Hillary's Curious Campaign Loan

By Nat Parry at www.consortiumnews.com ~ 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.

Nat Parry is co-author of Neck Deep: The Disastrous Presidency of George W. Bush.

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