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Suit Sheds Light on Clintons' Ties to a Benefactor
When former President Bill Clinton and Senator Hillary Rodham Clinton took a family vacation in January 2002 to Acapulco, Mexico, one of their longtime supporters, Vinod Gupta, provided his company's private jet to fly them there.
The company, infoUSA, one of the nation's largest brokers of information on consumers, paid $146,866 to ferry the Clintons, Mr. Gupta and others to Acapulco and back, court records show. During the next four years, infoUSA paid Mr. Clinton more than $2 million for consulting services, and spent almost $900,000 to fly him around the world for his presidential foundation work and to fly Mrs. Clinton to campaign events.
Those expenses are cited in a lawsuit filed late last year in a Delaware court by angry shareholders of infoUSA, who assert that Mr. Gupta wasted the company's money trying "to ingratiate himself" with his high-profile guests.
The disclosure of the trips and the consulting fees is just a small part of a broader complaint about the way Mr. Gupta has managed his company. But for the former president, and for the senator who would become president, it offers significant new details about their relationship with an unusually generous benefactor whose business practices have lately come under scrutiny.
In addition to the shareholder accusations, The New York Times reported last Sunday that an investigation by the authorities in Iowa found that infoUSA sold consumer data several years ago to telemarketing criminals who used it to steal money from elderly Americans. It advertised call lists with titles like "Elderly Opportunity Seekers" or "Suffering Seniors," a compilation of people with cancer or Alzheimer's disease. The company called the episodes an aberration and pledged that it would not happen again.
Asked to describe Mr. Clinton's consulting services, an infoUSA official said they were limited to making appearances at one or two company events each year. Jay Carson, a spokesman for Mr. Clinton, would not elaborate on what the former president does for infoUSA, but said that he shared the public's concern about misuse of personal information.
"It goes without saying that any suggestion that seniors are being preyed upon should be fully investigated and addressed by the appropriate agencies," Mr. Carson said.
Aides to Mrs. Clinton were at pains to distance her from infoUSA, pointing out that she had sponsored legislation that would strengthen privacy rights of consumers. As for the flights on infoUSA's plane, Phil Singer, Mrs. Clinton's spokesman, said the senator "complied with all the relevant ethics rules" on accepting private air travel.
Ethics rules for senators and candidates require only that the recipient of a flight make reimbursement at a rate equal to that of a first-class ticket, a long-derided loophole that allows special interests to provide de facto gifts of expensive private air travel, which generally costs far more than commercial fares. Mr. Singer would not say what Mrs. Clinton paid for her flights.
InfoUSA's troubles come at an especially awkward moment for Mrs. Clinton, since Mr. Gupta is among a loyal coterie of reliable fund-raisers whom she would be expected to turn to as she pursues the Democratic presidential nomination. He has raised hundreds of thousands of dollars for the Clintons' campaigns over the years, and has donated $1 million to Mr. Clinton's foundation.
The Clintons' role in the shareholder suit has been largely overlooked even as the presidential race has heated up. The Deal, a business publication, said in a February article about infoUSA that the lawsuit's references to an unnamed "former high-ranking government official and his wife" appeared to describe Mr. and Mrs. Clinton.
Neither aides to the Clintons nor infoUSA disputed that the complaint referred to the Clintons.
An entrepreneur from India, Mr. Gupta, 60, founded infoUSA in Omaha in 1972 and built it into a publicly traded company with more than $400 million in revenue. Along the way, he nurtured a taste for politics, becoming a major Democratic fund-raiser and a Lincoln Bedroom guest in the Clinton White House.
Before leaving office, Mr. Clinton appointed Mr. Gupta to the board of the Kennedy Center for the Performing Arts. Earlier, Mr. Clinton had nominated him for two minor ambassadorships, which Mr. Gupta declined because of business commitments.
"Vin's done a very good job over the years finding ways to get connected," said Stormy Dean, the chief financial officer of infoUSA and onetime candidate for governor in Nebraska, where the company is based.
"I don't know whether he's ever got anything out of his connections in politics," Mr. Dean said. "But he likes it, and he's good at it. He's a legitimate American success story."
Mr. Gupta declined to comment for this article.
