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With cut-throat competition and communization of hardware the pressure on salesmen sometime became unbearable and they resort to bribery to win the contract.
This just one case of general corruption problem under neoliberal regime. See Corporatist Corruption
The misconduct of the IT industry no longer surprises anybody. In a way it is similar to the parade of financiers accused of misdeeds, but on smaller and more limited scale. Have large corporations lost whatever ethical compass they once had? Or does it just look that way because we are paying more attention than we used to?
This is hard to answer because fraud and corruption are impossible to measure precisely.
In 2001, Transparency International’s Corruption Perceptions Index ranked the United States as the 16th least-corrupt country. In 2012, the nation had fallen to 24th place. The World Bank also reports a weakening of corruption controls in the United States since the late 1990s, so that it is falling behind most other developed nations. This is a direct effect implementing neoliberal economics of as it it often called casino capitalism.
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March 29, 2015 | naked capitalism
An unusual move by a thin-skinned too big to fail bank, Citigroup, to slap down the finance-skeptic faction of the Democratic party appears to be backfiring.
Reuters reported on Friday that Citigroup was making clear its displeasure with the way Elizabeth Warren had been calling to its overly-cozy relationship with the Administration by threatening to withhold its customary bribe, um, donation to the Democratic party:
Big Wall Street banks are so upset with U.S. Democratic Senator Elizabeth Warren's call for them to be broken up that some have discussed withholding campaign donations to Senate Democrats in symbolic protest, sources familiar with the discussions said.Representatives from Citigroup, JPMorgan, Goldman Sachs and Bank of America, have met to discuss ways to urge Democrats, including Warren and Ohio Senator Sherrod Brown, to soften their party's tone toward Wall Street, sources familiar with the discussions said this week.
The story noted that the amount at issue was only $15,000 per bank, so this scheme is more a warning shot that a serious move, particularly since it is aimed at the Senate, and thus pointedly steers clear of the Big Finance stalwarts, the Clintons. But if you widen the frame a bit, there is more at stake here than you might think. Warren has declared war on the Wall Street wing of the Democratic party, including the powerful network of proteges and fundraisers affiliated with former Treasury secretary, former Goldman partner, and more recently, vice chairman of Citigroup Bob Rubin. One politically-savvy financial analyst calls this cadre "the Rubino crime syndicate".
Warren fingered Citigroup's extensive connections to the Executive branch when she fought the addition of a rider to a must-pass spending bill that would eliminate a Dodd Frank provisions to force banks to stop trading certain derivatives in taxpayer-backstopped entities (the so-called swaps pushout rule). As you'll see below, not only did Warren have the bad taste to point out that the current Treasury secretary is a Citigroup alum, and that Sandy Weill, Citigroup chairman, had offered Timothy Geithner the opportunity to run the bank, she also said that Dodd Frank had come up short by not forcing Citigroup's breakup. If you've not seen this speech, you need to watch it. You'll understand why Citigroup is desperate to find a way to leash and collar Warren.
https://www.youtube.com/watch?v=DJpTxONxvoo
participant-observer-observed, March 29, 2015 at 3:55 am
I wonder how many of the American public know the Citigroup shareholder status of Saudi Prince Alwaleed bin Talal?
Keep interfering in legislative affairs, Citigroup, and lets get more and more daylight exposing all the dark alley ways you have over there!
How many DoD checks get processed through Citi to pay for the new Saudi front end to the US war economy? I bet that balance sheet is interesting, and may show that Citi has already moved its wares from the Dems into the Cheney/Halliburton/Xe (or whatever it is they call themselves now) camp. Must make the billions of HSBC cartel drug money look like monopoly game money! In that case, making a public show of crying over spilled milk is just hankering after more legislative give – aways and is more a call to GOP than dems.
Aren't we well into the oligarchy titan demigod wars? Prince bin Talal vs Rubin ? We have Ted Cruz's wife on leave from Goldman. Where's JR (Dallas fans)?
nat scientist, March 29, 2015 at 8:54 am
Not to mention the "sanctions" which pump up the jam for the "blessed" alternate route AKA economic warfare and Holy smoke.
John, March 29, 2015 at 9:40 am
Remember how the American taxpayer saved the majority of Saudi Prince Alwaleed bin Talal 's fortune that was invested in Citigroup when we bailed out Wall Stree ? About 11 billion at the time.
Then he went on the Charlie Rose Show about a year later after trillions of taxpayer money was extorted from us and given to Wall Street and said that America's debt and deficit were unacceptable and "entitlements" needed to be cut.
Every time he tours America since then he feels free to tell us that our debt and deficit are unacceptable and demand that the government do something about cutting "entitlements"
Jim Haygood, March 29, 2015 at 10:51 am
Citibank was a dynamic, rapidly-growing financial innovator … half a century ago. Lord, don't we miss ol' Wally Wriston.
Now Citi and its peers resemble the U.S. steel industry in its latter days, when its only edge was government handouts and using political influence to crassly bend the rules in its favor.
It didn't work for Big Steel. It wouldn't work for Big Banking, except that now the political corruption goes far deeper, and a banking cartel called the Federal Reserve has gotten itself installed as a quasi-governmental agency.
Abolish the freaking Fed.
Yves Smith, March 29, 2015 at 1:50 pm
Um, that innovation under Wriston brought us the Latin American debt crisis. It was Wriston who said countries don't go bankrupt.
flora, March 29, 2015 at 6:38 pm
Wally Wriston? Why not Charlie Mitchell, "Sunshine Charley" from the 1920's at National City Bank (later Citi)? Sen. Carter Glass – of Glass-Steagall regulation – said, "Mitchell more than any fifty men is responsible for this stock crash." (1929 crash).
Pretty devastating article about Citi in the April 2015 issue of Harper's Magazine by Andrew Cockburn. Plus ça change, plus c'est la même chose. Especially at Citi, aka National City Bank. Mr. Clinton, eliminating Glass-Steagall banking regulations, helped create the the current Citi monster.cnchal, March 29, 2015 at 6:00 am
The story noted that the amount at issue was only $15,000 per bank . . .
The banks would like to bribe Democratic senators, and are only offering $15K each? That's on a similar scale as Apple or Walmart paying it's Chinese slaves $2.00 per day. The senators will need a much bigger bribe for the banks to be successful. The greed and the gall of the banks. They won't share their stolen money with anyone.
Ned Ludd, March 29, 2015 at 9:41 am
While in office, corporations give a taste to hook politicians. The luxurious lifestyle comes after a politician leaves office.
After leaving (or being thrown) from office, politicians who were loyal to the wealthy get to fulfill all of their desires; which entices the next generation of political opportunists to put themselves up for sale. They become advisers or lobbyists, earning six figures per speech, while traveling around the world and vacationing at resorts under the guise of "ideas" conferences, which are simply venues to discuss new ways to fleece the rest of us.
For the most talented, most ambitious, or most connected politicians; the media then works to erase their past misdeeds; giving them (or members of their family) the ability to enter elected office again, for a new cycle of deceive-betray-and-profit.
bh2, March 29, 2015 at 10:31 am
Huey Long once commented that an honest politician is one who, once bought, stays bought.
Most do, regardless of party.
The banksters fund all sides and could care less which side "wins". Hence they always come out on the "winning" side.
OpenThePodBayDoorsHAL, March 29, 2015 at 6:03 am
The pathetic idea that Elizabeth Warren's softball questioning of the BankerState's absolute right to absolute rule is somehow seen as a glimmer of hope is…pathetic.
