Details in Memo
MEMORANDUM
November 18, 2011
Attorney-Client Privilege
To: Victoria Bjorklund, Simpson Thatcher
Jennifer Reynoso, Simpson Thatcher
Copy: President Bill Clinton, Clinton Foundation Founder
Chelsea Clinton, Board Member, Clinton Foundation
Terry McAuliffe, Board Member, Clinton Foundation
Bruce Lindsey, Board Member, Clinton Foundation
John Podesta, Special Advisor to the Clinton
Foundation Board
Re: Background on Teneo and Foundation Activities
Cheryl, John and Terry
suggested that I provide you with this memorandum to share background on Teneo,
a corporate entity established in June 2011, which subsumed DK Consulting, as
well as about Clinton Foundation matters (the Foundation).
In June 2009, DK Consulting
was founded by Declan Kelly.[1] Mr. Kelly served as COO of FTI Consulting
until June 2009, when he stepped down and established DK Consulting. At that time, he also became the United
States Economic Envoy to Northern Ireland. Pursuant to the terms of his exit agreement with FTI and consistent with
the ethics agreement of his uncompensated special government employee
appointment at the State Department, Mr. Kelly retained and continued to
provide services to three paying clients (Coke, Dow, and UBS) and one pro bono client (Allstate). In late 2009, Declan retained me as a
consultant to DK Consulting to help support the needs of these clients.
In May 2011, Mr. Kelly
resigned his Envoy position at the State Department. In June 2011, Mr. Kelly and I founded Teneo
Strategies; simultaneously, Mr. Kelly closed DK Consulting and shifted its
clients to Teneo. Additionally, his non compete with FTI expired and he was free to begin
working with his former clients which he had built over his 15 year career
totaling several hundred around the world. By the time he sold his company he
had built Financial Dynamics into the largest financial communications company
in the world with 1000 employees and offices in 28 countries. Mr. Kelly had by
then also represented or advised a large number of Fortune 500 companies in one
form or another.
Given concerns that have been
expressed about the role of Teneo in the Foundation’s and the President’s
activities, as well as regarding support I provide for President’s for-profit
business activities, I wanted to take this opportunity to share information and
help clarify my activities on behalf of the President –both on behalf of
non-profit Foundation activities and the management of the his for-profit
business opportunities.
Throughout the past almost 11
years since President Clinton left office, I have sought to leverage my
activities, including my partner role at Teneo, to support and to raise funds
for the Foundation. This memorandum strives to set forth how I have endeavored
to support the Clinton Foundation and President Clinton personally.
Foundation Fundraising
Since its inception, the
Foundation has raised funds to cover its infrastructure and operating
costs. In 2001, after Terry McAuliffe
raised the initial $100 million to build the Library, an additional $100
million needed to be raised to complete the $165 million building and fund the
library endowment required by the United State Government. Funds also then needed to be raised to fund
the Foundation’s operating costs, which today annually runs near $20 million.
That figure doesn’t include some of the initiatives within the foundation or
many of the other initiatives outside of it that President Clinton chose to
incorporate into the foundation activities such as Katrina, the Tsunami and
Haiti. At the same time, we had to build the Foundation itself, the office, and
create the initiatives and entire organization with a staff of 8 people under
extremely challenging circumstances.
The Foundation has engaged an
array of fundraising consultants over the past decade to help raise these
funds; however, these engagements have not resulted in significant new dollars
for the Foundation. For example, the
Foundation paid John O’Donnell and Associates $700,000 in fees but it had
limited success in raising new dollars for the Foundation; in other instances,
the Foundation has paid consultants a percentage of the funds they have
raised. The Foundation also has hired
employees with development experience (e.g.,
the Foundation hired Dennis Cheng this year) to fundraise for the Foundation. I
believe – given the Foundation’s desperate need to raise funds, the willingness
of the partner owners of Teneo to help fundraise, and my historical role in
carrying the majority of the fundraising burden – that Teneo should help raise
funds for the Foundation, which it has. To the best of my knowledge, other
individuals within the foundation who have or have had outside consulting
engagements, affiliations with law firms or business, and those who sit on
boards of other organizations, those have not been leveraged into support for
the Foundation.
