Consortium News
Feb 9 2008
Hillary’s Curious Campaign Loan
By Nat Parry
February 9, 2008
Only days before the make-or-break `Super Tuesday’ primaries, Hillary
Clinton dipped into her personal finances to lend her campaign $5
million, a move she kept secret until the day after she had battled
Barack Obama to a standstill in the coast-to-coast voting.
If she had disclosed the loan before Super Tuesday, it might not only
have generated troubling questions about the financial health of her
campaign; it might have focused unwanted attention on the sources of
the Clintons’ money.
Unlike other well-to-do politicians, the Clintons did not inherit
their wealth or amass a fortune during a prior business career. Just
seven years ago, on leaving the White House, the Clintons were
millions of dollars in debt due to the costs of fighting legal
battles.
Since then, they amassed a personal fortune – now estimated at about
$30 million – largely from book contracts and the cachet of a former
U.S. President, whose status attracted lucrative business deals and
speaking tours, many involving overseas interests.
The proximity between the Clintons’ new-found wealth and Hillary
Clinton’s presidential run raised eyebrows over whether the $5
million loan – and any future financial help she might give her
campaign – could constitute backdoor financing from benefactors
beyond what they could legally donate.
On Feb. 6, Sen. Clinton told reporters that the loan was `my money,’
apparently meaning that she was not relying on the funds of her
husband or anyone else. A Clinton spokesman later added that the loan
was from her `share of their joint resources.’
Since 2001, Sen. Clinton has reported earning $9.9 million from Simon
& Shuster for her memoir, Living History, on top of her Senate salary
of $169,300 a year.
Still, the bulk of the family income derives from Bill Clinton’s
speeches and his participation in business ventures, which — when
combined with the multi-million-dollar fundraising for his foundation
and his presidential library — have come to be known as `Clinton
Inc.’
Last month, the Wall Street Journal reported that former President
Clinton stands to make $20 million as he unwinds a complicated
business relationship with Yucaipa Cos., the investment firm of his
longtime supporter, billionaire Ron Burkle, which has connections to
the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum. [WSJ, Jan.
22, 2008]
A week ago, the New York Times described the help Clinton gave
Canadian mining financier Frank Giustra in securing a lucrative
uranium deal with the repressive government of Kazakhstan in 2005,
shortly before Giustra made an unreported $31.3 million donation to
Clinton’s foundation. [NYT, Jan. 31, 2008]
Sen. Clinton’s most recent financial disclosure form showed that the
former president also earned $10.2 million for giving 57 speeches in
2006. Of those speeches, 31 were delivered outside the United States
for $6.4 million.
>From 2001 to 2007, Bill Clinton collected nearly $40 million in
speaking fees, according to a review by the Washington Post. His paid
speeches – with fees as high as $400,000 – included appearances
before landlord groups, biotechnology firms, food distributors,
charities and leadership organizations all over the world.
The legal significance of Hillary Clinton’s assertion that the $5
million loan came from her portion of the couple’s wealth relates to
the political sensitivity – and questionable legality – of a husband
or wife financing the campaign of a spouse. Federal law only allows
the candidate to make unlimited contributions to his or her own
campaign.
For instance, when Sen. John Kerry arranged a $6.4 million loan to
keep his 2004 campaign afloat, he used his Boston townhouse as
collateral, rather than count on help from his multi-millionaire
wife, Theresa Heinz Kerry.
Troubled Campaign?
Since the announcement of the $5 million loan, the Clinton campaign
has tried to reassure anxious supporters that the loan does not
signify a lack of resources or possible trouble staying competitive
with Obama.
But Joe Trippi, a former adviser to John Edwards, said the loan is a
warning sign. `It means she’s at a tremendous disadvantage moving
forward,’ he said. `The worst thing to be is an 800-pound gorilla
who’s out of money.’ [Washington Post, Feb. 7, 2008]
There’s also the mystery of why Hillary Clinton’s campaign needed
this sudden infusion of cash. While Clinton justified the loan as
necessary `to be competitive’ with Obama, her campaign raised more
money in 2007 than any candidate of either party.