Read your history books for real opposition that has been mounted in the past, Andrew Jackson, William Jennings Bryan.
These are criminal enterprises and must continually be brought down by a (non-somnolent) population. Yes yes blah blah "oh oh but they perform a critical function in credit creation etc etc and if they failed it would be really disruptive" blah blah blah. It has become blatantly obvious to all but the infested presstitutes that their game of ever-expanding credit and new ways to steal from the poor is teetering as badly today as it was 7 years ago when they first began gifting money from taxpayers and savers to pay off their gambling debts.
I know we'd like to have at least a little hope with someone like Warren but I think we all need to grow a pair (girls too), get mad, and start screaming and educating people about much much more radical solutions than just a kindly lady being a little impolite.
Yves Smith, March 29, 2015 at 6:40 am
It's spurious to compare what a President can to do what a Senator can accomplish; we were against Warren running for the Senate for that very reason. But she has made remarkably effective use of the very constrained bully pulpit a modern Senator commands.
Rhetoric was more heated in the 19th century than now. And pray tell, what did William Jennings Bryan actually accomplish? Remarkably little. And unlike Warren, he spent his entire career in politics and had effective control of the Democratic party. It was Roosevelt, and not failed three time presidential candidate Byran, who broke up the trusts.
Warren has repeatedly called for prosecutions of bankers. You can criticize her on other fronts, but you are really off base here.
Code Name D, March 29, 2015 at 12:12 pm
I am not so sure.
Politics, like war, has a lot of angels in operation. One may think they are taking the enemy on and holding their own, only to discover the real force has snuck past you and cut off your supply line.
Today the political strategy is to not fall for the appearance of victory. I am not sure Warren has figured that out. Her speech here still makes it appear she thinks that Republicans and Democrats can still be reasoned with, hence her conciliatory tone.
Where dose she think she can go with this? If she gets the provision pulled out… what has she actually won? It's not like there aren't already plenty of other provisions insure the banks won't get bailed out already enshrined in policy. The very term "too big to fail" is predicated on the idea that we can not afford to let Citi Bank fail. So even if Warren is able to get all of these provisions removed, once City gets into trouble again, panic will rain in Congress and they will pass an emergency act granting just such power.
The reason why reformers were firebrands in the 30s was because they understood the balance of power. When politicians are bought off, you can't reason with them – but you can turn his political base against them for their decisions and cause them to lose re-election. And you don't do that from the congressional podium, but by going directly to the people. You don't so that by being calm and consolatory, but by pounding the podium and expressing the outrage that the events deserve.
Sorry, but Warren is going after small fry and working for tiny victories. Her heart is in the right place, but her strategy is still too little, too late.
hunkerdown, March 29, 2015 at 6:06 pmThe balance of power has shifted. Now that a Senator never really *needs* to see or set foot in their state again for any reason, they have six whole years to complete their grifting project and decamp. The act of voting cannot discipline a system, especially not one that depends on it for its legitimacy. Maybe the peasants get off on the whole fantasy of judgment day and the arrogance to believe their childish electoral games are actually an exercise of meaningful power, not just giving them a father without which most Americans are too scared to think independently, let alone venture out at night.
Also, now that the political class has equated cheap pathos with deliberation and cheap ethos with common interest, the whole stupid, half-assed performance of caring on the part of the upper class depends on the willingness of the populace to suspend disbelief every time they venture out-of-doors and see something incongruous with their personal Matrix that they "earned" by "paying their dues", which is only a gross euphemism for systematic hazing and, like any other scheme of deferred compensation you can't enforce, religious nuttery.
participant-observer-observed, March 29, 2015 at 8:56 pm
I believe that you are correct that we need to be skeptical of another Hopium-for-change delerium pipe smoke and mirrors show putting the electorate back to sleep, and that the populace must be engaged to make real change. Something must be learned from the Obama presidency on that front (Clinton 2.0 'used-car salesman,' 'go back to bed, kids, everything will be fine' talk)
But given an engaged populace (for the sake of argument, since we don't have one), why not have Warren as bankster watch-dog too?
Having a skeptical, watch-dog voting public and a senator both together is not to be discounted! (And throw in Alan Grayson too, for fearless watch dog track record)
We cannot afford to wait around for 1-size fits all. Coalitions (L-R alliances in Nader-speak) have to be found to fight issue by issue, AND where they converge (War economy + Wall St together). Perhaps YOU can show E Warren where the Israeli+Saudi war economy implicates US banking and enlighten her!
Code Name D, March 29, 2015 at 10:05 pm
I love this place because of questions like these.
Let me go over these one at a time for both hunkerdown and participate-observer-observed.
1) The balance of power has shifted?
Has it? I am curious how you might present an argument for this assertion. I certainly do not see it. (As is my point, I must admit.)
2) The act of voting cannot discipline a system.
I completely agree with one caveat. The act of voting ALONE can not discipline a system. Voting can only place or remove certain people from power. But the system we have now is either random (where voters can not make informed decision on who or what they are voting for) or pointless (where the all of the options presented will produce the same outcome.)
But I suspect you would agree that a substantive political sea-change can not be legitimate if it takes place without the consent of the governed. And voting is the only formal way of registering the will of the people. At some point, you must go to the polls.
But an election is actually one of the later stages in the process. Delegitimizing the current system is among the first steps.
3) Why not have Warren as backster watch-dog too?
I actually agree with you. Why not have her as a watch-dog? Now show me how she is an effective watch-dog?
I am not calling into question the quality of Warren's intentions or even her competence. I am calling into question the soundness of her strategy, assuming that it can be argued that she actually has one.
4) We cannot around to wait around for 1-sice fits all.
I am going to assume you meant that we can not wait around for a singular savior. (Do correct me if I am reading that wrong.) I would agree actually. But then I wonder why it is that this seems to be our strategy most of the time, because right now there are plenty of people who are latching onto Warren for precisely this reason.
But I have also come to suspect that change won't come from grass-roots activism either. That strategy has had more than sufficient time to show results and thus far we have very little success we can point to.
A real push for reform will likely require something between the two, involving the participation of singular leadership as well as an active popular movement to skeptically review such ideas and act on them. It is often said that the mark of a great leader is one who inspires, calls upon, and depends on the leadership of those he pretends to lead,
I have great difficulty imagining Warren as being that kind of leader.
Adam Eran, March 29, 2015 at 12:54 pm
While I'll second the notion that Warren's "victory" is pretty weak tea, I'd suggest admiring someone besides Andrew Jackson. He's the fellow responsible for the Trail of Tears genocidal Indian relocation (*after* the Georgia supreme court validated the Cherokees' title to their land in Georgia).susan the other, March 29, 2015 at 1:46 pmFor bonus points, he paid off the entire national "debt" in 1835, for which the U.S. was rewarded with the panic of 1837, the worst of its seven Great Depressions. Such Depressions follow major "debt" reductions, so the praise for the "fiscally responsible" Clintons, who ended welfare as we know it, is at least misplaced too.
The Saudis are the key. Together with the right wing Israelis, they are determined to create a war, however chronic it is, and luke-warm, to maintain control over the energy resources in the Middle East. The Gulf War has long since become an oxymoron because in siphoning off the money to perpetuate the war, the USA was impoverished. Just like the Cherokee had to be stripped of their land, the middle class became the goat. So busting up City is a red herring. Since our nation has been hollowed out by this modern imperialism, the only thing that will fix the mess is to assert national superiority over the clowns who can't quite ever end a war. Nationalize the banks. And take control of the military as if we were a democracy.Ulysses, March 29, 2015 at 7:57 pmYves Smith, March29, 2015 at 1:52 pm"Nationalize the banks. And take control of the military as if we were a democracy."
