"They made it crystal clear that the ask was from Hillary": Inside the Clinton fundraising machine -- as secretary of state

Sometimes in D.C., the crime is what's legal: Inside the massive Clinton fundraising operation at State

Published March 21, 2015 10:30AM (EDT)

  (AP/Carolyn Kaster)
(AP/Carolyn Kaster)

Excerpted from the book "HRC: State Secrets and the Rebirth of Hillary Clinton"

Hillary tapped Kris Balderston, the hit list author, to keep the Clinton political network humming at State. A longtime lieutenant to both Clintons, Balderston, who called everyone “buddy,” liked to talk in salesman’s terms about Hillary’s “power to convene” and her commitment to making sure her partners could “do well by doing good.” What he meant was that Hillary could use the Clinton Rolodex to focus private-sector money, government power, and the expertise at colleges and nonprofits to solve global problems. At best, they would do a public service and make a buck. At worst, they would make a powerful friend. Balderston became, for lack of a better term, Hillary’s special ops guy at State.

He wrote Hillary the first memo on his concept for an office that would mirror Bill’s Clinton Global Initiative on December 8, 2008, less than a week after she was named to her job and more than six weeks before she took office. Though she had to wait for some of her lieutenants to clear the Obama vetting process and a Senate confirmation vote, she had made it a priority to empower Balderston, the political fixer who could help her build unique networks connecting her State Department to other government agencies, the nonprofit sector, and the corporate world. While many Democrats believe that government is the answer to the world’s problems, and many Republicans believe the same of the private sector, Balderston’s office was the embodiment of Hillary’s core Clintonian belief that government, business, and charitable organizations are all vital components of a thriving society.

“It’s more than raising money,” said one source familiar with the concept. “It’s networking other people’s intellectual property, networks, lists, that sort of thing. You need somebody who does more than just raise money.” Just like the Clinton Global Initiative.

But intellectual property and network expansion would have to wait—Hillary needed cash. Balderston was still setting up the office when Hillary approached him at the end of February 2009. “I have the first project for you,” she said. The job: raise more than $60 million from the private sector in nine months. In an era of billion-dollar presidential campaigns, that might not sound like much jack. But the government generally doesn’t raise money from the private sector, in large part because of the potential for corporate donors to give with the expectation that they will get specific government actions in return. Moreover, Congress and the Bush administration had shunned the very initiative Hillary wanted Balderston to execute.

Hillary had just returned from China, the anchor stop on her first trip overseas, where she had been surprised to find that the United States didn’t have a plan to build a pavilion at the world’s fair the following year, the Shanghai Expo. Chinese officials were incensed at the insensitivity to a major international showcase event in their country, and they gave Hillary an earful. They had been complaining to American businesses, too. From China’s perspective, America’s failure to build a pavilion would be a little less insulting than a boycott of the Olympics but not much. At the time, Hillary and Obama were touting an American “pivot” toward Asia, a shift of focus away from Europe and the Middle East and toward China, Japan, and their neighbors, as a central part of their foreign policy agenda. The elevation of State through the Strategic & Economic Dialogue was but one example of the new emphasis on building a more comprehensive relationship with China. After all, the world’s two most powerful nations had common interests in issues ranging from the world economy to fighting terrorism. Certainly, snubbing China at the encore to the 2008 Beijing Olympics would complicate those efforts.

So the expo held outsize symbolic importance in the new partnership Obama wanted to build. “It became important to [Hillary] because it was made clear to her by the Chinese senior leadership that it was important to them,” said José Villarreal, a veteran Clinton fundraiser with ties to China. “It was inconceivable to the Chinese that they could have a world expo and not have the United States there, especially not have the United States [be] virtually the only country that was not going to participate.”

