NEWSWEEK has learned that law-enforcement and intelligence agencies have traced the movement of hundreds of thousands of dollars from mainland China into California banks–money they suspect came directly from the communist government. At least some of that cash, they believe, eventually found its way into the hands of California politicians. The Feds suspect Sioeng, an ardent supporter of Beijing with close ties to Chinese government officials, may have been a conduit for the money. The probe isn’t complete, and the funds Sioeng may have received from Chinese sources may have no connection to his political donations. But since earlier this year, when vague intelligence of a covert Chinese effort to influence U.S. campaigns emerged, the Feds have been searching for hard proof to back up their suspicions. The Sioeng money transfer is the first “verifiable, direct link to the People’s Republic of China,” one investigator told NEWSWEEK.
It is also the best indication yet that the money scandals may not be limited to Washington–or to Democrats. The Feds have yet to prove that the funds came from the PRC government, but investigators are trying to piece together how Beijing might have used political money to buy influence.
Intelligence officials say the circuitous route the cash took from the Chinese mainland to Sioeng’s California bank account was the first clue something might be amiss. In late 1994 or early 1995, funds from China were wired to an Asian-owned bank in Los Angeles where the Chinese Consulate has its accounts. Shortly thereafter, the Feds think, some money was transferred to another tiny Asian bank in California, the Grand National, where it was deposited into the account of the Hollywood Metropolitan Hotel. Sioeng’s family, it turns out, owns the hotel–and is part owner of the Grand National. In late April 1995 he wrote two checks totaling $50,000 on the hotel’s account, then donated the money to the campaign of Matt Fong, California’s GOP state treasurer. There is no evidence of wrongdoing on Fong’s part. “As far as we know, these are legal contributions,” Richard Turner, a Fong spokesman, told NEWSWEEK. “If we hear differently, we’ll take the appropriate steps.”
So the Feds are now looking West. Fiftyish and graying, with long bushy sideburns, Sioeng uses his L.A. charity work to push pro-Beijing politics. Last October he held an outdoor festival in honor of China’s National Day. Sioeng’s China courtship helped him win lucrative deals on the mainland: he is the exclusive U.S. distributor of popular Red Pagoda Mountain cigarettes. Last year he bought control of the International Daily News, a pro-Taiwan newspaper in Los Angeles. Now the paper is breathlessly pro-Beijing. THE SUCCESS DENG MADE IN CHINA SHOULD BE THE MODEL FOR ALL MANKIND, gushed a recent headline. Sources tell NEWSWEEK that the newspaper purchase was encouraged–and maybe bankrolled–by the Chinese government “as part of this propaganda campaign.” Sioeng, who once made frequent public appearances, has dropped out of sight. His daughter and business partner, Jessica Elnitiarta, is now the family’s public face. Neither responded to NEWSWEEK’s requests for comment.
A successful fund raiser for Chinese-American candidates, Sioeng has cultivated both Democrats and Republicans. At one event he met Fong, an ambitious GOP lawyer. Sioeng became a key Fong patron–support that helped Fong win the powerful post of California state treasurer in 1994. Fong–who is now running for the U.S. Senate–traveled to China and other Asian countries last January looking to invest $10 billion of California’s public pension funds.
Fong’s free-market politics also attracted Newt Gingrich’s attention: the speaker even asked the young pol for advice on China policy. Meanwhile, in July 1995–three months after Sioeng’s $50,000 contribution to Fong–the treasurer arranged for him to get face time with the speaker. The men chatted in Gingrich’s office for 10 minutes and posed for pictures. Fong’s spokesman said the encounter was a “meet and greet” and that no lobbying took place.
In speeches, Sioeng often recounts how he was adopted by an ethnic-Chinese family in Indonesia. He has hua kui, he says, a duty to repay the Chinese for that act of kindness. A touching story, but the Feds want to know just who was paying whom.
