Accounting for Errant Auditors
Posted by Pratap Chatterjee on September 14th, 2007
The U.S. Securities and Exchange Commission (SEC) brought charges against 69 accountants for failing to register with the Public Company Accounting Board (PCAB) earlier this week. This somewhat obscure action is the latest ripple in the wave of crackdowns that followed the Enron accounting scandals in 2001 -- to break up the all too cozy relationship between auditors and the multinationals that they are supposed to be policing.
Governments allow companies to close their financial books at the end of the fiscal year, if a qualified accountant has signed off on it. The problem is that both the companies and the auditors are private entities whose ultimate motive is to make a profit, so there is potential for one or both of the two not to report any cooking of the books, unless they know that a regulator might catch them and discipline them. And in the last two decades, as favored accountants have been rewarded with multi-million dollar non auditing consulting gigs (such as tax planning or management consulting), the worry was that they were looking the other way in order to win more business.
Following the Enron scandal, which showed that Arthur Andersen, the company's auditor, had failed in its public duty, the U.S. Congress passed the Sarbanes-Oxley law in 2002 that replaced the accounting industry's own regulators with the Public Company Accounting Board with subpoena and disciplinary powers. Auditors are supposed to register with the board, but clearly not everyone took this seriously.
The SEC's enforcement director, Linda Chatman Thomsen, said that Thursday's action showed that the agency "is committed to ensuring compliance with the regulatory framework Congress established for auditors of public companies." A total of 50 of the errant accountants settled the charges with the federal agency the very same day.
This action is an important warning shot across the bows to let the auditors know that the SEC is checking up on them. But the jury is still out as to whether the SEC will go one step further and prosecute auditors who fail to report companies that are cooking their books.
In related news, a new study from the University of Nebraska suggests the whistle-blowers who report violations of the Sarbanes-Oxley Act to agencies like the PCAB are not properly protected. The study looked at 700 cases where employees experienced retaliation from companies for whistle-blowing and found that a mere 3.6 per cent of cases were won by employees.
Richard Moberly, the study's author, argues the findings "challenge the hope of scholars and whistle-blower advocates that Sarbanes-Oxley's legal boundaries and burden of proof would often result in favourable outcomes for whistle-blowers."
The Financial Times reports that Louis Clark, president of the Government Accountability Project, a non-profit organization that lobbies for whistle-blowers, calls the law "a disaster." Jason Zuckerman, a lawyer at the Employment Law Group, a law firm that represents Sarbanes-Oxley whistle-blowers, says: "Part of the problem is that investigators misunderstand the relevant legal standards and believe that a complainant must have a smoking gun -- that is, unequivocal evidence proving retaliation."
The debate is still on
over whether Sarbanes-Oxley is effective five years after the law was
passed, although all appear to agree it was a step in the right
direction. The proof of the pudding, they say, will be in the eating,
so we eagerly await the day that SEC puts errant accountants behind
Digging for Dirt in the DRC?
Posted by Amelia Hight on July 25th, 2007
Billy Rautenbach, a South African mining kingpin, was deported from Lubumbashi airport in the Democratic Republic of Congo (DRC) on July 18th. “He was accused of fraud, theft, corruption and violating commercial law [the expulsion document] said. He was persona non grata. He would have to leave,” writes Ben Laurence in the Sunday Times (UK).
Best known in South Africa and Botswana for his activities in assembling Hyundai cars, Rautenbach faces hundreds of charges of fraud, corruption and other crimes in his home country of South Africa (the reasons cited in the documents prepared for his deportation last week). South Africa is currently considering asking Zimbabwe to extradite him to stand trial.
But Rautenbach was also once a powerful man in the DRC. He ran Gecamines, the DRC’s state-owned copper mining company, from 1998 to 2000. At the time he was accused of under-reporting exports of sales of huge quantities of DRC cobalt when he was in charge – and diverting the profits to a company he controlled in the British Virgin Islands.
