Archive for February, 2009


Yes, after the stellar examples of broken oversight in the federal contracting world like the infamous Boeing Deferred Prosecution Agreement, which would allow a corrupted contractor to evade being held accountable and losing contracts or being disbarred, I can well believe what Mr. Brodsky reports here.  –GFS

 

 

Government continues to provide unethical contractors with work, GAO says

 

By Robert Brodsky rbrodsky@govexec.com February 26, 2009

 

More than two dozen contracts were issued in fiscal 2006 and 2007 to businesses or individuals who at the time were under federal suspension or debarment, according to a new report from the Government Accountability Office.

“This is probably just the tip of the iceberg,” said Gregory Kurtz, GAO’s managing director of forensic audits and special projects before the House Oversight and Government Reform Committee on Thursday. “I believe that further investigation will find dozens or hundreds of other cases. These are the kinds of cases that cause taxpayers to lose faith in their government.”

When the government decides to suspend or debar a contractor, they are placed in the Excluded Parties List System, a database maintained by the General Services Administration. Contracting officers are required to check the list before issuing a new award.

But according to GAO, contracting officers repeatedly failed to check EPLS or, in the Army’s case, willfully ignored the suspension and debarment notice.

The president of defense contractor Optronics, a German military training company, was convicted in 2004 of attempting to illegally sell to North Korea aluminum tubes, which can be used to develop a nuclear bomb. In July 2005, more than a year after the conviction, the Army said there was a “compelling interest to discontinue any business with this morally bankrupt individual,” and debarred the company from receiving further contracts.

But Army procurement officers disregarded the debarment notice and continued to pay the company an additional $4 million in fiscal 2006 through contract extensions and task orders from an existing training contract, the report said.

Despite grilling from lawmakers, Brig. Gen. Edward Harrington, the Army’s deputy assistant secretary for procurement, would not acknowledge that extending Optronics’ contract was a mistake, noting that the company’s performance was rated as “excellent.”

The general argued that the training Optronics was providing was a matter of national security, that it would have taken as long as six months to bring on a new contractor and the Army would have been obliged to pay the debarred firm in full if it canceled the contract.

“What is the point of having suspension and debarment regulations, if our own agencies disregard them?” asked committee Chairman Edolphus Towns, D-N.Y.

In other instances, GAO attributed errors to ineffective management of the EPLS database or to control weaknesses at both excluding and procuring agencies.

For example, in April 2006 the Navy suspended a company after one of the contractor’s employees was caught sabotaging repairs on an aircraft carrier by using unsuitable parts to replace fasteners on steam pipes. If the pipes had ruptured as a result of faulty fasteners, hundreds could have died, the watchdog said.

But less than a month after the suspension the Navy awarded the same company three new contracts, worth more than $100,000, because a department contracting officer failed to check EPLS to verify the company’s eligibility.

The problems were not limited to military agencies. In September 2006, GSA suspended a construction company after its president opened fraudulent GSA surplus property auction accounts using phony Social Security numbers.

Shortly thereafter, the Interior Department tried to check the contractor’s eligibility in EPLS before making several awards to the company, but GSA had not yet noted the suspension in the system.

During its investigation, GAO successfully bought body armor worth more than $3,000 with a government purchase card through a GSA supply schedule from a company that had been debarred by the Air Force in 2007 for falsifying tests related to the safety of its products.

Jim Williams, commissioner of GSA’s Federal Acquisition Service, acknowledged the mistakes, but noted they represented a few “isolated incidents” of human error, rather than a systematic breakdown. Nonetheless, GSA, as well as the Army and Navy, has sent out alert notices to agency contracting officers to remind them to check the EPLS.

“EPLS is not broken,” said David Drabkin, GSA’s acting chief acquisition officer.

But some lawmakers noted the database suffers from fundamental flaws, such as missing corporate identification numbers, an inadequate search function, obsolete contact information and an incompatibility with other government procurement databases.

“The egregious examples of contracting failures found by GAO not only led to waste but endangered lives,” said Darrell Issa, R-Calif., the committee’s ranking member. “Recommendations for fixing mistakes, including better training and technology, need to be implemented.”

