James Riady

James Tjahaja Riady is an Indonesian banker and the son of Mochtar Riady, founder of the Lippo Group. His father met Jackson Stephens and Witt Stephens in 1976 while looking for a stake in an American bank, and the two families formed Stephens Finance Ltd. in Hong Kong in 1978. James Riady served an internship at Stephens Inc. in Little Rock.¹

Little Rock

The Stephens and Riady families both invested in the Worthen Banking Corporation in 1983, and James Riady moved to Little Rock to run its international division, with John Huang as his Far East manager from February 1985. That April the New Jersey securities dealer Bevill, Bresler and Schulman failed while holding 52 million dollars of Arkansas state funds that Worthen had placed with it. About 1987 the Riadys traded their Worthen shares for the Stephens interest in the Hong Kong Chinese Bank. Riady was chief executive of LippoBank in Los Angeles from 1986 to 1988. A memorandum in the family's files credited a five-minute car ride with Governor Bill Clinton as the start of its political giving to him. Through the end of 1991 the Lippo Group was expected to take over the Hong Kong subsidiary of the Bank of Credit and Commerce International, paying depositors as much as forty cents on the dollar. The plan ended in February 1992 when investigators found 145 million dollars in unrecorded claims against the bank.¹²

Hubbell

On June 23, 1994, Riady had breakfast at the Hay-Adams Hotel with Webster Hubbell, who had resigned from the Department of Justice in April, met President Clinton at ten with Huang and Mark Grobmyer, and had lunch with Hubbell. On June 27 Hubbell wrote to a director of Hong Kong China Limited, a Lippo company, offering his services for 100,000 dollars a year, and the money was in his account by that day. "Both Riady and Hubbell refuse to describe what services, if any, Hubbell performed," a House committee reported. Lippo also paid for a trip to Jakarta and Bali for Hubbell and his wife. An associate of Riady told a reporter: "Mr. Hubbell was our very close friend, when he left, we felt we should help him out. We didn't like to see him without a source of income." Hubbell wrote in his memoir: "it wasn't hush money." The former managing partner of the Rose Law Firm, C. Joseph Giroir, incorporated the Arkansas International Development Corporation with Lippo capital in April 1993 and gave close to 200,000 dollars in 1996 in connection with fundraisers organized by Huang.¹

Plea

On January 11, 2001, Riady agreed to plead guilty in the federal court in Los Angeles to a felony charge of conspiring to defraud the United States by reimbursing campaign donors with foreign corporate funds, and to pay 8.61 million dollars, which the Justice Department called the largest fine in the history of campaign finance law. LippoBank pleaded guilty to 86 misdemeanor counts covering 1988 to 1994. Indonesia has no extradition treaty with the United States, and Riady surrendered voluntarily after about six sessions with prosecutors. He agreed to 400 hours of community service and to stay out of the country for two years. The benefits the charge said he sought included "Community Reinvestment Act exemptions for LippoBank," "a repeal of the Glass-Steagall Act," and "Most Favored Nation status for China."³