We recently noted that former NSA boss Keith Alexander is running around asking for $600k to $1 million per month for his new “cybersecurity” consulting firm. While some people thought that the number was “low” for banks, that doesn’t make any sense. You could hire a lot of really good actual security professionals for that kind of cash. So it made us wonder just what banks thought they were getting for that $1 million. Actual security professional Bruce Schneier wondered that as well, and wondered aloud if the one difference was that… Alexander could give them classified info — such as where he hid the backdoors in their routers.
That statement apparently caught the attention of Rep. Alan Grayson, who has been a vocal opponent of NSA overreach. He’s now sent a letter to the Financial Service Rountable to point out that selling classified info is a crime:
Security expert Bruce Schneier noted that this fee for Alexander’s services is on its face unreasonable. “Think of how much actual security they could buy with that $600k a month. Unless he’s giving them classified information.” Schneier also quoted Recode.net, which headlined this news as: “For another million, I’ll show you the back door we put in your router.”
This arrangement with Mr. Alexander may also include additional work with the shadow regulatory firm The Promontory Group, with whom Alexander apparently will partner “on cybersecurity matters.” According to Promontory spokesman Chris Winans, Mr. Alexander “and a firm he’s forming will work on the technical aspects of these issues, and we on the risk-management compliance and governance elements.”
Disclosing or misusing classified information for profit is, as Mr. Alexander well knows, a felony. I question how Mr. Alexander can provide any of the services he is offering unless he discloses or misuses classified information, including extremely sensitive sources and methods. Without the classified information that he acquired in his former position, he literally would have nothing to offer to you.
Grayson also demands “all information related to your negotiations with Mr. Alexander,” so that Congress can verify whether or not he is selling military or cybersecurity secrets to the financial services industry for personal gain. Sure, it’s a snarky move, but there is a point behind it. Alexander can’t command those sums because of his actual technical expertise. The reality, of course, is that he’s selling his connections to the government. But it certainly raises the question of appearances.
Pro-independence Spaniards have staged a protest rally against the Spanish monarchy as the new king urges collaboration in the region.
On Thursday, thousands of Catalonians took to the streets of Girona to voice their anger against the royal family’s involvement in a series of corruption scandals.
The fresh protest came hours after Spain’s newly-appointed King Felipe VI reached out to Catalonians earlier in the day, urging their collaboration to help defuse tensions with Madrid.
“Sincere and generous collaboration is the best way to fulfill the legitimate aspirations of each person and achieve great collective goals for the common good,” the king said in a speech on his first visit to Catalonia since ascending to the throne.
The majority of 7.5 million inhabitants of Catalonia have expressed resentment for the redistribution of their taxes to other regions of Spain.
Catalan leaders plan to hold an independence referendum in November. The government has condemned the move as illegal.
Catalonia has been seeking independence and autonomy from Spain since the end of the 19th century. In recent years, massive rallies have been held to claim the self-determination right for the region.
The latest protest comes as the image of the royal family has been tarnished by a series of scandals. Juan Carlos’s daughter, Princess Cristina, and her husband, Inaki Urdangarin, are under investigation for possible tax fraud and money laundering.
Spain has been the scene of anti-monarchy protests in recent weeks after Juan Carlos announced he would step down in favor of his son Philippe. The 46-year-old monarch was officially sworn in before parliament on June 19.
According to a survey conducted earlier this month, the majority of the Spanish people are in favor of a referendum on the future of monarchy in their country.
Morning Edition had a strange piece discussing how regulators can punish banks for breaking the law. The piece focused on the various fines and regulatory measures that can be imposed as penalties when banks are found to have broken the law. Remarkably it never considered the underlying logic of the punishment and the likely deterrent effect on criminal activity.
While banks are legal institutions, ultimately it is individuals that break the law. The question that any regulator should be asking is the extent to which the penalties being imposed will discourage future law breaking. As a practical matter, the immediate victims of the measures mentioned in the piece are banks’ current shareholders. Since there is often a substantial period of time between when a crime is committed and when regulators discover it and succeed in imposing a penalty, the shareholders facing the sanction will be a different group from the shareholders who benefited from the original crime. This makes little sense either from the standpoint of justice or from the standpoint of deterring criminal activity by bankers.
The imposition of large fines may cause current shareholders to demand the executives who broke the law be fired, but in many cases they will have already moved on to other jobs or retired. In the case of the fraudulent loans that were passed on in mortgage backed securities (MBS) in the housing bubble years, most of the top executives had already left their banks by the time actions were brought by the Justice Department.
In this case, they made enormous amounts of money by breaking the law. The financial crisis may have caused them to retire or leave their banks somewhat sooner than they would have preferred, but almost all of them come out as net gainers from their actions.
The one sanction that would clearly be effective in deterring bankers from breaking the law would be putting them in jail for breaking the law. It is likely that the prospect of spending several years in prison, along with fines taking away most of their monetary gains, would provide a serious disincentive to bankers who might otherwise break the law. The Justice Department could have pressed cases by showing that top officials in banks had good reason to believe that many of the mortgages they were passing along in MBS were fraudulent.
It is likely that top executives at major investment banks had some knowledge that many of the loans they were securitizing were fraudulent, since there were numerous accounts in the business press about bad loans. There were also widely circulated jokes about the quality of these loans. (It was common to talk about “NINJA” loans, referring to loans where the borrower had no income, no job, and no assets.) It is likely that the top officials at these banks had at least as much knowledge of the loans their banks were securitizing as the people writing about them in the business press. (Deliberately passing along fraudulent loans is fraud.)
The US Supreme Court on Thursday, June 19th ruled that First Amendment protections extend to public employees who provide testimony, under subpoena, on corruption from adverse actions, such as retaliation or job termination. In a rare show of bi-partisan unity in Washington, DC, Justice Sonia Sotomayor wrote the Supreme Court decision in favor of whistleblowers over the opposition of those who nominated her for the Supreme Court, the Obama Administration. Although the corporate media hailed it as triumphant, the decision fails to provide necessary protections to whistleblower against retaliation for exposing corruption.
The case of Lane v. Franks centers on an employee, Edward Lane of Alabama Community College, hired in 2006 to direct an at-risk youth program that provided “counseling and educations as an alternative to incarceration.” The program received “substantial federal funds.” In the course of conducting an audit, Lane discovered that a state representative, Suzanne Schmitz, was being paid for work that she did not provide. Lane raised concerns about this fraudulent situation and was warned by the president of the community college, Steve Franks, that firing Schmitz could have a negative impact on his career at the community college. Despite the warning, Lane terminated Schmitz’s employment. As a result, a lawsuit was filed and the FBI initiated an investigation.
In 2008, Lane was subpoenaed and testified against Schmitz at her criminal trial. She was convicted of “fraudulently obtaining $177,000 in public in funds.” Under the thin pretext of a budgetary crisis, Franks laid off 29 employees but withdrew all but two of those lay offs – Lane was one of the two employees not re-hired. Lane filed charges claiming that Franks retaliated against him for testifying against Schmitz. He argued that his First Amendment rights had been violated. Franks on the other hand argued that he was protected from these charges because he was acting in an official capacity and therefore immune from such charges. In the federal government, managers also claim to be above the law because of sovereign immunity.