Mr. Gupta is clearly proud of his friendship with the Clintons. He once had a personal Web site - it was taken down last year - where he posted photographs of himself socializing with them. One showed him with Mr. Clinton on a golf course, arms draped around each other and smiling; another showed Mrs. Clinton posing with the Gupta family in Aspen. Mr. Gupta even dedicated two school construction projects he financed in a rural part of his native India to the Clintons, naming one of them after him and the other after her.
After Mr. Clinton left office, Mr. Gupta was one of two businessmen with whom the former president agreed to enter into consulting arrangements (the other was Ronald W. Burkle, a billionaire investor and major Democratic donor). In 2002, Mrs. Clinton began reporting her husband's work for infoUSA on her Senate financial disclosure forms, but she does not have to disclose his income and it is not clear what he is paid.
The shareholder lawsuit against infoUSA, brought by two Connecticut-based hedge funds, Dolphin Limited Partnership and Cardinal Capital Management, forced that information into the open. It charges that Mr. Gupta's spending on the Clintons is part of a pattern of improper company expenditures for things like luxury cars, jets and houses, as well as a yacht that is notable for being one of the few to have an all-female crew.
Mr. Gupta has defended the expenses as legitimate and business-related, and he has accused the hedge funds of trying to wrest control of the company through a smear campaign. Mr. Gupta has moved to have the lawsuit dismissed; a decision is pending.
Representatives of Dolphin and Cardinal declined to comment. Herbert A. Denton, president of Providence Capital, a New York hedge fund that also invested in infoUSA and had pressed for management changes, said the expenditures cited in the lawsuit were hard to defend.
"When the C.E.O. of a publicly traded company can say with a straight face that the shareholders benefit from having a yacht with an all-female crew stationed in the Virgin Islands, then you've got a problem," Mr. Denton said.
The lawsuit says Mr. Clinton signed a consulting agreement in April 2002 to "provide confidential advice and counsel to the chairman and C.E.O. of the company for the purpose of strategic growth and business development." InfoUSA made $2.1 million in quarterly payments to Mr. Clinton from July 2003 to April 2005, and in October 2005 entered into a new three-year agreement to pay him $1.2 million. It also gave him an option to buy 100,000 shares of infoUSA stock, with no expiration date.
The complaint asserts that the contracts with Mr. Clinton are "extremely vague" to the point of being wasteful. It says they state that Mr. Clinton will not lobby for infoUSA, and that the company cannot use his name, likeness or association for any business purpose.
Mr. Dean said the former president's presence at company events "adds a lot of credibility" to infoUSA in business circles. Mr. Clinton normally commands $125,000 to $300,000 for the many speeches he gives each year, and has earned almost $40 million on the lecture circuit since leaving office.
Mr. Dean said Mr. Clinton had no role in infoUSA's data collection and distribution business, which was criticized by the authorities in Iowa who uncovered the questionable sales of call lists during an investigation of unscrupulous telemarketers in 2005. After the Times article on Sunday about that case, officials at the Federal Trade Commission indicated they were considering opening their own inquiry into infoUSA's practices.
Mr. Dean also said that the numerous flights infoUSA provided for Mr. Clinton's nonprofit foundation activities constituted charitable donations, for which the company was entitled to a tax deduction. The flights included trips to European capitals, Alaska, Florida, Hawaii and Mr. Clinton's home state of Arkansas.
Mrs. Clinton's use of infoUSA planes appears to be mostly campaign related. In one instance cited in the lawsuit, Mrs. Clinton "traveled at the company's expense aboard a private jet from White Plains, N.Y., to Detroit, Mich., and then to Fort Lauderdale, Fla., and home to White Plains, N.Y., after calling the company the previous day in desperate need of a plane."
InfoUSA paid $18,480 in January 2004 to fly Mrs. Clinton "and her four-person entourage" to New York from New Mexico, where she had made a campaign appearance and attended a book signing. Campaign finance records show that her committee, Friends of Hillary, made a reimbursement of $2,127 for that flight. It was not clear if any other candidate committees in New Mexico also helped defray some of the cost.
