The Clinton Scandal That Still Matters Is Not the One You Think
Election 2016

The Clinton Scandal That Still Matters Is Not the One You Think

REUTERS/Stephen Lam

The Clinton era of the 1990s is remembered as a prosperous time punctuated by a series of scandals. Today, we tend to dismiss these scandals as irrelevant because they mostly involved sex, were exaggerated by partisan Republicans and were mostly related to actions taken by Bill Clinton, who will not be on the 2016 ballot. But sweeping away all this history deprives voters of the chance to consider a largely forgotten financial scandal that directly involved Hillary Clinton during 1978 and 1979.

Under the guidance of an attorney representing Tyson Foods, Hillary Clinton made a $98,540 profit from a $1,000 initial investment in less than one year trading commodity futures. While $98,540 may not seem like much money relative to the Clinton family’s wealth today, it exceeded Bill and Hillary’s combined annual income at the time.

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When this story was revealed in the spring of 1994, Hillary Clinton’s press secretary suggested that the enormous profit was the result of the First Lady’s own research — but the Tyson-linked attorney, James Blair, admitted that he advised Clinton when to buy and sell the futures. Further, there was no evidence that Clinton had previously traded in commodity futures or knew much about the market.

Careful readers at the time also learned that Clinton’s initial trading also had a serious irregularity. Unlike stock investments, commodity futures are almost always purchased with high levels of margin, meaning that the investor is using a substantial proportion of money borrowed from the broker to control positions. Exchanges and regulators typically require investors to keep a minimum amount of cash in their futures accounts to avoid getting into a negative position if futures prices move in the wrong direction. In Hillary Clinton’s case, her $1,000 initial investment was well below the $12,000 deposit required by the Chicago Mercantile Exchange for the first trades she executed. So not only did Hillary make an extraordinary profit for a novice investor, she did so without following the rules applied to less well-connected traders.

By the time the so-called “cattle futures” scandal fell out of the headlines, readers of The New York Times and Washington Post — mainstream outlets that both extensively reported the story — were left with the impression that Hillary’s trading activity was suspicious. But, since Hillary was not an elected official, the scandal was eclipsed by bimbo eruptions and the Whitewater Affair, both involving the president himself.

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It also was not much of an issue in 2008 — but that was before the federal government started bailing out banks and other big corporations. In the aftermath of TARP and other widely reported instances of crony capitalism, Clinton’s behavior back in 1978 and 1979 warrants further scrutiny.

The factor that makes the cattle futures scandal relevant is that Hillary Clinton received her trading advice from Tyson Food’s outside counsel. Tyson was a major agricultural producer in Arkansas and had numerous issues that Attorney General and later Governor Bill Clinton could affect.

One such issue involved enforcement of environmental regulations affecting Tyson’s chicken-processing plants. It can be costly for factory farmers to properly dispose of chicken manure, but the failure to do so can cause serious damage. This was demonstrated by an incident at the company’s Green Forest plant in northwest Arkansas. As The New York Times reported in March 1994:

In 1977, the state pollution control agency reissued the license for Tyson's Green Forest plant on the condition that the company meet with city officials to work out a plan for treating its wastes. But the state never enforced the order, and in May 1983, the waste from the plant seeped into the town's drinking water. Residents became ill, and 15 months later Governor Clinton declared the town a disaster area.

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So it is possible to link Tyson’s support for the Clintons to water contamination, an ironic circumstance given Hillary Clinton’s criticism of Governor Rick Snyder’s handling of the Flint water crisis.

The Times also reported, “During Mr. Clinton's tenure in Arkansas, Tyson benefited from a variety of state actions, including $9 million in government loans, the placement of company executives on important state boards and favorable decisions on environmental issues.”

Tyson appears to have obtained these results for what looks like a bribe delivered though Hillary Clinton’s commodities account. To quote the company’s former chairman: politics is “a series of unsentimental transactions between those who need votes and those who have money.”

This perspective should provide cause for concern today, since Hillary Clinton made $2.9 million in speaking fees from large financial institutions between 2013 and 2015. That total includes $675,000 from the much reviled Goldman Sachs. One is left to wonder whether Goldman and the other financial industry behemoths stand to gain any transactional benefits for their money.

While paid speech-making is not illegal, bribery is. Tyson might have simply made a campaign contribution to Bill Clinton back then, but that would have violated limits then in effect. Instead, Bill and Hillary pushed — and seemingly broke — ethical and legal limits to get the cash they needed.