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May 31, 2005
Andersen wins at the Supreme Court
In a unanimous decision, the Supreme Court overturned the conviction of the defunct Arthur Andersen accounting firm for destroying documents relating to its client, Enron Corp., before Enron collapsed into chapter 11 bankruptcy in late 2001. Here are the previous posts on the Andersen case.
Chief Justice Rehnquist, writing for the Court, said that the conviction was the product of defective jury instructions at trial that were too vague and broad for jurors to determine correctly whether Andersen obstructed justice. Justice Rehnquist noted that jurors were instructed to convict Andersen if the accounting firm had an "improper purpose," such as an intent to impede or subvert fact-finding in an "official proceeding." Thus, Justice Rehnquist reasoned, jurors were instructed to convict even if Andersen mistakenly thought it was acting legally. At trial, Andersen argued that employees who shredded tons of documents followed the policy and there was no intent to thwart the SEC investigation.
On a threshold basis, Justice Rehnquist analyzed the case in the following manner:
In this case, our attention is focused on what it means to "knowingly . . . corruptly persuad[e]" another person " with intent to . . . cause" that person to "withhold" documents from, or "alter" documents for use in, an "official proceeding."We have traditionally exercised restraint in assessing the reach of a federal criminal statute, both out of deference to the prerogatives of Congress, . . . and out of concern that ‘a fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is passed. [citations ommitted].
Such restraint is particularly appropriate here, where the act underlying the conviction -- "persua[sion]" -- is by itself innocuous. Indeed, "persuad[ing]" a person "with intent to . . . cause" that person to "withhold" testimony or documents from a Government proceeding or Government official is not inherently malign. Consider, for instance, a mother who suggests to her son that he invoke his right against compelled self-incrimination, . . . or a wife who persuades her husband not to disclose marital confidences. [citations ommitted].
Nor is it necessarily corrupt for an attorney to "persuad[e]" a client "with intent to . . . cause" that client to "withhold" documents from the Government.
In a later part of the opinion, Justice Rehnquist ribs the Government regarding its argument about Congress' alleged meaning of the key phrase in the criminal statute under scrutiny:
The Government suggests that it is "questionable" whether Congress would employ such an inelegant formulation as "knowingly . . . corruptly persuades." . . Long experience has not taught us to share the Government's doubts on this score, and we must simply interpret the statute as written.
And in discussing the defective instructions given to the jury at trial, Justice Rehnquist notes that following:
[T]he jury instructions at issue simply failed to convey the requisite consciousness of wrongdoing. Indeed, it is striking how little culpability the instructions required. For example, the jury was told that, "even if [Andersen] honestly and sincerely believed that its conduct was lawful, you may find [Andersen] guilty." . .The instructions also diluted the meaning of "corruptly" so that it covered innocent conduct. . .
The ruling is a stunning setback for the Department of Justice generally and the Enron Task Force specifically, which pursued a dubious prosecution of Andersen that effectively terminated a going concern that employed 30,000 persons in the U.S. (in comparison, Enron's implosion cost approximately 5,000 employees their jobs). That economic carnage was a stark reminder of the increasingly common governmental regulatory practice of criminalizing merely questionable business transactions, a practice that has been played out over and over again in other aspects of the Enron case and, more recently, in regard to the governmental investigations into American International Group Inc.
Professor Ribstein, a longtime critic of governmental regulation through criminalization of merely questionable business transactions, places the Supreme Court's decision in the perspective of the damage done by the government's prosecution:
[I]n addition to destroying value and lives, it significantly reduced competition in the auditing industry and thereby impeded efforts to engage in the cleanup the pro-regulatory folks have thought is oh so necessary. Now it turns out the whole thing was a legal as well as policy mistake.More generally, this is yet another nail in the coffin of the misbegotten idea that corporate criminal liability is the way to better markets.
In a subsequent post, Professor Ribstein also passes along these other salient thoughts. Professor Henning also has insightful thoughts about the Anderson decision here and here.
So, the Supreme Court reminds us that the rule of law does not allow the government to abuse the law to engage in popular prosecutions of unpopular business figures. As has been noted on many previous occasions on this blog, this principle is precisely what Sir Thomas More was talking about in A Man for All Seasons when he made the following comments to young lawyer Will Roper, who had just confirmed that he would abuse the rule of law in order to achieve the laudable goal of convicting the Devil of a crime:
"Oh? And Roper, when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down -- and you're just the man to do it, Roper -- do you really think you could stand upright in the winds that would blow then?""Yes, I'd give the Devil the benefit of law, for my own safety's sake!"
The Supreme Court's decision in Anderson cannot bring that firm back to life, and that is an injustice. But it does provide a measure of protection to us from the government abusing the law and using its overwhelming power to pursue wrongful prosecutions against the unpopular persons of the moment. And for that, I am very thankful.
Posted by Tom at 10:33 AM | Comments (4) | TrackBack (3)
It's vacation time!
Via Google Maps, the picture on the left is the satellite view of the waterpark area of the Fiesta Texas Theme Park in San Antonio, which -- of course -- includes a Texas-shaped pool!
By the way, Fiesta Texas is directly adjacent to the Westin La Cantera Resort, which is one of the best resort properties in Texas. A part of one of the two La Cantera golf courses (the one on which the Texas Open is played) runs right next to the Rattler, one of the giant rollercoasters at Fiesta Texas.
Several years ago, my older brother Bud and I were playing a round at that La Cantera course with a club pro from East Texas. The club pro was not having a good round. After snap hooking one off the tee on the hole where you tee off right above -- and within earshot of the screams emanating from -- the Rattler, the club pro turned to Bud and me and said with utter exasperation:
"This sure as hell ain't Augusta National."
Posted by Tom at 5:33 AM | Comments (1) | TrackBack (0)
Implications of the "Non" revolt
This Telegraph article provides a nice summary of the potential implications to French business interests of the vote over the weekend by French voters to reject the proposed European Union constitution.
The French left's vote heavily influenced the election, with two thirds of the Socialist base voting no, including over 70 per cent no vote levels in hard-Left strongholds such as Calais. French employers are clearly worried about the implications of the vote, which they believe will stymie employment reforms that would allow the French economy to become more competitive with the U.S. and emerging economic powers such as China and India.
By the way, Marginal Revolution's Tyler Cowen notes in this post that it's already not easy to find a plumber in France.
Meanwhile, Forbes Paul Maidment provides this insightful summary of the political implications of the vote, including this observation:
The French campaign united some strange political bedfellows. Witness the Trotskyite far left making common eurosceptic cause with the conservative right, The "no" camp was also boosted by the unpopularity of President Jacques Chirac and the cautious economic reform-minded Prime Minister Jean-Pierre Raffarin, both advocates of the draft constitution.But the pre-vote polling reflected a growing mistrust of Europe's institutions, not confined to France, we should note, as well as wider economic and social anxieties. The proposed EU constitution was attacked by its French opponents for being an Anglo-Saxon neoliberal document that threatens the integrity of the French social economy. (In the U.K, of course, the constitution is mainly opposed because it is a Franco-German neo-statist document that threatens the integrity of the British market economy.) So caution is required in interpreting the outcome of Sunday's poll.
