Year of the Rat: How Bill Clinton Compromised U. S. Security for Chinese Cash by Edward Timperlake, Edward Timperlake, William Triplett

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Just in time for the presidential campaign, this anti-Clinton expose arrives in paperback. Recent reports of Los Alamos security leaks might heighten interest in Timperlake and Triplett's review of the Red Chines drive for American's security secrets.

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The Chinese money train into the Clinton/Gore campaign, the White House and Democratic National Committee

Booknews

A somewhat emotional, personalized attack on Clinton and Gore in which the authors argue that the Clinton-Gore administration has compromised American security in exchange for millions of dollars in illegal campaign contributions from foreign businessmen linked to organized crime and Chinese military and intelligence agencies. Annotation c. Book News, Inc., Portland, OR (booknew.com)

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Chapter One

THE FAUSTIAN BARGAIN

On a wall in the basement of the United States Capitol in Washington, a bas-relief depicts a Greek warrior engaged in mortal combat with a snake. The artist captures the moment when the man raises his sword to strike the deathblow. Across the tableau is one word: Courage.

    Artistically, physical courage is easy to depict. Moral courage is another matter. Moral courage requires taking a cold, hard look at the world and then acting, accepting the consequences, and knowing that the greatest good will ultimately be served. Moral courage demands sacrifice--the subordination of self-interest to the interests of others. To be morally or intellectually courageous requires a basic sense of honesty and integrity coupled with the will to act decisively on those principles. Moral character is of great matter in a leader and will inevitably affect the substance of his performance. Courage, character, and performance cannot be separated.

    In these areas we have found President Clinton and his administration wanting. They have failed in their duty to the national interest. What is happening on Bill Clinton's watch while he serves as president and commander in chief is rapidly becoming a matter of history, and the devastating repercussions of his actions will be felt by Americans for generations to come.

    Our thesis is simple: The Clinton administration has made a series of Faustian bargains and policy blunders that have allowed a hostile power to further its aims in Washington. In the main, Bill Clinton and Al Goredid it for money.

    The hostile power is the People's Republic of China (PRC). It is the only foreign regime currently targeting American cities for nuclear destruction.

    The PRC, under the direction of the Chinese Communist Party (CCP), is engaged in four major lines of activities, all of which are contrary to the interests of the Chinese people, neighboring countries, U.S. friends and allies around the world, and ultimately the American people.

    First, arms dealers associated with the CCP's military arm, the People's Liberation Army (PLA), have transferred weapons of mass destruction and the means to produce them to terrorist nations, threatening Israel, our Gulf allies, and even Europe.

    Second, the PLA itself is suppressing the Chinese people's legitimate desire for democracy and human rights.

    Third, the PLA has a history of aggression against neighboring countries, including Tibet and India, and in recent times has shown a willingness to bully others, including Japan, Vietnam, the Philippines, and the Republic of China on Taiwan.

    Finally, the PRC's unjustified military modernization and expansion program threatens America's foreign policy interests and national security.

    Before Bill Clinton took office, the United States was the prime obstacle to the CCP's ambitions to dominate East Asia. After he was elected, the CCP expressed two major needs--political and economic intelligence on the United States, and assistance with its military modernization program. The Clinton administration has met both Communist Chinese goals.

    In these pages, we will show that, in order to gain and hold onto power, the Clinton administration has acted recklessly, allowing the wrong people to gain access to our most important political and economic secrets. Any number of Chinese arms dealers, spies, narcotics traffickers, gangsters, pimps, accomplices to mass murder, communist agents, and other undesirables will appear in these pages ... all associated one way or another with the White House and money.

    The most favorable explanation for this betrayal is incompetence. As the president said, "Mistakes were made." But it is far more likely that in order to gain campaign contributions and pay hush money to witnesses, the Clinton-Gore administration turned a deliberate blind eye to these threats to our national interests.

    Moreover, we believe that the Clinton administration's help to the Chinese military and the cover-ups of Chinese arms proliferation were motivated by equal parts corruption and classic appeasement.

    How we intend to show this rests on evidence. And here we ran into a number of initial stumbling blocks:

* Two crucial witnesses, Commerce Secretary Ron Brown and Assistant Commerce Secretary Charles Meissner, perished together in a plane crash.

