Stephen Colbert‘s comment on Warren Buffett’s decision to donate $30 billion to the Bill and Melinda Gates Foundation qualifies as the line of the week:
“Warren Buffet is so rich, he just hired Bill Gates to spend his money for him.”
By the way, Larry Ribstein has an interesting perspective on the Buffett donation in relation to the growing effort of certain shareholders to pursue social causes through their corporate ownership.
As noted earlier here, U.S. District Judge Lewis Kaplan earlier this week slapped the Department of Justice upside the head for threatening KPMG with indictment in the KPMG tax shelter case unless the firm threw its partners to the wolves by rescinding the firm’s policy of paying its partners’ defense costs in such cases. Although Judge Kaplan concluded that it was premature to dismiss the indictment against the KPMG partners as the remedy for the DOJ’s misconduct and fashioned a financial remedy for the partners instead, Larry Ribstein believes that Judge Kaplan’s opinion is a landmark decision that calls into question the DOJ’s dubious policy of criminalizing corporate agency costs in reaction to Enron and other recent corporate scandals:
My basic problem with criminalization of agency costs is precisely that it ignores internal corporate arrangements. The complex set of contracts and incentive devices that comprise a corporation simply doesn’t fit with the sort of moral condemnation that criminal penalties necessarily involve. The nuances of an agency contract are the proverbial square peg in the round hole of criminal law.
But Judge Kaplan emphasizes that indemnification serves an important function in an agency contract: If directors and other agents are over-exposed to liability, they simply wonít work for the firm. One might add that even if they do work for the firm, they wonít take the risks that are necessary to maximize shareholder value and to make capitalism work. Corporate criminal liability essentially seeks to reengineer the firm to change incentives so that agents are no longer maximizing profits, but attempting to root out fraud at all costs.
The fundamental importance of this case is that Judge Kaplan is telling the government that the contract matters, even if it gets in the way of prosecution. By doing this, Judge Kaplan is re-reengineering the firm to make it, once again, a profit-maximizing entity rather than a government agent. [. . .]
Of course this one case isnít going to solve all of the problems of corporate criminal liability. Corporate defendants will face the basic problem that it is hugely burdensome to defend these cases, which gives the government considerable leverage. The case’s precise implications for other uses of government leverage are unclear. But by saying that there is a limit to what the government may do in criminalizing agency costs, the judge has taken an important first step. I predict the opinion will be a landmark.
Read the entire post.
Although the 2006 Stros are quickly sliding into oblivion (I will post my next periodic analysis of the club’s 2006 season this weekend after the Stros reach the halfway point in the season on Saturday), Roger Clemens is still likely to make baseball interesting in Houston for the remainder of the season.
Earlier this week, Clemens pitched well (6 1/3 IP, 3 H, 2 R, 1 ER, 2 BB, 3 SO) in his second game of the season and, in so doing, became the first pitcher in Major League Baseball who has pitched after 1900 to reach 700 runs saved against average (“RSAA”) in his career. The following is the top ten pitchers in career RSAA who pitched after 1900, courtesy of Lee Sinins:
The Supreme Court issued its long-awaited decision yesterday (earlier posts here) ordering congressional districts in south Texas redrawn because a 2003 redistricting map orchestrated by former House Majority Leader Tom DeLay was designed to disenfranchise Hispanic voters so that vulnerable Republican incumbent Rep. Henry Bonilla could maintain his seat. However, a sharply-split Court rejected a broader Democratic challenge to the DeLay redistricting plan that prompted the new Republican majority in the Texas Legislature to throw out existing districts in favor of new ones designed for partisan benefit. Charles Kuffner, who has followed the redistricting case closely, has more here and an extensive archive on the case here. Amy Howe passes along what appears to be an interesting error in the opinion, a pdf of which is here.
The bottom line on this incredibly split-decision (the justices filed six separate opinions concurring and dissenting from parts of the ruling) is that that Justice Anthony Kennedy’s controlling opinion leaves open the possibility that the Court could step in someday to set limits for partisan gerrymanders if future litigants find “a manageable, reliable measure of fairness” for doing so. Four liberal-leaning justices joined Justice Kennedy in concluding that the south Texas districts violated the Voting Rights Act and must be redrawn. But Justice Kennedy and the four more conservative justices concluded that the state-wide map complied with Constitutional requirements and that a second district — which Democrats claimed disenfranchised black voters in Austin — posed no voting-rights violation. Just to give you an idea of how the Court is all over the place on these issus, Justices Thomas and Scalia would have simply dismissed the case as beyond the scope of the courts to resolve, while several Justices — including Samuel Alito and John Roberts — were in a group that left open the possibility that the Court might in the future come up with a legal test to be applied in this type of case.