Category: Uncategorized

Here is an article from 2008, Center for Public Integrity which discusses whether government agencies with responsibility for oversight have been able to do their jobs.  I will note that from what I have been hearing things are not improving much.  There appears to have been a near decade-long failure of disconnected criminal investigation cases, case files languishing on people’s desks that were not allowed to progress, and bad actors trying to impede oversight agencies employees, particularly field employees from doing their jobs.  If we recruited people for a whistleblower union, the list would be long.  

 If the taxpayers ever learn of just how much fraud waste and abuse they have been subjected to and have had to pay for because of not only corruption in defense contractors, but also within the ranks of government agency management (appointees and career SES/GS), there would be no end of righteous indignation and calls for prosecutions.  GFS

Link to original:

Whistleblower: BP Risks More Massive Catastrophes in Gulf

Friday 30 April 2010

by: Jason Leopold, t r u t h o u t | Report
(Image: Jared Rodriguez / t r u t h o u t; Adapted:, US Coast Guard)

A former contractor who worked for British Petroleum (BP) claims the oil conglomerate broke federal laws and violated its own internal procedures by failing to maintain crucial safety and engineering documents related to one of the firms other deepwater production projects in the Gulf of Mexico, according to internal emails and other documents obtained by Truthout.

The whistleblower, whose name has been withheld at the person’s request because the whistleblower still works in the oil industry and fears retaliation, first raised concerns about safety issues related to BP Atlantis, the world’s largest and deepest semi-submersible oil and natural gas platform, located about 200 miles south of New Orleans, in November 2008. Atlantis, which began production in October 2007, has the capacity to produce about 8.4 million gallons of oil and 180 million cubic feet of natural gas per day.

It was then that the whistleblower, who was hired to oversee the company’s databases that housed documents related to its Atlantis project, discovered that the drilling platform had been operating without a majority of the engineer-approved documents it needed to run safely, leaving the platform vulnerable to a catastrophic disaster that would far surpass the massive oil spill that began last week following a deadly explosion on a BP-operated drilling rig.

BP’s own internal communications show that company officials were made aware of the issue and feared that the document shortfalls related to Atlantis “could lead to catastrophic operator error” and must be addressed.

Indeed, according to an August 15, 2008, email sent to BP officials by Barry Duff, a member of BP’s Deepwater Gulf of Mexico Atlantis Subsea Team, the Piping and Instrument Diagrams (P&IDs) for the Atlantis subsea components “are not complete” and “there are hundreds if not thousands of subsea documents that have never been finalized, yet the facilities have been” up and running. P&IDs documents form the foundation of a hazards analysis BP is required to undertake as part of its Safety and Environmental Management Program related to its offshore drilling operations. P&IDs drawings provide the schematic details of the project’s piping and process flows, valves and safety critical instrumentation.

“The risk in turning over drawings that are not complete are: 1) The Operator will assume the drawings are accurate and up to date,” the email said. “This could lead to catastrophic Operator errors due to their assuming the drawing is correct,” said Duff’s email to BP officials Bill Naseman and William Broman. “Turning over incomplete drawings to the Operator for their use is a fundamental violation of basic Document control, [internal standards] and Process Safety Regulations.”

BP did not respond to repeated requests for comment for this story. Despite the claims that BP did not maintain proper documentation related to Atlantis, federal regulators continued to authorize an expansion of the drilling project.

Last May, Mike Sawyer, a Texas-based engineer who works for Apex Safety Consultants, voluntarily agreed to evaluate BP’s Atlantis subsea document database and the whistleblower’s allegations regarding BP’s engineering document shortfall related to Atlantis. Sawyer concluded that of the 2,108 P&IDs BP maintained that dealt specifically with the subsea components of its Atlantis production project, 85 percent did not receive engineer approval.

Even worse, 95 percent of Atlantis’ subsea welding records did not receive final approval, calling into question the integrity of thousands of crucial welds on subsea components that, if they were to rupture, could result in an oil spill 30 times worse than the one that occurred after the explosion on Deepwater Horizon last week.

In a report Sawyer prepared after his review, he said BP’s “widespread pattern of unapproved design, testing and inspection documentation on the Atlantis subsea project creates a risk of a catastrophic incident threatening the [Gulf of Mexico] deep-water environment and the safety of platform workers.” Moreover, “the extent of documentation discrepancies creates a substantial risk that a catastrophic event could occur at any time.”

