What They Don't Say About Matt Fong

Why nobody is talking about his Donorgate connection

It has been a fast ride for Matt Fong, a low-key California pol who is one of the Republican Party's best hopes for strengthening its majority in the Senate. As recently as 1995, Fong was laboring in obscurity as state treasurer. But he harbored big ambitions--and an appetite for campaign cash that could yet come back to bite him as he tries to unseat Democratic incumbent Barbara Boxer.

Fong's troubles began in 1994. Saddled with a big debt from his treasurer's race, Fong began haunting the Sunset Boulevard offices of Indonesian businessman Ted Sioeng. A respected benefactor of Asian causes, Sioeng wrote Fong two checks totaling $50,000.

Since then, Sioeng has become a controversial figure. He is under investigation by the Justice Dept. as a possible conduit for Chinese government money in the 1996 Presidential election and fled the country after the scandal broke. Thus far, the probe has focused almost exclusively on Democrats.

In fact, Fong is the highest GOP office-holder to be dragged into Donorgate (though to his credit, he returned the $50,000 as soon as questions arose about whether it came from overseas). And he is the only elected official who actually solicited money from the alleged "China connection."

However, such are the convoluted politics of scandal these days that Fong's campaign-finance problem is not even an issue in the Senate race. Boxer, so far, has not criticized Fong for two reasons: She has been a close ally of President Clinton, who has his own Donorgate problems. More important, she fears alienating California's Asian-Americans, who make up 5% of likely voters. And Fong's role has largely escaped notice in Washington, where fellow Republicans have kept him off the firing line. His testimony before the House committee investigating Donorgate was postponed several times--most recently on June 5, three days after he won the California primary.

An Oct. 8 report by the House Government Reform & Oversight Committee finds no evidence that Fong knew Sioeng's contributions were tainted. Still, it raises questions about Fong's role. The committee found the $50,000 all came from a Hong Kong company controlled by Sioeng, whom Fong knew well. He attended the weddings of two of Sioeng's daughters and even gave a toast at one. And an earlier report by Democrats on the Senate Governmental Affairs Committee concluded that Fong "had every reason to suspect" that Sioeng was "not eligible to contribute to his campaign." In a deposition, Fong says he explained to Sioeng that campaign-finance rules barred contributions from anyone who is not a legal resident. He says he assumed that Sioeng's contributions actually came from one of his children, all of whom are legal U.S. residents. Fong declined to discuss Sioeng's donation with BUSINESS WEEK.

The House report also shows that Fong's wife benefited from a second $50,000 donation by Sioeng's company to the National Policy Forum, a GOP think tank. In July, 1995, Fong escorted Sioeng to a meeting with House Speaker Newt Gingrich in Washington where the two discussed U.S.-China relations. Weeks later, Joseph R. Gaylord, Gingrich's top political adviser, sought help raising money for the NPF. Sioeng again was solicited, and his daughter wrote a $50,000 check. Fong's wife, Paula, received $6,500 as a commission from the NPF. Such commissions are not illegal, and Fong says he first found out about his wife's role in March, 1996, when he was preparing a financial disclosure form required of state officials.

None of this has stopped Fong from milking the character issue. He has attacked as hypocritical Boxer's initial silence on Clinton's behavior in the Lewinsky scandal, though she may have had more reason than most Democrats for her reticence: Boxer's daughter is married to Hugh Rodham, Hillary Rodham Clinton's younger brother.

Boxer should be crushing Fong. She faced token primary opposition, while Fong had a grueling contest. She went into the general election with a $4 million war chest; Fong began with a $493,000 debt. Boxer gives a stirring stump speech that brings audiences to their feet. Fong speaks awkwardly from notes.

Still, an Oct. 9 Field Institute poll shows Fong leading Boxer 48% to 44% among likely voters. According to the poll, Boxer, a brassy and abrasive liberal, is viewed negatively by a majority of voters. Boxer has tried to fight back by portraying the moderate Fong as an extremist who opposes gun control, environmental programs, and late-term abortions. It hasn't worked. "It's very difficult to convince anybody who's had exposure to Matt Fong that he's an extremist," says Dan Schnur, a GOP consultant. "He's such a cerebral, nonthreatening kind of person."

While Boxer agonizes about making an issue of Fong's Donorgate problem, Republicans are going all out for Fong, whom they hail as the new Upset Kid. They have imported such GOP luminaries as former Vice-President Dan Quayle and New York City Mayor Rudy Giuliani to stump for Fong. If it works, Fong will wake up on Nov. 4 as a new member of the U.S. Senate--and his messy fund-raising will be politics past.

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