THE RISE OF CORPORATE GLOBAL
POWER
Page II
Picture from: Dumbya Pictures
Bush’s Insider Connections Preceded Huge Profit On Stock Deal
The Republican layoff conspiracy
ELITIST HANDS IN THE COOKIE JAR by Jim Rarey
A World Wide Intifada? Why? by WILLIAM A. COOK
http://www.public-i.org/story_01_040400.htm
Bush’s Insider Connections Preceded Huge Profit On Stock Deal
It has been widely reported that Texas Gov. George W. Bush made money over the years with a little help from his friends. But new details show that he served on an energy corporation’s board and was able to realize a huge profit by selling his stock in the corporation because an accounting sleight-of-hand concealed it was losing large sums of money. Shortly after he sold, the stock price plummeted. That profit helped make him a multimillionaire.
By Knut Royce
The Center for Public Integrity
(Washington, 4 April) The year 1986 was very good for George W. Bush.
After a decade of striking Texas brown dust instead of oil, his luck finally turned that year when go-for-broke Harken Energy Corp. bought his failing oil exploration firm for stock. Four years later the company concealed large losses just before the GOP presidential hopeful unloaded those securities for a nice profit. That, in turn, helped finance his stake in the Texas Rangers baseball club and catapult him into the ranks of multimillionaires.
And it was in 1986, too, that Harken’s CEO introduced Bush, the company’s new director and consultant—as well as son of then-Vice President George Bush--to a little startup health-care company. He put in a modest investment, and a few years later walked away with a six-figure windfall.
There also was a little benefit on the side. In 1994, when Bush was running for Texas governor, and scrambling for campaign cash, insiders in that health-care company, now known as Advance Paradigm, contributed $23,700.
Bush’s sale of the Harken stock in 1990 attracted the attention of regulators and the national media because he was tardy in filing the required public disclosure, and because the trade came shortly before the company reported for the first time that it was incurring huge losses.
Hemorrhaging Concealed
But The Public i has found that Harken was bleeding profusely even before Bush unloaded his stock. Harken effectively concealed the hemorrhaging by selling a retail subsidiary through a seller-financed loan but recording the transaction in its 1989 balance sheet as a cash sale. Securities and Exchange Commission records suggest that Bush, a company director who sat on Harken’s audit committee and was a paid consultant to the firm, may nonetheless have been unaware of the sleight-of-hand accounting or, for that matter, other significant company actions Nevertheless, SEC accountants cried foul when it discovered Harken had recorded the 1989 sale as a capital gain.
But it was months after Bush’s June 1990 sale of the stock at $4 a share, for a total of $848,560, that the SEC directed Harken to recast its 1989 annual report and to publicly disclose the extent of its losses that year, according to records reviewed by The Public i.
It is unclear how a timely acknowledgement of the true losses would have affected the value of the stock when Bush sold. But most investors look at a company’s balance sheet, among other indicators of corporate well-being, before parting with their money.
Two months after Bush’s sale, Harken reported for the first time in a quarterly report that it was losing a lot of money, and the stock dropped to $2.37 a share. By the end of the year, it was trading at about $1.
Harken masked its 1989 losses when in mid-year it sold 80 percent of a subsidiary, Aloha Petroleum, to a partnership of Harken insiders called International Marketing & Resources for $12 million, $11 million of which was through a note held by Harken. By Jan. 1, 1990, IMR, in turn, sold its stake in Aloha to a privately held company called Advance Petroleum Marketing, and the Harken loan was effectively transferred to Advance, though garanteed by IMR.
‘George and I Became Friends’
Advance Petroleum was headed by a Texas entrepreneur, David Halbert, who had been a friend and business partner of Harken’s CEO, Mikel Faulkner. In 1986, Faulkner had introduced Harken’s newest director, Bush, to Halbert. Harken, in a stock swap, had just acquired the ailing Spectrum 7 Energy Corp., where Bush had been CEO and a significant shareholder.
“George and I became friends,’’ recalled Halbert in a telephone interview with The Public i. Halbert said that at the time Faulkner introduced Bush to him he had just formed a little home-health-care firm, Allied Home Pharmacy, and was in the process of raising $250,000 in seed money.
“Mikel said (to Bush), ‘Hey, you might want to invest in this,’” Halbert recalled. “I said fine. I don’t remember how many people we brought in, but it wasn’t that many. Maybe 25 or 30 . . . It was sort of friends and family, and George invested.’’ So did Faulkner. Halbert said Bush also put in a little more money in an offering to existing shareholders in 1991.
Halbert said he did not recall how much Bush invested in the company.
Allied Home Pharmacy became known as Advance Paradigm, one of the nation’s leading pharmacy benefits management companies, when it went public in 1996. Two years later, Bush’s trust sold his stock in the firm.
Public records give no precise amount of how much he earned on the Advance stock sale, but Bush’s financial disclosure form made public last year shows that he realized a capital gain, or profit, of as much as $1 million on the sale. Asked how much the Texas governor paid for the stock and how much he profited from the sale, spokesman Scott McClellan referred all questions to the manager of Bush’s blind trust, Robert McCleskey. McCleskey declined to discuss his client’s investment in the Advance stock. He said that under the terms of the Texas blind trust—a legal requirement for the governor but less rigorous than the blind trust that applies to federal executive branch officers—he cannot tell even Bush how much profit he made on the sale.
SEC Probe Was Limited
The SEC’s division of enforcement launched a probe of Bush’s sale of his Harken stock the day after the Wall Street Journal on April 4, 1991, reported that he had been eight months late in filing the required insider-trading form with the regulators. This investigation was separate from the earlier division of corporation finance probe that resulted in Harken’s recasting its 1989 balance sheet.
SEC enforcement investigators focused on whether Bush dumped his stock on June 22, 1990, because he knew that the company’s second-quarter report, announced on Aug. 20, would show a $23.2 million loss and depress the stock. Part of that loss was $7.2 million that Harken wrote off because it was being pressed by a nervous bank and renegotiated the Aloha sale to generate quick cash. Aloha’s buyer, Advance Petroleum, was a clear winner in the renegotiated deal.
The SEC probe was limited to whether Bush had inside knowledge of the red ink that would be reported in the August filing and concluded that he did not.
It is unclear whether Bush, who holds a master’s degree from the Harvard Business School, knew that the company, after five straight years of profits, began to bleed profusely in 1989, its first year of being traded on the New York Stock Exchange, though in its annual report for that year it had declared a net loss of only $3,300,000.
Even that small loss would have surprised readers of the January 1990 issue of National Petroleum News, a trade publication. Interviewed some time during the fourth quarter of 1989 for a lengthy and glowing article on Harken, company president Faulkner said that based on the strong earnings during the first three quarters, he expected that year to be the most profitable yet. “We made $6 million last year (1988) . . .We’ll certainly be ahead of last year.’’
Alas, a year later, in an amended 1989 annual report filed on Feb. 5, 1991, the company reported that after “discussions” with the SEC, which insisted that Harken use the traditional “cost recovery’’ method of accounting, it was revising its declared 1989 net loss of $3,300,000 fourfold--to $12,566,000. Harken also filed an amendment to its third quarter report for 1989 revealing that over the first nine months of that year it had lost nearly $4 million, rather than the $4.6 million profit it had declared.
Faulkner, now Harken’s chairman, did not return repeated calls from The Public i seeking comment on the Aloha sale and the subsequent public filings.
Company Directed to Correct Reports
The SEC can prosecute company officers for willfully filing fraudulent reports. But in the Harken case, as in most similarly questionable filings, the investigation was conducted by the agency’s accounting staff, which did not believe there was intent to defraud and therefore did not refer the matter to the SEC’s enforcement division. Instead, the agency directed the company to publicly correct its reports, according to a retired SEC official familiar with aspects of the case.
