Cattle futures redux?

posted at 10:02 am on March 7, 2008 by Ed Morrissey

Bill Clinton hit a $700,000 windfall in April 2006 by selling off some stock he received for a speech given in 2004. The Washington Times reports that the stock sold at $3.50 a share despite being millions of dollars in the red, and the Clintons have not released the name of the sap buyer who shelled out the cash. Scandal or snorer — and do the connections to China portend worse revelations?

The spring before his wife began her White House campaign, former President Bill Clinton earned $700,000 for his foundation by selling stock that he had been given from an Internet search company that was co-founded by a convicted felon and backed by the Chinese government, public records show.

Mr. Clinton had gotten the nonpublicly traded stock from Accoona Corp. back in 2004 as a gift for giving a speech at a company event. He landed the windfall by selling the 200,000 shares to an undisclosed buyer in May 2006, commanding $3.50 a share at a time when the company was reporting millions of dollars of losses, according to interviews.

A spokesman for the William J. Clinton Foundation declined to identify the buyer who was willing to pay so much for a struggling company’s stock, saying only that the transaction was handled by a securities broker. It occurred seven months before Sen. Hillary Rodham Clinton announced her bid to run for the 2008 Democratic presidential nomination.

The spokesman, Ben Yarrow, declined last week to say whether Mr. Clinton knew about the Chinese government’s connection to Accoona or the felony fraud conviction of one of the company’s founders.

The Chinese connection may take us into the debate over sovereign-wealth funds, which Rep. Thaddeus McCotter and I discussed in yesterday’s show. SWFs consist of state-owned investment funds from outside nations as diverse as Canad, Norway, Saudi Arabia, and China. Unlike the flood of investment from Japan in the 1980s, however, these funds are controlled by governments whose profit motives may take a distant second to political leverage. McCotter worries about these countries using SWFs to buy influence and to create a de facto socialism in the US by eventually controlling certain industries.

Having a business connected to Beijing stuffing the pockets of a politican running for President (or her spouse) brings those concerns into high relief. It shows how possible it could be to create political connections, if Accoona or other such companies decide to throw cash around without concern over profit. After all, SWFs get funded through taxation, not through investment, since they come straight from national treasuries. They can give away all the stock they want and buy it back at whatever price the recipient desires, because they have no stockholders holding them accountable.

The International Herald-Tribune notes the scope and nature of SWFs:

Now, with sovereign wealth funds, many experts are asking whether cross-border investment is evolving into something new that could be called cross-border nationalization, raising the specter of government interference in free markets – only this time, in other countries’ markets rather than their own.

Another concern is the sheer size and potential growth of these funds. Their estimated $2.5 trillion in assets exceeds the sum invested by the world’s hedge funds. Moreover, Morgan Stanley, in a widely cited study, projects that these investment funds could grow to a staggering $17.5 trillion in 10 years.

Though sovereign wealth funds do not appear to have played a role in the recent turmoil of global markets, experts say they could in the future, in favorable or unfavorable ways – by selling assets abruptly and precipitating a crisis, or by bailing out funds or companies that are in trouble.

Or by generating operating revenue for like-minded politicians to give them an advantage over their competitors? It’s certainly possible. The Clintons need to disclose the buyer so that we can see if the Accoona connections to Beijing circle back on themselves.

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Ed. Barak is still sleeping. Knock harder.

JiangxiDad on March 7, 2008 at 10:05 AM

There’s a mole in the government, and it’s at the top. :-O

p40tiger on March 7, 2008 at 10:07 AM

Obscene suspicious profits, and suspected Chinese connections…Groundhog Day politics.

right2bright on March 7, 2008 at 10:09 AM

Not a Clinton lover, but this could be totally above board.

1. Just because a company is struggling doesn’t mean it’s stock is worthless. Especially with a non-publicly traded company, it’s worth whatever someone is willing to pay (I realize that begs the question of why they would be willing to pay it, in this case, but it could be legitimate.)

