The China Syndrome
AT A PRESS conference last week, Bill Clinton continued to insist that there is "no evidence" of Chinese government attempts to influence U.S. elections--even as the scandal reached into the Republican Party. Sen. Fred Thompson's campaign finance investigation has quietly subpoenaed Republican National Committee records relating to a $2 million loan from an assetless Hong Kong businessman that bailed out the GOP in the 1994 and 1996 elections. Ambrous Tung Young put up the money to serve as collateral for a bank loan to an RNC subsidiary just days before the '94 elections gave Republicans control of Congress. The money was then funneled as last-minute campaign cash into tight House races. Two years later, when the bank called in the loan, the RNC decided to default on the remaining $1 million it owed rather than take the money away from its Congressional candidates--and Tung Young had to eat half a million of his guarantee.
The Tung Young case bears remarkable similarities to that of Charlie Trie, the Little Rock noodle salesman who bundled $600,000 in contributions to the president's legal defense fund. According to this week's Time, Young's company--like Trie's--has little income and its only asset is a Washington, D.C. apartment; his company is in fact backed by an aviation services and real estate outfit controlled by Hong Kong and Tawainese business men with ties to Beijing.
Meanwhile, the New York Times last Thursday revealed that the Chinese government was behind an attempt by the Riady family's Lippo Group to take over a multibillion dollar California bank--which helps explain why the Riadys so readily coughed up at least $100,000 in hush money for Webb Hubbell, the president's "closest friend" and the First Lady's former law partner.
This was the Riadys' third attempt to become a player in U.S. banking. In the 1980s, they became partners with giant Arkansas conglomerate Stephens Inc. (a longtime major contributor to Clinton's political campaigns) in the Worthen Bank of Little Rock; in 1986, as the Times put it, federal bank regulators investigating Worthen "found that large loans to Riady-related entities in Indonesia violated Federal banking laws that limit lending and bar preferential loan rates to insiders." James Riady was a top executive of Worthen at the time, where he became chummy with then-Governor Clinton.
In the wake of those regulatory troubles, the Riadys sold their interest in the Worthen Bank and bought a small bank in California, renaming it Lippobank. And, notes the Times, "Once again Mr. Riady's bank got in trouble with regulators. The Federal Deposit Insurance Corporation has found repeated banking violations at Lippobank since 1990, issuing three separate cease-and-desist orders against the bank, most recently last month."
Next came the multibillion dollar bank takeover attempt unearthed by the Times. The acquisition effort was directed by the giant Hong Kong Chinese Bank, which is jointly owned by the Riadys and China Resources, one of the Beijing government's biggest and most successful state-run companies. This bank is a spinoff of the Riadys' Hong Kong China Ltd., the holding company that paid Hubbell the $100,000 for no apparent work.
Up until now, while it was clear why Clinton wanted Hubbell paid off--to keep him from telling prosecutors and Congressional investigators what he knew about the Clintons' involvement in the Whitewater-related Castle Grande criminal real estate Ponzi scheme--it has never been evident what favors the Riadys were expecting in return. The significance of last week's Times article is that it tells us what the Riadys wanted in return for the payment to Hubbell and the hundreds of thousands of Lippodollars funneled directly and indirectly into Clinton campaign coffers through the efforts of John Huang, the former Lippobank exec whom the Riadys placed first at the Commerce Department and later (on the direct intervention of the president) at the DNC as finance vice chairman.
Given the history of the Riadys' U.S. banking interests and their repeated violations of federal bank statutes, the family's attempt to take over a huge California bank would have naturally run into problems with the bank regulators--which Clinton, in good ol' Arkansas fashion, could have been counted on to smooth over.
This is the missing motive, and while it may not be the proverbial smoking gun, it is about as close as we may come to knowing the truth unless and until Hubbell and Huang break their well-paid silence.
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you’ll never miss City Pages' biggest stories.