During the course of the federal investigation, FBI agents recorded Chatwal discussing the flow of money to politicians. He said without the cash, “nobody will even talk to you.” He added, “that’s the only way to buy them.”70
Chatwal also pleaded guilty to interfering with a grand jury investigation by telling a witness that “he and his family should not talk to FBI or IRS agents,” or if they did to lie about it. “Never, never” admit to reimbursements, he told them. Later, he allegedly told the person, “cash has no proof.”71
While those who transferred cash in an effort to secure the nuclear deal have all faced legal jeopardy for one reason or another, the recipients of those transfers have moved on. The Clintons have never explained who donated the millions the foundation attributed to Amar Singh. And they have never discussed the role Sant Chatwal and his flow of money might have played in getting Hillary to change her views on the nuclear deal. Indeed, although Chatwal was a longtime member of the Clinton Foundation board of trustees, since his admission of guilt the foundation has erased any mention of him from the Clinton Foundation website.72
CHAPTER 5
The Clinton Blur (I)
BILL AND HILLARY’S GLOBAL NEXUS OF PHILANTHROPY, POWER, AND PROFIT
On a beautiful evening in October 2011 the Clinton Foundation held an elaborate gala at the Hollywood Bowl in Los Angeles called “A Decade of Difference.” The night’s entertainment featured “socially responsible artists in music, film, and television” brought together to “celebrate the work and impact of President Clinton.” A company called Control Room, which modestly bills itself as “the world’s leading producer of massive global events,” put the events together.1
Lady Gaga sang a song. Looking over at Bill, she said “I just love you and your hot wife.” She praised the Clintons and promised the crowd, “Tonight, I thought we’d get caught up in a little Bill romance.” She then proceeded to belt out her hit “Bad Romance,” but made it Clinton specific.2
The Clinton Foundation is not your traditional charity. A traditional charity doesn’t have a globe-trotting ex-president, an ex–secretary of state, and their daughter running the show. But for all the benefits that derive from such star power, the real problem is delineating where the Clinton political machine and moneymaking ventures end and where their charity begins.
The stated purpose of the Clinton Foundation is to “strengthen the capacity of people throughout the world to meet the challenges of global interdependence.” It was founded in 2001 and boasts a staff of 350. Out of the foundation springs a hydra of projects including the Clinton Health Access Initiative, Clinton Climate Initiative, the Clinton Giustra Sustainable Growth Initiative (CGSGI), and Clinton Hunter Initiative.
But while the window-display causes of the Clinton Foundation, such as alleviating AIDS suffering, preventing obesity, and promoting economic growth in the developing world, are commendable, and while the foundation has done some legitimately good work, the moral authority of these works seems to provide a screen and pretext for a storehouse of private profit and promotion.
Some might argue that since the Clinton Foundation is a public charity, the flow of funds—even from questionable foreign sources seeking favors—is not really such a big deal. After all, the funds go to help people and the Clintons don’t directly profit from the money that gets raised. But it is a big deal, at least according to federal law. If the donors are giving money to the Clintons to influence them, it should still be considered a bribe. American corporations that steer contributions to politically connected charities overseas in hopes of currying favor are violating the Foreign Corrupt Practices Act (FCPA). American corporations have been dinged for giving money to legitimate charities linked to politicians. In 2002, for example, the pharmaceutical company Schering Plough settled with the SEC over charges that it had violated the FCPA by donating $76,000 to a legitimate charity in Poland called the Chudow Castle Foundation. It’s a well-respected charity, but that was besides the point. The SEC said the donation was made to influence a Polish government health official who sat on the charity’s board. The company settled the claim with the feds for $500,000.3
As secretary of state, Hillary Clinton supported aggressive enforcement of the FCPA. When some business organizations tried to water down the law, she declared she was “unequivocally opposed to weakening” it. Hillary took a “strong stand when it comes to American companies bribing foreign officials.”4
So the fact that the Clinton Foundation is a charity should not deter us from investigating and exploring the flow of foreign money into its coffers. Indeed, a charity deserves special attention because it is the perfect tool of influence. Foreign governments, corporations, and financiers who can’t legally contribute to American political campaigns can write large checks to the Clinton Foundation in addition to paying high fees for speeches.
