Tale of deep pockets and diplomacy

It was a muggy August evening in 1994, and Johnny Chung strolled through a sprawling estate overlooking the Potomac River feeling like a VIP. The slick-haired Taiwan-born businessman, who started out busing tables at a California Holiday Inn, was thrilled after meeting Bill and Hillary Clinton at the president's 48th-birthday fund-raiser.

For Mr. Chung, the heady sensation of his first presidential audience mingled with hard calculations of profit. The White House and its powerful inhabitants, he quickly realized, were as accessible to big Democratic campaign donors as a subway platform: You "put coins in ... [and] open the gate."

And in the currency of the Chinese business world, Chung knew, photographs of handshakes with President Clinton were worth "gold." They were the ultimate symbol of what Chinese call guanxi, or connections and pull, the most crucial ingredient for smoothing deals in China.

The posh birthday bash marked Chung's launch into an aggressive new career in influence peddling - one so bold that it piqued the interest of China's top intelligence officers. Two years later, Chung flaunted a "brochure" with photos from some of his dozens of White House visits in a meeting with Gen. Ji Shengde, head of China's military intelligence, and later accepted $300,000 offered by General Ji to back Mr. Clinton and the Democrats.

Chung's saga, described publicly for the first time in testimony last week, offers one of the few detailed glimpses available of the web of Chinese and American interests behind the 1996 campaign-finance scandal. It also hints at a far more complex and broad relationship between China's government and US-based political operatives than that suggested by either Democrats or Republicans so far.

Democrats tend to paint a relatively benign picture of Chung as a glad-handing entrepreneur out to make a buck. Questioning his credibility, they assert that even if he did stumble into a deal with Chinese intelligence officers, evidence of a political conspiracy is slim. "I don't think anybody's been able to establish that ... nefarious plots ever actually took place," said Rep. Henry Waxman, the ranking Democrat on the House Committee on Government Reform that is investigating 1996 campaign abuses.

The Democratic National Committee (DNC) in 1997 returned all $366,000 of Chung's donations - including $35,000 that he says came from Ji. The DNC denied knowing of Chung's Chinese-government connections at the time he contributed.

Republicans, in contrast, cast Chung as a conduit in a conspiracy by Beijing to fix the presidential election. "The Chinese government was making a concerted effort to undermine our political system," says Rep. Dan Burton, the GOP chairman of the House Government Reform Committee.

China has denied making illegal campaign contributions.

What the tale shows

The reality, Chung's story suggests, lies in between. Despite Democrats' doubts, his testimony, detailed below, indicates there existed an orchestrated effort by China's government - not just by wayward officials with private business motives.

But in contrast to what many Republicans believe, it suggests that China's chief goal was not to sway the 1996 election. Rather Beijing, in the classic Chinese way, sought to use favors to cultivate a broad network of US political contacts that could be exploited later at will. "Much of what these people wanted from me had less to do with influencing any election [than gaining] ... relationships with important people," Chung said.

US intelligence intercepts indicate the Chinese government planned to bolster China's influence in US politics in 1996. "The overarching policy was: 'Get off your duffs and buy influence in the US,' " says a top former US intelligence officer in China familiar with the intercepts.

Several well-connected Chinese-Americans became active in China's bid for US political heft. Chung is perhaps the best known, having decided in 1997 to cooperate with federal investigators. Another included former Little Rock, Ark., restaurateur Charlie Trie. Chung says he was told Mr. Trie solicited the Chinese government before the 1996 election for $1 million for Clinton and the Democrats.

Today Trie goes on trial in Little Rock on charges he obstructed a US Senate investigation into campaign fund-raising abuses, according to press reports.

In China, the key players were often members of Beijing's own unique political elite: the privileged sons and daughters of top Communist and military leaders known as taizidang, or princelings. These include General Ji, the son of party leader Ji Pengfei, and his associate Liu Chaoying, the daughter of Liu Huaqing, formerly China's top general.

Chung's story reveals how these groups came together in Beijing karaoke bars, Hong Kong hotels, and star-studded Hollywood fund-raisers in a covert swirl of maneuvering for power and profit. A drama complete with Swiss bank accounts and grocery bags of cash, it speaks volumes about the dealings of the politically connected in both countries.

