Chinese Firm Leases Base With Help Of White House

Shuttered by military cutbacks, a historic Navy base in Long Beach, Calif., is about to be leased to a China-owned shipping company under an agreement assisted by the White House.

President Clinton twice met with Long Beach officials to push their plan forward - once in California last year and at a White House meeting in 1995 that included his chief of staff and the Pentagon’s No. 2 official.

The deal approved by the Navy turns over the base - valued by the city at $65 million and by preservationists at as much as $300 million - free of charge to the city of Long Beach. The city has already agreed to lease it to COSCO, the China Ocean Shipping Co., which already has a small operation at the base.

The prospect has raised some eyebrows - a U.S. government property encompassing prime port space turned over to a foreign shipping company with a recent checkered history and in direct competition with U.S. shippers.

Materials prepared for the president’s September 1995 meeting identified the Chinese company as the likely “anchor tenant” for the base. Participants said Clinton encouraged his subordinates to do what they could to assist Long Beach.

Others in the meeting included Clinton’s then-Chief of Staff, Leon Panetta, Deputy Defense Secretary John White, various other officials and Carmen Perez, vice president of the Long Beach harbor and a former vice chairwoman of the Democratic National Committee.

The committee, a subject of intense scrutiny for months because of hundreds of thousands of dollars in campaign money donated by China and Taiwan interests, figured tangentially in at least two other COSCO connections.

Donor Johnny Chung, a Chinese-American businessman from California, gave $366,000 to the Democrats that was later returned on suspicion it illegally came from foreign sources. Chung brought six Chinese officials to the White House last year to watch Clinton make his weekly radio address. One of the six was an adviser to COSCO.

Also in 1996, the chairman of one of two Chinese arms companies implicated in a scheme to smuggle 2,000 illegal Chinese-made weapons into Oakland, Calif., aboard a COSCO ship had coffee in the White House in an affair associated with DNC fund raising. Officials of the weapons companies were indicted, but COSCO was not charged.

Despite the China connection, the Long Beach deal apparently went forward without a national security review.

“To the best of the recollection of those involved, there seemed to be no reason to check with the National Security Council on the decision made by Long Beach government officials,” White House spokesman Lanny Davis said.

A Navy official said no intelligence review was sought because of COSCO’s existing small presence in Long Beach, and the expansion is not considered a security threat.

City officials hail the agreement as an economic lifesaver for a community hard hit by defense cutbacks. “We were almost at a point of desperation,” Long Beach Mayor Beverly O’Neill said.

The facility will create only 300 to 600 direct jobs, but thousands of indirect jobs and millions of dollars of business will be generated as a result of increased trade, city officials said.

The city’s harbor will pay $200 million to prepare the base. Work is to be completed by next summer.

In turn, COSCO will lease the base for 10 years at $14.5 million a year.