What Did John Huang Know And Did He Share It?

At the Commerce Dept., he had access to secret trade data

When John Huang went to the Commerce Dept. in July, 1994, no one was happier than his former boss, Mochtar Riady. The Indonesian magnate bragged to business associates about placing one of his own executives in a top U.S. government position. Riady is the chairman of the $12 billion Indonesia-based Lippo Group, a financial and real estate conglomerate whose owners and family members donated nearly $1 million to President Clinton's reelection. While Huang was a highly valued employee of Lippo--for 10 years he had run its U.S. operations--Riady was only too happy to sweeten his move to a $116,000 government post with $879,000 in bonus and severance pay.

"EGREGIOUS." Now Huang, a U.S. citizen who was born in China and raised in Taiwan, is at the center of a storm over foreign political contributions to the Clinton campaign. Critics are raising troubling questions about his dual loyalties during his Commerce stint. It's not just that he received a large bonus from Lippo, a foreign multinational with close ties to China. Huang routinely had access to top secret information and had a hand in formulating Asian trade policy. And somehow, Huang breezed through background checks despite credentials that U.S. government and private security specialists say should have set off alarm bells. "There was a conflict of interest here," charges former White House counsel C. Boyden Gray.

Other Administration officials have been tripped up for far less serious conflicts. For example, Charlene Barshefsky's formal nomination to be U.S. Trade Representative has been stalled for months because she represented Canada on a trade matter in the 1980s. A new government ethics law bars anyone who has ever worked for foreign governments from ever becoming trade rep.

There's no evidence that Huang, while at Commerce, passed on sensitive information to Lippo. And Clinton Administration officials insist his security clearance was handled properly. "I have no reason to believe Mr. Huang compromised security in any way," says an Administration official knowledgeable about the background check. Neither Huang nor his lawyer would comment.

As Deputy Assistant Secretary for international economic policy, Huang had a window on a high-profile export promotion drive aimed at big emerging markets in Asia, including Indonesia and China. He attended weekly intelligence briefings and was privy to U.S. trade negotiating strategy. He also received updates from Commerce's "war room," which tracks bids on multibillion-dollar contracts around the globe.

Meanwhile, throughout his 18 months at Commerce, government documents show, Huang kept in close contact with Lippo executives. He attended several meetings and dinners and had phone conversations with Chinese embassy officials. Huang also made more than a dozen visits to the White House over 18 months--unusual entree for a midlevel appointee.

ON GUARD. Yet Commerce officials who granted Huang's security clearance did not have some crucial pieces of information. For example, Lippo's 50% partner in Hongkong Chinese Bank Ltd. was China Resources (Holding) Co., a commercial arm of Beijing's trade ministry. In fact, CRC's former chairwoman now sits on the board of Hongkong Chinese Bank. Lippo has numerous other ventures in China, ranging from property development to two power plants.

Administration officials say they aren't troubled. The official familiar with Huang's file says the globalization of the U.S. economy makes it impractical for Commerce to disqualify prospective employees because of foreign employment or other overseas experience.

Still, congressional panels are concerned. Several are delving into whether Huang was used by Lippo to help it curry favor with China, Lippo's partner in numerous business ventures. Ultimately, the Huang case may spur an overhaul of the procedures used for granting security clearances. And there could be some changes at the Commerce Dept. Once a sleepy backwater, Commerce has suddenly vaulted to prominence under Clinton's push to put economic issues on par with national security. The Huang affair may prod the agency to be more on its guard.

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