It is also clear that Harken did not draft the misleading 1989 annual report, filed with the SEC on April 16, 1990, merely to buttress the value of Bush’s stock. The filing date was two months before the company reported it became aware that Bush wanted to sell.
In its 1989 annual report, Harken recognized a profit of $8 million on the sale, which allowed it to limit its declared losses to only $3,300,000 for the year. But the SECobjected, saying that the income can be recognized only as the principal of the loan is reduced—that is, when real cash comes in.
A corporate accountant interviewed by The Public i agreed with the SEC’s claim, saying he found it “unusual’’ for a company to declare an earning on the sale when it is contingent on a loan. The accountant, who asked to not be further identified, said he knew of no other instance when a company declared full gain on a sale based on a loan.
Why Harken initially sold to IMR is unclear. But a senior tax lawyer who works for a leading auditing firm told The Public i after reviewing portions of the SEC filings that he believes Harken wanted to show a cash infusion to mitigate the 1989 losses.
“It looks like the sale was done (to IMR) in order to show a book gain of $7 or $8 million,’’ said the attorney, who also asked not to be further identified. “That would have eliminated a good part of their loss during that time. Given the fact that the sale was to a related entity, I would guess they were just trying to show a better financial statement at that time.’’
Advance’s Halbert said that he believes IMR bought, and then quickly sold, Aloha because of a sudden change of heart. “I think it had something to do with IMR wanting to own it [Aloha] but there was some concern about the affiliate relationship [between Harken and IMR],’’ he said.
The SEC, too, was curious about the transaction, according to agency records obtained under the Freedom of Information Act.
Six weeks before Harken publicly announced in January 1991 that it was revising its 1989 losses upward, the SEC asked the company to explain “whether the sale of Aloha to Advance was contemplated at the time IMR purchased Aloha from Harken.’’ In a letter, it also asked Harken to explain why the company and its independent accountants concluded it could declare a capital gain on the sale.
The SEC declined to provide Harken’s responses to The Public i.
Conflicting Accounts Offered
In its public filings to the SEC, Harken gave conflicting accounts of who sold Aloha, who bought it, and even when the sale occurred.
In its 1989 annual report, for example, it declared that it sold Aloha to IMR on June 30. In one passage of the report, it says that IMR then sold Aloha to Advance on Jan. 1, 1990; in another it says IMR sold on March 30.
But in its 1990 report, Harken declared that it was its subsidiary E-Z Serve Holding Co. that sold Aloha to IMR.
Adding to the confusion, E-Z Serve, which shortly after the transaction was spun off as a separate publicly traded company, claimed in its 1991 annual report that it had sold Aloha to Advance Petroleum—not IMR—in 1989.
Harken was notorious during that period for filing confusing reports. In 1991, Harken founder Phil Kendrick told Time magazine that the company’s annual reports “get me totally befuddled.’’Quoted in the same article, Faulkner had this advice to those trying to figure out the company’s financial statements: “Good luck. They’re a mess.’’
The corporate fog did not, however, obscure the fact that by the time the SEC directed Harken to recast its 1989 report, Bush already had already sold his stock in the company.
The bulk of the $848,560 went to pay off a bank loan he had taken out in 1989 to buy a partnership interest in the Texas Rangers for $600,000. He received nearly $16 million for his stake when the team was sold two years ago.
Bush’s run of financial good luck starting in 1986 is in stark contrast to the woeful performance of his previous oil ventures, which he had launched in 1977. Though he had little difficulty in rounding up investors for his Arbusto, Bush and Spectrum 7 oil exploration firms, they were all money losers.
Even as Harken in late 1989 and early 1990 appeared to be trying to minimize its losses, its bankers were clamping down because the company was having trouble meeting its loan payments.That led to a renegotiated loan agreement in May 1990, which required Harken to come up with fresh cash, raised the interest rate, required new guarantees from major shareholders and featured stricter terms overall.
“After closure (on the sale of Aloha) Harken discovered they had trading losses on gasoline purchases and they came back to us and said, ‘We really need some cash,’” Halbert recalled.
Cash Raised in Nick of Time
Halbert said he was able to raise the cash in the nick of time—just three days before Iraq invaded Kuwait, setting in motion huge gasoline-price increases that drove numerous small distributors out of business.
Under the original contract, Harken had given Advance an option to purchase the remaining 20 percent of Aloha, or 60,000 shares, for $50 each, or a total of $3 million.
By the time the contract was renegotiated in August, Advance agreed to pay off the $10 million note by the following year, which it did, instead of in March 1993 as stipulated in the original contract.It also relieved Harken from picking up the cost of fixing leaking underground tanks to meet environmental standards.
In turn, Advance got the $3 million of Aloha stock for $1. Harken also forgave $5 million in loans it had made to Aloha and about $1 million in interest payments.
The renegotiated contract reduced Harken’s bottom line, and the SEC clearly believed the write-off might have helped depress the stock. During its investigation of whether Bush benefited from insider information when he sold his stock, the SEC on July 25, 1991, asked both Bush and Harken to disclose when the company’s officers and directors “first became aware . . . that the Advance note . . . was going to be renegotiated; and that Harken intended to write down its investment in Aloha.’’
Unaware of Magnitude
After the SEC ended its investigation, according to one of its memos, the regulators concluded that Harken and Bush were unaware of the magnitude of the write- downs until at least mid-July, or after Bush’s stock sale.
While the renegotiated contract clearly hurt Harken’s bottom line, Halbert admits it clearly was beneficial for Advance Petroleum.
Meanwhile, Bush was generating admirers among Advance Paradigm’s insiders, the limited number of shareholders.
In 1994, when the company was known as Advance Health Care and Bush was making his first run for Texas governor, those insiders gave him $23,700 for his first gubernatorial run, including $14,500 from Halbert, his brother, Jon, their father and their wives. Virtually all the money came on the same day, July 22.
“That was his first time around, and he was trying to raise money any way he could,’’ recalled Halbert.
And, as has been the case throughout Bush’s career, a long-time friend of the family came to his aid.
This time it was Benno C. Schmidt, the pioneering venture capitalist and partner in J. H. Whitney & Co. in New York. Schmidt, who died last October at age 86, had been a director of Advance Health Care, and J. H. Whitney had provided the firm with much needed capital in 1993.
“Benno was an old friend of the Bush family. He called me one day and said, ‘David, I think we ought to do something for young George,’” Halbert recalled. “He said, ‘I think we ought to have a fund-raiser.’”
So after a board meeting on July 22, Bush spoke at a private little dinner attended by the directors and their wives and walked away that night with $20,750.
Knut Royce is a senior fellow at the Center for Public Integrity.
also see:
When President George W. Bush froze assets connected to Osama bin Laden, he didn’t tell the American people that the terrorist mastermind’s late brother was an investor in the president’s former oil business in Texas. He also hasn’t leveled with the American public about his financial connections to a host of shady Saudi characters involved in drug cartels, gun smuggling, and terrorist networks. http://www.americanfreedomnews.com/afn_articles/bushsecrets.htm
George Bush, Junior sold 60% of his stock in Harken Oil in June, 1990 for $848,560. That was brilliant timing; in August, Iraq invaded Kuwait and Harken's stock dropped 25%. Soon after, a big quarterly loss caused it to drop further. http://www.realchange.org/bushjr.htm
One of them [Jeb, now Governor of Florida] rented himself out to a crooked developer who scammed HUD and helped pry millions out of Medicare to fuel a giant health-care scam. A second [Texas Governor George W.] may have profited from an insider stock transaction in a [Persian] Gulf oil deal at the very time that U.S. soldiers were dying to make that region safe for oil. And a third son [Neil] ran a savings and loan into the ground while shoveling millions of its taxpayer-backed dollars into the pockets of two deadbeat partners. http://bushfiles.com/bushfiles/todynasty.html
Just 32 days before the attack on the World Trade Center and Pentagon, a Financial Times of Asia (FT) Wire-Business Line report linked Deutschebank to the United States Central Intelligence Agency (CIA), Pakistani and Afghani heroin smuggling, and money laundering of narcotics proceeds (8-10-2001). Retired Pakistani intelligence chief Brig Imtiaz was jailed for eight years on July 31, 2001 for laundering heroin profits -- for covert actions -- via a CIA-linked drug smuggling cell, using Deutschebank and other financial entities and properties. http://groups.yahoo.com/group/agentsmiley/message/2909
Robert Sterling Editor, The Konformist http://www.konformist.com
The Republican layoff conspiracy
By Kevin J. Shay Online Journal Contributing Writer
February 21, 2002—Lost in the excitement last year over Enron and the purported War on Terrorism was this fact: 2001 was the worst year for workers since the early Reagan years.