Although Rautenbach lost his job, he continues to play an important role in the mining sector, as he also happens to be a major shareholder of Central African Mining & Exploration Company (CAMEC), which won major contracts in the DRC a couple of years later.
CAMEC’s contracts were the result of an investor-friendly mining code introduced by the World Bank in July 2002. (An informative analysis of this code was done by the Bank Information Center.) While the code calls for a much-needed regulatory framework and environmental protection, it hands the responsibility for mining development to private companies.
However, it is doubtful that the Congolese public institutions charged with regulating the mining sector have the resources to carry through with it, and the World Bank certainly has not been successful in providing oversight. A memo leaked to the Financial Times in November 2006 details the World Bank’s failure to provide sufficient oversight in three major contracts made between Gecamines and international mining groups like CAMEC. Worth billions of dollars, these contracts reportedly gave these groups control over 75% of Gecamines mineral reserves. (In May 2007, the Financial Times also revealed that the World Bank withheld the findings of an inquiry into alleged mismanagement of funds in the Democratic Republic of Congo.)
More details on the business dealings of Rautenbach and CAMEC may emerge from a DRC commission that recently began a three-month review of mining contracts signed in the last decade. The commission is the first attempt of a new “democratically elected” government to investigate ongoing corruption in the DRC’s valuable mining sector. The new commission follows a string of attempts by previous governments and international financial institutions to investigate the exploitation of natural resources in the DRC.
If the commission hopes to be successful it must take a look at whose interests are being promoted/protected in the Congo and how. This would include an investigation into local elites, regional influences, international financial institutions and the powers they represent, and international corporations along with the relationships between these different actors.
History has shown that the more resources a nation or region possess, the more conflict and poverty the people of that nation are forced to endure. The DRC is the third largest country in Africa and is rich in natural resources, particularly cobalt, copper, diamonds and gold. It is home to one third of the world’s cassiterite, the most important source of the metallic element tin and holds 64-80% of the world’s coltan reserves, an ore that is the source of the metal tantalum, which is used in cell phones and other devices.
In an article for Alternet, Stan Cox quotes a miner responsible for digging the valuable cassiterite: "As you crawl through the tiny hole, using your arms and fingers to scratch, there's not enough space to dig properly and you get badly grazed all over. And then, when you do finally come back out with the cassiterite, the soldiers are waiting to grab it at gunpoint. Which means you have nothing to buy food with. So we're always hungry."
This cassiterite will inevitably end up in cheap cell phones and laptops laying abandoned in American landfills.
Despite (or indeed because of) its abundance of resources, the DRC has been plagued by conflict, famine and political instability since its independence in the 1960s. Following the end of the 30-year dictatorship of Mobutu Sese Seko (who was brought to power by the U.S. in the 1960s), the greed of neighboring countries for natural resources forced the DRC into the center of what organizations like Human Rights Watch have deemed, “Africa’s first world war.” The war resulted in the death of three to five million people, many from famine, exposure and disease.
A cease-fire ended the war in 1999, but the DRC has continued to suffer the extraction of resources and wealth through corrupt deals between local elites and international companies. A 2006 report from the London-based watchdog organization, Global Witness, describes how copper and cobalt are mined informally and illicitly exported, robbing the Congolese people of any opportunity to reduce poverty.
The new commission’s plan to revisit mining contracts between the state and private companies is a response to years of domestic and international pressure. Hopefully, once the review is completed (assuming that it is a transparent and non-corrupt process), the international companies involved will be willing to re-negotiate contracts in a way that is more beneficial to the Congolese state and its citizens. An interesting precedent was established last year in Liberia when Mittal Steel, the world’s largest steel company, agreed to step down from an unbalanced concessionary agreement made with a corrupt transitional government once a democratically elected government was in place.
