Stock gains are just super

The CEOs, fund managers, superannuation/pension salesmen, directors and many others who get "performance" bonuses and fees for "adding value" are just plum delighted with the marvelous rise of the Australian stock market.

Backed by the unabated demand of China and India for Australian resources, and the clever management and productivity of Australian business, the Australian stock market, measured by the S&PASX200, started the calendar year 2006 at 4760 and finished at 5670, putting on a whopping 19.1% increase in "value".

At merchant banks, super funds, brokerages and other financial institutions, champaigne corks were popped, new cars bought, girlfriends befriended, houses upgraded and life was just super. In executive offices and board rooms, "well done" was heard and more bonus checks passed around.

But was it management or financial "value adding" that did the job or something else?

Maybe the rising tide was nothing more than a ratcheting up of prices for the same old pig-in-a-poke that got the market up so high. Maybe it was a concious diversion of savings from mattresses to the stock market by a government bent on privatising retirement with mandatory "contributions" to the finance sector that "added the value".

Recall that one of the most prevalent explanations offered for the ever rising commodity and stock markets in recent times has been "liquidity" and "the weight of money".

Maybe it was just a coincidence that the 19.1% rise in the stock market happened at the same time that the assets in super funds rose 19.2%.

Super tops $1 trillion by Geoffrey Newman

Crocodile Tears

So this militiaman walks into the Senate with a loaded gun...

Now follow this fairly closely.

Phillip Thompson carried a gun and two loaded magazines into the US Senate building and got busted:

Thompson apparently put the gun in his briefcase, forgot he had it, drove into D.C., and was busted after walking through an X-ray machine at the entrance to the Russell Senate Office Building.

Not for violation of any US federal security breach, mind you, but because he violated the Washington District local law prohibiting the carrying of an unlicensed pistol outside the home or place of business (see photocopy of criminal complaint here). I guess no terrorist laws are implicated by taking a gun into the Senate.

Well, to use the Seinfeld defense: Not that there's anything wrong with that. The United States Court of Appeals has ruled that the Washington District prohibition is unconstitutional (though whether in this particular fact situation may still be debatable).

According to the United States Court of Appeals,

"[T]he District’s virtual ban on handgun ownership is
not based on any militia purpose. It is justified solely as a measure to
protect public safety. As amici point out, and as D.C. judges are well
aware, the black market for handguns in the District is so strong that
handguns are readily available (probably at little premium) to
criminals. It is asserted, therefore, that the D.C. gun control laws
irrationally prevent only law abiding citizens from owning handguns.
It is unnecessary to consider that point, for we think the D.C. laws
impermissibly deny Second Amendment rights."

"Once it is determined — as we have done — that handguns are “Arms”
referred to in the Second Amendment, it is not open to the
District to ban them.... Indeed, the pistol is the
most preferred firearm in the nation to “keep” and use for
protection of one’s home and family.... And, as we have noted, the Second
Amendment’s premise is that guns would be kept by citizens for
self-protection (and hunting)."

The Appeals Court reduced the Bill of Rights to a mere "policital document", to strip the militia reference of any operative or conditional meaning:

"We therefore take it as an expression of the drafters’ view that the
people possessed a natural right to keep and bear arms, and that
the preservation of the militia was the right’s most salient
political benefit—and thus the most appropriate to express in a
political document."

In fairness to the decision, it does canvass the debate between those who consider the second amendment "miilitia" reference to mean the "right" to keep and bear arms is a collective right resulting in the power of government to more expansively regulate guns, and those who find the militia reference only incidental to a fundamental individual right which is more strictly construed against government regulation of guns. The Appeals Court just prefers the (minority) individual rights position. It notes

"The lower courts are divided between these competing
interpretations. Federal appellate courts have largely adopted
the collective right model.4 Only the Fifth Circuit has
interpreted the Second Amendment to protect an individual
right.5 State appellate courts, whose interpretations of the U.S. Constitution are no less authoritative than those of our sister
circuits, offer a more balanced picture.6 And the United States
Department of Justice has recently adopted the individual right
model. See Op. Off. of Legal Counsel, “Whether the Second
Amendment Secures an Individual Right” (2004) available at
http://www.usdoj.gov/olc/secondamendment2.pdf; see also
Memorandum from John Ashcroft, Attorney General, to All
United States’ Attorneys (Nov. 9, 2001), reprinted in Br. for the
United States in Opposition at 26, Emerson, 536 U.S. 907 (No.
01-8780)."

"We have noted that there is no unequivocal precedent that
dictates the outcome of this case. This Court has never decided
whether the Second Amendment protects an individual or
collective right to keep and bear arms. On one occasion we
anticipated an argument about the scope of the Second
Amendment, but because the issue had not been properly raised
by appellants, we assumed the applicability of the collective
right interpretation then urged by the federal government.
Fraternal Order of Police v. United States (F.O.P. II), 173 F.3d
898, 906 (D.C. Cir. 1999). The Supreme Court has not decided
this issue either. See id. As we have said, the leading Second
Amendment case in the Supreme Court is United States v.
Miller.
...
"Few decisions of Second Amendment relevance arose in the
early decades of the twentieth century. Then came Miller, the
Supreme Court’s most thorough analysis of the Second
Amendment to date, and a decision that both sides of the current
gun control debate have claimed as their own. We agree with
the Emerson court (and the dissenting judges in the Ninth
Circuit) that Miller does not lend support to the collective right
model.... Although Miller did not explicitly
accept the individual right position, the decision implicitly
assumes that interpretation.

"On the question whether the Second Amendment protects
an individual or collective right, the Court’s opinion in Miller is
most notable for what it omits. The government’s first argument
in its Miller brief was that “the right secured by [the Second
Amendment] to the people to keep and bear arms is not one
which may be utilized for private purposes but only one which
exists where the arms are borne in the militia or some other
military organization provided for by law and intended for the
protection of the state.” Appellant’s Br. at 15, 307 U.S. 704
(No. 696). This is a version of the collective right model. Like
the Fifth Circuit, we think it is significant that the Court did not
decide the case on this, the government’s primary argument.
Emerson, 270 F.3d at 222. Rather, the Court followed the logic
of the government’s secondary position, which was that a shortbarreled
shotgun was not within the scope of the term “Arms”
in the Second Amendment....

"The government’s weapons-based argument
provided the Miller Court with an alternative means to uphold
the National Firearms Act even if the Court disagreed with the
government’s collective right argument. The Miller Court’s
holding is based on the government’s alternative position:

"In the absence of any evidence tending to show
that possession or use of a “shotgun having a barrel of
less than eighteen inches in length” at this time has
some reasonable relationship to the preservation or
efficiency of a well regulated militia, we cannot say
that the Second Amendment guarantees the right to
keep and bear such an instrument. Certainly it is not
within judicial notice that this weapon is any part of
the ordinary military equipment or that its use could
contribute to the common defense. Aymette v. State, 2
Humphreys (Tenn.) 154, 158."
Miller, 307 U.S. at 178 (emphasis added).

"The quotation makes
apparent that the Court was focused only on what arms are
protected by the Second Amendment, see Emerson, 270 F.3d at
224, and not the collective or individual nature of the right.
...
"Thus the Miller
Court limited the term “Arms”—interpreting it in a manner
consistent with the Amendment’s underlying civic purpose.
Only “Arms” whose “use or possession . . . has some reasonable
relationship to the preservation or efficiency of a well regulated
militia,” id. at 177, would qualify for protection."

So, the result of the analysis is that arms suitable for a militia-like defense, which surely would include military weapons such as AR-15s (and somehow tiny peashooting concealable handguns fall into this category), get second amendment privilege, but ones that are by some stretch of characterisation not of that ilk, such as a sawed-off shotgun, would not find second amendment protection. This seems to Guambat to be an unsatisfactory line to draw.

Guambat reckons the second amendment will end up being a right to bear any arm except a sawed-off shotgun.

Oops, since saw-off shotguns are used as riot guns for the police and in combat for the military, maybe even sawed-off shotguns are appropriate for the militia. So much for the Supreme Court Miller case bright lines.

See Dana Milbank's impressions of the Thompson case here.

Need to know

There appears to be a bit of friction between the credit and sales departments, on the one side, and the marketing department on the other. That is, when collecting information from consumers, what is more important, can we do a sale? or what demographic does this sale represent?

A recent study suggests that most privacy concerns of consumers could be alleviated if companies limited the information they require from consumers to a simple, can you afford the sale?, rather than collect the entire life-habits of the consumer. It's a matter of "let's do a deal" rather than "now tell me all about yourself".

We can have ‘win-win’ on security vs. privacy

People think there has to be a choice between privacy and security; that increased security means more collection and processing of personal private information. However, in a challenging report to be published on Monday 26 March 2007, The Royal Academy of Engineering says that, with the right engineering solutions, we can have both increased privacy and more security.

One of the issues that Dilemmas of Privacy and Surveillance – challenges of technological change looks at is how we can buy ordinary goods and services without having to prove who we are. For many electronic transactions, a name or identity is not needed; just assurance that we are old enough or that we have the money to pay.

In short, authorisation, not identification should be all that is required.

Who's your daddy now?

The US tech industry has long congratulated itself in pride of top place in the world of technological prowess. But wait a minute there, pilgrim:

U.S. loses top spot in global tech study By BRADLEY S. KLAPPER

European countries and Singapore have surpassed the United States in their ability to exploit information and communication technology, according to a new survey.

