In Haiti, a Factory Where Big Money, State Department and the Clintons Meet

Expert: Earthquake reconstruction failed to build Haiti "back better."

ByABC News
October 11, 2016, 1:42 PM

CAP HAITIEN, Haiti— -- Bill and Hillary Clinton have hailed the factory churning out Old Navy sweatshirts in an industrial park here as a shining achievement in their efforts to rebuild this island nation after a destructive earthquake in 2010.

But the garment factory has underdelivered on projected jobs. Haitian workers have accused managers of bullying and sexual harassment. And an ABC News investigation has found that after opening its factory in the Haitian industrial park — built with $400 million of global aid — the Korean firm became a Clinton Foundation donor and its owner invested in a startup company owned by Hillary Clinton’s former chief of staff.

“This was ‘building back better,’ in the words of Bill Clinton,” said Jake Johnston, an analyst with the Center for Economic and Policy Research, a nonpartisan group that has studied the earthquake reconstruction. “Haiti was going to stand on its own two feet. Certainly, by that standard, it’s been a complete failure … Six years later, it’s pretty clear that hasn’t happened.”

Haiti’s struggles were made all the more difficult earlier this month by the tragic fallout from Hurricane Matthew.

Few global humanitarian efforts have been more personal and important to Bill and Hillary Clinton, by their own estimation, than their attempt to shepherd the revival of the desperately poor island nation, where they long ago spent a delayed honeymoon. Even before the 2010 quake, Bill Clinton was serving as the U.N. special envoy for Haiti, and after the quake he helped lead the Clinton-Bush Haiti Fund and a key Haitian reconstruction commission, in addition to helping oversee the relief work of the Clinton Foundation there.

“It has been one of the great joys of my life,” Bill Clinton said during one trip to Haiti.

But the post-quake projects nurtured along with $10 billion in international relief and hefty support from the U.S. government and the Clinton Foundation have, at best, had mixed results, experts told ABC News. Several of those initiatives have benefited Clinton friends and foundation donors as much as Haitians, Johnston said.

“Contributors to the Clinton Foundation benefited from the relief effort in Haiti writ large,” Johnston said. “The evidence indicates that those who were contributing to the Clinton Foundation and active in Haiti were certainly a part of that reconstruction process.”

With Hundreds Living in Tents, a Luxury Hotel

In elite circles in Haiti, the Clintons are held in high regard. Henry Robert Louis, who helped the government rebuilding effort, told ABC News that Bill Clinton’s “time and expertise were greatly valued and helped us achieve more than we possibly could have without him.”

And the Clinton Foundation touts its success in deploying over $30 million in relief support. “The Clinton Foundation disbursed every dollar of that aid and did not take one cent in overhead,” said Bruce Lindsey, the foundation’s chairman, in a nine-page statement to ABC News. “As a philanthropic organization, the Clinton Foundation’s work in Haiti has only one goal: to help the people of Haiti.”

But in Port-au-Prince, where neighborhoods still teem with flimsy lean-tos and tarp-covered shacks, residents told ABC News they harbor frustrations with the way the Clintons marshaled international aid.

“I didn’t get any of the money,” said Inèse Luma, who lives crammed with five relatives in a makeshift home of tarp, wood and plastic. “I don’t think I’m ever going to have a permanent house.”

Efforts to rebuild the thousands of homes destroyed by the 7.0 quake have inched forward. In six years, USAID says, it has constructed fewer than 1,500 homes, and many of those have had to be rebuilt because of poor workmanship.

At the same time, the Clinton Foundation says it “facilitated” the construction of a luxury hotel in Port-au-Prince, a Marriott owned by Denis O’Brien, who has given $10 million to $25 million to the Clinton Foundation. O’Brien, an Irish billionaire who runs the Jamaica-based telecom giant Digicel, said he financed the hotel himself.

In an interview, O’Brien told ABC News that Bill Clinton “was encouraging to everybody.”