The ranks of the unemployed grew by 2.6 million last year, the most since 1982, according to the U.S. Department of Labor. Most of those new former laborers collecting unemployment were laid off—estimates on the number of layoffs in 2001 ranged from 1.8 million to 2.5 million.
I was one of those 2 million or so layoff victims. I had worked as a reporter and editor for Dallasarea newspapers owned by Texas-based Belo Corp. for the previous nineand-a-half years. My last position was as a business reporter for The Dallas Morning News. Remaining unconvinced that my company was doing as poorly as management said, I have conducted some research into the finances of Belo and other companies that made some major layoffs in 2001.
My findings may not surprise you: Half of 30 companies picked at random that made layoffs of at least 1,000 workers last year made money. And only one of those 15 that lost funds in 2001 showed a loss the previous year. Most of the firms made good money. For example, New Yorkbased financial firm Citigroup Inc. announced it would slash 7,800 jobs last November, then went on to record a whopping $14.1 billion in profit in 2001. That came on top of making $13.5 billion in 2000 and $9.9 billion in 1999. Why did Citigroup need to cut almost 8,000 employees when it made so much and paid its chief executive, Sanford Weill, an obscene $225 million in 2000? Weill has a history of leaving a trail of layoffs that help boost his pay. Between 1987 and 1997, when he was CEO of Travelers Insurance, which merged with Citibank to form Citigroup, Weill cut jobs by onethird and became one of the highest paid chief executives in the country.
Another company that made off well last year while cutting people was the New York Times Co., which said it would send 1,260 workers to the unemployment lines last June. The Times Co. made $444.7 million in 2001, after hauling in $397.5 million in 2000 and $310.2 million in 1999. Other companies I researched—including IBM, Verizon, WorldCom, Dell, HewlettPackard, American Express, Bristol-Myers, Sara Lee, VF Corp., Wachovia Corp., and Proctor & Gamble—took in similar nice profits before and after the layoffs.
So what's going on here? You can't blame all these layoffs on September 11—about 63 percent of job cuts tracked last year by the Labor Department came before that date. And you obviously can't blame declining profits in many cases. Is there some kind of campaign by executives, who were complaining about not having enough qualified employees throughout much of the 1990s, to make good employees stay longer and reduce wages and benefits through increased layoffs? In effect, are corporate bigwigs taking it on themselves to turn the employees' job market of much of the last decade back into an employers' market? Or is it just plain old greed, in which shareholders who care more about increased profits than the overall welfare of the company and its employees, not to mention the costs of job cuts to society, are demanding these layoffs? Where's Oliver Stone when you need him?
As you might guess, this layoff conspiracy leads directly to the White House. Remember what Bush and Cheney did in December 2000 as soon as they had stolen—er, been appointed to—the presidency? Cheney, a former corporate bigwig himself, went on major television programs and talked about how bad the economy was, blaming it on Clinton, when most real economists agreed it was not that bad—yet. Bush, a failed corporate smallwig who could only make money through a questionable stock transaction with Harken Energy and as part owner of the Texas Rangers baseball team by convincing taxpayers to fund most of a new stadium, talked the economy down in his own way in front of crowds of supporters and in oneon-one meetings with reporters. Bush's handlers wouldn't let him go on TV and actually answer a question more complex than "How's your golf game?" Their aim was to blame the impending recession on the Clinton administration, and to pay back their huge campaign contributors, many of whom were these same corporate executives who complained before about not having enough qualified employees, by aiding the return of an employers' market.
For example, Ivan Seidenberg, president of Verizon Communications, the $67 billion telecommunications giant formed by the union of Bell Atlantic and GTE, gave $1,000 to Bush's campaign, the legal limit for an individual. His company contributed $818,000 to Republican Party committees and $3 million to the 2000 Republican National Convention. Verizon was one of the first firms to lay off workers last year, cutting 10,000 jobs. The company ended up making $590 million in 2001, after hauling in an astronomical $11.8 billion in 2000. That year, Seidenberg amassed $15.7 million in salary alone.
Other company executives gave even more to the GOP. Cisco Systems President John Chambers donated $280,000 by himself to Republican committees in 2000, the same year he made $157 million. Cisco laid off 8,500 people last year after making $2.7 million in 2000. The firm did lose $1 billion in 2001, but it made up about 40 percent of that loss in the first three months of its 2002 fiscal year.
Then there is Cheney's former firm, Dallas based Halliburton Co., which is vying to become the next Enron and will more than likely announce some major layoffs soon. Halliburton's stock dropped to $16 a share on Feb. 19 after reaching $49.25 nine months before. The freefall was blamed largely on multimillion dollar asbestos court verdicts. Pittsburgh based Harbison-Walker Refractories Co., a former subsidiary of Dresser Industries, which Halliburton bought in 1998, has already filed for bankruptcy. Will Halliburton be next? And is this part of the reason why Cheney is pushing so hard for legislation that will benefit his former employer, such as drilling for oil on protected federal lands like in Alaska? When Cheney left in 2000 as CEO of Halliburton, a position he held since 1995, he sold his stock for more than $40 a share. He personally pocketed more than $33 million in 2000 from Halliburton. You don't think Cheney remembers that deal? Cheney presided over several rounds of job cuts, including of about 11,000 workers in 1999, a year that Halliburton showed a $438 million profit. Since those layoffs, Halliburton's profits have risen, to $501 million in 2000 and $809 million in 2001. An interesting side-bit to this story is that Houston based Kellogg Brown & Root, another Halliburton offshoot, recently agreed to pay the U.S. government $2 million to settle allegations it defrauded the military by submitting false claims for delivery orders between 1994 and 1998. So here you have Cheney trying to at least indirectly help his former company, which is possibly preparing to lay off more workers, through friendly legislation as one of its subsidiaries reportedly defrauds all of us. [And yes, Cheney still lived in the Dallas area until after the November 2000 election in apparent violation of the 12th Amendment to the U.S. Constitution. He didn't sell his Dallasarea mansion to a major Republican donor until Nov. 30, 2000, according to deed records. Through a local television station's camera, I saw Cheney stroll out of his Dallasarea home late at night after Nov. 7, 2000. Contrary to Republican spin, Cheney never was a resident of Wyoming in 2000.]
Company executives and their apologists will tell you they "need" to lay off workers—even when the firm is making boatloads of money—to remain competitive in today's market. Don't buy that bull. In the increasingly merger-friendly environment, competition for many large mega-corporations is not much of an issue. The main issue for many shareholders is to acquire as much capital and return on investment as possible. For these multimillionaires and billionaires, money is only a way to keep score, not a basic necessity that can mean the difference between eating and not eating. And they only feel good when that score is going up, even if it is at the expense of a person making $20,000 or $30,000 a year. Most really liked Bush's tax cut plan last year, which netted the super wealthy millions of additional dollars. The wealthiest 1 percent of Americans already own about 40 percent of the wealth, and that is only expected to grow under the current so called "Christian" administration [idle thought: would Christ really support this administration that cares primarily about the wealthy and those who want to be wealthy in monetary terms?].