The study, out Wednesday, largely blamed increased political and corporate interference in the judicial system.

The index, which measures the range of factors that affect a country's ability to harness information technologies for economic competitiveness and development, also cited the United States' low rate of mobile telephone usage, a lack of government leadership in information technology and the low quality of math and science education.

But Thierry Geiger, one of the Forum's economists responsible for the 361-page report, said the U.S. market environment remains the best in the world in terms of how easy it is to set up a business, get loans and have access to market capital.

Nordic countries - traditionally strong in all surveys conducted by the Geneva-based Forum - dominated the top of the rankings.

Guambat reckons a great deal of the lethargy in the US system is somehow tied to the expansion of the US strangle-hold on IP, including extending the time of copyright monopoly, allowing the patenting of vague business processes, and generally taking an aggressive stance on anything that can get past the patent office's inbox, while extending the global reach of that system via so-called free trade agreements, like the one with Australia. The industry has mired itself behind its own bulwarks. It spends a disproportionate amount of resource and time in defending and entrenching yesterday's tech advances over expanding tomorrow's.

I see just fine

Guambat had the recent privilege of trying on some night-vision goggles, courtesy of a demonstration of US Navy capabilities. They really open your eyes. We were told that commercially available products could provide even better vision but did not offer the rugged durability of the field goggles. Nevertheless, Guambat was comforted to know his defense was well-equipped to keep an eye on the bad guys.

But then, the commercially available products perhaps have found their way to the hands of the bad guys. Guambat does not consider that to be a good thing.

According to a WSJ report (but you need a ticket to read),

According to a written plea agreement to be filed Wednesday in U.S. District Court in Roanoke, Va., ITT will plead guilty to two felony counts: export of defense articles without a license and omission of statements of material facts in arms exports reports.

"The criminal actions of this corporation have threatened to turn on the lights on the modern battlefield for our enemies and expose American soldiers to great harm," U.S. Attorney John Brownlee said in a statement.

ITT, which Mr. Brownlee cited as the 12th largest systems supplier to the U.S. military, is the first major defense contractor convicted of violating the Arms Export Control Act.

The $100 million penalty includes a $2 million criminal fine, the forfeiture of $28 million in illegal proceeds to the U.S. and $20 million to the State Department. The remaining $50 million penalty will be suspended for five years and the White Plains, N.Y., company can reduce it on a dollar-for-dollar basis by investing in the development and production of more advanced night-vision technology so the U.S. military maintains battlefield advantage. (Read the U.S. statement and the ITT statement.)

High school science experiment doesn't get a C

Guambat first became familiar with Ribena in Australia. It's a tasty drink made from black currants and marketing. This Wikipedia entry is an unofficial history. This is the official home page of UK Ribena.

Ribena is made by the global pharmaceutical leviathan, GlaxoSmithKline. Their Australian website lists Ribena under its "nutritionals" products. Another of its sites puts the product under "consumer healthcare" products.

Evidently a couple of Kiwi schoolgirls analyzed Ribena, which, when Guambat first sampled it in Australia, claimed to have a healthy dose of Vitamin C in it. The schoolgirls just couldn't see it.

Ribena parent fined, humbled by curious minds

In Australia, GSK has admitted that its claims about Ribena may have misled consumers.

It agreed that its cartoned, ready-to-drink Ribena, which it claimed had seven milligrams of vitamin C per 100 millilitres, in fact had no detectable vitamin C content.

The Australian Competition and Consumer Commission said last week that claims on the nutrition information panel of Ribena's ready-to-drink cartons implied the product had four times the vitamin C of orange juice drinks, when this was not correct.

The case was brought after a science experiment in 2004 by 14-year-old Auckland schoolgirls Jenny Suo and Anna Devathasan raised questions about the vitamin C content in Ribena.

The girls were astonished at their findings and wrote to the makers. When they got no response, they phoned the company but were given short shrift.

Ms Suo, now 17, was in court for yesterday's ruling and said she was happy the company had been held to account, but felt the fine was far too low. "They are a multi-billion dollar company. I am sure that fine wouldn't have even left a dent in their pocket," she said.

Privateers blow a hole in the treasury chest

Sailing through the tax system by Elizabeth Knight

THERE is a nasty hole starting to appear in the Federal Treasury's tax receipts, thanks to the new phenomenon of private equity buy-outs. It's an amount that could easily hit $2 billion by next year, based on the deals that have been announced or completed to date.

And make no mistake - there will be more.

The reason for this is that assets that have been financially re-engineered by private equity owners generally pay little or no company tax.

Traditionally such companies had paid 30 per cent of their profits in tax - which formed an important part of Treasury's income.

But the game changes when private equity comes in. The new owners finance their acquisitions using debt, gearing the assets they acquire.

So instead of these assets earning healthy profits and paying tax to the Government they will be paying the profits away in interest to those financing the debt.

The potential for private equity to make a killing on its investment comes when the assets are sold some five to seven years later.

So in theory Treasury should make a bonanza profit in capital gains when the assets are sold. But here is the wrinkle.

Most of these private equity players are foreign corporations which, thanks to recent changes in the Australian tax rules, are now not subject to capital gains tax on these profits.

And even those that are Australian, I am told by Treasury officials, have found ways to minimise those capital gains payments.

[I]t is safe to assume that the tax paid on the capital gain won't offset the income tax that the Australian Tax Office will forgo when these companies pass to new owners. The Government's rationale in removing capital gains tax for foreigners was to stimulate offshore investment, laudable enough.

The only issue which needs to be taken into account before one writes off billions in corporate tax revenue is that those who sell these assets to private equity players may take a capital gains hit immediately.

In other words if I am a shareholder in Coles or Qantas or Rebel Sport and I sell my shares I could be liable for capital gains. But it's near impossible to calculate how much the ATO would collect from shareholders in those companies.

Some will be superannuation funds - large or self-managed - that pay a lower tax rate. Some could be sophisticated Australian investors that run their funds through offshore vehicles. Some will be foreigners, and some may have been investors that have made very little capital gain.

Put all these factors together and the upfront tax paid by those that sell to private equity probably won't make much of a dent on the overall tax revenue lost.

See: Privateers

And you're the patsy

Roger Montgomery ("Flash" in an earlier incarnation) gives away part of the privateer's trick in the private equity alchemy trick, in this article in the SMH by Simon Doyle:

Buy low, sell high to a patsy: that's private equity

It might seem that private equity investors have discovered a secret that public equity managers haven't worked out.

Otherwise, how could private equity funds apparently afford to pay such high prices for the assets they buy?

"For all its apparent sophistication and claimed brilliance, all that is required to generate high returns are low interest rates, lots of gearing, some modest improvements in the business's performance and a patsy in the room," say Clime Asset Management directors Roger Montgomery and John Abernethy.

In a note to Clime investors, Montgomery and Abernethy say that "ultimately, one cannot escape the basic law of investing: the higher the price paid, the lower the return received". "And in this game of musical chairs the final purchaser pays the highest price," they say.

"For what it is worth, a word of warning: Many, if not most of these deals are reliant on you and I being willing to buy these businesses back in the future at a significantly higher price [but] with less significantly improved economics."

So who is this nincompoop of a patsy who pays the highest price?

Why, it's you. Baby, it's you.

It's a compulsory payment you make through your compulsory super contributions, your pension plans, your mutual funds. Because, whilst you mind find the notion a bit rich, funds managers find all sorts of ways to justify buying this jumped up gem when it goes back on the market in the lastest "must have" IPO.

You're the patsy.

On behalf of the private equity team, let me say "thanks".

Because those buggers won't.

See: LBOs are to corporate balance sheets as fast foods are to slim bodies

Near 'nuff?

Nearology has returned to the Australian stock market, so it seems.

Avalon Minerals has IPO'd at a nice premium. Two separate stories (this one and this one) carried this quote, which Guambat reckons contains a typo:

"The Lennard Shelf are of the West Kimberley region of Western Australia is a world-class base metal province," Mr McSweeney said.

McSweeny is the MD of the Chinese-backed company.

Guambat reckons the word "are" was intended to be the word "area" ("The Lennard Shelf area of the West Kimberlyey region ...."). Avalon appears to be ramped up on the basis of being nearer my gold to thee.

Put de dime in de coconut and call me in the morning

Thailand Risks Losing Investments From U.S. on Patents Dispute By Anuchit Nguyen

Thailand risks losing investments by U.S. companies after the junta-installed government decided to break patents on some drugs, said Daniel Christman, senior vice president of the U.S. Chamber Commerce.



Christman also met with Finance Minister Chalongphob Sussangkarn and Commerce Minister Krirk-krai Jirapaet to express his concern about the government's capital controls and proposed changes in foreign business law, he said

Thailand's Health Ministry said in January it will make generic versions of efavirenz, Bristol-Myers Squibb Co.'s HIV treatment marketed as Sustiva, and clopidogrel, Bristol-Myers and Sanofi- Aventis SA's heart medicine marketed as Plavix. The ministry previously said it would also make generic versions of Abbott Laboratories' Kaletra, another AIDS medicine.

This is the first time a government has invoked so-called compulsory licensing to treat an ongoing health problem. The licensing is invoked by the state in the case of a drug being needed to save lives in emergency situations, previously reserved for extremes such as wars and pandemics. Drug companies are concerned the move will set a precedent for other nations.

