Washington Bulletin

Washington Bulletin


Asiagate, Day 7: Asiagate No More

The sound you hear could be the beginning of the collapse of the case against campaign-finance reform. The Senate Governmental Affairs Committee Wednesday heard from two witnesses involved in the 1994 Young Brothers loan guarantee to the Haley Barbour–chaired National Policy Forum. What they described is a transaction that may well be perfectly legal but is also embarrassing and seemingly indefensible, although we'll withhold judgment until Haley Barbour gets his chance at the witness table Thursday. But the Young-NPF-RNC arrangement in 1994 seems destined to make more plausible (the otherwise ridiculous) Democratic argument that it is what's LEGAL that's the problem in American politics.

The first witness yesterday, Bob Becker, is the lawyer for Ambrous Young, the Hong Kong businessman behind the NPF loan guarantee. Becker's explanation of the transaction in 1994 is roughly as follows (remember, he represents the interests of Young):

—Young was nervous about making the loan guarantee but was convinced after Barbour personally guaranteed him that the RNC would pick up the slack if the NPF defaulted on its debt.

—Reassured, Young had the Hong Kong parent company wire money to Young Brothers Development (US) to buy $2.1 million-worth of CDs at Signet Bank in Washington as collateral for the NPF loan.

—As soon as the NPF got the $2.1 loan it handed $1.6 million to it's debtor the RNC, which immediately began dispersing the money to state parties in the run-up to the 1994 elections.

—In early 1995 Barbour arranged (apparently non-substantive) meetings between Young and Newt Gingrich and Bob Dole.

—In the summer of 1995 Barbour traveled to Hong Kong and asked that the loan guarantee be forgiven, a request that Young refused.

—NPF paid off some of the loan, but in April 1996 told Signet bank that it would make no further payments (without bothering to tell YBD US).

—Young was understandably upset, and wrote a letter again to Barbour telling him he expected the loan to be paid off.

—Young representatives then brought up Barbour's guarantee that the RNC would pick up the slack for the NPF in these circumstances. The RNC said OK, it would place the item on its business agenda at the convention in August. But when the issue was raised at a meeting of the RNC Budget Committee it went nowhere, tabled by none other than John Bolton, the president of the NPF.

—One Young representative tried to get in contact Bolton and Barbour in September, but had no luck. Two letters he wrote received no reply.

—Young would have liked to have sued, but instead finally settled for a payment from the NPF of $745,000.

This presents numerous problems for Republicans. The main one is that it, in many ways, is a more direct story-line about foreign money influencing U.S. elections than some aspects of the Clinton scandal: there are almost direct lines from a foreign corporation to GOP state parties in the crucial final weeks of an election. Also, the GOP spin on this matter is—even if technically accurate—difficult to sustain. Almost every one of the defenses is contradicted by some document of statement of other:

The RNC and NPF were separate. OK, but there is former NPF president Michael Baroody calling the separation a "fiction."

Barbour didn't know the money was foreign (which is what he reportedly maintained in his deposition to the committee). OK, but Young maintains he was open about the Hong Kong source of the money all along.

The NPF wasn't involved in politics. Nonetheless, the Young loan, in extremely short order, made it to the coffers of an organization directly involved in politics, the RNC.

The flow of money was really from the RNC to the NPF, not the other way around. It's true that NPF owed the RNC big bucks, but the RNC was getting its hands back on the dollars exactly when it needed them—in the fall of 1994.

The big difference with the Clinton scandals is that Haley Barbour was not in command of the Fifth Fleet or national policy with regard to Hong Kong. Nor was he in a position to give Young any government favors. Also, Young wasn't a Communist, and did seem to have relatively pure motives in guarantees for his loans (perhaps his first mistake). But that's not going to keep the Democrats from running a long way with this. The shameless Bob Toricelli (D., N.J.), who before had warned the committee about its nationalist or racist excesses in the past, was all ready to take up some red-baiting and conspiracy-mongering of his own yesterday. He repeatedly emphasized that Young had renounced his U.S. citizenship. And, not only that, he renounced it for citizenship in the People's Republic of China! Well, not exactly, Becker pointed out, he became a citizen of the Republic of China (Taiwan—a big difference). "Be it the People's Republic of China or the Republic of China," continued Toricelli, undeterred. He then blustered that Young had a "larger impact on the elections in 1994 than anyone else in this country," and evoked the ghosts of Mario Cuomo, Rep. Ted Strickland (OH), Rep. Jack Brooks (TX), all Democrats slain by this foreign dragon.