“The absence of a complete set of final, up-to-date, ‘as built’ engineering documents, including appropriate engineering approval, introduces substantial risk of large scale damage to the deep water [Gulf of Mexico] environment and harm to workers, primarily because analyses and inspections based on unverified design documents cannot accurately assess risk or suitability for service,” Sawyer’s report said. He added, “there is no valid engineering justification for these violations and short cuts.”

Sawyer explained that the documents in question – welding records, inspections and safety shutdown logic materials – are “extremely critical to the safe operation of the platform and its subsea components.” He said the safety shutdown logic drawings on Atlantis, a complex computerized system that, during emergencies, is supposed to send a signal to automatically shut down the flow of oil, were listed as “requiring update.”

“BP’s recklessness in regards to the Atlantis project is a clear example of how the company has a pattern of failing to comply with minimum industry standards for worker and environmental safety,” Sawyer said.

The oil spill blanketing roughly 4,000 square miles in the Gulf of Mexico after the Deepwater Horizon explosion, which killed eleven workers, was exacerbated, preliminary reports suggest, by the failure of a blowout preventer to shut off the flow of oil on the drilling rig and the lack of a backup safety measure, known as a remote control acoustic shut off switch, to operate the blowout preventer.

Congressman Henry Waxman, chairman of the Committee on Energy and Commerce, sent a letter Thursday to BP Chairman and President Lamar McKay seeking documents related to inspections on Deepwater Horizon conducted this year and BP’s policy on using acoustic shut off switches in the Gulf of Mexico.

The circumstances behind the spill are now the subject of a federal investigation.

Profits Before Safety

Whether it’s the multiple oil spills that emanated from BP’s Prudhoe Bay operations in Alaska’s North Slope or the March 2005 explosion at the company’s Texas refinery that killed 15 employees and injured 170 people, BP has consistently put profits ahead of safety.

On October 25, 2007, BP pled guilty to a criminal violation of the Clean Water Act and paid a $20 million fine related to two separate oil spills that occurred in the North Slope in March and August of 2006, the result of a severely corroded pipeline and a safety valve failure. BP formally entered a guilty plea in federal court on November 29, 2007. US District Court Judge Ralph Beistline sentenced BP to three years probation and said oil spills were a “serious crime” that could have been prevented if BP had spent more time and funds investing in pipeline upgrades and a “little less emphasis on profit.”

Also on October 25, 2007, BP paid a $50 million fine and pleaded guilty to a felony in the refinery explosion. An investigation into the incident concluded that a warning system was not working and that BP sidestepped its own internal regulations for operating the tower. Moreover, BP has a prior felony conviction for improperly disposing of hazardous waste.

In 2007, the Department of Interior’s federal Minerals Management Services (MMS), the agency that monitors offshore drilling practices, fined BP $41,000 for not properly training employees in well control management related to a near blowout due to a rise in gass pressure on the Ocean King Rig five years earlier that forced the evacuation of all 65 workers for two days and halted drilling for a week.

According to MMS, Diamond Offshore Drilling, operator of the rig, and BP did not know that the critical safety procedures they employed to try and stop the increase in gas pressure on the Ocean King Rig could also have caused a blowout. Environmental publication Clean Skies reported that MMS “cited BP for what it called ‘no formal procedures’ and ‘no written guideline’ to follow in case of an emergency. MMS also cited BP and contract workers in the incident for what they said was a ‘lack of knowledge of the system, and lack of pre-event planning and procedures.'”

“In separate incidents, BP was also fined $75,000 in 2003 for not having adequate water pressure on one rig’s fire protection system as well as another $80,000 fine for bypassing safety alarms that could have indicated dangerously high pressure, similar to what caused the near-blowout in 2002,” according to MMS data cited by Clean Skies in a recent report.

The incident involving Deepwater Horizon, now the subject of a federal investigation, may end up being the latest example of BP’s safety practices run amuck.

The issues related to the repeated spills in Prudhoe Bay and elsewhere were revealed by more than 100 whistleblowers who, since as far back as 1999, said the company failed to take seriously their warnings about shoddy safety practices and instead retaliated against whistleblowers who registered complaints with their superiors.

In September 2006, days before BP executives were scheduled to testify before Congress about an oil spill from a ruptured pipeline that forced the company to shutdown its Prudhoe Bay operations, BP announced that it had tapped former federal Judge Stanley Sporkin to serve as an ombudsman and take complaints from employees about the company’s operations.

