozo
determined that the Trust should hire the Investigative
Group,Inc. (IGI), a private investigative firm, to investigate the
donations. On April 22, 1996, Cardozo held a conference call with the
Trustees to gain their consent to hire IGI. The Trustees consented, but
also raised a number of concerns. Elliott Richardson, former U.S.
Attorney General, observed that,
from a political point of view that we have a
relatively desultory fund with only a trickle of money
coming in and suddenly a big wave of Asian-American
money comes in, in the wake of a number of fairly
visible administration actions involving Asia in
general and Taiwan in particular.\42\
---------------------------------------------------------------------------
\42\ Transcript of Trustees' conference call, April 22, 1996, p. 2
(Ex. 8).
Similarly, John Brademus, former Congressman from Indiana,
---------------------------------------------------------------------------
raised the following concern:
One question . . . I would raise, but I hope Terry
Lenzner [of IGI] could look into is . . . do [the
donors] have a common position or can we find if there
is some leader of a group . . . that has views on let's
say continuation of MFN [Most Favored Nation status] or
termination of MFN . . . some political agenda behind
what they are doing? \43\
---------------------------------------------------------------------------
\43\ Id. at p. 4. Mr. Cardozo responded, ``Well I think we can ask
the Investigative Group to do that and I think at some point we can ask
Mr. Trie to come to a meeting and share with him some of our concerns .
. .'' Id.
Ronald Olson, an attorney from Los Angeles, suggested that
``someone in the California Asian community and I would think
the Taiwanese would be very, very prominent in this . . . I
think I would try to get beyond Mr. Trie.'' \44\ Yet, despite
the fact that these legitimate questions and concerns were
raised by the Trustees, IGI was never requested to look into
any of these matters.
---------------------------------------------------------------------------
\44\ Id. at p. 1.
---------------------------------------------------------------------------
Following the April 22 Trustee conference call, Cardozo and
Darryl Libow, counsel for the Trust, met with Terry Lenzner and
Garrick Tsui of IGI. Cardozo explained the events that had
transpired at the Trust and asked IGI to investigate the Trie-
related contributions.\45\ However, the one person Cardozo
specifically instructed IGI not to talk to was Charlie
Trie.\46\ Cardozo explained that one reason for this
instruction was that the Trust was limited to a $5,000
investigation budget.\47\ However, he acknowledged that Trie's
office in Washington, D.C. was only blocks from IGI and, thus,
a visit by an IGI investigator would have cost very little,
---------------------------------------------------------------------------
\45\ Deposition of Terry F. Lenzner, June 23, 1997, pp. 13-14.
\46\ Id. at p. 14.
\47\ Deposition of Michael Cardozo, May 7, 1997, pp. 98, 104.
Mr. Tipps: And on the matter of cost--by the way, Mr.
Trie's office was at the Watergate office building,
right?
Mr. Cardozo: That's what his business card said.
Mr. Tipps: Right. And IGI--I am not from Washington,
but I believe it is on Connecticut Avenue?
Mr. Cardozo: That's correct.
Mr. Tipps: And that is about a $5 cab ride?
Mr. Cardozo: That's correct.\48\
---------------------------------------------------------------------------
\48\ Cardozo testimony, p. 36.
He also expressed a reluctance to talk with Trie because he was
a friend of the Clintons.\49\ Whatever the reason, the failure
of those investigating the Trie-related donations to sit down
with Trie and ask him directly about the donations--and
specifically their origin and whether he was receiving anything
in return--is one of the more curious and troubling facts
related to this entire episode.
---------------------------------------------------------------------------
\49\ Deposition of Michael Cardozo, May 7, 1997, p. 104.
---------------------------------------------------------------------------
Another strange, and as-yet-unexplained fact, uncovered by
the IGI investigation was the possible role of longtime Clinton
friend and Lippo Group associate Joe Giroir in the Trust
matter. Loren Berger, an IGI investigator, interviewed Sally
Schwartz as part of the IGI investigation. Berger's notes of
the meeting indicate that at some point in the discussion about
the Trie donations the name ``Joe Giroir'' was mentioned. The
name appears in Berger's notes along with the name Mark
Middleton.\50\ However, when deposed by Committee attorneys,
neither Schwartz nor Berger could remember anything about
Giroir or even the context in which his name was mentioned.
Giroir is an attorney in Little Rock, Arkansas and a former
partner of the First Lady with the Rose Law Firm. His company,
Arkansas International Development Corp., is closely associated
with the Lippo Group and the Riady family, and Giroir was
active in trying to place John Huang at the DNC. The
Committee's complete findings regarding Giroir are included
elsewhere in this report.
---------------------------------------------------------------------------
\50\ Handwritten notes from Loren Berger, undated (Ex. 9).
---------------------------------------------------------------------------
B. The Rose of the Ching Hai Buddhist Sect
During its investigation, IGI conducted extensive computer
information searches, interviewed numerous donors
telephonically, and contacted several experts on cults and
religious sects. Based on these efforts, IGI determined that
Trie likely laundered some or all of the funds through members
of the Ching Hai Buddhist sect to the Trust and that many sect
members were, in fact, coerced into making the donations.
The Ching Hai Buddhist organization is headed by the
Supreme Master Suma Ching Hai. According to IGI's findings and
other published information, the Supreme Master studied
Buddhism in Taiwan, where she maintains her headquarters. Aside
from leading the sect, she also designs her own line of clothes
and conducts fashion shows.\51\ She encourages her followers to
make donations to and purchase items from Ching Hai.
Notwithstanding her teachings to her followers to focus on the
spiritual and not the material, IGI found that Suma Ching Hai
generally travels and lives in an opulent style. Indeed, IGI
reported that she is considered a fraud by many other Buddhist
groups.\52\ IGI also reported on certain unconventional
practices within the sect, such as the sale of the Supreme
Master's bathwater to her followers (which she apparently
claims has curative properties).\53\
---------------------------------------------------------------------------
\51\ Final report of IGI, stamped ``Draft,'' May 15, 1996, p. 5
(Ex. 10).
\52\ Id. at p. 4.
\53\ Id.
---------------------------------------------------------------------------
As a result of its interviews with experts who had studied
the Ching Hai sect extensively, IGI learned that its
membersoften donate sums to the organization greater than they can
afford.54 IGI concluded that it was highly likely that the
funds donated by members of Ching Hai to the Trust were not given
voluntarily.55
---------------------------------------------------------------------------
\54\ Berger deposition, p. 24.
\55\ Ex. 10.
---------------------------------------------------------------------------
IGI also discovered that the donors to the Trust were
solicited by the Supreme Master at large meetings in Los
Angeles, Houston and New York. Many of the members IGI
interviewed said they did not have check books or sufficient
funds with them at the meetings, so in some cases fellow
members wrote checks on their behalf, and in other cases money
orders were provided and people simply filled them out with
their addresses and social security numbers.56
---------------------------------------------------------------------------
\56\ Berger deposition, p. 24.
---------------------------------------------------------------------------
For obvious reasons, the Committee looked closely at
whether the Ching Hai members reimbursed the sect for the money
orders they had filled out or whether the sect simply funneled
its funds through its members to Trie and ultimately the Trust.
The organizer of the Ching Hai meeting in New York, Zhi Hua
Dong, addressed this issue when he testified before the
Committee on July 31, 1997.
C. Testimony of Zhi Hua Dong
Zhi Hua Dong is a computer systems administrator in the
physics department at Columbia University. He served as the New
York contact member for Ching Hai and was one of the organizers
of a March 16, 1996 meeting of the group in New York. Dong
testified before the Committee and explained how the donations
were gathered at that meeting. A couple of days prior to March
16, Dong was contacted by one of the Supreme Master's
assistants and told to purchase $20,000 in money orders and was
assured that he would be reimbursed for the purchase. He was
not told why the money was needed. Later the same day he
received another call from the same individual and was told to
purchase as many money orders as he could. After contacting a
few other members from the New York area, Dong was able to
purchase $70,000 in money orders.57
---------------------------------------------------------------------------
\57\ Testimony of Zhi Hua Dong, July 31, 1997, p. 151.
---------------------------------------------------------------------------
Dong testified that he and his wife met the Supreme Master
Suma Ching Hai at Kennedy International Airport along with
other sect members.58 Dong's wife, Tracy Hui, drove
Charlie Trie and the Supreme Master into Manhattan. Dong
followed in another vehicle. Upon arriving at the Ritz Carlton
Hotel in midtown, Dong went up to the Supreme Master's room
where he delivered the money orders he had been asked to
purchase. At that time the Supreme Master explained to him that
they were helping President Clinton raise funds for his
personal legal expenses. Trie, who was to be initiated into the
sect at the meeting, was also in the room and wrote down the
full name of the Trust so that people would be able to spell it
correctly on their money orders and checks. Before leaving,
Dong observed the Master removing $20,000-25,000 from the stack
of money orders for sect-related expenses.59
---------------------------------------------------------------------------
\58\ Deposition of Zhi Hua Dong, June 17, 1997, p. 49.
\59\ Dong testimony, p. 153.
---------------------------------------------------------------------------
During the meeting that night, which was held at the Inn at
57th Street, the Supreme Master addressed about 150 new
initiates, all U.S. citizens, and told them that President
Clinton was a good person and needed their help. After
requesting them to contribute to the Trust, the Master turned
to leave the room and to go downstairs to a private meeting.
When some of the new initiates tried to follow her, she turned
and in an angry tone told them to stay put and attend to
business.60 When one of the followers tried to ask a
``spiritual question,'' she angrily told him that it was not
the time for spiritual questions.61 According to
Dong, her tone made some of the members uncomfortable,
---------------------------------------------------------------------------
\60\ Dong Deposition, p. 79-80.
\61\ Dong testimony, p. 170.
The voice was very strong, very strong, you know,
from my perspective, I feel some energy coming out, and
her tone, you know, could make people uncomfortable . .
. there is one person stand up, after Master talked,
stand up, asked a spiritual question regarding the
practice. Master was very angry . . . It's a very
strong voice. That could irritate people.62
---------------------------------------------------------------------------
\62\ Dong deposition, p. 112.
Immediately following the event, Dong went back to the
Master's room at the Ritz-Carlton and helped count the funds
that had been raised. Between sixty and one hundred of the
blank money orders had been filled out by individuals who did
not pay for them.63 The Master added a number of
checks and money orders from another meeting, and, according to
Dong, the total amount finally given to Trie could have been
more than $400,000.64
---------------------------------------------------------------------------
\63\ Dong testimony, p. 158.
\64\ Id. at p. 161.
---------------------------------------------------------------------------
Dong had never met Trie prior to the New York meeting, and
he testified that from the way Trie talked, he was under the
impression that he worked directly for President
Clinton.65 This was the only time Dong was aware of
the Supreme Master ever asking for support for a political
figure.66 Four days after this New York meeting--on
March 20--Trie called Cardozo to set up their initial
meeting.67
---------------------------------------------------------------------------
\65\ Id. at p.163-164.
\66\ Dong deposition, p. 114.
\67\ Id. at p. 24.
---------------------------------------------------------------------------
Dong testified that in May, 1996, Trie called him and asked
him if they could meet at the airport while Trie was changing
planes in New York. At this meeting Trie was very upset because
the Trust was investigating the source of the contributions. He
told Dong that the Trust was being ``very cautious'' because it
was ``an election year.'' 68
---------------------------------------------------------------------------
\68\ Dong testimony, p.163.
---------------------------------------------------------------------------
Several weeks after the event, Dong contacted the Ching Hai
headquarters in Taiwan requesting that he and his fellow
membersbe reimbursed for the $70,000 in money orders that they
had purchased with their own money. Dong testified that up to this
point he had received little or no reimbursement from the individual
members. Dong and the other members who had advanced funds for the
money orders were eventually reimbursed by the sect in three wire
transfers, one for $20,000 from Taiwan, one for $30,000 from Cambodia
where the sect had a chapter, and the balance in a wire transfer from
Los Angeles chapter.69
---------------------------------------------------------------------------
\69\ Id. at p.165.
---------------------------------------------------------------------------
VI. May 9, 1996 White House Meeting
After receiving the initial investigative report from IGI,
including information about the Ching Hai Buddhist group,
Cardozo scheduled another meeting at the White House for May 9,
1996 to again discuss the Trie donations.70 The
meeting was attended by Cardozo, Schwartz and Libow on behalf
of the Trust, and Harold Ickes, Jack Quinn, White House
Counsel, Bruce Lindsey, Deputy White House Counsel, Cheryl
Mills, Deputy White House Counsel, Evelyn Lieberman, Deputy
Chief of Staff, and Maggie Williams, Chief of staff to the
First Lady, on behalf of the White House. Cardozo did not know
why it was necessary to meet with so many senior members of the
White House staff, especially in light of his insistence that
the Trust operated independent of the White House.71
The White House apparently made the decision as to which staff
members would attend.
---------------------------------------------------------------------------
\70\ On April 24, 1996, Trie visited the Trust for the second time.
He met with Cardozo and Schwartz and brought a shopping bag with him.
Cardozo testified that when he saw Trie approach he thought to himself
``Oh my God, he's got a million dollars.'' In fact, Trie had an
additional $179,000 for the Trust. Because the Trust was investigating
the first batch of donations, Cardozo refused to accept the donations.
Because IGI had been specifically instructed by Cardozo not to
interview Trie, they had instead prepared a list of questions to be
asked of Trie at the April 24 meeting in order to gain a better
understanding of the source of the donations. However, neither Cardozo
nor Schwartz asked any of IGI's questions at the meeting. Deposition of
Michael Cardozo, May 7, 1997, pp. 129-130.
\71\ Id. at p. 115.
---------------------------------------------------------------------------
During the May 9 meeting, Cardozo explained the key facts
surrounding Trie's donations to the Trust, and called upon
Libow, the Trust's attorney, to provide the group with a
summary of IGI's findings regarding Ching Hai and its leader,
Suma Ching Hai. Libow described IGI's findings in great detail
including their conclusion that at least some of the donations
may have been coerced.72
---------------------------------------------------------------------------
\72\ Id. at pp. 155-156. IGI's conclusion was ultimately proven
correct when in July Cardozo received a letter from Ching Hai member
David Lawrence. Cardozo circulated the letter to all of the people who
had attended the May 9 meeting, as well as Mrs. Clinton. The Lawrence
letter confirmed that in fact many of the donors did not contribute
their own funds:
Unfortunately as you suspected, the funds were raised by
the efforts of a concerned party who was unaware of some of
the terms mentioned in your letter. In particular, none of
those in the private association involved in the fund
raising knew that the individual U.S. citizen donors were
required to use only their own funds. In my case, $500
given by money order was advanced by the association or its
leader and not reimbursed by me. We were led to believe
that reimbursement was optional. I am sure that none of the
members or leadership of the association knew otherwise. In
addition, I was not made aware of the other terms mentioned
in your letter. I was not aware that the Trust ``will make
---------------------------------------------------------------------------
periodic public reports of fund contributors.''
Letter from David Lawrence to the Trust, July 5, 1996, p. 2 (Ex. 11).
The group discussed the pros and cons of returning the
donations and the type of press coverage such a story would
generate.73 Mills raised the question of whether
returning the money would be seen as some sort of
discriminatory act against Asian-Americans, but in the end the
group supported the Trustees preliminary recommendation to
return the money.74
---------------------------------------------------------------------------
\73\ Deposition of Michael Cardozo, May 7, 1997, p. 161-163.
\74\ Id. at p. 155.
---------------------------------------------------------------------------
Significantly, Cardozo testified that soon after the
meeting started Bruce Lindsey entered the room, heard Trie's
name mentioned, and commented that he knew Trie from Little
Rock and that he knew Trie was ``involved with the Democratic
Party.'' 75 Ickes was present when the comment was
made, but said nothing in response.76 Furthermore,
despite the fact that Ickes was supervising the President's re-
election effort from the White House, he apparently failed to
make any inquiry into Trie's fundraising activities with the
DNC.
---------------------------------------------------------------------------
\75\ Id. at p. 175.
\76\ Id.
---------------------------------------------------------------------------
A. Ickes' Failure to Notify the DNC
Lindsey was correct on May 9th that Trie was ``involved''
with the Democratic Party. In fact, he was a Managing Trustee
of the DNC (meaning he contributed or raised at least
$100,000). Ickes' was also involved with the DNC. In fact,
according to some witnesses, Ickes was calling the shots on a
day to day basis at the DNC.77 Yet, despite his
leading role with the DNC, Ickes failed to notify anyone at the
DNC that a major DNC donor and fund raiser was involved in
highly questionable fund raising for the Trust. According to
DNC Chairman Don Fowler, ``If we had known about the problems
with Trie earlier, we could have done something. I wish that I
had known that.'' 78 Instead, the DNC was ultimately
forced to return $645,000 in funds contributed or raised by
Trie.79 Indeed, the first time Ickes mentioned the
issue to anyone at the DNC was during a telephone conversation
with B.J. Thornberry, Executive Director at the DNC, in
October, 1996--after the fundraising controversy had broken in
the press. Ms. Thornberry raised questions with Ickes regarding
whether John Huang had been truthful with the DNC.80
Ickes responded by telling her that if she had those concerns
she should also check out Charlie Trie and talk to Bruce
Lindsey about him.
---------------------------------------------------------------------------
\77\ Deposition of Donald Fowler, May 21, 1997 pp. 61-62. A
complete discussion of Ickes' role in the DNC can be found in the
section of this report on White House control of the DNC.
\78\ ``What Clinton Knew,'' Los Angeles Times, December 21, 1997,
Sec. A, p. 1.
\79\ Deposition of David Mercer, May 14, 1997, p. 240.
\80\ Deposition of B.J. Thornberry, May 20, 1997, p. 114.
Q: What did Mr. Ickes say to you?
A: Mr. Ickes said two things to me. He said that if I
had concerns about John Huang that I also might want to
check out contributions from Charlie Trie, and he said
also that I might want to have the same conversation
with Bruce Lindsey.81
---------------------------------------------------------------------------
\81\ Id. at p. 114.
Mr. Ickes was not alone in his failure to follow up on
Trie's actions with regard to the Trust. White House personnel,
including the President, not only failed to notify the DNC of
Trie's questionable fundraising practices with the Trust, but
continued to have contact with him. Only four days after the
May 9 White House meeting, the President sat next to Trie at
the head table of a $5,000 per person dinner in
Washington.82 In August, 1996, two months after the
Trust decided to return the Trie-related donations, the
President accepted $110,000 from Trie at an event celebrating
the President's 50th birthday.83 In addition, as
noted above, the President proceeded to appoint Trie to a
federal trade commission and had the NSC prepare a personal
response to foreign policy questions raised by Trie, both after
Cardozo informed the White House and the First Lady about the
questionable Trust donations.
---------------------------------------------------------------------------
\82\ ``What Clinton Knew,'' Los Angeles Times, December 21, 1997,
Sec. A, p. 1.
\83\ Id.
---------------------------------------------------------------------------
vii. trie's final meeting with the trust
On May 17, 1996, Trie visited the Trust for the third and
final time. Cardozo asked Schwartz to meet with Trie alone
because Cardozo no longer wished to have any dealings with
him.84 During the meeting, Trie acknowledged that he
was indeed a member of the Ching Hai sect and that he had
encouraged the Supreme Master to help him raise money for the
Trust.85 Trie also had additional donations which he
said totaled $150,000--bringing the total to $789,000--that he
wished to deliver, but Schwartz refused to accept them because
by the Trust had yet to make a determination regarding the
first delivery of funds.86
---------------------------------------------------------------------------
\84\ Deposition of Michael Cardozo, May 7, 1997, p. 190-192.
\85\ Deposition of Sally Schwartz, May 6, 1997, p. 211.
\86\ Id. at p. 210.
---------------------------------------------------------------------------
viii. the trie-related contributions are returned
The decision to return the Trie-related contributions was
finalized in June, 1996, and the Trust began mailing
contributions back to the contributors.87 However,
it did so with a twist. Notwithstanding IGI's findings about
the involvement of the Ching Hai sect and the likely coercion
exercised on sect members, the Trust sent a cover letter along
with the returned contributions instructing the donors that
they could re-submit their contributions if they met the
Trust's guidelines.88 In other words, despite the
fact that the Trust knew the donations had been, at least in
part, coerced, it was still willing to accept the same money
from the same donors.
---------------------------------------------------------------------------
\87\ Return letter from the Trust to a contributor, June 26, 1996
(Ex. 12); The White House was informed of this decision as the option
had been discussed at the May 9 White House meeting.
\88\ Id.; Deposition of Michael Cardozo, May 7, 1997, p. 212;
Exhibit no. 12.
---------------------------------------------------------------------------
Loren Berger, the IGI investigator who authored the IGI
report, testified before the Committee that she had a theory as
to why the Trust sought to have the donations recontributed in
this manner. She knew that any contributions accepted in the
first six months of 1996 would be made public in the bi-annual
report filed in July 1996, prior to the election. However, if
the donations were returned and the donors then re-submitted
their contributions during the second half of 1996, the
``recontributions'' would not be made public until the next
reporting period--January 1997, after the election. Berger
theorized that by returning the contributions and allowing them
to be re-submitted after the first reporting period of 1996 had
passed, the Trust could effectively receive the funds and avoid
making them public until after the election.89 The
only flaw in Ms. Berger's theory was that the bi-annual report
had historically disclosed not just contributions, but returned
contributions as well, which would mean the story would have
become public prior to the election anyway. However, as
discussed below, the Trust changed its public reporting method
to avoid disclosing the return of the Trie-related
contributions.
---------------------------------------------------------------------------
\89\ Berger Deposition, pp. 84-85. Cardozo denied any such plan,
although he was unable to offer any logical explanation for why the
Trust would agree to accept tainted funds from the original donors,
knowing that the donations had been coerced in the first place.
---------------------------------------------------------------------------
ix. the bi-annual report is changed to keep the trie donations secret
Work on the mid-1996 bi-annual report began in the first
week of July 1996. The purpose of the report was to record the
activities of the Trust for the first half of 1996 and to make
them public at a press conference held in August. All previous
bi-annual reports submitted by the Trust since its inception
had listed ``total contributions'' received by the Trust during
the six month period and subtracted ``ineligible
contributions'' that had been returned during that same
period.90 However, in mid-1996 the Trust changed the
format of the bi-annual report so that only ``contributions
accepted'' by the Trust were listed. The Trust eliminated the
return line and rationalized that any contributions received
and returned within the six month period were never
``accepted'' and, thus, need not be disclosed. This was a
marked departure from the way returns had been accounted for
historically.91
---------------------------------------------------------------------------
\90\ Ex. 2.
\91\ Ex. 1.
Cardozo and Schwartz both admitted that the reason for the
deletion of the return line in the mid-1996 bi-annual report
was to keep the Trie-related donations from becoming
public.92 The net effect of this accounting change
was to treat the Trie-related contributions as if they had
never occurred.93
---------------------------------------------------------------------------
\92\ Testimony of Michael Cardozo, July 31, 1997, pp. 47-48;
Deposition of Sally Schwartz, May 6, 1997, p.283.
\93\ Even though Cardozo admitted the effect of the change was to
hide the existence of the Trie-related donations, he testified that the
real reason for the change was to clarify the Trust's accounting
procedures. Schwartz, however, admitted the reason for the change was
the Trie-related contributors. Deposition of Michael Cardozo, May 7,
1997 p. 246; Deposition of Sally Schwartz, May 6, 1997, p.283.
---------------------------------------------------------------------------
On August 14, 1996, the Trust held a press conference to
release the bi-annual report. Cardozo was specifically asked by
a reporter whether there were any contributions returned
because they came from someone who was ``unsavory or anything
like that.'' Cardozo said, ``No.'' 94 Cardozo
testified that he gave this answer to protect the privacy of
the donors and the credibility of the Trust.95 In
other words, if he had answered yes, the Trie-related matter
would have become public at that time.
---------------------------------------------------------------------------
\94\ Transcript of August 14, 1996 press briefing, p. 19 (Ex. 13).
\95\ Deposition of Michael Cardozo, May 8, 1997, p. 10.
---------------------------------------------------------------------------
In addition to the accounting change in the bi-annual
report, the Trust also revised the Quarterly Report that was
routinely sent to the President and which contained the names
of the donors to the Trust for the previous three months. On
April 25,the President received a list which included the Trie-
related donors. 96 Three months later that report was
``superseded'' by a subsequent report which omitted the names of those
donors. 97 The President, therefore, was not only aware of
the original Trie-related donors, but was also aware that their
donations had been returned.
---------------------------------------------------------------------------
\96\ Original Quarterly Report sent April 25, 1996 (Ex. 14).
\97\ Supplemental Quarterly Report omitting the names of the Trie-
related donors sent June 26, 1996 (Ex. 15).
---------------------------------------------------------------------------
That the White House knew of the accounting change in the
bi-annual report is also beyond dispute. First, a simple
comparison between the mid-1996 bi-annual report and all
previous bi-annual reports would have disclosed the change.
Moreover, it is inconceivable that the matter was not discussed
at one of the White House meetings concerning the Trie
contributions. In fact, Harold Ickes' notes from both the April
4th and May 9th White House meetings suggest that the matter of
how to report the returned contributions was discussed.
98 Additionally, as addressed below, notes taken by
Cardozo the day after the Trie contributions were finally made
public suggest that White House counsel had approved of the
manner of disclosure in the mid-1996 bi-annual report, and
wanted to avoid any public disclosure of the Trie matter until
at least after the election.
---------------------------------------------------------------------------
\98\ Ex. 7.
---------------------------------------------------------------------------
X. The Resubmitted Contributions are Returned/Trie's Growing Notoriety
During the period of August through October 1996, the Trust
began receiving ``recontributions'' from the original Trie-
related donors. Cardozo and Schwartz noticed that the
occupations of many of the donors were inconsistent with the
amounts they were giving. Students, hairstylists and others
were making $1,000 donations which once again raised the
question of whether they were contributing their own funds.
99
---------------------------------------------------------------------------
\99\ Deposition of Michael Cardozo, May 7, 1997, p. 320-321.
---------------------------------------------------------------------------
On November 8, 1996, Cardozo conducted a conference call
with the Trust's Co-Chairs regarding the re-submitted
contributions. They discussed the questions raised by the
donors' occupations, the letter from David Lawrence which
confirmed that Ching Hai members had signed checks and money
orders using someone else's money, and Trie's recent notoriety
in the press in connection with John Huang and the growing DNC
fundraising controversy. The group decided to re-engage IGI to
investigate the resubmitted contributions to determine whether
they too should be returned. However, there was no discussion
of making Trie's relationship to the Trust public during the
conference call. 100
---------------------------------------------------------------------------
\100\ Deposition of Michael Cardozo, May 7, 1997, pp.320-321.
---------------------------------------------------------------------------
On November 14, 1996, Cardozo, Schwartz and Libow once
again met at the White House with senior White House aides Jack
Quinn, Cheryl Mills, Evelyn Lieberman and Bruce Lindsey.
Cardozo informed them that IGI had once again been retained to
examine the re-submitted contributions and that questions had
been raised about the donors' occupations, as well as Trie's
involvement with John Huang the DNC. Cardozo informed them that
the Trust was inclined to return these contributions as well.
101
---------------------------------------------------------------------------
\101\ Deposition of Michael Cardozo, May 8, 1997, pp.77-78.
---------------------------------------------------------------------------
While Cardozo testified that the impetus for returning the
resubmitted contributions was the information about the donors'
occupations, this does not square with the other evidence
presented to the Committee. 102 First, information
regarding the occupations of the donors who were resubmitting
contributions had surfaced as early as July. 103
Second, IGI investigator Loren Berger testified that there was
no new information about the donors that the Trust did not have
when it decided to return the first round of contributions in
June 1996. 104 The real reason the Trust returned
the ``recontributions'' appears instead to be the public
notoriety Trie was receiving in the Fall of 1996 for his
involvement in the DNC fundraising controversy and his
relationship to John Huang and the Riady family. Yet,
notwithstanding Trie's growing role in the fundraising matter,
neither the White House nor the Trust, prior to the 1996
election, publicly disclosed the White House's substantial
involvement with Trie or Trie's attempt to deliver over
$700,000 in laundered contributions to the Trust. Indeed, from
handwritten notes taken by Cardozo subsequent to the election,
it appears likely that the White House Counsel's office made a
concerted effort to prevent any public disclosure of the Trie
matter until after the election.
---------------------------------------------------------------------------
\102\ Id. at p. 30.
\103\ Id. at p. 14.
\104\ Berger Deposition, pp. 88-89.
---------------------------------------------------------------------------
XI. Cardozo's Handwritten Notes
As discussed more fully below, the Trust eventually was
forced to disclose the Trie contributions at a press conference
on December 16, 1996. On the following day, Cardozo received
several telephone calls from the press and others which were
reflected on call sheets provided to the Committee.
105 It is apparent from the call sheets and
Cardozo's testimony that the press was questioning him about
why Trie's relationship with the Trust had not been disclosed
in mid-1996 with the bi-annual report. Cardozo's handwritten
notes appear on some of the call sheets. In most instances the
notes are written in the narrative form and contain lines drawn
to a specific reporter. They look and sound like notes of a
question being posed to Cardozo during a phone conversation.
However, in one margin Cardozo wrote, ``In June never came up.
