PAYBACK TIME?

By MICHAEL WEISSKOPF

When TIME reported two weeks ago that Hong Kong interests used a U.S. shell corporation to guarantee a $2.2 million loan to a G.O.P. think tank, ex-party chairman Haley Barbour (the think tank's head) denied knowledge of foreign backing. But a secret memo obtained by TIME shows that a year before Young Bros. Development-USA collateralized the 1994 loan, Barbour was advised of plans to seek overseas funds for the National Policy Forum. Last week the G.O.P. refunded $122,400 in Young Bros. campaign money, conceding its illegal Hong Kong origins. Democrats, smelling blood after months of battering for their fund-raising excess, are urging the return of the full $2.2 million. Most of that loan to the Forum was rerouted to the party to repay past debts and free up cash for the final weeks of the G.O.P.'s 1994 electoral coup. Two years later, Young Bros. was forced to pick up $500,000 of the loan balance after the party-backed Forum reneged on payments.

--By Michael Weisskopf