Embassy Pumped Money To US Political Race

By MURALI RANGANATHAN The Times of India [1996]

WASHINGTON: An Indian-American attorney, who is a veteran political fund-raiser, faces conviction after he pleaded guilty to election fraud in a US District Court May 8, in a scheme to launder at least $46,000 in illegal campaign contributions he received from the Indian Embassy in the course of last year's US congressional races.

Lalit H. Gadhia -- a 57-year-old immigration lawyer and former campaign treasurer to Governor Parris N. Glendening -- confessed in US District Court in Baltimore to his role in the scheme to influence congressional lawmakers involved in foreign policy decisions affecting India. If convicted, he could face up to 5 years in prison or $250,000 in fines.

While entering guilty plea, Gadhia admitted in court that he used money from a diplomat at the Indian Embassy. The contributors were reimbursed in cash by Gadhia from money furnished by an embassy official identified as Devendra Singh, according to a statement of facts filed in the court by the prosecutor Joseph L. Evans.

According to records released by the US attorney's office in Baltimore, a courier bill seized by the FBI was addressed to a minister named Devendra Singh at the Indian Embassy and it contained drawn checks not only to the Indian-American political fund but to 12 Democratic lawmakers -- essentially a report of the account Gadhia sent to Singh, who was minister for personnel and community affairs at the embassy at the time.

The dramatic revelations have surfaced months after an extensive investigation by the FBI and a grand jury hearing of the case. The scheme that involved many genuine Indian-American contributors into fraudulent means of raising money without their knowledge came to light last year after a two-month investigation by The (Baltimore) Sun into an obscure fund based in New Mexico, in the name of "the Indian-American Leadership Fund".

Illicit campaign money received from the embassy (in 1995) went to Democratic candidates including Sens. Charles S. Robb (D-Va.), Paul S. Sarbanes (D -Md.) and Reps. Benjamin L. Cardin (D-Md.) and Steny H. Hoyer (D-Md.), who claimed no knowledge of the scheme.

The investigation into the case covered both direct contributions to the lawmakers as well as those channeled through the Indian-American Leadership Fund's political action committee.

Gadhia, who hails from Bombay, now faces up to five years in prison and $250,000 in fines. Sentencing is scheduled for this summer.

US attorney Lynne A. Battaglia said, "The fact that the money came from the Indian Embassy and that so many people were manipulated into participating in the scheme takes this case to ahigher level than we normally see in thse kind of investigations."

According to documents filed in the case, federal authorities could find no evidence that any of the recipients was aware of the true source of the contributions. Sarbanes received $4,500 of the questionable contributions.

Other Maryland Democrats who received $3,000 contributions each were Reps. Cardin, Hoyer and Kweisi Mfume. In all, 19 Democratic candidates nationwide got the money shortly before the 1994 elections through a network of prominent Indian-American businessmen in Maryland, their families and employees of their companies.

Under Federal Election Commission rules, it is illegal for noncitizens to make political contributions or for anyone to make donations in another person's name. But Gadhia never informed donors that the money was coming from India, or told them that it was a serious offense to accept reimbursement for a donation. "The vast majority of people in the Indian-American community nationally are going to be appalled by this," said Subodh Chandra, 28, a Los Angeles lawyer who heads the PAC that unwittingly received at least $31,400 of the illegal contributions from Gadhia.

"We can only hope at this point that these were the acts of a lone bumbler or a group of bumblers and not some sort of international intrigue involving the Indian government. Whatever the case may be, it has harmed an immigrant community in this country that has worked hard for political recognition," Chandra said.

Gadhia and several friends solicited checks, some for as much as $1,000, from dozens of straw contributors. Most were members of the Indian-American community in the Baltimore area, including waiters, busboys and kitchen helpers at Indian restaurants, according to the statement.

Gadhia denied the allegations at the time when The Sun ran the investigative piece. But the case against him continued to build last summer as FBI agents issued subpoenas to those who gave to the PAC or who attended fund-raisers held by Gadhia for Maryland congressional candidates, Baltimore Mayor Kurt L. Schmoke and presidential aspirants Bill Clinton and Michael S. Dukakis.