* At least eighteen critical witnesses have fled the country.

* Another seventy-nine witnesses have taken the Fifth Amendment, deciding that telling what they know would tend to incriminate them.

* The higher one gets in the political structure at the White House, the more its people suffer from memory loss.

* Document tampering has been shameless. As the New York Times noted, "Much remains missing: Mr. Huang's Democratic National Committee (DNC) telephone logs, most of his outgoing correspondence, his travel records, details of visits to the White House and Clinton-Gore campaign headquarters, and accounts of business he conducted from locations other than his office at the Democratic Committee."

* Some of the most compelling evidence is highly classified and can only be discussed inferentially.

* And, we must admit, the White House has been fortunate in having incompetent members of the political opposition.

    That having been said, our account is not without proof. Most of it will be direct. We have, for example, the records of John Huang's entry into the Executive Office of the president. We know how many times he went there and at least who authorized his entrance. We also know how many long distance calls he made to his former employers from his new desk at the Commerce Department. We can document at least some of his visits to the Chinese embassy in Washington. We can document the wire transfers to the DNC from Macau criminal syndicate figure Ng Lapseng. We have the Treasury Department records of the hundreds of thousands of dollars in cash Ng brought into the United States and his trips to the White House.

    Other evidence will be circumstantial. A common layman's misunderstanding is that circumstantial evidence is in some way lacking. On this point the courts are clear: The United States Court of Appeals has ruled, "A conviction can rest solely on circumstantial evidence, which is intrinsically as probative as direct evidence." We will present a mountain of circumstantial evidence to show corrupt motivation and opportunity to harm the national interests of the United States.

    Did the Clinton administration sell out America's national security to one of this country's leading and most dangerous adversaries merely to raise campaign cash? In the pages that follow, we will prove our answer, which is: yes.

Chapter Two

LIPPO AND THE RIADYS

Who was the biggest contributor to the Clinton-Gore ticket in 1992? Not a corporation, not a labor union, not a Hollywood mogul, but Indonesian businessman James Riady and his wife, who gave $450,000 to elect Bill Clinton.

    During the final weeks of the campaign, the Riady family, its associates, and executives at Riady companies gave an additional $600,000 to the DNC and Democratic state parties.

    The patriarch of the business empire is Mochtar Riady, a frequent visitor to the United States. Of his three sons, James was a permanent resident of the United States, Stephen was educated here, and Andrew worked in California in the early 1980s. All, however, have fled the United States. Any Riady employee with detailed knowledge of the family's activities in the United States has likewise stolen away in the night. Even James Riady's secretary has vanished. Only John Huang, the family's former U.S. operative, remains in the United States--and he has pleaded the Fifth Amendment, maintaining that telling what he knows might incriminate him.

Who are the Riadys? They originally come from China's coastal province of Fujian, opposite Taiwan; the Riady family's Chinese name is "Lee." At some point the family relocated to Jakarta, the capital of Indonesia. Ethnic Chinese make up 5 percent of the Indonesian population but control at least 75 percent of the corporate assets in the country, a dangerous combination. Ethnic Chinese have often been targets in times of unrest, and the May 1998 riots protesting Indonesian President Suharto quickly became anti-Chinese riots, forcing hundreds of desperate ethnic Chinese to flee to Jakarta's international airport. The ethnic rioting in South Jakarta destroyed a branch of the Riady-controlled Lippo Bank, and elsewhere in the country, the Indonesian army had to send 360 soldiers to protect Riady property from anti-Chinese mobs.

    Mochtar Riady has a new Bell helicopter with long-range fuel tanks. If things go bad in Jakarta, he can easily fly to Singapore six hundred miles away. Son James's three-story manor house and helicopter pad in Jakarta are ringed by a moat. The Riadys aren't taking any chances.

    The Riady empire, centered on its Lippo Group, is, as one financial analyst in Jakarta describes it, "a carefully balanced house of cards." Newsweek has noted, "Moving cash around the globe in tangled webs of transactions has always been the Riady way," and the Asian Wall Street Journal accuses the Riadys of "ramping"--buying large numbers of shares in their own companies in order to support prices."

