The summary below is very long, but it explains in detail the machinery a the U.S. State Department, the backroom deals, the quid pro quo, the collusion and global relationships that circle around favors and money and power.
Bill Clinton’s foundation set up a fundraising arm in Sweden that collected $26 million in donations at the same time that country was lobbying Hillary Rodham Clinton’s State Department to forgo sanctions that threatened its thriving business with Iran, according to interviews and documents obtained by The Washington Times.
The Swedish entity, called the William J. Clinton Foundation Insamlingsstiftelse, was never disclosed to or cleared by State Department ethics officials, even though one of its largest sources of donations was a Swedish government-sanctioned lottery.
As the money flowed to the foundation from Sweden, Mrs. Clinton’s team in Washington declined to blacklist any Swedish firms despite warnings from career officials at the U.S. Embassy in Stockholm that Sweden was growing its economic ties with Iran and potentially undercutting Western efforts to end Tehran’s rogue nuclear program, diplomatic cables show.
“Sweden does not support implementing tighter financial sanctions on Iran” and believes “more stringent financial standards could hurt Swedish exports,” one such cable from 2009 alerted Mrs. Clinton’s office in Washington.
Separately, U.S. intelligence was reporting that Sweden’s second-largest employer, telecommunications giant Ericsson AB, was pitching cellphone tracking technology to Iran that could be used by the country’s security services, officials told The Times.
By the time Mrs. Clinton left office in 2013, the Clinton Foundation Insamlingsstiftelse had collected millions of dollars inside Sweden for his global charitable efforts and Mr. Clinton personally pocketed a record $750,000 speech fee from Ericsson, one of the firms at the center of the sanctions debate.
Mr. Clinton’s Swedish fundraising shell escaped public notice, both because its incorporation papers were filed in Stockholm — some 4,200 miles from America’s shores — and the identities of its donors were lumped by Mr. Clinton’s team into the disclosure reports of his U.S.-based charity, blurring the lines between what were two separate organizations incorporated under two different countries’ laws.
The foundation told The Times through a spokesman that the Swedish entity was set up primarily to collect donations from popular lotteries in that country, that the money went to charitable causes like fighting climate change, AIDS in Africa and cholera in Haiti, and that all of the Swedish donors were accounted for on the rolls publicly released by the U.S. charity.
The foundation, however, declined repeated requests to identify the names of the specific donors that passed through the Swedish arm.
A spokesman for Mrs. Clinton’s 2016 presidential campaign declined comment.
When Mrs. Clinton became President Obama’s secretary of state in 2009, she vowed to set up a transparent review system that would ensure any of her husband’s fundraising or lucrative speaking activities were reviewed for possible ties to foreign countries doing business with her agency, insisting she wanted to eliminate even the “appearance” of conflicts of interests.
But there is growing evidence that the Clintons did not run certain financial activities involving foreign entities by the State Department, such as the Swedish fundraising arm and the Clinton Giustra Sustainable Growth Initiative based in Canada, or disclose on her annual ethics form the existence of a limited liability corporation that Mr. Clinton set up for his personal consulting work.
The ethics agreement the Clintons signed in 2009 with the State Department stated that if a foreign government chose to “elect to increase materially its commitment, or should a new contributor country elect to support” Mr. Clinton’s charitable causes, “the Foundation will share such countries and the circumstances of the anticipated contribution with the State Department designated agency ethics official for review.”
The foundation spokesman said Mr. Clinton’s team had nothing to hide about the Swedish entity and set it up solely to take advantage of changes in Swedish law in 2011 that allowed some of the country’s lucrative lotteries to direct their charitable giving to the American-based Clinton Foundation.
The spokesman said Mr. Clinton’s team believed the Nationale Postcode Loterij and the Swedish Postcode Lottery, two of the biggest contributors to the Swedish fundraising arm, were privately owned and unrelated to the Swedish government.
Both lotteries are owned by the private firm Novamedia, but they are closely regulated by the Swedish government, and the Postcode Lottery’s top manager is approved and regulated by the Swedish government, according to interviews and documents.
According to Novamedia’s 2014 annual report, the Swedish Postcode Lottery’s managing director “is also the Lottery Manager appointed by the Swedish Gambling Authority. The Swedish Gambling Authority, which grants the lottery license, collaborates closely with the Lottery Manager and supervises the lottery.”
“The Clinton Foundation is a philanthropy, period,” foundation spokesman Craig Minassian told the Times. “We’ve voluntarily disclosed our more than 300,000 donors on our website, including those from Sweden. In fact, support from the Swedish Postcode Lottery has helped give millions of people access to HIV/AIDS treatment, lifted tens of thousands of rural farmers out of poverty, helped rebuild Haiti after the devastating earthquake and made it possible for cities and countries to reduce their carbon output by millions of tons. The truth is, when organizations like this support the Clinton Foundation, they do want something in return: they want to see lives improved through our work.”
