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Open Thread: Cuellar, Collared

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[NB: check the byline, thanks. /~Rayne]

It’s Friday afternoon and we’re much in need of an open thread.

Centrist Democrat Rep. Henry Cuellar (TX-28) gave us something to talk about to start off this thread. The Department of Justice announced today Cuellar and his wife Imelda have been indicted:

An indictment was unsealed today in the Southern District of Texas charging U.S. Congressman Enrique Roberto “Henry” Cuellar, 68, and his wife, Imelda Cuellar, 67, both of Laredo, Texas, with participating in two schemes involving bribery, unlawful foreign influence, and money laundering. Congressman Cuellar and Imelda Cuellar made their initial court appearance today before U.S. Magistrate Judge Dena Palermo in Houston.

As DOJ notes in its press release, An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

That said, you’d think a guy with a J.D. would at least avoid the appearance of bribery and money laundering, let alone foreign influence after the last nine years of Trump-y foreign influenced corruption.

Maybe Cuellar thought his firm grip on his House seat over the last 19 years was a permission slip. Maybe his DINO status and the inability of the state of Texas to hold corrupt asshats like state AG Ken Paxton fully accountable assured Cuellar he wouldn’t have to deal with the DOJ.

Whatever the case, Cuellar and his spouse are going to go through something and TX-28 Democrats are unfortunately going to have to come up with a backup plan if Cuellar ends up proven guilty, especially since Cuellar was uncontested in the March primary.

Again, this is an open thread.

 

Three Things: No News Isn’t Good News

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[NB: check the byline, thanks. /~Rayne]

This last several weeks have made the media look really bad. You’d think after several key stories broke there’d be more and deeper coverage but nope.

U.S. media, Congress, and the citizens who elected them each own some of the media fail. Why aren’t we demanding more protection of our personal data in order to protect our democracy?

~ 3 ~

The New York Times published a story on March 28 about the acquisition of the former LIFE magazine assets and the defunct magazine’s resuscitation.

Life Magazine Will Come Back to, Well, Life
The investor Josh Kushner and his wife, Karlie Kloss, have struck a deal with Barry Diller’s media company to revive it as a regular print title.
By Andrew Ross Sorkin, Ravi Mattu, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni

Nowhere in this puff piece a mere 404-words long written by at least one of seven contributors on this byline mention that Josh Kushner is Jared Kushner’s brother.

Nowhere in this heavily-laden beat sweetener is it mentioned that Josh and Jared share ownership of a problematic real estate management company, and that both met with Saudi and Qatari officials during the Trump administration.

Nowhere in this fluff is financing mentioned. Apparently it never occurred to one or more of seven journalists to ask if brother Jared contributed financing or guidance in any way.

We, the readers, are apparently supposed be very happy an attractive model and her now-billionaire spouse are reviving an old American media institution. We’re supposed to assume Kushner and Kloss are wholly financing this project out of their own pockets through their Bedford Media holding out of an appreciation for LIFE.

Why ever would we want to know more? As if we’d expect news from NYT.

~ 2 ~

It’s as if the Ronna McDaniel scandal never happened. There’s been no reported news about her since NBC canned her after MSNBC personalities protested her hiring on air.

I’ve been watching for any news about separation from Creative Artists Agency, who dropped her the same time she was terminated at MSNBC. CAA didn’t keep her on, as if they felt there was no hope of future contracts for her at all, even with right-wing news media.

Nada, not a word has emerged about CAA’s rejection. Just a spattering of op-eds in favor or against McDaniel’s separation from NBC.

One thing which has gone utterly unnoticed by journalists covering U.S. politics and media: a French conglomerate acquired majority interest in CAA last September, with two other foreign firms retaining substantive interest in the firm.

The Pinault Group closed on the deal while Singapore-based Temasek and Shanghai-based CMC Capital retain minority interests.

There are plenty of reasons for McDaniel to have lost her gig on NBC as well as her representation by CAA, like being an unindicted co-conspirator in Trump’s effort to defraud the U.S. and deny U.S. voters their civil rights.

But it doesn’t hurt to ask if foreign interests played a role in her representation or loss thereof. Perhaps a French-owned company doesn’t care to keep a talent who supported a NATO-undermining former president’s attempt to overthrow the U.S. government.

~ 1 ~

For decades there have been restrictions on foreign ownership of broadcast media. It’s about time we began to ask why we don’t have similar restrictions on social media, when social media has become a primary source for news in the U.S. for nearly half of Americans.

Twitter’s acquisition by Elon Musk, funded substantially by foreign interests, is one example. Since its sale, the former Twitter has become one of if not the largest source of misinformation and disinformation in U.S. media consumption. It’s difficult not to assume this is the reason Musk’s financial backers ponied up the money for an otherwise money-losing business.

Grindr, a social media platform for gay and bisexual men, and transgender people, was launched in the US in 2009. A majority interest was sold to a Chinese gaming company, Kunlun Tech Co. Ltd. in January 2016. Kunlun sought a buyer for Grindr after Committee on Foreign Investment in the United States (CFIUS) notified Kunlun in March 2019 its foreign ownership of Grindr posed a national security threat.