If I thought someone could actually accomplish that simple 2 step program, he or she would have my vote for POTUS in a heartbeat!!
Straw man. I never said Warren scored a major victory. I said she was creating the perception that the banks were vulnerable, which is an important shift given the power they wield in DC.susan the other, March 29, 2015 at 3:50 pmAnd fer Chrissakes, she's been a Senator for all of two years. Readers are comparing her to people who have had much longer careers in politics.
You are right. I confess I want her to barnstorm the whole political scene. Because I see her as a very inspired person with an understanding of the whole situation which is beyond most of us.Code Name D, March29, 2015 at 5:39 pmAnd because I fear that letting it go on with small fixes, is dangerous. But then it is a dangerous world.
What point are baby-steps when you are trying to compete with corporations that have a stride that spans the globe itself? Go big, or go home.Code Name D, March 29, 2015 at 5:38 pmThat is what is bothering me. She is showing the banks are venerable – when we have the argument that they are indispensable and can't fail left in tact, or worse, may actually be true at this point.GuyFawkesLives, March29, 2015 at 8:44 pmAnd the "venerability" of the banks is an elusion, a honey pot that they want her to go after. It makes her waster her time while they find a way to outflank her politically. I don't think the banks are vulnerable in this way.
She needs to undermine the authority of the banks to have power in congress before she can point out that the banks have too much power within congress.
The average American knows intuitively that the banks are corrupt and have too much influence on congress. But they have few facts to support that intuition. When cooler heads prevail, the rational argument will currently side with the banks every time.
Meanwhile, congress operates under the concusses that the bank's power within congress is proper and justified. The banks are what create the money supply and jobs. They are responsible for growing the economy, a task that government is ill-suited to manage even with the best of intentions. I have seen nothing from Warrant to lead me to think she is skeptical of this dynamic, let alone critical.
The secret to propaganda resides in the truth that remains undisclosed – not in the lies that they would have you believe. The fact that we have a revolving door between the administration and the banking industry is hardly undisclosed and is actually outside the point. Even if she did manage to lock down the revolving door, ideas and "economic theory" that favor the banks is already in place and well established in academic curricula.
What she needs to go after are the consequences of the decisions that are made and the reasoning behind those decisions. Even the deliberative process for those decisions is a proper target. Who makes those decisions is and will continue to be a red haring.
Comparing her with more established politicians is fair game when she is repeating their mistakes and repeating their narratives.
Where were you when we were getting beaten up and maced in the streets? People successfully laughed like the banks wanted you to at Occupy Wall Street. And then once again the populace remains obedient.Ulysses, March29, 2015 at 7:08 amI think I need to begin building that guillotine in my front yard.
DanB, March29, 2015 at 8:25 am"Warren has repeatedly called for prosecutions of bankers."
I do agree that Elizabeth Warren is to be commended for her pushing back against the power of the banksters. Yet she could go much further than her vague calls for accountability of the "too big to jail" fraudsters.
She could use her "bully pulpit" to outline specific crimes committed, by specific criminal banksters, and insist that there will be no business as usual until these named individuals are hauled into criminal court by the DOJ.
Holding up legislation, appointments etc., is all well and good -- but we have an intensely criminogenic atmosphere today on Wall Street, and we desperately need an Elliot Ness to start putting these fraudsters behind bars!!
Where Warren will go from here, if she's not engaging in a Machiavellian veal pen ruse, is to openly challenge and expose Obama, the Clintons and the entire DLC corrupt enterprise.Carla, March29, 2015 at 11:18 amShe's my senator and when some friends and I met her in August 2011 we told her she'd one day have to face the contradiction between the real interests the Democratic Party serves -- the 1% -- and her commitment to average Americans.
And I wish she'd knock off that "Middle class Americans" rhetoric that ignores the working poor and the dispossessed. On the other hand, maybe she's sincere and is unconsciously playing the role of "the first pancake" of -dare I still hope?- a citizens awakening to the class loyalty inspired depredations of both parties.
"She could use her "bully pulpit" to outline specific crimes committed, by specific criminal banksters, and insist that there will be no business as usual until these named individuals are hauled into criminal court by the DOJ."Vatch, March29, 2015 at 12:07 pmFor that matter, Senators Sherrod Brown and Bernie Sanders could back her up. Wouldn't kill 'em.
Excellent point about Brown and Sanders, Carla. For those Naked Capitalism readers who live in Vermont or Ohio, here's their contact information:Yves Smith, March29, 2015 at 2:00 pmBrown, Sherrod – (D – OH)
713 Hart Senate Office Building
Washington DC 20510
http://www.brown.senate.gov/contact/
(202) 224-2315
Ohio:
Toll Free: 1-888-896-OHIO (6446) or
Cincinnati: (513) 684-1021
Cleveland: (216) 522-7272
Columbus: (614) 469-2083
Lorain: (440) 242-4100Sanders, Bernard – (I – VT)
332 Dirksen Senate Office Building
Washington DC 20510
http://www.sanders.senate.gov/contact/
(202) 224-5141
(800)-339-9834 (toll-free in Vermont) or
(802) 862-0697 (calling in the Burlington area)Are you crazy? If you want her to become irrelevant pronto and hand the banks a huge PR win, that's just the way to do it.Code Name D, March29, 2015 at 5:49 pmWarren has no subpoena powers and all of maybe a half a dozen staffers. She'd be accused of shooting from the hip, just making stuff up to raise money and get headlines, when Federal prosecutors and regulators, who have vastly more access to what really happened at the banks investigated for years and found virtually nothing criminal (the little they have involves money laundering).
She'd become the new Joe McCarthy, circa July 1954.
Irrelevant in what regard? To the banks and politicians that they bought off perhaps. If she tried to take these accusations to a court of law, you might be right.Ulysses, March29, 2015 at 8:09 pmBut the court of public opinion is a different theater. Here she doesn't have to bring chargers; all she really needs to do is demand answers to hard questions. It will be the justification the bank apologists that will do them in because they will completely believe the bat-crazy excuses they throw out. When they back-fire, they will change there tune with a completely new theory that will still not answer the original question yet still be crazier than the first.
jonboinAR, March29, 2015 at 8:45 pm"When Federal prosecutors and regulators, who have vastly more access to what really happened at the banks investigated for years and found virtually nothing criminal (the little they have involves money laundering)."
And these prosecutors and regulators are honest??!??
So you have just been pulling our leg all these years when you have written, again and again, that these banksters have committed all sorts of control fraud and other crimes? Now your tune has changed to "nothing to see here, move along, don't make waves??!!" Please say it ain't so!!
