The Komisar Scoop Reports & Analysis by Investigative Journalist Lucy Komisar

Saturday, September 29, 2007

A Frenchman acting on principle

Filed under: arms trade,Blog,offshore,World — Lucy Komisar @ 5:18 pm

By Lucy Komisar
Sept 29, 2007

It’s that time of the year when the UN General Assembly opens and heads of state and foreign ministers meet up at parties and quiet gatherings and even give a few public speeches around town. A popular stop is the Council on Foreign Relations, at an elegant robber-baron style mansion at East 68th Street & Park Avenue, where anyone representing an establishment view is assured of a warm welcome.

That certainly holds true for a foreign minister in the conservative government of France, even if in this case he happens to be a Socialist. One must add that the Socialists who joined the cabinet of new President Nicolas Sarkozy have been written out of the party as opportunists, which confronts them with a special challenge: demonstrate integrity. I gave one of them a chance this week; he flubbed the test.

French Foreign Minister Bernard Kouchner, famous as the founder of Médecins Sans Frontières (actually, he was one of 12 doctor and journalist founders), spoke at the Council on Tuesday, Sept. 25, Bernard Kouchnerin a meeting that started with a friendly cocktail reception and continued with an hour’s tour d’horizon and questions that focused a lot on Iraq and its neighbors. The meeting was presided over by Felix Rohatyn, the prominent investment banker, who was US ambassador to France in 1997-2000 and is now an advisor to the chairman of Lehman Brothers.

In his introduction, Rohatyn said, “There are very few people who act according to their principles. Bernard Kouchner acts on his principles, and that’s a very rare virtue, especially in a politician.”

Hearing that, I was hopeful that Minister Kouchner would display these principles in his answer to my question about a corruption scandal that could be the French Watergate. However, the minister, who initially seemed startled that an American would bring up a very French matter, quickly displayed the not-so-rare political attribute of solidarity with high-level officials who want to suppress evidence of corruption.

From my question and his answer, available in video and audio and a transcript on the Council website:

KOMISAR: I’m Lucy Komisar. I’m a journalist. You talked about setting an example, showing the way, working in the framework that has to do with the rules of the game. Well, one of the major international questions is corruption. And in France, of course, the media is dominated often by the Clearstream scandal in which your president, Sarkozy, was accused falsely of having a secret account in Clearstream —

ROHATYN: Could we get to your question, please?

KOMISAR: Well, yes, but I have to explain what the question is.

KOUCHNER: No, no, because I know about it. (Laughter.)

KOMISAR: Okay, you know about it, but everybody else here doesn’t.

KOUCHNER: I will not answer you.

KOMISAR: Okay, the question then is, the real scandal is that the French company Thomson paid over a billion dollars in bribes and kickbacks connected to the sale of six frigates to Taiwan, and both the past Socialist and Conservative governments have refused to give the investigating magistrate the documents from the customs department that would show where this money went.

If you are going to be the harbinger of change and show the rules of the game as they ought to be done, honestly, will you open these records to the magistrate and expose this terrible bribery, which is convulsing your country, if not yet in the press here? Will you give those documents to the investigating magistrate?

KOUCHNER: Well, thank you, Madame, because you have said “honestly.” Honestly, I have nothing to answer to you. This is not the question.

UNKNOWN: Bravo. (Scattered applause.)

KOUCHNER: We are talking about the international relationship and transatlantic relations. And let me tell you something. It was completely false, (that we have said ?). Okay, thank you.

Does this mean that Sarkozy was really involved in taking frigates kickbacks via Clearstream? Not necessarily. The contracts were signed during the presidency of Socialist François Mitterrand. And some of the cash likely went to former President Jacques Chirac, Sarkozy’s internal conservative party enemy. It may just mean that people Sarkozy is connected to were involved. Or that if he blows the whistle on them, they will reveal his own past financial peccadilloes.

If the truth came out, and millions of dollars were traced to top political figures, this could convulse both parties. Meanwhile, French Judge Renaud van Ruymbeke, a man of impeccable integrity who has suffered vicious attacks by the political class he is investigating, has had to drop the frigates case, for the moment, until more evidence turns up. Stay tuned.


In an Oct 4th IPS article, Michael Deibert reports about the tight relationship that the French oil company Total has with the repressive generals who run Burma. About Kouchner’s role, he says:

“BK conseil, the former company of France’s current foreign minister Bernard Kouchner, advised Total in 2003 on improving the public face of its operations in Burma.

