Archive for August, 2009


Lobbyists Paid Off by China vs. 30,000 US Workers: Which Side Will Obama Choose?



Monday 10 August 2009

by: Mike Elk  |  Visit article original @ Campaign for America’s Future
A Chinese rubber company worker inspects tires at a factory. China is flooding the US market with tire imports. (Photo: Mark Ralston / Agence France-Presse / Getty Images)

    As the International Trade Commission considers comments on its recommendation to impose tariffs on Chinese tire imports, President Obama stands at a crossroads in the fight to rebuild the American economy.

    President Obama has made a commitment in the past to uphold previously signed trade agreements. China, however, is violating these agreements by flooding the market with a massive 300 percent increase in tire imports in an attempt to wipe out American tire manufacturers. In 2004, China sent 14 million tires to the U.S. valued at $453 million. By last year, that had increased to 46 million tires valued at $1.7 billion.

    The Chinese are shipping cheaply made tires in an effort that isn’t just killing American manufacturing, but also killing people. So far, two people have died as a result of the low quality of some of these Chinese import tires. The U.S. Government has launched a massive of recall of the tire in question, but so far the Chinese manufacturer has refused to cooperate fully with the recall.

    So far over 8,000 people have lost their jobs, and over 20,000 more jobs are at risk if the Chinese are allowed to continue with this strategy of not obeying trade laws.

    Next month Obama will be challenged to uphold his campaign pledge to enforce current trade laws when a decision on illegal Chinese tire imports came to his desk. Last month, a majority of the U.S. International Trade Commission (ITC) found that tariff relief was needed to urgently reduce tire imports because of market disruption. According to the United Steelworkers, between 2004 and the end of this year, more than 8,100 workers in the tire industry have lost or will lose their jobs and another 20,000 jobs are threatened.

    Speaking last week, USW President Leo Gerard said that this will “prove to be a test of enforcement of trade laws that China agreed to.” A ruling to enforce current U.S. trade laws would mark a clear break with Bush era economic policy. During the Bush Administration the United State International Trade Commission ruled four separate times that China had violated trade law and recommended measures to stop the flow. However, each time Bush refused to obey these recommendations.

    If President Obama follows the commission recommendations, it would send a stern message to China that the Obama administration, unlike the Bush administration, intends to enforce U.S. trade law. He is expected to decide on September 17, one week before the G-20 summit in Pittsburgh. If Obama chooses to enforce tariffs on illegal Chinese competition, that would send a message throughout the world that U.S. intends to enforce trade law.

    Unfortunately, corporate lobbyists paid for by the Chinese Chamber of Commerce, like former Bush official and Ohio U.S. Senate candidate Robert Portman, are running an aggressive misinformation campaign in attempt to thwart U.S. trade law. These groups have been claiming that limiting tire imports would cost Americans jobs and raise the costs of tires for consumers. However, the United States Commission on Trade found that the total benefits exceed the costs by $884 million.

    Chinese importers, in conjunction with the Chinese Chamber of Commerce, have ironically formed a lobbying front group ironically named American Coalition for Free Trade in Tires. The coalition is run by Jochum, Shore & Trossevin, a Washington D.C. lobby firm run by former Bush trade officials who are cashing in on their years of U.S. government service to advise foreign competitors. The law firm has used its ties to power to advise Chinese manufacturers on how to get around loopholes in the law. As a result, eight members of Congress wrote a letter this past June calling on the Government Accountability Office to investigate.

    Congressman Michael Michaud of Maine said ” “Many of these individuals appear to be repaying the investment that the American taxpayers made in them with their hard-earned tax dollars by using the knowledge, expertise and contacts they gained while on the federal payroll in ways that are adverse to the interests of our workers and our producers.”

    Speaking last week at a factory in Indiana, President Obama said that rebuilding American manufacturing was the key to build a vibrant economy. As President Obama has said previously many times we can’t go back to an economy, where 45 percent of our profits come from the financial sector. As Dave Johnson pointed out last week we in his piece “Manufacture or Borrow (Until We Can’t)”:

    “When it comes down to it you can’t have a healthy service sector unless you are manufacturing items to sell and trade because you can’t pay for the restaurant bill or insurance or hotel room or lawyer or even the doctor if you don’t make something to sell and trade. And mostly you can’t keep buying the things made elsewhere. You can only borrow for so long.”

    President Obama has announced bold new initiatives to invest billions of dollars into new green energy initiatives. However, if we don’t have to even enforce the current trade laws that we have, American manufacturing will be wiped out by low-wage Chinese manufacturing. As I highlighted previously, companies such as GE have already begun to move so-called green jobs to China already.

    The fight over whether to enforce trade laws against illegal Chinese tire imports will set a precedent that the U.S. will enforce previous trade agreements. President Obama has a choice of whether he will side with American workers or corporate lobbyists paid off by China.

Yes, the American public is more than determined to bring all of this corruption and greed to an end!  -GFS


Pelosi, Frank Urge Clampdown on Executive Pay


Wednesday 12 August 2009

by: Silla Brush  |  Visit article original @ The Hill
House Financial Services Committee Chairman Barney Frank with House Speaker Nancy Pelosi. (Photo: Reuters)

    House Democrats are urging the Obama administration to clamp down on corporate pay at seven large companies that rely on billions of dollars in federal bailout money.

    Speaker Nancy Pelosi (D-Calif.) and Financial Services Committee Chairman Barney Frank (D-Mass.) said Wednesday they are concerned about reports that the firms continue to pay lavish bonuses.

    In a letter to the administration, Pelosi and Frank said that the government “should make absolutely certain that financial institutions will never again play Russian roulette with the American taxpayers.”

    The seven companies are due to report on Thursday to the administration on how they will pay their top 25 executives. Kenneth Feinberg, the administration’s compensation czar, will then rule on the pay plans within 60 days.

    Feinberg’s role was established after AIG’s plans to pay $165 million in bonuses touched off more than a week of national debate and outcry over corporate pay. AIG has received roughly $180 billion in bailout aid.

    “This dangerous imbalance between rewarding risk and forgiving mistakes is what Congress and the American people are determined to bring to an end,” Pelosi and Frank wrote in the letter.

    The seven companies are: Citigroup, Bank of America, General Motors, Chrysler, GMAC, Chrysler Financial and AIG. The firms have received hundreds of billions of dollars in combined taxpayer aid.

    Pelosi and Frank also suggest that the compensation plans could “set standards for compensation planning that establish industry norms.”

Oversight Failures and Failure to Prosecute Crimes?  Rove get’s significant share of the blame. 

Federal Oversight employees have been living in hell for nearly a decade.  Just try to do your job, when doing your job gets in the way of the greedy, the partisan, and the corrupt who finance political campaigns of those who are supposed to be representing the American voters and tax payers, but who would rather curry favor with their campaign funders. 


Keep in mind that even if the oversight agents, inspectors, investigators in the field are not being sabotaged by appointed and/or corrupted managers, as they attempt to do their jobs and complete their agency missions, having no one willing to PROSECUTE in the agency IG’s and OIG’s as well as the Justice Department in general, pretty much blocks any oversight enforcement.  And truth be told, we have lots of proof ethical federal oversight employees have been sabotaged all across the federal government and suffered vast retribution just for trying to do their jobs. (Anyone out there monitoring the growing number of  whistleblower complaints?)  It’s been a bad decade. 


The lack of anyone willing to prosecute, preceded by the harassment of investigators and auditors so they can not properly investigate and prepare their initial cases, has been the bane of most oversight employees for the past 8 years.  It has nearly brought our government to its knees. 


There are signs that some clean up and clean out of that which has brought about this troubling environment is starting.   But it is going to be a nasty job, as some of those appointed by the last administration with marching orders to politicize and manipulate oversight to be sure it would not inconvenience or endanger certain greedy corporations and individuals, who were friendly with the Bush/Cheney administration, made end runs for regular Civil Service Jobs before the changeover to the Obama administration was complete. 


So, these same folks who brought you corrupted and failed oversight agencies, IG’s, OIG’s, Attorney General, and Office of the U.S. Attorney’s, (Remember Alberto Gonzales, Paul J. McNulty, and some others before him?)  When Justice Dept. fails, no agency or individual oversight agent, inspector or investigator can successfully do his or her job. 


