Sunday, November 6, 2016

Organizational Conflicts of Interest and National Interest: The Case of Hillary Clinton and the Clinton Foundation

Organizational lapses, such as in non-profits or companies, regarding institutional conflicts of interest can extend in impact as far as distorting or impairing government policy and national interest if a principal of the organization also holds a high government office. Relying on whether a position in such a dual-role has scruples of character against exploiting conflicts of interest is vulnerable because people differ substantially in character. As a result, I contend that even the appearance of such conflicts should not be permitted. I use the case of U.S. Secretary of State Hillary Clinton and the Clinton Foundation to make my point.

In late 2011, “lawyers from Simpson, Thacher & Bartlett LLP, the firm contracted to run the internal Foundation audit, emailed a draft of a government memorandum and recommendations to Podesta, who was serving as a special advisor to the Foundation [and would be Hillary Clinton’s 2016 campaign manager], and Bruce Lindsey, then the Foundation’s CEO.”[1] The audit draft indicated that a conflict-of-interest policy had not been implemented. Conflicts were not disclosed in a timely fashion, and board members did not follow the policy when they became aware of conflicts of interest. “In addition, some interviewees reported conflicts of those raising funds or donors, some of whom may have an expectation of quid pro quo benefits in return for gifts,” according to the draft.[2] For example, a leaked email from Huma Abedin, Hillary Clinton’s Deputy Chief of Staff at the U.S. State Department indicates that Hillary Clinton arranged a $12 million donation from Moroccan King Mohammed VI to the Clinton Foundation in 2014 in return for the Clinton Global Initiative hosting its international meeting in Morocco.[3]

The broader question is whether Hillary Clinton exploited the conflict of interest between her discretion as Secretary of State—a public interest—and her private interest in the Clinton Foundation. After the government of Saudi Arabia had contributed at least $10 million to the Foundation and Boeing had contributed $900,000, Clinton cleared the sale to the Kingdom of $29 billion worth of advanced fighter jets, including Boeing’s F-15.[4] That Israel was warning the Obama Administration that the sale would destabilize the Middle East suggests that the United States’ national interest was not being served. Perhaps the question for a person in such a dual-role is precisely, what is being served?

When Hillary Clinton was serving as the Secretary of State, “the State Department approved $165 billion worth of commercial arms sales to 20 nations whose governments [had] given money to the Clinton Foundation.”[5] The Department “also authorized $151 billion of separate Pentagon-brokered deals for 16 of the countries that donated to the Clinton Foundation.”[6] Even if motive cannot be definitively ascribed, that the Secretary permitted the appearance of the conflict of interest may reflect an underlying problem of character, and perhaps even a general toleration societally of institutional conflicts of interest even at high levels. Clearly, the problem of conflicts of interest was not taken seriously within the Foundation. According to the audit memo, the lawyers found no evidence that the Foundation’s own written conflict-of-interest policy was enforced.[7] At the very least, this enabled the sort of conflict-of-interest that Hillary Clinton enabled the appearance of at the State Department.

Therefore, I contend that society should not allow even the appearance of institutional conflicts of interest. Of course, such a prohibition would itself require a societal sentiment of disapprobation regarding the institutional sort of conflict-of-interest, and, unfortunately, I suspect that at least as of November, 2016 too many Americans—even if for partisan reasons—were indifferent toward such conflicts of interest and the high-level people who have exploited them or at least have been fine with standing in the shadow of such conflicts.

[1] “Clinton Aide Says Foundation Paid for Chelsea’s Wedding, WikiLeaks Emails Show,”, November 6, 2016.
[2] Ibid.
[3] Richard Pollock, “WIKILEAKS: Hillary Got $12 Million for Clinton Charity As Quid Pro Quo For Morocco Meeting,” The Daily Caller, October 20, 2016.
[4] David Sirota and Andrew Perez, “Clinton Foundation Donors Got Weapons Deals From Hillary Clinton’s State Department, International Business Times, May 26, 2015.
[5] Ibid.
[6] Ibid.
[7] “Clinton Aide Says Foundation Paid for Chelsea’s Wedding, WikiLeaks Emails Show,”, November 6, 2016.