Investigation wasn't complete. WH Counsel: agreed w/
disclosure. Jack, Bruce, Cheryl--not disclose info until after
election. Opposed disclosure.'' 106
---------------------------------------------------------------------------
\105\ Cardozo's handwritten notes on his telephone log, December
17, 1996, p. 5 (Ex. 16).
\106\ Id. at p. 5.
During his testimony at deposition and before the Committee
at public hearing, Cardozo speculated that the notes must have
referred to some question posed by one of the reporters on that
page. However, when pressed on the issue, he could not confirm
this:
Q. Is it your testimony under oath, Mr. Cardozo, that this
is a question posed to you by a reporter?
A. I don't know precisely what it refers to. 107
---------------------------------------------------------------------------
\107\ Testimony of Michael Cardozo, July 31, 1997, p. 109.
* * * * *
---------------------------------------------------------------------------
Mr. Tipps: Mr. Cardozo, you and I talked about these notes
in your deposition. Do you recall that?
Mr. Cardozo: Yes, I do.
Mr. Tipps: And you said here today that this was a
reporter. Can you tell us which reporter on that exhibit asked
you this?
Mr. Cardozo. No, I cannot be certain which reporter
it was.108
---------------------------------------------------------------------------
\108\ Id. at p. 108.
While Cardozo's speculation might be accurate, it appears from
the evidence, taken as a whole, that a much more likely
interpretation is that Cardozo was simply talking with someone
from the White House and lamenting all the questions he was
being bombarded with from the press concerning the timing of
the disclosure about Trie. The White House aide, in turn, was
simply stating what he or she knew about that issue and Cardozo
wrote it down. The notes are not written as though it is a
question being posed to him from a reporter. Moreover, the
notes are not connected with any particular reporter but are,
instead, bracketed or walled off in a manner that suggests
their separateness from the list of reporters. Additionally the
notes themselves do in fact explain what was going on at the
White House in the pre-election time frame. The phrase ``In
June never came up'' likely refers to the fact that in June
1996 Trie had not become a public figure connected to the DNC
fundraising controversy. The phrase ``W.H. counsel: agreed on
disclosure'' likely refers to the fact that the White House
counsel's office (many of whom were at the May 9 White House
meeting) agreed with the method of disclosure used in the mid-
1996 bi-annual report which omitted any reference to returned
contributions. Finally, the phrase ``Jack, Bruce, Cheryl--not
disclose info until after election'' speaks for itself. Cardozo
admitted that this note referred to Jack Quinn, Bruce Lindsey
and Cheryl Mills--all White House Counsel and all attendees at
the May 9 White House meeting. Indeed, at the bottom of the
this page of notes, also in Cardozo's handwriting, are the
names Mike McCurry and Lanny Davis, both senior White House
aides who would have been privy to this information. Cardozo
admitted during public hearing that he spoke to both of
them.109
---------------------------------------------------------------------------
\109\ Id. at p. 110. Furthermore, this interpretation of Cardozo's
notes is consistent with subsequent press reports indicating that the
Trie-related contributions were kept away from key White House
personnel for fear that they might make the story public. The Los
Angeles Times has reported that Trie's relationship with the Trust was
intentionally kept from Jane Sherburne, former Special Counsel to the
President, and Mark Fabiani, former White House counsel in charge of
press inquiries about Whitewater, until at least after the election
because they were known to be advocates of disclosing negative stories
rather than trying to hide them. Jane Sherburne was interviewed by the
Committee and confirmed that she was not notified about the Trie-
related contributions until after Trie's name surfaced in the press.
Memorandum of interview of Jane Sherburne, September 19, 1997, p. 13.
---------------------------------------------------------------------------
XII. Trie's Relationship with the Trust is Made Public
The Trust and the White House kept the Trie story private
until after the election, but their hopes of keeping it out of
the public completely ended with a phone call in December from
a reporter working on a story for NBC News. Once Cardozo
realized the story was going to become public, he worked
closely with the White House to make sure that it was released
on their terms and with their spin.
A. Cardozo's Call From John Mattes
On December 2, while on a business trip to Los Angeles,
Cardozo was informed by his office that he had received a
telephone call from John Mattes. When Cardozo called him back,
Mattes informed him that he was working on a story for NBC News
regarding a large number of contributions from Asian-Americans
to the Trust which had been returned. He also told Cardozo that
the producer he was working with was a Mr. Oetgen. He was aware
of the donors' association with Ching Hai, but gave no
indication that he was aware of Charlie Trie's
involvement.110
---------------------------------------------------------------------------
\110\ Deposition of Michael Cardozo, May 8, 1997, p.52.
---------------------------------------------------------------------------
Cardozo told Mattes that he was in conference and would
have to contact him later. Cardozo immediately called Cheryl
Mills, Deputy White House counsel, and set up a meeting the
next day at the White House to discuss the
matter.111
---------------------------------------------------------------------------
\111\ Id. at p. 49.
---------------------------------------------------------------------------
B. The December White House Meetings
On December 4, and December 11, Cardozo, Schwartz and Libow
once again met at the White House with senior White House aides
Quinn, Lindsey, Mills, Lieberman and Williams. The group
discussed the telephone call from Mattes and logistically how
the Trust should go about making the story public. In the
December 4 meeting, Cardozo told the the White House employees
about his call from Mattes and expressed his concern that if
the story was to go public he wanted to make sure that the
Trust was able to tell the story from its perspective. Mills
advised Cardozo to call Oetgen to see if Mattes was ``for
real'' before making any arrangements to make the story public.
This was the first meeting at which making the story public was
discussed or even contemplated.112
---------------------------------------------------------------------------
\112\ Id. at p. 57.
---------------------------------------------------------------------------
Following the December 4 meeting, Cardozo called Oetgen and
found out that Mattes was indeed working on a story for NBC.
Both Cardozo and Oetgen were planning to be out of town in the
near future, so they agreed that Oetgen would call back the
next week to follow-up on the story. Oetgen, however, failed to
call the next week.113 Nonetheless, as a result of
the call from NBC, Cardozo, with help from the White House,
proceeded with plans to make the Trie story
public.114
---------------------------------------------------------------------------
\113\ Id. at p. 56.
\114\ Id. at p. 57.
---------------------------------------------------------------------------
Having determined that Mattes was ``for real,'' another
meeting was held at the White House on December 11 to decide
how to disclose the story publicly. The White House aides
determined that the best method was a press conference and they
suggested that Cardozo contact Mark Fabiani, a former White
House counsel who had handled press inquiries regarding
Whitewater, for help in making logistical
decisions.115
---------------------------------------------------------------------------
\115\ Id. at p. 67.
---------------------------------------------------------------------------
Following the meeting, Cardozo called Fabiani on two
occasions and took notes of the conversations. Included in
thenotes is a reference to NBC which reveals that the call from Mattes
was indeed the impetus behind the decision to go public--``NBC changes
everything, could come back with a lot more info.'' 116
Another portion of Cardozo's notes states, ``Trie is a big-time player,
Daschle, Congress.'' 117
---------------------------------------------------------------------------
\116\ Cardozo's handwritten notes of conversation with Fabiani,
December 12, 1996, p. 1 (Ex. 17).
\117\ Cardozo's handwritten notes of conversation with Fabiani,
December 11, 1996, p. 2 (Ex. 18).
When asked what this meant, Cardozo said that Fabiani was
aware that Trie was well known on Capitol Hill and had raised
money for several Democratic members of Congress.118
Cardozo and Fabiani also discussed whether NBC should be
contacted prior to the press conference since they were
preparing a story, however NBC was not contacted.119
---------------------------------------------------------------------------
\118\ Deposition of Michael Cardozo, May 8, 1997, p. 100.
\119\ Id. at p. 88; Ex. 17.
---------------------------------------------------------------------------
C. The December 16, 1996 Press Conference
Cardozo scheduled the press conference for December 16,
1996, less than two weeks after first speaking with
Mattes.120 With regard to the NBC story, the
following exchange of questions and answers took place:
---------------------------------------------------------------------------
\120\ Id. at pp. 66, 69-70.
A Participant. Are you aware, sir, of a story being
prepared at this moment, prior to this calling of this
conference today?
Mr. Cardozo. No.
A Participant. In other words, are you trying to head
off a story that was thought to be----
Mr. Cardozo. No.121
---------------------------------------------------------------------------
\121\ Transcript of December 16, 1996 press conference (Ex. 19) p.
38.
Cardozo did not explain to the press that the impetus for the
press conference was the call from Mattes or that there had
been no discussion and no intention whatsoever of making the
donations public prior to that call. Cardozo later testified
before the Committee that at the time this question was posed
he did not think NBC was working on the story since Oetgen had
not called him back.
Although Cardozo was aware from press accounts that Trie's
fundraising activities were being investigated by the Justice
Department, he made no attempt to notify them of Trie's
activities concerning the Trust until two days prior to the
press conference.122
---------------------------------------------------------------------------
\122\ Deposition of Michael Cardozo, May 8, 1997, p. 164.
---------------------------------------------------------------------------
XIII. CONCLUSION
As a result of its investigation into Trie's activities
with the Trust, the Committee gained further insight into
Trie's close relationship with the White House, and how, as a
major fundraiser, Trie raised and laundered contributions for
the benefit of the President and First Lady. The evidence
uncovered by the Trust's own investigators reveals that the
donations were laundered through members of a controversial
Buddhist sect, many of whom were coerced into making the
donations. The evidence also reveals that senior members of the
White House staff were informed of this disturbing fact, yet
still acquiesced in a plan to have the donations returned to
the contributors, and then resubmitted to the Trust. This plan
soon became untenable because of Trie's sudden notoriety over
his relationship with John Huang and the growing DNC
fundraising controversy. Rather than publicly disclosing Trie's
involvement with the Trust, however, the White House sought to
keep the matter secret until after the presidential election.
Moreover, despite all of the warning signs they were given,
these same White House aides, particularly Harold Ickes and
Bruce Lindsey, made no effort whatsoever to alert the DNC that
a major DNC fundraiser was involved in money laundering with
the Trust.
The investigation also demonstrated that Trie was granted
several special favors by the White House at or about the same
time that he was raising and delivering the questionable funds
to the Trust. One question which remains unanswered is whether
these favors--the appointment of Trie to the trade commission,
Wang Jun's invitation to meet personally with the President, or
the personal reply letter from the President prepared by the
NSC explaining U.S. foreign policy--were linked in any way to
the Trust donations. These same types of questions were raised
by the Trustees in their initial meetings concerning Trie.
Inexplicably, neither the Trust nor the White House ever made
any attempt to investigate these matters. Because Trie had fled
to China during the course of the Committee's investigation and
did not return until early February 1998, and Mark Middleton
has asserted his Fifth Amendment privilege against self-
incrimination, the Committee could not conclusively answer
these questions.
The Saga of Roger Tamraz
The testimony of Roger Tamraz provided the Committee with
the chance to hear from an unrepentant access-purchaser. The
hearing at which he appeared revealed efforts by officials of
the DNC to reverse National Security Council (NSC) policy
regarding Tamraz's access to the President and pressure NSC
officials to change their position on the merits of Tamraz's
Caspian Sea pipeline scheme.
The Tamraz affair also stands out as one which produced a
genuine hero--or, to be more precise, a genuine heroine. For
despite the ugly window it provides upon high-level venality,
the Tamraz story is also the story of Sheila Heslin, a
courageous NSC staff member who resisted inappropriate and
possibly unlawful attempts by senior officials to change U.S.
Government policy in pursuit of Tamraz's money. This episode
also provides a reminder that despite all such wrongdoing,
there are decent people in government with noble ideals of
public service.
BACKGROUND
Roger Tamraz, an international financier and entrepreneur
in the oil business, is presently wanted by police in at least
two countries. A naturalized American citizen, he has been
ordered by a French court to pay the equivalent of some $ 57
million in connection with the collapse of a French bank and
faces an Interpol arrest warrant for allegedly embezzling
between $154 and $200 million from the failed Al Mashreq Bank
in Lebanon, of which he had been the chairman. In June 1995,
Tamraz--who had left Lebanon in 1989 with the assistance of
Syrian authorities--was also sentenced in absentia to 15 years
in prison by a military court in Lebanon.1 Tamraz
has also been closely involved in business dealings with
Libya's state-controlled National Oil Company, to which he sold
or with which he merged his own Tamoil company.2
---------------------------------------------------------------------------
\1\ Transcribed Interview of Roger Tamraz, May 13, 1997, pp. 4 & 8-
10.
\2\ Alejandra Y. Castillo, memorandum to Donald Fowler, July 12,
1995, p. 2 (Ex. 1).
---------------------------------------------------------------------------
Tamraz acknowledges his various continuing legal problems,
admitting that ``if anyone puts my name in NEXIS-LEXIS, you get
a lot of horror stories.'' 3 Nevertheless, he
maintains that he is entirely innocent of wrongdoing, having
been unfairly persecuted by his enemies because of his efforts
on behalf of ``the U.S. and peace'' and because he was
``portrayed as a Jew, a dirty word in the context in which it
was used.'' 4
---------------------------------------------------------------------------
\3\ Tamraz interview, p. 6.
\4\ Testimony of Roger E. Tamraz, September 18, 1997, pp. 4-6.
According to researchers at the DNC, Tamraz's claimed ``kidnapping''
and ``torture'' in Lebanon--see, e.g., Id. at p. 4--may have arisen out
of the failure of the Al-Mashreq Bank when a commander of a Christian
militia group in Lebanon held Tamraz hostage pending repayment of some
$3 million allegedly lost by that commander when the bank collapsed
because Tamraz used its funds to bankroll his private business
projects. Tamraz had apparently denied paying the $3 million ransom
reportedly demanded of him. See Ex. 1, p. 2.
---------------------------------------------------------------------------
Among Tamraz's business interests is a company called Oil
Capital Limited, which seeks to develop oil pipeline
concessions in the Caucasus. After the collapse of the Soviet
Union, extraordinary possibilities for oil production had
opened up for the huge reserves of the Caspian Sea region.
While governments such as that of the United States worked to
speed this oil to Western markets, to lessen the dependence of
the oil-rich countries of the region upon Russia, and to break
Russia's monopoly upon pipeline transit routes out of the
Caspian,5 international financiers and oil
companies--Oil Capital Limited among them--scrambled to take
advantage of the commercial opportunities presented by a
variety of proposed new pipeline projects.
---------------------------------------------------------------------------
\5\ Testimony of Sheila Heslin, Sept. 17, 1997, p. 4.
---------------------------------------------------------------------------
In mid-1995, negotiations were underway for an ``early''
oil pipeline deal for Caspian oil by the terms of which small
new pipelines would be built--or old ones refurbished--in order
to provide an interim solution to the problem of how to bring
this oil to Western markets. Also underway was a longer-term
project to find a ``final'' pipeline route for Caspian crude
oil. Both the ``early'' and the ``final'' oil projects involved
much debate over optimal pipeline routings; vast potential
profits hung in the balance.6
---------------------------------------------------------------------------
\6\ See generally Memorandum of Interview of Sheila Heslin, May 28,
1997 [redacted and declassified version], pp. 2-3.
---------------------------------------------------------------------------
Unfortunately, the Caucasus also remained a politically and
militarily unstable area, nowhere more so than with respect to
the long-simmering conflict between Armenia and Azerbaijan over
the ethnically-Armenian enclave of Nagorno-Karabakh within
Azerbaijan, a territory over which a bloody war had been fought
between 1990 and 1994. As a result, it became an important
objective of U.S. policy in the region both to facilitate oil
development and to do so in ways that preserved and enhanced
regional stability. Moreover, because certain prior oil
concessions in the Caspian region had been arranged and
executed in part through bribery and corruption--and because
this ``was beginning to destabilize governments in the region
because they were having no money come into their countries''
on account of such illicit diversions 7--it was also
an important objective to ensure that future deals complied
with ``international commercial standards.'' 8
---------------------------------------------------------------------------
\7\ Heslin testimony, p. 10.
\8\ See generally Heslin interview, p. 3; Hesline testimony, p. 10.
---------------------------------------------------------------------------
Tamraz had ambitious plans, however, for his own Caucasian
pipeline. As he put it in a letter to President Gaidar Aliyev
of Azerbaijan, Tamraz proposed a ``tentative agreement which
could be negotiated with Nagorno Karabakh'' by the terms of
which ``[o]il and gas pipelines will be built by Oil Capital
[Limited] from [the Azeri coastal city of] Baku to the
Mediterranean, passing through Nagorno Karabakh, Armenia,
Nakhichivan and Turkey.'' These pipelines would be ``paid for,
owned and constructed by Oil Capital Ltd., Inc,'' and his
company would have the right to purchase five percent of the
resulting consortium.9 In Tamraz's depiction, this
pipeline would help bring peace to Nagorno-Karabakh, in part
through being accompanied by the creation of a demilitarized
``liberated territory'' joined by a corridor to
Armenia.10 Furthermore--and perhaps more
importantly--this plan would make Tamraz very rich: his share
of the proposed Caspian Pipeline Consortium would have been at
least $125 million, and possibly much more.11 As
described below, U.S. foreign policy officials regarded his
plan as unworkable, undesirable, and perhaps even dangerous. It
is clear, however, that the stakes for Tamraz were quite high.
---------------------------------------------------------------------------
\9\ Roger Tamraz, letter to Harry Gilmore, U.S. Ambassador to
Armenia, attaching a May 3, 1995 letter to President Gaidar Aleyev, May
10, 1995, pp. 3-4 (Ex. 2).
\10\ Id., p. 4.
\11\ Heslin interview, p. 3 (giving $125 million figure); Tamraz
testimony, p. 94 (stating that he would have owned ``[m]uch more than 5
percent'' of Caspian pipeline deal).
---------------------------------------------------------------------------
It should be noted in this regard that Tamraz had long
aspired to playing a role in the formulation of United States
foreign policy in areas of the world in which he had business
interests--and had long sought to use political fundraising as
the means by which to do so. As he saw it, political
contributions were a time-tested means to high office in the
United States:
[A] lot of our Cabinet ministers and a lot of our
ambassadors have spent just that amount of money for
just [this] reason . . . . You know, we have got Felix
Rohatyn, who is ambassador in Paris. We have got a Mr.
Rubin who is a Cabinet minister, and they have all
given much more than I have.12
---------------------------------------------------------------------------
\12\ Tamraz testimony, pp. 81-82.
``Usually,'' he explained, ``you don't pick up Madeleine
Albright from her kitchen and make her into Secretary of
State.'' 13 For Tamraz, financial contributions to
political parties lay at the core of the U.S. political
process. Never bothering to vote since becoming an American
citizen in 1989, Tamraz believed himself to possess ``more than
a vote'' by virtue of his campaign contributions.14
Thus did he hope to advance himself and his business interests.
---------------------------------------------------------------------------
\13\ Id., p. 62.
\14\ Id., p. 158-159.
---------------------------------------------------------------------------
In the mid-1980s--with Ronald Reagan in the White House--
Tamraz's hopes of purchasing such a role in U.S. policy
entailed donations to Republican causes. Despite giving enough
money to become a ``Republican Eagle,'' Tamraz received no
response to his overtures from the Reagan Administration; he
could not even gain access to the Reagan White
House.15 Accordingly, Tamraz put his plans
aside.16 At that point, at least, access to U.S.
officials and policy concessions were not for
sale.17
---------------------------------------------------------------------------
\15\ Id., p. 150-51.
\16\ Tamraz interview, pp. 36-37.
\17\ The Minority has tried to make much out of a June 1985 letter
recommending Tamraz for some presidentially-appointed board or
commission ostensibly signed by RNC Chairman Frank Fahrenkopf, Jr. This
letter, however, was not written, authorized or signed by Fahrenkopf.
See Frank Fahrenkopf, letter to Senator John Glenn, Sept. 16, 1997 (Ex.
3).
---------------------------------------------------------------------------
In 1994 and 1995, however, Tamraz received unsolicited
letters from the DNC, asking for money.18 The timing
of these solicitations was perfect: Bill Clinton and Al Gore
now occupied the White House for the Democratic Party, and oil
issues were moving to the top of the Clinton Administration's
foreign policy agenda for the Caspian even as Tamraz put the
finishing touches on his own pipeline proposal in early 1995.
Hoping to promote his pipeline project--and finally to be able
to ``play a role which I aspire to'' in U.S. policy making
19--Tamraz contacted the DNC. As a result, Tamraz
had an initial meeting with the DNC's Ari Swiller in July 1995;
at a subsequent meeting, Swiller introduced him to DNC Chairman
Donald Fowler.20 Significantly, it was no
coincidence that Tamraz's decision to respond to the DNC's
fundraising solicitations should come in July 1995: it was at
this point that Tamraz first ran into opposition from U.S.
officials who viewed him as disreputable and who regarded his
Caspian schemes as a disruptive ``pipe dream.''
---------------------------------------------------------------------------
\18\ Tamraz interview, p. 37.
\19\ Id. at p. 38.
\20\ Id.
---------------------------------------------------------------------------
rejection and return
In mid-1995, Sheila Heslin was a staff member of the NSC.
Her duties as the NSC's Director of Russian, Ukrainian, and
Eurasian Affairs 21 made her responsible for
coordinating policy with regard to the States of the South
Caucasus in Central Asia and with regard to oil and gas issues
throughout the former Soviet Union, with a particular focus on
pipeline issues.22
---------------------------------------------------------------------------
\21\ As such, she reported to Coit (``Chip'') Blacker, the NSC's
Senior Director for Russian, Ukrainian, and Eurasian Affairs.
\22\ Heslin testimony, p. 3.
---------------------------------------------------------------------------
Heslin was deeply involved in U.S. efforts to negotiate the
Caspian ``early'' oil pipeline agreement, and she chaired an
interagency working group--the ``Caspian energy working group''
23--that dealt with this and related
issues.24 These responsibilities made her the
natural object of Tamraz's attentions.
---------------------------------------------------------------------------
\23\ This group included representatives from the NSC, the
Department of Energy, the Department of State, the Department of
Commerce, the Overseas Private Investment Corporation (OPIC), the Trade
& Development Agency, the Department of the Treasury, and the Export-
Import Bank. See Heslin interview, p. 5.
\24\ Heslin testimony, pp. 4-5.
---------------------------------------------------------------------------
With the help of Ed Pechous, a former CIA official then in
Tamraz's employ,25 Tamraz arranged to meet with
Heslin on June 2, 1995 to discuss his own pipeline plan for the
region. Even before this meeting, however, Tamraz had raised
Heslin's suspicions--and those of the other members of her
Caspian energy working group. Before the June 2 meeting with
Heslin, Tamraz had been meeting with various U.S. officials in
the Departments of State, Energy,26 and
Commerce.27 At these meetings, Tamraz represented
that his plan had the support of ``various entities and
governments,'' among them a number of major American oil
companies. It soon became apparent that these representations
were false: representatives of several oil companies, for
example, telephoned Energy Department officials and Heslin to
complain that they did not, in fact, support Tamraz's proposed
pipeline.28 Moreover,
---------------------------------------------------------------------------
\25\ Tamraz testimony, p. 45; Tamraz interview, pp. 22-23 & 121;
Heslin interview, p. 7.
\26\ One of these meetings took place with Energy Department
official Jack Carter, who met with Tamraz in the company of Carter's
colleague Theresa Beman, a lawyer from Philadelphia, and with Tim Denna
of Bethlehem Steel--a company which wished to sell Tamraz the steel
with which to build his pipeline. See Deposition of John Carter, June
23, 1997, pp. 30-32; Deposition of Charles Kyle Simpson, June 25, 1997,
p. 36; Tamraz interview, pp. 29-30.
\27\ Tamraz interview, p. 26; Heslin testimony, p. 8; Heslin
interview, p. 7.
\28\ Indeed, they apparently described him as a ``flake,'' and
resented his representations of their endorsement. See Heslin
testimony, p. 8; Heslin interview, p. 7.
we got reporting from embassies suggesting that, in
fact, Roger Tamraz had not had the level of access, the
Presidential level of access in Armenia or Azerbaijan
[he had claimed] . . . and that in fact, Azerbaijan had
been hostile to him, and then open source information,
which the State Department collected, indicated that he
had a highly controversial history, and then the
agency, the CIA, also provided some information which
indicated--well, a very controversial
past.29
---------------------------------------------------------------------------
\29\ Heslin testimony, pp. 8-9.
On top of Tamraz's ``controversial past'' and his
misrepresentation of support, it was the assessment of the
working group that ``his commercial proposal [did] not have a
lot of potential.'' 30
---------------------------------------------------------------------------
\30\ Id. at p. 8.
---------------------------------------------------------------------------
Nevertheless, Heslin agreed to meet with Tamraz on June 2
in order to ``clear up . . . whether, in fact, there was
something there or whether these problems that had cropped up,
were, in fact,correct.'' \31\ During their meeting, Tamraz
sought to persuade Heslin that the U.S. Government should endorse this
proposal--or at least announce that Washington did not object to it.
Heslin, however, did not think his plan realistic; she posed ``tough
questions'' to Tamraz about his proposal, ``and didn't get very
satisfactory answers.'' \32\ She made it clear to Tamraz that ``we were
not going to be able to--the U.S. Government--endorse him in any way.''
\33\
---------------------------------------------------------------------------
\31\ Id. at p. 9.
\32\ Id. at p. 9-10.
\33\ Id. at p. 11.
---------------------------------------------------------------------------
The next day, the interagency Caspian energy working group
determined that Tamraz's pipeline should not be given support
and that he should be denied high-level U.S. Government access:
the group agreed that there were too many ``holes'' in the
commercial aspects of his plan, and that its other aspects were
unacceptably weak.\34\ The official position of the U.S.
government, therefore, was that Tamraz's pipeline should not be
supported and that Tamraz should be given no further access to
senior U.S. officials.
---------------------------------------------------------------------------
\34\ Heslin interview, p. 8; see also Heslin testimony, pp. 12-13.
---------------------------------------------------------------------------
Tamraz first began to promote his pipeline idea to Heslin
through certain contacts of his in the CIA even before his June
2, 1995 meeting with Heslin. After Jim Collins, a State
Department official, first suggested in May 1995 that she meet
with Tamraz, Heslin had inquired about Tamraz with a friend of
hers at the CIA's Directorate of Intelligence (DI).\35\ As a
result of this inquiry, Heslin received a report on Tamraz from
the DI. She also, however, received a separate report on Tamraz
from the Agency's Directorate of Operations (DO), which the DO
had undertaken to provide to her on its own initiative.
According to Heslin, these two reports were quite different:
the DI report was ``more direct'' in recounting information
unflattering to Tamraz, whereas the DO report contained little
adverse information--referring only vaguely to certain
``unsubstantiated allegations'' against him.\36\
---------------------------------------------------------------------------
\35\ The CIA's DI performs the Agency's analytical functions and is
responsible for providing ``finished'' intelligence information to
national policymakers. Its Directorate of Operations (``DO'') is the
Agency's clandestine division, with responsibility for such things as
covert ``spying'' abroad.
\36\ Heslin interview, pp. 6-7.
---------------------------------------------------------------------------
After Heslin's rebuff in early June 1995, however, Tamraz's
lobbying efforts through the CIA moved into higher gear.
Shortly after Heslin's meeting with Tamraz on June 2, Heslin
received a telephone call from a CIA officer named ``Bob,''
\37\ who said that he wished to speak with her about the report
on Tamraz recently sent her from the DO. According to Bob, the
DO's report had been incomplete: it left out certain favorable
information about Tamraz. As Heslin recounted it, the CIA
officer ``went on, you know, at some length'' with ``real
reverence in his voice'' about Tamraz's virtues and
accomplishments.\38\ Bob said that his superior, William
Lofgren, had requested that he contact Heslin to supply
information that had not found its way into the earlier DO
report.\39\ Heslin found this a ``strange call'' because the
CIA man ``definitely called me right after'' her meeting with
Tamraz--so quickly, in fact, that ``[i]t surprised me: how
would he know my meeting [with Tamraz] went badly [for
Tamraz]?'' \40\
---------------------------------------------------------------------------
\37\ Bob's last name--known both to Heslin and to the Committee,
and confirmed by the CIA--is classified on account of his involvement
in clandestine CIA activities with the DO.
\38\ Heslin interview, pp. 8-9.
\39\ Heslin testimony, p. 12.
\40\ Heslin interview, p. 9; see also Heslin testimony, p. 12 (``He
went on to almost seem to rebut every tough question that I had in my
own meetings [with Tamraz]. So he seemed to be aware of what happened
in my meeting, which was strange.'').
---------------------------------------------------------------------------
On at least two, and perhaps three, occasions thereafter,
Heslin received additional calls from Bob at the CIA. Each call
was quite similar: ``it was always in this lobbying effort . .
. [i]t was just like a lobbyist. . . . It sounded like he was
representing Tamraz. . . . He was basically telling Tamraz's
story.'' \41\ Bob's efforts on behalf of Tamraz in this regard,
however, came to naught: Heslin refused to reconsider the
Tamraz issue, sticking by the official U.S. position adopted by
the interagency working group in June 1995.
---------------------------------------------------------------------------
\41\ Heslin interview, p. 10 (emphasis in original).