$100M Infrastructure and Endowment Fundraising
In 2001, the Foundation did not have the internal capacity
to raise the $100 million to complete the library building and endowment
costs. Accordingly, Justin Cooper and I
developed and implemented a strategy[2] to help raise the bulk of
these funds from individuals, corporate entities, and foreign government
contributing on behalf of their nations. This effort, which raised well over $150 million, much of it from people
who did not know President Clinton when he was in office, took 7 years to
complete.
Annual Operating Cost Fundraising
As stated above, the Foundation today has an annual
operating budget of nearly $20 million. Historically, the Foundation has not had the resident capacity to raise
these funds annually; though we in the past engaged development consultants to
help. To raise the more than $120
million the Foundation has used to operate since 2001 – including funding for
the now affiliated entities, Justin and I have helped to raise the majority of
the funds. Since 2006, approximately
$6-11 million of the Foundation’s operating costs have been covered by net
proceeds from CGI ($46 million total to date). CGI is the only Foundation initiative that raises money for the
Foundation. CGI and our fundraising efforts have generated sufficient funds to
establish a quasi endowment, which today stands at $18 or so million.[3] Since 2006, we have developed strategies to
raise the approximately $6-10 million a year gap between the net proceeds from
CGI and our annual operating budget. This gap is largely funded through direct solicitations by Justin and
me, some through speeches the President gives on behalf of the Foundation,
through events, finding partners throughout the world to donate if we attend
there dinner or event, auctions and so on.
Teneo
Teneo was established in June
2011. It has three partner/owners –
Declan Kelly, Paul Keary and Doug Band. We have offices in 3 places, and employ more than 65 individuals. Teneo provides the following services to its
18 clients: merchant and investment
banking services, corporate restructuring, public relations and communication
services, and strategic advising services. As of 30 October 2011, we have 19 clients, a list of which is enclosed.
Cognizant of the Foundation’s
significant fundraising needs as well my role as the primary fundraiser for the
Foundation for the past 11 years, as a partner in Teneo, Mr. Kelly and I have
asked and encouraged our clients to contribute to the Foundation.[4] Through our efforts, we have brought new
donors to the Foundation and garnered increased giving from existing donors.[5] Additionally, the
foundation donors require significant maintenance to keep them engaged and
supportive of the foundation. We have sought to make that the case when we
could particularly as we are thinking more long term at things such as estate
gifts and planned giving for the foundation.
Leveraging Teneo for the Foundation
Teneo Clients Who are
New Large Donors to the Foundation:
Below are Teneo clients who either are new to the
Foundation or who previously had a more limited giving relationship with the
Foundation (e.g.,CGI
membership). As Teneo partners, we have solicited
our clients to contribute or to increase their contributions to the Foundation.
The Coca-Cola Company —- Total Giving: $4,330,000[6]
2004:
$250,000 year total – for the Operating Fund
2006:
$30,000 year total – for CGI
2007:
$30,000 year total – for CGI membership
2008:
$20,000 year total – for CGI membership
2009:
$1,000,000 year total – for Operating Fund
2010:
$3,000,000 year total – for Operating Fund
Mr.
Kelly has advised the CEO of Coca Cola for years; he also enjoys a close
relationship with one of the company’s largest shareholders Don Keogh. Mr. Kelly introduced the CEO of Coca Cola,
Muhtar Kent, to President Clinton in January 2009 at a meeting he arranged at
President Clinton’s home in DC. Over the
course of 2009, Mr. Kelly cultivated Mr. Kent’s interest in the Foundation –
first in CGI and the Foundation. Mr. Kelly asked Mr. Kent to give $5 million to
the Foundation, which he pledged in early 2010. Mr. Kelly has collected $3 million of that pledge to date and he and I
both will secure the remaining $2 million in the near future.[7]
The Dow Chemical Company – Total Giving: $780,000
2007:
$15,000 year total – for CGI membership
2008:
$20,000 year total – for CGI membership
2009:
$40,000 year total – for CGI membership
2010:
$190,000 year total – $40,000 to CGI membership; $150,000 to General Operating
Fund
2011:
$515,000 year total –for CGI;
$40,000
for membership
$225,000
to sponsor CGI America
$250,000
to sponsor CGI Annual Meeting
Mr.
