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



105th Congress                                            Rept. 105-167
                                SENATE

 2d Session                                                      Vol. 4
_______________________________________________________________________


 
    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 4 of 6





                 March 10, 1998.--Ordered to be printed


INVESTIGATION OF ILLEGAL OR IMPROPER ACTIVITIES IN CONNECTION WITH 1996 
                  FEDERAL ELECTION CAMPAIGNS--VOLUME 4


105th Congress                                            Rept. 105-167
                               SENATE

 2d Session                                                      Vol. 4
_______________________________________________________________________


                      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 4 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

  MINORITY VIEWS OF SENATORS GLENN, LEVIN, LIEBERMAN, AKAKA, DURBIN, 
                         TORRICELLI AND CLELAND
                           Table of Contents
                                                                   Page
Foreword.........................................................  4559
Executive Summary................................................  4561
Part 1  Foreign Influence........................................  4577
Chapter 1: Overview and Legal Analysis...........................  4577
    Findings.....................................................  4577
    Overview of Following Chapters...............................  4577
    Legal Analysis...............................................  4579
Chapter 2: The China Plan........................................  4619
    Findings.....................................................  4620
    Introduction.................................................  4621
    The Committee's Investigation................................  4623
    Background...................................................  4623
    The China Plan...............................................  4625
        Events Leading up to the China Plan......................  4625
        Information about the China Plan.........................  4626
        Implementation of the China Plan.........................  4627
        Legal Activities.........................................  4627
        Illegal Activities.......................................  4628
        Individuals Under Investigation and the China Plan.......  4628
        Ted Sioeng...............................................  4629
        John Huang and Maria Hsia................................  4630
        The Riadys...............................................  4630
        Intermediaries: Relation to the Committee's Public 
          Investigation..........................................  4631
        Political Contributions to Federal Elections.............  4632
        Political Contributions: Relation to the Committee's 
          Public Investigation...................................  4633
    Information not Pursued by the Committee.....................  4633
    Conclusion...................................................  4634
Chapter 3: The National Policy Forum.............................  4657
    Findings.....................................................  4657
    Introduction.................................................  4657
    Haley Barbour................................................  4659
    Ambrous Young................................................  4659
    Origin Of the National Policy Forum..........................  4660
     The Barbour-Baroody Split...................................  4661
    Funding the NPF..............................................  4661
    Baroody Resigns..............................................  4662
    The NPF Under John Bolton....................................  4663
    Barbour Solicits Ambrous Young...............................  4665
    The Loan Transaction.........................................  4666
    Funding the Contract With America............................  4668
    The Trip to Hong Kong........................................  4669
    The Trip to China............................................  4670
    The Default..................................................  4670
    Other Foreign Contributions..................................  4671
    Conclusion...................................................  4672
Chapter 4: John Huang............................................  4788
    Findings.....................................................  4788
    Huang's Early Career.........................................  4789
    Background on the Lippo Group................................  4790
    Huang's Activities on Behalf of the Lippo Group..............  4791
        Political Contributions..................................  4792
    Huang's Tenure at the Department of Commerce.................  4794
        Huang's Appointment......................................  4794
        Huang's Role at Commerce.................................  4796
        Huang's Security Clearance and Access to Classified 
          Information............................................  4798
        Granting of Top Secret Clearance.........................  4799
        Huang's Access to Classified Information.................  4800
        Huang's Use of the Stephens Office.......................  4802
        Huang's Post-Commerce Clearance..........................  4803
        No Evidence of Espionage.................................  4806
        Evidence of Solicitations of Contributions...............  4808
    Hiring Huang to Work at the DNC..............................  4811
        Huang's Understanding of Applicable Law..................  4813
        Huang's Fundraisers......................................  4814
        February 1996 Hay Adams APALC Events, Washington, D.C....  4814
        May 13, 1996 Sheraton Carlton Event, Washington, D.C.....  4816
        July 22, 1996 Century Plaza Hotel Event, Los Angeles.....  4816
        July 30, 1996 Jefferson Hotel Event, Washington, D.C.....  4817
        Other Huang Activities...................................  4818
        Hsi Lai Temple Event.....................................  4818
        The Vice President and the Temple Event..................  4819
        John Huang and the Temple Event..........................  4831
        John H. K. Lee and the Cheong Am America Contribution....  4832
        June 18, 1996, DNC Coffee at the White House.............  4836
        Rawlein Soberano.........................................  4838
        The DNC's Supervision of Huang...........................  4839
    Conclusion...................................................  4840
Chapter 5: Charlie Trie..........................................  5270
    Findings.....................................................  5270
    Background...................................................  5271
    Trie's DNC Contributions and Fundraising.....................  5272
        Trie's DNC Contributions.................................  5272
        Trie's DNC Fundraising...................................  5274
    Chu and Wang Contributions...................................  5275
    DNC Awareness of Trie's Activities...........................  5276
    Trie's Fundraising for the Presidential Legal Expense Trust..  5277
        Trie's March 21, 1996 Meeting with Cardozo...............  5278
        Investigation into the Contributions.....................  5279
        The Trust's Decision to Reject the Contributions.........  5281
        The Trust's Change in Accounting Procedures..............  5282
        Foreign Funds............................................  5283
        Analysis.................................................  5284
    Trie's Access to White House and DNC Events..................  5285
    Trie's Commission Appointment................................  5287
    Trie and Wang Jun at the White House.........................  5289
        Wang Jun's Invitation to the White House Coffee..........  5290
        Role of Ernest Green.....................................  5291
        Analysis.................................................  5292
    Trie and China...............................................  5293
Chapter 6: Michael Kojima........................................  5413
    Findings.....................................................  5413
    Contribution History.........................................  5415
    Kojima's Access to the White House and Other Perks...........  5415
    The Bush White House and Fundraising.........................  5418
    GOP Claimed No Duty to Investigate...........................  5423
    Foreign Funds................................................  5425
    Failure to Conduct a Federal Investigation...................  5427
    Conclusion...................................................  5428
Chapter 7: Ted Sioeng............................................  5573
    Findings.....................................................  5573
    Ted Sioeng's Background......................................  5573
    Sioeng's Connections to China................................  5574
    The ``China Plan'' and Ted Sioeng............................  5576
    The Sioeng Family's Contributions to Matt Fong in April 1995.  5576
    The Source of Sioeng's April 1995 Contributions to Fong......  5578
    Fong Arranges for Sioeng to Meet Speaker Gingrich............  5578
    The Sioeng Family's Contributions to the National Policy 
      Forum......................................................  5579
    The Sioeng Family's Contribution to Matt Fong in December 
      1995.......................................................  5580
    Jessica Elnitiarta's Contributions to the DNC................  5581
        The Hay Adams Fundraiser.................................  5581
        Hsi Lai Buddhist Temple Event............................  5582
        Sheraton Carlton Hotel Event.............................  5582
        Century City Event and Subsequent $50,000 Contribution...  5583
    Conclusion...................................................  5584
Chapter 8: Jay Kim...............................................  5683
    Findings.....................................................  5683
    The Korea Traders' Club......................................  5683
    Kim's Contribution From His Own Business in 1992.............  5684
    The Kim's Acceptance of Corporate Funds......................  5684
    Acceptance of Funds From Foreign Nationals...................  5685
    Alleged Violations During the Federal Investigation..........  5686
    The Conviction of Kim's Former Campaign Treasurer............  5686
    Possible Election Law Violations During the 1996 Cycle.......  5687
    Kim's Commitment to Compliance With U.S. Election Laws.......  5688
    The Kims' Book Deal..........................................  5689
    Conclusion...................................................  5690
Part 2  Independent Groups.......................................  5926
Chapter 9: Overview and Legal Analysis...........................  5926
    Findings.....................................................  5926
    Overview of Following Chapters...............................  5926
        1996 Election-Related Activities.........................  5927
    Legal Analysis...............................................  5928
        Categories of Independent Groups.........................  5929
        Disclosure...............................................  5930
        Coordination.............................................  5930
        Circumvention............................................  5933
        Third Party Contributions................................  5934
        Violations of Tax Law....................................  5934
Chapter 10: The Republican Party and Independent Groups..........  5967
    Findings.....................................................  5967
    Introduction.................................................  5967
    RNC Ties to Independent Groups...............................  5969
        Coalition Plans..........................................  5969
        Coordination during the 1996 Election Cycle..............  5973
        RNC Funding of Independent Groups........................  5974
        RNC Funding Schemes in the 1996 Election Cycle...........  5975
        RNC Contributions and Fundraising Help in 1996...........  5976
        Circumventing Campaign Finance Laws......................  5978
    The RNC's Front Organizations................................  5979
        The National Policy Forum................................  5980
        Coalition for Our Children's Future......................  5981
    Fronts For Conservative Donors...............................  5981
        CCF's Attack Ads.........................................  5981
        Triad's Attack Ads.......................................  5982
        Triad's Donors...........................................  5982
    Conclusion...................................................  5983
Chapter 11: Americans for Tax Reform.............................  6034
    Findings.....................................................  6034
    Background...................................................  6034
    Grover Norquist..............................................  6035
    The $4.6 Million October Surprise............................  6037
    ATR Televised Attack Ads.....................................  6041
    ATR Candidate Advocacy.......................................  6043
    ATR: Coordinated Efforts in 1996 to Elect Republicans To 
      Office.....................................................  6048
    RNC-Directed Contributions to ATR............................  6050
    ATR and RNC's Refusal to Cooperate...........................  6051
    Possible Civil, Criminal, and Tax Law Violations.............  6052
        Circumvention............................................  6052
        Coordination.............................................  6053
        Disclosure...............................................  6053
        Tax Laws.................................................  6054
    Conclusion...................................................  6055
Chapter 12: Triad and Related Organizations......................  6289
    Findings.....................................................  6289
    Introduction.................................................  6290
    Background...................................................  6290
    The Committee's Investigation of Triad.......................  6291
    The Political Operation of Triad Management..................  6293
        Triad is Not a Business..................................  6293
        Robert Cone's Financial Support of Triad.................  6293
        Corporate Contributions by Triad.........................  6294
        Triad and Political Action Committees....................  6297
    The Advertising Campaign.....................................  6301
        Creation of Citizens for Reform and Citizens for the 
          Republic...............................................  6301
        Improper Coordination of Triad's Advertising with 
          Political Candidates...................................  6303
        No Comparison Between Triad and the AFL-CIO..............  6306
        Financing the Advertising Campaign.......................  6307
        The Trusts Behind Triad..................................  6308
        Economic Education Trust.................................  6309
        Triad's Impact on the 1996 Elections.....................  6312
        Advertising by Other Triad Contributors..................  6312
    Conclusion...................................................  6313
Chapter 13: Coalition for Our Children's Future..................  6771
    Findings.....................................................  6771
    Background...................................................  6771
    RNC Ties to CCF..............................................  6772
        CCF's 1995 Advertising Campaign..........................  6774
        CCF and its Exempt Organization Status...................  6775
    CCF 1996 Advertising for Republican Candidates...............  6777
    The Secret Trust and CCF's 1996 Election Advertising.........  6780
        Did CCF's Secret Contributor Fund Triad Attack Ads?......  6781
    Conclusion...................................................  6782
Chapter 14: Christian Coalition..................................  6934
    Finding......................................................  6934
    Background...................................................  6934
    Pat Robertson and Ralph Reed.................................  6935
    Voter Guides Before the 1996 Election Cycle..................  6937
    Distortion of Candidates' Positions on Issues................  6937
    Voter Guides in the 1996 Election Cycle......................  6938
    Coalition Officials Endorsed Candidates......................  6941
    Coalition Ties to the Republican Party.......................  6944
    Coalition Activity in State Elections........................  6947
    FEC Action...................................................  6949
    Conclusion...................................................  6951
Chapter 15: Other Independent Groups.............................  7051
    Seniors Organizations........................................  7051
    Term Limits Groups as Fronts for GOP Donors..................  7053
    Nonprofit Groups Linked to Presidential Candidates...........  7055
    Conclusion...................................................  7055
Chapter 16: The Democratic Party and Independent Groups..........  7062
    Findings.....................................................  7062
Chapter 17: Warren Meddoff.......................................  7064
    Findings.....................................................  7064
    Warren Meddoff...............................................  7064
    Meddoff and the October 1996 Fundraiser......................  7065
    Ickes Conversations With Meddoff.............................  7066
    No Evidence of Illegal Coordination..........................  7067
    Ickes's Alleged Direction to Meddoff to Shred the Fax........  7068
    Meddoff's Credibility........................................  7068
    The DNC'S Refusal of the Contribution Offer..................  7071
    Fundraising on Federal Property..............................  7072
    Conclusion...................................................  7073
Chapter 18: Teamsters............................................  7102
    Findings.....................................................  7102
    Teamster Contributions.......................................  7102
        Martin Davis's Initial Contacts With DNC Officials.......  7103
        Judith Vasquez's Contribution to Vote Now '96............  7104
        Teamsters' Contributions.................................  7105
    Sullivan's Role..............................................  7106
    Proposed Contribution to Unity '96...........................  7107
        DCCC Executive Director Rejected the Proposal............  7107
        DCCC Chairman Rejected the Proposal......................  7108
        DSCC Deputy Executive Director Rejected the Proposal.....  7108
        DSCC Chairman Rejected the Proposal......................  7109
        The Proposal and Unity '96...............................  7109
    Conclusion...................................................  7109
Chapter 19: Other Independent Groups.............................  7235
    Findings.....................................................  7235
    Overview.....................................................  7235
    The DNC and Independent Groups...............................  7236
    Activities of Independent Groups.............................  7237
        The AFL-CIO..............................................  7237
        Vote Now '96.............................................  7238
        Citizen Action...........................................  7239
        National Council of Senior Citizens......................  7239
    Conclusion...................................................  7239
Part 3  Contribution Laundering/Third Party Transfers............  7241
Chapter 20: Overview and Legal Analysis..........................  7241
    Finding......................................................  7241
    Overview of Following Chapters...............................  7241
    Legal Analysis...............................................  7242
Chapter 21: Contributions to the Democratic Party................  7244
    Findings.....................................................  7244
    Keshi Zhan, Yue Chu, and Xiping Wang.........................  7246
    Pauline Kanchanalak..........................................  7248
    Yogesh Gandhi................................................  7249
    Hsi Lai Temple Monastics.....................................  7253
    Arief and Soraya Wiaridinata.................................  7256
    The Lum Family...............................................  7257
    Conclusion...................................................  7258
Chapter 22: Contributions to the Republican Party................  7372
    Findings.....................................................  7372
    Michael Kojima...............................................  7372
    Aqua Leisure Industries, Inc.................................  7375
    Empire Sanitary Landfill, Inc................................  7377
    Deluca Liquor and Wine, Ltd..................................  7378
    Conclusion...................................................  7379
Part 4  Soft Money and Issue Advocacy............................  7515
Chapter 23: Systemic Problems of the Campaign Finance System.....  7515
    Findings.....................................................  7515
    Introduction.................................................  7515
    Soft Money...................................................  7516
        Background on Soft Money.................................  7516
        Soft Money Finds a Way into Federal Elections............  7517
        Soft Money Creates the Appearance of Corruption and 
          Undermines Public Financing............................  7519
        Disclosure of Soft Money.................................  7520
    Issue Advocacy...............................................  7521
        Background on Issue Ads..................................  7522
    Proposals for Reform.........................................  7524
        Kassebaum-Baker/Mondale..................................  7525
        League of Women Voters...................................  7525
        Common Cause.............................................  7526
        Campaign Reform Project..................................  7526
        Public Campaign..........................................  7526
        Disclosure Only..........................................  7526
    Conclusion...................................................  7526
Part 5  Fundraising and Political Activities of the National 
  Parties and Administrations....................................  7540
Chapter 24: Overview and Legal Analysis..........................  7540
    Finding......................................................  7540
    Overview of Following Chapters...............................  7540
    Legal Analysis...............................................  7541
        Taking Official Action in Exchange for a Contribution....  7541
        Use of Federal Property..................................  7542
        Use of Federal Employees.................................  7544
        Spending Limits, Coordination and Issue Advocacy.........  7546
Chapter 25: DNC and RNC Fundraising Practices and Problems.......  7595
    Findings.....................................................  7595
    Introduction.................................................  7596
    Structure of the National Parties............................  7598
        The Democratic National Committee........................  7598
        The Republican National Committee........................  7599
    Fundraising Drives...........................................  7600
    Soliciting Contributions.....................................  7600
        Training Fundraisers.....................................  7601
        The DNC's Training Procedures and Problems...............  7601
        The RNC's Training Procedures and Problems...............  7602
        Contribution Compliance..................................  7602
        The DNC's Contribution Compliance and Problems...........  7602
        The RNC's Contribution Compliance and Problems...........  7603
        Telephone Solicitations from Federal Property............  7605
    Organizing Fundraisers and Other Events......................  7605
        DNC Events and Contributor Services......................  7605
        RNC Events and Contributor Services......................  7606
    Spending Party Funds.........................................  7607
    DNC'S Splitting Contributions Between Hard and Soft Money 
      Accounts...................................................  7608
    Conclusion...................................................  7609
Chapter 26: Telephone Solicitations From Federal Property........  7773
    Findings.....................................................  7773
    Presidential Telephone Calls.................................  7773
        Richard Jenrette.........................................  7774
    Vice Presidential Telephone Calls............................  7776
        Purpose of the Phone Calls...............................  7777
        Raising Soft Money.......................................  7780
        DNC Splitting Contributions Between Hard and Soft Money 
          Accounts...............................................  7781
        Applicability of the Pendleton Act.......................  7783
        The Contributors.........................................  7783
        Payment for the Phone Calls..............................  7783
        Payment for the Thank-You Notes..........................  7784
        No Other Costs to the Government.........................  7784
    Republican Phone Calls.......................................  7785
    Conclusion...................................................  7786
Chapter 27: White House Coffees and Overnights...................  7956
    Findings.....................................................  7956
    DNC Coffees at the White House...............................  7956
        The Coffees and Fundraising..............................  7957
        The Coffees as DNC Events................................  7959
        The Law and Precedent....................................  7960
    White House Overnights.......................................  7960
    Conclusion...................................................  7961
Chapter 28: Republican Use of Federal Property and Contributor 
  Access.........................................................  7968
    Findings.....................................................  7968
    Major Contributor Access to Elected Officials................  7968
        Republican Eagles........................................  7968
        Team 100.................................................  7970
        Other Republican Events and Meetings for Contributions...  7972
    Use of Federal Property For Fundraising......................  7975
    Political Appointments Awarded to Republican Contributors....  7977
    Conclusion...................................................  7978
Chapter 29: Democratic Contributor Access to the White House.....  8057
    Findings.....................................................  8057
    Introduction.................................................  8057
    The Secret Service...........................................  8058
    The White House Office of Political Affairs..................  8059
    The National Security Council................................  8060
        Previous NSC Procedures..................................  8061
        Current NSC Procedures...................................  8062
        Other Issues.............................................  8063
    Conclusion...................................................  8065
Chapter 30: Roger Tamraz.........................................  8095
    Findings.....................................................  8095
    Overview.....................................................  8095
    1970-1990: Tamraz's Business Ventures, Dealings With the CIA 
      and Political Contributions................................  8096
        Business Ventures........................................  8096
        Reported Contacts with the CIA...........................  8097
        RNC's Recommendation for a Reagan Administration Position  8097
        Tamraz Leaves Lebanon after Embezzlement Charges.........  8098
    1994-1995: The Commerce Department...........................  8098
    1995: The Caspian Sea Pipeline...............................  8099
        U.S. Policy on the Caspian Sea Pipeline..................  8099
        May-June 1995: Meetings with Executive Branch Officials..  8100
        Bob of the CIA...........................................  8101
    July-October 1995: Contributions to the Democratic Party.....  8103
        Contribution History.....................................  8103
        The DNC's Acceptance of Tamraz's Contributions...........  8103
    September 1995: Request For an Official Meeting With the Vice 
      President..................................................  8104
    Tamraz's Attendance at DNC Events............................  8105
        Summary of Events........................................  8105
        Fowler's Role............................................  8105
        No Effect on Policy......................................  8107
    April 1996: Department of Energy Official Talks to Heslin....  8107
        Tamraz's Attendance at March 27 and April 1, 1996 DNC 
          Events.................................................  8107
        Follow-Up on the Pipeline Project........................  8108
        The Request within the Department of Energy..............  8109
        Carter's Call to Heslin..................................  8110
        Heslin's Testimony.......................................  8110
        Carter's Testimony.......................................  8110
        The Department of Energy Responds to the Request for 
          Information Conclusions................................  8111
    Conclusion: Access Still for Sale in 1997....................  8113
Chapter 31: Other Contributor Access Issues......................  8250
    Findings.....................................................  8250
    Johnny Chung.................................................  8250
        Political Contributions..................................  8251
        Access to Administration Officials.......................  8251
        Link Between Contributions and Visits....................  8252
        Williams's Handling of Chung's $50,000 DNC Contribution..  8253
        The Pendleton Act........................................  8255
        The Hatch Act............................................  8256
    Other Individuals............................................  8256
        Jorge Cabrera............................................  8256
        Grigori Loutchansky......................................  8257
        Wang Jun.................................................  8258
        Yung Soo Yoo.............................................  8259
        Michael Kojima...........................................  8260
    Conclusion...................................................  8260
Chapter 32: Coordination Among the Democratic National Committee 
  and the Clinton/Gore Campaign and the White House..............  8281
    Findings.....................................................  8282
    Introduction and Summary.....................................  8282
    The Origin of the DNC's Issue Ads Campaign...................  8282
    The DNC and Rules Governing Issue Ads........................  8283
    The DNC Adhered to the Legal Rules Governing Issue Ads.......  8285
    The Clinton Campaign and the DNC Campaign....................  8286
    The Legality of Coordination Among the Clinton Campaign, 
      White House and DNC........................................  8286
        The President's Role in the Making of DNC Issue Ads......  8286
        Ickes's Role in Coordinating with the DNC................  8287
    Conclusion...................................................  8290
Chapter 33: Coordination Between the Republican National 
  Committee and the Dole for President Campaign..................  8294
    Findings.....................................................  8294
    Introduction.................................................  8294
    The Origin of the Pro-Dole Issue Ads.........................  8295
    Dole for President and the Dole/RNC Campaign.................  8296
    The Substance of Dole/RNC Issue Ads..........................  8297
    The Dole/RNC ``Issue Ads'' and Presidential Battleground 
      States.....................................................  8299
    Dole/RNC Issue Ads and Soft Money............................  8300
    Coordination of Fundraising and Political Efforts............  8301
    Dole for President and the RNC Impeded the Committee's 
      Investigation..............................................  8302
    Conclusion...................................................  8303
Part 6  Allegations of Quid Pro Quos.............................  8368
Chapter 34: Overview and Legal Analysis..........................  8368
    Legal Analysis...............................................  8368
    Overview of Following Chapters...............................  8369
Chapter 35: Hudson Casino........................................  8371
    Findings.....................................................  8371
    Overview.....................................................  8372
    Secretary Babbitt's Remarks to Lobbyist Eckstein.............  8372
        Eckstein's Affidavit.....................................  8372
        Secretary Babbitt's Letter to Senator McCain.............  8373
        Eckstein's Deposition....................................  8373
        Secretary Babbitt's Letter to Chairman Thompson..........  8374
        Secretary Babbitt's Hearing Testimony....................  8374
    Eckstein's Allegations.......................................  8376
    Eckstein's Interpretation....................................  8378
    Secretary Babbitt and Lobbyists for the Opposing Tribes......  8378
    Role of the White House......................................  8379
        Lobbyist Contacts with Harold Ickes......................  8379
        White House Requested Status Report from Interior........  8380
        White House Requested Second Status Report from Interior.  8381
        White House and Interior Confer on Response to 
          Congressional Inquiry..................................  8382
        Other Interior and White House Contacts..................  8382
    Eckstein's Access to Interior Officials......................  8383
        Eckstein's Telephone Contacts with Secretary Babbitt.....  8383
        The Tribal Applicants' May 1995 Meeting with Interior 
          Officials..............................................  8384
        Eckstein's July 14 Meeting with Secretary Babbitt........  8384
    The Merits of Interior's Decision on the Hudson Application..  8385
        The Hudson Casino and the Surrounding Community..........  8385
        The Surrounding Communities Opposed the Hudson Casino 
          Proposal...............................................  8386
        Interior Staff Recommended Denial........................  8387
        The Administrative Record................................  8388
        Allegations of Timing and Political Pressure.............  8389
        Interior's Final Decision-Maker Acted on the Merits......  8390
    Conclusion...................................................  8390
Chapter 36: Tobacco and the 1996 Election Cycle..................  8511
    Findings.....................................................  8511
    The Tobacco Industry's Political Contributions During the 
      1996 Election Cycle........................................  8511
    Republican Assistance to Tobacco Companies...................  8512
    Haley Barbour Assisted Tobacco...............................  8513
    Tobacco Settlement and the $50 Billion Tobacco Tax Credit....  8514
    Haley Barbour and Kenneth Kies...............................  8515
    Conclusion...................................................  8517
Chapter 37: Cheyenne-Arapaho Tribes of Oklahoma..................  8539
    Findings.....................................................  8539
    Overview.....................................................  8539
    The Battle Over the Closure of the Fort Reno ARS.............  8540
    The Tribes Increase Their Political Activities...............  8543
    The Tribes' Contribution to the DNC..........................  8545
    The White House Luncheon.....................................  8547
    The President's Birthday Fundraiser..........................  8552
    The Tribes Continue Their Lobbying Efforts...................  8553
    The Tribes' Dealings with Mike Copperthite, Nathan Landow, 
      and Peter Knight...........................................  8554
    The Tribes' Dealings with Cody Shearer and Terry Lenzner.....  8560
    The Tribes' Contribution is Returned.........................  8561
    Conclusion...................................................  8562
Part 7  Investigation Process....................................  8680
Chapter 38: Laying the Groundwork................................  8680
    Findings.....................................................  8680
    Introduction.................................................  8680
    Initial Floor Statements By Chairman Thompson and Senator 
      Glenn......................................................  8681
    Organizational Meeting.......................................  8683
        A. Budget................................................  8683
        B. Scope.................................................  8685
        C. Process...............................................  8686
        D. Termination Date......................................  8686
    First Public Debate On Issuance of Subpoenas.................  8687
    Alternative Resolution, S. Res. 61...........................  8687
    Rules Committee Appearances..................................  8687
    Final Floor Debate...........................................  8689
    The Majority Impeded a Fair Investigation....................  8689
        A. Subpoenas.............................................  8690
        B. Consideration of Grants of Immunity...................  8690
        C. Interviews............................................  8691
        D. Hearings..............................................  8692
    Conclusion...................................................  8693
Chapter 39: Democratic Compliance Issues.........................  8710
    Finding......................................................  8711
    DNC Cooperation and Compliance...............................  8711
        Attorney-Client Privilege Issue..........................  8712
        Late Production of Certain Files.........................  8713
    Conclusion...................................................  8713
Chapter 40: Republican Compliance Issues.........................  8775
    Findings.....................................................  8775
    Introduction.................................................  8775
    The First Subpoenas..........................................  8776
    RNC Compliance Issues........................................  8777
    Triad Compliance Issues......................................  8779
    The NPF Order................................................  8780
    NPF Compliance Issues........................................  8780
    ATR Compliance Issues........................................  8782
    Conclusion...................................................  8785
Chapter 41: The Breakdown of Compliance..........................  8938
    Finding......................................................  8938
    Introduction.................................................  8938
    Organizations Suggested for Subpoena by the Minority.........  8941
    Tax-Exempt Groups Linked to Presidential Campaigns...........  8941
        Republican Exchange Satellite Network and Lamar Alexander  8941
        Better America Foundation and Bob Dole...................  8942
        The American Cause and Pat Buchanan......................  8943
    Other Tax-Exempt Groups......................................  8943
        Citizens Against Government Waste........................  8943
        The Heritage Foundation..................................  8944
        The Coalition: Americans Working for Real Change.........  8944
        American Defense Institute/American Defense Foundation...  8945
        Citizens for a Sound Economy.............................  8945
        Women for Tax Reform.....................................  8946
        National Right to Life Committee.........................  8946
        The Christian Coalition..................................  8946
    Private Corporations Linked to Contribution Laundering.......  8947
        DeLuca Liquor & Wine and Empire Landfill, Danella Inc./
          USA Waste Services of Eastern Pennsylvania.............  8947
    Organizations Suggested for Subpoena by the Majority.........  8947
        National Council of Senior Citizens......................  8948
        Citizen Action...........................................  8949
        National Education Association...........................  8949
        Vote Now '96.............................................  8950
        Campaign to Defeat Proposition 209.......................  8950
        The Sierra Club..........................................  8950
        Democratic Leadership Council............................  8951
        EMILY'S List.............................................  8951
        National Committee for an Effective Congress.............  8951
        American Trial Lawyers Association.......................  8951
        Americans United for Separation of Church and State......  8951
    Conclusion...................................................  8952
Chapter 42: White House Tapes....................................  9331
    Findings.....................................................  9331
    Overview.....................................................  9331
    Video and Audio Taping in the White House....................  9332
    The White House Communications Agency........................  9333
    Videotape Procedures for Coffees.............................  9334
    The Initial Failure to Identify Responsive Videotapes........  9335
    White House Definition of Document...........................  9337
    White House Search Procedures................................  9339
    White House Responses to Committee Inquiries About Videotapes  9340
    Notifying the Department of Justice of the Existence of 
      Responsive Videotapes......................................  9344
    Deputy White House Counsel and the Videotapes................  9345
    Allegations Concerning Alteration of the Videotapes..........  9345
    Other Production Issues......................................  9346
        The Presidential ``Diary''...............................  9346
        WAVE Records Relating to Mr. Wu..........................  9347
        Lisa Berg documents......................................  9348
    Conclusion...................................................  9349
Part 8  Minority Recommendations.................................  9394
Part 9  Response to Majority Report..............................  9399
Senator Glenn's Additional Views.................................  9507
Senator Levin's Additional Views.................................  9511
Senator Lieberman's Additional Views.............................  9525
Senator Akaka's Additional Views.................................  9559
Senator Durbin's Additional Views................................  9565
Senator Torricelli's Additional Views............................  9571





                    Foreword to the Minority Report

    The faith of the American people in our political system is 
being jeopardized by the increasing perception, expressed in 
public opinion polls, that campaign contributions buy access to 
officeholders that in turn affects policy decisions. The 
confluence of increased use of expensive television ads and 
increasingly lengthy campaigns has driven both major parties to 
excesses in raising and spending political money, particularly 
soft money. The campaigns of 1996 exhibited a dangerous rise in 
such excess, including the use of so called independent non-
profit and tax-exempt groups whose unregulated expenditures on 
issue ads that are really thinly disguised campaign ads have 
made them a major force in our political life.
    An investigation of what has happened to the campaign 
finance system and what is needed to fix it was warranted and 
had the potential to be a catalyst for a public uproar to bring 
about the needed legislative changes to the system.
    While the investigation produced some important 
information, its high potential was not realized by the 
Governmental Affairs Committee investigation as a result of the 
Committee Majority's highly partisan approach to the 
investigation. And this partisanship continues to be on 
spectacular display in the Majority's report. Bringing balance 
to the investigation was therefore left to the Minority, and we 
fulfilled what we saw as our obligation as best we could. This 
Minority Report is the culmination of our effort and contains a 
comprehensive description of the Committee's investigation, a 
set of findings that logically and compellingly follow from the 
evidence presented, and the implications of our findings for 
reform of the campaign finance system.
    It is the hope of the Minority and all the other Democrats 
in this Senate that the Senate will pass a strong campaign 
finance reform bill this year. Failing to do that would mean 
failure to take even a first step to dispel the growing 
cynicism and lack of trust in our political system and the 
growing notion of many Americans that our government is for 
sale. In that notion lies the seed for the future destruction 
of American democracy. We ignore it at our peril.

                                     John H. Glenn, Ranking Member.
                          THE MINORITY REPORT

                           Executive Summary

                              INTRODUCTION

    The founders of this country envisioned that American 
political discourse would be based on the power of ideas, not 
money, and that our elected representatives would be chosen by 
the principles for which they stand, not the amount of money 
they raise. Unfortunately, elected officials in the United 
States have become so dependent on political contributions from 
wealthy donors that the democratic principles underlying our 
government are at risk. As Senator Glenn has warned, we face 
the danger of becoming a government of the rich, by the rich, 
and for the rich. Candidates for Congress and the presidency 
spent over $1 billion on their 1996 election activities, 
according to an estimate by the Annenberg Public Policy Center. 
In order to raise that enormous quantity of money, some 
candidates and party officials pushed the campaign finance laws 
to the breaking point--and some pushed it beyond. The abuses 
that occurred during the 1996 election exposed the dark side of 
our political system and underscored the critical need for 
campaign finance reform, as well as the need to enhance the 
ability of the Federal Election Commission to enforce campaign 
finance laws.
    On March 11, 1997, the Senate voted unanimously to 
authorize the Governmental Affairs Committee to conduct an 
investigation of illegal and improper activities in connection 
with 1996 Federal election campaigns. The Senate asked the 
Committee to conduct a bipartisan investigation, one that would 
explore allegations of improper campaign finance activities 
``by all, Republicans, Democrats, or other political 
partisans.'' This was a noble goal, and there were widespread 
hopes that the Committee would conduct a serious, bipartisan 
investigation, one that would investigate allegations of abuses 
by candidates and others aligned with both major political 
parties. In the end, however, the Committee's investigation 
provided insights into the failings of the campaign finance 
system, but it did not live up to its potential.
    The Minority regrets the failure of the Committee to expose 
the ways in which both political parties have pushed and 
exceeded the limits of our campaign finance system.
    Both parties have openly offered access in exchange for 
contributions.
    Both parties have been lax in screening out illegal and 
improper contributions.
    Both parties have become slaves to the raising of soft 
money.
    Violating the spirit and the letter of the Senate 
resolution that established its investigation, the Committee 
aggressively pursued allegations of wrongdoing involving 
Democrats, but largely ignored allegations of wrongdoing 
involving Republicans. As a result, the investigation became a 
partisan exercise, losing credibility and significance.
     Every one of the 320 subpoenas proposed by the 
Majority was issued; fewer than half of the subpoenas proposed 
by the Minority--89 out of 200--were issued.
     Sixty-six deposition subpoenas requested by the 
Minority were denied because they were directed to individuals 
affiliated with the Republican National Committee and 
conservative political groups, all of whom refused to cooperate 
voluntarily with the Committee.
     Thirteen deposition subpoenas issued to, but then 
ignored by, individuals affiliated with the Republican Party, 
were not enforced by the Committee. These subpoenas were 
directed to top officers of the Republican National Committee, 
the Dole for President campaign, Triad Management, and 
Americans for Tax Reform.
     Twenty-five of the 28 hearing days devoted to 
fundraising practices examined the Democrats. Only three days 
were allotted to look at possible Republican wrongdoing. Four 
additional days were spent discussing the need for campaign 
finance reform.
    The partisan nature of the investigation was also 
demonstrated by the Majority's repeated violations of the 
Committee's longstanding rules of procedure, abrogation of 
bipartisan agreements on Committee process, and the failure to 
issue or enforce Minority-requested subpoenas. More 
significantly, the failure by the Committee to enforce its 
subpoena authority may have damaged the ability of the U.S. 
Senate to compel information in future oversight and 
investigative efforts.
    The Minority Report brings some balance to the Committee's 
investigation. Our Report does not shrink from or condone 
illegal or improper conduct by Democrats. On the contrary, when 
the evidence indicates misconduct on the Democratic side, that 
misconduct is noted and condemned. The Minority Report also 
lays out the evidence we were able to compile about fundraising 
illegalities and improprieties on the Republican side. The fact 
that both parties engaged in campaign abuses provides the 
foundation of our most important conclusion, that the 
underlying cause of the 1996 campaign scandal is our deeply 
flawed system of campaign financing. The Committee 
investigation has built an undeniable case for campaign finance 
reform.

                           A SYSTEMIC PROBLEM

    The Committee examined a host of 1996 election-related 
activities alleged to have been improper or illegal. We heard 
from fundraisers, donors, party officials, lobbyists, 
candidates and government officials. Roger Tamraz, a 
contributor to both parties, admitted making 1996 campaign 
contributions for one reason, to obtain access to events held 
in the White House. Buddhist Temple officials admitted 
reimbursing monastics for making campaign contributions at the 
temple's direction. A wealthy Hong Kong businessman hosted the 
chairman of the Republican National Committee on a yacht in 
Hong Kong Harbor and provided $2 million in collateral for a 
loan used to help elect Republican candidates to office.
    The Committee's investigation exposed these and other 
incidents that ranged from the exemplary, to the troubling, to 
the possibly illegal. But investigations undertaken by the U.S. 
Senate are not law enforcement efforts designed to arrive at 
judgments about whether particular persons should be charged 
with civil or criminal wrongdoing, but, by Constitutional 
design, are inquiries whose primary purpose must be ``in aid of 
the legislative function.'' Accordingly, the most important 
outcome of the Committee's investigation is the compilation of 
evidence demonstrating that the most serious problems uncovered 
in connection with the 1996 election involve conduct which 
should be, but is not now, prohibited by law. Or as Senator 
Levin has put it, the evidence shows that the bulk of the 
campaign finance problem is not what is illegal, but what is 
legal.
    The systemic legal problems and the need for dramatic 
campaign finance reform are highlighted in our Report and in 
the following summary, which covers subjects addressed during 
the hearings as well as subjects the Minority would have 
addressed at the hearings if it had been allocated additional 
hearing days. The summary is organized like the Minority Report 
itself--both thematically and by chapter--and, like the Report, 
it discusses a wide range of questionable conduct by persons 
and organizations associated with the Republican and Democratic 
Parties. But the Report also seeks to draw larger lessons about 
what is needed to repair a campaign financing system in crisis.
    In our democracy, power is ultimately to be derived from 
the people--the voters. In theory, every voter is equal; the 
reality is that some voters, to borrow George Orwell's phrase, 
are ``more equal than others.'' No one can deny that 
individuals who contribute substantial sums of money to 
candidates are likely to have more access to elected officials. 
And most of us think greater access brings greater influence. 
It was this concern over linkages between money, access and 
influence--amid allegations that Richard Nixon's 1968 and 1972 
presidential campaigns accepted individual contributions of 
hundreds of thousands, even millions, of dollars--that spurred 
Congress to enact the original campaign finance laws. While 
those laws have evolved over the 20 years since that time, the 
goals have remained the same: To prevent wealthy private 
interests from exercising disproportionate influence over the 
government, to deter corruption, and to inform voters. To 
achieve those goals, the law imposes both contribution limits 
and disclosure requirements:
     Certain categories of donors--including 
corporations, labor unions, and foreign nationals--are 
prohibited from making contributions to federal campaigns.
     Individual donors are limited in the amount of 
money they may contribute to federal campaigns.
     All campaign contributions must be disclosed.
    Violations of the law's contribution limits and disclosure 
requirements have occurred since they were first enacted. For 
example, corporations and foreign nationals prohibited from 
making direct campaign contributions have laundered money 
through persons eligible to contribute. Donors who have reached 
their legal contribution limit have channeled additional 
campaign contributions through relatives, friends, or 
employees. Indeed, the investigation of the 1996 elections was 
triggered by suspected foreign contributions to the Democratic 
Party allegedly solicited by Democratic National Committee 
(``DNC'') fundraiser John Huang. Indictments and convictions 
have emerged involving contributors to both parties, including 
Charlie Trie and the Lum family on the Democratic side, and 
Simon Fireman, vice chair of finance of Senator Dole's 
presidential campaign, and corporate contributors to the 
campaigns of Representative Jay Kim of California on the 
Republican side. The most elaborate scheme investigated by the 
Committee involved a $2 million loan that was backed by a Hong 
Kong businessman, routed through a U.S. subsidiary, and 
resulted in a large transfer of foreign funds to the Republican 
Party.
    While the Committee's investigation uncovered disturbing 
information about the role of foreign money in the 1996 
elections, the evidence also shows that illegal foreign 
contributions played a much less important role in the 1996 
election than once suspected. Whether judged by the number of 
contributions or the total dollar amount, only a small fraction 
of the funds raised by either Democrats or Republicans came 
from foreign sources. More importantly, the Committee obtained 
no evidence that funds from a foreign government influenced the 
outcome of any 1996 election, altered U.S. domestic or foreign 
policy, or damaged our national security.
    The Committee's examination of foreign money also brought 
to light an array of fundraising practices used by both parties 
that, while not technical violations of the campaign finance 
laws, expose fundamental flaws in the existing legal and 
regulatory system. The two principal problems involve soft 
money and issue advocacy.
    The federal election laws, as noted above, place strict 
limits on campaigncontributions to federal candidates. Campaign 
funds which meet all of the federal strictures are often called 
``federal'' or ``hard'' money. But FEC regulations also permit 
political parties to raise and accept contributions that do not meet 
the law's strict requirements, if the funds are not intended to be used 
to help specific federal candidates. That means, for example, under the 
FEC regulations, parties may accept otherwise prohibited contributions 
from corporations and unions and unlimited contributions from 
individuals. Parties can then--legally--use this so-called ``non-
federal'' or ``soft'' money to help state and local candidates and for 
generic, party-building purposes such as get-out-the-vote drives.
    The Committee's investigation revealed that the legal 
distinction created by the FEC between hard and soft money, 
while clear on the fundraising side, has become all but 
meaningless on the spending side. Both the Democratic and 
Republican Parties raised vast amounts of soft money from 
corporate, union and individual donors, and then used loopholes 
in the law to spend that money helping specific candidates. The 
biggest of these loopholes involves so-called issue advocacy, 
in which communications, paid for in whole or part with soft 
money, attack a candidate by name while claiming to be an issue 
discussion outside the reach of federal election laws. This 
loophole widened in 1996 due to rulings by a few courts giving 
wide latitude to the definition of issue advocacy. These courts 
held, in essence, that political communications are outside the 
scope of federal election laws unless they contain so-called 
``magic words'' (such as ``vote for,'' ``elect,'' or 
``defeat'') advocating the election or defeat of a clearly 
identified candidate. These court rulings led to over $135 
million in televised ads by parties and other groups, almost 90 
percent of which named specific candidates. This unlimited and 
undisclosed spending, which the Annenberg Public Policy Center 
has called ``unprecedented'' and ``an important change in the 
culture of campaigns,'' may have changed the outcome of at 
least some 1996 federal elections.
    It is beyond question that raising soft money and 
broadcasting issue ads are not, in themselves, unlawful. The 
evidence suggests that much of what the parties and candidates 
did during the 1996 elections was within the letter of the law. 
But no one can seriously argue that it is consistent with the 
spirit of the campaign finance laws for parties to accept 
contributions of hundreds of thousands--even millions--of 
dollars, or for corporations, unions and others to air 
candidate attack ads without meeting any of the federal 
election law requirements for contribution limits and public 
disclosure.
    The evidence indicates that the soft-money loophole is 
fueling many of the campaign abuses investigated by the 
Committee. It is precisely because parties are allowed to 
collect large, individual soft-money donations that fundraisers 
are tempted to cultivate big donors by, for example, providing 
them and their guests with unusual access to public officials. 
In 1996, the soft-money loophole provided the funds both 
parties used to pay for televised ads. Soft money also supplied 
the funds parties used to make contributions to tax-exempt 
groups, which in turn used the funds to pay for election-
related activities. The Minority Report details, in several 
instances, how the Republican National Committee deliberately 
channeled funds from party coffers and Republican donors to 
ostensibly ``independent'' groups which then used the money to 
conduct ``issue advocacy'' efforts on behalf of Republican 
candidates.
    Together, the soft-money and issue-advocacy loopholes have 
eviscerated the contribution limits and disclosure requirements 
in federal election laws and caused a loss of public confidence 
in the integrity of our campaign finance system. By inviting 
corruption of the electoral process, they threaten our 
democracy. If these and other systemic problems are not solved, 
the abuses witnessed by the American people in 1996 will be 
repeated in future election cycles. All that will change will 
be the names, dates, and details.

                             FOREIGN MONEY

    A substantial portion of the Committee's efforts was 
directed at uncovering whether there was an illegal infusion of 
foreign funds into the American political process during the 
1996 election cycle.

The China Plan

    In his opening statement on the first day of the 
Committee's public hearings, Chairman Thompson stated that the 
Committee had discovered a plan ``hatched by the Chinese 
Government'' that was designed ``to pour illegal 
contributions'' into American campaigns. Chairman Thompson 
suggested that the Committee had evidence that this ``China 
Plan'' had ``affected the 1996 presidential race.'' The 
Committee did, in fact, receive information that Chinese 
government officials had proposed a plan during the last 
election cycle designed to promote its interests in the United 
States. The Committee also discovered that the China Plan 
focused not on the presidential race, but on lobbying and 
promoting Chinese Government interests with Congress, state 
legislatures and the American public. Although the evidence 
presented to the Committee supports the conclusion that the 
plan was implemented in a number of ways, there was ultimately 
insufficient evidence presented to the Committee to show that 
the plan involved the Chinese government making contributions 
to the presidential campaign, let alone that any Chinese 
government money had actually made its way into any federal 
campaign, presidential or congressional. Based on the 
information available to the Committee to date, the China Plan 
was found to be of minimal significance to the issues 
investigated by the Committee.

Haley Barbour and the National Policy Forum

    The clearest example of foreign money being solicited and 
directed into U.S. elections involves the Republican Party and 
a Hong Kong businessman. It occurred when Haley Barbour, 
chairman of the Republican National Committee 
(``RNC'),persuaded Hong Kong businessman Ambrous Young to post 
collateral of $2 million in support of a loan to the National Policy 
Forum (``NPF''). NPF, a think tank also presided over by Barbour, was a 
de facto subsidiary of the RNC. The collateral was posted by a shell 
corporation that had no assets other than money transferred from Hong 
Kong. Because of Young's help, NPF was able to obtain a $2 million bank 
loan, and it quickly transferred the bulk of the loan proceeds to the 
RNC which, in turn, channeled the money into congressional races around 
the country. This was a clear case of foreign money being brought into 
our domestic political process. This money transfer was conceived and 
executed at the highest levels of the Republican Party.
    Barbour's testimony that he did not know that the source of 
the funds was foreign or that the money was intended for 
infusion into the 1994 congressional elections was contradicted 
by both documentary and testimonial evidence. Evidence before 
the Committee demonstrated that Barbour was made aware on 
several occasions, both before and after the loan was made, 
that the collateral, $2 million in certificates of deposit, was 
purchased with foreign money. Barbour himself was quoted on 
several occasions stating that the money was needed for the 
November 1994 congressional elections. His denials to this 
Committee were not credible.
    Both the Minority and Chairman Thompson agreed that the RNC 
should repay its Hong Kong benefactor the $800,000 that was 
forfeited as a result of NPF's default on the loan. Barbour 
authorized the default after having given assurances that the 
RNC would stand behind the NPF loan.

John Huang

    John Huang, a U.S. citizen who emigrated from Taiwan in 
1969, worked for several years for the Lippo Group, an 
Indonesian-owned conglomerate. During the late 1980s, he became 
active in Democratic Party politics. He raised money for 
President Clinton's campaign in 1992 and later joined the 
Department of Commerce. It appears that Huang may have raised 
money for the Democratic National Committee while he was a 
Commerce Department employee. If true, he may have violated the 
Hatch Act, which proscribes the solicitation of campaign 
contributions by federal employees.
    After leaving Commerce, Huang joined the DNC staff as a 
full-time fundraiser, concentrating on the Asian-American 
community. On several occasions, he collected contributions 
that he knew--or should have known--were improper and possibly 
illegal.
    Some Members of the Committee viewed Huang as a potential 
espionage agent, and spent considerable time attempting to 
establish that he relayed classified information to his former 
employer, the Lippo Group, or to the Chinese government when he 
was employed by the Department of Commerce. Huang offered to 
testify without immunity from prosecution for any acts of 
espionage or improper transfer of classified information. The 
Majority did not pursue this offer. The evidence before the 
Committee does not support the allegation that Huang served as 
a spy or a conduit for contributions from any foreign 
government, including China.

Yah Lin (``Charlie'') Trie

    Yah Lin (``Charlie'') Trie, a U.S. citizen who emigrated 
from Taiwan in 1974, was not a DNC employee, but he raised 
substantial sums of money for the DNC and the Presidential 
Legal Expense Trust, an entity established to raise money to 
defray the legal bills of President and Mrs. Clinton.
    Some of the money Trie raised appears to have come from 
foreign sources, notably Ng Lap Seng (also known as ``Wu''), a 
business associate of Trie's based in Macao. Trie appears to 
have made some of his own political contributions from a bank 
account that was funded with transfers from Wu.
    The evidence before the Committee does not support the 
allegations that Trie was acting on behalf of a foreign 
government or that he was improperly attempting to influence 
American foreign policy. However, there can be little doubt 
that Trie hoped to promote his business interests by 
capitalizing on his earlier friendship with President Clinton. 
In February, 1997 Trie was indicted by the Department of 
Justice for conspiracy to defraud the DNC and the FEC by making 
and arranging illegal contributions utilizing foreign funds. He 
has returned to the United States and has pleaded not guilty to 
these charges.

Ted Sioeng

    Individuals and companies associated with Ted Sioeng, an 
Indonesian-born businessman who is not a U.S. citizen or a 
legal resident, contributed large sums of money to both 
Democrats and Republicans. These contributions enabled Sioeng 
to gain access to high-ranking officials of both parties. The 
Minority urged the Committee to hold hearings on Sioeng, but 
none took place. This failure is striking since the Committee 
focused enormous attention on John Huang and Charlie Trie and 
other individuals linked to questionable Asian contributions. 
As noted above, unlike Huang and Trie, individuals associated 
with Sioeng contributed to both political parties.

Jay Kim

    One of the best-documented examples of foreign 
contributions to a federal candidate concerned U.S. 
Representative Jay Kim, a California Republican, who pled 
guilty last year to campaign finance violations stemming from 
his 1992 and 1994campaigns. Kim's wife also pled guilty, while 
a former campaign treasurer was convicted of criminal charges after a 
jury trial. While examining the Kim case, the Minority found evidence 
suggesting that there were ongoing improprieties during the 1996 
election cycle. Moreover, a recent lucrative book deal between Mrs. Kim 
and a South Korean publisher raises a serious question as to whether it 
is an attempt to channel foreign funds to the Kims for improper 
purposes. These transactions warrant further scrutiny.
    While the above examples clearly show that foreign money is 
a problem in the political process, the dimensions of the 
problem must be kept in perspective. It should be noted that 
the amount of foreign money that made its way into the election 
campaigns was a small fraction of the total amount of money 
contributed and the number of contributions received.

                           INDEPENDENT GROUPS

    The Minority hoped for a broad bipartisan investigation 
into the issue of how tax-exempt entities may have been used to 
circumvent the campaign finance laws. The Minority joined the 
Majority to issue a subpoena to the AFL-CIO, the Christian 
Coalition, and nearly 30 other independent groups holding a 
wide range of political ideologies and affiliations that 
appeared to have played some role in the 1996 elections.
    After the subpoenas were issued, however, the Majority 
failed to enforce them, even in the face of open non-
cooperation by entities and individuals subpoenaed by the 
Committee. The Minority indicated that it would support action 
against any entity, whether associated with either the 
Democratic or Republican Party, that failed to comply with a 
valid Committee subpoena. However, by late summer 1997, 
compliance by almost all of the independent groups had stopped.
    Despite these obstacles, the Minority was able to establish 
that several tax-exempt organizations spent millions of dollars 
on behalf of Republican candidates through purported ``issue 
ads'' and other campaign support. Even more disturbing, the RNC 
funneled money through several theoretically ``independent'' 
groups and thereby effectively evaded the federal legal limits 
on the spending of soft money contributions.

The RNC and Americans for tax reform

    One of the most egregious examples of the misuse of tax-
exempt entities concerned the Republican National Committee's 
transfer of money to Americans for Tax Reform (``ATR''). 
Shortly before the November 1996 election, ATR received a $4.6 
million ``donation'' from the RNC and spent that money on 
direct mail and phone bank operations to counter anti-
Republican advertising on the Medicare issue. The evidence 
collected by the Committee shows clearly that ATR acted as a 
surrogate for the RNC, enabling the Republican Party to evade 
campaign finance laws. The coordinated effort between the RNC 
and ATR permitted the RNC to conserve hard dollars which the 
RNC could then expend elsewhere. The alliance between the RNC 
and ATR is a classic example of the soft money loophole being 
exploited in a manner that pushed the limits of our campaign 
finance laws.
    These activities should have been exposed at public 
hearings, but the Majority refused to permit such hearings. The 
relationship between the RNC and ATR should be the subject of 
continued investigation by the Department of Justice, the 
Internal Revenue Service and the Federal Election Commission.

Triad and related organizations

    The issue advocacy loophole was also exploited by Triad 
Management Services, a for-profit company that claims to be in 
the business of providing advice to conservative donors in 
exchange for fees. In fact, Triad was funded by a handful of 
wealthy Republican donors who used it as a mechanism to support 
the election of conservative Republican candidates to the House 
of Representatives and the Senate. Triad channeled millions of 
dollars from its backers to two tax-exempt groups it had 
established for the sole purpose of running attack ads against 
Democratic candidates under the guise of ``issue advocacy.'' By 
operating this way, Triad and its financial backers avoided the 
disclosure and campaign contribution limits of the federal 
election laws.
    Triad itself made possibly illegal contributions by 
providing free consulting advice and other assistance to 
candidates. Moreover, the evidence suggests that Triad 
conspired with contributors who had reached their maximum 
contribution limit to evade the law by laundering additional 
contributions through designated political action committees 
(``PACs'') and then earmarking these contributions for certain 
campaigns. The Department of Justice and the Federal Election 
Commission should continue the investigation into the 
operations of Triad to determine the nature and the extent of 
any illegal activities by that organization.
    One of the most unfortunate aspects of this entire 
investigation was the decision by the Majority to unilaterally 
reverse its pledge to the Minority that the Minority would be 
afforded three hearing days in October or November, 1997. The 
Minority was prepared to use the promised hearing days to 
educate the American people about Triad.

The Christian Coalition

    Among all the ``independent'' groups in the pro-Republican 
camp, few have been as active as the Christian Coalition (``the 
Coalition''). In local, state, and federal elections, the 
Coalition spends substantial sums of money to distribute 
millions of copies of itsvoter guides. It has acknowledged 
spending between $22 million and $24 million on 1996 races, and working 
to distribute about 45 million voter guides.
    At the Minority's request, the Committee issued a subpoena 
to the Christian Coalition, but the organization produced only 
a handful of documents. It refused to provide copies of voter 
guides, even though copies had been distributed publicly across 
the country. Despite the lack of cooperation from the 
Coalition, and the failure of the Majority to seek enforcement, 
the Minority was able to piece together information about this 
organization from other sources, including court papers in the 
FEC's ongoing suit against the Coalition.
    The Minority found that the Christian Coalition has 
routinely circumvented federal election law by exploiting the 
``issue advocacy'' loophole. Its voter guides, for example, 
purport to be honest portrayals of candidates, examining how 
their positions on controversial issues are in accord with the 
Coalition. In fact, the guides are highly slanted publications, 
characterized by distortions and omissions in order to help 
Coalition-backed candidates. Although it purports to be a 
nonpartisan, social welfare organization, the Christian 
Coalition is one of the biggest proponents of the Republican 
Party and Republican candidates.

Warren Meddoff and tax exempt groups

    The evidence before the Committee on coordination between 
Democratic officials and independent groups is not comparable 
to the disturbing evidence of Republican coordination with 
independent groups. The Committee examined activities 
surrounding a written suggestion by White House Deputy Chief of 
Staff Harold Ickes to Florida businessman Warren Meddoff that, 
in response to Meddoff's request, identified organizations to 
which tax-deductible contributions could be made. However, 
there was no evidence presented that the groups identified by 
Ickes, which do not run issue ads and focus mostly on voter-
registration activities, coordinated their activities with the 
White House or the DNC. The Meddoff story sheds so little light 
on the issue of improper coordination that it is questionable 
that he would have been called to testify before the Committee 
were it not for his allegation that Ickes had asked him to 
shred the memorandum identifying the tax-exempt groups. This 
allegation, as discussed in this Minority Report, is not 
credible.

The Teamsters election and the DNC

    The Committee investigated allegations of a possible 
``contribution-swapping'' scheme proposed by Martin Davis, a 
direct-mail consultant to the reelection campaign of Ron Carey, 
former president of the Teamsters union. The essence of Davis's 
proposal was that the Teamsters would make contributions to the 
DNC in return for which Democratic Party officials would find a 
donor to contribute to Carey's re-election campaign. The 
evidence established that there were discussions between Davis 
and various fundraising officials at the DNC about this 
proposal.
    While the evidence does not support the conclusion that a 
contribution-swap ultimately took place, it is disturbing that 
the matter progressed to the point where a possible contributor 
for the Carey campaign was identified. This donor did not 
ultimately contribute to the Teamsters because her status as an 
employer made her ineligible to contribute to a union election. 
Nevertheless, Martin Davis's comments to DNC officials should 
have led them to suspect that Davis was improperly seeking to 
influence the use of Teamsters funds to benefit the Carey 
campaign. DNC officials should have immediately refused to take 
any action in response to Davis's request.

                        THE HSI LAI TEMPLE EVENT

    The Committee examined whether Vice President Gore knew or 
should have known that a community outreach rally held at the 
Hsi Lai Temple in California on April 29, 1996, was an event 
used by Huang to encourage contributions to the DNC and, 
therefore, should not have been held on the premises of a tax-
exempt religious organization. The evidence before the 
Committee indicates that the Vice President neither knew nor 
had reason to know that this was anything other than a 
community outreach event. The evidence presented to the 
Committee indicates that there had been plans for the Vice 
President to appear at a fundraising luncheon at a restaurant 
and then go to the Hsi Lai Temple for the community outreach 
event. When the luncheon was canceled, the Hsi Lai Temple event 
proceeded without any of the indicia normally associated with a 
fundraiser. There was no admission price for attending, no 
tickets were sold, no campaign materials were displayed, and 
the Vice President's speech made no reference to the 
solicitation of funds.
    The evidence established that the day after the Vice 
President appeared at the temple, DNC fundraiser John Huang 
advised Maria Hsia, a prominent member of the Asian-American 
community, that he needed to raise money and he asked her to 
help. She, in turn, asked members of the temple to find 
contributors. There is not a shred of evidence, however, that 
the Vice President had any knowledge of this. Moreover, 
although the donors were reimbursed for their contributions, 
the source of the funds appears to have been domestic, not 
foreign.
    The evidence before the Committee shows that no aspect of 
Vice President Gore's appearance at the temple was improper.

                        CONTRIBUTION LAUNDERING

    The Committee learned that some improper reimbursement of 
campaign contributions occurred in connection with the 1996 
federal election cycle. A number of persons associated with 
Trie and Wu appear to have been reimbursed for their 
contributions using funds from accounts controlled by Trie. 
Similarly, YogeshGandhi, a Los Angeles businessman, appears to 
have made a $325,000 contribution in his name using funds supplied by a 
Japanese businessman. Businesswoman Pauline Kanchanalak, while 
reportedly wealthy in her own right, appears to have made substantial 
contributions with funds supplied by her mother-in-law. All of these 
contributions were improper and were returned by the DNC. There was, 
however, no evidence presented to the Committee to suggest that any DNC 
officials were aware that contributions were being reimbursed from 
third parties. In addition, the evidence before the Committee does not 
support allegations of impropriety related to $425,000 in contributions 
by the Wiriadinatas.
    The Committee also investigated several instances of 
contributions to the RNC that were apparently laundered or 
unlawfully reimbursed. For example, Michael Kojima contributed 
$500,000 to the Republican Senate-House Dinner Committee in 
1992, and the evidence strongly suggests that those funds had 
actually come from several Japanese businessmen. Despite this 
evidence, the RNC has kept $215,000 from that contribution.
    Simon Fireman, a national vice chair of the Dole campaign, 
and his company, Aqua Leisure Industries, Inc., were convicted 
for using employees as conduits to make illegal corporate 
contributions. Aqua Leisure employees contributed more than 
$100,000 and were reimbursed with corporate funds laundered 
through a Hong Kong trust. These contributions went to several 
campaigns, including the Dole for President campaign. There was 
a similar scheme involving contributions to the Dole for 
President campaign by employees of Empire Sanitary Landfill, 
Inc., and, apparently, DeLuca Liquor and Wine, Ltd.
    Just as the DNC was unaware of having received laundered or 
illegally reimbursed contributions, there was no evidence to 
suggest that anyone at the RNC knowingly accepted such 
contributions.

                     SOFT MONEY AND ISSUE ADVOCACY

    The federal campaign finance laws provide that candidates 
should finance their campaigns with so-called ``hard 
dollars''--contributions received in relatively small dollar 
amounts from individual donors and political action committees. 
Soft money--which can be donated by individuals, corporations 
and unions and in unlimited amounts--is not supposed to be 
spent on behalf of individual candidates. And yet it is: Tens 
of millions of soft dollars are raised by the parties and 
spent, through such devices as ``issue advocacy'' ads, for the 
benefit of candidates. The soft money loophole undermines the 
campaign finance laws by enabling wealthy private interests to 
channel enormous amounts of money into political campaigns. 
Most of the dubious or illegal contributions that were examined 
by the Committee involved soft money.
    The Committee's investigation also showed that the legal 
distinction between ``issue ads'' and ``candidate ads'' has 
proved to be largely meaningless. The result has been that 
millions of dollars, which otherwise would have been kept out 
of the election process, were infused into campaigns obliquely, 
surreptitiously, and possibly at times illegally.
    The issue of soft money abuses is inevitably tied to the 
question of how access to political figures is obtained through 
large contributions of soft money. It is also tied to the 
question of how tax-exempt organizations have been used to hide 
the identities of soft money donors. A system that permits 
large contributions to be made for partisan purposes, without 
public disclosure, invites subversion of the intent of our 
election law limitations.

                          THE NATIONAL PARTIES

    It is beyond dispute that the present campaign finance 
system is riddled with loopholes that invite abuse by both 
parties. The flaws inherent in the system, however, do not 
excuse poor judgment.
    The evidence supports the conclusion that both parties 
failed to scrutinize their fundraising practices and political 
contributions with sufficient vigilance.
    The Committee received evidence that the DNC did not 
vigilantly supervise the fundraising of its employee John 
Huang, who was not an experienced professional fundraiser and 
who was tapping a source of funds--the Asian-American 
community--that had not previously been heavily targeted for 
substantial contributions. When the party received large 
contributions from previously unknown contributors such as 
Charlie Trie, Yogesh Gandhi, and others, it should have taken 
special steps to ensure that these were legal and proper 
donations and that all DNC fundraisers were familiar with--and 
in compliance with--the rules. Such heightened vigilance is 
important for any new source of contributions. Instead of 
heightened vigilance, however, there appear to have been 
instances where DNC officials ignored warning signals and 
permitted improper contributions to be accepted.
    The Committee also learned, however, that a very small 
proportion of the money raised by the DNC during the 1996 cycle 
was improper or illegal. The DNC raised $122 million and 
voluntarily returned less than 200 out of 2.7 million 
contributions, or .01% of the contributions it received.
    The DNC also deserves criticism for the manner in which it 
used access to political figures as a fundraising tool. Also of 
concern were instances when DNC Chairman Donald Fowler 
intervened on behalf of contributors in the face of admonitions 
to refrain from doing so. While there is no basis for ascribing 
improper intent to Fowler, he exhibited an insensitivity to 
both the appearance and theimplications of his conduct.
    Notwithstanding these failings, there was insufficient 
evidence to support a claim that the DNC was engaged in a 
systematic effort to disregard or evade the federal election 
laws. None of the evidence suggests that the DNC condoned any 
intentional misconduct. DNC fundraising personnel, with few 
exceptions, performed their functions in a legal and ethical 
manner.
    Many of the RNC's activities were subject to similar 
problems as the DNC. The RNC, for example, received foreign 
contributions, gave access to top Republican congressional 
leaders for large contributions, and held fundraising-related 
events on federal property. However, because the RNC did not 
comply with the Committee's document subpoena and did not make 
RNC officials available for deposition, the Committee did not 
subject allegations involving the RNC to the same level of 
scrutiny as it did allegations involving the DNC.

                           CONTRIBUTOR ACCESS

    One of the most troubling aspects of the campaign finance 
system is that major contributors often enjoy added access to 
decision-makers in the legislative and executive branches of 
government. It is neither a mystery nor a surprise that the 
drive of political campaigns to raise money enables those who 
can provide funds to gain access to those who control the 
government. Neither political party can claim the high road of 
virtue on this issue, and abuses are pervasive in both 
presidential and congressional fundraising.
    For years, Republicans have openly offered contributors 
access to congressional and political figures in their party. 
One 1997 Republican invitation states that for a $250,000 
contribution, a smorgasbord of benefits is available, including 
sharing a table with the Senate or House committee chairman 
``of your choice.'' Another 1992 invitation states in a burst 
of candor: ``Benefits based on receipts.'' This practice of 
promising access to political figures in exchange for 
contributions is the offensive product of a campaign finance 
system that remains badly in need of reform.
    One of the most egregious examples of access being provided 
in exchange for political contributions concerns businessman 
Roger Tamraz. Evidence presented to the Committee indicates 
that Tamraz used every tactic imaginable to gain administration 
support for his oil pipeline scheme. Eventually, Tamraz 
resorted to making campaign contributions to the Democratic 
Party, just as he had given to the Republican Party when 
President Reagan was in the White House. The sobering fact is 
that the tactic was effective. Despite warnings from DNC staff 
and opposition from National Security Council staff and Vice 
President Gore's staff, Tamraz gained access to DNC events in 
the White House.
    It was equally troubling for the Republican Party to 
provide access to Michael Kojima when President Bush was in 
office--a subject not explored in any of the Committee's 
hearings. Kojima, a notorious ``deadbeat dad'' who was pursued 
by creditors, was seated with President Bush because he had 
donated $500,000 to the Republicans. He also received special 
assistance from U.S. Embassy officials for his private business 
interests. After Kojima's attendance at the dinner was 
publicized, the Republicans were forced to relinquish some of 
the money he had contributed to Kojima's creditors. But the 
party has--to this day--ignored strong evidence that Kojima 
made his donation not with his own money, but with funds 
transferred to him from Japanese businessmen. The Kojima event 
may have contributed to subsequent campaign finance abuses. The 
failure to prosecute Kojima during the Bush administration may 
have sent a message to other donors that the campaign finance 
laws were not taken seriously in Washington, a message that 
could only have encouraged the excesses of 1996.

                WHITE HOUSE FUNDRAISING TELEPHONE CALLS

    Fundraising calls from the White House are not a new 
practice. President Reagan made such calls as did President 
Clinton.
    After conducting an extensive investigation into telephone 
calls made by President Clinton and Vice President Gore, the 
evidence showed that the calls were not illegal. President 
Clinton made fundraising calls for the DNC from the private 
residence while Vice President Gore made DNC telephone calls 
from his office, in all instances to persons who were outside 
any federal building. None of these calls violated the 
Pendleton Act, a 19th century law which forbids the 
solicitation of campaign contributions from persons who are 
located on federal property, and Chairman Thompson was correct 
when he stated that no one would be prosecuted based on such 
telephone calls.

                SECRETARY BABBITT AND THE HUDSON CASINO

    On the final day of the hearings, the Committee heard 
testimony by Interior Secretary Bruce Babbitt and Paul 
Eckstein, a lobbyist and former colleague of the Secretary. 
Eckstein had unsuccessfully lobbied Secretary Babbitt to 
approve an Indian trust application for the purpose of building 
a casino near Hudson, Wisconsin. Secretary Babbitt and Eckstein 
were questioned about allegations that Interior's denial of the 
Hudson casino proposal was undertaken in response to political 
pressure brought to bear by opposing tribes who were also 
Democratic Party supporters.
    Much of the hearing was devoted to the particulars of a 
conversation between Secretary Babbitt and Eckstein about 
Harold Ickes, then-Deputy Chief of Staff in the White House. 
Several members of the Committee questioned whether Secretary 
Babbitt had accurately described this conversation in 
responding to an earlier inquiryfrom Senator John McCain. More 
attention should have been paid, however, to the extensive evidentiary 
record which demonstrated that Secretary Babbitt had played no role in 
the decision and that the Interior officials who did make the decision 
had no knowledge of either campaign contributions by the opposing 
tribes or alleged ``pressure'' from the White House or the DNC to deny 
the casino proposal.

                         WHITE HOUSE PRODUCTION

    The Majority devoted two full hearing days to an effort to 
establish that the White House Counsel's Office conspired to 
withhold videotapes that showed the first few minutes of 44 
coffees held at the White House. The evidence before the 
Committee indicates that the tapes were not produced until 
October 1997--about six months after they had been requested by 
the Committee. But the evidence is also clear that shortly 
after the request was received at the White House, an 
appropriately worded directive was issued, asking for all 
materials, including any videotapes, from persons within the 
White House complex.
    Evidence presented at the hearing strongly suggested that 
the delay in producing the tapes was caused by the 
unintentional mishandling of a fax by personnel at the White 
House Communications Agency (``WHCA'). The WHCA is staffed by 
career military personnel who, among their many 
responsibilities, are charged with creating a videotape record 
of presidential events in the White House. Had the White House 
Counsel's Office fax been forwarded to them in its entirety, 
WHCA personnel would have retrieved the tapes and the tapes 
would have been produced on a timely basis. Allegations were 
also made that the tapes may have been tampered with. The 
Committee hired an expert to examine the tapes: after extensive 
analysis he concluded there was no evidence of tampering.
    Overall, the White House cooperated with the Committee's 
investigative efforts. Hundreds of thousands of pages of 
documents were voluntarily produced by the White House, many of 
which shed important light on the fundraising practices being 
examined by the Committee. In addition, over 50 witnesses were 
provided by the White House for interview or deposition by 
Committee staff without the need of subpoenas. During the 
course of the investigation, however, criticisms arose about 
delays in the production of certain categories of requested 
materials. The Committee found no evidence that these delays, 
although disappointing to the Committee, were the result of an 
intention to obstruct the Committee's work. In addition to the 
White House cooperation with the Committee, the DNC also 
cooperated by producing over 450,000 pages of unredacted 
documents and providing over 30 witnesses for interview or 
deposition without the need of subpoenas. In contrast, the RNC 
responded to its document subpoena, which was virtually 
identical to the DNC's subpoena, by producing only 70,000 pages 
of heavily redacted documents and providing no witnesses 
voluntarily, and only two witnesses for depositions after 
subpoenas were issued.

                               CONCLUSION

    Despite a highly partisan investigation, the Committee has 
built a record of campaign fundraising abuses by both Democrats 
and Republicans. This record will hopefully be useful to the 
Federal Election Commission, the Internal Revenue Service and 
to the Department of Justice as they investigate the 1996 
campaign. Most importantly, the Committee's investigation 
should spur much-needed reform of the campaign finance laws and 
strengthening of the Federal Election Commission. Congress 
should provide the Federal Election Commission with the 
necessary resources to significantly enhance its investigative 
and enforcement staff. Ultimately, the most important lesson 
the Committee learned is that the abuses uncovered are part of 
a systemic problem, and that the system that encourages and 
permits these abuses must be reformed.
PART 1  FOREIGN INFLUENCE

Chapter 1: Overview and Legal Analysis

                                FINDINGS

    (1) Large contributors to both the Republican and 
Democratic parties used funds from foreign sources to gain 
access to top U.S. Government officials.
    (2) Foreign money comprised only a small fraction of the 
total contributions made during the 1996 election cycle, and 
the evidence before the Committee suggests that, with the 
exception of Republican National Committee Chairman Haley 
Barbour and Representative Jay Kim, neither party's leaders or 
candidates intentionally solicited or accepted foreign 
donations. Nor did the evidence before the Committee suggest 
that foreign donations altered U.S. policy or damaged American 
national security.
    (3) Although detection of foreign-sourced donations is 
difficult, closer supervision of party fundraisers and a more 
careful and complete review of large contributions may have 
prevented some of these contributions from being accepted.

                     OVERVIEW OF FOLLOWING CHAPTERS

    A primary objective of the Committee's campaign finance 
hearings was to determine what role foreign money played in the 
1996 elections and what impact, if any, it had on American 
foreign policy. Media reports were rife with allegations that 
foreign money had infiltrated American political campaigns to 
win special consideration of private commercial ventures or 
policy concerns. Such allegations, if true, threaten the 
integrity of our electoral system, foreign policy, and national 
security.
    The Committee vigorously pursued these allegations. As the 
following chapters demonstrate, the investigation substantiated 
a host of disturbing facts involving both parties, including a 
$2 million loan transaction involving a foreign national and 
foreign funds resulting in the Republican Party benefiting from 
$800,000 in foreign funds; large contributions to the 
Democratic Party solicited by John Huang and Charlie Trie in 
which foreign dollars were used and/or the identity of the true 
contributor was hidden; large contributions to both parties 
from apparently insolvent individuals such as Yogesh Gandhi and 
Michael Kojima; repeated appearances at White House events and 
Democratic National Committee (``DNC'') fundraisers by foreign 
nationals attending as guests of DNC contributors; even an 
organized effort to solicit contributions from foreign 
nationals in South Korea, resulting in the criminal convictions 
associated with the election campaigns of Representative Jay 
Kim of California. In most cases, the Committee uncovered no 
evidence that a recipient candidate or political party 
intentionally solicited a contribution funded with foreign 
money. However, in the cases involving the $800,000 and 
convictions related to the Kim campaigns, the Committee did 
obtain evidence that foreign money had been deliberately 
targeted as a funding source.
    Some of the transactions described in this and other parts 
of the Minority Report, such as the conduit contributions 
obtained by Trie, the Cheong Am contribution, and the 
solicitation of foreign nationals in the Kim matter, involve 
foreign money in apparent violation of federal law. Other 
transactions initially portrayed as involving foreign money, 
such as contributions from persons associated with the Hsi Lai 
Temple, turned out not to involve foreign money, but the 
apparent improper use of domestic funds. Many of the 
transactions demonstrate that, during the 1996 election cycle, 
the DNC had deficient procedures for supervising fundraisers 
and detecting foreign contributions and exercised inadequate 
oversight, including instances in which DNC senior officials 
who observed questionable fundraising practices or 
contributions failed to take the action needed to prevent 
problems or wrongdoing. Still other transactions expose 
existing vulnerabilities in federal election law, which, 
although intended to prohibit foreign money in U.S. elections, 
is not always as clear or as strong as required.
    One critical question examined by the Committee was whether 
either party made a systematic attempt to solicit foreign funds 
for use in campaigns. After a year-long investigation, the 
Committee found no documentary or testimonial evidence 
indicating a deliberate plan by the DNC to pursue foreign 
funds.1 The Committee did obtain documentary and 
testimonial evidence that the RNC established and funded a tax-
exempt organization called the National Policy Forum (``NPF'), 
helped it solicit foreign funds, and then used a portion of 
those funds to advance Republican electoral activities in the 
1994 and 1996 election cycles. In Senator Glenn's words, NPF 
presents the only known case ``where the head of a national 
political party knowingly and successfully solicited foreign 
money, infused it into the election process, and intentionally 
tried to cover it up.'' 2
---------------------------------------------------------------------------
    Footnotes at end of chapter.
---------------------------------------------------------------------------
    A second important issue addressed by the Committee's 
investigation involved allegations that the Chinese government 
had devised a plan to, in Chairman Thompson's words, ``pour 
illegal money into American political campaigns'' and which 
affected the 1996 congressional and presidential 
elections.3 In the end, the evidence before the 
Committee demonstrated that Chinese government officials had 
proposed a plan during the last election cycle designed to 
promote China's interests with members of Congress and state 
legislators, not with presidential candidates. There was not 
sufficient evidence to support the conclusion that any Chinese 
government funds actually made their way into the 1996 federal 
elections, congressional or presidential, and there was no 
evidence that any steps that may have been taken by the Chinese 
government affected the 1996 presidential race.
    The evidence before the Committee indicates that foreign 
money, as a whole, provided a small fraction of the 
contributions involved in the 1996 elections. During the 1996 
election cycle, the Democratic Party received over three 
million contributions totalling about $346 million and returned 
fewer than 200 individual contributions totalling about $3 
million, of which an even smaller fraction involved foreign 
money.4 The Republican Party received about $555 
million in contributions and has returned about $137,000 in 
foreign contributions, and there is another $1 million that 
should also be returned, as this Report will 
explain.5 The evidence before the Committee also 
shows that, while contributors did win access to senior 
decisionmakers, none obtained a change in U.S. domestic or 
foreign policy.
    Although foreign contributions did compromise a small 
portion of campaign contributions during the 1996 election 
cycle and U.S. policy was not altered, the seriousness of the 
problem is established by the many disturbing facts that were 
uncovered or substantiated during the investigation with 
respect to both parties. As the chapters on John Huang and 
Charlie Trie demonstrate, deficient DNC oversight in monitoring 
fundraising activities and detecting foreign contributions 
allowed a number of contributions derived from foreign sources 
to enter the campaign finance system. The chapters on Ted 
Sioeng and Michael Kojima demonstrate that similar oversight 
deficiencies affected the Republican Party.6 The 
chapters on NPF and Representative Kim document two instances 
in which foreign funds were deliberately pursued. Together, 
these chapters demonstrate that both parties failed to 
adequately investigate large contributions for possible illegal 
involvement of foreign nationals or possible use of foreign 
funds; that both parties failed adequately to search out and 
stop the pursuit of illegal foreign contributions; and that 
both parties wooed large contributors by providing access to 
the White House, presidents, vice presidents, and other senior 
government officials. The Kojima chapter demonstrates that 
these tactics and the resulting stain on the federal campaign 
finance system are not new.

                             LEGAL ANALYSIS

    The federal law barring foreign contributions in U.S. 
elections is set forth in section 441e of Title 2 of the U.S. 
Code. Section 441e is intended to prohibit foreign money from 
playing any role in U.S. elections, but the statutory language 
is not as clear or as strong as needed and should be 
strengthened. Weaknesses in the existing legal prohibition may 
hinder the criminal prosecutions and civil enforcement actions 
needed to keep foreign money from influencing U.S. elections.
    Section 441e(a) states:

          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 contributions, in 
        connection with an election to any political office . . 
        . or for any person to solicit, accept, or receive any 
        such contribution from a foreign national.7

``Foreign national'' is defined in section 441e(b) to include: 
(1) a foreign government or foreign political party; (2) an 
individual who is not a U.S. citizen or legal permanent 
resident; or (3) a partnership, association, corporation, 
organization, or other combination of persons organized under 
the laws of or having its principal place of business in a 
foreign country.
    Section 441e's foreign money ban contains a number of 
ambiguities which have been partially resolved by the Federal 
Election Commission (``FEC'') and Department of Justice. For 
example, the key FEC regulation, 11 C.F.R. 110.4, states that 
section 441e's foreign money ban applies not only to 
contributions by foreign nationals, but also to campaign 
expenditures by foreign nationals.8 In addition, the 
regulation states that the statutory ban extends not only to 
federal elections, but also to state and local 
elections.9 A third ambiguity is the statutory 
language applying the foreign money ban to contributions made 
``in connection with an election,'' which has led to questions 
of whether the statute permits soft money contributions by 
foreign nationals to parties or others for non-election-related 
activities, such as payments for office building construction 
or issue ads.10 Clear legal prohibitions on foreign 
nationals in these three areas--campaign expenditures, state 
and local elections, and soft money contributions--are vital to 
keeping foreign money from influencing U.S. elections. While 
most are addressed administratively, section 441e's foreign 
money prohibition would clearly benefit from improved statutory 
language.
    A fourth set of issues involves foreign corporations which 
establish subsidiaries in the United States. The statute is 
silent on how these corporate entities are to be treated. The 
FEC has determined that they may make campaign contributions 
under certain circumstances. The key FEC regulation states that 
a ``foreign national shall not direct, dictate, control, or 
directly or indirectly participate in the decisionmaking 
process'' of a U.S. corporation with regard to ``election-
related activities, such as decisions concerning the making of 
contributions or expenditures'' or the administration of a 
PAC.11 A 1982 FEC advisory opinion holds that a U.S. 
subsidiary of a foreign corporation may lawfully make campaign 
contributions in state and local elections, provided that the 
subsidiary is organized under the laws of a state in the United 
States, its principal place of business is in the United 
States, and no foreign national controls or participates in the 
contribution decision.12 One FEC Commissioner 
strongly dissented, stating:

          The plain language of Section 441e explicitly 
        prohibits ``a foreign national directly or through any 
        other person to make any contribution . . .'' in 
        connection with an election. [The US subsidiary] is a 
        ``person'' under the definition in the Statute. . . . 
        The fact that the foreign national's assets go through 
        a USA subsidiary does not make a difference. . . . The 
        facts of this case are conclusive that the ultimate 
        source of the contribution will be [the foreign 
        national]. [The foreign national] owns [the U.S. 
        subsidiary]. They bought it. They paid for it. It's 
        theirs. But it cannot contribute its money to our 
        elections.

Despite this and other dissenting opinions taking the same 
position,13 the FEC continues to permit U.S. 
subsidiaries of foreign corporations to make soft money 
contributions if the subsidiary operates under U.S. laws, in 
the United States, and without the participation of a foreign 
national in its contribution decisions.
    In addition, a 1992 FEC advisory opinion states that a U.S. 
subsidiary of a foreign parent must be able to ``demonstrate 
through a reasonable accounting method that it has sufficient 
funds in its account, other than funds given or loaned by its 
foreign national parent,'' to pay for its campaign 
contributions.14 The opinion states that a foreign 
parent corporation ``cannot replenish all or any portion of the 
subsidiary's political contributions.'' The opinion cites 
approvingly an earlier advisory opinion prohibiting campaign 
contributions by a subsidiary ``predominantly funded by a 
foreign national parent, and whose projects were not yet 
generating income.'' 15 These rulings attempt to 
ensure that a U.S. subsidiary of a foreign corporation pays for 
its campaign contributions with domestic and not foreign money.
    These FEC rulings do not, however, resolve a key legal 
issue for U.S. subsidiaries--the type of accounting 
demonstration required. During the Committee's hearings, a 
question was raised as to whether the 1992 FEC advisory opinion 
requires U.S. subsidiaries to demonstrate that their 
contributions are made from domestic profits or net earnings, 
in order for these contributions to satisfy FEC regulatory 
requirements.16 The opinion's actual language is 
less explicit, however, requiring only a demonstration 
``through a reasonable accounting method'' that ``sufficient 
funds'' are in the subsidiary's account to pay for the 
contribution, not counting ``funds given or loaned by its 
foreign national parent.'' This language could be interpreted 
to require the subsidiary to demonstrate only that, at the time 
of the contribution, it had sufficient domestic funds in its 
account to pay the contributed amount, without reference to its 
ultimate net earnings or profits during a particular period of 
time. Since both intrepretations of the 1992 advisory opinion 
are reasonable, clarifying legislation or additional 
regulations are needed to ensure that subsidiaries are fully 
informed of their legal obligations with respect to such 
contributions.
    The following chapters demonstrate how compliance with 
section 441e's foreign money ban can be difficult, even for 
campaign organizations acting in good faith. With respect to 
contributors who are individuals, one key difficulty is 
ascertaining a person's legal status as a U.S. citizen or legal 
permanent resident. Neither candidates nor political parties 
have ready access to personal immigration and citizenship 
data.17 It also can be difficult to determine 
whether a U.S. citizen or legal resident who receives money 
from abroad, either from a business or relative, is properly 
using his or her own money to make a contribution or is instead 
making an illegal contribution in the name of 
another.18 With respect to corporations, it can be 
difficult for a campaign organization to determine whether a 
foreign national is participating, directly or indirectly, in a 
corporation's contribution decisions. It is also difficult to 
determine whether a corporation has sufficient domestic funds 
to pay for its contributions, or whether a foreign parent is 
planning to replenish a subsidiary's campaign 
contributions.19 These practical enforcement 
problems 20 are in addition to statutory ambiguities 
that should be resolved through legislation clarifying and 
strengthening section 441e's foreign money ban.21
                               footnotes
    1 DNC finance chair Richard Sullivan testified that no 
DNC plan for pursuing foreign money ever existed:

            Sen. Glenn. I would like to know if at the DNC 
        when you were there, there was ever any guideline 
        put out to go for foreign money, and let me clarify. 
        I do not mean money raised from American citizens of 
        foreign extraction. I do not mean foreign money that 
        is legal from green card holders in this country or 
        things like that. I am talking about going after 
        foreign money from abroad and bringing it back into 
        our political system. Was there ever any such 
        guideline with regard to foreign money by that 
        definition that you had at the DNC?
            Sullivan. No.
            Sen. Glenn. Did Mr. Fowler [Chairman of the DNC] 
        ever discuss the possibility of going into that area 
        and trying to raise money from abroad, foreign money 
        as I defined it?
            Sullivan. No.
            Sen. Glenn. Was there ever any discussion pro or 
        con about whether you would even consider something 
        like that?
            Sullivan. No.
            Sen. Glenn. Was there ever any communication or 
        even a hint from the President or the Vice President 
        that we should include foreign money?
            Sullivan. No. . . .
            Sen. Torricelli. [W]as there ever any discussion 
        of duplicating the Republican National Committee's 
        efforts with the National Policy Forum by using a 
        tax-free vehicle, which became a conduit for foreign 
        money?
            Sullivan. No.

    Richard Sullivan, 7/9/97 Hrg., pp. 30-31, 116;

    DNC Chairman Fowler testified:

            During the 1995-96 electoral cycle, we at the 
        Democratic National Committee made mistakes. . . . 
        Those mistakes, however, were mistakes of process, 
        not intent. If any member of our staff or anyone 
        associated with our fundraising efforts did things 
        that were illegal or unethical, they did so in 
        violation of our policies. Our vetting was 
        deficient, but our purpose and values were good and 
        proper. To the best of my knowledge, there was no 
        intent by DNC officials to accept money from illegal 
        foreign sources. . . . If there was a plot or 
        conspiracy to pump money illegally into the 
        Democratic National Committee coffers, no one told 
        me about it. And to my knowledge, it did not happen.

    Donald Fowler, 9/9/77 Hrg., pp. 4-5.
    \2\ Senator Glenn, 7/8/97 Hrg., p. 22. See Chapter 3 on the 
National Policy Forum. The evidence before the Committee includes a 
resignation memorandum by NPF President, Michael Baroody, which cites 
Chairman Haley Barbour's inappropriate ``fascination'' with soliciting 
foreign money for NPF; an NPF document listing ``foreign'' 
contributions as a fundraising option; and testimony and documents 
describing the successful solicitation of several foreign 
contributions. In the most significant transaction, documents and 
testimony chronicle how NPF, with the assistance of Barbour and the 
RNC, obtained a $2 million loan in October 1994, collateralized with $2 
million in certificates of deposit paid for with funds transferred from 
Hong Kong dollars at the direction of a foreign national, Ambrous 
Young; how $1.6 million of the loan proceeds were immediately 
transferred to the RNC and used in its 1994 election efforts; how 
Barbour met with Young on a yacht in Hong Kong in 1995 to ask him to 
forgive repayment of the loan; how NPF unilaterally stopped repayment 
five months before the 1996 elections, thereby halting a cash drain on 
the RNC which had been supplying the repayment funds; and how, after 
the election, NPF settled the loan with RNC funds wired to Hong Kong 
under an arrangement that allowed non-repayment of approximately 
$800,000.
    \3\ Chairman Thompson, 7/8/97 Hrg., pp. 2, 4.
    \4\ See FEC filings for Democratic National Committee, Democratic 
Senatorial Campaign Committee, and Democratic Congressional Campaign 
Committee; Exhibit 62: DNC In-Depth Contribution Review, DNC 0134-45.
    \5\ See FEC filings for Republican National Committee, National 
Republican Senatorial Committee, and National Republican Congressional 
Committee. To date, the Republican Party has returned a $15,000 foreign 
contribution made in 1995 by Methanex Management, Inc., a U.S. 
subsidiary of a Canadian corporation; and about $122,000 in foreign 
contributions made from 1991 through 1994 by Young Brothers Development 
(USA). See, for example, Roll Call, 10/21/96 (Methanex contribution); 
New York Times, 5/9/97 (Young Brothers contributions). The NPF has 
apparently returned a $50,000 foreign contribution made in 1996 by 
Panda Industries, Inc., a company owned by a foreign national, Ted 
Sioeng. See Newsday, 9/14/97.
    The Republican Party has not returned $800,000 retained in 1996 
from NPF's default on a loan transaction involving a foreign national 
and foreign dollars from Hong Kong; $25,000 from a 1996 contribution by 
a foreign organization, the Pacific Cultural Foundation, which is based 
in Taiwan; or $215,000 remaining from a 1992 contribution by Michael 
Kojima that apparently utilized foreign funds from Japan. Each of these 
matters is discussed in the following chapters.
    \6\ See also Part 3, chapters 21 and 22 on contributions in the 
name of another affecting both parties in 1996.
    \7\ 2 U.S.C. 441e.
    \8\ 11 C.F.R. 110.4(a)(1). The need to ban campaign expenditures as 
well as contributions by foreign nationals is illustrated, for example, 
in an incident involving the Embassy of India in Washington, which, in 
1996, sent an unknown number of mailings to Indian-American voters in 
New Jersey discussing one of the candidates running for the U.S. 
Senate. The 1/30/96 letter, which was addressed to ``Friend'' from 
Ambassador Shyamala Cowsik, Deputy Chief of Mission at the Embassy, 
states: ``As you know, Congressman Robert Torricelli (D-NJ) is . . . 
currently running for the New Jersey seat being vacated by Senator Bill 
Bradley. You also know that Congressman Torricelli has consistently 
been a strong critic of India. He was, in 1995, the original co-
sponsor, along with Congressman Dan Burton, of the amendment (H.R. 
1425) to suspend development assistance to India.'' See also The Ethnic 
NewsWatch, 11/15/96.
    \9\ 11 C.F.R. 110.4(a)(1). Section 441e bars a foreign national 
from making a ``contribution'' in connection with ``an election.'' 
``Contribution'' is defined in section 431(8)(A) of the law in terms of 
an election ``for Federal office.'' This limiting language in the 
definition of contribution may create an ambiguity as to whether the 
foreign money ban extended to Federal, state and local elections, which 
is resolved in the regulation.
    \10\ See, for example, Legal Times, 1/6/97. FEC Advisory Opinon 
1984-41 determined that it was acceptable for a foreign national to 
contribute $500,000 to a U.S. charitable organization to broadcast 
issue ads criticizing the ``liberal bias'' of the media. These ads did 
not mention candidates, political parties, or elections. The FEC 
deadlocked on three other proposed ads that did mention candidates, 
parties or elections, and so provided no guidance on whether foreign 
money may be used for those issue ads.
    \11\ 11 C.F.R. 110.4(a)(3).
    \12\ FEC Advisory Opinion 1982-10.
    \13\ See, for example, dissenting opinion in FEC Advisory Opinion 
1992-16.
    \14\ FEC Advisory Opinion 1992-16.
    \15\ FEC Advisory Opinion 1989-20.
    \16\ See Committee hearing on 7/15/97.
    \17\ No federal database exists with citizenship information for 
persons born in the United States; campaign organizations have to 
obtain such information from the birth records maintained by individual 
states and U.S. territories. While the U.S. Immigration and 
Naturalization Service does maintain a database of information about 
naturalized citizens and legal permanent residents, federal law 
prohibits the release of such personal information without the written 
permission of the person that is the subject of the inquiry. See 5 
U.S.C. 552(b)(6) and 552a; 28 C.F.R. Part 16. Even if a campaign 
organization were to obtain written permission from a donor to request 
citizenship or immigration information, replies to such inquiries would 
likely consume too much time to be of practical use during a campaign.
    \18\ 2 U.S.C. Sec. 441f states: ``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.''
    \19\ See, for example, testimony of Thomas R. Hampson, an 
experienced corporate investigator specializing in evaluating foreign 
companies. Thomas R. Hampson, 7/15/97 Hrg., p. 62. Hampson was asked by 
the Committee to examine companies related to Indonesia's Lippo Group, 
including Hip Hing Holdings, a U.S. corporation. He testified that a 
reasonably thorough search over two weeks of a number of different 
public databases did not enable him to determine the gross or net 
income of Hip Hing Holdings in the year in which it made a contribution 
to the DNC. Thomas R. Hampson, 7/15/97 Hrg., pp. 82-84. He indicated 
that this information is not a matter of public record nor easily 
accessible, even to an expert investigator.
    \20\An illustration is provided by In re Kramer, FEC MUR 4398, an 
FEC civil enforcement action settled by conciliation agreement dated 8/
22/96.
    Thomas Kramer, a foreign national, contributed a total of $322,600 
in illegal campaign contributions during the 1994 election cycle to 
both parties at the state, local and national level. He made these 
contributions directly, through several Florida corporations he 
controlled, and through several individuals used as contribution 
conduits. His donations included $205,000 to the Florida Republican 
Party and $65,000 to the DNC. His lawyer was quoted in the press as 
saying that ``no fundraiser had ever inquired into Kramer's immigration 
status or refused his funds because he was a foreign national'' and 
that Kramer first learned he might be violating the law from reading a 
newspaper article. Associated Press, 7/18/96.
    Kramer voluntarily contacted the FEC, which ultimately fined him 
$323,000. The press reported that some campaign organizations were 
resisting refunding his illegal contributions. The Florida Republican 
Party, for example, initially wrote to Kramer that his contributions 
``had been received in good faith and, therefore, were not available 
for refund,'' though it later returned a portion of the funds. The 
Kramer case illustrates the widespread lack of awareness and 
understanding of the law, the ease with which illegal foreign 
contributions enter the campaign finance system, and an enforcement 
apparatus that took action in this matter only after being contacted by 
the wrongdoer.
    \21\ S. 25, the McCain-Feingold bill, would make a number of the 
legislative remedies needed to clarify and strengthen section 441e.





PART 1  FOREIGN INFLUENCE

Chapter 2: The China Plan

    In early 1997, news reports appeared alleging that U.S. 
federal intelligence agencies had discovered an attempt by the 
government of the People's Republic of China (``Chinese 
Government'') to increase its influence in the U.S. political 
process. From February through December 1997, the Committee 
considered these allegations.
    The information gathered by the Committee shows that during 
the 1996 federal election cycle, Chinese Government officials 
decided to attempt to promote China's interests with the United 
States Congress, state legislatures and the American public. 
Following the 1995 congressional resolution advocating that 
Taiwanese President Lee be permitted to visit the U.S., as well 
as President Lee's subsequent visit, the Chinese Government 
determined that Congress and state officials were more 
influential in foreign policy decisions than the Chinese 
Government had previously believed. The Chinese Government's 
efforts have become known in the media as ``the China Plan.'' 
The Committee's public discussion of the China Plan began on 
July 8, 1997, when Chairman Thompson opened the first day of 
public hearings by asserting that the China Plan was ``hatched 
during the last election cycle by the Chinese Government and 
designed to pour illegal money into American political 
campaigns.'' The Chairman explained that the information before 
the Committee indicated that the Chinese Government had 
apparently taken legal steps pursuant to the plan, such as 
hiring lobbying firms, contacting the media and inviting more 
Congress members to visit China. He also asserted that 
``[a]lthough mostdiscussion of the plan focuses on Congress, 
our investigation suggests it affected the 1996 Presidential race and 
State elections as well.''
    The Chairman's assertions implied that the non-public 
information presented to the Committee included evidence that 
the Chinese Government's activities had affected, or had some 
meaningful impact on, the 1996 elections.
    Based on the evidence presented to the Committee, the 
Minority makes the following findings:
    (1) Following the 1995 congressional resolution advocating 
that Taiwanese President Lee be permitted to visit the U.S. and 
President Lee's subsequent visit, Chinese Government officials 
decided to attempt to increase the Chinese Government's 
promotion of its interests with the U.S. Congress, state 
legislatures and the American public. These efforts, which 
became known in the media as ``the China Plan,'' reflected the 
Chinese Government's perception that Congress was more 
influential in foreign policy decisions than it had previously 
determined.
    (2) The non-public information presented to the Committee 
to date does not support the conclusion that the China Plan was 
aimed at, or affected, the 1996 presidential election.
    (3) Although some steps were taken to implement the China 
Plan, the non-public information presented to the Committee to 
date does not support the conclusion that those steps involved 
Chinese Government funds going to federal campaigns, either 
congressional or presidential. During the Committee's public 
investigation, the Committee learned that contributions derived 
from foreign funds made their way into the 1996 federal 
election. The non-public information presented to the 
Committee, however, does not support the conclusion that these 
contributions were tied to the China Plan, or to Chinese 
Government officials. The non-public information presented to 
the Committee does support the conclusion that the China Plan 
was implemented with a relatively modest sum of money that was 
spent on lobbying Congress, paying for members of Congress to 
visit China, and increasing public relations with Chinese 
Americans.
    (4) The non-public information presented to the Committee 
raised questions regarding the political activities of one 
individual investigated by the Committee, Ted Sioeng, but the 
information available to date was insufficient to support the 
conclusion that his activities in connection with the political 
contributions made by his daughter or by his associates in the 
United States were connected to Chinese Government officials or 
the China Plan. For information on Sioeng's activities explored 
during the Committee's public investigation, see Chapter 7 of 
this Minority Report.

Chapter 3: The National Policy Forum

    One of the most striking examples of foreign money in 
federal elections involved the National Policy Forum 
(``NPF'')--Young Brothers Development loan transaction. 
Republican National Committee (``RNC'') Chairman Haley Barbour 
used grants and loans from the RNC to create NPF in 1993 (which 
applied for tax-exempt exempt status under section 501(c)(4) of 
the U.S. tax code as a social welfare organization). NPF was 
designed to advance the Republican Party's agenda. In the hope 
of finding funds to repay the RNC's loans, Barbour targeted 
foreign sources of money. At the request of Barbour, Ambrous 
Young, a Hong Kong businessman, agreed to post $2.1 million in 
collateral, transferred from his Hong Kong business, for a bank 
loan in the same amount to the NPF. NPF transferred the loan 
proceeds to the RNC, which used them to help Republican 
candidates in the 1994 Congressional elections. NPF eventually 
defaulted on the bank loan. The RNC paid $1.3 million to Young, 
but refused to repay the balance, resulting in an $800,000 
benefit of foreign money to the RNC.
    Based on the evidence before the Committee, we make the 
following findings regarding NPF and this transaction:
    (1) RNC Chairman Haley Barbour and the RNC intentionally 
solicited foreign money for the NPF.
    (2) The NPF was an arm of the RNC and, as the Internal 
Revenue Service concluded, was not entitled to tax-exempt 
status as a social welfare organization under section 501(c)(4) 
of the U.S. tax code.
    (3) Barbour solicited Ambrous Young, a foreign national, 
and Young agreed to provide the collateral for a loan to NPF 
for the purpose of helping Republican candidates during the 
1994 elections.
    (4) The evidence before the Committee strongly supports the 
conclusion that Barbour and other RNC officials knew that the 
money used to collateralize the NPF loan came from Hong Kong. 
Barbour's testimony that he did not know about the foreign 
source of the loan collateral was not credible.
    (5) As a result of NPF's default on the loan, the RNC 
improperly retained $800,000 in foreign money during the 1996 
election cycle.

Chapter 4: John Huang

    John Huang, an American citizen who emigrated from Taiwan 
in 1969, is a former Lippo Group executive, Commerce Department 
official, and Democratic National Committee (``DNC'') 
fundraiser. Huang engaged in a number of activities that were 
improper and possibly illegal during and prior to his tenure at 
the DNC. In the end, the DNC returned over $1.7 million of the 
almost $3.5 million in contributions attributable to Huang. The 
Committee investigated whether Huang engaged in improper 
fundraising activities. In addition, the Committee examined 
allegations that Huang acted as an agent for a foreign 
government or entity.
    Based on the evidence before the Committee, we make the 
following findings regarding Huang's activities:
    (1) John Huang engaged in a number of improper and possibly 
illegal activities during and prior to his service as a DNC 
fundraiser. These activities ranged from failing to ensure the 
legality or propriety of the contributions he solicited, to 
obtaining foreign reimbursement for a 1992 corporate 
contribution he directed, to possibly soliciting foreign 
contributions. In addition, he appears to have improperly 
solicited several contributions during his tenure at the 
Commerce Department, in possible violation of the Hatch Act.
    (2) There is no evidence before the Committee that DNC 
officials were knowingly involved in Huang's misdeeds, but the 
DNC did not adequately supervise Huang's fundraising, did not 
adequately review the contributions that Huang solicited, and 
did not respond appropriately to warning signs of his improper 
activities. The DNC could have avoided some of Huang's misdeeds 
had it more closely supervised Huang's activities and had it 
not unwisely abandoned its previously-existing system for 
checking the propriety of large contributions.
    (3) Huang contributed and raised substantial sums of money 
to benefit the DNC in order to gain access for himself and his 
associates to the White House and senior Administration 
officials.
    (4) The evidence before the Committee does not establish 
that Huang served as a spy or a conduit for contributions from 
any foreign government, including the People's Republic of 
China. The Committee's investigation yielded no direct support 
for the allegation that Huang acted as either a spy or a 
conduit for any foreign government.
    (5) The evidence before the Committee does not establish 
that Huang either misused his security clearance or improperly 
disseminated classified information during his service at the 
Commerce Department.
    (6) The evidence before the Committee does not allow for 
any definitive conclusion regarding the nature of Huang's 
interactions with the Lippo Group during his tenure at the 
Commerce Department andthe DNC. Huang's frequent contacts with 
Lippo-related entities and his intermittent use of an office across the 
street from the Commerce Department to receive faxes or mail cast 
suspicion on Huang's activities while working for the Commerce 
Department. Nevertheless, the absence of specific evidence on the 
nature of his contacts with Lippo or the contents of the materials he 
received makes it difficult to draw any conclusions regarding actual 
misconduct or a conflict of interest within the meaning of the ethics 
laws governing federal employees.
    (7) Neither Huang's hiring at the Commerce Department nor 
his receipt of a security clearance was inappropriate. At the 
time of Huang's hiring, all Commerce Department political 
appointees received interim clearances as a matter of course, a 
practice the Department subsequently discontinued.

Chapter 5: Charlie Trie

    Yah Lin ``Charlie'' Trie, an American citizen who emigrated 
from Taiwan in 1974, raised and contributed substantial sums of 
money to benefit the Democratic National Committee (``DNC'') 
and raised funds for the Presidential Legal Expense Trust 
(``PLET'') during the 1996 election cycle. Trie, who owned a 
restaurant in Arkansas and became a friend of then-Governor 
Clinton, opened a Washington, D.C.-based import-export company 
in 1992, apparently to take advantage of his relationship with 
the President-elect. He and his business associates had 
frequent access to the White House. In April 1996, President 
Clinton appointed Trie to the Commission on United States-
Pacific Trade and Investment Policy. Trie's international 
business dealings with Ng Lap Seng (also known as Wu), a 
wealthy Macao businessman, raised questions about the source of 
Trie's contributions.
    Based on the evidence before the Committee, we make the 
following findings regarding Trie's activities:
    (1) Charlie Trie contributed and raised substantial sums of 
money to benefit the DNC in order to gain access for himself 
and his associates to the White House and senior Administration 
officials.
    (2) Trie and his businesses received substantial sums of 
money from abroad and used these funds to pay for some or all 
of the $220,000 in contributions that Trie, his family and 
businesses made to the DNC. The evidence before the Committee 
suggests that some of the contributions may have been illegal, 
and, in fact, Trie was recently indicted with respect to some 
of these contributions. Trie has pleaded not guilty. The DNC 
returned all $220,000.
    (3) Trie and Wu used individuals who were legally permitted 
to make campaign contributions as conduits to make 
contributions to the DNC, in apparent violation of law.
    (4) There is no evidence before the Committee that any DNC 
officials were knowingly involved in Trie's misdeeds, but the 
DNC did not adequately review the source of Trie's 
contributions and did not respond appropriately to warning 
signs of his improper activities.
    (5) The evidence before the Committee does not establish 
that the Government of the People's Republic of China provided 
money to Trie or directed Trie's actions.
    (6) The Presidential Legal Expense Trust, a private trust 
not involved in campaigns, acted prudently and responsibly in 
its dealings with Trie.
    (7) There is no evidence before the Committee that Trie, 
Wu, or anyone associated with them had any influence or effect 
on U.S. domestic or foreign policy.

Chapter 6: Michael Kojima

    Michael Kojima, a Japanese-born American citizen, first 
gained public notice as a ``deadbeat dad'' who failed to pay 
child support but gave $500,000 to the Republican Party to sit 
with President Bush at a fundraising dinner in 1992. This 
contribution, which the evidence before the Committee strongly 
suggests Kojima paid for with funds obtained from Japanese 
businessmen, appears to be the second largest source of foreign 
money for either party during the 1990s--surpassed only by the 
$800,000 obtained by the RNC from a Hong Kong corporation 
through the National Policy Forum.
    Kojima's story has since gained importance as an example of 
a little-known contributor whose large contribution should have 
been investigated before being accepted and should have been 
returned when evidence emerged that it was from foreign 
sources. Kojima's dealings with the Republican Party and the 
Bush administration provide a context for understanding how 
many of the events on which the Committee focused its attention 
had precedent in previous campaigns and Administrations. The 
Kojima matter illustrates that the receipt of large foreign 
contributions, the provision of special access to large 
contributors, and the use of the White House for fundraising 
purposes are neither unprecedented practices nor confined to 
one party.
    Based on the evidence before the Committee, we make the 
following findings with respect to Kojima's activities:
    (1) Michael Kojima contributed substantial sums to the 
Republican Party in order to gain access for himself and his 
associates to President Bush and Bush administration officials 
and the help of U.S. embassies abroad. With the help of a 
Republican fundraising organization, the Presidential 
Roundtable, and because of his status as a contributor, Kojima 
obtained access to U.S. embassy and foreign officials to 
advance his private business interests.
    (2) Kojima's $500,000 contribution to the Republican Party 
appears to have been derived from foreign funds. As a result of 
his substantial contributions, Kojima was able to bring ten 
Japanese nationals with him to a 1992 dinner with President 
Bush. According to some of those foreign nationals, they 
provided Kojima with significant sums of money for the express 
purpose of facilitating their attendance at the dinner.
    (3) The RNC has improperly retained $215,000 in apparent 
foreign funds contributed by Kojima.
    (4) The Republican Party failed to conduct an adequate 
investigation of Kojima even when it had information that the 
source of the funds was questionable.

Chapter 7: Ted Sioeng

    Ted Sioeng, an Indonesian-born businessman who is not a 
U.S. citizen or a legal resident, and other members of the 
Sioeng family contributed to both Republican and Democratic 
organizations during the 1990s. Sioeng has longstanding 
relationships with business interests in the People's Republic 
of China (``PRC'') and owns a pro-PRC newspaper in California. 
The evidence before the Committee paints a disturbing picture 
of fundraisers from both political parties courting an 
individual (Sioeng) who, because of his status as a foreign 
national, had no ability to make or direct legal contributions 
under U.S. election laws.
    Based on the evidence before the Committee, we make the 
following findings with respect to political contributions from 
Sioeng and related persons:
    (1) The evidence before the Committee strongly suggests 
that Ted Sioeng, a foreign national, was directly or indirectly 
involved in a number of contributions to Democrats and 
Republicans.
    (2) Matt Fong, California State Treasurer, did not exercise 
appropriate diligence in personally soliciting and receiving 
$100,000 in contributions from Sioeng and helping solicit a 
$50,000 contribution to NPF from a Sioeng-owned company. Fong 
has since returned the $100,000 he received; NPF has reportedly 
returned the $50,000 it received.
    (3) The evidence before the Committee does not allow for 
any conclusion as to whether Sioeng served as a conduit for 
contributionsfrom any foreign government, including the 
Government of China.
    (4) Sioeng's contributions enabled Sioeng and his 
associates to gain access to senior figures in both the 
Democratic and Republican parties, including President Clinton, 
Vice President Gore, and House Speaker Gingrich.

Chapter 8: Jay Kim

    In July 1997, Representative Jay Kim (R-Ca.) and his wife, 
June Kim, pled guilty to numerous violations of federal 
campaign finance laws arising out of his 1992 and 1994 
campaigns. The violations were part of a scheme which funneled 
over $230,000 in illegal corporate funds, some of which were 
directed by Korean nationals, into Kim's campaigns. Five 
corporations pled guilty to making illegal contributions, and 
Kim's campaign treasurer, Seokuk Ma, was convicted of 
soliciting and accepting illegal contributions. Some of these 
violations occurred well after the Kims became aware that they 
were targets of a federal investigation.
    Based on the evidence before the Committee, we make the 
following findings regarding activities by the Kims:
    (1) The Kims appear to have continued some of the same 
troubling practices during the 1996 election cycle that laid 
the foundation for the criminal misconduct in the prior two 
election cycles, including using a campaign treasurer with no 
knowledge of federal election law and instructing the treasurer 
to sign blank checks and blank Federal Election Commission 
forms.
    (2) The evidence before the Committee suggests that June 
Kim's recently-disclosed book deal with a South Korean 
publishing company may be an attempt to inappropriately channel 
foreign money to the Kims.

