http://news.bbc.co.uk/1/hi/7426195.stm
Stonehenge 'a long-term cemetery'
Thursday, 29 May 2008
Stonehenge served as a burial ground for much longer than had previously been believed, new research suggests.
The site was used as a cemetery for 500 years, from the point of its inception.
Archaeologists have said the cremation burials found at the site might represent a single elite family and its descendents - perhaps a ruling dynasty.
One clue to this idea is that there are few burials in the earliest phase, but that the number grows larger in later centuries, as offspring multiplied.
Under the traditional view, cremation burials were dug at the site between 2,700 BC and 2,600 BC, about a century before the large stones - known as sarsens - were put in place.
Professor Mike Parker Pearson, from the department of archaeology at the University of Sheffield, and his colleagues have now carried out radiocarbon dating of burials excavated in the 1950s that were kept at the nearby Salisbury Museum.
Their results suggest burials took place at the site from the initiation of Stonehenge, just after 3,000 BC, until the time the large stones appear at about 2,500 BC.
The earliest cremation burial dated - a small pile of burned bones and teeth - came from one of the pits around the edge of Stonehenge known as the Aubrey Holes and dates to between 3,030 BC and 2,880 BC - roughly the time when the Stonehenge monument was cut into Salisbury Plain.
The second burial, from the ditch surrounding Stonehenge, is that of an adult and dates to between 2,930 BC and 2,870 BC.
The most recent cremation comes from the ditch's northern side and was of a 25-year-old woman; it dates to between 2,570 BC and 2,340 BC, around the time the first arrangements of sarsen stones appeared at Stonehenge.
The latest findings are the result of the Stonehenge Riverside Project, a collaboration between five UK universities. Details of the research are to be featured in National Geographic magazine.
Royal circle?
Professor Parker-Pearson, who leads the project, said: "I don't think it was the common people getting buried at Stonehenge - it was clearly a special place at that time."
He added: "Archaeologists have long speculated about whether Stonehenge was put up by prehistoric chiefs - perhaps even ancient royalty - and the new results suggest that not only is this likely to have been the case, but it also was the resting place of their mortal remains."
Two other Stonehenge experts, Professor Tim Darvill, from the University of Bournemouth, and Professor Geoff Wainwright, from the Society of Antiquaries, have a different theory about the monument.
They are convinced that the dominating feature on Salisbury Plain in Wiltshire was akin to a "Neolithic Lourdes" - a place where people went on a pilgrimage to get cured.
They recently carried out a two-week excavation at the site to search for clues to why the 4,500-year-old landmark was erected.
Wednesday, June 4, 2008
Huge Flying Reptiles Ate Dinosaurs
http://www.livescience.com/animals/080527-giant-reptile.htmlHuge Flying Reptiles Ate Dinosaurs
By Jeanna Bryner, Senior Writer
27 May 2008
A group of flying reptiles called Quetzalcoatlus may have strolled along a fern prairie eating baby dinosaurs for lunch.
With a name like T. rex, you'd expect to be safe from even the fiercest paleo-bullies. Turns out, ancient, flying reptiles could have snacked on Tyrannosaurus Rex babies and other landlubbing runts of the dinosaur world.
A new study reveals a group of flying reptiles that lived during the Age of Dinosaurs some 230 million to 65 million years ago did not catch prey in flight, but rather stalked them on land.
Until now, paleontologists pictured the so-called "winged lizards" or pterosaurs as skim-feeders. In this vision, the creatures would have flown over lakes and oceans grabbing fish from the water's surface, much as gulls do today.
The new findings, detailed this week online in the journal PLoS ONE, don't ground the animals totally.
"In our hypothesis, flight is primarily a locomotive method," said co-researcher Mark Witton of the University of Portsmouth in England. "They're just using it to get from point A to point B. We think the majority of their lives, when they're feeding and reproducing, that's all being done on the ground rather than in the air."
To uncover these feeding habits, Witton and Portsmouth colleague Darren Naish analyzed fossils of a group of toothless pterosaurs called azhdarchids, which are much larger on average than other pterosaurs. For example, one of the largest azhdarchids, Quetzalcoatlus, weighed about 550 pounds (250 kilograms) with a wingspan of more than 30 feet (10 meters) and a height comparable to a giraffe.
Witton and Naish learned that more than 50 percent of the azhdarchid fossils had been found inland. Other skeletal features, including long hind limbs and a stiff neck, also didn't fit with a mud-prober or skim-feeder.
"All the details of their anatomy, and the environment their fossils are found in, show that they made their living by walking around, reaching down to grab and pick up animals and other prey," Naish said.
A skim-feeder, such as a gull, trawls its lower jaw through the water, eventually smacking into a fish or shrimp and pulling it from the water. "Regardless of what they hit, the impact force drives the head and neck underneath the body and into the water, thus requiring a hugely flexible neck," Witton said.
This is the case with gulls and pelicans (which are considered plunge divers), but azhdarchid's neck, despite potentially reaching nearly 10 feet (3 meters) in length, was super stiff. "Whatever these animals were doing, it had to involve minimal neck action," Witton said.
Their tiny feet also ruled out wading in the water or probing the soft mud for food. "Some of these animals are absolutely enormous," Witton told LiveScience. "If you go wading out into this soft mud, and you weigh a quarter of a ton, and you've got these dinky little feet, you're going to just sink in."
The reptile's head also was pretty lengthy, up to 10 feet (3 meters). So Witton said an azhdarchid would only have to dip its head part way to the ground, enough for the tip of its jaws to touch down, to hunt and feed on terrestrial prey. Back before they went extinct 65 million years ago during the event that also killed off non-avian dinosaurs, these pterosaurs could lunch on animals ranging from small bird-like Velicoraptors to T. rex babies to amphibians.
YouTube law fight 'threatens net'
http://news.bbc.co.uk/1/hi/technology/7420955.stm
YouTube law fight 'threatens net'
Tuesday, 27 May 2008
A one billion dollar lawsuit against YouTube threatens internet freedom, according to its owner Google.
Google's claim follows Viacom's move to sue the video sharing service for its inability to keep copyrighted material off its site.
Viacom says it has identified 150,000 unauthorised clips on YouTube.
In court documents Google's lawyers say the action "threatens the way hundreds of millions of people legitimately exchange information" over the web.
The search giant's legal team also maintained that YouTube had been faithful to the requirements of the 1998 Digital Millennium Copyright Act and that they responded properly to claims of infringement.
In papers submitted to a Manhattan court, Google said it and YouTube "goes far beyond its legal obligations in assisting content owners to protect their works".
Viacom disagreed that either firm had lived up to that standard and said that they had done "little or nothing" to stop infringement.
Abuse
In a rewritten lawsuit filed last month, Viacom claimed YouTube consistently allowed unauthorised copies of popular television programming and movies to be posted on its website and viewed tens of thousands of times.
It said it had identified more than 150,000 such abuses which included clips from shows such as South Park, SpongeBob SquarePants and MTV Unplugged.
The company says the infringement also included the documentary An Inconvenient Truth which had been viewed "an astounding 1.5 billion times".
Viacom, which is asking for damages for the unauthorised viewing of its programming, said its tally represented only a fraction of the content on YouTube that violates its copyrights.
"The availability on the YouTube site of a vast library of the copyrighted works of plaintiffs and others is the cornerstone of defendants' business plan," Viacom said.
Viacom originally started legal action last year and filed an amended version last month. Earlier this month Viacom chairman Sumner Redstone told Dow Jones: "When we filed this lawsuit, we not only served our own interests, we served the interests of everyone who owns copyrights they want protected."
He added: "We cannot tolerate any form of piracy by anyone, including YouTube...they cannot get away with stealing our products."
For its part, Google said the only way the legal action would be resolved was in court.
Google's vice president of content partnerships David Eun has said: "We're going all the way to the Supreme Court. We've been very clear about it."
After the legal action was first started, YouTube launched an anti-piracy tool that checks uploaded videos against the original content in an effort to flag piracy.
YouTube law fight 'threatens net'
Tuesday, 27 May 2008
A one billion dollar lawsuit against YouTube threatens internet freedom, according to its owner Google.
Google's claim follows Viacom's move to sue the video sharing service for its inability to keep copyrighted material off its site.
Viacom says it has identified 150,000 unauthorised clips on YouTube.
In court documents Google's lawyers say the action "threatens the way hundreds of millions of people legitimately exchange information" over the web.
The search giant's legal team also maintained that YouTube had been faithful to the requirements of the 1998 Digital Millennium Copyright Act and that they responded properly to claims of infringement.
In papers submitted to a Manhattan court, Google said it and YouTube "goes far beyond its legal obligations in assisting content owners to protect their works".
Viacom disagreed that either firm had lived up to that standard and said that they had done "little or nothing" to stop infringement.
Abuse
In a rewritten lawsuit filed last month, Viacom claimed YouTube consistently allowed unauthorised copies of popular television programming and movies to be posted on its website and viewed tens of thousands of times.
It said it had identified more than 150,000 such abuses which included clips from shows such as South Park, SpongeBob SquarePants and MTV Unplugged.
The company says the infringement also included the documentary An Inconvenient Truth which had been viewed "an astounding 1.5 billion times".
Viacom, which is asking for damages for the unauthorised viewing of its programming, said its tally represented only a fraction of the content on YouTube that violates its copyrights.
"The availability on the YouTube site of a vast library of the copyrighted works of plaintiffs and others is the cornerstone of defendants' business plan," Viacom said.
Viacom originally started legal action last year and filed an amended version last month. Earlier this month Viacom chairman Sumner Redstone told Dow Jones: "When we filed this lawsuit, we not only served our own interests, we served the interests of everyone who owns copyrights they want protected."
He added: "We cannot tolerate any form of piracy by anyone, including YouTube...they cannot get away with stealing our products."
For its part, Google said the only way the legal action would be resolved was in court.
Google's vice president of content partnerships David Eun has said: "We're going all the way to the Supreme Court. We've been very clear about it."
After the legal action was first started, YouTube launched an anti-piracy tool that checks uploaded videos against the original content in an effort to flag piracy.
Titanic search was cover for secret mission
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article3994955.ece
May 24, 2008
Titanic search was cover for secret Cold War subs mission
Lewis Smith, Environment Reporter
The man who located the wreck of the Titanic has revealed that the discovery was a cover story to camouflage the real mission of inspecting the wrecks of two Cold War nuclear submarines.
When Bob Ballard led a team that pinpointed the wreckage of the liner in 1985 he had already completed his main task of finding out what happened to USS Thresher and USS Scorpion.
Both of the United States Navy vessels sank during the 1960s, killing more than 200 men and giving rise to fears that at least one of them, Scorpion, had been sunk by the USSR.
Dr Ballard, an oceanographer, has admitted that he located and inspected the wrecks for the US Navy in top secret missions before he was allowed to search for the Titanic.
Only once he had used his new underwater robot craft to map the submarine wreck sites was he able to use it to crisscross the North Atlantic seabed to pinpoint the last resting place of the luxury liner. It meant he had only 12 days to find the Titanic.
“I couldn’t tell anybody,” he said. “There was a lot of pressure on me. It was a secret mission. I felt it was a fair exchange for getting a chance to look for the Titanic.
“We handed the data to the experts. They never told us what they concluded – our job was to collect the data. I can only talk about it now because it has been declassified.”
Dr Ballard said what he had seen during the inspection of the wrecks gave him the idea of finding a trail of debris that would lead to the main sections of the Titanic. Thresher, had imploded deep beneath the surface and had broken up into thousands of pieces and Scorpion was almost as completely destroyed. “It was as though it had been put through a shredding machine. There was a long debris trail.” Dr Ballard developed a robotic submarine craft in the early 1980s and approached the US Navy in 1982 for funding to search for the Titanic, which sank in 1912 with the loss of 1,500 lives after hitting an iceberg.
He was told that the military were not willing to spend a fortune on locating the liner, but they did want to know what had happened to their submarines.The military were anxious to know how the nuclear reactors had been affected by being submerged for so long.
During the 1980s the nuclear submarine fleet was reduced after the Salt II (strategic arms limitation talks) agreement and one option was to sink unwanted reactors at sea. Dr Ballard said that samples taken from the reactor sections of both submarines showed that there was little risk to the environment from radioactivity.
The oceanographer was given the funding to embark on two expeditions, one to find the wreck of Thresher in 1984 off the eastern coast of the US and another to find Scorpion in the eastern Atlantic.
Thresher, the US Navy’s most advanced attack submarine at the time, sank with all her 129 crew in April 1963 while undergoing seaworthiness tests after dockyard repairs.
A surface ship, Skylark, was in contact when the submarine’s crew reported that a high-pressure pipe supplying the nuclear reactor with cooling water had blown. The accident 1,000ft down, caused the vessel to lose power. It then sank so deep that the pressure hull imploded.
Scorpion disappeared with 99 crew in 1968, and there had been speculation that it was sunk by Soviet forces. Dr Ballard’s visual examination of the wreck site showed that the most likely cause of its destruction was being hit by a rogue torpedo that it had fired itself.
— Titanic: The Final Secret will be shown on the National Geographic Channel at 9pm on June 8.
May 24, 2008
Titanic search was cover for secret Cold War subs mission
Lewis Smith, Environment Reporter
The man who located the wreck of the Titanic has revealed that the discovery was a cover story to camouflage the real mission of inspecting the wrecks of two Cold War nuclear submarines.
When Bob Ballard led a team that pinpointed the wreckage of the liner in 1985 he had already completed his main task of finding out what happened to USS Thresher and USS Scorpion.
Both of the United States Navy vessels sank during the 1960s, killing more than 200 men and giving rise to fears that at least one of them, Scorpion, had been sunk by the USSR.
Dr Ballard, an oceanographer, has admitted that he located and inspected the wrecks for the US Navy in top secret missions before he was allowed to search for the Titanic.
Only once he had used his new underwater robot craft to map the submarine wreck sites was he able to use it to crisscross the North Atlantic seabed to pinpoint the last resting place of the luxury liner. It meant he had only 12 days to find the Titanic.
“I couldn’t tell anybody,” he said. “There was a lot of pressure on me. It was a secret mission. I felt it was a fair exchange for getting a chance to look for the Titanic.
“We handed the data to the experts. They never told us what they concluded – our job was to collect the data. I can only talk about it now because it has been declassified.”
Dr Ballard said what he had seen during the inspection of the wrecks gave him the idea of finding a trail of debris that would lead to the main sections of the Titanic. Thresher, had imploded deep beneath the surface and had broken up into thousands of pieces and Scorpion was almost as completely destroyed. “It was as though it had been put through a shredding machine. There was a long debris trail.” Dr Ballard developed a robotic submarine craft in the early 1980s and approached the US Navy in 1982 for funding to search for the Titanic, which sank in 1912 with the loss of 1,500 lives after hitting an iceberg.
He was told that the military were not willing to spend a fortune on locating the liner, but they did want to know what had happened to their submarines.The military were anxious to know how the nuclear reactors had been affected by being submerged for so long.
During the 1980s the nuclear submarine fleet was reduced after the Salt II (strategic arms limitation talks) agreement and one option was to sink unwanted reactors at sea. Dr Ballard said that samples taken from the reactor sections of both submarines showed that there was little risk to the environment from radioactivity.
The oceanographer was given the funding to embark on two expeditions, one to find the wreck of Thresher in 1984 off the eastern coast of the US and another to find Scorpion in the eastern Atlantic.
Thresher, the US Navy’s most advanced attack submarine at the time, sank with all her 129 crew in April 1963 while undergoing seaworthiness tests after dockyard repairs.
A surface ship, Skylark, was in contact when the submarine’s crew reported that a high-pressure pipe supplying the nuclear reactor with cooling water had blown. The accident 1,000ft down, caused the vessel to lose power. It then sank so deep that the pressure hull imploded.
Scorpion disappeared with 99 crew in 1968, and there had been speculation that it was sunk by Soviet forces. Dr Ballard’s visual examination of the wreck site showed that the most likely cause of its destruction was being hit by a rogue torpedo that it had fired itself.
— Titanic: The Final Secret will be shown on the National Geographic Channel at 9pm on June 8.
A Tiny Fruit That Tricks the Tongue
http://www.nytimes.com/2008/05/28/dining/28flavor.htmlMay 28, 2008
A Tiny Fruit That Tricks the Tongue
By PATRICK FARRELL and KASSIE BRACKEN
CARRIE DASHOW dropped a large dollop of lemon sorbet into a glass of Guinness, stirred, drank and proclaimed that it tasted like a “chocolate shake.”
Nearby, Yuka Yoneda tilted her head back as her boyfriend, Albert Yuen, drizzled Tabasco sauce onto her tongue. She swallowed and considered the flavor: “Doughnut glaze, hot doughnut glaze!”
They were among 40 or so people who were tasting under the influence of a small red berry called miracle fruit at a rooftop party in Long Island City, Queens, last Friday night. The berry rewires the way the palate perceives sour flavors for an hour or so, rendering lemons as sweet as candy.
The host was Franz Aliquo, 32, a lawyer who styles himself Supreme Commander (Supreme for short) when he’s presiding over what he calls “flavor tripping parties.” Mr. Aliquo greeted new arrivals and took their $15 entrance fees. In return, he handed each one a single berry from his jacket pocket.
“You pop it in your mouth and scrape the pulp off the seed, swirl it around and hold it in your mouth for about a minute,” he said. “Then you’re ready to go.” He ushered his guests to a table piled with citrus wedges, cheeses, Brussels sprouts, mustard, vinegars, pickles, dark beers, strawberries and cheap tequila, which Mr. Aliquo promised would now taste like top-shelf Patrón.
The miracle fruit, Synsepalum dulcificum, is native to West Africa and has been known to Westerners since the 18th century. The cause of the reaction is a protein called miraculin, which binds with the taste buds and acts as a sweetness inducer when it comes in contact with acids, according to a scientist who has studied the fruit, Linda Bartoshuk at the University of Florida’s Center for Smell and Taste. Dr. Bartoshuk said she did not know of any dangers associated with eating miracle fruit.
During the 1970s, a ruling by the Food and Drug Administration dashed hopes that an extract of miraculin could be sold as a sugar substitute. In the absence of any plausible commercial application, the miracle fruit has acquired a bit of a cult following.
Sina Najafi, editor in chief of the art magazine Cabinet, has featured miracle fruits at some of the publication’s events. At a party in London last October, the fruit, he said, “had people testifying like some baptismal thing.”
The berries were passed out last week at a reading of “The Fruit Hunters,” a new book by Adam Leith Gollner with a chapter about miracle fruit.
Bartenders have been experimenting with the fruit as well. Don Lee, a beverage director at the East Village bar Please Don’t Tell, has been making miracle fruit cocktails on his own time, but the bar probably won’t offer them anytime soon. The fruit is highly perishable and expensive — a single berry goes for $2 or more.
Lance J. Mayhew developed a series of drink recipes with miracle fruit foams and extracts for a recent issue of the cocktail magazine Imbibe and may create others for Beaker & Flask, a restaurant opening later this year in Portland, Ore.
He cautioned that not everyone enjoys the berry’s long-lasting effects. Despite warnings, he said, one woman became irate after drinking one of his cocktails. He said, “She was, like, ‘What did you do to my mouth?’ ”
Mr. Aliquo issues his own warnings. “It will make all wine taste like Manischewitz,” he said. And already sweet foods like candy can become cloying.
He said that he had learned about miracle fruit while searching ethnobotany Web sites for foods he could make for a diabetic friend.
The party last week was his sixth “flavor tripping” event. He hopes to put on a much larger, more expensive affair in June. Although he does sell the berries on his blog, www.flavortripping.wordpress.com, Mr. Aliquo maintains that he isn’t in it for the money. (He said he made about $100 on Friday.) Rather, he said, he does it to “turn on a bunch of people’s taste buds.”
He believes that the best way to encounter the fruit is in a group. “You need other people to benchmark the experience,” he said. At his first party, a small gathering at his apartment in January, guests murmured with delight as they tasted citrus wedges and goat cheese. Then things got trippy.
“You kept hearing ‘oh, oh, oh,’ ” he said, and then the guests became “literally like wild animals, tearing apart everything on the table.”
“It was like no holds barred in terms of what people would try to eat, so they opened my fridge and started downing Tabasco and maple syrup,” he said.
Many of the guests last week found the party through a posting at www.tThrillist.com. Mr. Aliquo sent invitations to a list of contacts he has been gathering since he and a friend began organizing StreetWars, a popular urban assassination game using water guns.
One woman wanted to see Mr. Aliquo eat a berry before she tried one. “What, you don’t trust me?” he said.
She replied, “Well, I just met you.”
Another guest said, “But you met him on the Internet, so it’s safe.”
The fruits are available by special order from specialty suppliers in New York, including Baldor Specialty Foods and S. Katzman Produce. Katzman sells the berries for about $2.50 a piece, and has been offering them to chefs.
Mr. Aliquo gets his miracle fruit from Curtis Mozie, 64, a Florida grower who sells thousands of the berries each year through his Web site, www.miraclefruitman.com. (A freezer pack of 30 berries costs about $90 with overnight shipping.) Mr. Mozie, who was in New York for Mr. Gollner’s reading, stopped by the flavor-tripping party.
Mr. Mozie listed his favorite miracle fruit pairings, which included green mangoes and raw aloe. “I like oysters with some lemon juice,” he said. “Usually you just swallow them, but I just chew like it was chewing gum.”
A large group of guests reached its own consensus: limes were candied, vinegar resembled apple juice, goat cheese tasted like cheesecake on the tongue and goat cheese on the throat. Bananas were just bananas.
For all the excitement it inspires, the miracle fruit does not make much of an impression on its own. It has a mildly sweet tang, with firm pulp surrounding an edible, but bitter, seed. Mr. Aliquo said it reminded him of a less flavorful cranberry. “It’s not something I’d just want to eat,” he said.
China earthquake: Superstition a potent force
http://www.telegraph.co.uk/news/worldnews/asia/china/2021715/China-earthquake-Superstition-a-potent-force.html
China earthquake: Superstition a potent force
By David Eimer in Chengdu
24/05/2008
Superstition is still a potent force in China. Some Tibetans believe the earthquake was revenge for the Olympic torch being carried to the top of Mount Everest.
When Manchester United won the Champions League last Wednesday, many put the blame on Chelsea’s captain John Terry for missing a crucial penalty.
In China, though, almost 20 per cent of the respondents in an online poll thought it was because United, the most popular English team in China, had been blessed by the victims of the Sichuan earthquake.
But the most popular quack theory for the quake revolves around the number ’8’, the luckiest number for the Chinese and the reason why the Beijing Olympics will start at 8pm on the eighth day of the eighth month of the eighth year of the century.
But as amateur numerologists have been quick to point out, 2008 is turning out to be an extremely unlucky year for China.
On January 25th, blizzards and snowstorms blanketed much of the country, paralysing the railways just as hundreds of millions of people were preparing to travel to their hometowns for the Chinese New Year.
Two months later on March 14, the protests erupted in the Tibetan capital Lhasa and the government’s heavy-handed response saw China condemned around the world. Then the earthquake struck on May 12.
For the conspiracy theorists, the common denominator is that when the date of each of these three disasters is added together, the result is 8. That is somehow proof that 2008 was destined to be a bad year for China. So 2 and 5 and 1, for January, makes 8, as does 1 and 4 and 3 and now 1 and 2 and 5.
And, of course, May 12 was precisely 88 days before the start of the Olympics. If the trend continues, July 1 is set to be a difficult day for China too.
China earthquake: Superstition a potent force
By David Eimer in Chengdu
24/05/2008
Superstition is still a potent force in China. Some Tibetans believe the earthquake was revenge for the Olympic torch being carried to the top of Mount Everest.
When Manchester United won the Champions League last Wednesday, many put the blame on Chelsea’s captain John Terry for missing a crucial penalty.
In China, though, almost 20 per cent of the respondents in an online poll thought it was because United, the most popular English team in China, had been blessed by the victims of the Sichuan earthquake.
But the most popular quack theory for the quake revolves around the number ’8’, the luckiest number for the Chinese and the reason why the Beijing Olympics will start at 8pm on the eighth day of the eighth month of the eighth year of the century.
But as amateur numerologists have been quick to point out, 2008 is turning out to be an extremely unlucky year for China.
On January 25th, blizzards and snowstorms blanketed much of the country, paralysing the railways just as hundreds of millions of people were preparing to travel to their hometowns for the Chinese New Year.
Two months later on March 14, the protests erupted in the Tibetan capital Lhasa and the government’s heavy-handed response saw China condemned around the world. Then the earthquake struck on May 12.
For the conspiracy theorists, the common denominator is that when the date of each of these three disasters is added together, the result is 8. That is somehow proof that 2008 was destined to be a bad year for China. So 2 and 5 and 1, for January, makes 8, as does 1 and 4 and 3 and now 1 and 2 and 5.
And, of course, May 12 was precisely 88 days before the start of the Olympics. If the trend continues, July 1 is set to be a difficult day for China too.
LEGO Indiana Jones Video Game
http://www.kidzworld.com/article/13067-lego-indiana-jones-video-game-free-game-download
LEGO Indiana Jones Video Game
Free Game Download
Courtesy of LucasartsWith the new Indiana Jones and the Kingdom of the Crystal Skull rocking theaters with the return of the world's favorite archaeologist-turned-adventurer, Lucasarts wants to give you a dose of his old-skool adventures. A LEGO dose that is. The LEGO Indiana Jones The Original Adventures game takes the first three Indy movies, wraps 'em up into a ball and throws them right at your funny bone. They let you play as the fedora-wearin' dude himself, his friends and even his enemies, through tons of hilarious adventure that will keep reminding you of the award-winning LEGO Star Wars games.
LEGO Indiana Jones Video Game
Free Game Download
Courtesy of LucasartsWith the new Indiana Jones and the Kingdom of the Crystal Skull rocking theaters with the return of the world's favorite archaeologist-turned-adventurer, Lucasarts wants to give you a dose of his old-skool adventures. A LEGO dose that is. The LEGO Indiana Jones The Original Adventures game takes the first three Indy movies, wraps 'em up into a ball and throws them right at your funny bone. They let you play as the fedora-wearin' dude himself, his friends and even his enemies, through tons of hilarious adventure that will keep reminding you of the award-winning LEGO Star Wars games.
Hagar says new supergroup could "rival Zep"
http://www.musicradar.com/news/guitars/sammy-hagar-says-new-supergroup-could-rival-zep-156990Sammy Hagar says new supergroup could "rival Zep"
There's only one way to Zep
MusicRadar, Wed 28 May, 2008
By Joe Bosso
Sammy Hagar is excited about his new supergroup, Chickenfoot, so much so that he says the band "could rival Zep."
Comprised of acclaimed guitarist Joe Satriani, Red Hot Chili Peppers's drummer Chad Smith, former Van Halen bassist Michael Anthony and Hagar, Chickenfoot have written "around eight or nine songs so far" and are due to enter the recording studio in September..
"When people hear the music, it's Led Zeppelin," Hagar enthuses. "I know that's a bold statement, but it's as good as that." The Red Rocker then compares the group to another musical entity, one he has had some experience with: "It's ten times Van Halen, because it's functional - we all like each other."
For his part, Joe Satriani is jazzed about the project but is less hyperbolic than Cabo man Hagar: "We're having a very fun time. For years now I've wanted to do something with a real vocalist and a real band, and I came close a few times but nothing really panned out. This time is different. What I'm doing with Sammy and the rest of the guys feels right. We get together, we have a lot of laughs, and great things happen musically. I'm thrilled, and I can't wait to get our ideas recorded."
Interestingly, MusicRadar has just figured out that the intials of Chickenfoot's members - H.S.A.S. - are exactly the same as another supergroup in Hagar's past. Coincidence?
Radiohead Creeped Out by Prince
http://www.eonline.com/uberblog/b140067_radiohead_creeped_by_prince.html Radiohead Creeped Out by Prince
Fri., May. 30, 2008
by Josh Grossberg
Hail to the Thief suddenly has all kinds of new meaning.
Radiohead has a burgeoning beef with Prince over the Purple One's refusal to allow fan video recordings of his cover of the alt-rockers' seminal 1992 hit, "Creep," to be shown on YouTube.
Radiohead's frontman Thom Yorke tells the Associated Press that he has no problems with Prince's label, NPG Records, taking down clips of the artist performing his own tunes because of copyright concerns.
But when it comes to Prince's version of "Creep," Yorke says he and his mates are ticked not only because they didn't get to see the acclaimed rendition but also because it's their song.
"Really? He's blocked it?" asked a surprised Yorke. "Surely, we should block it. Hang on a moment...well, tell him to unblock it. It's our...song."
Prince unleashed his retooled take on "Creep" while headlining last month's Coachella festival.
Fan-recorded cell phone videos soon flooded YouTube but were quickly yanked after NPG unleashed cease-and-desist letters. The Minneapolis-based Prince is known to be extremely protective of how his image and music are disseminated online.
Radiohead, on the other hand, takes a less restrictive approach.
The band offered a digital version of its latest album, In Rainbows, for whatever listeners chose to pay for it, even if it was nothing.
And Radiohead often encourages devotees to become more interactive with the band's music, for instance releasing the single "Nude" in a format that allowed amateur and professional mixers to create their own mash-ups. No surprises either that Radiohead also has its own popular YouTube channel.
