BREAKING NEWS: Judge Vaughn Walker Keeps Al-Haramain Alive!

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graphic by politicalbase

graphic by politicalbase

The decision just came to me hot from a source involved in the case. Judge Walker has entered his order on al-Haramain. [pdf]

The court has, in keeping with its orders dated January 5 (Doc #537/57), February 13 (Doc #562/71) and February 19 (Doc #566/75), reviewed the Sealed Document and the parties’ various submissions on the subject of appropriate measures to prevent disclosure of classified information while allowing “both parties [] access to the material upon which the court makes a decision.” RT, Hearing held January 23, 2009 (Doc #532/67) at 34 and Doc #562/71 at 2,3.

The United States, in response to the court’s directive to “inform the court how it intends to comply with the January 5 order” (Doc #562/71 at 3) has offered up three similar-sounding alternatives all of which appear geared toward obtaining a stay of this court’s proceedings and review by the court of appeals, even though its simultaneous attempts to obtain review as of right and by means of an interlocutory appeal of the January 5 order failed in February (Doc #562/71 and Al-Haramain Islamic Foundation, Inc v Obama, No 09-15266 (9th Cir February 27, 2009)). As both this court and the court of appeals have determined that this matter is properly before the court, the United States should now comply with the court’s orders.

Accordingly, the parties are hereby ordered to meet and confer regarding the entry of an appropriate protective order which shall be entered herein before the court rules on the merits. The United States District Court for the District of Columbia has successfully employed protective orders in the In Re Guantánamo Bay Detainee Litigation, D DC No Misc 08-0442 TFH, even providing for the use of top secret/sensitive compartmented information (TS/SCI). See, for example, the documents at docket numbers 409 and 1481 in that matter. The United States has advanced no argument that would suggest a reason why the court’s use of a protective order in instant matter modeled on those in use in the Guantánamo Bay would not adequately protect the classified information at issue here.

The parties shall submit to the court a stipulated protective order on or before May 8, 2009. If the parties are unable to agree on all terms, they shall jointly submit a document containing all agreed terms together with a document setting forth the terms about which they are unable Read more →

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Does This Explain DOJ Reluctance to Turn Over AIG Monitoring Documents?

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TPMM has two posts noting that DOJ has been reluctant to turn over to the Oversight Committee the documents pertaining to its Delayed Prosecution Agreement with AIG, whereas SEC has been more forthcoming.

Last month, as we noted at the time, House Oversight committee chair Ed Towns formally asked the Justice Department for records kept by a government monitor, who since 2004 has had access to high-level internal deliberations at AIG.

But DOJ seems to be dragging its heels.

Today — 15 days after Towns made his legally binding request, and 13 days after the deadline he set for Justice to respond — department spokesman Ian McCaleb told TPMmuckraker: "We’re working on submitting a response." Asked what was causing the hold up, McCaleb declined to elaborate.

At issue is information compiled by James Cole, a lawyer with Bryan Cave, who was placed as a government monitor inside AIG, as part of a 2004 deferred prosecution agreement after AIG had been charged with helping clients avoid taxes. As Towns put it in his letter, Cole "had a seat at the table" for the string of cataclysmic developments at AIG over the last few years. Whatever reports or other information he compiled could therefore be of great value to investigators, like Towns, who are probing the causes of last fall’s financial collapse, which was triggered by the failure of AIG’s Financial Products unit.

There are a couple of data points that might begin to explain DOJ’s reluctance to turn over what it has received from Cole.

First, DOJ signed not one, but two deferred prosecution agreements with AIG. The first, in 2004, pertained to a scheme AIG-FP engaged in with PNC to shift assets off its books. The second, in 2006, pertained to a deal with Gen Re, again to shift assets around to hide risk. Now, both these schemes go back to 2000 and 2001; the actions AIG took did not take place while Cole was monitoring it. Nevertheless, AIG got two bites at the Delayed Prosecution Agreement, which does not appear to be true for any other corporations as of May of last year.  And, as this article on these early scams make clear, the intent was largely the same with both: to hide risk. So you might think AIG’s failure to admit to the second scheme until 2005 would undermine its claim to be cooperating in good faith with the DPA in 2004.