The government decided on compulsory licensing because it's concerned about Thai lives and wants to increase the availability of drugs to low-income patients, Supan Srithanma, spokesman of the health ministry, said in a phone interview today.

Indonesia warns vaccine inequity could threaten world peace

The inability of poor countries to get vaccines in the event of an influenza pandemic could threaten world peace, Indonesia's health minister said on Wednesday.

Siti Fadilah Supari said the virus-sharing scheme under the World Health Organization system did not guarantee poor countries access to vaccines and urged developed countries to help the developing world with the technology to produce them.

Indonesia, the nation worst hit by avian influenza with 66 deaths, has created a controversy by saying it will only share samples of the H5N1 avian influenza virus if it has guarantees they will not be used to make vaccines that will profit a company or another country.

Some health and aid agencies criticized Indonesia for refusing to share samples, while others defended the stance because developing countries often struggle to get access to life-saving drugs due to patent laws and high costs.

Sharing of virus samples is crucial as it allows experts to study their make-up and map the evolution and geographical spread of any particular strain. Samples are also used to make vaccines.

WHO and health ministers from the Asia-Pacific region are due to meet in the Indonesian capital, Jakarta, from March 26-27 to sort out the best ways of making sure companies can make more vaccines against influenza, and that these vaccines will be available to all who need them.

Few companies make vaccines, and total world capacity is only about 300 million to 400 million doses of vaccine a year -- far below what would be needed in a pandemic.

State Oversight of Industry Gifts to Physicians All Bark By Peggy Peck

Troyen A. Brennan, M.D., M.P.H., of Aetna, Inc., in Hartford and Michelle M. Mello, M.Phil., Ph.D., J.D., of Harvard School of Public Health, said there is a growing sentiment among physicians and hospital executives that "too much money is spent on marketing drugs and that the public has particular unease about off-label promotion."

But the study by Dr. Ross and colleagues suggested that pharmaceutical companies are turning a deaf ear to those concerns, they wrote in an accompanied JAMA editorial.

Drs. Brennan and Mello credited the pharmaceutical companies with "profound contributions to medical therapy and public health," but they pointed out that the companies are for-profit industries. "Their primary commitment is to create shareholder value, not maintain an altruistic commitment to patients," they wrote.

Johnson's answer to criticism about marketing was the contention that the editorial writers failed to realize that pharmaceutical marketing accounts for only about 10 cents of every health care dollar.

Leading the way

Canary in a coal mine

Thank god; it's only a few thousand birds.


Lead mine probe showing birds, not humans affected

SYDNEY (Reuters) - Lead poisoning that has led to a rash of bird deaths in Australia and halted shipments from the Magellan lead mine was not threatening human lives, early health findings showed.

Canada's Ivernia Inc. (IVW.TO: Quote) was continuing to operate the mine in Australia ever since shipments from the site to the Port of Esperance were halted by the Western Australian Department of Environment Conservation (DEC) about a week ago.

Up to 4,000 birds died in Esperance between early December and January, prompting the DEC to direct port operators to increase monitoring of air quality before allowing further shipments of lead-bearing material.

In the immediate Esperance townsite more than 100 bird deaths were reported a little over a week ago, mostly purple-crowned lorikeets, a nomadic species not reported in earlier mass deaths, according to the DEC.


The Magellan mine yielded 63,200 tonnes of lead metal in a concentrate last year, most of which was shipped to smelting firms in China after being trucked 700 kilometers (430 miles) across the Australian outback to ships in Esperance.

Once at full production, which the company expects the mine to reach in the second half of this year, it will account for about 3 percent of the world's lead supply.

Concentrate -- ground ore rich in lead -- was being stockpiled at the mine site while investigators looked for more signs of poisoning.

Western Australia Department of Health director Jim Dodds said 84 port workers tested last week returned lead levels well below recommended guidelines of 50 micrograms per deciliter.

"In fact, 75 percent of these workers had levels below 10 micrograms per deciliter, which is very pleasing," Dodds said in a statement.

Lead-related native bird deaths continue

Western Australia's Department of Environment and Conservation (DEC) says its latest tests show that the lead which caused thousands of native bird deaths in Esperance last year has also caused more fatalities in the past week.

Nearly 200 birds have been found dead this month in the south coast town and yesterday the DEC revealed a sample of 10 carcasses containing lead levels up to 10 times higher than a fatal dose.

On Monday the Esperance Port suspended lead shipments while the source of the heavy metal is found.

DEC spokesman Dave Mell says they have started to collect native flowers to assess whether the birds are ingesting the lead.

He says the location of the bodies when they were found is unlikely to help ascertain the source of the poisoning.

"It's possible they're feeding away from the zone, coming into an area to roost and then dying while they're roosting. That's one possibility," Mr Mell said.

"The other possibility is that they're suffering from an acute poisoning event and they're not moving very far from the area where they've ingested the poison."

Public urged to keep open mind about bird deaths

The Esperance Port Authority has urged the community in south-eastern Western Australia to keep an open mind about thousands of bird deaths in the region, despite its decision to suspend all lead shipments.

Yesterday, the port's board decided to suspend lead shipments after test results showed the heavy metal was the likely cause of the bird deaths.

[Chief executive Colin Stewart says] "From the port's point of view the most important issue for us is the health and welfare of our own employees who work down here," he said.

"Now, we monitor their blood lead levels and the like and we have experienced nothing to cause concern at this point in time, but it's important that we look after our employees and the community and wildlife."

The company's managing director, Pat Scott, says Magellan is happy to stockpile lead concentrate in the short-term, but could consider the Geraldton Port or other options if it has to.

"We'll obviously look at where things are at, but I would be very surprised if anything other than a continuation of operations as normal wasn't the case for at least some time to come while we work out what we want to do," he said.

Nickel contamination feared from port

DEC last week ordered the port to stop receiving and shipping lead carbonate, after it determined more than 4000 birds which died in the area had been victims of lead poisoning, prompting a health scare.

Tests of rain water tanks by Esperance Shire Council found about 10 per cent of tested tanks had higher than recommended levels of lead, and about a third had higher than recommended levels of nickel.

WA Health Minister Jim McGinty said yesterday that while not as serious as lead, nickel pollution was also a serious concern.

Director of Environmental Health Jim Dodds maintained there was no evidence, at this stage, that human health had been affected by lead contaminants.

"However, we acknowledge community concern, and the department is running a lead testing clinic at the Esperance Hospital to take blood tests and provide health information for concerned members of the community," he said.

Children under the age of five and pregnant women were most at risk from the effects of lead, he said.

Mr Dodds said 84 port workers tested last week had levels well below the current WA occupational health and safety guidelines.

In addition, test results from 13 community members who were voluntarily tested last week had also come back well under World Health Organisation guidelines.

Empire's umpire should retire

London's Financial Times is no commie, socialist, left leaning lover of liberalism. But, being British, it does know a thing or two about Empire. So when it calls Bush's administration "the imperial presidency", you know things are moving far beyond the norm of the traditional American form of government.

Apologist for the imperial presidency

Alberto Gonzales, US attorney-general, has always served one client: President George W. Bush. Such ­devotion was admirable, so long as Mr Bush was governor of Texas and Mr Gonzales was his in-house lawyer. But as ­attorney-general, he is meant to be the people’s lawyer – not the president’s.

The revelations of the past few days and weeks about the sackings of US prosecutors and violations of US civil liberties by the Federal Bureau of Investigation have amply demonstrated Mr Gonzales’ disdain for the people, the Congress and the justice system that underpins US democracy.

None of this is really surprising: since he became attorney-general in 2005, Mr Gonzales has repeatedly shown a worrisome willingness to do the president’s bidding. He has ­provided spurious legal justifications for government torture, detentions and surveillance policies, parts of which have been found to violate US and international law and the US ­constitution.

That is not the way America’s chief legal officer is meant to behave: the attorney-general is no mere political lackey of the White House; his job differs markedly from that of any common-or-garden cabinet officer. Attorneys-general, however close to the president, are supposed to put the cause of justice before the narrow political interests of the man that appointed them.

He has amply proved that he will never be anything other than Mr Bush’s lawyer – a mere apologist for the imperial presidency. The affair has already claimed one top scalp at the justice department. It is high time Mr Gonzales stepped down too.

Simple Fi nance

Move to Guam could cost Marine Corps extra $465M a year By David Allen, Stars and Stripes

The move of some 8,000 Marines and their families from Okinawa to Guam by 2014 is expected to cost the Marine Corps an extra $465 million annually.

However, a recent inspector general’s report concluded that the Navy, Air Force and Marine Corps are not prepared for the increased annual costs resulting from the planned changes to the force structure in the Pacific.

The 14-page report, released Monday, is the culmination of a yearlong audit and interviews with military officials. It states the Marine Corps is the only branch so far to estimate how much it will cost yearly to move assets to Guam from Okinawa. However, the corps has not included the cost in its budget projections.

“The source of funds for the additional requirements (has) not been resolved between Headquarters, Marine Corps and the Department of the Navy,” the report states.

The Navy and Air Force also will incur additional annual costs by moving assets to Guam, but the services have not determined what they are, the report adds.

“If DOD and the Services do not include the projected increased annual funding requirements in the next Program Objective Memorandums for DFY 2009,” the report read, “the quality of life for servicemembers and their dependents and the readiness of U.S. forces in USPACOM may be adversely affected.”