That’s who the whistleblower complained to via email about issues related to BP’s Atlantis operations in March 2009 a month after his contract was abruptly terminated for reasons he believes were directly related to his complaints to management about BP’s failure to obtain the engineering documents on Atlantis and the fact that he “stood up for a female employee who was being discriminated against and harassed.” The whistleblower alleged that the $2 million price tag was the primary reason BP did not follow through with a plan formulated months earlier to secure the documents.

“We prepared a plan to remedy this situation but it met much resistance and complaints from the above lead engineers on the project,” the whistleblower wrote in the March 4, 2009, email to Pasha Eatedali in BP’s ombudsman’s office.

Federal Intervention

Additionally, he hired an attorney and contacted the inspector general for the Department of the Interior and MMS and told officials there that BP lacked the required engineer-certified documents related to the major components of the Atlantis subsea gas and oil operation.

In 2007, MMS had approved the construction of an additional well and another drilling center on Atlantis. But the whistleblower alleged in his March 4, 2009, email to Eatedali in BP’s Office of the Ombudsman that documents related to this project needed to ensure operational safety were missing and that amounted to a violation of federal law as well as a breach of BP’s Atlantis Project Execution Plan. The ombudsman’s office agreed to investigate.

MMS, acting on the whistleblower’s complaints, contacted BP on June 30, 2009, seeking specific engineering related documents. BP complied with the request three weeks later.

On July 9, 2009, MMS requested that BP turn over certification documents for its Subsurface Safety Valves and Surface Controlled Subsea Safety Valves for all operational wells in the Atlantis field. MMS officials flew out to the platform on the same day and secured the documents, according to an internal letter written by Karen Westall, the managing attorney on BP’s Gulf of Mexico Legal Team.

But according to the public advocacy group Food & Water Watch, a Washington, DC-based nonprofit, which became involved in the case last July, BP did not turn over a complete set of materials to MMS.

“BP only turned over ‘as-built’ drawings for [Atlantis’] topsides and hull, despite the fact that the whistleblower’s allegations have always been about whether BP maintains complete and accurate engineer approved documents for it subsea components,” Food & Water Watch said in a 19-page letter it sent toWilliam Hauser, MMS’s Chief, Regulations and Standards Branch.

During two visits to the Atlantis drilling platform last August and September, MMS inspectors reviewed BP’s blowout preventer records. Food & Water Watch said they believe MMS inspectors reviewed the test records and failed to look into the whistleblower’s charges that engineering documents were missing. The blowout preventer, however, is an issue at the center of the Deepwater Horizon spill.

An MMS spokesperson did not return calls for comment.

Last October, Food & Water Watch filed a Freedom of Information Act (FOIA) request for expedited processing, seeking documents from MMS that indicate BP “has in its possession a complete and accurate set of ‘as built’ drawings … for its entire Atlantis Project, including the subsea sector.” “As-built” means lead engineers on a specific project have to make sure updated technical documents match the “as-built” condition of equipment before its used.

MMS denied the FOIA request.

“MMS does not agree with your assessment of the potential for imminent danger to individuals or the environment, for which you premise your argument [for expedited response]. After a thorough review of these allegations, the MMS, with concurrence of the Solicitor’s Office, concludes your claims are not supported by the facts or the law,” the agency said in its October 30, 2009, response letter.

In response, MMS said that although some of its regulatory requirements governing offshore oil and gas operations do require “as built” drawings, they need not be complete or accurate and, furthermore, are irrelevant to a hazard analysis BP was required to complete.

Unsatisfied with MMS’s response, Food & Water Watch contacted Rep. Raul Grijalva (D-Arizona), a member of the Committee on Natural Resources and chairman of the subcommittee on National Parks, Forests and Public Lands, about the issues revolving around BP’s Atlantis operations and provided his office with details of its own investigation into the matter.

“Unsubstantiated” Claims

On January 15, Westall, the BP attorney, wrote a letter to Deborah Lanzone, the staff director with the House Subcommittee on Energy and Minerals, and addressed the allegations leveled by Food & Water Watch as well as indirect claims the whistleblower made.

