March 6, 1998

Chu Shijian is still a hero in Yuxi, China, even though he stands accused of diverting more than $145 million from state coffers, one of most spectacular cases of corruption in China since Communist Party came to power nearly 50 years ago; Chu, who led Red Pagoda tobacco company for 17 years, is in prison, as is his wife; his daughter died in prison and his son is missing; Chu and story of Red Pagoda embody central paradox of China: virtually any multimillion-dollar company, striving to become modern in system that remains old-fashioned, is wide open to so much corruption that success almost inevitably leads to financial shenanigans that can spoil any chance of efficiency or genuine profitablity; drawings; chart; photos (L)

Critic's Notebook on Yasmina Reza's play Art discusses its major prop, an all-white painting that character named Serge has purchased; photo (M)

Defense lawyers take Amy S Grossberg another legal step away from her former high school sweetheart, Brian Peterson, two months before their scheduled trial in death of their baby at Delaware motel in 1996; lawyers for Grossberg, in move that startles prosecutors and lawyers for Peterson, contend that she passed two lie detector tests in which she denied plotting to kill baby; say, in fact, that she thought she suffered miscarriage; photo (M)

Article on car price policies of auto makers and dealers, in light of last year's Supreme Court ruling overturning rule that barred manufacturers from setting price ceilings; photo (S)

Johnny Chung, big donor to Democrats in mid-1990's, is charged with four counts of bank fraud, tax evasion and conspiracy, and will plead guilty and cooperate with authorities investigating campaign finance abuses; Federal officials say Chung used phony or 'conduit' contributors to illegally give more money to Clinton/Gore re-election campaign than is permitted for one person under Federal Election Campaign Act; Chung is charged with using similar scheme to funnel money into campaign of Sen John Kerry; Chung became one of most visible symbols of excesses of 1996 Democratic fund-raising campaign because of his frequent visits to White House and his aggressive efforts to turn photo opportunities with Pres Clinton into evidence of his political influence; associates say Chung used his political access to impress investors from Far East, winning more than $3 million in consulting fees and capital investments in his various companies; photo (M)