While she was in China, Hillary confessed that she hadn’t been briefed on the fair—few politicians fail to blame their staff when necessary—and committed to looking into it when she got home. This impending diplomatic faux pas over the Shanghai Expo would be a serious affront to a country that the United States was in the process of courting. In addition to the downside risk, the expo offered Hillary two opportunities. First, she could draw a sharp contrast with the Bush administration, which had made clear that it wouldn’t use government resources to raise money for a pavilion. “The Department of State is not now authorized, and does not in the future intend to seek authorization from the U.S. Congress, to provide funding for any aspect of the U.S. exhibition at the World Expo,” the department wrote in a 2006 request-for-proposals for a private entity to try to build a pavilion on America’s behalf. That effort had been going nowhere when the Chinese approached Hillary.

The U.S. government had soured on the world’s fair idea after a scandal involving the American operation at the 1998 expo in Lisbon, and Congress had subsequently placed a nearly comprehensive ban on the State Department directly funding pavilions at future world’s fairs. But lawmakers had left a loophole for staff to raise money from private donors, corporations, NGOs, and foreign governments. That loophole was just the right size for Balderston and his new shop to fit through. Under federal law and ethics regulations, Hillary could even express her support to potential donors without making a direct appeal for money—a wrinkle in the law that would create great controversy when the secretary of health and human services, Kathleen Sebelius, helped raise private funds to promote Obamacare in 2013.

As a second bonus, setting up a fund-raising operation for the fair gave Hillary an invaluable early opportunity to strengthen and expand her network among top American business executives, a potential source of campaign contributions if she decided to run in 2016.

Balderston was a political operative but not a fund-raiser per se, and Hillary turned to two longtime Clinton money bundlers, Elizabeth Bagley and Villarreal, to jump-start the capital campaign. Bagley, a former ambassador to Portugal and a million-dollar donor to the Clinton Foundation, was named as Hillary’s special representative for global partnerships, a role that Balderston would later take over. A former adviser to both Clintons and the treasurer of Al Gore’s 2000 campaign, Villareal had been a “Hillraiser,” one of her big-time campaign cash bundlers. He was also a former member of the board of directors of Walmart Stores.

Villarreal had heard about the Shanghai Expo issue on a trip to China to visit his daughter a few months earlier, when Chinese Walmart executives gave him the same grilling on America’s expected absence from the fair that Hillary would get from government officials. When he heard Hillary had been in China, he told Cheryl Mills he would be happy to help organize a U.S. pavilion— and Hillary tapped him to do just that as the U.S. commissioner for the expo.

In addition to the sheer magnitude of the fund-raising challenge, Villarreal, Bagley, and Balderston faced a set of rules that complicated their effort. They had to raise all the money from private donors, and Hillary couldn’t solicit corporate contributions directly. To make matters worse, several of America’s biggest players in China, including Coca-Cola and GM, were already building their own pavilions to safeguard their own relationships with the Chinese. As a result, they were not likely to contribute money to the official U.S. pavilion.

Hillary had a lot riding on her ability to turn an international slip into a diplomatic coup that saved face for both the United States and China. The talk about her clout as an international celebrity was nice, but could she deliver? Her fund-raising commandos didn’t have the luxury of time. They couldn’t wait for the charitable-giving arms of major corporations to process requests. Instead, they went straight to CEOs, and they made it crystal clear that the ask was from Hillary.

“We knew how to get to the leadership of companies, and of course, being able to suggest that this was a project that was very, very important to Secretary Clinton really, really helped in opening doors,” Villarreal recalled. Hillary even drafted a letter of support for potential donors, just in case they needed more proof than a name drop. Sources say she carefully walked on the legal side of the line, but there was no doubt that she was engaged. “She did a really good job of actually getting into the muck of raising that money,” said one source.