2. I’m not sure if you can buy an option contract for non-publicly traded securities, but if you can, it is one way in which someone could sell a stock for more than it’s market value.

samuelrylander on March 7, 2008 at 10:10 AM

McCain or Obama should go after this like a monkey on a cupcake.

p40tiger on March 7, 2008 at 10:10 AM

McCain or Obama should go after this like a monkey on a cupcake.

p40tiger on March 7, 2008 at 10:10 AM

I’m also not a McCain lover, but he should let Obama do it.

samuelrylander on March 7, 2008 at 10:12 AM

Nothing illegal about buying worthless stock. We all know what went on, but the Clinton’s have mastered riding that fine line between unethical and criminal.

THE CHOSEN ONE on March 7, 2008 at 10:14 AM

[email protected], Ed, you’re on a roll: Willie’s Windfall, Minnesota’s Mean Liberals, and Conan’s Carbon Footprint.

I still think you’re too fair and balanced. And mature. You should hang around with Allah more often, he could fix all three of those things.

misterpeasea on March 7, 2008 at 10:15 AM

SWF=de facto socialism???

I don’t follow you

ernesto on March 7, 2008 at 10:20 AM

[email protected]

misterpeasea on March 7, 2008 at 10:15 AM

Haha, that comes out as a link: mailto [email protected]

Ed gets up early, works hard, and posts interesting stuff. I appreciate it. I’m sure everyone else does too.

p40tiger on March 7, 2008 at 10:21 AM

Sometimes I wonder if they even realize that they’re crooked.

morganfrost on March 7, 2008 at 10:22 AM

So long as McCain doesn’t have any more skeletons in his closet, he could hold his nose and add a little gas to the fire in the following manner: He could offhandedly suggest that no matter who he ultimately faces in the general election that the public deserves a full vetting of the candidates. This should include a full, fair and transparent review of everyone’s record. And toward that end he hopes that the candidates will be forthcoming with requested documents.

This has the potential to be a sort of Tom Eagleton dilema in which both Clinton and Obama are “discovered” late in the political process to be sufficiently damaged goods so as to not be unelectable.

moxie_neanderthal on March 7, 2008 at 10:25 AM

Why didn’t anyone tell me “300” is loaded with brutal loads of awesomeness?

THE CHOSEN ONE on March 7, 2008 at 10:28 AM

Thanks for all the kind thoughts. AP & I are going to be a great duo — I like to do a lot of morning posting, and AP’s a dynamo in the evening.

Ed Morrissey on March 7, 2008 at 10:31 AM

Seems like a lot of hoops to jump through when all he needed to do was charge them $700K as a speaking fee. But instead he takes restricted stock that he holds for a while and then sells, all of which has to be disclosed….why? What would he gain from making a simple transaction so complex? I guess we would get to claim the majority of it as a capital gain rather than regular income. How much he would save in taxes depends on what he claimed his cost basis of the stock to be.

Let’s assume his average speaking fee was $400K in 2004. That would be his cost basis of that stock (assuming that’s all he received as payment). On that $400K he would pay roughly $160K in taxes. His capital gain taxes would be $45K (15% of the $300K in gain) which makes his total = $205K. If he just accepted a cash payment of $700K his taxes would have been $280K – so this type of transaction saved him $35K…

I’m missing the motivation.

TheBigOldDog on March 7, 2008 at 10:33 AM

I think sometime in the distant past the Clintons figured out they could fill up their bank accounts with dirty money from the Chinese and expect no one to notice. The instances of undisclosed or cleverly disguised funding coming from the ChiComs is mindboggling.

Maybe we should seriously consider putting Hill and Bill back in the White House. With Bill’s knack for turning a tanking company’s stock into $700,000 and Hillary’s supernatural ability to turn $1,000 into $100,000 on the commodities exchange – in just six months, we should put their incredible investing talents to good use.

Think about the possibilities. They could take the current tax revenues and magically increase them by 100 fold and we could pay off the national debt in no time at all.