Familiar patterns and storylines?
Those who have followed or investigated the Clintons over their three decades of power in Washington say the Swedish episode uncovered by The Times fits a familiar pattern of ambiguous transparency promises and fundraising carried out through cutouts that targeted foreigners with business interests before the U.S. government.
“They were very effective in being able to obfuscate what they were doing through cutouts and how they were raising their money,” said retired Rep. Dan Burton, a Republican who chaired the main House investigative committee in the late 1990s that probed many of the Clintons’ activities ranging from travel office firings and Whitewater investments to Asian fundraising.
The latter investigation disclosed an extensive 1996 Clinton fundraising operation that rewarded donors with White House coffees, access to top officials and nights in the Lincoln Bedroom despite the Clintons’ promise to run the most ethical administration in history. It also proved that illegal foreign money went to the Democratic Party from the likes of Johnny Chung, a fundraiser who admitted taking $300,000 from a Chinese military officer and giving it to Democrats, and James Riady, who pleaded guilty to routing foreign funds through a network of “straw donors” who enriched the Clinton campaign and Democratic Party while collecting political favors for his companies.
“[The Clintons] understood it’s easy to raise money when you solicit people who had business pending before the government,” Mr. Burton said. “The information that established this pattern was substantial, coming from both friends and adversaries around the world who knew they could gain access to the president and his administration and they could get things done if they were willing to pony up the money.”
Fundraising in Sweden as sanctions debate raged in U.S.
At the time of Mr. Clinton’s foray into Swedish fundraising, the Swedish government was pressing Mrs. Clinton’s State Department not to impose new sanctions on firms doing business with Iran, including hometown companies Ericsson and Volvo.
Behind the scenes, however, the U.S. Embassy in Stockholm was clearly warning the State Department in Washington that Sweden’s trade was growing with Iran — despite Swedish government claims to the contrary.
“Although our Swedish interlocutors continue to tell us that Europe’s overall trade with Iran is falling, the statements and information found on Swedish and English language websites shows that Sweden’s trade with Iran is growing,” the U.S. Embassy wrote in a Dec. 22, 2009, cable to the State Department that was released by WikiLeaks. The cable indicates it was sent to Mrs. Clinton’s office.
The Swedes were resistant to new sanctions, telling State Department officials repeatedly and unequivocally that they were worried new penalties would stifle the business between its country’s firms and Tehran. At the time, Iran was Sweden’s second-largest export market in the Middle East after Saudi Arabia.
“Behind the Swedish government’s reluctance to support further sanctions in Iran, especially unilateral European measures, is a dynamic (though still fairly small) trade involving some of Sweden’s largest and most politically well-connected companies: Volvo, Ericsson and ABB to name three,” the U.S. Embassy wrote in one cable to Washington.
Several top Swedish officials made the case against proposed U.S. sanctions in successive meetings in 2009 and 2010, according to classified cables released by WikiLeaks.
“[Swedish] Sanctions coordinator [Per] Saland told us that Sweden does not support implementing tighter financial sanctions on Iran and that more stringent financial standards could hurt Swedish exports,” one cable reported. Other cables quoted Swedish officials as saying they were powerless to order banks in their country to stop doing business with Tehran.
Sweden’s foreign trade minister, Ewa Bjroling, met with State officials and said even though her government was obeying all existing United Nations and European Union sanctions, “Iran is a major problem for the GOS (Government of Sweden) because Swedish businesses have a long-standing commercial relationship in the trucks and telecom industries.”
Eventually, Swedish Foreign Affairs Minister Carl Bildt — Mrs. Clinton’s equal on the diplomatic stage — delivered the message personally to top State Department officials, who described him as “skeptical” about expanded Iran sanctions.
“Overall, I’m not a fan of sanctions because they are more a demonstration of our inability than our ability,” Mr. Bildt was quoted as telling State officials in a cable marked “secret.”
When Mr. Obama planned to meet with Swedish Prime Minister Fredrik Reinfeldt in late 2009, the State Department described Sweden as having been a behind-the-scenes obstructionist to new Iran sanctions. “Sweden has hampered EU efforts to impose additional sanctions,” a State Department memo to the president warned.
Swedish government officials declined to address their back-channel overtures to Mrs. Clinton’s department. “Discussions leading to decisions on sanctions are internal and should remain so,” said Mats Samuelsson, a spokesman with the Swedish Embassy in Washington. “Sweden fully implements all U.N. and EU sanctions by which Sweden is bound.”
