Questionable donations to Democratic officials and presidential candidates from a Chinese-American businessman highlight past concerns over Chinese political influence-buying operations.
Apparel executive Norman Hsu, who turned himself in last week to authorities in California to face fraud charges, donated more than $1 million to senior Democrats, including the presidential campaigns of Sens. Hillary Rodham Clinton of New York and Barack Obama of Illinois.
Mr. Hsu, a native of Hong Kong, has not been linked to any foreign government, and the fraud charges are unrelated to campaign contributions. It is not known whether federal investigators are looking into his donations, most of which were made since 2003.
Mrs. Clinton, who gave $23,000 of Mr. Hsu’s money to charity, said last week that the case does not appear similar to the 1996 scandal involving a covert effort by China‘s government to funnel money to President Clinton’s re-election campaign.
China, however, is linked to past covert funding of Democratic and Republican campaigns.
The Senate Governmental Affairs Committee investigated what it called the Clinton campaign fundraising “scandal” in 1997 and issued a report showing that four persons were linked to large illicit contributions thought to have come from China’s government through Hong Kong.
The committee’s report identified one Chinese government agent, Indonesian Ted Sioeng, as having given a $7,500 donation to a Norman Hsu.
But that Norman Hsu was not the same person who is linked to recent questionable Democratic campaign fundraising. The Norman Hsu mentioned in the Senate report was a Republican political candidate in California who has no connection to the Mr. Hsu currently under scrutiny.
Some of Mr. Hsu’s donations were made through several people, raising suspicions that the money came from foreign or other hidden sources.
In one case, Mr. Hsu, a naturalized U.S. citizen who according to his attorney lived in Hong Kong from 1992 to 1996, worked with a family in Daly City, Calif. The family was headed by William Paw, a mail carrier who earned a relatively small salary, but who since 2004 gave more than $200,000 in donations, including $55,000 to Mrs. Clinton.
Mr. Hsu could not be reached for comment, and his attorney did not return a telephone call seeking comment.
Mr. Hsu’s Washington attorney, E. Lawrence Barcella, told Bloomberg News that “as far as campaign contribution aspects of that story, they are not only unproven allegations and innuendo but strongly denied by all the parties.”
William C. Triplett II, a former Senate Foreign Relations Committee staff member whose 1998 book “Year of the Rat” highlighted the 1996 funding scandal, said he suspects that the Chinese are involved in Mrs. Clinton’s presidential bid.
“What we saw in 1996 was similar,” Mr. Triplett said. “Whenever the Clintons have money trouble, they turn to the Chinese and the Chinese don’t let them down. Perhaps it is only a coincidence that both 1996 and 2008 are Years of the Rat in the Chinese calendar.”
The 1997 Senate investigation provided details of Chinese political influence operations, including the use of cash payments to political candidates and parties through intermediaries.
The Senate investigation revealed that the Chinese government carried out a secret “China Plan” by “high-level [People’s Republic of China] government officials” to “increase China’s influence over the U.S. political process and to be implemented by diplomatic posts in the U.S.,” the report said.
The program involved a “broad array of Chinese efforts designed to influence U.S. policies and elections through, among other means, financing election campaigns,” the report said.
The plan involved legal and illegal Chinese influence activities, including a “seeding strategy of developing viable candidates sympathetic to the PRC for future federal elections; the creation of a ‘Central Leading Group for U.S. Congressional Affairs’ to coordinate China’s lobbying efforts in this country; and PRC officials discussing financing American elections through covert means,” the report said.
A lesser-known Chinese influence-buying operation was brought to light after the 2003 arrest of Chinese double agent Katrina Leung, a Los Angeles businesswoman who was an FBI informant since the 1980s but who also secretly collaborated with Chinese intelligence.
Leung was recruited by the FBI and had affairs with two senior FBI counterintelligence officials until she was arrested on spying charges. She pleaded guilty to lesser charges in 2005.
A declassified FBI report made public in the case revealed that China’s Minister of State Security (MSS) Jia Chunwang and Chinese President Jiang Zemin discussed a plan in 1991 to influence the administration of President George Bush by bankrolling Leung’s membership in a Republican donors group.
The FBI report, dated March 15, 1991, stated that Leung was questioned by her MSS handler, Mao Guohua, on “how can you actively participate in this [upcoming 1992] election.” Leung replied that she could gain access to the “inner circle” of the Republican Party by making $10,000 donations.
Leung then reported meeting with the Chinese president and Mr. Jia on March 4, 1991, at the leadership compound in Beijing called Zhongnanhai. According to the report, Mr. Jiang asked Leung whether Mr. Bush would be re-elected and said the communist leadership was concerned about another candidate winning because “we don’t know if a new president would be as friendly as Bush.”
Leung reported that Mr. Jiang told her that “we do not expect you to go into politics, but we take every opportunity to support people we like because we do not have an organized lobbying effort.”
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