More interesting, though, is the squabble that the Fraud section at DOJ had with the US Attorney’s office in CT a few weeks back.  Read more →

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Cables and Toobz, Again

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Many of you who kept linking to the news on the cable cuts in CA’s South Bay were pointing in this direction. (h/t Susie)

This week in the San Francisco Bay Area, the fiber-optic cable network was purposely sliced at four distinct locations. Where a hacker cannot succeed, bolt cutters will do. Read more in The Wall Street Journal’s Digits blog. Once the cables were cut, Internet service was flaky for the region and completely out for 50,000 customers. On top of that, the landlines would not work and the cell-phone towers in the area went dead.  [snip] How much work would it take to find some choke points that you could cut for the purposes of disrupting data communications in an area? How would this affect the so-called smart grid? The peculiar nature of the four cuts around the Bay Area indicated to me that someone was mapping how they would affect the region, keeping in mind that by cutting the cable in key areas you might be able to take down half the country. If more cuts are made in the future, then someone is trying to reverse-engineer the network to find the most vulnerable points of disruption.

The MarketWatch article speculates that the intentional cuts were an attempt to map how to shut off parts of the system. But what it doesn’t question–but a lot of you already had–was whether these intentional cuts had anything to do with the cable cuts made in the Middle East last year, which took down Egypt and Pakistan, and much of the rest of the Middle East.

We know whoever cut the cables last year (intentionally or not or some combination thereof) demonstrated clear choke points in international internet traffic. Now is someone trying to do the same within the US?

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Louis Freeh Defending Iran-Contra Type Arms Deals Along with Bandar

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There’s an aspect of the Louis Freeh interview on Frontline I find fascinating.

In defense of his client, Saudi Prince Bandar, on allegations that Bandar received billions in bribes associated with a huge BAE defense contract, Freeh mostly tries to pretend there’s a meaningful distinction between the Saudi family and high government officials in it. Thus, the plane and estate that Bandar got in connection with the BAE deal are actually government-owned facilities he has use of.

And conveniently, Freeh hasn’t looked at the Swiss Bank Accounts or the Yamamah contract, so he can’t comment on their legality.

But I’m also fascinated by a more subtle tactic Freeh uses–to implicate high ranking Americans (and Brits) in the use of the funds. 

He explains away that structure of the al Yamamah contract to Congressional intransigence during the Reagan Administration. Congress wouldn’t let the Administration sell planes to Saudi Arabia, so what was Reagan to do except encourage Margaret Thatcher to set up a big corrupt contract to bypass this restriction?

Freeh: In other words, the United States, was not able to sell the Saudis F15s, and I think you understand the origin to this contract. The King sent Prince Bandar, my client, to President Reagan with very specific instructions, “Buy F15s.” And of course the United States had armed the Saudi armed forces for the last 20 years before that.

President Reagan said to my client, “Congress will never approve the sale of F15s.” My client then went up to the hill, spoke to senior leadership on both sides of the aisle, and they said, “We can’t authorize the purchase of F15s by the King of Saudi Arabia.” He went back to President Reagan who said, “Go talk to Maggie Thatcher,” which my client did. That’s how Tornados and the treaty, not the contract but the treaty between the two countries, was originated.

He wanted to buy the planes in the United States.

