NEW YORK – As the Clinton Foundation faces a deadline of Nov. 16 to refile audited statements of a spinoff charity that were admitted to be error, Wall Street analyst and investor Charles Ortel is demanding the foundation’s accounting firm, PricewaterhouseCoopers, answer questions he has posed to the firm since May.
Ortel, who has conducted an extensive investigation of the Clinton Foundation, explained to WND that the admission of error by the Clinton Health Access Initiative has opened up a can of worms for auditor PricewaterhouseCoopers, PWC, that extends back to the formation of the Clinton Foundation in 2001.
“To meet legally binding reporting requirements regarding 2014 and 2013, the Clinton Foundation, with PWC or with a replacement auditor, must amend and explain multiple years of false and materially misleading historical disclosures to the general public and to government authorities,” Ortel explained.
He referenced a new set of exhibits examining Clinton Foundation financials that he is posting on his website.
In a reversal of its position, Clinton Health Access Initiative spokeswoman Maura Daley said the key Clinton Foundation organization would refile Form 990s for 2012 and 2013. However, she backed away from foundation spokesman Craig Minassian’s assurances to Reuters in April that multiple years of foundation and CHAI filings were under review, beginning with 2010, the first full year in which Hillary Clinton was secretary of state.
As WND has reported since last spring, Ortel has concluded through an extensive investigation that the Clinton Foundation has illegally enriched its namesakes, Bill, Hillary and Chelsea Clinton.
WND reported Monday that Ortel has urged criminal investigations of a group formed in conjunction with the Clinton Foundation’s work for which Bill Clinton serves as honorary chairman.
‘False and misleading PWC audit’
Ortel said that beginning in May 2015, PWC was alerted to apparent material irregularities in its audit of consolidated Clinton Foundation financial results for calendar years 2013 and 2012.
“Unlike other accounting firms that may have audited the Clinton Foundation financial statements and assisted with filing public disclosure forms inside and outside the United States concerning calendar years 2001 through 2012, PWC had and still has robust global auditing resources and should, itself, have been able to spot numerous red flags arising in historical disclosures and through work done, from the inside, auditing books and records,” Ortel said.
He said the Little Rock, Arkansas, office of PWC “evidently did not exercise required professional skepticism,” particularly regarding 2013 financial statements.
“Instead, a false and materially misleading PWC ‘audit’ was issued past the final IRS deadline in December 2014,” he said.
Ortel said that if PWC is still auditing the consolidated books and financial records of the Clinton Foundation for 2014, the firm will have to complete its audit so that it can be attached to the Clinton Foundation Annual Report owed to the IRS and in key U.S. states by midnight Nov. 16.
“Moreover, PWC will have to reconcile whatever approach it takes concerning 2014 with the approach PWC took concerning 2013,” he said. “If a replacement auditor is now performing work, this firm will also wish to get answers to these and related questions.”
Why Ortel’s questions must be answered
In conclusion, Ortel stressed to PWC that since Dec. 31, 2013, the Clinton Foundation has actively solicited contributions for its annual operations and for an endowment fund, continuously holding out PWC’s audit as independent certification of its financial results for 2013.
“What specific steps has PWC taken in 2015 to revisit its audit of the 2013 financial statements for the Clinton Foundation?” Ortel asked PWC.
“If PWC stands by its original work, without modification, please confirm this to be the case,” he said.
“If PWC intends to adjust its work product and its conclusions, please explain why and please tender a thorough and fully vetted amended set of consolidated financial statements for 2013, together with complete and explicit footnotes, as well as all relevant consolidating financial statements,” he requested finally.
In his second email to PWC, Ortel wrote:
This is my final communication to you before contacting appropriate authorities, including the Internal Revenue Service, the Federal Trade Commission, the Attorney General of the State of Arkansas, the Attorney General of the State of New York, and representatives of foreign donor governments, including the following nations/organizations: Australia, Canada, Denmark, the Dominican Republic, France, Ireland, Norway, Sweden, Switzerland, the United Nations, UNITAID, the United Kingdom, and the World Health Organization.