    In Indonesia the Riadys have gone in for grandiose development projects where their connections can facilitate governmental approval of crucial licenses and permits. For example, their billion-dollar "Lippo Village" project is a walled community for opulent Indonesians with its own private school, country club, and other amenities. Tuition at the school runs to $15,000-a-year, way out of reach for ordinary Indonesians, but attractive to the super-rich who don't want to educate their children abroad. The school even has a horse show ring. Interestingly, the school received its operating license after James Riady took the Indonesian education minister to the White House for an Oval Office visit.

    The Riadys' corporate flagship is the Lippo Group. "Lippo" is a Chinese word that means "energy." The Riadys began in banking, branched out into securities, and later into land development. In Indonesia, the company has its fingers in many pies, making textiles and electronics, mining coal, selling insurance, and building shopping centers, housing developments, and hospitals. Though precise figures are difficult to determine due to the complex relations among Riady-associated companies, the Lippo Group as a whole has been quite successful, and the Riadys are extremely wealthy.

    Dr. Mochtar Riady (also known as "Dr. Man Tjin Lee") has moved from chairman of various Lippo entities to "honorary chairman," reflecting his declining health. His second son, James, runs the Indonesia operation, while the youngest son, Stephen, is in charge of Hong Kong and China affairs. The mysterious oldest son, Andrew, is alleged to have lost millions on the foreign exchange markets, and has disappeared from view completely.

    In 1977 Mochtar Riady tried to buy the National Bank of Georgia. He failed, but one of the brokers in the deal was Jackson Stephens of Little Rock, Arkansas, who tried to interest a disappointed Riady in joining Stephens, Inc., one of America's largest private investment banks outside of Wall Street--and one with which the Riadys would have an extended relationship, as we will see. Mochtar Riady agreed, and his son James, then aged twenty, arrived to intern at Stephens, Inc.

    Through Jackson Stephens, James Riady met a rising politician, Arkansas Attorney General Bill Clinton. Thus began a friendship that has lasted twenty years, and has spread a web of intrigue, financial corruption, and foreign influence into American government.

    In early 1984 James Riady and Jackson Stephens became co-owners of Arkansas's largest bank, the Worthen Bank. James was installed as the bank's chief operating officer, and a whole team of ethnic Chinese from Indonesia came to work in Little Rock.

    In the first year under Riady/Stephens management, the bank lost tens of millions of dollars in Arkansas State pension funds through a risky out-of-state investment scheme. Legally, Worthen could have passed the loss to the state. But that disaster would have ended then-Governor Clinton's political career by demonstrating his professional incompetence. Instead, Jackson Stephens wrote a personal check for $32 million to bail out the bank--and Clinton.

    But the Riadys and Stephens also began to have trouble with federal regulators who discovered that Worthen had transferred $7 million--in increments of just under $10,000 each--to a Hong Kong bank controlled by the Riadys. And almost all the transfers were placed under phony names. Because they were under $10,000, the transfers, by law, did not have to be reported to the Treasury, but the intent to deceive was clear. Later, regulators found a pattern of self-dealing that involved sweetheart loans by Worthen to Stephens-owned companies, and to Riady associates, for office buildings in Indonesia. Exposed, the Riadys were forced out of banking in Arkansas.

    However, they retained enough influence at Worthen to come to Bill Clinton's aid at a critical moment. In the spring of 1992 Clinton was facing a crucial primary in New York, and he was out of money. According to one ex-Worthen executive, James Riady "persuaded" the bank to issue the Clinton campaign $3.5 million worth of letters of credit. This was the first of two interventions in the American political system that the Riadys would make in 1992 to help elect the Clinton-Gore ticket.

    The Riady-Clinton connection is more than financial: it is personal. James Riady has met and often hired many of Bill Clinton's closest Arkansas cronies. Joseph Giroir and Webster Hubbell, both former law partners of Hillary Clinton, are or have been on the Riady payroll, as have Clinton golfing buddy Mark Grobmyer and ex-White House aide Mark Middleton. It was Clinton's golfing partner Paul Berry who helped the young Arkansas governor obtain an unsecured loan of $20,000 for the Whitewater development project. After the election, Berry joined a Washington lobbying firm, Global USA, that worked with the Riadys. Global USA sent pictures of Berry with Clinton to its Asian clients. Attached was a letter claiming that "Paul's long association with President Clinton and many of his top staff will provide you with unique and fresh insight into the workings of the Clinton administration."