Over the year, she brought in a total of $115.7 million, far above
the $75 million goal she set at the beginning of the year. In
comparison, the Obama campaign raised $102.2 in 2007. In the final
three months of the year, she out-raised Obama by nearly $4 million.
It does appear that Obama out-raised Clinton in January, with
reported receipts of $32 million for the month, compared to Clinton’s
reported $13 million. But Clinton seemed to go out of her way to
downplay that shortfall before Super Tuesday.
She claimed to have had `a great month fundraising in January,’ a
month in which her campaign `broke all the records.’
But there is concern among Clinton’s advisers that her smaller roster
of contributors means that many have reached their legal limit and
thus can’t give more. By contrast, Obama has relied on more small
donors who mostly have not `maxed out.’
Renewed Interest
Clinton’s acknowledgement of the loan also threatens to attract new
interest in the overseas financial ties of the Clintons and some of
their supporters.
According to a review of records by the Center for Investigative
Reporting and ABC News, several top fundraisers for Hillary Clinton’s
campaign have lobbied on behalf of foreign governments and sometimes
helped their clients gain access to Clinton as a U.S. lawmaker.
The review found that six Clinton `Hillraisers,’ specially designated
fundraisers who have collected at least $100,000 for her presidential
campaign, are registered with the Justice Department as lobbyists for
foreign governments.
As ABC News reported, `Two of Clinton’s top moneymen, John Merrigan
and Matthew `Mac’ Bernstein, are part of a lobbying team hired by the
rulers of Dubai to defend against a U.S.-based lawsuit alleging that
the rulers had enslaved young boys to race camels.’
Merrigan’s and Bernstein’s firm, DLA Piper, arranged a meeting with
Clinton and three other senators last year on behalf of Dubai,
according to filings. Dubai paid the firm $3.7 million for a year’s
work.
Merrigan and Bernstein also lobbied on behalf of the Turkish
government in March 2007 to prevent `the introduction, debate and
passage of legislation and other U.S. government action that harms
Turkey’s interests or image.’
Specifically, the lobbyists opposed a resolution, co-sponsored by
Clinton, that would term the World War I-era massacre of Armenians by
Ottoman Turks a genocide.
Although Clinton was an original co-sponsor, she soon qualified her
support for the resolution, telling the Boston Globe editorial board
that `the adamant expression of real dismay and outrage by this
Turkish government has to be factored into this.’
Merrigan and Bernstein have since pledged to raise at least $250,000
for Clinton’s presidential campaign, and DLA Piper employees now
represent the largest bloc of contributors to Clinton’s presidential
campaign, according to the Center for Responsive Politics.
Campaign finance experts say the connection between foreign lobbying
and presidential campaign fundraising deserves scrutiny because
lobbyists may have undue influence if their candidate reaches the
Oval Office.
`Someone who has worked with the Clintons over a number of years,’
said Sheila Krumholz, executive director of the Center for Responsive
Politics, `is worth their weight in gold.’
Hillraisers and Pioneers
Besides the issue of foreign influence in a potential Hillary Clinton
administration, there are broader concerns over the general
aggressiveness of the Clinton’s campaign’s fundraising machine.
Borrowing a page from Karl Rove’s playbook, the Clinton campaign has
broken new ground in the use of `bundling,’ a fundraising tactic
forged by the Bush campaign in Election 2000.
Similar to Bush Pioneers, Hillraisers are people who gather at least
$100,000 for Clinton’s presidential campaign. This is done through
the practice of bundling, or the gathering of contributions from many
individuals in an organization or community, and presenting the lump
sum to the campaign.
Karl Rove’s use of the Pioneers program came under criticism from
Democrats and campaign finance reform advocates for violating the
spirit of campaign finance laws, which attempt to curtail influence
peddling and corruption in elections.
