Senator-elect Hillary Clinton's book deal

[Gary Ruskin]

Congressional Reform Briefings			December 22, 2000

On December 16, The New York Times and Washington Post reported that
Senator-elect Hillary Rodham Clinton (D-NY) had agreed to accept a
gargantuan $8 million book advance from Simon & Schuster, a subsidiary
of Viacom, the second largest media conglomerate in the world.

Following are editorials on her book deal from two of her hometown
newspapers, The New York Times and New York Daily News, as well as our
letter to Mrs. Clinton.

http://www.nytimes.com/2000/12/22/opinion/22FRI1.html

The New York Times, December 22, 2000
Mrs. Clinton's Book Deal

We are sorry to see Hillary Rodham Clinton start her Senate career by
selling a memoir of her years as first lady to Simon & Schuster for a
near-record advance of about $8 million. The deal may conceivably
conform to the lax Senate rules on book sales, though even that is
uncertain. But it would unquestionably violate the tougher, and better,
House rules, and it is an affront to common sense. No lawmaker should
accept a large, unearned sum from a publisher whose parent company,
Viacom, is vitally interested in government policy on issues likely to
come before Congress — for example, copyright or broadcasting
legislation.

Mrs. Clinton's staggering advance falls just below the $8.5 million
received by Pope John Paul II in 1994. We wish as a matter of judgment
that she had not sought an advance but had voluntarily limited her
payments to royalties on actual book sales, as the House now requires of
its members. That way there would be no worry that she had been given
special treatment in an effort to curry political favor. 

The Senate will judge Mrs. Clinton's deal in the context of outmoded
rules that, regrettably, still permit members to accept advance payments
for their books provided they fall within "usual and customary" industry
patterns. Mrs. Clinton held an open auction for her book, so the $8
million advance emerged from a process that presumably represented the
industry's consensus about what the book would be worth. But Mrs.
Clinton has a duty to reveal the entire contents of her contract so that
the public and members of the Senate Ethics Committee can judge for
themselves whether its terms fulfill her pledge to comply with existing
Senate rules, inadequate though they are.

As it is, Mrs. Clinton will enter the Senate as a business associate of
a major company that has dealings before many regulatory agencies and
interests in Congress. It would have been far better if she had avoided
this entanglement. As she above all others should know, not every deal
that is legally permissible is smart for a politician who wants and
needs to inspire public trust.

Only a few years ago Newt Gingrich, at that time the House speaker,
accepted an ethically dubious $4.5 million book deal with a publishing
house owned by Rupert Murdoch, an aggressively political publisher
seeking help with his problems with federal regulators. This was the
issue that ultimately forced Mr. Gingrich to abandon his advance, and
led the House to ban all advance payments for members' books.

That is the right approach, and it would be nice if Republican critics
of Mrs. Clinton's deal now devoted real energy to persuading the Senate
to adopt the House rules for the future. Both bodies need maximum
protection against entangling alliances between lawmakers and government
favor- seekers now that nearly all major publishing houses are owned by
large corporations with a lot of business before Congress. 


New York Daily News, December 19, 2000
Hillary Starts On Wrong Page

Hillary Clinton spent months vilifying Rick Lazio as an acolyte of Newt
Gingrich. Well, based on her advertised opposition to the former House
speaker, the outgoing First Lady and soon-to-be senator knows well that
it's a bad idea for members of Congress to pocket multimillion-dollar
book advances.

Gingrich, you may remember, tried to take a $4.5 million advance in 1994
to write two books for media baron Rupert Murdoch, who was lobbying and
seeking favors, but the political pressure became too great. The speaker
dropped the advance and agreed to take just $1 up front, with standard
royalties. After that searing episode, the House adopted a rule banning
such advances. The Senate never did. That must change.

The problem is back, with Clinton set to receive a reported $8 million
advance for her White House memoirs. She did not submit the plan to the
Senate Ethics Committee because, not yet sworn in, she is not under its
jurisdiction. She should have, anyway.

Under Senate rules, senators can accept advances "so long as such fees"
are "in accordance with the usual and customary contractual terms" of
book deals. Since only one other nonfiction book has ever had a greater
advance — $8.5 million for the Pope — it would be a stretch to consider
Clinton's fee "usual and customary." And even if her deal were to be
okayed, the Senate rules are simply wrong. They should be changed to
match those of the House, which recognize the potentially corrupting
influence of such arrangements.

