White House officials said they knew nothing about the slender Chinese man sipping coffee with President Clinton last February, except that he arrived at the executive mansion with a prominent Democratic fundraiser from Little Rock long friendly with the president.
For his part, Clinton later would relate that he recalled “literally nothing” about the foreign visitor with close-cropped hair who mingled among the dignitaries and political donors invited to the White House reception.
If they had checked with colleagues a few blocks down Pennsylvania Avenue at the Justice Department, the president and his aides might have found plenty of people who knew a lot about their mysterious guest, Wang Jun.
Wang, China’s premier arms dealer, heads a company that had been the subject of a massive federal sting operation into its alleged scheme to sell 2,000 AK-47 assault rifles in the U.S. ultimately destined for gang members in California.
Defense Intelligence Agency officers just across the Potomac River at the Pentagon might have told them that U.S. national security experts had been trying to monitor Wang’s secretive global activities for more than a decade, following the trail of Chinese arms deals with hostile regimes from Iran to Syria to Burma.
Wang is chairman of the Poly Group, the Beijing-based chief weapons trading arm of the Chinese People’s Liberation Army. Regarded as one of the world’s more powerful private citizens, Wang also is a director of the China International Trust & Investment Corp., China’s primary overseas trading company.
He is well-known in international arms circles and reportedly enjoys close personal and political ties to several chiefs of state. At the Clinton White House, though, he is portrayed as a mystery man, someone no one knew. But now he has emerged as a central figure in a campaign finance scandal infused with international intrigue rapidly unfolding around the president and his aides.
Nearly a year after Wang was welcomed at the White House in what Clinton since has described as a “clearly inappropriate” visit, federal investigators are burrowing deep into Poly Group’s American activities, trying to unravel its tangled operations in the U.S. and ties overseas.
By understanding the Poly Group’s interests in this country and abroad, they hope they might be able to determine what Wang stood to gain from his White House visit and what, if anything, it reaped.
Wang may have taken a purely social interest in the Feb. 6, 1996, reception at which Clinton spoke. But Wang’s trading conglomerates are indivisible from China’s government and give him a keen and adversarial interest in U.S. trade and military policy.
Poly’s Atlanta-based U.S. subsidiary, PTK International Inc., was launched a decade ago by Wang and a group of associates that included some of China’s most politically connected figures, including relatives of China’s senior leader Deng Xiaoping. Records obtained by federal investigators indicate the company may have been intended to serve as a conduit through which the Chinese military could covertly acquire advanced U.S. weapons technology and products.
Known as “Baoli” in Chinese–a name that literally means “to keep the profit”–Wang’s Poly Group has developed a vibrant international business selling state-produced missiles, pistols and bullets to armies and mercenaries around the globe, then churning profits back to the Chinese defense industry.
Wang and the executives he oversaw at Poly’s Atlanta subsidiary meshed easily into this commercial hub of the New South, where they sold an estimated $200 million of assault rifles to U.S. citizens.
In May, 3 1/2 months after the White House coffee klatch, federal agents seized 2,000 illegally imported AK-47 automatic rifles, valued at $4 million, from a ring that allegedly included Robert Ma, president of PTK International Co. Ma, a close associate of Wang, has since fled the U.S.
Since the May sting and subsequent indictments, federal agents have gathered thousands of internal company papers in Atlanta, as well as bank records and invoices.
The documents have only multiplied their questions about Poly’s American activities, which have been investigated for more than a decade by U.S. defense intelligence and law enforcement agencies alike.
Company records obtained by federal agents indicate that starting in the late 1980s, top Poly executives in China and Atlanta discussed plans to disguise shipments of militarily sensitive U.S. technology to China, though it is unclear whether any improper shipments were ever made.
Company records also show the Chinese executives transferred funds between offshore accounts and shell corporations in an apparent attempt to conceal their assets and activities.
Accusations of intimidation
The company has also, at times, used ruthless intimidation in its business dealings, according to accusations in court records and interviews.
For instance, one gun-selling partnership between Poly and a Chinese-American import license-holder broke up amid allegations of death threats.
The former partner–an Atlanta firearms dealer who helped Poly launch its U.S. subsidiary during the 1980s–dropped a key portion of a shareholder’s lawsuit against Poly because his attorneys thought pursuing it might “endanger . . . the lives of witnesses in the People’s Republic of China,” court papers show.
The lawyers told an Atlanta federal judge that “individuals have been threatened with punishment in the event (Poly) learns of their involvement” in the case, court papers show. The lawyers said they could not call witnesses because they feared that the Chinese government “may subject individuals in China to the danger of retribution,” according to U.S. District Court papers.
The former partner and his attorneys declined to comment for this article. Attempts to reach Wang for comment in his company’s offices in New York and Beijing also were unsuccessful. The Atlanta attorney for Wang’s company, J. Allen Maines, did not return repeated phone calls to his office.
