December 15, 1998
Evidence of China Plan to Buy Entree to U.S.
Technology
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Issue in Depth: The White House Fund-Raising Inquiries
By JEFF GERTH, DAVID JOHNSTON and DON VAN NATTA Jr.
ASHINGTON -- After a two-year investigation of Chinese political
contributions to the 1996 election, Federal authorities have
unearthed new evidence that Beijing's efforts were part of a broader
campaign to obtain access to American high technology, according to
lawyers and investigators.
While still incomplete, the evidence provides a clearer understanding of
China's motivations -- and one that differs substantially from the initial view of
Federal investigators and a Senate committee that China intended to influence
the outcome of particular races, including President Clinton's re-election.
Investigators now believe the money was
intended to enhance the political standing
of those passing along the contributions to
Democratic causes, to give them clout in
arguing for favorable policies on trade and
technology.
"Technology was a primary motive," said
a senior Justice Department official who
spoke on the condition of anonymity.
It appears, the official said, that China
intended to follow the example of
American corporations, which use
donations to raise the profile of their
Washington lobbyists. Under American
law, foreign governments are prohibited
from contributing to campaigns.
Investigators and officials said their new
view of China's motivations was based on
inference and evidence that includes bank
records, phone calls and witness
statements.
One fund raiser connected to the inquiry,
Johnny Chung, was sentenced today in
Los Angeles to five years' probation.
Chung, who pleaded guilty to fraud,
received a reduced sentence by
cooperating with officials in the inquiry,
including telling them he had funneled
contributions from a Chinese military
officer to the Democrats. [Page A16.]
While they were sparing in details, the
officials investigating the China connection
said they have learned of additional links
between the fund raisers who arranged
the suspect donations and Chinese
executives and officials involved in
acquiring Western technology with
military uses. They said the inquiry has
documented more active and substantial
contacts between fund raisers like
Yah Lin Trie and Chinese officials than
was previously known.
The campaign finance investigation began
in 1996, when American intelligence
agencies eavesdropped on conversations
in which Chinese officials discussed a plan
to play a role in the elections. A Closer
Look At 3 Fund Raisers
Eventually, investigators focused on the
activities of three figures: John Huang, a
former Commerce Department official who became a leading fund raiser for
the Democratic Party; Trie, who is known as Charlie, a close friend of
Clinton's from Arkansas, and Chung, a California entrepreneur.
The Democratic Party, President Clinton's legal defense fund and Democratic
candidates returned several million dollars in contributions connected to the
three. There is no indication that the campaigns or the White House knew
that Chinese businesses or officials were behind any of the donations.
A Senate investigation of the contributions earlier this year raised questions
about the role of the Chinese Government, but lacked the banking records
and intelligence information that was subsequently made available to the
Federal Bureau of Investigation.
Senator Fred Thompson, the Tennessee Republican who was chairman of
last year's Senate inquiry into campaign finance abuses, was the first to raise
the alarm about China's possible role in the 1996 elections. He initially
asserted that the Chinese plan influenced the 1996 Presidential and
Congressional elections, as well as state elections.
Senator Thompson said in a recent interview that he now also believes that
the "China plan" was aimed at obtaining American technology.
"They were attempting not only to ingratiate themselves politically but in the
process to develop contacts and further relationships with companies in the
U.S. who had the same technology export interest," he said.
One of most intriguing new pieces of evidence involves Trie, who served on a
Presidential commission on Asian trade policy.
Trie is said to have met in Beijing with Chinese officials and asked for $1
million that could be used for political activities in the United States. Their
response could not be learned.
According to the investigators, Trie told associates he had Chinese backing.
He eventually raised or contributed more than $1 million to Democratic Party
causes.
The campaign inquiry is now examining whether any of this money originated
with Chinese companies or officials. Records show that Trie received almost
$1 million from a Macao businessman with ties to the Chinese Government.
Trie's lawyer, Reid Weingarten, said he knew nothing of Trie's activities in
China.
Investigators say they have learned more about another important figure in
the case, Lieut. Col. Liu Chaoying, a Chinese military officer and aerospace
executive. The California entrepreneur who raised money for the Democrats,
Chung, has already told investigators that he took money from Ms. Liu
knowing that it came from the Chinese military.
Now, investigators say, they have a deeper understanding of Ms. Liu's efforts
to help Chinese companies obtain American technology with military uses.
In recent weeks, Chung has told investigators that he tried to arrange
meetings for her with American aerospace companies when she visited the
United States in 1996.
Ms. Liu did not return a telephone call to her office in Hong Kong.
There is also new information about Huang, who worked as a banker in Los
Angeles before joining the Clinton Administration. Officials said he was
overheard on government surveillance equipment discussing political
donations with a Chinese official at the Los Angeles consulate.
Details of his conversation could not be learned. Huang subsequently joined
the Commerce Department as a mid-level trade official. Because of his
previous work as a banker in Hong Kong, he was barred from participating
in decisions about China.