The Curse of Gold
Posted by Sakura Saunders on February 28th, 2007
This week's CorpWatch feature highlights the plight of indigenous people in Papua New Guinea, where landowners feel that they are cheated out of their resources, livelihoods, and just compensation by the world's largest gold producer, Barrick Gold.
Papua New Guinea represents a case study in how resource extraction just might be the worst possible way to develop a country, especially where 85 percent of the population depends on the environment for their subsistence livelihood. Here, the pollution caused by open-pit mining and cyanide leaching creates an especially vulnerable situation for the indigenous people. In our recent feature, we attached testimonies from the landowners, mine workers, women, and human right activists who are affected by the mine. A principal landowner, Nelson Akiko, describes his disillusionment with the mine:
We depend on our land. You depend on money. Money is not need, it is only a want, but it is need in western society. I live on land, which is my stomach. I grow food from this land and then I survive. But now, where can I get food?
Also, the fact that mineral deposits, including oil, copper, and gold, account for two-thirds of PNG's export earnings leaves them susceptible to the Dutch Disease, or the phenomenon wherein resource exports raise the exchange rate for a country's currency, thereby making their labor less desirable. While this only accounts for a tiny part of the negative consequences of mining, it does illustrate that even within an economic paradigm, mining carries negative consequences for 'development', especially open pit mines because they require less human labor. Large mineral exports also make countries more susceptible to corruption because of the negotiating power held with government gatekeepers.
This is similar to Mali, where gold makes up 65 percent of its exports, dwarfing its former economic bedrock cotton. Some 64 mining companies have active mining and exploration projects in this landlocked African country, but despite a surge in gold prices, Mali's development indicators have stagnated. A recent Oxfam report 'Hidden treasure: in search of Mali's gold mining revenues',
"There is not sufficient disclosure in an
understandable form for citizens or civic groups to determine whether
they are indeed benefiting as they should according to current law in
The fact that gold is a largely useless metal (that is already hoarded and unused in large quantities) makes the destruction caused by it's extraction all the more tragic. According the No Dirty Gold Campaign, 80% of the gold is used by the jewelry industry. On average, the production of one gold wedding ring produces 20 tons of waste.
Unfortunately, Papua New Guinea is not an isolated example of how gold mines can destroy communities. Mining Watch Canada summed their view of the mining industry in Canada, where 60% of the world's mining companies reside:
Metal prices are booming, and Canadian mining companies are taking advantage of the same prejudicial conditions to expand into all corners of the globe, manipulating, slandering, abusing, and even killing those who dare to oppose them, displacing Indigenous and non-Indigenous communities alike, supporting repressive governments and taking advantage of weak ones, and contaminating and destroying sensitive ecosystems.
CorpWatch has been tracking Barrick elsewhere in the world, most recently at its Pascua Lama project in Argentina.
Barrick's plans to "relocate" three glaciers - 816,000 cubic meters of ice - by means of bulldozers and controlled blasting, is seen by mine-opponents as symbolic of the company's utter insensitivity to the environment. As headwaters for a water basin in an arid region receiving very little rainfall, many opponents are gravely concerned for the ice. They say the mechanical action involved in moving the glaciers will irreversibly melt much of it, jeopardizing a delicate ecological balance further downstream.
While Barrick originally planned to "relocate" three glaciers to another area, since being denied their original plan, the project now aims to build an open-pit mine next to the glaciers. However, most alarmingly, since construction has started on the mine, the glaciers have been depleted an estimated 50-70 percent, according to Chilean General Office of Waters (DGA). Barrick attempted to blame global warming for the melting, but those claims have been disproven.
Mining in the U.S.
In the U.S., Western Shoshone lands now account for the majority of gold produced within the United States and almost 10 percent of world production. The scale of development is unprecedented and will leave a legacy of environmental impacts for centuries into the future.
An excellent article on the boom in gold mining from the Las Vegas Mercury News explains the predicament that Shoshone face.
