Tuesday, February 16, 2016

The Clinton Foundation: The best way to gain access and influence with the Clintons..

Hillary Clinton has encountered an additional headache with questions concerning donations to the Clinton Foundation. The Clinton Foundation is huge, with a quarter-billion in assets, a track record of having raised $2 billion, and influence with power brokers around the world. This is where questions about potential conflict of interest are significance of the Clinton Foundation . In the 2016 presidential campaign, Hillary Clinton could find her family’s foundation, increasingly dependent on outside contributions from big corporations and foreign governments, to be a campaign albatross. It has been seen by many as simply another venue for special interests to purchase influence, favor, and face-time with the candidate. The issues involved with the Clinton Foundation, due its size (assets of $226m) and its visibility makes questions about the foundation a considerable problem for Hillary Clinton in her bid to become president in 2016.

“The word was out that one of the best ways to gain access and influence with the Clintons was to give to this foundation” 

In a nutshell, there are two streams of stories about the Clinton Foundation that have implications for the former Secretary of State. One is the fact that while she served as Secretary, the Clinton Foundation received several significant donations from as many as 19 foreign governments. Although the foundation is a 501(c)(3) public charity and not required to reveal its donors, the Clinton Foundation has done so, revealing information about the size of their donations in ranges on its website, including these foreign governments:

In the $10-25m category is the Kingdom of Saudi Arabia (plus Australia, though AUSAID, and Norway)
In the $5m-10m category includes the Kuwaiti government as a donor (plus donations from another government agency in Australia, apparently focused on climate change, and the Netherlands and Sweden)
Donors in the $1-$5m range included Qatar, the Sultanate of Oman, Brunei, and the United Arab Emirates (as well as more from Norway)
All told, the Clinton Foundation reports contributions from 19 foreign governments, with Germany, the Dominican Republic, Bahrain, Taiwan, Jamaica, and Canada also in the mix. Given that ranges rather than specific amounts were posted on the foundation’s website, the donations were worth between $51m and $136m. Listed as between $250,000 and $500,000 is a $500,000 donation (dedicated to Haiti earthquake relief) from the government of Algeria, made in 2010 when Algeria was negotiating with the U.S. Department of State on issues of human rights—and in the same year spent $422,000 in lobbying U.S. government officials.

By virtue of an agreement with the Department of State while Hillary Clinton served as Secretary, the Clinton Foundation was, after 2009, supposed to notify State of foreign government transactions and get an implicit nod of approval so that State and the Foundation could check on conflicts of interest. That didn’t happen with the Algeria donation, which one observer, former Congresswoman Jane Harmon, head of the Woodrow Wilson Center, suggested had simply gotten lost in the system.

There has been no insinuation of a specific quid pro quo between these governments and either Bill or Hillary Clinton. Because foreign governments cannot contribute to political campaigns,  and because 501(c)(3) public charities like the Clinton Foundation cannot engage in partisan political activity, these donations are not backdoor versions of campaign contributions. For example, the Algeria donation was dedicated to and spent on Haitian earthquake relief. Public charities in the U.S. can and do accept donations from foreign governments.

Nonetheless, it is hard to imagine that these donors didn’t have an expectation, much like donors to any politically connected foundation, of being seen as supportive of the former First Lady and of getting access to her now or in the future. Moreover, donors such as Qatar (which has been supportive of Hamas and Hezbollah) and Saudi Arabia (whose treatment of women seems runs counter to Hillary Clinton’s repeated endorsement of women’s empowerment around the world, not to mention Saudi Arabia’s distinctively harsh method of dealing with dissidents) raises questions as to why the foundation would solicit or accept donations from these governments. As Secretary of State, Hillary Clinton by virtue of her job had to deal with all kinds of nations, but acting as a philanthropist, the foundation didn’t have to solicit or accept donations from governments whose values might have conflicted with the foundation’s.

