Clinton Cash (13 page)

The Clintons point out that neither Bill, Hillary, nor Chelsea take a salary from the Clinton Foundation. This is true—the hundreds of millions that pour into the foundation do not benefit the Clintons directly. But they profit from the foundation in a way that is both indirect and far more lucrative: by taking enormous speaking fees for talking about their charitable work.

In his early post-presidential years Bill’s speeches were largely about his views of the world or his experiences in office. But in more recent years many of his speeches involve talking about the work of the foundation.

In October 2006, for example, Bill was paid $150,000 for a speech to the Mortgage Bankers Association for “discussing world events and his work on behalf of the William J. Clinton
Foundation.”
³⁹
In September 2006 he was paid $450,000 to speak at the Fortune Forum, which is a charitable fundraising event in London. These are just a few examples among many instances. Clinton’s go-to speech, entitled “Our Common Humanity,” is largely about the work of the foundation.

The Clintons’ charitable work puts money in their pockets in other ways, too. In 2007 Bill released a book called
Giving
that highlighted the charitable work of the Clinton Foundation and those who work with it. He made $6.3 million from sales.
⁴⁰
The book was widely criticized. Peter Baker, now of the
New York Times
, called it an “extended public service announcement masquerading as a book.”
⁴¹

Blurring their charitable, political, and financial interests has served the Clintons well. When Hillary became secretary of state, the practice continued. Indeed, it reached a whole new level.

CHAPTER 6

The Clinton Blur (II)

T
HE
V
IEW FROM
F
OGGY
B
OTTOM

I
n 2009 Hillary Clinton was in Russia, where she pushed Russian officials to sign a multibillion-dollar airplane agreement with Boeing. The $3.7 billion purchase was a big deal for the aerospace company. Two months after Boeing won the contract, the company pledged $900,000 to the Clinton Foundation. The
Washington
Post
called it “an indicator of a mutually beneficial relationship between one of the world’s major corporations and a potential future president. Clinton functioned as a powerful ally for Boeing’s business interests at home and abroad, while Boeing has invested resources in causes beneficial to Clinton’s public and political image.”
¹

When Hillary became secretary of state she announced a new commitment to what she called “commercial diplomacy” or “economic statecraft.” The idea was simple: she would use her diplomatic leverage to help American companies be more competitive
overseas. If they needed help in a foreign country, Hillary would be there as a supportive partner.

This was no idle commitment. As
Businessweek
put it in a retrospective look at her tenure, “There’s no doubt Clinton has had success using her personal clout to help a handful of companies close a handful of deals.”
²

Hillary’s commitment to commercial diplomacy was laudable to the extent that she was committed to helping American firms be competitive in the global marketplace. But in practice it would prove difficult to distinguish the personal and political aspects of this kind of activity.

In State Department parlance Hillary’s commercial diplomacy was executed as part of what it called “public private partnerships.” And the public-private partnerships came in many forms. The goals of these partnerships were often praiseworthy. But they often benefited friends of the Clintons.

Power Africa, for example, like all such partnerships, has a noble goal: to help African countries develop large energy projects.
³
But as
Forbes
magazine points out, initiatives like Power Africa tend to favor politically connected firms. Winners include firms like Symbion Power, which counts former ambassador Joe Wilson as a member of its board. (Wilson, who we will meet again in chapter 8, is a Clinton friend and political ally.)
⁴
Another firm involved with Power Africa is Hecate Energy. Its founder David Wilhelm has no background in the field. For most of his professional life he served as a lobbyist and partner in Wilhelm and Conlon Public Strategies. Before that, he was the manager for Bill Clinton’s 1992 presidential campaign.
⁵

The pursuit of commercial diplomacy required a new infrastructure within the State Department. Shortly after her confirmation as secretary of state, Hillary created the Office of Global Partnerships. The director of this office would serve as the “chief
liaison between corporate America, the State Department, and governments around the world.”

To run this sensitive office, she turned not to a diplomat, a former corporate executive, or even someone with NGO experience overseas but to longtime political operative Kris Balderston.
⁶

Balderston had served for eight years on Hillary’s Senate staff and also did a stint in Bill Clinton’s White House. His most famous role in Clinton World involved keeping the infamous List, which rated people as friends or enemies on a point system.
⁷
In a December 8, 2008, memo Balderston had suggested the idea for a State Department “corporate office” to create a series of public-private partnerships matching private capital with public governmental power. Hillary loved the idea and adopted it immediately, putting Balderston in charge, despite his having no background in the area of international business.
⁸

Other senior positions were given to political aides who had more experience in the world of Washington than in global affairs. Indeed, during her tenure both the State Department and the United States Agency for International Development (USAID), which fell under Hillary’s control, saw a substantial rise in staff. Staffing at the State Department increased 17 percent from 2008 to 2012, and USAID staffing was up 30 percent.
⁹

One can hardly blame Bill and Hillary for seeking to place friends and supporters in jobs under their control. Like other prominent political figures, the Clintons need to keep a large constellation of aides, advisers, and friends gainfully employed. Some of this employment, as indicated above, is handled by way of the Clinton Foundation. But the State Department was a convenient place for rewarding supporters as well. To enhance her scope of patronage, Hillary made extensive use of what is called the special government employee (SGE) rule. This special category of staff allowed the Clintons to have their
aides simultaneously involved with the Clinton Foundation, State Department, and various outside commercial interests.