The Fourth Branch of Government
Posted by Pratap Chatterjee on February 12th, 2007
Technology consultants Booz Allen Hamilton may not be on the top of everyone's lists for conflicts of interest, but Congressman Henry Waxman revealed some rather interesting information about this McLean, Virginia, company at last week's hearing on contracting abuse.
Waxman told the hearing that Booz Allen had $97 million in contracts with the Department of Homeland Security in 2005. One job that Booz Allen staff were hired to do was to help plan, award and manage the federal government's SBI-Net program, a high technology security fence between the U.S. and Mexico (Joe Richey wrote us an article on this program - see Border for Sale)
Of the 98 personnel assigned to the SBI-Net project office as of December 2006, 60 work for contractors like Booz Allen. The company that these personnel are overseeing for SBI-Net is Boeing.
What Waxman finds worrying is the fact that Booz Allen has had an ongoing relationship with Boeing since 1993 to assist Boeing in maintaining its market share in the airplane industry, and other extensive relationships with the aircraft manufacturer since 1970.
The question is an important one: how can you be an impartial supervisor over someone who also pays your bills?
Booz Allen is no stranger to the inner workings of government, though. They happen to be one of the largest contractors to the Central Intelligence Agency and the National Security Agency. Tim Shorrock has done some digging into this subject, which you can read in his Mother Jones article: The Spy Who Billed Me.
Contractors supervising their own business partners is fashionable in Washinton DC these days, so we are glad to see that Scott Shane of the New York Times has started a regular series on this subject which he calls "The Fourth Branch of Government". In the first article about this phenomenon he wrote:
In June, short of people to process cases of incompetence and fraud by federal contractors, officials at the General Services Administration responded with what has become the government's reflexive answer to almost every problem.The use of private interrogators at Abu Ghraib another matter we've been tracking, to read more about that, see David Phinney's article: "Prison Interrogation for Profit". To be fair, CACI is no longer in the interrogation business. To find out more about who has this lucrative work, do read "Intelligence in Iraq: L-3 Supplies Spy Support"
They hired another contractor.
It did not matter that the company they chose, CACI International, had itself recently avoided a suspension from federal contracting; or that the work, delving into investigative files on other contractors, appeared to pose a conflict of interest; or that each person supplied by the company would cost taxpayers $104 an hour.
... CACI had itself been reviewed in 2004 for possible suspension in connection with supplying interrogators to the Abu Ghraib prison in Iraq.
U.S. Army takes $19.6 million from Halliburton
Posted by Pratap Chatterjee on February 8th, 2007
Tina Ballard, deputy assistant secretary for policy and procurement for the U.S. Army, told the same hearing that they had taken back $19.6 million from Halliburton for employing private security guards in Iraq, because their contract specifically stated that they could only use U.S. military for security. "We removed the money yesterday," said Ballard (on February 6th, 2007)
Halliburton, a Houston, Texas-based company, has been paid over $20 billion to provide logistical support to U.S. troops occupying Iraq such as building bases, cooking food and cleaning toilets.
Although Halliburton director of security, George Seagle, acknowledged that the company had used Blackwater and other private security sub-contractors in Iraq, he denied that the company was working for them in Fallujah, the day that the four Blackwater men were killed in Fallujah in March 2004, as related earlier. He also told the Congressmen that he did not know what company provided security for their convoys because that was the responsibility of the sub-contractor.
"You should know who you hired, who you sub-contracted to," scolded Republican Congressman Christopher Shays. "You can't be Pontius Pilate and wash your hands of the matter."
Seagle's statement contradicts a 2004 investigation by the Raleigh News-Observer, which unearthed documents that suggest that Blackwater was working indirectly for Halliburton via a complex pyramid of sub-contracting.
An email dated June 3, 2004, produced by Congressman Waxman at the hearing, quotes James Ray, a Halliburton contract administrator, warning the company that they could get into trouble for using Blackwater. "We should not attempt to effect a material change in our contract with the government by hiring a company that we know uses armed contracts. That company is an agent of KBR (Halliburton) and if anything happens KBR is in the pot with them. Even with lipstick, a pig is a pig. Dancing around it will only weaken out position with the government."