---------------------------------------------------------------------------
Heslin's rebuff of Tamraz's advances in June 1995 helps put
into perspective Tamraz's July 1995 overtures to Ari Swiller at
the DNC: he had a very concrete problem to overcome, and
apparently had very concrete ideas as to how to overcome it. On
July 11, 1995, Tamraz met with Don Fowler and Ari Swiller in
Fowler's office at the DNC. As the DNC briefing notes for this
meeting put it, the chairman of Oil Capital Limited, Matt
Steckel, had ``spoke[n] with Don [Fowler] about contributing
$250,000 to the DNC.'' Accordingly, at this meeting Fowler was
to ``ask Mr. Tamraz to contribute $250,000 to the DNC.'' \42\
This request was apparently a resounding success: another
internal DNC memorandum, written the day after Fowler's meeting
with Tamraz, recounted that ``[i]n a conversation held with Ari
Swiller yesterday, Mr. Tamraz expressed his desire to
contribute $300,000 to the DNC.'' \43\
---------------------------------------------------------------------------
\42\ Briefing notes for Don Fowler and Ari Swiller on ``Private
Meeting w/Roger Tamraz,'' July 11, 1995 (Ex. 4).
\43\ Ex. 1, p. 3. Castillo's memorandum also advised Fowler that
``[i]f Mr. Tamraz is able to commit to $250,000, then you may extend an
invitation to attend the NY Managing Trustee dinner this evening.''
---------------------------------------------------------------------------
As Tamraz himself has noted, even a cursory search of
LEXIS-NEXIS news databases uncovers ``horror stories'' about
him.\44\ To the DNC's credit, its staffers did not overlook
this. Alejandra Castillo, for example, sent a memorandum to
Fowler on the day after his July 11 meeting with Tamraz. In it,
she warned that
---------------------------------------------------------------------------
\44\ See supra note 3.
As a potential Managing Trustee member, Mr. Tamraz's
business dealing may potentially, if not definite[ly], [raise]
political and ethical implications on the DNC fundraising
operations. I have had several conversations with Carol Khare
and Ari Swiller regarding Mr. Tamraz's background. . . .
* * * * *
. . . [Tamraz's] contribution is greatly appreciated and
highly needed, however, his past involvement in shaky
international business and para-military organizations may
generate considerable problems for the DNC. Mr. Tamraz seeks
political leverage to secure his oil ventures in the Russian
Republics (Caspian Oil Project).
. . . His business background has proved to be full of
significant financial and ethical troubles. Pay attention to
these warning signals!\45\
---------------------------------------------------------------------------
\45\ Ex. 1, pp. 1-3.
To the DNC's discredit, however, these warnings were ignored by
the party's senior leadership. Indeed, DNC officials not only
accepted Tamraz's money but also went to great lengths in an
attempt to provide Tamraz the ``political leverage'' he sought
in his Caspian ventures.
Over the next few months, Tamraz directly contributed or
helped solicit great sums of money to the DNC and to various
state Democratic parties at Fowler's direction. As Tamraz
testified, the ``only reason'' he made these donations was in
order to secure him the White House access he desired in order
to promote his pipeline plan to the President.\46\ The first
installment of these payments--totaling $90,000--occurred just
over a week after Tamraz's meeting at the DNC with Fowler and
Swiller: on July 19, 1995 Tamraz wrote a $20,000 check to the
DNC, a $25,000 check to the Virginia Democratic Party, a
$20,000 check to Richard Molpus' campaign for governor of
Mississippi, and a $25,000 check to the Louisiana Democratic
Party. The DNC tracking form for Tamraz's DNC contribution
listed Swiller as the DNC staff contact and Fowler as having
solicited the donation.\47\
---------------------------------------------------------------------------
\46\ Tamraz testimony, p. 63 (``Senator Levin: . . . Was one of the
reasons that you made these contributions because you believed it might
get you access? That is my question. / Mr. Tamraz: Senator, I'm going
even further. It's the only reason--to get access. . . .'').
\47\ Ex. 5 (Roger Tamraz check #1021 to Richard Molpus for Governor
on July 19, 1995; Roger Tamraz check #1022 to DNC on July 19, 1995,
with associated DNC tracking form; Roger Tamraz check #1023 to Virginia
Democratic Party on July 19, 1995; Roger Tamraz check #1024 to
Louisiana Democratic Party on July 19, 1995).
---------------------------------------------------------------------------
Fowler subsequently forwarded another $5,000 check from
Tamraz to the Molpus campaign,\48\ and another $75,000 check to
the Virginia Democratic Party.\49\ Tamraz helped solicit an
additional $60,000 for the DNC from four of his friends,\50\
and himself gave the DNC an additional $50,000 on September 10,
1995.\51\ All in all, according to internal DNC memoranda, by
the end of March 1996 Tamraz had made contributions totaling
$100,000 to the Virginia Democratic Party, $25,000 to the
Virginia Legislative Conference, $20,000 to the Molpus
campaign,\52\ $25,000 to the Louisiana Democratic Party, and
$130,000 to the DNC.\53\ Tamraz apparently also gave ``either a
thousand or two'' to the Presidential Legal Expense Trust
(PLET).\54\ Buoyed by their success in winning such large sums
from Tamraz, DNC Finance Director Richard Sullivan recounted,
``all of us were continually asking him for money through the
course of the year''--perhaps ``every six weeks'' during
1996.\55\ These figures, and the DNC's eagerness to solicit
further contributions from Tamraz, make clear why Alejandra
Castillo's warnings went entirely unheeded.
---------------------------------------------------------------------------
\48\ Ex. 6 (Roger Tamraz check #1501 for $5,000 to Richard Molpus
for Governor and accompanying note from Don Fowler reading ``Here's a
little more help for your campaign.'').
\49\ Virginia Democratic Party campaign contribution records, Oct.
26, 1995 (Ex. 7) (indicating $75,000 contribution on October 19, 1995).
This contribution was made in the name of Tamoil, Inc. rather than in
Tamraz's own name. As Matthew Steckel of Tamoil explained in a
subsequent letter, ``Tamoil, Inc. is 100% owned by Mr. Tamraz.''
Matthew Steckel, letter to Richard Newcomb, Nov. 6, 1995 (Ex. 8).
\50\ See Richard Sullivan and Ari Swiller, Memorandum for Roger
Tamraz, March 28, 1996 (Ex. 9) (indicating $20,000 solicitation from
Elias and Norma Haddad on July 29, 1995 and $20,000 each from Gil and
Marcia Sireni on September 1, 1995).
\51\ DNC Check Tracking Form for Roger Tamraz check #0086, Sept.
10, 1995 (Ex. 10). In November 1995, Fowler also helped put Tamraz in
touch with Kevin Mack of the Democratic Leadership Campaign Committee
(DLCC); Tamraz was reportedly ``inclined to support'' the DLCC, and
Mack hoped to ask him for $100,000. See Kevin Mack, memorandum to
Donald Fowler, Nov. 14, 1995 (Ex. 11).
\52\ As indicated by the figures above, this DNC summary apparently
neglected to record the second check--for $5,000--Tamraz gave to the
Molpus campaign.
\53\ Richard Sullivan and Ari Swiller, Memorandum for Roger Tamraz,
March 28, 1996 (Ex. 12).
\54\ Tamraz interview, p. 128.
\55\ Deposition of Richard Sullivan, June 25, 1997, pp. 75-76.
---------------------------------------------------------------------------
Both the extent of the NSC's opposition to allowing Tamraz
high-level U.S. government access and Tamraz's success in
circumventing this opposition through his campaign
contributions may be seen in what Sheila Heslin later termed
``the VP thing.'' \56\ At some point in August or early
September 1995, at a White House coffee or a DNC breakfast,
``the Vice President met with a friend of Tamraz's named Haroun
[or, variously, Harut] Sassounian.'' \57\ After Vice President
Gore expressed interest in Tamraz's pipeline and ``requested
that Harut Sassounian set up a meeting'' about the
proposal,\58\ Sassounian reportedly ``said he would be sending
a letter and seeking an appointment through normal channels''
so that the Vice President could discuss the issue with Tamraz
personally.\59\ As a result, Tamraz was invited to a breakfast
with the Vice President scheduled for October 5, 1995.\60\
---------------------------------------------------------------------------
\56\ Heslin interview, p. 10.
\57\ Richard Grimes, e-mail message to Leon Fuerth, Sept. 6, 1995
(Ex. 13); cf. Scott Pastrick, memorandum to Kimberly Tilley, undated
(Ex. 14) (giving September 7, 1995 as date); Leon Fuerth, memorandum to
Albert Gore, Sept. 11, 1995 (Ex. 15) (giving date as August 8, 1995);
Leon Fuerth, Memorandum for the Vice President, Sept. 13, 1995 (Ex. 16)
(later copy of same document).
\58\ Ex. 14.
\59\ Ex. 13.
\60\ See DNC memorandum re: ``Vice Chair Breakfast w/Vice President
Gore,'' Oct. 5, 1995, p. 3 (Ex. 17) (listing Tamraz as guest).
---------------------------------------------------------------------------
Heslin learned from one of the Vice President's national
security aides, Rick Grimes, that Tamraz was seeking an
appointment with the Vice President through a ``political
link'' or ``political channels.'' She related to Grimes her
concerns about Tamraz and his business dealings, and told
Grimes that she felt ``very strong[ly]'' that Tamraz should get
no high-level access to U.S. officials.\61\ Grimes apparently
notified his superior, Leon Fuerth, who sent a memorandum to
Vice President Gore on September 13 warning him that Tamraz had
a ``shady and untrustworthy reputation'' and that his pipeline
proposal was ``commercially questionable at best.'' Fuerth also
warned the Vice President that
---------------------------------------------------------------------------
\61\ Heslin interview, p. 11.
Tamraz's penchant for making false claims is now
impacting on the US Government . . . . The NSC has
advised that senior US Government officials not meet
with Mr. Tamraz should he or his associates seek
appointments. I concur with that recommendation. . . .
We just must be certain not to give his project even
the appearance of US Government support.\62\
---------------------------------------------------------------------------
\62\ Ex. 16.
As a result of Fuerth's memorandum, Tamraz's invitation to
breakfast with the Vice President was rescinded shortly before
October 5.\63\ Heslin's effort to stop Tamraz's access to Vice
President Gore worked--or so it seemed.
---------------------------------------------------------------------------
\63\ Tamraz testimony, p. 16.
---------------------------------------------------------------------------
In fact, however, Tamraz's ``political channels'' contained
a great deal of redundancy. As Tamraz described it later, he
was not unhappy to lose his invitation to the October 5 meeting
with the Vice President because he had other options: ``if they
kicked me from the door, I will comethrough the window.''
64 This ``window'' was opened for Tamraz by his DNC
contacts, on the strength of which he was invited to a private
fundraising dinner on October 2, 1995 for Senator Edward Kennedy at the
Senator's house in Virginia--a dinner at which Tamraz was seated at the
head table with Senator Kennedy and Vice President Gore.65
As Tamraz recalled it, his attendance had been arranged by ``somebody
from the Democratic Party'' after he had started making contributions
to the DNC and after he had donated ``10 [or] 20'' thousand dollars
either to Senator Kennedy's campaign or to the Massachusetts Democratic
Party.66
---------------------------------------------------------------------------
\64\ Id. at p. 66.
\65\ Briefing notes for Vice President's dinner event, Oct. 2,
1995, p. 11 (Ex. 18); see also Tamraz testimony, p. 66.
\66\ The Vice President's briefing notes for this dinner described
Tamraz as being ``very involved with the DNC.'' See Ex. 18, p. 10.
---------------------------------------------------------------------------
Indeed, this dinner with the Vice President on October 2,
also promised to open further opportunities for Tamraz. Also at
the head table with Tamraz sat DNC Finance Chairman Marvin
Rosen, who in addition to his voluntary DNC duties obtained his
principal livelihood as a partner in the Miami-based law firm
of Greenberg, Traurig. At the recommendation at this dinner of
Senator Kennedy's wife Vicki, who was also at the time a
partner at Rosen's firm, Tamraz subsequently retained
Greenberg, Traurig to do work for his company.67 The
choice of a firm the profits of which flowed in part to the
DNC's finance chairman may have added an additional layer of
redundancy to Tamraz's political lobbying campaign: Richard
Sullivan later claimed to have heard from DNC Treasurer Scott
Pastrick that Tamraz was no longer contributing to the DNC
because he ``had employed Marvin's law firm and . . . was kind
of getting taken care of by Marvin's law firm.'' 68
---------------------------------------------------------------------------
\67\ Tamraz interview, pp. 89-90; see also Tamraz testimony, p.
143.
\68\ Deposition of Richard Sullivan, June 25, 1997, pp. 76-77.
Tamraz, however, has claimed that efforts to attribute his slowing of
DNC contributions to the Rosen connection were merely an attempt to
escape blame for the failures of Sullivan and Pastrick as fundraisers.
See Tamraz testimony, pp. 43-46. In fact, neither of these accounts is
probably accurate: Tamraz most likely stopped giving money to the DNC
in 1996 after it became clear that his contributions were not going to
reverse the U.S. Government's policy on Caspian energy issues.
---------------------------------------------------------------------------
Leaving no stone unturned, however, Tamraz apparently never
gave up hope of winning Heslin and her interagency Caspian
energy working group to his cause. To this end, he enlisted the
help of both the DNC and Bob of the CIA. On the afternoon of
October 6, 1995, Tamraz met with Fowler and Sullivan at
Fowler's office.69 The subject of this meeting was
Tamraz's ``disinvitation'' from the Vice Presidential breakfast
the day before: Fowler told Tamraz that ``there was
resistance'' to Tamraz attending White House social events, and
that the White House ``want[ed] more information about you
before you can attend these events.'' 70
---------------------------------------------------------------------------
\69\ Schedule for National Chair Donald L. Fowler, Oct. 6, 1995, p.
3 (Ex. 19) (showing meeting at 3:00 p.m. with Tamraz and Sullivan). The
notation indicating Fowler's appointment with Tamraz is handwritten,
suggesting that the meeting was arranged at the last minute--which
would be entirely in keeping with Tamraz's recollection that this
meeting had been called to discuss Tamraz's ``disinvitation'' to the
Gore event only the day before.
\70\ Tamraz interview, pp. 31-35 & 46.
---------------------------------------------------------------------------
According to Tamraz, upon being told that the White House
``needed information'' about him,
I told them that they should go and get information
from Government departments. . . . I told [Fowler] he
could go to any department, including the CIA. . . . I
told him to tell the people who were requesting from
him information to tell the people to go to any
department, including the CIA. . . . I may have given a
name of a person at the CIA to contact, just to check
if information was, in fact, sent.71
---------------------------------------------------------------------------
\71\ Id. at pp. 51-53.
Indeed, Tamraz gave Fowler and Sullivan the name of his friend
Bob at the CIA--the same DO official who had been ``lobbying''
Heslin on Tamraz's behalf since June 1995--and the CIA
officer's classified office telephone number.72
Handwritten notes taken by both Fowler and Sullivan bear this
out, indicating their intention to call Bob about Tamraz and
making clear Bob's CIA affiliation.73
---------------------------------------------------------------------------
\72\ See Tamraz interview, pp. 51-53, 59 & 71. Providing classified
information to individuals without a security clearance is illegal. See
18 U.S.C. Sec. 793(d) (prohibiting disclosure ``to any person not
entitled to receive it'' of lawfully-possessed information which ``the
possessor has reason to believe could be used to the injury of the
United States or to the advantage of any foreign nation'').
\73\ Handwritten notes by Don Fowler (Ex. 20) (reading ``Roger
Tamraz 6 Oct 95 . . . Leon Fuerth--go to CIA Bob . . . Sheila Heslin at
NSC''); Handwritten notes by Richard Sullivan (Ex. 21) (reading ``CIA--
> Bob'').
---------------------------------------------------------------------------
Tamraz also met subsequently with Sullivan and Rosen later
in October 1995 to discuss ``the lack of information about me
in order to go to the [White House] functions.'' 74
The DNC officials, he said, were ``embarrassed . . . for a
donor to be disinvited,'' 75 and ``wanted to excuse
themselves that I was disinvited, and they hoped that if more
information would be available that somebody would review again
my status.'' 76 Tamraz repeated his suggestion that
if more information about his bona fides were needed, the CIA
should be able to provide it.77
---------------------------------------------------------------------------
\74\ Tamraz interview, p. 56.
\75\ Id. at pp. 87 & 91.
\76\ Id. at p. 57.
\77\ Id. at pp. 87-88 & 127.
---------------------------------------------------------------------------
On October 18, 1995, Tamraz called Bob at the CIA in order
``to say that he had given [Bob's] name to Fowler as a
reference.'' The next day, as Bob recorded it in an internal
CIA memorandum,
Don Fowler called me at the request of . . . Roger
Tamraz. . . . During the conversation, Fowler said that
he understood that I was in contact with the Vice
President's office concerning Tamraz. Fowler said he
was attempting to arrange a meeting between the Vice
President and Tamraz concerning Tamraz's oil pipeline
from Ceyhan, Turkey to Baku, Azerbaijan, but was aware
that there was opposition in the White House . . . .
Fowler queried whether I could provide him a copy of
any correspondence on Tamraz I might prepare for the
Vice President.78
---------------------------------------------------------------------------
\78\ Bob of the CIA, Memorandum for the Record, Oct. 20, 1995 (Ex.
22) [redacted and declassified].
At some point in October 1995, Heslin received another
telephone call from Bob at the CIA, who continued, she said,
``plying his lobbying methods'' on behalf of Tamraz's pipeline
scheme.79
---------------------------------------------------------------------------
\79\ Heslin interview, p. 12.
---------------------------------------------------------------------------
By now, however, Heslin was being ``really careful with
[Bob],'' having concluded that ``he was a lobbyist'' for
Tamraz.80 Accordingly, Fowler apparently decided to
try again. As indicated by Fowler's DNC telephone records, he
tried to telephone Bob at the CIA officer's classified work
telephone number on December 11 and 12, 1995.81 On
December 13, Fowler finally reached Bob at the Central Eurasia
(CE) Division of the DO.82 According to an internal
CIA memorandum later prepared by Bob, ``Don Fowler called CE
Division to ask if it could provide a letter on Tamraz to clear
Tamraz's name with the President.'' 83
---------------------------------------------------------------------------
\80\ Id.; see also Bob of the CIA, Memorandum for the Record, Dec.
28, 1995, p. 2 (Ex. 23) (``Based on conversation with Sheila Heslin at
the NSC, it is our understanding that the NSC would like to deny Tamraz
access to the President and the Vice President.'').
\81\ Donald Fowler, telephone log, Dec. 11, 1995 (Ex. 24) (listing
Bob with telephone number); Don Fowler, telephone log, Dec. 12, 1995
(Ex. 25) (same).
\82\ Also on December 13, Fowler and Richard Sullivan met again
with Roger Tamraz at Fowler's DNC office. Schedule for National Chair
Donald L. Fowler, Dec. 13, 1995, p. 2 (Ex. 26) (indicating meeting at
11:30 a.m. ``per DLF's phone conversation w/Tamraz'').
\83\ Ex. 23, p. 2.
---------------------------------------------------------------------------
Fowler has been less than candid in his recollection of
these events. In March 1997, he issued a press release in which
he asserted flatly that
In spite of the fact that my memory is imprecise on
some of the details associated with this sequence of
events, on one point I am clear and certain: I did not
in this situation, or in any other, call or contact the
CIA to ask them to supply information to Ms. Heslin,
Dr. Soderberg [sic] or anyone else, nor did I direct
anyone else to do so.84
---------------------------------------------------------------------------
\84\ Donald Fowler, press release, March 18, 1997 (Ex. 27).
According to her comments when interviewed by the Committee, Soderberg
has not received a Ph.D. See Memorandum of Interview of Nancy
Soderberg, May 29, 1997, p. 1 (recounting finishing graduate school
with Master's degree in International Relations).
As noted above, this assertion was false. When confronted with
evidence of his calls to Bob--evidence of which he was unaware
until shown it by Senator Thompson on September 9, 1997 at the
public hearings 85 Fowler changed his story. Having
discovered that the Committee possessed Bob's memoranda
recounting the CIA officer's discussions with him, Fowler then
testified under oath that he had ``no memory'' of having ever
called anyone at the CIA. He said, in fact, that he had been
``flabbergasted'' to read reports to this effect in the media;
``I have at midnight, at noontime, and almost every other
minute of the day plumbed my memory in every way that I can,
and I have no memory of ever having talked to anybody at the
CIA.'' 86 When probed more specifically about his
contacts with Bob, Fowler said that he did not know who the man
was; 87 Fowler also claimed not to recall Tamraz
ever asking him to contact the CIA.88
---------------------------------------------------------------------------
\85\ See Testimony of Donald Fowler, Sept. 9, 1997, p. 51
(remarking, when shown memorandum of conversation by Bob of the CIA,
that ``this is the first time I have ever seen that document'').
\86\ Deposition of Donald Fowler, May 21, 1997, p. 242; see also
Fowler testimony, pp. 47-48; see also id. p. 53 (affirming lack of
recollection).
\87\ Fowler deposition, p. 244.
\88\ Fowler testimony, p. 53.
---------------------------------------------------------------------------
It is likely that Fowler's September 9, 1997 claim of ``no
memory'' is as false as his March 1997 press release absolutely
denying any CIA contacts. The evidence makes clear that Fowler
was closely engaged in efforts to contact Bob at the CIA. As
mentioned above, Fowler's own handwritten notes indicate his
intention to call a CIA officer named Bob; these notes also
make clear that Fowler understood the man's CIA
affiliation.89 Fowler's telephone records document
his efforts to reach Bob at his work telephone
number.90 Moreover, as described in more detail
below, Fowler mentioned ``Bob . . . of the CIA'' both in a call
to Heslin, 91 and in a conversation he had with
Deputy National Security Advisor Nancy Soderberg about
Tamraz.92 Because Fowler twice talked to Bob,
recorded Bob's full name and CIA affiliation in his notes, and
told at least two other people of his contacts with the CIA
officer, it is extremely unlikely that Fowler genuinely did not
recall his contacts with the CIA.
---------------------------------------------------------------------------
\89\ Ex. 20 (handwritten notes by Fowler reading ``Roger Tamraz . .
. Leon Fuerth--go to CIA/Bob [last name redacted]/Sheila Heslin at
NSC''). It is clear from these notes and from Fowler's discussions of
``Bob of the CIA'' with Heslin and Soderberg, see infra text
accompanying notes 91 & 92, that even if Fowler never discussed Bob's
CIA affiliation, Fowler already knew it. Cf. Bob of the CIA, redacted
and declassified deposition, pp. 67, 93 & 95 (recounting that Fowler
and Bob did not discuss Bob's CIA affiliation). (The CIA officer did,
however, make it clear to Fowler that he was part of some government
agency, id. p. 94, and suggested that Fowler seemed already to know of
his CIA affiliation, id., p. 97 (``If Tamraz has told him I'm CIA,
there's not much I can do about it at that point.'').
\90\ See supra note 81.
\91\ Heslin testimony, p. 23; see also Heslin interview, p. 13.
\92\ Nancy Soderberg, handwritten notes (Ex. 28) (``Bob [last name
redacted] friend in CIA/memo to Sheila.''); see also Soderberg
interview, p. 5 (identifying notes as pertaining to conversation with
Fowler).
---------------------------------------------------------------------------
After Bob refused Fowler's request that he provide a letter
to ``clear Tamraz's name with the President,'' 93
Fowler contacted Heslin himself. According to Fowler's DNC
telephone records, he left a message for Heslin at her NSC
office on December 14.94 Uneasy with having received
a message from the chairman of the DNC, Heslin sent an e-mail
message to Soderberg.95 In this e-mail, Heslin
stated that
---------------------------------------------------------------------------
\93\ Ex. 23, p. 2.
\94\ Donald Fowler, telephone log, Dec. 14, 1995 (Ex. 29) (showing
``message'' left for Heslin at 3:45 p.m.).
\95\ Heslin testimony, p. 22.
Don Fowler, DNC Chairman[,] has a call in to me
(subject unclear). I wanted to check with you about
whether to refer this call to you or more generally, if
I should follow a particular procedure in returning the
---------------------------------------------------------------------------
call.96
\96\ Sheila Heslin, e-mail message to Nancy Soderberg, Dec. 14,
1995 (Ex. 30). Heslin apparently returned Fowler's call on December 14,
but did not reach him. See Donald Fowler, telephone message slip,
apparently Dec. 14, 1995 (Ex. 31).
Four days later, NSC legal advisor Alan Kreczko sent an e-mail
to Heslin by e-mail, advising her that ``[y]ou can always
return a call. But anything beyond that you would need to check
with us.'' 97
---------------------------------------------------------------------------
\97\ Alan Kreczko, e-mail message to Sheila Heslin, Dec. 18, 1995
(Ex. 30).
---------------------------------------------------------------------------
Also on December 18, Kenneth Baldwin, Nancy Soderberg's
assistant, contacted Heslin with a response from Soderberg
saying ``Sheila: I'll call him.'' 98 Accordingly,
Soderberg called Fowler that afternoon; Fowler returned her
call on the morning of December 19.99 Soderberg's
handwritten notes from her talk with Fowler make clear that the
subject of their conversation was Tamraz, and suggest that
Soderberg was aware of the efforts of Fowler and Tamraz to
enlist the CIA's assistance in changing Heslin's mind about
permitting Tamraz to attend events or make appointments to
visit officials at the White House. Under the heading ``Roger
Tamraz'' and ``Don Fowler,'' Soderberg wrote in her notebook
that ``WH event/appt. . . . Bob [last name redacted] friend in
CIA ) memo to Sheila.'' 100
---------------------------------------------------------------------------
\98\ Kenneth Baldwin, e-mail message to Sheila Heslin, Dec. 18,
1995 (Ex. 30). Soderberg had known Fowler for many years from working
together for various prior political campaigns. See Soderberg
interview, p. 2.
\99\ See Nancy Soderberg appointment schedule, Dec. 18, 1995 (Ex.
32) (showing ``Dan [sic] Fowler'' call at 4:00 p.m.); Donald Fowler,
telephone log, Dec. 19, 1995, p. 2 (Ex. 33) (showing call to ``Nancy
Soderberg for Sheila Heslin'' as ``DONE'' at 10:15 a.m.).
\100\ Ex. 28. Soderberg claimed later to have agreed with Heslin
about Tamraz, and to have communicated this view to Fowler in their
conversations on the subject. Soderberg interview, pp. 5-6. In any
event, Soderberg admitted that Fowler told her that his friend Bob at
the CIA had sent (or would send) information about Tamraz to Heslin.
See Soderberg interview, p. 6. As suggested by her own handwritten
notations upon her copy of one of the CIA reports given to Heslin,
Nancy Soderberg also spoke with DNC Finance Chairman Marvin Rosen about
the Tamraz issue. See Soderberg interview, p. 7 (declaring that
``[o]bviously Rosen did call me because his name appears right there,''
but claiming to have no specific recollection of any such
conversation).
---------------------------------------------------------------------------
That same day, Fowler telephoned Heslin. As Heslin
recounted it, this conversation was ``very short'':
He said hello. I answer[ed], ``NSC, Sheila Heslin,''
and he said ``Hello, Sheila''--``Hello, Ms. Heslin.
This is Don Fowler of the DNC, and I'm calling to
inform you that Bob''--using his full name --``of the
CIA will be sending you a report on Roger Tamraz, so
that . . . you will understand everything about his
background, and you won't have any further concerns
about having him go into the White House.''
101
---------------------------------------------------------------------------
\101\ Heslin testimony, p. 23.
Alarmed by this call, Heslin called her contact at the CIA's DI
to complain about this message, asking this official: ``What
the hell is your agency doing? You won't believe the phone call
I just got from Don Fowler of the DNC!'' Heslin expressed her
outrage at the apparent involvement of officers from the DO
with the DNC. ``I totally didn't trust [the DO] on this
issue,'' Heslin recalled later, adding that ``I just couldn't
understand what they were doing.'' 102
---------------------------------------------------------------------------
\102\ Heslin interview, p. 13; see also Heslin testimony, p. 22
(``I actually also called the Directorate of Intelligence at the CIA
and I said `What the hell is going on? . . . [W]hy are your people
working with Fowler?' '').
---------------------------------------------------------------------------
Heslin also telephoned Soderberg to complain about Fowler's
call. Soderberg was ``adamant that she'd take care of Fowler,''
but also seemed interested in seeing if there were some way
that Tamraz could attend a White House function. Soderberg
inquired of Heslin, for example, whether Tamraz might be able
to meet the President in a small group, or if that were not
possible, whether he could visit as part of a large group.
103 Heslin did not question Soderberg's motives,
104 but she sent Soderberg a memorandum the next day
rearguing the point that Tamraz should be denied high-level
U.S. government access; Heslin attached to this message the
text of Leon Fuerth's September 1995 memorandum to Vice
President Gore about Tamraz. 105 In her message to
Soderberg, Heslin warned that
---------------------------------------------------------------------------
\103\ Heslin interview, p. 13.
\104\ Heslin claims to have simply assumed at that point that
Soderberg was accumulating information with which to rebut possible
counter-arguments by Donald Fowler. See id.
\105\ Sheila Heslin, e-mail message to Nancy Soderberg, Dec. 20,
1995 (Ex. 34).