Now many are watching stock price vacillations for Donald Trump’s Truth Social social media platform, owned by Trump Media & Technology Group Corp. (TMTG), the entity which succeeded the former special-acquisition corporation Digital World Acquisition Corp. (DWAC). DWAC had been associated with Chinese-owned ARC Capital and China Yunhong Holdings, both of which had some role in financing DWAC.

TMTG has been under investigation by the Department of Justice since 2022 for possible money laundering after TMTG had received a loan from Paxum Bank, partially owned by Russian Anton Postolnikov. It’s not clear why TMTG was able to list on a U.S. stock market exchange given the possibility this loan may have violated sanctions against Russian interests.

TikTok is owned by a Chinese firm and its users’ data is stored in China. It’s not the content but the location and control of U.S. users’ data which is and has been most problematic, though it’s easy for TikTok’s Chinese parent to manipulate what U.S. users will see including misinformation and disinformation. Trump’s former Treasury Secretary Steve Mnuchin has been trying to pull together a consortium to buy TikTok, but TikTok may have no interest in selling out, and it’s not clear if Mnuchin will end up seeking more foreign investors as Elon Musk did.

If Mnuchin – who met with Middle Eastern leaders during his stint as Treasury Secretary and departed with $1 billion in Saudi cash for his Liberty Strategic Capital fund — manages to pull off buying TikTok, what will he do with users’ data since the future business model is unclear at this time. Will he sell it to offshore buyers including hostile nation-states since there are few restrictions now preventing such sales? TikTok would be as much of threat under such a business model as it is now.

We need federal legislation to regulate not only users’ data privacy – all social media created by U.S. users should be kept inside the U.S. – but to limit control of social media firms by foreign owners, especially hostile nation-states.

Why was Grindr, of all the social media platforms which have been sold in whole or part to overseas parties, the one which drew attention from CFIUS? Especially after Twitter had been infiltrated by multiple Saudi spies, one of which were prosecuted before Musk made an offer to buy the platform? What foreign spies now have access to U.S. citizens and users’ personal data after Musk shit canned so many of Twitter’s pre-acquisition personnel?

This isn’t a First Amendment issue. It’s regulation of commerce, and commerce conducted inside the U.S. relying on U.S. citizens and residents as consumers and data sources shouldn’t pose a threat to national security.

~ 0 ~

This is an open thread. In addition to media criticism, bring your stray cat and dog topics here.

What Lies Beneath the Turf

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[NB: check the byline, thanks! /~Rayne]

We learned this past week that the Westchester County, NY district attorney is investigating the Trump National Golf Club Westchester.

… The full scope of the investigation could not be determined, but the district attorney, Mimi E. Rocah, appears to be focused at least in part on whether Mr. Trump’s company, the Trump Organization, misled local officials about the property’s value to reduce its taxes, one of the people said. …

While in the White House Trump declared on mandatory financial disclosure statements the Westchester golf course was worth $50 million; however the Trump org claimed the 140-acre property with its 75,000 square foot clubhouse was worth only $1.4 million for local tax purposes.

For comparison, nearby residential homes (currently listed for sale) are assessed at much higher rates:

Home A, 1.12 acres, listed at $1.5M, assessed at $1.03M ($2543/month taxes)
Home B, 2.75 acres, listed at $2.3M, assessed at $1.4M ($3768/month taxes)
Home C, 3.52 acres, listed at $2.7M, assessed at $2.5M ($4,400/month taxes)

While there may be some rationale for a commercial property assessed at such ridiculously low value compared to these residential properties within walking distance, it doesn’t make sense when golf courses are being converted to residential property during a contraction of the golf industry, and when the municipality and neighbors have had a history of sewer and drainage problems caused by the golf course, resulting in damage to individual and community property.

The gap between the local tax assessment and the financial report valuation has been known for years now, noted well before Election Day 2016.

The possibility of tax and insurance fraud by the Trump organization has been clear for years now as well, in no small part because of testimony before the House Oversight Committee in February 2019 by Trump’s former attorney, Michael Cohen (beginning at 4:43:30):

Transcript:

