The Daily Grasshopper

In the weeks and months that preceded the U.S./U.K. invasion of Iraq, there were plenty of justifications given by those in the pro-war camp for a "pre-emptive strike." Among them was the morally questionable "We made Saddam, so we bear the responsibility for taking him out" argument. Among those who have succumbed to this line of reasoning is the Boston Globe's conservative columnist, Jeff Jacoby, who invoked it in an op-ed he wrote back on February 20th.

We should not be surprised, then, given the utility of this way of thinking, to discover that the ardent desire to right past wrongs (even if it means creating a whole new set of wrongs while simultaneously enriching your friends) is finding favor outside the foreign policy set. Check out this article from the front page of the Sunday New York Times "Money & Business" section:

"Advisers May Get 2nd Chance to Fail"
http://www.nytimes.com/2003/04/06/business/yourmoney/06WATC.html

Here's the gist of the article:

"On March 19, when it passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2003, the House voted to remove a significant restriction from the bankruptcy code that has barred so-called interested parties from advising a company during bankruptcy. Interested parties include any investment banker who has sold a company's securities during the three years before it entered bankruptcy.

The restriction on interested parties has been in the bankruptcy code since 1898. Understandably. Why should a firm earn fees advising a company that it may have helped push into bankruptcy by, say, loading on too much debt?"

The resounding answer investment bankers give to that question is a simple: "Why the heck not?" The removal of this 105-year old regulation will give their firms access to yet another source of income and fees. Here's a free survival tip for you: do not stand between an investment banker and his fees. So what if the firm whose advice contributed to the bankruptcy wants a piece of the action once the company goes Chapter 11? What's the big deal?

The process for undoing the law is equally simple, as the columnist, Gretchen Morgenson, notes. She's a highly-paid professional business writer for the New York Times, so she can be relied upon not to use discouraging words like "bribery" or "graft," but she paints an accurate picture nonetheless:

"Stock and bond issuance is down, and so are banking fees. Financial firms are naturally eager to earn money from bankruptcy advice, and their lobbyists have been working the issue hard in Washington. For the 12 months ended June 2002, the Securities Industry Association and the Financial Services Roundtable, two big industry groups, spent $10.5 million pleading their views."

Fortunately, I work for the "Daily Grasshopper," which is under no such constraints, and I can therefore use words that more accurately depict what is happening here. A bunch of whores down in Washington, D.C., myopically focused on their own re-election campaigns, are selling out to the same greedheads that brought us the Enron scandal, the WorldCom scandal, the Global Crossing scandal, the Savings and Loans scandal, the Teapot Dome scandal, etc., etc. Here's House Judiciary Committee flack Jeff Lungren, explaining the virtues of the new arrangement:

"You've got people who are intimately involved with a company that files for bankruptcy, and all of a sudden it has to hire new people and pay them to get up to speed on the company. That takes time; that takes money."

Naturally, when some corporate whore's mouthpiece wants to make excuses for a blatant conflict of interest, he'll fall back on "efficiency." Never mind that the vaunted "efficiency" that was implemented at some of these now-bankrupt companies involved determining how quickly and how easily gullible investors could be bilked of their life savings.

Not everyone is buying the argument, either, I'm happy to report. One observer, who knows a thing or two about the issues at hand, was quoted in the piece as saying "What we're talking about is a significant potential conflict of interest, and I think it is outrageous that investment banks would even try to go down this road." That's none other than former head of the Securities and Exchange Commission, Arthur Levitt. He stepped down from the SEC in 2001 after the first wave of accounting scandals had broken. Morgenson concludes:

"Outrageous, perhaps, but not surprising. Investment banks and corporate America want investors to get over the dreary corporate governance craze already. Failures at Enron and WorldCom are so five-minutes-ago. Never mind about the recent debacle at HealthSouth. It is time to return to business as usual, when corporate executives were worshipped and investment bankers revered."