Westall said BP “reviewed the allegations” related to “noncompliant documentation of the Atlantis project … and found them to be unsubstantiated.” But Westall’s response directly contradicts the findings of Billie Pirner Garde, BP’s deputy ombudsman, who wrote in an April 13 email to the whistleblower that his claims that BP failed to maintain proper documentation related to Atlantis “were substantiated” and “addressed by a BP Management of Change document.” Garde did not say when that change occurred. But he added that the whistleblower’s complaints weren’t “unique” and had been raised by other employees “before you worked there, while you were there and after you left.”

Westall noted in her letter that “all eight BP-operated Gulf of Mexico production facilities” received safety awards from MMS in 2009.

“Maintenance and general housekeeping were rated outstanding and personnel were most cooperative in assisting in the inspection activities,” MMS said about BP’s Gulf of Mexico drilling facilities. “Platform records were readily available for review and maintained to reflect current conditions.”

Westall maintained that the whistleblower as well as Food & Water Watch had it all wrong. Their charges about missing documents has nothing to do with Atlantis’ operational safety. Rather, Westall seemed to characterize their complaints as a clerical issue.

“The Atlantis project is a complex project with multiple phases,” Westall said in her letter to Lanzone. “The [August 15, 2008] e-mail [written by Barry Duff, a member of the Atlantis subsea team] which was provided to you to support [Food & Water Watch’s] allegations relates to the status of efforts to utilize a particular document management system to house and maintain the Atlantis documents. The document database includes engineering drawings for future phases, as well as components or systems which may have been modified, replaced, or not used.”

But Representative Grijalva was not swayed by Westall’s denials. He continued to press the issue with MMS, and in February, he and 18 other lawmakers signed a letter calling on MMS to probe whether BP “is operating its Atlantis offshore oil platform … without professionally approved safety documents.”

Grijalva said MMS has not “done enough so far to ensure worker and environmental safety at the site, in part because it has interpreted the relevant laws too loosely.”

“[C]ommunications between MMS and congressional staff have suggested that while the company by law must maintain ‘as-built’ documents, there is no requirement that such documents be complete or accurate,” the letter said. “This statement, if an accurate interpretation of MMS authorities, raises serious concerns” and requires “a thorough review at the agency level, the legal level and the corporate level. The world’s largest oil rig cannot continue to operate without safety documentation. The situation is unacceptable and deserves immediate scrutiny.

“We also request that MMS describe how a regulation that requires offshore operators to maintain certain engineering documents, but does not require that those documents be complete or accurate, is appropriately protective of human health and the environment.”

On March 26, MMS launched a formal investigation and is expected to file a report detailing its findings next month.

Zach Corrigan, a senior attorney with Food & Water Watch, said in an interview Thursday that he hopes MMS “will perform a real investigation” and if the agency fails to do so, Congress should immediately hold oversight hearings “and ensure that the explosion and mishap of the Horizon platform is not replicated.”

“MMS didn’t act on this for nearly a year,” Corrigan said. “They seemed to think it wasn’t a regulatory or an important safety issue. Atlantis is a real vulnerability.” 

This work by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.


The Government Accountability Project & Make it Safe Coalition




Monday, May 24, 2010 – Tuesday, May 25, 2010

Join the whistleblower community on May 24 and 25 for an intensive conference on Capitol Hill in Washington, DC. Co-Sponsors of this year’s Assembly include National Treasury Employees Union and Project On Government Oversight

The Conference Will Feature: A morning plenary session with our congressional allies, theme-based workshops led by prominent whistleblowers and good government organizations, a national security panel with star whistleblowers in the industry, street law update informational sessions, a meet and greet with the new appointees to the MSPB, OSHA, and ARB, and Lobby training and intensive lobbying appointments with congressional offices.

The 2010 National Whistleblower Assembly aims to:

Establish a cohesive social network between whistleblowers

Provide an outlet for direct legislative campaigning

Celebrate ten years of devoted advocacy to strengthen the Whistleblower Protection Act

Confirmed Speakers and Guests Include:

Whistleblowers Frank Serpico, Jack Spadaro, Coleen Rowley, Franz Gayl, George Sarris, and Robert MacLean

MSPB Chairwoman Susan Grundmann, Vice Chairwoman Anne Wagner and Member Mary Rose

ARB Chairman Paul Igasaki and Vice Chairman Cooper Brown

OSHA Assistant Secretary Dr. David Michaels

Special Counsel to the President for Ethics and Government Reform Norm Eisen

We look forward to your valued attendance. If you have any questions, or to RSVP, please contact Becky Jones at the Government Accountability Project or call us at (202) 457-0034 ext. 127.

