Commentary — November 17, 2015, 6:41 pm

Shaky Foundations

The Clintons’ so-called charitable enterprise has served as a vehicle to launder money and to enrich family friends.

After endless delays and excuses, the Clinton Foundation released its 2014 tax return as well as amended returns for the previous four years and an audit of its finances. That fulfilled a pledge made last April by Clinton Foundation acting CEO, Maura Pally, who acknowledged that the foundation had previously made a few unfortunate accounting “mistakes.”

Journalists are going to be scouring through this new financial information and pumping out “balanced” stories that evade what is already evident, namely that the  Clintons have used their foundation for crass profiteering and influence peddling.

If the Justice Department and law enforcement agencies do their jobs, the foundation will be closed and its current and past trustees, who include Bill, Hillary, and Chelsea Clinton, will be indicted. That’s because their so-called charitable enterprise has served as a vehicle to launder money and to enrich Clinton family friends.

It is beyond dispute that former President Clinton has been directly involved in helping foundation donors and his personal cronies get rich. Even worse, it is beyond dispute that these very same donors and the Clintons’ political allies have won the focused attention of presidential candidate Hillary Clinton when she served as Secretary of State. Democrats and Clinton apologists will write these accusations off as conspiracy mongering and right-wing propaganda, but it’s an open secret to anyone remotely familiar with accounting and regulatory requirements for charities that the financial records are deliberately misleading. And not coincidentally, those records were long filed by a Little Rock–based accounting firm called BKD, a regional auditor with little international experience.

It’s odd that a small Arkansas-headquartered firm would handle the books for a giant entity like the Clinton Foundation, and even odder given that BKD has been implicated in a variety of misconduct. For example, last year the Securities and Exchange Commission sanctioned BKD for “violating auditor independence rules when they prepared the financial statements of brokerage firms that were their audit clients.”

It brings to mind Bernie Madoff, who also used a small accounting shop when he was running his notorious Ponzi scheme. And it’s worth emphasizing here that smaller firms are typically far less likely to challenge major clients, and the Clinton Foundation was one of BKD’s major sources of revenue.

The new audit that was released yesterday was prepared by PricewaterhouseCoopers (PwC), a major accounting firm. I’ve been told by multiple sources with knowledge of the review that PwC was under tremendous outside pressure to turn in a truthful audit as opposed to the shoddy work performed by BKD. “The audit is the key, it’s far more important than the amended tax returns,” Charles Ortel, an independent financial expert, told me. “PwC is a top firm and they will not be able to claim they didn’t know that the past audits were fraudulent because they have been informed of problems. If they certify that the Clinton Foundation is clean, when it is apparent it is not, PwC is done. It may go the way of Arthur Andersen.” Ortel, a former managing director of Dillon, Read & Co., who helped expose massive financial fraud by GE, GM, and AIG before the 2008 global financial meltdown, was referring to the accounting firm that missed massive fraud by Enron and subsequently collapsed.

A Canadian charity called the Clinton Giustra Enterprise Partnership—which is run by one of Bill Clinton’s close friends, Frank Giustra—has been moving significant sums of money into the Clinton Foundation’s flagship in New York. There’s no way for the public to know precisely how much total money the CGEP has taken in over the years—or how much it has forwarded on to the Clinton Foundation—because, unlike in the United States, under Canadian non-profit law charities don’t need to report donors to tax authorities. Earlier this year, after being severely criticized by the Canadian press, the CGEP released the names of twenty-four of its donors, but more than 1,000 are still unknown. (CGEP wrote in an email that “going forward [it] will publicly disclose all future donors.”)

The Clinton Foundation’s list of donors on its website puts the CGEP in the top category of $25 million-plus, however a financial-industry source who has seen the relevant records estimated that the figure is at least $33 million. According to Ortel that number is certainly understated. “There are no effective controls over the Clinton Foundation or the Giustra entity,” he told me. “No independent party has had access to the bank account records, including wire transfer records. There are no independent directors ensuring compliance with the law. Only a fool would have any confidence in their numbers; it’s like Al Capone forming a foundation.”

