Justice Department’s brief in Arthur Andersen appeal

Arthur Anderson.gifHere is the Justice Department’s brief in Arthur Andersen’s appeal to the U.S. Supreme Court of its criminal conviction of witness tampering in connection with its destruction of Enron Corp.-related documents during the latter stages of that company’s collapse in late 2001.
The Justice Department frames its argument of the key issue in the appeal in the following manner:

The lower courts correctly defined the term ?corruptly? in Section 1512(b) as ?having an improper purpose? ?to subvert, undermine, or impede the fact-finding ability of an official proceeding.? The lower courts? definition is consistent with the purpose-based definition long given to the identical term in the general obstruction-of-justice statute, 18 U.S.C. 1503, on which Section 1512 was based; in other obstruction-of-justice statutes; and in other federal criminal statutes more generally. That definition does not render the term ?corruptly? superfluous. Nor does it criminalize conduct that is not inherently wrongful, because it has long been understood that it is improper to destroy documents when litigation is anticipated for the purpose of frustrating the truthseeking process.
Petitioner?s novel alternative definitions of the term ?corruptly? ? which would require either ?proof of improper means of persuasion or inducement to unlawful acts,? or ?proof of consciousness of wrongdoing? ? should be rejected. The former definition cannot be reconciled with the text of the statute; would give the term ?corruptly? a different meaning in Section 1512(b) than in other obstruction-of-justice statutes; and would criminalize little, if any, conduct that is not already criminalized by other provisions. The latter definition contravenes the established principle that ignorance of the law is no defense, and no exception to that principle is warranted here.

The Justice Department’s brief is 77 pages, which makes it even more incredible to me that appellate attorneys are not using the bookmark tool in Adobe Acrobat to facilitate ease of review of lengthy appellate briefs.

An interesting new museum

Nuclear_explosion_22.jpgLas Vegas is not normally the place that one goes to visit a museum, but the one described in this Opinion Journal piece appears to be worth checking out during a respite from the blackjack tables:

Over . . . 40 years, 928 nuclear devices were exploded at [the Nevada Test Site, 65 miles northwest of Las Vegas] — although atmospheric blasts eventually gave way to underground testing.
The fascinating, often surprising, story of the site’s four-decade history is the subject of the new Atomic Testing Museum (www.ntshf.org), not far from the Las Vegas Strip, a place where levity and holocaust often go hand-in-hand. In the museum gift shop, for example, I picked up a postcard. “Greetings from the Nevada Test Site,” it proclaimed, showing a collage of doomsday clouds floating above a scraggly desert. I half expected to see a postmark from hell.

This is not what the Chamber of Commerce had in mind

BP logo_bp.gifIn the wake of dismantling former Russian oil giant OAO Yukos, the Russian government hammered British Petroleum PLC‘s Russian joint venture with new back-tax claims totaling about $790 million. The news did not do much for the already jittery capital markets that are considering investments in Russia’s badly undercapitalized exploration and production infrastructure.
The news also came just weeks after Russian President Vladimir Putin promised in a meeting with local business leaders to control the excesses of Russian tax inspectors who have slammed numerous Russian companies over the past several years. In the case of Yukos, that conduct led to the effective nationalization of the company.
The BP Russian venture — called TNK-BP — announced that it would fight the claims, although that approach did not do Yukos much good. At least BP’s potential financial exposure is limited because the joint venture was formed only in 2003 in a transaction in which BP’s Russian partners agreed to carry most of the exposure.
Although Russian officials have sought to portray the Yukos case as an isolated event involving a rogue company, the tax claims against TNK-BP and others have continued to undermine investor confidence in the Russian business system. The current Russian government tax claims against TNK-BP are the largest against a company with a major foreign investor.
Meanwhile, in a closing statement during the Russian government’s trial of criminal charges against him, former Yukos chairman and CEO Mikhail B. Khodorkovsky laid the wood to the Russian government yesterday in which he alleged that the charges were “the fantasies of a pulp-fiction writer” meant to cover up the Russian government’s effort to seize his oil assets and silence him politically.