PART 2  FINDINGS ON INDEPENDENT GROUPS

Chapter 9: Overview and Legal Analysis

    (1) Independent groups, including tax-exempt organizations, 
corporations and unions, spent large sums of money to influence 
the public's perception of federal candidates and campaigns and 
the outcome of certain elections in 1996.
    (2) During the 1996 election cycle, tax-exempt 
organizations spent tens of millions of dollars on behalf of 
Republican and Democratic candidates under the guise of issue 
advocacy, in violation of the spirit and possibly the letter of 
the tax code and election laws. Despite their election-related 
activity, none of these organizations registered with or 
disclosed their activities to the FEC. Moreover, because of 
restrictions in the tax code with respect to such tax-exempt 
organizations, these organizations may have violated their tax 
status.
    (3) Although many groups conduct activities that influence 
the public's perception of federal candidates and campaigns, 
they either are not required, or do not, register with or 
disclose their activities with the FEC.

Chapter 10: The Republican Party and Independent Groups

    The Republican National Committee (``RNC'') used tax-exempt 
organizations for partisan political purposes during the 1996 
election cycle. The RNC channeled over $5 million--directly 
from party coffers--to organizations supposedly independent 
from the Republican Party, and collected and delivered 
significant additional sums from third parties to these groups. 
Some of these organizations then used the funds to help 
Republican candidates win election; two were actually founded 
and controlled by RNC officials. Other tax-exempt organizations 
served as conduits for Republican donors who used the 
organizations to conceal their identities and evade federal 
ceilings on campaign contributions.
    Based on the evidence before the Committee, we make the 
following findings with respect to the Republican network of 
independent organizations:
    (1) The Republican Party financed and participated in 
election-related activities by tax-exempt organizations, in 
part to evade the limits of federal election laws and to use 
the organizations as surrogates for delivering the Republican 
Party's message.
    (2) The RNC directly funded, for purposes that benefited 
the Republican Party, a number of tax-exempt organizations that 
were supposed to operate in a non-partisan manner.
    (3) The RNC also solicited, collected and delivered third-
party funds to tax-exempt organizations for election-related 
activities to benefit the Republican Party.
    (4) The RNC instructed and helped Republican candidates to 
coordinate their campaign activities with independent groups.

Chapter 11: Americans for Tax Reform

    Despite a commitment to nonpartisanship in its 
incorporation papers, ATR engaged in a variety of partisan 
activities on behalf of the Republican Party during the 1996 
election cycle. For example, ATR accepted $4.6 million in soft 
dollars from the Republican National Committee (``RNC'') and 
spent them on election-related efforts coordinated with the 
RNC. ATR acted as an arm of the RNC in promoting the Republican 
agenda and Republican candidates, while shielding itself and 
its contributors from the accountability required of campaign 
organizations. Although ATR's refusal to comply with Committee 
document and deposition subpoenas has kept the Committee from 
learning the full extent of ATR's involvement with the RNC in 
the 1996 elections, the evidence before the Committee strongly 
suggests coordinated campaign efforts between the RNC and ATR 
that appear to have circumvented hard and soft money 
restrictions, evaded disclosure requirements and abused ATR's 
tax-exempt status.
    Based on the evidence before the Committee, we make the 
following findings with respect to ATR's activities:
    (1) The Republican National Committee improperly and 
possibly illegally gave $4.6 million to Americans for Tax 
Reform to fund issue advocacy efforts including mail, phone 
calls, and televised ads. By using ATR as the nominal sponsor 
of issue advocacy efforts, the RNC effectively circumvented FEC 
disclosure requirements and the requirement to fund 65% of the 
cost of its issue advocacy with hard (restricted) money.
    (2) By operating as a partisan political organization on 
behalf of the Republican Party, Americans for Tax Reform 
appears to have violated its status as a tax-exempt, social 
welfare organization under section 501(c)(4) of the tax code.
    (3) ATR's issue advocacy activity was conducted, in part, 
by an affiliate called the Americans for Tax Reform Foundation, 
which appears to be a violation of the foundation's status as a 
501(c)(3) charitable organization, contributions to which are 
tax deductible.

Chapter 12: Triad and Related Organizations

    Triad Management Services, Inc. is a for-profit corporation 
owned by Republican fundraiser Carolyn Malenick. Malenick 
incorporated Triad in the spring of 1996, but appears to have 
operated the business as an unincorporated entity since at 
least early 1995. Triad holds itself out as a consulting 
business that provides advice to conservative donors about how 
to maximize their political contributions. Triad oversaw 
advertising in 26 campaigns for the House of Representatives 
and three Senate races. Triad also advised at least 53 
Republican candidates on ways to improve their campaigns. 
Despite Triad's refusal to fully comply with the Committee's 
subpoenas for both documents and testimony, substantial 
evidence of wrongdoing by Triad wasdeveloped by the Minority.
    Based on the evidence before the Committee, we make the 
following findings with respect to the activities of Triad and 
two non-profit organizations which it established:
    (1) The evidence before the Committee suggests that Triad 
exists for the sole purpose of influencing federal elections. 
Triad is not a political consulting business: it issues no 
invoices, charges no fees, and makes no profit. It is a 
corporate shell funded by a few wealthy conservative Republican 
activists.
    (2) Triad used a variety of improper and possibly illegal 
tactics to help Republican candidates win election in 1996 
including the following:
    (A) Triad provided free services to Republican campaigns in 
possible violation of the federal prohibition against direct 
corporate contributions to candidates. These services included 
raising funds for candidates, providing consulting advice on 
fundraising and political strategy, and providing staff to 
assist candidates.
    (B) The evidence before the Committee suggests that Triad 
was involved in a scheme to direct funds from supporters who 
could not legally give more money directly to candidates, 
through political action committees (``PACs''), and back to 
candidates. Triad obtained from Republican candidates names of 
supporters who had already made the maximum permissible 
contributions and solicited those supporters for contributions 
to a network of conservative PACs. In many instances, the PACs 
then made contributions to the same candidates.
    (C) Triad operated two non-profit organizations--Citizens 
for Reform and Citizens for the Republic Education Fund--as 
allegedly nonpartisan social welfare organizations under 
501(c)(4) of the tax code and used these organizations to 
broadcast over $3 million in televised ads on behalf of 
Republican candidates in 29 House and Senate races. Using these 
organizations as the named sponsors of the ads provided the 
appearance of nonpartisan sponsorship of what was in fact a 
partisan effort conducted by Triad. Neither organization has a 
staff or an office, and both are controlled by Triad. Over half 
of the advertising campaign was paid for and controlled by the 
Economic Education Trust, an organization which appears to be 
financed by a small number of conservative Republicans.

Chapter 13: Coalition for Our Children's Future

    Coalition for Our Children's Future (``CCF'') is a tax-
exempt organization under section 501(c)(4) of the tax code. 
Between its creation in mid-1995 and the November 1996 
election, CCF spent over $5 million on advertising in targeted 
Congressional districts.
    Based on the evidence before the Committee, we make the 
following findings with respect to CCF's activities:
    (1) Haley Barbour and others associated with the RNC 
created Coalition for Our Children's Future (``CCF'') as a 
purportedly nonpartisan, tax-exempt social welfare organization 
under 501(c)(4) of the tax code and used CCF to carry out issue 
advocacy campaigns on behalf of Republican candidates and 
against Democratic candidates in 1995 and the first part of 
1996.
    (2) The evidence before the Committee suggests that several 
Republican candidates solicited contributions for CCF from 
their own supporters and coordinated with CCF to secure issue 
ads that they believed would help their candidacy.
    (3) The evidence before the Committee suggests that in 
October 1996, CCF funded televised ads attacking Democratic 
candidates with money donated by a contributor who obtained a 
confidentiality agreement and oversaw development of the ads. 
Based on the evidence before the Committee, it is likely that 
this contributor was the Economic Education Trust, the same 
entity that funded and perhaps controlled the development and 
placement of ads through two tax-exempt organizations operated 
by Triad.

Chapter 14: Christian Coalition

    The Christian Coalition was founded by Reverend Marion G. 
(``Pat'') Robertson, a former Republican candidate for 
president, with $64,000 in seed money from the National 
Republican Senatorial Committee (``NRSC''). Its longtime 
executive director was Ralph Reed, a Republican activist. In 
spite of Reed's extensive Republican political experience, 
Robertson's ties to the Republican Party, and the infusion of 
start-up funds from the NRSC, the Christian Coalition applied 
for tax-exempt status as a nonpartisan social welfare 
organization under section 501(c)(4) of the tax code. The 
application has been pending and unapproved for over seven 
years. In 1996 the Federal Election Commission (``FEC'') 
brought suit in federal court against the Coalition for 
allegedly coordinating election-related activities with 
Republican candidates during the 1990, 1992, and 1994 election 
cycles. Despite the Christian Coalition's refusal to respond to 
the Committee's subpoena, the Minority was able to develop 
information about the Coalition's election-related activities.
    Based on the evidence before the Committee, we make the 
following finding with respect to the Christian Coalition's 
activities:
    Although the Christian Coalition has applied for status as 
a 501(c)(4) organization and claims to be a nonpartisan, social 
welfare organization, the evidence before the Committee 
suggests that the Christian Coalition is a partisan political 
organization operating in support of Republican Party 
candidates. The evidence of partisan activity includes: 
spending at least $22 million on the 1996 elections; working to 
distribute 45 million voter guides manipulated to favor 
Republican candidates; and endorsing Republican candidates at 
organization meetings.

Chapter 16: The Democratic Party and Independent Groups

    In 1996, the Democratic National Committee (``DNC'') 
contributed approximately $185,000 to five independent, tax-
exempt organizations, most of which were involved in voter 
registration activities. In addition, Democratic Party 
officials directed contributions to some of these 
organizations. Independent groups associated with Democratic 
issues also spent millions of dollars on issue ads, direct 
mail, and related organizing activities largely benefiting 
Democratic candidates.
    Based on the evidence before the Committee, we make the 
following findings with respect to the Democratic Party and its 
activities involving independent organizations :
    (1) During the 1996 election cycle, several independent 
groups spent millions of dollars to promote Democratic issues 
and possibly Democratic candidates through issue advocacy, and 
voter education and registration.
    (2) The evidence before the Committee, however, suggests 
that the Democratic Party did not play a central role in 
financing, or coordinating with, these groups.

Chapter 17: Warren Meddoff

    Shortly before the 1996 election, Florida businessman 
Warren Meddoff approached President Clinton at a Florida 
fundraiser concerning a possible $5 million donation to the 
President's campaign from Meddoff's associate. Subsequently 
contacted by Harold Ickes, White House Deputy Chief of Staff, 
Meddoff told Ickes that his associate wanted to make at least 
some of his contributions tax deductible. Ickes prepared a memo 
suggesting some possible tax-exempt and tax deductible 
recipients. After sending the memo to Meddoff, Ickes received 
word that a DNCbackground check of Meddoff and his associate 
raised serious questions and that it would be better for the DNC to 
decline Meddoff's offer of contributions. Ickes and Meddoff dispute 
what happened next. Meddoff testified that Ickes told him to ``shred'' 
the memo; Ickes testified that he merely told Meddoff that the memo 
``was inoperative.''
    Based on the evidence before the Committee, we make the 
following findings regarding these events:
    (1) There is no evidence before the Committee suggesting 
that Harold Ickes or any DNC official acted illegally in their 
dealings with Warren Meddoff. Current law does not prohibit a 
federal government employee or party official from directing 
contributions to tax-exempt organizations.
    (2) It would have been more prudent, as Ickes himself 
testified, for Ickes to have immediately referred Meddoff to 
the DNC. Meddoff sought suggestions on how to make a tax-
deductible contribution that would help President Clinton's 
campaign. The Committee does not have sufficient evidence to 
determine whether the organizations recommended by Ickes were 
actually engaged in any partisan political activities. Ickes's 
opinion that a contribution to such groups would benefit the 
President's campaign does not establish that these 
organizations were engaged in any activities that would have 
been inconsistent with their tax-exempt status.
    (3) The DNC acted appropriately by checking the backgrounds 
of Meddoff and his associate and ultimately refusing their 
proposed contribution.
    (4) Meddoff is not a credible witness. His explanation to 
the Committee of two past proposals on behalf of two different 
persons to contribute $5 million to the Republican Party in one 
case and the Democratic Party in the other case; his admission 
of involvement in conduct that appears to be an attempt to 
bribe a federal official; his apparent threats to his former 
employer and a DNC fundraiser; and the fact that he never met 
the person on whose behalf he was allegedly making a $5 million 
contribution to help President Clinton, cast significant doubt 
on his credibility.

Chapter 18: Teamsters

    During the reelection campaign of International Brotherhood 
of Teamsters President Ron Carey, consultants working for 
Carey's campaign launched a ``contribution-swapping'' scheme to 
help raise money for their campaign. As these fundraisers have 
acknowledged in court proceedings, they illegally asked a 
number of groups to donate money to Carey's campaign in 
exchange for donations to those groups from the Teamsters union 
funds. As a small part of this scheme, one of these 
consultants, Martin Davis, sought the help of DNC officials in 
locating donors willing to give money to Carey's campaign and 
promised greater Teamsters donations to Democratic party 
organizations in return. Evidence before the Committee suggests 
that DNC officials took little action in response to this 
request but that they did make an ultimately unsuccessful 
effort at directing to the Carey campaign the donation of an 
individual who sought to donate to the DNC, but whose foreign 
citizenship made her ineligible to make that donation.
    Based on the evidence before the Committee, we make the 
following findings regarding these events:
    (1) The evidence before the Committee indicates that the 
DNC's efforts at finding a donor for the Carey campaign were 
limited to exploring the legality of a possible donation from 
one individual to the Carey campaign, but that donation did not 
ultimately occur because the potential donor was not eligible, 
under labor laws and Teamsters'' rules, to contribute to the 
Carey campaign.
    (2) Nevertheless, Martin Davis's comments to DNC officials 
should have led them to suspect that Davis was improperly 
seeking to influence the use of Teamsters funds to benefit the 
Carey campaign. DNC officials should have immediately refused 
to take any action in response to Davis's request.

Chapter 19: The Democratic Party and Other Independent Groups

    During the 1996 federal election cycle, there were 
allegations that ostensibly independent, tax-exempt groups 
engaged in improper or illegal partisan political activity. The 
alleged activity ranged from broadcasting issue ads that in 
reality were candidate ads, to closely coordinating with one of 
the national political parties. Unfortunately, the vast 
majority of allegations against independent groups remain 
unexplored by the Committee because subpoenas issued to most of 
these groups were not complied with or enforced. Despite these 
and other limitations, allegations regarding groups 
traditionally associated with the Republican Party are 
addressed in Chapters 10-15. Allegations regarding groups 
traditionally associated with the Democratic Party, and 
including those that were explored in public hearings, are 
addressed in Chapters 17-18. This chapter addresses, to the 
extent possible based on evidence submitted to the Committee, 
allegations regarding certain other groups traditionally 
associated with the Democratic Party.
    Based on the evidence before the Committee, we make the 
following findings regarding these allegations:
    (1) During the 1996 election cycle, several independent 
groups spent millions of dollars to promote Democratic issues 
and possibly Democratic candidates through ``issue advocacy,'' 
voter education and voter registration.
    (2) The Committee, however, uncovered no evidence that the 
Democratic Party played a central role in contributing to, or 
coordinating with, these groups. The Democratic National 
Committee contributed only $185,000 to such groups in 1996, 
compared to over $5 million the Republican National Committee 
contributed to conservative groups in the last half of 1996 
alone.

PART 3  FINDINGS ON CONTRIBUTION LAUNDERING/THIRD PARTY TRANSFERS

Chapter 20: Overview and Legal Analysis

    The Federal Election Campaign Act (``FECA'') provides that 
``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.'' 2 U.S.C. Sec. 441f. This prohibition serves two 
purposes. (1) It helps guarantee that persons and entities 
otherwise prohibited from making political contributions cannot 
evade those restrictions by making donations using other 
peoples'' names. (2) It ensures that no one seeking to 
influence elections with their money can circumvent the 
election laws' requirement of contributions limits and full 
public disclosure by offering their money in someone else's 
name rather than their own. The Committee's investigation 
examined a number of individuals alleged to have engaged in 
activities that violated this prohibition.
    A number of individuals in both the Republican and 
Democratic parties made contributions to candidates for federal 
office and political parties through persons who were eligible 
to contribute, in apparent violation of the Federal Election 
Campaign Act.

Chapter 21: Contributions to the Democratic Party

    The Committee examined a number of allegations of 
contributions to the DNC that were ``laundered'' or made in the 
name of persons who were not the real source of the 
contributions.
    Based on the evidence before the Committee, we make the 
following findings regarding these contributions, all of which 
have been returned by the DNC:
    (1) The evidence before the Committee shows that a number 
of individuals made contributions to the DNC or Democratic 
organizations in the name of others. Some of these were hard 
(restricted) money contributions, in which case they may be 
improper or illegal; some of these were soft (unrestricted) 
money contributions, in which case they may be technically 
legal, but result in inaccurate contribution records at the 
FEC. Among those whose activities the Committee investigated 
are:
    (A) Charlie Trie/Ng Lap Seng (``Wu''): Trie and Wu used 
Keshi Zahn to arrange to have two legal permanent residents, 
Yue Chu and Xiping Wang, contribute $28,000 in hard 
(restricted) money to Democratic campaign organizations and 
reimbursed them. There is no evidence before the Committee to 
suggest that either Chu or Wang understood that their actions 
potentially violated campaign finance laws. Trie and Wu also 
used Zahn to make a $12,500 hard (restricted) money 
contribution to the DNC.
    (B) Pauline Kanchanalak: Kanchanalak used her mother-in-
law's money to fund $253,500 in contributions to the DNC, 
$26,000 of which was hard (restricted) money. Although both 
Pauline Kanchanalak and her mother-in-law Praitun Kanchanalak 
were legal permanent residents of the U.S. and each, therefore, 
lawfully could make contributions in her own name, the $26,000 
contribution of her mother-in-law's money in Kanchanalak's name 
appears to violate Section 441f.
    (C) Yogesh Gandhi: Gandhi, a legal permanent resident, 
appears to have used an associate's foreign-source money to 
fund a $325,000 contribution in soft (unrestricted) money in 
connection with a DNC fundraiser. Gandhi's bank records reveal 
that he would not have been able to make that contribution 
without significant wire transfers from Yoshio Tanaka, a 
Japanese national who attended a DNC fundraiser with Gandhi. 
Evidence before the Committee supports the conclusion that 
Tanaka transferred the money to fund Gandhi's contribution.
    (D) Arief and Soraya Wiriadinata: The Wiriadinatas, at one 
time legal permanent residents, made contributions of over 
$425,000 to the DNC, $20,000 of which appears to be hard 
(restricted) money contributions. The contributions were made 
in checks drawn on bank accounts funded with overseas transfers 
from Soraya Wiriadinata's father. In light of representations 
from Soraya Wiriadinata that her father transferred Soraya's 
own money, the evidence before the Committee does not establish 
that the $20,000 in hard money contributions came from another.
    (2) The evidence before the Committee does not support a 
finding that any DNC official knowingly solicited or accepted 
contributions given in the name of another.

Hsi Lai Temple event

    On April 29, 1996, Vice President Gore attended a DNC-
sponsored and John Huang-organized event at the Hsi Lai Temple 
in Hacienda Heights, California. Vice President Gore's briefing 
papers for the event described it as an outreach event with 
members of the Asian-American community, but much controversy 
has arisen regarding allegations that the DNC improperly used a 
religious institution to host a fundraising event and that the 
Temple funneled money through its monastics to the DNC.
    Based on the evidence before the Committee, we make the 
following findings regarding the event at the Hsi Lai Temple:
    (3) From the perspective of Vice President Gore and DNC 
officals, the Hsi Lai Temple event was not a fundraiser. There 
is no evidence before the Committee that Vice President Gore 
knew that contributions were solicited or received in relation 
to the Temple event. The information received by the Vice 
President regarding the event described it as an opportunity 
for the Vice President to meet with members of the local Asian-
American community. John Huang assured DNC Finance Director 
Richard Sullivan that the event was not a fundraiser, but 
instead would involve community outreach. Moreover, the event 
had none of the features of a fundraiser: no tickets were taken 
or sold at the door; the speakers did not solicit donations; 
and most of those who attended did not contribute to the DNC.
    (4) John Huang and Maria Hsia used Vice President Gore's 
appearance at the Temple to raise money for the DNC. Although 
the event itself was not a fundraiser, Huang and Hsia, 
unbeknownst to DNC officials or the Vice President, used it as 
an opportunity to raise money for the DNC. Both before and 
after the event, they suggested to Temple officials that they 
collect contributions in connection with the Temple event. 
Their efforts eventually yielded $65,000 in contributions from 
persons associated with the Temple.
    (5) There is no evidence before the Committee to suggest 
that the money donated in connection with the Hsi Lai Temple 
event was foreign in origin.
    (6) Many of the donations made in connection with the Hsi 
Lai Temple event appear to have violated federal campaign laws 
prohibiting contributions in the name of another. The Temple 
reimbursed the monastic donors for their contributions. There 
is evidence to suggest that most of those writing the checks 
did not understand that they were potentially violating federal 
election law. Nevertheless, there appears to be little doubt 
that most, if not all, wrote the checks to the DNC only because 
the Temple asked them to do so and with the understanding that 
they would not fund the contributions themselves.
    (7) There is no evidence before the Committee that any DNC 
official knew that contributions made by Hsi Lai Temple 
monastics were of questionable legality.

Chapter 22: Contributions to the Republican Party

    The Committee refused to devote sufficient resources, 
despite repeated requests to do so by the Minority, to 
investigating allegations of laundered contributions to the 
Republican Party, including the Dole for President campaign, 
RNC, and other Republican organizations. The Committee took 
testimony at one of the Minority's three days of hearings on 
the laundering scheme of Simon Fireman, a national vice 
chairman of the Dole for President finance committee, and had 
evidence with respect to other cases of proven and alleged 
laundered contributions to Republican organizations.
    Based on the evidence before the Committee, we make the 
following findings regarding these contributions to the 
Republican Party all of which have been returned:
    (1) Simon Fireman, a national vice chairman of the Dole for 
President campaign, used his company, Aqua Leisure Industries, 
Inc., to reimburse contributions to several Republican Party 
organizations made in the name of employees of Aqua Leisure. 
Over $100,000 in contributions made by employees of Aqua 
Leisure to the Bush-Quayle campaign, the RNC, and the Dole for 
President campaign were actually corporate contributions from 
Aqua Leisure. Fireman was convicted for his offenses.
    (2) Empire Sanitary Landfill, Inc. reimbursed its employees 
forover $110,000 in contributions the employees made to the 
Dole for President campaign and other Republican campaigns. Empire was 
convicted for its offenses.
    (3) DeLuca Liquor & Wine, Ltd. reimbursed five of its 
employees for $10,000 in contributions the employees and their 
spouses made to the Dole for President campaign.
    (4) There is no evidence before the Committee that anyone 
in the Dole for President campaign, the Bush-Quayle campaign or 
the RNC, other than Simon Fireman, knew about the above 
activities.

PART 4  FINDINGS ON SOFT MONEY AND ISSUE ADVOCACY

Chapter 23: Systemic Problems of the Campaign Finance System

    The Committee's investigation into campaign financing 
during the 1996 election cycle exposed a system in crisis, with 
the worst problems stemming not from activities that are 
illegal under current law, but from those that are legal. The 
massive use of soft, or unrestricted, money is a relatively new 
phenomenon in the campaign financing system. Since 1988 it has 
become the crux of many of the problems examined by the 
Committee, including the offers of access for large 
contributions and the use of party-run issue ads on behalf of 
candidates.
    Based on the evidence before the Committee, we make the 
following findings with respect to the role of soft money and 
issue advocacy in the 1996 elections:
    (1) The most insidious problem with the campaign finance 
system involved soft (unrestricted) money raised by both 
parties. The soft money loophole, though legal, led to a 
meltdown of the campaign finance system that was designed to 
keep corporate, union and large individual contributions from 
influencing the electoral process.
    (2) The vast majority of issue ads identified specific 
candidates and functioned as campaign ads.
    (3) Both parties went to significant lengths to raise soft 
money, including offering access to party leaders, elected 
officials, and exclusive locations on federal property in 
exchange for large contributions. Both parties used issue ads, 
which were effectively indistinguishable from candidate ads and 
which--unlike candidate ads--can be paid for in part with soft 
(unrestricted) money, to support their candidates.

PART 5  FINDINGS ON FUNDRAISING AND POLITICAL ACTIVITIES OF THE 
        NATIONAL PARTIES AND ADMINISTRATIONS

Chapter 24: Overview and Legal Analysis

    During the 1996 election cycle, spending by candidates, 
their campaign committees, political parties, other political 
committees and persons making independent expenditures totaled 
a record-breaking $2.7 billion. Of that amount, the Democratic 
and Republican Parties together spent almost $900 million, or 
one-third of the total. The two presidential candidates, 
President Clinton and Senator Dole, together spent about $232 
million, or almost 10 percent of the total.
    One of the primary objectives of the Committee's 
investigation was to investigate allegations of improper and 
illegal activities associated with fundraising by both parties 
used to finance this campaign spending. The allegations 
examined include the alleged misuse of federal property and 
federal employees to raise funds, the sale of access to top 
government officials in exchange for campaign contributions, 
and the circumvention of campaign spending restrictions through 
such devices as issue advocacy and coordination between the 
parties and their presidential nominees.

            I. Fundraising Practices of the National Parties

Chapter 25: DNC and RNC Fundraising Practices and Problems

    The Committee investigated a number of the allegations of 
improper conduct by the DNC during the 1996 election cycle, 
taking 38 days of depositions, conducting 14 interviews, 
receiving five days of public testimony and receiving over 
450,000 pages of unredacted DNC documents. Despite repeated 
requests from the Minority, allegations against the RNC were 
not fully explored by the Committee, which took only two 
depositions and one day of public testimony from RNC officials 
limited to issues involving the National Policy Forum. Although 
the RNC and DNC subpoenas were virtually identical, the 
Committee received only 70,000 pages of RNC documents, many of 
which were heavily redacted. The RNC's failure to comply with 
the Committee's document subpoena or to make RNC officials 
available for depositions, prevented the Committee from 
learning the true scope of the Republican Party's campaign 
activities during the 1996 election cycle.
    Based on the evidence before the Committee we make the 
following findings with respect to the overall fundraising 
practices of the national parties:
    (1) The evidence before the Committee establishes that both 
political parties engaged in questionable fundraising 
practices. Both parties scheduled events at government 
buildings and promised access to top government officials as 
enticements for donors to attend fundraising activities or make 
contributions. Both parties used their presidential candidates 
to raise millions of dollars in soft money donations in 
addition to the $150 million provided in public financing for 
presidential campaigns. Both parties worked with their 
candidates to design and broadcast issue ads intended to help 
their candidates' election efforts.
    (2) The RNC's activities were subject to some of the same 
or similar problems as the DNC's activities. The RNC received 
foreign contributions, gave access to top Republican leaders 
for large contributions, held fundraising-related events on 
federal property, engaged in coordination between the 
Presidential campaign and the national party and used 
supposedly nonpartisan, tax-exempt organizations for partisan 
purposes.
    (3) The compliance systems of the DNC in the 1996 campaign 
were flawed. Although the evidence before the Committee 
indicates that the DNC fundraising staff as a whole attempted 
to do their job in accordance with the law, isolated failures 
of supervision coupled with a compelling desire to raise more 
money led the DNC to accept hundreds of thousands of dollars in 
contributions it otherwise would not have accepted. Despite 
these problems, the overwhelming majority of contributions 
received by the DNC appear to have been legal and appropriate.
    (4) The position taken by the Republican Party in the 1992 
and 1994 election cycles that it had no obligation to 
investigate contributions or contributors is troubling. The 
evidence before the Committee is insufficient to evaluate the 
compliance procedures of the RNC during the 1996 election 
cycle. Because the Committee did not have the full cooperation 
of the RNC in complying with the Committee's subpoenas and 
requests for information (and the Committee failed to enforce 
the subpoenas), the Committee failed to fully assess the RNC's 
practices and procedures for insuring the legality and 
propriety of major contributions.

           II. Use of Federal Property and Contributor Access

Chapter 26: Telephone Solicitations From Federal Property

    Documents produced to this Committee by both the DNC and 
the White House indicate that on a number of occasions the DNC 
requested the President and the Vice President to make 
telephone calls to solicit funds for the DNC. The Committee 
reviewed evidence, including testimony and documents relating 
to the circumstances surrounding these calls and analyzed the 
laws applicable to these calls. The Committee also investigated 
whether past presidents and other federal officials had made 
fundraising phone calls.
    Based on the evidence before the Committee, we make the 
following findings with respect to fundraising calls made by 
the President, the Vice President, and past presidents and top 
officials:
    (1) Telephone calls made on federal property to solicit 
contributions from persons neither on federal property or 
employed by the federal government have been made by elected 
officials from both parties and prior administrations.
    (2) There was nothing illegal about the one solicitation 
telephone call known to the Committee made by the President.
    (3) There was nothing illegal about the solicitation 
telephone calls made by the Vice President.

Chapter 27: White House Coffees and Overnights

    Beginning in late 1994 and continuing through the end of 
the 1996 campaign, the President hosted a number of small 
events known as ``coffees'' at the White House, some of which 
were sponsored by the DNC Finance Division. Others were 
sponsored by the DNC Political Division and the Clinton 
campaign. The DNC and the President viewed the coffees as a 
means for the President to reconnect with, spread his message 
to, and motivate his political and financial supporters. Over 
1,000 people attended these coffees. The Committee examined 
these events and reviewed allegations that they included a 
number of persons who should not have been granted access to 
the President and violated federal law prohibiting the 
solicitation or receipt of contributions in federal buildings. 
The Committee also reviewed evidence on allegations that the 
President improperly offered overnight visits to a number of 
DNC contributors.
    Based on the evidence before the Committee, we make the 
following findings regarding the White House coffees and 
overnights:
    (1) The evidence before the Committee does not indicate 
that the DNC coffees at the White House violated existing law. 
The evidence before the Committee did not establish that anyone 
solicited contributions at the coffees, and, in any event, 
indicated that all but one of the coffees (about which the 
Committee heard no testimony) occurred in areas of the White 
House where solicitations are not prohibited by law.
    (2) Affording campaign contributors access to White House 
events, often where the President is in attendance, has been a 
bipartisan practice over the years, but the DNC's use of these 
events, such as coffees and overnights, during the last 
election cycle was extensive and created an appearance of 
offering access to the White House in exchange for campaign 
contributions. There is no evidence before the Committee that 
the coffees or overnights were offered in return for campaign 
contributions.
    (3) The DNC used poor judgment in permitting several 
persons of questionable affiliation or character to attend 
coffees as a favor to DNC contributors.

Chapter 28: Republican Use of Federal Property and Contributor Access

    The practice of granting large contributors access to 
elected officials and special locations on federal property, 
such as the White House, is a longstanding fundraising 
technique that has been used by both political parties. In 
response to claims that practices under the Clinton 
Administration were ``unprecedented,'' this Chapter examines 
how the Republican Party and preceding Republican 
Administrations have used the White House as a fundraising 
tool, provided access to elected officials for large 
contributors, and appointed large contributors to positions 
within the government.
    Based on the evidence before the Committee, we make the 
following findings with respect to the offers of access by the 
Republican Party:
    (1) In the 1996 election cycle, the Republican Party 
continued its longstanding practice of raising money by 
offering, and providing, major contributors with access to top 
Republican federal officials. These offers of access are 
central components of Republican donor programs such as Team 
100 and the Republican Eagles. They started in the 1970s and 
continue today.
    (2) Federal property has routinely been used by the 
Republican Party in its fundraising efforts. The RNC has hosted 
fundraising events on Capitol Hill, at the Bush White House, 
the Pentagon, and at other federal government locations.
    (3) The Bush Administration rewarded major contributors 
with significant government positions, including 
ambassadorships.

Chapter 29: Democratic Contributor Access to the White House

    From 1993 through 1996, the Democratic National Committee 
organized numerous events attended by the President, Vice 
President or First Lady to which it invited supporters of the 
Democratic Party and their guests. Many of these events were at 
the White House. The Committee investigated the procedures used 
by the White House and the DNC to assess and approve 
individuals invited by the DNC to attend events in the White 
House.
    Based on the evidence before the Committee, we make the 
following findings with respect to Democratic contributor 
access to the White House:
    (1) From 1993 through 1996, White House procedures for 
assessing and approving individuals invited by the DNC to 
attend events in the White House were similar to the procedures 
used by prior administrations, but such procedures were 
inadequate. The White House Office of Political Affairs relied 
on the DNC (and in prior administrations, the RNC) to assess 
the appropriateness of attendees at DNC (RNC) events at which 
the President was present. Unfortunately, from 1993 through 
1996, the DNC did not adequately perform that function.
    (2) When asked to provide information regarding the foreign 
policy implications arising from DNC-organized events, the 
National Security Council performed its function. 
Unfortunately, prior to 1997, the White House did not have a 
formal structure to adequately assess and approve all attendees 
at DNC events where the President was present.

Chapter 30: Roger Tamraz

    Roger E. Tamraz is an American businessman involved in 
investment banking and international energy projects. In the 
mid-1990s, he sought to become a ``dealmaker'' in an oil 
pipeline project that would cross the Caspian Sea region. In 
the hope of obtaining U.S. Government support for his project, 
Tamraz used his past relationship with the Central Intelligence 
Agency (``CIA''), met with mid-level U.S. Government officials, 
and made political contributions to the Democratic Party.
    The Committee's investigation focused on whether officials 
of the CIA, the National Security Council, the DNC, the White 
House, or the Department of Energy improperly promoted Tamraz's 
pipeline proposal or gave him access to high-level government 
officials; why Tamraz was permitted to attend DNC events in the 
White House when staff had recommended that he not have any 
contact with high-level officials; and whether U.S. policy on 
the Caspian Sea pipeline changed as a result of Tamraz's 
political contributions or access to governmental officials.
    Based on the evidence before the Committee, we make the 
following findings with respect to the matters involving Roger 
Tamraz:
    (1) Roger Tamraz openly bought access from both political 
parties.
    (2) Tamraz's attendance at DNC events was based on 
hispolitical contributions and was unwise given the warnings that he 
might misuse such attendance. DNC Chairman Donald Fowler endorsed 
Tamraz's attendance at these events, despite early warnings from DNC 
staff and opposition from NSC officials and Vice President Gore's 
staff.
    (3) A Central Intelligence Agency official promoted 
Tamraz's pipeline proposal in 1995, despite knowing that the 
NSC opposed it.
    (4) An Energy Department official promoted additional 
political access for Tamraz in 1996, despite knowing that the 
NSC and other officials opposed it.
    (5) U.S. policy in the Caspian Sea was not affected by 
Tamraz's lobbying, political contributions, or presence at DNC-
related events. This policy was solidified in early October 
1995 and did not incorporate any aspect of Tamraz's proposal.

Chapter 31: Other Contributor Access Issues

    Johnny Chung, a Taiwanese-American businessman, delivered a 
$50,000 check made payable to the DNC to the White House in 
1995. The Committee investigated whether Margaret Williams, 
Chief of Staff to the First Lady, acted appropriately when she 
was given this check. The Committee also reviewed whether 
Chung's access to the White House--over 32 visits in 1995--was 
appropriate.
    Based on the evidence before the Committee, we make the 
following findings with respect to Chung's contributions and 
access:
    (1) The evidence before the Committee shows that even 
though Chief of Staff to the First Lady, Margaret Williams, 
immediately placed the contribution from Johnny Chung to the 
DNC in the mailbox, it would have been more prudent for her to 
have refused to accept the check from Chung and told him to 
give it directly to the DNC.
    (2) Chung's access to the White House, which was based in 
part on his contributions to the Democratic Party, was 
excessive and inappropriate. On one occasion Chung was 
permitted to bring foreign business associates to view the 
President's delivery of a radio address without appropriate 
vetting by the DNC or the White House.

  iii. coordination between the national parties and their candidates

Chapters 32 and 33

    During the 1996 election cycle, the Democratic National 
Committee (``DNC'') and the Republican National Committee 
(``RNC'') coordinated issue advocacy campaigns with the Clinton 
campaign and the Dole for President campaign, respectively. 
Both presidential campaigns paid for this issue advocacy with 
millions of dollars in soft (non-restricted) money that the 
candidates themselves helped to raise.
    Based on the evidence before the Committee, we make the 
following findings with respect to this matter:
    (1) Both the Clinton campaign and the Dole for President 
campaign benefited from spending by their respective parties in 
excess of the spending limits applicable to presidential 
candidates who accept public financing.
    (2) Coordination of issue advocacy between the Clinton 
campaign and the DNC and between the Dole for President 
campaign and the RNC was legal under current campaign finance 
laws.
    (3) Both presidential campaigns coordinated fundraising to 
pay for the issue advocacy of their respective parties.

PART 6  FINDINGS ON ALLEGATIONS OF QUID PRO QUOS

Chapter 34: Overview and Legal Analysis

Chapter 35: Hudson Casino

    The Committee investigated and held a day of hearings on 
the Department of the Interior's decision to deny a 
controversial application of three Wisconsin Indian tribes to 
take control of land near Hudson, Wisconsin, to open a casino. 
Both the nearby Minnesota tribes who opposed it and the 
Wisconsin tribes making the application hired lobbyists who 
contacted various Administration officials in an attempt to 
influence the Interior Department's final decision. The local 
Hudson community and local, state and federal officials in 
Wisconsin from both parties opposed the application. Both 
before and after Interior's decision on the application, the 
Minnesota tribes opposing it made significant donations to the 
Democratic Party.
    The Committee took testimony on whether political influence 
affected Interior's decision, with particular focus on a 
conversation Interior Secretary Bruce Babbitt had with Paul 
Eckstein, who was a longtime friend and a former law partner of 
the Secretary and who had been retained as a lobbyist for the 
Wisconsin tribes, on the day Interior issued the decision 
denying the application. Eckstein testified that he tried to 
get the Secretary to reconsider the Department's imminent 
decision to deny the application, and that during that 
conversation Secretary Babbitt mentioned that White House 
Deputy Chief of Staff Harold Ickes had directed the Secretary 
to issue the decision. Secretary Babbitt testified that his 
comment to Eckstein was a general statement reflecting the fact 
that Ickes was Secretary Babbitt's official contact in the 
White House and was intended to end an awkward and lengthy 
conversation with Eckstein.
    Based on the evidence before the Committee, we make the 
following findings regarding these events:
    (1) The evidence before the Committee supports the 
conclusion that Secretary Babbitt did not act improperly with 
respect to the Department of Interior's decision to deny the 
Hudson trust application. The evidence shows that Secretary 
Babbitt played no role in the Hudson trust decision, that he 
did not hear from, or talk to, Harold Ickes about the decision, 
and that the Interior officials who recommended denying the 
trust application had no knowledge of either campaign 
contributions by the opposing tribes or the alleged 
``pressure'' from the White House or the DNC to deny the trust 
application.
    (2) However, Secretary Babbitt's actions with respect to 
Eckstein, his letters to Senators McCain and Thompson, and his 
testimony to this Committee regarding his conversations with 
Eckstein were unnecessarily confusing. Secretary Babbitt's 
letter to Senator McCain omitted the fact that Secretary 
Babbitt had invoked Ickes' name to Eckstein even though that 
allegation was at the center of Senator McCain's earlier letter 
to Secretary Babbitt. The Secretary's subsequent letter to 
Senator Thompson acknowledged that he did invoke Ickes' name 
with Eckstein, but said that he did so only as a means to 
terminate his conversation with Eckstein. Secretary Babbitt 
then testified to this Committee that, even though he had not 
spoken to Ickes about the trust application, he did not 
technically mislead Eckstein when invoking Ickes' name because 
the White House naturally wanted him to issue decisions in a 
timely way. These statements, when taken together, are 
confusing, but they are not directly inconsistent with the 
facts.

Chapter 36: Tobacco and the 1996 Elections

    During the 1996 election cycle, tobacco companies 
contributed roughly $8.5 million in soft money to the 
Republicans, much of which was raised by Haley Barbour. There 
are grounds for suspecting that Barbour assisted the industry 
in exchange for campaign money, but the Committee did not 
investigate these troubling allegations.

Chapter 37: Cheyenne-Arapaho Tribes of Oklahoma

    On June 17, 1996, two representatives of the Cheyenne-
Arapaho Tribes of Oklahoma (``Tribes'') ate lunch with the 
President and five other guests at the White House. Two weeks 
later, the Tribes donated $87,671.74 to the Democratic National 
Committee (``DNC'). In August 1996, they contributed an 
additional $20,000 to the party.
    The Committee investigated allegations that the DNC 
solicited $100,000 from a politically naive and poor Native 
American tribe; improperly granted tribal members access to the 
President of the United States; and illegally promised the 
return of historic tribal lands currently used by the federal 
government in a quid pro quo exchange for a contribution from 
the Tribes' ``welfare'' fund.
    Although no public hearings were held regarding the Tribes 
and their contributions to the DNC, the Committee conducted 
interviews and depositions of witnesses, as well as a review of 
numerous documents.
    Based on the evidence before the Committee, we make the 
following findings regarding these events:
    (1) No arrangement existed, or was ever contemplated, 
between the Cheyenne-Arapaho Tribes of Oklahoma and the 
Democratic National Committee or the Administration to return 
tribal lands held by the federal government to the Tribes in 
exchange for a political contribution to the DNC.
    (2) The evidence before the Committee supports the 
conclusion that the DNC and the Administration acted properly 
and legally throughout the course of their dealings with the 
Tribes.

PART 7  FINDINGS ON INVESTIGATION PROCESSES

Chapters 38-41

    Senate Resolution 39 directed the Senate Governmental 
Affairs Committee to conduct an investigation of illegal or 
improper activities in connection with the 1996 Federal 
election campaigns. By the specific terms of this resolution, 
the Committee was not to limit its investigation to the 
activities of only one political party or only one branch of 
government, but was to investigate and inform the public about 
the full nature of the problems associated with the last 
election cycle, regardless of the party with which those 
problems were associated.
    We make the following findings regarding the process by 
which the Committee conducted this investigation:
    (1) The Committee's investigation was not bipartisan. The 
Committee's investigation focused predominantly on persons and 
entities associated with the Democratic Party. The Majority 
devoted virtually no resources to exploring a variety of 
serious allegations against those affiliated with the 
Republican Party. Moreover, it refused to issue or enforce many 
of the Minority-requested subpoenas related to the Committee's 
mandate, simply because those subpoenas sought information from 
Republican-related persons and entities. When the Minority 
accumulated substantial evidence of Republican wrongdoing 
despite these significant limitations, the Majority refused to 
schedule hearings to allow for the public airing of this 
information. As a result, virtually all of the Majority's 
investigatory resources and Committee hearings focused upon 
activities involving the Democratic Party and its associates.
    (2) Although the Committee's investigation provided insight 
on the serious shortcomings in our campaign finance system, the 
failure to fully and impartially investigate wrongdoing in the 
1996 federal elections, regardless of party, kept the Committee 
from fulfilling its mandate and eliminated the ability to 
produce a bipartisan report. The Committee's hearings did make 
a contribution to the public's understanding of the ways in 
which money influenced the 1996 elections. As a consequence of 
the investigation's partisanship, the Committee cannot credibly 
claim that it offered the American people a complete picture of 
the illegal or improper activity that occurred during the 1996 
federal elections. The Committee virtually ignored at least 
half of the story of those elections, and the partisan 
framework in which it presented and interpreted the evidence it 
did uncover diminishes the Committee's ultimate findings and 
conclusions.
    (3) The Committee's failure to pursue enforcement actions 
against those who failed to comply with the Committee's 
subpoenas threatens to have lasting impact on the success and 
credibility of future Senate investigations. The Committee's 
acceptance of the refusal of groups and individuals to comply 
with the Committee's subpoenas will make objective 
investigations in the future much more difficult by emboldening 
persons and entities to ignore future Senate subpoenas.
    (4) The DNC made a good faith effort to comply with 
Committee requests. To this end, the Committee conducted 38 
days of depositions, 14 interviews, and five days of public 
hearings of DNC witnesses. The DNC also produced over 450,000 
pages of documents and hired over 30 additional staff to review 
and prepare documents for production to the Committee.
    (5) The RNC impeded the investigation. The RNC unilaterally 
redacted documents and appears to have intentionally withheld 
material documents. RNC witnesses failed to cooperate in 
scheduling depositions, and, in the instances where depositions 
were scheduled, they were unilaterally canceled.
    (6) Entities supportive of the Republican party impeded the 
investigation. Entities including the National Policy Forum, 
Americans for Tax Reform, and Triad intentionally impeded the 
investigation by failing to produce documents and witnesses 
under subpoena.
    (7) The White House Counsel's Office took appropriate and 
reasonable steps to discover the existence of responsive 
videotapes in response to the Committee's April 1997 document 
request. There is no evidence before the Committee to suggest 
that the White House Counsel's Office intended to obstruct the 
work of the Committee.
    (8) The evidence before the Committee is conclusive, based 
on exhaustive technical analysis, that none of the videotapes 
or audiotapes produced by the White House to the Committee have 
been altered in any way.

PART 1  FOREIGN INFLUENCE

Chapter 2: The China Plan

    In early 1997, news reports appeared alleging that U.S. 
federal intelligence agencies had discovered an attempt by the 
government of the People's Republic of China (``Chinese 
Government'') to increase its influence in the U.S. political 
process.1 From February through December 1997, the 
Committee examined these allegations. The examination included 
a consideration of both public and classified (``non-public'') 
information.
---------------------------------------------------------------------------
    Footnotes at end of chapter.
---------------------------------------------------------------------------
    Following the 1995 congressional resolution advocating that 
Taiwanese President Lee be permitted to visit the United 
States, as well as President Lee's subsequent visit, the 
Chinese Government determined that Congress and state officials 
were more influential in foreign policy decisions than the 
Chinese Government had previously believed. The information 
considered by the Committee shows that during the 1996 federal 
election cycle, Chinese Government officials decided to attempt 
to promote China's interests with the U.S. Congress, state 
legislatures, and the American public.2 The Chinese 
Government's efforts have become known in the media as ``the 
China Plan.'' The Committee's public discussion of the China 
Plan began on July 8, 1997, when Chairman Thompson opened the 
first day of public hearings by asserting that the China Plan 
was ``hatched during the last election cycle by the Chinese 
Government and designed to pour illegal money into American 
political campaigns.'' 3 The Chairman explained that 
the information before the Committee indicated that the Chinese 
Government had apparently taken legal steps pursuant to the 
plan, such as hiring lobbying firms, contacting the media and 
inviting more members of Congress to visit China.4 
He also asserted that, ``[a]lthough most discussion of the plan 
focuses on Congress, our investigation suggests it affected the 
1996 Presidential race and State elections as well.'' 
5
    The Chairman's assertions implied that the non-public 
information presented to the Committee included evidence that 
the Chinese Government's activities had affected, or had some 
meaningful impact on, the 1996 elections.
    Based on the evidence presented to the Committee, the 
Minority makes the following findings:

                                findings

    (1) Following the 1995 congressional resolution advocating 
that Taiwanese President Lee be permitted to visit the U.S. and 
President Lee's subsequent visit, Chinese Government officials 
decided to attempt to increase the Chinese Government's 
promotion of its interests with the U.S. Congress, state 
legislatures and the American public. These efforts, which 
became known in the media as ``the China Plan,'' reflected the 
Chinese Government's perception that Congress was more 
influential in foreign policy decisions than it had previously 
determined.
    (2) The non-public information presented to the Committee 
to date does not support the conclusion that the China Plan was 
aimed at, or affected, the 1996 presidential election.
    (3) Although some steps were taken to implement the China 
Plan, the non-public information presented to the Committee to 
date does not support the conclusion that those steps involved 
Chinese Government funds going to federal campaigns, either 
congressional or presidential. During the Committee's public 
investigation, the Committee learned that contributions derived 
from foreign funds made their way into the 1996 federal 
election. The non-public information presented to the 
Committee, however, does not support the conclusion that these 
contributions were tied to the China Plan, or to Chinese 
Government officials. The non-public information presented to 
the Committee does support the conclusion that the China Plan 
was implemented with a relatively modest sum of money that was 
spent on lobbying Congress, paying for members of Congress to 
visit China, and increasing public relations with Chinese 
Americans.
    (4) The non-public information presented to the Committee 
raised questions regarding the political activities of one 
individual investigated by the Committee, Ted Sioeng, but the 
information available to date was insufficient to support the 
conclusion that his activities in connection with the political 
contributions made by his daughter or by his associates in the 
United States were connected to Chinese Government officials or 
the China Plan. For information on Sioeng's activities explored 
during the Committee's public investigation, see Chapter 7 of 
this Minority Report.

                              introduction

    After numerous press accounts were published discussing 
information gathered by Executive Branch agencies regarding the 
Chinese Government's plan to gain influence in the United 
States, Chairman Thompson began the first day of the 
Committee's public hearings by discussing these allegations. 
Thereafter, the Committee's handling of the allegations became 
one of the most hotly debated issues surrounding its 
investigation into campaign finance activities.
    Before describing the plan on July 8, 1997, the Chairman 
cautioned that he was able to reveal only a small portion of 
the information gathered by the Committee due to its non-public 
nature. He stated, however, that the Committee had ``uncovered 
a significant amount of documentary and other relevant 
information'' 6 indicating that the Chinese 
Government plan was ``one of the most troublesome areas'' of 
the investigation and needed to ``be placed on the public 
record . . . as soon as possible and in a careful and accurate 
manner.'' 7
    The Chairman then described the plan as one ``hatched 
during the last election cycle by the Chinese Government and 
designed to pour illegal money into American political 
campaigns.'' 8 He asserted that ``high-level Chinese 
Government officials'' 9 crafted the plan and that 
``the Committee has identified specific steps taken in 
furtherance of the plan.'' Such steps, he claimed, were 
undertaken by ``Chinese Government officials and individuals 
enlisted to assist in the effort.'' 10
    The Chairman also asserted that the plan had been 
implemented by legal as well as illegal means.11 
According to the Chairman, the legal activities proposed by the 
Chinese Government included ``retaining lobbying firms, 
inviting more Congresspersons to visit China, and attempting to 
communicate Beijing's views through media channels in the 
United States.'' 12 Immediately following the 
statement that illegal actions were involved, he asserted:

          Although most discussion of the plan focuses on 
        Congress, our investigation suggests it affected the 
        1996 Presidential race and State elections as well. The 
        Government of China is believed to have allocated 
        substantial sums of money to achieve its 
        objectives.13

    In response to these assertions, Senator Glenn said that 
``the Committee should go just as far as the facts take us.'' 
14 Several Senators also immediately disagreed with 
the Chairman's conclusion that the China Plan had ``affected'' 
the presidential race, believing instead that the non-public 
information showed that the plan was focused exclusively on 
Congress. On the first day of hearings, Senator Levin pointed 
out that ``China's target in 1995 and 1996 was not the White 
House. It was the Congress.'' 15 In fact, Senator 
Levin noted that press reports indicated that the China Plan 
was focused on lobbying Congress, and that foreign countries 
had spent $86 million to lobby the U.S. Government in the first 
half of 1996 alone, with Japan registering expenditures of $17 
million in six months.16 He concluded that the China 
Plan expenditure which had been referred to during the public 
hearing that morning was a small fraction of the $86 
million.17 The amount referred to during the public 
hearing that morning was less than one candidate typically 
raises to run for election to the U.S. House of 
Representatives.
    On July 15, 1997, Senators Glenn and Lieberman issued a 
joint statement explaining their position:

          We are in absolute agreement as to the intelligence 
        information known to us and the conclusions that can be 
        drawn with certainty from that evidence. We 
        acknowledge, and never denied, that the information 
        shown to us strongly suggests the existence of a plan 
        by the Chinese Government--containing components that 
        are both legal and illegal--designed to influence U.S. 
        congressional elections.
          However, as we also both agree, it is not clear from 
        the evidence that the illegal aspects of such a plan 
        were ever put into motion. Nor is there sufficient 
        information to lead us to conclude that the 1996 
        presidential election was affected by, or even part of, 
        that plan.18

    Senator Durbin predicted that because the evidence pointed 
to the plan's focus on Congress, ``this Committee will not 
touch that issue'' and will instead focus only on any possible 
link between China and the Democratic presidential 
campaign.19 And, indeed, the Committee's 
investigation of the China Plan focused on the sole question of 
whether the Chinese Government actually made campaign 
contributions to the Democratic National Committee or the 
Democratic presidential campaign. After two months of hearings, 
Senator Durbin again commented that ``[t]his investigation 
kicked off with the Chairman's statement that we were setting 
out to find evidence of an effort by the Chinese Government to 
influence the outcome of the 1996 Presidential election. I 
don't believe there's been any evidence presented to support 
that . . . [P]erhaps there will be in the weeks to 
come.''20
    Ultimately, despite the attempt by the Majority to tie 
China to a variety of contributions to the Democratic Party, 
the Committee to date has not received information in its 
closed proceedings, or in its open proceedings, that supports 
the assertion that the China Plan ``affected the 1996 
presidential race.''

                     the committee's investigation

    The Committee's investigation of the China Plan consisted 
primarily of gathering non-public information already obtained 
by Executive Branch agencies. The Committee began requesting 
information from the agencies in February 1997, and thereafter 
received and reviewed boxes of responsive documents. The 
Committee also held closed hearings on July 28, 1997, and 
September 11, 1997, and received numerous staff briefings 
during the course of its investigation, which terminated on 
December 31, 1997. The Committee was informed that the non-
public information from the Executive Branch agencies should 
not be understood to represent the full picture of any issue 
that was under investigation.
    With that caveat, the Committee reviewed non-public 
information to determine the extent to which the Chinese 
Government's activities affected the 1996 federal elections. 
This chapter sets forth conclusions based on the non-public 
information made available to the Committee. A more detailed 
classified report has been lodged with the Office of Senate 
Security, located in the United States Capitol.
    The Minority believes that it is the responsibility of the 
Committee to clearly distinguish between conclusions based on 
non-public information, not available to the public, and public 
information that is available to both the Committee and members 
of the public. This chapter focuses on conclusions based on the 
non-public information reviewed by the Committee. Where public 
information is discussed, it is clearly noted as such, although 
this chapter does not fully address conclusions that may be 
drawn from the Committee's public proceedings. The Committee's 
public investigation is discussed elsewhere in this Minority 
Report and, unlike the Committee's closed proceedings, is based 
upon information that is available for public review and 
analysis.
    This chapter discusses background on federal law regulating 
the political activities of foreign governments and companies 
in the U.S.; the results of the Committee's closed proceedings 
regarding the China Plan; and information not pursued by the 
Committee in its closed proceedings. The Minority response to 
the Majority Chapter on the China Plan is located in Part 9 of 
this Minority Report. See Part 9, Response to Majority Chapter 
18.

                               background

    Foreign involvement in the American political process has 
long been permitted under federal law. In 1938, the federal 
government enacted the Foreign Agents Registration Act 
(``FARA'') to govern the activities of all individuals in the 
United States who engage in lobbying, political activities or 
public relations on behalf of foreign governments or 
companies.21 As amended, FARA requires individuals 
who conduct political or public relations activities on the 
behalf of foreign governments or political parties to register 
as ``foreign agents'' and disclose their expenditures. An 
``agent'' is defined as one who acts ``at the order, request, 
or under the direction or control of a foreign principal, or of 
a person whose activities are directly or indirectly 
supervised, directed, controlled, financed, or subsidized in 
whole or in part by a foreign principal. . . .'' 22 
Registration is not required if the individual is acting in his 
or her capacity as an official of a foreign government or a 
member of the news media.23 Beginning in 1996, 
individuals who lobby on behalf of foreign companies or other 
foreign private interests, as opposed to foreign governments, 
may register under the Lobbying Disclosure Act.24
    Promotional activities on behalf of foreign governments or 
other interests have increased dramatically as the world 
economy has become more integrated. Foreign governments and 
companies are affected by, among other things, U.S. trade 
policies, foreign aid decisions, intellectual property 
protections, and tourism.25 As the world economy 
becomes more integrated, decisions made in the United States 
have an impact on the ability of foreign governments and 
companies to prosper.
    A report published by the Asian Development Bank in 1997 
noted that ``[c]ountries that are well integrated into 
international production networks and widely exposed to market 
trends abroad will be much better placed to benefit than those 
that remain isolated.'' 26 The report suggested that 
Asian governments:

          Be open to foreign direct investment, and to capital 
        markets more generally [because] free capital mobility 
        allows firms to tap into funds from abroad and to 
        create new and flexible capital structure with partners 
        in other parts of the world.27

The report also noted that prosperous Asian countries are 
``increasingly relying on international joint ventures, 
strategic relationships and information-sharing partnerships.'' 
28
    It comes as no surprise that lobbying and promotional 
activities of foreign countries in the United States have 
increased in recent years. In 1992, the Justice Department 
reported that Hong Kong interests spent nearly $80 million on 
lobbying and public relations in the United States, with Japan 
spending over $60 million, Canada $22.7 million, and Mexico 
$1.5 million on lobbying for passage of the North American Free 
Trade Agreement alone.29 By 1996, a summary of the 
Justice Department figures showing that foreign interests spent 
over $400 million on such activities in the first six months of 
1996 alone.30
    Despite the fact that China is the most populous country in 
the world, the Chinese Government reportedly spent only 
$450,000 on lobbying in 1991 and 1992. Chinese Government and 
private companies together spent approximately $2 million in 
the first half of 1996, only a fraction of the multimillion 
dollars spent by other countries.31
    Although many foreign governments and companies have 
increased attempts to promote their interests in the United 
States, they are forbidden by federal law to influence the 
electoral process in the United States. Federal law bans (1) 
foreign contributions to political campaigns and (2) campaign 
expenditures paid for by foreign entities.32
    A key issue raised in connection with the China Plan was 
whether the Chinese Government had proposed or undertaken to 
promote its interests in the United States by legal and proper 
means, or whether its activities may have amounted to illegal 
Chinese Government interference in the 1996 election process.

                             the china plan

Events leading up to the China Plan

    From 1949 to the early 1970s, the Chinese Government 
maintained only sporadic diplomatic relations with the United 
States. In the 1970s, the Chinese and U.S. governments began to 
strengthen and expand diplomatic ties and subsequently 
completed a diplomatic exchange in 1979.33
    Evidence indicates that prior to 1995, the Chinese 
Government approach to promoting its interests in the United 
States was focused almost exclusively on using traditional 
diplomatic levers such as official summits and meetings with 
high-level Executive Branch officials.34 In these 
meetings, Chinese Government officials often negotiated with 
U.S. officials by using the appeal of China's huge commercial 
market.35 U.S. companies were also known to lobby 
the U.S. government on issues that benefited both the companies 
and China.36 In the 1990s, the news media reported 
on the increase of U.S. companies lobbying for favorable trade 
policies regarding China.37 This became known as the 
``New China Lobby'' and consisted of ``representatives of 
business groups with trade and investment interests in China, 
including AT&T, General Motors and Boeing.'' 38 In 
addition, prominent Americans were reported to be involved in 
promoting increased economic relationships with China, the most 
notable being Henry Kissinger, who has maintained business ties 
to the Chinese company CITIC. Others included George Shultz, 
Cyrus Vance, Lawrence Eagleburger Jr., and Brent 
Scowcroft.39 The New China Lobby apparently urged 
U.S. officials to uphold Beijing's trade privileges with the 
United States because American exports to China were rapidly 
increasing and creating American jobs.40
    U.S. exports to China have grown from $3 billion in 1980 to 
$38 billion in 1994.41 Between 1991 and 1996, U.S. 
exports to China increased by 90.5 percent and the U.S. 
Department of Commerce designated China as one of the top 10 
``Big Emerging Markets'' offering the largest potential for 
U.S. goods and services in the years ahead.42 Total 
trade between the two countries had risen from $4.8 billion in 
1980 to $63.5 billion in 1996, making China the fourth largest 
U.S. trading partner.43 President Clinton has 
renewed China's Most Favored Nation's trade status each 
year.44
    In light of the increased economic relations between China 
and the United States, foreign policy experts debate why it 
seems in the 1990s ``that China is about to replace Japan as 
America's new post-Cold War bogeyman?'' 45 One 
reason discussed was the negative American response to the 
Chinese Government's treatment of human rights, demonstrated by 
the Chinese Government's suppression of movements within China 
to promote democracy.46 Another reason, from the 
Chinese perspective, was that ``the coming to power of a China-
bashing Congress is perceived as part of an increasing anti-
Chinese atmosphere in Washington.'' 47 Evidence 
presented to the Committee during its investigation supports 
the conclusion that the Chinese Government, beginning in 1994, 
was concerned that decisions by Congress would harm Chinese 
Government interests.48
    In its relationship with the United States, China has 
traditionally been concerned with U.S. policy toward Taiwan. 
Chairman Thompson explained in his opening statement:

          Although the United States maintains no official ties 
        with the Government of Taiwan, our diplomatic relations 
        with the Government of China have long been influenced 
        by our ties to Taiwan. This is largely because the 
        Government of China considers Taiwan a rogue province 
        and suspects it of seeking independence from the 
        mainland.49

    In early 1995, Taiwanese President Lee Teng-hui requested a 
visa to enter the United States to attend events associated 
with his college reunion scheduled to be held in June 1995. 
Following this request, some predicted that Congress would 
pressure the President to permit Taiwan's President Lee to 
visit the United States.50 And, in fact, in March 
1995, Congress passed a resolution calling for the 
Administration to grant the visa to President Lee.51 
President Clinton subsequently agreed to grant the visa. In 
June 1995, news reports stated that President Lee had made a 
``triumphal first private visit'' to the United States, which 
included attending events in New York hosted by his alma mater, 
Cornell University.52
    The Chinese Government immediately protested the decision 
to grant President Lee a visa. The Chinese Government, working 
through traditional diplomatic channels, suspended ongoing 
treaty negotiations and recalled its ambassador to the United 
States.53

Information about the China Plan

    At the same time, Chinese Government officials developed a 
set of proposals to promote the Chinese Government's interests 
with Congress and the American public, particularly Chinese 
Americans. The proposals, which have become known in the media 
as the China Plan, were prompted by the Chinese Government's 
surprise that Congress had successfully lobbied the 
Administration to grant a visa to President Lee. The Chinese 
Government was aware that President Clinton initially had been 
opposed to the visa and concluded that the influence of 
Congress over foreign policy and other decisions was more 
significant than it had previously determined. When formulating 
its plan, Chinese Government officials also acknowledged that, 
compared to other countries, particularly Taiwan, it had little 
knowledge of, or influence over, policy decisions made in 
Congress.
    The plan was formulated in Beijing and was provided to 
Chinese Government officials in the United States. The plan 
instructed Chinese officials in the United States to increase 
their knowledge about members of Congress and increase 
diplomatic contacts with members of Congress, the public and 
the media. The plan also suggested ways to lobby Congress.
    The China Plan, as proposed by Chinese Government 
officials, was clearly designed to gain influence with the U.S. 
Congress and the American public. During its investigation, the 
Committee was informed during a closed hearing that the China 
Plan was designed to study and make decisions on how to work 
with members of Congress.54 As set forth in the non-
public information provided to the Committee to date, it was 
unclear whether the China Plan proposed funnelling campaign 
contributions to Congressional elections, but it was clear that 
it was not aimed at influencing the 1996 presidential 
race.55

Implementation of the China Plan

    The Committee also investigated how the Chinese Government 
may have implemented the China Plan. As proposed, the China 
Plan suggested activities that are legal in the United States 
as well as activities that could be illegal, depending on how 
they were implemented. As noted above, it is legal for foreign 
governments to promote their interests in the United States 
through lobbying, public relations and other political 
activities, as long as the individuals conducting these 
activities are official diplomatic representatives of the 
foreign government or have registered under the Foreign Agents 
Registration Act. However, individuals acting on behalf of 
foreign governments may violate U.S. law if they lobby or 
conduct political activities without registering under that Act 
or if they attempt to influence U.S. elections through campaign 
contributions.
            Legal activities
    The Committee received evidence that the Chinese Government 
implemented at least some of the legal proposals contained in 
the plan. The Chinese Government took steps to gather public 
information about specific members of Congress and to otherwise 
increase its lobbying of Congress by such means as inviting 
more members of Congress to visit China. The Committee learned 
that Chinese Government officials increased cultural exchanges 
with Chinese Americans, and the Chinese Government expressed 
concern that the majority of Chinese Americans, particularly 
those living in California, supported Taiwan.56
    The Committee also learned that the Chinese Government 
created a special ``legislative working group'' in Beijing, 
entitled The Leading Group on the U.S. Congress. The Committee 
was informed that the Leading Group included high-level Chinese 
Government officials and was similar to other committees within 
the Chinese Government that pursue policy initiatives, such as 
the Chinese Government's Leading Group on Foreign 
Affairs.57 Public information confirms that the 
Chinese Government has a variety of ``leading groups'' as part 
of its Government structure and that many of the groups contain 
high-level Chinese Government officials.58 The 
Committee was also informed that the Leading Group on the U.S. 
Congress apparently was a shell organization. Public 
information confirms the formation of the Leading Group on the 
U.S. Congress, with some diplomats and scholars stating that 
the group attempted to promote its interests with lawmakers and 
the American public, but was not effective.59
    Other information obtained by the Committee suggests that 
Chinese Government officials held meetings to discuss how to 
implement the China Plan and to consider how to raise money to 
implement the proposals.
            Illegal activities
    The Committee did not receive sufficient information from 
its non-public investigation to conclude that the China Plan, 
as implemented, resulted in illegal activity connected to U.S. 
federal elections. However, the Committee did receive 
sufficient information to suggest that illegal activities may 
have occurred on the state level.
    During a closed Committee hearing held on September 11, 
1997, agency officials informed the Committee that the 
information they had to date demonstrated that the China Plan 
had been implemented by Chinese Government officials by 
lobbying Congress, encouraging increased public relations with 
Chinese Americans, and possibly becoming involved in political 
activities at the state level. The agencies reminded the 
Committee that the information given to the Committee, while 
representing all the information that was then available, 
should not be considered complete. However, the agencies 
testified that the information at that time did not include 
information that any illegal activities had occurred on the 
part of the Chinese Government in relation to congressional or 
presidential elections.60 The agencies also 
cautioned the Committee that there could be violations of law 
if U.S. companies or persons were lobbying on behalf of China's 
interests, as opposed to their own, but did not register under 
the Foreign Agents Registration Act.61
    As Senators Glenn and Lieberman concluded upon review of 
the China Plan evidence:

          [T]he information shown to us strongly suggests the 
        existence of a plan by the Chinese government--
        containing components that are both legal and illegal--
        designed to influence U.S. congressional elections.
          [I]t is not clear from the evidence that the illegal 
        aspects of the plan were ever put into 
        motion.62

    As is evident from the events leading up to the formulation 
of the China Plan, the contents of the plan itself, and current 
information regarding its implementation, Chinese Government 
officials designed the China Plan to promote the Chinese 
Government's interests with Congress and the American public. 
There was insufficient information presented to the Committee 
to conclude that the China Plan resulted in illegal activity by 
the Chinese Government in relation to the 1996 federal 
elections.
            Individuals under investigation and the China Plan
    Information obtained by the Committee suggests that Chinese 
Government officials discussed ways to use ``intermediaries'' 
to implement the China Plan. Chinese Government hoped to use 
the influence of individuals in the United States by 
encouraging U.S. companies with interests in China to lobby for 
pro-Beijing trade policies and by encouraging Chinese Americans 
to promote pro-Beijing policies in the press and with 
Congress.63
    The Committee explored the possibility that the Chinese 
Government may have used other individuals to promote Chinese 
Government interests in the United States. During the 
Committee's public investigation, a number of individuals were 
alleged to have participated in a variety of political 
activities, including making or arranging for political 
contributions to federal elections that were possibly funded 
from sources in Asian countries. The individuals included John 
Huang, Maria Hsia, Ted Sioeng, Charlie Trie, Johnny Chung, 
James Riady, and Yogesh Gandhi.
    During the Committee's closed investigation, the Committee 
sought any nonpublic information available on these 
individuals. During a closed Committee hearing on July 28, 
1997, Committee Members took testimony from the Executive 
Branch agencies regarding the non-public information available 
on this topic. One Member asked, ``Is there any evidence that 
some of these people may have been intermediaries for the China 
plan or for PRC money [to the 1996 federal elections]?'' A 
senior executive official answered in the negative, based on 
the non-public information available at the time of the hearing 
in late July, 1997.64

Ted Sioeng

    After the closed hearing in late July 1997, additional 
information was provided to the Committee in September and 
November of 1997. The information concerned certain activities 
of Ted Sioeng, an Indonesian businessman who has family members 
living in California and business interests in China. The 
Committee learned that Chinese government officials in 
California were aware of, and possibly encouraged, Sioeng's 
purchase of a Los Angeles-based newspaper. Sioeng purchased the 
International Daily News in 1995 and succeeded in having the 
paper report from a pro-Beijing perspective.65 There 
was also information suggesting that Sioeng met with Chinese 
officials in 1995 and 1996.
    Sioeng also may have been involved in directing or funding 
contributions to American political entities and campaigns. The 
public information obtained by the Committee suggests that 
Sioeng personally directed contributions to Republican 
California officials in 1995.66 According to public 
information, Sioeng was involved in these 
contributions,67 but the source of the contributions 
is difficult to determine.68 The non-public 
information suggests that approximately half of the just over 
$100,000 used for these contributions may have come from 
unknown sources in China.69 According to public 
information, one of the officials, Republican California State 
Treasurer, Matt Fong, has returned the $100,000 he received 
from Sioeng.70
    The Committee's public investigation of Sioeng's activities 
also explored contributions to federal entities in 1995 and 
1996 made by Sioeng's daughter, Jessica Elnitiarta, or by 
companies Elnitiarta legally controls. Elnitiarta is an 
American citizen and businesswoman living in Los Angeles who 
contributed $50,000 to the National Policy Forum, an arm of the 
Republican National Committee, and $250,000 to the Democratic 
National Committee.71 Elnitiarta informed the DNC 
and this Committee that she had made the contributions to both 
the NPF and the DNC and that she used appropriate funds to do 
so.72 Bank records obtained as part of the 
Committee's public investigation suggest that the origin of the 
funds contributed to the NPR and the DNC could not be 
conclusively determined, but that the funds contributed to the 
DNC did derive either from Elnitiarta's personal account or 
from the accounts of domestic business interests she 
controlled.73
    The Committee's non-public investigation did not provide 
sufficient information regarding whether Elnitiarta's 
contributions to the NPF or the DNC were directed by Sioeng or 
were derived from unknown sources in China. Based on all the 
information before the Committee, however, including the 
information regarding Sioeng's apparent contacts with Chinese 
Government officials, the Minority believes that these 
activities warrant further investigation, including whether 
Sioeng directed any of the contributions to state officials or 
federal parties or entities. For a full discussion of the 
public information regarding Sioeng's activities, see Chapter 7 
of this Minority Report.
    The Committee received non-public information mentioning a 
few other individuals scrutinized in its public investigation: 
John Huang, Maria Hsia and the Riadys.

John Huang

    Regarding John Huang, one piece of non-public information 
that mentioned his name was factually incorrect based on other 
known information, and the other contained an unsubstantiated 
hearsay speculation gathered in 1997 after Huang's campaign 
finance activities were well-publicized. For a discussion of 
the Committee's public investigation of Huang, see Chapter 4 of 
this Minority Report.

Maria Hsia

    Regarding Maria Hsia, the Committee received non-public 
information connecting some activities she undertook while an 
immigration consultant in the state of California in the early 
to mid-1990s to Chinese Government officials. This information 
did not involve her activities with respect to fundraising, and 
there was no information presented to the Committee during its 
investigation that connected Hsia's fundraising activities to 
the Chinese Government. In an affidavit submitted to the 
Committee, Hsia strongly objects to this allegation, outlines 
her ties to Taiwan and the U.S., and describes her activities 
while an immigration consultant in California.74 In 
light of the incomplete investigation of the Committee on this 
issue, the Minority believes that the Committee lacks 
sufficient information about Hsia to endorse or rebut these 
serious allegations. The fact that the Majority emphasizes 
these allegations throughout its Report without putting the 
allegation in context or addressing this information is 
troubling. For a discussion of the Committee's public 
investigation of Hsia, see Chapters 4 and 21 of this Minority 
Report.

The Riadys

    Regarding Mochtar and James Riady, there was no non-public 
information presented to the Committee that provided relevant 
information not already uncovered in the Committee's public 
investigation. The Committee's public investigation, including 
hearing testimony by an expert witness called by the Majority 
in July, 1997, covered the Riady's business dealings throughout 
the world, including dealings within China and with the Chinese 
company China Resources.75 Public information 
confirms that the Riadys have a multi-million dollar 
international business that does business within China and with 
China Resources.76 According to public information, 
China Resources, while being a trading and investment company 
owned by the Chinese Government with subsidiaries involved in 
hundreds of joint ventures, also allegedly has some 
relationship with Chinese Government intelligence 
officials.77 The non-public information provided to 
the Committee to date, however, does not support the conclusion 
that the Riadys' business dealings consist of foreign spying or 
other similar intelligence activities. For a discussion of the 
Committee's public investigation of the Riadys, see Chapter 4 
of this Minority Report. For a response to the Majority's 
allegations regarding these individuals, see Part 8 of this 
Minority Report.

Intermediaries: Relation to the committee's public investigation

    Despite numerous searches and documents produced by the 
Executive Branch agencies, the non-public information presented 
to the Committee to date suggests that the political activities 
of one individual, Ted Sioeng, may possibly be linked to 
Chinese Government officials or the China Plan.78 
The non-public information received by the Committee to date, 
however, is insufficient to conclude that Sioeng participated 
in federal political contributionsto the National Policy Forum 
or the Democratic National Committee made by his daughter or her 
companies in 1995 and 1996 or that those funds were derived from the 
Chinese Government or other sources in China.
    One of the problems confronted by the Committee when 
examining the role of potential fundraising ``intermediaries'' 
in closed sessions was the use of the term ``foreign agent.'' 
In popular culture, the term ``foreign agent'' suggests that an 
individual is participating in illegal foreign spy activity. As 
used by the Executive Branch, however, the term also describes 
individuals who conduct legitimate activities in the United 
States on behalf of other countries. This broader definition of 
``agent'' used in the Committee's non-public information 
resulted in misleading allegations.
    Notwithstanding the allegations that derived from 
misleading information provided to the press, the non-public 
information presented to the Committee does not support the 
conclusion that the fundraising activities in the 1996 federal 
election cycle investigated by the Committee during its public 
investigation were connected to Chinese Government officials or 
to the China Plan. The agencies were careful to note, however, 
that their investigations are ongoing.
    It is also important to note that the Committee received 
information during its public investigation that raised 
troubling questions of private individuals using foreign funds 
to make contributions to state officials and federal entities, 
including Matt Fong, the National Policy Forum, and the 
Democratic National Committee. Although the non-public 
information presented to the Committee to date does not provide 
information tying these private individuals' federal 
fundraising to any foreign government, the public information 
presented to the Committee in open session did raise questions 
regarding the source of a number of those contributions and the 
activities of a number of individuals. Again, it is important 
to note that the goals of this chapter are (1) to clearly 
distinguish between conclusions based on non-public versus 
public information obtained by the Committee and (2) to set 
forth conclusions based only on the non-public information 
reviewed by the Committee to date. Despite the insufficiency of 
the non-public information on fundraising matters, the public 
information regarding the fundraising activities of certain 
individuals is troubling and is discussed elsewhere in this 
Minority Report. The public information is also available for 
public review and analysis.
            Political contributions to Federal elections
    Another issue raised in connection with the China Plan was 
whether there was non-public evidence showing that Chinese 
Government officials had used Chinese Government funds, 
directly or indirectly, to make political contributions to 
federal elections in the United States. (The information 
obtained by the Committee regarding state elections is 
discussed above in relation to Sioeng's activities with state 
officials in California.)
    There was evidence that the Chinese Government, by setting 
forth its proposals, was attempting to influence U.S. 
congressional decisions and elections, but there was 
insufficient information to conclude that the China Plan, as 
proposed or as implemented, involved Chinese Government 
political contributions to congressional campaigns. During a 
closed hearing of the Committee held on July 28, 1997, senior 
Executive Branch officials knowledgeable about the information 
were questioned about the effect of the China Plan on 
congressional elections. Senator Glenn asked whether the 
documents provided to the Committee to date discussed only 
activities surrounding Congress. The officials responded 
affirmatively.79 However, based on testimony during 
the July 28, 1997 closed hearing, as well as additional 
testimony during a September 11, 1997 closed hearing, there was 
no evidence that the Chinese Government had actually made 
illegal campaign contributions to members of 
Congress.80
    The Committee also investigated whether the information 
provided to the Committee suggested that the China Plan, as 
proposed or as implemented, involved Chinese Government 
political contributions going to the 1996 presidential 
election. The debate on this issue began on July 8, 1997, when 
Chairman Thompson concluded that the China Plan may have 
``affected the 1996 Presidential and State races.'' 
81
    As set forth above, the Committee already had learned that 
the China Plan, as proposed, was not aimed at the Executive 
Branch or the presidential race. The Committee nonetheless 
considered whether Chinese Government officials had taken steps 
to arrange placing money into the presidential election, or 
whether it took any actions at all that may have ``affected'' 
the 1996 presidential race. During the Committee's closed 
hearing on July 28, 1997, Senator Glenn asked the Executive 
Branch agencies:

          Is there any indication that the 1996 Presidential 
        race may have been affected by the Chinese plan? 
        82

    The agencies' officials responded in the negative, with the 
understanding that the response was based on the information 
available at the time and that the available information could 
not represent a complete picture of any issue under 
investigation.83 The Chairman then followed up on 
Senator Glenn's questions by stating:

          If I may follow up on one point for clarification. 
        You were asked about any evidence affecting the '96 
        Presidential campaign. . . . I believe you said you had 
        no evidence from your . . . investigation. Do you have 
        evidence from your . . . investigation or can you tell 
        us? 84

A senior Executive Branch official responded negatively 
again.85
    On July 28, 1997, the information presented to the 
Committee clearly did not support the conclusion that the China 
Plan affected the 1996 congressional or presidential races, 
either through illegal means, such as Chinese Government funded 
political contributions. In the following months, the Committee 
received additional non-public information, but that 
information regarded possible Chinese ``intermediaries'' and is 
discussed above. The information and conclusions on the issues 
regarding political contributions to federal campaigns and, 
ultimately, the conclusion about any effect the Chinese 
Government may have had on those federal elections, remain the 
same.86

Political contributions: Relation to the committee's public 
        investigation

    In its public investigation, the Committee received 
evidence of foreign funds from businessmen in a variety of 
Asian countries coming into the American political system from 
1993 to 1996. In particular, the Committee received public 
information that the DNC returned approximately $3 million in 
political contributions, a portion of which was determined to 
derive from foreign funds. These events raised troubling 
questions that are addressed elsewhere in Part 1 of this 
Minority Report. During its closed proceedings and 
investigation, the Committee did not receive non-public 
information tying these fundraising activities in the 1996 
federal election cycle to the China Plan or the Chinese 
Government.

                Information Not Pursued By The Committee

    Although the Committee's gathering of non-public 
information focused on the China Plan and the Chinese 
Government, the Committee received information surrounding the 
1996 federal election cycle that the Committee decided not to 
pursue, as follows:
     Although the Committee discovered that the China 
Plan was aimed at influencing Congress and discovered that 
specific steps had been taken to influence Congress, the 
Committee did not pursue this information in order to determine 
what activities may have occurred regarding specific members of 
Congress.
     The Committee received numerous documents 
suggesting that other Asian governments had developed plans to 
promote their interests in the United States. These plans 
proposed taking actions similar to those contained in the China 
Plan, including lobbying, using intermediaries, and encouraging 
ethnic Americans to contact U.S. officials. The Committee did 
not pursue this information or attempt to determine whether the 
plans were implemented.
     The Committee received documents suggesting that 
several non-Asian governments also had plans to promote their 
interests in the United States. Many of these plans were 
similar to the China Plan, while others set forth more detailed 
activities to gain influence in the United States. The 
Committee did not investigate these issues.
     The Committee received information that 
intelligence agents of a foreign country attended a Republican 
presidential fundraiser in 1995. This information was discussed 
by the Committee, but the issue was not pursued.

                               conclusion

    During the Committee's public investigation, evidence was 
presented that established that a portion of the $3 million in 
contributions that were returned by the Democratic National 
Committee derived from foreign funds. The public evidence also 
established that some of the funds came from private 
individuals or companies in a number of Asian countries and 
that the funds may have been used to provide access to DNC 
events. The public evidence received by the Committee is 
discussed in detail in Chapters 3 through 8 of this Minority 
Report. The public information, in conjunction with the non-
public information that China and other countries proposed 
plans to influence the political process raised legitimate 
questions of whether any foreign government funds were used to 
make political contributions during the 1996 election cycle. In 
light of the Committee's focus on the Chinese Government, the 
Committee examined that issue, but the nonpublic information 
presented to the Committee during the course of its 
investigation did not support the conclusion that the funds 
from a variety of Asian countries were connected to the Chinese 
Government. In addition, the non-public information does not 
support the conclusion that the China Plan, or its 
implemention, was directed at, or affected, the 1996 
presidential election. Ultimately, the China Plan and the 
allegations derived from the Committee's review of nonpublic 
information were found to be of minimal significance to the 
issues investigated by the Committee.

                               footnotes

    \1\ New York Times, 1/2/97; Washington Post, 3/13/97; Time 3/97.
    \2\ This chapter has been reviewed by Executive Branch agencies to 
ensure that it does not contain classified information. During that 
review, the Executive Branch agencies informed the Committee that their 
review of both the Majority and Minority chapters on this issue did not 
include any position regarding the conclusions reached by the Majority 
or the Minority.
    \3\ Chairman Thompson, 7/8/97 Hrg., p. 2.
    \4\ Chairman Thompson, 7/8/97 Hrg., p. 4.
    \5\ Chairman Thompson, 7/8/97 Hrg., p. 4.
    \6\ Chairman Thompson, 7/8/97 Hrg., p. 2.
    \7\ Chairman Thompson, 7/8/97 Hrg., p. 1.
    \8\ Chairman Thompson, 7/8/97 Hrg., p. 2.
    \9\ Chairman Thompson, 7/8/97 Hrg., p. 4.
    \10\ Chairman Thompson, 7/8/97 Hrg., p. 4.
    \11\ Chairman Thompson, 7/8/97 Hrg., p. 4.
    \12\ Chairman Thompson, 7/8/97 Hrg., p. 4.
    \13\ Chairman Thompson, 7/8/97 Hrg., p. 4.
    \14\ Senator Glenn, 7/8/97 Hrg., p. 19.
    \15\ Senator Levin, 7/8/97 Hrg., p. 47.
    \16\ Senator Levin, 7/8/97 Hrg., p. 47.
    \17\ Senator Levin, 7/8/97 Hrg., p. 47.
    \18\ Joint Statement by Senator John Glenn and Senator Joseph 
Lieberman, 7/15/97.
    \19\ Senator Durbin, 7/8/97 Hrg., p. 82.
    \20\ Senator Durbin, 9/9/97 Hrg., pp. 146-47.
    \21\ Foreign Agents Registration Act, 22 U.S.C. 611 et seq. (1997).
    \22\ Foreign Agents Registration Act, 22 U.S.C. 611(c).
    \23\ Foreign Agents Registration Act, 22 U.S.C. 623; 611(d).
    \24\ Lobbying Disclosure Act of 1995, 2 U.S.C. 1601 et seq. (1997).
    \25\ Congresional Research Service Issues Brief, China-U.S. Trade 
Issues, 1/23/98, pp. 7-8.
    \26\ Emerging Asia; Changes and Challenges, Asian Development Bank 
Publication 010297, 1997, p. 33.
    \27\ Emerging Asia; Changes and Challenges, Asian Development Bank 
Publication 010297, 1997, p. 33.
    \28\ Emerging Asia; Changes and Challenges, Asian Development Bank 
Publication 010297, 1997, P. 33.
    \29\ South China Morning Post, 11/3/93; New York Times, 7/1/93.
    \30\ The Hill, 6/27/97.
    \31\ Department of Justice data provided to the Committee; New York 
Times, 3/14/97; New York Times, 7/9/97; South China Morning Post, 8/15/
93.
    \32\ Federal Election Campaign Act, 2 U.S.C. 441e; Federal Election 
Commission regulations, 11 C.F.R. 110.4.
    \33\ Political Handbook of the World, 1997, Eds. Banks, A. Day, Al. 
and Miller, T. CSA Publications, Binghamton, NY, p. 168.
    \34\ Closed Committee Hearing, 7/28/97 Hrg., p. 5.
    \35\ Closed Committee Hearing, 7/28/97 Hrg., p. 5; see e.g., Boston 
Globe, 3/24/97.
    \36\ New York Times, 3/14/97; Boston Globe, 3/24/97.
    \37\ Business Times, 5/19/94; The Economist, EIU Ltd., 2/8/93.
    \38\ Senator Glenn, 7/9/97 Hrg., pp. 153-156; Business Times, 5/19/
94.
    \39\ Boston Globe, 3/24/97.
    \40\ The Economist, The Economist Intelligence Unit, Ltd., 2/8/93.
    \41\ Business Times, 2/7/95.
    \42\ Congressional Research Service Issue Brief, China-U.S. Trade 
Issues, 1/23/98, pp. 12-13.
    \43\ Congressional Research Service Issue Brief, China-U.S. Trade 
Issues, 1/23/98, p. 1.
    \44\ New York Times, 3/9/97; Washington Post, 3/20/97; Star 
Tribune, 3/22/97; Los Angeles Times, 3/23/97 and 3/25/97; Houston 
Chronicle, 3/27/97; Financial Times, 10/27/97.
    \45\ Business Times, 2/7/95; New York Times, 6/6/96P; Chicago 
Tribune, 8/27/96; New Republic, 7/31/95; Boston Globe, 1/7/96; 
Pittsburgh Post-Gazette, 3/31/96.
    \46\ See, e.g., Washington Post, 3/1/97.
    \47\ Business Times, 2/7/95; New York Times, 6/6/96; Chicago 
Tribune, 8/27/96; New Republic, 7/31/95; Boston Globe, 1/7/96; 
Pittsburgh Post-Gazette, 3/31/96.
    \48\ Closed Committee Hearing, 7/28/97, pp. 6-7.
    \49\ Chairman Thompson, 7/8/97 Hrg., pp. 2-3.
    \50\ Washington Post, 3/31/95; Financial Times, 3/8/95; Daily 
Yomiuri, 3/28/95; South China Morning Post, 3/24/95.
    \51\ H. Con. Res. 53, passed 3/29/95; see also S. Con. Res. 9, 3/6/
95; H. Con. Res. 33, 3/6/96.
    \52\ Washington Post, 6/11/95; see also Los Angeles Times, 6/8/95; 
Washington Post, 6/10/95.
    \53\ Houston Chronicle, 8/25/95; Senator Thompson, 7/8/97 Hrg., p. 
3.
    \54\ Staff Briefing, 7/24/97.
    \55\ Closed Committee Hearing, 7/28/97, p. 41.
    \56\ Closed Committee Hearing, 7/28/97, p. 7.
    \57\ Closed Committee Hearing, 9/11/97.
    \58\ South China Morning Post, 8/21/96 (generally); South China 
Morning Post, 11/5/97 (Leading Group on Foreign Affairs); Washington 
Post, 3/11/97 (head of the Leading Group on Foreign Affairs is also 
involved in ``discussions about how China might improve relations with 
American lawmakers.''); British Broadcasting Corp., 7/8/94 (Leading 
Group on Financial Affairs); Japan Economic Newswire, 11/16/95 (Chinese 
Government's Leading Group on Taiwan Affairs includes intelligence 
official); South China Morning Post, 1/7/97 (Leading Group on Military 
Affairs); Japan Economic Newswire, 11/30/95 (Leading Group established 
to oversee the 1999 handover of the Portuguese colony to mainland 
China); Xinhau News Agency, 3/28/95 (Leading Group established on 
Mining Resources).
    \59\ Christian Science Monitor, 3/13/97. This group has also been 
referred to as ``The Leading Group on U.S.Congressional Affairs.'
    \60\ Closed Committee Hearing, 9/11/97.
    \61\ Closed Committee Hearing, 9/11/97.
    \60\ Joint Statement by Senator John Glenn and Senator Joseph 
Lieberman, 7/15/97.
    \63\ Staff Briefing, 8/5/97.
    \64\ Closed Committee Hearing, 7/8/97, P. 54.
    \65\ Staff interview with David Ma, 8/24/97; Staff interview with 
Jessica Elnitiarta, 6/19/97; Los Angeles Times, 5/18/97.
    \66\ Matt Fong deposition, 9/19/97, pp. 14-19, 29, 30 & 35-37.
    \67\ Matt Fong deposition, 9/19/97, pp. 14-19, 29, 30 & 35-37.
    \68\ See Chapter 7 of this Minority Report.
    \69\ Closed Committee Hearing, 9/11/97.
    \70\ Matt Fong deposition, 9/19/97, pp. 66-67.
    \71\ Memorandum from Steve Hendershot, Special Agent detailed to 
the Senate Investigation, entitled ``Jessica Elnitiarta Record 
Review,'' 8/22/97; Staff interview with Jessica Elnitiarta 6/19/97; 
Letter from Thomas McFish, counsel to Jessica Elnitiarta, to the 
Committee, 6/18/97; Los Angeles Times, 7/4/97; Newsweek, 3/10/97.
    \72\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \73\ See Chapter 7 and supporting citations.
    \74\ Declaration of Maria Hsia, 2/23/98. Hsia received a Committee 
subpoena on May 19, 1997 that requested her to provide testimony 
regarding her campaign finance activities in the United States. In 
response, Hsia asserted her Fifth Amendment rights and did not provide 
such testimony. The allegations regarding Hsia's alleged connections to 
the Chinese Government appeared several months later, in November of 
1997. When these allegations were made, Hsia requested the opportunity 
to provide information to the Committee about these issues and on 
February 23, 1998, she submitted a sworn declaration to the Committee.
    \75\ Thomas Hampson, 7/15/97, Hrg. pp. 67-71.
    \76\ Thomas Hampson, Hrg., 7/15/97; Washington Post, 7/18/97; 
Newsweek, 2/24/97.
    \77\ Washington Post, 7/17/97; Newsweek, 2/24/97; Financial Times, 
8/21/93; Time, 5/5/97; Washington Post, 7/18/97; Business Wire, 1/7/98; 
Xinua Wire Service, 11/10/92.
    \78\ Closed Committee Hearings, 7/28/97 and 9/11/97; Closed 
briefings, 11/7/97, 12/5/97, 1/22/98.
    \79\ Closed Committee Hearing, 7/28/97, pp. 43-44.
    \80\ Closed Committee Hearing, 7/28/97, pp. 4, 30, 32, 69.
    \81\ Chairman Thompson, 7/8/97 Hrg. pp. 2-3.
    \82\ Closed Committee Hearing, 7/28/97, p. 44.
    \83\ Closed Committee Hearing, 7/28/97, p. 44.
    \84\ Closed Committee Hearing, 7/28/97, p. 46.
    \85\ Closed Committee Hearing, 7/28/97, p. 46.
    \86\ The only closed hearing on the China Plan that was recorded or 
transcribed was the one held on July 28, 1997. The other hearings were 
not transcribed, but are supported by briefing papers submitted by the 
agencies.





PART 1  FOREIGN INFLUENCE

Chapter 3: National Policy Forum

    Early in the investigation Chairman Thompson divided the 
hearings into two ``phases'' and focused the first phase on the 
issue of foreign money and foreign influence in the 1996 
elections. There was evidence of foreign money going to both 
the Republican National Committee (``RNC'') and the Democratic 
National Committee (``DNC'), but there was no evidence that 
foreign money influenced any policy decisions of the Clinton 
Administration or that it had any bearing on the outcome of the 
1996 presidential election. To the extent that foreign money 
may have influenced the 1994 Congressional elections, there is 
evidence with respect to money funneled to the Republican 
National Committee through the National Policy Forum (``NPF').
    Starting in 1993, Haley Barbour, the chairman of the RNC, 
carried out a scheme to collect foreign money by channeling the 
funds through the National Policy Forum, a tax-exempt 
organization controlled by the RNC. The RNC did this by 
arranging for a foreign businessman to put up collateral for a 
bank loan to the NPF. Shortly after the NPF received the loan, 
it transferred more than $2 million to the RNC which, in turn, 
channeled the money into the 1994 congressional races around 
the country. The NPF subsequently defaulted on the bank loan--
freeing up still more money for the RNC in 1996.
    While the evidence shows that foreign money in this case 
did not affect U.S. policy or the 1996 presidential election, 
it does suggest that foreign money played an important role for 
the RNC in the mid-term elections of 1994.

                                findings

    (1) RNC Chairman Haley Barbour and the RNC intentionally 
solicited foreign money for the NPF.
    (2) The NPF was an arm of the RNC and, as the Internal 
Revenue Service concluded, was not entitled to tax-exempt 
status as a social welfare organization under section 501(c)(4) 
of the U.S. tax code.
    (3) Barbour solicited Ambrous Young, a foreign national, 
and Young agreed to provide the collateral for a loan to NPF 
for the purpose of helping Republican candidates during the 
1994 elections.
    (4) The evidence before the Committee strongly supports the 
conclusion that Barbour and other RNC officials knew that the 
money used to collateralize the NPF loan came from Hong Kong. 
Barbour's testimony that he did not know about the foreign 
source of the loan collateral was not credible.
    (5) As a result of NPF's default on the loan, the RNC 
improperly retained $800,000 in foreign money during the 1996 
election cycle.

                              introduction

    During the Committee's investigation into the 1996 
election, which entailed 31 days of public testimony, the 
Minority was allowed to present witnesses on only three days. 
In that period, the Minority was able to demonstrate how the 
RNC solicited and benefitted from foreign corporate money 
channeled through a Florida shell corporation to collateralize 
a bank loan to the National Policy Forum--a Republican National 
Committee-created ``think tank.'' The proceeds of the loan went 
to the RNC. (Although this was not, technically speaking, a 
loan guarantee, it had the same effect. All parties involved in 
the transaction called it a guarantee, and that term is 
frequently used in this chapter for the sake of 
convenience.1) As Senator Glenn noted in his opening 
statement on July 8, the first day of the Committee's hearings, 
``This story . . . is the only one so far where the head of a 
national political party knowingly and successfully solicited 
foreign money, infused it into the election process and 
intentionally tried to cover it up.'' 2 The 
testimony with respect to NPF supports Senator Glenn's 
statement.
---------------------------------------------------------------------------
     Footnotes at end of chapter.
---------------------------------------------------------------------------
    The loan transaction may have constituted an illegal 
foreign contribution to the Republican National Committee. 
Ambrous Young, a Hong Kong businessman who had relinquished his 
American citizenship, transferred funds from Young Brothers 
Development (Hong Kong) to a U.S. company called Young Brothers 
Development (USA). This foreign money was used to provide 
collateral for a loan to the National Policy Forum from a U.S. 
bank. The loan proceeds were then transferred to the RNC which, 
in turn, used the money to fund Republican congressional 
campaigns in 1994. The evidence before the Committee shows that 
Haley Barbour, who was chairman of both the RNC and the NPF, 
solicited the loan guarantee, knew that the money was coming 
from a foreign source, and intended that the funds be used on 
behalf of Republican candidates. Some testimony suggests that 
Barbour intended from the very outset that the loan guarantee 
would be absorbed by his Hong Kong-based benefactor upon 
default by NPF.
    The Minority's investigation of the National Policy Forum 
was hampered by a lack of cooperation from both witnesses and 
lawyers for the NPF. Although the Committee deposed 14 people, 
some individuals, such as former NPF President Daniel Denning, 
simply refused to answer a significant number of appropriate, 
substantive questions. Others, including Barbour, refused to be 
deposed until a few days before the hearings commenced. The 
lawyer for the NPF maintained that the subpoena issued on April 
9 was invalid, and he refused to comply with it even after an 
order was issued by Chairman Thompson on July 3. The Majority 
never enforced the order.3
    The documents received by the Committee were obtained 
almost entirely through voluntary production by individuals 
associated with Young Brothers, who fully cooperated with the 
investigation. Ambrous Young submitted to a voluntary 
deposition in London. His U.S. lawyer, Benton Becker, and his 
Washington representatives, Richard Richards and Steve 
Richards, voluntarily offered their testimony to the Committee. 
Becker also voluntarily appeared at the Committee's hearings. 
Additionally, at the instruction of Ambrous Young, Becker made 
numerous documents relevant to the loan transaction available 
to the Committee, briefed the Majority and Minority staffs on 
the history and significance of the documents, and made YBD 
personnel available to Committee staff upon request. The 
Committee's investigation of the National Policy Forum was 
immeasurably enhanced by the cooperation it received from 
Ambrous Young, his counsel, and others associated with Young 
Brothers Development.

                             haley barbour

    Haley Barbour chaired the Republican National Committee 
from January 1993 until January 1997. A few months after 
becoming RNC chairman, Barbour founded the National Policy 
Forum; he chaired it while he was RNC chairman. Although 
Barbour did not oversee the NPF's day-to-day operations, he 
played an important role in its political activity, its 
fundraising, and its expenditure of funds.
    Barbour was deposed by the Minority on July 20, 1997, and 
he testified voluntarily before the Committee on July 25. He 
denied knowledge of the origin of the funds used to guarantee 
the loan, disputed the view that the NPF was an arm of the RNC, 
and claimed that no one ever intended that the proceeds of the 
Young Brothers Development loan guarantee would be used in 
election campaigns. Barbour's version of events is contradicted 
at several key junctures by numerous witnesses as well as by 
documents obtained by the Committee.4

                             ambrous young

    Ambrous Young was born and raised in mainland China but 
moved to Taiwan at an early age, adopting Taiwanese 
citizenship. In 1969, following his marriage to a U.S. citizen, 
Young became a U.S. citizen, but retained his Taiwan 
citizenship. He relinquished his U.S. citizenship in late 1993 
or early 1994.5 By the 1980s, Young was a very rich 
man and a supporter of the Republican Party, as were his three 
sons. In the mid-1980s, Young became friendly with the then-RNC 
chairman, Richard Richards, who became an adviser and business 
associate.
    In 1991, Alex Courtelis, the chairman of the RNC's ``Team 
100'' donor program, approached Young about investing in real 
estate in Orlando, Florida. Courtelis owned several shopping 
centers in north Florida and he knew that Young was interested 
in making a major investment in the United States. He proposed 
that Young buy part of the Riverwalk Shopping Center in Orlando 
for approximately $13 million.6 Young formed a 
Florida corporation, Young Brothers Development (``YDB 
(USA)''), to be the purchasing vehicle. Young's lawyer, Benton 
Becker, a former counsel to President Gerald Ford, was 
appointed an officer and director of the company, while Richard 
Richards, who served as Young's Washington representative, was 
designated president and chairman. The corporation was funded 
with $2.7 million transferred from its Hong Kong parent 
corporation, Young Brothers Development (``YBD'').7
    The purchase of the shopping center fell through due to 
conflicting appraisals of the property's worth. Most of the 
$2.7 million was transferred back to Hong Kong, but, as Becker 
testified, ``some funds were retained by the Florida 
corporation to pay for a commitment Mr. Young has made to Mr. 
Courtelis during Mr. Young and Mr. Courtelis's discussion on 
the shopping center purchase.'' 8
    Courtelis had asked Young to become a member of Team 100, 
the Republican organization that required at least a $100,000 
contribution to the party to join. Young decided that the newly 
formed corporation, YBD (USA), should purchase the membership 
so that his sons and Richards could participate in Team 100-
sponsored events. Courtelis directed that two checks be 
written: one for $75,000 to the Republican National State 
Election Committee, and a second for $25,000 to the Florida 
Republican Party. Over the course of the next two years YBD 
(USA) issued checks totaling nearly $50,000 to various 
Republican entities. All of this money was supplied by the Hong 
Kong parent corporation. Acknowledging that this was foreign 
money being used to finance U.S. election activity, the RNC 
eventually returned these checks in 1997.
    Young currently manages YBD as an international holding 
company for businesses ranging from aerospace to macadamia nuts 
in several countries around the globe, including China, Italy, 
and Australia.

                  origin of the national policy forum

    In 1993, Barbour, working with Donald Fierce, his friend, 
business partner, and RNC chief strategist, created the 
National Policy Forum as a ``think tank'' for the exchange of 
Republican ideas. The organization applied to the Internal 
Revenue Service for tax-exempt 501(c)(4) status, which would 
have prohibited it from engaging in partisan or primarily 
political activity. According to the testimony of several 
witnesses, Barbour touted the creation of NPF as a plank in his 
platform when he ran for the chairmanship of the RNC, stating 
that he believed that the Republican Party had failed to 
generate new ideas that could be integrated into a Republican 
ideology.9 In June 1993, Barbour announced that 
Michael Baroody, a prominent Republican, would be NPF's first 
president. Barbour himself was the chairman of NPF as well as 
the RNC, and he arranged for the RNC to provide NPF with 
several hundred thousand dollars in start-up 
money.10
    Baroody was apparently committed to creating a genuine 
think tank. He set about implementing what he believed to be 
Barbour's vision of holding participatory conferences around 
the country on a variety of public policy issues (``the 
Forum''). He hired a large staff and began identifying 
conference sites and participants. However, it appears that, 
almost immediately, Baroody and Barbour began to clash over the 
operations of NPF. Baroody was interested in making the 
conferences open--even bipartisan--events where there would be 
a legitimate exchange of ideas. Barbour, on the other hand, 
appears to have wanted to use NPF to strengthen the Republican 
Party's base and to give the party's supporters an opportunity 
to participate in formulating a national Republican policy 
platform. On at least one occasion, when Baroody suggested that 
a Democratic office holder participate in one of the 
conferences, Barbour objected.11 Nevertheless, 
Barbour has characterized NPF as ``the most participatory 
public policy institution ever,'' and he claimed 10,000 people 
attended forums held in more than 30 states.12

                       THE BARBOUR-BAROODY SPLIT

    An even more contentious issue between Baroody and Barbour 
developed over the question of how to fund the Forum. Baroody 
felt that the Forum should embody American values and American 
issues and therefore believed foreign fundraising would be 
inappropriate. From the outset, however, Barbour wanted to 
explore foreign sources of fundraising. In an extraordinary 
memorandum, Scott Reed, the executive director of the 
Republican National Committee, listed ``foreign'' under the 
heading of ``fundraising'' as an issue to be discussed with 
Barbour in a meeting on June 2, 1993.13 From the 
inception of NPF, its creators were contemplating raising 
foreign money. This memorandum, written only weeks before the 
announcement of the creation of the National Policy Forum, is 
extraordinary for another reason: The RNC executive director 
was making recommendations on the structure, goals, and 
personnel for a supposedly independent, nonpartisan 
organization.
    According to both Barbour and Baroody, they only discussed 
the issue of raising money from foreign sources on one 
occasion. That discussion nevertheless apparently led Baroody, 
who resigned one year later, to characterize Barbour as having 
a ``fascination'' with foreign money.14 Baroody 
testified that he never viewed a foreign contribution to the 
NPF as illegal, but later he recalled telling Barbour: ``We 
could get the money; that would be easy. But it would be 
wrong.'' 15 As he explained in more detail during 
his testimony, he felt such a contribution would be 
``[i]nappropriate, unseemly, and imprudent.'' 16
    As the rift between Barbour and Baroody deepened, Barbour 
brought in a trusted ally, Daniel Denning, as NPF executive 
vice president in early 1994. Denning had held numerous 
positions in the Republican Party and the federal government 
and was working for General Electric before joining NPF. With 
Denning in place, Barbour began an aggressive fundraising 
campaign. W. Lyons Brown, a wealthy Kentucky businessman and 
Republican contributor, was tapped to be fundraising chairman. 
Denning, with Barbour's knowledge and presumed approval, 
continued to explore foreign sources of funding. Denning raised 
the issue of foreign fundraising with Baroody but was rebuffed, 
as Barbour had been before him.17 Unbeknownst to 
Baroody, Denning then approached Fred Volcansek, a former 
Commerce Department official under President Bush, 
international businessman, and GOP fundraiser, to be a 
fundraising consultant for NPF. According to Volcansek, Denning 
``was consumed with the need to raise money.'' 18 
Volcansek testified that he, Denning, and Fierce met at 
Fierce's northern Virginia home in the spring of 1994 to 
discuss foreign fundraising options. Baroody was kept out of 
the loop, even though, technically, Denning was his 
subordinate.19

                            funding the npf

    Fred Volcansek testified that at the meeting held at 
Fierce's home, he and the others discussed the need for funds 
for the ``ongoing operations at the National Policy Forum'' and 
noted that ``the Republican National Committee was very 
interested in seeing that the National Policy Forum repaid [a 
loan it had outstanding with the RNC] so that the Republican 
National Committee could utilize those funds in appropriate 
ways during the 1994 election cycle . . .'' 20 In 
other words, Volcansek's early discussions with a top RNC 
official, Fierce, were about raising money for NPF to help the 
GOP in 1994.
    According to Volcansek, they also discussed where to seek 
the funds and what financing vehicle made the most sense. 
Fierce, Barbour's confidant, first suggested raising money from 
foreign sources. Fierce, Denning, and Volcansek decided on 
three possible sources of foreign money. They also decided that 
they should seek a loan guarantee and not a conventional loan 
because a loan guarantee could be arranged more quickly. What 
is significant about the meeting among Denning, Fierce, and 
Volcansek is that the NPF president, Michael Baroody, was not 
aware of their plans to raise foreign money. As Volcansek 
testified, ``I neither met Mr. Baroody then or discussed 
anything with him then nor have I met him to this day.'' 
21 Indeed, Baroody first learned of the meeting at 
Fierce's house when he testified before the Committee on July 
23, 1997.22
    Apparently, Volcansek's first choice for raising funds 
abroad did not pan out. Volcansek's second choice was Ambrous 
Young, whom he had met through Richard Richards. Volcansek and 
Richards were friends who had known each other in Utah and 
Washington, where Volcansek often visited Richards's offices. 
Volcansek recommended to Barbour that he approach Young to 
solicit a large contribution.23

                            baroody resigns

    On June 28, 1994, Michael Baroody submitted his resignation 
as president of NPF to Haley Barbour. Baroody submitted both a 
resignation letter and a confidential explanatory 
memorandum.24 While the letter only relayed 
Baroody's intent to resign, the memorandum, which the Committee 
obtained from sources other than the National Policy Forum, 
outlined in some detail Baroody's reasons for leaving. It is an 
extraordinary document. First and foremost, Baroody objected to 
Barbour's ``fascination'' with foreign money. Secondly, Baroody 
stated his belief that Barbour had allowed the ties between the 
NPF and the RNC to erase the necessary barriers between the two 
ostensibly independent entities. Baroody wrote: ``I believe 
that what has happened over many months has undermined my 
efforts, distorted our purpose, blurred the separation of the 
RNC and the NPF in such a way as to conceivably jeopardize our 
501(c)(4) application, and has occasioned the inexcusable, 
heavy-handed treatment of volunteers with the NPF.'' Baroody 
continued:

          I had understood at the outset that this would be an 
        organization separate from the RNC. Though both would 
        be chaired by you, they would operate distinctly. I had 
        this understanding not only because you and others told 
        me so, but because the deliberate decision had been 
        made to organize the NPF under section 501(c)(4) of the 
        Federal Tax Code. That provision requires separate 
        operation. Especially in recent months, it has become 
        increasingly difficult to maintain the fiction of 
        separation.25

In his testimony before the Committee, Baroody repeated some of 
the examples that he had provided in his letter: the overlap of 
staff, the partisan nature of the conferences, the NPF's 
increasing indebtedness to the RNC, and the general lack of 
autonomy that he felt.26
    Barbour's testimony contradicted Baroody's statements. 
Barbour stated that the NPF ``was and is a separate 
organization from any other organization.'' 27 
Barbour categorically denied that the NPF was an ``arm or 
subsidiary of the RNC.'' However, a number of documents 
contradict Barbour's assertion. For example, a memorandum 
obtained by the Committee from the files of Jo-Anne Coe, the 
former finance vice chairman of the RNC, referred to the NPF as 
``the Republican National Committee's 501(c)(4).'' 
28 Similarly, in an RNC document, Henry Barbour, 
Haley Barbour's nephew, referred to the NPF as an ``issue 
development subsidiary'' of the RNC.29 A third 
document, from RNC Team 100 staff member Kevin Kellum, asked 
Barbour for his recommendation on how to distribute a $1 
million pledge from gambling magnate Steve Wynn. One option 
calls for the entire amount to go to the RNC or Republican 
Party affiliates. Two alternative options provide for anywhere 
from $250,000 to $500,000 to go to NPF, demonstrating that for 
financial purposes, NPF was closely enough tied to the RNC as 
to warrant a significant portion of a party 
contribution.30 In addition to Baroody's views, 
Coe's memo, Henry Barbour's memo, and Haley Barbour's actions, 
there is a February 21, 1997, ruling by the Internal Revenue 
Service denying the NPF its 501(c)(4) status because it 
conducted itself in a highly partisan fashion. The IRS relied 
in part on NPF's close relationship with the RNC in terms of 
overlapping directors and interconnected finances. For example, 
the IRS decision letter states, ``[The] partisanship is 
exhibited in the key officers and personnel that founded and 
operate [the] organization.'' The ruling also states that the 
NPF ``was created for the partisan objective of promoting a 
particular political party'' and that ``it operated primarily 
for the benefit of the Republican Party and politicians 
affiliated with the Republican Party.'' 31

                       THE NPF UNDER JOHN BOLTON

    After Baroody resigned, he was replaced temporarily by 
Daniel Denning. Ultimately, John Bolton, a former Reagan and 
Bush Administration official, assumed the presidency of the 
NPF. NPF also changed its focus from grassroots conferences to 
``megaconferences,'' where top industry officials, lobbyists, 
and Republican members of Congress convened to discuss issues 
that were often the subject of legislation pending before the 
U.S. Congress. In his testimony before the Committee, Barbour 
characterized the conferences as ``serious events'' where ``the 
quality of the presentations was high.'' 32 The 
megaconferences, however, were clearly intended to help raise 
money for NPF, which was by now heavily in debt to the RNC. For 
example, a February 8, 1996, NPF memo regarding ``Fundraising 
Projections'' states:

          NPF will continue to recruit new donors through 
        conference sponsorships . . . In order for the 
        conferences to take place, they must pay for themselves 
        or turn a profit. Industry and association leaders will 
        be recruited to participate and sponsor those forums, 
        starting at $25,000.33

Other evidence shows how this fundraising tactic was put into 
use. In March 1995, an NPF megaconference on telecommunications 
at which Senate Majority Leader Bob Dole and other Republicans 
spoke, provoked complaints from communications companies that 
had been asked for $25,000 donations to NPF. One newspaper 
reported:

          [E]ven though the $25,000 payment is not mandatory to 
        attend, company representatives professed surprise at 
        the size of the contribution request. ``It's pretty 
        astounding,'' said one invitee. ``If this doesn't have 
        `payment for acces' (to top GOP lawmakers) written all 
        over it, I don't know what does.'' 34

Moreover, a memorandum to Bolton from two NPF employees, Grace 
Wiegers and Dianne Harrison, notes that $200,000 from US West 
was provided when NPF agreed to raise issues of concern to the 
company at a telecommunications megaconference.35
    But even the megaconferences and the personal fundraising 
efforts of Bolton, Barbour, and Brown were not enough to keep 
the Forum in sound financial health. The RNC had to transfer 
funds to the NPF continually to help the organization meet its 
expenses. Between June 1993 and September 1996 the RNC made 
over 50 transfers of funds to the National Policy Forum for a 
total of over $4 million.36 The internal RNC process 
for approving transfers of funds supports the view that the NPF 
was merely an extension of the RNC. According to the testimony 
of the RNC's Scott Reed, either Denning or Baroody called him 
to request loans from the RNC.37 Reed rarely 
questioned why the money was needed; he would simply pass the 
request on to Jay Banning, an administrator at the RNC, who 
made sure that the loan documents were prepared, the money was 
transferred, and the general counsel's office was kept 
informed.38 According to Reed, Barbour knew about 
the loans and did not object.39
    It is not completely clear why NPF was so expensive to run. 
It is possible that the staff was being used for partisan 
purposes relating to the 1994 elections and the Contract with 
America. Such nonpartisan activity might explain why in 1994, 
an election year, the staff ballooned from 20 to over 50.
    Even if some of NPF's staff were being used for election 
activities, payments to at least one consultant, Joseph 
Gaylord, seem hard to justify. Gaylord, a strategist and 
political consultant to House Speaker Newt Gingrich, was hired 
as a fundraising consultant for the NPF by Denning and has 
acknowledged that he was paid $7,500 a month. Gaylord had no 
written contract and had no idea how much money he 
raised.40 In fact, Gaylord was never given any 
indication of what he was expected to raise.41 The 
available evidence suggests that during the time he was a 
consultant to the NPF--more than a year--Gaylord raised less 
than half of what he was paid. Among the contributions he 
successfully obtained was a $25,000 check from Panda 
Industries, a business associated with Asian businessman Ted 
Sieong. (See ``Other Foreign Contributions,'' below.)