One money-laundering expert and former intelligence officer based in the Middle East who had access to the foundation’s confidential banking information told me that members of royal families in Middle Eastern countries, including Kuwait and the United Arab Emirates, have donated money to the CGEP that has then been sluiced through to the Clinton Foundation. He added that the CGEP has also received money from corrupt officials in South Africa during the regime of Jacob Zuma and from senior officials in Equatorial Guinea, one of the most brutal and crooked dictatorships in the world. “Equatorial Guinea doesn’t give to the Clinton Foundation in New York because it’s too embarrassing,” he said. “They give the money anonymously in Canada and that buys them political protection in the United States. The Clinton Foundation is a professionally structured money-laundering operation.”

In an email, a CGEP spokesperson wrote that the organization “has never received funding from any members of any royal family from any countries around the world.” Similarly, on its website the CGEP claims that it doesn’t take money from foreign governments. However, my source in the Middle East said, “in countries like Equatorial Guinea and Kuwait, there is no difference between government money and private money. You can call it private money but it’s stolen from the government and when these individuals donate they gain protection for their governments.”

“I can’t say for certain that it’s illegal because I don’t have access to all the financial information but at best they are skating along the edge,” the source added. “They get away with it because the major media outlets are too lazy to look into it but the [Congressional] Benghazi Committee has access to the key information, and so do government agencies like the IRS, the SEC and the FEC. If you put together the information that all of these agencies have it’s obvious that the foundation is a fraud.”

The Clinton Foundation declined to comment for this story.

Bill and Hillary Clinton have in tandem made enormous sums of money since Bill left the White House. According to the Washington Post, they netted at least $136.5 million between 2001 and 2012. “All the Benghazi committee has to do is match up Hillary’s travel as secretary of state with Bill’s speaking arrangements,” my source in the Middle East said. “Bill heads out to foreign countries and he gets paid huge amounts of money for a thirty-minute speech and then she heads out for an official visit as a favor. She racked up more miles than any secretary of state [other than Condoleezza Rice] and that’s one of the reasons why. How can they get away with that? The committee is either corrupt or incompetent, or both.”

There are other signs that the Clintons and their foundation may have violated federal, state, and international law. Under Treasury Department money-laundering rules, the Clinton Foundation is required to disclose every financial account it holds abroad. It has failed to disclose an account linked to the CGEP on its past eight tax returns.

I have been told by a source with firsthand knowledge that the Treasury Department, the IRS, the FBI, and Canadian tax authorities were informed of this and other transgressions many months ago but thus far have done nothing.

So why hasn’t the Obama administration’s Justice Department looked into the foundation? One can only speculate, but you have to wonder if it isn’t because it would be too embarrassing to Obama’s former secretary of state and to the president himself. For example, Obama donated part of the money he received for winning the Nobel Peace Prize to the Clinton Foundation’s scandal-plagued earthquake relief efforts in Haiti. And the domestic partner of Cheryl Mills—Hillary’s former chief of staff who shared now-classified information with the Clinton Foundation and currently sits on its board of directors—was involved in Haiti relief.

Surely, any competent government investigators with subpoena power should be able to quickly figure this all out.

Since it was founded by Bill Clinton in 2001, the Clinton Foundation has been very opaque in its accounting practices. It was only in 2008, in the face of mounting public criticism, that it started disclosing its donors.

Its biggest donors include some truly wonderful people and countries. There are, to name a few, the torture-happy, terror-exporting government of Saudi Arabia; a foundation controlled by Victor Pinchuk, a Ukrainian oligarch accused of bribery and corruption; and Frank Giustra, a penny-stock artist who became filthy rich with the generous assistance of Bill Clinton. In 2008, a former Kazakh official told reporters that Giustra, who established the CGEP with Clinton, donated millions to the foundation after Clinton helped him purchase uranium deposits in Kazakhstan. (At the time, Giustra denied this claim, pointing out that he had been engaged in mining deals in Kazakhstan since the 1990s.)