And, Jane Galt of Asymmetrical Information sums up the implications of the vote this way:
I'll tell you what is a big deal for the EU, though: the euro. The disparities between euro-zone economies are not shrinking as everyone had hoped; in some places, they're growing. That is making it nearly impossible to craft monetary policy that is both hawkish on inflation, and doesn't throw huge economies (i.e. Italy and Germany) deeper into the slough of economic despond. Italy, meanwhile, is managing to disprove the adage that "inflation is always and everywhere a monetary phenomenon" by having stagflation, a recession, and an inflation hawk at the monetary helm. If the euro falls apart, it could have major repercussions for the EU, as it would be a full scale retreat from "ever-closer union".
Posted by Tom at 4:18 AM | Comments (0) | TrackBack (0)
May 30, 2005
The "Sputnik effect" of economic pessimism
Robert J. Samuelson makes a good point in this Washington Post op-ed by comparing excessive negativism over a few economic events to the Soviet launch of Sputnik in 1957:
Americans are having another Sputnik moment: one of those periodic alarms about some foreign technological and economic menace. It was the Soviets in the 1950s and early 1960s, the Germans and the Japanese in the 1970s and 1980s, and now it's the Chinese and the Indians. To anyone old enough, there's no forgetting Oct. 4, 1957, when the Soviets orbited the first space satellite. It terrified us. We'd taken our scientific superiority for granted. Foolish us. Soon there were warnings of a "missile gap" with the Soviets. One senator admonished that Americans should "be less concerned with . . . the height of the tail fin on the new car and . . . be more prepared to shed blood, sweat and tears if this country and the free world are to survive."Every complex economy is more (or less) than the sum of its parts. What matters is not just how much we save -- but how well we invest. . . .
The Sputnik syndrome is an illusion. It transforms a few selective economic happenings -- a satellite here, a Toyota there, poor test scores everywhere -- into a full-blown theory of economic inferiority or superiority. As often as not, the result is misleading. We are now going through this process with China and India. Their entry into the global economy is a big deal, with some obvious pluses and minuses for us. As they get richer, some of their talent that once came our way may stay home (especially if we make getting U.S. visas harder). On the other hand, good ideas that originate in Bangalore or Shanghai will soon benefit people everywhere -- just as good American or Japanese ideas have before. . . .
On being overtaken, history teaches another lesson. America's economic strengths lie in qualities that are hard to distill into simple statistics or trends. We've maintained beliefs and practices that compensate for our weaknesses, including ambitiousness; openness to change (even unpleasant change); competition; hard work; and a willingness to take and reward risks. If we lose this magic combination, it won't be China's fault.
Posted by Tom at 6:46 AM | Comments (0) | TrackBack (0)
Break'em up!
When a 3-3 road trip and a two-game road winning streak are two of your baseball club's season highlights to date, you know you're in the middle of a tough season.
Nevertheless, there are glimmers of hope as the last place the Stros (18-31) return to Minute Maid Park on Memorial Day for a six game homestand against first the Reds (20-30) and then the Cards (32-17). Given that the Reds and the Cardinals are two of the best hitting teams in the National League in terms of runs created against average ("RCAA," explained here), the Stros' pitchers will have their work cut out for them in keeping the number of runs at the minimum level necessary to give the Stros a chance to win.
And, believe me, runs are a hard thing to come by for this Stros team. This is clearly one of the worst hitting Stros' clubs of the past 25 years, maybe ever. With just 30% of the season played, the Stros have already scored an incredible 53 less runs than an average National League club would have scored during the same number of games. That's easily the worst in the National League.
Only two regulars -- Bidg (7 RCAA/.297 BA/.353 OBP/.537 SLG) and Morgan Ensberg (6/.284/.381/.535) -- have positive RCAA's, and really only one other regular player -- Lance Berkman (-5/.212/.325/.288) -- is a good bet to have a positive RCAA after the remainder of the season. Moreover, don't buy into the common explanation in the mainstream media that the Stros' hitting woes this season are the result of losing Jeff Kent (3/.261/.351/.483) and Carlos Beltran (3/.300/.349/.465) over this past off-season -- even with those players, the Stros would still be tied for the worst team RCAA in the National League!
By the way, although I blew my pre-season prediction for the Stros, at least my prediction (here and here) that not signing Beltran was the right move is starting to look pretty good.
The Stros' hitting problems have been apparent for quite some time; last season's late-season surge and playoff run simply covered them up. Thus, the Stros are definitely a club that is in the market for a hitter, and it's good to see that the mainstream media is now discussing proposed trades that were suggested here a month ago. As noted here, a trade for a slugger to two should be a real possibility so long as the Stros are willing to use a couple of their good, young pitching prospects as bait.
Meanwhile, the Stros' pitching staff continues to hang in there despite the lousy hitting. After an earlier two-week span in May in which the pitching staff's runs scored against average ("RSAA," explained here) dipped a bit, the staff recovered over the past week with a string of strong performances. The staff is now 7th of the sixteen National League teams in RSAA with both the Rocket (24 RSAA-1st in NL/1.19 ERA) and Roy O (10 RSAA-9th in NL/3.23 ERA) performing at a particularly high level. In fact, if you exclude the absolutely abysmal performance of both Duckworth (-12/11.40) and Astacio (-14/10.98), the pitching staff's RSAA performance would currently be the third best in the National League. Inasmuch as those two hopefully will not pitch much more this season, it is reasonable to expect (barring injury) that the Stros pitching staff's RSAA will improve gradually over the balance of the season.
Clemens kicks off the upcoming homestand by pitching the Memorial Day matinee game to open the series against the Reds, which should be interesting for no other reason than it pits the worst hitting team in the National League (i.e., the Stros) against the worst pitching team in the National League (i.e., the Reds). After this homestand, the Stros go to New York for three games with the Mets (26-25), and then return home the following weekend for a three game series against the Blue Jays (27-23) before going back on the road for a six game road trip.
Posted by Tom at 5:00 AM | Comments (0) | TrackBack (0)
May 29, 2005
The ubiquitous nature of business fraud
A couple of articles today about local business disputes reiterate the truism that, so long as humans are involved in a market economy, the risk of fraud is an essential element of virtually every transaction.