Tamraz desperately needs the mantle of the President
to advance his goal. He will use any meeting with the
President . . . to the potential detriment of our
policy goals in the Caucasus region. 106
---------------------------------------------------------------------------
\106\ Id.
In response to Heslin's call and e-mail message, Soderberg
asked Randy Beers, the NSC's senior director for intelligence
matters, to look into the Tamraz issue. 107
---------------------------------------------------------------------------
\107\ See Heslin interview, p. 13; see also Nancy Soderberg, e-
mail message to R. Rand Beers, Dec. 20, 1995 (Ex. 34) (forwarding
Heslin's message to Beers).
---------------------------------------------------------------------------
Just as Fowler had indicated would occur, at some point in
December, Heslin received, through Beers' office, another
report on Tamraz from the CIA's DO. Heslin found this entirely
unsolicited report ``pretty dismaying'' and wholly inadequate.
Indeed, it was ``even worse than the last DO report'': while
the earlier report from the DO had at least contained veiled
references to ``unsubstantiated allegations'' against Tamraz,
this one contained no adverse information whatsoever. She felt
this DO report to be ``wholly divorced from the reality of what
the guy was about.'' 108
---------------------------------------------------------------------------
\108\ Heslin interview, pp. 14-15.
---------------------------------------------------------------------------
Heslin's determination to deny Tamraz access to top
officials and to prevent giving him even an apparent U.S.
endorsement of his pipeline project remained adamant throughout
these efforts by Roger Tamraz, his friend Bob at the CIA, and
Fowler at the DNC. Indeed, at the suggestion of Jamuna
Broadway, an assistant to Heslin's immediate superior, Chip
Blacker, Heslin tried to arrange for Tamraz's name to be put on
what Broadway described as a list that would ensure that he was
denied access to the White House. 109 All of
Heslin's efforts, however, were in vain.
---------------------------------------------------------------------------
\109\ Heslin interview, pp. 11-12. According to Heslin, when
Broadway suggested to her that ``a friend'' could arrange for Tamraz to
be thus listed, Heslin replied ``great!'' Broadway later told Heslin
that this matter had been ``taken care of,'' and that Tamraz would now
be unable to get into the White House ``through some social event.''
Id. No such list was ever produced to the Committee, but Heslin was
given the impression that this had occurred. See also Ex. 23, p. 2 (Bob
of CIA recounting that ``Heslin told [the DO's Central Eurasia
Division] that Tamraz's name had been put on a White House watch list
to prevent him from seeing senior officials.'').
---------------------------------------------------------------------------
Through his DNC and other DNC-coordinated Democratic Party
donations, Tamraz was able to attend events with President
Clinton on no fewer than six occasions from September 1995
through June 1996: (1) a reception for the DNC's Business
Leadership Forum on September 11, 1995; (2) a DNC dinner on
September 15, 1995; (3) the DNC Chairman's holiday reception on
December 13, 1995; (4) a DNC Trustee's dinner on March 27,
1996; (5) a Presidential coffee on April 1, 1996; and (6) a
buffet dinner and private screening of the film Independence
Day on June 22, 1996. 110 Once again, after being
denied access through the ``door,'' Roger Tamraz had found his
way in through a ``window.''
---------------------------------------------------------------------------
\110\ WhoDB Contact Manager Information database printout re:
Roger Tamraz, undated (Ex. 35).
---------------------------------------------------------------------------
TAMRAZ ATTEMPTS TO CHANGE U.S. POLICY
For Roger Tamraz, however, purchasing access to the White
House was not enough. Despite the NSC's objections, he had
little trouble getting into the White House, having succeeded
in doing so three times in 1995 alone. In 1996, however, what
Tamraz still lacked--and as Heslin put it, what he
``desperately need[ed]'' 111--was the U.S.
Government's actual or apparent endorsement of his pipeline
deal. Ideally, Tamraz would have preferred that the President
promote his pipeline deal to the governments of the Caspian
region, hoping that the White House would endorse his deal as
part of its efforts to promote U.S. business interests
overseas. 112 Failing this, Tamraz recalled, ``I was
looking for somebody to say, `We have no objection.' ''
113
---------------------------------------------------------------------------
\111\ Ex. 34.
\112\ See, e.g., Tamraz testimony, p. 166 (``Chairman Thompson: . .
. Do you think you have a constitutional right to have your business
deal personally considered by the President of the United States? / Mr.
Tamraz: Well, the President picked up the phone once and called King
Fahd [of Saudi Arabia] and told him, `I would like you to buy Boeings
instead of Airbus [airliners],' and another time, he called up and he
said, `I want you to buy AT&T instead of Ericsson.' '').
\113\ Id. at p. 139.
---------------------------------------------------------------------------
As described above, however, United States policy,
established by the Caspian energy working group chaired by
Heslin, remained firm in ruling out precisely what Tamraz
wanted. As set by this interagency group, U.S. policy held that
Tamraz's pipeline should get neither actual support nor any
mere ``non-objection.'' In the spring of 1996, therefore,
Tamraz directed his energies toward turning the Presidential
access he had purchased through Fowler and the DNC into real
policy change.`
Arranging through the DNC to attend a dinner with the
President for ``top supporters of the [Democratic] party'' on
March 27, 1996, 114 Tamraz used his victory in the
``guerilla fight to get close to the President'' 115
in order to promote his pipeline proposal. President Clinton
expressed interest, and assured Tamraz that he would look into
the issue. As White House Social Secretary Ann Stock summarized
their talk in a memorandum to Clinton the next day,
---------------------------------------------------------------------------
\114\ See Richard Sullivan, memorandum regarding March 27 dinner
(Ex. 36) (describing dinner); Marvin Rosen & Richard Sullivan,
memorandum to Karen Hancox, Feb. 28, 1996 (Ex. 37) (forwarding list of
names for March 27 dinner--including that of Roger Tamraz--to White
House); Ann Stock, memorandum to the President on March 27 dinner (Ex.
38) (briefing President on DNC dinner).
\115\ As Tamraz colorfully described it,
You think you get into the White House so you've won. It's
only the fight begins when you get into the White House.
Then there's a guerrilla fight to get close to the
President . . . First the President is surrounded by the
ladies because they swoon around him . . . Secondly, you
have his bodyguards, and thirdly you have the handlers, the
same handlers that get you into the White House are sure
once you get in, that you don't get the chance to get what
you want. They act like a basketball team professionally
around the President and anyone getting too close to the
---------------------------------------------------------------------------
President is waltzed away.
Tamraz testimony, p. 58.
Roger Tamraz . . . wanted to discuss the pipeline
that will go from the Caspian Sea to Turkey. You told
him that someone would follow-up with him.
116
\116\ Ann Stock, memorandum to the President, March 28, 1997 (Ex.
39).
---------------------------------------------------------------------------
So interested was President Clinton, in fact, that he made a
handwritten notation on Stock's memorandum asking about the
likely reaction of the government of Azerbaijan and suggesting
that a copy of this document be forwarded to Counselor to the
President Thomas F. (``Mack'') McLarty. 117
---------------------------------------------------------------------------
\117\ Id. (handwritten additions). A handwritten note on this
document indicates that a copy was to be forwarded to Nancy Soderberg
as well, while another note reads ``Make copies as noted.'' (The
President's notations on this document appear as typewritten
substitutions; it is White House policy to avoid releasing samples of
the President's handwriting.)
---------------------------------------------------------------------------
McLarty also spoke with Tamraz about his pipeline at this
dinner. As McLarty recalled it,
[he] did talk about his oil pipeline in the Caspian
Sea and the importance of it. As I remember, I related
to him that we had constructed a major pipeline in the
midcontinent, and I understood how important bringing
reserves to market were [sic], and we discussed, as I
remember it, kind of the importance of lessening
theU.S. dependence on the Middle East for energy supplies, something
that I have felt very strongly about for a number of years . . .
.118
---------------------------------------------------------------------------
\118\ Deposition of Thomas F. McLarty, June 30, 1997, pp. 28-30.
McLarty admitted that it was ``possible'' that Tamraz gave him
some document or documents that evening, but he said they had
not discussed Tamraz's political contributions.119
At some point after this dinner, in keeping with the Stock
memorandum about Presidential ``follow-up,'' McLarty learned
that
---------------------------------------------------------------------------
\119\ Id. at p. 38.
the President wanted more information about the
pipeline and for someone to follow up with Mr. Tamraz,
and I think I learned that I was to do that, and I
proceeded to do so. 120
---------------------------------------------------------------------------
\120\ Id. at pp. 33-35.
As these accounts of the March 27 dinner make clear,
Tamraz's focus was no longer upon access to U.S. officials: by
the time he was able personally to convey his views to
President Clinton and McLarty, of course, such access was a
foregone conclusion.121 Rather, Tamraz now focused
upon the substantive merits of his pipeline project. He sought
to change U.S. Government policy with regard to Caspian energy
issues.
---------------------------------------------------------------------------
\121\ Indeed, according to Tamraz, there was never any real chance
for anyone at the NSC to bar major campaign contribution from meeting
President Clinton. ``If we wanted an appointment,'' Tamraz said, ``[the
President] would have told me, `Come tomorrow for a golf game.' It
could have been expensive, but we could have done it.'' Tamraz
testimony. p. 51.
---------------------------------------------------------------------------
On March 28, 1996, the day after Tamraz's discussion with
the President about the pipeline and the same day that Ann
Stock memorialized the President's desire to ``follow-up'' on
the Tamraz pipeline issue, Sullivan and Swiller at the DNC
prepared two memoranda summarizing Tamraz's various political
contributions and the fundraising solicitations he had
undertaken. One memorandum listed a total of $205,000 in
various contributions and fundraising
solicitations,122 while the other listed $300,000 in
contributions to various Democratic institutions.123
As will be discussed below, the figures given by this first
memorandum correspond closely to sums apparently recounted to
Jack Carter at the Department of Energy by his colleague
Charles Kyle Simpson.
---------------------------------------------------------------------------
\122\ Ex. 9.
\123\ Ex. 12.
---------------------------------------------------------------------------
McLarty dealt frequently with energy issues for President
Clinton, and for this purpose often worked with Associate
Deputy Secretary for Energy Kyle Simpson.124 Simpson
was himself a longtime political supporter of the President,
having been active in Democratic politics in his native Texas
and having served both as an advisor to the Clinton/Gore
campaign and as a member of the President's transition team.
125 It was natural, therefore, for McLarty to
contact Simpson in order further to delegate President
Clinton's request to ``follow-up'' with regard to the
substantive merits of Tamraz's pipeline idea.
---------------------------------------------------------------------------
\124\ See McLarty deposition, p. 6.
\125\ See Simpson deposition, pp. 9-14.
---------------------------------------------------------------------------
Indeed, on March 29--the day after the President asked
McLarty to ``follow-up'' with the Tamraz issue and DNC
officials prepared their $205,000 and $300,000 memoranda
listing Tamraz's political contributions--McLarty inquired of
Simpson about a certain ``list.'' In a telephone message slip
produced to the Committee in response to its request for
Tamraz-related documents, McLarty's secretary informed him that
Simpson had called ``re: List--I told him you found out what
you needed to know from someone else so he could disregard it
for now.'' 126
---------------------------------------------------------------------------
\126\ Thomas F. McLarty, telephone message slip, March 29, 1996
(Ex. 40).
---------------------------------------------------------------------------
On April 1, Tamraz attended another event with President
Clinton, this time a DNC-sponsored coffee in honor of ``the top
supporters of the DNC.'' 127 The briefing materials
for this event listed Tamraz as ``pursuing the possibility of
building an oil pipeline,'' 128 and he indeed took
advantage of this opportunity to promote his project to
McLarty, who later recalled meeting Tamraz at this coffee, but
claimed to remember nothing of their
conversation.129 In a memorandum prepared the next
day, however, McLarty advised the President that
---------------------------------------------------------------------------
\127\ Richard Sullivan, memorandum on April 1, 1996 coffee, March
29, 1996 (Ex. 41).
\128\ List of ``POTUS April 1 Coffee Attendees,'' p. 3 (Ex. 42).
\129\ McLarty deposition, p. 44.
[p]er your direction, I had a good visit with Roger
Tamraz, President of Oil Capital Ltd., at the Monday
morning coffee. Roger was pleased with your interest,
and we will follow-up in a supportive but prudent and
appropriate way.130
---------------------------------------------------------------------------
\130\ Mack McLarty, memorandum to William J. Clinton, April 2, 1996
(Ex. 43).
Tamraz also apparently gave McLarty an Oil Capital brochure and
a copy of his business card, which McLarty duly forwarded to
Kyle Simpson, with a copy also being sent to President
Clinton.131 Indeed, McLarty appears by that point
already to have faxed Simpson information relating to Tamraz.
In his April 2 note forwarding Simpson the business card and
brochure, McLarty noted that this information ``[r]elates to
the fax I sent you last week.'' 132 Neither McLarty
nor Simpson claim to remember any such fax or ``list.''
133
---------------------------------------------------------------------------
\131\ Mack McLarty, letter to Kyle Simpson, April 2, 1996 (Ex. 44)
(forwarding attachments to Simpson for discussion and including
handwritten notation ``bcc: The President''). Although he apparently
did not speak with Tamraz about the pipeline after the March 27 dinner,
President Clinton remained quite interested in Tamraz's idea. According
to McLarty, after the April 1 coffee, the President ``again mentioned
to me his interest in learning more about the matter.'' Statement of
Thomas F. (``Mack'') McLarty, III, Sept. 17, 1997, p. 1 (Ex. 45).
\132\ Ex. 44 (forwarding attachments and noting ``Please review and
let's discuss the attached. (Related to the fax I sent you last
week.)'').
\133\ See, e.g., Simpson deposition, pp. 39-42; McLarty deposition,
pp. 38-39, 41 & 46. In October 1996, when the Clinton Administration's
campaign-finance scandals began to emerge in the press, McLarty's staff
tried, apparently unsuccessfully, to find the ``fax'' in question. One
telephone message given to McLarty ``Just FYI,'' for example, refers to
his April 2, 1996 ``Memo to POTUS'' and recounts that the author had
been ``asked if we have the fax mentioned in the note--I don't.''
Telephone message slip, Oct. 24, 1996 (Ex. 46).
---------------------------------------------------------------------------
At some point, most likely after the April 1 coffee,
McLarty contacted Simpson about Tamraz. According to McLarty,
he asked Simpson for
additional information about the [Tamraz pipeline]
project. I asked what he knew about it and for him to
provide me additional information, and I believe that I
told him that the President had given me this
task.134
---------------------------------------------------------------------------
\134\ McLarty deposition, pp. 53-58.
---------------------------------------------------------------------------
Simpson recalls their conversation similarly. According to him,
[McLarty] said the President had met with Mr. Tamraz
and Mr. Tamraz had talked about his pipeline proposal
and . . . he asked Mr. McLarty to find out if there was
anything we needed to do about it if it was important.
And McLarty was calling me to find out if there was
anything unique about this pipeline because it is the
policy, the importance, the strategic and economic
importance of getting a pipeline built from that region
[that] is very . . . critical.
So he wanted to know if this was one [project] that
had unique characteristics that we should be supporting
. . . . As I understood it, he wanted me to find out if
there was anything about this pipeline proposal that
was important enough, unique enough, different enough
that would cause it to rise above other proposals that
were in play in the Caspian. That's what he wanted to
know.135
---------------------------------------------------------------------------
\135\ Simpson deposition, pp. 43 & 47-48; see also Charles Kyle
Simpson, letter to Senators Fred Thompson and John Glenn, Sept. 17,
1997 (Ex. 47) (recounting that McLarty asked ``whether there was
anything unique about this pipeline proposal'').
As this account shows, the emphasis at this point was clearly
upon whether the U.S. Government should support Tamraz's
pipeline proposal.
Having received this request from McLarty, Simpson passed
it along to his Energy Department colleague Jack Carter--a
former Clinton/Gore fundraiser from Texas who was perhaps
particularly eager to assist because he had been seeking a job
at the White House working for McLarty.136 Simpson
mentioned McLarty's message and asked Carter to
---------------------------------------------------------------------------
\136\ See Carter deposition, p. 21; McLarty deposition, pp. 12-14.
[f]ind out what he could about this pipeline proposal,
and learn if there is anything, then tell me if there
was anything different about this one or unique about
this one that would cause us to be more interested in
it than in any others. . . .137
---------------------------------------------------------------------------
\137\ Simpson deposition, pp. 53-57; see also Ex. 47, p. 2 (Simpson
recounting that he asked Carter to ``find out what he could about Mr.
Tamraz' pipeline proposal and report to me whether there was anything
unique about it that would cause the United States to be interested in
it.'').
Significantly, as noted above, the purpose of the
President's inquiry and the efforts to ``follow-up'' upon the
President's talk with Tamraz was entirely substantive, relating
to the merits or demerits of Tamraz's pipeline project and
whether any reason could be found for the U.S. Government to
support it. Indeed, McLarty himself insisted that the issue of
a Presidential meeting with Tamraz ``never came up in my
discussions with Mr. Simpson. I just simply asked for
information about the pipeline and the region. . . . Meetings
were never discussed with Mr.Simpson.'' 138 Mere
access, in other words, had nothing to do with it.139 As
Simpson's account makes clear, Tamraz had actually persuaded President
Clinton, McLarty, and Simpson to begin looking for reasons to support
Oil Capital's pipeline proposal.
---------------------------------------------------------------------------
\138\ McLarty deposition, pp. 60 & 71.
\139\ Interestingly, Fowler's contacts with Bob of the CIA also
appear to have been more about substantive policy change than about
access. As Bob recalled later, Fowler complained to him over the
telephone that ``big oil companies were muscling out [Fowler's] friend
here Roger Tamraz, and that he intended to give this guy a fair hearing
. . . .'' Fowler told Bob that Sheila Heslin ``was keeping
consideration of Tamraz's pipeline from being fairly considered or
something like that.'' Bob deposition, pp. 93 & 95.
---------------------------------------------------------------------------
The key to understanding why these officials found the idea
of endorsing Tamraz's pipeline to be so attractive five months
before the presidential election may lie in Simpson's
communications to Carter and in Carter's own subsequent
communication with Heslin. By this point, after all, Heslin was
the principal obstacle that remained for Tamraz. Buying access
to U.S. Government officials had been comparatively easy, but
the interagency working group headed by Heslin remained opposed
to offering the official support Tamraz ``desperately
need[ed].'' 140 After receiving his instructions
from Simpson, therefore, it was not surprising that Carter
should continue to ``follow-up'' on the Tamraz issue by
contacting her at the NSC. What is particularly significant
about this contact, however, is the degree to which the two
Energy officials apparently understood this ``follow-up'' to
revolve around Tamraz's campaign contributions.
---------------------------------------------------------------------------
\140\ Ex. 34.
---------------------------------------------------------------------------
Carter's meeting with Simpson--at which Simpson asked his
colleague to find out ``if there was anything different'' about
Tamraz's pipeline which might justify supporting it--apparently
came at the end of another meeting on an unrelated subject. As
Carter left this meeting, he remembers, he noticed a notepad of
Simpson's that contained the words ``Oil Capital or Tamraz or
both'' and ``some numbers'' apparently in Simpson's
handwriting. Recognizing these names from his own work with the
interagency Caspian energy working group, Carter asked Simpson
about them, and their discussion ensued. The figures, Carter
said, included the number 200,000 and the number 400,000;
Simpson ``probably'' explained to him that Tamraz had given
$200,000 to the Democratic Party and might yet give another
$400,000.141
---------------------------------------------------------------------------
\141\ Carter deposition, pp. 49-50.
Kyle told me that McLarty had called and [that] they
wanted to find out something about the guy and whether
the President should meet with him. . . . Kyle either
on the pad or mentioned that the fellow [Tamraz] had
made a contribution, was going to make more
contributions apparently to somebody, political
contributions.142
---------------------------------------------------------------------------
\142\ Id. at p. 45; see also Testimony of John Carter, Sept. 18,
1997, pp. 29-30.
Carter's handwritten notes of his encounter with Simpson
corroborate that they discussed Tamraz and suggest also that
Simpson made clear President Clinton's interest in the
matter.143
---------------------------------------------------------------------------
\143\ John Carter, notes of meeting, undated (Ex. 48) (recording
name ``Oil Capital'' and phrase ``do background on Tamraz/consider
distance--memo to Prez'').
---------------------------------------------------------------------------
Simpson denies having discussed Tamraz's campaign
contributions with Carter, denies ever possessing any list of
such donations, and claims to have no memory of receiving any
such information from McLarty or anyone else.144
Significantly, however, Simpson admits that after the Tamraz
story broke in the press, he called McLarty to discuss these
issues. At that point, apparently on March 17 or 18, 1997,
McLarty had ``refreshed'' Simpson's memory of these crucial
events: ``[he] told me that he had called me because the
President had met with Tamraz and he wanted to know--he was
following up on a request from the President to get more
information.'' 145 Simpson admits having had a poor
memory of his dealings with relation to Tamraz.146
He apparently bases his present account, therefore, in large
part upon this memory ``refreshment'' given him in March 1997
by McLarty in response to reporters' discovery of the Tamraz
affair.147
---------------------------------------------------------------------------
\144\ Simpson deposition, pp. 40-42, 54-55, & 74-75.
\145\ Id. at pp. 81-84.
\146\ See id. at pp. 91-92 (claiming that he had mistakenly given a
factually incorrect account to Wall Street Journal reporter).
\147\ Simpson's credibility is also called somewhat into doubt by
his testimony under oath before the Committee that he was never
involved in any fundraising for the Democratic Party during the 1995-96
election cycle, see Charles Kyle Simpson testimony, Sept. 18, 1997, p.
101--testimony which is inconsistent with a document prepared by the
DNC in connection with a June 21, 1996 presidential reception which
includes Simpson's name on a list of people ``each raising $10,000 for
the gala.'' See Doug Sosnik and David Wofford, Memorandum on
``Democratic National Committee Presidential Reception and Gala
Celebration,'' June 21, 1996 (Ex. 49). (It is a potential Hatch Act
violation for a government employee to raise money for a political
campaign. See 5 U.S.C. Sec. 7323(a)(2).)
---------------------------------------------------------------------------
Interestingly, Carter seems to have misunderstood Simpson's
objectives. As noted above, the request from President Clinton
and McLarty through Simpson was exclusively concerned with the
substantive merits of Tamraz's pipeline--i.e., whether or not
some reason could be found for the Administration to reverse
the interagency working group's determination that the scheme
did not deserve U.S. support. As his testimony shows, however,
Carter seems to have understood Simpson to be asking ``whether
Mr. Tamraz should have a meeting with the President.''
148 This was clearly not the case: the request from
McLarty and Simpson only occurred because Tamraz had already
met with President Clinton. Nevertheless, aware of Tamraz's
significance to the Democratic Party and of the interest of
McLarty and the President in this matter, Carter called Heslin
on April 4, 1996.
---------------------------------------------------------------------------
\148\ Carter testimony, p. 30.
---------------------------------------------------------------------------
As Heslin recalls it, this talk with Carter was the most
uncomfortable conversation of her entire government career.
Jack called me . . . and he said that he wanted to
speak to me about Roger Tamraz; that he--that he was
calling basically at the behest of Mack McLarty who had
recently met with Roger Tamraz and really liked his
pipeline proposal.149
---------------------------------------------------------------------------
\149\ Heslin testimony, p. 29.
Heslin reminded Carter of the interagency working group's
determination that there was ``nothing there'' in Tamraz's
pipeline scheme to justify U.S. support. Carter, however,
---------------------------------------------------------------------------
responded that
well, Mack McLarty really likes [Tamraz] and he wants
him to have a meeting with the President . . . . Jack
said this could mean a lot--this would mean a lot of
money for the DNC, and I said to Jack, well, I don't
really care about $100,000, and he said this is not
100,000, this is five or six times that amount, and I
said, well, what do you mean, and he said, well, he's
already given 200,000, and if he got a meeting with the
President, he would give the DNC another
$400,000.150
---------------------------------------------------------------------------
\150\ Id. at pp. 29-30.
Not caring how much money Tamraz might give to the DNC, Heslin
repeated her opposition to the idea, telling Carter that she
would ``go to [National Security Advisor] Tony Lake to block
this if such a meeting were scheduled.'' Carter, however,
---------------------------------------------------------------------------
continued ``pressuring me.''
[H]e wasn't very gentlemanly during that talk, and he
said, that--he said that Mack [McLarty] was also
representing this because the President wanted him to
do this . . . and he said, well, Mack can push this
through . . . .151
---------------------------------------------------------------------------
\151\ Id. at p. 30.
Indeed, Heslin recalled, Carter threatened her by saying that
``it was something that Mack really wanted'' and telling her
that McLarty might be the next Secretary of Energy; if McLarty
got this position, Carter suggested, it would be difficult for
Heslin to work on oil and gas issues if McLarty were displeased
with her.152
---------------------------------------------------------------------------
\152\ Heslin interview, p. 16.
---------------------------------------------------------------------------
Heslin's handwritten notes of this conversation corroborate
Carter's recitation of the $200,000 and $400,000 figures and
his reference to President Clinton and McLarty.153
In fact, Carter himself admitted in his sworn deposition that
he had ``probably'' mentioned the $200,000 and $400,000 figures
to Heslin and that he must have said ``something to the effect
that there has been contributions made by Tamraz and more
contributions are considered by Tamraz, political
contributions.'' 154
---------------------------------------------------------------------------
\153\ Sheila Heslin, handwritten notes, April 4, 1996 (Ex. 50)
(bearing notation ``Oil Capital / Roger Tamraz--DNC / $400,000--
$200,000 ) $600,000 / Pres. want / Mack McLarty''). (The words ``Mack
McLarty'' are circled and underlined twice.)
\154\ Carter deposition, p. 61.
I would have been telling her that did she know that
there had been contributions made by Tamraz and that he
was--that he was thinking about making more
contributions to 200 and 400. . . . I understood from
others that he was thinking about making a
contribution, more further contributions, and the
question to us was, was there any reason that the
President should meet with Tamraz.155
---------------------------------------------------------------------------
\155\ Id. at pp. 62-63.
Carter also admitted that he might have mentioned the DNC in
his discussion with Heslin, and that ``I indicated to her that
McLarty had asked the question, that I understood Mack
[McLarty] had made the inquiry about whether the President
should take a meeting with Tamraz.'' 156 Heslin, who
had no idea that Tamraz had already met with President Clinton,
apparently shared Carter's misunderstanding that the matter at
issue was simply one of access, rather than whether the U.S.
should endorse the Oil Capital plan.
---------------------------------------------------------------------------
\156\ Id. at p. 63.
---------------------------------------------------------------------------
Despite Carter's pressure and his crude exhortation ``that
[she] shouldn't be such a Girl Scout,'' 157 Heslin
refused to back down. Indeed, Heslin had the impression that
---------------------------------------------------------------------------
\157\ Heslin testimony, p. 30.
Jack himself didn't really believe [that Tamraz
should be accommodated]. He was--Jack knew our policy,
and he had promoted it in the region. He had fought for
it. I think Jack was acting at the behest of someone
else, and he knew dates when Mack McLarty had met [with
Tamraz]. He knew dollar figures, and he never spoke to
me again like that before [or] after . . . I'm just
very sorry that that conversation took
place.158
---------------------------------------------------------------------------
\158\ Id. at p. 31.
In the end, she said, Carter retreated, acknowledging that he
clearly understood ``what your position is.'' 159
---------------------------------------------------------------------------
\159\ Id.
---------------------------------------------------------------------------
By now thoroughly alarmed, Heslin quickly contacted Nancy
Soderberg. As Heslin recalls it, Soderberg, upon being told of
Carter's telephone call and references to McLarty, said ``Oh
myGod, Mack shouldn't be doing that, he should know better, that's
illegal.'' 160 Soderberg does not recall making this
comment, but remembers that Heslin recounted being pressured by an
Energy Department official for ``political reasons'' to change her
position on Tamraz. Soderberg does recall, however, that McLarty's name
somehow came up in her conversation with Heslin. Soderberg says she
told Heslin that the Energy official was ``acting inappropriately.''
161
---------------------------------------------------------------------------
\160\ Id. at p. 32; see also Heslin interview, p. 16.
\161\ Soderberg interview, pp. 10-11.
---------------------------------------------------------------------------
According to Heslin, Soderberg then recommended that Heslin
draft a letter for McLarty to send to Tamraz, phrased in such a
way that ``we could issue [it] to deflate'' any subsequent
claims by Tamraz that the U.S. Government supported his
project.162 Heslin also remembers a second
conversation with Soderberg on this subject, in which Soderberg
asked about her progress in drafting the letter.163
Soderberg does not recall anything about such a letter,
164 but Heslin remembers trying to work out suitable
language with the help of a friend of hers at the State
Department 165 and the White House provided the
Committee with a draft of this letter.166 The letter
was, however, never sent.167
---------------------------------------------------------------------------
\162\ Heslin interview, p. 16; see also Heslin testimony, pp. 32-
33.
\163\ Heslin testimony, pp. 33-34.
\164\ Soderberg interview, p. 12.
\165\ Heslin interview, pp. 16-17.
\166\ Draft letter from Mack McLarty to Roger Tamraz, April 15,
1996 (Ex. 51).
\167\ See Heslin testimony, p. 33; Heslin interview, pp. 16-17.