Please click here for more information, including a working schedule for the Assembly

GAP’s mission is to promote corporate and government accountability by protecting whistleblowers, advancing occupational free speech, and empowering citizen activists.

GAP has been the nation’s leading whistleblower protection and advocacy organization since 1977.

The Government Accountability Project

1612 K Street NW, Washington DC 20006

Carrots, Eggs & Coffee

A carrot, an egg, and a cup of coffee…You will never look at a cup of coffee the same way again.

A young woman went to her mother and told her about her life and how things were so hard for her. She did not know how she was going to make it and wanted to give up, She was tired of fighting and struggling. It seemed as one problem was solved, a new one arose.

Her mother took her to the kitchen. She filled three pots with water and placed each on a high  fire. Soon the pots came to boil. In the first she placed carrots, in the second she placed eggs, and in the last she placed ground coffee beans. She let them sit and boil; without saying a word.

In about twenty minutes she turned off the burners. She fished the carrots out and placed them in a bowl. She pulled the eggs out and placed them in a bowl. Then she ladled the coffee out and placed it in a bowl. Turning to her daughter, she asked, ‘ Tell me what you see.’

‘Carrots, eggs, and coffee,’ she replied.   

Her mother brought her closer and asked her to feel the carrots. She did and noted that they were soft. The mother then asked the daughter to take an egg and break it. After pulling off the shell, she observed the hard-boiled egg. 

Finally, the mother asked the daughter to sip the coffee. The daughter smiled as she tasted its rich aroma. The daughter then asked, ‘What does it mean, mother?’

Her mother explained that each of these objects had faced the same adversity: boiling water.

Each reacted differently. The carrot went in strong, hard, and unrelenting. However, after being subjected to the boiling water, it softened and became weak. The egg had been fragile. Its thin outer shell had protected its liquid interior, but after sitting through the boiling water, its inside became hardened. The ground coffee beans were unique, however. After they were in the boiling water, they had changed the water.

‘Which are you?’ she asked her daughter. ‘When adversity knocks on your door, how do you respond? Are you a carrot, an egg or a coffee bean?

Think of this: Which am I? Am I the carrot that seems strong, but with pain and adversity do I wilt and become soft and lose my strength?

Am I the egg that starts with a malleable heart, but changes with the heat? Did I have a fluid spirit, but after a death, a breakup, a financial hardship or some other trial, have I become hardened and stiff? Does my shell look the same, but on the inside am I bitter and tough with a stiff spirit and hardened heart?

Or am I like the coffee bean? The bean actually changes the hot water, the very circumstance that brings the pain. When the water gets hot, it releases the fragrance and flavor. If you are like the bean, when things are at their worst, you get better and change the situation around you.

When the hour is the darkest and trials are their greatest do you elevate yourself to another level? How do you handle adversity? Are you a carrot, an egg or a coffee bean?

May you have enough happiness to make you sweet, enough trials to make you strong, enough sorrow to keep you human and enough hope to make you happy.  

The happiest of people don’t necessarily have the best of everything; they just make the most of everything that comes along their way. The brightest future will always be based on a forgotten past; you can’t go forward in life until you let go of your past failures and heartaches.

When you were born, you were crying and everyone around you was smiling.

Live your life so at the end, you’re the one who is smiling and everyone around you is crying.

You might want to send this message to those people who mean something to you (I JUST DID); to those who have touched your life in one way or another; to those who make you smile when you really need it; to those who make you see the brighter side of things when you are really down; to those whose friendship you appreciate.

A reader asked recently the following:  “Do you hate everyone and everything?”

Here is my answer in case anyone else has been wondering the same. 

“No, but lately, I don’t have a lot of sense of humor left.  I like good people who have some conscience, a backbone, and a good measure of ethics. I like people who try, really make the effort to do the right thing because it is the right thing to do, not just because they’ve figured an angle to profit from it themselves.   Because I am becoming more intolerant of greed and stupidity, I really like generous people who are not takers or gold diggers.  I like intelligence and those who are intelligent enough to have some self-doubts, because they are aware of what they don’t know.   Because I am really sick and tired of passive and passive-aggressive people, as most of the people I work with at my day job are that type, I love go-getters who see something that needs attention and are not afraid to roll up their sleeves and get something done.

