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Unless We Ban Soft Money

By Fred Wertheimer
Sunday, August 10, 1997; Page C07

The Senate campaign finance hearings that paused a week ago for the August recess have been marked by a swirl of partisan battles, conflicting agendas and nonstop political spin.

They have also taught us a valuable lesson for the future.

There is no way to stop foreign interests from injecting campaign contributions of $100,000 or $1 million or more into our national elections.

No way, that is, unless we shut down the political party "soft money" system.

The hearings have established that the soft money system is the pipeline through which huge foreign contributions come into our elections. As a practical matter, these foreign-based donations, given in the name of U.S.-based donors, cannot be segregated from domestic soft money contributions.

The lesson comes as the battle over ending the soft money system of unregulated contributions to political parties is headed for a Senate floor fight next month.

For supporters of the soft money ban, the millions of dollars in foreign contributions laundered into the 1996 elections represent a relatively small portion of the $250 million in unlimited soft money contributions that are corrupting the political process.

Opponents of the ban, however, see foreign contributions as the only serious campaign finance problem to come out of the last election and argue we just need to stop foreign money from coming into our elections in the future.

Sorry, the hearings now tell us. We can't do that.

In order to understand why, let's look at just three examples where powerful evidence exists that foreign money was able to enter our political system disguised as soft money contributions from U.S.-based donors.

Exhibit 1. Charlie Trie. An FBI investigator, working for the Senate committee, testified that Trie, an American citizen and Clinton/DNC fund-raiser, had laundered foreign contributions on behalf of his "business partner," Ng Lap Seng, a Macao real estate tycoon, in contributing $220,000 to the DNC. The FBI investigator pointed to more than $900,000 that had been wired to Trie from Ng and used, in part, to pay for Trie's soft money contributions to the DNC.

Ng, we recently learned, got to visit the White House on a dozen occasions, from June 1994 to October 1996, and enjoyed a rare opportunity to be a guest at a dinner held in the president's personal residence.

Exhibit 2. Johnny Chung. Chung, an American citizen, gave a $50,000 soft money contribution, made out to the DNC, to a White House staff member. It was part of his efforts, Chung has said, to obtain White House access and VIP treatment for five Chinese businessmen. A DNC official, who earlier had turned down the contribution, testified, "I had a sense that he might be taking money from them . . . and then giving it to us."

Chung reportedly received a $150,000 wire transfer from the Bank of China shortly before he made the soft money contribution.

The Chinese businessmen got their White House access and VIP treatment.

Chung, who contributed $366,000 to the DNC between December 1994 and September 1996, and visited the White House dozens of times, recently said, in a bid for the sound bite Hall Of Fame, "I see the White House is like a subway – you have to put in coins to open the gates." The DNC recently returned Chung's $366,000 because, according to a DNC audit, it was not able to confirm the money actually came from Chung.

Exhibit 3. Ambrose Young. Young, a Hong Kong businessman, funded a loan guarantee for a $2.1 million loan made to the National Policy Forum, a Republican Party arm founded and headed by then-RNC Chairman Haley Barbour. Young funded the guarantee by transferring money from his Hong Kong company to a U.S. subsidiary of the company, which then used the money to guarantee the loan received by the Policy Forum.

The Policy Forum, in turn, transferred the bulk of the $2.1 million loan it received to the RNC, which used the foreign-sponsored funds to make soft money expenditures in connection with the 1994 congressional races.

Barbour's claim that he did not know foreign funds were used for the loan guarantee was directly challenged in testimony and depositions from at least four other individuals, including former RNC head Richard Richards, and Young, who stated that Barbour was told the funds he wanted would come from a foreign source.

The only reason we know the details of how these contributions and numerous other foreign donations were laundered into our national elections is that an unprecedented campaign finance investigation is being conducted into the unprecedented campaign finance scandal that occurred last year.

As a result, investigators and subpoena power have been available to examine bank accounts, trace wired funds and track down the true sources of contributions. Even so we still have not been able to pin down just how much foreign money came in as soft money during the 1996 elections.

Unless one assumes that massive campaign finance investigations will occur every two years, following our national elections, there will be no way to get behind the soft money contributions being made to determine if, and when, a $100,000 or $1 million contribution from an American source, in fact, has been funded by foreign interests.

Absent a soft money ban, furthermore, this is likely to be a growth industry.

The global economy, the growing interrelationship between American and foreign business interests and the growing importance of U.S. economic decisions around the world are only going to increase the desire of foreign interests to play by Washington rules and invest big money in American politicians.

Campaign finance laws already ban many of the foreign money abuses that occurred, in prohibiting contributions from foreign individuals, companies and countries, and contributions disguised in the name of others. This did not stop the practices.

Even if Congress were to tighten the laws by banning contributions from foreign nationals residing in the United States and from U.S. subsidiaries of foreign companies, the soft money pipeline would remain wide open for unlimited foreign contributions to continue coming in disguised as contributions from American sources.

We have known for some time that the political party soft money system is a vehicle U.S. corporations, labor unions and wealthy citizens use to evade the nation's campaign finance laws. We now know it is a vehicle for foreign interests to do this as well.

When it comes to foreign contributions, we face a simple and stark choice. Ban soft money and stop the foreign contributions. Or allow soft money, and with it, allow foreign contributions to grow and prosper in American politics.

The writer is president of Democracy 21, a public affairs group.

© Copyright 1997 The Washington Post Company

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