Justice Sotomayor wrote in the Courts decision that Lane gave his testimony “as a citizen on a matter of public concern – a public program and misuse of state funds.” Sotomayor wrote: “ Anyone who testifies in court…bears an obligation, to the court and society at large, to tell the truth.”
Sotomayor further asserted:
“…The importance of public employee speech is especially evident in the context of this case: a public corruption scandal. The United States, for example, represents that because “[t]he more than 1000 prosecutions for federal corruption offenses that are brought in a typical year . . . often depend on evidence about activities that government officials undertook while in office,” those prosecutions often “require testimony from other government employees.” Brief for United States as Amicus Curiae 20. It would be antithetical to our jurisprudence to conclude that the very kind of speech necessary to prosecute corruption by public officials-speech by public employees regarding information learned through their employment may never form the basis for a First Amendment retaliation claim. Such a rule would place public employees who witness corruption in an impossible position, torn between the obligation to testify truthfully and the desire to avoid retaliation and keep their jobs.” [emphasis added]
Unfortunately, Franks was not held accountable for terminating Lane because of the on-going bias towards protecting the illegal behavior of managers and those in power.
The Sotomayor opinion is certainly a step forward in protections for citizens who have the courage to fight against corruption. However, what remains unclear is why a citizen should need a subpoena to protect them from retaliation?The Supreme Court, in future rulings need to eliminate this unnecessary barrier to justice. Because the Supreme Court did not order Lane to be reinstated, the Court ruling still sends a chilling message to whistleblowers in the sense that their jobs are still in jeopardy. This issue of holding officials to account for their illegal behavior remains unaddressed. The First Amendment victory is small consolation when one is facing unemployment.
However, the Barack Obama Administration — true to its core values of retaliating against, maligning and silencing whistleblowers– argued against First Amendment protections for public employees who testify against corruption at trials. At one point, the Obama Administration even argued “a police department would be within their rights to fire an officer who responded to a subpoena and testified about a search warrant in a court.”
Had the Supreme Court accepted the Obama Administration’s argument it would have further undermined democratic ideals and intensified the fear of losing ones job by providing testimony in corruption cases, even with a subpoena. With the Supreme Court pushing back against the Obama Administration’s position they have set the stage for further examination of how to best provide transparency in government and comprehensive whistleblower protection.
Dr. Marsha Coleman-Adebayo is the author of No FEAR: A Whistleblowers Triumph over Corruption and Retaliation at the EPA. Dr. Coleman-Adebayo worked at the EPA for 18 years and blew the whistle on a US multinational corporation that endangered South African vanadium mine workers. Marsha’s successful lawsuit against the EPA lead to the introduction and passage of the ﬁrst civil rights and whistleblower law of the 21st century: the Notiﬁcation and Federal Employees Anti-discrimination and Retaliation Act of 2002 (No FEAR Act).
Venezuelan President and High Ranking Officials to Declare Wealth, Ex-Minister Investigated for Corruption
San Francisco – Venezuelan comptroller Adelina Gonzalez announced yesterday that all senior officials in public office must update their sworn declaration of wealth (DJP) between the 1st and 31st of July.
The DJP has been required for select offices since the ratification of the Law Against Corruption in 2003. A government website for the task was set in place in 2009. The last DJP summons was for all police bodies, though the current injunction – detailed in the Official Gazette published just days after president Nicolas Maduro’s election to office – is much broader in scale.
The mandate extends to all state, federal, and municipal employs of superior rank, as well as any functionary working within the realm of public accounting. This includes President Nicolas Maduro, as well as magistrates of the Supreme Court, military generals and high ranking army personnel, the National Electoral Council, the Attorney General’s Office, governors, ministers and vice ministers, ambassadors, consuls, notaries, the Central Bank directors’ office and university rectors.
Those who do not comply with this requirement will be fined or, as articles 38 and 39 of the corruption law indicate, may be removed from their post and banished from all public office for up to 12 months.
Maduro’s firm stance against corruption has defined his presidency from the beginning, though critics believe his policies have been largely unsuccessful. Since he took office in April of 2013, there have been arrests and investigations within the tax and customs office, Seniat, the goods and services monitor, Indepabis, and state owned iron ore company, Ferrominera.
While addressing the National Assembly last October, the head of state implored deputies to reject the notion of corruption as “normal in political life.”
“I call on the people to not tolerate corruption,” he said, “neither of those with a yellow collar [opposition supporters] nor the corruption of those with a red collar [supporters of the Bolivarian revolution]. It’s the same thuggery, no matter how you dress; it’s the same anti-people and anti-country behavior.”
In an interview last September, Interior Minister Miguel Rodriguez Torres went into detail, “This problem of corruption neither started with the revolution, nor did it increase during the revolution. Rather, it began when the republic began. I believe that we should see corruption as part of an effort to dominate sectors of the public administration… In all public institutions there used to be parallel institutions. There always was someone who you would pay [on the side], to take care of the procedures. This created a culture.”
He explained how increasing government efficiency and eliminating bureaucracy are two key methods of destroying the normalized institution of corruption. He reminded reporters that in the pre-Chavez era, there was only one moment when politicians were publicly accused of corruption. That moment involved a scheme which left the country with “literally zero dollars in foreign currency reserves.
“Some experts who have studied this say that this was the greatest fraud in the history of the world,” Rodriguez stated.
Though the conspiracy was of vast proportions and markedly reliant on government insiders, only one man was accused and convicted for the renowned “RICADI fraud,” Rodriguez said.
The Attorney General’s Office, presided over by Luisa Ortega Diaz, is currently conducting an investigation on Eugenia Sader, Health Minister from 2010 to 2013. Sader, a known supporter of Hugo Chavez, was replaced in her position shortly after Maduro took office.
An alleged Justice Department informant leaked information to local newspapers that Sader’s trial will begin on Thursday, at which time she will be questioned regarding numerous “irregularities in management” during her time as Health Minister. The informant took this to mean corruption and embezzlement, but others interpreted the term differently.
On Tuesday a house deputy for the opposition Justice First party and physician, Dinorah Figuera, asked attorney general Diaz to clarify what the charges against Sader are to be. Figuera told reporters she believes the case corresponds with a number of grave complaints her office made in regards to public hospital management under Sader’s administration, including emergency rooms closed for improvements that were never reopened.
An auditing commission of the national assembly last year questioned Merida city mayor and member of the opposition Lestor Rodriguez, in response to a dozen accusations of embezzlement gathered by a city councilor. At the time, the mayoralty had not collected trash in Merida since the previous year, though Rodriguez had claimed it was for lack of funds.
Rodriguez was later indicted for corruption.