In this NY Times article, Kurt Eichenwald -- whose recent Conspiracy of Fools (previous posts here) is the best book written to date on the Enron scandal -- profiles a family-controlled business in Conroe, Texas (about 40 miles north of downtown Houston) that is now beset with competing allegations of business fraud between the brother-owners. As Mr. Eichenwald notes:
How could it happen? How could a small company be wrecked so quickly amid myriad accusations of financial wrongdoing that went undetected until the whole place came tumbling down?The answer is, it happens every day. The Con-Tex story is not just the tale of the downfall of one company or one family. It is a microcosm, a look at an underbelly of the investing and corporate worlds where hokey deals and mysterious webs of linked investors are part of the workaday business.
Although the article is quite good and interesting, one point that Mr. Eichenwald missed is that, despite the popular urge to use governmental regulation to punish every instance of business fraud, it really makes no economic sense to do so. The cost of such a regulatory net that would catch all business fraud (assuming that one could even be devised) would be enormous and far in excess of what Americans would be willing to subsidize.
Meanwhile, Chronicle columnist Rick Casey reviews the saga playing out in Harris County Probate Court between former Houston businessman Robert Alpert and his former attorney, Mark Riley. Mr. Riley is the trustee of a couple of trusts that Mr. Alpert had set up for his children. After a falling out with Mr. Alpert, Mr. Riley filed a lawsuit against Alpert in which he alleges that Mr. Alpert is interfering with his work as the trustee of the trusts and that Mr. Alpert is fraudulently using the trusts as a tax dodge.
The interesting twist to this case is that, during the civil litigation, Mr. Riley hired a well-known local criminal defense attorney -- Robert Scardino -- to negotiate a "bounty deal" between Mr. Riley and the IRS in which Mr. Riley could receive 15%, up to $7.5 million, of any penalties, fines and back taxes that the IRS recovers from Mr. Alpert as a result of information that Mr. Riley supplies.
Mr. Casey is troubled that the Probate Judge in the case -- who many years ago used to work for the law firm representing Mr. Riley -- will not allow attorneys for Mr. Alpert to introduce a copy of the bounty agreement as evidence during the trial of the civil case between Mr. Riley and Mr. Alpert. My sense is that Mr. Casey's suggestion is far-fetched that the judge's motivation in not allowing admission of the bounty agreement is to protect his former law firm, but it doesn't appear from the article that there is much of a reason that the jury should not be allowed to consider the bounty agreement in the context of the lawsuit between Mr. Alpert and Mr. Riley.
Just two more stories from the soft underbelly of the wild world of business litigation in Houston.
Posted by Tom at 7:08 AM | Comments (0) | TrackBack (0)
May 28, 2005
More on the wild world of Equatorial Guinea
As noted in these previous posts, the tiny West African dictatorship of Equatorial Guinea is one fascinating place.
Quashed coups (five since 1996) are so routine in Equatorial Guinea that some wags observe that the the government stages them like Broadway plays to add luster to its macho image. The latest coup last year was the stuff of novels, involving a highly dysfunctional ruling family, a rap-music-producing heir apparent who drives a Lamborghini, and a political opponent in exile who contends that Equatorial Guinea's dictator is a cannibal who particularly enjoys eating human gonads. The coup also allegedly involved a Lebanese front company, Sir Mark Thatcher (here and here and about 100 mercenaries from South Africa, Germany, Armenia and Kazakhstan. Add to that background the fact that Equatorial Guinea has huge oil and gas reserves that many Western exploration and production companies are competing to develop and you have a tempest of international intrigue and corruption.
Against that colorful backdrop, Simon Kareri, a former Riggs Bank senior vice president and his wife, Nene Fall Kareri, were arrested yesterday in Washington on fraud, conspiracy and money laundering charges related to accounts at the bank of the Equatorial Guinea government, which formerly was the bank's largest customer.
Riggs Bank, which is now owned by PNC Financial Services Group Inc., pleaded guilty in January to a felony charge of failing to report suspicious transactions involving foreigners, including former Chilean dictator Augusto Pinochet and members of his family. The bank also agreed to pay a $16 million fine, which the bank paid on top of a record $25 million civil fine that Treasury Department assessed against the bank last ago.
Mr. Kareri was Riggs' senior international banking manager and has been a target of a federal grand jury investigation since he took the Fifth Amendment at a Senate subcommittee hearing investigating U.S. oil company investments in Equatorial Guinea last July. In an example of a typical transaction, Senate investigators found payments totaling almost a half million dollars from a big U.S. oil company into the account of a 14-year-old relative of Equatorial Guinea's dictator, earmarked for "renting office space."
Life really is stranger than fiction.
Posted by Tom at 4:52 AM | Comments (0) | TrackBack (0)
May 27, 2005
The Greenberg defense team
On the heels of this lawsuit, this New York Times article profiles the defense team of former AIG chairman and CEO, Maurice R. "Hank" Greenberg -- David Boies, Robert G. Morvillo, and longtime Greenberg confidant, Kenneth J. Bialkin of Skadden, Arps.
In typical NY Times style, the article treats Mr. Boies as a rock star, while essentially avoiding too much mention of the two less flashy members of the defense team. Overall, the team strikes me as somewhat odd. Mr. Boies is a longtime supporter of Democratic Party interests, which is the opposite of Mr. Greenberg's political interests. Moreover, Mr. Morvillo -- the criminal law expert -- is coming off the rather disappointing trial defense of Martha Stewart last year. I would not be surprised to see additional members added to this team when the inevitable criminal indictments against Mr. Greenberg are filed, probably later this summer.
Posted by Tom at 5:55 AM | Comments (0) | TrackBack (0)
John White named A&M Board chair
Longtime Houston attorney John D. White was elected as chairman of the Texas A&M University System Board of Regents yesterday. John is the managing partner of the local office of the Jones Walker law firm, a first rate litigator (particularly in oil and gas matters), and one of the genuinely nicest guys in the Houston legal community. A&M's board has chosen well.
By the way, yesterday's A&M Board meeting was the first for new regent Gene Stallings. Coach Stallings is a former A&M, University of Alabama, and NFL Phoenix Cardinals head football coach, and his 1992 Alabama team won the National Championship.
Posted by Tom at 5:19 AM | Comments (0) | TrackBack (0)
May 26, 2005
The Lord sues AIG and Greenberg
New York AG ("Attorney General" or "Aspiring Governor," take your pick) Eliot Spitzer and the New York State Insurance Department filed a civil lawsuit today against American International Group, Inc and its two former top executives -- former CEO Maurice R. "Hank" Greenberg and former CFO Howard I. Smith -- alleging that the two executives orchestrated a scheme that allowed AIG to manipulate its financial results and mislead regulators and investors.
After managing AIG into one of the world's largest financial companies over the past 40 years, Mr. Greenberg resigned as AIG's CEO and chairman this past March under pressure from the AIG Board and Mr. Spitzer. At around the same time, Mr. Smith was fired as AIG's CFO for allegedly refusing to cooperate with Mr. Spitzer's investigation, although Mr. Spitzer had made clear by that time that both Mr. Greenberg and Mr. Smith were targets of his parallel criminal investigation. Here are previous posts on the saga of Mr. Spitzer's investigation of AIG and Berkshire Hathaway's General Reinsurance Corp, and here is a copy of the complaint and Mr. Spitzer's press release regarding the complaint.