Bill Clinton defended the donations from foreign governments, suggesting that their money was a good thing toward helping the foundation pursue its goals, that the foundation was voluntarily revealing the names of its donors, and that governments such as the United Arab Emirates were helping the U.S. in its fight against the Islamic State (ISIL or Da’esh). It may not be apparent, but his linking of the UAE donation to U.S. foreign policy is exactly the problem Hillary Clinton faces with the donations from foreign governments. Would the foundation reject donations from governments opposed to U.S. policy? (It obviously hadn’t, in light of the relationship of Qatar and Hamas.) What if oil-rich Venezuela under President Nicol├ís Maduro or Sudan ruled by Omar al-Bashir had offered donations? Is the foundation implementing a foreign policy vetting process of some sort?

The other area of defense of the donations from foreign governments is that during her tenure at State, Hillary Clinton had no official role at the Clinton Foundation, so that even if grants such as Algeria’s were coming to the foundation, she wasn’t in the driver’s seat, one way or the other. True, except that it is a primary family member—her husband—who was in the driver’s seat. The barrier between her official duties as Secretary of State and his activities in getting philanthropic donations from other countries is permeable, as critics have pointed out about the charities related to many members of Congress. In any case, since 2013, the foundation has been renamed the Bill, Hillary, and Chelsea Clinton Foundation, and her role as the clearly most significant albeit unofficial Democratic candidate for president makes the foreign government donations a legitimate area of inquiry.

A second stream of the critique has been revelations of the Clinton Foundation’s relationships with a number of banks that have run afoul of U.S. government regulators. Alexandra Jaffe of CNN reported that the Clinton Foundation and its Clinton Global Initiative arm had struck partnership arrangements with a number of banks while these banks were fending off investigations or paying substantial fines. Jaffe listed a variety of “strategic partners” of CGI including Barclays (which had to pay $300m in fines for breaking sanctions against Iran, Cuba, and the Sudan, and another $450m for global interest rate rigging), Deutsche Bank (under investigation for potential Iran sanctions violations), HSBC (which paid $1.92b because it allowed drug cartels to launder money and because it did transactions for customers in Iran, Libya, Cuba, and the Sudan), and Goldman Sachs (which paid a $1.2b fine for mortgage lending infractions).

A review of the Clinton Foundation’s listed donors reveals a number of big banks making sizable donations:

  • Between $1m and $5m: Citi Foundation, Barclay’s Capital, Goldman Sachs, Standard Chartered
  • $500,000-$1m: Bank of America Foundation, more Barclay’s, Citigroup, HSBC Holdings, UBS Wealth Management
  • $250,000-$500,000: Banco Santander Brasil, Deutsche Bank AG, Deutsche Bank Americas, Goldman Sachs Philanthropy Fund, Morgan Stanley Smith Barney Global Impact Funding Trust

The problem for Hillary Clinton with the bank contributions, notwithstanding the banks’ regulatory problems, is that she is seen in many political circles as close to Wall Street. A spate of donations from big banks and big corporations to the foundation could add to the perception, particularly within her own populist-leaning Democratic Party, that Hillary Clinton’s DNA isn’t all that populist. Among the other corporate donors to the Clinton Foundation are these:

  • $5m-$10m: Coca-Cola,
  • $1m-$5m: Anheuser-Busch, Duke Energy, ExxonMobil, Hewlett Packard, Humana, Microsoft, Pfizer, Procter & Gamble, Dow Chemical, Boeing, the Walmart Foundation (as well as the Walton Family Foundation), Toyota,
  • $500,000-$1m: Alibaba Group, Chevron, General Electric, Google, Monsanto, News Corporation (Murdoch), Allstate, Harrah’s,
  • $250,000-$500,000: AIG, Freeport McMoRan, McDonald’s, Walmart

That is a hefty list of companies that might be interested in finding a friendly ear in the White House in 2017. Some of them, such as ExxonMobil, are seen by progressive activists as inimical to concerns about the impact of fossil fuels on global warming. Others, like McDonald’s and Walmart, are frequently described by activists as exemplars of low wage, non-union shops. To the Clinton Foundation, the bank and corporate donors are seen as having the scale as funders and partners “to make the biggest impact,” as one foundation defender explained. The foundation believes that the track records of banks and corporations having been investigated and penalized by U.S. government regulators shouldn’t disqualify them from making a positive contribution to the foundation’s priorities.

