Not Chinese Agent, Chung Says

Not Chinese Agent, Chung Says

DNC fund-raiser Johnny Chung testifies Tuesday before a House committee investigating campaign finance. (AFP)

By Roberto SuroWashington Post Staff Writer
Wednesday, May 12, 1999; Page A2

Vowing to clear the record, former Democratic fund-raiser Johnny Chung told a congressional committee yesterday that he received $300,000 from a Chinese general interested in influencing the 1996 presidential election. Nonetheless, Chung insisted that he "never acted as an agent for the Chinese government."

Chung also said that last year a mysterious figure sent from Beijing threatened him and his family if he told federal prosecutors too much about Chinese involvement in American politics. Law enforcement sources confirmed that the threat has been the subject of an extensive investigation.

Chung's testimony marked the first extensive public comments by any of the fund-raisers cited in allegations that China funneled money illegally to the 1996 Clinton campaign. While denying he was knowingly involved in any foreign interference with the political system, Chung acknowledged he had engaged in old-style influence peddling on behalf of Chinese business and military figures.

The California businessman pleaded guilty last year to charges of tax evasion and violating campaign laws and could have faced nearly 40 years of prison time. Instead, he negotiated a deal with the Justice Department to help the investigation of illegal fund raising in the 1996 campaign in exchange for five years' probation.

Chung made more than $360,000 in contributions to Democratic coffers before the 1996 election and visited the White House more than 50 times, often in the company of the Chinese businessmen who were his clients and partners.

Speaking of those he escorted into Washington's inner sanctum, Chung said they wanted "what most Americans want from our system--influence and the ability to develop relationships with important people." The photographs they had taken with the president and first lady were worth "gold," he said, because "in China such photographs project a great sense of importance."

During his five hours of testimony before the House committee, Chung insisted that the Democratic officials receiving his contributions "were fully aware" that his business was to open doors for Chinese businessmen involved in everything from brewing beer to manufacturing weapons.

Chung expressed "mixed feelings" toward the president and Hillary Rodham Clinton, whom he once idolized. "I can't help but think that they used me as much as I used them," he said.

The most controversial of Chung's business contacts was a still-mysterious figure: Gen. Ji Shengde, the chief of China's military intelligence.

Chung testified that in the summer of 1996 he set up a holding company, Marswell Investments, in California with a senior executive of a Chinese aerospace firm. The executive, Liu Chao Ying, promised to put up $300,000, but instead proceeded to introduce him to Ji, who offered a cryptic deal during a meeting in China.

"We really like your president," Ji said, according to Chung's recollection. "I will give you $300,000 U.S. dollars. . . . You can give it to your president and [the] Democrat Party."

Chung later discussed the proposal with Liu, who told him he could use the money for campaign contributions, to take care of the general's son (then a student in California) or for their company. "I never had any intention to give the $300,000 to the Democrats," Chung said, adding that he used most of it himself and spent some on the general's son. Congressional investigators, however, have concluded that between $20,000 and $35,000 of Chung's contributions can be traced to the general's money.

Ji's shadow reemerged two years later after Chung had become the only major player to cooperate with the campaign finance investigation. According to Chung, Robert Luu, a California businessman, approached him while he was being debriefed by the FBI after his guilty plea and told him, "If you keep your mouth shut, you and your family will be safe."

In conversations monitored by the FBI, Luu suggested that he was in touch with the general and could produce money and an attorney if Chung kept quiet, Chung said. Luu could not be reached for comment.

In another development related to allegations of Chinese influence-buying, federal bank regulators yesterday denied that they had stalled a mid-1990s investigation into a small California bank suspected of being a conduit for illegal Chinese contributions.

Sen. Richard C. Shelby (R-Ala.) last week raised the allegation against the Office of the Comptroller of the Currency (OCC) in a letter to Senate Banking Committee Chairman Phil Gramm (R-Tex.).

"We investigated this matter thoroughly and promptly notified other federal agencies as appropriate," said Eugene Ludwig, who was comptroller of the currency during the period in question and is now an official at a New York bank. Government sources say that one of the issues regulators were concerned about was a connection between an official at the bank and the same Gen. Ji who gave $300,000 to Chung.

Staff writer Kathleen Day contributed to this report.