There is really nothing much new in the complaint, which was filed in State Supreme Court in Manhattan and seeks damages and disgorgement of profits from the allegedly illegal transactions. The Lord of Regulation alleges that Mr. Greenberg orchestrated wrongdoing in "an apparent effort to improve the company's financial results," even as AIG "was a well-run and profitable company that didn't need to cheat." The complaint does not address the fact that the transactions in question were approved by AIG and its independent auditors. The Securities & Exchange Commission and Justice Department are also investigating AIG, but neither is involved in Mr. Spitzer's civil lawsuit.
Meanwhile, AIG and its auditors, PricewaterhouseCoopers LLP, are working to finish the company's delayed annual report by the company's self-imposed May 31 deadline. Still remaining to be seen is whether AIG can weather an Enronesque meltdown now that the Lord has deemed Mr. Greenberg's earnings management strategies as illegal, and to ponder the importance of good timing in going bust. AIG's shares have lost almost a quarter of their value since Mr. Spitzer announced his campaign against AIG on February 12, closing today at $55.71 compared to a value of $73.12 on Friday, Feb. 11.
Posted by Tom at 3:00 PM | Comments (0) | TrackBack (0)
The BBC on the NatWest Three
In its inimitable style, the B.B.C. has produced a news video segment on the three U.K. bankers who have been dubbed the "NatWest Three" (earlier posts here) in the Enron case. To view the video:
Go to this site.Hit the "Launch" button, which produces a new window.
In the new window, scroll down on the right hand side to the April 20 hyperlink, "Million Dollar Manhunt." The video plays in RealPlayer.
It's always entertaining to hear the British pronounce "Houston." Also, the piece is definitely not complimentary of the Federal Detention Center in downtown Houston. Finally, it seems in the video as if Philip Hilder (Sherron Watkins' attorney) is doubling as a spokesman for the Enron Task Force. ;^)
By the way, this Glasgow Herald article provides an interesting U.K. perspective on the NatWest Three case, including the following comment from a Glasgow University law professor:
"Three questions arise here. Firstly, will they receive a fair trial, second, would the sentence be out of proportion with European norms and thirdly, is there a real risk of other forms of mistreatment either in detention conditions or more usual the infliction of violence?"
Posted by Tom at 10:57 AM | Comments (0) | TrackBack (0)
Brewing rebellion against Metro?
Tory Gattis runs the smart blog, Houston Strategies. In this post, Tory notes Metro's less-than-robust rail ridership figures (see this earlier post) and then describes litigation that Metro could be facing in the near future if Metro's ridership trends continue.
Great. Add litigation attorneys as another interest group favoring misguided rail plans. ;^)
Posted by Tom at 7:59 AM | Comments (0) | TrackBack (0)
"It's not the arrow, it's the Indian"
If you are contemplating a purchase of new golf clubs, make sure that you read this first.
As David Feherty comments:
"Maybe we're all supposed to stink at this. It's our punishment for playing this insane game."
By the way, if you are really interested in improving your golf game and not just hitting longer drives, read this.
Posted by Tom at 7:11 AM | Comments (0) | TrackBack (0)
Study favors bypass surgery over angioplasty
The New England Journal of Medicine yesterday published the findings of a large-scale study that indicate that angioplasty -- an increasingly popular invasive procedure for patients with blocked coronary arteries -- carries a higher risk of death over the long term than open-heart bypass surgery. The researchers were led by Edward L. Hannan, chairman of the Department of Health Policy Management and Behavior at the University at Albany School of Public Health.
The study is particularly significant because it raises questions regarding the shift in treatment for blocked coronary arteries over the past decade or so -- the shift away from coronary bypass surgery in favor of angioplasty, which involves sliding a balloon into an artery through a small incision and then propping it open with a wire-mesh stent.
Inasmuch as angioplasty procedures require a far shorter recovery time and lower risk of in-hospital complications than bypass surgery, it is currently performed more than one million times a year in the U.S., which is about three times the rate of bypass operations. Bypass surgery generally costs between $25,000 to $35,000 while angioplasties run from around $10,000 to $15,000.
The study involved a review of almost 60,000 patients from 1997 through 2000 with serious heart disease in two government databases in New York state. Researchers concluded that those with three blocked arteries who received stents were 1.56 times as likely to die within three years as those who had bypass surgery. Similarly, those with two blocked arteries who got stents were 1.33 times as likely to die as those who had bypass surgery. Finally, over a third of the angioplasty patients required either surgery or additional stents within three years, while only 5% of the bypass surgery patients required either angioplasty or further surgery within the same period. The researchers note that the study does not include findings on the newer generation of drug-coated stents, which some cardiologists believe will improve the outcome for angioplasty.
This large scale study adds to an increasing number of smaller studies finding advantages of bypass surgery over angioplasty for long-term survival. Last year, a Cleveland Clinic study that followed 6,000 patients found that the risk of death over time was more than twice as high in the angioplasty group of relatively high-risk patients.
Both the Cleveland Clinic and New York studies involved review of registry data and not the controlled clinical trials that scientists consider the best form of evidence. In registry studies, researchers must adjust existing data for various factors, which can lead to debate and criticism over the effect such adjustments have on the ultimate findings of the study. Nevertheless, registry data studies allow the reearchers to involve much larger patient groups than clinical trials and to evaluate medical practices that are being most commonly performed in the medical marketplace.
Posted by Tom at 5:10 AM | Comments (1) | TrackBack (0)
Prosecution rests in the Enron Broadband trial
The prosecution rested Wednesday in the Enron Broadband trial, about five weeks after the beginning of the trial. Here are previous posts on the trial.
The trial has been a strange one. Looking like a tap-in for the prosecution at the beginning, the prosecution committed some early blunders, such as allowing its key witness to testify falsely regarding a video shown to the jury and then compounding that mistake by attempting to blame the error on a clearly intimidated woman who previously provided video services for Enron. At that point, the trial was looking really interesting.
Unfortunately, the fireworks did not last long. The trial quickly descended into mind-numbing boredom, noted here and here. Thus, when the Enron Task Force prosecutors advised U.S. District Judge Vanessa Gilmore that they expected that it was going to take at least a week to ten days longer to complete presentation of their case-in-chief than they originally predicted, a jury rebellion nearly broke out. It's exceedingly difficult to read if a jury is blaming the prosecution or the defense for such delays, but the lawyers on both sides accelerated examination of witnesses over the past week in an attempt to get the trial back on course. Inasmuch as the defense side of this type of case normally does not take as long as the lawyers originally predict, my sense is that the trial is back on track to conclude by late June.