The Clintons frequently elide the distinction between their philanthropic work, their self-promotional and public relations efforts, and their moneymaking ventures. As Fortune puts it in an eyebrow-raising sentence, the Clinton Foundation is “a new turn in philanthropy, in which the lines between not-for-profits, politics, and business tend to blur.”5
Bill Clinton has said as much himself. In describing the foundation’s role, he positions it as a unique go-between for businesses, governments, and nongovernmental organizations (NGOs). The result is the creation of what he calls “public-goods markets.” He sees this as the wave of the future: “This is the kind of thing I believe will be a critical component of all philanthropic activity for the foreseeable future,” he told one reporter. “I believe that in the years ahead, the organization and expansion of public-goods markets will become one of the most important areas of philanthropy, and will be an area where philanthropy sometimes blurs into strict private enterprise.”6
In short, what the Clintons have attempted to do is create a crossroads for government, business, and NGOs, with the Clinton Foundation squarely in the middle. The Clinton Foundation calls this Bill’s “convening power,” his ability to bring together elites from business, politics, and the nonprofit world.7
There is nothing intrinsically wrong with this approach, which, if pursued in a scrupulous way, has the capacity to do a lot of good. The Clintons’ ability to convene various public and private interests around a common cause or project does create leverage for getting things done in the global arena. But the blur also creates opportunity for moving a lot of money around with very little accountability. Being a convening power has another useful benefit: it means that the organization doesn’t actually need to get its hands dirty. While there are plenty of photos of Bill, Hillary, or Chelsea holding sick children in Africa, the foundation that bears their name actually does very little hands-on humanitarian work. “When President Clinton’s foundation was formed, the first thought was to run its own projects,” says Harvard professor Rosabeth Moss Kanter. But then they came up with the convening-power model. “What’s brilliant is that President Clinton provides the platform and enlightening speakers, but other people do the actual work of change.”8
This causes confusion about who is actually doing what. As relief work and humanitarian veteran Miles Wortman explains, “The Clinton Foundation ‘partners’ with other foundations in the provision of services. When the Gates Foundation, for example, provides revenue to the Clinton Foundation, and it in turn partners with the Gates Foundation in the provision of say, antiretroviral drugs, is this double accounting of activity?”
This approach positions the Clinton Foundation in a way a politician could especially love: with little direct responsibility, it is able to take credit for good results and avoid blame for bad ones.
Another important function of the Clinton Foundation appears to be employing longtime Clinton associates. Like any political machine, jobs must be provided to those who served the Clintons when in power and who may serve them again in the future. This may help to explain why the foundation’s senio
r ranks are populated with so many former political aides and associates, as opposed to those with extensive experience in charitable work.
Ira Magaziner, who served the Clintons when Bill was in the White House—among other things, he was the author of Hillary’s famously convoluted health care reform proposal—has played a central role in the foundation.9 As he put it in 2009, “The biggest part of the Foundation includes four operating initiatives, accounting for about 90 percent of the Clinton Foundation budget, all of which I started and run.”10 These include the Clinton Health Access Initiative, which deals with matters related to HIV/AIDS around the world; the Alliance for a Healthier Generation, a domestic program focused on nutrition and health; the Clinton Hunter Initiative, which focuses on agriculture in Africa; and the Clinton Climate Initiative, which focuses on issues related to climate change. Even with structural changes in 2011 that diminished Magaziner’s administrative control, he still plays a key role.
These Clinton Foundation initiatives are part and parcel of the Clinton Foundation apparatus. The CGSGI, for example, despite being ostensibly based in Canada, has an executive director based in New York City. An examination of CGSGI’s financial records indicates that the bulk of the money it collects gets transferred to the Clinton Foundation itself. It largely functions as a pass through. Senior positions in the foundation have been filled by Clinton insiders like Bruce Lindsey, Bill’s longtime friend and political adviser; John Podesta, who was Bill’s chief of staff at the White House; Valerie Alexander, a senior communications adviser for Hillary’s 2008 campaign; Amitabh Desai, former legislative aide to then senator Clinton; and Laura Graham, a deputy assistant in Bill’s administration from 1995 to 2001.11
The chief development officer at the Clinton Foundation is Dennis Cheng, who previously served as national finance director and New York finance director for Hillary’s run for the Democratic presidential nomination in 2007–2008. When Hillary became secretary of state, Cheng joined her at Foggy Bottom, where he served as the deputy chief of protocol of the United States. That gave him the ability to ensure that Clinton financial supporters were well represented in the pecking order when foreign heads of state made their official visits to Washington.12
The Clinton Foundation also hands out honorary titles such as “adviser” to businessmen and investors who are ostensibly involved in the activities of the foundation (and who are contributors). As we have already seen, investors operating in the developing world regularly use the title of “adviser to the Clinton Foundation” on their résumés. They travel with Bill when they visit developing countries in which the Clinton Foundation has activities and where the investors have or are seeking investments.
The Clinton Foundation board of directors (or board of trustees as it has sometimes been called) is largely made up of the Clintons and their closest political aides and advisers. The tightness of the board has raised alarm bells at places like the Better Business Bureau (BBB). In 2013 the BBB conducted a charity review of the Clinton Foundation and found that it failed to meet minimum standards of accountability and transparency. It dinged the organization on its management and financial controls and pointed out that, despite having a staff of 319, the board of directors at the time had only three board members, who did not actually review the performance of the CEO. The BBB also said that board members did not receive information about financial arrangements with outside fundraising firms and consultants.13
Similarly, Charity Navigator, which evaluates and ranks philanthropic groups, will not rank or grade the Clinton Foundation. The explanation? The foundation’s “atypical business model” makes it difficult, if not impossible, to evaluate.14
The Clinton Foundation has added corporate executives or business investors to its board of trustees from time to time, especially if they are major contributors. One can only wonder how tight the screening process is, given that at least four Clinton Foundation trustees have either been charged or convicted of financial crimes including bribery and fraud.