    The Riadys have also invested in California, starting in the 1980s. They purchased a small bank, the Bank of Trade, in Los Angeles's Chinatown, making it the Riadys' American headquarters. James Riady bought an estate in the exclusive Brentwood section of Los Angeles and became the chief executive officer of the bank.

    John Huang, a Taiwan native employed by the Riadys in Hong Kong, was brought to Los Angeles to be James Riady's number two man. In time, Huang would become the Riadys' U.S. representative. Whether because of neglect or malfeasance, the Bank of Trade, renamed "LippoBank," soon became a target of federal regulators who found that its "problem loans" were seven times the average for a bank of its size and that LippoBank procedures were an "invitation for abuse by [a] criminal element." The Federal Deposit Insurance Corporation (FDIC) issued a cease and desist order against the bank and placed it under strict supervision.

    By the late 1980s James Riady was a permanent resident of the United States and thus could make legal campaign contributions. His debut was at an April 22, 1988, fund-raising dinner at his Brentwood estate for the Democratic Senatorial Campaign Committee. As the Los Angeles Times noted, "At every table, like a centerpiece--only better--was a United States senator primed to welcome wealthy Asian donors, both citizens and permanent residents, as valued participants in the Democratic Party."

    The dinner was organized by John Huang and Democratic activist Maria Hsia, and it raised $110,000. But there was an added twist to this event, which we would see repeated over and over again in fund-raising associated with the Riadys, Huang, and Hsia. The Los Angeles Times called it a "flirtation with deft bookkeeping." Federal election law requires that the source of a donation be disclosed, but attached to one $5,000 check from an Asian-American contributor was a note, perhaps in Maria Hsia's handwriting, stating, "cannot report what appears on the check. He will be very upset if his name appears at anywhere [sic]."

    In raising money for Democratic senators, James Riady had his own agenda. A few days after the fund-raiser, he wrote to Maria Hsia, giving her a list of "issues [that] needs to be followed up" with the senators. One of James's prime goals was senatorial pressure on Taiwan, where he wanted to open a branch of the Bank of Trade/LippoBank. But Taiwan would have required him to open his books, and Riady must have feared that if he did he wouldn't get a banking license. Riady thus wanted Democratic senators to "impress upon Taiwan" the need to open its doors to someone of his importance, no matter what the books disclosed.

    By August 1992 the Clinton-Gore ticket was desperately raising money in order to be competitive in certain key states for the fall election. As he had done just before the New York primary, Clinton turned to his chief moneyman, James Riady. In the middle of August, Clinton and Riady took a limousine ride together. Soon thereafter, a cascade of Riady money--nearly $600,000--made its way to the DNC and to a number of Democratic state parties where the election was considered a toss-up. Undeniably Riady's funding played a key role in Clinton's election to the presidency: the Clinton-Gore ticket ultimately won five out of the six state races where Riady money played a factor. In Georgia, one of the states targeted for Riady funds, Clinton and Gore edged out the Bush-Quayle ticket by a mere 13,000 votes out of a total 2.4 million cast. Clinton and Gore also squeaked by in Ohio, always considered a "must-win" state for Republicans; it was their closest margin of any large state. This was the second time James Riady would come to Clinton's rescue.

    The Clinton-Gore inauguration in mid-January 1993 was another opportunity for the Riadys to open their wallets. James Riady and John Huang each gave $100,000 to cover the cost of inaugural parties. The Riadys brought a number of friends from Indonesia to Washington for the swearing-in ceremony.

    Their generosity continued. At the direction of Mochtar Riady, Joe Giroir--a Lippo partner and Arkansas "Friend of Bill" (FOB)--bestowed a life-sized bust of Clinton upon the National Portrait Gallery. Giroir has personally contributed $200,000 to the DNC since 1993, something made easier by his $500,000-a-year compensation from Lippo.

