07/11/97 - 01:59 PM ET - Click reload often for latest version

Panel offers evidence of China link

WASHINGTON - On the third day of Senate hearings into political campaign fund-raising, Republicans introduced their first evidence that money was transferred from a Chinese bank to the Democratic National Committee.

Sen. Arlen Specter, R-Pa., introduced copies of bank transfers showing that Johnny Chung, a Los Angeles businessman, had received $150,000 wired to him from the Bank of China, which is owned by the Chinese government. Three days later, Specter said, Chung handed an envelope containing a $50,000 check for the DNC to Hillary Rodham Clinton's chief of staff.

"Now there is a solid connection between a Chinese source of money and a Democratic Party donation," Specter said.

Chung wanted something. He had repeatedly asked for invitations to watch President Clinton deliver his weekly radio address. Two days after the $50,000 donation, his request was granted. He attended with five Chinese businessmen, who had their picture taken with Clinton. The photograph later showed up in a Chinese beer ad.

Republicans on the Governmental Affairs Committee, which is conducting the hearing, said they believe Chung wanted much more. Chairman Fred Thompson, R-Tenn., said China contributed money to various American political campaigns last year in an attempt to gain influence.

After three days of hearings, the committee recessed with plans to resume taking testimony Tuesday. The topic then: connections between Democratic fund-raiser John Huang, who raised more than $3 million from Asian-American donors, and his former employer, Lippo Bank of California. Witnesses will be the current and former presidents of the bank, which is owned by the Indonesian Lippo family conglomerate, which has close ties to China.

The committee wants to know why Huang, who had left Lippo to work at the Commerce Department, regularly phoned his previous employer after receiving classified briefings.

Documents revealed at Thursday's hearing showed another questionable donation to the DNC was made by Californian Yogesh Gandhi, who wrote a $325,000 check to the DNC in May 1996. A few days later, he received $500,000 from Japanese businessman Yoshio Tanaka, who wired the money through Citibank in Japan. Gandhi has testified in an unrelated matter that he has no assets.

Meanwhile, the panel's first witness, Richard Sullivan, the former DNC finance director, completed two days of testimony. Sullivan said a system to scrutinize donors may have broken down occasionally but no one intended to break the law.

Committee Republicans suspect more than a breakdown. They see a corrupted system in which Democrats were so intent on raising money that they invited two rich men with questionable backgrounds to meet with President Clinton, said Sen. Robert Bennett, R-Utah.

And even though one of the men, Russian Gregori Loutchansky, has been accused of drug trafficking and smuggling nuclear materials, the DNC twice invited him to private dinners with the president.

"I said I made mistakes. This was one of them," Sullivan said.

Holding up a large chart, Bennett outlined how the DNC ignored their records and tried to get large donations from Loutchansky and Roger Tamraz, a Lebanese-American who is wanted in Beirut on charges of embezzlement.

Vice President Gore's staff had warned Gore in a memo not to meet with Tamraz. The memo said he has a "shady and untrustworthy reputation" and a history of making false claims. Gore did not see him, but the DNC arranged for Tamraz to see Clinton four times, including a private showing of the movie Independence Day.

Meanwhile, Sen. Daniel Akaka, D-Hawaii, the only Asian-American on the panel, said he had received a fax and dozens of phone calls telling him not to "even THINK about playing the race card." Some people have complained that the investigation is focused on Asian-Americans. Ed Thompson, Akaka's press secretary, said the senator's reaction was "along the lines of disappointment. . . . In no way did he (Akaka) try to play the race card."

By Judi Hasson, USA TODAY

Contributing: Robert Silvers