Yeah, that didn't quite make sense to me either. The message I have been getting from Yves for these several years has been that the regulators and government attorneys had never found anything prosecutable because they weren't really interested in doing so. The reply above sounds like a changing of that tune to that there may be nothing illegal to find. If so, this would support Obama's statement of several years ago to the same effect, which statement was roundly jeered by frequenters of this board and many others. But the Yves' reply is probably just slightly carelessly worded, or I'm not understanding something.participant-observer-observed, March29, 2015 at 9:18 pmGo back and read Bill Black's past years' of comments comparing GFC to S&L investigations, prosecutions, and convictions.JS Bach, March29, 2015 at 8:27 amI recall that one significant factor is lack of prosecutor numbers. Don't you remember the White House calling all of the state AGs down to trade in their pitchforks for apple pie crumbs from the WH linens? (Go back and read Harris or Schneiderman from 5 years ago vs now)
Warren's prospects re Wall St regulation are a matter of pragmatism and realism. Her work is a necessary but insufficient condition! She seems to understand her limitations and to make best use of what resources she has.
Until we elect a President who will appoint a US Attorney General who will prosecute criminal conduct by Wall Street, nothing will change. Neither Holder nor Loretta Lynch have pursued criminal prosecutions; fines by Wall Street are simply considered a cost of doing business passed along to the shareholders in the form of a temporary "hit" to the stock price.roadrider, March29, 2015 at 8:56 amIf the Dim-o-craps had any integrity they would have told the banksters to stick their campaign contributions where the sun doesn't shine a long time ago.BudinPA, March29, 2015 at 8:56 amBut, of course, they won't.
Please tell me, who could have removed the push-out amendment from the CR bill before the vote but didn't.craazyboy, March29, 2015 at 9:02 amTime is money. It's the age of ZIRP. Politicians get ZIRP for their time-money.Yves Smith, March29, 2015 at 2:03 pmWe must all tighten our belts for the good of the banking system.
IIRC, only five Senators voted against cloture, which was the vote that mattered. The threat was Warren filibustering a must-pass bill, so holding it up would have been a big deal.Henry Carraro, March 29, 2015 at 9:59 amBless her heart. Elizabeth Warren makes a hell of case, but all of this is smoke and mirrors. Bailing out the banks again the next time will be impossible.Yves Smith, March29, 2015 at 1:46 pmThe total U.S.A. debt is about 18 trillion dollars. But when you roll in unfunded liabilities like for example the one trillion in unfunded military retirement benefits for generals who can retire with 30% more annual income than the earned while on active duty.
The Federal Reserve hiding trillions and trillions of fictitious bond sales to no one. Paying governments to buy worthless paper. There is over 75 trillion dollars in unfunded liabilities. Yeah with a capital "T".
But wait there is more.
Last count there is nearly 625 trillion dollars in derivatives that are totally unfunded. Say what? The biggest banks are leveraged beyond my ability to fathom what could happen in case of a default. We the tax payers are liable to clean up this mess too. My question is how? And with what?
The question I leave you with is how can the U.S.A. be responsible for nearly 800 trillion dollars in unfunded liabilities. How did we allow this to happen?
*Sigh*JEHR, March29, 2015 at 10:05 amThe derivatives number is notional, and not the economic value. And of the global banks that are major derivatives players, only about 1/3 are American. Most of that number is really plain vanilla stuff like interest rate swaps. It also includes huge markets that are exchange traded, like Treasury futures and S&P futures, which are not risks to the banks at all. If you want to worry, worry about the economic risk of credit default swaps or OTC energy derivatives.
The US will never go bankrupt. It can create too much inflation. The banks most assuredly will be bailed out. Remember, the TARP made money!
The story noted that the amount at issue was only $15,000 per bank, so this scheme is more a warning shot that [sic] a serious move, particularly since it is aimed at the Senate, and thus pointedly steers clear of the Big Finance stalwarts, the Clintons.Expat, March29, 2015 at 11:44 amWarren is not a threat. She is the token populist. Obama can point to her to show how his administration and party are tough on banks. The banks can use her as their bogeyman and garner sympathy. The right can use her as a lightning rod and avoid having to address the issues.TimmyB, March29, 2015 at 12:15 pmIn short, Warren is perfect. The rest, however….
It is much too early to proclaim that Warren is "the token populist." If more populist candidates get elected, and/or more elected officials embrace populism, Warren will never be a token. If she keeps up the fight, even if she is not joined by additional elected populists, she will still retain the power of her "bully pulpit" to shine a light on Wall Street wrongdoing. To become a token populist, she will need to shut her mouth and go along with the rest of the corporate Democrats. Frankly, I don't see that happening.TimmyB, March29, 2015 at 12:34 pmWhile Obama might be able to point out to the public that Warren is a fighting
While Obama might be able to point out to the public that Warren is a fighting Democrat, to the people who really rule this country, the big money doners, pointing to Warren doesn't help at all. As this article highlights, Wall Street wants Warren neutered. If she were merely a token populist, instead of a real threat, Wall Street would have no need to neuter her. Token populists come already neutered.Yves Smith, March29, 2015 at 2:08 pmWarren stymied the Administration on Antonio Weiss, and they pulled out all stops to try to get him, including repeated articles attacking Warren in the Washington Post, the New York Times, and the Wall Street journal. She won a real David v. Goliath fight. And she and two other Senators stopped the Administration privately from another bank-boosting move that would have hurt large swathes of homeowners. I'm not at liberty to say more. But if I heard of one incident where a private talking-to stopped the Administration, there may be others. And more to the point, the fact that a mere tea and cookies conversation would make the Administration back down says they fear and respect her, and want to take her on only when they are confident they will win.OpenThePodBayDoorsHAL, March29, 2015 at 6:04 pmI see her as systematically taking on bigger and bigger targets, demonstrating that she can do damage and moving up to bigger and more important issues.
Yves I always appreciate it when you chime in. Yes Bryan didn't accomplish much. Yes A. Jackson genocided some folks (to use a current idiom). But we are very far from the point when tiny incremental wins like Antonio Weiss can make any difference at all, we are at the "hair-on-fire" stage across the board and need some true firebrands not just to speak truth to power but to inflame, enrage, inspire, and overthrow. Our Constitution says it is our right and indeed our duty to overthrow tyranny…and that's what this is by any definition of the term. The entire relationship between the citizen and the state is completely screwed up, we don't need to tinker, we need to reboot. I would call America in 1969 a reboot: we stopped a war, we threw out a crook president, and we completely changed the society. We can do it again…and boy do we need to.jonboinAR, March29, 2015 at 9:02 pmWarren doesn't appear so far to be the firebrand type. Will it be enough for her to be dogged and incorruptible? As Yves seems to be suggesting, biting off a little at a time, but ina relentless fashion?Felix_47, March29, 2015 at 11:56 amThe Saudis and the Israelis figured out how cheap our politicians are long ago. I would love someone to investigate just how much mid east money was involved in the Citigroup meltdown and how much was saved for them. I suppose the bigger fees have to go to the conduits of these funds…..the Harvard/Yale lobbyist lawyers….who make money both ways. If one wants to know how the USG is going to do something simply figure out the course that would benefit Israeli and Saudi billionaires.DJG, March29, 2015 at 12:18 pm"The Administration (remember that Obama is still very much the party leader) again got too clever by half." I recall reading an article that Obama originally favored breaking up Citi, but somehow, Tim Geithner ignored his wishes. This seems to be a self-exonerating story, too clever by half indeed. Poor Obama, all tactics, no strategy. That applies to the article posted today about TPP as well.Blurtman, March29, 2015 at 1:34 pmPresident Obama stated on the Leno show, a few months into his first term, having conducted absolutely no investigations, that the banks had committed no crimes. He is merely a tool.DJG, March29, 2015 at 12:20 pm"Rubino crime family"? Talk about too clever by half. "Rubin crime family" will do. Rectification of names. There is no ethnic propensity toward crime. (And as always these are the sort of stray data and little Rubino lapses that make me wonder what people are talking about when they talk "identity politics.")Yves Smith, March29, 2015 at 2:12 pmWow, are we being precious. The Mafia has a distinctive style of how it runs its crime operations. That's why we had a whole series of Godfather movies, and lots of other about treatments in novels and movies.Fool, March29, 2015 at 3:08 pmYeah but let's face it: the Jewish financiers* are better than the Italian Mafia at this game. Consider this twee leverage-and-loot operation; good strategy but just a few billion short of the kind of leveraged buyout that would make it onto Dealbook. The Mafia's style isn't so distinctive - I believe Bill Moyers drew the comparison between financial advisory of IRA's' to protection rackets.Yves Smith, March29, 2015 at 3:48 pmThe truth is, facetious Italian suffixes are socially acceptable. And yet, had you written the "Rubinowitz crime family", by Monday morning David Brooks would place you on the neo-Nazi watchlist.