The Clintons and slight of hand. Teamwork you can count on.

fogw on March 7, 2008 at 10:34 AM

Clinton’s involved in shadiness? Noooooo.That would be so new and out of character for them.

bbz123 on March 7, 2008 at 10:37 AM

fogw on March 7, 2008 at 10:34 AM

They should open a hedge fund. I’ll write the check and fedex it today!

TheBigOldDog on March 7, 2008 at 10:37 AM

The morning posting is great today, as always, Ed.

With Glass Jaw BO on the canvas, do you think he would ever drop a little Looming Tower knowledge on little Miss Foreign Policy experience? There is plenty of “failure to connect the dots” blame to go around. I think it would play well with the beer drinkers flocking to the Red Queen for security. He could allege ala. Micheal Scheuer (sp?) that the Bush/Clinton cabal is still playing CYA on 9/11.

By dropping the 9/11 bomb BO would force Hillary to get specific about how she would catch OBL and why she didn’t tell Bill to hold him when he had the chance.

Of course this all assumes that he already hasn’t cut a deal to continue to pull his punches in return for the VP seat.

Angry Dumbo on March 7, 2008 at 10:51 AM

Bill Clinton earned $700,000 for his foundation by selling stock to an “unidentified buyer” that he had been given from an Internet search company that was co-founded by a convicted felon and backed by the Chinese government, public records show.

This paraphrase tells us ALL we need to know about this story AND every aspect of these traitorous, socialist, lechorous, sacks of $hit known as the Clintons. Instead of trying to determine her fitness for the highest office of the land, we should be fitting her and them both for a hangman’s noose.

Alden Pyle on March 7, 2008 at 11:14 AM

That’s odd, I didn’t realize Bill Clinton had any connections with the Chinese…oh wait, there are a few things that I seem to recall..

I seem to recall the names Charlie Trie, John Huang, Wang Jun James Riadi, The LIPPO Group, Bernie Schwartz….

mmmmm…something does come to mind….something about advanced missle technology….I wonder if any of that was used to shoot down that sattelite?

It is clear that the Clinton’s are willing to take on extraordinary risks for minimal near term personal gain. This should be a disqualifying condition, period.

They appear to be unguided by anything approaching a moral compass. Pathetic.

At the very least, it appears as though Bill and Hillary both have been extremely successful in locking up the illegal campaign donations from Chinese niche.

So here is a very cursory review of some of the Clinton’s previous relationships with the ever generous folks of the PRC (People’s Republic of China).

“We have hundreds of thousands of donors. We are proud to have support from across New York and the country from many different communities,” campaign spokesman Howard Wolfson said. “In this instance, our own compliance process flagged a number of questionable donations and took the appropriate steps to be sure they were legally given. In cases where we couldn’t confirm that, the money was returned.”

The Times examined the cases of more than 150 donors who provided checks to Clinton after fundraising events geared to the Chinese community. One-third of those donors could not be found using property, telephone or business records. Most have not registered to vote, according to public records.

Dishwashers, waiters and others whose jobs and dilapidated home addresses seem to make them unpromising targets for political fundraisers are pouring $1,000 and $2,000 contributions into Clinton’s campaign treasury. In April, a single fundraiser in an area long known for its gritty urban poverty yielded a whopping $380,000. When Sen. John F. Kerry (D-Mass.) ran for president in 2004, he received $24,000 from Chinatown.

-that would normally make it difficult to donate amounts ranging from $500 to the legal maximum of $2,300 per election. …”

“…Hsiao Yen Wang, a cook in Chinatown, is listed as giving Clinton $1,000 on April 13. Contacted yesterday, she told The Post she had written a check.

But it was on behalf of a man named David Guo, president of the Fujian American Cuisine Council, and Wang told The Post that Guo had repaid her for the $1,000 contribution.

Such “straw donations” are strictly prohibited by federal law.

In addition, yesterday’s search by The Post also turned up several $1,000 donations from Chinatown that were made by cooks, dishwashers, a cashier and a college student. …”


On to the campaign contributions and missle connection:

The Clinton administration between 1993 and 1996 allowed numerous exports of potential ballistic-missile technology to the Chinese government despite China’s refusal, in some instances, to allow inspections to assure that the technology was only being used for civilian purposes, according to classified documents and four U.S. government officials.

