The guest list for a private State Department dinner on higher-education policy was taking shape when Secretary of State Hillary Clinton offered a suggestion.
In addition to recommending invitations for leaders from a community college and a church-funded institution, Clinton wanted a representative from a for-profit college company called Laureate International Universities, which, she explained in an email to her chief of staff that was released last year, was “the fastest growing college network in the world.”
There was another reason Clinton favored setting a seat aside for Laureate at the August 2009 event: The company was started by a businessman, Doug Becker, “who Bill likes a lot,” the secretary wrote, referring to her husband, the former president.
Nine months later, Laureate signed Bill Clinton to a lucrative deal as a consultant and “honorary chancellor,” paying him $17.6 million over five years until the contract ended in 2015 as Hillary Clinton launched her campaign for president.
There is no evidence that Laureate received special favors from the State Department in direct exchange for hiring Bill Clinton, but the Baltimore-based company had much to gain from an association with a globally connected ex-president and, indirectly, the United States’ chief diplomat. Being included at the 2009 dinner, shoulder to shoulder with leaders from internationally renowned universities for a discussion about the role of higher education in global diplomacy, provided an added level of credibility for the business as it pursued an aggressive expansion strategy overseas, occasionally tangling with foreign regulators.
“A lot of these private-education guys, they’re looking to get into events like this one,” said Sam Pitroda, a higher-education expert who was representing a policy commission from India at the State Department dinner. “The discussion itself is irrelevant. … It gets you very high-level contacts, and it gets you to the right people.”
While much of the controversy about Hillary Clinton’s State Department tenure has involved donations to her family’s charity, the Clinton Foundation, a close examination of the Laureate deal reveals how Bill Clinton leveraged the couple’s connections during that time to enhance their personal wealth – potentially providing another avenue for supporters to gain access to the family.
In addition to his well-established career as a paid speaker, which began soon after he left the Oval Office, Bill Clinton took on new consulting work starting in 2009, at the same time Hillary Clinton assumed her post at the State Department. Laureate was the highest-paying client, but Bill Clinton signed contracts worth millions with GEMS Education, a secondary-education chain based in Dubai, as well as Shangri-La Industries and Wasserman Investment, two companies run by longtime Democratic donors. All told, with his consulting, writing and speaking fees, Bill Clinton was paid $65.4 million during Hillary Clinton’s four years as secretary of state.
Details of Bill Clinton’s compensation are found in the couple’s tax returns, which were made public by his wife’s presidential campaign and provide an unusual glimpse into the way a former president can make millions in the private sector. Bill Clinton has proved particularly marketable because of his global celebrity, enhanced by his foundation, his continued visibility on the political scene and his wife’s stature as a senator, Cabinet official and potential president.
The Laureate arrangement illustrates the extent to which the Clintons mixed their charitable work with their private and political lives. Many of those who paid Bill Clinton to consult or speak were also foundation donors and, in some cases, supporters of political campaigns for one or both Clintons.
Becker, for example, donated to Hillary Clinton’s 2008 presidential campaign and last year donated $2,700 to her current effort. Laureate has given between $1 million and $5 million to the Clinton Foundation, according to the charity’s website, and made millions of dollars of charitable commitments through the Clinton Global Initiative, an arm of the foundation that arranged for corporations to make public pledges to their own philanthropic projects. Meanwhile, Laureate portrayed its association with the Clintons as a symbol of its legitimacy rather than the result of a business deal.
“People know that somebody like President Clinton, the most important thing to him is his reputation,” Becker said in a 2010 appearance at a Laureate campus in Malaysia. “And to attach himself to an organization that he doesn’t believe in, he would never do it. It wouldn’t make sense – not just with his own legacy and history but, in his case, being the spouse of the U.S. secretary of state, for example.”
When Becker introduced Clinton at an event at the same campus the next year, he read a statement from Malaysia’s education minister declaring that “there must be something very special about Laureate that has inspired President Clinton to devote his energy to such an endeavor.”
Aides to Clinton and representatives of Laureate characterized the arrangement as one that advanced global access to education.
Angel Urena, a Clinton spokesman, said the former president “engaged with students at Laureate’s campuses worldwide and advised Laureate’s leadership on social responsibility and increasing access to higher education.” Adam Smith, a Laureate spokesman, said Clinton “was paid to advise Laureate, inspire students and visit the campuses and communities they serve, and that’s what he did, with great conviction and energy.”