While Prince was one of the first artists to embrace digital distribution, offering his 1997 four-CD set, Crystal Ball, for sale online, he is adamant about keeping control of his content.
After announcing earlier this year that he planned to sue YouTube, eBay and fansites for posting music and videos without permission, he faced a huge backlash.
In a bid to placate peeved fans, Prince's camp has since eased off the legal threats and attempted to work out a compromise.
There was no immediate comment from Prince on Radiohead's remarks.
Meanwhile, we can sit back and wait for the band to cover "Let's Go Crazy" for YouTube.
Condi Rock & Rolls All Night, Parties Everyday
http://www.tmz.com/2008/05/30/condi-rock-and-rolls-all-night-parties-everyday/
Condi Rock & Rolls All Night, Parties Everyday
Posted May 30th 2008
Secretary of State Condoleezza Rice went to a KISS after-party in Stockholm, Sweden on Thursday night and got her groove on with the hard-rockin' band. Is it possible to do a keg stand in a pants suit?
The band invited Condi to hang with them after hearing she was in town. Rice told reporters it was fun meeting the guys and that they seemed really informed about current events. Did they also trade eye liner and lipstick tips?
Condi also says that her favorite KISS song is "Rock and Roll All Night" - a safe answer considering that's pretty much the only KISS song anyone knows.
'Sex and the City': Afterlife
http://www.mtv.com/movies/news/articles/1588364/story.jhtmlMay 30 2008
'Sex and the City': Afterlife, By Kurt Loder
Media attempts to whip up male hysteria around the release of the "Sex and the City" movie have been thoroughly peculiar. The assumption appears to be that any guy voluntarily going to see this picture — or, more likely, getting shanghaied into seeing it by the "Sex"-addicted woman in his life — would somehow be sullying his heterosexuality, and, who knows, might soon find himself mooning over a pair of $700 Jimmy Choo sandals, or something. In London, where the movie opened on Wednesday, a columnist for the Evening Standard warned, "If there ever was a time for men to avoid the cinema, this weekend is it."
This is truly stupid, and not just because the movie turns out to be so unexpectedly excellent. Granted, the "Sex and the City" series that ran on HBO for six seasons, from 1998 to 2004, was an urban-girly phenomenon, a window into a bright, chattery world in which women actually talked about things that women actually talk about, and in the earthy terms they actually use. (The show could only have flowered fully on cable; the censored reruns currently airing on TBS are a feeble facsimile of the original series.) The characters were, by most measures, deeply superficial — scene-makers, trend slaves and fashion victims of the most tragic sort. But they had real human complexities, out of which arose very human concerns. And the show was brilliantly written — the dialogue had a snap and bite that surely would have found favor with Howard Hawks or Preston Sturges or any of the other Hollywood screwball masters of yore. It was also beautifully shot — a visual valentine to the iconic delights of New York City (well, make that Manhattan).
So now, four years after the series wrapped up, we have the movie. It could have been a simple cash-in, a pointless brand-name regurgitation. The fact that it isn't — that it actually surpasses its source — is something of a wonder.
The founding four friends are still at the center of things, naturally: Carrie (Sarah Jessica Parker), the clothes-horse relationship columnist; Miranda (Cynthia Nixon), the sour-tongued corporate lawyer; Charlotte (Kristin Davis), the starry-eyed art dealer; and Samantha (Kim Cattrall), the man-eating PR exec. There's a lot to not want to give away about the story, so let's just say that Carrie — now working on a book, but continuing to write for Vogue magazine — is still tight with her longtime squeeze, Mr. Big (Chris Noth); in fact, they're finally moving in together, into a huge and blazingly sunny penthouse apartment. ("So this is where they keep the light," Big marvels.) Since the trailer already gives it away, we can also stipulate that they've suddenly become engaged, and that Carrie has burst into full, manic wedding-planner mode. (The guest list has already reached 200, and "Page Six" is on the story.)
Meanwhile, Miranda and her good-guy husband, Steve (David Eigenberg), are still living with their little boy in Brooklyn, and they're having problems — to the extent of not having had sex in six months. Charlotte, still happily married to the loving Harry (Evan Handler) and doting on their adopted Chinese daughter, remains the free-range sunbeam she's always been. (Davis' character is somewhat underserved by the exigencies of the plot.) And Samantha has moved to Los Angeles, if you can believe, where she's living with and managing her much younger (what else?) actor boyfriend, Smith (Jason Lewis). She is also beginning to chafe, however, under the constraints of true, monogamous love.
That'll do. This setup evolves into a rather grand comic examination of friendship and betrayal, love and forgiveness, and the inexorable social pressures of aging. At the beginning of the film we see the streets of Manhattan thronged with happy young women just starting out in the big city, and we hear Carrie saying, in voice-over, "Twenty years ago, I was one of them." This could've been a sappy line, but Parker delivers it in a matter-of-fact way, and it's unusually moving. (It's a small, recurring shock to keep realizing that the four main characters, who were in their lively 30s when the TV series started, are now embarked on their 40s — and that Samantha is about to turn 50.) To an even greater degree than you might expect, the picture has a lot of heart, and plenty of smart, pungent laughs. (Congratulated for finally snagging a man, Carrie is told by her Vogue editor that 40 is "the last age at which a woman can be photographed in a bridal dress without the unintended Diane Arbus subtext.")
The movie was written and directed by Michael Patrick King, who also worked in those capacities on the series, and here he's topped himself. Even more than before, the lines crackle with urban energy, and the picture sparkles with wonderful little dabs of character-illumination. (Stuck without her cell when she needs to make a call, Carrie is handed an iPhone — which she thrusts back as if it were some scary new breed of bug. "I can't operate that," she says, showing her age.) There are a few problems. A central jilting scenario is strained and unconvincing. There is some prolonged dog humor that could have been dispensed with. And a new character named Louise seems grafted onto the story for no especially interesting purpose. (Since she's played by the vibrantly appealing Jennifer Hudson, though, who cares?) On the other hand, fans, there are also trademark couture wallows — including a glittery Fashion Week runway show — that are, as I believe they still say, to die for.
But is "Sex in the City" a movie that men can relate to? Well, Judd Apatow has already softened up the male demographic with pictures like "The 40-Year-Old Virgin" and "Knocked Up." And like those films, this one maintains a near-perfect balance between tender sentiment and carnal extroversion. (When was the last time you saw a naked woman turn herself into a living sushi platter?) It's a funny movie that also resonates emotionally — a rare-enough twofer — and it's great to see these familiar characters being taken someplace new and considerably more adventurous. What's not to like? I mean, guys, come on.
'Carol Burnett Show' veteran Harvey Korman dies
http://www.usatoday.com/life/people/2008-05-29-korman-obit_N.htm'Carol Burnett Show' veteran Harvey Korman dies at 81
By Jim Cheng, USA TODAY
Harvey Korman was proud of his training at Chicago's Goodman Theatre, where he performed Shakespeare, Shaw and Ibsen.
But the versatile actor and comedian will forever be known for raising being "second banana" into an art of the highest order, especially during his 10 years on The Carol Burnett Show.
Korman died Thursday in Los Angeles of complications from the rupture of an abdominal aortic aneurysm four months ago, his family said. He was 81.
Korman, a native of Chicago, was a character actor from the beginning, playing the butler in a seventh-grade production of Heidi. In high school he was active in drama club, and after graduating, he enlisted in the Navy during World War II. After the war, Korman returned to Chicago, where his high school drama teacher recommended him for further study at Goodman.
He gained his first extended TV exposure as a regular for four seasons on The Danny Kaye Show in the early '60s. His also did voice-over work on Tom and Jerry and as the Great Gazoo on The Flintstones.
But he came into his own in 1967, when he joined Burnett's CBS variety show. He won four Emmys and a Golden Globe for his work and became famous for trying, and usually failing, to keep a straight face when confronted with the antics of his frequent sketch partner Tim Conway.
"You learn to work fast," Korman once said, describing the art of sketch comedy. "Yet, it has to have two elements: It has to have truth to it, and it has to be funny."
Burnett and Korman spoofed classic movies such as Gone With the Wind and soap operas such as As the World Turns, which they dubbed As the Stomach Turns. They also teamed up as Ed and Eunice, a bickering married couple who were at odds with the wife's mother (Vicki Lawrence).
Although he never found the same success on TV once he left Burnett in 1977, Korman worked steadily in a number of TV series. He hosted The Harvey Korman Show in 1978 and was a regular on The Tim Conway Show in 1980-81. In the mid-'80s, he reprised his Burnett Ed role in the NBC comedy Mama's Family.
Korman was a favorite of Mel Brooks and worked with the director in four films, including his memorable turn as the leering Hedley Lemarr in 1974's Blazing Saddles.
His other film credits include 1979's Americathon and 1982's The Trail of the Pink Panther.
"It takes a certain type of person to be a television star," he said in an interview in 2005. "I didn't have whatever that is. I come across as kind of snobbish and maybe a little too bright.
"Give me something bizarre to play or put me in a dress and I'm fine."
Remembering Sydney Pollack
http://www.consortiumnews.com/2008/052708a.html
Remembering Sydney Pollack
By Lisa Pease
May 27, 2008
Sydney Pollack has died of cancer at 73. If you don't know his name, you should, as he's responsible for some of the best films from the last 40 years.
Pollack was a film director par excellence, a name you could take to the bank. If he was involved, you knew the film would be compelling, and possibly an award winner.
His last credit was as an executive producer of HBO's recent film "Recount," a tight, compelling presentation of the key events in that awful 2000 debacle that passed for an election.
One of the first films of his that I saw left a lasting impression on me. "The Way We Were" was much more than a love story. It was my first introduction to the irrational anti-Communist hysteria that destroyed so many good people's lives in the 1950s.
Then came "Three Days of the Condor," the movie that first sparked my interest in the CIA. In retrospect, the movie was downright prescient:
Turner: Do we have plans to invade the Middle East?
Higgins: Are you crazy?
Turner: Am I?
Higgins: Look, Turner…
Turner: Do we have plans?
Higgins: No. Absolutely not. We have games. That's all. We play games. What if? How many men? What would it take? Is there a cheaper way to destabilize a regime? That's what we're paid to do.
Turner: So Atwood just took the games too seriously. He was really going to do it, wasn't he?
Higgins: A renegade operation. Atwood knew 54/12 would never authorize it, not with the heat on the Company.
Turner: What if there hadn't been any heat? Suppose I hadn't stumbled on their plan?
Higgins: Different ballgame. Fact is, there was nothing wrong with the plan. Oh, the plan was all right, the plan would've worked.
Turner: Boy, what is it with you people? You think not getting caught in a lie is the same thing as telling the truth?
Higgins: No. It's simple economics. Today it's oil, right? In 10 or 15 years, food. Plutonium. And maybe even sooner. Now, what do you think the people are gonna want us to do then?
Turner: Ask them.
Higgins: Not now — then! Ask 'em when they're running out. Ask 'em when there's no heat in their homes and they're cold. Ask 'em when their engines stop. Ask 'em when people who have never known hunger start going hungry. You wanna know something? They won't want us to ask 'em. They'll just want us to get it for 'em!
Underdogs
Pollack directed "The Electric Horseman," about a cowboy who resents being used by corporate America as a symbol of things he doesn't support.
So many of Pollack's movies burst with that theme - the guy who stands up to the world, against all odds. Pollack cared deeply about people, and how we treat each other as friends, as lovers, and as fellow denizens of our shared planet.
Given his sensibilities, it's no wonder he worked primarily with A-list talent. He did a number of films with Robert Redford. He explored journalistic ethics in the film "Absence of Malice" starring Paul Newman and Sally Field.
Pollack showed his versatility by directing one of the funniest comedies of all time. Aided by a brilliant script from Larry Gelbart and the comic genius of Dustin Hoffman, “Tootsie” explores the different treatment of women in men in the world and subjects a man to some of the same treatment.
Then there was the gorgeous "Out of Africa," a lyrical movie based on a memoir of the same name. The film dealt with one woman's fight to prosper on her farm in Africa in the waning days of European control of the continent.
Pollack’s trademark attention to detail showed in every frame, from small set details to soaring cinematography, from the haunting score to the overarching themes of colonization, racism and sexism.
His films were sometimes far better than box office numbers would suggest.
One of my personal favorites is "Havana," a powerful story of a last-chance gambler trying to hit the big time in Havana just before the revolution goes down.
Robert Redford falls for the wife of a Cuban rebel leader, and suffers the consequences of being pulled into a complicated plot. It's a modern day Casablanca against a backdrop of a piece of history about which I am forever curious.
The characters, like the story, are sharp and clear, right down to the restaurant reviewer who is really a CIA operative.
One of my favorite thrillers in recent years was "The Firm," yet another Pollack classic. I had read the John Grisham book, and was surprised that, for once, the film was better than the novel. The film has a much more satisfying ending.
“The Firm” dealt with the nexus of criminals and their lawyers, exploring, in the context of a compelling mystery, the moral issues involved.
Pollack was also an actor, playing small roles in many of the films he directed or produced. His portrayal of Hoffman's agent in Tootsie still makes me laugh, no matter how many times I've seen it.
I will miss him greatly. And while he brought a strong social consciousness to everything he touched, he never let the message overtake the entertainment. He made great films that mesmerized and moved and delighted.
You didn't realize until you were leaving the theater that you'd also gotten a little lesson in history or morality as well.
I hope future directors will find the heart and courage to follow in his exceedingly large footsteps. We lost a giant this week.
Lisa Pease is a historian who has studied the Kennedy assassinations and other enduring political mysteries.
Remembering Sydney Pollack
By Lisa Pease
May 27, 2008
Sydney Pollack has died of cancer at 73. If you don't know his name, you should, as he's responsible for some of the best films from the last 40 years.
Pollack was a film director par excellence, a name you could take to the bank. If he was involved, you knew the film would be compelling, and possibly an award winner.
His last credit was as an executive producer of HBO's recent film "Recount," a tight, compelling presentation of the key events in that awful 2000 debacle that passed for an election.
One of the first films of his that I saw left a lasting impression on me. "The Way We Were" was much more than a love story. It was my first introduction to the irrational anti-Communist hysteria that destroyed so many good people's lives in the 1950s.
Then came "Three Days of the Condor," the movie that first sparked my interest in the CIA. In retrospect, the movie was downright prescient:
Turner: Do we have plans to invade the Middle East?
Higgins: Are you crazy?
Turner: Am I?
Higgins: Look, Turner…
Turner: Do we have plans?
Higgins: No. Absolutely not. We have games. That's all. We play games. What if? How many men? What would it take? Is there a cheaper way to destabilize a regime? That's what we're paid to do.
Turner: So Atwood just took the games too seriously. He was really going to do it, wasn't he?
Higgins: A renegade operation. Atwood knew 54/12 would never authorize it, not with the heat on the Company.
Turner: What if there hadn't been any heat? Suppose I hadn't stumbled on their plan?
Higgins: Different ballgame. Fact is, there was nothing wrong with the plan. Oh, the plan was all right, the plan would've worked.
Turner: Boy, what is it with you people? You think not getting caught in a lie is the same thing as telling the truth?
Higgins: No. It's simple economics. Today it's oil, right? In 10 or 15 years, food. Plutonium. And maybe even sooner. Now, what do you think the people are gonna want us to do then?
Turner: Ask them.
Higgins: Not now — then! Ask 'em when they're running out. Ask 'em when there's no heat in their homes and they're cold. Ask 'em when their engines stop. Ask 'em when people who have never known hunger start going hungry. You wanna know something? They won't want us to ask 'em. They'll just want us to get it for 'em!
Underdogs
Pollack directed "The Electric Horseman," about a cowboy who resents being used by corporate America as a symbol of things he doesn't support.
So many of Pollack's movies burst with that theme - the guy who stands up to the world, against all odds. Pollack cared deeply about people, and how we treat each other as friends, as lovers, and as fellow denizens of our shared planet.
Given his sensibilities, it's no wonder he worked primarily with A-list talent. He did a number of films with Robert Redford. He explored journalistic ethics in the film "Absence of Malice" starring Paul Newman and Sally Field.
Pollack showed his versatility by directing one of the funniest comedies of all time. Aided by a brilliant script from Larry Gelbart and the comic genius of Dustin Hoffman, “Tootsie” explores the different treatment of women in men in the world and subjects a man to some of the same treatment.
Then there was the gorgeous "Out of Africa," a lyrical movie based on a memoir of the same name. The film dealt with one woman's fight to prosper on her farm in Africa in the waning days of European control of the continent.
Pollack’s trademark attention to detail showed in every frame, from small set details to soaring cinematography, from the haunting score to the overarching themes of colonization, racism and sexism.
His films were sometimes far better than box office numbers would suggest.
One of my personal favorites is "Havana," a powerful story of a last-chance gambler trying to hit the big time in Havana just before the revolution goes down.
Robert Redford falls for the wife of a Cuban rebel leader, and suffers the consequences of being pulled into a complicated plot. It's a modern day Casablanca against a backdrop of a piece of history about which I am forever curious.
The characters, like the story, are sharp and clear, right down to the restaurant reviewer who is really a CIA operative.
One of my favorite thrillers in recent years was "The Firm," yet another Pollack classic. I had read the John Grisham book, and was surprised that, for once, the film was better than the novel. The film has a much more satisfying ending.
“The Firm” dealt with the nexus of criminals and their lawyers, exploring, in the context of a compelling mystery, the moral issues involved.
Pollack was also an actor, playing small roles in many of the films he directed or produced. His portrayal of Hoffman's agent in Tootsie still makes me laugh, no matter how many times I've seen it.
I will miss him greatly. And while he brought a strong social consciousness to everything he touched, he never let the message overtake the entertainment. He made great films that mesmerized and moved and delighted.
You didn't realize until you were leaving the theater that you'd also gotten a little lesson in history or morality as well.
I hope future directors will find the heart and courage to follow in his exceedingly large footsteps. We lost a giant this week.
Lisa Pease is a historian who has studied the Kennedy assassinations and other enduring political mysteries.
'Indiana Jones' unearths $126M in box office gold
http://ap.google.com/article/ALeqM5jb68x_tOGx8QHjI0Cr6C-Vy79OGgD90SSR3G2'Indiana Jones' unearths $126M in box office gold
By RYAN NAKASHIMA
5-25-8
LOS ANGELES (AP) — Indiana Jones unearthed box office gold at domestic theaters with a performance that puts it on track to become the second biggest Memorial Day movie opening ever, according to studio estimates Sunday.
The fourth installment of the whip-cracking professor's exploits, "Indiana Jones and the Kingdom of the Crystal Skull," grossed an estimated $101 million from Friday to Sunday, plus $25 million from its opening Thursday, distributor Paramount Pictures said. The company expects it to earn another $25 million on Monday.
That would put it behind only "Pirates of the Caribbean: At World's End," which had a Friday-through-Monday total of $139.8 million, in the pantheon of Memorial Day weekend blockbusters.
Including Thursday's receipts, "Indiana Jones" was expected to collect $151 million over five days, slightly behind "Pirates," which took in $153 million with a partial Thursday included.
"'Indiana Jones' did incredibly well for a film that comes 19 years after the previous installment," said Paul Dergarabedian, president of tracking firm Media By Numbers LLC.
The adventure flick received a lackluster reception from critics at the Cannes Film Festival, but audiences thought otherwise.
Box office estimates grew from $25 million on its opening Thursday through $37 million on Saturday, suggesting strong word of mouth, Dergarabedian said.
"This is the definition of a summer movie from two of the architects of the summer movie season — George Lucas and Steven Spielberg," he said. "These guys have it down to a science and audiences want to go along for that ride."
The first three Indy movies took in $1.2 billion worldwide.
By RYAN NAKASHIMA
5-25-8
LOS ANGELES (AP) — Indiana Jones unearthed box office gold at domestic theaters with a performance that puts it on track to become the second biggest Memorial Day movie opening ever, according to studio estimates Sunday.
The fourth installment of the whip-cracking professor's exploits, "Indiana Jones and the Kingdom of the Crystal Skull," grossed an estimated $101 million from Friday to Sunday, plus $25 million from its opening Thursday, distributor Paramount Pictures said. The company expects it to earn another $25 million on Monday.
That would put it behind only "Pirates of the Caribbean: At World's End," which had a Friday-through-Monday total of $139.8 million, in the pantheon of Memorial Day weekend blockbusters.
Including Thursday's receipts, "Indiana Jones" was expected to collect $151 million over five days, slightly behind "Pirates," which took in $153 million with a partial Thursday included.
"'Indiana Jones' did incredibly well for a film that comes 19 years after the previous installment," said Paul Dergarabedian, president of tracking firm Media By Numbers LLC.
The adventure flick received a lackluster reception from critics at the Cannes Film Festival, but audiences thought otherwise.
Box office estimates grew from $25 million on its opening Thursday through $37 million on Saturday, suggesting strong word of mouth, Dergarabedian said.
"This is the definition of a summer movie from two of the architects of the summer movie season — George Lucas and Steven Spielberg," he said. "These guys have it down to a science and audiences want to go along for that ride."
The first three Indy movies took in $1.2 billion worldwide.
Female VP hopefuls contrast with Clinton
http://news.yahoo.com/s/politico/20080528/pl_politico/10672
Female VP hopefuls contrast with Clinton
Ben Adler
Wed May 28, 2008
Like Hillary Rodham Clinton, the three other women most frequently mentioned as possible running mates for Barack Obama are widely recognized as shrewd, trailblazing politicians who would provide critical ballast to an Obama-led presidential ticket.
But according to interviews with Republicans in their home states, Kansas Gov. Kathleen Sebelius, Arizona Gov. Janet Napolitano and Missouri Sen. Claire McCaskill differ from Clinton by two important measures: They’ve managed to win elections without developing polarizing personas, and they’ve shied away from emphasizing gender in their campaigns.
The distinctions are important for Obama, the front-runner in the Democratic nominating contest, as his campaign begins the process of thinking about possible running mates. Selecting a woman might serve to mend the gender-based rifts that have surfaced as a result of Clinton’s historic candidacy — and Sebelius, Napolitano and McCaskill all possess red-state political portfolios that would make them attractive vice presidential candidates.
Some common themes emerge when talking to Republicans who have battled them. All three are respected for their ability to win in difficult political environments for Democrats, and all are credited with having done so by successfully tacking to the center, reaching out to Republican voters by crafting an independent image. In part, that’s why Napolitano and Sebelius made Time magazine’s “5 Best Governors” list in 2005.
Napolitano draws praise from the other side of the aisle for managerial competence and canny political skills. Arizona Republicans describe the former federal prosecutor as extremely smart, noting that she has adeptly handled hot-button issues such as immigration.
“I think Gov. Napolitano, to the dismay of a lot of Republicans in this state, has been effective because she has governed from the center,” said Jaime Molera, a Republican political consultant in Phoenix. “She has not been seen as a partisan Democrat.”
Molera points to her successful budget compromises with the Republican state Senate last year as a prime example.
Napolitano’s opponents also agree that her pragmatic approach is an asset — though critics say it reflects a lack of core principles.
“I can’t help but wonder if her strengths and weaknesses are one and the same. She’s a highly calculating politician. She does not make a move without considering the political implications,” said Republican consultant Garrick Taylor. “That has benefited her in a traditionally Republican state, but she runs the risk of being cast as a typical politician.”
In Kansas, where Sebelius has managed to frustrate the Republican political establishment while winning over GOP voters, opponents also view her with a kind of grudging admiration. Though conceding she is warm and persuasive in small settings, Republicans gleefully note that she fell flat in her first moment in the national spotlight — when she delivered the Democratic response to the president’s State of Union speech in January.
But more than anything else, Sebelius’ foes generally agree that she has a great talent for recognizing and seizing opportunities in a state where the Republican majority has been bitterly divided between conservatives and moderates.
“She ran as a conservative. She won [reelection] in Kansas because she’s adopted whatever things the Legislature has done,” said Republican state House Speaker Melvin Neufeld. “She takes credit for whatever happens, which a good politician does.”
When Sebelius first captured the governorship in 2002, she did it with a Republican business executive as her running mate. Four years later, in her 2006 reelection, she stunned the state’s political establishment by selecting a new lieutenant governor candidate to run with — the state’s former Republican Party chairman.
“Kathleen has done a good job of walking through fissures in the Kansas Republican Party,” said Republican state Senate Majority Leader Derek Schmidt. “She’s governor because our party has been fairly deeply factionalized since the late '90s, particularly during the last two gubernatorial cycles.”
McCaskill is also respected for her savvy political instincts, winning credit for her campaign trail work ethic and for not making the same mistakes twice.
In an unsuccessful 2004 run for governor, she concentrated heavily on urban areas and got beaten badly in rural counties. When she won her Senate seat in 2006, it was with a populist flavor and a more pronounced focus on rural Missouri.
“She learned that a Democrat in Missouri can’t just focus on urban areas,” said Jared Craighead, executive director of the Missouri Republican Party. “You need to focus on rural areas.”
“Claire McCaskill is a crafty politician who campaigns hard,” added Gregg Keller, a Republican consultant who managed Talent’s 2006 campaign.
Curiously, while Sebelius and Napolitano both do well among women voters — according to 2006 exit polls, Napolitano won 66 percent among women in her easy reelection win — McCaskill’s advantage seems less pronounced. In 2006, she won 51 percent among women in a narrow victory.
Like Sebelius and Napolitano, McCaskill did not highlight the gender factor. “I frankly hope gender is not an issue in this campaign at all,” she told the St. Louis Post-Dispatch in 2006. “This is not something we’re stressing around the state.”
In Arizona and Missouri, Republicans also said gender has been a political nonissue.
“The story in Arizona is that we’ve had a number of female chief executives,” said Taylor, the Republican political consultant. “So [Napolitano’s gender] has been part of a story line but hasn’t been part of her narrative personally.”
“I don’t know that [Sebelius’] gender has played a big role, other than that her percentage of female appointees has been greater than most governors,” said Kansas state Senate President Stephen Morris.
Regardless of the strengths Sebelius, Napolitano and McCaskill might bring to the ticket, home state Republicans insist that none of them could deliver their respective states if they were on the ticket.
McCaskill has narrowly lost and narrowly won Missouri in her two most recent elections, and her popularity doesn’t rank with the two governors. Kansas, which delivered 62 percent to President Bush in 2004, is not considered a competitive state for the Democratic nominee. As for Arizona, local Republicans say any boost Napolitano might provide would be washed out by the presence of another home-stater on the ballot — presumptive Republican nominee and Arizona Sen. John McCain.
Female VP hopefuls contrast with Clinton
Ben Adler
Wed May 28, 2008
Like Hillary Rodham Clinton, the three other women most frequently mentioned as possible running mates for Barack Obama are widely recognized as shrewd, trailblazing politicians who would provide critical ballast to an Obama-led presidential ticket.
But according to interviews with Republicans in their home states, Kansas Gov. Kathleen Sebelius, Arizona Gov. Janet Napolitano and Missouri Sen. Claire McCaskill differ from Clinton by two important measures: They’ve managed to win elections without developing polarizing personas, and they’ve shied away from emphasizing gender in their campaigns.
The distinctions are important for Obama, the front-runner in the Democratic nominating contest, as his campaign begins the process of thinking about possible running mates. Selecting a woman might serve to mend the gender-based rifts that have surfaced as a result of Clinton’s historic candidacy — and Sebelius, Napolitano and McCaskill all possess red-state political portfolios that would make them attractive vice presidential candidates.
Some common themes emerge when talking to Republicans who have battled them. All three are respected for their ability to win in difficult political environments for Democrats, and all are credited with having done so by successfully tacking to the center, reaching out to Republican voters by crafting an independent image. In part, that’s why Napolitano and Sebelius made Time magazine’s “5 Best Governors” list in 2005.
Napolitano draws praise from the other side of the aisle for managerial competence and canny political skills. Arizona Republicans describe the former federal prosecutor as extremely smart, noting that she has adeptly handled hot-button issues such as immigration.
“I think Gov. Napolitano, to the dismay of a lot of Republicans in this state, has been effective because she has governed from the center,” said Jaime Molera, a Republican political consultant in Phoenix. “She has not been seen as a partisan Democrat.”
Molera points to her successful budget compromises with the Republican state Senate last year as a prime example.
Napolitano’s opponents also agree that her pragmatic approach is an asset — though critics say it reflects a lack of core principles.
“I can’t help but wonder if her strengths and weaknesses are one and the same. She’s a highly calculating politician. She does not make a move without considering the political implications,” said Republican consultant Garrick Taylor. “That has benefited her in a traditionally Republican state, but she runs the risk of being cast as a typical politician.”
In Kansas, where Sebelius has managed to frustrate the Republican political establishment while winning over GOP voters, opponents also view her with a kind of grudging admiration. Though conceding she is warm and persuasive in small settings, Republicans gleefully note that she fell flat in her first moment in the national spotlight — when she delivered the Democratic response to the president’s State of Union speech in January.
But more than anything else, Sebelius’ foes generally agree that she has a great talent for recognizing and seizing opportunities in a state where the Republican majority has been bitterly divided between conservatives and moderates.
“She ran as a conservative. She won [reelection] in Kansas because she’s adopted whatever things the Legislature has done,” said Republican state House Speaker Melvin Neufeld. “She takes credit for whatever happens, which a good politician does.”