    In return for such generosity, the Riadys and their friends were given unparalleled access to the White House. In Jakarta, James Riady likes to brag about where he was on the afternoon of April 19, 1993. On that day eighty members of the Branch Davidian religious cult were holed up in their compound outside of Waco, Texas, when it was shattered by a tank-led assault. By the time the FBI and Treasury's Alcohol, Tobacco, and Firearms agents had completed their work, seventeen American children had burned to death.

    As might be expected, the White House was a busy place that afternoon, and the president was preoccupied. Clinton was not too distracted, however, to chat with his leading contributors--James Riady, John Huang, and Mark Grobmyer--in his little study off the Oval Office. Riady later told Indonesian diplomats that, during their chat, a television in the corner showed the Waco compound burning over and over as CNN repeated its coverage. Clinton even took time to show his visitors the White House Situation Room, then on full alert. White House entry logs confirm that Riady and his companions were in the presidential offices (West Wing) of the White House that day. They apparently also dropped in on Robert Rubin, now secretary of the treasury, who was then a White House economics official.

    How many other presidents, in the middle of such a tragedy, would have spent their time giving major donors a White House tour?

THE BEIJING CONNECTION

During the congressional investigations of campaign fund-raising, Senate Democratic staff found a curious document in John Huang's files. On Lippo stationery is a memo dated March 9, 1993, from John Huang to James Riady, regarding "Mr. Chen Xitong from China." Huang is attempting to coordinate a trip to Atlanta by Mr. Chen. Huang assures Riady, "I have already stressed the importance of this visitor to all of us."

    We were initially puzzled by this memo. At the time it was written, Chen was a CCP Politburo member, ranking eighth in the hierarchy. He was also mayor of Beijing, and Beijing was competing with Sydney, Australia, for the right to host the year 2000 Summer Olympic Games. Atlanta, of course, was preparing for its own 1996 Summer Games, and it would make sense for Chen to have a look around.

    But how could Chen possibly get a U.S. visa? Short of the late paramount leader Deng Xiaoping and ex-Premier Li Peng, it would be hard to find a more notorious and corrupt CCP official than Chen, or one with more blood on his hands from the June 1989 Tiananmen Square massacre. Chen must be counted as at least an accomplice, if not a party, to mass murder, for it was he who instigated the state terrorism that was inflicted on his own people in Beijing. In April 1989, while some Party officials advised at least limited accommodation to the students' demands for democracy and human rights, Chen prepared an internal report for the Politburo urging an immediate crackdown. As the PLA prepared its assault on the city, Chen signed the martial law decrees justifying the use of tanks and flamethrowers against unarmed civilians. After the streets had been cleared of blood, Chen gave the official verdict on the massacre in a report to the Standing Committee of the National People's Congress. He blamed the murder of thousands of innocents on a conspiracy originated by "some political forces in the West."

    Of all the PRC officials who wanted to visit the United States in 1993, why did the Riadys and Stephens, Inc., feel they had to help such an obviously high-profile villain? Why did Huang have to remind his boss of "the importance of this visitor to all of us"?

    The answer is Wangfujing Street, just three short blocks east of the Tiananmen Square and Forbidden City tourist sites. In 1993 Wangfujing Street was a typically seedy, run-down commercial area of Beijing, but it had three things going for it: location, location, location. Because of the many government ministry buildings in central Beijing, there was no comparable commercial area available for redevelopment. Getting in on the ground floor of the Beijing municipal government's plans for Wangfujing Street would be like having a license to print money. And the totally corrupt mayor of Beijing, Chen Xitong, was the gatekeeper.

    In March 1993 a Riady subsidiary "signed a letter of intent with the Beijing municipal government on the land-use rights for two parcels of land in Wangfujing, the commercial and shopping centre of the capital," in the words of the South China Morning Post. The Riadys intended "to retain a majority stake in the projects and build retail and office properties," including the Lippo Tower, with 1.7 million square feet of rental space. The overall Wangfujing Street project will involve about $6 billion. Another major investor is Hong Kong billionaire Li Ka-shing.

