Sunday, April 27, 2014

PNN - Progressive Journalists

PNN  - 4/27/14 - Our Guests - Our Stories

RWS                             -  7:01 - 7:15
SEIU                             -  7:16 - 7:28
Shawna Vercher        -   7:29 - 7:59
Luis Cuevas                -   8pm - 8:20
Steve Horn                 -   8:21 - 8:41
Tony Noel                   -   8:42 - 8:58pm

0. A Spanish judge has just decided to proceed with a case against Bush, Cheney, and Rumsfeld, 
prosecuting them for torture at Guantanamo. The Spanish legislature can be expected to try to block the case, 
unless perhaps they hear our voices loudly and clearly enough. 

We began this effort in 2011, visiting Spanish embassies, generating media and placing advertisements in Spain, and communicating our appreciation for Spanish efforts to prosecute U.S. torturers. Now we need another big push.

1. President Obama and Secretary Vilsack:  Kill the Filthy Chicken Rule.
Only Superman could inspect 175 chickens per minute. Eliminating government inspectors and replacing them with chicken company employees may save a few dollars, but at too high a price.

Do you want chicken factories inspected by the poultry companies who own them—while feces-filled birds, doused with chemicals, zoom through the assembly line at three per second? That could be the future, if we don’t act now.  

The U.S. Department of Agriculture is considering a rule change that would privatize poultry inspection—allowing companies to inspect chicken and turkey carcasses themselves.

What happens if birds are contaminated with feces? The rule allows companies to douse them with more chemicals, while jacking up assembly line speeds to three birds per second.
USDA will be finalizing a decision soon, so we must act now. Please sign this petition to President Obama and Agriculture Tom Vilsack: Reject the “filthy chicken rule.”

On Monday, April 14, the the Washington Post and the Guardian U.S. newspapers received the Pulitzer for Journalism Public Service for their reports on NSA spying. In light of their hard work, let's recap events of the last year.

Embarrassed and irritated by Edward Snowden's leaks, Obama charged last year at a press conference that Snowden was presenting a false picture of NSA by releasing parts of its work piecemeal: “... America is not interested in spying on ordinary people,” he assured us. The government, he went on, is not “listening in on people's phone calls or inappropriately reading people's emails.”

Six days later, a Washington Post headline declared: “NSA broke privacy rules thousands of times per year.” In an internal audit in May 2012 of its DC-area spy centers, the agency itself found 2,776 “incidences” of NSA overstepping its legal authority. As the American Civil Liberties Union noted, surveillance laws themselves “are extraordinarily permissive,” so it's doubly troubling that the agency is surging way past what it is already allowed to do. The ACLU adds that these reported incidents are not simply cases of one person's rights being violated – but thousands of Americans being snared, totally without cause, in the NSA's indiscriminate, computer-driven dragnet.

The agency's surveillance net stretches so wide that it is inherently abusive, even though its legal authority to spy on Americans is quite limited. U.S. Rep. James Sensenbrenner, the sponsor of the PATRIOT Act (which NSA cites as its super-vac authority), said that Congress intended that it should apply only to cases directly tied to national security investigations. No lawmaker, he said, meant that government snoops should be able to conduct a wholesale grab of Americans' phone, email and other personal records and then store them in huge databases to be searched at will.

Yet look at what NSA has become:

The three billion phone calls made in the U.S. each day are snatched up by the agency, which stores each call's metadata (phone numbers of the parties, date and time, length of call, etc.) for five years.

Each day telecom giants turn over metadata on every call they have processed.

Every out-of-country call and email from (or to) a U.S. citizen is grabbed by NSA computers, and agents are authorized to listen to or read any of them.

The agency searches for and seizes nearly everything we do on the Internet. Without bothering with the constitutional nicety of obtaining a warrant, its XKeyscore program scoops up some 40 billion Internet records every month and adds them to its digital storehouse, including our emails, Google searches, websites visited, Microsoft Word documents sent, etc. NSA's annual budget includes a quarter-billion dollars for “corporate-partner access” – i.e., payments to obtain this mass of material from corporate computers.

Snowden says that in his days as an analyst, he could sit at his computer and tap into any American's Internet activity – even the President's.

The sheer volume of information sucked up by the agency is so large that as of 2008, it maintained 150 data processing sites around the world.

NSA's budget is an official secret, but a Snowden document shows that it gets about $11 billion a year in direct appropriations, with more support funneled through the Pentagon and other agencies.

President Obama recently announced an “overhaul” of the NSA's collection of bulk phone records. The reform may require phone companies to store metadata it collects for 18 months for the NSA's use with the approval from a special court. This might sound reasonable, but it is still gathering bulk data on millions of innocent Americans – by corporations for the government. And what about Internet, email and other surveillance? NSA is too heavily vested in its programs; it is not going to give up spying on us.