In the summer of 2009, PepsiCo CEO Indra Nooyi, one of the world’s most powerful women, according to Forbes, committed $5 million, a contribution that helped get the ball rolling. Chevron, General Electric, Honeywell, Microsoft, Intel, Yum!, the National Basketball Association, Pfizer, and nearly five dozen other corporations and foundations jumped on board. Just scratching the surface, the list included a who’s who of major donors to the Clinton Foundation. In addition to Microsoft, Yum!, and Pfizer, common contributors to the Clinton Foundation and the U.S. effort at the expo included Bloomberg LP, Citigroup and its foundation, Dow Chemical, Procter & Gamble, and Sidney Harman. (Harman’s company gave to the Shanghai Expo while his family foundation gave to the Clinton Foundation.)

“The Shanghai Expo,” one Clintonworld fund-raising source said, “was a primary example of being able to tap into a base of people that Elizabeth [Bagley] was able to go after.”

In November 2009, nine months after the Chinese chastised her, Hillary returned to Shanghai, where she made a personal pitch for more money. After visiting Boeing’s new two-bay hangar at Shanghai Pudong Airport, where she spoke to a group of fifteen to twenty executives, including the heads of Boeing China, Caterpillar China, and GE China, Hillary made her way to the fairgrounds to take a look at the still-skeletal U.S. pavilion and make an ask.

“I know there are some in the audience who are still contemplating sponsorship or who may be in negotiations with the USA Pavilion team,” she said. “Now is the time to join this effort.” Boeing, the host of her earlier session with executives, doubled its contribution to the pavilion fund from $1 million to $2 million.

Hillary’s personal effort paid dividends for Bagley, Villarreal, Balderston, and America’s relationship with China. They had raised enough money at that point to ensure that America would be present at the fair, but the U.S. pavilion wouldn’t be completed until the last minute.

Two days before the May 1, 2010, opening of the fair, Chinese president Hu Jintao, vice premier Wang Qishan, and state councilor Dai Bingguo toured the U.S. Pavilion, taking in what Hillary and her team had accomplished in less than fifteen months—under half the time it might normally have taken to complete such a project.

“We were still working on the finishing touches even after the expo officially opened,” Villareal said. “Had it not been for her personal involvement in really lending her personal prestige, we just never would have been able to get it done.”

In late May 2010, Hillary came back to Shanghai for a third time to get her own firsthand look as one of 7.36 million people who visited the carbon-neutral U.S. pavilion over a six-month period. The reviews were fair but not good. John Pomfret of the Washington Post called it “one of the singular successes” of her first year and a half in office but noted that the pavilion looked more like “a convention center in a medium-size American city than a national showcase—a warren of dark rooms with movie screens that pales in comparison to the ambitious pavilions of, among others, Saudi Arabia, which features the world’s biggest IMAX screen, and Germany, festooned with hundreds of giant red balls.”

Villarreal acknowledged that “we could have done much better” with two or three years to put it together. “We made the most that we could, given the limitations,” he said. “At the end of the day, the question is ‘Did ordinary Chinese enjoy it?’ and the answer is ‘Absolutely.’”

“I’m just relieved,” Hillary said when she arrived, adding a lukewarm assessment of the pavilion itself: “It’s fine.”

Years later an iconic photograph of Hillary speaking in the rain at the construction site hung on the wall of the reception area outside Balderston’s office, a testament to the first major project of the State Department’s version of the Clinton Global Initiative. American and Chinese officials knew that it was a minor miracle that Hillary had been able to secure financing and build the pavilion in the first place, which was a major sign of respect for China. The Clinton family contact list had been invaluable for Bagley, Balderston, and Villarreal as they dialed angel donors directly. They “went to a lot of people in the network, the givers and funders network,” said a senior Hillary adviser.

A hint of the Clinton network’s central role was inscribed on the first page of Balderston’s copy of the world’s fair commemorative coffee table book: “As you would say, ‘We did it, buddy.’” The signature: Bill Clinton.

Excerpted from the book "HRC: State Secrets and the Rebirth of Hillary Clinton" by Jonathan Allen and Amie Parnes. Copyright © 2015 by Jonathan Allen and Amie Parnes. Excerpted by permission of Broadway, a division of Penguin Random House.

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