JOHANNESBURG – At every step, from mine to ring finger, South Africa’s diamond industry is benefitting from royalty and export tax structures riddled with loopholes, shortchanging citizens of one of the world’s premier sources of diamonds of tens of millions of dollars a year in revenue.
In 2011, South Africa produced diamonds whose uncut, or rough, value was $1.73 billion, or 12 percent of global production, according to the most recent government data available. Yet from 2010 to 2011, diamond-producing companies paid South Africa’s government just $11 million in mining royalties, according to the latest Tax Statistics report, produced by the South African Treasury and the South African Revenue Service.
A 100Reporters investigation of the diamond trade in South Africa has found that companies here pay a royalty rate far lower than that of other African states. Companies can also reduce or cancel out export taxes if they offer locally-mined diamonds to the state for purchase—even if the South African government never buys the gems, often due to formidably high prices.
In an apparent conflict of interest, De Beers Consolidated Mines Ltd., the dominant player until 2010, ‘donates’ paid staff to the State Diamond Trader, charged with assessing diamonds offered by De Beers and other companies to the State for purchase. Provided 10 percent of domestic diamonds are offered, these companies may then receive export tax exemptions.
The main beneficiary of a system tilted in industry’s favor is De Beers, the sprawling multinational cartel that accounts for 35 percent of global rough diamond production, mainly from Africa. Until recently, De Beers dominated the South African diamond industry.
In 2011, De Beers accounted for $1.34 billion of South Africa’s production, and it remains the country’s primary diamond importer and exporter. The only other significant player, Petra Diamonds, with whom De Beers controls 97 percent of the local diamond industry, neither imports nor exports.
From 2005 to 2012, diamond exporters, primarily De Beers, appear to have downplayed the market value of their rough diamond exports by $3 billion, according to an analysis* of declarations in corporate filings under the Kimberley Process Certification Scheme, the rough diamond tracking system used to keep conflict gems off the world market. The same undervalued gems were then sold at market prices around the world.
Lynette Gould, head of media relations for De Beers, declined to comment on the findings, or to address questions about the valuation, sales and import and export volumes of diamonds from South Africa. In an email, Gould wrote that the “values and volumes of De Beers production is . . . proprietary.”
A Broken System
To ensure that the government gets its share of revenues from the extraction of the country’s diamonds, the South African government relies on a national agency, the Government Diamond Valuator (G.D.V.), charged with determining the quality, and thus worth, of diamonds. But highly-placed sources in the diamond industry said that the G.D.V. seldom issues independent assessments of the country’s diamonds, opting instead to echo the valuations that De Beers puts forth in the company’s price lists.
“The gap between the industry’s presence in South Africa and its contributions to the country’s coffers has its roots in how diamonds are valued in South Africa and who controls the process,” said Claude Nobels, a former government diamond valuator.
“We had a plan to create a system, under the Nelson Mandela government, that would generate fair revenues for all parties involved,” Nobels told 100Reporters. But to date, “the diamond mining and trading industry has not truly benefitted South Africans. The loss to the state is billions of dollars,” he said.
Calculating diamond revenue losses to the South African budget is complicated by a dearth of data, particularly concerning how diamonds are valued. Valuation, in turn, drives royalties and export taxes, as well various forms of tax exemptions. For example, companies can receive credits for importing diamonds to be cut and polished in South Africa, which in turn may reduce or even cancel export taxes.
Until 2012, government reports on diamonds generally showed blank spaces rather than reveal value and volume of local and export sales. Reports for other commodities such as gold and platinum, however, teemed with data. Martin Kohler, Deputy Director of Statistics for the Department of Mineral Resources (D.M.R.), said the government withholds diamond data to protect big producers, the largest among them De Beers, unless the companies authorize the release of the information.
“De Beers, who had a predominant share of the diamond market in the past, authorised us to publish the aggregated production data only (but not sales data),” Kohler said in an email. According to Kohler, the recent sale of De Beers’s mines to other owners meant that, “the predominant position of De Beers has been diluted, and we are able to publish sales data with effect from January 2013 (but not before that date).”
Kohler said such information was strictly confidential “where one company has more than 75 percent market share, or where there are less than three producers of a mineral, unless all such producers have granted permission to publish the data.”
In November 2013, the company moved its sorting, valuing, and selling center to Gaborone, Botswana from London. According to a knowledgeable source, the South African government pressured De Beers to shift sales activities to Africa, specifically South Africa. De Beers caved in to the pressure but preferred Botswana as a partner. The company signed a ten-year agreement relocating global production sales to Gabarone. South Africa, wary of being seen as a domineering neighbor, acquiesced, the source said.
“Bricks in the Wall”
To understand South Africa’s diamond industry and the system of taxation that now governs it, it helps to look to the industry’s origins, which are synonymous with De Beers. Historically, the apartheid regime cultivated close relations with South Africa’s diamond industry. John Vorster, an apartheid-era prime minister, once described corporate support from De Beers and other large companies as “bricks in the walls of the regime’s continued existence.”
De Beers was formed in 1888 by colonialist Cecil Rhodes and acquired by Ernest Oppenheimer’s Anglo-American in the 1920s. By 1987, Anglo-American PLC controlled over 60 percent of the wealth listed on the Johannesburg Stock Exchange, through an estimated 80 listed entities.
Despite its dominant role in the global diamond trade, De Beers has a history of running afoul of the law in important markets. In 2008, the European Union forced De Beers to end decades of price fixing with Russia’s Alrosa, another dominant diamond producer. At the time, De Beers controlled 50 percent of global rough diamond production.
Meanwhile, for more than 60 years, De Beers was banned from directly trading in the United States because of price fixing, despite the fact that the U.S. accounts for half the world’s diamond jewelry sales. In 2012, a settlement of $295 million was reached between the U.S. government and Anglo-American, which currently owns 85 percent of De Beers.
In South Africa, De Beers functioned in a protected niche even after the end of apartheid. For instance, it paid no export taxes on diamonds until 2007. According to Parliamentary documents, De Beers extracted the advantage in a twist worthy of a B-movie: for years, it held the government at bay by citing a smudged, unsigned document generated under the apartheid regime, just prior to the first democratic elections, that allegedly provided the company with an export tax exemption for 13 years.
Further, extractive industries in South Africa, including diamonds, did not pay royalties until 2010, with the adoption of the Mineral and Petroleum Resource Royalty Act.
According to the African Development Bank, South Africa was the “only major mining country on the continent without a royalty on mining” until the act’s passage. To address the gaps in the system, the act mandated that companies pay royalties at rates ranging from 0.5 to 7 percent. Royalties, calculated against criteria such as gross sales and the company’s net operating mining profits, are compensation to the nation for the permanent loss of non-renewable resources.Yet in crafting and applying the royalty rate, the diamond industry, rather than the South African government, has had the upper hand.
Take the rate itself, for example. Botswana and Namibia, major diamond-producing states, have royalty rates fixed at 10 percent. Yet because of its sliding royalty scale, South Africa averages an annual royalty rate of about 2 percent, which netted the government a total of $57.5 million from 2010 to 2012.