So what do we do about this situation? We stage a nonviolent revolt. We organize politically. We educate people on companies that practice alternatives to layoffs like reducing hours—Phil Hyde of Timesizing.com highlights numerous good examples. We educate people on studies that show layoffs actually hurt companies' profits due to lower morale, a loss of momentum, and other factors.
We support unions, even though they are not perfect themselves but are better than nothing. We demonstrate. We go on strike. We file employment discrimination claims with government agencies when we are laid off—I have a claim pending against Belo myself. In short, we do whatever we can to make the bigwigs feel our pain and perhaps think twice about laying us off just to make a few more bucks in the future.
In my daydreams, I see myself taking a page from Michael Moore, the populist film maker of Roger and Me who dogged former General Motors Chairman Roger Smith after GM closed plants and laid off thousands of workers in Moore's native town of Flint, Mich., in the 1980s, despite GM continuing to make billions in profits. I see myself bursting into Belo shareholders' meetings and firing questions about the layoffs at stunned executives. My wife, Michelle, even recently had an actual nocturnal dream about her and me and others doing just that at some Belo meeting and causing a big stink—things are really getting weird when your spouse has dreams about your former workplace. In her wild dream, Bush happened to be there and offered to help place a story I wrote in a national newspaper or magazine. I turned down Bush's help on principle, figuratively telling him to shove it before I walked off. It was only a dream, but the scenario sounds good to me.
Some say we shouldn't concern ourselves with this layoff conspiracy because executives like Smith and Weill and Seidenberg and Chambers— as well as their political conspirators like Bush and Cheney—will get their just desserts in their afterlives. Some believe the corporate and political masters will be sent to Hell—wherever the hell that is— to live in eternal damnation, if they aren't there already. Others say they will have to reincarnate to the Earth as low level workers and see what it's like to live paycheck to paycheck for themselves.
I don't know about those theories. But I do believe that one day in the near future, such executives and politicians will be forced to search the vacuous depths of their souls, and answer to themselves and to a Higher Authority.
And then, perhaps there will be hell to pay. Maybe through their redemption, the rest of us will benefit. Maybe not. All I know is we have to keep fighting, right here, right now.
Kevin J. Shay is the author of the electronic booklet, No More Layoffs: How to Work For a Workplace That Works For All of Us. He also started a new Internet site, LayoffWatch, that tracks layoffs and the profits of these companies at http://www.angelfire.com/biz/shaybiz/layoff.html . Shay can be contacted through email at mkshay40@yahoo.com.
Reproduced gratefully from The Konformist
MEDIUM RARE
By Jim Rarey
May 17, 2002
ELITIST HANDS IN THE COOKIE JAR
In this writer’s February 27th article this year, "Enronitis – A Communicable Disease" the following statement was made. "If the Enron practices are as widespread in other companies, as some believe, we may be seeing a domino effect with Enron and Global Crossing only the beginning. "
At that time, only Enron and Global Crossing, along with their mutual auditor/consultant Arthur Andersen, were under the microscope of public and Security and Exchange Commission (SEC)) scrutiny. At this writing there are at least thirty (and counting) companies that have admitted "accounting irregularities" and/or which are the subject of formal investigations by the SEC.
These disclosures should by no means be considered "voluntary mea culpas." The Federal Energy Regulatory Commission (FERC) along with the SEC seem to have awakened from a decades long slumber and are giving the perception of vigorously pursuing accounting irregularities and other questionable corporate practices. The FERC compiled a list of suspect practices gleaned from testimony by Arthur Anderson and Enron officials and sent out a questionnaire to 150 energy companies. The companies were required to answer, under penalty of perjury, whether or not they were engaging in any of those practices. Ergo, a flood of disclosures.
Wall Street analysts estimate that over one trillion dollars in the value of those companies’ stocks has vanished and that doesn’t count the billions (perhaps hundreds of billions) of dollars in bonds for which an accounting is yet to be made. Enron has notified the SEC that it may have overstated its assets last year by as much as $24 billion and that its financial statements as far back as 1997 are not reliable. The company did not even attempt to file the required reports for the quarter ended in March.
The "problems" are not limited to energy producing and trading companies. Implicated in the scandals are retailers like K-Mart (a FBI criminal investigation), security analysts, brokerage houses, insurance companies, auditors and consultants, large investment banks and even bond rating services. Banks like CitiGroup, Credit Suisse First Boston and J. P. Morgan Chase find themselves victims of their own greed in participating in the scams as well as targets of lawsuits and investigations by hapless investors and regulatory agencies. It almost seems like a game of musical chairs where there were not enough chairs when the Ponzi schemes collapsed. Companies like Enron and Global Crossing, although in bankruptcy, ended up with most of the money for which an accounting has not yet been made.
The maze of sham transactions has set insiders against each other in a scramble to cut losses and point fingers. We are treated to the spectacle of a subsidiary of the Rockefeller controlled CitiGroup (Travelers’ Insurance) suing its own parent company for losses on transactions it insured between CitiGroup and Enron. CitiGroup is refusing to pay claiming it was misled.
Along with the regulatory agencies, corporate boards of directors seem to have been asleep at the switch. Some very powerful and well-connected directors are now claiming they were misled by company executives and/or auditing firms. Many are members of the premiere U.S. organization pushing world government, The Council on Foreign Relations (CFR). Others are associated with one of the CFR’s many spin-offs or organizations controlled by CFR members i.e. The Trilateral Commission (TLC) and the Business Roundtable.
Boards of directors are not necessarily controlled by their chairmen. If the chairman himself does not fill the role, we usually find on the board someone from an investment bank or a high-powered law firm. What counts is who controls or influences the voting stock of the company.
So let’s take a brief tour of some of those powerful men (and women) on boards of companies who were so easily "misled." We shall start and end with Enron. Enron’s (former) Chairman and CEO, Ken Lay, was a close associate of both Bill Clinton and the George Bushes. He is a member of Rockefeller’s Trilateral Commission
Wendy Gramm is a member of the audit committee of Enron’s board. Just prior she was a Reagan appointee as chairman of the Commodity Futures Trading Commission, the powerful regulatory agency which oversees the nation's commodities and futures exchanges. Her husband is Senator Phil Gramm who sponsored legislation providing partial protection of professional firms like Arthur Andersen from class action suits. Gramm has decided not to run for reelection.
In our neighbor to the north a large bank got caught with huge losses when the Enron music stopped. The Canadian Imperial Bank of Commerce (CIBC) has on its board Lord ((Conrad M.) Black. An unabashed globalist, Black on his official biography lists memberships in the Council on Foreign Relations and the Bilderbergers (evidently that’s what they call themselves).
Canada’s largest energy company EnCana, which engaged in sham "round trip" transactions with Reliant Energy lists on its board T. Don Macy. Macy is the former Chairman and President of Amoco Eurasia Petroleum Co. In 1996 he signed an oil development deal with the Azerbaijan government joining a consortium for exploitation of Caspian Sea oil. Amoco and Unocal control 55.5% of the consortium.
Returning to the U.S., Rockefeller controlled CitiGroup (including subsidiaries CitiBank and Traveler’s Insurance) is a major player in the Enron scandal. Director Robert Rubin (CFR) is chairman of the firm’s executive committee that runs the group between annual board meetings. Rubin is the former U.S. Secretary of Treasury and a former CEO of Goldman Sachs.
CitiGroup director C. Michael Armstrong (CFR) is chairman and CEO of AT&T Corporation. He is the former chairman and CEO of Hughes Electronics. During his tenure there, Hughes and Loral illegally furnished classified rocket technology to the Communist Chinese government.
Another CitiGroup director is John M. Deutch (CFR), former head of the CIA. Deutch resigned his CIA position after he was caught with unauthorized classified information on his laptop computer. He is also a director on the board of CMS Energy, which has admitted to sham transactions with several other energy companies.