A similiar principle is at work in the arms sales racket, which was covered in the Boston Sunday Globe in a story reprinted from the Washington Post. You had to really dig to find it, but it was certainly an interesting read once you got there. You can read it online here:

http://www.boston.com/dailyglobe2/096/business/Battlefield_becomes_showcase_for_defense_firms+.shtml

The story, "Battlefield becomes showcase for defense firms," explains how the Merchants of Death have succeeded in creating a truly recession-proof industry. Like the Bush administration, whose moral duty it has become to take out a tyrant his father's administration supported, or like Salomon Smith Barney, which alone possesses the expertise to steer WorldCom through bankruptcy (by virtue of giving them the loans and advice that brought them there), the world's arms makers have their own penance to make. You see, in the past, they may have armed dictators of unstable regimes with the highest-quality weapons, which means that they now have to go to their patrons at the Defense Department and get permission to build even BETTER (i.e., more expensive) weapons, so that we can defend ourselves. Here's part of the story:

"When the war in Iraq winds down, the US defense industry is likely to launch a major offensive to sell its battlefield-tested weapons to countries around the world.

If the weapons systems perform in Iraq as Pentagon officials envision - with power and precision - then significant commercial benefits probably would follow, industry analysts say. Overseas buyers are expected to have their sights primarily on inexpensive, satellite-guided weapons rather than high-priced tanks and jets, because they've already bought about as many of those systems as they can afford.

The new weapons are being featured in nonstop television coverage, providing the kind of publicity that helped fuel a surge in international arms sales after the 1991 Persian Gulf War.

'It's the best possible marketing tool - CNN,' said Tamar Gabelnick, director of the arms sales monitoring project at the Federation of American Scientists.

After years of development and testing, a weapon proves its value only during 'cold, hard combat,' said Joel L. Johnson, vice president of international affairs at the Aerospace Industries Association.

Adds defense industry consultant James McAleese: 'You should be able to sell [at least] three times more of any weapon system that has been proven in combat than if you haven't seen it in combat.'

Foreign sales raise a sensitive issue, according to some observers. The Pentagon runs the risk of arming unstable regimes or nations sharing tense borders, opening itself up to charges that it is increasing volatility in an already insecure world. The United States also puts itself in the position of supplying sophisticated weaponry to a potential future enemy. In the 1980s, for example, the United States authorized the sale of several products to Iraq that could be used in weapons, including poisonous chemicals and deadly viruses, such as anthrax and bubonic plague."

One thing I didn't see in the Sunday papers was any mention of a national day of action called by Ralph Nader's organization "Citizen Works," which was designed to draw attention to all the war profiteering that's going on. You can read more information at the website, which is here:

http://www.citizenworks.org/corp/bbd03.php

The events took place around the country on Saturday, and were kicked off by an event on Friday in Washington, D.C. Vice-President Dick Cheney was given the "Daddy Warbucks" award. You can read the press release here:

http://www.citizenworks.org/corp/halliburton.php

Here's the critical part:

"This is not the first buck that Cheney's former company has made off military conflict and likely won't be the last. [Kellogg, Brown & Root] currently has thousands of military support personnel on the ground in Kuwait and Turkey as part of a multi-year contract worth close to a billion dollars. The engineering subsidiary was also one of a select few firms invited to bid on an initial $900 million USAID contract for rebuilding post-war Iraq. Though it didn't get that job, Halliburton says it is still in the running for subcontracts and there will likely be plenty more opportunities. After all, the American Academy of Sciences estimates the rebuilding Iraq will cost between $30 and $105 billion dollars. At a recent investor conference call, Halliburton reported a 30% increase in year-over-year revenues, to $1.6 billion, for KBR.

Cheney, who served as CEO from 1995 to 2000, continues to receive as much as $1 million a year in deferred compensation as Halliburton executives enjoy a seat at the table during Administration discussions over how to handle post-war oil production in Iraq.