Gadhia was at the height of his political influence, having been rewarded by Glendening with an $80,000-a-year post as his deputy secretary of international economic development. Within days, the governor demanded his resignation. Gadhia, the campaign treasurer for Glendening, was instrumental in shaping the governor's election last year.

On May 8, 1995, FBI agents seized documents from Gadhia's office which quickly expanded the investigation beyond the PAC contributions -- copies of 66 personal checks attached to an Airborne Express bill of lading.

The records enabled the FBI to trace some $46,000 in illegal contributions back to Singh at the embassy, Battaglia said. Singh is a high-ranking police official in Rajasthan. Gadhia and Singh were copiously showered with accolades and admiration by the Indian-American community in the greater Washington area.Singh's duties include reaching out to prominent Indian-Americans for their support for the Indian government. At a send-off to the diplomat last year, community members praised Singh's spontaneous qualities in his community outreach and coordination of public, cultural events with Indian embassy's backing.

Gadhia was a cut above the ordinary in terms of the tremendous political clout he came to exercise in Maryland and in the capital. He deserved the community praise because of his active involvement in Baltimore's early civil rights movement. Gadhia had led business delegations from the United States to India in the past.

The current minister for community affairs, Wajahat Habibullah, denied that the embassy is involved in trying to influence US foreign policy through campaign contributions.

The issue of any Indian official's involvement in American political affairs has come up before although in the present case prosecutors would not comment whether Singh had acted on his own or on behalf of the Indian government in funneling the money to Gadhia.

Shiv Mukherjee, the embassy spokesman, told the Sun, last week, "The Indian Embassy operates fully within the bounds of diplomatic propriety."

Officially, the State Department had no comment. Privately, officials viewed the illegal contributions funneled through Gadhia's Maryland political network to a lack of sophistication in how to influence the American system.

Former ambassador Siddhartha Shankar Ray was upbraided by Indiana Congressman Dan Burton for his statements exhorting the Indian-American voters to back certain members of Congress who were known to be strong supporters of India. Following criticisms, the embassy had reportedly given an assurance to the US legislative affairs wing that it would not indulge in any act that could be deemed as interference into the US political system.

When the probe against Gadhia was initiated, Ray replied to a question in the negative as to the embassy's involvement in Gadhia's fund-raising activities. However, on an earlier occasion timed with Prime Minister Narasimha Rao's visit, Ray had approached Gadhia to speak to the leader of Black Caucus, Rep. Kweisi Mfume, following the eruption of a controversy in a Boston hotel where Rao was served dinner.

The demand allegedly made by the Indian security officials that whites only serve the Indian prime minister sparked a furor leading to some damage control measures taken up by Ray with the angry members of Black Caucus. Gadhia came to the embassy's rescue time and again.

Gadhia's influence was crucial to the embassy at a time when much of the debate centered on US military assistance -- including the sale of 38 F16 fighters -- to Pakistan was played out in the Senate Foreign Relations Committee and the House International Relations Committee.

Hence, campaign money from both Indian and Pakistani immigrants including the laundered contributions were targeted at the influential members of these committees on the Hill.

Kevin Binger, chief of staff for Rep. Dan Burton, said: "We arevery concerned about political activities at the Indian Embassy. We feel very strongly that it should stay out of political races. Any allegation that this is going on should be investigated and made an issue with the Indian government."

In addition to Sarbanes, other members of Congress targeted were Gary L. Ackerman of New York, $3,000; Sherrod Brown of Ohio, $3,000; Lee H. Hamilton of Indiana, $3,000; Eliot L. Engel of New York, $3,000; Robert E. Andrews of New Jersey, $3,000; and Howard L. Berman of California, $2,800.

State Department officials said that the revelations were unlikely to do serious damage to US-Indian relations. Nor does the Gadhia case appear to rise to the level of other campaign financing scandals involving foreign nationals.

According to the prosecutor's statement, the contributors were members of the Indian-American community in the Baltimore area, including waiters, busboys, and kitchen helpers at Indian restaurants.