Well, I had a sucky month of May. It certainly wasn’t the merry one envisaged by Lerner and Loewe. Now that June is here, let’s hope it’s better. Maybe it’ll be marked by me keeping my job, getting a good annual review, and starting the first steps toward a promotion so I can get out of Bumf*ck, Kansas once and for all. Then again, maybe not. I have no clue right now, and that’s pushing me over the edge where not even the pills can overcome the negativity. Right now, I’ll settle for SpinRite getting my second drive back instead of me popping more cash for a replacement.
Since I revealed too much personal shit yesterday, I’ll just leave it to that and start with the pimps…
THE PIMP SECTION
McCullar should remember the Four Rules.
Shaffer ends off his massive reenvisioning of the Invasion. Too bad; it was really, really interesting.
Stevens seems to be mad about something that DC is doing.
Maillaro is not the same way with Marvel.
Memo to Gloomchen: Once upon a time, Circus World was really cool. Then again, I had a distant relative involved with circuses and I was a kid.
Weavil is a tad pissed about everyone except Christian.
Porter is a little tapped out for material now that soccer season’s over.
ACCOUNTING CAN BE VERY INTERESTING
From Reuters:
The Supreme Court ruled on Tuesday that the jury instructions were flawed in overturning the conviction of onetime accounting giant Arthur Andersen for the destruction of documents related to Enron Corporation.
In a decision that dealt the U.S. Justice Department a defeat, a unanimous high court ruled that the jury instructions failed to convey properly the elements of what constitutes a conviction for corrupt persuasion.
So this puppy gets kicked back to a lower court, where the jury will get proper instructions and come up with another verdict; whether the verdict is identical or different remains in the hands of the jury. Big deal. We’ve seen that a bunch of times from the Supremes.
Now, if the Supremes hadn’t voted unanimously, especially if it had been 5-4, I would have been screaming blue murder about the Junta influencing what P. J. O’Rourke once called “the nine dips in black muumuus” to absolve Arthur Andersen, one of the key connections in the Enron corruption shenanigans. This, of course, protects the leading members of the Junta because of Enron having their pocket lint on Dubbaya and Mad Dog, especially Mad Dog. But I can’t. A unanimous verdict takes the teeth out of any kind of screed that I can outline here.
Hopefully we’ll get the same verdict as last time. It may be too late to get the cocksuckers out of there, but it could cause embarassment to the Junta and neuter any candidate for 2008.
SPEAKING OF ENRON…
Again from Reuters:
Russian oil magnate Mikhail Khodorkovsky was sentenced to nine years in a prison camp on Tuesday after being found guilty in a tax evasion trial widely seen as orchestrated by the Kremlin to crush a political rival.
“My sentence has been decided in the Kremlin,” an unrepentant Khodorkovsky, 41, said in a statement read to reporters by his lawyer.
The severity of the sentence — a year short of the maximum demanded by the prosecution — is certain to stoke concerns in the West and among investors about the high risk of doing business in President Vladimir Putin’s Russia.
The central Moscow court found the billionaire guilty of six of seven charges of fraud and tax evasion in a verdict that took judges 12 days to read and which climaxed an 11-month trial.
Khodorkovsky’s YUKOS business associate, Platon Lebedev, was handed the same sentence. Both plan to appeal.
“Khodorkovsky and Lebedev entered into an organized group with the aim of illegally appropriating other people’s property and then selling the assets for their own gain,” said chief judge Irina Kolesnikova.
“The court finds (the defense arguments) to be groundless.”
A charge of repeated forgery of documents was dropped.
Those bitches at Reuters had two more pages of this article, but they were experiencing 404s when attempting to access them, so I decided to go for the meat of the story instead.
I’ve gone on about the Khodorkovsky trial in here before, claiming that it was politically motivated. However, last time I did so, I received mail about it from someone at Ground Zero. Alexey Bogatiryov states what might be the average Russian viewpoint of the Khodorkovsky trial:
Regarding Khodorkovsky, I slightly disagree with you. Since I am from Russia, I have a sense of the political situation and economic situation.
Yes, you are right that there runaway capitalsim in Russia. I strongly beleive that privatization, especially the scam that was the loans for shares program was a mistake. The people, like Khodorkovsky, that grabbed the state assets, were not true businessmen. All they did was skim revenue to offshore banks and bribe tax inspectors yo avoid paying the ridiculously high taxes imposed by the IMF. (May I suggest that you pick up “Russia Under Yeltsin and Putin” by Boris Kagarlitsky, it is a little dated, but is the best book on privatization to date) The worst part about it wasn’t that the oligarchs and their friends in the Kremlin under Yeltsin (such as former Head of Kremlin Staff Voloshin and former Prime Minster Victor Chernomyrdin) made off with a ton of cash, but that taxes were not being paid, which led to Russia’s default on its GKO bonds in August of 1998.