Ms. Ocasio-Cortez: OK. Thank you.
Second, I want to ask a little bit about your conversation with my colleague from Missouri about asset inflation. To your knowledge, did the President ever provide inflated assets to an insurance company?
Mr. Cohen: Yes.
Ms. Ocasio-Cortez: Who else knows that the President did this?
Mr. Cohen: Allen Weisselberg, Ron Lieberman, and Matthew Calamari.
Ms. Ocasio-Cortez: And where would the committee find more information on this? Do you think we need to review his financial statements and his tax returns in order to compare them?
Mr. Cohen: Yes, and you would find it at The Trump Org.
Ms. Ocasio-Cortez: Thank you very much.
The last thing here. The Trump Golf organization currently has a golf course in my home borough of the Bronx, Trump Links. I drive past it every day going between The Bronx and Queens. In fact, The Washington Post reported on the Trump Links Bronx course in an article entitled “Taxpayers Built This New York Golf Course and Trump Reaps the Rewards.”
That article is where many New Yorkers and people in the country learned that taxpayers spent $127 million to build Trump Links in a, quote, “generous deal allowing President Trump to keep almost every dollar that flows in on a golf course built with public funds.” And this doesn’t seem to be the only time the President has benefited at the expense of the public.
Mr. Cohen, I want to ask you about your assertion that the President may have improperly devalued his assets to avoid paying taxes. According to an August 21, 2016, report by The Washington Post, while the President claimed in financial disclosure forms that Trump National Golf Club in Jupiter, Florida, was worth more than $50 million, he had reported otherwise to local tax authorities that the course was worth, quote, “no more than $5 million.”
Mr. Cohen, do you know whether this specific report is accurate?
Mr. Cohen: It’s identical to what he did at Trump National Golf Club at Briar Cliff Manor.
Ms. Ocasio-Cortez: To your knowledge, was the President interested in reducing his local real estate bills, tax bills?
Mr. Cohen: Yes.
Ms. Ocasio-Cortez: And how did he do that?
Mr. Cohen: What you do is you deflate the value of the asset, and then you put in a request to the tax department for a deduction.
Ms. Ocasio-Cortez: Thank you.
Now, in October 2018, The New York Times revealed that, quote, “President Trump participated in dubious tax schemes during the 1990’s, including instances of outright fraud that greatly increased the fortune he received from his parents.” It further stated for Mr. Trump, quote,  “He also helped formulate a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns, sharply reducing his tax bill when those properties were transferred to him and his siblings.”
Mr. Cohen, do you know whether that specific report is accurate?
Mr. Cohen: I don’t. I wasn’t there in the 1990’s.
Ms. Ocasio-Cortez: Who would know the answer to those questions?
Mr. Cohen: Allen Weisselberg.
Ms. Ocasio-Cortez: And would it help for the committee to obtain Federal and State tax returns from the President and his company to address that discrepancy?
Mr. Cohen: I believe so.
Ms. Ocasio-Cortez: Thank you very much. I yield the rest of my time to the chair.

Here’s the rub: Trump’s dispute with local tax authorities in Westchester County, NY and the disparity in its property valuation goes back more than five years; this is publicly known, amply reported, even discussed here at emptywheel.

Why is it only after the August 2021 election of a new district attorney, Mimi Rocah, took office was the possibility of tax and insurance fraud finally investigated?

The Westchester course is only one of 11 in the U.S., though. They include:

Trump National Golf Club, Bedminster, NJ
Trump National Golf Club, Charlotte, NC
Trump National Golf Club, Colts Neck, NJ
Trump National Golf Club, Hudson Valley, NY
Trump National Golf Club, Jupiter, FL
Trump National Golf Club, Los Angeles, CA
Trump National Doral Golf Club, Miami, FL
Trump International Golf Club, West Palm Beach, FL
Trump National Golf Club, Pine Hill, NJ
Trump National Golf Club, Washington, DC

In reports to the Federal Election Commission, Trump reported more than half of these were worth $50 million or more while regularly suing the snot out of local tax authorities who dared to assess Trump golf courses for values higher than a million or two.

Again, this has been known and reported for years. Trump has and continues to treat every real estate asset as it were the reason for a SLAPP-type suit to cow government to his demands. It’s a pattern.

Why have the local, state, or federal governments failed to investigate these courses in the same way Westchester County is now investigating Trump National Golf Club Westchester?

Especially after Michael Cohen not only testified that golf courses came up as a means to launder payments to Stormy Daniels, and that asset valuations were skewed artificially to reduce Trump’s insurance premiums? It’s not as if there hasn’t been adequate reason to investigate this pattern of deflated asset valuations.

It’s been more than two and a half years since Michael Cohen testified before the House Oversight Committee that the Trump org reported deflated assets to reduce tax exposure while making false statements to the FEC and the public about golf course market value.

How many more years will pass before another domestic Trump golf course is investigated?

Foiling a Good Walk

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[NB: Check the byline, thanks! /~Rayne]

Don’t be surprised if Donald Trump decides to spend even more time at his golf courses between now and 2020. He should be worried if the courses will remain a part of the Trump organization let alone how much more time he can spend golfing in his lifetime.

At two points during the House Oversight Committee hearing this past Wednesday, Trump’s golf courses came up.

When Rep. Carolyn Maloney (D-NY) asked Michael Cohen about the “catch-and-kill” program by which Trump avoided being publicly exposed by his extra marital sexual partners, Cohen explained why he ended up financing the payment to Stormy Daniels (Miss Clifford).

Transcript (01:45:13) —

Cohen: Well, going back into the story as I stated when we — Allen Weisselberg and I — left the office and went to his office to make the determination on how the money was going to be wired to the IOLA, the interest on the lawyer’s account for Keith Davidson in California, I had asked Allen to use his money. I didn’t want to use mine. He said he couldn’t. We then decided how else we could do it and he asked me whether or not I know anybody that wants to have a party at one of his clubs that could pay me instead or somebody who may have wanted to become a member of one of the golf clubs. And I also don’t have anybody that was interested in that. And it got to the point where it was down to the wire. It was either we — somebody — wire the funds and purchase the life rights to the story from Miss Clifford or it was going to end up being sold to television and that would have embarrassed the president and it would have interfered with the election.