---------------------------------------------------------------------------
With one exception, this ended Heslin's dealings with
Tamraz during her time at the NSC. In July 1996, Heslin
received a telephone call from Dan Riordan of the Overseas
Private Investment Corporation (OPIC). Riordan informed her
that Tamraz was trying to meet with OPIC's president, Ruth
Harkin and that ``Ruth was under enormous pressure'' to meet
with Tamraz.168 Heslin told Riordan that Harkin
should refuse to meet Tamraz.169 It was, therefore,
perhaps not by coincidence that in November 1996, Tamraz both
contributed $35,000 to the Iowa Democratic Party at the request
of Ruth Harkin's husband, Senator Tom Harkin of
Iowa,170 and Tamraz's representative met with mid-
level OPIC officials in Washington, D.C.171
Nevertheless, he still did not obtain an official meeting with
Ruth Harkin about his pipeline.
---------------------------------------------------------------------------
\168\ Heslin testimony, pp. 92-93; see also Heslin interview, p.
19.
\169\ See Heslin testimony, p. 93; see also Heslin interview, p.
19 (recommending that if anyone at OPIC were to meet with Tamraz, this
should occur at lowest possible level).
\170\ See Tamraz testimony, pp. 114-15; Iowa Democratic Party
itemized receipts (Ex. 52) (indicating $5,000 and $25,000 contributions
by Roger Tamraz and $5,000 from Joelle Tamraz at same address); see
also Tamraz testimony, p. 114; Jane Norman, ``Iowa parties argue about
fundraising,'' Des Moines Register, June 17, 1997, p. 2.
\171\ See Jane Norman, ``Iowa Republicans Charge ''Severe'' Law
Violations by Harkin,'' Des Moines Register, Sept. 27, 1997, p. 3.
---------------------------------------------------------------------------
conclusion
The implications of the Tamraz affair are disturbing.
President Clinton was clearly aware that Tamraz was a major DNC
contributor, having met him at an event for the DNC's ``top
supporters'' and having written to thank Tamraz for his support
for the DNC on the day after McLarty notified Clinton of his
``good visit with Roger'' pursuant to Clinton's
``direction[s].'' As the President wrote in this April 3, 1996
letter to Tamraz,
Your support of the Democratic National Committee and
of my Administration has been critical to our efforts
and will be increasingly important in the coming
months. Thank you for being there when you are asked to
help.172
---------------------------------------------------------------------------
\172\ William J. Clinton, letter to Roger Tamraz, April 3, 1996
(Ex. 53).
After discussing Oil Capital's pipeline scheme with Tamraz
at their March 27, 1996 meeting, the President promptly ordered
McLarty to ``follow-up'' on this issue and report back to him.
For McLarty, this ``follow-up'' involved delegating the matter
to Simpson, who in turn enlisted Carter to the cause. For his
part, Carter's understanding of the financial benefits to the
DNC of endorsing Tamraz's proposal, an understanding he says he
acquired from Simpson, could hardly have been clearer.
Moreover, the $200,000 figure Carter quoted to Heslin closely
corresponds to the $205,000 total sum recounted on one of the
memoranda compiled for Tamraz by the DNC within 24 hours of
Tamraz's meeting with President Clinton, a memorandum which may
itself have been the mysterious Tamraz-related ``fax'' or
``list'' that passed between McLarty and Simpson at that time.
It is difficult not to conclude that Carter's pressure upon
Heslin to change U.S. government policy on the basis of
Tamraz's DNC contributions had its origins in the White House
itself, with uncertain but potentially serious legal
implications for the various officials involved.173
---------------------------------------------------------------------------
\173\ It is, for example, a felony if a ``public official . . .
directly or indirectly, corruptly demands, seeks, receives, accepts, or
agrees to receive or accept anything of value personally or for any
other person or entity'' in return for ``being influenced in the
performance of any official act.'' 18 U.S.C. Sec. 201(b)(2). This
bribery statute defines ``official act'' quite broadly, and nowhere
suggests that the actor must actually succeed in changing government
policy in pursuit of such value in order to fall within this criminal
prohibition.
---------------------------------------------------------------------------
Fortunately, despite his significant financial
contributions to the Democratic Party and his success in
enlisting both Fowler and at least one CIA official in a
lobbying campaign on his behalf,Tamraz did not succeed in
persuading the U.S. Government to support his pipeline schemes in the
Caucasus. Through his ties to the DNC, however, Tamraz did succeed in
subverting the policy of the U.S. Government, as established by the
interagency Caspian energy working group, to deny him access to high-
level U.S. officials. Despite the working group's firm position against
such access, Tamraz found access to the President of the United States
to be available for a price through Donald Fowler and the DNC.
More ominously, Tamraz also succeeded through his political
contributions, and apparently the promise of additional
donations, in enlisting senior United States officials in his
attempt to change the working group's policy on Caspian energy
issues. The access he purchased through the DNC allowed him the
opportunity to lobby for U.S. support for his pipeline scheme;
this lobbying, in turn, persuaded White House and Energy
Department officials to begin searching for excuses to support
the project, applying significant pressure to a member of the
NSC staff in the process.
Thanks to the determination of Sheila Heslin to resist such
pressures and her refusal to compromise what she understood to
be in the national interests of the United States, this attempt
to change government policy did not succeed. Tamraz himself,
for example, professed disappointment--though he remained
unrepentant, suggesting that he had simply not given enough
money to achieve his goals: ``I think next time, I'll give
600,000 [dollars].'' 174 Heslin's steadfastness in
the face of considerable pressure from Administration officials
swayed by Tamraz's campaign contributions led members of the
Committee from both political parties to describe her as a
``hero.'' 175
---------------------------------------------------------------------------
\174\ Tamraz testimony, p. 86.
\175\ See Hearing Testimony, Sept. 17, 1997, at 66 (remarks of
Senator Collins) (``This investigation has been bereft of heroes and I
think you are a real hero.''); see also id. at 73 (remarks of Senator
Lieberman) (``The earlier session ended with Senator Collins calling
you a hero and I agree with that. I think you are one of the points of
light, if I may borrow a bipartisan phrase, in an otherwise relatively
dark firmament.''). Despite having been urged to do so by Senators
Thompson and Collins, however, the Department of Justice has so far
refused to reimburse Heslin for the legal expenses she incurred during
investigations into the Tamraz affair. See Eva Plaza, letter to Richard
Janis, May 13, 1997 (Ex. 54) (denying Heslin request for
representation); Donald Remy, letter to Richard Janis, Oct. 9, 1997
(Ex. 55) (refusing to make final decision on Heslin reimbursement until
``the conclusion of all relevant investigations''). The Committee
believes that Heslin is entitled to have the U.S. Government reimburse
her for the legal expenses she incurred in connection with the Tamraz
matter.
---------------------------------------------------------------------------
Apart from Heslin, however, the Tamraz story has no heroes.
That Tamraz's effort to purchase access to the President and
policy concessions from senior U.S. Government officials
proceeded as far as it did, in fact, speaks volumes about the
party and the Administration whose officials were involved. In
pursuit of his Caspian pipeline deal, Tamraz's methodology of
choice was to use political contributions to buy policy
concessions, having reportedly offered $100 million to the
reelection campaign of Russian President Boris Yeltsin in 1995
in exchange for Moscow's endorsement of the pipeline
project.176 Any such proposal to Yeltsin, however,
apparently went no further than a mere offer. It is ironic
indeed that Tamraz seems to have come closer to purchasing
policy concessions in the United States of America than he did
in the unstable and corrupt new democracy of post-communist
Russia.
---------------------------------------------------------------------------
\176\ According to press accounts, Tamraz met in Milan on November
30 and December 1, 1995, with two senior Russian officials,
Presidential Security Chief Alexander Korzhakov and presidential
advisor Pavel Borodin. Yeltsin was then in the final stages of his
hard-fought presidential race, and Tamraz reportedly offered $100
million to the campaign in exchange for Russia's support for his
proposed Caspian Sea pipeline. See James Risen & Alan C. Miller, ``DNC
Donor's Officer of Funds to Yeltsin Told,'' Los Angeles Times, Sept.
10, 1997. If built, Tamraz's pipeline would bypass existing pipeline
links through Russia in favor of a corridor from Azerbaijan through
Armenia to Turkey--and would thus otherwise be expected to face Russian
resistance. Russian support would also have been important to securing
the new pipeline's acceptance by the other states in the region, since
Russia remains highly influential in the former Soviet republics of the
region.
DNC Efforts to Raise Money in the Indian Gaming Community
Introduction
The Committee examined in depth two different DNC fund-
raising stories relating to Native Americans: the Hudson,
Wisconsin casino, and the Cheyenne/Arapaho tribes. To provide
context to these stories, what follows first is an introduction
to DNC efforts generally to raise money from Indian tribes.
Although, in the case of the Cheyenne/Arapaho tribes of
Oklahoma, the DNC was certainly not adverse to accepting money
from the impoverished tribes, naturally the DNC's labors
focused on wealthy tribes.
Wealthy tribes--tribes able to make large political
contributions--are all tribes with successful gambling casinos.
In examining DNC fund-raising in this area, is it important to
bear in mind an increasing reality of Indian country. The
advent of gambling (also called ``gaming'' somewhat
euphemistically) facilities owned by tribes, which the federal
government permits as a means of tribal economic self-
sufficiency, has made a few tribes very wealthy, while leaving
the poverty of most tribes untouched. If a tribe lives in a
state that allows tribes to operate gambling casinos, possesses
land located near a decent-sized city, and receives permission
to run a casino, such a tribe is virtually guaranteed wealth.
The transformation that obtaining a successful gaming
facility has wrought for the few fortunate tribes is staggering
and in that sense, the law that created this, the Indian Gaming
Regulatory Act, 1 has worked successfully. However,
the law has also created a perfect recipe for the solicitation
of political contributions because the federal government is a
sine qua non participant in Indian gambling. Tribes frequently
need federal government action to open new casinos or expand
existing ones. Moreover, tribes with existing gaming operations
possess what amount to franchises, and the federal government,
by accepting or rejecting applications for new casinos from
potential competitors, can protect or harm those franchises. In
addition, by its authority to impose a tax on gaming revenues
(there is no gaming tax now) or alter the provisions of the
Gaming Act, the government controls such gaming completely.
---------------------------------------------------------------------------
\1\ 25 U.S.C. section 2701 et seq.
---------------------------------------------------------------------------
Documents received by the Committee reveal just how heavily
the DNC focused on raising money in the Indian gaming
community. Since many of the documents were received after the
Committee completed its depositions of DNC personnel,
2 the Committee has limited testimony on the
subject. Nevertheless, the documents speak for themselves. They
show a concentrated effort on behalf of certain wealthy tribes,
and an overall effort to assist the Indian gaming community.
There is also a clear recognition that assistance to the gaming
tribes would result in increased contributions to the DNC.
Moreover, several of the largest contributors to the DNC
received favorable action from the Department of the Interior.
While the Committee was unable to investigate fully these
decisions to see if there was any connection between the
financial support to the Democratic Party and the Interior
decisions, the circumstances, at a minimum, provide troubling
coincidences.
---------------------------------------------------------------------------
\2\ See the section of the report on DNC document production.
---------------------------------------------------------------------------
The Mashantucket Pequots
Since the federal government formally recognized the Pequot
tribe in 1983, the Pequots have steadily increased their
economic standing. The tribe currently operates the Foxwoods
Resort casino in Ledyard, Connecticut. Foxwoods is the one of
the world's largest casinos, with approximately 50,000
customers per day and estimated annual revenues of $1
billion.3 In the fall of 1993, the Pequots, led by
their chairman Richard ``Skip'' Hayward, donated $100,000 to
the DNC. According to a DNC memo, ``this contribution marked
the [Pequot] Nation's commitment to get involved.''
4 Though unstated in the memorandum, the
contribution also marked the DNC's involvement in working on
behalf of Pequot issues. In February 1994, for instance, the
Pequots asked for help from the DNC on an issue at the
Department of Health and Human Services.5 The tribe
also asked for a meeting with then-DNC Chairman David
Wilhelm.6 Wilhelm apparently met with the tribe, as
handwritten notes on his letterhead stationery describe a
variety of Pequot issues, including what appears to be some
land acquisition matters.7
---------------------------------------------------------------------------
\3\ Lyn Bixby, ``Baccarat, Blackjack and Luxury,'' The Hartford
Courant, Nov. 23, 1997, p. E2; Robert Hamilton, ``East Side, West Side:
Casino on the Thames,'' New York Times, June 18, 1995, Section 13CN, p.
1.
\4\ Briefing Paper for David Wilhelm and handwritten notes, undated
(Ex. 1).
\5\ Memorandum from Bob Kearney to Laura Hartigan, Feb. 18, 1994
(Ex. 2).
\6\ Id.
\7\ Ex. 1.
---------------------------------------------------------------------------
President Clinton took a personal interest in the Pequots.
In October 1994, DNC Finance officials included Hayward on a
call sheet for President Clinton. The call sheet noted that
Hayward had already contributed $650,000 to the DNC that
year.8 While never admitting that President Clinton
actually spoke to Hayward, the White House has confirmed that
on October 18, 1994, there was a call made from the White House
Residence to Hayward's office.9 According to White
House telephone records, the call to Mystic, Connecticut lasted
13 minutes.10 Hayward's attorney confirmed that
Hayward had been called by the President in October 1994 but
stated that the President did not specifically ask for
contributions to the DNC, and instead talked about his health
care initiative.11 FEC records indicate that the
Pequots made three separate $50,000 contributions to the DNC
around the time of the President's call--on October 17,
November 4, and November 21 of 1994. Hayward's attorney offered
no explanation for those contributions.12
---------------------------------------------------------------------------
\8\ Memorandum from Terrance McAuliffe to Harold Ickes, Oct. 18,
1994 (Ex. 3).
\9\ Letter from Charles Ruff to Michael Madigan, Oct. 21, 1997
(with attachments)(Ex. 4).
\10\ Id.
\11\ Staff interview of Jackson King, Nov. 1997.
\12\ Id.
---------------------------------------------------------------------------
The Pequots' generosity to the Democratic party assured
them special attention from the DNC. According to a DNC memo,
then-DNC head Don Fowler was scheduled to meet with Hayward,
the Pequot chairman, on November 13, 1995. In a briefing
memorandum for the meeting, Fowler was encouraged by DNC staff
to ask the Pequots to contribute ``at least'' $250,000 to the
DNC.13 The memo notes that an issue of special
significance for the Pequots was a provision in the 1995 budget
bill that proposed a 35% tax on Indian gaming revenues.
Inasmuch as the Foxwoods Resort casino has yearly revenues of
approximately $1 billion, such a tax would have had a huge
impact on the tribe. The provision was removed, and, according
to the memo, Fowler ``played an active role in expressing''
tribal opposition regarding the tax to the Administration and
Congress.14 The memo exhorts Fowler to ``take
credit'' for that and other pro-tribal
achievements.15
---------------------------------------------------------------------------
\13\ Memorandum from Alejandra Castillo to Don Fowler, Nov. 13,
1995 (Ex. 5).
\14\ Id.
\15\ Id.
---------------------------------------------------------------------------
The Pequots applied to the Interior Department on two
occasions for permission to take land into trust in order to
expand their Foxwood resort. Since at least 1993, residents of
three neighboring towns had ``bitterly opposed'' the expansion
of the casino.16 Nevertheless, Interior approved one
of the Pequot applications in May 1995 and reapproved the other
in August 1996. It is unknown if the DNC assisted the Pequots
in convincing Interior to rule in their favor. Between 1993 and
1996, the Pequots donated at least $475,000 to the DNC and
other Democratic campaigns.17
---------------------------------------------------------------------------
\16\ Robert Hamilton, ``East Side, West Side: Casino on the
Thames,'' New York Times, June 18, 1995, Section 13CN, p. 1. See also
David Lightman and Hilary Waldham, ``U.S. Approves Pequots' Bid to
Annex Land,'' The Hartford Courant, May 2, 1995, p. A1.
\17\ Printout from FEC Data Access Program, Jan. 16, 1998 (Ex. 6).
FEC records do not capture all of the possible donations. Thus, a DNC
memorandum indicates that by October 1994, the Pequots had already
contributed nearly $200,000 more than the $475,000 total reflected in
FEC records for all of 1993-96. See Ex. 3, p. 5.
---------------------------------------------------------------------------
the Sault Ste. Marie Tribe of Chippewas
The Sault Ste. Marie Chippewa tribe is located in northern
Michigan. In August 1993, they applied to the Interior
Department for permission to open a casino in the Greektown
area of downtown Detroit. One year later, in August 1994,
Interior approved the application and, pursuant to Section 20
of the Indian Gaming Regulatory Act, forwarded the application
to the Governor of Michigan for his concurrence. However,
because Governor Engler of Michigan exercised his veto power,
the casino never opened.
During the 1996 election cycle, the Sault Ste. Marie
Chippewas made large contributions to the Democratic Party. The
contributions were coordinated by the DNC, although the actual
contributions went to a variety of Democratic state parties.
Mark Thomann, a DNC finance staffer, testified that the tribe
made a $250,000 commitment to the DNC, but then gave much of
the money to various states because of ``privacy''
concerns.18 Thomann explained that the tribe
participated on both the Republican and Democratic sides, and
``by giving too much to one side may upset their friends on the
other side.'' 19 According to a DNC document, the
Sault Ste. Marie Chippewas contributed a total of $282,500 to
twelve different state Democratic parties.20 The
largest contribution, which was for $71,500, went to Tennessee.
Other significant contributions were $60,000 to Illinois,
$44,000 to Oregon, and $30,000 to Maine.21
---------------------------------------------------------------------------
\18\ Deposition of Mark Thomann, September 23, 1997, pp. 118-120.
\19\ Id. at 119.
\20\ List of DDD Contributions [title derived], undated (Ex. 7).
The document is captioned ``DDD,'' a likely reference to the DNC's
directed donor program.
\21\ Id.
---------------------------------------------------------------------------
It is clear that the St. Sault Marie Chippewas believed
their close ties to the DNC would bring them access to
government officials. Thomann testified that in April or May
1996 the tribe asked him to contact someone in the
administration on their behalf. He was hazy on the specifics,
though he recalled that the tribe ``needed help with some sort
of--I don't know what you'd call it--trust or--it's an issue
involving Native Americans.'' 22 Thomann explained
that he relayed the request to Sullivan and was not involved
further.23
---------------------------------------------------------------------------
\22\ Thomann deposition, p. 115.
\23\ Id., pp. 115, 118.
---------------------------------------------------------------------------
june 1995 meetings at the white house
In mid-1995, finance officials at the DNC and Clinton Gore
were targeting various Indian tribes for contributions. For
instance, DNC staffer Adam Crain wrote a May 24, 1995
memorandum requesting that Chairman Fowler solicit Mark
Nichols, the chief financial officer of the Cabazon Tribe of
Mission Indians.24 Crain also sent the memo to the
leadership of the DNC finance division--Richard Sullivan, Ari
Swiller, and David Mercer. After noting Nichols had already
committed to raise $100,000 for the Clinton/Gore campaign,
Crain suggested that Fowler ask him to contribute $100,000 and
become a DNC Managing Trustee. The memorandum confirms the
close ties between the Interior Department and the DNC. Crain
wrote that Nichols is ``close to [then-nominee to be Interior
Deputy Secretary] John Garamendi,'' and that ``Garamendi
suggested . . . that we reach out to Mark [Nichols].''
25 FEC records indicate that the Cabazons donated
approximately $125,000 to the DNC and other federal Democratic
campaigns in 1995-96.26 Nichols became a DNC trustee
later in 1995.
---------------------------------------------------------------------------
\24\ Memorandum from Adam Crain to Chairman Fowler, et al, May 24,
1995 (Ex. 8).
\25\ Id.
\26\ Printout from FEC Data Access Program, Jan. 13, 1998 (Ex. 9).
---------------------------------------------------------------------------
Crain reported further in his memo, ``In his conversation
with John Garamendi's assistant Pam Neifert, Mark was receptive
to the DNC Trustee/Managing Trustee Councils.'' 27
Garamendi, who is now the Deputy Secretary of the Interior, at
the time had been nominated but not yet confirmed for his
Interior position. According to an Interior official, Garamendi
ran unsuccessfully for governor of California in 1994, and was
in the process during 1995 of retiring his gubernatorial
campaign debt.28 He was being assisted in that
regard by Pam Neifert. Although neither Neifert nor Garamendi
were Interior Department officials at the time, and thus the
Hatch Act's prohibitions on soliciting political contributions
would have been inapplicable, the Committee finds unseemly
Garamendi's apparent participation in fund-raising,
particularly since it involved a group--an Indian tribe--over
whom he would soon exert enormous power in his new position.
---------------------------------------------------------------------------
\27\ Ex. 8.
\28\ Staff conversations with Melanie Beller, Director of
Legislative Affairs, Department of the Interior, Jan. 13-14, 1998.
---------------------------------------------------------------------------
On May 26, 1995, Richard Sullivan, DNC Finance Director,
asked Harold Ickes to meet with various Indian leaders coming
to Washington D.C.29 The meeting was set for June
21, 1995.30 Demonstrating the important role that
the finance staffs of the DNC and Clinton/Gore '96 had in
coordinating the meeting, a list of tribal leaders expected to
attend was sent to Sullivan and Terry McAuliffe, Clinton/Gore
Finance Director.31 Mark Nichols of the Cabazon and
Skip Hayward of the Pequots are among the listed attendees.
Coincidentally, another listed attendee is Marge Anderson,
Chair of the Mille Lacs Tribe, one of the tribes that opposed
the Hudson casino application.32
---------------------------------------------------------------------------
\29\ Memorandum from Richard Sullivan to Harold Ickes, May 26, 1995
(Ex. 10).
\30\ Memorandum from Bonnie McNair to Terry McAuliffe, et al, June
13, 1995 (Ex. 11).
\31\ Id.
\32\ Id. The DNC produced this document to the Committee on October
31, 1997, one day after the Committee conducted a hearing on the Hudson
matter.
---------------------------------------------------------------------------
A memorandum to White House political directors from
lawyers representing Indian interests suggested that the
administration needed to start treating its Indian supporters
more favorably.33 In advising the White House about
the meeting with Indian leaders, the lawyers offered, ``When it
comes to politics, though, you should embrace your friends and
keep your adversaries at a distance. Your 1992 supporters have
yet to be singled out for special attention by the President or
anyone else.'' 34 Later on, they pointed out that
``there is a lot of money in Indian country,'' and ``the tribes
have poured hundreds of thousands of dollars into the DNC and
Democratic campaigns in the last four years.'' 35
The co-author of this rather blunt political appraisal? Kevin
Gover, who was sworn in as the Assistant Secretary for Indian
Affairs in November 1997.
---------------------------------------------------------------------------
\33\ Memorandum from Kevin Gover and Cate Stetson to Craig Smith
and Judy DeAtley, June 19, 1995 (Ex. 12).
\34\ Id., at p. 2 (emphasis in original).
\35\ Id., at pp. 2 & 5.
---------------------------------------------------------------------------
DNC Activities in the Fall of 1995
Documentary evidence shows that DNC officials, especially
Chairman Fowler, were active on behalf of Indian tribes in the
fall of 1995. Adam Crain, from the Finance staff, apparently
took the lead as the liaison between the tribes and the DNC.
Besides acting as an advocate for the tribal issues and setting
up meetings for the tribes, the DNC solicited the tribes for
contributions.
By memorandum dated August 28, 1995, for instance, Crain
reported to Fowler about developments at the Native Indian
Gaming Association (NIGA) Convention in Milwaukee.\36\ A few
weeks later, in early September, Fowler met twice with tribal
leaders. A briefing memorandum prepared for Fowler before a
September 7, 1995 meeting noted that ``in the last two weeks,
working with Adam Crane [sic], the Native Americans have raised
$100,000 for the DNC.'' \37\ The memorandum also notes that
possible attendees at the September 7th meeting included Debra
Doxtator and Marjorie Anderson, both of whom represented tribes
that successfully defeated the Hudson application.\38\ In a
September 9, 1995 memorandum, Crain indicated the specific
Indian constituency the DNC was targeting when he wrote that
Fowler would be attending an upcoming Vice-Presidential dinner
with ``seven Indian gaming tribal leaders.'' \39\ Fowler also
met with Indian leaders on September 12, 1995. At that meeting,
according to a memo from Crain, the tribal leaders expressed
their opposition to cuts in the Bureau of Indian Affairs budget
and to amendments to the Indian Gaming Regulatory Act, which
would have increased the ability of states to limit Indian
gaming.\40\ Crain also summarized that the Indian leaders had
asked that calls be made to Ickes and White House Chief of
Staff Leon Panetta, and that ``the political and financial
stakes be emphasized.'' \41\
---------------------------------------------------------------------------
\36\ Memorandum from Adam Crain to Chairman Fowler, Aug. 28, 1995
(Ex. 13).
\37\ Memorandum from Judy DeAtley to Chairman Fowler, Sept. 7, 1995
(Ex. 14).
\38\ Id.
\39\ Memorandum from Adam Crain to Chairman Fowler, Sept. 9, 1995
(emphasis added) (Ex. 15). The memo warns that unless President Clinton
threatened to veto a cut in BIA funding, Democrats would lose
``significant pledges of support for the Committee to Re-elect and the
DNC.''
\40\ Memorandum from Adam Crain to Chairman Fowler, Sept. 15, 1995
(Ex. 16).
\41\ Id.
---------------------------------------------------------------------------
The DNC was already well aware of the financial stakes. In
another memorandum, Crain briefed Fowler on an upcoming
meeting, apparently the one held on September 12, 1995.\42\
After imploring Fowler to read the memo before the meeting,
Crain declares, ``You should ask them to commit $250k together
as a type of `PAC' to the DNC.'' \43\ Crain then explained what
the tribes wanted in return, foremost of which was opposition
to the proposed tax on Indian gaming. The leaders requested a
meeting with Senator Moynihan to talk about the tax provision
and also requested a public statement from the White House
opposing the tax.\44\ Finally, Crain noted that the leaders are
``big supporters of John Garamendi, who is currently Deputy
Secretary at Interior.'' \45\
---------------------------------------------------------------------------
\42\ Memorandum from Adam Crain to Chairman Fowler, undated (Ex.
17).
\43\ Id.
\44\ Id.
\45\ Id.
---------------------------------------------------------------------------
Meanwhile, Crain continued to keep Deputy Secretary
Garamendi informed about what was happening with the Indian
leaders. In a September 7, 1995 memorandum to Garamendi and his
fund-raising assistant, Neifert, Crain listed the schedule of
meetings between the tribal leaders and administration
officials, including Garamendi.\46\ Two of the listed attendees
for a Vice-Presidential dinner on September 11 were leaders of
the Oneida and Mille Lacs, tribes that opposed the Hudson
application. At the end of his memo, Crain explained that
certain tribal leaders were ``contemplating writing 30K'' and
that a call from Neifert ``asking them to write more would be
very helpful.'' \47\
---------------------------------------------------------------------------
\46\ Memorandum from Adam Crain to John Garamendi and Pam Neifert,
Sept. 7, 1995 (Ex. 18).
\47\ Id.
---------------------------------------------------------------------------
The fact that Garamendi received a memo from a DNC official
requesting Garamendi's attendance at an event and asking
Garamendi's former fund-raising assistant to solicit
contributions from a tribal representatives is, at a minimum,
questionable. Garamendi was a high ranking Interior official at
the time, and the Hatch Act barred him from soliciting
political contributions. Although the memorandum stops short of
asking Garamendi directly to violate the Hatch Act, it places
him squarely in the path of the DNC, Garamendi's fund-raising
assistant, and a proposed solicitation. It raises concerns
about Garamendi's involvement in fund-raising at Interior.
In any event, the DNC followed through on the Indian
requests, contacting the White House and Congress. According to
a Crain memorandum dated October 11, 1995, Fowler had already
called Senator Moynihan's office and had a discussion with
Bruce Lindsey at the White House.\48\ A few days later, Fowler
followed up his conversation with Lindsey with a memorandum
specifically setting forth the Indian tribes' ``highest
priority concerns.'' \49\ Fowler also wanted the Indian leaders
to know what he had done. Accordingly, Crain drafted a
memorandum from Fowler to the tribes. After declaring that
Fowler had communicated the tribal concerns to the President,
the memorandum concluded:
---------------------------------------------------------------------------
\48\ Memorandum from Adam Crain to Chairman Fowler, Oct. 11, 1995
(Ex. 19).
\49\ Memorandum from Donald Fowler to Bruce Lindsey, Oct. 16, 1995
(Ex. 20).
My staff at the Democratic National Committee and I
will continue to closely monitor these situations and
will continue to communicate your concerns to both the
Administration and the Congress. It is also important
that we continue our dialogue. Please do not hesitate
to call my office at any time.\50\
---------------------------------------------------------------------------
\50\ See Ex. 19.
Any doubt that one of the DNC's motives in working with the
tribes was securing contributions is put to rest by another
memorandum from Crain to Fowler.\51\ On November 9, 1995, after
this flurry of activity on behalf of the Indian gaming tribes,
Crain informed Fowler of the DNC's take. Crain wrote that over
the last three months, the DNC had received $110,000 from
certain tribes. In listing the contributors, Crain explained
that ``there are several tribes that are currently considering
supporting the DNC.'' \52\
---------------------------------------------------------------------------
\51\ Memorandum from Adam Crain to Chairman Fowler, Nov. 9, 1995
(Ex. 21). Three contributing tribes listed--the Minnesota Mille Lacs,
Wisconsin Oneida, and Wisconsin St. Croix--all lobbied successfully
against the Hudson casino earlier in 1995.