In Beijing, potential customers at the company’s $70 million office tower, called Poly Plaza, are given colorful brochures that list the features of Poly’s missile-equipped Fast Attack boat (“great firepower, good concealment”) and howitzer cannons (“powerful projectiles can strike the opponent a lethal blow”).
On nearby vacant land, Poly executives stage tank demonstrations, displaying the equipment destined for the Third World’s killing fields.
“Their mission is to derive revenue from weapons sales to boost China’s military might,” said Gary Milhollin, director of the Wisconsin Project on Nuclear Arms Control, a Washington-based group that tracks global military deals.
Although Poly’s transactions are shrouded in secrecy, American analysts suspect the company participated in several sales that defied U.S. efforts to limit international arms transfers, including the sales of M-11 ballistic missile technology to Pakistan and M-9 nuclear-capable missile technology to Syria.
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During the 1980s, Poly armed both sides in the Iraq-Iran war. Its other important clients have included Thailand and Burma, which some analysts suspect used narcotics profits to finance an estimated $1 billion in purchases of Chinese arms.
Poly’s state-run factories are located deep within China’s interior provinces, to shield them from attack, and the goods are transported by military trains to warehouses guarded by the army’s General Logistics Department personnel.
U.S. venture takes shape
Because the technical standards of most of those plants remain at least two decades behind those of the U.S., demand for Poly’s goods has slowed in recent years. Reported sales began to drop from a peak of more than $500 million in 1987 to an estimated $100 million in 1992.
In response, the company diversified into real estate investment and commercial trade, and sought a stake in the American wholesale firearms market.
Poly’s gun-selling venture in America was launched a decade ago, in a Japanese restaurant in Beijing, at a table ringed by the scions of China’s military establishment–the sons and daughters of the hardened revolutionaries who had founded China’s Communist Party, then spawned its privileged elite.
As at home in Paris as Beijing, Poly officials had acquired tastes for sports cars, golf outings and expensive cognac, and reputations in China for putting personal profit on par with patriotism.
On this occasion, Poly’s president, Army Maj. Gen. He Ping, the son-in-law of Deng Xiaoping, sat with his wife. Beside them, Poly director Wang Xiao Choa, the son-in-law of former Chinese President Yang Shangkun, sat with his wife, Poly Vice President Yang Li.
The toast was led by Poly chairman Wang, the son of the late Chinese Vice President Wang Zhen, a hard-line Red Army veteran who before his death in 1993 worked to crush the country’s pro-democracy movement.
Wang, who was divorced and alone that evening, said the new subsidiary they were launching, called PTK International Co., would establish “a beachhead” in America, one dinner participant recalled.
The fledgling company’s first shipment in June 1987, was $1.1 million worth of small arms ammunition. By 1989, Poly had sent PTK $19.9 million worth of guns for U.S. sale, company records show.
Distributors from Billerica, Mass., to Lebanon, Ohio, in turn paid more than $50 million for those guns, records and interviews show.
In 1989 alone, a financial statement prepared by PTK’s accountants shows, U.S. dealers paid PTK $18.4 million for its guns, and PTK reported profits of $7.5 million. By 1992, Poly executives had amassed total U.S. firearms sales of about $200 million.
Some of Poly’s semi-automatic Chinese assault rifles were freshly produced or modified in state-run factories, but the company’s real profits came from its decades-old, Red Army surplus guns and ammunition.
One American gun wholesaler said Poly executives told him they had millions of SKS semi-automatic rifles stored in their warehouses. In one 1992 transaction, PTK agreed to ship a Vermont gun dealer 100,000 of the SKS rifles, with bayonets and cleaning kits, for $55 apiece, corporate filings show.
But while PTK enriched the Chinese army, it also served hidden purposes.
Atlanta court records suggest the U.S. guns sales lined the pockets of Poly’s executives, who allegedly used company funds to pay personal tax debts and used company credit cards to buy luxury goods.
The Chinese executives allegedly devised a “dual billing” scheme to conceal U.S. profits from China’s Ministry of Foreign Trade and Economic Relations, using the unreported funds to support “extravagant” American lifestyles and invest in Chinese commercial ventures, court papers filed by former shareholders allege.
Also, PTK officials filed state papers creating no less than seven interlocking Georgia companies that shared offices and officers, and sometimes funds, making the transactions difficult to trace.
In one instance, company records show PTK ostensibly bought liability insurance by paying $2.4 million to another Poly-owned firm, Dynasty Holding Co., which in turn transferred the funds to a company headquartered in the Cayman Islands, where business secrecy laws are thick.
Funds from those companies were used or planned for real estate ventures in the Atlanta area and across the country. Federal agents are seeking to determine whether one PTK official used straw purchasers to buy heavily secured California property.
Buying U.S. technology
Perhaps of most concern to investigators are indications PTK may have been launched as part of a Chinese covert operation to acquire advanced U.S. weapons technology.