                     BARBOUR SOLICITS AMBROUS YOUNG

    In the summer of 1994, Barbour decided to pursue the 
suggestion by NPF fundraiser Fred Volcansek that Ambrous Young 
be approached for a loan or loan guarantee. Volcansek provided 
Barbour with a set of talking points for a discussion with 
approach Richard Richards, Young's U.S. representative. The 
talking points, which Volcansek developed in concert with 
Fierce and Denning, encouraged Barbour to tell Richards that 
the Republican Party had a chance of capturing the Congress, 
but only if the party obtained badly needed funds. Volcansek 
made no distinction between the NPF and the RNC in the 
memorandum.42
    Richards testified at the hearing that Barbour telephoned 
him and said:
          We have a problem. We at the National Committee have 
        loaned the forum $3 million . . . of money that we can 
        use in the campaign, but, we have got a problem. We 
        need to be able to take it out of the forum for our 
        purposes, and we can't take it out unless we replace it 
        with something because the forum has overhead and other 
        expenses. And I understand you represent a well-to-do 
        Chinese fellow in Hong Kong who has previously been a 
        beneficiary to the Republican Party. Would you be 
        willing to talk to him about loaning us $3 million for 
        that purpose? 43

    After Barbour talked with Richards, Volcansek provided 
Richards with a set of talking points for an approach to 
Ambrous Young.44 Richards called Young and asked him 
if would consider making a $3.5 million contribution to the 
National Policy Forum. The same themes that Volcansek had 
supplied to Barbour were reiterated to Young. Volcansek and 
Richards went to Hong Kong to meet with Young and to explore 
further the possibility of a donation to the National Policy 
Forum. Young agreed to consider a contribution, and said he 
would meet with Barbour in Washington. As soon as Volcansek 
returned to Washington he worked with Denning and Fierce to set 
up a meeting between Young and Barbour.
    On August 29, 1994, Barbour hosted a dinner at Sam and 
Harry's restaurant in Washington, D.C. The guests included Mr. 
and Mrs. Ambrous Young, Barbour, Fierce, Richard Richards, 
Steve Richards, Volcansek, and Denning. Barbour and Young 
testified that the dinner was largely a social occasion, but at 
some point in the evening there was some discussion of Young's 
potential involvement with the National Policy Forum. For 
instance, quoting from his interview with Young on the subject 
of the August dinner, Becker testified that using the proceeds 
of a loan to pay off the existing debt to the RNC was ``freely 
discussed at the dinner . . .'' 45 Young stated in 
his deposition that during the dinner he told Barbour that any 
loan or loan guarantee would originate from Hong Kong: ``The 
discussion was basically Mr. Haley Barbour requested me to 
consider for the loan of $3.5 million and assured me of the 
safe return of the loan. . . . I could not commit nor have the 
power to commit, but requested him to give us more information 
so that we can present it to the YBD (Hong Kong) board of 
directors for further consideration.'' 46 Barbour 
claims he does not remember any discussion of this issue but 
does remember offering Young the opportunity to contribute a 
series of articles about China policy to the Forum's 
publication, Common Sense.47
    Following the dinner, Volcansek prepared an NPF proposal 
for Ambrous Young. Once again, Volcansek tried to impress upon 
Young the need to assist the Republican Party. As Volcansek 
testified, his proposal was designed to convince Young that the 
funds provided a ``greater opportunity to enhance what the 
Republican National Committee was going to do in the 1994 
election cycle.'' 48 Volcansek also stipulated in 
the NPF proposal that:

          Chairman Barbour is committed to continuing his 
        fundraising efforts on behalf of the NPF's work and 
        fully intends for the NPF to repay the loan. However, 
        if there is any default by the NPF, he will authorize 
        the guarantee of the RNC and ask for the Republican 
        National Committee's ratification. As Chairman of the 
        RNC and the NPF, he intends to be certain that neither 
        organization defaults on its obligations.49

Volcansek clearly represented that the RNC was willing to 
indemnify the NPF and thereby indemnify Young on the loan 
guarantee. He claims he developed the specific language with 
another domestic fundraising source, whom he did not 
identify.50
    In addition to presenting Young with Volcansek's NPF 
proposal, Barbour personally contacted Young to encourage him 
to make a loan. According to Young's attorney Benton Becker, 
the men had ``numerous telephone conversations.'' 51 
At some point during the next several weeks, Young made the 
decision to assist Barbour and the NPF, although he decided 
against a direct loan--perhaps on the advice of Volcansek, 
Denning, and Fierce who, as noted earlier, had decided that a 
loan guarantee could be organized more expeditiously than a 
direct loan. On September 9, Barbour was notified of Young's 
willingness to assist when Stephen Young, Ambrous's son, hand-
delivered a letter to Barbour on the stationery of Young 
Brothers Development (Hong Kong). Young made clear that he 
``preferred to support the Republican Party under the same 
manner which we have done in the past if NPF's existing 
requirement can be obtained from other channels.'' He also 
decided to provide a guarantee of only $2.1 million and not the 
$3.5 million that had been originally requested. And he noted 
in the letter that Barbour had represented that the money was 
``urgently needed and directly related to the November 
election.'' 52 At this point Young asked Becker to 
work out the details.53

                          THE LOAN TRANSACTION

    Before committing Young to any written arrangement, Becker 
endeavored to determine how much risk his client would assume 
if he provided the NPF with a loan guarantee. Working with 
David Norcross, the general counsel to both the NPF and the 
RNC, Becker wanted to know what the NPF's balance sheet looked 
like and what assurances in the event of a loan default Haley 
Barbour was willing to offer. Daniel Denning, the chief 
operating officer of NPF, provided Becker with a list of 
fundraising pledges and commitments that reflected an 
increasingly robust and financially healthy organization--
albeit one based on contributions that had been either promised 
or were expected.54 Becker was provided records that 
reflected that current NPF pledges exceeded $2 million. He was 
told that ``all committed pledges in the past had always been 
100 percent honored.'' 55
    Even more reassuring to Becker was the letter he received 
from Barbour on August 30 telling him that in ``the event NPF 
defaults on any debt, I will ask the Republican National 
Committee to authorize me to guarantee and pay off any NPF 
debts. I am confident the RNC would grant me such authority at 
its next meeting, provided there is valid outstanding debt of 
NPF to a U.S. bank or other lending institution guaranteed by a 
U.S. citizen or domestic corporation.'' 56 Becker 
had not asked specifically for the letter, although he had 
indicated to Norcross ``that before Mr. Young's corporation 
would involve itself with this loan guarantee that we would 
like to see some sort of fall-back positions by the RNC in the 
event of a default by the NPF.'' 57 Becker discussed 
the content of Barbour's letter with Richard Richards, a former 
RNC chairman. Richards told Becker he considered Barbour's 
statements in the letter to be a firm RNC commitment to protect 
YBD (Hong Kong) against any loss in the event of an NPF default 
of its bank loan. Becker therefore considered Barbour's letter 
as a form of RNC indemnity for the NPF.58 This is, 
of course, another strong indication that the NPF was nothing 
more than a subsidiary of the RNC.
    Finally, Becker had asked Norcross to provide him with an 
independent opinion as to the legality of the 
transaction.59 At Norcross's request, Mark Braden, a 
lawyer at the Washington firm of Baker and Hostetler, provided 
that opinion. Although considered an election law expert, 
Braden was far from ``independent.'' He was a former general 
counsel to the RNC and involved with other nonprofit 
organizations connected to the RNC, as is discussed Chapter 12 
of the Minority Report. Moreover, as Becker testified, Braden 
had been ``given the relevant facts that formed the basis for 
this opinion letter'' by his RNC successor.60 
Finally, Becker received Braden's ``independent'' opinion 
letter not from Braden himself, but from Norcross.61 
Braden opined that the loan guarantee transaction was entirely 
appropriate. He wrote, ``We have been assured (and assume it to 
be true) that the partial repayment by NPF of such outstanding 
loan obligations will not be made to a political committee as 
defined by the [Federal Election Campaign] Act.'' 62
    On October 7, the structure of the loan guarantee was 
agreed upon and memorialized in a letter from Daniel Denning to 
Benton Becker and Ambrous Young.63 Six days later, 
$2.1 million was wired from YDB, Hong Kong to YBD (USA) in 
Florida. Within 24 hours the money was wired from Florida to 
Signet Bank in Washington where it was used to purchase 11 
certificates of deposit that were in turn used to collateralize 
a $2.1 million loan from the bank to the NPF. The plan was that 
as the NPF paid off the loan, CD's would be released by the 
bank. The funds from the released CD's would be wired back 
directly to YBD (Hong Kong)--where the money to buy them had 
originated.
    There are three notable aspects to the way in which the 
transaction was structured. First, steps were taken to conceal 
the origin of the funds by passing them through the Florida 
corporation. The money was only ``parked'' in the Florida 
account of Young Brothers Development, (USA) for several hours. 
YBD (USA), did not have sufficient funds of its own to purchase 
the CD's used as collateral.64 Volcansek testified 
that ``because [NPF] was a 501(c)(4) corporation, the source of 
those funds, whether they be foreign or domestic, was 
irrelevant from a legal perspective. And so, therefore, any 
discussions that we had on it, nobody focused on it because we 
didn't consider it to . . . be an issue.'' 65 
Nevertheless, Volcansek admitted that ``Yes, I remember telling 
Mr. Barbour, Mr. Fierce, and Mr. Denning that this money would 
be coming from the Hong Kong corporation through the U.S. 
corporation as a loan to the U.S. corporation, and that it 
would be put up as the collateral for the loan guarantee.'' 
66
    Second, after NPF received the money, $1.6 million was 
wired almost immediately to the RNC--leading to the inescapable 
conclusion that Barbour, the chairman of both organizations, 
all along had wanted the RNC to benefit from the loan 
guarantee. Third, after the NPF made several of the initial 
loan payments, CD's were released and, at Becker's direction, 
the funds were wired to Hong Kong--confirming that the money 
was Hong Kong corporate money.

                   funding the contract with america

    In his testimony before the Committee, Haley Barbour argued 
that the NPF could not have been a funnel to the RNC because 
``NPF failed to repay nearly $2.5 million the RNC loaned it 
over four years ago.'' 67 He called the notion of 
using the NPF to somehow circumvent the campaign finance laws 
``goofy.'' 68 His argument, of course, only makes 
sense if one accepts the premise that the two organizations 
were separate. But, as shown above, the organizations were not 
independent. The contribution of over $2 million in foreign 
money in the form of a loan guarantee to the NPF provided a 
critical infusion of funding to the RNC. Although in public 
testimony Barbour contradicted his earlier private 
representation that the money was needed in the 1994 elections, 
he did acknowledge that ``the goal of the national committee, 
of the RNC, was that we wanted to put money into the campaigns 
late.'' 69
     Although the NPF received the loan proceeds on October 13 
and immediately used $500,000 to pay off outstanding bills, the 
NPF's comptroller, Stephen Walker, asked Signet Bank not to 
disburse the remaining $1.6 million to the RNC until October 
20.70 The most likely explanation for Walker's 
request is that the RNC wanted to delay public disclosure of 
this inflow of funds to the FEC until after the November 
elections. October 19 was the last day of the FEC reporting 
period. Barbour admitted in his testimony before the Committee 
that he would have wanted a delay so that prospective GOP 
donors would continue to believe there was a need to 
donate.71 When the funds were transferred to the 
RNC, money was sent to 21 congressional races in 16 
states.72
    The November election was a stunning success for the 
Republicans. They captured the Congress for the first time in 
50 years. The money provided by Young Brothers contributed to 
that success. Barbour testified that the RNC had not needed the 
money, but this is belied by the RNC's bank records and by 
Barbour's own statements at the time. Richard Richards and 
Volcansek testified that the money would be used for the 1994 
races.73 Moreover, it is clear that on at least two 
days, had it not been for the NPF infusion of cash, the RNC 
soft money account would have been in the red.74
    Following the 1994 election, Barbour wrote to thank Young 
for his help and scribbled at the bottom of his letter, 
``You're a champ.'' 75 A few weeks later, Young came 
to the United States and spent the day in Washington being 
escorted around Capitol Hill by Barbour. According to Young, he 
met with Speaker Gingrich and Senate Majority Leader Bob Dole 
and had his photo taken with both GOP leaders.76 
After the visit, Barbour wrote to Young, ``I am delighted you 
were able to meet with both Senator Dole and Speaker Gingrich. 
They were pleased to hear your views on developments in Asia. 
Your discussion of the PRC leadership and how you see the next 
several years . . . was of great interest. . . . Your role as a 
key advisor on Asian policy is essential to both me and the 
NPF.'' 77
    Testimony diverges considerably on what happened next. 
Richards and Young remember that Barbour approached Young in 
Hong Kong in 1995 about forgiving the loan.78 
According to Young and Richards, Young refused Barbour's 
overture and demanded that the loan be repaid. Barbour claims 
that the issue of forgiveness was not broached at this point; 
that Young had considered it a possibility from the beginning--
even before the loan guarantee was in place.79 In 
his testimony before the Committee, Volcansek contradicted 
Barbour on this point: ``One fact is crystal clear. When the 
loan was first made, it was not the intention of anyone that 
the certificates of deposit posted as collateral for the Signet 
loan to National Policy Forum would be forfeited to pay the 
loan.'' 80

                         the trip to hong kong

    In the summer of 1995, Haley Barbour travelled to Hong Kong 
and raised the issue of forgiveness of the loan guarantee at a 
meeting on Young Brothers Development's corporate yacht, 
``Ambrosia.'' In essence, Barbour was proposing that NPF 
default on the loan, that Young Brothers's posted collateral be 
forfeited, and that YBD thereafter decline to pursue any civil 
action for reimbursement of loss against the NPF or RNC. 
Barbour was travelling in the Far East on his way back from a 
meeting of the International Democratic Union of which he was 
the U.S. chairman. Accompanied by Ed Rogers, his law firm 
partner, and Kirk Blalock, his assistant at the RNC, Barbour 
claims that when he asked Young to forgive the loan, Young said 
he would consider it.81 Young, however, testified 
that he told Barbour that the money was corporate money and 
that he could not act without the authority of his Hong Kong 
board of directors. Moreover, according to Young, he told 
Barbour that the Hong Kong financial authorities annually 
audited his company and that this kind of contribution to an 
American political party would raise concern.82 The 
discrepancy concerning Young's answer is important because if 
Young is correct, Barbour was on notice--yet again--that the 
money used to guarantee the loan to the NPF was Hong Kong 
corporate money. This completely contradicts Barbour's 
testimony at his deposition that he did not become aware until 
1997 that the funds used to collateralize the NPF loan came 
from Hong Kong.83 Indeed, the very fact that Barbour 
was discussing this issue on a corporate yacht in Hong Kong 
Harbor undermines the credibility of his testimony that he did 
not know the source of the posted collateral was in Hong Kong.

                           the trip to china

    Young and Barbour met again several months later when Young 
accompanied Barbour and Richard Richards on a trip to Beijing. 
According to Barbour, the trip had been planned for many months 
and had been rescheduled on more than one occasion. In his 
deposition, Barbour acknowledged that he saw it as an 
opportunity to lobby Young for forgiveness on the NPF loan 
guarantee.84 All participants testified that no 
business was transacted, although Young, Barbour, and Richards 
all have business interests in China. Young testified that he 
had not wanted to go to China, but relented only after Barbour 
made an appeal. But Richards indicated that Young had agreed to 
go because it ``put powder on his face'' to be seen in the PRC 
with the chairman of one of America's major political 
parties.85
    In China, the Barbour entourage met with the Chinese 
foreign minister in what Barbour described as a courtesy call. 
The meeting lasted approximately half an hour, and no 
substantive discussion occurred. In the evening, an official 
from the Foreign Ministry hosted a dinner for the 
delegation.86 Again, this appears to have been a 
purely social affair. The next day was devoted primarily to 
sightseeing. Any discussion of forgiving the Young loan 
guarantee was apparently brief and unproductive.87

                              the default

    During the spring of 1996 the RNC was in financial 
distress. Not only had it extended millions of dollars in loans 
to the NPF, but it had virtually subsumed the Dole presidential 
campaign by hiring staff and running ``issue'' ads on the 
candidate's behalf. The NPF, for its part, had missed a loan 
payment to Signet Bank in March. This caused serious concern on 
the part of Young's lawyer, Benton Becker. After discussions 
with RNC General Counsel Norcross and with lawyers at Signet 
Bank, a decision was made by NPF officials to postpone the 
payment--to engage in an ``allonge,'' a banking term, whereby a 
missed payment is tacked onto the end of the loan schedule. 
This seemed to be an adequate solution, but in June the NPF 
again missed a payment. This time, the NPF chose not to 
reschedule the payment, but instead stated that it would make 
no further payments. NPF did not advise Becker or Young. It 
only advised Signet Bank, which then notified Becker that NPF 
had defaulted and that the collateral would be forfeited in 60 
days.88 Becker, in turn, informed Richards and 
Young.
    Becker and Richards immediately began to try to find a 
solution. Richards tried to call John Bolton, the NPF 
president, no fewer than ten times. Bolton refused to accept 
his calls and never called him back.89 Becker wrote 
to Norcross and suggested that perhaps the issue of the RNC's 
reimbursement of YBD and its promise to ``guarantee and pay off 
any YBD debts'' could be raised by the RNC budget committee at 
the Republican National Convention in August.90 
Norcross agreed to have it placed on the agenda, but when the 
budget committee convened and the issue was raised, Bolton 
tabled it.91 According to Richards, himself a past 
RNC chairman, the chairman chooses the membership of the budget 
committee and controls the agenda. Had Barbour been willing to 
have the issue of repayment to the NPF raised, Richards 
believes it would have been done. Absent Barbour's approval, 
the motion was tabled.92
    By September, Richards felt completely frustrated in his 
attempts to settle the issue amicably. On the 17th he wrote 
Barbour what he now describes as an ``angry'' letter in which 
he recited the chronology of the loan guarantee, clearly 
stating once again that the money used for the loan guarantee 
was known from the outset to be Hong Kong corporate 
money.93 This was at least the fifth time Barbour 
had been made aware that the funds supplied for the NPF loan 
guarantee were of foreign origin. The letter reiterates that 
the money had been slated to help the Republicans win the 
Congress in 1994.94 In his deposition before the 
Committee, Richards maintained that the entire letter was 
accurate except for one part which he claimed was skewed by his 
anger--a reference to ``business opportunities'' in exchange 
for forgiveness.95
    Barbour testified that he regarded the Richards letter as 
so replete with inaccuracies and misstatements that he did not 
take it seriously. Barbour said he believed the letter was 
nothing more than ``a negotiating tool to put pressure on me . 
. . It's also why I didn't give it credibility.'' 96 
He disputes any charge that he should have been placed ``on 
notice'' as to the origin of the money by the letter. In fact, 
the evidence is overwhelming that Barbour knew from the outset 
that the money used to collateralize the loan came from Hong 
Kong. Barbour's denials to the contrary are not credible.
    In early November 1996, the NPF, fearing a lawsuit was 
imminent, agreed to settle with YBD (Hong Kong) for the $1.5 
million loss YBD had sustained.97 The funds were 
wired from the Republican National Committee to the NPF which, 
in turn, wired the money to Young Brothers Development (Hong 
Kong).98 For the NPF, the fiction of Young 
Brothers's U.S. subsidiary seemed no longer necessary. Ambrous 
Young had forfeited--involuntarily--nearly $800,000. He thought 
he had a promise from Haley Barbour, but it was never honored. 
In fact, Young said he never heard from Barbour 
again.99

                      other foreign contributions

    The NPF loan guarantee was not the only contribution from a 
foreign source received by NPF. At least one, and perhaps two 
additional large contributions came from foreign sources. As 
was the case with the NPF loan, the foreign contributions would 
have been legal if NPF were a legitimate nonprofit organization 
rather than an arm of the RNC. Because NPF was a unit of the 
RNC, the law's prohibition against foreign money being used for 
election activity is applicable.
    During John Bolton's tenure as president, the NPF received 
a $25,000 contribution from a foreign organization known as the 
Pacific Cultural Foundation.100 When asked during a 
March 16, 1997 television interview to ``tell the American 
people who gave hundreds of thousands of dollars to the 
National Policy Forum and did any of that money come from 
overseas,'' Barbour responded, ``None of the money came from 
overseas . . . period.'' 101 However, Barbour might 
have recalled that both he and Bolton communicated with the 
Taipei Economic and Cultural Representative Office with regard 
to the contribution.102 Barbour even personally 
thanked ``Ambassador [Jason] He,'' noting that the ``generous 
contribution'' would enable NPF ``to continue to develop and 
advocate good international policy.'' 103 Testifying 
before the Committee, Barbour admitted that he was aware that 
Ambassador He was the U.S. representative of the Taiwanese 
Government and that the Taipei Economic and Cultural 
Representative Office functions as the de facto embassy for the 
Government of Taiwan. Despite being the only contribution the 
Committee has discovered that is directly tied to a foreign 
government, the National Policy Forum never returned the 
contribution.104
    Another contribution that may be of foreign origin is a 
$50,000 contribution to NPF from Panda Industries, 
Inc.,105 a corporation associated with Ted Sioeng, a 
nonresident alien.106 Companies and individuals 
associated with Sioeng have contributed to both Democratic and 
Republican candidates and to the Democratic National 
Committee.107 Sioeng is reputed to have ties to 
Chinese officials and possible involvement in the China Plan 
discussed in Chapter 2 of the Minority Report.108 
The NPF contribution was made on July 18, 1995, and has been 
reported by the press to have been returned by 
NPF.109 More information about this contribution is 
provided in Chapter 7.

                               conclusion

    As chairman of the Republican National Committee, Haley 
Barbour established and controlled a tax-exempt organization 
which he may have used in violation of the federal tax laws and 
election laws. Although the National Policy Forum claimed to be 
a nonpartisan, ``social welfare'' organization, Barbour used it 
initially to assist the Republican Party in policy-formation, 
by organizing fora where the party could receive grassroots 
input. The fora also helped to energize Republican activists. 
Barbour next used the National Policy Forum as a way to bring 
together powerful lobbyists and Republican policy-makers on 
Capitol Hill to raise money for both the Forum and for the 
Republican Party at large. Lastly, he used the National Policy 
Forum as a means to funnel money to the Republican National 
Committee in order to promote the Contract with America in 1994 
and finance Republican campaigns in 1996. It is this last 
``use'' on which the Committee focused its investigation.
    Barbour has always maintained, correctly, that tax-exempt 
organizations can legally accept foreign contributions. 
Political parties, however, cannot accept such contributions. 
The critical question, then, is whether or not Barbour knew 
that the money he solicited from Young Brothers was foreign 
corporate money and whether he intended that those funds be 
used by the RNC for election purposes. Barbour claims that he 
had no knowledge of the origin of the Young Brothers 
collateralized funds, that the party did not need the money, 
and that he never solicited the contribution with the idea that 
it would be used to help the Republican Party in any campaign. 
Barbour's version, however, is riddled with inconsistencies and 
contradicted by virtually every other witness with knowledge of 
the loan transaction.110
    Barbour claims that he first learned in 1997 that the money 
used for the YBD loan guarantee was of Hong Kong origin. 
Barbour's testimony is contradicted by testimony and 
documentary evidence from Ambrous Young, Stephen Young, Fred 
Volcansek, Richard Richards, and Benton Becker, all of whom 
maintain that Barbour and/or his close advisers were aware that 
the YBD money used to collateralize the loan originated in Hong 
Kong. Ambrous Young testified that he told Barbour on two 
occasions that the money was from Hong Kong: at the August 1994 
dinner in Washington, D.C., and in 1995 on the yacht in Hong 
Kong. Stephen Young hand-delivered a letter from his father to 
Barbour in September 1994 on YBD, (Hong Kong) stationery in 
which Young repeated Barbour's statement that the money was 
``urgently needed and directly related to the November 
election.'' Volcansek testified he informed Barbour of the 
origin of the money at a meeting at RNC headquarters in the 
summer of 1994. Richard Richards' September 17, 1996, letter, 
which Barbour acknowledges receiving, clearly states that the 
money came from Hong Kong. Volcansek and Becker also testified 
that key RNC officials who were close to Barbour were also 
aware of the source of the YBD loan guarantee: Volcansek told 
Fierce, an RNC strategist, even before the approach was made to 
Young, and Becker believes that David Norcross, the RNC general 
counsel, was also aware. In the face of all of this evidence, 
Barbour's denials are not credible. He had to know that the 
money guaranteeing the NPF loan originated in Hong Kong. 
Moreover, as noted above, evidence before the Committee shows 
that Barbour knew the loan proceeds would be transferred to the 
RNC, which would then use the funds for electoral purposes.
    Barbour also is not credible on the question of forgiving 
the loan. Barbour testified that Ambrous Young was inclined to 
forgive the loan and that Young had told him this even before 
the loan guarantee was in place. Young flatly contradicts 
Barbour on this point, noting that he told Barbour on the yacht 
in Hong Kong that he could not forgive the loan unless he had 
the approval of the YBD (Hong Kong) board, because the company 
was subject to Hong Kong Government audits. Richard Richards 
was aware of the meeting on the yacht and he testified that 
Barbour ``raised the issue of forgiveness for the first time,'' 
and not, as Barbour testified, before the loan guarantee was 
even in place. Documents provided to the Committee by Young and 
Becker clearly demonstrate that Young and counsel were angry 
and disappointed upon learning of NPF's default of its bank 
loan. Barbour also testified in his deposition that Volcansek 
had been a party to conversations concerning forgiveness even 
before the loan guarantee was signed,111 but 
Volcansek flatly denied than any such conversations took 
place.112 The decision to default on the loan, 
according to Barbour, was made by himself and NPF's president, 
John Bolton.113 But Bolton stated under oath that he 
was ``instructed, not consulted'' about Barbour's decision to 
default.114
    During the hearings on the NPF, Chairman Thompson expressed 
on several occasions his concern over Barbour's role in 
securing the YBD loan guarantee. At one point, Senator Thompson 
remarked to Barbour: ``It would seem to me that you would 
think, in retrospect, anyway, that all of this, plus the fact 
that you were heading both organizations, plus the fact that it 
was your platform, and the fact that you provided the seed 
money, would make any appearance of any foreign involvement 
that much more radioactive . . .'' 115 The Chairman 
continued, ``[W]hen you are sitting on a boat in Hong Kong 
harbor talking to a gentleman who is a resident of--a citizen 
of Taiwan, I mean that does raise certain other potential 
implications in terms of appearances.'' 116 Thompson 
concluded, ``[I]t looks to me like you had a situation where 
this gentleman, whether he is a citizen or not, caused his 
company to put up some money that was lost at a time when he 
was thinking, anyway, that the RNC had a moral obligation to 
step in there and do what it could. . . . And he is holding the 
bag to the extent of $800,000. So legalities aside, you know a 
deal is a deal, and don't you think maybe you and I both ought 
to urge that that thing be looked at again?'' 117 
The Minority believes that the RNC has both a moral and a legal 
obligation to return the $800,000 foreign contribution.

                               footnotes

    1 When a loan is guaranteed, the bank can invoke the 
guarantee if the borrower defaults. If a third party has posted 
collateral, the bank can seize all or part of the collateral. Whichever 
approach is used, the guarantor or collateral-provider loses money if 
the borrower defaults.
    2 Senator Glenn, 7/8/97 Hrg., p. 22.
    3 Chairman Thompson said that he ``was proud of [the] 
fact'' that the Committee had issued a subpoena on April 9, although he 
never explained why he refused to enforce the order he issued after NPF 
failed to comply with the subpoena. Senator Thompson, 7/23/97 Hrg., p. 
34. He also said that ``if information comes to my attention that they 
or anybody else violates the order, we will take appropriate action. . 
. .'' Senator Thompson, 7/23/97 Hrg., p. 38. He never did.
    4 See appendix A: Chart showing instances where Haley 
Barbour's testimony is contradicted.
    5 Barbour testified that he was aware that there was 
some question as to the citizenship of Ambrous Young at the time the 
loan was being negotiated. Haley Barbour, 7/24/97 Hrg., p. 231. Senator 
Torricelli raised the possibility that Young's dealings with NPF were 
to curry favor with the Republican leadership in Congress who, at the 
time, were considering tax treatment of expatriates. Senator 
Torricelli, 7/23/97 Hrg., pp. 152-53. Becker declined to provide any 
information on the matter of Mr. Young's renouncement of his US 
citizenship, citing attorney-client privilege. Benton Becker, 7/23/97 
Hrg., p. 137.
    6 Benton Becker, 7/23/97 Hrg., pp. 40-42.
    7 Benton Becker, 7/23/97 Hrg., p. 41.
    8 Benton Becker, 7/23/97 Hrg., p. 41.
    9 Scott Reed deposition, 7/11/97, p. 22; Haley Barbour, 
7/24/97 Hrg., pp. 161-6.
    10 Exhibit 263: NPF Press Release, 6/21/93.
    11 Exhibit 273: Memorandum from Michael Baroody to Haley 
Barbour regarding Baroody's reasons for resignation from NPF, 6/28/94.
    12 Haley Barbour, 7/24/97 Hrg., pp. 111, 113.
    13 Exhibit 258: Memorandum from Scott Reed to Haley 
Barbour, Michael Baroody and Ken Hill regarding NPF action, 6/2/93. 
Scott Reed did not testify before the Committee, although he did submit 
a statement. In that statement, he explained his reference to the June 
2 memorandum: ``At that time, American subsidiaries of foreign 
companies had shown an interest in contributing to the NPF. I believed 
at that time and believe today that the NPF legally could accept such 
contributions. What I did not know was Chairman Barbour's position on 
accepting these donations. I thought that he needed to make a policy 
decision and give the NPF some staff direction. That is why I 
highlighted this issue, among others, in my memorandum.'' Scott Reed 
statement, 7/22/97. Barbour apparently did give the staff direction on 
the issue: Proceed to solicit foreign money.
    14 Exhibit 273: Memorandum from Michael Baroody to Haley 
Barbour regarding Baroody's reasons for resignation from NPF, 6/28/94.
    15 Michael Baroody, 7/23/97 Hrg., p. 192.
    16 Michael Baroody, 7/23/97 Hrg., p. 192. Baroody also 
testified that he discussed the concept of foreign fundraising with 
Bill Brock, a former RNC chairman, U.S. senator, and NPF board member. 
According to Baroody, Brock also thought it would be inappropriate to 
raise money abroad. Michael Baroody, 7/23/97 Hrg., p. 204. Brock was 
not interviewed by the Committee.
    17 Michael Baroody, 7/23/97 Hrg., p. 208.
    18 Fred Volcansek, 7/24/97 Hrg., pp. 56, 37-39. 
Volcansek believes he was asked to help because of his extensive 
international connections. Volcansek, 7/24/97 Hrg., p.58. Volcansek 
testified, however, that during 1995 he succeeded in raising several 
hundred thousand dollars from domestic sources. He made no reference to 
even attempting to raise money from foreign sources after recommending 
Ambrous Young. Fred Volcansek, 7/24/97 Hrg., p.15.
    19 When asked why, as president of the NPF, he was not 
kept informed of Denning's activities, Baroody replied, ``I cannot 
answer that.'' Michael Baroody, 7/23/97 Hrg., p. 211.
    20 Fred Volcansek, 7/24/97 Hrg., p. 28.
    21 Fred Volcansek, 7/24/97 Hrg., p. 31.
    22 Michael Baroody, 7/23/97 Hrg., p. 248.
    23 According to Volcansek, Steve Richards had told him 
that Ambrous Young might be interested in supporting the National 
Policy Forum because he was looking around for a think tank to which he 
could donate. Fred Volcansek, 7/24/97 Hrg., p.33. However, Steve 
Richards flatly denies that Ambrous Young ever said anything about 
looking for a think tank or that Richards ever made such a statement to 
Volcansek. Steve Richards deposition, 7/22/97, p. 17.
    24 Exhibit 273: Memorandum from Michael Baroody to Haley 
Barbour regarding Baroody's reasons for resignation from NPF, 6/28/94.
    25 Exhibit 273: Memorandum from Michael Baroody to Haley 
Barbour regarding Baroody's reasons for resignation from NPF, 6/28/94.
    26 See Michael Baroody, 7/23/97 Hrg., pp. 193, 212-21.
    27 Haley Barbour, 7/24/97 Hrg., p.116.
    28 Memorandum from Jo-Anne Coe to Dole contributor 
Philip Anschutz, 5/29/95, DFP 004294.
    29 Exhibit 259: Memorandum from Haley Barbour, John A. 
Moran, and Max M. Fisher to Team 100 Members regarding Team 100 
Structure and Activities, 6/10/93. In his testimony before the 
Committee, Barbour disavowed the memorandum and claimed that ``it was 
written by a staff member who happened to be my nephew. . . . But he 
screwed up.'' Haley Barbour, 7/24/97 Hrg., p. 160, 161. Barbour then 
explained, ``When I started and ran for chairman and said I thought 
there should be a policy institute, I was thinking it should be part of 
the RNC. As we went along, it became clear to me, before the National 
Policy Forum was founded, that that wasn't the right way to do it.'' 
Haley Barbour, 7/24/97 Hrg., p.161. During Baroody's testimony, 
Chairman Thompson observed, ``In a 501(c)(4), you are allowed some 
political activity. It is not supposed to be partisan political 
activity, but you are allowed some. But you are not supposed to be a 
subsidiary of a party.'' Chairman Thompson, 7/23/97 Hrg., p. 25.
    30 Exhibit 327: Memorandum from Kevin Kellum to Haley 
Barbour regarding Stephen Wynn, CEO of Mirage Resorts, 2/23/96, 
R013574. Barbour was at a complete loss to provide any credible 
explanation as to why Kellum would be writing him such a memorandum. He 
testified, ``It's--it looks to me like he is--and, again, I have no 
recollection of this . . . but it looks to me like he's recommending 
three scenarios.'' Barbour continued, ``Well, I-- you know, I'm seeing 
this for the first time, don't know if I've ever seen it before 
today.'' When Minority Chief Counsel Alan Baron reminded Barbour that 
the memorandum was addressed to him, Barbour responded, ``And I don't--
I understand that . . .'' Haley Barbour, 7/24/97 Hrg., p. 157.
    31 Exhibit 353: Letter from the Internal Revenue Service 
to the National Policy Forum denying NPF tax exempt status, 2/21/97. 
The Committee obtained yet another document, Signet Bank's Commercial 
Credit memorandum, in which the Bank's credit analyst, responsible for 
assessing the creditworthiness of the NPF, concluded essentially that 
NPF was financially sound because it was an offshoot of the RNC. 
Exhibit 297: Signet Bank Commercial Credit Memorandum, 10/12/94.
    32 Exhibit 353: Letter from the Internal Revenue Service 
to the National Policy Forum denying NPF tax exempt status, 2/21/97; 
Haley Barbour, 7/24/97 Hrg., p. 15.
    33 SIG 00197.  This memorandum had been 
provided to Signet Bank by NPF.
    34 Daily Variety, 3/7/95; See also, Daily Variety, 3/9/
95; The Village Voice, 8/6/96.
    35 Exhibit 309:  Memorandum from Grace 
Weigers and Dianne Harrison regarding megaconference sponsorships, 5/
24/95. This memorandum should have been produced to the Committee, but 
it was not. Instead the Committee obtained it from another source.
    36 See Appendix B.
    37 Scott Reed deposition, 7/11/97, pp. 58, 59.
    \38\ Scott Reed deposition, 7/11/97, pp. 64, 66.
    \39\ Scott Reed deposition, 7/11/97, p. 62.
    \40\ Joseph Gaylord deposition, 9/16/97, pp. 16-18.
    \41\ John Bolton deposition, 7/15/97, p. 5.
    \42\ Exhibit 277: Talking points for Haley Barbour, 7/28/94.
    \43\ Richard Richards, 7/25/97 Hrg., p. 69.
    \44\ Exhibit 278: National Policy Forum proposal for Ambrous Young, 
8/15/94, 00280029.
    \45\ Benton Becker, 7/23/97 Hrg., p. 107.
    \46\ Ambrous Young deposition, 6/24/97, p. 35.   Becker 
also testified that ``Mr. Richards has advised me and informed me that 
he, too, had conversations with people at the RNC on that matter 
[source of funds'']. Benton Becker, 7/23/97 Hrg., p. 164.
    \47\ Haley Barbour, 7/24/97 Hrg., p. 194. Young eventually did 
contribute to the publication. Becker testified that ``the publication 
of the articles was not of great concern to Young.'' Benton Becker, 7/
23/97 Hrg., pp. 44, 45.
    In response to Young's claim that he told Barbour that the funds 
would originate from Hong Kong, Barbour testified, ``[A]ll I can tell 
you is if he ever mentioned anything about a Hong Kong board or about 
Hong Kong authorities, either I didn't understand what he was talking 
about or I just didn't hear him.'' Haley Barbour, 7/24/97 Hrg., p. 143.
    \48\ Fred Volcansek, 7/24/97 Hrg., p. 38.
    \49\ Fred Volcansek, 7/24/97 Hrg., pp. 38, 39.
    \50\ Fred Volcansek, 7/24/97 Hrg., p. 39. According to Becker, 
shortly before the August 29, dinner, Young asked for his opinion about 
providing a loan guarantee to the National Policy Forum. Becker 
consulted with Richard Richards and ``we were all of the opinion that 
the RNC should serve as a form of safety net or guarantor to Mr. 
Young's company. . .'' Benton Becker, 7/23/97 Hrg., p. 45.
    \51\ Benton Becker, 7/23/97 Hrg., p. 44.
    \52\ Exhibit 289: Letter from Ambrous Young to Haley Barbour 
regarding support of the Republican Party and NPF, 9/9/94, 0040.
    \53\ When Senator Lieberman asked why Young, no longer an American 
citizen, would agree to help the Republican Party, Benton Becker 
testified, ``Mr. Young had spent many years in Republican functions and 
activities, was very active in Republicans Abroad and then was active, 
I believe, in the Reagan years and still had an affection for the 
Republican Party. . . . I think Mr. Young also saw that--some 
possibility that at some point in time his sons, who were American 
citizens, would come into and control and run his business and that 
kind of involvement with high government officials in Washington--at 
least the ability to sit and have dinner with them, or lunch, would not 
be harmful. He uses an expression, Senator, that I had never heard 
before, and his expression is, ``It put powder on my face.'' It is an 
expression that he tells me is of Oriental extraction, and what he 
meant by that is that it made him feel better and perhaps allowed him 
to walk among people that he would not normally be able to.'' Benton 
Becker, 7/23/97 Hrg., p. 121.
    \54\ Becker testified: ``Based on what I saw, although 
approximately $2 million in debt to the RNC at the time, the National 
Policy Forum appeared to be taking in significant contributions, mostly 
from well-respected Fortune 500 companies.'' Benton Becker, 7/23/97 
Hrg., p.46.
    \55\ Benton Becker deposition, 6/3/97, p. 44.
    \56\ Exhibit 285: Letter from Haley Barbour to Benton Becker 
regarding loan guarantee for the National Policy Forum, 8/30/94, 0037.
    \57\ Benton Becker, 7/23/97 Hrg., p. 67.
    \58\ Benton Becker, 7/23/97 Hrg., pp. 46-47.
    \59\ Benton Becker, 7/23/97 Hrg., p. 70.
    \60\ Benton Becker, 7/23/97 Hrg., p. 95.
    \61\ Benton Becker, 7/23/97 Hrg., p. 146.
    \62\ Exhibit 292: Letter from Mark Braden to Benton Becker 
regarding the loan guarantee, 10/6/94, 0065. Senator Specter pointed 
out, ``Mr. Braden is very explicit in his understanding that it will 
not be paid to a political committee, and that, in fact, is what is 
done. . .'' Senator Specter, 7/23/97 Hrg., p. 144. The money was 
provided to the Republican National State Election Committee 
(``RNSEC''), the RNC's ``soft money'' account. Contributions to this 
account are not to be used for federal election activity, although it 
is common knowledge and practice for both parties to ignore the law's 
prohibitions on the use of soft money and to spend it on federal 
election activity.
    \63\ Exhibit 293: Letter from Daniel Denning to Ambrous Young and 
Benton Becker, 10/7/94. It is noteworthy that the bank extended credit 
to the National Policy Forum because of the Forum's relationship to the 
RNC. Signet Bank's commercial credit memorandum states, ``While NPF is 
a new customer to the bank, Signet has a longstanding relationship with 
the RNC with whom NPF shares a top-level management.'' The memorandum 
recommends ``approval of credit facility as outlined above. This rating 
recommendation is based on the excellent collateral quality, the proven 
ability of Haley Barbour to generate political contributions, and the 
close relationship between the borrower and the Republican National 
Committee.'' Exhibit 297: Commercial Credit Memorandum, 10/12/94.
    \64\ Benton Becker, 7/23/97 Hrg., p. 123. According to Becker, the 
decision to use a collateralized loan guarantee was the bank's, because 
it ``recognized that the financial statement of YBD (USA), absent the 
$2.1 million that it acquired from its parent, would not support 
collateralization.'' Becker, 7/23/97 Hrg., p. 123.
    \65\ Fred Volcansek, 7/24/97 Hrg., p. 42.
    \66\ Fred Volcansek, 7/24/97 Hrg., p. 44. Volcansek claims that the 
only reason the money passed through Young Brothers, Florida, was 
because ``[the bank] felt better about dealing with a U.S. 
corporation.'' Fred Volcansek, 7/24/97 Hrg., p. 69. However, there is 
nothing in the documents supplied by the bank to support this view.
    \67\ Haley Barbour, 7/24/97 Hrg., p. 120.
    \68\ Haley Barbour, 7/24/97 Hrg., p. 120.
    \69\ Haley Barbour, 7/24/97 Hrg., p. 221.
    \70\ Exhibit 299: Letter from Steven S. Walker to Kevin Killoren, 
Signet Bank, 10/13/94, NPF 000315.
    \71\ Haley Barbour, 7/24/97 Hrg., p. 190.
    \72\ FEC Records. See Appendix C: Soft Money Transfers Out After 
Young Brothers Loan.
    \73\ See e.g., Richard Richards, 7/25/97 Hrg., p. 107; Fred 
Volcansek, 7/24/97 Hrg., pp. 27-28.
    \74\ FEC Records, post general records for RNSEC account 10/20/94--
11/28/94. See Appendix D: RNC's Soft Money Account Was Negative Without 
Foreign Linked Funds.
    \75\ Exhibit 302: Letter from Haley Barbour to Ambrous Young, 11/
29/94. 
    \76\ Ambrous Young deposition, 6/24/97, pp. 50-51, 71.
    \77\ Exhibit 304:  Letter from Haley Barbour to Ambrous 
Young, 1/31/95.
    \78\ Ambrous Young noted: ``On one of his trips to the Far East 
[Barbour] stopped over in Hong Kong and I invited him to join me for a 
drink, and he asked me to consider whether I can forgive the loan. [The 
conversation took place] on our yacht belonging to the company.'' 
Ambrous Young deposition, 6/24/97, p. 55. Similarly, when Richard 
Richards was asked by counsel, ``Do you recall that Mr. Barbour met 
with Mr. Young on Mr. Young's yacht?'' Richards responded: ``I 
understand they did, when Haley went over the first time and asked him 
to forgive the loan. I wasn't there. But I know I heard Haley talk 
about the yacht.'' Richard Richards deposition, 6/10/97, p. 80. 
Richards also testified at the hearing: ``I received a telephone call 
from Mr. Fred Volcansek--I don't recall the date--and he told me that 
Chairman Barbour was going to Hong Kong, he was going to visit with Mr. 
Young, and at that time he was going to ask Mr. Young to forgive the 
loan. . . . I called Mr. Young to give him a heads-up that this may 
occur, and he called me after he met with Chairman Barbour and told me 
that Chairman Barbour had indeed asked him to forgive the loan.'' 
Richard Richards, 7/25/97 Hrg., p. 75.
    \79\ Haley Barbour, 7/24/97 Hrg., pp. 147-48.
    \80\ Fred Volcansek, 7/24/97 Hrg., p. 17.
    \81\ According to Barbour, ``he was saying that they would make a 
contribution to pay off the loan. That's what I was thinking he was 
trying to tell me.'' Haley Barbour, 7/24/97 Hrg., p. 145. At his 
deposition, Young testified to the opposite, i.e., that Haley Barbour 
suggested YBD make a $2 million contribution to the RNC, which money 
the RNC would use to pay off the NPF loan. Young categorically refused. 
Ambrous Young deposition, 6/24/97, p. 59.
    \82\ ``I said no in the manner of an apology. I explained to him 
that we have difficulties to do that because the YBD (USA) money, which 
was guaranteed under the form of certificate, deposit certificate for 
the Forum loan, was a loan from YBD (Hong Kong), and YBD (Hong Kong), 
we are facing government audit every year. Without justification, the 
directors of the board, who approve such loan, could face government 
punishment. So, therefore, I explained this cannot be done.'' Ambrous 
Young deposition, 6/24/97, p. 57.
    \83\ Haley Barbour deposition, 7/19/97, p. 129. At the very least, 
it strains credulity that Barbour was on a yacht in the middle of Hong 
Kong harbor with a man whose citizenship he claims not to have known 
and to have never felt compelled to inquire whether the money 
contributed to the NPF was of foreign origin.  As Senator 
Thompson put it, ``But when you are sitting on a boat in the Hong Kong 
harbor talking to a gentleman who is an evident of--a citizen of 
Taiwan, I mean that does raise certain other potential implications in 
terms of appearances.'' Chairman Thompson, 7/24/97 Hrg., p. 169.
    \84\ Haley Barbour deposition, 7/19/97, p. 105.
    \85\ Richard Richards, 7/25/97 Hrg., p. 102.
    \86\ Haley Barbour deposition, 7/24/97, p. 104.
    \87\ Haley Barbour deposition, 7/24/97, p. 105.
    \88\ Exhibit 333: Letter from John S. Bredin to Benton Becker 
regarding the promissory note and credit and security agreement, 6/4/
96, 0159.
    \89\ Richard Richards deposition, 6/10/97, p. 50.
    \90\ Exhibit 340: Letter from Benton Becker to David Norcross 
regarding National Policy Forum's outstanding loan from the Signet 
Bank, 7/15/96, 0177.
    \91\ Richard Richards, 6/10/97 deposition, pp. 46-47.
    \92\ Richard Richards, 6/10/97 deposition, p. 48.
    \93\ Richard Richards, 6/10/97 deposition, p. 53.
    \94\ Exhibit 349: Letter from Richard Richards to Haley Barbour 
regarding the YBD loan to NPF, 9/17/96, RB 014591.
    \95\ Richard Richards deposition, 6/10/97, p. 70.
    \96\ Haley Barbour, 7/24/97 Hrg., p. 146.
    \97\ Signet Bank sent an interest payment of about $50,000 to YBD 
(HK) and copied the NPF on the transfer. NPF, in turn, deducted that 
amount from the $800,000 settlement it had agreed to pay YBD. Benton 
Becker, 7/23/97 Hrg., p. 183.
    \98\ See Exhibit 351: Letter from Benton Becker to the National 
Policy Forum regarding the dispute between the National Policy Forum 
and Young Brothers Development (USA), Inc., 11/11/96, 0201.
    \99\ Ambrous Young deposition, 6/24/97, p. 62.
    \100\ Haley Barbour acknowledged the contribution was foreign in a 
7/3/97 memo to NPF board members. Exhibit 372: Memorandum to the 
National Policy Forum Board Members from Haley Barbour, 7/3/97, NPF 
003388.
    \101\ Exhibit 374: Partial transcript of ``Meet the Press,'' 7/13/
97, replaying videotape of 3/16/97 interview with Haley Barbour. Months 
after the first interview, Barbour called interviewer Tim Russert to 
apologize for misleading Russert about the source of NPF's 
contributions.
    \102\ Exhibits 381 and 382: Memos from John Bolton to Michael Hsu, 
Special Assistant, Taipei Economic and Cultural Representative Office 
in the United States, 8/7/96, NPF 003204 and NPF 003200.
    \103\ Exhibit 383: Letter from Barbour to Ambassador He, 8/22/96, 
NPF 003203.
    \104\ Haley Barbour, 7/24/97 Hrg., pp. 134-35.
    \105\ Letter dated 6/18/97 from Thomas P. McLish, counsel, Akin, 
Gump, Strauss, Hauer & Feld, to Majority Counsel, Senate Governmental 
Affairs Committee special investigation, attachment entitled, 
``Tentative List of Political Contributions.''
    \106\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \107\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \108\ See Chapter 2 on the China Plan and Chapter 7 on Ted Sioeng; 
see also Los Angeles Times, 7/20/97.
    \109\ See Chapter 2 on the China Plan and Chapter 7 on Ted Sioeng; 
see also Los Angeles Times, 7/20/97; Newsday, 9/14/97.
    \110\ See Appendix A: Comparison of Barbour's Testimony with 
Documentary and Testimonial Evidence of Others.
    \111\ Haley Barbour deposition, 7/19/97, pp. 96-99.
    \112\ Fred Volcansek deposition, 7/21/97, p. 95.
    \113\ Haley Barbour deposition, pp. 111, 139-140.
    \114\ John Bolton deposition, 7/15/97, pp. 66-67.
    \115\ Chairman Thompson, 7/24/97 Hrg., p. 167.
    \116\ Chairman Thompson, 7/24/97 Hrg., p. 169.
    \117\ Chairman Thompson, 7/24/97 Hrg., p. 170.





PART 1  FOREIGN INFLUENCE

Chapter 4: John Huang

    John Huang, a former Lippo Group executive, Commerce 
Department official, and DNC fundraiser, personifies a 
significant aspect of the fundraising problems endemic to the 
1996 elections. Apparently driven by a desire to be perceived 
as an important fundraiser in Democratic Party circles, Huang 
engaged in a number of activities that were improper and 
possibly illegal during and prior to his tenure at the DNC. In 
the end, the DNC returned over $1.6 million in contributions 
attributable to Huang. The evidence before the Committee 
supports the claim that Huang engaged in improper fundraising 
activities. The evidence before the Committee does not support 
other allegations lodged against Huang, including the serious 
charge that he served as a spy for the People's Republic of 
China or any other foreign government.

                                FINDINGS

    Based on the evidence before the Committee, we make the 
following findings regarding Huang's activities:
    (1) John Huang engaged in a number of improper and possibly 
illegal activities during and prior to his service as a DNC 
fundraiser. These activities ranged from failing to ensure the 
legality or propriety of the contributions he solicited, to 
obtaining foreign reimbursement for a 1992 corporate 
contribution he directed, to possibly soliciting foreign 
contributions. In addition, he appears to have improperly 
solicited several contributions during his tenure at the 
Commerce Department, in possible violation of the Hatch Act.
    (2) There is no evidence before the Committee that DNC 
officials were knowingly involved in Huang's misdeeds, but the 
DNC did not adequately supervise Huang's fundraising, did not 
adequately review the contributions that Huang solicited, and 
did not respond appropriately to warning signs of his improper 
activities. The DNC could have avoided some of Huang's misdeeds 
had it more closely supervised Huang's activities and had it 
not unwisely abandoned its previously-existing system for 
checking the propriety of large contributions.
    (3) Huang contributed and raised substantial sums of money 
to benefit the DNC in order to gain access for himself and his 
associates to the White House and senior Administration 
officials.
    (4) The evidence before the Committee does not establish 
that Huang served as a spy or a conduit for contributions from 
any foreign government, including the People's Republic of 
China. The Committee's investigationyielded no direct support 
for the allegation that Huang acted as either a spy or a conduit for 
any foreign government.
    (5) The evidence before the Committee does not establish 
that Huang either misused his security clearance or improperly 
disseminated classified information during his service at the 
Commerce Department.
    (6) The evidence before the Committee does not allow for 
any definitive conclusion regarding the nature of Huang's 
interactions with the Lippo Group during his tenure at the 
Commerce Department and the DNC. Huang's frequent contacts with 
Lippo-related entities and his intermittent use of an office 
across the street from the Commerce Department to receive faxes 
or mail cast suspicion on Huang's activities while working for 
the Commerce Department. Nevertheless, the absence of specific 
evidence on the nature of his contacts with Lippo or the 
contents of the materials he received makes it difficult to 
draw any conclusions regarding actual misconduct or a conflict 
of interest within the meaning of the ethics laws governing 
federal employees.
    (7) Neither Huang's hiring at the Commerce Department nor 
his receipt of a security clearance was inappropriate. At the 
time of Huang's hiring, all Commerce Department political 
appointees received interim clearances as a matter of course, a 
practice the Department subsequently discontinued.

                          huang's early career

    John Huang was born in Fujian province, China,1 
and raised in Taiwan.2 In 1969, he came to the 
United States to study in the graduate business administration 
program of the University of Connecticut.\3\ He became a 
naturalized U.S. citizen in 1976.4
---------------------------------------------------------------------------
    Footnotes at end of chapter
---------------------------------------------------------------------------
    During the 1970s, Huang began a career as a banker in the 
Washington area.5 In late 1979, he moved to Kentucky 
and worked for First National Bank of Louisville.6 
Two years later, he joined Union Planters National Bank in 
Memphis.7 In 1983, Huang was transferred to Hong 
Kong to head Union Planters's Far East representative 
office.8 While in that post, he met Indonesian 
businessman James Riady, who was a legal permanent resident in 
the U.S. for many years and whose family owns the Lippo Group, 
an international conglomerate.
    Huang first went to work for the Riadys in February 1985, 
when he became a vice president and director of international 
banking for the Hong Kong Chinese Bank,9 in which 
the Riadys' Lippo Group held a large stake. Simultaneously, he 
served as a vice president and Far East manager of the Little 
Rock-based Worthen Bank, which was also partly owned by the 
Riady family in partnership with Stephens Inc., a major 
investment banking firm based in Little Rock, Arkansas. Huang 
reported to James Riady who was then residing in Arkansas. 
During Riady's tenure in Arkansas, Riady met and became 
friendly with then-Governor Bill Clinton.10 Huang 
later said he met the Governor when he led a trade mission to 
Asia.11 During business trips to Arkansas, Huang 
also met several people with ties to Governor Clinton, some of 
whom--like Huang himself--would later follow him to Washington 
after he was elected President.
    In 1984, after running into problems with bank regulators 
in Arkansas, the Riadys shifted their focus to California. In 
1984, James Riady acquired control of Bank of 
Trade,12 a small institution that specialized in the 
Asian-American market,13 and renamed it LippoBank of 
California.14 Riady moved from Little Rock to Los 
Angeles and, in 1986, he appointed John Huang president and 
chief operating officer of the California bank.15
    Huang remained with LippoBank of California until the 
summer of 1988, when he went to New York to become general 
manager of Bank Central Asia.16 Although it was not 
part of the Lippo Group, the Riadys were large investors in 
Bank Central Asia and, according to Huang, they managed 
it.17 In January 1990, Huang moved from New York 
back to California to become president of USA Operations for 
the Lippo Group, responsible for overseeing all of Lippo's U.S. 
interests. He also served as vice chairman of the California 
bank.18

                     background on the lippo group

    The Lippo Group was founded in Indonesia by Mochtar Riady, 
father of James Riady and the son of immigrants from the Fujian 
province of China.19 Mochtar Riady got his start in 
business by operating a bicycle shop in Indonesia catering to 
bicycle traders from his native province.20 In 1960, 
he entered the banking business when he raised $200,000 in 
equity for a failing bank from other ethnic Chinese in 
Indonesia. By 1990, the Lippo Group had grown astronomically 
and diversified from its financial services base to 
manufacturing and real estate development.21 Unlike 
most conglomerates, Lippo Group ``is an unconsolidated 
federation of companies with a multibillion-dollar asset base, 
a second major base in Hong Kong and activities throughout the 
Pacific Rim,'' 22 in the words of an academic study. 
All companies in the group are fully or partially owned and run 
by the Riady family.23 By the mid-1990s, the Lippo 
Group was a multibillion-dollar conglomerate headquartered in 
Indonesia and with a second large base of operations in Hong 
Kong. It was active in about a half-dozen 
countries.24
    In the 1990s, the Lippo Group began a major effort to 
invest and conduct business in China. Like many other major 
companies hoping to enter the Chinese market, the Lippo Group 
did so by entering into joint ventures with companies 
controlled by the Chinese government. In particular, Lippo 
forged a close relationship with a Chinese government-owned 
trading company called China Resources, Ltd. China Resources is 
a multi-national company based in Hong Kong whose revenues 
exceeded $250 million last year.25 Despite concerns 
expressed by some Members of the Committee, this relationship 
does not signal Chinese government control of the Lippo 
Group.26 Thomas Hampson, a private investigator 
called by the Majority to testify on the structure of the Lippo 
Group, testified that foreign nationals who do business in 
mainland China--a socialist and centralized economy--very often 
work with government-owned companies.27 Indeed, 
numerous American corporations, including General Motors, 
Boeing, Coca-Cola, Eastman Kodak, and Microsoft, have entered 
the Chinese market through joint venture relationships with 
Chinese government-owned companies.28
    The Lippo Group also has been involved in business ventures 
with several major American companies, including First Union 
Corp. and Wal-Mart Stores Inc., and with various European and 
Japanese concerns. One well-known American who has done 
business with Lippo is Pat Robertson, the television evangelist 
who founded the Christian Coalition. In 1995, a company chaired 
by Robertson teamed up with Lippo and a Malaysian real estate 
firm to launch a cable TV venture in mainland 
China.29

            huang's activities on behalf of the lippo group

    Huang's professional responsibilities on behalf of the 
Lippo Group appear to have been threefold. First, he was 
responsible for overseeing LippoBank of California 
(``LippoBank'') and three U.S. holding companies: Hip Hing 
Holdings, San Jose Holdings, and Toy Center Holdings. Each 
holding company owned one or more pieces of California real 
estate in varying stages of development. Although the 
properties generated some income from rent, all of the 
companies apparently operated at a net loss until 
1994.30
    Second, Huang was responsible for building the name of the 
Lippo Group in the U.S. and stimulating business in the Asian 
American community, the financial community, and the government 
and political communities. Third, Huang was the country liaison 
between Lippo Group headquarters and their U.S. contacts. James 
Alexander, a former LippoBank president, best described Huang's 
varied roles, testifying that Huang was the person who took him 
around to meet important clients, who escorted him when he 
visited Jakarta, and was the person to whom he turned when he 
had a bank matter that needed to be resolved. Harold Arthur, a 
subsequent LippoBank president, summed up by stating, ``I 
presumed [what Huang did from day to day] was business 
relations and client development.'' 31
    To fulfill his responsibility to promote the Lippo Group, 
Huang engaged in a tremendous amount of networking and became 
active in numerous organizations, including the Asia Society, 
the Committee of 100, the Chinese Chamber of Commerce, the 
California Taiwan Trade and Investment Council, the Asian 
Business League, Asian American Development Enterprises, the 
Chinatown Service Center, the Foreign Trade Association, the 
Asian Pacific American Legal Center, the National Association 
of Chinese Bankers, the Hong Kong Association of Southern 
California, the Independent Bankers Association of America, and 
the Indonesian Cultural Association.32 Huang also 
sat on two advisory state commissions: the California World 
Trade Commission and the California State Advisory Commission 
on Economic Development.33 He was not merely a 
member of these organizations, he held officer positions in 
almost all them. For example, he was a director of Committee of 
100, a bipartisan national organization of Chinese American 
leaders in the arts, academia, public service, business and the 
sciences, whose membership is by invitation only. Other members 
of Committee of 100 include prominent Chinese American leaders, 
including Yo-Yo Ma, I. M. Pei, Chang-Lin Tien and David Henry 
Hwang.34
    In his capacity as country liaison for the Lippo Group, 
Huang oversaw visits to the U.S. by members of the Riady family 
and other Lippo officials, acted as a broker for potential 
business associates of the group, and assisted delegations 
visiting from Asia as requested by Group officials. In this 
capacity, Huang handled such events as the Lippo delegation's 
attendance at the 1993 Seattle ASEAN conference, the visit to 
Atlanta by a visiting Chinese delegation from Beijing, and the 
hosting of a breakfast for a second visiting delegation from 
Beijing.35
    As part of his role in building the Lippo and Riady 
profiles, Huang was also very active in government and in 
politics. Between the time he assumed the position as Director 
of U.S. Operations in 1990, and the time he went to the 
Department of Commerce in 1994, Huang oversaw the making of a 
number of political contributions through domestic subsidiaries 
of the Lippo Group, to state local and federal candidates. 
Huang also volunteered to raise funds, to host receptions, and 
to build support for candidates within California's Asian 
American community.
    In the course of his political fundraising,36 
Huang formed relationships with members of the Asian American 
community who were involved in Democratic politics. In 1988, 
for example, he worked with Democratic activist Maria Hsia in 
the Pacific Leadership Council (``PLC''), ``a group formed to 
raise money and lobby for Asian American interests,'' 
37 in the words of a press report. In April of that 
year, the PLC held a Democratic fundraising event in James 
Riady's Los Angeles home that raised about 
$110,000.38 Huang also personally contributed 
$10,000 to the Democratic Senatorial Campaign Committee 
(``DSCC'') in 1988.39 In the fall of 1988, he hosted 
a fundraiser for Senator John Breaux of Louisiana, who was then 
head of the DSCC.40 The following January, Huang, 
Maria Hsia, and other members of the Pacific Leadership Council 
led a trade mission to Taiwan with then-California Lt. Governor 
Leo McCarthy. Then-Senator Al Gore of Tennessee joined the 
delegation in Taiwan.41
    In 1992, Huang volunteered to raise money for the Clinton 
presidential campaign in the Asian-American 
community.42 Huang assisted with the organization of 
a fundraising dinner in October 1992 that raised $250,000 for 
the campaign from Southern California's Asian-American 
community.43 Huang has testified that he became a 
fundraising volunteer because Governor Clinton ``had been a 
friend to us since the Arkansas time, [and] we [felt] obligated 
to help a friend.'' 44

Political contributions

    As a part of his responsibilities as Lippo Group's country 
representative, Huang oversaw three domestic holding companies 
incorporated in California: Hip Hing Holdings, Toy Center 
Holdings, and San Jose Holdings. Each of the three companies 
owned real estate in California at various stages of 
development. Hip Hing Holdings owned a series of adjoining 
parcels of property in the Chinatown area of Los Angeles with 
an assessed value of $9.8 million.45 In addition to 
its property holdings, Hip Hing Holdings was used by the Lippo 
Group to pay expenses associated with the Group's activities in 
the United States. These expenses included salaries for John 
Huang and other staff and consultants employed by the Group, 
and costs associated with hosting visiting delegations of 
businessmen. Employees of Hip Hing Holding would regularly send 
faxes to Indonesia requesting reimbursement of itemized 
expenses of Hip Hing Holdings and the other subsidiaries.
    Records produced by Hip Hing Holdings show that on August 
12, 1992, the company made a $50,000 contribution to the DNC 
Victory Fund. Juliana Utomo, a Hip Hing employee who handled 
general administration of the companies from 1994 forward, told 
the Committee that decision-making with regard to contributions 
in 1992 and 1993 rested with John Huang.46 Utomo 
stated that she did not know that the $50,000 paid to the 
Victory Fund was a political contribution; in fact, she stated 
that she did not know the purpose of the 
disbursement.47 A request for reimbursement for 
expenses of Hip Hing Holdings specifically sought reimbursement 
for the DNC contribution.48 The Committee was unable 
to depose or interview anyone who had actual knowledge 
regarding whether this contribution was reimbursed; however, in 
light of the fact that Hip Hing Holdings sought reimbursement 
for the contribution, and the fact that the holding company had 
not generated sufficient income in 1992 to cover the cost of 
such a contribution, it seems likely that the contribution was 
reimbursed with Lippo funds from abroad.49 A 
reimbursement would likely have converted the Hip Hing Holdings 
contribution into a foreign contribution under FEC rules for 
U.S. subsidiaries of foreign companies.50
    In September 1993, the DNC received additional 
contributions from Hip Hing Holdings and from two other holding 
companies: San Jose Holdings and Toy Center Holdings. Hip Hing 
Holdings and Toy Center Holdings each made $17,500 in 
contributions to the DNC while San Jose Holdings contributed 
$15,000.51 Unlike the contribution in 1992, however, 
the requests for reimbursement for the months in which the 
contributions were made do not contain requests for 
reimbursements of these contributions.52 Also, 
unlike the $50,000 contribution from Hip Hing Holdings in 1992, 
each of the companies generated sufficient rental income to 
support the cost of the 1993 contributions. In 1993, Hip Hing 
Holdings generated $35,200 in income from rental of the 
undeveloped property, while San Jose Holdings generated 
$155,979 in income, and Toy Center Holdings generated $167,000 
in income.53 Accordingly, unlike the 1992 
contribution, there is no evidence that the 1993 contributions 
made by Lippo-related entities were reimbursed with money from 
abroad.
    There is no evidence that the DNC was aware of the 
reimbursement of the 1992 contribution. Thomas Hampson also 
testified that, despite being an expert corporate investigator, 
he was unable to discover Hip Hing Holdings's 1992 income using 
publicly available information.54 It appears that no 
one knew of the reimbursement of this contribution until the 
Committee's hearing. After the hearing, the DNC promptly 
refunded the $50,000.
    James Riady and his wife Aileen were also strong supporters 
of the Democratic Party and President Clinton. Between August 
and October 1992, they contributed half a million dollars to 
state parties in California, Michigan, Louisiana, Ohio, North 
Carolina, Arkansas, and Georgia.55 In addition, the 
Riadys made a $200,000 contribution to Clinton's 1993 Inaugural 
Committee.56 As James and Aileen Riady were both 
legal permanent residents of this country at the time, they 
were entitled to make the contributions. However, the size and 
number of the contributions have led to allegations that Huang 
later received his position at the Department of Commerce as a 
favor to the Riadys. While it appears likely that James Riady 
was one of several individuals who supported Huang's efforts to 
obtain a post in the Clinton Administration, as discussed 
below, the Committee found no evidence that Riady or Huang 
targeted the specific Department of Commerce position to which 
he was ultimately appointed.
    Prior to his employment with the Department of Commerce, 
Huang received a large severance package from the Lippo Group. 
Questions have been raised about whether this bonus was payment 
in advance for services it was anticipated Huang would perform 
while at the Department of Commerce. The reported amount of 
this bonus has varied widely. In February 1994, Huang received 
an after-tax bonus of $132,000.57 According to the 
testimony of Juliana Utomo, it was the policy of the Lippo 
Group to pay annual bonuses in the first months of the new year 
and that it was fair to conclude that this bonus was Huang's 
1993 annual bonus.58 Upon his departure from the 
Group, Huang received a severance package including an after 
tax bonus of $284,000, slightly more than double his 1993 
annual bonus.59 While very generous, a study of the 
Lippo Group specifically notes that the Group is known for its 
generous bonuses of one and a half to three months' salary, a 
factor which helps attract qualified management. At the time of 
his departure, Huang, as country representative for the U.S., 
ranked well up in the corporate structure of the 
Group.60
    Allegations were also raised regarding favorable treatment 
of LippoBank of California as a result of the Riadys' and 
Huang's political contributions. The California bank, which is 
very small by U.S. banking standards with about $50 million in 
assets, has been riddled with regulatory problems and has 
received three cease and desist orders from the FDIC since 
1990.61 The Committee was presented with no evidence 
that the bank ever sought or received assistance from 
regulators as a result of political contributions. At hearings, 
former bank President Harold Arthur and Hip Hing Holdings 
employee Juliana Utomo testified that the bank never sought 
special help or relief from recipients of Riady's political 
contributions or connections.62

              Huang's Tenure At The Department Of Commerce

Huang's appointment

    There was nothing improper or inappropriate in the 
appointment of Huang to a position at the Department of 
Commerce; nor were any procedures or regulations ignored or 
circumvented in the decision-making process that led to his 
placement. Moreover, as described below, Huang was recommended 
for an administration position by three United States Senators, 
several high-ranking state officials, and the Asian Community 
Outreach and Priority Placement components of the Office of 
Presidential Personnel. His placement was also in conformity 
with the stated desire of both President Clinton and then-
Secretary of Commerce Ron Brown for the federal government to 
benefit from increased racial and gender diversity within the 
senior levels of the administration. Moreover, he was the 
personal choice of his immediate supervisor, Charles Meissner, 
the Assistant Secretary for International Economic 
Policy,63 and his appointment was made with the 
approval or consultation of the Undersecretary for the 
International Trade Administration.
    At the time he first sought an appointment from the Clinton 
Administration in 1992, Huang had over 20 years of business 
experience in banking and management, and much of his 
experience was international. As a result of his work, he had 
extensive contacts within the Asian business community, both in 
the U.S. and abroad. Huang had also personally raised funds for 
the Clinton campaign in 1992, and his employer, James Riady, 
had contributed generously to the Clinton campaign. Huang was a 
typical candidate for an appointed position within a new 
administration.
    Shortly after the 1992 election, Huang submitted his resume 
to the Office of Presidential Personnel. In the documents he 
submitted, Huang laid out his philosophy in seeking an 
appointment as follows:

          Our attitude toward life should totally dwell on a 
        concept ``to serve others''--to serve others base[d] 
        upon each individual's ability. . . . We want many good 
        and qualified Asian Americans to answer the call to 
        serve this country which we have all chosen to come to 
        establish ourselves; to raise our family and to educate 
        our children. . . . It will be an important agenda for 
        the Administration to bring this group of resourceful 
        people together to make further contribution to this 
        country.64

    Huang initially had been considered for a position with the 
Small Business Administration. A memorandum dated April 19, 
1993, from Gilbert Colon and Maria Haley of the Office of 
Presidential Personnel to then-Director Bruce Lindsey stated: 
``It should be noted that there is another qualified candidate 
for this position, Mr. John Huang, a banker from California, 
who has handled small business and has international 
expertise.'' 65 Although Huang was not selected for 
this position, the Office of Presidential Personnel continued 
to screen his file for a potential appointment.
    On October 18, 1993, Gary Christopherson, White House 
Associate Director for Presidential Personnel, wrote a memo to 
Lindsey recommending Huang for appointment as Principal Deputy 
Assistant for International Economic Policy at the Department 
of Commerce.66 Christopherson testified that his 
decision to recommend Huang was based on his review of Huang's 
resume and background, an analysis of the requirements of the 
Commerce position, and information supplied by Martha Wantanabe 
and Melinda Yee of the Asian Community Outreach 
section.67 He also indicated that the selection of 
Huang was not a major cause for deliberation in an office that 
handled placement of three or four thousand 
candidates.68
    Huang had support from a number of quarters, including 
state and federal elected officials.69 In addition, 
Huang's name appeared on lists of potential appointees 
submitted to the Office of Presidential Personnel by both the 
DNC and the Asian Community Outreach section. As a result, 
Huang was placed on a list of priority candidates by the 
office's Priority Placement section. Christopherson testified:

          Huang was considered to be a high priority placement 
        by the Asian community. That's how I viewed him, as a 
        high priority placement as well. What is important to 
        understand in this is that one of the roles I played in 
        Presidential Personnel was to be a strong advocate of 
        diversity coming into the administration. . . 
        .70

Christopherson noted that the addition of Huang to the group of 
priority candidates ``seemed to be a reasonable fit as a 
priority placement, and we were clearly looking for Asian 
people to get into various places--we clearly needed them in 
the Department of Commerce.'' 71 After review by 
Christopherson, Huang's name was included in a list of priority 
placements which was then forwarded to the Department of 
Commerce. The Office of Presidential Personnel did not have 
unilateral authority to make an appointment--Huang's placement 
had to be approved by the appropriate authorities at the 
department.72
    At the time of Huang's consideration, Jeffrey Garten was 
the Under Secretary of the Commerce Department's International 
Trade Administration (the ``ITA'').73 In testimony 
before the Committee, Garten stated that he received a list of 
priority placement candidates from the White House and that 
Huang's name was on that list.74 Garten testified 
that he gave that list to Charles Meissner, one of five 
Assistant Secretaries within the ITA, and that Meissner 
selected Huang as his Principal Deputy Assistant, a position 
which was akin to a chief of staff.75 Huang was 
selected for his position in early 1994; he began work in July 
1994.
    Huang apparently received the same level of review as other 
candidates for political appointments. He was never considered 
a ``must-hire.'' 76 In fact, his application sat for 
over six months before an appropriate match was found for 
him.77 Although perhaps not as thorough as one might 
wish, the process by which Huang was appointed appears to have 
been typical of a new administration that seeks to fill 
hundreds of slots in dozens of agencies as quickly and 
efficiently as possible.78

Huang's role at Commerce

    The position for which Huang was hired was viewed as 
primarily administrative rather than policy-making. Garten 
testified that at the time of Huang's hiring, he and Meissner 
had a conversation in which they agreed that Huang ``could be 
of use, someone who could basically handle the substantial 
administrative burdens which [Meissner] would not be able to 
handle because of his travels,'' but that Garten specifically 
voiced concerns about Huang's ability to handle matters of 
policy.79 As Garten explained:

          Under Secretary Brown, we set a very fast pace. It 
        was extremely dynamic. We were extremely focused and I 
        felt that Mr. Huang did not have the requisite 
        experience for policy matters. That's not to say he 
        didn't have it for other issues. . . .80

    During his tenure at Commerce, Huang acted as anticipated 
by Meissner and Garten--as a functional chief of staff for 
Meissner. Describing Huang's role, ITA Deputy Undersecretary 
David Rothkopf testified in a deposition that, ``[H]is 
responsibility was to sort of do what Chuck [Meissner] wanted, 
be there when Chuck couldn't be there, handle administrative 
functions within IEP.'' 81 Over time, however, Huang 
did come to have some policy responsibilities, particularly for 
Taiwan. According to Garten, this came about because Meissner 
felt Huang's knowledge of Taiwan would be useful.82 
Garten was aware of this expansion of Huang's role and did not 
object, so long as Huang was supervised by 
Meissner.83
    Documents produced by Commerce reflect that Huang was the 
primary individual assigned to oversee the Dragon Gate power 
project in Taiwan and that he accompanied Meissner on a trip to 
Taiwan to discuss the project.84 Huang also authored 
a ``Taiwan Country Strategy'' for integrating Taiwan into the 
Big Emerging Market (``BEM'') strategy within the China 
Economic Area.85 The BEM strategy was the 
cornerstone of the International Trade Administration policy 
under Garten.86
    Documents also reflect Huang's involvement with or 
attendance at meetings or briefings on Vietnam, South Korea, 
Japan, and Singapore.87 Huang also played a role in 
assisting ITA with congressional relations, another role common 
to the Deputy Assistant Secretary position.88 
Finally Huang performed an active outreach role, attending a 
diverse array of events, including embassy receptions, speaking 
engagements, and informational briefings with high-level 
foreign officials.
    During the hearings there was a claim that Garten attempted 
to ``wall off'' Huang from policy matters having to do with 
China.89 An allegation was made that Garten felt 
that Huang should not receive information pertaining to China 
and wanted to make sure that he did not receive such 
information. Although Garten testified that Huang was excluded 
from policy matters related to China, he did not testify that 
Huang should not receive information about China and testified 
that he never issued any sort of directive that Huang not 
receive such information.90
    It appears that the decision to exclude Huang from China 
policy matters resulted from internal battles over jurisdiction 
and control. Garten had created an ``inside team'' within ITA 
to deal with the high-profile trading areas of Asia and, 
specifically, with China. As Garten testified before the 
Committee:

         We created a real high performance team. The only 
        people that in my view were qualified to deal 
        especially with China given its enormous significance 
        and sensitivity were people that had a lot of 
        experience in the policy area. . . . A lot of people 
        didn't make the cut. I don't want to say [Huang] was 
        the only one.91

Indeed, not even Meissner was allowed to play a role in China 
policy. Garten acknowledged that responsibility for China, 
which ordinarily would have been under the purview of Meissner 
and the IEP division, was handled by himself and by his deputy, 
David Rothkopf.92
    The creation of the ``inside team'' caused a great deal of 
tension and resentment within various factions of the 
ITA.93 Various witnesses have suggested that 
Meissner and the IEP division he oversaw were particularly 
affected and that Garten and Rothkopf had essentially removed 
all authority for key trading countries from the respective 
division heads in order to work on these high-profile issues 
personally.94 This tension between Garten and 
Meissner is reflected in an October 4, 1994, memorandum from 
Garten to Meissner.95 In the memorandum, Garten 
specifically noted that Huang and another Asian-American 
appointee ``are not up to what I need at this time. I am not 
running a training program so I have to be brutal in terms of 
getting results.'' 96
    The real point of the memo however, was to respond to 
Meissner's perception that the responsibilities of his division 
are being usurped. Garten stated:

          I know I have created a big problem for you 
        particularly on Asia, but even more broadly. I am truly 
        sorry. But the reason we have achieved such good 
        results in the first 18 months, even though 
        confirmations were very late is because I ignored the 
        fiefdoms in ITA and spread responsibility to those who 
        could handle them including David [Rothkopf]ing. . . . 
        It works because I have flattened the structure and 
        spread responsibility.97

It is clear, then, that Huang was not singled out as someone to 
be ``walled off'' from matters pertaining to China. Numerous 
people who otherwise would have had responsibilities relating 
to China--including the Assistant Secretary for IEP-- were 
similarly ``walled off'' from Garten's power team. None of 
those individuals were in any way formally restricted from 
participating in, or receiving information about, countries in 
their official areas of responsibility.
    This conclusion is confirmed by the fact that Huang was 
permitted to receive briefings with respect to China. Garten's 
decision that Huang was not to be involved in China policy did 
not result in an instruction that he was not to receive any 
information about China. Indeed, that very question was put to 
John Dickerson, the security officer responsible for briefing 
Huang:

          Senator Specter. Did you know that there had been a 
        judgment made by higher-ups, by Mr. Garten, that Mr. 
        Huang should be walled off from information about 
        China?
          Mr. Dickerson. No, I did not.98

When asked during his deposition if he would have changed his 
briefings to Huang had he been ``aware that Jeff Garten had 
told Charles Meissner. . . that he wanted John Huang to be 
walled off from China issues,'' Dickerson indicated that, like 
other witnesses, he believed Garten was excluding Huang from 
China policy to retain personal control over those issues:

          As I started to say before, I think I would have had 
        to have a better understanding of what Jeff Garten was 
        talking about. My understanding of the article that I 
        read in the press was that this was sort of 
        bureaucratic squabbling between officials of Commerce 
        and that I do not think the implication was that Jeff 
        Garten thought John Huang was a person who could not be 
        believed with intelligence information. I think it was 
        more a foil played by Frank [sic] Garten and people 
        directly under him to retain the policy-making 
        decisions on some of these issues.99

Huang's security clearance and access to classified information

    Perhaps as a result of the misimpression that Huang was 
excluded from information pertaining to China, another 
impression has been created that Huang obtained access to 
classified material to which he was not entitled. This, in 
turn, fueled speculation that Huang was somehow passing 
classified material on to the Lippo Group, the Chinese 
government, or both. The Committee's investigation of Huang's 
security clearance and his access to classified information 
revealed no evidence that Huang gained--or even attempted to 
gain--access to classified information beyond that to which he 
was entitled in the normal course of his duties. Nor did the 
investigation reveal any evidence that Huang misused or 
compromised any of the information to which he had access.
            Granting of top secret clearance
    Huang was granted an interim security clearance prior to 
assuming his duties at Commerce. While there has been no 
evidence presented to the Committee that Huang even knew he had 
such a clearance, much less used it, this fact has been used by 
some to suggest that for some nefarious reason Huang was given 
special treatment. In fact, between January 1993 and March 
1997, all political appointees to the Department of Commerce--
totaling close to 240--were granted interim top secret 
clearances.100
    Interim security clearances were granted on the basis of a 
review of the appointee's job application, his application for 
a security clearance, a credit check, and a check of the NCIC 
law enforcement database.101 An interim clearance 
allowed an appointee access to classified material pending a 
complete background investigation.102 The policy of 
granting interim security clearances to all political 
appointees was established in January 1993 by Steven Garmon, a 
career government employee and the head of the Commerce 
Department's Security Office. Garmon had established this 
policy in reaction to criticism which had been leveled at the 
Security Office in previous administrations over the delays 
political appointees had faced in obtaining their clearances 
and their consequent inability to attend certain meetings or 
receive certain information.103
    In accordance with this policy, the Security Office, after 
receiving paperwork authorizing Huang's hiring in February 
1994, performed a limited background check and granted an 
interim clearance.104 The procedure used in the 
granting of Huang's interim clearance was identical to that 
used for all other political appointees to the Commerce 
Department.105 Indeed, a memorandum regarding 
Huang's interim clearance which cited ``the critical need for 
his expertise in the new Administration for Secretary Brown'' 
was nothing more than a form memorandum containing boilerplate 
language and was not specifically related to 
Huang.106
    Huang was never notified of this approval prior to 
beginning work at the agency, nor was he given a security 
briefing by the Security Office until assuming his 
position.107 He thus could not have made any use of 
this interim clearance until he actually started working at 
Commerce.108
    The Commerce Department made a blanket decision to grant 
interim top secret clearances to all political appointees with 
no consideration as to whether a particular appointee needed 
access to top secret information or whether the need for the 
information was so immediate that it justified the granting of 
an interim clearance pending a full background investigation. 
This procedure was largely designed to insulate the Security 
Office from complaints from new appointees that the lack of a 
clearance was interfering with their work, but it was properly 
reversed by Secretary William Daley in 1997.109

Huang's access to classified information

    Huang was the Principal Deputy Assistant Secretary for 
International Economic Policy. This position could have 
entitled him to a broad array of classified information; 
however, there was no evidence presented to the Committee that 
Huang exploited his position to gain access to information 
beyond that appropriate to his duties. Indeed, the record 
before the Committee shows that Huang declined opportunities to 
expand his access.110
    Huang's predecessor at the Department of Commerce, 
Republican appointee Richard Johnstone, held a clearance at a 
higher level than Huang's top secret clearance.111 
Robert Gallagher, Director of the Office of Executive Support 
in the Office of the Secretary of Commerce, testified that to 
the best of his recollection, he was approached by Huang's 
supervisor, Meissner, about getting a higher level clearance 
for Huang because of Huang's responsibilities in filling in for 
Meissner when Meissner was on travel. Gallagher stated:

          I believe that Mr. Huang's superior suggested that 
        Mr. Huang could receive a higher level of clearance and 
        I concurred. And then I believe I probably talked to 
        Mr. Huang about receiving that higher level of 
        clearance and what it would entail for him to do so, 
        how long it would take, how much paperwork was involved 
        and how much it would cost. And at that point, I 
        believe that Mr. Huang said he didn't think it was 
        worth it in either time or money and so we dropped the 
        matter.112

If Huang had a desire to have access to the most highly 
sensitive information available to the Department, a higher 
level clearance would have provided him with that access. 
Despite the suggestion of his superior and the example of his 
predecessor, Huang declined the opportunity.113
    Another opportunity for Huang to increase his access to 
sensitive information lay in his cable profile. A cable profile 
is an internal document which determines the clearance level 
and subject matter for which an official will receive State 
Department cable traffic. Huang's profile indicated that he was 
to receive material up to the secret level. Because Huang held 
a top secret clearance, he could have restructured his cable 
profile to receive significantly more cable information. He 
never did so.114
    In addition, Huang's profile called for him to receive only 
traffic addressed directly to him or to the office of the 
Principal Deputy Assistant Secretary. By contrast, Johnstone, 
Huang's predecessor, had established a cable profile for 
himself that included material relevant to all areas of IEP's 
business, regardless of his level of involvement in the 
work.115 Johnstone based his need for this 
information on his desire to have general background 
information on all of the work of IEP.116 This 
profile included all information on the General Agreement on 
Tarrifs and Trade (``GATT''), China, the Middle East, APEC, 
information on areas where travel was planned, information on 
individual projects of the IEP, and political issues of the 
regions of IEP.117 Although Huang could have done 
similarly, he never attempted to change his profile, as noted 
above.
    While much has been made of the number of intelligence 
briefings Huang received, he was actually briefed far less 
frequently than Johnstone and other Commerce officials who 
received weekly briefings.118 Huang received oral 
briefings from John Dickerson of the Department's Office of 
Intelligence Liaison (``OIL'') 37 times in 14 months, an 
average of 2.5 times per month.119
    Dickerson testified that the subjects of the briefings 
included ``areas of international relations and trade that we 
seem to feel were his responsibility.'' 120 
Briefings of this type took an average of 20 minutes, and the 
contents were largely at the discretion of the briefing 
officer. Huang was shown documents during briefings; however, 
the documents were not left with him, and he was not allowed to 
take notes about them. Dickerson further testified that Huang 
was not particularly interested in the material on which he was 
briefed:

          Q: During your briefings, did he ask you a lot of 
        questions?
          A: I would say he asked very few questions.
          Q: Did he seem to be aggressively pursuing classified 
        information?
          A: No, to the contrary. He was not very aggressive in 
        that regard at all.
          Q: Do you have any reason to believe that he handled 
        classified information in an improper fashion?
          A: I have no reason to believe that.121

    Overall, Huang appears to have been a passive recipient of 
briefings provided to him as a matter of routine. He further 
appears to have had minimal interest in gaining access to 
classified information.122 Dickerson told the 
Committee that had he believed Huang to be a security risk he 
would not have given him classified information.123
    No evidence was presented to the Committee that Huang 
mishandled or compromised any classified material provided to 
him. Indeed, this very question was put to three security 
officials from the Department of Commerce:

          Q: To your knowledge, was there ever any time when he 
        divulged any classified information that was not given 
        to people fully cleared to receive it, or misused any 
        of this intelligence information in any way, all three 
        of you?
          Mr. Dickerson. No.
          Mr. Gallagher. No, sir.
          Mr. McNair. No, sir.124

    The fact that Huang had made use of a spare office in the 
Washington, D.C., offices of Stephens, Inc. (``Stephens'') 
during his tenure at Commerce was thought to support an 
allegation that Huang was passing classified information to the 
Lippo Group, the Chinese government, or both.125 No 
evidence was presented to the Committee, however, to prove that 
Huang used the Stephens office for such purposes. Indeed, no 
conclusive evidence was ever presented to the Committee as to 
exactly what Huang did at the Stephens office.

Huang's use of the Stephens office

    Stephens, Inc. is one of the largest investment banking 
firms in the U.S. It is based in Little Rock and has offices in 
Washington and other cities. Stephens has a business 
relationship with the Lippo Group that dates back to 1977. In 
the 1980s, Huang, as a Lippo employee, was involved in Lippo's 
dealings with Stephens. As a result, Huang has had a long 
personal relationship with Vernon Weaver, who headed Stephens's 
Washington office. It was this office, located across the 
street from the Department of Commerce, that Huang made use of 
while employed at Commerce. Indeed, many of Huang's visits to 
the Stephens office involved a meeting or lunch with 
Weaver.126
    The Committee's investigation of Huang's use of the 
Stephens office focused on the testimony of two clerical 
employees: Paula Greene and Celia Mata. Greene worked as an 
administrative assistant in the Stephens office from 1993 
through 1996, while Mata worked as a receptionist. Vernon 
Weaver was interviewed by committee staff in the early stages 
of the investigation, but was not later asked to give a 
deposition or public testimony.
    According to the testimony of Greene and Mata, Stephens had 
a spare office that was used by visiting Stephens employees and 
friends of the firm. The office was not specifically set aside 
for Huang's use and there was no special arrangement for him to 
use this office.127 The office, which contained a 
desk, a telephone, and a chair, was located two doors down from 
where Greene sat.128 In order to enter the suite 
where the office was located, a visitor would have to ring a 
bell and be buzzed in by Mata.129 Regular Stephens 
employees all had a key to the suite--Huang was never given a 
key.130
    According to Greene, anyone who used the spare office had 
unrestricted access to the photocopier and fax 
machines.131 There were no security or recordkeeping 
measures in place to monitor such use.132 Green 
testified that anyone using the machines would have to pass two 
receptionists and several other offices to get to the 
machines.133 No testimony was ever presented from 
anyone in the Stephens office who had witnessed Huang using 
either the photocopier or the facsimile machine.
    Greene did testify that Huang used the phone in the 
Stephens office. The Committee subpoenaed Stephens's telephone 
records; however, even after analyzing the records, the 
Committee was unable to find a reasonable basis for attributing 
specific calls to Huang's use of the spare office and was 
unable to indentify any inappropriate calls on the 
records.134
    Greene testified that Huang was the most frequent non-
employee user of the spare office, visiting about once or twice 
a week.135 Mata's testimony, however, was that Huang 
``would come, you know, once or twice every week or there would 
be, like, weeks where he wouldn't come.'' 136 She 
also stated that his visits would last ``the most, ten 
minutes'' 137 Not only were Huang's visits short in 
length, but they occurred primarily at lunchtime,138 
a time when he would have been seen by a number of people 
moving in or out of the office. This would hardly seem to 
comport with the behavior of someone who was trying to 
surreptitiously pass classified information to foreign 
contacts.
    Greene testified that she would notify Huang if any 
packages or facsimiles came into the Stephens office for 
him.139 This was done at Weaver's 
request.140 Greene testified that she was 
specifically instructed by Weaver to speak directly to Huang if 
she had to notify him of a package or fax, and not to leave a 
detailed message if he was unavailable.141 While it 
was insinuated that this was a peculiar practice (and indeed, 
Greene stated this was not Weaver's usual practice), Greene 
testified that it was her impression that Weaver merely did not 
want his name to ``appear on the logs very frequently'' in 
order to ``avoid bad appearances.'' 142
    Greene stated that she would put any packages or faxes for 
Huang in the ``in'' box of the spare office. She said that she 
was not aware of Huang sending packages from the Stephens 
office, only receiving them.143 With regard to 
facsimile transmissions, Greene testified that Huang received 
two to three such transmissions per week.144 She was 
unaware, however, of the nature or source of these 
transmissions.145
    The evidence received by the Committee failed to support 
allegations that Huang used the Stephens office to pass 
classified information to the Lippo Group, the Chinese 
government, or anyone else. Indeed, the evidence before the 
Committee failed to establish in any manner what Huang's 
purpose was in using the Stephens office. What the evidence 
showed was that Huang stopped by the Stephens office from time 
to time at lunch to visit with Weaver, to use the telephone, or 
to pick up packages or messages. It is possible that Huang's 
use of the Stephens office was for no other purpose than 
maintaining personal contacts. Indeed, the Committee did 
receive evidence that throughout his tenure at Commerce, Huang 
continued his personal involvement with many organizations, 
including the Committee of 100.146 The evidence 
simply does not allow conclusive determinations to be made. 
What is clear, though, is that Huang's use of the Stephens 
office was open and obvious, not secretive as might be expected 
from one attempting to pass classified information.

Huang's post-Commerce clearance

    The final issue pertaining to Huang's access to classified 
information concerns the fact that he had an active security 
clearance for over a year following his departure from 
Commerce. This fact has been used to insinuate that Huang was 
involved in a scheme to continue obtaining classified material. 
Once again, however, there is no evidence that Huang used this 
clearance after leaving Commerce or that he even knew that his 
clearance was active.147 Indeed, the evidence 
establishes that due to procedures required for any use of a 
security clearance, Huang would not have been able to make use 
of the clearance even if he had attempted to do 
so.148
    During his tenure at Commerce, Huang found himself in the 
midst of a turf battle among several factions due to the 
changes that Garten had made to the way the ITA conducted 
business. Huang, Assistant Secretary Meissner, and several 
other officials had been marginalized in favor of those 
supported by Garten.149 After a little more than one 
year, Huang began to make inquiries and ultimately secured a 
position at the Democratic National Committee as a fundraiser.
    Evidence presented to the Committee established that 
Meissner attempted to retain Huang as a consultant after he 
announced his intention to leave Commerce.150 Such 
an arrangement was conceived as a way for Huang to assist 
Meissner during the transition period between the time he left 
and the time his replacement was found.151 Before 
obtaining approval for the arrangement, Meissner initiated 
paperwork for such a consulting position, an application for a 
clearance through the Defense Industrial Security Clearance 
Office of the Department of Defense (``DISCO''). This type of 
clearance is generally used for government contractors.
    Meissner discussed this proposed arrangement with Alan 
Neuschatz, Director of Personnel, and Tim Hauser, Deputy Under 
Secretary. Both men immediately disagreed with the idea and 
told Meissner that the appointment would not be approved. 
Meissner, however, determined to take the proposal up with more 
senior officials. In response, Neuschatz penned a note which 
was attached to the paperwork for this proposed appointment. 
Neushchatz described the note in deposition testimony in the 
following terms:

          I knew Meissner had wanted to make this appointment, 
        and what I was saying to them here is . . . I think 
        this issue is dead, and that's because we told him, no, 
        we weren't going to do it. But it may not be, and the 
        ``may not be'' reflects Meissner's parting shot that he 
        was going to discuss this upstairs.
          So what I'm telling them is to hold on to this 
        package for a while, or at least until the smoke 
        clears, meaning we get absolute clear and final 
        guidance. I didn't want to throw paperwork away that 
        might actually be needed eventually, but I didn't think 
        it would be needed.152

    Meissner did, in fact, take the issue up with Will 
Ginsberg, Secretary Brown's Chief of Staff. Ginsberg ultimately 
denied the request, and Huang never became a consultant. While 
the consultant position was in the process of being denied, the 
paperwork for the security clearance that went along with the 
position was still going forward. An administrative assistant 
at IEP stated that she had walked the application for the 
security clearance up to the security office at the direction 
of Meissner prior to the final decision not to make Huang a 
consultant.153 The request for the security 
clearance went forward in one office, while the authority to 
make the underlying appointment was being considered, and 
ultimately denied, in another. Neuschatz described this process 
in the following terms:

          The fact that the ITA Security Office acted without 
        authorization, I think, reflects more their desire to 
        support management than any intent to circumvent it.
          Clearly what happened was staff approached the ITA 
        Security Office and said ``Meissner . . . is going to 
        convert Huang to a consultant and we'll need the 
        appropriate clearance.''
          These people, I think, in the interest of minimizing 
        red tape and minimizing confusion, put the train on the 
        track assuming that they had Meissner's authorization. 
        What they could not have known was that when Meissner 
        approached me and [Deputy Undersecretary] Tim Hauser 
        who do have the authority to approve positions such as 
        this, we turned it down cold.154

    On December 14, 1995, the Defense Department sent a form to 
the Commerce Security Office indicating that Huang had been 
granted a clearance through the DISCO. According to the 
testimony of the two highest-ranking members of the Commerce 
Security Office,155 a clerk filed Huang's DISCO 
clearance form with all other DISCO clearance forms received 
from the Defense Department. The form remained in the file 
until it was discovered in January 1997.156
    According to the Deputy Director of the Security Office, 
proper procedure would have been for the DISCO clearance to 
have been input into the Security Office database. Due to 
personnel changes in the Security Office, however, some 90 days 
went by during which no one was inputting incoming DISCO 
clearances into the database. Had the clearance been input in 
mid-December, it conceivably would have raised issues because 
Huang was still on the payroll and still had a clearance. 
Further, had it been properly input, the Security Office would 
have been aware of the DISCO clearance when it was notified in 
January 1996 that Huang had left Commerce.157
    In his deposition, Neuschatz stated that after learning 
that Huang's clearance had been extended, he investigated 
whether Huang had used the clearance to gain access to 
classified material.158 This investigation led him 
to conclude that Huang had never attempted to gain such access 
nor could he have done so had he tried.159 According 
to Neuschatz, classified document access has two components: 
clearance and need to know. The granting agency has to verify 
clearance for any request for access from outside of that 
agency.160 Neuschatz told Senate investigators that 
for Huang to have used his clearance, a request would have to 
have been forwarded from the issuer, and a record would have 
been kept. No such request was ever found in Commerce's 
records. Furthermore, Huang's clearance was contingent on his 
contemporaneous employment in some manner with Commerce. As 
Neuschatz described it:

          Because the requirements for the issuance of the 
        clearance went away with the disappearance of his job; 
        therefore, this really was not a valid clearance once 
        he terminated his employment with [DOC].161

    Testimony is unequivocal that no one in ITA was notified of 
the clearance. In fact, there is no evidence that anyone other 
than the clerk who initially filed the form was aware that the 
clearance existed. This includes Huang. Neuschatz testified, 
``I have no reason to believe that Huang would have been aware 
of this [extension].'' 162
    While the fact that Huang neither knew about nor used the 
clearance dispels any concern about sinister motives with 
respect to this episode, the fact that the security clearance 
was granted even though the consultancy was not reveals a 
failure in the Department of Commerce security screening 
procedures.