Unlike Gingrich's deal, Clinton's was the result of an open auction,
with the advance payout set to be made in standard installments. Clinton
also has pledged to give a portion of the cash to charity. Moreover,
there is no evidence that Simon & Schuster wants anything from the new
senator — anything, that is, beyond making money when the book appears
in 2003. That's why Clinton should wait until then to collect her
earnings.

If she hadn't run for the Senate, or had lost, there would be no issue.
She would be a private person making a private business deal. But that's
not the case, and there's a major problem with an elected official
taking huge sums from a publisher before the first book is even sold.

The previous record for a senator's book advance is held by Al Gore, who
made $100,000 — 80 times less than Clinton will.  However, his deal was
approved by the Ethics Committee, which asked him whether his publisher
had any matters before his committees or was personally lobbying him.

Clinton should restructure her contract to forgo an advance and wait
until the royalties come in. In the meantime, she can concentrate on her
new day job.

<------editorial ends here----->
Following is the Congressional Accountability Project's letter to
Senator-elect Clinton.

http://www.essential.org/orgs/CAP/ethics/hclintcom1.html

December 18, 2000

The Honorable Hillary Rodham Clinton
Senator-elect
The White House
1600 Pennsylvania Ave. NW
Washington, DC 20500

RE: 	Submitting Your Book Contract with Simon & Schuster to the Senate
Select Committee on Ethics

Dear Senator-elect Clinton:

This letter is a request that you submit your book contract with Simon &
Schuster, and information surrounding the formation of the contract, to
the Senate Select Committee on Ethics ("Ethics Committee") to determine
whether it violates Senate Rules regarding conflicts of interest, the
sale of intellectual property, or other applicable Senate standards of
conduct.  By promptly submitting your contract and surrounding materials
to the Ethics Committee for review, you can show your commitment to
adhering strictly to Senate Rules and other Senate standards of
conduct.  

On December 16th, The New York Times reported that you had agreed to
accept an $8 million book advance in a book contract with Simon &
Schuster, a subsidiary of Viacom Inc., the second largest media
conglomerate in the world.  According to news accounts, your $8 million
book advance appears to be the largest one ever received by an elected
official in the history of the world.

"Senator-elect Hillary Rodham Clinton agreed last night to sell Simon &
Schuster a memoir of her years as first lady, for the near-record
advance of about $8 million."

* * * * * 
		
"Mrs. Clinton's $8 million advance is just below the advance of $8.5
million received by Pope John Paul II in 1994, believed to be the
largest ever for worldwide rights."

* * * * *
		
"Some publishers initially said that Mrs. Clinton sought almost all of
her advance upfront, pushing to sign a contract by the end of the year.
But people close to Mrs. Clinton said that she never requested the whole
advance right away. Other publishers said only upfront payments up to
half the total were discussed."

"Such an arrangement would still be highly unusual. Multimillion-dollar
advances are typically broken up into several smaller payments over the
course of a book's publication. It was not clear last night what payment
schedule was set." (1)
									

A: 	The Ethics Committee Should Determine Whether Your Book Deal
Violates Senate Standards of Conduct

According to the Senate Ethics Manual, a Senator may enter into a book
contract with a publisher, but the book contract's terms and execution
are subject to Ethics Committee review because the Senator's income from
the book may be controlled, to some extent, by the manipulations of
publishers and bookstores.  That leaves the Senator and the Senate
vulnerable to efforts to purchase influence through the promotion of
book sales.

"Although the original copyrighted property was created by the
individual's personal efforts, this type of income is made possible by
the actions of others (such as the publisher, promoter, and bookstores),
and calculated on the basis of income received by another person or
entity (the publisher) as a result of the property's appeal to the
purchasing public.  In order to prevent abuses of this provision, the
Committee has determined that such fees must be in accordance with usual
and customary contractual terms governing the transfer of
copyright...with established users or purchasers of those rights." (2)

At this time, you have not released your book contract to the public, so
the only information available about it is from news reports.  According
to these articles, at a minimum, your book deal appears to fail the
"usual and customary" test for book contract terms because it gives you
the largest book advance ever for an elected official.  In that respect,
it is sui generis, not usual and customary.

