Just What Clinton Hoped to Avoid Donation Scandal Stirs Sour Memories ELECTIONS 2008

By Patrick Healy

Of all the possible vulnerabilities facing her presidential campaign, Senator Hillary Rodham Clinton has long believed that one of the biggest was money, according to friends and advisers: Some sort of fund-raising scandal that would echo the Clinton-era controversies of the 1990s and make her appear greedy or ethically challenged.

As a result, Clinton told aides earlier this year to carefully vet major donors and help her avoid situations in which she might appear to be trading access for big money, advisers said. Also to be avoided, she said, were fund-raising tactics that might conjure up the Clinton White House coffees and the ties to relatively unknown donors offering large sums, like the Asian businessmen who sent checks to the Democratic National Committee.

Yet nine months into her campaign, Clinton is grappling with exactly the situation she feared – giving up $850,000 that had been donated or raised by Norman Hsu, a former fugitive and one of her top fund-raisers, whose actions raise serious questions about how well the campaign vetted its donors.

The Hsu case has revived ugly memories for voters about the Democratic fund-raising scandals when Bill Clinton was president, her campaign advisers acknowledge – a time when both Clintons were often photographed with people whose money later turned out to be dirty, including Johnny Chung and Charlie Trie. Clinton is running on her White House experience in the 1990s, and any attention cast on past fund-raising controversies could threaten her image with voters.

Even some of her own major donors are aghast that – given the Clintons’ past problems with fund-raising – her vetting process did not uncover Hsu’s criminal history. Even though Hsu had previously donated to other politicians and charities without his past surfacing, those donors say, the Clinton operation had been widely considered one of the best-run in recent campaigns – until now.

“People have often said about the Clintons, they don’t care who they hang out with as long as the people can be helpful to them,” said one of Hillary Clinton’s major fund-raisers. “The larger point in all of this is that the Clintons are the ultimate pragmatists in who they hang out with – if you can be useful to them, they will find a way to make it work.”

Advisers say that Clinton is not so much furious about the scandal, as she is worried about containing the political damage.

To that end, Clinton campaign aides Tuesday refused to release the names of the 260 donors whom Hsu had recruited, preferring to wait until they finished their own research on the individuals.

Clinton and her advisers are concerned that rival campaigns – or the news media – will dig into the background of each donor, and they want to be prepared if some of the donors end up having money funneled to them from Hsu or have shady backgrounds like his.

The campaign is refunding $850,000 to those donors, viewing the money as tainted. Yet the campaign is also risking another public relations mess by saying that it would take back money if it clearly comes from the donor’s bank account and not from Hsu or another source. The risk is that Clinton will appear to want more cash, even if it was once colored by a disgraced donor.

“We will accept their contributions and ask them to confirm for our records that they are from their own personal funds,” said Howard Wolfson, a Clinton campaign spokesman.

As for defense, Clinton advisers note that her top Democratic rivals, Senator Barack Obama and John Edwards, have their own fund- raising problems that will prevent them from attacking her over Hsu.

Obama has taken only a measured approach when dealing with donations raised by Antoin Rezko, a Chicago developer who is facing federal corruption charges. While Obama has given to charity contributions from people connected to the criminal case involving Rezko, he has kept thousands of dollars more that Rezko raised from others.

Edwards, a former North Carolina senator, is saddled with Geoffrey Fieger, a lawyer who was indicted in August on charges of illegally funneling more than $125,000 to the 2004 presidential campaign of Edwards.

“The Clinton campaign has done as much if not more than any campaign to protect itself from situations such as this, and none of the other campaigns – other than hypocritically – can point a finger at the Clinton campaign on fund-raising problems,” said Hassan Nemazee, who is a fund-raising bundler for Clinton, as Hsu had been.

The New York Times

Originally published by The New York Times Media Group.

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