The Clintons’ Achilles Heel?
By Paul R. Hollrah
DrRichSwier.com
For most of the 20th century, until 1989, the major
public accounting firms in the U.S. and the U.K.
were known as the Big Eight. Listed
alphabetically, they were Arthur Anderson, Arthur
Young & Company, Coopers & Lybrand, Ernst & Whinney,
Deloitte Haskins & Sells, Peat Marwick Mitchell,
Price Waterhouse, and Touche Ross.
However, in 1987, Peat Marwick Mitchell merged with
Klynveld Main Goerdeler, a mid-sized European firm,
to become KPMG. Then, in 1989, Ernst & Whinney
merged with Arthur Young to form
Ernst & Young, and Deloitte Haskins & Sells
merged with Touche Ross to become Deloitte & Touche.
Finally, in 1998, Price Waterhouse merged with
Coopers & Lybrand to become Pricewaterhouse Coopers.
Along with Arthur Anderson, they made up the Big
Five.
Arthur Anderson was founded in 1913. Its
namesake founder, Arthur Anderson, was a man who
held closely to the highest standards of the
accounting profession, insisting that the
accountant’s first responsibility was to his
client’s investors, not to his client’s management.
However, by the 1980s, because of intense
competition between the top accounting firms for
non-accounting consulting services, that standard
was beginning to show signs of erosion. Within
each firm, the commitment to audit independence was
slowly eroded as they strove to win more-lucrative
non-accounting consultancy contracts with their
major clients.
One of Arthur Anderson’s principal clients was the
Houston-based energy company, Enron. And as
the firm’s revenues from their non-accounting
consultancy at Enron far exceeded their audit and
accounting revenues, those involved in the audit and
accounting end of their business were increasingly
pressured to do what was necessary to keep Enron’s
top management happy. In other words, Arthur
Anderson experienced an ongoing internal struggle,
attempting to balance the need to maintain the
highest of accounting standards, while contributing
to the client’s desire to produce the most
attractive quarterly and annual earnings reports.
Finally, in 2001, it was learned that Enron had
maintained its position as an attractive investment
opportunity in large part through systematic
accounting fraud… none of which could have been
accomplished without the active complicity of their
accounting firm, Arthur Anderson.
When accounting irregularities involving some $100
billion were alleged, the members of Enron’s board
of directors appointed a committee, the Powers
Committee, to look into the matter. The
committee’s final report stated that, “The evidence
available to us suggests that Andersen did not
fulfill its professional responsibilities in
connection with its audits of Enron’s financial
statements, or its obligation to bring to the
attention of Enron’s Board (or the Audit and
Compliance Committee) concerns about Enron’s
internal contracts over the related-party
transactions.”
On December 2, 2001, Enron filed for Chapter 11
bankruptcy, and six months later, on June 15, 2002,
Arthur Andersen was convicted of
obstruction of justice, having been found guilty
of shredding documents related to its auditing of
Enron. And while the conviction was
later overturned by the U.S.
Supreme Court, the negative publicity resulting
from the high profile scandal, combined with the
findings of criminal complicity, ultimately
destroyed the firm. On August 31, 2002, Arthur
Anderson agreed to surrender its CPA license and its
right to practice before the SEC… and then there
were four.
Of the remaining top four accounting firms,
Pricewaterhouse Coopers (PwC) has been seen, until
now, as the “cream of the crop.” In fact,
among the Big Four, PwC has been ranked by Vault
Accounting as the best accounting employer for two
consecutive years, 2014 and 2015. But now,
because of their association with the Bill, Hillary,
and Chelsea Clinton Foundation, PwC is about to
learn, first hand, the meaning of the old adage,
“Lie down with dogs; get up with fleas.”
In a June 17, 2015, posting on WorldNetDaily (WND),
bestselling author Dr. Jerome Corsi, reports that,
according to respected Wall Street analyst Charles
Ortel, “The Big Four accounting firm,
Pricewaterhouse Coopers, failed to detect and report
the Clinton Foundation’s ‘apparent massive
diversions of funds’ from a global charity that
fights HIV/AIDS.”
Although the methodology is a bit difficult for
non-accountants to grasp, Ortel charges that the
Clintons siphoned off tens of millions of dollars
annually from pass-through funds received by the
Clinton Health Access Initiative (CHAI) from
UNITAID, a Geneva-based global health organization
which negotiates low prices for drugs and diagnostic
equipment and supplies, working through groups such
as CHAI to deliver drugs and health services where
needed.
