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?