As before, and despite your repeated previous failures to respond promptly, please respond as soon as possible, minimally indicating receipt of this communication and, ideally, answering my questions.
“What concerns me,” Ortel told WND “is that continuously during the term of PWC’s auditing and other work, the Clinton Foundation has been soliciting donations across state and national boundaries using the mails, telephones and digital media, relying on the PWC audit, while false and materially misleading public disclosures and accounting work product remained in the public domain.”
Ortel questions PWC
Produced here is the comprehensive list of questions Ortel posed to PWC in May. (Note that BKD preceded PWC as auditor of the Clinton Foundation and that MHM replaced BKD as auditor of CHAI starting in 2012.)
Ortel asked PWC the following questions in his May 14 email:
1. Please explain the basis for accepting BKD’s “consolidated” results for 2012 as a reasonable starting place for your 2013 audit of the Clinton Foundation, in view of the following:
(a) BKD, was replaced as auditor for CHAI (the largest single constituent element of the Clinton Foundation) in connection with the 2012 audit for CHAI;
(b) MHM determined that accounting for the largest single known cumulative donor towards the Clinton Foundation (UNITAID) had been incorrect during 2012, and by May of 2013 had restated UNITAID’s inflows as agency transactions for 2012 and for 2011;
(c) the consolidated net worth of CHAI at the start of 2012 through the end of 2013 was significantly lower than for the Foundation, so that this decision re: agency treatment of the purported UNITAID transactions with CHAI was [at] all times material to the MHM audits in 2012 and 2013, to the BKD audit in 2012 and to the PWC audit in 2013; and
(d) BKD seems to have reversed MHM’s May 2013 treatment in its “consolidated” statements for 2012, used as the starting point for your 2013 audit.
2. Why are “consolidating” schedules in 2013 apparently issued by PWC but obscured in the Clinton Foundation Financial Report section on their website and also not part of the package available in the NY State Charity Bureau files?
3. How closely did you investigate the starting point for the Foundation’s opening balance sheet in 2013?
4. Since 2004, did the Clinton Foundation employ consistent standards in consolidating elements under the control and direction of the Clinton Foundation?
[Note: Here, Ortel is concerned about amounts supposedly received and then sent to known entities such as the Bush-Clinton Katrina Fund, the Clinton-Bush Haiti Fund, the UK Fundraising Entity, and the Swedish Fundraising entity. Ortel is also concerned about any other entities, formal or informal, that procured funds in the name of the Clinton Foundation, directly and/or indirectly.]
5. On what date did the Foundation secure prior written approval from the New York State Attorney General to prepare its financial statements combining/consolidating the entities that may have been combined and consolidated, as is required under New York State law for entities required to register such as the Clinton Foundation that was so heavily engaged in solicitation to the public, particularly during 2013 and during 2014?
6. CHAI refiled its 990s for 2010 and for 2011 in November 2013, along with the 990 for 2012, reflecting MHM’s views of UNITAID’s inflows being agency transactions—in connection with this:
(a) Why were CHAI’s and the Clinton Foundation’s audits left alone for 2010 through 2012, when it would seem that they should have been restated?
(b) 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?
(c) Did PWC review the application to form New CHAI submitted close to year-end 2009 and also compare this application to consolidated and consolidating financial statements prepared by BKD for 2007, 2008, and 2009 that are available through the New York State Charity Bureau Service?
(d) What evidence has PWC obtained that New CHAI, and that the Clinton Foundation were validly authorized by the IRS to engage in tax exempt purposes other than those approved in May 2002?
(e) With UNITAID removed, why didn’t the Schedule B disclosures (donor amounts of 2% or more) change for all affected years?
(f) Please reconcile foreign grants and contributions disclosed in the First 990 for CHAI for 2010 (filed in 2011) with the second one (filed in 2013)–why were there not more changes and how do you explain the changes shown?
(g) How closely has PWC investigated the year by year statements repeatedly made in UNITAID’s annual financial reports (available online) concerning monies sent towards the Clinton Foundation with Clinton Foundation disclosures concerning UNITAID grants (year by year and within each year), particularly in Schedule B for each year?
