Later On

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Archive for the ‘Business’ Category

Not a surprise: Koch brothers want to advance their own corporate interests, not reform the criminal justice system

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Dan Froomkin writes in The Intercept:

The New York Times on Wednesday reported the shocking news that the “rare coalition” on criminal justice reform that included liberal groups and the right-wing billionaire Koch brothers is falling apart.

But as The Intercept‘s Lee Fang wrote earlier this month, the ostensible alliance over liberalization of America’s criminal justice laws was based on a misunderstanding of the Koch brothers’ fundamental political goal.

That goal is, quite consistently, to advance their own corporate interests.

So, while the Kochs and the liberal groups used similar language in their critique of the criminal justice system, when it came down to actual legislation, the Kochs were focused on reducing criminal prosecutions of corporations, not people.

Koch and the House Republicans turned out to be pushing a bill that critics describe as a “Get Out of Jail Free” card for white collar criminals.

Members of Washington’s elite media crave stories about bipartisanship, so groups like the pro-Clinton Center for American Progress garnered positive media attention for finding common ground with the Kochs earlier this year.

Now, CAP president Neera Tanden is issuing statements that “the bill is not aimed at addressing the aspects of the criminal justice system that are the drivers of mass incarceration and inequality and should not be part of any genuine discussion of criminal justice reform.” To the contrary, she says: “The bill would make it much more difficult to enforce bedrock regulatory safeguards—such as environmental, health, and consumer safety protections—and leave communities of color disproportionately vulnerable to unscrupulous, fraudulent, and predatory business practices that exacerbate existing inequality in our communities.”

There are some conservatives truly devoted to criminal justice reform – and there’s even a truly united left-right coalition on some specific criminal justice issues, like prison rape.

But, as Fang wrote, even while the Kochs were talking criminal justice reform, their money was notably continuing to finance election-year efforts that promote tough-on-crime politics.

Of the 38 federal lobbyists employed by Koch, . . .

Continue reading.

Written by LeisureGuy

25 November 2015 at 2:09 pm

The looting of Tyco—and it was indeed looted, pure and simple

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It’s on the same template as the way the Mafia reportedly takes over your restaurant, as a “partner” who steals everything not nailed down, takes out loans secured by the business, and leave it a broken, destroyed shell. Pam Martens and Russ Martens report in Wall Street on Parade in an article on how golden parachutes have gotten pathological:

On September 11, 2002, the Securities and Exchange Commission brought charges against the three top executives of Tyco International. The complaint began with this: “This is a looting case.”

The SEC charged that Tyco’s CEO, Dennis Kozlowski and Mark Schwartz, its CFO, “took hundreds of millions of dollars in secret, unauthorized and improper low interest or interest-free loans and compensation from Tyco.” The transactions were concealed from shareholders and, according to the SEC, “Kozlowski and Swartz later pocketed tens of millions of dollars by causing Tyco to forgive repayment of many of their improper loans” and “engaged in numerous highly profitable related party transactions with Tyco and awarded themselves lavish perquisites — without disclosing either the transactions or perquisites to Tyco shareholders.”

USA Today reported that the Manhattan apartment that Tyco had been providing to Kozlowski “includes a $6,000 shower curtain, coat hangers valued at $2,900, two sets of sheets for $5,960 and a $445 pincushion.”

The SEC also charged that the General Counsel of Tyco, Mark Belnick, a former partner of the corporate law firm Paul, Weiss, Rifkind, Wharton & Garrison, “defrauded Tyco shareholders of millions of dollars through egregious self-dealing transactions.” According to the SEC, “from 1998 into early 2002, Belnick received approximately $14,000,000 in interest-free loans from Tyco to buy and renovate a $4,000,000 apartment on Central Park West and to buy and renovate a $10,000,000 ski chalet in Park City, Utah.” The SEC noted that “by failing to disclose his self-dealing to investors, Belnick violated the antifraud provisions of the federal securities laws.”

Kozlowski and Schwartz were eventually tried by the Manhattan District Attorney’s office and sent to prison. (Both are out now.) Belnick was acquitted by a jury on fraud and larceny charges brought by the D.A. The jury believed that Belnick had internal company approvals for the loans. The SEC eventually settled its civil case against Belnick with a civil penalty in the amount of $100,000 and the prohibition that he not serve as an officer or director of a public company for a period of five years. He was allowed to retain his law license.

