07/23/97 - 01:32 PM ET - Click reload often for latest version

Senate gives nuns immunity

WASHINGTON - Senate investigators Wednesday rebuffed the Justice Department and voted to grant immunity to four Buddhist nuns involved in a controversial temple fund-raiser attended by Vice President Al Gore.

They then heard how a Hong Kong businessman used foreign money to assist Republicans.

Benton Becker, a lawyer for Hong Kong businessman Ambrous Tung Young, was the leadoff witness as a third week of fund-raising hearings gave Democrats their first chance to go on the offensive.

Becker testified how, at the suggestion of a Republican fund-raiser, Young used money he had wired from his Hong Kong company to a U.S. subsidiary in 1991 to make a $100,000 donation to the Republican National Committee. It is illegal for political parties to accept foreign money.

Young made the donation through the U.S. subsidiary at the suggestion of a Republican fund-raiser and believed that the RNC knew that the U.S. subsidiary's parent was based in Hong Kong, Becker testified.

After months of deriding Democrats for having to return $3 million in donations with foreign or other suspicious links, the RNC recently refunded donations Young or his companies made between 1991 and 1993.

Before Becker's testimony, all nine Republicans on the Senate Governmental Affairs Committee and a handful of Democrats supported the immunity grant, opening the door for the four nuns to testify at a later date. The committee also granted immunity to a Democratic donor from Virginia.

Such a grant gives witnesses limited protection from prosecution. The Justice Department had urged the committee not to grant immunity to the five witnesses, citing its own criminal investigation into fund-raising abuses.

But Sen. Sam Brownback, R-Kan., echoed the sentiments of supporters, noting the Justice Department had "this case involving the Buddhist nuns for months" and had plenty of time to decide whether to prosecute.

Becker disclosed that in 1994 then-RNC chairman Haley Barbour got Young to agree to secure a $2.1 million loan for the National Policy Forum, a think tank Barbour had formed. Democrats allege NPF was misused to assist the Republican Party.

Becker said his client agreed to secure the loan only after Barbour assured him that the RNC would agree to pay back the loan if the group defaulted. Young used money from his Hong Kong company to provide the collateral for the loan for NPF.

"Moreover, as chairman of the RNC, in the event the NPF defaults on any debt I will ask the RNC to authorize me to guarantee and pay off any NPF debts," Becker read from an August 1994 letter from Barbour. "I'm confident the RNC would grant me such authority."

After NPF got the loan, it immediately repaid $1.6 million it owed the RNC. The payment was made on the eve of Republicans' historic 1994 congressional election victory. Democrats allege that the money from the loan guaranteed by the Hong Kong businessman was routed directly to the RNC to assist candidates.

Barbour, who served as both NPF head and RNC chairman, is expected to testify later this week. He and the RNC contend that NPF was legally separate from the party and was not misused in any way to funnel illegal foreign donations.

"The Republican National Committee never used the National Policy Forum as a conduit for funds - foreign or otherwise," the RNC said.

Democrats are trying to show NPF was a front for the Republican Party. The IRS recently ruled that the policy forum did not deserve the federal tax exemption it claimed because its activities were too political.

One document obtained by the AP and turned over to the committee shows that two months before Barbour's think tank obtained the 1994 loan agreement secured by Young's company, Barbour's nephew apparently knew that Young was giving up his U.S. citizenship. Henry Barbour, at the time, was director of the RNC's $100,000-plus donor program.

Young "had dual U.S.-China citizenship, but for tax purposes he's giving up his U.S. citizenship," says a handwritten memo on Henry Barbour's stationary dated Aug. 23, 1994. Another handwritten note four days later notes that Haley Barbour planned to meet with Ambrous Young. The loan agreement was struck just weeks later.

Democrats will also question Michael Baroody, NPF's original executive director whose resignation letter in 1994 stated flatly that the NPF "operated like a division of the RNC" and accused Haley Barbour of promoting the idea of raising foreign money through the policy forum.

It is legal for a tax exempt group to accept foreign money but illegal for a political party or campaign to do so. The IRS recently made an initial determination that the NPF did not qualify for the tax exemption it sought.

Baroody's "reasons for resignation" memo to Barbour on June 28, 1994, parts of which have been made public previously, alleged it was Barbour's "belief that considerable money could be raised for this effort from foreign sources."

"I told you again even before starting at NPF that I thought you were right about the possibility foreign money could be raised but thought it would be wrong to do so," Baroody wrote.

Baroody's memo also cited several examples that he alleged showed the "separation between NPF and RNC is a fiction."

"These concerns were dismissed by you ... and staff here were directed to respond to party pressures in a way I thought put our c(4) (tax-exempt) status in jeopardy," Baroody wrote.

.By The Associated Press