\52\ Id.
---------------------------------------------------------------------------
In April 1996, Fowler weighed in on behalf of Indian tribes
regarding a pension matter. In a letter to Treasury Secretary
Robert Rubin, Fowler asked Treasury to examine what Fowler
characterized as a recent Treasury ruling that employees of
Indian tribes were not eligible to participate in Section
401(k) pension programs.\53\ After claiming that the ruling
would impose ``unfair costs'' on American Indians, Fowler
concluded, ``Please take appropriate action to ensure that
Indian tribes are treated fairly . . . .'' \54\
---------------------------------------------------------------------------
\53\ Letter from Donald Fowler to The Honorable Robert Rubin, Apr.
8, 1996 (Ex. 22).
\54\ Id.
---------------------------------------------------------------------------
Fowler's letter caused a stir at Treasury. The Acting
Assistant Secretary for Tax Policy wrote to Secretary Rubin
that the pension plan issue was already under consideration by
Treasury: ``Given that the issue is currently under review as
it affects a particular Indian tribe, we do not recommend that
the response address Mr. Fowler's request for administrative
action allowing Indian tribes to sponsor 401(k) plans. Because
of Mr. Fowler's position, and the FOIA disclosure of a
response, we believe it would be more appropriate for someone
other that the Secretary of Treasury to sign the response.''
\55\ At the same time, Treasury General Counsel Edward Knight
communicated his concern about this letter (and about another
letter from Fowler) to DNC General Counsel Joe Sandler. Knight
told Committee staff that he told Sandler that the letters were
``inappropriate'' and that he ``wanted them to stop.'' \56\
According to Knight, Sandler agreed with him.\57\
---------------------------------------------------------------------------
\55\ Memorandum from Donald Lubick to Secretary Rubin, June 20,
1996 (Ex. 23). Treasury Chief of Staff Sylvia Mathews responded to
Fowler on July 24, 1996. Letter from Sylvia Mathews to Donald Fowler,
July 24, 1996 (Ex. 24).
\56\ Memorandum of Interview of Edward Knight, May 2, 1997.
\57\ Id.
---------------------------------------------------------------------------
Conclusion
It is clear that access to the DNC resulted in increased
access to administration officials for tribes. And the way to
get access to the DNC was to make political contributions. This
is demonstrated not only by memoranda giving updates of tribal
contributions, but by the simple fact that the liaison to the
tribes was someone from the DNC's Finance Division. The tribes
with greater resources had many more doors opened to them. DNC
officials were eager to advocate the interests of wealthy donor
tribes before government agencies and the White House, even to
the point of making administration officials uneasy, as
demonstrated by the episode involving pension funds and the
Treasury Department.
But not all tribes were afforded the luxury of guaranteed
access. George Newago, Chairman of the Red Cliff Band of
Chippewas, one of the impoverished Wisconsin tribes that lost
out in the Hudson application, explained the distinction to the
Committee. In contrast to the leaders of wealthy tribes who are
stroked by the DNC and the Clinton administration, Newago
observed that the city of Washington D.C. doesn't see Indians
like him--``that the people there don't even know we exist.''
\58\
---------------------------------------------------------------------------
\58\ Staff Interview of George Newago, Oct. 24, 1997.
The Hudson, Wisconsin Casino Proposal
Introduction
This chapter of the report focuses on the events
surrounding the application by three impoverished bands of
Wisconsin Indian tribes to open a casino in Hudson, Wisconsin.
After being approved in November 1994 by the regional office of
the Department of Interior's Bureau of Indian Affairs (BIA),
the application was forwarded to Washington D.C. for final
review. On July 14, 1995, the Department reversed course and
formally rejected the tribes' application.\1\
---------------------------------------------------------------------------
\1\ Letter from Michael Anderson to Honorable Rose M. Gurnoe, et
al., July 14, 1995 (Ex. 1).
---------------------------------------------------------------------------
Prompted by allegations that the Interior decision was
dictated by political and fundraising considerations, the
Committee initiated an investigation into the circumstances
surrounding the rejection. As part of the investigation, the
Committee deposed various White House and DNC officials, as
well a number of current or former officials at Department of
Interior. The Committee also subpoenaed documents from a
variety of sources, including the White House and DNC.
Moreover, the Committee received relevant documents and sworn
testimony from federal and state lawsuits relating to this
application.
On October 30, 1997, the Committee held public hearings on
this issue. While the hearing covered some of the background to
the Hudson application, its focused primarily on a private
meeting between Secretary of Interior Bruce Babbitt and Paul
Eckstein, a lawyer representing the applicant tribes, and
Secretary Babbitt's varying recollections of the meeting.
During the meeting, held on July 14, 1995, the same day
Interior announced the rejection, Secretary Babbitt made
comments suggesting that Interior had come under political
pressure to deny the application. Specifically, according to
Eckstein, Babbitt said that Harold Ickes had directed Babbitt
to make a decision on the matter quickly, and Babbitt also
alluded to sizeable contributions to Democrats from gaming
tribes. Later, when asked about the July 14 meeting, Secretary
Babbitt provided the Senate with contradictory accounts of what
occurred.
In many ways, the Hudson casino story confirms the public's
worst suspicions about how things seem to work in Washington.
The BIA area office approved the casino application in November
1994 over the objections of the wealthy, neighboring tribes
whose nearby gambling casinos would face competition from a new
casino of the applicants. At the same time the area office
decision was sent to Washington for final approval, on a
separate track began a full-tilt lobbying effort against the
decision, which involved the DNC and the White House.
Interior's reversal of the area office recommendation, when
viewed in the context of the lobbying effort and through the
prism of Secretary Babbitt's comments to Eckstein, raises
questions regarding whether the final decision was made for the
right reasons and by the right people. There is strong
circumstantial evidence that the Interior Department's decision
to deny the Hudson application was caused in large part by
improper political considerations, including the promise of
political contributions from opposition tribes. At a minimum,
it is clear that the opposition tribes and their lobbyists
activated the DNC and, to some extent, the White House, to take
action on their behalf. Financial support--both past and
future--was crucial to this effort.
The following discussion describes some background on the
casino application and the lobbying effort put on by the
opposition tribes. It addresses the July 14, 1995 Babbitt/
Eckstein conversation, and Babbitt's subsequent representations
about it. Finally, it sets forth what can be gleaned about the
actual decision-making process at Interior, noting the
inconsistencies and other troubling aspects of it.
THE EVENTS LEADING TO THE DENIAL
In late 1993, three small, poor \2\ bands of Wisconsin
Chippewa Indians--the Sokaogon Chippewa Community, the Lac
Courte Oreille Band of Lake Superior Chippewa Indians, and the
Red Cliff Band of Lake Superior Chippewa Indians--applied to
have the Department of Interior take land in Hudson, Wisconsin
into trust for gaming purposes.\3\ The applicant tribes planned
to convert a failing dog track into a casino.
---------------------------------------------------------------------------
\2\ According to George Newago, the Chairman of the Red Cliff
Chippewas, the unemployment rate for his tribe is over 50 percent, and
the average household income is approximately $5,300 per year.
\3\ Section 20 of IGRA creates the mechanism for such ``off
reservation'' trust acquisitions. See 25 U.S.C. section 2719.
---------------------------------------------------------------------------
Concerned about losing their market share, other tribes
with nearby lucrative casinos lined up against the Hudson
application. The opposition tribes included most notably the
Shakopee Mdewakanton Sioux, the Mille Lacs, the St. Croix
Chippewas, and the Oneida.
Following the standard practice, the applicant tribes
submitted their application to the Minneapolis Area Office of
BIA. In November 1994, after an exhaustive review, including
consultation with local officials and the opposition tribes,
the area office recommended approval of the application in a 32
page memorandum.\4\ The area office found that the application
met both standards imposed by Section 20 of IGRA: (1) the
proposed casino was in the best interests of the applicant
tribes; and (2) it was not detrimental to the surrounding
community. Along with four volumes of documentary support, the
area office transmitted its analysis to Washington D.C. in
accordance with Interior Department procedures for a final
decision.
---------------------------------------------------------------------------
\4\ Memorandum from Department of Interior Area Office to Assistant
Secretary--Indian Affairs, Nov. 15, 1994 (Ex. 2).
---------------------------------------------------------------------------
The Pressure Builds
Once the application arrived in Washington D.C., the
political pressure started. In early 1995, the opposition
tribes hired Patrick O'Connor, a prominent lobbyist as well as
a former DNC Treasurer. O'Connor was a partner in the
Minneapolis based law firm of O'Connor & Hannan. As will be
described below, O'Connor and his lobbying partners became a
persistent presence in this story, blanketing the DNC, White
House, and Interior.
On February 8, 1995, O'Connor arranged a meeting between
the opposition tribes, members of the Minnesota congressional
delegation, and two Interior officials. Interior was
represented at the meeting by John Duffy, Counselor to
Secretary Babbitt, and George Skibine, head of the Indian
Gaming Management Staff. Skibine was the top career official
who dealt with Indian gaming; Duffy, a high ranking political
appointee, and Secretary Babbitt's point man for the Hudson
application. While Duffy testified in his deposition that he
did not have a ``clear recollection of the [February 8]
meeting,'' he believed that Department of Interior Chief of
Staff Tom Collier had asked him to go, probably because
Secretary Babbitt had been asked to attend and could not.\5\
Skibine, who had been head of the Indian gaming office only a
few days at the time of the meeting, said that his role as head
of the Indian gaming office was simply to accompany Duffy and
take notes.\6\ As for what happened at the meeting, Skibine
testified that the opposition tribes complained that they had
not been adequately consulted by the area office, and Duffy
agreed to allow them to supplement the record.\7\
---------------------------------------------------------------------------
\5\ Deposition of John Duffy, Sept. 29, 1997, pp. 11-13.
\6\ Deposition of George Skibine, Nov. 17, 1997, p. 15.
\7\ Id., pp. 17-18.
---------------------------------------------------------------------------
Reopening the administrative record was an unusual step.
The opposition tribes had already been permitted many months to
comment on the application and submit materials for the record.
No Interior official with whom the Committee spoke with could
recall another instance where such a record had been reopened.
O'Connor came to the realization that he could leverage the
DNC to help persuade Interior and the White House to support
his clients' position. On March 15, 1995, O'Connor had David
Mercer, the Deputy Finance Director of the DNC, arrange a
meeting with Don Fowler, the DNC chairman. O'Connor brought his
partner and fellow lobbyist, Larry Kitto.8 According
to O'Connor's date book, Fowler was accompanied by DNC Finance
Chair Truman Arnold.9 As for the purpose of the
meeting, Mercer explained in a memorandum to Fowler that
O'Connor and Kitto would be coming from a meeting with Tom
Collier and that the lobbyists' ``issue'' had to do with Hudson
casino proposal.10 Collier recalls that he, not
Duffy, made the determination to reopen the administrative
record. Moreover, Collier remembers reopening the record after
the meeting with O'Connor.11
---------------------------------------------------------------------------
\8\ Memorandum from David Mercer to Chairman Fowler, Mar. 15, 1997
(Ex. 3).
\9\ Excerpts of Patrick O'Connor's 1995 Date book (Ex. 4).
\10\ Ex. 3.
\11\ Deposition of Thomas Collier, Sept. 29, 1997, p.13.
---------------------------------------------------------------------------
Shortly after his meetings with DNC officials and Collier,
O'Connor began trying to contact officials at the White House.
In April 1995, O'Connor left numerous phone messages at the
White House for Loretta Avent, a member of Harold Ickes's staff
who handled Indian issues. Avent ducked O'Connor's initial
calls, consistent with the standing advice of counsel that
White House staffers should not speak to lawyers or lobbyists
on Indian issues.12 Undeterred, O'Connor faxed Avent
a memorandum, asking to talk to her about intervening on the
Hudson application.13
---------------------------------------------------------------------------
\12\ Memorandum from Loretta Avent to Harold Ickes, Apr. 24, 1995
(Ex. 5).
\13\ E-mail from Michael Schmidt to Cheryl Mills, Apr. 24, 1995
(Ex. 6).
---------------------------------------------------------------------------
Meanwhile, on Monday, April 24, 1995, during a Presidential
visit to Minneapolis, O'Connor was able to go right to the top.
At a small reception, O'Connor brought up the Hudson
application with President Clinton. In his state court
deposition, O'Connor described the situation:
When he [the President] got to me, I said, ``Mr.
President, the Indian tribes that I represent are
concerned about a possible casino going in near Hudson,
Wisconsin, which is across the river.'' And that's what
I said. At that juncture, he said, ``Bruce.'' And Bruce
[Lindsey] came over. . . . [The President] said,
``Bruce, talk to O'Connor here about his concerns about
tribes that he represents.'' That was it.14
---------------------------------------------------------------------------
\14\ Excerpts of State Court Deposition of Patrick O'Connor, Apr.
29, 1997, p. 61 (Ex. 7).
O'Connor explained to Lindsey that the proposed casino
would have a serious economic impact on his clients. After
O'Connor indicated he wanted to make sure this view got
communicated to Interior, Lindsey said that he would have
someone call O'Connor. When O'Connor commented that he ``hadn't
been able to get anywhere with Loretta [Avent]'', Lindsey
simply repeated he would have someone call
O'Connor.15
---------------------------------------------------------------------------
\15\ A White House memo described the O'Connor conversation with
the President as follows: ``Pat bumped into the President today in
Minneapolis and mentioned to him that Loretta never returned his
calls.'' Ex. 6. See also Ex. 7, p. 62.
---------------------------------------------------------------------------
Lindsey quickly followed through. The same day, he called
Avent from Air Force One to check into the Hudson
matter.16 Avent agreed to call O'Connor, but only
after cautioning that White House counsel had advised her not
to speak directly to lobbyists on Indian issues.17
---------------------------------------------------------------------------
\16\ Ex. 6.
\17\ Ex. 5.
---------------------------------------------------------------------------
Before calling O'Connor, Avent also wrote a strongly worded
memo to Ickes.18 In the memo, Avent described her
reluctance to get involved in the Hudson matter: ``This is such
a hot potato . . . too hot to touch. The legal and political
implications of our involvement would be disastrous.'' Avent
then cautioned that some tribal leaders have ``already gone
ballistic about other tribal governments who have greater
access to the Administration because of their ability topay
hired guns (as they call them) and their belief that this
unfairly gets things to happen.'' \19\
---------------------------------------------------------------------------
\18\ Id. Even before the Committee received the memoranda attached
as Exhibits 5 and 6, Avent's name had surfaced. Accordingly, Committee
staff contacted Avent by telephone in early October 1997 and asked her
about her involvement with the Hudson matter. Avent explained that she
really could not remember anything about it. Interview of Loretta
Avent, Oct. 14, 1997.
\19\ Ex. 5 Undeterred by Avent's April 24 memo, Ickes telephoned
O'Connor on April 25 and 26, leaving messages both times. O'Connor
apparently returned the calls and spoke to an assistant in Ickes'
office. Ickes could not explain why he called O'Connor on those dates.
In response to questions, Ickes testified at his deposition that he
could not recall any discussion with Lindsey or the President about
this issue and that he ``doubted'' that he had a discussion with either
one. Deposition of Harold Ickes, Sept. 22, 1997, pp. 31-32.
---------------------------------------------------------------------------
Avent also called O'Connor on April 24. According to a
memorandum of the conversation, O'Connor was agitated that
Avent still resisted meeting with him on the Hudson matter.
Before abruptly hanging up, O'Connor warned Avent that he would
discuss her resistance later in the week when he met with Don
Fowler at the DNC. 20
---------------------------------------------------------------------------
\20\ Ex. 6.
---------------------------------------------------------------------------
The opposition tribes activate the DNC
On April 28, 1995, O'Connor, along with other lobbyists and
opposition tribal leaders, met with Don Fowler at DNC
headquarters. The purpose of the meeting, succinctly stated in
a lobbyist's memo, was ``to discuss our position on the [Hudson
application] with influential Democrats in Washington. The
people we will be meeting with are very close to President
Clinton and can get the job done.'' 21
---------------------------------------------------------------------------
\21\ Memorandum from John McCarthy to All Tribal Leaders, Apr. 25,
1995 (Ex. 8).
---------------------------------------------------------------------------
If, as the saying goes, time is money, Fowler judged this
meeting to be important. He spent two hours with the lobbyists
and their tribal clients. The lobbyists, impressed by how much
time Fowler gave them, thanked Mercer after the meeting:
``Thank you for your note regarding our recent meeting with
Chairman Fowler on the Indian gaming issue. I was amazed and
pleased that he would devote so much of his time to the
issue.'' 22
---------------------------------------------------------------------------
\22\ Letter from Franklin Ducheneaux to David Mercer, May 4, 1995
(Ex. 9).
---------------------------------------------------------------------------
According to one meeting participant, money was a topic of
the meeting. Lewis Taylor, the head of the St. Croix tribe, has
testified in a state court deposition that he discussed making
contributions to the DNC. Asked whether he ``specifically
recollect[ed] discussing campaign contributions during that
[April 28] meeting with Don Fowler,'' Taylor recounted, ``I
believe I did.'' 23 Taylor also testified that he
told Fowler, ``We support our friends. St. Croix supports their
friends'' and ``[The St. Croix] have got a number of heavy duty
issues that we needed help on and our friends are the Democrats
and therefore I think we should donate to assist in some of
these causes.'' 24 When Fowler testified before the
Committee, he did not rule out the possibility that
contributions were discussed but repaired to the defense of
``no memory'' when asked directly: ``If such a comment was
made, I do not remember it.'' 25
---------------------------------------------------------------------------
\23\ State Court Deposition of Lewis Taylor, Dec. 17, 1996, pp. 75-
76 (Ex. 10).
\24\ Id. at pp. 69-71.
\25\ Testimony of Don Fowler, Sept. 9, 1997 p. 108. Fowler said in
his deposition, ``I'm aware that some of them [the opposition tribes]
contributed. I was not aware that they had contributed when I talked
with them, nor was I concerned with the possibility that they would or
would not contribute.'' Deposition of Don Fowler, May 21, 1997 p. 266.
---------------------------------------------------------------------------
Memoranda about the April 28 meeting illuminate its purpose
quite clearly. Larry Kitto explained in a memorandum that ``the
purpose of the meeting was to request the DNC and the Committee
to re-elect the President, to help communicate with the White
House and the President about why the Department of the
Interior should not approve [the Hudsonapplication].''
26 Kitto also wrote about what he and his clients told
Fowler: ``The message was quite simple: all of the people against this
project, both Indian and non-Indian are Democrats who have
substantially large blocks of votes and who contribute heavily to the
Democratic party. In contrast, all of the people for this project are
Republican.'' 27 Another memo summed up Fowler's demeanor
during the meeting: ``He [Fowler] listened. He took notes. He asked
questions. He got the message: ``It's politics and the Democrats are
against it and the people for it are Republicans.'' 28
---------------------------------------------------------------------------
\26\ Minnesota Legislative Update [lobbying report prepared by
Larry Kitto], April 24-28, 1995 (Ex. 11). The report mistakenly dates
the Fowler meeting as April 18, 1995.
\27\ Ex. 11 (emphasis added).
\28\ Memorandum from Tom Krajewski to JoAnn Jones, May 3, 1995 (Ex.
12).
---------------------------------------------------------------------------
According to a lobbyist's report, ``Fowler assured the
group that he would take this issue up with high ranking
officials in the White House and, if necessary, would arrange a
meeting with Tribal officials and the White House, and that he
would do this in a very timely manner.'' 29 Fowler
may have been even more specific in whom he would contact. One
opposition lobbyist summarized in a memo, ``Mr. Fowler stated
that he would speak with the President's assistant, Harold
Ickes. He would urge Mr. Ickes to urge Secretary Babbitt to
make a closer examination of impact of the proposed
operation.'' 30
---------------------------------------------------------------------------
\29\ Ex. 11.
\30\ Memorandum from Carl Artman to Scott Dacey, May 1, 1995 (Ex.
13).
---------------------------------------------------------------------------
Fowler was true to his word. Within days, Fowler called
Ickes and someone at the Department of Interior. Fowler
testified, ``I called Mr. Ickes, explained to him the nature of
the situation, and I called someone at the Department of
Interior. I do not recall the name of the person with whom I
spoke at the Department of the Interior. I just simply don't
recall that person's name. I simply asked that situation and
the facts in that situation be reviewed.'' 31 The
Committee was never able to identify who precisely Fowler
called at the Interior.32 Fowler followed his phone
call to Ickes with a memorandum describing the opposition
tribes as ``our supporters,'' and soliciting Ickes's advice on
``how we might proceed.'' 33
---------------------------------------------------------------------------
\31\ Fowler testimony, p. 107.
\32\ In Committee depositions, no current or former Interior
official admitted to speaking with Fowler. However, Tom Collier, former
Interior Chief of Staff, indicated that he would have been the most
likely person for Fowler to call, and that is ``absolutely possible
that he may have called me and I don't remember.'' Collier deposition,
p. 25.
\33\ Memorandum from Don Fowler to Harold Ickes, May 5, 1995
(Ex.14).
---------------------------------------------------------------------------
After Fowler contacted Ickes, O'Connor followed up with
Ickes directly.34 In a May 8, 1995 letter, O'Connor
described the Hudson application, including the fact that he
had already discussed the issue with President Clinton,
Lindsey, and Fowler. O'Connor then wrote candidly about ``the
politics involved in this situation.'' O'Connor explained,
``all of the representatives of the tribes that met with
Chairman Fowler are Democrats and have been so for years. I can
testify to their previous financial support to the DNC and the
1992 Clinton/Gore Campaign Committee.'' 35
---------------------------------------------------------------------------
\34\ Letter from Patrick O'Connor to Harold Ickes, May 8, 1995 (Ex.
15).
\35\ Id.
---------------------------------------------------------------------------
During this same time period, O'Connor and his partner
Kitto were having numerous conversations with fund-raising
officials of the DNC and the Clinton/Gore Campaign that related
to the Hudson matter. According to relevant excerpts from their
date books, O'Connor and Kitto met or spoke frequently with
Fowler, David Mercer, the DNC Deputy Finance Director, and
Terry McAuliffe, the Finance Chair of the Clinton/Gore
Campaign.36 Most of the entries, which begin in
early 1995 and continue through the date of the Interior
decision, simply show meetings or conversations between the
lobbyists and the fund-raisers.
---------------------------------------------------------------------------
\36\ See Ex. 4 and Excerpts of Larry Kitto 1995 Date book (Ex.16).
---------------------------------------------------------------------------
However, some of the entries are more telling. In somewhat
cryptic notes, for example, Kitto wrote, ``25 people at $1,000
each'' and also ``DNC, Committee to Reelect--50 grand.''
37 O'Connor had a similar entry. According to his
date book, on May 24, 1995, O'Connor also mentioned the Hudson
matter to Peter Knight, Chairman of the Clinton/Gore Campaign,
and David Strauss, Vice-President Gore's Deputy Chief of
Staff.38 On June 19, 1995, O'Connor wrote,
``Disc[ussion] re support to be given to Committee to Reelect
and DNC.'' 39
---------------------------------------------------------------------------
\37\ See Ex. 16.
\38\ See Ex. 4.
\39\ Id.
---------------------------------------------------------------------------
It is clear that these conversations and meetings were
related to the Hudson matter. O'Connor and Kitto were permitted
to redact unrelated entries from the date books they were
required to produce during litigation. Even more importantly,
O'Connor billed the opposition tribes for all of the above-
referenced contacts.40
---------------------------------------------------------------------------
\40\ Letters from Thomas Corcoran to Lewis Taylor, May 9, June 27,
July 11, Sept. 15, and Oct. 18, 1995 (enclosing O'Connor and Hannan
bills) (Ex. 17).
---------------------------------------------------------------------------
Meanwhile, on May 14, 1995, another of O'Connor's partners,
Tom Schneider, ran into Ickes at a Democratic fund-raising
event, and asked Ickes about the Hudson casino matter. Ickes
acknowledged that he told O'Connor that he would look into the
Hudson matter.41 When Schneider reiterated the
importance of Ickes's direct involvement in the matter, Ickes
confirmed to Schneider, ``I'll follow through on it.''
Schneider explained, ``[Harold Ickes and I] had a relationship
that if he said he was going to do something he'd do it.''
42
---------------------------------------------------------------------------
\41\ State Court Deposition of Thomas J. Schneider, Sept. 8, 1997,
p. 17 (Ex. 18). In his deposition testimony, Ickes said he could not
recall talking to O'Connor. Ickes testified, ``I don't recall ever
talking to O'Connor about this. Again, I'm not saying I did, but as a
deputy chief of staff, I talk to a lot of people in the course of a
day, week, months and years. So I have no specific recollection. I may
have, but I don't have any recollection, a specific conversation with
him.'' Deposition of Harold Ickes, Sept. 22, 1997, p. 31.
\42\ Ex. 18, p. 25.
---------------------------------------------------------------------------
On May 16, 1995 O'Connor wrote Ickes again, and forwarded
some materials favorable to the opposition tribes.43
Sometime in the next 24 to 48 hours, there is the first
documented contact between Ickes' staff and Secretary Babbitt's
staff at Interior about the Hudson matter.
---------------------------------------------------------------------------
\43\ Facsimile from Patrick O'Connor to Harold Ickes and John
Sutton, May 16, 1995 (Ex. 19).
---------------------------------------------------------------------------
The White House contacts Interior
On May 18, 1995, Jennifer O'Connor, an assistant to Ickes
(and no relation to lobbyist Patrick O'Connor), wrote Ickes a
memorandum about the Hudson matter.44 After
referencing Patrick O'Connor's interest in the matter, Jennifer
O'Connor provided an update. She wrote that the Interior staff
had met ``last night'' and had come up with a preliminary
decision to deny the application. After cautioning that the
information was not yet public, Jennifer O'Connor listed some
reasons for the rejection, including opposition from the local
community. She then wrote, ``some [Interior] Department staff
think the bottom line here is the Minnesota and Wisconsin
tribes who are benefiting enormously from gaming don't want the
competition, and are able to hire bigger lobbyists than the
three very poor tribes who want the casino.'' 45
---------------------------------------------------------------------------
\44\ Memorandum from Jennifer O'Connor to Harold Ickes, May 18,
1995 (Ex. 20).
\45\ Id.
---------------------------------------------------------------------------
Without being able to cite a precise date, Jennifer
O'Connor testified that she first became involved in the Hudson
matter when Ickes handed her a letter from Patrick O'Connor and
asked her to find out the status.46
---------------------------------------------------------------------------
\46\ Deposition of Jennifer O'Connor, Oct. 6, 1997, p. 37. In both
his hearing and deposition testimony, Ickes stated that he could not
recall much about the Hudson application. Ickes testified at the
hearing, ``I recall--as I stated in my deposition, I was not--to the
best of my recollection, I was very peripherally involved in that. I
think that Jennifer O'Connor on my staff was the primary point person
on it. I recall having one discussion. I think it was a telephone
discussion with Don Fowler--he and I talked constantly so it is hard to
separate all of this out--in which he raised the issue. I told him I
would check on it, and I think I had Ms. O'Connor check on it, on the
status of it.'' Testimony of Harold Ickes, Oct. 8, 1997, pp. 46-47.
Later in his testimony, when asked if he recalled talking to
Secretary Babbitt or any other political appointees at Interior about
this issue, Ickes again responded that he could not recall. He stated,
``No. As I said before, I don't have any recollection of it, and of
talking to Interior about this. I think that this--I had given this to
Jennifer O'Connor to check on the status.'' Ickes testimony, p. 55.
---------------------------------------------------------------------------
She testified that in response to Ickes'' request, she
called officials at Interior. She said that she may have spoken
to Collier or John Duffy, but if so, she was quickly pointed in
the direction of Secretary Babbitt's special assistant, Heather
Sibbison.47 Much like Avent, Jennifer O'Connor
apparently recognized the implications of White House
involvement in agency decisions. Asked what she and Sibbison
talked about, O'Connor volunteered that she began their
conversation with a disclaimer--that she was only looking for a
status and that she did not want to influence anything or learn
anything that she was ``not supposed to know.'' 48
---------------------------------------------------------------------------
\47\ Jennifer O'Connor deposition, p. 39.
\48\ Id., pp. 40-41.
---------------------------------------------------------------------------
Documents reflect additional contacts between Ickes'' staff
and Interior during the next few weeks. Jennifer O'Connor
continued to call Duffy. According to Duffy's phone logs,
Jennifer O'Connor called him on May 25, 1995, and left a
message. Duffy or someone from his office apparently called
O'Connor back again, because on May 31, there is another
message from Jennifer O'Connor to Duffy, with the notation,
``returned your call.'' Duffy likely called O'Connor back
because the same telephone log records the disposition as
``done.'' 49 Duffy was shown these telephone logs
and asked if they helped him remember whether he spoke to her
about the Hudson matter. Duffy replied, ``It does not. I don't
have any recollection of talking to Jennifer about the Hudson
casino. But I can't tell you I never talked to her because I
just don't recall one way or the other.'' 50
---------------------------------------------------------------------------
\49\ Interior Department Telephone log, May 25, 1995 (Ex. 21).