A foundation “talking points” email that made its way to press outlets instructed Clinton defenders to highlight the foundation’s “ground-breaking, life-changing” global impact, that it is a false choice to suggest that individuals and corporations can’t separate their political priorities from their philanthropic giving, and that its voluntary transparency is a significant positive difference about the Clinton Foundation. The emphasis is that the foundation is simply that, an entirely philanthropic endeavor. Her former campaign chair, now Virginia governor, Terry McAuliffe, added, “If your criticism…is that she raised too much money for her charity to help people around the globe, OK, I’ll take that.” But that statement, especially given that McAuliffe is a former board member of the foundation, puts Hillary Clinton back into the middle of the foundation’s fundraising strategies when she was serving full time as Secretary of State.

Money, even in philanthropy, is not a purely philanthropic endeavor. It buys access, which goes both ways. For example, the Foundation chose not long ago to invest its assets through Summit Rock Advisers, where one of Chelsea Clinton’s best friends is a managing director. That person’s husband ended up working for the hedge fund created by Chelsea’s husband, Marc Mezvinsky.

Saudi Arabia, Oman, and Qatar had donated multiple millions of dollars each to the Clinton Foundation

"Even The Appearance Of A Conflict"

During her Senate confirmation proceedings in 2009, Hillary Clinton declared that she and her husband were “committed to ensuring that his work does not present a conflict of interest with the duties of Secretary of State.” She pledged “to protect against even the appearance of a conflict of interest between his work and the duties of the Secretary of State” and said that “in many, if not most cases, it is likely that the Foundation or President Clinton will not pursue an opportunity that presents a conflict.”

Even so, Bill Clinton took in speaking fees reaching $625,000 at events sponsored by entities that were dealing with Hillary Clinton’s State Department on weapons issues.

In 2011, for example, the former president was paid $175,000 by the Kuwait America Foundation to be the guest of honor and keynote speaker at its annual awards gala, which was held at the home of the Kuwaiti ambassador. Ben Affleck spoke at the event, which featured a musical performance by Grammy-award winner Michael Bolton. The gala was emceed by Joe Scarborough and Mika Brzezinski, hosts of MSNBC’s Morning Joe show. Boeing was listed as a sponsor of the event, as were the embassies of the United Arab Emirates, Saudi Arabia, Kuwait and Qatar -- the latter two of which had donated to the Clinton Foundation while Hillary Clinton was secretary of state.

The speaking fee from the Kuwait America Foundation to Bill Clinton was paid in the same time frame as a series of deals Hillary Clinton’s State Department was approving between the Kuwaiti government and Boeing. Months before the gala, the Department of Defense announced that Boeing would be the prime contractor on a $693 million deal, cleared by Hillary Clinton’s State Department, to provide the Kuwaiti government with military transport aircraft. A year later, a group sponsored in part by Boeing would pay Bill Clinton another $250,000 speaking fee.

“Boeing has sponsored this major travel event, the Global Business Travel Association, for several years, regardless of its invited speakers,” said Gordon Johndroe, a Boeing spokesperson. Johndroe said Boeing’s support for the Clinton Foundation was “a transparent act of compassion and an investment aimed at aiding the long-term interests and hopes of the Haitian people” following a devastating earthquake. Boeing was one of three companies that helped deliver money personally to Bill Clinton while benefiting from weapons authorizations issued by Hillary Clinton’s State Department. The others were Lockheed and the financial giant Goldman Sachs.

Lockheed is a member of the American Chamber of Commerce in Egypt, which paid Bill Clinton $250,000 to speak at an event in 2010. Three days before the speech, Hillary Clinton’s State Department approved two weapons export deals in which Lockheed was listed as the prime contractor. Over the course of 2010, Lockheed was a contractor on 17 Pentagon-brokered deals that won approval from the State Department. Lockheed said that its support for the Clinton Foundation started in 2010, while Hillary Clinton was secretary of state. “Lockheed Martin has periodically supported one individual membership in the Clinton Global Initiative since 2010,” said company spokesperson Katherine Trinidad. “Membership benefits included attendance at CGI annual meetings, where we participated in working groups focused on STEM, workforce development and advanced manufacturing.”

