RODHAM WATCH

IS THE OTHER HSU ABOUT TO DROP?

Hillary's donor linked to China missile trader

Published: 09/02/2007

A shady Chinese megadonor to Hillary Clinton’s presidential campaign has close ties to an aerospace mogul accused of placing his business interests before national security by sharing missile secrets with Beijing during the Clinton administration.

Before his forced resignation last week, Norman Yuan Yuen Hsu sat on the board of trustees of the liberal New School university in New York with former Loral Corp. head Bernard L. Schwartz, who was allowed to transfer restricted satellite and missile technology to a People’s Liberation Army front after contributing a record amount of cash to President Clinton’s 1996 campaign.

The New School has removed Hsu’s name from its list of trustees. But the old list showing both Hsu and Schwartz is still captured on Google’s cache files. Here is the screen shot.

Schwartz, vice chairman of the New School board, was among officials who introduced Hsu to the school’s administration, WND has learned.

Last November, Schwartz and Hsu chaired a New School banquet at the Mandarin Oriental in New York which featured Sen. Clinton as keynote speaker. Clinton steered a $1 million federal grant to the college.

More recently, Schwartz and Hsu (pronounced shoo) appeared together at the New York Yacht Club for Democratic Rep. Patrick Kennedy’s 40th birthday bash.

The pair are so-called HillRaisers – major donors to Clinton’s war chest – with Hsu raising more than $1 million for her campaign. Hsu, like Schwartz, has lobbied the U.S. government to relax trade rules with China.

Before he was a Friend of Hill, Schwartz was a Friend of Bill. In fact, then-President Clinton feted Schwartz on his 71st birthday at a White House dinner.

Sources say Schwartz vouched for Hsu at New School, even though he was a fugitive convicted of grand theft in California.

New School President Bob Kerrey assumed Hsu, now in jail, was reputable. The former Democrat senator says he didn’t question Hsu’s credentials because he liked him. He also was taken by “his personal story, coming from China, and he had an interest in fashion as well.”

“It all intrigued me,” Kerrey said.

Of course, Hsu also gave generous sums of cash to Democrats and their causes, including The New School.

Kerrey assumed Hsu, a self-described apparel magnate, made his money in the garment industry. But even that claim is now in question.

It turns out that the various companies Hsu listed on federal campaign filings with the FEC no longer exist, and may always have been fictitious. Last decade Hsu declared bankruptcy.

The FBI has opened a criminal investigation into Hsu’s fund-raising activities.

Republicans in Congress, meanwhile, see parallels to last decade’s Chinagate fund-raising scandal, and are clamoring for public hearings to get to the bottom of what may be a new chapter in an old tale of corruption, foreign influence-peddling and espionage. All told, 22 Democrat donors were convicted in the Chinagate probe, which the Justice Department officially closed a few years ago.

After he was convicted of fraud last decade, and allegedly kidnapped by a Chinese gang in San Francisco, Hsu fled to Hong Kong, where he was born and raised. He returned to the U.S. not long after Hillary Clinton won her Senate seat. Then – for the first time – he started donating heavily to Democrats. He gave no political campaign gifts in the U.S. before 2004.

“The source of Hsu’s income at this point is unknown,” a congressional investigator told WND. “It begs the question, where did he get the resources to contribute so much money?”

During the last Clinton campaign of 1996, the People’s Liberation Army launched a massive campaign to buy influence in the Democratic Party and steer military hardware and technology Beijing’s way.

Reports by federal investigators say the PLA used a host of Chinese agents living in the U.S. as bagmen to funnel cash to the Clinton-Gore campaigns and gain access to the White House and sensitive government agencies.

Even U.S. corporate executives did their bidding. Most alarmingly, Schwartz persuaded the Clinton administration to give his Loral Space and Communications subsidiary a waiver to use inexpensive Chinese rockets to launch U.S. satellites into space.

Loral at the same time helped Beijing – over the objections of the U.S. intelligence community – improve its commercial space launchers. That in turn, helped make its nuclear-tipped missiles more reliable as ICBMs, several of which are aimed at U.S. cities.

In fact, it’s believed China’s recent downing of a satellite with a ground-based missile would not have been possible without Loral’s technical assistance.

Schwartz, who was Clinton’s top donor in the 1996 election cycle, insists his contributions did not buy policy changes regarding China. He says the favorable treatment he got from the administration was merely a “coincidence.”

However, two months before he won a prized seat on a Commerce Department trade junket to China, he wrote a check to Democrats for $100,000. On the trip, Schwartz scored a meeting with China’s top telecommunications official, which led to Loral winning a deal to provide cell phone service to China – a deal worth an estimated $250 million a year.

During the 1996 election cycle, moreover, Schwartz created his Loral Satellite and Communications subsidiary. He needed export controls loosened so the start-up unit could launch its satellites on cheap Chinese booster rockets, which are nearly identical to Beijing’s strategic missiles that would greatly benefit from such dual-use U.S. technology transfers.

Schwartz lobbied the Clinton administration to transfer satellite export licenses to the more lenient Commerce Department. At the same time, he pumped $632,000 into Clinton-Gore and Democratic National Committee coffers.

That same year, in a major policy shift, President Clinton overturned an earlier 1995 decision by Secretary of State Warren Christopher and transferred authority for satellite export licenses to the Commerce Department, where Beijing managed to plant an agent by the name of John Huang. Loral got its waiver – over the objections of the Justice Department – and Schwartz kept on giving to the Clinton machine, in the end contributing well over $1 million.

Schwartz not only met with top officials at China Aerospace International Holding Ltd. – a PLA front – but he even formed a joint venture with the communist front company.

A key contact at China Aerospace was Liu Chaoying, a lieutenant colonel in the PLA.

In 1998, in the course of plea bargaining with the Justice Department, a Chinese bagman by the name of Johnny Chung confessed that at least $100,000 of his contributions to the DNC and the Clinton-Gore campaign had come from a Chinese aerospace executive – a lieutenant colonel in the Chinese military – who had given him $300,000. It was the same Chaoying involved with Loral, who happened to also be the daughter of the PLA’s top general and a key member of China’s Communist Party leadership.

Chung later told prosecutors that the $300,000 had been ordered into his bank account by the head of Chinese military intelligence, whom he said he met through the lieutenant colonel.

During the 1996 election cycle, Chung was a regular White House visitor. All told, he visited 57 times. During one visit to the first lady’s office, he handed Hillary Clinton’s chief of staff a check for $50,000. Three days earlier, he had received a $150,000 wire transfer from the Bank of China.

Hillary Clinton posed for a White House photo with Chung and two Chinese officials, and later penned a personal note on a print of the photo for Chung: “To Johnny Chung with best wishes and appreciation – Hillary Rodham Clinton.”

Johnny Chung (pointing) with Hillary and Bill Clinton

Hillary Clinton rejects comparisons between Chung – and the entire 1996 Chinagate fund-raising scandal – and Hsu, her mysterious new Chinese donor.

“I don’t think it’s analogous at all,” she said.