Clinton's unexplained $700,000 windfall

Washington Times:

The spring before his wife began her White House campaign, former President Bill Clinton earned $700,000 for his foundation by selling stock that he had been given from an Internet search company that was co-founded by a convicted felon and backed by the Chinese government, public records show.

Mr. Clinton had gotten the nonpublicly traded stock from Accoona Corp. back in 2004 as a gift for giving a speech at a company event. He landed the windfall by selling the 200,000 shares to an undisclosed buyer in May 2006, commanding $3.50 a share at a time when the company was reporting millions of dollars of losses, according to interviews.

A spokesman for the William J. Clinton Foundation declined to identify the buyer who was willing to pay so much for a struggling company's stock, saying only that the transaction was handled by a securities broker. It occurred seven months before Sen. Hillary Rodham Clinton announced her bid to run for the 2008 Democratic presidential nomination.

The spokesman, Ben Yarrow, declined last week to say whether Mr. Clinton knew about the Chinese government's connection to Accoona or the felony fraud conviction of one of the company's founders.

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Accoona, based in Jersey City, N.J., was co-founded by Armand Rousso, who as of last year held more than 14 percent of the company's shares. He pleaded guilty in 1999 to federal money laundering and other charges in a fraud investigation in New Jersey.

After being jailed for 19 months and cooperating with government investigators for several years, he was sentenced to probation in 2006 and was barred from working in the securities industry.

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The China Daily Information Co., or CDIC, a subsidiary of the Chinese-controlled newspaper China Daily, holds nearly a 7 percent stake in Accoona, records show. Mr. Zammit said CDIC also has no management role.

Still, the company has touted its ties to China to potential investors.

"CDIC's market knowledge and its parent's ownership by the Chinese government gives us an advantage over companies that do not have such a relationship," the company said in a prospectus filed with the U.S. Securities and Exchange Commission (SEC) last year.

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There is no established market price for the stock because the company is private. But records show that the company posted at least $60 million in losses during the period from 2004 to 2006.

The Chicago Tribune, reporting the stock transaction on Tuesday, quoted a business agent for former Russian chess champion Garry Kasparov, saying his client also was paid in stock options after attending Accoona's launch in 2004.

However, the agent said, Mr. Kasparov did not exercise the options because financial advisers said the shares were worth less than the $1 option price, according to the report. The agent, Owen Williams, declined to comment when contacted by The Times.

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Normally stock prices for companies that are not public traded are based on some value that relates to the companies net worth divided by the shares outstanding. There is some suggestion that the former President may have gotten a put at a fixed price along with the stock which would have permitted him to sell it at the price he got, or ride it higher if it became worth more. It is still hard to imagine that his speech was worth what his foundation got for it. Indeed, the companies performance suggest it was of little value at all.