Blackwater counsel Andrew Howell says that the men who were killed in Fallujah, were providing security for a company in Kuwait named Regency Hotel, which in turn was employed by a company named ESS in Germany.
Throwing fresh doubt on this matter, was Steve Murray, the director of contracting for ESS, who was also at the hearing says that the four men who were killed that day were actually protecting another major U.S. engineering company named Fluor on that particular day.
But Tom Flores, the director of security for Fluor, who also testified at the hearing, says he was unaware that the Fallujah convoy was protecting his company.
"This tells me that we are not going to have good quality work if neither the government or the contractors can tell us who the subcontractors are," said an exasperated Shays.
Blackwater security shot Iraqi man
Posted by Pratap Chatterjee on February 7th, 2007
Lawyers for Blackwater, the private security company, today publicly acknowledged that one of their security guards shot dead an Iraqi man whom he worked with. "He was off-duty that day," said Andrew Howell, the company's general counsel told a Congressional hearing today. "We brought him back to the States the next day and took him off the contract."
The story of the killing, which took place on December 24, 2006, was first broken by Bill Sizemore of the Virginian Pilot less than a month ago.
The admission by Blackwater's lawyer came at a hearing that was convened by U.S. Congressman Henry Waxman at the House Government Reform Committee.
Blackwater, a North Carolina company, became famous when four of their contractors were shot and killed in Fallujah in March 2003, sparking a massive U.S. military assault on the city in which hundreds were killed. (Excellent accounts of this incident can be found in Robert Young Pelton's new book: "Licensed to Kill" and Jeremy Scahill's forthcoming book: “Blackwater: The Rise of the World's Most Powerful Mercenary Army.” out later this month from Nation Books) The company was back in the news ten days ago when five of their employees were shot down as they accompanied U.S. embassy employees in Baghdad.
The admission by Blackwater confirms worries that armed contractors working directly or indirectly for the U.S. government have been involved in killing Iraqi civilians and that they have escaped the rule of law in Iraq or in the United States.
An article in the Washington Post in September 2005 quoted Brigadier General Karl R. Horst, deputy commander of the 3rd Infantry Division, which is responsible for security in and around Baghdad. "These guys run loose in this country and do stupid stuff. There's no authority over them, so you can't come down on them hard when they escalate force. They shoot people, and someone else has to deal with the aftermath. It happens all over the place."
The article described the shooting of an Iraqi man named Ali Ismael in Erbil, Northern Iraq by unamed U.S. private security contractors.
Nor is Blackwater the only company to have been accused of shooting at Iraqi civilians with an intent to kill.
* In July 2006, two security contractors working for Triple Canopy in Iraq witnessed their boss shoot at Iraqi civilians.
Shane B. Schmidt, a former Marine Corps sniper, and Charles L. Sheppard III, a former Army Ranger, have sued the company, which they say fired them after they filed a report on July 8 that their shift leader fired deliberately and unnecessarily at Iraqi vehicles and civilians in two incidents while their team was driving in Baghdad.
Schmidt and Sheppard's lawsuit claims that the Triple Canopy employee announced that he was ''going to kill someone today,'' stepped from his vehicle and fired several shots from his M4 assault rifle into the windshield of a stopped white truck. The men claim that the truck was not an evident threat and that their team was not in danger. The men say in the suit that the shift leader then returned to their truck and said, ''That didn't happen, understand.'' Later that day, the suit says, the shift leader said, ''I've never shot anyone with my pistol before,'' and then opened the vehicle door and fired seven or eight shots into the windshield of a taxi.
* Custer Battles, another U.S. security company, was accused of shooting at Iraqis in February 2005, in an investigative report by NBC News. Titled "U.S. Contractors in Iraq Allege Abuses." The report quotes four former U.S. soldiers.