Jim Hightower is the former Texas Agriculture Commissioner and is now a columnists for Creators Inc. Syndicate.

3. U.S. ground troops going to Poland, defense minister says 18 Apr 2014 Poland and the United States will announce next week the deployment of U.S. ground forces to Poland as part of an expansion of NATO presence in Central and Eastern Europe in response to events in Ukraine. That was the word from Poland's defense minister, Tomasz Siemoniak, who visited The Post Friday after meeting with Defense Secretary Chuck Hagel at the Pentagon on Thursday. There will also be intensified cooperation in air defense, special forces, cyberdefense and other areas.

4. U.S. Plans Ground-Force Exercises in Eastern Europe --U.S. considering other ways to maintain regular ground-force presence in Eastern Europe 19 Apr 2014 The United States plans to carry out small ground-force exercises in Poland and Estonia, Western officials said Friday. It is not yet clear what additional troop deployments the United States and other NATO nations might undertake in Eastern Europe after the exercises. The exercise in Poland, which is expected to be announced next week, would involve a United States Army company and would last about two weeks, officials said. The exercise in Estonia would be similar, said a Western official who declined to be identified because he was talking about internal planning.

Is debate an unreasonable request?
I'll be unreasonable - like the factory workers who demanded safety after the TRIANGLE SHIRT FACTORY, I'm unreasonable like the radicals who opposed children in factory, I'm unreasonable like the workers who struck and earned the eight hour day and the forty hour week, who earned for all the lazy go-along get-alongs weekends and paid vacations, I'm unreasonable enough to demand again, CLEAN WATER, and HEALTHY AIR - and if fighting to keep money our of politics and MONSANTO off the Supreme Court and the FDA - COUNT ON ME TO BE UNREASONABLE - because I remember the promises of the candidate who was going to march with union brothers and sisters, who was going to make sure that instead of rebuilding Afghanistan, and Iraq we were going to rebuild AMERICAN infrastructure. I was in Denver I heard the promise of UNIVERSAL HEALTH CARE ... RIGHT UP TO THE ELECTION and after I wiped the happy tears from my eyes I saw exactly who we'd elected. - So if I'm UNREASONABLE - call it my stress position and Eric Holder can celebrate it - Him and the boys from Wall Street who got the - I'm Above the LAW BADGES! - RWS

6. Biden in Ukraine
"And we recognize no sphere of influence, or no ability of any other nation to veto the choices an independent nation makes as to with whom and under what conditions they will associate.  We also do not believe in zero-sum thinking.  We do not believe that a partnership with one nation must come at the expense of another.  It has not.  It does not, and it will not.

As I said, referencing the Munich Security Conference just weeks after taking office, it holds true again -- I want to reemphasize it.  We reject the notion of spheres of influence as 19th century ideas that have no place in the 21st century.  And we stand by the principle that sovereign states have a right to make their own decisions, to chart their own foreign policy, to choose their own alliances. 
President Obama, in his speech in Moscow two weeks ago, strongly affirmed this principle.  He said, and I quote, "State sovereignty must be the cornerstone of international order.  Just as all states should have the right to choose their leaders, states must have the right to borders that are secure, and to their own foreign policies.  Any system that cedes those rights will lead to anarchy.  That is why this principle must apply to all nations, including Ukraine."
We also re-affirmed the security assurances that the United States, Russia and the United Kingdom provided Ukraine in the 1994 Budapest Memorandum."