In his response, Cohen shares three different methods used to launder money, two of which would have gone through a Trump golf course. In a previous post examining profiteering and money laundering through a golf club, these same methods were mentioned as possibilities. A new member’s initiation fee could easily match the amount needed to pay off Miss Cliffords as could charges or fees for a single event held at a Trump course.

Given Cohen’s inability to say how many ‘catch-and-kill’ stories Trump or his organization had to pay off, it’s reasonable to suspect golf courses have been used this way to launder hush money let alone launder money for other purposes.

Toward the end of the hearing, Rep. Alexandria Ocasio Cortes asked Cohen about the property value of a Trump golf course after noting the exceptionally sweet deal Trump org received when developing the Trump Golf Links at Ferry Point, New York.

Transcript (04:50:13) —

Ocasio-Cortes: Thank you very much. The last thing here. The Trump golf organization currently has a golf course in my home borough of the Bronx and Queens. In fact, the Washington Post reported on the Trump links Bronx course in an article titled, ‘Taxpayers Built this Golf Course and Trump Reaps the Rewards’. Many learned that taxpayers spent $127 million to build Trump links in a, quote, generous deal allowing President Trump to keep almost every dollar that flows in on a golf course built with public funds. And this doesn’t seem to be the only time the president has benefited at the expense of the public. Mr. Cohen, I want to ask you about your assertion that the president may have improperly devalued his assets to avoid paying taxes. According to an August 21st 2016 report by the Washington Post, while the president claimed in financial disclosure forms that the Trump National Golf Club in Jupiter, Florida, was worth more than $50 million, he had reported otherwise to local tax authorities thaAt the course was worth, quote, no more than $5 million. Mr. Cohen, do you know whether this specific report is accurate?

Cohen: It’s identical to what he did at Trump National Golf Club at Briarcliff Manor.

Briarcliff offers a good example of Trump org’s treatment of municipal regulations as well as state and local laws. The course management damaged the local storm sewage system with unauthorized modifications, causing damage to residents’ and Ossining’s property. Goodwill was further damaged by years of fighting local tax assessments:

Nowhere has the conflict between the tax assessments on Trump’s properties and his claims of soaring value been more apparent than in Ossining, New York, where his lawyers argued to the city assessor that his Westchester County golf club was worth $1.4 million in 2015, less than a tenth of its appraised value. On the financial disclosure statement candidates are required to file, he valued it at more than $50 million. The city assessor’s office, which valued the property at $15 million, did not respond to a request for comment.

Trump and his organization fought the valuations of all Trump courses in Florida over the last handful of years as well as Mar-a-Lago and several small non-golf estates. The value of the Jupiter course, reported as $50 million on financial disclosure forms furnished to the government, was estimated by Palm Beach County at $19.7 million. But Trump org sued Palm Beach for a fifth time disputing the county’s valuation, electing to pay taxes on a property worth $5 million less than the county’s estimate.

Trump org also appealed its tax bill for the Trump National Doral Golf Club; they’ve tried for each of the last five years to shave its tax liability with Miami-Dade county. They weren’t sucessful.

Briarcliff and the Florida golf clubs aren’t the only courses for which Trump’s organization claimed lower property values in order to avoid tax obligations.

Trump National Golf Course in Hudson Valley, New York, was assessed at $6 million; the organization claims the property is only worth $2 million. The Trump organization doesn’t own the real estate, operating instead as a lessee. It’s not clear if ownership factors into Trump org’s argument against paying higher taxes; the municipality charges the lessee, however.

The Bedminster course was used to claim a $39.1 million federal tax deduction in 2005 relying on a land conservation rule, and a deduction as farmland because the course kept a small number of goats on the premises.

The Los Angeles course may be the most confusing to make sense of its value. Trump said it was worth $264 million when it opened in 2006, claimed it was worth at least $50 million on federal financial disclosure filings, but only $10 million when filing property taxes in 2008.

While the average business makes a reasonable effort to reduce its tax burden, the Trump organization made it a pattern of habit, particularly with its golf course businesses. It’s odd that each course’s asset valuation established by a local municipality was questioned multiple years in a row, even when the municipality had already gone out of its way to provide unusual benefits to the Trump organization (ex. a long-term lease of county-owned property adjoining the West Palm Beach airport while allowing the course to contest the value the county assigned to the real estate).

The pattern of behavior was tightly entwined with asset inflation for other purposes. One reason was for bank loans, elevating the amount the Trump organization could borrow. Cohen testified that he knew Deustche Bank had received these arbitrary numbers.

Rep. William Clay (D-MO) asked about specific Trump organization financial statements from 2011, 2012, and 2013 Cohen had in his possession pertaining to Trump and his organization, with regard specifically to manipulation of asset values.

Transcript (01:48: ) —

Clay: Thank you…can you explain why you had these financial statements and what you used them for?

Cohen: These were used by me for two purposes. One was discussing with media, whether Forbes or other magazines, to demonstrate Mr. Trump’s significant net worth. That was one function. Another was when we were dealing later on with insurance companies. We would provide them with copies so that they would understand that the premium on the individuals’ capabilities to pay would be reduced.