Putin’s influence has been a huge benefit and he is restoring order and discipline to Russia, which is was severely lacking during the chaotic Yeltsin era. He has outsed the criminal-tied oligarchs from power such as Gusinksiy and Berezovskiy (who financed the Chechen invasion of Dagestan). He forced other minor oligarchs such as Potanin, Alehrepov, and Abramovich to pay taxes. Khodorkovsky never paid his taxes either, was involved in the murder of the mayor of Ugansk as well as some of Yukos’s minor shareholders, and almost bankrupted Yukos’s 3 subsidiaries: Samaraneftegaz, Tomskneftegaz, and Ugnankaneftegaz. His financing of political parties was the final straw, as Putin clearly stated that he wants all oligarchs out of politics. Now that the government has re-acquired some of the privatized property and has control over the remaining oligatchs, it has paid off half of its foreign debt and an economic GP growth rate of almost 8% has been achieved.
Khodorkovsky should serve as an example to other criminals, especially to those that do not support Putin. I hope he rots in jail for all the damage that he did to my formerly great country. Thieves belong in jail, not in the boardroom.
I wish that Putin could do a complete reversal of privatization, but we will take what we can get.
As I implied in the title of this section, this is the Russian Enron, only without the shredding of documents and influence over the Junta instead of being against the government.
(By the way, Gusinsky and Berezovsky are also discussed in the book that I consider the best in English on the subject of these Boys of Rampant Capitalism, The Oligarchs by David Hoffman, and they come across as bigger slimeballs than Khodorkovsky in there. Take that for what you will.)
There are two problems with Alexey’s statements that I can find:
1) Systemic avoidance of taxes is common among corporations in the US, using the same methods as the oligarchs used: offshore bank accounts, setting up subsidiaries in European countries that are regarded as tax havens such as Liechtenstein, skimming on government contracts (especially defense companies), use of political influence to subvert the IRS, etc. It hasn’t harmed capitalism here, but capitalism is a lot more restrained thanks to the research of academics on the subject and Adam Smith’s Invisible Hand. But, and I don’t mean to insult Russia here, the Russians take everything to excess, such as the 20th Century evolution of government: from autocracy under the Czar to one-party absolutism under communism to anything-goes under Yeltsin. The worst of human nature tends to come out under all of them. There was no middle ground covered in any of those except in NEP under Lenin, and that was even limited. Maybe it’s something in the Russian character, I don’t know.
2) There were a number of examples of state monopolies being turned into capitalist competitors prior to the Russian transition of government from communism to democracy. I hate to say anything good about Baroness Thatcher, but there’s one thing she did right: she created and inspired a mediated transition from state electricity, trains, and telephone monopolies (and a tax-supported television near-monopoly) by allowing competition in a slow but sure fashion. Services improved in the former state programs and prices dropped significantly. British Rail has turned from the biggest joke in the Western world into an efficient service. Telephone monopolies being eliminated and the expanding of cable and satellite TV has allowed for more viewer choice and better programming, and it was finished just in time for the Internet explosion, which has allowed the same in that area. If Russia had taken the same path, we wouldn’t be talking about this today. They kept an unreformed state presence in key areas and allowed competition, just like Great Britain, but it managed to turn into a duopoly, a state-run industry versus one private competitor. What Russia was missing was anti-trust legislation. That’s what’s preventing the reintegration of the Bell System right now by SBC. The expense of buying Verizon, one of the last pieces of the puzzle needed to create Bell System II, prevents that from happening, in addition to fear from the feds. And you still have the private phone companies there to provide competition, especially in the wireless field. The marketplace has offered its judgment on this issue.
A return to state-run companies would mean a revival of the old communist system in a sense, an economic model that has been disgraced by the verdict of history. I understand personally about why Russians would want this. The last decade and a half has been confusion after confusion after confusion, with nothing in the Russian experience to fall back on. It’s Yeltsin’s fault for going with the Polish “shock treatment” method rather than the successful methods employed by the US and UK. Putin isn’t trying to mediate capitalism; he’s going back to the methods that he understands the best, namely reprivitization of anything he can get his hands on. And he has to eliminate the oligarchs to do it. The oligarchs getting involved with politics is a complete mistake. It’s one form of absolutism versus another, and this time it’s for bigger stakes: the direction Russia will take in the future. It’s essentially a return to state-run business versus an oligopoly.
