They arrived in Little Rock in 1977, young men on the make in their respective worlds. Bill Clinton's was politics. At 30, he'd just won his first election. He was serving as Arkansas attorney general and preparing to run for governor. James Riady's world was money. Only 20, he was the eldest son of a Chinese emigrant who had come to Indonesia and made billions in banking and real estate. An evangelical Christian, Mochtar Riady educated his son in Australia and shipped him off to the Bible Belt to learn the hard-charging ways of American finance.
Bill Clinton and James Riady met soon enough. In shadowy places -- Little Rock, Jakarta, Washington -- politics and money overlap. Clinton had already shown his knack for attracting campaign cash. He'd lost his first race, for Congress, but had raised nearly twice as much money as the incumbent Republican he ran against. Riady came from a family that had long since learned the importance of "'guanxi,'' the Mandarin word for "'connections.'' They were crucial in Indonesia, where ethnic Chinese were viewed with awe and suspicion. Javanese politicians, from Suharto on down, expected to get a piece of the action.
So it wasn't suprising that the two young men became friends. They shared a patron. He was Jackson Stephens, who'd bankrolled Arkansas campaigns and built the largest investment firm west of Wall Street. The Stephens and Riady families had met when both were deciding whether to bail out Bert Lance, the Georgia banker who was President Jimmy Carter's scandal-plagued budget director. Stephens ended up doing deals with Mochtar Riady, head of the Jakarta-based Lippo Group; taking on his son as a trainee was an act of goodwill. As for Clinton, Stephens saw him for what he was: a comer. He threw support to him and legal work to his wife, Hillary Rodham, who had just joined The Rose Law Firm. In the incestuous world of Little Rock, Clinton and Riady saw each other at golf or dinners or political functions.
Years later, this Little Rock history is news. For it turns out that Raidy, his family and friends have steered $1 million to Clinton and his party since 1991, much of it under questionable circumstances that even party officials now concede must be re-examined. More than two dozens members of Congress, mostly Democrats, have also received cash from individuals associated with the Lippo Group. Late last week one of Riady's closest associates, Democratic Party official John Huang, was "'suspended'' after questions were raised about a fundraiser he staged last spring at a Buddhist temple in Los Angeles.
The Riady circle touts its Clinton connections, its guanxi. No evidence has yet surfaced that they received unusual favors in developing U.S.-Indonesian deals. Nor is there evidence that they influenced American diplomatic or military policy toward Indonesia. But Raidy and his friends have managed to get key trade jobs in the administration, and they have been involved in numerous meetings with Clinton officials on matters ranging from Asian trade deals to human rights abuses on East Timor --unusual access even for American high-rollers.
The public has long since become disgusted at the sight of candidates for sale. In this election cycle alone, it's estimated that candidates at all levels will spend a staggering $1.6 TRILLION. Trailing badly and desperate to make his "'character'' attack stick, Bob Dole is seizing on the Jakarta connection forged years ago. Dole accused the president of countenancing "money laundering," and the "foreign corruption" of American politics in a "serious betrayal of public trust." Dole's handlers cranked out reams of faxes about each Riady deal, even though new polls from NEWSWEEK and CNN show Dole falling farther behind in the race by going so "negative". And before Dole protests too loudly, he should take a look at his own campaign reports. In 1988, he got a $1,000 donation from Riady's wife, Aileen. NEWSWEEK has learned that Dole this year was an honored guest at a lavish charity dinner underwritten and hosted by Riady. Over the years Dole, too, has received contributions from "foreign" supporters. Dole's vice-chair for finance, Simon Fireman, recently agreed to pay $6 million in fines for laundering funds through a Hong Kong bank and his own corporate employees.
Still, the story of the Riadys world is troubling -- and revealing. It shows a Clinton White House all-too-tolerant of the kind ofmoney grubbing they vowed four years ago to stop. The Riady saga offers a new, decidedly Perotian twist to the issue of campaign cash. At a time when global trade is growing and borders are porous, how do we protect our electoral process -- the most open in the world -- from "foreign" influence? With "soft money" flowing so freely, how do we prevent wealthy foreigners and corporations from elbowing aside our own fat cats? For all our self-criticism, Americans are amateurs at the "guanxi" game as it's played in Asia, where cabinet members take money to do drop-bys at weddings. "Your politicians come cheap," a Malaysian executive in Jakarta told NEWSWEEK. "'What's a ten thousand dollar contribution to an Asian businessman?,'' he laughed. "'That's peanuts for some face time.''
It's not so much the money the Riadys crowd has given, but they way they've given it. Nearly a third of the $1 million was donated by an obscure Indonesian couple, Arief and Soraya Wiriandinata, relatives of a wealthy former Lippo executive. The couple, resident aliens with "'green cards,'' had lived for a time in the Virginia suburbs of Washington. They gave $425,000 to the party, even though the husband listed his occupation as gardener and landscape designer. But $320,000 of the total was given AFTER the couple returned to Indonesia. Some experts think that such off-shore donations, even by aliens with green cards, violate campaign laws. And where did all that money really came from in the first place?
The Riady financial favors don't stop with the president himself. Earlier this year the Riadys hired Webster Hubbell, one of Clinton's best friends. They paid him a $150,000 retainer after he quit the Justice Department, and while he was waiting to begin serving a jail term for bilking his former law partners. The Raidys described Hubbell's work as business development. Testy Republicans are now wondering if it was "'hush money,'' even though Independent Counsel Kenneth Starr investigated the arrangement months ago and so far has taken no action.