No evidence of espionage

    While the Committee's investigation uncovered some serious 
shortcomings in the operation of the Commerce Department's 
Security Office, there was no evidence presented to the 
Committee that any security measures were circumvented, 
ignored, or compromised specifically to benefit Huang. Indeed, 
to the extent that these shortcomings led to the approval of 
Huang's clearance prior to his arrival at Commerce and to the 
extension of his clearance after he had departed, the evidence 
before the Committee shows that Huang was not even aware of 
these facts.
    More importantly, there was no evidence presented to the 
Committee that Huang exploited his position at the Commerce 
Department to pass classified information to the Lippo Group, 
the Chinese government, or anyone else. Indeed, the evidence 
shows that Huang availed himself of considerably less 
information than he could have obtained in light of his 
position. He declined the opportunity to obtain a higher level 
of clearance, he declined the opportunity to broaden his access 
to cable traffic, and he declined the opportunity to use his 
intelligence briefings from the OIL to aggressively pursue 
classified information.
    Evidence before the Committee does not allow for any 
conclusion with respect to Huang's continued contact with the 
LippoBank in California. In his deposition, James Per Lee, 
current President of the LippoBank California, testified that 
he had undertaken an internal investigation of Huang's calls to 
the bank that showed Huang's calls from the Department of 
Commerce to the bank were largely an exchange of telephone 
messages received for Huang by the executive secretary and that 
conversations with Huang lasted an average of three 
minutes.163 Per Lee later publicly stated that in 
his investigation of the calls he saw no indication Huang was 
``in any way relaying messages abroad.'' 164 Despite 
being interviewed and deposed by the Committee, subpoenaed to 
appear for hearing, and given a date and time for testimony, 
less than forty-eight hours before his scheduled appearance, 
Per Lee's testimony was abruptly canceled.
    It should also be noted that at the outset of this 
Committee's hearings Huang offered to come before the Committee 
and to testify fully about any allegations that he may have 
misused his position on behalf of foreign governments or 
corporations. While he requested limited immunity, he offered 
to testify without immunity with respect to matters pertaining 
to espionage, economic espionage, or the unlawful disclosure of 
classified information. Although the Minority does not conclude 
that Huang's offer of testimony is proof of his innocence, we 
do believe that in light of the lack of evidence to the 
contrary, his offer to testify without reservation regarding 
these allegations--and with all the applicable penalties of 
perjury attendant to such testimony--should be given some 
consideration. Unfortunately, the Committee did not pursue 
Huang's offer and, as a result, a potentially important 
opportunity to receive a response to these allegations was 
lost.
    The evidence before the Committee--or more appropriately, 
the lack thereof--was encapsulated in the following exchange 
during the Committee's questioning of the CIA's John Dickerson 
and Robert Gallagher of the Department of Commerce Security 
Office:

          Senator Durbin. Gentlemen, if I can try to summarize 
        my own view of where we have come to this point in 
        regard to Mr. Huang, I think there are two concerns and 
        perhaps a third. The first concern is whether or not 
        Mr. Huang played fast and loose in his fundraising 
        activities, especially when it came to raising foreign 
        funds, and the second concern is whether or not he 
        compromised our national security. . . .
          I want to ask you open-ended questions, not 
        shepherding you in any direction here, just to get your 
        opinion based on what you knew then and what you know 
        now. Mr. Gallagher, maybe I will start with you, and 
        maybe Mr. Dickerson can follow.
          First, is it your opinion that Mr. Huang was properly 
        cleared to learn classified information at the 
        Department of Commerce?
          Mr. Gallagher. Yes, sir.
          Senator Durbin. Mr. Dickerson, is that your opinion, 
        or do you have an opinion?
          Mr. Dickerson. That is my opinion, yes.
          Senator Durbin. Has anything come to light since this 
        controversy has arisen to change your view on that? Mr. 
        Gallagher?
          Mr. Gallagher. I have seen no evidence to the 
        contrary. No, sir.
          Senator Durbin. Mr. Dickerson?
          Mr. Dickerson. And similarly, I have seen no evidence 
        that would indicate that.
          Senator Durbin. Now, the second thing, the second 
        charge is that Mr. Huang while at the Department of 
        Commerce was shown things he should not have seen for 
        any number of reasons, his business connections, his 
        security clearance, whatever.
          Mr. Gallagher, based on what you knew then, is there 
        any question in your mind as to what you showed Mr. 
        Huang and whether or not what Mr. Dickerson showed Mr. 
        Huang and whether he should have seen it?
          Mr. Gallagher. In terms of the information that my 
        office controls, we were 100-percent correct in what we 
        showed him.
          Senator Durbin. Now, with all the information that 
        has come out and all the allegations since today, do 
        you believe there are things that Mr. Huang should not 
        have seen at the U.S. Department of Commerce?
          Mr. Gallagher. I think we have to distinguish between 
        the information and allegations. All I have seen is 
        allegations. Until I saw hard evidence of these 
        allegations and as long as he continued to have both 
        his need-to-know and his clearance, we would continue 
        to brief him as we had.
          Senator Durbin. Mr. Dickerson, the same questions. 
        Did you feel that you were showing things, did you have 
        any suspicion in your mind, that Mr. Huang should not 
        have seen while he worked at the Department of 
        Commerce?
          Mr. Dickerson. No, I had no suspicions whatsoever 
        that what I was showing him was inappropriate for him.
          Senator Durbin. And today, based on allegations and 
        information, do you have a different view?
          Mr. Dickerson. No, I don't have a different view 
        because I have no personal knowledge that he did 
        anything in an unauthorized manner in the handling of 
        this classified information.
          Senator Durbin. The third allegation appears to be 
        that he may have misused the information which was 
        given to him, may have compromised a source or 
        compromised the information. As you sit there today, 
        Mr. Gallagher, do you have any information to suggest 
        that that is the case?
          Mr. Gallagher. I have never been presented with any 
        evidence to prove or disprove that allegation.
          Senator Durbin. Mr. Dickerson?
          Mr. Dickerson. I would echo what Mr. Gallagher has 
        said in that regard.
          Senator Durbin. Now, I assume in your business, when 
        you are sharing delicate and secured classified 
        information that there is a counterintelligence aspect 
        to this to determine whether or not the people that you 
        are sharing it with are keeping it to themselves, is 
        there not? Mr. Gallagher?
          Mr. Gallagher. Certainly, with all intelligence, sir.
          Senator Durbin. Now, in terms of this period of time, 
        some 13 months at the Department of Commerce, was there 
        any evidence that the information that was being shared 
        with Mr. Huang or anyone at the Department at that time 
        was being compromised?
          Mr. Gallagher. I was not presented with any such 
        evidence.
          Senator Durbin. Mr. Dickerson?
          Mr. Dickerson. To the best of my knowledge, 
        no.165

Evidence of solicitations of contributions

    While there was no evidence presented to the Committee to 
support an allegation that Huang engaged in espionage while 
employed at the Commerce Department, there were indications 
that he may have engaged in soliciting donors to the Democratic 
National Committee while so employed. Specifically, Huang may 
have been involved in soliciting donations by Kenneth and A. 
Sihwarini Wynn, Mi Ahn, and Arief and Soraya Wiriadinata while 
employed at the Commerce Department. Although the evidence is 
not conclusive, it is sufficient to warrant further 
investigation by appropriate authorities.
    Evidence before the Committee shows that on August 1, 1994, 
Wynn, the president of Lippoland, Ltd., and his wife each made 
a $5,000 contribution to the DNC in connection with an event 
celebrating the President's birthday.166 The check 
tracking form completed by the DNC for these donations listed 
John Huang as the solicitor.167 This was only one 
month after Huang had begun working for the Department of 
Commerce and almost a year and a half before he began working 
for the DNC. When questioned in a deposition about this 
listing, David Mercer, DNC deputy finance director (and the 
individual responsible for filling out the form), testified 
that he did not know at the time that Huang was working at the 
Commerce Department.168 He further testified that he 
did not recall who solicited the Wynns, nor how he received the 
checks from the Wynns.169
    Slightly over a year later, on October 12, 1995, Wynn 
contributed $12,000 to the DNC in connection with another 
event.170 This time, the DNC tracking form listed 
Jane Huang (John Huang's wife) as the solicitor.171 
Just before Jane Huang's name, however, is a word that has been 
crossed out. This word appears to be ``John.'' 172 
When questioned about this contribution, Mercer testified that 
he did not know if Jane Huang had solicited this contribution 
and further, that he ``did not know the circumstances leading 
to this check being submitted.'' 173 When asked how 
he knew to put Jane Huang's name down as the solicitor, Mercer 
first stated that someone told him to, but he could not 
remember who it was.174 Mercer then suggested in the 
alternative that he may have done so because of his 
recollection that the Huangs were associated with the 
Wynns.175 Upon being asked why he chose to put Jane 
Huang's name down if his recollection was that the Huangs 
generally were associated with the Wynns, Mercer stated he 
could not recall.176
    The DNC's listing of John Huang as the solicitor for the 
Wynns' August 1994 contributions, followed by what appears to 
be a listing of John Huang's name on the October 1995 
contribution--only to be crossed out in favor of Jane Huang--
tends to support the allegation that Huang was involved in 
soliciting contributions while a Commerce employee. Moreover, 
Mercer's testimony with respect to these contributions raises 
more questions than it answers.
    Similar questions are raised with respect to a contribution 
by Mi Ahn. On June 12, 1995, Ahn, the president of Pan Metals, 
contributed $10,000 to the DNC in connection with a 
Presidential Gala.177 The DNC check tracking form 
filled out by Mercer lists Jane Huang as the 
solicitor.178 When asked in his deposition why he 
listed Jane Huang as the solicitor, Mercer testified that he 
did not have a clear recollection and that it ``either [had] 
something to do with either sending the check or getting the 
check to us in some way involved or knowing Mi Ahn. . . .'' 
179 Asked directly if he knew Jane Huang had 
solicited Ahn's check, Mercer stated, ``I don't know that for a 
fact.'' 180
    It appears, however, that John Huang may have been involved 
in the Mi Ahn solicitation. Evidence was presented to the 
Committee that on May 26, 1995--two-and-a-half weeks before 
Ahn's contribution--four telephone calls were placed between 
Huang and Ahn.181 Ten days later--on June 5, 1995--
two more phone calls were placed.182 On June 6, 
1995, Mercer called Huang at the Commerce Department and left 
the following message: ``Have talked to Mi, thank you very 
much.'' 183
    When asked why he was thanking Huang, Mercer testified: ``I 
don't know. I don't recall. It could have been he gave me her 
number. It could have been a number of things. I don't know 
particularly what I was thanking him for.'' 184 
Again, Mercer's testimony with regard to his listing of Jane 
Huang as the solicitor and his inability to recall his reason 
for thanking John Huang leaves room for concern about Huang's 
role as the possible solicitor of this contribution.
    Jane Huang was also listed as the solicitor of two 
contributions made in November 1995 by Arief and Soraya 
Wiriadinata.185 The Wiriadinatas, who were permanent 
legal residents at the time of their contributions, are the 
daughter and son-in-law of Hashim Ning, a business associate of 
Lippo founder Mochtar Riady. Between 1995 and 1996, the 
Wiriadinatas contributed about $450,000 to the DNC in multiple 
checks. Once again, when questioned as to how he knew to credit 
the two 1995 contributions to Jane Huang, Mercer stated that it 
was ``[t]hrough an understanding prior of the Wiriadinatas 
having association with the Huangs.'' 186 Mercer 
could not recall, however, how he had come to that 
understanding,187 nor could he recall what his 
understanding was as to how they were associated.188 
When asked why he didn't put John Huang down as the solicitor, 
Mercer testified as follows: ``I don't recall why. I, you know, 
I don't recall. I didn't, you know--I don't. . . [sic] I don't 
recall. Jane could have--I could have been told that Jane was 
the one that brought these checks in. I don't know.'' 
189
    Committee staff interviewed the Wiriadinatas concerning 
their contributions. According to Arief Wiriadinata, they first 
met John Huang when he came to visit Soraya's father in the 
hospital in the summer of 1995.190 Huang encouraged 
the Wiriadinatas to support the Democratic Party at that time, 
although it does not appear that he directly solicited a 
specific contribution.191 Indeed, the Wiriadinatas 
first contributions were not until November 1995.192 
According to the Wiriadinatas, the November 1995 contributions 
were solicited by John Huang.193 In fact, Arief 
Wiridiadinata told the Committee staff that all of their 
contributions were made in consultation with John 
Huang.194 When asked if any of their contributions 
had been solicited by Jane Huang, the Wiriadinatas stated that 
they had never met Jane Huang, nor did they believe that they 
had ever spoken to her.195
    The evidence clearly indicates that John Huang played a 
role in the contributions from the Wiridinatas and that this 
role began while he was still an employee of the Department of 
Commerce. Moreover, the evidence also points to his having 
played a role in the contributions of the Wynns and Mi Ahn. 
These instances are all worthy of further investigation by the 
appropriate authorities to determine whether John Huang 
violated the Hatch Act, which limits certain political activity 
by federal employees, or other campaign laws.
    Perhaps even more disturbing is the documentary evidence 
which shows the DNC listing Huang as a solicitor during a time 
when he was a Commerce Department employee. The fact that David 
Mercer, DNC's deputy finance director, listed Huang as a 
solicitor and called him at the Commerce Department, combined 
with Mercer's questionable recollection regarding the tracking 
form containing Jane Huang's name, raises serious questions 
about the forthrightness of Mercer, the procedures at the DNC 
at this time, and the level of oversight that was provided in 
connection with Huang's activities. Indeed, this lack of 
oversight proved even more problematic once Huang joined the 
DNC staff.

                    hiring huang to work at the dnc

    Having perhaps become disillusioned with his position at 
the Department of Commerce as a result of internal power 
struggles within the ITA, Huang began searching for another way 
to serve the Administration. That search led him to the DNC. 
Although he had raised money for the 1992 Clinton 
campaign,196 he had done so at that time as an 
unpaid volunteer fundraiser. The position he sought in 1995 was 
that of a full-time paid fundraiser. In seeking this position, 
Huang apparently utilized the network of contacts he had 
developed while working for the Lippo Group.
    In his deposition before the Committee, C. Joseph Giroir, 
an Arkansas lawyer for the Lippo Group and a friend of John 
Huang, said he learned of Huang's interest to move to the DNC 
to raise money in the Asian-American community.197 
As he conveyed this information to then-DNC Finance Chairman, 
Truman Arnold, he learned that Arnold was leaving his post at 
the DNC. As a result, in the summer of 1995, Giroir arranged a 
meeting with DNC Chairman Donald Fowler to suggest that Fowler 
hire Huang as a fundraiser.198 Because Giroir was 
viewed by the DNC as a potential contributor, DNC Finance 
Director Richard Sullivan attended the meeting with Fowler. In 
his deposition, Sullivan testified that he thought Giroir came 
on too strong and, for some reason, ``had rubbed him [Fowler] 
the wrong way during their meeting.'' 199 Sullivan 
speculated that, perhaps because of this, Fowler did not want 
to hire Huang.200 Fowler testified in his own 
deposition that he did not immediately commit to hiring Huang 
because the DNC did not have room on its staff for any new 
fundraisers at that time.201
    On September 13, 1995, Huang, Riady, and Giroir met with 
Sullivan and Fowler in the Four Seasons Hotel in Washington, 
D.C.202 Sullivan recalled this meeting as fairly 
social; it was called for Riady to get to know Fowler, since 
``he thought Don was a player and that they wanted to get to 
know each other on a social basis.'' 203 Fowler 
testified that Giroir ``made it clear . . . that he would like 
Mr. Huang hired at the DNC.'' 204
    Later that same day, Huang, Giroir, Riady, and Riady's 
wife, Aileen, went to the White House for a visit with White 
House staff and the President.205 Also in attendance 
was Bruce Lindsey, deputy counsel to the President. By all 
accounts, this visit was a social call.206 Riady had 
lived in Little Rock during the 1980s and met the President 
during that period. Riady supported the President during his 
gubernatorial campaigns, during his presidential campaign, and 
after his election as well. Giroir testified that there was no 
structure to the September 13 visit; people were just talking. 
In fact, Giroir had no recollection of any mention of Huang 
going to the DNC.207 But Lindsey recalled a 
discussion of the importance of the Asian-American community to 
the President's re-election effort and the suggestion that 
Huang would be well-suited to work on such an initiative at the 
DNC.208
    After that visit, and because, according to Lindsey, it was 
his experience that most people preferred to move from politics 
to government, rather than vice versa, he subsequently 
contacted Huang to ensure that he was interested in moving to 
the DNC. Lindsey testified in a deposition that the President 
may have indicated to him that if Huang, in fact, wanted to 
move to the DNC, that it would be a ``good idea,'' but he 
stated that this was not a directive 209 from the 
President to ``follow up'' on the discussion.210 
Lindsey ultimately informed White House Deputy Chief of Staff 
Harold Ickes of Huang's interest.211
    On September 26, 1995, Huang and Giroir also met informally 
with newly-appointed DNC Finance Chairman Marvin Rosen to 
discuss Huang's desire to move to the DNC.212 This 
meeting had been arranged by Mark Middleton, a former White 
House staffer from Arkansas. Rosen indicated during this 
meeting that he would look into the idea of initiating a DNC 
outreach program within the Asian-American 
community.213
    At the time, the DNC had employees who were responsible for 
political and fundraising outreach in most minority 
communities, including the African-American community, the 
Hispanic community, and women's groups. During the period that 
Huang was being interviewed, the DNC had an employee who was 
responsible for political outreach in the Asian-American 
community, Bill Kaneko; however, it did not yet have a staff 
person responsible for Asian-American fundraising. In his 
deposition before the Committee, Kaneko testified that he 
understood that Huang left Commerce to ``give the Asian 
community an opportunity to participate in the political 
process.'' 214 Other witnesses confirm that when 
Huang was being interviewed by the DNC, he indicated that he 
was interested in Asian-American outreach generally, not just 
fundraising, and witnesses involved in Huang's hiring testified 
that they perceived Huang as capable of providing the necessary 
assistance to the DNC's political and fundraising outreach 
efforts for the Asian-American community, particularly in 
California.215
    Rosen testified that Ickes subsequently asked him to 
formally interview Huang.216 Such an interview took 
place at DNC headquarters in November 1995, with Rosen and 
Sullivan, who were later joined by Fowler.217 During 
the interview, Huang suggested that he could help to raise 
money in the Asian-American community for the 1996 campaign, 
citing his effectiveness in raising funds during the 1992 
campaign.218 According to Sullivan, Huang felt 
``there was a void in terms of outreach from the national 
parties to the Asian-American community.'' 219 
Fowler, Rosen, and Sullivan agreed.220 Recognizing 
the untapped potential of the Asian-American community for 
Democratic fundraising efforts and political outreach, Fowler 
decided, on Rosen and Sullivan's recommendation, to hire Huang 
to manage the DNC's outreach efforts to this 
community.221
    In negotiating his position and salary with the DNC, Huang 
said that he needed credibility to raise money in the Asian-
American community because he was older than most other 
fundraisers.222 Fowler called it ``a technique to 
convey respect and prestige,'' 223 and thought that 
giving Huang an elevated title would ultimately benefit the 
DNC.224 They negotiated the title of Vice Chair of 
Finance, a title normally reserved for volunteer fundraisers 
who are elected as honorary officers of the DNC and do not 
raise money full time. While Rosen was unfazed by the 
title,225 DNC General Counsel Joseph Sandler was 
concerned because this position did not actually exist for paid 
staff. Sandler ultimately acceded to the request.226
    Salary was another concern for Huang. Seeing himself as a 
successful, older, more experienced person (he was 50 years 
old), Huang initially wanted a salary comparable to the one he 
had received at Commerce.227 Sullivan testified that 
they decided to pay Huang a salary of $60,000 and also to give 
him a lump-sum, bonus-type payment at some point.228 
Huang readily accepted this arrangement; indeed, Sullivan 
testified that Huang did not seem all that concerned about his 
salary.229

Huang's understanding of applicable law

    DNC procedures require every paid fundraiser to receive an 
oral briefing on campaign finance law and to familiarize 
himself with a written packet of information.230 
During the 1996 election cycle, the briefings were conducted by 
DNC General Counsel Sandler or his deputy, Neil Reiff. Reiff 
testified in his deposition that these briefings covered many 
topics, including which contributions are allowable under the 
law, as well as what the DNC considers appropriate or 
inappropriate contributions. Most importantly, Reiff said, 
fundraisers were told to seek advice from the general counsel's 
office if they had any questions about specific 
contributions.231
    Sullivan testified that he was ``nervous'' about Huang's 
fundraising because Huang was inexperienced in raising money 
full time. Sullivan testified that he requested Huang be given 
a special, individualized briefing.232 Sam Newman, 
director of the DNC's National Finance Council, who shared an 
office with Huang, testified that he recalled Huang attending 
one of the group briefings; Sandler had a vague recollection of 
this.233 Although there is some discrepancy between 
the testimony of Sandler and Sullivan as to what type of 
briefing Huang received, there is no dispute that he was 
briefed on the applicable law, and, in fact, a copy of the 
DNC's training materials was found in Huang's files after he 
left.234
    In addition to whatever type of initial briefing he may 
have received, Huang also received assistance from the general 
counsel's office following his first major fundraising event. 
According to Sandler, DNC Treasurer Scott Pastrick suggested 
that Sandler review with Huang some of the checks Huang had 
collected from that event. Sandler testified that he believed 
this suggestion was made because the Asian-American community 
for which Huang was responsible was a new one being tapped for 
funds, and therefore some of the donors would be unfamiliar to 
the DNC.235 Marvin Rosen, DNC Finance Chair, also 
believed that this briefing was necessary because some of the 
contributors to that event were connected to American 
subsidiaries of foreign corporations. In Rosen's mind, this 
automatically raised a red flag and called for review, 
especially for contributions from a new 
fundraiser.236 DNC policy required that all 
contributions by U.S. subsidiaries of foreign corporations be 
approved by the general counsel's office.237
    Sandler testified that he did conduct such a review with 
Huang. Within days of Huang's first event, a February 19, 1996 
fundraiser at the Hay Adams Hotel in Washington, D.C., Sandler 
had a 45-minute meeting with Huang during which he reviewed 
checks about which Huang had questions, asked Huang the 
citizenship status of each individual who wrote a check, and 
inquired into the ownership of corporations that 
donated.238 He then inquired into the basis of 
Huang's knowledge and was satisfied from Huang's disclosures 
and claims of firsthand knowledge (which, according to Sandler, 
is traditionally the best information on which to rely) that 
the checks were legal. During this meeting, Sandler and Huang 
reviewed the legal limits on contributions. Sandler testified 
that he felt comfortable that Huang was familiar with the rules 
he was to follow.239
    Having received an initial briefing on the laws and 
procedures applicable to campaign contributions, and having 
gone over specific instances of concern following his first 
fundraiser, Huang should have known what kinds of contributions 
the DNC could and could not accept. In light of this training, 
Huang's involvement in organizing a number of fundraisers which 
brought in questionable--and in some cases, illegal--
contributions is disturbing.

Huang's fundraisers

    As was true of other fundraisers targeting ethnic 
communities, Huang was assigned various dates for events to 
organize at which the President or the Vice President would be 
in attendance. Once given a date, Huang would have been 
responsible for reaching a certain fundraising goal. During his 
tenure at the DNC, Huang oversaw the following fundraising 
events, all held in 1996:
           February 19 event at the Hay Adams Hotel, 
        Washington, D.C.;
           May 13 event at the Sheraton Carlton Hotel 
        in Washington, D.C.;
           July 22 event at the Century Plaza Hotel in 
        Los Angeles; and
           July 30 event at the Jefferson Hotel in 
        Washington, D.C.240
In addition, after the July 30 event, Huang continued to help 
raise money at events,241 such as the President's 
birthday party in August 1996 at Radio City Music Hall in New 
York City.
            February 1996  Hay Adams APALC events, Washington, DC
    The first fundraising event for which Huang was responsible 
was actually a series of two events on February 19 and 20, 1996 
at the Hay Adams Hotel in Washington, D.C. These events were 
held in connection with the Asian Pacific American Leadership 
Council (``APALC''). The APALC had been created to engage and 
empower Asian-Pacific Americans, give them a stronger voice in 
the Democratic Party, and focus on issues of concern to the 
community.242 Ultimately, it was also used as the 
fundraising arm for this community within the DNC. Mona Pasquil 
testified that she was responsible for forming the APALC in 
late 1995. She testified that it was born out of her traveling 
and meeting with Asian-Pacific American leaders who recognized 
that there was no caucus within the DNC for this ethnic 
group.243
    The events included a dinner with the President on February 
19 and breakfast with the Vice President and a tour of the 
White House on February 20. Individuals paid $12,500 each to 
attend these events.244 The Hay Adams events were 
organized to coincide with a ``summit'' of Asian-Pacific 
Americans at the Mayflower Hotel in Washington, D.C. on 
February 24, 1996.245
    It is estimated that around 100 people attended the Hay 
Adams event. By all accounts, these events were successful in 
bringing Asian-Americans into the DNC. Fowler testified in his 
deposition that he recalled the events as positive in terms of 
outreach to the Asian-American community. He stated that there 
were a number of Asian nationalities represented and that he 
appreciated that diversity. He said he never gave a second 
thought to the citizenship of these individuals.246
    According to DNC records, the DNC raised $716,000 from this 
event from 50 individuals or corporations.247 A 
number of these contributions turned out to be suspect, 
however, leading the DNC ultimately to return over $100,000 
from this event.
    A total of $50,000 was returned to Charlie Trie, Keshi 
Zhan, Yue Chu and Xiping Wang. Trie attended the event and, in 
fact, was the event's co-chairman. Neither Chu nor Wang 
attended. These contributions--which are discussed in detail in 
Chapters 5 and 21 of the Minority Report--were returned because 
of questions as to the source of the funds contributed.
    Pauline Kanchanalak, a Thai businesswoman, and her sister-
in-law, Duagnet Kronenberg, attended the event and contributed 
$35,000. Their contributions were similarly returned by the DNC 
when it was determined that the funds contributed by 
Kanchanalak were actually those of her mother-in-law (see 
Chapter 21).
    Finally, monastics from the Hsi Lai Buddhist Temple are 
also recorded as having contributed $25,000 to this event. 
Although none attended, Maria Hsia, a longtime Democratic 
activist and Temple devotee, did.248 These 
contributions were returned to the U.S. Treasury over questions 
that the monastics may have been reimbursed for their 
contributions (see Chapter 21).
    As noted above, Joseph Sandler, DNC general counsel, 
testified that after the event, Huang came to see him with 
contributions about which he had questions. Sandler testified 
in his deposition that he did not recall whether any of the 
contributions they reviewed were returned as a result of their 
conversation, but Huang initiated the return of several 
contributions within a month of the event because of questions 
of citizenship of the donors.249
    The evidence before the Committee does not establish that 
Huang, or any other DNC employee or official, knew at the time 
that any of the returned contributions had problems. 
Kanchanalak appeared as a successful businessperson and had a 
long history of contributions. Trie likewise also appeared 
successful. There is no hard evidence establishing Huang's 
knowledge of reimbursements to the monastics, as explained 
below and in Chapter 21 of the Minority Report.
    In addition, Jessica Elnitiarta, who runs her family's real 
estate company, Panda Estates Investment Inc., had been 
contacted by Huang about attending this event. On February 10, 
1996, Elnitiarta contributed $100,000 to purchase eight seats 
at the event. Among Elnitiarta's guests at the event were her 
father, Ted Sioeng, and two of Sioeng's business associates. 
Elnitiarta did not attend the event herself because of an 
unexpected illness in her family.250 Elnitiarta was 
eligible to contribute (she is a legal permanent resident), and 
her contributions have not been returned. (Sioeng-related 
contributions are discussed in detail in Chapter 7.)
            May 13, 1996  Sheraton Carlton event, Washington, DC
    Huang's next major event was held at the Sheraton Carlton 
Hotel in Washington, D.C., on May 13, 1996, attended by the 
President. This event was attended by approximately 100 people. 
Approximately $579,000 was raised at this event from 20 
individuals and corporations.251
    Over half of the money raised at this event came from one 
individual--Yogesh Gandhi. Gandhi, a permanent legal resident 
of the United States, contributed $325,000 to the DNC in 
exchange for 26 tickets to the event.252 This 
contribution was attributed in DNC records to both Huang and 
Trie.253 This contribution was ultimately returned 
when the DNC could not verify the source of Gandhi's funds; it 
was later determined that Gandhi used foreign funds from Japan 
supplied by an associate to pay for the 
contribution.254 A detailed discussion is provided 
in Chapter 21.
    In addition, contributions totalling $125,000 were deemed 
inappropriate and were returned to legal permanent residents 
Soraya and Arief Wiriadinata, the daughter and son-in-law of 
Lippo associate Hashim Ning, because the source of the funds 
could not be verified.255 The Wiriadinatas are not 
listed as having attended the event. Their contributions are 
discussed in detail in Chapter 21 of the Minority Report. 
Charlie Trie's $10,000 contribution to this event was also 
returned.256
    In all, the DNC returned $475,000 of the $579,000 raised at 
this event.257
            July 22, 1996  Century Plaza Hotel event, Los Angeles
    One event for which there is relatively little testimony 
and only a few documents is an APALC gala organized by Huang at 
the Century Plaza Hotel in Los Angeles on July 22, 1996. A 
three-page briefing paper prepared for the President, the 
keynote speaker at the event, shows that the DNC expected to 
raise one million dollars from the 700 expected attendees; this 
was to be a ``hard money'' event. Most of the attendees were 
from California.258 News organizations have reported 
that the event was a ``who's who of Asian Americans,'' 
including Ted Sioeng and James Riady.259
    Monastics from the Hsi Lai Buddhist Temple were recorded as 
having contributed $30,000 to this event, although only the 
Temple's abbess attended.260 These contributions 
have been returned as a result of questions as to whether the 
monastics were reimbursed for their contributions, as explained 
in Chapter 21 of the Minority Report. A contribution of $3,000 
from one of Charlie Trie's companies was returned for 
insufficient information. Other contributions totalling $25,000 
were returned because, according to the DNC, it was 
inappropriate for the DNC to have accepted such contributions, 
contributions were not made by the named donor, the decision to 
contribute was participated in by a foreign national, or simply 
because there was insufficient information.261
    A total of $58,500 worth of contributions was returned by 
the DNC from this event,262 which the DNC recorded 
as having raised $367,850.263
            July 30, 1996  Jefferson Hotel event, Washington, DC
    Richard Sullivan testified that the White House had open 
dates for July 1996 which were available to the DNC for events. 
He and Marvin Rosen offered one of these dates to Huang. 
According to Sullivan, he and Huang were clear that Huang 
should only agree to organize an event on this date if he 
thought he could organize another ``hard'' money event that 
would raise $400,000 to $500,000. According to Sullivan, Huang 
said he could meet these criteria.264
    This event--which turned out to be the final event Huang 
organized--was held on July 30 at the Jefferson Hotel in 
Washington, D.C. It turned out to be a small gathering of 
individuals, many of whom were not eligible to contribute to 
the DNC.265 Contrary to the instructions given to 
Huang for this event, most, if not all, of the contributions 
Huang raised at this event were large, soft-money 
contributions.
    In addition to the President and other DNC officials, 
attendees at the event, many of whom brought spouses and 
children, included James Riady of the Lippo 
Group,266 his wife Aileen, and three prominent 
Taiwanese businessmen: Eugene T.C. Wu, chairman of the Shin 
Kong Group, a conglomerate that includes Taiwan's second-
largest life insurance company; Sen Jong (Ken) Hsui, president 
of Prince Motors Co. in Taipei and a former member of the 
central committee of Taiwan's Kuomintang party; and James L.S. 
Lin, a Taiwanese business associate of Wu.267 Hsui, 
who has U.S. residency status, contributed $150,000 to the DNC 
which has been attributed to this event.268
    Other contributions attributed to this event were from 
Jessica Elnitiarta's Panda Investments; Loh Sun International, 
a Los Angeles firm that imports Chinese cigarettes to the U.S.; 
and Edmund Pi of Hacienda Heights, California.269 In 
total, this event took in $259,000 270--far short of 
expectations.271
    Neither Wu nor Lin made contributions to the DNC in 
connection with this event, nor did anyone else who attended 
this event who was ineligible to contribute. The question has 
been raised, however, as to why the President was dining at a 
DNC event with such a small group of individuals, many of whom 
were ineligible to contribute to the DNC. Although this event 
was designed as a fundraiser, videotapes of the event show that 
the President discussed current events and issues of ethnic 
diversity but did not discuss fundraising.272 While 
there is nothing illegal about such an event--so long as those 
who are ineligible to contribute do not in fact do so--there is 
a legitimate issue that can be raised with respect to the 
perception that such an event creates. This issue could have--
and should have--generally been addressed in advance through a 
more careful review of attendees at small dinners with the 
President, Vice President or First Lady and greater supervision 
of DNC fundraisers and the fundraising process.
    Another important question is why Huang, who had promised 
to raise $400,000 to $500,000 in ``hard'' money at this event, 
would put together an event with only a limited number of 
participants, a large proportion of whom were ineligible to 
contribute. Unfortunately, the Committee was unable to obtain 
an answer to this question from Huang. All we are left with is 
Sullivan's speculation that perhaps Huang was trying to impress 
the attendees (all of whom he knew) with his ability to arrange 
an intimate gathering for them with the President of the United 
States.273
    With respect to this event, and all of Huang's other 
events, there is no evidence that either the White House or the 
DNC had any knowledge of any illegal contributions as a result 
of these events to the DNC at the time the contributions were 
made.

Other Huang activities

    In addition to organizing fundraising events, Huang was 
involved in a number of other activities on behalf of the DNC 
that were of questionable propriety.
            Hsi Lai Temple event
    On April 29, 1996, Vice President Gore attended an event 
organized by Huang and held at the Hsi Lai Temple in Hacienda 
Heights, California. The Hsi Lai Temple is the largest U.S. 
branch of the Fokuangshan Buddhist Order, a Taiwan-based 
Buddhist sect. The Temple operates under an umbrella 
organization called the International Buddhist Progress 
Society, a nonprofit organization incorporated in 
California.274 Approximately 100 community leaders 
and others from the Asian-American community had lunch with the 
Vice President at this event.
    Criticism of the Temple event arises from three sets of 
allegations: that the event was a DNC fundraiser in possible 
violation of tax laws barring religious organizations from 
engaging in campaign activities; that the Temple reimbursed 
Temple monastics for DNC contributions in possible violation of 
federal election laws barring contributions in the name of 
another; and that the Temple used foreign funds for the 
reimbursements in possible violation of federal election laws 
barring foreign contributions. The latter two allegations are 
discussed in detail in Chapter 21 of the Minority Report which 
concludes that Temple reimbursements did take place, though 
without the use of foreign funds and without the knowledge of 
the Vice President or officials at the DNC. This section 
focuses on the event itself and the involvement of Huang and 
the Vice President.
    In 1996, the Vice President routinely attended fundraisers 
and community outreach events organized by the DNC to motivate 
financial and political supporters during the 
campaign.275 Documents show that the Vice 
President's office was involved in scheduling two possible 
events for the Vice President in the Los Angeles area in April 
1996, one of which was supposed to be a fundraising lunch at a 
private restaurant and the other a community outreach event at 
the Hsi Lai Temple. The evidence suggests that the fundraising 
lunch was canceled a few weeks before it was to take place, and 
Huang invited the persons scheduled to attend the lunch to the 
Hsi Lai Temple instead.
    The evidence before the Committee shows that the Temple 
event was not a DNC fundraiser. It was not proposed, agreed to, 
organized or conducted as a fundraiser. The event was proposed 
by the Temple, and the Vice President agreed to it as a 
community outreach event. Invitations made no mention of 
fundraising or an admission price to attend the event. No 
tickets were taken or sold at the door; no campaign materials 
were present; neither the Vice President nor any other speaker 
ever solicited contributions or thanked attendees for 
contributing; and most of those who attended did not contribute 
to the DNC.
    The evidence also shows, however, that Huang did use the 
Temple event to raise money for the DNC, both from a small 
number of persons who attended the event and from Temple 
monastics who did not attend the event. Contributions totaling 
$159,000 were attributed in DNC records by Huang to this 
event.276 There is no evidence before the Committee, 
however, that the Vice President had any knowledge of Huang's 
activities or reason to believe that Huang used the Hsi Lai 
Temple event to raise funds for the DNC.
            The Vice President and the Temple event
    In 1996, the DNC frequently requested that the Vice 
President attend fundraisers and community outreach events in 
different cities across the country. The Vice President's 
office worked with the DNC to schedule dates and locations that 
fit into his busy schedule.Typically, the DNC would identify a 
city where they wanted to hold an event and then request a date from 
the Vice President's office to schedule it. During the early planning 
stages, the only details provided to the Vice President's office were 
cities and dates for proposed DNC events.277 The scheduling 
staff would then present the DNC proposals to the Vice President for 
his approval. The Vice President would sign off on cities and dates, 
not the exact sites for events.278 Kimberly Tilley, the Vice 
President's director of scheduling, testified about the general process 
of scheduling the Vice President at a DNC event in another city. She 
stated:

          . . . as an example there would be a request for the 
        Vice President, let's say, to go to Chicago, and we--I 
        would talk to the Vice President and say there is a 
        request for you to go to Chicago for a DNC event and 
        here's what's happening on your family schedule, are 
        you okay with this, and he would sign off on 
        that.279

    Tilley explained that as the date drew near, the scheduling 
office would work on the details and often discovered that the 
site had been changed. She testified, ``many times we would 
find out that it was not in Chicago. It was in Winnetka.'' 
280
    When the Vice President attended a DNC event in a 
particular city, other events were generally scheduled before 
and after the DNC event. The other events on the Vice 
President's schedule would often include speeches, meetings and 
appearances at other locations near the DNC 
event.281 The different events scheduled for a 
particular day would often change and not be finalized until 
shortly before the Vice President's trip to a city. Scheduling 
by the Vice President's office for April 1996 events was 
handled in the usual manner. Early in the planning process for 
April 1996, the Vice President agreed to travel to California 
long before the details of the trip were determined. The 
details, including the number of events he would attend, the 
cities he would visit and the sites of each event, were 
determined over a period of time and were not finalized until 
shortly before the Vice President's trip.
    Beginning in January 1996, the DNC proposed a series of 
fundraisers for the President and Vice President to schedule in 
April, May and June.282 No specific dates or sites 
were identified; the DNC simply suggested in its proposed 
calendar a month and a city in which to hold a fundraiser. A 
January 2, 1996 memo from Harold Ickes to the Vice President 
and others included a proposal that the Vice President attend 
three DNC fundraisers in the month of April in Washington, 
D.C., Los Angeles and San Jose.283 The event sites 
for the proposed cities were not identified in the DNC's 
proposal.
    Between January 2 and February 22, 1996, the Vice 
President's office worked on the general DNC request to 
schedule fundraisers for the Vice President to attend in 
California in April 1996. As an example, the Vice President's 
ever-changing California trip included a proposal to add an 
event in San Francisco that was later dropped.284 
While the schedule changed often, there is no evidence that the 
Hsi Lai Temple was considered as a potential site for an event 
during the early planning stages of the Vice President's trip 
to California.
    In March 1996, the dates of the Vice President's trip to 
California and the events he would attend were still not 
determined. Tilley received an e-mail message from one of her 
assistants on March 12, 1996, that showed the Vice President 
would travel to San Jose and Los Angeles for three days, from 
April 27th to the 29th, and that he could attend ``some 
combination of possible Olympic torch event in LA, DNC 
fundraisers in San Jose & LA'' and ``Family/Private time.'' 
285
    On March 15, Tilley sent the Vice President an electronic 
message asking if he would like to give a keynote address at an 
event in New York on ``the same evening that you wanted to fly 
out to California overnight and then do the two fund-raisers in 
San Jose and L.A. while Sarah and Mrs. Gore visit colleges. . . 
. We've confirmed the fund-raisers for Monday, April 29th.'' 
286 The Vice President responded that, ``If we have 
already booked the fund-raisers, then we have to decline.'' 
287
    While some have tried to claim that the Vice President's 
use of the word ``fund-raisers'' in this message proves that he 
knew the Temple event was a fundraiser, it proves only that the 
Vice President was planning to attend a fundraising event in 
Los Angeles well before the Temple event was added to his 
schedule and had coordinated the date with when his daughter 
was visiting colleges.288 As discussed below, an 
invitation to visit the Temple was extended by the Temple for 
the first time on March 15th and was not formally incorporated 
into the Vice President's schedule for another month, after an 
evaluation by the Vice President's national security adviser. 
The Vice President's deputy chief of staff David Strauss 
testified at the Committee hearing that the confirmed ``fund-
raisers'' referenced in the Tilley message could not possibly 
refer to the Temple event because that event had not yet been 
scheduled.289 ``There wasn't even an event scheduled 
at the temple on the 15th of March,'' Strauss said. ``That 
occurred much later.'' 290 The Tilley message 
demonstrates that the Temple event was a separate consideration 
from the DNC fundraising events that the Vice President had 
agreed to attend in California.
    The Temple event was first proposed during a March 15th 
meeting between the Vice President and the head of the Temple, 
the Venerable Master Hsing Yun.291 This meeting had 
been arranged by Huang and Maria Hsia, a fellow Democratic 
activist in the Asian-American community.292 In an 
interview with Committee investigators, the Master said, ``I 
only met with Gore for 10 minutes. We had a very polite 
conversation, then I departed.'' 293 Briefing papers 
for the Vice President state that the two ``discussed Master 
Hsing Yun's charity work in California and elsewhere.'' 
294 At the end of this brief meeting, the Master 
invited the Vice President to visit the Hsi Lai Temple in 
California.295 Vice President Gore responded that he 
would consider it since he was expecting to be in California in 
late April.296 This exchange reinforces the fact 
that the Vice President was already planning to visit 
California at the time of this meeting, and the Temple visit 
was a possible additional event, rather than the original 
reason for his visiting the area.
    The evidence indicates that after the meeting between the 
Temple's master and the Vice President, Huang and Hsia began 
planning two events in the Los Angeles area for April 29, a 
fundraising lunch at the Harbor Village Restaurant in Monterey 
Park and an Asian-American community outreach event at the 
Temple. Although the Harbor Village Restaurant in Monterey Park 
has no record of a reservation for April 1996,297 a 
draft invitation produced to the Committee by Hsia corroborates 
the planning for this event and that the organizers originally 
proposed two different events at two different locations for 
the Vice President.298 Moreover, a March 23, 1996, 
letter from Hsia to the Vice President demonstrates that the 
Vice President was specifically told of the plans for two 
events. The letter to the Vice President stated:

          John Huang has asked me to help with organizing a 
        fundraising lunch event, with your anticipated 
        presence, on behalf of the local Chinese community. 
        After the lunch, we will attend a rally at Hsi Lai 
        Temple where you will have the opportunity to meet 
        representatives from the Asian American community and 
        visit again with Master Hsing Yun. The event is 
        tentatively scheduled for April 29 and I am hoping you 
        will be able to attend.299 [emphasis added]

    Further corroboration that two events were planned was 
provided by Charlie Woo, an attendee of the Temple event and 
contributor to the DNC, who told Committee staff that Huang had 
contacted him to attend an April event with the Vice 
President.300 Woo identified this event as 
originally scheduled to be held at the Harbor Village Chinese 
Restaurant in Monterey Park. Woo said Huang called with the 
location change to the Hsi Lai Temple less than a month before 
the event and Woo was told that due to scheduling problems, 
there would only be this one event. Because Huang never told 
him otherwise, Woo said he arrived at the Temple event ``with a 
check in my pocket'' believing that he was going to a 
fundraiser. He said that he thought it was ``weird'' that there 
was ``no mention of money at the event.'' 301
    At some point in early April 1996, the DNC canceled the Los 
Angeles fundraiser but not the community outreach event at the 
Hsi Lai Temple.302 Huang contacted Richard Sullivan, 
the DNC's finance director, to inform him that there were 
problems with the proposed site for the 
fundraiser.303 Sullivan testified,

          I think Maura (McManimon) and/or John said they were 
        having problems working in the location, and then . . . 
        subsequently, I believe John told me that the place 
        that he wanted--that the home--I believe it was a home 
        that he wanted to have it at--would not work with the 
        Vice President's schedule, that he was doing things 
        downtown and couldn't put enough time in the schedule 
        to get out to this home--it may have been a restaurant, 
        but I remember it as a home--and that he had to change 
        the location. Then he came back, I think a day or two 
        later, and said that he wanted to do it at a 
        temple.304

    One or two days later Huang and Sullivan discussed the Hsi 
Lai Temple as a possible site for a DNC event. Sullivan told 
Huang ``you can't do a fundraiser at a temple,'' 305 
and Sullivan was assured by Huang that the temple event would 
not be a fundraiser.306 Instead, the Hsi Lai Temple 
event was intended to express appreciation to past contributors 
to the DNC and to encourage others in the Asian American 
community to contribute in the future.307 Huang told 
Sullivan that he ``would not charge people'' and that he ``was 
going to invite people for free'' to attend the ``community 
outreach'' event at the temple on April 29, 1996.308
    On or about April 3, 1996, Sullivan informed the Vice 
President's office of the changes and told them that the temple 
event would be an ``outreach event,'' not a 
fundraiser.309 Strauss does not recall this specific 
conversation with Sullivan and Huang, but he testified that he 
had no reason to believe that he did not have such a 
conversation with them.310
    The evidence before the Committee indicates that the Temple 
event was not actually incorporated into the Vice President's 
schedule until the latter half of April. Documents prepared for 
a scheduling meeting for the Vice President's California trip 
and a memorandum by Huang reflect the fact that as late as 
April 11th, two weeks beforehand, the Hsi Lai Temple had not 
been confirmed by either the White House or the DNC as the site 
for an event.311
    In mid-April 1996, the Hsi Lai Temple event was 
characterized by some staff members as a fundraiser while 
others, who worked closest on the April 29, 1996 schedule, 
believed it was a community outreach event. In several internal 
communications, including e-mails and memos between staff 
members, the term ``fundraiser'' was used to describe the Hsi 
Lai Temple event. The director of the scheduling office, 
Tilley, testified, ``I think that there was a certain 
sloppiness in the terms we were using, whether it was finance 
or fundraising.'' 312
    The scheduling office usually referred to an event from the 
DNC Finance Department as a fundraiser, even though it may not 
have been a fundraiser.313 Tilley testified that:

          A: ``There were traditional fundraisers that were 
        ticketed events at the door. There were events that 
        were community outreach like this Asian-Pacific where 
        it was part of the DNC Finance plan, where in order for 
        someone to be a member, there was a certain amount of 
        money they paid to be a part of that, you know, 
        committee or whatever they called; and then there were 
        those people to whom they wanted to reach out to, who 
        they hoped would become donors.
          Q: And would you define outreach events as different 
        than fundraisers?
          A: Yes, I would.317

    On April 11, 1996, the day of the ``Preliminary California 
Meeting'' Huang faxed a memorandum to Kim Tilley regarding a 
``Fundraising lunch for Vice President Gore 6/29/96 [sic] in 
Southern California.'' in which he wrote:

          Per our discussion this morning, I have furnished the 
        following information to you regarding the proposed 
        event.
          1. Proposed location: Hsi Lai Temple, Hacienda 
        Heights, California.
          This temple was established by Venerable Master Hsing 
        Yun during 1980's with many structures including Large 
        dinning [sic] facility . . . To show his appreciation 
        and friendship to Vice President Gore, Master Hsing Yun 
        would like to host this upcoming Vice Presidential 
        event in L.A. . . .
          3. Hsi Lai Temple has hosted other political events 
        before . . .
          5. . . . Please let me know if I can provide any 
        further information. I certainly would appreciate to 
        know the answer asap if we can proceed on this matter. 
        If so, in what parameters can we do, or not 
        do.315

    Jackie Dycke, who worked on the April 29, 1996 schedule 
until mid-April, before it was reassigned to Ladan Manteghi, 
prepared notes for the April 11th meeting which included the 
following information: ``DNC Luncheon in LA/Hacienda Heights: 
1000-5000 head/150-200 people.'' 316 Dycke testified 
that she obtained this information for a proposed event from 
Maura McManimon who worked with John Huang for the 
DNC.317
    The character of an event would often change during the 
scheduling process. Strauss was questioned during the Committee 
hearings about the scheduling process and he testified:

          Q: Is it common in your experience with regard to the 
        Vice President's schedule and how it evolves that an 
        event may be contemplated, but that over time and 
        indeed on fairly short notice, its character could 
        change or the event itself could be canceled?
          Mr. Strauss. That is correct.
          Q: Does that happen often?
          Mr. Strauss. That is correct.318

    As of April 11, 1996, Huang, an organizer of the Hsi Lai 
Temple event, had not yet received confirmation that the Vice 
President would even be attending an event at the Hsi Lai 
Temple on April 29, 1996. Other documents, including an April 
19th message just ten days before the event, indicate that a 
decision on the Temple event was delayed pending an evaluation 
by the Vice President's national security advisers who approved 
the event but cautioned against permitting it to be 
characterized as one favoring Taiwan.319 John 
Norris, who works in the Vice President's foreign policy 
office, wrote a note to Bill Wise, deputy director of the Vice 
President's foreign policy office, regarding the Hsi Lai Temple 
event. In his April 16, 1996 note, Norris wrote:

          State notes that any affair involving Taiwan involves 
        some risk of political exploitation by people from 
        Taiwan.
          State's advice is to make John Huang of the DNC 
        responsible for managing the event to ensure the VP is 
        not embarrassed--
          --the event is for the Chinese community of Southern 
        California; it is not a ``Taiwan'' event;
          --there are no Taiwan flags or KMT symbols or other 
        signs that would be embarrassing for the VP;
          --no Taiwan politician should be allowed to exploit 
        this event.320

    Wise wrote a hand note to Leon Feurth, the Vice President's 
National Security Advisor, on the bottom of Norris's April 16, 
1996, note with his opinion regarding the Hsi Lai Temple site. 
Wise wrote:

    I think it may be difficult for the sponsors to meet the 
three criteria suggested by State--but they will certainly 
claim that they can.

           *         *         *         *         *

    I suspect the VP might get to go ahead since we cannot 
point to a specific problem.'' 321

    On April 19, 1996, Norris received an e-mail message from 
Robert Suettinger regarding the foreign policy ramifications of 
holding an event at the Hsi Lai Temple. Suettinger wrote:

          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.322

    Tilley explained that the Vice President's National 
Security Office needed to approve the Hsi Lai Temple as an 
appropriate site for the Vice President to visit, based on 
foreign policy considerations. Tilley testified, ``for an event 
like this, we would not have proceeded--the Vice President 
would not have done it if the National Security Office had not 
signed off.'' 323 In response, the Vice President's 
office informed the Temple that the Vice President could attend 
the event only if all Taiwanese national symbols were removed 
from the site before the event took place.324 The 
Temple agreed to this condition.
    Once the event was agreed to, the evidence indicates that 
the Vice President's staff organized it as a community outreach 
effort, rather than a fundraiser. When the event was officially 
added to the Vice President's schedule in the latter half of 
April, the key scheduler responsible for the event in the Vice 
President's office was Ladan Manteghi who, in mid-April, had 
assumed responsibility for the Vice President's April 29 
schedule. Manteghi testified at her deposition that she clearly 
understood the event to be a community outreach event and not a 
fundraiser.325 She testified as follows:

          Q. Do you recall ever discussing with Kim Tilley 
        whether or not the event at the Hsi Lai Temple--what 
        type of an event it was?
          A. She and I had conversations, obviously, about the 
        event and the type of event it would be, and it was to 
        be an outreach event and to basically give us exposure 
        to the Asian community and vice versa as well. You 
        know, this was something very major for them as well as 
        for us in the sense that this was monumental in 
        demonstrating an ability to participate in the 
        political process and to have the ability to vote. . . 
        . I am an immigrant, and I know what a phenomenal 
        sensation that is. . . . [T]hat's why this was such a 
        great effort in terms of outreach to this community and 
        the Vice President having an opportunity to be exposed 
        to the community and to talk about leadership and 
        activity. . . .
          Q. Did you have any conversations with John Huang or 
        Maura McManimon or anyone with the DNC about whether 
        this was a finance-related event?
          A. We had conversations, and if this were a finance 
        event, we would have spoken in terms of dollar amounts 
        and people's donations to participate in the event, and 
        no such conversation ever took place, neither with John 
        Huang nor with Maura McManimon.
          Q. Or with anyone else at the DNC?
          A. Or with anyone else at the DNC or the Vice 
        President's Office. . . .
          Q. [D]o you recall if you received any documentation 
        that talked about the Hsi Lai Temple event being a 
        fundraiser?
          A. No, I do not. . . . I would have known from the 
        advance people if, you know, there were some indication 
        of money. In the typical setting of a fundraiser, 
        again, somebody who would have given a significant 
        amount of money . . . they would have an opportunity to 
        shake the Vice President's hand separately from 150 
        people. But that was not the case, and I would have had 
        a conversation with John Huang, and that didn't happen. 
        . . .
          Q. Did you ever discuss with anyone . . . about if 
        you had concerns that the event was taking place at the 
        Hsi Lai Temple, which was a religious center?
          A. No, I did not, because . . . I asked the question 
        of John to . . . explain the significance of the Temple 
        to me, and he did, and I was comfortable with the fact 
        that this was a place where the community congregates 
        on special occasions . . . not only a holy place, but 
        also a community center. . . .
          Q. And you stated earlier that after the press 
        accounts came out you were surprised because you didn't 
        know anything about any fundraising activities.
          A. That's correct. I mean, those were all accounts 
        that came out in the press, and it was rather shocking 
        to me.
          Q. Because you had been talking with John Huang prior 
        to the event, and you had had no discussions with him 
        about fundraising activities?
          A. That's correct. . . . [T]his was such a ``feel 
        good'' type event, if I can really say. . . . [W]e're 
        delving into yet another group that has been a part of 
        Americana for so many years, and you know, these people 
        were so excited about this event. . . .
          Q. So there was never a time that you believed that 
        this was going to be a fundraiser?
          A. No.326

    Despite this critical testimony from the key scheduler in 
the Vice President's office, the Majority refused to call her 
as a hearing witness, rejecting a unanimous request from 
Committee Democrats to have her testify.327
    The other person on the Vice President's staff who played a 
key role in the Temple event was the Vice President's deputy 
chief of staff, David Strauss, who personally briefed the Vice 
President about the event, counseled him on the type of remarks 
that would be appropriate at the event, and actually 
accompanied the Vice President to the Temple event. Strauss 
testified unequivocally that he understood the event to be a 
community outreach event and not a fundraiser, and informed the 
Vice President accordingly.328 Strauss testified:

          I was the person who was solely responsible for 
        telling the Vice President what this event was. He 
        relied on my judgment about this event. I explained to 
        him what the event was all about, suggested to him what 
        sort of remarks to make that would be appropriate for 
        this event. I take full responsibility for the Vice 
        President's knowledge about this event. He got the 
        significant information from me and from the briefing 
        book.329

    The briefing book, which Strauss testified that the Vice 
President would have reviewed immediately prior to the Temple 
event, also presented it as a community outreach event and not 
a fundraiser.330 Particularly compelling are the 
differences between the briefing materials given to the Vice 
President for the Temple event compared to the briefing 
materials given to him for a San Jose fundraiser later the same 
day. The briefing materials for the Temple event described it 
as a DNC Asian-Pacific American Leadership Council luncheon 
honoring Vice President Gore. Talking points prepared for the 
Temple event did not include any references to campaign 
contributions or any amounts being raised by the event, nor did 
they call for the Vice President to thank the participants for 
making a contribution.331 Furthermore, the talking 
points prepared for the Hsi Lai Temple event were much longer 
than the boilerplate fundraising speech and covered many 
different issues, including ethnic diversity. In contrast, the 
briefing materials prepared for the San Jose fundraiser 
specified the amount of money to be raised at the event: 
332

          This is the first San Jose-based event during the 
        Clinton/Gore Administration, so most of the guests are 
        new supporters of the DNC. San Jose Mayor Susan Hammer 
        has been extremely helpful with this event as co-chair 
        with George Marcus, the event host. Estimated 
        attendance at the reception is 100-125 guests. This 
        event is raising $250,000 for the DNC. [Emphasis 
        added.] 333

    That type of information was not included in the Temple 
briefing materials.
    In addition, the event itself was conducted like a 
community outreach event and not as a fundraiser. No money was 
collected at the door, no campaign materials were present, and 
no one discussed contributions at the event. According to an 
audio tape of the event produced to this 
Committee,334 the Vice President never made a 
request for contributions during his speech nor did he thank 
the luncheon attendees for their support.335 He 
spoke instead about diversity in America.
    Individuals who attended the Hsi Lai Temple luncheon on 
April 29, 1996, verified that the event did not appear to be a 
fundraiser. John Aloysius Farrell, a Boston Globe reporter, the 
Venerable Master Hsing Yun, and David Strauss attended the 
April 29, 1996, luncheon and provided consistent accounts that, 
based on the objective evidence at the event and the content of 
the Vice President's remarks, the Hsi Lai Temple event was not 
a fundraiser.
    On September 4, 1997, Farrell provided significant 
confirmation that the Hsi Lai Temple event did not appear to be 
a fundraiser. Farrell accompanied the Vice President on the 
``marathon trip from Washington to California on April 29, 
1996, and interviewed the vice president on Air Force II.'' 
336 Farrell wrote:

          . . . Gore's own words and actions at the Buddhist 
        temple, witnessed by a Globe reporter and described 
        here for the first time, give credence to the Vice 
        President's assertion that while he knew there was a 
        fund-raising component to the event, he viewed it more 
        as a good-will visit with Asian-American leaders.
          Although other party leaders warmed up the audience 
        with political rhetoric, Gore's remarks were non-
        partisan and restrained, markedly different from the 
        biting one-liners he offered at another fund-raiser 
        that evening in Northern California.
          At the Hsi Lai Temple, Gore spoke in personal terms 
        of his acquaintance with Hsing Yun, the venerable maser 
        and leader of the temple and its growing worldwide 
        congregation, and of the U.S. tradition of tolerance 
        for immigrant cultures. Gore made no explicit pitch for 
        contributions. . . .337

    The Venerable Master Hsing Yun confirmed in his interview 
with Committee staff that fundraising was not discussed at the 
Hsi Lai Temple event. He stated, ``In addition to Buddhists, 
there were also Catholic, Protestant, and Muslim friends at the 
event, also some people I didn't know. . . . We did not speak 
about the campaign or anything about politics or donations.'' 
338
    Strauss, who attended the event with the Vice President, 
explained to the Committee that the Vice President did not give 
a fundraising speech at the Hsi Lai Temple event. Strauss 
testified, ``it was a very good speech, but it had nothing to 
do with fundraising.'' 339 Strauss described the 
Vice President's speech to the Committee:

          A: . . . typically my role for this sort of event, 
        what I would try to do is quickly size up the situation 
        for the Vice President. I talked briefly to Congressman 
        Matsui who had heard the Vice President a week or so 
        beforehand give what I called his E Pluribus Unum 
        speech, and after consulting with Congressman Matsui, I 
        suggested that considering the nature of this group, 
        where you had Asians, Hispanics, African Americans, 
        that that would be an appropriate set of remarks for 
        this particular event, and in that speech, he would 
        refer to the richness of our diversity and what a 
        strength it is in this country and draw the comparison 
        with Bosnia, Rwanda, Burundi, Nagorno-Karavakh. I mean, 
        he had this very moving speech about tolerance that he 
        would make, and that those were the remarks that he 
        made at this particular event.
          Q: Did it include any request for money or any thank 
        you for people having contributed?
          A: It did not.340

    Strauss also testified that the event did not appear to be 
a fundraiser. The typical elements of a fundraiser or a 
political event were not present at the Hsi Lai Temple on April 
29, 1996: there were no ticket tables, no one collected or 
asked for contributions, there were no political campaign 
posters, there was no campaign literature, nobody tried to 
recruit volunteers for the campaign and nobody thanked 
attendees for making a financial contribution.341 
Strauss concluded that the Hsi Lai Temple event was not a 
fundraiser:

          Q: Based on your experience and all the years that 
        you have been doing this sort of thing and attending 
        hundreds of fundraisers, did this appear to you to have 
        the indicia of a fundraiser, this event?
          A: I believe that I know what a fundraiser is, and 
        this was not a fundraiser.342 [emphasis 
        added]

    Other attendees at the event confirm that it did not appear 
to be a fundraiser. Charlie Woo, mentioned earlier, told 
Committee investigators that there was ``no mention of money at 
the event.'' 343 Mona Pasquil, DNC Western States 
political director and former director of Asian-Pacific 
affairs, testified that she saw no signs of fundraising, such 
as a table at the door, name tags, checks being exchanged, or 
solicitations for money.344 DNC Chairman Fowler 
described it as an ``outreach event'' similar to those he 
attended at churches in the 1960s; not everyone who attended 
also contributed, and there were none of the typical trappings 
of a fundraiser.345 DNC Chairman Donald Fowler 
testified, ``[T]here were three people who made presentations 
there--myself, the temple master, and the Vice President. None 
of the three of us made any reference to raising money, 
contributing money, giving money before or after.'' 
346
    Persons associated with the Temple who helped organize the 
event also indicated that they did not consider the event to be 
a fundraiser.347 Man-Ho, assistant to the Temple 
abbess, testified at the hearing that Temple personnel did not 
focus on fundraising during planning before the 
event.348 In her deposition, she said that the 
guests ``were not required to pay a buck for [the] luncheon. . 
. .'' 349 She also told the Committee that she did 
not see anything at the event that would indicate that it was a 
fundraiser.350 The head of the Temple, Venerable 
Master Hsing Yun, provided a statement to the Committee with 
consistent information.351
    The evidence also indicates that no invitation associated 
with the event contained anything remotely resembling a 
solicitation.352 Such solicitations are generally 
included in invitations to DNC fundraisers and range from a 
price stamped on the invitation to a card enclosed with 
different contribution levels.353 The absence of any 
solicitation or admission price on any invitation is further 
evidence that a contribution was neither required nor expected, 
and the purpose of the event was not to raise funds.
    Further, most of the attendees did not 
contribute.354 For example, Ted Sioeng, his wife, 
daughter and two other relatives were invited by Huang and 
attended the event without making any 
contribution.355 While DNC records attribute 42 
contributions to the Temple event, 12 of which were from 
monastics who did not attend the event itself, and only another 
15 or so were from attendees. That means of the 100 or so 
persons who attended the event, only about 15 contributed in 
connection with their attendance.356
    The allegation has been made that the participation of John 
Huang and Maria Hsia in organizing the event should have told 
the Vice President that the event was a fundraiser, but both 
had previously been involved in arranging non-fundraising, 
political outreach events for the Asian-American community. For 
example, both helped organize a September 27, 1993, meeting 
with Asian-American leaders that was described in the Vice 
President's briefing papers as an Asian-American community 
outreach event.357 Moreover, Hsia had been involved 
in the organization of only one prior fundraiser for the Vice 
President but had organized his 1989 trip to Taiwan with the 
Pacific Leadership Council which had no fundraising aspects. 
And as indicated above, Huang had never given any indication to 
anyone on the Vice President's staff that any fundraising was 
involved in the Temple event.358
    Strauss addressed this issue in his testimony to the 
Committee. He testified emphatically that he had no knowledge 
that the Vice President or anyone on the Vice President's staff 
knew anything about the post-event fundraising activities 
engaged in by Huang or Hsia.359 Strauss testified:

          Q: Prior to the time that the newspaper articles 
        appeared in the fall of 1996, did you have any reason 
        to believe that anybody on the Vice President's staff 
        had heard that there was any fundraising engaged in by 
        Ms. Hsia, by virtue of a call from Huang?
          A: I have no knowledge that anyone did know.
          Q: Did you ever know anything about contributions 
        having been collected or monies having been collected 
        prior to the April 29th event at the Hsi Lai Temple? 
        There has been testimony that a certain amount of money 
        was generated in advance of the event.
          A: I had no knowledge of that.
          Q: Do you have any reason to believe that the Vice 
        President knew anything relative to this event, either 
        prior to the event or that after the event any monies 
        had been collected?
          A: I have no reason to believe that he knew anything 
        about this.360

    Ladan Manteghi, the scheduling staff person who put 
together the final details of the Vice President's April 29, 
1996 schedule, confirmed that the information regarding Huang 
and Hsia's activities were a surprise to the Vice President's 
staff when they were first reported by the news media. She 
explained in her deposition that the scheduling staff was 
``meticulous'' and that they ``scrutinized, really, 
everything'' to make sure that ``all the i's were dotted, the 
t's crossed.'' 361 She testified:

          A: So that's where the element of surprise came in 
        when all the accounts started coming out. It was, like, 
        wait a minute, we really went through everything, and 
        so how could this be? This seems really kind of off the 
        wall. You know, from my perspective, that's how it 
        seemed.
          Q: So there was never a time that you believed that 
        this was going to be a fundraiser?
          A: No. By the time I received it, this was not going 
        to be a fundraiser.362

    There are two types of evidence suggesting that the Temple 
event was a fundraiser. The first involves the fact that Huang 
did solicit contributions in connection with the event, as 
discussed below, but there is no evidence that the Vice 
President had any knowledge of those solicitations. The second 
involves several internal communications--e-mails and memoranda 
between staff members for the Vice President--that refer to the 
Temple event as a ``fundraiser,'' 363 as discussed 
above. Relevant testimony included Tilley's statements 
regarding the ``sloppiness in the terms we were using, whether 
it was finance or fundraising,'' 364 and Strauss's 
testimony that the character of an event would often change 
during the scheduling process, making it difficult to ensure 
that the proper term was used.365 In addition, 
Tilley testified that the Vice President's scheduling office 
usually referred to an event from the DNC Finance Department as 
a fundraiser, even though it may not have been a 
fundraiser.366
    From the perspective of Vice President Gore, the Vice 
President's office, and the DNC, the Hsi Lai Temple event was 
not a fundraiser. There is no evidence before the Committee 
that Vice President Gore knew that contributions were solicited 
or received in relation to the Temple event. The information 
received by the Vice President regarding the event described it 
as an opportunity for the Vice President to meet with members 
of the local Asian-American community. John Huang assured DNC 
Finance Director Richard Sullivan that the event was not a 
fundraiser, but instead would involve community outreach. 
Moreover, the event had none of the trappings of a fundraiser.
            John Huang and the Temple event
    Although the Temple event was not a fundraiser and Huang 
had represented that to Richard Sullivan, DNC finance director, 
when specifically asked, Huang did use it as an opportunity to 
obtain contributions to the DNC. Huang attributed $159,000 in 
DNC contributions to this event. Many of these contributions 
were from monastics at the Temple and were subsequently and 
possibly illegally reimbursed by the Temple. (See Chapter 21 of 
the Minority Report.) 367
    As mentioned above, Sullivan testified that, while he was 
not involved in the day-to-day planning of this event, he 
ensured that Huang knew that he could not hold a fundraising 
event at a Temple, and Huang confirmed to him that he was aware 
of this restriction.368 Sullivan further testified 
that he facilitated a conference call between himself, Huang 
and David Strauss, Deputy Chief of Staff to the Vice President, 
to reassure Strauss that the event was not a 
fundraiser.369
    It appears, however, that when the original fundraiser 
tentatively planned for the Harbour Village restaurant was 
canceled, Huang invited the guests for that event to the 
``community outreach'' event at the Temple. Huang then 
apparently used the Temple event to solicit contributions 
despite his contrary representations to the DNC.
    Man-Ho, the assistant to the abbess at the Temple, 
testified that at a particular meeting of monastics, the abbess 
told monastics that it would be all right for them to ask 
devotees to contribute $5,000 to come to the luncheon and have 
their picture taken with the Vice President. Man-Ho testified 
that she did not know whose idea this was, though it appears 
that, from other evidence, this likely was the result of 
direction from Maria Hsia or John Huang.370
    On April 28, 1996, the day before the event, at the third 
of three meetings between Man-Ho and Huang,371 Man-
Ho handed Huang a list of names and amounts contributed prior 
to the event.372 Despite Huang's representations to 
Sullivan and Strauss, Huang told Man-Ho that any other devotees 
who would like to attend the event could do so for $2,500, as 
opposed to the $5,000 that had been requested until 
then.373
    Prior to the April 29 event, checks written out to the DNC 
were collected totaling $45,000.374 In addition, 
some who contributed before the event also had their pictures 
taken with the Vice President.375
    Man-Ho testified that on April 30, the day after the Temple 
event, Maria Hsia called her to say that ``John Huang hoped 
that the Temple could contribute more money,'' 376 
since only $45,000 of an anticipated $100,000 had been 
collected. The ensuing facts of how the monastics contributed 
additional amounts to help Huang reach this goal are covered in 
Chapter 21 of the Minority Report. Man-Ho testified that she 
believed that the money the monastics collected was given to 
Huang later that day.377
    While there is no evidence that Huang spoke directly with 
anyone at the Temple regarding a request for additional 
contributions, it is clear that Hsia communicated Huang's 
fundraising appeal. She also assisted the monastics, for a fee, 
with many immigration matters and advised them on other legal 
matters. Yi Chu testified that the Temple monastics had been 
responding to fundraising requests by Hsia since 1993. Though 
the amount requested was larger than previous requests, it was 
viewed, once again, as helping Hsia, and the Temple complied. 
Huang and Hsia had known each other for a long 
time,378 and it is likely that Huang would have 
known about Hsia's relationship with individuals associated 
with the Temple.379 There is insufficient evidence, 
however, to determine whether Huang knew that the Temple 
planned to reimburse its monastics' contributions to the DNC.
            John H.K. Lee and the Cheong Am America contribution
    Huang's involvement in obtaining a $250,000 contribution 
from Cheong Am America in the spring of 1996 is disturbing for 
a number of reasons. This incident not only involves a campaign 
contribution later discovered to have been paid for with 
foreign funds at the direction of a Korean national, it also 
demonstrates Huang's apparent willingness to disregard 
established DNC procedures for evaluating contributions.
    Cheong Am America, Inc. was a joint venture between two 
South Korean firms that were considering constructing a large-
screen television manufacturing plant in Carson, California. 
The two firms were the Cheong Am Group and Ateck Company. The 
Cheong Am Group was headed by Korean businessman John H.K. Lee, 
the moving force behind the joint venture. Lee was later 
revealed to be a convicted criminal and was subsequently 
indicted in Seoul in connection with this matter.380 
Ateck, a $50 million company with a history of successful 
manufacture of large-screen televisions, was headed by Korean 
businessman Young Chull Chung, whom Lee was pressing to finance 
the U.S. plant.381 Their joint venture, Cheong Am 
America, was established in February 1996 as a U.S. subsidiary 
of the Cheong Am Group.382 If the large-screen 
television manufacturing plant had been built, it apparently 
would have been the first of its kind outside of 
Asia.383
    In the spring of 1996, Lee contacted Carson mayor Michael 
Mitoma and told him that before a final decision could be made 
on building the plant in Carson, Lee and his associates would 
like to meet with President Clinton.384 Lee had been 
advised to contact Mitoma by Lucy Ham, a Choeng Am America 
officer and friend of Mitoma.385 In testimony before 
the Committee, Mitoma said that he agreed to try to arrange a 
meeting for Lee by telephoning Doris Matsui, Deputy Director of 
the White House Office of Public Liaison in charge of Asian 
American issues. When Matsui failed to return his telephone 
messages,386 Mitoma called the DNC at the suggestion 
of Ham, who was aware that an Asian American was organizing 
fundraising events with the President.387 The person 
Mitoma talked to at the DNC was Huang.
    Mitoma and Huang apparently had several discussions about a 
possible meeting between Cheong Am America associates and the 
President, including Lee's preference for a 30-minute private 
meeting in Washington or Korea.388 Mitoma told the 
Committee that the final arrangement reached was that Lee, 
Chung, Lucy and Won Ham, and Mitoma would attend a small 
fundraising dinner with the President on April 8, 1996, at the 
Sheraton Carlton Hotel in Washington. In exchange, Cheong Am 
America would make a contribution to the DNC covering five 
dinner tickets at $50,000 apiece, for a total of 
$250,000.389 Although Cheong Am America did in fact 
purchase five tickets to the dinner, what actually took place 
was a five to ten minute meeting in a hotel reception 
room.390
    Documents show that on April 8--the day of the dinner--
Huang faxed DNC finance director Sullivan a two-page 
handwritten document, ``per our conversation,'' stating that 
Cheong Am America was looking for ``a large U.S. broadcasting 
company'' for a joint venture to manufacture and market large-
screen televisions, with the plant to be built in Carson. The 
document listed five meeting ``participants,'' identified Lee 
as chairman of the Cheong Am Group in Korea, and inaccurately 
identified Chung as head of a Cheong Am Group ``division.'' 
391 In response to the fax, Sullivan sent a 
memorandum--also dated April 8--to Doug Sosnick and Karen 
Hancox of the White House Office of Political Affairs stating 
that the Carson mayor wanted ``five minutes'' with the 
President that evening ``before our first dinner'' to discuss 
the proposed plant in Carson.392 Neither document 
indicated that the Cheong Am representatives would be attending 
the dinner itself.393
    Mitoma told the Committee that in a phone call on the day 
of the dinner, Huang had hinted that it might only be possible 
for Lee to have a private meeting with the President and not 
attend the dinner.394 Mitoma testified that he was 
upset by this conversation in light of the large sum of money 
Lee was paying for an opportunity to dine with the President. 
He testified that, in addition, Lee was flying into Washington 
from Korea for the sole purpose of attending the dinner and 
bringing the check with him from Korea.395
    Mitoma told the Committee that when his party arrived at 
the Sheraton Carlton Hotel, they waited for about an hour in 
the hotel lobby before being met by Huang.396 They 
were then ushered into a ``side room.'' 397 
According to Mitoma, he handed Huang the $250,000 check while 
they were in the lobby, prior to being taken to the side 
room.398 Mitoma testified that the President arrived 
in the side room and a brief meeting followed. Mitoma indicated 
that he told the President that Lee was interested in opening a 
manufacturing plant that would create much-needed jobs in 
Carson, and that the President said that was a ``very good 
idea'' and he hoped it would happen.399 Mitoma 
testified that Lee and the others then had their pictures taken 
with the President.400
    While Mitoma's testimony makes clear that neither he, Lee, 
nor Chung advocated any substantive policy change nor requested 
special treatment during or after the meeting,401 
the evidence before the Committee indicates that Cheong Am 
America's $250,000 contribution was made for the sole purpose 
of obtaining access to the President. The evidence also 
demonstrates that Huang was an apparently willing and 
uncritical participant in an apparent sale of access.
    The evidence also indicates that Huang apparently failed to 
meet his core responsibility of carefully evaluating the 
$250,000 contribution to ensure that the DNC could properly 
accept it. A 1995 DNC memorandum, authored by DNC General 
Counsel Sandler, required all contributions from U.S. 
subsidiaries of foreign corporations to be thoroughly reviewed 
by the DNC general counsel's office before 
acceptance.402 The memorandum identified four 
requirements for accepting such contributions: (1) the 
subsidiary must be incorporated and have its principal place of 
business in the U.S.; (2) the subsidiary must have sufficient 
funds from its own U.S. operations to support the contribution; 
(3) the subsidiary cannot be reimbursed by the foreign owners 
or parent corporation for its contribution; and (4) the 
decision to contribute must be made by U.S. citizens or 
permanent residents and not by foreign nationals.403 
The last paragraph of the memorandum stated the following:

          Each situation must be examined on a case-by-case 
        basis before any decision to accept a contribution can 
        be made. As we discussed, the procedure should be that 
        you or your staff discuss the situation with Neil or 
        myself, that DNC counsel review the above requirements 
        with counsel or another official of the company, and 
        that either the company confirm to us in writing that 
        the requirements have been met or that we issue a 
        letter to the company setting out their factual 
        representations to us showing that these requirements 
        have been met and confirming that on the basis of those 
        representations the contribution is 
        lawful.404 [Emphasis in original.]

    The evidence indicates that Huang, due to his DNC training, 
knew or should have known of these DNC procedures and legal 
requirements.405 Mitoma testified that at one 
point--it is unclear whether it was before or after he had 
delivered the check--Huang asked him whether Cheong Am was 
incorporated in the United States and whether the contribution 
would be drawn on a bank account belonging to the U.S. 
corporation. Mitoma stated he responded in the affirmative 
after checking with Lucy Ham at Cheong Am 
America.406 He testified that Huang never asked him 
whether any foreign national, such as Lee or Chung, was 
involved in the contribution decision, or whether the company 
was using U.S.-generated income to pay for the 
$250,000.407
    According to DNC Finance Director Sullivan, when Huang gave 
him the $250,000 check in April 1996, he told Huang that he had 
expected personal contributions from Ham and her husband (who 
were U.S. citizens), and expressed concern about the 
eligibility of Cheong Am America to contribute. Sullivan 
testified that Huang told him that he held onto the check for 
two days, and Sullivan assumed, based on his conversation with 
Huang, that he had run the check by the general counsel's 
office. He said:

          I remember looking at it with him and saying, are you 
        okay with this and have you vetted this with Sandler, 
        and he responded, yes.408

    Sandler testified, however, that Huang had not discussed 
the Cheong Am contribution with him prior to September 1996, 
when the DNC received information that there might be a problem 
with the contribution.409
    A memorandum dated September 20, 1996, attended by Sandler 
and Jake Siewert, states that after learning on September 19th 
that there might be a problem with the contribution, the DNC 
immediately investigated, uncovered significant questions, and 
returned the funds the same day, seven weeks before the 
election.410 The memorandum states:

          The DNC's fundraiser [Huang] understood that the 
        company had been in existence in the U.S. for some 
        months. He also was led to believe that all three of 
        the company's principals . . . were U.S. citizens or 
        permanent residents. . . . We learned yesterday . . . 
        the company had no operations in the U.S. at the time 
        the contribution was made . . . [and] one of the three 
        principals, its chairman, John Lee, was not a U.S. 
        citizen. The DNC's fundraiser had been led to believe 
        that Mr. Lee was a permanent resident because he has a 
        social security number, and had resided in Los Angeles 
        for some time; there may have been some confusion 
        because his son is a permanent resident. The other two 
        principals are in fact U.S. citizens and it is our 
        fundraiser's firm understanding that these two made the 
        decision to contribute. However, the involvement--and 
        presence at the fundraiser--of Mr. Lee, raises 
        sufficient additional questions . . . that we would not 
        have accepted the contribution had we known Mr. Lee was 
        not a permanent resident.411

The memorandum admits, ``In this case, the [DNC's] normal 
vetting process broke down.'' 412 Sandler also 
testified at his deposition that when he asked Huang about the 
contribution in September, Huang admitted that he ``had made a 
mistake.'' 413
    The evidence is clear that, with respect to the Cheong Am 
America contribution, Huang apparently failed to follow the 
DNC's procedures for evaluating contributions from U.S. 
subsidiaries of foreign corporations. He did not ask all of the 
required questions of the company and apparently failed to 
consult the DNC general counsel's office. When asked by 
Sullivan in April if he had spoken with the general counsel's 
office, Huang apparently indicated that he had, even though the 
general counsel has testified that the first time he was 
contacted about the contribution was in September. While the 
evidence does not establish that Huang knew that foreign 
nationals had participated in the contribution decision and 
used foreign funds to pay for the contribution, the evidence 
does show that Huang knew that Lee had flown in from Korea for 
the dinner and had originally wanted to meet with the President 
in Korea. Given these facts, Huang should have exercised 
greater care in determining whether Lee was a foreign national, 
whether Chung, his Korean partner, had participated in the 
contribution decision, and whether funds from Korea had been 
used for the contribution.
    DNC officials should have exercised more careful oversight 
over Huang's fundraising. However, once the DNC became aware of 
questions about the Cheong Am contribution, it initiated a 
prompt investigation, Huang admitted his missteps to Sandler, 
and the DNC immediately returned the funds.
            June 18, 1996, DNC coffee at the White House
    Another event Huang helped organize was a DNC coffee held 
at the White House on June 18, 1996. This was the only coffee 
Huang attended.414 Thai businesswoman Pauline 
Kanchanalak also attended with several of her business 
associates who were foreign nationals and nonresidents and, 
therefore, ineligible to contribute to the DNC. Kanchanalak was 
known at the DNC as a significant contributor.415 
The Committee investigated whether Huang sold access to the 
President through this coffee or whether he made a solicitation 
at the coffee. The Committee did not receive testimony from 
Huang, or from Kanchanalak, who reportedly has left the 
country.
    Also present at the coffee were Clarke Wallace, executive 
director of the U.S.-Thailand Business Council, which promotes 
trade and investment between Thailand and the United States; 
Beth Dozoretz, a volunteer fundraiser for the DNC, and her 
guests, Renee and Robert Belfer; the DNC's Donald Fowler and 
Marvin Rosen; and Bob Nash, Director of Presidential Personnel.
    Kanchanalak was a well-established supporter of the DNC 
prior to the 1996 election cycle.416 Sullivan 
testified that she had been giving to the DNC since at least 
1991.417 She was active in Asian-American political 
circles, and as an existing DNC Trustee, had attended the 
inaugural Asian Pacific American Leadership Council dinner with 
Vice President Gore on November 2, 1995.418 Huang 
was put in charge of Kanchanalak's ``account.'' 419
    In late spring 1996, Kanchanalak expressed her desire ``to 
come and bring a couple of people to [a] coffee.'' 
420 Sullivan testified that he initially opposed 
Kanchanalak's list of proposed coffee attendees because they 
did not serve the purpose of cultivating new contributors and 
appeared to be designed as an opportunity for Kanchanalak to 
impress her business clients.421 Thus, unlike the 
many other DNC events at the White House in which both 
established and prospective Democratic supporters were invited, 
the June 18, 1996 coffee did not involve an opportunity for the 
President to interact with a variety of party supporters but 
rather appeared to be a favor for Kanchanalak. However, John 
Huang was insistent that her Thai guests must be allowed to 
attend,422 and Sullivan and Rosen acceded.
    Sullivan testified that it was his sense that Kanchanalak 
wanted to attend this coffee to impress her clients from the CP 
Group, a large Thai conglomerate, and that the DNC included 
Kanchanalak and her guests as a favor to her.423 FEC 
records also indicate that ``P. Kanchanalak'' gave 
contributions of $85,000 on June 19, 1996, and $50,000 on July 
10, 1997, and Pauline Kanchanalak's sister-in-law, Duagnet 
(Georgie) Kronenberg, gave $50,000 on June 19, 1996. Two 
contributions from attendees to this event were attributed to 
this coffee. For internal tracking purposes, the DNC assigns 
``codes'' to contributions associated with particular events. 
Because coffees were not considered ``fundraisers,'' they did 
not normally have contributions credited to them.424
    While both the DNC and the White House both approved the 
list of prospective attendees, this is the very system which is 
to blame for the fact that this coffee occurred at all. For 
instance, the knowledge that a donor was ``insisting'' on 
bringing her business associates to a DNC coffee with the 
President should have raised a warning flag for Sullivan, who 
had earlier expressed concerns about Huang's fundraising.
    The second allegation is of a possible solicitation at the 
coffee. Karl Jackson, a Republican, was President of the U.S.-
Thailand Business Council with which Kanchanalak was also 
involved.425 Jackson testified that he was invited 
to the coffee a day before it was held and was told that 
representatives of the council, including the chairman, would 
be there.426 Jackson said he understood this to be a 
policy meeting with the President and was surprised when he 
heard ``DNC'' mentioned as he arrived at the White House for 
the coffee.427 Jackson alleged that at the beginning 
of the coffee, Huang stood up and said ``Elections cost money, 
lots and lots of money, and I am sure that every person in this 
room will want to support the re-election of President 
Clinton.'' 428 Jackson was contradicted by other 
attendees.429
    The Committee heard public testimony from three of the nine 
attendees at this coffee: Jackson, Wallace, and Dozoretz. 
Committee staff also deposed Wallace, Dozoretz, and Robert 
Belfer, but not Jackson. Much of this testimony focused on 
Jackson's allegation.
    Wallace testified that he did not consider the coffee to be 
a fundraiser. He said ``what it appeared to be was a 
relationship-building type event with major donors.'' 
430 Wallace recalled that the President introduced 
Huang to the group at the end of the coffee, not at the 
beginning as Jackson recounted.431 Wallace testified 
that at that time:

          John Huang spoke and he said [to] the President, 
        ``Thank you very much for being here, Mr. President,'' 
        and I think speaking more to the table, he said, ``as 
        you know,'' he said, ``this President is the right man 
        to lead [the] country into the 21st century, into the 
        next millennium and I think we have one small hurdle'' 
        or something like that, ``which is the elections in 
        November and I'm sure you will do everything you can to 
        support that, support the--everyone at this table will 
        do what they can to support the President.'' 
        432

Wallace has no independent recollection of Huang making any 
statement about ``elections being expensive,'' although he does 
not contest that this may have been said.433 Wallace 
testified in his deposition that he did not understand Huang to 
be suggesting to the coffee attendees that they themselves 
should contribute. Rather, Wallace testified that he 
interpreted Huang's remarks as follows: ``Helping to either . . 
. raise money or help to strengthen the DNC somehow either 
through networking to get people to support the President or . 
. . networking to get people to give donations.'' 
434
    Dozoretz has been a volunteer DNC fundraiser since 1992 and 
is familiar with fundraising events and how they are organized 
and carried out.435 She testified that she has never 
been told that if she raised a certain amount of money she 
would be given access to the President; indeed, she said she 
was always told that access to the President was not dependent 
upon the quantity of contributions given.436 Prior 
to press accounts, Dozoretz does not recall anyone at the DNC 
referring to the coffees as fundraisers.437
    Dozoretz who unlike Jackson, sat right next to Huang at the 
coffee, testified that Huang did not solicit the coffee 
guests.438 She said that she would have remembered 
if Huang had solicited the coffee attendees because ``he would 
have been soliciting people that I brought to the coffee. He 
would have been soliciting me, and I certainly would have 
remembered it, and I certainly would have left there having a 
clear understanding that he worked for the DNC.'' 
439 In fact, she initially thought Huang was a 
member of Kanchanalak's group.440
    Dozoretz's guest at the coffee, Robert Belfer, likewise 
testified he never formed the impression that he was attending 
a fundraiser. In his deposition, Belfer testified: ``Nothing 
occurred in that room to lead me to understand that I was asked 
or expected to give money as a result of that coffee. . . . I 
was not asked at the coffee, nor did I hear anybody else being 
asked at the coffee to give money.'' 441 Belfer also 
had no recollection of Huang making any remarks during the 
coffee. In his deposition, Belfer testified that he, too, 
assumed that Huang was a member of Kanchanalak's Thai 
delegation, and he would have ``clearly had an understanding 
that [Huang] was somehow not a part of this delegation if he 
got up and gave a fundraising pitch to the people there.'' 
442
    Jackson is the only coffee attendee who recalls Huang 
making a solicitation for money. Jackson's own testimony 
reveals that even his version of what Huang purportedly stated 
was not an express solicitation. Others who attended the coffee 
do not support even this version of Jackson's testimony; even 
Jackson's subordinate at the U.S. Thailand Business Council, 
Clarke Wallace, does not support Jackson's recollection. It is 
noteworthy that over 1,000 people attended numerous coffees 
over two years and that Jackson, a longtime Republican, is the 
only attendee who claimed that there was a solicitation at a 
coffee.
    The Pendleton Act prohibits solicitations for political 
contributions on federal property. Under the Pendleton Act, 
such solicitations are prohibited only in certain areas of the 
White House. This coffee occurred in the Map 
Room,443 which has been expressly excluded from the 
prohibition on solicitations on federal property. While the 
alleged solicitation, even if it had occurred, might not have 
been illegal, it would have been improper. The preponderence of 
evidence before the Committee, however indicates a solicitation 
did not, in fact occur.444
            Rawlein Soberano
    Rawlein Soberano, is an independent consultant and also co-
founder and vice president of the Virginia-based Asian American 
Business Roundtable (``AABR''). The AABR is a small 
organization that helps promote Section 8(a) contracts between 
its members (small, disadvantaged companies) and the federal 
government.445 Soberano testified before the 
Committee that he met with Huang for lunch in early August 1996 
to discuss potential sponsors for the annual AABR dinner 
banquet.446 Soberano alleged that when the 
conversation turned to a discussion of the AABR's small 
operating budget, Huang offered to provide the organization 
with $300,000.447 He described the offer in the 
following terms:

          And I told him about the organization. I remembered 
        that it was during the discussion about the budget when 
        he mentioned--and I remember this as if it was 
        yesterday. He said, ``Perhaps we can help you out,'' 
        and that's when I looked at him and said ``How?'' and 
        he said categorically and plainly, ``We can give you 
        $300,000 and you can give it back to us later, and you 
        can give 15 percent for the organization,'' but that is 
        when I told him, ``John, this conversation never took 
        place.'' 448

    As a result of this alleged conversation, Soberano inferred 
that Huang was offering to provide the AABR with money that he 
thought may come from the DNC. Soberano testified, however, 
that Huang never identified either the source of the money that 
could be provided to the AABR or to where the money would be 
repaid by the AABR.449 In both his deposition 
testimony and his hearing testimony, Soberano also confirmed 
that Huang never used the word ``DNC'' during their 
conversation.450 Soberano also testified that he did 
not ask Huang any follow-up questions, nor did the two have any 
other discussion at all about this except for the alleged 
statements recounted above.451
    The Committee was presented with no evidence to support 
Soberano's allegations. Soberano's calendar, which was produced 
to the Committee, shows no appointment with Huang on the date 
in question. Soberano admitted that he did not make 
reservations for his lunch with Huang452 and that he 
knew of no one who saw the two at the restaurant.453 
Soberano also stated that following the incident, he did not 
tell his boss at the AABR or anyone else, including his wife, 
about his alleged conversation with Huang.454
    Soberano's understanding of his conversation with Huang is 
subject to question. Soberano's allegation is based on his 
understanding of a brief comment by Huang, a man with whom he 
had never before had a one-on-one conversation.455 
Soberano is a registered Republican and former political 
appointee of the Bush Administration.456 Soberano 
did not come forward with this story until six months after 
this alleged event. His supervisor, a Republican activist, set 
up a meeting with a Washington Post reporter without Soberano's 
approval to urge Soberano to levy this charge against 
Huang.457 In fact, Soberano testified that he had 
refused to meet with reporters for many weeks and only did so 
after his supervisor set up an appointment without conferring 
with him.458 In the Post story that resulted from 
this interview, his supervisor appeared on the front page 
although she had no involvement with or knowledge of the 
activities at issue.459 Based on this evidence, the 
possibility cannot be ignored that Soberano misunderstood his 
conversation with Huang and that he was encouraged to assume a 
fundraising violation based on much publicized media accounts 
of allegations against Huang.460

The DNC's supervision of Huang

    Richard Sullivan, former DNC finance director, testified 
that as early as the Sheraton Carlton event in May 1996, he was 
concerned and ``nervous'' about the number of foreign nationals 
attending events organized by Huang.461 Despite this 
concern, Sullivan stated that he did not closely monitor 
Huang's fundraising in the months following this event because 
he believed Huang was reviewing questionable contributions with 
DNC general counsel Joseph Sandler.462 However, the 
only time Sandler reviewed contributions with Huang was after 
Huang's first fundraising event in February. Despite his 
concerns, there is no evidence that Sullivan ever raised the 
issue directly with Sandler or ever talked to Sandler to see if 
there were, in fact, any problems with the contributors Huang 
was soliciting.
    Following the Jefferson Hotel event, Sullivan became 
particularly concerned about small events organized by Huang 
with significant numbers of non-citizens in 
attendance.463 Although attendees at DNC events are 
often allowed to bring a guest, even if the guest is a 
noncitizen without permanent residence, Sullivan was worried 
about the impression created by an intimate DNC event with the 
President at which a large portion of the guests were unable to 
contribute because they were neither citizens nor permanent 
legal residents. Sullivan believed such events could invite 
unwanted press stories.464
    Sullivan also felt that it was possible that Huang had set 
up the Jefferson Hotel dinner as a way to impress his former 
boss, James Riady, and the other guests with his ability to 
arrange an intimate dinner for them with the 
President.465 Sullivan, however, apparently took no 
steps to stop the dinner or to expand the number of attendees. 
Sullivan evidently was aware of the guest list because he 
testified that he had run the list by Karen Hancox at the White 
House for her approval.466 Sullivan also testified 
that after the event Marvin Rosen, the DNC finance chairman, 
mentioned to him that some of the attendees were nonresidents 
and, thus, ineligible to contribute.467
    Although Huang had been hired to develop outreach efforts 
in the Asian Pacific American community, Rosen testified that 
he and Sullivan ultimately became concerned with Huang's 
failure to broaden the contributor base among this community. 
It appeared that Huang was inviting the same people to his 
events time and time again.468 Rosen stated that the 
DNC was looking for new sources of money, and he and Sullivan 
did not feel that Huang was producing such new 
sources.469 None of these concerns, however, led 
Rosen or Sullivan to scrutinize the contributors that Huang was 
bringing in, or to supervise him more carefully. Ultimately, 
the DNC did forbid Huang from arranging events at which the 
President would be in attendance.470
    While the DNC may not have had evidence that Huang was 
involved in soliciting foreign contributions, it does appear 
that there were sufficient concerns about the nature of the 
events Huang was involved in to warrant better supervision of 
his activities by his DNC supervisors

                               conclusion

    John Huang has been a central figure of the Committee's 
investigation into the 1996 federal elections, and the Minority 
believes that this scrutiny was fully justified. Although he 
did not hold a senior position in either the Democratic 
National Committee or any other Democratic organization, he has 
been linked to a large number of questionable and possibly 
illegal contributions. It would be impossible to conduct a 
serious inquiry into party fundraising without taking a close 
look at such an individual as well as the environment in which 
he operated. Who is John Huang? How was he hired as a 
fundraiser? How was he trained? How did he carry out his 
fundraising responsibilities? How well was he supervised and 
monitored by his superiors? The Committee examined all of those 
issues, and this chapter is an attempt to provide answers.
    But John Huang was a subject of the Special Investigation 
not only because of alleged fundraising abuses. Since the fall 
of 1996, he has been accused--directly or through insinuation--
of betraying his country, the United States, by acting as a spy 
for the People's Republic of China. The evidence gathered by 
this Committee does not support that allegation and, in some 
respects, seriously undermines it. The evidence shows that 
Huang did nothing to exploit his Commerce Department post to 
obtain classified information. Morever, Huang stated, through 
his attorney, that he was willing to testify before the 
Committee with a limited grant of immunity that would not have 
protected him from prosecution for any form of espionage or 
mishandling of classified information.
    Although the espionage allegations were not substantiated 
by the Committee's investigation, the Committee did find ample 
grounds for concern about the way Huang conducted himself when 
he was employed by the Democratic National Committee. No one at 
the DNC appears to have condoned Huang's improprieties, but the 
record shows that warning signs were ignored and that the DNC 
failed in its responsibility to ensure that Huang was complying 
with internal DNC policies and the federal campaign finance 
laws.

                               footnotes

    1 John Huang SF-171 Application for Federal Employment, 
DOC 03AM0042.
    2 John Huang SF-171 Application for Federal Employment, 
DOC 03AM0042.
    3 John Huang SF-171 Application for Federal Employment, 
DOC 03AM0042.
    4 John Huang SF-86 Application for Sensitive Position, 
DOC 03AM0047.
    5 Los Angeles Times, 10/21/96; Washington Post, 5/13/97. 
Huang spent seven years at American Security Bank in Washington, 
starting as a trainee and working his way up to assistant vice 
president.
    6 John Huang Deposition, 10/30/96, in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL).
    7 John Huang Deposition, 10/30/96, in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL).
    8 John Huang Deposition, 10/30/96, in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL).
    9 John Huang Deposition, 10/30/96, in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL).
    10 Newsweek, 10/21/96.
    11 Time, 12/11/96.
    12 Los Angeles Times, 11/17/96.
    13 American Spectator, 12/96.
    14 Los Angeles Times, 11/17/96.
    15 John Huang Deposition, 10/30/96, in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL).
    16 John Huang Deposition, 10/30/96, in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL).
    17 John Huang Deposition, 10/30/96 in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL).
    18 John Huang Deposition, 10/30/96, in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL): Huang SF-171, DOC 03AM0042.
    19 Harvard Business School Profile of the Lippo Group, 
1992, pp. 1-3.
    20 Harvard Business School Profile of the Lippo Group, 
1992, pp. 1-3.
    21 Harvard Business School Profile of the Lippo Group, 
1992, pp. 3, 7.
    22 Harvard Business School Profile of the Lippo Group, 
1992, p. 1.
    23 Thomas Hampson, 7/15/97 Hrg., pp. 64-65.
    24 Harvard Business School Profile of the Lippo Group, 
1992, pp. 1-3.
    25 Time Magazine, 5/5/97.
    26 Thomas Hampson, a private investigator called to 
testify on the structure of the Lippo Group testified that China 
Resources is used by the Chinese government as ``an agent of espionage, 
economic military and political.'' However, Hampson introduced no 
evidence that the Lippo Group engaged in espionage, economic or 
otherwise, testifying that he had no information that would indicate 
there was any activity on the part of the Chinese Government through 
China Resources or through Lippo, in the United States. Thomas Hampson, 
7/15/97 Hrg., pp. 71-73, 77-78. Hampson also testified that China 
Resources has a broader purpose, ``to foster trade and to promote 
development to the mainland's economy. Through business ties it has 
established, the group seeks out technology that the country needs and 
buys it.'' Thomas Hampson, 7/15/97 Hrg., pp. 70-71.
    27 Thomas Hampson, 7/15/97 Hrg., p. 56.
    28 Thomas Hampson, 7/15/97 Hrg., pp. 80-81.
    29 Fort Worth Star-Telegram, 10/31/96; Thomas Hampson, 
7/15/97 Hrg., pp. 76-81.
    30 Exhibit 105.
    31 Harold Arthur, 7/15/97 Hrg., p. 98.
    32 John Huang SF-86 Application for Sensitive Position, 
DOC 03AM0047.
    33 John Huang SF-86 Application for Sensitive Position, 
DOC 03AM0047.
    34 HHH 2378. Documents produced to the Committee by Hip 
Hing Holdings indicate that Huang was asked to join Committee of 100 in 
1993. HHH 2378. His work with this organization continued through his 
work with this organization after he left Lippo for the Department of 
Commerce. See 9/22/95 Committee of 100 directory identifying Huang as 
Director.
    35 Hip Hing Holdings documents, HHH 3037-38, 4609, 4967-
68.
    36 Los Angeles Times, 10/21/96.
    37 Los Angeles Times, 12/23/96.
    38 Los Angeles Times, 12/23/96.
    39 Washington Post, 10/18/96.
    40 Washington Post, 5/13/97.
    41 Los Angeles Times, 12/23/96.
    42 John Huang Deposition, 10/30/96, in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL).
    43 Los Angeles Times, 12/23/96.
    44 John Huang Deposition, 10/30/96 in Judicial Watch 
Inc. v. Dept. Commerce, CA. 95-0133 (RCL).
    45 Los Angeles County, CA tax records of holdings of Hip 
Hing Holdings.
    46 Juliana Utomo, 7/15/97 Hrg., p. 14.
    47 Juliana Utomo, 7/15/97 Hrg., p. 53.
    48 Exhibits 101, 104: Profit and Loss statements of 
Lippo Group Holding Companies, HHH 0233, HHH 0236-37, CHI 0085.
    49 Exhibit 103.
    50 See legal analysis in Part 1 Overview (Chapter 1), 
supra.
    51 FEC public disclosure reports of contributions by Hip 
Hing Holdings, Toy Center Holdings and San Jose Holdings. See 
www.tray.com for contribution records.
    52 Lippo Group holding companies requests for 
reimbursement of expenses from August to December 1993, HHH 0236-37.
    53 Exhibit 105. During the July 15 hearing, Senator 
Thompson referred to an Advisory Opinion issued by the Federal Election 
Commission, the summary of which states that ``in order for a 
contribution to be legal, a domestic subsidiary must make contributions 
out of net profits.'' Advisory Opinion 1992-16. While the Opinion holds 
it is proper for the particular domestic subsidiary seeking the Opinion 
to make contributions from its net profits, it does advise whether 
contributions from the net income of a domestic subsidiary operating at 
a loss are permissible. See legal analysis in Chapter 1, supra.
    \54\ Thomas Hampson, 7/15/97 Hrg., pp. 82-83.
    \55\ 1992 Riady contribution checks to state parties, HHH 1360, 
1362-63.
    \56\ 1992 Riady contribution checks to the Inaugural Committee, HHH 
1361.
    \57\ Check from Hip Hing Holdings to John Huang dated 2/3/94, HHH 
5067.
    \58\ Juliana Utomo, 7/15/97 Hrg., pp. 39-40.
    \59\ Check from Hip Hing Holdings to John Huang dated 7/15/94, HHH 
5184.
    \60\ Harvard Business School Profile of the Lippo Group, 1992, p. 
B4.
    \61\ The main issue in the cease and desist orders has been the 
quality of the loan assets and the balance of capital reserves relative 
to the loan portfolio, in part because of the poor performance of the 
bank prior to Lippo's purchase of it. See Harold Arthur's opening 
statement, pp. 12-14, 7/15/97 Hrg., p. 92. However, in 1990, the bank 
was found to have failed to file a number of reports of international 
wire transfers over $10,000 in violation of the reporting provisions of 
the laws meant to combat money laundering. While the FDIC referred this 
action to other agencies, the evidence before the Committee does not 
indicate that any investigation of money laundering was ever initiated 
against the bank.
    \62\ Harold Arthur, 7/15/97 Hrg., p. 145; Juliana Utomo, 7/15/97 
Hrg., p. 58.
    \63\ Assistant Secretary Charles Meissner was a victim of the 1996 
plane crash in Croatia which also claimed the life of Commerce 
Secretary Ron Brown, among others.
    \64\ EOP 002062-067.
    \65\ Gary Christopherson deposition, 6/4/97, p. 140.
    \66\ DOC Document No. 03AK0461.
    \67\ Gary Christopherson deposition, 6/4/97, pp. 42-46.
    \68\ Gary Christopherson deposition, 6/4/97, p. 47.
    \69\ EOP 002068, 002071, 009452, 009454, 009487.
    \70\ Gary Christopherson deposition, 6/4/97, p. 41.
    \71\ Gary Christopherson deposition, 6/4/97, pp. 50-51, 53.
    \72\ Gary Christopherson, 7/16/97 Hrg., p. 50.
    \73\ Jeffrey Garten, 7/16/97 Hrg., p. 117.
    \74\ Jeffrey Garten, 7/16/97 Hrg., p. 118.
    \75\ Jeffrey Garten, 7/16/97 Hrg., p. 119.
    \76\ Gary Christopherson, 7/16/97 Hrg., p. 23.
    \77\ Gary Christopherson, 7/16/97 Hrg., p. 49.
    \78\ Gary Christopherson deposition, 6/4/97, pp. 42-46.
    \79\ Jeffrey Garten, 7/16/97 Hrg., pp. 120-21.
    \80\ Jeffrey Garten, 7/16/97 Hrg., p. 120.
    \81\ David Rothkopf deposition, 6/2/97, p. 30.
    \82\ Jeffrey Garten, 7/16/97 Hrg., p. 121.
    \83\ Jeffrey Garten, 7/16/97 Hrg., p. 121.
    \84\ DOC Documents 03BA1258 and 03BA0891.
    \85\ DOC Document 03CC0269.
    \86\ DOC Document 03CC0269.
    \87\ DOC Documents 03AB2372, 03BA2959, 03BA2974, 03BA1754 and 
03BA1755.
    \88\ The requests that Huang fielded from Senators and 
Representatives on behalf of their constituents included requests from 
Congresswoman Ileana Ros-Lehtinen, whose constituent, Dr. Donn J. 
Tilson, wanted a list of U.S. companies doing business in Ecuador (DOC 
document 03BA2985); Senator Daniel Moynihan, who inquired on behalf of 
Louis R. Soto, who wanted licensing forms for the export of tires to 
South America (DOC document 03BA2982); Congressman Bob Goodlatte, whose 
constituent, Gregory W. Feldmann, was seeking information on incentives 
available to companies interested in purchasing companies in Mexico 
(DOC document 03BA3053); Congressman John Tanner, who wanted 
information on crossing the border with equipment for missionary work 
and taking tour groups into Mexico for Dr. Ernest C. Gambrell (DOC 
document 03BA3050); and Senator Trent Lott, who contacted Huang on 
behalf of Marcus Byrd seeking assistance removing squatters on his 
company's land holdings in Costa Rica (DOC document 03BA2987). 
Additionally, Huang, Susan Blackman and Hong Phong-Pho presented a 
briefing to Rep. Bennie Thompson regarding Vietnam (DOC document 
03AB0148).
    \89\ Wall Street Journal, 7/14/97.
    \90\ Jeffrey Garten deposition, 6/3/97, p. 82.
    \91\ Jeffrey Garten, 7/16/97 Hrg., p. 137.
    \92\ Jeffrey Garten, 7/16/97 Hrg., p. 122.
    \93\ See generally David Rothkopf deposition, 5/22/97; Timothy 
Hauser deposition, 6/2/97; Alan Neuschatz deposition, 5/22/97.
    \94\ Alan Neuschatz deposition, 5/22/97, p. 17.
    \95\ DOC Document 03AB0172.
    \96\ DOC Document 03AB0172.
    \97\ DOC Document 03AB0172.
    \98\ Senator Specter, 7/16/97 Hrg., pp. 156-157.
    \99\ John Dickerson deposition, 5/30/97, p. 13.
    \100\ Joseph Burns deposition, 5/3/97, pp. 100-101.
    \101\ Joseph Burns deposition, 5/3/97, pp. 99-100.
    \102\ Steven Garmon deposition, 5/23/97, p. 28.
    \103\ Steven Garmon deposition, 5/23/97, pp. 33-34. In March 1997, 
pursuant to an executive order doing away with interim clearances and 
in response to a request by Secretary Daley, the Security Office 
changed its policy to require a request from a supervisor before any 
employee, career or political, be granted a temporary clearance.
    \104\ In the course of the limited background check, an NCIC 
computer notation surfaced on John Huang. The NCIC form states that 
Huang was ``arrested or received 8/17/72'' and lists ``Agency-USINS 
Baltimore,'' and ``Charge--Dep Proc.'' When he received this 
information, the reviewing officer took it to his supervisor Al 
Buskirk. Buskirk testified that while he was unable to determine 
whether Huang had been arrested from the face of the NCIC form, his 
review of Huang's SF-171 and SF-86 revealed that Huang had married an 
American citizen on 8/6/72, several days before he entered the country. 
Based on his own understanding of the immigration process, Buskirk 
concluded that Huang was fingerprinted as a required step in the 
administrative citizenship process. Documents obtained from INS support 
Buskirk's supposition and confirm that Huang appeared at the INS in 
Baltimore on August 17, 1972, where a Record of Deportable Alien form 
was filled out noting his marriage. A fingerprint card in his file 
dated 9/5/72 indicates that the result of the FBI check was that he had 
never been arrested. On August 30, 1972, Huang applied for permanent 
resident status. No deportation proceedings were ever initiated against 
John Huang and he has never been arrested.
    \105\ Steven Garmon deposition, 5/23/97, pp. 76-77. Huang's file 
contained the typical form letter from the Security Office noting that: 
``____ is granted this waiver [of the OPM background investigation] due 
to the critical need for his expertise in the new Administration for 
Secretary Brown.''
    \106\ Steven Garmon deposition, 5/23/97.
    \107\ Paul Buskirk, 7/16/97 Hrg., p. 29; staff interview with Lewis 
Williams, 6/12/97.
    \108\ Questions have also been raised about Huang obtaining 
classified information from outside DOC during this period. In order 
for an individual with a clearance to receive classified information 
from an outside agency, the individual's clearance must be ``passed'' 
from the Security Office of the employing agency to the Security Office 
of the agency granting access to the information. Whenever a clearance 
is ``passed'' to another agency, a form is filled out authorizing the 
clearance being passed. No such forms exist indicating Huang's 
clearance was passed at any time.
    \109\ Gordon Burns deposition, 5/23/97, pp. 101-102.
    \110\ Robert Gallagher deposition, 5/30/97, p. 13.
    \111\ Staff interview with Richard L. Johnston, Jr., 6/12/97.
    \112\ Robert Gallagher deposition, 5/30/97, p. 13.
    \113\ Robert Gallagher deposition, 5/30/97, p. 13.
    \114\ Staff Interview with Lewis Williams, 6/12/97.
    \115\ Staff Interview with Lewis Williams, 6/12/97.
    \116\ Staff Interview with Lewis Williams, 6/12/97.
    \117\ Staff Interview with Lewis Williams, 6/12/97.
    \118\ Robert Gallagher deposition, 5/30/97, pp. 7, 15.
    \119\ John Dickerson deposition, 5/5/97, pp. 6, 8.
    \120\ Robert Gallagher deposition, 5/30/97, p. 7.
    \121\ Robert Gallagher deposition, 5/30/97, p. 15.
    \122\ John Dickerson deposition, 5/5/97, pp. 8-9.
    \123\ John Dickerson deposition, 5/5/97, pp. 8-9.
    \124\ Senator Glenn, 7/16/97 Hrg., p. 213.
    \125\ Chairman Thompson, 7/17/97 Hrg., p. 4. In his opening 
statement, the Chairman referred to Huang's use of the Stephens office 
in the following terms: ``He used the office of a private company for 
phone calls and faxes while he worked at Commerce, frequently 
corresponding to times when he had just received briefings on 
classified material.''
    \126\ Celia Mata deposition, 8/1/97, pp. 50, 68.
    \127\ Paula Greene and Celia Mata, 7/17/97 Hrg., pp. 24-25.
    \128\ Paula Green and Celia Mata, 7/17/97 Hrg., pp. 110-111.
    \129\ Celia Mata deposition, 8/1/97, p. 71.
    \130\ Celia Mata, 7/17/97 Hrg., pp. 29-30.
    \131\ Celia Mata, 7/17/97 Hrg., p. 13.
    \132\ Celia Mata, 7/17/97 Hrg., p. 13.
    \133\ Celia Mata, 7/17/97 Hrg., pp. 11-13.
    \134\ Celia Mata, 7/17/97 Hrg., p. 119.
    \135\ Celia Mata, 7/17/97 Hrg., p. 21.
    \136\ Celia Mata deposition, 8/1/97, p. 49.
    \137\ Celia Mata deposition, 8/1/97, p. 54.
    \138\ Celia Mata deposition, 8/1/97, p. 50.
    \139\ Paula Greene deposition, 7/2/97, p. 42.
    \140\ Paula Greene, 7/17/97, p. 14.
    \141\ Paula Greene deposition, 7/2/97, pp. 43-44.
    \142\ Paula Greene, 7/17/97 Hrg., pp. 19-20; Paula Greene 
deposition, 7/2/97, p. 45.
    \143\ Paula Greene, 7/17/97 Hrg., p. 54.
    \144\ Paula Greene deposition, 7/2/97, p. 38.
    \145\ Paula Greene deposition, 7/2/97, p. 38.
    \146\ A Committee of 100 Directory lists Huang as a director as of 
September 22, 1995. Moreover, during his tenure at Commerce, Huang 
received phone calls from people associated with the Committee of 100. 
See DOC 03 AB0017, records of call received by Huang while at the 
Department of Commerce.
    \147\ Paul Buskirk Deposition, 6/3/97, pp. 80-83.
    \148\ Staff interview of Alan Neushatz, 3/13/97.
    \149\ Alan Neushatz deposition, 5/22/97, pp. 17-18.
    \150\ DOC Document 03AB0022.
    \151\ DOC Document 03AB0022. ``As a former Principal Deputy 
Assistant Secretary for IEP, Mr. John Huang will help the Assistant 
Secretary for International Economic Policy during the transition time 
of the Principal Deputy Assistant Secretary's position in IEP. . . . 
The time frame for Mr. Huang's consultations on transition will not-to-
exceed 30 days.''
    \152\ Alan Neuschatz deposition, 5/22/97, p. 58.
    \153\ Staff Interview with Helena Malinowski, 3/13/97.
    \154\ Alan Neuschatz deposition, 5/22/97, p. 51.
    \155\ Paul Buskirk deposition, 6/3/97, pp. 68-70, 80-83.
    \156\ Paul Buskirk deposition, 6/3/97, p. 68.
    \157\ Paul Buskirk deposition, 6/3/97, pp. 80-83.
    \158\ Staff interview of Alan Neushatz, 3/13/97.
    \159\ Staff interview of Alan Neushatz, 3/13/97.
    \160\ Staff interview of Alan Neushatz, 3/13/97.
    \161\ Alan Neuschatz deposition, 5/22/97, p. 60.
    \162\ Alan Neuschatz deposition, 5/22/97, p. 55.
    \163\ James Per Lee deposition, 5/2/97, pp. 93-102.
    \164\ Los Angeles Times, 8/29/97.
    \165\ Senator Durbin, 7/16/97, Hrg., pp. 222-227.
    \166\ DNC 1276339-40.
    \167\ DNC 1276339.
    \168\ David Mercer deposition, 5/27/97, p. 14.
    \169\ David Mercer deposition, 5/14/97, p. 230; David Mercer 
deposition, 5/27/97, pp. 17-18.
    \170\ DNC Public Disclosure Records. See 1995 year end report.
    \171\ DNC 1276339.
    \172\ DNC 1276339.
    \173\ David Mercer deposition, 5/27/97, p. 31.
    \174\ David Mercer deposition, 5/27/97, p. 31.
    \175\ David Mercer deposition, 5/27/97, p. 31.
    \176\ David Mercer deposition, 5/27/97, pp. 31-32.
    \177\ DNC 1277722.
    \178\ DNC 1277722.
    \179\ David Mercer deposition, 5/27/97, pp. 8-9.
    \180\ David Mercer deposition, 5/27/97, p. 9.
    \181\ Exhibit 170.
    \182\ Exhibit 170.
    \183\ David Mercer deposition Exhibit 38, 5/14/97.
    \184\ David Mercer deposition, 5/14/97, p. 212.
    185 DNC 1276337.
    186 David Mercer deposition, 5/27/97, p. 33.
    187 David Mercer deposition, 5/27/97, p. 33.
    188 David Mercer deposition, 5/27/97, p. 33.
    189 David Mercer deposition, 5/27/97, pp. 33-34.
    190 Staff interview with Arief and Soraya Wiriadinata, 
7/13/97.
    191 Staff interview with Arief and Soraya Wiriadinata, 
7/13/97.
    192 Staff interview with Arief and Soraya Wiriadinata, 
7/13/97.
    193 Staff interview with Arief and Soraya Wiriadinata, 
7/13/97.
    194 Staff interview with Arief and Soraya Wiriadinata, 
7/13/97.
    195 Staff interview with Arief and Soraya Wiriadinata, 
7/13/97.
    196 Richard L. Sullivan deposition, 6/4/97, p. 208.
    197 C. Joseph Giroir deposition, 4/30,97, pp. 75-76.
    198 Richard L. Sullivan deposition, 6/4/97, pp. 210; C. 
Joseph Giroir deposition, 4/30/97, pp. 109-10.
    199 Richard L. Sullivan deposition, 6/4/97, p. 219.
    200 Richard L. Sullivan deposition, 6/4/97, pp. 210-219.
    201 Donald L. Fowler deposition, 5/21/97, p. 170.
    202 Donald L. Fowler deposition, 5/21/97, Exhibit 14: 
Fowler's schedule listing meeting at the Four Seasons with Giroir, 
Sullivan as contact, 9/13/95, DNC 3020731-3027032.
    203 Richard L. Sullivan deposition, 6/4/97, p. 241.
    204 Donald L. Fowler deposition, 5/21/97, p. 170.
    205 C. Joseph Giroir deposition, 4/30/97, pp. 84-86; 
Nancy Hernreich deposition, 6/21/97, Exhibit 51: President's schedule, 
9/13/95, EOP 02758-02760, the President's 9/13/95 schedule. Huang was 
not originally scheduled to meet with the President at this time. Upon 
arrival at the White House, Huang had to make special arrangements to 
be ``waved'' in for the visit. C. Joseph Giroir deposition, 4/30/97, 
pp. 86-87.
    206 Bruce Lindsey deposition, 7/1/97, p. 106-114; C. 
Joseph Giroir deposition, 4/30/97, p. 87.
    207 Joseph Giroir deposition, 4/30/97, p. 87.
    208 C. Joseph Giroir deposition, 4/30/97, p. 97. Huang 
had indicated his interest in moving to the DNC to Giroir earlier in 
the year. C. Joseph Giroir deposition, 4/30/97, p. 75. The Clinton 
campaign had not done well with this group in the 1992 election and it 
was acknowledged that they should endeavor to do better in the 1996 
election. Donald L. Fowler deposition, 5/21/97, p. 190-191.
    209 Bruce Lindsey deposition, 7/1/97, p. 115-117.
    210 Bruce Lindsey deposition, 7/1/97, pp. 117-118.
    211 Bruce Lindsey deposition, 7/1/97, p. 124.
    212 C. Joseph Giroir deposition, 4/30/97, pp. 101-104; 
Marvin S. Rosen deposition, 5/19/97, pp. 129-133. See also C. Joseph 
Giroir deposition, 4/30/97, Exhibit 7/Marvin S. Rosen deposition, 5/19/
97, Exhibit 5: Letter from Giroir to Rosen referencing a meeting of the 
previous day, 9/27/97, Middleton was involved because he knew Rosen. 
Marvin S. Rosen deposition, 5/19/97, pp. 129-130.
    213 C. Joseph Giroir deposition, 4/30/97, pp. 103-104.
    214 Bill Kaneko deposition, 4/29/97, p. 119.
    215 Harold Ickes deposition, 6/26/97, p. 115.
    216 Marvin S. Rosen deposition, 5/19/97, pp. 138-139.
    217 Rosen discussed Huang's hiring with Ickes, 
Middleton, Fowler, Sullivan and the President in a receiving line 
conversation in which the President requested the status of Huang's 
hiring. Sullivan received recommendations from Middleton (Richard L. 
Sullivan deposition, 6/4/97, pp. 216-217) and Arnold, but did not speak 
with anyone in the White House. Richard L. Sullivan deposition, 6/4/97, 
p. 249.
    218 Richard L. Sullivan deposition, 6/4/97, p. 224-225.
    219 Richard L. Sullivan deposition, 6/5/97, p. 12.
    220 Richard L. Sullivan deposition, 6/5/97, pp. 12-14.
    221 Donald L. Fowler deposition, 5/21/97, p. 171.
    222 Richard L. Sullivan deposition, 6/4/97, p. 226.
    223 Donald L. Fowler deposition, 5/21/97, p. 191.
    224 Donald L. Fowler deposition, 5/21/97, pp. 190-191.
    225 Marvin S. Rosen deposition, 5/19/97, pp. 148-150.
    226 Joseph E. Sandler deposition, 5/30/97, pp. 93-96.
    227 Huang's Department of Commerce salary was $117,927. 
DOC document 03CC0226.
    228 Richard L. Sullivan deposition, 6/4/97, p. 226.
    229 Richard L. Sullivan deposition, 6/4/97, p. 231.
    230 Joseph E. Sandler deposition, 5/15/97, p. 58.
    231 Neil Paul Reiff deposition, 6/20/97, pp. 55-58.
    232 Richard L. Sullivan, 7/9/97 Hrg., pp. 44-46; Richard 
L. Sullivan deposition, 6/4/97, pp. 226-230.
    233 Samuel Newman deposition, 7/17/97, pp. 142-143; 
Joseph E. Sandler, 9/10/97 Hrg., p. 13.
    234 Sullivan testified that he told Sandler of this 
desire for special attention for Huang. He further testified that 
Sandler said that he would ensure that Huang received such a briefing 
and that Sandler later told him that they did, indeed, have such a 
session shortly after Huang's arrival. Richard L. Sullivan, 7/9/97 
Hrg., pp. 142-144; Richard L. Sullivan deposition, 6/5/97, pp. 23-25. 
Sandler testified that he did not recall such a request from Sullivan. 
Joseph E. Sandler, 9/10/97 Hrg., pp. 12-14; Joseph E. Sandler 
deposition, 8/21/97, pp. 13-15.
    235 Joseph E. Sandler deposition, 5/30/97, pp. 100-101.
    236 Marvin Rosen deposition, 5/19/97, pp. 263-265.
    237 Neil Paul Reiff deposition, 6/20,97, Exhibit 9: 
Updated Legal Guidelines for Fundraising memorandum for Finance Staff 
from Joe Sandler and Neil Reiff, 4/24/95, DNC 1485662-145675 at DNC 
145665.
    \238\ Joseph E. Sandler deposition, 5/30/97, pp. 100-102.
    \239\ Joseph E. Sandler deposition, 8/21/97, p. 17. Sandler 
testified that he communicated this level of comfort to either Sullivan 
or Pastrick.
    \240\ Memorandum from Richard Sullivan for Chairman Fowler re: 
Asian American events, 10/21/96, D 0000967.
    \241\ Richard L. Sullivan deposition, 6/5/97, p. 86.
    \242\ Briefing for the President for Asian Pacific American 
Leadership Council dinner at the Hay Adams Hotel in Washington, D.C., 
2/19/96, DNC 0624297-308; briefing for the Vice President for Asian 
Pacific American Leadership Council breakfast at the Hay Adams Hotel in 
Washington, D.C., 2/20/96, DNC 1208377-388.
    \243\ Simeona Fortunata Pasquil deposition, 7/30/97, pp. 17-18.
    \244\ Briefing for the President for Asian Pacific American 
Leadership Council dinner at the Hay Adams Hotel in Washington, D.C. 2/
19/96, DNC 0624297-308; briefing for the Vice President for Asian 
Pacific American Leadership Council breakfast at the Hay Adams Hotel in 
Washington, D.C., 2/20/96, DNC 1208377-388.
    \245\ Democratic National Committee Asian Pacific American 
Leadership Council Summit Participant List, DNC documents B 0001094-
1099.
    \246\ Donald L. Fowler deposition, 5/21/97, p. 273.
    \247\ DNC Finance Systems Source Detail Report, Asian Dinner, 2/19/
96, DNC documents D 0000968-0000973.
    \248\ Democratic National Committee Asian Pacific American 
Leadership Council Donor Participant List, DNC 1208901-902.
    \249\ Joseph E. Sandler deposition, 8/21/97, pp. 21-25; Sandler 
deposition Exhibits # 23-27, 8/21/97.
    \250\ Staff Interview with Jessica Elnitiarta, 6/19/97.
    \251\ DNC Finance System Source Detail Report, POTUS Asian Dinner, 
DNC documents D 0000978-980.
    \252\ DNC Finance System Source Detail Report, POTUS Asian Dinner, 
DNC documents D 0000978-980.
    \253\ DNC check tracking form for Yogesh Gandhi $325,000 
contribution to the DNC, 5/28/96, DNC 0829404.
    \254\ DNC Press Release, ``DNC Refunds Contributions,'' 6/27/97.
    \255\ DNC Contributions Returned Since September, 1996 (as of 11/
22/96), DNC D 0000637.
    \256\ See DNC Press Release, ``DNC Refunds Contributions,'' 6/27/
97.
    \257\ See DNC Contributions Returned Since September, 1996 (as of 
11/22/96), DNC D 0000637; DNC Finance System Source Detail Report, 
POTUS Asian Dinner, DNC documents D 0000978-980; DNC Press Release, 
``DNC Refunds Contributions,'' 6/27/97.
    \258\ Briefing for the President for DNC Asian Pacific American 
Leadership Council event at Century Plaza Hotel, Century City, 
California, 7/22/97, DNC documents C 0000233-235.
    \259\ Los Angeles Times, 12/21/97.
    \260\ Man Ho deposition, 8/6/97, pp. 202-204.
    \261\ DNC Press Release, ``DNC Refunds Contributions,'' 6/27/97.
    \262\ DNC Press Release, ``DNC Refunds Contributions,'' 6/27/97.
    \263\ DNC Finance Systems Source Detail Report, L.A. Gala, DNC 
documents D 0000981-996.
    \264\ Richard L. Sullivan deposition, 6/5/97, pp. 59-61, 66-67.
    \265\ USA Today, 2/19/97.
    \266\ See discussion of Riady and the Lippo Group, supra.
    \267\ POTUS Dinner July 30 Attendees for an event at the Jefferson 
Hotel, Washington, D.C., DNC documents D 0000597-598.
    \268\ DNC Finance Systems Source Detail Report, POTUS Asian D.C. 
Dinner, DNC document D 0000997. DNC National Chairman Donald Fowler 
testified that the DNC occasionally requests that donors write their 
checks to state Democratic parties who need the financial help, 
sometimes in lieu of a contribution to the DNC or in lieu of the DNC 
making a donation. Donald L. Fowler deposition, 5/21/97, pp. 352-356.
    \269\ DNC Finance Systems Source Detail Report, POTUS Asian D.C. 
Dinner, DNC document D 0000997. See Washington Post, 5/13/97.
    \270\ DNC Finance Systems Source Detail Report, POTUS Asian D.C. 
Dinner, DNC document D 0000997.
    \271\ Richard L. Sullivan deposition, 6/5/97, p. 70.
    \272\ White House Tape # 8.
    \273\ Richard L. Sullivan deposition, 6/5/97, p. 71.
    \274\ For more information, see Chapter 21 of the Minority Report.
    \275\ For more information on why the DNC considers both types of 
events to be important during a campaign, see Chapter 25 of the 
Minority Report.
    \276\ DNC documents # D 0000974-977.
    \277\ Kimberly Tilley deposition, 6/23/97, p. 22-23.
    \278\ Kimberly Tilley deposition, 6/23/97, p. 54.
    \279\ Kimberly Tilley deposition, 6/23/97, p. 47.
    \280\ Kimberly Tilley deposition, 6/23/97, p. 47.
    \281\ For example, the April 29, 1996 schedule for the Vice 
President included a speech at the National Cable Television 
Association conference, a meeting with African American community 
leaders, an event at the Hsi Lai Temple, a community policing event in 
San Jose and a fundraiser in Los Altos Hills, California. Committee 
Exhibit 774, EOP 007195 to 7204.
    \282\ Memorandum that included a request for the President and Vice 
President to attend a certain number of DNC fundraisers in various 
cities, 1/2/96, SCGA-00270 to 291.
    \283\ Memorandum, 1/2/96, SCGA-00270 to 291, SCGA-00286.
    \284\ The early stages of trip planning were illustrated in a 
February 22, 1996, e-mail message to Tilley from Karen Hancox. Hancox 
wrote:

            The DNC has asked, once we know, to be told what 
        cities the VP will be in CA March 8/9. They can 
        probably use him, depending on the cities.
            thanks
            PS--POTUS is going to do SF when he is in CA 
        March 8/9--ergo--the DNC is dropping its SF request 
        for the VP in April--they just need L.A. and San 
        Jose in April.

