WASHINGTON -- 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.
BIG CONTRIBUTOR TO DEMOCRATS RECEIVES 5 YEARS OF PROBATION
LOS ANGELES -- Johnny Chung, a prolific donor to Democrats and a frequent visitor to the Clinton White House, was sentenced to probation and community service Monday for his involvement in illegal campaign contributions in the 1996 election.
At the sentencing, Judge Manuel L. Real of Federal District Court expressed doubt over Democratic Party officials' assertions that they did not know about fund-raising abuses, and said he was "surprised" that Attorney General Janet Reno did not appoint a special prosecutor to look into them, "as much as that term has become something of a pariah."
The judge, appointed to the bench in 1966 by President Lyndon B. Johnson, said he had reviewed transcripts of Chung's testimony before a grand jury investigating those accusations.
Ms. Reno has said that in making her decision she based it on the facts and the law and had not found sufficient grounds for appointing an independent counsel.
Referring to Donald L. Fowler, the former chairman of the Democratic National Committee, and Richard Sullivan, the committee's former finance director, the judge added: "If Fowler and Sullivan didn't know what was going on, I think they are the dumbest politicians I've ever seen." Rick Hess, a spokesman for the committee, declined to respond to Judge Real's comments.
Chung, 43, who faced up to 18 months in prison, was granted leniency after a recommendation by prosecutors and pleas from his lawyer on the basis of his cooperation with an investigation into campaign fund-raising abuses in the 1996 campaign.
Chung was sentenced to five years of probation and 3,000 hours of community service.
He pleaded guilty to bank fraud, tax evasion and conspiracy charges, and admitted circumventing individual limits on donations.
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."