7. Net Neutrality Away….
That, in a nutshell, is the Federal Communications Commission’s latest response to a bombshell court decision in January that blew apart its rules on “net neutrality” — the principle that internet service providers can’t favor one type of web traffic over another when they connect consumers to the internet.
According to the Wall Street Journal (sub req’d), the proposed rules the FCC will announce on Thursday will bar ISPs from discriminating against certain websites, but “allow content companies to pay Internet service providers for special access to consumers.” In plain English, this means that an ISP like Comcast can’t slow down traffic from Netflix — but that it could cut a deal with one of Netflix’s competitors to make that competitor’s traffic go faster.
If that sounds like a strange definition of net neutrality, you’re right: an ISP that gives faster treatment to some sites is no more neutral than one that slows down other sites. The measure comes after FCC Chairman Tom Wheeler said in February that the agency would not allow “blocking” or “discrimination.”
The FCC is now reportedly trying to maintain a semblance of neutrality by requiring that ISPs who offer a sweetheart traffic deal to one company must offer the same deal to others on “commercially reasonable” terms. This may sound reassuring, but it’s not.
The reality is that any competitor that wants to enforce the “commercially reasonable” rule will first have to wade through a slow and expensive legal swamp and, in any case, only the biggest of the big will have the means to sue in the first place. A small site that wants those “commercially reasonable terms?” Forget about it.
The horse has left the barn
In case you’re unfamiliar with this debacle, the reason that we’re even discussing “special access” in the first place is because the FCC bungled its own rule-making process in the first place. Specifically, the agency failed in 2002 to classify internet providers as “common carriers,”  which in turn led a Washington appeals court to rule in January that the FCC’s Open Internet Order of 2010 did not apply to ISPs.
The upshot is that the January court decision resulted in an uncomfortable choice for the FCC: if the agency wished to re-impose net neutrality, it could either start regulatory process from scratch and do it right by stating that the ISPs are common carriers — or else it can just sort of muddle through. And that is what it appears to be doing with the proposed “special rates” and “commercially available” language.
This is not entirely the fault of FCC Chair Tom Wheeler. The reality is that the FCC rule-making process is a slow one, and that re-classifying the ISPs as common carriers would be a slow, laborious and possibly unsuccessful process. As such, without the power of the “common carrier” stick, the FCC will have to rely on lesser measures like the ones that will be proposed this week.
The proposed rules also reportedly do not attempt to address the issue of “peering” arrangements, which concern network interconnections (and choke points) that occur before website traffics arrives at its ultimate destination via the ISP. The FCC has not tried to regulate peering in the past, but recent peering disputes over Netflix has brought new attention to the issue.

8. Net Neutrality Can Be Saved, But Only if Citizens Raise an Outcry
    By John Nichols, The Nation - 24 April 14 -

 When Barack Obama was running for president in 2007, he earned a great deal of credibility with tech-savvy voters by expressing support for net neutrality that was rooted in an understanding that this issue raises essential questions about the future of open, free and democratic communications in America.

Obama “got” that net neutrality represented an Internet-age equivalent of the First Amendment—a guarantee of equal treatment for all content, as opposed to special rights to speed and quality of service for the powerful business and political elites that can buy an advantage.

Asked whether he thought the Federal Communications Commission and Congress needed to preserve the Internet as we know it, the senator from Illinois said, “The answer is ‘yes.’ I am a strong supporter of Net neutrality.”

“What you’ve been seeing is some lobbying that says that the servers and the various portals through which you’re getting information over the Internet should be able to be gatekeepers and to charge different rates to different Web sites,” explained Obama, who warned that with such a change in standards “you could get much better quality from the Fox News site and you’d be getting rotten service from the mom and pop sites.”

Obama’s bottom line: “That I think destroys one of the best things about the Internet—which is that there is this incredible equality there.”

Candidate Obama was exactly right.

So was President Obama when, in 2010, the White House declared that, “President Obama is strongly committed to net neutrality in order to keep an open Internet that fosters investment, innovation, consumer choice, and free speech.”

And President Obama certainly sounded right in January, 2014, when he said, “I have been a strong supporter of net neutrality. The new commissioner of the FCC, Tom Wheeler, whom I appointed, I know is a strong supporter of Net Neutrality.”

The president expressed that confidence in Wheeler, even as concerns were raised about an appointee who had previously worked as a cable and wireless industry lobbyist.

There are two simple steps to take:

1. Recognize that there is a right response to court rulings that have rejected the complex and ill-thought approaches that the FCC has up to now taken with regard to net neutrality. The right response is to reclassify broadband Internet access as a telecommunications service that can be regulated in the public interest.

When the FCC’s clumsy previous attempt at establishing net neutrality protections was rejected in January by the U.S. District Court of Appeals for the District of Columbia, the court did not say that the commission lacked regulatory authority—simply that it needed a better approach. As David Sohn, general legal counsel at the Center for Democracy & Technology, notes: the court opinion laid out “exactly how the FCC essentially tied its own hands in the case, and makes it clear that the FCC has the power to fix the problem.”

“The Court upheld the FCC’s general authority to issue rules aimed at spurring broadband deployment, and accepted the basic policy rationale for Internet neutrality as articulated by the FCC,” explains Sohn. “The arguments in favor of Internet neutrality are as strong as ever, but prior FCC decisions on how to treat broadband have painted the agency into a corner. Those decisions are not set in stone, however, and the ball is now back in the FCC’s court. The FCC should reconsider its classification of broadband Internet access and reestablish its authority to enact necessary safeguards for Internet openness.”

2. Recognize that this is the time to send a clear signal of support for genuine net neutrality. The FCC has listened in the past when a public outcry has been raised, on media ownership issues, diversity issues and Internet access issues. Wheeler is a new chairman. It’s vital to communicate to him, and to the other members of the commission that President Obama was right when he said that establishing “fast lanes” on the Internet “destroys one of the best things about the Internet—which is that there is this incredible equality there.”

