New Zealand Taxpayers’ Union Incorporated Postal: PO Box 10518, The Terrace, Wellington 6143 Physical: Level 4, 117 Lambton Quay, Wellington 6011 Telephone: 04 282 0300 Email: enquiries@taxpayers.org.nz Web: www.taxpayers.org.nz
17 July 2017 Hon Gerry Brownlee Minister of Foreign Affairs Parliament Buildings Wellington By email: gbrownlee@ministers.govt.nz Dear Minister,
TAXPAYER FUNDING OF CLINTON FOUNDATION GROUP 1.
Thank you for your letter of 26 June 2017, responding to our email of 12 May 2017 requesting information relating to taxpayer funding of the Clinton Foundation and, specifically, the Clinton Health Access Initiative.
2.
You correctly observe in the letter that the Initiative is a separate legal entity from the Foundation. However, you also indicate that the Initiative is not a subsidiary of the Foundation. That is not correct.
3.
Enclosed with this letter is the Initiative’s “1023” Form – Application for recognition of Exemption under section 501 (c)(3) of the Internal Revenue Code. The 1023 shows that the Foundation has full rights of appointment of the members board of the Initiative. As these non-profit groups do not have equity allocation (shareholders) the definition of subsidiary and groups (to the extent that the Initiative must be included in the Foundation’s group or consolidated financial statements) depend on the ability of the Foundation to exercise control over the Initiative. There can be no greater way to do this than the rights to appoint members of the board.
4.
New Zealand law recognise this – refer to section 5 of the Companies Act 1993 where it states that a company is a subsidiary of another when it “controls the composition of the board”.
5.
Similarly, under IFRS, the same principle applies: the ability to exercise control over board appointments is determination of the separate legal entity being within the same group.
6.
Although we have not received specific advice on the requirements of US GAAP, the annual consolidated statements of the Clinton Foundation include the income and expenses of the Initiative – i.e. they are not treated as separate organisations. While the New Zealand Government may claim that the Initiative is not a subsidiary of the Foundation, it appears the Clintons do not agree.
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7.
The Government cannot reasonably claim that the Initiative is independent of the Foundation. Included on the Clinton Foundation website is Chelsea Clinton’s involvement in the Foundation activities in her role as a board member of the Initiative. President Clinton also sits on the Initiative’s board.
8.
Has some $9.1 million of New Zealand taxpayer money — equivalent to the annual income tax paid by 899 New Zealanders on the average wage — been pumped into the Clinton Health Initiative, under the false belief that it is independent (or not a subsidiary) of the Clinton Foundation?
9.
We are struggling to understand any basis on which your view that the Initiative is not a subsidiary of the Foundation, could rest. We therefore seek this information from your office. Please include, but do not limit to, all advice your office has received on the Foundation and Initiative, proposals and analysis by officials relating to the decision(s) to fund (and keep funding) the Initiative and all information relied upon by you (or officials) in claiming that the initiative is not a subsidiary.
10.
Finally, on what date did your office learn that Australia’s aid programme ceased funding the Initiative – cutting short its previous commitment? What was done following this date to find out the reasons for the Australian withdrawal? If no effort was made, why not?
11.
We look forward to your response, or even better, a decision from you to follow the Australians to pull the plug on this funding and stop New Zealand taxpayer’s money going to the Clinton groups.
Regards, New Zealand Taxpayers' Union Inc.
Jordan Williams Executive Director Jordan@taxpayers.org.nz Direct Dial: 04 282 0301
New Zealand Taxpayers’ Union Inc.
PO Box 10518, The Terrace 6143, Wellington
www.taxpayers.org.nz