*Jewish guy, so acceptable user of the term "Jewish financiers"
Oh, I dunno. The scene in The Departed where Jack Nicholson crushes Leonardo DiCaprio's hand and then throws cash at him to get it fixed is memorable. And it echoes Scorsese's scene in the Godfather where Sonny smashed a photographer's camera and then throws money on the ground.DJG, March29, 2015 at 4:02 pmAhh, it's a witticism based on the mob's management style. Maybe you should have cited "Bob 'Meyer Lansky' Rubin."timbers, March29, 2015 at 2:11 pmMilton Friedman said a shift in intellectual view from one policy mostly universally accepted as "correct" towards another policy takes decades and happens slowly, but once it takes hold it becomes powerful. He notes the Socialist Party in America was the most influential party not because it held office but because other parties in power adopted a good part of it's program, because that was the dominate view of intellectuals of the time.Chauncey Gardiner, March29, 2015 at 2:42 pmSo Liz might be the early signs of that shift taking place now, and not just a Democratic Hood Ornament.
If she is, the bad news we will all be dead in the long run before any of us derive much if any benefit from this shit. Which brings us to John Keynes.
Thank you for the clip of Senator Warren's speech and your related article. It is outrageous that Citigroup's lobbyists slipped that provision into the Omnibus "Must Pass" spending bill at the last minute misleadingly titled "Prohibition Against Federal Government Bailouts of Swaps Entities" that once again puts the American people on the hook for bailing out the biggest banks on their speculative derivatives trades.Fool, March29, 2015 at 2:54 pmSenator Warren's observations about Citigroup's grip over monetary and economic policy through their extensive network of former executives in the Executive branch of the U.S. government was enlightening to me. The amounts they have spent on lobbying, and the funds they have diverted to think tanks to influence public policy is particularly galling in light of the fact that Citigroup received over half a trillion dollars in bailout money under TARP, FDIC and the Fed. It is noteworthy that their constant lobbying pressure to pass legal loopholes has disappeared off the corporate media's radar screens along with all the other accounting, legal and regulatory forbearances, waivers, and the hidden subsidies and transfers of wealth to them over the past seven years. When does the statute of limitations expire on fraud?
I agree with Senator Warren regarding the need to pass the Brown-Kaufman amendment to the Dodd-Frank Act. It is clear that they have too much concentrated political power. That Citi and the other TBTFs are holding the entire country hostage is simply unacceptable.
I don't really understand the conflation of Obama with the Democrat "base" of limousine liberals. The limousine liberals hate Obama. For all you know, he's played a part in empowering Warren's ascent.Yves Smith, March29, 2015 at 3:55 pmHuh? Obama's New York City fundraiser have all been at the homes of private equity firm partners, the epitome of limousine liberals.Fool, March29, 2015 at 8:05 pmI grew up at the very core of limousine liberalism - and, if I were to guess, among the highest concentration of private equity firm partners' homes - and in my experience the dissatisfaction with Obama is almost unanimous (among people who voted for him). It's ironic that you would use his ties to the PE industry as an example: in theory, they should love him!…given how cheap credit is - for them to buy - and how high the public market is - for them to sell. But again, my impression is otherwise…Ned Ludd, March29, 2015 at 7:35 pmWhat I find more interesting though is the vague terms with which this sentiment among the limousine liberal class is articulated, e.g. "he does nothing," "he let me down," and so forth. So the right we know hates him, the neoliberals don't like him, and NC's linkfeed - which I arrive at daily - indicates to me that the left doesn't like him as well. It wouldn't be so strange if he wasn't doing an OK job, at least in superficial terms (buoyant stock market, reduced unemployment, etc.).
Perhaps come 2016 -- we'll have better perspective on his legacy. In any case, the ubiquitous dissatisfaction with Obama is odd, if unprecedented (indeed, at least the Carter administration was quantifiably bad). Personally, I have no read on Obama; put differently, where his ideological motives lie. However, I do think that for the President of the United States, in 2015, a transparently leftist agenda (gov't spending, progressive tax reform, etc.) would preclude the ability to get anything done. The tragedy of politics, in my view, is the paradox in which a politician cannot genuinely serve the people's interests and achieve them while at the same time acquire the accolades for having done so. That is to say: she cannot remain a politician! For that reason, I'm not quite as ready as you are to so definitively write Obama off as a neoliberal tool.
Money Chooses Sidespelham, March29, 2015 at 3:55 pmIn a barn-burning, record-smashing fund-raising campaign season, Barack Obama tapped a new breed of Manhattan donors and won the expectations game.
- By John Heilemann, Published Oct 24, 2007, in New York
The fact that a bank would come out - publicly - and threaten to refrain from bribing Democratic senators suggests that it believes (perhaps correctly) that our mainstream political culture is so far gone that it's literally safe and acceptable to make such an admission. Even worse, Citi apparently thinks that the public will go a big step further and sympathize with it. Maybe Citi believes that the absence of its contribution to a Senate campaign will raise questions in the public mind, that the broad public will think that if a big, prestigious institution like Citi is holding back on a donation, then maybe the candidate and the party are a little sketchy after all. Better to stick with Citi-approved Republicans.hunkerdown, March29, 2015 at 7:03 pmOn the face of it, it appears Citi's announcement is an own goal. But it's hard to believe they didn't do some focus groups on this.
But to respond effectively, every Dem and his or her dog should be howling WE DON'T WANT YOUR STINKIN' MONEY - not just Elizabeth Warren. Where's the indignation?
"Your money's no good here" is the antithesis of neoliberalism, i.e. the modern Democratic Party.thom, March29, 2015 at 4:47 pmRemember, some Black people couldn't dine out over a half century ago because of the concept that everything isn't for sale to everyone, therefore, those who have money now should be able to buy their way into anything. Perfectly logical!
Pure fascism - the merger of corporation and state (Mussolini) is not good enough for Citi and the Rubino Crime Syndicate.hunkerdown, March29, 2015 at 7:41 pmThey have 96, 97 of the 100 Senators, and all but three or four House members and the Fed and Treasury and the Supreme Court but that is Just Not Enough. They gotta have it all.
They just gotta have it all.
Pure fascism strikes any form of dissonance let alone dissent, wipes it out, exterminates it. That is why there are no more than three or four independent-minded, critically thinking, non-ideological US senators.
Authentic democracy would require more. Ten or 15? Maybe 34? It is too bad that Congressman Paul is no longer Congressman Paul.
