Clinton knew China’s Panama play in 1996

By Charles Smith

Newly released federal documents show that the Clinton administration
was aware in 1996 that China was attempting to gain control of the
Panama Canal.

The U.S. Commerce Department recently released a July 1996


unclassified cable
from the U.S. Embassy in Panama. The cable accuses Beijing of funneling money into Hutchison Whampoa, the company controlled by controversial Hong Kong billionaire Li Ka-Shing.

Hutchison Whampoa currently operates the two ports on the Panama Canal — the Pacific port of Balboa and the Atlantic port of Cristobal.

“Embassy Panama has received information to the effect that HIT (Hutchison International Terminals) is controlled by mainland Chinese, perhaps through a Macao front which allegedly recently invested $400 million in HIT,” states the cable. “Such control would have security implications and might affect the Panamanian government’s views on awarding the port concessions.”

Rep. Bob Barr, R-Ga., a ranking member of the House Judiciary and House Government Reform Committees.

Reacting to the information, Rep. Bob Barr, R-Ga., a ranking member on both the House Judiciary and House Government Reform Committees, sharply criticized President Clinton for ignoring the warnings about Chinese control of the canal.

“This message proves serious concerns about Chinese control of the canal raised by the U.S. Embassy in Panama in 1996 were and remain completely ignored by an administration that wants us to believe all is well in Panama,” stated Barr in an interview from his office inside Capitol Hill.

“This latest piece of evidence is part of a systematic pattern of deception about the dangers posed to American and Panamanian national security by our unilateral withdrawal from Panama,” concluded Barr.

The newly released documents were forced from the U.S. Commerce Department through the Freedom of Information Act. Some of the documents found by the Commerce Department have not been released and one document is being forwarded to an unnamed agency.

The Commerce Department documents also show that law enforcement agencies were very concerned about Li Ka-Shing’s connections to international smuggling. A 1995 cable from the American Embassy in Nassau noted that Li Ka-Shing had signed an agreement to build an $88 million container-ship terminal in the Grand Bahamas. The document shows that the embassy in Nassau copied the cable to several law enforcement agencies including the Customs Service and the Drug Enforcement Agency.

“Reftel describes U.S. agencies’ security concerns about possible smuggling attempts through the terminal,” states the cable from the American Embassy. “Post will request via septel assistance in addressing these concerns while port development plans are still on the drawing board.”

The documents the Commerce Department provided show that the Clinton administration was aware in 1996 of the $400 million investment into Li Ka-Shing’s company by the Chinese government.

The Commerce documents describe China Resources Enterprises as “the investment arm of China’s Foreign Trade ministry.” During the 1997 Senate Governmental Affairs Committee hearings, however, Sen. Fred Thompson, R-Tenn., described China Resources Enterprises as “an agent of espionage — economic, military and political — for China.”

China Resources Enterprises has previously appeared in congressional hearings involving illegal campaign donations to the Clinton / Gore 1996 re-election and foreign billionaires. According to Sen. Thompson, China Resources Enterprises is linked to billionaire Moctar Riady and the Lippo Group.

“Lippo group, run by the Riady family which employed (John) Huang, had over the past few years become a major business partner with China Resources, a trading company wholly owned by the government of the People’s Republic of China, and which has reportedly served as an intelligence-collection front for China,” noted Sen. Thompson during his summary on the China campaign finance scandal.

Despite questions about illegal links to Beijing front companies and international smuggling, the newly released documents show that U.S. Commerce Secretary William Daley, the newly appointed campaign chairman for Vice President Al Gore’s presidential bid, met with Li Ka-Shing at a 1997 luncheon hosted by the powerful investment firm Goldman Sachs.

The Commerce documents note that an informal “talk” between Daley, Li and several “influential business people” was held on the Goldman Sachs’ boat Monkey’s Uncle during a 1997 Hong Kong trade trip. Included in the meeting was Beijing-owned business CITIC, a firm directly linked to arms smuggling.

