The New Yorker 04/14/97

-------------------------------------------------------------------------------- A Reporter at Large: American Guanxi

What follows is an excerpt from "American Guanxi," by Peter J. Boyer. It appears in the April 14, 1997 issue of The New Yorker.

Copyright 1997 All Rights Reserved.

A REPORTER AT LARGE AMERICAN GUANXI It's a new kind of political operating, and it's what propelled the strange odyssey of Nora and Eugene Lum, who somehow managed to make a lot of money for the Democrats--and for themselves. By Peter J. Boyer

Ten days after Bill Clinton won his second term, he boarded Air Force One with his wife and set off for Hawaii, in pursuit of a corollary goal, which was to play more golf than any other President. Waiting for Clinton in Honolulu was former Governor John Waihee, an old friend and golfing partner. The golf promised to be spectacular. An advance team had secured the course at the Luana Hills Country Club, a challenging layout cut into a valley beneath an ancient volcano on Oahu's windward side, in a landscape of royal palms and tropical flowers. But the President's party met with bad luck: it rained. The weather was not merely wet but ruinously so--a deluge of such volume and ferocity and duration that the streams overflowed their beds, and the lovely grounds of Luana Hills became a swamp. Though Clinton and Waihee pressed on ("Aqua-golf," one person in the entourage termed it), it seemed as if the site had been cursed. It had been.

The Maunawili Valley, before the golf course was carved into it, was a place of environmental and historical importance: the site of ancient Hawaiian habitats and, more recently, the summer residence of Queen Liliuokalani, the last Hawaiian monarch, who was inspired there to write the Hawaiian anthem, "Aloha 'Oe." The valley was home to a small community of farmers and ranchers when word got out, in 1985, that an Osaka-based pachinko-parlor baron had bought a thousand acres from the farmers' landlord and planned to build two golf courses there. The residents who would be displaced protested; they won a few battles but lost the war, and were removed. It was not an easy parting. Homes, and even a chapel, were razed, and the community vanished, its residents scattered through the islands and beyond. One of them, an old woman named Jennie Olinger, had kept a banana patch for sixty years. As she was leaving that property, she paused and placed a curse on the golf-course development and those associated with it.

Very early in the struggle over the land, a local consultant hired by the pachinko-parlor baron to help overcome the political barriers facing the development had announced to one of the ranchers that his cattle were to be transported off his property, for "safekeeping." One day shortly afterward, the consultant directed a roundup, carried out by a posse of armed horsemen, which resulted in the slaughter of the rancher's prized stud bull. The consultant said that the bull had charged the horsemen, and that the killing had been an act of self- defense. But at least one witness reported that the riders had come with carving knives and butchering-platters, and it was later said that the bull was carved into steaks and distributed to the horsemen, and that the other cattle were sold, with the proceeds going to the consultant.

The consultant was an attorney named Eugene Lum. He and his wife, Nora, were a pair of local business people and political fixers. The Lums believed firmly in the persuasive power of political donations. In the case of the Maunawili Valley development, however, political donations were a problem, because the money from the pachinko-parlor baron--Gene Lum's client--came from a foreign source, and was therefore illegal. In 1994, his donations to Hawaiian politicians, which exceeded sixty thousand dollars, became the focus of what was then the largest civil penalty in the history of the Federal Election Commission; the F.E.C. ordered the politicians to return hundreds of thousands of dollars donated by foreign contributors. Among those cited for having accepted these donations was Waihee, who had received thirteen thousand dollars from the developer. He had also met with the Lums to discuss an issue connected to the proposed golf course in Maunawili.

By 1992, the F.B.I. was deep into an investigation of political corruption in Hawaii, and its inquiry included the Lums. But they were no longer in Hawaii; they had moved to California, had joined forces with Ron Brown, the chairman of the Democratic National Committee, and had set themselves up as fund-raisers for Bill Clinton and Al Gore.