The urgent new offensive was China’s attempt to settle a decades-old political score with Taiwan. Beijing was jealous of Taiwan’s successful U.S. lobbying. National Security Agency intercepts of conversations between Chinese officials in Beijing and Washington plainly show China’s obsession with Taiwan’s superior skills. ““They were whining about the strength of the Taiwan lobby,’’ says one official. Beijing denies any wrongdoing, but law-enforcement sources tell NEWSWEEK they have strong evidence the Chinese pursued a three-prong strategy to win influence: exploit a network of pro-Beijing intermediaries in the United States to illegally funnel money to politicians, mount an aggressive propaganda campaign and offer the relatives of targeted politicians ““economic advantages’’ - lucrative business deals on the mainland. The Feds say Beijing didn’t expect immediate results. Instead, the Chinese took ““the long view,’’ says one source, identifying promising local and state politicians - ““comers’’ they believed would one day rise to national prominence.
It’s not yet clear just how successful the Chinese were in carrying out the plan. But investigators working under FBI Director Louis Freeh believe the story of one politician - California Treasurer Matt Fong - is a case study in what the Chinese were up to. A young star in the Republican Party, Fong has aggressively promoted trade with China and regularly advises House Speaker Newt Gingrich on Asia policy. He recently announced his candidacy for the U.S. Senate. Just as the Taiwanese once tried to entice a young governor named Bill Clinton with trips to Taipei, the Chinese, the Feds believe, wanted to support Fong, a politician they believed was on his way up. Investigators are particularly interested in three contributions totaling $100,000 that Fong’s campaign received in 1995 - money that investigators believe was part of the Chinese influence scheme. There is no evidence Fong knew about the questionable source of the contributions. In fact, investigators believe, the Chinese went to great lengths to conceal it from him.
Face time: How that worked sheds light on the second part of the suspected Chinese plan: the use of foreign nationals as conduits for money and propaganda. In Fong’s case, investigators believe, that conduit was an elusive Indonesian entrepreneur in Los Angeles named Ted Sioeng. The FBI suspects the Chinese may have used Sioeng as a ““cutout’’ - a front man to make illegal contributions appear legitimate: the Feds traced the Fong money from Chinese sources into Sioeng-controlled businesses. Sioeng didn’t answer repeated requests for comment. Sioeng has close business ties with the mainland. He recently took over the International Daily News, a Chinese-language newspaper, and turned the once Taiwan-friendly publication strongly pro-Beijing.
Sioeng’s generosity wasn’t limited to Californians - or to the GOP. Last year his family also gave $250,000 to the Democrats. In return, Sioeng got face time with President Clinton at a Washington fund-raiser - and Clinton later wrote Sioeng a letter praising his newspaper. When Fong learned about the possible Chinese source of the Sioeng contributions from a report in NEWSWEEK, he issued Sioeng an ultimatum: prove the money was legit, or Fong would return it. Sioeng never responded, and Fong gave it back.
The most elusive component of the China plan was the attempt to curry favor with the families of politicians - it is still unknown if Beijing succeeded in carrying it out. But investigators say they believe another break is not far off. The Chinese are denying all of this. Last week, President Jiang Zemin said his government ““has never been involved in or supported any contributions.’’ He said it with a straight face, but that may be harder to do if the Feds keep closing in.