That’s why I don’t approve of putting Khodorkovsky on trial in the first place. The US has the same laws that Russia has on avoidance of taxes. However, except in rare cases, they’re used to prosecute drug dealers when nothing else will do. That’s how they got Al Capone. We don’t put business guys on trial for simply avoiding taxes. That charge is usually in conjunction with other charges, namely of fraud. Notice that the charge against Khodorkovsky on forgery of documents was dropped. It’s just the opposite here: Ken Lay and Bernie Ebbers were charged with cooking the books at Enron and WorldCom respectively, and that’s where their public shame came from.
What Putin should do is the opposite of what you’re saying, Alexey. Establish anti-trust laws and open up the market to competitors to the oligarchs. Those competitors should offer up better service and lower prices while channeling the profits into improvement in the rather sad infrastructure that still plagues Russia. Breaking up the oligarchs’ subsidiaries should be the first step in that. It worked for Standard Oil and US Steel a century ago here, and it should work in Russia as well. Allowing the government to be the only serious bidder on YUKOS during the bankruptcy auction was a mistake. Even foreign companies that were potential suitors know about how to reform a business giant. And if they keep making mistakes in reform, you get rid of the people at the top and let other people try to improve the situation (hello, Carly Fiorina). Putin being a hard-ass and putting people on trial for business malfesance when the real reason is political is against the very principle that Russia should be establishing.
Government ownership is bad. Government regulation is good. Without government regulation, I wouldn’t have a job.
And people have charged me with being communist in the past. Whoda thunk it?
AND THIS IS SUPPOSED TO BE HOW IT WORKS
Again from Reuters:
American International Group Inc., the insurer under fire from regulators for improper accounting, on Tuesday said it had overstated net income for the past five years by $3.9 billion, or 10 percent, as it struggles to clean up past errors.
Following an extensive internal review, the world’s largest insurer by market value in a regulatory filing also said it cut its net worth through the end of 2004 by $2.26 billion, or 2.7 percent, less than it previously warned.
The $3.9 billion reduction in net income for the five years through 2004 included an increase in AIG’s asbestos reserve of $850 million for the fourth-quarter of 2004, AIG said in its 10-K annual report filed with the U.S. Securities and Exchange Commission.
The thrice-delayed report was filed with the SEC one week after New York authorities filed a civil lawsuit against AIG, its former chief executive, Maurice “Hank” Greenberg, and its former financial chief, saying they committed fraud and manipulated the books.
“There is both good and bad news,” said Michael Chren, senior portfolio manager of National City Investment Management Co. He said investors were pleased to finally see the filing and called the smaller-than-expected reduction in net worth a positive.
“But the big negative from our perspective is the asbestos reserve review. That will leave a cloud over the shares,” Chren said.
AIG in early May had said that a planned restatement of more than four years of financial reports would slash $2.7 billion from its net worth, a reduction of 3.3 percent. The insurer in March had originally estimated its net worth would be cut by $1.7 billion.
The New York state lawsuit said Greenberg and former CFO Howard Smith, who were ousted when the investigation first picked up steam, took part in numerous fraudulent business deals that exaggerated the strength of the company’s core underwriting business and propped up its stock price.
The insurer’s press statement and securities filing on Tuesday followed several releases by the company laying out numerous accounting errors going back more than a decade.
“We are embarking on a new era for AIG that will be marked by changes in the way we operate — including greater responsiveness and transparency…,” said AIG President and Chief Executive Officer Martin Sullivan in a statement.
Before their naughtiness was revealed, AIG was a Fortune 10. We’re talking about a big, profitable company…well, according to their books. Actually, Fleabag knows more about the situation than I do; he’s consulted for them in the past.
These guys cooked the books for a decade, during the financial boom under President Clinton (not either Dubbaya or Senior). Now federal regulators (not federal owners) have caught them at it. The problem here is that they may be hiding a LOT of that cash inside the asbestos reserve. I haven’t heard anything about big asbestos liability suits lately that AIG would have to pay out insurance cash on. I think that era might be just about over thanks to mass renovations of buildings over the past fifteen years to get rid of asbestos insulation. So why is there nearly a billion in cash for such settlements? And how much of that is being overstated? Better yet, how much is being hidden inside the fund?
At this point, I’m not going to say anything more about AIG than what the feds found while sniffing around. More of this shit is yet to come, and it’ll be very interesting indeed. How much can you trust your insurance company?