    But there was one hitch in the Riadys' plans: American fast-food giant McDonalds. In the aftermath of the Tiananmen massacre, a number of foreign firms pulled out of China. Chen was so desperate to keep foreign investors in his city that he granted McDonalds a twenty-year lease on the best corner of Wangfujing Street, which drew locals and tourists visiting the square and the Forbidden City. It soon became the company's most profitable outlet worldwide. But now the Riadys and Li wanted Chen to break McDonalds' lease.

    McDonalds fought him for almost two-and-a-half years, but in the end Chen broke the lease. The company took a small face-saving amount ($12 million) in compensation and departed for less-green pastures. The Riadys' Wangfujing Street projects are scheduled for completion in 1999, in time for the fiftieth anniversary of the founding of the PRC. Chen's "importance" to the Riadys is now apparent.

    The Riadys were beholden to Chen for buying off McDonalds and paving the way for the Wangfujing Street deal. Actually, they are beholden to government and Communist Party officials all over China. In 1997 a senator asked the Central Intelligence Agency (CIA) to comment on the relationship between the Riadys and Beijing officials. The CIA said that almost all of the Riadys' joint ventures in China are "with local, regional and central governments in China." The CIA added, "Lippo has substantial interests in China--about US$2 billion in the Riadys' ancestral province of Fujian alone. These include real estate, banking, electronics, currency exchange, retail, electricity, and tourism."

    After noting Lippo's involvement in large-scale public works projects in China, the CIA added these very important and carefully chosen words: "Lippo has provided concessionary-rate loans to finance many of these projects in key [Communist] Party members' home areas." While China is not a democratic country, a politician, even a communist politician, who can bring home the bacon to his constituents with below-market loans for big public works projects would probably feel some obligation to the lenders. This combination of networking and exchange of obligation is called "guanxi" in Chinese. It is an important part of the way business is conducted in many parts of Asia.

    The mutual back-scratching between the Riadys and Chinese Communist officials became vital to the family in the summer of 1995. The Indonesian real estate market had taken a severe downturn, and the Riadys' chief property company, LippoLand, found itself seriously exposed. Worse than that, LippoLand owed a great deal of money to LippoBank. If one faltered, the other was equally in trouble, a domino effect that could bring down the entire Riady empire.

    And LippoLand was definitely faltering. After July 1995 Lippo sold very few of its residence units. In September, Lippo executive Michael Farley jumped to his death from the sixteenth floor of an office building in Lippo Village (Lippo Karawaci). The market dropped 40 percent, and the Riadys started selling properties in a desperate effort to keep afloat. After LippoBank missed a required payment there was a run on the bank, and the Indonesian Central Bank had to arrange support from a consortium of four other banks to keep it viable.

    What truly saved the bank was a timely purchase of Lippo shares by the Riadys' chief Chinese partner, China Resources. The share purchase was not large--5 percent of LippoLand--but it was enough to restore confidence and bring in other investors.

    China Resources, the Riadys' white knight, is an arm of Chinese military intelligence.

    With as much money as the Riadys have at risk in China and their level of integration into government and Communist Party circles, it is inevitable that they would have dealings with Chinese intelligence. The Riadys' chief partners in China (including Hong Kong)--China Resources and the China Travel Service--are government-owned companies that accommodate or serve as an extension of Chinese military intelligence. Regarding the Riadys' relationship with Chinese intelligence, an investigating Senate committee learned the following from the CIA:

The Committee has learned from recently-acquired information that James and Mochtar Riady have had a long-term relationship with a Chinese intelligence agency. The relationship is based on mutual benefit, with the Riadys receiving assistance in finding business opportunities in exchange for large sums of money and other help.

Although the relationship appears based on business interests, the Committee understands that the Chinese intelligence agency seeks to locate and develop relationships with information collectors, particularly with close association to the U.S. government.

    What this means as a practical matter is that the Riadys and Chinese intelligence engage in a series of exchanges that exemplify the concept of guanxi. China's intelligence service provides the Riadys with lucrative business opportunities in China--crony capitalism in its rawest form. But Chinese intelligence is no less corrupt than any other part of the Chinese political system. The Riadys are filling Chinese intelligence officers' pockets with "large sums of money" and providing the service itself with "other help." The CIA defines this "other help" as information collected from the American government. If the CIA is right, and we believe it is, what the Chinese intelligence service wanted from its Indonesian agents was not so much a policy tilt in its direction, but information from Riady sources close to the United States government, which is the main target of Chinese intelligence operations. It was simply classic espionage. The Riadys were in a position to satisfy their Chinese intelligence allies and help themselves at the same time.