“The revenues from diamond royalties are very low – just 1.1 percent of sales for 2011,” said Mark Curtis, a U.K.-based development finance consultant for global non-governmental organizations. “If diamond companies paid the mid-royalty range of 3.5 percent, royalties would have amounted to $24.8 million more than the state actually received,” he said.
The explanatory draft of the act originally pegged royalties at 10 percent of the value of diamonds at the ‘mine-gate’ and at 8 percent after processing. But the government reduced the rate following pressure from the diamond industry. Created around a complex profit-based system, royalties are considered a “cost” by business, and depend on the value of minerals sold.
Though diamonds are valued by their clarity, the same cannot be said of South Africa’s diamond industry or its largest player, De Beers.
Unlike other South Africa diamond companies, De Beers does not allow the government to publish key information about the value of the diamonds it extracts. As a result, the state and the public cannot verify the fairness of the royalty De Beers ultimately pays.
In addition, to determine the value of a diamond, DeBeers and other companies use complex and closely-held pricing formulas, that they do not permit the government to review. De Beers’s pricing formula counts 12,000 categories.
According to one European valuator who worked closely with De Beers, the company’s price book was not a single listing, but rather an “elaborate system used to value diamonds for different purposes. By manipulating various categories with price points, they can increase or decrease the value of diamonds . . . These figures have nothing to do with fair market prices.”
Speaking on behalf of De Beers, Gould said, “I’m afraid the information on pricing is proprietary and therefore confidential.”
Other companies also maintain proprietary pricing systems. In an email, the Government Diamond Valuator confirmed that it did not “have access to the pricing policies of other diamond companies,” but asserted that the Government Diamond Valuator assessed “each parcel imported or exported to determine a value deemed to be fair market value.”
However, highly placed sources in the diamond industry, including a former government valuator, said the G.D.V.’s relies on random spot checks, and verifies only the size of diamonds, not their quality. One official close to the Department of Minerals and Resources confirmed that mispricing of diamonds was easily possible due to what was considered the “very subjective nature of pricing.”
In 2007, the South African government established an export tax of 5 percent on diamonds. But from 2009 to 2013, according to the latest Tax Statistics report, it yielded only $21.9 million to the national purse.
The state has pulled in little revenue due to exemptions built into the 2007 Diamond Export Levy Act. The exemptions were created ostensibly to encourage mining companies to make quality diamonds available to domestic industry, before shipping abroad. Companies that offer rough diamonds to local buyers for cutting and polishing, or beneficiation, through a government mechanism called the State Diamond Trader system can obtain breaks on export taxes.
Large companies like De Beers can get the exemption if they sell 40 percent of their South African rough diamonds to buyers in South Africa, and offer 10 percent to the State Diamond Trader.
The State Diamond Trader, however, often cannot afford to purchase rough diamonds because the price is too high. The trader’s annual reports disclose that purchasing diamonds for the local beneficiation industry was difficult due to, “unsustainable rises in prices at producer level” and “limited rough supply.”
De Beers further provides fully-paid staff to the trader to conduct diamond valuation, according to reports of the State Diamond Trader, which describe the presence of De Beers staff at the government agency as a “donation.”
In an email, De Beers said, “the arrangement between De Beers and the S.D.T. is subject to confidentiality and information relating to this arrangement cannot be provided without the S.D.T.’s consent.”
Futhi Zikalala, C.E.O. of the State Diamond Trader, told 100Reporters that each parcel was individually valued. “The process is legislated. We do valuations for the 10 percent offered to the S.D.T. It takes four or five days at a time, with 10 cycles a year.”
Asked whether she would comment on the apparent conflict of interest in the State Diamond Trader’s long-standing use of De Beers’s donated staff, she responded, “Actually, no. I do not understand why you are asking that question.”
A source close to the Department of Mineral Resources said that use of De Beers’s staff was for practical reasons: the S.D.T. was under-resourced and in need of diamond experts.
In October 2013, the Minister of Minerals Resources, Susan Shabangu, said that the State Diamond Trader system had failed and would require an overhaul.
Companies can also win export tax exemption if they import rough diamonds for local beneficiation. The higher the value of the imported gems, the greater the import credits a company can generate to ultimately offset their export taxes, creating a system vulnerable to price manipulation.
But the arrangement appears to have done little to nurture domestic cutting and polishing industry. According to figures cited in a South African parliamentary report (2013), South Africa currently hosts just 300 polishers, down from 3,000 in 2008, when 140,000 carats, maximum, were locally beneficiated (see sidebar).
The report cited diamond industry officials who stated that the local cutting and polishing industry was “in distress.” While the 2008 recession had impacted the global diamond industry everywhere, beneficiation industries elsewhere–including India, China and neighboring Botswana–bounced back, even expanding training facilities as well as cutting and polishing labor. In 2013, African Romance, a medium-sized state-backed beneficiation diamond company, was liquidated. Reasons cited included the absence of consistent quality diamond supplies.
Until 2013, De Beers exported gems from its mines in Namibia, Botswana and South Africa to London for valuation and then imported them into South Africa for sale to select buyers called sightholders. The sales values declared to sightholders are confidential, the company said.
South Africa boasts curiously high import prices for diamonds. While higher import values are said to correspond to the quality of select rough diamonds, South Africa’s import price appears significantly more than the price of diamonds imported to other countries such as Israel, arguably one of the world’s leading gem quality cutting and polishing centers.
For example, South Africa’s average import prices, at $544 in 2009 and $773 in 2010, were significantly higher than Israel’s at $165 and $156, respectively, according to certificates filed under the Kimberley Process.
In 2007, South Africa’s import price hit a staggering $1,706 per carat with a total import value of $2.1 billion. Yet only $670 million would be sold to De Beers’s pre-approved South Africa-based purchasers, known as Diamond Trading Company (D.T.C.) sightholders. Though these figures were published in a De Beers report, when asked for annual D.T.C. local sales, Gould responded that the information was proprietary.
According to a diamond specialist previously employed by the South African government, who spoke on condition of anonymity, import and exported diamonds were often “mispriced” by an average of 20 percent or more.
The other countries with similarly high import averages were those where De Beers also held a large presence, such as Namibia.
“South Africa’s import figures are improbable,” said a European Government Diamond Valuator. “These prices are exceptionally high as an average price.”
Most imported diamonds appear to be re-exported uncut and unpolished. While imports make up relatively small volume, or carats, they drastically increase the value of rough diamond exports. Subtracting the values and volume of imported diamonds shown on South Africa’s K.P. certificates from corresponding exports, the actual price per carat of rough diamonds being exported for the first time falls dramatically.
When asked about the anomalies in reported trade figures for diamonds under the Kimberley Process (K.P.) in South Africa, where De Beers is a dominant player, Gould responded, “The primary purpose of the K.P. process (or the issuing of the certificates at least) is for Governments to certify the origin of diamonds, not to keep track of the volume and value of diamonds imported or exported; that is the function of the relevant Regulator and G.D.V.”