I am beginning to really value and appreciate dignity, privacy and peace and quiet as most of the crap and corruption we are fighting on every front is the antithesis of that.  I like good young people who have promise and potential to do good and great things, especially if I do not have to see them drug down and destroyed by the bad ones (kids and adults) before they can grow old enough to be strong and have direction.   

I really like hope.

I like people who won’t give up and remain hopeful while persistently staying realistic about the truth of what is going on and how some people are.  I like courageous people who will stand up when it is needed.  I like those who when on a righteous and ethical path refuse to give up.  I like kind people, who are kind from the inside, because they are.  I like seeing the spark in the eyes of kids when they’ve just “gotten it,” and are excited about life and doing something constructive, not destructive.  I like seeing people with initiative, not inertia.  And no doubt a whole lot of other things if I had time to reflect on it.  All I know is that it is necessary and worthwhile to struggle to make things better.  Our country and future depend on it!”


Be Strong, Darlin!

A reader sent this in today.  Just what we all needed, a bit of levity with the encouragement.  -GFS



(The original came with a charming picture of western great, Sam Elliot, one of my favorites)










Upon reading Shelley A. Stark’s, Hidden Treuhand:  How Corporations and Individuals Hide Assets and Money, my first response was of shock and disbelief.  Then the anger and outrage emerged.  It is clear Shelly Stark is a courageous Whistleblower.  She has dared to expose an organized and secret system of hiding money and assets that has been going on for a long period of history but, that few average people know exists. 

What Ms. Stark is writing about has been a very closely guarded secret prior to now.  Due to becoming aware of the Hidden Treuhand, because of being victimized by its use on her by some business partners, Ms. Stark started what turned out to be five years of hard investigation and research to find out what had happened to her business partnership.  It was not an easily solved mystery.  Fortuitously, Ms. Stark has the economic education, training, intellect, and courage to have tackled this previously secret strategy,  which large corporations and wealthy individuals have known about and had access to utilize in the shadows of our economic world  for a long time.  Her work required copious amounts of research into the history of the practice of Treuhands, hidden or not, and translating masses of German/Austrian law records to get an historical perspective and meaningful understanding of its contemporary impact on our financial  lives. 

In her book, Stark explains that this type of financial and legal strategy is not legal in the U.S., but is legal in certain countries in Europe (Austria, Lichtenstein, Switzerland) and is spreading to other regions (Dubai) making it possible for a lot of manipulation and corrupt dealings to take place, with the public having no inkling it is happening to their money and assets.  She explains how it is possible for a corporation or certain officers of a corporation to hide money, assets, and even people and other money payoffs to people using these Hidden Treuhands, potentially keeping the Hidden Treuhand and everything put into it, secret even from their own board of directors. 

 It appears that using a Hidden Treuhand, Corporations and the wealthy can now thwart any current U.S. government oversight activity, including laws or federal policies.  (Think about former Vice President, Dick Cheney and his conflict of interest in and financial benefits from Halliburton.  How was he able to evade accountability to even current federal laws regarding conflict of interest, quid pro quo, and revolving door prohibitions?    Halliburton coincidentally has moved its headquarters recently to Dubai.  Perhaps, now we know why.)

Recently an article in the Washington Post presented the concept of a new proposed Financial Protection Agency.  If the U.S. Government is going to tackle protecting Americans’ financial matters, they will have to include the problem of Hidden Treuhand, for what are becoming increasingly obvious reasons.  The corrupt and unethical business practices are not just an isolated American problem, but expand across the globe.

Due to the complicated financial dealings leading to our recent financial meltdown of the “Too Big to Fails” our pensions and 401 K’s are already at risk.  Think about Madoff and the huge sums he stole from the retirement accounts of Americans either directly or indirectly.  If Madoff used a Hidden Treuhand, there is little hope all those millions of dollars will ever be openly discovered and identified, let alone recovered.   

I don’t know about you, but the possibility of my retirement funds being siphoned off and shuffled around in secret hidden corporate accounts that no one can see or audit and that I will never see again is enough to get me writing letters and demanding change.  For anyone concerned about the safety and security of American consumers and their financial affairs, this book is a must read!   In fact, this book should immediately be required reading for all U.S. Federal Oversight authorities too.