    Exhibit 767, EOP 047839.
    \285\ Exhibit 1004: E-mail message from Lisa Berg to Kimberly 
Tilley, 3/12/96, EOP 053290.
    \286\ Jacqueline Dycke deposition exhibit #4, 8/8/97.
    \287\ Exhibit 771: E-mail message from Vice President Gore to 
Timberly Tilley, 3/15/96, EOP 053291.
    \288\ The meeting between the Vice President and Hsing was at 1:40 
p.m., and the electronic message were exchanged at about 2:20 p.m. 
Senator Levin, 9/5/97 Hrg., p. 66-67.
    \289\ David Strauss, 9/5/97 Hrg., pp. 29.
    \290\ David Strauss, 9/5/97 Hrg., p. 27.
    \291\ Exhibit 1006: Vice President Gore's schedule, 3/15/96, EOP 
053033-036.
    \292\ David Strauss, 9/5/97 Hrg., p. 62.
    \293\ Statement of the Venerable Master Hsing Yun presented during 
his interview with Committee investigators, 6/17/97.
    \294\ EOP 892.
    \295\ David Strauss, 9/5/97 Hrg., p. 15.
    \296\ Staff Interview with Hsing Yun, 6/17/97.
    \297\ Letter from Diana So to FBI Agent Gayle Jacobs, 5/20/97.
    \298\ Invitation to DNC Asian Pacific American Leadership Council 
event at Harbor Village Restaurant in Monterey Park, California; the 
name of the restaurant is crossed out and Hsi Lai Temple is written in: 
SEN 00111.
    \299\ Exhibit 772: Letter from Maria Hsia to the Vice President, 3/
23/96, SEN 01719.
    \300\ Staff interview of Charlie Woo, 5/30/97.
    \301\ Staff interview of Charlie Woo, 5/30/97.
    \302\ Richard Sullivan deposition, 6/25/97, p. 28.
    \303\ Richard Sullivan deposition, 6/25/97, p. 28
    \304\ Richard Sullivan deposition, 6/25/97, pp. 21-22.
    \305\ Richard Sullivan deposition, 6/25/97, pp. 23.
    \306\ Richard Sullivan deposition, 6/25/97, pp. 23-24.
    \307\ Richard Sullivan deposition, 6/25/97, pp. 23-24.
    \308\ Richard Sullivan deposition, 6/25/97, p. 24.
    \309\ Richard Sullivan deposition, 6/25/97, p. 31. Sullivan was 
able to determine that he called David Strauss on or about April 3, 
1997 to notify him of the changes regarding the Los Angeles fundraiser 
and the Hsi Lai Temple event after reviewing an April 11, 1996 memo 
written by Huang that reference a phone conversation with Strauss a 
week earlier. EOP 000809.
    \310\ David M. Strauss deposition, 6/30/97, p. 92.
    \311\ Exhibit 1003: Vice President Gore's trip schedule, EOP 
056497-499; Exhibit 1009: electronic mail from Dycke to Tilley, et. 
al., 4/10/96, EOP 053292; Exhibit 1010: Memorandum from Huang to Tilley 
re 6/29/96 [sic] fundraising lunch, 4/11/96, Bates #000809.
    \312\ Kimberly Tilley deposition, 6/23/97, p. 124.
    \313\ Kimberly Tilley deposition, 6/23/97, pp. 127-128.
    \314\ Kimberly Tilley deposition, 6/23/97, pp. 158-159.
    \315\ Exhibit 1010: Memo from John Huang to Kim Tilley, 4/11/96.
    \316\ Exhibit 1003: Document prepared by Jackie Dycke, 4/11/96, EOP 
056497 to 99.
    \317\ Jacqueline Dycke deposition, 8/8/97, p. 66.
    \318\ David Strauss, 9/5/97 Hrg., pp. 36-37.
    \319\ See Exhibits 1011 (EOP 047955), 1012 (EOP document, illegible 
Bates stamp), 1013 (EOP 005407), a series of internal notes between and 
among the Vice President's foreign policy and national security staff. 
These evaluations of the proposed Temple event are dated April 16 and 
April 19, 1996.
    \320\ Exhibit 1012: Handwritten note from John Norris to Bill Wise, 
4/16/96.
    \321\ Exhibit 1012: Handwritten note from John Norris to Bill Wise, 
4/16/96.
    \322\ Exhibit 1013: E-mail from Robert Suettinger to John Norris, 
4/19/96, EOP 005407. Suettinger's e-mail message was written in 
response to an e-mail from Norris in which he refers to the Hsi Lai 
Temple event as a ``fundraising lunch'' and he states that the ``event 
would take place at the end of June.'' Mr. Norris's use of the word 
`'fundraising lunch'' was due to the fact that he did not know how to 
properly characterize DNC events. In response to a question posed by 
Senator Collins regarding Mr. Norris's e-mail Mr. Strauss stated:

            It's accurate that it's referenced as a 
        fundraising lunch here, but you have people who have 
        no background in how to correctly describe DNC 
        events characterizing events here. And so the 
        important implications of this are the foreign 
        policy implications rather than how the event is 
        described because the person who's describing this 
        would have no basis for how to correctly describe a 
        DNC event.

    David Strauss, 9/5/97 Hrg., p. 78.
    \323\ Kimberly Tilley deposition, 6/23/97, pp. 131-132.
    \324\ Staff interview with Robert Suettinger, NSC Director of Asian 
Affairs, 6/3/97.
    \325\ Manteghi testified that she understood from Tilley and 
McManimon that this was an outreach event. Ladan Manteghi deposition, 
8/26/97, pp. 31-32, 53-55.
    \326\ Ladan Manteghi deposition, 8/26/97, pp. 53-67.
    \327\ See letters from all GAC Minority Members to Chairman 
Thompson and from Chairman Thompson to Senator Glenn requesting and 
refusing, respectively, Ladan Manteghi to appear before the Committee, 
9/3/97.
    \328\ David Strauss, 9/5/97 Hrg., pp. 30, 37, 57, 64-65.
    \329\ David Strauss, 9/5/97 Hrg., pp. 64-65.
    \330\ See David Strauss, 9/5/97 Hrg., p. 39 (indicating that the 
Vice President would have reviewed the briefing materials ``right 
before the event'').
    \331\ Exhibit 775: Briefing for Vice President Gore for Asian 
Pacific American Leadership Council luncheon honoring Vice President 
Gore, Hsi Lai Temple, Hacienda Heights, California, 4/29/96, EOP 000938 
to 950.
    \332\ David Strauss, 9/5/97 Hrg., p. 40.
    \333\ Exhibit 776: Briefing for Vice President Gore for reception 
honoring Vice President Gore at the home of George and Judy Marcus, Los 
Altos Hills, California, 4/29/96, EOP 06338-40.
    \334\ Transcript of Vice President Gore's speech at the Hsi Lai 
Temple on 4/29/96.
    \335\ See Donald L. Fowler, 9/9/97 Hrg., pp. 27-28; Mona Pasquil 
deposition, 7/30/97, pp. 65-66; Man Ho deposition, 8/6/97, p. 181.
    Strauss, who attended the event with the Vice President, explained 
to the Committee that the Vice President did not give a fundraising 
speech at the Hsi Lai Temple event. Strauss testified, ``it was a very 
good speech, but it had nothing to do with fundraising.'' David 
Struass, 9/5/97 Hrg., p. 42. See David Strauss, 9/5/97 Hrg., pp. 41-42 
for further details on the Vice President's speech.
    336 Boston Globe, 9/4/97.
    337 Boston Globe,, 9/4/97.
    338 Statement of the venerable Master Hsing Yun 
presented during his interview with Committee investigators, 6/17/97, 
p. 3.
    339 David Strauss, 9/5/97 Hrg., p. 42.
    340 David Strauss, 9/5/97 Hrg., pp. 41-42.
    341 David Strauss, 9/5/97 Hrg., pp. 43-44.
    342 David Strauss, 9/5/97 Hrg., pp. 43-44.
    343 Staff interview of Charlie Woo, 5/30/97.
    344 Mona Pasquil deposition, 7/30/97, pp. 59-62.
    345 DNC Chairman Fowler testified as follows:

            It was not an event, a fund-raising event like 
        many events are. There was no specifically 
        designated sum of money required to be admitted.
            There was nobody at the door taking up tickets, 
        nobody at the door receiving checks. Some people 
        contributed prior to the time they came and some 
        people contributed after they came. Many people who 
        came did not contribute at all. It was, in fact, 
        part of a political outreach that the Democratic 
        National Committee had with the Asian community. It 
        was a blended event, if you will, partly political 
        and partly fund-raising.
            The question arises--it arose in my mind--was 
        this appropriate? And let me say that, as my 
        deposition indicated, I did have some apprehension 
        about a fund-raiser in a house of worship, but I 
        learned that with Buddhists and with people from the 
        Asian community that a temple like that is as much a 
        community center as it is a house of worship. And, 
        frankly, I related that to my own experience in the 
        '60's in the civil rights movement where much of the 
        political activity was held in African American 
        churches and much of what went on stemmed from the 
        spirit and the motivation received in those 
        churches. And I considered, when I was going through 
        that in the '60's, that to be an appropriate 
        activity. So, that allayed my concerns about the 
        propriety of the fund-raising.

    Donald L. Fowler, 9/9/97 Hrg., pp. 26-28.

            . . . [T]here were three people who made 
        presentations there--myself, the temple master, and 
        the Vice President. None of the three of us made any 
        reference to raising money, contributing money, 
        giving money before or after. So it did not have 
        that aspect.

    Donald L. Fowler, 9/9/97 Hrg., p. 29; see also, pp. 71-
72.

    346 Donald L. Fowler, 9/9/97 Hrg., p 29.
    347 Man-Ho Shih, 9/4/97 Hrg., p. 83; Man-Ho Shih 
deposition, 8/6/97, pp. 136-146.
    348 Buddhist nuns, 9/4/97 Hrg., p. 143.
    349 Man-Ho Shih deposition, 8/6/97, pp. 134-37.
    350 Man-Ho Shih, 9/4/97 Hrg., pp. 137-139.
    351 Statement of the Venerable Master Hsing Yun 
presented during his interview with Committee investigators, 6/17/97, 
p. 3.
    352 Man-Ho Shih, 9/4/97 Hrg., pp. 125-126. See, for 
example, DNC invitation to the Temple event, 000776.
    353 See, e.g., contribution levels for a DNC gala, DNC 
document B 0001621; contribution levels for a Democratic Business 
Council dinner at the Mayflower Hotel in Washington, D.C. 3/19/96, B 
0000867-869.
    354 Man-Ho Shih, 9/4/97 Hrg., p. 70.
    355 Staff interview of Jessica Elnitiarta, 6/19/97.
    356 DNC Finance System Source Detail Report for Gore 
L.A. DNC event, DNC documents D 0000974-977; Bates # 000669-671.
    357 EOP 000965-969.
    358 Ladan Manteghi deposition, 8/26/97, pp. 54-57.
    359 David Strauss, 9/5/97 Hrg., pp. 44-45.
    360 David Strauss, 9/5/97 Hrg., pp. 44-45.
    361 Ladan Manteghi deposition, 8/26/97, p. 66.
    362 Ladan Manteghi deposition, 8/26/97, pp. 66-67.
    363 See, for example, a memorandum by Jackie Dycke, who 
worked on the April 29, 1996 schedule until mid-April, and described 
the Temple event for an April 11 scheduling meeting as a ``DNC 
Luncheon.'' She testified that she obtained this information for a 
proposed event from Maura McManimon who worked on this event with 
Huang.
    364 Kimberly Tilley deposition, 6/23/97, p. 124.
    365 Q: Is it common in your experience with regard to 
the Vice President's schedule and how it evolves that an event may be 
contemplated, but that over time and indeed on fairly short notice, its 
character could change or the event itself could be canceled?

            Strauss. That is correct.
            Q: Does that happen often?
            Strauss. That is correct.

    David Strauss, 9/5/97 Hrg., pp. 36-37.

    366 Kimberly Tilley deposition, 6/23/97, pp. 127-128. In 
addition, Tilley testified:

            A: There were traditional fundraisers that were 
        ticketed events at the door. There were events that 
        were community outreach like this Asian-Pacific 
        where it was part of the DNC Finance plan, where in 
        order for someone to be a member, there was a 
        certain amount of money they paid to be a part of 
        that, you know, committee or whatever they called; 
        and then there were those people to whom they wanted 
        to reach out to, who they hoped would become donors.
            Q: And would you define outreach events as 
        different than fundraisers?
            A: Yes, I would.

    Kimberly Tilley deposition, 6/23/97, pp. 158-159.

    367 DNC Finance System Source Detail Report for Gore 
L.A. DNC event, DNC documents D 0000974-977.
    368 Richard L. Sullivan, 7/9/97 Hrg., p. 91.
    369 Richard L. Sullivan, 7/9/97 Hrg., pp. 93-94.
    370 Man-Ho Shih, 9/4/97 Hrg., pp. 27, 93. Neither Huang 
nor Hsia's name was mentioned in connection with this request from the 
abbess. Man-Ho Shih, 9/4/97 Hrg., p. 93.
    371 Man-Ho Shih, 9/4/97 Hrg., pp. 30-32. These meetings 
were covered in more detail at her deposition, see Man-Ho deposition, 
8/16/97, pp. 136-155. Man Ho testified that these contacts were for 
logistics planning and had nothing to do with whether the event was a 
fundraiser. Man-Ho Shih deposition, 8/6/97, pp. 143-145.
    372 Man-Ho Shih, 9/4/97 Hrg., p. 31.
    373 Man-Ho testified that she did proceed to invite her 
friend, Catherine Chen who contributed $2500. Man-Ho Shih, 9/4/97 Hrg., 
pp. 32-33.
    374 Man-Ho Shih, 9/4/97 Hrg., pp. 33; Yi Chu, pp. 73-74. 
These checks were written out of the Temple's general expense account. 
See Chapter 21 of the Minority Report.
    375 Man-Ho Shih, 9/4/97 Hrg., p. 38.
    376 Man-Ho Shih, 9/4/97 Hrg., p. 41.
    377 Man-Ho Shih, 9/4/97, p. 48.
    378 Howard Hom deposition, 8/27/97, pp. 23-25.
    379 Exchange between Majority Counsel and Man-Ho Shih, 
9/4/97 Hrg., pp. 22-24.
    380 See, for example., Washington Post, 4/16/97.
    381 See, for example, Washington Post, 4/16/97.
    382 Cheong Am America, Inc. was incorporated in the 
State of California on 2/28/96. See Exhibits 807 and 810.
    383 See Richard Sullivan deposition, 6/25/97, pp. 41-59.
    384 Michael Mitoma, 9/5/97 Hrg., pp. 126-27. Mitoma was 
the elected mayor of Carson, a city of approximately 100,000 persons 
located near Long Beach, California. According to Mitoma, the 
unemployment rate in Carson approached 12 percent following the closure 
of the Long Beach Naval Shipyard and other defense-related downsizings 
in the early 1990s. The recruitment of Asian-based manufacturers such 
as Nissan. Pioneer, Kenwood and Mikasa had been an important part of 
Carson's strategy to decrease this unemployment rate, and Mitoma 
visited Lee in Seoul, South Korea, as part of this redevelopment 
effort. Michael Mitoma, 9/5/97 Hrg., pp. 144-45.
    385 Lucy Ham is an Asian American businesswoman who owns 
a Los Angeles legal services plan and had been friends with Mitoma for 
some time. Michael Mitoma, 9/5/97 Hrg., p. 170. Lucy and her husband, 
Won Ham, were both officers of Cheong Am America, Inc. Michael Mitoma, 
9/5/97 Hrg., pp. 125, 146.
    386 Michael Mitoma, 9/5/97 Hrg., p. 148.
    387 Michael Mitoma, 9/5/97 Hrg., p. 127. Ham's 
suggestion that Mitoma call the DNC apparently was based on a 
suggestion of a friend of hers in the Los Angeles Asian-American 
business community.
    388 Michael Mitoma, 9/5/97 Hrg., pp. 128-131. In a 4/1/
96 faxed message to Huang, Mitoma wrote that Lee would accept 
attendance at a fundraising dinner, but ``still prefers private meeting 
before trip to Korea by the President. Is it possible to have Lee meet 
Clinton privately for 30 minutes in Korea when he visits instead of the 
private meeting in Washington? If possible let me know how what [sic] 
kind of fund raising would be appropriate.'' Faxed message from Mitoma 
to Huang, 4/1/96, B 0000754. Mitoma also wrote directly to the White 
House requesting a private meeting in Korea with the President. Letter 
from Mitoma to the White House, 4/8/96, DNC 0625244. DNC Chairman Don 
Fowler informed Huang that such a meeting could not be arranged, 
writing on a copy of the Mitoma letter, ``President cannot see these 
folks in Korea.'' Letter from Mitoma to the White House, 4/8/96, DNC 
0625244. See also David L. Fowler deposition, 5/21/97, pp. 418-21.
    389 Michael Mitoma, 9/5/97 Hrg., pp. 128-130.
    390 Michael Mitoma, 9/5/97 Hrg., p. 141.
    391 Exhibit 805: fax cover sheet and two page document 
from John Huang to Richard Sullivan, 4/8/96, B 000747-49.
    392 Exhibit 806: memorandum from Sullivan to Sosnik and 
Hancox, 4/8/96, DNC 1143204. Sullivan testified that this memorandum 
was based upon conversation that he had with Huang, rather than on 
Huang's faxed document that he does not recall seeing at any time. 
Richard Sullivan deposition, 6/25/97, p. 44.
    393 The Huang and Sullivan documents differ in one 
important respect: the Sullivan memorandum indicates that three of the 
four Cheong Am officials are from Los Angeles, while the Huang document 
apparently was meant to convey that that the senior officials were from 
Seoul, Korea. This difference may have contributed to a misimpression 
at the DNC that Cheong Am America was an ongoing concern in Los Angeles 
seeking to open a new operation in Carson, California, rather than a 
brand new subsidiary not yet engaged in any U.S. business.
    394 Michael Mitoma, 9/5/97 Hrg., p. 134.
    395 Michael Mitoma, 9/5/97, Hrg., pp. 132-34. Mitoma 
told the Committee that he explicitly informed Huang at the hotel that 
Lee had flown in from Korea for the dinner, but never stated whether he 
told Huang that Lee had brought the contribution check with him from 
Korea. See Michael Mitoma, 9/5.97 Hrg., p. 162. The check itself 
provides an address in Los Angeles, and contains no indication of a 
foreign origin. See DNC check tracking form, DNC 0564548.
    396 Michael Mitoma, 9/5/97 Hrg., p. 137-139.
    397 Michael Mitoma, 9/5/97 Hrg., p. 139.
    398 Michael Mitoma, 9/5/97 Hrg., p. 138.
    399 Michael Mitoma, 9/5/97 Hrg., p. 154.
    400 Michael Mitoma, 9/5/97 Hrg., p. 140. Mitoma 
testified that after the meeting with the President he was able to 
persuade Lee and Chung to have dinner elsewhere. During his testimony, 
when asked to review documents he had not seen before, Mitoma 
apparently realized that there had actually been two DNC dinners 
occurring that evening at the Sheraton Carlton, and that the President 
had stopped by in between speeches at each. Michael Mitoma, 9/5/97 
Hrg., p. 141.
    401 Michael Mitoma, 9/5/97 Hrg., p. 153.
    402 Exhibit 851: Memorandum from DNC General Counsel 
Joseph Sandler to DNC Finance Director Richard Sullivan, regarding 
contributions by U.S. subsidiaries of foreign corporations, 5/11/95, 
DNC 1683964-66.
    403 Michael Mitoma, 9/5/97 Hrg., pp. 149-150.
    404 Exhibit 951: Memorandum from DNC General Counsel 
Joseph Sandler to DNC Finance Director Richard Sullivan, regarding 
contributions by U.S. Subsidiaries of foreign corporations, 5/11/95, 
DNC 1683964-66.
    405 See discussion above of steps taken by the DNC to 
educate Huang about federal election law requirements, including 
regarding contributions by foreign subsidiaries of U.S. corporations.
    406 Michael Mitoma, 9/5/97 Hrg., pp. 142, 151.
    407 Michael Mitoma, 9/5/97 Hrg., pp. 142 151.
    408 Richard Sullivan deposition, 6/5/97, p. 52:9-11.
    409 Joseph Sandler deposition, 5/15/97, pp. 82-84, 91. 
Sandler indicated that an attorney, who had been contacted by a 
journalist about the Cheong Am America contribution called him to let 
him know what there might be a problem with the contribution. Joseph 
Sandler deposition 5/15/97, p. 77.
    410 Memorandum from Jake Siewert and DNC General Counsel 
Joe Sandler to David Eicherbaum, with copies to DNC Chairman Fowler and 
others, regarding the Cheong Am America contribution, 9/20/96, DNC 
3111214. Joseph Sandler deposition, 5/15/97, p. 91.
    411 Memorandum from Jake Siewert and DNC General Counsel 
Joe Sandler to David Eichenbaum, with copies to DNC Chairman and 
others, regarding the Cheong Am America contribution, 9/20/96, DNC 
3111214.
    412 Memorandum from Jake Siewert and DNC General Counsel 
Joe Sandler to David Eichenbaum, with copies to DNC Chairman Fowler and 
others, regarding the Cheong Am America contribution, 9/20/96, DNC 
3111214.
    413 Joseph Sandler deposition, 5/15/97, p. 84.
    414 Richard Sullivan deposition, 6/4/97, p. 140. See 
Chapter 27, White House Coffees and Overnights.
    415 Richard L. Sullivan deposition, 6/4/97, pp. 124-126.
    416 See Clarke Wallace deposition, 8/27/97, Exhibit 18: 
Ethnic News Watch article written by Asian American Democratic activist 
Maeley Tom, describes a dinner party hosted by Kanchanalak and one 
other ``major Democratic party supporter'' for 50 people attending the 
first APEC Leaders' Forum in Seattle in November, 1993, 12/10/93.
    417 Richard L. Sullivan deposition, 6/4/97, p. 124. 
Sullivan said ``she was very well-to-do.'' Richard L. Sullivan 
deposition, 6/4/97, p. 134.
    418 Samuel Newman deposition, 7/17/97, p. 198, 
referencing Newman Deposition Exhibit 3: guest list for dinner with the 
Vice President at the Mayflower Hotel, 11/2/95.
    419 Richard L. Sullivan deposition, 6/4/97, p. 125. 
Thereafter, Huang, Sullivan and Rosen discussed ``working with Pauline 
to get her to come to the table, to make her contribution, to raise 
some money, when she was going to do it.'' Hoping that it would spur 
Kanchanalak on, in early 1996 the DNC invited her to a number of White 
House events early in 1996, (Richard L. Sullivan deposition, 6/4/97, p. 
125) and Kanchanalak visited the White House for a coffee on January 
25, a lunch on January 29, and a dinner on February 8. (White House 
WAVES records for Pauline Kanchanalak, EOP 002958-59.) According to FEC 
records, Kanchanalak and her sister-in-law, Daugnet ``Georgie'' 
Kronenberg, contributed a total of $15,000 in hard money in February, 
$10,000 in soft money in March, and another $10,000 in soft money on 
June 6, 1996.
    420 Richard L. Sullivan deposition, 6/4/97, p. 126.
    421 Richard Sullivan deposition, 6/4/97, pp. 125-130.
    422 Richard L. Sullivan deposition, 6/4/97, pp. 127-128.
    423 Richard L. Sullivan deposition, 6/4/97, pp. 133-134.
    424 Joseph E. Sandler deposition, 8/21/97, pp. 151-153.
    425 Karl Jackson, 9/16/97 Hrg., p. 4. Jackson and Quayle 
have a continuing relationship. For example, Quayle is affiliated with 
the Hudson Institute, a conservative think tank based in Indianapolis 
that financed a 1993 trip by Quayle and Dr. Jackson to Japan, China and 
Taiwan; Clarke Wallace deposition, 8/27/97, p. 134, referencing 
Deposition Exhibit 27: Washington Post, 6/20/93. Dr. Jackson is a 
Senior Fellow and an Associate Director of the Competitive Center of 
the Hudson Institute. Biography of Karl Jackson, UST 2006. Dr. Jackson 
also is a business partner with Dan Quayle in various enterprises, 
including FX Strategic Advisors, Inc. and FX Concepts, Inc. Clarke 
Wallace deposition, 8/27/97, p. 130, referencing Deposition Exhibit 28: 
Financial Times, 9/6/93.
    426 Jackson testified that Wallace may have called him 
with the invitation. Karl Jackson, 9/16/97 Hrg., p. 5. The CP Group, as 
explained by Jackson, ``was Thailand's largest trading group, an 
organization that was deeply involved with business in China and 
elsewhere around Asia.'' Karl Jackson, 9/16/97 Hrg., p. 6.
    427 Karl Jackson, 9/16/97 Hrg., p. 7.
    428 Karl Jackson, 9/16/97 Hrg., p. 11.
    429 Clarke Wallace, 9/16/97 Hrg., p. 108. Beth Dozoretz, 
9/16/97 Hrg., p. 119; Robert Belfer, 9/16/97 Hrg., p. 25; Clarke 
Wallace deposition, 8/27/97, p. 106.
    430 Clarke Wallace, 9/16/97 Hrg., pp. 110, 128.
    431 Clarke Wallace, 9/16/97 Hrg., p. 105.
    432 Clarke Wallace, 9/16/97 Hrg., p. 106-107, quoting 
Clarke Wallace deposition, 8/27/97, p. 54-55.
    433 Clarke Wallace, 8/27/97 deposition, p. 56; Clarke 
Wallace, 9/16/97 Hrg., p. 108.
    434 Clarke Wallace deposition, 8/27/97, p. 55:9-12.
    435 Beth Dozoretz, 9/16/97 Hrg., p. 156; Beth Dozoretz 
deposition, 9/2/97, pp. 11-12, 28. Dozoretz is a DNC Trustee and friend 
of the President and First Lady. Beth Dozoretz, 9/16/97 Hrg., p. 122; 
Beth Dozoretz deposition, 9/2/97, p. 28 Dozoretz and her husband have a 
history of being supporters of both Democratic and Republican 
candidates and party organizations. In addition to their support of 
President Clinton, the Dozoretz's continue to support Republican 
candidates including John Warner, Alfonso D'Amato, and Arlen Specter. 
Beth Dozoretz deposition, 9/2/97, pp. 162-63.
    436 Beth Dozoretz, 9/16/97 Hrg., p. 139.
    437 Beth Dozoretz, 9/16/97 Hrg., p. 157.
    438 Beth Dozoretz, 9/16/97 Hrg., p. 119; Robert Belfer, 
9/16/97 Hrg., p. 25; Clarke Wallace deposition, 8/27/97, p. 106.
    439 Beth Dozoretz, 9/16/97 Hrg., p. 120.
    440 It was during the coffee itself that Dozoretz formed 
the impression that Huang might be a representative from the DNC. Beth 
Dozoretz, 9/16/97 Hrg., pp. 118-119.
    441 Robert Belfer deposition, 9/16/97, p. 77-78, 82. 
Indeed, he characterized the event as follows: ``Let me suggest to you 
as someone who is very active in philanthropic circles, much more so 
than political, that one can have a multi-step process in which you 
engender goodwill at one event, in order to soften people up for 
raising money at different points in time. It doesn't necessarily make 
the particular event a fundraiser.'' Robert Belfer, 9/16/97 Hrg., p. 
176, quoting Robert Belfer deposition, 9/6/97, p. 76.
    442 Robert Belfer deposition, 9/6/97, p. 25.
    443 List of expected attendees at White House coffee, 6/
18/96, WH A 00097.
    444 See, for example, Senator Lieberman, 9/16/97 Hrg., 
p. 187.
    445 Rawlein Soberano, 9/16/97 Hrg., p. 198.
    446 Rawlein Soberano, 9/16/97 Hrg., pp. 201-202.
    447 Rawlein Soberano, 9/16/97 Hrg., p. 203.
    448 Rawlein Soberano, 9/16/97 Hrg., p. 203.
    449 Rawlein Soberano, 9/16/97 Hrg., p. 223-224.
    450 Rawlein Soberano, 9/16/97 Hrg., p. 209; Rawlein 
Soberano deposition, 5/13/97, p. 104.
    451 Rawlein Soberano deposition, 5/13/97, p. 104.
    452 Rawlein Soberano deposition, 5/13/97, pp. 29, 31.
    453 Rawlein Soberano, 9/16/97 Hrg., p. 211.
    454 Rawlein Soberano deposition, 5/13/97, p. 105.
    455 Rawlein Soberano deposition, 5/13/97, pp. 102-103.
    456 Rawlein Soberano deposition, 5/13/97, pp. 96, 99-
100.
    457 Rawlein Soberano deposition, 5/13/97, pp. 59-60.
    458 Rawlein Soberano deposition, 5/13/97, pp. 44-45.
    459 Rawlein Soberano deposition, 5/13/97, pp. 33-47.
    460 Rawlein Soberano deposition, 5/13/97, p. 33.
    461 Richard L. Sullivan deposition, 6/5/97, pp. 62-63.
    462 Richard L. Sullivan deposition, 6/5/97, pp. 62-63.
    463 Richard L. Sullivan deposition, 6/5/97, pp. 73-77.
    464 Richard L. Sullivan deposition, 6/5/97, p. 73.
    465 Richard L. Sullivan deposition, 6/5/97, p. 71.
    466 Richard L. Sullivan deposition, 6/5/97, pp. 82-83.
    467 Richard L. Sullivan deposition, 6/5/97, p. 73.
    468 Donald L. Fowler deposition, 5/21/97, p. 273.
    469 Marvin S. Rosen deposition 5/19/97, p. 175.
    470 Richard L. Sullivan deposition, 6/5/97, p. 85.





PART 1  FOREIGN INFLUENCE

Chapter 5: Charlie Trie

    Yah Lin (``Charlie'') Trie is a native of Taiwan who 
emigrated to the United States in 1974, when he was 25 years 
old. He later became an American citizen and settled in Little 
Rock, Arkansas, where he owned a Chinese restaurant patronized 
by then-Governor Clinton. A friendship developed between the 
two men which continued after Governor Clinton won the 1992 
presidential election. Trie subsequently contributed and raised 
substantial sums of money for the Democratic National Committee 
(``DNC'') and the Presidential Legal Expense Trust (``PLET''). 
In April 1996, President Clinton appointed Trie to the 
Commission on United States-Pacific Trade and Investment 
Policy.
    The Committee investigated the source of the substantial 
funds raised and contributed by Trie to the DNC and the funds 
he raised for the PLET. The Committee was particularly 
interested in whether any foreign funds were involved, in light 
of Trie's business dealings with Ng Lap Seng (also known as 
Wu), a wealthy Macao businessman with ties to businesses in 
China. The Committee examined Trie's appointment to the 
Commission. The Committee also examined Trie's relationship 
with the Chinese government and his attendance with Wang Jun, a 
Chinese businessman, at a White House coffee. On January 28, 
1998, the Department of Justice indicted Trie for conspiring to 
defraud the DNC and Federal Election Commission (``FEC'') by 
making and arranging illegal campaign contributions utilizing 
foreign funds.

                                FINDINGS

    (1) Charlie Trie contributed and raised substantial sums of 
money to benefit the DNC in order to gain access for himself 
and his associates to the White House and senior Administration 
officials.
    (2) Trie and his businesses received substantial sums of 
money from abroad and used these funds to pay for some or all 
of the $220,000 in contributions that Trie, his family and 
businesses made to the DNC. The evidence before the Committee 
suggests that some of the contributions may have been illegal, 
and, in fact, Trie was recently indicted with respect to some 
of these contributions. Trie has pleaded not guilty. The DNC 
returned all $220,000.
    (3) Trie and Wu used three individuals who were legally 
permitted to make political contributions--Keshi Zahn, Yue Chu 
and Xiping Wang--as conduits to make contributions to the DNC, 
in apparent violation of law.
    (4) There is no evidence before the Committee that any DNC 
officials were knowingly involved in Trie's misdeeds, but the 
DNC did not adequately review the source of Trie's 
contributions and did not respond appropriately to warning 
signs of his improper activities.
    (5) The evidence before the Committee does not establish 
that the government of the People's Republic of China provided 
money to Trie or directed Trie's actions.
    (6) The Presidential Legal Expense Trust, a private trust 
not involved in campaigns, acted prudently and responsibly in 
its dealings with Trie.
    (7) There is no evidence before the Committee that Trie, 
Wu, or anyone associated with them had any influence or effect 
on U.S. domestic or foreign policy.

                               BACKGROUND

    Charlie Trie, who fled the United States in late 1996 and 
remained abroad until February 1998, refused to be interviewed 
by or cooperate with the Committee. Much of the information 
before the Committee concerning Trie was compiled under the 
direction of Jerry Campane, a special agent detailed to the 
Committee from the Federal Bureau of Investigation and who 
testified before the Committee on July 29, 1997. On January 28, 
1998, the Department of Justice indicted Trie for conspiring to 
defraud the DNC and FEC by making and arranging illegal 
campaign contributions utilizing foreign funds. 1 He 
returned to the United States in early February to answer the 
charges and surrendered to federal law enforcement agents.
---------------------------------------------------------------------------
    Footnates at end of chapter.
---------------------------------------------------------------------------
    Trie was born in Taiwan on August 15, 1949.2 He 
emigrated to the United States in 1974 and later became a 
United States citizen. He eventually settled in Little Rock, 
Arkansas, where his older sister was in the restaurant 
business. Trie began as a busboy and eventually became co-owner 
with his sister of a popular Chinese restaurant in Little Rock 
known as Fu-Lin which was patronized by then-Governor 
Clinton.3 A friendship developed between the two men 
which continued after Clinton was elected President in November 
1992.4
    In 1990, Trie and his sister sold Fu-Lin, and Trie began 
exploring Asian business opportunities. He engaged in a variety 
of trading opportunities involving safe deposit boxes, 
chickens, cotton, and other products. Trie apparently was not 
successful in these business endeavors.5 Trie also 
undertook efforts to facilitate business ventures between firms 
in Little Rock and their counterparts in China. He arranged for 
a number of delegations of Chinese officials to come to Little 
Rock in order to promote business opportunities, and he 
escorted Arkansas business people to China.6
    One of Trie's attempted business ventures involved 
renovating the Camelot hotel in downtown Little Rock. Trie 
enlisted two investors in an attempt to win the bid for the 
project. One of the investors, a foreign national, was Ng Lap 
Seng (Cantonese spelling), also known as Wu Li Sheng (Mandarin 
spelling), a Macao 7 real estate tycoon. Although 
Trie and his group did not win the bid, Trie developed a 
business relationship with Wu that continued beyond that 
project.8 In October 1992, Trie incorporated a 
company called Daihatsu International Trading, Inc., to pursue 
ventures with Asian businesses.9 Trie later opened 
branch offices of Daihatsu in Washington, D.C., at the 
Watergate complex, as well as offices in Beijing, Taiwan, and 
three other Asian cities. According to witnesses interviewed by 
the Committee, Trie's move to Washington reflected his hope 
that he could capitalize on his long-term friendship with the 
President by bringing Daihatsu's business to 
Washington.10
    The Committee's investigation determined that Daihatsu was 
not a profitable enterprise.11 Although Trie claimed 
in one media interview to have made $1 million in 
1993,12 a Committee review of Daihatsu's corporate 
tax returns for 1992 through 1995 found that its gross income 
never exceeded $250,000, its net income was negligible, and 
Trie was paid a company salary of about $30,000 a year. A 
review of other Daihatsu records and Committee interviews with 
Charlotte Duncan, Daihatsu's bookkeeper, and Dewey Glasscock, 
Trie's accountant, also suggest that Daihatsu had meager, if 
any, profits. Moreover, Trie and his wife apparently had little 
income from other sources.13 The bank records for 
accounts maintained by three additional companies incorporated 
by Trie--San Kin Yip (USA), Inc., San Kin Yip International 
Trading Corp., and America Asia Trade Center, Inc.--suggest 
none had either earnings or ongoing business activity.
    The Committee's investigation also found, however, that 
from 1994 to 1996, bank records for Trie's personal and 
business accounts show a steady stream of wire transfers from 
abroad totaling about $1.4 million, including at least $900,000 
from accounts maintained by Wu or Wu-controlled 
companies.14 The Committee's analysis of these bank 
records indicate that Wu wired money from several foreign 
sources into three bank accounts maintained by or accessible to 
Trie. Trie then transferred the funds among six different 
domestic accounts.15 Charlotte Duncan stated that 
Maria Mapili, a Daihatsu employee familiar with these wire 
transfers, characterized the transfers from Wu to Daihatsu as 
``commissions'' or ``loans.'' However, in Duncan's view, Mapili 
never properly explained Daihatsu's entitlement to these funds. 
When she was interviewed by the Committee, Duncan was unable to 
identify the types of business Daihatsu 
transacted.16

                TRIE'S DNC CONTRIBUTIONS AND FUNDRAISING

    From 1994 to 1996, Trie, his family, and his businesses 
contributed a total of $220,000 to the DNC.17 During 
the 1996 election cycle, Trie also acted as a volunteer 
fundraiser for the DNC and was eventually credited with raising 
about $500,000 in contributions. To date, the DNC has returned 
all of the Trie-related contributions of $220,000 and most of 
the $500,000 attributed to him, making Trie--after John Huang--
the source or solicitor of the second largest volume of DNC-
returned contributions.18

Trie's DNC contributions

    Trie first began making significant contributions to the 
DNC in 1994.19 The records also show that in May and 
June 1994, Trie and his wife wrote three checks to the DNC for 
a total of$100,000. FEC records show that Trie, his family, and 
his businesses contributed a total of $127,500 in 1994, $50,000 in 
1995, and $29,500 in 1996.20
    On January 28, 1998, the U.S. Department of Justice 
indicted Trie and a business associate, Yuan Pei (``Antonio'') 
Pan, for conspiring to defraud the DNC and FEC in part by 
making improper contributions utilizing foreign 
money.21 Pan, a Taiwanese national, worked for both 
Trie and Wu.22 According to the indictment, in May 
1994, one of the foreign companies Pan was associated with 
transferred $100,000 to Trie's personal bank account, which is 
the account that Trie used to make several contributions to the 
DNC in 1994 and 1995.23 In October 1994, Wu wire-
transferred $100,000 to the account of San Kin Yip 
International Trading Co., a company that Trie had just 
established and which then made a $15,000 contribution to the 
DNC later that month.24 The indictment also cites 
several DNC contributions made from the bank account of Trie's 
Daihatsu company, but does not cite specific deposits from Wu, 
Pan, or related companies into this account.25
    The indictment and the evidence before the Committee 
indicating that the bulk of money obtained by Trie and his 
companies since 1994 came from abroad raise serious questions 
about the legality of the $220,000 in Trie-related 
contributions to the DNC. The indictment charges Trie with 
engaging in a criminal conspiracy to defraud the DNC and FEC in 
part ``by contributing . . . to the DNC.'' 26 In 
addition to this criminal charge, the Trie-related 
contributions may violate the Federal Election Campaign Act 
(``FECA''). For example, if Wu or Pan participated, directly or 
indirectly, in any of the contribution decisions involving the 
$220,000, the resulting contribution might violate FECA's 
prohibition against foreign contributions. If, in any instance, 
Trie or one of his companies acted as a mere conduit for a 
campaign contribution provided by Wu, Pan, or a related 
company, the resulting contribution might violate FECA's 
prohibition against contributions in the name of another. A 
third possible FECA violation involves any corporate 
contribution by a U.S. subsidiary of a foreign corporation 
utilizing foreign funds. This violation apparently occurred at 
least once when, in October 1994, as described above, San Kin 
Yip International Trading Corp., a U.S. subsidiary of a foreign 
corporation controlled by Wu, contributed $15,000 to the DNC 
just ten days after the company's incorporation and prior to 
its generating any income in the United States. Wu has 
apparently admitted to funding the $15,000 with money from 
abroad and a Committee analysis confirms that it appears to be 
an illegal foreign contribution.27
    Aside from the 1994 San Kin Yip contribution, given the 
multiple bank accounts and money transfers among Trie, Wu, Pan, 
and related companies, the evidence before the Committee is 
insufficient to establish the precise source of funds for many 
of the $220,000 Trie-related contributions.28 The 
Committee was also unable to obtain specific evidence on the 
role that Wu or Pan may have played in particular contribution 
decisions.29 However, Campane testified that, in 
light of how little income was generated by Trie's business 
ventures, it was his opinion that the entire $220,000 was paid 
for with foreign funds provided by Wu or others.30 
While it is possible that Trie could show that, due to his 
status as an American citizen, some portion of the 
contributions met the requirements of federal election 
law,31 Trie's flight from the United States and 
refusal to cooperate with the Committee's investigation cast 
doubt on whether that showing will be made.
    In light of the troubling facts known at the time, and 
rather than contending it may keep a contribution until proven 
illegal, the DNC properly returned all of the 
$220,000.32

Trie's DNC fundraising

    In addition to contributing to the DNC, beginning in 1995, 
Trie began to raise substantial funds for the DNC, primarily 
from the Asian-American community. Trie often worked with John 
Huang, although, unlike Huang, Trie was a voluntary, unpaid 
fundraiser for the DNC, rather than a paid 
employee.33 Trie's fundraising efforts appear to 
have begun around the time of a November 1995 inaugural 
fundraiser for the Asian Pacific American Leadership Council 
(``APALC''), a newly established DNC organization which, among 
other functions, sought to raise funds from the Asian-American 
community.34 In 1996, Huang organized several DNC 
fundraisers targeting the Asian-American community; Trie was 
active in most.
    The Trie indictment charges him with conspiring to defraud 
the DNC and FEC in part by ``channel[ing] foreign money to the 
DNC through the use of straw or conduit contributions''; 
``conceal[ing] the source of the money contributed by 
reimbursing conduits in cash and using multiple bank 
accounts;'' and ``caus[ing] the DNC to file false campaign 
finance reports with the FEC.'' 35 Many of the 
alleged conduit contributions described in the indictment 
appear to be associated with the DNC fundraising efforts that 
Trie undertook.
    In February 1996, in connection with his first event as a 
paid DNC fundraiser, Huang organized and Trie co-chaired an 
APALC fundraiser at the Hay Adams Hotel in Washington. This 
event, which brought in about $716,000,36 was 
described in the press as ``an unqualified financial success'' 
raising ``much more than the party had ever raised from the 
Asian-American community.'' 37 Trie sat next to the 
President at the head table. Wu attended the event as Trie's 
guest. Included among the contributions attributed in DNC 
records to both Trie and Huang in connection with that event 
were checks totaling $25,000 from Yue Chu and Xiping Wang. 
These contributions are described in more detail below. Another 
check attributed jointly to Trie and Huang in connection with 
this event was for $12,500 from Keshi Zahn, which appears to be 
identified in the indictment as an illegal conduit 
contribution.38 While Zahn maintains that she paid 
for this contribution with her own money, her association with 
Trie and Wu, involvement with the Chu and Wang checks, and bank 
records tracing the movement of funds over the course of a week 
from Trie to Zahn to the DNC provide convincing evidence that 
Trie and Wu supplied the funds for her 
contribution.39 The DNC has returned the Chu, Wang, 
and Zahn contributions.40
    In May 1996, Huang organized and Trie co-chaired a 
fundraiser at the Sheraton Carlton Hotel in Washington, an 
event which raised about $579,000.41 Trie again sat 
next to President Clinton at the head table. Trie and Huang 
were jointly credited in DNC records with obtaining the largest 
single contribution at the fundraiser, $325,000 from Yogesh K. 
Gandhi.42 Gandhi told the Committee in a staff 
interview that a friend of his from Houston had alerted him to 
the Asian-American fundraiser that would be taking place in 
Washington.43 Gandhi said that Trie visited him at 
his hotel on the day of the event and suggested a contribution 
of $500,000 for Gandhi and an entourage of 25 individuals to 
attend the dinner. According to Gandhi, he negotiated with Trie 
and ultimately provided a check for $325,000 in exchange for 26 
tickets to the event. Since Huang received credit for the 
contribution, Trie presumably presented the check to Huang who 
passed it on to the DNC.44 This $325,000 
contribution accounts for about half of the total DNC 
contributions attributed to Trie's fundraising efforts. The DNC 
later returned the contribution after published reports that 
Gandhi had claimed poverty in a California legal action, and 
Gandhi declined DNC requests to explain the source of the 
$325,000. The Gandhi check is not addressed in the Trie 
indictment.
    In July 1996, Trie assisted Huang with a DNC APALC gala 
fundraiser at the Century Plaza Hotel in Los 
Angeles.45 President Clinton attended, and the event 
raised about $368,000.46 James Riady and Ted Sioeng, 
businessmen from Indonesia, sat at the head table next to the 
President, and a number of other foreign nationals attended as 
guests. None of the checks attributed to Trie in connection 
with the event has been identified as problematic; none appears 
to be addressed in the Trie indictment.
    In August 1996, on the day of a Radio City Music Hall 
fundraiser in New York City celebrating President Clinton's 
50th birthday, Trie delivered to the DNC contribution checks 
totaling over $100,000, allegedly to help Huang who had been 
asked to raise hard money contributions in connection with this 
event.47 Apparently, for each of these checks, DNC 
tracking records identified Trie as the ``solicitor'' and Huang 
as the ``DNC contact.'' 48 After media reports began 
to raise questions about some of the checks, the DNC 
investigated and returned several due to unresolved concerns 
about the donors.49 Additional questions about the 
checks arose when a Committee review of bank records determined 
that, less than two weeks earlier, on August 7, 1996, $200,000 
had been wire-transferred from a bank account in Macao to a 
bank account in Washington, D.C., to which Trie had 
access.50 The January 1998 Trie indictment charges 
that, on or about August 15, an unidentified co-conspirator 
wire-transferred $80,000 from the Trie account in Washington to 
a bank account in California, and that on the same day Trie's 
business associate, Pan, ``received $80,000 in 
cash.''51 The indictment charges that Pan then used 
these funds to solicit five conduit contributions to the DNC 
totaling $40,000, which Pan reimbursed with cash.52 
The indictment charges that Trie also personally solicited two 
conduit contributions to the DNC totaling $20,000, which he 
reimbursed with cash.53 While the Committee did not 
obtain independent evidence on these alleged conduit 
contributions or on Pan, the indictment and the evidence before 
the Committee regarding other conduit contributions involving 
Trie provide reason to believe that Trie was involved in a 
number of conduit contributions to the DNC utilizing foreign 
funds.

                       CHU AND WANG CONTRIBUTIONS

    The Committee received detailed testimony about $25,000 
contributed to the DNC and $3,000 contributed to the Democratic 
Senatorial Campaign Committee (``DSCC''), a division of the 
DNC. The contributors of record are Yu Chu and Xiping Wang, two 
women who were bornin China, are related by marriage, and are 
both legal permanent residents of the United States.54 Both 
testified before the Committee pursuant to grants of immunity from 
criminal prosecution, and their contributions are further discussed in 
Chapter 21 of the Minority Report.
    An analysis of FEC, DNC, and bank records, together with 
testimony from Campane, Chu, and Wang, show that on November 
14, 1995, Chu wrote a check for $2,000 to the DSCC and a $1,000 
check payable to Keshi Zahn. Chu testified that she provided 
the checks at Zahn's request and did not know at the time that 
she was making a campaign contribution.55 The next 
day, November 15, 1995, Zahn reimbursed Chu with a check for 
$3,000 drawn on a joint account at Riggs Bank shared by Wu and 
Trie.
    On February 19, 1996, again at Zahn's request, Chu wrote a 
check for $7,500 and a check for $12,500 payable to the DNC. 
Chu was told by her husband, Ming Chen, who is employed by Wu 
at a restaurant in Beijing, that Wu wanted to visit the White 
House and this money would help him ``buy a ticket.'' 
56 Chu understood that the cost was $25,000, but 
they had sufficient funds to provide only $20,000. They asked 
Chen's cousin, Xiping Wang, for the remaining $5,000. Wang made 
out a check in that amount to the DNC. All three contributions 
were reimbursed by Zahn with checks drawn on the joint account 
at Riggs Bank. These three contributions were later attributed 
to Trie and Huang in connection with the February 1996 Hay 
Adams fundraiser.
    The evidence is convincing that Trie and Wu, with 
assistance from Zahn, used Chu and Wang as conduits to make 
$25,000 in contributions to the DNC as well as $3,000 in 
contributions to the DSCC. Their contributions do not appear to 
be included in the Trie indictment, presumably due to the 
immunity from prosecution granted by the Committee.
    The Committee's investigation found no evidence that, at 
the time of the contributions, anyone at the DNC or the White 
House knew or had reason to know that the women were being used 
as conduits.57 Both Chu and Wang are legal permanent 
residents who are eligible to make campaign contributions, and 
their checks were drawn on local U.S. banks in amounts which 
were substantial, but not so large as to trigger special 
inquiry. Neither woman had any contact with the DNC or White 
House; neither even understood that she was making a campaign 
contribution or that federal election law prohibits 
contributions in the name of another.58 Neither the 
DNC nor the White House had access to or was aware of the bank 
records demonstrating the reimbursements.59 The Trie 
indictment does not cite any facts suggesting that anyone at 
the DNC or the White House was aware of Trie's misconduct with 
respect to these or any other conduit 
contributions.60

                   dnc awareness of trie's activities

    The evidence before the Committee indicates that the DNC 
did not, and had no reason to, suspect that the contributions 
made by Trie, his family or his businesses should be 
investigated. Trie was an American citizen and eligible to 
contribute. He had the appearance of a successful businessman. 
He had prospered in the restaurant business in Arkansas and 
moved into international business ventures that drew upon his 
familiarity with Asian business and culture. He maintained 
offices at an expensive location in Washington and several 
cities abroad. He was a business associate of Wu, a wealthy 
international businessman with successful operations in several 
countries. Trie pledged and produced substantial sums to the 
DNC. Together, these facts indicate that the DNC could 
reasonably have believed his contributions were legitimate and 
that there was no reason to investigate them.
    Moreover, in late 1995, Trie gave written permission for 
the Federal Bureau of Investigation to investigate his 
background in connection with his possible nomination to a 
commission. The FBI concluded its work, and in February 1996, 
the White House legal counsel's office determined that no 
problems had been found that would bar his 
nomination.61 The successful completion of the FBI 
background investigation is an additional indication that, at 
the time, there was little or no evidence of misconduct by 
Trie. A few months later, as explained below, the Presidential 
Legal Expense Trust informed First Lady Hillary Clinton and 
White House Deputy Chief of Staff Harold Ickes that Trie had 
raised a considerable amount of money for the Trust. In May, 
the Trust informed Ickes and others that it had determined that 
the contributions had been solicited from American citizens 
belonging to a Buddhist religious organization and that it was 
planning to return them. None of the White House officials 
provided this information to the DNC; Ickes has testified that 
he did not realize at the time that Trie was raising funds for 
the DNC.62 DNC Chairman Donald Fowler has said that 
``[i]f we had known about the problems with Trie earlier, we 
could have done something.'' 63
    The Committee also heard testimony that Trie probably had 
``no particular knowledge of campaign financing laws.'' 
64 No evidence before the Committee indicates 
whether Huang, who worked with Trie at times, had informed Trie 
about election law requirements. Trie has told the media that 
he was unaware at the time that U.S. companies may not use 
funds from abroad to pay for campaign contributions, but must 
generate the funds within the United States.65 On 
the other hand, Trie's use of conduits for DNC contributions 
indicates, not only an awareness of restrictions on 
contributions by foreign nationals, but also a willingness to 
try to circumvent those restrictions. The Trie indictment 
alleges a ``knowing'' conspiracy by him to defraud the DNC; it 
does not charge the DNC with any wrongdoing nor does it cite 
any facts suggesting that the DNC or anyone at the White House 
was aware of Trie's misconduct.66

      trie's fundraising for the presidential legal expense trust

    The Presidential Legal Expense Trust (``PLET'') was 
established on June 28, 1994, in order to collect funds to 
defray the costs of President Clinton's private litigation. 
Donations to the Trust are not election-related contributions, 
and they are not subject to federal election law or 
regulations. The Trust is a private entity governed by the 
legal requirements that govern private trusts in the District 
of Columbia, and by the trust's self-imposed guidelines.
    The executive director of the Trust, Michael Cardozo, is an 
attorney who works at G. William Miller & Company, a financial 
services company in Washington, D.C. He is one of nine trustees 
who come from both political parties and share a wealth of 
legal, ethical and government experience. The trustees were the 
Reverend Theodore M. Hesburgh, Nicholas de B. Katzenbach, John 
Brademas, Barbara Jordan, Ronald Olson, Elliot Richardson, 
Michael Sovern, John Whitehead, and Michael 
Cardozo.67 The establishment of the trust was 
challenged in court, and its legality was upheld.68 
Furthermore, the Office of Government Ethics, an independent 
federal agency that oversees ethics issues for the executive 
branch, approved the trust's guidelines. The director of the 
Office of Government Ethics concluded on July 22, 1994, that 
the establishment of PLET ``does not and will not violate any 
of the conflict of interest or gift statutes or the 
administrative standards of conduct provisions that are 
applicable to the President.'' 69
    There are no laws that govern the establishment and 
administration of a private presidential trust except for those 
laws that concern presidential activity and gifts to the 
presidents generally. Despite the absence of federal law 
regulating the administration of the Trust, the Trust 
voluntarily undertook to impose very strict guidelines 
regarding eligible donors and disclosure. It determined that a 
donor must be a ``natural person'' to be eligible to give. 
Political action committees and corporations could not 
contribute, nor could federal employees. The Trust would not 
accept donations greater than $1,000. This amount is 
significantly lower than the $5,000 limit on expense trust 
contributions for members of the House, and the $10,000 limit 
for Senators.70
    Each quarter the Trustees were required to notify the 
President and Mrs. Clinton in writing of the names and 
addresses of the contributors. These quarterly contribution 
lists were not public.71 The Trustees, however, were 
required to disclose publicly the identity of all donors to the 
Trust at least semi-annually.
    In 1996, Charlie Trie attempted to present the Trust with 
at least $530,000 in contributions raised primarily from 
members of a religious order.72 These contributions 
were controversial, although not illegal, and, as discussed 
below, were ultimately rejected by the Trust. None of the 
donations presented to the Trust is the subject of charges in 
the recent Trie indictment.

Trie's March 21, 1996 meeting with Cardozo

    On March 20, 1996, Charlie Trie called Michael Cardozo to 
arrange for a meeting.73 Cardozo, who had never 
heard of Trie, suggested that they discuss matters over the 
telephone. Trie, however, insisted on a meeting,74 
and Cardozo agreed to see him the next day.
    At the meeting, Trie began by explaining that he was from 
Little Rock and was a friend of the President. He gave Cardozo 
some personal background about emigrating from Taiwan and how 
he came to be in the restaurant business in Little Rock. He 
told Cardozo that one of those restaurants was fairly close to 
the state capitol and was frequented by then-Governor Clinton, 
which explained how Trie had become friendly with 
him.75
    Trie told Cardozo that he had learned about the President's 
growing legal bills and hadheard about the Trust from Susan 
Levine, 76 an acquaintance of Cardozo's wife.77 
Levine had been an aide to Mack McLarty, the President's Chief of 
Staff, and had worked at the DNC.78 After reading about the 
President's legal bills, and learning about the Trust, Trie called PLET 
and was sent a fact sheet that outlined the Trust's donor 
guidelines.79
    According to Cardozo, Trie then leaned down and picked up a 
manila envelope that was sitting against his chair. He opened 
it up, turned it over, and a pile of checks and money orders 
spilled out. Trie then said, ``I have brought you about 
$460,000 in contributions to the Legal Expense Trust. . . . And 
I want to assure you that all of these people are U.S. citizens 
and all of them comply with your guidelines. . . . I am 
familiar with your guidelines and these meet your 
requirements.'' 80 Cardozo testified that Trie 
seemed proud that all of these contributions were from 
citizens.81
    In addition to his comment that all of the donors were U.S. 
citizens,82 Trie pointed out that Social Security 
numbers were provided on the checks and money 
orders.83 Cardozo knew that having a Social Security 
number was not evidence of U.S. citizenship. At that point, 
however, his concern was less about the citizenship of the 
donors, and more about how the funds had been 
collected.84
    Trie told Cardozo that he was not a contributor himself 
because he thought that he might become a federal government 
employee.85 Trie also stated that he was not seeking 
recognition from the Clintons, but rather was raising money for 
the Trust out of his personal affection for them.86
    Cardozo telephoned his assistant, Sally Schwartz, who 
worked in an office nearby. He wanted a witness to this 
discussion and wanted to make sure that Trie understood the 
Trust's disclosure process.87 He asked Schwartz to 
bring a copy of the last financial report, a list of 
contributors, and a contributor guidelines sheet.88 
When she came to Cardozo's office, he told her he did not know 
Trie, that Trie had called to make an appointment, and had come 
to the meeting with these contributions.89
    Cardozo was concerned about the contributions because PLET 
had received other bundled contributions, but nothing of this 
magnitude.90 The money Trie brought in was between a 
third and a half of the total contributions to date, and the 
average contribution brought in by Trie was about $900 compared 
to between $100 and $200 for other contributions.91
    Trie left for a lunch meeting, saying that he would return 
that afternoon to retrieve any defective checks so that he 
could get them corrected.92 Cardozo and Schwartz 
then tried to organize a conference call of the trustees and 
began to review the checks.93 Cardozo wanted to do 
this before Trie's return because ``if somebody brings you an 
envelope or a bag with almost half a million dollars in it, you 
better advise the people with whom you are associated in a 
particular endeavor, meaning your counsel and at least the co-
chairs of the trust.'' 94

Investigation into the contributions

    Schwartz began investigating the donations after Trie left 
for lunch. She initially went through the contributions and 
pulled out those that on their face did not meet the Trust's 
donor guidelines.95 She removed some for exceeding 
the $1,000 limit. Some of the money orders were pulled because 
they did not have names or addresses.96
    Cardozo held a conference call with trustee Nicholas deB. 
Katzenbach and counsel M. Bernard Aidinoff. They decided that 
those checks and money orders that were facially appropriate 
should be delivered to the bank for processing. They also 
decided that the Trust would follow its normal procedures of 
depositing the checks and ``[hold] them in suspension'' until 
the contributions were reviewed for acceptability or 
rejection.97 They agreed to talk later that day, 
when they could reach Father Theodore Hesburgh, one of the 
trustees.98
    When Trie returned from lunch, those contributions that 
appeared to be eligible were put into an envelope addressed to 
the Trust's lock box address.99 Sally Schwartz 
escorted Trie to the executive banking section at a branch of 
NationsBank.100 The Trust returned approximately 
$70,000 to Trie that day; about $380,000 in contributions from 
about 400 individuals were deposited.101 According 
to Cardozo, about 80 percent of the contributions were in the 
form of personal checks and that ``15 to 20 percent, at most'' 
of these contributions were in the form of money orders, some 
of which were sequentially numbered.102
    There was a second conference call that day with Hesburgh 
and Katzenbach 103 and subsequent calls among the 
trustees over the next few days.104 The Trustees 
agreed that Cardozo should seek an appointment with either the 
President or the First Lady to verify what Trie had said about 
himself and his relationship with the Clintons.105
    On April 4, 1996, Cardozo met with Hillary Clinton and 
Harold Ickes, the White House Deputy Chief of Staff, to brief 
them on the contributions and to check on Trie's assertion that 
he was a friend of the Clintons. At first, Mrs. Clinton did not 
recognize Trie's name, but later asked if he was ``the guy that 
owns the Chinese restaurant near the [state]Capitol.'' 
106
    Schwartz began contacting the contributors to determine 
which of the contributions the Trust could accept. In a 
memorandum dated May 9, 1996, summarizing her findings, she 
wrote that all of the contributors contacted identified 
themselves as U.S. citizens; their responses to her questions 
were ``open, unrehearsed, credible''; and most supported the 
President as ``a very good man'' and ``a man of peace'' and 
wanted ``to help the President.'' 107 She also found 
that Trie had not personally solicited the contributions, and 
most contributors had heard about the Trust through 
``meditation groups of Suma Ching Hai.''
    The Trustees hired an investigative firm, the Investigative 
Group International (``IGI'), to examine the contributions more 
closely.108 Cardozo testified that the purpose was 
not to investigate Trie, but rather to determine whether the 
contributions were eligible under the Trust's 
guidelines.109 He said that the Trustees determined 
the focus of the investigation without input from anyone at the 
White House. The Trust also opted not to return the checks 
immediately because, according to Cardozo, ``the trustees have 
a fiduciary responsibility to receive eligible contributions to 
the Trust and for the most part, these appeared to be eligible 
contributions, at least on the representation of Mr. Trie.'' 
110
    A meeting of the Trustees was scheduled for April 22. A few 
days before that meeting Trie brought additional contributions, 
allegedly totaling about $179,000, to Cardozo's 
office.111 Cardozo told him that the Trust was still 
investigating the eligibility of the first group of donations 
and therefore could not accept this second group.112 
Trie accepted this position.113 At this same 
meeting, Trie asked Cardozo if his firm was interested in 
helping him market novelty products manufactured in 
Asia.114 Cardozo told him that his firm provided 
financial services, not marketing, and could not help him in 
this venture.115
    On May 17, 1996, Trie visited the PLET offices a third time 
and asked to meet with Cardozo. Cardozo declined, and Schwartz 
met with Trie.116 Trie presented additional checks, 
allegedly totaling about $150,000, some or all of which may 
have been included in the second set of checks he had presented 
the prior month.117 The Trust declined to accept any 
of the checks.118
    IGI's investigation confirmed that many of the donors were 
members of Suma Ching Hai, a Buddhist sect based in Taiwan. The 
investigation also determined that the sect is controversial 
and that some critics have characterized it as a cult, raising 
questions about the voluntariness of the 
contributions.119 Of the 27 contributors interviewed 
by IGI, many affirmed that their donation was voluntary; some 
claimed to have no knowledge of Ching Hai; and one stated that 
she had been reimbursed by Ching Hai for her 
contribution.120

The Trust's decision to reject the contributions

    After receiving the IGI report in May 1996, the Trustees 
discussed whether to accept the contributions. Schwartz 
testified that usually, the Trustees took ``people at their 
word'' regarding the voluntary nature of their 
contributions.121 The Trustees decided, however, 
that they were confronting a unique situation and that it would 
be extremely difficult to determine on an individual basis 
which of the many contributions were truly 
voluntary.122 Despite the fact that many of the 
contributions appeared to meet the Trust's requirements, the 
Trustees decided to treat all of the contributions in the same 
manner by returning them to the donors.123
    As a result, all of the money was returned to the donors in 
June 1996.124 Letters were sent to the donors on 
June 26, explaining the Trust's decision and informing eligible 
donors of the Trust's criteria for contributions.125 
The letter included a fact sheet that had been revised to 
emphasize the fact that contributions had to be voluntarily 
made and with personal funds.126 Some of the 
original donors then attempted to donate to the Trust a second 
time. The Trustees, however, ultimately chose not to accept 
even those donations.
    On May 9, 1996, Cardozo, at the direction of the trustees, 
went to the White House tobrief representatives of the Clintons 
about the contributions.127 Present at the May 9 meeting 
were Jack Quinn, Cheryl Mills, and Bruce Lindsay of the White House 
Counsel's Office; Margaret Williams, the First Lady's Chief of Staff; 
Evelyn Lieberman, a representative from the President's office; and 
Harold Ickes, Deputy Chief of Staff. Cardozo informed them about the 
involvement of the Ching Hai sect.
    Cardozo testified that by the time of this meeting, the 
Trustees had already tentatively decided that the Trust would 
not accept the funds, and Cardozo advised the people at the 
meeting of this decision. He did not ask for their opinion, and 
none was expressed. Cardozo testified that ``there was never 
any recommendation that the funds be either accepted or 
rejected. They respected the independence of the trustees. They 
were not interfering in our decision at all.'' 128 
Cardozo also testified: ``I would emphasize that we never 
sought the agreement or the disagreement [of the White House]. 
We never sought the concurrence of the White House at all in 
any of our decisions.'' 129 When asked if anyone at 
the White House sought to interfere or influence the Trustees' 
decision-making process in any way, Cardozo answered: ``Not at 
any time. They always respected the independence of the 
trustees.'' 130 Cardozo also testified that the 
First Lady made no attempt ``to direct the trustees in any 
way.'' 131
    In June 1996, the Trust returned the checks and notified 
the White House of its decision to do so. In July, the Trust 
began receiving replacement contributions.132 By 
November 1996, the replacement contributions totalled nearly 
$122,000, or more than one quarter of the original $460,000. On 
November 15, 1996, the Trust met with White House staff to 
update them on the replacement contributions and inform them 
that the Trust was considering returning these contributions as 
well.133 Two weeks later, the Trust returned each of 
the replacement contributions to the individual donors. 
Subsequent to this action, in December 1996, the Trust received 
its first media inquiry about the returned 
donations.134

The Trust's change in accounting procedures

    As the result of a change in accounting methods, the 
Trust's 1996 semi-annual report did not reflect the donations 
returned to Trie's contributors. Prior to 1996, the semi-annual 
report of the Trust stated the total contributions received and 
also set out the total contributions received less the 
ineligible contributions.135 An accounting change 
was made so that the 1996 financial reports only gave the total 
amount of contributions accepted.136 Under this 
approach, a contribution was not deemed ``accepted'' by the 
Trust until the end of the reporting period, when the Trustees 
had concluded that the contribution met the Trust's guidelines. 
According to Cardozo, the Trustees implemented this accounting 
change without input from anyone at the White House. The 
Committee had some concern that the accounting change was an 
attempt to hide Charlie Trie's connection to the contributions. 
Cardozo, in his testimony, denied that this was the reason for 
the change:

          I would remind you that the trust is a private trust. 
        It has no obligation, no responsibility to make any 
        financial information public. What it does make public 
        is far in excess of what any of the congressional--
        House or Senate--legal defense funds make 
        public.137

    Cardozo indicated that the Trustees made this decision to 
keep confidential the decision to reject the funds. They felt 
confidentiality was needed to protect the privacy interests of 
U.S. citizens who had attempted to contribute and to protect 
the integrity of the Trust. He testified:

          We wanted to avoid sensational press coverage of the 
        attempt by the Ching Hai contributors to contribute. . 
        . . Charlie Trie was irrelevant. There were no 
        discussions with the White House. This was a judgment 
        that independent trustees made that it was in the best 
        interest of the trust.138

Indeed, the Trust would have had no reason at this time to keep 
Trie's involvement a secret. The decision to change the 
reporting format was made in June, but press accounts raising 
concerns about Trie did not appear until October.
    The Trust, which made its decision on a unanimous, 
nonpartisan basis, provided a number of valid reasons for 
changing the reporting format. The new presentation gave a more 
accurate picture of the Trust's financial condition. In 
addition, the Trustees were legitimately worried about 
protecting the privacy of those eligible donors whose checks 
were returned along with the ineligible donations.
    Furthermore, regardless of which accounting format was 
used, Trie's name would not have appeared because he was not 
personally a donor. Nevertheless, this change had the effect of 
obscuring Trie's involvement, which probably would have emerged 
upon investigation by the media into the returned 
contributions. In retrospect, the accounting change created at 
least the appearance of trying to hide Trie's role.

Foreign funds

    At the hearing, Cardozo testified that the Trust's 
investigation of the donations delivered by Trie found no 
evidence that foreign money was used to pay for the donations 
and no evidence of any involvement by a foreign 
government.139 The Committee also asked about the 
role of foreign money when questioning Zhi Hua Dong, a Ching 
Hai member who participated in the solicitation of PLET 
donations during an event in New York. Dong described a number 
of measures taken by the sect to ensure that only U.S. citizens 
made donations to PLET, including at the New York event he 
attended, by explaining the Trust's requirements, placing red 
dots on the name tags of attendees who were U.S. citizens, 
using a separate room for discussion of the PLET donations, and 
asking only U.S. citizens to enter that room.140 
Dong also testified, however, that some Ching Hai members had 
provided pre-paid money orders to enable other members to make 
donations to PLET while at the event, and when these members 
were not repaid for those money orders, funds from the Ching 
Hai organization, including funds transferred from abroad, were 
used to reimburse them for their expenditures.141 As 
explained above, money orders provided only 15 to 20 percent of 
the number of PLET donations delivered by Trie, which means 
that at least 80 percent of the contributions he delivered were 
unaffected by any money order controversy. In addition, the 
sect's reimbursement decision appears to have been an after-
the-fact response to inadequate measures taken during Ching 
Hai's solicitation process to ensure that persons using pre-
paid money orders had the information needed to pay for the 
money orders at a later time. No evidence was found of a 
premeditated plan by the sect or its members to use foreign 
funds for the PLET donations.142

Analysis

    Donations to the Presidential Legal Expense Trust are not 
campaign contributions and are not covered by federal election 
laws. The Committee found no evidence linking the PLET 
donations delivered by Trie to the 1996 federal elections. The 
PLET donations are not the subject of any of the charges made 
in the recent indictment of Trie.143
    The Trustees voluntarily imposed upon themselves very 
strict guidelines regarding donor eligibility and 
disclosure.144 When confronted with the donations 
delivered by Trie, the Trustees spent considerable funds to 
hire an investigative firm to examine the eligibility of the 
donations. Despite the fact that the Trustees felt confident 
that the majority of the donations met their requirements and 
despite the Trust's need for donations, the Trustees opted to 
return all of the donations associated with the Ching Hai sect, 
in order to avoid even an appearance of impropriety. When the 
donations were returned to the donors, they were accompanied 
with a fact sheet that explained the eligibility guidelines of 
the Trust. When some of the original donors again tried to 
contribute, the Trustees chose to return those donations as 
well. The Trustees are to be commended for having acted with 
the utmost prudence and integrity by investigating the 
donations and ultimately returning all of them. They are also 
to be commended for scrupulously maintaining their independence 
from any outside influences in making these decisions.
    At the hearing, some Committee members expressed concern 
that the investigative firm hired by the Trust did not examine 
Trie's role in soliciting the contributions and asked whether 
this limit on the scope of the IGI investigation had been 
dictated by the White House. Cardozo testified that no one at 
the White House had sought to affect the investigation or to 
influence the Trustees' decision in any way.145 
Cardozo also testified that once the Trustees learned about the 
Ching Hai association with the contributions, Trie ``became 
irrelevant to our consideration. Our responsibility was, can we 
accept these contributions, are they eligible.'' 146 
In response to questioning about why the Trust did not 
investigate Trie's motivations beyond Trie's representation 
that he was a friend of the President, Cardozo stated: ``I had 
no conversations with anyone else other than the trustees and 
counsel and the Investigative Group about what Mr. Trie's 
motivations might have been, but I remind you the trustees' 
responsibilities as fiduciaries was to determine whether or not 
these were eligible contributions.'' 147 Cardozo 
also made the point that the Trustees were trying to limit the 
amount of money they were spending on the investigation because 
that was money that would otherwise go to reduce the President 
and First Lady's legal bills.148 These explanations 
offer reasonable justifications for the Trust's actions and the 
scope of the IGI investigation.
    The decision by the Trustees to change the accounting 
procedures, however, raises a concern that its purpose was to 
obscure the fact that Trie had brought in a very large sum of 
money which had been returned. In so doing, the Trustees 
arguably made it appear that the Trust had something to hide. 
On the other hand, Cardozo and Schwartz were concerned that the 
old reporting system was flawed. Furthermore, the Trustees' 
desire to protect the privacy of those eligible donors whose 
contributions were returned was understandable given the 
likelihood that the media would probably have pursued the 
issue. With hindsight, however, given the controversy that now 
surrounds Trie (this controversy did not arise until after the 
reporting change had been made), it would have been the better 
course not to have changed the reporting format.
    A final issue concerns the role of foreign funds. The Trust 
determined that most of the contributions presented by Trie 
were from American citizens who were eligible to contribute, 
knew where their money was going, and supported President 
Clinton. The Committee's investigation found no evidence that 
Trie had attempted to solicit foreign funds; to the contrary, 
the facts indicate that Trie had informed Ching Hai of the need 
for donors to be U.S. citizens and to use their personal funds 
to make voluntary donations. Despite his efforts, evidence was 
developed that foreign funds were used to reimburse some Ching 
Hai members who provided pre-paid money orders to donors 
wishing to contribute to PLET. While the Trust is not a 
campaign organization or subject to a legal ban on foreign 
funds, its guidelines explicitly reject foreign contributions. 
There is no evidence that Trie was aware of the use of foreign 
funds to reimburse some of the pre-paid money orders. Moreover, 
since the Trust returned all of the contributions presented by 
Trie, no actual violation of its guidelines occurred.

              trie's access to white house and dnc events

    Trie, his family and his companies contributed $220,000 to 
the DNC in less than two years. Trie raised an additional 
$500,000 for the DNC, working with John Huang. He also raised 
at least $530,000 for the Presidential Legal Expense Trust. One 
issue repeatedly raised at the Committee hearing was Trie's 
motivation for his actions and what, if anything, he received 
in return.
    Although the Committee was unable to locate Trie to 
question him, the evidence before the Committee suggests that 
his contributions and fundraising efforts were intended not 
only to support President Clinton, but also to further Trie's 
private business interests. The evidence shows that, due to his 
contributions and fundraising for the DNC, Trie received 
unusual access to the White House and senior government 
officials and made valuable business contacts that furthered 
his private business interests.
    In May and June 1994, Trie and his wife contributed 
$100,000 to the DNC. On June 30, 1994, the DNC named Trie a DNC 
managing trustee. In addition, Trie served as a 1994 vice chair 
of the DNC's Business Leadership Forum and was appointed a 
member of the DNC's National Finance Board.
    Trie's contributions and fundraising also won him unusual 
access to the White House, President Clinton, and senior 
government officials, although he also drew upon personal 
friendships with individuals from Little Rock, particularly 
Mark Middleton.149 White House records show that 
Trie gained access to the White House on at least 23 occasions 
from 1993 to 1996.150 On many of these visits, Trie 
attended large social events such as a Christmas party, 
attended meetings of Asian-American organizations, or met with 
Middleton who was considering business dealings with Trie and 
twice traveled with Trie to Taiwan in 1995.151 On 
other visits to the White House or DNC fundraising events 
attended by President Clinton, however, Trie brought Asian 
business acquaintances as his guests.
     For example, on June 22, 1994, Trie purchased two tables 
at a DNC fundraising dinner at the Mayflower Hotel in 
Washington for a contribution of $100,000 to the DNC. He 
invited as his guests a number of Chinese and Taiwanese 
business people and spouses, including Wu.152 
According to press reports, in June 1995, Trie brought Winston 
Wang, CEO of Formosa Plastics, a Taiwanese firm, to a White 
House coffee and photo session with the 
President.153 In September 1995, Trie brought Wu and 
a Hong Kong banker to the White House for a tour and lunch. In 
November 1995, Trie brought as his guests several Asian 
business associates, including Wu, to an African-American 
Leadership Forum fundraiser in Washington. President Clinton 
attended, and Trie introduced him to his 
colleagues.154 On February 6, 1996, as described in 
detail below, Trie brought Wang Jun, chairman of China 
International Trust and Investment Corporation (``CITIC''), the 
chief investment arm of the Chinese government, to a White 
House coffee with the President.
    Senator Bennett stated at a Committee hearing that, in 
Asia, Trie's ability to arrange a White House tour or brief 
meeting with the President or another senior government 
official was valuable in establishing the credentials of Trie 
and Wu as having ``very high-level contacts'' in the United 
States. Senator Bennett also stated, ``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.'' 155
    One troubling development during the Committee 
investigation was the late production by the White House of 
records demonstrating that Trie's business associate Wu had 
obtained entry to the White House on ten occasions over a two-
year period, from June 1994 until October 1996, primarily 
through his associations with Trie and Middleton.156 
One of Wu's visits was related to Trie and Wang Jun's 
attendance at a White House coffee on February 6, 1996, 
discussed below.157 Several took place close in time 
to dates on which Trie or one of his companies made 
contributions to the DNC.158 Wu's repeated visits is 
convincing evidence of Trie's ability to gain White House 
access for his business associates. They provide additional 
troubling evidence that some portion of Trie's contributions 
may have been made at the suggestion of or with funds provided 
by Wu.159
    Another benefit tied to Trie's support of the President is 
his appointment to the Commission on United States-Pacific 
Trade and Investment Policy, discussed below.
    One question that was raised repeatedly at the Committee 
hearings was whether, in addition to obtaining access and 
furthering his private business interests, Trie influenced U.S. 
domestic or foreign policy. Based upon his investigation, 
Committee investigator and FBI detailee Jerry Campane testified 
that he found no evidence that Trie, Wu, or anyone associated 
with them influenced or affected American policy in any 
way.160
    The only document indicating an attempt by Trie to affect 
U.S. policy is a March 21, 1996, two-page letter which Trie 
sent to President Clinton after the President deployed aircraft 
carriers in the Taiwan Straits in response to a decision by the 
Chinese government to engage in military exercises there. The 
letter expresses Trie's concern that China might ``launch a 
real war'' in response to the President's action.161 
The evidence before the Committee shows that this letter, which 
was brought to the White House by Mark Middleton, was routinely 
referred to the National Security Council and received a 
standard reply a month later.162 There is no 
evidence that the letter had any policy impact.163 
When asked if there was any evidence of involvement by the 
Chinese government, Campane testified there was not--the 
evidence instead suggested one of Trie's employees had 
encouraged him to send the letter and helped write 
it.164
    Trie's experience in obtaining access to the White House, 
President, and senior government officials in large part due to 
his DNC contributions and fundraising is comparable in many 
ways to the experience of Michael Kojima under the Bush 
Administration.165 Both left the restaurant business 
to go into international ventures. With no policy background or 
government experience, both caught the attention of White House 
officials through large campaign contributions that apparently 
utilized foreign funds. Both used their contributor status to 
gain access to the President and other government officials to 
further private business interests. While some might claim that 
Trie's access was superior, as evidenced by a greater number of 
White House visits, others might claim that Kojima received 
better treatment, as evidenced by the numerous letters written 
on his behalf by the Republican Party to U.S. and foreign 
officials requesting their assistance.166 The sad 
truth is that the link between contributions and government 
access is a common story with a long history in both political 
parties.

                     trie's commission appointment

    On June 21, 1995, President Clinton, by executive order, 
established a 15-member Commission on United States-Pacific 
Trade and Investment Policy (``the Commission''). The executive 
order described the qualifications for members as follows:

          Members shall (1) be chosen from the private sector . 
        . . and (2) have substantial experience with selling 
        agricultural products, manufactured goods, or high-
        value-added services to Asian and Pacific markets or be 
        knowledgeable from their personal or professional 
        experience about the trade barriers or their industry 
        and government policies and practices, formal and 
        informal, that have restricted access by U.S. 
        businesses to Asian and Pacific markets.167

    Trie was appointed by President Clinton to serve on this 
Commission in April 1996. The timing of Trie's official 
appointment was approximately one month after Trie presented 
checks to the presidential trust. The White House denies that 
Trie's appointment had anything to do with contributions Trie 
obtained for the Presidential Legal Expense Trust, and that, in 
fact, Trie's appointment was finalized months earlier, in 1995, 
and was not connected in any way to the PLET 
fundraising.168
    Key documentation related to Trie's Commission appointment 
indicates that the appointment process did begin in 1995 and 
was well underway prior to Trie's first contact with PLET in 
1996. For example, a memorandum dated September 21, 1995, 
indicates that the White House personnel office was already 
seriously considering Trie as a possible Commission 
member.169 In a memorandum dated December 15, 1995, 
the White House personnel office states that ``President 
Clinton has approved'' Trie for appointment to the Commission 
and asks the White House legal counsel's office to ``initiate a 
preliminary background investigation.'' 170 On 
December 31, 1995, Trie signed two documents on White House 
stationery. The first states that Trie ``acknowledges and 
consents to consideration by the President of the United States 
for appointment or nomination to a position within the 
Executive Branch.'' The second gives Trie's ``express consent 
for the Federal Bureau of Investigation to investigate [his] 
background.'' 171 On February 5, 1996, the White 
House legal counsel's office notified the White House personnel 
office that it had ``completed its clearance review of the 
proposed appointments of [Trie] and James C. Morgan to be 
Members of the Commission on United States Pacific Trade and 
Investment Policy, and such appointments may proceed.'' 
172 All of these actions took place prior to Trie's 
initial contact with PLET on March 20, 1996.
    But even if the Trie appointment had been related to his 
financial support for the President through PLET, it would 
hardly have been an unprecedented event. For example, nine of 
the 27 private-sector members appointed by President Bush to 
the President's Export Council had been major financial 
supporters of the Republican Party. Similarly, after President 
Bush nominated Bruce S. Gelb as head of the United States 
Information Agency (``USIA''), Gelb acknowledged that his 
nomination was due to the $3 million he helped raise for 
President Bush's campaign.173 Indeed, then-Commerce 
Secretary Robert Mosbacher protested that only 50 percent of 
President Bush's top fundraisers had been given plum 
appointments as a reward for their fundraising 
efforts.174 Financial support of a president is a 
well traveled route to a Commission appointment. See Chapter 28 
of this Minority Report.
    The Commission members who served with Trie offered mixed 
assessments of Trie's participation. Kenneth Brody, Commission 
chairman, stated:

          His role wasn't extensive but he had some 
        contributions in looking at trade policy from the 
        standpoint of small- and medium-size companies and I 
        think he had some participation in understanding some 
        of the Asian countries. . . . I can't think of anything 
        that he specifically added that comes out as a report 
        recommendation. On the other hand, there is some flavor 
        that he added.175

Clyde Prestowitz, vice chairman of the Commission, told 
Committee investigators that Trie eventually became a valued 
member.176 Most members said that his participation 
was hampered by limited English abilities. Dr. Meredith Woo-
Cummings recalled feeling concern for Trie, because his 
educational background and understanding of policy issues were 
too limited for the purposes of the Commission. She said that 
she tried to engage him in discussions to little 
avail.177 However, Jackson Tai, another Commission 
member, found Trie to be an active participant, engaged in the 
issues being discussed.178 Committee investigator 
Campane testified that the Committee's investigative team found 
that Trie had no influence on the Commission's policy 
recommendations.179
    Trie served on the Commission for six months, from April to 
October 1996. He served without pay and paid his own expenses 
during the Commission's trip to Asia, as all Commission members 
were required to do.180

                  trie and wang jun at the white house

    On February 6, 1996, Trie accompanied Wang Jun to a White 
House coffee attended by President Clinton. Apparently, neither 
spoke during the coffee.181 Wang Jun is a former 
officer in the People's Liberation Army and the son of Wang 
Zhen, a retired general and former vice premier of 
China.182 Wang is also chairman of the China 
International Trade and Investment Corporation (``CITIC''), a 
major Chinese conglomerate.183
    After the coffee, controversy erupted when the news media 
discovered that Wang was also chairman of the China Poly Group, 
an arms company owned by the Chinese military. 184 
After the coffee, a China Poly subsidiary called Poly 
Technologies was identified as the source of 2,000 AK-47 
assault weapons seized as the result of an investigation of an 
arms smuggling operation. The import of such weapons was 
forbidden by executive orders and a law championed by President 
Clinton to limit the sale of automatic weapons. Poly 
Technologies has alleged that the smuggling was performed by 
two former employees falsely using the name of a defunct Poly 
company.185
    Given the tensions with the Chinese government over this 
incident as well as arms sales to developing countries, 
President Clinton stated in response to media inquiries that 
Wang's attendance at the coffee was ``clearly inappropriate'' 
and that he wished he had been more fully informed of Wang's 
background.186
    Robert Suettinger, Director of Asian Affairs at the 
National Security Council, has stated that, despite Wang's 
title as chairman of China Poly, his role at the company is not 
clear. Suettinger further stated that Wang is generally 
associated with CITIC, and not Poly Technologies.187
    CITIC, a $20 billion conglomerate, serves as the chief 
investment arm of China's central government with ministry-
level status on the Chinese State Council.188 CITIC 
is guided by a 13-member CITIC International Advisory Council, 
whose board members include prominent Americans including 
former Secretary of State George Shultz and Maurice Greenberg, 
chairman of American International Group, a major insurance 
firm.189 Senator Glenn noted that former Secretary 
Shultz had been quoted as saying that he attended CITIC's 
advisory council meeting in 1996 and that he planned to attend 
the 1997 meeting as well.190 CITIC companies have 
received more than $200 million worth of financing from the 
Export-Import Bank of the United States. CITIC has forged 
business partnerships with a variety of U.S. firms, including 
Westinghouse, Bechtel, and Chase Manhattan. Two months after 
appearing at the White House coffee, Wang hosted a dinner in 
Beijing attended by former President Bush and Brent Scowcroft, 
President Bush's former national security 
advisor.191 Wang calls Henry Kissinger ``a good 
friend.'' 192 During the hearing, Senator Glenn 
observed that Wang was ``a key figure for virtually any U.S. 
company interested in major economic involvement in China.'' 
193
    Descriptions of Wang as a ``Chinese arms dealer'' do not 
capture his role as an influential figure in determining 
American business in China and Chinese investments abroad.

Wang Jun's invitation to the White House coffee

    The evidence is conflicting as to how Wang was invited to 
attend the White House coffee. Amy Weiss Tobe, a DNC 
spokesperson, has said it was done as ``a favor to Charlie'' 
Trie.194 David Mercer, a DNC fundraiser, has 
testified that, in early 1996, Trie asked him if he could bring 
Wang to a White House coffee as his guest.195 Mercer 
testified that this type of request was not unusual for Trie or 
other contributors to make, and that Trie often asked for 
guests to be invited to White House events. Mercer said that 
Trie did not state why he wanted Wang to be invited, nor did he 
say anything to Mercer about making a contribution if the 
request was granted.196 Mercer testified that he 
agreed to submit Wang's name for consideration.
    DNC Finance Director Richard Sullivan testified to the 
Committee that he thought the Wang invitation was extended as a 
favor to another DNC fundraiser, Ernest Green. Sullivan stated: 
``It was something, as I understood it, that was important, 
that Ernie had this guy in town doing business. Ernie had been 
a longtime supporter and it was purely as a favor to Ernie.'' 
197 At his deposition, Sullivan had referenced both 
Trie and Green, describing information he had received from 
Mercer in a way which suggests that Green's connection to Wang 
may have been described by Trie rather than Green 
himself.198 Mercer has testified that he never 
discussed the invitation with Green.199 Green 
testified that he did not play any role in obtaining the 
invitation.200
    Mercer has testified that it was his responsibility, for 
guests under consideration to receive a White House invitation 
through the DNC, to compile standard information on each 
person, including the person's profession and social security 
or passport identification number.201 Mercer then 
prepared briefing materials which Sullivan or other DNC 
officials used to decide who would be invited as 
guests.202
    In the case of Wang, Mercer testified that he asked Trie to 
provide him with Wang's resume.203 Using the resume 
he received, he prepared materials describing Wang as a foreign 
national and chairman of CITIC. The resume did not include and 
Mercer was unaware of and did not include in the briefing 
materials any reference to Poly Technologies.204 
Faxed information at the top of the resume indicates it was 
faxed from Lehman Brothers's Washington office. However, Green 
denies that he sent it to the DNC, nor does he know why his 
firm sent the resume since, according to Green, neither he nor 
his firm played any role in obtaining Wang's invitation to the 
coffee.205 Other than the fax number on the 
document, no evidence was developed establishing that Green 
sent it. One obvious possibility is that Trie called Lehman 
Brothers in Green's absence and persuaded a clerical employee 
to fax the resume to the DNC. In any event, based on the 
materials Mercer provided, Sullivan testified that he discussed 
the Wang invitation with DNC finance chair Marvin Rosen and 
both agreed to propose it to the White House. Sullivan also 
testified that he alerted Karen Hancox at the White House to 
Wang's inclusion on the list and asked her to vet him, since he 
was a foreign national. Sullivan testified that he assumed 
Hancox would run Wang's name by the National Security Council, 
but that apparently was not done.206

Role of Ernest Green

    Ernest Green came to the Committee's attention, not only 
because Sullivan said Green requested the Wang invitation but 
also because, on the day of the coffee, Green made a $50,000 
contribution to the DNC. Questions were raised as to whether 
the two events were linked, and whether Wang or the Chinese 
government had supplied the funds for the $50,000 contribution. 
Green voluntarily submitted to a lengthy deposition and 
produced requested documents.
    Green is a managing director of Lehman Brothers, an 
international investment banking firm.207 He is 
originally from Arkansas and first achieved prominence as one 
of the ``Little Rock Seven,'' who integrated Little Rock 
Central High School in 1957. Disney later made a movie of his 
life entitled ``The Ernie Green Story.'' 208 Green 
received his undergraduate and master's degrees from Michigan 
State University, which also awarded him an honorary doctorate. 
In 1977, President Carter made him an Assistant Secretary of 
Labor and later the chairman of the African Development 
Foundation.209 Green is a longtime fundraiser for 
the Democratic Party.210 Green testified that he and 
Trie first met in the fall of 1994 at a breakfast arranged by 
Jude Kearney, a Commerce Department official and friend of 
Green, and by DNC fundraiser David Mercer who knew both 
individuals.211
    According to Green, it was Trie who informed him that Wang 
was planning a visit to the United States in early 1996, that 
would include stops in Washington and New York. Trie acted as a 
middleman in setting up meetings between Wang and Lehman 
Brothers executives in both cities to discuss possible business 
opportunities. Trie worked with Lehman Brothers personnel to 
schedule a meeting in Washington on February 6 at 10:30 am, and 
another in New York on February 7. Green, Wang, Trie, Wu and 
others then met at Lehman's offices on February 6th, in 
Washington.212 Green testified that it was at the 
end of this meeting, around noon, that Trie informed him Wang 
would be attending a coffee at the White House.213 
Green denied playing any role in arranging Wang's invitation to 
the White House. Wang and CITIC have also denied that Green or 
Lehman Brothers played any role in Wang's attending the White 
House coffee.214 Although DNC records list Green as 
attending the coffee,215 Green did not, in fact, 
attend.
    Green has also denied any connection between the coffee and 
the $50,000 contribution to the DNC that Green made on the same 
day. According to Green, this contribution was the result of a 
decision made in December 1995 by himself and his wife. He 
testified at his deposition that, although he had raised 
substantial funds for the Democratic Party, he had never 
personally made a large contribution. Green stated that he felt 
obligated to make this contribution, because he was constantly 
asking for large sums of money from others, some of whom had 
asked him about his own donations.216 He testified 
that, in late 1995, he and his wife resolved to make a major 
financial contribution of their own. Due to cash flow 
considerations, he said that he and his wife determined to make 
the contribution after he had received his annual bonus check 
from Lehman Brothers in January. He said they planned to 
contribute $50,000, because that was what Green generally 
sought when he solicited contributions and he thought the 
amount was appropriate to his status as a DNC managing 
trustee.217
    Green's bank records show a deposit of $114,961.70 on 
February 1,218 representing his annual bonus check 
from Lehman Brothers. Five days later, on the morning of 
February 6, Green provided a $50,000 check to the DNC. Green 
and Mercer agree that he gave the check to Mercer, and both 
have testified that they never discussed Wang's invitation to 
the coffee.219 Green testified that in the latter 
part of February he received an additional bonus check of 
$54,000 because of an unrelated business deal he had brought to 
his firm.220 He and his firm deny that Green's DNC 
contribution was reimbursed by Lehman Brothers or financed in 
any way by CITIC. Calling the money-laundering allegations 
``outrageous'' and ``preposterous,'' Green's attorney was 
quoted in the media saying, ``No one reimbursed him for his 
contribution either directly or indirectly. . . . There has 
never been a discussion with Wang Jun about a contribution.'' 
221 No documentary or testimonial evidence before 
the Committee establishes reimbursement.
    When asked about DNC records crediting Trie with obtaining 
the $50,000 contribution in connection with the February 6 
coffee, Green testified that he had never seen the records 
before and that ``Trie never solicited a $50,000 contribution 
from me.'' 222 He testified that his wife had signed 
the contribution check and referenced a ``fundraiser'' that 
Green himself had organized in November 1995.223 
Mercer testified that he probably completed the check tracking 
form in relation to Green's donation, but does not recall 
whether he included the information linking the contribution to 
Trie and the White House coffee.224 Mercer repeated 
his testimony that he had not spoken with Green about the Wang 
invitation. Green also told the press that he has had no 
contact with Wang since February 1996.225

Analysis

    The evidence is clear that Wang was invited to the White 
House and met President Clinton as a favor to a DNC fundraiser. 
Trie spoke with Mercer and actually attended the coffee with 
Wang. Green's firm faxed Wang's resume to the DNC, and Sullivan 
based his decision at least in part on his knowledge that Green 
had dealings with Wang--whether or not it was Green who 
imparted that information. The DNC records showing Green in 
attendance at the coffee were in error; DNC records crediting 
the $50,000 contribution to Trie in connection with the coffee 
are also questionable, since there is no reason for Green to 
have attributed his contribution to any fundraiser other than 
himself or to any event other than the fundraiser that Green 
himself had organized a few months earlier. The recent 
indictment of Trie makes no reference to the $50,000 
contribution by Green.
    There is also no evidence that Wang requested the 
invitation, that he spoke during the coffee, or that he made 
any request of the President or his staff. His attendance 
instead appears consistent with the analysis offered by Senator 
Bennett during the Committee hearing--it was a demonstration of 
access in which Trie showed that he and Wu had the necessary 
``high-level contacts'' to get an audience for Wang with the 
President of the United States. This demonstration presumably 
strengthened Trie and Wu's ability to do business with Wang.

                             trie and china

    One important question that the Committee sought to resolve 
was whether Trie had any role in the plan of the Chinese 
government to promote its interests in the United States. To 
date, the Committee has not obtained any evidence that Trie 
acted pursuant to this plan or on behalf of the Chinese 
government. In fact, no evidence regarding Trie was uncovered 
in the Committee's closed proceedings on the topic.
    Considerable evidence was developed regarding Trie's close 
ties to China in the Committee's public investigation however. 
After leaving the United States in late 1996, he spent time in 
China where he gave interviews to the media.226 He 
and his wife have a home outside of Beijing and own a 
restaurant in the city.227 During the 1990s, Trie 
made frequent business trips to China and hosted Chinese 
delegations and officials visiting the United States. It was 
Trie who accompanied Wang Jun, chairman of CITIC, to the White 
House as noted above. At the same time, however, Trie had ties 
to Taiwan. He visited Taiwan, did business there, included 
Taiwanese business associates at White House and DNC events, 
and had a relationship with the Taiwan-based Ching Hai 
religious organization. Trie's pursuit of Taiwanese business 
ventures and involvement with a Taiwan-based religious 
organization run counter to the allegations that he acted in 
any way on behalf of the Chinese government. Trie also has 
business ties to other Asian countries, such as Indonesia.
    Trie's extensive business dealings with Wu and his 
association with Wang do not prove that he was acting at the 
direction of the Chinese government. According to press reports 
that the Committee was unable to confirm, Wu is a member of the 
Chinese People's Consultative Congress in the city of 
Guangzhou. This organization allegedly provides economic and 
business advice to the Communist Party and Chinese 
government.228 In addition, Wu has been described as 
a ``business friend'' of Wang and as engaged in business 
dealings with CITIC.229 Some have said that it was 
Wu who introduced Trie and Wang.230 Others point 
out, however, that Wu has a Portuguese passport and cannot 
fairly be described as a Chinese government official. Senator 
Durbin pointed out that many reputable firms have business 
dealings with CITIC, including Westinghouse, Chase Manhattan 
and J.P. Morgan.231 Senator Glenn also noted that 
many prominent Americans, including former President Bush and 
former Secretary of State George Schultz, have ongoing business 
relationships with Wang. While Trie's association with Wu and 
Wang, in addition to his other ties to China raise questions, 
the evidence does not show that Trie acted at the direction of 
Chinese officials.
    Questions were also raised as to whether the money 
transfers provided by Wu to Trie could be traced to the Chinese 
government. Many of the money transfers came from a Macao 
branch of the Bank of China, which is a key financial 
institution in China's state banking system. The Committee 
heard in July, however, that Wu apparently had sufficient 
resources to finance all of the transfers, that he had reasons 
for supporting Trie financially, and that no evidence had been 
found linking the transfers to the government of 
China.232
    Another relevant factor is that Trie authorized an FBI 
investigation of his background in December 1995, and that 
investigation found no problems that would prevent Trie's 
nomination to a Presidential commission. An individual seeking 
to hide contacts with a foreign government presumably would not 
have either subjected himself to such an investigation or 
emerged from it unscathed. The January 1998 indictment of Trie 
makes no reference to the Chinese government.
    The evidence before the Committee to date indicates that, 
while the allegation of a connection between Trie and the 
Chinese government remains an open question, it also remains 
unproven.