The Ethics Committee should review other aspects of the book contract as
well, such as the structure and rate of royalties, the timing of the
advance payments, and the absence of a book proposal, to determine
whether they, too, fall outside the bounds of usual and customary
contractual terms. 

According to news reports, your staff asserts that you held an auction
to set the fair market value for your book.  To date, none of these news
reports provides conclusive evidence that your book auction either was
or was not fair.

An auction does not guarantee that a book's price will meet -- and not
exceed -- fair market value for the sale of book rights.  For example,
in 1994, then-House Speaker-presumptive Newt Gingrich agreed to accept a
$4.5 million book advance from HarperCollins Publishers.  After
sustained public outrcy, he returned the advance, keeping only $1. 
Subsequently, news reports indicated that his auction process was not
fair and open, with one publishing house calling the auction rules
"murky."(3)  The Ethics Committee should review your book auction
process to determine whether or not it actually established the fair
market value for your proposed book.    

		
B: 	The Ethics Committee Should Determine Whether Your Book Deal
Violates Senate Conflict of Interest Rules

According to news accounts, you have agreed to a book deal with Simon &
Schuster, which is owned by Viacom, Inc., the second largest media
company in the world.  Viacom has major holdings in movies, television,
radio, billboards, video stores, publishing and the Internet.  According
to Hoover's Company Profile Database, Viacom

"produces movies through Paramount Pictures...and produces, distributes,
and syndicates TV shows through Paramount Television...and CBS
Enterprises...Viacom's extensive TV assets consist of the CBS and UPN
(United Paramount Network) television networks and several cable TV
networks, including MTV Networks (MTV, VH1, Nickelodeon, CMT, TNN: The
National Network), Showtime Networks (Showtime, The Movie Channel,
FLIX), and 50% of Comedy Central. The company also owns 16 CBS and 19
UPN TV stations. Viacom also has plans to acquire BET Holdings, the
entertainment company which targets African Americans, for about $3
billion."

"Viacom also owns movie theaters, theme parks, publisher Simon &
Schuster, and 82% of Blockbuster (the #1 video rental chain). In
addition, the company owns 64% of Infinity Broadcasting (more than 160
radio stations and the #1 outdoor advertising firm) and has agreed to
buy the rest. It lords over stakes in a slew of Internet firms as well,
through CBS Internet Group (MarketWatch.com, SportsLine.com) and The
MTVi Group (MTV.com, VH1.com, SonicNet.com)."

"Viacom's merger with CBS in 2000 was a powerhouse media deal valued at
about $45 billion. The acquisition vaulted Viacom to the second-largest
media firm in the world."

Viacom has a vital interest in many legislative and regulatory matters
pending before the U.S. Congress, the Federal Communications Commission
and other executive branch agencies, including antitrust and ownership
restrictions on media holdings and market concentration, intellectual
property and copyright protection, regulation of media violence,
campaign finance reform, tobacco advertising, alcohol advertising, and
the public interest duties of broadcasters, among many others.(5) 
Viacom spends lavishly on its efforts to influence Congress and the
federal government on these issues. Between 1996-2000, Viacom spent
$9,290,000 on in-house and outside lobbying expenses, according to the
Center for Public Integrity. (6) 

Viacom is also major campaign donor.  According to the Center for
Responsive Politics, Viacom Inc. gave $533,595 in campaign contributions
during the 2000 election cycle. (7)

Given Viacom's extensive efforts to affect the outcome of numerous
matters pending before the Senate and federal government, if you accept
the $8 million book advance from Simon & Schuster, you may violate
Senate Rules regarding conflicts of interest.

"No Member, officer, or employee shall engage in any outside business or
professional activity or employment for compensation which is
inconsistent or in conflict with the conscientious performance of
official duties." (8) 

"A Member, officer, or employee of the Senate shall not receive any
compensation, nor shall he permit any compensation to accrue to his
beneficial interest from any source, the receipt or accrual of which
would occur by virtue of influence improperly exerted from his position
as a Member, officer, or employee." (9)

The Ethics Committee should determine whether your $8 million book
advance is, in fact, a violation of these conflict of interest rules.