"[He] sighted down his AK-47 and started firing," says (Corporal Ernest) Colling. "It went through the window. As far as I could see, it hit a passenger. And they didn't even know we were there."
Later, the convoy came upon two teenagers by the road. One allegedly was gunned down.
"The rear gunner in my vehicle shot him," says Colling. "Unarmed, walking kids."
In another traffic jam, they claim a Ford 350 pickup truck smashed into, then rolled up and over the back of a small sedan full of Iraqis.
"The front of the truck came down," says (Captain Bill) Craun. "I could see two children sitting in the back seat of that car with their eyes looking up at the axle as it came down and pulverized the back."
* CorpWatch's David Phinney was among one of the first reporters to chronicle the infamous "Trophy Video" in Novermber 2005, in which security contractors for Aegis, a British company, in Iraq, were seen shooting at Iraqi civilians.
David Phinney also broke the story of another North Carolina company named Zapata, whose security guards allegedly fired at U.S. Marines in Fallujah in May 2005.
Ding Dong ...
Posted by Brooke Shelby Biggs on July 6th, 2006
I admit when I heard that Ken Lay had died, I sat bolt upright in bed and then wondered what to think. No more. The bastard flipped America - and especially the thousands of peniless ex-Enron employees, and the entire state of California - a final bird. Not a day in jail. Not another penny to the people he stole from.
Perhaps what shocked me most was the discovery that the convicted felon was at home in Aspen, Colorado when he died, out on a $5 million bond while awaiting sentencing. How, I wondered, could this little man who claimed to be $250,000 in debt, be living so high, just a month post-conviction? Ah, the American legal system. Had Lay been, say, an African American looter in New Orleans, he'd have died in a rat-infested cell.
And, lookee here: poor, poor Kenny-Boy had a Goldman Sachs investment account worth over $6 million when he died. Woe was he, indeed.
Now we learn that the civil suits aimed at collecting some of Lay's ill-gotten assets for the benefit of those bilked by his scheming may be dropped. Lay's wife, who stands to inherit the estate, will likely keep it all. This is the woman who staged the most grotesque PR stunt ever when she opened a second-hand store (called, repulsively, "Jus' Stuff" to sell of trinkets from the Lays' 15 homes, claiming she was destitute.
It is infuriating, particularly if you don't believe in karma, or hell, or any other means of divine retribution available after the grave. It almost makes you believe he died on purpose.
How We Got Here: Post-Doctoral Division
Posted by Brooke Shelby Biggs on June 16th, 2006
The New Left Review will either excite or exhaust your brain. But if you want to see the rise of capitalism on a global scale through the eyes of an economist who speaks economese, this is your guy: Robin Blackburn. I'm not saying I understood the whole thing (I wonder if many outside the ivy-clad ivory towers could), but the whole issue of how corporations came to be the driving force in almost everything in the world, and how money became both the ends and the means to all things, is somewhere here between the lines.
The NLR summarizes the piece thusly: "The concept of alternative futures, banished from postmodernity’s
eternal present, flourishes on the financial summits of the global
economy. Robin Blackburn argues against a neo-Luddite dismissal of the
new financial engineering techniques by the Left, while coolly
assessing the economic and social costs of their current configurations."
Uh-huh. I almost said that.
The gist is, once you see everything - people, the environment, cultures - as commodities, it all makes perfect sense. Of course, money doesn't have a soul.
Therefore, this begins to appear to be a genius corporate philosophy:
In the years 2001–03 about three million jobs were lost in the United
States. By the turn of the century Enron’s managers had become famous
for a regime in which each employee knew that one tenth of the staff,
those who failed to reach trading targets, would be sacked each year,
no matter how good or bad the overall performance. Many of the most
powerful corporations today do their best to avoid having a workforce;
instead they out-source and sub-contract.
We've seen see how well that works.