Evidently, nobody bothered to consider the quality of life for the 180,000 thousand Guamanians already living here and trying their dead level best to make due with the absolutely decrepid, third world infrastructure of water, sewer, electricity, health, education and roads that is intended to support not only them but, as well, the additional 25 to 40 thousand more inhabitants (including family, support and independent contractors) destined to watch America's Pacific back.

Besides the Marines, the Air Force plans to relocate about 3,500 servicemembers, civilian employees and their families to Guam from various locations, but has not estimated the increased budget requirements for the move, according to the report. Also, the Navy, which closed many facilities on Guam in 1993, will need an increase in funds to “refurbish and adequately maintain facilities” for the influx of Marines and airmen.

Not the Guam Public School System (it's much, much worse)

Report: State's schools failing By Harrison Sheppard and Naush Boghossian
California policies that make it difficult to fire ineffective teachers and set tougher performance standards are among dozens of problems imperiling the state's public school system, according to a landmark report aimed at overhauling education.

The findings are among hundreds in the broadest report in years and paint a picture of a K-12 educational system that is failing the state's children and needs top-to-bottom changes and billions of dollars in investment.

The report -- actually a series of 22 studies -- recommends sweeping changes in school laws and structures such as teacher training and new data tracking. And in one of its most politically charged proposals, the report recommends giving principals more power to spend money, run their schools and fire teachers they deem ineffective.

"It may be that the power to dismiss teachers would allow the principal to exercise influence in the school even without dismissing teachers," the study's authors note. "And it is this increased influence and not the firing of substantial numbers of teachers that is particularly important for principals' efficacy."

The report also found the state's education finance system is flawed and haphazard, resulting in similar schools receiving different funding amounts. And it said the state needs to do a better job tracking educational data to measure student progress and track which reforms are effective.

he state currently spends about $66 billion a year on education. But its proposals for teachers may draw some of the most heat, as such issues have been long debated in districts like Los Angeles Unified, where powerful unions have blocked efforts to give principals more clout. While such moves wouldn't likely cost the state much more, they are likely to face strong opposition from the state's teachers unions.

Schwarzenegger felt their wrath in 2005 when the California Teachers Association spent tens of millions of dollars to defeat his plan to reform the state's tenure laws. That proposal would have extended by three years the period of time before teachers earn job security afforded by tenure.

But the study released Wednesday found that California teachers earn tenure more quickly than their counterparts in most other states.

CTA President Barbara Kerr said the group would oppose efforts to make it easier to fire teachers.





Guam economy on credit watch

Guam's economy has taken another hit with the Standard and Poor's credit rating agency placing the government on a credit watch.

Standard and Poor's moved after the Government of Guam last week borrowed $US6 million to pay its public school system employees.

The governor, Felix Camacho, concedes the island's fiscal situation is serious and immediate action is needed.

The former speaker, Senator Ben Pangelinan, told Radio Australia's Pacific Beat that things have reached crisis point and this latest blow could devastate the Guam economy.

Hell of hyperinflation

Can you say, Weimar?

The phrase Weimar Republic is an invention of historians....

The Weimar Republic had some of the most serious economic problems ever experienced by any Western democracy in history. Rampant hyperinflation, massive unemployment and a large drop in living standards were primary factors.

Zimbabwe sinks into hell of hyperinflation

Images of Morgan Tsvangirai, Zimbabwe’s opposition leader, his face swollen and his head visibly wounded as he faced charges of illegal protest, testify to the deepening brutality, cynicism and desperation of President Robert Mugabe’s regime. Behind that desperation is an economic chain reaction that will, unless halted soon, lead to the collapse of the Zimbabwean state and turn the country into an anarchic hell.

Zimbabwe’s latest official inflation rate is 1,730 per cent. The real figure – for the median household at actual market prices – is almost certainly much higher. Price rises have accelerated sharply in recent months.

Zimbabwe has entered hyperinflation. What has happened so many times, from Weimar Germany to Zaire in the early 1990s, is happening again. As people come to expect accelerating inflation they will raise prices in anticipation, creating a spiral that feeds on itself. Chronic inflation, of a few hundred per cent per annum, can continue for years. A hyperinflation cannot.

Prices are either stabilised, or the monetary system collapses, and the economy reverts to barter and the use of foreign currency. On the monetary system rests the state: when a soldier or policeman is paid in worthless currency, he will take his gun, turn bandit and live off his fellow citizens.

Yet, a hyperinflation can be stopped easily. No outside help is needed and stabilisation at least can be achieved without much reform. All the government has to do is make a credible promise that it will not revert to the printing press and that it will balance its budget. But no government led by Mr Mugabe can make such a promise and expect to be believed.

The hyperinflation is driven by corrupt and inefficient public bodies, packed with government cronies, that demand foreign currency from the central bank to buy fuel or fertiliser from abroad. They siphon off wealth and come back for more. That is how Mr Mugabe’s government works.

The plot sickens

He compares Al Qaeda operatives to American revolutionaries in his tribunal testimony.
By Peter Spiegel

Khalid Shaikh Mohammed, the Kuwaiti national who is thought to be the highest-ranking Al Qaeda operative in U.S. custody, told a military tribunal in Guantanamo Bay, Cuba, last weekend that he was responsible for the Sept. 11 terrorist attacks, according to a transcript of the hearing.

In a written statement read to a three-officer panel, Mohammed claimed he was Al Qaeda leader Osama bin Laden's "operational leader" for the "9/11 operation," responsible for the "organizing, planning, follow-up and execution" of the plot.

- Transcript: Khalid Sheikh Mohammed hearing (released by the Pentagon)

"I was responsible for the 9/11 operation, from A to Z," Mohammed said, according to the transcript, which was released by the Pentagon on Wednesday night.

Mohammed was present at the hourlong, closed-door hearing Saturday, and he interjected frequently in slightly broken English. His admission was read to the tribunal by an Air Force lieutenant colonel who was serving as Mohammed's representative.

Mohammed also gave a lengthy, apparently spontaneous speech in which he likened Al Qaeda operatives to American revolutionaries, described a war against a dominating U.S. presence and even expressed a measure of remorse.

"I'm not happy that 3,000 been killed in America," he said, according to the transcript. "I feel sorry, even. I don't like to kill children and the kids. Never Islam are give me green light to kill people. Killing, as in the Christianity, Jews and Islam, are prohibited."

In his 31-point statement, Mohammed claimed responsibility for a wide range of terrorist plots, including the 1993 attack on the World Trade Center; the 2002 bombings of nightclubs in Bali, Indonesia; and the so-called shoe-bomber plot to down U.S. airliners traveling across the Atlantic. He said he took part in plans to kill former Presidents Carter and Clinton, as well as the late Pope John Paul II.

And it was the first time he was allowed to freely discuss U.S. allegations without interrogators present. He used the opportunity to present charges that he had been tortured by his U.S. captors, and he attempted to portray himself as a soldier fighting a war of independence.

"What I wrote here is not I'm making myself hero when I said I was responsible for this or that," Mohammed said, addressing the U.S. Navy captain who presided over the tribunal. "You are military man. You know very well there are language for any war."

Saturday's hearing, formally called a combatant status review tribunal, was intended to determine whether Mohammed will officially be classified as an "enemy combatant" and held at Guantanamo Bay.

Although Mohammed's tribunal is largely a formality, under military detention rules adopted after a series of Supreme Court rulings, all Guantanamo Bay detainees must be accorded such a hearing. A ruling is likely to take several weeks.

Mohammed appears to have exaggerated his role in some of the plots. The 1993 World Trade Center bombing, for instance, was masterminded by Ramzi Ahmed Yousef, who was convicted of coordinating the attack by a U.S. court in 1996.

Mohammed spent most of his speech, which stretched over nearly four pages in the single-spaced transcript, attempting to explain his view that Al Qaeda attacks were a series of battles in a war for liberation. He said that U.S. labels such as "terrorists" and "enemy combatants" were deceptive, and that Al Qaeda operatives were merely soldiers. At one point, he compared Bin Laden to George Washington.

"If now we were living in the Revolutionary War and George Washington, he being arrested through Britain, for sure they would consider him enemy combatant," he said. "But American, they consider him as hero."

As he expressed regret for the children killed in the Sept. 11 attacks, he said they were the victims of a war and likened them to Iraqi civilians killed during the U.S. invasion.

"Because war, for sure, there will be victims," Mohammed said.

Mohammed appeared calm and composed, based on the transcript, and made an effort to understand the tribunal process and to cooperate with the panel. At one point, an officer asked him if he had any questions about the tribunal process.

"OK by me," Mohammed answered.

Just what state was he waging a "war of independence" for? Methinks it was a State of Mind. A murderous, malevolent, unjustifiable state of mind. If his "confession" is fair dinkum, and the operative words are "if" and "fair dinkum", the bastard should hang.

Two items from Thailand

'Muslim militants' execute nine Thai bus passengers by Ian MacKinnon

Separatist violence in southern Thailand boiled over today when suspected Muslim militants ambushed a commuter minibus and killed nine Buddhists in cold blood.

The execution-style attack in the province of Yala - which included women and children among the victims - shocked even those who have become inured to the almost-daily tally of bombings, drive-by shootings and beheadings.

Thailand's military-installed government, which has made strenuous efforts to calm ethnic tensions since seizing power, further stepped up security across three restive southern provinces populated by ethnic Malay Muslims.

The latest murders, which add to a grim litany of killings over the past week, mark a new low and send a clear message that the separatists have no intention of compromising or entering a dialogue.

