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02/26/98- Updated 08:41 PM ET

Justice may indict ex-GOP chairman

WASHINGTON - Justice Department prosecutors are considering whether to seek an indictment of former Republican Party national chairman Haley Barbour in their investigation of campaign financing, officials said Thursday.

The department's campaign finance task force is investigating whether Barbour violated federal election law when he negotiated a $2.1 million loan guarantee in 1994 from a Hong Kong businessman for a policy arm of the Republican National Committee.

Also at issue is whether Barbour, now a lobbyist, lied to Senate hearings last July when he said that he thought the money was from a U.S. subsidiary of the Hong Kong business.

Barbour also insisted that the money was not used to help Republican congressional candidates. It was simply to repay a loan the National Policy Forum owed the RNC, he said.

Barbour's testimony was contradicted by several witnesses, notably by another former GOP chairman, Richard Richards, who represented Hong Kong businessman Ambrous Tung Young, in the transaction.

If prosecutors proceed against Barbour, he would be the first Republican target of the task force, which has recently obtained indictments of two major Democratic fund-raisers, Yah Lin "Charlie" Trie and Maria Hsia, on charges of disguising the identity of the true donors of campaign contributions that went overwhelmingly to Democrats. Trie and Hsia have pleaded not guilty.

In draft reports, Democrats and Republicans on the Senate Governmental Affairs Committee have reached different conclusions about Barbour's activities.

Democrats noted that as soon as the National Policy Forum received the money, it wired $1.6 million to an RNC account used to help state party organizations. Such accounts are used to finance get-out-the-vote efforts and campaign assistance, according to evidence developed at the hearings.

Barbour "knew the money would be used to fund congressional elections in 1994" because the policy forum was "a de facto subsidiary" of the RNC, says an excerpt of the Democrats' draft report.

Richards told the committee that Barbour told him the loan guarantee was "an urgent thing" because "he needed to withdraw RNC monies" that the party had previously lent to the policy forum.

"He said that the purpose was to assist in the election of 60 potential new congressmen," Richards, who headed the party in the early 1980s, told the Senate panel.

Richards also said that he told Barbour that the collateral for the loan would be transferred from Young's Hong Kong company to a U.S. subsidiary.

The policy forum later defaulted on the loan, and the RNC had repaid Young only half the loan collateral.

In a draft summary of its findings, the Republican majority on the Senate panel concluded that "no foreign money involved in the NPF's loan guarantee" was used to finance congressional campaigns.

The Republican members also found no reason to conclude that Barbour's testimony "was anything less than truthful."

"Witnesses who testified to the contrary all made inconsistent statements themselves, and Barbour's version of events is corroborated by contemporary documents."

By The Associated Press

Copyright 1998 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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