As the most expensive presidential race draws to a close, a mysterious $425,000 donation to Democrats from an Indonesian landscaper and his wife is spurring calls for a congressional investigation and highlighting what one expert calls an “overall breakdown” of campaign finance laws.
Campaign finance experts say the case highlights broader issues that touch both parties. The controversy is but one example of how both Democrats and Republicans have helped big-ticket donors and advocacy groups skirt a federal $1,000-per-person limit imposed on contributions to the candidates.
“The big story is not this contribution, which may prove to be legal,” said University of Maryland government professor Paul Herrnson. “It is the general overall breakdown of the campaign finance system, which is probably more loophole than law now.”
At issue is a $425,000 contribution from an Indonesian couple, both legal immigrants who lived apparently modest and apolitical lives in suburban Virginia.
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Republicans contend the couple may have been a conduit for Indonesians who sought access to the White House.
Campaigning in Albuquerque Tuesday, President Clinton defended his party’s acceptance of the controversial funds.
“I believe that political parties should not give back contributions that were legally made and legally received. And if they made a mistake and took any money that shouldn’t be taken, they ought to give that back,” Clinton said.
He added: “I expect to have the opportunity to discuss that tomorrow night,” during the final presidential debate.
Indeed, he will. Republican presidential candidate Bob Dole has served notice he plans to use the debate to pursue vigorously the issue of the Indonesian contribution and a separate controversial donation to the Democrats from a U.S. subsidiary of a South Korean firm which the party was forced to return.
Dole’s running mate, Jack Kemp, campaigning in San Diego Tuesday, suggested that the Indonesian couple’s $425,000 contribution and other donations from individuals connected with the Indonesian banking conglomerate Lippo Group were illegal, and showed that influence could be bought in Clinton’s administration.
“Give back the money Mr. President and take down the `for sale’ sign over the U.S. Departments of State and Commerce,” Kemp said in a statement given to reporters.
Election finance experts said a more pressing question about the ever-expanding role of money in modern politics lay behind the campaign squabble.
“I think this particular contribution really highlights a broader problem: We have created an almost insatiable demand for gifts (from) large donors, because they are the fuel for the multimillion-dollar campaigns both parties have under way,” said Colby College government professor Anthony Corrado.
As in previous years, campaign financing was hotly debated in Congress this year. But a broad reform bill introduced by Arizona Republican Sen. John McCain was defeated by a Republican-led filibuster in June.
Nor did anything come of a public handshake agreement between Clinton and House Speaker Newt Gingrich in June 1995 to form a panel to study the issue.
“The present system favors incumbents, therefore incumbents are going to be reluctant to change a system that keeps them in office,” said McCain, who sponsored the campaign finance reform bill with Sen. Russ Feingold (D-Wis.).
After the primaries, the two major presidential candidates each received roughly $62 million in federal election funds, on the condition that they would spend no more than that by Nov. 5.
To get around the cap, both parties have relied more heavily than ever on so-called “soft money”– donations raised by the parties, which are not bound by the strict rules that apply to presidential candidates.
First permitted in 1979, soft money was created so that parties could spend freely to canvas and register voters.
“The original idea was to give a grass-roots quality to the campaign–to use money at the local level for activities that involve people,” said University of Southern California government professor Herb Alexander.
But today, the parties and independent advocacy groups spend tens of millions of dollars of soft money, much of it raised from wealthy contributors and corporations, to buy television time for so-called “issues” advertisements. The ads are legal if they attempt to influence voters’ views on issues, but do not support a particular candidacy.
By Election Day, Corrado estimates, the parties will have spent $120 million apiece on these separate campaigns, more than double the combined $107 million they spent in 1992.
In addition to the money spent by the political parties, private interest groups increasingly wage their own issues campaigns. Pro-Democratic unions have spent more than $20 million on television ads that Republicans call thinly disguised commercials for Clinton. Democrats complain that Dole has benefited from similar campaigns bankrolled by private business groups and the Christian Right.