CitiBank was caught laundering hundreds of millions of dollars in cocaine money through the private account of the brother of the Mexican president. The only consequence was the resignation of a vice president.
The Security and Exchange Commission (SEC) played a large role in enabling the Enron scams. Arthur Levitt, the New York Democrat fund-raiser was appointed chairman of the commission by Bill Clinton. During his tenure, the SEC granted Enron huge exemptions from security laws. Although Levitt claims he can’t recall the exemptions, a former SEC regulator told Insight Magazine Levitt was involved in the decision. Experts say the exemptions allowed Enron to set up its sham offshore partnerships that played such a large role in the meltdown. Levitt is now a senior analyst for the Carlyle Group.
A book could (and probably should) be written about corporate governance through former government officials and titans of industry on corporate boards, of which most are committed globalists. Space considerations have only permitted a brief sampling of the phenomenon here.
No list would be complete without examining the connections of Herbert S. (Pug) Winokur, not exactly a household name. Winokur was chairman of the Enron finance committee. He is a former chairman and CEO of Dyncorp and currently chairs its compensation committee.
Catherine Austin Fitts has authored a devastating expose of Winokur and his influence. Fits is a former managing director of the Wall Street firm Dillon, Reed & Co., a former assistant secretary of HUD and president of the Hamilton Securities Group. The following information (some of it paraphrased) is from her expose titled, "Damage Control at Dyncorp – Harm at Harvard."
Winokur (a Harvard graduate) is a director of the Harvard Corporation and Harvard Management Company. His investment firm, Capricorn Holdings, is a lead investor in Dyncorp.
Winokur claims he and other Enron directors were mislead by Arthur Anderson and Enron management and it legal counsel as to the true nature of its financial structure. Yet Highfields Capital which manages a large portion of Harvard’s $19 billion endowment, reaped a quick profit of somewhere between $50-120 million through short sales (puts) of Enron stock. Fitts suspects insider trading.
In addition to its contracts with the CIA and State Department, Dyncorp manages, under contract, much of the financial data and other electronic records of the SEC, Department of Defense (DOD), Department of Justice (including the FBI), and the Dept. of Housing and Urban Development (HUD).
Between just two of those departments, DOD and HUD, over $3 trillion dollars cannot be accounted for by auditors since 1997. Fitts asks the question, "Could it have moved through the 300-plus subsidiaries that Enron operated in the Cayman Islands?"
And who are the auditors? Dyncorp, DOD and HUD all use Arthur Andersen. In a letter directed to Winokur, Fitts asks him how he can allow Dyncorp to continue to us Arthur Andersen while he claims the auditors misled (lied to) him at Enron.
In closing, Fitts laments (justifiably)," Still worse yet, while most activists are trumpeting the dog and pony show being given by Congress, the SEC and the General Accounting Office (GAO), full of blustery rhetoric and convenient outrage, what the government and Congress are really doing is giving the bad guys all the time they need to destroy evidence, transfer assets, and hide the money."
Permission is granted to reproduce this article in its entirety.
The author is a free lance writer based in Romulus, Michigan. He is a former newspaper editor and investigative reporter, a retired customs administrator and accountant, and a student of history and the U.S. Constitution.
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[Times Literary Supplement, 2002-06-07]
THE SPIRIT OF CAPITALISM. Nationalism and economic growth. Liah Greenfeld. 541pp. Harvard University Press. £30.95. 0 674 00614 3.
Marxists and market liberals like to see themselves as deadly adversaries, but they have a remarkably similar view of the world. Both subscribe to a version of determinism in which economic forces are the motor of history, and nationalism and religion are secondary or marginal factors. Both look forward to a universal civilization in which the cultural identities of the past have withered away, or else retreated into private life. If Marxists and neo-liberals differ, it is on a point of detail--the question of which is the more productive system, central planning or the market economy--that history has now settled. In their crudely rationalistic understanding of history, politics and culture, and their quasi-religious faith that a radiant future is near at hand, the two ideologies are at one. As Liah Greenfeld puts it in the opening chapter of The Spirit of Capitalism: Nationalism and economic growth, "Curiously, Marxism, abandoned in the lands traditionally dedicated to its propagation and proved wrong by experience, is remarkably similar to the dominant Anglo-American view of the world."
The affinities between the two philosophies are not confined to the textbook and the lecture hall. They are strikingly similar in practice. Both have supported massive programmes of social engineering, while steadfastly denying mounting evidence of their human costs and perverse consequences. Like the Communists in the 1930s who cast a benignly sightless eye on the millions of lives ruined or ended by Stalinism, Western free-marketeers have chosen to ignore the vast social havoc and personal misery that has resulted from neoliberal shock therapy in post-Communist Russia. At the same time, both Marxists and neoliberals have been thoroughly unprepared for the actual course of events. The disintegration of the Soviet state was very largely a result of the power of nationalism--a force that neither ideology has ever managed to encompass. It was not its manifest economic failures or its repression of intellectual dissidents, its endemic corruption or the devastation it wrought on the environment that brought the Soviet Union down. It was nationalist popular resistance in Poland and the Baltic states, together with defeat in Afghanistan and the unintended consequences of Gorbachev's far-fetched schemes of economic reform. The centrality of nationalist movements in the events leading up to the Soviet collapse was not perceived in the West, which--in a fateful coincidence whose damaging consequences we are still suffering—was dominated by a free-market ideology as primitive and reductive in its view of nationalism as Marxism has ever been, if not more so.
In neoliberal ideology, modern capitalism embodies the moral culture of individualism. By contrast, Greenfeld maintains that modern capitalism owes its existence to nationalism. In a tour de force of social theory and historical interpretation, she argues that modern economies came about not through the emancipation of the rational, utility-maximizing individual but from the emergence of national consciousness. Contrary to Marxist and neoliberal determinism, there is nothing inevitable about economic growth. Like nationalism itself, it is a historical accident. Taking England, France, Germany, Japan and the United States as case studies, Greenfeld provides historical evidence for the thesis that "the spirit of capitalism", which generates economic growth, is a by-product of the collective rivalry inherent in nationalism.
The Spirit of Capitalism echoes Max Weber's celebrated argument that modern capitalism is a product of "the specific and peculiar rationalism of Western culture". According to Weber, market exchange can be found in all societies, but in capitalism it is organized so that it can be subject to exact calculation, and only in capitalism is economic life oriented towards continuous growth. Famously, Weber suggested that the emergence of growth-oriented economies owed much to Protestantism, which supposedly put a high value on worldly success. Greenfeld believes this was not an unreasonable hypothesis for Weber to have advanced; even so, citing a number of studies showing that early Protestantism did not revalorize economic activity in the ways Weber suggested, she rejects it. The spirit of capitalism flows from the collective sentiment of nationality, she believes, not from religion. Here Greenfeld builds on an earlier work of her own, Nationalism: Five roads to modernity (1992), to argue that nationalism signifies much more than the post-Westphalian sovereign state. It is the basis of modern society. "Nationalism", she writes, "is a form of social consciousness, a way of cognitive and moral organization of reality. As such it represents the foundation of the moral order of modern society, the source of its values, the framework of its characteristic -national -identity, and the basis of social integration in it."
The Spirit of Capitalism is an immensely refreshing book, not least in its destructive impact on the determinism that underpins recent neoliberal theories and policies. Three implications of Greenfeld's argument are worth stressing. Firstly, the link between capitalism and individualism, taken for granted by Marxists and neoliberals, is an accident of history, not a universal law. A culture of individualism may have been present in the first exemplar of a modern economy, seventeenth-century England, and successfully transplanted into countries such as the US and Australia.