Despite their early mistakes, the Enron Task Force prosecutors ended their case-in-chief by eliciting testimony about the "elephant in the courtroom" -- i.e., the large amount of money that three of the former Enron executives-defendants made on stock sales during the period in which the prosecution alleges that they were making false public statements about Enron Broadband's prospects. That is clearly the strength of the prosecution's case, and expect the prosecutors to hammer that point again and again throughout the remainder of the trial.
The defense team begins presentation of their case today. Let's hope they liven things up a bit.
Posted by Tom at 5:00 AM | Comments (0) | TrackBack (0)
May 25, 2005
Thoughts about Texas university endowments
This handy document ranks the size of the 741 largest university and college endowments in the United States. Although most of the largest endowments are held by well-known institutions, there are surprises even among the biggest endowments. Not many people realize that little Grinnell College in Grinnell, Iowa has the 34th largest endowment in the U.S. at almost $1.3 billion.
Here are some entries of interest to Houstonians:
1. Harvard University $22.1 billion
2. Yale University $12.7 billion
3. University of Texas System $10.3 billion
10. Texas A&M University System $4.375 billion
17. Rice University $3.3 billion
52. Baylor College of Medicine $972 million
56. Southern Methodist University $914.5 million
57. Texas Christian University $869 million
78. Trinity University $673 million
79. Baylor University $672 million
125. University of Houston System $402.5 million
129. Texas Tech University $392.5 million
Given the institutions' relative contributions to the welfare and economy of the State of Texas, does it really make sense for the University of Houston to have an endowment that is only roughly 4% the size of the University of Texas endowment and only 10% of that of Texas A&M? Ah, the legacy of the Permanent University Fund. At least UH is providing some serious "bang for the buck" in furnishing a quality educational resource for the State of Texas and Houston at a fraction of the endowed capital of UT and A&M.
On the other hand, one way to ameliorate the effects of the disproportionate size of the endowments would be through merger. How about turning UH into the University of Texas at Houston (UTH) and Tech into Texas A&M University at Lubbock? Or vice versa, in that it actually might make more sense to merge UH with A&M, which is more in need of an urban presence than UT. Inasmuch as it is in the interests of Texas for UH and Tech to achieve Tier I university status, a merger into either the UT or A&M systems would give both institutions access to endowed capital that would facilitate such an effort.
By the way, don't worry. Both UH and Tech could retain their football teams after the mergers. ;^)
Posted by Tom at 5:19 AM | Comments (3) | TrackBack (0)
May 24, 2005
Update on Enron's "NatWest Three"
One of the more interesting sidelights to the criminal investigations into Enron Corp. has been the saga of the "NatWest Three" -- David Bermingham, Gary Mulgrew and Giles Darby, the three former National Westminster Bank PLC bankers based in London who are charged in Houston with bilking their former employer of $7.3 million in a scheme allegedly engineered by former Enron CFO Andrew Fastow. Here are the previous posts on the NatWest Three.
Earlier this morning, English Home Secretary Charles Clarke approved the extradition of the NatWest Three to Houston to face the seven counts of wire fraud that each of them face under the U.S. indictment. The NatWest Three have two weeks to appeal Mr. Clarke's decision, and an appeal would likely tie the matter up further in U.K. courts.
The case of the NatWest Three is gaining increased public interest in England because the three bankers have contended that, if a fraud case should be prosecuted against them at all, then the case should go forward in England because the men are all British and the alleged offenses were committed against a United Kingdom company. If a British prosecution against the three were to proceed, then the U.S. prosecution would be delayed because the British charges would take precedence over foreign ones. A British prosecution would also raise all sorts of double jeopardy and collateral estoppel issues that could at least complicate any subsequent U.S. prosecution.
The U.K.'s Serious Fraud office decided not to prosecute the three former bankers, but the three bankers last month won a judicial review of that decision. Although Mr. Clarke was not required to consider the judicial review issue in deciding whether to approve the men's extradition, British legal commentators are now openly questioning why the British government is giving in so easily to a U.S. government extradition request relating to reputable U.K. businessmen, particularly in regard to an extradition that would result in a prosecution of those U.K. citizens in Houston's anti-Enron environment for alleged crimes that the U.K. government has declined to prosecute?
That's a pretty darn good question.
Posted by Tom at 11:06 AM | Comments (6) | TrackBack (0)
Crandall on the Wright Amendment
Before retiring in 1998, former American Airlines chairman and CEO Robert Crandall steered American successfully through the first two decades after deregulation of the American airline industry.
Mr. Crandall was viewed as a hard-knuckled but successful executive during his tenure at American. Always worried about the tendency of airlines to price cut themselves to ruination, Mr. Crandall was tape-recorded (some would say set up) by the CEO of bankrupt Braniff Airlines, who prompted Mr. Crandall to make the unremarkable statement that both airlines would benefit if they raised prices. The Justice Department censured Mr. Crandall for broaching price fixing over that incident. In his campaign to control rising costs during the new era of deregulation, Mr. Crandall took on the airline labor unions, prompting a flight attendant strike in 1993 and a pilot strike in 1997. However, when he retired, American was a much healthier company financially than it is now.
While running American, Mr. Crandall did not enjoy the competition that Dallas-based American faced from Dallas-based discounter, Southwest Airlines. In this WSJ ($) letter to the editor, Mr. Crandall takes the Journal to task for what he considers revisionist history regarding the controversial Wright Amendment, which restricts Southwest from flying most interstate routes from its Dallas Love Field hub:
In the 1960s, the cities of Dallas and Fort Worth made an agreement with the U.S. government and with the airlines then serving the two cities. The U.S. had told the cities that it wouldn't provide continued support for two airports, but that if they could agree on a single airport, the government would provide help in creating it. The cities agreed to prohibit competition with DFW from any other airport, the airlines serving both city airports agreed to move and to take on the financial burden of paying off the bonds with which DFW would be built and sustained, and the new airport was built. During construction, Southwest was created, and when the airlines moved to DFW, Southwest found a legal loophole that allowed it to remain at Love Field, which is much closer to the businesses, hotels and high-income residential areas of Dallas. Thus, Southwest gained a unique monopoly position in one of the country's premier markets and avoided bearing any of the cost of creating and sustaining DFW.The city of Dallas could and should have closed Love Field to fulfill its promise to prevent competition against DFW, as Denver did when it closed Stapleton to prevent it from competing with the new Denver airport. Unfortunately, Dallas lacked the moral courage to fulfill its obligation. In retrospect, it was a mistake for American and others to agree to the compromise that the Wright Amendment represented, for Southwest and others now mischaracterize it at every opportunity.
Posted by Tom at 5:56 AM | Comments (6) | TrackBack (0)
Graglia on judicial activism
Lino A Graglia is the A. Dalton Cross Professor of Law at the University of Texas Law School and Texas' foremost Constitutional law scholar. From time to time, he has also been one of the more outspoken and controversial commentators on application of Constitutional law to social issues in American society.
