How guanxi came to Little Rock Influence: How is it that a Indonesian-Chinese banking family wound up schmoozing RTC business leaders in the capital of Arkansas? The answer isn't Bill Clinton.

Sun Journal

November 12, 1996|By Mark Matthews | Mark Matthews,SUN NATIONAL STAFF Sun researcher Robert Gee contributed to this article.

WASHINGTON -- Separated by culture, language, an ocean spanning thousands of miles and a huge disparity in size, the Far East and Arkansas have one thing in common when it comes to doing business: the importance of personal connections.

Chinese call it guanxi. For many it is a way of life. Arkansans practice it in the camaraderie of business associates who are golfing partners and political chums.

Now, guanxi has entered the public spotlight, as a network linking Arkansans close to President Clinton and the Indonesia-based, ethnic Chinese Riady family has emerged as a focus of the controversy over foreign contributions to the Democratic Party.

Masters of the game played on both sides of the Pacific, the Riadys have parlayed years of cultivating Arkansas relationships into powerful White House access. Together with a small group of well-connected Arkansans, they have set their sights on rapid economic growth in the Pacific rim -- particularly in China.

But several congressional committees have begun examining a tantalizing question: What, if anything, did the Riady family get in return for their efforts to curry favor with Arkansans who move in the Clinton orbit.

More precisely, congressional investigators are trying to determine if relationships between the Lippo Group -- the international financial conglomerate controlled by the Riadys -- and the Arkansans crossed the line from friendly access to influence buying.

"I can tell you categorically that there was no influence," Clinton said at his news conference last week, when asked whether policies were shaped by Democratic contributions from donors with ties to Indonesia's government and banking interests.

When the Riadys first ventured into Arkansas in the late 1970s, they couldn't have known that Bill Clinton would become president. But Arkansas was home to three firms with clear potential for expansion into the eastern Pacific.

Over the years Lippo has done business with each one: Stephens Inc., the biggest U.S. investment bank outside Wall Street; Wal-Mart, the largest U.S. retailer; and Tyson Foods, the nation's largest chicken processor.

Mochtar Riady, Lippo's patriarch, began putting down business roots in Little Rock in 1977 when his son, James, trained at Stephens Inc. Several years later, Lippo and Stephens joined in acquiring large chunks of stock in Arkansas' Worthen Bank, and tapped James Riady to help run it.

In that role, the younger Riady soon became a familiar figure in Little Rock business and social circles. Along the way, he became acquainted with the Clintons.

In addition, Lippo joined with Wal-Mart to open stores in Indonesia. Lippo also explored with Tyson Foods how the firm could expand into China.

The Riadys' Arkansas network has widened over the years to include lawyers and businessmen with their own ties to Clinton:

C. Joseph Giroir, former managing partner of the Rose Law Firm, where Hillary Rodham Clinton worked, is linked with Lippo and the Riadys on a number of fronts. He was a stockholder in the Worthen Bank during the time that Lippo and Stephens held a major stake in the company. He is now a partner with the Riadys in a firm called the Arkansas Regional Development Corp., according to the Arkansas Gazette.

Mark Grobmyer, a Clinton golfing partner and friend of Vice President Al Gore's family, has been working for years to expand trade ties between Washington and Asia. He accompanied James Riady on at least one of his meetings with Clinton. In all, Grobmyer himself made over 100 visits to the White House from June 1995 through last month.

In a statement last week, he said that as "liaison to the White House" for the Center for the Study of the Presidency, "it is necessary for me to visit the White House on several occasions to meet with people to gather ideas concerning programs and to attempt to schedule speakers to participate in center programs."

Mark Middleton, a lawyer and former aide to White House counselor Thomas F. "Mack" McLarty, has tried to build up an Asian trade consulting business since leaving the White House in February 1995. He carried a get-well note last year from the president to Hashim Ning, a former top executive with the Lippo Group.

Ning's daughter and son-in-law, who had been living in Virginia, subsequently made contributions totaling $425,000 to the Democratic Party, funds that Republicans allege were laundered foreign contributions.

More recently, Middleton is alleged to have solicited $15 million for Clinton's re-election effort from Taiwan's ruling Kuomintang Party, a charge he denies. However, he did arrange for a Kuomintang leader to meet with Clinton at a San Francisco fund-raiser.

Webster L. Hubbell, former law partner of Hillary Clinton, was hired by the Riadys after he stepped down as the Justice Department's No. 3 three official to face charges of having bilked some of his Rose Law Firm's clients. He later was convicted and sentenced to 21 months in federal prison.

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