Dozens of public interest groups, ranging from the American Civil Liberties Union to the Government Accountability Project to the PEN American Center to Fairness & Accuracy In Reporting and the National Hispanic Media Coalition have urged the FCC to do the right thing. The “Save the Internet” coalition has a track record of rapidly mobilizing Americans to thwart wrongheaded moves by the FCC.

They’re already up and at it, with a petition urging Wheeler and the FCC to “scrap” approaches that won’t work and “restore the principle of online nondiscrimination by reclassifying broadband as a telecommunications service.”

Vermont Senator Bernie Sanders says that, “Our free and open Internet has made invaluable contributions to democracy both here in the United States and around the world. Whether you are rich, poor, young or old, the Internet allows all people to seek out information and communicate globally. We must not turn over our democracy to the highest bidder.”

Sanders is right about that—especially when he recognizes the vital link between technology and democracy. A free and open Internet is essential to modern democracy. But that freedom and openness will only be maintained if Americans use their great democratic voice to demand it.

There is a way to save net neutrality. And if ever there was a time for citizens to urge the FCC to go the right way, this is it.

9. Rep. Mark Pafford, the House Democratic Leader-designate (D-West Palm Beach) said the legislative leadership has devoted extensive hearings to overhauling the Florida Retirement System. Conflicting bills in the House and Senate are likely to be compromised in the closing days of the session, but Democrats have insisted that the FRS is in no trouble and that GOP leaders are just trying to get the state out of the pension business by moving new employees into a market-based investment plan. "There is no issue," said Pafford. "this is another example of something the Republican leadership has offered as a major issue. It's pretty sad when politics is put over good policy."

10. tell the FCC - 
But the Federal Communications Commission is proposing rules that would kill — rather than protect — Net Neutrality and allow rampant discrimination online.
Under these rules, telecom giants like AT&T, Comcast and Verizon would be able to pick winners and losers online and discriminate against online content and applications. And no one would be able to do anything about it.
We must stop the FCC from moving forward with these rules, which would give the green light to ISPs eager to crush Net Neutrality.
The agency can preserve Net Neutrality only by designating broadband as a telecommunications service under the law. Anything else is an attack on our rights to connect and communicate.
Tell FCC Chairman Wheeler to throw out his proposed rules. Demand nothing less than real Net Neutrality.

 A few might be aware that our County's Human Service budget ( Social Services ) was severely impacted since 2008. Our County has also cut tens of millions of dollars in library funding. Our Mayor wanted to closed half the libraries. He wanted to imposed park entrance fees.

Yet, due to these cuts, people have donated more to the County's Animal Trust than to Parks, Social Services and Libraries combined.

People with money favor dogs over us.

Read the statistics below.

Honorable Toufic Zakharia  M.P.A.
Miami Dade County Community Councilman - District 10
Florida Advisory Committee member for the United States Commission on Civil Rights
President/Co-Founder of MEAPA
Co-Founder of the Near East Peace Project

12. About 15 thousand years ago, the world’s first farmer had the idea of saving the seeds from one year’s crop and planting them again next year. And that’s how farmers did it for thousands of years after that.

Until Monsanto. - Today, Monsanto is claiming patent rights over seeds -- the fundamental source of all plant life -- so it can charge farmers royalties for doing what people have done for thousands of years.

It's already charging millions in illegal royalties in Brazil. It's suing farmers in the U.S. And in India it's jacked up the cost of seeds so much that it’s contributing to an epidemic of suicides among bankrupt farmers.

The latest front in Monsanto’s war on farmers is Canada, where a bill is flying through parliament to give corporate agribusiness long-term patent rights over seeds. And if it win heres, Monsanto will use trade agreements to force other countries to abide by these patent claims as well.

Canadian farmers are fighting back, but they’re massively outgunned by Monsanto’s lobbyists and money. If they’re going to have any chance to stop this bill, they need our help to fight back. Can you chip in $5 a month to stop Monsanto’s attempt to monopolize food production in Canada and around the world?

13.Obama In Asia Pushing TPP

President Obama is in Japan as part of his "pivot to Asia" tour of Pacific countries. He is also visiting South Korea, Malaysia and the Philippines. The trip is meant to demonstrate U.S. diplomatic and economic efforts toward Pacific nations to counterbalance China's increasing influence in the region. Part of this effort is a big push to get TPP negotiations back on track and completed.

TPP is a massive "trade" treaty between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. "Trade" is in quotes because only five of the treaty's 29 chapters actually deal with trade. Others set rules on investment, set limits on the ability of governments to regulate corporations, restrict a government's ability to spend its own tax dollars on goods made in that country (such as "Buy America" procurement policies) and other things well beyond the usual scope of what would be considered a trade agreement. This leads many to claim that the treaty is really about limiting the ability of governments to reign in the giant corporations

Most Workers Likely To Lose

The treaty is being negotiated in secret with lots of corporate involvement and not much involvement by stakeholders like labor, environmental, human rights, consumer and other groups that would be affected. But even though it is secret we know from leaks that TPP as currently negotiated appears to be designed to benefit a few giant corporate interests, while potentially driving the nail into the coffin of America's middle class.