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New Book Out Soon by Shelly Stark!  Must Read!

 

In addition, a writer, Shelly Stark, who wrote the article about this problem for Truthout, is shortly going to be publishing an intensive book on the subject of Hidden Treuhand and European Banking Secrecy.  She left a comment on my Word Press Blog.

 

She said,  “Hi! It’s me Shelley Stark. Thank all of you for commenting. Shirley, I hope you will read my book. I’m almost finished. You be sure to comment, I’m looking forward to hearing from you. You’re OK. Your just frustrated and it is not easy to separate all the issues facing all of us today. I love America, but that doesn’t mean I have to love what is being done to my country and its people. In fact, in light of my education and knowledge, it would be immoral to hold back this information. For that reason, I spent the last few years translating German law in order to explain a phenomenon that impacts our understanding of the war in Iraq, Halliburton, and even the current financial crisis. The book will include some of the documents I turned over to the IRS. I assure you, this is not a game. The foreword was written by the most religious man I have ever known if that makes you feel better- Ernst Florian Winter- Google him. Read his foreword when the book comes out. I did much of the work living high in the Austrian Alps in his 350 year old Tyrollean style home complete with wood burning stove for heat and cooking. No meal is eaten without prayers and on Sunday the local peasants hold Mass high in the meadow alps. It’s an event i wouldn’t miss though i admit I look forward to the barbeque and giant mugs of beer afterwards. The story is straight forward. Everything I claim is footnoted in the original German language. I don’t expect you to understand the German references but they are there nonetheless. I foretold that billions would go missing – this book explains how it is done – the Hidden Treuhand and European banking secrecy – that is why you can’t find it in any law in the English language. This is the dark side of globalization. God bless us all – we are going to need it.”

 

 

 

 

 

 

Shelly Stark’s original article for Truthout

 

Halliburton’s Hidden Treuhand

by: Shelley Stark, t r u t h o u t | Report


Vanity Fair reported shipments of over $12 billion in cash to Iraq. $9 billion of the cash is gone and unaccounted for. (Photo: The Village Voice)

Halliburton takes advantage of a European loophole that lets corporations hide beneficiaries and assets.

    Little is known of a customary European legal practice that offers corporations and individuals an opportunity to profit from assets while maintaining complete anonymity of the beneficiary’s identity. This practice is referred to as “Hidden Treuhand” in the English language. The practice of Hidden Treuhand submits to legal local customs in Austria, Germany, Liechtenstein, Luxemburg and Switzerland, but due to globalization, has moved beyond European borders via corporations and individuals, who put it to personal use.

    The practice of Hidden Treuhand is relevant and unregulated. More and more, the relevant practice of Treuhand is used in hiding an asset owner’s identity from the outside world. Assets, whether they are corporate shares or fixed assets, can be owned in secret. The personal income derived from these assets can also be kept secret from tax authorities. An example of how Hidden Treuhand facilitates tax evasion is part of the latest scandal where thousands of Germans evaded tax through the services of the LGT Treuhand Bank in Liechtenstein, using a combination of Treuhand and foundations to hide true owner identity of bank accounts.

    Hidden Treuhands in Europe impact the lives of American citizens. Hidden Treuhands enable even American corporations to hide the identity of beneficiaries, assets and income. Halliburton has a Hidden Treuhand embedded in its Austrian subsidiary. It prevents transparency regarding corporate activities.

    The lack of transparency creates special advantages for some, and consequences for others such as governments, competitors, stockholders and citizens. For example, a beneficiary can evade personal income tax, because the income derived from a hidden asset is not linked to the beneficiary. There is another advantage to Hidden Treuhands that borrows from the concept of a “trust.” The “trust” concept allows for dividends to be removed. Money transferred to a subsidiary may be considered a dividend. By using a network of subsidiaries, favorable tax laws and banking secrecy, CEOs and insiders can profit without transparency. The Hidden Treuhand is an important aspect of what makes globalization so attractive to American and European corporations.