The giant agriculture conglomerate Archer Daniels Midland Co., which Monday agreed to pay a record $100 million federal fine for price-fixing, has given generously to politicians of both parties and especially to Dole, who championed tax breaks that would have benefited the company.
The Indonesian contributions at the heart of this week’s political tempest were soft money gifts to the Democratic Party. But it’s not yet clear exactly where the money came from.
The donors, Arief and Soraya Wiriadinata, lived in a modest townhouse in suburban Virginia. He was a landscaper, she was a homemaker. The Wiriadinatas recently left the U.S., returning to Indonesia, but continued to write checks to the Democrats.
Dole campaign manager Scott Reed on Tuesday questioned whether the money had been illegally funneled from other Indonesian sources who bought influence in the administration.
Reed suggested that the donations were given so Clinton would ignore human rights violations in East Timor, a former Portuguese colony incorporated into Indonesia in 1976.
Campaign finance laws are designed to prevent foreigners from exerting such influence in America’s political system. But the laws are complex. Foreigners like the Wiriadinatas, who are legal U.S. residents, and U.S. subsidiaries of foreign companies are allowed to make campaign donations if the money was earned in the United States.
The problem has bedeviled both parties. During the 1992 presidential campaign, Japanese-born California businessman Michael Kojima donated $500,000 to the Republicans, and used his GOP connections to win unusual assistance from U.S. diplomats for an Asian consortium. Kojima is a U.S. citizen, and authorities did not determine whether his case involved foreign contributions, but questions about his donations and past embarrassed Republicans.
Lawyers from both parties said they screen contributions and turn back dozens of questionable and potentially unsavory checks, but they are simply unable to do extensive digging into donors’ backgrounds.
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“Are you going to ask everybody who has a funny-sounding foreign name to show you their green card or passport? No political organization does that, and if one did, it would raise separate legal questions,” said elections lawyer Jan Baran, who represents the Republican Party in court and is himself an immigrant.
No one is really sure how much foreign money is in the American political system; neither the Federal Election Commission or campaign finance watchdog groups have tallied it.
In the 1987-88 campaign cycle, The Political and Finance Lobby Reporter, a newsletter then known as PACs and Lobbies, counted 22 political action committees formed by U.S. subsidiaries of foreign corporations that had made at least $25,000 apiece in campaign contributions.
But contributions from multinational corporations that have U.S. and overseas subsidiaries are especially difficult to trace.
Nothing presented on the record so far indicates that Democratic Party officials sought to break the law when they accepted the Wiriadinatas’ checks.
But the donations are linked to a web of contributions from a powerful Indonesian banking family. Wiriadinata’s father was a business partner of Mochtar Riady, whose family controls the Lippo Group, a financial and real estate conglomerate based in Indonesia and Hong Kong.
Members of the Riady family in the United States and people and businesses related to the Lippo conglomerate have contributed at least $200,000 to Clinton and the Democratic Party since 1992, according to news reports.
Lippo Group USA hired Clinton’s friend Webster Hubbell, a former top Justice Department official, shortly after he left the department in disgrace and a few months before he pleaded guilty to defrauding his former law clients in Arkansas.
The Riadys also were investors in Arkansas’ Worthen Bank, which made a loan to Clinton’s 1992 presidential campaign.
One of the family’s top business associates went on to high-ranking posts within the Clinton administration and the Democratic Party. John Huang, now a vice chairman for fundraising at the Democratic National Committee, is a former president of Lippo Group USA who later held a senior position at the Commerce Department. He has raised an estimated $4 million to $5 million for the Democrats from Asian-Americans this year alone.
Those contributions reportedly included $250,000 from Cheong Am America Inc., the recently established U.S. subsidiary of a South Korean electronics company. The Democratic National Committee returned the money last month after the Los Angeles Times questioned whether the money really came from the South Korean parent.