Democracy should rule capitalism but capitalism should NEVER rule democracy.
With due respect, you're fighting about five wars ago. Authentic democracy, by definition, requires that *final* say lay in the hands of the people. If in some system the people en masse are not the final deciders, then you, sir or madam, are committing violence against democracy itself by equating Potemkin popular suffrage with the ability to produce facts on the ground. Authentic democracy requires that the three branches of government be *subordinate* to the people; mere accountability has been proven ineffective when a single six-year term, sold to the right people, more than pays for any losses or embarrassment from the plebes who no longer provide you with any utility (watch Sen. Reid on trade promotion authority to see this in action). It's such an infantilizing conceit that choosing one's sovereign master by committee is *self-rule* in any meaningful fashion that I'm surprised people still want to be seen falling for it.Ulysses, March29, 2015 at 8:27 pmWhat's more, you should consider tokenism, classical conditioning and diminishing returns in your analysis. Tokenism is more or less a dishonest signal on the part of a group of approval or participation of some selected out-group. Classical conditioning finds that intermittent reward is more effective in conditioning the desired response to a stimulus than predictable reward or non-reward. In light of those, just what advantage would *being seen* owning the lot be? The engine that starts, lopes and shudders to a halt is more "fixable", and thus subjectively more worthy of time, effort and attention, than the one that won't even turn over. Thus, they are best served by a system that delivers the outcomes that suit their interests and pretends to respond to the efforts and interests of others while doing so in fact to the minimum extent possible. Hence the portrayal of a functioning representative government via distractions such as the culture war and affiliated kayfabe.
Finally, we should be able to read our labels for meaning and not just slap Mr. Yuk on everything. Roger Griffin's three traits of fascism: "(i) the rebirth myth, (ii) populist ultra-nationalism and (iii) the myth of decadence". Liberalism seems to negate all three of those traits: an evangelical myth that merely uttering the (for those properly indoctrinated) "self-evidently" correct answer will unlock and coalesce stunted potentials, more flowering than rebirth; anti-populist (i.e. anti-democratic) globalism under the public-private partnership; and the broad veneration of carefully circumscribed deviance (not dissent!) from tradition for its own sake. The "managed" mob rule of the creative class might arguably count as a form of faux-populist ultranationalism, but I'm not nearly convinced yet.
"Potemkin popular suffrage"Chris Grimley, March29, 2015 at 10:03 pmI think I'll have to start using that!!
Our world is fast becoming one big Potemkin village!
http://uk.reuters.com/article/2013/06/03/uk-irish-g8-fakeshops-idUKBRE9520Z520130603Actually, Bryan was worse than that. For becoming Secretary of State he sold out to the banker interests promoting Woodrow Wilson. The banker interests also provided the money for Roosevelt against Taft (who was against a Federal Reserve) to split the Republican vote. This put their puppet, Wilson, into the White House under the careful tutelage of banker Colonel House.I suspect the Secretary of State position was also a sop to Hillary Clinton for being gentle with Obama
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Aug. 22 2013
A federal judge has agreed that $10 million will settle a corruption case between International Business Machines Corp. (IBM) and the U.S. Securities and Exchange Commission. A Department of Justice investigation of IBM's overseas business practices remains open.
Neither admitting nor denying wrongdoing, the company nonetheless agreed to pay $5.3 million to the SEC to make up for any profits it may have reaped from alleged violations of the Foreign Corrupt Practices Act in China and South Korea. The FCPA is the same law the discount retailer Walmart is accused of having violated in Mexico in the early 2000s.
The charges against IBM entail payment of cash bribes, plus gifts, entertainment and travel, in exchange for sales and business contracts with foreign governments.
The charges against IBM entail payment of cash bribes, plus gifts, entertainment and travel, in exchange for sales and business contracts with foreign governments.
Prejudgment interest of $2.7 million and a $2 million civil penalty bring the total settlement to $10 million. The deal was reached between the parties in 2011 and approved by U.S. District Judge Richard J. Leon on July 25.
IBM also must file annual reports by Dec. 1 for two years, "describing its efforts to comply" with foreign business regulations and notifying the court of any new investigations it's aware of by any federal agency.
The technology company established a presence in Essex Junction, Vt., in 1958. That plant, along with scores of others around the world, underwent another in a string of layoffs this summer.
The Essex Junction facility is not implicated in the SEC case. The ongoing Dept. of Justice investigation is closed to public inspection.
A spokesman from IBM did not return VTDigger's request for comments by publication time.
SEC
The most recent SEC case charges IBM on three main counts: 1. that IBM employees paid bribes to government officials in exchange for sales and business contracts in those countries; 2. that the international corporation lacked sufficient internal controls to prevent corruption; and 3. that the publicly traded firm's inaccurate bookkeeping allowed the bribes to be covered up.
Alleged corruption in South Korea took place between 1998 and 2003, while accusations stemming from business practices in China span from 2004 to 2009. The allegedly "deficient" internal controls and inaccurate bookkeeping cover all those years.
An IBM envelope stuffed with cash, free notebook computers, overpayment for services, payment for services never rendered and travel agency slush funds to cover unapproved or fraudulent business trips comprise but a few of 35 specific allegations.
The employees implicated in the case worked for the subsidiaries IBM-Korea, IBM (China) Investment Company Limited and IBM Global Services (China) Co., Ltd. The South Korean holding was a joint venture in which IBM held majority interest, and the Chinese subsidiaries were wholly owned by the parent company.
An earlier SEC case against IBM also was settled, without the company admitting or denying wrongdoing. In 2000, IBM agreed to pay $300,000 as a penalty for allegations of similar illicit payments to foreign officials in Argentina that may have violated the Securities and Exchange Act of 1934.
The SEC had claimed that at least $4.5 million was transferred to several bank directors as part of a $250 million contract to modernize the computer system of a government-owned bank.
Justice Department and other investigations
Argentina also plays a role in an ongoing investigation of IBM by the U.S. Department of Justice. According to the company's April quarterly filing with the SEC, IBM learned that month that the agency was scrutinizing transactions in Argentina, Bangladesh and Ukraine.
"The DOJ is also seeking information regarding the company's global FCPA compliance program and its public sector business," IBM reported. "The company is cooperating with the DOJ in this matter."
IBM said in the same filing that it's also cooperating with Polish authorities looking into a former Polish IBM employee's allegedly illegal activity there.
Business continues
Despite the allegations of foreign wrongdoing by U.S. law enforcement, domestically the company has won its largest-yet contract with the American government, according to Bloomberg News.
Along with Lockheed Martin Corp. and eight other technology suppliers, IBM will help the Interior Department transition to cloud-based information management. The award, with a maximum value of $1 billion, would cover 10 years.
Bloomberg also reports that IBM has agreed to buy Trusteer, Inc., for more than $800 million. The Israeli company makes security software.
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March 21, 2011 | ZDNet UK
The Wall Street Journal first reported that the Securities and Exchange Commission is suing the company over cash bribes that it says IBM paid between 1998 and 2003 to South Korean government officials, and between 2004 and 2009 to Chinese government officials.
Despite paying the $10m (£6.2m) settlement, IBM did not admit to wrongdoing, but did say it has higher ethical standards for its employees and had taken "appropriate remedial action", according to the newspaper report.
For more on this ZDNet UK-selected story, see Feds: IBM bribed South Korea, China officials on CNET News.
