Seven weeks ago, Katrina Leung was greeting friends at the state Republican Convention in Sacramento, a dynamic party fund-raiser and enthusiastic leader in the growing effort to bring more Asian Americans into the GOP.

But Leung's arrest Wednesday as an alleged spy for the Chinese government could make it even tougher for Asian Americans to carve out their spot on California's political scene.

Coming on top of scandals involving illegal contributions by Asian Americans to President Bill Clinton's 1996 re-election campaign and Democrat Al Gore's embarrassing fund-raiser at a Buddhist temple, Leung's arrest and the concerns that surround it could send would-be donors packing, warned Assemblyman Leland Yee, D-San Francisco.

"This is going to put a damper on Asian American involvement in politics," said Yee, who is Chinese American. "You're going to have people who might have wanted to get involved staying out."

Until the day FBI agents snapped the handcuffs on Leung at her multimillion- dollar home in the wealthy Los Angeles suburb of San Marino, the self-employed businesswoman was everything the Republicans could want in a party activist.

The 49-year-old Leung rubbed shoulders with Southern California's elite on civic boards and at political fund-raisers. She was on the board of the Los Angeles World Affairs Council with people like former Secretary of State Warren Christopher, Disney CEO Michael Eisner, former Los Angeles Dodgers owner Peter O'Malley and John Puerner, publisher of the Los Angeles Times.

Leung traveled to China on a trade mission with Los Angeles Mayor Richard Riordan in 1998 and helped to put together a fund-raiser that brought Riordan $100,000 from the Asian American community for his unsuccessful 2002 campaign for governor.

She and her husband, Kam, gave $10,000 to Riordan last year and an additional $4,000 to Bill Simon, who lost the governor's race to Democrat Gray Davis in November.

They also gave $5,000 to Santa Cruz state Sen. Bruce McPherson's 2002 campaign for lieutenant governor and $1,000 to Los Angeles Rep. David Dreier, a GOP congressional leader.

Contributions like those helped gain Leung entree to the top levels of Republican political circles. While GOP leaders deny that Leung was ever a major force in the party, her checkbook, combined with her connections to the wealthiest parts of the Asian American community, made Leung someone to be reckoned with.

Speaking to the World Affairs Council in Los Angeles in October, Simon talked about how pleased he was to have the chance to visit "dear friends," including Leung.

"She expressed interest about becoming more involved in the party," said Rob Stutzman, a spokesman for the state GOP. "You can't turn people away when everything on its face seems to be exactly what you're looking for."

For the past 20 years, federal prosecutors said this week, Leung has been on the payroll of the FBI, collecting $1.7 million for supplying information on China. Prosecutors say she was also passing on classified documents to the Chinese, documents she allegedly obtained during the course of a long-running sexual affair with an FBI agent.

Leung's arrest also brings into question her prominent role as a link between the Asian American community and the state's political power structure.

For years, she served as master of ceremonies at events honoring Chinese visitors to Southern California, using her fluent command of English, Mandarin and Cantonese to smooth sometimes troubled waters. In 1988, for example, she helped bring then-Los Angeles Mayor Tom Bradley and the Chinese ambassador to a dinner of the National Association of Chinese Americans, and in 1999 arranged meetings between Los Angeles-area officials and Chinese Premier Zhu Rongji.

In November, she tried unsuccessfully to get on a trade delegation that Los Angeles Mayor James Hahn was taking to China for 10 days.

"It was weird," recalled Julie Wong, a spokeswoman for Hahn. "She asked to go on the trip and we said no, because we didn't know who she was. But when we got to China, she just showed up and stayed at some of the same hotels."

Federal investigators believe that trip to China was part of Leung's alleged espionage activities. According to court documents, a secret search of her luggage before she left Los Angeles found pictures of various FBI agents, pictures that could not be found when Leung returned from China.

After the well-publicized Asian money scandals involving Clinton and Gore and the 1999 nuclear secrets case that targeted Chinese American scientist Wen Ho Lee, many Asian American leaders were concerned about the long-term effects it could have on their community. The combination of sex, espionage and politics that make up Leung's case raise those worries again.

"That whole scandal about foreign money influencing Clinton was a major setback for Asian Americans in politics," Yee said. "Even non-Asian candidates started to be concerned about what they might be given (by Asian American donors)."

If Leung's arrest persuades Asian Americans to back away from party politics, it could be a political death knell for Yee and other Asian American officeholders just starting their trips up the career ladder.

"Look at my financial reports," Yee said. "More than 50 percent of my money came from the Asian American community. If that dries up, where do I get money to replace it?"

FBI Woman "Spied for China"

Katrina Leung has been charged with passing on classified nations security information to China, allegedly obtained from her lover and FBI "handler," James Smith.

Smith has also been charged with gross negligence after allegedly allowing her access to secret documents during "debriefing" sessions at her home.

Correspondents say that the scandal could prove a great embarrassment to the FBI and the Republican party, with whom Leung -- a Los Angeles socialite -- had close links.

Leung was arrested on April 9 and charged with "obtaining a classified national security document for the purposes of aiding a foreign nation."

She has claimed that she is innocent, but has been denied bail. At the same time, Mr Smith, a former FBI special agent, was charged with gross negligence but given bail.

Authorities said that Ms Leung was recruited to work for the FBI in the 1980s and began an affair with Mr Smith.

According to the prosecution's affidavit, she was paid $1.7m over 20 years by the FBI, and operated under a number of aliases, including "parlormaid."

But during this time, the prosecution alleged, she was also working as a double agent for the Chinese government.

Prosecutors said that they found classified documents at Ms Leung's home, including a secret 1997 memorandum about Chinese fugitives.

Network of contacts

The affidavit also said that the FBI secretly searched her luggage when she left for a trip to China in November 2002 and found six photographs of former and current FBI agents.

When she returned from the trip, her luggage was covertly searched again, and the photos were no longer there.

It was alleged that Mr Smith came to Ms Leung's San Marino home, which she shares with her husband and son, for "debriefing sessions."

During the times of his visit, she was able to copy documents from his briefcase which she then passed on to Chinese agents.

Mr Smith was alerted to her duplicity by another FBI agent with whom she allegedly also had an affair, but he continued to see her.

A statement by the FBI Director, Robert S Mueller, said the day of the arrests was "a sad day for the FBI."

"Former Agent Smith not only betrayed the trust the FBI placed in him, he betrayed the American people he was sworn to protect.

"Allegations that he caused the loss of classified information, as well as his personal indiscretions with Ms Leung, are very serious and warrant a strong response," the statement said.

Ms Leung's lawyers, however, said that she is a "loyal American citizen."

"She repeatedly endangered herself in order to make significant contributions to the security and well-being of the United States.

"We believe that when the full story is known, Ms. Leung will be cleared of all wrongdoing," the lawyers said.

Ms Leung was well-known in the Chinese-American community and also had a network of contacts in China.

In 1999 she organised a banquet for then Chinese premier Zhu Rongji when he visited the USA.