Here are some recent revelations regarding Mr. Rove’s contributions to these problems. 




Rove “Driving Force” Behind US Attorney Firings

Thursday 13 August 2009

by: Jason Leopold, t r u t h o u t | Report



    Political adviser Karl Rove and other officials inside George W. Bush’s White House pushed for the firing of a key federal prosecutor because he wasn’t cooperating with Republican plans for indicting Democrats and their allies before the 2006 election, according to internal documents and depositions.

    The evidence was released Tuesday and turned over to a special prosecutor by House Judiciary Committee Chairman John Conyers. It contradicts claims by Rove and other senior Bush administration officials that the White House played only a minimal role in the firing of David Iglesias and eight other US attorneys who were deemed by a Justice Department official as not “loyal Bushies.”

    In a recent interview with The New York Times and The Washington Post, Rove downplayed his role in the firings, saying he only acted as a “conduit” for complaints that Republican Party officials and GOP lawmakers sent to him about the federal prosecutors. The documents tell a different story.

    The documents reveal that Rove, his White House aides and then-White House counsel Harriet Miers actively participated in the decision to oust New Mexico US Attorney David Iglesias because Republicans had wanted him to bring charges against Democrats regarding alleged voter fraud and other issues. Iglesias refused to do that.

    According to Miers’s closed-door testimony to the House Judiciary Committee, a “very agitated” Rove phoned her from New Mexico, apparently in September 2006, and told her that Iglesias was “a serious problem and he wanted something done about it.”

    At the time of the phone call, Rove had just met with New Mexico Republican Party officials angry at Iglesias, who was refusing to proceed with voter fraud cases because he felt the evidence was weak and because pre-election indictments would violate Justice Department guidelines.

    Miers said she responded to Rove’s call by getting on the phone to Deputy Attorney General Paul McNulty and passing along the message that Rove “is getting lots of complaints.” Miers added, “it was a problem.” About one month later, Iglesias was added to the list of US attorneys to be removed.

    But the documents show that White House dissatisfaction with Iglesias over his resistance to bringing politically motivated cases against Democrats had been building for more than a year. On June 28, 2005, Scott Jennings, one of Rove’s aides, sent an e-mail to Tim Griffin, another Rove aide, asking what could be done to remove Iglesias.

    “I would really like to move forward with getting rid of NM US ATTY,” Jennings wrote, complaining that “Iglesias has done nothing” on prosecuting voter fraud cases and adding: “We’re getting killed out there.”


    “Driving Force”

    In a statement on Tuesday of this week, accompanying the release of more than 5,000 pages of documents – including transcripts of the recent interviews with Rove and Miers – Conyers said the revelations warrant further inspection by special prosecutor Nora Dannehy, who has spent nearly a year conducting a criminal probe into the firings.

    “After all the delay and despite all the obfuscation, lies, and spin, this basic truth can no longer be denied: Karl Rove and his cohorts at the Bush White House were the driving force behind several of these firings, which were done for improper reasons,” Conyers said.

    A Justice Department watchdog report concluded last year that a majority of the prosecutor firings were politically motivated. The US attorney in Little Rock, Arkansas, was pushed out, so Rove’s aide, Tim Griffin, could be given the job. But – in the face of the growing scandal – Griffin bowed out.

    For months, Rove and Miers had dodged Congressional subpoenas seeking their testimony in the matter, citing George W. Bush’s broad claims of executive privilege. But the Obama administration brokered a deal that had Rove and Miers testify behind closed doors.

    Besides the Bush White House pressure for ousting Iglesias, powerful New Mexico Republicans also weighed in.

    In October 2006, a month before the midterm elections that cost Republicans control of Congress, an e-mail chain started by Rep. Heather Wilson (R-New Mexico) faulted Iglesias for not using his office in a manner that would help Wilson in her reelection campaign.

    Wilson’s e-mail included a news report about an FBI probe of Rep. Curt Weldon (R-Pennsylvania) as an example of criminal investigations proceeding close to election day.

    Steve Bell, chief of staff to New Mexico Sen. Pete Domenici, forwarded the e-mail to Jennings at Rove’s White House shop, with a note saying it “seems like other U.S. attorneys can do their work even in election season. And the FBI has already admitted they have turned over their evidence [in a federal corruption probe] to the [U.S. Attorney] in [New Mexico] and are merely awaiting his action.”

    Jennings then passed along the e-mail to Rove, saying Iglesias was “shy about doing his job on [Patricia] Madrid,” a Democratic Congressional candidate who would lose the 2006 election to Wilson by only 800 votes.

    Last year, Wilson told Justice Department watchdogs investigating the US attorney purge that the context of her e-mail was more of a “heads up” to the recipients. She said that if she were asked by reporters about an FBI investigation into Madrid, she would confirm it. Madrid was New Mexico’s former attorney general who was involved with a political action committee that was allegedly under scrutiny.


    Domenici’s Intervention

    Domenici also intervened, personally lobbying Bush’s top aides to fire Iglesias, according to the documents. Between September 2005 and April 2006, Domenici called Attorney General Alberto Gonzales three times to complain about Iglesias’s handling of voter fraud and corruption probes and to ask that he be fired.

    Gonzales testified to Congress that he did not recall Domenici ever making such a request. Gonzales resigned in August 2007 amid political fallout from the prosecutor-firing scandal.

    On October 4, 2006, Domenici also called Deputy Attorney General McNulty, “expressing concern about Iglesias’s lack of fitness for the job of U.S. Attorney.”

    At one point, according to Rove’s testimony, Domenici wanted to speak with President Bush to press his case, but Rove talked him out of it. However, in October 2006, the senator personally asked Bush’s chief of staff Josh Bolten to replace Iglesias, according to White House phone logs and e-mails.

    In Congressional testimony, Iglesias said he also received telephone calls from Domenici and Wilson in October 2006 inquiring about the timing of an indictment against former state Sen. Manny Aragon, a Democrat, and other Democrats who were involved in a courthouse construction project.

    Domenici’s interventions prompted a Senate Ethics Committee investigation, which resulted last year in a letter of reprimand for creating an “appearance of impropriety.” Special prosecutor Dannehy is probing possible obstruction of justice charges against Domenici and his former aide Steve Bell.

    Dannehy secured the testimony last April of Scott O’Neal, the assistant FBI special agent in charge of the Albuquerque field office, who reportedly informed Domenici or his aide Bell about the status of the FBI’s investigation of alleged Democratic wrongdoing, according to legal sources who requested anonymity because of secrecy surrounding the probe.

    In an interview, former US Attorney Iglesias said the briefing to Domenici and/or Bell, if it did take place, would be significant because it would have required approval from himself or his former colleagues who never received a formal request from O’Neal or his FBI superiors.

    The US attorney’s manual states that “personnel of the Department of Justice shall not respond to questions about the existence of an ongoing investigation or comment on its nature or progress, including such things as the issuance or serving of a subpoena, prior to the public filing of the document.”


    Rove’s Fingerprints

    Regarding Tuesday’s revelations, Iglesias said he had long suspected that Rove’s “fingerprints were all over this.”

    In an interview with me two years ago, Iglesias said he believed “somewhere on an RNC computer – on some server somewhere – there’s an e-mail from Karl Rove stating why we need to be axed.” He added that he believed a “smoking gun” would eventually surface and lead directly to Rove and blow the scandal wide open.

    “The e-mail timing [in October 2006] corroborates what I suspected,” Iglesias said Tuesday. Domenici and other New Mexico Republican Party officials “wanted me to file indictments and [Wilson] would benefit. They wanted to use me and my office as a political tool.”

    Iglesias said Dannehy has access to “a lot of the facts” and “there still may be obstruction of justice charges” filed. He added, “I can’t believe Gonzales did not know what was going on,” suggesting that the former attorney general may be one of Dannehy’s targets.

    Domenici retired from the Senate and Wilson also left Congress in 2009 after unsuccessfully seeking the Republican nomination to fill Domenici’s seat, which is now held by Democratic Sen. Tom Udall.

    Deputy Attorney General McNulty testified before Congress in February 2007 that the prosecutor firings were “performance related,” though that testimony also now appears to be in question.

    Documents released by the Justice Department showed that Gonzales and McNulty participated in an hour-long meeting with Gonzales’s chief of staff, Kyle Sampson, who compiled the list of prosecutors to be fired, a group he famously designated as not “loyal Bushies.”