When Sebelius first captured the governorship in 2002, she did it with a Republican business executive as her running mate. Four years later, in her 2006 reelection, she stunned the state’s political establishment by selecting a new lieutenant governor candidate to run with — the state’s former Republican Party chairman.
“Kathleen has done a good job of walking through fissures in the Kansas Republican Party,” said Republican state Senate Majority Leader Derek Schmidt. “She’s governor because our party has been fairly deeply factionalized since the late '90s, particularly during the last two gubernatorial cycles.”
McCaskill is also respected for her savvy political instincts, winning credit for her campaign trail work ethic and for not making the same mistakes twice.
In an unsuccessful 2004 run for governor, she concentrated heavily on urban areas and got beaten badly in rural counties. When she won her Senate seat in 2006, it was with a populist flavor and a more pronounced focus on rural Missouri.
“She learned that a Democrat in Missouri can’t just focus on urban areas,” said Jared Craighead, executive director of the Missouri Republican Party. “You need to focus on rural areas.”
“Claire McCaskill is a crafty politician who campaigns hard,” added Gregg Keller, a Republican consultant who managed Talent’s 2006 campaign.
Curiously, while Sebelius and Napolitano both do well among women voters — according to 2006 exit polls, Napolitano won 66 percent among women in her easy reelection win — McCaskill’s advantage seems less pronounced. In 2006, she won 51 percent among women in a narrow victory.
Like Sebelius and Napolitano, McCaskill did not highlight the gender factor. “I frankly hope gender is not an issue in this campaign at all,” she told the St. Louis Post-Dispatch in 2006. “This is not something we’re stressing around the state.”
In Arizona and Missouri, Republicans also said gender has been a political nonissue.
“The story in Arizona is that we’ve had a number of female chief executives,” said Taylor, the Republican political consultant. “So [Napolitano’s gender] has been part of a story line but hasn’t been part of her narrative personally.”
“I don’t know that [Sebelius’] gender has played a big role, other than that her percentage of female appointees has been greater than most governors,” said Kansas state Senate President Stephen Morris.
Regardless of the strengths Sebelius, Napolitano and McCaskill might bring to the ticket, home state Republicans insist that none of them could deliver their respective states if they were on the ticket.
McCaskill has narrowly lost and narrowly won Missouri in her two most recent elections, and her popularity doesn’t rank with the two governors. Kansas, which delivered 62 percent to President Bush in 2004, is not considered a competitive state for the Democratic nominee. As for Arizona, local Republicans say any boost Napolitano might provide would be washed out by the presence of another home-stater on the ballot — presumptive Republican nominee and Arizona Sen. John McCain.
Barack Obama’s Unlikely Supporter
http://finance.yahoo.com/tech-ticker/article/20951/Barack-Obama%E2%80%99s-Unlikely-Supporter-Rupert-'Fox-News'-Murdoch
Barack Obama’s Unlikely Supporter: Rupert 'Fox News' Murdoch
Posted May 29, 2008
Sarah Lacy
Kara Swisher and Walt Mossberg had a long day of grilling executives at their All Things Digital Conference. But they saved Rupert Murdoch -- their Wall Street Journal overlord -- for last. The highlight? Murdoch’s not-quite-but-almost endorsement of Barack Obama for president.
The founder -- and defender -- of Fox News said he expected Obama to win in a landslide, citing widespread unhappiness with the current administration and his disenchantment with Republican contender John McCain. Murdoch added that after a long career in the Senate, McCain had been forced to compromise too much and doesn’t stand for much. Murdoch even nonchalantly owned up to influencing the New York Post to back Obama in the New York primary.
During the Q&A, I pressed Murdoch -- a new U.S. citizen -- on whether he would actually vote for Obama in November. He said he was leaning toward it, but would know in the next six months. When I asked if I could call him, he said yes, then joked I could probably just figure it out from reading the Post.
I also asked Murdoch about reports that he said he would buy the New York Times if he had the opportunity, just to shut it down. He said he was kidding, but likely Times staffers in the audience shuddered.
I caught up with Kara of the WSJ and All Things D once they got offstage to discuss her newfound admiration for the outspoken mogul -- not to mention Alaskan elk.
Barack Obama’s Unlikely Supporter: Rupert 'Fox News' Murdoch
Posted May 29, 2008
Sarah Lacy
Kara Swisher and Walt Mossberg had a long day of grilling executives at their All Things Digital Conference. But they saved Rupert Murdoch -- their Wall Street Journal overlord -- for last. The highlight? Murdoch’s not-quite-but-almost endorsement of Barack Obama for president.
The founder -- and defender -- of Fox News said he expected Obama to win in a landslide, citing widespread unhappiness with the current administration and his disenchantment with Republican contender John McCain. Murdoch added that after a long career in the Senate, McCain had been forced to compromise too much and doesn’t stand for much. Murdoch even nonchalantly owned up to influencing the New York Post to back Obama in the New York primary.
During the Q&A, I pressed Murdoch -- a new U.S. citizen -- on whether he would actually vote for Obama in November. He said he was leaning toward it, but would know in the next six months. When I asked if I could call him, he said yes, then joked I could probably just figure it out from reading the Post.
I also asked Murdoch about reports that he said he would buy the New York Times if he had the opportunity, just to shut it down. He said he was kidding, but likely Times staffers in the audience shuddered.
I caught up with Kara of the WSJ and All Things D once they got offstage to discuss her newfound admiration for the outspoken mogul -- not to mention Alaskan elk.
Barr secures Libertarian Party nod
http://www.thecarpetbaggerreport.com/archives/15660.html
May 26, 2008
Barr secures Libertarian Party nod; looks to affect ‘08 election
Posted May 26th, 2008
When former Republican Rep. Bob Barr announced that he would seek the Libertarian Party’s presidential nomination, many assumed he’d get the party’s nod. After all, he’s a fairly high-profile figure who’d be in a position to help Libertarians raise their profile and win some votes.
But Barr wasn’t about to get the nomination without a fight. For one thing, there are other party leaders who’ve been around a lot longer and who felt like it wasn’t Barr’s turn. For another, Barr isn’t entirely ideologically pure — he supports less government and lower taxes, but the Libertarian worldview/platform demands almost no government and practically no taxes.
It took a while — six rounds of balloting — but eventually yesterday, Barr won out.
Barr beat research scientist Mary Ruwart, who also sought the party’s presidential nomination unsuccessfully in 1983, on the final ballot. The vote was 324-276.
Barr endorsed Wayne Allyn Root, who was eliminated in the fifth round, to be his vice-presidential nominee. […]
The former Georgia congressman said he’s not in the race to be a spoiler.
“I’m a competitor and I’m in this to win. I do not view the role of the Libertarian Party to be a spoiler and I certainly have no intention of being a spoiler,” Barr said.
Barr said he expects the party to be on the ballot in at least 48 states and perhaps all 50 if the party can qualify in West Virginia and Oklahoma. Barr said he also expects to be invited to the national political debates by qualifying with poll support of 15 percent or more of registered voters.
Barr probably shouldn’t count too much on that debate idea, given that he’s going to have a very hard time getting to 15% in the national polls.
Nevertheless, the party is already on the ballot in 28 states, and is currently gathering petitions in another 20, and may actually be in a position to have an impact this year.
Noah Millman had an item last week in which he argued, “I’m becoming increasingly convinced that Bob Barr’s candidacy could have a significant impact on the 2008 election.” He makes a compelling case, not that Barr could actually win a state or electoral vote, but rather that Barr will be in a position to draw votes from John McCain by appealing to disaffected Republicans.
I’d just add two more angles to consider. First, this marks a key milestone for Bob Barr. Following up on an item from a couple of weeks ago, Dana Milbank reminded us of Barr’s colorful reputation during his four-term tenure in the House.
As a Republican candidate for the House in 1994, he rose to national attention when reports alleged that he had licked whipped cream off the breasts of two women at a charity event.
As a congressman from Georgia, the thrice-married Barr returned attention to the whipped-cream episode when, speaking in support of the Defense of Marriage Act, he argued that “the flames of self-centered morality are licking at the very foundations of our society.”
As one of the managers of Bill Clinton’s impeachment, Barr gained enough prominence to attempt a run for the Senate in 2002. But that effort fell apart at about the time Barr accidentally fired a .38-caliber pistol through a glass door at a fundraising reception.
Ironically, Barr became more principled and serious after serving in Congress. After departing Capitol Hill, Barr became disillusioned with what had become of his Republican Party. He was nearly apoplectic about Bush’s conduct in the NSA warrantless search scandal, suggesting the president “deliberately order[ed] that federal law be violated,” and “ignored” the Constitution. Shortly thereafter, Barr agreed to introduce Al Gore at an event in which Gore blasted the president’s “excessive power grabs.” He was also highly critical of the Bush administration in the prosecutor purge scandal.
About a year ago, Barr left the GOP altogether and began talking to the Libertarian Party, calling for a “multidecade effort” to build a movement to make the party nationally competitive. He added that many “real conservatives” have become disheartened with Republicans. “They are eager for a philosophical home,” Barr said. “There are enough of them out there that a significant number can be weaned away” from the GOP.
And finally, it’s also worth noting that Barr was competing for the Libertarian Party nomination against former Democratic Sen. Mike Gravel of Alaska, who is apparently retiring, telling reporters, “I just ended my political career.”
May 26, 2008
Barr secures Libertarian Party nod; looks to affect ‘08 election
Posted May 26th, 2008
When former Republican Rep. Bob Barr announced that he would seek the Libertarian Party’s presidential nomination, many assumed he’d get the party’s nod. After all, he’s a fairly high-profile figure who’d be in a position to help Libertarians raise their profile and win some votes.
But Barr wasn’t about to get the nomination without a fight. For one thing, there are other party leaders who’ve been around a lot longer and who felt like it wasn’t Barr’s turn. For another, Barr isn’t entirely ideologically pure — he supports less government and lower taxes, but the Libertarian worldview/platform demands almost no government and practically no taxes.
It took a while — six rounds of balloting — but eventually yesterday, Barr won out.
Barr beat research scientist Mary Ruwart, who also sought the party’s presidential nomination unsuccessfully in 1983, on the final ballot. The vote was 324-276.
Barr endorsed Wayne Allyn Root, who was eliminated in the fifth round, to be his vice-presidential nominee. […]
The former Georgia congressman said he’s not in the race to be a spoiler.
“I’m a competitor and I’m in this to win. I do not view the role of the Libertarian Party to be a spoiler and I certainly have no intention of being a spoiler,” Barr said.
Barr said he expects the party to be on the ballot in at least 48 states and perhaps all 50 if the party can qualify in West Virginia and Oklahoma. Barr said he also expects to be invited to the national political debates by qualifying with poll support of 15 percent or more of registered voters.
Barr probably shouldn’t count too much on that debate idea, given that he’s going to have a very hard time getting to 15% in the national polls.
Nevertheless, the party is already on the ballot in 28 states, and is currently gathering petitions in another 20, and may actually be in a position to have an impact this year.
Noah Millman had an item last week in which he argued, “I’m becoming increasingly convinced that Bob Barr’s candidacy could have a significant impact on the 2008 election.” He makes a compelling case, not that Barr could actually win a state or electoral vote, but rather that Barr will be in a position to draw votes from John McCain by appealing to disaffected Republicans.
I’d just add two more angles to consider. First, this marks a key milestone for Bob Barr. Following up on an item from a couple of weeks ago, Dana Milbank reminded us of Barr’s colorful reputation during his four-term tenure in the House.
As a Republican candidate for the House in 1994, he rose to national attention when reports alleged that he had licked whipped cream off the breasts of two women at a charity event.
As a congressman from Georgia, the thrice-married Barr returned attention to the whipped-cream episode when, speaking in support of the Defense of Marriage Act, he argued that “the flames of self-centered morality are licking at the very foundations of our society.”
As one of the managers of Bill Clinton’s impeachment, Barr gained enough prominence to attempt a run for the Senate in 2002. But that effort fell apart at about the time Barr accidentally fired a .38-caliber pistol through a glass door at a fundraising reception.
Ironically, Barr became more principled and serious after serving in Congress. After departing Capitol Hill, Barr became disillusioned with what had become of his Republican Party. He was nearly apoplectic about Bush’s conduct in the NSA warrantless search scandal, suggesting the president “deliberately order[ed] that federal law be violated,” and “ignored” the Constitution. Shortly thereafter, Barr agreed to introduce Al Gore at an event in which Gore blasted the president’s “excessive power grabs.” He was also highly critical of the Bush administration in the prosecutor purge scandal.
About a year ago, Barr left the GOP altogether and began talking to the Libertarian Party, calling for a “multidecade effort” to build a movement to make the party nationally competitive. He added that many “real conservatives” have become disheartened with Republicans. “They are eager for a philosophical home,” Barr said. “There are enough of them out there that a significant number can be weaned away” from the GOP.
And finally, it’s also worth noting that Barr was competing for the Libertarian Party nomination against former Democratic Sen. Mike Gravel of Alaska, who is apparently retiring, telling reporters, “I just ended my political career.”
Remark About RFK Keeps Clinton on the Defensive
http://www.washingtonpost.com/wp-dyn/content/article/2008/05/25/AR2008052502685_pf.html
Remark About RFK Keeps Clinton on the Defensive
Her Aides Say Obama Campaign Has Exploited Statement
By Anne E. Kornblut
Washington Post Staff Writer
Monday, May 26, 2008; A04
Sen. Hillary Rodham Clinton tried again yesterday to explain her reference last week to Robert F. Kennedy's assassination, while her campaign aides accused Sen. Barack Obama's advisers of taking the comment out of context and exploiting it.
In an interview in South Dakota on Friday, Clinton was discussing why she is still seeking her party's presidential nomination when she referred to the assassination of Kennedy -- then, like her, a senator from New York -- on June 5, 1968, as he celebrated his victory in the California primary. She used the June date to illustrate how long the Democratic race has gone on in past cycles, and she apologized after it caused an immediate furor. But yesterday she said the remarks had been misinterpreted.
"Almost immediately, some took my comments entirely out of context and interpreted them to mean something completely different -- and completely unthinkable," Clinton wrote in an article published in the New York Daily News, whose publisher, Mort Zuckerman, is a longtime friend of the Clintons.
"I want to set the record straight: I was making the simple point that given our history, the length of this year's primary contest is nothing unusual," Clinton said. She went on to say that she "was deeply dismayed and disturbed" that her comment about Kennedy's shooting would be construed as anything other than a historical reference.
Her campaign chairman, Terence R. McAuliffe, was more explicit in his criticism. "It's unfortunate -- a hyped-up press over Memorial Day weekend, the Obama campaign inflaming it, tried to take these words out of context," he said on "Fox News Sunday."
On Friday, a spokesman for the Obama campaign, Bill Burton, said Clinton's statement was "unfortunate and has no place in this campaign." On Saturday, Obama told a Puerto Rican radio station that he took Clinton at her word when she said she meant no harm in invoking Kennedy's assassination.
Neither Clinton nor McAuliffe -- nor Obama or his spokesmen -- mentioned the concern about his safety, particularly among African Americans, that the reference to Kennedy touched on. In a Washington Post-ABC News poll taken in March, nearly six in 10 Americans said they were worried that someone might try to harm Obama (Ill.) if he were the nominee -- more than double the percentage who said they were worried about the same for Sen. John McCain (Ariz.), the presumptive Republican nominee.
Among African Americans, the concern was even greater: More than eight in 10 said they would be worried about Obama's safety, including 55 percent who said they would be "very concerned" (20 percent of whites said they would have that level of fear).
Clinton devoted the rest of her op-ed piece to answering the same question raised in the interview with the Argus Leader in Sioux Falls -- why she is still in the race, "even in the face of calls from pundits and politicians" for her to leave it. She ticked off seven reasons, including her belief that she can still win, that she owes it to older women who have told her they want to see a woman in the White House, and that staying in the race will help unite the Democratic Party.
Campaigning for a second day in Puerto Rico, which will hold its primary next Sunday, Clinton continued her theme that she has defied the pundits by staying in the race.
"If I had listened to those who had been talking the last several months, we would not been having this campaign in Puerto Rico today," she told several hundred people at an evangelical church in Hormigueros.
Remark About RFK Keeps Clinton on the Defensive
Her Aides Say Obama Campaign Has Exploited Statement
By Anne E. Kornblut
Washington Post Staff Writer
Monday, May 26, 2008; A04
Sen. Hillary Rodham Clinton tried again yesterday to explain her reference last week to Robert F. Kennedy's assassination, while her campaign aides accused Sen. Barack Obama's advisers of taking the comment out of context and exploiting it.
In an interview in South Dakota on Friday, Clinton was discussing why she is still seeking her party's presidential nomination when she referred to the assassination of Kennedy -- then, like her, a senator from New York -- on June 5, 1968, as he celebrated his victory in the California primary. She used the June date to illustrate how long the Democratic race has gone on in past cycles, and she apologized after it caused an immediate furor. But yesterday she said the remarks had been misinterpreted.
"Almost immediately, some took my comments entirely out of context and interpreted them to mean something completely different -- and completely unthinkable," Clinton wrote in an article published in the New York Daily News, whose publisher, Mort Zuckerman, is a longtime friend of the Clintons.
"I want to set the record straight: I was making the simple point that given our history, the length of this year's primary contest is nothing unusual," Clinton said. She went on to say that she "was deeply dismayed and disturbed" that her comment about Kennedy's shooting would be construed as anything other than a historical reference.
Her campaign chairman, Terence R. McAuliffe, was more explicit in his criticism. "It's unfortunate -- a hyped-up press over Memorial Day weekend, the Obama campaign inflaming it, tried to take these words out of context," he said on "Fox News Sunday."
On Friday, a spokesman for the Obama campaign, Bill Burton, said Clinton's statement was "unfortunate and has no place in this campaign." On Saturday, Obama told a Puerto Rican radio station that he took Clinton at her word when she said she meant no harm in invoking Kennedy's assassination.
Neither Clinton nor McAuliffe -- nor Obama or his spokesmen -- mentioned the concern about his safety, particularly among African Americans, that the reference to Kennedy touched on. In a Washington Post-ABC News poll taken in March, nearly six in 10 Americans said they were worried that someone might try to harm Obama (Ill.) if he were the nominee -- more than double the percentage who said they were worried about the same for Sen. John McCain (Ariz.), the presumptive Republican nominee.
Among African Americans, the concern was even greater: More than eight in 10 said they would be worried about Obama's safety, including 55 percent who said they would be "very concerned" (20 percent of whites said they would have that level of fear).
Clinton devoted the rest of her op-ed piece to answering the same question raised in the interview with the Argus Leader in Sioux Falls -- why she is still in the race, "even in the face of calls from pundits and politicians" for her to leave it. She ticked off seven reasons, including her belief that she can still win, that she owes it to older women who have told her they want to see a woman in the White House, and that staying in the race will help unite the Democratic Party.
Campaigning for a second day in Puerto Rico, which will hold its primary next Sunday, Clinton continued her theme that she has defied the pundits by staying in the race.
"If I had listened to those who had been talking the last several months, we would not been having this campaign in Puerto Rico today," she told several hundred people at an evangelical church in Hormigueros.
OBAMA - THE POSTMODERN COUP
http://www.rense.com/nook/books1.htm#anchor19064449OBAMA - THE POSTMODERN COUP
By Webster Tarpley
MAKING OF A MANCHURIAN CANDIDATE
Barack Obama is a deeply troubled personality, the megalomaniac front man for a postmodern coup by the intelligence agencies, using fake polls, mobs of swarming adolescents, super-rich contributors, and orchestrated media hysteria to short-circuit normal politics and seize power. Obama comes from the orbit of the Ford Foundation, and has never won public office in a contested election. His guru and controller is Zbigniew Brzezinski, the deranged revanchist and Russia-hater who dominated the catastrophic Carter presidency 30 years ago. All indications are that Brzezinski recruited Obama at Columbia University a quarter century ago. Trilateral Commission co-founder Brzezinski wants a global showdown with Russia and China far more dangerous for the United States than the Bush-Cheney Iraq adventure. Obama's economics are pure Skull & Bones/Chicago school austerity and sacrifice for American working families, all designed to bail out the bankrupt Wall Street elitist financiers who own Obama. Obama's lemming legions and Kool-Aid cult candidacy hearken back to Italy in 1919-1922, and raise the question of postmodern fascism in the United States today. Obama is a recipe for a world tragedy. No American voter can afford to ignore the lessons contained in this book.
Webster Griffin Tarpley (Massachusetts 1946) is an intelligence expert and historian who has been studying and exposing covert operations for over thirty years. He is the author of George Bush: The Unauthorized Biography (1992) and 9/11 Synthetic Terror (2005). He has appeared on C-SPAN, CNN, Fox News, and many others.
PDF file from $5, hard copy from $14.99
Review from:
http://www.lulu.com/content/2325554
Why do we know so little about Obama? Is he the Secret Door to World War for Brzezinski & Co?
15 Apr 2008
by John Leonard
Politicians do the opposite of what they promise more often than not. So before you vote, plug your ears to their speeches, and see what policies their advisers advocate.
In "Obama: the Postmodern Coup," Tarpley gets a giant scoop as the first to delve behind the screen into the forces behind Obama: his policy advisors are far right-wingers! Zbigniew Brzezinski is CEO of the BHO show. For the economy, regressive Skull & Bones and Wall Street figures. In military affairs, it's Gen. McPeak, the perpetrator of genocidal civilian bombing tactics.
Obama's backers make a laundry-list of the elite: the Rockefellers, Rand Corp., Council on Foreign Relations, Trilateral Commission, Chicago School of Economics, Bilderbergers - and the Ford Foundation six ways to Sunday. No wonder he gets the lion's share of the campaign financing from the corporations and a free ride from the corporate media.
All unawares, the United States slipped into the grip of a soft coup last fall, the Brzezinski faction has won over the power elite, and the neo-cons are already lame ducks. Tarpley finds that "Zbig" also controls two of the three front runners for the presidency -- Barack Obama and John McCain, but that Obama is the elitist favorite for a facelift to the tottering empire.
Obama is a Brzezinski protegé, scripted in the lofty role of savior, a required figure in the planned hysteria of the "people power" coups perfected by the CIA and NGO's in Eastern Europe. The recipe has now been brought home to short-circuit America's political process.
Tarpley should be dean of social sciences in a prestigious university, if they aren't all funded by Rockefeller and Ford foundations! I have a poli sci degree, but almost all of "Postmodern Coup" was new to me:
- American political history is marked by cycles or "party realignments" of about 36 or 40 years, such as FDR's 1932 landslide or the upheavals of 1968. A few right-wing strategists like Samuel Huntington know this. They began planning around 1980 to subvert our current cycle shift, first by the War on Terror, now with the synthetic, pseudo-leftist Obama movement, to set the nation on a course they will determine until around 2050.
- The Democrats repeatedly nominate losing presidential candidates with their caucus system, favoring "Volvo-driving" Democrats who decide the primaries in red states, which the Dems don't win in the GE. Obama continues this tradition of Mondale, Dukakis, McGovern etc., folks who won't play in Peoria.
- Fascism doesn't start out as a right-wing, top-down system. How to recognize it in the bud? It begins as a youth movement, often leftist, idealist, mystical, with stirring slogans, euphoria, and a theme of national regeneration. Like Obamania. Mussolini and Hitler both got their start with outwardly leftist laborite parties.
- Why does Obama want to attack Pakistan, the world's 6th largest country, with almost 3 times more people than Iran, and 6 times more than Iraq? It's a Chinese ally, and to get at Russia, Brzezinski wants to isolate China, forcing it to attack Russia to get oil. A madcap scheme that will only isolate the US even more.
"Postmodern Coup" is a book with a mission: to stave off the looming world-historical tragedy Tarpley foresees. Yet it's about much more than "Manchurian candidate" Obama, or even Brzezinski and his earlier puppet, Jimmy Carter. Historian Tarpley draws on an unparalleled store of erudition, past precedents and inside knowledge of today's political players, and distills it in this book for our up-to-the-minute situation.
It's a crash course in the essentials you need to know about US and world politics, but the media never wanted you to.
The 10 Worst Corporations of 2007
http://www.multinationalmonitor.org/mm2007/112007/mokhiber.html
Neither Honest Nor Trustworthy: The 10 Worst Corporations of 2007
by Russell Mokhiber and Robert Weissman
Abbott
Blackwater
BP
Chiquitta
Countrywide
ExxonMobil
Gen Re
Murray Energy
Purdue Pharma
SAIC
The U.S. public holds Big Business in shockingly low regard.
A November 2007 Harris poll found that less than 15 percent of the population believes each of the following industries to be "generally honest and trustworthy:" tobacco companies (3 percent); oil companies (3 percent); managed care companies such as HMOs (5 percent); health insurance companies (7 percent); telephone companies (10 percent); life insurance companies (10 percent); online retailers (10 percent); pharmaceutical and drug companies (11 percent); car manufacturers (11 percent); airlines (11 percent); packaged food companies (12 percent); electric and gas utilities (15 percent). Only 32 percent of adults said they trusted the best-rated industry about which Harris surveyed, supermarkets.
These are remarkable numbers. It is very hard to get this degree of agreement about anything. By way of comparison, 79 percent of U.S. adults believe the earth revolves around the sun; 18 percent say it is the other way around.
The Harris results are not an aberration. The results have not varied considerably over the past five years - although overall trust levels have actually declined from the already very low threshold in 2003.
The Harris results are also in line with an array of polling data showing deep concern about concentrated corporate power.
An amazing 84 percent told Harris in a poll earlier in 2007 that big companies have too much power in Washington. By contrast, only 47 percent said that labor unions have too much power in Washington (compared to 42 percent who said labor has too little power), and 18 percent said nonprofit organizations have too much power in Washington.
These results have proven durable. At least 80 percent of the public has ranked big companies as having too much power in Washington since 1994. In 2000, Business Week and Harris asked a broader question: Has business gained too much power over too many aspects of American life? Seventy-four percent agreed.
The November 2007 poll also asked about support for measures to control corporations. These results are eye-opening as well, though perhaps not in the expected way.
Harris asked which industries "should be more regulated by government - for example for health, safety or environmental reasons - than they are now?" Only oil companies (53 percent), pharmaceutical companies (53 percent) and health insurance companies (52 percent) crossed the 50 percent threshold. Even the tobacco industry managed to escape in the survey with only 41 percent favoring greater regulation. The data trends significantly negative - against greater regulation - over the last five years.
Does this show that while people distrust Big Business, they equally distrust the government to constrain corporate power?
No.
The U.S. skepticism to regulation is only skin deep. When polls present specific regulatory proposals for consideration, U.S. public support is typically strong and often overwhelming - even when arguments against government action are presented.
For example:
After hearing arguments for and against, 76 percent favor granting the Food and Drug Administration (FDA) regulatory authority over tobacco, with 22 percent opposed.
After hearing arguments for and against, 75 percent favor legislation that would significantly increase energy efficiency, including auto fuel efficiency standards, and the use of renewable energy.
Eighty-five percent favor country-of-origin labeling for meat, seafood, produce and grocery products, and three quarters favor a legislative mandate.
Seventy-one percent say it is important that drugs remain under close review by the FDA and drug companies after they have been placed on the market.
And, from a Harris finding a week after the poll showing skepticism about industry regulation in general, the polling agency found that those who think there is too little government regulation in the area of environmental protection outpaced those who think there is too much by a more than 2-to-1 margin (53 to 21 percent).
What the Harris findings on attitudes to regulation do show is that the business campaign against regulation as an abstract concept has been very successful.
It highlights the need for consumer, environmental, labor and other corporate accountability advocates to defend the concept of regulation, and to connect the rampant corporate abuses in society with the deregulation and non-regulatory failures of the last three decades. There's little doubt that the general public attitude toward regulation significantly affects the willingness of politicians - none too eager to offend business patrons in the first place - to take on corporate power.
With the 10 Worst Corporations of 2007, we aim to show - again - that Big Business is out of control and to connect comparable abuses to the failure of government overseers, regulators and enforcers.
The task ahead is to reassert the supremacy of the people over corporations, and for democratic government to impose controls and limits on what corporations can and cannot do.
Presented alphabetically, here are the 10 Worst Corporations of 2007:
Abbott: Blackmailing Thailand
Imagine you are the only pharmacist in an isolated town. You impose massive mark-ups on the drugs you sell. A customer needs a life-saving medication, but can't afford your high price. So, the customer finds a pharmacy in a faraway town, which agrees to supply the medicine for a quarter of your price.
Then the customer comes back. She needs several other medicines that you sell, and is willing to pay your standard profiteering price. At least one of those medicines is not available at the other pharmacy, or anywhere else.
You refuse to sell the medicines, unless the customer agrees to stop buying the life-saving medicine from the other pharmacy.
If you engaged in this kind of behavior in the United States, you would be in violation of the U.S. pharmacist code of ethics, which commands that "a pharmacist promotes the good of every patient in a caring, compassionate and confidential manner." You would also be breaking the law in most, if not all, states.
Should the ethical and legal treatment be any more lenient if it's not a pharmacist refusing to serve an individual, but a pharmaceutical company - motivated solely by retaliatory animus - denying medicines to an entire country? Doesn't denying medicines on a mass scale out of animus merit harsh punishment?