It did not exist in anything like the same form in France or Germany, later converts to capitalism, and it was wholly absent in the most astonishing conversion to capitalism--that of nineteenth-century Japan. By the start of the twentieth century, the chief feature of capitalism--sustained economic growth--was securely established in countries where moral cultures varied enormously, and which have shown no tendency to converge on Anglo-American individualism since that time.) The strength of capitalism is due to its successful reshaping of individual motivation on a new collective model. The vulgar Whig view that the triumph of market capitalism is owed to the superiority of its individualist values, which was so stridently trumpeted in the fast-receding go-go days of the 1990s, is a myth.
Secondly, Greenfeld's book deals a death-blow to the legend that there is anything uniquely rational about the type of economic activity that produces economic growth. Quite to the contrary, Greenfeld--following Weber—argues persuasively that utility-maximizing agents would not engage in the pursuit of unending growth. Economic growth is a benefit to nations, not necessarily to individuals. A rational utility-maximizer would find nothing compelling in a life of incessant striving. Indeed, in terms of pure economic self-interest, such a life is plainly irrational. As Greenfeld puts it:
A Homo economicus, motivated solely by self-interest and rational in the sense of strictly economic rationality . . . could not be attracted to profit for profit's sake--which, we are reminded by Weber, "from the point of view of the happiness of, or utility to, the single individual, must appear entirely transcendental and absolutely irrational"--and thus could not find the idea of economic growth reasonable.
The spread of capitalism from England to France and Germany, and beyond Europe to the United States and Japan, cannot be explained by any increase in the economic rationality of individuals. It is as a result of the increasing power of a mode of collective consciousness in which individual economic rationality is subordinated to the power and dignity of the nation.
These two points suggest a third regarding the pretensions of economics. At present, the expertise of economists is more widely sought by governments than that of any other social scientists; but the prestige of economics as a discipline derives chiefly from its remoteness from any actual society. Economists have aped natural scientists in their fondness for mathematical modelling, but, unlike those of natural scientists, the models of economists are notably lacking in predictive power. This is only to be expected, since the very respects in which economics as currently practised most resembles the natural sciences are those in which it is most humanly unrealistic. In the real world, human beings do not maximize or optimize the satisfaction of their wants; they stumble along, their actions guided not by any calculation of utility but by their sense of self-identity, the meaning or lack of it they find in their daily activities, and whatever solidarity they can call up with others. Economic life is not a free-standing sphere of activity, but an outgrowth of the religious, political and moral life of those who engage in it. This fact, so strikingly absent from the minds of most economists today, was a truism to Adam Smith. It is hardly accidental that his great inquiry into the nature and causes of economic growth should be entitled The Wealth of Nations. Like other practitioners of political economy in the eighteenth and nineteenth centuries, and in sharp contrast with most economists nowadays, Smith had a highly developed sense of history, and rarely mistook his own theoretical constructions for social facts. Writing of the state of the economics profession in the United States towards the end of the nineteenth century, Greenfeld observes:
The idea of science among American intellectuals who professed themselves economists could not reflect the nature of their social subject matter, of which they were ignorant; nor could it reflect a deep understanding of the activity of natural scientists, of which they were ignorant as well.
One might add that the conception of the method appropriate to the study of economic activity to which the majority of economists subscribe today does not reflect a familiarity with the history of their own subject--of which they are also ignorant.
By returning the study of capitalism to the intellectual disciplines where it belongs--sociology and history--Greenfeld's book deserves to bring about a paradigm shift in the understanding of economic growth. That is not to say her argument must be accepted as it stands. She is right to argue that capitalism is not the product of any one religion, but it seems cavalier to suggest (as she sometimes comes close to doing) that religion has not been a major influence on economic development. There are doubtless many reasons why Russia has not managed to achieve a modern market economy, but the anti-capitalist moral culture of Russian Orthodoxy must surely be important among them. On the other hand, one should not make the mistake of thinking that Russia never experienced a period of rapid economic growth--it did precisely that towards the end of the nineteenth century. It is therefore a reasonable question why this achievement was not sustained. Greenfeld's answer is that the sense of national identity in Russia was not linked with success in economic competition with other countries as it was in England, France and Germany. But one might equally well reply that national consciousness was never as highly developed in Russia as it was in England or France, say. After all, Russia remained a land empire, unlike these other countries, and the Russian State remains to this day an imperial construction. If Russia has not achieved sustained economic growth, one reason may be that it has not become a nation state.
A salient fact about our current circumstances is that in much of the world the modern State has collapsed. A monumental project of nation-building is under way in China, which is reflected in the rapid economic growth that has been recorded in some parts of the country. But in much of post-Communist Russia and parts of former Yugoslavia, large areas of Africa, much of the Middle East and parts of Asia such as Afghanistan and Pakistan, there is nothing resembling an effective modern nation state. In any future that can be realistically foreseen, it is extremely unlikely that there will be nation states in these parts of the world. If economic growth is a by-product of national consciousness, their future is bleak. Greenfeld comments that much of what is seen as globalization "is a reflection of the specific American tradition –its peculiar business ethic, which condones and encourages competition on an individual basis, and which is a product of the nature and development of American national consciousness". Greenfeld is right to note the absurdity of the belief that singularly American practices and values can be made universal. But her argument has wider, and -for some people, at least -more disturbing implications.
The popular idea of globalization was based on the belief, propagated by neoliberal ideologues and endorsed by the majority of economists, that economic growth is a result of the adoption of free markets. Today's evangelists for globalization are at one with Marx's disciples in believing that history is a process of convergence on a single economic system. In this view, we are on the brink of a new era, in which the rising prosperity achieved by some capitalist countries over the past few centuries will be replicated worldwide. If Greenfeld is even half right, this is a delusion: global capitalism is a mirage, just like Communism.
December 7, 2002
by WILLIAM A. COOK
A satellite view of attacks against western interests spotlights the reality that a world-wide intifada against the "developed" nations of the west and their allies is already underway. Russian apartment houses and, recently, a theater, the Twin Towers in New York, two Bali discos, a French super tanker blown up off the coast of Yemen, an Israeli hotel destroyed in Kenya, a failed missle shot at an Israeli passenger plane off the coast of Africa, and others too numerous to mention demonstrate the magnitude of the effort underway to wake up the west to the consequences of its dominance over the lives and interests of peoples throughout the world. Recent events, coupled with the investigations of Jean-Louis Bruguiere, the French Judge who has been tracking terrorist acts for two decades, forces us to grapple with why this is happening. Bruguiere recently warned that France is one of the two or three countries "most at risk of attack due to its historic links to Algeria." "Islamic extremism," he noted, "is breeding like a virus in Europe."(World-Rueters, Sunday, Dec. 1, 2002)
What conditions prefigure the coming "Intifada" against the United States and the west? The first is misunderstanding of the deprived and displaced people of the world, a subject far too broad for this article. Let us concentrate on what Bin Laden told us was the most egregious cause: "You attacked us in Palestine. Palestine, which has sunk under military occupation for more than 80 years. The British handed over Palestine, with your (US) help and your support, to the Jews, who have occupied it for more than 50 years; years overflowing with oppression, tyranny, crimes, killing, expulsion, destruction and devastation" (Bin Laden, "Letter to America," 11/24/02). Harley Sorensen pointed out, tellingly, that Osama's letter had virtually no publicity in the American Press; America's corporate press does not want Americans to know why they are hated. (San Francisco Gate, Dec. 2, 2002)
Most citizens in the west, and certainly American citizens, do not understand the Palestinian people, their history, and their perception of the existence that has been thrust upon them, what I will label as "The Stolen Homeland"; the second is consciousness of the disparity that exists between the Palestinians and the Israelis and the reluctance of the state of Israel and its major supporter in the west, the United States, to engage that disparity, which results from the economic controls, the indignity and disrespect engendered by the Ultra-Orthodox Right-Wing Likud and the military, and this I label "The Chasm of Indifference and Desperation"; and, finally, the third is the corrosive destruction of a culture by brute force in the bulldozing of their memory and the destructive power implicitly present in globalization that impacts the uniqueness of a people's culture, its economic structures, and its values, what can only be labeled "Ethnic Erasure by Globalized Capitalism".