    Given these attributes, it is alarming when a Hidden Treuhand is discovered in a subsidiary that is fully owned by Halliburton USA. Halliburton’s Hidden Treuhand is evident in the firm’s corporate records. Halliburton International GmbH was created in Austria in June of 1992, although another subsidiary, at the same address, was in existence in Austria since 1958. The new subsidiary, Halliburton International GmbH, has no apparent reasons for existing other than to house a Hidden Treuhand in its corporate structure, receive dividends from other subsidiaries and acquire other subsidiaries. This firm has no employees. It creates no income. Another company, Halliburton Company Austria GmbH, at the same address, could have equally performed whatever function this subsidiary has, but it has no Hidden Treuhand. The obvious conclusion is Halliburton USA needed a subsidiary with a Hidden Treuhand.

    The Hidden Treuhand easily accomplishes tax evasion because dividends transferred to a subsidiary with a Hidden Treuhand can be anonymously distributed or used to purchase other holdings. For example, Halliburton International GmbH has acquired acquisitions in Russia and Kazakhstan that later disappear from the corporate records.

    Halliburton attracts a certain limelight in connection with any Treuhand activities because of its link to a highly controversial war and Vice President Dick Cheney’s earlier association with Halliburton. We would have expected all ties to his former employer to be have been severed when he took office to avoid a conflict of interest. The impenetrability of the Hidden Treuhand makes it impossible to know who else is involved beyond the CEOs listed on Halliburton International GmbH historic corporate data.

    Dick Cheney claims to no longer own stock in Halliburton, but he was its chairman and CEO for five years, and either hired or promoted many of the executives now running Halliburton, or formerly involved with the subsidiary with the Hidden Treuhand in Austria. It is highly unlikely the chief executive officer, Dick Cheney, would be unaware of the Austrian subsidiary’s existence, originally headed by the executive vice president and chief legal officer, Lester L. Coleman, of Halliburton International USA. But it is an absolute certainty Lester L. Coleman and all the other CEOs listed on Halliburton International GmbH corporate historic records do know of the subsidiaries existence and its Hidden Treuhand. It was the intention of these CEOs to set up a secret subsidiary in 1992 with a Hidden Treuhand embedded.

    Perhaps more importantly, Halliburton’s CEOs, listed in the corporate historic records of Halliburton International GmbH in Austria, should know Hidden Treuhands could be used to undermine American security by providing a means for financing terrorists. Currently, one of the strongest arguments the US and the OECD are using against banks, lawyers and Treuhand activities in Europe to combat tax evasion and money laundering is how these activities can be used to fund terrorism. The Iraq War is one portion of the overall strategy of the ‘War on Terror’ that also includes preventing any funding for terrorism. It takes little imagination to see the huge potential Treuhands facilitate: creating a means for terrorists and criminal organizations to conceal their true identities and motives and yet work openly in the capitalist system.

    Halliburton’s CEOs must be aware of the potential misuse of Hidden Treuhands, as they have not been particularly open about their own use of Hidden Treuhands to date. Halliburton simultaneously contracts to fight a “war on terror,” while utilizing the same nontransparent mechanisms concerned authorities seek to prevent access to by terrorists. Faced with a conflict of interest, Halliburton CEOs demonstrate with their silence a willingness to protect their own interests, and doing so while we are at war with an enemy that works in the shadows.

    The noncompetitive contract awarded Halliburton was orchestrated by Vice President Dick Cheney and backed by the Bush administration. This contract has afforded an estimated US$1.4 trillion to US$3 trillion of US taxpayer money to flow through the coffers of Halliburton, virtually unmonitored and fraught with accounting irregularities. The receiver of much of this US taxpayer money is Halliburton USA, its affiliates and subsidiaries. One of the subsidiaries, the Austrian subsidiary, is capable of dispersing any money sent to it to unknown persons, without a hint of transparency.

    The Hidden Treuhand is more than just a means of profiting without transparency; it is a national security threat, whether wielded by al-Qaeda or Halliburton. If Americans were brought into a war based on a profit motive while we were supposed to be focused on alleviating the threat of terrorism, it could amount to treason. This risk should be given some credence and investigated. For this reason, Halliburton’s corporate records were given to the US Internal Revenue Service. Maybe they will find something illegal, tax evasion for example, or maybe they will come back and say they found nothing illegal: The Hidden Treuhand is just a little bit naughty.

