Dec. 17 (Bloomberg) -- Former President Bill Clinton's decision to reconsider a business relationship with California billionaire Ron Burkle reflects concern those financial dealings may embarrass his wife's presidential candidacy.
Securities and Exchange Commission documents and financial- disclosure forms filed by Hillary Clinton show that Bill Clinton, 61, has a financial stake in three investment entities registered in the Cayman Islands by Burkle's Yucaipa Cos. LLC.
In 2004, Hillary Clinton, a New York senator, said she wanted to close the ``loopholes'' for ``people who create a mailbox, or a drop, or send one person to sit on the beach in some island paradise and claim that it is their offshore headquarters.''
`An Appropriate Transition'
Jay Carson, a Clinton spokesman, said that while the former president hasn't ``severed ties'' with Yucaipa, he ``is taking steps to ensure'' that ``there will be an appropriate transition for those relationships'' if his wife receives the 2008 Democratic presidential nomination.
Carson, in an e-mail, said the funds are designed for foreign investors. ``All three of these entities (which are related) are organized in the Cayman Islands so that each investor or partner pays the taxes they would owe in their home country,'' he said. ``For U.S. citizens like Bill Clinton, that means he pays U.S. taxes on his income from this fund, which he does.''
The disclosures that Hillary Clinton, 60, is required to make as a lawmaker and candidate show that her husband has holdings in three Burkle-controlled funds -- YGOF GP Ltd., Yucaipa Global Holdings and Yucaipa Global Partnership Fund LP -- all listed at Yucaipa's Los Angeles address. An October filing with the SEC by Burkle, Yucaipa's lead partner, names YGOF as a Cayman Islands corporation and the latter two as Cayman Islands partnerships.
The amounts disclosed by Hillary Clinton are minimal, though a person familiar with the matter confirmed a report last year in The New York Times that Bill Clinton stands to make tens of millions of dollars with little risk if the Yucaipa funds he is involved in profit beyond a certain level.
Forbes Magazine listed Burkle, 55, as the 91st richest American this year, with a net worth of $3.5 billion.
In a Dec. 13 debate, Hillary Clinton's chief rival for the Democratic nomination, Senator Barack Obama of Illinois, said that as president he would crack down on corporate loopholes and tax savings, particularly those involving offshore transactions.
``"""There's a building in the Cayman Islands that houses, supposedly, 12,000 U.S.-based corporations,'' Obama said""".
``"""That's either the biggest building in the world or the biggest tax scam in the world. And I think we know which one it is.'' """"
The former president isn't the only person in the campaign with links to funds in the Cayman Islands. Former North Carolina Senator John Edwards, who is also seeking the Democratic nomination, was a senior adviser to Fortress Investment Group Inc., a New York-based private-equity and hedge-fund manager, and reported at least one asset, the Investments Fund III (Fund D) LP, that was incorporated in the Cayman Islands in 2004.
Edwards, who was the first candidate to criticize tax preferences for the private-equity industry, also pays taxes as if the money was earned in the U.S., spokesman Eric Schultz told the Washington Post in May. Schultz said Edwards, 54, ``believes offshore tax shelters are wrong'' and ``will end them'' if elected. The Edwards campaign didn't immediately respond to a request for comment today.
When he left the White House in 2000, Bill Clinton reported assets of more than $1 million and legal fees of more than $2.4 million. In his wife's most recent disclosure, Hillary Clinton reported that the couple now has a net worth estimated at between $17.4 million and $53.7 million.
Both now claim to be uneasy about their place among the richest Americans. This ``new experience,'' Hillary Clinton said during a debate Oct. 30, isn't ``one that makes us very comfortable.''