MONEY TROUBLE May 19, 1998 The NewsHour with Jim Lehrer Transcript

---

The New York Times has reported that controversial Democratic fund-raiser Johnny Chung funneled $100,000 of Chinese money into DNC coffers during the 1996 campaign. Following a background report, two members of Congress debate the latest allegations.

---

A RealAudio version of this segment is available. NEWSHOUR LINKS: March 9, 1998: A discussion about several campaign-related fronts. December 9, 1997: The House Committee hears testimony concerning the Justice Department's investigation. August 1, 1997: A review the Senate's investigation into the actions of Democratic fund-raiser Charlie Yah Lin Trie. July 8, 1997: It is believed that the Chinese government had made a concerted effort to influence the U.S. government. July 8, 1997: A possible immunity deal for Democratic fund-raiser John Huang. March 6, 1997: A report on campaign fund-raising. Browse the NewsHour's coverage of campaign hearings. OUTSIDE LINKS: The White House

JIM LEHRER: The possible Chinese connection to Democratic Party fund-raising and to Margaret Warner.

Sen. Thompson: "The committee believes that high-level Chinese government officials crafted a plan to increase China's influence over the U.S. political process."

MARGARET WARNER: Last year, Senator Fred Thompson, Chairman of the Governmental Affairs Committee, opened his investigation of campaign fund-raising abuses by making a startling charge.

SEN. FRED THOMPSON: The committee believes that high-level Chinese government officials crafted a plan to increase China's influence over the U.S. political process. The Committee has identified specific steps taken in furtherance of the plan. Implementation of the plan has been handled by Chinese government officials and individuals enlisted to assist in the effort. Activities in furtherance of the plan have occurred both inside and outside of the United States.

MARGARET WARNER: But the hearings ended last October without establishing a Chinese government connection to various illegal contributions made during the 1996 election season.

Then, last Friday, The New York Times reported that Justice Department investigators believe they have established such a link, based on testimony provided by California businessman Johnny Chung. Chung, who made hundreds of thousands of dollars in questionable contributions to the Democratic National Committee, began cooperating with the Justice Department after pleading guilty to campaign-related bank and tax fraud charges in March. Chung reportedly told investigators that a significant portion of his 1996 contributions came from China's People's Liberation Army by way of Liu Chao-Ying, a lieutenant colonel who also is a top executive of Beijing's state-owned aerospace company, China Aerospace. That same year, the Clinton administration was making it easier for American commercial satellites to be launched by Chinese rockets--a move that benefitted Liu's company. Such launchings had been tightly restricted in the past out of concern that they would give China access to technology that could be used for military purposes.

The Justice Department is also investigating whether the administration's decision was influenced by domestic campaign contributions from executives of two American aerospace companies that had been lobbying to get the restrictions eased--Loral Space Communications and Hughes Electronics. Loral Chairman Bernard Schwartz gave the Democrats more than $600,000 before the '96 elections, making him the party's largest single contributor that year. President Clinton insisted that contributions had not influenced the decision to let China launch American satellites.

PRESIDENT CLINTON: The decisions we made we made because we thought they were in the interest of the American people. Now, if someone tried to influence them, that's a different issue, and there ought to be an investigation into whether that happened.

MARGARET WARNER: Yesterday, Senate Majority Leader Trent Lott said Congress may investigate the matter.

SEN. TRENT LOTT: There are very legitimate questions about how that decision was made, how that has strengthened China's hand, and of course, you know, did campaign contributions affect that in any way.

Congress reacts.

MARGARET WARNER: Late today House Speaker Newt Gingrich said he intends to create a special committee to investigate these latest allegations. For more on all this we have two perspectives now from Capitol Hill. Republican Sen. Arlen Specter of Pennsylvania is a member of Senator Thompson's Government Affairs Committee. And Democratic Congressman Thomas Barrett of Wisconsin is on Congressman Dan Burton's House Committee that's been investigating campaign fund-raising abuses. Congressman Barrett is the ranking Democrat of that Committee's National Security Sub-committee. And, welcome, gentlemen. Sen. Specter, what do you make of all this?

