FBI Said to Suspect Donor as Agent for China

WASHINGTON — U.S. officials are investigating whether an executive of a Chinese-language newspaper in Southern California who sat next to President Clinton at a Democratic fund-raiser in Century City in July is an agent of the Chinese government, according to sources familiar with an ongoing federal inquiry.

Ted Sioeng, an Indonesian entrepreneur whose family owns the International Daily News in Monterey Park and other businesses, has come under suspicion apparently because of evidence gathered from secret Chinese communications intercepted by U.S. intelligence last year, according to sources.

The communications from Beijing to the Chinese Embassy in Washington allegedly outline a covert scheme to expand China’s influence in the U.S. political process. The intercepts are part of a high-priority FBI investigation into illegal foreign money and influence in U.S. campaigns.

Justice Department officials, citing the classified nature of the information about the case, refused to comment. FBI officials also refused to comment on their pending investigation.

Sioeng is the first person known to have emerged in the investigation as a suspected Chinese agent. He could not be reached for comment. Acquaintances said he is in Asia and has not been in the United States for some time.

Sioeng, who was orphaned in Indonesia and raised there by ethnic Chinese parents, is well-known in the Chinese emigre community in Los Angeles.

His family acquired the International Daily News in 1995 or early 1996 and changed its independent editorial stance to one that is pro-Beijing. It is now operated by his daughter.

In addition to the newspaper, Sioeng has other business interests, including two hotels, and he imports Chinese cigarettes into the United States.

The FBI is now conducting an intensive investigation into Sioeng’s bank transactions to try to determine the origin of his funds, sources said.

Sioeng’s family took an active role in the Democratic national campaign last year, in part through an association with John Huang, the former Los Angeles banker and Democratic fund-raiser who has been at the center of the growing scandal over improper foreign contributions in the U.S. political process.

Sioeng’s daughter, Jessica Elnitiarta, who has real estate businesses in Los Angeles, gave the Democrats a total of $250,000 personally and through a family company, Panda Estates Investment Inc., in 1996. Huang handled the contributions, and in one internal Democratic document Elnitiarta referred to him as “Uncle Huang,” a term of endearment.

Huang has resigned from the Democratic National Committee, and investigators are looking into his contacts with his former employer, the Indonesia-based Lippo conglomerate, which has extensive interests in China.

Sources said investigators are trying to determine whether people acting as agents of China’s interests funneled, at Beijing’s behest, illegal foreign money into the campaign to win influence with top political figures who might help advance Beijing’s policy interests.

Officials declined to discuss the specific contents of the intercepted Chinese communications. However, they said the investigation is attempting to determine whether Sioeng played a role in the operation.

Elnitiarta did not return numerous calls seeking comment.

The Democrats have announced plans to return $3 million in donations received from suspected illegal or inappropriate sources. Amy Weiss Tobe, a party spokeswoman, said the party has not challenged Elnitiarta’s donations because she is a legal U.S. resident, but would reconsider if “new information comes to light.”

While the family’s contributions were made by Elnitiarta, Sioeng personally went to major fund-raising events last year that were arranged by Huang and attended by the president and Vice President Al Gore.

Sioeng sat next to Clinton at a fund-raising dinner at the Century Plaza Hotel in Century City on July 22, 1996--the day before his daughter gave an installment of $100,000 to the Democrats. Sioeng also went to a controversial fund-raiser in April 1996 at the Hsi Lai Buddhist temple in Hacienda Heights attended by Gore.

In addition to attending the fund-raising events, Sioeng asked for and received a letter last year from Clinton congratulating his newspaper on its anniversary.

Sioeng travels frequently between China, the United States and other countries. He has had no public comment on the investigation since Newsweek magazine first reported last month that his finances were being examined.

U.S. sources familiar with the intercepted Chinese communications said Beijing outlined its plans for increasing its American influence in a series of detailed messages to the Chinese Embassy.

The communications show Beijing urging embassy officials to begin cultivating relationships with state and local officials in the United States as well as federal leaders in Washington. In a memo recently sent to FBI field offices seeking agents to join the investigation, the FBI said the bureau needs agents to investigate foreign intelligence activities intended to influence state and local officials as well as those at the federal level.

Such a grass-roots campaign in part would be an effort to counter the tactics of Taiwan, a Beijing rival for influence in the United States.

According to sources, the series of intercepted communications shows the Chinese influence-buying scheme initially was modest in size but gradually expanded to about $2 million. One official said that the Chinese messages named members of Congress to be targeted for influence buying and said they described the need to provide economic support for China’s friends.

Subsequently, the FBI warned at least six members of Congress last year to be alert for possible suspicious donations.

But while the intercepts detail proposed efforts to gain influence in Congress and at the state and local levels, they apparently include no discussion of efforts to target the White House, sources said.

Despite the evidence from the intercepted communications, the FBI so far has been unable to link the Chinese influence-buying scheme directly to specific individuals in the senior ranks of the Chinese government, U.S. sources said. While the plan presumably was sanctioned by top Chinese officials in Beijing, the FBI has no “smoking gun” linking it to Chinese President Jiang Zemin or Premier Li Peng, said one official. “But there is also no evidence that they didn’t” order the plan, the source added. “These kinds of things don’t just happen on their own.”

The Chinese government has denied that it mounted any such plan and blamed the controversy on mischief fomented by China’s enemies in the United States.

The FBI is now expanding its investigation into the campaign finance scandal and has reportedly assigned 38 agents and about two dozen intelligence analysts and computer specialists to the inquiry. Also, Atty. Gen. Janet Reno said Thursday that she has increased the number of attorneys on a special Justice Department task force.

The alleged Chinese influence-buying scheme is the most sensitive and highly classified aspect of the larger campaign finance controversy, which has found other large improper donations obtained from foreign sources.

The suspected Chinese influence-buying operation apparently was just part of a larger initiative involving more traditional lobbying and public relations efforts for increasing support for the country in the United States.

Sioeng’s political activities began before the 1996 campaign.

In addition to his family’s support for the Democratic Party, Sioeng personally contributed heavily to Matt Fong, California’s Republican state treasurer. In the wake of the Newsweek article in April raising questions about Sioeng, Fong returned $100,000 in contributions dating back to 1995 from the businessman and Panda Estates. Fong, who is hoping to run for the Senate next year, returned the money in late April after Sioeng failed to respond to a request to verify within 24 hours that the contributions were not from foreign sources. In addition to Sioeng’s contributions to Fong, Elnitiarta also gave $2,000 to the California Republican Party in 1993.

In mid-1995, Fong accompanied Sioeng to a meeting with House Speaker Newt Gingrich (R-Ga.), which Gingrich’s office has since described as nothing more than a “photo op.” But Fong also asked Gingrich to write a letter endorsing a $200,000 badminton tournament, a charity event supported by Sioeng’s family. Both Fong and Gingrich wrote letters of support, according to Fong.

On the Democratic side, Elnitiarta’s contributions to the national committee came in three separate installments, with $100,000 provided by her personally in February 1996, another $100,000 from Panda Estates in July and a final $50,000 provided by Panda Estates in August.

Times staff writer K. Connie Kang in Los Angeles contributed to this story.