In many ways, these three form a complex interwoven fabric that makes it difficult if not impossible to see each clearly, yet, unless we make the attempt, we are doomed to find ourselves constrained to our homes through fear of the unknown individual(s) who must resort to self-sacrifice as the last resort to rectify the unacceptable disparity that allows no alternative.
The Stolen Homeland:
Most Americans know nothing about the way in which Israel was created. They do not know that Britain turned Palestine over to the UN for resolution because it could not continue its governance in light of the rising tensions that existed between Zionists and Palestinians. In 1947 the UN General Assembly resolved by a two-thirds vote to endorse the partition of Palestine into a Jewish and an Arab state (Resolution No. 181). The Palestinians did not accept that resolution, yet the partition went forward even though the General Assembly had no legal authority to divide a country especially through the process of endorsing a Resolution. The proposed partition called for 55% of the Palestinian area to be given to the Israelis, yet they comprised slightly more than 30% of the population and owned only 6% of the land. The Jewish population was composed mostly of foreign-born immigrants, only one-third of whom had acquired Palestinian citizenship. In addition, the territory allocated to the Jews comprised the coastal plain from Akka to Ashdod and other fertile lands. The Palestinians were left with mainly mountainous areas and arid regions.
Americans receive most of their information regarding the Israeli/Palestinian conflict from corporate controlled, politically manipulated mainstream media. Few have the opportunity to scrutinize the reality of the history that has resulted in the tensions that exist in the mid-east. Few know that Palestinians are, in all legitimate ways, the indigenous population of the area; that the land now occupied by the Israelis was owned by the Palestinians; that in 1870, 98% of the population was Arab and only 2% Jewish; that in 1940, Palestinians accounted for 69% of the population even as Jews thronged to the area from Europe in an attempt to escape the Nazis; that in 1946, the year that the UN created Israel without the approval of the indigenous population, the Palestinians represented 65% and the Israelis less than 35% of the 1,845,000 who lived there; that Israel now occupies all but 22% of the Palestinian land having taken it in the 1967 war and consistently refused to return it to its proper owners in direct refutation of UN resolutions demanding its return; that Israel has created illegal settlements in Palestinian areas, with a population in excess of 400,000, taking land and aquifers from the Palestinians, 34 of those settlements created during the two year Prime Ministry of Ariel Sharon, and in direct violation of UN mandates.
Is it surprising that the Palestinians have rejected the existence of a state imposed upon its population by foreign powers? Is it surprising that it has rejected the Oslo Agreement when its full implementation was not part of the "final" settlement and provided no resolution of the refugee problem? Is it surprising that a people occupied by a state supported by the world's greatest military power which supplies the Israeli people with more than 3 billion dollars for military hardware a year, more than any other nation receives from the US, finds itself oppressed and humiliated?
The Chasm Of Indifference And Desperation:
On May 4, 2002, the New York Times reported that "It is safe to say that the infrastructure of life itself and of any future Palestinian state roads, schools, electricity pylons, water pipes, telephone lines has been devastated." The most recent estimate of the infrastructure damage alone by the UN and the World Bank comes to over 361 million dollars. The totality of Sharon's destruction can never be known because Sharon refused to admit the United Nations to inspect the carnage, but it is safe to say that if we limit our focus to the Human Rights Watch reports alone, the savagery is more than terrorism, it is barbaric. Palestinians, especially the families who suffered immediate devastation of homes and family members, cannot but perceive the dehumanization of their lot by the Israelis. HRW reports that 22 civilians in the Jenin refugee camp "were killed willfully or unlawfully" (5/3/02), civilians were used as human shields, medical personnel were killed, and civilian homes became military targets. Yet no one cared.
Perhaps nothing is so incomprehensible to the deprived as the indifference of those who are responsible for the deprivation. Nothing is more devastating to human dignity than to be ignored. Nothing is more destructive to communication among people than the hypocrisy of "developed", "democratic", and "Judaic-Christian" nations exploiting "under-developed", non-democratic, and non-Christian nations.
The United States, led by a "reborn" Christian, supported by a fundamentalist Attorney General and by fundamentalist denominations like Pat Robertson's, rally behind support of Israel because they believe that their God has determined that the Jews must be resident in "Judea" if they are to be converted to the one true faith, Christianity. They willingly accept the necessity of Sharon's slaughter of the Palestinians to accomplish that goal. It matters not that Christ said you should not take up the sword; the myths of the Old Testament shall carry the day, "An eye for an eye, a tooth for a tooth." These are the Christians who support the right-wing elements among the Jews who call Palestinians "two-legged vermin" (former Prime minister Golda Meir) and "drugged roaches in a bottle" (former Prime Minister Begin). These are bloodthirsty Christians unwilling to give their cloak to the beggar, unwilling to give shelter to the homeless, unwilling to give food to the hungry, unwilling to succor the weak and the dying. These are the Americans willing to provide on average $500.00 per Israeli citizen per year beyond that provided for the military, but unwilling to provide comparably for the Palestinians. This is the born again President who extols Sharon, a man condemned by an Israeli court for allowing the wanton slaughter of thousands at Shabra, as a "man of peace."
Considering the slave-like conditions imposed on the Palestinians by the Israelis, it might be instructive to hear the thoughts of the former slave Frederick Douglas as he contemplated his condition: "I loathed them (my oppressors) as being the meanest as well as the most wicked of men." And that inner anger tormented him day and night, "I saw nothing without seeing it, I heard nothing without hearing it, and felt nothing without feeling it I found myself wishing myself dead " Here is an explanation for the "suicide bombers," intolerable indignities and humiliations inflicted by those who are the chosen of God. They are acts of absolute desperation wrought by futility as Daoud abu Sway's family suggested as they attempted to explain why a father of eight would detonate himself: "That he did so illustrates the depths to which people caught up in this conflict are sinking." (L.A. Times 12/9/01)
Consider the slave-like conditions we as Americans have imposed on the deprived of the world to fuel our economy at home and we can understand how desperation will seek its solace in destruction through sacrifice. Such people need only a bin Laden, a man driven by hatred of the perceived oppressors, to bring the requisite money to achieve his ends, and the future state of fear for America becomes immediately apparent. Israel's oppression of the Palestinians mirrors how the deprived of the world perceive America, a land that could receive the same condemnation from Hosea in 800BC: "Sins of greed are compounded by Israel's arrogance."
Ethnic Erasure By Globalized Capitalism:
Beyond America's image as overseer of Israel and protector of her right to exist, is the image created by America as the protector of transnational corporations. This image coupled with the presence of America's military creates a negative image of the US as the perpetrator of Third World exploitation, the destroyer of forests, minerals, metal resources, land, and people. And the people of these poor nations must live with the environmental disasters, soil erosion, pollution, poisonings from toxic waste, and industrial accidents. With only 5% of the world's population America emits 1.5 billion tons per year of carbon dioxide, a quarter of the world's total.