                               footnotes

    1 United States v. Yah Lin (``Charlie'') Trie and Yuan 
Pei (``Antonio'') Pan , Criminal Case No. 98-0029 (U.S. District Court 
for the District of Columbia), 1/28/98 (hereinafter referred to as the 
``Trie indictment'').
    2 Jerry Campane, 7/29/97 Hrg., p. 6.
    3 Jerry Campane, 7/29/97 Hrg., pp. 6-7.
    4 Jerry Campane, 7/29/97 Hrg., p. 7.
    5 Jerry Campane, 7/29/97 Hrg., pp. 7-8.
    6 Jerry Campane, 7/29/97 Hrg., pp. 8, 33.
    7 Macao is a Portuguese territory on the coast of 
southern China.
    8 Jerry Campane, 7/29/97 Hrg., pp. 8-9.
    9 Jerry Campane, 7/29/97 Hrg., p. 7; Trie indictment, 
paragraph. 2.
    10 Jerry Campane, 7/29/97 Hrg., p. 9.
    11 Jerry Campane, 7/29/97 Hrg., pp. 11-12.
    12 See NBC Nightly News, 6/24/97.
    13 Jerry Campane, 7/29/97 Hrg., pp. 11-12.
    14 Jerry Campane, 7/29/97 Hrg., p. 12. See also Trie 
indictment.
    15 Jerry Campane, 7/29/97 Hrg., p. 13.
    16 Jerry Campane, 7/29/97 Hrg., p. 13.
    17 Jerry Campane, 7/29/97 Hrg., pp. 10, 20.
    18 Jerry Campane, 7/29/97 Hrg., p. 5.
    19}Jerry Campane, 7/29/97 Hrg., pp. 91-92.
    20}Jerry Campane, 7/29/97 Hrg., p. 10.
    21 Trie indictment, ``The Conspiracy,'' paragraph 14, 
and ``Manner and Means of the Conspiracy,'' paragraph 15.
    22 Trie indictment, ``Introductory Allegations,'' 
paragraph 5. Prior to working for Trie, Pan was employed by the Lippo 
Group in China. He also worked for Wu as director of Lucky Port 
Investments, Inc. Pan began working for Trie in August 1995, and 
eventually became the chief executive officer of Daihatsu and executive 
director of America-Asia Trade Center, Inc.
    23 Trie indictment, ``Overt Acts,'' paragraphs 2-14, 21, 
40.
    24 Trie indictment, ``Overt Acts,'' paragraphs 15, 17.
    25 See, for example, Trie indictment, ``Overt Acts,'' 
paragraphs 21, 38.
    26 Trie indictment, ``Manner and Means of the 
Conspiracy,'' paragraph 15(b).
    27 Jerry Campane, 7/29/97 Hrg., pp. 15-16.
    28 Jerry Campane, 7/29/97 Hrg., p. 14.
    29 Pan was not addressed in the Committee's public 
hearings, although he was the subject of an October 9, 1997 hearing 
before the House Committee on Government Reform and Oversight.
    30 Jerry Campane, 7/29/97 Hrg., pp. 36-39.
    31 For example, Trie might be able to show that some of 
the foreign funds were his personal work earnings. Personal income 
earned abroad by an American citizen may be used for a campaign 
contribution, provided that no foreign national participates in the 
contribution decision; 2 U.S.C. Sec. 441e.
    32 The DNC's position is in sharp contrast to that of 
the RNC which, for example, continues to retain $215,000 from a Michael 
Kojima contribution that apparently utilized foreign funds. See Kojima 
chapter, infra .
    33 Washington Post, 12/18/96 (``Trie and Huang worked 
together to raise funds for the Democratic Party from the Asian 
American community, according to Trie. Huang `often wanted me to help' 
with fundraisers, Trie said in an interview.'')
    34 Apparently, both Trie and Huang attended the APALC 
fundraiser. Six months earlier, in May 1995, Trie and Huang had both 
attended an inaugural dinner for the Congressional Asian Pacific 
American Caucus Institute, another new organization aimed at the Asian 
American community. While not DNC-related, this institute may have 
energized Trie to join Huang's efforts to increase the political 
involvement of the Asian American community in Democratic politics.
    35 Trie indictment, ``Manner and Means of the 
Conspiracy,'' paragraph 15 (c), (d), (i).
    36 See DNC documents No. D 0000968-0000973.
    37 Los Angeles Times, 12/21/97.
    38 Trie indictment, ``Overt Acts,'' paragraph 34.
    39 Jerry Campane, 7/29/97 Hrg., pp. 17-18 and 71-72. See 
also Part 3 discussion of the Zahn, Chu and Wang checks.
    40 See Exhibit 62: DNC In-Depth Contribution Review, DNC 
0134-145. Other checks from the Hay Adams fundraiser, attributed to 
persons other than Trie, were also returned by the DNC. See chapter on 
Huang, supra.
    41 See Huang DNC event summary, in Minority Report 
Chapter 4. See also Los Angeles Times, 12/21/97.
    42 See Chapter 21 which discusses the Gandhi 
contribution.
    43 Staff interview with Yogesh Gandhi, 3/24/97. Gandhi 
had originally agreed to provide a deposition, but at the beginning of 
the deposition asserted his constitutional rights under the Fifth 
Amendment and refused to provide sworn testimony. He reluctantly 
consented to an unsworn, untranscribed interview.
    44 Gandhi stated during the staff interview that he met 
Huang for the first and only time during the fundraiser when Huang 
approached him and thanked him for attending. Later during the dinner, 
Gandhi obtained a few moments with President Clinton to present him 
with an award.
    45 Los Angeles Times , 12/21/97; New York Times, 7/2/97.
    46 See DNC documents No. D 0000981-0000996.
    47 See New York Times , 7/2/97.
    48 See, for example, Los Angeles Times , 12/7/97, p. A1.
    49 Exhibit 62: DNC In-Depth Contribution Review, DNC 
0134-145. For example, the DNC returned a $10,000 check from Kun Cheng 
Yeh, after the media reported ``an employee [at the Los Angeles address 
on the check] said Mr. Yeh lived in China and had not been to the 
United States for several years.'' New York Times , 7/2/97. Not all the 
media allegations were proven correct, however; one $3,000 check was 
from Michele Lima who was initially identified as deceased, but was 
later discovered ``alive and well'' in Queens. Wall Street Journal, 6/
13/97.
    50 Jerry Campane, 7/29/97 Hrg., p. 13. See also Trie 
indictment, ``Overt Acts,'' paragraph 43.
    51 Trie indictment, ``Over Acts,'' paragraphs 46-47.
    52 Trie indictment, ``Over Acts,'' paragraph 48-51. See 
also Los Angeles Times, 12/7/97, p. A1.
    53 Trie indictment, ``Over Acts,'' paragraphs 44-45, 52.
    54 Yue Chu, and Xiping Wang, 7/29/97 Hrg, pp.137-140.
    55 Yue Chu, 7/29/97 Hrg., p. 132. Chu stated that the 
check was made out to the ``DSCC'' and she was unaware that the 
initials stood for Democratic Senatorial Campaign Committee.
    56 Yue Chu, 7/29/97 Hrg., p. 134.
    57 Jerry Campane, 7/29/97 Hrg., pp. 64-65, 93.
    58 Yue Chu, 7/29/97 Hrg., pp. 132, 137, 158; Yue Chu 
deposition, 7/9/97, p. 63.
    59 Jerry Campane, 7/29/97 Hrg., p. 93.
    60 Trie indictment, ``The Conspiracy,'' paragraph 14.
    61 Exhibits 664-666.
    62 Harold Ickes deposition, 6/26/97, p.158.
    63 Los Angeles Times , 12/21/97.
    64Jerry Campane, 7/29/97 Hrg., p. 91.
    65 Washington Post, 12/18/96.
    66 Trie indictment, ``The Conspiracy,'' paragraph 14.
    67 These trustees have been called ``a blue ribbon group 
... whose detachment and probity were assured.'' Washington Post, 
editorial, 12/18/96. The trustees are: The Reverend Theodore M. 
Hesburgh, C.S.C., President Emeritus of the University of Notre Dame 
(Co-Chair); Nicholas deB. Katzenbach, former Attorney General of the 
United States (Co-Chair); John Brademas, president emeritus of New York 
University and former Democratic Representative from Indiana; Ronald 
Olson, partner, Munger, Tolles and Olson of Los Angeles; Elliot 
Richardson, former Attorney General, Secretary of Defense, and 
Secretary of Health, Education, and Welfare; Michael Sovern, President 
Emeritus of Columbia University and former dean and professor of law at 
Columbia Law School; John Whitehead, former Deputy Secretary of State 
and former co-chair of Goldman, Sachs and Company; Michael H. Cardozo, 
managing director, G. William Miller and Co. and former Deputy Counsel 
to President Carter (Executive Director); and, until her death, Barbara 
Jordan, professor at LBJ School of Public Affairs and former Democratic 
Representative from Texas.
    68 Judicial Watch Inc. v. Hillary Rodham Clinton, 76 
F.3d 1232 (D.C. Cir. 1996).
    69 Letter from Stephen D. Potts, Director, Office of 
Government Ethics, to Michael Cardozo, 7/22/94.
    70 Michael Cordozo, 7/30/97 Hrg., p. 91; PLET Notes to 
Financial Statements, 12/31/94, PT06493.
    71 Michael Cardozo deposition, 5/8/97, p. 18.
    72 As discussed below, Trie initially presented the 
Trust with donations totalling about $460,000. The Trust immediately 
rejected checks with obvious problems, and deposited $380,000 into a 
suspense account pending assessment of the individual checks. On a 
second occasion, Trie attempted to present the Trust with checks which 
Trie indicated totaled $179,000, but the Trust declined to accept them. 
It is unclear whether any of the $70,000 to $80,000 in problematic 
checks that had been rejected on the first occasion were included in 
the second batch of checks. On a third occasion one month later, Trie 
attempted to present the Trust with checks which he indicated totaled 
about $150,000, but the Trust again declined to accept them. It is 
unclear the extent to which the second and third batches of checks 
overlapped; it is possible that the same checks were being offered both 
times. Due to the uncertainty involved, the amount of donations that 
Trie offered to the Trust is estimated at $530,000 ($380,000 plus 
$150,000).
    73 Michael Cardozo deposition, 5/7/97, p. 25.
    74 Michael Cardozo deposition, 5/7/97, p. 25.
    75 Michael Cardozo deposition, 5/7/97, p. 28.
    76 Michael Cardozo deposition, 5/7/97, p. 29.
    77 Michael Cardozo deposition, 5/7/97, p. 30.
    78 Michael Cardozo deposition, 5/7/97, p. 30.
    79 Michael Cardozo deposition, 5/7/97, p. 33.
    80 Michael Cardozo deposition, 5/7/97, p. 34.
    81 Michael Cardozo deposition, 5/7/97, p. 34.
    82 Michael Cardozo deposition, 5/7/97, p. 34.
    83 Michael Cardozo deposition, 5/7/97, p. 40.
    84 Michael Cardozo deposition, 5/7/97, p. 41.
    \85\ Michael Cardozo deposition, 5/7/97, p. 42.
    \86\ Michael Cardozo deposition, 5/7/97, p. 41.
    \87\ Michael Cardozo deposition, 5/7/97, p. 35.
    \88\ Sally Schwartz deposition, 5/6/97, pp. 21-22.
    \89\ Sally Schwartz deposition, 5/6/97, p. 22.
    \90\ Michael Cardozo deposition, 5/7/97, p. 37.
    \91\ Sally Schwartz deposition, 5/6/97, p. 29.
    \92\ Michael Cardozo deposition, 5/7/97, p. 38.
    \93\ Michael Cardozo deposition, 5/7/97, pp. 46-47.
    \94\ Michael Cardozo deposition, 5/7/97, p. 51.
    \95\ Sally Schwartz deposition, 5/6/97, p. 35.
    \96\ Sally Schwartz deposition, 5/6/97, p. 35.
    \97\ Michael Cardozo deposition, 5/7/97, p. 48.
    \98\ Michael Cardozo deposition, 5/7/97, p. 48.
    \99\ Michael Cardozo deposition, 5/7/97, p. 48.
    \100\ Michael Cardozo deposition, 5/7/97, p. 49.
    \101\ At the hearing, Cardozo stated that the bank reported that 
the deposited contributions totaled $380,000 from 409 individuals. 
Michael Cardozo, 7/30/97 Hrg., p. 7. See also Sally Schwartz 
deposition, 5/6/97, p. 40.
    \102\ Michael Cardozo, 7/30/97 Hrg., pp. 9, 79, 87.
    \103\ Michael Cardozo deposition, 5/7/97, p. 49.
    \104\ Michael Cardozo deposition, 5/7/97, p. 49-50.
    \105\ Michael Cardozo deposition, 5/7/97, p. 50.
    \106\ Michael Cardozo deposition, 5/7/97, p. 71.
    \107\ Memorandum from Schwartz to Cardozo, 5/9/96, 0078.
    \108\ Michael Cardozo deposition, 5/7/97, p. 84.
    \109\ Michael Cardozo deposition., 5/7/97, p. 53.
    \110\ Michael Cardozo deposition, 5/7/97, p. 51.
    \111\ Since the donations offered on this occasion were not 
accepted, no precise total was presented to the Committee. See, for 
example, Michael Cardozo, 7/30/97 Hrg., pp. 36-37.
    \112\ Michael Cardozo deposition, 5/7/97, pp. 124-125.
    \113\ Michael Cardozo deposition, 5/7/97, p. 125.
    \114\ Michael Cardozo deposition, 5/7/97, p. 125.
    \115\ Michael Cardozo deposition., 5/7/97, p. 126.
    \116\ Michael Cardozo deposition, 5/7/97, pp.188-190.
    \117\ Michael Cardozo, 7/30/97 Hrg., p. 43; Michael Cardozo 
deposition, 5/7/97, p. 192.
    \118\ Michael Cardozo deposition, 5/17/97, pp. 190-191.
    \119\ Sally Schwartz deposition, 5/6/97, p. 143. See also IGI 
Report re: Interviews with Donors to Presidential Legal Expense Trust, 
12/6/96.
    \120\ IGI Report re: Interviews with Donors to Presidential Legal 
Expense Trust, 12/6/96.
    \121\ Sally Schwartz deposition, 5/6/97, p. 144.
    \122\ Michael Cardozo, 7/30/97 Hrg., p. 80.
    \123\ Michael Cardozo, 7/30/97 Hrg., p. 80; see also Sally Schwartz 
deposition, 5/6/97, p. 144.
    \124\ Michael Cardozo deposition, 5/7/97, p. 220.
    \125\ Michael Cardozo deposition, 5/7/97, pp. 214, 220.
    \126\ Michael Cardozo deposition, 5/7/97, p. 214.
    \127\ Michael Cardozo, 7/30/97 Hrg., pp. 37-38.
    \128\ Michael Cardozo, 7/30/97 Hrg., pp. 39-41.
    \129\ Michael Cardozo, 7/30/97 Hrg., p. 52.
    \130\ Michael Cardozo, 7/30/97 Hrg., p. 53.
    \131\ Michael Cardozo, 7/30/97 Hrg., p. 61.
    \132\ Michael Cardozo, 7/30/97 Hrg., pp. 65-66.
    \133\ Sally Schwartz deposition, 5/6/97, pp. 336-337.
    \134\ Sally Schwartz deposition, 5/6/97, p. 326.
    \135\ Michael Cardozo deposition, 5/7/97, p. 78.
    \136\ Michael Cardozo deposition, 5/7/97, p. 231.
    \137\ Michael Cardozo, 7/30/97 Hrg., p. 48.
    \138\ Michael Cardozo, 7/30/97 Hrg., pp. 48, 85.
    \139\ See, for example, Michael Cardozo, 7/30/97 Hrg., p. 67.
    \140\ Zhi Hua Dong, 7/31/97 Hrg., pp. 154-57; 177-78.
    \141\ Zhi Hua Dong, 7/31/97 Hrg., pp. 180-81.
    \142\ This conduct is in direct contrast to conduct by other tax-
exempt groups associated with elected federal officials such as The 
Jesse Helms Center which hired a fundraiser ``to undertake fundraising 
for the Center from non-U.S. citizens, foundations and corporations.'' 
Memorandum dated 3/9/92, from Howard Segermark to Clark Goodwin, p. 1, 
included in the publicly available court file associated with Segermark 
v. The Jesse Helms Center Foundation, Inc., Civil Action No. 0010857-94 
(Superior Court of the District of Columbia).
    \143\ See Trie indictment.
    \144\ Washington Post, 12/31/97.
    \145\ Michael Cardozo, 7/30/97 Hrg., pp. 61; 64.
    \146\ Michael Cardozo, 7/30/97 Hrg., p. 115.
    \147\ Michael Cardozo, 7/30/97 Hrg., p. 119.
    \148\ Michael Cardozo, 7/30/97 Hrg., p. 117.
    \149\ Jerry Campane, 7/29/97 Hrg., p. 90.
    \150\ Jerry Campane, 7/29/97, Hrg., p. 10.
    \151\ Jerry Campane, 7/29/97 Hrg., p. 90.
    \152\ Jerry Campane, 7/29/97 Hrg., p. 10.
    \153\ Jerry Campane, 7/29/97 Hrg., p. 10.
    \154\ Los Angeles Times, 12/21/97. White House videotapes of the 
event show Commerce Secretary Brown gesturing to Trie and his 
associates and telling the President, ``This is part of the Trie 
team.''
    \155\ Senator Bennett, 7/29/97 Hrg., p. 88. See also, Trie 
indictment, ``Manner and Means of the Conspiracy,'' paragraph 15(g), 
alleging that Trie used his ``membership in the DNC committees . . . to 
promote [his] private business activities.''
    \156\ See WAVES records, EOP 056850-056862.
    \157\ See WAVES records for 2/6/96, EOP 056856, 056861-056862.
    \158\ See Associated Press, 7/31/97; New York Times, 7/31/97.
    \159\ Apparently, Antonio Pan, business associate of both Trie and 
Wu, gained entry to the White House on eight occasions between 8/95 and 
10/96. See Los Angeles Times, 12/7/97, p. A1.
    \160\ Jerry Campane, 7/29/97 Hrg., pp. 58, 95. See, for example, at 
page 95: ``Chairman Thompson. [T]here is no indication, I guess I 
should say, that Mr. Trie had any impact on White House policy; is that 
correct? Campane. That is correct.''
    \161\ Letter from Trie to the President, 3/21/96, EOP 005325.
    \162\ See letter from the President to Trie, 4/26/97, EOP 029282; 
staff interview of Robert Suettinger, director, Asian affairs, National 
Security Council, 6/3/97; and staff interview of Nancy Soderberg, 
National Security Council, 5/30/97. Suettinger indicated that he 
prepared the response to Trie's letter and used standard language 
developed to respond to the many letters the White House received on 
this topic. He indicated the letter had no impact on U.S. policy.
    \163\ See staff interview with Robert Suettinger, director, Asian 
affairs, National Security Council, 6/3/97; and staff interview of 
Nancy Soderberg, National Security Council, 5/30/97.
    \164\ Jerry Campane, 7/29/97 Hrg., pp. 77-78.
    \165\ See Chapter 6.
    \166\ See Chapter 6. The Republican Party wrote numerous letters to 
further Kojima's private business efforts; the Committee investigation 
found no comparable letters written by the Democratic Party to further 
Trie's private business efforts.
    \167\ Executive Order 12964 of 6/21/95, as listed in Federal 
Register. 6/28/95, Vol. 60.
    \168\ USA Today, 7/30/97.
    \169\ Memorandum from Phyllis Jones to Jennifer Hillman and others 
regarding expanding the Commission and adding 3 new members, 9/21/95, 
EOP 056804.
    \170\ Exhibit 664, Memorandum from Winston Allen to Marvin Krislov 
regarding Trie's addition as a member of the commission, 12/15/95, EOP 
002098.
    \171\ Exhibit 666.
    \172\ Exhibit 665, Security Clearences as of 2/14/96, EOP 015131; 
see also, Robert Nash deposition, 6/25/97, p. 221 (memorandum signified 
FBI background investigation had been completed without any outstanding 
issues). Nash was director of the White House personnel office.
    \173\ New York Times, 2/20/89.
    \174\ New York Times, 2/20/89.
    \175\ Los Angeles Times, 4/29/97.
    \176\ Staff interview with Clyde Prestowitz, 6/13/97.
    \177\ Staff interview with Dr. Meredith Woo-Cummings, 6/25/97.
    \178\ Staff interview with Jackson Tai, 6/17/97.
    \179\ Jerry Campane, 7/29/97 Hrg., pp. 52-53, 58.
    \180\ See Exhibits 670: executive order establishing the 
commission; Exhibit 678: letter from Nancy Adams, commission executive 
director, to Trie, with information on trip expenses, 2/97; and Exhibit 
679: a final talley of trip expenses.
    \181\ See, for example, Washington Post, 3/16/97.
    \182\ Senator Specter, 7/9/97 Hrg., p. 119; Washington Post, 3/16/
97.
    \183\ Washington Post, 12/20/97.
    \184\ The Los Angeles Times, 3/16/97.
    \185\ Washington Post, 3/16/97.
    \186\ Press conference held by President Clinton on 12/7/96; see 
also Los Angeles Times, 12/21/97; Washington Post, 12/20/97.
    \187\ Staff interview with Robert Suettinger, 6/3/97.
    \188\ Austin-American Statesman, 3/30/97.
    \189\ Austin-American Statesman, 3/30/97.
    \190\ Senator Glenn, 7/9/97 Hrg., p. 155
    \191\ Austin-American Statesman, 3/30/97.
    \192\ Washington Post, 3/16/97.
    \193\ Senator Glenn, 7/9/97 Hrg., p. 154.
    \194\ New York Times, 1/4/97.
    \195\ David Mercer deposition, 5/27/97, p. 139.
    \196\ David Mercer deposition, 5/27/97, pp. 139-142.
    \197\ Richard Sullivan, 7/9/97 Hrg., p. 124.
    \198\ Richard Sullivan deposition, 6/4/97, pp. 103-104.
    \199\ David Mercer deposition, 5/27/97, p. 140; and 6/11/97. p. 23.
    \200\ See, for example, Ernest Green deposition, 6/18/97, pp. 154-
55.
    \201\ David Mercer deposition, 5/27/97, pp. 144.
    \202\ David Mercer deposition, 5/27/97, pp. 139, 144-49.
    \203\ David Mercer deposition, 5/27/97, pp. 139, 144.
    \204\ David Mercer deposition, 5/27/97, pp. 147-48.
    \205\ Ernest Green deposition, 6/18/97, pp. 169-170; 176. Green 
also, at first, denied having a copy of Wang's resume but was later 
shown documents indicating that he had faxed the resume to the Lehman 
Brothers' New York office and acknowledged he must have had the 
document.
    \206\ Richard Sullivan deposition, 6/4/97, pp. 105-106.
    \207\ Ernest Green deposition, 6/18/97, pp. 14, 271.
    \208\ Sara Fritz, The Los Angeles Times, reprinted in The 
Commercial Appeal, 3/9/97.
    \209\ Arkansas Democrat-Gazette, 9/25/97.
    \210\ Ernest Green deposition, 6/18/97, p. 281.
    \211\ Ernest Green deposition, 6/18/97, pp. 11-14.
    \212\ Los Angeles Times, 3/26/97.
    \213\ Ernest Green deposition, 6/18/97, p. 145.
    \214\ Ernest Green deposition, 6/18/97, pp. 154-55, 176-77.
    \215\ DNC Finance Executive Summary, 10/17/96, DNC 3081454.
    \216\ Ernest Green deposition, 6/18/97, pp. 194-95.
    \217\ Ernest Green deposition, 6/18/97, pp. 155-160.
    \218\ G 0017.
    \219\ Ernest Green deposition, 6/18/97, pp. 181-82; David Mercer 
deposition, 5/27/96, p. 140 and 6/11/97, pp. 22-23.
    \220\ Ernest Green deposition, 6/18/97, p. 165.
    \221\ Los Angeles Times, 3/26/97.
    \222\ Ernest Green deposition, 6/18/97, pp. 180-81, 281-82.
    \223\ Ernest Green deposition, 6/18/97, pp. 155-58, 163.
    \224\ David Mercer deposition, 6/11/97, pp. 22, 32.
    \225\ Los Angeles Times, 3/26/97.
    \226\ Jerry Campane, 7/29/97 Hrg., p. 85.
    \227\ Jerry Campane, 7/29/97 Hrg., p. 11; Washington Post, 12/18/
96.
    \228\ Jerry Campane, 7/29/97 Hrg., p. 11; Washington Post, 12/18/
96. See also Jerry Campane, 7/29/97 Hrg., p. 21.
    \229\ Jerry Campane, 7/29/97 Hrg., p. 21; Senator Specter, 7/29/97 
Hrg., p. 42.
    \230\ Jerry Campane, 7/29/97 Hrg., p. 22.
    \231\ Senator Durbin, 7/29/97 Hrg., p. 103.
    \232\ Jerry Campane, 7/29/97 Hrg., pp. 27-29, 63-64, 95. Campane 
also described the difficulty involved in tracing money transfers 
beyond the borders of the United States.





PART 1  FOREIGN INFLUENCE

Chapter 6: Michael Kojima

    Michael Kojima first gained public notice as a ``deadbeat 
dad'' who failed to pay child support but gave $500,000 to the 
Republican Party to sit with President Bush at a fundraising 
dinner. His story has since gained importance as an example of 
a little known contributor whose large contribution should have 
been investigated before being accepted and should be returned 
now. His dealings with the Republican Party and Bush White 
House contradict claims that accepting foreign contributions, 
providing access to large contributors, and using the White 
House for fundraising purposes are unprecedented practices 
confined to one party.

                                findings

    (1) Michael Kojima contributed substantial sums to the 
Republican Party in order to gain access for himself and his 
associates to President Bush and Bush Administration officials 
and the help of U.S. embassies abroad. With the help of a 
Republican fundraising organization, the Presidential 
Roundtable, and because of his status as a contributor, Kojima 
obtained access to U.S. embassy and foreign officials to 
advance his private business interests.
    (2) Kojima's $500,000 contribution to the Republican Party 
appears to have been derived from foreign funds. As a result of 
his substantial contributions, Kojima was able to bring ten 
Japanese nationals with him to a 1992 dinner with President 
Bush. According to some of those foreign nationals, they 
provided Kojima with significant sums of money for the express 
purpose of facilitating their attendance at the dinner.
    (3) The RNC has improperly retained $215,000 in apparent 
foreign funds contributed by Kojima.
    (4) The Republican Party failed to conduct an adequate 
investigation of Kojima even when it had information that the 
source of the funds was questionable.
    Michael Kojima is a Japanese-born, naturalized U.S. 
citizen. After immigrating to the United States in or around 
1970, he worked as a chef in the Los Angeles area and 
eventually became president of a partnership called 2M 
Management Co., Ltd., which owned and operated several Chinese 
restaurants.1 In 1987, 2M Management obtained three 
loans totaling $655,000 from the Bank of Trade, a financial 
institution later purchased by the Lippo Group.2 In 
1989, 2M Management defaulted, and the bank was unable to 
collect the amounts owed.3
---------------------------------------------------------------------------
    Footnotes at end of chapter.
---------------------------------------------------------------------------
    In 1990, Kojima formed a California corporation called 
International Marketing Bureau, Ltd. (``IMB'').4 He 
was the president, his wife was the treasurer, and his 
attorney, T.J. Pantaleo, was company secretary.5 IMB 
apparently never opened its own office or hired 
employees.6 Documents requiring a business address 
used the address of Kojima's attorney's office or his wife's 
business, the Association for Refining Cross-Culture, a 
nonprofit student-exchange program.7
    Kojima first gained public notice when he appeared on 
television seated with President George Bush at the 1992 
President's Dinner, a fundraising event which raised $9 million 
for Republican Senate and House candidates. Kojima was publicly 
identified as the event's largest contributor.
    Kojima's $500,000 contribution provoked immediate 
controversy 8 due to a history of nonpayment of 
child support, over $1 million in unpaid court judgments owed 
to former wives and creditors, and his apparent lack of assets. 
The Los Angeles Times reported that one ex-wife had been 
searching for Kojima for five years to pay $700 per month in 
child support, while another had ``given up searching for the 
purportedly poverty-stricken Kojima--until he showed up with 
the President.'' 9 A month after learning of the 
$500,000 donation, the Los Angeles County District Attorney's 
Office issued an arrest warrant for Kojima for nonpayment of 
child support, describing him as ``America's most wanted 
deadbeat dad.'' 10
    The Washington Post reported that, aside from unpaid child 
support, Kojima had ``a string of bad debt claims totaling more 
than $1 million from previous business ventures.'' 
11 The New York Times reported that one creditor's 
attorney ``thought Mr. Kojima had no assets,'' while another 
creditor's attorney, after learning of the Kojima contribution, 
felt his ```blood began to boil''. . . since Mr. Kojima had 
declared bankruptcy to avoid paying his debts.'' 12 
Kojima was repeatedly described as an unknown figure in 
political, business, and Japanese-American circles.
    The Republican Party was unable to answer questions raised 
about Kojima. One newspaper reported:

          When the flurry of questions arose last week, even a 
        Republican spokesman [Rich Galen] could shed little 
        light on Kojima's identity. . . . ``One could say you 
        should require some further proof of where the money 
        comes from'' before taking a check as large as 
        Kojima's, he said, ``but that's not the way life is.'' 
        ``It's a little difficult to cross-examine a man who's 
        a major donor,'' Galen said.13

    After lawsuits were filed by Kojima's creditors and two 
former wives to take possession of the $500,000, the Republican 
Senate-House Dinner Committee, which formally sponsored the 
dinner and accepted the Kojima contribution, deposited the 
$500,000 into an escrow account and consolidated the cases 
before a federal court in the District of 
Columbia.14 After two years of litigation and an 
unfavorable court ruling, 15 the Republican Dinner 
Committee settled out of court.16 Under the 1994 
settlement, Kojima's creditors and a former wife received 
$285,000 plus accumulated interest, while the Republican Dinner 
Committee retained $215,000, which was paid into a newly 
created ``President's Dinner 1992 Trust & Building Fund.'' 
17
    Kojima did not participate in the litigation. In October 
1992, he was briefly arrested for nonpayment of child support, 
but released from jail after agreeing to pay more than $120,000 
in fines and payments to two former wives.18 He then 
virtually disappeared from public view. Attempts by the 
Committee to locate him proved unsuccessful.

                          CONTRIBUTION HISTORY

    Prior to the 1992 election cycle, Federal Election 
Commission (``FEC'') records indicate that Kojima, his family, 
and businesses made occasional contributions to the Republican 
Party, with the largest in 1988 in the amount of $4,000 to the 
National Republican Senatorial Committee (``NRSC'). FEC records 
then show a sudden increase in the number and size of 
contributions during the 1992 election cycle. By the 
President's Dinner in April, Kojima-related contributions 
totaled over $600,000. After the President's Dinner and 
resulting controversy, FEC records show no further 
contributions. FEC records show no Kojima-related contributions 
to the Democratic Party or Democratic candidates.
    The specific contributions listed in Federal Election 
Commission records during the 1992 election cycle are as 
follows:
         $5,000 contributed by IMB to the NRSC on 
        February 19, 1991;
         $90,000 contributed by IMB to the 1991 
        President's Dinner, made in two payments with the first 
        for $15,000 on April 12, 1991, and the second for 
        $75,000 on May 24, 1991;
         $3,000 contributed by Mr. and Mrs. Kojima to 
        the campaign committee of Senator Frank Murkowski of 
        Alaska on October 24, 1991;
         $30,000 contributed by IMB to the NRSC on 
        March 6, 1992, later recorded as returned on April 1, 
        1992 due to insufficient funds;
         $8,770 in the form of an in-kind contribution 
        by IMB to the NRSC on April 1, 1992, for a National 
        Museum for Women in the Arts dinner in connection with 
        the NRSC's Presidential Roundtable Spring Forum;
         $500,000 contributed to the 1992 President's 
        Dinner made in three payments, with the first for 
        $200,000 on March 6, 1992, the second for $200,000 on 
        March 16, 1992, and the third for $100,000 on April 22, 
        1992.19

           KOJIMA'S ACCESS TO THE WHITE HOUSE AND OTHER PERKS

    Although the Committee was unable to locate Kojima to 
question him, documents,20 interviews conducted by 
Committee investigators,21 and sworn depositions 
from the 1992 court case 22 provide detailed 
information about Kojima's contributions and dealings with the 
GOP. These materials paint a revealing picture of GOP 
fundraising practices during the Bush Administration and are 
attached as exhibits to this chapter.
    The documents indicate that Kojima's primary association 
with the Republican Party was through the Republican 
Presidential Roundtable. The Roundtable is a Republican 
fundraising organization which requires an annual contribution 
of $5,000.23 A 1992 brochure for prospective members 
states:

          Designed especially to promote one-on-one personal 
        relationships, the Presidential Roundtable allows 
        members to participate in the development of policy as 
        well as help forge close friendships with Washington's 
        top decisionmakers. . . . [G]atherings often include 
        receptions with the President or Vice President and 
        always include meetings with Republican Senators, 
        Cabinet Officers, senior White House officials and 
        select leaders of our national and international 
        political and business communities.24

Member benefits included two Washington policy fora each year 
in which, the brochure states, members can discuss issues 
``directly with U.S. Senators, Administration officials and 
major business leaders,'' and attend ``receptions and private 
dinners held in premier restaurants, exclusive clubs, historic 
locations and even in Senators' homes.'' 25 Also 
provided were ``Ambassador Club'' trips abroad ``to bring top 
American businessmen and women together with their counterparts 
in Europe and Asia.'' The brochure states that, during a 1991 
trip to England, Roundtable members met with ``Members of the 
British Cabinet, Members of Parliament, the American Ambassador 
to Great Britain and various lords and ladies who hosted 
private dinners at their estates.''
    During the 1992 election cycle, the director of the 
Roundtable was Lisa DeGrandi, an experienced Republican 
fundraiser who previously worked in the Reagan White House and 
for the RNC. 26 Her immediate supervisor was the 
finance director of the National Republican Senatorial 
Committee, Albert Mitchler.27
    When interviewed by Committee staff, DeGrandi recalled that 
Kojima was already a Roundtable member when she was hired in 
1989. She remembered his requesting and her providing a number 
of letters to assist him with his private business dealings. 
She told Committee investigators that, ``because Kojima had 
given a great deal of money to the [Republican Presidential 
Roundtable], it was important for her to do what she could ``to 
keep him happy'' in order to maintain his membership.'' She 
indicated that ``it was not uncommon for many of the individual 
[Roundtable] members to use their memberships to market 
themselves and/or their businesses.'' 28
    DeGrandi confirmed that she signed letters of support from 
the Republican Presidential Roundtable on behalf of Kojima 
addressed to U.S. embassy officials, foreign officials, and 
even heads of state. She estimated sending ``15-20'' such 
letters, 29 of which the Committee has obtained 
copies of over a dozen, including: two letters from DeGrandi to 
the U.S. ambassador to Japan dated June 7, 1991 and March 6, 
1992; three letters to officials at the U.S. Embassy in Tokyo 
dated June 7, 18, and 20, 1991; a letter to the chief secretary 
of Hong Kong dated August 8, 1991; a letter to the Hong Kong 
chief secretary dated August 8, 1991; a general letter of 
support with no specific addressee dated August 12, 1991; a 
letter to a member of the Japanese Parliament dated October 15, 
1991; a letter to the U.S. consul general in Hong Kong dated 
October 15, 1991; a letter to the U.S. Consulate in Hong Kong 
in the fall of 1991; a letter to the prime minister of Japan 
dated March 9, 1992, and a letter to Deng Xiaoping, leader of 
the People's Republic of China, dated March 9, 1992.
    The letters use stationery containing a circular logo at 
the top resembling the presidential seal and an italicized 
heading on the left naming Presidents Bush, Reagan, and Ford as 
``honorary members.'' The text generally begins with the 
statement, ``I am writing on behalf of Mr. Michael Kojima, 
President of International Marketing Bureau,'' and describes 
him as ``one of the executive members of the Presidential 
Roundtable, a business advisory group to President George Bush 
and the administration.'' Many of the letters describe a 
specific business venture, such as a Hong Kong airport project, 
that Kojima was pursuing. The letters then ask for a meeting or 
alert the recipient that Kojima would be contacting them. Many 
invoke President Bush by name, stating that Kojima has met or 
would be meeting with the President or indicating that a copy 
of the letter was being forwarded to the President. In the two 
March 9 letters addressed to foreign leaders, DeGrandi wrote 
that Kojima will be carrying a ``message from the President of 
the United States that he will share with you upon your meeting 
him.''
    Other documents indicate that DeGrandi's efforts played a 
key role in Kojima's obtaining meetings with top U.S. 
officials. An internal State Department cable dated June 15, 
1991, for example, from the State Department in Washington to 
the U.S. Embassy in Tokyo regarding Kojima cites his GOP 
connections:

          Lisa DeGrandi of the Republican National Committee 
        asked for followup on her fax to you dated June 7. . . 
        . The Committee is eager to assist Mr. Kojima in 
        getting an appointment with Ambassador Armacost (Ms. 
        DeGrandi sent a letter directly to the Ambassador as 
        well.).

A meeting took place at the embassy on June 24, attended by 
Kojima, his business associate, and two senior embassy 
officials. A memorandum drafted by Embassy personnel 
summarizing the meeting begins: ``This appointment was set up 
by Ms. Lisa DeGrandi, Director of the Presidential Roundtable 
(see attached correspondence). We met first with Mr. Kojima 
alone at his request. He explained his close ties with the 
Republican Party and the importance of this project to 
Republican Party campaign financing.'' A memorandum drafted by 
Embassy personnel summarizing a March 19, 1992, meeting 
attended by Kojima, his business associates, and U.S. 
Ambassador to Japan Michael Armacost, begins the same way: 
``This appointment was set up by Ms. Lisa Degrandi, Director of 
the Presidential Roundtable (see attached correspondence).'' 
DeGrandi herself has been quoted as saying, ``If I hadn't 
helped him, [Kojima] wouldn't have gotten his calls returned.'' 
30
    The documents identify nine meetings between Kojima and 
U.S. officials facilitated by DeGrandi. Six were at the U.S. 
Embassy in Tokyo on June 24 and 26, July, September 30, and 
October 4, 1991, and March 19, 1992. One was at the U.S. 
Consulate in Hong Kong in the fall of 1991; another with the 
U.S. ambassador to the United Kingdom at the ambassador's 
residence in London on September 25, 1991; and one with U.S. 
Treasury officials in Washington, D.C., in March 1992. An 
Associated Press article by Michael Hirsh and Yuri Kageyama on 
May 15, 1992, describing Kojima's foreign business dealings and 
contributions to the Republican Party, includes this statement 
from a U.S. official in Hong Kong:

          When President Bush's people say give this guy the 
        time of day, we give him the time of day. We did our 
        best and got him the meetings he wanted. . . . We 
        called and set up appointments for him and for the 
        group. He probably couldn't have gotten through the 
        door without the consulate.31

    The letters, faxes, and telephone calls provided by the 
Republican Presidential Roundtable on behalf of Kojima to 
further his private business interests have no logical 
explanation other than Kojima's contributor 
status.32 The fact that the Roundtable wrote letters 
to two foreign leaders and invoked President Bush's name to 
encourage a private meeting with Kojima illustrates the lengths 
to which GOP fundraisers went in 1992 to assist large 
contributors.

                  THE BUSH WHITE HOUSE AND FUNDRAISING

    The documents also illustrate the GOP's use of the White 
House and access to the president and other senior government 
officials for fundraising purposes.
    Kojima's $500,000 contribution to the 1992 President's 
Dinner, five times larger than any previous contribution he had 
made, is one of the largest contributions to a political party 
by an individual ever recorded by the FEC. Documents related to 
the making of this contribution demonstrate GOP fundraising 
practices at the time.
    A sworn deposition provided by the executive director of 
the 1992 President's Dinner, Elizabeth Ekonomou, 33 
describes her interactions with Kojima. Ekonomou testified that 
she was first introduced to him by DeGrandi at an October 1991 
lunch at the Watergate Hotel. She said that she met Kojima, his 
wife, and two associates who did not appear to speak English. 
She testified that Kojima indicated at that lunch that he was 
interested in contributing to the 1992 Dinner and ``talked 
about his participation in the neighborhood of $300,000.'' 
34 Apparently because of the size of his pledge, 
35 Kojima was made a ``co-chairman'' of the 1992 
Dinner, one of about two dozen persons given that title by the 
Dinner Committee.
    On February 1, 1992, invitations to the 1992 President' 
Dinner went out in a mass mailing over President Bush's 
signature. The cover letter, signed by President Bush, states 
in part:

          Together, we will join with Vice President and Mrs. 
        Quayle, Republican dignitaries, and key supporters, 
        like you, to raise the funds necessary to elect more 
        Republicans to the U.S. House of Representatives and to 
        the United States Senate. . . . Barbara and I look 
        forward to seeing you. . . .

The invitation included a separate sheet listing ticket prices. 
It indicates that individuals may purchase a dinner ticket for 
$1,500 or tickets for a ten-person table for $15,000, while 
corporations were required to pay $2,000 for a single ticket 
and $20,000 for a table.
    The invitation also included a document entitled ``Benefits 
for Tablebuyers.'' This document states that a tablebuyer is 
entitled to attend a ``Private Reception hosted by President 
and Mrs. Bush at The White House'' or a ``Reception hosted by 
The President's Cabinet.'' In addition, a tablebuyer is 
entitled to attend a ``Luncheon hosted by Vice President and 
Mrs. Quayle'' and a ``Senate-House Leadership Breakfast hosted 
by Senator Bob Dole and Congressman Bob Michel.'' The 
tablebuyer also has an ``Option to request a Member of the 
House of Representatives to complete the table of ten. With 
purchase of a second table, option to request one Senator or 
one Senior Administration Official.''
    A similar document entitled ``Benefits for Tablebuyers and 
Fundraisers,'' was sent by the dinner committee to the co-
chairmen of the dinner. It lists a range of benefits for the 
most successful fundraisers. Fundraisers who sell ``two 
tables'' receive the same benefits as tablebuyers plus 
attendance at a ``Reception with Senator Bob Dole at U.S. 
Capitol.'' Fundraisers who raise ``$92,000 and above'' receive 
a ``Photo Opportunity with President Bush.'' ``Top 
Fundraisers'' are promised all of the listed benefits plus the 
``Opportunity to be seated at a head table with The President 
or Vice President based on ticket sales.'' The document warns, 
``Note: Attendance at all events is limited. Benefits based on 
receipts.''
    Of all the documents examined by the Committee, this 
document contains perhaps the most explicit offers of access in 
exchange for large contributions. It states outright that 
fundraisers receive ``[b]enefits based upon receipts.'' It 
states explicitly that seating with the President will be 
``based on ticket sales.'' It offers GOP fundraising receptions 
at government facilities including the White House, the Vice 
President's Residence, and the U.S. Capitol. It promises 
fundraisers access to the most senior Republican officials 
including the President, Vice President, cabinet officers, and 
the Senate and House minority leaders. ``Tablebuyers'' are 
given the option of requesting a Member of Congress or ``Senior 
Administration Official'' to sit at their tables. The offer of 
access to important government officials in exchange for 
contributions could hardly be more blatant.
    The documents also demonstrate how these fundraising 
strategies were employed by the Republican Party to encourage 
large contributions. On February 5, 1992, a memorandum to 
Kojima from the dinner chairman, former Senator Howard Baker of 
Tennessee, promised a meeting with the President for attending 
an event devoted to making fundraising calls for the dinner:

          The White House has just confirmed Monday, March 9th 
        on The President's schedule for a special meeting with 
        The 1992 Dinner Deputy and Co-Chairmen. As in past 
        years, we will gather for a Strategy Session in which 
        we will make some recruiting calls and hear updates 
        from the House and Senate. It would be very helpful if, 
        in preparation for this meeting, you would put together 
        a list of individuals you would like to contact that 
        day . . .  [P]lease clear your calendar for this unique 
        opportunity to work together to reach our goals. I look 
        forward to seeing you on March 9th.

    A similar memorandum, dated February 5, from Senator Baker 
to another dinner co-chairman, James R. Elliott, is even more 
explicit: ``I would like to invite you to join the [dinner co-
chairmen] for this meeting with The President.'' 36
    A followup letter dated February 19, 1992, from Senator 
Baker to Kojima, expresses thanks for ``agreeing to serve as a 
Co-Chairman by pledging $300,000 to The 1992 President's 
Dinner. I look forward to seeing you on March 9.'' A similar 
letter dated February 19, was sent to Elliott.
    On February 21, the Dinner Committee sent the first in a 
series of weekly memoranda from Senator Baker to the dinner co-
chairmen reporting on fundraising and urging additional 
contributions. Entitled ``Finance Report,'' the February 21 
memorandum states:

          With just 67 days until April 28th [the date of the 
        dinner], we have reached a critical point in our 
        fundraising efforts. It is essential that you make your 
        recruiting calls now so there is time for the 
        commitments to be fulfilled. . . . I hope I'll be 
        seeing you in Washington on March 9th. . . .

A February 28 ``Finance Report'' from Senator Baker to the 
dinner co-chairmen states: ``There are only 60 days until April 
28th! . . . I would like to see all Co-Chairmen on board before 
the March 9th Strategy Session so they will be able to attend 
the meeting. This is an opportunity to show strong support for 
President Bush when we report our progress to him at the end of 
the day of calls.''
    Kojima made his first contribution to the Dinner on March 
6, three days before the White House meeting. The check from 
his company, IMB, is for $200,000. March 6 is also the date of 
a letter from DeGrandi of the Republican Presidential 
Roundtable to the U.S. ambassador to Japan requesting a meeting 
for Kojima. The letter states, ``As also a Co-Chairman of the 
President's Dinner, Mr. Kojima met with the President regarding 
a balance between the United States and Japan and working to a 
new world order. Mr. Kojima will be meeting with the Prime 
Minister while in Japan and at that time he has requested to 
meet with you.'' This letter has a handwritten notation on it, 
``Has he called?'' The requested meeting between the ambassador 
and Kojima took place two weeks later, on March 
19.37
    President Bush's public schedule confirms that on March 9, 
he met ``in the Roosevelt Room with members of the National 
Republican Senatorial and Congressional Committee[s] to discuss 
the President's Dinner.'' 38 A ``Tentative Agenda'' 
for the March 9th Strategy Session also cites this White House 
meeting:

          10:30 a.m. ``Briefing and Strategy Session'' with 
        Dinner Chairman Senator Baker at the Hay Adams Hotel
          12:30 p.m. ``Lunch with the Vice President and 
        Cabinet Members'' at the hotel
          2:30 p.m. ``Strategy Session (Part II)'' at the hotel
          3:30 p.m. ``Depart for the White House''
          4:00 p.m. ``Meeting with the President'' at ``The 
        White House''

Clearly, the dinner committee used the promise of a White House 
meeting with the President, as well as a luncheon with the Vice 
President and Cabinet members, to convince the individuals 
serving as its co-chairmen to fly to Washington and spend 
several hours making telephone fundraising calls to potential 
contributors.
    Kojima apparently not only attended the March 9 strategy 
session and White House meeting with the President, he also 
visited DeGrandi at the Republican Presidential Roundtable and 
obtained letters on his behalf to the leaders of Japan and 
China. The two letters, each dated March 9, contain the 
identical sentence: ``I met with Mr. Kojima while he was here 
in Washington, D.C. before he met with President Bush at the 
White House.'' Both also state that Kojima has a ``message from 
the President of the United States that he will share with you 
upon your meeting him.''
    On March 13, the dinner committee sent another ``Finance 
Report'' to its co-chairmen. The memorandum states: ``One 
hundred tables were sold last Monday at the Strategy Session, 
making it the most successful ever. . . . In order to insure 
reaching our goals, it is still necessary to keep recruiting. 
However, it is also time to start turning pledges into 
receipts.''
    On March 16, Kojima signed a second IMB check contributing 
$200,000 to the dinner. His wife, Chiey Nomura Kojima, sent the 
check to the dinner's executive director, Ekonomou, with a 
cover letter stating that ``we have provided a check in the 
amount of $200,000 to support Bush administration for re-
election,'' even though dinner contributions were supposed to 
be used to elect Republican Members of Congress rather than to 
re-elect President Bush.
    On March 20, the dinner committee issued its weekly Finance 
Report to the co-chairmen. The memorandum states: ``I want to 
remind you that the individual who raises the most money in 
actual receipts by Friday, April 24 will have the honor of 
saluting President Bush with a special toast during The Dinner. 
As of today, the following are in contention for the toast to 
The President: ``1. Mike Kojima--Receipts $400,000 . . . .'' 
[Original emphasis.]'' The memorandum lists six other 
individuals as well, but none has ``receipts'' approaching 
$400,000.
    The March 27 Finance Report states: ``32 DAYS AND COUNTING! 
We are at $5.7 million in pledges and receipts. Keep on 
working. Remember that the top fundraisers and their spouse or 
guest will be invited to sit at the head tables.''
    On April 1, 1992, FEC records indicate that IMB made an in-
kind contribution of $8,770 to the NRSC for a National Museum 
for Women in the Arts dinner in connection with a Presidential 
Roundtable Spring Forum.39 A February 27 letter 
offering tickets to the Spring Forum for $265 per person or 
$530 per couple states: ``The day concludes with our reception 
and dinner with President Bush at the historical National 
Museum for Women in the Arts.'' President Bush's public 
schedule confirms that he and his wife attended.40 
DeGrandi recalled that Kojima sponsored the event by paying for 
the museum rental,41 and a handwritten note from 
Kojima's wife states that she and her husband ``sponsored and 
hosted it.'' 42 The documents do not indicate 
whether Kojima sat at the head table with the President or 
offered a toast.
    On April 3, the dinner committee sent its weekly Finance 
Report to the co-chairmen. The memorandum states: ``With only 
25 days until The Dinner, now is the critical time for us to 
focus on turning pledges into receipts. The toast and headtable 
standings are shaping up as follows:

------------------------------------------------------------------------
                                                             Pledges/   
                                             Receipts        Receipts   
------------------------------------------------------------------------
1. Mike Kojima..........................        $400,000        $450,000
2. Bill Schreyer........................         258,000         877,500
3. Carl Lindner.........................         250,000         250,000
------------------------------------------------------------------------

The memorandum lists 11 names in all.
    The next two Finance Reports, dated April 10 and 17, also 
provide prospective ``Headtable seating arrangements'' based 
upon actual receipts. The April 10 report lists Kojima, with 
$400,000 in receipts, as the fourth and final fundraiser to be 
seated with the President. However, the April 17 report--the 
final report before the dinner--shows Kojima as having dropped 
in the ``standings'' and lists him as being seated at the Vice 
President's table.
    A fax and memorandum dated April 20, 1992, from Ekonomou to 
Kojima, also place him at the Vice President's table. Entitled, 
``Dinner and Special Events Attendees,'' the memorandum states: 
``Thank you for the list of individuals planning to attend The 
Dinner and the Special Events that day. Because of their 
intimate nature, the two receptions where it is not appropriate 
for your photographer to accompany you are the Oval Office 
Reception and the Headtable Reception. As of today, it looks as 
if you and your wife will be seated at The Vice President's 
Headtable. This leaves 23 guests . . . to be seated at your 3 
tables. We have placed Senator and Mrs. Murkowski at table #1 
and Senator and Mrs. Seymour at table #2, which brings your 
total attendees to 27. If you would like a VIP at your 3rd 
table, please let us know.''
    On April 22, 1992, Kojima signed a third check for $100,000 
made out to the President's Dinner. Unlike the first two 
checks, this contribution was not from an IMB account, but from 
Kojima's personal account. His total contribution of $500,000 
was the largest from any individual at the dinner; his 
competing fundraisers had raised their sums from more than one 
source.
    As a result of his last-minute contribution, Kojima and his 
wife were seated at the head table with President 
Bush.43 Kojima was listed in the dinner program as 
one of 24 deputy chairmen and co-chairmen of the event. The 
program describes the dinner as ``the single largest 
fundraising event in history for Republican House and Senate 
candidates.'' Television coverage showed the President greeting 
Mrs. Kojima with a kiss on the cheek when joining the 
table.44 Kojima's contribution was also widely 
reported, leading to the lawsuits filed by his past wives and 
creditors.
    The facts surrounding the 1992 Republican President's 
Dinner provide important information about GOP use of the White 
House to encourage fundraising. The Dinner invitations 
explicitly promise a White House reception with the President 
and First Lady in exchange for contributions. Dinner co-
chairmen who made fundraising calls for the dinner met with the 
President in the White House's Roosevelt Room and lunched with 
the Vice President and Cabinet members. Top fundraisers 
attended a special, exclusive reception in the Oval Office.
    Videotapes of the March 9 meeting in the Roosevelt Room and 
the April 28 Oval Office reception likely exist, and the 
Minority made requests to view the videotapes. The Majority, 
however, refused to support these requests on the ground that 
such events were outside the scope of an investigation into the 
1996 elections. But evidence documenting the Bush 
Administration's use of the White House to facilitate 
fundraising is critical to evaluating whether the Clinton 
Administration's use of the White House was in line with 
precedent.45

                   gop claimed no duty to investigate

    One issue examined by the Committee during its hearings is 
to what extent parties have an obligation to investigate 
persons offering large contributions. The Republican Party 
provided its views when Kojima's $500,000 contribution became 
public and questions arose regarding his status as a debtor and 
``deadbeat dad'' who may have lacked the financial resources 
for such a large donation. The Republican Party responded that 
it had no duty to investigate or verify his contribution.
    Rich Galen, spokesman for the Republican President's 
Dinner, told the press at the time, ``There's no requirement in 
practice or in law that a political organization or charitable 
organization get any kind of statement from a donor as to the 
origins of the money.'' 46
    Deposition testimony provided a year later by Ekonomou, an 
experienced Republican fundraiser and the Dinner's executive 
director, establishes that GOP fundraisers believed they had no 
obligation to investigate any contributor or contribution. 
Ekonomou stated under oath:

          Q. Did the Dinner Committee do any kind of background 
        search or verification regarding its top fundraisers?
          A. No.
          Q. Do you believe that the Dinner Committee has 
        responsibility to do any kind of background 
        verification or search about its fundraisers or top 
        fundraisers?
          A. No.
          Q. In light of your experience and the concern that 
        was raised in you after revelations of Mr. Kojima's 
        outside activities, you continue to have no belief that 
        the Dinner Committee has any kind of obligation to do 
        any verification of the background of its top 
        fundraisers?
          A. I do not believe that the President's Dinner has 
        any obligation to get background information on its top 
        fundraisers.47

    Jan Baran, legal counsel for the dinner committee and also 
long-time legal counsel to the RNC and other Republican Party 
organizations, put it even more forcefully in 1993 legal 
pleadings filed with the U.S. District Court for the District 
of Columbia:

          [P]olitical organizations such as the [Republican 
        Dinner] Committee must be able to receive and use 
        contributions. If they were required to investigate all 
        contributors and establish a pedigree for all 
        contributions, their First Amendment protected 
        activities would be seriously handicapped. . . . The 
        Federal Election Campaign Act of 1971, as amended, 
        imposes no burden upon political organizations to 
        investigate the solvency of contributors.48

The unequivocal position of the dinner's legal counsel, 
executive director, and spokesman is powerful evidence that, in 
the years prior to the start of the 1996 election cycle, GOP 
fundraisers believed they had no legal obligation to 
investigate either contributors or suspect contributions. This 
position is clearly relevant to understanding the actions of 
fundraisers during the 1996 cycle who also failed to 
investigate particular contributions and to evaluating the 
propriety of those actions.
    The documents do show, however, that as media inquiries 
about Kojima intensified in the period before the April 28 
dinner, the dinner committee made one attempt to obtain more 
information about Kojima and the source of his funds. A 
memorandum dated April 24, 1992, to Senator Baker from Ekonomou 
and Galen provides this account:

          Chuck Babcock of the Washington Post has called 
        numerous times, over the past two days, regarding the 
        donations of Mr. Kojima. Mr. Kojima is listed as one of 
        the largest donors to The Dinner in the FEC report 
        which was filed on April 15. . . .
          Babcock has been unable to find out any information 
        regarding Mr. Kojima which raised his interest. . . .
          He had the Post's Los Angeles bureau check Secretary 
        of State documents in California and found the only 
        reference to a ``Michael Kojima'' one who was a chef 
        and owned, at one time, a series of restaurants.
          His further research indicated that the address 
        listed as the headquarters of International Marketing 
        Bureau was also the address of one of the restaurants 
        owned by the Michael Kojima he could find. . . .
          His specific concerns . . . ``How do you know whether 
        these checks come from the assets of his corporation or 
        whether they are the result of laundered money?'
          This question raised our concerns to the point where 
        we placed a call to Mr. Kojima and asked him about his 
        business.
          Mr. Kojima, in a phone conversation with Rich and 
        Betsy said:
          (1) His business is ``international marketing'';
          (2) He has clients in ``various countries'' 
        including: The USA, Japan, Hong Kong and Israel;
          (3) He is involved in ``organizing consortiums'' for 
        ``national projects'' such as airports and 
        telecommunications systems. . . .
          (4) We specifically asked him the source of funds 
        which are represented by the checks he has sent. He was 
        asked if they were from corporate proceeds or ``from 
        individuals who had chosen to donate to The Dinner.'' 
        His specific answer was that the checks were 
        ``corporate assets, my own corporation assets.''
          We feel much more comfortable now, having spoken to 
        Mr. Kojima:
          --That we have taken reasonable steps to ensure the 
        funds he has sent to The Dinner are from a legitimate 
        source;
          --That he understood the nature of our concerns; and,
          --That he answered our questions with no hint of 
        evasion.49

    This memorandum indicates that, prior to the dinner, the 
Republican dinner committee knew that Kojima was engaged in 
international business, that the business address he had 
provided for IMB was the address of a California restaurant, 
and that the lack of ready information about him and his 
business had raised concerns that he lacked the funds to make a 
$500,000 contribution and might be ``laundering'' money for 
someone else.
    When the press raised these red flags, the dinner 
committee's senior personnel telephoned Kojima to ask him about 
the funds used for his contribution. He responded that he was 
using corporate funds, yet the day before the committee had 
received his personal check for $100,000. They also failed to 
ask him whether he or his company, whose business was 
international marketing, was utilizing foreign funds. In 
addition, despite having a list of 23 persons that Kojima was 
inviting to the dinner as his guests, including at least ten 
foreign nationals, the dinner committee never asked Kojima if 
he was using funds supplied by his guests to finance the 
$500,000.

                             foreign funds

    If the Republican Dinner Committee had asked, it might have 
discovered the evidence that emerged in early 1997 indicating 
that the Kojima contribution was being financed, in whole or in 
part, with foreign money.
    Kojima brought 23 guests to the 1992 President's 
Dinner.50 In a July 7, 1997, broadcast and 
subsequent materials posted on its website, CBS News revealed 
that these guests included ten Japanese citizens who flew in 
from Tokyo for the dinner.51 Five were Japanese 
businessmen, three of whom stated, according to CBS News, that 
they had paid Kojima significant sums of money to attend the 
President's Dinner. For example, Shuuichi Nakagawa told CBS 
said that he attended the dinner as a Kojima guest and that 
Kojima asked him for hundreds of thousands of dollars. Takashi 
Kimoto, a real estate company owner, reportedly stated that he 
``KNOWS his money went to the GOP.'' 52 [Original 
emphasis.]
    CBS News also released a document apparently provided by 
one or more of the Japanese businessmen. Printed in English and 
Japanese, the English version appears on IMB letterhead, is 
entitled ``Receipt,'' and is addressed to Tsunekasu Teramoto, a 
person known to work with Kojima and IMB.53 The next 
line of the document is the word ``Participant:'' followed by a 
blank line. The text states: ``Your Participation for 1992 
President's Dinner will be the minimum requirement of donation 
at one Hundred Seventy-Five Thousand (US $175,000) U.S. 
Dollars.'' The document instructs the money to be remitted to 
IMB, providing the location and number of a specific bank 
account, which is the same bank account number that appears on 
the two IMB checks providing $400,000 to the Republican Dinner 
Committee. Below the remittance instructions is a blank 
signature line over: ``Michael Kojima, Co-Chairman.'' If 
authentic, the document suggests that Kojima was using his 
status as a co-chairman of the President's Dinner to obtain 
huge sums of money from foreign sources in exchange for 
arranging attendance at the dinner.
    Given Kojima's apparent lack of assets, the explanation 
offered by the Japanese businessmen for the source of Kojima's 
$500,000 contribution, their attendance at the President's 
Dinner, and the English/Japanese receipt bearing IMB's specific 
bank account number are, together, strong evidence that the 
Kojima contribution utilized illegal foreign funds. Yet, 
despite requests from the Minority, the Majority refused to 
allow Committee investigators to interview any of the Japanese 
businessmen or investigate their allegations.
    The Majority also refused to issue a subpoena for bank 
records associated with IMB or Kojima bank accounts, which 
might have established the deposit of foreign funds into these 
accounts. Some of these bank records were produced in 
connection with the 1992 court case. The signature card for the 
IMB account at Sumitomo Bank of California, for example, shows 
that the account was opened in November 1990, with three 
authorized signatories: Kojima, his wife, and his attorney. But 
no monthly bank statements for the IMB account were produced in 
connection with that case.
    Other records were produced in connection with Kojima's 
personal account at the Bank of California, which was the 
account used to write the third check to the President's Dinner 
for $100,000. These records show that the account was opened on 
February 20, 1992, that Mr. and Mrs. Kojima were the only 
authorized signatories, and that an initial deposit was made of 
$1,000. Monthly bank statements show that no further activity 
took place in the account until April 1992, when three deposits 
were made in a four-day period. The first was for $24,381 on 
April 20; the second was a wire transfer of $200,000 on April 
23; and the third was a wire transfer of $164,631.90 on April 
24.
    Four checks were then written over a three-week period in 
April and May 1992. The first, for $8,100, paid on April 24, 
may have been for the museum rental bill associated with the 
Spring Forum dinner. The next, for $100,000, was the 
contribution to the President's Dinner. The third check, also 
for $100,000, represented a contribution to Harvard 
University.54 The fourth check, for $175,000, 
withdrew the bulk of funds from the account on May 11, 1992. No 
further activity took place until the account was closed in 
July, five months after it was opened. None of the documents 
from the 1992 court case indicate where the two April wire 
transfers originated. A Committee subpoena might have 
established whether those wire transfers deposited foreign 
money into the Kojima account, but the Majority denied Minority 
requests for subpoenas to obtain the necessary bank records.
    The Majority's justification--that the 1992 Kojima 
contribution was too old for Committee investigation--is 
contradicted by the fact that the Majority not only 
investigated but held hearings on a $50,000 contribution to the 
Democratic Party by Hip Hing Holdings that was made in August 
1992, and for which Hip Hing Holdings later sought 
reimbursement from sources in Indonesia.55 The 
Kojima contribution is from the same year and ten times 
larger--potentially the second largest single infusion of 
foreign funds into either party, exceeded only by the loan 
transaction involving the National Policy Forum, RNC and Hong 
Kong funding, described in an earlier chapter. It is also 
relevant that, while the Democratic Party returned the $50,000 
Hip Hing Holdings contribution, the Republican Party has 
continued to retain $215,000 from Kojima. Its retention of 
these funds means that the Republican Party is holding almost a 
quarter of a million dollars in likely foreign funds.
    One other set of facts raises questions about the dinner 
committee's own suspicions regarding the Kojima funds. Kojima 
originally contributed $500,000 to the Republican Senate-House 
Dinner Committee to elect Senate and House candidates in 1992. 
The 1994 settlement agreement, however, re-directed the funds, 
depositing them into a new dinner committee account called a 
``Trust & Building Fund.'' Section 441e of the Federal Election 
Campaign Act prohibits foreign contributions to local, state, 
or federal candidates, but is silent on whether foreign funds 
may be contributed to parties to conduct non-candidate-related 
activities, such as constructing office facilities. Did the 
Republican Party re-direct the Kojima funds from a candidate to 
a non-candidate account in order to better its chances for 
retaining the funds in case they were later deemed foreign? How 
else can the complex 1994 transaction creating a new account 
solely for the Kojima funds be explained?

               failure to conduct a federal investigation

    On June 9, 1992, Common Cause asked Attorney General 
William Barr to request appointment of an independent counsel 
to investigate ``whether criminal violations of federal law 
[had] occurred in connection with The President's Dinner.'' 
Common Cause raised two sets of possible violations, each 
involving a co-chair of the dinner. With respect to Kojima, 
Common Cause stated:

          Published reports indicate that Kojima was heavily in 
        debt, that [IMB] may not have had $500,000 to 
        contribute and therefore that the $500,000 may in fact 
        have come from unidentified contributors. The published 
        reports . . . raise serious questions of violations of 
        2 U.S.C. 441(f) (prohibiting contributions made in the 
        name of another) and 2 U.S.C. 434 (requiring disclosure 
        of the source of contributions).

    Two weeks later, on June 24, 1992, John C. Keeney, deputy 
assistant attorney general for the criminal division, sent a 
one-page letter to Common Cause. He stated without further 
explanation:

          We have determined that there is no basis to seek 
        appointment of an Independent Counsel. . . . Moreover, 
        we find no personal or Department of Justice conflict 
        of interest which requires the appointment of an 
        Independent Counsel.

As far as the Minority has been able to determine, no criminal 
investigation of the Kojima contribution took place outside of 
this two-week period.
    The Minority is also unaware of any FEC investigation of 
the Kojima contribution, although it is possible an 
investigation was initiated without any public notice and is 
still underway.56
    The absence of any significant civil or criminal federal 
investigation of the Kojima contribution may have sent the 
message that even a contributor with a questionable background 
may contribute hundreds of thousands of dollars to a political 
party, and no federal inquiry will follow. The FEC and Justice 
Department's apparent inaction in the Kojima matter may have 
been perceived as giving a green light to the no-questions-
asked fundraising that followed in the 1996 election cycle.

                               conclusion

    At the start of the Committee's investigation, the Majority 
supported efforts to investigate the Kojima contribution, 
issuing document requests to the State Department and 
Lippobank, among others. But the Majority later reversed 
course, refusing to support obtaining additional documents, 
interviews, or public testimony about Kojima.
    Yet the facts and documents surrounding Kojima's $500,000 
contribution provide information of great relevance to the 
Committee's investigation into the 1996 elections. This 
contribution is potentially one of the largest foreign-funded 
contributions to either party. The Kojima case establishes 
clear precedent for a political party using the White House and 
access to senior government officials to encourage fundraising. 
In a two-year period, due to his contributor status, Kojima met 
President Bush on five occasions, including at an Oval Office 
reception; met with Vice President Quayle twice; met Cabinet 
members at an intimate lunch; and met multiple times with U.S. 
ambassadors and senior embassy personnel. The Kojima case is a 
precedent for large contributors bringing foreign nationals as 
their guests to fundraising events attended by the President. 
The Kojima case also demonstrates the lengths to which GOP 
fundraisers went to assist large contributors in furthering 
their private business interests--even attempting meetings with 
foreign leaders. The Kojima case demonstrates the belief in the 
fundraising community that the law imposed no legal obligation 
on them to investigate any contributor or contribution, even 
when questions were raised. The Kojima case also demonstrates 
the Republican Party's continuing belief that it has no 
obligation to return suspect funds.
    In short, the Kojima case offers proof that campaign 
finance abuses are a bipartisan problem with a long history.

                               footnotes

    \1\ Kojima's employment history is described in documents contained 
in files associated with 1992 Republican Senate-House Dinner Committee 
v. Carolina's Pride Seafood, Inc. Civil Action No. 92-1141 (D.D.C), and 
Bank of Trade v. 2M Management Co., Ltd., No. C697606 (California 
Superior Court, Los Angeles County).
    \2\ The first loan was made on 3/3/87 for $80,000 to finance new 
restaurant franchises; the second loan was on 4/14/87 for $250,000 to 
finance interior construction of a new restaurant at a shopping mall; 
and the third was on 4/14/87 for $325,000 to buy out other shareholders 
in certain restaurants. Kojima personally guaranteed repayment along 
with his partner and the founder of 2M Management, Margaret Wong.
    \3\ Bank of Trade v. 2M Management Co., Ltd., No. C697606 
(California Superior Court, Los Angeles County); 1992 Republican 
Senate-House Dinner Committee v. Carolina's Pride Seafood, Inc., 858 F. 
Supp. 243, 246 (D.D.C. 1994) (The bank obtained creditor's judgment 
against Kojima for $586,000 on 12/31/90.)
    \4\ Certified statement by California Secretary of State, 5/20/97. 
The certification states that IMB was incorporated on 6/27/90, 
suspended for nonpayment of taxes from 8/3/92 until 5/24/93 and from 4/
1/94 until 4/18/94, and listed on 5/20/97 as an active California 
corporation.
    \5\ IMB's Statement By Domestic Stock Corporation, 6/17/91; 
signature card for IMB bank account at Sumitomo Bank of California, 11/
90.
    \6\ Committee investigators were unable to locate any IMB office. 
See also Washington Post, 5/8/92 (IMB ``operates out of his lawyer's 
office, and phone messages are taken by an answering service.'') and 
Los Angeles Times, 5/8/92 (IMB ``is run out of the office of his wife's 
student exchange program. . . . Nowhere in the two-room office is there 
any evidence of a marketing company.'').
    \7\ See, for example, IMB incorporation documents (attorney's 
office and wife's office address used), IMB checks and bank records at 
Sumitomo Bank of California (wife's office address used), and FEC 
contribution records (attorney's office address used).
    \8\ See, for example, Associated Press, 4/29/92; Los Angeles Times, 
4/29/92; Chicago Tribune, 4/30/92; Orlando Sentinel Tribune, 5/7/92; 
Washington Post, 5/8/92; and St. Louis Post-Dispatch,  5/9/92.
    \9\ Los Angeles Times, 5/9/92.
    \10\ New York Times, 10/11/92; Los Angeles Times, 10/11/92; New 
York Times, 10/18/92; and Daily News, 10/15/96.
    \11\ Washington Post, 5/8/92.
    \12\ New York Times, 5/9/92.
    \13\ Los Angeles Times, 5/8/92.
    \14\ The 1992 Republican Senate-House Dinner Committee v. 
Carolina's Pride Seafood, Inc., (D.D.C.), Civil Action No. 92-1141.
    \15\ 858 F. Supp. 243 (D.D.C. 1994).
    \16\ Judgment by Consent, Civil Action 92-1141 (9/6/94).
    \17\ Judgment by Consent, Civil Action 92-1141 (9/6/94). FEC 
records show that the Fund was established on 9/20/94 as a new non-
federal account of the Dinner Committee. Statement of Organization, FEC 
ID No. C00261719; and 1992 President's Dinner, Report of Receipts and 
Disbursements, Schedule B, Itemized Disbursements, 10/94, p. 1.
    \18\ People v. Kojima, Los Angeles Municipal Court, Case Nos. 
92R25264 and 92R00618, Reporter's Transcript of Proceedings on 10/15/
93. See also Dallas Morning News, 10/11/92 (``Kojima, 51, . . . was 
arrested in the Salt Lake City Airport as he prepared to board a plane. 
. . . He had eluded investigators for four months, moving frequently 
and living under assumed names, officials said.'') and Los Angeles 
Times, 10/11/92.
    \19\ Although FEC records indicate that all three contributions to 
the 1992 President's Dinner were made by IMB, the final payment of 
$100,000 was drawn on Kojima's personal bank account, and was held in 
the 1992 court case to be a personal expenditure. 858 F. Supp. 243, 
249.
    \20\ Documents analyzed by the Minority include records from the 
1992 court case; FEC contribution and enforcement records; records 
collected by Common Cause regarding the 1992 President's Dinner; 
records provided by the State Department and Lippobank in response to 
Committee document requests; documents provided in connection with 
Committee interviews; and other materials.
    \21\ Committee investigators conducted a number of interviews, 
prepared eight formal interview reports, and summarized several 
investigative efforts. In several instances, interviewed persons 
voluntarily provided documents.
    \22\ Depositions in the 1992 court case were provided by the 
Republican Dinner Committee's executive director Elizabeth Ekonomou, 
comptroller Christopher Ward, and assistant treasurer Trudy Matthes 
Barksdale.
    \23\ 1992 Presidential Roundtable brochure.
    \24\ A letter dated 6/22/90, from Presidential Roundtable co-
chairman Senator Don Nickles to prospective members, describes it this 
way: ``Working with the Republican members of the United States Senate, 
the Presidential Roundtable operates much like a private club--a club 
whose members meet, talk, and dine with some of the most important 
people in the world. . . . It is an exclusive political organization, a 
unique business forum, and a special social club combined.''
    \25\ The brochure also lists benefits related to the 1992 
Republican National Convention in Houston, including a ``private tour'' 
of the NASA Space Center ``hosted by Senators from the Committee on 
Commerce, Science and Transportation.'' A brochure photograph is 
captioned: ``Secretary Richard Cheney briefs the Roundtable Members on 
Defense issues at the Pentagon.'' Both are examples of U.S. government 
facilities being used to encourage GOP fundraising.
    \26\ Committee investigators interviewed DeGrandi at length and 
prepared two interview reports dated 6/4/97 and 7/3/97.
    \27\ Staff interview with DeGrandi, 6/4/97, p. 1.
    \28\ Staff interview with DeGrandi, 6/4/97, p. 4.
    \29\ Staff interview with DeGrandi, 6/4/97, p. 4.
    \30\ DeGrandi, Lisa. ``A Staffer's Own Story,'' 
www.eveningnews.com/lisadegrandi.html, p.3.
    \31\ See also Los Angeles Times, 5/18/92: ``In October, theForeign 
Commercial Service at the U.S. Consulate in Hong Kong did get a letter 
from the Presidential Roundtable introducing Kojima, a consulate 
spokesman said Sunday. . . . A week later, Kojima asked the consulate 
to set up appointments with the Hong Kong airport authorities. The 
consulate obliged, and Kojima met with airport officials, but did not 
land a contract, the spokesman said.''
    \32\ A 10/1/91 memorandum prepared by an Embassy official, for 
example, summarizing a 45-minute meeting with Kojima, states the 
following: ``Mr. Kojima explained that he is trying to assemble a 
consortium for the Hong Kong Airport project and needs introductions to 
Japanese banks to secure funding. We explained that [the commercial 
office of the U.S. Embassy in Japan] is primarily concerned with 
promoting exports of U.S. goods and services, and is not positioned to 
make introductions to Japanese banks. We also indicated that Mr. 
Kojima's list of consortium members showed little participation by U.S. 
firms.'' In other words, the embassy was being asked to further 
Kojima's private business interests even when they involved obtaining 
business for foreign, not American, firms.
    \33\ This deposition was provided on 4/8/93 in connection with the 
1992 court case.
    \34\ Elizabeth Ekonomou deposition, 4/8/93, pp. 35-36.
    \35\ See letter from Dinner Chairman Howard Baker to Kojima, 
thanking him for ``agreeing to serve as a Co-Chairman by pledging 
$300,000,'' 2/19/92.
    \36\ This memorandum, as well as other internal documents related 
to the President's Dinner became publicly available in connection with 
an FEC enforcement action against Elliott. See In re Cherry 
Communications Inc., MUR No. 3672.
    \37\ FEC records also indicate that on March 6, IMB contributed 
$30,000 to the NRSC, but one month later this contribution was returned 
due to insufficient funds.
    \38\ 28 Weekly Comp. Pres. Doc. 477 (3/13/92).
    \39\ NRSC/Nonfederal Schedule A for Itemized Receipts, p. 16.
    \40\ 28 Weekly Comp. Pres. Doc. 584 (4/3/92).
    \41\ DeGrandi interview report, 6/4/97, p. 6.
    \42\ Letter from Chiey N. Kojima to Dr. Hausman of the John F. 
Kennedy School of Government, enclosing a copy of the dinner menu with 
a thank you to the Kojimas printed at the bottom, 4/4/92.
    \43\ The Court in the 1992 court case describes the sequence of 
events this way: ``The flurry of notices to contributors like Michael 
Kojima exhorted them to increase donations. Kojima, apparently taking 
the notices to heart, contributed another $100,000 to the 1992 
Committee via a personal check . . . Kojima then qualified to sit at 
the President's table.'' 858 F. Supp. 244.
    \44\ CBS Evening News footage re-broadcast on July 7, 1997.
    \45\ In October, Committee Chairman Thompson was reported by the 
press as disagreeing with ``the notion that possible [campaign-finance] 
misdeeds by President Clinton and his aides are no worse than those of 
the Reagan and Bush administrations. . . . ``We have a scandal going on 
in Washington, D.C., now that is not like anything we've seen before,'' 
he said. ``We have seen unprecedented amounts of money flow into the 
White House.''' Associated Press, 10/18/97.
    \46\ Column by Lars-Erik Nelson in San Diego Union-Tribune, 5/14/
92.
    \47\ Elizabeth Ekonomou deposition, 4/8/92, pp. 102-103.
    \48\ Pleading filed by Baran on July 22, 1993, on behalf of the 
Republican Senate-House Dinner Committee. The Court subsequently 
disagreed, found Kojima insolvent, ordered a portion of his $500,000 
contribution paid to his creditors, and authorized additional discovery 
into IMB's solvency. 858 F. Supp. at 249. The Republican Committee then 
settled the lawsuit, keeping $215,000 and releasing $285,000 plus 
interest to Kojima's creditors. Judgment by Consent, Civil Action 92-
1141 (9/6/94). The Republican Committee also moved and the court agreed 
to vacate its published decision, so that no precedent would be set 
requiring political committees to surrender contributions from 
insolvent contributors. Motion filed by Republican Committee 8/30/94; 
court order filed 11/8/94.
    \49\ This memorandum is referenced in the Court decision, 858 
F.Supp. at 245, n. 5, and is available in the public file associated 
with the 1992 court case.
    \50\ See 4/20/92 fax and memorandum to Kojima from Ekonomou, 
described  acknowledging receipt of a list of 23 guests. 
Ekonomou had this guest list prior to calling Kojima on April 24.
    \51\ CBS News has reprinted several photographs of Kojima's 
Japanese guests at the President's Dinner on its website at 
www.eveningnews.com/moneytrail2.html.
    \52\ While Kojima's guest list for the dinner has not been produced 
to the Committee, Kimoto's name does appear in a State Department 
document summarizing a 3/6/92 meeting between Kojima and the U.S. 
ambassador to Japan. The document lists Kimoto as a participant at the 
invitation of Kojima, thereby providing evidence that the two were 
engaged in business dealings in the month before the President's 
dinner.
    \53\ Teramoto, for example, attended meetings with Kojima and U.S. 
embassy personnel, and is listed on embassy documents summarizing the 
meetings. His name also appears in correspondence between Mr. and Mrs. 
Kojima and Harvard University, including a 3/10/92 letter from Mrs. 
Kojima which describes Teramoto as Kojima's ``Japan agent.'
    \54\ In the spring of 1992, in addition to contributing $500,000 to 
the President's Dinner, Kojima made three contributions to Harvard 
University totalling $205,000. Committee investigators conducted 
interviews and obtained documents in connection with this matter, 
including copies of the checks used to make the contributions. Two of 
the checks, both dated March 5, 1992, are written on IMB's account at 
Sumitomo Bank of California. One gave $100,000 to the Institute for 
Social and Economic Policy in the Middle East at the John F. Kennedy 
School of Government; the other contributed $5,000 to the University's 
general fund. The third check, dated May 1, 1997, was drawn on Kojima's 
personal account at the Bank of California and contributed another 
$100,000 to the Institute.
    The documents and staff interview reports dated 5/29/97 and 6/3/97 
with Institute Director Leonard Hausman indicate that Kojima invoked 
his status as co-chairman of the President's Dinner to establish his 
credentials with Harvard. The 5/29 report states that the director 
called a person from the ``Republican party in Washington, D.C.'' who 
confirmed ``that Kojima was a significant contributor to the Dinner, 
that he was a Dinner co-chairman and that he was indeed going to sit at 
the head table with the President and Mrs. Bush. [The director] 
concluded that if the G.O.P. thought enough of Kojima . . . [to] sit 
him with the President, then Harvard could accept Kojima's money as 
well.'' The director indicated that ``[i]n return'' for his 
contribution, Kojima ``desired to be appointed to the Board of 
Directors for the Institute.'' He recalled receiving letters of 
recommendation ``from Japanese legislators or officials urging [him] to 
appoint Kojima to the Board of Directors,'' but did not do so. Harvard 
University did, however, arrange for Kojima to meet with senior 
university personnel and invited him to participate in a Harvard 
symposium. Kojima, in turn, invited the director to the President's 
Dinner, and he attended as one of Kojima's 23 guests. These incidents 
demonstrate Kojima's use of his status as a dinner co-chairman to win 
entry into other circles and the Republican Party's ready assistance to 
further his personal interests.
    \55\ See, for example, Juliana Utomo, 7/15/97 Hrg., pp. 9-12.
    \56\ The FEC did initiate, in October 1992, a civil investigation 
of the other dinner co-chair named in Common Cause's request for an 
independent counsel, James R. Elliott. That investigation, MUR 3672, 
concluded in 1996 when the FEC released a conciliation agreement in 
which Elliott and his company, Cherry Communications, Inc., agreed to 
pay a $150,000 civil penalty for violating 2 USC 441b(a)'s prohibition 
against corporate contributions.





PART 1  FOREIGN INFLUENCE

Chapter 7: Ted Sioeng

    Ted Sioeng, an Indonesian-born businessman who is not a 
U.S. citizen or a legal resident, and other members of the 
Sioeng family, who are U.S. legal permanent residents, 
contributed to both Republican and Democratic organizations 
during the 1990s. Sioeng has longstanding relationships with 
business interests in the People's Republic of China (``PRC'') 
and owns a pro-PRC newspaper in California. The circumstances 
surrounding the Sioeng family's donations paint a disturbing 
picture of fundraisers from both political parties assiduously 
courting an individual (Sioeng) who, because of his status as a 
foreign national, has no ability to make or direct legal 
contributions under U.S. election laws.
    Ted Sioeng and his family vigorously deny acting on behalf 
of the Chinese government or pursuant to any plan to illegally 
influence U.S. elections. Sioeng initially agreed to cooperate 
with the Committee's investigation of the allegations involving 
him and his family, and his daughter Jessica Elnitiarta--a 
legal permanent resident of the U.S.--provided a voluntary 
interview. After apparent leaks to the press of information 
provided in this interview, however, Sioeng's attorney advised 
against additional voluntary interviews. When the Committee 
issued a subpoena for the deposition testimony of Jessica 
Elnitiarta, her counsel refused to comply, invoking her Fifth 
Amendment right not to offer self-incriminating testimony. As a 
result, much of the following information was pieced together 
from sources other than Sioeng or his family.
     Based on the evidence before the Committee, we make the 
following findings with respect to political contributions from 
Sioeng and related persons:

                                findings

    (1) The evidence before the Committee strongly suggests 
that Ted Sioeng, a foreign national, was directly or indirectly 
involved in a number of contributions to Democrats and 
Republicans.
    (2) Matt Fong, California State Treasurer, did not exercise 
appropriate diligence in personally soliciting and receiving 
$100,000 in contributions from Sioeng and a $50,000 
contribution to NPF from a Sioeng-owned company. Fong has since 
returned the $100,000 he received; NPF has reportedly returned 
the $50,000 it received.
    (3) The evidence before the Committee does not allow for 
any conclusion as to whether Sioeng served as a conduit for 
contributions from any foreign government, including the 
Government of China.
    (4) Sioeng's contributions enabled Sioeng and his 
associates to gain access to senior figures in both the 
Democratic and Republican parties, including President Clinton, 
Vice President Gore, and House Speaker Gingrich.

                        ted sioeng's background

    News accounts of the development of Ted Sioeng's far-flung 
business empire portray him as an entrepreneur who has relied 
heavily on partnerships with Chinese government-sponsored 
enterprises and licensure agreements. According to several 
accounts, Sioeng's first business ventures in the 1960s 
involved the production of foam rubber in 
Indonesia.1 In the early 1970s, as China began to 
open to outside investment, Sioeng began selling used 
cigarette-making equipment to tobacco companies in China's 
Yunnan Province.2 Later, Sioeng also sold to China 
medical, toy, and other manufacturing equipment acquired in the 
U.S. and Canada.3 In the early 1980s, a Chinese 
provincial government granted him a license to sell a cigarette 
brand popular in China, Hongtashan (Red Pagoda), in non-Chinese 
markets.4 Sioeng manufactured the cigarettes in 
Indonesia and distributed them in Asia and, later, the United 
States.5 Sioeng has also established a joint venture 
with the Chinese government in Singapore.6
---------------------------------------------------------------------------
    Footnotes at end of chapter.
---------------------------------------------------------------------------
    In 1987, Sioeng's wife, Sundari Elnitiarta, acquired an 
immigration visa and moved to Los Angeles with their five 
children.7 One of their daughters, Jessica 
Elnitiarta, is particularly active in Sioeng's business affairs 
and is a legal permanent resident of the U.S. Sioeng himself 
never acquired permanent resident status, although he appears 
to have spent a substantial amount of time in the United 
States.8 During the 1990s, the Sioeng family created 
or acquired numerous businesses in the United States, including 
a part ownership of Grand National Bank in Santa Ana, 
California, and a real-estate development company, Panda Estate 
Investments, which owns numerous properties in the Los Angeles 
area.9 In almost all cases, Sioeng has provided his 
adult children and/or their spouses with the money to purchase 
these businesses.10

                     sioeng's connections to china

    Although not an ethnic Chinese, Ted Sioeng was raised in 
Indonesia by ethnic Chinese parents and is strongly attached to 
China. ``His appearance is not Chinese, but he speaks Chinese, 
he practices Chinese culture and he most certainly has a 
Chinese heart,'' reports Daniel Gu, president of UCLA's 1,000-
member Chinese Students and Scholars Association.11 
Sioeng readily agrees with this assessment and has been quoted 
as saying, ``I don't have a drop of Chinese blood in me, but I 
have a Chinese heart.'' 12
    As Sioeng cultivated his business interests in China during 
the 1970s and 1980s, he made gifts to Chinese government 
officials and helped to finance community projects, such as 
schools.13 Many observers have noted that the 
Chinese government cultivates allies by awarding them lucrative 
concessions. ``China is very good at using people,'' says one 
prominent Chinatown businessman in Los Angeles. ``They give 
businessmen some kind of special privilege or business 
advantage so that these people work for China.'' 14 
Even joint ventures with putatively ``private'' enterprises in 
China raise the specter of government involvement. ``You have a 
situation where public and private investment are not all that 
clear,'' says Benjamin Ellman, professor of Chinese history at 
UCLA. ``There are very, very few purely private enterprises.'' 
15 Or as another longtime chronicler of the Chinese-
American community put it, ``Right now it is very hard to say 
which money is from the government and which money is 
private.'' 16
    Capitalizing on his reputation as ``a spokesperson for 
state-enterprise entities from the mainland,'' Sioeng has 
cultivated numerous business partners who have benefited from 
their relationship with him and his relationship with the 
People's Republic of China.17
    Since he began investing in the United States in the late 
1980s, Sioeng has emerged as a leader of the Chinese-American 
community in Los Angeles. He has provided generous financial 
assistance to the numerous mutual-aid associations that have 
formed in Los Angeles to assist new Chinese immigrants from the 
mainland, including the Southern California Cantonese 
Association, the Southwest China Association of Southern 
California, and the Southern California Teo-Chew 
Association.18 In October 1996, he held a festival 
in honor of China's National Day.19 Sioeng also 
chaired a made-for-TV event called ``Welcome Home Hong Kong 
Spectacular ``97,'' which was to be broadcast as part of the 
official handover ceremonies on Hong Kong. To that end, the 
event was filmed by camera crews from the state-controlled 
China Central TV.20
    In 1995, Sioeng's daughter, Jessica Elnitiarta, purchased 
the Monterey Park-based Chinese-language newspaper, the 
International Daily News. The paper's ultimate parent company 
is Sioeng's Group, a holding company owned by Sioeng's daughter 
Jessica Elnitiarta, her four siblings, and their mother, with 
Elnitiarta holding the largest share.21 Elnitiarta 
is also the sole director and officer of Sioeng's Group, as 
well as the sole director of the company that directly owns the 
paper, Chen International Publications.22 Elnitiarta 
admits, however, that her father was the one who approached her 
with the idea of purchasing the newspaper and, as with many of 
the other businesses owned by the Sioeng family, he transferred 
the monies used for the purchase from overseas.23 In 
addition, Sioeng continues to pour money into the paper to 
subsidize its unprofitable operations.24
    Prior to the purchase by Sioeng's family, the IDN had 
offered intermittent support for Taiwan.25 After 
numerous complaints during the ensuing year from the Chinese 
Consul General in Los Angeles, Feng Shusen, Sioeng installed a 
new editor from New York and the paper is now ``breathlessly 
pro-Beijing'' with respect to issues like Taiwan and human 
rights.26 The paper runs releases issued by 
Beijing's state-controlled news media and offered ``lavish'' 
praise for former Chinese leader Deng Xiaopeng upon his death, 
including the banner headlines: ``HEAVEN, EARTH AND MAN GRIEVED 
TOGETHER'' 27 and ``THE SUCCESS DENG MADE IN CHINA 
SHOULD BE THE MODEL FOR ALL MANKIND.'' 28 David Ma, 
a noted pro-democracy activist in the Los Angeles area, relates 
that International Daily News reporters were provided with the 
names of persons to contact for quotes after Deng's death, and 
that Ma's name was left off that list because of his criticisms 
of the Chinese government.29 The paper has also 
played up events such as the visit of Chinese Navy vessels to 
Los Angeles in 1996. Sioeng's lawyer argues that the switch in 
editorial philosophy to a more pro-Chinese bent is actually 
just good business sense designed to appeal to a growing 
immigrant Chinese population, but the paper continues to lose 
substantial sums of money each year.30 Moreover, 
Sioeng sells only 500-600 cases of cigarettes a year in the 
United States despite having been one of the International 
Daily News's biggest advertisers for a number of 
years.31 It seems untenable, therefore, to claim 
that Sioeng's expenditure of $3 million to purchase a money-
losing newspaper was solely motivated by a desire to facilitate 
cigarette advertisements.

                   the ``china plan'' and ted sioeng

    During its investigation, the Committee received non-public 
information regarding a Chinese Government plan to promote the 
Chinese Government's interest in the United States during the 
1996 election cycle.
    The China Plan followed China's concerns about signs of 
Taiwan's successful lobbying of Washington, expressed most 
visibly in the period when the United States granted permission 
in June 1995 for the Taiwanese president to enter the country 
for an informal visit to Cornell University, his alma mater. In 
response, Chinese officials hoped to advance Chinese interests 
in in the United States by lobbying Congress and increasing 
contacts with American lawmakers, the media and ethnic Chinese 
Americans. One aspect of the China Plan included increasing 
contacts with both Congress and state legislators. Although 
there was insufficient evidence that the China Plan was 
implemented by illegal means, some of the non-public 
information received by the Committee related to Sioeng's 
activities in the United States. See Chapter 2 of this Minority 
Report.
    According to public information derived from a news 
article, in late 1994 or early 1995, funds from China were 
wired to an Asian-owned bank in Los Angeles where the Chinese 
consulate has its accounts.32 Shortly thereafter, 
some money was transferred to another tiny Asian-American bank 
in California, Grand National Bank, where it was deposited into 
the account of the Hollywood Metropolitan Hotel.33 
The Sioeng family is a part-owner of Grand National Bank and 
the owner of the hotel.34 These published reports 
invited intensive scrutiny of the circumstances surrounding the 
Sioeng family's political contributions.

      the sioeng family's contributions to matt fong in april 1995

    Matt Fong, a Republican, is California's State Treasurer 
and has announced his candidacy for the United States Senate. 
He voluntarily agreed to be deposed by the Committee concerning 
contributions he received from the Sioeng family in 1995. Fong 
first met Sioeng in1988 at a rally for Julia Wu, the Republican 
candidate for the Los Angeles Community College's governing body. 
35 Fong understood Sioeng to be a supporter of Wu and was 
introduced to Sioeng by Wu herself.36 Over the next few 
years, Fong encountered Sioeng regularly at various community 
fundraisers for cultural centers that helped first-generation 
immigrants.37 According to Fong, Sioeng and his family were 
generous contributors to these organizations and Sioeng frequently 
served as a co-chair or host of these events.38 At these 
events, Fong also met other members of the Sioeng family, including his 
sons, daughters, son-in-laws and his wife.39 However, Fong 
could not recall any names of the Sioeng family besides that of Jessica 
Elnitiarta, one of Sioeng's daughters.40 In 1994, during his 
campaign for state treasurer, Fong held a $1,000-per-ticket fundraising 
event at the Biltmore Hotel in Los Angeles. Jessica Elnitiarta attended 
the event and donated $2,000.41
    After Fong's election as state treasurer in the fall of 
1994, his campaign had a deficit of approximately 
$200,000.42 During the last quarter of 1994, Fong 
received a $100,000 contribution from the owner of the San 
Diego Chargers, Alex Spanos, accompanied by a request that Fong 
use the contribution to ``challenge'' the Chinese-American 
community to match it.43 Fong presented this 
``challenge'' directly to Sioeng, among many others, during an 
event in late 1994 or early 1995.44 Significantly, 
Fong has no recollection of Jessica Elnitiarta being present at 
the time that this challenge was presented to 
Sioeng.45 In response, Sioeng indicated a 
willingness to help, but did not commit to any specific dollar 
amount.46
    Fong saw Sioeng again during one of the numerous Chinese 
New Year events in the first quarter of 1995 and reminded him 
of his previously stated willingness to help. Sioeng again 
offered a non-specific promise of assistance.47 
Numerous follow-up phone calls from Fong and Steve Kinney, 
Fong's ``fundraising strategist,'' secured Sioeng's agreement 
to make a donation.48 Fong made arrangements with 
Sioeng to visit Sioeng's offices and pick up the 
check.49 Fong testified that Sioeng asked him during 
this meeting about the legal restrictions on campaign 
contributions.50 Fong informed Sioeng that, under 
California state law, the contribution had to be from a U.S. 
citizen, a green-card holder, or a U.S. company with assets 
generated in the United States.51 (Fong related that 
Sioeng or his daughter, Jessica Elnitiarta, had raised these 
same issues about restrictions on campaign contributions on 
previous occasions.) 52 Sioeng then went into 
another part of his office and returned with a check for 
$20,000 in an envelope.53 Sioeng promised Fong at 
that meeting that ``more help will come'' and, indeed, a 
separate check for $30,000 arrived about a week 
later.54 Contrary to Fong's account, however, recent 
press reports allege that Sioeng wrote both checks in front of 
Fong and simply postdated the second check so that he could 
replenish his account to cover the amount.55
    Both of these checks, totaling $50,000, were written from 
the account of ``San Wong Sioeng,'' 56 which is Ted 
Sioeng's Chinese name. Fong claims that he did not believe that 
these two contributions came from Ted Sioeng himself, but that 
they came from either one of his sons or son-in-
laws.57 Fong explained that in the context of 
earlier discussions about the rules for raising funds, Sioeng 
indicated that his daughters and sons owned independent 
businesses.58 When Fong was actually soliciting 
support from Sioeng, Sioeng remarked that his children ``all 
have companies here and we're all very successful.'' 
59 Fong also indicated that Sioeng was generally 
very supportive of his children getting involved in the 
political arena and making financial 
contributions.60 Based on these statements from 
Sioeng, Fong claimed it was ``always my understanding that the 
support I was going to be getting was from his family.'' 
61
    Fong's attempts to disavow knowledge that Ted Sioeng 
personally contributed $50,000 to him is unpersuasive. Fong 
personally solicited Ted Sioeng and challenged him--not his 
children, only one of whom he could even name--to match the 
$100,000 donation by Spanos. Pursuant to that challenge, Ted 
Sioeng--not his children--promised to assist Fong. Fong admits 
that Sioeng himself was the subject of follow-up contacts to 
secure the contribution.62 Fong went to Sioeng's 
offices and was personally handed a check by Sioeng along with 
a promise that ``more help will be coming.'' The check named 
only Sioeng as the account holder. In addition, the thank-you 
letter from Fong's campaign was sent to Ted 
Sioeng.63 Jessica Elnitiarta told the Committee in 
her interview that she had no knowledge of either the $20,000 
or $30,000 contribution at the time they were 
made.64 Indeed, the circumstances so clearly point 
to Ted Sioeng as the source of these contributions that if, as 
Fong claims to have believed, the checks were actually from the 
account of a family member, a reasonable person would question 
whether Sioeng was directing a family member to make 
contributions--a practice prohibited by law.65
    The $50,000 in contributions made in April 1995 were, in 
fact, drawn from the personal account of Ted Sioeng, a non-U.S. 
citizen who did not have permanent residence status and was, 
therefore, ineligible to contribute. Again, it is the 
Minority's view that Fong had every reason to suspect that this 
was a contribution from an individual not eligible to 
contribute to his campaign.

        the source of sioeng's april 1995 contributions to fong

    The public evidence examined by the Committee including 
Sioeng's banking records, presents evidence that these 
contributions may have been funneled through Sioeng by persons 
unknown. On April 28, a check was written from Sioeng's account 
for $30,000 payable to Matt Fong.66 That same day, a 
check for $30,000 from the Grand National Bank account of an 
individual named Glenville A. Stuart was deposited into 
Sioeng's account.67 A check of publicly available 
databases indicates that Stuart is the proprietor and sole 
employee of a small grocery store, Sunset Market and Liquor, in 
Long Beach, California.68 The Committee was unable 
to uncover additional information concerning Stuart. These 
circumstances raise concerns about the true source of at least 
$30,000 of the $50,000 donated to Fong by Sioeng.

           fong arranges for sioeng to meet speaker gingrich

    Approximately two months after the April 1995 donations, 
Fong met Sioeng at another community event.69 Fong 
was scheduled to travel to Washington in mid-July on state 
treasurer business and asked Sioeng if he would like to meet 
House Speaker Newt Gingrich.70 In response, Sioeng 
asked Fong: ``Who is Speaker Gingrich?'' 71 When 
Fong explained that he was the speaker of the Congress, Sioeng 
asked: ``What's the Congress?'' 72 Notwithstanding 
Sioeng's apparent lack of knowledge about U.S. politics, Fong 
reminded Sioeng of his previously stated desires to increase 
the political involvement of himself and his family and that 
the Republican Party was trying to reach out to the Asian-
American community.73
    According to Fong, Sioeng said that he was scheduled to be 
in New York at around the same time and asked if his son-in-
law, who would be traveling with him, could also meet Speaker 
Gingrich.74 Fong then asked Steve Kinney, his 
campaign pollster in 1994, to contact Gingrich's office to 
arrange a meeting.75 Kinney had long been Gingrich's 
top advance person for California and, because of these ties, 
he served as the primary liaison between Fong and the Speaker's 
office.76 Fong credits Kinney for having him serve 
on Newt Gingrich's National Strategies Group,77 a 
panel that advises Representative Gingrich on domestic 
policy.78
    As described by Fong, the resulting meeting in 
Representative Gingrich's office on July 12 was brief and 
inconsequential. Fong and Sioeng were given a tour of the 
office and Representative Gingrich spoke generally to Sioeng 
``about empowerment and about getting involved in the community 
and being Republicans.'' 79 The Speaker also posed 
for photographs with Sioeng.80

     the sioeng family's contribution to the national policy forum

    According to Fong's deposition testimony, shortly after the 
Gingrich meeting in July 1996, Steve Kinney asked Fong whether 
the Sioeng family would be interested in supporting any of the 
Speaker's activities.81 Fong advised Kinney to go 
ahead and ask.82 Some time later, Fong recalls that 
Sioeng or Jessica Elnitiarta, he cannot recall which, asked his 
advice about whether they should support the 
speaker.83 Fong responded, ``The speaker is a 
friend, and supporting the speaker on my behalf is a good 
idea.'' 84 During her interview with the Committee, 
Jessica Elnitiarta interpreted this conversation as an actual 
solicitation by Fong on behalf of the National Policy Forum 
(``NPF''), a Republican Party think tank. She acknowledged that 
the suggestion to give to NPF may have come from 
Kinney.85 Fong testified that he did not know until 
after 1995 that the Sioeng family contributed $50,000 to the 
NPF when he read about it in news accounts.86 
According to later news reports, however, Fong's wife received 
a 10 percent commission from NPF on the contribution from the 
Sioeng family, which Fong reported on his 1995 statement of 
economic interest.87 When questioned about NPF, 
Elnitiarta stated that she didn't care to what ``department'' 
the check went, indicating that she viewed it as a donation to 
the Republican Party.88
    Also in July 1996, Kinney was organizing a fundraising trip 
to California by Speaker Gingrich, including a non-fundraising 
``outreach event'' for Asian-Americans at the Beverly Hills 
Peninsula Hotel.89 At Kinney's request, Fong 
provided a suggested list of ``political Asian Republican 
leaders that should be invited from the community'' that 
included the Sioeng family.90 Kinney invited Jessica 
Elnitiarta ``and [her] family.'' 91 The event was 
attended by Ted Sioeng, Jessica Elnitiarta, and one of 
Jessica's sisters.92 On July 18, having secured an 
agreement from Jessica Elnitiarta to contribute to the NPF, 
Kinney stopped by the HollywoodMetropolitan Hotel (owned by the 
Sioeng family) to pick up the check, which is dated July 
18.93 Elnitiarta provided Kinney with a $50,000 check from 
the account of Panda Industries, an export-import 
business.94 Elnitiarta serves as the president of the 
company, but Ted Sioeng is the sole owner.95 The day after 
this $50,000 contribution to the NPF, at the ``non-fundraising'' event 
organized by Kinney, Sioeng sat next to Gingrich at the Beverly Hills 
event.96 Sioeng's meeting with Speaker Gingrich was 
described in a story on page one of the China Press, a Chinese language 
newspaper in Alhambra, California. The story included two photos of the 
luncheon, including one showing Sioeng seated next to the Speaker, and 
related Sioeng's comments at the meeting that ``he was very honored to 
have the opportunity to introduce his family members, as well as other 
business friends to Gingrich.'' 97 Sioeng, whom the China 
Press article identified as a ``consultant'' to the Chinese provinces 
of Jilin and Yunan, also reportedly invited Representative Gingrich to 
visit those two provinces.98
    An examination of the bank records underlying the $50,000 
contribution to the NPF raises troubling questions about the 
actual source of the funds. The day before Jessica Elnitiarta 
donated $50,000 to the NPF, the Panda Industries account had a 
balance of only $1,300. That same day, Ted Sioeng wrote a check 
for $50,000 from his personal account into the account of Panda 
Industries.99 These transfers raise the fair 
inference that Sioeng both directed and was the real source of 
the NPF donation.
    NPF President John Bolton testified at his deposition that 
Joseph Gaylord, a fundraiser for Speaker Gingrich who had 
accompanied him on the California trip, directed that $5,000 be 
subtracted from the $50,000 contribution and paid as a 
commission to another person whose name Bolton could not 
recall.100 Steve Kinney testified that he received a 
10 percent commission for the monies he raised for NPF 
101 and Joseph Gaylord also recalled that Kinney had 
called him during this time to specifically inquire whether he 
would receive a 10% commission on contributions he solicited 
for the NPF.102 Subsequent press reports, however, 
indicate that Fong's wife, Paula Fong, also received a 10 
percent commission on Elnitiarta's NPF 
contribution.103 Bolton testified that he also asked 
an NPF employee to question Gaylord about Panda Industries, and 
that Gaylord responded by describing it as a ``Hollywood 
entertainment company.'' 104 When asked about this 
testimony, Gaylord testified that he had no understanding about 
the nature of Panda Industries and that he had no recollection 
of being asked by anyone to supply such 
information.105 Kinney emphatically denied that 
Gaylord had ever questioned him about the nature of Panda 
Industries.106 These conflicting accounts raise 
serious questions about the adequacy of NPF's vetting 
procedures, at the least. Although Kinney testified that he had 
solicited Elnitiarta for additional contributions besides the 
one to NPF, his counsel instructed him not to discuss these 
additional solicitations.107

     The sioeng family's contribution to matt fong in december 1995

    During the remainder of 1995, Fong continued to solicit the 
Sioeng family whenever he encountered them at community events. 
Specifically, Fong recalls soliciting both Ted Sioeng and 
Jessica Elnitiarta at a reception in Pasadena, 
California.108 Shortly before a badminton tournament 
co-sponsored by the Sioeng family, Jessica Elnitiarta contacted 
Fong and requested a congratulatory letter from Speaker 
Gingrich.109 Fong contacted Kinney, who was able to 
secure the requested congratulatory letter from the speaker 
within a tight deadline.110 Fong attended the 
tournament, saw the Sioeng family there and again solicited 
them for additional contributions.111 Subsequently, 
Fong received a check for $50,000, dated December 14, 1995, 
from the account of Panda Estates Investment, Inc., a real 
estate development company owned by the Sioeng 
family.112 Fong denies any connection between the 
congratulatory letter and the subsequent donation from the 
Sioeng family,113 but Jessica Elnitiarta told 
Committee staff that she gave the $50,000 ``in appreciation'' 
for the letter.114
    Again, the bank records underlying this donation raise 
troubling questions. On the day that Elnitiarta wrote this 
$50,000 check to Matt Fong, there was only $14,000 in the Panda 
Estates Investments bank account.115 Four days later 
the December 14 check cleared, presumably producing an 
overdraft in the account.116 The following day, 
December 19, Elnitiarta's aunt, Yanti Ardi, made a telephone 
transfer of $50,000 from her personal account into the Panda 
Estate Investments account.117 For her part, Yanti 
Ardi, a non-citizen living in the Los Angeles area, would not 
have had sufficient funds to transfer the $50,000 to the Panda 
Estate Investments account but for a December 11 wire transfer 
from Pristine Investments Ltd of Hong Kong, a wholesale 
clothing company with uncertain ties to Sioeng's business 
empire.118 Between September 5, 1995 and January 6, 
1996, Yanti Ardi received approximately $2.6 million in wire 
transfers from Pristine Investments.119 Sioeng's 
attorneys refused to answer questions about Pristine or other 
companies in Asia that made large transfers to Sioeng-related 
accounts.120
    In April 1997, articles appeared in Newsweek and the Los 
Angeles Times that raised questions about the source of the 
Sioeng family contributions to Fong. In response to these 
articles, Fong's campaign organization wrote letters addressed 
to Sioeng and ``San Wong Sioeng'' insisting on verification 
within 24 hours ``of the fact that these contributions were 
made with your personal funds and not those of any other person 
or entity.'' 121 Upon receiving no reply to these 
letters within the prescribed time period, Fong returned a 
total of $100,000 in contributions from the Sioeng family. At 
no time since has Fong received any information from any member 
of the Sioeng family concerning the source of those 
contributions.122

             Jessica elnitiarta's contributions to the DNC

    In 1996, Jessica Elnitiarta contributed a total of $250,000 
to the Democratic National Committee and attended several DNC-
sponsored events. These contributions appear to have been 
arranged by John Huang, who first met Sioeng and Elnitiarta in 
1995 at a Chinese community event.123 The available 
information concerning these donations is sketchy and further 
investigation by other entities may be appropriate.

The Hay Adams fundraiser

    According to Elnitiarta, Huang telephoned her in January 
1996 regarding a Chinese New Year event, the Asia-Pacific 
American Leadership Council Dinner, being sponsored by the DNC 
in Washington, D.C., at the Hay Adams Hotel. Elnitiarta invited 
her father, Sioeng, on her own and is not aware of any 
conversations between Huang and Sioeng regarding this 
event.124 On February 10, 1996, Elnitiarta wrote a 
check for $100,000 from her personal account to the DNC in 
order to secure eight seats at the event, which were priced at 
$12,500 each.125 At that time, Elnitiarta's account 
had a balance of approximately $10,000. On February 22, 
$200,000 was transferred into Elnitiarta's account from Yanti 
Ardi's account.126 Ardi's account, in turn, had 
received a wire transfer of over $500,000 from the Hong Kong 
bank account of Pristine Investments Ltd. on February 12, 
1996.127 Prior to that transfer, Ardi's account held 
only approximately $3,000.128 Unlike the $30,000 
donation to Matt Fong and the $50,000 donation to the NPF, 
however, these transfers are not in the same amount of the 
contributions, do not occur as closely in time to the 
contribution, and Elnitiarta herself (who holds a power of 
attorney over Ardi's account) most probably effectuated the 
transfer from Ardi's account to her own. These transfers, 
therefore, are not as strongly suggestive of contributions in 
the name of another. Elnitiarta invited her father, her sister 
Sandra Elnitiarta, Sandra's husband, Didi Kurniawan; her 
brother, Yopi Gatot Elnitiarta; and two of Sioeng's business 
associates.129 Elnitiarta and her husband were also 
planning to attend, but did not due to their son's unexpected 
illness.130

Hsi Lai Buddhist Temple event

    Huang invited Elnitiarta to the Hsi Lai Buddhist Temple 
event held in Hacienda Heights, California, on April 29, 1996. 
(See Chapter 21.) Elnitiarta claims he invited her because she 
had missed the Hay Adams event due to her son's 
illness.131 Elnitiarta explained to Committee staff 
that one of her sisters, Laureen Elnitiarta, is a Buddhist and 
wanted to attend the event for that reason.132 
Elnitiarta attended the event with her sister, Laureen, Sioeng 
and his wife, and another family member, Sioeng Fei 
Man.133 Sioeng sat with Vice President Gore during 
the event.134 The Sioengs were not solicited for a 
contribution in connection with this event and did not make 
one.135

Sheraton Carlton Hotel event

    Elnitiarta was contacted again by Huang and invited to 
attend an event in May 1996 at the Sheraton Carlton Hotel in 
Washington, D.C.136 She, in turn, invited her father 
and five others to the event.137 In a fax to ``Uncle 
Huang,'' Elnitiarta informed John Huang that in addition to her 
father, six other Chinese executives would come to the dinner. 
One was Guo Zhong Jian, an officer of the China Construction 
Bank. One of four major banks run by Beijing, China 
Construction last September became the first Chinese bank since 
the laws were tightened after the BCCI scandal in 1991 to win a 
federal license to do business in the U.S.138
    Elnitiarta made no contributions at the event, but Huang 
told her that he would collect a contribution check from her 
the next time he was in Los Angeles.139 On July 12, 
Elnitiarta wrote a $100,000 check to the DNC from the account 
of her real estate company, Panda EstatesInvestment, 
Inc.140 This is the same account used by Elnitiarta for her 
December 1995 contribution of $50,000 to Matt Fong.141 At 
the time the check was cashed, the Panda Estates Investment account had 
a small negative balance.142 The monies used to cover this 
check came from Panda Estates domestic rental income and Elnitiarta's 
transfer of $60,000 from Ardi's account on July 26, 1996.143 
Ardi's account, in turn, could not have financed the $60,000 transfer 
without the benefit of a deposit of approximately $1.6 million from the 
Hong Kong account of R.T. Enterprises, Ltd.--another business with ties 
to Sioeng. In addition, Panda Estates Investment, Inc. appears to have 
generated sufficient domestic revenues to cover the political 
contributions drawn from that account. The Minority's examination of 
the bank records of Panda Estates Investment, Inc., shows that the 
company enjoyed a rental income of over $900,000 from approximately 
mid-1995 through 1996. Nevertheless, the Committee was unable to 
satisfactorily resolve the ultimate question of what role, if any, was 
played by Sioeng himself in directing the contribution.