    The documents, along with Rove’s and Miers’s testimony, contradict numerous public statements made by White House spokespersons Tony Snow and Dana Perino in the aftermath of the December 2006 firings. Snow and Perino insisted that the White House did nothing wrong and didn’t oust prosecutors for political reasons.

    Yet, upon being informed in November 2006 via e-mail of the plan to fire the US attorneys, Perino responded: “Someone get me the oxygen can!” When told the firings included some US attorneys who were actively investigating GOP lawmakers alleged to be involved in corruption, Perino added: “Give me a double shot – I can’t breathe.”

    The newly released documents also show that Kansas City US Attorney Todd Graves was removed in a deal between the White House and Sen. Kit Bond of Missouri that appears to have been personally approved by Rove.

    According to the documents, Bond agreed to lift his hold on an Arkansas judge nominated to the Eighth Circuit federal appeals court in exchange for Graves’s firing. A December 21, 2005, e-mail sent by White House lawyer Fred Klingler to Miers stated that “Karl is fine” with the proposal



Miers Told House Panel of ‘Agitated’ Rove
Bush White House Counsel Said Adviser Called U.S. Attorney a ‘Serious Problem’



By Carrie Johnson
Washington Post Staff Writer
Wednesday, August 12, 2009

The dismissal of U.S. Attorney David C. Iglesias of New Mexico in December 2006 followed extensive communication among lawyers and political aides in the White House who hashed over complaints about his work on public corruption cases against Democrats, according to newly released e-mails and transcripts of closed-door House testimony by former Bush counsel Harriet Miers and political chief Karl Rove.

A campaign to oust Iglesias intensified after state GOP officials and Republican members of the congressional delegation apparently concluded that he was not pursuing the cases against Democrats in a way that could help then-Rep. Heather A. Wilson (R) in a tight reelection race in New Mexico, according to interviews and Bush White House e-mails released Tuesday by congressional investigators. The documents place the genesis of Iglesias’s dismissal earlier than previously known.

The disclosures mark the end of a 2 1/2 -year investigation by the House Judiciary Committee, which sued to gain access to White House documents in a dispute that challenged the Bush administration’s claims of executive power.

House Judiciary Chairman John M. Conyers Jr. (D-Mich.) on Tuesday characterized the role of Bush White House figures in the firing of Iglesias and eight other U.S. attorneys as improper.

“Under the Bush regime, honest and well-performing U.S. attorneys were fired for petty patronage, political horse-trading, and, in the most egregious case of political abuse of the U.S. attorney corps — that of U.S. attorney Iglesias — because he refused to use his office to help Republicans win elections,” Conyers said.

In a statement Tuesday, Rove asserted that he “never sought to influence the conduct of any prosecution” and did not decide which prosecutors were fired. He also accused Democrats of making “false accusations and partisan innuendoes.”

An attorney for Miers did not return calls seeking comment, but Miers told House investigators that the prosecutors were not fired for improper reasons.

In their testimony in June and July, both Miers and Rove said they could not recall key incidents, according to the transcripts. In the course of her 10-hour deposition, Miers said she could not recall events almost 150 times. Rove said he received hundreds of e-mails a day, so “asking me to remember replies is like asking me to remember a raindrop in a thunderstorm.”

The House panel focused most of its attention on Iglesias, a rising star in New Mexico who came to displease his political patrons. Miers told investigators that Rove called her in September 2006, “agitated” about the slow pace of public corruption cases against Democrats and weak efforts to pursue voter-fraud cases in the state. In the call, Miers said, Rove described Iglesias as a “serious problem” and said he wanted “something done” about it. Miers testified that she called then-Deputy Attorney General Paul J. McNulty to pass along the concerns.

According to e-mails and interviews with people familiar with the investigation, GOP figures in New Mexico thought that if Iglesias pursued public corruption cases against Democrats, it could help Wilson in her run for reelection.

A mid-October 2006 e-mail chain that began with Wilson indirectly criticized Iglesias for not bringing public corruption prosecutions in the run-up to the midterm elections. Attached was a news report about an FBI investigation of then-Rep. Curt Weldon (R-Pa.).

The same day, Steve Bell, chief of staff to then-Sen. Pete V. Domenici (R-N.M.), e-mailed Rove’s deputy, Scott Jennings, to say that it “seems like other U.S. attorneys can do their work even in election season. . . . And the FBI has already admitted they have turned over their evidence to the USA in NM and are merely awaiting his action.”

Jennings forwarded the messages to Rove, saying, “Steve Bell sent this email . . . essentially saying that the US Attorney in PA has no trouble going after Weldon, so why should the US Attorney in New Mexico be shy about doing his job on [Patricia] Madrid.” Madrid was Wilson’s Democratic opponent in the 2006 congressional race.

A few weeks after this e-mail, Iglesias’s name was placed on the final firing list.

In a telephone interview Tuesday, Wilson said her October 2006 e-mail dealt with an unrelated subject and had nothing to do with the U.S. attorney in New Mexico and cases he might have been pursuing against Democrats.

“My e-mail is only one sentence long and does not relate in any way” to Iglesias, Wilson said. “In early October 2006, we made a strategic decision to campaign on national security and competence,” not public corruption.

In a follow-up statement, Wilson said that the House findings were “incorrect in several important respects” and that investigators had “failed to inquire about or review basic facts.”

Domenici — who accepted a Senate ethics reprimand last year for calling Iglesias to ask about the timing of prosecutions before the 2006 election — pursued his complaints at the highest levels of the government, according to the testimony. The longtime senator, who has since retired, wanted to contact President George W. Bush directly, Rove testified to the House panel. But Rove told investigators that he “discouraged” the senator, who went on to phone White House Chief of Staff Joshua B. Bolten in October 2006, according to White House call logs.

Meanwhile, federal prosecutor Nora R. Dannehy continues to probe whether false-statements or obstruction-of-justice charges could be lodged against anyone in connection with the dismissals and previous congressional testimony under oath about them.

In 2007, Attorney General Alberto R. Gonzales and his deputy D. Kyle Sampson resigned, in part because of the political furor over the prosecutor dismissals.

The plan to fire U.S. attorneys raised alarm bells among some in the Bush White House days after the dismissal list arrived from the Justice Department in late 2006. Deputy press secretary Dana Perino told White House colleagues in e-mails that she needed “an oxygen tank” and a “double shot” of air after aides reported that some of the prosecutors had been conducting politically sensitive investigations of Republicans at the time of their dismissal.

U.S. Attorney Paul Charlton of Arizona had been moving toward an indictment of then-Rep. Rick Renzi (R) in that state, while Carol Lam in San Diego had expanded her probe of Rep. Randall “Duke” Cunningham (R-Calif.) to include another Republican congressman from that state as well as former CIA operative Kyle “Dusty” Foggo. Cunningham and Foggo since have been convicted of crimes. Renzi has been indicted and awaits trial.

Despite allegations by Democrats, the House investigation did not uncover smoking-gun documents or testimony showing that Lam and Charlton were removed as part of a broader effort to interfere with investigations of prominent Republicans. Rove told lawmakers: “I know they would not enter into the president’s thinking at all. Because I know how he felt about both Duke Cunningham and Rick Renzi’s behavior.”


Probe shows Rove played key role in firing U.S. attorneys
By Marisa Taylor | McClatchy Newspapers

WASHINGTON — Karl Rove and other top officials in the George W. Bush White House were deeply involved in pushing for the ouster of several U.S. attorneys, notably including one in New Mexico, according to testimony and e-mails that the House of Representatives Judiciary Committee released Tuesday.

Sworn testimony from former White House Counsel Harriet Miers revealed that Rove considered former U.S. Attorney David Iglesias of New Mexico a “serious problem” and “wanted something done about it” because of complaints about politically sensitive investigations that Iglesias had mounted. Miers said that she couldn’t recall whether Rove specifically demanded Iglesias’ firing during a 2006 conversation, but Iglesias was fired later that year.


Miers’ testimony and e-mails between White House officials contradict Rove’s assertion that he was merely a passive “conduit” to the Justice Department for complaints from Republican operatives and wasn’t himself an advocate for the administration’s eventual ouster of nine U.S. attorneys.