The pool of funds used to finance UNITAID’s
activities is derived from a US$1 surcharge on
coach-class airline tickets (up to US$40 on business
and first class tickets) in nine countries:
Cameroon, Chile, Congo, France, Madagascar, Mali,
Mauritius, Niger and the Republic of Korea. According
to records of the French Civil Aviation Authority,
the tax imposed on airline tickets by the French
government alone has produced more than $1 billion
in a six year period.
According to the WND article,
Ortel contends that PwC “allowed the Clintons to
continue diverting millions of dollars donated for
charitable purposes to the personal enrichment and
benefit of themselves and their close associates,
perpetrating a crime called inurement.
(The “inurement” prohibition of the Internal
Revenue Code prohibits the use of the income or the
assets of a tax-exempt organization, such as the
Clinton Foundation, to directly or indirectly
benefit any person with a close relationship with
the organization, or one who is in a position to
exercise significant control over the organization.)
In order to reach that conclusion, Ortel used
financial information drawn directly from UNITAID
sources, comparing it to financial reports of the
Clinton Foundation contained in their PwC audit for
2013. Ortel contends that “PwC failed to
conduct the basic due diligence required of
auditors, neglecting to discover and report the
diversion of funds.” He found that, as has
been reported in recent stories of Hillary Clinton’s
tenure as U.S. Secretary of State, the Clintons
purportedly used their international prestige and
political power to “leverage” international
manufacturers of prescription quality drugs and
various health care products and sell them to
Third-World countries at a discount to combat
AIDS/HIV.
WND quotes Ortel as saying that, if any of the 50
state attorneys general should present the available
evidence to a federal judge, he believes “an
injunction would be ordered, shutting down the
Clinton Foundation and placing the organization in
receivership.”
He is quoted as saying, “Ironically, the Clinton
Family holds itself out for praise when Clinton
Foundation financial statements are inaccurate and
riddled with material, uncorrected errors.” He
concludes. “Those who take requisite time to study
public financial filings should see what I see –
that the Clintons are playing ‘Robin Hood,’ but in
reverse, now with a major accounting firm of PwC’s
magnitude participating in the cover-up.” In
other words, what Ortel suggests is that the
Clintons, instead of taking from the rich and giving
to the poor, are profiting from the poor to give to
the rich… i.e. the Clintons and their toadies.
What is surprising… perhaps not so surprising where
the Clintons are concerned… is the fact that neither
PwC, nor any other Clinton Foundation auditor since
2006, has bothered to reconcile Clinton Foundation
receipts from UNITAID, as reported on their IRS Form
990, with audited annual financial statements
published by UNITAID. In other words, in
examining the financial dealings of the most corrupt
political family in America, none of the most highly
paid accounting professionals in the country thought
to look for corruption in any of the most logical
places.
So where did the Clintons get off on the wrong
track? Upon leaving the White House in
disgrace in January 2001, Bill Clinton, a disbarred
lawyer who narrowly avoided criminal prosecution for
perjuring himself before a federal judge, was
desperate to find some way to salvage a positive
legacy for the history books.
Like modern era Republican presidents… Eisenhower,
Nixon, Reagan, Bush (41) and Bush (43)… he could
have retired gracefully into relative obscurity.
He could have retired to a posh hilltop mansion near
Hot Springs where he could spend all of his free
time patronizing the spas and nudie bars of that
famed Arkansas gambling mecca. But that’s not
what he chose to do. Like his Democrat
predecessor, Jimmy Carter, Clinton could not find
happiness and contentment outside the political
spotlight. Instead, he decided to establish a
path to respectability by creating a foundation
dedicated to helping the poor and downtrodden of the
Third World. That was the genesis of the
Clinton Foundation and the Clinton Global
Initiative. And while the Clinton Foundation
and the Clinton Global Initiative may have washed a
bit of the seediness off the Clinton image, it is
the excesses of the Clinton Foundation that may
ultimately destroy Hillary Clinton’s dream of ever
becoming the first female president of the United
States.
But more than that, the Clintons’ unbridled greed
and their unquenchable thirst for power could easily
reduce the Big Four of the accounting profession to
the Big Three… taking thousands of accounting
executives and their families down with them.
If Ortel’s findings are ultimately confirmed, the
Clinton era of American politics may finally be at
an end. More than Benghazi, the missing
emails, the private email server, the outlandish
speaking fees, and the suspected pay-to-play
quid pro quo’s of Hillary’s state department
tenure, the alleged fraudulent accounting provided
by PwC, the country’s top accounting firm, may yet
be the Clintons’ Achilles heel.
Now all we have to do is to get one of our fine
conservative state attorneys general to get off
their backsides and take the available evidence
before a federal judge. Bill and Hillary will
soon learn that attempting to hoodwink the IRS and
the SEC is almost certain to meet with disaster.