Hatred of America grows with each passing day. The most recent Pew Foundation Report detailing that dislike came out this week and shows that European states as well as Arab have the same loathing. People feel deprived, taken advantage of, and ignored. They see the disparate conditions because the west has made available, through satellite communications, the viewing of the standard of living available in the west, particularly in the US, since its programming dominates the airwaves. They understand that Americans and Europeans spend 17 billion a year on pet food, 4 billion more than the estimated annual additional total needed to provide basic health and nutrition for everyone in the world. (UN Human Development Report, 1997). The excessive use of natural resources in the US, resources taken from Third World countries, explodes visually on the TV screen even in the worst of hovels in Africa, South and Central America, Asia, and the Mid-East. These are the deprived who have nothing to lose and much to hate. These are the people that the CIA and the FBI talk about when they warn Americans of future "terrorist" acts. As this anger erupts, America will live in the same atmosphere of fear that envelops Israel. Consider the reality of this "Ethnic Erasure by Globalized Capitalism" and the perceptions and reactions it causes in the minds and hearts of the deprived as it prefigures attitudes and behaviors in lands beyond Palestine impacted by the west and particularly the United States. As transnational corporations spread their tentacles around the world, they create strangleholds on local governments forcing them to concede relaxation of tax income, release of land areas for industrial development, sale of natural resources, and exploitation of citizens. Martin Khor has noted how transnational corporations have moved their operations to Third World countries " where safety and environmental regulations are either lax or nonexistent." The result is exposure for Third World citizens to hazardous products, toxic or dangerous technologies, crippling drugs, pesticides and the like. (Global Economy and the Third World)
The introduction of global agreements that benefit transnationals has negated the standards forced upon these corporations in the United States, standards that require regulations to protect against child labor, that regulate safety conditions, and protect workers' health. Neither NAFTA nor GATT imposes regulations that ensure worker protection in these areas. Sunday's Los Angeles Times (December 1, 2002) carried a magazine story detailing the end of Levi Strauss Company's production in America. Levi had to resort to production abroad because it is caught in the web of competition and must "chase low-cost labor." These wages reflect the full exploitation of people in "underdeveloped" countries: Guatemala, 37 cents per hour; China, 28 cents; Nicaragua, 23 cents; Bangladesh, 13 to 20 cents.
The transnationals have deforested more than half of the forest area in developing nations, created large infrastructures to support industrial projects, built huge steel plants, cement plants, vast highways, bridges, all requiring enormous land holdings taken out of the control of the weak nation states, all needing energy resulting in hydroelectric dams and nuclear power stations. These conditions result in displacement of thousands of people, the crowding of populations into cramped quarters in urban areas, sanitation problems, homelessness and poverty.
The chasm of disparity glares through the statistics: the richest fifth of the world's population receives 86% of global income while 1.2 billion live on the equivalent of less than a dollar a day. Edward Goldsmith explains the situation in these terms: "Even strong national governments are no longer able to exert any sort of control over TNCs (Transnationals) Indeed, TNCs are now free to scour the globe and establish themselves wherever labor is the cheapest, environmental laws are the laxest, fiscal regimes are the least onerous, and subsidies are the most generous." (Development as Colonialism) Documentation of human exploitation in Indonesia, Vietnam, China, Malaysia, and Mexico is readily available. What is not available, then, is an understanding of the feelings that gnaw at the souls of the deprived: the sense of hopelessness, of indignity, of lack of respect, of dehumanization.
In addition, the United States military presence in a hundred and fifty nations, ostensibly for the protection of US interests, results in huge areas owned and/or controlled by a foreign power. As the US pours millions of dollars into the economy of these countries, the benefits are seen by the local population as going to the local power elite, as is evident most recently in the case of Saudi Arabia. But the same conditions have resulted in flare-ups in Japan, Korea, and Greece (until the US was expelled under the Papandreou regime in the early '90s). In short, the people of these countries are at odds with their rulers. This has been painfully evident in recent months as even Kuwait citizens have demonstrated against their government and the US.
As a result of America's monetary support since its founding in 1947, Israel has prospered militarily and economically at a rate far greater and faster than any other nation anywhere. The US has poured more than 3 billion a year into the Israeli military since 1947, an amount that since 1995 equals more than 8 trillion dollars. Considering that this investment ensures the continuation of the military-industrial complex in the US, since Israel is required, by the agreement that provides this support, to buy three quarters of its equipment and technology from US firms, it is crystal clear why the corporate elite desire to maintain Israel's dominance in the mid-east. Israeli allegiance to the US interests ensures that the oil needed by the US will continue to flow. But Israel can demand a heavy price for their collusion with the US, and hence their defiance of Bush's demands that they withdraw from the West Bank.
The US's support for Sharon's government is touted throughout the world without regard for its consequences by Senate and Congressional resolutions; the standard of living in Israel which is a mirror image of its host, the United States, stands in mocking contrast to the squalor of the refugee camps and the sewage infested alleys of the Palestinians who are crammed into miniscule segments of land surrounded by their oppressors; the oppressors army controls Palestinian movement through heavily guarded positions with towers, barbed wire fences, and crossing guards whose attitude toward the Palestinian is one of hatred and distain. These conditions give rise to jealousy, hatred, vengeance, despair, retaliation, and sacrifice against the enemy; conditions every Israeli should understand from their own unfortunate history. How many Jews offered themselves for sacrifice against the Nazi forces during the war and against the British when the Israelis were attempting to establish a Jewish state in Palestine?
In their drive to own and control all of Palestine, the right-wing Likud party and the Ultra Orthodox look only to the Old Testament, a text 2500 years old that does not reflect the reality of the past two thousand years. Yet their absolute commitment to these ancient myths legitimizes their actions to suppress the Palestinians. They encouraged, nay they forced Sharon to bulldoze whole sections of ancient cities sacred to the Palestinians, demolish mosques so even the memory of their existence would be forgotten, destroy documents that established ownership of properties and the personal identities of Palestinian citizens as though through that destruction they could erase the memory of a people. How ironic that this was the purpose of the Nazi regime's eradication of the Jews.
They are indifferent to the plight of those who have been driven from their homeland penniless, uncompensated for the homes they have lost, who await the day when they can return after fifty years in refugee camps in foreign lands. They are indifferent to the rampant poverty that sits next to them in Jenin, Ramallah, or Rafah; they do not see or want to see the wastelands that the tanks and bulldozers have created in Rafah as they smashed 100s of homes, dozens of shops, leaving hundreds homeless, a scene repeated over and over again throughout Palestine. Yet these are the religious of Israel, those who claim to believe in the one true God, a God who willingly allows the destruction and slaughter of thousands of defenseless women and children. But, blinded by their ambition to claim once again God's Promised Land, they overlook the reality of what they have created, a people more defiant then ever, a people who have endured and will continue to endure even if that be their only lasting claim to their humanity, a people filled with patience, lacking hope, but determined to be a people, to retain a culture, to love a God, to share what little they have with those worse off than themselves,
The above scenario plays throughout the world in those nations labeled underdeveloped. The deprivation and poverty have been created by Capitalism's global thrust and by the indifference of its corporate elite who have only their investments to protect and the ultimate fulfillment of their faith's ultimate promise, globalized markets where products can be produced at the lowest possible cost and return the greatest profit for the investor regardless of the consequences to the workers, the natural resources, or the cultures that are destroyed in the process. Islamic fundamentalism has become the "repository of a passion for pure belonging, a passion exacerbated by the unsettlements of globalization," according to Todd Gitlin in a review of In the Name of Identity. (L.A. Times Book Review, 9/23/01). Gitlin's point refers to the helpless state of those deprived throughout the world, and Islamic fundamentalists capture only a small percentage of those deprived. He cautions that we must understand the hatred that drives the terrorist for he/she is neither a god or an animal but a wounded person touched by a community of wounded people among whom arises an agitator "who promises victory or vengeance" against those who deserve it and they slip imperceptibly from denouncing injustice to perpetrating it.
Unless the US and the west recognize the inherent and explosive consequences generated by their indifference to the plight of those exploited, unless sincere attempts are made to realign the disparity between the haves and the have-nots, unless the arrogance of the elite changes to empathy for the deprived, the vicious and insidious behaviors of the fanatics, the desperate, and the powerful will explode throughout America.
William Cook is a professor of English at the University of La Verne in southern California. He can be reached at: cookb@ULV.EDU
Reproduced gratefully from an Internet Forum posting.