SANT CHATWAL COURTS CONTROVERSY FOR HILLARY
By Arun Kumar, Washington, 3 September 2007 (IANS)

Indian American businessman Sant Chatwal helped raise hundreds of thousands of dollars for Hillary Clinton's campaigns even as he battled to escape bankruptcy and millions of dollars in tax liens, the Washington Post alleged Monday. The founder of the Bombay Palace restaurant chain, Chatwal is one of a growing number of fundraisers in the 2008 presidential campaign whose backgrounds have prompted questions about how much screening the candidates devote to their 'bundlers' while they press to raise record amounts, the daily said.

Chatwal's case reached from India to New York City. The US Internal Revenue Service (IRS) pursued him for about $4 million in unpaid business taxes, while New York state placed a lien seeking more than $5 million in taxes, it said. He forfeited a building to New York City on which he was delinquent on property taxes and was sued by federal regulators seeking to recoup millions from a failed bank where he served as a director.

Across the ocean, three Indian banks forced him into US bankruptcy, and he was charged with bank fraud. He was out on bond when he showed up in India in 2001 during a visit by his long time friend Bill Clinton, the Post said. Yet none of the legal and financial woes - touched on in American or Indian newspapers or highlighted by opponents - raised red flags inside Democrat Hillary Clinton's fundraising operation, it said. Chatwal recently said he plans to help raise $5 million from Indian Americans for Clinton's presidential bid, the daily said.

According to the Post, asked whether anything in Chatwal's background caused concerns about his activities on behalf of the campaign, Clinton spokesman Phil Singer answered, "No". He declined last week to be more specific, saying only that major fundraisers are routinely vetted "through publicly available records".

It also cited Rajen Anand, a long time friend of Chatwal and another Clinton fundraiser, as saying that the campaign encourages strict vetting for fundraisers. "They advise me to be very careful not to associate the campaign with people where there is something wrong," he said. Anand said, however, that Chatwal may have slid through any vetting because of his long time friendship with the Clintons. The Clintons maintained a close association with Chatwal; both attended one of his sons' weddings in 2002, and the former president attended another son's wedding in 2006.

While Chatwal raised money for Clinton's New York Senate and presidential campaigns and Bill Clinton's charitable efforts, he settled the regulatory and tax cases one by one, mostly by working out plans to pay portions of the debts. He resolved the last of them this spring.

"The man came to this country, accumulated an empire, lost it during the time of real estate, and has struggled and worked to try to pay off his debts," said the Post citing A. Mitchell Greene, Chatwal's lawyer for 25 years. "It has been a long battle, but he has cleared up all of his obligations, and in the process he is trying to accumulate his wealth again."

Chatwal saw his fortunes sour when he began dabbling in New York real estate just as the market softened. He was forced into bankruptcy in 1995 by three Indian banks that claimed he owed them millions. During the 1990s, the IRS and New York City and state tax authorities also pursued liens, and Chatwal worked out deals to pay them back. When the rents from one apartment building he bought no longer covered the real estate taxes, Chatwal turned over the building to New York City to resolve a reported $2 million tax lien, his lawyer said.

In 1997, the Federal Deposit Insurance Corp. sued Chatwal over his role as a director and a guarantor of unpaid loans at the failed First New York Bank for Business. The government alleged that his loans had "resulted in losses to the bank in excess of $12 million", and it questioned his claims that he could not repay the debts. The regulators also questioned why he continued to rent a spacious penthouse in the midst of his turmoil.

In September 2000, Chatwal hosted a half-million dollar fundraiser at that Upper East Side penthouse for Hillary Clinton's Senate campaign. A few months later the FDIC abruptly settled the case, agreeing on Dec 18, 2000, to let him pay $125,000 for the loans.

The Post cited Greene as saying he believed that the actual losses caused by the loans were smaller but agreed that the bankruptcy resulted in a much smaller settlement. The lawyer also said there was nothing wrong with Chatwal raising political money even as he worked to clear up the legal and financial matters.

On Friday, another major 2008 Clinton fundraiser generated fresh headlines:

Norman Hsu surrendered to authorities in San Mateo, California, on an outstanding warrant in a 15-year-old California criminal case involving allegations of grand theft. A judge ordered him held on $2 million bail until a hearing next week.

The Clinton camp said it had no way of knowing about the warrant, which was not listed in publicly accessible records.

Former President Bill Clinton said he was "shocked" by revelations that a top fundraiser for his wife is a fugitive from justice and claimed he didn't even know what "Hill Raiser" Norman Hsu did for a living, Newsday reported.