Later On

A blog written for those whose interests more or less match mine.

Sen. Dianne Feinstein’s Husband Selling Post Offices to His Friends, Cheap

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Dianne Feinstein has never been a favorite Senator of mine. She is a primary enabler of NSA’s overreach, and her business dealings (through and with her husband) have always had a certain smell. Peter Byrne wrote an interesting book, from which this excerpt is taken:

Editor’s note: The following is an excerpt from the new book, Going Postal, in which investigative journalist Peter Byrne reveals the results of a year-long study into a privatization scheme that has enriched the powerful and robbed ordinary Americans.

Going Postal: Introduction

On July 27, 200 singing and chanting people demonstrated on the steps of the historic main post office in downtown Berkeley, Calif., to protest its upcoming closure and sale. A city council member took the microphone to angrily decry the closure. In fact, the Berkeley City Council had voted unanimously to oppose the sale. Why the day of rage?

When a post office closes, it is obviously that much harder to buy a stamp, pick up a package, send a registered letter, or purchase a money order. But inconvenience alone did not account for the existential angst being expressed by the mostly over-50 throng as it questioned the motives of the United States Postal Service for selling post offices all over the country to developers. “Which of our public assets will be privatized next?” speakers asked. “Streets? Schools? The Lincoln Bedroom?”

The Berkeley crowd is not acting alone: From the beaches of Santa Monica to the avenues of the Bronx to the orange farms of Nalcrest, Florida, people who like the U.S. mail are getting mad, “Hey, wait a minute, Mr. Postman! That is our community post office!”

To which the federal flak-catchers reply: “The Internet is killing us. The Postal Service is broke. We have to sell. Get used to it.”

But email is not the problem and the budget deficit is easy enough to fix, so there must be other reasons for the forced sales, say save-the-post-office activists. Political reasons, they assert, pointing out that the realtor with the exclusive contract to negotiate sales for the Postal Service’s $85 billion real estate portfolio is C.B. Richard Ellis (CBRE). And that the corporation is chaired by Richard C. Blum, who is the husband of U.S. Sen. Dianne Feinstein of California. The corporation’s connection to a politically powerful family with a history of accessing public pension funds to make private investments has caused more than a few activists to suspect wrongdoing—even though no evidence of any conflicts of interest tied to the CBRE contract has been revealed.

Until now.

This year-long investigation has uncovered evidence of multiple conflicts of interest and problems with post office sales supervised by Blum’s company:

  • CBRE appears to have repeatedly violated its contractual duty to sell postal properties at or above fair market values.
  • CBRE has sold valuable postal properties to developers at prices that appear to have been steeply discounted from fair market values, resulting in the loss of tens of millions of dollars in public revenue. In a series of apparently non-arm’s length transactions, CBRE negotiated the sale of postal properties all around the country to its own clients and business partners, including to one of its corporate owners, Goldman Sachs Group.
  • CBRE has been paid commissions as high as 6 percent by the Postal Service for representing both the seller and the buyer in many of the negotiations, thereby raising serious questions as to whether CBRE was doing its best to obtain the highest price possible for the Postal Service.
  • Senator Feinstein has lobbied the Postmaster General on behalf of a redevelopment project in which her husband’s company was involved.

Backstory

Because the Postal Service is running an artificially created budget deficit, tens of thousands of jobs are being liquidated as post offices and mail processing facilities in towns and cities across the country are short-listed to be sold for ready cash. CBRE has already sold 52 of these properties, and hundreds more are on the chopping block.

Eighty percent of the agency’s multi-billion-dollar deficit is caused by a law passed by Congress in 2006 that requires it to prepay retiree health benefits 75 years into the future. This unprecedented, budget-killing command does not apply to any other government agency. If this burden was to be rescinded—and business-mail was to be charged the cost of its delivery—the Postal Service would be in the black, according to congressional reports.

The ugly truth of the matter, say informed critics such as New York University professor Steve Hutkins, is that the Postal Service is being privatized in the interests of scores of corporations that not only compete with it, but are also its largest contractors, including FedEx and United Parcel Service (package routing); Parsons Corporation (management services); Accenture (financial consulting); and Pitney Bowes (direct mail).

Then there is CBRE, the world’s largest commercial real estate firm. In June 2013, Postal Service Inspector General David C. Williams published a scathing audit of CBRE’s exclusive contract to manage all of the sales and leasing of postal real estate. Williams noted that outsourcing these activities to a single firm is “a fundamental change from how the Postal Service previously managed its real estate portfolio [and] Facilities officials should improve oversight to mitigate inherent risks associated with the CBRE contract … Specifically, there are conflict of interest concerns.”

Williams warned of the potential for contract fraud, but he stopped short of referring the matter to a district attorney, and advised the postal executives in charge of the CBRE contract to clean up their act. Over the past year, this investigation explored the types of conflicts of interest that concerned Williams by diving deep into the public record. CBRE’s contract, its postal facility sales data, as well as expense reports for Postal Service executives were obtained under the Freedom of Information Act (FOIA).

The deeds of sale and assessment data for most of the postal properties sold by CBRE were found at the county level. The county records allow for comparing the assessed value of the postal properties before they were sold to the final sales prices negotiated by CBRE on behalf of the Postal Service. The comparisons reveal that CBRE has sold the bulk of this public real estate at prices under their assessed values—and apparently at far below fair market values.

When these findings were shared with Chuck Zlatkin, legislative and political director of the New York Metro Area Postal Union, he said, “Shocking as this information is, it is not surprising because we have seen a pattern of corruption at the Post Office ever since the manufacture of the healthcare benefit prepayment crisis. It is certainly not permissible for CBRE to sell property paid for by the public to its own business partners, or to anyone else, at a discount. In my opinion, CBRE’s conflicts of interest contain an element of fraud.”

CBRE Group Inc. was given a list of the key facts and analysis reported in this investigation. Through its spokesperson, Philip Russo, the corporation declined to comment.

Conflicts of interest

In June 2011, the Postal Service hired CBRE as its exclusive agent to sell post offices, warehouses, parking lots and vacant land worth hundreds of millions of dollars. The contract instructs CBRE to propose properties to sell with final approval reserved to the head of the Postal Service’s Facilities Division, Tom Samra. It requires CBRE to sell them at or above appraised (fair market) values, or not at all. CBRE is charged with appraising the fair market value of these properties and listing a reasonable sales price. It is important to point out that real estate appraisals are not customarily performed by the realtor who is marketing the property. To avoid conflicts of interest, property appraisals are normally performed by professionals who are not involved in negotiating the sale.

Responding to a FOIA request through a staff attorney, Postmaster Patrick Donahoe categorically refused to disclose CBRE’s appraisals. . .

Continue reading.

Written by LeisureGuy

8 November 2013 at 10:20 am

Posted in Business, Government

One Response

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  1. Reblogged this on Citizens, not serfs and commented:
    2013 – events surrounding privatisation of Royal Mail eerily similar.

    prayerwarriorpsychicnot

    11 January 2015 at 12:10 pm


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