    There is no transparency to a Hidden Treuhand, and, therefore, no means to identify the real benefactors. But the most important factor concerning a Treuhand contract is this: If a Treuhand contract is embedded in the corporate structure, then its sole purpose is to prevent the public from knowing the identity of the real stockholders. Who is calling the shots and who is benefiting is kept secret.

    The “True Hands,” the true benefactors’ identity, is hidden from public knowledge; they remain anonymous and nameless in transactions, and that is the sole incentive for creating a Hidden Treuhand.

    ——–

    Shelley Stark is the author of a forthcoming book, “The Hidden Treuhand: How Europe Offers US Corporations and Individuals an Opportunity to Hide Assets, Identity, and Income.”

 

 

http://www.isrjournal.com/story.php?F=2581313

 http://www.australianit.news.com.au/story/0,24897,21155034-15319,00.html

 http://www.pension4army.co.uk/index.php?option=com_content&view=article&id=29&Itemid=67

http://www.strategypage.com/militaryforums/512-47207.aspx

http://www.militaryphotos.net/forums/showthread.php?t=91654

 http://defense-update.com/features/2008/july08/b737_aewc.html

http://www.irconnect.com/noc/press/pages/news_releases.html?d=14718

http://www.leeham.net/filelib/ScottsColumn120208.doc

http://www.avions-militaires.net/forum/viewtopic.php?f=3&t=1130&p=179603 http://www.idrw.org/2009/01/

 http://www.iht.com/articles/2006/06/29/business/boeing.php

http://seattletimes.nwsource.com/html/boeingaerospace/2008418104_webboeing20.html

http://www.ausairpower.net/region.html

http://forum.onlineopinion.com.au/thread.asp?article=7401&page=6

http://www.news.com.au/couriermail/story/0,23739,24677403-953,00.html

Questions about Jim Jones, National Security Advisor

 

Someone wrote me a question today about a person featured in some material I posted some time ago.  I post the question and a quick answer here, as well as more information about author, Shelly Stark and her research on European secrecy in banking and the device used by a lot of multinational companies (including many of our large defense contractors) to keep their financial machinations secret.  

-GFS

 

                       

Question:  Just a thought, but I wonder what the danger of General Jim Jones being so close to the President is to those of us seeking reform at Boeing. Why was he allowed in? It’s like having a fox in the henhouse.

 

 

Answer:  Yes, it is.  That is why I posted what I did on the blogs about him immediately upon hearing he was selected.  He was only on the Boeing Board of Directors for a year before accepting the Obama Admin. post. One might think it possible, he was inside and did not like what he saw.  If that is the case, I can understand he wanted out of there.  It does though, present the look of a fox sent in to seize control of guarding the hen house, if he is just moving through the revolving door to service the Boeing Company as so many before him have.  It is hard to tell what is really going on.  While on the Boeing Board of Directors, General Jim Jones  was in charge of something financial as his role on the board. In June 21, 2007 through Dec. 15, 2008 he served as a director on the Boeing Company’s Board of Directors, serving on the company’s audit and finance committees.  (http://en.wikipedia.org/wiki/James_L._Jones)

 

 

 I wonder what he really knows. It seems like he would have to know a lot of TBC’s inside financial business, including some things they’ve done that are not proper, unless the upper managers of the company keep the Board ignorant of what is really going on, which seems unlikely.  He may well know about the Hidden Treuhand, the secret European banking way companies can hide funds and stockholders and just about anything else from the U.S. government for various reasons including taxes or fraud or you name it. 

 

 

New Book Out Soon by Shelly Stark!  Must Read!

 

In addition, a writer, Shelly Stark, who wrote the article about this problem for Truthout, is shortly going to be publishing an intensive book on the subject of Hidden Treuhand and European Banking Secrecy.  She left a comment on my Word Press Blog.