Ultimately, the soveriegnty of financial institutions that make this entire "financialization" thing work, actually causes corporations and the system they have creates, self-destruct (see Enron, WorldCom, Delphi et al):
[F[inancial profits over the last
decade have mainly taken the form of the cancellation of promises made
to employees—exploitation over time—the erosion of small capital
holdings by large and unscrupulous money managers and the swallowing of
shoals of tiny fish by a shark-like financial services industry. Few of
the gains from the reallocation of capital through superior risk
assessment have been channelled to production. Financial profits have
instead prompted a surge in upscale real-estate prices and the turnover
of the luxury goods sector. The mass of employees and consumers have
sunk deeper into debt. Yawning domestic inequalities have been
compounded by escalating international imbalances, with an inflow of
foreign capital covering a deficit on the us
current account. With a sagging dollar, an oil price shock and rising
interest rates, American households—the consumers of first and last
resort—are likely to find the strain of carrying the world on their
shoulders ever more difficult. Financialization promotes such a skewed
distribution of income that it ends by undermining its own
Took the words right out of my mouth.
U.S. Military Clothing Contractor Raided
Posted by Brooke Shelby Biggs on May 17th, 2006
How cynical is this? In order to take advantage of quotas that require a certain nmumber of federal contracts be awarded to minority-owned and operated businesses, the cuddly sounding "National Center for the Employment of the Disabled" used the word "disabled" to win a contract to manufacture miltary uniforms, and then failed to actually employ disabled people to do the work.
Well, the FBI agents who raided the company's factory last week found out that a whopping 7 percent of the laborers at the plant were moderately to severely disabled. The contract was awarded based on assurances that the labor force would be at least 75 percent disabled.
Cheney Profits From Katrina
Posted by Brooke Shelby Biggs on April 19th, 2006
A Notre Dame professor has analyzed Dick Cheney's 2005 tax return and concluded that our fair Vice President exploited a new tax law instituted post-Katrina to save himself several million dollars. It turns out that Smirky Dick used a loophole intended to encourage charitable donations for Katrina relief to write off charitable contribution which went to non-Katrina causes. That alone might not be enough to get irked about, except that it looks like the exploitation of the loophole was deliberate to minimize his overall liability, and he used Halliburton money to do it.
Cheney exercised some of his Halliburton options in late 2005, during which time that company's profits were soaring in part because of fat no-bid reconstruction contracts granted to its subsidiary KBR in the wake of Katrina. Cheney used those proceeds -- $6.8 million -- to donate to charities per his 2001 agreement to use his options only for charity.
Says the prof: "While there's nothing inappropriate about that from a legal
perspective, it does demonstrate how the legislation, which was sold to
the public as providing relief to Katrina victims, provided significant
tax benefits to the VP (and potentially other wealthy individuals) in
situations that have nothing to do with Hurricane Katrina."
Not illegal but definitely soulless, cynical, opportunist, and greedty. So, no big surprise.
See No Corruption, Address No Corruption
Posted by Brooke Shelby Biggs on April 3rd, 2006
It seems that not only does the right hand not know what the left hand is doing, the right hand doesn't even knows what it's doing.
Last week the Pentagon, presumably with a collective straight face, finished reviewing its contract procurement system (specifically with regard to its primary vendors), and found that, hey! the system works great!
Never mind that Iraq contractor Custer Battles was found guilty of $3 million in fraud just the week prior. Never mind that the Defense Logistics Agency confessed that it had been overcharged more that $300,000 by its suppliers of such crucial terror-fighting implements as refrigerators and ice-cube trays. ($32,000 for a refrigerator somehow didn't spark suspicion for years, nor did a $20 ice-cube tray; I'm in the wrong business). Never mind that the DLA decided to discontinue contracts with several suppliers deemed to have scammed them.
