Copyright © 1997 The Telegraph plc. All Rights Reserved. Reproduced with permission.
International News Electronic Telegraph
Sunday 16 February 1997
Issue 632

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Clinton's Chinese takeaway
By Ambrose Evans-Pritchard in Washington


External Links

Washington Post: Chinese funding coverage


Politics Now Scandal Sheet


America International Policy: East Asian and Pacific Affairs


Corruption in America


Lippo Group


China home page



CHINA finally replaced the old Soviet Union as the number one enemy last week in the eyes of the US political establishment.

If one could date the beginning of the new Cold War, it would be Thursday, February 13, 1997, the day that the Washington Post reported that US counter-intelligence had caught the Chinese embassy plotting to subvert the US political system. The Chinese were overheard discussing plans to funnel money to the Democratic Party before the 1996 elections, an absolute no-no in the hierarchy of Washington sins.

It looks as if the avalanche has now begun. A two-month investigation by the cable TV network NET alleges that the Chinese government laundered large donations to the Democratic Party by passing the money through the Lippo Group, an Indonesian financial conglomerate tied into the powerful network of the Chinese diaspora in the Far East. According to the NET report, to be broadcast next week, the Lippo Group has served as a front to assist Beijing in espionage against the United States and to buy influence in Washington.

The FBI now has a taskforce of 25 agents investigating the Lippo Group. The prime target is John Huang, the former chief of Lippo's American operations and an emigré from Taiwan who raised $1.2 million for the Democrats from overseas, which is illegal. This was bad enough, but he also managed to secure a post with a Top Secret clearance at the Commerce Department without being properly vetted. Over a period of 18 months he received 37 intelligence briefings and had access to 15 classified field reports, much of them dealing with China. His telephone records at the Commerce Department show that he was in touch with the Chinese embassy and his colleagues at the Lippo Group.

The secret of Huang's success was his friendship with Bill Clinton. This had been cultivated over a long period. The Lippo Group, owned by Mochtar Riady, made a serious investment in Arkansas, and the career of its up-and-coming governor, long before the rest of the world had heard of Little Rock. In 1985 Lippo bailed out the Worthen Bank in Little Rock, shielding the governor from serious political exposure. In 1992 it bailed out Clinton's bid for the presidency, helping to provide an emergency loan of $3.5 million after his campaign ran out of money. Mochtar Riady's son, James, lived in Little Rock in the Eighties during his apprenticeship in American banking, securing personal ties with the Clintons.

One of the things that the Senate Governmental Affairs Committee intends to explore this spring is precisely when Lippo entered into partnership with the Chinese regime. According to the NET documentary, Beijing used a proprietary company in Hong Kong called China Resources, a legitimate trading organisation but also suspected to be an intelligence front, to buy shares in the Lippo-owned Hong Kong Chinese Bank in 1992 after a stock issue had flopped.

In 1993, after Clinton was elected president, China raised its stake dramatically, paying a 50 per cent premium over the share price. That amounted to a $163 million windfall for the Riady family. Republicans would like to know whether the Lippo Group was just selling a bank, or the promise of access to the Oval Office as well. They also want to know whether John Huang passed on intelligence data.

During the 1992 campaign Bill Clinton had castigated George Bush for "coddling dictators" in Beijing. But, once in office, nothing ever came of Clinton's call for a stronger line on human rights. After a lot of bluster the new White House soon adopted the Bush policy of accommodation. In June 1993 it renewed China's Most Favoured Nation trading status. There is no proof so far that the Democratic Party was aware of China's penetration of the Lippo Group when it accepted $4 million in donations from the friends of John Huang. The White House insists that the donations did not influence policy.

But was US policy in the Far East put up for sale? At the very least, Bill Clinton is responsible for creating an atmosphere in which the Chinese imagined it possible to buy what they wanted. Had the Chinese kept a low profile and smiled - the Japanese way - they probably could have gained a few more years. Now President Clinton will have to reassure America that he is not on the Chinese payroll.

18 December 1996: Embarrassment for Clintons over legal fund fiasco
22 October 1996: Fresh allegations of illegal funding threaten Clinton



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