One of the most striking revelations in the Belnick case was the retention agreement Belnick had with Tyco. It guaranteed Belnick a payment of at least $10.6 million should he commit a felony and be fired before October 2003.

Another obscene Golden Parachute that came to light involved a Dow Jones Industrial Average blue chip company: General Electric.  . .

Continue reading.

Written by LeisureGuy

25 November 2015 at 11:51 am

The big problem with electric cars: They’re too reliable.

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Perverse incentives abound when a company makes decision using profit as a metric. Kevin Drum blogs at Mother Jones:

Matt Richtel has an intriguing article today in the New York Times about electric cars. The question is: why aren’t they selling better? Is it because they have weak performance? Because they can only go a hundred miles on a charge? Because they’re expensive?

Those are all issues.1 But it turns out that people who want to buy an electric car anyway have a hard time getting dealerships to sell them one:

Kyle Gray, a BMW salesman, said he was personally enthusiastic about the technology, but…the sales process takes more time because the technology is new, cutting into commissions…. Marc Detsch, Nissan’s business development manager for electric vehicles said some salespeople just can’t rationalize the time it takes to sell the cars. A salesperson “can sell two gas burners in less than it takes to sell a Leaf,” he said. “It’s a lot of work for a little pay.”

He also pointed to the potential loss of service revenue. “There’s nothing much to go wrong,” Mr. Deutsch said of electric cars. “There’s no transmission to go bad.”….Jared Allen, a spokesman for the National Automobile Dealers Association, said there wasn’t sufficient data to prove that electric cars would require less maintenance. But he acknowledged that service was crucial to dealer profits and that dealers didn’t want to push consumers into electric cars that might make them less inclined to return for service.

I suppose this makes sense. And to all this, you can add the fact that none of these cars can fly. There are so many hurdles to overcome before we make it into the Jetson’s future we were all promised.

1We are, of course, talking about the non-Tesla market here.

Written by LeisureGuy

24 November 2015 at 2:32 pm

Posted in Business, Technology

Is the US government becoming a subsidiary of major corporations?

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Rebecca Gordon reports at

A top government official with energy industry holdings huddles in secret with oil company executives to work out the details of a potentially lucrative “national energy policy.” Later, that same official steers billions of government dollars to his former oil-field services company. Well-paid elected representatives act with impunity, routinely trading government contracts and other favors for millions of dollars. Meanwhile, ordinary citizens live in fear of venal police forces that suck them dry by charging feesfor services, throwing them in jail when they can’t pay arbitrary fines orselling their court “debts” to private companies. Sometimes the police just take people’s life savings leaving them with no recourse whatsoever. Sometimes they steal and deal drugs on the side. Meanwhile, the country’s infrastructure crumbles. Bridges collapse, or take a quarter-century to fix after a natural disaster, or (despite millions spent) turn out not to be fixed at all. Many citizens regard their government at all levels with a weary combination of cynicism and contempt. Fundamentalist groups respond by calling for a return to religious values and the imposition of religious law.

What country is this? Could it be Nigeria or some other kleptocraticdeveloping state? Or post-invasion Afghanistan where Ahmed Wali Karzai, CIA asset and brother of the U.S.-installed president Hamid Karzai, made many millions on the opium trade (which the U.S. was ostensibly trying to suppress), while his brother Mahmoud raked in millions more from the fraud-ridden Bank of Kabul? Or could it be Mexico, where the actions of both the government and drug cartels have created perhaps the world’s first narco-terrorist state?

In fact, everything in this list happened (and much of it is still happening) in the United States, the world leader — or so we like to think — in clean government. These days, however, according to the Corruption Perception Index of Transparency International (TI), our country comes in only 17th in the least-corrupt sweepstakes, trailing European and Scandinavian countries as well as Canada, Australia, and New Zealand. In fact, TI considers us on a par with Caribbean island nations like Barbados and the Bahamas. In the U.S., TI says, “from fraud and embezzlement charges to the failure to uphold ethical standards, there are multiple cases of corruption at the federal, state and local level.”

And here’s a reasonable bet: it’s not going to get better any time soon and it could get a lot worse. When it comes to the growth of American corruption, one of TI’s key concerns is the how the Supreme Court’s 2010 Citizens United decision opened the pay-to-play floodgates of the political system, allowing Super PACs to pour billions of private and corporate money into it, sometimes in complete secrecy. Citizens United undammed the wealth of the super-rich and their enablers, allowing big donors like casino capitalist — a description that couldn’t be more literal — Sheldon Adelson to use their millions to influence government policy.