The Cheney-Halliburton story is the classic military-industrial revolving door tale. As Secretary of Defense under Bush I, Cheney paid Brown and Root services (now Kellogg Brown and Root) $3.9 million to report on how private companies could help the U.S. Army as Cheney cut hundreds of thousands of Army jobs. Then Brown and Root won a five-year contract to provide logistics for the U.S. Army Corp of Engineers all over the globe. In 1995, Cheney became CEO and Halliburton jumped from 73rd to 18th on the Pentagon's list of top contractors, benefiting from at least $3.8 billion in federal contracts and taxpayer-insured loans, according to the Center for Public Integrity."

And just so nobody gets the idea that these things aren't connected (corporate corruption, illegal armed interventions, arms sales/war profiteering), here are a couple more facts about Halliburton that were part of the "Daddy Warbucks" press release, but somehow didn't make it into the papers:

"Questionable Accounting: The SEC recently formalized an investigation into whether Halliburton artificially inflated revenue by $234 million over four years. Halliburton switched to a more aggressive accounting method in 1998 under Cheney."

Access to Evil -- business dealings in Iraq, Iran, and Libya: News reports suggest that Pentagon is currently using the Iran-Libya Sanctions Act (ILSA) to draw up a blacklist of non-US companies that have done business in Iran. Yet, Halliburton has conducted Business in Iran through subsidiaries. When Cheney was CEO of Halliburton, he inquired about an ILSA waiver to pursue oil field developments in Iran. In 1997, Halliburton subsidiary Halliburton Energy Services paid $15,000 to settle Department of Commerce allegations that the company had broken anti-boycott provisions of the U.S. Export Administration Act for an Iran-related transaction. Halliburton recently agreed to evaluate its operations in Iran, after the Securities and Exchange Commission rebuffed the company's request to dismiss a New York City police and fire pension funds shareholder proposal for the company to examine its role in Iran.

Also forgotten is that story about how Cheney's Halliburton did business with Saddam. According to the Washington Post, 'Halliburton held stakes in two firms that signed contracts to sell more than $73 million in oil production equipment and spare parts to Iraq while Cheney was chairman and chief executive officer.'

Halliburton has also done business in Azerbaijan, Burma, Indonesia, Libya and Nigeria. As Dick Cheney once said, 'The good Lord didn't see fit to put oil and gas only where there are democratic regimes friendly to the United States.'

Tax Havens: Under Cheney's tenure, the number of Halliburton subsidiaries in offshore tax havens increased from 9 to 44. Meanwhile, Halliburton went from paying $302 million in company taxes in 1998 to getting an $85 million tax refund in 1999."

It's worth reflecting on the whereabouts of the President of the United States right now. Today, he's in Northern Ireland, meeting with British Prime Minister Tony Blair to discuss how the war is going, among other things. The two are going to be greeted by protesters from the Irish Green Party, according to a report in yesterday's Globe. Sinn Fein spokesman Gerry Adams said his group will not be protesting, but that their opposition to war in Iraq is well known.

In his book "Rebels: The Irish Rising of 1916," Peter De Rosa has a chapter called "Kicking In A Rotten Door," a description of the corruption and moral bankruptcy of the British Empire that left the Irish nationalists no choice but to take up arms against it and the occupation of their land.

"All successful revolutions," said economist John Kenneth Galbraith, "are the kicking in of a rotten door." Time will tell whether the corruption that pervades our government at all levels has reached the point of rot - and whether, once again, we will find it "necessary for one People to dissolve the Political Bands which have connected them with another, and to assume among the Powers of the Earth, the separate and equal Station to which the Laws of Nature and of Nature's God entitle them."

Or, in the words of the Declaration of the Provisional Government of the Republic of Ireland:

"We declare the right of the people of Ireland to the ownership of Ireland, and to the unfettered control of Irish destinies, to be sovereign and indefeasible. The long usurpation of that right by a foreign people and government has not extinguished the right, nor can it ever be extinguished except by the destruction of the Irish people."

PK
http://www.dailygrasshopper.com