In sworn closed-door testimony to the House Judiciary Committee in July, Rove continued to distance himself from the decision to push out certain prosecutors. He recalled a proposal to fire some or all of them in late 2004, but denied that he’d come up with a plan to have it done and rejected the suggestion that he had a direct role.


“My view was this is a decision that had to be made at the Justice Department,” Rove said, according to a transcript of his sworn testimony.


House Judiciary Chairman John Conyers, D-Mich., issued a statement that said: “After all the delay and despite all the obfuscation, lies and spin, this basic truth can no longer be denied: Karl Rove and his cohorts at the Bush White House were the driving force behind several of these firings, which were done for improper reasons.”


Iglesias, too, said Tuesday that the e-mails confirmed his suspicions that Rove was more directly involved in his December 2006 firing than he’d acknowledged.

“That was just spin,” he said of Rove’s claim that he’d merely passed along complaints from Republican operatives in New Mexico and had no active role. “The e-mails and testimony confirm my worst fears that the true basis for not only my removal but for several of my colleagues was improper political reasons.”

In a statement released Tuesday afternoon, Rove again denied that he’d sought to influence any of the prosecutors’ investigations.


“I played no role in deciding which U.S. attorneys were retained and which (were) replaced,” his statement said.


Rove, who said the documents’ release showed that allegations against him “have proved utterly groundless,” urged the public to read the documents rather than rely on “partisans selectively quoting testimony or excerpting e-mail messages.”

The committee’s release of more than 700 pages of transcripts and 5,000 pages of White House and Republican National Committee e-mails on these subjects marks the end of the House investigation into the U.S. attorneys’ firings.

The e-mails reveal more details about the political sources of the White House’s dissatisfaction with Iglesias and other prosecutors.


In e-mails, Rove’s then-aide Scott Jennings repeatedly pressed the issue with his boss and other White House officials. In a June 2005 e-mail, he told former Bush campaign operative Tim Griffin that he’d “really like to move forward with getting rid” of Iglesias because of the New Mexico prosecutor’s handling of allegations about Democratic voter fraud. Griffin, who later replaced ousted Arkansas U.S. Attorney Bud Cummins, was favored for the job by Rove and other White House officials.


In a 2005 e-mail, Rove urged another White House official to “keep pushing” for Griffin. “I want him on the team,” Rove wrote.


The e-mails also confirmed that former Missouri U.S. Attorney Todd Graves was forced to leave because staffers for U.S. Sen. Kit Bond, R-Mo., wanted him out, not because of professional misconduct. Bond issued a statement Tuesday denying involvement in Graves’ firing.


In another 2005 e-mail, then-White House lawyer Richard Klingler said “Karl is fine” with the plan to remove Graves in a deal struck with Bond, which Bond previously has denied making.


The Justice Department’s inspector general and Office of Professional Responsibility later found Graves’ removal to be “inappropriate.”


U.S. Attorney Nora Dannehy, a special prosecutor, continues to investigate whether any former administration officials involved in the firings violated the law. The House Judiciary Committee forwarded the material collected during its more than two-year investigation to Dannehy “to assist in her effort to determine whether federal criminal charges are appropriate and to pursue any such charges,” Conyers’ statement said.

Get It Yet?  Americans Being Taken to the Cleaners by Big Corporations and Banks, and It’s Legal…. In Europe!


It just keeps getting worse.  Any day, check the articles popping in mainstream media as well as the Internet about financial intrigue and crime.  Missing money, (bailout or not), missing estates, missing retirement accounts, you name it, it’s been happening.  As the operations of the ruthless and greedy, (in this wild-west economic time we are in),  break out of the shadows, we all wonder, how could this have happened? After all, we have laws to protect people in the U.S. don’t we? 

Below is the introductory article written by author, Shelley A. Stark, about an secret banking institution called Hidden Treuhand, and a recent follow up article regarding the same.

   Since the preliminary article in August of 2008, Ms. Stark’s book has been published and is now available.  Copies have been going fast.  Last night Amazon had only three left.  If you delay, you’ll have to wait for the next printing.

 This book will open your eyes to the drama that has been going on out of sight and frankly for most American’s below our radar.  Ignorance is NOT bliss!  It is a must read for everyone, but in particular federal oversight employees, ALL federal oversight employees.  -GFS


Halliburton’s Hidden Treuhand

Monday 11 August 2008

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  “The Hidden Treuhand: How Corporations and Individuals Hide Assets and Money,” now available at Barnes and Noble and



In the Age of Stealth Wealth – Bank Secrecy is Alive and Well!

Written by Shelley Stark author of: Hidden Treuhand: How Corporations and Individuals Hide Assets and Money 

Bank Secrecy Bites the Dust in Europe”- Newsweek. “Switzerland, Luxembourg, Austria Loosen Secrecy Rules” – Bloomberg. “Tax Havens Give in to EU Pressure” – Spiegel ONLINE.

Has banking secrecy finally come to an end? This is what newspapers are unanimously saying. Is it true or should these headlines be punctuated with a question mark? Well, once again Switzerland, Austria, Luxembourg, Liechtenstein, and Belgium too are in the spotlight for their bank secrecy rules. There have been strong words emanating from the international community in the past and they produced little, or we would not be entertaining headlines such as these today. 

Changes to bank secrecy have come along way since the day of the anonymous savings book (‘Sparbuch’ in the German language). On January 1st 1994 some provisions concerning banking secrecy were partly amended in response to concerns of money laundering, but these provisions were largely undertaken on a voluntary basis by each bank. Up until this time, one could simply show up at the bank with $10 or $10 million dollars, and put it in anonymous savings account.  It was anonymous because you didn’t have to show any identification. The bank account was identified by a secret password, which the owner of the account assigned to the savings book and was subsequently registered in the bank. To get the money, you would have to show up at the bank with the savings book and give the secret password. This means in reality, to make a pay-off as seen in spy-thrillers, nobody needed to run around with suitcases of money. One could simply make a pay-off by handing over the savings book with the password and the recipient could visit his money at leisure. The new account holder could change the password to afford more security, but as longs as he had the savings book and the password, the money was safe and the old owner could not obtain these funds. Of course, this also meant if the savings book was lost or the password forgotten, then no one could access the money. The password account is much like its Swiss cousin the numbered account. The concept of the number and the password account originated when Hitler sought to stem the flow of money seeking a safe haven in Switzerland and in Austria. The capital exodus began due to inflation, but later due to Nazi persecution of Jewish citizens, it was feared that Hitler would try to force the Swiss to reveal Jewish accounts. By giving out numbers, the Swiss bank could claim not to know whom the account belonged to. In Austria, the practice became passwords. 

In 1995, Austria became a member of the European Union. Many of the earlier voluntary duties became law so that by November 1st 2000 the ability to open anonymous accounts was finally ended and no payments or withdrawals could be made to existing accounts unless the bank identified the identity of the savings account holder and money laundering was finally rendered a criminal offence. Tax evasion on the other hand, the concealing of income and not falsifying any documents, is merely a civil offense, not unlike a traffic violation. In addition, as of January 1st 2000 any cash transaction over €15,000 with a customer that didn’t have an ongoing relationship with the bank or was wired to the bank from offshore, needed to register their identity with the bank. These changes were brought about as the result of a European Council Directive to prevent the financial system from being used to launder money.  As a result of these amendments to the banking law, the European Commission withdrew its complaints against the Republic of Austria.                                           

The story regarding Switzerland and Liechtenstein is slightly rockier. German federal investigators paid €5 million to a former bank employee of the Liechtenstein Große Treuhand bank (LGT). The employee, Heinrich Kieber, is alleged to have removed the secret bank data from the LGT bank, thus kicking off a row over tax evasion in the EU. Before the dust settled, U.S. investigators charged Switzerland’s UBS bank for deliberately encouraging American citizens to engage in tax fraud activities. The Swiss have always attracted a certain limelight regarding chocolate, cheese, cuckoo clocks, and banking secrecy – a financial business model that attracts an estimated $1.84 trillion in assets of which about €450 billion belong to private customers. In Switzerland, the hoopla began when the bank was found to have offered tax evasion tactics to Americans that were invented by auditors at KPMG, who only managed to avoid criminal prosecution when they paid up $456 million in fines and penalties. The UBS bank was ordered to pay $780 million, and then they did the unthinkable, they handed over the names of 300 customers after the U.S. government produced strong evidence of tax evasion. The U.S. authorities are still seeking the names of an estimated 52,000 Americans with secretive UBS accounts.