Since NAFTA our "trade" agreements have gotten a bad reputation with the public. People have come to realize that these "free trade" agreements are causing companies to close American factories and open factories in countries with low wages and that allow companies to pollute. Pitting American workers against low-wage workers has encouraged employers to cut wages and benefits for those who are able to keep their jobs.

14. Corporate CEOs Demand that they be Tipped Off When a Whistleblower Reports their Crimes

I'm writing on the flight returning from the XIIth International CIFA Forum in Monaco. CIFA is an NGO.  It is a confederation of independent financial advisor organizations that works with the UN in promoting the protection of investors.  This means that their clients are often very wealthy and that many of the participants are speakers are very conservative or libertarians (or an admixture).  One of the speakers, Dr. Hans Geiger, gave an impassioned denunciation of "bureaucrats" (which turned out to mean anyone who worked for the government) and the imposition of a duty on bankers to file criminal referrals when they had a "reasonable suspicion" that their clients had committed certain crimes.  The official U.S. jargon for a criminal referral is "Suspicious Activity Reports" (SARS).  Geiger was particularly distressed that the banker would not be allowed to inform his client that he was making the criminal referral (which FATF terms "Suspicious Transaction Reports" (STRs)) under the standard 21 proposed by the Financial Action Task Force in 2012.

21. Tipping-off and confidentiality

Financial institutions, their directors, officers and employees should be:

(b) prohibited by law from disclosing ("tipping-off") the fact that a suspicious transaction report (STR) or related information is being filed".

The new requirement for criminal referrals will arise as nations adopt the FATF recommendations for financial policies.  A number of nations have already done so.  Geiger is a leader of the effort to convince the Swiss government not to adopt these provisions.  He is part of an organization that encourages "tax competition" among nations.  The goal is to minimize taxes and governmental spending by denying governments revenues.  The aim is to encourage the wealthiest people to move that wealth and income to nations with the lowest taxes on wealth and income.  Geiger is also a fierce austerian.  The next day when I responded I wore my special austerian repellant tie -- it's resplendent with images of defaulted German bonds -- the equivalent of wearing a garlic garland to ward off vampires.

In this first installment of my written response prompted by Geiger's remarks I make only one point that I do not believe was made in a related context.  FATF not only forbids the bank that makes the criminal referral against the client to inform the client, it labels such an act "tipping" -- tipping off the suspect to the potential criminal investigation so that the client can destroy documents and avoid making future incriminating statements and requests.  FATF's language prohibiting tipping off the subject of the criminal referral comes from the f ederal banking agencies' rules that require banks that they regulate to make such referrals and forbids them to inform the subject of the referrals.


    (d) (9) Notification to board of directors--

    (ii) Suspect is a director or executive officer. If the State savings association files a SAR pursuant to this paragraph (d) and the suspect is a director or executive officer, the State savings association may not notify the suspect, pursuant to 31 U.S.C. 5318(g)(2), but shall notify all directors who are not suspects.

The Dodd-Frank Act has provisions designed to encourage whistleblowers.  The Chamber of Commerce, Financial Services Roundtable (FSR), and the American Bankers Association (ABA) hated the provision and made exceptional efforts to prevent the SEC from adopting a rule that would allow the whistleblower to notify the government of his corporation's misconduct without first notifying the corporation.

This was rather obviously nuts for all the reasons that have long led us to ban banks from informing their clients of criminal referrals and which were leading FATF to propose recommendations that every nation adopt a similar ban.  The ABA and the FSR know full well about criminal referrals and why the bank is forbidden to tip off the customer (even if the customer is a corporation with a system of internal controls) about the criminal referral.  The opponents of the SEC rule, however, were not treated by the media as if they were trying to reverse a long-standing policy that made eminent sense given the reality of what the controlling officers leading a corporate control fraud would do to thwart an investigation if the whistleblower were required to notify the people leading the felony that he wished to alert the government that he had detected a likely crime.

Indeed, the policy argument is far stronger in the whistleblower context because the leading manner in which the controlling officers leading a control fraud seek to thwart investigations is to retaliate against the whistleblower.  The goal is to intimidate and harm the whistleblower, but the reprisal also allows the officers to label him "a disgruntled employee who was fired for his incompetence and lack of integrity."  The "disgruntled employee" label is the favorite tactic of fraudulent officers seeking to discredit the whistleblower.  The SEC rejected the demand that whistleblowers be required to tip off the alleged perpetrators of the crime, but that demand was overwhelmingly endorsed by the business community and by the SEC members who are Republicans.  Their claim was based on the (implicit) assumption that control fraud does not exist and that the virtuous CEO needs to know of the crimes committed by his corporation's officers and employees that were spotted by the whistleblower so that the CEO could remedy the crimes.