AND NO SIGN OF LINDA LOVELACE ANYWHERE (THEN AGAIN, SHE’S DEAD)
From the AP Wire:
A former FBI official says he was the source called “Deep Throat” who leaked secrets about President Nixon’s Watergate coverup to The Washington Post, Vanity Fair reported Tuesday.
W. Mark Felt, 91, who was second-in-command at the FBI in the early 1970s, kept the secret even from his family until 2002, when he confided to a friend that he had been Washington Post reporter Bob Woodward’s source, the magazine said.
“I’m the guy they used to call Deep Throat,” he told lawyer John D. O’Connor, the author of the Vanity Fair article, the magazine said in a press release.
The Washington Post had no immediate comment.
Felt is one of a number of people who have been named over the years as the source whose disclosures helped bring down the Nixon presidency. Others include Assistant Attorney General Henry Peterson, deputy White House counsel Fred Fielding, and even ABC newswoman Diane Sawyer, who then worked in the White House press office.
In 1999, Felt denied he was the man.
“I would have done better,” Felt told The Hartford Courant. “I would have been more effective. Deep Throat didn’t exactly bring the White House crashing down, did he?”
Here’s a little more from Reuters:
Woodward, now a managing editor at the Post, did not immediately return phone messages. Woodward and Bernstein have refused to reveal the name of their source for more than three decades and said they would not name their source until after his death.
Bernstein told WABC-TV in New York: “We’re not going to say anything at this time. When the person is deceased we will identify him.”
Felt had long been a primary suspect on the relatively short list of potential candidates for “Deep Throat,” who was instrumental in the Post reporting on the Watergate scandal that led to Nixon’s resignation in August 1974 — the only resignation of a U.S. president in history.
The Vanity Fair article said Felt’s family had convinced him that his actions during Watergate were heroic and worthy of acknowledgment and he should come forward. His daughter had spoken to Woodward, who visited Felt in Santa Rosa in 1999, by phone more than a half-dozen times to discuss a potential joint announcement, Vanity Fair said.
But Woodward would often begin those conversations with a caveat, the magazine said, saying, “Just because I’m talking to you, I’m not admitting that he is who you think he is.”
So one of the great mysteries of our time is apparently solved. Woodstein always said that they’d never identify Deep Throat until he was dead. Now Felt, near the end of his life, comes forward and changes his earlier denial. In the interview with Vanity Fair, he also says that he wasn’t proud of being Deep Throat, because “you should not leak information to anyone”. But Woodstein aren’t saying a damn thing about it, and they’re reiterating the “not until he’s dead” line.
But I can understand why Felt became Deep Throat, if indeed he did. The background of Watergate was a turf war between the FBI and the CIA. Nixon wanted the CIA to handle some aspects of the case and cover-up, and the FBI cried foul because domestic issues were their turf. It was ex-CIA guys like G. Gordon Liddy, E. Howard Hunt, and James McCord who were involved in the Watergate break-in. And L. Patrick Grey, the successor to J. Edgar Transvestite as head of the FBI, was a complete ninny. In other words, Felt, if he was Deep Throat, probably started as a way to screw over the CIA for poaching on their turf, and the Nixon Administration may have been collateral damage at that point. But the more Felt became involved, the more sick he became at what was going on, and started to reveal more and more to Woodward in that famous parking garage.
You know, I have a feeling that top people in the Nixon Administration knew who Deep Throat was. However, Felt may have had access to Hoover’s famous “blackmail” files, which would have been a bombshell if he’d passed Woodward excerpts on Nixon and the President’s Men. It could have gone beyond that. If Hoover had complied data on Hunt, it may have revealed that Hunt had a role in the Kennedy Assassination, something that’s been long suspected by conspiracy theorists. This could have been damn fun for the journalists and an even greater shock to the system to the American public than Watergate already was.
You know, I lived through Watergate as a young kid. Most of you reading this haven’t. If you want to learn exactly how the President of the United States became an open target for journalists, read some of the books on the subject (All The President’s Men is a good start, or see the movie if you’re too lazy to read the book). Look it up on Google. Do something. This is an invaluable part of US history, and it can explain my excitement and my skepticism over Felt’s revelation. Remember, just because the President does it doesn’t necessarily make it legal.
And I’ll cut this thing off here. Hope that you enjoyed it, and I’m hoping that the return of the Smackdown Short Form will take place this weekend. If not, have a great week. If so, have a great few days.
About Eric Szulczewski