Century City event and subsequent $50,000 contribution

    As with the previous fundraisers, Elnitiarta was contacted 
by Huang about attending a DNC dinner to be held in the Century 
City area of Los Angeles on July 22.144 Elnitiarta 
brought her father, and Sioeng brought a business partner from 
Hong Kong, Lam Kwok Man.145 Sioeng was seated at the 
head table next to President Clinton at the 
event.146 At Huang's urging, Elnitiarta also agreed 
to be responsible for filling an additional five to six 
tables.147 These additional invitees did not pay for 
their seats.148 According to Elnitiarta, Huang did 
not press her for a contribution at the time of the 
event.149 On July 29, Elnitiarta wrote a check to 
the DNC for $50,000 from the same Panda Estates Investment 
account that had funded her July 12 DNC 
contribution.150 At this time, the Panda Estates 
Investment account did not contain sufficient funds to cover 
the contribution.151 However, on August 1 and August 
6, Elnitiarta made transfers totaling $47,000 from a different 
account maintained by Panda Estate Investment, indicating that 
Panda Estates Investment had sufficient funds to cover the 
contribution.152 The FBI agent assigned to analyze 
the Sioeng bank records concluded that all of the transfers 
from Panda Estates Investment's other account was ``supported 
by normal account activity'' except for the $60,000 transfer 
from Yanti Ardi's account discussed above.153
    Huang's internal documents link this $50,000 donation from 
Panda Estates to a small fundraiser held on July 30, 1996, at 
the Jefferson Hotel in Washington, D.C. that featured President 
Clinton and was attended by the following individuals: James 
Riady; Taiwanese businessman Eugene T.C. Wu, chairman of the 
Shin Kong Group, a conglomerate that includes Taiwan's second-
largest life insurance company; James J.S. Lin, a Taiwan 
businessman and associate of Wu's; and Sen Jong (``Ken'') Hsui, 
the president of Prince Motors Co. in Taipei and a U.S. 
citizen.154 Each of these attendees also brought 
their wives and children.155 DNC officials projected 
that the dinner would raise $500,000, but of the attendees, 
only Hsui was legally permitted to make 
donations.156 According to Huang's records, Hsui 
contributed only $150,000 and the remaining amount was credited 
to individuals who had not attended the event, including 
Elnitiarta's $50,000 donation from the Panda Estates account 
and an August 2 donation of $131,000 from Laurie M. Jonsson, 
the president of a Seattle shipping company.157 When 
interviewed, Jonsson disavowed any knowledge of Huang or the 
Jefferson Hotel dinner and said she gave $100,000 to become a 
designated trustee of the DNC's Women's Leadership Forum and 
the other $31,000 for general purposes.158 
Elnitiarta also stated that she had no knowledge of the 
Jefferson Hotel event.159 It appears to the Minority 
that, for reasons unknown, Huang was crediting unrelated 
contributions from some donors to the Jefferson Hotel event.

                               Conclusion

    The Committee found clear evidence that Sioeng, a foreign 
national, contributed to Republican California State Treasurer 
Matt Fong, who returned the contributions two years later. The 
Committee also found evidence that suggests that Sioeng may 
have participated in directing political contributions made by 
his daughter Elnitiarta to both the National Policy Forum and 
the Democratic National Committee, although it was unable to 
reach any definitive conclusions on this issue. In addition, 
our examination of the bank records surrounding the 
contributions to both Fong and the NPF has raised serious 
questions about the ultimate source of the contributions made 
in those instances. The Minority believes that further 
investigation by law enforcement authorities into these issues 
is clearly warranted.
    Regardless of the source of the contributions, the 
contributions by the Sioeng family present a stark picture of 
how quickly substantial contributions can be translated into 
personal access to elected policy makers. The Committee found 
no evidence, however, that any member of the Sioeng family 
sought to exploit the access they were afforded to lobby on any 
particular issue or to receive any favor other than pro forma 
letters of support or congratulations.

                               footnotes

    1 Business Week, 8/11/97.
    2 Business Week, 8/11/97.
    3 Business Week, 8/11/97.
    4 Los Angeles Times, 5/18/97.
    5 Los Angeles Times, 5/18/97.
    6 Los Angeles Times, 5/18/97.
    7 Business Week, 8/11/97.
    8 INS records.
    9 Business Week, 8/11/97.
    10 Staff interview with Jessica Elnitiarta, 6/19/97.
    11 Los Angeles Times, 5/18/97.
    12 Los Angeles Times, 5/18/97.
    13 Los Angeles Times, 5/18/97.
    14 LA Weekly, 7/4/97.
    15 LA Weekly, 7/4/97.
    16 LA Weekly, 7/4/97.
    17 LA Weekly, 7/4/97 (quoting Anthony Chieng, a 
``prominent Chinese-American attorney.')
    18 LA Weekly, 7/4/97.
    19 Newsweek, 4/28/97.
    20 Newsweek, 4/28/97.
    21 Staff interview with Jessica Elnitiarta, 6/19/97.
    22 Letter from Thomas P. McLish, counsel for Elnitiarta, 
to Majority counsel-Special Investigation, 6/18/97
    23 Staff interview with Jessica Elnitiarta, 6/19/97; 
Letter from Thomas P. McLish, counsel for Elnitiarta, to Majority 
counsel-Special Investigation, 6/18/97.
    24 Letter from Thomas P. McLish, counsel for Elnitiarta, 
to Majority counsel-Special Investigation, 6/18/97.
    25 Los Angeles Times, 5/18/97.
    26 LA Weekly, 7/4/97; Newsweek, 4/28/97; Newsweek, 6/9/
97.
    27 Business Week, 8/11/97; Newsweek, 3/10/97.
    28 Newsweek, 4/28/97.
    29 Interview with David Ma, 8/24/97.
    30 Los Angeles Times, 5/18/97.
    31 Interview by FBI detailee with Nancy La, 5/25/97; 
letter from Thomas P. McLish, counsel for Elnitiarta, to Majority 
counsel-Special Investigation, 6/18/97.
    32 Newsweek, 4/28/97.
    33 Newsweek, 4/28/97.
    34 Newsweek, 4/28/97.
    35 Matt Fong deposition, 9/19/97, pp. 7-8.
    36 Matt Fong deposition, 9/19/97, p. 8.
    37 Matt Fong deposition, 9/19/97, pp. 8-9.
    38 Matt Fong deposition, 9/19/97, pp. 8-9.
    39 Matt Fong deposition, 9/19/97, p. 9.
    40 Matt Fong deposition, 9/19/97, p. 10.
    41 Matt Fong deposition, 9/19/97, pp. 14-15.
    42 Matt Fong deposition, 9/19/97, p. 25.
    43 Matt Fong deposition, 9/19/97, p. 29.
    44 Matt Fong deposition, 9/19/97, p. 29.
    45 Matt Fong deposition, 9/19/97, p. 36.
    46 Matt Fong deposition, 9/19/97, p. 30.
    47 Matt Fong deposition, 9/19/97, pp. 30-31.
    48 Matt Fong deposition, 9/19/97, p. 54.
    49 Matt Fong deposition, 9/19/97, p. 33.
    50 Matt Fong deposition, 9/19/97, pp. 34-35.
    51 Matt Fong deposition, 9/19/97, p. 34.
    52 Matt Fong deposition, 9/19/97, p. 53.
    53 Matt Fong deposition, 9/19/97, p. 36.
    54 Matt Fong deposition, 9/19/97, pp. 35-37.
    55 Los Angeles Times, 2/26/98.
    56 Letter from William R. Turner, Treasurer, Matt Fong 
for State Treasurer, to Mr. Ted Sioeng, Mr. San Wong Sioeng, requesting 
information on legality of contributions, 4/21/97 (copies of 
contribution checks dated 4/20/95 and 4/28/95 attached); Letter from 
William R. Turner, Treasurer, Matt Fong for State Treasurer, to Mr. Ted 
Sioeng, Panda Estates Investment, Inc., requesting information on 
legality of contributions, 4/21/97 (copy of contribution check dated 
12/14/95 attached).
    57 Matt Fong deposition, 9/19/97, p. 23.
    58 Matt Fong deposition, 9/19/97, pp. 38-39.
    59 Matt Fong deposition, 9/19/97, p. 39.
    60 Matt Fong deposition, 9/19/97, p. 39.
    61 Matt Fong deposition, 9/19/97, p. 39.
    62 Matt Fong deposition, 9/19/97, p. 33.
    63 Matt Fong deposition, 9/19/97, p. 23.
    64 Staff interview with Jessica Elnitiarta, 6/19/97.
    65 2 U.S.C. Sec. 441(e) (prohibiting a foreign national 
from participating directly or indirectly in a contribution decision).
    \66\ Letter from William R. Turner, Treasurer, Matt Fong for State 
Treasurer, to Mr. Ted Sioeng, Mr. San Wong Sioeng, requesting 
information on legality of contributions, 4/21/97 (copies of 
contribution checks dated 4/20/95 and 4/28/95 attached).
    \67\ Check from Glenville A. Stuart to Sioeng San Wong for $30,000, 
4/28/95, and Grand National Bank miscellaneous credit slip 
acknowledging deposit. [GNB 1280500063]
    \68\ Report from Dun's Market Identifiers on ``Sunset Market and 
Liquor.''
    \69\ Matt Fong deposition, 9/19/97, p. 44.
    \70\ Matt Fong deposition, 9/19/97, pp. 44-45.
    \71\ Matt Fong deposition, 9/19/97, p. 45.
    \72\ Matt Fong deposition, 9/19/97, p. 45.
    \73\ Matt Fong deposition, 9/19/97, p. 45.
    \74\ Matt Fong deposition, 9/19/97, p. 45.
    \75\ Matt Fong deposition, 9/19/97, p. 49.
    \76\ Matt Fong deposition, 9/19/97, p. 47.
    \77\ Matt Fong deposition, 9/19/97, p. 47.
    \78\ Los Angeles Times, 4/22/97.
    \79\ Matt Fong deposition, 9/19/97, p. 48.
    \80\ Matt Fong deposition, 9/19/97, p. 48.
    \81\ Matt Fong deposition, 9/19/97, p. 50.
    \82\ Matt Fong deposition, 9/19/97, p. 50.
    \83\ Matt Fong deposition, 9/19/97, p. 55.
    \84\ Matt Fong deposition, 9/19/97, p. 55.
    \85\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \86\ Matt Fong deposition, 9/19/97, pp. 49, 54-55.
    \87\ Los Angeles Times, 2/25/98.
    \88\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \89\ Matt Fong deposition, 9/19/97, p. 50; Steve Kinney deposition, 
9/23/97, p. 11.
    \90\ Matt Fong deposition, 9/19/97, p. 51.
    \91\ Steve Kinney deposition, 9/23/97, p. 19.
    \92\ Steve Kinney deposition, 9/23/97, p. 19.
    \93\ Los Angeles Times , 7/4/97.
    \94\ Staff interview with Jessica Elnitiarta, 6/19/97; letter from 
Thomas P. McLish, counsel for Elnitiarta, to Majority counsel-Special 
Investigation, 6/18/97.
    \95\ Staff interview with Jessica Elnitiarta, 6/19/97; letter from 
Thomas P. McLish, counsel for Elnitiarta, to Majority counsel-Special 
Investigation, 6/18/97.
    \96\ Memorandum from Steven E. Hendershot, FBI agent, to Senate 
Investigating Team re: ``China Press  newspaper article of 7/22/95,'' 
7/23/97.
    \97\ Memorandum from Steven E. Hendershot, FBI agent, to Senate 
Investigating Team re: ``China Press  newspaper article of 7/22/95,'' 
7/23/97.
    \98\ Memorandum from Steven E. Hendershot, FBI agent, to Senate 
Investigating Team re: ``China Press  newspaper article of 7/22/95,'' 
7/23/97.
    \99\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \100\ John Bolton deposition, 7/10/97, pp. 66-67.
    \101\ Stephen M. Kinney deposition, 9/23/97, pp. 22-23.
    \102\ Joseph Robert Gaylord deposition, 9/16/97, p. 35.
    \103\ Los Angeles Times, 2/25/98.
    \104\ John Bolton deposition, 7/10/97, pp. 67-68.
    \105\ Joseph Robert Gaylord deposition, 9/16/97, pp. 42-44.
    \106\ Stephen M. Kinney deposition, 9/23/97, p. 23.
    \107\ Stephen M. Kinney deposition, 9/23/97, p. 26.
    \108\ Matt Fong deposition, 9/19/97, pp. 60-61.
    \109\ Matt Fong deposition, 9/19/97, p. 62.
    \110\ Matt Fong deposition, 9/19/97, pp. 62-63.
    \111\ Matt Fong deposition, 9/19/97, pp. 61-62.
    \112\ Letter from William R. Turner, Treasurer, Matt Fong for State 
Treasurer, to Mr. Ted Sioeng, Mr. San Wong Sioeng, requesting 
information on legality of contributions, 4/21/97 (copies of 
contribution checks dated 4/20/95 and 4/28/95 attached); Letter from 
William R. Turner, Treasurer, Matt Fong for State Treasurer, to Mr. Ted 
Sioeng, Panda Estates Investment, Inc., requesting information on 
legality of contributions, 4/21/97 (copy of contribution check dated 
12/14/95 attached).
    \113\ Matt Fong deposition, 9/19/97, p. 63.
    \114\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \115\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \116\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \117\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \118\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \119\ Wire of $1 million to Yanti Ardi GNB account no. 240417614 
from Pristine Investments Ltd., 9/5/95 [GNB 002970-2972]; Wire of 
$928,432.17 to Yanti Ardi's GNB acct no. 240417614 from Pristine 
Investments Ltd. [GNB 003000]; Wire of $150,000 to Yanti Ardi's GNB 
acct no. 240979814, 12/11/95 [GNB 002888 & 002890]; Wire of $595,283.35 
to Yanti Ardi's GNB acct no. 240417614, 1/3/96 [GNB 003030].
    \120\ In addition to the monies received from the Sioeng family, 
published reports indicate that Fong received at least $24,000 from 
sources suspected of channeling contributions to the DNC. Los Angeles 
Times, 4/22/97. In 1995, for example, records show that Fong received 
$4,000 from two officers of the Lippo Group that were arranged by John 
Huang. Los Angeles Times, 4/22/97. Fong acknowledges asking Huang for 
help during his campaigns for treasurer and for controller and while he 
served on the Board of Equalization, but denies that he asked Huang for 
any assistance since the 1994 election cycle.  Matt Fong deposition, 9/
19/97, p. 68.
    \121\ Letter from William R. Turner, Treasurer, Matt Fong for State 
Treasurer, to Mr. Ted Sioeng, Mr. San Wong Sioeng, requesting 
information on legality of contributions, 4/21/97 (copies of 
contribution checks dated 4/20/95 and 4/28/95 attached); Letter from 
William R. Turner, Treasurer, Matt Fong for State Treasurer, to Mr. Ted 
Sioeng, Panda Estates Investment, Inc., requesting information on 
legality of contributions, 4/21/97 (copy of contribution check dated 
12/14/95 attached).
    \122\ Matt Fong deposition, 9/19/97, pp. 66-67.
    \123\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \124\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \125\ Staff interview with Jessica Elnitiarta, 6/19/97; Memorandum 
from Steven E. Hendershot, FBI agent, to Minority Counsel, re: 
``Jessica Elnitiarta Record Review,'' 8/22/97.
    \126\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \127\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \128\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \129\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \130\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \131\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \132\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \133\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \134\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \135\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \136\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \137\ Staff interview with Jessica Elnitiarta, 6/19/97; Los Angeles 
Times, 7/4/97.
    \138\ Newsweek, 3/10/97.
    \139\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \140\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \141\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \142\  Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \143\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \144\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \145\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \146\ Los Angeles Times, 7/4/97.
    \147\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \148\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \149\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \150\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \151\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \152\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \153\ Memorandum from Steven E. Hendershot, FBI agent, to Minority 
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
    \154\ POTUS Dinner July 30 Attendees [DNC 000597]; Los Angeles 
Times, 2/7/97.
    \155\ POTUS Dinner July 30 Attendees [DNC 000597]; Los Angeles 
Times, 2/7/97.
    \156\ Los Angeles Times, 2/7/97.
    \157\ Los Angeles Times, 2/7/97.
    \158\ Los Angeles Times, 2/7/97.
    \159\ Staff interview with Jessica Elnitiarta, 6/19/97.





PART 1  FOREIGN INFLUENCE

Chapter 8: Jay Kim

    In July 1997, Representative Jay Kim (R-Ca.) and his wife, 
June Kim, pled guilty to numerous violations of federal 
campaign finance laws arising out of his 1992 and 1994 
campaigns. The violations were part of a scheme which funneled 
over $230,000 in illegal corporate funds, some of which were 
directed by foreign nationals, into Representative Kim's 
campaigns--the largest amount of criminal campaign violations 
ever committed by a member of Congress.1 Five 
corporations pled guilty to making the illegal contributions, 
and Representative Kim's campaign treasurer, Seokuk Ma, was 
convicted of soliciting and accepting illegal contributions. 
Some of these violations occurred well after the Kims became 
aware that they were targets of a federal investigation. 
Federal prosecutors have reportedly argued that Representative 
Kim should receive jail time for conduct that was 
``substantial, prolonged, deceptive and serious.'' 2
---------------------------------------------------------------------------
     Footnotes at end of chapter.
---------------------------------------------------------------------------
    Based on the evidence before the Committee, we make the 
following findings regarding this matter:

                                FINDINGS

    (1) The Kims appear to have continued some of the same 
troubling practices during the 1996 election cycle that laid 
the foundation for the criminal misconduct in the prior two 
election cycles, including using a campaign treasurer with no 
knowledge of federal election law and instructing the treasurer 
to sign blank checks and blank Federal Election Commission 
forms.
    (2) The evidence before the Committee suggests that June 
Kim's recently-disclosed book deal with a South Korean 
publishing company may be an attempt to inappropriately channel 
foreign money to the Kims.

                         THE KOREA TRADERS CLUB

    In July 1992, the Korean-American community of Los Angeles 
was reeling from the effects of the riots that had devastated 
many neighborhoods in the city earlier that year. In many 
instances, angry mobs of looters had targeted Korean-owned 
businesses and many of the victims felt that they had not 
received adequate protection or attention from the city. 
Against this backdrop, an association of businesspeople called 
the Korea Traders Club of Los Angeles met on July 16, 1992, to 
discuss the recently-announced candidacy of Jay Kim, a 
prominent Southern California businessman and member of the 
Korean-American community.3 Kim attended the meeting 
and was the featured speaker.4 Although many of the 
attendees supported his candidacy, the foreign nationals in the 
group could not legally direct contributions to his campaign 
and corporate funds could not be used under any circumstances 
to make direct contributions. Faced with these obstacles, the 
members of the club devised a scheme to make illegal campaign 
contributions ``in a manner that would prevent them from being 
detected by the U.S. Government.'' 5 Following the 
meeting, club Chairman Byung Joon Lee, who had presided at the 
meeting, sent a letter to members of the club summarizing and 
confirming the plan devised at the meeting.6 The 
plan provided for the member companies to make their 
contributions to the Kim campaign under the names of individual 
employees who were United States citizens or permanent 
residents.7 These employee ``conduits'' would then 
be reimbursed for their contributions.
    Five U.S. subsidiaries of corporations headquartered in 
Seoul, South Korea, eventually pled guilty to making 
contributions pursuant to this scheme and paid fines totaling 
$1.6 million. 8 In early September 1992, for 
example, three top managers of the Daewoo Corporation, 
including the vice-president/general manager, received a total 
of $5,000 from the Daewoo Corporation and immediately made 
campaign contributions in the same amount to the Kim campaign 
committee. 9 Collectively, these five corporations 
and their foreign national employees made over $27,000 in 
illegal campaign contributions to Representative Kim's 1992 
election campaign.

           KIM'S CONTRIBUTIONS FROM HIS OWN BUSINESS IN 1992

    In addition to the $27,000 in illegal corporate/foreign 
national contributions, Representative Kim also funneled at 
least $83,000 worth of goods and services from his company, Jay 
Kim Associates, into his campaign from March 1992 through July 
1993.10 According to press reports, these illegal 
contributions included company payments for numerous mailing, 
printing, telephone, photocopying, entertainment, and travel 
costs of the campaign.11 In addition, the campaign 
reportedly received free office space in the company's 
headquarters, and benefitted from the services of several 
company employees who worked half-time for the campaign while 
being paid entirely from company funds.12 Questions 
were also raised about Representative Kim's continuing receipt 
of a full-time salary from the company even after he was 
elected.13
    When first confronted with these specific allegations, 
Representative Kim blamed any improper campaign expenditures on 
the company's financial chief, Fred Schultz, who also served 
briefly as campaign treasurer.14 ``If I've done 
anything wrong, I believe it's his fault,'' Representative Kim 
said. ``It's his job to make sure I don't make a mistake.'' 
15 Four years after this statement, as discussed in 
more detail later in this chapter, Representative Kim has 
failed to ensure that his campaign is served by qualified 
campaign treasurers. This lapse invites serious skepticism 
about whether his future campaign finances will be conducted in 
accordance with the law.

                THE KIMS' ACCEPTANCE OF CORPORATE FUNDS

    Both Representative Kim and his wife, June Kim, have 
acknowledged that they knowingly accepted illegal corporate 
contributions during the 1992 campaign and concealedthe nature 
of those contributions in the election reports they filed with the 
Federal Election Commission (``FEC').16 Misreporting was 
sometimes accomplished simply by omitting a donor's corporate 
designation, such as. ``inc.'' from the names of contributors reported 
to the FEC.17 In addition, the Kims pled guilty to knowingly 
accepting illegal contributions from Korean Air Travel ($1,000), Daewoo 
Electronics ($5,000), Rocket Electric Company, Inc. ($1,000), Pusan 
Pipe America, Inc. ($3,000), and Samsung America, Inc. 
($10,000).18
    June Kim also accepted a $12,000 check that she knew to be 
from a corporate account. Although the writer of the check, 
David Chang of Nikko Enterprises, had intended to donate $5,000 
to President Bush, $5,000 to Sen. Alphonse D'Amato (R-NY), and 
only $2,000 to Representative Kim, June Kim filled in her own 
name as the payee and deposited the entire amount into her 
personal account.19 Representative Kim began listing 
the money from Chang as a ``personal loan'' on his financial 
disclosure reports in 1994 after FBI agents visited Chang's 
office.20 However, when David Chang contacted 
Representative Kim to determine why he had not received a 
thank-you letter for his contribution, Representative Kim 
denied receiving any contribution from Chang.21 
After Representative Kim learned that FBI agents had questioned 
Chang about the contribution, he encouraged Chang to describe 
it as a loan.22 The ``personal loan'' from Chang 
does not appear on Representative Kim's latest financial 
disclosure statement.23 Representative Kim has 
admitted knowing that this was an illegal corporate 
contribution. 24 The Kims'' admissions as to the 
illegal nature of the corporate contributions made by Pusan, 
Rocket Electric, and Nikko brought to $43,000 the total amount 
of illegal corporate contributions made during the 1992 
campaign.

               ACCEPTANCE OF FUNDS FROM FOREIGN NATIONALS

    Representative Kim also admitted accepting a $50,000 loan 
from a Taiwanese national named Song Nien Yeh in May 1992, and 
depositing the loan proceeds into his personal bank account. 
Four days later, Kim wrote a $50,000 personal check from that 
same account to his campaign committee.25 The next 
month, following the same pattern, he arranged for a $30,000 
loan from another Taiwanese national. Kim's wife deposited 
these funds into their personal joint checking 
account.26 Four days later, June Kim wrote a 
personal check from that same account for $25,000 to Kim's 
campaign committee.27
    June Kim also personally laundered two illegal 
contributions, each in the amount of approximately $9,000 (in 
excess of contribution limits) from Jaycee Kim, a businessman 
and father-in-law of Kim's son.28 From September 15, 
1992 and continuing to on or about January 24, 1997, at least 
one (and sometimes all) of these illegal loans, totaling 
$84,000, were misreported by the campaign committee as personal 
loans from Jay Kim to the campaign.29
    To put these amounts of illegal contributions into 
perspective, Representative Kim received $346,218 in 
contributions for his initial 1992 primary race, which he won 
by 898 votes, or two percent of the total votes 
cast.30 Of that total, $146,010 of the contributions 
were illegal.31 These illegal contributions 
constituted the approximate difference between Representative 
Kim's fundraising and that of his two closest 
rivals.32 In recommending that Representative Kim 
serve time in prison for these violations, the prosecutor 
argued that ``[t]he election results might have been different 
if defendant Jay Kim had not had the illegal and unfair 
advantage of these campaign contributions.'' 33

          ALLEGED VIOLATIONS DURING THE FEDERAL INVESTIGATION

    Remarkably, the illegal activities of the Kims continued 
even after they knew they were under investigation for possible 
election law violations, and after the FBI had seized records 
from Jay Kim Engineering as part of the inquiry. For example, 
in October 1993, June Kim has admitted that she knowingly 
accepted a total of $14,000 from Amko Advertising Inc. had 
first been deposited with Samas Telecom, the business owned by 
Representative Kim's campaign treasurer, and then used by June 
Kim to reimburse various individuals for making seemingly legal 
campaign contributions.34 In January 1994, June Kim 
knowingly accepted illegal corporate contributions totaling 
$5,450 from the following seven corporations: Haitai America, 
Inc. ($1,000), Bacco, Inc. ($500), Korean Federation of Los 
Angeles, Inc. ($500), Sun Princess Cosmetics, Inc. ($2,500), 
Dong-A America Corp. ($150), Universal Market Supply Corp. 
($600), and Tiger Contract Services, Inc. ($200).35

           THE CONVICTION OF KIM'S FORMER CAMPAIGN TREASURER

    In his trial in early 1997, Seokuk Ma, Representative Kim's 
campaign treasurer during 1994 and 1995, candidly admitted that 
he had violated several election laws, but claimed that he did 
not do so knowingly because he had received no training or 
instruction on how to discharge the responsibilities of a 
campaign treasurer. Although the culpability of Representative 
Kim in appointing Ma to the position of campaign treasurer was 
not addressed during Ma's trial, the record of that proceeding 
produced ample evidence that Representative Kim adopted an 
attitude of reckless disregard for the legal problems that 
political fundraising activities inevitably present.
    Ma's trial testimony paints a picture of a moderately 
successful businessman who emigrated to this country in 1971 
and was very active in the affairs of the Korean-American 
community in Southern California.36 Ma became 
involved in numerous charitable fundraising activities, but had 
never participated in political fundraising until a friend 
asked for his assistance in staging an October fundraiser for 
Representative Kim's 1992 campaign.37 Ma met 
Representative Kim for the first time at that fundraiser, which 
surpassed expectations, and was later asked to serve as a 
volunteer fundraiser.38 Ma testified that he was 
unwilling to say no to such a prominent member of the Korean-
American community, acceded to Representative Kim's request and 
assisted in organizing two or three additional fundraising 
events over the next year.39 During this entire 
time, Ma had no familiarity with U.S. election laws and turned 
all proceeds from such fundraisers over to June Kim, whom Ma 
understood to be ``the person in charge of financial matters 
for the Kim campaign.'' 40
    In April 1994, as Representative Kim was preparing to make 
his first run for reelection, his campaign office presented Ma 
with an FEC document designating him as campaign treasurer and 
asked him to sign it. As Ma describes it, this was not a 
momentous occasion for him: ``[T]hey bring this one sheet of 
paper with a blank. They want me to sign, so I sign it.'' 
41 Ma received no special training or instruction of 
any kind with respect to FEC regulations or federal election 
law.42 Correspondence from the FEC addressed to the 
campaign treasurer, including guides explaining federal 
campaign laws, was never forwarded to Ma.43 During 
this time, June Kim presented at least two totally blank FEC 
disclosure forms to Ma for his signature. These FEC disclosure 
forms were filled in by campaign staff and later filed as the 
April 15, 1994, and December 2, 1994, reports from the Kim 
campaign.44 When asked why he had signed these forms 
in blank when his signature constituted a verification that the 
contents of the document were accurate, Ma explained: ``I 
respecting congressman very much. He's a very successful man. 
And also Mrs. Kim is Congressman Kim's wife. They asking me do 
something like that, I cannot refuse because I trusted them. 
Our culture is very different to explain, but . . . if I say 
no, it's kind of insult to them . . .'' 45 Ma also 
explained that, although he technically had authority over 
Representative Kim's campaign account, June Kim invariably only 
presented him with blank checks to sign.46 As Ma 
testified, ``always a blank check, 20 stack of blank check they 
gave to me, want me to sign it, I sign it.'' 47
    Ma also testified that he had used $14,000 from his own 
business to reimburse individuals whom he had asked to make 
contributions to Representative Kim.48 Based partly 
on Ma's testimony, June Kim pled guilty to knowingly accepting 
these same illegal contributions, as well as illegal 
contributions from other sources.49 Although both 
individuals sought to evade U.S. election law, the outcomes 
were not the same. As Ma noted in his deposition, ``I tell the 
truth, that's what happened. So I got that count also. My case 
that's the felony; her case that's the misdemeanor.'' 
50

         POSSIBLE ELECTION LAW VIOLATIONS DURING THE 1996 CYCLE

    Ma testified during his trial that he violated election 
laws as recently as 1996 by reimbursing his secretary and her 
husband for contributions to the Kim campaign.51 
When asked about these revelations of recent election law 
violations, Ma explained that the pressure for money continued 
even after he was replaced as the campaign treasurer in 1995. 
``I heard a lot of times every time campaign fund is not 
enough, campaign fund is not enough, all the time I hear from 
both Jay Kim and June Kim. I feel like--feel guilty, I trying 
to help them. So I had $1,000 donation 1996 election, so my 
limit, my limit is $1,000, so I trying to help the last time, 
so I used my secretary name and her husband.'' 52 
This account of the unrelenting pressure being placed on Ma to 
come up with additional contributions is especially damning 
when one considers that June Kim knowingly accepted at least 
$14,000 in illegal contributions from Ma in 1994.
    June Kim had removed Ma as campaign treasurer when she 
learned that he was being investigated by the FBI with respect 
to election law violations.53 Then, in 1996, with a 
federal investigation ongoing, both she and her husband 
continued to pressure this sameindividual to arrange additional 
contributions. Ma conceded that June Kim had personally received the 
checks in question and that she knew Ma's secretary, but he claimed 
that June Kim would not know that they would be unlikely to be able to 
afford such contributions.54 Nevertheless, his testimony in 
this regard is perhaps even more revealing than any attribution of 
direct knowledge. Ma testified that ``[O]h, she knows my secretary, but 
like she has ability contributing that $500 or not, June Kim don't 
know. Actually, she don't care.'' 55 Ultimately, the jury 
rejected Ma's defense and required him to accept responsibility for his 
actions in violating federal election laws. Although, as detailed 
above, the Kims pled guilty to certain misdemeanor violations, it 
appears to the Minority that they have yet to accept responsibility for 
the role they played in fostering an atmosphere in which so many 
violations could occur.

         kim's commitment to compliance WITH U.S. ELECTION LAWS

    According to one press report, Representative Kim once 
characterized U.S. election laws as ``stupid'' and compared 
violations to ``jaywalking.'' 56 Later, in a brief, 
written statement released to the press upon the announcement 
of his guilty plea last August, Representative Kim remarked 
that ``[w]ith many lessons learned, it is time to move 
forward.'' 57 Based on the depositions of his 
current campaign staff conducted by the Committee, it appears 
that few lessons have, in fact, been learned. Most notably, the 
Committee deposed his current campaign treasurer, Moon Jae Lee. 
Lee is a grocery store operator and a friend of Seokuk Ma who 
has served as Representative Kim's treasurer since 
approximately February 1995.58 When June Kim 
indicated to Ma that she wished to replace him as campaign 
treasurer because of the FBI investigation, Ma testified that 
she asked him, ``You have any friends, anybody, maybe can sign, 
just like [you]?'' 59
    June Kim's search for someone who would ``sign just like'' 
Ma appears to have been successful. Moon, who agreed to assume 
the non-paying title as a favor to both Ma and 
Kim,60 candidly related that his only duties as 
Representative Kim's campaign treasurer are to sign batches of 
blank checks from the campaign account presented to him by 
either Mrs. Kim or the campaign's sole staffer at the present 
time, assistant treasurer Inyoung Brazil.61 Moon 
does not receive or review the bank statements for the campaign 
account and has only visited the campaign office twice during 
his tenure as campaign treasurer.62 All of the 
campaign's financial records and finance reports are the 
responsibility of Brazil, a campaign staffer who works only 
part-time during non-election years.63 Neither Lee 
nor Brazil could offer any explanation of why the 
responsibilities of the campaign treasurer were so narrowly 
defined.64 Lee does not sign FEC disclosure reports 
for the campaign,65 but Ma testified that Lee had 
told him that June Kim had asked Lee to sign a blank FEC 
disclosure report.66 According to Ma, Lee refused 
this request.67 Lee, for his part, denied that June 
Kim had ever made this request of him.68
    Minimal as they are, Lee testified that he has grown tired 
of his duties as campaign treasurer (he appeared before grand 
juries both in 1995 and early 1997) and that he has indicated 
to both June Kim and Representative Kim since early 1997 that 
he would like to resign from the position.69 
According to Lee, his meeting with Representative Kim in the 
spring of 1997 expressed his desire to resign was the first and 
only time he had met Representative Kim during the more than 
two years as his campaign treasurer.70 A replacement 
could not be found and Lee was asked to continue as treasurer 
while the search continues.71 The Kims' insistence 
on giving campaign treasurers the authority to sign campaign 
checks without providing them with any real responsibility to 
ensure that such authority is properly exercised is extremely 
disturbing given the long history of election law violations 
and the imminence of the 1998 elections.

                          the kims' book deal

    Although questions of inappropriate remuneration from book 
deals generally raise questions of ethical violations rather 
than election law violations, circumstances surrounding the 
Kims' consecutive book deals with South Korean publishing 
houses raise troubling questions about whether foreign business 
or governmental interests are seeking to funnel money to 
support Representative Kim personally. These concerns are 
heightened by the testimony of Jane Chong, a former Kim 
campaign treasurer, that Representative Kim had planned a trip 
to Korea in 1993 during which he intended to raise substantial 
amounts of money.72 Chong testified that the trip 
was canceled only after a Los Angeles Times series reporting on 
Representative Kim's 1992 election law violations was published 
in July 1993.73
    The year after the cancellation of the South Korean 
fundraising trip, Representative Kim secured a lucrative 
contract for his book I'm Conservative.74 The 
Congressman's book was written in Korean and published by a 
small, Seoul-based publishing company.75 In August 
1995, Representative Kim filed a financial disclosure form that 
revealed that he had been required to refund $132,298 in book 
``proceeds'' pursuant to a May 15 Ethics Committee 
decision.76 Although the House ethics decision in 
question is not public, the House ethics manual specifies that 
for income to be valid ``a book must be published by an 
established publisher pursuant to a usual and customary royalty 
agreement.'' 77 According to a Korean specialist at 
the Library of Congress, the amount of ``proceeds'' reported by 
Representative Kim would suggest that his book was extremely 
successful in South Korea, which has a relatively small book 
market by American standards.78
    Later in 1995, June Kim's own memoirs, There Is An 
Opportunity, were published in Korea by Hantutt Publishing Co., 
another small, Seoul-based company that is listed in a 
publishing directory as specializing in finance and technical 
books.79 Representative Kim's financial disclosures 
reveal that his wife has earned between $125,000 and $1.05 
million from this book deal. Seokuk Ma, however, stated in his 
deposition that he had heard only negative reactions to June 
Kim's book from inside Korea.80 Since the ethics 
restrictions are less onerous with respect to books published 
by the spouse of a member, these circumstances raise troubling 
questions about whether this second, lucrative book, published 
by a relatively unknown Korean company, without apparent 
experience in marketing political memoirs is actually a second 
attempt to channel funds inappropriately to the Kims. Such 
actions may represent a criminal attempt to circumvent U.S. 
laws which prohibit foreign political contributions. Given the 
potential seriousness of the alleged wrongdoing, investigation 
of these issues by the House Ethics Committee, the Department 
of Justice and the Federal Elections Commission is also 
merited.

                               conclusion

    The Minority's investigation of Representative Kim was 
conducted by Minority staff and uncovered evidence of foreign 
contributions and systemic inadequacies in complying with 
federal election laws--both of which are issues that were 
highly relevant to the Committee's investigation. It is 
revealing that the Committee confined its investigation of 
foreign money to allegations concerning the Democratic 
administration.

                               footnotes

    \1\ Washington Post, 2/7/98.
    \2\ Washington Post, 2/7/98.
    \3\ Plea and Sentencing Agreement, p. 5, United States v. Daewoo 
International (America) Corporation, No. CR 96-340, 3/26/96.
    \4\ Plea and Sentencing Agreement, p. 5, United States v. Daewoo 
International (America) Corporation, No. CR 96-340, 3/26/96.
    \5\ Plea and Sentencing Agreement, p. 5, United States v. Daewoo 
International (America) Corporation, No. CR 96-340, 3/26/96.
    \6\ Plea and Sentencing Agreement, p. 5, United States v. Daewoo 
International (America) Corporation, No. CR 96-340, 3/26/96.
    \7\ Plea and Sentencing Agreement, p. 5, United States v. Daewoo 
International (America) Corporation, No. CR 96-340, 3/26/96.
    \8\ Associated Press, 8/1/97.
    \9\ United States v. Daewoo International (America) Corporation, 
No. CR 96-340 (C.D. Ca.), Plea and Sentencing Agreement, p. 6, 4/12/96.
    \10\ United States v. Jay C. Kim, et al., Plea Agreement, p. 8, 7/
31/97.
    \11\ Los Angeles Times, 7/14/93.
    \12\ Los Angeles Times, 7/14/93.
    \13\ Los Angeles Times, 7/14/93.
    \14\ Los Angeles Times, 7/14/93.
    \15\ Los Angeles Times, 7/14/93.
    \16\ United States v. Jay C. Kim, et al., Plea Agreement, p. 9, 7/
31/97.
    \17\ United States v. Jay C. Kim, et al., Plea Agreement, p. 9, 7/
31/97.
    \18\ United States v. Jay C. Kim, et al., Plea Agreement, p. 11, 7/
31/97.
    \19\ United States v. Jay C. Kim, et al., Plea Agreement, p. 9, 7/
31/97; Los Angeles Times, 8/19/97.
    \20\ Los Angeles Times, 8/19/97.
    \21\ Los Angeles Times, 8/19/97.
    \22\ Washington Post, 2/7/98.
    \23\ Los Angeles Time, 8/19/97.
    \24\ United States v. Jay C. Kim, et al., Plea Agreement, p. 9, 7/
31/97.
    \25\ United States v. Jay C. Kim, et al., Plea Agreement, p. 10, 7/
31/97.
    \26\ United States v. Jay C. Kim, et al., Plea Agreement, p. 10, 7/
31/97.
    \27\ United States v. Jay C. Kim, et al., Plea Agreement, p. 10, 7/
31/97.
    \28\ United States v. Jay C. Kim, et al., Plea Agreement, p. 10, 7/
31/97.
    \29\ United States v. Jay C. Kim, et al., Plea Agreement, p. 10, 7/
31/97.
    \30\ Washington Post, 2/7/98.
    \31\ Washington Post, 2/7/98.
    \32\ Washington Post, 2/7/98.
    \33\ Washington Post, 2/7/98.
    \34\ United States v. Jay C. Kim, et al., Plea Agreement, p. 11, 7/
31/97.
    \35\ United States v. Jay C. Kim, et al., Plea Agreement, p. 11, 7/
31/97.
    \36\ Trial transcript (Direct of Seokuk Ma), pp. 8-11, United 
States v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \37\ Trial transcript (Direct of Seokuk Ma), pp. 8-11, United 
States v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \38\ Trial transcript (Direct of Seokuk Ma), pp. 12-16, United 
States v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \39\ Trial transcript (Direct of Seokuk Ma), pp. 17-20, United 
States v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \40\ Trial transcript (Direct of Seokuk Ma), pp. 23-24, United 
States v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \41\ Trial transcript (Direct of Seokuk Ma), pp. 57-58, United 
States v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \42\ Trial transcript (Direct of Seokuk Ma), pp. 58, United States 
v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \43\ Trial transcript (Direct of Seokuk Ma), p. 59, United States 
v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97; Los Angeles Times, 4/10/
97.
    \44\ Trial transcript (Direct of Seokuk Ma), p. 58, United States 
v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97; Los Angeles Times, 4/10/
97.
    \45\ Trial transcript (Direct of Seokuk Ma), pp. 62-63, United 
States v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \46\ Seokuk Ma deposition, 9/19/97, p. 10: ``June Kim called me, 
sign the check, blank check, campaign check, without any contents. I 
just sign it. She bring 20 sometimes or 40. I sign it.''
    \47\ Trial transcript (Direct of Seokuk Ma), p. 58, United States 
v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \48\ Trial Transcript (Cross/Redirect of Seokuk Ma), p. 13, United 
States v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \49\ United States v. Jay C. Kim, et al., Plea Agreement, p. 9, 7/
31/97; Seokuk Ma deposition, 9/19/97, p. 43: ``That's why I tell the 
truth; that's why she got that guilty.''
    \50\ Seokuk Ma deposition, 9/19/97, p. 43.
    \51\ Trial transcript (Cross/Redirect of Seokuk Ma), p. 14, United 
States v. Seokuk Ma, No. CR 96-1141(B) -R, 4/11/97.
    \52\ Seokuk Ma deposition, 9/19/97, p. 25-26.
    \53\ Seokuk Ma deposition, 9/19/97, p. 13: ``[T]he reason for June 
Kim change me, title as treasurer, because at that time I investigated 
by the FBI. He asking me questions. So I talk to June Kim, `Oh, yes, I 
talk with the FBI.' and then since that time, she--in her mind, she's 
going to change me.''
    \54\ Seokuk Ma deposition, 9/19/97, p. 30.
    \55\ Seokuk Ma deposition, 9/19/97, p. 30.
    \56\ Los Angeles Times, 2/7/98.
    \57\ Los Angeles Times, 8/1/97.
    \58\ Moon Lee deposition, 10/1/97, pp. 7-9.
    \59\ Seokuk Ma deposition, 9/19/97, p. 13.
    \60\ Moon Lee deposition, 10/1/97, p. 29.
    \61\ Moon Lee deposition, 10/1/97, pp. 11-12.
    \62\ Moon Lee deposition, 10/1/97, pp. 12-14 & 30.
    \63\ Inyoung Brazil deposition, 10/1/97, pp. 8-15.
    \64\ Inyoung Brazil deposition, 10/1/97, pp. 19-20.
    \65\ Inyoung Brazil deposition, 10/1/97, p. 17.
    \66\ Seokuk Ma deposition, 9/19/97, p. 19.
    \67\ Seokuk Ma deposition, 9/19/97, p. 19.
    \68\ Moon Lee deposition, 10/1/97, pp. 14-16.
    \69\ Moon Lee deposition, 10/1/97, pp. 23-25.
    \70\ Moon Lee deposition, 10/1/97, pp. 23-26.
    \71\ Moon Lee deposition, 10/1/97, p. 25.
    \72\ City News Service of Los Angeles, 4/10/97.
    \73\ City News Service of Los Angeles, 4/10/97.
    \74\ The Hill, 8/6/97.
    \75\ The Hill, 8/6/97.
    \76\ The Hill, 8/6/97.
    \77\ The Hill, 8/6/97.
    \78\ The Hill, 8/6/97.
    \79\ The Hill, 8/6/97.
    \80\ Seokuk Ma deposition, 9/19/97, p. 32.





PART 2  INDEPENDENT GROUPS

Chapter 9: Overview and Legal Analysis

                                FINDINGS

    (1) Independent groups, including tax-exempt organizations, 
corporations and unions, spent large sums of money to influence 
the public's perception of federal candidates and campaigns and 
the outcome of certain elections in 1996.
    (2) During the 1996 election cycle, tax-exempt 
organizations spent tens of millions of dollars on behalf of 
Republican and Democratic candidates under the guise of issue 
advocacy, in violation of the spirit and possibly the letter of 
the tax code and election laws. Despite their election-related 
activity, none of these organizations registered with or 
disclosed their activities to the FEC. Moreover, because of 
restrictions in the tax code with respect to such tax-exempt 
organizations, these organizations may have violated their tax 
status.
    (3) Although many groups conduct activities that influence 
the public's perception of federal candidates and campaigns, 
they either are not required, or do not, register with or 
disclose their activities with the FEC.

                     OVERVIEW OF FOLLOWING CHAPTERS

    One of the striking differences between the 1996 elections 
and prior elections was the prominent role played by groups 
that never registered with the Federal Election Commission 
(FEC) as campaign organizations.\1\ These groups included tax-
exempt charities, social welfare organizations, labor unions 
and corporations. Some groups ran television ads attacking 
candidates, conducted direct mail and telephone bank operations 
targeting voters, distributed voter guides, increased voter 
turnout, advised campaigns, and attended weekly meetings 
discussing candidates and campaign strategy. These groups spent 
millions of dollars on activities designed to affect the 
outcome of federal elections in 1996, yet none disclosed their 
contributions or expenditures to the public or acknowledged 
that federal campaign laws applied to their operations.
---------------------------------------------------------------------------
      Footnotes at end of chapter.
---------------------------------------------------------------------------
    The Committee hearings provided an invaluable opportunity 
to examine the role of these groups during the 1996 election 
cycle. The hearings could have examined, in a systematic way, 
whether national political parties used these groups to 
circumvent federal contribution limits and disclosure 
requirements; whether the persons directing the organizations 
deliberately evaded federal election law requirements or abused 
an organization's tax-exempt status; and whether the relevant 
federal election or tax laws require strengthening. Instead, 
the Majority failed to conduct a vigorous investigation, 
rejected Minority requests to hold hearings on specific 
groups,and left the legislative issues largely unexamined.
    One key difficulty was the refusal of many groups to 
cooperate with the Committee's investigation. 2 Some 
simply asserted that they had never engaged in election-related 
activity and were outside the scope of the Committee's 
investigation. Others claimed that the First Amendment 
protected them from inquiry. The vast majority of subpoenaed 
groups refused, in whole or in part, to respond to Committee 
requests for interviews and documents. Faced with widespread 
resistance, the Majority lacked the political will to enforce 
the subpoenas issued, compel document production and deposition 
testimony, or hold public hearings and confront the groups. It 
settled instead for four days of hearings in which academics 
and public interest organizations discussed the problem 
generally and urged campaign finance reform.3
    Despite the absence of a vigorous investigation and in-
depth hearings, available evidence demonstrates that a number 
of independent groups engaged in partisan, election-related 
activities in 1996, that some of these groups coordinated their 
activities with a political party or candidates, and that 
additional investigation by the U.S. Departments of Justice and 
Treasury and the FEC is warranted. The evidence also 
demonstrates that legislation is needed, not to halt election-
related activities by independent groups, but to bring their 
efforts within the existing legal requirements for contribution 
limits and disclosure.

1996 election-related activities

    During the 1996 election cycle, both parties benefited from 
the expenditures and activities of independent groups. The most 
visible example is televised ads. A study conducted by a 
nonpartisan organization, the Annenberg Public Policy Center, 
estimated that, during the 1996 election cycle, independent 
groups spent between $67 and $82 million on televised ads that 
split about evenly in their support of the two 
parties.4 Almost 90 percent of these ads named 
specific candidates.5 Groups like the AFL-CIO, 
Citizen Action, Citizens for Reform, and Citizens for the 
Republic Education Fund each spent millions of dollars on these 
televised ads.
    While both parties benefited from the activities of 
independent groups, the evidence before the Committee indicates 
that the Republican National Committee (``RNC'') organized and 
financed independent group activities to a much greater extent 
than did the Democratic National Committee (``DNC'') during the 
1996 election cycle. For example, FEC records indicate that, in 
1996, the RNC gave nearly $6 million to tax-exempt 
organizations,6 or 30 times more than the DNC which 
gave less than $185,000.7 Documents produced by the 
parties indicate that, while both asked supporters to make 
contributions to sympathetic groups, the RNC explicitly planned 
to raise millions of dollars for certain pro-Republican groups 
and actually collected and delivered specific checks to 
them.8 Documents produced to the Committee also 
indicate that the Republican Party worked to identify, on a 
national and regional level, the groups most likely to help 
Republican candidates win office; 9 instructed its 
candidates to develop formal ``coalition plans'' with 
sympathetic groups; 10 and distributed a ``coalition 
building manual'' to help them do so.11 No 
comparable manual, memoranda or any other evidence before the 
Committee indicates this level of effort by the Democratic 
Party. The evidence before the Committee also suggests that the 
RNC undertook a wide variety of specific election-related 
activities with independent groups, including joint issue 
advocacy efforts, joint polling and joint election strategy 
sessions; the evidence does not support a similar level of 
coordination between the DNC and independent groups sympathetic 
to Democratic candidates.12
    The following chapters describe the parties' interactions 
with independent groups, the 1996 election-related activities 
of a few of the most active organizations, and a brief 
description of allegations involving other groups. Because the 
Committee did not hold hearings or enforce its document and 
deposition subpoenas, the available information is limited, and 
many unanswered questions remain. However, the types of 
campaign activities undertaken, the unmistakable signs of 
coordination with political parties and candidates, and the 
millions of dollars involved provide overwhelming evidence that 
independent groups were significant players in the 1996 
election cycle.
    On the Republican side, the following chapters chronicle 
how the RNC developed plans and worked with outside groups to 
affect the outcome of the 1996 elections; Americans for Tax 
Reform used $4.6 million in RNC soft dollars to conduct a 
direct mail and telephone bank operation in 150 Congressional 
districts countering anti-Republican ads on Medicare; Triad 
Management formed and directed two tax-exempt organizations to 
run over $3 million in televised ads attacking Democratic 
candidates; and the Christian Coalition spent at least $22 
million and distributed 45 million voter guides before election 
day, manipulating the information in those guides to favor 
Republican candidates. On the Democratic side, the chapters 
examine the AFL-CIO's $35 million televised ad and get-out-the-
vote efforts; Ickes' recommendation that Warren Meddoff 
contribute $1 million to specified pro-Democratic groups; the 
Teamsters' contribution-swapping schemes with other independent 
groups and attempt to involve the DNC; and contributions 
directed by Democratic officials to Vote Now '96.
    Corporations, unions and other independent groups are 
legally permitted to participate in federal election activity 
if they comply with federal requirements for contribution 
limits and disclosure. The complaint with these groups in the 
1996 election cycle is that they sought to affect election 
outcomes, while evading the contribution limits and disclosure 
requirements that apply to other entities engaged in campaign 
activities. It is this evasion of the law, and the resulting 
erosion of public confidence in the federal campaign finance 
system, that has made the election activities of independent 
groups such a serious concern.

                             LEGAL ANALYSIS

    Some of the activities engaged in by independent groups 
during the 1996 election cycle raise issues invoking both 
federal election law and federal tax law. While some of the 
campaign restrictions set out in these laws are clear, other 
provisions provide insufficient guidance on what conduct is 
lawful, while ambiguities in other provisions may hinder 
criminal prosecutions and civil enforcement actions in this 
area. As with the provisions banning foreign contributions, 
legislation is needed to strengthen and clarify the laws 
applicable to independent groups engaged in campaign activity.

Categories of independent groups

    The groups examined include a variety of organizations 
whose common denominator is a claim of independence from any 
political party, candidate or campaign committee, and a refusal 
to report contributions or expenditures to the Federal Election 
Commission.
    Two types of groups that raised considerable concern during 
the 1996 elections are charitable and social welfare 
organizations exempt from taxation under section 501(c) of the 
Internal Revenue Code.13 Historically, these 
organizations have not engaged in significant election activity 
due to constraints in federal tax law.
    Section 501(c)(3) exempts from taxation organizations 
organized and operated for ``religious, charitable, scientific 
. . . educational'' and similar purposes. Unique among 501(c) 
tax exempts, donors to 501(c)(3) charitable organizations are 
allowed to deduct from their federal income tax a portion of 
their donations. The statute explicitly prohibits these 
charitable organizations from engaging in any campaign 
activity, stating that the exemption covers only an 
organization ``which does not participate in, or intervene in 
(including the publishing or distributing of statements), any 
political campaign on behalf of (or in opposition to) any 
candidate for public office.'' 14 In addition, the 
statute prohibits section 501(c)(3) charitable organizations 
from operating for the benefit of any private interest, 
including a political party.15 Conferring such a 
private benefit violates the organization's tax exempt status 
and provides grounds for denying or terminating an 
exemption.16 Examples of charitable organizations 
active during the 1996 election cycle are Vote '96 and the 
Americans for Tax Reform Foundation.
    Social welfare organizations are exempt from taxation under 
section 501(c)(4) of the Internal Revenue Code. To qualify for 
this exemption, social welfare organizations must engage in 
activities that promote ``the common good and general welfare 
of the people of the community.'' 17 The 
implementing regulation states, ``The promotion of social 
welfare does not include direct or indirect participation or 
intervention in political campaigns on behalf of or in 
opposition to any candidate for public office.'' 18 
This regulation has been interpreted as prohibiting social 
welfare organizations from engaging in campaign activity as 
their primary pursuit, but allowing them to engage in it as a 
secondary pursuit.19 Any campaign activity engaged 
in must be nonpartisan, so that the organization does not 
confer a private benefit on a particular political 
party.20 In contrast to charitable organizations 
under section 501(c)(3), donations to 501(c)(4) organizations 
are not deductible by the donor. Examples of 501(c)(4) 
organizations active during the 1996 election cycle are 
Americans for Tax Reform and Citizen Action. Others, including 
the National Policy Forum and Christian Coalition, presented 
themselves as 501(c)(4) organizations, despite the fact that 
during the 1996 election cycle their applications were still 
pending before the IRS.
    Two other types of independent groups are labor unions and 
corporations. Both are prohibited under 2 USC 441b from making 
campaign contributions or expenditures exceptthrough a 
separately established political committee or segregated fund that 
registers with the FEC, complies with contribution limits, and 
discloses its contributions and expenditures.21 Campaign 
restrictions on corporations have been part of federal law for 90 
years, while restrictions on unions have been in place for more than 50 
years.22 The Supreme Court has repeatedly upheld their 
constitutionality.23 Despite this history, the advent of the 
soft money and issue advocacy loopholes led to an explosion in 
corporate and union spending and activism during the 1996 election 
cycle.24 Two examples in the 1996 election cycle are the 
AFL-CIO and Triad Management.
    Each of these four types of groups--charitable and social 
welfare organizations, unions and corporations--has social and 
economic objectives apart from electioneering. They are not 
campaign organizations like the RNC, DNC, candidate committees, 
and corporate and union PACs, which register with the FEC under 
2 USC 431(4) for the purpose of influencing federal elections 
and which file under section 527 of the federal tax code for 
groups organized and operated for the purpose of influencing 
elections.25 But all four have become increasingly 
important players in federal elections.

Disclosure

    RNC chairman Haley Barbour announced at a press conference 
on October 29, 1996, ``Disclosure of contributions and 
expenditures, shining the bright light of public scrutiny, is 
the fundamental principle underlying our campaign finance 
laws.'' 26 During the 1996 election cycle, however, 
many independent groups never disclosed their election-related 
activities, contending primarily that they were engaged in 
issue advocacy efforts outside the jurisdiction of federal 
election laws. Efforts by the media to investigate televised 
ads attacking candidates on the eve of election day, sponsored 
by groups with unfamiliar names and no readily available 
spokesperson, were time-consuming and often 
unsuccessful.27 Even after a year-long Senate 
investigation, due to the absence of FEC reports and the 
groups' defiance of Senate subpoenas, this Committee has 
limited information about their 1996 election activities.
    The initial legal analysis is to determine, on a case-by-
case basis, whether any of these groups violated federal 
election law disclosure requirements. The issues include 
whether a particular group qualified as a political committee 
under 2 USC 431(4) subject to the reporting obligations in 2 
USC 434(a); or whether the group made ``independent 
expenditures'' expressly advocating the election or defeat of a 
clearly identified candidate subject to the reporting 
obligations in 2 USC 434(c). While straightforward in some 
respects, these federal disclosure requirements contain many 
ambiguities that render enforcement uncertain and difficult. 
These provisions would clearly benefit from legislation 
clarifying when groups must register as political committees 
and what expenditures qualify as independent expenditures, 
including better statutory tests to distinguish between 
candidate versus issue advocacy. Another possible approach is 
legislation which, rather than improving the tests for 
distinguishing candidate versus issue advocacy, would instead 
require greater disclosure of issue advocacy efforts that name 
candidates or take place close in time to federal 
elections.28

Coordination

    Another relevant legal inquiry concerns coordination, 
specifically whether any of the independent groups was 
coordinating its efforts during the 1996 election cycle with a 
political party, political committee or candidate. In Buckley 
v. Valeo, 424 U.S. 1, 47 (1976), the Supreme Court held that 
``expenditures placed in cooperation with or with the consent 
of a candidate, his agents, or an authorized committee of the 
candidate'' are to be treated ``as contributions subject to the 
limitations'' on contributions in federal election law. The 
Court held that this approach was necessary to ``prevent 
attempts to circumvent the Act through prearranged or 
coordinated expenditures amounting to disguised 
contributions.'' 29 The Court explicitly upheld 
disclosure requirements directed to independent groups--
``individuals and groups that are not candidates or political 
committees''--for expenditures on ``communications that 
expressly advocate the election or defeat of a clearly 
identified candidate,'' and for coordinated political 
expenditures ``authorized or requested by a candidate or his 
agent.'' 30
    Twenty years later, in Colorado Republican Federal Campaign 
Committee v. FEC, 116 S.Ct. 2309 (1996), the Supreme Court 
reaffirmed this approach. The Court stated that Buckley upheld 
the constitutionality of contribution limits ``that apply both 
when an individual or political committee contributes money 
directly to a candidate and also when they indirectly 
contribute by making expenditures that they coordinate with the 
candidate.'' 31 The Court distinguished between 
``coordinated'' and ``independent'' expenditures, holding that 
only coordinated expenditures are limited by the Federal 
Election Campaign Act (``FECA'').32 The Court also 
rejected the proposition that party expenditures should be 
treated, without exception, as having been coordinated with the 
party's candidates, holding instead that a party has a 
constitutional right to make independent expenditures and must 
be given an opportunity to demonstrate the absence of candidate 
coordination with respect to a particular party expenditure.
    Section 441a(a)(7)(B)(i) of FECA states that, for purposes 
of applying the law's contribution limits, ``expenditures made 
by any person in cooperation, consultation, or concert, with, 
or at the request or suggestion of, a candidate, his authorized 
political committees, or their agents, shall be considered to 
be a contribution to such candidates.''
    The significance for independent groups is twofold. First, 
if an independent group coordinates expenditures with a 
political party, campaign committee or candidate, its 
expenditures must be considered contributions subject to FECA's 
contribution limits and disclosure requirements. Second, if the 
independent group hides its coordinating activity, the group 
opens itself up to the charge that it is hiding contributions 
and deliberately circumventing federal contribution limits and 
disclosure requirements.
    The issue of what actions constitute coordination is still 
largely unresolved. New regulations, ongoing litigation and FEC 
enforcement actions are tackling a variety of questions in this 
area. For example, in March 1996, the FEC issued new 
regulations which state in part that a corporation or union 
distributing candidate voting guides to the general public 
``shall not contact or in any other way act in cooperation, 
coordination, or consultation with or at the request or 
suggestion of the candidates.'' 33 In Clifton v. 
FEC, 114 F.3d 1309 (1st Cir. 1997), the First Circuit struck 
down the part of the regulation that completely prohibited oral 
contact with a candidate as overly restrictive and without 
statutory authorization.34 The court held that, 
while it ``readily accept[s] that the government has an 
interest in unearthing disguised contributions,'' 35 
contacts such as simply asking a candidate for his or her 
position on an issue are not enough to establish coordination:

          [E]xpenditures directed by or `coordinated' with the 
        candidate could be treated as contributions; but 
        `coordination' in this context implie[s] some measure 
        of collaboration beyond a mere inquiry as to the 
        position taken by a candidate on an issue.36

    The FEC is currently engaged in drafting regulations on 
coordination, but has yet to issue them.
    A few FEC enforcement actions provide further guidance. In 
July 1996, for example, the FEC brought an enforcement action 
in federal court alleging that the Christian Coalition had 
coordinated expenditures during the 1990, 1992 and 1994 
election cycles with federal House, Senate and Presidential 
candidates and their campaigns, thereby, inter alia, making 
illegal corporate contributions in violation of 2 USC 
441b.37 The complaint cited coordinated expenditures 
made by the Christian Coalition for voter identification and 
get-out-the vote efforts, the preparation and distribution of 
voter guides, and public communications expressly advocating 
the election or defeat of clearly identified candidates. To 
date, no court has ruled on the merits of this complaint. The 
FEC has also settled two enforcement actions against 
independent groups for coordinating their actions with 
candidates, obtaining conciliation agreements in which each 
group admitted violating FECA. One action was brought against 
Americans for Tax Reform (``ATR'') in 1986 for coordinating 
with candidates on the timing and distribution of media 
advisories related to ATR's Taxpayer Pledge 
Program.38 Another was brought ten years later, in 
1996, against the Hyatt for Senate campaign committee and Hyatt 
Legal Services corporation for using a campaign media adviser 
to re-write television commercials broadcast by the 
corporation.39 These two settlements were not tested 
in court.
    A key legal issue now being litigated is the question of 
whether the Supreme Court holdings on coordination are limited 
to coordinated expenditures which expressly advocate the 
election or defeat of a candidate or whether they extend to 
expenditures for issue advocacy. On September 25, 1997, several 
federal election law experts testified before the Committee 
that, while the law is unsettled on this point, their view was 
that the Supreme Court holdings did extend to issue 
advocacy.40 Lawrence Noble, the FEC's general 
counsel, testified that it is the FEC's position that issue 
advocacy paid for by an independent group and coordinated with 
a candidate may result in a contribution to the candidate, if 
the issue advocacy contains an ``electioneering message.'' 
41 He testified that an issue ad with no 
electioneering content would not be affected by FECA, using the 
example of an ad broadcast by the Red Cross and coordinated 
with a candidate in which the candidate urges the public to 
join a blood drive.42 He testified that, in the view 
of the FEC, coordinated issue ads which fall short of expressly 
advocating the election or defeat of a candidate, but which do 
convey an electioneering messagebenefiting the candidate, 
result in a contribution. He said that the FEC was currently involved 
in litigation to determine if this position is correct. A second 
witness, former FEC Chairman Trevor Potter, testified that ``whether it 
is express advocacy, or issue advocacy, or anything else, it is 
relevant to ask in the case of a nonparty organization whether the 
spending . . . was, in fact, directed and controlled by the 
candidate.'' 43 Both Noble and Potter testified that a 
different legal analysis would apply to coordination involving only a 
party and its candidate--and not an independent group--due to a 
longstanding legal presumption that coordination between a party and 
its candidates is permissible and appropriate.44
    Given the lack of certainty, clarifying legislation on the 
types of actions that should be considered coordination and how 
coordinated issue advocacy should be treated would provide 
needed guidance and clear statutory authority to FEC 
enforcement efforts.45
    Once coordination is established between an independent 
group and a political party, political committee or candidate, 
a coordinated expenditure becomes a contribution subject to the 
contribution limits in FECA. For example, if the expenditure 
were made by a corporation or union, the resulting contribution 
could be a violation of law--FECA's ban on corporate and union 
contributions. Alternatively, if coordination were not 
established, the expenditure could nevertheless qualify as an 
``independent expenditure'' under 2 USC 431(17) subject to 
disclosure under 2 USC 434(c).46 Expenditures or 
contributions exceeding $1,000 during a calendar year could 
trigger requirements that a group register with the FEC as a 
political committee and comply with disclosure requirements in 
2 USC 434(a).47
    Coordination by an independent group with a political 
party, political committee or candidate is not, in and of 
itself, improper or illegal. But coordinated expenditures 
resulting in a contribution trigger requirements for the 
independent group to comply with relevant contribution limits 
and disclosure requirements. Coordinated expenditures without 
this compliance can constitute misconduct.

Circumvention

    A third legal issue focuses on coordination undertaken by 
political parties, specifically, whether a political party or 
campaign coordinated with independent groups on issue advocacy 
spending during the 1996 elections. Political parties are 
required by the FEC to pay for their issue advocacy efforts 
with a mix of hard and soft dollars.48 The FEC 
determined in 1995 that, in a presidential election year, a 
political party must pay 65 percent of the cost with hard 
dollars that meet FECA contribution limits and disclosure 
requirements. The FEC reasoned that issue ads sponsored by a 
political party are either administrative expenses or generic 
voter drive efforts designed to ``urge the general public to 
register, vote or support candidates of a particular party or 
associated with a particular issue,'' 49 In the case 
of issue advocacy paid for by an independent group but 
coordinated with a political party, the questions that must be 
asked are, not only whether the independent group has violated 
federal contribution limits and disclosure requirements as 
discussed above, but also whether the political party 
deliberately circumvented federal hard money requirements by 
having the independent group serve as the nominal sponsor. For 
example, the chapter on Americans for Tax Reform describes a 
multi-million dollar issue advocacy effort on Medicare which 
was nominally sponsored by ATR, but coordinated with the RNC 
and paid for with an RNC soft money donation of $4.6 million. 
If the RNC had sponsored the Medicare effort directly, it would 
have had to use hard dollars for 65 percent of the cost; it 
instead financed the ATR-sponsored effort entirely with soft 
dollars.

Third party contributions

    A fourth issue involving independent groups arose when the 
Committee received evidence indicating that both political 
parties suggested to supporters that they make contributions to 
sympathetic groups. Although pending campaign finance reform 
measures such as S. 25, the McCain-Feingold bill, would outlaw 
this practice, there is currently no statutory or regulatory 
provision that explicitly prohibits a political party from 
suggesting that a person make a contribution to an independent 
group, such as a charitable or social welfare organization. The 
suggestion alone, without more, does not establish a 
coordinated expenditure, unreported contribution, or 
circumvention of election law limits and disclosure 
requirements.
    If, in addition to the fact that a contribution was 
recommended, evidence is found that the political party 
controlled the timing of the contribution or made the 
contribution contingent upon the recipient taking action at the 
suggestion of, or in concert with, the party or a candidate, it 
is possible that coordination occurred and compliance with 
contribution limits and disclosure requirements was required.

Violations of tax law

    A fifth set of issues involves federal tax law. Charitable 
and social welfare organizations exempt from taxation engaged 
in a number of election-related activities during the 1996 
election cycle. An initial legal analysis is whether any of 
these groups violated their tax-exempt status by engaging in 
partisan political activity and conferring benefits on a 
particular political party. For social welfare organizations 
under section 501(c)(4), an additional question is whether 
campaign activities were a dominant or secondary pursuit. A 
third question is whether any of these groups made false 
statements to the Internal Revenue Service in violation of 26 
USC 7206, for example by indicating in an application for tax 
exempt status that the organization had not spent and did not 
plan to spend any money attempting to influence 
elections.50 While the statutory restrictions on 
campaign activity are clear for charitable organizations under 
section 501(c)(3), social welfare organizations under section 
501(c)(4) must rely on a number of regulatory interpretations 
that would benefit from legislation clarifying the campaign 
restrictions applicable to them.
    Another concern that arose during the course of the 
Committee's investigation involves the problems associated with 
obtaining accurate information about an organization's tax 
exempt status. While section 6104 of the tax code makes 
available to the public successful applications under section 
501(c) and related IRS materials, no similar public disclosure 
requirement applies to organizations whose applications are 
pending or ultimately rejected. The evidence before the 
Committee indicates, for example, that the National Policy 
Forum (``NPF'') held itself out and operated as a 501(c)(4) 
social welfare organization for four years, from 1993 to 1997, 
while its application was pending before the IRS. The IRS 
decision letter ultimately rejecting the NPF application 
describes the standards used for granting 501(c)(4) status, as 
well as the results of an IRS investigation into NPF 
activities. This information is as important to the public as 
materials associated with successful 501(c) applicants, 
particularly since during the four-year period the NPF 
application was pending, NPF held itself out to the public as a 
501(c)(4) tax-exempt organization as allowed by law. The same 
issues apply to the Christian Coalition, whose application for 
501(c)(4) status has been pending for seven years. The public 
has a right to know during these long periods of time the basis 
for an organization's application, its status, and the IRS' 
evaluation of the applicant. To solve the problem, section 6104 
could be amended to authorize the release of the same 
information for all 501(c) applications, rather than just for 
the successful ones. Alternatively, section 501(c) could be 
amended to prohibit organizations from holding themselves out 
as charities or social welfare organizations until their 
application for that status is actually approved by the IRS.
    A related legislative concern involves indications by some 
organizations whose application for 501(c)(4) was rejected that 
they will instead claim tax exemption under section 527 of the 
tax code.51 Section 527, as explained earlier, 
exempts from taxation groups organized and operated primarily 
for the purpose of influencing elections. The failed 501(c)(4) 
applicants apparently intend to argue that they operate to 
influence elections through the use of issue advocacy, rather 
than candidate advocacy. In this way, the groups apparently 
plan to avoid payment of taxes under section 527, while also 
avoiding the disclosure requirements in federal election law 
that otherwise subject campaign organizations to public 
scrutiny. Their aim, apparently, is to engage in election-
related activities without paying taxes and without disclosing 
their activities to the IRS, FEC or public. This plan may 
succeed since, currently, section 527 grants a tax exemption 
without any required filing or public disclosure--it does not 
have a requirement similar to section 501 that organizations 
file formal applications for the exemption or annual 
information returns; it does not require through section 6104 
public disclosure of applications or annual returns (since none 
is filed); and it does not require organizations claiming the 
exemption to meet the disclosure requirements of the Federal 
Election Campaign Act. Corrective legislation could amend 
section 527 to limit the availability of the tax exemption to 
organizations that have registered with the FEC or the 
equivalent state body as a political committee. Legislation 
could also require organizations claiming the exemption to file 
applications and annual information returns under section 527 
in the same manner now required under section 501. These 
filings would strengthen the ability of the IRS to detect tax 
avoidance and false statements.
                               footnotes
    \1\ On the first day of the Committee's hearings, Senator Glenn 
named misuse of independent organizations as a key concern that needed 
to be investigated. 7/8/97 Hrg. p. 20. Senator Torricelli stated that 
the ``single greatest change in the political culture of the 1996 
elections . . . was the use of non-profit, tax-free organizations.'' 7/
8/97 Hrg. p. 98.
    \2\ See Chapter 40.
    \3\ See hearings on September 23, 24, 25 and 26, 1997.
    \4\ See Annenberg Public Policy Center, ``Issue Advocacy 
Advertising During the 1996 Campaign: A Catalog,'' Report Series No. 16 
(9/16/97), p. 7. The Center estimated that parties and independent 
groups together spent between $135 and $150 million on issue ads. Since 
the two parties together spent about $68 million on issue ads, that 
leaves the total for independent groups alone between $67 and $82 
million. See also Washington Post, 2/9/97, which estimated total 
election-related spending by independent groups at $70 million.
    \5\ Annenberg Public Policy Center, ``Issue Advocacy Advertising 
During the 1996 Campaign: A Catalog,'' Report Series No. 16 (9/16/97), 
p. 7.
    \6\ According to FEC records, in 1996, the RNC gave $4.6 million to 
Americans for Tax Reform; $650,000 to the National Right to Life 
Committee; and $600,000 to American Defense Institute which later 
returned the funds.
    \7\ According to FEC records, in 1996, the DNC gave $117,500 to the 
National Coalition of Black Voter Participation; $20,000 to the African 
American Institute; $10,000 to the Stonewall Gay and Lesbian Club; 
$10,000 to the Congressional Black Caucus; and $4,000 to the Hispanic 
Caucus.
    \8\ See, for example, undated document produced by the RNC entitled 
``Soft Money Fundraising Strategy,'' R003215, indicating that the RNC 
would raise ``miscellaneous revenue'' totaling $7.7 million for 
Americans for Tax Reform, National Right to Life Committee and American 
Defense Institute; Exhibit 2400: memorandum from RNC finance chair Jo-
Anne Coe to RNC chairman Haley Barbour and other RNC officials, 
regarding the delivery of checks to these organizations; an undated 
document produced by the RNC, 10/17/96, R021609, analyzing whether 
contributions to five tax-exempt organizations are tax deductible and 
whether they would have to be reported to the public; an undated 
document, DFP004244, which lists four pro-Republican tax-exempt 
organizations and indicates for each organization a large dollar figure 
which, when added together, total $15.1 million. See also Chapter 10.
    \9\ See for example, Exhibit 2365: memorandum from RNC director of 
campaign operations Curt Anderson to RNC chairman Haley Barbour, 
entitled ``Group of 12, or Council of Trent, or Whatever,'' 3/4/96, 
R006050.
    \10\ Exhibit 2363: memorandum from RNC director of campaign 
operations Curt Anderson to RNC chairman Haley Barbour, 4/23/96.
    \11\ Exhibit 2367, Coalition Building Manual, authored by Curt 
Anderson.
    \12\ See following chapters.
    \13\ Subsection 501(c) authorizes an exemption from taxation for 
over two dozen types of organizations.
    \14\ See 26 U.S.C. 501(c)(3) and 26 CFR 1.501(c)(3)-1; Association 
of the Bar of the City of New York v. Commissioner, 858 F.2d 876 (2d 
Cir. 1988), (even insubstantial political activity endangers an 
organization's exemption under section 501(c)(3)).
    \15\ 26 USC 501(c)(3) and 26 CFR 1.501(c)(3)-1(d)(1)(ii) (``it is 
necessary for an organization to establish that it is not organized or 
operated for the benefit of private interests''); American Campaign 
Academy v. Commissioner, 92 T.C. 1053 (1989) (organization operated for 
the benefit of Republican organizations or candidates does not qualify 
for tax exemption under section 501(c)(3)).
    \16\ American Campaign Academy v. Commissioner, 92 T.C. 1053 (1989) 
(organization operated for the benefit of Republican organizations or 
candidates does not qualify for tax exemption under section 501(c)(3)); 
Regan v. Taxation with Representation, 461 U.S. 540 (1983) (tax 
exemption is a privilege that can carry severe restrictions).
    \17\ 26 USC 501(c)(4); 29 CFR 1.501(c)(4)-1.
    \18\ 26 CFR 1.501(c)(4)-1.
    \19\ Rev. Rul 81-95, 1981-1 Cumulative Bulletin 332. The statute 
states that, to qualify for a tax exemption under 501(c)(4), an 
organization must be ``operated exclusively for the promotion of social 
welfare'' (emphasis added). The implementing regulation, 26 CFR 
1.501(c)(4)-1(a), states that, ``[a]n organization is operated 
exclusively for the promotion of social welfare if it is primarily 
engaged in promoting in some way the common good and general welfare of 
the people of the community'' (emphasis added). It is this regulatory 
language that is cited as permitting 501(c)(4) organizations to engage 
in campaign activity as a secondary pursuit.
    \20\ See IRS decision letter disqualifying National Policy Forum 
from tax exemption under section 501(c)(4) due to partisanship, 2/21/
97; Chairman Thompson, 7/23/97 Hrg. p. 225 (``In a 501(c)(4), you are 
allowed some political activity. It is not supposed to be partisan 
political activity, but you are allowed some. But you are not supposed 
to be a subsidiary of a party.''). See also endnotes 15 and 16, supra.
    \21\ 2 USC 441b(a). Unions and business organizations such as a 
Chamber of Commerce may also be exempt from taxation under section 
501(c)(5) or (6) of the Internal Revenue Code, but their exemption does 
not carry any prohibition against campaign activity. Unlike charitable 
and social welfare organizations, campaign restrictions on unions and 
corporations are contained in federal election law, not federal tax 
law.
    \22\ See, for example, Tillman Act of 1907, prohibiting corporate 
campaign contributions. Campaign restrictions on unions date from 1943. 
Congressional Research Service Report No. 90-199A, ``Campaign Financing 
& Corporate Expenditures: Analysis of Austin v. Michigan State Chamber 
of Commerce'' (4/10/90).
    \23\ See, for example, FEC v. Massachusetts Citizens for Life, 479 
U.S. 238 (1986); Austin v. Michigan State Chamber of Commerce, 494 U.S. 
652 (1990).
    \24\ See Part 4 on soft money and issue advocacy, infra.
    \25\ 26 USC 527(e).
    \26\ ``Haley Barbour, Chairman of the Republican National 
Committee, Discusses Democratic National Committee Refusal of Pre-
Election FEC Report,'' Presidential Campaign Press Materials, Federal 
Document Clearing House, Inc., 10/29/96.
    \27\ See, for example, Arkansas Democrat-Gazette, 10/24/96; Kansas 
City Star, 10/27/96; Fresno Bee, 11/3/96; Wall Street Journal, 2/5/97; 
Washington Post, 3/9/97.
    \28\ See S. 25, the McCain-Feingold bill, which proposes a number 
of legislative remedies to this problem; statement by Senator Carl 
Levin of Michigan, Congressional Record, 10/6/97, pp. S10409-16. See 
also Part 4 on issue advocacy, infra.
    \29\ 424 U.S. at 46.
    \30\ 424 U.S. at 80.
    \31\ 116 S.Ct. at 2321.
    \32\ See, for example, Parts II and III of the prevailing opinion. 
Some Justices suggested, in dicta, that parties should be able to make 
unlimited coordinated expenditures with their candidates, but no ruling 
was made by the Court on that issue. See, for example, opinion by 
Justice Kennedy.
    \33\ 11 CFR 114.4(c)(5).
    \34\ The court also struck down a requirement in the regulation 
that the voting guides provide substantially equal space and prominence 
to each candidate.
    \35\ 114 F.3d at 1314.
    \36\ 114 F.3d at 1311 (citations omitted).
    \37\ FEC v. Christian Coalition, Civil Action No. 96-1781 (D.D.C.), 
7/30/96.
    \38\ FEC MUR 3975. See also chapter 11 discussing Americans for Tax 
Reform.
    \39\ FEC MUR 3918.
    \40\ See, for example, Buckley v. Valeo, 424 U.S. 1, 80 (1976), 
discussed above, in which the Supreme Court identified two separate 
categories of expenditures by independent groups which could 
constitutionally be subjected to disclosure requirements: express 
advocacy communications, and expenditures coordinated with candidates. 
By mentioning coordinated expenditures in a separate category, apart 
from express advocacy communications, the Court implied that 
coordinated expenditures which do not reach the threshold of express 
advocacy may qualify as candidate contributions subject to contribution 
limits and disclosure requirements.
    \41\ Lawrence Noble, 9/25/97 Hrg., pp. 34-40.
    \42\ Lawrence Noble, 9/25/97 Hrg., p. 38.
    \43\ Trevor Potter, 9/25/97 Hrg., p. 36.
    \44\ Lawrence Noble and Trevor Potter, 9/25/97 Hrg., pp. 35-36, 39-
40. Potter testified that the FEC had traditionally ``presumed all 
party spending was coordinated with candidates'' and had deemed 
coordination between the two irrelevant, concentrating instead on 
determining whether specific party expenditures were generic party-
building efforts that could not be attributed to individual candidates 
or candidate-specific spending subject to contribution limits. 9/25/97 
Hrg., p. 22. See also legal analysis provided in Part 5, infra.
    \45\ S. 25, the McCain-Feingold bill, proposes a number of 
legislative remedies to clarify what actions constitute coordination 
and result in contributions subject to FECA.
    \46\ 2 USC 431(17) defines an ``independent expenditure'' as ``an 
expenditure by a person expressly advocating the election or defeat of 
a clearly identified candidate which is made without cooperation or 
consultation with any candidate, or any authorized committee or agent 
of such candidate, and which is not made in concert with, or at the 
request or suggestion of, any candidate, or any unauthorized committee 
or agent of such candidate.''
    \47\ See 2 USC 431(4); Buckley v. Valeo, 424 U.S. 1, 79 (1976); 
Akins v. FEC, 101 F.3d 731 (D.C. Cir. 1996).
    \48\ FEC Advisory Opinion 1995-25.
    \49\ FEC Advisory Opinion 1995-25.
    \50\ See, for example, item 15 on IRS Form 1024, ``Application for 
Recognition of Exemption Under Section 501(a).''
    \51\ See, for example, Roll Call, 10/20/97, p. 1.





PART 2  INDEPENDENT GROUPS

Chapter 10: The Republican Party and Independent Groups

    One of the striking differences between the 1996 elections 
and prior elections was the prominent role played by so-called 
``independent groups'' that were not registered with the 
Federal Election Commission as political organizations. 
Typically, these groups ran campaign ads under the guise of 
``issue advocacy.'' By operating in that fashion, they were 
able to circumvent federal restrictions on campaign financing. 
Evidence before the Committee shows that the Republican 
National Committee closely coordinated with several ostensibly 
independent groups, channeled millions of dollars (from the RNC 
and from Republican donors) to such groups, and even 
established front organizations.
    Additionally, a number of conservative groups acted as 
fronts for Republican donors, enabling the donors to circumvent 
the campaign finance laws. Many of these purported to be 
grassroots organizations but were actually shell organizations 
established by professional fundraisers for the purpose of 
running attack ads.
    Several of the organizations mentioned in this chapter are 
discussed at greater length in other parts of the Minority 
Report. The purpose of this chapter is to examine how 
purportedly independent groups have served as fronts or proxies 
for the Republican National Committee and/or Republic donors.

                                findings

    (1) The Republican Party financed and participated in 
election-related activities by tax-exempt organizations, in 
part to evade the limits of federal election laws and to use 
the organizations as surrogates for delivering the Republican 
Party's message.
    (2) The RNC directly funded, for purposes that benefited 
the Republican Party, a number of tax-exempt organizations that 
were supposed to operate in a non-partisan manner.
    (3) The RNC also solicited, collected and delivered third-
party funds to tax-exempt organizations for election-related 
activities to benefit the Republican Party.
    (4) The RNC instructed and helped Republican candidates to 
coordinate their campaign activities with independent groups.

                              introduction

    A significant number of nonprofit organizations that 
claimed to be nonpartisan played an active role in the 1996 
elections, spending millions of dollars on behalf of political 
parties or specific candidates. These groups were not 
registered with the Federal Election Commission as political 
organizations and most of them claimed to be ``social welfare'' 
or charitable organizations, registered with the Internal 
Revenue Service as either 501(c)(4) or 501(c)(3) tax-exempt 
entities.
    The Republican National Committee had close ties to several 
of these groups. It coordinated with a number of them and often 
provided financial support--directly or by raising money from 
conservative donors. The RNC and the independent groups were 
able to engage in these activities by exploiting the two most 
important gaps in the campaign finance laws: the soft-money 
loophole and the issue-advocacy loophole.
    The federal campaign finance laws clearly state who is 
allowed to contribute to candidates and how much money those 
donors are allowed to give and require candidates to identify 
individuals who contribute in excess of $2,000 to the Federal 
Election Commission.1 Although the rules seem clear-
cut, they are easily circumvented. The biggest loophole is by 
way of so-called ``soft money,'' which can be contributed in 
unlimited amounts to the political parties and can even be 
contributed by corporations, which are barred from making 
contributions to specific candidates. Although soft money is 
only supposed to be used on behalf of state-level candidates or 
for generic, party-building purposes (such as get-out-the-vote 
drives), it has become routine for both major parties to spend 
these funds in ways that benefit specific candidates (see 
Chapter 23).
---------------------------------------------------------------------------
     Footnotes at end of chapter.
---------------------------------------------------------------------------
    Issue advocacy is the second most significant loophole. As 
long as ads avoid using ``express advocacy'' terms like 
``elect'' and ``defeat,'' the advertisers have been able to 
argue successfully that they are not running campaign ads--even 
if the ads are obviously intended to benefit specific 
candidates. When an ad falls into the ``issue advocacy'' 
category, the campaign finance laws do not apply: Vitually 
anyone can contribute money to independent groups to pay for 
such ads, there are no limits on how much money a donor can 
give, and there is no disclosure of the donor's identity. Thus, 
many organizations that run ``issue ads'' are not required to 
or do not register with the Federal Election Commission as 
political organizations, despite running television ads 
attacking candidates, conducting mail and telephone operations 
targeting voters, and spending millions of dollars on 
activities which affect election outcomes.
    Although the issue-advocacy loophole was exploited on 
behalf of both Democratic and Republican candidates, the 
evidence before the Committee indicates that there were some 
major differences. Whereas the Democratic National Committee 
does not appear to have engaged in extensive coordination with 
independent groups, evidence before the Committee shows that 
the Republican National Committee actually established two 
nonprofit groups and that it engaged in a high level of 
coordination with several others. Documents produced to the 
Committee indicate that the Republican Party worked to 
identify, on a national and regional level, the groups most 
likely to help Republican candidates win office; instructed its 
candidates to develop formal ``coalition plans'' with 
sympathetic groups; and distributed a ``Coalition-Building 
Manual'' to help them do so. In addition to general 
organizational and planning efforts encouraging Republican 
candidates to coordinate their campaign efforts with 
independent groups, the RNC undertook a wide variety of 
specific election-related activities with particular 
organizations, including joint mailings, joint issue advocacy 
efforts, joint media events, and joint polling.
    The contrast between the DNC and RNC is even sharper on the 
financial side. Federal Election Commission records show that 
the DNC contributed less than $185,000 to nonprofit groups in 
1996. The RNC, by contrast, contributed close to $6 million (of 
which $600,000 was returned) to nonprofits in the weeks before 
the November election. The RNC also raised millions of dollars 
for ``independent'' groups from major Republican Party donors, 
sometimes actually collecting and forwarding donors' checks to 
the recipient organizations.
    By using outside groups as proxies and surrogates, the RNC 
was able to foster the impression that independent, 
``grassroots'' organizations were backing the party's agenda 
and its candidates. The RNC was also able to circumvent federal 
campaign finance laws by channeling ``soft money'' to outside 
groups which, in turn, used the funds for issue advocacy. If 
the RNC had conducted the same activities itself, it would have 
been obliged under FEC rules to use a mixture of soft dollars 
and hard dollars. In short, the Republican Party worked with 
and financed nonprofit organizations as part of an organized 
effort to circumvent the campaign finance laws.
    Many of the conservative organizations investigated by the 
Committee were organizations that purported to be independent, 
grassroots groups. However, the Committee found that several 
such groups were created mainly, or exclusively, for the 
purpose of running attack ads. Donors who contributed to such 
groups were able to spend money on behalf of political 
candidates without limit and without disclosure. Professional 
fundraisers played a key role in setting up and running such 
organizations.
    Several of the conservative groups mentioned in this 
chapter are discussed at length in subsequent chapters of the 
Minority Report, notably Americans for Tax Reform, the 
Christian Coalition, and Triad Management Services. The purpose 
of this chapter is to examine how such groups have served as 
fronts for the Republican Party and/or Republican donors, thus 
operating as mechanisms to circumvent the federal campaign 
finance laws.

                     rnc ties to independent groups

Coalition plans

    Haley Barbour, a long time Republican lobbyist, became 
chairman of the Republican National Committee in January 1993 
and served a four-year term. Throughout his tenure, Barbour 
encouraged Republican candidates to work closely with 
conservative organizations, which are referred to in RNC 
documents as ``coalition'' groups.
    During Barbour's tenure, the party urged Republican 
campaigns to develop coalition plans to organize the campaign's 
ties to such groups as the National Right to Life Committee, 
the Christian Coalition, and the National Rifle Association. 
Coalition plans served many purposes, the principal one being 
to convince voters that ``independent'' groups were supporting 
GOP candidates. A ``Coalition-Building Manual,'' issued in 
1994, notes that ``what we say about ourselves is suspect, but 
what others say about us is credible.'' 2 The manual 
was prepared by the National Republican Senatorial Committee 
(``NRSC''), a division of the RNC.
    When messages come from a third party, there are other 
advantages, not mentioned in the NRSC manual:
         If a Republican candidate runs hard-hitting 
        attack ads, he can be accused of negative campaigning. 
        When a third party runs such ads, the Republican 
        candidate can disavow any responsibility--and can even 
        denounce the advertiser--while, at the same time, 
        benefitting from the attack ads. Perhaps the best-known 
        example of this was the Willie Horton television ad in 
        the 1988 presidential campaign. The ad, which attacked 
        Democratic nominee Michael Dukakis, was widely 
        criticized because of perceived racial 
        overtones.3 But the Bush campaign averted 
        blame, because the ad was run by an independent group.
         Republican contributors are able to avoid 
        limits on campaign contributions by donating to 
        ostensibly ``nonpolitical'' groups engaged in issue 
        advocacy. Since these donations are not classified as 
        campaign contributions, corporations, which are 
        forbidden to contribute to candidates, are free to 
        donate; there are no limits on the size of 
        contributions; and donors can hide their 
        identities.4
    RNC documents provided to the Committee show that the RNC 
worked to identify, on a national and regional level, the 
groups most likely to help Republican candidates win office; 
instructed its candidates to develop formal ``coalition plans'' 
with sympathetic groups; and distributed the NRSC's Coalition-
Building Manual to help its candidates coordinate their 
campaign efforts with outside organizations.
    On March 4, 1996, Curt Anderson, RNC political director and 
head of campaign operations, sent a memo to RNC Chairman Haley 
Barbour entitled, ``Group of 12, or Council of Trent, or 
Whatever.'' 5 In it, Anderson wrote:

          You had asked us in Atlanta to come up with ideas for 
        a group that would encompass the leadership of the base 
        Republican coalition. . . . Membership should be 
        restricted to groups that actually have troops in the 
        field that they can motivate, activate, and deliver, or 
        groups that have a track record of expending 
        significant resources to do the same.

Anderson then listed possible members for a coalition composed 
of the leaders of pro-Republican outside groups. Although the 
list is heavily redacted, it includes Americans for Tax Reform 
(``ATR'), the National Right to Life Committee (``NRTLC''), the 
Christian Coalition, and Citizens for a Sound Economy. That 
this list was compiled for campaign purposes is demonstrated by 
some of the descriptions of possible members. For example, the 
memorandum proposes as a member, the Christian Coalition's 
``national field director [who] works with campaigns and the 
actual field organization.''6
    It appears that approximately 40 individuals were later 
reviewed by Barbour, Anderson, RNC co-Chairman Evelyn McPhail, 
RNC Communications Director Edward Gillespie, and RNC chief 
strategist Donald Fierce. Their support for, opposition to, and 
comments on each of the proposed persons are tallied on an 
undated, two-page document produced by the RNC to the 
Committee.7 Two persons had unanimous support: Ralph 
Reed of the Christian Coalition and Wayne LaPierre of the 
National Rifle Association. Republican officials considered 
working with several other individuals, including 
representatives of ATR, NRTLC, the United Seniors Association, 
the U.S. Chamber of Commerce, GOPAC (House Speaker Newt 
Gingrich's ``leadership PAC''), the National Federation of 
Independent Business, the Republican Governors Association, 
NRCC, NRSC, and a person from ``Tobacco.'' (The NRCC--which 
stands for the National Republican Congressional Committee--is, 
like the NRSC, part of the Republican National Committee.) 
Anderson urged that the coalition include ``only folks with 
troops in the field.'' Fierce agreed, suggesting that the group 
``only include people who have large coalitions that are 
organized that can help us.'' Fierce also suggested keeping the 
group ``small enough so you can have confidential 
conversations.'' 8 Because no RNC official provided 
testimony to the Committee on these issues, it is unclear 
whether this evaluation process resulted in a formal coalition 
of pro-Republican group leaders which the RNC used to 
coordinate campaign efforts.
    Several Republican candidates took the RNC's advice and 
worked closely with independent groups. As Anderson noted in an 
April 23, 1996, memo:

          Today, most of our campaigns lead off with their 
        coalition plan when you meet them.
          We no longer treat coalition planning as if it is an 
        ancillary activity, or a quaint way of getting well 
        meaning but ignorant people involved.
          We teach [in the RNC's campaign management college] 
        that campaigns must include both a thematic and 
        tactical approach to including the combined efforts of 
        every coalition group that they can conceivably appeal 
        to. We additionally demand that each campaign have a 
        senior person--campaign manager, deputy, etc.--who has 
        line item responsibility for the execution of the 
        coalition plan.
          Every state party Victory '96 plan is required to 
        have a coalition component.
          Every Regional Field Representative is in the process 
        of putting together the definitive list of the 5 top 
        reachable coalition groups in each state, and their 
        approximate size . . . [Redacted] will be on this list 
        for most states, as will the [redacted], and [NRTLC]. 
        Christian Coalition will make the list in about \1/2\ 
        of the states.
          At virtually all of our field meetings we have put 
        together day long meetings in which we bring the 
        decision makers from the biggest coalition groups. We 
        generally spend an hour with each of them comparing 
        notes on races . . .
          I should add at this point, that while [redacted] did 
        do some work in the OR race, both Dave Hansen and Wes 
        were very frustrated at their unwillingness to think 
        outside the lines and consider expanding their 
        activities in the way that some of the other groups 
        did.
          While it has always been true that our coalition 
        groups need direction on how they can best effect the 
        outcome of elections, many of the larger groups are 
        becoming increasingly sophisticated in their approach 
        and they employ competent professionals who know how to 
        make things happen.9

This exchange between the two top RNC officials in charge of 
the 1996 campaign operations leaves no doubt that the RNC 
deliberately planned for its candidates to coordinate with 
sympathetic independent groups to affect the outcome of 
elections.
    The memorandum also illustrates the RNC's attempt to use 
only certain groups that clearly supported Republican 
candidates and that the RNC distrusted truly independent 
endeavors, even by conservative organizations. Barbour had made 
the same point in an urgent memorandum to ``Republican 
Leaders,'' dated March 5, 1996, warning against ``independent 
expenditure campaigns.'' 10 Barbour wrote:

          As we approach the time when it may become clear who 
        our nominee will be, it is crucial our supporters do 
        not get suckered into participating in any 
        ``independent expenditure'' campaigns that purport to 
        be helping the Republican nominee for president. . . . 
        First, the party (the RNC and our state party 
        organizations) are allowed to run issue and generic 
        party advertising, and we have a sizeable (though it 
        needs to be bigger) budget for that. We are scheduled 
        to begin in April. Second, the party can coordinate our 
        generic advertising with anybody, but an independent 
        expenditure group is not allowed to coordinate or 
        consult with the nominee's campaign or the party. It 
        must be truly independent. That means it is not only 
        unaccountable, but could actually turn out to be a 
        loose cannon saying something very different from what 
        the message should be.11

    The evidence before the Committee shows that the RNC not 
only instructed its candidates to develop formal coalition 
plans, it provided them with the NRSC's ``Coalition Manual,'' 
12 which contained instructions on how to coordinate 
their campaign efforts with outside groups. The 29-page manual, 
which was written by Anderson when he worked at the NRSC, 
states that coalition groups can:

          Contact their members on your behalf--and at no cost 
        to you--using mail, phones, even earned media
          Make their membership lists available to you so the 
        campaign can contact them with a message directly from 
        the candidate
          Register new voters
          Provide a source of campaign volunteers to complement 
        the campaign operation
          Increase the turnout of their members . . .
          Publicly endorsing your candidacy, allowing you to 
        use their endorsement in your campaign materials 
        included in your advertising and mail
          Private endorsement in the groups' ``internal media'' 
        (e.g. newsletters, meetings, phone trees, mailings)
          Providing surrogate speakers for your campaign
          Generating public attacks on the Democrat oppo- nent 
        . . .
          Direct mail solicitation of their membership for 
        contributions to your campaign
          Provide contributor lists to your campaign
          Host fundraising events among their 
        constituents.13

    The manual also provides a list of specific organizations 
that ``have been the most active in encouraging their 
constituents to support Republican candidates.'' 14 
The manual states that this list excludes groups that ``do not 
really engage in voter contact'' and notes that additional 
information can be obtained on what specific groups ``have done 
in previous campaign cycles.'' 15 The groups are 
divided into two categories, ``those who endorse candidates and 
those who do not.'' 16 In discussing the groups that 
do not endorse candidates, the manual states that ``[s]ome 
groups will bend their rules for specific candidates,'' 
whileothers will nevertheless ``communicate favorable and unfavorable 
messages about candidates to their members.'' 17 For 
example, the manual classifies the Christian Coalition as a group which 
does not endorse candidates, while noting that the Coalition conducted 
``some of the most effective and hard-hitting mail and phone programs 
last cycle.'' 18
    Still other documents demonstrate the RNC's deliberate 
coordination with carefully selected outside groups. For 
example, an undated internal RNC memorandum entitled, 
``Outreach, Auxiliaries, Coalitions,'' states:

          The five coalition organizations that have 
        distinguished themselves and we have to pay special 
        attention to are: National Rifle Association, National 
        Right to Life Committee, National Right to Work 
        Committee, National Federation of Independent 
        Businesses, Christian Coalition.19

    A March 6, 1996, RNC memorandum to Anderson is entitled 
``Coalitions'' and lists specific independent groups 
categorized by issue areas.20 Although the contents 
of the document were heavily redacted by the RNC before it was 
produced to the Committee, one entry that did remain describes 
``Family issues.'' That entry states: ``Christian Coalition/
Eagle Forum/Pro-Life groups/in-state PACs. In this community 
alone, there are probably two dozen different organizations. 
What we ask them to do would be very different than what we ask 
pro-gun groups to do.''

Coordination during the 1996 election cycle

    During the 1996 campaign cycle, RNC officials also met 
frequently with representatives of ``independent'' conservative 
groups to compare notes about campaign strategy and tactics. 
One important venue for information exchange was the 
headquarters of Americans for Tax Reform, a nonprofit 
organization headed by Grover Norquist, a Republican activist 
with close ties to Speaker Gingrich (see Chapter 11). Norquist 
hosted weekly meetings at the headquarters of ATR where 
representatives of conservative organizations met with 
Republican candidates, operatives, and party officials. 
Republican Party officials attended these Wednesday meetings 
along with 50 to 70 conservative activists at a time. At the 
meetings, discussions took place concerning specific 
candidates, races, and election strategy.21
    The RNC also undertook a wide variety of specific election-
related activities with particular organizations. These 
activities included joint polling, joint mailings, joint issue 
advocacy efforts, and joint media events. An RNC internal 
memorandum dated March 30, 1996, to the RNC's Evelyn McPhail 
describing a ``Seniors Program'' illustrates the type of 
coordination undertaken.22 (Some of the seniors 
groups mentioned in the memo are discussed in Chapter 15 of the 
Minority Report.) The memorandum states:

          We had a great meeting w. Haley. He was extremely 
        supportive and wanted us to ``go all the way'' with 
        this. . .
          3/25-3/27 Meetings with Coalition Groups
          U.S. Seniors-- . . . Interested in developing 
        political strategy as to where and how we reach senior 
        voters in key states. I think they want to do the mail 
        for the campaign effort.
          60 Plus-- . . . They give awards to ``senior 
        friendly'' members of congress and publicize them. . .
          Seniors Coalition-- . . . They were very interested 
        in sponsorship of our conference. They offered to help 
        take on some financial obligations as well. They asked 
        us to determine where we think they should do their 
        next poll (Kellyanne has done research in CA & FL on 
        how Medicare and senior issues are playing). They 
        indicated a willingness to give us some input into the 
        questions asked as well. Per Judy, I discussed this 
        with Wes Anderson and he recommended we suggest 
        Illinois, based on the fact that it is a key 
        battleground state which leans slightly Democratic, and 
        could provide for a good sample.23

This memorandum alone provides evidence that the RNC engaged in 
joint mailings, joint media event, and joint polling with 
independent groups.

RNC funding of independent groups

    The RNC not only coordinated with conservative groups, it 
provided them with millions of dollars of financing--further 
undermining these organizations' assertions that they are 
``independent'' and ``nonpartisan.'' An organization that 
receives financial help from the Republican Party is, of 
course, less likely to stray from the party line. Moreover, the 
practice of financing independent groups enabled the RNC to 
circumvent limits on how soft money can be spent, as noted 
elsewhere in this chapter.
    The RNC's practice of donating party money to conservative 
organizations did not begin in the 1996 election. In 1990, the 
RNC contributed $64,000 in seed money to the Christian 
Coalition, which had been founded the year before by religious 
broadcaster Marion G. (``Pat'') Robertson, a former Republican 
presidential candidate. The Christian Coalition holds itself 
out as a ``nonpartisan'' organization, and yet it spends 
millions of dollars on behalf of Republican candidates (see 
Chapter 14).
    In 1992, the National Republican Senatorial Committee 
contributed to the American Defense Institute, a 501(c)(3) 
charitable organization that conducts get-out-the-vote drives 
among retired and serving military people. After the donation 
became public, ADI was criticized for accepting Republican 
funding of an allegedly nonpartisan voter registration 
effort.24 (The Democratic Party has also provided 
support to get-out-the-vote organizations, as discussed 
elsewhere in the Minority Report.)
    Also in 1992, the NRSC contributed to the National Right to 
Life Committee, a 501(c)(4) organization.25 Like 
other recipients of RNC contributions, the NRTLC claims to be 
nonpartisan, but it is closely associated with the National 
Right to Life PAC, a political action committee that is a major 
donor to Republican candidates. (During the 1996 campaign, for 
example, nearly all of the PAC's $180,000 in political 
contributions went to Republican candidates.26) 
While the National Right to Life PAC donates ``hard money'' to 
Republican candidates, the National Right to Life Committee 
helps some of the same candidates through ``issue advocacy'' 
activities.
    In 1994, the NRSC contributed $175,000 to the National 
Right to Life Committee during the week before the November 
election.27 A few months later, Senator Phil Gramm 
of Texas, then chairman of the NRSC, told the Washington Post 
that the party made this donation because it knew the funds 
would be used on behalf of several specific Republican 
candidates for the Senate. Senator Gramm, in the Post's words, 
said that he had ``made a decision. . .to provide some money to 
help activate pro-life voters in some key states where they 
would be pivotal to the election.'' 28 He later told 
the newspaper that the money had only been given because the 
NRTLC's ``message conformed to the Republican message.'' 
29

RNC funding of independent groups in the 1996 election cycle

    During the 1996 election cycle, the Republican National 
Committee provided an unprecedented amount of money to 
``independent'' groups. It also arranged for Republican donors 
to contribute millions of dollars to such groups.
    An undated document produced by the RNC analyzes whether 
contributions to six tax-exempt organizations, including 
Americans for Tax Reform, the National Right to Life Committee, 
American Defense Institute, and the City of San Diego, would be 
tax-deductible and whether they would have to be reported to 
the public.30 (San Diego hosted the Republican 
National Convention in August 1996.) Another undated RNC 
document lists five tax-exempt organizations, providing for 
each its address, telephone and fax numbers, contact person. 
The RNC document also states for each group whether it has 
section 501(c)(3) or (c)(4) tax-exempt status, whether 
contributions to the group are tax-deductible, followed by a 
large dollar figure.31 The listed organizations and 
corresponding dollar amounts are:
           ATR--$6 million;
           NRTLC--$2 million;
           ADI--$700,000;
           the City of San Diego--$4 million; and
           the United Seniors Association--$2.4 
        million.
The figures, when added together, total $15.1 million.
    Another RNC document prepared during the 1996 campaign is 
entitled ``Soft Money Fundraising Strategy'' 32 and 
it suggests various ways in which soft money could be raised 
for the party, including direct mailings to corporations and 
solicitations by members of Congress and business leaders.
    The most intriguing part of the document is a section 
headed ``Miscellaneous Revenue.'' This section appears to 
outline a plan for the RNC to raise several million dollars 
from corporations and wealthy individuals. The document 
proposes that ``Haley,'' ``Newt,'' ``Team 100,'' ``V96'' 
(possibly the GOP's Victory `96 fundraising committee), and a 
``cigarette company,'' among others, assist in the fundraising. 
Four tax-exempt organizations are identified as possible 
recipients of the funds raised and includes, along with the 
amounts of money they were apparently slated to receive:
           Americans for Tax Reform--$6 million;
           National Right to Life Committee--$1 
        million;
           American Defense Institute--$700,000; and
           the City of San Diego--$4 million.
    Because no RNC official provided testimony to the Committee 
about RNC fundraising practices, the precise meaning of these 
documents remains unclear. When viewed together, however, they 
suggest explicit planning, research, and fundraising goals by 
the RNC in an organized effort to provide millions of dollars 
in financing to the named organizations. The facts suggest that 
the RNC took steps to execute these fundraising plans.

RNC contributions and fundraising help in 1996

    Shortly before the November 1996 election, the RNC made 
transfers of nearly $6 million to groups mentioned in the 
``Soft Money Strategy'' document. The RNC gave $4.6 million to 
Americans for Tax Reform, $650,000 to the National Right to 
Life Committee, and $600,000 to the American Defense 
Institute.33 This direct payment to tax-exempt 
organizations is an unprecedented amount. It is roughly 30 
times the DNC's donations to tax-exempt organizations in all of 
1996,34 and it dwarfs all prior party transfers to 
tax-exempt groups in the 20 years the Federal Election Campaign 
Act has been on the books. Prior to 1996, no party had given 
even $1 million to a tax-exempt organization. Apparently, the 
transferred funds consisted entirely of soft money paid over 
the course of the two months before election day.
    ADI returned the $600,000 in late October. Months later, 
when a reporter asked ADI President Eugene B. (``Red'') 
McDaniel why the donation was returned, he said that ``we 
didn't want to be controversial and we had funding from other 
sources.'' 35 He failed to mention that the 
``funding from other sources'' had been arranged by the RNC. 
(Not only was McDaniel's statement to the press suspect, so was 
an ADI document relating to the return of the donation. A 
$600,000 check from ADI to the RNC, dated October 25, 1996, 
includes the notation on the memo line: ``Repayment of loan.'' 
36)
    RNC Chairman Haley Barbour raised $500,000 for ADI from 
Philip Morris and collected checks totalling $510,000 from 
other donors, according to an internal RNC document discussed 
below. ADI's McDaniel has confirmed to the press that ADI did, 
in fact, receive $500,000 from Philip Morris and that Barbour 
``could have'' helped solicit it.37 McDaniel also 
apparently provided to the press a copy of an October 1996 
letter from Jo-Anne Coe, the RNC's deputy finance chair, 
enclosing six checks from prominent Republicans totalling 
$530,000.38 This letter has not been produced to the 
Committee by the RNC. The checks identified in the letter 
apparently exactly match the checks described in the October 17 
memorandum, with the addition of one new check for $100,000 
from an RNC finance chair.39 The letter reportedly 
asks McDaniel to ``[p]lease send an acknowledgment to each 
individual as well as a receipt for their use in claiming 
deductions on their tax returns.'' 40
    The evidence indicates that the RNC steered about $1 
million to ADI, which is roughly the same amount that of money 
ADI spent on its entire voter turnout effort, according to an 
estimate by McDaniel.41 These facts suggest that the 
RNC essentially provided the funding for ADI's entire voter 
effort in the 1996 elections. McDaniel told the press that his 
organization was ``apolitical'' and ``had asked for money from 
both parties,'' but received funding only from the RNC. ``Asked 
why the RNC provided him with so much financial support, 
McDaniel said, ``Maybe they think it helps them.'' 
42 McDaniel did not explain why ADI allegedly asked 
the RNC for funding, but then later returned it. One possible 
explanation is that ADI returned the $600,000 to the RNC--after 
receiving $530,000 in checks from prominent Republicans 
delivered by the RNC finance chair--to avoid public disclosure 
of the RNC's role in financing ADI's allegedly nonpartisan 
effort with partisan dollars.
    ADI was just one of several ``independent'' groups whose 
contributions had apparently been organized by the RNC. On 
several other occasions, RNC officials solicited donors and, at 
times, even forwarded checks to the recipient groups.
    In the weeks leading up to the November election, the RNC 
arranged for pro-Republican donors to give large donations to 
three groups listed in the ``Soft Money'' document: 
43 Americans for Tax Reform, the National Right to 
Life Committee, and the American Defense Institute. The RNC's 
role in these donations is made clear in a memorandum dated 
October 17, 1996--and marked ``confidential''--from Jo-Anne 
Coe, the RNC's deputy finance chair, and addressed to three 
other RNC officials: Chairman Haley Barbour, Sanford 
McAllister, and Curt Anderson. In the memo, Coe discusses her 
efforts to forward a number of checks from third parties to 
ATR, NRTLC, and ADI.44 With respect to ADI, Coe 
states that ``the following checks for ADI are en route to 
me,'' listing five checks which ``will bring the total for ADI 
to $510,000--plus the $500,000 Haley obtained from Philip 
Morris.'' 45
    The RNC also collected and delivered checks from third 
parties to Americans for Tax Reform and the National Right to 
Life Committee. The October 17 memorandum from Coe to Barbour, 
McAllister, and Anderson describes Coe's intention to forward a 
$100,000 check from businessman Carl Lindner to ATR and a 
second $100,000 check from Lindner to NRTLC.46 Two 
letters written by Coe on October 21--which, unlike the ADI 
letter, were produced to the Committee--indicate that these 
checks were delivered.47 The first letter is 
addressed to Grover Norquist, president of ATR, and the second 
to David O'Steen, executive director of NRTLC. Each states that 
a $100,000 check from Lindner to the organization is enclosed. 
Coe also states in each, ``Glad to be of some help. Keep up the 
good work.'' According to bank records produced to the 
Committee, ATR deposited a $100,000 check on October 
23.48 Since no NRTLC bank records were obtained by 
the Committee, the evidence is not conclusive that NRTLC 
received and deposited the $100,000 check, but there is 
currently no reason to believe otherwise.
    The evidence before the Committee suggests that the RNC was 
not merely collecting and delivering checks to ATR, NRTLC, and 
ADI, it may have also been using the checks as leverage to 
persuade the three organizations to cooperate or participate in 
certain activities. The October 17 memorandum from Coe to 
Barbour, McAllister, and Anderson asks the three RNC officials 
for a quick response to several questions about the checks 
being forwarded to the three organizations ``so I can put this 
project to bed.'' 49 The ``project'' itself is not 
described in the memorandum; however, a second document may 
provide additional information. It is an October 21, 1996, 
memorandum from Coe to Barbour. This memorandum states:

          As soon as we meet and hopefully come to some 
        resolution on the joint state mail project, I will 
        forward these checks to the three organizations. In the 
        meantime, I am respectfully withholding delivery of the 
        checks until we have the opportunity to discuss this 
        matter.50

Could the ``joint state mail project'' be the ``project'' 
referred to in the October 17 memo from Coe to Barbour? The 
fact that the RNC finance director was ``respectfully 
withholding'' checks to ``three organizations''--presumably 
ATR, NRTLC, and ADI--may be evidence that the RNC was 
attempting to use the checks as leverage to persuade these 
organizations to participate in a ``joint state mail project.'' 
Unfortunately, because Coe, McAllister, Anderson, and other top 
RNC officials refused to provide testimony to the Committee, 
the questions raised by these documents remain unanswered. 
(Barbour did testify, but his testimony was limited to issues 
surrounding the National Policy Forum, a nonprofit set up by 
the RNC. The Minority sought to question him later about other 
issues, but was unsuccessful.)
    Despite unanswered questions, the evidence before the 
Committee establishes that the RNC provided, both directly and 
indirectly, millions of dollars to independent groups in 
thelast two months before the 1996 election. The RNC's direct payments 
to three of these groups exceeded $5 million. The evidence suggests 
that the RNC intended to and perhaps succeeded in directing another $10 
million in undisclosed third-party contributions to five groups. In the 
absence of Committee enforcement of its document and deposition 
subpoenas, however, the extent to which the RNC obtained contributions 
for pro-Republican independent organizations and what it received in 
return for this fundraising remain unexplored.

