Husband's charity clouds Clinton nomination

WASHINGTON Tue Jan 13, 2009 6:07pm EST

1 of 6. Hillary Clinton talks to Senator Charles Schumer during her confirmation hearing before the Senate Foreign Relations Committee on Capitol Hill, January 13, 2009.

Credit: Reuters/Yuri Gripas

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WASHINGTON (Reuters) - Concerns about her husband's foreign fund-raising cast a shadow over Sen. Hillary Clinton's nomination as U.S. secretary of state when Republicans on Tuesday pressed her to do more to avoid conflicts of interest.

Clinton is expected to easily win confirmation as President-elect Barack Obama's top diplomat and she carefully avoided breaking new ground on foreign policy as she appeared before the Senate Foreign Relations Committee.

But the work of her husband, former President Bill Clinton, and his William J. Clinton Foundation raised questions from Republicans who believe a deal between the charity and the Obama team does not do enough to avoid conflicts of interest.

"The core of the problem is that foreign governments and entities may perceive the Clinton Foundation as a means to gain favor with the secretary of state," said Sen. Richard Lugar of Indiana, the panel's respected and centrist senior Republican.

"The only certain way to eliminate this risk going forward is for the Clinton Foundation to forswear new foreign contributions when Senator Clinton becomes secretary of state," Lugar said, although he also proposed a series of compromise steps that stopped short of a full cutoff of foreign funding.

Clinton, who was greeted warmly by her fellow senators, said she and her husband had sought to avoid any appearance of conflicts of interest but resisted Republican calls to change the pact between his foundation and the Obama transition.

Under that agreement, signed on December 12, the Clinton foundation made public a list of its past donors, promised to annually publish the names of its future donors, and to submit future foreign donations to a State Department ethics review.

"There is no intention to amend" the agreement, Clinton said. "I will certainly do everything in my power to make sure that the good work of the foundation continues without there being any untoward effects on me and my service."

'BOUND TO BE A DILEMMA'

Clinton said government ethics lawyers had concluded there was no inherent conflict of interest between her husband's foundation, which combats HIV/AIDS, global warming and poverty, and her potential service as secretary of state.

The agreement, she said, was designed to avoid even the appearance of such conflicts and went far beyond what is normally expected of the spouses of government workers.

"These are unique circumstances, to say the least," Clinton said, alluding to the unprecedented case of a former first lady being tapped to serve as secretary of state. "It is not unique, however, for spouses of government officials to work."

"My career in public service is hardly free of conflict, senator, so I have no illusions about the fact that no matter what we do there will be those who will raise conflicts," Clinton said. "We have tried to do the very best we could."

Lugar did not appear satisfied by Clinton's answer.

"This was bound to be a dilemma," Lugar said. "I plea for you to ... give even more consideration" to the matter.

The dispute about the former president's fundraising was for the most part raised gingerly by lawmakers and was a far cry from the intense controversies of his presidency, including his impeachment, his wife's failed effort at health care reform and the extensive investigations of their personal finances.

FEW HINTS ON POLICY

Clinton gave few hints on how Obama may try to restrain the nuclear programs of North Korea and Iran, promote Arab-Israeli peace, end the Israeli offensive in the Gaza Strip or to manage an expected drawdown of U.S. forces in Iraq and a planned build-up in Afghanistan.

While saying she and Obama supported the six-party process to end North Korea's nuclear programs, Clinton hinted at a willingness to examine alternatives to the talks among the two Koreas, China, Japan, Russia and the United States.

Clinton also said the Obama administration wanted to lift travel restrictions on U.S. families with relatives in Cuba. She said she would "sound the alarm" on Darfur and that the Obama administration was looking at several options to end the violence, including a no-fly zone over western Sudan.

On most issues, however, she evaded giving precise answers, declining to say how an Obama administration may engage Iran or whether it may open a low-level diplomatic presence in Tehran.

The hearing's flash of news was Lugar's misgivings about the former president's deal with the Obama team.

While making clear his preference was for the foundation to stop accepting foreign donations, Lugar also offered the New York senator a compromise by proposing the following steps:

-- The foundation disclose donations of $50,000 or more immediately rather than annually.

-- Foreign pledges of more than $50,000 be disclosed when they are made and when the money is actually received.

-- Gifts of $50,000 or more from any foreign source be submitted to a State Department ethics review; under the current agreement, only donations from foreign governments or entities they control must undergo this scrutiny.

Clinton did not speak in detail about the Israeli offensive in the Gaza Strip that began on December 27 and has killed 971 Palestinians according to Gaza's Hamas-run Health Ministry, including some 400 women and children.

Israel says 10 Israeli soldiers and three civilians hit by Hamas rockets have been killed.

(Additional reporting by Sue Pleming; editing by David Alexander and Mohammad Zargham)

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