It’s not clear whether Cohen meant individuals singular or plural. The proliferation of disparities between asset valuations reported by media, by members of the Trump family and organization, and by different government entities now makes more sense — the confusion allows easy misrepresentation of value for insurance purposes.

Transcript (04:43.46) —

Ocasio-Cortes: Okay, thank you. Secondly, I want to ask a little bit about your conversation with my colleague from Missouri about asset inflation. To your knowledge, did the president ever provide inflated assets to an insurance company?

Cohen: Yes.

Mr. Trump’s federal financial disclosure statements need to be audited for false statements if they were completed using manipulated asset data.

The House Oversight Committee now has testimony and evidence suggesting further investigation into bank and insurance fraud by Trump and the Trump organization is warranted.

But it isn’t the House Oversight Committee alone which should now investigate insurance fraud. While insurance in the U.S. must comply with federal law, it’s regulated at state level. Insurance commissioners and state attorneys general in each state where the Trump organization owns, operates, and insures businesses including golf courses should now review Trump’s insurers and policies. How did insurers write policies for Trump organization for so long given the disparities between property values established by municipalities and the asset values published by so many different media outlets?

It’s easy to see there’s a problem with the perception of Trump org’s asset valuations by comparing a few articles written about the golf courses. Outside Florida it’s not well known that Trump org doesn’t own the real estate underneath Trump International Golf Club, West Palm Beach, Florida. It’s even less well known that Trump org does not own the real estate beneath the Hudson Valley, New York course. Many articles reported, however, that these courses are wholly owned by Trump without any additional detail about what assets are included.

How has this gap in public knowledge been used?

The entire financial industry needs to take a good look at itself and consider how it may have been played. Cohen mentioned media outlets like Forbes coming to him for asset valuations which they published, replicating and dispersing deceit read most often by finance people. Because he appeared to own multiple golf courses in addition to other real estate, the perception of Trump’s wealth wasn’t adequately questioned.

It will hurt not only municipalities if Trump org golf courses were to suddenly cease operations.

This is an open thread.

[US Oil Fund ETF via Google Finance]

The Curious Timing of Kushner’s visit to KSA and the U.S.’ EITI Exit

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Trump’s son-in-law Jared Kushner — he of the shaky memory and a massive debt in need of refinancing — met with Crown Prince Mohammed bin Salman within the same week the U.S. withdrew from an anti-corruption effort and Saudi Arabia cracked down on corruption. What curious timing.

Let’s look at a short timeline of key events:

Tuesday 24-OCT-2017 — Saudi Arabia’s Crown Prince Mohammed bin Salman helms a three-day business development conference at the Ritz-Carlton in Riyadh, referred to as “Davos in the desert.” Attendees include large investment banks as well as fund representatives; one of the key topics is the impending IPO for Saudi Aramco.

Wednesday 25-OCT-2017 — Jared Kushner departed for an unpublicized meeting with government officials in Saudi Arabia.

Wednesday 25-OCT-2017 — Treasury Secretary Steve Mnuchin and Undersecretary for Terrorism and Financial Intelligence Sigal Mandelker traveled separately from Kushner to participate in bilateral discussions, which included the memorandum of understanding with the Terrorist Financing Targeting Center (TFTC). The U.S. and Saudi Arabia chair the TFTC while Gulf States form its membership.

Friday 27-OCT-2017 — Reports emerged that at least one Trump campaign team will be indicted on Monday.

Monday 30-OCT-2017 — Jared Kushner met with Crown Prince Mohammed bin Salman, discussing strategy until 4:00 am. News reports didn’t indicate when exactly Kushner arrived or when discussions began. (Paul Manafort, Rick Gates, George Papadopolous were indicted this day, but not Kushner; good thing “excellent guy” Papadopolous as a former Trump campaign “energy and oil consultant” wasn’t involved in Kushner’s work with Saudi Arabia, that we know of.)

Thursday 02-NOV-2017 — U.S. Office of Natural Resources Revenue sent a letter to the Extractive Industries Transparency Initiative (EITI), a multinational effort to reduce corruption by increasing transparency around payments made by fossil fuel companies to foreign governments. The U.S. had been an implementing member since 2014.

Saturday 04-NOV-2017 — At 7:49 am EDT, Trump tweets,

“Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!”

Saturday 04-NOV-2017 — (approximately 5:00 pm EDT, midnight Riyadh local time) At least 10 Saudi princes and dozens of government ministers were arrested and detained under what has been reported as an anti-corruption initiative. Prince Alwaleed Bin Talal, a critic of Trump and a tech industry investor of note, was among those arrested this weekend.

Saturday 04-NOV-2017 — At 11:12 pm EDT Reuters reported Trump said he had spoken with King Salman bin Abdulaziz about listing Saudi Aramco on the NYSE. The IPO is expected to be the largest offering ever.

