Clinton Foundation officials have ignored virtually all of the “best practices” urged by good governance organizations for public charities, according to an investigation by The Daily Caller News Foundation.
Most glaringly, for example, the foundation’s insular board of directors is unusually small, ranging from only two to no more than five members, all of whom are among President Bill and Hillary Clinton’s closest and richest friends.
The “good governance” movement in the nonprofit field has been gathering strength for two decades, but it clearly has yet to reach the Clinton Foundation. Most foundation boards have on average 15 members, according to a 2015 survey by Boardsource, a national organization working to strengthen nonprofit board leadership.
Good governance groups also encourage well-managed non-profits to create dedicated oversight committees for audits, donations, governance, executive compensation and whistle-blower policy. The Clinton Foundation has none of those committees, according to its Internal Revenue Service 990 tax filings.
Term-limits are also recommended for board members to encourage fresh thinking in non-profit management. Seventy-one percent of all public foundations today have term limits, according to Boardsource.
Most of the Clinton Foundation’s board members have occupied the same board seats for most of the controversial non-profit’s life.
Arms-length, independent boards also are considered the essential first step in good governance. The Independent Sector, a non-partisan good governance organization for nonprofits and foundations urge the creation of independent boards and said they should be in the majority. “A substantial majority of the board of a public charity, usually meaning at least two-thirds of its members, should be independent,” the group recommended.
That is not the case with the Clinton Foundation. The board consists of Bill Clinton’s tightest inner circle, including Democratic mega-fundraiser and now Virginia Gov. Terry McAuliffe, former Arkansas Democratic Sen. David Pryor, and the senator’s former aide, J.L. “Skip Rutherford.
McAuliffe was the top fundraiser for Bill and Hillary’s Clinton’s presidential campaigns. He also put up $1.35 million of his own cash to pay for the Clinton’s first 11-room mansion in Chappaqua, N.Y.
The gift infuriated liberal activist Fred Wertheimer who at the time said, “It’s just plain wrong. It’s dangerous. It’s inappropriate,” adding, “This is a financial favor worth over a million dollars to the president.”
Charles Ortel, a Wall Street analyst and twice a trustee of public foundations, argued the gift should have been disclosed in the foundation’s tax returns, stating in an interview:
Terry McAuliffe made it possible for the Clinton’s to buy their house in Chappaqua. That’s a significant financial relationship that should have been disclosed in the 990’s (tax return) and was not. And has never been corrected.
TheDCNF asked Gov. McAuliffe’s office to provide details of the terms of the cash payment and if the Clinton’s had paid it back. The governor’s office did not reply.
Sen. Pryor established a second legal defense fund for Bill Clinton after it was discovered that the first defense committee accepted $600,000 in illegal contributions raised by his longtime friend Charlie Trie. Reportedly, Trie delivered the money in two thick envelopes. He was convicted of election law violations.
Both defense funds were trying to raise money for Clinton’s legal fees generated by the Whitewater scandal and the President’s reported affairs with Monica Lewinsky and Paula Jones.
Rotating on and off the board were other two women. One is Cheryl Mills, who served as White House counsel to Bill Clinton and chief of staff for Secretary of State Hillary Clinton. Mills got into trouble when it was revealed she was double dipping and taking a salary from both the foundation and the State Department.
The other long-time board member was Ann Jordan, wife of one of Bill’s closest advisors, Vernon Jordan.
“When there too many insiders, it certainly does raise red flags,” said Vernetta Walker, the vice president and chief governance officer at Boardsource in an interview with TheDCNF.
You want a board that can say ‘no,’ adds Leslie Lenkowsky, a founding member of Bill Clinton’s Corporation for National and Community Service and an expert on philanthropy.
“It’s kind of hard to imagine those people will say no very easily to something the Clinton’s want to do,” he told TheDCNF. Lenkowsky later directed the Corporation under President George W. Bush.
McAuliffe, Pryor, Mills and Jordan serve as board members from 2000 to 2005. Pryor jumped off to become the Dean of the Clinton School of Public Service at the University of Arkansas. Rutherford would join the school after his stint at the foundation.