In April 2011, Goldman Sachs paid Bill Clinton $200,000 to speak to “approximately 250 high level clients and investors” in New York, according to State Department records obtained by Judicial Watch. Two months later, the State Department approved a $675 million foreign military sale involving Hawker Beechcraft -- a company that was then part-owned by Goldman Sachs. As part of the deal, Hawker Beechcraft would provide support to the government of Iraq to maintain a fleet of aircraft used for intelligence, surveillance and reconnaissance missions. Goldman Sachs has also contributed at least $250,000 to the Clinton Foundation, according to donation records. “There is absolutely no connection among all the points that you have raised regarding our firm,” said Andrew Williams, a spokesperson for Goldman Sachs.

Federal records show that ethics staffers at the State Department approved the payments to Bill Clinton from Goldman Sachs, and the Lockheed- and Boeing-sponsored groups without objection, even though the firms had major stakes in the agency’s weapons export decisions.

Stephen Walt, a Harvard University professor of international affairs, said that the intertwining financial relationships between the Clintons, defense contractors and foreign governments seeking weapons approvals is “a vivid example of a very big problem -- the degree to which conflicts of interest have become endemic.”

“It has troubled me all along that the Clinton Foundation was not being more scrupulous about who it would take money from and who it wouldn’t,” he said. “American foreign policy is better served if people responsible for it are not even remotely suspected of having these conflicts of interest.”

Even by the standards of arms deals between the United States and Saudi Arabia, this one was enormous. A consortium of American defense contractors led by Boeing would deliver $29 billion worth of advanced fighter jets to the United States' oil-rich ally in the Middle East.

Israeli officials were agitated, reportedly complaining to the Obama administration that this substantial enhancement to Saudi air power risked disrupting the region's fragile balance of power. The deal appeared to collide with the State Department’s documented concerns about the repressive policies of the Saudi royal family. But now, in late 2011, Hillary Clinton’s State Department was formally clearing the sale, asserting that it was in the national interest. At press conferences in Washington to announce the department’s approval, an assistant secretary of state, Andrew Shapiro, declared that the deal had been “a top priority” for Clinton personally. Shapiro, a longtime aide to Clinton since her Senate days, added that the “U.S. Air Force and U.S. Army have excellent relationships in Saudi Arabia.”

These were not the only relationships bridging leaders of the two nations. In the years before Hillary Clinton became secretary of state, the Kingdom of Saudi Arabia contributed at least $10 million to the Clinton Foundation, the philanthropic enterprise she has overseen with her husband, former president Bill Clinton. Just two months before the deal was finalized, Boeing -- the defense contractor that manufactures one of the fighter jets the Saudis were especially keen to acquire, the F-15 -- contributed $900,000 to the Clinton Foundation, according to a company press release. The Saudi deal was one of dozens of arms sales approved by Hillary Clinton’s State Department that placed weapons in the hands of governments that had also donated money to the Clinton family philanthropic empire.

Under Clinton's leadership, the State Department approved $165 billion worth of commercial arms sales to 20 nations whose governments have given money to the Clinton Foundation, according to an analysis of State Department and foundation data. The Clinton-led State Department also authorized $151 billion of separate Pentagon-brokered deals for 16 of the countries that donated to the Clinton Foundation, a 143 percent increase in completed sales to those nations. These extra sales were part of a broad increase in American military exports that accompanied Obama’s arrival in the White House. The 143 percent increase in U.S. arms sales to Clinton Foundation donors compares to an 80 percent increase in such sales to all countries over the same time period.