The Lord of Regulation chats with the Oracle of Omaha

Buffett image2.jpgLet’s review the landscape of regulating business for a moment.
Various former executives of disgraced and insolvent Enron Corp. are under indictment for using structured finance transactions that independent lawyers and accountants approved to mislead investors regarding Enron’s true financial condition. Although such transactions came to light almost four years ago, no such Enron executive has yet to be tried on such charges. In the meantime, Enron has been effectively liquidated.
Several years ago, General Reinsurance Corp., a unit of Berkshire Hathaway, and American International Group, Inc. entered into at least one large structured finance transaction with each other. As with Enron’s structured finance transactions, numerous executives, lawyers, accountants and perhaps even consultants for both companies reviewed and approved the deal. Here are the previous posts on the saga involving AIG and Berkshire.
New York Attorney General Eliot Spitzer, the new Lord of Regulation, believes that the companies did not account for the transaction properly and, as a result, that the transaction made AIG and Berkshire’s financial performance appear better to each company’s investors than it really was. Despite not having heard his side of the story, the Lord has already concluded that former AIG chairman and CEO Maurice “Hank” Greenberg — a rather hard-knuckled executive — committed a crime in regard to the transaction.
Greenberg image2.jpgYesterday, as this NY Times article reports, the Lord had a nice chat with the avuncular Oracle of Omaha, the chairman of Berkhsire, in which he questioned the Oracle over his knowledge of the transaction. The Oracle replied that he knew about the deal generally, but that others at General Re handled the details of the transaction. The Oracle also stated that he understood that the deal had been properly accounted for, but again, he did not really know much about the details of all that.
By the way, the Oracle agreed to chat with the Lord because the Lord assured him that — unlike the dastardly Mr. Greenberg — the popular Oracle is not a target of the Lord’s investigation. In appreciation for the Lord’s courteous gesture, the Oracle served up some more juicy tidbits of AIG’s involvement in the transaction for the Lord to chew on.
In the meantime, former Enron chairman and CEO Ken Lay’s defense of the criminal charges against him relating to Enron’s structured finance transactions is precisely the same as the Oracle’s above explanation of his role in the transaction with AIG.
Ken Lay2.jpgIn the wake of almost unprecedented negative publicity — much of which has been flamed by prosecutors pursuing him — Mr. Lay is facing the prospect of spending much of the remainder of his life in jail. The same is probably true for Mr. Greenberg.
Meanwhile, another large company that engaged in similar structured finance transactions — and which collapsed at about the same time as Enron — announced yesterday that it had settled civil charges with the SEC over its involvement in such transactions. No criminal charges were ever filed in regard to that matter.
And the Oracle returns to Omaha to work on his next letter to shareholders.
Quare: Is this any way to regulate business?

More on oil prices

oil rig.jpgThis Angry Bear post provides a good overview of the probable impact of current oil prices on the American economy, which segues nicely to this recent Wall Street Journal ($) interview with ExxonMobil CEO Lee Raymond, in which he observes the following:

WSJ: What do you think of ChevronTexaco’s decision to acquire Unocal?
Mr. Raymond: I can never remember an industry consolidating at high prices. But I can remember an industry consolidating at low prices.
WSJ: Some people think prices will keep going up.
Mr. Raymond: Maybe. I’ll bet they’ll be lower at some point.
Let me go back to the last time we went through something like this, which started when the shah of Iran was around. [The shah went into exile in 1979.]
A lot of people don’t remember, but we went through a period of relatively high oil prices, which by today’s standard would be very high oil prices, that lasted for almost five years. It was at that time that we got into our first stock-buyback program.
As today, we had very strong cash flows. There were a lot of people that were talking about buying other companies. Although we didn’t say it directly at that time, we had a view that the price structure could not last — that it was fundamentally unstable, and that it was just a matter of time. And so we concluded that the cheapest oil we could buy was our own. But because of the stock-buyback program, we were roundly criticized on Wall Street. There were no opportunities. We were liquidating the company. All that kind of stuff.
But the facts are that, behind the scenes — we were not going to say it publicly, obviously — we just felt that the price structure couldn’t persist. And, come along December of 1985, it just collapsed. Went from $28 to $10 in two weeks. So when people ask today, what are you going to do with the money, my answer is: We’re not going to do anything stupid. We’re going to manage it like we’ve managed everything else.
WSJ: What is Exxon planning to do with all its cash?
Mr. Raymond: First of all, we’ll sort through it. And secondly, why in the world would we ever tell anybody in advance what we were going to do with it anyway?

