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To Avoid Conflicts, Clintons Liquidate Holdings


By PATRICK HEALY
Published: June 15, 2007
WASHINGTON, June 14 — Concerned that their personal finances might become a political liability once again, Bill and Hillary Rodham Clinton in April sold the millions of dollars of stocks held by their blind trust after learning that those investments included oil and pharmaceutical companies, military contractors and Wal-Mart, their aides said Thursday.

The Clintons liquidated the trust — valued at $5 million to $25 million — and are leaving the proceeds for now in cash in an effort to eliminate any chance of ethical problems or political embarrassment from their holdings as Mrs. Clinton runs for the 2008 Democratic presidential nomination, their advisers said. By disposing of all their stocks, Mrs. Clinton was seeking to avoid potential conflicts of interest that might arise from legislation that she votes on in the Senate, as well as avoid holding financial stakes in companies and industries — like Rupert Murdoch’s News Corporation, the owner of Fox News — that could draw criticism from some Democratic voters.

Mrs. Clinton automatically became aware of her investments because of a government directive this spring that she, as a presidential candidate, had to dissolve her blind trust and disclose all of her assets to the public.

The decision by the Clintons to sell their stock carried a financial cost, according to their advisers and new personal financial documents made available Thursday. The couple will owe “substantial amounts” in capital gains taxes, an adviser said, and are giving up the potentially higher returns from stocks for the safety but generally lower returns of holding their money in various forms of savings accounts.

According to the financial disclosure documents, the couple’s total net worth falls between $10 million and $50 million. Besides investments, Mr. Clinton earned about $10 million in paid speeches in 2006, continuing a pattern since he left office of earning large sums through paid speeches and other activities to help pay legal bills and cover the couple’s expenses. Mrs. Clinton earned $350,025 in royalties for her autobiography, “Living History,”

The Clintons sold the stock as they prepared to disclose their holdings under government ethics rules for presidential candidates. Until getting ready to release the holdings in the blind trust, the Clintons did not know what stocks and other financial assets it contained. But the rules did not require the Clintons to sell the stock, their advisers said.

Their decision to cash out their holdings was a reminder of their history with investments that, fairly or not, came back to haunt them politically, most notably the Whitewater real estate affair that dogged them through Mr. Clinton’s presidency.

In 1993, Mr. Clinton complied with federal ethics rules and created a qualified blind trust to hold and invest the family’s assets. Under the rules, public officials must disclose their assets at the time of the creation of the trust, and then hand off day-to-day management of the trust and its investments to an independent trustee. Officials who set up blind trusts are not aware of, nor do they have influence over, the investments chosen.

According to their 1993 financial disclosure form, the Clintons were far less wealthy than they are today. Their estimated net worth at the time was $633,015 to $1.62 million. Mr. Clinton’s share of the blind trust was valued from $15,001 to $50,000, and Mrs. Clinton’s $500,001 to $1 million.

The Clintons continued with this executive branch blind trust through the end of his presidency in 2001. At that time, Mrs. Clinton became a senator from New York, and the family trust was registered as a Senate blind trust, according to her advisers. The trustee was Pell Rudman while Mr. Clinton was president; it became Citigroup when Mrs. Clinton entered the Senate.

This spring, the federal Office of Government Ethics informed Mrs. Clinton that, as a presidential candidate, she had to dissolve her trust and report all of her investments on public financial disclosure forms.

The Clintons discussed their options with a range of advisers, including one of their lawyers, Cheryl Mills, a former deputy White House counsel to Mr. Clinton and currently a top adviser to the couple.

They ultimately decided that they were better off, with Mrs. Clinton in office and running for the presidency, to liquidate the entire blind trust and not keep the stock or reinvest the money for the duration of her campaign, their advisers said. Senators are not required to have blind trusts.

“Senator Clinton and the president wanted to go above and beyond and avoid even the appearance of a conflict of interest, so they chose to liquidate the assets,” said Howard Wolfson, communications director of Mrs. Clinton’s campaign.

http://www.nytimes.com/2007/06/15/us/politics/15clintons.html?hp