It’s seems like only yesterday when a mere mention of your name in connection with the Asian money scandal of 1997 was enough to get you run out of this town on a rail. A business connection with a John Huang or a Charlie Trie and you were pretty much toast.
But apparently times have changed. Today you can have a close business connection with a leading figure in the ’97 scandal and be a senior Bush administration appointee and it’s pretty much no problem at all.
Want to know more?
Let me explain.
One of the more colorful episodes in the 1997 campaign finance and foreign contribution scandal centered on a man named Dai Xiaoming. In June of 1996 Dai attended a $50,000 a plate dinner in honor of then-President Bill Clinton at the San Francisco home of California Senator Diane Feinstein. According to Feinstein’s husband Richard Blum, Dai was invited as a favor to DNC fundraiser John Huang, who was also there. “The DNC says John Huang had a guy who had written them a check for $50,000 that they wanted to bring to an exclusive event (sic), and could they bring him,” Blum told the Wall Street Journal almost a year later.
Only Dai wasn’t really a contributor. Or so said the DNC. 
He couldn’t be. He wasn’t even an American citizen. Dai was a Chinese national who had emigrated to Hong Kong in 1991. In 1996 he was the CEO of Dan Form Holdings Company, Ltd., a real estate investment and development firm with substantial holdings in Hong Kong and a series a property holdings and major construction projects in the People’s Republic of China.
Throughout the 1997 investigations, Dai remained an enigmatic figure, with no one quite sure why he was at the Feinstein fundraiser, why Huang had brought him along, and what if any role he played in the larger, apparent efforts to launder money into the 1996 presidential campaign. “Chinese Guest at Clinton Dinner Proves to Be Vexing” ran the headline of one Asian Wall Street Journal article (April 9th, 1997) probing into Dai’s story.
(The same article ran the next day in the US Wall Street Journal under the headline ‘Sen. Feinstein’s Husband, DNC Disagree Whether Chinese Guest Was Big Donor’)
At the time there were seven members of the board of directors of Dai’s company and one of them was James A. Kelly.
Who’s James A. Kelly?
Kelly is the Bush administration’s 
Assistant Secretary of State for East Asia and the Pacific Affairs, the administration’s chief diplomat for East Asia. He’s also the fellow who’s been pushing hardest for Douglas H. Paal controversial appointment as America’s chief envoy to Taiwan, which rumor has it is set to be announced early next week. (On Friday, Salon.com and the Washington Post raised questions about Kelly’s involvement in the evolving Taiwan slush fund scandal.)
(In the interests of full disclosure, let me mention that James A. Kelly is also the one who recently called TPM a practitioner of ‘hack journalism’ for writing this article on Doug Paal in the New Republic.)
According to Mr. Kelly’s public disclosure form, Kelly served on the board of Dan Form Holdings Company, Ltd. as a “compensated non-executive Director” from December 1995 until January 2001, just three months before President Bush nominated him to his current post. This apparently didn’t come up at his confirmation hearing.
In other words, if congressional investigators or members of the press had wanted to find out what the score was with Dai Xiaoming, they could have just rung up Jim Kelly and he probably could have filled them in since he was a board member of Dai’s company.
And there’s more.
There’s nothing wrong of course with a former and future American diplomat sitting on a board of Hong Kong real estate and investment firm, even one with substantial holdings in the People’s Republic of China. But Dan Form Holdings Company wasn’t just any Hong Kong-based concern. And Dai Xiaoming isn’t just any CEO.
Dai’s career began in Beijing almost twenty years ago. In the mid-1980s Dai worked as a mid-level bureaucrat in the municipal government of Beijing’s Western District. His boss was Chen Yuan, one of the most prominent of the so-called ‘princelings’, the privileged progeny of China’s revolutionary elite. Chen’s father, Chen Yun, was one of the so-called ‘eight immortals’ who ruled China in the post-Mao era. The elder Chen was an orthodox Marxist and long served as a conservative counterweight to the reformist Deng Xiaoping.
In 1994 The Economist described Chen in this way: “The most powerful of the princelings is probably Chen Yuan, the vice-governor of the central bank and the son of Chen Yun, the country’s second-most eminent revolutionary.”
Dai Xaioming and Chen Yuan began their first business venture, Huayuan Development Company, in the municipal government. In 1988, Chen left the Beijing city government to become the deputy governor of China’s central bank, The People’s Bank of China. Not long after that, Dai left Beijing for Hong Kong where he started a whirlwind rise to become one of the port city’s high-flying entrepreneurs. Not long after he arrived in Hong Kong Dai purchased Dan Form Holdings and set up a joint venture with aforementioned Huayuan Development Company to develop prime real estate in Beijing.
Then in late 1994 Dai secured a $100 million loan from the Bank of China to purchase Asia Securities International from the Lippo Group. At the time Dai had no apparent assets to justify such a massive loan and in Hong Kong it was widely assumed that Dai had high-ranking political connections in the PRC government who had secured the financing. Dai was apparently Chen’s proxy.
A year later, in December of 1995, Kelly joined the board of Dai’s company.
Since 1994 Dan Form Holdings and its various subsidiaries have been involved in building shopping malls, real estate developments and highways in and around Beijing and other major Chinese cities, in addition to acquiring overseas shipping vessels from one of the Chinese export ministries.
Today Chen Yuan is the Governor of the China Development Bank.