Kleptocracy USA?

Every now and then, a book changes the way you see the world. It’s like shaking a kaleidoscope and suddenly all the bits and pieces fall into a new pattern. Sarah Chayes’s Thieves of State: Why Corruption Threatens Global Security shook my kaleidoscope. Chayes traveled to Afghanistan in 2001 as a reporter for NPR. Moved by the land and people, she soon gave up reporting to devote herself to working with non-governmental organizations helping “Afghans rebuild their shattered but extraordinary country.”

In the process, she came to understand the central role government corruption plays in the collapse of nations and the rise of fundamentalist organizations like the Taliban, al-Qaeda, and the Islamic State. She also discovered just how unable (and often unwilling) American military and civilian officials were to put a stop to the thievery that characterized Afghanistan’s government at every level — from the skimming of billions in reconstruction funds at the top to the daily drumbeat of demands for bribes and “fees” from ordinary citizens seeking any kind of government service further down the chain of organized corruption. In general, writes Chayes, kleptocratic countries operate very much as pyramid schemes, with people at one level paying those at the next for the privilege of extracting money from those below.

Chayes suggests that “acute government corruption” may be a major factor “at the root” of the violent extremism now spreading across the Greater Middle East and Africa. When government robs ordinary people blind, in what she calls a “vertically integrated criminal enterprise,” the victims tend to look for justice elsewhere. When officials treat the law with criminal contempt, or when the law explicitly permits government extortion, they turn to what seem like uncorrupted systems of reprisal and redemption outside those laws. . .

Continue reading.

Written by LeisureGuy

24 November 2015 at 11:14 am

Posted in Business, Government, Law

The Pfizer-Allergan merger is a tax-avoidance scheme

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John Cassidy reports in the New Yorker:

In  an announcement on Monday morning, Pfizer, the big drug company, whose headquarters are on East 42nd Street, in Manhattan, said that it is merging with one of its competitors, Allergan PLC. Ian Read, a Scottish-born accountant who is Pfizer’s chairman and chief executive, said that the proposed deal, which is valued at a hundred and sixty billion dollars, would “create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world.”

On Wall Street and in the world of big pharma, that statement will raise chuckles. It is widely acknowledged that the primary impetus for the deal is a financial one. In merging with Allergan, which is based in Dublin, Pfizer intends to move its corporate residency to Ireland, where the corporate tax rate is just 12.5 per cent, compared to thirty-five per cent for a company of its size in the United States. Over the next few years, the merger could save Pfizer billions of dollars in taxes and deprive the U.S. Treasury of the same amount.
Tax-driven deals of this nature are known as “inversions,” and they are becoming increasingly common. Burger King, Liberty Global, and Medtronic are among the U.S. corporations to have carried out mergers that moved their headquarters abroad. Last year, Treasury Secretary Jacob Lew said that inversions were “wrong,” and that he would try and restrict them. Only last week, the Treasury Department issued some new administrative guidelines in this area. Without actual legislation, though, there isn’t very much the Obama Administration can do to prevent these exercises in corporate tax-dodging, and Republicans on Capitol Hill have displayed little eagerness to coöperate in a crackdown.
The Pfizer–Allergan deal will be the biggest inversion yet, and it is nothing short of a disgrace. Drug companies like Pfizer have long benefitted from taxpayer-funded research carried out under the auspices of organizations like the National Institutes of Health and the National Science Foundation. Now, Pfizer is seeking to avoid paying the taxes that are due on its profits, particularly profits generated by its overseas subsidiaries. Even though the Obama Administration doesn’t have the legal powers to block the Allergan transaction, it should seek to shame Pfizer and its board of directors into calling it off. . .

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Written by LeisureGuy

24 November 2015 at 10:53 am

Posted in Business

Overreaching in an effort to control customers: The Apple pentalobe

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In Motherboard Jordan Pearson notes the restrictions corporations regularly attempt to enforce on their customers:

It happened suddenly, like most of these stories do. My alarm went off. I kicked my leg out as I jolted awake, making solid contact with my new laptop, which was innocently lying at the foot of my hotel bed for some reason. It landed on a chair leg; the crash was loud. The aluminum next to the Apple logo was visibly, obviously dented. I flipped it open and was greeted with a large blob of dead pixels radiating outward from the dent.

