In our previous post we published Clinton adviser and former White House staffer Erskine Bowles' assessment of documents which pointed to a $23M deficiency in the CHAI books of account, triggering CHAI's misuse of endowed or restricted financial assets

Thanks to our world class team of researchers (in particular Seeker of Truth) we now have one of the source documents which Bowles analysed. 

Background

The history of the CHAI #1 and #2 is here, Clinton's false statements on a purported merger are here and here.

The 21 missing pages from the Clinton Foundations public exhibition of its IRS financial return for 2005 are here.

In summary, Clinton Foundation folklore records the CHAI, the Clinton HIV/Aids Initiative (Inc and without incorporation) and the Clinton Health Access Initiative (both Inc and without incorporation) as having commenced operation in 2002 and continuing operation in an unbroken chain to the present day.

Ira Magaziner is referred to as the CEO during periods when the CHAI #1 & #2 were merged, de-merged, separate entities and in-house business units of the CF.

It's difficult to understand (perhaps intentionally) what the CF is referring to at any point in time when it talks about the CHAI.

Some relevant facts/claims to keep in mind

• the CF 990 and "audited" financials for 2008 refer to the Clinton HIV/Aids Initiative as an "Initiative" of the CF without clearly separating financials
• the Clinton Foundation claims that the Clinton HIV/Aids Initiative Inc was merged back into the CF at 31 December 2005 after operating as an incorporated separate entity from March 2004
• In March 2008 (backdated to 31 DEC 2007) the Clinton HIV/Aids Initiative Inc was deregistered/dissolved by the Massachusetts corporate regulator
• The Australian Government continued to deal contractually with an entity it described as the Clinton HIV/Aids Initiative during the 2008 calendar year

Maura Pally's history with the Clintons

This from a Politico story dated 5 May 2013

Hillary Clinton is staffing up at her family’s foundation, bringing on a longtime associate as the executive director of her office there, according to an e-mail sent around this week.

Maura Pally, who worked in cultural affairs at the State Department while Clinton was there, later went on to work at Bloomberg Philanthropies.“Maura will supervise Secretary Clinton’s Foundation-related activities, exploring new opportunities and ways to leverage existing Foundation efforts. She is excited to be joining the Foundation family,” said Clinton Foundation CEO Bruce Lindsey in an email to staff that was sent around Tuesday.

In addition to her work at State, Pally was a counsel on Hillary Clinton’s 2008 presidential campaign and worked in the Office of White House Counsel when Bill Clinton was president.

In December 2014 Hillary Clinton decided to run for the Presidency in 2016.

On 9 January 2015 Maura Pally replaced Eric Braverman as CEO of the Clinton Foundation - here's Huma Abedin's announcement:

Good Morning - wanted to flag a personnel change at the Clinton Foundation that will be announced this morning. Eric Braverman, the CEO, has resigned and will be replaced by HRC's Program Director Maura Pally in an acting position until a new CEO has been hired. Below was the note sent to staff. Happy to answer any questions people may have. Best, Huma

 On 11 February 2015 Ms Pally delivered the Memorandum below to Bill and Chelsea Clinton briefing them on issues raised in a letter to Clinton from the "management" of CHAI.

The briefing memorandum states:

Before addressing specific assertions in the letter, it is important to set a context for the existence of CHAI and its relationship with the Foundation dating back to 2008. In July 2008, Ira Magaziner, CHAI's CEO, and Anil Soni, CHAI's president at the time, informed the Clinton Foundation that CHAI, then a part of the Clinton Foundation, had been using grant funds from restricted grants (i.e., grants made to CHAI pursuant to a written grant agreement that provides that the grant funds shall be used to fund a specific CHAI program) to fund other CHAI programs. This practice had resulted in CHAI over-spending its financial resources by over $23 million. The Clinton Foundation was forced to use almost all the funds it had set aside to begin an endowment to "restore" the $23 million to the original grants."

CHAI's success today is not only due to the vision and leadership of President Clinton, but more directly to the financial support that the Clinton Foundation provided to CHAI at a time when CHAI's own fiscal mismanagement would have been the end of the organization.

Clinton Foundation - 11 FEB 2015 - Maura Pally memo to Bill and Chelsea Clinton on Ira Magaziner & CHAI iss... by Michael Smith on Scribd

Here's the CF's published accounts for the 2008 year and its 990 IRS filing.

