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EXCLUSIVE: Commerce pick tied to China cash

- The Washington Times - Wednesday, March 18, 2009

EXCLUSIVE:

Commerce Secretary nominee Gary Locke, whose job would include approving sensitive exports to China, has performed legal work for companies doing business with Beijing and was forced to refund several political donations that he received in the 1990s from key figures in a Chinese influence-buying investigation.

The former Washington state governor is expected to face questions about both issues during his confirmation hearing on Wednesday, Senate aides and an Obama administration official familiar with the vetting told The Washington Times.

Mr. Locke was the first Chinese-American to become governor when Washington state voters elected him in 1996, and he served two terms. Since leaving the governor's mansion in 2005, Mr. Locke has been working with the Seattle law firm of Davis Wright Tremaine LLP as part of its China practice, which has offices in Shanghai.

On its Web page, www.dwt.com, the law firm says it has represented several state-run Chinese companies, including China Eastern Airlines, Shanghai Airlines and China Shipping as well as the Bank of China, BankOne, Boeing Co., Freightliner, Ford Motor Co., General Electric Capital Corp. and Microsoft Corp.

John A. Shaw, who held senior posts at the Defense, State and Commerce departments overseeing export controls and technology transfers from 1992 to 2004, said senators should question nominees about their past fundraising and views on high-technology transfers to nations such as China.

"Commerce has total control over all dual-use technology and if there is a decision to open the commercial floodgates to China, Locke will be able to steamroll any military concerns coming from State and Defense," Mr. Shaw said in an interview.

Meanwhile, President Obama on Tuesday issued a waiver of a 1999 defense export-control law that will allow the transfer of U.S. high-technology goods to China. Mr. Obama stated in a notice to Congress that fine-grain graphite and aircraft composite gear will not "measurably improve [China's] missile and space launch capabilities."

Cabinet troubles

Mr. Locke declined to comment while his nomination is pending. White House spokesman Ben LaBolt said Mr. Locke predominately worked for law clients who were U.S. companies doing business in China and the administration is confident he can avoid any conflicts of interests.

"As governor of the state of Washington and later as an attorney representing U.S. companies, Gary Locke opened markets and created opportunities for American businesses overseas critical experience for any commerce secretary," Mr. LaBolt said.

"We are confident that Governor Locke will be able to continue to advocate on behalf of American businesses and workers while at the same time adhering to the administrations ethics policy," he said.

As for the Clinton-era donations that Mr. Locke received from sources connected to the Chinese influence-peddling investigation, Mr. LaBolt said the nominee had long since refunded the money and was never implicated in any wrongdoing by congressional or Justice Department investigators.

Mr. Locke is Mr. Obama's third choice for commerce secretary. New Mexico Gov. Bill Richardson, a Democrat, withdrew from consideration after it was revealed that a grand jury is investigating illegal contracting in the state, and Sen. Judd Gregg, New Hampshire Republican, withdrew over policy disputes with the administration.

Mr. Locke is not a registered lobbyist at Davis Wright, but the firm has made millions lobbying for several U.S. companies and also is registered as a foreign lobbyist.

Bad company

Edward Timperlake, a former congressional investigator who worked on the 1990s fundraising probe, said the Senate should examine Mr. Locke's ties to fundraisers like John Huang, Ted Sioeng and others who were identified during the 1990s investigation. That probe looked into whether Chinese government cash was illegally routed into Democratic coffers during President Clinton's 1996 re-election campaign.

VIEW: Campaign contribution check from 1996.

REPORT: Details of the POTUS Asian dinner event and political contributions

"The players connected to any examination of Locke and his confirmation are Triad gangsters and Chinese military agents," Mr. Timperlake said in an interview.

The Pentagon's last annual report on China's military warned that China "continues a systematic effort to obtain dual-use and military technologies from abroad through legal and illegal commercial transactions."

It stated that Immigration and Customs Enforcement rated China's aggressive and wide-ranging espionage as "the leading threat to U.S. technology."

Mr. Huang was a Chinese-born employee of Indonesia's Lippo Bank, who went to work for the Commerce Department and also became a major Democratic Party fundraiser, collecting $3.4 million nearly half of which had to be returned to donors because of suspicions that the money came from the Chinese government.

He sponsored several fundraisers for Mr. Locke in 1996, raising more than $30,000.

Mr. Huang pleaded guilty in 1999 in a deal with U.S. prosecutors to illegally giving $2,500 to Los Angeles mayoral candidate Michael Woo in 1993 and $5,000 to a California political group that raised money for Democratic candidates. Mr. Locke's donations were not mentioned in the court case.

Mr. Sioeng, an Indonesian businessman who has ties to the Chinese government, also supplied funds to Mr. Locke through intermediaries, according to a congressional report on the campaign finance investigation. Mr. Sioeng fled the U.S. in the 1990s after the FBI began investigating.

He was never formally charged in the case, but congressional testimony from senior U.S. intelligence and law enforcement officials, including Attorney General Janet Reno and FBI Director Louis J. Freeh, identified him as a Chinese agent. They told a Senate committee that there was credible intelligence that Mr. Sioeng acted on behalf of China to influence U.S. elections with campaign contributions.

A spokesman for Mr. Sioeng denied the allegations at the time.

Records show Mr. Sioeng's bank account got wire transfers of more than $2 million from two Hong Kong holding companies at the same time that he was contributing to Mr. Clinton's re-election campaign.

Under investigation

According to a 1998 House Committee on Oversight and Government Reform report, Mr. Locke received $8,700 in contributions from Sioeng family members, business associates and employees. The committee found no evidence showing that Mr. Locke knowingly accepted illegal donations from Mr. Sioeng's family and associates but outlined "serious questions regarding some of the contributions and their apparent violation of Federal campaign funding laws."

It is illegal for a foreign national to contribute to a U.S. candidate. Mr. Locke told the House committee that he met Mr. Sioeng twice but had no knowledge that donations were funneled from abroad, according to the report.

"Committee investigators identified eight contributions from Sioeng family members and associates totaling $8,700 around July 29, 1996 to Gary Locke's 1996 campaign for governor of Washington State," the House report said. "Committee investigators traced the funding of five of the contributions totaling $5,500 to a foreign bank account in Hong Kong that the Committee has associated with Ted Sioeng."

Four other payments totaling $4,400 appeared to be illegal "straw donor" conduit payments by employees of companies that the Sioeng family either owned or had business ties, according to the House committee report.

A separate 1997 Senate report of the Governmental Affairs Committee said Mr. Sioeng and his family made $2,200 in contributions to Mr. Locke's campaign for governor. The report also contained photos of Mr. Locke, Mr. Clinton and Mr. Huang together at a May 1996 Democratic fundraising event in Washington, D.C., which had the goal of raising $1 million, and together at a separate May 1996 fundraiser also in Washington with Mr. Clinton and Mr. Sioeng.