 

She said,  “Hi! It’s me Shelley Stark. Thank all of you for commenting. Shirley, I hope you will read my book. I’m almost finished. You be sure to comment, I’m looking forward to hearing from you. You’re OK. Your just frustrated and it is not easy to separate all the issues facing all of us today. I love America, but that doesn’t mean I have to love what is being done to my country and its people. In fact, in light of my education and knowledge, it would be immoral to hold back this information. For that reason, I spent the last few years translating German law in order to explain a phenomenon that impacts our understanding of the war in Iraq, Halliburton, and even the current financial crisis. The book will include some of the documents I turned over to the IRS. I assure you, this is not a game. The foreword was written by the most religious man I have ever known if that makes you feel better- Ernst Florian Winter- Google him. Read his foreword when the book comes out. I did much of the work living high in the Austrian Alps in his 350 year old Tyrollean style home complete with wood burning stove for heat and cooking. No meal is eaten without prayers and on Sunday the local peasants hold Mass high in the meadow alps. It’s an event i wouldn’t miss though i admit I look forward to the barbeque and giant mugs of beer afterwards. The story is straight forward. Everything I claim is footnoted in the original German language. I don’t expect you to understand the German references but they are there nonetheless. I foretold that billions would go missing – this book explains how it is done – the Hidden Treuhand and European banking secrecy – that is why you can’t find it in any law in the English language. This is the dark side of globalization. God bless us all – we are going to need it.”

 

Airbus could build next Air Force One; 747 due to be replaced

Los Angeles Times

For nearly two decades, Boeing’s 747 jumbo jet has served as the president’s flying White House, projecting America’s might wherever it landed.

But in the next decade, “United States of America” could end up being emblazoned on an even bigger plane that has been a symbol of European unity and pride.

The 747 Air Force One is scheduled to be replaced, and the new plane is likely to be stuffed with top-secret gee-whiz gadgetry, including countermeasures to thwart missile attacks, and aerial-refueling capabilities so it can fly for days without landing.

That’s on top of comforts likely to make even the world’s richest jet setters envious, including a medical facility and lavish staterooms with showers.

What it will not have is a presidential escape pod, analysts said, a feature that became an urban legend, thanks to a 1997 action film that starred Harrison Ford.

Follow the link to the original above to read the full story. 

Boeing in.…

 

Is that plane Boeing’s 787 or the 7-Late_7 Dreamliner?

From Blogging Stocks, Joseph Lazzaro http://www.bloggingstocks.com/2009/02/16/is-that-plane-boeings-787-or-the-7-late-7-dreamliner/

 

Boeing says 787 production, deliveries on schedule from Business Week, link:  http://www.businessweek.com/ap/financialnews/D9690D581.htm

 

UPDATE 2 – Boeing 787 on track for Q1 2010 delivery-executive-link: http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSN1026757820090210

 

 

Statement of DCAA auditor regarding Boeing:

http://hsgac.senate.gov/public/_files/091008Hackler.pdf

 

FAA to loosen fuel-tank safety rules, benefiting Boeing’s 787

Link to Original:  http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2008719843&zsection_id=2003750727&slug=lightning08&date=20090208

 

Seattle Times aerospace reporter

The Federal Aviation Administration (FAA) has quietly decided to loosen stringent fuel-tank safety regulations written after the 1996 fuel-tank explosion that destroyed flight TWA 800 off the coast of New York state.

The FAA proposes to relax the safeguards for preventing sparks inside the fuel tank during a lightning strike, standards the agency now calls “impractical” and Boeing says its soon-to-fly 787 Dreamliner cannot meet.

Instead of requiring three independent protection measures for any feature that could cause sparking, the revised policy would allow some parts to have just one safeguard.

Boeing has worked closely with the FAA to make the change in time for the 787 Dreamliner, whose airframe built of composite plastic makes lightning protection a special challenge.

But the move has stirred intense opposition inside the local FAA office from the technical specialists — most of them former Boeing engineers — responsible for certifying new airplane designs.

The national union representing about 190 Seattle-based FAA engineers this past Tuesday submitted a formal critique to the agency, calling the new policy “an unjustified step backward in safety.”

In a lightning storm, the critique said, the less stringent rules could leave a commercial airliner “one failure away from catastrophe.”

 

Please follow link above to read entire original story. 

