For Shanghai Fair, Famous Fund-Raiser Delivers

http://www.nytimes.com/2010/01/03/world/asia/03clinton.html?partner=rssnyt&emc=rss&pagewanted=print

January 3, 2010
For Shanghai Fair, Famous Fund-Raiser Delivers
By MARK LANDLER and DAVID BARBOZA

WASHINGTON — In the hectic last week before she became secretary of state, Hillary Rodham Clinton squeezed in a Bon Jovi benefit concert in New York, part of a frantic effort to pay off the debt from her presidential campaign. No sooner had she arrived at the State Department than Mrs. Clinton discovered she needed to start raising money all over again.

This time, the cash-starved beneficiary was not her own campaign but the United States, which needed $61 million to finance the construction of a national pavilion at a world’s fair in Shanghai. Under federal law, no public money could be used for the project. And Mrs. Clinton, as a federal official, could no longer solicit private financial donations herself.

So she turned to her well-established network of Clinton fund-raisers, and after negotiating with the State Department’s lawyers about what she could legally do herself to support the project, she mounted an ambitious fund-raising campaign that has netted close to $54 million in barely nine months.

With multimillion-dollar pledges from PepsiCo, General Electric, Chevron and other American corporations, the United States is on track to open a sleek, 60,000-square-foot pavilion at the Shanghai Expo 2010, which runs from May through October.

The prospect of the nation’s chief diplomat asking for money worried government lawyers, according to officials. Referring to the first secretary of state, one lawyer asked, “Would Thomas Jefferson do this?” They imposed strict limits on the kinds of calls or other contacts she could make, allowing her to promote the pavilion but prohibiting any one-on-one appeals for cash.

Despite those restrictions, and a dismal economy, Mrs. Clinton is closing in on her $61 million goal. She is clearly proud of the effort, which staved off what could have been a rupture in American-Chinese relations. In a year in which she has mostly worked to prove herself a loyal member of the Obama team, the campaign also showcases her enduring political drawing power.

“The idea, for many people, of raising more than $50 million would seem really daunting,” Mrs. Clinton said in an interview. “Maybe because I had participated in raising so much money in the past, I wasn’t daunted by it. I knew it was going to be hard under the circumstances.”

By all accounts, the effort to build a national pavilion was near death at the end of the Bush administration. The near-collapse of the global economy, the proximity of the expo to the Beijing Olympics in 2008 and the general ambivalence of the State Department had left U.S.A. Pavilion, the nonprofit group in charge of the project, with little support or money.

“There is a sense in the U.S. that Americans got disenchanted” with world’s fairs, said Nick Winslow, a former Warner Brothers executive who is the president of U.S.A. Pavilion.

With deadlines passing, the Chinese advanced the Americans money to conduct technical work for the pavilion. They raised the issue with former President Jimmy Carter when he visited China last January.

Enter Mrs. Clinton, who made her first trip as secretary of state to Beijing in February and was eager to talk about trade, climate change and the North Korean nuclear threat. Instead, she got an earful about how bad it would be if the United States did not have a presence at the Shanghai Expo.

For the Chinese, the expo is a bookend to the Olympics. Shanghai is spending $45 billion to transform the city, even more than Beijing spent preparing for the Games. Nearly 200 countries have signed on to take part, leaving only the United States and minuscule Andorra as potential no-shows.

“I was dumbfounded that so little attention had been paid to it,” Mrs. Clinton said. “Everyone knows China is going to be an enormously powerful player in the 21st century. They have an expo, which is a kind of rite of passage that countries like to do to show they have arrived. We’re not there? What does that say?”

She said she did not relish the prospect of more fund-raising — “When would it ever end?” she recalled asking herself — but she promised Chinese officials that she would try to raise the money.

There was little support within the State Department. So Mrs. Clinton turned to two major fund-raisers with long ties to the Clinton family: Elizabeth F. Bagley and Jose H. Villarreal.

Mrs. Bagley, who is married to Smith Bagley, an heir to the R. J. Reynolds fortune, was ambassador to Portugal under President Bill Clinton. Mrs. Clinton appointed her to be the department’s special representative for global partnerships, a job that involves rounding up private support for public projects.

Mr. Villarreal, a well-connected San Antonio lawyer, has raised money for Mrs. Clinton as well as for Mr. Clinton, former Vice President Al Gore and Senator John Kerry. In July, Mrs. Clinton named him the commissioner general to the expo.

To kick off the effort, Mrs. Clinton held a conference call with 10 prominent chief executives. Chevron, PepsiCo and General Electric each pledged $5 million. Indra K. Nooyi, the chief executive of PepsiCo, made calls to other chief executives. Mrs. Bagley and Mr. Villarreal also opened their Rolodexes, calling companies with operations in China. Some obvious prospects, like banks, were off limits because they were receiving federal bailout money.

“In the beginning, we had to use a patriotism argument,” said Kris M. Balderston, Mrs. Bagley’s deputy. “The second wave of argument was commercial diplomacy. All of a sudden the companies understood it would be good for them.”

Although Mrs. Bagley is a State Department employee, she said she was advised that she could solicit contributions. She noted that every would-be donor also had to be vetted by lawyers.

Fred Wertheimer, an advocate for stricter regulations for campaign fund-raising, said he was satisfied that the State Department had handled a difficult situation properly.

“It would have been far better if the U.S. government was able to pay for the activity involved, but that does not appear to have been the case,” he said.

While Mrs. Clinton was barred from soliciting individuals, she met with corporate sponsors in Shanghai in November, when she visited the expo site.

Her experience in the political trenches made a difference, Mr. Villarreal said. “Any other diplomat would not have had the broad base of contacts,” he said.

Mrs. Clinton said it was easier raising funds for this project than to pay off campaign debt. “I’m much better at raising money for other people and other causes than I am for myself anyway,” she said, adding, “Even though I’ve obviously raised a lot of money.”

Mark Landler reported from Washington, and David Barboza from Shanghai.