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.”

Share
Single Page

More from Ken Silverstein:

From the November 2013 issue

Dirty South

The foul legacy of Louisiana oil

Perspective October 23, 2013, 8:00 am

On Brining and Dining

How pro-oil Louisiana politicians have shaped American environmental policy

Postcard October 16, 2013, 8:00 am

The Most Cajun Place on Earth

A trip to one of the properties at issue in Louisiana’s oil-pollution lawsuits 

Get access to 168 years of
Harper’s for only $45.99

United States Canada

CATEGORIES

THE CURRENT ISSUE

October 2018

FEATURED ON HARPERS.ORG

Article
The Printed Word in Peril·

= Subscribers only.
Sign in here.
Subscribe here.

In February, at an event at the 92nd Street Y’s Unterberg Poetry Center in New York, while sharing the stage with my fellow British writer Martin Amis and discussing the impact of screen-based reading and bidirectional digital media on the Republic of Letters, I threw this query out to an audience that I estimate was about three hundred strong: “Have any of you been reading anything by Norman Mailer in the past year?” After a while, one hand went up, then another tentatively semi-elevated. Frankly I was surprised it was that many. Of course, there are good reasons why Mailer in particular should suffer posthumous obscurity with such alacrity: his brand of male essentialist braggadocio is arguably extraneous in the age of Trump, Weinstein, and fourth-wave feminism. Moreover, Mailer’s brilliance, such as it was, seemed, even at the time he wrote, to be sparks struck by a steely intellect against the tortuous rocks of a particular age, even though he labored tirelessly to the very end, principally as the booster of his own reputation.

It’s also true that, as J. G. Ballard sagely remarked, for a writer, death is always a career move, and for most of us the move is a demotion, as we’re simultaneously lowered into the grave and our works into the dustbin. But having noted all of the above, it remains the case that Mailer’s death coincided with another far greater extinction: that of the literary milieu in which he’d come to prominence and been sustained for decades. It’s a milieu that I hesitate to identify entirely with what’s understood by the ringing phrase “the Republic of Letters,” even though the overlap between the two was once great indeed; and I cannot be alone in wondering what will remain of the latter once the former, which not long ago seemed so very solid, has melted into air.

What I do feel isolated in—if not entirely alone in—is my determination, as a novelist, essayist, and journalist, not to rage against the dying of literature’s light, although it’s surprising how little of this there is, but merely to examine the great technological discontinuity of our era, as we pivot from the wave to the particle, the fractal to the fungible, and the mechanical to the computable. I first began consciously responding, as a literary practitioner, to the manifold impacts of ­BDDM in the early 2000s—although, being the age I am, I have been feeling its effects throughout my working life—and I first started to write and speak publicly about it around a decade ago. Initially I had the impression I was being heard out, if reluctantly, but as the years have passed, my attempts to limn the shape of this epochal transformation have been met increasingly with outrage, and even abuse, in particular from my fellow writers.

As for my attempts to express the impact of the screen on the page, on the actual pages of literary novels, I now understand that these were altogether irrelevant to the requirement of the age that everything be easier, faster, and slicker in order to compel the attention of screen viewers. It strikes me that we’re now suffering collectively from a “tyranny of the virtual,” since we find ourselves unable to look away from the screens that mediate not just print but, increasingly, reality itself.

Photograph (detail) by Ellen Cantor from her Prior Pleasures series © The artist. Courtesy dnj Gallery, Santa Monica, California
Article
Among Britain’s Anti-Semites·

= Subscribers only.
Sign in here.
Subscribe here.

This is the story of how the institutions of British Jewry went to war with Jeremy Corbyn, the leader of the Labour Party. Corbyn is another feather in the wind of populism and a fragmentation of the old consensus and politesse. He was elected to the leadership by the party membership in 2015, and no one was more surprised than he. Between 1997 and 2010, Corbyn voted against his own party 428 times. He existed as an ideal, a rebuke to the Blairite leadership, and the only wise man on a ship of fools. His schtick is that of a weary, kindly, socialist Father Christmas, dragged from his vegetable patch to create a utopia almost against his will. But in 2015 the ideal became, reluctantly, flesh. Satirists mock him as Jesus Christ, and this is apt. But only just. He courts sainthood, and if you are very cynical you might say that, like Christ, he shows Jews what they should be. He once sat on the floor of a crowded train, though he was offered a first-class seat, possibly as a private act of penance to those who had, at one time or another, had no seat on a train.

When Corbyn became leader of the Labour Party, the British media, who are used to punching socialists, crawled over his record and found much to alarm the tiny Jewish community of 260,000. Corbyn called Hez­bollah “friends” and said Hamas, also his “friends,” were devoted “to long-term peace and social justice.” (He later said he regretted using that language.) He invited the Islamist leader Raed Salah, who has accused Jews of killing Christian children to drink their blood, to Parliament, and opposed his extradition. Corbyn is also a patron of the Palestine Solidarity Campaign and a former chair of Stop the War, at whose rallies they chant, “From the river to the sea / Palestine will be free.” (There is no rhyme for what will happen to the Jewish population in this paradise.) He was an early supporter of the Boycott, Divestment, and Sanctions (BDS) movement and its global campaign to delegitimize Israel and, through the right of return for Palestinians, end its existence as a Jewish state. (His office now maintains that he does not support BDS. The official Labour Party position is for a two-state solution.) In the most recent general election, only 13 percent of British Jews intended to vote Labour.