In 2006 McAuliffe and Mills were the only ones on the board. That year its net assets spiked from $80 million two years earlier to more than $200 million.
It’s also the year that the Clinton Foundation spent $12.6 million on Bill Clinton’s 60th Birthday Party. The foundation recorded the expense as “fundraising expenses.”
In 2005 Skip Rutherford became the foundation’s president. McAuliffe, Mills, and Rutherford would serve as directors until 2009 when Mills left to work full time for Hillary as her chief of staff.
2009 was also Hillary’s first year as Secretary of State. That year was the high water mark for the foundation’s overseas operations. It then supported 70 offices and had 704 employees working overseas.
In 2010 it appears that McAuliffe and Rutherford were the only directors at the foundation. That year its net assets were reported to be $181 million.
“I rarely see only two directors,” Walker of Boardsource told TheDCNF. “Quite honestly I can’t remember when I’ve only seen two.”
“Usually in a public charity, the organization is much more cognizant of not having a lot of insiders or interested directors,” Walker told TheDCNF. “That reassures the public that the organization is operating as it should and in best interests of the mission.”
In May 2011 Chelsea Clinton joined the board as vice chair.
A year later the foundation was renamed from the William J. Clinton Foundation to the Bill, Hillary and Chelsea Clinton Foundation. McAuliffe appears to be the only director that year, according to tax returns.
In 2013, however, dramatic changes were in play at the foundation. Press reports suggest that the changes were initiated by Chelsea, who wanted to reform the foundation and modernize it.
Also that year the foundation dumped the tiny and relatively limited accounting firm called BKD and hired international accounting powerhouse PriceWaterhouseCoopers.
In 2013, the foundation expanded the board to 12 people. But virtually all of them remained insiders.
They included Bill, Hillary and Chelsea, along with McAuliffe, Cheryl Mills and Frank Giustra. Giustra is a Canadian mining billionaire who donated $100 million to the Clinton Foundation to create the Clinton Giustra Enterprise Partnership.
The mining mogul also benefited from the U.S. Government’s approval of a Russian state-run company’s effort to gain a controlling interest in his uranium mines in the Western U.S. Hillary, as Secretary of State, had to approve the transaction.
Another State Department alumnus to join the board was U.S. Ambassador Richard Verma, who served as an Assistant Secretary of State while Hillary was Secretary of State.
Lisa Jackson, Obama’s Environmental Protection Agency chief joined the foundation that year. One of her claims to fame was using a phony email while at EPA under the pseudonym “Richard Windsor.”
Cheryl Saban joined the board too. Her billionaire husband currently is the third biggest donor to her super PAC. He is just behind Tom Steyer and George Soros in contributions to super PACs.
Saban’s 2016 super PAC contribution is a whopping $11 million. The Saban’s additionally donated between $10 to $25 million to the Clinton Foundation.
Eric Goosby is on the board too. He headed up PEPFAR, a UN health organization that partnered with the Clinton Foundation while Hillary was Secretary of State.
Hadeel Ibrahim joined that year. Her father is Mo Ibrahim, a Sudanese-British telecom billionaire. Hadeel runs her father’s foundation.
Rounding out the board was Rolando Gonzalez Bunster, a solar energy enthusiast who received $100 million from a World Bank unit in the last month of Hillary’s term at the State Department.
In July 2013 Chelsea reportedly tried to initiate many reforms at the Clinton Foundation and recruited Eric Braverman to become the new CEO.
Clinton loyalist Bruce Lindsey had served as CEO for nearly all of the foundation’s life.
In December 2014 the board approved a $395,000 pay package for Braverman to become the new CEO. But the next month he abruptly resigned.
Politico reported that Clinton’s insular staff were appalled at Braverman’s attempts at reforms.
Braverman never explained the reasons for his departure. But Politico believes it was a backlash from Bill and Hillary’s hardened loyalists and “mega-donors” who chafed at the notion of more openness and transparency.
Bruce Lindsey now is back as CEO at the foundation.
TheDCNF submitted questions about the board to the Clinton Foundation, but they did not respond.
This report, by Richard Pollock, was cross-posted by arrangement with the Daily Caller News Foundation.