Senior U.S. official says no trade favors for RI

Senior U.S. official says no trade favors for RI

WASHINGTON (Reuter): The Clinton administration took issue on Wednesday with a newspaper report raising questions about large donations to the Democratic Party by a wealthy Indonesian family and U.S. trade policy toward Jakarta.

An investigative report by the Los Angeles Times on Wednesday said the Clinton White House in some cases had rejected recommendations or stopped investigations by lower-level U.S. officials regarding relations with Indonesia.

A senior administration official said Indonesia has not received favorable treatment.

"Contrary to whatever the innuendo is, we moved very aggressively toward Indonesia and have had a very tough policy toward them in many areas," a senior official told Reuters.

Commerce Secretary Mickey Kantor, previously the U.S. trade representative, denied in the Los Angeles Times report that there had been any connection between trade policy toward Indonesia and the donations from James Riady, scion of a wealthy Indonesian family.

The newspaper listed several beneficial steps the Clinton administration took toward Indonesia.

The paper said that at one point U.S. officials were investigating whether to cut off Indonesia's trade privileges because of the country's labor policies. It said that in February 1994 Kantor suddenly announced the suspension of the process, allowing Indonesia to keep the privileges worth more than $600 million to Indonesian companies.

A senior administration official told Reuters the year-long investigation was suspended after President Soeharto's government announced a series of actions to address U.S. concerns.

"This was a major departure of where they had been. We announced suspension but not termination of the review," said the official who asked not to be identified. Further action was taken later that year, the official said.

"Obviously given the progress made, we didn't suspend GSP," the generalized system of preference, he said.

The program eliminates import tariffs on some goods from developing countries. Duty-free imports from Indonesia under the program were worth about $643 million, according the Los Angeles Times report.

The newspaper also said that in one instance the White House had interceded after Riady came to Washington to arrange meetings between a senior Soeharto aide and top-level U.S. officials.

Riady, his family and executives of their companies had contributed $475,000 to the Democratic Party and its candidates since 1991, the newspaper said. Riady attended at least two meetings with U.S. officials at which Indonesia's trade benefits were discussed, it said.

Clinton administration officials have asserted that the contributions by the Riady family were legal and had not influenced U.S. government policy toward Indonesia. "There was no connection between James Riady and U.S. trade policy in Indonesia," Kantor told the newspaper. "Absolutely none."

The Riadys own the Indonesia-based Lippo Group and once owned a bank in Clinton's hometown of Little Rock, Arkansas.

The Los Angeles Times said that in addition to the Riadys' money, $425,000 was contributed to the Democratic National Committee by an immigrant Indonesian family.