Moreover, as early as 1993, a classified Pentagon study raised questions about the possible diversion of U.S. technology by the Chinese military for China’s ballistic-missile program, according to the documents and sources. Defense Department officials privately charge that the Clinton administration ignored its warnings regarding the potential diversions.

Loral’s chairman, Bernard Schwartz, has personally been the single largest campaign contributor to the national Democratic Party during the Clinton presidency, making $1.1 million in contributions in recent years.

When Loral was granted the waiver in February by the Clinton administration, the aerospace corporation was under investigation by the Justice Department for providing unauthorized assistance to China’s ballistic-missile program. Justice Department officials were concerned that a waiver might make it tougher to bring a potential criminal prosecution against Loral.

Justice Department officials were reportedly not properly consulted before the administration’s waiver decision. Loral has denied any wrongdoing, while the Justice Department continues its investigation.

In 1994 Bernard Schwartz, CEO of Loral Aerospace, went to China with Commerce Secretary Ron Brown. Bernard Schwartz, by co-incidence, also donated just over a million dollars to the DNC.

Beijing obtained detailed information on the U.S. GPS system through the Clinton administration during the 1990s. Chinese military officers were given detailed briefings on construction, design, coding, and manufacturing GPS systems through President Clinton.

For example, in 1997, Chinese army officers were given a demonstration in Sunnyvale, Calif., by Ashtech, a maker of GPS receivers. The briefing for the PLAAF and Chinese Navy officers states, “Ashtech produces a receiver that uses both the U.S. GPS signals and the Russian GLONASS signals resulting in significantly greater availability and integrity.”

In 1999, the Clinton administration offered the PLAAF the latest in advanced “mobile radars,” command and control systems, GPS navigation, and “surveillance avionics” such as “air to air,” “air to ground,” and “surface area movement” surveillance radars.

The FAA documents forced from the Clinton administration by the Freedom of Information Act also show extensive briefings on GPS technology given to the PLAAF officers. One such document describes in English and Chinese the workings of the GPS “space segment” and the system’s “ground control segment” including the central control location in Colorado.

The document also details how GPS works using “triangulation from satellites” to “measure distances using the travel time of a radio signal” and “very accurate clocks.”

The Clinton gift of GPS technology to Beijing also gave the People’s Liberation Army a new offensive punch.

It is known that Chinese air force aircraft are often equipped with U.S. GPS receivers for navigation and more accurate bombing. In addition, many of the aircraft and missiles sold by China to Iran and Sudan are equipped with GPS systems.

China is also deploying its DH-10 long-range cruise missile. The subsonic missile appears to be in the final stages of development. It is to be deployed on a three-launcher road mobile platform. The DH-10 has a 930-mile range.

Its guidance system is reportedly based on U.S. technology obtained by the Chinese during the Clinton administration, again using GPS navigation this time combined with electro-optical digital scene mapping for the final attack mode.

The Pentagon reported in 2003 that China had improved its ballistic missile force with U.S GPS technology. The improvements enable Chinese missiles to now accurately strike the U.S. base at Okinawa with “satellite-aided guidance” navigation technology obtained from America during the Clinton administration.

The Clinton administration was warned that the unbridled transfer of space technology would improve the Chinese offensive missile force. The Clinton GPS transfer and its military impact were documented in a 1997 Rand Corp. report forced from the U.S. Commerce Dept. by a federal lawsuit.

“The most troubling potential transfer to China is Rockwell’s proposed joint venture deal with the Shanghai Broadcast Equipment Factory and the Shanghai Avionics Corporation, the latter of which is a key enterprise of the Aviation Industries of China,” states the 1997 Rand report.

“Rockwell Collins Navigation and Communications Equipment Company, Ltd. will design, develop, and build Global Positioning System (GPS) navigation receivers systems for the Chinese market. These components have serious dual-use applications, since the acquisition of reliable GPS data can enhance, to varying degrees, the capacity of militaries to field highly accurate cruise and ballistic missiles, such as those used to intimidate Taiwan during March 1996.”

