07/25/97 - 05:08 PM ET - Click reload often for latest version

Barbour testimony contradicted

WASHINGTON - In another conflict with former Republican Party chairman Haley Barbour's testimony, a lawyer who helped broker a Hong Kong loan deal testified Friday that Barbour wanted the money to help the GOP's 1994 congressional elections.

Richard Richards, himself a former GOP chairman from the 1980s, told Senate campaign investigators that in the summer of 1994 Barbour asked him to approach a Hong Kong businessman to see if he would guarantee a loan for the nonprofit National Policy Forum that Barbour had formed.

Senate Democrats have been trying to show that Barbour sent most of the $2.1 million loan proceeds guaranteed by Hong Kong businessman Ambrous Tung Young to the Republican Party to repay an old debt and free up cash on the eve of the 1994 congressional election.

"Chairman Barbour spoke to me on the phone and he told me that he felt like the Republican Party had an opportunity to gain control of the House of Representatives for the first time in decades," Richards testified as the third week of Senate hearings into fund-raising abuses drew to a close.

"He said we have a problem. We at the national committee have loaned the forum $3.3 million, some amount in excess of $3 million of money that we can use in the campaign. But we've got a problem. We need to be able to take it out of the forum for our purposes," he added.

Richards said Barbour then said, "I understand you represent a well-to-do Chinese fellow in Hong Kong who has previously been a beneficiary to the Republican Party. Would you be willing to ask him about loaning us" the money.

On Thursday, Barbour testified flatly that none of the loan proceeds NPF sent to the GOP were used for campaigns - and that the party didn't even need the money for late election spending. He also testified he did not know that the source of the money for the loan collateral had come from Hong Kong until this year.

Richards, like several witnesses before him, also disputed Barbour's testimony on that point. He said before the loan transaction was consummated, "I told him the money would be transferred from Young Brother's Hong Kong to Young Brother's USA."

NPF ultimately defaulted on the loan, causing the bank that made the loan to seize $1.5 million of Young's collateral. Richards testified that Barbour at first asked Young to forgive the debt. The Republican Party ultimately made a partial payment to Young, still leaving the Hong Kong businessman with more than $700,000 in losses.

Richards said after Democratic fund-raising abuses came to light in last year's election, he wrote Barbour to warn that the loan agreement might come to light and be viewed as another example of a foreign gift.

Richards said he wrote the GOP chairman to say, "I think we stand the same risk of some very adverse publicity."

Alternatively combative and folksy, Barbour insisted "not a cent, not a red cent" of the money was used for campaigns.

"The NPF did nothing illegal or inappropriate; there was no illegal foreign loan," Barbour said.

Earlier Friday, Donald Stern, the U.S. attorney in Boston, described the prosecution of businessman Simon Fireman, who pleaded guilty last October to funneling $120,000 from his swimsuit company to campaigns of Dole, the 1992 Bush-Quayle campaign and a group supporting Rep. Joseph P. Kennedy II, D-Mass.

Stern said, "There was no evidence that any of the campaign committees were aware of this illegal activity." Sen. Fred Thompson, R-Tenn., the committee chairman, called the case "a fairly typical contribution in the name of another scheme."

"I don't know how much more blood we can squeeze out of this particular turnip," Thompson cracked.

During his appearance Thursday, Barbour was lectured about the propriety of the loan guarantee not only by Democrats but by Thompson as well. Thompson was particularly bothered that Hong Kong businessman Ambrous Tung Young lost $800,000 when the NPF defaulted on the $2.1 million loan.

Even though the Republican National Committee agreed to pay Young $745,000 as partial reimbursement for the forfeited loan collateral, "as far as I am concerned, that does not absolve the RNC of responsibility," Thompson said.

"Legalities aside, a deal is a deal," Thompson said. "Don't you think maybe you and I both ought to urge that thing be looked at again?"

By The Associated Press

Copyright 1997 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.