In 1988, for example, Poly executives wrote memos showing they planned to purchase at least $19 million worth of militarily sensitive U.S.-made radar equipment, then use a state-controlled shipping line to send the products to a harbor about 100 miles from Beijing. It is unclear whether the sales or shipments were consummated.
Also in 1988, an officer in Poly’s purchasing branch in Beijing wrote to a PTK executive instructing him to repackage a shipment of computer equipment in brown paper and unmarked wooden crates, then create secondary shipping documents that would indicate the packages contained a “radio direction finder system”–spelling those words in blocky English script, before resuming the memo in Chinese.
In the summer of 1994, President Clinton announced a ban on the importation of guns and ammunition from China, a sanction he levied in lieu of more severe trade penalties.
At about that time, PTK and one affiliated company surrendered their firearms dealers licenses, but a federal official said Poly executives quickly began seeking to smuggle Chinese-made guns.
Posing as Miami mobsters, federal agents set up a sting that over 16 months targeted executives of Poly and another state-controlled Chinese company, China North Industries Corp., or NORINCO.
At the center of the case was PTK’s president, Robert Ma.
A slight, ingratiating man, Ma lived anonymously among the rows of identical townhouses in Atlanta’s Brookhaven subdivision, where the company bought him a $273,000 home in June 1989. He drove a modest Ford Taurus to the downtown office. There he processed invoices for crateloads of rifles and ammunition.
The son of a provincial Army boss, Ma, now 44, was a Navy intelligence division lieutenant when Poly recruited him in 1984. He was deputy general manager of the company’s export section in 1987 when Poly sent him, his wife and son, now 11, to Atlanta to run PTK.
In a company memo written in 1986, before he left China for the U.S. on his new venture, Ma wrote that PTK “is China’s business, not just Poly’s business . . . We should help each other out based on the principal that the interest of the nation is the highest interest.”
A middleman targeted in the government sting was taped describing Ma as his partner in the smuggling deals, which he said could eventually yield hand-held rocket launchers, anti-aircraft missiles and silenced machine guns.
The crate of 2,000 AK-47s was shipped from China on Feb. 18 and arrived at the port of Oakland on March 18, when it was surreptitiously seized by Customs officials.
The middleman, who traveled from the U.S. to China to arrange that alleged sale, told undercover agents that he met with a Chinese official in charge of exporting weapons, and said that “the Chinese government knew exactly what was going on,” a federal affidavit said.
Because Chinese military authorities strictly control arms exports, letting only selected factories produce weapons and assigning officers to monitor output so nothing goes astray, some U.S. officials have assumed that government leaders were aware of the smuggling plan.
“These are state-owned companies,” U.S. Customs supervisor Rollin Klink told reporters in May. “The (Chinese) government should be aware of who’s buying what and where it’s going.”
That picture of tight Chinese government control is amplified in Poly memos to Atlanta.
“We have to report to the government in many aspects including cost accounting, foreign currency and management efficiency audit,” said a 1990 memo from a Poly vice president to a PTK executive. “Poly is a state-owned company . . . She is bound by the policies and the laws of the state.”
U.S. authorities ended the sting hastily in May when their wiretaps revealed Chinese officials had learned of the operation, court papers show. By then, Ma, the PTK president, had fled the country.
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Investigation leak probed
Officials from three law enforcement agencies are now seeking to determine how reports of the sting were leaked.
It is not clear when Ma learned of the probe, but Fulton County land records show that on March 8, a month and two days after Wang visited the White House, Poly executives sold the suburban townhouse where Ma and other PTK executives had lived.
The closeness in timing between Wang’s White House visit and Ma’s disappearance may be sheer coincidence, as the undercover probe involved dozens of agents and government workers across the country, and investigations of that magnitude rarely can be kept completely secret.
Wang has not commented on the sting, and Chinese authorities insist the smuggling operation was a rogue enterprise run by outsiders with no connection to Poly or the government. A Poly spokesman has even denied Ma had any connection to the company.
But in Atlanta, Ma signed more than 100 corporate records as the president of Poly’s U.S. subsidiary, and described himself as responsible for overseeing the U.S. sales of millions of dollars worth of Chinese firearms, court and corporate records show.
Ma is among seven people that the Justice Department wants China to send to San Francisco for trial.
In the meantime, Clinton administration officials say they are trying to determine whether Wang–apart from the White House coffee klatch–had any other contacts with White House aides or meetings with officials from any federal agency.
Wang was brought to the February reception by Little Rock restaurateur Charlie Trie, a Clinton friend and fundraiser. Trie, a Chinese immigrant with business interests in Beijing, emerged as a central player in the campaign finance controversy when the Clintons’ Whitewater legal defense fund disclosed that it had returned more than $640,000 in questionable donations he delivered last spring.
Democratic National Committee officials asked the White House to clear entry for Trie and Wang, and a background check normally conducted for foreign visitors was not done.
Presidential aides said they were unaware of Wang’s ties to China’s Communist government or his company’s involvement in the gun-smuggling case.