The Government Diamond Valuator
While the Government Diamond Valuator is responsible for independently appraising gems and for monitoring the trade in diamonds, it remains questionable whether the South African valuator is able to provide an independent assessment. Such assessments are critical for the South African government, and public, to secure royalties and export taxes that reflect the true worth of the country’s diamond trade.
Former De Beers director Bertie Lincoln, in a rare quote under oath to a South African court 17 years ago, described the Government Diamond Valuator as “an auditor. The value is the price which is in the [De Beers] Price Book. So the government valuator has got no input into the value of a diamond.”
The Government Diamond Valuator did not respond to follow-up questions about the source of information informing the G.D.V.’s Price Book, the size of the agency or office, the amount of time available for valuation of imported and exported diamonds, and other questions.
“The significant differences between the dollar-per-carat for South African rough diamond imports and exports suggest possible price manipulation for the purposes of aggressive tax avoidance,” said public finance specialist, Len Verwey. Companies like De Beers, he stated, may indeed have a plausible explanation, in which case, “diamond companies as well as the Government Diamond Valuator should provide more transparent reporting to society on the factors that determine such valuations.”
Verwey stated that the Government Diamond Valuator’s credibility “in ensuring fair market value for diamond transactions is essential to its success.”
But critics of South Africa’s current royalty and taxation system are skeptical that the government will impose greater transparency on De Beers and other major producers.
“Inevitably,” stated one former De Beers employee, “the company will stonewall and the G.D.V. will run a mile” from transparency and accountability in the diamond valuation system.
He added, “No one will want this brought into the open.”
*The information on transfer pricing manipulation of diamonds comes from a report by Sharife and Sarah Bracking, published by the Leverhulme Center for the Study of Value, University of Manchester, and supported by a grant from Oxfam Great Britain.
Khadija Sharife is the lead Africa forensics researcher for Investigative Dashboard (ID) and a senior investigator for African Network of Centers for Investigative Reporting (ANCIR). She is the author of Tax Us If You Can: Africa.
A group of Mexican legislative deputies announced on June 2 that they would call on the federal Governance Secretariat to guarantee the security of family members of Nestora Salgado, an imprisoned community activist from the largely indigenous town of Olinalá in the southwestern state of Guerrero. The announcement came one day after an attack on a bus that Salgado’s daughter Saira Salgado was riding from Olinalá to Mexico City for a scheduled meeting with legislators. Armed men stopped the bus shortly after it left Olinalá and without explanation executed a woman passenger. Saira Salgado said the victim was dressed the way she herself is usually dressed. After the murder, the men left without harming or robbing the other passengers. Deputy Roberto López, of the center-left Party of the Democratic Revolution (PRD), charged that the attack was not an isolated incident.
Nestora Salgado is a naturalized US citizen from Olinalá who migrated to the US and settled in Washington state. In recent years she began visiting her hometown and became involved in community affairs there; eventually she was elected head of the community police force. Community police forces are legally recognized in Guerrero, and Salgado originally had good relations with the state government. But in August 2013 she ordered the arrest of a local official, Armando Patrón Jiménez, in connection with cattle rustling and the deaths of two ranchers. Five days later Salgado herself was arrested on charges of kidnapping and was removed to a federal women’s prison at Tepic in the western state of Nayarit. She has been held there ever since without access to a lawyer; her daughter’s meeting with legislators was intended to discuss their plan to have her transferred to a more accessible prison in Mexico City.
Mexican and US activists have organized a campaign for Salgado’s release, along with a petition drive. The US government had done nothing to help with Salgado’s case despite her status as a US citizen, Deputy Loretta Ortiz Ahlf, of the small leftist Labor Party (PT), said on June 2. (La Jornada (Mexico) 6/3/14; Desinformémonos (Mexico) 6/8/14)
IRS Claims Two Years Of Emails Were Destroyed In A ‘Computer Crash;’ Congressman Asks The NSA To Supply ‘Missing’ Email Metadata
The IRS is currently being investigated by Congress for some possibly politically-motivated “attention” it directed towards “Tea Party” and other conservative groups that operated as tax-exempt entities. Along the way, IRS official Lois Lerner, who was the first to publicly disclose the inappropriate targeting, was also one of the first government officials to plead the Fifth (twice) in government hearings.
The Congressional investigation demanded copies of Lois Lerner’s emails from the IRS. Some were turned over to the House Ways and Means Committee, but not everything it sought. Now, the IRS is telling the committee that it’s not going to get everything it asked for.
The IRS has told Congress that it lost more than two years’ worth of emails involving former IRS official Lois Lerner, due to a computer crash.
House Ways and Means Committee Chairman Dave Camp (R-Mich.) on Friday said it was “unacceptable” that he was just learning of this problem now, after a lengthy investigation into Lerner’s involvement in the IRS targeting scandal.
Camp points out that the IRS withheld these emails for over a year before suddenly “discovering” they were unavailable. The IRS says it can find everything Lerner sent to and received from other IRS employees but nothing containing correspondence with those outside the agency.
Obviously, this convenient “computer crash” has generated a lot of skepticism. For one thing, a “computer crash” doesn’t really have the power to destroy electronic communications. Email is almost always stored somewhere else other than the local user’s computer. And even if the IRS meant a “server crash” instead of a “computer crash,” any decent server system contains multiple levels of redundancy.
The Blaze sought input from Norman Cillo, a former Microsoft project manager, who presented six reasons why he believes the IRS is lying about its inability to recover these emails. Number one on the list seems to be the most applicable.
I believe the government uses Microsoft Exchange for their email servers. They have built-in exchange mail database redundancy. So, unless they did not follow Microsoft’s recommendations they are telling a falsehood.
The IRS’s own policies on email state that its employees use both Microsoft Outlook and Exchange, which means it should have some form of backup available.
Secure Messaging enrollment is an automated process for all LAN accounts with an Exchange mailbox in IRS. You can find the instructions for configuring the Outlook client to use the certificates at the Secure Enterprise Messaging Systems (SEMS) web site: http://documentation.sems.enterprise.irs.gov/.
According to Cillo, the only other explanation for the IRS’s inability to recover these emails is that the agency is “totally mismanaged and has the worst IT department ever.” Unfortunately, the government seems to have a lot of mismanaged and terrible IT departments, so this may be closer to the truth than anyone would really like to admit. Perhaps the general ineptitude of large government agencies is behind the Treasury Department’s policy that all email sent to or from IRS employees be “archived” via hard copy printouts.
If you create or receive email messages during the course of your daily work, you are responsible for ensuring that you manage them properly. The Treasury Department’s current email policy requires emails and attachments that meet the definition of a federal record be added to the organization’s files by printing them (including the essential transmission data) and filing them with related paper records. If transmission and receipt data are not printed by the email system, annotate the paper copy.
There’s more information here, citing the IRS’s own internal guidelines on tape backups, etc., that suggest further levels of redundancy, as well as the commissioner of the IRS testifying that the agency stores its emails on servers.