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November 10, 2010 | Computerworld
Computerworld - Hewlett-Packard will pay $16.25 million to settle a case that resulted in jail time for a school district's former chief technology officer and computer reseller of HP equipment, the U.S. Federal Communications Commission said on Wednesday.
The case, triggered by a whistleblower, involves bribery and passing along insider knowledge on contracting needs to win school district contracts that included $17 million in HP equipment, the FCC said.
It was a scheme with some colorful elements to it, including the purchase of a 46-foot fishing yacht that cost $305,000, called "Sir Verza" and then a second larger yacht, named "Sir Verza II," a 58-foot vessel costing $800,000.
There were trips and 2004 Super Bowl tickets, played in Houston that year between the New England Patriots and the Carolina Panthers, with the Patriots winning 32 to 29.
The ultimate cost of the fishing and football was for Ruben Bohuchot, former CTO at the Dallas Independent School District. His sentence: 11 years in federal prison. The reseller, Frankie Logyang Wong, of Houston, received 10 years.
The case involved the FCC's E-Rate program, which aimed to help fund broadband at schools and libraries. The FCC said that most of the money that HP is paying to settle will go into that fund.
"The FCC's compliance agreement with HP ensures that HP will train its employees thoroughly on the FCC's gift and other E-Rate rules, and provides for audits of HP's E-Rate business," said Austin Schlick, General Counsel of the FCC, in a statement.
"If HP fails to monitor its E-Rate activities closely and abide by E-Rate Program requirements, it will face substantial penalties," he said.
FCC Chairman Julius Genachowski said in a statement, "Broadband is key to our children's 21st century education. That's why one of the FCC's top priorities is making sure E-rate works to benefit students and libraries. Today's settlement shows the extensive efforts of the FCC and DOJ to protect the E-Rate program from waste, fraud, and abuse, and to deter misconduct in the future."
HP said in response to the settlement, "HP requires that all employees and partners adhere to lawful and ethical business practices. The activities at the center of this investigation occurred more than five years ago, the partner relationships have been terminated and the employees involved are no longer with the company. HP fully cooperated with the authorities and the matter is now resolved."
Whistleblowers filed two related lawsuits under the U.S. False Claims Act, which permits private parties to sue for false claims on behalf of the U.S. government and share in any recovery.
In one case, the DOJ has joined the lawsuit against contractor MSE, its former CEO and a former CTO in the Dallas school district. The DOJ has joined the second lawsuit against contractor ACS.
With today's HP settlement, the two whistleblowers in the Dallas case will share more than $1.4 million. The two whistleblowers in the Houston case will share nearly $800,000.
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September 10, 2010
The U.S. government has widened its probe into possible bribes paid by Hewlett-Packard to help it capture a lucrative contract in Russia.
Officials in the U.S., Germany, and Russia have been investigating allegations that current and former employees of HP engaged in bribery, embezzlement, and tax evasion in connection with a business deal between Hewlett-Packard ISE GmbH, a former HP German subsidiary, and the chief public prosecutor's office in Russia, according to an SEC document filed by HP on Thursday (see Note 16 under Russia GPO and Related Investigations).
According to the allegations , the HP subsidiary paid bribes totaling $10.9 million to win a $44.5 million contract stretching from 2001 to 2006 to set up an IT network for the Russian prosecutor's office. Looking into the transaction, known as the Russia GPO deal, the Justice Department and the Securities and Exchange Commission are trying to determine if HP violated the Foreign Corrupt Practices Act (FCPA), which specifically covers bribes paid to foreign government officials.
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Hewlett Packard has agreed to fork over $16.25 million to settle charges that the computer maker "lavished" gifts on two Texas school districts in order to win government contracts to provide computer equipment.
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08/31/10 | The Hill's Hillicon Valley
The Department of Justice (DoJ) announced Hewlett-Packard will pay $55 million to settle claims that it paid kickbacks in order to secure government contracts.
Whistleblowers Normal Rille, a former partner at PricewaterhouseCoopers, and Neal Roberts, a former senior manager at Accenture, first sued HP and other technology companies in 2004 under the False Claims Act, alleging HP had paid systems integrators including IBM and Accenture to recommend its products to federal agencies. Justice announced the final settlement on Tuesday after HP agreed to resolve the case earlier this month.
"Contractors must deal fairly with the government when doing business with federal agencies," said Tony West, assistant attorney general for the Civil Division at DoJ. "As this case demonstrates, we will take action against those who seek to taint the government procurement process with illegal kickbacks."
HP is the latest in a string of technology firms to settle with the government over alleged violations of the False Claims Act. EMC settled a kickback lawsuit in May for $87.5 million, and other firms, including Network Appliances, IBM and PricewaterhouseCoopers, have settled similar cases. HP has denied any wrongdoing in connection with the case.
"HP denies engaging in any illegal conduct in connection with these matters. We believe it is in the best interest of our stakeholders to resolve the matter and move beyond this issue," HP said in a statement.
Under the False Claims Act, Rille and Roberts are entitled to a portion of the money recovered by the government. The DoJ joined their lawsuit in 2007, indicating the case had merit. Out of the firms the pair have pursued in court, only Accenture has failed to settle their case.
The statement also resolves charges that HP failed to provide complete information on its commercial pricing practices during 2002 contract negotiations with the General Services Administration. Under a rule known as the Price Reduction Clause, all vendors on GSA's Federal Supply Schedules vehicle must offer the government the same price as their best commercial customers. HP revealed in 2007 that it hadn't complied with that rule, leading to a GSA audit.
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Cellini said one reason HP (NYSE:HPQ) was concerned with gray market issues and anti-corruption enforcement was that the U.S. government has signaled that it will be focusing on high-tech companies for possible violations of the FCPA.
"Some smaller partners may be scratching their heads, but that just shows how much this is needed," he said. "The U.S. Department of Justice has targeted the high-tech industry on anti-bribery laws. Whether you're doing business for yourself or on behalf of a larger company like HP, you can't bribe anyone."
"Routing things in a certain way, to avoid taxes and duties, actually lands people in jail. Normally the DOJ squeezes individuals to get at companies. But the bribery guys want to put individuals in jail," Cellini said, adding that "98 percent" of FCPA violations brought to court involve distributors and resellers.
"It's essentially the 'reseller corruption act.' And it's not the wave of the future, it's the wave of the present," he said.
Cellini's interpretation of a tough new DOJ attitude towards FCPA violators was seconded by Hugh Quinn, principal at Washington, D.C.-based compliance consultant Quinn Forensics. Quinn said the DOJ was currently conducting about 120 open investigations into possible FCPA violations, a major increase in focus on the Carter-era law.
"They've had more enforcement of the FCPA in the past four years than in last 40 years," he said. "They've increased their staffing and the biggest area they're going after is third-party vendors. So anything a partner does, the liability could go to HP."
Quinn said that even the smallest of businesses ought to be as concerned with FCPA compliance as larger firms, pointing to the September conviction on federal bribery charges of Gerald and Patricia Green, a husband and wife who ran film festival and tourism businesses together in Los Angeles. The Greens face up to five years in prison for each of their FCPA violations.
"Most of the people getting hit with this FCPA stuff, they're your next door neighbor. They're not robbing banks," Quinn said. "And most of the FCPA cases never go to trial. They get settled because everybody's scared to death of it."
Participating in compliance programs like Integrity Interactive's can help protect individuals against FCPA charges if an employee or business partner violates the law, Quinn said.
