WORLD

Cash and the campaign

Clinton faces a tide of revelations about his political fund-raising

ANDREW PHILLIPS January 13 1997
WORLD

Cash and the campaign

Clinton faces a tide of revelations about his political fund-raising

ANDREW PHILLIPS January 13 1997

Cash and the campaign

WORLD

UNITED STATES

Clinton faces a tide of revelations about his political fund-raising

ANDREW PHILLIPS

Many remarkable figures have surfaced during the revelations about how President Bill Clinton’s Democratic party financed his re-election campaign. There are the financiers and Hollywood high rollers whose hefty contributions earned them a night in the Lincoln Bedroom at the White House. There is the administration official with mysterious ties to Indonesian billionaires, and the Chinese-American who parlayed a modest restaurant in Little Rock, Ark., and a friendship with the President into a web of trading interests stretching from Washington to Beijing. But perhaps oddest of all is the Taiwanese cult leader whose disciples contributed hundreds of thousands of dollars (most of it illegal) to the Democrats. Followers of Suma Ching Hai claim she is the living reincarnation of Buddha and Jesus Christ, and go so far as to drink her bathwater and buy up her used personal items, marketed as “Celestial Clothing.” One disciple bought her sweat socks for $1,100 because “when the Master leaves the physical world, at least I will have her socks.”

The shadowy network of Asian fund-raisers and donors who poured millions into Clinton’s re-election effort has focused the most attention since the Watergate era two decades ago on how American politicians have become cash junkies—addicted to ever-increasing injections of money to keep them going. The Democrats have returned at least $2.1 million in illegal contributions from Asian sources, and the President’s legal defence fund has sent back cheques totalling another $880,000. But for critics of how the U.S. political system is financed, a few million in dodgy donations is not the issue. The bigger problem is how politicians of all stripes dropped all restraint in their quest for money during the 1996 campaign season, and how existing laws did nothing to prevent it. Candidates for president and Congress, along with corporations and interest groups that backed them, spent some $2.8 billion—nearly twice the previous total in the 1992 election year.

Democrats have taken most of the heat, but Republicans, too, raked in hundreds of millions, some from foreign sources. And their leader, Newt Gingrich, faces money woes of his own that have deflected public concern from Clinton’s questionable fundraising tactics. At issue is whether Gingrich violated ethics rules of the House of Representatives by using money he raised ostensibly for nonpartisan purposes to finance a course he taught, taped and distributed, as well as a televised town hall meeting. A House ethics committee has said that Gingrich broke the rules by giving it false information, casting a shadow over his re-election as House Speaker expected this week.

The enormous amounts of money flowing into the political system have put reform of campaign financing near the top of Washington’s political agenda. Two federal departments—Commerce and Justice—are already investigating the Democrats’ Asian connection. House and Senate committees will launch their own inquiries soon after Congress goes back to work on Jan. 20. And two senators who campaigned for reform last year vow to renew their efforts. John McCain, an Arizona Republican, and Russell Feingold, a Democrat from Wisconsin,

won 54 votes out of 100 for a bill that would bring in voluntary limits on campaign spending and require candidates to raise most funds in their own states or districts. Republicans in the Senate blocked the bill with a filibuster, but McCain and Feingold say the new furor over campaign money may let them get the bill passed this year. “It’s still very difficult, but our chances are better this time,” Feingold told Maclean’s last week. “Public perception is that the system is as bad as it can be. More and more people think we have a cesspool of specialinterest money dominating our political process. The good news is that it’s easier to make the case for change because the public is really outraged.”

The revulsion, says Feingold, reaches beyond so-called ordinary voters who fear that corporate fat cats and foreign interests may be manipulating their leaders. Politicians’ demands for cash have become so incessant that they are starting to annoy the fat cats themselves. “Even the pillars of the community are some of the most disgusted with the system,” says Feingold. “They may have hoped to gain access [by donating money]. But they’re tired of being hit up. They’ve become targets for every campaign.” Feingold calls it “the revolution of the contributors.” The Asian connection dominated the last few weeks of the presidential campaign, damaging the Democrats and helping the Republicans keep control of Congress. At the time, attention centred on John Huang, the onetime commerce department official who

Even the big fund givers are tired of 'being hit up'

raised about $4.7 million for the Democratic National Committee from mainly Asian sources. Huang’s ties to his former employer, the Riady family of Indonesia, which controls the Lippo Group conglomerate, raised the spectre of possible influence-buying at the highest levels of U.S. policy-making. Clinton flatly denied that his policies towards Indonesia or any other part of Asia had been swayed. Still, the DNC suspended Huang as vice-chairman for fund-raising and returned at least $1.6 million he had collected from non-U.S. citizens, who are barred from donating money to American candidates or parties.

Since the Nov. 5 election, though, it has become clear that the Asian connection goes far beyond one man. Documents made public by the DNC a few days before Christmas show that the Democrats deliberately targeted Asian-Americans in their quest for cash. Their message was simple: leading Asians were told it was time they acquired the type of political influence that other ethnic groups have wielded for decades. In return, they were promised invitations to the White House and “face time” with Clinton— carefully calibrated according to the size of their donations. The fund-raising target among Asian-Americans for 1996 was ambitious: nearly $10 million.