“He would introduce people to other people and say ‘Why don’t you do this project?’” O’Brien said. “It was like Noah’s ark. In the aftermath of the earthquake, President Clinton said to 50, 60 and 100 people, ‘Please come down to Haiti, maybe invest money there, maybe adopt a project.’”

O’Brien recognized the “little bit of a contradiction” between the decision to build a Marriott just blocks from the neediest Haitian neighborhoods.

“If you want to get foreign investors to come down to Haiti, they want to stay in branded hotel,” he said. “They want to stay in comfort environment. And they want to have the place to have meetings.”

The Marriott was one of several hotel projects pursued in Haiti. Johnston said he believes more energy should have been dedicated to housing instead. “It speaks to putting the political priorities over the actual needs on the ground,” he said.

The Korean Factory With Clinton Connections

No project received as much attention from the Clintons as the long-discussed industrial park and garment factory built a six hour drive north of the Haitian capital, in a speck of a town called Caracol.

The location was well beyond the destructive earthquake’s epicenter, in a rural part of the country left largely untouched by the disaster. But economists working with the State Department argued that drawing residents out of densely populated Port-au-Prince to more rural areas would help make Haiti more resilient.

The project, strongly backed by the U.S. government, held great promise. At one point, officials estimated it would bring 100,000 new jobs to Haiti.

Clinton Foundation donors surfaced in many facets of the project.

The modern industrial park, with wide, clear roads connecting rows of low-slung warehouses, would be paid for by the Inter-American Development Bank, which provided $256.8 million in grants to support construction. The bank has donated $1 million to $5 million to the Clinton Foundation, according to its website. Large American retailers, including Wal-Mart and Gap Inc., have served as buyers for the clothes shipped from Haiti to the U.S. with special U.S. tax breaks. Wal-Mart has given $1 million to $5 million, and Gap has given $100,000 to $250,000 to the foundation. And in 2012, SAE-A, the Korean garment company that was recruited to become the anchor tenant of the park, gave $50,000 to $100,000 to the foundation.

Both Bill and Hillary Clinton attended a ribbon-cutting ceremony shortly after the factory opened in 2012.

“A single building was not here a year ago, and now more than a thousand Haitians are coming to work,” Hillary Clinton said at the ceremony. “This is something that is remarkable.”

For Haiti, the factory was an avenue into a new industry — textiles — and the jobs it could bring. Hillary Clinton predicted a factory humming with 20,000 jobs by 2016. Estimates of how many people work there now range from 8,000 to 9,000.

Sae-A has built and continues to operate two schools, with plans for a third. The company has supported medical missions, donated clothing and delivered 4½ tons of medical supplies to remote villages in cargo trucks emblazoned with the words “Sae-A loves Haiti.”

What Sae-A has received, according to State Department records, is the ability to operate a productive garment factory with a nominal tax burden, duty-free access for its products in the U.S. and an enormous — if untrained — pool of inexpensive labor. The Haitian government provided the land for the factory, the development bank paid for the factory’s construction, and USAID built a power plant to provide an uninterrupted flow of electricity and a neighborhood of small pastel-colored dwellings to house many of the workers.

Allegations of Abuse

The invitation to SEA-A to anchor the industrial park occurred despite past allegations of worker abuse the company faced in Guatemala. As the labor group Worker Rights Consortium reported in 2012, Sae-A’s Guatemala managers were accused of stifling union workers and mistreating female employees. The New York Times reported in 2012 that, before sealing the deal in Haiti, the AFL-CIO sent a detailed memo to American and international officials describing “acts of violence and intimidation” and declaring the company “one of the major labor violators.” A SAE-A spokesman told ABC News that “corrective action was taken, including dismissal of two of our local managers and improvement of grievance procedures.”

Now assertions against the company are emerging in Haiti, according to workers and labor advocates interviewed by ABC News. In April, a group called Better Work Haiti published a report finding the factory was noncompliant in the areas of sexual harassment, bullying and humiliation of employees. Yannick Etienne, a labor organizer, told ABC News she received reports from SAE-A workers that they had to provide sexual favors to supervisors in order to obtain jobs in the factory.