Consider the case of Abbott Laboratories in Thailand. In January 2007, Thailand issued a compulsory license on an AIDS drug made by Abbott. A compulsory license is a lawful authorization of generic competition for a product that remains on patent. In Thailand's case, the government issued a license that would enable its public health sector to buy generic versions of lopinavir/ritonavir, sold by Abbott under the brand-name Kaletra.
Kaletra is a very important second-line AIDS drug, used for patients who have developed resistance to first-line drugs. One reason Kaletra is so important is that Abbott has endeavored to prevent other companies from combining ritonavir, which makes other AIDS drugs more effective, with products they control [see "The 10 Worst Corporations of 2004," Multinational Monitor, December 2004].
Thailand is a leader among developing countries in providing treatment to people living with HIV/AIDS. Its treatment program started early and covers most people with HIV. The natural progression of treatment is that people need to shift drugs over time, and an increasing number of Thais living with HIV now need Kaletra.
Abbott has a discount program for Kaletra for developing countries, but its discount price for middle-income countries like Thailand was $2,200 per person per year. Thailand's per capita income is under $3,000, according to the World Bank.
In a detailed white paper explaining its decision, the Thai government estimated that 50,000 Thais will need second-line treatment in the near future. The cost of providing lopinavir/ritonavir at Abbott's price to this population would be more than the entire current budget for AIDS drugs, according to the government. Within a year of the license, according to Thailand's National Health Security Office, the government had managed to triple the number of people receiving lopinavir/ritonavir, to roughly 2,500. The white paper estimated the government would be able to shift 8,000 people onto lopinavir/ritonavir based on the immediate cost savings from buying generic. That number will grow as generic costs fall over time.
Big Pharma viewed Thailand's actions as a major threat. Most worrisome to the industry was the example Thailand set. "There could be 'a spreading epidemic of disrespect for IP [intellectual property] rights,'" Billy Tauzin, head of PhRMA, the U.S. pharmaceutical industry trade association, said in May.
Although Thailand's actions were consistent with its obligations under national and international law, Big Pharma was able to employ the U.S. government (as well as the European Union) to pressure Thailand. In April 2007, the U.S. Trade Representative designated Thailand a "priority watch" country, a designation indicating it to be a serious violator of U.S. patent and copyright interests, and triggering close scrutiny from U.S. trade officials [see "Big Pharma and AIDS: Act II Patents and the Price of Second-Line Treatment," Multinational Monitor, March/April 2007].
Abbott executives also took matters into their own hands. In March, the company withdrew applications to market seven new medicines in Thailand. One of those medicines was the heat-stable formulation of lopinavir/ritonavir - meaning it does not require refrigeration, an important consideration in a tropical country like Thailand.
Public health advocates in Thailand and around the world reacted with outrage.
"What Abbott has done by withdrawing seven drugs from Thailand is using drugs as a bargaining chip," says Jon Ungphakorn, the executive secretary of the AIDS Access Foundation in Thailand. "This is unacceptable; it is a moral outrage that Abbott is doing this. It's playing games, not only with the patients in Thailand, but with patients all over the world. Abbott knows that what it's doing is intimidating the whole developing world against using the same measures - legal measures - that Thailand has used to get access."
Dr. Tido von Schoen-Angerer, director of Médecins Sans Frontières/Doctors Without Borders' Campaign for Access to Essential Medicines, agreed. "What Abbott is doing is trying to protect high drug prices by actively denying an entire population access to new medicines it produces," Dr. von Schoen-Angerer said. "This is as unprecedented as it is shocking. We consider it unethical and utterly unacceptable."
Abbott declined repeated requests from Multinational Monitor to comment on the dispute.
Campaigners in Thailand called for a boycott of Abbott. In April, health advocates around the world held coordinated protests against the drug multinational.
Its hard-line approach notwithstanding, Abbott was not immune to the market pressure applied by Thailand. In demonstrating how it could reduce prices for Kaletra by 75 percent, Thailand was laying out a road map for other middle-income countries. In April, Abbott reduced its price for Kaletra for middle-income countries from $2,200 to $1,000.
The pressure campaign on Abbott also had some effect. In July, the company announced it would register its pediatric formulation for Kaletra in Thailand.
Otherwise, Abbott continues to maintain its new-drug boycott of Thailand.
Should denying medicines as a form of collective punishment be legal in a civilized world?
Actually, it's not so obvious that Abbott's actions are legal.
In April, a coalition of Thai consumer and health organizations - the Foundation for Consumers, AIDS Access Foundation, the Thai Network of People Living with HIV/AIDS and the Thai NGO Coalition on AIDS - filed a complaint with the Thai Trade Competition Commission. It called for the instigation of criminal prosecution against Abbott.
Sean Fynn, associate director of the Program on Information Justice and Intellectual Property at American University's Washington College of Law, prepared a supporting memorandum for the health and consumer groups' complaint.
Explains Flynn, "Abbott's response to the compulsory license - withholding a new version of its Kaletra product from the Thai market - appears to directly contravene the Thai Competition Act which prohibits 'suspending, reducing or restricting services, production, purchase, distribution, deliveries or importation without justifiable reasons.' An unwillingness to comply with a legal and justifiable government order cannot be a 'justifiable reason' for suspending the supply of life-saving medicines to Thai citizens."
In December, however, the Thai Trade Competition Commission declined to pursue the complaint. It argued that Abbott does not have sufficient market share - even though it has a monopoly on its patented medicines - to trigger the terms of the country's competition law.
Blackwater: Deadly Cowboys in Iraq
On September 16, 2007, Blackwater private military contractors escorting a State Department convoy in Iraq fired machine guns and grenade launchers at civilians at a busy intersection. Seventeen civilians died.
The incident crystallized Iraqi fury at the unaccountable, cowboy-like actions of foreign military contractors (the polite term for mercenaries). Iraqi Prime Minister Nouri al-Maliki said the company should be ejected from Iraq. The Iraqi Minister of Interior reportedly suspended the company's right to operate outside of the Green Zone.
Blackwater said its personnel operated properly in the incident, but numerous reports and news accounts blamed the company's contractors for the slaughter.
In the wake of the incident, attention in Washington suddenly focused on the legal Twilight Zone in which U.S.-employed private contractors operate - not subject to Iraqi law, U.S. military law or U.S. civilian law.
But, in the subsequent months, attention has died down. Blackwater continues to operate in Iraq, with no more accountability than existed on September 15.
The investigations that followed the September 16 massacre did establish two things beyond any doubt. First, the September 16 incident was not exceptional. It fit a pattern of outrageous conduct by Blackwater contractors. Second, Blackwater was representative of a broader problem of reliance on private contractors.
Blackwater was founded in 1997 by Erik Prince, an ex-Navy Seal and scion of a prominent Michigan Republican family.
Its business is based almost entirely on servicing the U.S. government, though it has designs on providing military services to other countries. Prince says that 90 percent of the company's business is contracts with the U.S. government. He testified before the House Oversight Committee in October that he could not - or would not - say how much the company earned. He did testify that key contracts paid the company a 10 percent profit rate.
Blackwater obtained more than $1 billion in contracts from the U.S. government from 2001 to 2006, rising from $736,000 in 2001 to more than half a billion dollars in 2006.
Blackwater's main contract is providing security to State Department operations in Iraq. It has roughly 1,000 personnel in Iraq.
In October, the majority staff of the House Oversight Committee prepared a devastating report that concluded, "The Blackwater and State Department records reveal that Blackwater's use of force in Iraq is frequent and extensive, resulting in significant casualties and property damage." Blackwater is legally and contractually bound to only engage in defensive uses of force to prevent "imminent and grave danger" to themselves or others. In practice, however, the vast majority of Blackwater weapons discharges are preemptive, with Blackwater forces firing first at a vehicle or suspicious individual prior to receiving any fire.
The House Oversight Committee report found that from 2005 to 2007, Blackwater personnel were involved in almost 200 incidents involving firearms discharge. In 84 percent of cases, Blackwater personnel were the first to fire.
The Committee's report showed that reckless activity by Blackwater mercenaries was common. It described one case as follows:
On November 28, 2005, a Blackwater motorcade traveling to and from the Ministry of Oil for official meetings collided with 18 different vehicles during the round trip journey (six vehicles on the way to the ministry and 12 vehicles on the return trip). The written statements taken from the team members after the incident were determined by Blackwater to be "invalid, inaccurate and, at best, dishonest reporting." According to a Blackwater contractor who was on the mission, the tactical commander of the mission "openly admitted giving clear direction to the primary driver to conduct these acts of random negligence for no apparent reason." The only apparent sanction resulting from this incident was the termination of two of the employees.
The State Department is supposed to exercise oversight of Blackwater, but the House Oversight Committee found the department had utterly failed in this duty. "Even in cases involving the death of Iraqis, it appears that the State Department's primary response was to ask Blackwater to make monetary payments to 'put the matter behind us,' rather than to insist upon accountability or to investigate Blackwater personnel for potential criminal liability."
The oversight committee's report was issued just prior to a high-profile hearing in which Erik Prince defended the company.
"We have to provide that protective screen," he testified. "We only play defense, and our job is to get those reconstruction people that are trying to weave the fabric of Iraq back together, to get them away from that X, the place where the bad guys, the terrorists, have decided to kill them that day."
Prince emphasized repeatedly that no individual protected by Blackwater had ever been killed or seriously injured.
He said the company had fired more than 100 personnel for violating company and State Department rules, but besides also fining them, could do no more to punish them for wrongful acts. It was up to the Justice Department to prosecute them, he said.
Representative Danny Davis, D-Illinois, asked, "You do admit that Blackwater personnel have shot and killed innocent civilians, don't you?"
Prince replied, "No, sir. I disagree with that. I think there have been times when guys are using defensive force to protect themselves, to protect the package they are trying to get away from danger. There could be ricochets. There are traffic accidents. Yes. This is war. You know since 2005, we have conducted in excess of 16,000 missions in Iraq and 195 incidences with weapons discharged. In that time, did a ricochet hurt or kill an innocent person? That is entirely possible. Again, we do not have the luxury of staying behind to do that terrorist crime scene investigation to figure out what happened."
Concluded Representative Henry Waxman, D-California, "We have never had anything of this magnitude before, where we have turned so much of our military activity over to private military - [activity] that used to be, for the most part, provided by the U.S. military itself." As Waxman noted, the October hearing showed that relying on Blackwater is incredibly expensive - more than $400,000 per contractor per year - and has undermined the U.S. military objective, by fostering animosity toward the United States.
It has also led to the deaths of untold numbers of Iraqis, terrorized the Iraqi civilian population, and added to the lawless atmosphere in Iraq in which violence is pervasive and (Iraqi) life is cheap.
BP: Taking the Public
BP is a giant multinational oil company. It spends a lot of money trying to get us to believe that it is something else: a decent, clean, conscientious corporation.
It is not.
It kills workers in Texas. It pollutes Alaska. It manipulates markets. And it uses the tricks of the corporate criminal class to escape penalties commensurate with the seriousness of the harm it causes.
In October, BP cut a deal with the Justice Department to pay $373 million in fines and restitution related to a series of crimes and instances of wrongdoing: a felony violation of the Clean Air Act connected to a 2005 refinery explosion that killed 15 contract employees, a violation of the Clean Water Act related to major pipeline leaks in Alaska, and a conspiracy to manipulate the propane market.
The $50 million fine in connection with the Texas refinery explosion was the largest ever under the Clean Air Act, a source of pride at the Justice Department.
Not everyone was impressed. "I note with curiosity that when an average citizen commits a felony it usually leads to a prison sentence," says Representative John Dingell, D-Michigan, the chair of the House Energy and Commerce Committee. "Yet, apparently, when a big oil company commits a felony that causes 15 deaths, it pays a criminal penalty equal to less than a day's corporate profits. Until the Department of Justice starts holding corporate executives accountable, I am not sure that there will be a meaningful shift in corporate culture."
"It is troubling," says Representative Bart Stupak, D-Michigan, chair of the Subcommittee on Oversight and Investigations of the House Energy and Commerce Committee, "that many of the same BP executives who were responsible for the management failures that led to the criminal charges and settlements announced today are still employed by BP, and, in some cases, have been promoted to the highest levels of the company. This does not reflect the kind of corporate culture change we would expect if the company's leadership took to heart the consequences of its mismanagement."
For BP, the October settlement put to rest a series of debacles that has beset the company over the last several years.
But it's certainly not the end of the company's mischief.
In February 2007, the company announced that it had chosen the University of California (UC) at Berkeley, in collaboration with the Lawrence Berkeley National Laboratory and the University of Illinois at Urbana-Champaign, to host the Energy Biosciences Institute (EBI).
Funded with $500 million over 10 years, the agreement would double the amount of corporate funding for research on campus, and change the direction of biofuels research at UC Berkeley for years to come.
"In launching this visionary institute, BP is creating a new model for university-industry collaboration," says Beth Burnside, UC Berkeley vice chancellor for research.
That's one way to look at things. Another is to characterize the BP-Berkeley deal as the farthest-reaching effort by a corporation in recent U.S. history to colonize a major university.
The agreement drew harsh criticism from much of the university community in part because the deal was hatched without input from professors, students and others in the university community.
In March 2007, students opposing the deal demonstrated outside the Chancellor's office on the Berkeley campus.
Two students were arrested for dumping molasses on the steps of a university building (it looked like oil).
They had a lot to protest.
The Energy Biosciences Institute, dedicated to problems related to global energy production and primarily expected to research biofuels, is projected to encompass 24 laboratories on the three campuses, representing an unprecedented occupation of university space and cooptation of public resources by a corporation.
BP will actually construct a building on the UC Berkeley campus, where it will be able to conduct proprietary research, off limits to Berkeley personnel. There may be no precedent for such absolute ceding of public university space to secret, for-profit industry research.
The deal will enable BP to expropriate a major public investment. Various public institutions are kicking in tens of millions of dollars to the project. Much more importantly, BP will be able to capitalize on the long-term public investment in UC-Berkeley and the other institutions, including the students and faculties who enjoy very significant public support.
BP gets to control whatever useful technologies emerge from its colonial project. The terms of the Energy Biosciences Institute contract between BP and the public partners give BP the right to exclusively license and commercialize inventions developed in the Institute's shared university/BP facilities, even inventions developed entirely by university scientists (provided they are BP-funded). The company will almost surely be able to cherry pick publicly funded inventions.
The deal also likely gives BP power to direct the research agenda at the Energy Biosciences Institute. The deal specifies that BP representatives will serve in "high-level" positions on the Institute's governing committees.
"BP researchers will be able to suck up the best of what Berkeley's scientists have to offer, retreat behind locked, guarded doors and pursue their corporate agenda without giving anything back," says John Simpson of the the Foundation for Taxpayer and Consumer Rights in Santa Monica, California. "Academic research is based on an exchange of ideas and information. This is a one-way street benefiting only BP."
Chiquita: Payments to Paramilitaries
In March, Chiquita entered into a plea agreement with the U.S. Department of Justice, in which it admitted making illegal payments in Colombia to a right-wing militia designated as a terrorist organization by the United States. Under terms of the deal, Chiquita agreed to pay $25 million in fines to the U.S. government.
The victims of that terrorist paramilitary have a simple question: Why is Chiquita paying the U.S. government, but not them?
The Justice Department's announcement of the deal was damning enough.
"From sometime in 1997 through February 4, 2004," explained the Justice Department's release, "Chiquita paid money to the AUC [the Spanish acronym for a paramilitary organization whose English name is United Self-Defense Forces of Colombia] in two regions of the Republic of Colombia where Chiquita had banana-producing operations: Urabá and Santa Marta. Chiquita made these payments through its wholly-owned Colombian subsidiary known as 'Banadex.' By 2003, Banadex was Chiquita's most profitable operation. Chiquita, through Banadex, paid the AUC nearly every month. In total, Chiquita made over 100 payments to the AUC amounting to over $1.7 million."
The U.S. government designated the AUC as a foreign terrorist organization in September 2001. That designation - which made it a crime for U.S. persons or companies to make payments to the AUC - "was well-publicized in the American public media," notes the Justice Department's release. "The AUC's designation was even more widely reported in the public media in Colombia." Yet Chiquita's payments continued - 50 payments totaling more than $800,000 followed.
In February 2003, top Chiquita officers learned of the payments and consulted with outside counsel. Chiquita's outside lawyers unequivocally stated payments should stop. The advice from numerous communications:
"Must stop payments."
"Bottom Line: CANNOT MAKE THE PAYMENT."
"Advised NOT TO MAKE ALTERNATIVE PAYMENT through CONVIVIR."
"General Rule: Cannot do indirectly what you cannot do directly."
Concluded with: "CANNOT MAKE THE PAYMENT."
"You voluntarily put yourself in this position. Duress defense can wear out through repetition. Buz [business] decision to stay in harm's way. Chiquita should leave Colombia."
"[T]he company should not continue to make the Santa Marta payments, given the AUC's designation as a foreign terrorist organization[.]"
"[T]he company should not make the payment."
But the company continued to make payments.
Two months later, Chiquita self-reported the payments to the Justice Department. But even then payments continued - 20 more payments of more than $300,000 through June 2004, at which time Chiquita sold its Colombian subsidiary.
Chiquita's version of the story is that it had been in a horrible dilemma. The then-leader of the AUC, Carlos Castaño, met with a senior executive of Banadex and threatened that he would harm Banadex personnel and property if the company did not pay protection money.
"The payments made by the company were always motivated by our good faith concern for the safety of our employees," says Chiquita CEO Fernando Aguirre. "Nevertheless, we recognized - and acted upon - our legal obligation to inform the Department of Justice of this admittedly difficult situation." The plea deal, he says, "is in the best interests of the company."
Says company spokesperson Michael Mitchell, "Our payments were entirely motivated by safety concerns."
"It was a difficult ethical dilemma," he says. "The Department of Justice admitted it was a difficult situation."
A lawsuit filed in July 2007 by family members of Colombians killed by the AUC paints a less sympathetic view of Chiquita's dilemma. The family members are represented by the Washington, D.C.-based EarthRights International and other lawyers.
"The stability and social control provided by the AUC was to Chiquita's benefit," charges the suit, "in allowing exportation of bananas without interruption due to conflict. The influence of the AUC in the leadership of the banana workers' trade unions was also to Chiquita's benefit, as it reduced labor strife. The AUC also provided protection services to banana plantations dealing out reprisals against real or suspected thieves, as well as against social undesirables, suspected guerrilla sympathizers or supporters, and anyone who was suspected of opposing the AUC's activities and social programs."
The lawsuit also charges that Chiquita facilitated the illegal transfer of thousands of assault rifles to the AUC.
The family members filing the suit - all named as John or Jane Doe to protect them from retaliation - allege the AUC killed their relatives because they were active in labor organizing and advocating for marginalized groups.
The suit seeks to represent a class of all people harmed by the AUC's "campaign of military and social control" aiming to "exert total control over the land and inhabitants of the banana-growing region of Colombia." The family members ask that the class include "individuals who were the objects of acts constituting extrajudicial killing, forced disappearance, torture, cruel, inhuman or degrading treatment, kidnapping, rape, forced displacement, crimes against humanity, or crimes against civilians constituting war crimes."
Chiquita "categorically denies" the allegations in the lawsuit, according to company spokesperson Mitchell. "We reiterate that Chiquita and its employees were victims and that the actions taken by the company were always motivated to protect the lives of our employees and their families."
"The company," he says, "was forced to make payments to both left- and right-wing paramilitary organizations to protect the lives of our employees at time when kidnappings and murders were frequent, and government authorities were unable to provide security and protection."
In the 1990s, Mitchell says, the company's workforce was put in grave danger by the escalation of violence in the region. "Among hundreds of documented attacks by left- and right-wing illegal groups were the 1995 massacre of 28 innocent Chiquita employees who were ambushed and killed on a bus on their way to work, and the 1998 cold-blooded murder of two more of our workers on a farm while their colleagues were forced to watch."
In this context, the company was "forced to make protection payments to safeguard our workforce. It is absolutely untrue for anyone to suggest that these payments were made for any other purpose."
Countrywide: Subprime Kings
Many factors combined to create the current housing crisis in the United States.
Low interest rates after the 2001 stock market crash spurred the housing boom. Housing prices skyrocketed above historic trendlines. People were duped into thinking prices would rise forever, but it was inevitable that the housing bubble would burst, and houses would suddenly be worth a lot less. With house prices falling, lots of people are now finding they owe more than their house is worth. This problem is exacerbated by predatory loan arrangements that have left millions facing suddenly rising mortgage payments.
A lot of people and corporations deserve blame for this state of affairs.
Instead of warning consumers about the housing bubble - which would have gone a long way to counter the excessive price run-ups - then-Federal Reserve Chair Alan Greenspan denied a bubble was occurring.
Wall Street firms created exotic investment instruments that made possible the purchase and trading of large numbers of mortgages. This created conditions so that banks and initial lenders took less care in issuing mortgages - since they wouldn't be responsible for mortgages gone bad. The Wall Street firms not only sold these instruments to duped investors, they took on major liabilities on their own - even though it was obvious the housing bubble would have to burst.
Rating agencies like Moody's and Standard & Poor's, which evaluated the riskiness of these new mortgage investment instruments, failed utterly. The housing bubble meant mortgage investments were sure to lose money, but the ratings agencies gave them top ratings anyway. Along with the "innovation" of the Wall Street firms, the ratings agencies helped maintain a market that dramatically exacerbated, and to a considerable degree may have created, the housing bubble.
Financial bubbles create an incentive for criminal and shady activity. Just like the stock bubble of the late 1990s created the climate for Enron and dozens of other companies to cook their books, the housing bubble created incentives for predatory lenders to exploit consumers.
The predatory lenders offered low rates, at least at first. Rates would rise later, but the lenders said that - because home prices were rising so fast and would continue to do so - borrowers could always refinance with a new loan.
The biggest of the predatory lenders was Countrywide, a mortgage lender acquired by Bank of America in January 2008. The company and its CEO, Angelo Mozilo, made a bundle, while setting up thousands and thousands of families for financial ruin.
"Over the past few years," says Martin Eakes of the Center for Responsible Lending, "by steering millions of people into bad loans, Countrywide has been the largest rogue mortgage lender in the country. According to Countrywide's own data, more than 80 percent of its exotic adjustable-rate loans were made to borrowers that do not meet current banking standards. Countrywide knew that these homeowners would not be able to make their monthly loan payments after dramatic payment increases became effective."
The Center for Responsible Lending has compiled a dossier on Countrywide's irresponsible practices, presented in a report, "Unfair and Unsafe." Its devastating report, based on customer complaints, lawsuits, regulatory actions, news accounts, government reports and company documents, shows how Countrywide engaged in rampant wrongdoing:
o Predatory lending. "Lawsuits filed around the country have accused Countrywide of preying on borrowers through a variety of unfair and fraudulent tactics that have siphoned equity out of their homes and pushed many into foreclosure," notes "Unfair and Unsafe." "Borrowers and regulators have accused the company of: steering borrowers with good credit into higher-cost 'subprime' loans; gouging minority borrowers with discriminatory rates and fees; working in cahoots with mortgage brokers who use bait-and-switch tactics to land borrowers into loans they can't afford; targeting elderly and non-English-speaking borrowers for abusive loans; and packing loans with inflated and unauthorized fees."
In one lawsuit, Albert Zacholl, a 74-year-old man living in Southern California, alleges that Countrywide and a pair of mortgage brokers "cold-called and aggressively baited" him. They promised him $30,000 cash, a mortgage that would replace his previous mortgage (which was leaving him owing more each month) and a monthly payment that would not exceed $1,700. Zacholl told the brokers that his income consisted of a pension of $350 a month and Social Security payments of $958, and that with help from his son, he could afford a mortgage up to $1,700. According to the lawsuit, the broker falsified his loan application by putting down an income of $7,000 a month, and then arranged for a high-interest mortgage that required him to pay more than $3,000 a month (and failed to deliver the $30,000 cash payment). The motivation for the scam, according to the lawsuit, was to collect $13,000 in fees.
In court papers, the Center for Responsible Lending reports, Countrywide responded that Zacholl "consented to the terms of the transaction" and that any problems were the result of his own "negligence and carelessness."
Dangerous products. Countrywide has been a leader in pushing unsound mortgage terms. These include "exploding" subprime adjustable rate mortgages - with reasonable interest rates in the first year that jump in subsequent years, often by as much as 30 percent to 50 percent.
Conflicts of interest. "Countrywide has created a corporate structure designed to allow its subsidiaries to work hand-in-hand in squeezing borrowers with excessive fees and penalties," according to "Unfair and Unsafe." Countrywide affiliates handle appraisals, credit reports, flood certifications and other documentation for new loans; provide "force-placing" insurance for borrowers whose homeowners insurance has lapsed; and serve as a foreclosure trustee. The interconnections enable Countrywide to charge high fees, and deny borrowers the benefit of third parties' independent judgment and independent interests.
Broken promises on loan modifications. The company has a history of failing to fully live up to its promises to help borrowers keep their homes by modifying onerous loans, according to "Unfair and Unsafe." The report cites a Fall 2007 Credit Suisse review that ranked Countrywide as one of the mortgage lenders least willing to adjust loan terms.
Countrywide says it is committed to working out fair arrangements to keep homeowners in their houses. In December, it entered into an arrangement with the community group ACORN designed to help subprime borrowers.
"During the first 11 months of 2007, Countrywide helped more than 69,000 customers retain their homes through solutions such as loan modifications, long-term repayment plans, special forbearance and other options," says Steve Bailey, a Countrywide senior managing director of loan administration. "Regardless of the reason for the payment difficulties, Countrywide wants to try to find reasonable solutions for our borrowers."
Abusive loan servicing. Borrowers claim that Countrywide has engaged in sloppy and fraudulent loan servicing that has produced unwarranted fees and foreclosures.
With the collapse of the housing market in 2007, Countrywide's fortunes turned, its mortgage-backed securities plummeted in value, and the company seemed on the edge of bankruptcy. In January 2008, Bank of America agreed to buy the company.
Do not weep for company co-founder and long-time CEO Angelo Mozilo, however. Mozilo grabbed compensation worth $185 million from 2002-2006, according to an analysis by the U.S. House of Representatives Committee on Oversight and Government Reform. Between November 2006 and December 2007, Mozilo sold $150 million in stock - effectively jumping from a sinking corporate ship for which he was supposedly at the helm, or at least on the captain's deck.
"Particularly, the discrepancy between Mr. Mozilo's compensation and Countrywide's performance is striking," concludes the Oversight Committee analysis. "In 2007, Countrywide announced a $1.2 billion loss in the third quarter and an additional loss of $422 million in the fourth quarter." By the end of the year, the company's stock fell 80 percent from its February peak. "During the same period, Mr. Mozilo was paid $1.9 million in salary, received $20 million in stock awards contingent upon performance, and sold $121 million in stock."
Mozilo retired as CEO in 2006, remaining as company chair and an employee. The House Oversight Committee analysis shows that his compensation contract, taking effect in 2007, was outrageous, and based in part on recommendations from a compensation consultant loyal to Mozilo rather than Countrywide.
Even so, Mozilo was bitter that the company did not give him everything he wanted. In an e-mail message turned up by the Oversight Committee, Mozilo wrote to the compensation consultant:
"I appreciate your input but at this stage in my life at Countrywide this process is no longer about money but more about respect and acknowledgement of my accomplishments. ... Boards have been placed under enormous pressure by the left wing anti business press and the envious leaders of unions and other so called 'CEO Comp Watchers' and therefore Boards are being forced to protect themselves irrespective of the potential negative long term impact on public companies. I strongly believe that a decade from now there will be a recognition that entrepreneurship has been driven out of the public sector resulting in underperforming companies and a willingness on the part of Boards to pay for performance."
With attention focused on the discrepancy between Mozilo's compensation package and Countrywide's well-being, he waived various payments - totaling $37.5 million - he could have received once Bank of America finalizes its takeover.
In March 2008, Mozilo appeared before the House Oversight Committee to explain his compensation.
"Countrywide's board," he testified, "has aligned the interests of our top executives, including me, with shareholders by making our compensation primarily performance-based - namely, tied to earnings per share and share price appreciation. Since 1982 through early 2007, Countrywide's stock appreciated over 23,000 percent, reaching a peak market value of over $25 billion from a starting value of zero. As a result, over recent years, I have received substantial income from bonuses under a formula that was approved by our shareholders on at least two occasions."
He also received substantial stock options, explaining, these were "options that required the price of the stock to rise above the option price before any income could be realized, thereby aligning me squarely with our shareholders." In anticipation of his retirement, he testified, he put in place a plan to cash in some stock options earned in earlier years. His sales were thus planned in advance of Countrywide's downturn. But he continues to hold substantial shares in Countrywide - shares worth much less than before the company's stock collapsed.
Mozilo testified that he is "very proud of the home ownership opportunities that Countrywide has provided for over 20 million families," while acknowledging the hardship faced by homeowners and Countrywide employees and shareholders.
"In my 55 years in the industry," he said, "this by far is the worst housing crisis I have ever seen, combined with an unprecedented collapse of the credit and liquidity markets."
"The problem we face," he said, "is the deterioration of the value of homes. As values were going up, we had no problem. We had no delinquencies and no foreclosures, because people had options, because people run into three things in their lives generally - loss of job, loss of marriage, loss of health. When that happens and they own a home, and it impacts their income, they generally have a way out - sell the house, refinance, do something.