Boeing 787 may not fly this year

By Dominic Gates

Seattle Times aerospace reporter

The structural flaw that delayed the first flight of the 787 Dreamliner is more complex than originally described by the company, and the plane’s inaugural takeoff is likely at least four to six months away, say two engineers with knowledge of Boeing’s problem.

Follow link above for full story at the Seattle Times.

CIA Committed Fraud, Judge Writes in Ruling
5 Involved in Suit Could Face Sanctions
Former CIA director George J. Tenet might face sanctions. (Bebeto Matthews – AP)
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Who’s Blogging» Links to this article
By Del Quentin Wilber
Washington Post Staff Writer
Tuesday, July 21, 2009
A federal judge has ruled that government officials committed fraud while defending a lawsuit brought by a former DEA agent who accused a CIA operative of illegally bugging his home.
In rulings unsealed Monday, U.S. District Chief Judge Royce C. Lamberth wrote that he was considering sanctions against five current and former agency lawyers and officials, including former director George J. Tenet, for withholding key information about the operative’s covert status.
The rulings, issued in recent months, highlighted what the judge called fraudulent work by CIA lawyers in defending a suit that Lamberth said had a lengthy and “twisted history.” Brought in 1994 by DEA agent Richard A. Horn, the suit alleged that the CIA illegally bugged his residence in Rangoon, Burma, while he was serving in the country.
Horn said that portions of a telephone conversation with a subordinate were used by the head of the U.S. mission, Franklin Huddle, to oust him from his post.
Horn, 63, returned to the United States and retired from the DEA in 2000, according to his attorney. His suit was sealed at the government’s request.
The CIA operative and Huddle, represented by the Justice Department, fought the suit and asked Lamberth to throw it out, invoking the state’s secrets privilege. The government argued that the case involved information, including the operative’s identity, that was too sensitive to be revealed in court.
Lamberth agreed and dismissed the suit in 2004. Three years later, the U.S. Court of Appeals for the D.C. Circuit overturned Lamberth, ruling that Horn could try to prove his case against Huddle by using unclassified information. The court upheld Lamberth’s decision to remove the CIA operative from the suit.
Early last year, the Justice Department informed Lamberth that the CIA operative’s cover had actually been lifted in 2002 but nobody told the judge or the appeals court about the change. A CIA lawyer learned about it in 2005 but did not alert the Justice Department, Lamberth or the appeals court, Lamberth wrote.
Lamberth identified that lawyer as Jeffrey W. Yeates. In his rulings, Lamberth chastised the former CIA operative, identified as Arthur Brown, for not informing the courts about his change in status and reinstated Brown as a defendant. Brown claimed in court papers that he told top CIA lawyers about his cover being lifted as early as 2002.
Lamberth called the decision to withhold the information a “fraud on the court.”
“The CIA was well aware that the assertion of the state secrets privilege as to Brown was a key strategy in getting the case dismissed,” Lamberth added.
In an order issued Monday, Lamberth ordered Yeates, Brown, Tenet and three current or former CIA lawyers — John Rizzo, Robert J. Eatinger and A. John Radsan — to file court documents explaining why he should not sanction them for the government’s conduct. Attorneys for the officials and lawyers declined to comment or could not be reached. CIA spokesman George Little said the agency “takes seriously its obligations to U.S. courts.”
Horn’s attorney, Brian C. Leighton, said Lamberth’s rulings showed that the CIA was trying to “cover up wrongdoing.”


SEC Charges Halliburton and Two Former Officers for Failure to Disclose a 1998 Change in Accounting Practice


Halliburton’s Settlement with the SEC Includes a $7.5 Million Penalty Reflecting Lapses in Conduct During the Course of the Investigation


Washington, D.C., Aug. 3, 2004 — The Securities and Exchange Commission announced today enforcement proceedings against Halliburton Co., its former chief financial officer, Gary V. Morris, and its former controller, Robert C. Muchmore, Jr. The Commission’s actions are in response to Halliburton’s failure to disclose a 1998 change to its accounting practice. As a result of that undisclosed change, Halliburton’s public statements regarding its income in 1998 and 1999 were materially misleading.

Halliburton and Muchmore have agreed to settle the enforcement actions by consenting to a Commission order to cease and desist from committing or causing future securities law violations. Additionally, Halliburton and Muchmore have agreed to pay penalties of $7.5 million and $50,000 respectively, in a related civil action. Halliburton’s penalty for the disclosure failure reflects lapses in the company’s conduct during the course of the Commission investigation, which commenced in mid-2002.