According to mainstream press, these events are what have sparked the U.S., British, and German push for an ‘end’ of banking secrecy and prompted bankers from Switzerland, Austria, Luxembourg, and Liechtenstein to hoist their skirts and run for cover. Baa-humbug!

Firstly, tax evasion is not a criminal offense in any of these countries currently being hounded for their bank secrecy laws and for the most part bank secrecy is federal and constitutional law in these countries.

Basically the international community has pushed these European tax havens to accept Article 26 of the OECD Model Tax Convention on Income and Capital. Article 26 creates an obligation to exchange information, but the contracting state is not at liberty to engage on a “fishing expedition”. The contracting country must firstly show evidence of tax evasion, can only request information that is relevant to the tax affairs of a given taxpayer, must demonstrate the foreseeable relevance of the requested information, and prove to have pursued all domestic means to access such information. As of yet, it is unclear just how much tax evasion evidence even need be presented.

Austria, Belgium, Luxembourg, and Switzerland were opposed to the current version of Article 26, last updated on July 17, 2008, but since March 2009 each of these countries has notified the OECD that they are withdrawing their reservation to Article 26. They now believe that bank secrecy is not incompatible with the requirements of Article 26. And with little wonder, because the particulars of Article 26 are easily circumvented with a legal phenomenon called ‘Hidden Treuhand’.

Hidden Treuhand is a customary practice in Austria, Switzerland, Luxembourg, Liechtenstein, and even Germany. Due to globalization, it has transcended its national borders to impact industry, commerce, and banking worldwide. It is key to creating shell companies, foundations, and bank accounts where the real owner identity is hidden and cannot be exposed by any legal means. A Hidden Treuhand creates conditions where a lawyer conducts the duties required of him on behalf and in the interest of the client, but all business actions appear to be in the name of the lawyer. The real beneficial owner remains unknown. This construct can be liberally applied to stock in corporations, foundations, real estate, patent and copyrights, financial instruments such as derivatives and bonds, and of course, cash.

In 2000, some aspects of banking secrecy came to an end, but the Hidden Treuhand is frequently used to close the gap that those transparency laws were supposed to fill. In essence, the Hidden Treuhand is somewhat like a hidden trust, but legally it and the environment in which it functions, can achieve far more than is presently realized. Hidden Treuhand hides the beneficial owner of any asset and that includes bank accounts. Hidden Treuhand, when combined with banking secrecy, hides profits beyond the reach of tax investigations and governments. It’s like missile shield for money – nothing gets past this protective barrier.

Article 26 of the OECD MODEL TAX CONVENTION ON INCOME AND CAPITAL concerns the exchange of information between Contracting States. Hidden Treuhand is the creation of customary practice, but it is not regulated and there are no laws in existence that could be equated as regulatory. The following Hidden Treuhand provisions are quoted from law books referring to customary practice and illustrate how each of the OECD provisions is rendered mute. Compare the inherent capabilities of Hidden Treuhand with text of Article 26 where it states that none of the following provisions shall be construed so as to impose the obligation to:

OECD: to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

Hidden Treuhand: “What makes a Treuhand contract so special and unique under Austrian Law is that there is no special law regulating Treuhand contracts…there is no regulation of Treuhand contracts under Austrian Civil Law, and there are not any laws that could be equated as regulatory.” 

OECD: to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

Hidden Treuhand: “It is not to be expressed that any direct legal relationship or connection exists between the businessmen and the lawyer. In fact, the lawyer would be guilty of misconduct should the lawyer reveal that a legal relationship (power of attorney) exists between himself and the client”.  

OECD: to supply information which would disclose any trade, business, industrial commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

Hidden Treuhand: “When using a Hidden Treuhand, trustees are referred to as a Straw Man. A trustee functions like a Straw Man and acts in the name of the client who remains undeclared in the background. The relationship between the businessman and the lawyer is secret, which often includes even knowledge of a ‘power of attorney’ existing between the lawyer and the businessman”

When it comes to Hidden Treuhand, lawyers exploit attorney client privilege and claim it their legal duty to deny information and to keep all matters pertaining to their client confidential. No one, no court or authority, no government, can force an attorney to reveal any secrets concerning his client. And what of banking or bank accounts?  

The EU and international money laundering laws have striven to eliminate any criminal elements from the banking system, but Hidden Treuhand works within the law and in the banking system. Hidden Treuhand bank accounts are not made public because only the trustee is entitled to use the account, and there is no legal relationship between the client and the bank account. A lawyer lets the bank know that an account is a trust account, but does not have to disclose the name of the beneficiary. A Treuhand account means a banking relationship exists between the bank and the trustee and the bank is not entitled to know whom the lawyer represents anymore than anyone else.

“According to leading banks, designating an account as a Treuhand account alters nothing. The true account beneficiary remains a secret because only the trustee is authorized to use the account and there is no legal relationship between the client and the ‘special account’. The clients’ identity is not exposed when making bank transactions because it is the trustee’s responsibility to make money transfers from this ‘special lawyer trust account’ (Anderkonto)”.

As result of the crackdown against tax havens, more clients will have to resort to Hidden Treuhand and lawyers services. Already Liechtenstein has sold its Treuhand services to a separate company, quite possible even to itself via Hidden Treuhand. Their business model will no doubt resemble the Austrian one where the registration of foundations and Hidden Treuhand is separate from bank institutions. If foreign tax authorities manage the first hurdle and can provide strong evidence of tax evasion and seek further information regarding bank accounts they will firstly have to petition the cooperation of the Ministry of Finance. The ministry will ask the banks, but to what end? The bank cannot tell them what they do not know.  

So much for the grandiose announcement heralding the end of bank secrecy and tax havens!

Many large-cap US corporations have headquarters or subsidiaries based in tax havens. For example: McDonalds recently moved to Switzerland. Moreover, it is possible for a hedge fund to own an offshore bank. For example: the highly secretive hedge fund Cerberus owns Bawag, an Austrian bank, as well as a majority shareholder stake in Chrysler and GMAC. If questioned, would Bawag reveal information regarding any accounts held by a stakeholder of Cerberus?

Just how big is the offshore banking industry? The OECD estimates that assets held by the offshore banking industry might be as high as $11.5 trillion. Little wonder U.S. banks are having trouble lending money and no big surprise the European legal community claims to have no objection to Article 26.

Bank secrecy is alive and well! No question mark necessary. It just got a bit more expensive and devious. It is high time someone made the announcement: we have officially entered the ‘Age of Stealth Wealth’!

To learn more about Hidden Treuhand and what role it is playing in the financial crisis, bank secrecy, bailouts, globalization, the privatization of Iraq, and your financial security, please read: Hidden Treuhand: How Corporations and Individuals Hide Assets and Money

Available direct from publisher and Amazon and Barnes and Noble


Panel To Probe Contractor Business Systems, Rules On Subcontracting

By Robert Brodsky August 10, 2009


A bipartisan panel investigating procurement abuses in Iraq and Afghanistan will examine this week whether billions of taxpayer dollars are at risk from inadequate contractor business systems and deficiencies in the government’s subcontracting rules.


On Tuesday the congressionally appointed Commission on Wartime Contracting will explore the challenges federal oversight officials face when systems some of the largest wartime contractors use for billing, compensation, cost estimates and purchasing fail to provide timely and accurate information. Business systems and subcontracting rules — which will be the subject of an oversight hearing on Wednesday — emerged as issues in the panel’s interim report to Congress in June.

While conducting research for the interim report, the commission reviewed audits of contractor business systems used for $43 billion in federal work. The panel found investigators had deemed half the systems for billing and compensation inadequate and prone to unallowable costs. Panel staffers uncovered somewhat smaller problems with the systems used for accounting, budget, electronic data processing, indirect and overhead costing, labor and purchasing.


Christopher Shays, co-chairman of the commission, said self-interest should compel contractors to implement more effective business systems.

“Private businesses have much more flexibility than federal departments in changing procedures,” said Shays, a former Republican congressman from Connecticut. “Yet some contractors have had inadequate systems in place for years without suffering serious consequences. We need to understand why this is happening and how we can identify changes that will promote better oversight to ensure accurate payments and to reduce waste, abuse and fraud.”