In today's attack, three men and six women, including two girls aged 14 and 15, were shot in the head at point blank range after their vehicle was held up in daylight.

Logs had been used to block the road, and when the bus slowed down five gunmen opened fire on the vehicle, which ran off the road and crashed into a ditch. The Muslim driver, the only survivor, was shot in the face before the militants wrenched open the side door to shoot those inside.

Officers discovered the victims - described as Buddhist villagers, traders, teachers and school students and a soldier - slumped in their seats. One passenger was still alive, but they died on the way to hospital.

Angered U.S. firm excludes Thailand from new drugs by Darren Schuettler

(Reuters) - U.S. drugs giant Abbott Laboratories said it would stop launching new medicines in Thailand in protest at the army-backed government's move to override international drug patents ... [which] which declared a "compulsory licence" in January allowing it to make or buy generic versions of Abbott's Kaletra to treat HIV/AIDS.

Malaysia and Indonesia were the first in Southeast Asia to issue such licences for AIDS drugs three years ago, but Thailand has gone farther in challenging Big Pharma by targeting other drugs.

[The licenses are] legal under world trade rules, ... which allow governments to make or buy generic versions of medicines needed for public health measures....

"Thailand has chosen to break patents on numerous medicines, ignoring the patent system. As such, we've elected not to introduce new medicines there," Abbott spokeswoman Jennifer Smoter told Reuters.

There was no immediate reaction from the Health Ministry, which argues it needs cheaper, copycat drugs to ensure wider access for Thailand's 63 million people, including 580,000 living with HIV/AIDS.

Hillary says Hello?, and Halliburton says Dubai!

I don't know why you say Hello?, I say Dubai.

Investors unfazed by Halliburton announcement

The world's second-largest oil-field services company and biggest U.S. contractor operating in Iraq said the new office in Dubai will help strengthen its presence in the Eastern Hemisphere, where its business is growing.

Through its KBR subsidiary, Halliburton also is the Pentagon's largest private contractor operating in Iraq. Under a logistics contract with the Army valued at more than $25 billion, KBR serves up meals, builds bases and provides other support services for U.S. troops.

Halliburton officials skipped some of the corporate courtesies that would usually attend such an announcement, failing to notify Houston Mayor Bill White and other community leaders in advance.

Investors appeared mostly unfazed by Halliburton Co.'s stunning announcement Sunday that it will open a new headquarters in the United Arab Emirates and move its chief executive officer there.

Industry analysts, meanwhile, were mostly optimistic about the announcement because they said it signaled that Houston-based Halliburton is serious about expanding its reach around the world.

U.S. lawmakers remain openly suspicious of the United Arab Emirates, despite the growing prominence of its bustling financial center, Dubai.

A political firestorm erupted last year when a Dubai-based marine terminal operator tried to take over operations at six major U.S. ports. Lawmakers repeatedly recalled that much of the money used to fund the Sept. 11 terrorist attacks was funneled through the United Arab Emirates' banking system.

The Gulf state of Qatar on Monday affirmed its interest in taking a stake of up to 10 percent in European defense and aerospace group EADS, which has been pummelled by problems at its Airbus unit.

"When you look into the future, it's really going to be these (national oil companies) that are going to control the future production," noted Amy Myers Jaffe, a fellow for energy studies at Rice University's James A. Baker III Institute for Public Policy. "Who do the oil service companies work for? They are working for the companies that are producing the oil and gas."

Jaffe was in Dubai on Sunday to discuss a report the Baker Institute has just completed on the changing role of these national oil companies.

That report points out that these national oil companies controlled some 77 percent of the world's proved oil reserves in 1995. In contrast, Western international oil companies hold less than 10 percent of the global oil and gas resource base.

Clinton on Halliburton and Dubai By Kate Phillips

Senator Hillary Rodham Clinton lashed out at Halliburton today for its announcement that it would open a corporate headquarters in Dubai and move its chief executive officer there. The action has raised a lot of questions, and Senator Clinton was quick to link the company to its multi-billion defense and war contracts as well as its ties to Vice President Dick Cheney.

“Does this mean they’re going to quit paying taxes in America? They’re going to take all the advantage of our country but not pay their fair share of taxes. You know, they get a lot of government contracts… Is this going to affect the investigations that are going on? Because we have a lot of evidence about their misuse of government contracts and how they have cheated the American soldier, cheated the American taxpayer. They have taken money and not provided the services. So, does moving overseas mean that we won’t be able to pursue these investigations?

“I think it raises a lot of very big concerns and I think we’re going to be looking into that in Washington. I think it’s disgraceful that American companies are more than happy to try to get no-bid contracts, like Halliburton has, and then turn around and say, ‘But, you know, we’re not going to stay with our chief executive officer, the president of our company, in the United States anymore.’ Well, I’m proud to be an American and I’m proud that this is the greatest country in the world.”

Dick Morris: Clinton on Dubai Payroll

Halliburton: We're going to Dubai-land!

Few things get the Web's conspiracy theorists hopping more than Halliburton, the oil services and military logistics provider that boasted current Vice President Dick Cheney as its CEO from 1995-2000. So when the company announced on Sunday that it was moving its corporate headquarters to Dubai, the rumors started flying instantly.

• Dubai has no extradition treaty with the U.S., one blogger wrote, so Halliburton's top execs will be safe should the company be found guilty of any crime.
• It's all about the taxes and Dubai's business-friendly regulations. Some companies move to the Caymans, but Halliburton's going to Dubai-land!
• The Democrats have taken over Congress, and Halliburton wants to get as far away as possible from Henry Waxman.

Far be it from me to rain on anyone's anti-Halliburton parade, but the company will continue to be legally registered in the U.S., so the move is not quite the equivalent of a corporate relocation to the Bahamas. This could also be a case where the explanation being proffered might actually be the true one. Halliburton is desperately trying to unload its military logistics and contracting subsidiary, KBR, and wants to focus on oil field services.

As How the World Works waits to see how big this story gets, I'll content myself with the fabulous explanation offered by a Texas congressman:

Rep. Kevin Brady, R-The Woodlands, said the news "is not surprising."

"It would make sense," Brady said, for an oil and gas company to "go where oil and gas is," Brady said. "America these days essentially vilifies our own energy companies."

It's our fault! We didn't love Halliburton enough! Now the jilted company is seeking a warmer embrace from the friendly folks in Dubai.

Mohammed Abbas and Anna Driver report for Reuters in the online San Diego Union-Tribune, rightly or wrongly, that "It [Halliburton] plans to list on a Middle East bourse once it moves to Dubai.


Adding a potpouri of bits to the story, CBS reports, Members Of Congress Criticize Move As Insult To U.S. Soldiers And Taxpayers

Sen. Patrick Leahy, D-Vt., called the decision to move as "an example of corporate greed at its worst."

"This is an insult to the U.S. soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges for all these years," Leahy said in a statement.

Federal investigators last month alleged Halliburton was responsible for $2.7 billion of the $10 billion in contractor waste and overcharging in Iraq.

Dubai is an Arab boomtown, where free-market capitalism has been paired with some of the world's most liberal tax, investment and residency laws.

Labourers angered by low pay and long hours are preparing to take their protest into the luxury malls they built by Dan McDougall

Kamal swats away a swarm of black desert flies from his face as he pours coffee from a battered tin pot. His calloused hands are shaking as he looks furtively at his 'watchman' standing outside in the courtyard.

'If we are caught speaking to you here, we are finished, you understand that? They will throw me in prison and deport everyone in this camp, not just the people in this room. They are actively looking for us,' he tells me.

The construction workers, packed together inside the tiny hut in one of Dubai's harsh desert labour camps, are breaking the most fundamental of all the draconian laws governing immigrants within the United Arab Emirates - they are holding a union meeting, a practice that is banned in all but one of the Gulf States.

They are also plotting their next move in protest at their treatment by their Arab employers who, they claim, exploit them for cheap labour. It's a move that will, for the first time, involve direct confrontation with the millions of tourists who visit the city every year. They plan to shame foreigners into taking notice of their plight.

Dubai, one of the country's seven emirates and uniquely poor in oil, is at the pinnacle of a decade-long building boom that has transformed the city into one of the world's most popular tourist destinations. Today it is the largest construction site in the Middle East, home to luxurious hotels and three of the largest shopping malls on the planet. Each year an estimated 700,000 Britons visit the city to take advantage of its sunshine and pristine beaches. Record numbers from the UK are shunning the Spanish costas to buy property in the region. By 2008 an estimated 250,000 Britons will call Dubai their second home.

The city's unrivalled building frenzy may be creating one of the Middle East's most modern and alluring holiday destinations, but it is supported by an increasingly disgruntled foreign labour force whose basic human right - the right to voice their opinion - is denied. 'One of the world's largest construction booms is feeding off impoverished immigrant workers in Dubai, but they're treated as less than human,' said Sarah Leah Whitson, Middle East and North Africa director at Human Rights Watch.

Welcome to the other side of Dubai

It is the fastest growing city on earth, ... a neverland, rising out of the barren desert and fringed by beaches and a ski resort. There are no taxes. And it is the favoured destination of Britons wishing to work and play abroad.

Fifty per cent of the world's supply of cranes are now at work in Dubai on projects worth $100bn - twice the World Bank's estimated cost of reconstructing Iraq and double the total foreign investment in China, the word's third-largest economy.

... the glistening towers that soar above the shopping malls, the six-lane highways and the world's only seven-star hotel with suites that can cost $50,000 (£28,000) a night....