\50\ Duffy deposition, p. 60.
---------------------------------------------------------------------------
In early June, Ickes's office again telephoned Interior. It
is unclear what prompted this contact, though the record shows
that on June 1, 1995, Patrick O'Connor faxed another note to
Ickes.51 In any event, Jennifer O'Connor testified
that she asked an intern, David Meyers, to see if Interior had
already announced its decision.52 Meyers followed
through and spoke to Sibbison. According to a June 6, 1995
memorandum of his conversation, which preceded Interior's
announcement of the rejection by five weeks, Sibbison told
Meyers that it is ``95% certain that the application will be
turned down'' and that Interior will make a decision in the
next two weeks.53 Sibbison also described Interior's
reasoning to Meyers and indicated Interior was aware of the
intense lobbying by the opposition tribes. ``She [Sibbison]
explained that there is significant local opposition. Much of
the opposition, however, is a by-product of wealthier tribes
lobbying against the application. . . . Nonetheless, she stated
that they will probably decline, without offering much
explanation, because of their `discretion' in this matter.''
54 Besides cautioning that this information was not
yet public, Sibbison apparently solicited the views of the
White House. Meyers wrote to Jennifer O'Connor, ``She asked
that if you have any feedback please call her with your
thoughts.'' 55
---------------------------------------------------------------------------
\51\ Facsimile from Patrick O'Connor to Harold Ickes and John
Sutton, June 1, 1995 (Ex. 22).
\52\ Jennifer O'Connor deposition, p. 53.
\53\ Memorandum from David Meyers to Jennifer O'Connor, June 6,
1995 ( Ex. 23).
\54\ Id.
\55\ Id.
---------------------------------------------------------------------------
In her deposition, Sibbison acknowledged speaking to Meyers
but took issue with his characterization of her comments. As
for the local opposition, she testified, ``we were hearing
those rumors, and I must have told this guy that, and he's
written it as if it's fact instead of rumor.'' 56 As
for the feedback comment, Sibbison denied that she ever asked
for Jennifer O'Connor's opinion nor was she concerned with
Jennifer O'Connor's views on the application.57
---------------------------------------------------------------------------
\56\ Deposition of Heather Sibbison, Sept. 26, 1997, p. 94.
Regardless of whether the claim of manufactured local opposition is
characterized as rumor or fact, it appears that Interior officials did
not take any steps to inquire further. Sibbison testified that no one
at Interior conducted any further exploration into the issue of
lobbyists generating local opposition. Sibbison deposition, pp. 97-98.
Moreover, Michael Anderson, the Interior official who signed the denial
letter, testified in his deposition that ``if someone ginned that [the
local opposition] up by wealthier tribes lobbying, I didn't look behind
that.'' Anderson deposition, Sept. 19, 1997, pp. 82-83.
\57\ Sibbison deposition, p. 99.
---------------------------------------------------------------------------
At some point in time, Jennifer O'Connor reported to Fowler
about what she had learned. Jennifer O'Connor testified:
A: Mr. Fowler called me. He said roughly--this is,
again, it's vague and hazy in my memory, but he said
something along the lines of can you tell me what the
status is of this issue because I really want to be
able to get back to some people when it's finished.
And I said to him--I can't remember exactly when he
called, but the Department had not yet finished its
deliberations, and I said, here's the status, they're
not done yet. There's nothing we can tell anybody. All
you can say to whoever it is you're talking to--I don't
think he told me who he was talking to--but I said to
him the only thing he could say to them was that
Interior was moving along and would have a decision at
some point soon.
And I made clear to him he couldn't tell them
anything other than that. So--
Q: So, Mr. Fowler called you, he merely inquired into
the status of the pending application?
A: Yes. My recollection of the conversation was that
he was very interested in being able to be responsive
to some set of people who wanted to know when the
decision was going to be made.
Q: Did you understand that set of people were donors
to the Democratic National Committee or prospective
donors to the DNC?
A: He never told me who they were.58
---------------------------------------------------------------------------
\58\ Jennifer O'Connor deposition, pp. 62-63.
It is unclear whether Fowler or anyone else reported back
to Patrick O'Connor or his opposition tribe clients.
Nevertheless, a June 12, 1995 entry in O'Connor's date book
shows that he received a report on White House ``new
developments.'' 59
---------------------------------------------------------------------------
\59\ Ex. 4.
---------------------------------------------------------------------------
The Formal Decision
Against the backdrop of this full tilt lobbying push, the
decision process at Interior moved forward. Briefly, the
process unfolded as follows: On June 8, 1995, Tom Hartman, a
career BIA employee with the Indian Gaming Management Staff,
wrote a 17-page analysis, in which he recommended finding the
necessary predicate for approving the application.60
Apparently sometime after Skibine received Hartman's memo, a
longer version of the memo, again favoring approval of the
application, was prepared. Skibine is the author listed; the
final decision maker listed is the Assistant Secretary for
Indian Affairs.61
---------------------------------------------------------------------------
\60\ Memorandum from Indian Gaming Management Staff [signed by Tom
Hartman] to Director, Indian Gaming Management Staff, June 8, 1995,
(Ex. 24).
\61\ Memorandum from George Skibine to the Assistant Secretary--
Indian Affairs, undated (Ex. 25).
---------------------------------------------------------------------------
Despite these detailed staff analyses approving the
application, Skibine testified that he prepared a draft letter
rejecting the application, readied for Assistant Secretary Ada
Deer's signature, on June 29, 1995.62 During the
next two weeks, the Secretary's office at Interior coordinated
the review and revisions of Skibine's June 29 draft letter.
Somewhere in the process Assistant Secretary Deer quietly
recused herself from the decision. On July 14, 1995, Michael
Anderson, Deer's deputy, Michael Anderson, signed the denial
letter and Interior formally issued its decision.
---------------------------------------------------------------------------
\62\ Skibine deposition, p. 65.
---------------------------------------------------------------------------
The payback?
On July 14, 1995--the day of Interior's decision and the
meeting between Babbitt and Eckstein--O'Connor and Kitto
discussed fund-raising. This conversation, for which the
opposition tribes were billed, is described in O'Connor's date
book as follows: ``Disc[ussion] re[garding] necessity to follow
up with Harold Ickes at the White House, Fowler at the DNC and
Terry Mac [McAuliffe] at the Committee to Reelect outlining
fund-raising strategies.'' 63
---------------------------------------------------------------------------
\63\ Ex. 4.
---------------------------------------------------------------------------
The fund-raising strategies alluded to by O'Connor
certainly worked well. According to FEC records, during the
next four months, the DNC and the Democratic Senatorial
Campaign Committee (DSCC) collected about $53,000 from the
opposition tribes. FEC records show that those same tribes
contributed an additional $230,000 to the DNC and DSCC during
1996. In addition, many of the same tribes contributed a total
of over $50,000 to the Minnesota Democratic Farmer Labor Party.
These numbers do not include any contributions made by the
lobbyists or individual tribal members to the Clinton/Gore
campaign or donations to other state parties that might have
been directed by the DNC.
After the July 14 decision, the opposition tribes and
lobbyists showed who they thought was responsible for tilting
the decision in their favor. Fowler received at least three
thank you notes from opposition tribes and lobbyists. In a
letter dated August 3, 1995, JoAnn Jones,the President of the
Ho-Chunk Nation, wrote, ``I want to thank you for your help in the
successful effort to defeat the Hudson casino. Numerous people
contributed to the Department of Interior decision. You were
particularly instrumental in helping the Department understand the
significance and importance of their decision.'' 64 David
Mercer at the DNC also received at least one note from a lobbyist.
Franklin Ducheneaux wrote to Mercer on July 27, 1995, ``The Minnesota
Tribes are very grateful to you and the Chairman for your assistance in
advising the President and the Secretary on this matter.''
65 JoAnn Jones of the Ho-Chunks even wrote to President
Clinton, thanking him for his help in defeating the Hudson
application.66
---------------------------------------------------------------------------
\64\ Letter from JoAnn Jones to Don Fowler, Aug. 3, 1995; Letter
from Dallas Ross to Don Fowler, July 24, 1995; Letter from Franklin
Ducheneaux to David Mercer, July 27, 1995; and Letter from Stanley
Crooks to Don Fowler, July 27, 1995 (Ex. 26).
\65\ Id.
\66\ Letter from JoAnn Jones to President Clinton, Aug. 3, 1995
(Ex. 27).
---------------------------------------------------------------------------
O'Connor and Kitto also stated their belief that the White
House had assisted the opposition tribes. In a September 14,
1995 fund-raising invitation for the Clinton/Gore Campaign, the
two lobbyists wrote, ``As witnessed in the fight to stop the
Hudson Dog Track proposal, the Office of the President can and
will work on our behalf when asked to do so.'' 67
---------------------------------------------------------------------------
\67\ Fund-raising invitation letter, Sept. 14, 1995 (Ex. 28).
---------------------------------------------------------------------------
Paul Eckstein and Bruce Babbitt
By early July 1995, nine months after the area office's
approval, the Secretary's office at the Department of Interior
had still not formally acted on the application. At that time,
according to Eckstein, ``there were a lot of rumors flying
around'' that a decision was imminent.68 Concerned
because wealthy tribes with competing casinos had mounted an
intense lobbying campaign against their application, the
applicant tribes retained Paul Eckstein to ``find out what
[was] happening.'' 69 Eckstein was retained in April
1995. Shortly after being hired, Eckstein secured a commitment
from Secretary Babbitt that if the Department was going to deny
the application, Babbitt would first have a face-to-face
meeting with leaders of the applicant tribes.70
---------------------------------------------------------------------------
\68\ Testimony of Paul Eckstein, Oct. 30, 1997, p. 18.
\69\ Id. Eckstein is a prominent Phoenix, Arizona lawyer, and a
partner in the firm of Brown and Bain. During his 32 years of law
practice, Eckstein has handled a wide variety of matters, including
various issues on behalf of Indian tribes. Id., p. 11-12. Eckstein is
also a long time friend of Secretary Babbitt, as the two of them met at
Harvard Law School in 1962. After law school, the two men took the
Arizona bar exam together and then in 1967, Babbitt was hired by the
same Phoenix law firm that Eckstein had joined two years earlier. At
that time, the firm had less than 10 lawyers. Eckstein and Babbitt
practiced law together through 1974, when Babbitt was elected Arizona
Attorney General. Id., p. 13.
As Babbitt moved from Attorney General to Governor of Arizona in
1978, Eckstein continued to have regular contact with Babbitt.
Eckstein, in fact, was a member of what was known at the time as then-
Governor Babbitt's ``kitchen cabinet.'' Id., p. 14. In 1982, Eckstein
ran Secretary Babbitt's reelection campaign for Governor. Eckstein,
moreover, once represented then-Governor Babbitt in a defamation
lawsuit. Id. Asked whether he considered Secretary Babbitt a friend,
Eckstein responded simply, ``yes.'' Id.
\70\ Deposition of Paul Eckstein, Sept. 30, 1997, pp 29-30.
---------------------------------------------------------------------------
Tasked with determining the status of the pending
application, Eckstein called Secretary Babbitt on July 11,
1995. During their conversation, Secretary Babbitt directed
Eckstein to meet with Babbitt's counselor, John Duffy,
indicating that Duffy and would call him.71 Duffy
was the Secretary's point man on this application. Duffy called
Eckstein that day from a plane, telling him that if Eckstein
wanted a meeting, he needed to get to Washington D.C.
immediately. When Eckstein asked to have the meeting the
following Monday, Duffy said, ``Well it's got to be this week,
you've got to get here.'' 72 Accordingly, they set
the meeting for the morning of Friday, July 14.
---------------------------------------------------------------------------
\71\ Eckstein testimony, p. 19.
\72\ Id.
---------------------------------------------------------------------------
The Friday morning meeting between Eckstein and Duffy
lasted about 45 minutes. Eckstein described the meeting as
follows:
We . . . began making the arguments in favor of
granting the application, and thought that Mr. Duffy
was agreeing with us. The nods seemed to be at the
appropriate times, and rather abruptly, well into the
presentation, a half-hour, 40 minutes into the
presentation, he says, Wait a minute. He said the
application is going to be denied. The decision of
denial is going to be issued today, and the reasons are
that the St. Croix Chippewas will be injured and their
Turtle Lake facility will be hurt if they grant this
application, and the local opposition that exists in
the Hudson area. And we questioned him a little about
that, and then left . . . .73
---------------------------------------------------------------------------
\73\ Id., p. 20.
Shortly after finishing with Duffy, Eckstein called Babbitt
and asked for a meeting. Babbitt agreed and the two men met
alone later that afternoon in Babbitt's office at Interior.
According to Eckstein, their meeting lasted for ``a half-hour,
conceivably 45 minutes.'' 74 Eckstein testified, ``I
went in and explained that we had just heard from Counselor
Duffy that the decision was going to be issued that day and
that it was going to be a denial, and reminded him of the
commitment that had been made to make a presentation to him
with my clients. And his response was that Harold Ickes had
directed him to issue a decision that day.'' 75
Eckstein remembers clearly that this comment from Secretary
Babbitt took place at the beginning of their
meeting.76
---------------------------------------------------------------------------
\74\ Id., p. 21.
\75\ Id.
\76\ Eckstein deposition, pp. 52-54.
---------------------------------------------------------------------------
Their meeting continued with Eckstein arguing the merits of
the Hudson application. After ten or fifteen minutes of
Eckstein addressing the merits without any feedback, Secretary
Babbitt stood up from the sofa. Eckstein also stood up. At that
point, Eckstein brought up the May 8, 1995 letter that Patrick
O'Connor had written to Ickes. The letter said of opposition
tribes, ``I can testify to their previous financial support to
the DNC and the 1992 Clinton/Gore Campaign Committee.''
77
---------------------------------------------------------------------------
\77\ Ex. 15.
---------------------------------------------------------------------------
Although Eckstein had seen the O'Connor letter a few months
earlier, this was the first time he had mentioned it to any
Department of Interior officials. He explained that until the
Babbitt meeting he had considered it ``so crude'' and ``so much
in error'' that he saw no need to dignify it with a
response.78 Asked what prompted him to bring it up
then, Eckstein explained that hearing Babbitt mention Ickes may
have triggered his reference.79
---------------------------------------------------------------------------
\78\ Eckstein deposition, p. 59.
\79\ Id.
---------------------------------------------------------------------------
Eckstein perceived Secretary Babbitt to be aware of the
O'Connor letter, notwithstanding the fact that the letter was
not addressed to Babbitt: 80 ``Well, he certainly to
me, he--did. He didn't say what letter, what are you talking
about. He seemed to nod when I mentioned it. To me--and this is
my interpretation--the signs were that he had familiarity with
it.'' 81 Eckstein also stated, ``I was watching him
pretty carefully, and it seemed to me just reading his eyes and
his body language that he was aware of it.'' 82
---------------------------------------------------------------------------
\80\ Id., p. 57.
\81\ Eckstein testimony, pp. 27-28.
\82\ Eckstein deposition, p. 57.
---------------------------------------------------------------------------
After explaining his clients were upset by the O'Connor
letter, Eckstein addressed the letter's various points.
Eckstein recalled talking about the letter's characterization
of an applicant tribe's chairman as a Republican and its
description of the opposition tribes as significant supporters
of President Clinton.83 At that point, Babbitt
brought up the topic of political contributions. Eckstein
testified, ``The Secretary asked me, Do you have any idea how
much these Indians, Indians with gaming contracts--it wasn't
exactly clear what Indians he was referring to, but Indians
were certainly used--have given to Democrats. I said I don't
have the slightest idea, and he said, Half a million dollars.''
84
---------------------------------------------------------------------------
\83\ Eckstein testimony, p. 22.
\84\ Id.
---------------------------------------------------------------------------
Eckstein acknowledged that he is unclear whether Secretary
Babbitt referred to ``these tribes,'' ``Indian tribes,'' or
``Indian tribes with gaming facilities.'' 85
Nevertheless, he testified, there is no doubt in his mind that
Babbitt made the comment.86 Eckstein explained,
``But the rest of it, the rhetorical nature of the question,
the fact that it was Indian tribes, the fact that they have
given to Democrats, the fact that it was half a million
dollars, all of that is absolutely clear to me.'' 87
---------------------------------------------------------------------------
\85\ Eckstein deposition, pp. 61-62.
\86\ Id.., p. 55.
\87\ Id., p. 61.
---------------------------------------------------------------------------
After this comment from Secretary Babbitt, their meeting
ended and Eckstein left the Interior Department. Disappointed,
Eckstein recounted the substance of his conversation, including
both the Ickes comment and the political contributions comment,
to his colleagues immediately after it occurred.\88\
---------------------------------------------------------------------------
\88\ Eckstein testimony, pp. 67, 104-105.
---------------------------------------------------------------------------
The aftermath--Eckstein's affidavit and Secretary Babbitt's letters to
the Senate
Shortly after Interior's denial of the Hudson application,
the losing tribes filed a lawsuit in Wisconsin federal court
against Babbitt and the Department of Interior. The lawsuit
alleged improper political interference in the decision making
process. As part of that litigation, Eckstein swore out an
affidavit on January 8, 1996, in which he specifically
recounted the Ickes comment Secretary Babbitt made to him on
July 14, 1995: ``Secretary Babbitt said that the decision could
not be delayed because Presidential Deputy Chief of Staff
Harold Ickes had called the Secretary and told him that the
decision had to be issued that day.'' \89\
---------------------------------------------------------------------------
\89\ Affidavit of Paul Eckstein, Jan. 8, 1996 (Ex. 29).
---------------------------------------------------------------------------
However, Eckstein's affidavit did not include Secretary
Babbitt's additional comments about political contributions.
Asked why he did not include that comment, Eckstein responded
that he made the decision partly because of the nature of the
comment, and partly because he knew that whatever he put in his
affidavit would become public information. Eckstein testified:
Well, first and foremost, I didn't want to put it in
the affidavit. The affidavit was in support of a motion
for discovery in an action, and I thought those points,
the points that I made in the affidavit, were
sufficient to obtain that request.
Secondly, it was a question. It was a rhetorical
question, and I didn't know how to interpret it.
Thirdly, I saw the potential for more embarrassment
[for Babbitt], and I didn't want to--didn't want to put
it in.\90\
---------------------------------------------------------------------------
\90\ Eckstein testimony, pp. 29-30. Eckstein further explained that
the affidavit never purported to be a recollection of everything--or
even everything important--that was said during his July 14 meeting
with Secretary Babbitt. Id., p. 107.
In July 1996, the Wall Street Journal printed an article
summarizing the allegations of political influence regarding
the Hudson decision.\91\ The Journal article cited Eckstein's
sworn statement, specifically Babbitt's comment about Ickes
directing him to issue a decision that day.
---------------------------------------------------------------------------
\91\ Jill Abramson and Glenn Simpson, ``Top Democratic Lobbyist
Helped Kill Hudson Casino,'' Wall Street Journal, July 12, 1996, p. A1.
---------------------------------------------------------------------------
In response to the Journal story, Senator John McCain, at
that time the Chairman of the Senate Committee on Indian
Affairs, wrote to Secretary Babbitt on July 19, 1996 and asked
for an explanation about the Hudson application.\92\ After
recounting the reported statements in Eckstein's affidavit
about the Ickes' comment, McCain asked Secretary Babbitt
directly, ``Is this true?'' \93\
---------------------------------------------------------------------------
\92\ Letter from Senator John McCain to Secretary Babbitt, July 19,
1996 (Ex. 30).
\93\ Id.
---------------------------------------------------------------------------
On August 30, 1996, Secretary Babbitt responded to Senator
McCain.\94\ After claiming that the Journal article ``falsely
insinuated that this Department has allowed campaign
contributions to dictate Indian policy,'' Babbitt turned to his
meeting with Eckstein. Babbitt wrote:
---------------------------------------------------------------------------
\94\ Letter from Secretary Babbitt to Senator McCain, Aug. 30, 1996
(Ex. 31).
I met with Paul Eckstein, an attorney for the three
tribes applying for the trust land acquisition, shortly
before a decision was made on the application.
Following this conversation, I instructed my staff to
give Mr. Eckstein the opportunity to discuss the matter
with John Duffy. I must regretfully dispute Mr.
Eckstein's assertion that I told him that Mr. Ickes
instructed me to issue a decision in this matter
without delay. I never discussed the matter with Mr.
Ickes; he never gave me any instructions as to what
this Department's decision should be, nor when it
should be made.\95\
---------------------------------------------------------------------------
\95\ Id. (emphasis added)
Secretary Babbitt concluded his letter to Senator McCain
with a somewhat indignant paragraph: ``Over the years, you and
I have worked together on a wide variety of issues affecting
Native Americans . . . I regret that, relying solely on a
newspaper article, you have chosen to so publicly call into
question the integrity of our decision making on this matter. I
am pleased to have the opportunity to set the record
straight.'' \96\
---------------------------------------------------------------------------
\96\ Id. Senator McCain acknowledged Secretary Babbitt's letter,
apologized for questioning Secretary Babbitt's integrity, and the
matter went no further.
---------------------------------------------------------------------------
Meanwhile, in the ongoing federal lawsuit, the United
States Attorney's Office used Secretary Babbitt's letter to
Senator McCain to defend the position of the Department of
Interior against the charges of improper political influence.
In filing Babbitt's letter with the court, the government
argued, ``Thus, Secretary Babbitt conclusively lays to rest any
claim that the Department bowed to improper influence when it
denied the plaintiff Tribes' application to take St. Croix
Meadows in trust.'' \97\
---------------------------------------------------------------------------
\97\ Defendant's Motion to Supplement the Record, Oct. 15, 1997
(Ex. 32).
---------------------------------------------------------------------------
Secretary Babbitt's recollection of the Eckstein
conversation would soon change drastically, however. In October
1997, after the Committee deposed Eckstein and heard Babbitt's
comment about Ickes and Babbitt's additional comment regarding
campaign contributions, the Committee sought to interview
Secretary Babbitt. The Committee made an informal request
through the Interior's Office of Congressional and Legislative
Affairs. When Interior indicated preliminarily that Secretary
Babbitt would not appear for a voluntary interview or
deposition, the Committee wrote to Interior, seeking written
confirmation.\98\
---------------------------------------------------------------------------
\98\ Letter from U.S. Senate Governmental Affairs Committee to
Secretary Babbitt, Oct. 9, 1997 (Ex. 33).
---------------------------------------------------------------------------
Interior's response came from Secretary Babbitt himself,
who wrote Chairman Thompson directly on October 9, 1997.
Babbitt confirmed that he would not submit to a private
interview, but stated that he would agree to answer questions
in public. Secretary Babbitt then admitted that he may have
said something to Eckstein about Ickes wanting a decision:
[W]hile I did meet with Mr. Eckstein on this matter
shortly before the Department made a decision on the
application, I have never discussed the matter with Mr.
Ickes or anyone else in the White House. Mr. Ickes
never gave me instructions as to what this Department's
decision should be, or when it should be made.
I do believe that Mr. Eckstein's recollection that I
said something to the effect that Mr. Ickes wanted a
decision is correct. Mr. Eckstein was extremely
persistent in our meeting, and I used this phrase
simply as a means of terminating the discussion and
getting him out the door. It is not the first time that
I have dealt with lobbyists by stating that the
Administration expects me to use my good judgment to
resolve controversial matters in a timely fashion, nor
do I expect it to be the last.\99\
---------------------------------------------------------------------------
\99\ Letter from Secretary Babbitt to Senator Thompson, Oct. 10,
1997 (Ex. 34) (emphasis added).
Babbitt did not address the political contributions comment
Eckstein attributed to him.\100\
---------------------------------------------------------------------------
\100\ By letter dated Oct. 15, 1997, Chairman Thompson responded to
Secretary Babbitt, asking Babbitt to reconsider his refusal to appear
for a voluntary interview with the Committee. Letter from Senator
Thompson to Secretary Babbitt, Oct. 15, 1997 (Ex. 35). Chairman
Thompson explained, ``I firmly believe that as a Cabinet officer, you
have an obligation to cooperate with Congress.'' A week later, Babbitt
again confirmed that he would not agree to a deposition or private
interview. Letter from Melanie Beller to Senator Thompson, Oct. 22,
1997 (Ex. 36).
---------------------------------------------------------------------------
The Committee called Secretary Babbitt to testify publicly
on October 30, 1997. In his opening statement, Secretary
Babbitt stated that the Hudson application was decided solely
on the merits and that there was no improper White House or DNC
influence.\101\ After admitting that his letters to Senator
McCain and Senator Thompson ``muddied the waters somewhat,''
Secretary Babbitt then described his version of what happened
during the July 14 meeting with Eckstein:
---------------------------------------------------------------------------
\101\ Testimony of Bruce Babbitt, Oct. 30, 1997, p. 123.
On July 14th of 1995, Mr. Eckstein was visiting other
offices at the Department to urge the Department to
delay a decision in the Hudson case, which was ready to
be made and released that day.
Mr. Eckstein then asked to meet with me. Against my
better judgment, I acceded to that request. When he
persistently pressed for a delay in the decision, I
sought to terminate the meeting. I don't recall exactly
what was said, but on reflection, I probably said that
Mr. Ickes, the Department's point of contact on many
Interior matters, wanted the Department or expected the
Department to decide the matter promptly. If I said
that, it was an awkward effort to terminate an
uncomfortable meeting on a personally sympatheticnote,
but as I have said here today, I had no such communication with Mr.
Ickes or anyone else from the White House.
It has been reported that Mr. Eckstein recently made
the additional assertion that I also mentioned campaign
contributions from Indian tribes in this context. I
have no recollection of doing so or of discussing any
such contributions with anyone from the White House,
the DNC, or anyone else.
If my letters to Senator McCain and Senator Thompson
have caused confusion, then I must and do apologize to
them and to the Committee. I certainly had no intention
of misleading anyone in either letter. My best
recollection of the facts are as I have just stated
them.\102\
---------------------------------------------------------------------------
\102\ Id., pp. 123-124.
Under questioning from Senator Thompson, Secretary Babbitt
testified that while he may have told Eckstein that Ickes
``wants'' or ``expects'' a decision, he ``definitely'' did not
tell Eckstein that Ickes wanted a decision that same day.
Therefore, Secretary Babbitt testified, his statement in the
McCain letter--``I must regretfully dispute Mr. Eckstein's
assertion that I told him to issue a decision in this matter
without delay''--was still accurate.\103\ Apparently focusing
on the words ``without delay,'' Secretary Babbitt claimed that
he did not misrepresent anything in his letter to Senator
McCain.\104\ He explained, ``Senator, I believe those
statements are consistent. They both reflect my best
recollection about what I said and what I didn't say.'' \105\
He attempted to square the differences when questioned about
them:
---------------------------------------------------------------------------
\103\ Id., p. 137.
\104\ Id. pp. 130-131.
\105\ Id., p. 139.
Secretary Babbitt. I told--to the best of my
recollection, I said something to Mr. Eckstein to the
effect that Mr. Ickes expected or wanted a decision.
Chairman Thompson. Well, certainly that meant
something more than just carrying out your duties. I
mean, clearly, everybody--I mean, a decision had to be
made. I mean, clearly you were stating something more
than just what the law required you to do as a----
Secretary Babbitt. No. That's really all I was
stating.
Chairman Thompson. Did Mr.----
Secretary Babbitt. That's the whole point.
Chairman Thompson. In effect, Mr. Ickes wanted you to
do your job?
Secretary Babbitt. That is correct. That is exactly
correct.
Chairman Thompson. Kind of like saying Mr. Ickes
wanted you to pay your Federal income taxes by April
15th.
Secretary Babbitt. Yeah.\106\
---------------------------------------------------------------------------
\106\ Id., pp. 137-138.
Later in his hearing testimony, Secretary Babbitt made a
further distinction in an attempt to buttress his claim that he
did not mislead Senator McCain, explaining that his McCain
letter is ``precise and correct.'' \107\ Secretary Babbitt
explained his interpretation: ``I think Senator McCain was
asking in that letter . . . was there a communication between
you and Ickes, and my response was, unequivocally, no, there
was not.'' \108\
---------------------------------------------------------------------------
\107\ Id., p. 182.
\108\ Id., p. 183.
---------------------------------------------------------------------------
Secretary Babbitt's contention that he did not mislead
Senator McCain is belied by his actions. Sometime before his
testimony, Secretary Babbitt spoke to Senator McCain, telling
him, ``To the extent [the letter] could be construed as
misleading, I certainly owe you an apology.'' \109\
---------------------------------------------------------------------------
\109\ Id., p. 136.
---------------------------------------------------------------------------
During his hearing testimony, Secretary Babbitt continued
to repeat that he never actually spoke to Ickes on the Hudson
matter. At the same time, however, he also maintained that his
reference to Ickes during his discussion with Eckstein was not
misleading, even to Eckstein. In his October 10, 1997 letter to
Senator Thompson, Secretary Babbitt wrote that he used the
Ickes phrase ``simply as a means of terminating our discussion
and getting him [Eckstein] out the door.'' \110\ Nevertheless,
in his hearing testimony, Secretary Babbitt would not concede
that he deceived Eckstein. Asked by Senator Thompson whether he
misled his old friend as a way to get him out of the office,
Secretary Babbitt replied, ``On the spur of the moment, I made
that statement with the hope that I could end the discussion,
express in a way some sympathy toward his point of view, and
suggest that this decision had to be made.'' \111\ The
following exchange then occurred between Senator Thompson and
Secretary Babbitt:
---------------------------------------------------------------------------
\110\ Ex. 34.