"That equity that they have in their homes has been virtually wiped out. And that's what's exacerbating this whole foreclosure problem."
Wasn't that problem entirely foreseeable? Didn't Countrywide's lending policies - which generously might be called aggressive - depend on constantly rising housing values in what was obviously a bubble market?
ExxonMobil: Planetary Endangerment
It is no longer possible for even ExxonMobil to deny the reality of climate change.
Here is the current company line, as elaborated by CEO Rex Tillerson in a November 2007 speech: "Many more questions on this complex subject remain and require continued research. But it has become increasingly clear that climate change poses risks to society and ecosystems that are serious enough to warrant action - by individuals, by businesses and by governments."
Well, sure, lots of questions remain. And action is certainly "warranted."
But that understates things by several orders of magnitude.
The Intergovernmental Panel on Climate Change (IPCC), a collaboration of hundreds of the world's leading climate scientists that won the 2007 Nobel Peace Prize, always presents its findings in the most cautious and restrained language.
The IPCC concludes in its Fourth Assessment report, issued in April 2007: "Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice and rising global average sea level." Not only were 11 of the 12 years from 1995 to 2006 among the 12 warmest years recorded, the last 50 years in the Northern Hemisphere were probably the warmest in the last 1,300 years.
"Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic [greenhouse gas] concentrations."
The IPCC details a series of horrors likely to befall the planet to rival the 10 Plagues the Bible says were visited upon Egypt. Projections include:
By 2020, between 75 and 250 million people in Africa are projected to be exposed to increased water stress.
By 2020, in some countries, yields from rain-fed agriculture could be reduced by up to 50 percent. Agricultural production throughout Africa is projected to be severely compromised.
Sea level rise will affect heavily populated coastal areas in Africa by the end of the century, imposing costs on affected countries of at least 5 percent to 10 percent of gross domestic product (GDP).
African desertification will increase by 5 percent to 8 percent by 2080.
Freshwater availability throughout Asia will be a serious problem by the 2050s.
Flooding in heavily populated Asian coastal areas will intensify (posing risks to lives and imposing massive economic costs).
New patterns of flood and drought will lead to more infant and child deaths from diarrhea in Asia.
By 2020, significant loss of biodiversity is projected to occur in Australia's Great Barrier Reef.
By 2050, ongoing coastal development and population growth in some areas of Australia and New Zealand are projected to exacerbate risks from sea level rise and increases in the severity and frequency of storms and coastal flooding.
Mountainous areas in Europe will face glacier retreat, reduced snow cover and winter tourism, and extensive species losses (in some areas up to 60 percent under high emissions scenarios by 2080).
By mid-century, increases in temperature and associated decreases in soil water are projected to lead to gradual replacement of tropical forest by savanna in eastern Amazonia. Semi-arid vegetation will tend to be replaced by arid-land vegetation.
Biodiversity will be lost everywhere.
Heatwaves will increase in number, intensity and duration in North America and Europe.
In a company statement, ExxonMobil responded to the April report from the IPCC, with its new line that "Because the risks to society and ecosystems could prove to be significant, ExxonMobil believes that it is prudent now to develop and implement global strategies that address the risks …"
But there was a caveat. Here's the end of that sentence: "keeping in mind the central importance of energy to the economies of the world."
The company therefore favors "putting policies in place that start us on a path to reduce emissions, while understanding the context of managing carbon emissions among other important world priorities, such as economic development, poverty eradication and public health."
It's hard to find words to describe this posture. If the world fails to mobilize the needed, increasingly urgent response to climate change - a disturbingly likely scenario - future generations will look back on this kind of talk, and the global warming denialism that Exxon so long funded, and know who to blame for the misery and suffering that could have been avoided.
If in fact addressing climate change would interfere with other important world priorities like poverty eradication and public health, perhaps there would be some moral hand-wringing about doing what must be done to prevent the worst climate change projections from being realized.
However, the very cautious IPCC report conveys in unmistakable terms that global warming will impose the greatest burdens on the world's poorest countries. Climate change will devastate agricultural production and rural societies in Africa. New disease challenges will be worst in tropical countries. Flooding will be most severe in developing countries. Adapting to climate change will be expensive but ultimately affordable for rich countries; it will drain poor countries' economies, however.
You only need common sense to know that the rich will be better able to buy their way out of both the hardships and inconveniences imposed by climate change.
Many people concerned about global warming are seeking ways to pressure or incentivize ExxonMobil and the rest of Big Oil to change their business model. The idea is for the companies to shift from providing oil and gas to becoming energy service corporations, as ready to deliver solar power as gasoline.
We're not in that camp. We think ExxonMobil and Big Oil will need to be displaced, and will be.
The most serious problem is that ExxonMobil, as the largest and most vociferous of the oil majors, exerts its political and economic power to distort policy debates and stop governments from taking proportionate action to address climate change.
We're not upset that ExxonMobil refuses to invest its obscenely large profits - $39.5 billion in 2007 - in renewable energy research and development. We place the company on the 10 Worst list because it continues to deploy its political power to stop the U.S. Congress from enacting a windfall profits tax, or ending tax and royalty subsidies for the oil industry, and directing the proceeds for renewable energy.
Gen Re: Case Closed. Why?
In 2006, the Justice Department abruptly dropped a federal criminal probe into allegations of insurance fraud at Berkshire Hathaway's General Reinsurance (Gen Re) unit.
Paul McNulty was the U.S. Attorney in Alexandria, Virginia at the time. In March 2006, McNulty went on to become the Deputy Attorney General. He is currently a partner at Baker & McKenzie in Washington, D.C. McNulty did not return a call seeking comment for this article.
Did anyone pressure McNulty or his successor, Chuck Rosenberg, the current U.S. Attorney, to close down the investigation?
The case was looked at by the Justice Department's Inspector General, Glenn Fine. Fine's office will not comment on the current status, if any, of the investigation.
Fine was dragged in after evidence was presented to his office that federal officials may have incinerated more than 100 boxes of grand jury information in April 2007, just days after the Virginia Lawyer's Weekly published an article titled, "Further Federal Indictments In Reciprocal Case Unlikely."
The driving forces behind the criminal investigation of Gen Re were Thomas Gober, a certified fraud examiner based in Glen Allen, Virginia - and David Maguire, the Assistant U.S. Attorney in Alexandria charged by McNulty with shepherding the case.
For 12 years of his 18-year career, Gober has worked with federal investigators and prosecutors, ferreting out significant insurance and reinsurance fraud schemes.
Most recently, he worked closely with Maguire on the criminal prosecution of the top executives at Reciprocal of America (ROA), a major Virginia insurance company that went belly up in January 2003. ROA provided malpractice insurance to lawyers, doctors and hospitals. When the company went out of business, the policy holders were left without coverage - and victims of malpractice, in many cases, were left with no way to collect damages.
The collapse of ROA resulted in unpaid liabilities totaling $500 million.
The work of Maguire, Gober and a handful of FBI agents led to the February 2003 guilty pleas of former ROA president Kenneth Patterson and former ROA CFO Carolyn Hudgins. The two pled guilty to manipulating ROA's books. By cooking the books, the ROA executives concealed from regulators the company's financial weakness. Their failure to maintain sufficient reserves paved the way for the company's collapse.
In Richmond, Virginia, Judge James Spencer sentenced Patterson to 12 years in prison and Hudgins to five years in prison.
Also caught up in the ROA case was the giant Gen Re company - a unit of the Omaha, Nebraska-based Berkshire Hathaway. Gen Re is a reinsurer, a company which effectively provides insurance to insurers
Between 2004 and 2007, McNulty, Maguire and their team of a half dozen FBI agents, Assistant U.S. Attorneys and forensic auditors began to build their case against Gen Re. They believed they had accumulated evidence that Gen Re had entered into sham transactions with ROA. The Justice Department lawyers believed these deals helped ROA hide its losses from regulators.
Gober says that McNulty "repeatedly championed the ROA case and all of our diligent work," until McNulty left in March 2006 to become the Deputy Attorney General at Main Justice.
The prosecution team believed that the evidence against Gen Re was overwhelming. Maguire, Gober and FBI agent David Hulser drafted a more than 60-page indictment against top Gen Re executives.
At the same time, lawyers for the giant reinsurer were pressuring the government to drop the case or settle it as part of an overall global settlement with other matters the government was looking at involving Gen Re.
When McNulty left for Main Justice in March 2006, he was replaced by Chuck Rosenberg. Soon thereafter, the case was derailed.
In March 2007, in an effort to salvage years of work on the case, Gober wrote a seven-page letter to Judge Spencer - the judge who had sentenced ROA executives Patterson and Hudgins to long jail terms - chronologically laying out the derailment and pleading for advice.
"First, David Maguire was totally removed from working the case," Gober wrote. "Dave called me into his office and apologized about leaving the case, telling me that Main Justice had told him he was being removed due to 'health concerns,'" Gober wrote. "Dave had lost about 10 pounds while working on the ROA matter ... something I did not consider very troubling (or even unusual) because this has been a very large and very complex case. Dave is a brilliant prosecutor and he knows all of the facts of the ROA case; indeed, he can literally recite them from memory."
Maguire was replaced by Assistant U.S. Attorney Mike Gill, another Texas import.
In his letter to Judge Spencer, Gober says that in the very first "team meeting" after Maguire's removal, Gill announced to the team of FBI agents and prosecutors that he was "glad we are all in agreement that this case is all about [name redacted] and that Gen Re is no longer a target."
"To say the least, the team was a bit shocked about this 'announcement' concerning 'how we all felt.'" Gober wrote.
Gill said he wanted to focus on an in-house ROA lawyer "who essentially had made many of the day-to-day reinsurance decisions that had impacted ROA and resulted in its eventual collapse."
But the "team" also wanted to focus on Gen Re and top Gen Re executives because they believed, as Gober put it, that "the Gen Re issues were significant and far-reaching."
"We discovered a fraud scheme which included, but was not limited to, the execution of 'side letter agreements' between the reinsurer and ROA which resulted in a misleading balance sheet impression for the insurance regulators," Gober wrote. "In effect, we found that Gen Re was permitting the insurer to 'rent' reinsurance certification but there was no true shifting back of risk."
"Because Gen Re is owned by the parent company of Berkshire Hathaway, and the two richest men in the world (Warren Buffett and Bill Gates) serve on the Berkshire Hathaway Board of Directors, I became quite concerned when the case against Gen Re was allowed to 'go away,'" Gober wrote. "Why, I wondered, was this happening when the entire team - prior to Mr. McNulty's elevation at the Justice Department - had been so absolutely sure we had a 'slam dunk' case? Nevertheless, I decided to make the best of a bad situation. If Gen Re was going to be let go, that was a decision over my head. At least, I thought, the case was going to be forcefully and professionally pursued" against the ROA lawyer.
Because the prosecutorial team felt that the case against the ROA lawyer was so strong, they prepared a prosecution memo outlining their case. That memo was submitted to Gill in February 2007. But the team heard nothing from Gill.
All Gill would say to Gober was that he just "felt" there was not a strong enough case against the lawyer.
Gober was so upset with the decision not to proceed against Gen Re and the ROA lawyer that he wrote a letter to McNulty outlining his concerns.
McNulty never responded to the letter.
"What has happened to this case?" Gober rhetorically asked Judge Spencer. "The facts are the same (or better) as they were when Paul McNulty left to become the #2 man in the Justice Department. The only thing that is 'different' is that two fellows from Texas have been brought in and they do not seem to want to do anything with this matter but let it die. I am very troubled that everyone on our team, and we are talking about seasoned professionals, concluded this was (and remains) a very important case that needs to go forward. Yet, somehow, the U.S. Attorney goes to D.C. and the new guy comes in and the case is over, for all intents and purposes. Something is just wrong about all of this."
Gober is concerned not just because a criminal prosecution of a powerful U.S. corporation has been derailed.
He's concerned not just because the case involved the largest single insurance collapse in the history of Virginia that cost $500 million and has left more than 80,000 policyholders with an insolvent and liquidated insurer. Gober is concerned also because the case "has exposed a serious problem in the reinsurance industry which is going to have to be addressed and corrected," he wrote to Judge Spencer.
"Hundreds of millions of dollars are at stake, and very powerful people are interested in this matter simply dying," he wrote. "I am not one of them. Nothing would be worse than to see a case like this one pushed 'under the radar' by greedy people who simply want more and more money through fraud. Based on what has been going on lately at the Justice Department, I am very worried about how all of this has happened and what should be done to correct it."
Judge Spencer, through his clerk, suggested that Gober directly and personally approach Glenn Fine, the Inspector General.
On April 2, 2007, the Virginia Lawyer's Weekly wrote the first article outlining Gober's account. (A few months later, in July 2007, the McClatchy Newspapers ran a more detailed article titled "Justice Department Drops Massive Accounting Fraud Case," by Marisa Taylor.)
On April 3, the day after the Virginia Lawyer's Weekly article hit the stands, Gober wrote a frantic e-mail to Fine's office warning that the FBI was planning on incinerating crucial evidence in the case.
"I know from working past FBI cases that documents are stored for years," Gober wrote to the Office of Inspector General's (OIG) Keith Bonanno. "The agents must not know of your inquiry."
On April 5, Gober wrote again to Bonanno. "Yesterday, all documents were hauled off from our site office to the FBI incinerator," Gober wrote. "My hard drive which held all of the case data was taken as well. It is my hard drive and it was to be 'wiped clean' before its return to me. I pushed for them to back it up before wiping clean or all case data would be gone. Please request that the data be copied before my drive is re-formatted. Otherwise, the investigation may be for naught. Two independent sources told me that the agents were going to incinerate them to 'get ahead of the ball' and 'not let this drag on forever.'"
OIG's Bonanno responded later that day. "Our office contacted the USAO [U.S. Attorney Office] in Richmond and instructed that they (and/or the FBI) cease destruction of documents related to the case since there is a pending OIG/OPR review," Bonanno wrote.
Before the whip came down, the government was in pretty serious negotiations with Gen Re to settle the ROA case amicably.
Joshua Hochberg was at the time head of the Justice Department's Fraud Section. Hochberg is currently a partner at McKenna Long & Aldridge in Washington, D.C. Hochberg did not return a call seeking comment for this article.
In May 2005, Hochberg wrote to Maguire about the settlement of the Gen Re case. "The bottom line has always been - what do we want to do with Gen Re." Hochberg wrote. "The options range from indicting the company, to a plea by a subsidiary to a deferred prosecution or a non-pros [non-prosecution] agreement with lots of favorable terms for the government, including large $, monitors, cooperation. … Indicting the company would have enormous collateral consequences. As you know, when we met with Gen Re's counsel, we made no promises about any final resolution."
Thomas Hanusik was at the time assistant chief of the Fraud Section. He's now a partner at Crowell & Moring. Hanusik said he would have no comment on this story.
On July 20, 2005, Hanusik wrote to Maguire to detail negotiations he had with Ron Olson, a partner at Munger Tolles & Olson in Los Angeles.
Olson is an attorney for Gen Re and a member of the Berkshire Hathaway board of directors.
Olson could not be reached for comment. But he told McClatchy's Marisa Taylor that "there was no knowledge at Gen Re that people at Reciprocal of America were hiding information from regulators or auditors."
He said the Gen Re had entered into "side deals" with ROA, and that these were the industry norm. The company has since banned such arrangements as bad business practice, he told Taylor.
He described the criminal case as "maybe the longest investigation I remember being associated with. We were extremely frustrated."
Maguire responded to Hanusik's July 2005 note the next day. "I think we need a strong united front on Gen Re's culpability on ROA in order to get them to fess up and pay a share of the $450 million ROA loss commensurate with their conduct," he wrote.
"From the mid-1980s until approximately 2001, ROA grew from a small, marginally capitalized Virginia reciprocal insurer of approximately 100 hospitals and a few hundred doctors and lawyers into four commonly managed reciprocal insurers of more than 80,000 insureds in many different states across the country," Maguire wrote. "This phenomenal growth, however, could not have happened without the world believing that ROA was fully and truly reinsured by Gen Re and the receipt of consistently high ratings from A.M. Best (A Ratings from 1983 to 2001), a national respected ratings service of insurance companies, which also believed ROA was truly backed by Gen Re."
"Unfortunately, for more than 18 years, material facts about the true nature of ROA's reinsurance relationship with Gen Re were falsely represented and concealed from Best, the insurance commissioners, state legal and medical societies and hospital associations that endorsed ROA to its members, and the insureds themselves. Indeed, the losses that drove ROA into insolvency were the very losses that were supposedly covered by reinsurance contracts with Gen Re," Maguire wrote. "The dark little secret we have uncovered is that when Gen Re has to pay larger that [sic] expected losses, it uses it [sic] might to dump the losses back on the reinsured."
The Gen Re investigation ultimately did not come out entirely to the company's liking - and company executives have not escaped accountability, at least as relates to other matters. The ROA case led federal prosecutors to investigate a similar alleged arrangement between Gen Re and the insurer AIG. A federal jury would later find four top Gen Re executives and an AIG executive guilty of conspiracy and securities fraud, in a scheme also allegedly involving sham transactions, these intended to make AIG's finances appear stronger than they actually were.
Murray Energy: Collapse of Decency
Mining disasters can transfix a nation.
Miners trapped underground, and the uncertainty of whether they survived a collapse, evokes empathy for the miners, their families and their community in even the hardest of hearts. Not many people have experience deep underground, but until the fate of the involved miners is established, the drama and suspense feels very personal to the millions waiting for updates, desperately hoping for good news and fearing the worst.
In the United States, the millions following the rescue typically watch the disasters play out according to a familiar script. Families, miners and mine operators are stricken with fear, supportive of each other, and articulate about the raw emotional urgency of rescue operations.
In August 2007, a major calamity struck the Crandall Canyon coal mine in Utah. Six miners were killed in the mine collapse. Ten days later, two rescue workers and a mine inspector were killed trying to reach the six trapped men. The second set of fatalities marked Crandall Canyon as particularly tragic.
There was something else unusual about the Crandall Canyon disaster. With the nation watching, the mining company did not display the usual humility.
Rather than relying on PR professionals, Robert Murray, CEO of Murray Energy, the operator of Crandall Canyon, stepped into the spotlight.
A day after the mine collapse, he began a nationally televised new conference by proudly relating how he had built up the company, and fulminated against climate change legislation.
"Without coal to manufacture our electricity," he exclaimed, "our products will not compete in the global marketplace against foreign countries, because our manufacturers depend on coal, low-cost electricity, and people on fixed incomes will not be able to pay their electric bills. And every one of these global warming bills that has been introduced in Congress today to eliminate the coal industry will increase your electric rates four- to five-fold."
He went on to insist, against all evidence at the time - and the very detailed evidence now available - that the disaster was caused by an earthquake.
He concluded his lengthy remarks by denouncing former mine industry regulators and the leaders of the United Mine Workers of America, as well as reporters from the Associated Press and Fox News. Referring to the experts and the union, he said, "These individuals have given very false statements to the media and to America, for their own motives. They know nothing about the natural disaster that occurred here. They know nothing about the damage in the mine and the circumstances surrounding the trapped miners, or the rescue efforts that are under way. And I caution the media to very much question the veracity of these sources and their motivations."
Murray maintained the same tone in subsequent interviews, belligerently denying that he knew of previous cave-ins in the same mine, or that the trapped miners were engaging in a particularly dangerous operation known as "retreat mining."
The Ohio-based Murray Energy and its affiliates mine more than 20 million tons of coal annually, according to the Cleveland Plain Dealer.
From 2004 through the end of 2007, a Multinational Monitor analysis found, the U.S. Mine Safety and Health Administration (MSHA) cited companies controlled by Murray for safety violations more than 7,500 times.
That astounding fact says quite a bit about the culture at Murray Energy.
But nothing can match the chilling report issued in March 2008 by Senator Edward Kennedy, D-Massachusetts, chair of the Senate Health, Education, Labor and Pensions Committee. The report shows a callous and utter indifference to miners' lives and well-being. There were countless opportunities to recognize the dangers posed by Murray Energy's perilous plans for Crandall Canyon, but Murray Energy ignored, discounted or suppressed the warning signs, and feckless regulators let the company proceed.
Summarizes Kennedy, "The Committee's investigation has revealed that the owner of Crandall Canyon mine, Murray Energy, disregarded dangerous conditions at the mine, failed to tell federal regulators about these dangers, conducted unauthorized mining and - as a result - exposed its miners to serious risks."
The report explains that "the mining operations proposed by Murray Energy, and approved by MSHA, at Crandall Canyon were among the most dangerous ever attempted." Murray Energy was undertaking retreat mining or pillar extraction - pulling out the mine's supporting pillars, in the opposite direction from which the mine advanced. Often the plan is designed to provided for controlled roof collapse. The retreat mining at Crandall Canyon was the deepest MSHA had ever authorized. The deeper the mine, the greater the stress on supporting pillars, and the more dangerous it is to remove them.
Murray Energy took over Crandall Canyon mine from a previous operator, Andalex, in August 2006. It immediately began to pressure MSHA to lessen safety inspections, according to the Kennedy report.
A few weeks after Murray Energy began operating Crandall Canyon, an MSHA official e-mailed a colleague, "[Murray Energy] also told my supervisor they have been very successful at getting MSHA people removed in other districts. I expected we would have trouble with this operator, but didn't expect it on the 2nd day after they took over [the mine]."
Six weeks later, another MSHA official wrote to the administrator of MSHA's Office of Coal Mine Safety and Health, "Over the course of the first 10 days of Murray Energy ownership they have aggressively opposed enforcement actions taken by [MSHA] Inspectors Durrant and Shumway, accused them both of retaliation, met with Supervisor Farmer and attempted to dictate how inspections should be performed at the mines. All indications so far are that this operator intends to use whatever means available to try to leverage enforcement at their mines."
By August 2007, if not earlier, internal company documents show, Murray Energy had adopted a policy of contesting all MSHA safety violations, regardless of the merits.
The Kennedy report shows that Murray Energy's pressure tactics worked, and the agency lightened up on enforcement activities. Internal company memos relate MSHA commitments to "pul[l] back enforcement."
The August tragedy at Crandall Canyon could have been avoided if the retreat mining had never been undertaken.
Andalex, the previous operator of the mine, had concluded that retreat mining could not be conducted safely in the area where the mine collapse occurred. The company even argued against the retreat mining encouraged by the Utah state department overseeing mine leases, which earns royalties from the sale of extracted coal.
Murray Energy had an entirely different approach.
The company presented a plan based on a technical analysis of retreat mining safety at Crandall Canyon performed by a consultant, Agapito. In a review conducted after the disaster, the National Institute of Occupational Safety and Health found Agapito's work to be deeply flawed.
Under federal law, MSHA must review and approve plans for underground coal mining. The Kennedy report concludes that "the record shows that MSHA's review of the company's mine plan was often rushed, superficial and pro forma. Indeed, mining expert and former MSHA engineer Robert Ferriter described MSHA's review of Crandall Canyon's mine plan as a 'broken system.'"
The MSHA engineer initially reviewing Murray Energy's plans urged rejecting the proposal. A supervisor told the engineer that his analysis was flawed. Rather than conducting a new one, according the Kennedy report, the supervisor "seems to have simply accepted the company's rebuttal of Del Duca's analysis at face value," authorizing the plan to go forward.
Even after the plan was approved, however, the Kennedy report shows, "there were multiple warning signs during mining operations - including heightened seismic activity and a major mine bounce [a bounce is a mine collapse in which the pressure on pillars leads them literally to explode outward] - that should have raised red flags for both MSHA and the mine operator. The company ignored these signs of danger and did not tell MSHA about them, as the company promised it would do."
In February 2007, Murray Energy began retreat mining in a northern section of the mine. Internal company records show 17 separate reports of roof falls, cave-ins and bounces. An internal memo to Robert Murray identified these problems, beside which Murray wrote "noted."
Only one of the 17 incidents listed in internal company records was reported in the official logs Murray Energy is required to maintain by law, according to the Kennedy report.
On March 11, the northern section where the retreat mining was being conducted - 900 feet away from the southern section that would be the site of the August tragedy - collapsed. Because the collapse occurred at night, when no miners were nearby, no one was hurt.
"The multiple warning signs that preceded the March bounce and the force of the collapse itself should have alerted MSHA and the company to fundamental flaws in the barrier pillar retreat mining plans," asserts the Kennedy report. "MSHA and Murray Energy knew that the depth of cover and other geological characteristics of the South barrier pillar were extremely similar to the North, yet they allowed retreat mining to go forward in the South."
Internal company documents make clear that Robert Murray had been notified of the March collapse. This directly conflicts his claim in the wake of the August disaster that he did not know about similar, earlier problems.
Murray Energy also failed to formally report and investigate the March collapse, likely in violation of federal law, according to the Kennedy report. The report notes, "A possible - and inexcusable - reason for this reporting failure was a tacit agreement between Murray Energy and MSHA to excuse the company from the Mine Act's reporting requirements."
On July 17, the company began retreat mining in the southern section of the mine. Problems, including bumps and bounces, quickly became apparent and were reported to Robert Murray (who marked "good" on an internal memo saying progress was being made though significant warning signs were evident). Only one of the bumps and bounces was noted in mine pre-shift reports. The memo to Murray, which he marked, makes clear that - his subsequent claims notwithstanding - he did know that retreat mining had been underway in the southern section of the mine.
Although the company had badgered and perhaps misled MSHA into authorizing an unreasonably dangerous retreat plan, it is possible it was deviating even from the approved plan, the Kennedy report concludes. "It is impossible to know to a certainty what happened in the moments before the August 6th collapse," the report states. "However, the investigation has uncovered evidence indicating that, at the time of collapse, the company was conducting unauthorized mining."
There is evidence that the company was both conducting unauthorized mining of floor coal, and extracting coal from a barrier pillar MSHA had specifically prohibited mining.
Murray Energy flatly denies, without elaboration, the findings of the Kennedy report. Its subsidiary UtahAmerican Energy issued an official statement, but refused to comment further. "We are shocked and outraged that the Senate Health, Education, Labor and Pension (HELP) Committee, after conducting a superficial review of only some of the facts, would level such serious and biased allegations. This report is politically motivated, irresponsible and unjustifiable," Michael O. McKown, general counsel of UtahAmerican Energy, said in the statement. "This matter merits considered and non-political judgements."
"This sensational and irresponsible report makes slanderous allegations against innocent individuals," McKown said. "We are confident that, with a full review of the facts, this will be established. It is clear that the Senate HELP Committee report is precipitous and wrong. It is obviously political grandstanding to certain constituents of some of its members. Given the complex technical nature of this matter, the incompleteness of the factual record and the lack of knowledge of the Committee, we consider the Senate HELP Committee's report to be completely unreliable."
"Mr. Robert E. Murray, UtahAmerican and our employees all mourn the loss of our miners and grieve for their families," McKown said. "Mr. Murray, our Company and our employees have always been totally committed to the safety of our employees. Mr. Murray and the Company would never knowingly expose any employee to danger, and he hasn't in his 50 years of experience. For anyone to imply otherwise is blatantly false. Once the facts are known, they will show that Mr. Murray deserves tremendous credit for his courage and leadership under very difficult conditions. We are confident that the comprehensive review of the facts will render a far more accurate and unbiased accounting of what happened in this tragedy. We will reserve further comment until such time as the facts can be clearly known."
The Kennedy report concludes that enough is already known. "Miners were exposed to unnecessary and extreme risks," the report states. "The mine operator and MSHA must be held accountable for their failures of diligence, care and oversight. The Secretary of Labor should refer the case to the Department of Justice for prosecution."
Purdue Pharma: White-Collar Drug Dealers
How does street crime work? You commit the crime, you do the time.
How does corporate crime work? Big Pharma corporation commits a crime and hires a high-paid white-collar crime defense lawyer.
Defense lawyer approaches prosecutor and says, "Let's make a deal." You agree not to prosecute the company. I'll give you a shell company that does little business but has a similar name. That company pleads guilty to the crime. It no longer sells drugs and thus when Medicare lists the shell as a company with which Medicare will not do business, it loses nothing. We turn over a couple of executives. They plead guilty. And you promise no jail time.
You can hold a press conference and say, "We cracked down on corporate crime." And we can get on with our business of making millions of dollars off average people addicted to our opiate of choice.
That's pretty much what came down in 2007 when the Justice Department went after the maker of OxyContin, the addictive pain killer that addicts will die for.
OxyContin offers major benefits for cancer patients and others in chronic pain.
But it's also an easy high for thousands of down and out Americans.
Crush the pill and snort it.
It's like heroin - without the needles. It's big in Appalachia. You don't need to ship it in from overseas. You can get it at your local doctor's office or pharmacy.
Talk to family doctors working in hill country and one of the first issues they raise is Oxy addiction. Abuse is so rampant that some hill doctors have stopped prescribing it. No more break-ins and harassing phone calls from addicts claiming back pain.
In 2007, John Brownlee, the U.S. Attorney in Roanoke, Virginia, charged that "Purdue, under the leadership of its top executives, continued to push a fraudulent marketing campaign that promoted OxyContin as less addictive, less subject to abuse and less likely to cause withdrawal."
"In the process," said Brownlee, "scores died as a result of OxyContin abuse and an even greater number of people became addicted to OxyContin; a drug that Purdue led many to believe was safer, less abusable and less addictive than other pain medications on the market."