Critics believe the IRS has simply “vanished” the crucial emails in order to cut Lerner adrift and make it appear she acted alone. Any evidence that would tie outside government agencies (including the administration itself) into this situation has been deemed unrecoverable. Supposedly, there should be paper copies of the missing emails, but no one in Congress has requested these and the IRS certainly isn’t offering to look.
But one Congressman thinks he has a solution to the missing email dilemma. Steve Stockman (last seen here threatening to bring a defamation lawsuit against someone who uttered true facts about his criminal past) knows some people who have a whole lot of email data just laying around.
“I have asked NSA Director Rogers to send me all metadata his agency has collected on Lois Lerner’s email accounts for the period which the House sought records,” said Stockman. “The metadata will establish who Lerner contacted and when, which helps investigators determine the extent of illegal activity by the IRS.”
Yeah, let me know how that works out for you, Steve. The NSA can’t even confirm or deny its monthly water usage at its Utah data site, much less that it has metadata pertaining to Americans’ communications.
[Sidebar: I do really love the fact that this sort of thing is becoming increasingly common -- the use of the NSA as the backup-of-last-resort for phone/email/internet communications data. If anyone claims it can't find email X or phone record Y, someone's going to say, "Hey, I'll bet the NSA has a copy!" Hilarious. The NSA will never again be allowed to pretend it doesn't harvest data on American citizens.]
The whole letter, which begins with some light ass-kissing of new NSA director Michael Rogers (“thank you for your 33 years of, and continued service to, our country...”) and closes with a bit of grandstanding, surreally asking “the Agency” to send all relevant metadata on the missing Lerner emails to “Donny@mail.house.gov.” All in all, probably one of the most incongruous demands the NSA has ever received, a letter which conjures up the image of a late-night meeting in an underground parking garage, with sunglassed NSA liaisons handing over a briefcase full of metadata to a 19-year-old intern dressed in his dad’s suit.
It’s pretty hard to shake the impression that this is a coverup. As always, the specter of pure ineptitude lurks in the background, as it often does when large bureaucracies tangle with technology. But until the IRS presents further evidence detailing how exactly these emails went missing, it’s safe to assume there’s been an active effort made to cover up government impropriety.
U.S. companies are reaping big benefits from the Iraqi government’s battle with ISIS militias. Three sales, including some big-ticket items, announced last month will put nearly $1 billion in the pockets of American defense contractors if Congress approves the sales.
- Beechcraft Defense Co. and eight other contractors are selling 24 AT-6C Texan II aircraft, plus spares and other equipment to Iraq. That deal is worth about $790 million. The plane is used for “light attack and intelligence, surveillance and reconnaissance.”
- AM General has a deal to send 200 of its venerable Humvees to help guard oil installations. The contract, which includes spares and equipment such as radios and machine gun mounts, is worth $101 million.
- Raytheon has a $90-million deal for seven aerostats along with 14 Rapid Aerostat Initial Deployment (RAID) Tower systems to be used for command and control by the Iraqi military.
These are just the latest in a string of sales of military equipment to the Iraqi government. Others have included Stinger missiles, C-130J cargo planes, drones and patrol boats.
Since 2005, the U.S. government has provided more than $14 billion in military hardware, services and training to Iraq, according to Global Post. The Iraqi government is now requesting more equipment to battle the Sunni militias, which have taken over large swaths of the country, and American contractors stand to make even more money as the fighting progresses.
To Learn More:
Pentagon Plans To Deliver $1B In Weapons Systems To Iraq. Even Blimps. (by Jill R. Aitoro, Washington Business Journal )
These Are The 9 Weapons The U.S. Is Selling Iraq (by Allison Jackson, Global Post )
Forgotten by Most Americans, Iraq is Still a Source of Profits for U.S. Weapons Makers (by Noel Brinkerhoff, AllGov )
SSRI stands for Selective Serotonin Reuptake Inhibitor, and it is a class of drugs that is often used to treat depression and anxiety. It includes Prozac, Zoloft, Celexa, Paxil and a host of other commonly prescribed antidepressants. And the perpetrators of a raft of school shootings, mass murders and other violent incidents in recent years have been taking them.
Find out more about the correlation between SSRIs and mass murder in this week’s edition of the EyeOpener Report with James Corbett.
By James Corbett | BoilingFrogsPost | April 16, 2014
[CLICK HERE for a French translation of this video.]
In May 1998, 15 year old Kip Kinkel murdered his parents and two classmates, as well as injuring 25 others, after engaging in a shooting spree that ended up in his school’s cafeteria. In the investigation it emerged that he had been taking popular antidepressant medication Prozac since the summer of the previous year.
In December 2000, Michael McDermott went on a shooting rampage at his workplace, Edgewater Technologies, killing seven of his co-workers. During his trial, the court heard testimony that in the weeks before the shooting, McDermott had tripled the dosage of his antidepressant medication, Prozac, from 70 milligrams per day to 210 milligrams.
In March 2005, 16 year old Jeff Weise shot and killed nine people, including five students at Red Lake Senior High School in Minnesota, before turning the gun on himself. It was later revealed he had been undergoing treatment for depression and had been on Prozac at the time.
In September 2008, Finnish post-secondary student Matti Saari shot and killed ten other students on campus before killing himself. The official Finnish government report on the incident revealed that he had been taking an SSRI medication at the time of the shooting.
SSRI stands for Selective Seratonin Reuptake Inhibitor, and it is a class of drugs that is often used to treat depression and anxiety. It includes Prozac, Zoloft, Celexa, Paxil and a host of other commonly prescribed antidepressants. And the perpetrators of a raft of school shootings, mass murders and other violent incidents in recent years have been taking them.
And so it was perhaps not surprising when the culprit of this month’s mass shooting at Fort Hood, Specialist Ivan Lopez, turned out to be taking unnamed antidepressants himself.
Although it has yet to be reported (and may in fact never be revealed) precisely what type of antidepressant Lopez was taking or whether it was an SSRI, the number of confirmed SSRI shooters in recent years has raised the question of a causal link between the medication and incidents of violence.
Although the drug manufacturers are quick to downplay this connection as anecdotal or coincidental mounting scientific evidence points to a strong correlation between the use of psychiatric drugs in general, and SSRIS in particular, and violent behavior.
In 2010, the Public Library of Science published a study titled “Prescription Drugs Associa
ted with Reports of Violence Towards Others” which examined how 484 drugs were associated with 1,937 documented cases of violent behaviour. Of those 484 drugs, 31 of them were responsible for 79% of the violence, including 11 antidepressants.
When incidents of school massacres in the US are charted against prescription of psychiatric medication, the correlation is undeniable. Further research is needed to establish if there is a causal linkage between these pharmaceuticals and the incidents of violence, but critics of the big pharmaceutical manufacturers complain such research is hampered by the low standards for reporting that these companies are held to.