The problem was that Huang went shopping for money among foreigners and companies with no income in the United States, one of the few restrictions on fund-raising under American law. Others got in on the act, as well. One was Charlie Yah Lin Trie, a Taiwanese-American who met Clinton after opening a Chinese restaurant called Fu Lin in Little Rock in the early 1980s, while Clinton was governor of Arkansas. Trie, who now calls himself an adviser on Asian trade, gave $880,000 in cheques to the President’s legal defence fund—but that money was also illegally raised and had to be returned. Much of it came from members of Suma Ching Hai’s bizarre sect in Taiwan, who offered only vague answers when reporters asked them why they were so eager to donate money to Clinton. The lingering suspicion is that they were fronting for other interests.

The illegal foreign donations, though, amount to only a few million dollars—a drop compared to the estimated $385 million that Clinton and the Democrats spent on their re-election. For critics of the system, it is the legal contributions that are the real scandal. U.S. laws governing campaign financing are so weak and riddled with loopholes that politicians and their special-interest allies have found dozens of ways around them. In the wake of the Watergate scandals in 1974, Congress banned corporations and unions from do-

nating to candidates, put strict limits on how much individuals could give to candidates, and limited how much politicians could spend on their campaigns. An individual could donate only $2,000 (U.S.) to one candidate, and a maximum of just $20,000 (U.S.) to a political party. In Canada, there is no limit to how much individuals, corporations and unions can donate to a federal party, but the amounts raised are miniscule by American standards. In 1995, for example, the Liberals took in $13.2 million, while Reform collected $5.2 million. During a federal campaign, party spending is limited to 30 cents per voter— meaning that a party with candidates in all 295 ridings could spend only a little over $10 million in 1993. Individual candidates, typically, could spend only about $60,000 each under another formula set by Ottawa.

The strict limits in the United States were shortlived. In 1976, the Supreme Court gutted the spending-limit provisions by ruling they were an infringement on free speech. And two years later, the Federal Election Commission ruled that individuals, corporations and other groups could donate to political parties as long as the money was used for what it called “general party-building activities” rather than support for a particular candidate. The line between those two purposes is so vague, however, that it effectively did away with restrictions on fund-raising and opened the door to what has become known as “soft money.”

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Soft money cannot be used for advertising that explicitly urges people to vote for one candidate. But it can be used to promote issues that favor a party, or to attack an opponent. It can be donated at any time, even during the official campaign period, and it now dwarfs the amounts raised under the 1974 rules, which qualify for federal matching funds. The Republican party collected some $200 million in soft money during 1995-

1996, while the Democrats collected $165 million. By comparison, Clinton and Republican Bob Dole received only $85 million each in official matching funds for their campaigns. “At the presidential level, the increase in soft money really just blew the system open,” says Candice Nelson, associate professor of government at American University in Washington and author of a 1990 study on cash and politics called The Money Chase.

Post-election revelations also show Clinton to have been the most enthusiastic fund-raiser of any modern president. Shaken by the Republican congressional victory in 1994, the President was determined to start bringing

in re-election money early—and to collect a campaign fund big enough to scare off any potential Democratic challenger. The result, documents released over the past weeks show, is that he gave his fund-raisers generous quantities of their most precious asset: himself. For the wealthiest donors, that was a bigger thank-you than any special favors.

The result was that Clinton attended literally dozens of fund-raising events over the past year—at least 90 by one count. They included splashy semi-public events such as his 50th birthday party at Radio City Music Hall in New York City last August, which brought in $14 million for the Democrats. More controversially, they included dozens of private sessions for donors at the White House, ranging from intimate “coffees” to lunches, dinners and sleepover sessions behind the wrought-iron fences at 1600 Pennsylvania Avenue. IT ere were so many that observers began to joke that the White House had become “Motel 1600,” with the Clintons turning down the sheets in the Lincoln Bedroom for the likes of Hollywood mogul David Geffen and Wall Street financier Steven Rattner. The tab: the men donated more than $150,000 apiece and raised hundreds of thousands more for the DNC.

Reformers such as senators McCain and Feingold vow to step up efforts to bring down the cost of campaigning, and persuade politicians to wean themselves from the corporate cash cows. There is very little support, however, for mandatory spending limits. McCain, Feingold and others propose a system whereby politicians would voluntarily limit their fund-raising and spending in return for incentives such as free TV time, while the soft money loophole would be closed for good.

Even such modest measures face formidable obstacles. Most Republicans oppose any tightening of campaign finance laws, arguing that a better solution would be to deregulate the entire system and hold politicians accountable by requiring them to disclose all contributions and spending. They follow the arguments of libertarians such as Bradley Smith, a professor at Capital University Law School in Columbus, Ohio. In a recent commentary for the conservative Cato Institute, he noted that the hundreds of millions of dollars lavished on U.S. campaigns seem less formidable when compared with other things Americans spend money on. If the cost of all national campaigns in a two-year election cycle is between $1.5 and $2 billion (U.S.), he wrote, that amounts to less than $10 per voter—the cost of a couple of video rentals.

One of the leading proponents of such views has been Gingrich himself, whose own financial and ethical difficulties have eased public pressure on the Democrats. Republicans, who hold a majority of 226-207 in the House, were confident last week that Gingrich would face only a mild reprimand for his rules violations. But he will still be a chastened and diminished figure—a bonus for a President with more than his own share of woes even before he is sworn in for a second term.

LUKE FISHER