According to the 1997 Rand Corp. report on the Chinese Defense Industry, “More accurate GPS systems would enhance the PLA’s ability to carry out attacks against Taiwan’s military and industrial facilities, potentially reducing the ability of the Taiwanese military to defend itself against PRC coercive diplomacy.

“The use of GPS to enhance the accuracy of long-range Chinese cruise missiles, coupled with long-range sensors, would raise serious concerns for the U.S. Seventh Fleet in the Pacific, and possibly circumscribe their ability to provide an effective deterrent in a crisis over Taiwan.”

It is a significant fact, although little noted in the press, that the FBI is the likely source of the account of Chung’s testimony. FBI Director Louis Freeh publicly opposed Attorney General Janet Reno last year when she rebuffed appeals from congressional Republicans to appoint an independent counsel to investigate campaign finance allegations. Freeh has made a point of distancing himself from Clinton, his nominal boss, while cultivating relations with Republican leaders in Congress.

Bill’s generous Chinese donar:

-Johnny Chung, a Los Angeles businessman who fled to China last year to avoid a subpoena, then returned to the United States earlier this year.

Chung pled guilty in March to charges of bank and tax fraud related to his activities in laundering campaign contributions to the Democratic Party. While he was the nominal donor, he was serving as a front man for foreign contributors who could not legally give money to an American election campaign.

Chung has reportedly told federal investigators he funneled nearly $100,000 from a Chinese military officer to President Clinton’s reelection campaign. The officer, Lieutenant Colonel Liu Chao-ying, is a top level Chinese aerospace executive and the daughter of Liu Huaqing, who recently retired as China’s top military commander and remains a member of the Politburo, the ruling body of the Chinese Communist Party.


moxie_neanderthal on March 7, 2008 at 11:21 AM

Anyone read Executive Orders?

shibumiglass on March 7, 2008 at 11:23 AM

The Manchurian Sex Offender.

Hening on March 7, 2008 at 11:23 AM

This is chump change for this crew. Terry McAuliffe is still the bench mark to beat. He was given $100,000 of options on the infamous Global Crossing which he sold for $18 million before the company pulled an Enron.

patrick neid on March 7, 2008 at 11:24 AM

SWF=de facto socialism???

I don’t follow you

ernesto on March 7, 2008 at 10:20 AM

Beyond the “state ownership of the means of production” part, I’m not sure I get the connection either. I guess the question is the degree of ownership. I understand the troubling issue about the behavior of SWF managers, though.

DrSteve on March 7, 2008 at 11:31 AM

Let’s assume his average speaking fee was $400K in 2004. That would be his cost basis of that stock (assuming that’s all he received as payment). On that $400K he would pay roughly $160K in taxes. His capital gain taxes would be $45K (15% of the $300K in gain) which makes his total = $205K. If he just accepted a cash payment of $700K his taxes would have been $280K – so this type of transaction saved him $35K…

$400,000 – $160,000 in taxes = $240,000
$300,000 – $45,000 capitol gains = $255,00
Total income = $495,000

$700,000 – $280,000 in taxes = $420,000

I think you also missed out on the fact hewould of been paid $400,000 in 2004, not $700,000, so his real gain was to turn $240,000 into $420,000.

Now, lets throw in the fact it is for his “foundation” so it was most likely non-profit.

WoosterOh on March 7, 2008 at 11:33 AM

Flagrant example of foreign powers buying a politician.

landlines on March 7, 2008 at 12:31 PM

The influence that SWF will attain over big business is much more disconcerting than their influence over individual politicians. A foreign government that pulls strings by calling in a favor to a corp executive, who in turn calls a politician, has the kind of indirect leverage that will fly under the radar. And the kind of power that these funds are in the process of acquiring is hard to underestimate.