One such critic, David Healy, author of over 150 peer-reviewed papers in the field of psychiatry and the author of numerous books, including Pharmageddon, joined me on The Corbett Report last week to discuss this issue.
Further complicating the issue is the fact that the general public is often, as in the case of the Fort Hood shooter, left in a state of limbo regarding the medical history of the perpetrators of these mass shooting events. Often stories are reported with vague and unconfirmed details about “antidepressants” or sometimes just medication. It can be difficult for the average person to sort through the daily reports of adverse and violent effects of these types of drugs.
One website that helps in that effort is SSRIStories.org. Begun in the 1990s, it is a repository of over 5000 news articles in which prescription drugs were linked to adverse events, including incidents of violence. Last week Julie Wood, one of the proprietors of the site, joined me to discuss the problem of sorting through the often incomplete information from these reports.
In the final equation, the question of the causal linkage between SSRIs and indeed other forms of psychiatric drugs and incidents of violence needs to be taken seriously. There are many factors at play here, from differences in individual reactions to the fact that people who are more likely to commit violent acts in the first place are often the people who are prescribed these drugs.
But the threat of violence has been taken seriously enough that the FDA in the US, the Ministry of Health in Japan and other similar bodies in countries around the world have added a warning in their guidelines for antidepressants. According to the Japanese Ministry of Health, “There are cases where we cannot rule out a causal relationship [of hostility, anxiety, and sudden acts of violence] with the medication.” And in the FDA formulation: “Antidepressant medicines may increase suicidal thoughts or actions in some children, teenagers, and young adults within the first few months of treatment.”
How can it be seen to be a good thing for anyone but the drug manufacturers themselves that these drugs have been on the market for decades and the bodies in charge of regulating them still can only offer such wishy-washy, non-evidence based statements? The issue of drug-linked violence is one that we as a society need to start discussing and acting on soon, otherwise we will continue to let the status quo be ruled not by doctors or patients or their loved ones, and certainly not by the victims of these mass murders, but by the men in the board rooms of these pharmaceutical companies who have been shown time and time again to care about nothing other than their own bottom line.
Dr. Caleb Rossiter was “terminated” via email as an “Associate Fellow” from the progressive group Institute for Policy Studies (IPS), following his May 4th, 2014 Wall Street Journal OpEd titled “Sacrificing Africa for Climate Change,” in which he called man-made global warming an “unproved science.” Rossiter also championed the expansion of carbon based energy in Africa. Dr. Rossiter is an adjunct professor at American University. Rossiter, who has taught courses in climate statistics, holds a PhD in policy analysis and a masters degree in mathematics.
In an exclusive interview with Climate Depot, Dr. Rossiter explained: “If people ever say that fears of censorship for ‘climate change’ views are overblown, have them take a look at this: Just two days after I published a piece in the Wall Street Journal calling for Africa to be allowed the ‘all of the above’ energy strategy we have in the U.S., the Institute for Policy Studies terminated my 23-year relationship with them… because my analysis and theirs ‘diverge.’”
“I have tried to get [IPS] to discuss and explain their rejection of my analysis,’ Rossiter told Climate Depot. “When I countered a claim of ‘rapidly accelerating’ temperature change with the [UN] IPCC’s own data’, showing the nearly 20-year temperature pause — the best response I ever got was ‘Caleb, I don’t have time for this.’”
Climate Depot has obtained a copy of a May 7, 2014 email that John Cavanagh, the director of IPS since 1998, sent to Rossiter with the subject “Ending IPS Associate Fellowship.”
“Dear Caleb, We would like to inform you that we are terminating your position as an Associate Fellow of the Institute for Policy Studies,” Cavanagh wrote in the opening sentence of the email.
“Unfortunately, we now feel that your views on key issues, including climate science, climate justice, and many aspects of U.S. policy to Africa, diverge so significantly from ours that a productive working relationship is untenable. The other project directors of IPS feel the same,” Cavanagh explained.
“We thank you for that work and wish you the best in your future endeavors,” Cavanagh and his IPS associate Emira Woods added.
On May 13, 2013, Rossiter wrote a blog titled on his website further detailing his climate views. The article was titled: “The Debate is finally over on ‘Global Warming’ – Because Nobody will Debate.” He wrote: “I have assigned hundreds of climate articles as I taught and learned about the physics of climate, the construction of climate models, and the statistical evidence of extreme weather.”
“My blood simply boils too hot when I read the blather, daily, about climate catastrophe. It is so well-meaning, and so misguided,” Rossiter explained.
Rossiter also ripped President Barack Obama’s climate claims in his blog post: “Obama has long been delusional on this issue, speaking of a coming catastrophe and seeing himself as King Canute, stopping the rise in sea-level. But he really went off the chain in his state of the union address this year. ‘For the sake of our children and our future’ he issued an appeal to authority with no authority behind it.”
Rosstier’s May 4, 2014 Wall Street Journal OpEd also pulled no punches. Rossiter, who holds a masters in mathematics, wrote: “I started to suspect that the climate-change data were dubious a decade ago while teaching statistics. Computer models used by the U.N. Intergovernmental Panel on Climate Change to determine the cause of the six-tenths of one degree Fahrenheit rise in global temperature from 1980 to 2000 could not statistically separate fossil-fueled and natural trends.”
His Wall Street Journal OpEd continued: “The left wants to stop industrialization—even if the hypothesis of catastrophic, man-made global warming is false.” He added: “Western policies seem more interested in carbon-dioxide levels than in life expectancy.”
“Each American accounts for 20 times the emissions of each African. We are not rationing our electricity. Why should Africa, which needs electricity for the sort of income-producing enterprises and infrastructure that help improve life expectancy? The average in Africa is 59 years—in America it’s 79,” he explained.
“How terrible to think that so many people in the West would rather block such success stories in the name of unproved science,” he concluded his WSJ OpEd.
Rossiter’s and IPS seemed a natural fit, given Rossiter’s long history as an anti-war activist. IPS describes itself as “a community of public scholars and organizers linking peace, justice, and the environment in the U.S. and globally. We work with social movements to promote true democracy and challenge concentrated wealth, corporate influence, and military power.
But Rosstier’s credentials as a long-time progressive could not trump his growing climate skepticism or his unabashed promotion of carbon based fuels for Africa.
Rossiter’s website describes himself as “a progressive activist who has spent four decades fighting against and writing about the U.S. foreign policy of supporting repressive governments in the formerly colonized countries.”
“I’ve spent my life on the foreign-policy left. I opposed the Vietnam War, U.S. intervention in Central America in the 1980s and our invasion of Iraq. I have headed a group trying to block U.S. arms and training for “friendly” dictators, and I have written books about how U.S. policy in the developing world is neocolonial,” Rossiter wrote in the Wall Street Journal on May 4.
Rossiter’s Wall Street Journal OpEd continued: “The left wants to stop industrialization—even if the hypothesis of catastrophic, man-made global warming is false. John Feffer, my colleague at the Institute for Policy Studies, wrote in the Dec. 8, 2009, Huffington Post that ‘even if the mercury weren’t rising’ we should bring ‘the developing world into the postindustrial age in a sustainable manner.’ He sees the ‘climate crisis [as] precisely the giant lever with which we can, following Archimedes, move the world in a greener, more equitable direction.”
