DONATION RECEIVED INSIDE WHITE HOUSE : `TOTALLY IMPROPER'.

Byline: Stephen Labaton The New York Times

The chief of staff to Hillary Rodham Clinton accepted a $50,000 donation to the Democratic Party in 1995 in the White House from a California businessman who has emerged as a central figure in the criminal and congressional investigations into improper fund-raising activities by the Democrats, administration officials said Wednesday night.

The donation by Johnny Chung through Margaret Williams to the Democratic National Committee is the first known instance in which a campaign check was handed to an administration official at the White House during the past four years. It is likely to fuel criticism that the administration had inadequate safeguards for separating politics and fund-raising from the business of governing.

Federal laws prohibit anyone from either soliciting or receiving contributions in government offices such as the White House. Just this week, Vice President Al Gore found himself on the defensive as he explained his occasional practice of telephoning potential donors from his office.

White House aides defended Williams on Wednesday, saying that she had simply passed along a check she had been given by a frequent White House guest and devoted fan of the first lady.

``This was legal and proper and she was following established procedures,'' said Ann Lewis, deputy White House communications director. It was unclear why Williams did not direct Chung to give the check directly to the DNC. Other lawyers outside the administration disagreed, and some questioned why Chung was giving a payment to a top aide to Hillary Clinton rather than simply giving the check to officials at the DNC.

``It is totally improper,'' said Joseph E. diGenova, a Republican and former U.S. attorney in Washington. ``It is illegal to receive federal campaign funds on property at the White House or at the Executive Office Building.''

The payment by Chung was made the same week that he escorted some officials from the Chinese government to a taping of President Clinton's weekly radio address at the White House. The group included Huang Jichun, the vice president of a Chinese conglomerate that trades weapons.

After that visit, President Clinton told his aides that he ``wasn't sure we'd want photos of him with these people circulating around,'' according to a White House document made public last month.

And Robert Suettinger, a China specialist on the National Security Council, warned that Chung was ``a hustler'' who appeared ``to be involved in setting up some kind of consulting operation that will thrive by bringing Chinese entrepreneurs into town for exposure to high-level U.S. officials.''

Later that summer, Chung also tried to insert himself as a negotiator between Chinese and U.S. officials after China imprisoned a leading critic of human rights in China, Harry Wu. Suettinger then warned the White House that Chung could ``conceivably do damage'' to American-Chinese relations.

Referring to Chung and Williams, Brian A. Sun, Chung's lawyer, said: ``I can confirm that he had discussions with her about the donation in the first lady's office. But I would not go so far as to describe it that she solicited the donation.''

Sun said Chung had discussions with Williams and at least one other person in Hillary Clinton's office ``talking about the fact that the party needed help. But I will not say who said what to whom,'' Sun said.

Sun said Chung wrote the $50,000 check and gave it to Williams in her White House office March 9, 1995, two days before he brought the Chinese businessmen to the taping of the radio address.

Sun said Chung also met with other White House and Democratic Party officials while he was in Washington that week. The lawyer said that ``in the context of his visits that week, he was asked to help out the party. But it was not a situation where they ask him for donations by saying he would get something in return. It wasn't a situation where somebody said, `If you give, you'll get a, b, c or d.' ''

The result, Sun said, was that Chung's ``mind-set was that making the donation would facilitate access.''

Contributions refunded

Last week the Democratic Party announced that it had returned 12 contributions of $366,000 from Chung and his company, Automated Intelligent Systems, because it could not verify the source of the money. The contributions refunded to Chung, including the check received by Williams, reflect more than 10 percent of the nearly $3 million that the Democratic National Committee has returned in improper and suspicious donations.

Sun has said that some of the money Chung used to make the donations had come from more than $3 million he had received in consulting fees and in capital from investors in his companies, including some in China.

Chung, who apparently told Williams earlier in the administration that he had wanted to give money to the Clintons personally, has sought to exploit his contributions and access for commercial gain. Associates of Chung have said he used his political access to cement business deals with investors from China, Taiwan and Hong Kong, bringing them to White House events and fund-raisers.

For instance, he arranged for a photograph of President Clinton and the first lady with the chairman of a Chinese beer company. The photo has been used as an advertisement for the beer company in China.

Chung has said in interviews that he began courting political figures in 1992, when he was having trouble getting his fax business off the ground. He met Hillary Clinton in 1992 after it occurred to him that government offices could be a market for his fax service, which uses a computer system to transmit a fax simultaneously to thousands of locations.

He began making political contributions two years later, giving $11,000 in August 1994 to attend a birthday party for the president and $40,000 in December of that year to bring guests to a luncheon with the first lady in Los Angeles.

Chung is an engineer who was born in Taiwan and is now a U.S. citizen living in California. He has visited the White House at least 50 times since mid-1994.

Lewis said Chung was a regular visitor to Hillary Clinton's office and that he sometimes asked Williams how he could contribute money to the Clintons.

``She responded that he could not give to the Clintons but he could give to the Democratic National Committee or some other entities,'' Lewis said. Lewis said Williams recalls receiving a check from Chung, which she immediately forwarded to the DNC, but did not recall the amount. Other White House officials said they thought it was a $50,000 check dated March 17.