The fluctuation of oil prices is a common topic on this blog, and prior posts on the topic can be reviewed here.

Paul Johnson on JP2

johnpaui.jpgBritish historian Paul Johnson (author of “Modern Times,” “History of the Jews,” “History of Christianity,” “A History of the American People,” and his more recent “Art, A New History,” among others) is one of my favorites. In Modern Times, one of his dominant themes is the development in the 20th century of huge governments and their exponential capacity to do evil, particularly to human life.
In this insightful Opinion Journal op-ed on Pope John Paul II, Mr. Johnson notes that the world has lost one of its staunchest supporters of the sanctity of human life:
pauljohnsonhistorian.jpg

This great pontiff was essentially a defender, promoter, protector and enhancer of life: life in all its forms, as God created them, but especially human life.
He sought to limit, almost to vanishing point, the occasions on which the state, let alone individuals, might legitimately extinguish or frustrate life. He had spent his manhood largely under the tyranny of the two vilest anti-life systems the world had ever seen: Nazism and Communism, together responsible for the unnatural deaths of over 120 million people in Europe and Asia. He had seen at close quarters the appalling consequences which inexorably follow when authority is directed by philosophy contemptuous of life.

John Paul was, perhaps, most vehement in his condemnation of abortion, especially when practiced under the sanction of law and on a huge scientific scale, in the clinics specially created to smother the spark of life before birth, which he compared to the death camps erected by Nazi and Soviet mass murderers. It was a sharp sword in his heart which filled him with righteous indignation that, after the world had been scourged for more than 50 years by the mass killings of totalitarianism, anti-life politicians, above all in the democracies, should have set up a holocaust of the unborn which has already–as he often asserted with awe and anger–ended the existence of more tiny human creatures than all the efforts of Hitler, Stalin and Mao combined.
But it should not be thought that John Paul’s defense of life was conducted on principles seen as conservative. He was an absolute and implacable opponent of capital punishment, an issue on which he parted sorrowfully from many of his warmest admirers. He was most reluctant to admit the admissibility of war in almost any circumstances. He was wary of giving any kind of approval to President Bush’s active war on terror, and plainly opposed the invasion of Iraq. It was his view that a righteous ruler, however tempted by the urge to end wicked regimes, should not set in motion events which would soon move out of control and perhaps cause evils far worse than those it was designed to end.
Not that the pope condoned terrorism in any form. He was never among those clergy in the West who mitigated their disapproval by pointing to legitimate grievances.
Indeed it would be hard to imagine a greater contrast between Pope John Paul, who spent his entire existence searching perpetually to prolong and preserve life, and that evil caricature of a spiritual leader Osama bin Laden, who from the moment he awakes, throughout the day, until he falls into a troubled sleep, directs his agents to end as many lives as possible, including their own (but never his). In their cataclysmic duality, these two men came as close as ever human beings do to embodying the principles of Good and Evil.

Read the entire piece.

You don’t say?

eliot_spitzer.jpgEliot Spitzer, the New York AG (i.e., “Aspiring Governor”) made the Sunday talk show circuit yesterday in regard to his campaign against corporate wrongdoing generally and his ongoing investigation of transactions between AIG and a unit of Berkshire Hathaway (earlier posts here) specifically.
The investigation — which has not yet resulted in a single indictment, but has battered AIG’s stock and credit rating — involves scrutinizing complicated financial transactions that were approved by scores of transaction lawyers, accountants, and consultants for both AIG and Berkshire. Indeed, the MSM reporting on Mr. Spitzer’s campaign have not even attempted to obtain an explanation of the transactions from the persons involved in structuring the transactions. Nevertheless, the Lord of Regulation said yesterday that he had strong evidence that former AIG chairman and CEO Maurice “Hank” Greenberg committed fraud in initiating the deal between A.I.G. and General Re, the subsidiary of Berkshire. Mr. Spitzer’s following comments will give you a flavor for the entire interview:

These are very serious offenses, 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.

