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.