Vinod Gupta, the founder and chairman of the database firm InfoUSA, was a major Clinton financial supporter who served as a foundation trustee. In 2008 he was charged with fraud by the Securities and Exchange Commission (SEC) for using company funds to support his luxurious lifestyle. He was alleged to have used more than $9.5 million in corporate funds to pay for personal jet travel, millions for his yacht, personal credit card expenses, and the cost of twenty cars. He settled with the SEC for $4 million.15
Company shareholders also filed suit against him for misuse of corporate funds, including paying Bill a $3 million consulting fee, and using corporate assets to fly the Clintons around. Gupta defended his relationship with the Clintons, saying that those payments and his relationship with the Clintons earned huge dividends for Infogroup. The company settled with shareholders to the tune of $13 million.16
Sant Chatwal, whom we met in the previous chapter, was another foundation trustee who has been in legal trouble over the years, including his conviction for illegal campaign financing, obstruction of justice, and other charges.17
Victor Dahdaleh, another trustee, was charged by the Serious Fraud Office (SFO) in Great Britain with paying more than 35 million pounds in bribes to executives in Bahrain to win contracts of more than 2 billion pounds. He has worked for the American aluminum company Alcoa as a “super-agent.”18 (The billionaire had his bail revoked in the case because he contacted prosecution witnesses.)19 Dahdaleh was found not guilty after the SFO offered no evidence against Dahdaleh because a key witness, Bruce Hall, pleaded guilty to conspiracy to corrupt but refused to testify.20 Alcoa ended up pleading guilty in the US case arising out of the transaction and settled with the US Justice Department for $384 million. Dahdaleh was not charged in the United States individually.21
Current Clinton Foundation board member and trustee Rolando Gonzalez Bunster has been named in a fraud case in the Dominican Republic involving his company InterEnergy. The charges were filed by the Dominican government’s Anti-Corruption Alliance (ADOCCO).22 In 2013 Bunster was charged along with officials of a government agency concerning alleged “ballooned” fees charged to the government. The company dismisses the charges as “baseless allegations.”23
The flow of funds into the Clinton Foundation comes from a variety of sources. While the foundation boasts that it has hundreds of thousands of contributors, it relies heavily on a group of high-dollar donors to fund its operations. Since it reports contributions in ranges, not exact amounts, it is difficult to know precisely how dependent it is on those donors. But approximately 75 percent of its money has come from contributions of $1 million or more. And as we will see, many of these contributions came from foreign nationals who decided to give large gifts or make large pledges at times when they had business before the US government.
As we have seen, the Clinton Foundation failed to report multimillion-dollar contributions from foreign entities like Ian Telfer’s Fernwood Foundation. Another Canadian mining investor whose contributions were never disclosed by the Clinton Foundation is Stephen Dattels. This mines-to-metals tycoon has donated millions of shares of stock to the foundation.
On June 8, 2009, Dattels donated two million shares of stock in his company Polo Resources—worth about $40,000 at the time. Eight weeks later, on July 29, according to WikiLeaks, the US ambassador in Bangladesh urged the prime minister and energy minister to reauthorize the Phulbari Mines for the use of “open pit” coal mining. Dattels’s Polo Resources is an investor in the mine.24
By donating shares in small mining companies, Dattels is creating a powerful incentive for the Clintons to help his companies succeed. If the stock price rises, the value of the foundation’s shares will rise. In the case of Dattels, this potentially creates a significant conflict of interest for Hillary Clinton.
This was not the first contribution Dattels made to the Clinton Foundation. Back in 2007 he had committed extensive financial support to CGSGI over a five-year period. He committed
to do the same in 2012. The Dattels Family Foundation’s private website mentions the Clinton Foundation as a recipient of its support. But the name Dattels appears nowhere on Clinton donor disclosures nor does that of his company, Polo Resources. Again, the Clinton Foundation has failed to report a foreign contribution. How many more undisclosed foreign donors might there be? It is impossible to know. But this was a basic and simple requirement that demands further investigation. And we will meet more undisclosed donors later in this book.
The flow of funds into the Clinton Foundation, which was supposed to be transparent, is far from it. As we saw in the previous chapter, even when contributions are disclosed, as in the case of an obscure Indian politician, he was apparently not really the source of those funds. Is this happening on other occasions?
Perhaps the most important function of the foundation is to bolster Bill and Hillary’s reputations as global humanitarians by bringing relief and care to people all over the world. This reputation not only flatters the ex-president’s ego and benefits Hillary’s political career, but it also has real value both in terms of global influence and financial reward. But how much good has the Clinton Foundation actually done?
At the Hollywood Bowl event, the publicity material included some sweeping claims about the Clinton Foundation’s accomplishments. “Over the past ten years,” it reads, “President Clinton’s vision and leadership have resulted in nearly 4 million people benefiting from lifesaving HIV/AIDS treatments.”25 This is perhaps the most popular and oft-repeated success of the foundation, and it stems from Bill’s efforts to negotiate and help create an international system whereby the cost of treatment drugs for HIV/AIDS victims would be radically reduced. “We set out to organize a drug market to shift it from a high-margin, low-volume, uncertain payment process . . . we were able to lower the price to just under $140 a person a year.”26
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