Kelly has advised Andrew Liveris for years. In August of 2009, Mr. Kelly invited Mr. Liveris to play golf with
President Clinton and me as a way to get Mr. Liveris engaged in the foundation.[8] Mr. Kelly subsequently asked Dow to become a
CGI sponsor at the $500,000 level, which they did, as well as making a $150,000
donation to the Foundation for President Clinton to attend a Dow dinner in
Davos. To date Mr. Kelly has secured
Dow’s support for CGI 2012 for $250,000 as well as an commitment to host a CGI
America event in Midland Michigan if President Clinton so chooses.
UBS – Total Giving: $540,000
(since 2005)
2005:
$25,000 year total – for Katrina
2006:
$15,000 year total – for CGI membership
2007:
$90,000 year total – for CGI membership
2008:
$20,000 year total – for CGI membership
2010:
$20,000 year total – for CGI membership
2011:
$370,000 year total – $20,000 for CGI membership; $350,000 for Clinton Economic
Opportunity
Bob
Mccann is the head of UBS Wealth Management and a long time client and close
friend of Mr. Kelly. Mr. Kelly
introduced Mr. Mccann to President Clinton at an American Ireland Fund event in
2009. Mr. Kelly subsequently asked Mr.
Mccann to support the Foundation, which he did via the Clinton Economic
Opportunity Initiative. Mr. Kelly also
encouraged Mr. Mccann to invite President Clinton to give several paid
speeches, which he has done.
The American Ireland Fund
(AIF) – Total
Giving: $350,000
2010:
$250,000 year total – for the Operating Fund
2011:
$100,000 year total – for the Operating Fund
Mr.
Kelly is a trustee of AIF; he has urged and ensured that the AIF is a
significant donor to the Foundation. Mr. Kelly has successfully secured
$350,000 to date. Mr. Kelly also will continue giving in the coming years as
well through the AIF.
The All-State Corporation – Total Giving: $265,000
($500,000 pledge).
2008:
$15,000 year total – for Center Sponsorships
2011:
$250,000 year total – for CGI (Annual Meeting sponsorship)
Mr.
Kelly brought Joan Walker, his long time friend, to CGI in 2010 to expose her to
the initiative and to the foundation. Mr. Kelly then asked her to be a Foundation donor; she agreed to sponsor
CGI for 2 years at $250,000 a year starting in 2011.
Barclays Capital —- Total Giving: $1,100,000
(since 2008)
2008:
$40,000 year total – for CGI membership
2009:
$40,000 year total – for CGI membership
2010:
$520,000 year total – for CGI membership and sponsorship
2011:
$500,000 year total – for CGI sponsorship
Teneo does limited work
with Barclays. In 2010, Teneo partners
encouraged Barclays give $500,000 a year to CGI, which they have done for two
years to date.
Indo Gold – Total Giving: $100,000 with
a $150,000 commitment
2010:
$50,000 year total – for CGI (Annual Meeting sponsorship)
2011:
$50,000 year total – for CGI (Annual Meeting sponsorship)
Indo
gold is a small Teneo client that we asked to become a CGI sponsor.
BHP Billiton Limited – Total Giving: $20,000 for CGI 2011.
BHP,
one of the world’s largest companies, had never sent anyone to attend CGI nor
has any relationship with the Foundation. A client of Teneo’s since early 2011,
Teneo partners encouraged them to send a senior person to CGI in 2011 to begin
building a stronger relationship between BHP and the Foundation/President
Clinton.
Mylan –
Mylan recently purchased
Matrix, one of the largest and longest suppliers of ARV’s to the CHAI program.
A senior executive at Teneo had, in his previous capacity, represented Mylan
and brought them to Teneo as a client. That same individual introduced the
newly appointed CEO of Mylan to the Foundation and requested that they
contribute to the Foundation which they are currently considering as well as
becoming a sponsor of the Hope golf tournament.