The Oxymoron that is Modern Legal Ethics

Michael E. Clark, Special Counsel to the Duane Morris law firm of Houston, Texas did us all the favor of revealing a bit too much of the basis for the CEOs' rage against whistleblowers.  The hostility is evident in the title he chose for his article: "The Dodd-Frank Act's Bounty Hunter Provisions."

The Review of Securities and Commodities Regulation, Vol. 44 No.3 (February 9, 2011).

    "Although turning workers into informants by realigning their loyalties seemed fundamentally wrong to me, both then and now, Congress has recently decided to move in this direction [in Dodd-Frank].

    As a result, publicly traded companies can expect higher compliance costs, added enforcement activities, and more follow-on civil litigation.

    These new bounty provisions promise to be a "game-changer" for financial fraud enforcement. Not only will whistleblowers now have strong incentives to put their personal interests ahead of loyalties to their employers, but they will have ample opportunities to do"."

The argument that whistleblowers betray their "loyalty" to the corporation  when they alert authorities to the actions of officers and employees who are likely to be violating the law and harming the corporation in order to make the CEO wealthy never made sense.  CEOs leading control frauds use executive compensation and the power to hire, fire, promote, and bully to create perverse incentives to induce employees to act on their own behalf by harming the corporation.  It is true that Dodd-Frank's whistleblower provisions will increase enforcement actions and civil suits, but that would be a very good thing for corporations (and shareholders) if it clawed back fraud proceeds from the controlling officers.  In the longer run, more effective deterrence could reduce civil suits and enforcement actions.

It is bizarre that an attorney, who must deal constantly with officers and directors' fiduciary duties and the absolute necessity of complying with the law, would assert that employees who blow the whistle on fraud are "disloyal" to the corporation and morally degenerate "informers" while employees who say nothing and aid frauds by controlling officers are "loyal" to the corporation and morally superior.  (The not very hidden truth is that the senior corporate officers decide whether lawyers are hired, fired, and paid, so lawyers are eager to conflate the CEO with the client even when the CEO is looting the client.)  Clark's discussion of fiduciary duties makes clear his all too common conception of legal "ethics."

"Both agencies' analyses appear to be markedly incomplete. For one thing, they do not address the duties of care, loyalty, and good faith that such key corporate officials [who are members of the control group], as fiduciaries, owe to an entity as its decision-makers."

I think it is Clark who misses the concept of fiduciary duties.  The most likely scenario is that the CFO learns that the CEO is leading a control fraud.  The typical situation is that the CEO dominates the board of directors.  The CFO cannot stop the fraud.  If he aids the fraud he will be committing a felony.  If he confronts the CEO he will be fired and the fraud will continue, harming the client to which he owes these fiduciary duties.  The only way he can fulfill his fiduciary duties effectively is to blow the whistle to the SEC (which should promptly make a criminal referral).  If the CFO blows the whistle to the SEC and continues to operate as CFO and while refusing to aid the fraud he can provide the SEC with constantly updated information and place the CEO in a dilemma about whether to fire him.  Conversely, if the CFO were to blow the whistle only within the organization the CEO can learn exactly what the CFO knows -- and doesn't know -- about the fraud schemes and take steps to make it far more difficult for the government to sanction him for his crimes.

Fish and Corporations Rot from the Head

The obvious question, which the opponents of whistleblowers studiously ignored was how common is it that the senior officers lead securities fraud.  COSO's (Treadway's) 2010 study gave an answer to that question -- and the question of whether securities frauds helps a corporation or harms it.  The passage below is from COSO's May 20, 2010 press release announcing the key findings of their study.

"The COSO study, which examined financial statement fraud allegations investigated by the U.S. Securities and Exchange Commission over a ten-year period, found that news of an alleged fraud resulted in an average 16.7 percent abnormal stock price decline in the two days surrounding the announcement. Companies engaged in fraud often experienced bankruptcy, delisting from a stock exchange, or asset sale, and in nine out of ten cases the SEC named the CEO and/or CFO for alleged involvement."

