Whoops!
Nobody verified Clinton Foundation a legal charity
Wall Street analyst: Major accounting firm neglected to
exercise due diligence by Jerome Corsi, 6/21/15
NEW YORK – Along with filing financial reports filled with
errors and misstatements, “Big Four” accounting firm PricewaterhouseCoopers
neglected to verify whether the Clinton Foundation obtained tax-exempt status
for its various sub-entities, including its AIDS charity, contends respected
Wall Street analyst Charles Ortel.
As WND has reported, Ortel’s six-month investigation
indicates the Clintons have diverted tens millions of dollars donated for
charitable purposes to the personal enrichment of themselves and their close
associates.
He says PWC neglected to exercise due diligence in
fulfilling its professional responsibilities in conducting even the most basic
inquiries required of an honest audit.
PWC, he says, failed to inquire whether the Clinton Foundation
has applied for and received duly issued IRS tax-exempt determinations for its
various sub-entities and activities, including fighting HIV/AIDS globally under
the auspices of the Clinton Health Access Initiative Inc., also known as CHAI.
He notes that there as an “Old CHAI” and a “New CHAI” that
was created after Hillary Clinton became secretary of state. In addition, the
foundation launched the Clinton Global Initiative and numerous foreign funds
and endowments created, for instance, in conjunction with George W. Bush to
raise money for the victims of Hurricane Katrina in 2005 and the 2010
earthquake in Haiti.
In his draft report, Ortel says PWC’s “work product
concerning the Clinton Foundation in 2013 is riddled with errors.”
Ortel documents “each material deficiency in appropriate
detail,” but he also poses an important preliminary question: “Did PWC, as part
of its 2013 audit, establish that under applicable laws and regulations that
the Clinton Foundation, including its various sub-entities and numerous
charitable endeavors, many of which have been foreign based, is duly
constituted as a tax-exempt organization?”
PricewaterhouseCoopers has not replied to numerous requests
from WND, by email and by telephone, to comment. Ortel also asked PWC a number of
questions based on his investigation and has received no reply.
Ortel insists the question of whether the Clinton Foundation
is validly constituted as a U.S. tax-exempt organization is “fundamental to any
analysis of its financial statements.
If it is not validly constituted, he says, “the organization
and its directors face substantial financial liabilities as well as other
penalties that would severely impact, even bankrupt numerous parties.”
“Moreover, if the Clinton Foundation is not validly
constituted as a U.S. tax-exempt organization, the legal implications for the
board of directors may be severe,” Ortel writes.
In addition, there would be severe “tax consequences for
those who donated to what may be a fraudulent charity, including thousands of
ordinary individuals and families worldwide, as well as for wealth foundations,
foreign donors, foreign governments, and possibly even the U.S. government for
all contributions the U.S. government entities have made to the Clinton
Foundation since inception.”
Tax-exempt purpose: To build
Clinton library
As WND
has previously reported, the Clinton
Foundation’s initial IRS tax-exemption determination was obtained for the
purpose of building the Clinton presidential library
While the Clinton Foundation’s IRS
determination letter dating back to the foundation’s creation in 2001 is not
archived on the Clinton Foundation website, its
2002 IRS Form 990, Part III filing
makes clear the organization’s “primary exempt purpose” in narrowly defined
terms: “to design, construct, and initially endow a presidential archival
depository to house and preserve the books, correspondence, documents, papers,
pictures, and other memorability of President Clinton.”
WND has also reported that the idea to morph the purpose of
the Clinton Foundation from building the Clinton presidential library to
fighting HIV/AIDS worldwide arose from a conversation Bill Clinton had with
Nelson Mandela, which is recounted in Clinton’s 2007 bestselling book “Giving:
How Each of Us Can Change the World.”
While the discussion led in 2002 to the creation of the
Clinton Health Access Initiative Inc., it is not clear the Clinton Foundation
sought or received a new tax-exempt determination letter from the IRS to expand
the foundation’s purpose from building the Clinton presidential library to
fighting HIV/AIDS worldwide.
“The Clinton Foundation has yet to produce definitive and
compelling evidence that it was ever authorized appropriately by the IRS to do
more than serve as an archival records repository based in Little Rock,
Arkansas for the papers and related memorabilia of President Bill Clinton,”
Ortel charges.
“It is true that an application to form a companion entity
called Clinton Health Access Initiative, Inc. (“New CHAI”) as a tax-exempt
organization was approved by the IRS on 15 March 2010,” Ortel acknowledges.
“However, the application posted on the Attorney General of New York State
Charity Bureau website is incomplete, false, and misleading, so it is difficult
to understand why it was approved, less than three months following its
submission on or around 31 December 2009, and whether CHAI can reasonably
continue to operate having procured IRS tax-exempt approval fraudulently.”