The Commerce document states, “Goldman Sachs’ boat (Monkey’s Uncle) will depart from the Causeway Bay Typhoon Shelter at 11:30 a.m. The boat will sail near the new airport site at Chek Lap Kok. Lunch will be served onboard.”

Even before the Monkey’s Uncle meeting, cables from the U.S. Embassy in Hong Kong asserted that Li is linked to President Jiang Zemin of China through a real estate deal. A 1996 cable also noted that Li had moved against democratic business groups in Hong Kong.

Hong Kong Tycoon Li Ka-Shing. Did he buy control of the Panama Canal for himself or for China?

“Li is reputed to have a close business relationship with key figures in Beijing,” states the August 1999 cable from the American Embassy in Hong Kong. “And he has a number of real estate and infrastructure projects in the mainland. These close relationships were said to be key to his obtaining the prime site on Beijing’s Wangfujing for his USD2 billion Oriental Plaza Project. Some have suggested that it was because of Li’s mainland connections that the man behind the 1996 kidnapping of his son Victor was arrested last year in China and swiftly executed. Li is a leading member of Hong Kong’s ethnic Chinese business elite, a tycoon who is no democrat. This fact is reflected in his recent claim that he canceled a HKD10 billion (USD1.3 billion) project because of the unfavorable business climate created by Hong Kong’s politicized (more democratic) business climate.”

The Commerce documents also reveal Li Ka-Shing’s business dealings with the Chinese military. One document titled “principal subsidiary and associated companies,” states that Li owns 25 percent of “Guangzhou Aircraft Maintenance Engineering Company,” a firm run by the Chinese air force.

The documents show that Li owns one-third of Asia Satellite Telecommunications Holdings, or AsiaSat, a company owned in part by the Chinese army. In 1989, Peter Kwok, the business partner of Robert Blum, the husband of Senator Diane Feinstein, D-Calif., helped CITIC and Li Ka-Shing raise $120 million to buy a Hughes-built communications satellite for AsiaSat.

The documents also state that Li Ka-Shing is directly in business with the Chinese government through the China Ocean Shipping Company, or COSCO. In 1996, a COSCO ship was caught in an attempt to smuggle over 2,000 fully automatic machine guns into the United States. COSCO is better known for its unsuccessful attempt to purchase the former Long Beach Naval station in California.

In January 1997, President Clinton authorized four container ships for export directly to China. The four container ships were to be constructed for COSCO and Li Ka-Shing’s Hutchison Whampoa by the Alabama Shipyards of Mobile, Ala.

The four ships were to be built using $138 million in private loans backed by the U.S. government. The loans had very favorable terms, including low interest rates and a 25-year repayment plan — longer than the expected life of the ships. The COSCO container-ship deal fell apart in November 1997, however, amid questions about COSCO links to organized crime and the Chinese navy.

Li Ka-Shing’s ties to China have also attracted U.S. military attention. U.S. Defense Department documents discovered by Larry Klayman of Judicial Watch, a Washington-based public interest group, focused on Li Ka-Shing and his company Hutchison Whampoa. According to an October 1999 “Intelligence Assessment” prepared by the U.S. military Southern Command, the Hong Kong billionaire is a potential threat to America.

Official logo of Hutchison Whampoa

“Hutchison’s containerized shipping facilities in the Panama Canal, as well as the Bahamas, could provide a conduit for illegal shipments of technology or prohibited items from the West to the PRC, or facilitate the movement of arms and other prohibited items into the Americas,” concluded the intelligence report.


Related stories:

Riady a target of Justice probe?


Hong Kong tycoon’s secret trade deals


U.S. knew of China canal threat


Secret memo on Loral deal


China’s growing influence in Panama


Panama company denies China connection


China canal threat real, says Barr

Charles Smith

Charles R. Smith is a noted investigative journalist. For over 20 years, Smith has covered areas of national security and information warfare. He frequently appears on national television for the Fox network and is a popular guest on radio shows all over America. Read more of Charles Smith's articles here.