Useful searches include CHAI, Clinton HIV/Aids Initiative, restricted assets, etc

I have not found any useful pointers to the CHAI improper use of restricted assets as set out in the Memo above.

Clinton Foundation Financial Report 2008 with Form 990 by Michael Smith on Scribd

Just for completeness, the CF financials for 2007 are here

https://www.clintonfoundation.org/files/clinton-foundation-financial-report-2007.pdf

I am reasonably conversant with financial statements.

The CF 2008 management accounts and 990 IRS filing contain no obvious reference to a separate set of CHAI books of account from which an outside observer could come to the conclusion that:

 In July 2008, Ira Magaziner, CHAI's CEO, and Anil Soni, CHAI's president at the time, informed the Clinton Foundation that CHAI, then a part of the Clinton Foundation, had been using grant funds from restricted grants (i.e., grants made to CHAI pursuant to a written grant agreement that provides that the grant funds shall be used to fund a specific CHAI program) to fund other CHAI programs. This practice had resulted in CHAI over-spending its financial resources by over $23 million. The Clinton Foundation was forced to use almost all the funds it had set aside to begin an endowment to "restore" the $23 million to the original grants. 

Nor is there any obvious advice that funds forwarded to the CF for the specific purpose of endowment had been diverted to cover a deficiency in a different class of restricted funds, provided by donors for specific and quite different purposes.

There are suspect entries, including $75 expensed for the purchase of pharmaceuticals, care partner expenses of $20M, $10M in conference expense (for the one CGI conference)  $7M in bad debts (trading debts related to selling pharmaceuticals in contravention of charity case law in the US???) and another $12M odd in program expenses.

I would be obliged to any financial analysts who might help reconcile the reported information with the memorandum's statement about a $23M OVERSPEND in restricted assets by the CHAI.

In the absence of any satisfactory explanation in the books of the CF and its IRS return, I can only presume that there exists somewhere separate and unreported books of account which account for the interests held in a nominal entity CHAI versus the CF.   Bank account information would be very helpful in establishing whether or not the CHAI and CF separated their funds.

If that is so, the obvious unanswered question is why and who benefitted from that arrangement?

This memorandum in and of itself is sufficient cause, in fact it places an obligation on IRS, corporations regulators and police/FBI, to commence an investigation into who gets what and why from the Clinton Foundation.

Every touch leaves its trace.

NB - this PODESTA email from 2015 points to a number of negative media reports about Hillary's role at the Foundation and Maura Pally's attempts to explain the damning facts away.

https://wikileaks.org/podesta-emails/emailid/2046

And this 2012 email chain discusses an incredible proposal put forward by Ira Magaziner to create an "Innovation Fund" associated with CHAI.

https://wikileaks.org/podesta-emails/emailid/12251

Ami Desai described it thus:

You probably already are aware but just to be sure: yesterday in the CHAI board meeting, Ira discussed the formation of an advisory board for CHAI - he said he is targeting 10 people to each give $500k per year for 3 years. He mentioned the names below. He also said he is looking to do a series of dinners on the west coast, east coast, and overseas to raise money for a CHAI Innovation Fund that would "invest" in projects / businesses that CHAI deems worthy. 

The proposed CHAI Innovation Fund seems poised to go well beyond what we would consider to be the core traditional work of CHAI on HIV/AIDS, malaria, etc (at least based on the investment examples in the documents Ira provided) and I therefore just wondered why we'd cede this to CHAI to do/control. It's probably safe to assume that any Fund that bears WJC's name will attract "investors" or donors or whatever we call them. Maybe I am over-thinking this, but just wanted to brainstorm aloud and I'm happy to drop this if it's not worth discussing further. Thanks, Ami

Doug Band said,

Great stuff It would be hard to imagine a worse idea than ira magaziner running an investment fund of any kind not to mention one under this scenario Good luck with this

Podesta said,

I'm a little confused--an investment fund or an innovation fund? Probably both are bad, but they seem different in the pitch and liklihood that people would give $.

Ami said

It's a bit vague in the documents Ira provided. I can't tell if he would make equity/debt investments or just grants, but I got the sense during the Board meeting that he would like the flexibility to make both. 

Turns out Ira Magaziner is not quite the business guru he's been made out to be.

Very good with other people's money though.