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06/08/98- Updated 10:33 PM ET

Donations linked to Clinton car ride

WASHINGTON - In the earliest evidence linking President Clinton to a foreign donation, investigators have unearthed a 1992 memo indicating James Riady took a coveted private car ride with Clinton just before the Indonesian banker began writing checks that totaled half a million dollars.

Riady "will be giving $100,000 to this event and has the potential to give much more," Clinton was told in a memo Aug. 14, 1992, that advised he would share a car ride that day with the Indonesian billionaire after a fund-raiser. Clinton was then the Democratic presidential nominee.

The memo, obtained by The Associated Press, was written by Melinda Yee, the Democratic Party's outreach director for Asian Americans. It said Riady, whose family controls the Lippo banking and industrial empire, wanted to talk to Clinton "about banking issues and international business" and the car ride was "a courtesy call."

Bank statements and memos reviewed by investigators show one of the 1992 donations from a Riady company was directly covered by foreign money and the rest were drawn on a personal account that appears to have been replenished - before and after the donations - with foreign funds. Some of the donations went to the Democratic Party's accounts that directly help federal candidates.

Clinton's schedule for that day says Riady greeted Clinton at the door of an Arkansas restaurant where the two attended a Democratic fund-raiser and then took a five-minute car ride. In political circles, the one-on-one access of a car ride, no matter how brief, is a plum privilege.

The memo, schedule and checks were brought to the attention of the Justice Department months ago by congressional investigators.

Attorney General Janet Reno has resisted naming an independent counsel to investigate fund raising although the chief of her campaign fund-raising task force and FBI director Louis Freeh have urged such an appointment. The chief of the task force, Charles LaBella, is writing a report and will make a final recommendation.

Riady had a permanent green card and was a Clinton acquaintance from the 1980s when Riady worked in Arkansas. After Clinton's election, Riady was an occasional visitor to the White House, where he got direct access to Clinton.

White House officials said Clinton had no reason to suspect the donations.

"Mr. Riady ... owned and continues to own American financial institutions that generate U.S. income," White House spokesman Jim Kennedy said. "In 1992, he was a lawful permanent resident and eligible to contribute to any political party.

"Thus there was no basis for anyone to believe that Mr. Riady's contributions to the DNC might be illegal. To suggest that, based upon the routine briefing memo to then-Gov. Clinton is truly absurd."

The AP made a weeklong effort to reach Riady, but a spokesman said Monday he was still unavailable for comment. In the past, Riady has said he believes his donations were legal.

Federal law forbids U.S. candidates and parties from accepting foreign money. The law allows foreigners who are legally and permanently residing in the United States to make donations. U.S. subsidiaries of foreign companies can only donate if they use funds generated inside the United States.

The memo to Clinton clearly noted that Riady had moved from the United States. "He has flown all the way from Indonesia, where he is now based, to attend the fund-raiser," it said. And some of the donations were written from Lippo Bank in California on what appear to be starter or counter checks lacking the normal numbering of a personal checkbook.

Former Federal Election Commissioner Trevor Potter said that the issue of green-card holders who donate while outside the United States is untested but that a "careful reading of the law suggests a green-card holder must be residing in the country to donate."

Potter said that in 1992, most fund-raisers would have accepted a green card as reason enough to accept a donation. But the memo and checks "should have raised a red flag."

DNC spokesman Rick Hess said Monday the DNC has instituted stricter scrutiny of donations since the controversy erupted, but he said even "the most careful vetting procedures" wouldn't have raised questions about Riady.

Ms. Yee, who has cooperated with the Justice Department's fund-raising probe, said through a lawyer she had nothing to do with the checks and simply provided the information to Clinton.

"Melinda is not certain whether this memo was ever given to the president, and her only knowledge of Mr. Riady reflected in the memo is that he was living in Indonesia at the time," Attorney Nancy Luque said.

Copies of checks show Riady immediately made good on his $100,000 pledge.

He and his wife, Aileen, wrote two checks totaling $30,000 from a personal account to the Democratic National Committee's hard money accounts - those used to assist federal candidates. The couple wrote another $10,000 in checks to the California Democratic Party's federal accounts.

Those checks were dated Aug. 13, 1992, the day before the car ride, but weren't cashed for several days.

Bank statements reviewed by federal investigators show the California account received a string of $9,000 credits in the three weeks before the donations were made, according to government sources who spoke only on condition of anonymity.

The statements have notations suggesting two deposits came from Jakarta, the Indonesian capital, and the rest from somewhere inside Lippo, the sources said.

In addition to the personal checks, a Lippo subsidiary, Hip Hing Holdings, wrote out another $50,000 check to the DNC's soft money accounts the week of the car ride.

Three days after the check, Riady assistant John Huang wrote Lippo headquarters in Jakarta asking that it "please kindly wire" the money to cover the $50,000 donation. A Hip Hing official has confirmed to Senate investigators the money was reimbursed from foreign accounts. The DNC has since returned the money.

The Riadys followed with several more donations to state Democratic parties in the weeks before Clinton was elected, including: $85,000 to Arkansas, $75,000 each to Louisiana, Michigan and Ohio; and $50,000 each to Georgia and North Carolina.

The bank statements reviewed by investigators show Riady continued to infuse his account with a string of $9,000 credits. The last donation is recorded in campaign records on Oct. 27, 1992. Three days later, Riady's bank statements suggest his account was replenished with $330,000 from Jakarta, the sources said.

Two weeks later, the couple contributed $200,000 to Clinton's inaugural fund.

By The Associated Press

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