Her aides said that in addition to using campaign money to pay for some of the infoUSA flights, Mrs. Clinton used personal finances to pay for parts of any flights that did not involve political activities, like the 2002 trip to Acapulco. As for why infoUSA paid anything at all for a round-trip flight to a vacation destination, Mr. Dean insisted it was a legitimate expense.
"I'm not sure what they were doing down there," Mr. Dean said, "but it was business related."
Copyright 2007 The New York Times Company
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10 Comments so far
Show AllI'm really tired of hearing politicians giving excuses about how they "complied with all the relevant ethics rules".
This country is drowning in "relevant ethics rules" that don't mean squat.
For a country whose economic system relies on one of the seven deadly sins, I don't think we can rely on the ethics rules it makes.
What do you expect from the people that brought us NAFTA? Look no one ever said Bill Clinton wasn't a scoundrel or a corporatist-- he's just not the outright gangster that the Bush gang is.
Ho Hum...Just one more instance of the corruption which is so widespread at all levels of American society. Its interesting and ironic that two hedge funds were responsible for the release of much of the information in the article since hedge funds are notorious for being secretive. Hedge funds are where the very rich put their money for the purpose of getting much richer faster. The hedge funds play with derivative investments which are based on mathematical abstractions far removed from tangible investments like common stocks. The rich in the USA operate in ways which are hidden to the rest of us. Their lawyers help them get richer mostly at our expense of course.
WOW! The Clintons doing something shady. This is news? Come on people. It's just one more example of how our politicians in Washington as well as the very rich in this country live at the expense of others.
parasites
Politicians are bought and sold by the corporations....They are no longer for the people. F___ the people.
Kind of like ancient Rome-only different. Our political elites are not quite as bloody nasty to each other as the Roman senators and emperors were to their own, but our national policy overseas is just as bloody as the Romans.
Our corruption, looked at through the eyes of history seems somewhat benign, until one realizes the resources this country control, comes at a horrible blood price-those overseas victims I just mentioned pay the price in their lowered quality of life; we extract the goods, oil, rare earth metals, agricultural products and services, and then spend it here on:
carting the citizens of the stratosphere (Remember the Star-Trek episode entitled Stratos?) around from place to place-one wonders of the Clintons ever tour the garbage heaps of Cambodia to help the folks look for food? Or maybe a tour of the inner city streets-like Detroit- to help a homeless person find a nice clean dumpster to sleep in for the night?
Do we have any stories about The Bush's The Old Man, The Brothers?
And you talk about the Clintons.
Has anyone taken a look on who Resident Bush puts into power in all those government cabinets? How are they still flying? Come On
What is fair for the Clintons Should Be Fair for The Bush's
How many government investigations is this Bush Administration doing on itself?
Lobbiest coming in for a short while to regulate foe what they once lobbied ,,and then leave and go back to their same job.
or even corporate heads taking government jobs for a short time and overseeing what use to regulatte their corporation and then leaving and getting another civilian job with huge benefits.
Heck, look at Dick Cheney. Why did they give an complete inexperience politician the head job at a huge corporation? Or why did that corporation get exclusive contracts where no one else was able to bid.
And you people talk about THE CLINTONS?
Did the Clintons hide anything about flying whereever? or were those Millions Bill made tucked under his mattress?
Come on people you still cannot reconized a Republican Smokescreen.
You all ought to be declared Legally blind.
This article simply puts specifics to a practice that, while disappointing, is not surprising to be routine for the Clintons. I imagine this sort of favor-giving/receiving becomes normalized in the minds of politicians and office holders . . . "doesn't everybody do this?" It is part of the spectrum between honesty and complete corruption. It is the path most politicians travel between their (perhaps) idealistic beginnings and their cynical prime. If we could take the money out of the system, we might create some honest public servants. Yeah, and we'd prove the existence of the tooth fairy, Santa Claus, and the Easter Bunny. . . . oh, and cold fusion, let's not forget cold fusion.
It's my understanding that more innocent people were killed - largely by economic sanctions/policies under Bill Clinton, than were killed under either of the Bush's.
Many are waking up to the fact that the USA is the #1 obstacle to world peace, and the top cause of needless poverty and hunger in the world.