COLLECTING FOR THE COMRADES

It is said that in his private Hong Kong office Mochtar Riady keeps two gold-framed pictures, one of Bill and Hillary Clinton, the other of Chinese Politburo member Li Peng. One ex-Lippo executive commented on the Riady-Clinton connection: "Riady's goal was to sell his relationship with Clinton to two governments, Indonesia and China."

    We believe that Riady actually intended to exploit his relationship with Mr. Clinton in several ways. First, to make money and enhance his own prestige. That was always the first order of business. Then he could sell his Clinton relationship to the Indonesian and Chinese governments. Finally, he might use his White House connection to advance his American friends at Stephens, Inc.

    That leads to the question: What precisely did Riady have to sell? Was it policy changes benefiting himself and his clients, or was it more likely to be information? We believe it was some of the former and a lot of the latter.

    It is important to bear in mind that the Riadys are bankers, first and foremost. All else--the land deals, the stock brokerage, the insurance company--are derivative of their banking operations. In addition to LippoBank in Indonesia and LippoBank California, they are partners with China Resources in a medium-sized Hong Kong bank. Before "Lippogate" surfaced as an issue in the American press, the Riadys were in the market to purchase a large American bank.

    Information is vital in the banking business, both to judge risk and to find opportunity. First, a banker wants to know everything he can about a deal before the depositors' money goes into it. Second, if a banker has more accurate and timely information on investment opportunities than his competitors have, his bank will have an edge over them. An edge, even a small edge, means money.

    Information collecting by bankers is quite similar to information collecting by an intelligence service. A classic of the espionage business is The Craft of Intelligence by the late CIA Director Allen Dulles. Dulles shows how great financial fortunes have gone hand in hand with intelligence gathering. The merchant princes of Florence, the Fuggers of Germany, the Rothschilds of Europe, and the British East India Company all combined investment strategies with accurate intelligence. He points out that in the sixteenth century the Fuggers were the first banking house to understand and exploit information collection: "That the Fuggers made few errors in the placement of their investments was in large measure a result of the excellent private intelligence they gathered." According to Dulles, the Rothschilds perfected the Fuggers' system to the point that "one of the great intelligence services of the nineteenth century in Europe was maintained not by a government but by a private firm." Finally, Dulles comments that the Rothschilds "benefited their clients as well as themselves by their superior intelligence-gathering abilities."

    At the end of the twentieth century, information collection is even more vital to banks than it was in the past. Cutthroat competition is not just local or even regional but global. At the same time, large international banks continue to have governments as clients, and, in the case of the Riadys, one of those governments is an ambitious communist dictatorship with an insatiable appetite for intelligence, especially about American security, American technology, and American foreign policy.

    We believe we can show that the Riadys were in a position to help themselves to American intelligence, as well as satisfy the desires of their Chinese intelligence-service partners for information. Because of campaign contributions to President Clinton and Vice President Gore, as well as financial support to Clinton friend Webb Hubbell at a crucial moment, they were able to place one of their representatives, John Huang, in a position to collect vital American political and economic information. This information was immensely valuable to themselves and to others, including the security services of Communist China.

On the day Bill Clinton and Al Gore were inaugurated, we could say this about the Riadys of Indonesia:

* They were knowing, participating agents of the CCP and its intelligence services.

* They had talent-spotted Bill Clinton fifteen years earlier, when he was an obscure politician from Arkansas.

* They were instrumental in gaining the Democratic presidential nomination for Clinton in 1992.

* Through illegal campaign contributions, they became the number one contributors to the Clinton-Gore ticket in the 1992 national election, and they targeted their funds at key states that were ultimately vital to Clinton and Gore's election.

* Presumably, they were not bailing out Clinton and Gore simply out of the goodness of their hearts; they expected to be paid off.