Circumventing campaign finance laws

    Although RNC officials refused to submit to questioning by 
the Committee, there have been published reports in which party 
officials commented on RNC ``donations'' to nonprofit groups. 
For example, Barbour, as noted below, described the donations 
as simply contributions to ``like-minded'' organizations.
    In fact, the Committee has found that millions of dollars 
channeled to ``independent'' groups were used on behalf of 
Republican candidates during the weeks leading up to the 
November 1996 election. Americans for Tax Reform--the largest 
recipient of RNC funds--received $4.6 million, as noted above. 
ATR used this money to conduct a massive ``issue advocacy'' 
campaign aimed at helping the Republicans. With Republican 
Party money, ATR sent 19 million pieces of mail to voters and 
arranged for telemarketers to make four million telephone 
calls. ATR also paid for a television commercial attacking 
then-Representative Robert Torricelli (NJ), a Democratic 
candidate for the Senate. (see Chapter 11)
    By operating through surrogates like ATR, the RNC was able 
to circumvent federal campaign finance laws. When a political 
party broadcasts issue ads, it is required to pay for them with 
a combination of hard dollars and soft dollars. If an outside 
group runs such ads, there are no such restrictions--even if 
the funding comes from the RNC. Thus, the RNC was able to use 
100 percent soft money to pay for ads by outside groups. By 
channeling money to outside groups and having them run issue 
ads, the RNC was able to conserve precious hard dollars and 
circumvent federal restrictions on how soft money can be spent.
    Shortly before the November election, Barbour acknowledged, 
in effect, that the RNC's contribution to Americans for Tax 
Reform made it possible for the party to circumvent the 
campaign finance laws. At an October 1996 press conference, 
Barbour was asked about the RNC's $4.6 million transfer to ATR 
and he made the following statement:

        You'll see in our FEC report . . . that we've made 
        contributions to a number of organizations that are 
        like-minded, share our views, promote our ideas. . . . 
        [W]hen we do advocacy, no matter what we do, we 
        typically have to pay for it, either totally with FEC 
        dollars or a mixture of FEC and non-FEC dollars. . . . 
        [W]e often find ourselves in the position where we 
        cannot match up non-FEC funds with enough FEC funds. 
        So, when we came to that point, we decided we would 
        contribute to several groups who are like-minded and 
        whose activities we think, while they're not 
        specifically political, we think are good for the 
        environment for us.51

Barbour's benign description of the RNC as simply supporting 
like-minded groups is overshadowed by his admission that it was 
the RNC's shortage of ``FEC funds,'' or hard money, to match 
its ``non-FEC funds,'' or soft money, that led to its giving 
excess soft dollars to groups to undertake activities ``good'' 
for the Republican Party. This explanation is close to an 
admission that the RNC gave soft money to independent groups 
primarily to circumvent federal election requirements that 
parties use hard money in federal campaigns.

                     the rnc's front organizations

    One problem with outside groups is that they cannot always 
be controlled, as Barbour noted in the March 5, 1996, memo 
mentioned earlier. One solution, is to channel money to 
independent groups, with the understanding that the recipient 
will follow the party line. During Barbour's tenure, the RNC 
also used an even bolder tactic: It actually established two 
nonprofit organizations that served as arms of the Republican 
Party.

The National Policy Forum

    In May 1993, four months after Barbour became RNC chairman, 
he launched the National Policy Forum as a ``think tank'' to 
develop conservative ideas and policies 52 (see 
Chapter 3). The NPF applied to the Internal Revenue Service for 
tax-exempt status as a 501(c)(4) organization, asserting in its 
application that it was a nonpartisan, social welfare 
organization.
    Contrary to what the NPF told the IRS, the NPF was, in 
fact, an arm of the Republican National Committee--created by 
RNC officials, chaired by Barbour, and operated in such a way 
that its work dovetailed with the RNC's. Perhaps most 
importantly, the NPF relied heavily on the party for financial 
support, receiving millions of dollars in gifts and loans from 
the RNC. (For these and other reasons, the IRS eventually 
denied the NPF's application for 501(c)(4) 
status.53).
    Although the NPF was not involved in running issue-advocacy 
ads, it did provide services to the party related to political 
campaigning. The NPF's main activity was organizing ``forums'' 
where Republican officials and others could discuss various 
public policy options and where Republican donors were able to 
meet with members of the GOP congressional leadership. In 
addition, the NPF conducted focus groups and commissioned 
public opinion surveys which were useful to the party's 
strategic planning. In fact, the RNC's chief strategist, Donald 
Fierce, was a founding board member of the NPF.54
    One of the most intriguing aspects of the NPF is its 
fundraising operation, which was clearly intertwined with the 
RNC's efforts. On several occasions, prospective donors were 
told they could support the party by giving to the NPF. Major 
donors to the RNC were also told that one of the benefits of 
donating was the chance to attend NPF forums.
    The close connection between NPF and RNC fundraising can be 
illustrated with two examples.
     In July 1995, a company controlled by the family 
of Ted Sioeng, a businessman from Indonesia, donated $50,000 to 
the National Policy Forum (see Chapter 7). The next day, 
Speaker Gingrich attended a luncheon in Beverly Hills hosted by 
Sioeng. When Committee staff asked Sioeng's daughter about the 
donation, she indicated that she viewed it as a donation to the 
Republicans. ``I don't care what department'' the money goes 
to, she said.55
     Stephen Wynn, chairman and chief executive officer 
of Mirage Resorts, Inc., a major casino company in Las Vegas, 
is the subject of an internal RNC memo obtained by the 
Committee.56 This memo discusses a $1 million pledge 
from Wynn and suggests three possible ways in which the money 
could be allocated. It says that Wynn could give some of it in 
the form of soft money to the RNC and some of it in the form of 
a donation to the NPF. The proportions could be changed, 
depending, in part, on Wynn's desire for anonymity (since the 
NPF donations would not be disclosed).

Coalition for our children's future

    While there is no doubt that the National Policy Forum was 
a tool of the RNC, it was, at least, a ``real'' organization, 
with an office and a large staff. The same cannot be said of 
another RNC creation: Coalition for Our Children's Future 
(``CCF'), a nonprofit organization founded in May 
1995.57 Although its name suggested that it was a 
grassroots organization of concerned citizens, CCF was, in 
fact, established and controlled by RNC officials.
    In 1995 and 1996, CCF ran a series of ``issue ads'' on such 
subjects as Medicare and the balanced budget, as discussed in 
Chapter 13 of the Minority Report. In August 1995, CCF received 
a $500,000 donation from the National Republican Congressional 
Committee, part of the RNC.58 Additional money for 
the issue ads was raised by RNC Chairman Barbour and Speaker 
Gingrich. Among the donors were major Republican contributors, 
including large corporations. The Republican party therefore 
financed these ads but because the ads were run by CCF, the RNC 
was able to create the illusion that the message was coming 
from an ``independent'' organization of concerned citizens, 
rather than from a national political party. Moreover, if the 
RNC had run the ads itself, it would have been obliged to pay 
for them with a mixture of hard and soft money.
    The Coalition for Our Children's Future was also one of 
several nonprofit groups active in the 1996 campaign that 
served as vehicles for Republican donors who wanted toinfluence 
elections.

                     fronts for conservative donors

    The RNC was not alone in using ``independent'' groups as 
fronts to circumvent the campaign finance laws. Several 
Republican donors contributed money to nonprofit organizations 
that ran purported ``issue ads'' aimed at helping specific 
Republican candidates win election in 1996. These nonprofits 
were typically put forth as ``grassroots'' organizations but 
several were, in fact, established for the main--or sole--
purpose of running political ads under the guise of issue 
advocacy.

CCF's attack ads

    Shortly before the November 1996 election, Coalition for 
Our Children's Future received a large contribution from an 
anonymous donor and used the money to run a series of ads 
attacking Democratic candidates for the Senate and House of 
Representatives. (It also operated on the state level--
attacking Democratic candidates for the Minnesota House of 
Representatives.)
    When witnesses knowledgeble about CCF's ad campaign were 
deposed by the Committee, they testified that all the funds 
came from a single donor, but they refused to identify the 
donor. The Committee later obtained evidence suggesting that 
the ``sole donor'' was actually an entity called the Economic 
Education Trust.
    The Economic Education Trust was established by Washington 
lawyer Benjamin Ginsberg, who is outside counsel to the 
National Republican Senatorial Committee and a former general 
counsel to the RNC. Ginsberg arranged for several individuals 
involved in the attack ads to sign confidentiality agreements 
forbidding them to reveal the identity of the donor. According 
to a press report, Ginsberg ``said it was done [this way] to 
protect aided politicians from charges of quid-pro-quos if they 
also helped the donors.'' 59 This seems to be an 
admission by Ginsberg that the trust, by funding CCF, was 
really making de facto campaign contributions.
    The Economic Education Trust was also a major donor to two 
tax-exempt organizations controlled by a company called Triad 
Management Services (``Triad''), which is discussed in Chapter 
12 of the Minority Report.

Triad's attack ads

    Triad is a for-profit business established in the 
Washington area in 1995 by Carolyn Malenick, a former 
fundraiser for Oliver North, a figure in the Iran-Contra 
scandal and, in 1994, an unsuccessful candidate for a Senate 
seat in Virginia.
    Triad managed two tax-exempt organizations whose names 
suggested they were large, grassroots organizations: Citizens 
for Reform and Citizens for the Republic Education Fund. In 
fact, both entities were shell companies with no offices, no 
employees, and no members. They were established in the spring 
of 1996 for the sole purpose of running attack ads--under the 
guise of ``issue advocacy''--to help Republican candidates win 
election to Congress.
    Triad officials refused requests by the Committee to 
identify its donors, arguing that the donations did not 
constitute campaign contributions. In fact, there is 
overwhelming evidence that these so-called ``issue ads'' were 
but one tool in a carefully orchestrated campaign to spend 
money on behalf of specific Republican candidates without 
adhering to federal election laws.
    Although Triad would not disclose its donors, the Committee 
has been able to identify some of them through a review of bank 
documents. The records show that several Triad donors had 
contributed the legal maximum in ``hard dollars'' to candidates 
who benefited from ads run by Triad's tax-exempt organizations. 
This is further evidence that the ads were de facto campaign 
ads--and that the ``donations'' to the tax-exempts were de 
facto campaign contributions.
    By operating through Triad, these donors were able to avoid 
complying with federal rules limiting the size of campaign 
contributions and requiring disclosure of those contributions.

Triad's donors

    Triad's largest donor appears to be the family of Robert L. 
Cone of Elverson, Pennsylvania, former chairman of Graco 
Children's Products,60 a privately held company in 
which the Cone family held a large stake until it was sold in 
1996. The Committee found that Cone and members of his family 
had, on many occasions, made the maximum legal contributions 
(``maxed out'') to candidates who benefitted from the Triad-
orchestrated attack ads.
    The second largest donor to Triad's tax-exempt groups 
appears to be the Economic Education Trust which, as noted 
above, also contributed to Coalition for Our Children's Future. 
The Committee has developed circumstantial evidence suggesting 
that the Economic Education Trust was funded in whole or in 
part by Charles and David Koch, the controlling shareholders of 
Koch Industries of Wichita, Kansas,61 as discussed 
in Chapter 12 of the Minority Report. For example, many of the 
candidates who benefited from attack ads run by Triad's tax-
exempts and by CCF received thousands of dollars in campaign 
contributions from Charles Koch, David Koch, and/or their 
company's political action committee. (The Kochs were also 
active fundraisers: David Koch raised money for Bob Dole, the 
Republican presidential nominee, and served as vice chairman of 
the Dole campaign.)
    Koch Industries, a major oil company with annual revenues 
of nearly $30 billion, has been described as the second largest 
privately held company in the United States.62 The 
Koch brothers are major political donors and have contributed 
millions of dollars to public-policy and lobbying groups of 
various kinds, as discussed in an endnote to this 
chapter.63
    The Committee has been unable to confirm that the Kochs 
funded the Economic Education Trust. On September 30, 1997, the 
Minority staff wrote to Charles Koch asking for his assistance 
with the investigation and he received no reply. When 
journalists contacted Koch Industries, spokesmen declined to 
say whether or not it had funded Triad's ``issue advocacy'' 
campaign. Benjamin Ginsberg, the lawyer who set up the Economic 
Education Trust, also declined to identify the donor or donors 
who funded the trust.64 Although it is impossible to 
say who funded the Economic Education Trust, it is clear that 
the donor (or donors) went to great lengths to avoid exposure--
channeling money through at least two layers of shell 
companies. It is noteworthy that similar techniques were used 
to obscure the money trail in the Iran-Contra case and that a 
few individuals involved in Iran-Contra or with its principal 
architect, Oliver North, were later involved in Triad's or 
CCF's questionable ``issue advocacy'' activities during the 
1996 campaign.65

                               conclusion

    The evidence collected by this Committee shows clearly that 
there were really two campaigns conducted during the 1995/96 
cycle. There was an ``overt'' campaign and a ``covert'' 
campaign.
    In the ``overt'' campaign, all contributors--whether they 
were individual donors or political action committees--revealed 
their names, their occupations, and the size of their donations 
to the Federal Election Commission. All donors to specific 
candidates were subject to strict limits on how much they could 
give.
    In the ``covert'' campaign, the rules were utterly 
different. In this parallel campaign, there was no disclosure 
and there were no limits on how much money could be 
contributed. Tax-exempt ``issue advocacy'' groups and other 
conduits were systematically used to circumvent the federal 
campaign finance laws.
    Although the secret donors in the covert campaign were 
invisible, they had a powerful impact. These anonymous 
contributors poured millions of dollars into House, Senate, and 
presidential campaigns. In many cases, the secret donors 
financed massive advertising blitzes in the closing weeks of 
the campaign--boosting certain candidates and undermining their 
opponents. There is every reason to believe that these de facto 
campaign contributions determined the outcome of some of the 
close races.
    The secret flows of money used to pay for these attack 
campaigns severely undermine our campaign finance laws and 
corrupt the electoral process. What is particularly disturbing 
is that Republican Party officials were, in many cases, witting 
participants, sometimes using party money to finance these 
schemes and were, by and large, unwilling to cooperate with the 
Committee's exploration of these important issues.

                               footnotes

    \1\ Rosenberg, Lisa. A Bag of Tricks: Loopholes in the Campaign 
Finance System. Washington, D.C.: The Center for Responsive Politics, 
1996: ``Labor unions have been barred from contributing to candidates 
since 1943. In addition, the post-Watergate campaign finance law caps 
individual contributions at $25,000 per calendar year, and permits 
individuals to give no more than $20,000 to a national party, $5,000 to 
a political action committee (PAC), and $2,000 to a candidate. 
(Contributions of up to $1,000 each for primary and general elections 
are permitted.)'' See also, 2 U.S.C. 434(b)(3)(A) (1977).
    \2\ Coalition Building Manual, Overview section, R 1824.
    \3\ During Dukakis's tenure as governor of Massachusetts, Horton, a 
convicted murderer, was released from a state prison on a weekend 
furlough program. He then raped a Maryland woman and attacked her 
fiance. Horton is black and his face was featured prominently in the 
television ad. His victims were white. Many observers felt the 
Republican ad was racist.
    \4\ The RNC's own donations to outside groups were reported to the 
Federal Election Commission but the donations raised by the RNC from 
Republican donors were not disclosed.
    \5\ Exhibit 2365: Memorandum from RNC political director and head 
of campaign operations Curt Anderson to RNC chairman Haley Barbour, 
regarding ``Group of 12, or Council of Trent, or Whatever,'' 3/4/96, 
R006050.
    \6\ Exhibit 2365.
    \7\ Untitled and undated document tallying support for, opposition 
to and comments by RNC officials on proposed members in a coalition of 
independent group leaders, R021559-60.
    \8\ Untitled and undated document tallying support for, opposition 
to and comments by RNC officials on proposed members in a coalition of 
independent group leaders, R021559-60.
    \9\ Untitled and undated document tallying support for, opposition 
to and comments by RNC officials on proposed members in a coalition of 
independent group leaders, R021559-60.
    \10\ Memorandum, from RNC chairman Haley Barbour to ``Republican 
Leaders'' on ``Independent Expenditure Campaigns,'' 3/5/96, R028572-73.
    \11\ Memorandum, from RNC chairman Haley Barbour to ``Republican 
Leaders'' on ``Independent Expenditure Campaigns,'' 3/5/96, R028572-73.
    \12\ Exhibit 2367: Coalition Building Manual, authored by Curt 
Anderson, R01821-49.
    \13\ R01823.
    \14\ R01841.
    \15\ R01841.
    \16\ R01841.
    \17\ R01841, R01845.
    \18\ R01847.
    \19\ Exhibit 2353: undated memorandum from ``Blaise'' to ``Pat,'' 
regarding ``Outreach, Auxiliaries, Coalitions,'' R51299-30.
    \20\ Exhibit 2362: memorandum dated 3/6/96 from ``Hopper'' to RNC 
political director and head of campaign operations Curt Anderson, 
regarding ``Coalitions,'' R056245.
    \21\ See Chapter 11. See also, for example, Drew, pp. 1-6, 14, 33, 
82-88, 167-69.
    \22\ Exhibit 2364: Memorandum from ``Howard & Phil'' to ``Evelyn 
and Judy'' regarding the ``Seniors Program,'' 3/30/96, R033753-54.
    \23\ Exhibit 2364: Memorandum from ``Howard & Phil'' to ``Evelyn 
and Judy'' regarding the ``Seniors Program,'' 3/30/96, R033753-54.
    \24\ Washington Post, 12/10/96.
    \25\ See Washington Post, 2/12/95. After the election, the 
Democratic Senate Campaign Committee filed a complaint with the FEC 
charging the NRSC with transferring the funds to the groups to 
circumvent federal limits on coordinated expenditures by the Republican 
Party on behalf of its Senate candidate.
    \26\ FEC records.
    \27\ Washington Post, 12/12/95, citing FEC records.
    \28\ Washington Post, 12/12/95, citing FEC records.
    \29\ Washington Post, 12/12/95, citing FEC records.
    \30\ Undated and untitled document, R021609. The other two 
organizations are the United Seniors Association and ``CCRI'' the 
California ballot initiative on affirmative action.
    \31\ Document DFP004244. This document was not produced by the RNC, 
but was produced by the Dole for President campaign.
    \32\ Undated RNC document headed ``Soft Money Fundraising 
Strategy,'' R 3215.
    \33\ FEC records.
    \34\ According to FEC records, in 1996, the DNC gave a total of 
less than $185,000 to tax-exempt organizations, including $117,500 to 
the National Coalition of Black Voter Participation; $20,000 to the 
African American Institute; $10,000 to the Stonewall Gay and Lesbian 
Club; $10,000 to the Congressional Black Caucus; and $4,000 to the 
Hispanic Caucus.
    \35\ Washington Post, 10/23/97.
    \36\ RNC documents provided to the Committee include a copy of a 
check from ADI to RNSEC for $600,000 dated 10/25/96. The memo line 
says: ``Repayment of loan,'' R61404.
    \37\ Washington Post, 10/23/97.
    \38\ This letter is described in the Washington Post, 10/23/97. The 
six checks are from the following persons: (1) $100,000 from Jack C. 
Taylor, identified as founder of Enterprise Rent-a-Car; (2) $100,000 
from Max Fisher, who is a longtime supporter of the Republican Party 
and, in 1996, honorary chair of the RNC's premier donor organization, 
Team 100; (3) $50,000 from a ``foundation controlled by former defense 
secretary Donald Rumsfeld'; (4) $30,000 from ``Houston oil executive 
Patrick R. Rutherford;'' (5) $100,000 from ``billionaire investor Kirk 
Kerkorian''; and (6) $150,000 from John Moran, a national finance chair 
of the RNC and head of Victory ``96, one of the RNC's key fundraising 
committees.
    \39\ That check was from John Moran. See previous note.
    \40\ Washington Post, 10/23/97.
    \41\ Washington Post, 10/23/97.
    \42\ Washington Post, 10/23/97.
    \43\ Washington Post, 10/23/97. The RNC's role in funneling donors' 
money to ``independent'' groups is also mentioned in several RNC and 
Dole for President memos. See Chapter 11.
    \44\ Exhibit 2400: memorandum from RNC finance chair Jo-Anne Coe to 
RNC chairman Haley Barbour and other RNC officials, regarding the 
delivery of checks to ADI, ATR and NRTLC, 10/17/96, DFP004240. This 
document was produced to the Committee by the Dole for President 
campaign.
    \45\ Exhibit 2400: The five checks are identified in the memorandum 
as follows: $100,000 from Jack Taylor; $100,000 from Max Fisher; 
$50,000 from Don Rumsfeld; $30,000 from Pat Rutherford; and $100,000 
from ``Lincy Foundation (Kirk Kerkorian).''
    \46\ Exhibit 2400: Memorandum from RNC Finance Chair Jo-Anne Coe to 
RNC Chairman Haley Barbour and other RNC officials, regarding the 
delivery of checks to ATR, NRTLC and ADI, 10/17/96, DFP004240.
    \47\ DFP004241 & DFP004243.
    \48\ ATR/R00850. A second check for $100,000 was deposited on 10/
28/96. Document ATR/R00854.
    \49\ Exhibit 2400: memorandum from RNC finance chair Jo-Anne Coe to 
RNC chairman Haley Barbour and other RNC officials, regarding the 
delivery of checks to ATR, NRTLC and ADI, 10/17/96, DFP004240.
    \50\ Exhibit 2402: Memorandum from RNC Finance Chair Jo-Anne Coe to 
RNC Chairman Haley Barbour, 10/21/96, DFP004242.
    \51\ ``Haley Barbour, Chairman of the Republican National 
Committee, Discusses Democratic National Committee Refusal of Pre-
Election FEC Report,'' Presidential Campaign Press Materials, Federal 
Document Clearing House, Inc., 10/29/96.
    \52\ NPF filed its articles of incorporation in Washington, D.C., 
on 5/24/93.
    \53\ Exhibit 353: IRS letter to NPF, 2/21/97, NPF 3375-3387.
    \54\ Exhibit 257: NPF's articles of incorporation.
    \55\ Staff interview with Jessica Elnitiarta, 6/19/97.
    \56\ Exhibit 327: Memo from Kevin Kellum of Team 100 to Haley 
Barbour re ``Stephen Wynn, CEO, Mirage Resorts,'' 2/23/96, R 13574.
    \57\ Abstract of filing by Coalition for Our Children's Future with 
Virginia Secretary of State.
    \58\ FEC records.
    \59\ Associated Press, 11/1/97.
    \60\ According to bank records, Cone contributed at least $325,000 
to Triad, while his brother Edward gave at least $404,000. In addition, 
a trust believed to be funded by the Cone family gave at least $150,000 
to Triad, $400,000 to Citizens for Reform, and $200,000 to Citizens for 
the Republic Education Fund.
    \61\ In addition to the circumstantial evidence developed by the 
Committee, there is documentary evidence that Koch Industries gave a 
small amount of money to Triad: The company sent a $2,000 check to 
Triad on 10/29/96.
    \62\ Forbes, 10/13/97.
    \63\ Koch Industries is affected by governmental action in a myriad 
of ways, including taxation and environmental regulation. In 1995, the 
U.S. Department of Justice filed ``a $55 million civil suit against 
Koch [Industries] for causing more than 300 oil spills over a five-year 
period,'' according to a report in Business Week, 4/1/96.
    Koch Industries has also been criticized on Capitol Hill. In 1989, 
the company was accused by a Senate committee of stealing oil from 
Indian lands. Final Report and Legislative Recommendations: A Report of 
the Special Committee on Investigations of the Select Committee on 
Indian Affairs, United States Senate, 101st Congress, 1st Session, 10/
20/89, p. 105.: ``Koch Oil (`Koch'), a subsidiary of Koch Industries 
and the largest purchaser of Indian oil in the country, is the most 
dramatic example of an oil company stealing by deliberate 
mismeasurement and fraudulent reporting.''
    The same allegation is made in a qui tam (false claims) suit filed 
in 1989 on behalf of the United States Government by a company 
controlled by William I. Koch, a former Koch Industries shareholder and 
a brother of Charles and David Koch. United States of America ex rel. 
The Precision Company et al. v. Koch Industries, Inc., et al. United 
States District Court for the Northern District of Oklahoma, Civil 
Action No. 91-C-763-B.
    Koch Industries denies the oil-theft allegations.
    Since the 1970s, the Kochs have donated millions of dollars to the 
Cato Institute, a Libertarian think tank that promotes deregulation and 
tax cuts. Cato, which was founded in 1977 with financial backing from 
Charles Koch, has received more than $21 million from the Kochs, 
according to The Nation, 8/26/96. In 1980, David Koch was the 
Libertarian Party's candidate for vice president in 1980.
    The Kochs have also donated millions of dollars to Citizens for a 
Sound Economy, a pro-business organization in Washington that promotes 
deregulation. Lewis, Charles and the Center for Public Integrity.  The 
Buying of the President. New York: Avon Books, 1996, p. 127.
    Around the time of the 1989 Senate investigation, the Kochs became 
major donors to the Republican party and to Republican politicians, 
some of whom defended Koch Industries against the oil-theft 
allegations:
     In late 1989, Senators Bob Dole (R-Kans.), Nancy Kassebaum 
(R-Kans.), Don Nickles (R-Okla.), and David L. Boren (D-Okla.), sent 
two letters to Senator Dennis DeConcini, chairman of the Special 
Committee conducting the investigation (the ``DeConcini Committee''), 
in which they challenged the reliability of testimony given to the 
committee. One letter was dated October 24, the other November 2.
     On March 26, 1990, Senator Dole gave a speech on the 
Senate floor in which he attacked the DeConcini investigation and 
characterized Koch Industries as a ``solid corporate citizen.'' Senator 
Dole said he was speaking on behalf of himself and Senators Kassebaum, 
Boren, and Nickles.
     On August 13, 1992, Senators Dole, Nickles, Kassebaum, and 
Boren sent a pro-Koch letter to Senator Daniel K. Inouye, chairman of 
the Select Committee on Indian Affairs, in which they recommended 
attaching an addendum to the DeConcini Committee's 1989 report that 
would clear Koch Industries.
    \64\ See Chapters 12 and 13
    \65\ Some of the techniques used to conceal donors to dubious 
``issue advocacy'' groups are reminiscent of methods used to hide 
donors to the Nicaraguan Contras during the 1980s. In Iran-Contra, the 
conduits included tax-exempt corporations. In ``issue advocacy'' 
schemes of the 1990s, some of the funds used to pay for purported 
``issue ads'' were channeled through tax-exempt corporations and secret 
trusts. Another parallel is that a few individuals who were involved 
with Iran-Contra or Oliver North were also involved in the purported 
``issue advocacy'' activities of either Triad or Coalition for Our 
Children's Future.
     Fred Sacher, a California businessman, contributed an 
estimated $400,000 to the Contras and was also a donor to the 1994 
Senate campaign of Oliver North, a central figure in the Iran-Contra 
affair. In 1996, he contributed heavily to Triad's tax-exempts: Bank 
records show that he gave $50,000 to Citizens for Reform and $150,000 
to Citizens for the Republic Education Fund.
     J. Curtis Herge, a Virginia lawyer who has represented 
numerous conservative groups, helped to form the National Endowment for 
the Preservation of Liberty (``NEPL''), a tax-exempt entity which 
served as an illegal conduit for aid to the Contras. As a result, the 
head of NEPL, Carl R. (``Spitz'') Channell, pleaded guilty to 
conspiracy to defraud the United States, a felony. Herge, who was never 
accused of wrongdoing, served as a trustee for Oliver North's legal 
defense trust. During the 1990s, Herge served as counsel to Coalition 
for Our Children's Future.
     Lyn Nofziger, a longtime Reagan aide, ran a public 
relations firm in Washington after leaving the White House staff. As a 
consultant to Spitz Channell, the head of NEPL, Nofziger assisted in 
fundraising for the Contras by arranging for some of Channell's donors 
to meet with President Reagan at the White House, according to a 
spokesman for Channell (Chicago Tribune, 5/5/87). In 1996, Nofziger was 
named director and spokesperson for a Triad-controlled tax-exempt: 
Citizens for the Republic Education Fund.
     Carolyn Malenick, the owner of Triad, had been a 
fundraiser for Oliver North's legal defense trust during the Iran-
Contra prosecution. In 1994, she was finance director of his 
unsuccessful campaign for the Senate. She then established Triad, which 
used two tax-exempt corporations to run attack ads under the guise of 
issue advocacy.





PART 3  INDEPENDENT GROUPS

Chapter 11: Americans for Tax Reform

    The conduct of Americans for Tax Reform (``ATR'') in the 
1996 elections provides a prime example of campaign abuses 
involving tax-exempt organizations. Despite a commitment to 
nonpartisanship in its incorporation papers, ATR engaged in a 
variety of partisan activities on behalf of the Republican 
Party during the 1996 election cycle. ATR also accepted $4.6 
million in soft dollars from the Republican National Committee 
and spent them on election-related efforts coordinated with the 
RNC. The ability of ATR to act as an alter ego of the 
Republican National Committee in promoting the Republican 
agenda and Republican candidates, while shielding itself and 
its contributors from the accountability required of campaign 
organizations, underscores the need for reform of the rules 
governing the political activities of such organizations.
    The case of ATR is also a prime example of the 
unwillingness of the Majority to examine improper and 
apparently illegal activities of the RNC and Republican-
oriented entities with the same vigor and aggressiveness it 
demonstrated in examining the activities of the Democratic 
National Committee and Democratic-oriented organizations. 
Indeed, the refusal of the Majority to exercise the lawful 
authority of the Committee in the face of ATR's repeated 
defiance of Committee document and deposition subpoenas belies 
its stated commitment at the outset of this investigation to 
approach the issues in a balanced and bipartisan manner.
    Despite ATR's noncompliance and the Committee's failure to 
enforce its authority to investigate ATR's activities, the 
Minority has been able to piece together the outline of 
coordinated campaign efforts between the RNC to nonpartisanship 
and ATR that appear to have circumvented hard and soft money 
restrictions, evaded disclosure requirements, and abused ATR's 
tax-exempt status.

                                FINDINGS

    (1) The Republican National Committee improperly and 
possibly illegally gave $4.6 million to Americans for Tax 
Reform to fund issue advocacy efforts including mail, phone 
calls, and televised ads. By using ATR as the nominal sponsor 
of issue advocacy efforts, the RNC effectively circumvented FEC 
disclosure requirements and the requirement to fund 65% of the 
cost of its issue advocacy with hard (restricted) money.
    (2) By operating as a partisan political organization on 
behalf of the Republican Party, Americans for Tax Reform 
appears to have violated its status as a tax-exempt, social 
welfare organization under section 501(c)(4) of the tax code.
    (3) ATR's issue advocacy activity was conducted, in part, 
by an affiliate called the Americans for Tax Reform Foundation, 
which appears to be a violation of the foundation's status as a 
501(c)(3) charitable organization, contributions to which are 
tax deductible.

                               BACKGROUND

    ATR was established in 1985 by a group of prominent 
Republicans to rally support for then-President Reagan's tax 
reform proposals.1 It was created as a tax-exempt 
corporation under section 501(c)(4) of the Internal Revenue 
Code.2 Its articles of incorporation state in 
article 3:
---------------------------------------------------------------------------
     Footnotes at end of chapter.
---------------------------------------------------------------------------
          The purpose for which this corporation is organized 
        and operated shall be to engage in such charitable, 
        scientific, educational and political activities 
        relating to tax reform, the promotion of tax fairness 
        and economic prosperity as may qualify it as exempt 
        from federal tax under section 501(c)(4) of the 
        Internal Revenue Code.3

Article 6 of ATR's articles of incorporation states that ATR's 
purposes must be pursued without partisanship:

          The Corporation's purposes shall be pursued wholly 
        without partisanship, and the corporation shall not 
        participate in, or intervene in (including the 
        publishing or distribution of statements), any 
        political campaign on behalf of any candidate for 
        public office, [nor] engage in any partisan 
        activity.4

    ATR has a number of affiliated organizations.5 
The oldest is Americans for Tax Reform Foundation (``ATRF'') 
which was created in conjunction with ATR in 1985 as a tax-
exempt corporation under section 501(c)(3) of the Internal 
Revenue Code.6 ATRF shares office space, facilities, 
equipment, and personnel with ATR. ATRF's stated role is to 
educate the public about the need to reduce taxes and simplify 
the federal tax system.7 Article 6 of ATRF's 
articles of incorporation states that it ``shall not 
participate in, or intervene in (including the publishing or 
distribution of statements), any political campaign on behalf 
of any candidate for public office, nor engage in any partisan 
activity.''

                            GROVER NORQUIST

    Since 1987, Norquist has served as the president and 
guiding force of both ATR and ATRF.8
    Norquist's activism in Republican affairs is long standing. 
In the early 1980s, after obtaining a degree from Harvard 
Business School, Norquist served as director of the National 
College Republican Committee, the collegiate arm of the 
RNC.9 He then worked for Americans for the Reagan 
Agenda, a grassroots organization supporting President Reagan; 
the U.S. Chamber of Commerce; and Citizens for America, another 
grassroots organization backing the Reagan agenda.10 
After joining ATR as president, Norquist continued to engage in 
Republican Party activities. In both 1988 and 1992, he served 
as staff to the Republican Platform Committee.11 In 
1988, Norquist was an advisor to the Bush/Quayle presidential 
campaign.12 Norquist has also, since the early 
1980s, been a close advisor and confidant of the Republican 
Speaker of the House, Newt Gingrich, and is also a registered 
foreign agent.13
    In Rock the House, a book written by Norquist on the 1994 
Republican takeover of the House of Representatives, prominent 
Republicans praise his work on behalf of the Republican Party. 
Conservative radio talk show host Rush Limbaugh calls Norquist 
``perhaps the most influential and important person you've 
never heard of in the GOP today.'' (Original emphasis.) RNC 
Chairman Haley Barbour calls Norquist ``a true insider.'' 
Speaker Gingrich states that Norquist ``has entree at every 
level of the Republican Party.'' Journalist Michael Barone of 
U.S. News and World Report states that ``Norquist is one of the 
few people who both predicted and worked for the Republican 
victories in November 1994.'' Norquist's inclusion of these 
statements in his book is evidence that he considers them 
accurate descriptions of his involvement with the Republican 
Party.
    Documents produced to the Committee by the RNC demonstrate 
Norquist's continued involvement with the Republican Party 
during the 1996 election cycle. A December 6, 1994, memorandum 
on RNC stationery from Donald Fierce, counselor to the RNC 
chairman, prepared at the threshold of the 1996 election 
cycle,14 is entitled ``Core Working Group'' and 
lists key personnel from the RNC, Republican Governors 
Association, and outside organizations sympathetic to the 
Republican Party, including Norquist as president of ATR. A 
March 4, 1996, memorandum from Curt Anderson, RNC political 
director, to RNC Chairman Haley Barbour,15 states: 
``You had asked us in Atlanta to come up with ideas for a group 
that would encompass the leadership of the base Republican 
coalition.'' On that list is Norquist. An August 22, 1996, RNC 
media advisory states that, during the Democratic National 
Convention, Norquist is available to answer press inquiries as 
a ``Republican surrogate.'' 16
    Other public statements also portray Norquist as actively 
engaged in the effort to elect Republicans to office in 1996. 
When Representative Bill Paxon, head of the National Republican 
Congressional Committee, was asked to ``list the most important 
people or groups behind the Republicans' effort to maintain 
control of the House'' in 1996, the first name he gave was 
Norquist.17 When Speaker Gingrich held a September 
1996 dinner in his so-called ``Dinosaur Room'' and discussed 
the state of House campaigns, Norquist attended.18 
For his part, when asked in 1995 how to ensure dramatic tax 
reform, Norquist replied, ``Elect a Republican president, and 
it will happen.'' 19
    Norquist has spent the last decade becoming an increasingly 
important Republican Party insider, dedicated to electing more 
Republicans to office.20 The facts and documents 
indicate that he has consistently used ATR to promote not only 
Republican ideas but also Republican candidates. In the 1996 
election cycle, ATR's partisanship culminated in a $4.6 million 
contribution by the RNC, a sum which was more than four times 
ATR's total income the previous year.21 ATR used 
this money, as well as large contributions directed to it by 
the RNC, to finance a range of election-related activities, 
including a multimillion-dollar direct mail and phone bank 
operation to counter anti-Republican ads on Medicare; 
television ads attacking Democratic candidates; media events 
and awards to assist Republican candidates and disparage 
Democratic candidates; and weekly meetings of conservative 
activists at ATR's offices to encourage an organized response 
to 1996 election concerns. ATR undertook all of these 
activities without registering with the FEC as a political 
organization, without disclosing its contributors or 
expenditures, and without admitting any partisan or election-
related objectives.

                   THE $4.6 MILLION OCTOBER SURPRISE

    In October 1996, the final month before the election, the 
RNC gave $4.6 million to ATR--the single largest dollar 
transfer from a national political party to a tax-exempt 
organization in the history of American politics.
    ATR has refused to provide an accounting of how it obtained 
the $4.6 million from the RNC or how it spent the money. It has 
told the Committee that such information is outside the scope 
of the Committee's investigation, because ``ATR has never 
engaged in electioneering of any sort. It has never advocated 
the election or defeat of any candidate for any office at any 
time; it has never run political advertising on any subject.'' 
22 The facts and documents show, however, that ATR 
used the $4.6 million in RNC funds to finance a number of 
election-related efforts, including a multimillion-dollar 
direct mail-phone bank operation, in coordination with the RNC, 
to counter anti-Republican advertisements on the issue of 
Medicare.
    For months prior to the transfer, the RNC had been 
objecting to television advertisements sponsored by organized 
labor and others criticizing the Republican Party for its 
positions on Medicare. The RNC claimed that the advertisements 
distorted the facts and that Republicans did not intend to 
reduce Medicare benefits. Yet, the RNC delayed spending funds 
to respond to those ads until October 1996. At an October 25 
press conference, RNC Chairman Haley Barbour offered this 
explanation of the RNC's decision to delay spending:

          [W]e made the decision not to borrow money last year 
        or early this year in order to try to compete with the 
        unions and the other liberal special-interest groups' 
        spending. You see, our campaigns do come into the real 
        election season late September and October without 
        having spent all the money . . . to match what the 
        unions were doing. And you will see us--you are seeing 
        now, and have been throughout the month of October, you 
        are seeing Republicans using the resources that we've 
        raised in voluntary contributions to finish very 
        strong, to make sure our message is in front of voters 
        when they are making their voting 
        decisions.23

    One step taken by the RNC to ensure that its message was 
``in front of voters when theyare making their voting 
decisions'' was to pay ATR $4.6 million from the RNC's soft money 
account. ATR then used the money primarily for a direct mail and phone 
bank operation targeting 150 Congressional districts with 19 million 
pieces of mail and four million telephone calls on the issue of 
Medicare.24
    The ATR mailings are entitled: ``Straight Talk About You, 
Medicare and the November 5 Election.'' 25 One 
mailing urges senior citizens to ignore ``political scare 
tactics'' involving Medicare, and states ``[t]here's barely a 
difference between the Republican Medicare Plan and President 
Clinton's Medicare Proposal.'' 26
    These mailings were handled by the John Grotta Company, the 
contractor that actually managed the Medicare direct mail and 
phone bank effort for ATR in October 1996. This company has 
also run direct mail campaigns for the RNC and is owned by an 
individual--John Grotta--who is a former western political 
director for the RNC as well as a former director of voter 
contact for the National Republican Senatorial Committee. A key 
planning document submitted by the John Grotta Company to ATR 
about these mailings is entitled, ``A Strategic Direct Mail and 
Telemarketing Proposal to Inform and Activate the Seniors 
Electorate in Select Congressional Districts During the 1996 
Election Season.'' 27 The proposal's use of the word 
``Electorate'' to describe seniors and ``1996 Election Season'' 
to describe the relevant time period is evidence of an 
election-related purpose. The proposal states that, ``[u]nlike 
other direct marketing companies, we possess unique campaign 
experience and telemarketing technology which allow us to 
target your mail and phone programs to produce the results you 
need.'' The proposal cites ``vast campaign and political 
expertise'' and past ``direct mail and telephone programs for 
winning Presidential, Gubernatorial, U.S. Senate and House 
Republican candidates'' as two of the company's selling points. 
(Emphasis added.)
    RNC-produced documents provide further evidence that the 
Medicare effort was election driven. An undated memorandum 
produced to the Committee by the RNC entitled, ``Memorandum for 
the Field Dogs,'' 28 states in its entirety:

          Re: Outside Mail and Phone effort
          Attached is a rotten copy of the 1st of 3 mail 
        piece[s] that will be sent to 150 selected 
        congressional districts it will be directed at, a map 
        of which has been included for your viewing pleasure.
          We discussed this effort during Wednesday's 
        conference call.
          This is an effort undertaken by Americans for Tax 
        Reform. They are attempting to warn seniors about 
        Democrat Mediscare tactics . . . 29

    This memorandum shows that the RNC had a copy of ATR's 
first Medicare mailing before it was sent out--it attaches the 
``piece that will be sent.'' It shows that the RNC knew it was 
the first of three mailings, and that it was being sent, not to 
specified cities or counties or zip codes, but to specified 
Congressional districts. To ensure that RNC field personnel 
would know exactly which districts were targeted, the memo 
included ``a map . . . for your viewing pleasure.'' The memo 
also states that RNC field personnel had discussed the ``effort 
undertaken by Americans for Tax Reform'' in a previous 
``Wednesday's conference call.''
    This memorandum demonstrates advance RNC knowledge not only 
of ATR's general Medicare effort, but also of ATR's first 
specific mailing and of the 150 congressional districts 
selected to receive it. The fact that the mailing targets 
congressional districts, rather than cities or zip codes, again 
demonstrates an election-related intent. The fact that this 
information was communicated to RNC field personnel doing 
election-related work at the time--and in the last month before 
election day--provides still more evidence of an election-
related purpose.
    Additional documents analyzed by the Minority indicate that 
the RNC knew when it gave ATR the $4.6 million that ATR 
intended to spend the funds on the Medicare issue. Consisting 
primarily of invoices, check copies, wire transfers and bank 
records, this evidence shows that the RNC's $4.6 million 
``donation'' to ATR actually consisted of four payments made 
throughout the month of October in amounts and on dates that 
enabled ATR to pay the bills for the Medicare direct mail and 
phone bank operation.
    A key document is an October 29, 1996, invoice provided to 
ATR's executive director, Audrey Mullen, from the John Grotta 
Company.30 This invoice shows that the company sent 
out three mailings, directed two rounds of telephone calls, and 
purchased a database for ATR. It shows ATR owing various 
amounts throughout October 1996. The grand total for the entire 
direct mail and phone bank operation, not including postage for 
the mailings, is $3,325,498.60, of which only about $608,000 
was still owed on October 29.
    ATR's bank records,31 provided by Riggs National 
Bank in response to a Committee subpoena,32 show 
that on October 1, 1996, ATR had two bank accounts with a 
combined total of $294,078.50. This amount, less than a tenth 
of the total cost of the direct mail-phone bank operation, 
would have been insufficient to pay for that effort. The bank 
records show, however, that beginning on October 4, the RNC 
began transferring funds directly into one of ATR's bank 
accounts in amounts that would prove more than enough to pay 
for the entire direct mail-phone bank operation.
    The timing of the RNC payments is also revealing. According 
to the October 29 invoice, ATR owed John Grotta an initial 
payment of $195,177.50 on October 7. On October 4, three days 
before that initial payment was due, the RNC gave $2 million to 
ATR. The RNC didn't write a check to ATR--the bank documents 
show that the RNC wire-transferred the funds directly from its 
soft money account into ATR's bank account.33 Five 
days later, on October 9, ATR paid its bill to John 
Grotta.34
    Two weeks later, ATR faced another $1,313,677.40 in bills 
owed to the John Grotta Company. These bills were due on 
October 18 and October 22. On October 17, the RNC made a second 
payment to ATR, this time in the amount of $1 million. Again, 
this money was wireddirectly into ATR's bank 
account.35 Within days of receiving it, ATR paid the John 
Grotta Company $1,418,544.38.36
    Yet another Grotta bill came due on October 24, in the 
amount of $1,104,000. On October 23, however, the total in 
ATR's bank account was only $216,344.93. But on October 25, the 
RNC made a third payment of $1 million wired into ATR's 
account.37 Within hours of receiving this million-
dollar payment, ATR paid the John Grotta Company 
$1,104,000.38
    The fourth and most telling payment came one week later, at 
the end of October. ATR faced a final Grotta bill in the amount 
of $607,776.72. On the day before that bill was due, the total 
in ATR's bank account was only $70,085.65. But on the next 
day--the day when the $607,000 bill was due--the RNC wired ATR 
a fourth and final payment in the amount of 
$600,000.39 Within two hours of receiving the RNC 
funds, ATR paid its final bill for the Medicare direct mail-
phone bank operation.40
    The timing and amounts of RNC payments to ATR, when 
compared to the billing dates and amounts owed by ATR to the 
John Grotta Company, suggest ongoing communication and 
coordination between ATR and the RNC. They indicate, for 
example, that the RNC's $600,000 payment to ATR just in time 
for ATR to pay a $600,000 bill was more than coincidence.
    However, when asked publicly about the transactions, RNC 
Chairman Haley Barbour and ATR President Grover Norquist denied 
that the $4.6 million transfer was part of any coordinated 
effort between the two organizations. Barbour told the 
Washington Post that ``he had no understanding with Norquist 
about how the money would be spent,'' 41 while 
Norquist told the press that he had made ``no specific 
commitment'' 42 to the RNC on how ATR would spend 
the money.
    But other statements by the two men indicate the opposite. 
When asked to comment on the $4.6 million, Norquist told the 
Washington Post that ATR ``just ramped up on stuff we were 
going to do anyway. They, the RNC, the conservative movement, 
knew the projects we were working on.'' 43
    When asked about the $4.6 million at a news conference at 
RNC headquarters on October 29, 1996, Barbour said the 
following:

          Sure. We made a contribution to Americans for Tax 
        Reform, which is a conservative, low-tax organization. 
        You'll see in our FEC report now and at the end of the 
        year that we've made contributions to a number of 
        organizations that are like-minded, share our views, 
        promote our ideas.
          As you know, when we do advertising, when we do 
        advocacy, no matter what we do, we typically have to 
        pay for it, either totally with FEC dollars or a 
        mixture of FEC and non-FEC dollars. While our 
        fundraising among small donors has been nothing short 
        of spectacular, we often find ourselves in the position 
        where we cannot match up non-FEC funds with enough FEC 
        funds. 
          So, when we came to that point, we decided we would 
        contribute to several groups who are like-minded and 
        whose activities we think, while they're not 
        specifically political, we think are good for the 
        environment for us.44 (Emphasis added.)

In a Washington Post article on February 9, 1997, again 
referring to the RNC contribution to ATR, Barbour was quoted as 
saying that groups like ATR ```have more credibility' in 
pushing a political message than the parties themselves.'' 
45
    These statements by the RNC chairman indicate that the RNC 
gave ATR $4.6 million in soft money for two reasons. The first 
reason was that the RNC did not have enough matching hard 
dollars to allow the RNC to do the desired issue advocacy 
itself. FEC filings demonstrate just how few hard dollars the 
RNC had during the last month before the election. On September 
30, 1996, the RNC reported having $16.7 million on hand, of 
which only $3.8 million was hard money; on October 16, of the 
$3.9 million the RNC reported having on hand, none was hard 
money.46 The FEC has ruled that issue advocacy 
undertaken by a national political party in a presidential 
election year must be paid for with a mix of 65 percent hard 
dollars and 35 percent soft dollars,47 yet the RNC 
paid for the ATR Medicare mailings and phone calls without 
using a single hard dollar. The second reason the RNC gave for 
giving $4.6 million to ATR in October was that political 
advertising sponsored by a group like Americans for Tax Reform 
had more credibility than advertising sponsored by the RNC 
itself. Norquist's statement is unequivocal that the RNC 
already knew what projects ATR was working on--one would assume 
that included ATR's Medicare project whose projected cost was 
three times greater than ATR's entire income the previous year.
    The facts, documents and public statements of Barbour and 
Norquist, when viewed together, reveal a deliberate, 
coordinated strategy of moving RNC soft dollars to a tax-exempt 
organization to pay for an election-related direct mail and 
phone bank operation. Had the RNC undertaken that operation 
itself, it would have required substantial hard dollars which 
the RNC did not have. The resulting mailings and telephone 
calls were paid for entirely with soft dollars, drew on ATR's 
greater credibility, and targeted 150 selected congressional 
districts presumably where Republican candidates needed help on 
the Medicare issue.48
    In addition to demonstrating coordination between the RNC 
and ATR to fund the Medicare direct mail-phone bank operation, 
the invoices and bank records provide evidence of the 
involvement in that operation by the Americans for Tax Reform 
Foundation, ATR's affiliated charitable organization which is 
legally prohibited from engaging in campaign activity or 
operating for the benefit of a private interest like the 
Republican Party.49 The documents suggest that of 
the $4.6 million provided by the RNC, ATR transferred about 
$2.3 million to the Foundation which, in turn, paid the John 
Grotta Company for almost half of the direct mail-phone bank 
bills. In effect then, the RNC funneled soft money through two 
tax-exempt organizations--one a 501(c)(4) and one a 501(c)(3)--
to pay for an election-related effort it could not do on its 
own due to a shortage of hard dollars. ATR paid approximately 
$1.8 million for the operation, while the ATR Foundation paid 
approximately $1.5 million.50 Additional proof of 
the Foundation's involvement is provided by one of the mailings 
which states, underneath the heading ``Straight Talk About You, 
Medicare & the November 5 Election'': ``Paid for by AMERICANS 
FOR TAX REFORM FOUNDATION.'' 51

                        ATR TELEVISED ATTACK ADS

    The RNC's $4.6 million paid for more than the Medicare 
direct mail and phone bank operation. That operation cost 
approximately $3.3 million plus postage. That leaves RNC funds 
in the range of $1 million unaccounted for. Although Norquist 
told the Washington Post in December 1996, that ATR ``didn't do 
televised issue ads,'' 52 and told the Committee in 
June 1997 that ``it has never run political advertising on any 
subject,'' 53 the evidence establishes that ATR did 
in fact produce and run television ads attacking Democratic 
candidates, the costs of which appear to have been paid at 
least in part with RNC funds.
    A videotaped copy of a 1996 television ad attacking then-
Representative Robert Torricelli, the Democratic senatorial 
candidate in New Jersey, for allegedly missing votes during his 
tenure as a Congressman, was provided to the 
Minority.54 The ad states plainly in the closing 
frame that it was paid for by ATR. An invoice to ATR from a 
company called Title Wave requests roughly $8,000 for producing 
an ad called ``Missing.'' 55 In addition, ATR 
provided to the Committee invoices from a company called 
Mentzer Media Services, Inc. (``Mentzer''). These invoices show 
that Mentzer charged ATR $325,230 for a 30-second television 
media buy in the New York/New Jersey media markets 
56 and another $56,656.25 for media buys in the 
Philadelphia/New Jersey media markets.57 These media 
buys began in October and lasted until November 4, 1996, the 
day before the election. The Mentzer invoices do not specify 
the Torricelli/``Missing'' ad, but that is the only ad which 
the Minority has evidence was broadcast in those markets. It is 
possible, however, that these media buys were for other ATR-
sponsored television ads not yet identified.
    ATR's bank records indicate that RNC funds were used by ATR 
to pay the bills related to this television attack ad. The 
records indicate that on October 4, 1996, the same day it 
received $2 million from the RNC, ATR wrote a $4,000 check to 
Title Wave as partial payment on the Torricelli/``Missing'' 
ad's production costs.58 Two weeks later, ATR wrote 
a $4,900 check to a company called Soundwave. 59 The 
memo at the bottom of the check states that it is payment on an 
invoice for the ``Torricelli ad.'' ATR's bank records also 
indicate that beginning October 8, ATR wire-transferred a total 
of $374,830 to Mentzer Media Services for media 
buys.60 Overall, at the beginning of October, ATR's 
bank account balances stood at just over $290,000. After 
receiving the influx of RNC money, ATR spent over $383,000 on 
producing and televising the television ad attacking then-
Representative Torricelli.
    Documentary evidence suggests ATR's possible involvement 
with other television ads as well during the 1996 election 
season. Two such television ads, both of which attack President 
Clinton by name, were allegedly sponsored by an organization 
called Women ForTax Reform. Both ran in Chicago in the last 
week of August, during the Democratic National Convention.61 
These ads were announced at a news conference held at the National 
Press Club on August 21, 1996.62 The records of Women for 
Tax Reform indicate, however, that this organization was formed on 
August 15,63 just six days earlier. Since six days hardly 
seems sufficient time for a new organization to develop, produce, and 
purchase air time for two television ads and announce them at a 
National Press Club briefing, the facts suggest that Women for Tax 
Reform must have had assistance prior to its formation.
    That assistance was likely provided by ATR. The president 
of Women for Tax Reform was Audrey Mullen, who served 
concurrently as ATR's executive director.64 In 
addition, Women for Tax Reform shared office space, facilities, 
equipment, and personnel with ATR.65 In its 
application to the IRS for tax-exempt status, Women for Tax 
Reform states that it has a ``special relationship'' with 
ATR.66 The extent to which ATR assisted Women for 
Tax Reform with its television ads cannot be determined 
conclusively, due to the refusal of both ATR and Women for Tax 
Reform to comply with Committee subpoenas for documents and 
deposition testimony. But the acknowledged relationship between 
the two organizations together with the timing of Women for Tax 
Reform's anti-Clinton ads so quickly after its formation 
suggest that ATR was more than a bystander in this matter.
    Documents also suggest that ATR was working with the RNC to 
produce television ads attacking other Democratic candidates. 
Among the documents produced to the Committee by the RNC is the 
script of a television ad which was designed to attack 
Democratic candidates running for open seats.67 The 
document states at the top, ``RNC-TV/Open Seat TV:30/ 
`Control.' '' The ad calls for inserting a picture of a 
Democratic candidate, stamping ``Wrong!!'' over it, and then 
inserting the ``Democrat Tax Record'' under the picture. The 
last line of the ad reads: ``For more information call 
Americans for Tax Reform.'' At the bottom of the document is a 
typewritten notation ``As of 10/15/96 4:50 PM/ Approved by 
legal counsel.'' This document is compelling evidence of 
coordination between the RNC and ATR on television attack ads 
during the 1996 election season. It reveals a sufficient 
investment of resources to involve a written script and legal 
consultation three weeks before election day. Since RNC and ATR 
officials refused to be interviewed or to appear in response to 
a subpoena for deposition testimony, it is unclear whether any 
of the contemplated ads were broadcast. Whether or not a 
broadcast took place, however, this RNC-produced document is 
evidence of ATR-RNC coordination on political advertising.

                         atr candidate advocacy

    During the 1996 election season, in addition to its 
Medicare operation and involvement with television ads 
attacking Democratic candidates, ATR used its taxpayer pledge 
and award programs to assist Republican candidates and attack 
Democratic candidates.
    ATR first initiated its taxpayer pledge program in 
1986.68 Essentially, it consists of ATR's asking 
candidates for office to sign a pledge that, if elected, they 
will oppose efforts to raise taxes. ATR then publicizes, 
through media advisories, press conferences and advertisements, 
the willingness or unwillingness of a candidate to sign its 
pledge.69
    In 1986--the first year of its taxpayer pledge program--the 
FEC found reason to believe that ATR had violated federal 
campaign laws by improperly coordinating with candidates the 
timing and distribution of its pledge media 
advisories.70 ATR settled this matter with the FEC 
through a conciliation agreement in which it admitted violating 
the federal election laws and agreed to pay a $1,000 civil 
penalty.
    In 1994, in response to complaints from the Democratic 
Party, the FEC again investigated ATR's taxpayer pledge 
program.71 The investigation initially focused on 
ATR activities during a 1994 special election in Kentucky, 
expanded to other 1994 congressional campaigns, and also 
included examination of ATR activities in 1995 with respect to 
the Dole presidential campaign.
    In September 1996, the FEC general counsel issued a report 
on ATR's activities, including its dealings with the Dole 
presidential campaign.72 According to the general 
counsel's report, Norquist attended several events in 1995 at 
the request of the Dole for President Committee (``Dole 
campaign''). The first was a media event on April 7, in 
Washington, D.C., at which Senator Dole signed ATR's Taxpayer 
Pledge, an action he had not taken previously.73 The 
second event, on April 10, was a ``town hall meeting'' in New 
Hampshire in which Senator Dole made his formal announcement 
for the presidency. According to the general counsel's report, 
the press stated that Norquist attended the event to assure 
reporters that Senator Dole had finally signed ATR's 
pledge.74 After the announcement, Norquist 
reportedly flew with the Dole campaign to New York City and 
attended fundraisers for the Senator.75 Norquist's 
transportation and accommodation costs were paid by the Dole 
campaign.76 The general counsel's report describes 
similar media events that Norquist attended on behalf of 1994 
congressional campaigns, as well as an ATR radio advertisement 
during the Kentucky special election which the general counsel 
determined contained ``express advocacy,'' meaning that the 
radio ad advocated the defeat of the Democratic candidate and 
the election of the Republican candidate.
    ATR told the FEC that Norquist had attended the 1994 and 
1995 media events solely as a spokesman for the organization 
and ``with the explicit understanding that [he] would not 
advocate the election or defeat of any candidate'' and ``would 
not discuss the candidate . . . or the candidate's campaign 
outside the context of the taxpayer pledge.'' 77 
However, the FEC general counsel's report concludes, in part:

          Mr. Norquist's affidavits and press reports show that 
        ATR and certain federal candidates coordinated the 
        timing, and possibly the content, of press conferences 
        and other press events where such candidates announced 
        that they had taken ATR's pledges. Specifically, ATR 
        coordinated Mr. Norquist's appearances at such events 
        with . . . Dole for President. . . . ATR's activities 
        here appear analogous to those at issue in MUR 2269, 
        [the 1986 enforcement action] a matter in which the 
        Commission also found that ATR violated Section 
        441b(a). . . . [S]uch committees appear to have 
        accepted corporate in-kind contributions from ATR. 
        Accordingly, this Office recommends that the Comission 
        find reason to believe that . . . Dole for President 
        Committee . . . violated 2 USC 441b(a). . . . [I]t 
        appears that other issues brought to light in this 
        matter also require further investigation. . . . ATR's 
        documents also indicate that it provided candidates 
        with ideas for their campaigns, i.e., it offered to 
        coordinate tax rallies, its flyers provided candidates 
        with ideas on how to win election and it offered free 
        of charge extra-large copies of its tax pledge that 
        were designed to assure adequate media coverage. These 
        appear to be things of ``value'' and thus 
        contributions. . . . [T]his Office also recommends that 
        the Commission approve the attached Subpoenas for 
        documents and Orders for Written Answers.78

The report made similar findings with respect to the 1994 
Republican candidate committees. In short, the report found 
reason to believe that ATR had engaged in improper coordination 
with Republican candidate committees and provided illegal in-
kind corporate contributions to them by coordinating the pledge 
media events. The report recommended that the FEC find reason 
to believe that ATR had violated section 441b's prohibition 
against corporate contributions or, in the alternative, section 
433(a)'s requirement for registration as a political committee. 
The report also recommended further investigation of ATR. While 
the general counsel's findings and recommendations received the 
support of three of five Commissioners,79 a vote of 
four Commissioners is required to sustain an action, and the 
FEC ultimately closed the matter without further 
action.80
    Other than ATR's actions in 1995 with respect to the Dole 
presidential campaign, the FEC did not report on ATR's 
activities during the 1996 election cycle. It seems clear, 
however, that the FEC general counsel's negative findings 
regarding ATR's 1994 and 1995 activities had no deterrent 
effect, as ATR continued to use its pledge program to assist 
Republican candidates in 1996.
    One key document is a March 8, 1996, letter on ATR 
stationery from Norquist to RNC Chairman Haley 
Barbour.81 In it, Norquist thanks Barbour for his 
letter ``regarding our `Taxpayer Protection Pledge', your 
support is always greatly appreciated.'' Norquist then writes:

          If possible, we would like to receive an updated list 
        of Republican candidates directly from the RNC. It is 
        important that we receive this list soon, as we would 
        like to bring as many candidates on board as possible. 
        And, in so doing, make the tax issue a central campaign 
        feature for Republican candidates.

In his own words, Norquist directly ties ATR's taxpayer pledge 
program to Republican campaign efforts.
    On October 8, 1996--just one month before election day--ATR 
held a Capitol Hill press conference to highlight candidates 
who had signed ATR's taxpayer pledge. This media event in 
Washington, D.C., was coordinated with numerous local media 
events across thecountry by candidates who had signed the 
pledge. According to ATR's own documents, its Washington press 
conference featured high-level speakers from the Dole campaign and 
GOPAC, a Republican political action committee set up by Speaker of the 
House Newt Gingrich.82 Also included among the speakers were 
a Republican Congressional candidate from Hawaii and senior executives 
from the Christian Coalition, the Eagle Forum, and the U.S. Chamber of 
Commerce.83 No Democratic candidates or representatives of 
Democratic-oriented organizations were included in the press 
conference.84
    Also in October 1996, ATR initiated a new program 
announcing ``Enemy of the Taxpayer Awards.'' Media advisories 
by ATR on October 28, a week before election day, announced 
these awards to ``the most pro-tax, pro-spending Members of the 
House of Representatives.'' 85 The 34 taxpayer 
``enemy'' awards went to 33 Democrats and one Independent. Not 
a single Republican candidate was named.
    ATR stated that it had based the awards on the recipients 
having voted ``no'' on four specified votes relating to taxes 
and a balanced budget. However, a review of the votes shows 
that two of the Democrats recipients, Representative Bill 
Hefner of North Carolina and Representative William Orton of 
Utah, were cited despite the fact that they had voted ``no'' on 
only three of the four votes, while two Republicans, 
Representative Amo Houghton of New York and Representative John 
Porter of Illinois, who had also voted ``no'' on three of the 
four votes, were not cited. This double standard between 
Democrats and Republicans with similar voting records is 
additional evidence of the partisan nature of ATR's Enemy of 
the Taxpayer Award program.
    At about the same time that ATR initiated its Enemy of the 
Taxpayer Awards, it also began citing incumbent Democratic 
congressmen as ``Taxpayer Villain of the Month.'' The target of 
ATR's November Villain of the Month Award was Representative 
Ken Bentsen a Democrat from Texas, who at the time was involved 
in a run-off election. Over the course of five days from 
December 2, 1996, through December 6, 1996, ATR issued six 
different press releases citing Representative Bentsen as a 
``Taxpayer Villain'' and criticizing his voting record on a 
wide variety of issues.86 Every one of the press 
releases cited the fact that Representative Bentsen was facing 
a run-off election and gave the date of the election in 
December. It should also be noted that despite the fact that 
Representative Bentsen had been chosen as the ``Taxpayer 
Villain'' for the month of November 1996, the vast majority of 
the votes he was criticized for took place in 1995; indeed, the 
most recent vote for which he was criticized took place in 
April 1996.
    In contrast to the ``enemy'' and ``villain'' awards given 
to Democrats in 1996, ATR issued hundreds of ``Friend of the 
Taxpayer Awards'' and ``Defender of the American Taxpayer 
Awards'' to Republicans. According to ATR's published criteria, 
the 1996 Friend of the Taxpayer Awards went to House incumbents 
who had received a score of 90 percent or better on a series of 
19 votes of interest to ATR and who had signed ATR's Taxpayer 
Protection Pledge.87 ATR gave this award to 208 
Republicans (32 Senators and 176 Representatives) and one 
Democrat (Representative Barbara Rose Collins).88 On 
September 27--six weeks before Election Day--ATR issued a press 
release praising Republican Representative George Nethercutt of 
Washington for winning a Friend of the Taxpayer 
Award.89 The release reveals, however, that 
Representative Nethercutt's vote rating was 85 percent--below 
the stated criteria for the award and clear evidence that an 
exception had been made for him.90 Other Republicans 
who did not meet the 90 percent criterion also won the award, 
including Representatives Nathan Deal of Georgia and Michael 
Castle of Delaware.91 According to ATR materials, 
Representative Castle received the award even though he had not 
signed the taxpayer pledge.92
    On September 18, ATR issued more than 115 ``Defender of the 
American Taxpayer Awards'' to Republican Members of Congress 
who cosponsored legislation that opposed alleged efforts by the 
United Nations to impose a ``tax'' on American 
citizens.93
    ATR's 1996 taxpayer awards reveal a clear partisan bias. 
Republicans are routinely deemed taxpayer ``friends'' while 
Democrats are routinely called taxpayer ``enemies.'' Norquist 
himself provides a partisan analysis in the press release 
announcing ATR's first enemy of the taxpayer awards: ``It is 
unfortunate that tax relief and spending cuts are so alien to 
the Democratic party.'' The partisan track record of the 1996 
awards, coupled with an FEC enforcement history citing problems 
with ATR's coordination of pledge media events with Republican 
candidates, indicate that ATR's taxpayer pledge and award 
programs are partisan in nature and an abuse of federal 
election laws. They also plainly contradict ATR's statements to 
the Committee that ATR ``has never advocated the election or 
defeat of any candidate for any office at any time.'' 
94
    In fact, on several occasions in 1996, ATR expressed 
support for or opposition to a particular candidate outside the 
context of any taxpayer pledge event or award announcement. A 
case in point is the Kansas Senate race. Republican incumbent 
Senator Sheila Frahm, appointed to her seat after Senator 
Dole's resignation, faced a primary challenge from then-
Representative Sam Brownback. On June 13, 1996, Norquist sent a 
memorandum to ``Conservatives [and] Taxpayers'' on the subject 
of ``Sam Brownback's Senate Candidacy.'' Norquist's memorandum 
states in part:

          A very important race is underway in Kansas. Sam 
        Brownback, a leader among the freshman in the U.S. 
        House of Representatives is running for the U.S. Senate 
        seat which has been vacated by Senator Dole. On 
        Tuesday, June 11th, Sheila Frahm was appointed to fill 
        the Dole vacancy until the November election. She will 
        be running against Rep. Brownback in the Republican 
        primary on August 6th. Several taxpayer groups and 
        conservative advocacy groups have inquired about this 
        race. I have analyzed this race, and as a taxpayer 
        activist, I wanted to share the following information 
        that will show the distinction between the candidates.
          This race is extremely important to taxpayers in 
        Kansas and to people around the nation. . . . Brownback 
        has been an able fighter in bringing about the change 
        that occurred in the House throughout this current 
        Congress. He will bring this change to the Senate. Sam 
        Brownback is a leader who is dedicated to the cause of 
        cutting taxes, reducing the size and scope of 
        government, and passing real term limits legislation. 
        Sheila Frahm stands in the way of these reforms. . . . 
        This race is a clear battle between a tax and spend 
        status quo candidate and a tested advocate of 
        taxpayers, Sam Brownback.95

    Despite a statement in the memorandum that ``ATR does not 
endorse candidates,'' this memorandum clearly sends the message 
that ``conservatives and taxpayers'' should support 
Representative Brownback. The memorandum is entitled, ``Sam 
Brownback's Senate Candidacy.'' The second sentence states that 
``Sam Brownback . . . is running for the U.S. Senate.'' The 
first paragraph gives the date of the primary election. The 
body of the memorandum praises Representative Brownback for 
positions he has espoused in the House of Representatives, and 
contrasts his record with a description of Senator Frahm as 
``stand[ing] in the way of these reforms.'' ATR's preference 
couldn't be clearer than in its final sentence characterizing 
the race as ``a clear battle between a tax and spend status quo 
candidate and a tested advocate of the taxpayers, Sam 
Brownback.''
    ATR has also supported specific candidates in general 
elections. In the 1996 Iowa Senatorial race, for example, 
between Democratic Senator Tom Harkin and Republican challenger 
James Lightfoot, citing ``lists provided by their campaigns,'' 
the Des Moines Register reported that Lightfoot had received 
the endorsement of Americans for Tax Reform.96 ATR 
was active in Iowa during the prior election cycle as well. In 
November 1994--just days before election day--Norquist attended 
a press conference with Iowa Republican Greg Ganske who was 
challenging the Democratic incumbent Neal Smith. During the 
press conference, according to the Des Moines Register, 
Norquist said, ``You have a very strong delegation from Iowa, 
with the exception of Neal Smith, who stands out like a sore 
thumb in the eye of the Iowa taxpayer.'' 97
    Another example is a 1996 House race involving Democratic 
Minority Leader Richard Gephardt of Missouri. An ATR press 
release dated July 8, 1996, announces a press conference to be 
held in Representative Gephardt's district in which Norquist 
will discuss ``the proliferation of legislators who feel no 
accountability towards their constituents.'' 98 The 
contact person listed on the ATR press release is ``Wheelehan 
for Congress 314-487-8199.'' Wheelehan was the Republican 
candidate opposing Representative Gephardt in 1996. Two 
versions of the press release state, ``If you would like to set 
up an interview with Mr. Norquist, please contact Charlie Van 
Esler at (314) 487-8199.'' The telephone number was that of the 
Wheelehan for Congress campaign.
    The Norquist memorandum on Representative Brownback, his 
statements to the media in specific races, ATR press releases 
issuing taxpayer awards--each of these activities should be 
acknowledged for what it is, ATR's advocating the election or 
defeat of specific candidates, while ducking compliance with 
legal requirements for organizations engaged in federal 
election activity.

    ATR: COORDINATED EFFORTS IN 1996 TO ELECT REPUBLICANS TO OFFICE

    ATR did more in 1996 than express support for or opposition 
to specific candidates. ATR also engaged in several efforts to 
coordinate support for Republican electoral success.
    Documents produced to the Committee indicate that ATR 
coordinated two of its biggest media events in 1996 with 
Republican organizations. On April 29, according to an RNC-
produced document,99 a meeting was held in the 
conference room of the National Republican Congressional 
Committee to discuss ATR's upcoming ``Tax Freedom Day Event'' 
in May and ``Cost of Government Day'' in July. Attendees 
included Norquist and two other persons from ATR; five 
representatives from the RNC; two representatives from the Dole 
campaign; two representatives from the Republican Governors 
Association; one representative each from the Republican Senate 
Policy Committee and the House Republican Conference; and a 
representative of Republican Senator Paul Coverdell of Georgia, 
sponsor of a ``Cost of Government Day'' resolution.
    Since ATR and the RNC both refused to respond to Committee 
subpoenas to discuss ATR-RNC interactions, little information 
is available about what happened at this meeting; however, 
another RNC-produced document dated the next day, April 30, 
sheds some light.100 Labeled ``Confidential 
Memorandum,'' it is addressed to the ``Tax Freedom Day Working 
Group'' and is authored by one of the ATR participants who 
attended the April 29 meeting the day before. The memorandum 
states that ``we are still standing by for a confirmation from 
Senator Dole. Gary Koops says he hopes to have an answer for us 
this afternoon. I have reminded him that satellite availability 
and coalitions turnout could be a real problem if we delay much 
further.'' Koops attended the April 29 meeting on behalf of the 
Dole campaign. The memorandum also states that, to join a 
conference call later that day, persons should ask for the 
``Tax Freedom Day Working Group call.'' Read together, the 
April 29 and 30 memoranda contain compelling evidence that ATR 
had formed a working group with Republican organizations and 
candidates, including Senator Dole, to coordinate its media 
events in May and July--exactly the type of improper media 
coordination that ATR had been cited for by the FEC in 
1986.101
    Another key development was ATR's decision to host weekly 
meetings in its offices that, at least in part, addressed the 
1996 elections. These Wednesday morning meetings were convened 
by Norquist, attended by 50-70 conservative activists at a 
time, and regularly attended by such groups as the Christian 
Coalition, the National Right to Life Committee, the U.S. 
Chamber of Commerce, the National Rifle Association, the 
Seniors Coalition, and GOPAC.102 According to ATR's 
own policy documents, these meetings also included ``Capitol 
Hill staffers, candidates for national office, and visiting 
Members of Congress.'' 103 One meeting, on September 
18, took place at the U.S. Capitol, presumably at the 
invitation of House Speaker Gingrich who spoke to the group 
about ``how Republicans should conduct their campaigns.'' 
104 At the end of his remarks, Norquist presented 
the Speaker with an ATR Friend of the Taxpayer 
Award.105
    As chronicled in Elizabeth Drew's book Whatever It Takes, 
these meetings often served as strategy sessions for the 1996 
elections. Drew recounts, for example, group discussions of GOP 
presidential primaries and candidates such as Senator Dole, 
Patrick Buchanan, Steve Forbes, and Lamar 
Alexander,106 as well as specific House and Senate 
races such as the Kansas Senate race.107 In some 
instances, meeting participants reported on a specific election 
contest. For example, after a Washington state primary showed 
Republican Representative Randy Tate trailing his Democratic 
challenger, a representative of GOPAC told the meeting, ``We 
need to pay attention. This is problematic. . . . We have our 
work cut out in Washington State.'' 108 In other 
instances, staff from the National Republican Congressional 
Committee or National Republican Senatorial Committee provided 
detailed briefings on specific races.109
    In still other instances, Republican candidates made formal 
presentations at the meetings and requested support for their 
election efforts.110 For example, Representative 
Tate, running for re-election in the House, and Representative 
Brownback, running for election to the Senate, were permitted 
to address the meeting and request the support of the groups 
represented there.111 Michael Hammond, running in a 
Republican primary against a congressman in New Hampshire, was 
allowed to explain why attendees should support him rather than 
the Republican incumbent.112 At a meeting on 
September 11, 1996, four Republican candidates made such 
presentations. Drew writes:

          The federal election law stipulates that interest 
        groups aren't supposed to coordinate their efforts for 
        or against a candidate, but what actually goes on 
        appears to be a distinction without a difference. [One 
        meeting participant] said, ``The Federal Election 
        Commission says you can't coordinate, but everybody 
        talks to each other.'' He added, ``We make a practice 
        of not talking specific amounts with each other. We 
        talk about who's targeted, how somebody's doing, but 
        not in terms of `Why don't you throw in three thousand 
        and we'll throw in five thousand.' '' This is a very 
        narrow interpretation of the law.113

                   RNC-DIRECTED CONTRIBUTIONS TO ATR

    A final area of concern in 1996 involves documents in the 
Committee's possession which reveal that, in addition to 
transferring $4.6 million of its own funds to ATR, the RNC also 
solicited funds from third parties and directed those 
contributions to ATR.
    A memorandum dated October 17, 1996, marked 
``confidential,'' from Jo-Anne Coe, RNC finance director, to 
Haley Barbour, RNC chairman; Sanford McCallister, RNC general 
counsel, and Curt Anderson, RNC political director, discusses 
efforts by Coe to forward certain sums of money to three tax-
exempt organizations, including a $100,000 check from Carl 
Lindner to ATR, another $100,000 check from Lindner to the 
National Right to Life Committee, and $950,000 from several 
sources to the American Defense Institute.114 The 
memorandum poses questions about how certain checks should be 
handled and requests quick action ``so I can put this project 
to bed.''
    The ``project'' itself is not described in the memorandum; 
however, a second document may provide additional information. 
It is an October 21 memorandum from Coe to Barbour. This 
memorandum states:

         As soon as we meet and hopefully come to some 
        resolution on the joint state mail project, I will 
        forward these checks to the three organizations. In the 
        meantime, I am respectfully withholding delivery of the 
        checks until we have the opportunity to discuss this 
        matter.115

Could the ``joint state mail project'' be the ``project'' 
referred to in the October 17 memo from Coe to Barbour? Could 
it be a reference to ATR's $3.3 million direct mail-phone bank 
operation on Medicare? The fact that the RNC finance director 
was ``respectfully withholding'' checks to three organizations 
appears to be evidence that the RNC was exercising control over 
the performance of those organizations in the joint state mail 
project in exchange for funding. The fact that this document 
was produced, not by the RNC or ATR, but by the Dole for 
President committee indicates possible participation of the 
Dole campaign in these efforts as well.
    Two letters written by Coe on the same date as her 
memorandum to Barbour on the joint state mail project offer 
additional clues.116 The first letter is addressed 
to Norquist at ATR and the second to David O'Steen, the 
executive director of the National Right To Life Committee. 
Each encloses a $100,000 check from Carl Lindner to the 
organization, as described in the October 17 memo. Coe states 
in both letters, ``Glad to be of some help. Keep up the good 
work.'' A review of ATR's bank records shows that ATR deposited 
a $100,000 check on October 23.117 It thus appears 
that the RNC directed contributors to write checks payable to 
specified tax-exempt organizations such as ATR, but to send 
them to the RNC. The RNC then forwarded the checks to the 
organizations, possibly in exchange for participation in the 
``joint state mail project'' or other campaign activities.
    Two additional documents also contain evidence of RNC 
coordination with ATR and other tax-exempt organizations. The 
first 118 was produced by the RNC and has the same 
distinctive ``confidential'' heading as the October 17 memo 
from Coe to top RNC officials. This document discusses 
contributions to ATR, National Right to Life Committee, 
American Defense Institute, United Seniors Association, the 
City of San Diego, and ``CCRI,'' which was the California 
ballot initiative on affirmative action. Each organization is 
analyzed in terms of whether contributions to it would have to 
be reported to the public and whether a contribution would be 
tax deductible. The final document is a list of the same 
organizations with the exception of the CCRI.119 By 
each organization's name is a large dollar figure. The figure 
for ATR is $6 million. Altogether, the figures add up to $15.1 
million.
    The significance of these two documents and the dollar 
figures is unclear. Could the $6 million figure for ATR 
indicate that in addition to giving ATR $4.6 million directly, 
the RNC directed another $1.4 million to ATR in third party 
contributions to ATR? 120 If the same is true for 
the other listed organizations, the RNC may have directed more 
than $9 million in undisclosed third party contributions to 
these groups. In the absence of Committee subpoenasbeing issued 
or enforced, however, the extent to which the RNC obtained 
contributions for ATR and other tax-exempt organizations and what it 
received in return for this fundraising remain unclear.

                   ATR AND RNC'S REFUSAL TO COOPERATE

    On April 9, 1997, Grover Norquist was quoted in the press 
as saying that he would ``cheerfully testify before the 
Committee.'' 121 He thereafter continuously refused 
to be deposed or interviewed by the Committee staff. When 
subpoenaed for a deposition in September 1997,122 he 
refused to instruct his attorney to accept service of the 
subpoena,123 and he failed to appear. In fact, 
despite repeated requests and efforts by the Minority to seek 
ATR testimony either voluntarily or by subpoena, no one from 
ATR ever submitted to an interview or a deposition by this 
Committee. As noted above, ATR also refused to comply with the 
Committee's document subpoena, claiming, ``ATR has never 
engaged in electioneering of any sort. It has never advocated 
the election or defeat of any candidate for any office at any 
time; it has never run political advertising on any subject.'' 
124 Having cloaked itself in this self-serving 
proclamation, ATR refused further cooperation or compliance 
with document or deposition subpoenas, thereby making a mockery 
of the Committee's subpoena process. Despite requests from the 
Minority that the Chairman issue an order compelling ATR to 
comply with the Committee's subpoena, no action was ever taken 
by the Committee to enforce its subpoena authority.
    The RNC was equally intransigent. Not one RNC official ever 
provided an interview or deposition testimony on the $4.6 
million transfer or on any dealings between the RNC and ATR.

            POSSIBLE CIVIL, CRIMINAL AND TAX LAW VIOLATIONS

    The facts and documents behind the RNC's $4.6 million 
transfer to ATR are compelling support for the proposition that 
the RNC used ATR as a surrogate to do what the RNC itself had 
neither the hard dollars nor the ``credibility'' to do on its 
own. In addition to questions of impropriety, questions arise 
regarding four sets of possible legal violations by ATR and the 
RNC.

Circumvention

    The first and most serious issue involves the RNC's 
possibly deliberate circumvention of hard money requirements in 
funding ATR's election-related efforts.
    With respect to the Medicare direct mail and phone bank 
operation, FEC rulings are clear that if the RNC had funded 
this issue advocacy effort directly, it would have had to pay 
the bills with a mix of hard and soft dollars.125 
Sixty-five percent of the cost would have had to come from hard 
dollars that complied with federal contribution limits. The RNC 
instead funded the Medicare effort indirectly through ATR using 
only soft dollars. These funds were wired into ATR's bank 
account for as short a period as two hours before ATR used them 
to pay for Medicare mailings and telephone calls that clearly 
benefited the GOP. Given the coordination between the RNC and 
ATR on how these funds would be used, their brief detour 
through ATR's bank account is possibly insufficient to relieve 
the RNC of its legal obligation to comply with hard money 
requirements, including contribution limits and disclosure.
    The same analysis applies to RNC funds used by ATR to pay 
for $383,000 in televised ads attacking the Democratic 
Senatorial candidate in New Jersey, and perhaps for other 
television attack ads aimed at Democratic candidates. The RNC 
funds used to pay for the televised ads consisted entirely of 
soft dollars. If the RNC had sponsored these television ads 
directly, it could have been required to pay for them entirely 
with hard dollars or, at a minimum, 65 percent with hard 
dollars. Sponsoring the ads directly also would have subjected 
the RNC to federal limits on the direct contributions and 
coordinated expenditures that a national political party may 
make with respect to a particular Senate race. In the 1996 New 
Jersey Senate race, section 441a(h) of the Federal Election 
Campaign Act limited the RNC to no more than $17,500 in direct 
contributions to the GOP Senate candidate, while section 
441a(d)(3) limited the RNC to coordinated expenditures of no 
more than $369,807. ATR spent $383,000 on the New Jersey 
television attack ads alone. ATR's sponsorship of the 
Torricelli attack ads, paid for in whole or in part with RNC 
soft dollars, appears to have been a deliberate ploy to allow 
the RNC to evade federal limits on contributions and 
coordinated spending in that Senate race.

Coordination

    A second issue concerns improper or illegal coordination. 
The evidence is compelling that extensive coordination took 
place between ATR and the RNC regarding ATR's Medicare direct 
mail and phone bank operation. The documents show that ATR's 
taxpayer pledge, Tax Freedom Day and Cost of Government Day 
media events were coordinated with several Republican 
organizations and candidates. ATR's weekly meetings repeatedly 
analyzed specific candidates, races and election strategy. 
Those meetings were attended by Republican Party officials, 
candidates and persons sympathetic to electing Republicans to 
federal office. Although more information is needed to 
establish violations of federal election law, the evidence 
available to date justifies an immediate in-depth investigation 
by the FEC and Justice Department.
    Another coordination issue arises from the documents 
establishing that the RNC directed contributions from third 
parties to ATR and other tax-exempt groups. Although pending 
campaign finance reform measures such as S. 25, the McCain-
Feingold bill, would outlaw this practice, it is currently not 
against the law for a political party to suggest that a person 
make a contribution to a tax-exempt organization. Even under 
current law, however, a directed contribution may become an 
illegal act, if the timing of that contribution is controlled 
by the political party that arranged it or made contingent upon 
the recipient taking action at the suggestion of, or in 
coordination with, the party. In the case of ATR, remaining 
questions include how many contributions the RNC directed to 
ATR in addition to the $100,000 contribution from businessman 
Carl Lindner; how those funds were used by ATR; whether the RNC 
exercised control over the expenditure of the funds or over 
other ATR activities in exchange for the funds; and whether the 
facts indicate the directed contributions were an attempt to 
circumvent contribution limits and disclosure requirements.
    Directed contributions between a national political party 
and tax-exempt organizations was a topic of concern for the 
Committee when the political party involved was the Democratic 
Party. The Committee held an entire day of hearings to take 
testimony from businessman Warren Meddoff regarding his 
discussions with Harold Ickes, former deputy chief of staff in 
the White House, about possible contributions to tax-exempt 
organizations by a Meddoff associate. As discussed in Chapter 
17 of this Report, Ickes's suggestions were made in response to 
a request from Meddoff, and no contributions were ever made. 
The RNC did much more than make suggestions--it collected 
checks, controlled checks, and delivered checks to tax-exempt 
organizations sympathetic to the Republican Party--yet not a 
single witness was called to testify on such RNC conduct.

Disclosure

    A third issue involves disclosure. RNC Chairman Haley 
Barbour stated in an October 29 press conference that, 
``[d]isclosure of contributions and expenditures, shining the 
bright light of public scrutiny, is the fundamental principle 
underlying our campaign finance laws.'' 126 Yet the 
RNC's payment of $4.6 million to ATR, when coupled with ATR's 
decision not to file any FEC reports on its activities, 
effectively prevented all disclosure of expenditures paid for 
with RNC funds. The Medicare mailings and telephone calls, for 
example, were represented as ATR-sponsored efforts, and RNC 
funding was kept secret. When asked about television ads, ATR 
denied to the press and to this Committee that it engaged in 
television advertising, thereby hiding its televised attack ads 
on the New Jersey Democratic Senatorial candidate and keeping 
doubly secret the use of RNC funds to pay for those ads. 
Additional investigation by the FEC and Justice Department 
should be undertaken to establish whether the RNC and ATR 
improperly or illegally evaded federal disclosure requirements 
by ATR's failing to file any FEC reports on its activities.

Tax laws

    A fourth issue involves federal tax law, in particular 
ATR's possible abuse of its tax-exempt status and whether 
either ATR or the RNC should have, but failed to, report the 
$4.6 million as taxable income.
    ATR is exempt from taxation under Internal Revenue Code 
section 501(c)(4). A 501(c)(4) organization is required to be 
engaged in social welfare that promotes ``the common good and 
general welfare of the people of the community.'' 
127 Social welfare organizations may not engage in 
campaign-related activity as their primary activity. The 
relevant tax code regulation, 26 CFR 1.501(c)(4)-1, describes 
the prohibited activity as ``direct or indirect participation 
or intervention in political campaigns on behalf of or in 
opposition to any candidate for public office.'' Campaign 
activity that a 501(c)(4) organization does engage in must be 
nonpartisan, so that the organization does not confer a private 
benefit on a particular political party, in violation of its 
tax-exempt status.128
    An analysis of ATR's bank records for 1996 indicates that 
the $4.6 million donated bythe RNC provided more than two-
thirds of ATR's 1996 income.129 Despite ATR's claim to be a 
grassroots organization supported by taxpayers across the country, its 
bank records indicate that only $12,470, or less than 0.2% of its 1996 
deposits, came from donations of $1,000 or less.130 The fact 
that RNC funds outmatched all other sources of ATR funding by a 2-1 
margin is compelling evidence that, in 1996, electioneering was ATR's 
dominant pursuit, in violation of its tax-exempt status. ATR's key 
activities during the year--from its multimillion-dollar Medicare 
direct mail-phone bank operation to its advocacy of particular 
candidates to its active support of Republican electoral success--
provide added evidence that electioneering dominated. A second possible 
violation of ATR's tax-exempt status lies in the fact that its election 
pursuits were clearly partisan in favor of the Republican Party. 
Partisan activities do not promote ``the common good'' required of 
501(c)(4) social welfare organizations, but confer a private benefit on 
the favored political party.131 Together, ATR's partisan, 
election-driven activities strongly suggest that it may have violated 
its tax-exempt status.
     A similar analysis applies to the Americans for Tax Reform 
Foundation, a 501(c)(3) organization prohibited by federal tax 
law from engaging in any campaign activity.132 The 
facts and documents indicate that the Foundation served as a 
second conduit for RNC funds, paid nearly half the bills 
associated with the Medicare direct mail-phone bank operation, 
and placed its name on at least one of the three Medicare 
mailings. The Foundation's participation in this RNC-funded, 
election-related effort appears to violate the legal 
prohibitions against a 501(c)(3) charitable organization's 
participating, directly or indirectly, in campaign activity and 
against its operating to benefit a private interest such as the 
Republican Party.
    A final issue is how the RNC and ATR treated the $4.6 
million on their tax returns. Section 527 of the federal tax 
code suggests that one or the other organization may have been 
required to treat this sum as taxable income. As a political 
organization, the RNC's income is exempt from taxation to the 
extent it is used for the purpose of influencing an 
election.133 If the money which the RNC received 
from contributors and then transferred to ATR was for election-
related purposes, then the RNC could exclude the amount from 
its taxable income; however, if the RNC made a non-election-
related, charitable contribution to ATR, then it is possible 
that this income is taxable to the RNC. Conversely, ATR's 
income is exempt from taxation to the extent that it is used 
for charitable and not election-related purposes.134 
While ATR is entitled to engage in a limited amount of 
election-related activity, income expended on such activity is 
taxable. It would thus seem that if the $4.6 million was for an 
election-related purpose, the RNC could exclude it from its 
taxable income, but ATR could not. In contrast, if the $4.6 
million was for a charitable purpose, then ATR could exclude it 
from its taxable income, but the RNC could not. It is unclear 
how either organization treated this money, whether any tax was 
paid, and whether any violation of tax law occurred as a 
result, but what is clear is that this issue merits further 
investigation and analysis by the appropriate authorities 
within the Department of the Treasury.

                               CONCLUSION

    The facts and documents, as well as the public statements 
of Haley Barbour and Grover Norquist, make it clear that RNC 
soft money--$4.6 million in all--flowed through ATR bank 
accounts and paid for a multimillion-dollar direct mail-phone 
bank operation as well as other election-related efforts such 
as television attack ads. It is also clear that if the RNC had 
paid for these election-related efforts directly, it would have 
required substantial amounts of hard dollars. The facts suggest 
that the RNC laundered 1996 soft dollars through ATR in order 
to avoid using hard money to pay for election-related 
activities, to capitalize on ATR's ostensibly greater 
credibility, and to avoid public disclosure of RNC involvement.
    The facts and documents also show that, in 1996, ATR 
undertook a host of partisan activities to support the 
Republican agenda and elect Republican candidates to office. 
ATR's efforts included taxpayer pledge and award media events 
coordinated with specific candidates; Tax Freedom Day and Cost 
of Government Day media events coordinated with Republican 
organizations, and weekly meetings with outside groups designed 
in part to further Republican electoral success in 1996. These 
partisan, election-driven activities appear to violate the tax-
exempt status of ATR and its Foundation; ATR's coordination 
with the Republican Party may have resulted in other federal 
election law violations as well.
    Was the RNC directing contributions from third parties to 
ATR to circumvent contribution limits and disclosure 
requirements? Did the RNC and ATR violate campaign disclosure 
requirements? Did the RNC or ATR violate federal tax law in how 
they reported the $4.6 million on their tax returns?
    The evidence of possible civil, criminal, and tax-law 
violations involving ATR is powerful and should have been 
explored at a Committee hearing with full opportunity for 
examination and cross-examination. Unfortunately for the 
American public, ATR's role in the 1996 elections remained 
largely unexplored in this Committee's investigation. The 
Committee did not call a single hearing witness to testify 
about the $4.6 million transfer. The Committee rejected 
repeated requests from the Minority to hold hearings on the 
subject. Committee investigators were thwarted in their efforts 
to interview or depose witnesses from the RNC or ATR regarding 
the $4.6 million or any other dealings between the two 
organizations. Despite public statements promising cooperation, 
no one from either the RNC or Americans for Tax Reform provided 
any testimony to the Committee, in public or in private, 
regarding the relationship between the RNC and ATR.
    The Committee's failure to investigate does not, however, 
eliminate ATR or the RNC's potential legal liability. Because 
of the quality of the evidence and the potentially serious 
misconduct involved, the Minority has determined to refer 
information regarding the apparent coordination between the RNC 
and ATR to the U.S. Departments of Justice and Treasury and the 
FEC for further investigation into potential civil, criminal, 
and tax-law violations.

                               FOOTNOTES

    \1\ The original officers of ATR were Peter Ferrara, president, and 
William P. Barr, the secretary/treasurer. See also letter from John M. 
Richman, chairman and CEO, Dart & Kraft to William E.C. Dearden, 
chairman, Hershey Foods Corporation, 10/3/85, ATR000579.
    \2\ FEC MUR 4204, ATR Answers to Interrogatories, Section A, 
question (1). To qualify under IRC section 501(c)(4), an organization 
must be operated to benefit the common good and general welfare of the 
community.
    \3\ Articles of Incorporation of Americans for Tax Reform, amended 
3/31/93, ATR000013.
    \4\ Articles of Incorporation of Americans for Tax Reform, amended 
3/31/93, ATR000013.
    \5\ In addition to the Foundation, ATR's affiliated organizations 
include Citizens Against a National Sales Tax; Women for Tax Reform, a 
501(c)(4) corporation; and the Anti-Tax PAC, a political action 
committee established 4/5/96, but inactive during the 1996 election 
cycle. Norquist also recently established The Merritt Group Ltd., a 
lobbying firm in which he is a principal along with two senior ATR 
employees and a fourth individual from outside of ATR.
    \6\ Letter from Jeffrey L. Yablon to Whom It May Concern at the 
Internal Revenue Service, submitting ATRF and ATR's applications for 
tax-exempt status; Application for Recognition of Exemption, Form 1023, 
Attachment F, submitted by Fairness for Families, the former name of 
ATRF, 8/30/85.
    \7\ Articles of incorporation of Fairness for Families, the former 
name of ATRF, 7/2/85, p. 1; Application for Recognition of Exemption, 
Form 1023, Attachment E, submitted by Fairness for Families, 8/30/85.
    \8\ FEC MUR 4204, ATR Answers to Interrogatories, Section A, 
question (3).
    \9\ Drew, Elizabeth, Whatever It Takes, New York: Penguin Books USA 
Inc., 1997, p. 7.
    \10\ Drew, p. 8.
    \11\ Norquist, Grover, Rock the House: History of the New American 
Revolution, Ft. Lauderdale, FL: VYTIS Press, Inc., 1995, ``About the 
Author.''
    \12\ Norquist, ``About the Author.''
    \13\ Norquist, ``Prologue'' by Speaker Gingrich; Roll Call, 2/6/97.
    \14\ R027732.
    \15\ R006050.
    \16\ See R047456-047458.
    \17\ Drew, p. 14.
    \18\ Drew, pp. 182-83.
    \19\ Baltimore Sun, 4/17/95, p. 2A.
    \20\ In his book, Rock the House, pp. x-xi, Norquist writes: ``The 
Republican capture of the House of Representatives is the culmination 
of a 40-year struggle by a conservative nation to overthrow a liberal 
political elite that has used gerrymandering, incumbent protection 
laws, and taxpayer dollars to stay in power. . . . Chapter One begins 
by describing what actually happened on election day, November 8, 1994: 
the size and depth of the Republican victory and the overturning of the 
old order. . . . It means that more than 50,000 Democrat political 
activists have lost their hold on taxpayer-supported positions as a 
result of this election.''
    \21\ ATR's annual income in 1994 and 1995 was less than $1 million 
each year. ATR's IRS Form 990 for 1994 and 1995.
    \22\ Letter from Thomas Wilson of Lane & Mittendorf to Majority 
Counsel, 6/11/97.
    \23\ Daily Teleconference with RNC Chairman Haley Barbour, 10/25/
96, reported by Federal News Service, Federal Information Systems 
Corporation.
    \24\ ATR000048.
    \25\ See, for example, ATR000194-197 and ATR000504-505.
    \26\ ATR000194-195.
    \27\ ATR000512-19.
    \28\ R014844.
    \29\ R014844.
    \30\ ATR000560.
    \31\ See ATR/R00001-00942.
    \32\ Committee Subpoena 000348, issued 8/21/97.
    \33\ See ATR/R00864.
    \34\ See ATR/R00871 and ATR/R00875.
    \35\ See ATR/R00866.
    \36\ See ATR000560.
    \37\ See ATR/R00867.
    \38\ See ATR/R00877 and ATR000560.
    \39\ See ATR/R00868.
    \40\ See ATR/R00881.
    \41\ Washington Post, 10/29/96.
    \42\ Drew, p. 223.
    \43\ Washington Post, 12/10/96. The John Grotta Company proposal 
for the Medicare direct mail-phone bank operation is dated 7/8/96, 
three months before ATR received the first $2 million from the RNC.
    \44\ ``Haley Barbour, Chairman of the Republican National 
Committee, Discusses Democratic National Committee Refusal of Pre-
Election FEC Report,'' Presidential Campaign Press Materials, Federal 
Document Clearing House, Inc., 10/29/96.
    \45\ Washington Post 2/9/97.
    \46\ See RNC filings with FEC, 9/30/96 and 10/16/96. See also 
Newsday 12/28/97.
    \47\ FEC Advisory Opinion 1995-25.
    \48\ ATR has not identified the 150 Congressional districts, nor 
how they were selected. The ``Field Dogs'' memorandum, supra, however, 
shows that at a minimum the RNC was fully informed of the particular 
districts selected.
    \49\ 26 USC 501(c)(3); 26 CFR 1.501(c)(3)-1(d)(1)(ii) (``it is 
necessary for an organization to establish that it is not organized or 
operated for the benefit of private interests''); The Association of 
the Bar of the City of New York v. Commissioner, 858 F.2d 876 (2nd Cir. 
1988), cert. denied, 1989 (even insubstantial political activity 
endangers an organization's exemption under section 501(c)(3)); 
American Campaign Academy v. Commissioner, 92 T.C. 1053 (1989) 
(Republican organizations and candidates are not a charitable class, 
but a private interest; an organization operated for the benefit of 
Republican organizations or candidates does not qualify for tax 
exemption under section 501(c)(3)).
    \50\ The ATR Foundation's involvement in the direct mail-phone bank 
operation was difficult to uncover due to incomplete document 
production. The Foundation never produced, for example, any bank 
records. Although ATR's bank had possession of and was willing to 
produce the Foundation records, it felt it could not do so under the 
wording of the Committee subpoena without ATR's consent. ATR refused to 
allow the bank to produce the Foundation records. See letter from 
Thomas E. Wilson of Lane & Mittendorf, to Alan Edelman, Associate 
Counsel to the Minority, 9/19/97. When the Ranking Member subsequently 
asked the Chairman to issue a new subpoena to the bank explicitly 
requesting ATRF records, the request was ignored. See letters from 
Senator Glenn to Chairman Thompson, 10/1/97 and 10/14/97. This forced 
the Minority to re-create the Foundation's role from documents already 
obtained.
    ATR's bank documents indicate that on October 4, 1996, the RNC 
wired $2 million to ATR. See Document ATR/R00864. On October 17, the 
RNC wired another $1 million to ATR. Document ATR/R00866. The next 
day--October 18--ATR transferred $508,000 to the ATR Foundation. 
Document ATR/R00844. Four days after that--on October 22--ATR 
transferred another $851,000 to the Foundation. Documents ATR/R00846 & 
ATR/R00848. The RNC wired yet another $1 million to ATR on October 25. 
Document ATR/R00867. That same day, ATR transferred the $1 million to 
the Foundation. Document ATR/R00852. The result is a pattern of the RNC 
transferring money to ATR, and ATR then either using that money 
directly to pay the John Grotta bills or routing it through its 
Foundation to pay the John Grotta bills. This pattern is all the more 
striking, because ATR bank records for the preceding year and a half, 
from June 1995 to December 1996, do not indicate a single month in 
which ATR transferred money to its Foundation. Yet in October 1996, ATR 
transferred over $2 million to ATRF.
    Two types of evidence indicate that the Foundation used the RNC 
funds to help pay for the direct mail-phone bank effort. First, 
comparing the October 29 Grotta invoice, Document ATR000560, to ATR 
bank records shows that for every recorded bill payment but two there 
is a corresponding wire transfer from ATR's bank account to the John 
Grotta Company. The two exceptions are two bill payments that are both 
shown as having been made on October 25--one in the amount of $468,000 
and one in the amount of $1,104,000. Both payments are shown on the 
invoice as having been made by ATR, but there is no corresponding wire 
transfer from ATR's bank account. However, both payments were made 
after ATR had transferred over $2 million to the ATR Foundation. Logic 
suggests that the Foundation must have made both bill payments on ATR's 
behalf. While the Foundation's bank records would have provided 
affirmative proof of its payments to Grotta, the Minority's requests 
for these bank records were denied. In the meantime, one of the 
mailings paid for with RNC funds, Document ATR000194-000195, states 
that it was ``[p]aid for by AMERICANS FOR TAX REFORM FOUNDATION.''
    \51\ ATR000194-000195
    \52\ Washington Post , 12/10/96.
    \53\ Letter from Thomas Wilson of Lane & Mittendorf, to Majority 
Chief Counsel Michael Madigan, 6/11/97.
    \54\ A copy of the videotape is maintained in the files of the 
Committee.
    \55\ ATR000101
    \56\ ATR000106
    \57\ ATR000107-000108
    \58\ ATR/R00590
    \59\ ATR/R00602
    \60\ See ATR/R00870,00873,00878,00880
    \61\ Women for Tax Reform Media Reminder, 8/21/96, alerting media 
to a press event that day on the formation of the group and its 
intention to televise anti-Clinton ads.
    \62\ Women for Tax Reform Media Reminder, 8/21/96, alerting media 
to a press event that day on the formation of the group and its 
intention to televise anti-Clinton ads.
    \63\ It is interesting to note that Women for Tax Reform was formed 
with a contribution of $100,000 from a single, private (and unnamed) 
individual. See Exhibit C to Form 1024, Application for Recognition of 
Exemption Under Section 501(a), WTR0070.
    \64\ See Exhibit C to Form 1024, Application for Recognition of 
Exemption Under Section 501(a), WTR0070. Women for Tax Reform was 
granted tax exempt status under Section 501(c)(4) by the Department of 
Treasury on November 6, 1996, see WTR0024-0025.
    \65\ See Exhibit C to Form 1024, Application for Recognition of 
Exemption Under Section 501(a), WTR0070.
    \66\ Exhibit C to Form 1024, Application for Recognition of 
Exemption Under Section 501(a), WTR0070.
    \67\ R001938.
    \68\ FEC MUR 4204, General Counsel's Report, 9/10/96, p. 2.
    \69\ FEC MUR 4204, General Counsel's Report, 9/10/96, pp. 2, 5. In 
recent years, ATR has presented federal candidates with two additional 
pledges, an ``anti-VAT pledge'' opposing a national value added tax, 
and a ``legislative probity pledge'' opposing certain health care 
reform legislation. FEC MUR 4204, General Counsel's Report, 9/10/96, p. 
2; ATR000816.
    \70\ FEC MUR 2269.
    \71\ FEC MUR 4204.
    \72\ FEC MUR 4204, General Counsel's Report, 9/10/96.
    \73\ See, for example, Kansas City Star, 4/11/95.
    \74\ FEC MUR 4204, General Counsel's Report, 9/10/96, p. 8.
    \75\ FEC MUR 4204, General Counsel's Report, 9/10/96, p. 8.
    \76\ FEC MUR 4204, General Counsel's Report, 9/10/96, p. 9.
    \77\ FEC MUR 4204, General Counsel's Report, 9/10/96, p. 9.
    \78\ FEC MUR 4204, General Counsel's Report, 9/10/96.
    \79\ There was one vacancy on the Commission at the time.
    \80\ FEC MUR 4204, Statement of Reasons, 12/10/96.
    \81\ R 004610.
    \82\ ATR000056-57.
    \83\ ATR000056-57.
    \84\ In September, ATR also held a ``Taxpayer Salute to the 104th 
Congress'' in the Cannon Caucus Room of the U.S. House of 
Representatives to thank the Republican House for its work and ``to get 
earned media attention for the accomplishments of the 104th Congress.'' 
Documents ATR000659 and ATR000058. A 9/17/96 memoranda from Norquist 
inviting attendance at the event is addressed to ``House Republican 
Members and Staff'' and states that the program will feature the 
``Republican leadership.'' Document ATR000659. This ``Salute'' is 
another example of an ATR-sponsored media event benefiting the 
Republican Party prior to the 1996 elections.
    \85\ ATR000272.
    \86\ ATR000599-599F.
    \87\ ATR000054.
    \88\ ATR000054; ATR states elsewhere in the document, on ATR000048, 
that the award went to 210 officeholders, but the specific list of 
award-winners includes 209 names. The sole Democrat who won the award 
did not run a general election campaign in 1996, having lost in the 
primary.
    \89\ ATR000388.
    90 The basis for this exception is unclear, but may have 
been due to the symbolic importance of his seat to the Republican 
Party. Rep. Nethercutt had gained office in 1994 by defeating 
Democratic Speaker of the House Thomas Foley.
    91 ATR000536-46.
    92 ATR000536-46.
    93 ATR000056. It is possible that one Democrat, 
Representative James Traficant of Ohio, received the award, but ATR's 
refusal to cooperate with the Committee prevented making a final 
determination.
    94 Letter from Thomas Wilson, of Lane & Mittendorf, to 
Majority Chief Counsel Michael Madigan, 6/11/97.
    95 ATR000547.
    96 The Des Moines Register , 11/3/96.
    97 The Des Moines Register, 11/2/94. At the time of 
Norquist's statement, Rep. Smith was the only Democratic member of the 
Iowa congressional delegation.
    98 ATR000549-551.
    99 R 047272.
    100 R 004605.
    101 ATR's 1996 annual report on its activities also 
states that RNC Chairman Haley Barbour ``issued a three-page press 
release on [Cost of Government Day]. The RNC also sent copies of our 
information packet to all state Republican parties.'' It states that 
Norquist gave a June briefing to ``Republican district directors'; ATR 
was ``involved in putting together a briefing paper and talking points 
for the House Republican Conference'; and that ATR ``contributed 
language on Cost of Government Day for the GOP National Convention.'' 
ATR 000052-54.
    102 Drew, pp. 5-6.
    103 ATR000087
    104 Drew, p. 168.
    105 Drew, p. 169.
    106 Drew, pp. 1, 155-56. Anti-Clinton discussions also 
took place; Drew, pp. 82-84, 206-7.
    107 Drew, pp. 86, 111, 156, 168, 184, 207-9.
    108 Drew, pp. 167-68.
    109 Drew, p. 207.
    110 Drew, pp. 65, 84, 156.
    111 See Drew, pp. 65, 156.
    112 See Drew, p. 84.
    113 Drew, pp. 18-19.
    114 DFP004240. This document was produced to the 
Committee by the Dole for President campaign.
    115 DFP004242.
    116 DFP004241 and DFP004243.
    117 ATR/R00850. A second check for $100,000 was 
deposited on 10/28/96. ATR/R00854.
    118 R021609.
    119 DFP004244.
    120 An analysis of ATR's bank records shows that, from 
August 1 to October 31, 1996, ATR received more than $5.8 million in 
major donations, including $4.6 million from the RNC, four $100,000 
donations, one $75,000 donation, four $50,000 donations, two $30,000 
donations, and nine $25,000 donations. In addition, ATR received a 
$10,000 donation from the Coalition for Our Children's Future. 
CCF000384-85.
    121 Associated Press, 4/9/97.
    122 See Committee subpoena 000390.
    123 Letter from Thomas Wilson of Lane & Mittendorf, to 
Majority Chief Counsel Michael Madigan, 9/19/97.
    124 Letter from Thomas Wilson of Lane & Mittendorf, to 
Majority Chief Counsel Michael Madigan, 6/11/97.
    125 FEC Advisory Opinion 1995-25 to RNC.
    126 ``Haley Barbour, Chairman of the Republican National 
Committee, Discusses Democratic National Committee Refusal of Pre-
Election FEC Report,'' Presidential Campaign Press Materials, Federal 
Document Clearing House, Inc., 10/29/96.
    127 26 CFR 1.501(c)(4)-1(a).
    128 See IRS decision letter disqualifying National 
Policy Forum from tax exemption under Section 501(c)(4) due to partisan 
activites, 2/21/97. See also Footnote 49.
    129 An anlysis of ATR's bank records shows that, from 
August 1 to October 31, ATR received more than $5.8 million in major 
donations, including $4.6 million from the RNC, for $100,000 donations, 
one $75,000 donation, four $50,000 donations, two $30,000 donations, 
and nine $25,000. In addition, ATR received a $10,000 donation from the 
Coalition for Our Children's Future. CCF000384-85.
    130 Norquist's statement that, ``ATR didn't receive more 
than ten percent of its funds from any one company or industry,'' Drew, 
p. 10, is therefore misleading, since the majority of its funding in 
1996 came from the RNC and a few other sources.
    131 See footnote 49.
    132 See footnote 49.
    133 See 26 U.S.C. 527(a) and (e)(2).
    134 See 26 U.S.C. 501(a) and 527(f).





                               
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