Scrubbing Witness Muddies Waters in Donation Probe

By DAVID WILLMAN

Aug. 29, 1997 12 AM PT

TIMES STAFF WRITER

WASHINGTON — His boss is James T. Riady, the elusive billionaire who refuses to answer Senate investigators’ questions about his relationship with President Clinton. Another of his longtime superiors was John Huang, the fallen Democratic fund-raiser who also is refusing to talk.

In fact, James E. Per Lee, president and chief executive officer of LippoBank California, has spent more time with Riady and Huang than any federal agent or congressional staffer assigned to the campaign finance investigations.

But to the surprise of some, Per Lee was disinvited from publicly testifying before the Senate investigative committee. He was informed while literally packing for the cross-country flight to Washington last month that his appearance had been canceled.

There is sharp disagreement over why the Senate Governmental Affairs Committee, led by Sen. Fred Thompson (R-Tenn.), scrubbed Per Lee as a witness: Republicans say a separate witness was an adequate substitute. But Democrats say Per Lee was dropped because his testimony would have blunted suspicions that Huang--a former Lippo executive--committed economic espionage or was doing Riady’s bidding while working at the Commerce Department and the Democratic National Committee.

Whatever the case, Per Lee clearly was positioned to shed fresh light on individuals and circumstances that otherwise remain shrouded in mystery. For instance, in a wide-ranging interview with The Times this week, Per Lee said publicly for the first time that:

* Huang urged him in November or December to pass a message to federal banking officials in Washington. Huang’s message ostensibly explains a controversial contact he had made with a top regulator in 1995, when Huang was a Clinton political appointee at the Commerce Department.

* Huang, while employed by the DNC, implored Per Lee to “fill a table” for an exclusive Asian community fund-raiser for Clinton at the Century Plaza Hotel in Los Angeles that also was attended by Riady. The dinner and its attendees are centerpieces of the inquiry into the Democratic donations controversy.

* And as recently as March, Per Lee traveled to Jakarta, Indonesia, to confer over several days with Riady, who owns 99% of the Los Angeles-based LippoBank’s stock and who remains beyond the reach of congressional or Justice Department subpoenas.

Why then was Per Lee not brought before the Klieg lights of the Senate hearings?

“The reason the committee chose not to call James Per Lee as a hearing witness is because the committee deemed his testimony redundant,” said committee spokesman Paul Clark.

Instead of calling Per Lee, the Republican majority decided instead to showcase only one witness affiliated with LippoBank--the frail, elderly chairman of the bank’s board, who retired as CEO in 1994.

“The committee’s decision has to be understood in light of the nature of a congressional hearing,” Clark said, noting that Per Lee was questioned privately by committee lawyers. “It’s not a trial. . . . We’re not trying to prove everything at a level that would stand up in court. We’re trying to elucidate the basic facts.”

Democrats have not been so sanguine about the majority’s motive.

Sen. Robert Torricelli (D-N.J.) has chided his GOP colleagues, implying that committee Republicans feared Per Lee’s testimony would be authoritative--and help refute the notion that Huang or Riady had abetted any form of economic espionage.

Clark this week termed Torricelli’s comments “incorrect.”

For his part, Per Lee said he was “surprised” at the turn of events in Washington. Per Lee granted the interview, spanning nearly three hours at his Los Angeles office, because, he said, he wants to bring about “closure” to the controversy that has beset LippoBank since last fall.

Per Lee discussed some matters only reluctantly, including Huang’s call late last year asking him to convey a message to officials at the Federal Deposit Insurance Corp. The call came at a time when Huang--besieged because of his efforts to raise illegal or questionable campaign donations--was in virtual seclusion. It had just been reported that Huang, while a deputy assistant secretary at the Commerce Department, had in 1995 arranged a meeting with Ken A. Quincy, a high-ranking FDIC official with oversight authority for “problem” banks, including LippoBank.

The FDIC had launched an inquiry of Huang’s contact with Quincy, seeking to discover whether Huang might have been pressing for favorable treatment of Lippo. The probe was not producing immediate answers; Quincy himself said he could not recall even talking to Huang.

Per Lee said Huang had a benign explanation for the contact, and that he wanted Per Lee to relay it to the FDIC.

“I have no way of knowing what actually took place [between Huang and Quincy]; all I know is what he [Huang] told me. . . . He brought that subject up, because there had been a lot of talk about this contact with somebody at the FDIC,” Per Lee said.

