Clinton Foundation's Missteps Point to Broader Problem

On the surface, the uproar over foreign contributions to the Clinton Foundation while Hillary Rodham Clinton was secretary of State looks like another example of the Clintons behaving badly. But the problem goes beyond the Clintons and could tar Republicans as well.

Conservative author Peter Schweizer says in his forthcoming book, “Clinton Cash,” that the foundation pocketed millions from foreign interests that won favorable treatment from the State Department. The foundation also repeatedly flouted an agreement with the Obama administration to seek approval from State Department ethics officials before accepting new donations from foreign governments.

Clinton, who is running for president, may find it hard to shake her reputation as ethically tone deaf. The foundation’s disregard for public warnings and foreign donor guidelines evoke the scandal-plagued Bill Clinton presidency.

But the controversy is just the worst and most recent example of a problem that goes beyond the Clintons: the habit of public officials to establish, raise money for and cultivate cozy ties with charitable and other tax-exempt groups. The groups may receive unlimited contributions, don’t disclose donors and provide an avenue for moneyed interests to win favor with office holders.

“It’s a very dangerous mix,” said Meredith McGehee, policy director for the nonpartisan legal institute the Campaign Legal Center. McGehee and other advocates of stricter ethics rules have tried to persuade Congress to ban officeholders from getting involved with foundations and other tax-exempt groups. By operating outside disclosure rules, the groups give foreign donors an avenue to influence elections, she noted. 

Republicans on Capitol Hill, who pushed for tighter Clinton Foundation limits when Clinton first sought confirmation as secretary of State, are now gearing up for a congressional investigation.

But Schweizer’s next investigative reporting target is former Florida Gov. Jeb Bush, a potential leading GOP presidential candidate. Bush created a foundation focused on school overhauls, the Foundation for Excellence in Education, that receives large corporate contributions. A liberal watchdog group has accused the group of promoting education laws that potentially benefit its underwriters — something the foundation denies.

The watchdog group Common Cause has called for an independent audit of donations to the Clinton Foundation and to Bush’s education foundation. 

Bush stepped down from that foundation in January, but now is associated with another tax-exempt advocacy group set up by his backers. The new group bears the same name — Right to Rise — as the unrestricted super PAC that Bush has set up to test the waters for a  presidential bid.

Such tax-exempt groups are “one avenue through which large-scale donors can purchase access and influence to public officials and candidates, and it’s a cause for real concern — whether it’s the Clinton Foundation or the Bush foundation or any others,” said Common Cause President Miles Rapoport.

Bush is one of more than a half-dozen declared and undeclared GOP presidential candidates involved in charitable and advocacy groups that don't disclose their backers. These include former Arkansas Gov. Mike Huckabee, Kentucky Sen. Rand Paul, Ohio Gov. John R. Kasich, Louisiana Gov. Bobby Jindal and former Texas Gov. Rick Perry. Several of the groups promote the candidate’s ideas, pay for travel and employ his top political aides.

Foundations run by public officials pose obvious legal hazards in one area: abroad. The Foreign Corrupt Practices Act bars U.S. companies from using charities “as a vehicle to conceal payments made to corruptly influence foreign officials,” notes Michael Edney, a partner at Steptoe & Johnson who served in the George W. Bush administration.

The Obama administration’s enforcement of the corrupt practices law, though, is not “credible or consistent” in light of foreign contributions to the Clinton Foundation, said Edney. A U.S. company that made such payments to a favorite charity of the Nigerian foreign minister would be penalized heavily, noted Edney in a recent commentary with fellow Steptoe & Johnson partner Shannen W. Coffin.

The administration treats such donations as “improper, bribe-like payments,” Edney said. “The government agencies enforcing that act against U.S. businesses either need to relax their enforcement and recognize that they may not be bribes, or they need to look very seriously at what the Clintons have done.”

Clinton campaign officials have said recent disclosures by Schweizer, The New York Times and other news organizations are based on “innuendo” and offer no evidence Clinton gave special treatment to foundation donors.

The foundation has acknowledged errors but vowed to improve its transparency and accountability.

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