Obama administration defending Bush secrets

Justice Department seeks to hold back lawsuits as FOIA rules rewritten

Link to original:  http://www.msnbc.msn.com/id/29225492/page/2/

 

updated 1:21 p.m. PT, Mon., Feb. 16, 2009

WASHINGTON – Despite President Barack Obama’s vow to open government more than ever, the Justice Department is defending Bush administration decisions to keep secret many documents about domestic wiretapping, data collection on travelers and U.S. citizens, and interrogation of suspected terrorists.

In half a dozen lawsuits, Justice lawyers have opposed formal motions or spurned out-of-court offers to delay court action until the new administration rewrites Freedom of Information Act guidelines and decides whether the new rules might allow the public to see more. 

 

Follow link above to see the rest of the story.

 

 Statement of Paul Hackler

Supervisory Auditor

Defense Contract Audit Agency

September 10, 2008

Mr. Chairman, Ranking Member Collins, and members of the Committee:

Thank you for the opportunity to speak to you today about DCAA’s ELC Buy III proposal audit. I am currently a GS-13 Supervisory Auditor in the Defense Contract Audit Agency’s Western Region – Huntington Beach Resident Office responsible for Department of Defense contractor audits. I am a certified public accountant with 25 years of contract audit experience. The 2005 and 2006 ELC proposal audits I supervised were based on a 15-year lot costing scenario designed to allow Boeing to recover approximately $270 million in losses Boeing incurred as a result of its poor business decision to gear up for a robust commercial cell phone satellite market that failed to materialize. In using a 15-year lot costing approach, Boeing was able to average those losses over 15 years, thereby reflecting higher costs for future missions. In restructuring the program to avoid further losses, the government agreed to reimburse Boeing prospectively for launch capability efforts and Boeing was forced to abandon lot costing for that portion of the program. Boeing seized this opportunity to recover past losses by

1

developing proposals that violated numerous procurement regulations. In its proposals, Boeing claimed that the cost per launch would decrease in the future and the government needed to compensate Boeing for higher up-front costs. In actuality, the devastatingly high up-front costs were a direct result of Boeing’s unprofitable decision to gear up for a prolific commercial market that failed to materialize. My office was directed by DCAA upper management to basically play along with this outrageous government bailout!

 

Link to rest of testimony: http://hsgac.senate.gov/public/_files/091008Hackler.pdf

 

Please, if any of you have any ability to help apply pressure to Justice to clean up their act and start doing their job(s), (which WILL support whistleblowers), of investigating and following through with prosecuting those who are committing fraud and other crimes against the American taxpayers and federal and corporate whistleblowers, please do make use of that ability now.  Thank you!  -GFS

*****************************************************************

Justice Department Putting New Focus on Combating Corporate Fraud

By Carrie Johnson
Washington Post Staff Writer
Thursday, February 12, 2009; A06

Ten years ago, a Justice Department official drafted a set of guidelines for prosecuting corporate crime. Little noticed at the time, the strategy ultimately transformed the way prosecutors pursue corrupt businesses — by exhorting them to hire their own investigators and share the results with the government in exchange for leniency in plea deals.

The memo’s author was Eric H. Holder Jr., who has become the nation’s attorney general at the same time that a financial crisis is putting pressure on prosecutors to hold businesses accountable for fraud.

“I want to see people prosecuted,” Senate Judiciary Committee Chairman Patrick J. Leahy (D-Vt.) said yesterday at a hearing that examined the Justice Department’s handling of corporate corruption.

Senators from both parties are advocating that more federal resources be devoted to investigating business fraud, pointing out that such prosecutions plunged after the Sept. 11, 2001, attacks, when more than 2,000 FBI agents were diverted to protect national security.

Justice Department and FBI officials committed anew to weeding out fraud in the marketplace, telling lawmakers that they are looking into more than 530 cases of alleged corporate malfeasance. Among them are 38 investigations of name-brand businesses and financial institutions involved in the financial crisis, including American International Group, Countrywide Financial, Fannie Mae and Freddie Mac.

FBI Deputy Director John S. Pistole said the bureau is “doing a complete scrub of all resources” to ensure that enough agents are assigned to corporate investigations.

Prompted by the government’s bank bailouts and mounting taxpayer anger, Democrats have introduced two bills in recent weeks to fund the hiring of more agents and prosecutors to combat mortgage fraud and financial wrongdoing.