Almost immediately after Chung first met Clinton in 1994, he began promoting himself in China as a well-connected jack-of-all-trades - a businessman who, for a fee, could do everything from securing US visas, to squiring visitors around the country, to obtaining coveted photographs with the US president.

In December 1994, Chung ushered a major Chinese beer-maker named He into a White House Christmas party for a meeting and photo with Clinton. Once back in China, Mr. He used the Clinton photos juxtaposed with giant beer bottles in ads, which in turn became an instant plug for Chung's political access.

Soon afterward, in early 1995, Chung struck up a strategically vital relationship with Charles Parish, a visa officer at the US Embassy in Beijing. Again, Chung used his White House access to impress Mr. Parish. For example, that September he escorted Parish to a private VIP reception with Clinton at the Century Plaza Hotel in Los Angeles.

Chung did many other favors for Parish, who retired last year, including "at least" once passing on to the diplomat a shopping bag full of money and visas. In return, Chung testified, Parish obtained US visas for He and 25 to 30 of Chung's other Chinese contacts. Parish, in a press interview, disputed Chung's version of events.

As word of Chung's influence spread, he collected ever-increasing "consulting fees" and "investments" from Chinese entrepreneurs. Between 1994 and 1996, he amassed "in excess of" $2 million and donated up to 20 percent of it - or roughly $400,000 - to "political causes."

Finally, at a crowded Hong Kong banquet in June 1996, Chung was approached by a woman who eventually became his direct tie to Chinese military intelligence. Aerospace executive Liu Chaoying, the general's daughter who herself had the rank of Army lieutenant colonel, ostensibly wanted access to high-level Washington officials. Chung quickly obliged. He took Liu on a US tour including the Securities Exchange Commission and soon set up a company, Marswell Investments, with Liu, who he nicknamed guniang, or country girl.

Meeting at an abalone cafe

Meanwhile, however, Liu had other plans. On Aug. 11, 1996, she invited Chung to meet "a very important man from Beijing" at an abalone restaurant in the balmy southern China boomtown of Zhuhai. A 50-ish man slipped in through the kitchen door and introduced himself as "Mr. Xu," the Chinese equivalent of "Smith," which struck Chung as a "bogus" name. It was General Ji.

"We really like your president," Ji said during conversation. "We hope to see him reelected," he added, promising Chung $300,000 for Clinton and the Democratic Party. Who is this guy? Chung recalls thinking at the time; but he replied, "fine."

From that encounter until last summer, when Chung revealed he was cooperating with the FBI, the relationship between the blunt-spoken businessman and the shadowy intelligence chief unfolded as part spy novel, part political thriller, and part farce.

Ji, known in US intelligence circles as "a spoiled dilettante" with odd tastes who owes his position to his powerful father, hastily revealed his true identity to Chung. In typical Chinese fashion, he also quickly established a family connection, sending his son, Alex, to work in Chung's California company.

But a mix-up occurred when Chung attempted to arrange a private audience with Clinton for Alex and Mrs. Ji at a Hollywood studio fund-raiser. Chung's driver and secretary got in to see Clinton instead. Infuriated by the snafu, Chung refused to donate money for the event, provoking a tongue-lashing by DNC Chairman Don Fowler.

After the campaign-finance scandal broke after the 1996 election, Chung halted his donations and eventually agreed to secretly cooperate with the FBI investigation.

Yet fallout from Ji's botched influence scheme continued to haunt Chung. In March 1998, Chung pleaded guilty to charges of bank fraud, tax evasion, and making almost $30,000 in illegal conduit contributions to the Clinton-Gore campaign.

In April, he received a call from Robert Luu, a shadowy figure whom Chung had first met one night in 1996 in a Beijing karaoke bar. Mr. Luu made a polite threat: Keep quiet and your family will be safe. Wired and carrying a hidden camera, Chung recorded several meetings with Luu, in which he established that Luu had connections with Ji and Liu. Last May, concerns over a possible Chinese hit squad led the FBI to move Chung and his family to a hotel for 21 days.

In his testimony, Chung chided lawmakers, who he said created a corruptible campaign system. "If you really want to do something about this, then change the system that allowed me to, with a few selected donations, attract the interest of the head of Chinese military intelligence."