Harold F. Degenhardt, Administrator of the Commission’s Fort Worth office, commented, “The SEC’s action today emphasizes the importance of complete transparency in a company’s financial disclosures. Important information bearing on a company’s results should be clearly and timely disclosed, even if those results are calculated in accordance with Generally Accepted Accounting Principles (GAAP).”

“The penalty against Halliburton serves as yet another reminder that the Commission will not tolerate lapses by companies that serve to delay or hinder the Commission’s investigative processes,” said Spencer C. Barasch, enforcement head in the Commission’s Fort Worth office.

The Commission approved these enforcement actions following a thorough investigation that included the review of approximately 340,000 documents and sworn testimony from 23 individuals. The company’s former Chief Executive Officer, Vice President Richard B. Cheney, provided sworn testimony and cooperated willingly and fully in the investigation conducted by the Commission’s career staff.

Today’s enforcement actions include all of the charges that the Commission deemed appropriate in light of the investigative record developed by its staff. These actions conclude the Commission’s investigation of Halliburton’s 1998 change to its accounting practice.

Halliburton provides a wide range of industrial construction services. In providing those services, Halliburton, at times, incurs cost overruns; the overruns may be recovered from Halliburton’s customer depending on the terms of the construction contract and the nature of the overruns. Historically, Halliburton recognized income arising from cost overrun claims only in the financial quarter in which the claim was finally resolved with the customer. From 1993 to 1997, Halliburton had set forth this practice in its periodic filings with the Commission. In the second quarter of 1998, Halliburton changed its historical accounting practice and began recognizing revenues by offsetting losses on certain projects with revenues based on estimated probable recoveries on claims that had not been resolved with customers.

Under the new practice, Halliburton recognized revenues on certain claims that the company believed were probable of collection rather than, pursuant to the prior practice, claims that had been finally resolved with its customers. Although both of Halliburton’s claims recognition practices, the historical one and the revised one, are appropriate under Generally Accepted Accounting Principles, there was a significant difference in their respective effects on Halliburton’s financial presentation: the new practice reduced losses on several large construction projects. As a result, Halliburton’s reported income was higher under the revised practice than it would have been under the prior practice.

Over six reporting periods, spanning approximately 18 months covering 1998 and 1999, Halliburton failed to disclose its change of accounting practice. In the absence of any disclosure, the investing public was deprived of a full opportunity to assess Halliburton’s reported income — more particularly, the precise nature of that income, and its comparability to Halliburton’s income in prior periods. It was not until March 2000 that Halliburton, in its 1999 Form 10-K, disclosed its change in accounting practice.

The following chart demonstrates the impact the undisclosed accounting change had on the company’s pre-tax income in 1998 and 1999:

Year Filing Reported
Pre-Tax Income
Reported Pre-Tax Income — Without Component of Unapproved Claim Revenue $ Difference % Difference
  Form 10-Q [Q2] $228.70 $183.30 $45.40 24.8%
  Form 10-Q [Q3] ($609.50) ($646.20) $36.70 5.7%
  Form 10-K $278.80 $190.90 $87.90 46.1%
  Form 10-Q [Q1] $149.00 $129.80 $19.20 14.8%
  Form 10-Q [Q2] $146.00 $135.80 $10.20 7.5%
  Form 10-Q [Q3] $103.00 $92.30 $10.70 11.6%

These income figures appeared in Halliburton’s filings with the Commission. They were also presented in the company’s quarterly earnings releases and analyst teleconferences.

The Commission alleges that Morris and Muchmore were responsible for the company’s failure to disclose the accounting change, over six quarters, in Halliburton’s Commission filings. Additionally, Morris and Muchmore played key roles in the preparation and review of quarterly earnings releases and analyst teleconference scripts that included the affected income figures. They were, therefore, also responsible for the absence in the releases and scripts of any clarifying reference to the accounting change or its impact.

Halliburton and Muchmore neither admit nor deny the Commission’s findings against them.

The enforcement action against Morris is unsettled, and has been filed in U.S. District Court in Houston, Texas.

Contact: Stephen M. Cutler, Director
SEC Division of Enforcement


See Also:  Administrative Proceeding Release No. 33-8452; Litigation Release 18817

Last modified: 8/3/2004