[snip]

So there was only one bidder here by default and that was the British Aerospace Systems and the Toranado, at least as the contract began. So the way the treaty was set up, if the Ministry of Defense and Aviation wanted to purchase U.S. arms, U.S. arms could be purchased through BAE and DESO, which was the U.K. Ministry that did the purchasing, and that was sort of a way to purchase arms, transparent way to purchase arms, Read more →

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Yo Ho Yo Ho, It’s The Risk Management Life For Thee

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Image by iairia/Melange

Image by isiria/Melange

Pirates! Arrrr, they’re teh new sharks matey. Scary! And we should rightly be worried about this pirate problem, because CNN, MSNBC and the print have been relentlessly telling us so. First it was the seizure of the quasi American flagged cargo ship Maersk Alabama, and now the pesky pirates have snared an Italian tugboat too.

Sara related some fascinating background on Maersk and its business:

…. part of Public Law 480 requires that food relief from US Agricultural surpluses, be carried in “American Bottoms” — and US Flagged and owned ships, all have union crews. This ship is owned by Moller/Maersk, which is a vast international Danish Company, but which bought an American Shipping Company, and thus is a bi-national corporation. When it carries American Humanitarian Relief Supplies, they must use a ship chartered in the US, US Flagged, and American Crew. Moller/Maersk is perfectly capable of changing the charter, flag, and crew if it is hired to deliver a non-restricted cargo. For instance, this is the Danish Shipping Company that “sold” Ollie North his ship for shipping the anti-tank weapons to Iran back in the middle of Iran Contra — the ship he took back to Denmark and parked once the story broke, and left the crew without paying their wages. Not covered in the US Press at all — the Danes had a nice little trial in a public court on the Island of Fyn, and took public testimony of all the seamen (all Danes) who were unpaid, and out spilled all the cargo’s they had hauled, and all their ports of Call. Not sure whether North ever paid his fines and got right with the Danish Seaman’s court. Moller/Maersk also was the primary contractor hauling arms to Central America back in the Reagan Days. They’ve done covert stuff for CIA for years.

Shipping, even through troubled waters like those near Somalia, is big business. Isn’t everything these days? Which brings me to the knee jerk question, one I am sure many have asked, of why these big global business ships do not simply arm themselves sufficiently to repel the rag tag Somali pirates? Seriously, the Maersk Alabama is 508 feet long and staffed by a trained and unionized crew, why can’t they fight off these pirates with AK-47s in rinky dink junks and skiffs? Insurance and regulatory liability concerns; and, it turns out, that appears to be a pretty valid explanation. Read more →

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Michael Moore Endorses Chase Boycott

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Michael Moore–who’s utterly swamped doing his next film on the Wall Street meltdown–did take time away from his campaign to endorse FireDogLake’s and Progress Michigan‘s boycott of Chase. 

I guess Moore is yet another Michigander who recognizes how a Chrysler bankruptcy will devastate the state and country. 

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Save American Jobs: Boycott Chase

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JP Morgan Chase wants to push Chrysler into bankruptcy so it can jump the line ahead of retirees and US taxpayers to get paid back.

If JP Morgan Chase does that, 300,000 people will lose their jobs.

That’s sorry thanks we get from a company that has gotten $25 billion in TARP funds from American taxpayers–plus billions more in other benefits from the Wall Street bailout.

My husband and I decided the only way to pressure JP Morgan Chase to negotiate in good faith with Chrysler was to close our Chase accounts. We want our money to go to a bank that is investing in rebuilding Michigan–not bankrupting it.

Now, FDL and Progress Michigan are calling on others to join our Chase boycott.

Sign the petition

Join the FaceBook group

Find your Michigan Chase branch and close your account

Explain why you’re closing your account

Update: Progressive radio host Nancy Skinner–who drives a Chrysler and lives in MI–is joining the boycott.

She’ll have Jane on her show today at 3PM to talk about the boycott. Listen in. 

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Is Rahm Congressman A?

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The Blago indictment describes a previously unreported failed extortion attempt of Congressman A. Congressman A seems to be Rahm Emanuel. If that’s true, then it means Rahm will be dragged into the trial (and discovery) of this case. But it also shows that he resisted Blago’s advances even before it became clear Blago was under suspicion for corruption.

Extorting Congressman A

The indictment describes this extortion attempt in 2006.

