Daily Archives: July 24, 2007

Steyn on reforming the criminal justice system

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conrad_black%20072307.jpgCanadian Mark Steyn’s experience in blogging the Conrad Black trial gives him an interesting perspective in proposing several common sense reforms for the federal criminal justice system, most of which have been addressed in this blog over the years:

1) An end to the near universal reliance on plea bargains, a feature unknown to most other countries in the Common Law tradition. [. . .]
2) An end to the reliance on technical charges such as “mail fraud” and “wire fraud”, whereby you’re convicted not for the crime itself but for sending a letter or authorizing a bank transfer in the course of said crime. [. . .]
3) An end to the process advantages American prosecutors have accumulated over the years – such as the ability to seize a defendant’s funds and assets and deprive him of the means to hire good lawyers and rebut the charges. Or to take another example: Unlike the Crown in Commonwealth countries, in closing arguments to the jury the US government gets to go first and – after a response from the defence – last. This is an offence against the presumptions of English law: The prosecutor makes his accusation, the accused answers them. Every civilized legal system allows the defendant the last word.
4) An end to countless counts. In this case, Conrad Black was charged originally with 14 crimes. That tends, through sheer weight of numbers, to favour a conviction on some counts and acquittal on others as being a kind of “moderate” “considered” “judicious” “compromise” that reasonable persons can all agree on. [. . .]
5) An end to statute creep. One of the ugliest features of American justice is the way that laws designed to address very particular situations are allowed to metastasize and be applied to anything a prosecutor fancies. The RICO statute was supposed to be for mobsters and racketeers. Conrad Black is not a racketeer but he was nevertheless charged with racketeering. [. . .]
6) An end to de facto double jeopardy. Conrad Black is likely to wind up back in court to go through all the stuff he’s been acquitted of one mo’ time, this time in a Securities and Exchange Commission case. That would be a civil case, not a criminal one, and the US Attorney insists that the SEC is an entirely separate body. Oh, come on. The US Attorney and the SEC are both agencies of the US Government. They work in synchronicity. It’s not the same as Nicole Brown’s family suing OJ after the state’s murder case flopped. In this instance, two arms of the same organization are bringing separate cases on exactly the same matters. That’s double jeopardy – or, in fact, given the zealousness of the SEC, triple and quadruple jeopardy.

Steyn expands on these points, so read the entire post. And here is another proposed reform that should be added to the list.

Belly putters as Segways

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Navel%20putter.jpgFor the first three days of this year’s British Open, Sergio Garcia used his new belly putter to sink seemingly every crucial putt to take a three-stroke lead into the final round. Through five holes of the final round, Garcia’s new-found putting stroke continued as he extended his lead to four strokes. But then, as Lawrence Donegan of The Guardian reports, the wheels of Garcia’s putting stroke suddenly careened into the nearest burn:

The first glimmer that the procession was heading for a few detours came on par-five 6th when he missed a four-foot putt for birdie, then barely holed the one coming back for par. The scores on the boards remained the same but the mood music had changed, from steady march to jazzy stagger. A poor approach shot to the back of the 7th green ended up costing him a shot and he dropped another at the next when he missed an eight-foot putt for par.

Which brings us to the best line that I’ve seen describing the probable result of Garcia’s fourth round putting collapse:

To [Garcia’s] credit he made a par at the next but, when he missed another short one on the 10th, shares in belly putters went the way of the Segway scooter.

By the way, my bet is that it’s just a matter of Garcia becoming comfortable with his belly putter before he wins a major tournament. He is a simply too good a ball-striker not to win at least one.
Also, did you notice how much more entertaining the British Open was in comparison to this year’s U.S. Open?

Debt really is cheaper than equity

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transocean%20rig.jpgDealmaking in Houston is as hot as the downtown pavement these days. Last week it was the Plains-Pogo deal, and this week local offshore drilling firms Transocean Inc. and GlobalSantaFe Corp. are proposing an $18 billion merger deal that will create the largest offshore drilling contractor by a mile. The new company will have a market capitalization of $52 billion and will have a 145-rig fleet, which is more than twice as many rigs as the fleet of the next largest competitor.
The deal comes amidst an unprecedented period for deep sea drilling contractors. With crude-oil and natural gas prices maintaining at historically high levels, exploration and production companies have been willing to pay top dollar to be able to tap reserves that often are often deep under the ocean. As a result, offshore drilling contractors are enjoying intense demand for deepwater rigs, which has increased lease rentals dramatically. Not surprisingly, the stock prices of most of the publicly-owned drilling contractors have been soaring for the past year or so.
Transocean, which is the much larger company (a $32 billion market cap to GlobalSantaFe’s $17 billion), is actually the acquiring company in the merger. Transocean shareholders will end up with around 66% in the combined company, while GlobalSantaFe shareholders will end up with the other 34%. But the really interesting aspect of the deal is that the merged company is going to borrow a cool $15 billion (Goldman Sachs and Lehman Brothers are handling that debt vehicle) to spread among the shareholders of the two companies even as debt offerings generally are being downsized in most other markets. The merged company will use its first two years of free cash flow to reduce that debt.
Thus, the bottom line is that the companies are borrowing $15 billion, giving it to their shareholders, and then will take advantage of the hot drilling market to pay the money back quite quickly out of cash flow. Why not just use the cash flow over the next several years and give that to shareholders? Not sure, but I suspect that the structure of the deal will save the merged company a boatload of taxes over the next several years.