Becker declined to be interviewed for this report. Laureate officials said that the Baltimore businessman first met through Laureate Vice President Joseph Duffey, a former Clinton administration official, at a 2007 Clinton Global Initiative event in Hong Kong.
Clinton became familiar with the company after giving a few unpaid speeches on its international campuses and then grew closer with Becker when they traveled to Haiti together in 2009 to explore education issues in the troubled nation, a Clinton aide said.
Laureate had grown rapidly under Becker, a college dropout who became wealthy in the 1980s after inventing a card that could store personal medical information. He launched Laureate in 2003, transforming an old tutoring company called Sylvan Learning Systems into a network of for-profit college campuses.
The company has been intertwined over the years with the global financial elite. Once publicly traded, it was bought out for $3.8 billion in 2007 with investments from, among others, a private-equity firm founded by liberal philanthropist George Soros, as well as the investment firm Kohlberg Kravis Roberts.
Laureate, which is taking steps to become publicly traded again, has in recent years been largely focused on growing internationally. Typically, it has purchased financially struggling colleges and vocational schools and improved management while boosting profits through expanding enrollment. The company has said in regulatory filings that it enrolls more than 1 million students on 87 campuses in 28 countries. It has five U.S. campuses.
Laureate hired Clinton as scrutiny of private colleges was increasing in the United States and internationally. Congress in 2010 launched an investigation into for-profit schools, which critics say profit from needy students while making often grand but unfulfilled promises of valuable degrees.
Laureate has clashed at times with regulators in other countries, such as Chile, where the law forbids for-profit education and Laureate operates by acting as a contractor to local nonprofit institutions.
Clinton at times mingled with foreign government leaders during his appearances on Laureate campuses, such as a 2013 Laureate-hosted conference on youth unemployment in Madrid featuring top European officials.
Urena said the former president “never sought to influence any foreign or U.S. official on Laureate’s behalf.”
Smith said Clinton played an active role as honorary chancellor, visiting 19 locations, meeting with students and delivering speeches that were broadcast to tens of thousands of students around the world. He said Clinton’s role was not related to the company’s business prospects.
Clinton’s contract with Laureate was approved by the State Department’s ethics office, in keeping with an Obama administration agreement with Hillary Clinton that gave the agency the right to review her husband’s outside work during her tenure. An ethics official wrote that he saw “no conflict of interest with Laureate or any of their partners,” according to a letter recently released by the conservative group Citizens United, which received it through a public-records request.
The contract itself became public through a records request by a different conservative group, Judicial Watch, but descriptions of Clinton’s exact consulting role were blacked out in the publicly released document and labeled as trade secrets. Laureate and Clinton aides declined to release an unredacted copy of the contract.
Based on appearances on Laureate’s behalf by Clinton and public statements by the company, it seems that part of the strategy in hiring the former president was to bolster Laureate’s image by aligning it with the former president’s famous charitable efforts – thereby portraying the company as a force for good in the world.
News releases about Clinton’s paid campus appearances often invoked his work on education issues with the Clinton Foundation. And every news release during Clinton’s time with the company carried his name and his title of honorary chancellor.
In 2013, Clinton recorded a message to Laureate students and, without mentioning his financial ties to the company, said he joined Laureate because he admired its “dedication to helping the next generation of leaders be truly educated and well prepared for your future.”
Also that year, Laureate prominently featured its association with Clinton as part of its effort to purchase the Thunderbird School of Global Management, a 70-year old private business school in Arizona that was struggling financially.
Karen Longo, a graduate of the school who was on the board of directors at the time, recalled that Becker specifically referenced the Clinton tie when he pitched the board on the deal. She provided The Washington Post with brochures Laureate gave out at the time, featuring a letter from Clinton praising Laureate students for working to improve the world and declaring himself “proud to be a part of their efforts.” Clinton’s picture was included on multiple pages.
“His face, his name was in all their brochures,” Longo recalled. “It was a very big sell for them.”
She and other alumni were concerned that Laureate would lower the school’s admissions standards to expand its enrollment in an effort to make more money from the campus.
“The more students they got, the more money they got from student-loan funds,” she said. “It would have been a dilution of the Thunderbird brand.”
Longo and four other alumni on the school’s board protested the purchase to the school’s accrediting agency, the Higher Learning Commission. In 2014, the commission refused to sign off on the purchase. Thunderbird has since merged with Arizona State University.