In this Opinion Journal op-ed, Professor Graglia notes that modern Constitutional law is narrowly based:
The essential irrelevance of the Constitution to contemporary constitutional law should be clear enough from the fact that the great majority of Supreme Court rulings of unconstitutionality involve state, not federal, law; and nearly all of them purport to be based on a single constitutional provision, the 14th Amendment--in fact, on only four words in one sentence of the Amendment, "due process" and "equal protection." The 14th Amendment has to a large extent become a second constitution, replacing the original. . .The problem is that the Supreme Court justices have made the due process and equal protection clauses empty vessels into which they can pour any meaning. This converts the clauses into simple transferences of policy-making power from elected legislators to the justices, authorizing a court majority to remove any policy issue from the ordinary political process and assign it to themselves for decision. This fundamentally changes the system of government created by the Constitution
The basic principles of the Constitution are representative democracy, federalism and the separation of powers, which places all lawmaking power in an elected legislature with the judiciary merely applying the law to individual cases. Undemocratic and centralized lawmaking by the judiciary is the antithesis of the constitutional system. . .
Plato argued for government by philosopher-kings, but who could argue for a system of government by lawyer-kings? No one can argue openly that leaving the final decision on issues of basic social policy to majority vote of nine lawyers--unelected and life-tenured, making policy decisions for the nation as a whole from Washington, D.C.--is an improvement on the democratic federalist system created by the Constitution. Yet that is the form of government we now have.
The claim that the court's rulings of unconstitutionality are mandates of the Constitution, or anything more than policy preferences of a majority of the justices, is false. Rule by judges is in violation, not enforcement, of the Constitution. Ending it requires nothing more complex than insistence that the court's rulings of unconstitutionality should be based on the Constitution--which assigns "All legislative Power" to Congress--in fact as well as name.
Posted by Tom at 5:33 AM | Comments (4) | TrackBack (0)
Competition in regulation markets
As noted in this earlier post, the Lord of Regulation latest political grandstanding strategy has been to launch an investigation into the sub-prime lending industry, which provides the valuable service of lending money for home loans at higher interest rates to those who cannot qualify for a conventional mortgage because of insufficient income, lack of assets or credit problems. It's almost certain that his investigation will damage the industry and thus, reduce the number of people it can profitably serve while scaling back the growth rate in home-ownership. As with many of Mr. Spitzer's investigations, the real victims are not the ones he pretends to threaten.
Well, apparently the banks are not rolling over for Mr. Spitzer quite as quickly as most of his other targets. This Wall Street Journal ($) article reports that certain of the banks in Mr. Spitzer's latest probe may decline to cooperate because the primary regulator of national banks is the Office of the Comptroller of the Currency and not Mr. Spitzer's office.
As usual, the Lord of Regulation is not reacting well to competition on his turf of regulating all alleged business corruption. Last week during a speech in Washington, Mr. Spitzer accused the OCC of trying to thwart his lending investigation and, in so doing, noted a telephone call he received from the OCC's acting comptroller, Julie L. Williams.
That did not sit well with Ms. Williams, who criticized Mr. Spitzer for launcing an investigation into an area that is clearly within the regulatory mandate of the OCC:
"I was surprised and disappointed to see what I had understood to be a personal conversation recounted as part of a speech."
Given Mr. Spitzer's general disdain for markets in regulating business, wouldn't it be delicious irony for one of his investigations to be thwarted by competition within the regulatory marketplace?
Posted by Tom at 5:04 AM | Comments (0) | TrackBack (0)
May 23, 2005
"Yeah, like really . . ."
The youngest player to win an LPGA golf tournament in 50 years emerged yesterday as graduating high school student Paula Creamer won her first LPGA event at something called the Sybase Classic by sinking a clutch 20-foot birdie putt on the final hole.
For you fellow parents of teenage girls, I'm sure you can relate to Paula's following answer to a question during her post-round interview:
Q: You said yesterday you were anxious. Did you just handle that much better today?A: Yes, I think so. I called Colin, my caddie. We talk a lot, every day, and we talked to Lance about it, and just things to help me be not anxious and be calm and patient out there. And it worked well for a while. It's funny, because on 17 I hit a pretty decent good shot and then Gloria hit it within two feet. And Lance was like, "Come on, you have to make this putt." And I'm like, "Listen, you need to settle down, not me. We have a hole and a half to play. Come on." It worked well.
There were times I tend to walk very fast when things are like on the last hole, 18, I was 50 yards in front of Lance. And Lance was screaming, "Paula, Paula, stop!" And I waited. And then we walked up. I just have to learn how to control it. The last putt, I was shaking because of nerves and just wanting to see what's going to happen.
It's only a matter of time before Dan Jenkins picks up on this material.
Posted by Tom at 6:10 AM | Comments (0) | TrackBack (0)
The potential effect of the human genome on health insurance
Doctor and author Robin Cook has re-evaluated his view on universal health insurance based on advances in academic understanding of the human genome. In this NY Times op-ed, Dr. Cook notes the following:
In this dawning era of genomic medicine, the result may be that the concept of private health insurance, which is based on actuarially pooling risk within specified, fragmented groups, will become obsolete since risk cannot be pooled if it can be determined for individual policyholders. Genetically determined predilection for disease will become the modern equivalent of the "pre-existing condition" that private insurers have stringently avoided.As a doctor I have always been against health insurance except for catastrophic care and for the very poor. It has been my experience that the doctor-patient relationship is the most personal and rewarding for both the patient and the doctor when a clear, direct fiduciary relationship exists. In such a circumstance, both individuals value the encounter more, which invariably leads to more time, more attention to potentially important details, and a higher level of patient compliance and satisfaction - all of which invariably result in a better outcome.
But with the end of pooling risk within defined groups, there is only one solution to the problem of paying for health care in the United States: to pool risk for the entire nation. (Under the rubric of health care I mean a comprehensive package that includes preventive care, acute care and catastrophic care.) Although I never thought I'd advocate a government-sponsored, obviously non-profit, tax-supported, universal access, single-payer plan, I've changed my mind: the sooner we move to such a system, the better off we will be. Only with universal health care will we be able to pool risk for the entire country and share what nature has dealt us; only then will there be no motivation for anyone or any organization to ferret out an individual's confidential, genetic makeup.
Hat tip to the HealthLawProf Blog for the link.
Posted by Tom at 5:29 AM | Comments (2) | TrackBack (0)
An expensive blown save
In a gathering of advertisers last Wednesday in New York City, CBS chairman Leslie Moonves explained that CBS lost the key rating title this past season to Fox among viewers between the ages of 18 and 49 because of Yankees relief pitcher Mariano Rivera.