Almost everything is for sale in this part of the United Arab Emirates. Among the developments springing up daily are Flower City, which aims to take over the international flower trade from Amsterdam; Hydropolis, an underwater hotel alongside another with revolving mountains; a Chess City with buildings in the shape of chess pieces; the $5bn Dubailand, which will become the world's biggest theme park - bigger than Manhattan and dwarfing Disneyland. Then there are the 300 manmade islands in the Arabian Gulf in the shape of different countries of the world ...


The one thing money cannot buy in Dubai, however, is UAE nationality. Around 80 per cent of the population are foreigners from no less than 160 different countries and the Maktoums appear to be prepared to let the foreigner-to-local ratio grow even wider. But however long the expatriates stay, they will not be allowed citizenship. Visas are tied to jobs, and there is always the risk of being thrown out when the contract ends.

The average pay for an unskilled labourer is around $4 a day, and that is enough of a lure for the impoverished of India, Pakistan, Sri Lanka and Bangladesh to flock to the UAE. The jobs are arranged through contractors and those who get them have to take out loans, often at exorbitant rates of interest, to pay for their passage. On arrival in Dubai, their passports are confiscated to prevent absconding while they are on contract.

Details of how companies repeatedly abused the system have recently begun to emerge. Workers were often not paid for months as their contracts drew to an end and then promptly kicked out when they demanded their wages. (Their visas expired at the end of the job.)

But now, in an attempt to become a serious commercial player, Dubai is negotiating with the World Trade Organisation and, as a result, is having to clean up its act. A big sign at the arrivals lounge of Dubai International airport professes " Dubai Cares". The police and the labour ministry has set up a hotline for foreign workers with complaints; civil servants turn up at factories and labour camps to listen to grievances and have, on occasions, ordered restitution from the firms involved.

But the problems have continued....

But what about the citizens of Dubai? How do they see this influx of foreigners - many of whom, especially from the West, bring with them an alien culture which jars with Muslim customs. Jamal, who sells real estate, said he has done well out of the commercial boom. But, in the back of his mind, he said, there is a feeling of uneasiness.

"Our leaders want to turn us into a modern, first-world country, and that is good. But the place has become all about money. Do you know, there wasn't any real protest here about the Danish cartoons of the prophet - Dubai was the only place in the Muslim world where there was no outcry. What does that say about us?" Meanwhile, Jamal pointed out, the Dubai stock exchange, along with the rest of the Gulf, experienced a spectacular fall in share prices earlier this month.

"Maybe that was a sign. Maybe we need to slow down and think about things," said Jamal. "Everything is going too fast. Is it getting out of control? That is a big worry."

Promise and Illusion in a New Arab City by Anthony Shadid

To Sharaf and others, Dubai is the answer to the Arab world's ills, so diverse that conversations in taxicabs are sometimes a patois of Arabic, English and Hindi. Its architecture suggests Pharaonic ambition; at 3 billion square feet, the amusement park known as Dubailand will be three times the size of Manhattan, complete with a replica of the Eiffel Tower and a 60,000-seat stadium. The city's growth, vision and dynamism -- to advocates, at least -- chart a way forward for Arab development independent of the Bush administration's emphasis on democratic reform. Arab expatriates who have flocked here declare Dubai a success and say that the Arab world needs a success story.

"We're seeing the beginning of an Arab renaissance, and I find it very hopeful," said Nasser Saidi, a former Lebanese minister and the chief economist of the Dubai International Financial Center.

But a darker undercurrent pervades the success of Dubai ["an autocratic city-state ruled by a dynasty"]. Hundreds of thousands of foreign workers ["the city-state's citizens make up just one in five of its 1 million residents"] toil with few rights and sometimes just above subsistence. Unrest has mounted; last month, laborers rioted near the site of Burj Dubai, planned as the world's tallest skyscraper, where a new floor is added every week. The Islamic piety visible in the rest of the Persian Gulf has receded behind a rollicking nightlife of bars, clubs and prostitution so rampant it is assumed to have official sanction. The city has a history as a shipping hub for contraband, including illegal drugs and nuclear weapons components. Rumors of money-laundering are laced through the real estate speculation that has sometimes driven prices to double in six months.

At the heart of what Dubai and its globalization are creating, two cities overlap. One is a dystopic, even soulless vision of the future, where notions of civil society, individual rights and identity are subsumed in the logic of capital. The other is a rare triumph of the private sector in an Arab city that provides a model for prosperity and a force for integration, reversing decades of disappointment and defeat.

Over a lunch of Lebanese appetizers at a fashionable restaurant, Sharaf and his boss, Saeed al-Muntafiq, chief executive officer of Tatweer, traded aphorisms on the rise of the Dubai model. Dubai had little oil of its own (oil accounts for just 5 percent of Dubai's economy), so it was forced to diversify to prosper. To prosper, it needed skilled workers. To attract that talent, it had to ensure that it would be the most free-wheeling, hospitable and libertine of the traditional Gulf Arab states.

"Look around you in this restaurant," Sharaf said proudly. "Just take a look."

At the tables, none of them empty, were Emiratis in traditional dress, men in suits and women in skirts. Snippets of English and a plethora of Arabic dialects were audible. There were perhaps 30 nationalities seated here, he said.

"Here's an example of what I'm talking about," he said. "They're all sitting side by side and all doing it with respect."

It is remarkable how little U.S. policy figures in conversations here. Religion comes up usually only in the context of illustrating Dubai's tolerance. Unlike in Egypt, Lebanon or Syria, almost no one mentions the Bush administration's talk about democratic reform. Politics, in fact, is rare in Dubai, where power resides with a single family, the Maktoum clan. In this city of transients, 85 percent of its workforce foreign, politics hardly exists.

For good reason, Muntafiq said.

"Democracy is a means, not an end," he said. [Guambat invites commentary/debate but only after full article is read and digested.]

"It's a system, a process, a tool. What is the end? I don't know, but I have my own opinions -- a world-class health-care system, a world-class education system, a job for every person willing and able, rule of law, civil rights and liberties. I would have thought these would be the outputs of democracy. Does it matter how we get there? I don't know, but I'm asking the question. I'm not saying we should or shouldn't have it, I'm just saying it doesn't really matter here."

The city's gritty beginnings have become part of the legend of the Dubai model. Its museum celebrates records that as recently as 1908 summed up Dubai's wealth in a few typewritten lines, including 4,000 date trees, 1,650 camels, 45 horses, 380 donkeys, 430 cattle and 960 goats. Pearl diving and fishing were mainstays until a generation ago. The Indian rupee served as the currency until 1966.

The itinerant city Roken [a civil rights, Muslim lawyer] sees today is unrecognizable, not even Arab. All that remains of the neighborhood of his youth is the mosque. When he goes to a mall, he estimates that 99 percent of the patrons are foreigners, and he rarely hears Arabic. Despite religious prohibitions, drinking is unabashed, and he fears public wine-tasting parties are on the way. The beaches of his youth were either taken over by hotels and their occasionally topless sunbathers or frequented by Westerners whose dress he deems inappropriate. He grimaces at women jogging in the streets, sometimes with their dogs, considered unclean under Islamic law. The celebration of Islamic holidays and the country's national day on Dec. 2 pale before the more commercialized commemoration of Christmas.

Arguments for democratic reform in the Arab world are often offered as an antidote to the region's stagnation and repression. Roken argues for democratic reform, but on different grounds. Only with more say by citizens like him can the process of Dubai's globalization be stanched. His democratic vision is not of a different society, but of a society he once had.

"The brakes are accountability, sharing in the decision-making," he said. "These things will work as brakes on the train's speed. If citizens had a say, I don't think the city would have turned into this."

Dubai then and now, and now and then

Halliburton in the Stew

Pulling on threads

Carrying out a threat to follow through on sharing some of the threads that come from hits to the Stew, Guambat noticed a couple of hits on the last post, having to do with Abramoff's dealings with the Guam Superior Court and such matters.

The hits seemed to be sourced from Koch Industries. Guambat hadn't heard of Koch Industries, or hadn't paid attention if he had, and had no idea why anyone from Koch Industries would be interested in the Abramoff/Guam link.

That's just Guambat up to his usual lazy habit of not paying attention, it seems. Turns out, on closer examination, there was a reference to Koch Industries in that post:

In July 2002, seven entries for Duane Gibson mentioning “performance roads” that appeared to be related to work done by Greenberg & Traurig on behalf of Koch Industries were also included in the Guam billing records.

So who is Koch Industries and why the interest in such a seemingly trivial reference?

Google-blog Koch Industries. It has got to be the only place on the planet that not only puts dots between Anna Nicole Smith, big business and the John Birch Society, but actually joins them. (Wikipedia has a profile, too.)



As the guy on Laugh-in used to say, "velly intellesting".

Guam Superior Court's correspondence with Abramoff revealed

The Abramoff Connection: Guam's paper trail

KUAM News recently sent a Freedom of Information Act request to the Guam Judiciary requesting information about the previous court administration's dealings with California-based attorney Howard Hills and the disgraced lobbyist.

The paper trail behind the former Superior Court administration's hiring of Hills and Abramoff sheds new light on the great lengths local officials went to fight congressional efforts to have an independent judiciary.