American defense contractors also donated to the Clinton Foundation while Hillary Clinton was secretary of state and in some cases made personal payments to Bill Clinton for speaking engagements. Such firms and their subsidiaries were listed as contractors in $163 billion worth of Pentagon-negotiated deals that were authorized by the Clinton State Department between 2009 and 2012.

The State Department formally approved these arms sales even as many of the deals enhanced the military power of countries ruled by authoritarian regimes whose human rights abuses had been criticized by the department. Algeria, Saudi Arabia, Kuwait, the United Arab Emirates, Oman and Qatar all donated to the Clinton Foundation and also gained State Department clearance to buy caches of American-made weapons even as the department singled them out for a range of alleged ills, from corruption to restrictions on civil liberties to violent crackdowns against political opponents.  

As secretary of state, Hillary Clinton also accused some of these countries of failing to marshal a serious and sustained campaign to confront terrorism. In a December 2009 State Department cable published by Wikileaks, Clinton complained of “an ongoing challenge to persuade Saudi officials to treat terrorist financing emanating from Saudi Arabia as a strategic priority.” She declared that “Qatar's overall level of CT cooperation with the U.S. is considered the worst in the region.” She said the Kuwaiti government was “less inclined to take action against Kuwait-based financiers and facilitators plotting attacks.” She noted that “UAE-based donors have provided financial support to a variety of terrorist groups.” All of these countries donated to the Clinton Foundation and received increased weapons export authorizations from the Clinton-run State Department.

In all, governments and corporations involved in the arms deals approved by Clinton’s State Department have delivered between $54 million and $141 million to the Clinton Foundation as well as hundreds of thousands of dollars in payments to the Clinton family, according to foundation and State Department records. The Clinton Foundation publishes only a rough range of individual contributors’ donations, making a more precise accounting impossible. Under federal law, foreign governments seeking State Department clearance to buy American-made arms are barred from making campaign contributions -- a prohibition aimed at preventing foreign interests from using cash to influence national security policy. But nothing prevents them from contributing to a philanthropic foundation controlled by policymakers.

Just before Hillary Clinton became Secretary of State, the Clinton Foundation signed an agreement generally obligating it to disclose to the State Department increases in contributions from its existing foreign government donors and any new foreign government donors. Those increases were to be reviewed by an official at the State Department and “as appropriate” the White House counsel’s office. According to available disclosures, officials at the State Department and White House raised no issues about potential conflicts related to arms sales.

During Hillary Clinton’s 2009 Senate confirmation hearings, Sen. Richard Lugar, R-Ind., urged the Clinton Foundation to “forswear” accepting contributions from governments abroad. “Foreign governments and entities may perceive the Clinton Foundation as a means to gain favor with the secretary of state,” he said. The Clintons did not take Lugar’s advice. In light of the weapons deals flowing to Clinton Foundation donors, advocates for limits on the influence of money on government action now argue that Lugar was prescient in his concerns.

“The word was out to these groups that one of the best ways to gain access and influence with the Clintons was to give to this foundation,” said Meredith McGehee, policy director at the Campaign Legal Center, an advocacy group that seeks to tighten campaign finance disclosure rules. “This shows why having public officials, or even spouses of public officials, connected with these nonprofits is problematic.”

Hillary Clinton’s willingness to allow those with business before the State Department to finance her foundation heightens concerns about how she would manage such relationships as president, said Lawrence Lessig, the director of Harvard University’s Safra Center for Ethics. These continuing revelations raise a fundamental question of judgment. Can it really be that the Clintons didn't recognize the questions these transactions would raise? And if they did, what does that say about their sense of the appropriate relationship between private gain and public good?”

National security experts assert that the overlap between the list of Clinton Foundation donors and those with business before the the State Department presents a troubling conflict of interest.

While governments and defense contractors may not have made donations to the Clinton Foundation exclusively to influence arms deals, they were clearly “looking to build up deposits in the 'favor bank' and to be well thought of,” said Gregory Suchan, a 34-year State Department veteran who helped lead the agency’s oversight of arms transfers under the Bush administration.