\111\ Babbitt testimony, p. 140.
Chairman Thompson. So you misled him?
Secretary Babbitt. Well, Senator, I suspect that almost all
of us here at one time or another have terminated a discussion
by saying somebody is waiting for me on the telephone when
maybe in not every single case there was somebody waiting on
the other line.
Chairman Thompson. I think you are getting in awfully deep
water here, but that is up to you. Did you mislead him?
Secretary Babbitt. I don't think so.
Chairman Thompson. Did you tell him the truth about that?
Secretary Babbitt. Well, we've been through that before. I
think it's fair to say that my superiors expect me to make
decisions.
Chairman Thompson. But did Mr. Ickes tell you to make the
decision?
Secretary Babbitt. He did not.
* * * * *
Chairman Thompson. And you told Mr. Eckstein that he told
you to make the decision?
Secretary Babbitt. I did not.
Chairman Thompson. What did you tell him?
Secretary Babbitt. Well, I've repeated that several times.
I said I believe--what I believe I've said is that Mr. Ickes
expects me or Mr. Ickes wants me to make a decision.\112\
---------------------------------------------------------------------------
\112\ Id., pp. 140-142.
Despite his specific recollection about the Ickes comment,
Secretary Babbitt said that he had no memory of making any
statement to Eckstein about political contributions from
Indians. Babbitt, moreover, did ``not recall any reference to
or discussion of'' the May 8, 1995 O'Connor letter to
Ickes.\113\ When pressed, Babbitt testified as follows:
---------------------------------------------------------------------------
\113\ Id., p. 133.
Chairman Thompson. Well, is it possible that you
could have talked about contributions in that
conversation by the Indians?
Secretary Babbitt. Senator, I simply have no
recollection of any conversation to that effect.
Chairman Thompson. Are you stating under oath,
definitely, that you did not have such a conversation?
Secretary Babbitt. I am stating under oath that I
have no recollection of any conversation of that
kind.114
---------------------------------------------------------------------------
\114\ Id., pp. 133-134.
Besides testifying regarding his meeting with Eckstein,
Secretary Babbitt tried to explain the rationale for the
Interior decision on the Hudson application. In his opening
statement, Secretary Babbitt stated that the Department based
its decision solely on the ``criteria set forth in . . . the
Indian Gaming Regulatory Act.'' 115 He explained
that ``the Department and this administration has adhered to a
policy that off-reservation gaming will not be imposed on
communities that do not want it,'' and, therefore, ``this
virtually unanimous opposition of local governments, including
the nearby St. Croix Tribe, required the Department to reject
the application.'' 116
---------------------------------------------------------------------------
\115\ Id., p. 120.
\116\ Id., pp. 120-122.
---------------------------------------------------------------------------
According to Secretary Babbitt, the Interior decision was
clear cut and not influenced by any outside factors. Babbitt
said it was made in the first instance by George Skibine, a
career official, ``on a record that virtually compelled that
decision and that Mr. Skibine . . . made the correct decision
entirely uninfluenced by any external considerations . . . and
[the decision] could not have been made in any other way.''
117 Later in his testimony, Secretary Babbitt
explained that while the political appointees at Interior are
the ones vested with final decision-making authority, one of
the ways to keep politics out of a decision is to ``put a heavy
burden on them [the political appointees] to defer to the civil
servants, and that is, in fact, what happened here.''
118
---------------------------------------------------------------------------
\117\ Id., p. 165.
\118\ Id., p. 198.
---------------------------------------------------------------------------
Secretary Babbitt also testified that he did not personally
make the decision to deny the application, nor did he
participate in any deliberations about the
application.119 He declared that he did not have any
contact with anyone at the DNC or the White House about the
application.120 While conceding that he could not
know for sure whether any of his subordinates were in touch
with the White House or DNC, Secretary Babbitt maintained that
the record spoke for itself and that there was no inappropriate
pressure on Interior. Asked by Senator Domenici, ``Mr.
Secretary, is it your position now before the Committee that
politics had nothing to do with the denial of the . . . permit
to the three poor Indian tribes?'' Secretary Babbitt replied,
``Senator, that is my position.'' 121
---------------------------------------------------------------------------
\119\ Id., pp. 120, 143.
\120\ Id., pp. 119-120.
\121\ Id., p. 229.
---------------------------------------------------------------------------
Despite Secretary Babbitt's assurances, and the blanket
assertions by other Interior officials that the Hudson
application was not influenced by politics, the events leading
to the denial of the application raise a number of troubling
questions. In tracing the chronology of the application, it is
clear that the opposition tribes used the DNC and the White
House in an attempt to influence the Department's decision.
THE DECISION PROCESS AT INTERIOR--WHAT REALLY HAPPENED?
The career officials
In his opening statement and hearing testimony, Secretary
Babbitt attempted to draw a clear line between the career
officials, including Skibine, and the activities of the
Interior political appointees. Secretary Babbitt suggested that
Skibine's decision to reject the Hudson application was not
only obvious and clear cut, but that Skibine and the career
officials made it entirely on their own, unaffected by any
other views. The facts do not support Secretary Babbitt's
testimony.
First, it is apparent that from early on, the two career
Interior employees most involved--George Skibine and Tom
Hartman--favored granting the Hudson application. For example,
Skibine attended the February 1995 meeting with the Minnesota
Congressional delegation, which argued that the Hudson
application might harm the existing gambling operations of the
wealthy opposition tribes, several of which were located in
Minnesota. When Skibine noted the arguments made by the
Minnesota delegation during the February meeting, Hartman
refuted each of the arguments point-by-point in a memorandum
written to Skibine.122
---------------------------------------------------------------------------
\122\ Notes to files re: February 8, 1995 meeting, undated, p. 3
(Ex. 37).
---------------------------------------------------------------------------
Later, Hartman's June 8, 1995 memorandum established in
detail the predicate for approving the casino. After
considering the arguments of the opposition tribes and economic
impact study they had commissioned, Hartman concluded that
there was no actual detriment to the surrounding community.
While not explicitly arguing that the opposition was the
product of high-powered lobbyists, Hartman made it clear that
Interior needed to ensure that they accounted for naked
political pressure. He wrote,
Detriment is determined from a factual analysis of
evidence, not from opinion, political pressure,
economic interest, or simple disagreement. In a
political setting where real, imagined, economic, and
moral impacts are focused in letters of opposition and
pressure from elected officials, it is important to
focus on an accurate analysis of facts. . . Allowing
local opposition, not grounded in factual evidence of
detriment, to obstruct Indian economic development sets
a precedent for extensive interference, compromised
sovereignty, and circumvention of the intent of
IGRA.123
---------------------------------------------------------------------------
\123\ See Ex. 24, p. 15.
Despite Hartman's detailed analysis, it appears that many
of the political appointees at Interior never saw it. Duffy
said that he did not know who Hartman was and could not recall
seeing the memo.124 Sibbison testified that she did
not remember reading it or even knowing that Hartman wrote a
memo.125 Michael Anderson also stated that he had
never seen the Hartman memo before.126
---------------------------------------------------------------------------
\124\ Duffy deposition, pp. 21, 27.
\125\ Sibbison deposition, p. 19.
\126\ Anderson deposition, Sept. 19, 1997, p. 14.
---------------------------------------------------------------------------
One person who did acknowledge receiving and reviewing
Hartman's memo was Hartman's superior, Skibine. In his
deposition, Skibine testified about what he did after receiving
the memo. He stated, ``Well, I took, I read the records, the
record initially, and I read the recommendation from the
Minneapolis area. I read the Hartman memo. I read essentially
all of the record. And I formulated my views and then looked at
the supplementary documentation that was provided between
February 8th and April 30th, and I essentially made my
decisionwhich I put down in writing by June 29th, 1995.''
127 Later in his deposition, Skibine testified that the June
29 draft letter was his recommendation, and that he produced no other
written memoranda or analysis of the Hudson application.128
---------------------------------------------------------------------------
\127\ Letter from Ada Deer to Rose Gurnoe, June 29, 1995 (Ex. 38);
Skibine deposition, p. 65.
\128\ Skibine deposition, p. 112.
---------------------------------------------------------------------------
Documentary evidence casts doubt on Skibine's assertions.
After Skibine was deposed, the Committee located an undated
version of the Hartman memorandum that contained a few
substantive additions but still favored granting the Hudson
application.129 The memorandum lists Skibine as the
author. The memorandum thus puts Skibine squarely beside
Hartman in favor of granting the application. Other documents
show that Skibine was leaning towards agreement with Hartman.
In a June 30, 1995 E-mail, Skibine wrote about the Hartman
draft to other Interior officials. Skibine wrote, ``Our
tentative conclusion is that the record permits us to make a
finding that a gaming establishment at that location will not
be detrimental to the surrounding community. We have not
finalized the document, and I have not determined whether it
should be signed or simply stay in draft form.'' 130
Skibine sent this email one day after he purported to reach his
final conclusion in the Hudson matter.
---------------------------------------------------------------------------
\129\ Ex. 25.
\130\ E-mail from George Skibine to Heather Sibbison, June 30, 1995
(Ex. 39).
---------------------------------------------------------------------------
Finally, putting aside the inconsistencies between the
paper record and Babbitt's recitation of how the decision
occurred, not even Skibine agrees with Secretary Babbitt that
the record made the denial decision clear. In his deposition,
Skibine acknowledged that the decision on the application was
not indisputable. He testified that there were merits on both
sides and that it was ``a close call'' for him.131
---------------------------------------------------------------------------
\131\ Skibine deposition, p. 156. In his deposition, Michael
Anderson confirmed that Skibine was on the fence. He testified about
Skibine, ``I don't really remember Mr. Skibine articulating a final
recommendation. Because it was an interactive process, I didn't detect
that he had a strong view either way.'' Anderson deposition, Sept. 19,
1997, p. 35.
---------------------------------------------------------------------------
The role of the political appointees
It is clear that the political appointees at Interior were
confident that the final decision would be a denial well before
June 29, 1995, when Skibine prepared a first draft of the final
decision letter for Assistant Secretary Deer's signature. As
demonstrated in the May 18 and June 6, 1995 memoranda, by mid-
May the political appointees were telling the White House that
the application would be denied. Furthermore, on June 27, two
days before Skibine issued his recommendations in the form of a
draft letter, Sibbison prepared and sent to the White House two
draft letters about the application.132 In her cover
note to the letters, which were alternative responses to an
inquiry from the Minnesota congressional delegation, Sibbison
made clear that for all practical purposes the decision to
reject had already been reached. She observed, ``Please note
that I anticipate that the Department's decision to decline . .
. may be made public later this week.'' 133
---------------------------------------------------------------------------
\132\ Fax from Heather Sibbison to Jennifer O'Connor, June 27, 1995
(Ex. 40).
\133\ Id.
---------------------------------------------------------------------------
Not only was Sibbison's note written before Skibine
prepared the first denial draft on June 29, but Michael
Anderson, who actually signed the final decision letter, stated
he was unaware that Sibbison had sent such letters to the White
House.134 Anderson also testified that Sibbison
never consulted with him, and that he had no idea that the
Interior position had ever been communicated to the White
House.135
---------------------------------------------------------------------------
\134\ Anderson deposition, Sept. 26, 1997, p. 29.
\135\ Id., pp. 29-31.
---------------------------------------------------------------------------
It is also clear that the Secretary's office coordinated
and revised Skibine's June 29 draft letter before it was
presented to Anderson for final signature. Anderson, for
instance, stated that Skibine's draft was ``edited by Mr. Duffy
and substantially changed.'' Anderson later clarified that
changes were made by someone from Duffy's office, and stated
that there were only ``two possibilities''--Duffy or
Sibbison.136 Sibbison did not talk about her role in
editing the letter, but stated that she was sure that Duffy
``messed with it because he messes with everything that sat on
his desk.'' 137 Skibine testified that he was in
Denver with Anderson during the week of July 10, and that they
received via fax an updated draft of his letter.138
In response to questions about who edited or sent the revised
draft, Skibine testified that he did not know if it came from
Duffy or from the Secretary's office.139
---------------------------------------------------------------------------
\136\ Anderson deposition, Sept. 19, 1997, p. 18.
\137\ Sibbison deposition, p. 71.
\138\ Skibine deposition, p. 139.
\139\ Id., pp. 140-141.
---------------------------------------------------------------------------
Documents received after the Committee completed its
depositions of Interior officials show that Sibbison and Duffy
were an integral part of the revision process. It appears that
Sibbison made extensive changes to Skibine's draft, and then
forwarded it to Duffy with the note ``John: Please review asap
and call me back. H.'' 140 On June 30, 1995,
Sibbison informed Skibine that she was faxing the letter to
Duffy and was waiting for him to
respond.141According to an E-mail describing a
meeting on July 5, 1995 between Duffy, Sibbison, and Interior
lawyers, Duffy directed that the decision letter be rewritten
to include an additional rationale.142
---------------------------------------------------------------------------
\140\ Letter from Michael Anderson to Rose Gurnoe, et al., June 29,
1995, with handwritten revisions (Ex. 41).
\141\ E-mail from Heather Sibbison to George Skibine et al., June
30, 1995 (Ex. 42).
\142\ E-mail from Troy Woodward to George Skibine, et al., July 6,
1995 (Ex. 43).
---------------------------------------------------------------------------
Sibbison's June 30, 1995 E-mail is interesting for two
additional reasons. First, it mentions the involvement of Tom
Collier, Secretary Babbitt's Chief of Staff. Sibbison wrote,
``I agree with Collier's uneasiness about some tribes getting
all of the goodies at the expense of other tribes--
theoretically they should all have equal opportunities.''
143 Second, it indicates Sibbison's belief that
``Ada [Deer] should sign the letter.'' 144 It is
clear that as of June 30, 1995, Sibbison was unaware that Deer
had recused herself. Deer's recusal is discussed further below.
---------------------------------------------------------------------------
\143\ Ex. 42.
\144\ Id.
---------------------------------------------------------------------------
Other documents confirm that Skibine coordinated revisions
of the letter with Duffy and Sibbison. In an E-mail dated July
8, 1995, Skibine wrote his staff, ``I have left on Tona's desk
the redrafted version of the Hudson letter, per Duffy and
Heather's instructions . . . Please make sure it is put in
final form and brought up to Heather first thing on Monday.''
145
---------------------------------------------------------------------------
\145\ Ex. 44.
---------------------------------------------------------------------------
In light of so much ``hands on'' involvement by the
political appointees in the Secretary's office, did Skibine in
fact feel no pressure from the political appointees, as Babbitt
testified? Even in his guarded deposition testimony, Skibine
was not so confident that he made his recommendation in a
vacuum. He explained, for instance, that he was aware of other
views, and that they may have come into consideration. He
testified:
Yes. You know, I've got to say that in formulating my
own views, I look at the record. But I looked also at
all the input from others, and I know that in one
interview with the press they asked me, well, what
percentage of your decision is based on Mr. Duffy's
view, and I can't really answer that. You know, I'd
like to think that this was my own decision in terms of
what I would recommend to the Secretary based on the
record and on everything that I had heard. But I
certainly considered everyone's views.146
---------------------------------------------------------------------------
\146\ Skibine deposition, p. 122.
Later in his deposition, Skibine again talked about the
fact that it is difficult to formulate a decision without
---------------------------------------------------------------------------
considering the viewpoints that he heard. He testified:
Yes, sure. This part of the decision making process,
I don't know exactly what influenced me or who
influenced me, but any oral communication that is made,
it's in your head. That's it. I mean, you can't say one
way or the other whether you consider them or not. It
is part of--then it really becomes a part of what you
know.
As an aside can I--I sat on the jury last week or two
weeks ago. The counsels and witnesses both made
statements and there were objections and the judge said
disregard the statement. You know, that's a fallacy.
It's what is supposed to be, but how can you disregard
something that you hear? When we went back for
deliberations, all of the jurors said that. What does
he mean disregard? I mean, I heard that.
You know, once something is said, it stays with you,
I guess.147
---------------------------------------------------------------------------
\147\ Skibine deposition, pp. 142-143.
Although Interior contends that the actual decision maker
was Michael Anderson, the deputy assistant secretary who signed
the final decision letter, the reality is that he played hardly
any role in the Department's deliberations. He testified that
he suggested some changes in the denial draft before signing
the final version.148 Beyond that, the evidence
shows that he was hardly involved. He conceded that he only
spent four to five hours total on the application; he did not
even bother to read the November 1994 area office report that
recommended granting the application.149 There are
other indications that Anderson was simply a figurehead. He did
not attend the meetings where the decision letter was
discussed, and the documents do not mention his name. In a
handwritten note, dated July 10, 1995, on one of the recently
produced Interior documents, Sibbison demonstrated her view of
Anderson's importance in the matter. Sibbison wrote to an
administrative assistant, ``Please let me know as soon as the
letters are signed. . . Also, I know Mike Anderson is out, so
we'll need to have it signed by whoever is acting for him.''
150
---------------------------------------------------------------------------
\148\ Anderson deposition, Sept. 19, 1997, pp. 18-19.
\149\ Anderson deposition, Sept. 26, 1997, pp. 66-67.
\150\ BIA routing slip [title derived], July 8, 1995 (Ex. 45).
---------------------------------------------------------------------------
Anderson also played no role in deciding when the denial
letter should be issued. Anderson testified that on July 14,
Michael Chapman, a special assistant at Interior, brought him
the letter to sign. Anderson ``assum[ed] it [the letter] came
from Mr. Duffy's office.'' 151 Chapman also directed
Anderson that the decision had to be signed and go out on the
14th.152 Asked if Chapman indicated why the urgency,
Anderson responded, ``No, he didn't. He just said that it
needed to be done.'' 153 Anderson testified that he
did not ask Chapman why, and that he simply ``assumed there was
a reason why the Secretary's office wanted to get it out.''
154 Anderson summarized, ``I'm not sure what the
rationale was for the urgency.'' 155
---------------------------------------------------------------------------
\151\ Anderson deposition, Sept. 19, 1997, p. 59.
\152\ Id., p. 58.
\153\ Id.
\154\ Id., p. 60.
\155\ Id., p. 63.
---------------------------------------------------------------------------
The curious recusal of Ada Deer
Another murky aspect of the Hudson matter is the role of
Ada Deer. As the Assistant Secretary of Indian Affairs, Deer
was the proper official to sign the final Hudson decision.
However, she never signed the denial, delegating the
responsibility to Anderson, her deputy. Deer told the Committee
that the reason she recused herself was because in December
1994, she had contributed $250 to the political campaign of
Gaiashkibos, one of the leaders of the applicant tribes. Her
contention is that she divorced herself from the Hudson
application very soon after learning that Gaiashkibos' tribe
(Lac Courte Oreilles) was one of the applicants.156
She indicated learning of the Hudson matter ``through my
general knowledge of the issue, which one gets through various
sources; Indian Country Today is a newspaper that I read
regularly, and, of course, there are various clips that come
from the papers across the country. . . . [and] through the
general discussions that go on.'' 157
---------------------------------------------------------------------------
\156\ Deer deposition, pp. 19-23.
\157\ Id., p. 22.
---------------------------------------------------------------------------
Even without parsing what might have been the true motives
behind Deer's recusal, the timing and mechanics of her decision
are troubling. She testified to recusing herself in June 1995,
shortly after she became aware of the Hudson application. When
pressed for how long it was between the time she heard about
the application and her recusal, Deer testified, ``It would
be--it would be awhile; no, it wouldn't be a day. It was
probably, you know, several weeks. Again I'm not 100 percent
certain of the exact time.'' 158
---------------------------------------------------------------------------
\158\ Id., p. 19.
---------------------------------------------------------------------------
Deer's testimony about the timing of her recusal is simply
not credible. First, it is clear that by February 1995, both
political and career appointees at Interior were actively
considering the Hudson application. It is difficult to conceive
how Deer, who oversaw BIA, would be unaware of its existence
until June. Second, it is clear that on April 8, 1995, Deer
accompanied Babbitt to a ``contentious'' meeting in Wisconsin
where the Hudson issue was ``extensively debated'' among
Wisconsin tribes.159
---------------------------------------------------------------------------
\159\ Anderson deposition, Sept. 19, 1997, pp. 24-25.
---------------------------------------------------------------------------
The Committee received a transcript of the April 8, 1995
Wisconsin meeting 160 several weeks after Deer's
deposition. There is no question that Deer attended and
participated in the Wisconsin meeting, as the transcript
reveals that Deer introduced Secretary Babbitt, made comments
throughout the session, and closed the meeting with a final
statement. Further, the transcript confirms that the Hudson
application was debated by the participants and that everyone
present knew the Hudson matter was then pending before the
Department. It is evident that the meeting participants knew
beforehand the Hudson matter would be a prime topic for
discussion. Tribal leaders on both sides of the issue described
their positions to Babbitt and Deer, and urged Secretary
Babbitt to act in accordance with their wishes.161
Gaiashkibos attended the meeting.
---------------------------------------------------------------------------
\160\ Excepts of Wisconsin Tribal Dialogue with Secretary Babbitt,
Apr. 8, 1995 (Ex. 46).
\161\ Id.
---------------------------------------------------------------------------
Deer failed to mention the April 8 meeting during her
deposition. It strains the Committee's credulity for Deer to
say that she was primarily made ``aware'' of Hudson through
newspaper articles and ``general discussions'' (a term she
could not define) and that soon after she discovered
Gaisakibos' involvement, she bowed out. At a minimum, Deer must
have been aware of the Hudson application, and Gaisakibos'
role, by April 8. Inasmuch as Deer is a Menominee Indian from
Wisconsin, the Committee finds it hard not to believe she knew
precisely what Hudson involved far earlier than April.
Quite apart from the timing of her recusal, there is
confusion regarding how Deer reached and communicated the
decision. Her testimony on the subject is vague. She testified
as follows:
Q: Did you recuse yourself in writing?
A: I don't think so. I think I just told Michael
Anderson.
Q: And how come you didn't write anything down?
A: Because I'm not a lawyer. I know that people do
this, but no, I just didn't. Generally, I try not to
write things.
Q: Did you have discussions with anyone before you
decided to recuse yourself?
A: Yes, I think I talked with him about it. I'm not
sure if I talked with anybody else about it. He's the
principal deputy, and it seemed, you know, that was the
appropriate thing to do.
Q: Did you speak to anyone else in the Department
about it?
A: I don't think so. You mean about my recusal?
Q: About your decision to recuse yourself.
A: I might have mentioned it to Mr. Duffy. He was the
Counselor to the Secretary at that time.162
---------------------------------------------------------------------------
\162\ Deer deposition, pp. 24-25.
Anderson, however, disputed Deer's account that she
discussed her recusal with him. Anderson said that he was told
about the recusal by a special assistant, Michael
Chapman.163 Anderson stated that despite the fact
that his office was next door to Deer's, he never spoke to her
about the recusal or about the Hudson issue.164
---------------------------------------------------------------------------
\163\ Anderson deposition, Sept. 19, 1997, p. 29.
\164\ Id., pp. 27-30.
---------------------------------------------------------------------------
Other important Department of Interior officials were also
unaware of Deer's recusal. During a meeting on June 16, 1995,
Duffy told an opposition lobbyist that Deer had ``not yet
reached a decision on the matter.'' 165 Duffy
testified that he did not learn of Deer's recusal until after
the Interior decision was announced on July 14,
1995.166 Moreover, on June 29, 1995, Skibine
prepared a draft letter for Deer's signature. Skibine testified
that he is not sure when he learned about Deer's recusal, but
that it was certainly after June 29, 1995.167
Because of questions surrounding the timing and mechanics of
Deer's recusal, it has been suggested that Deer may not have
wanted to sign off on a decision she knew was dictated by
political considerations, particularly since it harmed
impoverished tribes in her home state. The judge in the federal
litigation wrote in a March 1997 opinion:
---------------------------------------------------------------------------
\165\ Memorandum from Scott Dacey to Debbie Doxtator, June 16, 1995
(Ex. 47).
\166\ Duffy deposition, pp. 22-23.
\167\ Skibine deposition, p. 124. The various e-mails referenced
above, in which Interior officials discuss the Hudson application,
demonstrate that even in early July, Interior officials assumed Deer
would be signing the denial letter.
``I [have] remarked . . . that Deer's late recusal
was `odd' but refrained from questioning her motives. I
now find it necessary to consider the flip side of the
`odd' recusal: that Deer may have wanted to back out
once she understood that higher level officials in the
department wanted plaintiff's application rejected for
political purposes. It is reasonable to infer that Deer
backed out because she supported plaintiff's
application and did not want to be responsible for
denying it. If that were not the case, one might
surmise that Deer would have recused herself from the
process earlier.'' 168
---------------------------------------------------------------------------
\168\ Opinion and Order, U.S. District Court for the Western
District of Wisconsin, March 19, 1997, pp. 17-18 (Ex. 48).
When asked whether the judge's comments were accurate, Deer
had difficulty providing a direct answer, as the following
---------------------------------------------------------------------------
exchange reveals:
A: That's [the judge's] opinion. She's entitled to
her opinion.
Q: Well, I'm asking you if there is any truth at all
to what she wrote.
A: Well, I told you my point on this, and that's the
basic information.
Q: She writes it's reasonable to infer that Deer
backed out because she supported plaintiff's
application and did not want to be responsible for
denying it; is that true in any way?
A: No, my--that's her opinion.
Q: I understand it's her opinion.
A: And I stand on the statements that I have given
you.
Q: I'm asking you for your reaction to that sentence.
Is there any kernel of truth at all to that particular
sentence?
A: That's her opinion, and that's her decision she
wants to make on that, you know?
Q: Well, let me ask you a direct question, then: did
you recuse yourself because you supported the tribes'
application and did not want to be responsible for
denying it?
A: No, that's not the reason I recused myself. I have
stated several times now why I recused myself. So,
that's my statement.
Q: Did you support plaintiff's application--I'm
sorry, I keep saying plaintiff.
A: Yes.
Q: Did you support the tribes' application and not
want to be responsible for denying it?
A: I have stated why I recused myself. I have given
you my philosophical bent of approach, that I like to
help, and I want the Department to support, the tribes'
economic initiatives, and I can't add anything more
than what I've already said about why I recused myself,
and people can draw their own conclusions, as the Judge
has.169
---------------------------------------------------------------------------
\169\ Deer deposition, pp. 88-89.
---------------------------------------------------------------------------
CONCLUSION
The December 31, 1997 cut-off date for the Committee's
investigation prevented it from fully exploring all of the
issues surrounding Interior's decision to deny the Hudson
application. Even as this report was being completed, in
January 1998, Interior was producing additional relevant
documents.
Nevertheless, what emerged from the Committee's
investigation is the outline of a story that shows the power of
political contributions. Wealthy lobbyists from the opposition
tribes activated the DNC to work on their behalf. As is clear
from the evidence, this was neither unusual nor difficult, as
the DNC basically acted as a lobbying arm for tribes with
gaming interests. The White House also became involved on
behalf of the opposition tribes. Patrick O'Connor, the chief
lobbyist for the opposition tribes, spoke directly to President
Clinton--and received an immediate response. Financial support,
past, present, and future, was integral to this effort. From
all the circumstances, there appears to be a direct
relationship between the activities of the Department of the
Interior and contributions received by the DNC and DSCC from
the opposition tribes.
The Committee's investigation also established that
Secretary Babbitt had both Harold Ickes and political
contributions on his mind on the day of the decision.
Eckstein's sworn testimony, both in his deposition and hearing
appearance, was credible and persuasive.
Eckstein's testimony should be compared to the troubling
shifts in Secretary Babbitt's own description of the July 14
conversation. Secretary Babbitt first told Senator McCain that
he never made the Ickes comment. Then, Secretary Babbitt told
Chairman Thompson that Eckstein was right, and that he may have
made the comment, but only as a ruse to get his old friend out
of his office. Finally, Secretary Babbitt testified under oath
that his two statements were consistent, and that he did not
mislead Senator McCain. If Secretary Babbitt saw it that way,
he may be the only one who did. Also, it is curious that of all
the names Secretary Babbitt would have made up to get rid of
Eckstein, he selected Ickes, the White House official most
heavily connected to the President's fund-raising operation and
to the very transaction at issue.170
---------------------------------------------------------------------------
\170\ Secretary Babbitt's counsel has written the Committee to
explain why Babbitt's statements were consistent and are not
misleading. Letter from Lloyd N. Cutler to Senators Thompson and Glenn,
Jan. 13, 1998 (Ex. 49).
---------------------------------------------------------------------------
Moreover, at the end of the day, Secretary Babbitt has
still never denied telling Eckstein that Indian tribes with
gaming interests donated half a million dollars to the DNC.
Because of the evidence uncovered and presented by the
Committee, on February 11, 1998 the Attorney General applied
for the appointment of an independent counsel to examine
Secretary Babbitt's representations to Congress and, more
broadly, the events leading up to the Hudson decision. It is
the Committee's hope that the court appoints such a counsel so
that the matter can be investigated and resolved appropriately.