22. It was further part of the scheme that in or about 2006, after United States Congressman A inquired about the status of a $2 million grant for the benefit of a publicly-supported school, defendant ROD BLAGOJEVICH instructed defendant HARRIS not to release the grant until further direction from ROD BLAGOJEVICH, even though ROD BLAGOJEVICH previously had agreed to support the grant and funding for the grant had been included in the state’s budget.

23. It was further part of the scheme that, in response to inquiries by a high-ranking state official as to whether the grant money could be released, defendant ROD BLAGOJEVICH informed the official that ROD BLAGOJEVICH wanted it communicated to United States Congressman A that United States Congressman A’s brother needed to have a fundraiser for ROD BLAGOJEVICH.

24. It was further part of the scheme that defendant ROD BLAGOJEVICH told Lobbyist A that ROD BLAGOJEVICH was giving a $2 million grant to a school in United States Congressman A’s district and instructed Lobbyist A to approach United States Congressman A for a fundraiser.

25. It was further part of the scheme that after defendant ROD BLAGOJEVICH learned from defendant HARRIS that the school had started to incur expenses that were to be paid with the grant funds, ROD BLAGOJEVICH initially resisted the release of the grant money, and then ultimately agreed to the release of certain of the grant funds to cover incurred expenses, but only on a delayed basis, even though no fundraiser had been held.

Note, it’s clear from the last paragraph that Congressman A did not hold a fundraiser for Blago, and that at least some funds were provided to the school in any case. So Congressman A definitely blew off Blago’s attempt at extortion.

Jesse Jackson Jr is Senate Candidate A

Congressman A does not appear to be Jesse Jackson Jr, another of the male Congressmen who got pitched during the Senate sale this year.  We know JJJ had worked with Fitzgerald to expose two earlier attempted corruption schemes from Blago–a $25,000 scheme involving JJJ"s wife, and an attempt to open a third airport in Peotone, IL. But if JJJ had been a target of this third extortion attempt, why wouldn’t it have come out earlier when he revealed the earlier contacts?

Also, JJJ is mentioned elsewhere as Senate Candidate A.

It was further part of the scheme that on or about December 4, 2008, defendant ROD BLAGOJEVICH instructed defendant ROBERT BLAGOJEVICH to contact a representative of Senate Candidate A, and advise the representative that if Senate Candidate A was going to be chosen to fill the Senate seat, some of the promised fundraising had to occur before the appointment.

It’s unlikely they would refer to  JJJ as both Senate Candidate A and Congressman A.

Congressman A matches details on Rahm in the complaint

In addition to the attempted extortion in 2006, Congressman A is also described in context of the attempt to sell the Senate seat last year, specifically in regards to a demand to set up a 401(c)4 in exchange for the appointment of a Senate candidate.

On or about November 13, 2008, at Chicago, in the Northern District of Illinois, Eastern Division, and elsewhere,

ROD BLAGOJEVICH,

defendant herein, for the purpose of executing the above-described scheme, did knowingly cause to be transmitted by means of wire and radio communication in interstate commerce signals and sounds, namely a phone call between ROD BLAGOJEVICH in Chicago, Illinois, and Advisor B in Michigan (Session 624), in which they discussed presenting to United States Congressman A a proposal by ROD BLAGOJEVICH that a not-for-profit organization be set up and that the connection between setting up this organization and the awarding of the U.S. Senate seat would be "unsaid”;

[snip]

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Blagojevich Indicted

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Big surprise … not. Rod Blagojevich indicted for corruption, including trying to sell the Senate seat.

Here is the indictment.

In addition to Blago and Harris (who were arrested in December), RobBlago, Lon Monk, Christopher Kelly, and William Cellini were indicted. I’m looking for the document now, will update later. 

Former Gov. Rod Blagojevich, his brother Rob and Christopher Kelly, a former top fundraiser for Blagojevich, were all indicted today on corruption charges, the U.S. attorney’s office in Chicago announced.