As Hillary Clinton presses a campaign for the presidency, she has confronted sustained scrutiny into her family’s personal and philanthropic dealings, along with questions about whether their private business interests have colored her exercise of public authority. Clinton switched from opposing an American free trade agreement with Colombia to supporting it after a Canadian energy and mining magnate with interests in that South American country contributed to the Clinton Foundation. A review of the Clintons’ annual financial disclosures also revealed that 13 companies lobbying the State Department paid Bill Clinton $2.5 million in speaking fees while Hillary Clinton headed the agency.

Questions about the nexus of arms sales and Clinton Foundation donors stem from the State Department’s role in reviewing the export of American-made weapons. The agency is charged with both licensing direct commercial sales by U.S. defense contractors to foreign governments and also approving Pentagon-brokered sales to those governments. Those powers are enshrined in a federal law that specifically designates the secretary of state as “responsible for the continuous supervision and general direction of sales” of arms, military hardware and services to foreign countries. In that role, Hillary Clinton was empowered to approve or reject deals for a broad range of reasons, from national security considerations to human rights concerns.

The State Department does not disclose which individual companies are involved in direct commercial sales, but its disclosure documents reveal that countries that donated to the Clinton Foundation saw a combined $75 billion increase in authorized commercial military sales under the three full fiscal years Clinton served, as compared to the first three full fiscal years of Bush’s second term.

News reports document that at least seven foreign governments that received State Department clearance for American arms did donate to the Clinton Foundation while Hillary Clinton was serving as secretary: Australia, Oman, Qatar, Kuwait, Thailand, Norway and  Algeria. That year, the Algerian government donated $500,000 to the Clinton Foundation and its lobbyists met with State Department officials. Clinton’s State Department the next year approved a one-year 70 percent increase in military export authorizations to the country. The increase included authorizations of almost 50,000 items classified as “toxicological agents, including chemical agents, biological agents and associated equipment”. During Clinton’s tenure, the State Department authorized at least $2.4 billion of direct military hardware and services sales to Algeria.

The monarchy in Qatar had been lobbying the State Department for a similar weapons deal. Qatar donated to the Clinton Foundation while Hillary Clinton was running the State Department. During the three years of her tenure, Qatar saw a 14-fold increase in State Department authorizations for direct commercial sales of military equipment and services. The department also approved the Pentagon’s separate $750 million sale of multi-mission helicopters to Qatar. That deal would employ contractors United Technologies, Lockheed Martin and General Electric to maintain the fighter jets and missiles. All three companies have supported the Clinton Foundation over the years. That group of arms manufacturers, along with other Clinton Foundation donors Boeing, Honeywell, and Hawker Beechcraft (a company owned by Goldman Sachs) were together listed as contractors in 114 such deals while Clinton was secretary of state. 


Hillary Clinton helped broker a settlement in a tax case against UBS while she was secretary of state, and the Swiss bank giant  has increased its financial support tenfold in Clinton Foundation projects.

In February 2009, the IRS sued UBS and demanded that it disclose the names of 52,000 possible American tax evaders with secret Swiss bank accounts. In the months that followed, a legal settlement was negotiated. On 19 August 2009, it was announced that UBS would pay no fine and would provide the IRS with information about 4,450 accounts within a year. Since the deal was struck, disclosures by the foundation and the bank show the donations by UBS to the Clinton Foundation growing “from less than $60,000 through 2008 to a cumulative total of about $600,000 by the end of 2014”.

The bank also teamed up with the foundation on the Clinton Economic Opportunity Initiative, creating a pilot entrepreneur program through which UBS offered $32m in loans to businesses. Other UBS donations to the Clinton Foundation include a $350,000 donation from June 2011 and a $100,000 donation for a charity golf tournament.Additionally, UBS paid more than $1.5m in speaking fees to Bill Clinton between 2001 and 2014. A UBS spokeswoman told the Journal that any insinuation of a connection between the legal case and the Clinton Foundation “is ludicrous and without merit”. Clinton’s involvement in the UBS settlement is no secret. A Reuters analysis of the settlement negotiations published in April 2010 showed that Clinton was involved at several points in the process.

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