The Clinton Foundation has received more than $1 billion over the years to purchase HIV/AIDS drugs for poor people in Africa, Asia, and elsewhere. However, a unit set up to receive the money—the Clinton Foundation HIV/AIDS Initiative, Inc., which was run by Ira Magaziner, a Clinton administration veteran with close ties to Hillary—clearly spent far, far less than it took in. In fact, the unit’s accounting practices were so shoddy that its license was revoked by the state of Massachusetts, where it was headquartered.

One foundation deal, which involved Magaziner, is the mysterious “Procurement Consortium” that was announced in 2006. The consortium works with more than seventy world governments to coordinate their health care purchases from international vendors, supposedly at attractive prices. Data gleaned from these discussions can be enormously valuable, particularly to startup firms in the health-care industry. Magaziner is heavily involved in the health-care industry and previously, as reported by the New York Times, he was the “chief architect of the Clinton Administration’s ill-fated health plan.”

A number of other Clinton cronies have been on the Clinton Foundation’s payroll. Take two: Doug Band, a Clinton administration veteran who subsequently became a founding partner of a bipartisan clusterfuck called Teneo Holdings, and Huma Abedin, an employee of the Foundation and of Teneo during 2013. (Disclosure: Abedin is married to former New York congressman Anthony Weiner. Sydney Elaine Leathers, one of the women who exposed Weiner’s sexting scandal, is a personal friend of mine.)

There’s also Sidney Blumenthal, another Clinton administration veteran and long-time Clinton family hatchet man. (Perhaps I’m biased but my view is that allowing Blumenthal to operate in the political environment is like letting Typhoid Mary loose in an orphanage.) Blumenthal was paid as a consultant at least $120,000 annually by the Clinton Foundation and has also been lavishly subsidized by Media Matters and American Bridge, two groups that are pushing Hillary’s 2016 campaign.

Now let’s return to the Clinton Giustra Enterprise Partnership, the Clinton Foundation’s dirty slush fund. On its website, the CGEP says it was established so that “Mr. Giustra and other Canadian residents could receive a charitable tax credit in support of Mr. Giustra’s vision of working toward innovative solutions to poverty alleviation on a global scale.” As examples, it notes that in Colombia the good people at CGEP have provided “4.3 million meals to 4,000 underserved children” and “skills training and various construction certifications to 5,424 marginalized individuals.” It’s enough to bring tears to your eyes, but if you stop to think about it, providing “various construction certifications” and food to a few thousand “underserved” kids in a country like Colombia probably doesn’t cost a lot of money.

The CGEP has released the names of only a fraction of its donors and partners. But consider a few members of its rogues’ gallery:

• Ian Telfer, a friend of Giustra’s who formerly chaired a company called Uranium One. While Hillary was the secretary of state, the State Department cleared the sale, for good reasons or bad, of Uranium One to a state-run company in Russia.

• Sergey Kurzin, who worked with Giustra on a mining deal in Kazakhstan.

• Eric Nonacs, of the Skoll Global Threats Fund, who at one point was simultaneously employed by Endeavor Financial, the company Giustra set up to run his Kazakh deal, and the Clinton Foundation. (Nonacs was the foundation’s highest paid employee in 2005.)

Lukas Lundin, a mining magnate who runs his family-founded Lundin Group from Vancouver. Giustra and Lundin are good pals and they do business the same way, namely, as the old saying goes, by investing when there is still blood on the ground. In the case of Gisutra and Lundin, they typically jet off to poor countries where corruption thrives, and buy assets up for suspiciously cheap prices. Then, after failing to deliver on public promises to invest a lot of their money and provide social projects for the poor, they make a killing by flipping the assets or they monetize their gains by setting up shell companies that go public on the stock market in Vancouver, which is notoriously lax on regulation.

So why haven’t the Clintons gotten caught? My intelligence source summed up the situation perfectly in explaining why the Benghazi Committee has not thus far bagged them. “The Democrats are stupid but they have ruthless leadership. The Republicans are even dumber. Donald Trump is an idiot but he’s right about one thing: We are led by stupid people. These are some of the dumbest motherfuckers I have ever seen.”

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More from Ken Silverstein:

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