Ortel notes that judging from subsequent filings of IRS Form
990 by New CHAI, its official tax-exempt purpose was: “to support governments
to build and strengthen integrated health systems in the developing world and
expand access to high-quality care and treatment for HIV/AIDS, malaria and
other diseases”
“While laudable, the stated purpose of New CHAI may not
afford private donors the possibility of obtaining tax deductions under U.S.
law in that furnishing services abroad that are the legitimate responsibilities
of foreign governments has been consistently held to be other than a valid
charitable purpose as far as U.S. law is concerned,” he argued.
Independent certification?
Ortel stresses that since Dec. 31, 2013, the Clinton
Foundation has solicited contributions for its annual operations and for an
endowment fund, continuously holding out PWC’s audit as independent
certification of the foundation’s financial results for 2013.
Yet, Ortel told WND he can find no documentation that PWC,
in conducting its audit of Clinton Foundation financial statements, ever
bothered to inquire into the status and specific content of the IRS tax-exempt
determination letters that the Clinton Foundation and its various subgroups,
including CHAI, possess that would allow them to receive tax-exempt donations
to fight HIV/AIDS or engage in any of the other charitable purposes the
foundation specifies on its website and published literature.
He points out that according to IRS Filings for New CHAI
covering 2010, 2011, 2012 and 2013, the Clinton Foundation exercised the legal
power to control the operations of New CHAI.
“It is not clear, however, that the Clinton Foundation was
ever appropriately authorized by the IRS to pursue the stated purposes of New
CHAI that are so much at variance from its own authorized purposes, serving as
an archival records repository and operating exclusively inside the United
States from a Little Rock, Arkansas base,” he notes.
This led Ortel to pose the following questions to PWC in an
email dated May 19 that PWC has yet to answer:
- What evidence has PWC obtained that that the Clinton Foundation and New CHAI in particular were validly authorized by the IRS to engage in tax exempt purposes other than those approved in May 2002?
- How closely did PWC investigate disclosures made and authorizations received from the IRS that the Bill, Hillary, and Chelsea Clinton Foundation was actually a duly constituted tax-exempt organization in each year it operated, including 2013 and previous years where the top-level Clinton Foundation, as the parent company of New CHAI, CGI, and its various predecessors, controlled the activities of CHAI and the Clinton Global Initiative?
- How closely did PWC examine each entity that may have worked in league with the Bill, Hillary, and Chelsea Clinton Foundation, including the various named joint ventures and special purpose efforts purportedly led by the top-level Clinton Foundation, including the Bush-Clinton Katrina Fund, the Clinton-Bush Haiti Fund, the U.K. fundraising entity and the Swedish fundraising entity?
- Did PWC examine whether the top-level Clinton Foundation in operating these various sub-ventures as a tax-exempt charity had authorization to act as an agent for foreign governments beginning as early in July 2002, when the HIV/AIDS was first conceptualized as a charitable purpose that could be added without specific approval to the IRS tax-exemption determined for funds donated to build the Clinton presidential library?
- How closely did PWC investigate the opening balance sheet of CHAI in 2010 and its relevance to the opening balance sheet of the Clinton Foundation in 2010, flowing through to the opening balance sheet in 2013?
- Did PWC review the application to form New CHAI submitted close to year-end 2009? Did PWC compare this application to consolidated financial statements prepared by previous Clinton Foundation auditor BKD for 2007, 2008 and 2009, that are available through the New York State Charity Bureau Service?
Responsibility to investigate
A careful analysis of audit guidance published by the
American Institute of Certified Public Accountants, AICPA, makes clear auditors
have a responsibility to investigate the legal and regulatory framework
applicable to the entity being audited and the industry or sector in which that
entity operates – a standard that applies equally to foundations operating as
charities having applied for and received duly issued IRS tax-exempt
determinations.
Specifically, Ortel cites
AU-C Section 250 of the AICPA “Clarified Statements on Auditing Standards,” SAS
No. 122, titled “Consideration of Laws and
Regulations in an Audit of Financial Statements.” The section makes clear the
auditor has a responsibility to take into account the applicable legal and
regulatory framework.
Section 122.13 states: “The auditor should obtain sufficient
appropriate audit evidence regarding material amounts and disclosures in the
financial statements that are determined by the provisions of those laws and
regulations generally recognized to have a direct effect on their
determination.”
Section 122.14 (a) charges fulfilling this responsibility includes, “Inquiring of management, and when appropriate, those charged with governance about whether the entity is in compliance with such laws and regulations.”
Section 122.14 (a) charges fulfilling this responsibility includes, “Inquiring of management, and when appropriate, those charged with governance about whether the entity is in compliance with such laws and regulations.”
Ortel concludes that if it’s true that the Clinton
Foundation was “never authorized to engage in what has become, by far, its
largest activity, then the balance of this memorandum deals with significant
accounting issues that pale in comparison to legal perils that directors,
management and donors to the Clinton Foundation must soon face.”
http://www.wnd.com/2015/06/clinton-foundation-a-valid-irs-charity/
No comments:
Post a Comment