KUAM News initially reported that in October 2002 a power struggle within the local judiciary was noted, as Congress was reviewing a measure that would give the Guam Supreme Court control over the entire Judicial Branch. The struggle continued for several years, as taxpayers footed the growing bill. In April 1998 then-Superior Court administrative director Tony Sanchez entered into an agreement with Hills. Sanchez at the time explained why hills had been retained, saying, "He helps with regards to our federal court case, which is an issue right now before the U.S. Supreme Court and certainly will determine whether certain laws are in place and so forth and are related to the Judicial Council." As House Resolution 521, the Judicial Empowerment Act, moved through Congress, Hills' role became more important than ever.

In 2001 presiding judge Alberto Lamorena instructed Hills to hire former congressional staffer Manase Mansur as a subcontractor to assist the court. Mansur was paid $90,000 for his services, but that wasn't the only person Hills claims court officials asked him to hire. A year later the name of one of the nation's most powerful lobbyists at the time came up. But in 2002 Sanchez claimed he had no knowledge that the court had hired Jack Abramoff. When Sanchez was asked by KUAM News if he was ever give any indications that lobbyist would be hired, after he found out the Supreme Court was going to, he replied, "I think we discovered the lobbyist was clearly in place when we were there [in D.C.], but never discussed the matter."

But according to e-mail messages and letters obtained by KUAM through a Freedom of Information Act request, Sanchez did in fact know about the hiring of Abramoff long before our story aired.

According to Hills' attorney, Carol Elder Bruce, in a letter to the Judiciary the idea to hire Abramoff came from Sanchez - as early as May 8, 2002. Sanchez allegedly asked hills to set up a meeting between himself, Presiding Judge Lamorena and Abramoff at the former lobbyist's restaurant, Signatures. According to Hills, Sanchez wanted his assistance in temporarily "transferring the retainer to Abramoff" until the court could establish a new contract with Abramoff's law firm, Greenberg Traurig. In a later letter to the court attorney, Bruce stated that Hills was used by the court "not just to facilitate the transition of counsel, but to disguise its new relationship with a high-priced, now discredited, Washington, D.C. lobbyist."

She went on to write that the court imposed "uncompensated administrative burdens on Mr. Hills" in order to transmit fee payments to Abramoff as secretly as possible.

Days after their meeting with Abramoff, Sanchez wrote an e-mail to Hills requesting twenty-two individual invoices of no more than $9,000 for may payments - as opposed to three $75,000 invoices. Sanchez stressed it was very important, and that the invoices must be made daily with separate invoice numbers. In that same e-mail, Sanchez also requested Hills amend his agreement with the court to add an additional $400,000 immediately. (Hills later learned that the amount was Abramoff's fee to lobby for the court.)

On May 23, 2002 Abramoff wrote a letter to Hills confirming Greenberg Traurig's representation to oppose HR- 521 and clarifying that the fee was to be paid up front. A day later - before Abramoff had performed any work - Sanchez wrote an e-mail to Hills asking for the contract to be amended to $420,000. A change order was signed on the 29th of the month increasing that figure to $479,000. And the money couldn't have been paid fast enough, as Hills transmitted invoices and the court cut multiple checks of $9,000 each.

Abramoff was still anxious to get his money, while Hills became more and more disturbed about his involvement with the court. E-mail messages provided by Greenberg Traurig to Hills state that Abramoff wrote Sanchez in August 2002, demanding full payment. Abramoff stated in one such correspondence, "I am under real pressure here regarding the payments to the firm...we really need the rest of the funds ASAP...we have already gone beyond the $400,000 in total expenses."

BUT WAIT, THERE'S MORE:

The Marianas Variety has brought out more on the Guam-Abramoff connection, venturing beyond the Superior Court. The MarVar story looks set to come in 2 installments. Guambat will update as it becomes available. Here's the first:

Guam judge linked to Abramoff By Gina Tabonares (first of a series)

NOW it can be told. The decision to pay disgraced Washington, D.C. lobbyist Jack Abramoff significant sums of public funds to fight a turf battle between the Guam Superior Court and the Guam Supreme Court in Congress was made by Presiding Judge Alberto Lamorena.
Lamorena’s link to the controversial lobbyist and how he orchestrated efforts to control the reigns of Guam judicial administrative power were shown in a paper trail uncovered by the House of Representatives’ Committee on Government Reform which launched an investigation into the lobbying work of Abramoff.
Abramoff entered a plea of guilty in one case, was sentenced to jail time, and is awaiting sentencing in another case. He is cooperating fully with prosecutors in Washington, D.C. by providing lists of his clients through his firm, Greenberg & Traurig.
Greenberg & Traurig was subpoenaed by the House committee on Aug. 7, 2006. The committee demanded that the firm produce two categories of documents: all billing records from Jan. 1, 1998 to the present related to matters involving Abramoff, and all records related to contacts between the disgraced lobbyist or any person working with him and the White House.
The documents included a detailed description of professional services rendered by Greenberg & Traurig to Guam officials and the exchanges of e-mails between former Superior Court administrative director Tony Sanchez, California-based attorney Howard Hills, and Abramoff.
Sanchez, who is now facing criminal charges involving the lobbying scheme that resulted in the disbursement of $479,000 from the Guam court, was Abramoff’s constant contact who would communicate with Hills and the lobbyist using the code “Nobody Guam” with a yahoo e-mail address nobodyonguam@yahoo.com.
Using this e-mail address, Sanchez allegedly hatched a plan with Abramoff who, according to Hills, was under the direction of Judge Lamorena.
Camacho-Moylan endorsement
The exchange of e-mails indicated how Judge Lamorena asked the assistance of Abramoff on “three matters”—confirming that Abramoff was not only tapped to lobby for the court but also for other political issues such as the campaign of Gov. Felix P. Camacho and former Lt. Gov. Kaleo Moylan.
On Oct. 6, 2002, in an exchange of e-mails between Abramoff and Sanchez, local court officials confirmed the transmittal of $440,000 and Abramoof’s solicitation of assistance for the Camacho-Moylan campaign. The team was then running in the 2002 gubernatorial election against Robert Underwood and Tom Ada.
Citing a poll conducted by the University of Guam where Camacho’s team was only up by 5 percent over Underwood, court officials asked Abramoff to get the endorsement of President Bush and other congressmen.
Sanchez was quoted as saying they needed Abramoff to counter Underwood, who went out for his own endorsement.
Abramoff, in his reply, assured Sanchez that Bush was willing to endorse and indicated that he had already sent an e-mail to Moylan about the plan.
“I have e-mailed Kaleo but he does not respond to me. Have him check his e-mail and get back to me. I’ll get whatever they need from the Congress,” Abramoff told Sanchez in his e-mail.
‘Other matters’
Sanchez also allegedly asked Abramoff if Camacho could make a request for federal appropriations of $21 million for Guam’s sewer system which they suggested should be supported by former Texas Rep. Tom Delay.
Abramoff replied in all capital letters saying “the appropriations process for this year is over. We could do it for next year. Delay would not be public with his support, as he never supports appropriations requests outside his district publicly. We could definitely do this for next year, but it should be done in the context of an overall approach, as we do with our other clients. One attempts like this usually fails. They have to be part of an overall strategy.”
Court officials also asked the power broker if Camacho wrote Defense Secretary Rumsfeld or President Bush to order the military to ship goods to Guam in case of a West Coast strike.
The idea was apparently brought up to counter Underwood’s conversation with Pacific Fleet and union leaders.
Abramoff answered: “Possible. Get me a sample letter which Felix would write and what you guys want as a response from Bush. I’ll get them to them and see if we can get this for you guys.”
Guam spent monies
The paper trail showed how Judge Lamorena allowed the disbursement of court funds that were also spent for other lobbying programs that appeared to have nothing to do with the Guam judicial system.
While the engagement letter made by Abramoff on May 23, 2002 accepted the court as one of his clients specifically to assist the presiding judge in a House bill that would amend the Organic Act of Guam to clarify the local judicial structure of Guam, the billing records of Greenberg and Traurig reveal charges for work done on a number of other matters, including Guam’s Application for Expanded Air Service.
Between January and March 2002, there were at least a dozen entries specifically referencing “Open Skies.”
In July 2002, seven entries for Duane Gibson mentioning “performance roads” that appeared to be related to work done by Greenberg & Traurig on behalf of Koch Industries were also included in the Guam billing records.
Between October and December 2002, there were a number of entries specifically referring to federal grants. A couple of entries in November 2002 referred to the Craig Amendment which is not related to the Guam judicial bill.
In late February 2002, there were entries for fees and expenses related to meetings with former Guam Senator Mark Charfauros.
A number of the charges for expenses appeared to be unrelated to any charges of fees for the local court. There were five separate limousine service charges for Abramoff in November 2001.
There were more than two dozen entries for expenses incurred at Signatures, Abramoff’s defunct restaurant in Washington, D.C., and more than $13,000 in fees and expenses incurred by Neil Volz, who earlier pleaded guilty to honest services fraud.
Discrepancies were pointed out by Hills’ lawyer, Carol Elder Bruce, who also told Guam Judiciary Staff Attorney Bruce Bradley in a letter that her client forwarded a total of $324,000 to Greenberg & Traurig on behalf of the court, but Abramoff’s firm only produced billing records accounting for less than half of the amount—$144,620.49.
In a confidential letter to Bradley dated Sept. 1, 2006, Bruce noted discrepancies in the timeframe of the Greenberg & Traurig billing records to the court as it included fees and expenses going back to Nov. 13, 2001, which was six months prior to the lobbying engagement.
Furthermore, the fees and expenses for work done prior to the engagement totaling $16,067.24 were not invoiced until Greenberg & Traurig’s fourth bill dated Oct. 28, 2002.
Lamorena and Hills
Documents also showed how Lamorena initiated the Guam court lobby by retaining Hills as early as April 7, 1998.
According to Bruce, Hills was retained by the presiding judge to provide legal and policy advice to the Guam Superior Court regarding federal, state, and territorial models of judicial organization.
Hills also monitored congressional policies and activities in the U.S. Department of the Interior relating to the growing debate over Guam’s court organization.
At the request of Judge Lamorena, Bruce stated in a July 19, 2006 letter to the Guam Judiciary, Hills developed a comprehensive legal and policy analysis of how the court organization issue is related to the larger issues of Guam’s self government, including future adoption of a local Guam constitution and the resolution of Guam’s ultimate political status.
She disclosed that the analysis developed by Hills was presented to the presiding judge in meetings in Los Angeles and Washington, D.C. over a three-year period.
According to Bruce, Judge Lamorena instructed Hills in 2001 to retain an expert on territorial policy, a former congressional staffer, Manase Mansur, as a subcontractor to assist the court.
It was the same year when Hills met Sanchez, who began supervising Hills’ work.
Hills’ lawyer also stated that contrary to the Office of the Public Auditor’s report, Hills was only paid $76,000 for his services over the four-year period beginning in April 1998 and endingon May 8, 2002. Hills’ subcontractor, however, received $90,000 for services.
Bruce said Mansur and Hills never performed any lobbying services, and the subcontractor simply monitored deliberations in the local legislature and Congress.
The court
Hills’ lawyer reiterated that the court hired Abramoff, adding that when she uses the word “court” it refers to Judge Lamorena who acted through Sanchez.
Bradley said her clients were used as part of the court’s broader scheme to conceal from the public the court’s retention of Abramoff.
She said Hills proposed other less costly and less politically charged strategies to sustain the legislation in Congress, but this was rejected by the court which instead contacted and sought the services of Abramoff.
“To now suggest that his accommodation of the court’s request for his assistance in referring the matter to Abramoff makes him (Hills) the scapegoat for the controversy that ensued is not something Mr. Hills can passively tolerate,” Bruce said.
Hills’ legal services as retained by Lamorena are now being questioned by the present administration of the Guam Judiciary which is asking the lawyer to return the fee for services that has no proof.
Bradley said there was no evidence to show what legal work Hills did to justify the original retainer of $20,000 paid by the court in June 1998.
(To be continued)