Any government crackdown on financial malfeasance is likely to tap into corporate resources, given the drain of years-long investigations on tight federal budgets. Many of the Justice Department’s largest ongoing fraud inquiries appear to be months if not years from reaching their targets, lawyers said yesterday. It is far easier for department officials to deputize companies to hire law firms and bear the cost of investigations of themselves. The companies are encouraged to turn over the results to the government, along with evidence against employees complicit in accounting fraud or other schemes.

That strategy has alienated some judges who argue that employers have sacrificed individuals to secure better deals for their companies. It also could rile lawmakers who already have put the Justice Department on notice about protecting employee rights.

While President Obama has decried corporate greed and fraud in recent weeks and during the presidential campaign, it is too early to know how his administration will approach such cases, and Holder has been difficult to read.

“We’re not going to go out on any witch hunts, and yet we’ll drill down and see” what evidence exists of fraud and other crimes, the attorney general told reporters after being sworn in last week.

Holder’s experience on both sides of the courtroom adds to interest in the legal community about how he will tackle the issue.

A decade ago, after Holder, who was deputy attorney general at the time, heard persistent complaints from corporate defense lawyers, he enlisted a group of government lawyers to draft guidelines for prosecutors handling business cases. The Holder memo instructed lawyers to take into account a company’s cooperation with authorities in deciding whether to bring an indictment. The government wields substantial leverage in negotiations, because even the threat of criminal charges can put some companies out of business, as happened to accounting firm Arthur Andersen more than six years ago.

In 2001, Holder left government and moved into a lucrative career in private law practice, conducting investigations for companies and then sharing the results with prosecutors in exchange for leniency.

Holder is not the only senior Justice Department official with experience defending corporate America. David W. Ogden, who is nominated to serve as the department’s second in command, represented media companies, government contractors and technology firms while in private practice. And Lanny A. Breuer, the nominee to lead the department’s criminal division, defended a host of businesses and individuals.

New Justice Department officials are still considering their options for policing corporate fraud. Among the questions is whether to create a national task force to standardize decisions about what criminal charges and prison sentences to pursue in cases against employees at mortgage companies and financial institutions, said Rita M. Glavin, acting chief of the department’s criminal division.

But authorities appear to sense that interest in the issue is peaking as the economy suffers. Ogden told senators at his confirmation hearing last week that on his watch, the department would undertake a “strong, law enforcement response” to crime on Wall Street.

“Serving jail time may well be an appropriate result, and it could be a deterrent in the future,” he said.

Link to original:  http://www.washingtonpost.com/wp-dyn/content/article/2009/02/11/AR2009021103674.html?wpisrc=newsletter&wpisrc=newsletter&wpisrc=newsletter

 

 

 

Key Witnesses to Be Interviewed in Prosecutor Firings

Thursday, February 12, 2009; A06

A federal prosecutor investigating the dismissal of nine U.S. attorneys during the Bush administration has issued a subpoena to former senator Pete V. Domenici (R-N.M.) and is preparing to interview key witnesses, lawyers following the case say.

Nora R. Dannehy, a public corruption prosecutor who helped convict Connecticut’s GOP governor four years ago, was named last year to go to Capitol Hill and the Bush White House, where government officials declined to provide voluntary testimony to the Justice Department inspector general probing the firings.

At the time, Inspector General Glenn A. Fine urged prosecutors to use their subpoena power to compel documents and testimony about the dismissal of New Mexico U.S. Attorney David C. Iglesias, whose pace on criminal investigations involving Democrats in the state drew complaints from Domenici and then-Rep. Heather A. Wilson (R-N.M.).

The Dannehy investigation appears to be intensifying with the disclosure that she will interview former White House political affairs deputy J. Scott Jennings as early as today, lawyers involved in the case said. Jennings worked alongside Karl Rove, a top aide to President George W. Bush.

Jennings will “cooperate to the best of his ability” and is not a target in the case, lawyer Mark R. Paoletta said yesterday.

Through lawyer Robert D. Luskin, Rove also has said he will cooperate with Dannehy’s investigation. K. Lee Blalack, an attorney for Domenici, declined to comment.