Brownlee charged that Purdue officials drafted an article published in a medical journal claiming that OxyContin had less euphoric effect and less abuse potential than short-acting opioids. The company then had its sales representatives distribute the article to healthcare providers.
Said Assistant U.S. Attorney General Peter D. Keisler, Purdue "misled physicians about the addiction and withdrawal issues involved with OxyContin."
Brownlee tried to pin the blame where it rightly belongs - on the company and executives who pushed the drug on an unsuspecting public with claims that it was less addictive than other painkillers.
Emphasis on the word "tried."
If you read the papers, you might now believe that Purdue Pharma, the Stamford, Connecticut-based maker of OxyContin, pled guilty to illegally touting OxyContin. You might believe, as the Los Angeles Times and other newspapers reported, "Purdue Pharma pleaded guilty to one felony count of fraudulently misbranding a drug."
One problem. Purdue Pharma did not plead guilty to this crime. It was Purdue Frederick that pled guilty.
Why is this distinction important? Under federal law, pharmaceutical companies convicted of a felony are automatically excluded from federal insurance programs like Medicare.
The idea behind mandatory exclusions is clean government - if a party commits a serious crime, the federal government shouldn't do business with it.
Unless you are a giant corporation with hundreds of millions of dollars in profits at stake.
Then you get a deal.
In this case, the deal was brokered by Howard Shapiro, a partner at WilmerHale in Washington, D.C. - the lawyer for Purdue Pharma. Shapiro did not return calls seeking comment for this story.
Shapiro offered up Purdue Frederick to plead guilty.
What is Purdue Frederick?
We sent an e-mail off to company spokesperson James Heims.
We asked, "What is the difference between Purdue Frederick and Purdue Pharma?"
He wrote back immediately. "They are independent, associated companies. Please let me know if you have further questions."
Well, yes, we do have further questions. Why did Purdue Frederick plead guilty and not Purdue Pharma? No answer.
We call Mr. Heims. Now he's busy. No response.
So, we turn to the press packet sent out by Heidi Coy, the public affairs representative for U.S. Attorney Brownlee. It's 89 pages. It contains Brownlee's statement, the press release, the information, the agreed statement of facts, the plea agreements with Purdue Frederick, Michael Friedman, the president and CEO, Howard Udell, the company's general counsel, and Paul Goldenheim, the company's former medical director. But it doesn't contain the non-prosecution agreement.
And, not surprisingly, out of the hundreds of mainstream news outlets that carried this story, not one mentioned the non-prosecution agreement. The non-prosecution agreement is the one that protects the companies that make the money.
Purdue Frederick takes the hit. It's the felon. It is excluded from government programs. But so what? We can assume it has little if any government business to lose. (Brownlee says he doesn't know. The company won't return calls.)
The more than 200 other affiliated Purdue Pharma companies scattered around the world and listed in Appendix A of the non-prosecution agreement get off. No felony charge. No exclusion. Business as usual.
Purdue is a privately held, very secretive company controlled by the Arthur Sackler family. Arthur Sackler is the guy who, before he delivered OxyContin, brought to you the marketing for Librium and Valium. Walk on the Mall in Washington and you walk by the Freer Gallery of Art and Arthur Sackler Gallery.
Purdue was very happy with the deal to resolve the OxyContin criminal charge. In a statement, Purdue said, "Nearly six years and longer ago, some employees made, or told other employees to make, certain statements about OxyContin to some healthcare professionals that were inconsistent with the FDA-approved prescribing information for OxyContin and the express warnings it contained about risks associated with the medicine. The statements also violated written company policies requiring adherence to the prescribing information." The company said that, since 2001, it has cured these problems.
It also insisted that "any attempt to connect the agreed to plea of misbranding by Purdue with abuse and diversion of OxyContin is completely false."
In his statement that he read before the cameras, U.S. Attorney Brownlee said that Purdue Frederick is the "manufacturer and distributor" of OxyContin.
Well, as it turns out, they used to be. No longer. Now, that's Purdue Pharma.
In an interview, Brownlee admitted that Purdue Frederick was chosen to plead guilty because "we didn't want to ban the future sale of the drug."
Had Purdue Pharma been forced to plead guilty, OxyContin would have been excluded from Medicare coverage, he said. "And we didn't want that," Brownlee said.
Actually, it's the company that would have been excluded from Medicare. It's up to the government to decide what this means. Could it have ordered Purdue to let other companies make OxyContin and sell it to Medicare? Yes, it could.
The other document that was not sent out in the press packet was the corporate integrity agreement. This was the agreement that Purdue Pharma entered into and that requires the company to hire an independent monitor to make sure it doesn't engage in future criminal activity.
Brownlee won't give the name of the independent monitor who has been appointed. Why not? He won't say.
The bottom line is that Brownlee prosecuted a case that few other U.S. Attorneys would touch. He proceeded against a powerful privately held and secretive pharmaceutical company with major resources at its disposal. He secured a guilty plea against an entity and three top executives.
As part of the settlement, the company will pay over $600 million in fines, restitution and a civil settlement. The three executives will pay collectively over $34.5 million in penalties.
But in the end, he pulled his punches. Purdue Pharma was not charged. The independent monitor's name has not been made public.
And perhaps most importantly, the executives will not face jail time. Why not?
Brownlee dodges the question.
This irks Sidney Wolfe of Public Citizen's Health Research Group.
Wolfe calls the fines and guilty pleas "an important message to the drug industry that this kind of malicious, death-dealing behavior will not be tolerated."
But the government could have come down much harder on what he calls "white-collar drug pushers."
Wolfe points out that from 2000 through 2006 alone, according to data from Drug Topics, the news magazine for pharmacists, there have been $9.6 billion in retail U.S. sales of OxyContin. It was one of 25 top-selling drugs from 2000 to 2005 - it was the 11th largest selling prescription drug in 2003.
"The government should have forced the company to disgorge far more of its ill-gotten profits in this case," Wolfe says. "Hundreds of thousands of people are languishing in jail for relatively minor drug possession or distribution crimes involving illegal drugs or, in a smaller number of cases, prescription drugs such as OxyContin. Why have the three wealthy Purdue executives, who have pleaded guilty to orchestrating this dangerous promotional campaign, escaped jail time, and why are they paying merely $34.5 million in penalties? The damage to the public from these white-collared drug pushers surely exceeds the collective damage done by traditional street drug pushers. Why do we have such a double standard of justice?"
SAIC: The Government-Contractor Complex
When investigative reporters Donald Barlett and James Steele were fired from Time magazine in May 2006, the magazine cried poverty.
"They're very good, but very expensive, and I couldn't get anyone to take them on their budget," said John Huey, editor in chief at Time.
Time magazine then turned around and paid $4 million for photographs of Brad Pitt and Angela Jolie's baby.
"That $4 million would pay for about 10 more years of salary and expenses for Barlett and Steele and their research help," said Steve Lovelady, of the Columbia Journalism Review, at the time.
Luckily, Brangolina central - Vanity Fair - picked up Barlett and Steele. They came back with an exposé of SAIC - Science Applications International Corporation - the mega-giant defense and intelligence contractor that straddles the Potomac. Through a spokesperson, SAIC told Multinational Monitor it would not comment on the Vanity Fair article.
Buried deep inside Vanity Fair's 500-page Hollywood issue, surrounded by anorexic male and female models pushing bras, perfume, jewelry and handbags - is a 10-page profile of the permanent government on the Potomac.
Barlett and Steele open with a nod to Hollywood:
"One of the great staples of the modern Washington movie is the dark and ruthless corporation whose power extends into every cranny around the globe, whose technological expertise is without peer, whose secrets are unfathomable, whose riches defy calculation, and whose network of allies, in and out of government, is held together by webs of money, ambition and fear. …
"To be sure, there isn't really such a corporation: the Omnivore Group, as it might be called. But if there were such a company - and, mind you, there isn't - it might look a lot like the largest government contractor you've never heard of: a company known simply by the nondescript initials SAIC (for Science Applications International Corporation), initials that are always spoken letter by letter rather than formed into a pronounceable acronym."
In 2006, SAIC raked in nearly $8 billion, almost all of it from the government. The company holds more than 9,000 contracts with the federal government.
Barlett and Steele say that while Halliburton and Bechtel supply the muscle - building infrastructure - SAIC sells brainpower.
Founded almost 40 years ago in San Diego, the core of the company's sprawling operations are now in the Washington, D.C. suburbs, where it serves the Pentagon and the National Security State, as well as other arms of the federal government.
Two developments over the last 15 years have spurred SAIC's growth. One is the outsourcing of federal government operations, an ongoing trend that got a huge boost with then-Vice President Al Gore's "Reinventing Government" initiative. Under the Bush administration, contracting out has gone into overdrive. A permanent government of contractors like SAIC now do what the government once did - typically at greater expense than when the same functions were performed in house.
The second boost for SAIC was the 9/11 terrorist attack, and the U.S. response - which includes the Iraq War, despite the fact that Iraq and Saddam Hussein had nothing to do with 9/11.
"There isn't a politically correct way to put it, but this is what needs to be said: 9/11 was a personal tragedy for thousands of families and a national tragedy for all of America, but it was very, very good for SAIC," Barlett and Steele write. "In the aftermath of the attacks, the Bush administration launched its Global War on Terror, whose chief consequence has been to channel money by the tens of billions into companies promising they could do something - anything - to help. SAIC was ready."
Ready to capitalize on the business opportunity, that is. The extent to which the company delivers useful services to the government is not so clear.
Barlett and Steele document a long list of whistleblower lawsuits and federal criminal investigations of the company, and describe how several of SAIC's projects have turned out to be colossal failures.
One example is the Iraqi Media Network.
A week before the invasion of Iraq, Barlett and Steele write, "SAIC was awarded yet another no-bid contract, this one for $15 million, which within a year would balloon to $82 million. The contract gave SAIC the responsibility for establishing a 'free and independent indigenous media network' in Iraq, and for training a cadre of independent Iraqi journalists to go with it. The selection of SAIC for this job may have seemed counter-intuitive. A year earlier, SAIC had been involved in a Pentagon program designed to feed disinformation to the foreign press."
"The job of establishing the Iraqi Media Network's infrastructure - cables, transmitters, dishes - was rife with corruption and waste," Barlett and Steele write. In March 2004, the Pentagon's inspector general found widespread violations of normal contracting procedures. "One of the more blatant transgressions concerned SAIC's overall manager of the media effort in Iraq. The investigators discovered that he had bought a Hummer and a pickup truck in the United States and then chartered a DC-10 cargo jet to fly them to Iraq. When a Pentagon official refused to allow the charge, the inspector general reported, 'SAIC then went around the authority of this acquisition specialist to a different office within the Under Secretary of Defense for Policy to gain approval and succeeded.'"
SAIC hired Don North, a former NBC news staffer, to help build the Iraqi Media Network. North and his colleagues aimed to create an independent media operation. Their hopes were quickly dashed.
"With SAIC's cooperation," Barlett and Steele write, "the network quickly devolved into a mouthpiece for the Pentagon - 'a little Voice of America,' as North would put it. Iraqis openly snickered at the programming. Every time North protested, he recalls, he was rebuffed by SAIC executives. 'Here I was going around quoting Edward R. Murrow,' North says, 'and the people who were running me were manipulating and controlling a very undemocratic press and media that was every bit as bad as what Saddam had established.'"
With no authentic independent culture, the Iraqi Media Service was just a pawn of its controllers. When it was turned over to the Iraqi government, it continued as a propaganda machine, but with a different message. Today, in an ironic twist, it "spews out virulently anti-American messages day and night."
Failure does not seem to hurt SAIC much. Nor do elections seem to matter much for the company that has become a fixture in Washington.
"Political change causes scarcely a ripple," Barlett and Steele write. "As one former SAIC manager observed in a recent blog posting: 'My observation is that the impact of national elections on the business climate for SAIC has been minimal. The emphasis on where federal spending occurs usually shifts, but total federal spending never decreases. SAIC has always continued to grow despite changes in the political leadership in Washington.'"
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Russell Mokhiber is Editor of the Corporate Crime Reporter. Multinational Monitor Editor Robert Weissman is Director of Essential Action.
Neither Honest Nor Trustworthy: The 10 Worst Corporations of 2007
by Russell Mokhiber and Robert Weissman
Abbott
Blackwater
BP
Chiquitta
Countrywide
ExxonMobil
Gen Re
Murray Energy
Purdue Pharma
SAIC
The U.S. public holds Big Business in shockingly low regard.
A November 2007 Harris poll found that less than 15 percent of the population believes each of the following industries to be "generally honest and trustworthy:" tobacco companies (3 percent); oil companies (3 percent); managed care companies such as HMOs (5 percent); health insurance companies (7 percent); telephone companies (10 percent); life insurance companies (10 percent); online retailers (10 percent); pharmaceutical and drug companies (11 percent); car manufacturers (11 percent); airlines (11 percent); packaged food companies (12 percent); electric and gas utilities (15 percent). Only 32 percent of adults said they trusted the best-rated industry about which Harris surveyed, supermarkets.
These are remarkable numbers. It is very hard to get this degree of agreement about anything. By way of comparison, 79 percent of U.S. adults believe the earth revolves around the sun; 18 percent say it is the other way around.
The Harris results are not an aberration. The results have not varied considerably over the past five years - although overall trust levels have actually declined from the already very low threshold in 2003.
The Harris results are also in line with an array of polling data showing deep concern about concentrated corporate power.
An amazing 84 percent told Harris in a poll earlier in 2007 that big companies have too much power in Washington. By contrast, only 47 percent said that labor unions have too much power in Washington (compared to 42 percent who said labor has too little power), and 18 percent said nonprofit organizations have too much power in Washington.
These results have proven durable. At least 80 percent of the public has ranked big companies as having too much power in Washington since 1994. In 2000, Business Week and Harris asked a broader question: Has business gained too much power over too many aspects of American life? Seventy-four percent agreed.
The November 2007 poll also asked about support for measures to control corporations. These results are eye-opening as well, though perhaps not in the expected way.
Harris asked which industries "should be more regulated by government - for example for health, safety or environmental reasons - than they are now?" Only oil companies (53 percent), pharmaceutical companies (53 percent) and health insurance companies (52 percent) crossed the 50 percent threshold. Even the tobacco industry managed to escape in the survey with only 41 percent favoring greater regulation. The data trends significantly negative - against greater regulation - over the last five years.
Does this show that while people distrust Big Business, they equally distrust the government to constrain corporate power?
No.
The U.S. skepticism to regulation is only skin deep. When polls present specific regulatory proposals for consideration, U.S. public support is typically strong and often overwhelming - even when arguments against government action are presented.
For example:
After hearing arguments for and against, 76 percent favor granting the Food and Drug Administration (FDA) regulatory authority over tobacco, with 22 percent opposed.
After hearing arguments for and against, 75 percent favor legislation that would significantly increase energy efficiency, including auto fuel efficiency standards, and the use of renewable energy.
Eighty-five percent favor country-of-origin labeling for meat, seafood, produce and grocery products, and three quarters favor a legislative mandate.
Seventy-one percent say it is important that drugs remain under close review by the FDA and drug companies after they have been placed on the market.
And, from a Harris finding a week after the poll showing skepticism about industry regulation in general, the polling agency found that those who think there is too little government regulation in the area of environmental protection outpaced those who think there is too much by a more than 2-to-1 margin (53 to 21 percent).
What the Harris findings on attitudes to regulation do show is that the business campaign against regulation as an abstract concept has been very successful.
It highlights the need for consumer, environmental, labor and other corporate accountability advocates to defend the concept of regulation, and to connect the rampant corporate abuses in society with the deregulation and non-regulatory failures of the last three decades. There's little doubt that the general public attitude toward regulation significantly affects the willingness of politicians - none too eager to offend business patrons in the first place - to take on corporate power.
With the 10 Worst Corporations of 2007, we aim to show - again - that Big Business is out of control and to connect comparable abuses to the failure of government overseers, regulators and enforcers.
The task ahead is to reassert the supremacy of the people over corporations, and for democratic government to impose controls and limits on what corporations can and cannot do.
Presented alphabetically, here are the 10 Worst Corporations of 2007:
Abbott: Blackmailing Thailand
Imagine you are the only pharmacist in an isolated town. You impose massive mark-ups on the drugs you sell. A customer needs a life-saving medication, but can't afford your high price. So, the customer finds a pharmacy in a faraway town, which agrees to supply the medicine for a quarter of your price.
Then the customer comes back. She needs several other medicines that you sell, and is willing to pay your standard profiteering price. At least one of those medicines is not available at the other pharmacy, or anywhere else.
You refuse to sell the medicines, unless the customer agrees to stop buying the life-saving medicine from the other pharmacy.
If you engaged in this kind of behavior in the United States, you would be in violation of the U.S. pharmacist code of ethics, which commands that "a pharmacist promotes the good of every patient in a caring, compassionate and confidential manner." You would also be breaking the law in most, if not all, states.
Should the ethical and legal treatment be any more lenient if it's not a pharmacist refusing to serve an individual, but a pharmaceutical company - motivated solely by retaliatory animus - denying medicines to an entire country? Doesn't denying medicines on a mass scale out of animus merit harsh punishment?
Consider the case of Abbott Laboratories in Thailand. In January 2007, Thailand issued a compulsory license on an AIDS drug made by Abbott. A compulsory license is a lawful authorization of generic competition for a product that remains on patent. In Thailand's case, the government issued a license that would enable its public health sector to buy generic versions of lopinavir/ritonavir, sold by Abbott under the brand-name Kaletra.
Kaletra is a very important second-line AIDS drug, used for patients who have developed resistance to first-line drugs. One reason Kaletra is so important is that Abbott has endeavored to prevent other companies from combining ritonavir, which makes other AIDS drugs more effective, with products they control [see "The 10 Worst Corporations of 2004," Multinational Monitor, December 2004].
Thailand is a leader among developing countries in providing treatment to people living with HIV/AIDS. Its treatment program started early and covers most people with HIV. The natural progression of treatment is that people need to shift drugs over time, and an increasing number of Thais living with HIV now need Kaletra.
Abbott has a discount program for Kaletra for developing countries, but its discount price for middle-income countries like Thailand was $2,200 per person per year. Thailand's per capita income is under $3,000, according to the World Bank.
In a detailed white paper explaining its decision, the Thai government estimated that 50,000 Thais will need second-line treatment in the near future. The cost of providing lopinavir/ritonavir at Abbott's price to this population would be more than the entire current budget for AIDS drugs, according to the government. Within a year of the license, according to Thailand's National Health Security Office, the government had managed to triple the number of people receiving lopinavir/ritonavir, to roughly 2,500. The white paper estimated the government would be able to shift 8,000 people onto lopinavir/ritonavir based on the immediate cost savings from buying generic. That number will grow as generic costs fall over time.
Big Pharma viewed Thailand's actions as a major threat. Most worrisome to the industry was the example Thailand set. "There could be 'a spreading epidemic of disrespect for IP [intellectual property] rights,'" Billy Tauzin, head of PhRMA, the U.S. pharmaceutical industry trade association, said in May.
Although Thailand's actions were consistent with its obligations under national and international law, Big Pharma was able to employ the U.S. government (as well as the European Union) to pressure Thailand. In April 2007, the U.S. Trade Representative designated Thailand a "priority watch" country, a designation indicating it to be a serious violator of U.S. patent and copyright interests, and triggering close scrutiny from U.S. trade officials [see "Big Pharma and AIDS: Act II Patents and the Price of Second-Line Treatment," Multinational Monitor, March/April 2007].
Abbott executives also took matters into their own hands. In March, the company withdrew applications to market seven new medicines in Thailand. One of those medicines was the heat-stable formulation of lopinavir/ritonavir - meaning it does not require refrigeration, an important consideration in a tropical country like Thailand.
Public health advocates in Thailand and around the world reacted with outrage.
"What Abbott has done by withdrawing seven drugs from Thailand is using drugs as a bargaining chip," says Jon Ungphakorn, the executive secretary of the AIDS Access Foundation in Thailand. "This is unacceptable; it is a moral outrage that Abbott is doing this. It's playing games, not only with the patients in Thailand, but with patients all over the world. Abbott knows that what it's doing is intimidating the whole developing world against using the same measures - legal measures - that Thailand has used to get access."
Dr. Tido von Schoen-Angerer, director of Médecins Sans Frontières/Doctors Without Borders' Campaign for Access to Essential Medicines, agreed. "What Abbott is doing is trying to protect high drug prices by actively denying an entire population access to new medicines it produces," Dr. von Schoen-Angerer said. "This is as unprecedented as it is shocking. We consider it unethical and utterly unacceptable."
Abbott declined repeated requests from Multinational Monitor to comment on the dispute.
Campaigners in Thailand called for a boycott of Abbott. In April, health advocates around the world held coordinated protests against the drug multinational.
Its hard-line approach notwithstanding, Abbott was not immune to the market pressure applied by Thailand. In demonstrating how it could reduce prices for Kaletra by 75 percent, Thailand was laying out a road map for other middle-income countries. In April, Abbott reduced its price for Kaletra for middle-income countries from $2,200 to $1,000.
The pressure campaign on Abbott also had some effect. In July, the company announced it would register its pediatric formulation for Kaletra in Thailand.
Otherwise, Abbott continues to maintain its new-drug boycott of Thailand.
Should denying medicines as a form of collective punishment be legal in a civilized world?
Actually, it's not so obvious that Abbott's actions are legal.
In April, a coalition of Thai consumer and health organizations - the Foundation for Consumers, AIDS Access Foundation, the Thai Network of People Living with HIV/AIDS and the Thai NGO Coalition on AIDS - filed a complaint with the Thai Trade Competition Commission. It called for the instigation of criminal prosecution against Abbott.
Sean Fynn, associate director of the Program on Information Justice and Intellectual Property at American University's Washington College of Law, prepared a supporting memorandum for the health and consumer groups' complaint.
Explains Flynn, "Abbott's response to the compulsory license - withholding a new version of its Kaletra product from the Thai market - appears to directly contravene the Thai Competition Act which prohibits 'suspending, reducing or restricting services, production, purchase, distribution, deliveries or importation without justifiable reasons.' An unwillingness to comply with a legal and justifiable government order cannot be a 'justifiable reason' for suspending the supply of life-saving medicines to Thai citizens."
In December, however, the Thai Trade Competition Commission declined to pursue the complaint. It argued that Abbott does not have sufficient market share - even though it has a monopoly on its patented medicines - to trigger the terms of the country's competition law.
Blackwater: Deadly Cowboys in Iraq
On September 16, 2007, Blackwater private military contractors escorting a State Department convoy in Iraq fired machine guns and grenade launchers at civilians at a busy intersection. Seventeen civilians died.
The incident crystallized Iraqi fury at the unaccountable, cowboy-like actions of foreign military contractors (the polite term for mercenaries). Iraqi Prime Minister Nouri al-Maliki said the company should be ejected from Iraq. The Iraqi Minister of Interior reportedly suspended the company's right to operate outside of the Green Zone.
Blackwater said its personnel operated properly in the incident, but numerous reports and news accounts blamed the company's contractors for the slaughter.
In the wake of the incident, attention in Washington suddenly focused on the legal Twilight Zone in which U.S.-employed private contractors operate - not subject to Iraqi law, U.S. military law or U.S. civilian law.
But, in the subsequent months, attention has died down. Blackwater continues to operate in Iraq, with no more accountability than existed on September 15.
The investigations that followed the September 16 massacre did establish two things beyond any doubt. First, the September 16 incident was not exceptional. It fit a pattern of outrageous conduct by Blackwater contractors. Second, Blackwater was representative of a broader problem of reliance on private contractors.
Blackwater was founded in 1997 by Erik Prince, an ex-Navy Seal and scion of a prominent Michigan Republican family.
Its business is based almost entirely on servicing the U.S. government, though it has designs on providing military services to other countries. Prince says that 90 percent of the company's business is contracts with the U.S. government. He testified before the House Oversight Committee in October that he could not - or would not - say how much the company earned. He did testify that key contracts paid the company a 10 percent profit rate.
Blackwater obtained more than $1 billion in contracts from the U.S. government from 2001 to 2006, rising from $736,000 in 2001 to more than half a billion dollars in 2006.
Blackwater's main contract is providing security to State Department operations in Iraq. It has roughly 1,000 personnel in Iraq.
In October, the majority staff of the House Oversight Committee prepared a devastating report that concluded, "The Blackwater and State Department records reveal that Blackwater's use of force in Iraq is frequent and extensive, resulting in significant casualties and property damage." Blackwater is legally and contractually bound to only engage in defensive uses of force to prevent "imminent and grave danger" to themselves or others. In practice, however, the vast majority of Blackwater weapons discharges are preemptive, with Blackwater forces firing first at a vehicle or suspicious individual prior to receiving any fire.
The House Oversight Committee report found that from 2005 to 2007, Blackwater personnel were involved in almost 200 incidents involving firearms discharge. In 84 percent of cases, Blackwater personnel were the first to fire.
The Committee's report showed that reckless activity by Blackwater mercenaries was common. It described one case as follows:
On November 28, 2005, a Blackwater motorcade traveling to and from the Ministry of Oil for official meetings collided with 18 different vehicles during the round trip journey (six vehicles on the way to the ministry and 12 vehicles on the return trip). The written statements taken from the team members after the incident were determined by Blackwater to be "invalid, inaccurate and, at best, dishonest reporting." According to a Blackwater contractor who was on the mission, the tactical commander of the mission "openly admitted giving clear direction to the primary driver to conduct these acts of random negligence for no apparent reason." The only apparent sanction resulting from this incident was the termination of two of the employees.
The State Department is supposed to exercise oversight of Blackwater, but the House Oversight Committee found the department had utterly failed in this duty. "Even in cases involving the death of Iraqis, it appears that the State Department's primary response was to ask Blackwater to make monetary payments to 'put the matter behind us,' rather than to insist upon accountability or to investigate Blackwater personnel for potential criminal liability."
The oversight committee's report was issued just prior to a high-profile hearing in which Erik Prince defended the company.
"We have to provide that protective screen," he testified. "We only play defense, and our job is to get those reconstruction people that are trying to weave the fabric of Iraq back together, to get them away from that X, the place where the bad guys, the terrorists, have decided to kill them that day."
Prince emphasized repeatedly that no individual protected by Blackwater had ever been killed or seriously injured.
He said the company had fired more than 100 personnel for violating company and State Department rules, but besides also fining them, could do no more to punish them for wrongful acts. It was up to the Justice Department to prosecute them, he said.
Representative Danny Davis, D-Illinois, asked, "You do admit that Blackwater personnel have shot and killed innocent civilians, don't you?"
Prince replied, "No, sir. I disagree with that. I think there have been times when guys are using defensive force to protect themselves, to protect the package they are trying to get away from danger. There could be ricochets. There are traffic accidents. Yes. This is war. You know since 2005, we have conducted in excess of 16,000 missions in Iraq and 195 incidences with weapons discharged. In that time, did a ricochet hurt or kill an innocent person? That is entirely possible. Again, we do not have the luxury of staying behind to do that terrorist crime scene investigation to figure out what happened."
Concluded Representative Henry Waxman, D-California, "We have never had anything of this magnitude before, where we have turned so much of our military activity over to private military - [activity] that used to be, for the most part, provided by the U.S. military itself." As Waxman noted, the October hearing showed that relying on Blackwater is incredibly expensive - more than $400,000 per contractor per year - and has undermined the U.S. military objective, by fostering animosity toward the United States.
It has also led to the deaths of untold numbers of Iraqis, terrorized the Iraqi civilian population, and added to the lawless atmosphere in Iraq in which violence is pervasive and (Iraqi) life is cheap.
BP: Taking the Public
BP is a giant multinational oil company. It spends a lot of money trying to get us to believe that it is something else: a decent, clean, conscientious corporation.
It is not.
It kills workers in Texas. It pollutes Alaska. It manipulates markets. And it uses the tricks of the corporate criminal class to escape penalties commensurate with the seriousness of the harm it causes.
In October, BP cut a deal with the Justice Department to pay $373 million in fines and restitution related to a series of crimes and instances of wrongdoing: a felony violation of the Clean Air Act connected to a 2005 refinery explosion that killed 15 contract employees, a violation of the Clean Water Act related to major pipeline leaks in Alaska, and a conspiracy to manipulate the propane market.
The $50 million fine in connection with the Texas refinery explosion was the largest ever under the Clean Air Act, a source of pride at the Justice Department.
Not everyone was impressed. "I note with curiosity that when an average citizen commits a felony it usually leads to a prison sentence," says Representative John Dingell, D-Michigan, the chair of the House Energy and Commerce Committee. "Yet, apparently, when a big oil company commits a felony that causes 15 deaths, it pays a criminal penalty equal to less than a day's corporate profits. Until the Department of Justice starts holding corporate executives accountable, I am not sure that there will be a meaningful shift in corporate culture."
"It is troubling," says Representative Bart Stupak, D-Michigan, chair of the Subcommittee on Oversight and Investigations of the House Energy and Commerce Committee, "that many of the same BP executives who were responsible for the management failures that led to the criminal charges and settlements announced today are still employed by BP, and, in some cases, have been promoted to the highest levels of the company. This does not reflect the kind of corporate culture change we would expect if the company's leadership took to heart the consequences of its mismanagement."