(f) How many of the large donors were contacted to verify, independently, the amount, timing, and intended purposes of each donation in 2013? Were donors asked about previous years?
(g) Did PWC crosscheck by country, currency, time period, and donor the amounts said to be spent on pharmaceuticals with intended purposes stated for each major donation?
7. How closely has PWC reviewed the activities of the Foundation internationally in numerous countries since July 2002? Reference Bill Clinton’s 2007 book entitled “Giving” for several pages starting on page 179.
8. How closely did PWC consider related party disclosures and then cross-check them for example, concerning:
(a) Doug Band (director of the Clinton Global Initiative, CGI, through March 2013) and Teneo;
(b) Mustapha Bakali (chief operating officer, CHAI) and Leapfrog, a Mauritius investment pool; and
(c) Huma Abedin, an employee of the Foundation and of Teneo during 2013?
9. Why did PWC fail to bring down its “subsequent events” disclosures to the issuance date of the audit letter?
10. Who signed the management representation letter? And, did you review the certification that management should have made to New York State when the Clinton Foundation’s Annual Report/Filings were made there?
11. On what dates did PWC meet with the audit [committee] of the Clinton Foundation Board and whole Board, with and without management and any conflicted directors having been present?
12. Is PWC auditing the Clinton Foundation results for 2014?
More unanswered questions
In his May 19 email, Ortel made additional statements and asked the following additional questions, also not yet answered:
In considering our telephone conversation of last week, I decided to take another look comparing the BKD work product for 2012 for the Foundation with PWC entries for 2012 in the income statement, cash flow statement and balance sheet, which PWC explains in its letter constitute BKD audited statements,” Ortel stated in the email. “The comparison yields some quite surprising results.
The email continued:
BKD’s audit explains that it consolidates CGI into the Foundation for 2012, while PWC explains that CGI was merged into the Foundation in March 2013—both approaches should yield precisely equivalent results for 2012 for the Foundation.
For a set of reasons that is not explained in PWC’s work product, Total Inflows and Total Outflows for 2012 are slightly different from BKD work product for 2012, and there are major differences in amounts shown for Contributions, Grants, and other income. Still, the amount shown for Change in Net Assets is the same $7,532,693.
All important line items for Cash Flow Statement details are precisely the same in the BKD and PWC treatments for 2012, save for the extremely important entry for cash and equivalents as of the start of 2012 which BKD has as being $107,066,637, whereas PWC has as being $103,873,526.
If PWC relied upon BKD for its 2012 audit, why and how did PWC determine that the correct starting place for cash and equivalents was $3,193,111 lower at the start of 2012?
What happened to this cash?
Ortel continued the comparison between the BKD and PWC audits for 2012, noting the following:
Looking more closely at the balance sheets for year end 2012, investments are higher in the PWC version by $1,811,109—how and why did PWC reach this determination?
And why are accounts payable and accrued expenses lower in PWC’s version by $1,302,468?
Moreover, how could these balance sheet discrepancies arise yet the income statements and cash flow statements reconcile–this seems highly irregular?”
He concluded with the following:
One further set of points–BHC at all times controlled New CHAI and New CGI—what steps did PWC take to establish that BHC was legally authorized to carry on (Via New CHAI and New CGI) their stated tax exempt purposes?
How closely did PWC investigate disclosures made and authorizations received from the IRS that BHC was actually a duly constituted tax exempt organization in each year it operated?
Why did BHC file to create New CHAI in December 2009 but wait to file to create New CGI until August 2010?
How closely did PWC compare answers made in IRS 1023 applications with state filings for BHC entities, particularly those made in NY, in MA, in FL, and in CA?
How closely did PWC investigate the “audit” history of BHC, back to its original founding in 1997? I cannot find any audits for the years through 2003 and I have serious questions about all BKD work product dealing with 2004 forward.
How closely did PWC examine each entity that may have worked in league with BHC, including the various named joint ventures as well as special purpose efforts purportedly led by BHC, perhaps as agent, for foreign governments and other donors beginning as early as in July 2002.