But wait…there are some much earlier events which should be inserted in this timeline:

Friday 03-FEB-2017 — Using the Congressional Review Act to fast track their effort, Senate passes a joint resolution already approved by the house, disproving the Securities and Exchange Commission’s Rule 13q-1, which implemented Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1504, the bipartisan product of former senator Richard Lugar and Sen. Ben Cardin (now ranking Democrat on the Foreign Relations Committee),

“…a public company that qualified as a “resource extraction issuer” would have been required to publicly disclose in an annual report on Form SD information relating to any single “payment” or series of related “payments” made by the issuer, its subsidiaries or controlled entities of $100,000 or more during the fiscal year covered by the Form SD to a “foreign government” or the U.S. Federal government for the “commercial development of oil, natural gas, or minerals” on a “project”-by-“project” basis. Resource extraction issuers were not required to comply with the rule until their first fiscal year ending on or after September 30, 2018 and their first report on Form SD was not due until 150 days after such fiscal year end.” (source: National Law Review)

Section 1504 and SEC rule 13q-1 enacted the U.S.’ participation in the EITI’s anti-corruption effort.

Monday 13-FEB-2017 — Trump signed the disproving resolution. (Probably just another coincidence that Michael Flynn resigned this day as National Security Adviser.)

From the earliest days of this administration, both the Trump White House and the GOP-led Congress have been ensuring that extractive industries including oil companies will not be accountable for taxes, fees, and other miscellaneous payments (read: dark money donations and bribes, the latter being a bone of contention to Trump) paid to foreign governments.

Some of the immediate beneficiaries are Exxon Mobil, for which Secretary of State Rex Tillerson used to work, and the Koch brothers, among U.S. oil companies which claimed additional reporting requirements under Rule 13q-1 would make them less competitive with overseas oil producers.

What’s not yet clear: How is this reduced openness supposed to help track financing of terrorism, which Treasury was supposed to be working on?

What of transparency related to arms deals involving Saudi money or Aramco? What of transactions between U.S. oil companies and other foreign companies involved in deals with Russian fossil fuel firms like Gazprom?

Can Trump, Jared Kushner, their family and minions, and members of Congress profit from this increased lack of transparency?

What happens to the U.S. and global economy when oil prices rise without adequate transparency to the market to explain price increases?

Also not yet clear: what happened to the 19.5% stake in Rosneft sold last year, allegedly bought by Qatar’s sovereign wealth fund and Glencore (the same Glencore now embroiled in Paradise Papers scandal)? This massive chunk of Russia’s largest oil company has increased in value in tandem with crude oil’s rise, especially since the Saudi crackdown on Saturday. What’s to keep this massive amount of Rosneft shares from being laundered through stock markets as Deutsche Bank did between 2011 and 2015?

It’s all just so curious, the unanswered questions, the odd timing: Aided and abetted by GOP-led Congress, Trump pulls out of an anti-corruption initiative while Treasury Department appears to work on anti-corruption, and Kushner meets on the sly with the Saudi crown prince just days before an anti-corruption crackdown.

Hmm.

Monday: Build That Wall

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Poor Ireland. Poor Inishturk. To be forced to consider the onslaught of refugees fleeing political upheaval should one loud-mouthed, bigoted, multi-bankrupt idiot with bad hair win the U.S. presidency. I’m amused at how the Irish in this short film mirror the U.S. albeit in a more placid way. There are some who are ardently against him, some who’d welcome the business, and the rest cover the spread between the extremes though they lean more to the left than the right.

I find it appalling, though, that Trump would install a sea wall *now* after the golf course development has already been established, rather than do his homework upfront before investing in real estate which relies on natural dune formation. This kind of thoughtlessness is completely absurd, and the disgust evident in this film is well merited.

Keep your volume control handy; hearing Trump blathering may set your teeth on edge. Mute for a moment and continue.

Schtuff happens
I couldn’t pull a cogent theme out of the stuff crossing my desk today. I’m just laying it down — you see if you can make any sense out of it.

  • Ramen can get you killed in private prisons (Guardian) — The federal government may have to do more than simply stop using private prisons for federal criminal incarceration. This report by a doctoral candidate in the University of Arizona’s school of sociology suggests states’ prisons operated by private industry may be violating prisoners’ civil rights by starving them. Ramen noodles have become a hot commodity for this reason. Not exactly a beacon of morality to the rest of the free world when incarcerated citizens must scrap for ramen noodles to make up for caloric shortfalls.
  • World Anti-Doping Agency may have been attacked by same hackers who poked holes in the DNC (Guardian) — “Fancy Bear” allegedly had a fit of pique and defaced Wada after Russian athletes were banned at Rio. This stuff just doesn’t sound the same as the hacking of NSA-front Equation Group.
  • New Mexico nuclear waste accident among most costly to date (Los Angeles Times) — Substitution of an organic kitty litter product for a mineral product two years ago set off a chemical reaction un an underground waste storage area, contaminating 35% of the surrounding space. Projected clean-up costs are $2 billion — roughly the amount spent on Three Mile Island’s meltdown.
  • Build that wall! Americans blown ashore in Canada by high winds (CBC) — Participants riding flotation devices on the St. Clair River in the annual Port Huron Float Down were pushed by high winds into Sarnia, Ontario. About 1,500 Americans had to be rescued and returned to the U.S. by Canadian police, Coast Guard, and Border Service. Just a test to see if Canada’s ready for the influx of refugees should Trump win in November, right?
  • Paternity test reveals a father’s sperm actually made him an uncle (Independent) — Upon discovering a father’s DNA only matched 10% of his child’s DNA, further genetic ancestry revealed the ‘father’ had an unborn twin whose DNA he had absorbed in the womb. His twin’s DNA matched his child’s. This is not the first time paternity testing has revealed chimerism in humans.