Formed as a one-off consulting concern by Kouchner and Total lawyer Jean Veil, Kouchner, who was the company’s only official employee, visited the site of the Yadana pipeline in March 2003. He wrote a report in September 2003 exonerating the company of any wrongdoing. The report was carried on Total’s website.”

Now, that’s principle!


Monday, September 17, 2007

Offshore shell games threaten global financial system

Filed under: Blog,offshore,tax evasion — Lucy Komisar @ 10:28 am

By Lucy Komisar
Sept 17, 2007

There’s an astonishing article in the Washington Post’s Business Section (“Risk. Now They See It. Now You Don’t. Sept 16, 2007)

The Post, which has never, ever, railed against tax havens, is now suggesting that their use to cheat tax authorities and investors threatens the entire global financial system. Of course, it doesn’t put it so starkly, but that’s the gist.

The Post says, “Over the past few years, major banks figured out how to use “conduits” and “structured investment vehicles” to earn big fees while playing cute little games of tax and regulatory arbitrage and keeping it all pretty much hidden from investors.”

Where does The Post think those off-balance-sheet investment vehicles are? Most of Enron’s were in Grand Cayman. The Post should connect the dots. Tax and regulatory arbitrage plus hidden plus off-balance-sheet investment vehicles = offshore.

Why did regulators tolerate the use of offshore? Because global tax evasion and avoidance of regulation is something corporations want. That’s what offshore secrecy is for. Now, will Congress act, in spite of corporate power, when there is a threat to the entire global financial system?

The full Post article:

“You’d think after Enron, folks would have gotten wise to the old shell game of moving assets and liabilities to off-balance-sheet investment vehicles, where no one can tell what the risks really are. Think again.

Over the past few years, major banks figured out how to use “conduits” and “structured investment vehicles” to earn big fees while playing cute little games of tax and regulatory arbitrage and keeping it all pretty much hidden from investors.

It worked like a dream until it turned out that a good portion of the hundreds of millions of dollars in assets held by these vehicles were mortgage-backed securities that weren’t as risk-free as everyone assumed. Now wary investors are refusing to roll over the “commercial paper” used to finance these vehicles, forcing the banks to assume the loans themselves.

In the old days, when bankers behaved like bankers rather than hedge fund managers, banks would raise money on the bond market and use it to make loans to companies that had assets to put up as securities. The bonds were recorded as a liability, the loans as assets, and a certain amount of the bank’s own capital would have to be put aside in case something went wrong. Any profits would be subject to taxation.

The conduits and SIVs changed all that. Because it wasn’t the bank issuing IOUs, but the conduit, the borrowing didn’t have to show up on the bank’s balance sheet as a liability, where it might affect the bank’s credit rating. And because the financial risks associated with the conduit were sold off for a nominal sum, there was no need to list it as an asset. Because the conduit was registered in an offshore tax haven, no taxes had to be paid until profits were repatriated. And for reporting purposes, all that was required was a cryptic little footnote in the annual report about the promise of backup credit facilities in the unlikely event of a liquidity crisis.

Now that the unlikely has happened, it’s fair to ask why regulators and auditors tolerated this ruse — a ruse that not only makes a mockery of their promise of greater transparency in financial reporting but also now threatens to take down the entire global financial system.”

Thursday, September 13, 2007

Palestinian Martyrs and Traitors

Filed under: Theater — Lucy Komisar @ 5:26 pm

By Lucy Komisar

Inter Press Service (IPS), Sept 13, 2007

Credit:Aaron Epstein

Arian Moayed and Daoud Heidami (background) in a scene from “Masked”.

In a new play by a Palestinian-American woman, two characters say in unison: “Oppression is like a coin maker. You put in human beings, press the right buttons and watch them get squeezed, shrunk, flattened till they take the slim shape of a two-faced coin, one side is a martyr, the other a traitor. All the possibilities of a life get reduced to those paltry two.”

In a strange coincidence — or maybe not so strange — that is also the theme of a play written in 1990 by an Israeli man. Both were commenting on the murderous violence that had engulfed Palestinians. Betty Shamieh wrote “The Black Eyed” after the 2001 attack on the World Trade Centre. Ilan Hatsor wrote “The Masked” a decade earlier during the first intifada. Both plays have made their way to off-Broadway in New York.

In the taut, tense drama “Masked”, three brothers confront each other in a West Bank Arab village butcher’s back room. Juxtaposing life and death, there are small black and white snapshots on one wall and meat hooks and blood on another.

Na’im (Arian Moayed), in his mid-20s, who has been hiding in the mountains, and his brother Khalid (Sanjit De Silva), 18, who runs the shop, are suspicious that Daoud (Daoud Heidami), 30, a dishwasher in Israel, is a collaborator. Someone saw him in an Israeli secret service car. They think he tipped the army before a protest in which their 7-year-old brother Nidal — dressed by Na’im in a militant’s uniform — was shot and left in a vegetative state.