Corbyn freed something. The scandals bloomed, swiftly. In 2016 Naz Shah, Labour MP for Bradford West, was suspended from the party for sharing a Facebook post that suggested Israel be relocated to the United States. She apologized publicly, was reinstated, and is now a shadow women and equalities minister. Ken Livingstone, the former mayor of London and a political supporter of Corbyn, appeared on the radio to defend Shah and said, “When Hitler won his election in 1932, his policy then was that Jews should be moved to Israel. He was supporting Zionism before he went mad and ended up killing six million Jews.” For this comment, Livingstone was suspended from the party.

A protest against anti-Semitism in the Labour Party in Parliament Square, London, March 26, 2018 (detail) © Yui Mok/PA Images/Getty Images
Article
Nothing but Gifts·

= Subscribers only.
Sign in here.
Subscribe here.

If necessity is the stern but respectable mother of invention, then perhaps desperation is the derelict father of subterfuge. That was certainly the case when I moved to Seattle in 1979.

Though I’d lived there twice during the previous five years, I wasn’t prepared for the economic boom I found upon this latest arrival. Not only had rent increased sharply in all but the most destitute neighborhoods, landlords now routinely demanded first, last, and a hefty security deposit, which meant I was short by about fifty percent. Over the first week or so, I watched with mounting anxiety as food, gas, and lodging expenses reduced the meager half I did have to a severely deficient third. To make matters even more nerve-racking, I was relocating with my nine-year-old son, Ezra. More than my well-being was at stake.

A veteran of cold, solitary starts in strange cities, I knew our best hope wasn’t the classifieds, and certainly not an agency, but the serendipity of the streets—handmade for rent signs, crowded bulletin boards in laundromats and corner grocery stores, passersby on the sidewalk; I had to exploit every opportunity that might present itself, no matter how oblique or improbable. In Eastlake, at the edge of Lake Union between downtown Seattle and the University District, I spied a shabby but vacant one-story house on the corner of a block that was obviously undergoing transition—overgrown lots and foundation remnants where other houses once stood—and that had at least one permanent feature most right-minded people would find forbidding: an elevated section of Interstate 5 just across the street, attended by the incessant roar of cars and trucks. The house needed a new roof, a couple of coats of paint, and, judging by what Ezra and I could detect during a furtive inspection, major repair work inside, including replacing damaged plaster-and-lath walls with sheetrock. All of this, from my standpoint, meant that I might have found a solution to my dilemma.

The next step was locating the owner, a roundabout process that eventually required a trip to the tax assessor’s office. I called the person listed on the rolls and made an appointment. Then came the moment of truth, or, more precisely, untruth, when dire circumstance begot strategic deception. I’d never renovated so much as a closet, but that didn’t stop me from declaring confidently that I possessed both the skills and the willingness to restore the entire place to a presentable—and, therefore, rentable—state in exchange for being able to live there for free, with the length of stay to be determined as work progressed. To my immense relief, the pretense was well received. Indeed, the owner also seemed relieved, if a bit surprised, that he’d have seemingly trustworthy tenants; homeless people who camped beneath the freeway, he explained, had repeatedly broken into the house and used it for all manner of depravity. Telling myself that inspired charlatanry is superior to mundane trespassing—especially this instance of charlatanry, which would yield some actual good—I accepted the keys from my new landlord.

Photograph (detail) © Larry Towell/Magnum Photos
Article
Checkpoint Nation·

= Subscribers only.
Sign in here.
Subscribe here.

Laura Sandoval threaded her way through idling taxis and men selling bottles of water toward the entrance of the Cordova International Bridge, which links Ciudad Juárez, Mexico, to El Paso, Texas. Earlier that day, a bright Saturday in December 2012, Sandoval had crossed over to Juárez to console a friend whose wife had recently died. She had brought him a few items he had requested—eye drops, the chimichangas from Allsup’s he liked—and now that her care package had been delivered, she was in a hurry to get back to the Texas side, where she’d left her car. She had a …
Checkpoint on I-35 near Encinal, Texas (detail) © Gabriella Demczuk

Amount a 2006 defense bill authorized for a daylong “celebration‚” of “success‚” in Iraq and Afghanistan:

$20,000,000

Male orangutans announce their travel plans in advance.

Paul Manafort accepts a plea deal; Brett Kavanaugh accused of sexual assault; Jeff Bezos gets into the kindergarten racketon the clock

Subscribe to the Weekly Review newsletter. Don’t worry, we won’t sell your email address!

HARPER’S FINEST

Happiness Is a Worn Gun

By

Illustration by Stan Fellows

Illustration by Stan Fellows

“Nowadays, most states let just about anybody who wants a concealed-handgun permit have one; in seventeen states, you don’t even have to be a resident. Nobody knows exactly how many Americans carry guns, because not all states release their numbers, and even if they did, not all permit holders carry all the time. But it’s safe to assume that as many as 6 million Americans are walking around with firearms under their clothes.”

Subscribe Today