Securities fraud harms corporations and shareholders.  It is overwhelmingly led by the controlling officers. Credible whistleblowers to the SEC, therefore, will overwhelmingly be giving evidence of likely frauds led by the CEO and CFO.  It would be insane to assume out of existence "control fraud" in the securities fraud context where such frauds are nearly always control frauds.  The opponents of whistleblowing take their orders from the CEOs and CFOs so their opposition to the SEC's proposed rules invariably -- and implicitly -- assume control fraud does not exist and that securities fraud originates in the cubes instead of the C-suites.  They never cite the COSO study findings that demonstrate that it originates almost exclusively in the C-suites even though the COSO study was the definitive work that had just been released.  Economists emphasize "revealed preferences."  Corporate CEOs have revealed their preferences about integrity -- forget their prating endlessly about their principles -- their actions on whistleblowing demonstrate that their true preference is to prevent the disclosure of securities fraud by senior corporate officers.

The SEC rule does not forbid the whistleblower from alerting the corporation about the misconduct he has spotted.  An honest CEO who sends a clear message through her acts and deeds that she demands integrity and takes forceful action against corporate misconduct should be successful in encouraging whistleblowers to inform her of such misconduct.

Corporations and Courts Encourage Retaliating v Whistleblowers

But it gets much, much worse.  Corporations are going to court and claiming that the Dodd-Frank provisions that protect whistleblowers from retaliation do not apply if the whistleblower only blows the whistle to the corporation, but not the SEC.  The real reason why corporations objected to the SEC's proposed whistleblower rule, which provided greater encouragement to whistleblowers to notify the SEC becomes clear.  The corporate CEOs hoped to maintain the ability to take reprisals against greater numbers of whistleblowers.  The obscene news is that the Fifth Circuit Court of Appeals has ruled that Dodd-Frank's anti-reprisal remedy does not protect whistleblowers who only notify the corporation of the likely crime.

Conclusion and a Plea to Act

The degree of hostility against regulators and whistleblowers, and intense sympathy for the CEOs leading the control frauds, is palpable among large numbers of Reagan and Bush judicial appointees.  When the Republicans obtain control of presidency they will resume appointing similar judges and are likely to use their control over the SEC to force whistleblowers to tip off the crooks so that elite corporate criminals can further enhance their already near total ability to defraud and to take reprisals against whistleblowers with impunity. It is disturbing that when corporate CEOs and these SEC board members revealed their desire to help fraudulent CEOs escape prosecution and retaliate against whistleblowers they paid no political or reputational price.  The business media typically supported their disgraceful efforts.  It needs to be emphasized that COSO has confirmed what white-collar criminologists and effective regulators have stressed for decades -- many of the frauds led by the CEOs harm the corporation, so the ideologues cannot even claim that they are "pro-business."  They are pro fraudulent CEOs, which makes them anti-business, anti-labor, anti-capitalist, and anti-American.  We need to use logic, common sense, and the long-standing banking rule requirements, now endorsed for international application by FATF, to build a backfire today rather than waiting until they formally propose to destroy the SEC rule or conservative judges gut it by claiming that its costs exceed the benefits and that many whistleblowers are not entitled to protection from reprisals because they trusted the CEO and blew the whistle only inside the firm.  The most famous whistleblowers at Enron and Worldcom would have been excluded from Dodd-Frank's protection from reprisals under the Fifth Circuit decision because they blew the whistle only internally.

15. As Iraq violence grows, U.S. sends more intelligence officers
Mark Hosenball and Warren Strobel
3:36 PM CDT, April 25, 2014

WASHINGTON (Reuters) - The United States is quietly expanding the number of intelligence officers in Iraq and holding urgent meetings in Washington and Baghdad to find ways to counter growing violence by Islamic militants, U.S. government sources said.

A high-level Pentagon team is now in Iraq to assess possible assistance for Iraqi forces in their fight against radical jihadists from the Islamic State of Iraq and the Levant (ISIL), a group reconstituted from an earlier incarnation of al Qaeda, said two current government officials and one former U.S. official familiar with the matter.

The powerful ISIL, which seeks to impose strict sharia law in the Sunni majority populated regions of Iraq, now boasts territorial influence stretching from Iraq's western Anbar province to northern Syria, operating in some areas close to Baghdad, say U.S. officials.

Senior U.S. policy officials, known as the "Deputies Committee," met in Washington this week to discuss possible responses to the deteriorating security outlook in Iraq, said a government source, who spoke on condition of anonymity because of the sensitivity of the subject matter.

The source did not know the outcome of the meeting.

White House spokeswoman Bernadette Meehan declined to comment.

The meetings underscore how Iraq's instability is posing a new foreign policy challenge for President Barack Obama, who celebrated the withdrawal of U.S. troops more than two years ago. Despite the concern, officials said it remains unclear whether Obama will commit significant new resources to the conflict.

Four months after Iraqi Prime Minister Nuri al-Maliki declared war on Sunni militants in Iraq's western Anbar province, the fighting has descended into brutal atrocities, often caught on video and in photographs by both militants and Iraqi soldiers.

Iraqi soldiers say they are bogged down in a slow, vicious fight with ISIL and other Sunni factions in the city of Ramadi and around nearby Falluja.


