Canadian Partnership Shielded Identities of (Uranium) Donors to Clinton Foundation

[Uranium One]

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.

“This is hardly an effort on our part to avoid transparency,”
said Maura Pally, acting chief executive of the Clinton
Foundation.

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.

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
donation came 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.

This week, in an interview with Bloomberg News, Mr. Giustra said
he was frustrated with the news media treatment he had received,
and echoed the foundation’s position on Canadian privacy law,
saying that by law he could not even tell the Clinton Foundation
who his donors were.

“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.

Malcolm Burrows, the head of philanthropic advisory services at
Scotiabank in Toronto, said that “general Canadian privacy
rules” could apply to charities, but that “in most cases” it is
not a concern because charities and their donors want the
publicity.

“The irony here is that the foundation is saying they’re not
allowed to do it,” he said. “But many foundations want to put
that information out there.”

Mr. Blumberg, the tax lawyer, said that while privacy laws would
prohibit charities from misusing donor information for
commercial purposes, they generally did not otherwise prevent
disclosure of donors. But, he said, laws in the province of
British Columbia — where the Clinton Giustra partnership is set
up — are stricter. But even there, he said, a charity could
arrange for disclosure of donors if it wanted to, something Mr.
Giustra is now saying he will attempt to do.

“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.

https://www.nytimes.com/2015/04/30/us/politics/canadian-
partnership-shielded-identities-of-donors-to-clinton-
foundation.html