itsmeeeeeee

Bill Clinton's Midas touch
Stock deal benefiting his foundation among shrouded successes

By Andrew Zajac | WASHINGTON BUREAU
March 4, 2008

WASHINGTON - In December 2004, former President Bill Clinton made a much-publicized appearance at a launch party in New York for Accoona, a new Internet search engine billing itself as a rival to Google.

Clinton's presence at the gathering at Tavern on the Green in Central Park was a coup for the unheralded, privately held Accoona, which paid for the former president's appearance by issuing options for 200,000 shares of stock to Clinton's charity, the William J. Clinton Foundation. In 2006, the Clinton Foundation sold the shares for $700,000.

Another celebrity hired by Accoona, Russian chess grandmaster Garry Kasparov, did not fare as well. Kasparov also was paid in stock options, but his agent said he has not exercised them because his financial advisers told him last year that the shares were worth less than their $1 option exercise price.

The Clinton Foundation's good fortune with Accoona stock is among several lucrative transactions involving the former president's personal and charitable finances. Since leaving office in 2001, Clinton has wiped out millions of dollars in legal bills and become a multimillionaire through a brisk schedule of speechmaking and book-writing, as well as a pair of consulting and investing agreements that have yielded as-yet-undisclosed sums.

Clinton also raised more than $362million for his foundation through 2006 and secured pledges for billions more.

Interest in Clinton's financial dealings has intensified since Hillary Clinton lent her presidential campaign $5 million in January. She has been asked in nationally televised debates whether she would disclose tax returns or persuade the former president to release information about his charitable pursuits.

But evaluating the transactions is difficult because both Clintons, while complying with legal filing requirements, have somewhat limited disclosure of their finances.

With respect to the Accoona stock, for example, Clinton's foundation reported the sale of shares for $700,000 on its 2006 IRS-mandated financial statement for tax-exempt organizations. But the foundation was not legally required to report the initial receipt of Accoona shares, and it did not do so.

The foundation also declined to disclose to whom it sold the stock. "The foundation sold its shares through a broker in 2006," Clinton Foundation spokesman Ben Yarrow said in an e-mail.

Accoona's chief financial officer, William Rose, also declined to disclose the buyer or to give the stock's current value. Accoona did not buy back the stock and the buyer had no connection to his firm "that I'm aware of," Rose said Monday.

Valuing shares in privately held start-ups can be difficult because they often don't have an earnings track record and the price sometimes is pegged to the hope of future earnings based on announcements of promising partnerships or technology.

Speaking generally, James Schrager, a professor of entrepreneurship at the University of Chicago Graduate School of Business, said, "When you have a political figure involved, many times the terms are arranged in advance."

The $700,000 the Clinton Foundation received for its stock is more than four times the $150,000 Clinton typically commands for appearances in the New York area. The amount startled Kasparov's agent, Owen Williams, who said he regrets not setting different terms for his client's appearance.

Williams declined to say how many options Kasparov received but said the chess champion and one-time Russian presidential candidate was advised last year that exercising them "was not a good expenditure of Garry's money. ... Our financial guy said, 'You will not make money buying those shares at $1.' ... He didn't exercise his options."

2 failed bids to go public

The markets seemed to agree. Twice in the last year, Accoona filed, and subsequently withdrew, plans for a public offering, once on London's AIM market and more recently in the U.S. on the Nasdaq exchange.

Accoona's prospectus for its aborted U.S. offering pointed to some of its difficulties. The company had never made a profit; a co-founder and major shareholder had pleaded guilty to a felony fraud charge; and Accoona's key partner is a media company controlled by the Chinese government, which is often criticized for censoring the Internet.

There is nothing illegal or improper about former presidents making paid appearances. Jimmy Carter, George H.W. Bush and Ronald Reagan all earned hefty fees on the lecture circuit.

Clinton's situation is more complicated because he is involved in a global web of commercial and philanthropic relationships. And he is subject to more scrutiny than his retired peers because his spouse is running for president.

Hillary Clinton has been challenged during the campaign to take the voluntary steps of releasing her tax returns and disclosing donors to the Clinton Foundation.

The campaign said in an e-mail that the candidate would release "tax information at tax time in April" but did not commit to releasing the returns itself.

Clinton's Democratic rival, Illinois Sen. Barack Obama, has released his tax returns. The presumptive Republican nominee, Sen. John McCain of Arizona, has not done so.

The Clinton Foundation's funding stream has been a sensitive topic since the former president was assailed by members of Congress for reportedly accepting a $450,000 library contribution from the ex-wife of fugitive financier Marc Rich shortly before pardoning Rich for tax evasion in 2001,[/b][/color] just before Clinton left the White House.

The Clinton campaign said the Clinton Foundation would release a list of future donors if Hillary Clinton is elected president.

Contributors to the Clinton Presidential Library, which was paid for by the Clinton Foundation, gave with the "understanding that they may remain anonymous as provided by law," the Clinton campaign said in its statement. "Retroactively revising the rules would be unfair."

At the same time, at least twice previously the foundation or a related organization has released names of donors.

In 2004, a publicly accessible computer terminal at the Clinton Presidential Library briefly held a list of contributors to the facility. After The New York Sun published the list, the computer went dark.

The givers included charitable foundations, longtime political supporters and a smattering of foreign governments, including those of Qatar, Taiwan, Brunei and Kuwait. The Saudi royal family also contributed.

Foreign governments also have donated to other presidential libraries, including that of Clinton's predecessor, George H.W. Bush, and President Bush last week said he would consider foreign contributions for his library.

In 2005, the IRS filing for the Clinton HIV/AIDS Initiative Inc., a charity that subsequently was folded into the Clinton Foundation, voluntarily listed donors who gave more than $5,000.

About two-thirds of the $16 million in the organization -- more than $9.7 million -- came from foreign organizations. Other major donors included the Bill and Melinda Gates Foundation.

The largest donation, $4.5 million, came from the London-based Children's Investment Fund Foundation, the charitable arm of The Children's Investment Fund, a large hedge fund.

Who invited Bill Clinton?

In some cases, contributions to the Clinton Foundation have come to light because they were made in exchange for an appearance by Clinton. That was the case with his appearance on behalf of Accoona, which was trying to build buzz about its prospects.

It's not clear who invited Clinton. Current Accoona CEO Val Zammit said the event occurred before his tenure. A person answering the phone of former CEO Stuart Kauder said he would have no comment.

Accoona's former chairman, Eckhard Pfeiffer, who had previously been CEO of Compaq Computer Corp., could not be reached for comment.

Kasparov was recruited to help Accoona by its co-founder, Armand Rousso, whose background includes a lengthy career as a chess impresario. But Rousso's background also includes a conviction for securities fraud in France and a guilty plea to a similar charge in the U.S. in 1999, according to a prospectus for Accoona's short-lived U.S. public offering. The charges did not pertain to Accoona.

Rousso owns about 14 percent of Accoona's shares and was paid $3million for consulting for Accoona from 2004 to 2006, the prospectus states.

Rousso could not be reached for comment.

Accoona's main partner is China Daily Information Co., a subsidiary of Chinese government-run China Daily, the country's largest English-language newspaper, which has put the Accoona search engine on the front page of the Web version of its paper.

Accoona's prospectus acknowledged that the company is subject to censorship by the Chinese government and that the "Ministry of Public Security has the authority to order any local Internet service provider to block any Internet Web site at its sole discretion. ... Furthermore, we are required to report any suspicious content to relevant governmental authorities."

Clinton aide Yarrow said the former president has defended dissenters using the Internet in China.

__________________