In recent weeks, Dannehy has requested documents through a grand jury operating out of the federal courthouse in Washington. When she was selected by then-Attorney General Michael B. Mukasey last year, she also was asked to examine public statements by former Justice Department officials about their knowledge of the firings.

n      Carrie Johnson

n      Link to original:  http://www.washingtonpost.com/wp-dyn/content/article/2009/02/11/AR2009021103673_pf.html

 

Halliburton, KBR Settle Bribery Allegations

By Zachary A. Goldfarb
Washington Post Staff Writer
Thursday, February 12, 2009; D01

Halliburton and Kellogg Brown & Root have agreed to pay $579 million in fines related to allegations of foreign bribery, the biggest fines ever paid by U.S. companies in a foreign corruption case, federal authorities and the companies said yesterday.

The Securities and Exchange Commission and Department of Justice alleged that Houston-based Halliburton and KBR were part of a joint venture that spent $182 million to bribe Nigerian government officials over a 10-year period to win more than $6 billion in construction contracts.

Halliburton, which owned KBR during the time of the alleged actions and spun it off in April 2007, will be responsible for paying all but $20 million of the penalty.

KBR, one of the top U.S. government contractors, pleaded guilty to violating the federal law banning companies from paying bribes to get business in foreign countries. Halliburton did not admit or deny wrongdoing.

Federal authorities alleged that the companies used agents in Tokyo and Gibraltar to funnel money to Nigerian officials, who gave the companies contracts to build liquefied natural gas facilities on Bonny Island, on the Western African country’s coast.

The companies’ efforts to obtain the contracts, alleged in court documents, sound like scenes from a James Bond movie.

In June 2002, KBR’s then-chairman, Albert “Jack” Stanley, authorized a $23 million payment to a consultant in Gibraltar if a joint venture in which KBR participated won a contract to build natural gas facilities. Stanley intended that the fee would be used in part to pay bribes to Nigerian officials, with whom he had arranged for the bribes, according to the documents. The payment would wired to Swiss and Monaco bank accounts.

Two months later, a subcontractor hired by the consultant allegedly visited an official of the Nigerian National Petroleum Corp. in Abuja, Nigeria’s capital, with a pilot’s suitcase containing $1 million in $100 bills. In April 2003, the subcontractor drove $500,000 in Nigerian currency to an NNCP official. The car, filled with the cash, was left in a hotel parking lot until the NNCP official unloaded it, according to the documents.

The joint venture won the contract — to build a structure to pipe raw natural gas from wellheads, convert it to liquefied natural gas and deliver it to tankers.

Last year, Stanley pleaded guilty to conspiring to violate federal anti-bribery laws. He also settled with the SEC. His lawyer, Larry Veselka, yesterday said Stanley is cooperating with authorities and has no further comment. An official from the Nigerian embassy could not be reached for comment.

Under its agreement with the Justice Department, KBR agreed to retain an independent compliance monitor for three years to ensure the company follows anti-bribery regulations. The investigations began in 2003.

“Today’s guilty plea by KBR ends one chapter in the department’s long-running investigation of corruption in the award of $6 billion in construction contracts in Nigeria. This bribery scheme involved both senior foreign government officials and KBR corporate executives who took actions to insulate themselves from the reach of U.S. law enforcement,” said Rita M. Glavin, acting assistant attorney general.

The SEC’s complaint charged that KBR violated the Foreign Corrupt Practices Act and said that KBR and Halliburton committed violations related to maintaining their books, records and internal compliance systems.

The SEC has been bringing an increasing number of foreign corruption cases. It settled its largest case ever late last year, against the German corporation Siemens, which agreed to pay $800 million in fines in the United States and a similar amount to German authorities.

“Multinational companies should take heed that attempting to conceal bribes by funneling them through intermediaries or offshore entities will not be successful,” said Antonia Chion, associate director of the SEC’s division of enforcement.

KBR chief executive William Utt said yesterday he was pleased “to finally conclude this very difficult but necessary settlement.” He said it closes a “regrettable and unfortunate chapter in KBR’s rich and storied history. KBR has fully cooperated with the U.S. government through the extensive investigations over the last five years.”

Staff writer Dana Hedgpeth contributed to this report.

 

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