My options were few. $600 for an LCD replacement at the Apple store. $500 to get an independent repairman to do it. On a whim, I searched eBay and was shocked to see that I could get a new LCD for $50, if I was willing to find out whatever the inside of a MacBook Pro looked like. I pressed buy.

And then I saw the screw.


If you’ve tried to open any iDevice—iPad, iPhone, iMac, any of them—within the last four years, you’ve come face-to-face with Apple’s very small, five-pointed Do Not Enter sign. It’s an overt declaration that your phone, or your computer, or your tablet is not really yours to tamper with, a public statement that you are not qualified to fix your own things.

If you’re reading this on your iPhone or have one nearby, look at either side of the charging port and you’ll seem them: two tiny, star-shaped screw heads that, outside of an obscure wheelchair manufacturer, do not otherwise exist in the wild.

There is a solution to this “pentalobe” screw, however. A screwdriver engineered by iFixit, a California startup that has been simultaneously antagonizing Apple and making sure that, as electronics get more and more complicated, the layperson will still be able to learn how to fix them. (Other companies have since begun offering pentalobe screwdrivers.)

I spent a few days with iFixit CEO Kyle Wiens and professional repair experts at the Electronics Reuse Conference in New Orleans earlier this month to learn more about how your right to open, tinker with, and repair devices that you own is under attack from the very companies that make them. . .

Continue reading.

Later in the article:

. . . The iPhone 4 shipped with standard, Phillips head screws. Sometime in late 2010, however, the company began ordering its Apple Store Geniuses to replace standard screws with pentalobe ones on any iPhone 4 devices that were brought in for repair.Reuters reported on January 20, 2011 that employees were instructed to not tell customers that they had made the switch. The switch should have, in theory, made it impossible for anyone except for Apple to open the device. . .

Written by LeisureGuy

24 November 2015 at 10:44 am

Posted in Business, Technology

The problem with trade agreements, exemplified by dolphin-safe tuna

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Public opinion cannot seem to halt the passage of the Trans Pacific Partnership agreement, strongly supported by many international corporations and President Obama, but trade agreements supersede national sovereignty and should be approached cautiously. David Dayen provides a good example in The Intercept:

International trade deals like the Trans-Pacific Partnership (TPP) need to be carefully examined piece by piece because they can take precedence over a country’s own laws.

Case in point: the World Trade Organization (WTO) on Friday ruled that dolphin-safe tuna labeling rules — required by U.S. law, in an effort to protect intelligent mammals from slaughter — violate the rights of Mexican fishers.

As a result, the U.S. will have to either alter the law or face sanctions from Mexico.

I wrote a few weeks ago about how the “investor-state dispute settlement system” baked into trade agreements can force countries to compensate corporations when regulations cut into their profits.

The long-running quarrel over tuna reveals another way that domestic laws can be overturned by trade agreements: when countries can file trade challenges on behalf of domestic industries.

“This should serve as a warning against expansive trade deals like the Trans-Pacific Partnership that would replicate rules that undermine safeguards for wildlife, clean air, and clean water,” said the Sierra Club’s Ilana Solomon in a statement.

In the Marine Mammal Protection Act (MMPA) of 1972, the United States banned importation of yellowfin tuna harvested with netting that also scooped up dolphins, which often swim in the eastern Pacific Ocean above yellowfin schools. Since the 1950s, millions of dolphins have been killed in the tuna fishing trade, but the MMPA resulted in significant reductions in dolphin deaths.

Mexico, which has more lax fishing standards than the U.S., launched trade challenges in 1990 to overturn the import ban. Other nations piled on to the trade challenges, seeking to force the U.S. to change its dolphin conservation practices.

Congress did weaken the law in a series of amendments in 1997, replacing the import ban with a voluntary labeling policy. This allowed countries to use the same harmful netting that caught dolphins, as long as they ensured no dolphins were killed. Tuna caught without conforming to these standards can still be sold in the U.S., just without the dolphin-safe label.

But in 2008, Mexico launched a case against the revamped tuna labeling law, arguing that it still violated international trade agreements.

The WTO has ruled in Mexico’s favor on four separate occasions since 2011, most recently last Friday, in a final ruling that cannot be appealed. Though the U.S. changed its label standards several times, most recently in 2013, the WTO said that the law discriminates against tuna caught in Mexico, relative to other countries. Informing consumers of the fishing practices used to catch their tuna, the WTO concluded, represented a “technical barrier to trade.” . .

Continue reading.

Written by LeisureGuy

24 November 2015 at 10:40 am


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