The hearing, scheduled to last five-and-a-half hours, will focus on three of the largest companies operating in war zones: DynCorp International, Fluor Corp. and KBR Inc. The panel selected those contractors partly because they hold pieces of the Army’s massive 10-year, $150 billion LOGCAP IV contract, commission spokesman Clark Irwin said.


William Ballhaus, president and chief executive officer of DynCorp; William Walter, senior vice president and director of government compliance at KBR; and David Methot, chief compliance officer with Fluor Government Group, are scheduled to testify.


Agencies have the authority to withhold payment if a company’s business system is determined to be inadequate. “But, those requests are not often made, and even if they are made, they are rarely heeded,” Irwin said.


A “judgment of inadequacy” is generally made by the Defense Contract Audit Agency, while the Defense Contract Management Agency determines how the contractor should implement the recommended changes, Irwin said. But the two agencies often disagree on the assessments, Irwin said.


DCAA Director April Stephenson, DCMA Director of Contract Business Operations David Ricci and Jeff Parsons, executive director of the Army Contracting Command, also will testify at the hearing.


Wednesday’s hearing will examine the five-year, $4.5 billion Translation and Interpretation Management Services contract that provides translators and linguists to support American operations in Iraq.


The Army’s Intelligence and Security Command awarded the contract to Global Linguist Solutions in 2008. One of the losing bidders — former contract holder L-3 Communications — protested the award initially, but later withdrew its challenge and entered a subcontracting arrangement with Global Linguist Solutions. Other vendors such as Northrop Grumman Corp. also serve as subcontractors.


“Contractual arrangements like this are in compliance with federal rules, but they need to be evaluated to determine if the practice results in substantially increased contract cost with minimal added value,” said commission co-chair Michael Thibault.

Among those scheduled to testify during Wednesday’s hearing are John Houck, president of Global Linguist Solutions; Thomas Miller, general counsel of L-3 Communications; Gregory Schmidt, vice president of Northrop Grumman Technical Services; John Isgrigg, deputy director of contracting at INSCOM; Forrest Evans, deputy program manager and contracting officer’s representative at INSCOM; and DCAA’s Stephenson.

Just another defense contractor running wild with taxpayer dollars….    This time at least an auditor recognized that fact!  Bravo.  -GFS


DynCorp Billed U.S. $50 Million Beyond Costs in Defense Contract



By V. Dion Haynes
Washington Post Staff Writer
Wednesday, August 12, 2009

A Defense Department auditor testified Tuesday that DynCorp International billed the government $50 million more than the amount specified in a contract to provide dining facilities and living quarters for military personnel in Kuwait.

April G. Stephenson, director of the Defense Contract Audit Agency, described a variety of problems in DynCorp contracts associated with the wars in Afghanistan and Iraq. She appeared before the Commission on Wartime Contracting in Iraq and Afghanistan, which Congress established to investigate overspending by military contractors and issue recommendations for improvement.

Stephenson said the Falls Church-based company exceeded the costs outlined in its contract with the government for the Kuwait project by 51 percent. She said the government was overbilled $13.3 million — all of which was repaid — for generators, rifle scopes, body armor and other equipment that was not delivered. And she noted that, in a recent audit, the government rejected 15 of 29 billings, or $8.7 million out of $20.6 million in expenses.

DynCorp is working under several contracts with the government and provides other services, such as recruiting and deploying civilian peacekeepers and destroying land mines.

Stephenson, who also testified about similar problems with contractors KBR and Fluor Corp., blamed DynCorp’s situation in part on frequent changes in its organization structure and on new business systems that were applied inconsistently throughout the company.

Members of the commission, though, expressed frustration after hearing Stephenson’s testimony.

“There is a tremendous amount of waste and abuse and some fraud — billions and billions of dollars are wasted,” former congressman Christopher Shays (R-Conn.), co-chairman of the panel, said in an interview. “We’re looking to change policy, regulations, law — and in some cases culture.”

William L. Ballhaus, president and chief executive of DynCorp, said the billing problems with the Kuwait contract were largely the result of the government’s decision to expand the scope of the project and shorten the time frame for it, which required the company to use more expensive workers from the West rather than locals.

“The transition time got compressed. It caused us to adjust our labor and staffing profile,” Ballhaus said. As a result, he added, 50 percent of the labor the company is using is from the West, compared with 10 percent called for in its proposal.

Ballhaus told the commission that the company is upgrading its information technology system to better track expenses and is implementing new measures to better assess compensation and benefits costs. “We will see cost reductions over time,” he said. “If we’re not competitive [in costs], it’s possible for the government to replace us.”

But Stephenson, in a written statement, said the company submitted a “corrective action” plan in 2007 but has not implemented it.

So much of the emasculation of the U.S.’s ability to oversee and control unethical and criminal behavior in government, defense and private contracting and corporations was ultimately achieved by the disabling of the Justice Department.  Government Oversight Agents must oversee and inspect contracts, business practices, etc. and then if there is a problem investigate, write reports, etc. and then must rely on someone in the Justice Dept. (OIG’s) to be willing and able to PROSECUTE!  One-can only hope things are beginning to be cleaned out and turned around.  It is the only hope of getting things headed the right direction again.  -GFS


Former Attorney General Makes the Mistake of Talking




By Al Kamen
Wednesday, August 12, 2009

In early July, when last we checked in with former attorney general Alberto “Fredo” Gonzales, he had finally landed a job at Texas Tech University in Lubbock. That — assuming he’s not indicted by special prosecutor Nora Dannehy, who’s investigating the firing of those U.S. attorneys — would be the end of his troubles, we figured.

But no. First, a small group of TTU faculty members — 74 out of some 1,200-plus full-timers — circulated a petition protesting the hiring, saying that Gonzales’s “years in the White House were characterized by conduct which . . . demonstrated significant ethical failings.”

Gonzalez, who resigned two years ago this month in part over the U.S. attorneys matter, has also been much criticized for his statements about the National Security Agency’s domestic surveillance program. But TTU Chancellor Kent Hance, a former Democratic House member (he later switched parties), said he would not change his mind.

Hance said he had not hired Gonzales — salary $100,000 a year — to be a faculty member but rather to recruit and retain minority students. The visiting professorship was arranged afterward, he said, according to the Associated Press, but Gonzales would be welcome to continue teaching beyond that year.

That whole flap faded. And Gonzales is set to start teaching his course on issues confronting the Obama administration Aug. 31.

So that’s that.

But no. Inexplicably, Gonzales did a please-let-me-set-my-hair-on-fire interview that appeared in the New York Times Magazine on Sunday in which he acknowledged that he hadn’t had any job offers from law firms because of tough economic times and because firms “want to make sure that the investigations are complete and there is no finding of wrongdoing before they make a hiring decision.”

Why did he suddenly quit as attorney general? “I’m in the process of writing a book,” Gonzales said, “and I’ll get into greater detail on some of those reasons.” But he has no publisher.

Does he still talk his old buddy from Texas days, former president George W. Bush? “I have not spoken with the president since he left office,” Gonzalez said.

Been tempted to call? After all, last fall, Bush gathered up some of the old Texas gang, including Gonzales, former White House political adviser Karl Rove, then-Education Secretary Margaret Spellings and former White House adviser and undersecretary of state Karen Hughes for a day touring Gettysburg. And that group was on the last flight home Jan. 20 when Bush left Washington for Texas.

“I do, of course, think about our time together,” Gonzalez said, “and there are times when I think about doing that. But listen, I know that he has his life to live. I’ve got challenges and my life to live as well.”

Besides, Bush’s book, tentatively titled “Decision Points,” has gotten him a reported $7 million advance.

Asked if he’s approached Bush or Dick Cheney for help with his legal bills, Gonzales said: “I have not asked them personally.” Interesting caveat.

In Lubbock on Monday, Gonzales told the Associated Press he opposed a possible Justice Department investigation into CIA interrogation techniques after 9/11, saying this would hamper anti-terrorism efforts.

Note to file: Send e-mail to Fredo — no more interviews.

Team Af-Pak

It’s waiting-list-only for today’s rollout of the all-star, interagency team assembled by Richard Holbrooke, special representative for Afghanistan and Pakistan, in a gathering sponsored by the Center for American Progress and moderated by CAP chief executive John Podesta, recently back from that trip with former president Bill Clinton to North Korea.