For BP, the October settlement put to rest a series of debacles that has beset the company over the last several years.
But it's certainly not the end of the company's mischief.
In February 2007, the company announced that it had chosen the University of California (UC) at Berkeley, in collaboration with the Lawrence Berkeley National Laboratory and the University of Illinois at Urbana-Champaign, to host the Energy Biosciences Institute (EBI).
Funded with $500 million over 10 years, the agreement would double the amount of corporate funding for research on campus, and change the direction of biofuels research at UC Berkeley for years to come.
"In launching this visionary institute, BP is creating a new model for university-industry collaboration," says Beth Burnside, UC Berkeley vice chancellor for research.
That's one way to look at things. Another is to characterize the BP-Berkeley deal as the farthest-reaching effort by a corporation in recent U.S. history to colonize a major university.
The agreement drew harsh criticism from much of the university community in part because the deal was hatched without input from professors, students and others in the university community.
In March 2007, students opposing the deal demonstrated outside the Chancellor's office on the Berkeley campus.
Two students were arrested for dumping molasses on the steps of a university building (it looked like oil).
They had a lot to protest.
The Energy Biosciences Institute, dedicated to problems related to global energy production and primarily expected to research biofuels, is projected to encompass 24 laboratories on the three campuses, representing an unprecedented occupation of university space and cooptation of public resources by a corporation.
BP will actually construct a building on the UC Berkeley campus, where it will be able to conduct proprietary research, off limits to Berkeley personnel. There may be no precedent for such absolute ceding of public university space to secret, for-profit industry research.
The deal will enable BP to expropriate a major public investment. Various public institutions are kicking in tens of millions of dollars to the project. Much more importantly, BP will be able to capitalize on the long-term public investment in UC-Berkeley and the other institutions, including the students and faculties who enjoy very significant public support.
BP gets to control whatever useful technologies emerge from its colonial project. The terms of the Energy Biosciences Institute contract between BP and the public partners give BP the right to exclusively license and commercialize inventions developed in the Institute's shared university/BP facilities, even inventions developed entirely by university scientists (provided they are BP-funded). The company will almost surely be able to cherry pick publicly funded inventions.
The deal also likely gives BP power to direct the research agenda at the Energy Biosciences Institute. The deal specifies that BP representatives will serve in "high-level" positions on the Institute's governing committees.
"BP researchers will be able to suck up the best of what Berkeley's scientists have to offer, retreat behind locked, guarded doors and pursue their corporate agenda without giving anything back," says John Simpson of the the Foundation for Taxpayer and Consumer Rights in Santa Monica, California. "Academic research is based on an exchange of ideas and information. This is a one-way street benefiting only BP."
Chiquita: Payments to Paramilitaries
In March, Chiquita entered into a plea agreement with the U.S. Department of Justice, in which it admitted making illegal payments in Colombia to a right-wing militia designated as a terrorist organization by the United States. Under terms of the deal, Chiquita agreed to pay $25 million in fines to the U.S. government.
The victims of that terrorist paramilitary have a simple question: Why is Chiquita paying the U.S. government, but not them?
The Justice Department's announcement of the deal was damning enough.
"From sometime in 1997 through February 4, 2004," explained the Justice Department's release, "Chiquita paid money to the AUC [the Spanish acronym for a paramilitary organization whose English name is United Self-Defense Forces of Colombia] in two regions of the Republic of Colombia where Chiquita had banana-producing operations: Urabá and Santa Marta. Chiquita made these payments through its wholly-owned Colombian subsidiary known as 'Banadex.' By 2003, Banadex was Chiquita's most profitable operation. Chiquita, through Banadex, paid the AUC nearly every month. In total, Chiquita made over 100 payments to the AUC amounting to over $1.7 million."
The U.S. government designated the AUC as a foreign terrorist organization in September 2001. That designation - which made it a crime for U.S. persons or companies to make payments to the AUC - "was well-publicized in the American public media," notes the Justice Department's release. "The AUC's designation was even more widely reported in the public media in Colombia." Yet Chiquita's payments continued - 50 payments totaling more than $800,000 followed.
In February 2003, top Chiquita officers learned of the payments and consulted with outside counsel. Chiquita's outside lawyers unequivocally stated payments should stop. The advice from numerous communications:
"Must stop payments."
"Bottom Line: CANNOT MAKE THE PAYMENT."
"Advised NOT TO MAKE ALTERNATIVE PAYMENT through CONVIVIR."
"General Rule: Cannot do indirectly what you cannot do directly."
Concluded with: "CANNOT MAKE THE PAYMENT."
"You voluntarily put yourself in this position. Duress defense can wear out through repetition. Buz [business] decision to stay in harm's way. Chiquita should leave Colombia."
"[T]he company should not continue to make the Santa Marta payments, given the AUC's designation as a foreign terrorist organization[.]"
"[T]he company should not make the payment."
But the company continued to make payments.
Two months later, Chiquita self-reported the payments to the Justice Department. But even then payments continued - 20 more payments of more than $300,000 through June 2004, at which time Chiquita sold its Colombian subsidiary.
Chiquita's version of the story is that it had been in a horrible dilemma. The then-leader of the AUC, Carlos Castaño, met with a senior executive of Banadex and threatened that he would harm Banadex personnel and property if the company did not pay protection money.
"The payments made by the company were always motivated by our good faith concern for the safety of our employees," says Chiquita CEO Fernando Aguirre. "Nevertheless, we recognized - and acted upon - our legal obligation to inform the Department of Justice of this admittedly difficult situation." The plea deal, he says, "is in the best interests of the company."
Says company spokesperson Michael Mitchell, "Our payments were entirely motivated by safety concerns."
"It was a difficult ethical dilemma," he says. "The Department of Justice admitted it was a difficult situation."
A lawsuit filed in July 2007 by family members of Colombians killed by the AUC paints a less sympathetic view of Chiquita's dilemma. The family members are represented by the Washington, D.C.-based EarthRights International and other lawyers.
"The stability and social control provided by the AUC was to Chiquita's benefit," charges the suit, "in allowing exportation of bananas without interruption due to conflict. The influence of the AUC in the leadership of the banana workers' trade unions was also to Chiquita's benefit, as it reduced labor strife. The AUC also provided protection services to banana plantations dealing out reprisals against real or suspected thieves, as well as against social undesirables, suspected guerrilla sympathizers or supporters, and anyone who was suspected of opposing the AUC's activities and social programs."
The lawsuit also charges that Chiquita facilitated the illegal transfer of thousands of assault rifles to the AUC.
The family members filing the suit - all named as John or Jane Doe to protect them from retaliation - allege the AUC killed their relatives because they were active in labor organizing and advocating for marginalized groups.
The suit seeks to represent a class of all people harmed by the AUC's "campaign of military and social control" aiming to "exert total control over the land and inhabitants of the banana-growing region of Colombia." The family members ask that the class include "individuals who were the objects of acts constituting extrajudicial killing, forced disappearance, torture, cruel, inhuman or degrading treatment, kidnapping, rape, forced displacement, crimes against humanity, or crimes against civilians constituting war crimes."
Chiquita "categorically denies" the allegations in the lawsuit, according to company spokesperson Mitchell. "We reiterate that Chiquita and its employees were victims and that the actions taken by the company were always motivated to protect the lives of our employees and their families."
"The company," he says, "was forced to make payments to both left- and right-wing paramilitary organizations to protect the lives of our employees at time when kidnappings and murders were frequent, and government authorities were unable to provide security and protection."
In the 1990s, Mitchell says, the company's workforce was put in grave danger by the escalation of violence in the region. "Among hundreds of documented attacks by left- and right-wing illegal groups were the 1995 massacre of 28 innocent Chiquita employees who were ambushed and killed on a bus on their way to work, and the 1998 cold-blooded murder of two more of our workers on a farm while their colleagues were forced to watch."
In this context, the company was "forced to make protection payments to safeguard our workforce. It is absolutely untrue for anyone to suggest that these payments were made for any other purpose."
Countrywide: Subprime Kings
Many factors combined to create the current housing crisis in the United States.
Low interest rates after the 2001 stock market crash spurred the housing boom. Housing prices skyrocketed above historic trendlines. People were duped into thinking prices would rise forever, but it was inevitable that the housing bubble would burst, and houses would suddenly be worth a lot less. With house prices falling, lots of people are now finding they owe more than their house is worth. This problem is exacerbated by predatory loan arrangements that have left millions facing suddenly rising mortgage payments.
A lot of people and corporations deserve blame for this state of affairs.
Instead of warning consumers about the housing bubble - which would have gone a long way to counter the excessive price run-ups - then-Federal Reserve Chair Alan Greenspan denied a bubble was occurring.
Wall Street firms created exotic investment instruments that made possible the purchase and trading of large numbers of mortgages. This created conditions so that banks and initial lenders took less care in issuing mortgages - since they wouldn't be responsible for mortgages gone bad. The Wall Street firms not only sold these instruments to duped investors, they took on major liabilities on their own - even though it was obvious the housing bubble would have to burst.
Rating agencies like Moody's and Standard & Poor's, which evaluated the riskiness of these new mortgage investment instruments, failed utterly. The housing bubble meant mortgage investments were sure to lose money, but the ratings agencies gave them top ratings anyway. Along with the "innovation" of the Wall Street firms, the ratings agencies helped maintain a market that dramatically exacerbated, and to a considerable degree may have created, the housing bubble.
Financial bubbles create an incentive for criminal and shady activity. Just like the stock bubble of the late 1990s created the climate for Enron and dozens of other companies to cook their books, the housing bubble created incentives for predatory lenders to exploit consumers.
The predatory lenders offered low rates, at least at first. Rates would rise later, but the lenders said that - because home prices were rising so fast and would continue to do so - borrowers could always refinance with a new loan.
The biggest of the predatory lenders was Countrywide, a mortgage lender acquired by Bank of America in January 2008. The company and its CEO, Angelo Mozilo, made a bundle, while setting up thousands and thousands of families for financial ruin.
"Over the past few years," says Martin Eakes of the Center for Responsible Lending, "by steering millions of people into bad loans, Countrywide has been the largest rogue mortgage lender in the country. According to Countrywide's own data, more than 80 percent of its exotic adjustable-rate loans were made to borrowers that do not meet current banking standards. Countrywide knew that these homeowners would not be able to make their monthly loan payments after dramatic payment increases became effective."
The Center for Responsible Lending has compiled a dossier on Countrywide's irresponsible practices, presented in a report, "Unfair and Unsafe." Its devastating report, based on customer complaints, lawsuits, regulatory actions, news accounts, government reports and company documents, shows how Countrywide engaged in rampant wrongdoing:
o Predatory lending. "Lawsuits filed around the country have accused Countrywide of preying on borrowers through a variety of unfair and fraudulent tactics that have siphoned equity out of their homes and pushed many into foreclosure," notes "Unfair and Unsafe." "Borrowers and regulators have accused the company of: steering borrowers with good credit into higher-cost 'subprime' loans; gouging minority borrowers with discriminatory rates and fees; working in cahoots with mortgage brokers who use bait-and-switch tactics to land borrowers into loans they can't afford; targeting elderly and non-English-speaking borrowers for abusive loans; and packing loans with inflated and unauthorized fees."
In one lawsuit, Albert Zacholl, a 74-year-old man living in Southern California, alleges that Countrywide and a pair of mortgage brokers "cold-called and aggressively baited" him. They promised him $30,000 cash, a mortgage that would replace his previous mortgage (which was leaving him owing more each month) and a monthly payment that would not exceed $1,700. Zacholl told the brokers that his income consisted of a pension of $350 a month and Social Security payments of $958, and that with help from his son, he could afford a mortgage up to $1,700. According to the lawsuit, the broker falsified his loan application by putting down an income of $7,000 a month, and then arranged for a high-interest mortgage that required him to pay more than $3,000 a month (and failed to deliver the $30,000 cash payment). The motivation for the scam, according to the lawsuit, was to collect $13,000 in fees.
In court papers, the Center for Responsible Lending reports, Countrywide responded that Zacholl "consented to the terms of the transaction" and that any problems were the result of his own "negligence and carelessness."
Dangerous products. Countrywide has been a leader in pushing unsound mortgage terms. These include "exploding" subprime adjustable rate mortgages - with reasonable interest rates in the first year that jump in subsequent years, often by as much as 30 percent to 50 percent.
Conflicts of interest. "Countrywide has created a corporate structure designed to allow its subsidiaries to work hand-in-hand in squeezing borrowers with excessive fees and penalties," according to "Unfair and Unsafe." Countrywide affiliates handle appraisals, credit reports, flood certifications and other documentation for new loans; provide "force-placing" insurance for borrowers whose homeowners insurance has lapsed; and serve as a foreclosure trustee. The interconnections enable Countrywide to charge high fees, and deny borrowers the benefit of third parties' independent judgment and independent interests.
Broken promises on loan modifications. The company has a history of failing to fully live up to its promises to help borrowers keep their homes by modifying onerous loans, according to "Unfair and Unsafe." The report cites a Fall 2007 Credit Suisse review that ranked Countrywide as one of the mortgage lenders least willing to adjust loan terms.
Countrywide says it is committed to working out fair arrangements to keep homeowners in their houses. In December, it entered into an arrangement with the community group ACORN designed to help subprime borrowers.
"During the first 11 months of 2007, Countrywide helped more than 69,000 customers retain their homes through solutions such as loan modifications, long-term repayment plans, special forbearance and other options," says Steve Bailey, a Countrywide senior managing director of loan administration. "Regardless of the reason for the payment difficulties, Countrywide wants to try to find reasonable solutions for our borrowers."
Abusive loan servicing. Borrowers claim that Countrywide has engaged in sloppy and fraudulent loan servicing that has produced unwarranted fees and foreclosures.
With the collapse of the housing market in 2007, Countrywide's fortunes turned, its mortgage-backed securities plummeted in value, and the company seemed on the edge of bankruptcy. In January 2008, Bank of America agreed to buy the company.
Do not weep for company co-founder and long-time CEO Angelo Mozilo, however. Mozilo grabbed compensation worth $185 million from 2002-2006, according to an analysis by the U.S. House of Representatives Committee on Oversight and Government Reform. Between November 2006 and December 2007, Mozilo sold $150 million in stock - effectively jumping from a sinking corporate ship for which he was supposedly at the helm, or at least on the captain's deck.
"Particularly, the discrepancy between Mr. Mozilo's compensation and Countrywide's performance is striking," concludes the Oversight Committee analysis. "In 2007, Countrywide announced a $1.2 billion loss in the third quarter and an additional loss of $422 million in the fourth quarter." By the end of the year, the company's stock fell 80 percent from its February peak. "During the same period, Mr. Mozilo was paid $1.9 million in salary, received $20 million in stock awards contingent upon performance, and sold $121 million in stock."
Mozilo retired as CEO in 2006, remaining as company chair and an employee. The House Oversight Committee analysis shows that his compensation contract, taking effect in 2007, was outrageous, and based in part on recommendations from a compensation consultant loyal to Mozilo rather than Countrywide.
Even so, Mozilo was bitter that the company did not give him everything he wanted. In an e-mail message turned up by the Oversight Committee, Mozilo wrote to the compensation consultant:
"I appreciate your input but at this stage in my life at Countrywide this process is no longer about money but more about respect and acknowledgement of my accomplishments. ... Boards have been placed under enormous pressure by the left wing anti business press and the envious leaders of unions and other so called 'CEO Comp Watchers' and therefore Boards are being forced to protect themselves irrespective of the potential negative long term impact on public companies. I strongly believe that a decade from now there will be a recognition that entrepreneurship has been driven out of the public sector resulting in underperforming companies and a willingness on the part of Boards to pay for performance."
With attention focused on the discrepancy between Mozilo's compensation package and Countrywide's well-being, he waived various payments - totaling $37.5 million - he could have received once Bank of America finalizes its takeover.
In March 2008, Mozilo appeared before the House Oversight Committee to explain his compensation.
"Countrywide's board," he testified, "has aligned the interests of our top executives, including me, with shareholders by making our compensation primarily performance-based - namely, tied to earnings per share and share price appreciation. Since 1982 through early 2007, Countrywide's stock appreciated over 23,000 percent, reaching a peak market value of over $25 billion from a starting value of zero. As a result, over recent years, I have received substantial income from bonuses under a formula that was approved by our shareholders on at least two occasions."
He also received substantial stock options, explaining, these were "options that required the price of the stock to rise above the option price before any income could be realized, thereby aligning me squarely with our shareholders." In anticipation of his retirement, he testified, he put in place a plan to cash in some stock options earned in earlier years. His sales were thus planned in advance of Countrywide's downturn. But he continues to hold substantial shares in Countrywide - shares worth much less than before the company's stock collapsed.
Mozilo testified that he is "very proud of the home ownership opportunities that Countrywide has provided for over 20 million families," while acknowledging the hardship faced by homeowners and Countrywide employees and shareholders.
"In my 55 years in the industry," he said, "this by far is the worst housing crisis I have ever seen, combined with an unprecedented collapse of the credit and liquidity markets."
"The problem we face," he said, "is the deterioration of the value of homes. As values were going up, we had no problem. We had no delinquencies and no foreclosures, because people had options, because people run into three things in their lives generally - loss of job, loss of marriage, loss of health. When that happens and they own a home, and it impacts their income, they generally have a way out - sell the house, refinance, do something.
"That equity that they have in their homes has been virtually wiped out. And that's what's exacerbating this whole foreclosure problem."
Wasn't that problem entirely foreseeable? Didn't Countrywide's lending policies - which generously might be called aggressive - depend on constantly rising housing values in what was obviously a bubble market?
ExxonMobil: Planetary Endangerment
It is no longer possible for even ExxonMobil to deny the reality of climate change.
Here is the current company line, as elaborated by CEO Rex Tillerson in a November 2007 speech: "Many more questions on this complex subject remain and require continued research. But it has become increasingly clear that climate change poses risks to society and ecosystems that are serious enough to warrant action - by individuals, by businesses and by governments."
Well, sure, lots of questions remain. And action is certainly "warranted."
But that understates things by several orders of magnitude.
The Intergovernmental Panel on Climate Change (IPCC), a collaboration of hundreds of the world's leading climate scientists that won the 2007 Nobel Peace Prize, always presents its findings in the most cautious and restrained language.
The IPCC concludes in its Fourth Assessment report, issued in April 2007: "Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice and rising global average sea level." Not only were 11 of the 12 years from 1995 to 2006 among the 12 warmest years recorded, the last 50 years in the Northern Hemisphere were probably the warmest in the last 1,300 years.
"Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic [greenhouse gas] concentrations."
The IPCC details a series of horrors likely to befall the planet to rival the 10 Plagues the Bible says were visited upon Egypt. Projections include:
By 2020, between 75 and 250 million people in Africa are projected to be exposed to increased water stress.
By 2020, in some countries, yields from rain-fed agriculture could be reduced by up to 50 percent. Agricultural production throughout Africa is projected to be severely compromised.
Sea level rise will affect heavily populated coastal areas in Africa by the end of the century, imposing costs on affected countries of at least 5 percent to 10 percent of gross domestic product (GDP).
African desertification will increase by 5 percent to 8 percent by 2080.
Freshwater availability throughout Asia will be a serious problem by the 2050s.
Flooding in heavily populated Asian coastal areas will intensify (posing risks to lives and imposing massive economic costs).
New patterns of flood and drought will lead to more infant and child deaths from diarrhea in Asia.
By 2020, significant loss of biodiversity is projected to occur in Australia's Great Barrier Reef.
By 2050, ongoing coastal development and population growth in some areas of Australia and New Zealand are projected to exacerbate risks from sea level rise and increases in the severity and frequency of storms and coastal flooding.
Mountainous areas in Europe will face glacier retreat, reduced snow cover and winter tourism, and extensive species losses (in some areas up to 60 percent under high emissions scenarios by 2080).
By mid-century, increases in temperature and associated decreases in soil water are projected to lead to gradual replacement of tropical forest by savanna in eastern Amazonia. Semi-arid vegetation will tend to be replaced by arid-land vegetation.
Biodiversity will be lost everywhere.
Heatwaves will increase in number, intensity and duration in North America and Europe.
In a company statement, ExxonMobil responded to the April report from the IPCC, with its new line that "Because the risks to society and ecosystems could prove to be significant, ExxonMobil believes that it is prudent now to develop and implement global strategies that address the risks …"
But there was a caveat. Here's the end of that sentence: "keeping in mind the central importance of energy to the economies of the world."
The company therefore favors "putting policies in place that start us on a path to reduce emissions, while understanding the context of managing carbon emissions among other important world priorities, such as economic development, poverty eradication and public health."
It's hard to find words to describe this posture. If the world fails to mobilize the needed, increasingly urgent response to climate change - a disturbingly likely scenario - future generations will look back on this kind of talk, and the global warming denialism that Exxon so long funded, and know who to blame for the misery and suffering that could have been avoided.
If in fact addressing climate change would interfere with other important world priorities like poverty eradication and public health, perhaps there would be some moral hand-wringing about doing what must be done to prevent the worst climate change projections from being realized.
However, the very cautious IPCC report conveys in unmistakable terms that global warming will impose the greatest burdens on the world's poorest countries. Climate change will devastate agricultural production and rural societies in Africa. New disease challenges will be worst in tropical countries. Flooding will be most severe in developing countries. Adapting to climate change will be expensive but ultimately affordable for rich countries; it will drain poor countries' economies, however.
You only need common sense to know that the rich will be better able to buy their way out of both the hardships and inconveniences imposed by climate change.
Many people concerned about global warming are seeking ways to pressure or incentivize ExxonMobil and the rest of Big Oil to change their business model. The idea is for the companies to shift from providing oil and gas to becoming energy service corporations, as ready to deliver solar power as gasoline.
We're not in that camp. We think ExxonMobil and Big Oil will need to be displaced, and will be.
The most serious problem is that ExxonMobil, as the largest and most vociferous of the oil majors, exerts its political and economic power to distort policy debates and stop governments from taking proportionate action to address climate change.
We're not upset that ExxonMobil refuses to invest its obscenely large profits - $39.5 billion in 2007 - in renewable energy research and development. We place the company on the 10 Worst list because it continues to deploy its political power to stop the U.S. Congress from enacting a windfall profits tax, or ending tax and royalty subsidies for the oil industry, and directing the proceeds for renewable energy.
Gen Re: Case Closed. Why?
In 2006, the Justice Department abruptly dropped a federal criminal probe into allegations of insurance fraud at Berkshire Hathaway's General Reinsurance (Gen Re) unit.
Paul McNulty was the U.S. Attorney in Alexandria, Virginia at the time. In March 2006, McNulty went on to become the Deputy Attorney General. He is currently a partner at Baker & McKenzie in Washington, D.C. McNulty did not return a call seeking comment for this article.
Did anyone pressure McNulty or his successor, Chuck Rosenberg, the current U.S. Attorney, to close down the investigation?
The case was looked at by the Justice Department's Inspector General, Glenn Fine. Fine's office will not comment on the current status, if any, of the investigation.
Fine was dragged in after evidence was presented to his office that federal officials may have incinerated more than 100 boxes of grand jury information in April 2007, just days after the Virginia Lawyer's Weekly published an article titled, "Further Federal Indictments In Reciprocal Case Unlikely."
The driving forces behind the criminal investigation of Gen Re were Thomas Gober, a certified fraud examiner based in Glen Allen, Virginia - and David Maguire, the Assistant U.S. Attorney in Alexandria charged by McNulty with shepherding the case.
For 12 years of his 18-year career, Gober has worked with federal investigators and prosecutors, ferreting out significant insurance and reinsurance fraud schemes.
Most recently, he worked closely with Maguire on the criminal prosecution of the top executives at Reciprocal of America (ROA), a major Virginia insurance company that went belly up in January 2003. ROA provided malpractice insurance to lawyers, doctors and hospitals. When the company went out of business, the policy holders were left without coverage - and victims of malpractice, in many cases, were left with no way to collect damages.
The collapse of ROA resulted in unpaid liabilities totaling $500 million.
The work of Maguire, Gober and a handful of FBI agents led to the February 2003 guilty pleas of former ROA president Kenneth Patterson and former ROA CFO Carolyn Hudgins. The two pled guilty to manipulating ROA's books. By cooking the books, the ROA executives concealed from regulators the company's financial weakness. Their failure to maintain sufficient reserves paved the way for the company's collapse.
In Richmond, Virginia, Judge James Spencer sentenced Patterson to 12 years in prison and Hudgins to five years in prison.
Also caught up in the ROA case was the giant Gen Re company - a unit of the Omaha, Nebraska-based Berkshire Hathaway. Gen Re is a reinsurer, a company which effectively provides insurance to insurers
Between 2004 and 2007, McNulty, Maguire and their team of a half dozen FBI agents, Assistant U.S. Attorneys and forensic auditors began to build their case against Gen Re. They believed they had accumulated evidence that Gen Re had entered into sham transactions with ROA. The Justice Department lawyers believed these deals helped ROA hide its losses from regulators.
Gober says that McNulty "repeatedly championed the ROA case and all of our diligent work," until McNulty left in March 2006 to become the Deputy Attorney General at Main Justice.
The prosecution team believed that the evidence against Gen Re was overwhelming. Maguire, Gober and FBI agent David Hulser drafted a more than 60-page indictment against top Gen Re executives.
At the same time, lawyers for the giant reinsurer were pressuring the government to drop the case or settle it as part of an overall global settlement with other matters the government was looking at involving Gen Re.
When McNulty left for Main Justice in March 2006, he was replaced by Chuck Rosenberg. Soon thereafter, the case was derailed.
In March 2007, in an effort to salvage years of work on the case, Gober wrote a seven-page letter to Judge Spencer - the judge who had sentenced ROA executives Patterson and Hudgins to long jail terms - chronologically laying out the derailment and pleading for advice.
"First, David Maguire was totally removed from working the case," Gober wrote. "Dave called me into his office and apologized about leaving the case, telling me that Main Justice had told him he was being removed due to 'health concerns,'" Gober wrote. "Dave had lost about 10 pounds while working on the ROA matter ... something I did not consider very troubling (or even unusual) because this has been a very large and very complex case. Dave is a brilliant prosecutor and he knows all of the facts of the ROA case; indeed, he can literally recite them from memory."
Maguire was replaced by Assistant U.S. Attorney Mike Gill, another Texas import.
In his letter to Judge Spencer, Gober says that in the very first "team meeting" after Maguire's removal, Gill announced to the team of FBI agents and prosecutors that he was "glad we are all in agreement that this case is all about [name redacted] and that Gen Re is no longer a target."
"To say the least, the team was a bit shocked about this 'announcement' concerning 'how we all felt.'" Gober wrote.
Gill said he wanted to focus on an in-house ROA lawyer "who essentially had made many of the day-to-day reinsurance decisions that had impacted ROA and resulted in its eventual collapse."
But the "team" also wanted to focus on Gen Re and top Gen Re executives because they believed, as Gober put it, that "the Gen Re issues were significant and far-reaching."
"We discovered a fraud scheme which included, but was not limited to, the execution of 'side letter agreements' between the reinsurer and ROA which resulted in a misleading balance sheet impression for the insurance regulators," Gober wrote. "In effect, we found that Gen Re was permitting the insurer to 'rent' reinsurance certification but there was no true shifting back of risk."
"Because Gen Re is owned by the parent company of Berkshire Hathaway, and the two richest men in the world (Warren Buffett and Bill Gates) serve on the Berkshire Hathaway Board of Directors, I became quite concerned when the case against Gen Re was allowed to 'go away,'" Gober wrote. "Why, I wondered, was this happening when the entire team - prior to Mr. McNulty's elevation at the Justice Department - had been so absolutely sure we had a 'slam dunk' case? Nevertheless, I decided to make the best of a bad situation. If Gen Re was going to be let go, that was a decision over my head. At least, I thought, the case was going to be forcefully and professionally pursued" against the ROA lawyer.
Because the prosecutorial team felt that the case against the ROA lawyer was so strong, they prepared a prosecution memo outlining their case. That memo was submitted to Gill in February 2007. But the team heard nothing from Gill.
All Gill would say to Gober was that he just "felt" there was not a strong enough case against the lawyer.
Gober was so upset with the decision not to proceed against Gen Re and the ROA lawyer that he wrote a letter to McNulty outlining his concerns.
McNulty never responded to the letter.
"What has happened to this case?" Gober rhetorically asked Judge Spencer. "The facts are the same (or better) as they were when Paul McNulty left to become the #2 man in the Justice Department. The only thing that is 'different' is that two fellows from Texas have been brought in and they do not seem to want to do anything with this matter but let it die. I am very troubled that everyone on our team, and we are talking about seasoned professionals, concluded this was (and remains) a very important case that needs to go forward. Yet, somehow, the U.S. Attorney goes to D.C. and the new guy comes in and the case is over, for all intents and purposes. Something is just wrong about all of this."
Gober is concerned not just because a criminal prosecution of a powerful U.S. corporation has been derailed.
He's concerned not just because the case involved the largest single insurance collapse in the history of Virginia that cost $500 million and has left more than 80,000 policyholders with an insolvent and liquidated insurer. Gober is concerned also because the case "has exposed a serious problem in the reinsurance industry which is going to have to be addressed and corrected," he wrote to Judge Spencer.