A pass to telecommunications companies?
The U.S. is allowed to penalize foreign firms — even if they are incorporated in countries that are U.S. allies under the Iran Sanctions Act (ISA). Beginning in 2010, the Obama administration stepped up U.S. efforts to use ISA authorities to discourage investment in Iran and to impose sanctions on companies that insisted on continuing their business with Iran, according to a Congressional Research Service (CRS) report.
The State Department is required to report to Congress on ISA matters, which should be done every six months. The State report typically covers U.S. diplomatic concerns over which companies and countries may be interfering with U.S. policy by continuing their investments in Iran — much like the concerns that were coming out of Stockholm.
However, the State Department was slow in delivering its reports to Congress and placing them in the Federal Register as required by Section 5e of the ISA, which drew the concern of lawmakers that State wasn’t moving fast enough on making its sanction recommendations prior to the 2011-2012 formal announcements.
In February 2010, Mrs. Clinton testified before the House Foreign Affairs Committee that the State Department’s ISA preliminary review was completed in early February and that some of the cases reviewed “deserve more consideration” and were undergoing additional scrutiny. The preliminary review, according to the testimony, was conducted, in part, through State Department officials’ contacts with their counterpart officials abroad and corporation officials.
That preliminary review hasn’t been made public, and the first like-report was posted to the Federal Registrar in 2012 with no company names specifically mentioned.
Current State Department officials and outside experts who advised the department on Iran sanctions told The Times that Sweden, and more specifically Ericsson, was a matter of internal discussion from 2009 to 2011 before new sanctions were finally issued. “The Ericsson concerns were well-known, but in the end many of the sanction decisions were arbitrary and often involved issues beyond the actual business transactions,” one adviser directly involved in the talks told The Times, speaking only on the condition of anonymity because he was describing private deliberations.
U.S. intelligence officials told The Times that they kept the Obama administration apprised of Ericsson’s activities inside Iran, including the fact that the Swedish firm had provided Iran’s second-largest cellular provider with location-based technology to track customers for billing purposes. The technology transfer occurred in late 2009, shortly after Tehran brutally suppressed a pro-democracy movement in that country, the officials said.
U.S. intelligence further learned that Ericsson in 2010 discussed with Iran’s largest cellular firm providing tracking technology that could be used directly by Iranian security authorities but never formally pursued the contract, officials said.
State officials declined to say whether Ericsson ever appeared on any preliminary sanctions lists, but they described a process for each sanction decision that involved input from the Treasury Department, the CIA, the Commerce Department and State. During those deliberations, there was a propensity to give extra consideration to companies promoting telecommunications technology inside Iran, the officials explained.
The reason, one official said, was that these companies were seen to be providing something that might help average Iranians stay in contact with the rest of the world. More specifically, the official said, such technology might help them circumvent the draconian censorship measures being taken by Tehran’s government.
Swedish trade with Iran continued undeterred.
Swedish-based Ericsson and Volvo continued their business in Iran during this heightened period of scrutiny — even as other international companies started ending their relationships.
Ericsson has sold telecommunications infrastructure and related products to three Iranian firms: MCCI, MTN IranCell and Rightel. Volvo is the leading heavy truck company in Iran. U.S. senators have specifically raised concerns about the technology Ericsson was providing to Iran.
The company told The Times that it did, in fact, provide a location-based customer-tracking hub to MTN IranCell in 2009 but that it did not believe the system could be misused by Iranian security authorities to track dissidents because its location tracking wasn’t real-time and instead was aimed at facilitating billing.
“We have sold a location-based charging (LBC) to MTN IranCell,” Ericsson spokeswoman Karin Hallstan said. “LBC is used by operators all over the world as a market segmentation tool in order to charge customers differently depending on where they are located. Ericsson is unaware of authorities in any country using LBC as an active monitoring tool, not least as typically this is not open to real-time analysis.”
The company said it also pitched a tracking system specifically for Iran’s security agencies to mobile operator MCCI to determine the scope of their requirements. But it never bid or won such a deal, company officials said.
Ericsson, for its part, believes the sale of telecommunications equipment in Iran may foster a democratic state — and help human rights issues.
“Ericsson strongly believes telecommunication contributes to a more open and democratic society, and we believe that the people of Iran have gained from having access to this technology,” Ms. Hallstan said.
The telecommunications giant didn’t make any contributions to the Swedish fundraising entity set up by Mr. Clinton, but it did pay the former president a record $750,000 for a speech in Hong Kong in November 2011, just weeks after Mrs. Clinton released the first sanctions list that excluded Ericsson and other Swedish firms.