SEN. ARLEN SPECTER, (R) Pennsylvania: Well, I think that an investigation is warranted. The president himself has said that if there was an effort to influence the decisions, that there ought to be an investigation. And I think that it is so close to the president being one of the covered persons that this is a matter for an independent counsel. I believe that a strong case has been made for some time with so much soft money in the 1996 campaign, and the president's direct coordination. I think Republicans too have a lot of soft money in violation of the commitments not to have funds beyond what was paid on governmental financing. But I think that when you have these recent developments with hundreds of thousands of dollars of Chinese contributions at the time the government of China and the China aerospace company benefitted, and six hundred thousand dollars first and then four hundred thousand dollars given by a U.S. company, by a chief executive officer, that these matters may be coincidences, but they raise an unsavory inference and ought to be investigated.

MARGARET WARNER: Just so I understand, is what concerns you the change in policy that Mr. Sanger described, or the possibility that that was influenced by campaign contributions, whether that's from Chinese sources or these American companies?

SEN. ARLEN SPECTER: The critical question is whether the campaign contributions influenced these decisions. Here you have the secretary of state making a determination that this technology ought not to be transferred, and here at a time when you have a Justice Department investigation of the earlier breach, the president makes a unilateral decision, gives the technology to the Chinese, makes it available to the Chinese government, which totally eliminates the pending federal Department of Justice investigation. And then you have these contributions. So the question is whether there's a connection, whether there's a quid pro quo, because if there was, it's bribery.

MARGARET WARNER: Congressman Barrett, do you think these latest allegations raise that real possibility?

REP. THOMAS BARRETT, (D) Wisconsin: Well, I don't necessarily think that they raise that possibility. What I do think is that these are serious allegations, and they should be investigated. And I am very pleased that the Justice Department has already begun a criminal investigation against the Loral Corporation to see whether it had disseminated technology to Chinese in violation of American law. It's also my understanding that the Justice Department is close to making a decision this week as to whether it should launch an investigation into the allegations pertaining to the contributions made to the president of Loral and whether those had any influence whatsoever on the decisions. I think that both of those decisions are the correct decisions, that we should be investigated exactly what went on here. But I would stress that this is a policy that began under President Bush. This is not a policy that began under President Clinton. There was a turf war. There's no question there was a turf war.

MARGARET WARNER: I'm sorry. Explain this policy that you say began under President Bush.

REP. THOMAS BARRETT: The policy that began under President Bush was to grant waivers to American companies to allow them to launch on Chinese rockets American satellites. And–

Leave the investigation to the Justice Department?

MARGARET WARNER: But isn't that quite different from the overall change in policy, which was to move this whole matter over to the Commerce Department?

REP. THOMAS BARRETT: Right. You're right. But what I'm saying is the policy of having these manufacturers sell to the Chinese, that's consistent. There was a change, no question about it. And there was obviously a turf battle between the Secretary of Commerce Ron Brown and Secretary of State Warren Christopher. And the position that was taken by the Commerce Department was that these pieces of technology were more similar or were similar to supercomputers, computers, more so than munitions. And I think one could argue that either way. But I do think that we should be investigating, because I do think that it's a serious allegation. And anytime you're talking about attempts of foreign influence in our country, I think that they should be investigated. But I have not been allowed thus far by the actions of the Justice Department. I think the Justice Department, which, after all, is the department that is basically–carried out this investigation thus far has been acting quite responsibly.

MARGARET WARNER: Sen. Specter, the Justice Department has, in fact, developed a lot of this evidence that we're now discussing, or this–these allegations. Why not leave it with the Justice Department for now?

