Campaign finance scandal in the 1990s
The campaign finance scandal of the 1990s primarily revolved around the fundraising efforts of President Bill Clinton's 1996 re-election campaign. Faced with the challenge of an energized Republican opposition following the 1994 "Republican Revolution," Clinton sought to raise substantial funds, estimated at around $300 million for the campaign. This led to controversial practices, including the use of White House events to attract large donations, which blurred the lines between political fundraising and official duties. Investigations highlighted instances of illegal contributions, particularly involving foreign entities, with allegations of money laundering tied to contributions from individuals connected to China and other sources.
Notably, Vice President Al Gore faced scrutiny for a fundraiser at the Hsi Lai Buddhist Temple, which involved questionable donations linked to Chinese agents. Despite significant findings, including returning millions in illegal contributions, neither Clinton nor Gore faced legal repercussions, as the investigations could not conclusively prove their awareness of the illegal activities. The scandal had lasting implications, influencing public perceptions of campaign finance and leaving a legacy that echoed in subsequent political events.
Campaign finance scandal in the 1990s
The Event Interlocking series of scandals involving campaign finance in the 1996 Clinton reelection campaign
The scandal served as a dark cloud over the final stages of President Bill Clinton’s reelection campaign and a potential legal hazard.
Bill Clinton was determined to raise as much money as possible for the 1996 presidential campaign, in part because of the 1994 “Republican Revolution,” in which Republicans gained a majority in both houses of Congress. The victory was of such a magnitude as to foreshadow a likely defeat for Clinton in 1996. Clinton decided to launch an ad campaign to refurbish his image and brought on longtime friend and consultant Dick Morris to run it. Morris estimated the price as at least $1 million per week, which inevitably would increase later, and did not include any other campaign expenses; he later estimated the total campaign cost at $300 million and also estimated that one-third of Clinton’s public schedule, at least while in the United States, involved raising funds.
Misuse of the White House
Technically, public property such as the White House is not supposed to be used for purely political purposes. In reality, it can be hard to separate policy from politics, and this is made even more difficult because the White House is also the president’s official residence. As Clinton desperately sought money, the White House also became a cash cow for his campaign. White House coffees were used as fund-raisers, and the Lincoln Bedroom, the White House’s guest room, was used similarly. Morris later identified seventeen individuals and four couples who contributed $100,000 or more and attended coffees, as well as thirty-eight individuals and five couples who contributed $100,000 or more and overnighted in the Lincoln Bedroom (ten individuals and one couple were on both lists). This was the first time the White House had been used that way.
Clinton himself claimed that most of the guests at the coffees and in the Lincoln Bedroom were friends, many of whom happened to be major contributors. He continued to say this even after the discovery of a personal memo (after the Center for Public Interest in 1996 charged him with misusing the White House) he wrote after meeting Democratic National Committee (DNC) fund-raiser Terry McAuliffe linking overnight stays at the White House to money donated (the DNC in fact had projected income from overnight stays).
The Chinese Connection
It is illegal to launder political donations through someone else. In the case of the recipients, the illegality only occurs if they are aware of the laundering. Thus, the most serious scandal involved Vice President Al Gore’s fund-raiser at Hsi Lai Buddhist Temple in Los Angeles (organized by Maria Hsia, later identified as a Chinese agent). Though Gore initially made light of the charges, in the end the DNC returned the tainted money.
There were other Chinese money-laundering operations as well. Johnny Chung received $300,000 from Ji Shengde, the head of Chinese military intelligence, to pass on to Clinton and the DNC. A Macao hotelier suspected of organized crime ties, Np Lap Seng, gave $1.4 million to Charlie Trie, a longtime friend of Clinton. James Riady, scion of the Indonesian Lippo Group (tied to Clinton friend Webb Hubbell), gave Clinton and the DNC $700,000 in 1992. Papers released in 1998 indicated that this and other contributions were for ending the trade embargo with Vietnam. In 1996, Riady worked with John Huang to supply another $1.6 million in laundered contributions. Not all the laundered money came from China: The $690,000 in laundered funds arranged by Pauline Kanchanalak came from many sources, including three Thai businessmen.
The final scandal involved influence peddling rather than money laundering. Inevitably, there was a great deal of this, as is generally true in politics. There are legal consequences only if one can prove that there was an explicit promise of action in exchange for money. In 1998, news came out that in 1996 Loral Space and Communications (whose chief executive officer, Bernard Schwartz, was the top Democratic contributor in 1997) and Hughes Electronics provided secret rocket-guidance technology to China that could be used for space launches as well as ballistic missiles. While a grand jury was considering the matter, Clinton overruled the Justice, Defense, and State Departments, approving such high-technology transfers to a potential enemy. Even many Democrats opposed this, including future House Speaker Nancy Pelosi.
Legal Consequences
The key figures in the money-laundering scandal either stonewalled or fled to foreign countries. Federal Bureau of Investigation chief Louis Freeh compared these actions to the Mafia rule of omertà. Attorney General Janet Reno made the controversial decision not to appoint an independent prosecutor. As a result, there was no serious pursuit of either Clinton or Gore. In regard to the campaign finance scandal, they faced no charges or impeachment, despite the efforts of a small band of Republicans in early 1997.
The others involved fared less well. The DNC in 1996 returned a total of $2.8 million in illegal funds. Many of the illegal contributors were convicted, including Charlie Trie, James Riady, Pauline Kanchanalak, Maria Hsia, Johnny Chung, and John Huang, though some (most notably Huang) basically received slaps on the wrists. The technology transfers led to significant punishments for Hughes and Loral.
Impact
The scandal probably reduced Clinton’s vote in 1996, thereby depriving him of a majority of popular votes, and the follow-up scandal involving Norman Hsu in Hillary Rodham Clinton’s 2008 presidential campaign was undoubtedly made worse by its similarity to the previous scandal. Without evidence that Bill Clinton’s campaign was aware of illegal contributions, there was no legal case against Clinton, Gore, or their top campaign staff.
Bibliography
Clinton, Bill. My Life. New York: Alfred A. Knopf, 2004. Includes the former president’s perspective on the scandal.
Harris, John F. The Survivor: Bill Clinton in the White House. New York: Random House, 2005. Extensive study of the Clinton presidency, including a brief discussion of the campaign finance scandal.
Limbaugh, David. Absolute Power: The Legacy of Corruption in the Clinton-Reno Justice Department. Washington, D.C.: Regnery, 2001. A critical look at the Justice Department under Reno, including three chapters focusing on the campaign finance scandal and providing considerable details on all its aspects.
Lowry, Rich. Legacy: Paying the Price for the Clinton Years. Washington, D.C.: Regnery, 2003. A critical look at the Clinton administration, including the various scandals.
Morris, Dick, and Eileen McGann. Because He Could. New York: ReganBooks, 2004. Biography of Clinton as politician by a longtime aide and friend involved in the 1996 campaign. Includes a brief discussion of each scandal.
Smith, Sally Bedell. For Love of Politics: Bill and Hillary Clinton—The White House Years. New York: Random House, 2007. A study of the Clinton administration, with a special focus on the dynamics between the Clintons.