One former and two current U.S. security officials said the number of U.S. intelligence personnel in Baghdad had already begun to rise but that the numbers remained relatively small.

"It's more than before, but not really a lot," said one former official with knowledge of the matter.

Much of the pressure to do more is coming from the U.S. military, the former official said, but it is unclear if the White House wants to get more deeply involved.

After ending nearly nine years of war in Iraq, the United States has limited military options inside the country. About 100 U.S. military personnel remain, overseeing weapons sales and cooperation with Iraqi security forces.

The U.S. government has rushed nearly 100 Hellfire missiles, M4 rifles, surveillance drones and 14 million rounds of ammunition to the Iraqi military since January, U.S. officials said. The Obama administration has also started training Iraqi special forces in neighboring Jordan.

Before the U.S. military withdrew, it trained, equipped and conducted operations with Iraqi special forces.

Staff from the Pentagon's Central Command are working closely with the Iraqi military but have advised it against launching major operations due to concerns Iraqi forces are not prepared for such campaigns, the former U.S. official said.

In Anbar, militants have a major presence in Falluja, while in Ramadi there is a stalemate, with territory divided among Iraqi government forces, ISIL and other Sunni armed groups.

In testimony before the House of Representatives Foreign Affairs Committee in February, Brett McGurk, the State Department's top official on Iraq, described how convoys of up to 100 trucks, mounted with heavy weapons and flying al Qaeda flags, moved into Ramadi and Falluja on New Year's Day.

Local forces in Ramadi subsequently succeeded in pushing militants back, but the situation in Falluja remained "far more serious," McGurk said.

(Additional reporting by Phil Stewart in Washington and by Ned Parker in Baghdad. Editing by Jason Szep and Ross Colvin)

16. Secret Public Pension Deals
In the national debate over what to do about public pension shortfalls, here’s something you may not know: The texts of the agreements signed between those pension funds and financial firms are almost always secret. Yes, that’s right. Although they are public pensions that taxpayers contribute to and that public officials oversee, the exact terms of the financial deals being engineered in the public’s name and with public money are typically not available to you, the taxpayer.

To understand why that should be cause for concern, ponder some possibilities as they relate to pension deals with hedge funds, private equity partnerships and other so-called “alternative investments.” For example, it is possible that the secret terms of such agreements could allow other private individuals in the same investments to negotiate preferential terms for themselves, meaning public employees’ pension money enriches those private investors. It is also possible that the secret terms of the agreements create the heads-Wall-Street-wins, tails-pensions-lose effect — the one whereby retirees’ money is subjected to huge risks, yet financial firms’ profits are guaranteed regardless of returns.

North Carolina exemplifies the latter problem. In a new report for the union representing that state’s public employees, former Securities and Exchange Commission investigator Ted Siedle documents how secrecy is allowing financial firms to bilk the Teachers’ and State Employees’ Retirement System, which is the seventh largest public pension fund in America.

The first part of Siedle’s report evaluates the secrecy.

“Today, TSERS assets are directly invested in approximately 300 funds and indirectly in hundreds more underlying funds, the names, investment practices, portfolio holdings, investment performances, fees, expenses, regulation, trading and custodian banking arrangements of which are largely unknown to stakeholders, the State Auditor and, indeed, to even the (State) Treasurer and her staff,” he reports. “As a result of the lack of transparency and accountability at TSERS, it is virtually impossible for stakeholders to know the answers to questions as fundamental as who is managing the money, what is it invested in and where is it?”

Before you claim this is just a minor problem, consider some numbers. According to Siedle’s report, this huge pension system now is authorized to invest up to 35 percent — or $30 billion — of its assets in alternatives. Consider, too, that Siedle’s report shows that with such a large allocation in these risky alternatives, the fund “has underperformed the average public plan by $6.8 billion.”

So what is happening to retirees’ money? As Siedle documents, more and more of it is going to pay the exorbitant fees charged by the Wall Street firms managing the pension money.

“Fees have skyrocketed over 1,000 percent since 2000 and have almost doubled since (2008) from $217 million to $416 million,” he writes, adding that “annual fees and expenses will amount to approximately $1 billion in the near future.”

The details get worse from there, which makes Siedle’s report a genuine must-read for anyone who wants to understand the larger story of public pensions. After all, North Carolina is not an isolated incident. In state after state, the financial industry is citing modest public pension shortfalls to justify pushing those pensions to invest more money in riskier and riskier high-fee investments — and to do so in secret.

It is a story that isn’t some minor issue. On the contrary, the fight over that $3 trillion is fast becoming one of the most important economic, business and political stories of modern times. The only question is whether the story can even be told — or whether those  profiting off secrecy can continue hiding their schemes from the public.


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