Teneo[9]
Total Giving – $100,000
2011 – $100,000
Teneo donated $100,000 to the
Foundation in 2011 and made two CGI commitments.
Teneo Clients Who are Pre-existing Donors
to the Foundation:
The following are current Teneo clients whose relationship
with President Clinton and the Clinton Foundation pre-dated their client
relationship with Teneo.
GEMS Education – Total Giving: $780,000
(since 2008)
2008:
$5,000 year total – for CGI
2010:
$500,000 year total – for CGI Sponsorship
2011:
$275,000 year total – $250,000 for CGI
Gems approached President
Clinton in 2009 to seek his personal services as an advisor to the
company. Justin and I convinced them to
initiate a relationship to Foundation, which they did; that relationship has
grown into a business relationship for President Clinton and a donor
relationship for CGI.
The Rockefeller Foundation – Total Giving: $4,276,841
(since 2006)
2006:
$350,000 year total – for CGI (Annual Meeting sponsorship)
2007:
$350,000 year total – for CGI (Annual Meeting sponsorship)
2008:
$2,050,000 year total – $350,000 for CGI (Meeting sponsorship), $1,700,000 for CCI
2009:
$1,176,016 year total – $350,000 for CGI (Meeting sponsorship), $300,000 for CCI, $526,016 for HIV/AIDS (Rwanda)
2010:
$350,825 year total – $350,000 for CGI (Annual Meeting sponsorship),
$850 for Haiti
Mr.
Kelly was introduced to Judy Rodin, the head of the Rockefeller foundation, by
Andrew Liveris. Judy and Andrew are close friends and Judy asked Andrew who
could help and advise her and the Rockefeller foundation. Andrew suggested she
meet with Mr. Kelly which she did and quickly hired him to advise her and the
foundation. Mr. Kelly has become a close advisor to Judy Rodin and the Rockefeller
foundation which has been supportive of the Foundation for years. Mr. Kelly is counseling Ms. Rodin on where to
direct Rockefeller funds for 2012; Mr. Kelly is seeking to obtain more support
for the Foundation.
Laureate International
Universities
– Total Giving: $1,401,332
2009:
$1,150,000 – for CGI ($400,000 for CGI Asia sponsorship, $750,000 for CGI Annual
Meeting sponsorship)
2010:
$201,332 year total – $200,000 for CGI (Annual Meeting sponsorship), $1,332 of which for CBHF
2011:
$50,000 year total – for CGI University
Laureate
is a Foundation relationship that evolved into a personal advisory services
business relationship for President Clinton. I have managed this relations and, since 2011, Teneo partners have
helped manage this relationship, which is very time-consuming. Laureate pays President Clinton $3.5 million
annually to provide advice and serve as their Honorary Chairman.
Teneo Client’s who have no
relationship to the Foundation
The remainder of the
clients have no relationship with the Foundation and were either clients of
Declans in his previous position or were clients of employees of Teneo that
they have brought with them to the firm.
ATT
Black Diamond
Bank of America [10]
Firebird
Liberty Mutual
Stone Harbor
Frank Stronach
TiVo
UBS AG
For-Profit Activity of President Clinton (i.e., Bill Clinton, Inc.)
Independent of our
fundraising and decision-making activities on behalf of the Foundation, we have
dedicated ourselves to helping the President secure and engage in for-profit
activities – including speeches, books, and advisory service engagements. In that context, we have in effect served as
agents, lawyers, managers and implementers to secure speaking, business and
advisory service deals. In support of
the President’s for-profit activity, we also have solicited and obtained, as
appropriate, in-kind services for the President and his family – for personal
travel, hospitality, vacation and the like. Neither Justin nor I are separately compensated for these activities (e.g., we do not receive a fee for, or
percentage[11]
of, the more than $50 million in for-profit activity we have personally helped
to secure for President Clinton to date or the $66 million in future contracts,
should he choose to continue with those engagements).
