`A Second Set Of Books' For The Democrats?

The DNC directed unreported donations to key states

It had been a long night of back-to-back fund-raisers in Washington last July 30. But an indefatigable President Clinton pressed on with his third event, dining on sea bass at a dinner arranged by controversial fund-raiser John Huang with a select group of Taiwanese-American businessmen and their families at the swank Jefferson Hotel. The dinner pulled in nearly $500,000 in "soft money" for Democratic Party activities--and more. Several weeks later, one attendee, Ken Sen-Jong Hsui, wrote $110,000 in checks directly to party organizations in four battleground states--California, Illinois, Florida, and Michigan.

Those donations, and hundreds like them, are raising questions about whether the Democratic National Committee, with White House help, skirted federal election laws by directing donors to send contributions into state party coffers. The pattern of giving can be seen in recently released documents of former White House Deputy Chief of Staff Harold M. Ickes.

HUANG AGAIN. The files show the DNC directed $4 million into key states. That meant the DNC could avoid reporting the donations to the Federal Election Commission, which only regulates federal giving. The implication: "You have a national party running a second set of books with money they didn't report and appear to have controlled," says former FEC official Kent C. Cooper, now director of the nonpartisan Center for Responsive Politics. "These are questionable practices that could be skirting the law." A DNC spokeswoman says the giving was perfectly legal.

The new disclosures mean the Democrats raised more than the $124 million in soft money they reported to the FEC. Moreover, the files point to an even bigger fund-raising role for Huang than the Democrats have previously acknowledged. For example, the $110,000 from Sen-Jong Hsui (pronounced shoe), owner of Taiwan's Prince Motors Co., was solicited by Huang. Contributions by Hsui, who has dual U.S. and Taiwanese citizenship, seem legal. Yet the DNC appears to have wanted to hide them. A source says one possible reason is that Hsui's family is close to Taiwan President Lee Teng-hui, and the contribution could be a thank-you to Clinton for having allowed Lee to visit the U.S. in 1995. Hsui did not return phone calls. Repeated calls to the White House went unanswered.

The White House may have wanted to hide $150,000 in donations from Philip Morris Cos. and R.J. Reynolds Tobacco Co. These donations, beyond the $62,500 in soft money the companies openly gave to the DNC, came at a time when the Administration was calling for tighter industry regs and criticizing GOP candidate Bob Dole's tobacco support. An RJR spokeswoman says the DNC solicited the contributions and told RJR which states could use the money. Was the DNC trying to hide the donations? Says the spokeswoman: "That's certainly one of the conclusions that could be reached. This is the irony of the whole thing, with [the campaign] taking a stand against tobacco money and yet accepting it through other venues." Philip Morris did not return calls.

Still other givers may have raised red flags at the White House. Pauline Kanchanalak, a Thai dealmaker who helped arrange White House dinners and coffees for ethnic Chinese execs, was directed along with several family members to send $223,000 into five states. This is on top of $253,000 the family donated to the DNC, most of which has since been returned. Kanchanalak's giving is under investigation by the Justice Dept. and Congress.

Some donors may have had their own reasons for laying low. The Chippewa Indian tribe of Sault Sainte Marie, Mich., for example, poured $150,000 into five states. The checks were written one day before Clinton was to name members of a federal commission to study gambling issues of vital interest to the tribe. A Chippewa spokeswoman says the timing is a coincidence.

ICKES FILES. Similarly, Carl H. Lindner's American Financial Corp., which owns the Chiquita banana operation, gave $70,000 to seven state funds, on top of $115,000 he donated to the DNC. The state checks went out on Apr. 12, 1996, a day after the U.S. filed complaints with the World Trade Organization against Europe's banana import limits. Lindner did not return calls. Donations by Pamela Liapakis, past president of the Association of Trial Lawyers of America, came three weeks after Clinton's veto of the tort reform bill. Liapakis would not comment.

Some of the state party recipients are perturbed that the DNC directed this money to them. Ohio Chairman David J. Leland is said by another state Democratic official to be upset that 10% of the $1.1 million he got from the DNC in '96 was questionable money, because he is worried he may have to return it. Leland did not return calls.

These revelations from the Ickes files suggest a whole new dimension to Democratic fund-raising excesses. The trail of potential campaign-finance abuses now extends to at least 40 states.

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