Sen. Clinton Faces Political Challenges with Ties to Wal-Mart

NEW YORK – With retail giant Wal-Mart under fire to improve its labor and health care policies, one Democrat with deep ties to the company — Sen. Hillary Rodham Clinton — has started feeling her share of the political heat.

Clinton served on Wal-Mart's board of directors for six years when her husband was governor of Arkansas. And the Rose Law Firm, where she was a partner, handled many of the Arkansas-based company's legal affairs.

Hillary Clinton had kind words for Wal-Mart as recently as 2004, when she told an audience at the convention of the National Retail Federation that her time on the board "was a great experience in every respect."

But in recent months, as the company has become a target for Democratic activists, she has largely steered clear of any mention of Wal-Mart. And late last year, Clinton's re-election campaign returned a $5,000 contribution from Wal-Mart, citing "serious differences with current company practices."

As Clinton sheds her Arkansas past and looks ahead to a possible 2008 presidential run, the Wal-Mart issue presents an exquisite dilemma: how to reconcile the political demands she faces today with her history at a company many American consumers depend upon but many Democratic activists revile.

"The interesting question is not just Hillary Clinton's history at Wal-Mart, but why it's delicate for her to talk about Wal-Mart," said Charles Fishman, author of "The Wal-Mart Effect," a book on the company's impact on the national economy. "Plenty of Democrats denounce Wal-Mart, but there are also plenty of people who need it, love it and rely on it."

Clinton Joins Wal-Mart's Board

In 1986, when Wal-Mart's founder, Sam Walton, tapped Clinton to be the company's first female board member, Wal-Mart was a fraction of its current size, with $11.9 billion in net sales.

Today, Wal-Mart is the world's largest retailer and largest private employer, with over $312 billion in sales last year and 1.3 million employees or "associates" in the U.S. alone. But recently, the company has drawn intense scrutiny for its labor practices — from its wages to the lack of affordable health coverage for employees, to its stiff resistance to unionization.

Throughout the 1980s, both Bill and Hillary Clinton nurtured relationships with Walton, a conservative Republican and by far Arkansas' most influential businessman.

Among other things, Hillary Clinton sought Walton's help in 1983 for Bill Clinton's so-called Blue Ribbon Commission on Education, a major effort to improve Arkansas' troubled public schools. The overhaul became a centerpiece of Clinton's governorship.

And Wal-Mart's Made in America campaign, which for years touted the company's sales of American products in its stores, was launched after Bill Clinton persuaded Walton to help save 200 jobs at an Arkansas shirt manufacturing plant. The Made in America campaign has virtually vanished in recent years, as the company's manufacturing has gradually moved overseas — another point of criticism by many anti-Wal-Mart activists.

The Clintons also benefited financially from Wal-Mart. Hillary Clinton was paid $18,000 each year she served on the board, plus $1,500 for each meeting she attended. By 1993 she had accumulated at least $100,000 in Wal-Mart stock, according to Bill Clinton's federal financial disclosure that year. The Clintons also flew for free on Wal-Mart corporate planes 14 times in 1990 and 1991 in preparation for Bill Clinton's 1992 presidential bid.

Wal-Mart, Clinton Remain Tight-Lipped

Wal-Mart has little to say about Hillary Clinton's board service, and will not release minutes of the company's board meetings during her tenure. Lorraine Voles, Clinton's communications director, turned down a request for an interview with the senator.

Still, details have come to light over the years.

Bob Ortega, author of "In Sam We Trust," a history of Wal-Mart, said Clinton used her position to urge the company to improve its gender and racial diversity. Because of Clinton's prodding, Walton agreed to hire an outside firm to track the company's progress in hiring women and minorities, Ortega said.

"These were things the company was not addressing and wouldn't have, had she not pushed them to do so," Ortega said. "She's somebody who could definitely get things done."

In fact, Clinton proved to be such a thorn in Walton's side that at Wal-Mart's annual meeting in 1987, when shareholders challenged Walton on the company's lack of female managers, he assured them the record was improving "now that we have a strong willed young lady on the board."

Clinton was particularly vocal on environmental matters, pressing the company to boost its sale and use of recycled materials and other "green" products.

Garry Mauro, who served with Clinton on a Wal-Mart environmental advisory committee, pointed to many successes, such as persuading the company to establish recycling centers and sell products like recycled oil and long-life light bulbs.

"Hillary had real impact — when she had an idea, things got moving," he said. "When she resigned from the committee, it stopped having any innovative ideas and stopped being effective."

Still, critics say there was little tangible change at Wal-Mart during Clinton's tenure, despite her apparent prodding.

"There's no evidence she did anything to improve the status of women or make it a very different place in ways Mrs. Clinton's Democratic base would care about," said Liza Featherstone, author of "Selling Women Short: The Landmark Battle for Worker's Rights at Wal-Mart."

Debate Continues

The Wal-Mart debate has been playing out in Legislatures and city councils around the country in the last year, even hitting close to Clinton's adopted home.

New York State legislators of both parties are promoting bills requiring businesses including Wal-Mart to provide health coverage to their workers. And in October, New York City passed a law, aimed squarely at Wal-Mart, requiring large grocery stores to pay most workers a health care benefit worth an estimated $2.50 to $3 an hour. The law helped stall Wal-Mart's efforts to move into the city, even though recent polls indicate a majority of New Yorkers would welcome Wal-Mart.

Amid the deluge of legislative proposals around the country, Wal-Mart CEO Scott Lee announced last month that the company would expand its effort to enroll more workers in a new, low-premium health plan. The company will also trim the waiting period for part-time employees to become eligible for coverage.

But Hillary Clinton, who as first lady proposed a wide-ranging but ultimately unsuccessful plan to reshape the nation's health care system, has had little to say about Wal-Mart's health care record.

"That was a long time ago," she said recently when asked if she had done anything about the company's health care policies while she served on its board.

That comment was met with disbelief from Jonathan Tasini, a longtime labor organizer mounting a longshot challenge to Clinton in New York's Democratic Senate primary.

"Voters would find it a strained argument to believe that the senator who prides herself on intelligence and knowledge of detail can't recall any details in this case. It just strains credulity," Tasini said.

Nonetheless, Clinton and her advisers continue to insist that Wal-Mart has fundamentally changed since her tenure on the board.

"Wal-Mart was a different company then and the country was not facing the same health care challenges we face today," communications director Lorraine Voles said.

Even Clinton's decision to return Wal-Mart's campaign contribution illustrated the complicated role still Wal-Mart plays in her political life.

Wake-Up Wal-Mart posted several entries on its Web log applauding the decision, but others complained that the move seemed hypocritical and opportunistic given her history with the company.

Meanwhile, Republican National Committee spokeswoman Tracey Schmitt called the move "standard operating procedure" for Clinton.

"When push comes to shove, the senator allows politics to trump principle every time," Schmitt said.