“He told me that a group of New York Asian bankers . . . wanted to visit with somebody in the FDIC. Either visit with them in Washington or have someone visit with them in New York. . . . And John told me that he called this person at the FDIC and set this meeting up with this group of Asian bankers from New York, and that he did not even attend the meeting.

” . . . He said that maybe the next time I had contact with the FDIC, I could pass that information on to them. I said, ‘Well, you know the number of the FDIC; you call them and tell them if you want. I’m not going to call them.’ . . . I declined to be the bearer of information to the FDIC.”

Huang’s lawyer in Washington did not return calls seeking his comment. Huang, who remained a director of LippoBank until mid-1994, served as its president and CEO in the mid-1980s. Huang also tended Riady’s other investments in California, based in Los Angeles.

Any contact between Huang and a senior FDIC official would be of particular interest because of LippoBank’s repeated brushes with the agency. In March, regulators hit the bank with a “cease and desist” order--Lippo’s third such sanction in seven years, warning it to stop certain practices. When Huang contacted Quincy in May 1995, the bank was trying to get out from under the second order.

According to records provided by Per Lee, recent changes at LippoBank, including the elimination in April of numerous jobs and the announced closure of a branch office, have enabled it to begin turning a slim profit. The bank has lost more than $16 million since Riady became its controlling owner in 1984.

Some analysts have questioned privately why the FDIC has not taken more severe action against the bank, which continues to be represented by the politically connected Los Angeles firm of Manatt, Phelps & Phillips. Per Lee said the bank has received no favorable treatment.

It was also late last year that Per Lee began his own private inquiry into why Huang had placed scores of phone calls to LippoBank from the Commerce Department. Per Lee said he found nearly all of Huang’s calls went to any of six employees.

“There were approximately 60 calls from John to the bank and approximately 60 calls back, from the bank, to John’s number at the Commerce Department,” Per Lee said, adding that he saw no indication that Huang had engaged in economic espionage or that he was in any way relaying messages abroad.

“I talked to those people [who were in phone contact with Huang],” Per Lee said. “To the best that I could learn, it was pretty innocent.”

However, Per Lee said he was “troubled” to find that a large number of Huang’s phone contacts were with Per Lee’s own secretary, who subsequently has returned to Indonesia to work for Riady in another capacity. Per Lee said Huang, who resigned from the bank’s board of directors in mid-1994 to join the Clinton administration, had continued to use the bank staff to field his phone messages.

“I didn’t know about it [when the calls were occurring], and that’s one of the things that troubled me,” Per Lee said. “If I had known about it, I would have put a stop to it: ‘Go get your own secretary.’ ”

On one occasion, Per Lee said that he himself spoke for 21 minutes with Huang--after Huang was contacted by an important bank customer who was dissatisfied.

Moreover, Per Lee found that for about two months after Huang had been on the job at the Commerce Department, he continued to use a LippoBank-issued long-distance calling card.

“Personally, I wouldn’t have done it--and I was disappointed to see he did,” Per Lee said. Cost to the bank: approximately $60.

Per Lee, 54, has a regulator’s background--having worked as a bank examiner for the U.S. Office of the Comptroller of the Currency before jumping to the private sector and eventually joining Lippo in 1991 as executive vice president and chief credit officer. He was a subordinate of Huang, who he described as a “well prepared” member of LippoBank’s board and loan committee.

Nonetheless, Per Lee said he was surprised to receive a call from Huang in July 1996, just before the Century Plaza fund-raiser.

“He called me and asked if I could fill a table with officers and directors of the bank at that event, which was only a couple of days off,” said Per Lee, adding that he and six other bank representatives attended--without contributing any money. “I got the impression that they were having trouble filling the tables up and that we were helping him not have an empty room when the president arrived.”

At the head table that July 22, 1996, night was Riady, who at that point was still making regular trips to the U.S. from Indonesia. In early March of this year, Per Lee spent several days conferring with Riady in Jakarta. He declined to relay what Riady said regarding the U.S. political-money controversy, other than to say that his boss no longer watches CNN.

“He’s there [in Jakarta], and he’s very busy there,” Per Lee said. “They have a big empire to run. . . . In the final analysis, [the controversy in the U.S.] doesn’t impact what they’re doing there.”

So when will Riady feel at liberty to visit his summer home in Brentwood or any other destination on U.S. soil?

“I have no idea,” Per Lee said.

* DONOR PROBE FOCUS: Senate panel next week will seek to find out what DNC donors got for their money. A22