Of Bush’s 246 Pioneers in the 2000 campaign, the Washington Post
reported, 104 ended up with jobs in the administration or
appointments. Twenty-three Pioneers were named as ambassadors and
three were named to the Cabinet. At least 37 worked on the
post-election transition in 2000, which helped place political
appointees into key regulatory positions affecting industry.
Now, with Hillary Clinton emulating Rove’s fundraising machine, some
campaign reformers wonder if similar favors are in store for her
biggest bundlers. Some point out that her level of disclosure of
bundlers does not even meet the low standard set by George W. Bush in
2004.
In a letter to Clinton, Public Citizen said her campaign `fails to
disclose bundlers’ cities and states of residence, how much money
they raised other than to note that they have raised at least
$100,000, or who they raised their money from.’
Her disclosure `not only fails to set an exemplary standard,’ it
doesn’t even `live up to the standard of George Bush and Dick
Cheney,’ the watchdog group said.
Library Money
Another issue that has arisen relates to the relationship between
Hillary Clinton’s presidential campaign and the William J. Clinton
Foundation, which among other things, provides funding for his
presidential museum in Little Rock, Arkansas.
Hillary Clinton has faced questions about the source of the money for
the library, as well as the relationship between the Clinton
Foundation and her campaign.
At least two dozen Clinton Foundation donors have become Hillraisers,
and the early library donors, combined with their families and
political action committees, have contributed at least $784,000 to
Hillary Clinton’s Senate and presidential coffers.
Terry McAuliffe, who led the foundation’s fund-raising and sits on
its board, is now Clinton’s campaign chairman and chief fund-raiser.
During a September debate, moderator Tim Russert asked the senator
whether her husband would release a foundation donor list. She said
that her husband would `be happy to consider that,’ but the former
president later declined to provide a list of donors.
Some of her rivals argue that donors could use gifts to the
presidential foundation to circumvent campaign finance laws intended
to limit political influence. Looking at some of the contributors, it
does appear that some hope to gain favor on various issues.
The New York Times has compiled the first comprehensive list of 97
donors who gave or pledged a total of $69 million for the Clinton
presidential library in the final years of the Clinton
administration.
The examination found that while some $1 million contributors were
longtime Clinton friends, others were seeking favors from the
administration. Two pledged $1 million each while they or their
companies were under investigation by the Justice Department.
Others are directly connected to foreign governments, some of which
may want policy changes from a second Clinton administration.
The Saudi royal family, the king of Morocco, a foundation linked to
the United Arab Emirates, and the governments of Kuwait and Qatar
have all made contributions of unknown amounts to the Clinton
Foundation.
The Clinton campaign says it has no relationship with the Clinton
Foundation. `Sen. Clinton is not involved in the fund-raising or
operations of the Clinton Foundation,’ said campaign spokesman Phil
Singer.
Although Hillary Clinton may not be directly involved in the
foundation’s fundraising, one longtime Democratic insider said he has
heard complaints from lobbyists that after they have `maxed out’ to
her presidential campaign, the senator asks if they have donated to
her husband’s foundation. The suggestion is that they must get their
checkbooks out again, he said.
The foundation and her campaign are intertwined in other ways, as the
New York Times noted.
Not only did McAuliffe raise money for both the foundation and the
campaign, other top foundation employees overlap with the Clinton
campaign. Cheryl Mills, for example, sits on the foundation board and
serves as the general counsel to the Clinton campaign.
And Jay Carson recently traded a communications position at the
foundation for a job as her campaign’s press secretary.
But what may be of greater concern is the political influence that
may be developing behind the scenes, and what it may mean in a future
Clinton presidency.
With her campaign emulating strategies pioneered by Karl Rove, the
question arises as to why Americans should expect a break from the
cronyism and corruption that have defined the Bush administration.
Along with ending the war in Iraq, reining in the Bush cronyism was a
central theme for the Democratic victories in the 2006 congressional
elections.
Now, having missed opportunities to end the Iraq War, Democrats may
find themselves in a difficult position for criticizing
influence-peddling, too.
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http://www.consortiumnews.com/2008/020808.ht