Canadian Partnership Shielded Identities of Donors to Clinton Foundation
By MIKE McINTIRE and JO BECKER
APRIL 29, 2015
Aides to former President Bill Clinton helped start a Canadian charity that effectively shielded the identities of donors who gave more than $33 million that went to his foundation, despite a pledge of transparency when Hillary Rodham Clinton became secretary of state.
The nonprofit, the Clinton Giustra Enterprise Partnership (Canada), operates in parallel to a Clinton Foundation project called the Clinton Giustra Enterprise Partnership, which is expressly covered by an agreement Mrs. Clinton signed to make all donors public while she led the State Department. However, the foundation maintains that the Canadian partnership is not bound by that agreement and that under Canadian law contributors’ names cannot be made public.
The foundation cited that restriction last weekend in explaining why it did not disclose $2.35 million in donations from the chairman of Uranium One, the subject of an article in The New York Times last week. The article examined how company executives and shareholders had sold a majority stake in the company — and with it a significant portion of American uranium reserves — to an arm of the Russian government in a deal that required the approval of the United States government.
Instead, the foundation said that the partnership was created by the Canadian mining financier Frank Giustra to allow Canadian donors to get a tax benefit for supporting his work with Mr. Clinton — a benefit that came with the price of respecting Canada’s privacy laws. On Wednesday, the partnership issued a statement citing a legal opinion that “charitable donors have an expectation and right of privacy.”
However, interviews with tax lawyers and officials in Canada cast doubt on assertions that the partnership was necessary to confer a tax benefit; an examination shows that for many donors it was not needed, and in any event, since 2010, Canadians could have donated to the foundation directly and received the same tax break. Also, it is not at all clear that privacy laws prohibit the partnership from disclosing its donors, the tax lawyers and officials in Canada said.
The partnership, established in 2007, effectively shielded the identities of its donors — and the amount they gave — by allowing them to bundle their money together in the offshoot Canadian partnership before it was passed along to Clinton Foundation programs. The foundation, in turn, names only the partnership as the source of those funds.Continue reading the main story
In response to questions about the tax-break rationale for the formation of the offshoot charity, the Canadian tax experts pointed out that donations to the partnership from other charities and foundations would not have been eligible for tax breaks. That is because the donors who gave money to those other charities had already received their tax benefit. Records show that those nonprofit groups accounted for about half of the donations to the Canadian partnership.
For example, the Uranium One chairman, Ian Telfer, used his family charity, the Fernwood Foundation, to make his donations to the partnership. Mr. Telfer would have received a tax benefit when he first put his money into Fernwood, not when Fernwood donated to the partnership.
“There would only be one tax benefit no matter how many charities it passes through,” said Mark Blumberg, a tax lawyer in Toronto.
The partnership might have been necessary to provide a tax benefit to early individual donors, but not since 2010. That year, the Clinton Foundation was specially designated by the Canadian government, allowing Canadians to write off donations given directly to it.
“It makes no tax difference,” Mr. Blumberg said, “whether a donor gives the money to a Canadian charity or the Clinton Foundation.”
Because of longstanding concerns about potential conflicts of interest, the Clinton Foundation agreed to strict limits on foreign government donations while Mrs. Clinton served as secretary of state. The existence of the Canadian Clinton Giustra partnership has implications for the foundation’s recent pledge to limit donations from other countries, and disclose all donations quarterly, while Mrs. Clinton is running for president. Ms. Pally said the foundation “will only accept funding from a handful of governments, many of whom the foundation receives multiyear grants from, to continue the work they have long partnered on.”
But the statement did not make clear whether parallel organizations like the Canadian entity would be allowed to accept donations from governments that the foundation itself would not take. The Canadian partnership’s records show that it took donations from outside Canada in 2009 and 2010, the origins of which do not have to be made public. Foundation officials said it was their understanding that the non-Canadian donations to the partnership had not come from governments.
How many more such entities exist, or might be created in the future, is also unclear. A search of charity registrations in Britain, for instance, found a William J. Clinton Foundation UK that has raised about $1.5 million for a climate change initiative. Foundation officials said those donations were made public.
Canadian records show that the partnership was incorporated in August 2007, but it was not until Dec. 5 of that year that it was registered to accept charitable donations. The founding board included Bruce R. Lindsey, a longtime aide to Mr. Clinton who at the time served as chief executive officer of the Clinton Foundation, and Eric Nonacs, another aide to Mr. Clinton and Mr. Giustra.
Six days earlier, in response to questions from The Times, the foundation turned over records that by law must be made public and that made clear that the Clinton Foundation had attracted a $31.3 million donor. The records contradicted the foundation’s repeated assertions that a $31.3 million line item on its tax return was an aggregate of small contributions. It initially refused to identify the donor. But with the foundation’s activities drawing scrutiny amid Mrs. Clinton’s first run for president, the foundation reversed course and Mr. Giustra stepped forward as the donor on Dec. 18.
The following month, The Times reported that the $31.3 million donationcame after Mr. Clinton accompanied Mr. Giustra to a dinner with the president of Kazakhstan; days after that dinner Mr. Giustra finalized a lucrative uranium mining deal in the Central Asian republic.
“We’re not trying to hide anything,” he said, adding that all the money, “every penny,” was passed onto the Clinton Foundation to fund specific charitable initiatives.
But tax specialists said the disclosure prohibition was not as clear-cut as the foundation made it seem.
A spokeswoman for the Canadian Revenue Agency, Magali Deussing, said that the tax law “does not regulate whether a registered charity or other qualified donee can disclose donor information.” However, other federal or provincial privacy laws may apply, she said.
“If an organization operating in British Columbia wants to be transparent about who their donors are, then they could easily provide an opportunity for donors to consent to the disclosure of their name and/or donation amount,” Mr. Blumberg said.
In disclosing its contributors, the Clinton Foundation says only that the Canadian partnership gave more than $25 million — making it among the foundation’s biggest donors. Canadian tax records show that the partnership took in $33.3 million between 2008 and 2013.
About half the $33.3 million was given by other charities, which, like the partnership, must file financial reports with the Canadian Revenue Agency. The reports list donations made by the charities — but not donations received — making it possible in some instances to identify donors to the partnership. Searching the records in this way found that in addition to the $2.35 million from Mr. Telfer’s foundation, a charity controlled by Mr. Giustra, the Radcliffe Foundation, gave $10.5 million to the partnership that bears his name
That leaves about $20 million from donors whose identities remain a mystery, at least for now.
To paraphrase Kerry Packer to David Hill after Kate Fitzpatrick's debut calling the cricket, "Was Bill any good?"
Then you missed out on both counts.