Today, this NY Times article today reports that Mr. Greenberg is probably going to refuse to testify based on his Fifth Amendment privilege at a deposition that Mr. Spitzer has scheduled for Tuesday.
After Mr. Spitzer’s public comments of yesterday, how could Mr. Greenberg responsibly do anything else?
By the way, it’s nice to see that someone else is noting that Mr. Spitzer is manipulating prejudices in an unhealthy manner.

Stros 2005 Review: Stros sweep Reds and head out on the road

Roy O1.jpgThe Stros rode strong pitching from the Rocket, Brandon Backe, Roy O. and Brad Lidge over the weekend in sweeping the Reds, 3-2, 4-3, and 5-2.
The Stros finish their first home stand of the season at 4-1, although the five runs that they scored in the Sunday win over the Reds was the most that the club has scored in any of its first five games of the season. At least Bags hit a couple of yaks over the weekend, along with taters from Bidg, Ensberg, and Lane. Rookie Chris Burke drew his first start of the season in the Sunday game (in left field) and acquitted himself well with three hits.
The Stros now go on the road for a week with an odd Monday, Wednesday, and Thursday series in New York against the 1-5 Mets, who just won their first game of the season on Sunday. Ex-Stro Beltran has not yet warmed up (.273 Avg./.304 OBP/.455 SLG.), so let’s hope he stays in the doldrums for awhile longer. After the Mets series, the Stros visit Cincinnati for another series next weekend against the Reds (3-3), and then return for a quick four game homestand on Monday April 18th with two games each against the Braves (4-2) and the Brewers (3-2) before heading back out on the road against the Cardinals (2-3) and then the Pirates (2-4).

Update on what’s going on in Wayne’s World

KTRK2 logo.gifAfter previous posts here and here regarding local investigative reporter Wayne Dolcefino‘s recent squabble with his long-time employer, KTRK-TV, this Chronicle article confirms that the conflict arose from the station quashing Dolcefino’s story on the non-profit Houston Livestock Show & Rodeo‘s lavish spending on its offices and the Rodeo’s rather pedestrian amount of charitable contributions in relation to the size of the revenues generated by the Rodeo.
Dolcefino is famous (or infamous, depending on your point of view) in local circles for his outspoken investigative journalism pieces of high-profile targets. Who can forget the devastating Dolcefino series that KTRK ran several years ago on Doug Sanders‘ now-defunct charity senior golf tournament? The Chron reports that KTRK bowed to pressure from the Rodeo in spiking Dolcefino’s Rodeo story, probably because the station is one of many local groups that is considering partnering with the Rodeo on a summer festival that is currently in the planning stages.
WayneDolcefino.jpg
Essentially, Dolcefino would have reported that the Rodeo spent lavishly on its new offices at Reliant Park and that it provides many free perks to the media representatives who cover the event for various media organizations. Dolcefino’s story also would have addressed the Rodeo’s low level of charitable contributions compared to other charitable organizations, which Rodeo representatives contend is unfair because the Rodeo’s primary purpose is entertainment and its charitable contributions are ancillary to that primary purpose.
An interesting story would be comparing the charitable contributions of the Rodeo with those of Houston’s other major non-profit entertainment sponsor, the Houston Golf Association, which puts on the Shell Houston Open each April. The HGA is considerably smaller than the Rodeo, but each organization operates in much the same way — a non-profit corporation sponsoring an entertainment event with the pitch that charities are the primary beneficiary of the proceeds from the event. Maybe that’s the story that Dolcefino should really pursue.

Burge v. Rains on the Harris County Sports Authority

Burge,Billy.jpgOn the heels of this earlier post regarding the controversy over whether the Harris County Sports Authority should be put out of its misery, don’t miss this Anne Linehan blogHouston.net post about current HCSA chairman Billy Burge’s (picture left) over-the-top outburst during a recent appearance of former HCSA chairman Jack Rains on Dan Patrick’s call-in show on KSEV-AM radio.
It occurs to me that, when a quasi-governmental official such as Burge expresses this degree of concern over dissolution of his agency, then that is pretty darn good evidence that the agency needs to be dissolved. Quickly.