We'll see whether Barbour can take Toricelli down a notch today. Meanwhile, the committee finally voted to give immunity to those Buddhist nuns. This is a significant development, especially because the Democrats echoed Republican concerns about the Justice Department. Sen. Dick Durbin (D., Ill.) said the committee was now in an "impossible position in our relationship with the Department of Justice." A meeting earlier this week to discuss immunity with Justice lawyers apparently was extremely unhelpful—which serves to stoke Republican suspicions that Justice is trying to cover for Al Gore. The GOP is renewing calls for an independent counsel. Good luck. But at least now it has more fodder for the charge that there is an administration-wide effort to cover for Clinton and Gore on the scandals. But that's a matter for next week—after the Democrats and the TV cameras get their turn at Haley Barbour. He is generally expected to be a strong witness, and he'll need to be if Republicans are going to turn around what potentially could be a disastrous week.

The Census Bureau's 12-Billion Dollar Guessing Game

The Census may provoke yawns at the dinner table, but the Census Bureau's proposal to use statistical sampling in the upcoming Census has a potential price tag of more than $12 billion dollars and the power to drastically change the electoral map. Additionally, constitutional questions threaten to put millions of federal dollars in limbo.

In 1990 the Census may have left as many as ten million people uncounted while counting another six million people twice—undercounting the population by four million (1.6 per cent of the population). The Census Bureau suggests that about 1.9 per cent of the population will be left out of Census 2000. To solve the problem of inaccuracy, the Census Bureau insists upon an unprecedented proposal: to count only 90 per cent of the population and apply a statistical projection that will account for the remaining 10 per cent—a method accepted by pollsters, but which might not be constitutional for the Census.

The Census Bureau wants to ignore a GAO report from earlier this year that includes Census 2000 on its brief list of "high risk" programs most vulnerable to waste, fraud, and abuse. The GAO does not look like it will soften its stance on the Census. On Monday, a GAO report announced that the "risk of a failed Census in 2000 has increased." Rep. Dennis Hastert, Chairman of the House Committee on Government Reform and Oversight—the committee that oversees the Census Bureau—points out that the GAO puts the Census in a category with notorious examples of government waste, including the Pentagon's $600 toilet and seat and the IRS's useless $4 million computer system. And, although Census Director Martha Farnsworth Riche uses the research arm of the National Academy of Sciences to claim that sampling is needed, she fails to acknowledge suggestions by the NAS that 82 per cent of the errors in the 1990 Census could have been avoided without resorting to sampling.

Making the Census Bureau look especially suspicious is the revelation that Census officials provided the GAO with information about the sampling procedure reluctantly and only on the condition that data would be kept away from Members of Congress and their staff—including members and staff on the committee that has oversight responsibility over the Bureau's operations. Chairman Hastert wants to know what the Census Bureau is hiding. In a letter sent to Director Riche this week, Hastert insists that she provide his committee with the same information the GAO was told not to pass along to Congress.

The Census is a powerful political tool in the hands of bureaucrats. Its decennial results can have dramatic ramifications for the allocation of federal (entitlement) money and for elective seats from school board through the White House. New York State knows that too well—the site of the first Presidential inauguration, after 100 years as the largest state in the Union, she had to take a back seat to California in the shadow of the 1970 Census. Today New York has 31 seats in the House and California has 52 —that's 33 electoral votes for NY and 54 for California. Furthermore, it is widely reported that had sampling been used in preparing the 1990 Census, Pennsylvania would have erroneously lost a House seat. Any high-school graduate knows Lord Acton's axiom on the corruptibility of power. It does not seem wise to give federal bureaucrats the power to estimate the results of the Census—especially an agency that refuses to let Congress know exactly how it plans to do its guessing.

The Director of the Census Bureau is a White House appointee. Statistical sampling will easily allow the Census to reflect the will of the presiding administration. President Clinton seems to understand the uses of sampling: he has pointed out that "only about 12,000 more votes spread out over 10 districts would have given us control of the House back."

For a selection of recent Washington Bulletins click here

Updated By:
Rich Lowry - National Political Reporter
Ramesh Ponnuru - National Reporter



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