Sixteen top members of the team — including New York University Afghanistan expert Barnett Rubin, British diplomat Jane Marriott, Tufts University Pakistan expert Vali Nasr and folks from the Agency for International Development, Treasury and Agriculture — will be on hand for a discussion of the issues. Most every key member will be there except for the intelligence guy. Of course, he might be. You won’t know.

The event won’t be at CAP but at the newly remodeled St. Regis Hotel, the D.C. equivalent of the Serena Hotel in Kabul.

Surreal World

Best job posting of the week. From U.S. Vacancies Bulletin, which deals with openings on the Hill.

“Legislative Assistant — Congresswoman [Virginia] Brown-Waite (R-Fla.) seeks a highly motivated individual with exceptional writing, communication and organizational skills to handle a variety of issues including Homeland Security and Judiciary. Responsibilities will include writing legislative mail, formulating and tracking legislative proposals, and briefing the Congresswoman on a daily basis. Successful applicants will have a strong understanding of the legislative process, a knack for research, well developed critical thinking skills, and patience. To apply, please submit your resume, a cover letter, and write an essay explaining what you would do to get on the Real World, D.C.”

That’s the MTV reality television show now filming in the District.

The Hidden Truth Behind Drug Company Profits


Wednesday 05 August 2009

by: Johann Hari  |  Visit article original @ The Independent UK
At Kasturba Gandhi Hospital in Mumbai, a man waits for a swine flu test. (Photo: AP)


    Ring-fencing medical knowledge is one of the great grotesqueries of our age.

    This is the story of one of the great unspoken scandals of our times. Today, the people across the world who most need life-saving medicine are being prevented from producing it. Here’s the latest example: factories across the poor world are desperate to start producing their own cheaper Tamiflu to protect their populations – but they are being sternly told not to. Why? So rich drug companies can protect their patents – and profits. There is an alternative to this sick system, but we are choosing to ignore it.

    To understand this tale, we have to start with an apparent mystery. The World Health Organisation (WHO) has been correctly warning for months that if swine flu spreads to the poorest parts of the world, it could cull hundreds of thousands of people – or more. Yet they have also been telling the governments of the poor world not to go ahead and produce as much Tamiflu – the only drug we have to reduce the symptoms, and potentially save lives – as they possibly can.

    In the answer to this whodunnit, there lies a much bigger story about how our world works today.

    Our governments have chosen, over decades, to allow a strange system for developing medicines to build up. Most of the work carried out by scientists to bring a drug to your local pharmacist – and into your lungs, or stomach, or bowels – is done in government-funded university labs, paid for by your taxes.

    Drug companies usually come in late in the process of development, and pay for part of the expensive, but largely uncreative final stages, like buying some of the chemicals and trials that are needed. In return, then they own the exclusive rights to manufacture and profit from the resulting medicine for years. Nobody else can make it.

    Although it’s not the goal of the individuals working within the system, the outcome is often deadly. The drug companies who owned the patent for Aids drugs went to court to stop the post-Apartheid government of South Africa producing generic copies of it – which are just as effective – for $100 a year to save their dying citizens. They wanted them to pay the full $10,000 a year to buy the branded version – or nothing. In the poor world, the patenting system every day puts medicines beyond the reach of sick people.

    This is where the solution to the swine flu mystery comes in. Ordinary democratic citizens were so disgusted by the attempt to deprive South Africa of life-saving medicine that public pressure won a small concession in the global trading rules. It was agreed that, in an overwhelming public health emergency, poor countries would be allowed to produce generic drugs. They are the exact same product, but without the brand name – or the fat patent payments to drug companies in Switzerland or the Cayman Islands.

    So under the new rules, the countries of the poor world should be entitled to start making as much generic Tamiflu as they want. There are companies across India and China who say they are raring to go. But Roche – the drug company that owns the patent – doesn’t want the poor world making cheaper copies for themselves. They want people to buy the branded version, from which they receive profits. Although not obliged to, they have licensed a handful of companies in the developing world to make the treatment – but they have to pay for license, and they can’t possibly meet the demand.

    And the WHO seems to be backing Roche – against the rest of us. They are the ones best qualified to judge what constitutes an overwhelming emergency, justifying a breaching of the patent rules. And their message is: Don’t use the loophole.

    Professor Brook Baker, an expert on drug patenting, says: “Why do they behave like this? Because of direct or indirect pressure from the pharmaceutical companies. It’s shocking.”

    What will be the end-result? James Love, director of Knowledge Economy International, which campaigns against the current patenting system, says: “Poor countries are not as prepared as they could have been. If there’s a pandemic, the number of people who die will be much greater than it had to be. Much greater. It’s horrible.”

    The argument in defence of this system offered by Big Pharma is simple, and sounds reasonable at first: we need to charge large sums for “our” drugs so we can develop more life-saving medicines. We want to develop as many treatments as we can, and we can only do that if we have revenue. A lot of the research we back doesn’t result in a marketable drug, so it’s an expensive process.

    But a detailed study by Dr Marcia Angell, the former editor of the prestigious New England Journal of Medicine, says that only 14 per cent of their budgets go on developing drugs – usually at the uncreative final part of the drug-trail. The rest goes on marketing and profits. And even with that puny 14 per cent, drug companies squander a fortune developing “me-too” drugs – medicines that do exactly the same job as a drug that already exists, but has one molecule different, so they can take out a new patent, and receive another avalanche of profits.

    As a result, the US Government Accountability Office says that far from being a font of innovation, the drug market has become “stagnant”. They spend virtually nothing on the diseases that kill the most human beings, like malaria, because the victims are poor, so there’s hardly any profit to be sucked out.

    We all suffer as a result of this patent dysfunction. The European Union’s competition commissioner, Neelie Kroes, recently concluded that Europeans pay 40 per cent more for their medicines than they should because of this “rotten” system – money that could be saving many lives if it was redirected towards real health care.

    Why would we keep this system, if it is so bad? The drug companies have spent more than $3bn on lobbyists and political “contributions” over the past decade in the US alone. They have paid politicians to make the system work in their interests. If you doubt how deeply this influence goes, listen to a Republican congressman, Walter Burton, who admitted of the last big health care legislation passed in the US in 2003: “The pharmaceutical lobbyists wrote the bill.”

    There is a far better way to develop medicines, if only we will take it. It was first proposed by Joseph Stiglitz, the recent Nobel Prize winner for economics. He says: “Research needs money, but the current system results in limited funds being spent in the wrong way.”

    Stiglitz’s plan is simple. The governments of the Western world should establish a multi-billion dollar prize fund that will give payments to scientists who develop cures or vaccines for diseases. The highest prizes would go to cures for diseases that kill millions of people, like malaria. Once the pay-out is made, the rights to use the treatment will be in the public domain. Anybody, anywhere in the world, could manufacture the drug and use it to save lives.

    The financial incentive in this system for scientists remains exactly the same – but all humanity reaps the benefits, not a tiny private monopoly and those lucky few who can afford to pay their bloated prices. The irrationalities of the current system – spending a fortune on me-too drugs, and preventing sick people from making the medicines that would save them – would end.

    It isn’t cheap – it would cost 0.6 per cent of GDP – but in the medium-term it would save us all a fortune because our health care systems would no longer have to pay huge premiums to drug companies. Meanwhile, the cost of medicine would come crashing down for the poor – and tens of millions would be able to afford it for the first time.

    Yet moves to change the current system are blocked by the drug companies and their armies of lobbyists. That’s why the way we regulate the production of medicines across the world is still designed to serve the interests of the shareholders of the drug companies – not the health of humanity.

    The idea of ring-fencing life-saving medical knowledge so a few people can profit from it is one of the great grotesqueries of our age. We have to tear down this sick system – so the sick can live. Only then we can globalise the spirit of Jonas Salk, the great scientist who invented the polio vaccine, but refused to patent it, saying simply: “It would be like patenting the sun.”

Geithner Asks Congress for Higher US Debt Limit


Friday 07 August 2009

by: David Lawder  |  Visit article original @ Reuters
Secretary of the Treasury Tim Geithner. (Photo: AP)

    U.S. Treasury Secretary Timothy Geithner formally requested that Congress raise the $12.1 trillion statutory debt limit on Friday, saying that it could be breached as early as mid-October.