Commute-or-lunch-length reads

  • Walmart is a crime magnet (Bloomberg) — Holy crap. Communities should just plain refuse to permit any more Walmarts until they clean up their act. Bloomberg’s piece is a virtual how-to-fix-your-bullshit task list; Walmart has zero excuses.
  • It’s in your body, what version is it running? (Backchannel) — Before the public adopts anymore wearable or implantable medical devices, they should demand open access to the code running inside them. It’s absurd a patient can’t tell if their pacemaker’s code is jacked up.
  • Dirty laundry at Deutsche Bank (The New Yorker) — This you need to read. Parasitic banking behavior comes in many forms — in this case, Deutsche Bank laundered billions.

There, we’re well on our way this week. Catch you tomorrow!

Monday Morning: Welcome to BVI – Have a Tax-Free Day

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Aw, shucks. Spring Break is over just as I find another warm place to visit. The British Virgin Islands expect a balmy daytime high of 84F/29C degrees today with partly cloudy skies.

And a 100% chance of tax havens galore.

Blood’s in the water, though, stay ashore. You may hear a lot in the media today about the Panama Papers leak dump in which the BVI feature prominently. What you won’t hear much about: this is the second leak about tax havens in exactly three years.

Jack-doodly-squat happened after the first one in April 2013.

The UK’s PM David Cameron was pressed in 2013 to do something about BVI’s tax laws. He said he would work with the G8 to tackle tax evasion. Of course, we now know why he sat on his hands; he had highly-rewarding and substantial familial interest in doing nothing but continue his family’s tax avoidance scheme. And yet he still managed to get reelected last year, the corrupt pig fucker.

If governments had felt any pressure at all to do something corrective, there wouldn’t be a second wave of leaks, right? But the 1% have continued to milk profits from businesses, transfer the money offshore, and buy themselves enough politicians and corporate media to ensure things remained nice and cozy.

Color me skeptical that anything will come of investigations into tax shelters which are for the most part legal, thanks to pwned and compromised governance. But the unfolding story sheds new light on older ones.

Like the decade-plus work on tax havens and abusive tax schemes by the U.S. of Permanent Senate Committee on Investigations, which did not slow or stop the offshoring of capital. B-schools continue to teach offshore tax shelters as ‘A Good Thing’, right alongside ‘Taxes Are Bad’ — because the 1% have amassed enough money to make sure legislators and B-schools’ leadership stay bought.

How much do the Panama Papers leak materials overlap with the Swiss Leaks scandal, including India’s investigation into HSBC, money laundering and influence peddling, reaching into the UK and beyond?

Or a more recent story about hacked elections, including Argentina’s. Has laundered money acquired the services necessary to manipulate elections in order to ensure nothing would change in tax laws?

Perhaps the Panama Papers will offer a more cohesive picture of just how badly the 99% are being screwed, if nothing else.

Nothing else, that is, besides the No Confidence vote Iceland’s Prime Minister Sigmundur David Gunnlaugsson now faces after the Panama Papers revealed his financial interests in BVI.

It’s actually rather quiet on the technology front as I write this. I’ll add a few snippets later after caffeination.

Weekend Open Thread: You’re Gonna’ Need a Bigger Boat

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We’ve been rather busy around the emptywheel this weekend, but it looks like we need something for conversations about two big topics.

First, the Panama Papers — here’s a short and sweet explainer at The Guardian to get you started. It’s the biggest leak-based, multi-outlet, global journalistic investigation to date. The server where the papers are located is already ready flooded with traffic (or attempts at DDoSing).

You might be interested in watching the story’s impact on world media. Go to Newsmap (turn off technology, sports, entertainment, and health news in the very bottom toolbar if necessary). Then notice how often “Panama Papers” is mentioned. Australia and some of the earliest EU outlets have picked up this story. Watch for the story to roll westward.

Second, the Associated Press announced this weekend its style would henceforth use ‘internet’ (lowercase i) versus Internet (uppercase I) in all cases. Which is all groovy for journalists who write using AP style, but a misrepresentation of the existence of the Internet versus the internet, because the Internet is still very much a thing. In my opinion, this looks more like word guys not understanding the technology they rely on once again. Hello, future shock?

Have at it below. I’ll catch you tomorrow morning as usual.

Wednesday Morning: All the Range from Sublime to Silly

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We start with the sublime, welcoming astronaut Scott Kelly back to earth after nearly a year in space — 340 days all told. Wouldn’t you like to know how these first hours and days will feel to Kelly as he regains his earth legs?

And then we have the silly…

Apple’s General Counsel Sewell and FBI Director Comey appeared before House Judiciary Committee
You’d think a Congressional hearing about FBI’s demand to crack open Apple iPhone would be far from silly, but yesterday’s hearing on Apple iPhone encryption…Jim Comey likened the iPhone 5C’s passcode protection to “a guard dog,” told Apple its business model wasn’t public safety, fretted about “warrant-proof spaces” and indulged in a thought exercise by wondering what would happen if Apple engineers were kidnapped and forced to write code.