Mr. Moonves reasoned that the ratings race between Fox and CBS was so close that if the ratings for just one of the seven playoff games between the Yankees and the Red Sox last October were subtracted, CBS would have beaten Fox for the year. That series went to a seventh game because Riviera uncharacteristically blew several Yankee save opportunities. Thus, Mr. Moonves concluded, "Mariano Riviera cost us more money than the Yankees."
I wonder if that will lead to a new pitching statistic: "Blown ratings race?"
Posted by Tom at 4:51 AM | Comments (0) | TrackBack (0)
May 22, 2005
Stros 2005 Review: Checking in on the Stros
After admitting a couple of weeks ago that my preseason prediction about the Stros (15-28) appears to have been dead wrong, I continue to watch the hometown club, although it's not easy.
My younger son and I attended last Thursday's game against the D-Backs (26-18) that was highlighted by five Stros' errors. It's a sure sign that the season is not going well when the loudest cheers of the evening occur when a Stros player would beat out a double play ball. Then, the Rangers (24-20) swept the Stros over the weekend, concluding with an 18-3 rout in which Stros starting pitcher Ezequiel Astacio (10.61 ERA/-13 RSAA, explained here) punched his ticket back to AAA Round Rock while imitating a deer in the headlights, and a 2-0 waste of a strong Roy O (3.50/6 RSAA) pitching performance. The Stros are now tied for last place in the NL Central with the Reds.
There is really no mystery to why the Stros are doing so poorly. As was the trend last season (except for the last third of the season), the Stros have become a poor hitting team. The club is now in last place in the National League at -31 runs created against average ("RCAA," explained here), and the poor hitting has seemed to affect the pitching staff, which has fallen to 11th in the National League at -4 RSAA. Inasmuch as only Bidg (10 RCAA/.310 AVE/.371 OBP/.568 SLG), Ensberg (10/.311/.414/.561), and Palmeiro (2/.341/.388/.477) currently have a positive RCAA among the Stros hitters, the loss of Bags, Kent, and Beltran really has not had that big of an effect on the Stros -- the Stros would still only have a -21 RCAA even with those players. Ouch!
Consequently, this is a fundamentally deficient team in terms of hitting. The Stros' failure to upgrade their personnel at catcher and a couple of the outfield positions is really coming home to roost at this point, and it's time for Stros management to rid the club of some dead wood on the roster and open the spots up for younger players who at least have some potential. For example, Ausmus, who has exactly two extra base hits in almost 100 plate appearances this season, should be released in favor of AAA catcher Humberto Quintero, who is currently hitting .277/.326/.477 at Round Rock compared to Ausmus' -6 RCAA and pathetic .253/.320/.275.
Meanwhile, the Stros have at least four top pitching prospects at AAA Round Rock (Wandy Rodriguez and Jared Gothreaux) and AA Corpus Christi (Fernando Nieve and Jason Hirsch). Perhaps dangling Backe with one of two of those prospects would generate interest from a pitching starved club such as the Reds so that they would dangle one of their young slugging outfielders, Adam Dunn, Austin Kearns, or Wily Mo Pena. The Stros are a team that has been desperately in the need of an infusion of hitting for over a year now, and it's time for Stros management to get creative in dealing some of the club's pitching strength to create the balance between hitting and pitching that is essential to success on the Major League level.
The Stros are on the road for the next week against the Cubs (19-22) and the Brewers (20-23) before returning home next Monday (Memorial Day) for a homestand against against the Reds (15-28) and the Cardinals (27-16). Lefthander Wandy Rodriguez, who has a 3.69 ERA at Class AAA Round Rock, has been promoted to make his major-league debut tonight against the Cubs at Wrigley Field in place of Andy Pettitte, who is missing at least one start due to "forearm" (translated: "elbow") stiffness.
Posted by Tom at 2:31 PM | Comments (0) | TrackBack (0)
May 21, 2005
The Chronicle makes a point about DeLay that it failed to make about Enron
A good, old-fashioned snit between Texas political opponents gave the Houston Chronicle an opportunity this week to make a good point about the rule of law and the integrity of governmental investigations. But in so doing, the Chronicle highlighted its failure to apply precisely the same standard to far more egregious examples of prosecutorial impropriety, a good bit of which is taking place in the Chronicle's own backyard.
As this Washington Times article reports, Travis County District Attorney Ronnie Earle (first picture left) -- who is investigating House Minority Leader Tom DeLay's campaign finance methods (previous posts here) -- characterized Mr. DeLay as a "bully" in a speech at a Democratic Party fundraiser in Dallas. Among Mr. Earle's comments were the following:
"This case is not just about Tom DeLay. If it isn't this Tom DeLay, it'll be another one -- just like one bully replaces the one before. This is a structural problem involving the combination of money and power. Money brings power and power corrupts."
Well, level-headed liberals and conservatives agreed that Mr. Earle should not have sullied the integrity of the investigation into Mr. DeLay's campaign finances by taking potshots at Mr. DeLay during a partisan gathering. But Mr. DeLay's hometown newspaper -- the Chronicle -- went even further and published this stinging editorial questioning Mr. Earle's judgment:
Earle's attendance and remarks attacking DeLay at a Democratic fund-raiser last week in Dallas damaged the credibility of his investigation with a stunning display of prosecutorial impropriety.
[I]t is inappropriate for a prosecutor to discuss a case under investigation in a political setting, or to single out a potential target of that probe for criticism.The fact that Earle refuses to recognize his blunder and would do it again calls into question whether he has the necessary impartiality and judgment to conduct the investigation . . .
The Chronicle's broadside toward Mr. Earle was made all the more surprising by the fact that the local newspaper has been a frequent critic of Mr. DeLay. So, the Chronicle editorial definitely scores some points for objectivity.
However, before the Chronicle editorialists pat themselves on the back too much for their fairness in defending Mr. DeLay against Mr. Earle's imprudent remarks, they need to answer the following question:
Where has that objective viewpoint been over the past several years as other "stunning displays of prosecutorial impropriety" have been perpetrated on business executives, including many right under the nose of the Chronicle in Houston?
In that connection, it has become commonplace for officials of the federal government to conduct a virtual political rally as they flame already well-stoked local emotions against former executives of that favorite corporate pariah, Enron:
"[T]he president's corporate task force, which celebrates its second anniversary tomorrow . . . [has demonstrated that] just the mention of the name Enron evokes images of duplicity and greed," said Linda C. Thomsen, director of enforcement for the Securities and Exchange Commission;"[T]he corporate culture of Enron guided by Mr. Lay is now synonymous with corporate fraud and greed at its worst. And Enron's crooked 'E' logo depicts the corporate management team at Enron -- crooked," opined Internal Revenue Service Commissioner Mark W. Everson; and
In a December, 2004 interview, the Chronicle reported that Andrew Weissmann (second picture above), director of the Enron Task Force, compared Enron executives to New York mobsters that he previously prosecuted.