“The investment was significant but should be seen in light of [Mr. Clinton‘s] perceived crowd pull, the location (far to travel to Hong Kong) and an engagement that spanned two days,” Ms. Hallstan said. “The conversation regarding Iran that you refer to had no impact on this decision and was not considered by the event team.”
Ms. Hallstan said Ericsson started paying an annual membership fee to the Clinton Global￼ Initiative in 2010 and is supporting a joint effort with Refugees United to help missing families reconnect with loved ones.
The company says it intends to continue pursuing opportunities with Tehran.
“Ericsson intends to continue to engage with existing customers and explore opportunities with new customers in Iran while continuously monitoring international￼ developments as they relate to Iran and its government,” Ms. Hallstan said. “As a company present in 180 countries, we are sometimes asked to provide factual input regarding countries we operate in.”
After the U.S. announced its sanctions list in 2011 and 2012 — which included no Swedish companies — the Clinton Foundation Insamlingsstiftelse saw an uptick in its fundraising, from about $3 million in 2011 to $9 million in 2012 to $14 million in 2013, according to data released by the Swedish Svensk Insamlings Kontroll.
Two months after the second sanctions list was released, Mrs. Clinton made her first trip to Sweden as secretary of state to attend a Climate & Clean Air Coalition forum.
Setting up the Insamlingsstiftelse
When Mr. Clinton set up his Swedish fundraising arm in 2011, he turned to one of the former first family’s longtime confidants: Mrs. Clinton’s former Arkansas law partner Bruce Lindsey.
The entity was essentially a fundraising shell, having no employees or contractors￼ in Sweden, and it was governed by a board with six directors: Mr. Clinton’s two close aides in retirement, Doug Band and Mr. Lindsey; the foundation’s chief financial officer, Andrew Kessell; Swedish lawyer Jan Lombach; German media mogul Karl-Heinz Kogel; and British financier Barry Townsley.
Mr. Townsley was a public figure in the 2006-2007 “pay for peerage” scandal that rocked the British government and tarnished the reputation of Tony Blair months before he left office as prime minister.
A House of Commons report concluded that Mr. Townsley, a successful stockbroker and generous philanthropist, provided a 1 million pound loan in 2005 to the ruling Labor Party and received a peerage nomination from Mr. Blair’s government. Mr. Townsley eventually declined the peerage appointment, saying the publicity had intruded on his privacy. He and other businessmen who made similar loans￼ and were nominated for peerages were never charged with any wrongdoing, but the controversy tarnished Mr. Blair’s tenure.
Mr. Townsley told The Times that Mr. Clinton called him personally to ask him to serve on the Swedish entity’s board, and there were never any issues raised with him about the British patronage scandal.
He described himself as “a non-exec director,” saying he never got paid, never raised any money, never attended any functions for the Swedish entity and didn’t even get financial reports about the group’s activities.
He said he did not believe the past controversy in Britain should have any bearing on his relationship with the Clintons, which began in 1999. “There was nothing to it, and the investigation went away. Nothing to be investigated,” Mr. Townsley said.
The incorporation documents for Clinton Foundation Insamlingsstiftelse say “fundraising is the Swedish foundation’s only purpose,” and its annual reports show a total of $26 million raised since 2011. The Swedish documents disclose only a few sources of incoming donations, with the largest being the Nationale Postcode Loterij with about $5 million donated in 2012 and 2013 and the Swedish Postcode Lottery with about $4 million donated in that same time frame.
Mr. Clinton set up the Clinton Foundation Insamlingsstiftelse to become a direct recipient of the funds from the Swedish Postcode Lottery, rather than having to go through an intermediary organization to get the contributions￼, according to a Clinton Foundation official.
“Under Swedish lottery legislation, an organization must be registered in Sweden to receive funds￼ directly from the Swedish Postcode Lottery,” said Roger Magergard, a spokesman for the lottery.
He added: “The partnership with Clinton Foundation Sweden is ongoing. The Swedish Postcode Lottery has 53 beneficiaries, and the cooperation with all organizations continues until either the beneficiary or the lottery decides to end the cooperation.”
In 2011, Sweden changed its giving laws to allow “little-brother” foundations, such as the Clinton Foundation Sweden, to operate in the country and broadened the issues those foundations could collect money for, explained Filip Wijkstrom, a director at the Stockholm School of Economics￼, who has studied Swedish foundations and nonprofits.
That same year, Sweden changed its tax laws so that individuals could get small tax breaks on their charitable contributions and companies could deduct some donations as business￼ expenditures.