But Republicans are right to say that there is a faint, sweet smell of laundered money in a Democratic fundraiser last April at the Hsi Lai Buddhist Temple in Hacienda Heights, Calif. In the largest Buddhist temple outside Asia, Vice President Al Gore collected $140,000. But there were problems. First, the Democratic Party didn't pay to use the temple, in effect receiving an unreported, in-kind contribution and jeapardizing the institution's tax exemption. (The DNC last week sent the temple a $15,000 check to cover the costs.)
And when the Wall Street Journal and Los Angeles Times went through the donor list, they found many Buddhist nuns and monks who had taken vows of poverty -- and who seemed unlikely to have been able to fork over the $5,000 donations they were listed as handing over. One nun told the Journal that another nun had given her a wad of cash, asking her to pocket the money and write a check to the party. John Huang, James Riady's friend, was suspending from fundraising duties for his role in planning the event.
Ironically, the Riadys aren't the best-connected players in Indonesia. The Lippo Group, with at last $6 billion in assets in banking, real estate and insurance, is only the seventh largest holding company in the country. All of them, including Lippo, are owned by Indonesians of Chinese ancestry. But the others, sources in Jakarta and Washington say, are far closer to the ruling Javanese politicians than are the Riadys. Mochtar Riady has prospered instead primarily by being a shrewd businessman, importing Western methods of advertising and management before it was fashionable in Jakarta.
So the Riadys were among the first Indonesian conglomerates to search out business partners in the U.S. -- and were eager to establish the "'guanxi'' they didn't have back in Jakarta. Mochtar Riady and Jackson Stephens met in 1977. Each wanted access to each other's country. Within a few years, they jointly acquired a major stake in the Worthen Bank in Little Rock. James Riady was installed as the banks' co-president. By virtue of that position, he was at the hub of a group of investors who were main contributors to Clinton's six gubernatorial campaigns.
From their base in Little Rock, the Riadys began expanding their contacts and their business in America. They bought a bank in Los Angeles and James was, for a time in the "80s a senior executive there. On a trip to Hong Kong, he met John Huang, a naturalized American who had been born in China. Huang provided Riady with what he needed: a bridge between Asia and the U.S. A graduate of the University of Connecticut, ambitious to rise in American politics, Huang was the perfect partner. Senior members of the Riady family in Jakarta liked him. He was seven years older than James and considered much smarter: just the man to keep the heir apparent out of trouble. Huang was put on the Lippo payroll.
When Clinton ran for and won the presidency, Riady and his friends were there. James Riady and his wife contributed $100,000 in "'soft money'' to the party in 1991, and $75,000 to the inaugural committee. When Clinton won, the Riadys flew 15 of their Indonesian pals to Washington for the inaugural festivities. Riady was one of the few foreigners to have attended the exclusive inaugural party hosted by Arkansans. More important, he was the only foreign businessman given a prime seat at the economic conference hosted by the president-elect in Little Rock during the transition.
After Clinton moved into the White House, all those years of contacts and contributions paid dividends. A Riady acquintance from Little Rock, Maria Haley, became a White House personnel aide overseeing the selection of top trade appointees. In that position, she helped to place Huang right where he wanted to be: at the intersection of trade and fundraising in the late Ron Brown's Commerce Department. The job, which carried a top secret clearance, gave Huang wide access to U.S. trade negotiating strategies. Another Riady executive, Charles De Queljoe, was named to an elite committee advising the U.S. Trade Representative. Later, Haley moved to the U.S. Export-Import Bank, where she opened her door to Riady and his cronies.
There's no concrete evidence that the Riadys themselves got any financial payback. Among their business associates, the biggest winner, it seems, was C. Joseph Giroir, Jr., the former managing partner at Hillary's law firm. In part through his Riady contacts, NEWSWEEK has learned, Giroir got involved in deals with prominent Indonesian businessmen, including Bambang Trihatmodjo, the second son of President Suharto. Last May, Giroir and a partner of Bambang's were able to visit Haley to discuss U.S. financing for one of their Indonesian deals.
Another big winner was Huang, who built a reputation as one of the Democratic Party's most prolific fundraisers. In April 1993, while still with Lippo, he and James Riady met with the president in the Oval Office. The following year, Huang went to work at Commerce. He left late last year to work as a fundraiser at the DNC and, by most estimates, was responsible for generating some $5 million in donations -- much of it in the Asian-American community he'd cultivated for years. The president was suitably impressed. At a fundraiser in L.A. last July, Clinton smilingly praised the "'aggressive efforts'' of "'my longtime friend John Huang.'' Huang was last seen on TV fleeing from Washington reporters as he raced to his car.
In their own way, the Riadys are winners, too, though they're also ducking interviews. After all, they wanted to be known as the banking family that operates American style. Their "'Lippo Village'' development in suburban Jakarta features U.S. style tract houses and shopping malls complete with Toys R Us, J.C. Penny's and, of course, Arkansas-based Wal-Mart. "'James likes to show off in an American way,'' says an ethnic-Chinese academic who knows him in Jakarta. Now the Americanization of the Riadys is complete. Like Checkers and Gennifer Flowers, they've become famous -- of infamous -- in the lore of presidential politics.