Na’im tells Daoud that he is a marked man; “The Leadership” will deal with him. They’re going to clean the village of squealers. Khalid retorts, “Terrific, you learned something from the Israelis.”

They also talk about the darkness of Israeli occupation: houses destroyed, raids, round-ups, teargas, shooting at protesters.

Daoud insists he was set up, then that he’s pulled between both sides, and finally that he acted because the Israelis threatened him and his brothers: “There were four or five interrogators working me over…I threw them a few names…They can do anything.”

He adds, “You and your militias killed more of us than the Israelis.” Na’im retorts, “You sold yourself to be a slave.” He plants his foot on his brother’s neck. Khalid demands, “I want a solution without blood.”

The first intifada had been running for three years when Ilan Hatsor wrote this. He wanted a Jewish audience to see their enemy as human beings, members of a family.

He said at a talk-back after a New York performance, “The play is about being torn apart; it’s a triangle of brothers. In the first intifada, more Palestinians were killed by Palestinians suspicious of collaborators than were killed by the Israeli army. We put them here. We as Israelis locked them in this place and are responsible that the collaborator is a collaborator.” He added, “The young brother Khalid [for a solution without blood] is my partner.”

Hatsor’s work is male, about fighters and accommodators. Betty Shamieh’s work is feminist, showing that though men start and manage wars, women are swallowed by them.

“The Black Eyed” takes place in the afterlife, shown as a painted pink box, a tongue-in-cheek assertion of a feminine view of heaven. Four Palestinian women from different ages wait outside a room reserved for martyrs. Delilah (Emily Swallow), in a blue Egyptian robe, had a brother slaughtered in a charge against Samson. Tamam (Lameece Issaq), in a black and white robe, had a brother killed in defiance against the Crusaders. The Architect (Jeanine Serralles), modern in a chic slim dress and yellow pumps, died in a 9/11 plane. Aiesha (Aysan Celik), in baggy pants and shirt, is a terrorist.

Their conversation challenges the myth of heroic violence. Delilah comments, “Our loved ones are allowed an afterlife.” But Tamam adds, “Just like every other misguided soul who murdered and raped.”

Tamam’s name means “enough”. After her brother was picked up with a weapon, she tried to ransom his freedom and was raped. On his release, he joined an armed group and went to the marketplace with a knife and a mace to kill.

She says she should have told him, “You are the most precious thing in the world to me…If you think this is a gift for me, the box will be empty, brother…They burned down our entire village, because you killed those people. What you did wasn’t about my honour. It was about yours.”

On the other side, Aiesha declaims: I built something more intricate than the human heart, hugged it to my chest, and walked into the biggest crowd I could find.” When she detonates herself, she kills a 7-year-old Arab girl. Delilah asks, “How could you do that? It’s so angry.” The three women say to Aiesha: “It’s so male.”

Shamieh satirises the notion that in the afterlife terrorist bombers get women, houris, whose virginity is continually renewed, and who are known as The Black Eyed. Aiesha says, “The minute I got to the afterlife, I had a hundred men of every hue. That’s what I believed I’d get.” Aiesha dreams of a renewably chaste man. It’s pointed out that “who wants a man with no experience?…Besides, any girl could have twice that number on earth if she wanted to.”

Like Hatsor, Shamieh sympathises with what drives terrorists. Aiesha: “Live my life on earth in my dirty, crowded refugee camp in the place that your parents abandoned…I never had the chances you had to do anything different than what I did. So don’t you judge me.”

The Architect acknowledges that the hijackers have “lived lives that would break the hardest of men. They only want to be heard.” But she insists, “All that still doesn’t make it right to kill. I would say to them, ‘You’re hijacking this plane full of people who are ignorant, who are looking at you and saying, what kind of people could do such violent, cruel things? They don’t know that it’s the kind of people the American government had been doing just as violent cruel things to in its people’s name for generation. Maybe they don’t care. But they’re not worth killing yourself over.’ She would say: “They rate our lives at nothing. When we kill ourselves in the hope of hurting them, we show that we agree, that we feel our lives are dispensable.”

Shamieh says she wrote the play “to talk about violence in a historical perspective, because I thought that what was being lost after 9/11 was the idea of where is this violence coming from.”

She says, “You have a character saying no one is going to reduce me to a coin. I don’t care that this oppression is happening to me, that is not going to make me choose between these two things that are extreme.”

Article on IPS site

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