Riady or not?

Forget Whitewater. Clinton's Indonesian money scandal may be the real thing. L.J. Davis, who has followed Clinton's ties to billionaire Mochtar Riady since 1992, raises questions about Riady's relationship to Indonesian dictator Suharto.

If you compare the scandals of the Clinton administration to the opéras bouffes of the Harding, Nixon, and even the Reagan years, they seem like small potatoes indeed. Harding's Teapot Dome scandal was a classic example of a common Republican delusion: Because the U.S. government is illegitimate, anything it owns is by nature the property of any Cabinet member with the audacity to take it. In Watergate, Nixon and his cronies extended this idea: They believed they owned the government itself and anyone who tried to take it from them should be handled with extreme ruthlessness. During Reagan's tenure, more than 100 administration officials were accused of illegal or unethical acts. The Iran-Contra and HUD scandals alone brought more than two dozen convictions.

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And now we have the amiable Bill Clinton, who differs in degree but is remarkably similar in kind. We can set aside, for the moment, Whitewater, Travelgate, and Craig Livingstone -- all of them matters that the Gipper, on his worst day, would have turned away with a twinkle and a quip.

The Indonesian affair, however, is a different story. First, billionaire Mochtar Riady conducted his businesses in Arkansas (where he first met Clinton nearly 20 years ago) and elsewhere in a manner of dubious legality. Second, Riady's Lippo Group, his son James, and his associate John Huang gave and/or raised large quantities of money for Clinton and the Democrats. And third, it is possible that Riady is closely tied to the ruthless Indonesian dictator Suharto, who seems to be getting a lot of what he wants from the Clinton administration.

These are, as they say, deep waters.

Mochtar Riady's connection to Arkansas began in 1977. Arkansas-based Stephens Inc., one of the country's largest investment banks outside New York, was trying to help Bert Lance, Jimmy Carter's friend and former budget director, sell stock he held in the National Bank of Georgia.

Riady was eager to establish a banking presence in the United States, and he expressed an interest in Lance's stock. Although the stock deal never materialized, Witt and Jackson Stephens, the brothers who ran Stephens Inc., persuaded Riady to join them in their bank holding company, Worthen. Riady sent his son, James, to Worthen to learn the banking business. And the Riadys made the acquaintance of the young Arkansas governor, Bill Clinton. Still with us? Good.

In 1983, the Riadys formed another Little Rock company, Lippo Finance and Investment, with the help of $2 million in financing guaranteed by the Small Business Administration. As a nonresident alien, Riady was not allowed to chair a company capitalized by the SBA, so he hired President Carter's former SBA administrator, Vernon Weaver, to chair Lippo Finance for him.

Then, in 1985, Worthen was investigated by the Office of the Comptroller of the Currency for extending several million dollars' worth of illegal, preferential loans to companies owned by the Riadys and the Stephenses. According to the Arkansas Democrat-Gazette, Worthen also extended at least $14 million in loans to companies owned by Liem Sioe Liong, another Indonesian billionaire who had been instrumental in Riady's rise.

Over the next few years, the Riadys focused their American banking interests on the West Coast. James Riady moved to Los Angeles to run a new branch of the family's Lippo Bank; his father soon sent a trusted executive, John Huang, from Hong Kong to keep an eye on the lad. Nonetheless, the bank lost a lot of money, made a number of bad loans, and violated laws designed to prevent money laundering.

Helping With the Campaigns

When Clinton ran for the presidency in 1992, his Indonesian friends did not forget him. James Riady, in particular, exerted himself mightily in rallying California's Asian community to support Clinton. Once Clinton was elected, James Riady became a repeat guest at the White House. Meanwhile, Huang, the Riady's trusted executive, went to work for the Commerce Department and later joined the Democratic National Committee, where he excelled at raising large, sometimes dubious contributions. Riady family members and executives of the Lippo Group have given more than $475,000 to the Democrats since 1991. Huang also faces questions concerning a $250,000 donation he solicited from a South Korean company and $140,000 from a fundraiser at a Buddhist temple in California. Huang's wife, Jane, was No. 262 on the Mother Jones 400 list of the nation's top political contributors (March/April 1996), having given $66,375 from 1993 to mid-1995.

The Suharto Connectioni

New York Times columnist William Safire has raised the possibility that Mochtar Riady and his associates may have connections to Chinese intelligence. A more likely -- though no less troubling -- possibility is that Riady could be tied to Indonesian dictator Suharto. Liem Sioe Liong, the Indonesian billionaire who received loans from Worthen, is a longtime Riady patron (the Los Angeles Times describes them as sharing a "close friendship"). Liem is also Suharto's business partner. According to Forbes, Suharto has granted Liem (also known as Seodono Salim) monopolies on cloves, flour, and cement in Indonesia.

Further, Suharto, his family, and his army are deeply wound into the business life of their country. It is hard to imagine that any Indonesian -- especially one of Chinese descent -- could prosper as conspicuously as Riady without Suharto's blessing.

A Riady-Suharto connection might also explain why Riady tried to buy Bert Lance's stock back in 1977. The stock was not worth a heck of a lot, especially not to a man like Riady, who already owned a large bank. But Lance was a man with close ties to President Carter, and was facing financial ruin unless he found someone to take the stock off his hands.

At the time, the Washington Post quoted an American banker with experience in Indonesia who believed Riady was working for Suharto, who wanted to curry favor with Carter. "They think of this country like a 'regime' similar to their own," he said, "and they just don't realize that such a ploy wouldn't work." (A cynic might say: not then.)

The General's Wish List

What would Suharto want from the Clinton administration? There are three obvious answers:

First, Suharto is keen on new business opportunities. The Clinton administration has been sharply interested in expanding American exports to Indonesia. Clinton has dispatched trade delegations to Indonesia and personally attended the 1994 Asia-Pacific Economic Cooperation summit in Jakarta.

Second, Suharto would like the Clinton administration to maintain its current indifference to the situation in East Timor, a province Suharto seized in 1975. Since then, Suharto has killed about 200,000 East Timorese; a third of the 1975 population. In 1992, Clinton himself called the situation "unconscionable." But since then, he's been quiet on the subject.

Third, the general wants to buy nine F-16 fighters from the United States. Though Suharto might well use these planes to further the genocide in East Timor, the Clinton administration appears inclined to sell them to him.

Of course, it is possible that Mochtar Riady has nothing to do with Suharto, deplores the human rights situation in Indonesia, and has found a soul mate in Bill Clinton. If the Republican attack machine ever recovers from its embarrassing obsession with Whitewater, we may actually find out. It would be interesting to see the GOP rottweilers chew on something meaty for a change.

L.J. Davis is a Mother Jones contributing writer.