"I don't think it's too much to ask," he said, referring to the $120 fee HP partners are required to pay for the program. "It's a nuisance fee, but if you want to play with the big boys, you've got to pay it.
"I'm pretty sure HP doesn't want to do business with somebody who's going to sink the ship. Look, the best thing in the world is that you get to be CEO of HP," Quinn added. "The worst thing in the world is if you're CEO of HP and the feds put you in handcuffs because one of your resellers violated the FCPA."
Some partners, however, say they might just walk away from their partnership with HP over the compliance initiative. Gabriel Phoenix Communications owner Derek Gabriel said his Kaneohe, Hawaii-based company already pays fees for other compliance programs independent of HP.
"If you want me to jump through an extra hoop to prove additional compliance for you, that's an expense you should be responsible for. By forcing my company to pay for your compliance efforts, you add additional costs to do business with you. This compounds the already high costs associated with training and certifications to do business as an HP partner," Gabriel told ChannelWeb.com in an e-mail exchange.
"Last I checked, Lenovo, Dell (NSDQ:Dell), Xerox (NYSE:XRX), Lexmark and the myriad other major PC, printer and network equipment manufacturers don't charge partners for compliance schemes. So to continue to maintain a competitive stance with respect to my operating costs, I'll choose to strengthen my business relationship with these other vendors over paying to prove compliance with HP programs," he said.
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A Culture of CorruptionThis situation isn't the only public scandal HP has endured. In 2006, HP's chairman of the board, Patricia Dunn, resigned after it was discovered that she hired outside contractors to spy on board members and journalists. HP can't seem to escape big headlines about scandals, and it would do investors and the public well to pay attention.
As a forensic accountant and fraud investigator, I've seen fraud at hundreds of companies, ranging from small family-owned businesses to large public companies. Fraud is never pretty. But it's even uglier when companies are doing things that create a culture of corruption, opening the door for fraud to occur over and over again.
The propensity of employees to commit fraud is dictated by the tone at the top. Whether we like it or not, employees look to those above them for cues about appropriate workplace behavior, and that includes fraud. When everyone knows that the boss does personal business on company time, it makes it easier for them to justify doing the same thing. If managers are stealing equipment, their in-the-know subordinates are likely to do the same. Monkey see, monkey do.
Rewarding Bad Behavior
In this case, when the head of the company steals via expense reports, and the company pays him millions on his way out the door, the message it sends to the employees is that stealing is okay. How could it send any other message?
Of course, lower level employees know that if they're caught stealing, they might get unceremoniously shown the door without a penny in severance. They aren't delusional enough to think that they merit millions of dollars as a parting gift. But they still realize that the company is going to allow a certain amount of fraud. So long as they stay under that limit, they are almost assured of keeping their jobs and fitting right in.
Rewarding bad behavior has consequences. And those watching the HP scandal unfold ought to heed this warning: The culture of corruption at HP is alive and well. This is neither the first, nor the last scandal for HPs management, I'm sure. I've seen enough fraud to know that when the company condones and rewards such behavior, the behavior grows in frequency and in magnitude.
See full article from DailyFinance: http://srph.it/gtpdJW
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Hewlett-Packard Co. said it has reached a settlement with the U.S. Department of Justice to resolve an investigation into alleged kickbacks paid by technology companies on government contracts.
H-P said the settlement will reduce earnings in its fiscal third quarter by about two cents a share, which is equal to about $50 million.
The settlement resolves a Justice Department investigation into an H-P contract with the General Services Administration as well as a separate civil suit filed in 2007 by the agency in federal court in Arkansas.
"H-P denies engaging in any illegal conduct in connection with these matters," a spokeswoman for the Palo Alto, Calif., company said. "We believe it is in the best interest of our stakeholders to resolve the matter and move beyond this issue."
A spokesman for the Department of Justice declined to comment.
The litigation against H-P and other technology companies sprang from so-called whistle-blower suits that were filed by a former employee of computer outsourcing and consulting firm Accenture PLC.
The suits contended that most computer-industry players regularly violated the Anti-Kickback Act of 1986 by forming marketing partnerships involving what some companies called "influencer fees" or "referral fees"-payments or discounts that passed between the companies doing business together on federal contracts but weren't revealed to the government.
The technology companies had argued that the payments at issue were common rebate and discount programs widely used in their industry and others. The suits were filed in 2004, but sealed until April 2007, when the Department of Justice agreed to joint the cases.
Some other companies have settled the allegations. Data storage equipment maker EMC Corp., for example, agreed in May to pay $87.5 million to settle similar charges.
In May, H-P had estimated earnings for its third quarter, which ended Saturday, of $1.05 to $1.07 a share, excluding items.
Write to John Kell at [email protected]
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(Reuters) - The U.S. government is looking into whether Hewlett-Packard Co employees were involved in a bribery scheme involving a business contract in Russia, amid a probe by German and Russian authorities.HP said it has been in contact with the U.S. Securities and Exchange Commission, and said it will cooperate with agencies investigating the matter.
A U.S. Justice Department spokeswoman declined to comment.
German authorities on Thursday said they have targeted nine suspects, including former HP staff, in a Russian bribery probe. At issue is whether the world's top personal computer maker paid $11 million in bribes to win business in Russia.
Prosecutors in the eastern German city of Dresden said on Thursday they had asked Russian colleagues to search HP offices in Moscow to check suspicions that around 8 million euros ($10.9 million) in bribes changed hands to win a contract.
"The case came to light here," a spokesman for the prosecutors' office in Dresden said. "The suspicion is that 8 million euros in kickback payments were made."
Russian prosecutors on Wednesday raided HP's Moscow offices at the behest of German authorities.
Investigators became suspicious after an audit of a small company in the eastern German state of Saxony turned up money transfers that seemed to produce nothing real in return.
That led to what the spokesman called an international network of money transfers and prompted German officials to search HP premises in the southern town of Boeblingen and in Munich in early December.
He said investigators are examining a 35 million euro contract that HP won in 2000 to provide computers and software for criminal prosecutors in Moscow. The contract was wrapped up by 2007.
On Wednesday, HP said the investigation involved alleged conduct that happened almost seven years ago, mainly by employees who are no longer with the company. HP added that it is investigating the matter internally.
Carly Fiorina, who was chief executive of HP from 1999 until 2005, denied any knowledge of conduct under investigation.
A spokeswoman for Fiorina, who is running for the U.S. Senate in California, said in an e-mailed statement: "When she served as the CEO of HP if she had been aware of any illegal or inappropriate behavior by any employee she would have taken action immediately to terminate the parties involved. In addition, Carly has a record doing just that throughout her career."
CORRUPTION PROBE
The unidentified suspects are under investigation for possible breach of trust, tax evasion and bribery of foreign officials, the spokesman for the prosecutors' office in Dresden said.
German prosecutors were awaiting documents seized in the searches in Moscow before deciding how to proceed.
The case is the latest corruption probe to make headlines in Germany.
Carmaker Daimler last month agreed to pay $185 million to settle U.S. charges it showered foreign officials with money and gifts to win contracts, including in Russia.
Engineering group Siemens agreed in 2008 to pay $1.3 billion to end corruption probes in the United States and Germany.
(Reporting by Jens Hack; Additional reporting by Anastasia Teterevleva in Moscow and Gabriel Madway in San Francisco; Writing by Michael Shields; Editing by David Cowell, Matthew Lewis and Richard Chang)
($1 = 0.7331 Euro)