Wining and dining at Guam’s expense By Gina Tabonares (2nd of a series)

FOR more than two years, Guam taxpayers forked out an average of $200 per hour to more than a dozen Washington, D.C. workers who would make phone calls, read stories about the island, and wine and dine in the capital’s restaurants.
These “tasks” cost Guam almost half a million dollars in public funds funneled by the Guam Superior Court to Greenberg Traurig, the lobbying firm of Jack Abramoff, the disgraced Capitol power broker.
Greenberg Traurig was retained by Guam Superior Court Presiding Judge Alberto Lamorena and former Guam Superior Court administrative director Tony Sanchez to win a turf fight over who would control the reigns of Guam’s judicial administrative power.
Detailed billing records have been turned over to the House Committee on Government Reform, including descriptions of professional services rendered to the Guam court.
From Nov. 13, 2001 to March 13, 2003, Guam paid the likes of Abramoff, Michael Williams, Neil G. Volz, Kevin Ring, Todd A. Boulanger, Lindsey Crisler, Brigham Pierce, Douglas Heron, Stephanie Short, Michael D. Smith, Duane R. Gibson, Jane Gumbrewicz, Jon W. Van Horne, Shana Tesler and a paralegal clerk to dine with congressmen and staff on the pretext that they were strategizing about the Guam judiciary.
Williams, a senior director of Greenberg Traurig, charged Guam $750 for spending two hours in Congress to talk about the Guam Judicial Empowerment Act.
His phone call to Congress cost Guam $600 and when he handed a letter to a Congress staffer, he charged the island $660, not to mention the Verizon cellular phone call bills that were added to the Guam account.
On July 29, 2002, he discussed with House and Senate members a bill filed by former Congressman Robert Underwood, and his price tag for three hours and 40 minutes was $1,020.
He would prepare for the same kind of meeting with members of the House of Representatives for more than two and a half hours and would charge Guam $720.
The same person reviewed a letter for almost three hours and charged Guam $840.
Another staffer like Gibson would somehow find a way to revise the letter for an hour and then charge a separate $360, all coming from Guam’s coffers.
Williams bought refreshments for Capitol Hill employees or stayed at the Westside Hotel, dining with Republican staffers, and paying his dues at a golf club with Guam money.
Crisler, a Williams staffer, cost Guam at least $135 for every hour that she spent reading clips and publications about the island. On several occasions, she would visit the House for her boss and the price tag would be $140.13 per hour.
Meal tickets
But among the list of charges, the “business” meals were always at the top of the list.
The expenses included a quick bite at Taco Bell or expensive dinners at Abramoff’s Signatures restaurant.
Records of expenses billed to Guam showed that Williams loved to play golf and drink, while Todd Boulanger loved dining.
Boulanger, a Republican activist, frequented Signatures for lunch and dinner. Sometimes, he would bring Senate staffers who he normally met at Abramoff’s restaurant via a taxi ride also paid for by Guam taxpayers.
Everywhere Boulanger ate, he would charge it to Guam and whatever he decided to do, he would charge for his hours. When he monitored House floor developments regarding the Guam judiciary, he charged $240 per hour and when he lifted a phone to call a House staffer, he charged another $168.
Fare tickets
While Greenberg Traurig staff used Guam money for taxi fare around Washington, D.C., Abramoff, the boss, would hire limousine service at Guam’s expense.
Former Senator Mark Charfauros, who was the only local official who admitted his link with the disgraced lobbyist, traveled at a cost of $4,300, which Abramoff charged to his Guam clients. The invoice date was May 9, 2002, but the actual trip transpired on Feb. 28, 2002.
Concert and parking tickets
Guam taxpayers also paid for Bruce Springsteen concert tickets on Aug. 6, 2002, which were bought by Ring for a Senate staffer for $85 and an Encore ticket paid by island taxpayers for Volz on Dec. 5, 2002.
Boulanger went for a Grim Deeper fishing trip on Aug. 19, 2002, billed Guam for the gas he used, plus a 7-Eleven purchase and a parking ticket.
Triple whammy
Guam taxpayers were also hit three times over for every occasion that the lobbyists met in their favorite dining spot, the defunct restaurant of Abramoff.
The lobbyists earned their hourly rate using Guam for their meetings, would bill the local court for their meals, and would contribute to the earnings of Abramoff’s restaurant.
Even before Abramoff sent an engagement letter on May 23, 2002, Boulanger had started charging Guam for his dinner at the restaurant on May 9, 2002.
As reflected in his expense billings, Boulanger dined at Signatures more than a dozen times while Williams hosted a dozen luncheon and dinner meetings in the same restaurant.
In fact, Boulanger had a dinner at Signatures on Oct. 9, 2002 and charged it to Guam although the meeting was with the Senate Indian Affairs Committee.
Abramoff treated Guam the same way he treated his other clients including the Native American groups.
Federal documents indicated that the restaurant was a favorite of Republican power brokers such as Reps. Bob Ney of Ohio, Dana Rohrabacher of California, and former House Majority Leader Tom Delay of Texas whose meals were often complimentary.
Lawyers, lobbyists and several lawmakers thought that their food and liquor were free but those free tabs were reflected in the billing records of Abramoff’s defrauded clients.
The famous Washington, D.C. restaurant was also the venue for the first meeting of Abramoff, Lamorena, and Sanchez. According to California-based attorney Howard Hills, he was present but only stayed for brief pleasantries.
Abramoff’s restaurant closed on Nov. 16, 2005, after media and congressional scrutiny of Abramoff and his dealings became intense.
In the description of services, the word “research” was the most overused term. The timekeepers at Greenberg Traurig stated that they did some research on Guam.
Such was the work description of Hills, who was retained by Judge Lamorena to spend a great deal of time researching complex questions on international and territorial law.
When Hills hired a subcontractor, Manase Masur, who was recommended by the presiding judge, his job was to do research for the court.
Wasted monies
Despite the research and studies done, plus the amount of money paid, the lobbying effort did not succeed.
According to Hills’ attorney Carol Elder Bruce, in her letter to Guam Judiciary Staff Attorney Bruce A. Bradley, Abramoff actually won the turf fight for the Superior Court for a period of time until public revelations about the lobbyist’s involvement in the lobbying forced a reversal.
The present administration of the Guam Judiciary is trying to recover some money from Hills who, according to Bradley, did not provide any supporting documents to show the work he did for the court.
The Guam judiciary is asking Hills to return the $20,000 retainer paid by the Superior Court of Guam on June 18, 1998, but Bruce said that there are no funds to be refunded because the amount covered Hills’ legal services for the period of April 7, 1998 through January 2001.
Bruce also refused to provide copies of Hills’ documents regarding his contract and payments, explaining that her client is a solo practitioner and does not bill his clients separately, and that he does not provide detailed billing statements all the time.

The Abramoff plea agreement can be found here or here.

An instructive article on the "honest services fraud" law and its application to Abramoff's case is here.