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Tracing Lippo Empire's Campaign LinksBy Lena H. Sun
Washington Post Staff Writer
Monday, July 7, 1997; Page A04
Senate investigators have discovered records that indicate a real estate holding company run by John Huang while he was working for the Jakarta-based Lippo Group apparently was used to funnel money from Indonesia into U.S. election campaigns, according to sources close to the probe into campaign fund-raising activities.
Financial documents obtained by the Senate Governmental Affairs Committee, which begins televised hearings Tuesday into the campaign finance scandal, show that Hip Hing Holdings Ltd., part of the Lippo Group, received regular injections of foreign funds and gave about $79,000 in U.S. political contributions, the sources said.
Huang, a former top fund-raiser for the Democratic National Committee who is the major figure in the scandal, formerly headed Lippo's U.S. operations and was Hip Hing's vice president.
Committee investigators believe that they have developed the first substantive insight into how money directed by Lippo, a multibillion-dollar global business conglomerate, might have found its way into U.S. political campaigns. For months, key questions in the fund-raising controversy have been how foreign money was channeled into campaigns here and whether Lippo was directing illegal contributions by its executives and employees.
It is illegal under U.S. election law for noncitizens or nonlegal residents to contribute to campaigns, or for anyone to contribute in someone else's name. Any money donated by corporations must come from income generated in the United States.
It has been previously reported that many of the Lippo-affiliated entities made political contributions. The financial documents obtained by investigators show that Hip Hing Holdings, based in California, did not generate enough income to cover the political contributions it made to local, state and federal campaigns from 1991 to 1993.
Huang was in charge of Hip Hing's administration at a time when it was donating to U.S. political campaigns. Investigators are also questioning whether funds from the real estate company might have been used to reimburse Lippo executives for political contributions.
The committee is to hear testimony from two former Hip Hing employees.
Tracking Lippo has proved complicated, investigators said. The Lippo empire is divided into at least 143 subsidiaries and joint ventures in 11 countries. Many of the firms are domiciled in such jurisdictions as the Cayman Islands or Bermuda, where disclosure laws are weak. Former Lippo managers tell of discovering that company stock was listed in their names even though they had never been told they owned it.
Lippo's owners, the Riady family of Indonesia, have longtime political and personal ties to President Clinton.
Mochtar Riady got to know Clinton in the early 1980s when he and his sons became involved in a Little Rock business venture. Son James Riady became active in Democratic Party causes with Huang in the 1980s while living in California. The Riady family owned a California bank that Huang headed.
The Riadys and their business associates have contributed more than $700,000 to the Democratic Party since 1991.
As a Lippo executive, Huang was an important figure in Asian American political circles and helped raise money for Clinton's 1992 presidential campaign and for Democratic senators. He frequently spoke out for more political involvement by Asian Americans and suggested that campaign donations were a way for the Asian community to gain greater influence in the political system.
Huang left Lippo in 1994 to take a deputy assistant secretary's position at the Commerce Department. He specialized in international economic affairs, was responsible for Asian trade and had a top-secret security clearance that enabled him to receive classified briefings.
Just before joining the federal government, Huang received $788,750 from Hip Hing for what he described as "salary, bonus and severance bonus" for his Lippo employment. Committee Republicans also plan to raise more questions during the hearings about Huang's contacts with Lippo while he was on the federal payroll.
In addition to previously reported telephone calls from his Commerce Department office to Lippo's offices in Los Angeles, Huang often used the Washington office of Stephens Inc., then at the Willard Hotel, to keep in touch with Lippo, congressional and White House sources said.
Huang also used the Stephens office when he was still employed by Lippo but seeking a job with the new Clinton administration. Stephens is a large, Little Rock-based investment bank that had joint ventures with Lippo in Arkansas and in Asia.
Stephens officials said A. Vernon Weaver, now the U.S. representative to the European Union and formerly head of the Stephens office in Washington, allowed Huang to use the office for personal business as a courtesy. Paula Green, a former office secretary, may testify that Huang regularly used office telephones and fax.
Several former or current Commerce Department officials, including John Dickerson, the CIA officer who briefed Huang, also may testify about Huang's classified meetings and his desire to keep his top-secret clearance after he left the department and joined the DNC.
"Who was Huang working for? How did he end up at positions at Commerce and the DNC? Why was he still making those phone calls while he was at Commerce?" asked Peter Kadzik, a DNC attorney.
"I don't think they have a smoking gun. . . . But if you ask these questions enough times, the right way, you'll get the impression that Huang was engaged in some kind of nefarious activities."
Huang's attorneys have said he did nothing improper. DNC and White House officials say that if Huang was engaged in illegal activity, he did it without their knowledge.
Staff writer Susan Schmidt contributed to this report.
© Copyright 1997 The Washington Post Company