"Hundreds of millions of dollars are at stake, and very powerful people are interested in this matter simply dying," he wrote. "I am not one of them. Nothing would be worse than to see a case like this one pushed 'under the radar' by greedy people who simply want more and more money through fraud. Based on what has been going on lately at the Justice Department, I am very worried about how all of this has happened and what should be done to correct it."
Judge Spencer, through his clerk, suggested that Gober directly and personally approach Glenn Fine, the Inspector General.
On April 2, 2007, the Virginia Lawyer's Weekly wrote the first article outlining Gober's account. (A few months later, in July 2007, the McClatchy Newspapers ran a more detailed article titled "Justice Department Drops Massive Accounting Fraud Case," by Marisa Taylor.)
On April 3, the day after the Virginia Lawyer's Weekly article hit the stands, Gober wrote a frantic e-mail to Fine's office warning that the FBI was planning on incinerating crucial evidence in the case.
"I know from working past FBI cases that documents are stored for years," Gober wrote to the Office of Inspector General's (OIG) Keith Bonanno. "The agents must not know of your inquiry."
On April 5, Gober wrote again to Bonanno. "Yesterday, all documents were hauled off from our site office to the FBI incinerator," Gober wrote. "My hard drive which held all of the case data was taken as well. It is my hard drive and it was to be 'wiped clean' before its return to me. I pushed for them to back it up before wiping clean or all case data would be gone. Please request that the data be copied before my drive is re-formatted. Otherwise, the investigation may be for naught. Two independent sources told me that the agents were going to incinerate them to 'get ahead of the ball' and 'not let this drag on forever.'"
OIG's Bonanno responded later that day. "Our office contacted the USAO [U.S. Attorney Office] in Richmond and instructed that they (and/or the FBI) cease destruction of documents related to the case since there is a pending OIG/OPR review," Bonanno wrote.
Before the whip came down, the government was in pretty serious negotiations with Gen Re to settle the ROA case amicably.
Joshua Hochberg was at the time head of the Justice Department's Fraud Section. Hochberg is currently a partner at McKenna Long & Aldridge in Washington, D.C. Hochberg did not return a call seeking comment for this article.
In May 2005, Hochberg wrote to Maguire about the settlement of the Gen Re case. "The bottom line has always been - what do we want to do with Gen Re." Hochberg wrote. "The options range from indicting the company, to a plea by a subsidiary to a deferred prosecution or a non-pros [non-prosecution] agreement with lots of favorable terms for the government, including large $, monitors, cooperation. … Indicting the company would have enormous collateral consequences. As you know, when we met with Gen Re's counsel, we made no promises about any final resolution."
Thomas Hanusik was at the time assistant chief of the Fraud Section. He's now a partner at Crowell & Moring. Hanusik said he would have no comment on this story.
On July 20, 2005, Hanusik wrote to Maguire to detail negotiations he had with Ron Olson, a partner at Munger Tolles & Olson in Los Angeles.
Olson is an attorney for Gen Re and a member of the Berkshire Hathaway board of directors.
Olson could not be reached for comment. But he told McClatchy's Marisa Taylor that "there was no knowledge at Gen Re that people at Reciprocal of America were hiding information from regulators or auditors."
He said the Gen Re had entered into "side deals" with ROA, and that these were the industry norm. The company has since banned such arrangements as bad business practice, he told Taylor.
He described the criminal case as "maybe the longest investigation I remember being associated with. We were extremely frustrated."
Maguire responded to Hanusik's July 2005 note the next day. "I think we need a strong united front on Gen Re's culpability on ROA in order to get them to fess up and pay a share of the $450 million ROA loss commensurate with their conduct," he wrote.
"From the mid-1980s until approximately 2001, ROA grew from a small, marginally capitalized Virginia reciprocal insurer of approximately 100 hospitals and a few hundred doctors and lawyers into four commonly managed reciprocal insurers of more than 80,000 insureds in many different states across the country," Maguire wrote. "This phenomenal growth, however, could not have happened without the world believing that ROA was fully and truly reinsured by Gen Re and the receipt of consistently high ratings from A.M. Best (A Ratings from 1983 to 2001), a national respected ratings service of insurance companies, which also believed ROA was truly backed by Gen Re."
"Unfortunately, for more than 18 years, material facts about the true nature of ROA's reinsurance relationship with Gen Re were falsely represented and concealed from Best, the insurance commissioners, state legal and medical societies and hospital associations that endorsed ROA to its members, and the insureds themselves. Indeed, the losses that drove ROA into insolvency were the very losses that were supposedly covered by reinsurance contracts with Gen Re," Maguire wrote. "The dark little secret we have uncovered is that when Gen Re has to pay larger that [sic] expected losses, it uses it [sic] might to dump the losses back on the reinsured."
The Gen Re investigation ultimately did not come out entirely to the company's liking - and company executives have not escaped accountability, at least as relates to other matters. The ROA case led federal prosecutors to investigate a similar alleged arrangement between Gen Re and the insurer AIG. A federal jury would later find four top Gen Re executives and an AIG executive guilty of conspiracy and securities fraud, in a scheme also allegedly involving sham transactions, these intended to make AIG's finances appear stronger than they actually were.
Murray Energy: Collapse of Decency
Mining disasters can transfix a nation.
Miners trapped underground, and the uncertainty of whether they survived a collapse, evokes empathy for the miners, their families and their community in even the hardest of hearts. Not many people have experience deep underground, but until the fate of the involved miners is established, the drama and suspense feels very personal to the millions waiting for updates, desperately hoping for good news and fearing the worst.
In the United States, the millions following the rescue typically watch the disasters play out according to a familiar script. Families, miners and mine operators are stricken with fear, supportive of each other, and articulate about the raw emotional urgency of rescue operations.
In August 2007, a major calamity struck the Crandall Canyon coal mine in Utah. Six miners were killed in the mine collapse. Ten days later, two rescue workers and a mine inspector were killed trying to reach the six trapped men. The second set of fatalities marked Crandall Canyon as particularly tragic.
There was something else unusual about the Crandall Canyon disaster. With the nation watching, the mining company did not display the usual humility.
Rather than relying on PR professionals, Robert Murray, CEO of Murray Energy, the operator of Crandall Canyon, stepped into the spotlight.
A day after the mine collapse, he began a nationally televised new conference by proudly relating how he had built up the company, and fulminated against climate change legislation.
"Without coal to manufacture our electricity," he exclaimed, "our products will not compete in the global marketplace against foreign countries, because our manufacturers depend on coal, low-cost electricity, and people on fixed incomes will not be able to pay their electric bills. And every one of these global warming bills that has been introduced in Congress today to eliminate the coal industry will increase your electric rates four- to five-fold."
He went on to insist, against all evidence at the time - and the very detailed evidence now available - that the disaster was caused by an earthquake.
He concluded his lengthy remarks by denouncing former mine industry regulators and the leaders of the United Mine Workers of America, as well as reporters from the Associated Press and Fox News. Referring to the experts and the union, he said, "These individuals have given very false statements to the media and to America, for their own motives. They know nothing about the natural disaster that occurred here. They know nothing about the damage in the mine and the circumstances surrounding the trapped miners, or the rescue efforts that are under way. And I caution the media to very much question the veracity of these sources and their motivations."
Murray maintained the same tone in subsequent interviews, belligerently denying that he knew of previous cave-ins in the same mine, or that the trapped miners were engaging in a particularly dangerous operation known as "retreat mining."
The Ohio-based Murray Energy and its affiliates mine more than 20 million tons of coal annually, according to the Cleveland Plain Dealer.
From 2004 through the end of 2007, a Multinational Monitor analysis found, the U.S. Mine Safety and Health Administration (MSHA) cited companies controlled by Murray for safety violations more than 7,500 times.
That astounding fact says quite a bit about the culture at Murray Energy.
But nothing can match the chilling report issued in March 2008 by Senator Edward Kennedy, D-Massachusetts, chair of the Senate Health, Education, Labor and Pensions Committee. The report shows a callous and utter indifference to miners' lives and well-being. There were countless opportunities to recognize the dangers posed by Murray Energy's perilous plans for Crandall Canyon, but Murray Energy ignored, discounted or suppressed the warning signs, and feckless regulators let the company proceed.
Summarizes Kennedy, "The Committee's investigation has revealed that the owner of Crandall Canyon mine, Murray Energy, disregarded dangerous conditions at the mine, failed to tell federal regulators about these dangers, conducted unauthorized mining and - as a result - exposed its miners to serious risks."
The report explains that "the mining operations proposed by Murray Energy, and approved by MSHA, at Crandall Canyon were among the most dangerous ever attempted." Murray Energy was undertaking retreat mining or pillar extraction - pulling out the mine's supporting pillars, in the opposite direction from which the mine advanced. Often the plan is designed to provided for controlled roof collapse. The retreat mining at Crandall Canyon was the deepest MSHA had ever authorized. The deeper the mine, the greater the stress on supporting pillars, and the more dangerous it is to remove them.
Murray Energy took over Crandall Canyon mine from a previous operator, Andalex, in August 2006. It immediately began to pressure MSHA to lessen safety inspections, according to the Kennedy report.
A few weeks after Murray Energy began operating Crandall Canyon, an MSHA official e-mailed a colleague, "[Murray Energy] also told my supervisor they have been very successful at getting MSHA people removed in other districts. I expected we would have trouble with this operator, but didn't expect it on the 2nd day after they took over [the mine]."
Six weeks later, another MSHA official wrote to the administrator of MSHA's Office of Coal Mine Safety and Health, "Over the course of the first 10 days of Murray Energy ownership they have aggressively opposed enforcement actions taken by [MSHA] Inspectors Durrant and Shumway, accused them both of retaliation, met with Supervisor Farmer and attempted to dictate how inspections should be performed at the mines. All indications so far are that this operator intends to use whatever means available to try to leverage enforcement at their mines."
By August 2007, if not earlier, internal company documents show, Murray Energy had adopted a policy of contesting all MSHA safety violations, regardless of the merits.
The Kennedy report shows that Murray Energy's pressure tactics worked, and the agency lightened up on enforcement activities. Internal company memos relate MSHA commitments to "pul[l] back enforcement."
The August tragedy at Crandall Canyon could have been avoided if the retreat mining had never been undertaken.
Andalex, the previous operator of the mine, had concluded that retreat mining could not be conducted safely in the area where the mine collapse occurred. The company even argued against the retreat mining encouraged by the Utah state department overseeing mine leases, which earns royalties from the sale of extracted coal.
Murray Energy had an entirely different approach.
The company presented a plan based on a technical analysis of retreat mining safety at Crandall Canyon performed by a consultant, Agapito. In a review conducted after the disaster, the National Institute of Occupational Safety and Health found Agapito's work to be deeply flawed.
Under federal law, MSHA must review and approve plans for underground coal mining. The Kennedy report concludes that "the record shows that MSHA's review of the company's mine plan was often rushed, superficial and pro forma. Indeed, mining expert and former MSHA engineer Robert Ferriter described MSHA's review of Crandall Canyon's mine plan as a 'broken system.'"
The MSHA engineer initially reviewing Murray Energy's plans urged rejecting the proposal. A supervisor told the engineer that his analysis was flawed. Rather than conducting a new one, according the Kennedy report, the supervisor "seems to have simply accepted the company's rebuttal of Del Duca's analysis at face value," authorizing the plan to go forward.
Even after the plan was approved, however, the Kennedy report shows, "there were multiple warning signs during mining operations - including heightened seismic activity and a major mine bounce [a bounce is a mine collapse in which the pressure on pillars leads them literally to explode outward] - that should have raised red flags for both MSHA and the mine operator. The company ignored these signs of danger and did not tell MSHA about them, as the company promised it would do."
In February 2007, Murray Energy began retreat mining in a northern section of the mine. Internal company records show 17 separate reports of roof falls, cave-ins and bounces. An internal memo to Robert Murray identified these problems, beside which Murray wrote "noted."
Only one of the 17 incidents listed in internal company records was reported in the official logs Murray Energy is required to maintain by law, according to the Kennedy report.
On March 11, the northern section where the retreat mining was being conducted - 900 feet away from the southern section that would be the site of the August tragedy - collapsed. Because the collapse occurred at night, when no miners were nearby, no one was hurt.
"The multiple warning signs that preceded the March bounce and the force of the collapse itself should have alerted MSHA and the company to fundamental flaws in the barrier pillar retreat mining plans," asserts the Kennedy report. "MSHA and Murray Energy knew that the depth of cover and other geological characteristics of the South barrier pillar were extremely similar to the North, yet they allowed retreat mining to go forward in the South."
Internal company documents make clear that Robert Murray had been notified of the March collapse. This directly conflicts his claim in the wake of the August disaster that he did not know about similar, earlier problems.
Murray Energy also failed to formally report and investigate the March collapse, likely in violation of federal law, according to the Kennedy report. The report notes, "A possible - and inexcusable - reason for this reporting failure was a tacit agreement between Murray Energy and MSHA to excuse the company from the Mine Act's reporting requirements."
On July 17, the company began retreat mining in the southern section of the mine. Problems, including bumps and bounces, quickly became apparent and were reported to Robert Murray (who marked "good" on an internal memo saying progress was being made though significant warning signs were evident). Only one of the bumps and bounces was noted in mine pre-shift reports. The memo to Murray, which he marked, makes clear that - his subsequent claims notwithstanding - he did know that retreat mining had been underway in the southern section of the mine.
Although the company had badgered and perhaps misled MSHA into authorizing an unreasonably dangerous retreat plan, it is possible it was deviating even from the approved plan, the Kennedy report concludes. "It is impossible to know to a certainty what happened in the moments before the August 6th collapse," the report states. "However, the investigation has uncovered evidence indicating that, at the time of collapse, the company was conducting unauthorized mining."
There is evidence that the company was both conducting unauthorized mining of floor coal, and extracting coal from a barrier pillar MSHA had specifically prohibited mining.
Murray Energy flatly denies, without elaboration, the findings of the Kennedy report. Its subsidiary UtahAmerican Energy issued an official statement, but refused to comment further. "We are shocked and outraged that the Senate Health, Education, Labor and Pension (HELP) Committee, after conducting a superficial review of only some of the facts, would level such serious and biased allegations. This report is politically motivated, irresponsible and unjustifiable," Michael O. McKown, general counsel of UtahAmerican Energy, said in the statement. "This matter merits considered and non-political judgements."
"This sensational and irresponsible report makes slanderous allegations against innocent individuals," McKown said. "We are confident that, with a full review of the facts, this will be established. It is clear that the Senate HELP Committee report is precipitous and wrong. It is obviously political grandstanding to certain constituents of some of its members. Given the complex technical nature of this matter, the incompleteness of the factual record and the lack of knowledge of the Committee, we consider the Senate HELP Committee's report to be completely unreliable."
"Mr. Robert E. Murray, UtahAmerican and our employees all mourn the loss of our miners and grieve for their families," McKown said. "Mr. Murray, our Company and our employees have always been totally committed to the safety of our employees. Mr. Murray and the Company would never knowingly expose any employee to danger, and he hasn't in his 50 years of experience. For anyone to imply otherwise is blatantly false. Once the facts are known, they will show that Mr. Murray deserves tremendous credit for his courage and leadership under very difficult conditions. We are confident that the comprehensive review of the facts will render a far more accurate and unbiased accounting of what happened in this tragedy. We will reserve further comment until such time as the facts can be clearly known."
The Kennedy report concludes that enough is already known. "Miners were exposed to unnecessary and extreme risks," the report states. "The mine operator and MSHA must be held accountable for their failures of diligence, care and oversight. The Secretary of Labor should refer the case to the Department of Justice for prosecution."
Purdue Pharma: White-Collar Drug Dealers
How does street crime work? You commit the crime, you do the time.
How does corporate crime work? Big Pharma corporation commits a crime and hires a high-paid white-collar crime defense lawyer.
Defense lawyer approaches prosecutor and says, "Let's make a deal." You agree not to prosecute the company. I'll give you a shell company that does little business but has a similar name. That company pleads guilty to the crime. It no longer sells drugs and thus when Medicare lists the shell as a company with which Medicare will not do business, it loses nothing. We turn over a couple of executives. They plead guilty. And you promise no jail time.
You can hold a press conference and say, "We cracked down on corporate crime." And we can get on with our business of making millions of dollars off average people addicted to our opiate of choice.
That's pretty much what came down in 2007 when the Justice Department went after the maker of OxyContin, the addictive pain killer that addicts will die for.
OxyContin offers major benefits for cancer patients and others in chronic pain.
But it's also an easy high for thousands of down and out Americans.
Crush the pill and snort it.
It's like heroin - without the needles. It's big in Appalachia. You don't need to ship it in from overseas. You can get it at your local doctor's office or pharmacy.
Talk to family doctors working in hill country and one of the first issues they raise is Oxy addiction. Abuse is so rampant that some hill doctors have stopped prescribing it. No more break-ins and harassing phone calls from addicts claiming back pain.
In 2007, John Brownlee, the U.S. Attorney in Roanoke, Virginia, charged that "Purdue, under the leadership of its top executives, continued to push a fraudulent marketing campaign that promoted OxyContin as less addictive, less subject to abuse and less likely to cause withdrawal."
"In the process," said Brownlee, "scores died as a result of OxyContin abuse and an even greater number of people became addicted to OxyContin; a drug that Purdue led many to believe was safer, less abusable and less addictive than other pain medications on the market."
Brownlee charged that Purdue officials drafted an article published in a medical journal claiming that OxyContin had less euphoric effect and less abuse potential than short-acting opioids. The company then had its sales representatives distribute the article to healthcare providers.
Said Assistant U.S. Attorney General Peter D. Keisler, Purdue "misled physicians about the addiction and withdrawal issues involved with OxyContin."
Brownlee tried to pin the blame where it rightly belongs - on the company and executives who pushed the drug on an unsuspecting public with claims that it was less addictive than other painkillers.
Emphasis on the word "tried."
If you read the papers, you might now believe that Purdue Pharma, the Stamford, Connecticut-based maker of OxyContin, pled guilty to illegally touting OxyContin. You might believe, as the Los Angeles Times and other newspapers reported, "Purdue Pharma pleaded guilty to one felony count of fraudulently misbranding a drug."
One problem. Purdue Pharma did not plead guilty to this crime. It was Purdue Frederick that pled guilty.
Why is this distinction important? Under federal law, pharmaceutical companies convicted of a felony are automatically excluded from federal insurance programs like Medicare.
The idea behind mandatory exclusions is clean government - if a party commits a serious crime, the federal government shouldn't do business with it.
Unless you are a giant corporation with hundreds of millions of dollars in profits at stake.
Then you get a deal.
In this case, the deal was brokered by Howard Shapiro, a partner at WilmerHale in Washington, D.C. - the lawyer for Purdue Pharma. Shapiro did not return calls seeking comment for this story.
Shapiro offered up Purdue Frederick to plead guilty.
What is Purdue Frederick?
We sent an e-mail off to company spokesperson James Heims.
We asked, "What is the difference between Purdue Frederick and Purdue Pharma?"
He wrote back immediately. "They are independent, associated companies. Please let me know if you have further questions."
Well, yes, we do have further questions. Why did Purdue Frederick plead guilty and not Purdue Pharma? No answer.
We call Mr. Heims. Now he's busy. No response.
So, we turn to the press packet sent out by Heidi Coy, the public affairs representative for U.S. Attorney Brownlee. It's 89 pages. It contains Brownlee's statement, the press release, the information, the agreed statement of facts, the plea agreements with Purdue Frederick, Michael Friedman, the president and CEO, Howard Udell, the company's general counsel, and Paul Goldenheim, the company's former medical director. But it doesn't contain the non-prosecution agreement.
And, not surprisingly, out of the hundreds of mainstream news outlets that carried this story, not one mentioned the non-prosecution agreement. The non-prosecution agreement is the one that protects the companies that make the money.
Purdue Frederick takes the hit. It's the felon. It is excluded from government programs. But so what? We can assume it has little if any government business to lose. (Brownlee says he doesn't know. The company won't return calls.)
The more than 200 other affiliated Purdue Pharma companies scattered around the world and listed in Appendix A of the non-prosecution agreement get off. No felony charge. No exclusion. Business as usual.
Purdue is a privately held, very secretive company controlled by the Arthur Sackler family. Arthur Sackler is the guy who, before he delivered OxyContin, brought to you the marketing for Librium and Valium. Walk on the Mall in Washington and you walk by the Freer Gallery of Art and Arthur Sackler Gallery.
Purdue was very happy with the deal to resolve the OxyContin criminal charge. In a statement, Purdue said, "Nearly six years and longer ago, some employees made, or told other employees to make, certain statements about OxyContin to some healthcare professionals that were inconsistent with the FDA-approved prescribing information for OxyContin and the express warnings it contained about risks associated with the medicine. The statements also violated written company policies requiring adherence to the prescribing information." The company said that, since 2001, it has cured these problems.
It also insisted that "any attempt to connect the agreed to plea of misbranding by Purdue with abuse and diversion of OxyContin is completely false."
In his statement that he read before the cameras, U.S. Attorney Brownlee said that Purdue Frederick is the "manufacturer and distributor" of OxyContin.
Well, as it turns out, they used to be. No longer. Now, that's Purdue Pharma.
In an interview, Brownlee admitted that Purdue Frederick was chosen to plead guilty because "we didn't want to ban the future sale of the drug."
Had Purdue Pharma been forced to plead guilty, OxyContin would have been excluded from Medicare coverage, he said. "And we didn't want that," Brownlee said.
Actually, it's the company that would have been excluded from Medicare. It's up to the government to decide what this means. Could it have ordered Purdue to let other companies make OxyContin and sell it to Medicare? Yes, it could.
The other document that was not sent out in the press packet was the corporate integrity agreement. This was the agreement that Purdue Pharma entered into and that requires the company to hire an independent monitor to make sure it doesn't engage in future criminal activity.
Brownlee won't give the name of the independent monitor who has been appointed. Why not? He won't say.
The bottom line is that Brownlee prosecuted a case that few other U.S. Attorneys would touch. He proceeded against a powerful privately held and secretive pharmaceutical company with major resources at its disposal. He secured a guilty plea against an entity and three top executives.
As part of the settlement, the company will pay over $600 million in fines, restitution and a civil settlement. The three executives will pay collectively over $34.5 million in penalties.
But in the end, he pulled his punches. Purdue Pharma was not charged. The independent monitor's name has not been made public.
And perhaps most importantly, the executives will not face jail time. Why not?
Brownlee dodges the question.
This irks Sidney Wolfe of Public Citizen's Health Research Group.
Wolfe calls the fines and guilty pleas "an important message to the drug industry that this kind of malicious, death-dealing behavior will not be tolerated."
But the government could have come down much harder on what he calls "white-collar drug pushers."
Wolfe points out that from 2000 through 2006 alone, according to data from Drug Topics, the news magazine for pharmacists, there have been $9.6 billion in retail U.S. sales of OxyContin. It was one of 25 top-selling drugs from 2000 to 2005 - it was the 11th largest selling prescription drug in 2003.
"The government should have forced the company to disgorge far more of its ill-gotten profits in this case," Wolfe says. "Hundreds of thousands of people are languishing in jail for relatively minor drug possession or distribution crimes involving illegal drugs or, in a smaller number of cases, prescription drugs such as OxyContin. Why have the three wealthy Purdue executives, who have pleaded guilty to orchestrating this dangerous promotional campaign, escaped jail time, and why are they paying merely $34.5 million in penalties? The damage to the public from these white-collared drug pushers surely exceeds the collective damage done by traditional street drug pushers. Why do we have such a double standard of justice?"
SAIC: The Government-Contractor Complex
When investigative reporters Donald Barlett and James Steele were fired from Time magazine in May 2006, the magazine cried poverty.
"They're very good, but very expensive, and I couldn't get anyone to take them on their budget," said John Huey, editor in chief at Time.
Time magazine then turned around and paid $4 million for photographs of Brad Pitt and Angela Jolie's baby.
"That $4 million would pay for about 10 more years of salary and expenses for Barlett and Steele and their research help," said Steve Lovelady, of the Columbia Journalism Review, at the time.
Luckily, Brangolina central - Vanity Fair - picked up Barlett and Steele. They came back with an exposé of SAIC - Science Applications International Corporation - the mega-giant defense and intelligence contractor that straddles the Potomac. Through a spokesperson, SAIC told Multinational Monitor it would not comment on the Vanity Fair article.
Buried deep inside Vanity Fair's 500-page Hollywood issue, surrounded by anorexic male and female models pushing bras, perfume, jewelry and handbags - is a 10-page profile of the permanent government on the Potomac.
Barlett and Steele open with a nod to Hollywood:
"One of the great staples of the modern Washington movie is the dark and ruthless corporation whose power extends into every cranny around the globe, whose technological expertise is without peer, whose secrets are unfathomable, whose riches defy calculation, and whose network of allies, in and out of government, is held together by webs of money, ambition and fear. …
"To be sure, there isn't really such a corporation: the Omnivore Group, as it might be called. But if there were such a company - and, mind you, there isn't - it might look a lot like the largest government contractor you've never heard of: a company known simply by the nondescript initials SAIC (for Science Applications International Corporation), initials that are always spoken letter by letter rather than formed into a pronounceable acronym."
In 2006, SAIC raked in nearly $8 billion, almost all of it from the government. The company holds more than 9,000 contracts with the federal government.
Barlett and Steele say that while Halliburton and Bechtel supply the muscle - building infrastructure - SAIC sells brainpower.
Founded almost 40 years ago in San Diego, the core of the company's sprawling operations are now in the Washington, D.C. suburbs, where it serves the Pentagon and the National Security State, as well as other arms of the federal government.
Two developments over the last 15 years have spurred SAIC's growth. One is the outsourcing of federal government operations, an ongoing trend that got a huge boost with then-Vice President Al Gore's "Reinventing Government" initiative. Under the Bush administration, contracting out has gone into overdrive. A permanent government of contractors like SAIC now do what the government once did - typically at greater expense than when the same functions were performed in house.
The second boost for SAIC was the 9/11 terrorist attack, and the U.S. response - which includes the Iraq War, despite the fact that Iraq and Saddam Hussein had nothing to do with 9/11.
"There isn't a politically correct way to put it, but this is what needs to be said: 9/11 was a personal tragedy for thousands of families and a national tragedy for all of America, but it was very, very good for SAIC," Barlett and Steele write. "In the aftermath of the attacks, the Bush administration launched its Global War on Terror, whose chief consequence has been to channel money by the tens of billions into companies promising they could do something - anything - to help. SAIC was ready."
Ready to capitalize on the business opportunity, that is. The extent to which the company delivers useful services to the government is not so clear.
Barlett and Steele document a long list of whistleblower lawsuits and federal criminal investigations of the company, and describe how several of SAIC's projects have turned out to be colossal failures.
One example is the Iraqi Media Network.
A week before the invasion of Iraq, Barlett and Steele write, "SAIC was awarded yet another no-bid contract, this one for $15 million, which within a year would balloon to $82 million. The contract gave SAIC the responsibility for establishing a 'free and independent indigenous media network' in Iraq, and for training a cadre of independent Iraqi journalists to go with it. The selection of SAIC for this job may have seemed counter-intuitive. A year earlier, SAIC had been involved in a Pentagon program designed to feed disinformation to the foreign press."
"The job of establishing the Iraqi Media Network's infrastructure - cables, transmitters, dishes - was rife with corruption and waste," Barlett and Steele write. In March 2004, the Pentagon's inspector general found widespread violations of normal contracting procedures. "One of the more blatant transgressions concerned SAIC's overall manager of the media effort in Iraq. The investigators discovered that he had bought a Hummer and a pickup truck in the United States and then chartered a DC-10 cargo jet to fly them to Iraq. When a Pentagon official refused to allow the charge, the inspector general reported, 'SAIC then went around the authority of this acquisition specialist to a different office within the Under Secretary of Defense for Policy to gain approval and succeeded.'"
SAIC hired Don North, a former NBC news staffer, to help build the Iraqi Media Network. North and his colleagues aimed to create an independent media operation. Their hopes were quickly dashed.
"With SAIC's cooperation," Barlett and Steele write, "the network quickly devolved into a mouthpiece for the Pentagon - 'a little Voice of America,' as North would put it. Iraqis openly snickered at the programming. Every time North protested, he recalls, he was rebuffed by SAIC executives. 'Here I was going around quoting Edward R. Murrow,' North says, 'and the people who were running me were manipulating and controlling a very undemocratic press and media that was every bit as bad as what Saddam had established.'"
With no authentic independent culture, the Iraqi Media Service was just a pawn of its controllers. When it was turned over to the Iraqi government, it continued as a propaganda machine, but with a different message. Today, in an ironic twist, it "spews out virulently anti-American messages day and night."
Failure does not seem to hurt SAIC much. Nor do elections seem to matter much for the company that has become a fixture in Washington.
"Political change causes scarcely a ripple," Barlett and Steele write. "As one former SAIC manager observed in a recent blog posting: 'My observation is that the impact of national elections on the business climate for SAIC has been minimal. The emphasis on where federal spending occurs usually shifts, but total federal spending never decreases. SAIC has always continued to grow despite changes in the political leadership in Washington.'"
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Russell Mokhiber is Editor of the Corporate Crime Reporter. Multinational Monitor Editor Robert Weissman is Director of Essential Action.
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