FOR A WOMAN USUALLY GIVEN TO lawyerly dispassion, the words were raw. ““I was mad,’’ Attorney General Janet Reno told reporters, blaming the White House for failing to tell her about 44 videotapes of presidential ““coffees’’ for potential donors–until after she had issued a letter essentially clearing the White House of wrongdoing. But Reno’s greatest embarrassment, NEWSWEEK has learned, unfolded not in a televised press conference last week, but behind closed doors in a Senate hearing room a month ago. At an ““executive session’’ of the Senate Governmental Affairs Committee on Sept. 11, Reno had to admit to incredulous senators that the most damning evidence of a foreign plot to influence an American election had been lost in the files of the Justice Department for nearly two years. The brutal dressing-down she received from lawmakers (““We broke some furniture,’’ Sen. Arlen Specter told NEWSWEEK) forced her to admit to her own lieutenants that the Justice Department’s investigation of the scandal was in chaos and needed to be completely reorganized.
The missing evidence had nothing to do with President Bill Clinton or his fund-raising machine, but it goes to the heart of the most titillating allegations, that the Chinese were plotting to subvert American politics. Because of bureaucratic bungling, Justice Department lawyers were not provided with an FBI report on top-secret electronic intercepts and bank records that appear to trace a $3,000 campaign donation in early 1996 from Beijing to a candidate for the California state legislature. A NEWSWEEK investigation reveals that the probable recipient was Dr. Daniel Wong, an obstetrician and former GOP mayor of Cerritos, Calif. The money was allegedly funneled through a middleman, Los Angeles entrepreneur Ted Sioeng. The FBI files also include a report from an informant who allegedly overheard Sioeng plot with a Chinese government official to get the money to the assembly candidate.
Of course, such an insignificant contribution to an obscure politician would hardly subvert the political process. Running on an ““eye for an eye’’ anti-crime platform (he advocated caning criminals and cutting the testicles off convicted rapists), Wong didn’t even win the Republican primary. He told NEWSWEEK that he did receive a contribution from a member of Sioeng’s family, but he dismissed the allegation that Sioeng was a spy for Beijing. Sioeng’s lawyers deny that the Chinese government ““directed or funded any political contribution made by Mr. Sioeng,’’ and say that it would be ““comical’’ to suggest that such a small donation would be central to a Chinese plot.
WHEN SEN. FRED Thompson began his hearings into campaign-finance abuses last June, he strongly suggested on the first day that he would expose a plot by the Chinese government to buy American political candidates. Not much has been heard about the plot since then. The real Asian connection remains the efforts of a handful of old friends of Bill Clinton’s to funnel legally questionable money into his re-election campaign–charges that may soon get new attention. The administration is frantically reviewing up to 200 more videotapes of political events attended by the president. On these tapes, NEWSWEEK has learned, Clinton can be heard effusively thanking former Lippo Group executive John Huang and Little Rock restaurateur Charlie Trie for their fund-raising efforts. The Democratic National Committee has been forced to return hundreds of thousands of dollars generated by these two men because the money appears to have come from foreign sources, which is illegal.
Even bigger bombshells may await. This week the White House will deliver some as-yet-unspecified audiotapes to Thompson. Some Senate investigators believe these audiotapes may include conversations from Air Force One–possibly of Clinton’s dialing for dollars from 35,000 feet. Administration sources say Vice President Al Gore can be heard on White House audiotapes, though they would not reveal what he said (presidential events were videotaped; the veep’s were audiotaped). Until now, White House aides have been fairly successfully stonewalling Thompson–especially Harold Ickes, who seemed to delight in snarling at senators. But new evidence has a way of mysteriously surfacing in the Clinton White House.
Will the Justice Department get to the bottom of it all? The history of the investigation so far is not encouraging. Reno has long insisted that an independent counsel wasn’t really necessary, that career prosecutors at Justice could handle the probe, which includes not just the Asian connection but charges that Clinton and Gore illegally raised funds with calls and coffees on federal property. Given the stakes–and the charges in Congress and the press that career lawyers at Justice are too passive or partisan or just not up to the job–one would think that Reno would have demanded extra care from her troops. Instead, she put an inexperienced lawyer, Laura Ingersoll, in charge of the campaign-finance task force. The age-old turf struggle between the FBI and Justice was allowed to get in the way, despite efforts by Reno and FBI Director Louis Freeh to amicably work together.