“Then, as now, the computer models simply built in the assumption that fossil fuels are the culprit when temperatures rise, even though a similar warming took place from 1900 to 1940, before fossil fuels could have caused it. The IPCC also claims that the warming, whatever its cause, has slightly increased the length of droughts, the frequency of floods, the intensity of storms, and the rising of sea levels, projecting that these impacts will accelerate disastrously. Yet even the IPCC acknowledges that the average global temperature today remains unchanged since 2000, and did not rise one degree as the models predicted.
“But it is as an Africanist, rather than a statistician, that I object most strongly to ‘climate justice.’ Where is the justice for Africans when universities divest from energy companies and thus weaken their ability to explore for resources in Africa? Where is the justice when the U.S. discourages World Bank funding for electricity-generation projects in Africa that involve fossil fuels, and when the European Union places a ‘global warming’ tax on cargo flights importing perishable African goods?”
Is he still working for his former masters in Washington, DC?
Two diplomatic messages from the WikiLeaks Public Library on U.S. Diplomacy indicate that newly elected President of Ukraine, Petro Poroshenko was an agent for United States State Department. A confidential message from the U.S. Embassy in Kiev on April 29, 2006 mentions the newly elected Ukraine president twice.
“During an April 28 meeting with Ambassador, Our Ukraine (OU) insider Petro Poroshenko emphatically denied he was using his influence with the Prosecutor General to put pressure on Tymoshenko lieutenant Oleksandr.”
“During an April 28 meeting with Ambassador, Our Ukraine (OU) insider Petro Poroshenko denied that he was behind Prosecutor General Oleksandr Medvedko’s recent decision to issue an arrest warrant for Tymoshenko lieutenant Oleksandr Turchynov. … [to] question him about the alleged destruction of SBU [Ukraine intel] files on organized crime figure Seymon Mogilievich.” [Russian Mafia Boss of Bosses] WikiLeaks Public Library of U.S. Diplomacy
The motivation for alleged destruction of files appeared in an embassy message from April 14, 2006.
“– The files contained information about Tymoshenko’s cooperation with Mogilievich when she ran United Energy Systems in the mid-late 1990s.” WikiLeaks
Yulia Tymoshenko, an aspiring oligarch, is the darling of the both the Bush and Obama administrations for her role in the 2004 Orange Revolution that brought the first modern anti-Russian Ukraine government to power. She helped negotiate the natural gas deals between Ukraine and Russia.
Another mention of Poroshenko made it clear that the State Department saw the future value of Poroshenko’s insider role.
“OU-insider Petro Poroshenko was in the running for the PM job.” WikiLeaks
Secretary of State Hillary Clinton met with the current president in 2009 when he served as Ukraine Foreign Minister. The content of the meeting was described in a confidential message from the U.S. Embassy in Kiev on December 18, 2009:
[Speaking to Ukraine Foreign Minister Petro Poroshenko] “She [Secretary of State Clinton] emphasized that the United States envisioned multiple pathways to NATO membership.” WikiLeaks
Since he was doing his work in secret, and he was “our insider,” it follows that Poroshenko played the role of agent: ” someone hired or recruited by an intelligence agency to do its bidding. The person to whom the agent reports — the actual agency employee–is known as an operative.” Encyclopedia of Espionage, Intelligence, and Security
Poroshenko is a Ukrainian oligarch, one of the fifty or so wealthiest citizens who run the country. It is unlikely the president got cash for his services but highly likely that he extracted financial advantage as a result.
Amidst the chaos and ruin visited upon Ukraine, Poroshenko’s recent election may mean a full synchronization of U.S. – Ukraine policies regarding the eastern regions where citizens of Ukraine are subject to bombardment by land an air in their towns and cities.
False Hope at D-Day Gathering?
At the recent D-Day commemoration in France, German Chancellor Angela Merkel and French President Francois Holland arranged a fifteen-minute meeting between Russian President Vladimir Putin and the newly elected Ukrainian president. Both leaders agreed that military actions must stop and set up a date for meetings to accomplish that goal. Putin went beyond military settlement by offering Ukraine its former discounts on Russian gas.
According to the Guardian, “Putin said he welcomed Poroshenko’s call for an end to the bloodshed and liked his approach to settling the crisis but wanted to wait until the Ukrainian leader could deliver it in detail to the nation.” (Authors emphasis) Poroshenko delivered some detail to the nation but it wasn’t what Putin wanted to hear in order to move forward. The inauguration speech in Kiev included the new president’s desire to sign the European Union (EU) association agreement and seek full integration into the EU, which implies NATO membership.
“Dear friends, my pen is already in my hands. I am ready now. As soon as the EU takes a relevant decision, the signature of the Ukrainian president will immediately appear under this document. We see the association agreement as only the first step towards Ukraine’s fully-fledged membership in the European Union ” Petro Poroshenko, June 7
As Poroshenko spoke, “Residents [of Slavyansk, eastern Ukraine] said the sounds of shelling reverberated around the city on Friday.” ABC, June 7
Which Poroshenko can we believe? The president who worked for the U.S. as “Our Ukraine insider” or the elected head of a sovereign state engaged in honest diplomacy?
Right now, it’s safe to stick with the bellicose rhetoric of the inaugural speech. In a heavily documented report, RT showed the handiwork of President Poroshenko’s troops in Slavyansk – eight dead yesterday from aerial bombardment of the separatist occupied city administrative building.
“Death and destruction is reported in eastern Ukraine as Kiev’s artillery has resumed shelling the rebellious city of Slavyansk. Locals tell RT they have been without running water and power for days, and that hope is fading.” RT, June 8
The $5 billion spent to get a U.S. friendly government in the Ukraine worked. “Our Ukraine insider,” Petro Poroshenko is president. He was informed five years ago that the U.S. wanted Ukraine in NATO, and he no doubt heard Vice President Joseph Biden’s speech in Kiev. Without a vote by Congress or a valid treaty, Biden assured the then coup-run government that our government would be there to help.
U.S. will stand by Ukraine in face of Russian aggression, Biden says
“I came here to Kiev to let you know, Mr. Prime Minister, and every Ukrainian know that the United States stands with you and is working to support all Ukrainians seeking a better future. You should know that you will not walk this road alone. We will walk it with you.” Vice President Joseph Biden, April 22
The players and plans have been in place for years and it’s all paid off. The White House and their masters finally have their insider in place in charge of Ukraine. It’s worth listening to the assessment of former U.S. Ambassador to Ukraine John E. Herbst and his Deputy around the time they handled Poroshenko. The ambassador saw him as a “disgraced oligarch” and his deputy pointed out that “Poroshenko was tainted by credible corruption allegations.”
Spreading brand democracy around the world is a tough job. Somebody’s got to do it.