Also charged in the indictment were Lon Monk, a lobbyist and former Blagojevich chief of staff; John Harris, also a former chief of staff to Blagojevich; and William Cellini, a Springfield insider for decades.

From the press release:

Since 2002, even before he was first elected governor that November, and continuing until he was arrested on Dec. 9, 2008, former Illinois Gov. Rod R. Blagojevich and a circle of his closest aides and advisors allegedly engaged in a wide-ranging scheme to deprive the people of Illinois of honest government, according to a 19-count indictment returned today by a federal grand jury. Blagojevich, 52, of Chicago, was charged with 16 felony counts, including racketeering conspiracy, wire fraud, extortion conspiracy, attempted extortion and making false statements to federal agents. He allegedly used his office in numerous matters involving state appointments, business, legislation and pension fund investments to seek or obtain such financial benefits as money, campaign contributions, and employment for himself and others, in exchange for official actions, including trying to leverage his authority to appoint a United States Senator, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.

Also charged as co-defendants in the same indictment are:

John Harris, 47, of Chicago, Blagojevich’s chief of staff from late 2005 until last December after he was arrested along with Blagojevich. Through his attorney, Harris, disclose that he has agreed to cooperate with the United States Attorney’s Office in the prosecution of this case;

Alonzo Monk, 50, of Park Ridge, a lobbyist doing business as AM3 Consulting, Ltd., and a long-time Blagojevich associate who served as his general counsel when Blagojevich represented Illinois’ Fifth Congressional District, and later managed his 2002 and 2006 gubernatorial campaigns, was his first gubernatorial chief of staff from 2003 through 2005, and later chairman of his campaign fund;

Robert Blagojevich, 53, of Nashville, Tenn., Blagojevich’s brother, who became chairman of his campaign fund in August 2008;

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Hank’s Dog and Pony Show

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Hank Greenberg will testify before the House Oversight Committee about the AIG collapse today at 10 AM.

I’m uncertain that it’ll be useful in unpacking what happened with AIG at all. If Greenberg’s planned testimony from last fall is any indication (he called in sick for an October 7 AIG hearing, but had already submitted his testimony), he will say that the CDS before he left were hedged properly, not in subprime mortgages, and watched closely by management (that is, by him); but all that changed after he was forced out.  

AIG’s strategy, accordingly, was to look for opportunities in businesses that benefitted from its AAA rating, strong capital base, risk management skills, as well as the intellectual capital needed to manage such diversification.

That led to the creation of AIGFP in 1987. At that time, the derivative market was small and growing. From the beginning, AIG’s policy was that AIGFP conduct its business on a "hedged" basis – that is, its net profit should stem from the differences between the profit earned from the client and the cost of offsetting or hedging the risk in the market. AIGFP would therefore not be exposed to directional changes in the fixed income, foreign exchange or equity markets.

AIGFP, at that time, reported directly to me and Ed Matthews, Senior Vice Chairman, and later to William Dooley, Senior Vice President, supported by AIG’s credit risk and market risk departments. When I was AIG’s CEO, AIG management closely monitored AIGFP and its risk portfolio. AIGFP was subject to numerous internal risk controls, including credit risk monitoring by several independent units of AIG, review of AIGFP transactions by outside auditors and consultants, and scrutiny by AIGFP’s and AIG’s Boards of Directors. Every new type of transaction or any transaction of size, including most credit default swaps, had to pass review by AIG’s Chief Credit Officer.

[snip]

AIGFP reportedly wrote as many credit default swaps on collateralized debt obligations, or CDOs, in the nine months following my departure as it had written in the entire previous seven years combined.

Moreover, unlike what had been true during my tenure, the majority of the credit default swaps that AIGFP wrote in the nine months after I retired were reportedly exposed to sub-prime mortgages. By contrast, only a handful of the credit default swaps written over the entire prior seven years had any sub-prime exposure at all.

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