February 8, 1998

Excerpts From Draft of Senate Report on Improper Fund-Raising

WASHINGTON -- Following are excerpts from the 1,500-page draft report being prepared by the majority staff of the Senate Governmental Affairs Committee, which conducted an investigation last year into accusations of improper fund-raising activities in the 1996 election. A copy of the draft report was obtained by The New York Times.

The 1994 election results were a major setback for the Democrats. For the first time in 40 years, Republicans controlled both houses of Congress. The Democrats' loss of Congress, along with the president's concern that he might face a primary challenge, fueled an urgent need for political money. The president and his top advisers decided to raise money early for his re-election campaign. To accomplish their goal, the president and his top advisers took control of the DNC, and designed a plan to engage in a historically aggressive fund-raising effort, utilizing the DNC as a vehicle for getting around federal election laws. The DNC ran television advertisements, crafted under the direct supervision of the president, which were specifically designed to promote the president's re-election. To fund this early advertising for the president's benefit, the DNC had to raise more than three times what it raised during the 1991-92 election cycle -- and nearly three times what was raised during the 1993-94 election cycle.

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In total, the Sioeng family and businesses spent over half a million dollars on the 1996 elections. The committee has examined bank records relevant to most of the family's large political contributions and discovered a recurring pattern: wire transfers from Hong Kong companies to Sioeng & Co. accounts in the United States. Five companies -- Pristine Investments Ltd., RT Enterprises Ltd., Dragon Union Ltd., Mansion House Securities and Victory Union Trading Co. -- believed to be based in Hong Kong, are the apparent source of funding for many of the Sioeng family's activities in this country.

. . . The committee's analysis of the Sioeng family bank records reveals that at least $200,000 in contributions to the DNC derived from foreign sources. In addition, some $16,000 in contributions to Matt Fong are linked to foreign money.

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In examining the hiring of (John) Huang, at least three important themes arise that are revisited later in the 1996 campaign fund-raising matter. First, there is evidence that the president of the United States personally played a central role. President Clinton not only spoke to Huang and others about the potential of raising money in the Asian-American community, but the president recommended to the DNC that it hire Huang. Second, there is evidence that even before his hiring, DNC officials were concerned that Huang might not comply with federal campaign finance laws, and thus they insisted on an unprecedented, individualized training session with the DNC's general counsel. These concerns may have been prompted, in part, by DNC officials' probable knowledge that Huang had violated the Hatch Act while he was an employee of the Department of Commerce. Third, despite these concerns, the DNC established a structure that could promote fund-raiser abuses, in part by offering Huang an incentive bonus for raising large amounts of money.

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