It is noteworthy, as well, that your book advance would be impermissible
under the Rules of the U.S. House of Representatives, which prohibit
House Members from accepting any book advance.

"A Member, Delegate, Resident Commissioner, officer, or employee of the
House may not receive an advance payment on copyright royalties." (10) 


C: 	Conclusion

The sheer size of your $8 million book advance raises questions about
whether you and Senate processes may be affected by large cash payments
from a major media conglomerate.  This book contract, with its uniquely
lavish advance for an elected official, may be, in fact, a way for that
corporation to place money into your pockets, perhaps to curry favor
with you. (11) 

We are not the only ones to express opposition to your $8 million book
advance.  Both Common Cause and the Center for Public Integrity have
also questioned the propriety of it. (11)  In addition, on December 15,
Senator John McCain suggested that the Ethics Committee review your book
contract. (12)

We urge you to submit your book contract and surrounding materials to
the Ethics Committee for review of whether they violate Senate Rules
regarding conflicts of interest, the sale of intellectual property, or
other Senate standards of conduct.  

During your campaign for the Senate, you often voiced support for
campaign finance reform as a way to mitigate the corrupting influence of
money in politics.  As an advocate against public corruption, we urge
you to walk your talk, by altering the terms of your book contract to
accept only copyright royalties, under usual and customary contractual
terms, for books actually sold.  This would protect the Senate and the
public from the possibility that a powerful corporation may be trying to
obtain special favors from a Senator in exchange for a singularly
lucrative book advance.

Sincerely,

Gary Ruskin
Director


cc: 	The Honorable Pat Roberts, Chairman, Senate Select Committee on
Ethics
	The Honorable Harry Reid, Ranking Member, Senate Select Committee on
Ethics

Footnotes
(1) David D. Kirkpatrick, "Hillary Clinton Book Advance, at $8 Million,
Is Nearly a Record."  The New York Times, December 16, 2000.  Linton
Weeks, "Hillary Clinton Seals $8 Million Book Deal."  The Washington
Post, December 16, 2000.

(2) Senate Ethics Manual at 127.

(3) David Streitfeld, "Bidders And Losers; Several Publishers Found
Gingrich's Price Too High."  The Washington Post, January 13, 1995. 

(4) Hoover's Company Profile Database, American Public Companies, Viacom
Inc., 2001.

(5) See especially "Off The Record: What Media Corporations Don't Tell
You About Their Legislative Agendas."  The Center for Public Integrity,
2000, <http://www.publicintegrity.org/reports/OffTheRecord/index.html>.
See also Charles Lewis, "Media Money." Columbia Journalism Review,
September-October 2000, <http://www.cjr.org/year/00/3/mediamoney.asp>. 
Robert McChesney, Rich Media, Poor Democracy: Communications Politics in
Dubious Times.  (Urbana and Chicago, IL: Illinois University Press,
1999).

(6) "Off The Record: What Media Corporations Don't Tell You About Their
Legislative Agendas."  The Center for Public Integrity, 2000, at 63.

(7)  <http://www.opensecrets.org/industries/contrib.asp?Ind=B02>.

(8) Senate Rule 37, cl. 2.
<http://rules.senate.gov/senaterules/rule37.htm>.

(9) Senate Rule 37, cl. 1.
<http://rules.senate.gov/senaterules/rule37.htm>.

(10) House Rule 26, cl. 3(a).

(11) Such questions have arisen in the past.  See, for example,
Lars-Erik Nelson, "Newt's Book Deal Fits A Disturbing Pattern."  Denver
Post, February 5, 1995.

(12) NBC News Transcripts, Interview with U.S. Senator John McCain,
December 15, 2000. Richard Sisk and Paul D. Colford, "McCain: Read Fine
Print on Hil's $8m Book Deal."  New York Daily News, December 16, 2000.

<----letter ends here--->

The Congressional Accountability Project opposes corruption in the U.S.
Congress. For more information on our work, see our web page at
<http://www.congressproject.org/>.

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Gary Ruskin | Congressional Accountability Project
1611 Connecticut Ave. NW, Suite #3A | Washington, DC 20009
Phone: (202) 296-2787 | Fax (202) 833-2406
http://www.congressproject.org | mailto:gary@essential.org |
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