Welcome to the worthless dollar. An administration that runs massive deficits coupled with a Fed that will kill interest rates in a fruitless attempt to rescue the economy is a recipe for a dead dollar. This country needs to return to fiscal discipline. When the economy is going strong, raise taxes. When it gets weak, pass massive tax cuts. Keeping tax rates uniformly low, all the time, permits only minor tax cuts when the economy needs it most, leaving the Fed’s monetary policy as the only fix for a slowdown. Clearly the cost that it’s now imposing on the dollar- turning the dollar in the new peso- is not an acceptable outcome. As oil inflation and inflation of other imported products continues, the pain of the new peso will only grow.

bayam on March 7, 2008 at 12:36 PM

This sounds like something Leo Getz would do.

29Victor on March 7, 2008 at 12:50 PM

WoosterOh on March 7, 2008 at 11:33 AM

Meant to say 75K, not 35K which is the difference in the taxes.

He would have been free to charge $700K or $2M for that matter, if he wanted in 2004. he wasn’t limited to $400K (I’m not even sure that’s what he was charging, I just picked a number).

The question remains, why do such a complicated risky deal if it nets you a gain of only $75K? The risk is not just the public disclosure it’s also the risk that the other party is not going to keep their word and buy the stock later. It’s not like you can call the police or sue somebody for not keeping up their end of a dirty deal…

I am not seeing the motivation unless he’s just really greedy and stupid which is always a real possibility.

TheBigOldDog on March 7, 2008 at 12:59 PM

you know what probably really happened – something that does make sense – he was sitting on this stock which he took for his fees and found somebody to bail him out of it in exchange for whatever it was the buyer wanted from Bill. The 2 transactions might be completely unrelated.

TheBigOldDog on March 7, 2008 at 1:02 PM

WoosterOh: Now, lets (sic) throw in the fact it is for his “foundation” so it was most likely non-profit.

And aren’t “foundations” a means for the seriously wealthy to hide from the IRS?

onlineanalyst on March 7, 2008 at 1:11 PM

Momma always said, “Sleaze is as sleaze does.”

TooTall on March 7, 2008 at 1:26 PM

Torpedo launched, Captain !

mymanpotsandpans on March 7, 2008 at 2:23 PM

They should open a hedge fund. I’ll write the check and fedex it today!

TheBigOldDog on March 7, 2008 at 10:37 AM

Yeah, and they could have Chelsea manage it!

Del Dolemonte on March 7, 2008 at 5:09 PM

Bill & the Chinese story happens to come along just when there is news of a chinese related hack of the Pentagon. Moreover, CNN interviewed the hackers and they claim that they sometimes work for the govt. One of the hackers is a former member of the PLA.

Anytime the pro-Obama faction within mainstream news wants to start bombing the Clintons they will have plenty of amunition.

moxie_neanderthal on March 7, 2008 at 6:56 PM

Good sir, are you somehow suggesting that the Clintons are for sale to the highest Red Chinese bidder or am I misunderstanding you?
I am shocked an disgusted by these allegations. Provide for me 1 10 50 100 1000 examples of anything remotely similar to this going on in connection with the Clintons and perhaps I’ll believe it.
Now if you’ll excuse me, I have to talk to this fine Chinese gentleman at the Panama Canal so my yacht may pass through. Good day to you, sir.

MannyT-vA on March 8, 2008 at 6:21 AM

Always, follow the money.

MSGTAS on March 8, 2008 at 8:50 AM

I believe Slick Willie’s ‘foundation” is a non-profit. He didn’t make the money, the non-profit did. Taxes? He don’ pay no steenkin’ taxes. Somehow all The Impeached ex-President’s foundation fundage and liebrary donations and speaking fees, etc. all seem interchangably fungible. Like a magicians “magic” trousers, the money wanders from one pocket to another. Herself has been in the Senate for how long? 6 or 7 years? Her entire gross salary doesn’t amount to the $5mil she “loaned” to her campaign. Are her finances distinct from Slick Willie’s? Does she moonlight at Big Boy or IHoP to make up the difference? Inquiring minds want to know!!!

GeneSmith on March 8, 2008 at 6:05 PM