Literally dozens of other examples of inflammatory public statements from Enron prosecutors and government officials could be cited.
Meanwhile, as noted in this earlier post, the Lord of Regulation went on the Sunday talk show circuit recently to condemn Maurice "Hank" Greenberg, one of the targets of the Lord's ongoing investigation into American International Group, Inc.:
"These are very serious offenses," stated Mr. Spitzer gravely. "Over a billion dollars of accounting frauds that A.I.G. has already acknowledged. . . That company was a black box, run with an iron fist by a C.E.O. who did not tell the public the truth. That is the problem."
Now, let's take stock here. In each matter described above, prosecutors have made inflammatory public statements about subjects of their highly-publicized criminal investigations. In Mr. Earle's case, the Chronicle condemns his one imprudent remark in the strongest terms. But what has the Chronicle had to say about the multiple comments of the Enron prosecutors and Mr. Spitzer, which frankly are much more numerous and egregious than Mr. Earle's relatively tame comments?
Nothing. Nada. Zilch.
The Chronicle's blindspot is typical of the mainstream media's apathy toward the prosecutorial misconduct that is taking place these days as big government criminalizes big business. The existence of business fraud at companies such as Enron, WorldCom, Tyco and maybe even AIG does not necessarily mean that there is more misconduct in big business than in any other relatively large organization, such as big government or even big news organizations. Nevertheless, prosecutors such as Mr. Spitzer and those on the Enron Task Force are publicizing these instances of business fraud to generalize arbitrarily against those who are easy and popular targets -- i.e., wealthy (and apparently greedy) businessmen. The Chronicle has embraced this public relations tactic while portraying the Enron Task Force as the defender of noble egalitarianism fighting against the forces of corrupt capitalism.
In the wake of such seemingly simple morality plays, many legitimate business transactions -- most notably structured finance transactions that most prosecutors and journalists neither understand nor do the homework necessary to understand -- are unfairly and incorrectly portrayed as complex business frauds. Completely ignored in the process is the fact that such transactions build wealth in companies for the benefit of shareholders, and that such transactions are usually reviewed and approved by multiple professionals who are experts in such transactions. The misguided nature of the government and the Enron bankruptcy examiner's criminalization of Enron's valid structured finance transactions has been well-chronicled by University of Chicago business professor and structured finance expert Christopher Culp in his recent books, Corporate Aftershock (Cato 2003) and Risk Transfer (Wiley 2004).
So, three and a half years now after Enron spiraled into bankruptcy, the Enron Task Force has completed one trial, and obtained one conviction and one acquittal of former Enron executives (the Task Force is currently conducting a trial against five former Enron executives in the Enron Broadband case). Rather than prosecute clearly criminal conduct, the preferred approach of the Task Force has been to sledgehammer former Enron executives with multi-count indictments so that each of the executives is faced with the prospect of what amounts to a life prison sentence if they risk exercising their Constitutional right to defend themselves against the charges. Yale Law School Professor John Langbein has written and spoken extensively about how the government is manipulating this plea bargain system to pressure people to buckle and accept a plea, even if they are innocent.
Admittedly, some of the former Enron executives who copped pleas -- notably Andrew Fastow, Ben Glisan and Michael Kopper -- stole from Enron and thus, certainly engaged in criminal conduct. However, many others who have entered into plea deals did not engage in any clearly criminal conduct. Rather, they entered into those deals simply because they could not risk either the financial drain or the long prison term that they faced if they attempted to defend themselves against the Task Force's sledgehammer.
In the meantime, just to make sure that public perception remains inflamed against big business targets, Mr. Spitzer and the Enron Task Force continue to make inflammatory public statements and disclosures about their targets that strongly imply guilt and wrongdoing. Again, what has the Chronicle had to say about this unsavory use of the government's overwhelming prosecutorial power?
Nothing. Nada. Zilch.
The preservation of our freedom is inextricably tied to upholding the rule of law, and that includes restraining the government when it attempts to erode the rule of law to convict an unpopular defendant. As noted many times on this blog, this principle is precisely what Sir Thomas More was talking about in A Man for All Seasons when he made the following comments to young lawyer Will Roper, who had just confirmed that he would abuse the rule of law in order to achieve the laudable goal of convicting the Devil of a crime:
"Oh? And Roper, when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down -- and you're just the man to do it, Roper -- do you really think you could stand upright in the winds that would blow then?""Yes, I'd give the Devil the benefit of law, for my own safety's sake!"
The Chronicle is right that even Tom DeLay is entitled to the protection of due process of law in the face of the overwhelming power of a governmental prosecution. But so are former Enron and AIG executives. Not only for their protection, but for ours.
Posted by Tom at 12:00 PM | Comments (9) | TrackBack (2)
May 20, 2005
The black hole that is Metro
The economic lunacy of light rail has been an occasional topic on this blog (here, here, here, and here). However, blogHouston.net has a much more impressive archive of insightful posts over the past year on the foibles of the Houston Metropolitan Transit Authority, which has completely redesigned Houston's public transit system over the past decade from a flexible one based primarily on bus transit to an inflexible one based primarily on light rail.
Well, as this Anne Linehan post from today points out, that inflexible light rail system is turning out to be a rather expensive one, too. This Chronicle story reports the shocking news:
Metro wants to spend an additional $104 million on its Main Street light rail line to almost double the number of trains and fix costly problems it blames on construction errors.Metropolitan Transit Authority president and CEO Frank Wilson laid out his wish list to the agency's board Thursday, shortly after releasing statistics that show surging rail ridership but decreased numbers of bus riders and overall customers.
The cost Metro estimates for the improvements would raise the bill for what Metro calls its Red Line � the 7.5-mile route from downtown to Reliant Park � by about a third.
At the same time, the agency is seeking federal money to help build four light rail extensions with a combined price tag of $1.7 billion.
The Chronicle goes on to report that, although light rail ridership has increased, the total number of people using Metro mass transit (i.e., light rail and buses) has declined by 3% over the past year.
Not exactly the return on investment that one would wish for after plunking down $325 million to build the 7.5 mile light rail system.
At any rate, Ms. Linehan uses her skill in translating Metro-speak to explain why Metro officials believe that spending another cool $104 mil on the existing light rail line is a good idea:
"We cut corners building the 7.5 miles of downtown light rail; we have dismantled bus and trolley service in order to feed the light rail; we don't have a consistent method for collecting fares so we can't talk about 'paid ridership;' we are bleeding passengers systemwide even though Houston's population has increased; and now we'd like an extra $100 million to help fix our mess."
Thus, the scam of this publicly-financed rail system continues to eat money voraciously with no end in sight. The economic benefit of light rail is actually highly concentrated in only a few interest groups, such as elected officials who enjoy touting their political "accomplishment," environmental groups who seek to gain political influence, construction-related firms who can soak the public till, and real estate develop