With respect to business
deals for his advisory services, Justin and I found, developed and brought to
President Clinton multiple arrangements for him to accept or reject. Of his
current 4 arrangements, we secured all of them; and, we have helped manage and
maintain all of his for-profit business relationships for the past 11 years. Since 2001, President Clinton’s business
arrangements have yielded more than $30 million for him personally, with $66
million to be paid out over the next nine years should he choose to continue
with the current engagements. (Teneo Advisory Firm Earns Bill Clinton Inc $6.3mil/yr
Via Clinton Foundation)
President Clinton Paid
Speeches:
In support of the President’s
paid speech activity, Teneo partners have created and secured the following
paid speeches for President Clinton.
UBS – $900,000
- $450,000 in 2011; $450,000 to be paid in 2012
Mr. Kelly asked UBS to offer
President Clinton paid speeches based upon a concept he developed with Bob
Mccann for the firm’s clients. In
addition to the $540,000 UBS contributed to the Foundation, Teneo partners have
secured a commitment from UBS for President Clinton to deliver three additional
paid speeches for them in 2012, should he choose to do so.
Ericson – $750,000
plus $400,000 for a private plane
After meeting one of Director
of Ericsson on a business trip, I learned that they were sponsoring an
inaugural event in China. I pursued them to invite President Clinton to China
to speak at this event. I negotiated a
fee for President Clinton of $1 million dollars to speak for two one-hour
sessions in Hong Kong, which he did this past weekend. In addition to the $1 million speaking fee, I
negotiated additional coverage of the cost of a private plane.
BHP – $175,000
in 2012
BHP is hosting a board of
directors meeting in June of 2012. Teneo is organizing the event for BHP and
encouraged them to do it in NY and pay Presdent Clinton through Walker. The
offer is currently at the state department being vetted.
Mati Kochavi
President Clinton recently
turned down a 2 year, $8 million offer to become Honorary Chairman of Mati
Kochavi’s new media business venture. Mati is a former client of Teneo who we
were referred to through Marty Edelman. I went back to Mati and proposed a new
structure without any business connectivity other than 4 speeches for $1
million and $250k to the foundation should President Clinton choose to accept
it. That would also include any broadcasting of foundation events or anything
President Clinton would like exposure for on his website. This offer will be
presented to President Clinton in Walker speech invitations which he can choose
to decline or accept with no role or relationship with the company.
Barclays
Teneo cultivated its client
relationship to help secure two paid speeches in 2010 and 2011 totaling more
than $700,000.
Other Matters:
Justin Cooper and I have, for
the past ten years, served as the primary contact and point of management for
President Clinton’s activities – which span from political activity (e.g., campaigning on behalf of
candidates for elected office), to business activity (e.g., providing advisory services to business entities with which
he has a consulting arrangement), to Foundation activity (e.g., supporting his engagement on behalf of the initiatives and
affiliated entities of the Foundation), to his speech activity (e.g.,
soliciting speeches and staffing and supporting him on speech travel) to his
book activity (e.g., editing his
books and arranging and supporting him on book tours) to supporting
family/personal needs (e.g., securing
in-kind private airplane travel, in-kind vacation stays, and supporting family
business and personal needs). In the
unique roles in which we have had the opportunity to serve, we have been able
to help balance the multiplicity of activities that demand his time and
engagement to best fulfill his personal, political, business, official former
President, and Foundation/non-profit goals.
We appreciate the unorthodox
nature of our roles, and the goal of seeking ways to ensure we are implementing
best practices to protect the 501(c)3 status of the Foundation.[12] As we go forward, we welcome the opportunity
to identify better strategies for serving the President, the Foundation and its
affiliated entities.
[1] Mr. Kelly was one of Secretary Clinton’s top fundraisers
in 2008, raising in excess of $2 million for her Presidential campaign; he also
raised funds for her 2000 and 2006 Senate campaigns as well as for President
Obama in 2008.
[2] This strategy included engaging the
President’s time to undertake specific speeches, events, targeted donor
meetings, and other activities, after which Justin and I would follow-up to
seek support for the Foundation.