Nonetheless, officials said, Huang obtained at least one secret Government
report on exports of military-related technology to China, which he kept in
his office safe.
Huang's lawyer, Ty Cobb, did not reply to questions about these matters.
Huang has not been charged with wrongdoing, but $1.6 million of the $3.4
million he raised was returned by the Democratic Party because of
unanswered questions about its origins. A Possible Exploitation Of a Policy
Shift
China's efforts in the 1996 elections came at a time when the Clinton
Administration was relaxing controls over technology exports and military
exchanges with China, a policy that dovetailed precisely with Beijing's
interests. Still, no evidence has surfaced that Administration officials knew
about the covert Chinese activities.
But some United States and Chinese aerospace companies may have tried to
improperly exploit the policy shift, investigators say. The Justice Department
is investigating three leading American aerospace companies, and some of
their Chinese counterparts, for possibly illegal exports of sophisticated
machining equipment and satellite technology.
These cases, involving technology that can be used for both commercial and
military purposes, illustrate the interwoven lines between government and
business in China. These same complex relationships between the
government in Beijing and the nation's aerospace and arms-production
companies have also complicated efforts by campaign finance investigators to
untangle the motives of the Chinese.
Chinese leaders have repeatedly denied that they authorized a government
plan to influence the American Presidential election. But Senator Thompson
said the denials were hollow because they left open the possibility that
Chinese business interests funneled money into the American political system.
Last July, at the end of his trip to China, President Clinton said the Chinese
President, Jiang Zemin, had told him that no senior Chinese officials had
sanctioned the channeling of money into American campaigns. But Clinton
said that
Jiang said he "could not speak to whether any people pursuing their own
business interest had done that."
The Chinese military industrial complex effectively reports to the Communist
government, through a state council that oversees extensive business
operations focused on technology development. Those operations include the
acquisition, legally and illegally, of American technology, through imports,
front companies and sometimes theft, according to U.S. Government officials
and documents.
Technology is central to the future of China's armed forces. Beijing's military
strategy, once dependent on a massive land-based army, has shifted to a
reliance on a smaller, more mobile military heavily oriented to sophisticated
computer and other electronic weaponry.
A recent Pentagon report concludes that the Chinese Army has shown
"exceptional interest" in acquiring and developing advanced technology, from
information and electronic warfare to anti-satellite laser capabilities and
telecommunications networks. Tracing Chinese Money To a Fund Raiser
These Chinese policy goals are central to understanding the motivations of
Ms. Liu, the first person who provided a link between Chinese money and
Democratic donations. She works for a Hong Kong unit of China
Aerospace, which is "tasked to acquire U.S. technology by the Chinese
Defense Ministry," according to a 1997 Commerce Department affidavit filed
in support of a search warrant in Federal court in northern California.
In her previous jobs, at other China Aerospace subsidiaries, Ms. Liu helped
market sensitive missile technology in countries like Pakistan, according to
Government documents and officials. She also made secret trips into the
United States in pursuit of American technology and was frequently
monitored by American intelligence agents, according to the officials and
documents.
Ms. Liu was not a focus of last year's Senate hearings that investigated
campaign finance abuses.
But the Senate inquiry hinted that major Democratic donors like Chung, Trie
and Ted Sieong, a Southern California businessman, may have been working
with the Chinese Government or acting as conduits for Chinese money. The
donors all denied any wrongdoing and the Republican-controlled Senate
committee was never able to trace the sources of their money beyond
corporate bank accounts in Hong Kong.
However, the F.B.I. has now been able to go further. For example, it found
that Ms. Liu made payments to Chung's Hong Kong bank account,
according to officials and documents.
Chung told investigators that Ms. Liu told him about her ties to the Chinese
military, where her father, Gen. Liu Huaqing, was the senior official on the
central military commission until last year. Gen. Huaqing personally ordered
an investigation into the January 1995 explosion of a Chinese rocket.
Later in 1995, scientists from Hughes Space and Communications helped the
Chinese determine the cause.
But as it assisted the Chinese in its investigation of the explosion's cause,
Hughes provided -- without proper authorization -- technological insights
crucial for launches of ballistic missiles and satellites to engineers working for
a Chinese aerospace company, the Pentagon concluded in a report released
last week. The aerospace company that benefitted was Ms. Liu's employer.
The commercial technology transfer "raised national security concerns," the
Pentagon report on the matter found. A Hughes spokeswoman said the
transfer was properly authorized by the Commerce Department.
Chung helped Ms. Liu enter the United States in 1996 by trying to arrange
meetings for her with top American aerospace companies, according to a
1996 letter from Chung to Ms. Liu.
Senator Thompson said he believed there were striking similarities in the
political actions of the Chinese and American corporations.
"It's not that they had any particular motivation at the moment," he said, "but
that they had lots of motivations to have access. And would technology
access and export controls be part of that? Yes."
nytimes.com
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