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Tenacious Tentacles

by J. Orlin Grabbe


Both the Wall Street Journal and William Safire are getting to the nitty-gritty of paid political influence in the Clinton administration. Both have been inquiring into the political fund-raising activities of Mochtar Riady's Lippo Group.

Mochtar Riady is the Indonesian billionaire who was a joint investor with Little Rock billionaire Jackson Stephens in Worthen Bank, which bailed out the 1992 Presidential campaign of Bill Clinton with a three million dollar loan at a crucial juncture.

Safire has been wondering about the propriety of former Lippo employee--and current finance vice chairman of the Democratic National Committee--John Huang's conducting of $25,000-a-plate Presidential dinners at the Hay-Adams Hotel, across the street from the White House. The Wall Street Journal similarly wonders how the millions of dollars poured into the re- election efforts of Bill Clinton by the Lippo Group have influenced U.S. commercial policy in Asia.

The Lippo Group is still represented in Arkansas by Joseph Giroir, a former Rose Law-Firm managing partner, who, on one of Ron Brown's "trade" trips to China, secured a $1 billion deal between Entergy and Lippo to build a power plant in China. Giroir works out of the firm he set up to do deals like this, Arkansas International Development Company.

The same set of characters has been parading in and out of the continuing Little Rock saga for quite a long time.

Recall that it all started when an investor group that included Jackson Stephens took over First American Bank in Washington, D.C. This bank was headquartered near the White House, and had many government employees as account holders--the perfect vehicle for gathering political intelligence. To take advantage of this fact, Jackson Stephens proposed that his software firm Systematics handle all the accounting for the bank. But the investor group refused to go along.

So Stephens, with the help of Bert Lance and others, brought in BCCI (Bank of Credit and Commerce International) to wrest control of the bank from that group, and to put it into the hands of friendlier partners. There were lawsuits, and Stephens' software firm Systematics was represented by Joseph Giroir, Hillary Rodham Clinton, and Vince Foster of the Rose Law Firm.

Hillary Clinton is now the First Lady of the U.S. Vince Foster is now dead, and the mysterious circumstances of his death are being investigated by the Special Prosecutor Kenneth Starr. Joe Giroir now does paid favors for the Lippo Group.

The software firm Systematics was to become the nation's biggest supplier of back-office banking software, and would eventually work closely with the National Security Agency to facilitate intelligence monitoring of banking transactions. Vince Foster would be assigned by Stephens to an oversight role on this project.

Jackson Stephens, meanwhile, proposed, developed, and financed a plant for hazardous waste facilities, called Waste Technology Inc., beginning in 1979. This project became a bottomless pit for the consumption of funds, and at one point, the financially- strapped Stephens made a Faustian pact with Indonesian Mochtar Riady to set up a money-laundering operation in Arkansas. Stephens and Riady had previously formed Stephens Finance Ltd. in Hong Kong in 1976.

Stephens bought 9.3 percent of Little Rock's Worthen bank from the John H. Hendrix Corp. of Midland, Texas, while Lippo purchased 9.4 percent. Lippo paid about $16 million for its share, and installed James Riady as a bank director in 1984. Stephens-Lippo continued to increase their share of Worthen stock, up to 36.7 percent.

This propitious union came about just as the Mena, Arkansas, drug-and-arms trade was creating a vast local demand for money-laundering services. At the Asian end, with Mochtar Riady, Stephens purchased Seng Heng Bank in Macao, the "Oriental Las Vegas", where gambling is the primary source of government revenue. Stephens' Systematics supplied software to the Banco Nacional Ultramarino, the cashier and treasury bank of the Macao government and the bank that issues the local currency. (Macao is located less than 40 miles from Hong Kong, the center for heroin trade.)

The cozy relationships continued. Hillary Clinton became the intellectual property lawyer for Systematics, and obtained access to important materials from Systematics clients, such as the operating system for a new national security computer at E-Systems of Dallas, Texas, which the CIA determined ended up in the hands of the Israelis after a month's time.