The SGE rule was originally designed to ensure that experts like scientists and engineers could be tapped for their expertise by the federal government without giving up their regular jobs at a research lab or university. The assignment was also supposed to be temporary—totaling no more than 130 days out of 365.

But Hillary used the SGE status not for scientists or academics but for political aides, some of whom simultaneously held jobs at Clinton-affiliated firms. Take Huma Abedin, who served as Hillary’s deputy chief of staff at State. As an SGE, Abedin was able to remain on the payroll of the Clinton Foundation, as well as on that of a corporate consulting firm called Teneo, which was started in 2009 by Bill’s longtime aide Doug Band.

Teneo, where Bill was a paid adviser, represented firms who had often either paid for Bill’s speeches or donated to the Clinton Foundation. Also involved in Teneo was Declan Kelly. An SGE at State for a while, Kelly joined Teneo in 2011. Teneo’s clients included Fortune 500 companies, governments, and high-net-worth individuals. The companies it represented included Coca-Cola, UBS, and Standard Chartered.

The arrangement worked seamlessly until March 2012, when Bill ceased to be a Teneo adviser. One of Teneo’s clients was MF Global, the commodities brokerage run by Clinton friend John Corzine.
¹⁰
MF Global collapsed after a series of highly leveraged trades. Some customers accused the firm of raiding their private accounts to shore up its finances after risky bets went sour. When news broke that MF Global was a client, Bill apparently felt it best to sever his ties.

SGE Abedin played a central role in everything Hillary did. She assured a Senate committee that there was no cross-pollination between her job at the State Department and her
other work at Clinton-connected entities. She explained that she provided “strategic advice and consulting services” to Teneo’s management team but did not provide “insights about the department, my work with the secretary or any government information to which I may have had access.” But public concerns were not so easily allayed. As the
New York Times
put it, “the lines were blurred between Ms. Abedin’s work in the high echelons of one of the government’s most sensitive executive departments and her role as a Clinton family insider.”
¹¹

SGE Caitlin Klevorick, who worked as a consultant to Bill Clinton and the Clinton Foundation, joined the State Department in 2009 as a special assistant to Cheryl Mills. In that capacity she “provided expert knowledge and advice to the counselor and the chief of staff and other department officials on a variety of important foreign policy issues,” according to the State Department. SGE status allowed her to keep her firm CBK Strategies, where she simultaneously worked for corporate clients.

Cheryl Mills herself, Hillary’s longtime chief of staff, was also granted SGE status so she could continue to direct Haiti relief efforts at the State Department while returning to work for the Clinton Foundation after Hillary resigned.

SGE Elizabeth Bagley, who married into the RJR Reynolds tobacco fortune, was a longtime Hillary fundraiser who joined the State Department as a “special advisor to the Secretary” and then “special advisor for Secretary initiatives.” Bagley and her husband had kicked in more than $1 million to the Clinton Foundation. At State, she was paid a $129,000 salary (the highest possible) and allowed to continue her other commercial activities.

Ann Gavaghan, a former member of Hillary’s Senate staff, was also granted SGE special status. Gavaghan served as the chief of staff in the State Department’s Office of the US Global AIDS Coordinator.

One value of SGE status is that ethics rules are looser than those that apply to regular public employees. SGEs can “work on a matter if you have a personal relationship with one of the parties.”
¹²
They are also able to work for clients with matters before the office they work in. And they can raise money for political candidates (or entities like the Clinton Foundation) “if you do so only during non-duty hours and if you do not use a government resource.”
¹³

As the
Boston Globe
put it, this kind of arrangement is “fraught with potential conflicts and abuses.”
¹⁴

Propublica
, a nonprofit news organization, investigated the use of SGE status in the federal government and asked numerous government agencies to send them lists of SGEs at their agencies. According to
Propublica
’s Justine Elliott and Liz Day, many of them did. But the State Department balked. So
Propublica
filed a Freedom of Information Act (FOIA) request. The State Department responded after several months that assembling the list would require “extensive research,” finally handing it over four months after that. State Department officials would not explain why they were so reluctant to share the information.

The other tool Hillary used to create payroll opportunities for Clinton friends and allies was the S-class designation. S-class positions were under the direct purview and financial control of the secretary of state and no one else. This allowed Hillary to exclude State Department bureaucrats, Foreign Service officers, or civil servants from involvement or control over certain projects or activities, including everything from economic diplomacy to health care issues. As reporters Jonathan Allen and Amie Parnes put it in a sympathetic portrait of her tenure, Hillary appointed “a cluster of special ambassadors, envoys and representatives and senior advisers who exercised tremendous power to circumvent the department bureaucracy.”
¹⁵

Hillary further centralized control over the awarding of government grants, contracts, and consulting agreements by dramatically reducing the independence of USAID, which was part of the State Department apparatus. Dubbed the “Foggy Bottom Smackdown” by some in Washington, Hillary effectively took away power from USAID administrators and in her Quadrennial Diplomacy and Development Review made clear that the agency’s budget would remain under the State Department. As the
New Republic
reported, not only were USAID programs further put under her control, but she populated the agency with loyalists who had little or no relevant experience.
¹⁶

The practice of appointing special status employees throughout the State Department bureaucracy effectively blurred the lines between American diplomatic initiatives and the interests of the Clintons and their friends.

C
onsider the case of Laureate Education—a typical example of the Clinton Blur in action.