WASHINGTON – The conservative Heritage Foundation, once a strong anti-communist voice, has raised “several million dollars” in Hong Kong, with most of the money coming from pro-Beijing tycoons, according to a report in the South China Morning Post.

The think tank’s fund-raising was coordinated through a shadowy Hong Kong shop first uncovered by WorldNetDaily in January. Heritage says it’s closing the office, which has been run by a personal aide to the foundation’s president, Edwin Feulner.

Feulner opened the office in 1996, the same year he brought aboard Elaine Chao as an Asian scholar. Chao, now Labor Department secretary, has close family ties to Chinese President Jiang Zemin through her father.

Heritage “has targeted tycoons in Hong Kong and around the region, and money raised is said to come mostly from a number of pro-China figures and property developers,” said the Morning Post’s June 25 story.

The Hong Kong office’s director, Kenneth Sheffer, admitted in written replies to questions from the Hong Kong-based Morning Post that his office raised “several million dollars” for the foundation, although he refused to disclose the source of the money.

The article, which cites WorldNetDaily, went on to say that the revelation that money is being funneled from Hong Kong to Washington is “likely to cause concern among Heritage Foundation supporters.”

“I think traditional conservatives in the U.S. would be interested to know how much money would be perceived as pro-China money,” the paper quoted Mark Simon, Apple Daily’s corporate-accounts director, who is active in conservative circles in Hong Kong, as saying.

WorldNetDaily, in its Jan. 24 story, quoted a Heritage fellow who said Chao was not hired (at a starting salary of $200,000) to do research at the foundation, but to open doors in China for Heritage’s corporate donors.

He said she was no great scholar on Asia, but knew as much as she needed to know “to strike the deals over there.”

The fellow added that Chao herself “clearly had business interests in China, and has taken a lot of trips to China” while at Heritage.

In 1997, Chao reportedly led a delegation of Heritage’s major donors and trustees to the Hong Kong reunification ceremony.

Sheffer, in his written replies to the Morning Post, denied that the office was involved in opening doors for donors on the mainland.

Heritage spokeswoman Khristine Bershers says the Hong Kong office was set up primarily for scholars as a “listening post” in the region. It also provided a venue, she says, for press events like the release of the foundation’s annual Index of Economic Freedom, which has ranked Hong Kong at the top.

Since Chao came aboard, the think tank has tilted more favorably toward China.

For instance, a long-time defense scholar was pushed out after warning too loudly of the growing People’s Liberation Army threat. And a paper urging caution on permanently normalizing trade with Beijing was rewritten after a Heritage donor, who is a key player in the pro-China corporate lobby, complained and threatened to withdraw his support. The donor, Hank Greenberg, also supports Chao’s husband, GOP Sen. Mitch McConnell.

Following the publication of WorldNetDaily’s stories and subsequent media reports, Feulner admitted to having “toned down our rhetoric [on Communist China] over the years.”

Feulner, who sources say is “obsessed” with fund-raising, has visited Hong Kong often and reportedly has done much of the fund-raising out of that office.

In Hong Kong, Heritage has sided with chief executive C.H. Tung, hand-picked by a committee appointed by Beijing, over democratic opposition leader Martin Lee, the Morning Post says.

“Heritage Foundation has held banquets in honor of Mr. Tung,” the paper said, “and Mr. Feulner has held meetings with the chief executive in Hong Kong.”

In its mission statement, Heritage says it supports “free enterprise, limited government, individual freedom, traditional American values and a strong national defense.”

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Previous stories:

Elaine Chao’s ties to Chinese leader

Chao’s pro-China coup at Heritage

Chao has biz ties to Lippo

Dissident Wu ‘very surprised’ by Chao pick

Heritage to close old Hong Kong shop

McConnell’s belated dirty-money discovery

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