If it weren't my money, as a United States taxpayer, it would be hard to feel sorry for the feds for getting, er, used and abused. After all, the only way they can avoid being embarassed is to deny that they were suckered. Its like enabling an abuser. Rumsfeld pops up with a black eye, and says "I ran into a door," instead of "I bought a $32,000 fridge." Maybe he thinks deserves it.
Beyond Cronyism to Geopolitics in the Port Controversy
Posted by Brooke Shelby Biggs on February 22nd, 2006
As much as this is a story of privatization and racism, it is also about cronyism. The New York Daily News notes that Dubai Ports World has at least two ties to the Bush Administration - Treasury Secretary John Snow who, a year after joining the administration, sold his company's port operations to the same Dubai firm; and David Sanborn, the head of the U.S. Maritime Administration who still runs Dubai Ports World's European and Latin American operations.
But before concluding that this is simply more Bushistic cronyism, consider that almost all of the United States' military supplies headed for Iraq and Afghanistan are channelled through Dubai's ports, at the pleasure of Dubai's government, which in turn just happens to run DP World. This is geopolitical quid-pro-quo. Don't piss off Dubai, and we can still run our wars in the Middle East.
Pump and Dump
Posted by Brooke Shelby Biggs on February 22nd, 2006
Great interview with the authors of "Pump and Dump: The Rancid Rules of the New Economy" on the WaPo site today. The book's authors float an obvious theory (to us anyway) of 1990s financial fraud called "pump and dump," in which corporate executives artificially inflate stocks and securities in order to sell
their shares at higher prices, leaving any fall-out and responsibility
on naive investors.
You don't say? We applaud the market timing of the publisher, releasing the book as they did during the Enron trial.
Tyco Execs' Mugshots
Posted by CorpWatch on January 3rd, 2006
It isn't everyday you get to see Dennis Kozlowski holding a jailhouse clapboard featuring his vitals. Thanks to Thesmokinggun.com, we can give you that pleasure.
Click here for former Tyco CFO Mark Swartz's mugshot. (Hey, where did his curly tresses go?)
Looking Back on 2005
Posted by Brooke Shelby Biggs on January 2nd, 2006
Sure, sure, The New York Times is the voice of the status quo according to lefties, the bully pulpit of the liberal elite according to righties. But if corporate corruption, graft, greed, incompetence and influence-peddling are of concern to you - no matter your political stripe - you have to admit that a lot of stories used to fly under the radar of the Gray Lady are now frontpage news, and that is good news. Perhaps we can thank Kenneth Lay for that; what we at CorpWatch have long done just wasn't as sexy before he came along. Thanks, you big lug.
So here in the first week of a new year, we begin with a clean slate, ready for a year of customary despoiling. In reflection, let us review the year in corporate crime, courtesy of Gretchen Morgenson at The New York Times. (Or, of course, you could page through a few thousand of our favorite stories on the subject from the last 12 months ...)
Welcome to the CorpWatch Blog!
Posted by Brooke Shelby Biggs on December 20th, 2005
Welcome to the Corpwatch Blog! We're introducing this new feature as a tool for you to navigate our resources, and to help provide context to breaking news elsewhere on the Web.
For example, you may have read today that the ex-CEO of Qwest Communications was indicted today for illegally cashing in on his company's IPO during the Internet boom, to the tune of $100 million. But did you know that Qwest in 2001 entered into Enron's bogus scam to trade digital bandwidth like any commodity? Back then, investigators discovered that the deal was all smoke and mirrors: Qwest agreed to pay Enron $308 million for use of "dark fiber" --
unused fiber optic capacity. In exchange, Enron agreed to pay Qwest
between $86 million and $195 million for access to active sections of
Qwest's network. Both companies could report these phantom revenues on their balance sheets to fool investors.
It's this kind of news-behind the news only CorpWatch can offer, and we think this forum is the place to do it.
We hope you find this new blog to be useful, informative, and enlightening. Of course, we welcome your comments, complaints, and especially compliments.