SEN. ARLEN SPECTER: Because if there's a question as to whether the contribution from the chief executive officer of an American company influenced the decision, then it touches the decision maker as to whether his decision was influenced. You have somebody who seeks to influence. You have somebody who might have been influenced, and the person who might have been influenced is the president, and he's a covered individual. But when you talk about what President Bush did on waivers, there's nothing extraordinary about that. But I don't think President Bush ever issued a waiver on a matter which was under investigation by the Department of Justice on the earlier breach. And you have these contemporaneous contributions of very, very large sums of money, which makes it–which makes it very different. Now, the Department of Justice also has invited Maria Hsa and Charlie Trie–

MARGARET WARNER: These are other–just give us a thumbnail sketch of them.

SEN. ARLEN SPECTER: Well, these are individuals who made very large contributions to the Democratic National Committee. And there's also John Lang, who took the Fifth Amendment, and who did work for the Commerce Department and who left his job at the Commerce Department to walk across the street to a private company and then faxed out a lot of materials where an inference was raised if they went to Lippo and other groups, which had connections to the government of China.

Sen. Specter: "I think the Congress should be involved because we have an independent duty to investigate."

MARGARET WARNER: Sen. Specter, let me ask you, do you think, though, that in addition to an independent counsel the Congress should get re-involved in this either through reviving your–the committee on which you sit, or Speaker Gingrich's idea about some sort of a special committee?

SEN. ARLEN SPECTER: Well, I think the Congress should be involved because we have an independent duty to investigate. And I believe that our Governmental Affairs Committee went into these matters very, very extensively, but there have been more recent developments. And I think our committee ought to take a look at what documents there were, what paper that may have been generated at the staff level, which would have justified a change by the president. And I think we ought to be questioning the chief executive officer of the companies who ought to make an effort to question the people from the government of China, of the Chinese companies which were involved. We have an independent responsibility to do that. And my thought is that we ought to move ahead with it.

MARGARET WARNER: Congressman Barrett, excuse me, but what's your view, Congressman, about whether Congress should look at this?

REP. THOMAS BARRETT: I think it's appropriate that Congress take a look at it. The problem that we face in the House and the reason that the Speaker has indicated that he wants to have a special committee look into this is because of the lack of credibility that the Burton Committee currently has. This is an inquiry that normally would come to this committee, but because of a lack of credibility in the problems that the chairman has had, the Speaker is looking for a way to literally go around this committee. And that's why you have talk this week of creating a special committee. And, frankly, if it will allow us to have a more credible committee–more credible investigation and a fairer investigation, then I think that's something that unfortunately is necessary. And the reason I say unfortunately is because we have spent so much money in Chairman Burton's committee it's just a shame that we're going to have to duplicate that effort in a committee that really should not have to be created. But it looks like that's the route we're going to have to go if the Speaker decides to create this committee. But there certainly are committees in existence that could do this right now.

MARGARET WARNER: But the House Minority Leader Dick Gephardt has been quoted as saying he opposes the special committee, but you're saying from your point of view you think it would be a good idea?

REP. THOMAS BARRETT: Well, no, I'm not saying it would be a good idea. I think it's inevitable. And the reason I think it's inevitable is because, again, the place it should be is in–Congressman Burton's committee. But because that committee has no credibility, frankly, on the Democratic side and I think this speaker recognizes the problems that it has, that I think it's an inevitable decision that he is going to make, which will be to put this decision into a separate newly created committee.

MARGARET WARNER: All right. Well, gentlemen, thank you both very much.

SEN. ARLEN SPECTER: Nice being with you.

REP. THOMAS BARRETT: Thank you very much.

REGIONS TOPICS RECENT PROGRAMS ABOUT US FEEDBACK SUBSCRIPTIONS / FEEDS:

Support the kind of journalism done by the NewsHour...Become a member of your local PBS station.
PBS Online Privacy Policy Copyright ©1996- MacNeil/Lehrer Productions. All Rights Reserved.