“We’ve heard that there are people who are victim of this sexual harassment situation in the park,” she said.

SAE-A spokesman Lon Garwood told ABC News that the “health, safety and well-being of workers is our priority.”

“If something arises,” he said, “we act swiftly to adjust and address it.”

During a tour of the factory for ABC News, an SEA-A manager said those issues were minor and in the past — mainly the result of misunderstandings, not ill will. Today, signs posted around the factory floor show cartoon images with a red slash through them of managers bullying employees.

But factory officials were reluctant to let ABC News reporters talk directly to workers during a recent visit. When ABC News asked to speak with workers, one company official spoke in Korean to another, saying, “I don’t think you should allow that.” Eventually, three workers were taken from another part of the factory to be interviewed.

Haitians are just eager for the work, said one of the workers, Mileon Fontila, as her managers looked on. “They’re just trying to get more people jobs,” she said.

An Investment in Clinton Aide’s New Firm

At an opening ceremony for the park in 2012, Bill and Hillary Clinton singled out one person for her dedication to the successful launch of the Sae-A factory at Caracol: Cheryl Mills. At the time, she was serving as Hillary Clinton’s chief of staff.

“I want to thank our friend Cheryl Mills because it was her determination, her sheer will to work through every obstacle that made this possible,” Bill Clinton said.

Hillary Clinton praised “my chief of staff, Cheryl Mills, who has been, as others have already said, a real driver of our government’s support for everything that we see here today.”

Two years after the factory was operational, Mills had left the State Department. She turned up, according to an online press release, at a Sae-A company event in Costa Rica. She appeared there, the release said, on behalf of her privately owned international development firm, Black Ivy Group. “Ms. Mills was invited and came to the event as a guest, as did many others,” Garwood said, in response to questions from ABC News.

The chairman of SAE-A, Woong-ki Kim, was identified on the Black Ivy website as one of the initial investors in the firm. That page has since been taken down. “The chairman’s investment in Black Ivy was a personal investment that was not made until late in 2014,” Garwood said. “As a policy, the chairman does not discuss his personal investments.”

Black Ivy Group is described on its website as a firm that “builds and grows commercial enterprises in sub-Saharan Africa” and focuses on “building and leveraging a vast network of global and local relationships spanning the public, private and government sectors.” Mills’ partner in the venture, Jean-Louis Warnholz, worked on the Caracol project in Haiti while serving as a senior State Department adviser to Hillary Clinton.

Messages left with Black Ivy and with Mills’ attorney were not returned.

The Clinton Foundation’s chairman told ABC News that it “was not involved” in the decision to build Caracol, did not work to recruit Sae-A as its anchor tenant, did not help secure financing from the Inter-American Development Bank or help persuade companies such as Gap and Wal-Mart to buy goods there.

In past interviews and assertions on its website, however, the foundation has embraced the Caracol project. One foundation official, Greg Milne, was quoted in a press report saying the foundation “helped to promote Caracol as an investment destination and worked … to attract new tenants and investments to the park.” The website adds that the foundation was part of the “collaboration” to plan Caracol and “assisted with [its] development.” Sae-A officials credited the Clintons for bringing together “the private sector, [aid groups], individuals and others who care about the country to tackle and work towards a better Haiti.”

Bill Clinton’s spokesman, Angel Urena, did not respond to or acknowledge repeated requests by ABC News to interview Clinton on the topic.

In Haiti, there remain deep misgivings about the international earthquake relief effort. It is a sore subject for the former U.S. president, who spoke repeatedly about it in public in recent weeks, after ABC News submitted questions to the Clinton Foundation on the subject.

“I’m sure we made a few mistakes, but way, way more good than harm was done by this,” Bill Clinton said at the final meeting of the Clinton Global Initiative, of which SAE-A was a member. “It was the most organized, clearly directed efforts to bring private capital to Haiti, to do good work, either through not-for-profits or through profitmaking ventures that would include Haitians, that I’ve ever seen.”

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