What. The. Feck.

I think I’ll read about this hearing in French news outlets as it somehow sounds more rational: iPhone verrouillé: le patron du FBI sur le gril face au Congrès américain (iPhone locked: FBI boss grilled by US Congress – Le Monde). Other kickers in Comey’s testimony: an admission that a “mistake was made” (oh, the tell-tale passive voice here) in handling the San Bernardino shooter’s phone, the implication that the NSA couldn’t (wouldn’t?) backdoor the iPhone in question, and that obtaining the code demanded from Apple would set precedent applicable to other cases.

Predictably, Apple’s Bruce Sewell explained that “Building that software tool would not affect just one iPhone. It would weaken the security for all of them.” In other words, FBI’s demand that Apple writes new code to crack the iPhone 5C’s locking mechanism is a direct threat to Apple’s business model, based on secure electronic devices.

Catch the video of the entire hearing on C-SPAN.

Facebook’s Latin American VP arrested after resisting release of WhatsApp data
Here’s another legal precedent, set in another country, where a government made incorrect assumptions about technology. Brazilian law enforcement and courts believed WhatsApp stored data it maintains it doesn’t have, forcing the issue by arresting a Facebook executive though WhatsApp is a separate legal entity in Brazil. Imagine what could happen in Brazil if law enforcement wanted an Apple iPhone 5C unlocked. The executive will be released today, according to recent reports. The underlying case involved the use of WhatsApp messaging by drug traffickers.

USAO-EDNY subpoenaed Citigroup in FIFA bribery, corruption and money laundering allegations
In a financial filing, Citigroup advised it had been subpoenaed by the U.S. Attorney’s office. HSBC advised last week it had been contacted by U.S. law enforcement about its role. No word yet as to whether JPMorgan Chase and Bank of America have been likewise subpoenaed though they were used by FIFA officials. Amazing. We might see banksters perp-walked over a fútbol scandal before we see any prosecuted for events leading to the 2008 financial crisis.

Quick hits

I’m out of here, need to dig out after another winter storm dumped nearly a foot of the fluffy stuff yesterday. I’m open to volunteers, but I don’t expect many snow shovel-armed takers.

Lanny Breuer Covers Up Material Support for Terrorism

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I noted last week how prosecutors were claiming they were being extra tough on HSBC for all its money laundering because of the seriousness of the charge they were going to defer: money laundering. Yesterday, with great fanfare, DOJ rolled out their deferred prosecution for money laundering, as if it were a good thing to ratchet up the charges you excuse.

But I was struck even more by how DOJ treated HSBC’s crimes they chose not to indict. Here’s how Assistant Attorney General Lanny Breuer described HSBC’s crimes:

HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries.

From 2006 to 2010, the Sinaloa Cartel in Mexico, the Norte del Valle Cartel in Colombia, and other drug traffickers laundered at least $881 million in illegal narcotics trafficking proceeds through HSBC Bank USA.  These traffickers didn’t have to try very hard.  They would sometimes deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows in HSBC Mexico’s branches.

In total, HSBC Bank USA failed to monitor over $670 billion in wire transfers from HSBC Mexico between 2006 and 2009, and failed to monitor over $9.4 billion in purchases of physical U.S. dollars from HSBC Mexico over that same period.

In addition to this egregious lack of oversight, from the mid-1990s through at least September 2006, HSBC knowingly allowed hundreds of millions of dollars to move through the U.S. financial system on behalf of banks located in countries subject to U.S. sanctions, including Cuba, Iran and Sudan.  On at least one occasion, HSBC instructed a bank in Iran on how to format payment messages so that the transactions would not be blocked or rejected by the United States.

That is, Breuer says HSBC 1) helped Mexican drug cartels launder money and 2) helped Cuban, Iranian, and Sudanese banks avoid US sanctions.

But that’s not all, according to the Permanent Subcommittee on Investigations, that HSBC did. The four main sections of the PSI report on HSBC’s Bank Secrecy Act and money laundering violations pertain to:

  1. Money laundering for Mexican cartels
  2. Helping banks evade sanctions
  3. Processing masses of travelers checks from Hokoriku bank in Japan which had suspicious ties to Russian “businessmen”
  4. Maintaining correspondent accounts with banks that had ties to terrorism, most notably the Al Rajhi bank

One of the things, according to Carl Levin, that HSBC did was help banks involved in terrorist financing get US dollars (that section takes up 53 pages of a 340 page report). And yet, Breuer’s speech did not once mention the word terrorism. The US Attorney’s release used the word “terror” once, though not in conjunction with HSBC. And the Statement of Facts mentions terrorism in conjunction with a description of the laws HSBC violated and in this one paragraph.

In addition to the cooperative steps listed above, HSBC Bank USA has assisted the Government in investigations of certain individuals suspected of money laundering and terrorist financing.

In short, Lanny Breuer and his prosecutors did not mention that this bank they were letting off without prosecution provided a terrorist-connected bank with US dollars for years.

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