Laureate, meanwhile, pursued close ties with the Clinton Foundation.
The company paid to send a group of international students each year to the Clinton Global Initiative conference in New York, where they conducted video interviews with CGI attendees such as former secretary of state Madeleine Albright for broadcast to fellow Laureate students around the world.
“We’re here with one of the most remarkable world leaders. We’re here with Chelsea Clinton,” said Daniel Rubio Sánchez, a student on a Laureate campus in Madrid, as he began a video interview with the former first daughter at the September 2015 CGI gathering – a few months after Bill Clinton’s contract ended – sitting in front of a glass wall inscribed with the logos of Laureate and CGI.
Sánchez, 20, in an interview with The Post, called his CGI experience “really, really enriching” and one that has opened doors for him at European think tanks. “My personal profile changed greatly,” he said.
The Clintons’ Laureate connection emerged as a campaign issue earlier this summer, when Republican presidential nominee Donald Trump charged that Hillary Clinton “laundered money” to her husband by funneling tens of millions of dollars in federal grants to Laureate while she was secretary of state.
By all accounts, Trump’s claim was false, and his campaign did not respond to requests for documentation.
The company says its campuses have received about $1.4 million total over the years in grants from the State Department and its international aid arm, USAID. Of that amount, only $15,000 came while Clinton was secretary of state – student scholarships funded by USAID, Laureate said.
Publicly available grant records are not detailed enough to corroborate Laureate’s exact numbers. But the records do show that neither Laureate nor any of its campuses has received any individual grant larger than $25,000 from the State Department or USAID.
Trump appeared to be drawing on – and misrepresenting – a report in the 2015 book “Clinton Cash” that grants from USAID to a separate charity chaired by Becker, the Laureate founder, increased during the Clinton years.
Founded in 1989, the International Youth Foundation has partnered with Laureate campuses in some of its charitable education work. The group has received USAID funding since 1999, and its president said the increase in USAID funding under Clinton was largely the result of the receipt of multi-year grants awarded before she entered office. There is no evidence Hillary Clinton played a role in the grants, and the group’s president, William Reese, said no government money went to Laureate or Becker.
Though some Republicans tried to draw parallels between Laureate and Trump University, the real estate seminar company founded by Trump that faces multiple fraud investigations, Laureate is a different sort of business.
Unlike Trump University, Laureate’s campuses are fully accredited and offer graduating students valid diplomas. Compared with other universities, including its for-profit competitors, Laureate has a relatively low percentage of students who default on their loans, seen as an indicator of student financial success after graduation. A 2012 Senate report on for-profit colleges said that Laureate’s flagship U.S. school, Walden University, was the best of 30 campuses studied and that students there generally “fared well.”
Still, the company has faced some complaints.
A group of students at Walden, a Minneapolis-based online school, sued Laureate in 2015, arguing the institution unnecessarily dragged out their education so they would have to pay more. Laureate denied the allegation, and the lawsuit was settled out of court.
As of July, three of Laureate’s five U.S. schools were included on a government list of 500 schools that receive additional financial oversight after being found out of compliance with the requirements of federal student aid programs.
Outside the State Department, Laureate’s ties extended into the world of the Clintons’ in other ways. Politico has reported that Laureate and GEMS Education were both clients of Teneo Holdings, a public-relations group founded by longtime Bill Clinton aide Doug Band that also paid Clinton a $100,000 consulting fee in 2011. Band declined to comment, as did Laureate.
The Clintons were also close to Duffey, a top Laureate official who has been friends with Bill and Hillary Clinton since the two worked as young staffers for his unsuccessful campaign for the Senate in Connecticut in 1970.
When Hillary Clinton requested that her staff invite a Laureate official to her 2009 State Department policy dinner, it was Duffey whom she recommended, according to emails released by the State Department.
People who participated in the dinner said they remember a high-level conversation about using education to boost diplomacy, held amid antique furniture in the State Department’s elegant James Monroe room. Duffey spoke positively of Laureate’s approach to overseas expansion, according to one participant.
Kevin Kinser, who studies for-profit colleges at Pennsylvania State University, said that given Laureate’s rapid growth, it was not unreasonable to include a company representative in that setting. But he said Laureate’s inclusion just months before Bill Clinton began being paid by the company does not look good.
“They were clearly a legitimate participant in this sort of event,” he said. “But knowing what we know now, it does seem unseemly.”
(c) 2016, The Washington Post · Rosalind S. Helderman