Systematics also came to be represented by Beryl Anthony, a partner at the Washington law office of Winston and Strawn, former chairman of the Democratic Congressional Campaign Committee, and husband of Vince Foster's sister Sheila Foster Anthony. It was Sheila Anthony who, while assistant attorney general for legislative affairs at the Justice Department, effected a $286,000 transfer to Vince Foster from a Democratic National Committee account held at Mellon Bank, just four days before Vince Foster met his death. Upon Foster's death, Hillary Clinton hopped on the phone and directed the removal of files from Foster's office.

Worthen Banking Corp. was sold to Boatmen's Bancshares Inc. of St. Louis in 1995 for $535 million. Members of the Stephens family owned 22 percent of Worthen at the time of the sale, and acquired shares in Boatmen's. In addition, the investment bank Stephens Inc. retained the right to handle the trades (and to collect commissions) for Worthen Investments, which was folded into Boatman's Investment Services, Boatman's securities subsidiary. (All other securities trades at Boatman's Investment Services are handled by Pershing Inc. of New Jersey.)

Currently, Boatman's Bancshares Inc. is being acquired for around $9 billion by NationsBank Corp. of Charlotte, N.C. This merger will make NationsBank the fourth largest U.S. banking franchise. The investment bank Stephens Inc. was brought in to give a "fairness opinion" on behalf of NationsBank Corp. shareholders, even though the Stephens family, through their Boatmen's stock holdings, stand to make more than $200 million on the acquisition. Also standing to gain on stock holdings is Curt Bradbury, the chief operating officer at Stephens Inc., and also the former chief executive of Worthen Bank. Stephens Inc. represented NationsBank in the merger negotiations, while Goldman Sachs represented Boatmen's.

NationsBank has its own discount brokerage service, NationsBank Discount Brokerage Inc., which clears its trades through Stephens Inc. Stephens Inc. is trying to acquire all of NationsBank's brokerage business after the merger of Boatmen's and NationsBank is complete. If so, that would make Stephens Inc. the largest clearing firm for banks in the U.S. It clears the brokerage trades for around 200 banks--banks like Wells Fargo and First Interstate Bancorp, which recently merged in California.

Meanwhile, over in Indonesia, the Riady family has stirred up consternation among the minority shareholders in the Lippo Group by a planned restructuring that would enable the family to extract cash to invest elsewhere. The new primary ownership vehicle is intended to be a "financial supermarket" named Lippo Securities. Under the plan, the Riady family would increase their ownership of Lippo Securities from 19 percent to 50 percent. Lippo Securities would in turn be the major owner of the insurance company Lippo Life, increasing its ownership share from 4.9 percent to 32 percent. Lippo Life would then buy a 40 percent stake in Lippo Bank. The Riady family would sell their interest in the latter institution. The deputy chairman of Lippo Group is James Riady, a former director of Worthen Bank.

After the Fifth Column began looking into the financial affairs of Jackson Stephens, Stephens hired an international assassin, Pablo Vitale Rodriquez, to kill the Angel of Death. When Pablo failed to do the job, Stephens then teamed up with Don Tyson and Richard Mellon Scaife to purchase a $100,000 contract on the Angel of Death from the New Orleans mafia. The New Orleans mafia gave the contract to two ex-CIA wet boys. Unfortunately, these two men showed up one morning, wrapped in barbed wire and very dead, on Jackson Stephens' lawn. Stephens had the bodies removed, but one of them was subsequently recovered, having been stuffed down a capped oil well in Louisiana. The corpse is rumored to be abiding its time, waiting to show up in Stephens' refrigerator, or served up to him as a roasted dinner entree.

A couple of details need to be cleared up.

". . . Lippo was also generous with Webster Hubbell, paying him for unspecified legal work on his trip from the Justice Department to federal prison. The amount was never revealed in Mr. Hubbell's depositions, but was reported by Mr. Safire as $250,000" ("Who is Mochtar Riady--II", Wall Street Journal, Oct. 9, 1996). Well, the amount wasn't $250,000. As I reported back in March, the correct figure is $500,000. And "unspecified legal work" is a short-hand way of saying "a bribe to keep his mouth shut".

Safire himself, meanwhile, has joined the chorus of indictment nay-sayers, referring to "the Independent Counsel, a part-time prosecutor who won't bring indictments until after the election" ("Absence of Outrage," The New York Times, October 10, 1996). Sorry, Mr. Safire. You'll now have to go stand in the corner with all the other morons of the media.

October 10, 1996
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