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Clinton feels heat over Wal-Mart ties

New York senator trying to distance herself from chain

NEW YORK -- With retailer Wal-Mart under fire for its labor and healthcare policies, one Democrat with ties to the company, Senator 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 reelection 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 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."

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 in the US 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 Wal-Mart critics.

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 forms that year.

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.

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.

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."

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