[3] Each year we
raised sufficient funds to both operate the Foundation and generate excess
capacity, which has been set-aside in the quasi endowment. We have also been
faced with events that have transpired that required unplanned funding (e.g., the Tsunami, the Gujarat
earthquake, Hurricane Katrina, the Haiti earthquake). We have been fortunate to raise funds to
cover these unanticipated costs and to help defray additional Foundation costs
by securing in-kind gifts of private airplanes for Foundation trips, office
space for CGI (saving $5 million over 5 years), $2 million through an
arrangement that I made with Sonia Gardner to relieve the Foundation ‘s
obligation to the AHA initiative, $raising 21 million for the 60th
birthday, $2 million when the President recovered from his heart surgery and many
other arrangements of this kind to fundraise. We have achieved these outcomes primarily through developing,
cultivating and maintaining a global network of donors. The Foundation has had to draw down on the
quasi-endowment, which originally stood at over $35 million as of 2007, to fund
the $28 million in unauthorized overruns in CHAI operating costs several times,
and to fund the creation and operation of CCI for $7.6 million. Today, the quasi endowment stands at roughly
$18 million.
[4]To
date, Teneo partners have raised in excess of $8.5 million for the Foundation,
more than $5.75 million of which is in the bank. Teneo partners also have
generated over $3 million in paid speeches for President Clinton, $1.25 million
of which has been paid to him thus far.
[5] Teneo partners
raise funds for the Foundation and contribute time, staff, resources and
relationships of the firm to help generate these donations to the Foundation.
[6] Coca
Cola has an additional $2 million commitment outstanding.
[7] Mr. Kelly also was instrumental in my
appointment by Mr. Kent to serve on the Coca Cola International Public Policy
Advisory Board. Through this
relationship, I have been able to get Coca Cola to sponsor many other Foundation
initiatives and events such as the Hope Classic next year, supplying water to
Haiti, investing in the Haiti hope juice as well as help individuals around the
world, and support candidates running for office that President Clinton was
supporting.
[8]Mr. Liveris provided the Dow plane to fly
President Clinton and his staff to and from California for our trip to, and
from, North Korea. As a private trip,
the Foundation had to pay the costs of airfare; Mr. Liveris’ in kind
contribution saved the Foundation in excess of $100,000.
[9]
An issue that was raised to my attention was Teneo’s use of space on the 5th
floor of the Sheraton during CGI, a common occurrence, as I understand it for
people to do at CGI. Teneo hosted 15
meetings in that room during the 4 days of CGI, primarily with the clients
identified in this memo. I assumed CGI sent a bill for that room; when I
recently learned we had not been billed, I directed that Teneo resources be
used to pay any and all costs associated with the room they used during CGI. I
believed, rightly or wrongly, that Teneo’s further development of its clients
to be bigger donors to the Foundation and CGI was an important priority.
[10]
The Clinton’s have used Bank of America since 1992 in Little Rock for campaigns
and various banking services including managing the foundation’s accounts. That
local branch of the bank has supported the foundation largely because they have
profited quite heavily given the 20-year relationship and the heavy amount of
interest the Foundation was paying on the tens of millions of dollars it had to
borrow in order to complete the library by November of 2004. That support came
mostly in 2001 and 2003. Teneo represents Bank of America through the Ceo from
the national organization and is a completely separate relationship established
through a relationship of a Teneo employee.
[11] For example, the Harry Walker agency, the
President’s speaking agent, receives a10% fee on every paid speech without
regard to whether they originated the speech. The agency conservatively estimates that in the last decade, $20 million
in speeches for the President have derived sole from Justin and my efforts.
[12] For example, I
understand our policy on uncompensated (comped) passes to attend CGI is being
reviewed. Historically, CGI has
accommodated as many paying members as we can identify; the majority of members
that attend are comped. In the absence
of an established policy, there are a variety of methods used to determine who
receives comped passes. We have comped
individuals that fall primarily into the following categories: spouse of CGI employees, government
employees, potential donors being cultivated – including target Teneo clients,
President Clinton’s family and friends, family and friends of Foundation
employees, guest requests of foreign dignitaries, and celebrities. As the Foundation identified a formal policy
for comped passes, we encourage the creation of a policy that will be commonly
applied – as opposed to applied by exception. We are happy to help identify the range of instances where comped passes
benefit the goals of the Foundation so the final policy operates in service of
the Foundation’s goals.