The strange case of Ted Sioeng illustrates how the Feds have fumbled the probe. A NEWSWEEK reconstruction of the Sioeng investigation shows the FBI and Justice tripping over each other just to keep up with reports in the press. Last February, when Bob Woodward of The Washington Post first reported that U.S. intelligence intercepts had picked up evidence of a Chinese plot, Jamie Gorelick, who was then the deputy attorney general, ordered the FBI to round up any evidence that would prove, or disprove, Woodward’s story. Before they can be circulated to policymakers or used in a criminal investigation, intelligence reports are carefully combed by the FBI and the CIA to make sure they do not reveal sources and methods–the names of foreign spies or techniques of electronic eavesdropping. But when the report was actually put together, a simple clerical error omitted the most important evidence–the key information on Sioeng. Reno later revealed she had briefly glimpsed some of the raw intelligence about Sioeng–but then forgot about it.
In July, at a meeting of the Governmental Affairs Committee, when Sen. Robert Bennett of Utah asked Freeh and CIA Director George Tenet about Sioeng (whose name first came to light when it was published in a NEWSWEEK story in February), the nation’s top G-man was unable to supply any details. At a private hearing of the Senate Intelligence Committee on Sept. 10, Reno was clueless about Sioeng, though Freeh had at least a vague recollection. Tenet, on the other hand, knew all about Sioeng and his alleged dealings with the Chinese. How did the CIA director know this? asked a senator. From the FBI, replied Tenet. Freeh was unable to explain how he was in the dark about his own agency’s intelligence. The next day Freeh had to sheepishly inform the Governmental Affairs Committee that the FBI had finally turned up a file on Sioeng that had been lost for months. On her way out of the hearing room, still smarting from a senatorial tongue-lashing, Reno turned to Freeh and quietly complained that she felt badly let down by the FBI. Reno later told her top aides that she was furious, that the lost intelligence was the last straw and that the time had come to shake up Justice’s inquiry. On Sept. 16, Reno removed Ingersoll as head of the scandal task force and appointed a more experienced prosecutor, Charles La Bella.
That same day, NEWSWEEK has learned, Freeh sent out a rocket–a secret cable from the ““Director to All Field Offices’’ demanding a ““meticulous review of all file holdings in the FBI’s possession that bear on attempts by the PRC [China] to influence U.S. political elections.’’ The ““importance’’ of the task, wrote Freeh, ““cannot be overstated.’’ The only names mentioned in the cable are those of Ted Sioeng and his daughter, Jessica Elnitiarta. (The FBI is only now making arrangements to interview the suspected recipient of Beijing’s largesse, Dr. Wong.) Though there has been considerable speculation that Huang and Trie were also working for the Chinese, the Feds say they have no solid evidence linking them to the Beijing government. Huang, who has remained silent so far except to deny any wrongdoing, and Trie, who fled the country and is believed to be in China, may still be guilty of laundering illegal contributions from overseas.
THE SIOENG CASE IS ONLY ONE OF Reno’s embarrassments. It was the Post’s Woodward, not the Justice Department, who first pointed out late last summer that Gore’s fund-raising calls might be in technical violation of federal election laws. Two weeks ago it was the White House’s turn to make Reno look foolish. The president’s legal office learned about the videotapes of the presidential coffees on a Wednesday. The next day White House counsel Charles Ruff met with Reno–but failed to tell her about the tapes. On Friday Reno issued her letter clearing Clinton of illegality in using the Lincoln Bedroom and White House coffees as fund-raising lures, only to find out about the tapes on Saturday. The public explanation from the White House is that Ruff didn’t see any connection between the tapes and Reno’s letter. In fact, say White House sources, Ruff, a former white-collar defense lawyer, was playing the standard litigator’s game of volunteering nothing–at least until he had assessed the potential damage to his client. He decided only on Friday that the tapes were legally harmless. A White House aide then played telephone tag with his counterpart at Justice until both went home for the weekend.
In PR terms, the tapes are a disaster. TV viewers began tuning in to see the video of Clinton glad-handing contributors and fixers like John Huang and DNC Chairman Don Fowler; on one tape, an Indonesian-born landscape architect who had given $400,000 to the DNC, Arief Wiriadinata, could be heard telling the president, ““James Riady sent me.’’ One poll shows 47 percent of Americans paying some or close attention to the scandal, up from 38 percent in June. And though Clinton’s approval ratings continue to float along at a heady 65 percent, he may no longer be able to count on a slow-moving attorney general. Reno’s aides have urged her to be more aggressive, and she is trying to decide whether to appoint a special prosecutor, or perhaps some other kind of special counsel–a distinguished outside lawyer or jurist who would report to her. So Clinton is not home free yet: there may be more tales on the tapes to come.
