CONASON: Barbour Shaves Truth In Funny-Money Deal

You have to admire good ol' Haley Barbour, the tough-talking former chairman of the Republican National Committee. From what we now know about him, it's obvious that his knuckles weren't the only part of his anatomy made of brass.In case you've missed the news about his recent embarrassment--scantily covered in the newspapers of record--Mr. Barbour is caught up in a foreign-money scandal. That's right: Haley Barbour, whose Mississippi drawl deplored the Democrats' Asian money connection, has been caught with his hand in the till of a Hong Kong corporation. And the amazing thing is that he bawled so loudly about the alleged crimes of the Democrats, knowing all the while that as R.N.C. chairman, he himself had raised a couple of dollars under circumstances that might be considered equally dubious. Actually, at last count, it was a couple of million dollars.The story of Mr. Barbour's Asian scam begins in 1993. That year, as R.N.C. chairman, he set up a think tank called the National Policy Forum and applied for a tax exemption under Section 501(c)(4), the section of the I.R.S. code that covers nonprofit "social welfare" organizations. Although any outfit covered by 501(c)(4) is supposed to be nonpartisan, Mr. Barbour explicitly created the National Policy Forum as "an issue-development subsidiary" of the R.N.C., to "complement the work of Republican leaders in the Congress as they work to develop legislative strategy." He also transferred about $2.5 million from the Republican war chest in order to get the Forum going. This was at least a potential violation of the law, but as Mr. Barbour no doubt knew, the I.R.S. takes a long, long time to assess whether tax-exempt groups are behaving correctly, and in the meantime, Mr. Barbour's outfit simply assumed that it didn't owe any taxes.From the Republican point of view, the beautiful part of setting up a tax-exempt think tank was that it could collect millions from corporate donors without reporting a dime. In fact, the Forum could raise money from just about anywhere, including "foreign" sources--as pointed out in a June 2, 1993, memo to Mr. Barbour about Forum fund-raising goals from Scott Reed, the R.N.C. executive director who later mismanaged Bob Dole's Presidential campaign.Among the nonpartisan activities conducted by the Forum was an issue poll of 600,000 Americans, probably the largest survey research project in history, whose results were tested in town meetings and then used to write the "Contract With America." Surely you remember the Contract, famed weapon of the Republican Congressional offensive in 1994? As the 1994 election drew near, the Republicans needed more than the Contract; they needed an emergency infusion of cash. Mr. Barbour turned to a Hong Kong businessman named Ambrous Tong Young, who obligingly guaranteed a $2.2 million loan to the Forum--which then turned the money over to the R.N.C. as repayment of the loans which had gotten the Forum started.Who is Mr. Young? As Time magazine has reported, he is a "low-profile tycoon" with interests primarily in real estate and aviation services, including aircraft sales to Asian governments. A year after receiving the loan guarantee, Mr. Barbour repaid Mr. Young's largesse by inviting him along on a visit to Beijing, where they met with China's Foreign Minister. He also published a pro-China essay by Mr. Young in the National Policy Forum's magazine.The loan guaranteed by Mr. Young was never fully repaid, and Mr. Young was forced to cough up $500,000 to make good on it. Meanwhile, his Florida subsidiary, Young Brothers Development USA, had given another $122,000 to the R.N.C. directly in "soft money." The problem with Mr. Young's generosity is that his American subsidiary is an empty shell, with almost no income or assets in this country (except for a company official named Richard Richards, who also served for a time as R.N.C. chairman). That made the "soft money" donation illegal (and after it was exposed in Time, the R.N.C. sent it back).Let's see now: millions funneled from a Hong Kong company into the R.N.C., a visit to top officials in Beijing, pro-China propaganda in an American political party, aircraft sales _ why, this is beginning to look like the Chinese influence-buying racket that Mr. Barbour accused the Democrats of running. As he put it on May 13, "they did something indirectly that if they had done directly, would have been illegal. That's the real scandal. That's the real corruption."Mr. Barbour scoffed when the Democrats said they didn't know where their tainted money had come from, but he is offering the same excuse. Last March, he claimed on national television that none of the Forum's funding "came from overseas." Now he insists he didn't know that the money put up by Mr. Young came from Hong Kong. The extent of Mr. Barbour's brazenness may be revealed in due course, when the records of his tax-free G.O.P. front group are opened under Congressional subpoena. Until then, of course, he is owed the same presumption of innocence that he granted to his adversaries.


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