    “It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations,” Geithner said in a letter to Senate Majority Leader Harry Reid that was obtained by Reuters.

    A Treasury spokeswoman declined to comment on the letter.

    Treasury officials earlier this week said that the debt limit, last raised in February when the $787 billion economic stimulus legislation was passed, would be hit sometime in the October-December quarter. Geithner’s letter said the breach could be two weeks into that period, just as the 2010 fiscal year is getting underway.

    The latest request comes as the Treasury is ramping up borrowing to unprecedented levels to fund stimulus and financial bailout programs and cope with a deep recession that has devastated tax revenues.

    It is expected to issue net new debt of as much as $2 trillion in the 2009 fiscal year ended September 30 and up to $1.6 trillion in the 2010 fiscal year, according to bond dealer forecasts.

    The request to increase the debt limit will likely raise the ire of Republicans who have accused President Barack Obama of runaway spending. They may try to hold up the legislation in effort to win concessions on Obama’s health care reform plan.

    Geithner urged Reid to not let politics hamper U.S. credit-worthiness and said he looked forward to working with the Nevada Democrat to secure enactment of legislation on the debt limit as early as possible.

    “Congress has never failed to raise the debt limit when necessary. Because members of both parties have long recognized the need to keep politics away from this issue, these actions have traditionally received bipartisan support,” he wrote. “This is clearly a moment in our history that calls for continuation of that tradition.”


    (Reporting by David Lawder; editing by Carol Bishopric)


I hear from credible sources that much of it may have been the large transfers to Deutchebank, possible to meet the conditions of Hidden Treuhand secret contracts.  Do we ever need some knowledgable auditors for this arena.  Maybe the U.S. Government should hire Shelley Stark (author of Hidden Treuhand:  How Corporations and Individuals Hide Assets and Money)  Her book explains how this kind of shenanigans may be accomplished even by US companies using U.S. Taxpayer money.   – GFS


Where Did that Bank Bailout Go? Watchdogs Aren’t Sure


Sunday 09 August 2009

by: Chris Adams  |  Visit article original @ McClatchy Newspapers
Neil Barofsky. (Photo: Michael Connor / The Washington Times)

    Washington – Although hundreds of well-trained eyes are watching over the $700 billion that Congress last year decided to spend bailing out the nation’s financial sector, it’s still difficult to answer some of the most basic questions about where the money went.

    Despite a new oversight panel, a new special inspector general, the existing Government Accountability Office and eight other inspectors general, those charged with minding the store say they don’t have all the weapons they need. Ten months into the Troubled Asset Relief Program, some members of Congress say that some oversight of bailout dollars has been so lacking that it’s essentially worthless.

    “TARP has become a program in which taxpayers are not being told what most of the TARP recipients are doing with their money, have still not been told how much their substantial investments are worth, and will not be told the full details of how their money is being invested,” a special inspector general over the program reported last month. The “very credibility” of the program is at stake, it said.

    Access and openness have improved in recent months, watchdogs say, but the program still has a way to go before it’s truly transparent.

    For its part, the Treasury Department said it’s fully committed to transparency, and that it’s taken unprecedented steps to report the status of TARP to the public. It regularly posts information on which banks have received money, as well as details about each of those transactions. Further, Treasury said, it doesn’t agree with all of its watchdogs’ recommendations, which it said could hamper the program’s effectiveness.

    TARP was passed in the midst of last fall’s financial meltdown as a way to keep American banks from falling deeper into the abyss.

    The program was controversial from the start. Its supporters say it’s helped spark bank lending in the country, but critics say it’s unfairly rewarded the big banks and Wall Street firms that pushed the economy to the brink.

    The program also has undergone a major transformation. When the Bush administration first went to Congress for the money, TARP’s main purpose was to buy up hundreds of billions of dollars in bad mortgages and so-called mortgage-backed securities that were bought and sold on Wall Street.

    Today, TARP consists of 12 programs that sent those hundreds of billions of dollars to big banks, but it’s also bailed out auto companies, auto suppliers, individuals delinquent on their mortgages, small businesses and American International Group, the big insurance company.

    The watchdogs now must oversee the maze that TARP has become.

    Just because a lot of people are watching, however, doesn’t mean they get everything they want to see.

    One of the most prominent watchdogs is Elizabeth Warren, a Harvard Law School professor who chairs a TARP oversight panel created by Congress.

    Her panel has released 10 major reports that examine TARP’s plans and policies, finding that much of the work by the Treasury and the Federal Reserve has been opaque, with unclear or contradictory goals.

    One report took Treasury to task for vastly undervaluing more than $250 billion in transactions with the country’s major banks, and another suggested several ways to revamp federal regulation over the financial sector. Other reports have criticized the Treasury for its initial defensiveness in opening its books.

    Despite its mandate, however, the panel doesn’t have subpoena power. That means it can ask, but can’t compel, officials from Treasury, the Federal Reserve or the nation’s banks to testify.

    Henry Paulson, the Treasury secretary under former President George W. Bush, repeatedly stiff-armed the panel. Timothy Geithner, the current secretary, has been more open, but so far has testified just once before Warren’s group. Geithner is scheduled to appear again in September, and has agreed to do so quarterly, and two other senior Treasury officials also have appeared.

    The relative lack of testimony from top officials, however, is one reason why critics of Warren’s panel think it hasn’t delivered on its promise.

    In June, in an otherwise mundane congressional hearing, Republican Rep. Kevin Brady of Texas surprised Warren with an aggressive critique of the panel, saying it’s failed to help taxpayers understand what Treasury is doing with the billions at its disposal.

    “There’s been very little value that the panel has brought to this issue or even insight on how these bailout dollars have been used,” he said. “I frankly believe at this point, given the reports that we’ve seen again with little value, I think the panel needs to be abolished.”

    Warren defended the panel’s work, saying the lack of subpoena power means we “only have the capacity to invite” witnesses.

    “So you asked Secretary Paulson in the first month of existence?” Brady asked.

    “I believe we asked him repeatedly,” Warren said. “We asked him in our first month, in our second month, in our third month.”

    Warren said she took the criticism seriously, dropping by Brady’s congressional office as soon as the hearing adjourned. The two had never met before, she said, and “I was really surprised,” by his comments.

    “He said he felt frustrated,” she said. “He wanted us to be even blunter” in the panel’s reports.

    Brady amplified his comments in an interview last month, saying that some of the panel’s work seems like a “PR ploy” and that “the moment has passed” for Warren’s group to play the role Congress envisioned.

    His feelings have been partially echoed by two other members of the panel, Rep. Jeb Hensarling of Texas and former Sen. John E. Sununu of New Hampshire, both Republicans appointed by congressional GOP leaders (the other three members were appointed by Democrats).

    Both have accused the panel of mission creep — of straying from the central goal of determining exactly how, and how well, Treasury is doing its job.

    Hensarling said that “taxpayers have not received answers as to whether the TARP program works, how decisions are being made or what the banks are doing with the taxpayers’ money.” While he praises the “very smart people on the panel,” he said too many questions have been left unexplored.

    He acknowledges that the lack of subpoena power makes things tough. “But even if we had it, I’m not sure we would have used it,” said Hensarling, who’s pushing to abolish TARP.

    The other primary watchdog is Neil Barofsky, a special inspector general named in November by Bush specifically to track TARP funds. His office does have subpoena power, and a growing staff that’s expected ultimately to have 160 people pursuing audits and criminal investigations.

    It’s also made a series of recommendations to the Treasury, asking that it do more to reveal how TARP money is being spent. Treasury has adopted some of its recommendations, but rejected others — including one of the most important: Giving taxpayers precise details on how TARP funds have been used by banks.

    The recommendation involves one of the most visible aspects of TARP: investing $218 billion in 650 banks, helping them to strengthen their balance sheets and boost lending to American businesses and homeowners.

    Barofsky’s office has long advocated that the Treasury require banks to detail how the TARP money they’ve received has been used. The department has refused, saying that once an investment is made in a big bank, it’s not possible to track how it’s used.

    Barofsky’s office rejected that assertion, and did its own survey of 360 institutions, finding that most could say how they’d used the money.

    “Treasury’s reasons for refusing to adopt this recommendation have been squarely refuted by” the inspector general, his office reported to Congress.

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    About Neil Barofsky